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SCOPE INDUSTRIES (INDIA) LIMITED
ANNUAL REPORT 2011-2012
DIRECTOR'S REPORT
To
The Members,
Scope Industries (India) Limited
Your Directors have pleasure in presenting herewith the 28th Annual Report
of your Company together with the Audited Accounts for the financial year
ended 31st March, 2012.
FINANCIAL RESULTS:
(Rs. in lakhs)
PARTICULARS YEAR ENDED YEAR ENDED
31.03.2012 31.03.2011
Sales 5440.69 1521.59
Other Income - 2.59
Total 5440.69 1524.18
Expenditure 5294.00 1495.71
Profit before depreciation and Income tax 146.69 28.47
Depreciation 0.24 -
Net profit before tax 146.45 28.47
Provision for taxation
a. Current tax 29.30 5.95
b. Deferred tax 0.27 -
Profit after tax 116.88 22.52
DIVIDEND:
As a measure of prudence and with a view to conserve resources for funding
the business plans of the Company, no dividend on the Equity Shares for the
year ended 31st March, 2012 was recommended.
PARTICULARS OF EMPLOYEES:
There are no employees whose particulars are required to be furnished under
Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars
of employees) Rules, 1975, and as amended from time to time as remuneration
of none of the employees is in excess of Rs. 5, 00,000/- per month, if
employed for the part of year or Rs.60, 00,000/- per annum during the
financial 2011-2012.
DIRECTORS:
Sri Akella Sai Kumar, Sri Tammina Eswar Rao and Sri Damaraju Srihari
Charan, Directors of your company retires by rotation at the ensuing Annual
General Meeting and being eligible for re-appointment, offers themselves
for re-appointment. Pattela Srinivas Goutam, Niyaz Ahmad and Nisar Ahmed
were appointed as Additional Directors w.e.f 8th February, 2012, Allama
Prabhu Anandwade was appointed on w,e,f 16.02.2012 and Bobburi Pampapathi
and Praveen Kumar Chodavarapu were appointed as Additional Directors w.e.f
10th May 2012. The Company has received individual notices from the members
of the Company complying with the provisions of the Section 257 of the Act,
proposing their respective candidature for the office of Director.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2AA) of the Companies Act, 1956 the directors of
your company hereby confirm that:-
1. In preparation of annual accounts, the applicable accounting standards
have been followed along with proper explanation relating to material
departure, if any, there from;
2. The directors have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give true and fair view of the state of affairs of the
Company at the end of the financial year ended 31st March 2012 and of the
profit and loss of the company for that period;
3. The directors have taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of this
Act, for safeguarding the assets of the Company and for preventing and
detecting frauds and other irregularities;
4. The directors have prepared the annual accounts on a going concern
basis.
AUDITORS:
M/s S S SRAVAN & ASSOCIATES Chartered Accountants, Statutory Auditors of
the Company has resigned from the office of the Statutory Auditors of the
Company and in their place M/s. RAMASAMY KOTESWARA RAO & CO Chartered
Accountants, was appointed as the Statutory Auditors of the company at the
EGM held on 26th April, 2012 who retire at the conclusion of the ensuing
Annual General Meeting and being eligible offers themselves for re-
appointment. The company has received a certificate from the Auditors to
the effect that their appointment, if made will be in accordance with the
provisions of Section 224(1B) of the Companies Act, 1956. The Board
recommends their appointment.
Reply to Auditors Qualification:
1. With regard to the deposit of Amounts to statutory Authorities (Point
No. 9 (a) of the Auditors Reports). Your Board would like to bring to your
kind notice that the Company is under the process of depositing the same.
2. With regard to unsecured loan taken from the directors, Your board would
like bring to your kind notice that these are short terms loans for day to
day operations.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
AND OUTGO:
A. Conservation of Energy - The present operation of the Company do not
involve high energy consumption. However steps being taken to minimize
energy consumption where ever possible.
B. Research & Development - Not Applicable
C. Technology Absorption - Not Applicable
D. Foreign Exchange Earnings & Outgo: (In Rs. Lakhs)
2011-2012 2010-11
Foreign Exchange earnings Nil Nil
Foreign Exchange outgo Nil Nil
CORPORATE GOVERNANCE:
Your Company has complied with the requirements of Clause 49 of the Listing
Agreement entered into with the Stock Exchanges. Report on Corporate
Governance including Auditor's Certificate on Compliance with the code of
Corporate Governance under Clause 49 of the listing agreement is enclosed
as ANNEXURE III to this report.
