Parekh Platinum Ltd Management Discussions

PAREKH PLATINUM LIMITED ANNUAL REPORT 2009-2010 MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW: The turnover of the company & in particular, the domestic turnover have been reduced as compared to the previous year. The profit of the company mainly consists of other income. The companys performance has been affected due to take over of physical possession of Bhat unit by IFCI Ltd coupled with lack of working capital. The Company had made a reference to the Board for Industrial and Financial Reconstruction (BIFR) and Appellate Authority for Industrial and Financial Reconstruction (AAIFR) under section 15(1) of the said Act has however been rejected. The company has filed an appeal against this order of AAIFR before the High Court, Mumbai. The said appeal has been admitted and the matter is in progress. BUSINESS SEGMENTS Your companys operations are broadly classified into two business segments - Jewellery Division & Industrial Products Division. (A) Jewellery Division The performance of the Jewellery division is adversely affected mainly due to the closure of Bhat operations as the physical possession of the same is taken over by IFCI Ltd. The fall in turnover is also due to high prices of Gold and sluggish domestic as well as global market. The Jewellery industry as such continues to pass through difficult times primarily on account of high prices of gold in the international as well as domestic markets. The Companys major focus is to strengihen the competitive positioning of its master alloy business with the renewed thrust on the local business. Opportunities: The master alloys have received tremendous acceptance throughout the country. Our product quality has been appreciated in the domestic markets. The Company has refocused its domestic marketing strategies to streamline the marketing activities more effectively, keeping in view the shortage of working capital requirements. Threats: The high price and volatility in the prices of gold and silver have an adverse effect on the jewellery business with the hesitant global economic recovery, jewellery demand remained heavily influenced by gold price movement. The sharp increase in gold and silver prices was the important factor in restraining the market. The company is carrying on operations from leased assets including premises and plant and machinery. The company has declared a lock out on 5th november 2010 & continued to be lock out. Review and Analysis: (Amount in Rs. Lacs) Current Year Total Sales Domestic 268.20 Export 0.50 Operating Profit/ (Loss.) 121.05 (B) Industrial Product Division: Industrial Products Division manufactures several precious metal products such as catalysts, chemicals and salts, which have industrial applications. By offering superior value to customers through innovation, the Company will continue to shift the market in its favour. The company will expand the scope and reach of its operations through intense focus on domestic business. Efforts towards higher operational efficiencies shall continue. Given the present scenario involving international competition, and consequent pressure on operating margins, the division has evolved strategies to exploit its strength and enhance business prospects. During the year under review the business of IPD division ,both domestic and export have been reduced as compared to previous year. Opportunities: The company is concentrating on silver salts, where value of material is low but the margins are considerably high. Threats: The opportunities of business in India are limited and there is lot of competition in this business. Hence profit margins are getting squeezed and quantum of business is also affected. ices was the important factor in restraining the market. The company is carrying on operations from leased assets including premises and plant and machinery. The company has declared a lock out on 5th november 2010 & continued to be lock out. Review and Analysis: (Amount in Rs. Lacs) Current Year Total Sales Domestic 403.93 Export 32.25 Operating Profit/ (Loss) (82.31) Risk and Concerns: The Companys main concerns are as under: 1 High price and Fluctuation in the price of Precious Metals. 2. The non-availability of working capital in near future. 3. General Recessionary trends prevailing globally Internal Control System and their adequacy: The Company has adequate systems of internal controls to provide reasonable assurance - that the business of the Company is conducted in a fair and proper manner. - that transactions are authorized, recorded and reported properly and - that accounting records are properly maintained and financial statements are reliable. Periodic discussions by the management with the statutory auditors and the meeting of Audit Committee of the Board of Directors regarding the issues raised from time to time on financial matters also reinforce the impact of internal controls in the Company. Human Resources: The Company firmly believes that Human Resources and knowledge capital are vital for business success and creating value for stakeholders. During the year, the Company maintained harmonious and cordial relations. No man-days were lost due to strike, lock out etc. Human resource is the strength of the company. Financial Analysis: The following are the relevant financial performance details with respect to the operational performance of the Company: Rupees in Lacs Particulars Year Ended Year Ended 31.03.2010 31.03.2009 (12 Months) (12 Months) Turnover 704.87 926.24 Profit/(Loss) Before 1358.88 (174.43) Depreciation, Interest and Tax Interest and other 0.68 1.59 Financial Expenses Depreciation 145.58 583.58 Profit/(Loss) After 1212.62 (759.60) Depreciation & Interest Fringe Benefit Tax 0.00 1.50 Deferred Tax Assets 114.09 91.65 Profit/(Loss) After Tax 1326.71 (669.45) Prior period 2.21 12.26 Adjustments Profit/(Loss) transferred 1324.50 (657.20) to Balance Sheet The turnover of the company & in particular, the domestic turnover of the company have been reduced as compared to the previous year. The companys performance continues to be affected for want of working capital and General recessionary trends prevailing globally. CAUTIONARY STATEMENT Statement in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include raw material availability and prices, availability of working capital finance, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors.