wilwayfort india ltd Management discussions

WILWAYFORT INDIA LIMITED ANNUAL REPORT 2006-2007 MANAGEMENT DISCUSSION AND ANALYSIS CURRENT OPERATIONS: The sales revenue including other income for the financial year ended 31st March, 2007 was Rupees 1493.56 lacs as compared to the last year sales revenue of Rupees 1670.90 lacs. The Company made losses of Rupees 299.65 lacs in the financial year 2006-2007 compared to Rupees 154.00 lacs in the previous financial year 2005-2006. Margins were under pressure due to volatility & higher raw material prices due to lack of working capital availability, Company could not utilize installed capacity at optimum level. During the year under review, higher capacity installation by the captive users as well as unorganized sector in the market also affected the business opportunities in domestic as well as export market. INDUSTRY STRUCTURE AND DEVELOPMENT: Metallising and Coating of Polyester Film segment of the packaging industry made a significant expansion & capacity enhancement during the year. The polyester film producers themselves to avail the opportunity of the higher demand from domestic as well export market installed the fresh capacities in metallising and coating. The metallising and coating segment of packaging industry grew at the rate of 12% as compared to the growth of 20% of overall Packaging Industry. Metallising and Coating of Polyester Film segment is contributing 40% market share with the organised sector in which your Company is operating and rest 60% market share is controlled by unorganised sector. OPPORTUNITIES AND THREATS: The demand of the product in the domestic as well as international market is growing gradually which provide an opportunity to the Company to make an aggressive marketing with the available resources. Last year the installed capacity of Polyester Film in the domestic market was approximately 1,50,000 Metric Ton. With the hike in overall capacity in the industry by way of modernisation and expansion during the current financial year, the demand and supply of raw material i.e. Polyester Film has been disturbed which has resulted into instability in the raw material prices. The Company is exposed to the risk of fluctuating interest rates and Polyester Film prices, The Company being a Sick Industrial Company also facing cash flow problem in day to day affairs. SEGMENT-WISE / PRODUCT-WISE PERFORMANCE: The Companys operating business is organised and managed according to the nature of product with Single Primary Reportable Segment comprising of manufacturing and supply of Metallising, Coating and Embossing of Plastic Film and Papers. The detail of segment reporting is given at Schedule XVI (25) of the Annual Accounts. FUTURE OUTLOOK: With the good economic and industrial scenario in the Country, which is reflected with the higher GDP indication, we expect a reasonable growth in product demand in the domestic as well as international market. In view of growing organized retail market in India, the demand of FMCG will increase significantly which may have positive impact on overall packaging industry. The Company will make a efforts to take advantage of every opportunities within its constrain and resource available. INTERNAL CONTROL SYSTEMS: The Company has evolved a system of internal control to ensure that the assets are safeguarded and transactions are authorized, recorded and correctly reported. Planned periodical reviews are carried out resulting in identification of control, deficiencies and opportunities for bridging gaps with best practices. The Audit Committee reviews the adequacy of the internal control systems. REHASILITION PACKAGE: Based on the compromise proposal submitted by the Company to Vijaya Bank (lending bank) for One Time Settlement (OTS), the lending bank has agreed to accept the sum of Rs. 500 lakhs (Rs. Five Crores only) in full and final settlement of the dues payable in quarterly installment excluding interest @ 5% per annum of the offer amount on reducing balance basis and other terms and conditions mentioned in their letter of acceptance. However, due to acute financial problem in the Company, the Company could not make payment of OTS amount to Vijaya Bank on schedule time. Consequently, the lending bank took action for the possession of properties of the Company under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (54 of 2002). The management is taking all possible steps to replace dues of Vijaya Bank with other scheduled Bank / financial investor / body corporate. Part payment of OTS amount has been made to Vijaya Bank. The management is committed to liquidate the liabilities of secured and unsecured creditors with all possible resources. HUMAN RESOURCE DEVELOPMENT: The industrial relations remained cordial during the year under review. Mapping of jobs has been initiated to ensure that the right person is allocated the right job. The Company reviews manpower need and allocation of job from time, to time to ensure the best utilization and growth of the workforce. CAUTIONARY STATEMENT: Statements in this report, describing the Companys objectives, expectations and/or predictions, 1, may be forward looking within the meaning of applicable securities law and regulations. Actual results may differ materially from those stated in the statement. Important factors that could influence the Companys sales revenue, includes global and domestic supply and demand conductions, affecting selling prices of finished goods, availability of inputs and their prices, changes in the government regulations, tax laws, economic development within the country and outside and other factors such as litigation and industrial relation.