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Harbor Network Systems Ltd.

BSE: 531094 Sector: Others
NSE: N.A. ISIN Code: INE021C01014
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Harbor Network Systems Ltd. (HARBORNETWORK) - Director Report

Company director report

HARBOR NETWORK SYSTEMS LIMITED ANNUAL REPORT 2003-2004 DIRECTOR'S REPORT Dear Members, Your Directors present their Twelfth Annual Report and the audited accounts for the period ended 31st March 2004. OPERATION & OUTLOOK Financial Highlight for the year 2003-2004 2002-2003 (Rs.in lakhs) (Rs.in.lakhs) INCOME Sales nil 07.29 Increase/decrease in stock nil (6.44) Other income 0.03 - Total income 0.03 0.85 EXPENDITURE Expenses 15.54 51.23 Interest 0.52 0.34 Depreciation 0.07 0.85 Misc. expenses 2.66 2.74 LOSS FOR THE YEAR 18.76 54.35 PRIOR PERIOD 0.85 0.03 ADJUSTMENTS BALANCE BROUGHT 165.71 111.38 FORWARD FROM PREVIOUS YEAR BALANCE CARRIED 185.32 165.71 FORWARD TO BALANCE SHEET During the year also due to the severe recessionary trend in the economy the company's activities could not progress satisfactorily. The company had been looking for new avenues for Profitable ventures for the survival of the company due to setbacks, in the previous business undertaken in the hardware sector. Towards this end the company took steps to venture into activities in the power sector. The company has been successful in developing its two new products, i.e. RF-AMR (Radio Frequency Automatic Meter Reader) and ESS (Energy Saving Streetlights). The products are in the demonstration stage. The company is also in discussions with various international companies for bringing new technologies in the field of solar Thermal power generation to India. It is hoped that with the huge potential in the energy sector and the encouragement given to the power sector by the Government of India the company will be able to take advantage of the opportunities and turnaround the company in the near future. DIVIDEND The directors do not recommend any dividend during the year. PARTICULARS OF EMPLOYEES During the year there were no employees drawing remuneration attracting the provisions of section 217 (2A) of the Companies Act 1956. DEPOSITS The company had not accepted any fixed deposits attracting the provisions of section 58A of the Companies Act 1956. DIRECTORS Ms. Kshemankari Nadgir retires by rotation and being eligible offers herself for reappointment AUDITORS M/s. Mehta & Parmar Chartered Accountants, the Company's Auditors retire at the conclusion of the ensuing Annual General Meeting and being eligible for re-appointment offer themselves for reappointment. ENERGY CONSERVATION. TECHNOLOGY ABSORPTION. FOREIGN EXCHANGE & OUTGO As the energy consumption was minimal no separate details of the energy consumption is provided in the report. The company had accorded top most priority in conserving the energy wherever possible. The company had not adopted any foreign technology during the year. The company had not spent any foreign exchange during the year. DIRECTORS' RESPONSIBILITY STATEMENT Your Directors State that :- 1. In preparation of the Annual Accounts, the application of Accounting Standards had been followed along with proper explanation relating to material departures. 2. That they had selected such accounting standards, 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 and loss of the company for that period. 3. That they had taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the relevant acts for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. 4. That they had prepared the Annual Accounts on a going concern basis. CORPORATE GOVERNANCE In terms of the requirements of the Stock Exchange the company has constituted the audit committee, shareholders grievance committee, and remuneration committee. It is pertinent to point out that as the company is not a profit-making one, only one independent director was willing to get associated with the company. Hence the constitution of the various committees are done with the directors in the board of directors. Similarly the constitution of the board of directors could not meet the requirement of the Corporate Governance because of the reasons explained above. COMMENTS ON OBSERVATION MADE BY THE AUDITORS The various observations made by the auditors are explained in the notes to the accounts of the company. However the following are some of our explanations in general to the points raised by the auditors. Regarding the non provision of the diminution of the value of investment of Goldhammer Securities Limited, since the said Goldhammer Securities Limited has applied for striking off the name of the company under section 560 of the Companies Act 1956 and the said company has not received any intimation