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Directors Report of Avantel Ltd.

Mar 31, 2014

Dear Members,

The Directors take pleasure in presenting the Twenty Fourth Annual Report on the operations of your Company and the Audited Accounts for the financial year ended 31st March, 2014 together with the Auditors'' Report thereon.

FINANCIAL PERFORMANCE OF THE COMPANY:

Your Company''s results for the year in comparison with the previous year are given below in a summarized format:

(Rs.In Lakhs) Current Year Previous Year Particulars 2013-14 2012-13

Income 1318.91 4315.67

Expenses 1122.84 3270.64

Operating Profit 196.07 1045.03

Depreciation 198.99 126.40

Financial expenses 112.27 99.04

Profit/ (Loss) before Tax (115.19) 819.59

(PBT)

Provision for tax:

Current & Deferred 11.82 167.67

Profit/(Loss) after Tax (103.37) 651.92

(PAT)

Profit brought forward 984.05 623.25

Profit Available for 880.68 1275.17 Appropriation

Appropriations:

Transferred to General - 160.00

Reserve

Proposed Dividend - 112.07

Corporate Dividend Tax - 19.05

Balance carried to 880.68 984.05 balance sheet

Earnings Per Share (EPS)

- Basic - 14.54

- Diluted - 14.54

Your company''s fi nancial performance during the current year 2013-14 is quite unsatisfactory when compared to the last year as most of the orders for important projects have been delayed due to reasons beyond the control of the Company. However we are happy to inform you that we have now received the supply orders from Ministry of Defence and we are confi dent that the fi nancial year 2014- 15 will show good results.

1. DIVIDEND:

The Board of Directors does not recommend any dividend for the fi nancial year under review due to the reason that the company has incurred loss of Rs.115.19 lakhs for the year ending 31st March, 2014.

2. MANAGEMENT''S DISCUSSION AND ANALYSIS:

A. Macro-Economic Overview: Prospects of Indian Economy in 2014 -15

In the recent past, the Indian economy had to overcome varied challenges such as growth slowdown and infl ationary pressures. The slowdown manifested in the decline in the growth of Gross Domestic Product (at factor cost at constant 2004-05 prices) from 8.9 per cent in 2010-11 to 6.7 per cent in 2011-12 and 4.5 per cent in 2012-13. With the economy projected to have registered a growth rate of 4.9 per cent in 2013-14, the declining trend in growth seems to have reversed. The World Economic Outlook (WEO) update released by the International Monetary Fund in January 2014 has revised the growth projection for the world economy slightly upwards to 3.0 per cent and 3.7 per cent for 2013 and 2014 respectively. From 2014 onwards, global growth prospects are projected to improve over the medium term at a gradual pace. (Source: India budget.nic.inub 2014-15).

B. Defence Overview 2014 – 2015

The current Defence Procurement Procedure (DPP)-2013 explicitly backs indigenous procurement over foreign purchases. It stipulates that Indian defence companies will get access to the military''s long-term equipment roadmap, providing them with the time needed for developing the military''s future equipment requirements; with a level playing fi eld between the Defence Public Sector Undertakings (DPSUs) and private defence companies; simplifi es the "Buy & Make (Indian)" procedure to benefit Indian industry; and defi nes ambiguous terms in the DPP like "indigenous content."

DPP-2013 lays down an order of preference for categories, in which building and buying in India is at the top and buying over-the-counter abroad is the last priority. The order of preference is: (1) "Buy (Indian)" (2) "Buy & Make (Indian)" (3) "Make" (4) "Buy & Make with ToT" and (5) "Buy (Global)". Any proposal to select a particular category must now state reasons for excluding the higher preferred category/categories". But DPP-2013''s most far-reaching change lies in its stringent defi nition of "indigenous equipment". The successive DPPs of 2002, 2005, 2006, 2008, 2009 and 2011 have regarded all equipment purchased from Indian suppliers as "indigenous", even when it contains 80-90 per cent foreign- sourced items, with just 10-20 per cent Indian components, that too in secondary fi elds like assembly and delivery. Now DPP-2013 rules that, "Import content in the products supplied by the sub-vendors will not qualify towards indigenous content".

The new defi nition of "indigenous content" requires the following to be deducted from the cost of indigenous equipment: the direct costs of all materials, components, sub-assemblies, assemblies and products imported into India; the costs of all services obtained from non- Indian entities; all royalties, licence fees, technical fees etc. that are paid abroad. While vendors are allowed to self-certify the true value of indigenisation, certain safeguards have been put in place, such as the banning or suspending of a vendor for up to fi ve years if any false certifi cation is detected.

In addition to the steady evolution of the DPP over the years, there is recognition that the "Make" procedure needs to be simplifi ed to attract more Indian private players into defence production. In addition to simplifying procedures in successive DPPs, a full-fl edged exercise is underway to rewrite the ''Make'' and the ''Fast Track'' Procedure. This MoD insiders hope, might be completed by the end of this year.

MoD has also released the "Technology Perspective & Capability Road Map" (TPCR 2013), to provide the industry an overview of the direction in which the Armed Forces intend to head in terms of capability over the next 15 years, which in turn would drive the technology in the developmental process. It is based on the LTIPP of the Armed Forces. The document has been put up in the public domain in line with the vision of former defence minister Shri AK Antony, Raksha Mantri, to establish a level playing fi eld for the Indian defence industry, both public sector and private sector. The new policy also entitles private companies to access to important details from the military''s 15-year Long Term Integrated Perspective Plan (LTIPP). This will allow industry the lead-time needed to meet future equipment needs.

ACCOMPLISHMENTS:

- Developed Satellite based Voice Communication Terminals for MR Aircrafts for Indian Defense Services.

- Developed and supplied Satellite Mobile Radio (SMR) for ISRO.

- Developed and supplied L-Band Demodulators for ISRO.

- Developed and supplied High Power Broad Band Power amplifi er in the Frequency Band of 1 -2.5GHz, 500W for DRDO.

- Developed and supplied Portable Multimedia Terminals for ISRO.

- Developed Voice and Data Terminals using Auto tracking unit. (ATU).

- Developed Data Terminals for Helicopters, Submarines & Marine Commandos.

C. OVRVIEW OF OPERATIONS:

The Company has recorded a total income of ^ 1318.91 Lacs as against Rs.4315.67 Lacs for the previous year and has incurred a loss during the year at Rs.103.37 lakhs as against Profit after tax of ^ 651.92 lakhs for the previous year.

D. OUTLOOK AND STRATEGY FOR CURRENT YEAR:

Your Company has developed Mobile Satellite Services based products and UHF Communication Systems and continue to offer solutions for various applications. Your company is looking forward to growth in this segment by offering integrated solutions for Airborne, Underwater platforms and special operations. The Company is also developing 1 KW HF- communication system for Indian Navy. The Priority segments include provision of MSS for Helicopters and UHF Satcom for MR class Aircrafts & Helicopters of Indian Navy.

E. INTERNAL CONTROL SYSTEMS:

Periodical internal quality audits and management review meetings ensure successful implementation of the Quality Management System. The ISO compliance Management Information System seamlessly integrates all the intra and inter-departmental activities of the organization, simultaneously ensuring data integrity and effective monitoring of the day-to- day operations. In addition, the Company has appointed independent internal auditors to carry out the internal audit on a regular basis. The internal audit is supplemented by external audit and periodic review by the Management.

F. INDUSTRIAL RELATIONS:

Your Company had harmonious relations throughout the year at all levels of the organization and would endeavor to maintain this cordial relationship in the future as well. Your Directors wish to place on record their deep sense of appreciation for the valuable work done and co-operation extended by the employees at all levels.

3. DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby confi rms that: -

i. In the preparation of the annual accounts, the applicable Accounting Standards have been followed and there is no material departure.

ii. Appropriate accounting policies have been selected and applied consistently and have made judgments 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, 2014 and of the Profit of the Company for the year ended on that date.

iii. Proper and suffi cient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

iv. Annual accounts have been prepared on a ''going concern'' basis.

4. DEPOSITS:

During the year, the Company has not accepted any deposits covered under the provisions of Sec. 58A of the Companies Act, 1956, read with Companies (Acceptance of the Deposit Rules), 1975.

5. PARTICULARS OF EMPLOYEES:

The particulars of employees, which are required to be given under Sec 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Amendment Rules, 2011:

a. Particulars of employees who are in receipt of Rs.60 lakhs or more per annum: NIL

b. Particulars of employees employed for a part of the fi nancial year with a salary of Rs.5 lakh or above per month : NIL

6. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT INCLUDING NUMBER OF PEOPLE EMPLOYED.

The Company believes that the quality of the employees is the key to its success in the long run and is committed to provide necessary human resource development and training opportunities to equip them with skills, enabling them to adopt the contemporary technology advancements.

An atmosphere of cordial relations with the employees has prevailed in the organization all over the year During the year, the Company has organized training programmes for all the categories of employees in different segments to enable them to sharpen their skills, thereby increasing the overall effi ciency of the organization

As on 31st March 2014, the employee strength stands at 165.

7. CONSERVATION OF ENERGY & FOREIGN EXCHANGE INFLOW AND OUTFLOW:

The details, as required under Sec 217(1) (e) of the Companies Act, 1956, read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure-I.

8. TECHNOLOGY, PATENTS, R&D AND INNOVATION:

Your Company has submitted fi ve applications to the Patent offi ce, Government of India, for grant of Patents under different R&D inventions. All are published in the Patents Journal and are waiting for further examination in chronological order of applications fi led. The members will be informed of the grant of patents as and when they happen.

9. STATUTORY COMPLIANCE:

During the year, the company has complied with all the statutory provisions in all respects with regard to all the affairs of the Company.

10. CORPORATE GOVERNANCE:

The Company is committed to achieve the highest standards of corporate governance and it complies not with just letter of law but also spirit of law.

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance practices followed by the Company together with a certifi cate from a Statutory Auditors of the company confi rming compliance is annexed as part of the Annual Report in Annexure- II.

11. SECRETERIAL COMPLIANCE CERTIFICATE

Certifi cate from a Practicing Company Secretary as stipulated in Section 383A of the Companies Act, 1956 read with Companies (Compliance Certifi cate) Rules, 2001 is annexed as part of the Annual Report in Annexure- III.

12. LISTING FEES:

The Company has paid the listing fees for the year 2014-15 to BSE Limited in pursuance of the Listing Agreement.

13. SHIFTING OF REGISTERED OFFICE:

During the year under review, the Company has shifted its Registered Offi ce w.e.f 5th September, 2013 from Plot No. 16, Sector III, Huda Techno Enclave, Opp. K Raheja IT Park, Madhapur, Hyderabad-500081 to the Sy No. 141, Plot No 47/P, APIIC Industrial Park, Gambheeram (V), Anandapuram (M), Vishakhapatnam, Andhra Pradesh – 531163 by passing a Special Resolution through postal ballot.

14. AUDITORS:

M/s. Ramanatham & Rao, Chartered Accountants, the Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment for a term of 5 (fi ve) years subject to the ratifi cation by the members at every AGM in accordance with the provisions of Sec. 139 of the Companies Act, 2013 and the rules made thereunder.

The Company has received written consent from the Auditors and a confi rmation to the effect that their re-appointment, if made, would be within the limits prescribed under Section 141 of the Companies Act, 2013 and the rules made thereunder.

15. COST AUDIT REPORT:

The Company has received the cost audit report from Mr. N.V.S. Kapardhi, Cost Accountant, the Cost Auditor for the fi nancial year 2013-2014. There are no qualifi cations or remarks made by the cost auditors in their report.

The Board has reappointed Mr. N.V.S. Kapardhi, Cost Accountant, as Cost Auditor to carry out the Cost audit of the Company for the fi nancial year 2014-15.

16. DIRECTORS:

During the year, the Board has appointed Maj. Gen S. Balakrishnan, VSM (Retd) as additional director in its Board meeting held on 31st October, 2013 who holds offi ce as such till the ensuing AGM.

The Board has also appointed Mrs A Sarada as Whole- Time Director (Finance & Accounts) of the Company for a term of 3 (three) years subject to the approval of members in their Meeting held on 14th May, 2014.

Pursuant to provision of Section 152 of the Companies Act, 2013 read with the rules made thereunder and Clause 49 of the Listing Agreement, all the Independent Directors are being appointed for a term of 5 (fi ve) years and are not liable to retire by rotation.

In accordance with the provisions of Section 152 of the Companies Act, 2013, Dr. Vidya Sagar, Managing Director of the Company will retire by rotation and being eligible, offers himself for the re-appointment.

17. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:

As per provisions of section 135 of the Companies Act, 2013 and the Rules made thereunder every Company meeting a specifi c criteria shall constitute a Corporate Social Responsibility Committee.

Keeping in view of the above legal requirements and in deference to the public interest, the Board in its Meeting held on 31st July, 2014 has constituted the Corporate Social Responsibility Committee with the following Directors.

Mrs. A. Sarada : Chairperson

Mr. N. Naveen : Member

Mr. Y. Kishore : Member

The terms of reference of the Committee covers the matters specifi ed under section 135 and Schedule V of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014.

18. WHISTLE BLOWER POLICY:

In pursuance of the provisions of the section 177 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 and amended clause 49 of the listing agreement, the Board has established a vigil mechanism and adopted the Whistle Blower Policy for Directors and employees of the Company to enable them to report their genuine concerns about unethical behaviour, actual or suspected fraud, malpractices, or violation of the Company''s code of conduct without any fear.

Shri Naveen Nandigam has been designated as the Ethics Counsellor for the purpose of effective implementation of the Whistle Blower Policy and redressal of complaints made under this policy.

19. DEMATERIALISATION OF SHARES:

As on 31st March, 2014, 97.69% of paid up capital is in dematerialized form.

20. ACKNOWLEDGEMENT:

Your Directors express their sincere appreciation and gratitude to Canara Bank, Industrial Finance Branch, Hyderabad, for their continued support and to all employees, shareholders, suppliers, customers and various statutory authorities, who have extended their immense support to the Company during the Financial Year under review.

For Avantel Limited

Y. Kishore Chairman of the Meeting Place : Hyderabad Date : 31.07.2014


Mar 31, 2013

Dear Members,

The Directors take pleasure in presenting the Twenty Third Annual Report on the operations of your Company and the Audited Accounts for the financial year ended 31st March, 2013, together with the Auditors'' Report thereon.

