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Company director report

M.P. TELELINKS LIMITED ANNUAL REPORT 2008-2009 DIRECTOR'S REPORT Dear Members, 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 March, 2009 FINANCIAL RESULTS: (Rs. in Lac) Year Ended Year Ended Particulars 31.03.2009 31.03.2008 Gross Sales 1439.56 3537.33 Net Sales 1234.96 2993.53 Other Income 1.49 3.94 Total Expenditure 1360.23 3420.38 Operating Profit / (Loss) before Interest, Depreciation and Tax (123.78) (422.91) Interest Received / (Paid) (255.38) (66.99) Gross Profit / (Loss) after Interest but before Depreciation and Tax (379.16) (489.90) Depreciation (126.50) (130.54) Profit / (Loss) Before Tax (505.66) (620.44) Provision for Tax / FBT (0.70) (0.97) Profit / (Loss) After Tax (506.36) (621.41) Balance brought forward from previous year (1464.53) (843.12) Balance carried to Balance Sheet (1970.89) (1464.53) Year in retrospect: Your Directors regretfully place on record that the financial statement for the year 2008-09 reflect significant decline in the sales as compared to the last year and the bottomline reveal continuous losses due to non- utilisation of plant capacity. The Company had to discontinue the manufacture of PIJF Cables, in view of its low demand and unrealistic prices, consequent to cut throat competition on account of excess capacity amongst the cable players. It could be evidenced from the financial statements, that the Company is incurring continuous losses during the last 5-6 years and in turn, the Company is facing severe financial difficulties and not able to fulfill the payment of statutory dues viz. commercial tax on time. The Company is seriously pursuing the company bankers' for higher limits of working capital facilities. On the other hand, the promoters too are having plans to infuse additional long term funds to meet out the financial obligations that may arise in the near future. The Audited Balance Sheet of the Company for the financial year shows that its accumulated losses as at the end of the financial year have exceeded its net worth as at the same date. The Board of the Company shall consider the said fact along with applicability of, and compliance required with the provisions of Sick Industrial Companies (Special Provision) Act, 1985 at its next meeting. The Company has been laying emphasis on the products viz. Quad Cables and Power Cables. Although, the Company could procure orders in the past, of smaller quantities from the Railways for Quad Cables, the encouraging factors that revealed recently, indicate that the Company's status as far as eligibility to procure big orders are concerned, have been upgraded by the Indian Railways and hence, in the ensuing year, the Company is optimistic that orders for large quantity could flow in, from the Railways. The demand of the Railways for this product is high due to overall expansion of the railway network across the country and hence, with the flow of valued orders, the topline is expected to scale up in the next year. Similarly, in the Power Cables, the silver lining is that the Company had got the approval for its status to manufacture high voltage cables in the range of 33 KV and with this recognition in the background, the Company would strive in the next year to procure value added orders for Power Cables, thereby contributing to the topline growth to a level of Rs.30-35 Crore. Dividend: Your Directors do not recommend dividend for the year 2008-09 in view of continuous losses. Corporate Governance: Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and Analysis, Corporate conditions of Corporate Governance are made part of the Annual Report. Directors' Responsibility Statement: Pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors report as under: (i) the applicable Accounting Standards as specified by the Institute of Chartered Accountants of India have been followed in the preparation of the Annual Accounts for the year ended 31st March 2009; (ii) that the Company has selected such Accounting policies and applied them consistently (read with Notes) and made judgements 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 ended 31 March 2009 and of the loss for the year ended 31 March, 2009; (iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting. records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) That the Directors have prepared the Annual Accounts on a going concern basis. Directors: Shnd K.M. Gupta, retires by rotation at this Annual General Meeting and is eligible for re-appointment Shri Prahodh Mahajan, retires by rotation at this Annual General Meeting and is eligible for re-appointment. Auditors: Ws V. Bapna & Co. Chartered Accountants, Auditors of the Company retires at the ensuing Annual General Meeting and being eligible have offered themselves for reappointment. The notes to the accounts referred to in the Auditors Report are self-explanatory and, therefore, do not call for any further, comments. STATUTORY INFORMATION; Information on Conservation of Energy Technology Absorption, Foreign, Exchange, Earning and Outgo required to be disclosed under. Section 217 (I) (e) of the Gwallor Companies Act, 1956 is annexed hereto arui form of the Director's Report. PERSONNEL; The Board of Directors wish to express its appreciation to all the employees of the Company for their continued contribution to the operations of the Company during the year despite adverse conditions. Particulars; of employees in accordance with the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of the Employees) Rules 1975 as amended, are not given, as none of the employees qualify for such disclosure. FIXED DEPOSITS: The Company has not accepted any fixed deposits during the year under review. ACKNOWLEDGEMENT: Your Directors wish to place on record its gratitude for the continued support from its bankers and other Govt. Departments. Your Directors are also grateful to members for the confidence reposed in the Company and acknowledge their contribution. On Behalf of the Board KASHIRAM GUPTA Chairman Gwallor April 16, 2009 ANNEXURE TO DIRECTORS' REPORT Information under Section 217 (1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors' Report for the year ended 31st March 2009: (A) CONSERVATION OF ENERGY: (i) Energy conservation measures taken: The Company's products are material intensive. However, adequate and appropriate measures are being taken for saving energy / reduction of consumption of energy at floor level by adopting preventive measures. All energy conservative measures are adopted at the time of installation of additional machinery (ii) Additional investments and proposals, if any, being implemented for reduction of consumption of energy; No major investments are envisaged / contemplated. (iii) Impact of measures at (i) and (ii) above for reduction of energy consumption and consequent