adam comsof ltd Directors report

ADAM COMSOF LIMITED ANNUAL REPORT 2002-2003 DIRECTORS REPORT To The Members, Your Directors are pleased to present the 13th Annual Report, together with the audited accounts, for the financial year ended 30th June, 2003. FINANCIAL RESULTS: (Rs. in Lakhs) 2002-03 2001-02 GROSS INCOME: Exports - 19.00 Domestic 1522.60 3127.08 Other Income 27.72 28.06 TOTAL 1550.32 3174.14 OPERATING RESULTS: Profit Before Tax 123.22 782.52 Provision for Taxation 10.50 74.00 Provision for Deferred Tax 0.02 6.27 Net Profit After Tax 112.70 702.25 Add: (Short)/Excess Tax (0.70) (0.04) Provision of earlier Years. Balance Brought Forward 2145.25 1443.04 from Previous year Balance Available for Appropriation 2257.25 2145.25 APPROPRIATIONS: Transfer to General Reserve 100.00 - Surplus Carried Forward 2157.25 2145.25 KEY RATIOS: The following ratios appropriately reflect, the financial performance and position of your Company: Particulars EY2002-03 FY2001-02 Earnings Per Share 0.84 5.25 Interest Coverage Ratio 10.69 39.98 Net Profit Ratio 8.09% 24.87% Current Ratio 10.98 8.43 Book Value Per Share 30.32 29.48 DIVIDEND: Your Directors are of the view that the IT sector has to face challenges and changes in technological development. In order to meet the diversification and expansion programmes it is necessary to conserve the resources and hence the inability to recommend dividend LISTING AGREEMENT WITH STOCK EXCHANGES: Pursuant to requirement of Listing Agreement, the Company declares that its securities are listed on stock exchanges at Mumbai, Ahmedabad, Calcutta and Cochin. The Company confirms that it has paid annual listing fees, to all the above Stock Exchanges up to the year 2003-2004. The company is regular in complying with the guidelines of the Listing Agreements. VOLUNATARY DELISTING FROM THE OTHER STOCK EXCHANGES: In order to economise on expenditure on listing fees and in view of SEBI Guidelines permitting delisting, the Company has decided to get its shares delisted from Calcutta and Cochin Stock Exchanges. A resolution in this regard has been incorporated in the accompanying notice. IN-HOUSE CONNECTIVITY FOR DEMATERIALSATION OF SHARES: In compliance with the SEBIs directives the company has established in- house electronic connectivity with NSDL and CDSL and all shares registry functions in terms of both physical and electronic are being discharged at single point at its registered office. RESULTS OF OPERATIONS: The Company sought to effect radical changes in its product line and the resultant category of customers that it deals with, during the year under review. As a result of such changes being effected, the gross turnover was adversely hit and recorded a significant fall during the year. Your Directors however take satisfaction from the fact that despite such a fall in turnover, its bottom line remained positive which is seen as a validation of the presently amended business plans of the Company, there was also a reduction in the operating and administration costs, due to long term cost cutting measures initiated by the Company, which are bearing result. Due to debt reduction and restructuring, an encouraging reduction in the financials costs and interest was also recorded. The results for the improved period may be viewed as those of an intervening period when a revalidation of business plans was being effected by the Company. FUTURE BUSINESS AND OUTLOOK: The Indian economy, in tandem with the world economy, has registered a marked growth in the current fiscal. Our GDP is expected to grow by 8% aided by a smart recovery in agricultural growth and industrial production. The recovery has been balanced and all round, and information technology remains a bright spot. Due to the sharp pick up in IT spend in the key Western markets, these has been a growth of almost 25% in the IT sector in India. It has been witnessed in hardware as well as the software segments of information technology, wherein the company is very well positioned. This growth momentum is perceived to be of a long term and is expected to surge ahead, in the near foreseeable future too. As long as the Company moves its trade and business into products in demand, profitable growth is bound to be registered. The outlook for business is thus bright and is very encouraging. As more and more foreign companies seek to tap our strength in the 17 sector, it will further expand our markets and help us to record a faster growth. India is indeed very well positioned in the IT business globally, which should enable it to drive further growth in the Indian economy too. Your Directors are confident of adopting the companys business to new products and sector from time to time. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: Pursuant to Clause 49 of the Listing Agreement, a Management Discussion and Analysis Report, giving segment wise performance and outlook is given as Annexure to this Report. CORPORATE GOVERNANCE: A separate section on Corporate Governance Report, is included in the Annual Report together with the Certificate from the Companys Auditors, confirming the compliance of the conditions. DIRECTORS RESPONSIBILITY STATEMENTS: Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors subscribe to the Directors Responsibility Statement and confirm that: 1. In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures. 2. The Directors have such accounting policies and applied them consistently and made judgments and estimates that are resonable and prudent, so as to give a true and fair view of the state affairs of the Company, at the end of the financial year and of the profit or loss of the Company, for that period. 3. They have taken proper and sufficient care, to the best of their knowledge and ability, for the maintenance of adequate accounting records, in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. 4. They have prepared the financial statements on a going concern basis. FIXED DEPOSITS: The Company has accepted fixed deposits within the meaning of Section 58A of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 and the required rules have been duly complied with. DIRECTORS: Dr. Umesh R. Khariwala and Mr. Raja Yadav, retire by rotation and being eligible, offer himself for reappointment at the ensuing Annual General Meeting. Mr. Rajkumar C. Basantani, Dr. Swamy Pravin Kartikaswamy, Mr. Vijay Jain, and Mr. Haresh Teckchandani has resigned as Directors of the Company, in view of their other pressing engagements, which prevented them from devoting adequate time to the Company. The Board places on record, its appreciation for the valuable contributions made by them. Further Dr. Umesh R. Khariwala and Mr. Raja Yadav were appointed as Additional Directors in the Board. APPOINTMENT OF MANAGING DIRECTOR: Mr. Vikash Seth were appointed as additional director and the Board has proposed to appoint him as the Managing Director of the company in the forthcoming Annual General Meeting, considering his rich experience in the industrial and commercial field. Thus, your approval is sought for his appointment vide resolution set out in the accompanying notice. CHANGE OF CONTROL: The Company is planning to come up with some expansion plans. Mr. Raj Basantani was the Chairman and Director of the company and looking after day to day management of the Company. The Securities and Exchange Board of India in its order dated September 19, 2002 barred Mr. Raj Basantani from assessing the Capital Market for a period of 3 years. Since the Company is planning to come up with some expansion plans, the order against Mr. Raj Basantani could be a roadblock in the smooth going of process of expansion work. Thus Mr. Raj Basantani has requested the Board to accept his resignation in the best interest of the company and proposed to shift the control to Mr. Vinod Hingorani and to appoint him as the Chairman of the company. The Board has approved the change of control in its Board Meeting dated 2nd August, 2003 and the same is being confirmed by special resolution under section 192A of the Companies Act, 1956 and Regulation 12 of the SEBI (Take Over) Regulation in the Extra Ordinary General Meeting held on 6th September, 2003 with the facility of Postal Ballot. AUDITORS: During the year Ms. Sunita Narang, Chartered Accountants have resigned as the Statutory Auditor of the Company due to her other pre-occupations. The casual vacancy caused by her resignation was filled by the appointment of M/s. V. Subramanian & Co., Chartered Accountants, in the Extraordinary General Meeting held on 61h September, 2003, till the conclusion of 13th Annual General Meeting. Shareholders are requested to re-appoint the Auditors to the Company. M/s. V. Subramanian & Co., Chartered Accountants, the statutory auditor of the Company, retires at the Annual General Meeting and is eligible for reappointment. AUDIT COMMITTEE: The Audit Committee consists of three non-executive directors. The present members of the committee are Mr. Vinod Hingorani, Dr. Umesh Khariwala and Mr. Raja Yadav. Mr. Vinod Hingorani is the Chairman of the Audit Committee. The role, terms of reference, the authority and power of Chairman are in conformity with the requirements of the Companies Act, 1956. The Committee met periodically during the year and had discussions with the auditors on the internal control systems and internal audit report. PARTICULARS OF EMPLOYEES: Information, in accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, regarding the employees, is presently not applicable to the Company. Since no employee draws the amount, as specified in the provision. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION: The operations of the Companyt are not energy intensive. Adequate measures, have however been taken, to reduce energy consumption. There was no transaction pertaining to technology acquisition during the year under review. FOREIGN EXCHANGE EARNINGS AND OUTGO: The total foreign exchange during the year, through exports is Rs.Nil Lacs (Previous year Rs.19 Lac) as against the total foreign exchange expenditure ampount of Rs.Nil Lac (Previous Year Rs.Nil). APPRECIATION: Your Companys relation with the employeed at all level has been cordial. The Directors take this opportunity of placing on record their appreciations of the devoted and committed services rendered by the staff during the year under review. By and on behalf of the Board of Directors For ADAM COMSOF LIMITED Place: Mumbai Vinod Hingorani Date : 5th December, 2003 Chairman Management Discussion and Analysis A. GENERAL: The global economic situation as well as that of India, has improved considerable in the past few months. After four years of of chronic downturn, the American economy has recorded stunning growth of 7.2% in its last quarter its highest ever in the past 20 years. Japan has at last recorded a positive growth, much as China continues to raise ahead with officially announced growth rate of over 8%. After fall in the growth rate to 4.8%last year due to a crippling drought, the Indian economy is expected to grow by over 8%o in the current fiscal,due to a bountiful monsoon and an all-round growth impectus. Agricultural production is expected to increase by over 20% YOY, industrial production is up by about 11%, the service sector growth rate too is beyond 12% and exports are growing by almost 10%, Indias international trade has registered a marked growth both in exports and imports. The encouraging aspect in our global trade is the continuing rise in our non oil imports, indicting a growing expenditure on capital goods and addition to productive capacity. Though the current year for India,is expected to end with the deficit in the current account in foreign trade, yet it will be more than made up by the growing invisible receipts and the bulging foreign exchange reserves, which have already crossed $96 billion, the growth in India has been balanced, with a sharp uptick in the demand in the rural sector. A bountiful monsoon indeed does wonders to the Indian economy. The bright spots in our growth story remain pharma, auto components, biotech and pharma ofcourse. Founded on a now widely appreciated education system. India is forecasted to be very well positioned on all knowledge sectors-the latest to be recognized being ouer engineering and design capabilities apart from our great talent,due to year of relentless reform, Indian corporates have effected structural connections, absorbed state of the art technology and are ready to compete in the toughest of the global markets. Based on their ability to produce top quality goods and provide excellent services, at very competitive prices. The growth of India in international markets is not due to our low cost advantages only, but due to the real attraction to our ability to produce goods and provide services of the highest order. India is integrating rapidly with world markets, on the basis of its own strengths and synergies and also due to the globalisation initiated by multilateral bodies like the WTO. Being projected as a rising economic global power, India is surging ahead to occupy its rightful place in the unity of nations. The growth importers being presently witnessed is of along-term nature and will enable India to banish poverty, derived prosperity and fulfill the aspirations of the Indian public. Indias technology sector is expected to be on the forefront of such growth momentum and will be a key driver thereof, as a result of political stability and sagacious political leadership. India should be able to harness the growth trends so as to provide the greatest prosperity to the greatest numbers, which is the objective of every political and economic system. I. BUSINESS STRATEGY AND OUT LOOK: Micro economic trends, which indicate growth, also average growth at the micro level and translate into growing growth opportunities for individual corporate. The challenge is to be engaged in those activities, which are expected to the registered. The best growth and to keep a vigilant eye on performance such as the overall outlook is bright and filled with opportunities, gains to individual corporate with therefore accrue only if smart and dynamic business strategies are applied. The IT industry outlook has improved significantly due to the general growth in the world economy and due to the increase IT spend in the west in particularly. Added to the IT growth has been that off of the booming IT enabled services, such as BPO and Call centers in India. These call centers have registered such a formatable in India, that they have caused political turmoil in America, with calls for imposition of restrictions therein, in the land of free trade. The growth momentum in these sectors is said to be at its infancy and much better growth is expected to be registered in future years. As long as Indian corporates are able to provide top quality products at competitive prices and display the ability to move up the value chain, the growth process will go on unabated. It is worth noting that despite the protracted downturn witness by America in the past four years and the unfortunate meltdown in the silicon valley, the Indian corporates did not record any downturn in the performance. All that happened was a dip in the rate of growth, which in itself was a timely rectification. The company continues to be focus on its business of software development and ancillary trade. It has altered its product pipe line significantly, to bring in tune with products and services, which are and which will continue to be in demand. This also entailed the shifting of custom of focus and relationships and retraining of staff, in order to adapt to the new business model and paradigms. The companys current business strategies encompasses the following: 1. Constant review of the business scene, to spot emerging trends and also to identify those getting into obsolence. 