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Directors Report of High Energy Batteries (India) Ltd.

Mar 31, 2015

Dear Members,

The Board hereby present their 54th Annual Report and the Audited Accounts for the year ended 31st March, 2015.

OPERATING RESULTS

The Company's financial performance under review is summarised below:

(Rs in Lakhs) Particulars For the year Ended

2014 2015 2013 2014

Sales 3228.30 3054.27 (Net of Excise Duty and VAT /Sales Tax)

Profit / (Loss) before Finance Cost' 341.33 (244.90) Depreciation and Tax

Less:

1. Finance Cost 616.91 582.38

2. Depreciation 153.69 770.60 150.49 732.87

PROF|T / (LOSS) BEFORE TAX (429.27) (977.77)

Less: Provision for Taxation Current Tax - -

Deferred Tax (148.13) (355.23)

(148.13) (355.23)

NET PROFIT /(LOSS) (281.14) (622.54)

The Company has achieved a turnover of Rs.3228.30 Lakhs against last year's turnover of Rs.3054.27 Lakhs.

The Impasse of non receipt of Export orders and delayed receipt of indigenous orders for the Aerospace, Naval and Power System Battery division continued during the year under review. This coupled with lower orders and delayed collections in the Lead Acid Battery Division led to lower turnover and losses.

The efforts made by the Company to sell a portion of the surplus land materialized only during the end of year. Thus, the company ended the year with a loss before tax of Rs.429.27 Lakhs as against Rs.977.77 Lakhs in the previous year. The loss after tax works out to Rs.281.14 Lakhs as against Rs.622.54 Lakhs in the previous year.

DIVIDEND

As the Company has incurred loss, the Directors regret their inability to recommend any Dividend for the year under review.

PERFORMANCE HIGHLIGHTS SILVER ZINC BATTERIES

The Company has achieved a turnover of Rs 2213.84 Lakhs during the year as against Rs 2171.93 Lakhs achieved during the previous year. The inordinate delay in receipt of orders from the Government Departments despite completion of negotiation meetings in the first half of the year led to lower turnover. The orders from DRDO Laboratories also could not be supplied as planned due to various delays / procedural formalities in the testing during development phase. Export orders from various countries did not materialize for various reasons including non release of budget allocations. Lower turnover and consequent losses impacted the cash flow and resulted in lower production and despatch.

NICKEL CADMIUM BATTERIES

As the company got some major orders for Aircraft Batteries in this division during the year, the turnover achieved stood at Rs.414.08 Lakhs as against Rs.130.94 Lakhs during the previous year.

LEAD ACID BATTERIES

The company could achieve a turnover of only Rs.600.38 Lakhs against the turnover of Rs.751.40 Lakhs during the previous year. Absence of major Private Label customers, intense competition from established players, poor collections and debtors led to lower turnover and consequently substantial losses in the Lead Acid Battery Division.

However, the company has developed and type tested batteries for Solar, Inverter, UPS applications. This will contribute to higher turnover in future.

EXPORT

The company could achieve a turnover of Rs.817.86 Lakhs as compared to Rs.120.85 Lakhs achieved during the last year. Due to slow down of the global economy, the company's efforts to obtain orders from various countries did not bear fruits.The repeat order from OEM, the receipt of which was anticipated in the year under review also did not materialize on account of non completion of trials of the original equipment.

CURRENT YEAR - 2015-16

The Company is having reasonable orders from DRDO Laboratories. The type approvals of number of batteries for DRDO have already been completed and expected to be despatched during the current year. The Company has also taken further efforts to get the finalized orders from other customers. These regular orders along with the orders on hand will help the company to achieve a higher turnover as compared to the earlier year.

The Company continues to identify new markets and customers from overseas buyers to get both repeat and new orders in the current year.

The market for Lead Acid Batteries has become highly competitive and with aggressive marketing strategies of existing major players, the company continues to suffer with low volume of production and sales and consequent losses. The Company is exploring avenues to identify major Private Label customers to augment the volume of production and sales to curtail losses.

FINANCE

The lower turnover coupled with continuous losses severely impacted the cash flow of the company. This has resulted in adhoc / additional borrowings from banks to manage the working capital. Further, the delay in collection of debtors from the Lead Acid Battery Division added to the cash flow constraints.

Realising the above situation and in order to

infuse funds to the operations, the Company contemplated to sell a portion of the surplus land. However, this got completed only during the end of the year.

During the current year, the company will be getting advances from the customers for new orders and will be able to manage the cash flow without further borrowings.

