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Gujarat Telephone Cables Ltd.

BSE: 500175 Sector: Engineering
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Gujarat Telephone Cables Ltd. (GUJRATTELE) - Director Report

Company director report

GUJARAT TELEPHONE CABLES LIMITED ANNUAL REPORT 2002-2003 DIRECTOR'S REPORT To, The Members Gujarat Telephone Cables Limited Your Directors present their Twentieth Annual Report together with the Audited Statements of Accounts, for the period ended 30th June, 2003. FINANCIAL RESULTS: (Rs. In Lacs) PARTICULARS Year Year Ended Ended 30.6.2003 30.6.2002 Gross Total Income 4405.69 12882.81 Profit (Loss) Before Interest, (10625.25) 1621.61 Depreciation & Tax Less Interest 2049.00 1903.37 Profit after Interest but (12674.25) (281.76) before Depreciation and Tax Less: Depreciation 611.50 610.35 Profit/ (Loss) before Tax (13285.75) (892.11) Less: Provision for Tax - 0.30 Profit /(Loss) after Tax (13285.75) (892.41) Surplus/Loss carried forward (93.16) 799.25 from the Previous year. Transferred from General Reserve 2650.00 _ Balance Carried to Balance Sheet (10728.91) (93.16) OPERATIONS AND FUTURE OUTLOOK During the year under review, there was a steep decline in turnover as Rs.3903 12 Lacs compared to Rs.12244.98 Lacs achieved during the previous year resulting in the drastic loss of Rs 13285.75 Lacs during the year as compared to the previous years' loss of Rs.892.41 Lacs. The decline in the Turnover and income is mainly due to the steep decline in the prices of Jelly Filled Cables and steep fall in the demand for it due to present mobile phone/ wireless phone technology. This factor affected not only the Company, but also covered the industry itself. With a view to offset the effect of the failing prices, your Company has initiated Major Cost cutting Exercise in the entire operations of the Company. Demand for Jelly Filled Telephone Cables is expected to decrease in the current year which may further effect the revenue of the Company. Hence the Company is making thrust on exploring the possibility of diversifying in other areas. This throws open various opportunities as well as challenges to the Company. The Company is aware of the said fact of dwindling demand of the PIJF Cables and taking into consideration the existing state-of-the art manufacturing facilities which is coupled with quality manpower, the Company has idenfitied and developed a wide range of electrical and specialised communication cables and the Company is making vigorous efforts to cater the market thereof. DIRECTORS: Shri Laxman R. Patel and Shri Hasmukh R. Rami. Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The Central Government, by its letter Ref. No. 1/206/2003-CL.VII dated 5th December 2003, has approved under section 269 of the Companies Act, 1956 the re-appointment of (i) Shri R H Patel as Managing Director (ii) Shri N R Patel as Whole-time Director and (iii) Shri D D Patel as Whole-time Director of the Company for a period not exceeding 5(five) years with effect from 02-06-2003 to 01-06-08, 31-05-3003 to 30-05 2008 and 30-06-2003 to 29-06-2008 respectively, as approved by the Board as well as by the Members of the Company. AUDITORS: M/s Nitin K. Shah & Co. Chartered Accountants, hold Office till the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. The Auditors Report, the observation of the Auditors read in conjunction with the Notes on accounts are self explanatory. DIRECTORS' RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217 (2AA) OF THE COMPANIES ACT, 1956. The Directors confirm that (1) In the preparation of the annual accounts. the applicable accounting standards have been followed along with proper explanation relating to material departure; (2) The Directors have selected such accounting policies have been selected and applied 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 loss of the Company for that period; (3) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with toe provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (4) The directors had prepared the annual accounts on a going concern basis. CORPORATE GOVERNANCE: Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges. Management Discussion and Analysis, Corporate Governance Report and Auditors Certificate regarding compliance of Corporate Governance are made a part of the Annual Report. PARTICULARS OF EMPLOYEES There are no Employees who are covered as per the Provisions of Section 217 (2A) of the Companies (Particulars of Employees) Rules. 1975. COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS RULES, 1988. In terms of the above rules, the Board is pleased to give the particulars as prescribed therein in the annexure which forms part of this report. ACKNOWLEDGMENT Your Directors are grateful for the assistance and co-operation received from the Financial Institutions Banks, and Employees of the Company. BY ORDER OF THE BOARD Place : Ahmedabad R.H. Patel Date : 30th December, 2003 Chairman & Managing Director ANNEXURE TO THE DIRECTORS' REPORT COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988. (A) CONSERVATION OF ENERGY As in the past, the company continued its efforts to improve methods of energy conservation and utilisation. Wind Farm located at Village Dhank of Rajkot District has generated 1083231 Units during the year. Energy generated at the Wind Fram is made available by Gujarat Electricity Board at Company's Plant located at P.O. Chharodi Fram, Tal. Sanand, Dist. Ahmedabad, which has resulted in slight saving of Power Cost. (B) TECHNOLOGY ABSORPTION RESEARCH AND DEVELOPMENT (R & D) RESEARCH AND DEVELOPMENT (R & D) 1. Specific Areas in which R & D : Process Improvement, Product carried out by the Company. Improvement & Cost effectiveness. 2. Benefits derived as a result of : Reduction in cost of Production & above R & D Improvement in quality & Productivity. 3. Future Plan of Action : Efforts will continue to be made in the areas of cost reduction and product and process improvement. 4. Expenditure on R & D : R & D Expenditure has not been accounted separately. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION 1) Efforts in Brief toward : The Company has successfully absorbed technology absorption the technology to manufacture all adaptation and innovation types and sizes of PIJF Telephone Cables and efforts are being continuously made on to upgrade the same with innovation in design, process controls and logistics. 2) Benefits derived as a result : Cost has been reduced where ever of the above efforts. possible. (C) FOREIGN EXCHANGE EARNINGS AND OUTGO Total Foreign Exchange earned : Rs. Nil Total Foreign Exchange Outgo : Rs. Nil For and on behalf of the Board Place : AHMEDABAD R. H. PATEL Date : 30-12-2003 CHAIRMAN & MANAGING DIRECTOR MANAGEMENT DISCUSSIONS AND ANALYSIS OVERALL REVIEW The Company is in the business of manufacture and sale of Jelly Filled Telephone Cables. Jelly Filled Telephone Cables were introduced by the erstwhile Department of Telecommunications (DOT) to substitute paper covered unfilled cables in order to solve the problem of water seepage in Telecom Cables resulting in distortion of signals. At present there are about 48 PIJF Cable Manufacturers in India having such manufacturing installed capacity approximately 1600 LCKM, and the total estimated demand was less than 200 LCKM, which has resulted in increase in competition and pressure on the prices of the cables. The year under review was a difficult year for the Telecom Industry due to steep decline in the prices and increased competition FINANCIAL REVIEW The Company's earnings was Rs.4405.69 Lacs. for the year ended 30th June 2003 against Rs.12882.81 Lacs for the previous year. Lower earning was mainly due to: 1) Lower demand resulting into lower sales volume of Jelly Filled Cables. 2) Steep fall in selling prices of Jelly Filled Cables. The turnover of the Company has come down to Rs. 3903.12 Lacs. from Rs. 12244.98 achieved during the previous year on account of the reasons mentioned above. OPPORTUINITES AND THREATS: Government policies relating to the Investments in the Telecom Sector have a substantial impact on the performance of the Company and there seems to be no positive sign of improvement in investments in this sector. The Company, with its huge manufacturing capacity and being one of the major players of the Industry, could not able to reap the fruits of the same. The Telecom Cables Industry depends on the Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL). During the year , BSNL has floated the bender for a quantity, which is less by more than 50 of the Tender for the previous year. This reduction is mainly due to increased use of wire Less in Local Loop (WLL) technology by BSNL and MTNL and other private operators. This is in addition to the increased competition from the existing as well as new entrants in the Industry. Orders are being accepted by the competitors at a rate much below the variable cost. The Company is taking steps to offset the implications of this by undertaking a major cost cutting exercise. INTERNAL CONTROL SYSTEMS: The Company has proper and adequate Internal Control System, which ensures the proper authorization , recording and reporting of all the transactions and safeguard of all assets from the risk of loss due to unauthorised use and disposition. The internal control system ensures prompt financial reporting, optimum utilisation of various resources and quick reporting of deviations. Compliance with laws and regulations is also ensured and confirmed and is reported in every Board Meeting. The Company has fully computerised and integrated various financial and accounting functions, information feed back system of process parameters and back tracing from finished goods to raw-material stage. All financial, operating and information technology systems are reviewed from time to time by the Management. INDUSTRIAL RELATIONS AND HUMAN RESOURCES The Company has a proper mix of experienced and youth among its employees. The Company is committed to provide necessary training and opportunity to its employees, which helps them to develop themselves to face the future challenges. The company's relations with the employees at all levels are very cordial and peaceful.