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Directors Report of Bartronics India Ltd.

Mar 31, 2015

Dear Members,

The Board of Directors have pleasure in presenting the Twenty Third Annual Report and the Audited Financial Statements of the Company for the period ended 31st March, 2015 consisting of 18 months (i.e. from 1st Oct, 2013 to 31st Mar, 2015).

Company Performance:

The Company has achieved a turnover of Rs. 4,387.06 lakhs for the period ended 31st March, 2015 (consisting of 18 months i.e., from 1st October, 2013 to 31st March, 2015), against the turnover of Rs. 11,362.85 lakhs for the previous year ended 30th September, 2013 (12 months only), the highlights of the financial results are as follows:

Rs. in Lakhs

Particulars 2013-2015 2012-2013 (18 Months) (12 Months) (Restated)

Profit Before Depreciation (47.89) (1,136.21) & Interest

Financial Costs 7,004.75 5,046.14

Depreciation 5,721.11 5,276.84

Profit Before Tax (12,773.75) (11,459.19)

Provision for Tax

* Current Tax - -

* Deferred Tax (1,528.94) (3,470.36)

Profit After Tax (11,244.81) (7,988.83)

Balance of profit brought 2,847.11 9,782.48 forward from earlier years

Add: Excess Provision for - 1,076.47 IT written off

Profit available for (8,397.70) 2,870.12 appropriation

Appropriations: - -

Proposed Dividend: - -

* Equity - -

* Preference - -

* Dividend Tax - -

Balance of Profit (8,397.70) 2,870.12

Presently your Company offers the following business activities:

* Providing solutions using umbrella of AIDC technologies and smart card manufacturing.

* Financial Inclusion Division for implementing the FI projects as per the guidelines of RBI.

* Providing solutions in Radio Frequency Identification and Data Capture (RFID) Technology.

Your Company continues to see strong growth traction across existing business and expects the momentum to continue in future also.

Capital Structure:

Foreign Currency Convertible Bonds:

Your Company, during 2007-08 had successfully issued Foreign Currency Convertible Bonds (FCCBs) as under:

Particulars Year of Size of Issue Issue (In Million US$)

FCCB 2013 2007-08 50

Conversion Period FCCB 2013 (January 09, 2008 and January 23, 2013)

Conversion Price per 191.25 Equity Shares (Rs)

Number of shares Nil converted till 31st March, 2015 out of FCCB 2013 issue

Outstanding FCCBs as 50 on 31st March, 2015 (In Millions US$)

The Foreign Currency Convertible Bonds (FCCB''s) are listed on the Singapore Stock Exchange. These bonds were due for redemption in February 2013. The company has appointed M/s Avista Advisory Group, Mumbai, to assess all the options available with the company and finalize best suited approach in order to address the maturity. The options available with the company include restructuring the bonds i.e., rolling over the bonds for next five years or replacing the bonds with fresh bonds, or redeeming all the bonds at a mutually agreeable price. With these available options; the Company, along with M/s Avista Advisory Group, Mumbai, has got in touch with the bondholders and has initiated discussions which are at advanced stages now. The company had filed a request for an extension of the maturity of the bonds to 4th May, 2014 with Reserve Bank of India which was granted vide letter dated 21st February, 2014. The company has applied for further extension of the maturity of the Bonds to Reserve Bank of India (RBI) and the Company is waiting to hear from RBI to move forward. The Company is confident of addressing the maturity of Bonds shortly.

Changes to Share Capital:

At present the Authorized Share Capital of the Company stands at Rs. 110 crores and the paid up capital stand at Rs. 34.04 crores there has been no change in the share capital during the period ended 31st March, 2015.

Extension of Financial Year & time to hold the Annual General Meeting:

The Financial Year 2013-14 (consisting of 12 months i.e., from 1st October 2013 to 30th September, 2014) of your Company has been extended up to 31st March, 2015 consisting of 18 months i.e., from 1st October, 2013 to 31st March, 2015 in order to maintain uniform accounting year as per new provisions of the Companies Act, 2013, so that the balance sheet and profit and loss account giving effect to such extension shall be compiled for a period of 18 months for the period 2013-2015 (from 01st October, 2013 to 31st March, 2015), accordingly the time to hold/ conduct Annual General Meeting for the period 2013-15 is extended up to 30th June, 2015 with the approval of Registrar of Companies, Hyderabad, Andhra Pradesh & Telangana.