ISO SYSTEMS

The company continues to be certified both under ISO 9001:2008 and ISO 14001:2004 (Revised) Systems.

RESEARCH AND DEVELOPMENT

The Company is now concentrating on various Silver Zinc Batteries for Missile applications and development of advanced batteries with enhanced life and performance are in progress. For Naval applications, the company is working on development cum supply orders involving Sea Water Activated Batteries both for Lightweight and Heavyweight Torpedoes. Development and Qualification of Battery for Air Force version of BrahMos Missile is in progress.

CORPORATE GOVERNANCE

Though the compliance with the provisions of Corporate Governance is not mandatory to the company, utmost importance has been given to good Corporate Governance in all its activities. A report on Corporate Governance is provided in Annexure 1 to this report. Section 134(3) of the Companies Act, 2013 requires the Board's report to include several additional contents and disclosures compared to the earlier law. The applicable contents and disclosure have accordingly been made in the Corporate Governance report at the appropriate places which forms an integral part of this report.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 is given in Annexure 2.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act, 2013 with respect to the Directors Responsibility Statement, your Board confirms that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed.

(b) the directors have selected such accounting policies and applied them consistently and made judgements 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 loss of the company for that period.

(c) the directors have 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.

(d) the directors have prepared the annual accounts on a going concern basis.

(e) the directors have laid down internal financial controls to be followed by the company and that said internal financial controls are adequate and were operating effectively.

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

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The company did not give any Loan or Guarantee or provided any security or make investment covered under Section 186 of the Companies Act, 2013 during the year.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY

Since the company remains outside the purview of Section 188(1) read with Rule 15 of Companies (Meeting of Board and its Power) Rules, 2014, the reporting requirements thereunder are not applicable.

MATERIAL CHANGES AND COMMITMENTS

There is no change in the nature of business of the company during the year.

There are no material changes and commitments in the business operations of the company since the close of the financial year as on 31st March 2015 to the date of this report.

CONSERVATION OF ENERGY ETC.

Information relating 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 Rule 8 of the Companies (Accounts) Rules, 2014 is given in Annexure -3

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Section 135 of the Companies Act, 2013 has imposed CSR mandate on companies having minimum threshold limit of net worth, turnover or net profit as prescribed. Since the company does not meet any of these criterion, it remains outside the purview of Section 135 and consequently the reporting requirements thereunder are not applicable. However, as a responsible Corporate Citizen, the Company is organising tree plantation and associate itself with free medical camp organised by recognised hospitals.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is furnished in Annexure -4.

ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO FINANCIAL STATEMENTS

1) The company has laid down adequate systems and well drawn procedures for ensuring internal financial controls. It has appointed an external audit firm as

internal auditors for periodically checking and monitoring the internal control measures.

2) Internal auditors are present at the Audit Committee meetings where internal audit reports are discussed alongside of management comments and the final observation of the internal auditor.

3) The Board of Directors have put in place budgetary control and monitoring measures for ensuring the orderly and efficient conduct of the business of the company, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

DIRECTORS

In accordance with Article 106 of the Articles of Association of the Company, Mr. R. Vaidyanathan, Director retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting.

Pursuant to Section 149 of the Companies Act, 2013 read with Rules made thereunder Mr. M. Natarajan, RAdm. S Mohapatra and Mrs. T. V. Rajalakshmi were appointed as Independent Directors through Postal Ballot process for a fixed term of five years from 30th September 2014 and not liable to retire by rotation.

All the independent directors have given the declaration that they met the criteria on independence as laid down under Section 149(6) of the Companies Act, 2013. The performance evaluation of independent directors has been done by the entire Board of Directors, excluding the director being evaluated at its 26th March 2015 meeting. The Board on the basis of such performance evaluation determined to continue the term of appointment of all the independent directors who have been appointed by the company at its 53rd AGM and who have been appointed through Postal Ballot process for a fixed tenure of five years.

AUDITORS

M/s. R. Subramanian & Co., Chartered Accountants, Chennai, have been appointed as Statutory Auditors of the Company till the conclusion of 56th Annual General Meeting subject to ratification by members at every AGM. Accordingly requisite resolution for ratifying their appointment is proposed in the manner stated in the Notice for the 54th AGM. Particulars of statutory auditors, cost auditor, internal auditors and the secretarial auditor have been given in the corporate governance report that forms an integral part of this report. Secretarial audit report as required by Section 204(1) of the Companies Act, 2013 is attached (Annexure 5).

