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GUJARAT OPTICAL COMMUNICATION LIMITED
ANNUAL REPORT 2002-2003
DIRECTOR'S REPORT
To,
The Members
Gujarat Optical Communication Limited
Your Directors have pleasure in present their Ninth Annual Report together
with the Audited Statements of Accounts, for the Period ended 30th June,
2003.
FINANCIAL RESULTS:
(Rs. In Lacs)
PARTICULARS Year Year
Ended Ended
30.6.2003 30.6.2002
Gross Total Income 1813.58 5652.93
Profit Before Interest,
Depreciation & Tax (1326.71) 290.04
Less: Interest &
Finance Charges 83.93 1507.39
Profit after Interest but
before Depreciation & Tax (1410.64) (1217.35)
Less: Depreciation 281.59 281.57
Profit / (Loss) before Tax (1692.22) (1498.92)
Profit /(Loss) after Tax (1692.22) (1498.92)
Surplus/ (deficit) carried
forward from the Previous year (4901.94) (3406.21)
Less: Prior Period expenditure (258.18) (3.20)
Balance Carried to Balance
Sheet (6335.98) (4901.94)
OPERATIONS AND FUTURE OUTLOOK
During the year Under review, your Company was able to achieve a turnover
of Rs. 1738.37 Lacs as compared to Rs. 5523.42 Lacs achieved during the
previous year. The Income during the year has come down to Rs. 1813.58 as
compared to Rs. 5652.93 during the previous year. The decline in the
Turnover and income is mainly due to the steep decline in the prices of
Jelly Filled Cables not limited to your Company alone but also covered the
industry itself. With a view to offset the effect of the falling prices,
your Company has embarked upon A Major Cost cutting Exercise in the entire
operations of the Company.
Further, your Company is also exploring the possibility of diversifying in
other areas with the opening up of the Telecom Sector, the number of
players has increased to a great extent. This throws open various
opportunities as well as challenges to the Company. The Company is aware of
the said fact of dwindling demand of the PIJF Cables and taking into
consideration the existing state-of-the art manufacturing facilities which
is coupled with quality manpower, the Company has identified and developed
a wide range of electrical and specialised communication cables and the
Company is making vigorous efforts to cater the market thereof.
DIRECTORS:
Shri Ramjibhai H. Patel, Director of the Company retire by rotation at the
ensuing Annual General Meeting and being eligible, offer himself for
reappointment.
AUDITORS:
M/s Manubhai & Co. Chartered Accountants, hold Office till the conclusion
of the ensuing Annual Genera! Meeting and are eligible for reappointment.
The Auditors Report, the observation of the Auditors read in conjunction
with the Notes on accounts are self explanatory.
DIRECTORS' RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217 (2AA) OF
THE COMPANIES ACT, 1956.
The Directors confirm that -
(i) in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departure;
(ii) appropriate accounting policies have been selected and applied
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the Profit or loss of the
Company for that period;
(iii) That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities ;
(iv) That the directors had prepared the annual accounts on a going concern
basis.
CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges,
Management Discussion and Analysis, Corporate Governance Report and
Auditors Certificate regarding compliance of Corporate Governance are made
a part of the Annual Report.
PARTICULARS OF EMPLOYEES
There are no Employees who are covered as per the Provisions of Section 217
(2A) of the Companies (Particulars of Employees) Rules, 1975.
COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF
DIRECTORS) RULES, 1998.
In terms of the above rules, the Board is pleased to give the particulars
as prescribed therein in the annexure which forms part of this report.
ACKNOWLEDGEMENT
Your Directors are grateful for the assistance and co-operation received
from the Financial Institutions, Banks, and Employees of the Company
By order of the Board
Place : AHMEDABAD R. H. PATEL
Date : 29th November, 2003 CHAIRMAN
ANNEXURE TO THE DIRECTORS' REPORT
COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF
DIRECTORS) RULES, 1988.
(A) CONSERVATION OF ENERGY
As in the past, the company continued its efforts to improve methods of
energy conservation and utilisation.
(B) TECHNOLOGY ABSORPTION RESEARCH AND DEVELOPMENT (R & D)
RESEARCH AND DEVELOPMENT (R & D)
1. Specific Areas in which R & D carried out by the Company.
Process Improvement. Product Improvement & Cost effectiveness.
