Milk Specialities Ltd Management Discussions.

MILK SPECIALITIES LIMITED ANNUAL REPORT 2011-2012 MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL PERFORMANCE During the year under review, the Company has achieved a turnover of Rs.4773.55 lacs with a Net Loss of Rs. 6.19 lacs against the previous year Sales Turnover of Rs. 5692.62 lacs and Net Profit ofRs. 69.54 lacs. INDUSTRY STRUCTURE & DEVELOPMENTS With the liberalization of the Indian economy in 1991, the Dairy sector too was de-licensed which was earlier dominated by the Cooperative Sector. Indian Dairy Industries is heading towards an accelerated & positive momentum with accelerated growth in milk production by over two & half times in the two decades. India has emerged as the largest producer of milk in the world. The Company is a manufacturer of varieties of Dairy Products such as Pure Ghee, Milk Powder, Pasteurized Milk etc. and is marketing its products under the brand name MILKTIME. The Company is committed to provide Pure, Fresh & unadulterated Milk to the society at large. OPPORTUNITIES & THREATS The opportunities for the products of the Company are enormous because of essential nature and application to varieties of uses. With the rising health consciousness among the people, demand for the products of Company will further increase. The expected rise in urban population and their purchasing power would be a boom to Indian Dairy. At present only few cities and towns are served by the organized milk sector in India. This leaves the organized sector with huge untapped market. As your Company is also operating in the liquid milk market, there exists a vast opportunity for increasing the share in the liquid milk market. There are large numbers of Milk Dairies operating in the unorganized Sector producing Dairy products with adulterated and unhealthy Milk. Since these products are cheap, they cause strain on the marketing and pricing policies of the Company. OUTLOOK Considering the growth potential in the Liquid market, your Company has drawn plans to increase its market share in the existing markets and to enter into new markets by providing Fresh and unadulterated Milk. RISK & CONCERN The real risk and concern to the Company is the fluctuation in prices of Raw Milk not directly related to the selling prices in the market. Dairy Industry is dependent upon the assured supply of quality Raw Milk at competitive & predictable prices. Fluctuation in Raw Milk prices and deficiency in rain falls due to adverse climatic conditions present a business risk. Milk is highly perishable commodity. There exists an inherent risk due to delay in transport bottlenecks and breakdown of Machinery. SEGMENT WISE OR PRODUCT WISE PERFORMANCE The Company deals with only one segment i.e. Milk and Milk products. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY The Company ensures existence of adequate internal control and procedure at various levels in the Company commensurate with the size of the Company and the nature of its business for the purchases of Stores, Raw Materials including components Plant & Machinery, Equipments and other Assets, and for the sale of goods. HUMAN RESOURCES DEVELOPMENT & INDUSTRIAL RELATION The current strength of the manpower is 54 besides employing worker on contract basis. Industrial relation at the plant during the year were cordial. CAUTIONARY STATEMENT The report may contain certain Statements that the Company believes are, or may be considered to be forward looking statements that describe our objectives, plan or goals. All these forward looking Statements are subject to certain risks and uncertainties, including but not limited to, Government action, economic development, risks inherent in the Companys growth strategy and other factors that could cause the actual results to differ materially from those contemplated by the relevant forward looking Statements.