padmini technologies ltd Directors report

ANNUAL REPORT 1999-2000 DIRECTORS REPORT To the Members, Your Directors take pleasure in presenting their Ninth Annual Report together with Audited Accounts for the period ended June 30, 2000. YEAR IN RETROSPECT During the period under review, the companys sales and other income was Rs. 515.85 Crs. as compared to Rs. 543.68 Crs. achieved in the previous period. The marginal decline in the sales compared to the previous period is attributed to higher number of units replicated, which yield less unit sales realisation. The company earned higher net profit of Rs. 40.48 Crs., compared to the net profit of Rs.17.80 Crs. earned during the previous period, as a result of change in the product-mix and emphasis on sales from Technology division, which yields comparatively higher contribution margin. EXPANSION DURING THE YEAR The CD/DVD plant with an installed capacity of 11 million units of CD/DVD per annum was commissioned in September 1999. This plant is the first of its kind in India. With this, the company has become the largest facility for manufacture of CD/DVDs in India. The company also successfully commissioned 5 colour Dry Offset online printing machine from Kamman, Germany with an installed capacity of over 30 million units per annum. This machine has automated visualising and printing system which is being used to produce real photographic quality images. The CD/DVD mastering plant with an installed capacity of 15000 stampers per annum, was also installed along with the above plant. This facility, first of its kind in India, reduces the lead time for stamper from 14 days to less than 45 minutes, eliminates dependence on external factors for procurement of stampers. It also reduces t,he cost of stamper by almost Rs.15000 per piece and saves precious foreign exchange outflow, required hither to before for stamper making. As a result of efforts towards stronger distribution network and introduction of new and varied products the performance of the company is showing consistant improvement. *TECHNOLOGY DIVISION The technology division of the company comprises CD/ DVD manufacturing, Multimedia Development and Designer CDs. * CD/DVD MANUFACTURING The company is the first in India to have come up with CD and DVD manufacturing plant in collaboration with M/s Toolex of the Netherlands It is the only integrated facility of its kind in India with CD/ DVD replication, multimedia development and marketing of software under one roof with an installed capacity of over 16.7 million units of CDs/DVDs per annum. The benefits of integrated facilities are manyfolds. This reduces risks of piracy, gives world class quality imaging, improves competitive edge not only for the Indian market, but also for the world markets. The company has the flexibility to produce both CD and DVD. It is universally accepted that DVD will be the format of the future. The company has strategically placed itself into this product. DVD encompasses all facets of the entertainment business. It will provide greater value addition to customers de to higher storage capacity. DVD has high versatility leading to clearer images and corruption free software leading to high broadcast quality and high resolution pictures and sound. Due to the quality for product and services, fastest delivering schedule in India, company is able to serve its prestigious clients like BPL, Bambino Audio, Cannon, Cyber Mulimedia, Department of Tourism, Deptt. of Electronics Software Councils of India, IANCA, IATI (Philips), LG, Maruti Udyog Ltd., MTNL, NIIT, Samsung, Sony, Tata Infotech, VSNL, etc. * MULTIMEDIA Overall, the market for multimedia in India is witnessing an upswing, since 1992. Keeping pace with changing market trends, the company is having one of the best studios in India to produce Animation films, gaming engines for role playing games,strategic games, sports related games, edutainment CD- ROMs and interactive educational projects. Company has developed in house, a number of CD-ROM titles including few of the best selling titles like, 50 years of Independence, Panchtantra, Karishma etc. The company has the largest domestic distribution network of distributors, dealers and retailers covering more than 85% of the user population. It has one of the largest collection of CD ROM titles in India for games. Strategic Alliances The company has also entered into strategic tie-ups with multimedia major across the globe like, Microprose of U.K. Pinpoint of Denmark, Iridon Interactive, Sweden, Activision, Australia, Europress, U.K., Prism Leisure of UK, Rainbow Tech. of USA, Simon Schuster, Germany, ITE Media Denmark, CD-ROM Update, Denmark, Monolith, USA, Interplay, U.K. Europress Located in U.K. Europress, is a provider of powerful international PR solutions tailored to meet the needs of todays technology companies. Iridon Based just outside Gothenburg, on the west coast of Sweden, Iridon is owned by people that actually care about bringing interactive entertainment to the global masses. Currently Iridons development talent is comprised of number of designers, producers, programmers, artists and sound engineers. Activision It is a caliofornia based company, with a revenue of more than $ 500 million per annum. They are the leaders in the video gaming world. They are the pioneer of the video game industry. Its decade old Pitfall tomb raiding game is still remembered fondly. Few of the best titles are Defender, Castle, etc. Monolith Founded in 1995 and based in Kirklan, Washington, is one of the leading developer founded and developer-centric publishers, in the gaming