Multi Arc India Ltd Share Price directors Report
MULTI-ARC INDIA LIMITED
ANNUAL REPORT 2008-2009
DIRECTORS REPORT
Dear Shareholders,
The Directors of Multi-Arc India Ltd. take pleasure in presenting their
22nd Annual Report on the Business and Operations of your company together
with Audited Accounts for the year ended 31st March 2009.
FINANCIAL RESULTS
Performance of the Company for the financial year ended on 31st March, 2009
is summarized below:
(Rs. in Lakhs)
A B C D
Income
Coating Charges 2004.94 3299.54 1121.30 2100.45
Other Income 86.45 218.22 57.24 218.22
Total 2091.39 3517.76 1178.54 2318.67
Total Expenditure 1862.70 2420.85 1253.62 1536.54
Profit before finance cost, 228.69 1096.91 (75.08) 782.13
depreciation and tax
(Operating Profit)
Finance Cost 321.14 469.21 77.30 224.77
Depreciation Cost 241.07 321.49 195.73 301.70
Misc. Exp W/off 0.12 0.12 000.00 000.00
Tax 9.55 33.83 2.73 27.85
Extra-ordinary Item 328.10 0.00 328.10 0.00
Deferred Tax Liability 5.09 1.292 000.00 0.08
Net Profit/(Loss) for the (15.09) 259.33 (22.74) 227.80
year
Balance brought forward from (2055.60) 231.493 (2093.82) (2321.63)
last year
Balance carried forward to the (2070.69) (2055.60) (2116.56) (2093.82)
Balance Sheet
A = Consolidated Year Ended 31.03.2009
B = Consolidated Year Ended 31.03.2008
C = Standalone Year Ended 31.03.2009
D = Standalone Year Ended 31.03.2008
OPERATIONS REVIEW
During the year under review, due to recessionary trend in gold economy and
various industrial segments, the gross revenue and profits of the company
are at lower level.
During the last quarter, the company has introduced a new black DLC
(Diamond Like Carbon) Coating which is being well received in the market
and has a lower demand for Working Capital. The Company is in process of
completing the restructuring.
DIVIDEND
In view of the current financial position of the company your Directors
express their inability to recommend the declaration of Dividend for the
year ended 31st March 2009.
OUTLOOK FOR 2009-10
The future outlook remains cautions though some sectors in economy are
posting the signs of improvement. In order to address future challenges,
the Management is looking at rationalization of production facility, man
power, disposal of surplus assets, introduction of new coatings where use
of expensive, raw material is less or almost absent.
SUBSIDIARY
The working results of the subsidiary Company Multi Arc Coatings & Straps
Ltd. reflected in the consolidated accounts forming of part of the Annual
Report.
MANAGEMENTS DISCUSSION AND ANALYSIS REPORT
Managements Discussion and Analysis Report for the year under review, as
stipulated under clause 49 of the Listing Agreement with the Stock
Exchanges, is presented as a separate section forming part of the Annual
Report.
CORPORATE GOVERNANCE
The Company, being a value driven organization, believes in coherent and
self-regulatory approach in the conduct of its business to achieve the
highest levels of good corporate governance practices. Your Directors
adhere to the requirement of Corporate Governance as stipulated by SEBI.
Report on Corporate Governance as stipulated under clause 49 of the Listing
Agreement of the Stock Exchanges forms part of the Annual Report and is
attached as Annexure B to this report. Certificate from the Auditors of the
Company Mr.J.C. Bhatt, Chartered Accountant confirming compliance of the
conditions of Corporate Governance as stipulated in Clause 49 is also
attached and forms a part of Annexure B.
HUMAN RESOURCES
Employee relations were a little less cordial during year under review
because of delays in paying wages. Your Directors place on record their
appreciation to all the employees for their commendable understanding
despite all odds and constraints.
The provision of section 217 (2A) of the Companies Act, 1956 read with
Companies (Particulars of Employees) Rules, 1975 is annexed to the
Directors Report.
FIXED DEPOSITS
During the period under review, the Company has not received any deposits
from the public pursuant to Section 58-A of the Companies Act, 1956.
DIRECTORS
Mr. Peter D. Flood, Mr.K. Ravindranath retire by rotation at the Annual
General Meeting and being eligible, offer themselves for re-appointment.
Mr. Duane Decara has been appointed as Additional Director from 31st July
2009 and holds the office till the ensuing Annual General Meeting.
Brief resume of the Directors proposed to be re-appointed nature of their
expertise in special functional areas and the number of Companies in which
they hold directorship and membership/chairmanship of the Board Committees,
as stipulated under clause 49 of the Listing Agreement with the Stock
Exchange is provided in the Notice and Explanatory statement of the Annual
General Meeting.