2. Technical upgradation, to adapt to new skills and products, from time to time. 3. Reviewing the product pipe line and amending the business plans. 4. Cultivating customer relationships and loyalty, by providing top quality services at reasonable prices. 5. Cost cutting to remain profitable and competitive. 6. Development of a diverse range of relationship for sourcing goods, in order to remain at cutting edge competitiveness. 7. Exploring strategic tie-ups for business growth. The IT industry is constantly evolving and demands high level of dynamism and adaptability. That it itself is the crisis as well as the opportunity for nimble players. To remain profitable, it demands vigilance affinity for change and swift shifts strategy. The overall outlook for the industry though may be encouraging, is also very challenging. successful strategies are likely to endow the company with growing profits. C. INDUSTRY STRUCTURE AND DEVELOPMENT: If there is one segment of the Indian industry, which has called global fancy, it is the software industry. It has virtually become the international face of Indian business and had brought resounding appreciation for its top quality skills. So attractive is its offering, that every foreign major seeks to tap it, to augment its own revenues or to cut its cost and thus inturned drive the profitability parameters. Thus apart from the hundreds of the home grown firms, brimming with dynamism and skills, there are dozens of subsidiaries of foreign majors, engaged in in- house technology development. In tandem with the software industrys growth, also growing is the segment of the enable services, which consist of call centers and BPOs, which have been mushrooming all over the countrys key centers viz. Banglore, Gurgaon, Chennai, Mumbai and Pune. If our IT skills are validation system and processes, the growth of the software business is a validation of the business model, where minimal Govt. interference ensures unbridled growth. Over the years, as sector as grown, Indian I.T. firms have gained a larger market share, due to wider range of skills and increased manpower and technology base. At bottom of this software industry, are hundreds of entities, started by trained technicians, but possessing cutting edge skills in software development. These startups possess valuable skills and expertise, which are comparable with the best in the world, thus justifying our recognition of being a growing technology power. At the top end are the software biggies like TCS, Infosys and Whipro which are all set to number the $1 billion mile stone in software billings. This software giants employ thousands of software professionals, possess huge state of the art facilities, have a proven technical and business ability and their clients are the top entities in the fortune 500 list. They have graduated from low end body shopping to development of software products and do keep moving up the value change. The profit margin in both the segments are chiefly determine by the level of skills they possess and the quality of services/products, that they provide to their clients. Recognising the long term gain that lie in a base of products, these firms also seek to acquire domain knowledge and develop exclusive products and services. Every passing year witnesses are deeper integration of Indian firms with foreign entities, as they seek to take advantage of our technology skills and seek to establish robust and profitable relationships. In the year under report, a marked up tick was recorded in the growth equations of Indian software firms. While a growth in tech. Spend in America helped, so did the continued upsurge in IT spends in the domestic Indian markets. The current fiscal is recording in an average growth rate of 25%. Encouraged by such growth over the years, more and more Indian firms are setting up base in foreign markets as the seek to have a large share therein. Software exports have recorded a smart recovery and the forecast is that of a growing share for them in the global software markets. The easy and cheaply priced connectivity has unable the growth through provision of offshore development services. Thus despite lesser number of Indian software engineers going abroad, yet the software export turnovers have increased significantly. The growth in demand for software in Indian markets has open yet another lucrative market for Indian firms to tap. The domestic software segment is another profitable area, with a deep long term potential. The American