Restatement of Financial Statements for the Financial Year 2013:

National Stock Exchange of India Limited, Mumbai vide their letter no NSE/LIST/1583 dated 30th October, 2014 has advised the Company to restate the Financial Statements for the year ended 30th September, 2013 (i.e., Financial Year 2012-13) on the impact of trade receivables of the Company i.e., the Company was advised to create provision for the trade receivables of Rs. 65.85 Crores, which was not created by the Company originally.

The Company at their Board of Directors meeting held on 20th May, 2015 has restated the financials by creating provision for trade receivables and the same were circulated to the Stock Exchanges and also placed at the company''s website i.e., www.bartronics.com.

Particulars of Loans, Guarantees and Investments:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Contracts and Arrangements with Related Parties:

Details of Contracts and arrangements with related parties under section 188 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Subsidiary Companies:

Your Company has two subsidiary companies viz., Bartronics Asia Pte. Limited and Bartronics Middle East FZE and four step down subsidiary companies viz., Bartronics Hongkong Ltd, Bartronics Global Solutions Limited, Veneta Holdings Ltd and Burbank Holdings Ltd.

Bartronics Asia Pte Limited:

The Company was incorporated as a wholly owned subsidiary of Bartronics India Limited on 14th June 2007, in the Republic of Singapore with a Share Capital of US$ 7,69,500. Bartronics Asia Pte Limited (BAPL) acquired the only issued share of Cason Limited on 21st December, 2007; subsequently the name of the Company was change to Bartronics Hong Kong Limited with effect from 15th October, 2008. In the month of April 2011, BAPL acquired the only shares of Veneta Holdings Limited, Mauritius making it its wholly owned subsidiary. BAPL had incorporated another subsidiary in Mauritius named Burbank Holdings Limited.

Bartronics Middle East Fze:

Bartronics Middle East FZE, Sharjah, UAE was incorporated on 22nd June, 2010 as a wholly owned subsidiary of Bartronics India Limited with a share capital of AED 1,50,000 Shares.

Consolidated Financial Statements:

As required under the Listing Agreements entered into with the Stock Exchanges and as per provisions of Companies Act, 2013, a consolidated financial statement of the Company and all its subsidiaries is attached. The consolidated financial statement has been prepared in accordance with the relevant accounting standards as prescribed under Section 129, 133 of the Companies Act, 2013 and as per Schedule III of the Companies Act, 2013. The consolidated financial statement discloses the assets, liabilities, income, expenses and other details of the Company and its subsidiaries.

The annual accounts of the subsidiary companies will also be kept for inspection by any investor at its Head Office in Hyderabad and that of the subsidiary companies concerned. A gist of the financial performance of the subsidiary Companies is contained in the report.

Dividend:

In the absence of profit, your directors are unable to declare any dividend for the period 2013-2015.

Significant and Material Orders passed by the Regulators or Courts or Tribunals Impacting the Going Concern Status of the Company.

There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status and the Company''s future operations.

Industrial Relations:

Your Directors are happy to report that during the period there were very cordial and extremely good industrial relations at all levels.

Directors:

In accordance with the Articles of Association of the Company, Mr. A. B. Satyavas Reddy is liable to retire by rotation and being eligible, offer himself for reappointment.

During the period the Board of Directors had appointed Mr. C. Prakash Ramaiah as an Additional Director (Independent) of the Company w.e.f. 12th February, 2014 and appointed Mrs. A. Syamala Reddy as an Additional Director (Independent) of the Company w.e.f. 30th March, 2015.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Further Mr. Sudhir Sundar Rao was reappointed as Managing Director of the Company from 20th August, 2014 to 31st May, 2015 subject to the approval of members.

Board Evaluation:

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholder Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Remuneration Policy:

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

Meetings:

During the period six Board Meetings and six Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and Listing Agreement.

During the period a meeting of Independent Directors was convened and held on 31st March, 2015.

