micro technologies india ltd share price Directors report

Directors

Your Directors are pleased to present the Twenty-first Annual Report and the Audited Accounts for the Financial Year ended September 30, 2013.

FINANCIAL RESULTS

The financial performance of your Company for the 18 months ended September 30th , 2013 is summarized below:

*Previous years figures have been regrouped wherever necessary to bring them in line with the current years representation of figures (Rupees in Lac)

	Standalone 18 months period ended September-2013	Standalone 2011-12	Consolidated 18 months period ended September	Consolidate 2011-2012
Particulars
Turnover Sales	48253.42	45548.27	105861.44	86188.37
Operating Profit/(Loss)	(5034.07)	8422. 75	(2145.51)	21493.18
Less: Interest/Finance Cost	6790.48	2298.94	8823.05	3090.64
Less: Exceptional Items	-	1969.01	-	1969.01
Profit/(Loss) Before Tax (PBT)	(11824.55)	4154.8	(10968.55)	16433.53
Current Year - Provision for Tax	-	823.39	-	2028.95
Deferred Tax - Provision for Tax	(723.09)	384.56	(268.46)	1025.29
Income Tax of earlier years	-	208.7	(838.63)	208.7
MAT credit entitlement				(127.46)
Net Profit/(Loss) before Minority
Interest	(11101.46)	2738.15	(9861.46)	13298.05
Less Minority Interest		-		303.84
Net Profit/(Loss) after Minority Interest	(11101.46)	2738.15	(9861.46)	12994.21
Balance of Profit from previous year	28256.42	25705.7	44936.09	32276.82
Amount available for Appropriation	17154.96	28443.85	35074.63	45271.03
Transferred to General Reserve		-		-
Proposed Dividend	-	161.27	-	288.19
Dividend Tax	-	26.16	-

*Previous years figures have been regrouped wherever necessary to bring them in line with the current years representation of figures

REVIEW OF PERFORMANCE

The Year 2012-2013 has been a very challenging year.

On a standalone basis, your Company achieved Total Income of Rs. 48253.42 Lac during the year under report as against Rs.45548.27 Lac during the previous year, representing an increase of 5.93 %. The Net Profit After Tax stood at Rs. 11101.46 compared to Rs. 2738.15 Lac in the previous year.

On a consolidated basis, your Company achieved Total Income of Rs. 105861.44 Lac during the year under the report and Net Loss After Tax stood at Rs. 9861.46 Lac.

Overall, 2012-13 has been a very challenging year. Your Company withstood the global economic downturn stoically. The Company was aggressive in its quest for new contracts, executed on its full services strategy and maintained pricing discipline. This helped to deliver 5.93% revenue growth for the year along with overall performance.

DIVIDEND

No dividends were declared during the Financial Year 2012-2013.

DEPOSITS

The Company has accepted deposits and complied with the provisions of Section 58A of the Companies Act, 1956 read with Companies (Acceptance of Deposits) Rules, 1975 made thereunder at time of acceptance of deposits.

SUBSIDIARIES

Your Company has two major subsidiaries viz. Micro Secure Solutions Limited and Micro Retail Limited incorporated in 2007 and 2008 respectively. Your Company holds more than 90% of the total equity share capital of these companies.

During the period under review the management of the company has taken the following decisions. Namely

1.Consolidation of business in MTIL Mumbai- Due to the bad economic scenario resulting in decline of business opportunities resulting in the decline in margin of profit and also in some branches incurring of losses the management of the company decided to shift the entire operation of the business and to have the better control on the operation , reduction in the operational cost from their branches to Mumbai including taking over of the assets , liabilities and fixed assets to optimistically utilize there strength in Mumbai main subsidiary.

2.Closure shift of foreign branches In view of the losses being incurred and lack of business opportunities the management has decided to close all the foreign branches one of the branches MSSL branch has been closed during the current financial year to start with and balances branches in the current financial year.

3.Discontinuation of some of the verticals of business segment and as a result accounting of resultant losses in the books The management of the company due to the bad market condition and up gradation of the latest technology and certain product getting outdated has decided to discontinue certain verticals of the business.

4.Technical and financial evaluation of entire evaluation of entire inventories both stock n wip and accounting of devaluation in the value of stock due to drastic technical change resulting into devaluation of stock of Rs. 5,762.27 Lacs on standalone basis.

5.Accounting of long overdue receivable pertaining to disclosure/slowed down business vertical as bad and doubtful. Giving effect of short provision/non provision of depreciation on some of the intangible assets of the company of the FY 2011-12 and given retrospective effect of the same in the financial result amounting to Rs. 3248.2 lacs from the financial result.

DIRECTORS & OFFICERS

1) Mr. Aditya Sekhar has been appointed as an Additional Director and as Joint Managing Director w.e.f 1st October, 2012 and then he was designated as the Chairman and Managing Director of the company w.e.f. 19th May, 2013. Dr. P Sekhar, Founder Chairman & Managing Director has retired w.e.f 19th May, 2013. He is now the Chairman Emeritus of the Company.

2) Ms. Jayanthi Sekhar, Executive Director of the Company resigned from the office of directorship w.e.f 13th August, 2013 and Mr. Ganapathy V, is appointed as Whole Time Director of the Company w.e.f 13th August, 2013.

3) Mr. A.R.Kale, Dr. R.S. Deshmukh, and Mr. Prakash Bhave, Independent Directors resigned from the office w.e.f. 30th May, 2013, 13th August, 2013 and 26th April, 2013 respectively. Mr. Raghvendra Raichur, alternate director to Prof. Paul Jerome Coleman, Independent Director resigned from the office of alternate directorship w.e.f 26th April, 2013.

4) Mr. Sudhir Koppikar, Mr. Bhavin Parikh and Mr. Satya Swaroop, were appointed as Independent Directors of the Company w.e.f. 26th April, 2013, 26th April, 2013 and 13th August, 2013 respectively.

5) Ms. Neha Gaur, Company Secretary and Compliance Officer of the Company resigned from the office w.e.f. 28th February, 2013 and Mr, Ganapathy V, was appointed as Compliance Officer w.e.f. 25th July, 2013.

6) Mr. Paul Jerome Coleman Jr., Director of the Company who retires by rotation and being eligible offers himself for re-appointment at this ensuing Annual General Meeting. Your directors recommend his re-appointment.

MATERIAL CHANGES AND COMMITMENTS DURING THE YEAR:

1.Capital Work-In-Progress (CWIP)

Capital Work-In-Progress (CWIP) includes tangible assets of Rs. 67.92 cr. is for managing commercial property at Vashi, Navi Mumbai. The expenditure incurred is preliminary in nature and the same would be capitalized and allocated project wise.

The Directors have considered the probability of the project proceeding by assessing the commercial viability of the project, the expectation of obtaining finance and the requirements of the regulatory processes.

Some facilities / assets do remain idle for some time due to technical or economical reason. Sometimes it requires considerable time to bring the assets for its intended use. However, idle assets no longer required, are expensed after proper scrutiny at the year end.

2. Inventory/Work -In-Progress

Company has invested heavily and carrying inventory worth 645.60 Cr on consolidated basis after technical evaluation and based on expert opinion. Management is confident of realizing the value with certain required investment to keep upto date the said inventory. If realized the value of realization, shall not be less than the amount stated in books of account.

3. Human Resources Development

Your companys human resource strategies and practices are designed to ensure that they integrate with and support the corporate business strategies of your company. The Board wishes to place on record its appreciation of the contribution made by all employees in ensuring a high level of performance for the growth and development of the company during the year.

4. Extraordinary General Meeting

Your Company has not convened any Extra-ordinary General Meeting (EGM) during this period from the last AGM.

5. Delisting/Fresh listing of Securities

The shares of your company will continue to be listed on the Bombay Stock Exchange (BSE) and the National Stock exchange (NSE), which has nation-wide trading terminals and therefore, provides full liquidity to the investors.

The details regarding conversion of FCCB to be mentioned The number of FCCBs outstanding as on September 30, 2013 are 120.

6. Directors Responsibility Statement

As required by sub-section (2AA) of Section 217 of the Companies Act, 1956, the Directors state:

(a)That in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b)That the Directors 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 your Company at the end of the September 30th 2013 and of the profit or loss of your Company for the period;

(c)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 your Company and for preventing and detecting fraud and other irregularities; and

(d)That the Directors had prepared the annual accounts on a going concern basis.

7.Consolidated Financial Statements

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates, the audited Consolidated Financial Statements are provided in the Annual Report.

PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT

As per Section 212 (8) of the Companies Act, 1956, the Company vide a Board Resolution passed on 29th November, 2013 has been exempted from attaching the Directors Report, Balance Sheet and Profit and Loss Account of our subsidiaries such as an attachment as however we present the Audited Consolidated Financial Statements in the Annual Report. Accordingly, the Annual Report does not contain the Financial Statements of these subsidiaries. We will make available the Audited Annual Accounts and related information of subsidiaries, where applicable, upon request by any of our investors. These documents will also be available for inspection during business hours at our Registered Office at Mahape, Navi Mumbai, Maharashtra and also at the Registered Office of the subsidiaries at Andheri, Mumbai, Maharashtra.

