Himachal Futuristic Communication

The Directors have pleasure in presenting the Annual Report and Audited
 Accounts for the Financial Year ended 31st March, 2008.
 
                                                      (Rs. in crores)
 
 FINANCIAL RESULTS                               2007-2008  2006-2007
 
 Sales and Services                               357.92     1143.21
 Other Income                                       1.87        5.67
 Profit/ (Loss) before depreciation, 
 finance charges and taxation
                                                 (57.79)      186.06
 Less: Depreciation & Amortisation                27.16        26.08
 Finance charges                                  69.37        39.60
 Profit/(Loss) before taxes                     (154.32)      120.38
 Provision for taxation                            0.44         8.57
 Prior period adjustments                         (4.21)        1.76
 Profit/(Loss) for the year                     (150.55)      110.05 
 Balance brought forward from previous year .  (1022.12)    (1132.17)
 Charge on account of transitional 
 liability for employees benefits                  0.55
 Balance carried to Balance Sheet              (1173.22)    (1022.12)
 
 DIVIDEND
 
 In view of the loss incurred by the Company, your Directors do not
 recommend any dividend on equity and preference shares for the year
 ended 31st March, 2008.
 
 MANAGEMENT DISCUSSIONS & ANALYSIS (MDA)
 
 Financial Review
 
 Sales during the year has decreased to Rs.357.92 crore from Rs. 1143.21
 crore in the previous year. During the year under review the Company
 has incurred a net loss of Rs. 150.55 crore as against the net profit
 of Rs. 110.05 crore in the previous year.
 
 Capital Structure
 
 During the financial year 2007-08 the paid up capital of the Company
 comprising of equity and preference shares stood at Rs. 523.29 crore.
 
 Overview of Telecom growth in India
 
 The Present Indian telecommunications network with over 270 million
 connections is the third largest in the world and the second largest
 among the emerging economies of Asia. India has emerged as a major base
 for the telecom industry worldwide and it is the endeavour of the Govt,
 of India to facilitate further growth of this vital industry as it is
 not just the growth in telecom sector but it has a multiplier effect
 on the entire economy. Reform measures coupled with proactive policies
 of the Govt, of India have resulted in an unprecedented growth Of the
 telecom sector.
 
 Indian telecom sector has come a long way in achieving the dream of
 providing affordable and effective communication facilities to its
 citizens as envisaged in the National Telecom Policy (NTP) 1999.
 Efforts are continuously being made to provide universal access service
 to all uncovered areas including rural and hilly regions. The other
 thrust areas broadly consist of building a modern and efficient telecom
 infrastructure, transforming telecommunication sector to a greater
 competitive environment with equal opportunities and level playing
 
 field, strengthening R&D efforts in the country, achieving efficiency
 and transparency in spectrum management and enabling Indian telecom
 companies to become truly global players.
 
 During the last few years the sector has witnessed a very high growth
 rates. Since 2004 the number of telephones grew at a rate of 40 percent
 plus, with the exception of 2005. The sector registered significant
 growth during 2007-08. The targeted growth of 250 million by end of
 2007 was achieved in October 2007, when the number of telephones
 touched 257 million. The current addition of about eight million lines
 per month puts the telecommunication sector on a strong footing to
 achieve the target of 500 million connections by 2010. Apart from
 growth of number of connections, there has been spectacular growth in
 broadband connections and other value added services.
 
 Opportunities
 
 Large quantity equipments requirements are primarily in the GSM, CDMA
 and soft switching technologies leading to new generation networks.
 These are the areas where the multinationals are bidding directly. We
 are exploring to harness business in soft switch technologies for our
 manufacturing activities. Large tenders in GSM and CDMA provide us
 enough opportunities to provide installations and commissioning and
 other infrastructure related services.
 
 The Company at present is focussing on the telecom infrastructure
 services segment. The growth in telecom infrastructure service areas is
 enormous in the coming years and it is hoped that the Company .  will
 be able to stabilize the overall performance by capturing a sizeable
 chunk of the business in these areas.
 