Directors'' Responsibility Statement:

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) that in the preparation of the annual financial statements for the period ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in Note: 2 of the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made 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, 2015 and of the profit of the Company for the period ended on that date;

c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the annual financial statements have been prepared on a going concern basis;

e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Disclosures Under Section 134(3)(l) of the Companies Act, 2013:

Material changes and commitments which can affect the financial position of the Company occurred between the end of the period of the Company and date of this report:

S. Particulars Change No (Yes/No)

(a) The purchase, sale or destruction No of a plant or the destruction of inventories.

(b) A material decline in the market value No of inventories or investments

(c) The expiration of a patent which No had given the Company a virtual monopoly in the sale of its principal products.

(d) The settlement of tax liabilities of No prior period and the settlement of any legal or other proceedings either favourably or adversely, if they were pending at the balance-sheet date.

(e) The institution of importance No proceedings against the Company.

(f) Material change in the capital No structure in the resulting from the issuance, retirement or conversion of share capital or stock.

(g) The disposal of a substantial part No of the undertaking or the profits or loss whether of a capital or revenue nature.

(h) Alteration in the wage structure No arising out of Union Negotiations.

(i) Incurring or any reduction of long- No term indebtedness.

(j) Entering into or cancellation of No contracts.

(k) Refund of taxes or completion of No assessments

Related Party Transactions:

As mentioned in the Note No. 33 (on Page No. 66) under the head Notes to Accounts.

The Company has adopted related party transactions policy as per Clause 49(VIII)(A)(2).

Code of Conduct:

As the New Companies Act, 2013 has been made effective from 01st April, 2014 which replaces the erstwhile Companies Act, 1956 (to the extent of notified sections) and the provisions of Section 149 (8) requires that the Audit Committee shall review and recommend to the Board for their approval, the Code of Conduct for the Independent Directors. In this connection, the draft Code of Conduct for Independent Directors was placed before the Board along with the recommendations of the Audit Committee and the same was approved by the Board in the Meeting held on 20th January, 2014.

The Board has laid down a Code of Conduct for all Board Members and Senior Management of the Company. The Code of Conduct has been posted on Companies website. Board Members and Senior Management Personnel have affirmed Compliance with the Code for the period 2013- 15. A separate declaration to this effect is made out in the Corporate Governance Report.

The Company has adopted code of practices and procedures for fair disclosures of unpublished price senstive in information and code of conduct as required under Regulation (8)(1) and Regulation (9)(1) of the SEBI (Prohibition of Insider Trading) Regulations, 2015.

Conservation of Energy, Research and Development, Technology Absorption, Foreign Exchange Earnings and Outgo:

Particulars with respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Section 134 (3)(m) of the Companies Act, 2013, read with the Rule, 8 (3) of the Companies (Accounts) Rules, 2014, are given in the Annexure-A attached hereto and forms part of this Report.

Statutory Auditors:

The Company''s Statutory Auditors, M/s T. Raghavendra & Associates, Chartered Accountants [Registration No.003329S], Hyderabad will retire at the ensuing Annual General Meeting of the Company and being eligible offers themselves for re-appointment.

The Company has received necessary certificates from the Auditor pursuant to Section 139 and 141 of the Companies Act, 2013 regarding their eligibility for re-appointment.

Accordingly, the approval of the Shareholders for the re-appointment of M/s T. Raghavendra & Associates, Chartered Accountants as Auditors of the Company is being sought at the ensuing Annual General Meeting.

Your Board recommends the appointment of M/s T. Raghavendra & Associates, Chartered Accountants as Auditors of the Company.

Secretarial Audit:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Y. Ravi Prasada Reddy, a Company Secretary in Practice (having CP No. 5360) to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as "Annexure B".

Personnel:

In terms of provisions of Section 197 read with Rule, 5 (2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, none of the employees are receiving remuneration as mentioned in the said section.

The information required pursuant to Section 197 read with Rule, 5 (1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is annexed as per Annexure C.

Human Resource Management:

The Company believes and considers its human resources as the most valuable asset. The Management is committed to providing an empowered, performance oriented and stimulating work environment to its employees to enable them realize their full potential. Robust HR processes and initiatives adopted by the Company helped in containing the attrition of executives. Industrial Relations remained cordial and harmonious during the period.

