newlink overseas finance ltd Management discussions

NEWLINK OVERSEAS FINANCE LIMITED ANNUAL REPORT 2007-2008 MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL RESULTS: (Rs. in lakhs) Year Year ended ended 31.03.2008 31.03.2007 Gross Income 615.94 621.35 Profit before depreciation and tax 143.14 133.79 Less: Depreciation 33.78 34.06 Profit before tax 109.35 99.73 Less: Provision for Taxation 47.75 38.25 Add: Provision for deferred tax written back 13.54 (12.57) Profit after tax 75.15 74.05 Add: Surplus brought forward from the Previous year 17.05 17.90 92.20 91.95 APPROPRIATIONS: Transfer to General Reserve 20.00 20.00 Transfer to Statutory Reserve 15.00 15.00 Proposed Dividend 34.12 34.10 Dividend Tax 5.80 5.80 Surplus carried to Balance Sheet 17.28 17.05 92.20 97.95 OPERATIONS: The Company has made a net profit of Rs.75.15 Lakhs in the year under report as against Rs.74.05 Lakhs in the previous year. The year under review witnessed fall in income from windmills at Rs.54.29 Lakhs as compared to Rs.64.53 Lakhs in the previous year which has adversely affected the results of the Company; otherwise, the performance of the Company for the year would have been much better than what has been achieved. WINDMILLS: During the year under review, the Company continued to operate the four windmills, one at Ayyanaruthu Village, Kayathar Union, Kovilpatti Taluk, Tuticorin District, two at Pazhavoor Village, Radhapuram Taluk, Tirunelveli District and the fourth at Keelaveeranam, V.K. Pudur Taluk. Tirunelveli District and income of Rs.54.29 Lakhs earned was lower as compared to the Previous Year (Previous Year Rs.64.53 lahhs). The Company faced problems with frequent load shedding during high wind period and tripping of electric power, which reduced the life of critical items of spare parts in the windmills. Coupled with the above, the wind availability got reduced over the past three years. Your company is expecting that the wind availability during the current year would be normal yielding normal income to the Company. OUTLOOK FOR 2008-09: Although the outlook for the NBFC Sector appears to be moderate in short term but macroeconomic fundamentals continue to be strong. The underlying growth momentum in the Indian economy remains strong with average. GDP, growth at 8.7% per annum in the last five years. There is no deceleration in the niche segments in which your company ?s operating. Maintaining the growth momentum is a great challenge for the economy consequent on unprecedented inflation, on account of steep rise in oil prices, which has been externally imposed on India, and continuing economic reforms expanding infrastructure and giving a push to agriculture will be critical for sustained growth.