spbl ltdmerged Management discussions

SPBL LIMITED ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS The core business of the company is processing of fabric and manufacturing and marketing of flock fabric. The management discussions and analysis is given hereunder: - a) Industry structure and development: There is general awareness and concern about the need to revive the industry and exploit its export potential. On its part, the Government is conscious and taking steps which should have positive impact on this industry. TUFS is an example of Govt. initiative, b) Opportunity and threats: With effect from 1st January 2005, Industry is exposed to International market on dismantling of quota of textiles and garments. While globalization offers unlimited opportunities, the same is fraught with threats from competitors specially from countries like China, which can adversely affect our exports and local markets. However, with conscious efforts by the Industry to become competitive, it is expected that opportunities provided by the free market economy in the long run would be fully exploited to the benefit of the country. To seize the opportunity your company has already embarked upon modernisation programme. c) Segment-wise performance: The company is mainly in activities as cited above. The company has no activity outside India except some exports. Segment wise performance is given at Note No. 12 of Schedule i.e. Notes on Accounts. d) Outlook: The Directors are hopeful that with the thrust on improvement in International scenario, change in the product mix, cost effectiveness and development of new qualities, it would be possible to meet the challenges being faced by the processing and flock fabric industry. It is also expected that the export scenario would improve in the coming years, e) Risk and concerns: The year under review has been a difficult one for the textile industry in general due to increase in power cost and raw material cost. However due to competitive edge enjoyed, your company is expanding its market and aims to achieve world class market development, order procurement and supply management have been re-engineered and new practices adopted at all levels. Technology obsolescence is an inherent business risk in a fast changing world and fast adaptability to change is crucial for survival of business. Continuous modernization programme adopted by the company coupled with international bench making has enabled the company to emerge as a modern and efficient processing and flock fabric plant. f) Internal control system: The company maintains adequate internal control systems, which provide adequate safeguards and proper monitoring of the transactions. The company has an inhouse Internal Audit Department. The internal auditor reports to the Executive Director and Audit Committee of the Board. The internal auditor conducts regular departmental audits to ensure that the companys control systems are adequately followed and all statutory requirements are complied with. g) Discussion on financial performance with respect to operating performance: The operating performance of the company has been discussed in Directors Report for the year ended on 31st March 2006. h) Development in human resources and industrial relations: The company HRD activities involve total approach to develop the employees with emotional maturity, creativity, customer focus, quality consciousness, etc. The industrial relations throughout the year remained cordial in general. i) Cautionary Statement: Statements in the Management Discussions and Analysis describing the companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable security laws and regulation. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the companys operations include economic conditions affecting demand and supply and price conditions in domestic and overseas market in which the company operates, changes in Government regulations, tax regimes, economic developments within India and the countries in which the company conducts business and other incidental factors.