praga tools ltd Management discussions

PRAGA TOOLS LIMITED ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS PRESENT STATUS OF THE COMPANY WITH BIFR: Your Directors are pleased to inform that the Revival Plan as recommended by the Board for the Rehabilitation of Public Enterprises (BRPSE) in the month of March, 2005 has been accepted by the Government of India vide their Letter No. 12(3)/2005 PE. X dt. 11.11.2005 as per the details given below: A. Infusion of funds : Capital Rs.5.00 Cr. expenditure for acquiring machines and technology by way of equity B. Conversion of principal Rs.82.39 Cr. amount of Government of India loan into equity and simultaneously write off the equity against accumulated losses C. Waiver of interest accrued Rs.94.73 Cr. on Government of India loan Total Rs.182.12 Cr. During the year, the Government of India has released an amount of Rs.5 Cr. to your Company as indicated at A above for its CAPEX requirements which is being utilized in the current year whereby the operations are expected to improve. Further to the above reliefs, the Government has also accorded approval to extend Guarantee to the tune of Rs.32.59 Cr. for raising a loan from the market for liquidating some of the liabilities. However, as per the DRS prepared by your Company some of these liabilities have been sought to be waived by the Government of India as concessions extended to sick industries. Your Company has therefore not utilized the Government Guarantee for raising loan from the market and instead has proposed to liquidate them out of the proceeds that would accrue on sale of its NPAs i.e., land at Kavadiguda, Secunderabad. During the year your Company has disposed off 1.41 Acres of its land to M/s. PGCIL & M/s. BEL and realized an amount of Rs.8.41 Cr. and the same has been utilized for liquidating part of the dues of State Bank of Hyderabad and arrears of Property Tax of its land at Kavadiguda. In the meantime the Government had extended guarantee in respect of the outstanding dues of State Bank of Hyderabad amounting to Rs.33.48 Cr. for the period 1.11.2003 to 31.03.2006. The Government has also approved the merger of your Company with HMT Machine Tool Limited, which has to be completed by end September, 2007. Pending the merger and the approval of DRS by BIFR, the marketing functions of the Company have already been entrusted to the country wide marketing network of HMT Machine Tool Ltd. ISO 9001-2000 QUALITY MANAGEMENT SYSTEM: NVT-QC, Bangalore, Auditors, carried out their second Surveillance Audit on the Quality Management System of your Company during the month of April, 2006 and observed that the system and procedures are properly followed and implemented as laid down in the Quality Manuals. In the current year your Company plans to go for renewal of the Certificate after completion of the Renewal Audit by NVT-QC. MANPOWER: The strength of the employees as on 31st March, 2006 stood at 554. The information on the various categories of employees as on 31.03.2006 is given below: Category No. of employees Scheduled Caste 97 Scheduled Tribes 13 Ex-Servicemen 07 Physically challenged 08 EMPLOYEE RELATIONS AND WELFARE: The overall Industrial Relations during the year were cordial. No man-hours were lost due to Strikes/Lockout or any other industrial disturbances. HUMAN RESOURCES & DEVELOPMENT: In the emerging knowledge-based and service intensive environment, the sustained focus of the Company is on optimum utilization of the talents and capabilities of the employees at all levels and also to promote their skills and competencies. During the current year nearly 588 man-days were spent in training 78 employees on different subjects with the assistance of experts from the Central Board for Workers Education (CBWE) Hyderabad, Engineering Staff College of India, Hyderabad and IMTMA Design Institute, Bangalore. VIGILANCE ACTIVITIES: A Vigilance Cell headed by an Assistant Vigilance Officer independently reporting to the Chief Vigilance Officer of the Holding Company viz., HMT Limited is functioning in the Company and his functions also cover the vigilance activities of all the Hyderabad based Units of HMT Limited. OFFICIAL LANGAUGE: During the year, your Company continued to pursue its efforts in implementing the Official Language Policy of the Government of India. The Hindi Diwas & Saptah were observed by organizing essay writing and song competitions in Hindi.