TAAL Enterprises Ltd Management Discussions.

INDUSTRY STRUCTURE

As one of the fastest growing airline markets, India is the 7th largest civil aviation market in the world, according to the International Air Transport Association (IATA). Since 2014, India has overtaken major domestic markets like Australia, Japan, Brazil, and Russia in terms Revenue Passenger

Kilometres (RPK) flown, and accounts for around 1.50% of total industrywide RPKs.

India is poised to experience a rapid upswing in the business aviation sector due to its strategic geographic location, favourable demographics and robust economic growth. The civil aviation sector in India is growing rapidly with a annual double digit growth in passenger traffic in the last two years. has contributed significantly to the growth of international civil aviation sector.

Non Scheduled Aviation Services in India have picked up steadily in line with overall economic growth.

While the long term prospects of the industry remain positive, there will be huge impact on aviation on account of the Covid-19 pandemic in the short run. All aviation activities were suspended for many months and are operating at a highly curtailed level.

ABOUT THE COMPANY

The Company has its presence in the segment in the Aviation Industry in Air Charter business.

The Company operates one Cessna Citation CJ2+ type of aircraft with a seating capacity of seven passengers. The aircraft is based at Pune airport and the Company has a loyal set of Charter customers centered around Maharashtra. The aircraft is maintained at the MRO facility of Taneja Aerospace and Aviation Limited at Hosur in Tamil Nadu.

MATERIAL SUBSIDIARIES

The Company has one material subsidiary viz. TAAL Tech India Private Limited (TTIPL).

TTIPL is a niche Engineering and Technology solutions provider serving global corporations in their pursuit for faster innovation and technological excellence. TTIPL provides Product Engineering Services, R&D Services and IT Services customized to the specific needs of every individual customer.

The Financial Performance of TTIPL for the FY 2019-20 as compared to the corresponding previous year is given below:

(Rs. In Lakhs)

Particulars 2019-20 2018-19
Total Income 13,225.06 14,823.27
Expenditure 10,297.95 11,497.94
Profit Before Tax 2,927.11 3,325.32
Profit After Tax 2,384.00 2,268.55

The Government has still not announced the SEIS rates for 2019-20 and therefore the Company could not take credit for the same in the accounts of 2019-20.

OPPORTUNITIES AND THREATS

The Indian aviation industry is expected to continue to grow at a robust pace over the next two decades. Increasing

It middle class population, favourable demography, along with the expected continuation of economic development and growth in household incomes support the positive long-term outlook. The growth will be further fuelled by increased aircraft penetration from current levels, and the expansion of aviation infrastructure.

Economic downturn, shortage of skilled manpower along with infrastructural challenges and high cost of operations associated with owning an aircraft add to the woes of the owners. There is also a threat from those low entry barrier competitors including international players who own mixed fleet of aircraft which are economical for short haul flights.

The aircraft operated by the Company as part of its Charter operations, veered off the runway during landing, which has resulted in extensive damage to the aircraft. Hence, the Charter Operation of the Company remains suspended.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company is in the process of further strengthening of internal control systems.

FINANCIAL PERFORMANCE

The financial performance of the Company for FY 2019-20 as compared to the corresponding previous year is given below:

(Rs. in Lakhs)

Particulars 2019-20 2018-19
Gross Income 542.20 2,114.11
Expenditure 576.68 878.09
Profit / (Loss) before Interest, Tax, Depreciation and Amortization (570.22) 1,236.02
Profit / (Loss) after Interest, Tax, Depreciation and Extraordinary Items (570.22) 1,236.02
Earnings Per Share (18.30) 39.66

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS

The Company maintained good industrial relations with its employees and staff. Human Resources remained a key focus area for your Company during the year under review. As on March 31, 2020, the Company had two employees.

KEY FINANCIAL RATIOS

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, as Amended, the Company is required to provide the details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector specific financial ratios. The Company has identified the following ratios as key financial ratios:

Particulars 2019-20 2018-19 Change
Debtors Turnover (times) 47.35 82.36 (35.01)
Inventory Turnover (times) NA NA NA
Interest Coverage Ratio (4.66) 150.55 (155.21)
Current Ratio 3.16 4.74 (1.59)
Debt Equity Ratio Nil 0.02 (0.02)
Operating Profit Margin (%) (46.91 %) (15.22%) (31.69%)
Net Profit Margin (%) (47%) 56% (103%)
Return on Net Worth (%) (16%) 71% (87%)

The Debtors Turnover has improved on account of timely realization.

The Current Ratio has improved due to investment in liquid funds.

The improvement in the debt equity is owing to better cash management and reduction in debts and increase in equity.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys expectations or predictions are ‘forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include demand-supply conditions, changes in Government regulations, tax regime, economic developments within the country and other factors such as litigations.