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Directors Report of IQ Infotech Ltd.

Mar 31, 2010

The Directors have pleasure in presenting herewith the 25th Annual Report on the activities of your Company during the year ended 31st March, 2010.

FINANCIAL RESULTS

(Rs. in Lakhs)

PARTICULARS Year Ended Year Ended 31.03.2010 31.03.2009

TOTAL INCOME 149.48 219.53

Profit for the year before Dep. & Tax -61.98 3.78

Less: Depreciation For the year 35.08 108.44

Less: Diminishing in Investment value Less: doubtful 0.00 0.00 Debts - Provision

Loss before Tax -97.06 -104.66

Less: Provision for Tax 0.00 0.00

Less: Provision for Deferred Tax 10.51 -21.94

Less: Provision for fringe benefit tax 0.00 0.67

Net Loss for the year -114.26 -83.39

ADD: Balance of Loss B/F -422.84 -339.45

Total -537.10 -422.84

Add: Excess provision of Income Tax related to earlier 0.00 0.00 years

Less: Transfer to DRR 0.00 0.00

Less: IT relating to Pr. Year 0.00 0.00

Balance of Loss C/F -537.10 -422.84

Performance

During the year your Company registered a turnover of Rs. 149.48 Lakhs as against Rs 219.53 Lakhs achieved during the previous year. The Company has incurred net loss of Rs. 114.26 Lakhs during the year.

The Company is in the process of getting Defence order from M/s Bharath Dynamic Limited, Hyderabad, to the tune of Rs.8.00 crores during this course of month

The Company has already received an order from M/s Mahindra Defence tune of Rs. 85.00 Lakhs for Defence items.

Apart from this, orders of Mahindra Reva and Ashok Lailand will continue to come.

As approved in the earlier annual general meeting, The Company is in the process of relocating its activities in City Industrial Suburb. Once shifted the new location the company is in a better position to attract talented Technicians and Engineers.

Dividend:

In view of the Loss incurred, your Directors could not propose any dividend for the year. Prospects & Outlooks

(a) The demand for the products that are being manufactured by your Company, are very good and hence the Company is confident that the turnover can be substantially increased during the current year.

(b) Your Company is also expecting production orders for defence items, which has been qualified by your Company for the last 10 years. Hence, your Company is in the process of getting orders for the defence equipments to the tune of Rs.4.40 Crores from two defence oriented companies, which will result in healthy higher turnover. Your Company has also entered into full range of LED Lighting systems for home, industry and commercial lighting applications. Your Company has already supplied sample units to various organizations and has received excellent response. Your Company hopes to exploit this particular area fruitfully as there is very good demand for LED Lightings both in India and abroad. It may kindly be noted that all lightings will be converted into LED Lightings in the course of next five years.

(c) Your Company continues to work on development of higher version of LED products in the field of energy saving, safety and general use. Your Directors are confident that R&D efforts would result in developing fast moving products.

Finance:

Your Company is turning around speedily and looks to be solving many of its earlier financial problems and it is hoped that the whole financial structure will be strengthened in the coming years. Your Directors are following up vigorously various options left to them for raising funds and since the discussions are in advanced stage, a positive development is in the coming years. Relocating the Company also will help getting Trained Engineers and growth of the Company.

Your Directors are following up various options of raising funds and results are expected during the current year.

Public Deposit:

Your Company has not accepted any deposit from the Public during the year.

Human Resources & Industrial Relations:

Your Directors wish to place on record their appreciation for the dedicated services rendered by the employees at all levels.

Particulars of employees pursuant to Section 217(2A) of the Companies Act, 1956 are not applicable since none of the employees are in receipt of remuneration in excess of the limits prescribed therein.

Internal Control System & Their Adequacy:

Your Company remains committed to maintain high standards of Internal Control designed to provide adequate assurance of the efficiency of operations and security of its assets. The adequacy and effectiveness of the internal control across the various activities is well laid down and continuously monitored by the management of the Company.

The Audit Committee of the Board meets four times a year and actively reviews internal control system, financial disclosures and compliance with various applicable accounting standards.

