The Directors' are pleased to present-the Eighth Annual Report and the Audited Statement of Accounts for
the year ended -March 31, 1996.
The financial results for the year are as follows:
Rs. in lakhs
Year ended Year ended
March 31, 1996 March 31, 1995
Gross Profit 352.41 384.22
Interest (246.66) (249.25)
Depreciation (79.38) (91.82)
Profit before tax 21.59 38.49
Provision for Taxation NIL NIL
Net Profit 21.59 38.49
As the profit for the year is inadequate, the Board of Directors have not recommended payment of dividend on
Equity Shares for the year under review.
The year 1995-96 was very encouraging and eventful. Various policy changes for Globalising Indian Economy
brought out by the Government thrusted enormous pressure on Indian Capital Goods Industry. Whereas the Auto
Industry Sector saw spectacular increase in sales and the volumes increased vertically. This has created a
boom scenario for the
Machine Tool Sector in which your Company is placed. The emphasis of Capital Goods procurement of Auto
Sector turned from standard machines to special machines, from single stand alone machines to line concept;
whereby the Auto Industry gets fully integrated batch production machines.
Your Company has entered into this field of producing special machines to Auto Sector and have pleasure in
confirming number of orders are forthcoming from Auto Industry. The Standard Machines manufactured by the
Company such as Horizontal Surface Grinder Machine and co-ordinate
measuring machines witnessed higher demand during the financial year. Your Company has brought out number of
new sizes of machines within the existing product group so that the market demand is met.
Large scale import of Standard machines are being resorted to by Indian Consumer Companies from Taiwan. This
causes tremendous pressure on pricing of Indian Machine -Tools, as the ones imported from Taiwan are lower
priced. There is also pressure created for quick delivery of machines as equivalent Taiwanese machines are
available almost off the
shelf. This trend has made your Company think of augumenting mother machinery and Working Capital Base to
suit and to take on International marketing and competition. Esteemed Members of the Company have already
approved Company's capital expansion and Company raising adequate resources to take on these challenges
thrust on us due to globalisation of Indian economy; a policy which we are sure in the long run will be
beneficial to Indian Industry to become global and competitive. -
The year under review was very rough due to tight money policy announced by RBI and Banks, whereby, the cost
of money went up steeply, from the point of view of Capital goods industry.
The operational cost for year under review went up due to interest factor and other inputs. Your Company
had to realign its Working Capital Banks due to their not providing adequate Working Funds to sustain
operations at higher level planned by your esteemed Company, with Introduction of Wind Turbine
Non-provision of export finance also triggered lower deliveries to USA where your Company has established a
Joint Venture for marketing its products. Against an order of 50 machines valued over US$ 900,000 your
Company could not deliver even 5 machines a month on a continuous basis.
This is again due to non-provision of adequate pre-shipment credit and also Company going in for necessary
mother machines in time to take on exports as basis of existence.
During the year, your Company has shown more emphasis on improving the quality of machines manufactured to
meet the demands of the Indian Industry as well as exports.
Your Company is planning to increase the investments in the Joint Venture Company established in USA and in
the process, convert the Company to be a Subsidiary, subject to Government approvals. This change will be
helpful to your Company to increase investments, use the same Subsidiary as springboard for increasing sales
in NAFTA area.
The American demand for your Company's products is good which calls for both increasing mother machines
capability in our Madras Plant and also establish servicing and warehousing facility in the USA. Though the
Company wanted to involve its presence in the USA, there has been slips in timeframe, due to financing of
Effective steps are being taken by your Company to meet fresh challenges in India, due to. increasing
imports of Machine Tools taking place and diversify into products that have ready market i.e. Vertical
Machining Centres and CNC Lathes in association with Taiwanese Companies.
During the year under review, your Company furthered the collaboration for manufacture of Wind Turbine
Generators and have identified good market for 250 KW machines. Since availability of finance through IREDA
was not forthcoming due to paucity of International funds, many orders could not fructify into despatches.
Your Board has decided that the Company should create an Energy division to undertake setting up of Wind
Farms and other possible source of Power generation, has seen good progress and is looking up Andhra Pradesh
as a launching pad. Land and other infrastructure requirement has been
applied for. The current priority of the Government being infrastructure creation through private
participation it would be appropriate for the Company to get into such development at the earliest.
Your Company has good order book both for Exports and sales within India. The Current trend seen with
booming Auto sales both mother and ancillary industries are bound to place large emphasis on Capital goods
procurement for augumenting their volume of production. With the addition of Wind Turbines manufacturing
your Company would establish
very large turnover base, both with Machine Tool and Wind Energy Converter Products.
The year 1995-96 ended with your Company supplying first batch of Wind Turbine Generators of 250 KW and the
products are well received. Your Company expects large orders for Wind Turbine Generates in the coming years.
