Your Directors present the twenty third Annual Report on the business
 and operations of the Company and the Audited Statement of Accounts for
 the financial year ended on 31st March, 2004. The Financial Highlights
 of the Company are as follows :
 
 FINANCIAL HIGHLIGHTS
 
                                                           (Rs. in lacs)
 Particulars                                   31.03.2004     30.06.2003
 
 Net Income                                        913,05       5,582,07
 
 Gross Profit/(Loss) for the year                (374,56)       (760,94)
 
 Less: Finance Charges                              68,19         953,14
 
 Depreciation                                      474,93         809,69
 
 Deferred Revenue Expenditure written off           66,52         609,64
 
                                                   110,87       1,873,70
 
 Loss for the year                               (984,20)     (2,634,64)
 
 Provision for Diminution in value of Investments  700,08
 
 Extra-ordinary/Non recurring expenses                  -       2,072,76
 
 Provision for taxation (prior years)                   -          65,05
 
 Loss carried to Balance Sheet                 (1,684,28)     (4,772,45)
 
 OPERATIONS
 
 The Gross operating income (Including Excise Duty) for the nine months
 period ending on 31st March, 2004 was Rs. 986.47 lacs compared to Rs.
 6,206.98 lacs for the fifteen months period ended on 30th June 2003.
 Your Company has incurred a loss of Rs. 1,684.28 lacs for the period.
 
 The operating loss during the year under review is Rs. 374.56 lacs
 before finance charges, depreciation and deferred revenue expenditure
 written off compared to Rs. 760.94 lacs during the previous year.
 
 In the previous report, the Directors had reported that one of the
 major constraint on volume growth had been the inadequate non-fund
 based working capital facilities. During that year, the banks had
 permitted your Company to utilize only Rs.500 lacs of letter of credit
 facilities as against the assessed limit of Rs. 1,925 lacs, minimum
 that was required for reaching a break even level of operations. In
 spite of highlighting the requirement of non-fund based working capital
 facility, the LC facility was completely withdrawn by the banks during
 2003-04.
 
 The high cost of borrowings, excessive financial leverage and the
 withdrawal of existing letter of credit facilities have had a cascading
 effect on the overall operations of the company.
 
 Due to unviable operations, the operations of the Palakkad factory had
 to be suspended during-the year. The Company filed an application with
 the Government of Kerala seeking its permission to close down the
 factory. Though Government of Kerala has refused permission for the
 same, your Company sought a review of the Governments order
 highlighting the non-viability of the unit. Your company is awaiting
 response from the Government.
 
 DIVIDEND
 
 Your directors are unable to recommend any dividend, in view of absence
 of profits for the period under review.
 
 PUBLIC DEPOSITS
 
 Your Company had 51 unclaimed deposits aggregating to total amount of
 Rs. 8.78 lacs as on 31st March, 2004 as against Rs. 12.11 lacs as on
 30th June 2003. Out of the above said unclaimed deposits, a sum of Rs.
 0.25 lacs has been repaid as on date. Your Company has stopped
 accepting/renewing deposits and the depositors had been requested to
 approach the Company for repayment of matured deposits.
 
 OUTLOOK FOR THE FUTURE
 
 In the absence of Letter of Credit facilities from banks and the
 resultant inability to source raw materials and components for
 production of Audios, the strategy of your. Company is to make use of
 the facilities at Doddaballapur, Bangalore for manufacture and assembly
 of zaudio and other electronic products, moulding of plastic parts on
 job order basis for various customers, using its own technically
 skilled staff and infrastructure.
 
 REFERENCE TO BIFR
 
 As at the end of 30th June 2003, the companys accumulated losses at
 Rs. 7,385 lacs had exceeded the networth and as such the company had
 become a sick industrial company under the provisions of Sick
 Industrial Companies (Special provisions) Act, 1985 (SICA). Hence a
 reference under section 15(1) of SICA was made to the Honourable Board
 for Industrial and Financial Reconstruction (BIFR). The reference has
 been admitted by BIFR in December 2003. Your Company is awaiting
 initiation of restructuring process by BIFR.
 
 CONTRIBUTION TO EXCHEQUER
 
 Your company has contributed Rs. 118.96 lacs by way of Excise Duty,
 Sales Tax and Customs Duty, etc., during the year to the Government
 Revenue.
 
 DIRECTORS
 
 Your Directors co-opted Mr. K.P. Balagopal and Mr. S. Hariharan as the
 Additional Directors of the Company on 28th January, 2004.
 
 Mr. C.R. Menon and Mr. Alok Arora resigned as the Directors of the
 Company on 28th January, 2004.
 
 Your Directors place on record their deep appreciation of the valuable
 contributions rendered by Mr. C.R. Menon and Mr. Alok Arora during
 their tenure as directors of the Company.
 
 Your Company voluntarily de-listed its shares from the Cochin Stock
 Exchange Limited during the year in pursuance of the Special Resolution
 passed by the members. In view of the cost considerations, it is
 proposed to de-list the shares in Mumbai Stock Exchange during the
 current year for which approval is sought through a Special Resolution
 in this meeting. However, the shares will continue to be listed on the
 National Stock Exchange Limited, which has nationwide trading terminal.
 
