GUJARAT TELEPHONE CABLES LIMITED
ANNUAL REPORT 2002-2003
Gujarat Telephone Cables Limited
Your Directors present their Twentieth Annual Report together with the
Audited Statements of Accounts, for the period ended 30th June, 2003.
(Rs. In Lacs)
PARTICULARS Year Year
Gross Total Income 4405.69 12882.81
Profit (Loss) Before Interest, (10625.25) 1621.61
Depreciation & Tax
Less Interest 2049.00 1903.37
Profit after Interest but (12674.25) (281.76)
before Depreciation and Tax
Less: Depreciation 611.50 610.35
Profit/ (Loss) before Tax (13285.75) (892.11)
Less: Provision for Tax - 0.30
Profit /(Loss) after Tax (13285.75) (892.41)
Surplus/Loss carried forward (93.16) 799.25
from the Previous year.
from General Reserve 2650.00 _
Balance Carried to
Balance Sheet (10728.91) (93.16)
OPERATIONS AND FUTURE OUTLOOK
During the year under review, there was a steep decline in turnover as
Rs.3903 12 Lacs compared to Rs.12244.98 Lacs achieved during the previous
year resulting in the drastic loss of Rs 13285.75 Lacs during the year as
compared to the previous years' loss of Rs.892.41 Lacs. The decline in the
Turnover and income is mainly due to the steep decline in the prices of
Jelly Filled Cables and steep fall in the demand for it due to present
mobile phone/ wireless phone technology. This factor affected not only the
Company, but also covered the industry itself. With a view to offset the
effect of the failing prices, your Company has initiated Major Cost cutting
Exercise in the entire operations of the Company.
Demand for Jelly Filled Telephone Cables is expected to decrease in the
current year which may further effect the revenue of the Company. Hence the
Company is making thrust on exploring the possibility of diversifying in
other areas. This throws open various opportunities as well as challenges
to the Company. The Company is aware of the said fact of dwindling demand
of the PIJF Cables and taking into consideration the existing state-of-the
art manufacturing facilities which is coupled with quality manpower, the
Company has idenfitied and developed a wide range of electrical and
specialised communication cables and the Company is making vigorous efforts
to cater the market thereof.
Shri Laxman R. Patel and Shri Hasmukh R. Rami. Directors of the Company
retire by rotation at the ensuing Annual General Meeting and being
eligible, offer themselves for reappointment.
The Central Government, by its letter Ref. No. 1/206/2003-CL.VII dated 5th
December 2003, has approved under section 269 of the Companies Act, 1956
the re-appointment of (i) Shri R H Patel as Managing Director (ii) Shri N R
Patel as Whole-time Director and (iii) Shri D D Patel as Whole-time
Director of the Company for a period not exceeding 5(five) years with
effect from 02-06-2003 to 01-06-08, 31-05-3003 to 30-05 2008 and 30-06-2003
to 29-06-2008 respectively, as approved by the Board as well as by the
Members of the Company.
M/s Nitin K. Shah & Co. Chartered Accountants, hold Office till the
conclusion of the ensuing Annual General Meeting and are eligible for
reappointment. The Auditors Report, the observation of the Auditors read in
conjunction with the Notes on accounts are self explanatory.
DIRECTORS' RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217 (2AA) OF
THE COMPANIES ACT, 1956.
The Directors confirm that
(1) In the preparation of the annual accounts. the applicable accounting
standards have been followed along with proper explanation relating to
(2) The Directors have selected such accounting policies have been selected
and applied 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 loss of
the Company for that period;
(3) The Directors had taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with toe provisions of the Act
for safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities;
(4) The directors had prepared the annual accounts on a going concern
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges.
Management Discussion and Analysis, Corporate Governance Report and
Auditors Certificate regarding compliance of Corporate Governance are made
a part of the Annual Report.
PARTICULARS OF EMPLOYEES
There are no Employees who are covered as per the Provisions of Section 217
(2A) of the Companies (Particulars of Employees) Rules. 1975.
COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF
DIRECTORS RULES, 1988.
In terms of the above rules, the Board is pleased to give the particulars
as prescribed therein in the annexure which forms part of this report.
Your Directors are grateful for the assistance and co-operation received
from the Financial Institutions Banks, and Employees of the Company.
BY ORDER OF THE BOARD
Place : Ahmedabad R.H. Patel
Date : 30th December, 2003 Chairman &
ANNEXURE TO THE DIRECTORS' REPORT
COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF
DIRECTORS) RULES, 1988.