Policy on Prevention of Sexual Harassment

The Company has formulated and implemented a policy for Prevention of Sexual Harassment of Women at workplace. During the year under review, the Company has not received any complaints under the policy.

The company has many systems, processes and policies to ensure professional ethics and harmonious working environment. We follow Zero Tolerance towards Corruption and unethical conduct. These are ensured through Whistle Blower Policy, Gift Policy, Sexual Harassment Policy and Redressal Guidelines.

Quality:

Your Company accorded high priority to quality, safety, training, development, health and environment. The Company endeavors to ensure continuous compliance and improvements in this regard.

Insurance:

All the properties and insurable assets of the Company, including Building, Plant and Machinery, stocks etc., wherever necessary and to the extent required, have been adequately covered.

Fixed Deposits:

Your Company has not accepted any fixed deposits from the public and the provisions of Section 73 of the Companies Act, 2013 are not applicable.

Corporate Governance:

Your Company is committed to principles of good Corporate Governance. The Board of Directors ensures that your Company is in compliance with all the applicable provisions of the Clause 49 (as amended) of the Listing Agreement pertaining to Corporate Governance. A detailed report on Corporate Governance is attached and forms part of this report. Certificate from the Practicing Company Secretary confirming the compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the listing agreement is attached to this report.

Risk Management Policy:

The Company has adopted Risk Management Policy as per Clause 49 of the Listing Agreement.

Corporate Social Responsibility:

The Board of Directors of the Company had constituted Corporate Social Responsibility Committee and had formulated a policy on Corporate Social Responsibility. The Company was not required to spend any amount during the financial year.

Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT 9 are annexed herewith as "Annexure D".

Whistle Blower Policy and Vigil Mechanism:

Your Company recognizes the value of transparency and accountability in its administrative and management practices. The Company promotes the ethical behavior in all its business activities. The Company has adopted the Whistle blower Policy and Vigil Mechanism in view to provide a mechanism for the directors and employees of the Company to approach Audit Committee of the Company to report existing/probable violations of laws, rules, regulations or unethical conduct.

Explanation to the Qualifications in Auditor''s Report and Secretarial Audit Report:

There are no qualifications or adverse remarks in the Auditor''s Report or Secretarial Audit Report:

Acknowledgement:

The Board of Directors of the Company extends their sincere appreciation to the Government, Bankers, Financial Institutions and others for their kind support. On behalf of the Company, the Board of Directors thanks the Employees for their valuable efforts and the shareholders for their undaunted faith in the Company.

BY ORDER OF THE BOARD

Sudhir Sundar Rao A. B. Satyavas Reddy Managing Director Director

Place: Hyderabad Date: 20.05.2015


Mar 31, 2010

The Directors have the pleasure in presenting the Nineteenth Annual Report together with the Audited Accounts for the Financial Year ended on 31st March, 2010 comprising of twelve (12) months from 01.04.2009 to 31.03.2010.

STAND ALONE FINANCIAL RESULTS :

Rupees in Lakhs

Particulars Year Year Growth 2009-10 2008-09 %

Total Income 58756.09 37604.71 56.25

Total Expenditure 38798.17 25835.06 50.18

Operating Profit

(EBITDA) 19957.92 11769.65 69.57

Interest 4375.40 2184.84 100.26

Depreciation 4775.96 2772.34 72.27

Profit Before Tax 10806.56 6812.47 58.63

Provision for Tax 1867.90 795.67 134.76

Deferred Tax 2434.60 1072.40 127.02

Fringe Benefit Tax -- 133.01 --

Profit after Tax 6504.06 4811.39 35.18

Add: Profit B/F from previous year 9674.59 5347.33 80.92

Less : Adjustment -- 6.20 -- towards employees benefit

Profit available for appropriation 16178.65 10152.52 59.36 Appropriation as under:

Transfer to

General Reserve -- 125.00 --

Proposed Dividend 340.49 301.66 12.87

Tax on Dividend 56.56 51.27 10.32

Balance C/F to next year 15781.60 9674.59 63.12

CAPITAL STRUCTURE

(A) Foreign Currency Convertible Bonds

Your Company, during 2007-08 has successfully issued Foreign Currency Convertible Bonds (FCCBs) as under:

Particulars Year of Issue Size of Issue (In Million US$)

FCCB 2013 2007-08 50

Conversion Conversion Period Price per Eq. Share (Rs.)