CORPORATE GOVERNANCE

Your Company is committed to maintaining the highest standards of Corporate Governance. The Directors adhere to the requirements set out by the Securities and Exchange Board of Indias and the Stock Exchanges Corporate Governance practices and have implemented all the stipulations prescribed. Your Company has implemented several best corporate governance practices as prevalent globally. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

Further, the Company has also engaged the world renowned Legal Consultants LEGASIS which stands for Legal Systems and Integrated Solutions. Legasis is a process-driven organization and stands apart from other LPO companies because of its distinctive IT-enabled legal support services. Legasis core strength lies in its ability to deliver value to law firms and corporate counsels by leveraging the industry expertise and legal framework. They provide the following services: Legal Research, Document Review, Contract Management, Legal & Regulatory Compliance Management, Due Diligence Support, IPR Support Services, Litigation Support, Document Management, and Corporate Secretary Services.

AUDITORS

The Auditors, M/s. Laxmikant Kabra & Co, Chartered Accountants, Thane have expressed their willingness for re-appointment as auditors of your Company at the ensuring Annual General Meeting. The certificate from M/s Laxmikant Kabra & Co, Chartered Accountants, Thane has been received to the effect that their appointment, if made, would be within the limits as prescribed under Section 224(1B) of the Companies Act, 1956.

ACKNOWLEDGMENTS

Your Directors wish to express their appreciation of the continued co-operation and support of the Central and State Governments, Bankers, Financial Institutions, Customers, Dealers, Suppliers, Consultants and all the Shareholders. The Directors also acknowledge and thank all the employees for their hard work, dedication and commitment.

For and on behalf of the Board of Directors

Sd/-

Aditya Sekhar

Chairman & Managing Director

Place: Navi Mumbai , 29th November 2013

ANNEXURE TO THE DIRECTORS REPORT

Particulars as prescribed under section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of continued Particulars in the Report of Board of Directors) Rules, 1988:

Conservation of energy and Foreign exchange earnings and outgo:

The operations of your company are not energy intensive. Your Company evaluates on an ongoing basis new Technologies and Techniques to make infrastructure more energy efficient. Investments are made on a continuous basis to reduce energy consumption.

The information on foreign exchange earnings and outgo are contained in the notes to the accounts in schedule R. Your Company continues to strive to improve its export earnings.

Development, Technology absorption, Adaptation and Innovation

Your Company has continually invested into efforts for developing technologies and products for affordable and high end security products. A number of products that were IT enabled security and messaging focused, was introduced during the year and has been actively accepted by the global market. Your company has also partnered with the local governments and corporate in developing products that addressed specific local needs.

Benefits Derived From Product Development

As a result of the Companys Product Development activities, it has been able to retain its technological leadership, achieve cost reduction and retain customer acceptance despite working capital constraints. Improving export business with development of customer specific OTC (Over the Counter) Products. Your Company has achieved a brand image in customers perception as an innovative and research -oriented company.

Future Plan of Action

In line with the Product Development road map and to put the Division on a fast track, Micro Technology has entered into agreements with a number of global technology companies to bring latest & appropriate technologies. These products will drive the cost of security down by promoting mass multiplication.

Fixed Asset Valuation:

All fixed assets are valued at cost less depreciation. During the year under review, your company has upgraded the technologies and accordingly procured the latest new / upgraded version. It has aided your company to upgrade the product versions and also to develop new product lines enabling it to increase its market penetration. Furthermore, your company has increased / improved the economic valuation, through vertical integration of modules enabling an efficient turnaround time of newer product technologies. Considering the optimal maximum utilization of its assets and to keep the technologies upgraded, certain depreciable assets have been replaced and restructured with better and newer technologies to gain higher economic benefits and quicker commercial results. To match with these new and improved versions of technologies, your company has restructured its uneconomical assets by replacing them with the economical ones.

Particulars of Employees

The information required under provisions of sub-section (2A) of Section 217 of the Companies Act, 1956 read with Companies (Disclosures Of Particulars In The Report Of Board of Directors) Rules, 1988 and, forming part of the reports annexed hereto.

Employees employed throughout the financial year and in receipt of the remuneration exceeding Rs. 60,00,000/- p.a. in Maharashtra and also at the Registered Office of the subsidiaries in Andheri, Mumbai, Maharashtra.

Sr. No.	Name , Qualifications & Age in Years	Designation/ Nature of Duties	Remuneration Receivable/ Received (Rs.) During the Financial Year 2012-13		Date of Commencement of Employment	Last Employment
1.	Mr. Aditya Sekhar	Chairman & Managing Director w.e.f. 19th May 2013	Gross Rs. 9,64,256	Net Rs. 6,99,256	1st October 2012	Managing Director
2.	Dr. P. Sekhar	Chairman & Managing Director (Till 19th May 2013)	Rs. 6,19,105	Rs. 4,33,374	Since Incorporation	Director of 1st Technology Park
3.	Mrs. Jayanthi Sekhar	Whole Time Director (Till 13th August 2013)	Rs. 3,02,000	Rs. 2,11,400	Since Incorporation	NA

 

For and on behalf of the Board of Directors	Place: Navi Mumbai
Sd/-	Date: 29th November 2013
Aditya Sekhar
Chairman & Managing Director