Blue Bird India Ltd Management Discussions

BLUE BIRD (INDIA) LIMITED ANNUAL REPORT 2010-2011 MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW: Blue Bird (India) Limited is a Note Books manufacturing company. The Companys revenues are from manufacture and sale of branded Note Books, Drawing Books, Publication, Trading in Stationery Items, construction business. The Construction business has been stopped by the company and only the project on hand is being completed. INDUSTRY ANALYSIS: The Printing Industry has been growing at a CAGR 11% during the previous years. The demand for Stationary and books are seasonalfn nature, so activities in printing industry vary accordingly. The presence of unorganized sector in printing Industry in the market has mode the business activity very challenging and there is cut throat competition. MARKET SCENARIO: The study Products, Books and Stationeries, are exclusively used by students and office. Due to higher allocation of budget provision towards education by the Union Government and adoption of The Right to Education Act, 2009 there is more focus on education by the state governments. MARKET FORECAST: Printing and stationary industry will grow rapidly based on past trends. SCHOOL BOOKS AND STATIONERY MARKET: * Students irrespective of their age extensively consume books and stationery items. The demand for books and stationery items hence will largely depend on expenditure by house hold in education. Urban areas are expected to have more number of Middle and High Income Group households as there are better employment opportunities and there is good earning But due to inflation the cost are also risen which may dampen the industry. GOVERNMENT EXPENDITURE ON EDUCATION: There has been a consistent increase in government spending towards social sector which also includes education. Expenditure on social services as a percentage of total expenditure has increased from 19.9% in 2004-05 to 23.8% in 2009-10. RIGHT TO EDUCATION ACT, 2009: Government of India, in an attempt to facilitate percolation of education to every strata of society, has mulled an act called Right to Education Act which endeavors to provide free and compulsory education to all children in the age group between 6-14 years. This new law makes it a duty for all state governments and local bodies to see to it that every child gets education in a school in his/her neighborhood. The implementation is likely to benefit a huge number of children across the country. The implementation of this act is bound to increase the need for education related items particularly books and stationery. DEMAND SUPPLY FORECAST: Demand Forecast-School Books and Stationery: The demand for school books and stationery items is expected to remain strong during next 10 years. The organized players will be able to witness growth than unorganised players but the said unorgqnized players are also going to give tough competition in the organized sector as the cost will be higher for the organized sector due to inflationary pressures. FINANCIAL REVIEW: During the year, the Company could not recover the dues from its customers in time despite art efforts by the management. The Company is facing severe cash crunch due to which the company has not been able to pay its dues to the banks. The Company had submitted a Corporate debt restructuring programme to the Bank and the management is happy to inform that the same was approved by the Corporate Debt restructuring cell of the Reserve Bank of India. The said CDR package will be implemented after the compliance and necessary sanction which are awaited from the bank and is in process. In the meanwhile the production process in the company has come to a grinding halt and the company has lost huge market due to non production, as there was no finance available for doing the production of goods. The Company will also be filing an application with Board of Industrial and Financial Reconstruction under Sick Industries Regulations Act, as the net worth of the company is completely eroded and management is hopeful that the company will be revived. There are various petitions as filed by creditors and lenders for winding up and the Hon. High court has passed the order for the winding up of the company. The company is working to prefer appeals to Hon. Division Bench / Hon. Supreme Court. Also after registering with the BIFR the order from BIFR will be served on the Court, wherein the winding up proceedings will stop. RISK AND CONCERNS: The Company is facing the most important risk of financial crunch and the management is taking all the efforts to get the investors to pump money in the company in order to come out of the tight situation. INTERNAL CONTROL: The Company has internal control systems since its inception. Management has realized a need to review and reorganize the entire internal control procedures and has initiated efforts in that direction. HUMAN RESOURCES: Due to cash-crunch the Company was not in a position to pay salaries in time, resulting into substantial employees leaving the job. Company is in the process of restructuring its manpower at all the levels in such a manner that it con achieve the best results at the optimum costs. ENVIRONMENT, OCCUPATIONAL HEALTH & SAFETY: The Company has taken all measures for Non-Pollution of environment. The Company is using Papers manufactured from Non-wood products. Water Based Inks are used for Printing. If is Companys endeavour to protect environment and propagate health & safety measure amongst its employees. CAUTIONARY STATEMENT: The statement made in this report describing the Companys projections, expectations and estimations may be a forward looking statement within the meaning of applicable securities laws and regulations. Actual results may differ from those expressed or implied in this report due to the influence of external and internal factors which ore beyond the control of the Company.