The Directors present their Forty Eighth Annual Report and the Audited
Accounts for the year ended 31st March, 2007.
Sales for the year under review were Rs. 1003 crores compared to Rs.843
crores in the last year. The financial results of your Company for the
year under review are as below:
(Rupees in Lakhs)
Gross profit before interest and depreciation 8,593 7,826
Interest 2,052 1,743
Depreciation 2,672 2,316
Profit before tax for the year 3,869 3,767
Profit after tax for the year 2,603 2,637
Two interim dividends totaling to 65% amounting to Rs.6,41,51,386/-
were paid for the year ended 31st March, 2007. The Directors are not
recommending any further dividend for the year ended 31st March, 2007.
Management Discussion and Analysis
The Indian economy saw a growth rate of 9.4% in the year under review
compared to 8.4% in the earlier year. The growth was largely on account
of manufacturing and services both of which had double digit growth.
The agricultural sector grew at only 2.7% as against 6% in 2005-06.
In the commercial vehicle segment the market saw a growth of 35%
fuelled by increasing conversions from single to multi-axle vehicles.
This trend has been sustained following the Supreme Court ruling last
year on overloading and the economics of higher fuel cost. The major
part of the wheels requirement arising from this growth was met from
supply of low cost wheels from China. However, your Company saw a
growth of 17% in commercial vehicle wheels segment. In the coming year,
demand for haulage trucks is expected to be lower.
The tractor segment following the higher agricultural growth in 2005-06
and government policies to increase rural funding registered a 23%
growth. Your company grew with the market and maintained its position
as the leading supplier to tractor manufacturers.
The passenger car segment witnessed a growth of 22% in the year under
review. The higher interest rate which came into force would have some
effect on the domestic demand for passenger cars. With a number of
passenger car manufacturers having aggressive growth plans including
those for exports, demand for passenger car wheels is expected to grow
and your Company is expected to benefit from this.
The government has been concerned about the high inflation and has
taken steps to control liquidity. This has resulted in hardening of
interest rates compared to the last financial year.
We expect tightening of money supply to slow down segments such as
commercial vehicles and agricultural tractors.
The Company is the major supplier to the construction equipment
industry in India and the year under review saw a 50% increase in
off-take from the earlier year. This trend is likely to increase with
infrastructure activity in the country speeding up and with global
customers setting up export based plants in India.
Air Suspension system saw an increase of 45% in sales with higher level
of OE fitment with Tata Motors and Ashok Leyland. Your Company is
participating in a number of new bus programs including the City Low
Floor buses. We see the growth in this segment sustaining in the coming
The Company saw a 24% growth in its export sales coming mainly from the
construction equipment industry worldwide. The industry is showing a
double digit growth globally and your Company is well positioned to
take advantage of this. On aluminium wheels, we have marketed our
product to trailer manufacturers in major geographies through our
existing distribution set-up. We are in early discussions with
international OEMs on supply of forged aluminium wheels to them.
The Company is starting two new plants in the coming year, one in
Uttaranchal to service Tata Motors and Mahindra plants in the state,
and one in Sriperumbudur to service the plants of the domestic
construction equipment industry. These new plants should contribute to
the sales of your Company in the latter part of the current year.
The Company's products are steel intensive. The price levels in the
country have remained high reflecting the demand-supply mismatch in the
country. While your Company continues to work on cost reduction
measures through value engineering methods, high steel prices and high
interest rates will continue to put pressure on us in the coming year.
It has been through the team work and effort of your Company's
employees that we have been able to manage our operations in these
The internal control systems of the Company are adequate and are
regularly reviewed by the internal and statutory auditors. The Internal
audit is conducted at regular intervals at all the locations of the
Company covering all key areas. The audit observations and follow-up
actions are discussed with the management and the audit committee and
reviewed at regular intervals.
Under Article 94(3) of the Company, Mr T S Vijayaraghavan and Mr S
Prasad, retire from office by rotation, and being eligible, offer
themselves for re-appointment.
In pursuance to Clause 49 of the Listing Agreement with the Stock
Exchange, Corporate Governance Report is given elsewhere and forms part
of this Report.
Directors' responsibility statement:
Pursuant to Section 217(2AA) of the Companies Act, 1956 your Directors
i. in the preparation of the annual accounts, the applicable accounting
standards have been followed;
ii. such accounting policies have been selected and applied
consistently and judgements and estimates made that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
your company as at 31st March, 2007 and of the profit of the Company
for the year ended on that date;
iii. proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities and
iv. the annual.accounts have been prepared on a going concern basis.
M/s Sundaram and Srinivasan, Chartered Accountants, Chennai retire at
the conclusion of the Forty Eighth Annual General Meeting and are
eligible for re-appointment. The Directors recommend their
Particulars of Employees
None of the employees of the Company was in receipt of remuneration in
excess of the limits prescribed under Section 217(2A) of the Companies
Act, 1956, read with Companies (Particulars of Employees) Rules, 1975.
Particulars prescribed by the Companies (Disclosure of Particulars in
the Report of Board of Directors) Rules, 1988 are enclosed in the
annexure and form part of this report.
The Directors wish to thank United Bank of India, State Bank of India,
Standard Chartered Bank and HDFC Bank Limited for their continued
The Company continues to enjoy the full cooperation of all its
employees. The Directors wish to place on record their appreciation of
the good work done by them.
On behalf of the Board of Directors
Chennai S Ram
21st June, 2007 CHAIRMAN & MANAGING DIRECTOR
Annexure to the Directors' Report
Conservation of Energy
Your Company has been shifting towards non conventional energy sources.
Currently, 20% of our main plant at Padi's energy requirements are met
by wind generators.
We have also increased the level of natural lighting at our plant to
double last year's level and have started the process of converting to
turbo ventilation which does not require power.
In addition, energy conservation audits are taken up and optimal use of
energy is ensured in utility equipment like compressors, chillers &
During the year under review, your Company has successfully developed
237 new wheels to meet customer requirements using in-house design
In addition, your company has developed air suspension systems for
ultra low floor city bus applications that are coming up in the
Expenditure on R & D
(Rs. in Lakhs)
Total as a percentage of turnover 0.47%
Foreign Exchange Earnings and Outgo
The foreign exchange outgo to the Company during the year under review
was Rs.9999 lakhs and the foreign exchange earned was Rs. 18277 lakhs.
Chennai S. Ram
21st June, 2007 Chairman & Managing Director