magnus rubber industries ltd Management discussions

MAGNUS RUBBER INDUSTRIES LIMITED ANNUAL REPORT 2004-2005 MANAGEMENT DISCUSSION AND ANALYSIS Industrial Structure and Development Due to severe competition in the manufacture of pharmaceutical rubber stoppers as well as increasing prices of raw material and price-cut in products has not left any room for the company to earn profit. Opportunities & Threats As mentioned above. the competitive market position has left marginal opportunities for the growth of market of companys product. Segment Review & Analysis The company is a single product company. Outlook Due to traditional production method and incapacity to adopt new technology, it is difficult for the company to expect any with in market share enjoyed at present. Risk & Concerns The low price level of rubber stoppers during the year has taken heavy toll on financial health of the company. Being a highly competitive industry, a fair return is essential for this industry to remain healthy. Poor margins of the product has restricted any further new developments. Internal control systems and their adequacy The company maintains adequate internal control systems. The company has adequate internal control measures to monitor the purchase of raw materials, stores, sales etc. which are under direct supervision and control of joint managing director. Financial performance Due to deteriorating financial conditions of the company, it has become difficult for the management to honour its commitments for repayment of loan installments as well as interest payable to IDBI, Bank of India and repayment due under Sales Tax Deferment Scheme as well as interest on above. Moreover, as mentioned in Note No. 12, Schedule 16 of the Notes of Accounts, the company could not adhere to the requirements of provisions of Section 58A of the Companies Act, 1956 regarding deposits accepted by the company. Human Resource Development/Industrial Relations The companys policy is to increase the spirit of teamwork and well qualified personnel are at the helm of the affairs. As on 31/03/2005, the company has 40 personnel on its roll. The Industrial relations were cordial at plant and offices. Cautionary Statement The statements made in the report are based upon assumptions and expectations of future events. Actual results could however differ in future. The company assumes no responsibility in respect of forward looking statements that may be amended or modified later on the basis of subsequent developments, information or events.