FCCB 2013 0anuary 09, 2008 and January 23, 2013) 191.25

Number of shares converted Outstanding till March 31, 2010 out FCCBs as on of FCCB 2013 issue March 31, 2010 (In Millions US$)

Nil 50

The Foreign Currency Convertible Bonds (FCCBs) arc listed on the Singapore Stock Exchange.

All the bonds of FCCB 2012 have been converted into equity shares before 31.03.2010.

Changes to Share Capital

During the year under review the Authorized Capital has increased from Rs. 600 rryllion to Rs. 1100 million and the Issued, Subscribed and Paid up Capital has increased by an amount of Rs. 50.71 millions, from Rs. 289.77 millions as on 1st April, 2009 to Rs. 340.49 millions as on 31st March, 2010. This change in Issued, Subscribed and Paid up Capital is attributed mainly due to allotment of Equity Shares against conversion of Outstanding Foreign Currency Convertible Bonds (FCCBs) and shares allotted through Preferential Issue.

At present the Authorized Share Capital of the Company stands at Rs. 1100 millions.

1. Dividend

Your Directors recommend a dividend of Rs. 1 /- per equity share on fully paid equity shares of Rs. 10 each, for the year ended March 31, 2010. This will absorb Rs. 39.71 million (inclusive of tax) based on existing capital.

2. Subsidiary Companies

Your Company has five subsidiary companies viz., Bartronics America Inc., Bartronics Asia Pte. Limited, ROI Public Relations Private Limited and Bartronics Middle East FZE and four step down subsidiary companies viz., SRG America Inc.,

Quality-E-People, Inc., Perforraica Software Private Limited and Bartronics Hong Kong Limited.

Bartronics America Inc.

The Company was incorporated as a wholly owned subsidiary of Bartronics India Limited on 16th November 2007 in the State of Dalware in USA with a Share Capital of US$ 1500. In April 2008 Bartronics America Inc. acquired the shares of SRG America Inc. which in turn has two subsidiaries namely Quality- E- People and Performica Software Private Limited.

Bartronics Asia Pte. Limited

The Company was incorporated as a wholly owned subsidiary of Bartronics India Limited on 14th June 2007, in the Republic of Singapore with a Share Capital of S $ 769500. On 21st December 2007 the Bartronics Asia Pte. Limited acquired the only issued share of Cason Limited, subsequently name of the Company was changed to Bartronics Hong Kong Limited with effect from 15th October 2008.

ROI Public Relations Private Limited

ROI Public Relations Private Limited was incorporated on 4th December 2008. Bartronics India Limited is a promoter and subscriber to its Memorandum holding 62.50% shares (in the total paid up Capital of Rs. 5 Lakhs) in the Company. Investment of Rs. 3.13 lakhs has been provided for and an advance of Rs. 42.26 lakhs has been written off during the year.

Bartronics Middle East FZE

Bartronics Middle East I-ZK, Sharjah, UAE was incorporated on June 22, 2010 as a wholly owned subsidiary of Bartronics India Limtied with a share capital of AED 1,50,000 Shares.

Statement pursuant to Section 212 of the Companies Act, 1956 is given in Annexure-A of this report.

Audited financial accounts of Bartronics America Inc. and Bartronics Asia Pte. Ltd. have been attached at the end of this Annual Report. Since there are no operations in ROI Public Reladons Private Limited, consolidation has not been done.

Consolidated Accounts

Consolidated Financial Statements have been prepared by the Company in accordance with the requirements of AS-21, Consolidated Financial Statements, notified by the Companies (Accounting Standards) Rules, 2006.

COMPANY OVERVIEW

Presently your Company offers the following business activities:

Trading and solutions business using Automatic Identification and Data Capture Technologies viz. bar code equipments, access control systems, label materials, printers, verifiers and allied products.

Solution Business viz. provide high end AIDC solutions to manufacturing industry.

Providing solutions in Radio Frequency Identification and Data Capture (RFID) Technology.

