The Directors present their Forty Ninth Annual Report and the Audited
Accounts for the year ended 31st March, 2008.
Sales for the year under review were Rs. 1130 crores compared to Rs.
1003 crores in the last year. The financial results of your Company for
the year under review are as below:
(Rs. in Lakhs)
Gross profit before interest and depreciation 10,170 8,593
Interest 3,069 2,052
Depreciation 3,127 2,672
Profit before tax for the year 3,974 3,869
Profit after tax for the year 2,586 2,603
Two interim dividends totaling to 70% amounting to Rs.6,90,86,108/-
were paid for the year ended 31st March, 2008. The Directors are not
recommending any further dividend for the year ended 31st March, 2008.
Management Discussion and Analysis
In the last year, the Indian economy grew at 9%, slightly lower than
the 9.4% growth in GDP in the preceding year. The latter part of the
year, saw some slowdown in the momentum of growth, especially in the
manufacturing sector which grew at 8.8% as against 12.1% in the
previous year. A higher growth of 4.5% in the agriculture sector made
up for the lower growth in industry and services.
The latter part of the year and the beginning of this year saw severe
global inflationary trends in commodities, resulting in high inflation.
The government has tried to restrict money supply to counter inflation.
The combination of inflation and tighter money supply is likely to
restrict growth in the coming year.
The medium and heavy commercial vehicle segment saw a decline of 2% in
2007-08 as against a growth of 35% in the previous year. Within this,
the goods haulage segment saw a steep drop of 16%, which was partially
offset by growth in buses and tippers. In light of the environment of
economic uncertainty in the current year, we expect no growth in the
commercial vehicle market. Similarly, in the light commercial vehicle
segment, the last year saw growth slowing down to 10% from 33% in the
previous year. We expect only a marginal growth in the coming year.
In the passenger car and utility vehicle segment, growth slowed down to
12% from 22% in the previous year. This growth is likely to further
come down to 8% in the current year. The uncertainty caused by
inflation and high fuel prices will curtail growth to some extent. The
growth in the segment will come primarily from new models and export
based programs of car manufacturers.
The agricultural tractor market declined in volume by 5%, after a
positive growth of 20% in the previous year. In spite of reasonable
growth in the agricultural sector, the tractor market declined partly
due to excess capacity that had built in the previous year and partly
due to tighter availability of money. While the coming year is expected
to have a good monsoon, issues of availability of finance is likely to
result in only a marginal growth in the tractor market.
The mining and construction equipment industry grew in excess of 30%
for the third consecutive year. In the coming year, availability of
finance is likely to affect the lower end segments of the industry. At
the same time, the commodity markets and export programs of equipment
manufacturers will ensure growth at the higher end to maintain the
growth in the current year. Your company is a major supplier to the
international market in this industry. In the international market,
while all customers are looking at double digit growth, Asia-Pacific,
where we have a significant share, is likely to grow at 20% in the
In the last fiscal, the companys performance mirrored the various
industry segments. In addition to the segments covered, we did double
our sales in air suspension systems as public transport corporations
across the country looked at buses with factory fitted air suspension.
We expect this trend to continue in the current year.
In the last fiscal, we had successfully filed for anti-dumping duty
against Chinese truck wheel imports. This along with cost escalations
in China, will stand the company in good stead, as our capacities come
on stream later on in the year.
In the current year, the availability and prices of steel are major
concerns. The prices have increased by over 30% in the current fiscal.
At the same time, availability of steel in the country is tight and our
ability to manage the situation will be a critical factor in our growth
in the coming year.
Our international business grew by 23% in the year under review and
forms 18% of our business. This performance has been during a period in
which the Indian Rupee has appreciated by almost 10%. We expect our
export business growth trend to continue in the current year.
In the last year, your company commenced production at a new plant at
Sriperumbudur for manufacture of large earthmover wheels for mining
trucks. The plant was commissioned in a record period of 9 months and
we expect the plant to break even in the latter part of the coming
year. In the coming year, we will commission our plant at Pantnagar in
Your company has started a new company, Sundaram Hydraulics Ltd, along
with Sundaram Finance Ltd (your company will hold a 49% stake) for
manufacture of hydraulic cylinders for the construction equipment
industry. We believe that there is a tremendous opportunity to develop,
manufacture and market this product to a number of our existing
It has been through the team work and efforts of your Companys
employees that we have been able to manage our operations in these
Inflation compounded by slow growth is a major challenge that your
company has to face in the coming year. In line with this, we are
actively looking at cost rationalization exercises at all our plants to
improve our competitiveness.
Your company has an adequate system of internal control commensurate
with the size and nature of the Companys business. The internal
auditors conduct periodical audits to ensure adequacy of internal
control systems, adherence to management policies besides ensuring
compliance with laws and regulations of the country. We are in the
process of implementing the ERP package SAP to improve the internal
controls and responsiveness of your organization.
Under Article 94(3) of the Company, Mr J M A Akers and Mr T K Seshadri,
retire from office by rotation, and being eligible, offer themselves
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, 2008 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 & Srinivasan, Chartered Accountants, Chennai retire at the
conclusion of the Forty Ninth Annual General Meeting and are eligible
for re-appointment. The Directors recommend their re-appointment.
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
Your Company continues to enjoy the full co-operation 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
27th June, 2008 Chairman & Managing Director