sarita synthetics and industries ltd Management discussions

SARITA SYNTHETICS AND INDUSTRIES LIMITED ANNUAL REPORT 2010-2011 MANAGEMENT DISCUSSION AND ANALYSIS Industry Structure and Developments The company is having quality certification of ISO 9002. The Core business of the Company is manufacture of Cotton Woven Grey Fabric. Your Company has been constantly endeavoring to meet the e challenges of the Textile Industry. Opportunities and Threats Generally the removal quota system has thrown open vast opportunities for the textile sector, However, the severe financial constraints faced by the company due to working capital and other financial problems and also the continued losses, the company has not been in a position to undertake periodical capacity maintenance programme to keep the assets in a fit condition even though the company had installed state of the art machineries. The result is that the productivity gets gradually reduced year after year. This in turn has its impact on its orders and profitability. Division Wise Performance There are three divisions in the factory Tex. Yarn division, Polyester weaving Division and cotton weaving division. Texturising - Installed Capacity - 8972 MT Polyester Weaving - Installed Capacity - 94 LMT Cotton Weaving -Installed Capacity - 113 LMT The polyester weaving division is not in operation. The above machines in other divisions could not be put to optimum use during the year due to lack of working capital limits and other factors. Companys Foreign Subsidiary The Companys joint venture project in Nepal could not be implemented due to preconditions set by financial institutions and hence the company is exploring various alternatives like disinvestments of our stake in the joint venture project. This position was stated in the last balance sheet and the same has not changed since then. Out Look The revival of the company hinges on the sympathetic and positive outlook of the majorjenders Le. SASF (IDBI) and Exim Bank for settlement of the dues to them..The company has been in discussion with them for OTS of its dues. Unless the lenders take a sympathetic view and sanction substantial concessions and bring the debts to a sustainable level, the revival of the company will be very difficult. The company is planning to approach bankers for working capital for its operations once the settlement with institutions are over. The company is also searching for an investor for infusing funds in the company for increasing the viability of the company.. Risks and Concerns The regime of quota in textile industry is done away with. Many new challenges will test the companys ability to grow in the competitive International Market. Financial Results The Company has registered a total turnover of 3349.14 lakhs during the year against 1605.42 lakhs in the year 2009-10 representing a growth of 52.06% and incurred an operational loss of 793.95 lakhs against 1120.47 lakhs in the previous year. After adjusting the interest waivers, the company earned PAT of Rs 621.47 lakhs as against Rs 1423.43 lakhs in the previous year. The company is making all out efforts and leaving no stone unturned to improve the operations during the current year to reach the breakeven level. Human Resources /Industrial Relations Your company continued its good record of industrial relations with its employees / workers. Your Company has dedicated man power at all levels. Internal Control Systems and Their Adequacy Your companys Internal Auditors and Audit Committee provide strong and independent internal checks. Internal audit findings and recommendations are reviewed by the top management and the Audit Committee.