odyssey video communications ltd Directors report

ODYSSEY VIDEO COMMUNICATIONS LIMITED ANNUAL REPORT 2004-2005 DIRECTORS REPORT Your Directors place the Twelfth Annual Report on the working of your Company for the financial year ended 31st March 2005. FINANCIAL RESULTS Particulars Current Year Previous Year Rs. In Lakhs Rs. In Lakhs Earnings from Services including other income 448.41 453.63 Cost of Services 420.69 437.74 Operational Costs 107.36 99.26 Profit/(Loss) (79.64) (83.37) OPERATIONAL REVIEW The Companys earnings has decreased to Rs. 448.41 lakhs in the current financial year from Rs. 453.63 lakhs during the previous year. The Company is expecting good orders during the current financial year. LISTING AGREEMENT REQUIREMENTS The Companys shares are listed on The Bangalore Stock Exchange Limited, The Mumbai Stock Exchange Limited and The Hyderabad Stock Exchange Limited. DIVIDEND The Board is not recommending any Dividend for the year uncle- review. MANAGEMENT DISCUSSION AND ANALYSIS a. Industry structure and developments. The Company operates in the areas of media and marketing communications. It is projected that the ad industry will grow at an annual rate of 7% to 8%. Due to privatisation and globalisation and shackles being opened for FDI to come into the country in a big way, there is a potential for this industry. Many MNCs operating in the ad industry have come in with their own wholly owned subsidiaries and have got referral business Your Company has built a reputation over the years amongst its customers for quality work b. Opportunities and Threats. Entry of new businesses into the country due to liberalisation in FDI policy Retail being asked to come into the country in a big way. The Company can utilize its skills in the industry due to its domain expertise and past experience in working with international brands c. Segment-wise or product wise performance. The Company operates only in one pre dominant segment i.e, the advertising & Print Production industry. d. Outlook Despite working capital shortage and financial crunch, your Directors have endeavored and prioritized vigorous improvement in productivity of its employees and have been successful in keeping its clients happy on the delivery front. The Company is also negotiating with the secured lenders for relief and concessions. The Management looks to the future with optimism. e. Risks and concerns High attrition rate in ad professionals and high salary costs are the major risks the industry is facing Shortage of funds for the Company is a cause of concern for the short term. The Company having created a niche its services and by remaining competitive would be able to meet any situation arising out of the risks stated hereinabove. f. Internal control systems and their adequacy. The Companys internal control systems are in place and the management is of the opinion that they are adequate keeping in view the current level of operations of the Company g. Discussion on financial performance with respect to operational performance. The Companys operations have not been upto the mark in for the financial year under review. The Company is looking at ways and means of getting into new lines of work to enable the company to increase its bottom line. h. Material developments in Human Resources / Industrial Relations front, including number of people employed. The Company has professionals drawn from the filed of advertising and print production. The employees have been recruited keeping in view the current level of operations and the liquidity problems being faced by the Company. DEPOSITS In terms of the provisions of Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits Rules) 1975, the company has not accepted any fixed deposit during the year under review. PERSONNEL None of the employees of the Company were drawing remuneration in excess of the limits specified in Section 217 (2A) of the Companies Act 1956 read with the Companies, (Particulars of Employee Rules), 1975. DIRECTORS In accordance with the provisions of the Companies Act, 1956, and the Articles of Association of the Company, Mr. Gautam Chowdhury, Directors retires by rotation at the ensuing Annual General Meeting and being eligible, offers himselves for re - appointment. AUDIT COMMITTEE The Company had constituted an Audit Committee pursuant to the provisions of Section 292A of the Companies Act, 1956 read with clause 49 of the Listing Agreement. The Audit Committee consists of Mr. B P Ravishankar, Mr. Mohan Krishnan and Mr. Gautam Chowdhury as members, under the Chairmanship of Mr. B P Ravishankar. DIRECTORS RESPONSIBILITY STATEMENT: (Under Section 217 (2AA) of the Companies Act, 1956) As per the provisions of Section 217 (2AA) of the Companies Act 1956, the Directors hereby submit that: 1) The Company has followed all the applicable Accounting standards and there is no material departure from this in the preparation of the annual accounts. 2) The Company had selected the normal accounting policies and applied them consistently and made judgment and estimates that are responsible and prudent so as to give a true and fair view of the affairs of the Company at the end of the financial year and the profit and loss account of the Company for that period. 3) Proper and sufficient care has been taken by the Company for maintenance of proper accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for detecting frauds and irregularities. 4) The accounts of the Company are prepared on a `going concern concept basis. AUDITORS & AUDIT REPORT M/s B K Ramadhyani and Co., Chartered Accountants, the statutory auditors of the Company retire at the ensuing Annual General Meeting and have expressed their willingness to continue, as auditors if reappointed and are eligible for reappointment. In response to the qualifications of the Auditors in their report, your directors wish to state as follows: Point 4(f) and Point 11 of annexure in Auditors Report An application has been made to the Debenture holders seeking Rephasement of Repayment / Redemption and waiver of interest and resultantly these amounts are not due for Redemptions. Point 4(g) and Point 10 of annexure in Auditors Report The management is of the belief that the operations can be revived and made profitable by increasing the operational efficiency and the ability to obtain future contracts on consultancy basis. The management is of the belief that a ore time settlement and resultant waiver of interest/penal interest from secured lenders can be obtained: The management is of the belief that it can obtain a favorable order from high court of Bombay and repossess the confiscated goods imported under EPCG Scheme along with waiver of the fine, export obligations and refund of deposit. Point 5(a) in Auditors Report The Company had sent formal requests to debtors and creditors for confirmation of balances. In spite of earnest efforts made by the company, most of the debtors / creditors have not responded confirming the same. The same. has been mentioned also in Note 2, Schedule 17. Point 5(b) in Auditors Report The appeal filed with the Ministry of Commerce on the conditions imposed under the EPCG scheme is pending disposal. The Company had filed a writ in the High Court of Karnataka to hasten the hearing of the appeal pending with the DGFT. The same has been mentioned also in Schedule 17. Point 7 of Annexure to Auditors Report The Company is going through a turbulent period and all expenses have been pared to the minimum. Once the cash flows become smooth, the Company will comply. Point 9 (a) & (c) of Annexure to Auditors Report There has been a delay in remittance of statutory dues in certain months and service tax payable are in arrears due to tight cash flows. Once the cash flows become smooth, the Company will comply CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTFLOW The information required to be furnished in terms of Section 217(1)(e) of the Companies Act, 1956, read with the Company (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, with respect to Research and Development, Technology absorption, and Conservation of energy, is not applicable to the Company. There has been no earnings or outflow on account of foreign exchange during the year. ACKNOWLEDGMENTS The Board of Directors take this opportunity to express their appreciation to the employees at all levels in the Company for their dedicated service. Your Directors also thank the Bankers, KSFC and the customers for their unstinted support to the Company. FOR AND ON BEHALF OF THE BOARD FOR ODYSSEY VIDEO COMMUNICATIONS LIMITED GAUTAM CHOWDHURY B.P.RAVISHANKAR DIRECTOR WHOLE -TIME DIRECTOR Date : 25h August, 2005 Place : Bangalore