 The rapid growth in broadband and multimedia services has resulted in
 increased requirement of optical fibre cable (OFC) and turnkey services
 which will boost our OFC and turnkey business.
 
 Outlook
 
 The Indian economy is expected to grow at around 8% until 2020 and is
 poised to become second biggest economy of the world by 2050. About 8
 million subscribers are being added every month for the next two to
 three years making Indian telecom network to have 500 million
 subscribers and teledensity of about 50%. Telecom equipment production
 is expected to reach  billion by 2011. With all these, the outlook
 for the Company appears to be good. The focus of the Company will
 remain on telecom infrastructure services and increased attention will
 be given to business where financial requirement is less and collection
 is better.
 
 Threats, Risks & Concerns
 
 Low ARPUs, severe competition amongst Service Providers and the need to
 focus on core strengths have compelled Private Service Providers to go
 in for Managed Network Services (MNS), outsourcing the delivery and
 management of network equipment, services and applications to other
 organizations as a strategic method for improved and efficient
 operations thus allowing them to focus on their core competencies. MNS
 Service Providers are thus gaining foothold in the Indian telecom
 industry providing a challenge to conventional equipment manufacturers
 and turnkey telecom service providers like our Company.
 
 MNS Service Providers source equipments from foreign equipment vendors
 who are able to provide very attractive supplier credit terms to
 Service Providers to obtain contracts, thus making Indian manufacturers
 non competitive. Migration of the telecom network to all-IP, next
 generation networks is advantageous for foreign vendors because Indian
 manufacturers have not been able to develop and manufacture equipment
 using the new technologies.
 
 ADEQUACY OF INTERNAL CONTROL
 
 HFCL has a proper and adequate system of internal controls to ensure
 that all assets are safeguarded and protected against loss from
 unauthorized use or disposition and that transactions are authorized,
 recorded and reported correctly. HFCL has adequate internal audit
 system, covering on a continuous basis, the entire gamut of operations
 and services spanning all locations, businesses and functions,.
 
 HUMAN RESOURCE DEVELOPMENT (HRD)
 
 HFCL group has a team of experienced and competitive professionals.  In
 the ever changing telecom scenario, we recognize the need for training
 and retaining the talent pool of the Company. Hence, the Company has
 taken various initiatives in that direction. Employees have undergone
 technical trainings to further enhance their skills.  Performance
 reviews of employees are conducted on a regular basis to motivate and
 reward the performers.
 
 The policies are in the process of being reviewed to make them more
 employees friendly.
 
 SUBSIDIARIES
 
 M/s. HTL Ltd., M/s HFCL infotel Ltd. and M/s Moneta Finance (P) Ltd.
 continue to be the subsidiaries of your Company. M/s Connect Broadband
 Services Ltd. (name changed to CBSL Cable Networks Ltd. w.e.f.
 05.02.2008) ceased to be a subsidiary of M/s HFCL infotel Ltd.
 consequently it also ceased to be a subsidiary of your Company w.e.f.
 16.04.2008.
 
 As required under Section 212 of the Companies Act, 1956 the audited
 statements of accounts, along with the reports of the Directors and
 the Auditors thereon, of the above subsidiaries for the year ended 31st
 March, 2008 are not annexed as the Company has obtained the approval
 under section 212 (8) of the Companies Act, 1956 from the Ministry of
 Corporate Affairs exempting the requirements of attaching the annual
 accounts of the above mentioned subsidiaries.
 
 However, any shareholder desirous of obtaining the Annual Accounts and
 related information of the above subsidiary companies may write to the
 Company Secretary at the address given below and the same shall be sent
 by post:-
 
 The Company Secretary
 
 M/s Himachal Futuristic Communications Ltd.
 8, Commercial Complex
 Masjid Moth, Greater Kailash - II
 New Delhi-110 048
 
 The Annual Accounts of the subsidiary companies are kept open for
 inspection for the Members at the Registered Office and Corporate
 Office of the Company as well as at the Registered Office of concerned
 subsidiary companies between 10:00 A.M. to 1:00 P.M. on all working
 days upto the date of AGM.
 
