Samtel Color Ltd.
|BSE: 500372||Sector: Engineering|
|NSE: SAMTEL||ISIN Code: INE381A01016|
|BSE 00:00 | 18 Jul||Samtel Color Ltd|
|NSE 05:30 | 01 Jan||Samtel Color Ltd|
|BSE: 500372||Sector: Engineering|
|NSE: SAMTEL||ISIN Code: INE381A01016|
|BSE 00:00 | 18 Jul||Samtel Color Ltd|
|NSE 05:30 | 01 Jan||Samtel Color Ltd|
To the Members
Samtel Color Limited
Your Directors have pleasure in presenting this 26th Annual Report togetherwith the Audited Accounts of the Company for the financial year ended 31stMarch 2012.
The key financial highlights of the Company for the year ended 31st March2012 are as under: -
(Rs in Crores)
The market for color picture tube based television sets is in decline across the Globe.However, the process of decline is slow in the market of Latin America, South Africa andSouth Asia. However, despite a reasonable demand for color picture tube based televisionsin South East Asia including India, the year under review was subdued for the Company.
The demand for CPT in the year 2011 was around 40 millions, majority of which were fromSouth East Asian countries. However, from the period beginning October, 2010, theCompanys volume and margins have declined sharply due to surge in imports and thepricing mechanism adopted by the importers to circumvent the imposition of anti dumpingduty (ADD), thereby affecting the average realization and margins of the CPT industry inIndia. This has considerably impacted the market share of the Company.
In addition to the above, the sudden change of policy of the Chinese Government withregard to mining and export of certain rare earth minerals have increased the price of thematerials by almost 10 times. The CPT manufacturers use red phosphor, one of the rareearth materials, in coating of the screen.
Both the above factors have not only adversely impacted the volume and margins of theCompany, but also choked the liquidity forcing the Company to scale down its operationsconsiderably during the year resulting in lower capacity utilization. Currently, theCompany has declared lay off in some of its Units. Other units of the Company arefunctioning with scaled down capacity.
The sales volume of the Company declined from 7.65 million numbers to 2.86 millionduring the year under review. The sales in terms of value declined by 59% from Rs. 1000.01crs. in 2010-11 to Rs 408.14 crs. in 2011-12.
Erosion of Net-Worth- Reference to BIFR
On account of losses incurred during the year under review and also with carriedforward losses of past years, the net-worth of the company has got eroded at the end ofthe Financial Year ended on 31st March 2012. Therefore, Company isrequired under the provisions of Sick Industrial Companies (Special Provisions) Act tomake a reference to the Board for Industrial and Financial Reconstruction (BIFR) fordetermination whether the company is a sick industrial company or not.
Accordingly, the Board of Directors at their meeting held on August 30, 2012 advisedthe Company to make a reference to BIFR in terms of the provisions of Sick IndustrialCompanies (Special Provisions) Act. The Company is in the process of submitting itsapplication to the Board for Industrial and Financial Reconstruction.
In case an order declaring the company as Sick Industrial Company is passed, BIFR willappoint an operating agency to examine and recommend the measures for the revival of thecompany. The Management of the company will take all possible steps for the revival of thecompany.
The market for CPTs globally is on a decline. Demand for CPT world wide is expected toremain at around 30 millions in number in the year 2012-13 as compared to 40 millions innumber in the year 2011-12.
The demand in India in the year 2012-13 and over next few years is expected to remainat around 12/13 millions units per annum.
There are indications of slowing down of import of cheap picture tubes to India fromacross the world as some of the major picture tubes manufacturers have closed down theiroperations. Further, the non parity of US Dollar and Indian Rupee is making the importmore expensive. These factors to some extent would have a positive impact on theoperations/performance of the Company in years to come as the dependence of CPTmanufacturers on imported units will decline, giving an opportunity to the Company to rampup its volume as well as margins.
Further, to come out of the difficult situation and to sustain operations increase thevolume and market share, the Company has initiated several steps including cost cuttingmeasures. Some of the measures, effect of which is expected to have a positive impact onthe over all performance of the Company in the next few years is as under:
Developed and lunched a low cost variant of the 21" ultra slim variant CPT.This will help the Company to capture the domestic market for this product.
Successful in reducing the consumption of Red Phosphors thereby reducing the rawmaterial cost.
Phasing out of low volume and low margin variants such as 15" &20" CPTs.
Realignment/Impairment/re-sizing and efficient utilization of the productionfacilities and work force.
Your Companys strategy and operations are discussed in detail in the sectiontitled "Management Discussion & Analysis".
In view of loss the Directors do not recommend any dividend on the Preference andEquity Shares of the Company for the financial year ended 31st March 2012.
Financial Restructuring and Changes in Capital Structure.
During the year under review, the Stock Exchanges accorded their in-principal approvalfor listing of the following equity shares allotted to Promoters and CDR Lenders onpreferential basis in terms of the CDR Scheme:
4651163 equity shares of Rs. 10/- each issued and allotted on 25.01.2008 and2325581 equity shares of Rs.10/- each issued and allotted on 24.07.2009 to Promoters at apremium of Rs. 12.49 per share.
31901831 equity shares- of Rs. 10.00 each issued and allotted on 16.06.2010 toCDR Lenders at a premium of Rs. 4.55 per share against conversion of debts aggregating toRs. 46.42 crores.
Applications for in-principal approval for issuance and allotment of 68,72,852 and1,37,45,704 warrants respectively of Rs. 10/- each at a premium of Rs. 4.55 per warrantconvertible into equity shares, to Promoters on preferential basis, against contributionof Rs. 10.00 crores and Rs. 20.00 crores made towards the equity capital of the Company ispending with Stock Exchanges for their approval.
During the year under review, the Promoters could not infuse the requisite fund of Rs.20 crores towards the equity capital of the Company as envisaged in the revised CDRmechanism and approved by the Members of the Company.
During the year under review w.e.f 04.08.2011, ICICI Bank Limited nominated Mr. AlokSingh as its nominee on the Board of the Company in place of Mr. Yogesh Rastogi.
Mr. Alok Singh is MBA and currently working with ICICI Bank Limited in the capacity ofDeputy General Manager.
Further, in terms of Section 260 of the Companies Act, 1956 and Articles of Associationof the Company the Board of Directors in their meeting held on 15.11.2011 have appointedMr. N K Sehgal as an additional Director. He holds the office upto the date of ensuingAnnual General Meeting. Pursuant to Section 257 of the Companies Act, 1956 the Company hasreceived a notice in writing from a member of the Company proposing his candidature forthe office of Director liable to retire by rotation. Your Directors recommend hisappointment for your approval.
During the year under review Mr. Arun Bharatram, Mr. Subodh Bhargava, Mr. Puneet Kaura,Mr. Yogesh Rastogi and Mr. V.Narayanan resigned from the Board of the Company due topersonal reasons and other pre-occupations.
Your Directors welcome Mr. Alok Singh and Mr. N.K. Sehgal and place on record theirsincere appreciation and gratitude for the services rendered by Mr. Arun Bharatram, Mr.Subodh Bhargava, Mr. Puneet Kaura, Mr. V.Narayanan and Mr. Yogesh Rastogi during theirtenure on the Board of the Company.
In accordance with the provisions of Section 256 of the Companies Act, 1956 read withArticle 85 of the Articles of Association of the Company, Mr. S P Gugnani, Director of theCompany retire by rotation and being eligible offer himself for re-appointment.
With regard to remuneration paid to Mr. Satish K Kaura, Chairman & ManagingDirector during the period April 1, 2011 to March 31, 2012 is as per the approval receivedfrom the Central Government.