economy, which is the largest customer for our software companies, has staged a remarkable recovery. It is back to a strong growth path, which is expected to search and sustain. While the public protests for outsourcing technology and call centre assignments to Indian firms are a source of peripheral concern, the fact is that as long as Indian software firm possess cutting edge skills and fend over technological obsolescence, they will continue to grow at a fast pace in all the software demand centers of the globe. In a sector where dynamic skills are core food for businesses, the track record of Indian firms has been very satisfying so far. Yet challenges do remain as in the case of any business battle, and constant up gradation will remain the key issue at all times. D. OPPORTUNITIES AND THREATS: The IT industry is loaded with opportunities and threats, which go hand in hand. Rapid and sudden changes in technology, which radically alter demands, is the biggest ingering threat, which has the capability to wipe out profitability and firms at times. Just as technological obsolescence can render firms impotent overnight, so can technical innovation give rise to large and sudden profit potency. Thus firms which are slothful and inertia prone have as much a chance of failure as dynamic and nimble firms have a chance of resounding success. Vigilane, monitoring industry trends and constant technological up gradation and innovation are the mantras to ward off threats and bestow profitable opportunities to firms. Technology continues to have short and sudden phases survival and profitable. In such cases todays profitable segments could simply wither away tomorrow. Adaptability needs to be the key corporate motto and innovation its driving mission. While computing remain a low key and low profit business, storage is maturing and niche technologies like WIFI and Internet connectivity, which converge computing, telephonic, internet and television are where the rich pickings lie. A lot of times the shifts have caught even the best and most alert once unaware, as happened in the case of much touted 3G technology in telecom. Indian firms are said to be very well position in this game of technology upheavals and are supporting all kinds of established and emerging technologies. Yet while Indian firms are widely uploaded for their technical ability and performance capabilities, yet complacence and creeping cost are growing threat. A number of players in China and Philippines are seeking to replicate the Indian model and to repeat its success story. In an era of unlimited media and unlimited interconnectedness, the resurgence of new software centres should not be a rude surprise. Indias software strategy for profitable growth to ward of competition need to be based on a movement up the value chain, constant technological up gradation and a control on cost. Upgradation must be constant in skills, software and hardware, so that Indian firms are not caught napping while other race past. The company has a comprehensive corporate strategy toward of threat and to take up opportunities. It has been reviewing its strategy from time to time, based internal analysis and output from external consultants in order to remain competent and competitive. It also seeks to develop domain. knowledge and exclusive software products which give enduring profitability to operations. Strategic tie-ups are being considered to strengthen the company and enhance its profitability. E. SEGMENTWISE PRODUCTWISE PERFORMANCE: The Segmentwise details of performance are as follows: (Rs. in lakhs) Sales 2002-03 2001-02 Local Trade 1522.60 3127.08 International Trade - 19.00 Other Income 27.72 28.06 Total 1550.32 3174.14 As a result of a shift in products profiles in the IT Industry which necessitated a change in the product mix, the company recorded a steep fall in its turnover during the year. The company has entered a few product segments, due to turn of technology and for ensuring a correction in its long terms business strategy. The current years performance has been satisfied, indicating the fact that the change in strategy is bearing result for the company. For an entity engaged in a technology oriented business, such product shift are a usual phenomenal. These setbacks are temporary and will energies the company for better long term growth. The company continues to enjoy excellent customer relationship and has a sharp focus on deliverance of top quality, state of the art, competitively priced products to them. In addition to the product mix changes, the company has resorted to all-round cost cutting and control, to improve profitability for now and for the future. The adverse trends of sales have been reversed indicating a success in the companys shift in the business paradigm. A significant improvement in the profit margin is expected upon the on going programme of cost cutting and alteration of the product mix. The previous year also witnessed a slowdown due to the overall down turn in the Indian economy. Due to the upswing in the Indian economy during the current fiscal, the