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Micro Technologies (India) Ltd.

BSE: 532494 Sector: IT
NSE: MICROTECH ISIN Code: INE358B01012
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Micro Technologies (India) Ltd. (MICROTECH) - Director Report

Company director report

Directors

Your Directors are pleased to present the Twenty-first Annual Report and the AuditedAccounts for the Financial Year ended September 30 2013.

FINANCIAL RESULTS

The financial performance of your Company for the 18 months ended September 30th 2013is summarized below:

*Previous years' figures have been regrouped wherever necessary to bring them in linewith the current year's representation of figures (Rupees in Lac)

Standalone 18 months period ended September-2013 Standalone 2011-12 Consolidated 18 months period ended September Consolidate 2011-2012
Particulars
Turnover Sales 48253.42 45548.27 105861.44 86188.37
Operating Profit/(Loss) (5034.07) 8422. 75 (2145.51) 21493.18
Less: Interest/Finance Cost 6790.48 2298.94 8823.05 3090.64
Less: Exceptional Items - 1969.01 - 1969.01
Profit/(Loss) Before Tax (PBT) (11824.55) 4154.8 (10968.55) 16433.53
Current Year - Provision for Tax - 823.39 - 2028.95
Deferred Tax - Provision for Tax (723.09) 384.56 (268.46) 1025.29
Income Tax of earlier years - 208.7 (838.63) 208.7
MAT credit entitlement (127.46)
Net Profit/(Loss) before Minority
Interest (11101.46) 2738.15 (9861.46) 13298.05
Less Minority Interest - 303.84
Net Profit/(Loss) after Minority Interest (11101.46) 2738.15 (9861.46) 12994.21
Balance of Profit from previous year 28256.42 25705.7 44936.09 32276.82
Amount available for Appropriation 17154.96 28443.85 35074.63 45271.03
Transferred to General Reserve - -
Proposed Dividend - 161.27 - 288.19
Dividend Tax - 26.16 -

*Previous years' figures have been regrouped wherever necessary to bring them in linewith the current year's representation of figures

REVIEW OF PERFORMANCE

The Year 2012-2013 has been a very challenging year.

On a standalone basis your Company achieved Total Income of Rs. 48253.42 Lac duringthe year under report as against Rs.45548.27 Lac during the previous year representing anincrease of 5.93 %. The Net Profit After Tax stood at Rs. 11101.46 compared to Rs. 2738.15Lac in the previous year.

On a consolidated basis your Company achieved Total Income of Rs. 105861.44 Lac duringthe year under the report and Net Loss After Tax stood at Rs. 9861.46 Lac.

Overall 2012-13 has been a very challenging year. Your Company withstood the globaleconomic downturn stoically. The Company was aggressive in its quest for new contractsexecuted on its full services strategy and maintained pricing discipline. This helped todeliver 5.93% revenue growth for the year along with overall performance.

DIVIDEND

No dividends were declared during the Financial Year 2012-2013.

DEPOSITS

The Company has accepted deposits and complied with the provisions of Section 58A ofthe Companies Act 1956 read with Companies (Acceptance of Deposits) Rules 1975 madethereunder at time of acceptance of deposits.

SUBSIDIARIES

Your Company has two major subsidiaries viz. Micro Secure Solutions Limited and MicroRetail Limited incorporated in 2007 and 2008 respectively. Your Company holds more than90% of the total equity share capital of these companies.

During the period under review the management of the company has taken the followingdecisions. Namely

1.Consolidation of business in MTIL Mumbai- Due to the bad economic scenario resultingin decline of business opportunities resulting in the decline in margin of profit and alsoin some branches incurring of losses the management of the company decided to shift theentire operation of the business and to have the better control on the operation reduction in the operational cost from their branches to Mumbai including taking over ofthe assets liabilities and fixed assets to optimistically utilize there strength inMumbai main subsidiary.

2.Closure shift of foreign branches In view of the losses being incurred and lack ofbusiness opportunities the management has decided to close all the foreign branches one ofthe branches MSSL branch has been closed during the current financial year to start withand balances branches in the current financial year.

3.Discontinuation of some of the verticals of business segment and as a resultaccounting of resultant losses in the books The management of the company due to the badmarket condition and up gradation of the latest technology and certain product gettingoutdated has decided to discontinue certain verticals of the business.

4.Technical and financial evaluation of entire evaluation of entire inventories bothstock n wip and accounting of devaluation in the value of stock due to drastic technicalchange resulting into devaluation of stock of Rs. 5762.27 Lacs on standalone basis.

5.Accounting of long overdue receivable pertaining to disclosure/slowed down businessvertical as bad and doubtful. Giving effect of short provision/non provision ofdepreciation on some of the intangible assets of the company of the FY 2011-12 and givenretrospective effect of the same in the financial result amounting to Rs. 3248.2 lacs fromthe financial result.