EMPLOYEE STOCK OPTION SCHEME:
As members are that the Company has, vide Special Resolution passed at the
Extra-ordinary General Meeting held on May 12, 2011, introduced Employees
Stock Option Scheme-2011 (Scope ESOS-2011) to enable the employees of the
Company to participate in the future growth and financial successes of the
Company. The Board of Directors of your Company, based on the
recommendations of the Remuneration Committee granted 30,00,000 stock
options to its eligible employees out of which 900000 option were exercised
by the employees. The disclosure required under SEBI Guidelines, in this
regard, is furnished in the ANNEXURE. II
MANAGEMENT DISCUSSION & ANALYSIS:
Aspects of Management Discussion and Analysis are enclosed as ANNEXURE-I to
this report.
DEPOSITS:
Your company has not accepted any deposits falling under Section 58A of the
Companies Act, 1956 read with Companies (Acceptance of Deposits) Rules 1975
during the year.
SHARE CAPITAL:
Your Company has allotted 1900000 Equity Shares on 10th May, 2012 on
preferential basis to promoter and non promoters of the Company.
SUBSIDIARY:
During the financial year under review your company has incorporated two
wholly owned subsidiary M/s Edplus Information Technology Private Limited
and M/s Etracker Mobile Technologies Private Limited, these Companies are
yet to start the commercial productions.
ACKNOWLEDGMENTS:
Your directors would like to express their sincere appreciation and
gratitude to all Employees, Shareholders, the Suppliers, Customers and
various authorities who have extended their immense support to the
organization.
By order of the Board of Directors
sd/-
Place: Hyderabad Sriram Pavan Kumar Vemuri
Date : 27.08.2012 Chairman & Managing Director
Annexure - 1
MANAGEMENT DISCUSSION AND ANALYSIS
INDUSTRY STRUCTURE AND DEVELOPMENTS:
The Infrastructure sector in India is set to boom as the country enters a
high growth phase. With a growing economy and double digit growth expected
over the next four years, the infrastructure sector would witness
exponential growth and enormous investments. With the expected average
annual compounded growth rate of 8.5%, India's GDP is expected to be USD
1.4 trillion by 2017 and USD 2.8 trillion by 2027.
The construction sector has grown at an annual rate of 12-15% from
financial year 2004-2008 and is expected to rise at around 35% during 2009-
2013. All infrastructure sub-sectors are set to grow with similar scorching
pace.
OPPORTUNITIES AND THREATS:
The Infrastructure sector in India is attracting more funds not only from
the domestic funds but also from the international arena, even in the form
of Public Private Partnership. Other factors including political intent,
liquidity position, commodity and crude prices, structural and procedural
reforms at various government body levels (like NHAI) are also well-placed
to rollout the Indian infrastructure growth story ahead. Moreover,
companies in the infrastructure space are backed with strong orders which
show strong revenue visibility in coming future. Therefore, looking at the
current scenario and future growth potential experts expect Indian
Infrastructure Sector to outperform the trends in long term thereby
providing excellent investment opportunities in the sector.
Introduction of Public Private Partnerships (PPP): Government has
introduced the concept of public-private partnerships in India, to combine
the best practices of public and private sectors to efficiently develop and
maintain infrastructure facilities.
The construction industry everywhere faces problems and challenges.
However, in developing countries like India, these difficulties and
challenges are present alongside a general situation of socio-economic
stress, chronic resource shortages, institutional weaknesses and a general
inability to deal with the key issues. There is also evidence that the
problems have become greater in extent and severity in recent years. One of
the charges leveled at the construction industry, as at the beginning of
the 21st century, is that it has a poor record on innovation, when compared
with manufacturing industries such as aerospace or electronics.
SEGMENT WISE OR PRODUCT WISE PERFORMANCE:
As the members are aware that your Company has newly entered in this
segment and is operating at present in single segment of infrastructure and
constructions
INDUSTRY OUTLOOK:
Infrastructure remains a vital sector for India's growth story. But, lack
of adequate infrastructure is a major constraint in India's growth.
Infrastructure, which was the golden sector a few years ago, is battling
regulatory bottlenecks, land acquisition delays and credit crunch. Without
any dichotomy - the future growth prospects of the Indian economy lingers
primarily on the infrastructure investment and timely execution of the
projects. The infrastructure sector was one of the thrust areas in Union
Budget 2012-13 as a string of measures were announced in the budget.
