Bartronics India
BSE: 532694 | NSE: BARTRONICS | ISIN: INE855F01034 | Miscellaneous
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Directors Report | Year End : Mar '08 |
The Directors have pleasure in presenting the Seventeenth Annual
Report together with the Audited Ac- counts for the Financial Year
ended 31st March, 2008 comprising of twelve (12) months from 01-04-2007
to 31-03-2008.
Financial Results:
Your Directors do hereby report that your Company has achieved a total
income of Rs. 184.44 Crores during the financial year under review as
against a total income of Rs.64.44 Crores during the previous financial
year.
(Rupees in Lakhs)
Particulars Year ended Previous year
ended
31st March,2008 31st March,2007
Total Income 18444.44 6444.06
Total Expenses other than Interest 13944.78 4799.67
Interest 395.90 167.33
Total Expenses 14340.68 4967.00
Profit Before Tax 4103.77 1477.06
Provision for Tax 830.47 131.50
Profit After Tax 3273.30 1345.56
Add: Profit brought Forward from last year 2074.03 728.47
Profit Available for Appropriation 5347.33 2074.03
Review of Operations:
During the year under review the Companys turnover has increased to Rs
183.30 Crores from Rs. 63.50 Crores of previous year, a growth of
188.66% and Profit before tax has increased to Rs. 41.04 Crores from
Rs. 14.77 Crores of previous year registering growth of 178%. The
current year looks equally promising and both, the turnover as well as
the retained earnings, are expected to be better in the current year.
Industrial Relations:
Your directors are happy to report that the Industrial Relations have
been extremely cordial at all levels throughout the year.
Employees Stock Option Scheme (ESOS)-2007
The shareholders of the Company at an Extra-Ordinary General Meeting
held on February 25, 2008, gave their approval to amend the ESOS-2007
to vary the vesting schedule to enable 100% vesting of the options
granted at the end of the first year from the date of grant. Similarly,
Clause (h) of the ESOS-2007 was amended to remove restriction of
entitlement to any employee of more than 1 % of the issued capital of
the Company During the year under review, the Company allotted 6,40,000
equity shares of Rs.10/- each upon exercise of stock options by the
eligible employees under the ESOS-2007.
Employees Stock Option Scheme (ESOS)-2008
Your Company has always believed in rewarding employees for their
continuous hard work, dedication and support, which has led the Company
on a growth path. To enable more and more employees to enjoy the fruits
of phenomenal growth that the Company has witnessed in the recent past,
the shareholders of the Company at an Extra-Ordinary General Meeting
held on February 25, 2008, gave their approval to implement the
ESOS-2008 , in accordance with Clause 6 of the Securities and Exchange
Board of India (Employees Stock Option Scheme and Employees Stock
Purchase Scheme) Guidelines, 1999 and the said Scheme has already been
implemented as per the provisions contained in the above special
resolution, with the grant of options under the Scheme.
Details about BARTRONICS INDIA LIMITED Employees Stock Option Scheme
called ESOS- 2007 (8ILESOS, 2007) and Employees Stock Option Scheme
called ESOS- 2008 (BILESOS, 2008).
Pursuant to the provisions of Clause 12 of the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme), Guidelines, 1999, the details of stock options as on
31st March, 2008 under the BARTRONICS INDIA LIMITED Employee Stock
Options Scheme called ESOS- 2007 and Employee Stock Options Scheme
called ESOS- 2008 are as under:
SI.No Particulars
1 Options Granted
2 Pricing formula
3 Options Vested
4 Options exercised
5 The total number of
shares arising as a result
of exercise of option
6 Options lapsed
7 Variation of terms of options
8 Money realized by exercise of options
9 Total number of options in force
10 Employee wise details of options granted to
i) Senior Management personnel
ESOS-2007
8,00,000
At Face Value of Rs.10/- each as per the Resolution passed at the
Extra-Ordinary General Meeting of the Company held on 29.01.2007.
