hotline teletube components ltd share price Directors report

HOTLINE TELETUBE AND COMPONENTS LIMITED ANNUAL REPORT 2005-2006 DIRECTORS REPORT To, The Members Hotline Teletube & Components Ltd. Your Directors are pleased to present the Seventeenth Annual Report together with the Audited Statement of Accounts of the company for the year ended 31st March 2006. FINANCIAL RESULTS (Rs. In Lacs) Particulars Year ended Year ended 31st March 2006 31st March 2005 Sales and Other Income 4796 6467 Profit/(Loss) before Depreciation and Financial Expenses 320 467 Financial Expenses 200 227 Cash Profit/(Cash Loss) 120 240 Depreciation 136 128 Net Profit/(Loss) before tax -16 112 Income Tax: Tax Including FBT: 13 61 Deferred Tax: -13 -39 Net Profit After Tax -16 90 DIRECTORS RESPONSIBILITY STATEMENT Pursuant to sub section (2AA) of section 217 of the Companies Act, 1956 the Board of Directors of the Company hereby state and confirm that: (i) In the preparation of Annual Accounts for the year ended 31st March 2006, the applicable Accounting Standards have been followed. (ii) The financial statements do give a true and fair view of the state of affairs of the company for the financial year ended 31st March 2006 and your directors have selected and applied the consistent Accounting Policies and the judgement and estimates made therein are reasonable and prudent. (iii) Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safe guarding the assets of the Company and for preventing and detecting fraud and other irregularities have been ensured. (iv) The Annual Accounts for the year ended 31st March 2006 have been prepared on a going concern basis. OPERATIONS During the year, the company has incurred a net loss of Rs.16 lakhs as against a net profit after tax of Rs.90 lakhs in the year 2004-2005. Considering decline in Black & white TV industry, your company had started manufacturing sheet metal parts for Colour TV tubes. It has been supplying these parts to Hotline CPT Limited. During the year under review the scale of operations of Hotline CPT Limited were severally effected due to non availability of funds. This affected the results of your Company as well. The turnover including other income declined from Rs. 64.67 crores to Rs.47.96 crores. DIVIDEND In view of losses in the current year your Directors are not recommending any dividend this year. FUTURE PROSPECTS There is still some demand for Black & White Televisions. However, due to high rate of taxation, the sales in organized sector have gone down drastically. Your Company has represented to government for reduction in excise duty and sales tax to shift the business to organized sector. Besides there is market for black & white picture tubes in CCTV, Defence Application etc. Decision to produce Black & White Tubes will depend on the Government policy and demand from other applications. The focus of the Company is to produce sheet metal parts for Colour Picture Tube industry. The profitability of the Company is dependant on the Colour TV industry which is witnessing a growth of over 12-15% for last 5 years. Presentably Company is producing sheet metals parts for Hotline CPT Limited only. It has plans to diversify into production of sheet metal parts for other Companies within or outside the Industry as well to fully utilize its capacity. If the scales of Hotline CPT Limited increase, the profitability of your Company will also improve. CORPORATE GOVERNANCE A separate section on Corporate Governance and a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, form part of the Annual Report. FIXED DEPOSIT The Company has not accepted any fixed deposit from the public during the year. DELISTING At present the shares of Company are listed on The Stock Exchange, Mumbai. The Company has paid the listing fees of The Stock Exchange, Mumbai for the year 2006-2007. During the year the share of the Company got De-listed from Calcutta Stock Exchange. The Company has completed all formalities for Delisting from Madhya Pradesh Stock Exchange as well. DIRECTORS Mr. D.C. Mathur and Mr. Amarjit Chopra retire by rotation and being eligible; offer themselves for reappointment at the ensuing Annual General Meeting. Mr. Anuj Gupta was appointed as Additional Director till the Annual General Meeting. He is to be appointed by you as a Director of the Company subject to retirement by rotation. Brief resume of the above Directors, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, are given in Corporate Governance Report forming part of the Annual Report. During the year Mr. Govind Narain, and Col B.K. Rai resigned from the Directorship of the Company. AUDITORS M/s. S. S. Kothari Mehra and Co., Chartered Accountants, Delhi, Statutory Auditors of the Company retire as Auditors of the Company at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. The Audit Committee of Directors at its meeting held has recommended continuing the appointment of M/s. S. S. Kothari Mehta and Co. as Statutory Auditors of the Company. OBSERVATION OF AUDITORS The observation of Auditors is self explanatory and/or has been suitably explained in the notes to the Accounts. PARTICULAR OF EMPLOYEES None of the employees are covered under section 217 (2A) of the Companies Act, 1956 and rules framed there under. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTFLOW. A. ENERGY CONSERVATION The Company changed critical operations of the plant from DG Power to State Power thus saving substantial amount on Power cost. It has planned to use electricity based on CNG to save further cost in coming years. TECHNOLOGY ABSORPTION Company has developed various new Sheet Metal Parts through In-House Technology. It has designed various tools and dies which have improved the efficiency levels. B. RESEARCH &DEVELOPMENT In order to minimize wastage of Chemicals, raw materials and other process wastes and increase productivity the company carries continuous Research & Development As a result of this Research & Development activity company saved substantial amount on cost of important raw materials and power. The expenditure on Research & Development is booked in respective accounting heads. C. FOREIGN EXCHANGE EARNINGS & OUTFLOW Total foreign exchange outflow by Company during the period is Rs.240 Lacs for imports, commission on sale and traveling and foreign exchange earned during the period is Rs. 53 Lacs from exports. ACKNOWLEDGEMENT Your directors wish to place on record their sincere appreciation for continuous co-operation, support and assistance provided by shareholders, banks, government bodies, customers, dealers and suppliers of the company. Your directors also wish to place on record their appreciation for the dedicated services rendered by the employees of the Company. FOR AND ON BEHALF OF BOARD OF DIRECTORS V.N. MASALDAN (MANAGING DIRECTOR) PLACE : NEW DELHI DATE : 23.08.2006 MANAGEMENT 1. Management discussion and Analysis Report - Industry Structure and Development - The business of the Company is dependant on the growth of the TV industry, as the Company is dealing in various components of television. The TV industry is growing at 12 to 15% per annum. The Black & White TV market, is being slowly replaced by colour TV. - Opportunities and Threats -As the purchasing power continue to increase steadily the demand for Colour TV is growing. Due to low level of penetration of Colour TVs in urban, semi-urban as well as rural market all these areas will continue to have increased demand in coming years for Colour TVs. Further global increase in demand especially from developing countries is expected to increase demand. Hence, there is great opportunity for the company to manufacture the parts required in this industry. Lowering of custom duties on TV, Picture Tubes and other major components of TV poses a challenge for the Industry. - Segment wise or Product wise Performance - The Company has been engaged in the business of picture tubes and components and no separate segment has been identified. - Outlook - The outlook for Colour TV industry is bright due to:- (i) Decline in the prices of Colour TV coupled with increasing per capita income of the country. (ii) Unexplored rural market having low penetration levels presently (iii) Emphasis of the Government on Rural Electrification. As the future of your Company is directly related to the growth of Colour TV industry, the outlook for the Company is positive. - Risks and Concerns - Being dependent on a single buyer, though the market for Colour TV and Colour Picture Manufacturing is increasing in the country. To mitigate this risk your Company plans to expand its customer base from TV as well as other industries. - Internal Control Systems and their adequacy - The Company has Internal Control System and procedures commensurate with its size and nature of business. The Internal Control Systems are supported by internal audit carried out by professional audit firms aiming at increasing operational efficiency and achieving cost efficiency and reduction in overheads at all ends of the business operations The Internal Audit Reports of the Internal Auditors are discussed at the Audit Committee Meetings and appropriate corrective steps have been taken. - Discussions on financial performance with respect to operational performance - During this year, the company have incurred a net loss before tax of 16 lakhs as against net profit before tax of Rs.112 lakhs in the year 2004-2005. The loss has been due to reduced scales of operations of Hotline CPT Limited, to whom the Company has been supplying sheet metal parts. - Material developments in Human Resources / Industrial Relations front, including number of people employed - To manage the ever increasing competition and changing work environment your Company focuses its efforts to upgrade the skills of its workforce. Your Company provides equal opportunities to the employees to perform and in their work. The company provides in-house training to its employees and maintaining safety and healthy environment for workers working within the factory premises. The company employs 102 workers. As a result of sound Human Resources policies the industrial as well as labour relations have been good and cordial.