Manufacturing sector projected to grow at 4.5 per cent. Electricity,
automotive, steel and cement sector have shown improvement in the period of
April-June. Because of the benefits of the low base, manufacturing sector
will show improved performance in the second half of this year.
Construction expected to show some improvement compared to last year as
evidenced by the recent increase in the output of steel and cement.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has a proper and adequate Internal Control System to ensure
that all the assets are safeguarded and protected against any loss from
unauthorized use or disposition and that all transactions are authorized,
recorded and reported correctly.
The Company's Internal Control System is supported by an adequate programme
of internal audit, conducted by the Auditors of the Company, reviewed
periodically by the management together with the Audit Committee of the
Board. The Management also regularly reviews the operational efficiencies,
utilization of fiscal resources and compliance with laws so as to ensure
optimum utilization of resources and achieve better efficiencies.
FUTURE OUTLOOK:
Infrastructure development is a major input to economic development and
sustained growth in an economy. As India continues down its path of
development, infrastructure has become increasingly important. Although the
Indian Government has been proactive in building necessary infrastructure
in the energy, transportation, and urban sectors, additional investment is
needed. Like many countries, private-sector involvement will be critical in
escalating India's infrastructure beyond meeting basic needs and reaching a
level that advances the efficiency with which India's economy operates.
Many PPP and BOT Projects have been and will continue to be a growing trend
with very large investment plans. Although, the climate for the
infrastructure sector in India is strong in the long run, there is a
temporary concern of:
* A slowdown in the global economy
* Growth in global competition; and
* Weakening international currencies.
To respond to this, SIIL has embarked on a plan to:
* Take advantage of the growth in global competition and to partner with
those companies who compliment SIIL's specialisation, experience and know
how, to grow its top line; and
* Increase its bottom line through rigorous receivables management, lean
operations management and tight project management practices.
* The Company is equipped to undertake and carryout a reasonable share of
the Infrastructure Development for years to come.
* The Company has adequately trained manpower and sophisticated plant,
machinery and equipment to withstand the scope of work to the international
standard.
* The Company is well equipped to contribute its might in the best interest
of infrastructure development and it is poised for further growth and
development in germane fields of civil engineering.
* It has built up in-house strength for quality construction scheduled for
completion within given time, conforming to rigid technical specifications.
We believe that through the above actions we will be able to navigate
through any uncertain times and take advantage of future developments.
Annexure - II
Disclosure under Clause 12 of the Securities and Exchange Board of India
(Employee Stock Option Scheme) Guidelines 1999.
Particulars Details
a) Options Granted 30,00,000
b) Pricing and Pricing formula as decided by the Remuneration
Committee but shall not be less
than Rs.10/- (Rupees Ten Only)
per share
c) Options vested on Date:
(31.03.2012) Nil
d) Options Exercised (31.03.2012) Nil
e) Total No of Shares arising as a
result of Exercise of option 30,00,000
f) Option lapsed Nil
g) Variation of terms of options Nil
h) Money realized by Exercise
of options Nil
i) Total No of options in force Nil
j) Employee wise details of Options
granted to Senior managerial Personal
ii) Employees receives a grant of
5% or more of options granted
during that year None
iii) Employees receives grant of
1% or more Issued Capital None
K) Diluted Earnings Per Share (EPS) Not Applicable, as amortization
Pursuant to issue of Shares on will commence in the financial
Exercise of options calculated in Year in which exercise of Options
accordance with the Accounting
Standard (AS-20) 'EPS'
L) Where the Company has calculated Not Applicable, as amortization
the employee Compensation Cost will commence in the financial
Using the Intrinsic value of Stock Year in which exercise of Options
options, the difference between the
Employee Compensation Cost so
computed and Employee Compensation
Cost that shall have been recognized
if it had used the fair value of the
options shall be disclosed.
M) The Impact of this difference on Not Applicable, as amortization
Profits and on EPS of the company will commence in the financial
shall be Disclosed Year in which exercise of Options
N) Weighted average exercise prices
and weighted average fair values of
options shall be disclosed separately
for options whose exercise price
either equals or exceeds or is less
than the market price of the stock. NA
O) A description of the method and NA
significant assumptions used during
the year to estimate fair value of
options including following weighted
average information
i) Risk free Interest rate
ii) Exercise Price
iii) Expected life of the option
iv) Expected volatility
v) Dividend Yield
vi) Price of the underlying share
in the market at the time of the
option grant.
vii) Fair value of the option (Rs)
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