1994 TELEMATICS SYSTEMS LIMITED DIRECTORS' REPORT TO THE SHAREHOLDERS Your Direclors have pleasure in presenting the Ninth Annual Report together with the Audited Accounts of the Company for the year ended 31st March 1994. OPERATIONS a) Volumes i) Rural Automatic Exchanges (RAX) - 128 PORT The procurement of this equipment which was decentralised during the previous year was again centralised and with the introduction of the 256 Port RAX syslem the demand for this product by DOT reduced substantially. As against a sales of 263 units in the previous year only 27 units equivalent to 2700 lines could be sold during the current year. ii) Rural Automatic Exchanqes (RAX) - 256 PORT Although the Company had obtained the necessary approvals there was subslanlial delay by DOT in releasing the orders and the quanlity was also reduced. Because of various problems faced by the Company in arranging for funds etc. only 2 nos. equivalent to 432 lines could be sold during the year. iii) SBM - RAX SYSTEMS (MAX) - The educational order received for 2 systems (equivalent to 2016 lines) was executed after oblaining the various approvals. However further orders for 6 syslems were received only in March 1994 based on the lender floaled in July 1993. In view of the inordinale delay in finalising the lender produclion and sales were restricled to the execution of educational order as mentioned above. iv) Push Button Telephones Delay in placement of orders and non availability of funds resulted in reduced volume of around 6000 nos. b) Operating Results Substantial lower volumes combined with lower prices for almost all the products resulted in a sleep all of gross realisation to nearly Rs. 333 lacs compared to Rs. 1213 lacs achieved last year. This also resulted in the Company incurring a cash loss of Rs. 311 lacs and a net loss of Rs. 366 lacs. FINANCE Non availabilily of funds continued to cripple operations. The cash credit limits with Indian Bank were substantially overdrawn. IDBI also did not disburse the balance amount of Rs. 31.60 lacs of loan sanctioned by them for MAX project but adjusted it against a part of their overdues. Your Directors have made every effort to cut overheads and keep expenditure to the minimum. DIVERSIFICATION During the year approval of prototypes for 256 Port and MAX systems were obtained and orders were also received. Garmin International USA has appointed the Company as their authorised agent in India to market the product Global Posilioning System" used extensively in Defence. Although the volumes will initially be small once the product is indigenised volumes may pick up. Non availability of funds continued to affect plans for various diversificalion schemes as well. EXPORTS There has been no significant development in this sector during the year. NEW TELECOM POLICY The recently announced Telecom Policy appears to offer plenty of scope for private parties to set up and operate exchanges in addition to offering other value added services. However full details of the policy including salient factors like tariff structure etc. are awaited. OUTLOOK FOR THE CURRENT YEAR The outlook for the current year does not give any room for oplimism. In recent tender opened by DOT for supply of Telephones in which the Company also participated the lowest bid was Rs. 411/-. This price will hardly give any margin. A part from the orders received in March 1994 for supply of SBMRAX systems for a gross value of Rs.300 lacs no other orders are expected in the near future. With continuing funds constraints lack of regular orders and the fact that the net worth has been eroded more than two ames there hardly appears to be any ray of hope in the immediate future. REFERENCE TO BIFR As a resut of the amendment early this year to the Sick Industrial Companies (Special Provisions) Act 1985 your Company a. having been registered for not less than five years and b. having suffered an erosion of its entire net worth s a "Sick Industrial Company". Your Directors have made the mandatory reference under Section 15of the said Act to the Board for Industrial and Financial Reconstruction (BIFR) and their advice is awaited. R & D AND TECHNOLOGY ABSORPTION Due to reduced prices for telephones the R & D leam is looking into ways and means of culling the cost of production of telephone. As quality cannot be sacrificed achieving cost reductbn may be a difficult process. CONSERVATION OF ENERGY Although our manufacture is not power intensive all possible steps are being taken to conserve energy. DIRECTORS During the year Mr. T.S. Vijayaraghavan IAS took over from Mr. Shaktikanta Das IAS and later Mr. K.A. Malhew IAS look over from Mr. T.S. Vijayaraghavan IAS. Also Mr. K. Appuswamy look over from Mr. R.T. Arasan and later Mr. Dipak Jain IAS took over from Mr. K. Appuswamy. Mr. P.M. Thampi and Mr. S. Ghosh resigned during the year. The Board wishes to record is appreciation of the valuable services rendered by Mr.T.S. Vijayaraghavan IAS, Mr. Shaklikanla Das IAS Mr. P.M. Thampi Mr. S. Ghosh Mr. K. Appuswamy and Mr. R.T Arasan. Mr.K.A.Mathew IAS Mr.Dipah Jain IAS and Mr. A. Joseph Louis retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. PARTICULARS OF EMPLOYEES As the emoluments of the employees are below the prescribed level a slatement of particulars of employees pursuant to the provisions of Seclion 217 (2A) of the Companies Act 1956 is not applicable. ACKNOWLEDGEMENT Your Directors take this opportunity to thanh the Govemment of India the Government of Tamil Nadu Eleclronics Corporation of Tamil Nadu Limited Industrial Development Bank of India Industrial Finance Corporatbn of India Limited The Industrial Credit and Investment Corporation of India Limited Indian Bank and The Hongkong and Shanghai Banking Corporation Limited for the continuous support they have given to your Company. Your Directors also wish to place on record the loyal and devoted service rendered by all the Employee of your Company throughout the year. FOR AND ON BEHALF OF THE BOARD R. DEVADASS Managing Director T.S. SUBRAMANIAN Director Madras 24th June 1994.