impact on the cost of production of goods: The above measures have resulted in savings of energy and reduction in mfg. Cost wherever power oriented processes are involved. (B) TECHNOLOGY ABSORPTION: (Particulars as per form B) Research and Development (R & D) (1) Specific areas in which R & D carried out by the Company: i) Import substitution of auxiliary equipment & Spares. ii) Quality Improvement and design & development of products as per emerging technical standards in power cables. (2) Benefits derived as a result of the above R & D: i) Successful launch of new products by usage of improved Production Methods. (ii) Reduction in operational cost, (iii) Quality Improvement and reduction in scrap. (3) Future plan of Action; To strive / innovate means of production to derive maximum business potential with judicious employment of resources, wherever necessary, with focused strategy on growth. (4) Expenditure on R & D : NIL a) Capital: Separate Account of expenditure is not maintained and the expenses are merged with relevant heads of expenditure. b) Recurring : NIL c) Total : NIL d) Total R & D Expenditure as a percentage of total Turnover : NIL (C)TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION: 1) Efforts in brief, made towards technology : NIL absorption, adaptation and innovation. 2) Benefits derived as a result of the above : NIL efforts, e.g., Product improvements, cost reduction, product development, import substitution etc. 3) Information regarding imported technology a) Technology imported : NIL b) Year of import : NIL c) Has technology been fully absorbed : NIL d) If not fully absorbed, areas where this has not taken place. : NIL (D) FOREIGN EXCHANGE EARNINGS AND OUTGO: a) Foreign Exchange Earned : NIL b) Foreign Exchange Outgo : Rs.204.41 Lac - Purchase of Raw Materials CERTIFICATE OF COMPLIANCE WITH THE CODE OF CONDUCT: As provided under Clause 49 of the Listing Agreement relating to Corporate Governance with the Stock Exchanges, all the Board of Members and the Senior Management Personnel of the Company have affirmed compliance with the Company's Code of Conduct during the financial year 2008-09. On Behalf of the Board Gwalior KASHIRAM GUPTA April 16, 2009 Chairman MANAGEMENT DISCUSSION AND ANALYSIS Industry Structure and Developments: The Company was established for the manufacture of Polyethylene Insulated Jelly Filled Telephone (PIJF) Cables. Although the business of PIJF Cables was running on sound footing, out of the blue, there was all round technical upgradation in the telecom industry, and the govt's keenness to introduce WLL Technology and the entry of private corporates' in the mobile phones, had rendered the PIN Cables as an obsolescent product. The slackness of demand from the main customers viz. BSNL had further shrinked the market demand drastically. In view of this adverse market scenario, the Company had discontinued the manufacturing operation of PIJF Cables and desired to penetrate into other diversified supply of cables viz, Quad / Power Cables. basically, the Quad Cables are supplied to the Railways and the Power Cables are supplied to private corporate utilities SEBs. During the last few years, the Company was able to supply both Quad and Power Cables consistently, although in limited quantity of cables. The silver lining in the dark clouds is that due to our technical upgradation, the railways have elevated our supplier grade and accordingly, the Company stands eligible now, to procure for a larger quantity of Quad Cables and this turn of event, would eventually bear fruit, enhancing the volume of sales during the current year. Simultaneously, the management had desired to attain optimum utilization of the existing infrastructural facilities by way of manufacturing Power Cables, a branch line in the Cables family. The Company have got its technical upgradation to manufacture high voltage cable of 33 KV and consequently, this would scale up the turnover curve in the current year, at a level Rs.30-35 Crore. It is pertinent to note that the Central Govt., has ambitious plans in the current Five Year Plan to allocate sizable plan outlay for the development of infrastructure facilities that include generation / distribution / transmission of power and to add to this, gates were opened for the private corporates to equally participate in power line development and the overall booming industrial development across the country would all contribute to the bright future for the supply of Power Cables. The Company is seriously pursuing the Company bankers' to grant higher limits of working capital facilities, so as to meet the emerging needs to service the growing Quad Cables/Power Cables production lines. The promoters too have plans to infuse additional funds to meet the long term requirements of the Company in the years ahead. Financial Review: In terms of requirements of Companies Act, 1956, the Financial Statements have been prepared, taking cognizance of applicable Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI). (a) The current year's sales and Job work receipts of Rs.1439.56 Lac has declined considerably, as compared to previous year's sates of Rs.3537.33 lac due to global economic recession, followed by restricted quantity requirements from the customers. (b) Inventories amounted to Rs.183.23 lac as at 31.03.2009 as against Rs.138.10 lac as at the previous year end. The obsolete and unserviceable items in the inventory stock have been adequately dealt with in the accounts. (c) Sundry Debtors amounting to Rs.156.12 lac as at 31.03.2009 as against Rs.1267.36 lac as at 31.03.2008. Action Plan is being enforced in the realization of receivables within the stipulated credit period to ease out the severe cash flow position of the Company. (d) Cash and Bank Balances with Scheduled Banks amounted to Rs.12.20 Lac at the year end. (e) Loans and Advances, other than balances with excise dept / tax deducted at source as at 31.03.2009 amounted to Rs.43.59 lac as against Rs.46.73 Lac that represent advances paid for raw materials, stores and consumables and advances to employees, and security deposits as well as advances to others. (f) Current Liabilities as at 31.03.2009 include creditors for raw materials of Rs.207.10 lac as against Rs.805.85 lac at the end of the previous year. Human Resource Development: It is our strong conception that machine tools alone cannot build an industry without coordinated application of human skills. The Management of company encourages and support its employees at all levels so as to ensure that their skill and efficiency are reflected in the Company's business growth. The management strives to ensure that the quality of life of its employees is properly taken care of, by providing safe and clean working atmosphere. Industrial relations have continued to be cordial and amicable through out the year.