Smart Card manufacturing, the Company has smart card manufacturing facility at the Registered office.

Your Company continues to see strong growth traction across existing business and expects the momentum to continue in future also.

HUMAN RESOURCE MANAGEMENT

Your Company has a forward looking Human Resource Development Strategy, which focuses on talent management and strengthening the talent pool. Systems are aligned to foster excellence, empower and enrich employees, recognize creativity, innovation and reward performance.

RISK MANAGEMENT

An effective risk management framework drives continued economic sustainability as it aligns operations & activities of the organization to its vision & values. Your Company has a strong risk management framework that enables active monitoring of the business environment and identification, assessment and mitigation of potential internal or external risks. Your Company promotes strong ethical values and high levels of integrity in all its activities, which in itself is a significant risk mitigator. Further, a perpetual internal audit activity carried out by M/s T. Raghavendra & Associates, Chartered Accountants, as internal auditors also provides us with their independent assessment on our risk mitigating measures along with recommendations for improvement.

DIRECTORS

In accordance with the Articles of Association of the Company, Mr. A.B. Satyav-as Reddy, Mr. Y. Raghavendra Rao and Mr. R.V. Panchapakesan are liable to retire by rotation and being eligible, offer themselves for reappointment.

Mr. B. Narayanswamy, Director of the Company resigned from the Board w.e.f 14.08.2010.

Mr. A.C. Varma has been appointed as additional director w.e.f 06.12.2010 and holds office upto the date of ensuing Annual General Meeting. Notice has been received under Section 257 of the Companies Act, 1956 proposing the names of Mr. A.C. Varma for appointment as Director liable to retire by rotation.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

Information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required to be made pursuant to section 217(l)(e) of the Companies Act, 1956 read with Companies [Disclosure of Particulars in the Report of Board of Directors] Rules, 1988 is set out as Annexure-B and forms part of this Report.

EMPLOYEES

The particulars of employees, as required under section 217(2A) of, the Companies (Particular of Employees) Rules, 1975, are given in a separate Annexure - C and forms part of this Report.

MANAGEMENT DISCUSSION & ANALYSIS

Notes on Management Discussion & Analysis of the financial position of the Company have been given separately and form part of this Report.

AUDITORS

Statutory Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re-appointment.

CORPORATE GOVERNANCE

A separate section on Corporate Governance is attached to this Report as Annexure - D.

A certificate from Mr. Y. Ravi Prasada Reddy, Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under clause 49 of the listing Agreement with Stock Exchanges is enclosed as Annexure - E.

The Board has laid down a code of conduct for all Board and Senior Managerial Personnels of the Company. The code of conduct has been posted on the Companys website. Board Members and Senior Managerial Personnels have affirmeil compliance with the code for the financial year 2009-10.

A certificate from the Managing Director that all Board members and senior management personnel have affirmed compliance with the Code of Conduct for the year ended March 31, 2010 is attached as Annexure - F.

CEO/CFO Certificate is enclosed as Annexure - G.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 217(2AA), of the Companies Act, 1956, the Directors, based on representations received form the operating management confirm, that:

(i) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) the directors had selected such accounting policies and applied them consistently and 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 at the end of the financial year and of the profit or loss of the company for that period

(iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) the directors hail prepared the annual accounts on a going concern basis,

PROMOTER GROUP COMPANIES

Pursuant to intimation from promoters, names of promoters and companies comprising the "Group" as defined in Monopolistic and Restrictive Trade Practices ("MRTP") Act, 1969, have been disclosed in Annexurc - H to this report.

LISTING OF COMPANYS SECURITIES

Your Companys Shares are presently listed on Bombay Srock Exchange Limited ant! National Stock Exchange of India Limited.

DEMATERIALIZATION OF SHARES

Your Companys shares have been made available for dematerialization through the National Security Depository Limited (NSDL) and Central Depository Services (India) Limited, (CDSIL).

FIXED DEPOSITS

There were no fixed deposits at the end of the year.

EXPLANATIONS TO QUALIFICATIONS IN AUDITORS REPORT:

The Statutory Auditors of the Company, M/s. Deloitte Haskins & Sells have made the following comments in their report for the war 200910.

