1996 INDO-MAXWELL LIMITED DIRECTORS REPORT Your Directors present herewith the 7th Annual Report of the Company together with Audited Accounts for the financial year ended 31.03.1996. Present status and future prospects: The Company could not perform to its full potential due to shortage of funds and as a result could achieve only 9% capacity utilisation. LCC even though expressed its intention of entering into sub contract for ferrite production along with its partners namely FDK, Japan they withdrew from the proposal as FDK Japan did not show their keeness in entering into such a proposal. IML had under the sub contract arrangement with EID Parry produced ferrites on their arranging Raw material and they were satisfied with the yields and the quality of the output. The Company has become a sick company as defined under section 3(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 and accordingly the Company is getting itself registered with Board for Industrial and Financial Reconstruction and a revival proposal is being submitted to the Financial Institutions as the Project was adversely affected by the De- valuation of Indian Rupee, Reduction in Import Duty on Ferrites and Gulf War which was beyond the control of the Management and since the Project was under implementation stage the viability got affected and fell into a debt trap from which it could not recover even though the Management tried its best to over come the problems. The Management feels that on the Financial Institutions waiving the accumulated interest and reducing the interest to the present levels the Company would be able to stabilise and become viable as the demand for products manufactured by the Company is booming and the technology used by the Company in manufacture of Ferrites is the most advanced. The Ferrites also have a very good export market potential. Fixed Deposits: The Company has not accepted any fixed deposits from the Public. Directors: Mr. S R Mohapatra and Mr. P R Patnaik were nominated by OSEDC as Additional Directors of the Company with effect from 29th March, 1996 in place of Mr. B B Padhy and Mr. U K Panda. Mr. S.P. Sen Gupta was appointed as Alternate Director for Mr. Armin Albert DEG Nominee. Pursuant to section 257 of,the Companies Act, 1956 Company has received a notice proposing the candidature of Mr. S.R. Mohapatra and Mr. P.R. Patnaik as Director liable to retire by rotation. Under to the provisions of the Section 255 and 256 of the Companies Act, 1956 Mr. G S Mishra and Mr. C S Sastry, Directors retire by rotation and are eligible for re-appointment. Auditors: M/s. Karvy & Co., Chartered Accountants, Hyderabad the Auditors of the Company retire at the conclusion of the Annual General Meeting and are eligible for re-appointment. Auditors Remark: With reference to the Auditors remark we wish to state that: Due to paucity of funds we could not remit the dues of Employees Provident Fund and Employees State Insurance to the prescribed authorities. The Company would take steps to remit the dues during the current year. Energy, Technology and Foreign Exchange: Additional information on Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo as required to be disclosed in terms of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the of Board of Directors) Rules, 1988 is given in Annexure - I to the Directors' Report. Particulars of Employees: Information as required in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, regarding employees is given in Annexure - II to the Directors' Report. Acknowledgments: Your Directors take this opportunity to place on record their deep appreciation and gratitude for the unstinted support, assistance, co- operation and guidance that is being extended by IDBI, IFCI, Indian Bank, Vysya Bank, Allahabad Bank, DES, OSEDC, DOE and various departments of the State and Central Governments for this Project. The Directors further thank all the employees for their dedication and co-operation. ANNEXURE - I ANNEXURE TO THE DIRECTOR'S REPORT In formation as required under Section 217(1)(e) of the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988. A. CONSERVATION OF ENERGY (a) Company has installed power factor capacitors to improve lead factors. (b) No additional investments were made for reduction of consumption of energy. B. TECHNOLOGY ABSORPTION: Disclosure of particulars with respect to Technology absorption (to the extent applicable) is shown in Form - B. FROM-B Form of Disclosure of particulars with respect to absorption: 1. Specific areas in which R & D : No research is carried out by the carried out by the company company but indegenous sources for raw materials are being developed by getting samples and testing, to determine suitability for import substitution. 2. Benefits derived as a result : Indigenisation of Raw Material of the above R & D 3. Future plan of action it : With the sophisticated test equip- ments installed in the plant will be possible to develop ferrites power for various applications using indigenous materials even for sophisticated communication ferrites. The company is planning to go for energy audit. 4. Expenditure on R & D : Nil TECHNOLOGY ABSORPTATION AND INNOVATION 1. Effort in brief made towards : During the year under review the technology, absorption, company absorbed the imported adaptation & innovation technology from LCC. Adaptation : The company achieved cost effective import situation. Innovation : The Company successfully achieved rationalising the varieties of raw materials both imported and indig- eneous. This has resulted cost effective procurement of these items as also lowering of stock levels to support the planned production. 2. Benefits derived as the result : Due to what is stated in (1) above the above improvement the company will realise the following benefits :- (a) Secure optimum market share & achieve rated production of colour yokes. (b) Derive benefit of cost reduction due to indigenisation of refrac- tories which are not only cost effective directly but also will result in substantial reduction of inventory holdings and avoid interruption in kiln operations. (c) Higher yields achieved in the production of RTP will not only fully support higher level of production of TV Ferrites but could also result in increasing the effective installed capacity from 1000 tons to 1300 tons per annum. 3. In case of imported technology (imported during the last five years reckoned from the begin- ning of the financial year) the following information may be furnished : a) Technology : Yes imported from France. b) Year of import : 1991 c) Has technology been : Yes, for TV Ferrites, for which the fully absorbed process of production has been stab- ilised. As regards pot cores plant fully installed and commissioned. Trial production being taken up to make samples to be furnished to OEMs and the market. 4. If not fully absorbed area : Not applicable. where this has not taken place reasons therefor and future plans of action. FOREIGN EXCHANGE EARNINGS AND OUTGO 1. Activities relating to : The Company has entered overseas exports initiatives taken Distribution Agreement with TCA to increase exports, Hongkong for export of Soft Development of new exports Ferrites. markets for products and services and export plans 2. Total Foreign Exchange : Earnings: Nil used and earned. Outgo : Rs. 6,27,200 For and on behalf of the Board For INDO MAXWELL LIMITED G.S. MISHRA Chairman Place : Bhubaneswar Date : 28th June, 1996.