Asian Electronics Ltd.
|BSE: 503940||Sector: Engineering|
|NSE: ASIANELEC||ISIN Code: INE441A01026|
|BSE LIVE 05:30 | 01 Jan||Stock Is Not Traded.|
|NSE LIVE 00:00 | 09 Dec||Stock Is Not Traded.|
|BSE: 503940||Sector: Engineering|
|NSE: ASIANELEC||ISIN Code: INE441A01026|
|BSE LIVE 05:30 | 01 Jan||Stock Is Not Traded.|
|NSE LIVE 00:00 | 09 Dec||Stock Is Not Traded.|
To the Members
Your Directors present the Forty-Eighth Annual Report on the business and operations ofthe Company for the year ended 31st March, 2013.
[Amt in Rs. Lacs]
In respect of the year under review, i.e., the year 2012-2013, in the absence ofprofits your Directors do not propose to declare any dividend.
During the year, the Company was able to achieve gross revenue of Rs. 20.32 crores asagainst Rs. 85.48 crores in the previous year.
Sales of lighting products comprises of domestic sales and export sales.
The Company has undertaken an exercise including creating SPVs (Special PurposeVehicles) for effective and consolidated recovery of various assets and minimizing theimpact on the operations or financial stability of the Company. However, such exerciseneeds an approval from lenders, shareholders and stakeholders in view of the uncertaintyabout the impact of any changes to the plans drawn up and timing of implementation, theCompany and the management cannot ascertain the final outcome at this juncture.
The Companys sales suffered significantly for want of working capital and delayedrecoveries from markets.
The Export Sales was to the tune of Rs. 4.41 Crores for the year under review ascompared to Rs. 10.45 crores in the previous year. Your Company intends to increasecontract manufacturing and exports sales.
RESEARCH AND DEVELOPMENT
Asian Technology Center (ATC), the design and development center of the Company isbased in Pune, Maharashtra. This R&D center is ISO-9001:2008 compliant and hasdeveloped products conforming to global standards.
ATC understands the importance of innovating and customizing the existing products inminimum possible time frame. The expertise in developing full functional prototypes helpsto reduce the design cycles and achieve faster time to market.
Global practices of NPI (New Product Introduction) and TOTTransfer of Technology) are being followed for conducting Research & Developmentactivities. The team at ATC consisting more than 20 engineers and 5 support staff has morethan 100 man-years of experience of working together among them.
Major milestone of the R&D unit are as follows:
1) POC samples of LED products are developed using standard component available in themarket.
2) Completion of pilot batch of Line Monitoring and Controllers for an overseas companyin the field of Power Control and Management. The product involves 4-5 multilayer boards,its integration with IP cabinet, testing and basic functioning.
3) The sample batch quantities have been put in place for the coming year.
4) Some new projects regarding the Line monitoring devices are now into NPI.
5) Modified Samples of High Voltage loop management System, whose POC had beenevaluated and approved have been sent for evaluation to customer.
The enclosed statement forming part of the report gives details such as FinancialPosition at a glance, Distribution of Income etc. Your directors wish to bring thefollowing to your attention:
The Company has a debt burden which its established sources of income and assets cannotservice or repay. A detailed exercise had been carried out with the help of professionalagencies and secured creditors in pursuance of establishing the viability. The reportsinter alia conclude as under:
# The unit is viable and business is feasible.
# The Company needs equity infusion and debt restructuring or repayment at a discount.
# The present realisable values of assets have eroded significantly.
# The new initiatives taken for development and production of identified products oncontract basis make the enterprise viable.
The above clearly indicates need for fresh fund raising and the debt restructuring. Therelevant notes have been carried elsewhere in this report.
The Company had filed a proposal with the Corporate Debt Restructuring (CDR) cell forthe restructuring of its Bank Liabilities under consortium. The CDR proposal submitted bythe Company was approved by the CDR Empowered Group Committee (CDR-EG) at its meeting heldin March 2012. However, since the process consequent to such approval could not becompleted, the concerned Banks did not execute the master restructuring agreement,therefore the CDR proposal has lapsed.
