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GUJARAT OPTICAL COMMUNICATION LIMITED
ANNUAL REPORT 2002-2003
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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