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Smartlink Network Systems
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Explore Smartlink Net connections « Mar 10
Directors Report Year End : Mar '11
TO THE MEMBERS,
 
 The Board of Directors of your Company take pleasure in presenting
 their 18th Annual Report together with Audited Balance Sheet and Profit
 & Loss Account for the financial year ended 31st March 2011.
 
 1. FINANCIAL RESULTS AND APPROPRIATIONS:
 
                                 (Rs. in million)
 
                              2010-11     2009-10
 
 Turnover (Gross)             1857.90     1556.32 
 
 Income from Services          128.00      168.52
 
 Profit Before Depreciation 
 and Tax                       288.62      360.67  
 
 Less: Depreciation for the 
 year                           75.76      117.97   
 
 Profit Before Tax             212.86      242.70
 
 Less: Provision for Tax
 
 a) Current Tax                 55.21       85.00
 
 b) Deferred Tax               (9.42)     (22.73)
 
 Profit After Tax              167.07      180.43
 
 Less: Tax adjustment of
 Previous Year                   1.46        1.78
 
 Net Profit                    165.61      178.65
 
 Balance of profit brought 
 forward                      1033.26      959.95 
 
 Amount available for
 Appropriations               1198.87     1138.59 
 
 Transfer to General Reserve    16.56       17.86
 
 Dividend                       60.01       75.01  
 
 Tax on Dividend                 9.73       12.46
 
 Balance carried forward to
 
 Balance Sheet                1112.57     1033.26  
 
 Earnings per Share (Rs.)       5.52         5.95
 
 2. PERFORMANCE AND SIGNIFICANT DEVELOPMENTS:
 
 In the financial year 2010-11, the company achieved a Turnover of Rs.
 1857.90 million representing a growth of 19.38% as compared to Rs.
 1,556.32 million in the previous year. The sales from services were
 lower at Rs. 128.00 million for the year ended 31st March, 2011 as
 compared to Rs. 168.52 million in the previous year.
 
 Net Profit after tax decreased by 7.3% to Rs. 165.61 million for the
 year ending 31st March, 2011 as compared to Rs.  178.65 million in the
 previous year.
 
 3.  SALE OF DIGILINK BUSINESS:
 
 On 31st March, 2011, the Company entered into a Business Transfer
 Agreement with Schneider Electric India Private Limited (Schneider)
 for the sale of “DIGILINK Business” to Schneider for a consideration of
 Rs. 5030 million in cash on a slump sale basis. DIGILINK Business
 includes the land and building along with manufacturing facilities
 located at Plot No. L-3, Verna Industrial Estate, Verna, Goa and land
 and building premises located at Plot No. L-30, Verna Industrial
 Estate, Verna, Goa and all assets and liabilities relating to the
 DIGILINK Business (excluding cash and cash equivalents), distribution
 network, trademarks and the employees relating to the DIGILINK
 business.
 
 On 11th May, 2011 the shareholders approved through Postal Ballot the
 sale of the DIGILINK Business'' to Schneider by passing an Ordinary
 Resolution under Section 293 (1) (a) of the Companies Act, 1956 read
 with the Companies (Passing of Resolution by Postal Ballot Rules,
 2001). The votes cast assenting to the Ordinary Resolution were
 22,502,181 shares representing 99.78 % of the total valid votes polled.
 
 On 13th May, 2011, the Closing date, the company received the aforesaid
 consideration of Rs.5030 million subject to necessary working capital
 changes and the DIGILINK Business has been transferred to Schneider
 as a going concern on a slump sale basis.
 
 The sale of DIGILINK Business constitutes discontinuing operations
 and a detailed disclosure required under Accounting Standard 24 is
 given in the notes to the financial statements in Schedule 15 (B) (3).
 
 Following the sale of the ''DIGILINK Business'', the company shall
 continue to operate its other existing business in the areas of active
 networking products under the brand name ‘DIGISOL’ and the service
 business comprising mainly of after sales service and support of all
 computer hardware products and technical call center services under the
 brand name ''DIGICARE.
 