8,00,000
6,40,000
6,40,000
Nil
The terms of options in the Financial year 2007-08 by amending the
vesting schedule to enable 100% vesting of the options granted at the
end of the first year from the date of grant and Clause (h) of the
ESOS- 2007 also amended to remove restriction of entitlement to any
employee of more than 1% of the issued capital of the Company.
64,00,000
1,60,000
Sudhir Rao, Managing Director
ESOS-2008
5,84,041
During the year under review 3,65,959 (out of 9,50,000 Options) options
are yet to be granted. Since the performance appraisal is under process
as on 31.03.08.
At Face Value of Rs. 10f- each as per the Resolution passed at the
Extra-Ordinary General Meeting of the Company held on 25.02.2008.
Not applicable as on date
Not applicable as on date
Not applicable as on date
Not applicable as on date
The terms of options were not varied in the Financial year 2007-08
Not applicable as on date 5,84,041 (Total options available for grant:
9,50,000 and Total Options granted is 5,84,041)
As per the table given below.
SI.No Particulars
ii) Any other employee who
receives a grant in any one year
of option amounting to 5% more
of option granted during that
year
iii) Identified employees who
were granted option, during any
one year, equal or exceeding
1% of the issued capital
(excluding outstanding warrants
and conversions) of the
Company at the time of grant.
11 Diluted Earning Per share (EPS) pursuant to issue of shares on
exercise of option calculated in accordance with Accounting Standard
(AS)20 Earning Per share_
12 The difference between the employee compensation costs computed
under intrinsic value method and the employee compensa-tion cost that
shall have been recognized if the Company had used the Fair Value
methods and its impact on profits and EPS of the Company.
13 Weighted Average exercise prices and weighted average fair values of
options for options whose exercise price either equals or exceeds or is
less than the market price of the stock_
14 Description of the method and significant assumptions used during
the year to estimate the fair value of options.
i. Risk-free interest rate
ii. Expected life
iii. Expected Volatility
iv Expected dividends
v. The price of the underlying share in market at the time of option
grant
ESOS-2007
Sudhir Rao, Managing Director
Sudhir Rao, Managing Director
10.45
The employee compensation cost on account of ESOS in the financial year
2006-07 based on Intrinsic value method is Rs. 9.55 Crore. Had the
Company used the Fair value method, the ESOS cost in the financial year
2006-07 would have been Rs. 10.35 Crores.
There would not have been any adverse effect on the profit and EPS of
the Company, if Fair Market value method of accounting was adopted
instead of intrinsic value.
N.A.
The Company has opted intrinsic Value method for accounting of
Compensation Cost arising out of ESOS. The Company has not made any
assumptions.
ESOS-2008
As per the table given below.
As per the table given below.
10.45
The employee compensation cost on account of ESOS in the financial year
2007-08 based on Intrinsic value method is Rs. 18.57 Crore. Had the
Company used the Fair value method, the ESOS cost in the financial year
2007-08 would have been Rs. 19.26 Crores.
There would not have been any adverse effect on the profit and EPS of
the Company, if Fair Market value method of accounting was adopted
instead of intrinsic value.
Not applicable as on date
The Company has opted intrinsic Value method for accounting of
Compensation Cost arising out of ESOS. The Company has not made any
assumptions.
Stock Options granted during the year to employees including directors
of the Subsidiary Companies
Number of Stock
S.No Name of the Employee Options granted
1 Mr.Krishna Vemuri 281951
2 Mr. Narayan Ravi Setty 169171
3 Mr.Pundarika Bibi Reddy 70488
4 Mr.Sudhir Moni 28195
Total 549805
% (of 5,84,041 Options %(of Issued Capital)
Granted during the
year)
48.28% 1.06%
28.97% 0.64%
12.07% 0.27%
4.83% 0.11%
Note: 549805 Options(out of 600000 Options earmarked for the employees
including directors of the Subsidiary Companies) were granted during
the year. 50195 Options are yet to be granted. Since, the performance
appraisal is under process as on 31.03.08.