1. Auditors Comments:

Paragraph 4 (a) of the Audit Report, "the trading sales and purchases includes software transmitted through electronic form without adequate documentary evidence with respect to transfer of significant risks and rewards incidental to the ownership aggregating to Rs.8837.59 lakhs and Rs.8461.87 lakhs respectively and arc outstanding as on 31 March2010, on which we are unable to express our opinion, had the adjustment made in the financial statements, the sales anil the debtors would be lower by Rs. 8837.59 lakhs, the purchases and the creditors would be lower by Rs. 8461.87 lakhs".

Company explanation:

The trading sales and purchases include software sales of Rs.8,837.59 lakhs and Rs.S,461.87 lakhs recognized upon transmission of software to customer or by vendors through electronic form and significant risks and rewards relating to ownership of products are transferred to the customers or by the vendor. These sales and purchases are integral part of the project fulfillment process and are in the normal course of business praclice. The Customers and Vendors have confirmed the receipt / dispatch of goods/ services and the balance outstanding as on 31 March 2010.

2. Auditors Comments:

Paragraph 4 (b) of the Audit Report, "Company based on the expert opinion obtained, has recognized the deferred tax expense using current applicable effective tax rate, being Minimum Alternate Tax (MAT) rate, instead of regular tax rates as specified by paragraph 21 of Accounting Standard 22 - "Accounting for Taxes on Income". Had the Company recognised the deferred tax expense using regular tax rates, the deferred tax expense for the year would be higher by Rs.2,615.89 lakhs".

Company Explanation:

As the company has been paying taxes under MAT provisions from the year 2005-06 onwards anil considering the tax exemptions available and other benefits, the company would pay only MAT tax in the near future. As advised by the tax experts and also considering the prudent accounting, the company had applied MAT rate of tax for the computation of deferred tax.

3. Auditors Comments:

Paragraph (ii) (b) in the annexure to the Auditors Report, "In view of the fact that the fixed assets register is in the process of reconstruction, management has informed that discrepancies, if any, arising between the assets verified and the book records would be dealt with in the period in which such re-compilation of the register is completed".

Company Explanation:

Company has initiated process to reconstruct fixed assets register. The discrepancies, if any, arising between the assets verified and the book records would be dealt with in the period in which such recompilation of the register is completed.

4. Auditors Comments:

Paragraph V in the annexure to the Auditors Report, "there is inadequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services, which needs further improvement and needs to strengthen systems and procedures relating to documentation."

Company Explanation:

The company has identified benchmark procedures and systems in the industry and the same are being implemented in order to strengthen systems and procedures. The company has already initiated many steps to strengthen internal controls in the areas of purchase of inventory and fixed assets and for sale of goods and services and procedures relating to documentation and other areas also. The company is in regular touch with statutory auditors and internal auditors to improve internal control systems and procedures commensurate with increased level of operations.

5. Auditors Comments:

Paragraph VI of Annexure to the Auditors Report, "the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the management which is not commensurate with the size of the Company and the nature of its business".

Company Explanation:

The Audit committee had defined the scope of internal audit function for the year 2010-11. Internal auditors are covering the areas specified in the scope and regularly presenting the reports to the management. Management reviews internal audit reports and take corrective actions. They improve the internal audit function based on the suggestions and directions given by the audit committee. The company believes that the Internal Audit Function is crucial for strengthening its internal controls and procedures. As a result, review of procedures and systems and improvement thereof is part of the continuous improvement programme.

6. Auditors Comments:

Paragraph VII (a) in Annexure to the Auditors Report, "undisputed statutory dues in respect of provident fund, employees state insurance, professional tax, income-tax, wealth tax, value added tax, fringe benefit tax and service tax have not been regular and substantial delays in deposit of such dues have been noticed, with the appropriate authorities".

Company Explanation:

In some occasions, there have been delays in payment of statutory dues. The Company has cleared all the statutory dues with necessary late pavment fees and the Company has taken appropriate steps to avoid delay payments in fimire.

By Order of the Board For BARTRONICS INDIA LIMITED

Sd/- Sd/- Sudhir Rao T. Venkateswara Rao

Managing Director Director

Place: Hyderabad Date : 06.12.2010



 
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