community. Recognised for their stylish and high energy approach to development, Monolith creates the content gamers want, often using their own proprietary technology. Interplay Interplay Entertainment Corpn. is worldwide developer, publisher and distributor of award winning entertainment software for both core gamers and the mass market. Founded in 1983, Interplay offers a broad range of products in the action, adventure, role-playing, strategy and sports categories across multiple platforms including Playstations, Dreamcast and Nintendo 64. Few of the best selling tiles include Descent, Virtual Pool, Fallout, Baldurs Gate and Earthworm Jim. The company has also done strategic alliance for supply of entertainment video and music and CD ROM bundling with companies like Samsung Vintron; HCL, Cannon, etc. The clients for this segment includes prestigeous clients like Department of Tourism, IGNOU, Indian Embassy of Berlin, Germany, Ministry of Defence, Ministry of Eternal Affairs, US Embassy, PNB, DSJ Communication and many more. + DESIGNER CD Our company also launched for the first time in India, Designer CDs, developed through in-house R&D, a patentable concept for designing CDs to almost any shape and size. This"offers nascent field having tremendous prospects, as the company enjoys vitual monopoly in this product. Designer CD Designer CDs can be used as product sampling, as Travelogue, as a VIP pass, as an AD Teaser, as a Visiting Card etc. In the organised sector, company expects to capture 10% of the market share, estimated at around Rs.1000 crores. The client list includes industry majors like: Infosys, BPL, Titan, IMI, LG, Samsung, National Panasonic, Philips, Ansals, Poddar Infotech, Archies, etc. * PET Eventhough, company is one of the largest players in the manufacturing and marketing of PET products, the margins from the business are shrinking due to severe competition from new entrants in the small scale sector, who enjoys better tax advantage. * BUSINESS AND FINANCIAL RESTRUCTURING Due to the shrinking margins in the PET Division, the company has decided to, hive-off the PET Division, as a going business. To company has already Initiated,the process of hiving-off with restrospective effect from 1,st July, 2000. After hiving-off the PET business, the focus will be towards the Information Technology (IT). To achieve financial restructuring, company has entered into settlement with various banks and financial institutions with a view to reduce its debt burden. It is hopeful to become a zero debt entity, within a year. The financial restructuring will help in reducing the interest burden on the company and would result in saving of around Rs. 30 crores every year. This will consequently result in better performance. * FUTURE FORAYS In view of the insatible demand for CD/DVD the company is planning to upgrade Multimedia Studio, produce CD-R and CD-RW and add 2 more lines for DVD production, to tripple the existing facilities. Besides, the company is also planning to enter into the area of Internet Portal. Company plans to set up multimedia studios at Delhi, Bangalore and Bombay. The studios will be interlined so as to be production flexible. Special focus will be given to produce gaming titles, animation films and education projects. With huge and expanding base of recorders, consumption is expected to reach 500 million pieces per year by 2005. To meet the increasing demand for digital storage devices, company is also planning to enter into the production of CD-R and CD-RW. These products are best suited for long term data storage, archiving and distribution and wide range of everyday personal and corporate backup as well as short term data storage applications. The portal segment will include an immense multi- store, virtual entertainment emporium starting with a music store, followed by other stores for products like CD-Video, CD-ROM, DVD, etc. It would not only carry albums of all leading music labels, but also from other low-profile known labels. It will be specifically and exclusively devoted to on-line retailing of music and entertainment software site. + RESEARCH AND DEVELOPMENT During the period under review, the R&D unit continued to play a key role in improvement of process development, process modification & product development. The company also developed through in-house R&D a patented concept for designing CDs to almost any shape for the first time in India. To further strengthen its R&D facilities, your company is planning to make additional investment in future to further improve the performance of the existing products. * COLLABORATION We are pleased to inform that relationship with our foreign collaborators continued to be cordial during the period under review. Their active participation, support and technical expertise are being fully utilised for improving the operations of the company. * CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION. FOREIGN EXCHANGE EARNINGS AND OUTGOINGS The particulars are given in the addendum to his report. * DIVIDEND Though the company has disposable profits, in order to conserve financial resources to meet the obligations under Settlement of dues to banks and Financial Institutions, the Board of Directors have not recommended any dividend for the period under review. + INCREASE IN EQUITY SHARE CAPITAL During the period under review, the company had issued 2 crore equity shares aggregating to Rs. 20 crores, on private placement basis to various body corporates. * FIXED DEPOSITS The company has not accepted any fresh fixed deposits from the public/shareholders. + DEMAT OF EQUITY SHARES The