 AUDITORS
 
 M/s T Velu Pillai & Company, Chartered Accountants, retire at the
 forthcoming annual general meeting and have confirmed their eligibility
 under Section 224(1B) of the Companies Act, 1956.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the requirement under Section 217 (2AA) of the Companies
 Act, 1956 with respect to Directors Responsibility Statement, it is
 hereby confirmed that:
 
 i) in the preparation of the annual accounts for the financial year
 ended 31st March, 2004 the applicable accounting standards had been
 followed along with proper explanation relating to material departures;
 
 ii) the Directors had selected such accounting policies and applied
 them consistently and made judgments and estimates that were reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the company at the end of the financial year and of the profit or
 loss of the company for the year under review;
 
 iii) the Directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the company and for preventing and detecting fraud and other
 irregularities;
 
 iv) the Directors had prepared-the accounts for the financial year
 ended 31st March, 2004 on a `going concern basis.
 
 INTERNAL CONTROLS AND SYSTEMS
 
 The Company has an adequate system of Internal Audit conducted by
 qualified Chartered Accountants. The scope of internal audit includes
 Inventory Management, Purchases, Production, Sub-contract activities,
 Accounts and Finance including Cash/Bank Operations, Expenses,
 Debtors, Creditors, Fixed Assets, Insurance besides Statutory
 Compliances. The Statutory Auditors also review the area, scope and
 coverage of the Internal Audit from time to time and advise (he
 Management.
 
 RISKS, THREATS AND CONCERNS
 
 Your Directors are deeply concerned at the lack of non fund based
 working capital facilities that has led to serious reduction of
 operations and the resultant cash losses incurred. Further, the Company
 is unable to service its debts to the banks, financial institutions and
 other creditors that may lead to recovery proceedings.
 
 PEOPLE & HR INITIATIVES
 
 Your Company believes that its greatest asset is the human resources.
 Within the available resources, efforts are being made to retain the
 trained personnel and initiate HR actions to improve competencies in
 the core business i.e., manufacturing.
 
 As at 31st March, 2004 the Company had a total strength of 349
 employees.
 
 PARTICULARS OF EMPLOYEES
 
 During 2003-04, none of the employees drew remuneration in excess of
 Rs.24 lacs per annum or Rs.2 lacs per month. Hence, furnishing
 information in terms of Section 217 (2A) of the Companies Act, 1956
 read with the Companies (Particulars of Employees) Rules, 1975 does not
 arise.
 
 MANAGEMENT DISCUSSION & ANALYSIS
 
 Your Directors have covered the Management Discussion & Analysis as
 required under Corporate Governance requirements, as a part of the
 Directors Report in appropriate places, to avoid duplication and
 overlapping of the contents of the said two reports.
 
 ACKNOWLEDGEMENTS
 
 The Directors express their appreciation to all the employees for their
 dedication and hard work.
 
 Your Directors place on record their appreciation of the valuable
 support from the customers, suppliers, the financial institutions,
 bankers and the shareholders for their support.
 
                                                For and on behalf of the
                                                      Board of Directors
 Bangalore                                           N P Perumal  K Gopi
 28th July, 2004                             Director & Manager Director
 
 ANNEXURE TO DIRECTORS REPORT
 
 Information under the Companies (Disclosure of Particulars in the
 Report of Board of Directors) Rules, 1988 and formingpart of the
 Directors Report for the financial year ended 31st March, 2004.
 
 CONSERVATION OF ENERGY
 
 Your Company has taken up energy saving projects like power factor
 improvement. Adequate awareness has been created among employees to
 conserve energy by way of switching off lights and power when not
 required, making use of natural ventilation/lighting for shop floors
 and improving the efficiency of the diesel generator sets by preventive
 maintenance.
 
 RESEARCH AND DEVELOPMENT (R&D) AND TECHNOLOGY ABSORPTION, ADAPTATION
 AND INNOVATION
 
 In view of severe financial constraints, R&D expenditure had to be
 curtailed. However, as part of on going process, process improvements
 were done to keep the competitive edge in technological excellence.
 
 The total expenditure on R&D during the year under review amounted to
 Rs. 0.11 lacs.
 
 EXPENDITURE ON R&D
 
                                                     Rs. in Lacs
 
 a. Capital                                                  Nil
 
 b. Recurring                                               0.11
 
 c. Total                                                   0.11
 
 d. Total R&D expenditure as a percentage of total turnover 0.01
 
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 During the year under review, your Companys foreign exchange earnings
 were Rs.65.18 lacs and the outgo was Rs. 82.10 lacs
 
                                                For and on behalf of the
                                                      Board of Directors
 Bangalore                                        N P Perumal     K Gopi
 28th July, 2004                             Director & Manager Director
 
 ADDENDUM TO THE DIRECTORS REPORT
 
 With reference to the comments made by the Auditors in their Report,
 the Directors wish to state the following:
 
 Non Provision of interest
 
 The Company has been registered under BIFR. Anticipating waiver of
 interest, no provision for interest has been made.
 
                                                For and on behalf of the
                                                      Board of Directors
 Bangalore                                           NP Perumal    KGopi
 28th July, 2004                             Director & Manager Director
 Registered Office:
 Audio House 7/711, N H Bypass
 Road, Palakkad-678 007: