HOTLINE GLASS LIMITED
ANNUAL REPORT 2006
Hotline Glass Limited
Your Directors are pleased to present the Fifteenth Annual Report together
with the Audited Statement of Accounts of the company for the year ended
31st December 2006.
(Rs. In Lacs)
Particulars Year ended Year ended
31st December 2006 31st March 2006
Sales and Other Income 843 6420
Financial Expenses (10196) 571
Financial Expenses 1052 291
Cash Profit / (Cash Loss) (11248) 280
Depreciation & Misc. Exp. w. off 808 495
Net Profit/(Loss) before tax (12056) (215)
Tax Including FBT: 2 13
Deferred Tax: (1241) (57)
Net Profit/(Loss) After Tax (10817) (171)
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to sub section (2AA) of section 217 of the Companies Act, 1956 the
Board of Directors of the company hereby state and confirm that:
(i) In the preparation of Annual Accounts for the year ended 31st December
2006, the applicable accounting standards have been followed.
(ii) The financial statements do give a true and fair view of the state of
affairs of the company for the financial year ended 31s, December 2006 and
your directors have selected and applied the consistent accounting policies
and the judgment and estimates made therein are reasonable and prudent.
(iii) 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 have been ensured.
(iv) The Annual Accounts for the year ended 31st December 2006 have been
prepared on a going concern basis.
As you are aware, Company has been facing problems and incurring losses due
to faulty Government policy of allowing import of Colour picture tubes
under Free Trade Agreement (FTA) with Thailand, at concessional rate of
duty since September 2004 and at zero duty since September 2006. Due to
this policy Hotline CPT Limited, the only buyer, has incurred huge losses.
Hotline CPT Limited was not able to arrange for funds also which resulted
in total stoppage of production and their demand for funnels.
During the current period Company also received letter from Stressed Asset
Stabilization Fund revoking One Time Settlement scheme. Due to this, the
Company had to provide entire amount of simple interest on IDBI loan.
Your company was initially producing Black and White tube Glass Parts.
However, due to shift in demand from Black & white to Colour TV, for
survival of the company, it had to convert the plant from Black & white
Glass Parts to Colour Funnel Plant. This entailed an expenditure of approx.
Rs. 20 crores. Despite requesting Banks and Institutions, no funding was
provided by them and the conversion had to be done through internal
resources. As the funnels were supplied to Hotline CPT Limited, a company
promoted by your company, the company could survive. CPT manufacturers
prefer to buy both Panel & Funnel for tube from one source. It is pertinent
to note that in whole value chain from colour glass to colour picture tubes
to Colour TV the maximum value addition is in Colour Glass (Panel &
Funnel). Because of the competitive nature of the TV industry, on account
of emerging new technologies, government policy of allowing imports of
Colour Picture Tubes at zero duty, it became imperative for the company to
venture into Colour Panel Project. By implementing this project your
company could have emerged as profit making and customer centric company.
Although the technology for manufacturing Glass Panels was scarce, your
company could tie up with LG Philips U.K. for plant and technology.
Your company appointed SREI Capital Market fox arranging funds for panel
project who could arrange only a small part of the total loan requirement.
Despite best efforts funds for the project could not be arranged and the
company had to make necessary provision for impairment of assets.
Company had invested Rs. 27 crores in promoting Hotline CPT Limited. Due to
adverse government policy Hotline CPT Limited lost its entire net worth.
The Company is also registered with BIFR. In view of this a provision of
50% is made in the investment.
Further a sum of Rs.46.84 crores are recoverable from Hotline CPT Limited.
Considering the fact that Hotline CPT Limited has made continuous losses
and is unable to pay its debts a provision of 40% is considered necessary
by the Board.
As a result of continuous losses, the entire net worth of the Company has
been eroded and Company has become a Sick Industrial Company with in the
meaning of Section 3(1)(a) of Sick Industrial Companies Act, 1985. The
Board of Directors have made an opinion that a reference should be filed at
the earliest before Hon'able BIFR for the purpose of revival of the
In view of losses in the current year your directors are not recommending
The CPT Industry witnessed sharp decline in the prices as a result of
Government's policy to include Colour TV and Colour Picture Tubes in Early
Harvest Scheme of Free Trade Agreement (FTA) with Thailand. Under the FTA,
TV and tubes can now be imported at Zero duty. As your company is
manufacturing glass parts for Colour Picture Tubes and there is good demand
for Colour Picture Tubes in India, once the Government policy is corrected,
the Company operations can revive.