Stock Options granted during the year to employees including directors
of Bartonics India Limited
1 Mr.T.Venkateswara Rao 8318 1.42% 0.03%
2 Mr.Sudhir Rao 25918 4.44 0.09%
Total 34236
Note: 34236 Options (out of 350000 Options earmarked for the employees
including directors of the Bartronics India Limited) were granted
during the year. 315764 Options are yet to be granted. Since, the
performance appraisal is under process as on 31.03.08.
Zero Coupon Convertible Bonds due 2012:
Pursuant to approval of the shareholders in the Extra-Ordinary General
Meeting held on 19.04.2007 Board has taken the approval of shareholders
to issue Foreign Currency Convertible Bonds (FCCBs) to the foreign
investors to the extent of US$ 40 million on private placement basis
with tenure of five years from their allotment, for the purpose of
expansion of its activities in India and abroad and to finance the
additional working capital requirements and for general corporate
purposes including acquisitions , in accordance with provisions of
Issue of Foreign Currency Convertible Bonds and Ordinary Shares
(Through Depository receipt Mechanism) Scheme, 1993 and accordingly the
Company had issued and allotted FCCBs to an extent of US million on
04.06.2007. The details about the utilization of proceeds of FCCBs were
already disclosed in the previous Annual Report.
During the year under review, the Company allotted 34,46,046 equity
shares of Rs.10/- each (as per the table given below) against the
conversion of 115 Bonds (each bond representing US0,000).
Principle value Deemed value of
Principle value of of Bonds Bonds (103% upto
SI.No. Total Number of received upto
Bonds allotted 31.03.2008 04.06.08)
(us$)
(1) (2) (3)
1 25000000 11500000 11845000
Deemed Conversion No. of shares
Fixed value of Price issued and
Exchange Bonds in (Rs.) allotted during the year
Rate Indian Rupees
(4) (5) (6) (7=5/6)
40.73 482446850 140 34,46,046
Zero Coupon Convertible Bonds due 2013:
Pursuant to approval of the shareholders in the Annual General Meeting
held on September 10, 2007, your Company raised US$ 50 million through
issue of Foreign Currency Convertible Bonds (FCCBs) with tenure of five
years from their allotment, for the purpose of expansion of its
activities in India including acquisitions abroad, in accordance with
provisions of Issue of Foreign Currency Convertible Bonds and Ordinary
Shares (Through Depository receipt Mechanism) Scheme, 1993 and
accordingly the Company had issued and allotted FCCBs to an extent of
US million on 04.01.2008.
The Statement of utilization of proceeds of Foregin Currency
Convertible Bonds (FCCBs):
1. Nature of Issue issue of FCCBs to foreign investors to the extent
of US million on private placement basis.
2. Size of the Issue US million
3. Aggregate amount of the Issue
Rs.197.85 Crores
4. Objects of the Issue
For the purpose of expansion of existing operations, setting up of new
projects and overseas acquisitions and international investments.
5. Utilization of the Issue:
Funds have been utilized for the envisaged project. The production has
commenced during the current financial year.
Allotment of 46,30,000 equity shares of Rs.10/- each against
compulsorily convertible warrants issued by the Company on March 08,
2007 on preferential allotment:
The Company in the Extra-Ordinary General Meeting held on 29.01.2007
has taken the approval of shareholders to issue 46,30,000 Convertible
Warrants of Rs. 10/- each at a price of Rs. 130/- per warrant to the
existing members of the Company and/or Promoters or Promoter Group
members and/or non-promoters and/or Strategic Investors and/or
Financial Institutions/ Banks whether resident in India or non-resident
Indians, Overseas Corporate Bodies (OCBs), Mutual Funds, Debenture
Holders, Employees, Foreign Institutional Investors (Flls), Companies,
other entities/authorities on preferential basis, in accordance with
the SEBI (Disclosure and Investor Protection) Guidelines, 2000, for the
purpose of expansion project of the Company relating to Manufacture of
Smart Cards and RFID related Products. Accordingly, the Company
allotted 46,30,000 Convertible Warrants to the promoters/non promoters
on 08.03.2007.