from the Registrar Of Companies, Maharashtra to their application the said amount has not been written of till now. As soon as any intimation is received by the company from the said Goldhammer Securities Limited the company would take necessary action to write off the said investment. Regarding the non provision of interest of Rs.24,96,960/- from Punjab & Surd Bank (PSB) and from Priya Ltd. The above mentioned parties have filed the suit against the company. As the amount due is disputed no provision has been made. PSB had filed suit against the Company in the Debts Recovery Tribunal, which passed order in favour of the Company by dismissing the Bank's suit on merits. The Bank has appealed the DRT's order and the matter is sub judice. In respect of item no 14 of the Annexure to the audit report, there have been delays in the payment of the statutory dues. This has been basically due to certain disputes in those particular returns. The company ensures that such delays would be avoided in future. AUDIT COMMITTEE The audit committee members consisting of Mrs. Kshemankari Nadgir, Dr.Lakshmi Nadgir and Mr. Satish Ailawadi continued to function as the members of the audit committee in the company. SUBSIDIARY COMPANY The subsidiary company has applied for striking off its name from the Registrar of Companies, Maharashtra and are awaiting the response from ROC. As such no activities are conducted by the subsidiary company. The accounts of the subsidiary company are attached with this report. ACKNOWLEDGMENT The directors thank the bankers, shareholders and its customers for the support extended to the company. Mumbai : On behalf of the Board Dated : 30th October, 2004 Kshemankari Nadgir Director MANAGEMENT DISCUSSION AND ANALYSIS Industry Structure During the financial year 2003-2004, India continued to face power shortage and Power Generation continued to be a high priority agenda of the Government, which is encouraging non-conventional electricity generation, energy conservation devices, etc. with financial incentives and preferential treatment. Non-conventional Power generation in the field of solar thermal and energy conservation devices continue to be a greenfield area of business. Outlook on Opportunities, Threats, Risk and Concerns The Power Industry is on the threshold of explosive growth in the coming years. The growth of the shortage of power is indicative of the growth of industry demand. ENERGY & POWER: DEMAND & SUPPLY STATISTICS Category 2000-01* 1999-00 1998-99 1997-98 1996-97 Energy (MU**) Requirement 377680 480430 446584 424505 413490 Availability 349368 450594 420235 390330 365900 Shortage 28312 29836 26349 34175 47590 Shortage % 7.5% 6.2% 5.9% 8.1% 11.5% Power (MW) Peak Demand 74216 72669 67905 65435 63853 Peak Demand Met 65628 63691 58445 58042 52376 Shortage 8588 8978 9460 7393 11477 Shortage % 11.6% 12.4% 13.9% 11.3% 18.0% Source: Tata Statistical Outline 2001-02 *April - December ** Million. Units (1 unit= 1 KWh) Many opportunities exist for power conservation and renewable energy generation. The predominant threat is cheap products available from China and the threat of intellectual property theft. The main market for these products is municipal corporations and utility services, i.e. institutions and public sector organizations that tend to be slow to evolve, accept and approve new products and technologies. Internal Control Systems and Adequacy The Company has adequate Internal Control procedures commensurate with its size and nature of business. The business control procedures ensure efficient use and protection of the resources and compliance with the policies, procedures and statutes. As the Company is still in the take-off stage, the Internal Control systems are not extremely detailed or documented, but they provide for guidelines on efficient utilisation of the Company's resources. Financial Performance The total turnover of the Company for the year under review was nil as against a nominal turnover of Rs. 7 lacs last year. However, the company was involved in R&D activities and successfully developed its two new products, i.e. RF-AMR (Radio Frequency Automatic Meter Reader) and ESS (Energy Saving Streetlights). The products are in the demo stage. The company is also discussing with international companies for new technologies in the field of solar thermal power generation. It is hoped that with the huge potential in the energy sector and the encouragement given to the power sector by the Govt. of India the company will be able to take advantage of opportunities and turnaround the company in the near future. Human Resources The Company is yet to develop its human resources as it has just emerged from the stage of R&D and has not yet embarked on the marketing of its products.