IQ Infotech Ltd Directors Report

IQ INFOTECH LIMITED ANNUAL REPORT 2010-2011 DIRECTORS REPORT Your Directors have pleasure in presenting herewith the 26th Annual Report on the activities of your Company during the year ended 31st March 2011. FINANCIAL RESULTS (Rs. in Lakhs) PARTICULARS Year Ended Year Ended 31.03.2011 31.03.2010 TOTAL INCOME 409.53 149.48 Profit for the year before Dep. & Tax 99.85 -61.98 Less: Depreciation For the year 30.81 35.08 Profit/Loss (-) before Tax 69.04 -97.06 Performance During the year under review, the total income of the Company was Rs.409.53 Lakhs as against Rs 149.48 Lakhs achieved during the previous year. The Company has earned a profit of Rs.69.04 Lakhs during the year. The Company has good orders from the Defence Department which will be executed in the coming year. The Company has also received an order to the tune of Rs. 85.00 Lakhs from M/S. Mahindra Defence which will be executed during the current year. Apart from this, orders of Mahindra Reva and Ashok Leyland will continue to come. Since Reva Electric Company has been taken over by the Mahindras, we expect increased orders from them. As approved in the earlier Annual General Meeting, the Company has relocated its activities in Industrial Suburb, at Yeshwanthpur in the Bangalore City limits. The new location of the Company with in the City limits has improved the operation efficiency of the Company and the Company is in a better position to attract talented Technicians and Engineers. Dividend: As the Company is still in the grip of carry over loss, your Directors could not propose any dividend for the year. Prospects & Outlooks (a) The demand for the products that are being manufactured by your Company, are very good and hence the Company is confident that the turnover can be substantially increased during the current year. (b) Your Company will be completing the Defence orders on hand during the Current year and hence the Turn over will substantially increase during the current year. Your Company has also entered into full range of LED Lighting Systems for home, Industry and Commercial lightings applications. Your Company has already supplied good number of LED lightings to various Organizations and has received excellent response. Your Company hopes to exploit this particular area fruitfully as there is very good demand for LED lightings both in India and abroad .It may kindly be noted that all lightings will be converted in to LED Lightings in the course of next five years. (c) Your Company continues to work on development of higher version of LED products in the field of energy saving, safety and general use. Your Directors are confident that R&D efforts would result in developing fast moving products. Finance: Your Company is turning around speedily and looks to be solving many of its earlier financial problems and it is hoped that the whole financial structure will be strengthened in the coming years. Your Directors are following up vigorously various options left to them for raising funds and since the discussions are in advanced stage, a positive development is in the coming years. Public Deposit: Your Company has not accepted any deposit from the Public during the year. Human Resources & Industrial Relations: Your Directors wish to place on record their appreciation for the dedicated services rendered by the employees at all levels. Particulars of employees pursuant to Section 217(2A) of the Companies Act, 1956 are not applicable since none of the employees are in receipt of remuneration in excess of the limits prescribed therein. Internal Control System & Their Adequacy: Your Company remains committed to maintain high standards of Internal Control measures designed to provide adequate assurance of the efficiency of operations and security of its assets. The adequacy and effectiveness of the internal control across the various activities is well laid down and continuously monitored by the management of the Company. The Audit Committee of the Board meets four times a year and actively reviews internal control system, financial disclosures and compliance with various applicable accounting standards. Energy, Technology & Foreign Exchange : A. Conservation of Energy The Company makes evaluation on continuous basis to explore new technologies to make the infrastructure more energy efficient. Although the operations of the Company are not energy intensive, Company continues to upgrade all energy devises to the extend feasible to make the operations, save energy, where ever possible. B. Research and Development Research and Development is one of the thrust areas for the Company and constant endeavour is made to bring out innovative products for security and energy saving requirements, in the automobile, domestic and industrial sectors. R&D activities are carried out on a continuous basis. Directors Responsibility statement: As required under section 217(2 A A) of the Companies Act, 1956, your Directors hereby confirm that:- * In preparation of these annual accounts, the applicable accounting standards have been followed and no material departure have been made from the same. * They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company. * They have taken sufficient care for the maintenance of adequate records as per the requirements of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing fraud and other irregularities. * They have prepared annual accounts on a going concern basis. Corporate Governance A detailed Compliance Note on Corporate Governance, as required under the provisions in the listing agreements with the Stock Exchanges, together with the certificate of Statutory Auditors thereon, is attached as Annexure - B to this report. Management discussion and analysis Management discussions and analysis, as applicable, is included in this report, in order to avoid duplication and overlap of materials & matters, between Directors report and a separate report on management Discussion and Analysis. Directors At the ensuing Annual General Meeting, Mr. Sudarshan S will retire by rotation and being eligible offers himself for reappointment. Auditors M/s.Pal & Shanbhogue, Chartered Accountants, Statutory Auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting and being eligible offers for reappointment as Statutory Auditors. M/s Swamy & Associates, Company Secretaries have been appointed as Secretarial Auditors of the Company for the year 2011-12. Replies to Audit Remarks (1) Observation No.4 of the Annexure to the Auditors Report regarding the strengthening of Internal Control procedures have been taken care of by the appointment of internal audit assistants. (2) The Audit observation No.9 a. of the Annexure to the Auditors Report relating to not regular in depositing undisputed Statutory dues including Provident Fund, ESI, Sales Tax, Service Tax and Excise Duty would be taken care of in this fiscal year for the timely remittance. Acknowledgements Your Directors place on record their sincere gratitude to the continuing patronage of our valued customers, whose sustained support and encouragement has enabled the Company in achieving results. Your Directors also place on record, their sincere appreciation for the dedication and commitment of staff at all levels. Your Directors wish to register their acknowledgement and appreciation for the timely support and co-operation being extended by the Banks and all their executives. For and on behalf of the Board Place: Bangalore Dr. K R Srinivasan Date : 03.09.2011 Chairman and Managing Director. ANNEXURE-C MANAGEMENT DISCUSSION & ANALYSIS REPORT I. Industry Structure and Development The company is now focusing into three main areas namely Defence Electronics, Industrial Electronics and LED Lightings/Digital Display Systems and other major areas. All these three areas have got tremendous potential in terms of market schemes. Hence the company will focus in these areas in the next 2-3 years. Since the company was involved in Automotive Electronics for a long time the company is also looking out at newer potential areas in this segment. II. Segment wise Performance: The company is concentrating on Indian PSUs who are the blue chip companies of India to-day. III. Industrial Segment: With reference to the Industrial segment the company was in a position to bag good orders through tender process and the company is established as one of the reliable vendors in this sector. LED Lighting is one of the fast growing sectors. Many lighting majors like WIPRO are sourcing LED Lights from your Company. Hence, the Company can expect very large orders. The Company will also continue to concentrate in Defence sector as this segment is being opened for private industries. IV. Threats and concerns : The areas in which the company is working have a number of competitors and the only way the company can bag orders is through their pricing structure and also quality of its products. Hence, the company is focusing on value engineering and also upgrading the technology to appraise these two threats and concerns. V. Out look opportunities: As mentioned above, there is tremendous opportunity in the area of Digital Display Systems as well as Automotive Electronics in which the company has the required expertise. The company hopes to strengthen its R & D activities and also modernize the company in these areas so that the company can bag large volume orders. The modernization will be in terms of upgrading existing facilities and also add more equipment in order to achieve the desired development and manufacturing activities. INTERNAL CONTROL AND ITS ADEQUACY The Management reporting system adopted by the company at different levels for different activities is considered adequate and enables to take corrective action by the management through regular review meetings. The companys systems and processes in all areas are regularly reviewed by the internal auditors. Management regularly reviews the internal audit reports and corrective actions are initiated to further strengthen the control. FINANCIAL AND OPERATIONAL PERFORMANCE Higher productivity, aggressive cost curtailment together with debt restructuring has been key areas to improve the operational performance. The sale prices are adjusted wherever required to match cost with the revenue. HUMAN RESOURCES The industrial relations have been harmonious. By order of the Board of Directors Place: Bangalore Dr. K R Srinivasan Date : 03rd September, 2011 Chairman and Managing Director ANNEXURE-D Conservation of Energy, Technology absorption, Foreign exchange Earning and outgo Conservation of energy: The Company has installed fuel efficient and energy saving devices with the help of professional consultants to reduce energy consumption. Research and Development: A team has been formed internally comprising of Engineers with experience in various functions. Few projects have been identified which will yield results in terms of new product development technological up gradation to improve manufacturing process and to try out different materials/ consumables to reduce product costs etc. Technology absorption: The Company has no outside technical collaboration. Foreign exchange Earning and outgo: a. Foreign Exchange utilized Rs.18.53 Lakhs b. Foreign Exchange earned NIL