During the year under review, the Company allotted 46,30,000 equity
shares of Rs.10/- each against the conversion of warrants on
04.03.2008.
The Statement of utilization of proceeds of 46,30,000 Convertible
Warrants:
1. Nature of Issue
Issue of 46,30,000 Convertible Warrants of Rs.10/- each at a price of
Rs.130/- per warrant to the existing members of the Company and/or
Promoters or Promoter Group members and/or non-promoters on
preferential basis.
2. Size of the issue
46,30,000 Convertible Warrants
3. Aggregate amount of the Issue Rs.6.02 Crores
4. Objects of the Issue
For the purpose of expansion Project of the Company relating to
manufacture of Smart Cards and RFID related products.
5. Utilization of the Issue:
The proceeds have been used to set up smart card manufacturing facility
at Raj Bollaram Village, Medak Distrcict, Andhra Pradesh and for
working capital requirements.
SUBSIDIARY COMPANIES:
Bartronics Asia Pte Ltd :
The Company has incorporated a Wholly Owned Subsidiary Company named
M/s. Bartronics Asia Pte Ltd on June 14,2007 in the Republic of
Singapore with the share capital of S 00 to capture Asian market and
provide better after sales services.
M/s Bartronics Asia Pte Ltd has commenced its operations during the
current year and recorded turnover of Rs. 5391.28 Lacs during the year
2007-2008.
Bartronics America Inc:
The Company has incorporated a Wholly Owned Subsidiary Company named
M/s. Bartronics America Inc. on November 16, 2007 in the State of
Delaware in USA under Registration No: 0334318 with the share capital
of US00.
M/s. Bartronics America Inc has commenced its operations during the
current year and recorded turnover of Rs. 3,360.46 Lacs during the
year 2007-2008.
Your Companys Financial Year is not coinciding with the Financial Year
of above Subsidiary Companies.
Both Subsidiary Companies have carried on the business transactions
from the date of the incorporation till 31st March, 2008. The
Consolidated Financial Statements (consisting of annual audited
accounts of your Company for the year ended 31st March 2008) have been
annexed to the annual report of your Company for the financial year
2007-08. Furthermore since both the subsidiary Companies have been
incorporated during the financial year 2007-08 and accounts are yet to
be closed, therefore audited accounts, the Directors report, Auditors
report and other related information of both subsidiary Companies could
not be annexed.
Statement pursuant to Section 212 of the Companies Act, 1956 relating
to Subsidiary Companies, as at 31 st March, 2008, is also annexed to
this Report.
New products:
During the year the Company has commenced the Smartcards Manufacturing
facility. The Companys smart card manufacturing unit is Indias first
smart card manufacturing unit as of now, having 100% EOU status from
Government of India. The Company offers one stop customized smart card
based solutions and application. The Company is manufacturing smart
cards, magnetic stripe cards, scratch cards and plain PVC cards.
The 80 million cards per annum facility is one of the largest
facilities for manufacture of smart cards in South Asia. A recent
study by one of the reputed market research Companies has projected the
depiand for smart cards to be over 150 million units this year and
growing at a CAGR of around 45%. In line withthe market demands, the
Company intends selling its new products and solutions initially to the
telecom industry and then gradually moving on to Government projects
and the banking sector over the next 3-4 years. The Company has already
entered into selling arrangements with a few leading consumers for the
next two years and consequently move up from an estimated 70% capacity
utilization in the first year to 100% in the second year of operations.
Acquisitions:
Companys wholly owned subsidiary Company named Bartronics America Inc.