Mr. Lincoln Schomer was appointed as Additional Director on 01.10.2008 and
resigned on 31st July 2009. Mr. Umesh Gala and Dr. Yancy Riddle resigned as
Directors of the Company with effect from 31st July 2009. The Board,places
on record its appreciation for the valuable services rendered by the
Directors during their tenure of the office.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies Act,
1956 with respect to the Directors Responsibility Statement, it is hereby
confirmed that:
(i) In preparation of the annual accounts, the applicable accounting
standards have been followed along with a proper explanation relating to
any material departures from the same.
(ii) The Directors have selected such accounting policies, applied them
consistently, and made judgment and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company as at 31st March 2009 and of the profit or loss of the Company for
the year ended on that date. 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 asset of the
Company and for preventing and detecting fraud and other irregularities;
and
(iii) The Directors have prepared the annual accounts on a going concern
basis.
CONSOLIDATED FINANCIAL STATEMENT
In accordance with the Accounting Standard AS-21 on Consolidated Financial
Statements, your Directors provide the audited Consolidated Financial
Statement in the Annual Report.
REMARKS IN AUDITORS REPORT
Due to the continued liquidity crunch, investment in subsidiary, there have
been delays in payment of statutory dues, employee related dues and Banks.
Due to senior management attention focused in crisis Management there has
been lapses in internal control system. The same will be corrected in the
current ensuing year. The Management taking effective steps for resolving
the liquidity crunch which will resolve all the issues and lead to
improvement in gross revenue and profitability.
AUDITORS
M/s. J.C. Bhatt., Chartered Accountants, Statutory Auditors of the Company
retire at the conclusion of the forthcoming Annual General Meeting and
being eligible, offer themselves for re-appointment.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
AND OUTGO
This information pursuant to Section 217 (1) (e) of the Companies Act, 1956
read with the Companies (Disclosure of Particulars in the Report of Board
of Directors) Rules 1988 is given in Annexure A to this report.
ACKNOWLEDGEMENT
Your Directors wish to place on record their deep appreciation for the
whole hearted and sincere co-operation and guidance received from all
Institutions, Financial Creditors. Your Directors also wish to extend their
sincere thanks to all the customers, shareholders and vendors for their
continuous support and to the employees for their unstinting co-operation
and support extended to the management in achieving the desired performance
from time to time.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
ASHOK K. JANI
Executive Chairman
Place: Mumbai
Date : 30th July 2009
ANNEXURE A TO THE DIRECTORS REPORT
STATEMENT UNDER SECTION 217(1)(e) READ WITH COMPANYS (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING
PART OF THE DIRECTORS REPORT FOR THE PERIOD ENDED MARCH 31, 2009.
A. CONSERVATION OF ENERGY
(a) Energy Conservation measures taken.:
The power factor for the period under review has been sustained at unity
through continuous and closely monitoring by internal teams formed at
coating center.
(b) Additional Investment and proposal being implemented for reduction of
energy consumption.:
In Umargam the Chilling Plant and Compressor has been changed with a lower
rating but with same required output. This has resulted reducing total
power consumption. Further, the coating process has also been modified
wherever necessary, which has resulted in, reduced power consumption in a
number of operations at the coating center.
(c) Impact of measurement at (a) and (b) above for reduction of energy
consumption and the consequent impact on the cost.:
The impact of (a) and (b) has resulted into conservation of energy and
savings in total power bill has been lower than previous period even though
the number of articles coated have been more (current year 8,60,458 units,
previous year 20,49,252 units).
(d) Total energy consumption per unit of production as per FORM A:
Our industry is not listed among the industries which should furnish the
information in FORM A and therefore your Company is exempted from
production of goods furnishing the information under this clause.
B. TECHNOLOGY ABSORPTION:
Efforts made in technology absorption as per FORM B are as under:
FORM B
Form of disclosure with respect to absorption of technology and research
and development (R&D).
1. Specific areas in which R&D was carried out by your Company.:
The development of Coating on writing Pen parts such as pen clips and
barrels has been completed and the commercialization of the same has been
initiated.
Development of Coating on Sewing Needles has been completed and
commercialization is under way.
2. Benefit derived as a result of the above R&D:
The commercialization of Pen parts coating will help the company to cater
to non-horological sector, which has huge potential.
Coating on sewing needles will enable company to venture in the non-gold
sector of the market and will reduce companys dependence on gold coating.
3. Future plan of action:
Our Company is the process of developing coating for machine (automobile)
components. D L C Coatings are being developed for use in medical
applications.
Besides a number of similar developments are taking place with various
agencies of the Government and also IISc Bangalore, IIT, Chennai, IIT
Mumbai.
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
1. Efforts, in brief, made towards technology absorption, adaptation and
innovation:
The coating processes have been modified for aesthetic coatings (gold
coatings). Some new cathode designs are also under trials.
2. Benefits derived as a result of the above efforts, e.g. product
improvement, cost reduction, reducing product development import
substitution, etc.:
The modification in the aesthetic coating process has helped the Company to
reduce the consumption of gold and the reduce operational cost and save
precious national resource. New cathode design will improve the product
quality and reduce process rejection.
