Annual Report - TTK Prestige - 2008-2009

TTK PRESTIGE LIMITED

ANNUAL REPORT 2008-2009

DIRECTOR'S REPORT

Your Directors have pleasure in presenting their Fifty Third Annual Report,
together with the Audited Accounts of the Company, for the year ended 31st
March 2009 as follows:



FINANCIAL RESULTS:

(Rupees in lakhs)
2008-09 2007-08

Sales (inclusive of excise duty) 41621 33985
Other income 50 149
Profit before Extra-Ordinary item 2900 2115
Net Extra-Ordinary income - 331
Profit/(Loss) before tax 2900 2446
Tax Provision 662 380
Net Profit/(Loss) 2238 2067
Transfer to General Reserve 224 208
Proposed Dividend (including tax) 662 465
Surplus carried to balance sheet 1352 1394

REVIEW OF PERFORMANCE :

The performance highlights are as follows :

* Sales grew by 22.47% notwithstanding over all slowdown of the economy.

* Profit before extra ordinary items increased by 41.37%.

* Profit after tax increased only by 8.27% on account of higher provision
for taxation whereas till last year only minimum alternate tax was
attracted. Further, there was no Extra-ordinary income during the year
under report as compared to the previous year.

* Borrowings reduced by Rs.26.18 Crores.

* Earnings per Share (before net extra-ordinary items) rose to Rs.19.77
from Rs.15.62 - a growth of 26.6%.

A detailed analysis is provided under the following section Management's
Discussion and Analysis'.

MANAGEMENTS' DISCUSSION AND ANALYSIS:

A. INDUSTRY SCENARIO:

In 2008-09 the industry in general was widely affected by global recession
and uncertain financial market conditions. The Indian Economy grew at a
rate less than the expected growth of 9%. In spite of general adverse
economic conditions and the fear of unemployment in several sectors, your
company was able to achieve a growth of 22.5% by pursuing aggressive
strategies including launch of new models and products to sustain consumer
interest in the product categories your company is dealing in and also to
increase the market share. Your Company also fully passed on to the
consumers the benefits of reduction in excise duty announced by the
Government as part of over all stimulus package announced in December 2008.

Your Company operates in the Kitchen Appliances segment with a range of
product categories consisting of Pressure Cookers, Non-stick Cookware, Gas
Stoves and Domestic Kitchen Appliances. The key product category of your
Company is Pressure Cookers which market is shared amongst organized
national branded players, regional players and unorganized players. The
market is equally divided between organized branded players and others. In
the other product categories also, the market structure is similar but the
share and role of regional brands and unorganized players is quite high.

B. OPPORTUNITIES, THREATS AND COMPANY'S RESPONSE:

Your Company has been growing steadily building on its core strengths of
brand, manufacturing, designing, distribution, sourcing and service
capabilities.

Having broad based the business to cover the entire kitchen, your Company
continues to enjoy the recognition as Super Brand'. In its traditional
category of pressure cookers your Company continues to be the preferred
brand namely Mera Brand'.

The Total Kitchen Solution' strategy itself is creating new opportunities
for your Company to continuously expand its product base as well as the
market base. Your Company's retail network Prestige Smart Kitchen' is
supporting these strategies well.

As regards the two new formats Prestige Life Style Store' and Prestige
Kitchen Boutique' your Company is mindful of the current economic
conditions, especially the demand for High Value Items' and will take
these formats forward gradually.

The threats continue to be from unorganized players and regional brands
that compete with unviable low pricing strategies. Your Company has been
adopting different strategies from time to time to stay above such
competition and has also been growing at a pace faster than the industry
average.

As regards exports, severe recession is gripping most of the markets and it
is planned to work towards maintaining the current volumes.

C. ANALYSIS OF PERFORMANCE :

1. Kitchen Appliances : The products include Pressure Cookers, Non-stick
Cookware, Kitchen Electrical Appliances and Gas Stoves. The turnover of
these product categories is given in the following table.