(BAI), a Delaware Corporation, USA has acquired the Assets of
Proximities Inc. and SRG America Inc. based in the United States of
America for a total consideration of US $ 50 million.
The Proximities, Inc, is a privately held Company headquartered in
Melbourne, FL. The Company develops, markets and supports secure RFID
cashless payment, access control and age verification solutions.
Proximities proprietary technologies enable fast, more efficient and
more secure transactions. Proximities, Inc., is also the leading
developer of secure Radio Frequency Identification (RFID) wristbands,
cashless payment, age verification and access control systems.
The Software Research Group, Inc. (SRG), headquartered in Iselin, New
jersey, is a leading multinational organization that has successfully
served the information technology market place for over ten years.
Since its inception, SRG has gained vast experience in providing
quality IT solutions to its customers on time cost effectiveness.
Statutory Disclosures
The particulars as prescribed under sub-Section [1 ] [e] of Section 217
of the Companies Act, 1956 read with the Companies [Disclosure of
particulars in report of Board of Directors] Rules, 1988, are set out
hereunder.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and outgo
Information relating to conservation of energy, technology absorption,
foreign exchange earnings and outgo forming part of Directors Report
in terms of Section 217(1)(e) of the Companies Act, 1956 and Companies
(Disclosure of particulars in the report of Board of Directors) Rules,
1988 is as follows: Conservation of Energy
The Operations of your Company are not Energy intensive. The Company
makes every effort to conserve energy as far as possible in its
facilities. The Company continuously evaluates new technologies and
techniques to make infrastructure more energy efficient.
Technology absorption
Your Company did not invest in any R&D activity during the year under
consideration. However, the upgradation of the Technology in vogue is
being given highest priority to give a better service to the clientele.
Foreign Exchange Earnings and Outgo
Particulars 2006 - 07 2007 - 08
Foreign Exchange Earnings 3226.42 6433.96
Foreign Exchange Outgo 2480.09 4942.67
PERSONNEL
The relations with employees continued to be cordial through out the
year. The Board appreciates the willful co- operation and team spirit
in the Management Cadre and other employees of the Company.
Information required to be furnished under Section 217 (2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended is annexed to this report.
Reply to the Auditors Report
Though the Company is regular in payment of statutory dues with the
concerned authorities there has been some delays in deposit of Income
Tax with appropriate authorities. Your Directors have taken note of the
situation and efforts are being made to see that these delays are not
repeated.
Directors
Shri A.B.Satyavas Reddy, Director of your Company, is liable to retire
by rotation in this ensuing Annual General Meeting and being eligible,
offers himself for re-appointment. Resolution seeking approval of the
Members for the re-appointment of Shri A.B.Sayavas Reddy as Director is
being proposed at the ensuing Annual General Meeting. The Board of
Directors recommend adoption of the resolution. A brief profile of Shri
A.B.Satyavas Reddy, including areas of his expertise and other details,
are attached to the Notice convening the ensuing Annual General
Meeting.
Shri Y.R.Rao, Director of your Company, is liable to retire by rotation
in this ensuing Annual General Meeting and being eligible, offers
himself for re-appointment. Resolution seeking approval of the Members
for the re-appointment of Shri Y.R.Rao as Director is being proposed at
the ensuing Annual General Meeting. The Board of Directors recommend
adoption of the resolution. A brief profile of Shri Y.R.Rao, including
areas of his expertise and other details, are attached to the Notice
convening the ensuing Annual General Meeting.
Shri S.Tirumala Prasad has been appointed as an Additional Director of
the Company with effect from 02.09.2008. Shri S.Tirumala Prasad holds
office upto the date of the ensuing Annual General Meeting. Notice has
been received from a Member, under Section 257 of the Companies Act,
1956, proposing the name of Shri S.Tirumala Prasad for appointment as
Director.