3. In case of imported technology (imported during last 5 years reckoned
from the beginning of the financial year), following information may be
furnished.
a. Technology imported Nil
b. Years Nil
c. Has technology been fully absorbed Nil
C. FOREIGN EXCHANGE EARNING AND OUTGO.
Foreign Exchange outgo is in terms of traveling abroad and import of
capital goods, raw materials and components. The Company coats few imported
tools which improves its life by 10% resulting into corresponding foreign
exchange savings coupled with reduction in the consumption of imported High
Speed Steel, raw materials used for the manufacture of tools.
a. Activities relating to exports initiative taken to increase exports,
development of new export markets for product and service and export
plans.:
Ours is a service industry and therefore export opportunities are minimum.
However, your Company is making efforts to export the expertise.
b. Total Foreign Exchange used and earned:
i. Used Rs. Nil (Previous year Rs.2,99,985)
ii. Earned Rs. Nil (Previous year Rs.32,48,575)
MANAGEMENT DISCUSSION AND ANALYSIS
INDUSTRY STRUCTURE AND DEVELOPMENTS
Our company is in the business of surface enhancement. This is a high-tech
Research and Development oriented business.
Our business is multi-product, multi-location hence tight operational
management of the logistic cost, Rationalization of Human Resources, Gold
cost and effective use of assets is essential to meet the customers demand
and faster turned around of their material.
The Industry is moving towards supply of coated product rather than either
supplying uncoated products or providing coating services. In this respect,
our acquiring of Bharuch Plant through our subsidiary has proved very
effective.
To overcome the slow down in economy, we have increased and shifted our
customer base from unorganized to organized segment improving gold
recovery, to manage the increase in Gold cost and introduction of new black
DLC (Diamond Like Carbon) Coating.
OPPORTUNITIES AND THREATS
(a) In Aesthetic coatings enormous opportunities exist both in gold coated
products and non-gold products. Company continuously works hand in hand
with the Industrial manufacturers and successfully develops new
applications.
In Wear Coatings new technologies are coming in internationally and our
company has successfully tied-up arrangements to bring these new path
breaking technologies to our country.
In the changing industry scenario and to meet quick turnaround requirement
of customers, Company has implemented its plans to establish additional
Coating Centres.
(b) Aesthetic coating business can be affected by high price of gold.
However, impact of this has been mitigated by gold cost linked pricing with
major customers. Company is also making progress in successful application
of non-gold coating business.
SEGMENT-WISE PERFORMANCE
The Company has only single segment namely surface enhancement, therefore,
disclosure of segment-wise performance is not required.
OUTLOOK
The Global economy and Indian economy are facing recessionary trends and a
slow down. There are signs of improvement in some sectors. The increase in
Gold price is a threat and would affect our margins. The poor quality
unorganized sector is trying to enter the Coating business. These would
post some problem in the short term, but the lack of quality and technology
will not seriously on the part of unorganized sector will have no impact on
our performance, as we mainly cater to organized Players who have a strong
quality control and expect strong commitments to deliveries. Besides the
growth of rural market will also provide growth opportunity,
The increase of Gold price has paradoxical impact to the business whereby
the margins will be squeezed but market-size will grow. Many applications
which were conventionally Electro plating would use our technology. The
business will be driven by strong technological development and managing
Gold cost. The Decorative coatings of other colours which do not involve
Gold also become very important.
RISKS AND CONCERNS
Our company is exposed to external and internal risks.
External risks arise out of nature of demand, entry of new manufacturers,
expansion of capacity by existing players, international companies entering
India, technological obsolescence, rising price of raw materials, etc.
These risks are continuously being monitored and are sought to be mitigated
by tie-up for new technologies, acquiring new capacities, establishing new
Coating Centers near to customer locations and achieving backward and
forward integration. Internal risks are being mitigated by continuous
productivity improvements, developing new applications through our R&D
efforts in collaboration with customers and Government Agencies. Employees
are motivated and prepared for higher responsibilities to successfully
manage new businesses through training and empowerment and to mitigate
risks arising from attrition.
INTERNAL CONTROL SYSTEMS
The company is committed to maintaining an effective system of internal
control for facilitating an accurate, reliable and speedy compilation of
financial information for safeguarding the assets and interest of the
Company and ensuring compliance with laws and regulations. The Audit
Committee consists of independent Directors from our Board of Directors.
HUMAN RESOURCES
Our Company has always believed that Human Resource is the most important
capital of the company, and as a continuous process has been striving to
value-add to this asset by various measures.
CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis describing the
Companys position and expectation may be forward looking statements
within the meaning of applicable securities laws and regulations. Actual
performance could differ from those express or implied. Important factors
that could make a difference to the Companys operations include,
interalia, economic condition affecting demand/supply and price conditions
in the market in which the company operates, especially the price of raw
material (Gold), changes in government regulations, other statutes and
incidental factors that are beyond the control of the Management.