erratic trends have been mitigated. The company continues to explore the option of having exclusive suppliers. A few such options are under discussion and are expected to bestow long-term benefits to the company. E. RISKS AND CONCERNS: Technology induced shifts in product and resultant change in customer preference is a central risk for any entity engaged in the I.T. business. An unfavorable trend and being caught unawares, affects sale price profitability and cash flows advisable. These risks can only be mitigated by strong inherent ability to adapt and absorb new technologies and moving product sales quickly, to avoid any sudden saddling of unsold stock. Since the I.T. business has global reach and thus attracts global competition, the changes in technology and the resultant challenges, get further accentuated by the fact that competition is largely global and not merely confined to local player. These risks of obsolesce are a constant danger, to our software, as well as hardware businesses. Yet, the very factor that endows lucrative profits to the IT industry to is such change. Unlike any other industry, the change here is radical and can be sudden. Its implications can be wide trend and can impact the full user industry. Though a matter of deep concern, incidentally. This is also where the possibility of earning huge profit lies. Much as such changes have the potential to endanger the very survival of firms, yet they also bistow bounties on those entities which foresee the shifts and are prepared for the alter business equations. The awareness for such shifts and the training to adapt to new products processes and technologies, is an on going process, both at the top managerial levels, as well as the lower operating levels. As part of these challenges, the company also makes forays into businesses, which are in an emerging mode, in order to build strengths and acquire up-to-date skills and technology. The inputs in this regards, are internally generated and are also source from external consulting firms. Competition induced price risks are a recurring risk in the IT industry, where product prices tend to fall and newer supply sources too erode it with predictable regularity. Much as the strategic direction of the company is to continuously work on the Improvement of prices and profitability, yet it depends on the overall international trends in product prices. The selling prices generally are market denominated and the only protection for the company here is to ensure that it is not saddled with unsold stocks. The company also mitigates this risk, by constantly nurturing customer loyalty, founded on the supplies of top quality products and the best of services. Low inventory levels, product vigilance and movement into low competition areas, also help to mitigate the risks here. The levels of competitions keep residing, as the company strive to move up the value chain. Since the company does not presently have any significant amount of exposure to foreign currency, whether on current or capital account, it faces little currency risk. Moreover the corporate policy is to ensure that at no point of time our currency risk remain uncovered. However, as India gets increasing integrated into global markets, with IT sector being a forerunner, such risks will increasing become an inherent part of our businesses and we will need to factor them into our financial performance parameters. The company constantly addresses such financial risk as those towards interest, liquidity and funds management, by adopting prudent financial management, often wetted by outside financial consultants, retain by the company. The American led global economic recovery being presently witnessed, is bound to be of benign repercussions for the Indian IT industry, which is recognized as global technology power house. A number of our software companys have crossed billion dollar mark in annual turn over and are position very well for further growth. The fact yet remains that a few low cost centers like China & Phillipines are providing nascent competition to us. They are entering into technology tieups and are putting in focused efforts to enter our domain. In an increasingly open world, no one has any exclusive claims to technology, which can be available of the shelf for a price. Yet competition can be mitigated, if we leverage our proven experience and strong customer relationship to enter into sectors with far better value addition potential. It is worth noting that tech spend has improved considerably in our key markets of USA & Europe and the demand for our products and services is buoyant and surging. Moreover the Indian model of providing offshore technology services is being widely applauded and has attracted a number of large MNCs, to set up software subsidiaries in India. The interesting part here is that it is not companies from the West who are seeking our services, but those from the East too are demanding technology from India, in greater numbers. It has helped us to widen our customer based and broaden our skill sets. Despite such favourable trends, the