A separate section on Corporate Governance and a Certificate from the
Auditors of the Company regarding compliance of conditions of Corporate
Governance as stipulated under Clause 49 of the Listing Agreement with the
Stock Exchanges, form part of the Annual Report.
The company has not accepted any fixed deposit from the public during the
At present the shares of company are listed on The Stock Exchange, Mumbai.
The company has paid the listing fees of The Stock Exchange, Mumbai for the
year 2006-2007. The company has completed all the formalities for de-
listing from Calcutta and Madhya Pradesh Stock Exchange.
Mr. D. C. Mathur retires by rotation and being eligible; offer himself for
reappointment at the ensuing Annual General Meeting.
During the year ended 31.12.2006 Mr. Sanjiv Narayan, Mr. Anuj Gupta, Mr.
M.P. Rajan, Mr. G.L. Modi & Mr. Ram K. Gupta resigned from the Board. On
13th January 2007 Mr. Anuj Gupta and Mr. Rajneesh Malhotra were appointed
as additional Director and Mr. V.N. Masaldan resigned w.e.f. 14th January
Brief resume of the Directors appointed / reappointed, as stipulated under
Clause 49 of the Listing Agreement with the Stock Exchanges, are given in
Corporate Governance Report forming part of the Annual Report.
M/s. S. S. Kothari Mehta & Co., Chartered Accountants, Delhi, Statutory
Auditors of the Company retire as Auditors of the Company at the
forthcoming Annual General Meeting and being eligible, offer themselves for
reappointment. The Audit Committee of directors at its meeting held has
recommended continuing the appointment of M/s. S. S. Kothari Mehta & Co. as
statutory auditors of the Company.
OBSERVATION OF AUDITORS
The observations of Auditors are self explanatory and / or have been
suitably explained in the notes to the Accounts.
PARTICULAR OF EMPLOYEES
None of the employees is covered under section 217 (2A) of the Companies
Act, 1956 and rules framed there under.
INFORMATION OF ENERGY CONSERVATION, TECHNOLOGY ABSORBTION AND FOREIGN
EXCHANGE EARNINGS AND OUTFLOW
As per annexure.
Your directors wish to place on record their sincere appreciation for
continuous co-operation, support and assistance provided by shareholder,
banks, government bodies, customers, dealers and suppliers of the company.
Your directors also wish to place on record their appreciation for the
dedicated services rendered by the employees of the Company.
FOR AND ON BEHALF OF BOARD OF DIRECTORS
CHAIRMAN & MANAGING DIRECTOR
PLACE : NEW DELHI
DATE : 16TH FEBRUARY, 2007
INFORMATION ON ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN
EXCHANGE EARNINGS & OUTFLOW
POWER & FUEL CONSUMPTION
CURRENT YEAR PREV.YEAR
Units (KWH) 1023750 4741650
Total Amount (Rs. in lacs) 68.82 222.68
Rate / Unit (Rs.) 6.72 4.70
b. Own Generation
(Through Diesel Generator)
Units (KWH) 18700 1274860
Units per Ltr. of Diesel Oil 4.88 3.69
Cost / Unit (Rs.) 7.68 8.14
2. H.S.D. FOR FURNACE
Quantity (K.L.) 9.300 157.037
Total Cost (Rs. in lacs) 2.55 43.12
Rate / Unit (Rs. per K.L.) 27453.62 27458.42
3. F.O. / L.D.O. FOR FURNACE
Quantity (K.L.) 162.578 1850.051
Total Cost (Rs. in lacs) 29.36 326.82
Rate / Unit (Rs. per K.L.) 18059.49 17665.52
Quantity (M.T.) 112.82 433.658
Total Cost (Rs. in lacs) 34.21 133.94
Rate / Unit (Rs. per M.T.) 30323.68 30887.22
CONSUMPTION PER UNIT OF PRODUCTION
PRODUCT - GLASS PARTS PANEL / FUNNEL STANDARDS THIS PREVIOUS
(IF ANY) YEAR YEAR
- ELECTRICITY N.A. 0.00 KWH 5.81 KWH
- H.S.D. & L.D.O. N.A. 0.00 LTR 2.09 LTR
- PROPANE N.A. 0.00 KG 0.42 KG
B. RESEARCH & DEVELOPMENT
The company has strong Research & Development base. However due to very
limited operations during the year there has been no significant change in
the production techniques.
C. FOREIGN EXCHANGE EARNING / OUTFLOW
Total foreign exchange outflow by Company during the period is Rs. 26.09
lacs for import of Raw Materials.
Management discussion and Analysis Report
- Industry Structure and Development - The business of the company is
directly related to the business of TV Industry. The company is producing
Glass parts for Colour Picture Tubes. The business of the company is
dependent upon the working of Hotline CPT Ltd to whom it has been supplying
- Opportunities and Threats - Lower penetration level in domestic market
creates good opportunity for the company as demand for TV is expected to go
up with the rural electrification. The expected increase in demand,
especially in rural area, is an opportunity for the company to manufacture
Glass Parts for Colour TV.
The company is facing threat due to lowering of duties on Colour Picture
Tubes under Free Trade Agreement with Thailand. As per the Free Trade
Agreement the rate of Import duty has gone down to 0% w.e.f. September
2006. This has seriously affected the working of Hotline CPT Ltd, which in
turns has adversely affected the business of our company. Further non
availability of funds to Hotline CPT Ltd has hampered the production of
Hotline CPT and its operations have come to a grinding halt. Due to this
there is no demand from
Hotline CPT Limited
- Segment wise or Product wise performance - The Company has been engaged
in the production of Glass Parts for Television Picture Tube and in trading
of Picture Tube Parts. The segment wise results are discussed in detail in
notes to accounts.
- Outlook - Though the outlook of TV Industry appears to be a good in long
run, non availability of funds to Hotline CPT Ltd and government policy of
allowing Import for Colour Picture Tube at zero duty under Free Trade
Agreement from Thailand has seriously affected the business of the Company.
Despite best efforts from the Company, funds are not provided by Banks,
Institutions for Panel Project. The company has also tried for financing
from private funds. However till date the financial closure could not be
done. In the absence of funding it is doubtful if the panel project could
be started. Accordingly necessary provision is made in accounts for
impairment of plant, as per accounting standards.
- Risks and Concerns - The biggest risk for the company is stoppage of
production of Hotline CPT Ltd., which has been caused by lowering of prices
of Colour Picture Tubes due the Free Trade Agreement with Thailand. It has
been informed that Hotline CPT Ltd. tried for funds to run its operation.
However even after making detail study, no bank provided need base funds to
Hotline CPT Ltd. This resulted in stoppage of the production of Hotline CPT
Ltd. As there is no demand of Hotline CPT Ltd., the production of Hotline
Glass Ltd. is also stopped.
- Internal Control Systems and their adequacy - The Company has internal
control system and procedures commensurate with its size and nature of
business. The internal control systems are supported by internal audit
carried out internally. The adequacy and effectiveness of the internal
control, as well as compliance with the laid down systems and policies are
comprehensively monitored by the internal auditors.
The Internal Audit Reports of the Internal Auditors are discussed at the
Audit Committee Meetings and appropriate corrective steps have been taken.
- Discussions on financial performance with respect to operational
performance - During the year under review, the company have incurred a net
loss before tax of Rs.120.56 Crores as against net loss before tax of
Rs. 2.15 Crores in the year,2005-2006. The losses are high due to low
volume of production caused by low demand. Further the company has made
provisions for impairment of Glass Panel Equipments, investment in Hotline
CPT Limited and for the amount recoverable from Hotline CPT Limited as
explained in the notes to accounts.
- Material developments in Human Resources / Industrial Relations front,
including number of people employed - Your Company believes in employee's
involvement in achieving the organizational objectives and focused its
efforts to upgrade the skills of its workforce to take up the challenges in
present cutthroat competition.
Your company is conscious and committed in providing equal opportunities to
the employees to excel in their work and advance themselves in their career
depending on their abilities.
The company provides in-house training to its employees and maintaining
safety and healthy environment for workers working within the factory
The company employs 346 workers. As a result of sound Human Resources
policies the industrial as well as labour relations have been good and