2. Benefits derived as a result of above R & D :
Reduction in cost of Production & Improvement in quality & Productivity.
3. Future Plan of Action :
Efforts will continue to be made in the areas of cost reduction and product
and process improvement.
4. Expenditure on R & D :
R & D Expenditure has not been accounted separately.
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
1) Efforts in Brief toward technology absorption adaptation and innovation:
The Company has successfully absorbed the technology to manufacture all
types and and sizes of PIJF Telephone Cables and Optical fiber Cables and
efforts are continuously on to upgrade the same with innovation in design,
process controls and logistics.
2) Benefits derived as a result of the above efforts. :
Cost has been reduced where ever possible.
(C) FOREIGN EXCHANGE EARNINGS AND OUTGO
Total Foreign Exchange earned : Rs. Nil
Total Foreign Exchange Outgo : Rs. Nil
BY ORDER OF THE BOARD
Place : AHMEDABAD R. H. PATEL
Date : 29th November, 2003 MANAGING DIRECTOR
MANAGEMENT DISCUSSIONS AND ANALYSIS
OVERALL REVIEW
The Company is in the business of manufacture and sale of Jelly Filled
Telephone Cables and Optical fibber Cables.
Jelly Allied Telephone Cables were introduced by the erstwhile Department
of Telecommunications (DOT) to substitute paper covered unfilled cables in
order to solve the problem of water seepage in Telecom Cables resulting in
distortion of signals. The Telecom industry in India forms part of the
priority sector of the Industrial Policy of the Government of India and a
total outlay of Rs.40000 Crores have been planned for this sector in the
8th Five year plan. Bharat Sachar Nigam Limited (BSNL), part of erstwhile
Department of Telecommunications (DOT) and Mahanagar Telecom Nigam Limited
(MTNL) are the major purchasers of the cables accounting for more than 80%
of the domestic consumption, other users includes railways, defence and
other private sector telecom service providers. At present there are about
48 PIJF Cable Manufacturers In India, which has resulted in increase in
competition and pressure on the prices of the cables. The year under review
was a difficult year for the Telecom Industry due to steep decline in the
prices and increased competition.
FINANCIAL REVIEW
The Company's earnings were lower mainly due to steep fall of about 20% in
the cable prices.
OPPORTUINITES AND THREATS
With the Telecom Industry being part of Priority Sector, the Government of
India has ambitious plans carved out for the industry in is Eighth Five-
year plan. Gujarat Optical Communication Limited, with its huge
manufacturing capacity and being one of the major players of the Industry,
is in a better position to reap the fruits of the same.
The Telecom Cables Industry depends on the Bharat Sanchar Nigam Limited
(BSNL) and Mahanagar Telephone Nigam Limited (MTNL). During the year, BSNL
has floated the tender for a quantity which is less by more than 50 % of
the Tender for the previous year. This reduction is mainly due to increased
use of wire Less in Local Loop (WLL) technology by BSNL and MTNL and other
private operators. This is in addition to the increased competition from
the existing as well as new entrants in the Industry. Orders are being
accepted by the competitors at a rate much below the variable cost. The
Company is taking steps to offset the implications of this by undertaking a
major cost cutting exercise.
INTERNAL CONTROL SYSTEMS:
The Company has proper and adequate Internal Control System, which ensures
the proper authorization, recording and reporting of all the transactions
and safeguard of all assets from the risk of loss due to unauthorised use
and disposition. The in place internal control system ensures prompt
financial reporting, optimum utilisation of various resources and quick
reporting of deviations. Compliance with laws and regulations is also
ensured and confirmed and is reported in every Board Meeting.
The Company has fully computerised and integrated various financial and
accounting functions, information feed back system of process parameters
and back tracing from finished goods to raw-material stage.
All financial, operating and information technology systems are reviewed
from time to time by the Management.
INDUSTRIAL RELATIONS AND HUMAN RESOURCES
The biggest of any Company is its committed staff and work force, and your
Company sees its relationship with its employees as very critical to the
existence of the Company. The company's relations with the employees at all
levels are very cordial and peaceful.
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