Now the Company has approached/is in the process of approaching individual Banks forsettlement of their dues under One Time Settlement (OTS) basis.
As at 31st March, 2013, the gross fixed assets stood at Rs. 9960.75 lacs and the netfixed assets at Rs. 2800.60 lacs. Additions to fixed assets during the year Amt Rs. 6.65Lacs and deductions to the fixed assets during the year amt Rs. 6.34 Lacs.
INVENTORIES, RECEIVABLES AND CURRENT ASSETS
The management has done a detailed analysis of its current assets as reported in theprevious year. For the reasons explained below, the board is of the opinion that therealizable value of assets has gone downsignificantly:
Inventories: The inventories include a large portion of products meant for oil divisionwhich has ceased to be operative and hence not realizable. Also a large volume ofcomponents, WIP remained unutilized for such products.
Receivables: The Company has disputed export receivables from M/s Westinghouse LightingCorporation where a lawsuit has been lost and also other cases where quality counterclaims and customers reorganization have delayed recoveries. On domestic front,large number of debtors have raised counter claims. Coupled with a reduced turnover, thishas made recoveries more difficult. The Company has issued legal notices in over 200cases.
Advances: In many cases, the Company had advanced certain amounts for long termbusiness contracts. The reconciliation for the individual parties is under process andonce shall be taken.
In view of the above, current assets as stated above are not at realizable values asstated in the Balance Sheet
Pursuant to the approval of members by way of Special Resolution passed at the AnnualGeneral Meeting held on 29th December, 2012 the registered office of the Company has beenshifted from D-11, Road No.28, Wagle Industrial Estate, Thane 400604 to 107, SumerKendra Building, P.B. Marg, Behind Mahindra Towes, Worli. Mumbai 400 018.
During the year under review, the paid up share capital of the Company was increasedconsequent upon the allotment of 41,80,057 equity shares to Asian Electronics Limited,Employees Welfare Trust, 2009 under Employees Stock Option Scheme 2009.
The Company has effective from 1st October, 2009 transferred the following Divisions totwo 100% subsidiaries (SPVs) as under:
a. Business of ESCO Division, i.e. financing of Projects / Products to customers onenergy saving basis, and all activities related thereto together with all related assets,liabilities and entitlements at book values as at the time of transfer, on a going concernbasis. The name of this 100% subsidiary is AEL ESCO PRIVATE LIMITED.
b. Business of Projects Division, i.e. State Electricity Board Projects and allactivities related thereto together with all related assets, liabilities and entitlementsat book values as at the time of transfer on a going concern basis. The name of this 100%subsidiary is AEL PROJECTS PRIVATE LIMITED.
The Accounts for the year ended 31st March, 2010 to 31st March, 2013 have incorporatedall these transactions at the book values at the time of transfer the difference betweenthe book values of identified assets and liabilities of ESCO Division amounting to Rs.5174.34 Lacs and of Project Division amounting to Rs. 1129.15 Lacs are shown as investmentin those subsidiaries.
Pending approval of secured / unsecured lenders, the Company has, for the time being,shown the said investments under Investment Suspense Account read with Note 10 of theAccounts as on 31st March, 2013. On account of transfer of these two Divisions to twoseparate subsidiaries, the Company has also prepared Consolidated Balance Sheet andProfit& Loss Account which forms part of the Annual Reports for the financial years2009-2010 to 2012-13.
The accompanying Financial Statements of the Company have been prepared on a goingconcern basis.
In preparation of these accounts, the Accounting Standards made applicable by theInstitute of Chartered Accountants of India, have been followed.
We have selected appropriate accounting policies which have been applied consistentlyand have made judgments and estimates that are reasonable and prudent so as to ensure thatthe accounts give a true suitable action for recovery and fair view of the state ofaffairs of the Company as at 31st March, 2013 and of the loss of the Company for the yearended on that date.
We have taken proper and sufficient care for maintenance of appropriate accountingrecords in accordance with the provisions of the Companies Act, 1956, for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities.
