hotline glass ltd share price Management discussions

HOTLINE GLASS LIMITED ANNUAL REPORT 2006 MANAGEMENT DISCUSSION AND ANALYSIS MANAGEMENT - Industry Structure and Development - The business of the company is directly related to the business of TV Industry. The company is producing Glass parts for Colour Picture Tubes. The business of the company is dependent upon the working of Hotline CPT Ltd to whom it has been supplying Glass Parts. - Opportunities and Threats - Lower penetration level in domestic market creates good opportunity for the company as demand for TV is expected to go up with the rural electrification. The expected increase in demand, especially in rural area, is an opportunity for the company to manufacture Glass Parts for Colour TV. The company is facing threat due to lowering of duties on Colour Picture Tubes under Free Trade Agreement with Thailand. As per the Free Trade Agreement the rate of Import duty has gone down to 0% w.e.f. September 2006. This has seriously affected the working of Hotline CPT Ltd, which in turns has adversely affected the business of our company. Further non availability of funds to Hotline CPT Ltd has hampered the production of Hotline CPT and its operations have come to a grinding halt. Due to this there is no demand from Hotline CPT Limited - Segment wise or Product wise performance - The Company has been engaged in the production of Glass Parts for Television Picture Tube and in trading of Picture Tube Parts. The segment wise results are discussed in detail in notes to accounts. - Outlook - Though the outlook of TV Industry appears to be a good in long run, non availability of funds to Hotline CPT Ltd and government policy of allowing Import for Colour Picture Tube at zero duty under Free Trade Agreement from Thailand has seriously affected the business of the Company. Despite best efforts from the Company, funds are not provided by Banks, Institutions for Panel Project. The company has also tried for financing from private funds. However till date the financial closure could not be done. In the absence of funding it is doubtful if the panel project could be started. Accordingly necessary provision is made in accounts for impairment of plant, as per accounting standards. - Risks and Concerns - The biggest risk for the company is stoppage of production of Hotline CPT Ltd., which has been caused by lowering of prices of Colour Picture Tubes due the Free Trade Agreement with Thailand. It has been informed that Hotline CPT Ltd. tried for funds to run its operation. However even after making detail study, no bank provided need base funds to Hotline CPT Ltd. This resulted in stoppage of the production of Hotline CPT Ltd. As there is no demand of Hotline CPT Ltd., the production of Hotline Glass Ltd. is also stopped. - Internal Control Systems and their adequacy - The Company has internal control system and procedures commensurate with its size and nature of business. The internal control systems are supported by internal audit carried out internally. The adequacy and effectiveness of the internal control, as well as compliance with the laid down systems and policies are comprehensively monitored by the internal auditors. The Internal Audit Reports of the Internal Auditors are discussed at the Audit Committee Meetings and appropriate corrective steps have been taken. - Discussions on financial performance with respect to operational performance - During the year under review, the company have incurred a net loss before tax of Rs.120.56 Crores as against net loss before tax of Rs. 2.15 Crores in the year,2005-2006. The losses are high due to low volume of production caused by low demand. Further the company has made provisions for impairment of Glass Panel Equipments, investment in Hotline CPT Limited and for the amount recoverable from Hotline CPT Limited as explained in the notes to accounts. - Material developments in Human Resources / Industrial Relations front, including number of people employed - Your Company believes in employees involvement in achieving the organizational objectives and focused its efforts to upgrade the skills of its workforce to take up the challenges in present cutthroat competition. Your company is conscious and committed in providing equal opportunities to the employees to excel in their work and advance themselves in their career depending on their abilities. The company provides in-house training to its employees and maintaining safety and healthy environment for workers working within the factory premises. The company employs 346 workers. As a result of sound Human Resources policies the industrial as well as labour relations have been good and cordial.