Brief resume of the above Directors, nature of their experience and expertise inspecific functional areas and the name of the public companies in which they hold theDirectorship and the Chairmanship/Membership of the Committees of the Board, as stipulatedunder Clause 49 of the Listing Agreement with the Stock Exchanges, are given in theNotice/Report on Corporate Governance and forms part of this Report.
Directors Responsibility Statement
In accordance with the provisions of Section 217 (2AA) of the Companies Act, 1956, westate as follows:
i. that in the preparation of the annual accounts for the financial year ended 31stMarch, 2012, the applicable accounting standards have been followed and that there hasbeen no material departures.
ii. that the Directors have selected such accounting policies and applied themconsistently and made judgment and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for the year under review.
iii. 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 the Company and for preventing and detecting fraud andother irregularities.
iv. that the Directors have prepared the annual accounts on a going concern basis.
Employee Stock Option Scheme
The details of options granted under the employee stock option scheme are given inAnnexure "A" to this Report.
During the year under review, the Company has neither invited nor accepted anydeposits. There are no unclaimed or unpaid deposits lying with the Company.
Auditors & Audit
The Auditors of the Company M/s. S.S.Kothari Mehta & Co., Chartered Accountants,New Delhi, retire at the forthcoming Annual General Meeting and being eligible, offerthemselves for reappointment. The Company has received a letter from them to the effectthat their appointment, if made, would be within the prescribed limit under Section224(1B) of the Companies Act, 1956. The Board of directors recommends their appointment,as Statutory Auditors for the next financial year for your approval.
The observations of the Auditors and the relevant notes on the accounts areself-explanatory. Further explanations with regard to the observation / qualifications ofthe Auditors are as under:
1. The Companys production facility located at Kota for production the 21color picture tube and facility located at Ghaziabad for production of Gun (a rawmaterial) are in running conditions. The Company is taking necessary steps to streamlinethe operations of other manufacturing facilities. Thus, Company is confident of runningthe operations as "Going Concern" in foreseeable future.
2. The Company has impaired the plant & machinery and its related stores and sparesof some of its manufacturing facilities on the basis of applicable accounting standard.
3. During the year, the net worth of the Company is fully eroded and necessary legalformalities / compliances in terms of provisions of Sick Industrial Company Act, 1985(SICA) will be completed as per the required time line.
4. During part of the year, the fixed assets of the Company were not verified by themanagement but it is hopeful to complete the verification process of fixed assets inphased manner. Management does not expect any major discrepancy.
5. The physical verification of inventory was done on 30th June, 2012 and it isproposed to conduct physical verification of inventory on quarterly basis.
Pursuant to Section 212 of the Companies Act, 1956, the required information in respectof subsidiary companies, i.e. Paramount Capfin Lease Private Limited and Blue Bell TradeLinks Private Limited are annexed to the Annual Report.
Consolidated Financial Results
In accordance with the Accounting Standard 21 Consolidated FinancialStatements read with Accounting Standard 23 Accounting for Investments inAssociates issued by the Institute of Chartered Accountants of India, your Directors havepleasure in attaching the consolidated financial statements, which forms part of theAnnual Report & Accounts.
Declaration under Clause 49 of the Listing Agreement
All Directors and Senior Management Executives of the Company have affirmed compliancewith the Code of Conduct for Board Members and Senior Management executives for the periodApril 1, 2011 to March 31, 2012.
Your Company has taken adequate steps to ensure compliance with the provisions ofCorporate Governance as prescribed under the Listing Agreement with the Stock Exchanges.
A separate Report on Corporate Governance alongwith necessary Certificates and Reporton Management Discussion & Analysis are enclosed as part of this Annual Report.
All the properties of your Company, including its building, plant & machinery andstocks, where necessary, and to the extent required, have been adequately insured.
None of the Directors of your Company is disqualified as per the provisions of section274 (1)(g) of the Companies Act, 1956. All the Directors have made necessary disclosuresas required under various provisions of the Companies Act and Clause 49 of the ListingAgreement. Particulars of employees as required u/s 217(2A) of the Companies Act, 1956read with the Companies (Particulars of Employees) Rules, 1975 are given in AnnexureB forming part of this Report.
