boss profiles ltd Management discussions

BOSS PROFILES LIMITED ANNUAL REPORT 2004-2005 MANAGEMENT DISCUSSION AND ANALYSIS OPERATING RESULTS: The operations for the period ended 30.06.2005 present in brief the following position: (Rs. in Lakhs) 01.04.2004 to 01.04.2003 to 30.06.2005 31.03.2004 Turn over (Net) 1499.08 1052.44 Other Income 19.06 18.71 Total 1518.14 1071.15 Gross Profit before Interest and Depreciation 164.26 87.26 Interest and Financial Charges 1244.62 803.99 Loss before Depreciation 1080.36 716.73 Depreciation 380.14 306.01 Loss after Depreciation 1460.50 1022.74 Amortization of Preliminary/ Pre-operative Expenses 275.30 220.24 Prior period Income/(Expenses) Net (148.80) 2.53 NET Loss carried over 1884.60 1240.45 PERFORMANCE REVIEW: Your Directors are pleased to inform you that despite severe operating constraints and intense competition in the market your Company has achieved a 34% growth in sales on an annualized basis. This was made possible on account of new product introductions and active follow up with potential customers. Your Directors are pleased to inform you that the decision taken to introduce a 8mm thick tile has found wide spread acceptance in the market and contributed substantially to the sales revenue. Your Directors are pleased to inform you that a major review of all operating expenses was taken and a substantial saving in expenses has been effected. On account of these measures, members will be pleased to note that the Profit before interest and depreciation increased by 2.7% for the period under review. Your Directors are confident that this improvement will be sustained and every effort will be made to further improve the operating margin. RESTRUCTURING: Subsequent to the Extra-Ordinary General Meeting held on 11th July 2005, the Company has filed a Petition before the Honble High Court at Madras seeking confirmation of the resolution passed by the Members for reduction of capital from Rs. 19,27,56,840/- to Rs. 1,92,75,684/-. The legal process is on and the management does not envisage any difficulty in completing the formalities in due course. The Management is pleased to inform that as a part of the ongoing efforts to make the operations viable and minimize liabilities, the negotiation with the major Preference Shareholder namely SACMI has been extremely fruitful. According to the revised terms, SACMI has agreed to waive all accrued preference dividend upto 30th June 2005 and also reduce the coupon rate from 9% to 4% with effect from 01st July 2005. Additionally, the redemption of the Preference Shares is now deferred and will be made in four equal installments commencing from 15th July 2012. The Management sincerely appreciates the gesture made by SACMI in mitigating the financial hardship of the Company. The Financial Restructuring Scheme (FRS) submitted to the Banks seeking various concession, including reduction in rate of interest, rescheduling in repayment of Term Loans etc., is under the active consideration of the Banks, and as per the information available with the Company, the proposal has been forwarded to the Head Office of the Consortium Participant Banks. RESEARCH AND DEVELOPMENT: Your Company continued to focus its in-house R & D efforts on improvement in quality, adding value to the products with an emphasis on improving productivity. The results would be reflected in the coming years performance. OTHER MATTERS: GAIL: The Company made an application under Section 9 of the Arbitration and Conciliation Proceedings Act, 1996, to the Honble High Court at Madras, seeking appointment of an Arbitrator, to Arbitrate the dispute between the Company and Gas Authority of India Limited (GAIL). Your Directors are pleased to inform you that the Honble High Court granted an interim stay restraining GAIL from disconnecting the Gas supply and also directed that the matter to be referred for Arbitration. Accordingly Honble Justice Mr. Jagannatha Shetty, former Judge of the Supreme Court of India, has been appointed as the Sole Arbitrator. The Arbitration is in progress, and your Directors are optimistic of obtaining the necessary relief from the Arbitral Tribunal.