TAAL Enterprises Ltd Management Discussions.

INDUSTRY STRUCTURE

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 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. This economic growth led to rising revenues of Indian corporates and increasing number of high-net-worth individuals which is one of the main reason for growth in Aircraft Charter Business in India.

ABOUT THE COMPANY

The Company is holding Non Scheduled Operators Permit (NSOP) and is engaged in Air Charter business.

The Company presently 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 TAAL at Hosur in Tamil Nadu.

MATERIAL SUBSIDIARY

The Company has one material subsidiary viz. TAAL Tech India Pvt. Ltd. (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 2018-19 as compared to the corresponding previous year is given below:

(Rs. In Lacs)
Particulars 2018-19 2017-18
Total Income 14,823.27 10,152.68
Expenditure 11,497.94 8,242.48
Profit Before Tax 3,325.32 1,910.20
Profit After Tax 2,268.55 1,712.35

OPPORTUNITIES AND THREATS

Relaxation in Foreign Direct Investment norms coupled with increasing number of airports in India should create sufficient business opportunities. The Civil Aviation policy introduced by government which lays emphasis on regional connectivity is likely to give further impetus to this growth. Uncertainty in operations of some commercial aircraft companies presently, may increase demand for charter of aircraft.

Economic downturn, shortage of skilled manpower along with infrastructural challenges and high cost of operations associated with owning the last two years. It 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 economical for short haul flights.

RISKS AND CONCERNS

Any adverse changes in DGCA regulations can have a negative impact on charter operations. Also volatility in aviation fuel prices, rising airport charges and maintenance of aircraft are concerns for operating a charter aircraft.

Apart from above, any adverse movement in the exchange rate which can increase fixed costs and events such as natural calimities, terrorist attacks can possess risk for the business operation.

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 2018-19 as compared to the corresponding previous year is given below:

(Rs. in Lacs)

Particulars 2018-19 2017-18
Gross Income 2114.11 937.82
Expenditure 878.09 876.72
Profit Before Tax 1236.02 61.11
Profit After Tax 1236.02 50.21
Earnings Per Share 39.66 1.61

Dividend income of Rs. 1275 Lacs has contributed to increase in net profit.

The Consolidated Financial Performance of the Company for the FY 2018-19 as compared to the corresponding previous year is given below:

(Rs. In Lacs)
Particulars 2018-19 2017-18
Total Income 15,725.11 11,233.14
Expenditure 12,195.87 9,164.43
Profit Before Tax 3,529.24 2,068.71
Profit After Tax 2,178.96 1,827.94

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, 2019, the Company had three employees.

KEY FINANCIAL RATIOS

In accordance with the SEBI (Listing Obligations and Disclosure Requirements 2018) (Amendment) regulations 2018, the

Company is required to 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 2018-19 2017-18 Change
Debtors Turnover (times) 1,862.86 34.40 5,315%
Inventory Turnover (times) NA NA NA
Interest Coverage Ratio 58.25 2.79 1,989%
Current Ratio 4.76 1.93 147%
Debt Equity Ratio 0.02 0.11 81%
Operating Profit Margin (%) 161 15.10 967%
Net Profit (%) Margin 158.00 7.90 1,911%
Return on Net Worth (%) 71.70 6.30 1,046%

Improvement in Debtors Turnover Ratio is on account of lower credit period to customers and better collection. Improvement in all other ratios is mainly due to higher profits on account of dividend income of Rs. 12.75 Crore from the subsidiary company.

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.