Treadsdirect Ltd Merged Management Discussions

TREADSDIRECT LIMITED ANNUAL REPORT 2008-2009 MANAGEMENT DISCUSSION AND ANALYSIS An abstract of the financial results of the company is given below: 2008-2009 2007-2008 (Rs. in million) Profit Before Depreciation 197.57 131.38 Less: Depreciation 33.65 44.95 Profit Before Taxation 163.92 86.43 Less: Provision for Taxation 65.25 29.30 Less: Provision for Deferred Tax (13.34) (0.51) Profit After Tax 112.01 57.64 Add: Balance from previous year 38.28 - Less: Transfer on account of scheme - 0.19 Profit available for appropriation 150.29 57.45 Appropriation: General Reserve 11.20 5.76 Proposed Dividend @17% (10%) 19.47 11.45 Dividend Distribution Tax 3.31 1.95 Balance Carried to Balance Sheet 116.31 38.29 Review of operations and future outlook: The companys sales for the year was Rs. 1,511.77 Million. Other income amounted to Rs. 54.13 Million. Cash profit was Rs. 197.57 Million. The company has a debt free status as on date. The industry witnessed phenomenal increases in input costs during the first half of the year. This was due to steep rise in crude oil prices and shortage in the supply of polymers, rubber chemicals and carbon black. However, the prices started declining thereafter towards the end of the financial year. Further, during the second half of the financial year, with the Indian Rupee weakening against the US Dollar, the company regained some of the exports lost during the first part of the year and realized better contribution from exports. During the current year, the uncertainties continue. Raw material prices have been erratic as also the foreign exchange rates. However, the indications of a stable government and the expected economic reforms could bring about growth and stability in the transport and infrastructure industries that will help the performance of the company. Overall, the company expects to face serious competition worldwide and declining margins. Risks and Concerns: The company does not face any risks other than those that are prevalent in the industry. The company has taken all possible steps to overcome such risks. The main concerns are the volatility in raw material prices and fluctuations in foreign exchange. The company is taking measures that will enable it to pass on raw material prices in tune with the competition. Foreign exchange fluctuation risk is minimized through proper planning and natural hedging. As a part of the overall risk management strategy, all assets are appropriately insured. Internal Control Systems: Internal Audit is being done every quarter by an independent firms of Chartered Accountants and observations are reported to management. Immediate steps are taken to rectify any discrepancies. All significant audit observations were discussed in the audit committee meetings. Human Resources and Industrial Relations: The company continues to have cordial and harmonious relationship with its employees. As at March 31, 2009, it employs 476 people. Cautionary Statement: Statements in this report, especially those relating to the MD&A giving details of companys objectives, projections, estimates and expectations may be construed as forward looking statements within the realm of applicable laws and regulations. Actual results might be liable to differ materially from those ether expressed or implied.