ACKNOWLEDGEMENT

Your Directors wish to express their sincere thanks to

i) the Defence Services, DRDO Laboratories, ISRO and Ministry of Defence for the whole-hearted support and encouragement received from them for indigenisation efforts on sophisticated high energy batteries;

ii) the Overseas customers, who have reposed utmost faith and confidence in our products;

iii) the Lead Acid Battery Customers, Dealers, Distributors and Institutional Indentors like Postal, Railways;

iv) the Bankers for extending timely financial support for the continued successful performance of the company and

v) to all the shareholders for their continued support.

(For the Board of Directors)

N. GOPALARATNAM Chairman

Chennai 600 034 May 30, 2015


Mar 31, 2013

The Directors hereby present their 52nd Annual Report together with the Balance Sheet and the Statement of Profit and Loss for the year ended 31st March, 2013.

OPERATING RESULTS

The Company''s financial performance under review is summarised below:

(Rs. in lakhs) For the year Ended

2012 - 2013 2011 - 2012

Sales 6650.96 5532.27

(Net of Excise Duty and VAT / Sales Tax)

PROFIT before Finance Costs, depreciation and 653.33 708.70 tax

Less:

1. Finance Costs 441.24 489.05

2. Depreciation 160.98 165.02 602.22 654.07

PROFIT BEFORE TAX

51.11 54.63

Less:

Provision for Taxation

Current Tax

Deferred Tax 14.51 15.52 14.51 15.52

NET PROFIT 36.60 39.11

The company achieved an overall sales (Net of Excise Duty, VAT and Sales Tax) of Rs. 6650.96 lakhs as compared to Rs. 5532.27 lakhs on year-on-year basis.

However, low capacity utilisation in the Lead Acid Battery Division coupled with unremunerative prices had impacted the profitability of the company resulting in the Profit Before Tax coming down to Rs. 51.11 lakhs.

DIVIDEND

Your Directors recommend a Dividend of 10%, absorbing a sum of Rs. 20.98 lakhs (including Corporate Dividend Tax).(or)

PERFORMANCE HIGHLIGHTS

SILVER ZINC BATTERIES

The Company registered a record sales of Rs. 5223.20 lakhs during this year as against Rs. 4543.92 lakhs during the previous year, registering an increase of 15% .

NICKEL CADMIUM BATTERIES

Owing to inadequate margin prevalent throughtout the year, sales had to be restricted to Rs. 20.60 lakhs only as compared to Rs. 31.38 lakhs last year.

LEAD ACID BATTERIES

Though the sales were higher at Rs. 1407.16 lakhs as compared to Rs. 956.97 lakhs last year, low capacity utilisation, steep increase in costs (both materials and labour) and unremunerative prices resulted in substantial loss in this division.

The Company is taking all out efforts for improving the overall performance of this division by improving quality, reducing costs and through better market penetration.

EXPORT

During the year the company achieved a sales of Rs.3124.70 lakhs compared to Rs. 2766.05 lakhs in the last year registering an increase of 13%. The Company is in dialogue with Original Equipment Manufacturers (OEMs) for securing further orders. During the year, the company has received Certificate of Recognition as Export House from Ministry of Commerce and Industry, Government of India. This is valid for a period of 5 years, up to March 2017.

OUT LOOK - 2013-14

With the Orders on hand at Rs. 3700 Lakhs for the Aerospace, Naval and Power System Batteries Segment, and the efforts taken for securing further orders during the current year both in the Domestic and Overseas markets, the company expects to better its sales during the current year as well. The company is working closely with Original Equipment Manufacturers (OEMs) for improving its overall financial and operational performance.

With a view to contain the losses, steps have been initiated for maximizing capacity utilisation of the Lead Acid Battery Plant and for augmenting the quality standards. Also it is proposed to introduce higher range products for Commercial Vehicles (CVs) applications and newer varieties for catering to Electric Vehicles (EVs), solar and other upcoming segments for enhancing our presence in the market place.

FINANCE

During the year, the company received timely advances from the customers. However, due to delay in collection of the dues from the customers of the Lead Acid Battery Division, cash flow constraints continued and the company had to resort to further borrowings. With the reduction in interest rate and effective control of costs, the company hopes to tide over cash crunch during the current year.

ISO SYSTEMS

The copany continues to be certified both under ISO 9001:2008 and ISO 14001:2004 (Revised) Systems, Certification of LAB segment is under way.

RESEARCH AND DEVELOPMENT

Development of battery for heavy weight torpedo for NSTL was completed. The sea trials are yet to take place and further orders are expected by next year. The company also received new developmental orders for missile programmes of DRDO which will enter into production phase in coming years. Your company has completed the Qualification of Batteries for Brahmos missile and commenced regular supplies.

DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors in terms of Section 217(2AA) of the Companies Act, 1956 confirm that:

(i) all applicable accounting standards have been followed in the preparation of the annual accounts.

(ii) the Company has 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 as of 31st March 2013 and of the profit of the Company for year ended that date.

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the latest provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) the annual accounts have been prepared on a "going concern” basis.

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

The information regarding Conservation of Energy and Technology Absorption as required under Section 217(1)(e) of the Companies Act,

1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 is given in Annexure 1 and forms part of this Report.

EMPLOYEES

No employee of the Company was in receipt of remuneration in excess of the sum prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, during the financial year 2012-13.

INDUSTRIAL RELATIONS

Industrial relations continued to be cordial.

DIRECTORS

In accordance with Article 106 of the Articles of Association of the Company, Sri R Vaidyanathan and Sri A. L. Somayaji, Directors retire by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Though the code of Corporate Governance is not applicable to the Company, utmost importance has been given to good Corporate Governance in all its activities.

A separate note on Corporate Governance is provided in Annexure II

AUDITORS

M/s. R Subramanian & Co., Chartered Accountants, Chennai, Auditors of the company retire at the conclusion of the ensuing 52nd Annual General Meeting of the Company and are eligible for re-appointment.

Necessary Resolution for their appointment under Section 224 of the Companies Act, 1956 is being placed at the ensuing 52nd Annual General Meeting for this purpose.

COST AUDIT

Cost Audit Report for the year would be filed with the Central Government in due course. Mr. S Hariharan, Cost Accountant, was reappointed as Cost Auditor for the Financial year 2013-14.

ACKNOWLEDGEMENT

Your Directors wish to express their sincere thanks to

i) the Defence Services, DRDO Laboratories, ISRO and Ministry of Defence for the whole-hearted support and encouragement received from them for indigenisation efforts on sophisticated high energy batteries;

ii) the Overseas customers, who have reposed utmost faith and confidence in our products;

iii) the Bankers for extending timely financial support for the continued successful performance of the Company and

iv) to all the shareholders who have reposed faith in us.

(For the Board of Directors)

N. GOPALARATNAM

Chairman

Chennai 600 034

May 30, 2013


Mar 31, 2012

The Directors hereby present their 51st Annual Report together with the Balance Sheet and the Profit and Loss Account for the year ended 31st March, 2012.

OPERATING RESULTS

The Company's financial performance under review is summarized below:

(Rs.in lakhs)

For the year Ended

2011 - 2012 2010 - 2011

Sales 5532.27 3415.55

(Net of Excise Duty and ;

VAT / Sales Tax)

PROFIT before Interest, 610.38 343.41

depreciation and tax

Less:

1. Interest 390.73 316.71

2. Depreciation 165.02 555.75 169.86 486.57 PROFIT/(LOSS) BEFORE TAX 54.63 (143.16) Less:

Provision for Taxation

Current Tax _ -

Deferred Tax (15.52) 51.86

Excess provision for tax - - written back (15.52) 98.97

NET PROFIT /(LOSS) 39.11 (44.19)



The company achieved an overall sales (Net of Excise Duty, VAT and Sales Tax) of Rs 5532.27 lakhs as compared to Rs 3415.55 lakhs on year-on-year basis.

Profit before interest, depreciation and tax moved up almost in tandem with Sales.

However additional borrowings for meeting the enhanced production level of Lead Acid Batteries and the need for procurement of Silver at exorbitant prices for production of increased number of Silver Zinc Batteries contributed to the increase in the Financing Cost.

Depreciation was slightly lower at Rs 165.02 lakhs

DIVIDEND

In view of inadequacy of profit, the Directors regret their inability to recommend any Dividend for the year under review.

PERFORMANCE HIGHLIGHTS SILVER ZINC BATTERIES

The Company recorded a turnover of Rs 4543.92 lakhs during this year as against Rs 3098.74 lakhs during the previous year, registering an increase of 46.63% contributing better margin to the company.

NICKEL CADMIUM BATTERIES

The turnover was Rs 31.38 lakhs compared to Rs 78.85 lakhs during the last year. The reduction in turnover is due to stiff and unhealthy competition.

LEAD ACID BATTERIES

The turnover was Rs 956.97 lakhs (includes export of Rs 11.69 lakhs) compared to Rs 237.95 lakhs last year. The Company has established depots in Chennai, Bangalore, Cochin and Hyderabad and is in the process of setting up depots in Jaipur and Kanpur. As mentioned in the earlier report, the Company has also added DIN Series Batteries and two types of VRLA batteries to the product range, which started contributing to the turnover. The company has identified both domestic and international suppliers for outsourcing and expects to achieve higher turnover during the current year.

