eider infotech ltd Directors report

EIDER INFOTECH LIMITED ANNUAL REPORT 2004-2005 DIRECTORS REPORT DEAR MEMBERS, Your Directors have pleasure in presenting the 15th Annual Report of the Company together with Audited Financial Accounts of the Company for the year ended 31.03.2005. FINANCIAL HIGHLIGHTS PARTICULARS 2004-05 2003-04 2002-03 (Rs. in Lakhs) (Rs. in Lakhs) Total Sales 2573.75 1850 1537.52 Other Incomes 10.08 8.11 6.95 Total Expenditure before 1829.73 1245.73 1093.705 interest and Depreciation Interest 0.53 0.45 0.46 Gross Profit after interest 954.1 611.93 450.305 but before Depreciation and Taxation Depreciation 109.80 97.47 89.75 Provision for Taxation 0.15 0.10 0.12 Net Profit after Dep. & 844.15 514.36 360.435 taxes Prior Period Adjustment Nil Nil Nil Appropriations Nil Nil Nil Transferred to General Nil Nil Nil Reserves Profits carried to Balance 844.15 514.36 360.435 Sheet. OPERATIONAL PERFORMANCE Your Company has continued to excel in computer software and solution arena there is a growth in the software sector. During the year under review, the total sales of the Company increased to Rs. 2573.75 lakhs as against Rs. 1850.00 lakhs in the previous year, thus registering a growth of 20% in sales. The net profits of the Company after Depreciation and taxes have increased to Rs. 844.15 lakhs as against Rs. 514.36 Lakhs in the previous year indicating an increment of around 42%. DIVIDENDS In view of the restructuring of the existing operations of the Company and Hyper Growth Plan chalked out for immediate future, the Board of Directors of the Company has not recommended any dividends. DIRECTORS Shri Ravi Kumar, Director of the Company retire, by rotation and being eligible, offers himself for reappointment. The said reappointment is subject to the approval of shareholders at the ensuing Annual General Meeting. REPORT ON CORPORATE GOVERNANCE A detailed Report on Corporate Governance as required under Clause 49 of the Listing Agreements with the Stock Exchanges, together with a Certificate from the Companys Auditors has been separately included in this Annual Report. AUDITORS The Auditors M/s Varun Koshal & Associates, Chartered Accountants, retire at the conclusion of ensuing Annual General Meeting of the Company and they have confirmed their eligibility and willingness to accept the office, if reappointed. The Board and Audit Committee recommends their reappointment. VOLUNTARY DELISTING The Board of directors of the Company has, subject to the approval of the shareholders by way of Special Resolution proposed to be passed at the coming Annual General Meeting, decided to get the equity shares of the Company voluntarily delisted from the following Stock Exchanges in view of the SEBI (Delisting of Securities) Guidelines, 2003 vide which the Companies are allowed to get their shares voluntarily delisted from one or more stock exchanges. The shares however shall continue to be listed at The National Stock Exchange of India Limited (NSE) and/or The Stock Exchange Mumbai (BSE), which have nationwide online trading terminals. 1. The Ludhiana Stock Exchange Assn. Limited, Ludhiana (LSE) 2. The Delhi Stock Exchange Assn. Limited, New Delhi (DSE) 3. The Calcutta Stock Exchange Assn. Limited, Kolkata 4. The Stock Exchange Ahmedabad, Ahmedabad CASH FLOW STATEMENT As per the requirements of the Listing Agreements, Cash Flow Statement for the year ended 31.03.2005 is appended alongwith this Annual Report. PERSONNEL During the year under review, industrial relations at all units of the Company continued to be cordial and peaceful PARTICULARS OF EMPLOYEES During the year, no employee whether employed for the whole or part of the year was drawing remuneration exceeding the limits provided in Section 217 (2A) of the Companies Act, 1956. Thus the information required under Section 217 (2A) read with Companies (Particulars of employees) Rules, as amended is Nil. PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO : As required under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the said particulars are set out in Annexure `A to the Directors Report. DIRECTORS RESPONSIBILITY STATEMENT To the best of their knowledge and belief and according to the information and explanations obtained by Directors, they make the following statement in terms of Section 217 (2AA) of the Companies Act, 1956: 1. that in preparation of Annual Accounts for the year ended 31.03.2005, the applicable accounting standards have been followed alongwith proper explanation relating to material departures, if any. 2. That such accounting policies as mentioned in Notes. on Accounts have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31.03.2005 and of the profits of the Company for the year ended as on that date. 3. That proper and sufficient care has been taken 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 the frauds and the other the irregularities. 4. The annual accounts have been prepared on a going concern basis. ACKNOWLEDGEMENTS The Board of Directors wish to place on record their appreciation for the support and cooperation extended by every member of the Eider Family. The Directors are thankful to the Companys valued customers, suppliers, dealers, Central and State Governments, Bankers, Shareholders, and collaborators for their continued support and confidence in the Company. The Board in particular acknowledges the cooperation of esteemed shareholders for the constant support and for the confidence reposed in the Management of the company. By Order of the Board For Eider Infotech Limited Dated : 31.07.2005 Sd/- Place : Chandigarh (Sanjay Sinha) (Managing Director) ANNEXURE `A ANNEXURE TO DIRECTORS REPORT Particulars pursuant to Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988. 1. CONSERVATION OF ENERGY The operation of your Company are not energy intensive. Adequate measures have, however been taken to reduce energy consumption by using energy- efficient equipments of latest technology. Your Company. Your Company has replaced incandaescent lamps with CFL fittings and has started using Electronic Ballast to reduce power consumption of flourscent tubes. Your Company evaluates, on an ongoing basis, new technologies and techniques to make the infrastructure more energy efficient. Air Conditions are used economically when required and AC areas have been treated with heat resistant materials to reduce heat absorption. As energy cost forms a very small part of total costs, the impact on costs is not material, however your company evaluates on an ongoing basis, new. technologies and techniques to make infrastructure more energy efficient. 2. RESEARCH AND DEVELOPMENT (R & D) The Research and Development Centre developed by the company provides technological inputs with thrust on cost reduction, value addition, quality improvement and development of new projects. The R & D Centre has pioneered the use of several leading edge management principles in the software industry in India, and will continue to innovate in these areas. 3. TECHNOLOGY ABSORPTION, ADAPTION AND INNOVATION The Company has continued to invest in the latest servers and workstations and continues to use the latest technologies for improving the productivity and quality of its services and products. 4. FOREIGN EXCHANGE EARNINGS AND OUTGO There has been no foreign exchange earnings and outgo during the year. By Order of the Board For Eider Infotech Limited Dated : 31.07.2005 Sd/- Place : Chandigarh (Sanjay Sinha) (Managing Director) MANAGEMENT DISCUSSION AND ANALYSIS HIGHLIGHTS OF PERFORMANCE EVENTS - The total sales of the Company increased by of 20 - The net profits of the Company after Depreciation and taxes by approx. 42%. - Charting of Hyper Growth Plan - Improvements in operational efficiencies - ECONOMY AND BUSINESS ENVIRONMENT The year, 2004-05 witnessed buoyant and sustained growth of the Indian economy. The normal monsoon, which spurred the agricultural sector growth, the pick up of industrial growth and the continued growth of service sector made the Indian economy one of the fastest growing economies I the world. The burgeoning foreign reserves and modest inflation notwithstanding the high crude oil prices are positive factors for economic growth. The key growth drivers like information technology and software sector are continuing to be robust which augers for the software industry. INDUSTRY OUTLOOK AND OPPORTUNITIES FOR SOFTWARE SECTOR Despite the backlash against outsourcing in the US and other challenges, Indian IT and ITESBPO exports have touched $12.5 billion (Rs 56,250 crore) during 2003-04, a rise of 30.5 per cent as against $9.6 billion (Rs 43,200 crore) over the previous year. Of the total exports, IT services grew by 25 percent, registering revenues of $8.9 (Rs 40,000 crore) billion while ITES-BPO segment clocked revenues of $3.6 billion (Rs 16,200 crore) recording a growth of 46 per cent, according to National Association of Software and Services Companies (Nasscom) survey. The overall software and services market in India will breach the $20 billion (Rs 90,000 crore) mark in 2004-05 with exports growing by 30-32 per cent to $16.3 billion (Rs 73,350 crore). The IT services and products exports is expected to touch $11.2 billion while exports in ITES-BPO segment will be $5.1 billion (Rs 22,950 crore). Americas continued to be the primary market for Indian software exports, accounting for 70 per cent of the revenues, followed by UK with 15 per