HIGH ENERGY BATTERIES (INDIA) LIMITED
ANNUAL REPORT 2006-2007
I have great pleasure in welcoming you all to this 46th Annual General
Meeting of the Company.
I greatly appreciate the sustained support extended by all of you
to the Company and it will be our earnest endeavour to be worthy of
your trust and confidence as in the past.
The Annual Report of the Company has been with you for some time and I
would like to, with your permission, treat the same as read.
At the outset, I would like to share with you my deep grief on the
demise of our Director Sri S. Paramanandhan in Nov' 2006. He was
a distinguished officer of the Indian Navy and retired as the Director
General (Naval Design). He was awarded the prestigious 'Padmashri' in
1971 in recognition of his outstanding contribution to the development of
Indian Navy. Sri. S. Paramanandhan joined our Board in 1985 as an
Independent Director and continued till his demise. He was the
Chairman of the Research & Development Committee of Directors. He
rarely missed a board meeting and had offered many noteworthy
suggestions for improving the quality of our products; for eliminating
wastes and for improving the overall performance. His was an incisive mind
and his observations were penetrating. His loss is hard to fill.
Before I comment on the highlights of the operations of the company
during the year under review, it is customary to take a look at the
prevailing economic scenario of the country. Outlook for the Indian
Economy is indeed bright and growth prospects are sound as never before.
The Indian Economy, Asia's third largest had grown at an average of
8.6% in the past four years touching 9.4% in 2006-07. It is likely to
grow by 9% during 07-08, given a benign monsoon. Potential downside risks
are; rising crude oil prices, and supply disruption and shortfall in
the quantum and spatial distribution of the south-west monsoon.
Containing inflation and vitalizing the Farm and Power sectors will be
the prime focus areas of the Government to achieve targeted levels of
The Budget for 2007-08 provides for an 8% increase in the allocation
to the defence sector, to enable this Sector to carry out large-scale
modernisation and upgradation. About US $10 billion was spent last year on
import of defence equipment.
Strategic partnerships between public sector and private sector (Public-
Private-Partnership - PPP) are to be encouraged to achieve self reliance
in the development and manufacture of armaments. The procurement
policy currently pursued by the Government includes an 'Offset'
programme for all alien defence procurement calculated to encourage
development of domestic manufacturing sector. All these augur well for
As indicated in my Speech of last year, orders for our products could
be received only during the second and third quarter of the year
resulting in the company posting a lower turnover and profits for the
year under review.
The company successfully completed the development of Magnesium
Cuprous Chloride Batteries and made initial supplies to the customer,
during the year. It is a matter of great joy and pride that this
technology has been successfully developed and demonstrated for
the first time in India, by your company. Equally praiseworthy was
the successful development and manufacture of Fuel Cells against
order received from DRDO.
These two new product lines should help the company secure additional
orders in the coming years.
OUTLOOK FOR THE CURRENT YEAR:
Your company has started the current financial year with a lean order
position. Nevertheless it is hoped that substantial orders will flow
during the 2nd and 3rd quarter of the current financial year, enabling
the company to post healthy growth in both the Topline and Bottomline.
Since its inception, your company has been engaged mainly in the
development and supply of products for defence applications. The
outstanding contribution made by your company to the defence sector has
been well recognised by the Government of India leading to several
national awards. However procurement cycle of Indian defence is
undergoing significant changes, lately, resulting in starvation of orders
on and off.
Your company has been working on a strategy to include in its
product range, batteries for the commercial sector and has
identified a project for manufacture of Lead-Acid Batteries for which
tremendous opportunities exist. Details of this project can be seen in the
Annual Report. To part finance this project, the company proposes to come
out with a Rights Issue. Related Resolution is coming up for your
approval at this meeting. I seek your support and participation in the
Issue to enable the company to successfully diversify and insulate itself
from the uncertainties associated with receipt of orders from the defence
During the year, LIC had withdrawn the nomination of Sri D. Krishnan as
Director on our Board. Mr. Krishnan played a very active and
constructive role during his tenure as Director. I express my gratitude
to him. LIC has nominated Smt. D. Vijayalakshmi, Executive Director,
in place of Mr. Krishnan. With her years of holding strategic management
positions in LIC, I am sure we will be deeply benefited by her counsel
I wish to express our Board's appreciation of the splendid work done by
our Executives and Employees under the inspiring leadership of
Sri. S. Sridharan, our Managing Director. I am grateful to my colleagues on
the Board for their sagacious guidance and advice. I am beholden to the
Financial Institutions, Defence Departments, Defence Public Sector
Undertakings, DRDO and our Bankers viz. UCO Bank, Indian Bank and Canara
Bank for their solid support. Above all my thanks are due to all of you
for your sustained support to the company since inception.
I now move for adoption of the Directors' Report, Auditors' Report and the
Accounts and before doing so, I shall be glad to answer any queries that
you may have.
Date: 26-07-2007 N. GOPALARATNAM
Source: AGM Notice
Dated : 27th August, 2007