Deltron Ltd Management Discussions

DELTRON LIMITED ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS The Year in Retrospect During 2005-06, the Indian economy recorded a high growth of 7.5%. However, the continuous reduction in import duties and further opening up of the economy to global trade kept up the pressure on margins. The current climate continues to support Trading rather than Manufacturing. The year saw some reforms in the indirect tax front, through the introduction of uniform Value Added Tax (VAT) across several States. The Company did not carry out any business for the major portion of the year. Income generated was largely from sale of assets and investment of funds. Financial Results Total income during the year was Rs 263 lacs as against Rs. 920 lacs in the previous year. The Pre-Tax profit was Rs 235 lacs as against a loss of Rs 339 lacs in the previous year after providing for depreciation of Rs.0.1 lacs. No provision has been made for taxation in the current year. After adjusting for deferred tax, the net profit was Rs 242 lacs. Out of this, an amount of Rs 100 lacs has been transferred to the General Reserve. The book value per share as on 31st March 2006 was Rs. 23.69. During the year, the Company converted 3,00,000 Series B warrants issued to Promoters on Preferential basis on 23rd December 2003. The equity share arising on conversion of the warrants at par, resulted in the share capital increasing from Rs 255 lacs to Rs 285 lacs. Future Outlook The Company is looking at new avenues for investments in the future. Knowledge Industry Biotechnology Information Technology, Software Development and Telecommunication Services have emerged as new growth areas world-wide. Further, with the opening up of the economy and the progressive removal of import barriers, Trading has also emerged as a potential new opportunity area for companies to diversify their activities. The Company looks forward to business prospects in these fields and the related areas. In this regard, the Board is seeking the shareholders approval under Section 149(2A) at the Annual General Meeting to expand the objects of the Company.