Treadsdirect Ltd Merged Directors Report

TREADSDIRECT LIMITED ANNUAL REPORT 2009-2010 DIRECTORS REPORT The Board of Directors take pleasure in presenting the 12th Annual Report and Audited Accounts for the year ended March 31, 2010. The Management Discussion and Analysis (MD&A) Report is included at the appropriate places in this report. An abstract of the financial results of the company is given below (Rs. in million) 2009-2010 2008-2009 Profit Before Depreciation 309.15 197.57 Less: Depreciation 26.62 33.65 Profit Before Taxation 282.53 163.92 Less: Provision for Taxation 102.01 65.25 Less- Deferred Tax (6.25) (13.34) Profit After Tax 186.77 112.01 Add/(Less): Income Tax of earlier years (1.41) - 185.36 112.01 Add: Balance from previous year 116.31 38.28 Profit available for appropriation 301.67 150.29 Appropriation General Reserve 18.53 11.20 Proposed Dividend - Re.0.30 per share (30%) 34.36 19.47 Dividend Distribution Tax 5.71 3.31 Balance Carried to Balance Sheet 243.07 116.31 Dividend The directors recommend a dividend of Re.0.30 per equity share of Re.1 each. This along with the dividend distribution tax translates to a payout of 21.61% of the profit after tax. The dividend will be paid to the registered members, who are in the register of members as on the book closure date and upon approval by the members in the ensuing annual general meeting. In respect of the dematerialised shares, dividend will be paid to the beneficial owners based on the list provided by the depositories. Review of operations and future outlook The companys sale for the year was Rs.1625.77 Million. Other income amounted to Rs. 49.66 Million. Cash profit was Rs. 309.15 Million. The company has a debt free status as on date. The industry continued to witness substantial increases in input costs during the second half of the year. The price increases of natural and synthetic rubbers during the period were unprecedented. The Indian rupee also strengthened against dollar putting pressure on the earnings in exports. In the domestic market, the company was able to pass on the cost escalations and maintain a healthy bottom line. But serious competition in the international market resulted in little or no margins in exports. During the current year, the uncertainities continue. Raw material prices continue to be erratic. However the domestic market demand continues to be strong and a good performance can be anticipated for the year. However exports will continue to be non remunerative and the company is consciously reducing its dependence on exports. Risks and Concerns The company does not face any risk 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 firm 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 on March 31, 2010, it employs 479 people. Subsidiaries Ministry of Corporate Affairs. Government of India, vide its order No.47/98/2010-CL-III dated February 5. 2010 has granted approval exempting the Company from the requirement to attach various documents in respect of subsidiary companies, as set out in sub-section (1) of Section 212 of the Companies Act, 1956. Financial information of the subsidiary companies as required by the said order, is disclosed in the Annual Report. The company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the company. The annual accounts of the subsidiary companies will also be kept open for inspection by any investor at the Registered Office of the company and that of the respective subsidiary companies. The consolidated financial statements presented by the company include financial results of its subsidiary companies. Directors In accordance with the provisions of the Articles of Association, K Gnanasekaran and R Vidhya Shankar retire by rotation and being eligible offer themselves for re-appointment. Auditors The statutory auditors, Reddy, Goud and Janardhan retire in the ensuing Annual General Meeting and are eligible for reappointment. Directors Responsibility Statement: In terms of Section 217(2AA) of the Companies Act, 1956, the Directors confirm that they have a. Followed in the preparation of the Annual Accounts, the applicable accounting standards with proper explanations relating to material departures; b. Selected suitable accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period; c. Taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; and d. Prepared the annual accounts on a going concern basis. Other information Particulars as required by Section 217(1)(e) of the Companies Act, 1956, relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are provided as an annexure to this report along with the Particulars of Employees as required under section 217(2A) of the Companies Act, 1956. Corporate Governance A separate report on the compliance with Clause 49 of the listing agreement with the stock exchange and the auditors certificate on the compliance form part of this report. 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 either expressed or implied. Acknowledgment We are pleased to place on record of the continued cooperation and support of our customers, suppliers, employees and bankers. Annexure to Directors Report Annexure 1 A. Conservation of Energy a) Energy conservation measures taken: Energy Conservation is one of the primary objectives of the company and measures taken, albeit small, is a constant process. b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: No significant proposals. c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: Marginal reduction in energy costs. d) Total energy consumption per unit of production Not applicable. B. Technology absorption e) Efforts made in technology absorption Research and Development (R&D): No significant steps or expenditure. Technology absorption, adaptation and innovation: Not applicable C. Foreign Exchange Earnings and Outgo: (f) Activities relating to exports; initiatives taken to increase exports, development of new export markets for products and services and export plans The company frequently participates in international trade fairs to promote its products. (g) Total Foreign Exchange earned and used Foreign Exchange Earned Rs. 378.42 million Foreign Exchange Used Rs. 276.06 million * vide The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988. For the Board of Directors Coimbatore Sudarsan Varadaraj 26.05.2010 Chairman & Managing Director