Brushman India Ltd Management Discussions

BRUSHMAN (INDIA) LIMITED ANNUAL REPORT 2008-2009 MANAGEMENT DISCUSSION AND ANALYSIS A separate report on Management Discussion and Analysis is attached as a part of this Report. REPORT ON CORPORATE GOVERNANCE A separate report on Corporate Governance is attached as a part of this Report. ACKNOWLEDGEMENT The Directors place on record their appreciation for the faith and trust reposed by the Bankers, Shareholders and all other business associates. The directors wish to thank their principals, viz. Denman International Ltd., U.K. and Keune Hairecosmetics, Holland for their continued support, guidance and commitment to Indian market and investment in the equity of your Company. Your directors also wish to thank all those individuals/ entities/corporate bodies/financial institutions, who have invested in the equity of your Company and have reposed their faith in the management and the vision of the management. The Directors also appreciate the support and contributions made by the employees during the year. On behalf of the Hoard FOR BRUSHMAN (INDIA) LIMITED Place : New Delhi Date : 01.09.2009 KAPIL KUMAR ROHIT SOOD MANAGING DIRECTOR WHOLE-TEME DIRECTOR MANAGEMENT DISCUSSION AND ANALYSIS CAUTIONARY STATEMENT Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may be forward looking statements within the meaning of applicable securities laws and regulations. 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/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and other incidental factors. OVERVIEW: PAST, PRESENT & FUTURE The Company holds its leadership position in the paint brush industry both in terms of volume and value. BIL is the largest manufacturer of paint brushes in India by a wide margin. The Company enjoys substantial brand niche in an industry largely dominated by unorganized sector and has significant market share. But due to Global Recession and slowdown in reality and infrastructure sector there is severe impact on the sales and Margins of the Company in third and fourth quarter for the year ending 31st March 2009. INDUSTRY ANALYSIS BIL is the only organized player in the paint brush industry in India, with Brushman being the largest selling paint brush in India. With the recession hitting the global markets there has been sever effect on the Company profits and sales volume. At present the housing, reality and infrastructure sector is showing signs of revival and therefore the management is hopeful and positive that the Company would show better financial results in the coming period. MANUFACTURING DIVISION: As the members are aware, your Company is in the business of manufacturing and trading of paint brushes etc. Due to global recession which has grossly affected the housing, infrastructure and reality sector in the economy has in turn, negatively impacted the manufacturing business line of the Company during the last fiscal. Your directors would like to inform you that the management is hopeful and positive that the Company would definitely do better in the coming period(s) as the markets globally is now showing signs of economic recovery. Your Company is operationalizing through its manufacturing plant in Pantnagar, Uttarakhand and is the leading paint brush manufacturing Company in India. The management is realigning its manufacturing expansion plans in the light of present economic condition and would take suitable decisions in the best interest of the Company. TRADING DIVISION In the trading division your Company has deferred its plan(s) of expansion as the global recession has majorly effected the retail sector. Your Company holds the distributor rights for leading brands of the world in trading segment and hopeful that this business line would revive soon as the market is recovering and demand for niche products is picking up. SALONS /ACADEMIES DIVISION: Your Directors wish to inform you that due to global recession and current slowdown in the market the management had during the year decided to close down the operations of the following salons due to high rentals and other input costs which had contributed towards their operational unviability in the current scenario. Following is the details of the salons/academies which have been closed down: - Keune the salon al Infinity Towers, DLF Phase III, Gurgaon - Keune the salon at MGF City Centre Mall, Rajouri Garden, New Delhi - Keune the salon at TDI Mall, Rajouri Garden. New Delhi - Keune the salon at North Square Mall, Pitampura, New Delhi-110034 - Scratch Hie Academy at IIIrd Floor. E-5. Part-II. R.K. Jewellers Building. New Delhi-1100-18 Your directors wish to inform you that following salons/academies are operational as on date: - Keune the salon at Greater Kailash- 1 (M Block market), New Delhi - Keune the salon at MGF Metropolitan Mall, Gurgan, Haryana. - Keune the salon at J-12/14, Rajouri Garden, New Delhi - Keune the salon at Mariplex Mall, Kalyani Nagar, Pune - Keune The Academy, E-5, South Extension, Part-II. IInd Moor, R.K. Jewellers Building. New Delhi- 110048 SWOT ANALYSIS OF BIL Strengths: - The Company is a market leader in paint brush industry by a wide margin. - Brushman enjoys strong brand recognition in the paint brush segment for its innovations. - It has successfully introduced alternative raw materials, which have increased margins. - Brushman is recognised as one of the leading distribution houses for marquee beauty and cosmetic brands. - Brushman has been able to recognize and influence emerging fashion trends and introduce contemporary brands and products Weaknesses: - Paint-brush market is still an unorganised sector resulting in huge investments in user awareness and training. - Grey market for some beauty and cosmetic products exists, though small in size. Opportunities: - Growing user industry of paint brushes owing to boom in the economy. - Increasing affluence of consumers due to high GDP growth. - Rising awareness due to globalisation. Threats: - Ever evolving fashion trends. - Increasing presence of competitive brands in the market. Outlook: With the revival in the construction, housing, reality and infrastructure industry after recession the pant brush market is set for a growth and the Company being a leader is expected to be a major gainer. In the beauty and cosmetic industry, the rise in GDP. income levels and awareness of latest fashion and trends, is leading to double digit growth. The ongoing revival in retail sector in the beauty salon is acting as a catalyst to the growth of the cosmetic trading division of the Company. The Company is expected to gain substantially with all these developments in the medium to long term and sail through the tough times.