sri asoka textiles ltd Management discussions

SRI ASOKA TEXTILES LIMITED ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS BORROWINGS: SECURED LOANS: Your company has availed a secured term loan of Rs.230 lacs from IDBIL under the Technology Upgradation Fund Scheme during 2005-2006 and 2006- 2007. UNSECURED LOANS: An amount of Rs. 49.61 lacs has been accepted during the year by way of acceptance/renewal of deposits from public and shareholders. No fixed deposit remain unpaid after the due date. Unclamied deposit as on 31-03-2006 is nil. OPERATIONS DURING THE YEAR AND PERFORMANCE: The net loss of the year is due to unfavourable working caused by several factors such as increasing power cost, hike in C.S.T by 3% compared to 1% in the previous financial year, sluggish yarn market and spiralling price of raw cotton. Further, the new workload settlement providing for revision of workload and wages did not achieve the anticipated results and this was a factor in pushing up the cost of production. FUTURE OUTLOOK: The industry as a whole has wide potential growth and profitability in view of the removal of the quota system, this is possible only if we are competitive and able to hold and bring down the cost of production by increasing all-round efficiency, improving productivity and modernising the plant. EXPORTS: During the year, the company exported through merchant exporters yarn for a total value of Rs.57.74 lacs. The exports were mainly to European Countries. EMPLOYEE RELATIONSHIP: During the period, the employee relationship has been cordial. The long term settlement with trade unions, with revision of workload and wages, was implemented from September 2005 onwards. This has been a disappointment and the company could not achieve the anticipated production and the expected results owing to factors such as sub-optimal labour productivity, heavy absenteeism, low efficiency and intermittent stoppage of work frequently. The management is seeking the co-operation of the trade unions to rectify the situation.