All efforts are taken to increase the production and sales. This requires balancing of machines, streamlining of process like curing and charging, identifying required storage space, sourcing the materials and realization of Debtors on time. While the above steps were already taken, more improvements will be made to achieve the desired results during the current year.

EXPORT

During the year the company has achieved a turnover of Rs 2766.05 lakhs compared to Rs 1947.73 lakhs in the last year registering an increase of 42%. This increase is due to commencement of supply of batteries to OEM after successful development. The company is also expecting further orders from OEM Company. Efforts are also being taken to get orders from other avenues in the export market. It is to be noted that Lead Acid Battery Division has also contributed to export turnover to the tune of Rs 11.69 lakhs for export to Middle East Countries.

CURRENT YEAR - 2012-13

With the Orders on hand and the orders expected during the current year both in domestic and export market, the company expects to achieve better turnover in Silver Zinc Division. The company is also putting in special efforts to secure orders for Nickel Cadmium Division for achieving a reasonable turnover. The company is taking necessary steps to open sales depots in various places for widening the customer access to Lead Acid Batteries. Few manufacturers have been identified to outsource batteries to provide complete range of batteries as desired in the market to increase the turnover in Lead Acid Battery Division.

The company is also gearing itself to control cost of materials and other avenues to maximize profits from the operations.

FINANCE

Despite timely receipt of advances and dues from customers both from domestic and export orders the cash flow continued to remain tight. However, Inter Corporate Deposit of Rs 50 lakhs availed from the group companies was repaid.

ISO SYSTEMS

The company continues to be certified both under ISO 9001:2008 and ISO 14001:2004 (Revised) Systems.

RESEARCH AND DEVELOPMENT

The company is glad to report that it has supplied batteries for the flight test of the 'Agni Missile' which has been successful and has also received 'an Appreciation Letter' from the Advanced Systems Lab. Development of battery for heavy weight torpedo developed by NSTL is under progress and the prototype being type tested. The company is also glad to report that trials on BrahMos battery was successful.

All missile batteries developed are being productionised.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors in terms of Section 217(2AA) of the Companies Act, 1956 confirm that:

(i) all applicable accounting standards have been followed in the preparation of the annual accounts.

(ii) the Company has 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 as of 31st March 2012 and of the profit of the Company for year ended that date.

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the latest provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) the annual accounts have been prepared on a going concern basis.

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

The information regarding Conservation of

Energy and Technology Absorption as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 is given in Annexure 1 and forms part of this Report.

EMPLOYEES

No employee of the Company was in receipt of remuneration in excess of the sum prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, during the financial year 2011-12.

INDUSTRIAL RELATIONS

Industrial relations continued to be cordial.

DIRECTORS

Dr. G.A. Pathanjali, Vice President (Operations) was co-opted as an Additional Director and was appointed as Whole-time Director and designated as Executive Director of the Company from 30th May 2012. Necessary Resolution is placed before the Members for their approval.

In accordance with Article 106 of the Articles of Association of the Company, Sri N. Gopalaratnam and Code. R. P. Premkumar Directors retire by rotation and being eligible, offer themselves for re- appointment at the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Though the code of Corporate Governance is not applicable to the Company, utmost importance has been given to good Corporate Governance in all its activities.

A separate note on Corporate Governance is provided in Annexure II

AUDITORS

M/s. R Subramanian & Co., Chartered Accountants, Chennai, Auditors of the company retire at the conclusion of the ensuing 51st Annual General Meeting of the Company and are eligible for re-appointment.

Necessary Resolution for their appointment under Section 224 of the Companies Act, 1956 is being placed at the ensuing 51st Annual General Meeting for this purpose.

COST AUDIT

Pursuant to Section 233-B of the Companies Act, 1956, and Cost Audit Circular F.No.52/ 26/CAB-2010 dated 24th January 2012 that the company shall get its cost accounting records audited by a Cost Auditor from the financial year commencing on or after 1st April 2012. Mr. S Hariharan, Cost Accountant, Trichy was appointed as Cost Auditor for the Financial year 2012-13. The Cost Audit Report will be submitted to the Central Government before the due date.

ACKNOWLEDGEMENT

Your Directors wish to express their sincere thanks to

i) The Defiance Services, DRDO Laboratories, ISRO and Ministry of Defiance for the whole-hearted support and encouragement received from them for indigenization efforts on sophisticated high energy batteries;

ii) the Overseas customers, who have reposed utmost faith and confidence in our products;

iii) the Bankers for extending timely financial support for the continued successful performance of the Company and

iv) to all the shareholders who have reposed faith in us.