Shri S.Tirumala Prasad has also been appointed as Whole-time Director
designated as Chief Executive Officer for a period of five years with
effect from 02.09.2008, subject to approval of the Members and other
authority (ies), as may be required.
Resolutions seeking approval of the Members for the appointment of Shri
S.Tirumala Prasad as Director and also as Whole-time Director,
designated as Chief Executive Officer, are being proposed at the
ensuing Annual General Meeting. The Board of Directors recommends
adoption of the resolutions. A brief profile of Shri S.Tirumala Prasad,
including areas of his expertise and other details, are attached to the
Notice convening the ensuing Annual General Meeting.
Listing of Companys Securities:
Your Companys shares are currently listed on Bombay Stock Exchange
Limited and National Stock Exchange of India Limited.
Dematerialization of Shares:
Your Companys shares have been made available for dematerialization
through the National Securities Depository Limited (NSDL) and Central
Depository Services (India) Limited (CDSL).
Fixed deposits
Your Company has not accepted any deposits. As such, no amount of
principal or interest was outstanding on the date of the Balance Sheet.
Auditors
The Companys existing Statutory Auditors M/s.Yaji Associates,
Chartered Accountants, Hyderabad, have expressed their inability to
continue as Statutory Auditors of the Company due to their
Pre-Occupation. It is proposed to appoint M/s Deloitte Haskins & Sells,
Chartered Accountants, Hyderabad, as Statutory Auditors of the Company
for the financial year 2008-09 at a remuneration as fixed by the Board
of Directors.
The Company has received letters from M/s Deloitte Haskins & Sells,
Chartered Accountants, Hyderabad to the effect that their appointment
as Statutory Auditors, if made, would be within the prescribed limits
under Section 224(1 B) of the Companies Act, 1956 and they are not
disqualified for such appointment.
Human Resources
Bartronics India Limited has been fortunate in having a set of
committed employees at all levels and looks forward to nurture them and
retain their loyalty. The Company recognises the value of the committed
workers and efforts are being made to enhance the bonding between the
Company and the committed employees.
Dividend
As the Company intends to plough back the profits for the ultimate
benefit of shareholders, therefore no dividend is proposed.
Code of conduct
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 the Companys website. Board Members and Senior Management personnel
have affirmed compliance with the Code for the financial year 2007-08.
Aseparate declaration to this effect is made out in the Corporate
Governance Report.
Directors Responsibility Statement
As required under the Companies Act, 1956 your Directors wish, to
state:
a) In the preparation of the annual accounts for the year ended 31st
March 2008 applicable accounting standards have been followed with no
material departure.
b) Accounting policies have been selected and applied consistently, at
the same time judgments 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 at the end of the financial year and of the
profit for the year under review.
c) Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities, and d) Accounts for the year
ended 31st March, 2008 have been prepared on going concern basis.
Group:
Persons forming part of the Group coming within the definition of
Group as defined in the Monopolies and
Restrictive Trade Practices (MRTP) Act, for the purpose of inter-se
transfer of shares of the Company under
Regulation 3(1 )(e)(i) of the SEBI(Substantial Acquisition of Shares
and Takeovers) Regulations, 1997 are enclosed in separate Section of
the report.
Management Discussion and Analysis Report
Management Discussion and Analysis Report is annexed to this Report.
Corporate Governance
Pursuant to the Clause 49 of the Listing Agreement entered with the
stock exchanges, the Company has complied with all the provisions of
Corporate Governance and a detailed note in this regard is annexed to
this report alongwith a Certificate of Compliance from Auditors of the
Company.
Acknowledgement
Your Directors extend their gratitude to the valuable customers,
investors, Bankers, Central and State Government officers and agencies
for their continued support and acknowledge the valuable contribution
made by the employees.
BY ORDER OF THE BOARD
For BARTRONICS INDIA LIMITED
Sd/-
Place : Hyderabad SUDHIR RAO
Date : 02-09-2008 MANAGING DIRECTOR |
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