As regards observations contained in Auditors Report dated 30th May, 2013,regarding transfer of related loans and debentures of ESCO and Project Divisions to whollyowned subsidiaries, Stock Options granted to Directors and Employees, litigationsinitiated by LIC Mutual Fund, Bank of India and other Banks for recovery of their dues anddiminution in the value of investments, old / unsalable stocks, sundry debtors and loansand advances the following explanation of the Management may be noted:
The boards of directors have advised a detailed scrutiny of accounts and nature ofliability appearing under the head Statutory Dues and have the following explanation:
a) VAT/Central Sales Tax
Amount payable as on 31st March, 2013 is Rs. 675.50 Lacs. There is a refund due of overRs. 300 lacs to be adjusted against the demand. For the balance amount an application isbeing made by the Company for payment in installments.
b) Tax Deducted at Source:
Amount payable as on 31st March, 2013 is Rs. 127.68 Lacs. There is a refund due of Rs.163.65 Lacs and the department is advised to adjust the same.
c) Custom Duty and Service Tax:
Amount payable as on 31st March, 2013 is Nil However, accounting reconciliation ispending. d) Provident Fund: Amount payable as on 31st March, 2013 is Rs. 9.38 Lacs.However same has been paid before June, 2013.
EROSION OF NET WORTH
The accumulated losses of the Company as at 31st March, 2013 amounting to 215.09 Croreshave resulted in erosion of more than fifty percent of its peak net worth of 234.14 Croresduring the immediately preceding four financial years.
The Board is already seized of the situation arising on account of erosion of net worthand is taking the necessary steps including discussions with the lenders and a package offinancial restructuring under the OTS mechanism which is under consideration with thesecured lenders, for details regarding reasons of erosion and steps taken and proposed tobe taken by the management please refer to the explanatory statement pursuant to section173(2) of the Companies Act, 1956 forming part of the notice of 48th Annual GeneralMeeting.
In terms of Section 23 of the Sick Industrial Companies (Special Provisions) Act, 1985,if the accumulated losses of an industrial Company, as at the end of any financial yearhave resulted in erosion of fifty percent or more of its peak net worth during theimmediately preceding four financial years, that Company falls under the category ofpotentially sick Industrial Company and therefore the fact is required to be reported toBoard of Industrial and Financial Restructuring (BIFR) within 60 days from the date offinalization of the audited accounts which is the date of this Annual General Meeting, thesame is required be considered by the shareholders at the General Meeting.
PARTICULARS OF THE EMPLOYEES
None of the Employees were drawing salary of Rs. 60,00,000/- or more per annum, ifemployed throughout the year or Rs. 5,00,000/- or more per month, if employed for part ofthe year.
1. Retirement by Rotation :
Mr. Rajesh Mehta was appointed as an Additional Director with effect from June 1, 2011.He was also appointed whole time director of the Company, designated as Executive Director& Joint Chief Executive Officer (Technology & years with effect from 1st June,2011
Mr. Mehtas appointment as Director was approved by the shareholders at the 46thAnnual General Meeting (AGM) held on 22nd September, 2011. His appointment as whole timedirector, designated as Executive Director & Joint Chief Executive Officer(Technology& Finance) and the terms and conditions thereof were also approved by the shareholdersat the said AGM
Mr. Rajesh Mehta tendered his resignation as Executive Director & Joint ChiefExecutive Officer (Technology & Finance) w.e.f. 14th February, 2013, He also conveyedhis intention to continue as a non-executive director liable to retire by rotation, Thesame was approved by the Board at their meeting held on 14th February, 2013.
Therefore in accordance with the provisions of the Articles of Association of theCompany and the provisions of Companies Act, 1956, Mr. Rajesh Mehta retires by rotation atthe ensuing Annual General Meeting and is eligible for reappointment. The Board recommendshis re-appointment.
2. Appointment Of Director :
Pursuant to the provisions of Section 260 of the Act and Article No. 161 of theArticles of Association, Mr. Hardik Shah was appointed as Additional Director with effectfrom 6th March, 2013 and holds office up to the date of the forthcoming Annual GeneralMeeting.
