Futura Polyesters Ltd Management Discussions.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT: 2011-12

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

The Company has been engaged in the manufacturing and marketing activities of polyester products namely polymer, performs and polyester staple fibre (PSF). The corporate focus has been on manufacture and sale of "Specialty products" across all segments, especially environmental friendly green products. However all these operations are now suspended for a variety of reasons and causes disclosed below.

2. OPPORTUNITIES AND THREATS

The Company enjoyed a good standing and reputation in the polyester fibre market, especially black and dope dyed colour fibre markets. In the polyesters resin segment, the Company made focussed efforts to come out with new resins for heat sealing applications, thermoforming, barrier applications etc. Perform business supplies mainly to MNCs exists in the market at a good volume.

As already indicated in the Management Discussion & Analysis Report of the previous periods power (electricity) situation in the State of Tamilnadu was serious and a major concern. These anticipations turned out to be true and played a negative role on the functioning and production plans of the Company.

The Governments policy of blanket ban on the import of bottle waste contributed to failure of flow of raw material and input costing, making the production cease thereby fall of revenues leading to financial crises.

3. PERFORMANCE

During the year the accounting period was extended to eighteen month period from 1st July, 2011 to 31st December, 2012. The figures are therefore not directly comparable with that of previous year.

The gross turnover of the Company for the year ended 31-12-2012 was Rs. 21,473.67 Lacs (18 Months) compared with Rs. 57,377.75 Lacs (15 Months) during the previous year .The suspension of operations, non materialisation of power, loss of personnel and the non availability of Corporate Debt Restructuring has all contributed to a net loss of Rs. 18968.80 Lacs.

4. OUTLOOK

In order to tide over the financial crisis, the Company has agreed to selling and disposing off its land and factory etc at Chennai to meet its legal liabilities. Postal Ballot approval of shareholders was obtained for the sale and disposal of land at Chennai. Settlement is being arrived at with the workmen at Chennai. Efforts are on to meet legal payments.

The Company has also approached Lenders and Banks for a One Time Settlement (OTS) of its debts for which the Lenders and Banks have requested the Company to deposit 10% of the assistance (package) sought. The process for the same has already commenced and we are hopeful of achieving it by end of September, 2013.

5. RISKS & CONCERNS

Adequecy of funds to meet the liabilities inspite of best efforts to raise funds by means of selling and disposing off land etc at Chennai is matter of serious concern. The Company is finalising alternate plans for the future.

6. INTERNAL CONTROL SYSTEMS AND ADEQUACY

The Audit Committee set up by the Board of Directors reviews periodically the internal audit reports submitted by the internal auditor. The internal auditor, cost auditor and statutory auditor are invited to the Audit Committee Meetings to interact directly with Audit Committee Members. The Company has adequate internal control systems commensurate with its size and operations.

7. DISCUSSION ON FINANCIAL PERFORMANCE

During the 18 months ended 31.12.2012 the operating loss was Rs. 18,006.13 Lacs as compared to an operating loss of Rs. 3,916.36 Lacs incurred during the Previous Year .The net turnover including other income was Rs. 21,473.67 Lacs (compared with Rs. 57,377.75 Lacs of the previous year).

8. HUMAN RESOURCES / INDUSTRIAL RELATIONS

Industrial relations remained by and large cordial throughout the period. A settlement is being arrived at with workmen at Chennai The Directors wish to place on record their appreciation for the co-operation extended by the workmen, staff and officers at all levels.