lucas indian services ltd Management discussions

LUCAS INDIAN SERVICE LIMITED ANNUAL REPORT 2007-2008 MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL HIGHLIGHTS: Rs. in lakhs Details 2008 2007 SALES 17095 14860 Profit [before Depreciation, Interest & Tax] 1581 1432 Less: Depreciation 177 140 Interest 27 41 Profit Before Tax 1377 1251 Taxation 338 255 Balance brought forward from previous year 44 529 Balance 1083 1525 Interim dividend 400 360 Final dividend proposed 0 60 Tax on Dividend 68 61 Transfer to General Reserve 500 1000 Balance carried to Profit and Loss Account 115 44 OPERATIONS: GENERAL: The sales during the year under consideration were higher in value terms by 15% compared to the previous year. The increase in sales was across all regions. Operating profit for the year was higher compared to last year mainly due to the increased level of business. Non-operating income was lower due to the lower dividends received from India Nippon Electricals Limited and lower income from the mutual fund investments. TRADING: The trading business grew by 15%. There was improvement in margins consequent to the reduction in the rate of central sales tax and the rationalistation of discounts. MANUFACTURING: Ignition coil and solenoid switch volumes were lower than last year due to lower off take of the vehicle manufacturers. SERVICE: Service revenue increased significantly by 75% as compared to last year due to various measures taken in his area like opening of new workshops, service marketing, etc. Workshops at Ludhiana, Chandigarh and Faridabad started operating during the year. Other service activities like training programmes and participation in campaigns of vehicle manufacturers are continuing to get encouraging response. FUEL INJECTION FOIlIPMFNTS: Sales of FIE related products was higher by about 29%. Expansion of FIE service network is going as per plan with special focus on rural service centres to support the tractor segment. CR spares for both 3.0L & 1.4L imported and positioned across the country to attend to field issues without delay. CR diagnostickit developed by Delphi-TVS was positioned at various dealers locations and necessary training was imparted to them on diagnostics. PROSPECTS: During the year 2008-09, your company is hopeful of improving its performance from various parameters. Increasing fuel prices and a higher level of inflation indicate a possible slow down in global economic growth. Your company is planning to enter into some new businesses which is expected to help improve its revenues and generate profit within a reasonable span of time.