(A) CONSERVATION OF ENERGY
As in the past, the company continued its efforts to improve methods of
energy conservation and utilisation.
Wind Farm located at Village Dhank of Rajkot District has generated 1083231
Units during the year. Energy generated at the Wind Fram is made available
by Gujarat Electricity Board at Company's Plant located at P.O. Chharodi
Fram, Tal. Sanand, Dist. Ahmedabad, which has resulted in slight saving of
(B) TECHNOLOGY ABSORPTION RESEARCH AND DEVELOPMENT (R & D)
RESEARCH AND DEVELOPMENT (R & D)
1. Specific Areas in which R & D : Process Improvement, Product
carried out by the Company. Improvement & Cost effectiveness.
2. Benefits derived as a result of : Reduction in cost of Production &
above R & D Improvement in quality & Productivity.
3. Future Plan of Action : Efforts will continue to be made in
the areas of cost reduction and
product and process improvement.
4. Expenditure on R & D : R & D Expenditure has not been
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
1) Efforts in Brief toward : The Company has successfully absorbed
technology absorption the technology to manufacture all
adaptation and innovation types and sizes of PIJF Telephone
Cables and efforts are being
continuously made on to upgrade the
same with innovation in design,
process controls and logistics.
2) Benefits derived as a result : Cost has been reduced where ever
of the above efforts. possible.
(C) FOREIGN EXCHANGE EARNINGS AND OUTGO
Total Foreign Exchange earned : Rs. Nil
Total Foreign Exchange Outgo : Rs. Nil
For and on behalf of the Board
Place : AHMEDABAD R. H. PATEL
Date : 30-12-2003 CHAIRMAN & MANAGING DIRECTOR
MANAGEMENT DISCUSSIONS AND ANALYSIS
The Company is in the business of manufacture and sale of Jelly Filled
Jelly Filled Telephone Cables were introduced by the erstwhile Department
of Telecommunications (DOT) to substitute paper covered unfilled cables in
order to solve the problem of water seepage in Telecom Cables resulting in
distortion of signals. At present there are about 48 PIJF Cable
Manufacturers in India having such manufacturing installed capacity
approximately 1600 LCKM, and the total estimated demand was less than 200
LCKM, which has resulted in increase in competition and pressure on the
prices of the cables. The year under review was a difficult year for the
Telecom Industry due to steep decline in the prices and increased
The Company's earnings was Rs.4405.69 Lacs. for the year ended 30th June
2003 against Rs.12882.81 Lacs for the previous year. Lower earning was
mainly due to:
1) Lower demand resulting into lower sales volume of Jelly Filled Cables.
2) Steep fall in selling prices of Jelly Filled Cables.
The turnover of the Company has come down to Rs. 3903.12 Lacs. from Rs.
12244.98 achieved during the previous year on account of the reasons
OPPORTUINITES AND THREATS:
Government policies relating to the Investments in the Telecom Sector have
a substantial impact on the performance of the Company and there seems to
be no positive sign of improvement in investments in this sector. The
Company, with its huge manufacturing capacity and being one of the major
players of the Industry, could not able to reap the fruits of the same.
The Telecom Cables Industry depends on the Bharat Sanchar Nigam Limited
(BSNL) and Mahanagar Telephone Nigam Limited (MTNL). During the year , BSNL
has floated the bender for a quantity, which is less by more than 50 of the
Tender for the previous year. This reduction is mainly due to increased use
of wire Less in Local Loop (WLL) technology by BSNL and MTNL and other
private operators. This is in addition to the increased competition from
the existing as well as new entrants in the Industry. Orders are being
accepted by the competitors at a rate much below the variable cost. The
Company is taking steps to offset the implications of this by undertaking a
major cost cutting exercise.
INTERNAL CONTROL SYSTEMS:
The Company has proper and adequate Internal Control System, which ensures
the proper authorization , recording and reporting of all the transactions
and safeguard of all assets from the risk of loss due to unauthorised use
and disposition. The internal control system ensures prompt financial
reporting, optimum utilisation of various resources and quick reporting of
deviations. Compliance with laws and regulations is also ensured and
confirmed and is reported in every Board Meeting.
The Company has fully computerised and integrated various financial and
accounting functions, information feed back system of process parameters
and back tracing from finished goods to raw-material stage.
All financial, operating and information technology systems are reviewed
from time to time by the Management.
INDUSTRIAL RELATIONS AND HUMAN RESOURCES
The Company has a proper mix of experienced and youth among its employees.
The Company is committed to provide necessary training and opportunity to
its employees, which helps them to develop themselves to face the future
The company's relations with the employees at all levels are very cordial