(For the Board of Directors)

N. GOPALARATNAM

Chairman

Chennai 600 034

May 30, 2012


Mar 31, 2011

The Directors hereby present their 50th Annual Report together with the Balance Sheet and the Profit and Loss Account for the year ended 31st March, 2011.

OPERATING RESULTS

The Companys financial performance under review is summarised below:

(Rs. in lakhs)

For the year Ended 2010 - 2011 2009 - 2010

Sales 3415.55 2744.04

(Net of Excise Duty and VAT/Sales Tax)

PROFIT before Interest, 343.41 169.66

depreciation and tax

Less:

1. Interest 316.71 304.12

2. Depreciation 169.86 486.57 139.95 444.07

LOSS BEF0RE TAX (143.16) (274.41)

Less:

Provision for Taxation Current (including Wealth Tax & Fringe Benefit Tax) - 0.36

Deferred Tax (51.86) (93.97) Excess provision for tax written back 47.11 (98.97) (93.61)

NET LOSS (44.19) (180.80)

The company achieved an overall sales (Net of Excise Duty, VAT and Sales Tax) of Rs. 3415.55 lakhs as compared to Rs. 2744.04 lakhs on year-on-year basis.

Profit Before Interest Depreciation and Tax has not however moved up in tandem with the growth in sales on account of spiralling cost of Silver and increase in bank guarantee commission and processing charges attributable to the increase in the bank borrowings. Increase in interest charges on account of additional borrowings for meeting the working capital requirements and full year depreciation on Lead Acid Battery plant as compared to nine months depreciation during the last year have contributed to the increase in interest and depreciation charges.

Nonetheless it is gratifying to note that the Loss Before Tax stood substantially reduced at Rs.143.16 lakhs as compared to Rs.274.41 lakhs and the Loss After Tax at Rs.44.19 lakhs as against Rs.180.80 lakhs on account of write back of excess provision of tax in the earlier years.

DIVIDEND

As the Company has incurred a loss, the Directors regret their inability to recommend any Dividend for the year under review.

PERFORMANCE HIGHLIGHTS

SILVER ZINC BATTERIES

The Company recorded a turnover of Rs.3098.74 lakhs during this year as against Rs.2274.15 lakhs during the previous year, registering an increase of 36.26%. As mentioned earlier, the sudden spurt in Silver price and unprecedented rise in the cost of other materials and expenses during the year under review have reduced the margins.

NICKEL CADMIUM BATTERIES

The turnover was Rs.78.85 lakhs compared to Rs.435.58 lakhs during the last year. Non- availability of main imported raw materials, delay in type approval of aircraft batteries, stiff competition faced in securing orders and major break-down in one of the machines resulted in lower turnover.

LEAD ACID BATTERIES

The turnover was Rs.237.95 lakhs compared

to Rs.31.12 lakhs last year. The company has spread its wings across South India by establishing Depots at Chennai, Cochin, Bangalore and Hyderabad during later half of the year, which contributed to the increase in sales. As the distributors requested for wider range of batteries, the company added DIN series of batteries by outsourcing the same for the time being. While the companys focus had been mainly on the after market in South India it is proposed to have it extended to Delhi and Maharashtra progressively during the current year. The company developed two types of VRLA Batteries and carried out trial production which are proposed to be introduced in the market during the current year. The company expects to achieve a sizable turnover in the current year.

EXPORT

During the year the company has more than doubled its sales at Rs.1947.73 lakhs as compared to Rs. 966.15 lakhs in the last year. The Company also received Development cum Supply of sea water activated batteries from an OEM Company. The Company expects to receive sizeable orders in the current year for various Silver Zinc Batteries.

CURRENT YEAR - 2011-12

Taking into account, the orders on hand and the problems experienced by the Company in the year under review, the company is in the process of consolidating the production and marketing set up for achieving better turnover with reduced cost, thereby returning to profitable operations.

While adequate orders are available in the Silver Zinc division, efforts are made to secure orders in the Lead Acid Battery division for bettering the performance during the current year. The company is also taking all steps to control the cost of materials by insisting on provision of Silver by customers themselves and / or by incorporating price variation clause in all major orders.