(In Rupees Lakhs)
2008-09 2007-08
Domestic Export Total Domestic Export Total

Pressure Cookers 20060 1974 22034 16796 1815 18611
Non-stick Cookware 6311 45 6356 5388 9 5397
Kitchen Electric
Appliances 7262 - 7262 4712 - 4712
Gas Stoves 3999 - 3999 3535 - 3535
Others 1967 3 1970 1722 8 1730
Total 39599 2022 41621 32153 1832 33985

a. Domestic Sales registered a growth of 23.15% while exports registered a
growth of 10.37%.

b. The traditional product categories, namely, Pressure cookers and
Cookware registered a growth of over 18%.

c. The growth in non-traditional product lines like kitchen electrical
appliances has been very impressive at 54%.

d. Your Company revamped its offerings in Gas Stove portfolio and the
offerings were available for only a part of the year and hence a lower
growth as compared to other product categories.

e. Operating EBIDTA/Sales ratio marginally dropped to 9.2% from 9.6% due to
higher outlay on Advertisement & Selling Expenses and one time bad debt
write-offs.

f. Significant improvements were made in working capital management thus
improving the free cash flow which resulted in sharp reduction in debt
burden.

g. Your company introduced a new category of induction cook tops this year.
In the existing categories, many new products and models were introduced
during the year to make the range contemporary and competitive.

h. The Prestige Smart Kitchen retail net work was consolidated and
improvised as per plans. While new outlets were opened, some trimming was
also done by discontinuing a few non-viable outlets. The number of outlets
as at 31.3.2009 was 196. The network now covers 19 States and 120 towns.
The network contributes to nearly 15.22% of trade sales.

i. Seven Prestige Kitchen Boutiques' offering a wide range of modular
kitchens were opened during the year, taking the total of Boutiques to 9.

2. Properties & Investment :

a. This consists of Dooravani Nagar, Bengaluru property under development
and other commercial properties. The inter-division revenue earned in this
Division is Rs.76 lakhs.

b. Property Development : The developer was granted possession for the
purpose of development towards the end of the last financial year. The
developer has applied for sanctions and approvals from various authorities
some of which are pending. Pending receipt of the necessary sanctions large
portions of old structures have been demolished leaving a part of the
structure for administrative / business requirements.

D. OUTLOOK:

The global economic climate and its continuing impact on the Indian Economy
calls for a cautious outlook. As of now the market sentiment is becoming
positive and your Company is looking forward to register a reasonable
growth.

E. RISKS AND CONCERNS:

Your Company, due to well directed marketing strategies, insulated itself
from the downturn during the last financial year 2008-09. Delayed Monsoon
and any further deterioration in the global economic situation can
adversely impact the overall business of the Indian economy and of your
company.

F. FINANCES AND INTEREST RATE STRUCTURING:

During the year, there was no change in the equity capital. Debt was
reduced by Rs.26.18 crores. In spite of increase in the interest rates, the
Company was able to keep the ratio of interest to sales at lower levels.

G. INVESTMENTS:

There was no change in the investments during the year.

H. INTERNAL CONTROL SYSTEMS:

Your Company is continuously improving the internal control systems in all
the areas of operation including the effective monitoring of Prestige Smart
Kitchens established across the length and breadth of the country. Your
Company is now operational on the SAP Platform and this has lead to further
improvements in the internal control systems.

I. DEVELOPMENTS IN HUMAN RESOURCES:

The direct employment strength stood at 877 as compared to 852 in the
previous year. Your company has a structured policy in training and
development.

CAPITAL EXPENDITURE & EXPANSION PLANS:

Apart from normal capital expenditure there were no major projects that
were taken up during the year. It is proposed to establish a new unit in
Uttarakhand for manufacture of Gas Stoves and Domestic Kitchen Electrical
Appliances during the financial year 2009-10.

DIRECTORS:

Mr. Dileep K Krishnaswamy, Mr. Arun Thiagarajan and Mr. K. Shankaran retire
by rotation and are eligible for re-election. The information on these
retiring Directors is provided in the Notice calling the Annual General
Meeting.

