willard india ltd Management discussions

WILLARD INDIA LIMITED ANNUAL REPORT 2003-2004 MANAGEMENT DISCUSSION AND ANALYSIS SUGAR INDUSTRY Industry Structure and developments The Sugar Industry in India is dominated by the Cooperative Sector which account for nearly 55% in terms of number of factories, installed capacity and production capacities. The entire industry has been affected by various problems including huge arrears in sugarcane payment, overstock, less margin, government regulations etc. In order to stabilise the sugar prices, the Government has tightened the Regulated Release Mechanism by amending the Essential Commodities Act. Opportunities and threats The total record production for the sugar season ended during 2002-03 was of 20 million tons which has aggravated the glut situation prevailing in the industry. But the majority areas of India are reeling under severe drought, the production is likely to be affected during the sugar season 2003-04. The production has sharply declined by about 25% during the season and it is expected that it will take a year or two to stabilise once again. The drop in production due to natural phenomena has helped to liquidate the excess sugar stock with the industry and of late, the prices have shown reasonable improvement. Outlook Due to the severe drought conditions in the last year, there was drop in sugar cane production by about 25% during the season 2003-04 and the availability of sugar cane for crushing season 2004-05 is also affected. Sugar pries are likely to remain at higher levels during the coming year. There would also be an upward revision in cane prices. Risks and concerns Because of various Governmental regulations, basically there is no correlation between the price payable for sugar cane and sugar price realization. Large scale import of sugar may adversely affect the demand supply equilibrium. JUTE INDUSTRY Jute Industry Structure India is the world leader in terms of raw jute production as well as jute goods manufacturing. Nearly 80% of the production is for the domestic market. On account of increased production of food grains and sugar, the demand for the jute goods in the domestic market has gone up despite the loss of jute goods market for packaging cement and urea. Opportunities and threats With the increasing production of food grains and other edible products such as sugar, the prospects of greater demand for jute bags for packaging the same are encouraging. The only alternative available to jute packaging are hydro carbon plastic woven sacks which are deemed to be health hazardous as well as environmentally undesirable due to their non biodegradability. Even so, bulk handling systems developments in future and greater inroads by the synthetic woven sacks in the domestic market do pose a threat to the jute industry. Outlook The demand for jute products wail always be there and the inputs namely raw materials arid supplies for the jute industry V, III continue to be available throughout the year. The jute industry is one of the most eco- friendly industries and in the present era of much greater awareness of environmental and ecological concerns, the industry is well poised for growth and development. The natural fiber jute bags are also considered health safe, particularly in comparison with plastic bags which may prove to be hazardous to human and animal health. Efforts are on to develop new jute products for diversified uses in areas other than packaging. Internal control systems and their adequacy The company has installed proper internal control systems for the various function areas. The checks and control measures are effective and adequate. Financial Performance and operational performance The details of financial performance and operational performance is mentioned m the Directors Report. Cautionary Statement Management Discussion and Analysis detailing the companys objectives and expectations may have "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from these expressed or implied depending upon the demand-supply conditions, government regulations, changes in Government policies, tax implications, economic developments within India and overseas.