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MRO-TEK Directors Report, MRO-TEK Reports by Directors

MRO-TEK

BSE: 532376  |  NSE: MRO-TEK  |  ISIN: INE398B01018  |  Computers - Hardware

Explore MRO-TEK connections « Mar 07
Directors Report Year End : Mar '08
The Directors have pleasure in presenting herewith their Twenty Fourth
 Annual Report on the activities of your Company during the year ended
 31 March 2008.
 
 FINANCIAL RESULTS
 
                                         2007-2008      2006-2007
                                        (Rs. Lacs)     (Rs. Lacs)
 
 Net Revenue                             13,952.95     11,554.18
 Profit before Depreciation               2,402.91      1,803.83
 Depreciation                               259.60        297.14
 Profit before Taxation                   2,143.31      1,506.69
 Provision for Taxation                     585.24        434.88
 Profit after Taxation                    1,558.07      1,071.81
 Prior year income /(expenditure)             8.29        (21.62)
 Balance for appropriations               1,566.36      1,050.19
 
 APPROPRIATIONS
 To General Reserve                         160.00        150.00
 To Interim Dividend paid - 20%
 (previous year-20%)                        189.86        204.30
 To Dividend Tax
 (on interim dividend)                       32.27         28.65
 To Final Dividend - 40%
 (previous year-20%)                        379.72        207.42
 To Dividend Tax
 (on final dividend)                         64.53         35.25
 To carry-over to Balance Sheet             739.98        424.57
 
 DIVIDEND
 
 Higher revenue and profits during the year, provide adequate scope for
 your Directors to recommend a final dividend at a higher percentage of
 40 (Re 2 per share), in addition to the Interim dividend of 20% (Re 1
 per share) disbursed in February 2008, thereby aggregating to a total
 dividend of 60% for the year, amounting to Rs 3 per share of face value
 Rs 5 each.
 
 PERFORMANCE
 
 During the year under review,
 
 a steady boom in the telecom sector, resulting in need by the
 service-providers to enlarge their capacity and infrastructure,
 provided the much-needed scope for your company, to increase its sales
 - both by volume and value;
 
 * unswerving trust, by the customers, in products of your company, was
 accomplished by strict adherence, by your company, to quality,
 cost-control & prompt service, which also facilitated combating the
 persisting competition & pressing market situations;
 
 * with the above, your company achieved a Net Sale Revenue of Rs.
 13,227 lacs, higher by 20% approx as compared to that of the previous
 year;
 
 * Total Revenue increased from Rs 11,554 lacs to Rs. 13,953 lacs
 resulting in PBT of Rs.2,143 lacs and PAT of Rs. 1,558 lacs, higher by
 42% and 45% respectively, compared to that of previous year;
 
 * plant capacity was augmented to adequately meet the growing demand
 and the technology changes, with addition of requisite equipment,
 re-orientation of production activity/line and implanting certain
 manufacturing process controls and improvisations.
 
 PROSPECTS & OUTLOOK
 
 a Thrust for development in communication sector, present and projected
 growth in mobile telephony infrastructure, 3G, Internet, IPTV and
 Broadband, together with ever-growing awareness and demand by Banking,
 Finance, Insurance and Corporate sectors, and developing requirement of
 State Wide Area Network (SWAN) ensure incessantly increasing market
 demand for the products of your company;
 
 * staunch thrust in In-house R&D activity provides added scope for
 increasing the product-spread;
 
 * in this setting, your directors are confident that your Company would
 sustain the accomplished growth in Revenue, and Profits, in the coming
 years.
 
 FINANCE
 
 During the year under review,
 
 * the buyback scheme was implemented, with 17,55,554 equity shares
 bought-back and extinguished, resulting in cash outflow of Rs 825 lacs;
 consequently, the Paid-up Capital reduced from Rs 1,037.08 lacs to Rs
 949.30 lacs comprising of 189,85,974 equity shares of Rs 5 each;
 
 1 Deposits with the Bank increased from Rs 3,000 lacs to Rs.3,950 lacs;
 
 1 all the above being financed out of internal generations, your
 company continued to sustain DEBT-FREE status;
 
 1 book value per share as at 31 March 2008 stood at Rs. 49.24 as
 compared to Rs.44.44.
 
 Your Directors place on record their sincere appreciation for the
 assistance, guidance, co-operation and whole- hearted support from your
 companys bankers.
 