fact is that competition is at our heels at all times and we need to remain technically uptodate and price competitive, at all times. G. INTERNAL CONTROL: Robust and evolving systems of internal control are the best defence against frauds or asset abuse. The company has a reasonable system of internal control, comprising authority levels and powers, supervision, checks and balances, policies procedures and internal audit. The systems are reviewed, rectified and updated, on an ongoing basis. These systems provide a reasonable assurance with regard to maintenance of proper financial records, preserving the economy and efficiency of operations, safeguarding assets against unauthorized use or losses and facilitating the reliability of financial and operating information. The Management Information System (MIS) constitutes the backbone of the overall control mechanism. Clearly defined roles and responsibilities, down the line, for all managerial positions have been institutionalized. All operating parameters and monitored and controlled. Regular internal audits and checks ensure that responsibilities are executed effectively and that the MIS is flawless, among a well established system of managerial control. The internal control system include: * Clear delegation of power with authority limits for incurring capital and revenue expenditure. Corporate policies on accounting and capital raising. * Established processes for setting and reviewing annual and long term business plans and preparation and monitoring of annual budgets. * A suitable internal audit system, which inter alia, reviews the internal controls of the company and actively contributes to cost control * An audit committee of the Board of Directors, with a majority of independent directors, which regularly reviews the audit plans, material audit findings, adequacy of internal controls, as well as the compliance with Accounting Standards. The Systems of internal control of the company is adequate, keeping in mind the nature and size of the business of the Company. H. DISCUSSION ON FINANCIAL PERFORMANCE: The financial statements of the Company, are prepared, in compliance with the requirements of the Companies Act, 1956 and the generally accepted accounting principals, as established by the ICAI in India. The management of Adam Comsof Ltd. accepts the responsibilities for the integrating and objectivity of these financial statements and the basis for various estimates and judgments, used in preparing the financial statements. There has been no change in the accounting policies adopted by the company and are same, as where followed in the earlier accounting periods. (Rs. In Lacs) BALANCE SHEET AS AT 30th JUNE, 2003: Share capital 1338.20 Revenue and surplus 2719.01 Secured loans 2.69 Unsecured loans 140.87 Gross fixed assets 489.78 Accumulated depreciation 167.69 Investments 202.45 Inventories 19.79 Debtors 3064.04 Loans and advances 960.39 Cash & bank balances 7.05 Current liabilities & provisions 368.46 RESULTS OF OPERATIONS FOR THE YEAR ENDED 30th JUNE, 2003: Income for sales 1522.60 Other income 27.72 Cost of goods sold 1231.94 Salaries and manpower 65.50 Selling admn. And general expenses 81.10 Depreciation 34.64 Interest 12.71 Amortisation & write off 0.28 Income tax 10.52 L. OUTLOOK FOR 2003-2004: The economic outlook for 2003-04 is a considerably improved one. The major economics of the world, led by America are displaying buoyand growth, which is accepted to endure in the coming years. The other economies, which are growing rapidly, are China, India and Russia. The opportunities for growth are likely to be above. Due to years are globalisation, the Indian entities now have a changed mindset, where they perceive global markets to be their turf and not merely local once. With a sterling growth expected, both in the Indian economy, as well as the global economy in the coming months, Indian company like ours have chance to attempt rapid growth and to enter new territories and products. The growth forecast for India for F.Y. 2004 is GDP of 8%, fuelled by 20% growth in agriculture, 10% growth in industrial production and a continue upsurge in the service sector. Our economy is poised for a long-term growth and we are making the required efforts to be part of such growth momentum. The policies of the Govt. to recognized the growth search and are tuned to facilitating it. CAUTIONARY STATEMENT: Statement in this Management Discussion and Analysis, describing the companys objectives, projections, estimates, expectations or predictions, may be forward looking statements, within the meaning of the applicable securities laws and regulations. Actual results could differ materially, from those expressed or implied. Important factors that could make a difference to the Companys operations include availability and price of cost of goods sold, cyclical demand and pricing in the Companys principal markets, changes in government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors. On behalf of the Board, For ADAM COMSOF LIMITED Place: Mumbai Vinod Hingorani Dated: 5th December, 2003 Chairman