FINANCE

Finance of the Company continued to be tenuous in the backdrop of cash loss suffered by the Company in the last year. During the year under review the Company availed additional term loan of Rs.100 lakhs sanctioned by the banks in the earlier year. In view of the delay in receiving advances from customers and for meeting the requirement of additional funds for purchase of Silver at high prices, the Company also availed an inter corporate deposit of Rs.50 lakhs from their group companies. The Company repaid the short term working capital loan of Rs. 200 lakhs and the term loan of Rs.131.25 lakhs.

ISO SYSTEMS

The company continues to be certified under both ISO 9001:2008 and ISO 14001:2004 (revised) systems.

RESEARCH AND DEVELOPMENT

Your R&D has contributed for development of various types of batteries for missile application. The batteries have been updated, improved or modified based on Customer feed back. Your Company has received development order for special types of sea water batteries through DRDO Laboratories.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors in terms of Section 217(2AA) of the Companies Act, 1956 confirm that:

(i) all applicable accounting standards have been followed in the preparation of the annual accounts;

(ii) the Company has 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 as of 31st March 2011 and of the Loss of the Company for year ended that date;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the latest provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and

(iv) the annual accounts have been prepared on a "going concern" basis.

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

The information regarding Conservation of Energy and Technology Absorption as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 is given in Annexure I and forms part of this Report.

EMPLOYEES

No employee of the Company was in receipt of remuneration in excess of the sum prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, during the financial year 2010 -11.

INDUSTRIAL RELATIONS

Industrial relations continued to be cordial.

DIRECTORS

In accordance with Article 106 of the Articles of Association of the Company, Sri. R. Vaidyanathan and Sri. A. L. Somayaji Directors, retire by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Though the code of Corporate Governance is not applicable to the Company, utmost importance has been given to good Corporate Governance in all its activities.

A separate note on Corporate Governance is provided in Annexure II

AUDITORS

M/s. R Subramanian & Co., Chartered Accountants, Chennai, Auditors of the company retire at the conclusion of the ensuing 50th Annual General Meeting of the Company and are eligible for re-appointment.

Necessary Resolution for their appointment under Section 224 of the Companies Act, 1956 is being placed at the ensuing 50th Annual General Meeting for this purpose.

ACKNOWLEDGEMENT

Your Directors wish to express their sincere thanks to

i) the Defence Services, DRDO Laboratories, ISRO and Ministry of Defence for the whole-hearted support and encouragement received from them for indigenisation efforts on sophisticated high energy batteries;

ii) the Overseas customers, who have reposed utmost faith and confidence in our products and

iii) the Bankers for extending timely financial support for the continued successful performance of the Company.





(For the Board of Directors) N. GOPALARATNAM Chairman

Chennai 600 034 May 28, 2011


Mar 31, 2010

The Directors have pleasure in presen- ting the 49th Annual Report together with the Balance Sheet and the Profit and Loss Account for the year ended 31s1 March, 2010.

OPERATING RESULTS

The Companys financial performance under review is summarised below:

(Rs. in lakhs)

For the year Ended

2009 - 2010 2008 - 2009

Sales 2744.04 2416.80

(Net of Excise Duty and VAT/Sales Tax)

PROFIT before Interest 169.66 364.71

depreciation and tax

Less:

1. Interest 304.12 148.16

2. Depreciation 139.95 444.07 57.59 205.75

PROFIT/(LOSS) BEFORE TAX (274.41) 158.96

Less:

Provision for Taxation Current (including Wealth Tax & Fringe Benefit Tax) 0.36 8.32

Deferred Tax (93.97) (93.61) 53.40 61.72

NET PROFIT/ (LOSS) (180.80) 97.24

Despite an increase in the overall sales at Rs.2744.04 lakhs (net of Excise Duty and VAT and Sales Tax) compared to Rs.2416.80 lakhs on year-on-year basis, profit before interest, depreciation and tax has more than halved to Rs.169.66 lakhs for the year under review.

Spiralling costs of almost all the inputs used in the manufacture of Silver Zinc / NiCd products coupled with extremely competitive prices of your Companys products had resulted in deep erosion of margins and profitability.

The Company also had to bear the burden of higher interest and financing charges (Rs.155.96 lakhs) and higher provision for depreciation (Rs. 82.36 lakhs) arising out of commissioning of Lead Acid Battery (LAB) plant during the year.

DIVIDEND

As the Company has incurred a loss, the Directors regret their inability to recommend any Dividend for the year under review.

PERFORMANCE HIGHLIGHTS

SILVER ZINC BATTERIES

The Company recorded a turnover of Rs. 2274.15 Lakhs during this year as against Rs. 2169.00 Lakhs during the previous year, registering an increase of 4.85%. However, as stated earlier, margins were under deep stress.

