Switching Technologies Gunther Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

Your company was established in the year 1988. Your company is into the manufacturing and sale of reed switches, proximity censors, ball switches, etc. The reed switches is one of the unique kind of switches. Your company is the only company in India, other than one M/s. Reed Relays Electronics limited (RRE), based at Bangalore manufacturing reed switches. Your company champions in manufacturing of miniature and Standard reed switches, which RRE does not manufacture at their facility. Your company comes under the category of Electrical and Electronic Industrial segment.

Your company has got all its machine and equipment dating more than 37 years old. Nevertheless, your company has customized the machinery and equipment to suit the latest technological up gradation and need of the hour.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

A) Segment wise / Division wise Operations

B) Other Initiatives

Initiatives has been taken up by your company on a trial basis in trying to use a substitute cheaper raw material Ruthinium in place of Rhodium, and if it proves to be successful then the Company will be in a position to earn profits and wipe out the losses going forward. The Company is also undergoing cost cutting measures to bring down the losses.

C) Outlook

There were no sufficient business orders. The prices of the raw materials had increased but the Company could not pass on the proportionate increase in prices to the end consumer.

However the Company had undergone cost cutting measures to bring down the losses and the Management is confident of reviving the business of the company in the years to come by increasing the productivity and by adding new products and reduce the scrap generation because of which, your company will be in a position to reduce the loss and be profitable in the years to come.

D) Finance and Investments

Your company has not taken any loan, or deposit etc. from any one, except for issuance of 98,178 Zero Coupon Redeemable Preference Shares (RPS) of Rs100/- each to its holding company M/s.Gunther America Inc.,

In this context, the Company has passed the special resolution in its Annual General Meeting held on 21st September, 2021 to convert the RPS into equity shares of the Company. However as on date the conversion is not materialized yet and the company is taking the initiative to convert the same at the earliest.

E) Human Resource Development and Industrial Relations

Human Resource Development and Industrial Relations was very cordial. Your companys subsisting wage agreement with the STGs worker Union is due for finalisation.

F) Internal Control Systems and Their Adequacy

Your company has got sufficient internal control system. Your company has appointed independent third party internal auditor besides statutory auditor. The present system is sufficient to meet the requirements of the company,

G) Information Security

Your company has a full proof information security system. The data backup are taken and kept separately so as to return back to the working in case of any unforeseen circumstances. This apart, your company has introduced adequate measures to avoid theft of information.

H) Opportunities and Threats & Risks and Concerns

Your company is located in MEPZ-SEZ area. There is a minimum commitment of exports given by your company to the Development Commissioner of MEPZ-SEZ as mandated by law. Secondly, your company has entered into an export marketing agreement with the group companies. As per the agreement, the group companies provide the Raw Material and your company converts them into Finished Goods and export them back to the group companies. Under such scenario, after meeting the commitments of the group company as per the agreement and also the commitment given to the MEPZ-SEZ authorities, your company can make independent sales of left over finished goods. In general, demand for your companys products keeps fluctuating upward and downward and is very volatile.

With regard to the threat, the major threat is the obsolescence of technology involved in the production machinery and equipment. Your company has however been successful in customizing those machinery and equipment to suit the latest technological requirement vis-a-vis production and export requirement. Secondly, your company is manufacturing gold plated reed switches whereas lot of competitors have emerged in the international market who are offering low cost tin and copper plated reed switches performing the same function as that of your companys reed switches. H owever, your company is able to offset this threat by canvassing the products superior quality and longtime durability.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT FOR SWITCHING TECHNOLOGIES GUNTHER LIMITED

Part A:

SUSTAINABILITY EFFORTS BY SWITCHING TECHNOLOGIES GUNTHER LTD.

Your companys plants and machineries are age old and the manufacturers of those plants and machineries have either closed their facilities or stopped manufacturing the same. Nevertheless, your company has been customizing the repairs and maintenance aspect to suit the technological upgradation requirements. This has been possible by utilizing the in-house intellectual expertise and also by appointing outside consultants.

Your companys other sustainable efforts were to focus on reducing the scrap rate and increasing the productivity. This has been introduced in all segments of the production processes.