Energy, Technology & Foreign Exchange :

A. Conservation of Energy

The Company makes evaluation on continuous basis to explore new technologies to make the infrastructure more energy efficient. Although the operations of the Company are not energy intensive, Company continues to upgrade all energy devises to the extend feasible to make the operations, save energy, where ever possible.

B. Research and Development

Research and Development is one of the thrust areas for the Company and constant endeavour is made to bring out innovative products for security and energy saving requirements, in the automobile, domestic and industrial sectors. R&D activities are carried out on a continuous basis.

Directors Responsibility statement:

As required under section 217(2AA) of the Companies Act, 1956, your Directors hereby confirm that -

- In preparation of these annual accounts, the applicable accounting standards have been followed and no material departure have been made from the same.

- They have 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.

- They have taken sufficient care for the maintenance of adequate records as per the requirements of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing fraud and other irregularities.

- They have prepared annual accounts on a going concern basis.

Corporate Governance

A detailed Compliance Note on Corporate Governance, as required under the provisions in the listing agreements with the Stock Exchanges, together with the certificate of Statutory Auditors thereon, is attached as Annexure - B to this report.

Management discussion and analysis

Management discussions and analysis, as applicable, is included in this report, in order to avoid duplication and overlap of materials & matters, between Directors report and a separate report on management Discussion and Analysis.

Directors

At the ensuing Annual General Meeting, Mr. Sudarshan S and Mr. Krishna Srinivasan will retire by rotation and being eligible offer themselves for reappointment.

Auditors

M/s Pal & Shanbhogue, Chartered Accountants, have offered for the appointment of Statutory Auditors of the Company, in place of the retiring auditors M/s G. V. Sunder & Co., Chartered Accountants, to hold office from the conclusion of this meeting until the conclusion of the next Annual General Meeting.

Replies to Audit Remarks

(1). Note No. 2.1 (a) of accounting policies regarding accounting of Gratuity and Encashment of Leave on cash basis as mentioned in Note 8.2 of accounting policy read with Note No. 12 of Notes to Accounts regarding non provision for gratuity liability, which is inconsistent with Accounting Standard -15 (revised) notified under the Companies Accounting Standard Rules, 2006.

The Audit observation has been taken note of and the management will implement the provision of Gratuity and Encashment of Leave on cash ins inconsistent with Accounting Standard -15 (revised) notified under the Companies Accounting Standard Rules, 2006.

(2). Note No. 6 regarding disclosure of quantitative particulars and capacity utilization is not in accordance with Part II of Schedule VI of the Companies Act.

The Audit observation has been taken note of and the management will disclose quantitative particulars and capacity utilization in accordance with Part II of Schedule VI of the Companies Act, 1956.

(3). Note No.13 of Notes to accounts regarding Intangible Assets disclosure is not in accordance with the Accounting Standard -26 (Intangible Assets) notified by the Companies Accounting Standard Rules, 2006. Further, the Company has not assessed the probability of the future economic benefits from the research and development activities.

The Audit observation has been taken note of and the management will disclose the details of Intangible Assets in accordance with the Accounting Standard - 26 notified by the Companies Accounting Standard Rules, 2006. The Company also will disclose the probability of the future economic benefits from the research and development activities.

(4). Note No.15 of Notes to accounts regarding reconciliation of sundry debtors, bank balance, creditors and VAT and Excise duty balances.

The Audit observation relating to reconciliation of sundry debtors, bank balance, creditors, VAT and Excise duty balances related to old balances and efforts are being taken for their reconciliation in this current year.

(5). Note No. 16 of Notes to Accounts regarding non payment of statutory liabilities and non provision for interest and penalty payable for default in payment of statutory liabilities.

The Audit observation relating to non payment of statutory liabilities and non provision for interest and penalty payable for default in payment of statutory liabilities related to old dues and the company would like to confirm that most of the old dues have already been settled and every efforts will be made to clear all the dues at the earliest.

(6). Note No. 18 of Notes to account regarding non availability of share certificates for investments made in equity shares of ASIA HR Technologies Limited (Formerly known as SMR Universal Softech Ltd)., and Suntrack Diamond Ltd., amounting to Rs. 6,19,716/- and Rs. 45,00,000/- respectively.

