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Tata Elxsi Directors Report, Tata Elxsi Reports by Directors
Tata Elxsi
BSE: 500408|NSE: TATAELXSI|ISIN: INE670A01012|SECTOR: Computers - Software
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Download Annual Report PDF Format 2013 | 2011 | 2010
Directors Report Year End : Mar '13    Mar 12
1.  The Directors present the Twenty-Fourth Annual Report, along with
 the Audited Statements of Accounts of your Company, for the year ended
 March 31, 2013.
 2.  Financial Highlights:
 During the financial year 2012-13, the operations of your Company
 resulted in the following:
                                                        (Rs. Crores)
                             Unconsolidated            Consolidated
                           2012-13    2011-12     2012-13      2011-12
 Sales and Service          604.69     514.46      621.67       538.71
 Other income                 6.23       6.12        4.84         4.20
 Total Income               610.92     520.58      626.51       542.91
 Profit before financial 
 expenses, depreciation 
 and exceptional items       75.30      73.20       76.91        78.21 
 Less : Financial expenses    3.91       2.33        3.91         2.33
 Depreciation                23.73      20.52       23.73        20.52
 Exceptional Items           15.90          -       15.90            -
 Profit for the year         31.76      50.35       33.37        55.36
 Less : Provision for 
 Income tax                  10.77      16.40       10.99        16.65
 Share of loss from
 associate Company               -          -        1.07         4.12
 Profit after tax            20.99      33.95       21.31        34.59
 Add: Profit brought 
 forward                    111.08     107.47      113.65       109.40
 Balance available for 
 appropriation which 
 has been appropriated      132.07     141.42      134.96       143.99
 as under:
 Proposed dividend           15.57      21.80       15.57        21.80
 Dividend tax thereon 
 net of reversal thereof.     2.65       3.54        2.65         3.54
 Transfer to General Reserve  2.50       5.00        2.50         5.00
 Balance of profit 
 carried to Balance Sheet   111.35     111.08      114.24       113.65
 Tbtal appropriations       132.07     141.42      134.96       143.99
 3.  Dividend:
 Your Directors recommend for your approval, a dividend of 50% (Rs. 5.00
 per share) [previous year 70% (Rs.7.00 per share)] for the year ended
 31st March 2013, involving an outgo of Rs. 15.57 crores compared to Rs.
 21.80 crores in the previous year. Additionally, the dividend
 distribution tax will involve an outlay of Rs. 2.65 crores compared to
 Rs. 3.54 crores in the previous year,. The total payout ratio is 87%
 for this year as compared to 75% in the previous year.
 4.  Review of Operations:
 The total consolidated income during the year under review was Rs.
 626.51 crores as against Rs. 542.91 crores in the previous year,
 registering an overall increase of 15.4%.
 The Profit after Tax (PAT) was Rs. 21.31 crores, as against Rs. 34.59
 crores in the previous year. The decrease in profit is mainly due to
 retiring of the corporate guarantee given to bank for securing the loan
 for its JV entity, A2E2 and share of loss in the said JV entity.
 During the previous years, VCL undertook two significant initiatives to
 help scale its business. It expanded its studio in Los Angeles in
 anticipation of a large volume of work from Hollywood and entered into
 a Joint Venture to develop and produce its own IP. While both
 initiatives showed initial promise, the outcomes were not up to
 expectations and impacted the bottom-line of the company significantly.
 The normalised PBT before the impact of these two is higher in FY13
 than in FY12. Your company has taken suitable actions after due
 consideration on both initiatives to ensure the bottom line is not
 further impacted.
 More details are set out in the attached Management Discussion and
 Analysis Statement.
 A business-wise analysis of your Company''s two main segments viz.
 Software Development & Services, and Systems Integration & Support
 follows hereunder:
 Software Development & Services:
 The businesses constituting this segment are Embedded Product Design,
 Industrial Design, and Visual Computing Labs. This segment reported a
 revenue of Rs. 552.95 crores in FY13, registering an increase of 21.7%
 over the previous year. The segment''s profit was Rs. 62.39 crores.
 Embedded Product Design:
 The Embedded Product Design division provides technology consulting,
 new product design and development, and testing services for the
 broadcast consumer electronics, healthcare, telecom, and transportation
 industries.  It also creates and licenses intellectual property and
 software components, helping customers create product differentiation,
 and reduce development costs and time-to-market.
 Industrial Design:
 The Industrial Design division helps customers develop winning brands
 and products by using design as a strategic tool for business success.
 It provides an end-to-end design and innovation service for new
 products from consumer research and ideation, to interaction design,
 prototyping, and manufacturing support. It addresses the FMCG,
 Automotive, Healthcare, Consumer Electronics, and Retail sectors.
 It has designed award-winning packaging in the food, beverage,
 personal, and home care segments, for leading brands in India and
 It also executed several projects for interior and exterior styling of
 vehicles and the design of cutting-edge products for consumer
 electronics and healthcare.
 In the interaction design area, its design for an interactive e-sales
 book for Mahindra and Mahindra won the award for the best User
 Interface Design at the CII Design Excellence Awards 2012.
 In the FMCG packaging area, its packaging design for Ocean Herbal, a
 new Ayurvedic personal care brand, was conferred with the India Design
 Mark (I Mark). The ''I Mark'' is a prestigious design standard given by
 the Indian Design Council.
 This division has been successfully certified for ISO 13485:2003, a
 management systems standard relating to the design and development of
 medical devices.
 Visual Computing Labs:
 Visual Computing Labs (VCL) offers Animation, Visual Effects (VFX) and
 3D stereoscopic content for feature films, episodic television and
 advertising. It also offers custom content development for
 visualization and product marketing.
 This year VCL won several national and international awards including
 the Best VFX Shot of the year and Best Animated Feature Film
 (Theatrical) awards at the prestigious FICCI Frames BAF Awards 2013.
 It won the Best Special Effects award for ''Ek Tha Tiger'' at the Star
 Guild Awards 2013 (also known as Apsara Awards). It also won the Best
 Animated Feature Film (Theatrical) award for ''Arjun - The Warrior
 Prince'' at the Infocom-Assocham EME Awards 2013.
 Systems Integration & Support:
 During the year under review, the segment turnover and profit were Rs.
 68.72 crores and Rs. 1.70 crores respectively.
 This business segment integrates, installs and commissions complete
 systems and solutions for areas such as Computer Aided Design, Analysis
 and Manufacturing, Virtual Reality, High Performance Computing and
 Storage for enterprise customers. It provides best-of-breed solutions
 through partnerships and distribution agreements with leading
 international software and hardware vendors. It also provides
 infrastructure management, support and maintenance services.
 This business will continue to focus on a solutions-centric approach
 that drives higher composition of software and services in the business
 mix to improve margins.
 5.  Finance:
 Interest cost for FY13 was Rs. 3.91 crores, as against Rs. 2.33 crores
 in the previous year. Borrowings as at the end of FY13 was Rs. 58.51
 crores, compared to Rs. 34.16 crores in the previous year.
 6.  Directors:
 Mr. P.G. Mankad and Mr. P. McGoldrick retire by rotation and being
 eligible, offer themselves for re-appointment.
 7.  Directors Responsibility Statement:
 Pursuant to Section 217(2AA) of the Companies Act, 1956, your
 Directors, based on the representations received from the Operating
 Management, confirm that -
 (i) in the preparation of the annual accounts, the applicable
 accounting standards have been followed and that there are no material
 (ii) they have, in the selection of the accounting policies, consulted
 the Statutory Auditors and have applied them consistently and made
 judgments and estimates that are 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 of the Company for that year;
 (iii) they have taken proper and sufficient care, to the best of their
 knowledge and ability, 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) they have prepared the annual accounts on a going concern basis.
 8.  Personnel:
 Your Company recognizes the critical importance of its human capital.
 Capacity addition through the induction of fresh engineers and lateral
 hires are driven by the annual business planning exercise. Capacity
 addition is continuously monitored and changed, depending on the
 business demand. Your Company takes significant initiatives to increase
 efficiency through training, leadership development, and other
 9.  Disclosure of Particulars:
 Information required under Section 217(2A) of the Companies Act, 1956
 and the Rules made there under, is provided in Annexure-B forming part
 of the Report. In terms of Section 219(1) (b) (iv) of the Act, the
 Report and Accounts are being sent to the Shareholders, excluding the
 aforesaid Annexure. Any Shareholders interested in obtaining a copy of
 the same may write to the Company Secretary.
 10.  Subsidiary Company, Statement under Section 212 of the Companies
 Act, 1956 and Consolidated Financial Statements:
 The Company''s wholly owned subsidiary, Tata Elxsi (Singapore) Pte. Ltd.
 recorded a turnover of Rs.17.21 crores and Profits before Tax of Rs.
 1.93 crores during the year 2012-13, as against the previous year''s
 turnover of Rs. 26.54 crores and Profit before Tax of Rs. 2.82 crores.
 The Board of Directors of your Company has given their consent for not
 attaching to its Balance Sheet, the documents relating to its
 subsidiary specified in Section 212 (1) of the Companies Act, 1956 in
 terms of the General Circular no. 2/2011 of the MCA.
 In terms of the said circular, a statement in one page containing
 specified financial details of the subsidiary company is to be included
 in the consolidated annual financial statements of the parent Company.
 The annual accounts of the subsidiary and the related detailed
 information will be made available to the holding and subsidiary
 companies investors seeking such information at any point of time. The
 annual accounts of the subsidiary will also be kept available for
 inspection by any investor at the head office of the parent and
 subsidiary Company respectively.
 As required pursuant to the Accounting Standards of the Institute of
 Chartered Accountants of India (ICAI) and the Listing Agreement with
 the Stock Exchanges, the stand-alone annual accounts of your Company,
 along with the consolidated financial statements of your Company and
 the subsidiary Company made up to 31st March 2013, are also presented.
 11.  Corporate Governance:
 Pursuant to Clause 49 of the Listing Agreement, the Corporate
 Governance Report, the Management Discussion & Analysis Statement, and
 the Auditors'' Certificate regarding Compliance of Conditions of
 Corporate Governance are part of this Annual Report.
 12.  Acknowledgements:
 The Directors wish to thank the Company''s employees, customers,
 partners, suppliers, and above all, its shareholders and investors for
 their continued support and co-operation.
                                  On behalf of the Board of Directors
                                                        S.  RAMADORAI
 Bangalore, April 19, 2013
Source : Dion Global Solutions Limited
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