FIXED DEPOSIT:

The Public Deposits aggregated to Rs.283.90 lakhs as on 31st March 2009.
There were no unclaimed deposits which remained unpaid as on that date.

DIVIDEND:

Your directors recommend payment of a dividend of Rs.5 per share for the
financial year 2008-09.

FUTURISTIC STATEMENTS:

This Directors Report and the Management Discussion and Analysis included
therein may contain certain statements, which are futuristic in nature.
Such statements represent the intentions of the Management and the efforts
being put in by them to realize certain goals. The success in realizing
these goals depends on various factors both internal and external.
Therefore, the investors are requested to make their own independent
judgments by taking into account all relevant factors before taking any
investment decision.

CORPORATE GOVERNANCE:

Report on Corporate Governance is separately presented as part of the
Annual Report. Management Discussion and Analysis is included in this
Directors' Report in the preceding sections.

EMPLOYEES:

The particulars as required under Sec.217 (2A) of the Companies Act, 1956
are given in the Annexure to this report.

AUDITORS:

M/s. S. Viswanathan, Chartered Accountants retire at the ensuing Annual
General Meeting and are eligible for reappointment.

LISTING:

Your Companys shares are listed in the Bombay Stock Exchange and National
Stock Exchange and the listing fees for these two exchanges have been paid.

REGISTERED OFFICE:

Pursuant to the Special Resolution passed by the Members and the approval
of the Company Law Board, your Company's Registered Office is now located
at Hosur in the State of Tamil Nadu.

FORFEITURE OF EQUITY SHARES:

During the year the Board of Directors after giving due notice forfeited
28600 shares for non-payment of call money.

FOREIGN EXCHANGE EARNINGS:

The details of foreign exchange earnings and outflow are given in the
annexure to this Report.

CONSERVATION OF ENERGY AND RESEARCH AND DEVELOPMENT:

The measures related to conservation of energy, etc., are covered in the
annexure to this Report pursuant to Section 217(1)(e) of the Companies Act,
1956.

DIRECTORS' RESPONSIBILITY STATEMENT:

As required by Sec 217(2AA) of the Companies Act, 1956 your Directors
confirm :

1. that in the preparation of the annual accounts, the applicable
accounting standards have been followed, along with proper explanation
relating to material departures;

2. that they have selected such 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 or loss of the
Company for that period;

3. that they have 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

4. That they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS:

Your Directors deeply appreciate and acknowledge the significant and
continued co-operation given to your Company by the Bankers, Financial
Institutions and the employees of the Company.

Registered Office : For and on behalf of the Board
Plot No. 38,
SIPCOT Industrial Complex,
HOSUR - 635 126,
Tamil Nadu.
(T.T. JAGANNATHAN)
Executive Chairman
Place : Bengaluru
Dated : 30th June 2009.

Information as per Section 217(1) (e) of the Companies Act, 1956 read with
Companies (Disclosure of Particulars in the report of the Board of
Directors) Rules, 1988 for the year ended 31st March 2009.

A. CONSERVATION OF ENERGY AS PER FORM A - Not Applicable.

B. PARTICULARS AS PER FROM B - RESEARCH & DEVELOPMENT

Constant efforts are made to improve the quality of the product and upgrade
the Manufacturing Process of all the products of the Company. During the
year your Company has filed two patent and three design applications.

C. FOREIGN EXCHANGE EARNINGS & OUTFLOW:

1) Inflow
Export of Goods (FOB) - Rs. 2019.25 lakhs

2) Outflow
Import of Goods & Others - Rs. 2250.02 lakhs

Registered Office: For and on behalf of the Board
Plot No. 38,
SIPCOT Industrial Complex,
HOSUR 635 126
Tamil Nadu
(T.T. JAGANNATHAN)
Executive Chairman

Place : Bengaluru
Dated : 30th June 2009