hv transmissions ltd Management discussions

HV TRANSMISSIONS LIMITED ANNUAL REPORT 2009-2010 MANAGEMENT DISCUSSION AND ANALYSIS YEAR UNDER REVIEW: After the downturn in the economy which affected sales of medium & heavy commercial vehicles in the previous year, the current year saw a steady and significant growth in demand. This coupled with the initiatives taken by the Company to improve its operational efficiencies resulted in 41% increase in volume from 88,899 gear-boxes in the FY 2008-09 to 1,24,980 gear boxes in the current financial year. During the year, the Company achieved a record turnover of Rs.209.84 crores which was higher by 47% as compared to FY 2008-09, whilst Profit Before Tax at Rs.77.47 crores was higher by 200% as compared to the previous year. Profit After Tax at Rs.52.64 crores was 171% higher than the previous year. Earning Per Share increased to Rs.13.16 per share as against Rs.4.86 per share in FY 2008-09. COST REDUCTION INITIATIVES AND FUNDS MANAGEMENT: The Company continued aggressive pursuit of cost reduction and control programme. With intensified efforts variable conversion cost was reduced significantly leading to a saving of Rs.91.98 Lac. Productivity improved significantly from 102 equivalent gearboxes / man / year in 2008-09 to 115.7 equivalent gearboxes / man / year in 2009-10. The Company has continued its prudent working capital management through effective utilization of Bill Marketing Scheme of Tata Motors Limited, which ensured a bare minimum receivable of Rs.17.20 lacs. Inventory was reduced by 20% over the previous year. The Company continued to have negative working capital during the year. QUALITY AND PROCESS IMPROVEMENT INITIATIVES: The Company continued with its intense focus on Quality and Process Improvement as a result of which the field complaints showed sharp decline across all models. Similar improvement was also observed in internal indices like First Shot OK and COPQ. PRODUCT DEVELOPMENT, INVESTMENTS AND FUTURE PLANS: After concerted efforts, the Company has developed and validated the first indigenous 9-speed commercial vehicle transmission GBS-1150. Having successfully launched the platform of 6-speed family of gear-boxes, the Company is now working on a new platform to cater to higher HP range of vehicles. A major portion of the factory re-organisation and upgradation having been completed, the investments are, in part, focused on creating incremental capacities, specially to enable meeting of the increasing demand for the new products launched. A key focus in the investments is to address infrastructural facilities aimed at not only improving operational parameters, but also building capabilities for successful delivery of the expanded product range. DEMATERIALISATION OF SHARES: The Companys Ordinary Shares have been included in the Indian Depository System operated by the Central Depository Services (India) Limited [CDSL] which facilitates script less trading. Dealings in shares in electronic form eliminates problems such as loss, theft, mutilation, bad deliveries, forgeries, fake certificates etc. associated with physical handling of share certificates as is also more cost efficient to the investor. TSR Darashaw Limited, the Companys Registrar and Transfer Agents has established an interface with CSDL for facilitating dematerialization of the Companys Equity Shares. 99.99% of the Companys shares are in dematerialized form. HUMAN RESOURCES AND INDUSTRIAL RELATIONS: Employee relations continued to be cordial throughout the year. With active co-operation between Management and Union, the Company could weather the recessionary trends of 2008-09 and successfully catered to the significantly increased customer demand for 2009-10. The Company appreciates the constructive role, understanding and support of the Union in maintaining cordial industrial relations. The Company has therefore been able to meet customer demands and embarked on a growth trajectory. This year, the Company completed a decade since inception and as a token of appreciation for the employees, it distributed a silver coin to all its employees. JOURNEY TOWARDS BUSINESS EXCELENCE: The Company again subjected itself to external scrutiny by participating in the assessment process of Tata Business Excellence Model (TBEM) and scored 473 points against 452 scored in the previous year. The Company received the Serious Adoption award in the Tata Group wide JRDQV function to held on July 29, 2009.