PERFORMANCE OF THE COMPANY:

Your Company''s results for the year in comparison with the previous year are given below in a summarized format:

(Rs in Lakhs) Particulars Current Year Previous Year 2012-13 2011-12

Income 4315.67 2608.02

Expenses 3270.64 1974.59

Operating Profit 1045.03 633.43

Depreciation 126.40 119.33

Financial expenses 99.04 49.06

Profit Before Tax (PBT) 819.59 465.04

Provision for tax Current & Deferred 167.67 75.81

Profit After Tax (PAT) 651.92 389.23

Profit brought forward 623.25 498.22

Profit Available for Appropriation 1275.17 887.45

Appropriations:

Transferred to General Reserve 160.00 160.00

Proposed Dividend 112.07 89.66

Corporate Dividend Tax 19.05 14.54

Balance carried to balance sheet 984.05 623.25

Earnings Per Share (EPS)

- Basic 14.54 8.68

- Diluted 14.54 8.68

1. DIVIDEND:

Your Directors have pleasure in recommending a dividend @ Rs. 2.50/- per share (25%) for the financial year 2012-13, out of current year profits absorbing an amount of Rs. 112.07 lakhs towards dividend & Rs. 19.05 lakhs towards dividend distribution tax, subject to the approval of the members of the Company in the ensuing Annual General Meeting.

2. DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby confirms that: -

i. In the preparation of the annual accounts, the applicable Accounting Standards have been followed and there is no material departure.

ii. Appropriate accounting policies have been selected and applied consistently and have made judgments 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, 2013, and of the Profit of the Company for the year ended on that date.

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

iv. Annual accounts have been prepared on a ''going concern'' basis.

3. DEPOSITS:

During the year, the Company has not accepted any deposits covered under the provisions of Sec. 58A of the Companies Act, 1956, read with Companies (Acceptance of the Deposit Rules), 1975.

4. PARTICULARS OF EMPLOYEES:

The particulars of employees, which are required to be given under Sec 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Amendment Rules, 2011:

a. Particulars of employees who are in receipt of Rs. 60 lakhs or more per annum NIL

b. Particulars of employees employed for a part of the financial year with a salary of Rs. lakh or above per month NIL

6. CONSERVATION OF ENERGY & FOREIGN EXCHANGE INFLOW AND OUTFLOW:

The details, as required under Sec 217(1) (e) of the Companies Act, 1956, read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure-I.

7. TECHNOLOGY, PATENTS, R&D AND INNOVATION:

Your Company has submitted five applications to the Patent office, Government of India, for grant of Patents under different R&D inventions. All are published in the Patents Journal and are waiting for further examination in chronological order of applications filed. The members will be informed of the grant of patents as and when they are granted. Due to long procedure of examination after which the patents will be granted, the likely schedule of examination may be during 2013-14 as per Chennai, IPR wing. However the patents have been published and either, we will receive final exam report or patent certificate.

8. CLOSURE OF CHERLAPALLY PRODUCTION UNIT:

Consequent to the completion of Visakhapatnam facility and commencement of production facility at the new outfit, the Cherlapally unit under lease for the last 5 years had been closed after shifting all the production related equipment to Visakhapatnam. All customers, statutory bodies, inspection agencies have been informed accordingly and the facility at Visakhapatnam has also been duly registered with the local licencing and regulatory authorities.

9. NEW UNIT AT VISAKHAPATNAM:

As was informed during the last year, establishment of a new state of the art manufacturing unit on 0.93 acre of land at Gambheeram Industrial Park, Visakhapatnam, Andhra Pradesh has since been completed.. This exclusive facility will be used for development and manufacturing of defense electronics equipment, satellite communication products, IT products and naval systems. The Center will develop import substitution products in strategic electronics for Indian Defense Services. The Center has commenced production and all the statutory approvals have since been obtained in the name of the new facility. This facility will further strengthen interaction with defence services, particularly with Indian Navy.

10. CORPORATE GOVERNANCE:

Attention of the members is drawn to Annexure-II to this Report dealing with the practices of Corporate Governance, being followed by the Company. A certificate from the Statutory Auditors of the Company regarding compliance of the conditions of the Corporate Governance, as stipulated under Clause 49, also forms part of this Annual Report.

11. SECRETARIAL COMPLIANCE CERTIFICATE

Certificate from a Practicing Company Secretary as stipulated in Section 383A of the Companies Act, 1956 read with the Companies (Compliance Certificate) Rules, 2001, attached as Annexure-III to the Directors'' Report.

12. LISTING FEES:

The Company has paid the listing fees for the year 2013- 14 to BSE Limited (BSE) in pursuance of the Listing Agreement.