DIRECTORS & OFFICERS

1) Mr. Aditya Sekhar has been appointed as an Additional Director and as Joint ManagingDirector w.e.f 1st October 2012 and then he was designated as the Chairman and ManagingDirector of the company w.e.f. 19th May 2013. Dr. P Sekhar Founder Chairman &Managing Director has retired w.e.f 19th May 2013. He is now the Chairman Emeritus of theCompany.

2) Ms. Jayanthi Sekhar Executive Director of the Company resigned from the office ofdirectorship w.e.f 13th August 2013 and Mr. Ganapathy V is appointed as Whole TimeDirector of the Company w.e.f 13th August 2013.

3) Mr. A.R.Kale Dr. R.S. Deshmukh and Mr. Prakash Bhave Independent Directorsresigned from the office w.e.f. 30th May 2013 13th August 2013 and 26th April 2013respectively. Mr. Raghvendra Raichur alternate director to Prof. Paul Jerome ColemanIndependent Director resigned from the office of alternate directorship w.e.f 26th April2013.

4) Mr. Sudhir Koppikar Mr. Bhavin Parikh and Mr. Satya Swaroop were appointed asIndependent Directors of the Company w.e.f. 26th April 2013 26th April 2013 and 13thAugust 2013 respectively.

5) Ms. Neha Gaur Company Secretary and Compliance Officer of the Company resigned fromthe office w.e.f. 28th February 2013 and Mr Ganapathy V was appointed as ComplianceOfficer w.e.f. 25th July 2013.

6) Mr. Paul Jerome Coleman Jr. Director of the Company who retires by rotation andbeing eligible offers himself for re-appointment at this ensuing Annual General Meeting.Your directors recommend his re-appointment.

MATERIAL CHANGES AND COMMITMENTS DURING THE YEAR:

1.Capital Work-In-Progress (CWIP)

Capital Work-In-Progress (CWIP) includes tangible assets of Rs. 67.92 cr. is formanaging commercial property at Vashi Navi Mumbai. The expenditure incurred ispreliminary in nature and the same would be capitalized and allocated project wise.

The Directors have considered the probability of the project proceeding by assessingthe commercial viability of the project the expectation of obtaining finance and therequirements of the regulatory processes.

Some facilities / assets do remain idle for some time due to technical or economicalreason. Sometimes it requires considerable time to bring the assets for its intended use.However idle assets no longer required are expensed after proper scrutiny at the yearend.

2. Inventory/Work -In-Progress

Company has invested heavily and carrying inventory worth 645.60 Cr on consolidatedbasis after technical evaluation and based on expert opinion. Management is confident ofrealizing the value with certain required investment to keep upto date the said inventory.If realized the value of realization shall not be less than the amount stated in books ofaccount.

3. Human Resources Development

Your company's human resource strategies and practices are designed to ensure that theyintegrate with and support the corporate business strategies of your company. The Boardwishes to place on record its appreciation of the contribution made by all employees inensuring a high level of performance for the growth and development of the company duringthe year.

4. Extraordinary General Meeting

Your Company has not convened any Extra-ordinary General Meeting (EGM) during thisperiod from the last AGM.

5. Delisting/Fresh listing of Securities

The shares of your company will continue to be listed on the Bombay Stock Exchange(BSE) and the National Stock exchange (NSE) which has nation-wide trading terminals andtherefore provides full liquidity to the investors.

The details regarding conversion of FCCB to be mentioned The number of FCCBsoutstanding as on September 30 2013 are 120.

6. Directors' Responsibility Statement

As required by sub-section (2AA) of Section 217 of the Companies Act 1956 theDirectors state:

(a)That in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;

(b)That the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of your Company at the end of theSeptember 30th 2013 and of the profit or loss of your Company for the period;

(c)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 your Company and for preventing and detecting fraud andother irregularities; and

(d)That the Directors had prepared the annual accounts on a going concern basis.

7.Consolidated Financial Statements

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statementsread with Accounting Standard AS-23 on Accounting for Investments in Associates theaudited Consolidated Financial Statements are provided in the Annual Report.

PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT

As per Section 212 (8) of the Companies Act 1956 the Company vide a Board Resolutionpassed on 29th November 2013 has been exempted from attaching the Directors' ReportBalance Sheet and Profit and Loss Account of our subsidiaries such as an attachment ashowever we present the Audited Consolidated Financial Statements in the Annual Report.Accordingly the Annual Report does not contain the Financial Statements of thesesubsidiaries. We will make available the Audited Annual Accounts and related informationof subsidiaries where applicable upon request by any of our investors. These documentswill also be available for inspection during business hours at our Registered Office atMahape Navi Mumbai Maharashtra and also at the Registered Office of the subsidiaries atAndheri Mumbai Maharashtra.

