PENTAFOUR SOLEC TECHNOLOGY LIMITED
ANNUAL REPORT 2002-2003
TO THE MEMBERS
Your Directors' have pleasure in presenting the Tenth Annual Report of the
company and the audited statement of accounts for the period ended March
SUMMARISED FINANCIAL RESULTS
(Rupees in lakhs)
Period ended Period ended
Mar. 31,2003 Dec. 31,2001
Sales/ Income 16.30 95.27
Profit/(Loss) before interest, depreciation & tax (318.07) (501.69)
Profit/(Loss) before depreciation & tax (753.85) (979.83)
Depreciation 291.17 291.15
Profit/(Loss) before tax (1045.03) (1270.98)
Provision for tax Nil Nil
Profit/(Loss) after tax (1045.03) (1270.98)
Add : Surplus/(Deficit) brought forward
from previous year (1028.90) 242.08
Surplus/( Deficit) carried forward (2073.93) 1028.90
RESERVES & SURPLUS
The unadjusted reserves and surplus of the company stood at Rs.155 lakhs as
at March 31, 2003; the accumulated loss has exceeded the entire gross net
worth (paid up equity share capital plus reserves and surplus) of the
The company filed its application with the Board for Industrial & Financial
Reconstruction (BIFR) and the same was registered as Case No.346/2002. The
company is formulating a detailed scheme for consideration by the Board for
Industrial and Financial Reconstruction for rehabilitation, restructuring
and revival of the business operations of the company.
The operations at the Plant remained suspended throughout the period, due
to the delay in tie up of funds operations could not be revived. The loss
suffered by the company in the preceding financial years and delay in
infusion of envisaged funds during the year has resulted in severe cash
crunch. The net loss posted during the year has been comparatively higher
due to diminution in value of inventory and slump sales, the high incidence
of interest and financial charges associated with the Cell Line (Phase II)
with no corresponding revenue accruing on the investments made on this
backward integration. The performance of the company during the period
under review should be viewed in the backdrop of these events.
The banks and financial institutions have recalled the facilities and
advances besides initiating judicial and recovery proceedings against the
immovable properties of the company. The absence of adequate working
capital has resulted in delay in settlement/payment of employee related
dues including provident fund and other statutory dues. However, periodic
payments are being made to reduce the outstandings. As a measure of
austerity the company has thoroughly reviewed its manpower requirements and
has retained the services of only those which are presently essential.
Negotiation and crystallization of liabilities with banks and financial
institutions would be initiated. Significant concessions, reduction in
liabilities and savings in interest' costs are expected to accrue as a
result of this exercise, appropriate adjustments have been made in the
financial statements to reflect these changes, the liabilities have been
Your directors propose to seek rescheduling the repayment of term loans and
other concessions in the interest on term loan and working capital loans
from the financial institutions and banks. With the industry showing signs
of recovery your directors are confident of turning around from the
sickness and achieving positive net worth within the next five years.
There has been an upward trend in global awareness and appreciation for the
need to harness energy through environment friendly non-conventional
methods. Worldwide, significant research and development activities are
underway in the field of solar photo voltaic. With the infrastructure
industry registering positive growth rates the solar photo voltaic segment
is poised for accelerated growth. The Projected growth in world demand for
SPV by European Photo voltaic Industry Association (EPIA) has been
encouraging. The current estimates are approx. 225 MW in year 2003, 550 MW
in year 2005 and 1800 MW in 2010. The global installed capacity for solar
photo voltaic is 225 MW. While the domestic installed capacity is 20 MW.
The company has an installed capacity of 3 MW.
Adequate steps are being taken not only to restructure and revive the
operations of the company but also embark upon upgradation of the existing
facilities besides exercising strict control over cost, adopting austerity
measures and reducing the employees strength.
With the proposed package for rehabilitation of your company and support
from bankers and financial institutions, your directors are optimistic of
achieving better performance. Your directors are confident that the company
will be in a position to meet the challenges of the future with the support
of its bankers and financial institutions. The future of the company would
largely depend on the rehabilitation package and anticipated infusion of
adequate working capital.
At the annual general meeting of the company held on June 29, 2001 members
of the company have accorded their consent in terms of section 293 (1)(a)
of the Companies Act, 1956 and other applicable provisions to empower the
Board to carry out such restructuring of its business operations, in the
process may sell, lease or otherwise dispose off its assets as they may
The members of the company at the previous annual general meeting held on
June 29,2001 have accorded their consent to the board of directors of the
company for raising resources by way of offer, issue and allotment of
securities in the aggregate not exceeding US Dollars 15 million or
equivalent in Indian rupees (excluding the sums raised by way of premium).