 CAUTIONARY STATEMENT
 
 Statements in the managements discussions and analysis describing the
 Companys projections, estimates, expectations or predictions may be
 forward looking statements within the meaning of applicable
 securities laws md regulations. Actual results could differ materially
 from those expressed or implied. Important factors that would make a
 difference to the Companys operations include demand-supply
 conditions, raw material prices, changes in government regulations, tax
 regimes and economic developments within the country and abroad and
 such other factors.
 
 FIXED DEPOSITS
 
 The Company has not accepted any Deposits during the year.
 
 DIRECTORS
 
 Shri Y L Agarwal, Director retires by rotation at this Annual General
 Meeting and being eligible, offers himself for re-appointment.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the requirements under Section 217(2AA) of the Companies
 Act, 1956 with respect to Directors Responsibility Statement, it is
 hereby confirmed:
 
 1.  That in the preparation of the accounts for the financial year
 ended 31st March, 2008, the applicable accounting standards have been
 followed alongwith proper explanations relating to material departures;
 
 2.  That the Directors have 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
 loss of the Company for the year under review;
 
 3.  That the Directors have 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;
 
 4.  That the Directors have prepared the accounts for the financial
 year ended 31st March, 2008,on a going concern basis,
 
 AUDITORS
 
 M/s. Khandelwal Jain & Company, Chartered Accountants, Auditors of the
 Company retire at the conclusion of the ensuing Annual General Meeting
 and being eligible, offer themselves for re-appointment.
 
 
 AUDITORS REPORT
 
 The information and explanation on qualifications/observations in the
 Auditors Report are given in Annexure -1.
 
 PERSONNEL
 
 Information in accordance with the provisions of Section 217 (2A) of
 the Companies Act, 1956 read with Companies (Particulars of Employees)
 Rules, 1975 as amended forms part of this report and marked as Annexure
 - II.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS/ OUTGO
 
 The information required under Section 217 (l)(e) of the Companies Act,
 1956, read with the Companies (Disclosure of Particulars in the Report
 of the Board of Directors) Rules, 1988 with respect to these matters is
 set out in the Annexure-III and forms part of this Report.
 
 DEPOSITORY SYSTEM
 
 The Companys scrip have come under compulsory dematerialisation w.e.f.
 29th November, 1999 for Institutional Investors and w.e.f.  17th
 January, 2000 for all investors. So far 99.77% of the shares have been
 dematerialised. The ISIN no. allotted to the equity shares of the
 Company is INE548A01010.
 
 CORPORATE GOVERNANCE
 
 A separate statement on Corporate Governance along with the Auditors
 Certificate on its compliance is given as a part of the Annual Report.
 
 CHANGE OF NAME OF THE COMPANY
 
 The Board of Directors of the Company at its meeting held on 26th May,
 2008 have decided not to pursue the matter further at present regarding
 the change of name of the Company from Himachal Futuristic
 Communications Ltd. to Dynamic Infotel Ltd.
 
 ACKNOWLEDGEMENTS
 
 The Directors thank the Central Government, Government of Himachal
 Pradesh, Government of Goa, Industrial Development Bank of India, State
 Bank of India, Oriental Bank of Commerce, Unit Trust of India, Punjab
 National Bank, Bank of Baroda, Union Bank of India, Centurian Bank of
 Punjab Ltd. and other Banks and Institutions for all co-operation,
 facilities and encouragement they have extended to the Company. Your
 Directors acknowledge the continued trust and confidence you have
 reposed in this Company.  The Directors also place on record their deep
 appreciation for the services rendered by the officers, staff and
 workers of the Company at all levels and for their dedication and
 loyalty.
 
                                         For and on behalf of the Board
 Place : New Delhi                                           M P Shukla
 Date : llth August, 2008                                      Chairman