 JOINT VENTURE
 
 In the process of re-structuring its operations, to reap the best
 benefit/s and to minimize operational and administrative time, as well
 as expenditure, the activities in RAD-MRO Manufacturing Pvt. Ltd., the
 Joint Venture Company, have been suspended effective from November
 2007. Further actions for (voluntary) winding-up of the company have
 been initiated.
 
 As has already been conveyed through a communique issued to/through the
 Stock Exchanges, such closure of the JV company shall not affect the
 activities and the business or commercial interests of your Company, as
 adequate arrangements have already been made for availing supply of the
 components, directly from RAD Data communications Limited, Israel, the
 overseas partner in the Joint Venture Company.
 
 For the year ended 31 March 2008, as per provisional figures pending
 audit finalization, this JV company has achieved a total revenue of Rs.
 1,675 lacs, with a PBT of Rs.118 lacs and PAT of Rs. 86 lacs.
 
 HUMAN RESOURCES & INDUSTRIAL RELATIONS
 
 Your company endeavors to attract the best available talents in the
 industry, recognize, register and retain the most-valuable human power.
 
 Information relating to the implementation of the Employee Stock Option
 Scheme has been detailed elsewhere in this report.
 
 Information as per Section 217(2A) of the Companies Act, 1956 read with
 the Companies (Particulars of Employees) Rules, 1975, as amended from
 time to time, forms part of this Report. However, as per the provisions
 of Section 219(l)(b)(iv) of the Companies Act, 1956, the Report and
 Accounts are being sent to all the members, excluding the statement
 containing the particulars of employees to be provided under Section
 217(2A) of the Companies Act, 1956. Any member interested in obtaining
 such particulars may inspect the same at the Registered Office of the
 Company or write to the Company Secretary for a copy.
 
 EMPLOYEE STOCK OPTION SCHEME (2005)
 
 Under approval for grant of 10,00,000 equity shares under the ESOS
 scheme cleared by the members at their Annual General Meeting held on
 10 August 2005, read with amendments approved on 28 June 2006, your
 company had granted and allotted, in the first tranche, a total of
 3,11,400 equity shares. Out of the balance of 6,88,600 shares, options
 equaling 5,50,000 shares have been granted, in October 2007, to the
 employees of the Company, carrying a vesting period of 12 months.
 
 No options have lapsed or have been exercised, during the year under
 review. The exercise price being payable only at the time of exercising
 the options, during the year under review, no money has been realized
 on this account.
 
 In respect of 5,50,000 options granted during the year, in order to
 recover, in addition to exercise price, the incidence of applicable FBT
 from the grantees, your Directors have proposed a resolution for
 suitably amending the Scheme, and commend the same for your
 consideration.
 
 No employee has been granted 5% or more of the options during the year
 and / or options equal to exceeding 1% of issued capital of the company
 at the time of grant. Total options granted includes, grants to senior
 management personnel, viz., CFO of the Company, at 1,00,000 options.
 
 The exercise price has been fixed at approximately 46% of the market
 value, and other relevant details pertaining to ESOS have been
 furnished also under Notes to accounts.
 
 The total amount considered for charging to employee compensation
 cost using intrinsic value method, is higher by Rs 1,14,23,129 as
 compared to computation under the the fair method under Black &
 Scholes Method. As such, the amount charged to the Profit & Loss
 account of this year would have been lower by Rs 50,08,663 & the EPS
 would have been higher by Rs 0.25.
 
 In computation of fair-value, following assumptions have been made:
 
 Risk-free interest rate                               7.50%
 
 Expected life of the options                          12 months
 
 Expected volatility                                   22.91%
 
 Expected Dividend                                     60.00%
 
 Price of share in the market at the
 time of option grant                                  Rs 43.20
 
 Weighted average exercise price
 per share                                             Rs 20.00
 
 Weighted average fair value per share                 Rs 22.43
 
 BUY BACK
 
 The buyback scheme reported in the previous Annual Report was completed
 on 17 October 2007, the requisite details pertaining to which, are
 furnished under Schedule 18 -• Notes to accounts.
 
 Your Directors are happy to intimate you that the intended benefits, to
 the remainder shareholders, envisaged under the said Buy Back Scheme,
 have duly been accomplished even in this year now under review, and
 further benefits would accrue in the coming years.
 
 INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY
 
 Your company remains committed to maintain, high standards of internal
 control designed to provide adequate assurance on the efficiency of
 operations and security of its assets. The adequacy and effectiveness
 of the internal control across various activities, as well as
 compliance with laid-down systems and policies are comprehensively and
 frequently monitored by your Companys management at all levels of the
 organization. The Audit Committee, which meets at-least four times a
 year, actively reviews internal control systems as well as financial
 disclosures.
 
 CONSERVATION OF ENERGY
 
 During the year under review, efforts continued to conserve and avoid
 wastage of energy in every possible way.
 
 RESEARCH & DEVELOPMENT
 
 The products developed in this division and commercialized by your
 company registered a higher contribution to the Net Sale Revenue during
 the year.
 
 Your Company continues its intensified thrust on the R&D activities,
 duly taking cognizance of the need for increasing product-spread in the
 ever-increasing demand scenario.  Efforts are maintained in developing
 niche products for niche markets, to meet the demand envisage to arise
 from the onset of IPTV and Broad Band activities.
 
 During the year under review, an amount of Rs. 63.94 lacs (Prev. year-
 Rs. 14.15 lacs) has been invested in equipment and an amount of Rs
 505.13 lacs (Prev. year- Rs. 449.95 lacs) has been defrayed towards
 Revenue Expenses, which has been absorbed in these accounts, in
 accordance with the attending accounting standards.
 
 TECHNOLOGY ABSORPTION
 
 The in-house technical and commercial teams consistently engage
 themselves in their endeavor to indigenize technology and components,
 as well as implementation of value-engineering and cost-saving methods.
 
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 Development of overseas market for the products of your Company, as
 also development of products required for the overseas market, are
 progressing satisfactorily. Efforts also continue to minimize foreign
 exchange outflow by the process of indigenization.
 
 Full details of foreign exchange earnings and expenditure are furnished
 under note no. 19 and 20 of Notes on Accounts.
 
 CORPORATE GOVERNANCE
 
 A detailed compliance note on Corporate Governance, as required under
 the provisions in the listing agreement with the Stock Exchanges,
 together with the certificate of Statutory Auditors thereon, is
 attached to this report.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 As requisite and appropriate Management Discussion & Analysis is
 covered under this Report itself, a separate note on the same is not
 being furnished.
 
 DIRECTORS
 
 The present five-year tenure of S.Narayanan and H.Nandi, as Chairman &
 Managing Director, and Managing Director, respectively of the Company,
 ended on 31 March 2008.
 
 Based on the recommendations of the Remuneration Committee and the
 Board of Directors, approval of the members is now sought for
 re-appointment of S.Narayanan and H.Nandi, as Chairman & Managing
 Director, and Managing Director, respectively of the Company, for a
 period of five years effective from 1 April 2008 to 31 March 2013, on
 terms and conditions detailed in the Notice.
 
 N Sivaram and A.Murali retire by rotation at this meeting, and being
 eligible, offers themselves for re-appointment.
 
 Your Directors commend the above for your approval.
 
 AUDITORS
 
 M/s. Narayanan, Patil & Ramesh, Chartered Accountants, Bangalore,
 retire as Statutory Auditors at the conclusion of this Annual General
 Meeting. Being eligible for re- appointment, your Directors recommend
 the same for your consideration.
 
 ACKNOWLEDGEMENTS
 
 Your Directors place on record their sincere gratitude to the steadfast
 patronage of the valued Customers. Your Directors also place on record,
 their sincere appreciation of the dedication and commitment of the
 employees at all levels, who have together been responsible for the
 growth of the Company.
 
 Your Directors wish to register their acknowledgement and appreciation
 for the timely support and co-operation being extended by the Banks and
 all their officials.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 As required under Section 217(2AA) of Companies Act, 1956, your
 Directors hereby confirm that in the preparation of these annual
 accounts, the applicable accounting standards have been followed and no
 material departures have been made from the same;
 
 * they have selected such accounting policies and applied them
 consistently and made judgements and estimates that are reasonable and
 prudent so as to give a tpue and fair view of the state of affairs of
 the Company at the end of the financial year and of the profits for
 that period;
 
 * they 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; they have
 prepared annual accounts on a going concern basis.
 
                            for & on behalf of  the Board of Directors
 
 Place : Bangalore                              S. Narayanan
 Date  : 14 May 2008                      Chairman & Managing Director
Source : Religare Technova

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