Due to the prevailing tight monetary conditions in the domestic and
international markets the board deemed it fit not to act on the consent
accorded by the members for raising resources. Efforts are underway to
identify strategic investment(s) and the board would act on the said
resolution at the appropriate juncture.
Considering the losses suffered by the company, the directors do not
recommended any dividend for the period ended March 31, 2003.
Mr. V. Ramakrishnan, Director, retires by rotation and being eligible
offers himself for re-appointment.
Messrs. R. Swaminathan & Co. Chartered Accountants, Chennai, hold office
until the conclusion of the ensuing annual general meeting. The company has
received a letter from M/s. R. Swaminathan & Co., Chartered Accountants,
Chennai to the effect that their appointment, if made, would be within the
limits prescribed under section 224 (1) of the Companies Act, 1956 and are
thus eligible for re-appointment.
With regard to the remarks in the Auditors' Report, the relevant financial
notes are self explanatory and in the opinion of the management, do not
call for further elucidation.
The company has not accepted any deposits from the public.
DIRECTORS' RESPONSIBILITY STATEMENT
The directors hereby state that in the preparation of the annual accounts,
the applicable accounting standards have been followed except accounting
standards 6, 17, 18, 20 & 22; that the directors have selected such
accounting policies and applied them consistently and made judgments and
estimates that are reasonable and prudent 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 or loss of the company for that period; that the directors
have taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Act for
safeguarding the assets of the company and for preventing and detecting
fraud and other irregularities; that the directors have prepared the annual
accounts on a going concern basis.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING /
The thrust on energy conservation continued though energy consumption of
the company's factory is not a major cost factor. Energy consumption
devices have been installed where appropriate and steps taken to conserve
energy time to time.
The statement in Form B pursuant to 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 is disclosed in the annexure forming
part of this report.
PARTICULARS OF EMPLOYEES
UNDER SECTION 217 (2A)
There were no employees drawing remuneration during the period in excess of
limits prescribed under Section 217(2A) of the Companies Act, 1956 read
with the Companies (Particulars of Employees) Rules, 1975.
A report on Corporate Governance is annexed to this report.
Your directors wish to record their deep sense of gratitude to the Central
and State Governments, Financial Institutions, Banks, customers, suppliers
and member's for their continued support and assistance. Your directors
also wish to place on record their deep sense of appreciation for the
devoted services of the executives, staff and workers of the company.
for and on behalf of the Board
Dated: August, 21, 2003
Statement of particulars of conservation of energy, technology absorption,
foreign exchange earningsand outgo pursuant to section 217 (1) (e) read
with Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988.
FORM - B
DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION.
Research and Development (R&D)
1. Specific areas in which R & D is carried out by the Company.
R&D efforts are directed towards quality control improvement/upgradation of
existing products and development of new products.
2. Benefit derived as a result of the above R&D:
Improvement in quality, cost effectiveness and realisation of higher levels
3. Future plan of action:
Consolidate the results achieved, pursue improvements in the above areas to
achieve international quality standards.
4. Expenditure on R & D
a) Capital Nil (2001 - Nil)
b) Recurring Rs. 9,450 (2001-Rs. 1,47,855)
c) Total Rs. 9,450 (2001-Rs. 1,47,855)
d) Total R&D expenditure as
a percentage of total turnover 0.58% (2001-1.55%)
Technology absorption, adaptation and innovation
1. Efforts, in brief, made towards technology absorption, adaptation and
Training and retraining of the existing personnel and the new personnel is
being practised to ensure that technology absorption is complete and
transferred to new generation technical personnel.
2. Benefit derived as a result of the above efforts etc. product
improvement, cost reduction, product development, import substitution, etc.
Absorption of the state-of-the art technology and reduction.
Particulars of Imported Technology
a) Technology imported From Solec International Inc.,USA
b) Year of Import 1993-94 and 1997-98
c) Has technology been fully absorbed Partially absorbed.
d) If not fully absorbed, areas where this has not taken place, reasons
thereof and future plans of action:
Technology for manufacture of modules absorbed, solar cells in progress.
Foreign Exchange Earnings and Out Go
1. Activities relating to exports, Firm tie-up with collaborators
initiatives taken to increase for buy-back of P.V. modules.
development of new export markets
for products and services and
2. Total foreign exchange (a) used Rs. Nil (2001 - Rs. Nil)
(b) earned Rs. Nil(2001 - Rs. Nil)
for and on behalf of the Board
Dated: August 21, 2003