hindustan breweries bottling ltd Management discussions

HINDUSTAN BREWERIES AND BOTTLING LIMITED ANNUAL REPORT 2007-2008 MANAGEMENT DISCUSSION AND ANALYSIS Overviews: The financial statements have been prepared in compliance with the provision of Companies Act, 1956 and Generally Accepted Accounting Principles (GAAP) in India along with proper explanation relating to material departures. The management of the Company accepts the responsibility for the integrity and objectivity of these financial statements, as well as for the various estimates and judgements used therein and the financial statements reflect a true and fair manner the state of affairs of the Company for the year. Beer Industry - Profile: Beer is gaining popularity as an alternative drink to a large section of Indian society, riding on greater social acceptance, liberal attitude and rising purchasing power of the fast growing urban middle class. This section of society prefers Beer against soft drink options but still remains resistant to the hard alcoholic drinks like wine, whisky and rum. Beer has a low alcohol content. Pasteurized Beer is free from any artificial agents, coliform bacteria and other pathogenic microorganisms.: Beer is a highly cyclical product, just like soft drinks. Put differently, consumption of beer is linked to weather conditions. People drink beer during summer. Traditionally, strong beer has been growing much faster than mild beer. Strong beer constitutes 55 per cent-plus of the overall beer market. Strong beer is unique to the Indian beer industry. Through strong beer the industry is responding to meet customer aspirations for value for money. Localised manufacturing is extremely important in the beer industry because freight costs are high and there are import-export levies in interstate movement of beer. Currently the beer industry is going through a rough phase. Since we have the capability to pass through this phase we are consolidating our position. that we believe very strongly that the Indian beer market is set to explode. Beer sales in India are forecast to grow at a compound annual growth rate of 17.2% to 2011. So, with the Indian beer industry seeing steady growth during the last decade, due to strong economic growth resulting in high disposable incomes, an increase in beer sales In the next two or three years is expected. Company Policy: Keeping in view the prevailing trends in the market and in order to have better utilization of its products, our company has started offering value- added products to have better sales realization. Barring any unforeseen circumstances the working of the company will improve in coming years. Quality Control: In order to compete in the competitive market and to supply quality product, quality control is exercised at every stage of manufacturing, starting from incoming raw material up to outgoing finished product. Testing is done at different stages of manufacturing our well-equipped laboratory. Efforts are made to achieve the best and scale new heights in quality through constant learning and continuous improvement, technology up gradation, comprehensive training and development, which form part of quality commitment to provide the best product to our valued customers with motto Complete Customers Satisfaction. Segment Review: Being engaged in manufacture of beer segment reporting as prescribed under AS 17 issued by Institute of Chartered Accountants of India (ICAI) is not applicable to the Company. Financial Performance: Please refer the Board Report on performance review. Internal Control Systems and Adequacy: The company has a proper system of internal control to ensure that all assets are safeguarded and protected against loss from unauthorized use of disposition and transaction and transactions are authorized, recorded and reported correctly. The internal control is supplemented by extensive programme of internal audit, review by management and documents as per the guidelines and procedures laid down. Safety: Utmost importance was attached to maintain safety standards in the unit of the company. No major accident was reported during the year under review. Environment: The company continued to strive its commitments to protect and promote the environment. On environmental matter, the operational norms prescribed by Maharashtra Pollution Control Board are strictly followed in the Plant by the Company. Subsidiary & Holding Company: The Company do not have any holding and subsidiary Company. Industrial Relation: The industrial relation with the staff and the workers in the Company continued to remain cordial and harmonious during the year under review. The Company recognizes the importance and contribution of Human Resource for its growth and development and is committed to the development of people. As on March, 2008, the Company has about 170 employees in its various offices and factory. Cautionary Statement: Statements in the Management Discussions and Analysis describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities, laws and regulations. Actual results may differ materially from the statements. The important factors that could influence the Companys operations include cost of fuel, determination and other dues, changes in Government regulations, tax laws, economic developments and improvement in the demand of Beer in the domestic as well as international market and such other factors.