13. AUDITORS:

M/s. Ramanatham & Rao, Chartered Accountants, Statutory Auditors of the Company, retires at this ensuing Annual General Meeting and are eligible for re- appointment. Confirmation from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

14. COST AUDIT REPORT:

The Board at their meeting held on 6th May, 2013 reappointed Mr. N.V.S. Kapardhi Cost Auditor to carry out the Cost Audit of the Company for the financial year 2013-14. Confirmation from the Cost Auditor has been received to the effect that his re-appointment, if made would be within the limits prescribed under Section 224 (1B) of the Companies Act, 1956.

15. BUY BACK OF EQUITY SHARES OF THE COMPANY

Members are aware that the Board of Directors at their meeting held on 6th May, 2013 approved the Buyback of Equity Shares of the Company which has been commenced with effect from 20th May, 2013 and the Company closed the said Buy Back Offer on 3rd June, 2013 and the Company bought back 3,00,000 Equity Shares of Rs 10/- each during the Buyback Offer. The Board considered to go for further Buyback at its meeting held on 14th June, 2013 upto 25 % of Paid up capital and free reserves seeking your consent through postal ballot.

16. DIRECTORS:

In accordance with the provisions of the Companies Act, 1956, Shri Maj. Gen.(Retd.) Dr. Rajinder Kumar Bagga, AVSM and Shri Y. Kishore, Directors of the Company will retire by rotation and being eligible, offer themselves for re-appointment and the Board recommends their reappointment. The Board of Directors in their meeting held on 31st January, 2013 has approved the re- appointment of Managing Director for another term of 3 years w.e.f. 1st April, 2013 and the resoultion seeking the approval of the members at the ensuing Annual General Meeting is included in the agenda of the notice of AGM.

17. ACKNOWLEDGEMENT:

Your Directors express their sincere appreciation and gratitude to Canara Bank, Industrial Finance Branch, Hyderabad, for their continued support and to all employees, shareholders, suppliers, customers and various statutory authorities, who have extended their immense support to the Company during the Financial Year under review.

For Avantel Limited

Maj Gen. (Retd) Dr. Rajinder Kumar Bagga, AVSM

Chairman

Place : Hyderabad

Date : 14.06.2013


Mar 31, 2012

The Directors take pleasure in presenting the Twenty Second Annual Report on the operations of your Company and the Audited Accounts for the financial year ended 31 st March, 2012, together with the Auditors' Report thereon.

PERFORMANCE OF THE COMPANY:

Your Company's results for the year in comparison with the previous year are given below in a summarized format:

(Rs in Lakhs)

Particulars Current Year Previous Year 2011-12 2010-11

Income 2608.02 2234.60

Expenses 1974.59 1766.35

Operating Profit 633.43 468.25

Depreciation 119.33 114.68

Financial expenses 49.06 40.63

Profit Before Tax (PBT) 465.04 312.94

Provision for tax

Current & Deferred 75.81 67.34

Profit After Tax (PAT) 389.23 245.60

Profit brought forward 498.22 409.94

Profit Available for Appropriation 887.45 655.54

Appropriations:

Transferred to General Reserve 160.00 75.00

Proposed Dividend 89.66 70.60

Corporate Dividend Tax 14.54 11.72

Balance carried to balance sheet 623.25 498.22

Earnings Per Share (EPS)

- Basic 8.68 5.22

- Diluted 8.68 5.22

1. DIVIDEND:

Your Directors have pleasure in recommending a dividend @ Rs 2.00/- per share (20%) for the financial year 201 1-12, out of current year profits absorbing an amount of 7 89.66 lakhs towards dividend & Rs 14.54 lakhs towards dividend distribution tax, subject to the approval of the members of the Company in the ensuing Annual General Meeting.

2. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby confirms that: -

i. In the preparation of the annual accounts, the applicable Accounting Standards have been followed and there is no material departure.

ii. Appropriate accounting policies have been selected and applied consistently and have made judgments 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, 2012, and of the Profit of the Company for the year ended on that date.

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

iv. Annual accounts have been prepared on a 'going concern' basis.

3. DEPOSITS:

During the year, the Company has not accepted any deposits covered under the provisions of Sec. 58A of the Companies Act, 1956, read with Companies (Acceptance of the Deposit Rules), 1975.

4. PARTICULARS OF EMPLOYEES:

The particulars of employees, which are required to be given under Sec 2I7(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Amendment Rules, 2011:

a. Particulars of employees who are in receipt of Rs 60 lakhs or more per annum : NIL

b. Particulars of employees employed for a part of the financial year with a salary of Rs 5 lakh or above per month : NIL

5. CONSERVATION OF ENERGY & FOREIGN EXCHANGE INFLOW AND OUTFLOW:

The details, as required under Sec 217( I) (e) of the Companies Act, 1956, read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure-I.

6. TECHNOLOGY, PATENTS, R&D AND INNOVATION:

Your Company has submitted five applications to the Patent office, Government of India, for grant of Patents under different R&D inventions. All are published in the Patents Journal and are waiting for further examination in chronological order of applications filed. The members will be informed of the grant of patents as and when they happen.

7. NEW UNIT AT VISAKHAPATNAM:

The Company is presently having Research & Development (R&D) facility, at Hyderabad, which is recognized by DSIR, Govt, of India. With a view to establish a new unit, the Company has acquired 0.93 acre of land at Gambheeram Industrial Park, Visakhapatnam, Andhra Pradesh in the last year and is presently constructing a certified Green Building. With respect to the constructions work, civil works for the building have been completed and interior, electrical and other miscellaneous works are in progress. The proposed building will be utilized to set up an exclusive facility for development and manufacturing of defense electronics equipment, satellite communication products, IT products and naval systems. Apart from providing employment opportunities for about 150 engineering professionals, the Center will develop import substitution products in strategic electronics for Indian Defense Services. The Unit is likely to be operational in this financial year only.

8. CORPORATE GOVERNANCE:

Attention of the members is drawn to Annexure-II to this Report dealing with the practices of Corporate Governance, being followed by the Company. A certificate from the Statutory Auditors of the Company regarding compliance of the conditions of the Corporate Governance, as stipulated under Clause 49, also forms part of this Annual Report.

9. LISTING FEES:

The Company has paid the listing fees for the year 2012-13 to Bombay Stock Exchange Limited (BSE) in pursuance of the Listing Agreement.

10. AUDITORS:

M/s. Ramanatham & Rao, Chartered Accountants, Statutory Auditors of the Company, retires at this ensuing Annual General Meeting and is eligible for re- appointment. Confirmation from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224( IB) of the Companies Act, 1956.

11. COST AUDIT REPORT:

The Company was subjected to Cost Audit under Section 23 3 B of the Companies Act, 1956 as per the Central Government Industry-wise General Order i.e. to conduct the audit of Cost accounting records maintained by the Company, in relation to telecommunication products, for the financial year ending on 31st March, 2012. Accordingly, the Company appointed Mr. N.V.S. Kapardhi, Cost Auditor to carry out Cost Audit for the financial year 2011-12 and submit his report to the Central Government.

12. BUY BACK DURING THE YEAR:

Members are aware that the Board of Directors at their meeting held on 13th October, 201 I approved the Buy Back of Equity Shares of the Company which has been commenced with effect from 5th December, 201 I and the Company has closed the said Buy Back Offer w.e.f. 25th January, 2012 and the Company has bought back 2,09,413 Equity Shares of 7 10 each during the Buy Back Offer.

13. DIRECTORS:

In accordance with the provisions of the Companies Act, 1956, Shri N. Naveen Director of the Company will retire by rotation and being eligible, offer himself for re-appointment. During the Financial Year Shri. K.B.K. Moorthi, Shri. M. Venkata Rao resigned as Directors of the Company w.e.f 13th October, 2011 and Maj. S.S. Mohanthy was appointed as Director of the Company w.e.f. 13th October, 201 I. However, subsequent to the financial year Mr. N. Divakar, Whole Time Director and Maj. S.S. Mohanthy, Director have resigned from the Board w.e.f. 30th April, 2012.

14. ACKNOWLEDGEMENT:

Your Directors express their sincere appreciation and gratitude to Canara Bank, Industrial Finance Branch, Hyderabad, for their continued support and to all employees, shareholders, suppliers, customers and various statutory authorities, who have extended their immense support to the Company.

For Avantel Limited

Maj Gen (Retd) Dr. Rajinder Kumar Bagga, AVSM

Chairman

Place : Hyderabad

Date : 30.04.2012


Mar 31, 2011

Dear Members,

The Directors take pleasure in presenting the Twenty First Annual Report on the operations of your Company and the Audited Accounts for the financial year ended 31st March, 2011, together with the Auditors' Report thereon.

PERFORMANCE OF THE COMPANY:

Your Company's results for the year in comparison with the previous year are given below in a summarized format:

(Rs. in Lakhs)

Particulars Current Year Previous Year 2010-11 2009-10

Income 2415.19 2280.14

Expenses 1946.94 2011.57

Operating Profit 468.25 268.57

Depreciation 114.68 123.35

Financial expenses 40.63 28.24

Profit Before Tax (PBT) 312.94 116.98

Excess/(Short) provision relating to earlier years 4.94 (16.99)

Provision for tax Current & Deferred 62.40 10.55

Profit After Tax (PAT) 245.60 123.43

Profit brought forward 409.94 371.57

Profit Available for Appropriation 655.54 495.00

Appropriations:

Transferred to General Reserve 75.00 30.00

Proposed Dividend 70.60 47.06

Corporate Dividend Tax 11.72 8.00

Balance carried to balance sheet 498.22 409.94

Earnings Per Share (EPS)

-Basic 5.32 2.26

-Diluted 5.32 2.21

1. DIVIDEND:

Your Directors have pleasure in recommending a dividend @ Rs. 1.50/- per share (15%) for the financial year 2010-11, out of current year profits absorbing an amount of Rs. 70.60 lakhs towards dividend & Rs. 11.72 lakhs towards dividend distribution tax, subject to the approval of the members of the Company in the ensuing Annual General Meeting.

3. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby confirms that: -

i. In the preparation of the annual accounts, the applicable Accounting Standards have been followed and there is no material departure.

ii. Appropriate accounting policies have been selected and applied consistently and have made judgments 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, 2011, and of the Profit of the Company for the year ended on that date.

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

iv. Annual accounts have been prepared on a 'going concern' basis.

4. DEPOSITS:

During the year, the Company has not accepted any deposits covered under the provisions of Sec. 58A of the Companies Act, 1956, read with Companies (Acceptance of the Deposit Rules), 1975.

5. PARTICULARS OF EMPLOYEES:

The particulars of employees, which are required to be given under Sec 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Amendment Rules, 2011:

a. Particulars of employees who are in receipt of Rs.60 lakhs or more per annum NIL

b. Particulars of employees employed for a part of the financial year with a salary of Rs.5 lakh or above per month NIL

6. CONSERVATION OF ENERGY & FOREIGN EXCHANGE INFLOW AND OUTFLOW:

The details, as required under Sec 217(1) (e) of the Companies Act, 1956, read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure-I.

7. TECHNOLOGY, PATENTS, R&D AND INNOVATION:

Your Company has submitted five applications to the Patent office, Government of India, for grant of Patents under different R&D inventions. All are published in the Patents Journal and are waiting for further examination in chronological order of applications filed. The members will keep informed of the grant of patents as and when they happen.

8. NEW UNIT AT VISAKHAPATNAM:

The Company is presently having Research & Development (R&D) facility, at Hyderabad, which is recognized by DSIR, Govt. of India. With a view to establish a new unit, the Company has acquired 0.93 acre of land at Gambheeram Industrial Park, Visakhapatnam, Andhra Pradesh, and is presently constructing a certified Green Building. The proposed building will be utilized to set up an exclusive R&D Center and manufacturing facility for Aero Space sector. Apart from providing employment opportunities for about 150 engineering professionals, the Center will develop import substitution products in strategic electronics for Indian Defense Services. The Center will be operational in the next financial year.

9. CORPORATE GOVERNANCE:

Attention of the members is drawn to Annexure-II to this Report dealing with the practices of Corporate Governance, being followed by the Company. A certificate from the Statutory Auditors of the Company regarding compliance of the conditions of the Corporate Governance, as stipulated under Clause 49, also forms part of this Annual Report.

10. LISTING FEES:

The Company has paid the listing fees for the year 2011-12 to Bombay Stock Exchange Limited (BSE) in pursuance of the Listing Agreement.

11. AUDITORS:

M/s. A. Madhusudana & Co., Chartered Accountants, Statutory Auditors of the Company, retires at this ensuing Annual General Meeting and expressed un- willingness for re-appointment due to pre-occupations. The Board also taken in to consideration the corporate governance voluntary guidelines and recommended M/s. Ramanatham & Rao. Chartered Accountants, for appointment as Statutory Auditors of the Company. Necessary confirmation has been received to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

12. DIRECTORS:

Shri A. Venkateswara Rao and Maj. Gen. (Retd.). S. Bala Krishnan, VSM, Rotational Directors, have decided not to seek re-appointment and retire at the present AGM. In their place, the Board has recommended Maj. Gen. (Retd.) Dr. R.K. Bagga, AVSM, and Shri N. Naveen as Directors liable to retire by rotation.

Shri N. Naveen and Maj. Gen. (Retd.) Dr. R.K. Bagga, AVSM, who are already on the Board as Additional Directors, and whose term is expiring at the ensuing Annual General Meeting, are proposed for appointment as Directors liable to retire by rotation, as mentioned above.

Shri Y. Kishore was inducted in to the Board as Additional Director of the Company and necessary resolution has been put forth for his continuation as Director, liable to retire by rotation.

In compliance with the Corporate Governance Voluntary Guidelines, Shri K.B.K. Moorthi, Director, has submitted resignation and the Board has approved the same in its meeting held on 07th July, 2011.

13. ACKNOWLEDGEMENT:

Your Directors express their sincere appreciation and gratitude to Canara Bank, Industrial Finance Branch, Hyderabad, for their continued support and to all employees, shareholders, suppliers, customers and various statutory authorities, who have extended their immense support to the Company.

By order of the Board

N. Naveen Director

Dr. A. Vidyasagar Managing Director

Place : Hyderabad Date : 07.07.2011


Mar 31, 2010

The Directors take pleasure in presenting the Twentieth Annual Report on the operations of your Company and the Audited Accounts for the financial year ended 31st March 2010, together with the Auditors Report thereon.