 4.  DIVIDEND:
 
 In view of the above, your Directors declared a payment of Special
 Interim Dividend of Rs. 30/- (Rupees Thirty only) per Equity Share of
 Rs. 2/- each i.e. 1500% for the year 2011-12 at its Meeting held on
 23rd May, 2011.
 
 Your Directors have also recommended for your consideration the payment
 of dividend of Rs. 2/- each for the year 2010-11 @ 100% per Equity
 Share of Rs. 2/- each if approved by Members at the forthcoming Annual
 General Meeting.
 
 5.  EMPLOYEE STOCK OPTION PLAN
 
 The Company had Employee Stock Option Scheme, which was being
 administered by ESOP Trust and Remuneration Committee (earlier known as
 ESOP Compensation Committee) of Directors constituted as per SEBI
 Regulations. During the year 76,000 shares were exercised and the
 Employee Stock Option Plan has been terminated following the completion
 of the term of the ESOP Scheme.
 
 6.  MANAGEMENT DISCUSSION & ANALYSIS REPORT
 
 In accordance with Clause 49 of the Listing Agreement with the Stock
 Exchanges, Management Discussion & Analysis Report is attached as part
 of this Annual Report.
 
 7.  CORPORATE GOVERNANCE
 
 A separate section on Corporate Governance as well as Certificate by
 Dr. K. R. Chandratre - Practising Company Secretary, regarding
 compliance of conditions of Corporate Governance as stipulated under
 Clause 49 of the Listing Agreement with the Stock Exchanges forms part
 of the Annual Report.
 
 Disclosure on Voluntary Corporate Governance Guidelines:
 
 The Ministry of Corporate Affairs has issued a set of Voluntary
 guidelines called “Corporate Governance - Voluntary Guidelines 2009” in
 December, 2009. The guidelines include conditions for composition of
 board, appointment of directors, scope and role of audit committee,
 rotation of Auditor firms and partners, Secretarial Audit Report and
 Institution of mechanism for whistle blowing. The Company is
 substantially complying with the recommendations on Audit committee and
 whistle blower policy and is taking steps towards implementation of
 other guidelines.
 
 8.  AWARDS & RECOGNITION
 
 The Company’s efforts have been acknowledged through numerous awards
 and prestigious accolades in 2010-11 for various brands as mentioned in
 the Management Discussion and Analysis Report.
 
 9. DIRECTORS
 
 Mr. Jangoo Dalal and Mr. Dattaraj Salgaocar, Directors of the Company
 who retire by rotation at the forthcoming Annual General Meeting and
 being eligible offer themselves for re-appointment.
 
 10.FIXED DEPOSITS
 
 Your Company has not accepted any fixed deposits during the year under
 review and, as such, no amount of principal or interest was outstanding
 as on the date of Balance Sheet.
 
 11.AUDITORS
 
 The Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants,
 retire at the ensuing Annual General Meeting and are eligible for
 re-appointment.
 
 12.CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
 ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
 
 a.  Conservation of Energy and Technology Absorption: Your Company’s
 manufacturing facilities at Goa continue to maintain the prestigious
 ISO Certification under ISO 14001:2004 for Environmental Management
 System and ISO 9001:2008 for the Quality Management System from UL DQS
 Inc. a leading international certification company.
 
 Your Company continued to implement energy conservation measures during
 the year in various areas such as efficient use of air conditioning,
 provisioning of cross ventilations for the buildings and use of better
 thermal insulating materials in new aircondition installations. Rain
 Water Harvesting and recharging of ground water which was one of the
 major initiatives undertaken last year, has been completed successfully
 helping your company to contribute substantially towards water
 conservation.
 
 In continuance of the energy conservation initiative of your company,
 modernisation of the chiller units of the Air Conditioning system, is
 under active consideration.
 