company has entered into an agreement with NSDL & CDSL to facilitate the holding/trading of the companys shares in electronic form. As per SEBI Notification the companys Equity Shares are being traded in Compulsory Dematerialisation Mode in the Stock Exchanges w.e.f.28th August, 2000. * DIRECTORS During the period under review, Mr. V.B. Mainkar and Lt. Gen. R.V. Kulkarni resigned from the Directorship of the Company. Our directors place on record their deep appreciation for the guidance and valuable contribution made by them during their tenure. The IFCI Ltd. has nominated Mr. H.N. Belawat as a Director of the Company in place of Mr. N.K. Bakshi. Your Directors lace on record their deep appreciation for the valuable guidance and contribution made by Mr. N.K. Bakshi during his tenure. Mr. Mitsuo Shimojo, Director of the company, who retires by rotation and being eligible offers himself for reappointment. * NAME CHANGE With a view to reflect proper business scenario, the name of the Company has been changed from PADMINI POLYMERS LIMITED to PADMINI TECHNOLOGIES LIMITED with effect from 14th June, 2000. * EMPLOYEES STOCK OPTION PLAN (ESOP) In order to reward and motivate employees of the company and also to attract ad retain the best talent, your Directors recommend for your approval a proposal for issue of 10 lacs equity shares to the employees and eligible Directors of the company under ESOP. The board details of the ESOP have been set out in the notice convening this Annual General Meeting. , * PARTICULARS OF EMPLOYEES A statement of particulars of Employees, as required under section 217(2A) of the Companies Act, 1956 is annexed and forms integral part of this report. * AUDITORS M/s. Ashok Amar & Associates, Chartered Accountants, New Delhi have furnished a certificate under section 224(1 B) of the Companies Act,1956 to the effect that their appointment if made, at the ensuing Annual General Meeting of the Company will be within the limits as prescribed under the Companies Act, 1956. Your Directors recommend for your approval the re-appointment of M/s. Ashok Amar & Associates, Chartered Accountants, New Delhi as Statutory Auditors. * ACKNOWLEDGEMENT Your Directors would like to express their grateful appreciation for the assistance and sincere co-operation received from the Financial Institutions, Banks, Central and State Government Authorities. Your Directors also place on record their deep sense of appreciation for the support and goodwill extended by the Employees and Shareholders of the Company. for and on behalf of the Board New Delhi VIVEK NAGPAL 28th August, 2000 Chairman and Managing Director ANNEXURE TO DIRECTORS REPORT PARTICULARS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD DIRECTORS) RULES, 1988 A. CONSERVATION OF ENERGY a) Using imported and superior raw material. b) Installation of air-conditioning units in the production unit to control humidity and temperature leading to lower rejection of material. c) Superior quality air dryer installed to r,educe the purging losses and give clean air for better production quality. d) Power generator of appropriate capacity installed and electrical circuit has been separated into two parts to avoid excess power costs. e) Use o low pressure screw compressors for the operation and high pressure compressors for blowing resulting in saving of power. f) Installed one new air drying units with 0.1 micron filters. g) Installed electrical station with captive generation by generators. h) Installed new compressors for blowing and operation separately. i) Installed Air Conditioning units at plants. j) The installed soft starters for compressors. B. TECHNOLOGY ABSORPTION Research & Development a) Development of new products/designs/processors/methods, improving ot systems In existing products/processors . b) Development of new moulds for different shapes and designs. c) Designed new material handling systems, which includes unloading of jumbo bags of 1 ton raw material, shifting of finished goods from shop floor to store by conveyors and despatch of goods. d) Developed new products, i.e. Designer CD C. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION a. Efforts in brief, made towards technology absorption, adaptation and innovation. i. Companys personnel were deputed abroad for training and exposure to latest products, designs and manufacturing technologies and tecHniques. ii. Attending National/international Conferences, Seminars and Exhibitions. iii. Adaptation/modification of imported designs/technologies to suit indigenous requirements, alternative materials/components . b. Benefits derived as a result of above efforts e.g. product improvement, cost reduction, produce development import substitution etc. All the above efforts resulted in improving the existing processes, product quality, performance, productivity,reliability and serviceability, reduction of cost, import substitution introduction of new products and better accuracy, speed safety, standards, aesthetics and economy. c. In case of imported technology (imported during the last five years reckoned from the beginning of the financial year) following information may be furnished. Product Technology from Year of Status of import absorption/ adaptation Compact Discs/ ODME of, 1996 Fully absorbed CD-ROMS Netherlands DVD Toolex of 1999 Fully absorbed Netherlands Colour Printing Kamman of 1999 Fully absorbed Germany D. FOREIGN EXCHANGE EARNINGS AND OUTGOINGS Foreign Exchange Earnings Nil Foreign Exchange Outgoings Rs. 2l275.66 lacs For and on behalf of the Board New Delhi (VIVEK NAGPAL) 28th August, 2000 Chairman & Managing Director