Zenith Fibres Ltd Management Discussions.

ZENITH FIBRES LIMITED ANNUAL REPORT 2011-2012 MANAGEMENT DISCUSSION AND ANALYSIS (a) Industry Structure and Development: Man-made fibre industry is well poised for reasonable growth despite slow down in European and certain other markets. Polypropylene fibre industry was not growing at the same rate as Polyester fibre because many sectors where PP should be used is replaced by Polyester because of lower prices. Certain novel uses have been found in some sectors where use of PP fibre cannot be replaced and this augurs well for PP fibre industry and it should also show similar growth as other fibres. (b) Segment-wise operational performance: Your Company operates into only one business segment - Manufacturing of Man Made Fibres. Turnover for the year ended 31st March, 2012 amounted to Rs. 5349.94 lacs as against Rs. 4177.55 lacs last year. Operating profit stood at Rs. 654.09 lacs as against Rs. 481.87 lacs in the previous year. Cash profit was at Rs. 638.58 lacs as against Rs. 467.33 lacs in the earlier year. Profit before tax stood at Rs. 544.32 lacs as against Rs. 372.55 lacs in the earlier year and Profit after tax was at Rs. 354.12 lacs as against Rs.247.81 lacs in the previous year. Production during the year was higher at 4172 tons as against 3830 tons in the previous year. Sales of fibre including self consumption for conversion was 4223 tons as compared to 3809 tons last year. Sales of yarn was at 1078 tons as compared to 636 tons last year. The year under review saw highest revenues, production and sales during a year since inception of the Company. (c) Outlook: The general outlook for the industry is bright. Several sectors have been identified where use of PP fibre will be essential. Besides traditional need in various infrastructure sector its use has started in fabrics used for soil erosion and collection of ashes from power plants. To take advantage of expected increase in demand the company has augmented its capacity and commercial production should commence from June 2012. (d) Threats and concerns: With considerable depreciation of Indian currency and European market being in bed shape there is not much of a threat from imports. However, in view of expected surge in demand competitors may also enlarge their capacity and market may need some time to stabilize and achieve correct balance between demand and supply. (e) Internal control systems and their adequacy: Adequate internal control systems are in place to maintain quality of product, proper accounting as per norms laid, asset maintenance and its proper use. All assets are adequately covered by comprehensive insurance. Independent Internal Auditor reviews accounts periodically and Audit Committee of the Board overviews the same and ensures compliance. (f) Human Resources and Industrial Relations: The Company has adequate and qualified human resources and enjoys cordial relations with all its employees at all levels. Number of employees are 97 as on 31st March 2012. The Board of Directors wishes to place on record its highest appreciation for the contribution made by all the employees during the year.