 Your company was also one of the recipients of Safety Award from Green
 Triangle Society of Goa.
 
 b.  Technology Absorption:
 
 The manufacturing lines are now completely complying with the European
 Union’s RoHS requirements and your company is committed to a continous
 programme of
 technological upgradation and development of new products, processes
 and applications.
 
 New Interop Labs have been created at R&D facilities in Goa and
 Bangalore. This shall cater to the needs of the industry in test and
 measurements of the products in the niche technology areas such as
 VoIP, Internetworking and Network Security. Another initiative has been
 taken to get your Goa infrastructure facilities approved by
 Telecommunication Engineering Center.
 
 The company''s Research & Development Centre''s at Bangalore and Goa has
 been recognized by Department of Scientific and Industrial Research
 (DSIR) and the expenditure on the same is stated in Schedule 15 B -
 Notes forming part of the Accounts.
 
 c.  Foreign Exchange Earnings and Outgo:
 
 Total foreign exchange earnings and outgo is stated in Schedule 15 B -
 Notes forming part of the Accounts.
 
 13.PARTICULARS OF EMPLOYEES:
 
 Particulars of employees as required under the provisions of Section
 217 (2A) of the Companies Act, 1956 read with the Companies
 (Particulars of Employees) Rules, 1975, as amended, forms part of this
 report. However, in pursuance of section 219(1) (b) (iv) of the
 Companies Act, 1956, this report is being sent to all the members of
 the company excluding the aforesaid information and the said
 particulars are made available at the Registered Office of the Company.
 The members desirous of obtaining such particulars may write to the
 Company Secretary at the Registered Office of the Company.
 
 14.CONSOLIDATED FINANCIAL STATEMENTS:
 
 In accordance with Accounting Standard - 21 on Consolidated Financial
 Statements, the audited consolidated statements including the financial
 results of the 100% subsidiary, Digilink Middle East FZE has been
 provided in the Annual Report.
 
 The Company has availed the exemption given under Notification No:
 51/12/2007-CL-III dated 8th February, 2011 issued by the Ministry of
 Corporate Affairs, Government of India, and accordingly the Balance
 Sheet, Profit and Loss Account and other documents of the subsidiary
 company are not being attached with the Balance Sheet of the Company.
 
 The information relating to the subsidiary company as required under
 the aforesaid circular is being provided by way of a separate note in
 the consolidated financial statements. The Company will make available
 the Annual Accounts of the subsidiary company, M/s Digilink Middle East
 FZE to any member/investor of the Company who may be interested in
 obtaining the same. The annual accounts of the subsidiary company are
 also available for inspection at the Registered Office of the Company.
 
 15.DIRECTOR’S RESPONSIBILITY STATEMENT:
 
 As required under Section 217(2AA) of the Companies (Amendment) Act,
 2000, your Directors hereby state and confirm that
 
 a) in the preparation of annual accounts, the applicable accounting
 standards have been followed and that no material departures have been
 made from the same.
 
 b) appropriate accounting policies have been selected and applied
 consistently and 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 as at March 31, 2011 and the profit of the
 Company for the financial year ending on March 31, 2011.
 
 c) proper and sufficient care has been taken 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.
 
 d) the annual accounts have been prepared on a ''going concern’ basis.
 
 16.ACKNOWLEDGEMENTS
 
 The Board wishes to thank the customers, vendors, dealers,
 distributors, resellers, bankers and shareholders for their continued
 support. Your Directors also thank the Goa Industrial Development
 Corporation, State Industries and Electricity Departments for their
 continuing support.
 
 Your Directors wish to place on record their appreciation of the
 continued excellent work done by all the employees of the Company
 during the year.
 
                                  For and on behalf of the Board
                                                      K. R. NAIK
                                              Executive Chairman
 
 Place :Mumbai 
 
 Dated :23rd May, 2011
 
 
Source : Dion Global Solutions Limited
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