Hyderabad Flextech Ltd merged Directors Report

HYDERABAD FLEXTECH LIMITED ANNUAL REPORT 2008-2009 DIRECTORS REPORT Dear Members, Your Directors present their 17th Annual Report for the year 2008-09(9 Months) together with the Balance Sheet as at 31st March, 2009 and the Profit & Loss Account for the year ended on that date. 1. FINANCIAL RESULTS: (Rs. lakhs) 2008-09 2007-08 (9 Months) (15 Months) Operational Income 227.98 235.40 Other Income 14.43 104.50 Total Income 242.41 339.90 Operating Profit/(Loss) 6.29 (26.33) Depreciation & Interest 93.81 159.78 Profit/(Loss) for the year (87.52) (100.22) 2. OPERATIONS: During the year under review, the company has recorded an operational income of Rs. 227.98 lacs (for 9 months as against the income of Rs. 235.40 lacs for 2007-08 15 months). However, your company has suffered a loss of Rs 87.52 lacs on its operations for the year under review against the loss of Rs. 100.22 lacs for 2007-08. Further, the Export market is still not encouraging due to stiffer competition in the international market. The domestic sales have contributed Rs 69.80 lacs in the total sales for the year under review. 3. DIRECTORS: In accordance with the provisions of Companies Act, 1956 and the Companys Articles of Association, Dr.Abid Hussian and Sri J.S.Krishna Murthy retire by rotation and, being eligible, offer themselves for re-appointment. 4. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to the requirement under Section 217(2AA) of the Companies Act. 1956. with respect to Directors Responsibility Statement, it is hereby confirmed: (i) That in the preparation of the accounts for the financial year ended 31st March, 2009, the applicable accounting standards have been followed along with proper explanation relating to material departures; (ii) That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 loss of the company for the year under review. (iii) That the Directors have taken proper and sufficient care 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; and (iv) That the Directors have prepared the accounts for the financial year ended 31st March. 2009 on a going concern basis. 5. MERGER WITH M/s KEERTHI INDUSTRIES LIMITED: As you are aware, your Company is in the process implementing scheme of merger with M/s. Keerthi Industries Limited (the transferee company). The merger petition is pending before the Honble High Court of Andhra Pradesh for its approval. 6. REPLY TO AUDITORS QUALIFICATIONS: STATUTORY PAYMENTS - PF, TDS & ESI: Regarding delay in payment of PF, TDS & ESI contributions your Directors would like to inform you that the payments were delayed due to liquidity issues. Further, the payments to the aforesaid Departments are paid for the year under review. The company has extended unsecured loan Rs. 9.00 lacs to M/s. Hyderabad Bottling Company Ltd. (HBCL), where some of the Directors of the company are the majority, for its urgent requirements. In fact, HBCL has invested an amount of Rs. 268.34 lacs in the 9% redeemable preference shares issued by the company in the year 2001 on which the company has not been able to pay any dividend so far. In view of the above, your Directors are of the opinion that the small loan extended to HBCL is not pejudicial to the interest of the company. Compliance of AS-15: As regards the Auditors qualification in the compliance of AS-15 your directors would like to clarify that the company is in the process of merging with M/s. Keerthi Industries Ltd and the effective date of merger is taken as 1st April, 2007. The compliance will be ensured in the merged entity during the current year (Post merger). 7. AUDITORS: M/s. Brahmayya & Co., Chartered Accountants. Hyderabad, the present Auditors, retire at the ensuing Annual General Meeting, and are eligible for re-appointment. 8. PERSONNEL: Employer-Employee relations remained cordial during the year under review. Your Directors place on record their sincere appreciation of the contribution made by the employees of the Company at all levels. As regards, information pursuant to Section 217(2AA) of the Companies Act 1956 read with Companies (Particulars of Employees) Rules, 1975 (as amended), there are no employees governed by the said provisions. 9. ADDITIONAL INFORMATION: Information pursuant to Section 217(e)&(2A) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules. 1988 is annexed herewith. 10. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: Industry Structure and Developments: Your Company is one of the few companies specialized in manufacturing flexible printed circuit boards in India. The flexible PCBs being sold by the Company in India is an import substitute. The PCB industry purely depends on electronic industry. The Electronic Industry is looking up and doing well giving a scope for PCB industry to expand. Opportunities and Threats: Spreading into domestic market, as an import substitute is a major opportunity for the Company. However due to fall in exports, there is a constraint on DTA eligibility. Therefore, the Company would have to make DTA sales by paying full Excise Duty, which is an additional burden on the margins. The company has been following this system through out the year under review. Segment or product-wise performance: Segment or product-wise performance is not required to be given as the Company has only one business segment and one product during the financial year under review. Outlook: The company is expecting to improve its prospects by concentrating on the domestic sales, which are encouraging comparatively. Risks and concerns: The machinery being Fourteen years old, requires thorough overhauling and replacement of certain high cost spares. Further, to be more cost effective, the plant needs to be modernized to match the latent technology. Internal control systems and their adequacy: The company has adequate internal control systems. Further, the Company also has independent internal auditors, who conduct periodical audit and their report is taken into account by the Management as well as the Statutory Auditors. Financial/operational performance: This has been already discussed elsewhere in this Report. Human Resources/Industrial Relations: The company enjoys very cordial industrial relations and there is very low employee/labour turnover in the company. You will be happy to note that ever since the inception of the Company, there were no strikes, lockouts, lay-offs, retrenchments, etc. 11. ACKNOWLEDGEMENTS: Your Directors take this opportunity to thank all the Central and State Government authorities, the Department of Electronics, the Central Excise and Customs officials and officials of STPI for their whole hearted co- operation. Your Directors place on record their appreciation for the valuable support given by State Bank of India. On behalf of the Board J. Triveni Director J.S. Rao Managing Director Place: Hyderabad Date : 2nd September, 2009 ANNEXURE TO THE DIRECTORS REPORT FOR THE FINANCIAL YEAR 2008-09 (9 MONTHS): Statutory Particulars: Particulars as per Section 217(1)(e) & (2A) of the Companies Act, 1956. a) Conservation of Energy: Our Company is not required to give the details of the consumption of power & fuel as our Company do not consume much energy and thus no plans for conserving it further, except taking steps to optimize the use with the balanced loading, which is being already adopted. b) Technology Absorption: The Technology imported in the year 1994 had been absorbed fully. There are no foreign technicians on the rolls of the Company. c) Foreign Exchange Earnings and Expenditure: (Rs. in Lacs) Particulars 2008-09 2007-08 Forex earned through Product Sales 6.32 - Forex Expenditure 98.02 63.57 d) Particulars of Employees: There are no employees governed by the provision of section 217(2A) of the Companies Act, 1956. On behalf of the Board J. Triveni Director J.S. Rao Managing Director Place: Hyderabad Date : 2nd September, 2009