krisons electronics systems ltd Directors report

1996 KRISONS ELECTRONIC SYSTEMS LIMITED DIRECTORS REPORT Your Directors have pleasure in presenting the Sixteenth Annual Report of the Company together with the audited statement of accounts for the year ended 31st March, 1996. Financial Results The downtrend continued during the year as there was steep fall in turnover from Rs. 724.05 lacs in the previous year to Rs. 341.70 lacs during the year. This is attributable to the in adequate working capital facilities and the resultant low volumes during the year. However, despite sharp fall in turnover, the net loss during the year (Rs. 121.30 lacs) is lower than the loss in the previous year (Rs. 290.07 lacs). (The loss of Rs. 121.30 lacs is however subject to non provision of interest on various facilities from PNB amounting to Rs. 110.04 lacs which has not been provided for the reasons explained in the notes to accounts). The reason for comparative low loss can be assigned to change in product mix and focus of the Companys activities on remunerative products, viz., Telephones, etc., which demand less investment and yield high margins as compared to B&W TV with inverse features of investment and margins in the previous year. Besides, the management has also succeeded in reducing the overheads which has further contributed in minimising the losses. Rehabilitation The sickness has crept into the unit primarily because of external factors beyond the control of the management. The situation is improving with the liberalisation of imports and reduction in import duties as also recent diversification of the Company into telecommunications. As stated in our last report, the Company had filed another rehabilitation proposal with Punjab National Bank (PNB) for the revival of-the unit as the earlier rehabilitation contained certain inherent defects on account of which the desired results could not be achieved and the unit could not recover from sickness. The proposal was appraised by PNB, and a Viability Study conducted by it confirmed that the unit is technically feasible and commercially viable. However, approval of the rehabilitation scheme was inordinately delayed due to various reasons, and the management has now been advised to submit a fresh proposal. The Company has finalised a fresh revival proposal which will be submitted to the bank in a couple of days. The turnaround strategy in the present proposal is based on induction of need based funds both by the Promoters and PNB, apart from restructuring of debts and grant of certain reliefs and concessions by the bank. The package, if approved, will augment the long term resources for working capital and pull the Company out of woods. Future Outlook The Company has diversified into the Telecom sector and is concentrating on Telephones in the recent past. Encouraged with the continued positive response from the market, the Company has added in its range three models of Corded Telephones to the existing three models of Cordless Telephones. Apart from boom in telecommunications, there has been growth in the consumer electronics industry. The VCP/VCR market, which was virtually killed for a long time and in which your Company had been a veteran player, is again bouncing back in the country. Due to tremendous market of consumer electronics in the years ahead as also recent diversification of the Company into telecom sector, coupled with possession of a well known brand KRISONS to market the products, your Directors look future with a sense of optimism, promise and reversal of trends. Steps taken by the management to combat with the unfavourable external factors have already started yielding tangible results. Particulars of Energy Conservation etc. The information required under Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988, is annexed hereto and forms an integral part of this report. Fixed Deposits No deposits falling within the purview of Section 58A of the Companies Act, 1956 have been accepted by the Company. Personnel None of the employee of the Company is covered by the provisions of Section 217 (2A) of the Companies Act, 1956. Directors Since the last annual general meeting, Shri S. Vaid has resigned as Whole time Director w.e.f. 29th January, 1996. However, he continues to be on the Board as a Director of the Company. In accordance with the provisions of the Companies Act, 1956 and the Companys Articles of Association, Shri S.K. Vaid will retire by rotation at this annual general meeting and being eligible, offers himself for reappointment. Auditors Messrs Gupta & Jhunjhunwala, Chartered Accountants, who were appointed as Auditors of the Company at the last annual general meeting, retire at this meeting, and are eligible for reappointment. The auditors observations in para 2( d) of their main report have been properly explained in Schedule 21 forming part of the accounts. Acknowledgments Your Directors take this opportunity to offer their sincere thanks to the various departments of the Central and State Government, and Punjab National Bank (PNB) for their valuable assistance and support. Your Directors also gratefully acknowledge the contributions made by the employees at all levels. And last but not the least, your Directors wish to place on record their appreciation for the cooperation and support extended by the esteemed shareholders for bearing with the management without any dividend for the last so many years. ANNEXURE TO THE DIRECTORS REPORT Information under the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988. A. CONSERVATION OF ENERGY (a) ENERGY CONSERVATION MEASURES TAKEN : The energy conservation measures taken by the Company includes installation of energy efficient equipments, energy saving devices, steps taken to improve the electronic power factor and reduction of motor rating wherever possible. (b) ADDITIONAL INVESTMENTS AND PROPOSALS BEING IMPLEMENTED. Additional investments along similar lines with be made as and when required for the reduction of consumption of energy. (c) IMPACT OF MEASURES (a) AND (b) ABOVE. Considerable efficiency has been achieved in consumption of diesel and electricity. The impact of above measures on the cost of production of goods are not precisely ascertainable. (d) TOTAL ENERGY CONSUMPTION AND ENERGY CONSUMPTION PER UNIT OF PRODUCTION AS PER PRESCRIBED FORM-A : Not given as the Company is not covered under the list of specified industries mentioned in the schedule. B. TECHNOLOGY ABSORPTION : FORM - B Research & Development (R&D) : Quality and process improvement are the specific areas in which R&D was carried out by the Company. Reduction in cost and improvement in quality of the Telephones, VCRs & VCPs are the benefits derived as a result of R&D. The Company will continue to lay emphasis in the areas specified above. Expenditure on Research & Development : Current year Previous year (Rs.) (Rs.) (a) Capital expenditure Nil Nil (b) Recurring expenditure 97,843 3,35,558 (c) Total expenditure 97,843 3,35,558 (d) Total R&D expenditure as a percentage of total turnover 0.30% 0.49% Technology absorption, adaptation and innovation : The Company has successfully partially absorbed technology by adoption and innovation of several processes required for assembly of Telephones, VCRs & VCPs. The Company is making continuous efforts towards the introduction of new products and processes, suitable to Indian conditions. C. FOREIGN EXCHANGE EARNINGS AND OUTGO (a) Foreign Exchange used : Current year Previous year (Rs.) (Rs.) Raw material, Components & Spare Parts 92,50,030 71,82,931 Foreign Travelling Nil 19,880 (b) Foreign Exchange Earned FOB Value of Exports Nil 12,50,800 BY ORDER OF THE BOARD R.K. SURI BHARAT CHOPRA MANAGING DIRECTOR WHOLETIME DIRECTOR PLACE : NEW DELHI, DATED : 26th August, 1996.