The Audit observation relating to non availability of share certificates for investments made in equity shares of ASIA HR Technologies Limited (Formerly known as SMR Universal Softech Ltd)., and Suntrack Diamond Ltd., amounting to Rs. 6,19,716/- and Rs. 45,00,000/- respectively will be looked into and, if necessary, arrangements will be made for obtaining Duplicate Share Certificates and also will be disposed of during the current year at the prevailing market rate.

(7). Note No. 18 of Notes to Accounts regarding non provision for diminution in the value of investments in ASIA HR Technologies Limited (Formerly known as SMR Universal Softech Ltd), and Suntrack Diamond Ltd. The amount of diminution value is not ascertained by the Company.

The Audit observation relating to non provision for diminution in the value of investments in ASIA HR Technologies Limited (Formerly known as SMR Universal Softech Ltd), and Suntrack Diamond Ltd will be looked into and will be disposed of during the current year at the prevailing market rate.

(8). Accounting Policy No 7, with regards to Inventory Valuation of Raw Materials and Method of Valuation of Inventory is inconsistent with the Accounting Standard - 2 notified by the Companies Accounting Standard Rules,2006.

The Audit observation relating to Inventory Valuation of Raw Materials and Method of Valuation of Inventory is inconsistent with the Accounting Standard - 2, has been taken note of and will be implemented in consistent with the Accounting Standard - 2 notified by the Companies Accounting Standard Rules, 2006.

Acknowledgements

Your Directors place on record their sincere gratitude to the continuing patronage of our valued customers, whose sustained support and encouragement has enabled the Company in achieving results.

Your Directors also place on record, their sincere appreciation for the dedication and commitment of staff at all levels.

Your Directors wish to register their acknowledgement and appreciation for the timely support and co- operation being extended by the Banks and all their executives.

For and on behalf of the Board

Sd/-

DR. K. R .Srinivasan Chairman & Managing Director

Place : Bangalore Date : 28.08.2010


Mar 31, 2009

The Directors have pleasure in presenting herewith their Twenty-forth Annual Report on the activities of your Company during the year ended 31st March 2009

FINANCIAL RESULTS

(Rs. in Lakhs)

PARTICULARS Year Year Ended Ended 31.03.2009 31.03.2008

TOTAL INCOME 219.53 355.18

Profit for the year before Pep. & Tax 4.33 39.43

Less: Depreciation For the year 108.44 111.78

Less: Diminishing in Investment value Less: doubtful 0.00 0.00 Debts - Provision

Profit/Loss before Tax -104.66 -72.90

Income Adjusted - -

Arrears of Depreciation - -

Less: Provision for Tax 0.00 0.00

Less: Provision for Deferred Tax -21.94 4.84

Less: Provision for fringe benefit tax 0.67 0.94

Add: debenture reserve 0.00 0.00

Net profit for the year -83.39 -79.70

ADD: Balance of Profit B/F -339.45 -259.75

Total -422.84 -339.45

Add: Excess provision of Income Tax related to 0.00 0.00 earlier years

Less: Transfer to DRR 0.00 0.00

Less: IT relating to Pr. Year 0.00 0.00

Balance of Loss C/F -422.84 -339.45

Performance

During the year your Company registered a turnover of Rs. 219.53 lakhs as against Rs 355.18 lakhs achieved during the previous year. The company has incurred Book loss of Rs. 83.3 lakhs during the year. However Company has made cash profit of Rs. 4.33 lakhs before depreciation.

The company has received very good orders from M/s SFO Technologies Pvt Ltd Bangalore to the tune of Rs.350 Lakhs till Sept to Nov 2009 and further of Rs. 250 350 Lakhs we are expecting order from M/S.SFO Technologies Pvt Ltd. As LED Product is the new technology and power saving, we are in right field at the right time. We have a range of products from LED Emergency light to LED street Lights.

Dividend:

In view of the Loss incurred, your Directors do not propose to declare any dividend for the year.

