MANAGEMENT DISCUSSION ANDANALYSIS I. INDUSTRYSTRUCTUREAND DEVELOPMENTS The demand for vehicles in the segments in which the Company is active has continued to be subdued during the year under review. In view of the increasing emphasis on school buses and ambulances now being placed in the country, the proportion of these vehicles in the overall sale of vehicles by the Company shows improvement. There is potential for significant growth in the years to come as the prosperity of society increases in India. It should be noted that school buses and ambulances are a small niche of the commercial vehicles and passenger transport market. II. PERFORMANCEOFTHECOMPANY The number of vehicles sold during the year under report was 29,366 compared to 27,537 vehicles sold in the year 2013-14. During the year under report, the Company achieved a topline of Rs. 2,638.90 crore. The sales turnover stood at Rs. 2,610.31 crore compared to the brvious year's turnoverof Rs.2,275.50 crore. The sale of the Traveller van, backed by improved sale of school buses, etc. has registered good growth. The Company has made significant efforts to align product offerings in the van range to changing market requirements. The Bus Body Code is to be applicable to all vehicles with seating capacity more than 12 passengers. The Company has effected the necessary improvements / modifications in its vehicle range, to ensure compliance. The Company entered into a contract with BMW India Pvt. Ltd. BMW are one of the world's leading automobile manufacturers, of highly acclaimed range of high performance luxury vehicles. We shall be supplying engines for their Indian operations. During the year under review, the project was undertaken to set up a dedicated facility to meet this requirement in Chennai. It is a matter of pride and satisfaction for the Company that the young team engaged in the project, established this facility within seven months from the assignment of the contract to achieve actual production of the first engine, including procurement of land, designing and construction of buildings, procurement and installation of equipment, and organising the actual production. The tractor business of the Company has shown an improvement in sales on account of the focused effort in select markets, and the significantly improved customer support established. During the year under review, the tractor industry declined by 13 percent over Financial Year 2013-14. However the Company's sale of tractors improved by 28 percent. While the 25 horse power Orchard tractor has met with very good acceptance in select markets, efforts are on to enhance the penetration of higher horse power tractors from the Balwan range, available in the Company's product portfolio. During the year, special efforts have been made to introduce product variants on the Traveller platform on the 26 seater Traveller a special luxury model, with air suspension and air conditioning, with seating for 15 passengers has been introduced. These have been well received. The Company's 4x4 Off Road product - the GURKHA-is widely acclaimed and apbrciated as one of the best of froad vehicles anywhere. In the Rain Forest Challenge competition, which is an international competition carried out under excruciatingly difficult conditions, the Company's vehicles were placed first and second in 2014. The Company has made satisfactory progress in developing a complete range of engines, with various displacement capacities such as 2 litres, 2.6 litres and 3.2 litres. These engines are established to meet not only BS IV emission requirement, but are capable of meeting the BS V and BS VI emission regulations. Further development activity is taken up in this regard. The Company's Engine Tech Centre has been very well utilized in this effort. The Company has also completed development during the year, of a new family of transmissions, suitable for the future requirements, compatible with the power ranges for BS IV, V and VI engines. The design, development and proving of the new family of transmissions has been carried out in house. III. SUBSIDIARY The Company is a subsidiary of Jaya Hind Investments Private Limited, promoter of the Company, which holds 55.92 % in the Company. The Company is a Holding Company of Tempo Finance (West) Private Limited, and holds 66.43 % in the subsidiary company. IV. OPPORTUNITIES, THREATSAND RISK FACTORS The Company produces "working vehicles" and not personal usage vehicles. While the personal transportation vehicle segments have been growing rapidly - such as personal passenger cars and 2-wheelers, the growth of commercial vehicles is tied very greatly to the situation of economic growth and transformation occuring in India. Another factor affecting the sale of passenger vehicles for hire and reward is government's policies relating to categorisation of vehicles, applicable excise duty structure, permit regime, permit charges, facilities for operating in specific territories, etc. In this regard the new Motor Vehicles Act may improve the conditionalities under which vehicles ply for hire and reward, to facilitate convenient, easy and safe transportation. If such an effect does occur, this sector in which the company operates, would see significant improvement in its market opportunities. Excise duty rationalization is a major concern. V. FINANCIALPERFORMANCE As stated above, the Company sold 29,366 vehicles during the Financial Year 2014-15 compared to 27,537 vehicles in the brvious year 2013-14. The proportion of Light Commercial Vehicles and Utility Vehicles, in the product mix of the Company, has increased in relation to the Small Commercial Vehicles. The Profit, before Finance Costs and Taxes, from operations for the year under report was Rs. 131.50 crore compared to operating profit for the brvious year2013-14 amounting toRs. 71.81 crore. The Net Profit of the Company after Finance Costs, Debrciation and Taxes items was Rs. 101.36 crore for theyear2014-15. Considering the above, the Board of Directors of the Company has recommended a dividend of Rs. 5 per share on 1,31,76,262 equity shares of Rs. 10 each for the consideration of the Members. The Reserves and Surplus of the Company as on 31st March 2015 stood atRs. 1303.70 crore. While the Company has seen significant improvement in the bottom line during the year under review, due to changes in product mix and market penetration, the growth in the top line has been subdued. VI. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY To further enhance the internal control systems, the Company has emphasized the audit process which comprises 3 levels in the Company: Level I –Statutory Audit Level II - Controlling The controlling department analyses information and trends in the operational parameters, and provides wide ranging inputs to Company Management. Level III- Internal Audit Two firms of auditors are engaged, to examine the 'operating processes' employed by the Company, and to assess conformance thereto by various operatives and departments within the Company. These auditors are engaged in all plants of the Company, as also to examine all the operational functions. These auditors, on a quarterly basis, report their findings to the Board of Directors and the Audit Committee. VII. HUMANRESOURCEDEVELOPMENT Human Resource Development activity is greatly strengthened by a combrhensive initiative. Training initiative at the Head Office, at all plants and also for the field force, comprising of Company's employees as also the employees of Company's dealers - has been greatly emphasized. Increase in Management bandwidth, at senior and middle management levels, in view of growth as pirationsis being carried out. The Company is attempting to install performance based incentive, across all levels of employees. VIII. CAUTIONARYSTATEMENT Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations may be forward looking statements. Actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations include, amongst others, economic conditions affecting demand/supply and price conditions in the markets in which the Company operates, changes in the Government regulations, tax laws and otherstatutes and incidental factors. |