The Company, as you are aware is gearing up to meet investments required to meet such demands, particularly
for Wind Turbine Generators
which are to be supplied on a time bound basis.
Government Import Policies announced and modified from time to time favours import of New and Second Hand
Machine Tools on one side. Indian Machine Tool Industry itself offered opportunity to Indian User Industries
to go in for import of Machine Tools due to its high cost as well as long delivery periods quoted. This trend
will be harmful for the Indian Machine Tool Industry; but, in the long run, such competition would enable
Indian Engineering Industry to appreciate the high quality and short delivery period expected from Indian
Machine Tool Manufacturers.
Then the cost of finance provided for Capital Goods Sector, particularly Machine Tool Sector, should be
reduced, to enable them compete globally. The cost of Finance provided in India is very expensive, which
ultimately pushes up the cost of our operation. Indian Machine Tool Industry can be successful in taking on
global competition, only when level playing field is created both for Technology and other
input costs are made available at global costs. Profitability should be the goal and to achieve this, every
input must be made cost-effective. In an era of liberalisation, cost of funds and efficiency of production
will play a vital role in determining the winnes.
Mr. K. Raman, Director, retires by rotation and being eligible, offers himself for re-election.
The notes to the accounts referred to in the Auditors' Report are self-explanatory and therefore do not call
for any further comments.
M/s. M. Srinivasan & Associates, Auditors of the Company, retire at this Annual General Meeting and are
eligible for reappointment.
CONSERVING ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
The information 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 with respect to these matters is
appended hereto and forms part of this report.
Particulars pursuant to Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules 1975 and Statement under Companies (Disclosure of particulars in the Report of Board of
Directors) Rules, 1988 are given as Annexures to this Report.
Your Directors appreciate the continued support and assistance received from the Central Government, the
local Government and its agencies, the Foreign Collaborators, the participating Financial Institutions, Bank,
Staff and Workmen of our Company.
ANNEXURES TO DIRECTOR'S REPORT
Form for Disclosure of Particulars with respect to conservation of energy
NOT APPLICABLE AS PER SCHEDULE TO RULE 2
(See Rule 2)
Form for Disclosure of particulars with respect to
RESEARCH AND DEVELOPMENT (R & D)
1. Specific areas in which R & D : 1) Indegenisation of
carried out by the Company CNC Controls System
during the year
2) New 3D Software
which is relatively
cheaper has been
association with an
American Company for
marketing in India.
3) The RT-1 Surface
undergone change for
2 axies motorization
4) New Surface Grinder
Model RT-1 (M)has
2. Benefits derived as a result of : 1) CNC controller
the above manufactured in
India will R & D
result in lesser
2) New All Granite CMM
manufactured by the
Company will give
edge for marketing
our Products not
only in India; but,
also for Exports.
3) CNC Controller
introduced on RT-1
Model will give the
edge for exporting
4) New Model Surface
will increase both
sales within India
3. Future Plan of Action : R & D base will be
4. Expenditure of R & D
A. Capital Nil
B. Recurring Nil
C. Total Nil
D. Total R & D expenditure as a
percentage of total Turnover Nil
TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION
1. Efforts in brief made towards All Technologies
technology absorption, adoption imported through
and innovation Collaboration/ Designs
Purchase etc. have
been fully absorbed.
the Company has
Grinders and CNC
Marking and Measuring
2. Benefits derived as a result of New range of products
the above efforts, eg. product have been put to
improvement, cost Indian & Overseas
reduction, product development, market.
import substitution etc.
3. In case of imported technology
(imported during the last 5 years
reckoned from the beginning of the
financial year) following
information may be furnished.
a) Technology imported Manufacturing
Marking & Measuring
Machine and Horizontal
Machines and CNC
b) Year of import Three collaborations
signed and technology
imported in 1987-89
have been fully
production is going on
in with full
signed in 1991-92 is
1995-96. The same will
be taken up during
the financial year
c) Has the technology been fully Yes, in the case of
absorbed Co-Ordinate Measuring
Marking & Measuring
Machine and Horizontal
Machines. In the off
CNC Controls, it is
yet to be fully
d) If not fully absorbed, areas This is applicable to
where this has not taken place, CNC Controls, where
reasons therefore and future plan the technology is
of action quite complicated and
application and volume
production. This will
be attended to, in
the next 2 financial
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
Foreign Exchange Earnings NIL
Foreign Exchange Outgo Foreign Travel -
The Company has imported various, sub-assemblies and components from Collaborators and others. The Rupee
equivalent of the Foreign Exchange involved in this is Rs. 15.25 Lakhs.
The total outflow of Foreign Exchange in terms of Rupee value is Rs. 16.04 Lakhs.
C.I.F value of Capital Goods imported during the period is NIL.