Prospects & Outlooks

a) The demands for the products that are being manufactured by your company are very good and hence the company s confident that the turnover can be substantially increased in the current year.

b) Your company is also expecting production orders for defence items, which has been qualified by your company for the last 10 years. Hence it is hoped that substantial order booking can be achieved during the current year, which will result in healthy higher turnover. Your company has also entered into Digital Display and your company has already supplied sample units to various organizations and has received excellent response. Your company hopes to exploit this particular area fruitfully as there are very few in the market in this field.

c) Your company continues to work on development of various LED products in the field of energy saving, safety and general use. Your directors are confident that R&D efforts would result in company developing fast moving products.

Finance:

Your company is turning around speedily and looks to be solving many of its earlier financial problems and it is hoped that the whole financial structure will be strengthened in the coming years. Your Directors are following up vigorously various options left to them for raising funds and since the discussions are in advanced stage, a positive development is in the coming years, Relocating the company also going to help us getting Trained Engineers and growth of the company.

Your directors are following up various options of raising funds and results are expected during the current year.

Public Deposit:

Your company has not accepted any deposit from the Public during the year.

AUDITORS;

M/S. G.V. Sunder & Company has offered themselves to act as statutory auditors and furnished necessary certificates, under Section 224 (IB) of the Companies Act, of their eligibility for their appointment. Members are requested to consider their appointment.

Human Resources & Industrial Relations:

Your directors wish to place on record their appreciation for the dedicated services rendered by the employees at all levels.

Particulars of employees pursuant to Section 217(2A) of the Companies Act, 1956 are not applicable since none of the employees are in receipt of remuneration in excess of the limits prescribed therein.

Internal Control System & Their Adequacy:

Your company remains committed to maintain high standards of Internal Control designed to provide adequate assurance of the efficiency of operations and security of its assets. The adequacy and effectiveness of the internal control across the various activities is well laid down and continuously monitored by the management of the company.

The Audit Committee of the Board meets four times a year and actively reviews internal control system, financial disclosures and compliance with various applicable accounting standards.

Energy, Technology & Foreign Exchange:

A. Conservation of Energy

The Company makes evaluation on continuous basis to explore new technologies to make the infrastructure more energy efficient. Although the operations of the company are not energy intensive, company continues to upgrade all energy devises, to the extend feasible to make the operations, save energy, where ever possible.

B. Research and Development

Research and Development is one of the thrust areas for the company and constant Endeavour is made to bring out innovative products for security and energy saving requirements, in the automobile, domestic and industrial sectors. R&D activities are carried out on a continuous basis with this end. Only imitation is retaining good Engineers at this company location

Directors Responsibility statement:

As required under section 217(2AA) of the Companies Act, 1956, your directors hereby confirm that -

- In preparation of these annual accounts, the applicable accounting standards have been followed and no material departure have been made from the same.

- They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true artd fair view of the state of affairs of the company.

- They have taken sufficient care for the maintenance of adequate records as per the requirements of the Companies Act, 1956, for safeguarding the assets of the company and for preventing fraud and other irregularities.

- They have prepared annual accounts on a going concern basis.

Corporate Governance

A detailed Compliance Note on Corporate Governance, as required under the

provisions in the listing agreements with the Stock Exchanges, together with the certificate of Statutory Auditors thereon, is attached annexure B to this report.

Management discussion and analysis

Management discussions and analysis, as applicable, is included in this report, in order to avoid duplication and overlap of materials & matters, between Directors report and a separate report on management Discussion and Analysis.

Directors

Mr. S. Sudarshan, Director of your company who virtue of earlier resolution will continue and the company would like to place on record his selfless dedication towards the company and the valuable work rendered to the company for the past fourteen years.

The company place on record the excellent guidance expert advice rendered by the Directors Mr.K.S.santhanakrishnan Director Mr.Krishna Srinivasan will continue a Director and give his rich experience to the company

The company proposes to induct 3 highly experienced very Technocrats and finance expert as Director in the Board

Acknowledgements

Your Directors place on record their sincere gratitude to the continuing patronage of our valued customers, whose sustained support and encouragement has enabled the company in achieving results.

Your Directors also place on record, their sincere appreciation for the dedication and commitment of staff at all levels.

Your Directors wish to register their acknowledgement and appreciation for the timely support and co-operation being extended by the Banks and all their executives.

Place: Bangalore Date : 01.08.2009

For and on behalf of the Board

Dr K R Srinivasan Chairman & Managing Director



 
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