crew b.o.s. products ltd share price Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS

OVERVIEW

Crew B.O.S. Products Ltd is a Public Company which is listed in the BSE/NSE and Luxembourg Stock Exchange, engaged in the manufacturing and export of leather Products. During the year under review an increase in the total expenditure (with increased interest costs, finance charges, higher depreciation and staff and other costs going up) affected net profits of the Company. Your company is confident of increasing its business during the current fiscal and steps taken in the form of consolidations plans encompassing the high adherence to world class quality standards shall contribute in realizing its aspirations. The present year has had its share of misfortune in the international trade and your company suffered heavily due to non realization of debts from exports /domestic trades due to the economic downturn in the Global economy. Coupled with this the company was led to believe by its senior financial head to enter into very ambitious transactions which led to quantum losses and devastating financial collapse. The company had no options but to accept these losses in its overseas business and in its subsidiaries.

The Company had to take far reaching and urgent measures by removing the Chief Financial Officer and have started serious investigation into the frauds and misappropriation in such dealing. The matter is being investigated by the law enforcement authorities of the country.

In spite of these drastic setbacks your company is confident that the inherent robustness and corrective actions will pave the path of recovery though slow.

Now company has taken the following measures to retrieve its position once again. (a) Cost cutting measure on all fronts:- In this direction the company has consolidated its labour force including staff and supervisors by massive number from its previous strength nearly from 5000 to 1500 thereby reducing cost of labour drastically in insuring period. (b) Closure of Unviable Units:- The Company has taken a consensus decision to close its operation of the unviable and loss making units located at (I) 140, Leather Complex, Jalandhar, Punjab, (II) 172 Udyog Vihar, Phase-1, Gurgaon (Haryana), & (III) 407/07, Rangasamy Street, Kathandan Nagar, Chromepet, Chennai-600044. This will helps in consolidating the core area of the Crew BOS Products Ltd. (c) The company has also started cost cutting measures in all its fronts which include reduction of expenditure in Travelling, Printing & Stationary, Spares and Consumables, Telephone expenses, Motor & Transportation etc. (d) The company has taken steps to reduce it manufacturing items relating to low margins and concentrate on core competence area and products based on high value or value added products. (e) The company is aggressively started its marketing for the purpose of bringing in new cliental base for a lasting and continuous export orders.

SYNOPSIS OF THE INDUSTRY

In Indian Economy the leather industry occupies an important place, India is well-equipped to have a distinctive advantage in the production of leather and leather goods.

The leather industry is spread across different segments, namely, tanning & finishing, footwear & footwear components, leather garments, leather goods including saddler & harness, etc. The product variation covers semi and finished leather, footwear and footwear components, garments for ladies and gents, handbags for ladies and gents, wallets, diaries and cardholders, gloves and fashion accessories, tableware, upholstery (for houses, offices and vehicles), and luggage and portfolio bags.

The Major Markets for Indian Finished Leather are Hong Kong with the share of 37.84%, Italy 13.50%, China 9.06%, Korea Republic 3.90%, Indonesia 2.30%, Spain 2.56% and Germany 2.53%

These 7 countries together accounts for nearly 71.69 % of India’s total leather products export.

RISK AND CONCERNS

Like any other enterprise having national as well global business interests, is exposed to business risks which may be systematic as well as unsystematic to company. The Company is well aware of these risks and challenges and has put in place mechanisms to ensure that they are managed and mitigated with adequate timely actions.

HUMAN RESOURCES

Human resources are recognized as one of the critical area to the success of the organization. Employees are vital and most valuable assets. We have created a favorable work environment that encourages innovation and meritocracy. There is close interaction between the Management and employees to facilitate smooth functioning of all the organizational activities.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The internal controls are designed to provide reasonable assurance with regard to defined roles and responsibilities down the line for all managerial position.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analys is describing the Company’s objectives, projections, estimates and expectations may be ‘forward looking statements’ within the meaning of applicable laws and regulations. Actual results may differ substantially or materially from those expressed or implied. Important developments that could affect the Company’s operations include a downward trend in the domestic industry, rise in input costs, exchange rate fluctuations, and significant changes in political and economic environment in India, environment standards, tax laws, litigation and labour relations

For Crew B.O.S Products Limited

Sd/-

(Tarun Oberoi)

Managing Director