PERFORMANCE OF THE COMPANY:

Your Companys results for the year in comparison with the previous year are given below in a summarized format:

(Rs. in Lakhs)

Particulars Current Year Previous Year

2009-10 2008-09

Income 2280.14 2760.27

Expenses 2011.57 2284.65

Operating Profit 268.57 475.62

Depreciation 123.35 113.71

Financial expenses 28.24 21.06

Profit Before Tax 116.98 340.84

Excess/(Short) provision

relating to Earlier years 16.99 (8.59)

Provision for tax

(Current & Deferred) (10.55) (87.59)

Profit After Tax 123.43 244.67

Profit brought forward 371.57 295.74

Profit Available for

Appropriation 495.00 540.40

Appropriations:

Transferred to General Reserve 30.00 100.00

Proposed Dividend 47.06 58.83

Corporate Dividend Tax 8.00 10.00

Balance carried to balance sheet 409.94 371.57

Earnings Per Share (EPS)

- Basic 2.26 4.75

- Diluted 2.21 4.75

1. DIVIDEND:

Your Directors have pleasure in recommending a dividend @ 10% for the financial year 2009-10, out of current year profits absorbing an amount of Rs. 47.06

lakhs towards dividend & Rs. 8 lakhs towards dividend distribution tax, subject to the approval of the members of the Company in the ensuing Annual General Meeting.

3. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby confirms that: -

i. In the preparation of the annual accounts, the applicable Accounting Standards have been followed and there is no material departure.

ii. Appropriate accounting policies have been selected and applied consistently and have made judgments 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 2010 and of the Profit of the Company for the year ended on that date.

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

iv. Annual accounts have been prepared on a going concern basis.

4. DEPOSITS:

During the year, the Company has not accepted any deposits covered under the provisions of Sec. 58A of the Companies Act, 1956 read with Companies (Acceptance of the Deposit Rules), 1975.

5. PARTICULARS OF EMPLOYEES:

The particulars of employees, which are required to be given under Sec 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of employees) Amendment Rules, 2000.

a. Particulars of employees who are in receipt of Rs.24 lakhs or

more per annum NIL

b. Particulars of employees employed for a part of the financial year with a salary of Rs.2 lakh or

above per month NIL

6. CONSERVATION OF ENERGY & FOREIGN EXCHANGE INFLOW AND OUTFLOW:

The details as required under Sec 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure-I.

7. CORPORATE GOVERNANCE:

Attention of the members is drawn to Annexure-II to this Report dealing with the practices of Corporate Governance, being followed by the Company. A certificate from the Auditors of the Company regarding compliance of the conditions of the Corporate Governance, as stipulated under Clause 49 also forms part of this Annual Report.

The Ministry of Corporate Affairs has announced the Corporate Governance Voluntary Guidelines 2009. The preamble mentioned about good practices for adoption by the Companies, which are in addition to the existing ones and recommendatory in nature. Similarly, the Ministry has also issued the Corporate Social Responsibility Voluntary Guidelines 2009 duly mentioning CSR activities, which are purely voluntary in nature.

Your Company has reviewed the above Guidelines and ensured to adhere some of the practices, as these guidelines are Volunatary in nature.

In respect of the Voluntary Guidelines pertaining to the tenure of Shri. K.B.K. Moorthi and Maj. Gen (Retd). S. Balakrishnan, VSM, Independent Directors, whose tenure has exceeded six years, the Board of Directors considering their valuable guidance and contribution in various facets of the Company which are invaluable, decided to avail their services for some more time for better performance of the Comapny

8. LISTING FEES:

The Company has paid the listing fees for the year 2010-11 to Bombay Stock Exchange Limited (BSE) in pursuance of the Listing Agreement.

9. AUDITORS:

M/s. A. Madhusudana & Co., Chartered Accountants, Statutory Auditors of the Company retires at this ensuing Annual General Meeting and is eligible for re- appointment. Confirmation from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

10. DIRECTORS:

In accordance with the provisions of the Companies Act, 1956, Shri K.B.K. Moorthi and Shri M. Venkata Rao, Directors of the Company will retire by rotation and being eligible, offer themselves for re-appointment.

The tenure of Dr. A. Vidyasagar, Managing Director was expired on 31st March 2010, and Board recommends for re-appointment of another three years. Necessary resolution is commended for the approval of members.

Similarly, the tenure of Shri N. Divakar, Director (Technical) will be expiring on 31st October 2010, and Board recommends for re-appointment of another two years. Necessary resolution is commended for the approval of members.

Further, due to preoccupations, Shri M.L.N. Acharyulu, Director, has submitted his resignation and the Board has approved the same in its meeting held on 30th July, 2010.

11. ACKNOWLEDGEMENT:

Your Directors express their sincere appreciation and gratitude to Canara Bank, Industrial Finance Branch, for their continued support and to all employees, shareholders, suppliers, customers and various statutory authorities, who have extended their immense support to the Company.



By Order of the Board



Place: Hyderabad A. Venkateswara Rao

Date: 30.07.2010 Chairman



 
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