soma papers industries ltd share price Management discussions

SARIKA PAINTS LIMITED ANNUAL REPORT 2004-2005 MANAGEMENT DISCUSSION AND ANALYSIS Opportunities and Threats The Market is being thrown open. The competition has necessitated aggressive marketing strategy for the Survival of industry. The Company selling strategy through a well-established network of branches and consignment selling Agents (CSAs) located in different parts of the country, which are supported by the Companys strong marketing force. The Company relies on a strong trade push strategy through a well-defined Trade Relationship Management Policy. The Companys broad product range and visits by its marketing people to the branches and CSAs ensure that the Companys products receive maximum response and are adequately promoted. Initiatives by the Company The initiatives being taken by the Company are that focusing on modern system of manufacturing process for improving quality standard and reduction of costs of the products. The employees at all levels are being made aware of the changing conditions and the challenges of the open market. They are also being trained to tackle the situations under different circumstances. The Company is expecting to improve the overall productivity, profitability as a result of this strategy. Outlook The margins in the industry are under severe pressure on account of stiff competition. However, the Company expects that it can meet the challenges with its strength in marketing network, its strategic planning, productivity improvement and cost reduction exercise, which have already been implemented in right perspectives. These measures would lead to better position to meet the future challenges. The Company has adopted the latest technology. Risks and Concerns The aggressive marketing and price wars by competitors are the major risks and concerns of the Company. Tough competition and price wars have put a lid on the growth and profitability of the industry whereby the margins are under pressure. The players need increased working capital. However, Company expects to overcome the areas of concern with strategic initiatives. Internal Control Systems and their adequacy The Company has an adequate internal audit system commensurate with its size and the nature of its business towards achieving efficiency in the operation, optimum utilization of resources and effective monitoring thereof and compliance with applicable laws. Material Development in Human Resources Employee relations continue to be cordial. Training and development activities are identified, organized and progress monitored as part of human resource development activities. Financial Highlights Revenues The sales during the year under review was Rs. 376.29 lacs (previous year Rs. 661.37 lacs). Operating Expenses The operating and other expenses for the year ended 31-03-2005 were Rs.413.29 lacs (previous year Rs. 597.03). Profit/Loss after Tax The net loss after tax during the year under review was Rs. 87.10 lacs (previous year loss was (Rs. 95.04 lacs). Interest and Financial charges The Company has incurred interest cost of Rs. 35.90 lacs during the year. (Previous year Rs.41.74 lacs). Fixed Assets There was no, addition to any Fixed Assets of the Company during the year under review except for computer system of Rs.13650/- (Previous year Rs.329709/-). Cautionary Statement The statements on the Companys objectives, projections, estimates and expectations made herein above are based on certain assumptions and likelihood of future events and are forward-looking Statements within the meaning of applicable securities laws and regulations. Actual results could differ materially, from those expressed or implied. The Management Discussion and Analysis presents the industry Overview, Opportunities and Threats, Initiatives by the Company and overall strategy of the Company in the midst of the competition faced due to the globalization, liberalization and other factors. Increasing liberalization and competition in the domestic as well as international market has intensified and forced the players to adopt aggressive marketing strategy and promotional campaigns to protect their market shares. The Company, in order to protect and expand its market share, has given thrust on the marketing. Opportunities and Threats The Market is being thrown open. The competition has intensified and aggressive marketing is necessary for survival of industry. The Company sells its products through a well-established network of Branches and Consignment Selling Agents (CSAs) located in various parts of the country, which are supported by the Companys strong marketing force. The Company relies on a strong trade push strategy through a well-defined Trade Relationship Management Policy. The Companys broad product range and visits by its marketing people to the branches and CSAs ensure that the Companys products receive maximum response and are adequately promoted. Initiatives by the Company The following initiatives are being taken by the Company : Focusing on modernization of manufacturing process to improvise quality and reduction of costs. The employees at all levels are being made aware of the changing conditions and the challenges of the open market. They are also being trained to tackle the situations under different circumstances. The Company is quite confident that the overall productivity, profitability would improve in a sustainable manner, as a result of this strategy. Outlook The margins in the industry are under pressure on account of stiff competition. However, the Company expects that it can meet the challenges with its strength in marketing network, its strategic planning, productivity improvement and cost reduction exercise, which have already been launched in right earnestness. These measures would place the Company in a position of comfort to meet the real challenges of the future. The Company has adopted the sophisticated technology. Risks and Concerns The aggressive marketing and price wars by competitors are the major risks and concerns of the Company. Tough competition and price wars have put a lid on the growth and profitability of the industry whereby the margins are under pressure. The players need increased working capital. However, Company expects to overcome the areas of concern with strategic initiatives. Internal Control Systems and their adequacy Your Company continues to place considerable emphasis and effort on the internal control systems. There is a well established internal control system with clearly laid down powers and responsibilities that are required to ensure the adequacy of the internal Control System. Material Development in Human Resources The Company takes measures to make more efficient HRD functioning with the parameters to achieve Excellent Rank. Steps have been taken to create a sense of belongingness in the minds of the employees.