TANEJA AEROSPACE AND AVIATION LIMITED
ANNUAL REPORT 2004-2005
CHAIRMAN'S REPORT
Dear Shareholders,
It is indeed very gratifying to note and review the performance of the
Company in the last year ending March 06. The turnover of the Company
increased from Rs.13.46 Crore in 04/05 to Rs.22.24 Crore in 05/06. During
the same period the net Profit increased from Rs. 3.12 Crore to Rs. 6.03
Crore. This heartening rate of growth reflects the convergence of a variety
of positive factors - the efforts and investments that TAAL has made
through trying times, the diversified technologies and capabilities that it
has developed and, of course, the economic environment which is now vastly
more conducive to the growth of the aircraft industry than in prior years.
More importantly, it reflects the competitive strengths that the Company
has been able to develop and the foothold that it has managed to secure in
a number of growth sectors of the aviation industry. Given this positioning
and given the robust foundation that has been laid, we believe the Company
has every reason to look forward to a bright, exciting and rewarding
future.
As most of you would be aware, TAAL is present in three principal business
segments, the manufacture of Aerostructures (aircraftparts and assemblies),
aircraft sales (currently including P68C and Cessna aircraft) and aircraft
maintenance, repair and overhaul (often referred to in the industry as
MRO). In each of these areas, within India, TAAL enjoys certain competitive
advantages be it in terms of infrastructure or be it in terms of a set of
unique capabilities resulting from a first mover advantage. Going forward
TAAL's growth strategy hinges on using these advantages to establish itself
as a 'Centre of Excellence' or as a Leader in each of these sectors.
On the aerostructures front the principal growth drivers are the Offset
Policies proposed by the Ministry of Commerce and the Ministry of Defence
(whereby foreign suppliers of aircraft are required to offset their
supplies with purchases of aeronautical products from India) and the
increased impetus to outsouyce by domestic organizations such as ISRO and
HAL. As one of the first private sector entrants in this sector TAAL enjoys
a substantial first mover advantage in terms of capabilities, relationships
with customers and industry knowledge. Over the next six months your
company intends to roll out an ambitious plan to capitalize on these
opportunities and advantages and establish itself firmly as a global player
in this arena.
The excitement and the growth in the MRO segment stems, as you would
expect, from the rapid and sustained growth in the airline industry. TAAL's
key strengths in this area include its past experience and the
infrastructure that the Company owns. TAAL's airfield at Hosur has recently
been upgraded to be able to accept an Airbus A320 or Boeing 737 class of
aircraft. Simultaneously, a hangar has been built that can accommodate such
aircraft. Recently the Company has entered into an agreement with a leading
courier company for the maintenance and operation of their three BAE ATP
aircraft. These aircraft have now arrived in India and are ready to enter
service. This year the Company shall also launch an Approved Service Center
for Cessna Citation Business Jets. TAAL is currently in discussions with a
number of potential partners for setting up a full fledged MRO, facility at
its airfield. We expect the outcome of such discussions to be known within
the next six months.
The interest in business aircraft continues to be strong and with the
economy on a stable footing we expect this trend to continue. Increasingly,
companies as well as individuals are beginning to place value on their time
and are therefore beginning to realize the benefits of a private aircraft.
As the sole Indian representative of the Cessna Aircraft Company for their
Citation range of Business Jets and the Caravan aircraft, TAAL enjoys a
very strong positioning in the market and is therefore certain to
benefit from the tailwinds in this sector:
To facilitate all of the above TAAL has embarked on an aggressive HRD
initiative. A number of executives have been recruited at middle to senior
levels and they now form part of a very motivated and diverse team that
will be responsible for driving the Company into the future. In short, the
future looks exciting and every effort is being made to convert this
excitement into real growth.
We look forward to the continued support of our customers, banks, financial
institutions and shareholders in bringing these aspirations to fruition.
Thank you,
Salil Taneja
Pune, June 30, 2006 Chairman