Dated: 19/01/2016

Our Revival Plans

In continuation of your discussion on TEV study at our plant, our
management has drawn plan following strategy to revive company
and its financial health in these tough economic circumstances.
1) The present problem with the company is:a)

Underutilization of capacity due to global recession in

manufacturing industries, especially with automobile and
Infrastructure industry. The company is utilizing almost
55% of its manufacturing capacity while other area
marked for trading is not generating any sales revenue.

b)

Continuous Development/ upgradation in various products

require continuous infusion of capital.

c)

Lower generation of profits due poor demand and

continuous requirement of cash infusion in capital
expenditures. This continuous loss due lower utilization
and various capital expenditures, available working capital
gets eroded.

d)

Higher repayment burden and high financial cost during

these recessionary days resulting defaults in meeting
repayment commitments.

2) Revival Plan
a)

Restructuring of our financial liabilities: - Management

has requested bank to restructure the existing financial
exposure, so that the immediate repayment burden will be
reduced and substantial repayment will be defer till the time
company starts utilizing significant capacity with better
utilization of working capital. Bank also understood the
problem faced by the company and accepted to consider
the request by the company as per the companys letter
dated 03/11/2015. Copy of letter attached.

b)

Reduction in working capital loan:As mentioned

above, the present problem with the company is erosion/
diversion in working capital in capital expenses and also
meeting debt repayments. Accordingly, management has
considered maintaining working capital limits at optimum
level considering all factors in mind. We have requested to
reduce working capital to Rs. 5 Crores from United bank of
India.

c) Concentrating on regular product and slowing the

new development projects:- Management realizes that
taking up various new development product requires
continuous infusion of capital and further delaying the
regular operation of company, where company can grab
higher business potential with steady performances.
Therefore
management
has
slowdown
all
major
development projects and present focus is on better
utilization of capacity with regular products.
e) Ballooning repayment terms:- Management and
bank has consider the ballooning repayment term so
that company generates substantial revenue in hand
before the high repayment commitments gets due.
f) Leasing of ideal area for trading operation:Management is exploring various option to lease out
the existing infrastructure and space of trading
operation to other corporate entities. These will help
company to earn lease rental without any significant
cost and also utilization of available infrastructure,
which otherwise has no use for company for next few
years.