The Company has received notice from a member proposing his appointment as Director.
3. Resignation :
Mr. James Mitropoulos has resigned from the post of Director w.e.f. 1st January, 2013.The same was accepted by the Board of Directors of the company at their meeting held on14th February, 2013. The Board of directors places on record their appreciation for thevaluable services rendered by Mr. James Mitropoulos during the tenure of his office.
M/s. Sorab S. Engineer & Co., Chartered Accountants who are the statutory auditorsof the Company, hold office until the conclusion of ensuing Annual General Meeting and areeligible for re-appointment. The members are requested to consider appointment ofStatutory Auditors to hold the office till conclusion next Annual General Meeting.
The Company also proposes to appoint branch auditors for the same period.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION ETC.
Information on Conservation of Energy, Technology Absorption, Foreign Exchange Earningand Out-go as required to be disclosed pursuant to Section 217  (e) of the CompaniesAct, 1956, read with Companies [Disclosures of Particulars in the Report of Board ofDirectors] Rules, 1988 is given in the Annexure forming part of this Report.
IMPLEMENTATION OF "GREEN INITIATIVE IN CORPORATE GOVERNANCE" INTRODUCED BYTHE MINISTRY OF CORPORATE AFFAIRS
Your Companys products are designed for energy efficiencyand it was therefore anatural decision for the Company to whole-heartedly support the Green Initiative inCorporate Governance introduced by the Ministry of Corporate Affairs in April 2011. TheCompany therefore proposes to send all notices / documents / communications includingannual reports in electronic form to email addresses of shareholders registered withDepository Participants (DPs) and made available by the Depositories. Shareholders aretherefore requested to keep their email address updated with the DPs at all times so thatthe above documents always reach them at the email account of their choice. As regardsshareholders whose email IDs are not available with the Company, physical copies of suchdocuments will be sent.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 withrespect to Directors Responsibility Statement, it is hereby
(i) that in the preparation of the annual accounts for the financial year ended 31stMarch, 2013, the applicable accounting standards have been followed along with properexplanation relating to material departures;
(ii) that the directors have selected the accounting policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancialyear and of the loss of the Company for the year under review;
(iii) that the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act, 1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
(iv) that the directors have prepared the accounts for the financial year ended 31stMarch, 2013 on going concern basis.
During the year under review, the Company had not invited any fixed deposits.
The total outstanding Fixed deposits as on 31st March, 2013 were Rs. 3.49 Crores (831depositors). Out of which Rs. 0.91 Crores (203 depositors) were not matured up to 31stMarch, 2013. Unpaid deposits as on 31st March 2013 are Rs.2.58 Crores (628 depositors).The Company has applied for extension for repayment of fixed deposits from the CentralGovernment pursuant to rule 2 of the Companies (Application for Extension of Time undersub section (8) of Section 58A) Rules, 1979 which is under process with the concernedministry.
A separate report on Corporate Governance along with Auditor's certificate on itscompliance is attached as an annexure to this report.
As the members are aware, the Companys shares are compulsorily tradable inelectronic form. As on 31st March, 2013, 98.97% of the Companys total paid-upcapital representing 3,92,25,919 shares are in dematerialized form. In view of thenumerous advantages offered by the Depository system, Members holding shares in physicalmode are requested to avail of the facility of dematerialization of the Companysshares with either of the Depositories.
Your Directors take this opportunity to thank the Financial Institutions, Banks,Central & State Government authorities, Regulatory authorities, Stock Exchanges andthe Stakeholders for their continuous co-operation and support to the Company.
Your Directors also thank customers, vendors and investors for their faith and support.Your Directors also place on record their deep sense of appreciation of the contributionmade by employees at all levels. Their continuous support and their competence, hard work,team spirit and solidarity will make all the difference to the business of your Company.
ANNEXURE TO THE DIRECTORS REPORT FOR THE YEAR ENDED MARCH 31, 2013.
ADDITIONAL INFORMATION AS REQUIRED UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS)RULES, 1988.
(A) ENERGY CONSERVATION MEASURES TAKEN
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