coventry spring engineering co ltd Management discussions

COVENTRY SPRING AND ENGINEERING COMPANY LIMITED ANNUAL REPORT 2004-2005 MANAGEMENT DISCUSSION AND ANALYSIS a. Industry Structure & Development: Your Company has been one of the pioneers in manufacturing of springs for the last fifty years. The company supplies its products not only to the automobile sector but is also one of the leading suppliers to Indian Railways. Further with the globalization coming in the industry shall have the international area open to itself. b. Opportunity & Threats: Over the period of the last fifty years the company has developed recognition. and goodwill in the market and demand from its customers is showing an upwards trend. Your company has order in hand worth Rs 20 Crores approximately which has come not only from existing customers but many new customers have shown interest in developing new products. The company has substantial presence in the foreign markets. The company has struggled in recent times to fulfill its orders in due time due to financial constraints and hence new competitors are queing up to take our place. Even our export. orders have been suspended due to non- fulfillment of their orders in time. However the company feels that once the financial constraints are over the company can overcome such competition with ease due to the quality and rates the company offers. c. Performance: The company has suffered a fall in turnover in the current year, although our order position has not suffered. Due to the financial constraints executing of entire orders is not possible at the present moment. d. Outlook: The company has taken certain positive steps in order to overcome the financial crisis which it finds itself in. Once the financial affairs are sorted out the company can look forward in increasing both its production and sales. e. Risks & Concerns: The risks involved in the pricing of quality raw materials which are increasing drastically. With tough competitors in the market it may not be feasible to pass on the entire increase to the customers. This may effect the profitability of the company. The inability of the Company to execute existing orders due to shortage of working capital has caused the company to lose both domestic and export orders. f. Internal Control systems and their Adequacy: The company has internal control systems and procedures commensurate with its size and nature of business. The internal control systems are supported by internal audit carried out by a professional audit firm. The adequacy and effectiveness of the internal control, as well as compliance with the laid down systems, policies and accounting standard are comprehensively monitored by the Auditors. g. Human Resources: The company continues to accord top priority to human resources development, by imparting proper training to its supervisory and managerial staff. The company is putting efforts to make its appraisal system more effective to cater to the financial and career aspiration of employees to increase the organisational effectiveness. The company maintained good industrial relations in all units of the company. h. Cautionary Statement: Statements in this report on Managements Discussion and Analysis describing the companys objectives, projections, estimates, expectations or predictions maybe forward looking statements within the meaning of applicable laws or regulations. These statements are based on certain assumptions and expectations of future events. Actual results could however differ materially from those expressed or implied. Important factors that could make a difference to the companys operation include global and domestic demand supply conditions, finished goods prices, raw material cost and availability, Government policies and regulations with which the company has business links and other factors such as litigation and industrial relations. The company assumes no responsibility in respect of forward looking statements herein which may undergo changes in future on the basis of subsequent development, information or events.