Information u/s 217 (1)(e) of the Companies Act, 1956 read with Companies (Disclosureof Particulars in the Report of Board of Directors) Rules, 1988 is given in AnnexureC forming part of this Report.
Due to decline in demands for the products of the Company and resultant financialconstraints, the Company had to declare lay off in one of its unit located at Chhapraula,Uttar Pradesh. This some what has vitiated the industrial relations. Your Directors wishto place on record their sincere appreciation for the continued and devoted servicesrendered by all employees of the Company.
Your Directors express their gratitude and thanks to the Financial Institutions, Banks,Government Authorities particularly in the State of Uttar Pradesh, Himachal Pradesh &Rajasthan, Shareholders, Customers, Suppliers and other business associates for theircontinued cooperation and patronage.
Annexure to the Directors Report
Annexure "A" to eh Directors Report: Details of Stock Options GrantedDuring the Year 2011-12
6 Salient Terms of option
a) Each option will entitle the holder to apply for 1 equity share at the closing priceof Bombay Stock Exchange on grant date.
b) The options will vest in employees in 3 equal installments at the end of Ist , IIndand IIIrd year from the date of grant.
c) There will be no lock in period for sale of shares after employees have exercisedtheir options
8 Details of options granted to Senior Management Personnel: No options has been givenduring the year 2011-12.
Annexure B to the Directors Report
Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies(particulars of employees) rules 1975 and forming part of the Directors Report
Note: (1) Remuneration received includes: Salary, Allowance, Payment in respect ofUnfurnished Accommodation, Hard Furnishing, Company contribution to Provident Fund andSuperannuation Fund, Gratuity, Medical Reimbursement and LTA.
(2) None of the above employees are relative of any Director or Manager of the Company
(3) Employment in the Company is non contractual
(4) Designation denotes the nature of duties.
Annexure C to the Directors Report
1. Conservation of Energy:
A) Energy conservation measures taken and consequent impact on the cost of productionof goods:-
1. Elimination of 3 AHU of store & BMSC mixing area to reduce plant airconditioning load.
2. Reduction in consumption of compressed air by reducing Air Pressure from 5.5 Kg/ cm2to 2.2 Kg/cm2
3. Optimization of annealing furnaces by running one furnace in place of two furnaces
4. Optimization of critical load by Shifting of Exhaust (Non Critical Load) on UPSEB
5. Efficient Utilization air conditioning by clubbing AHU of various areas to useunused available capacity.
6. Reduction of salvage running days from 6 days / week to 3 days by optimization ofresource utilization.
B) Additional investment and proposal, if any, being implemented for reduction ofConsumption of energy:-
1. Optimization of Power Generation cost through overhauling of Gas Engines forefficient generation
2. Starting of GT 1 in place of GT 2 (with higher efficiency)
2. Technology Development, Absorption and Research & Development Activities:
a) Specific areas in which R&D carried out by your Company
i) Successfully designed & developed prototype and commercialized 21" UltraSlim Pin Free CRT in line #5. We are producing 100 K/Month
ii) Successfully developed & modified the complete process in Front End as per therequirement of 21" Ultra slim Pin free CPT.
iii) Design and Development of 14" Round Slim CRT completed. Commercial productiondepends on the Market requirement.
b) Benefits derived as a result of the above activities
i) Ability to introduce new products and meet market expectations on quality and priceand also to enhance the cost competitiveness of your Company.
ii) Saving on product development cost like Royalty, Technical Know How fees etc.
c) Future plan of action
In-house development of low cost deflection yoke for 21" Ultra Slim CPT. (PinFree)
1. Technology Absorption, Adoption & Innovation
The Company has developed capability to design and develop CPTs, their components,materials and equipment.