veejay lakshmi textiles ltd Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under clause 49 of the listing agreement, a detailed report on the management discussion and analysis is given below:

INTRODUCTION

The Company started its operations in the year 1975 to produce Twisting machines. The Company has been specializing in the Twisting machines and Automatic Cone Winder was added to the product line in the year 1998. Both the products are used in textile mills for post spinning/weaving preparatory operations. The Company diversified into textile spinning in the year 1993 and the textile unit now functions under a wholly owned subsidiary from 2003. The Company has also invested in Wind Mills.

INDUSTRIAL SCENARIO

Indian Textile engineering industry is more than 50 years old and one of the largest capital goods segments in India and has potential for growth. The prospects of the industry are directly related to the prospect of the user textile industry. The industry, which was working under protective environment for a long time has been dependent on foreign technical know-how. With the opening of economy and removal of all controls the local industry has been exposed to competition and is under compulsion to update its technology with improvement in quality and prompt after-sales service. The industry is suffering with low capacity utilization mainly due to imports and fluctuation in demand.

The non-availability of adequate power, increase in cost of self-generated power, non-availability of labour, vagaries in the prices of cotton and yarn and increase in the cost of inputs are affecting both the user industry and also the machinery manufacturers.

HIGHLIGHTS OF OPERATIONS:

SEGMENTWISE/PRODUCTWISE PERFORMANCE

The sale of Twisters is 104 nos of value Rs.1,501 Lakhs as against 48 nos of value Rs.722 Lakhs in the previous year. The sale of winders is 51 nos of value Rs.3,869 lakhs as against 59 nos. of value Rs.4,078 Lakhs in the previous year.

Assembly/Random winder sales have increased from Rs.100 Lakhs to Rs.141 lakhs. The facilities available to produce Aluminium die cast and Plastic injection moulded components have been used only for in-house requirement of components.

The income from windmills is Rs.173 lakhs as against Rs.138 lakhs in the previous year. RISKS & CONCERNS:

The user industry is looking for maximum automation of their plants due to increase in cost of labour and also non availability of labour. The future of the company will depend upon its ability to keep pace with the technology levels of the competitors.

OUTLOOK

There is some improvement in the order inflow for twisters as the new models introduced have been well received in the market. The sale of assembly winders is also picking up. Even though new projects will look for machines with higher automation there will be still good demand for the Automatic cone Winders produced by the company for replacement/modernization of manual winders. The Company can increase its sales volume and market share if it can offer new models with latest technology.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has a proper and adequate system of internal controls commensurate with its size and nature of business.

All the assets are safeguarded, properly utilized and protected against loss from unauthorized use or disposition and the transactions are authorised, recorded and reported correctly.

A Chartered Accountant carries out the audit on monthly basis to monitor the effectiveness of the internal checks and controls in different areas and reports/suggests improvement measures for review by the management.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company has a dedicated team of professionally qualified/experienced personnel in all functional areas. Opportunities are provided for self-development and career growth and wherever necessary employees are sent for training programme conducted in house and also outside by other professional bodies. The industrial relationship was cordial throughout the year. Part of the workmen who opted to retire have been offered a Voluntary retirement scheme.

CAUTIONARY STATEMENT

Statements in this report on management discussion and analysis describing the Companys future objectives, projections, estimate and expectations may be forward looking statements within the meaning of applicable security laws or regulations. These statements are based on certain assumptions and expectations of future events, as they are perceived by the management at this juncture. The actual results, however, may differ materially from those which have been made explicit or which are implied. The major factors that could make a difference to the Companys operations include the supply demand condition of the Companys products, both domestic and global, the price realizations, which are market related and all other factors such as litigation and industrial relations.

	For and on behalf of the Board
Coimbatore	(Sd/-) V.J. Jayaraman
30th May, 2013	Chairman cum Managing Director