NICKEL CADMIUM BATTERIES

The turnover was Rs.435.58 Lakhs compared to Rs.132.00 Lakhs during the last year. In the back drop of stiff competition experienced in securing orders from local sources, export orders for supply of Aircraft Batteries significantly contributed to the increase in turnover compared to last year. However, due to steep increase in the cost of imported materials, margins were again under stress.

LEAD ACID BATTERIES

Lead Acid Batteries for all ranges of Passenger cum Light Commercial Vehicle (LCV) sectors ranging from 32 Ah to 80 Ah were manufactured and Customer Feedback /Field Evaluation Reports are quite encouraging.

However due to intense competition from well established players in this field, sales is yet to show appreciable volume. The turnover for

the year has therefore been low at Rs. 31.12 lakhs.

VRLA (Valve Regulated Lead Acid) Batteries, 26 Ah & 65 Ah types have been developed for mid-range online UPS (Uninterrupted Power Supply). Based on the satisfactory customer evaluation reports, the business for VRLA types is expected to be in place by end of September 2010.

Fuel Cell

Continued production of stacks for Fuel Cells has been kept in abeyance on account of modification needed in the process and requirement of additional machinery for undertaking manufacture of large size electrodes.

CURRENT YEAR - 2010-11

Alive to the problems of operating in a highly competitive and challenging market environment, the company is in the process of strengthening its marketing and distribution set up for improving the off take of LAB products. With this initiative, the company hopes to report better results in the coming year.

Simultaneously efforts have also been undertaken to secure orders for the Silver Zinc and NiCd products with better margins.

Considering the orders on hand and orders expected to be received both from domestic and overseas markets, the company hopes to achieve better performance, both in terms of turnover and profits.

FINANCE

During the year under review, the company secured sanction for a short term loan of Rs. 150 lakhs for meeting the working capital requirements. Repayment of Inter Corporate Deposit of Rs. 100 lakhs was made during this year. The company also availed the entire term loan of Rs 1000 lakhs sanctioned by the bankers for LAB project. The bankers, at the request of the company, rescheduled the repayment terms of the term loan.

ISO SYSTEMS

The company has upgraded to ISO 9001:2008 certification and continues to be certified under ISO 14001:2004.

RIGHTS ISSUE

The issue was over subscribed. The allotment of shares was completed and the shares have also been listed on the Bombay Stock Exchange (BSE).

RESEARCH AND DEVELOPMENT

Development of new types of Silver Zinc batteries for advanced missile applications was taken up and the same was demonstrated successfully, to the satisfaction of the customer.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors in terms of Section 217(2AA) of the Companies Act, 1956 confirm that:

(i) all applicable accounting standards have been followed in the preparation of the annual accounts;

(ii) the Company has 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 as of 31st March 2010 and of the Loss of the Company for year ended that date;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the latest provisions of the Act for

safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and

(iv) the annual accounts have been prepared on a "going concern" basis.

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

The information regarding Conservation of Energy and Technology Absorption as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 is given in Annexure I and forms part of this Report.

EMPLOYEES

No employee of the Company was in receipt of remuneration in excess of the sum prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, during the financial year 2009-10.

INDUSTRIAL RELATIONS

Industrial relations continued to be cordial.

DIRECTORS

In accordance with Article 106 of the Articles of Association of the Company, Sri. N.Gopalaratnam and Smt. D. Vijayalakshmi Directors, retire by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Though the code of Corporate Governance is not applicable to the Company, utmost importance has been given to good Corporate Governance in all its activities.

A separate note on Corporate Governance is provided in Annexure II.

AUDITORS

M/s. R Subramanian and Company, Chartered Accountants, Chennai, Auditors of the company retire at the conclusion of the ensuing Annual General Meeting of the Company and are eligible for re-appointment.

Necessary Resolution for their appointment under Section 224 of the Companies Act, 1956 is being placed at the ensuing Annual General Meeting for this purpose.

ACKNOWLEDGEMENT

Your Directors wish to express their sincere thanks to

i) the Defence Services, DRDO Laboratories, ISRO and Ministry of Defence for the whole-hearted support and encouragement received from them for indigenisation efforts on sophisticated high energy batteries;

ii) the Overseas customers, who have reposed utmost faith and confidence in our products;

iii) the Bankers for their understanding, guidance and assistance and

iv) to all the shareholders who have reposed faith in us, in our diversification efforts into Lead Acid Battery project.

(For the Board of Directors)

N. GOPALARATNAM

Chairman

Chennai 600 034

May 29, 2010

 
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