cent. Indian software and service companies are exporting to 112 countries around the world and are exploring new markets. Nasscom is setting up a high-powered Global and National Advisory Board to constantly evolve best practices, both from a regulatory and compliance perspective. In view of above, there are ample opportunities of growth for this sector RISKS AND CONCERNS/ THREATS Our business is subject to extensive regulation by Government, which could have an adverse effect on our business. We may be required to obtain additional approvals from Central, State and Local Governments. Competition is also a matter of concern. Changes in technology may render current technology obsolete or require further capital investments. However your Company is always conscious about these factors and tries to think a step ahead. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The operations of the Companys units and subsidiaries are reviewed by finance and software professionals of the Companys management Audit Department. The management Audit function examines and evaluates the adequacy, relevance and effectiveness of the internal control systems, compliances with the policies and statutory/ regulatory and other requirements. Appropriate recommendations are made from operational and financial managements perspectives. It also provides value added services to the auditees for improvements in efficiencies and prevention of avoidable losses. The system is headed by Chief Auditor and reports to Executive Director. HUMAN RESOURCES Industrial relations remained cordial and harmonious throughout the year. The efforts are being regularly made to enhance the output and efficiency of employees. The focus is also on the training and development through on job environment and training programmes. SEGMENT WISE PERFORMANCE The segment wise performance of the Company is covered in Notes on Accounts given in this Annual Report. FINANCIAL CONDITION * Share Capital * Paid up capital of the Company stands at Rs. 1999 lakhs. * Reserves and Surplus a) Loan funds Your Company is a Zero Debt Company with no loans liability. ENHANCING SHAREHOLDERS VALUE The creation of shareholders value is one of the prime objectives of the Company. The Management is considering Hyper Growth Plan which in turn will also improve returns to shareholders. FUTURE PLANS: Business Expansion Programmes With the above credentials, experience, expertise & strengths, and with a view to participate in & partake of, the global information revolution, the company has adopted and is implementing a Business Expansion Programme through acquisition of Software Company in USA, investment in Software development and Education Centre at Toronto, Canada and expanding the operations of its subsidiary in USA through FCCB and Public Issues:- Expansion of existing Area/Facilites * Expansion of Software Development Centres Activites in Delhi, Chandigarh & kala Amb. * Strengthening of R & D Centres in two engineering Colleges (Land & Buildings being provided free of cost by the colleges.) * Formation of Joint Venture Partnerships in South Africa & Kenya for franchising Higher Technical Education & IT Training. * Establishment of IT Academies/Software Centers in 08 cities of India. B) Entry into fresh Allied Areas * Establishment of an International IT Gateway at New Delhi. * Creation e-commerce Payment Gateway with Secure Servers & launch of various specialized products & services thru e-comm sites. * Acquisition of Infotech & Software/ Companies in USA /Canada for strengthening overseas marketing promotion activities and launching Sales Globalization. * Commercialize the operations of Bio-Technology Division in which the Company Research and Development has made substantial investment. * Establishment of out sourcing Office at Shangai China to promote import export business in High value Hi-Tech products. * Establishment of Software Development and Education. Centers in Canada, New Zealand, U. K and South Africa. * Restructuring of e-comm portals with new 1 MB Mail Box & E-Mail services internet on GSM & providing leading services as a Global Long Distance Communications provider. * Strengthening of Wireless Business which the Company has acquired in a structured deal from Eider Technologies Ltd. * Enhancing of Channel Partners & Distribution Network from Costing 256 to 700. CAUTIONARY STATEMENT Statements in the Management Discussion and Analysis describing the Companys objectives, expectations or predictions may be forward looking with in the meaning of applicable securities, law as and regulations. Actual results may differ materially from those expressed in the statement. Important factors could influence the Companys operations.