CORPORATE GOVERNANCE

Your Company is committed to maintaining the highest standards of Corporate Governance.The Directors adhere to the requirements set out by the Securities and Exchange Board ofIndia's and the Stock Exchange's Corporate Governance practices and have implemented allthe stipulations prescribed. Your Company has implemented several best corporategovernance practices as prevalent globally. The Report on Corporate Governance asstipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

Further the Company has also engaged the world renowned Legal Consultants LEGASISwhich stands for Legal Systems and Integrated Solutions. Legasis is a process-drivenorganization and stands apart from other LPO companies because of its distinctiveIT-enabled legal support services. Legasis' core strength lies in its ability to delivervalue to law firms and corporate counsels by leveraging the industry expertise and legalframework. They provide the following services: Legal Research Document Review ContractManagement Legal & Regulatory Compliance Management Due Diligence Support IPRSupport Services Litigation Support Document Management and Corporate SecretaryServices.

AUDITORS

The Auditors M/s. Laxmikant Kabra & Co Chartered Accountants Thane haveexpressed their willingness for re-appointment as auditors of your Company at the ensuringAnnual General Meeting. The certificate from M/s Laxmikant Kabra & Co CharteredAccountants Thane has been received to the effect that their appointment if made wouldbe within the limits as prescribed under Section 224(1B) of the Companies Act 1956.

ACKNOWLEDGMENTS

Your Directors wish to express their appreciation of the continued co-operation andsupport of the Central and State Governments Bankers Financial Institutions CustomersDealers Suppliers Consultants and all the Shareholders. The Directors also acknowledgeand thank all the employees for their hard work dedication and commitment.

For and on behalf of the Board of Directors

Sd/-

Aditya Sekhar

Chairman & Managing Director

Place: Navi Mumbai 29th November 2013

ANNEXURE TO THE DIRECTORS' REPORT

Particulars as prescribed under section 217 (1) (e) of the Companies Act 1956 readwith the Companies (Disclosure of continued Particulars in the Report of Board ofDirectors) Rules 1988:

Conservation of energy and Foreign exchange earnings and outgo:

The operations of your company are not energy intensive. Your Company evaluates on anongoing basis new Technologies and Techniques to make infrastructure more energyefficient. Investments are made on a continuous basis to reduce energy consumption.

The information on foreign exchange earnings and outgo are contained in the notes tothe accounts in schedule R. Your Company continues to strive to improve its exportearnings.

Development Technology absorption Adaptation and Innovation

Your Company has continually invested into efforts for developing technologies andproducts for affordable and high end security products. A number of products that were ITenabled security and messaging focused was introduced during the year and has beenactively accepted by the global market. Your company has also partnered with the localgovernments and corporate in developing products that addressed specific local needs.

Benefits Derived From Product Development

As a result of the Company's Product Development activities it has been able to retainits technological leadership achieve cost reduction and retain customer acceptancedespite working capital constraints. Improving export business with development ofcustomer specific OTC (Over the Counter) Products. Your Company has achieved a brand imagein customer's perception as an innovative and research -oriented company.

Future Plan of Action

In line with the Product Development road map and to put the Division on a fast trackMicro Technology has entered into agreements with a number of global technology companiesto bring latest & appropriate technologies. These products will drive the cost ofsecurity down by promoting mass multiplication.

Fixed Asset Valuation:

All fixed assets are valued at cost less depreciation. During the year under reviewyour company has upgraded the technologies and accordingly procured the latest new /upgraded version. It has aided your company to upgrade the product versions and also todevelop new product lines enabling it to increase its market penetration. Furthermoreyour company has increased / improved the economic valuation through vertical integrationof modules enabling an efficient turnaround time of newer product technologies.Considering the optimal maximum utilization of its assets and to keep the technologiesupgraded certain depreciable assets have been replaced and restructured with better andnewer technologies to gain higher economic benefits and quicker commercial results. Tomatch with these new and improved versions of technologies your company has restructuredits uneconomical assets by replacing them with the economical ones.

Particulars of Employees

The information required under provisions of sub-section (2A) of Section 217 of theCompanies Act 1956 read with Companies (Disclosures Of Particulars In The Report Of Boardof Directors) Rules 1988 and forming part of the reports annexed hereto.

Employees employed throughout the financial year and in receipt of the remunerationexceeding Rs. 6000000/- p.a. in Maharashtra and also at the Registered Office of thesubsidiaries in Andheri Mumbai Maharashtra.

Sr. No. Name Qualifications & Age in Years Designation/ Nature of Duties

Remuneration Receivable/ Received (Rs.) During the Financial Year 2012-13

Date of Commencement of Employment Last Employment
1. Mr. Aditya Sekhar Chairman & Managing Director w.e.f. 19th May 2013 Gross Rs. 964256 Net Rs. 699256 1st October 2012 Managing Director
2. Dr. P. Sekhar Chairman & Managing Director (Till 19th May 2013) Rs. 619105 Rs. 433374 Since Incorporation Director of 1st Technology Park
3. Mrs. Jayanthi Sekhar Whole Time Director (Till 13th August 2013) Rs. 302000 Rs. 211400 Since Incorporation NA

 

For and on behalf of the Board of Directors Place: Navi Mumbai
Sd/- Date: 29th November 2013
Aditya Sekhar
Chairman & Managing Director