The Directors have pleasure in presenting the Eleventh Annual Report
and the audited statements of accounts for the year ended 31st March,
(Rupees in Crores)
Particulars Year ended 31st March, 2005
31st March, 2006 (15 Months)
Sales and other income 265.72 317.40
Cost of goods sold 189.60 221.67
Contribution Margin 76.12 95.73
Administrative & other expenses 68.94 85.55
Earnings Before Interest & Tax (EBIT) 7.18 10.18
Profit Before Tax (PBT) 2.88 5.49
Tax (0.29) 1.48
Profit After Tax (PAT) 3.17 4.01
Profit brought forward from previous year 4.50 5.04
Add/(Less): Tax relating to earlier years (0.01) 0.27
Total available for appropriations 7.66 9.32
-Proposed Dividend 1.32 1.59
-Tax on Dividend 0.19 0.23
-Transfer to General Reserve - 3.00
Surplus in Profit and Loss account 6.15 4.50
The Directors are pleased to recommend a dividend of Re.0.75 per equity
share of Rs.10/- each for the year. The dividend, if approved by the
shareholders, would absorb Rs.1.32 Crores and the proposed dividend
will be paid to all those shareholders whose names appear in the
Register of Members of the Company as on 21st September, 2006
(beginning of the day) in case of shares held in electronic form and as
on 28th September, 2006 in respect of shares held in physical form.
REVIEW OF PERFORMANCE
The net turnover of the company was Rs.259 Crores for the year. On a
comparable basis this represents a growth of 16% over a turnover of
Rs.223 Crores, excluding Payment Systems in the corresponding period of
the previous year.
The Products and Solutions (P&S) business group consisting of Printers,
Supplies, Keyboards, POS and Solutions, registered 11% growth with
revenue of Rs.178 Crores excluding Payment system products during the
year compared to Rs.161 Crores during the corresponding period in
previous year. The market share in value terms for DMP was at 41% on an
average during the year as compared to 40% during the corresponding
period in previous year.
The Customer Support (CS) business group consisting of contract
manufacturing for OEMs, traded products like Set Top Box and field
support business generated revenue of Rs. 81 Crores during the year as
against Rs.62 Crores last year, thereby registering 31% growth. The
Contract Manufacturing business grew by 17% during the year generating
revenue of Rs. 65 Crores compared to Rs.56 Crores during the
corresponding period in previous year.
The businesses have generated a net cash of Rs.18.45 Crores from
operations during the year under review. It is significant to note that
there has been a reduction in the Companys borrowings from Rs.95.30
Crores to Rs.88.60 Crores. During the year, we had undertaken a close
review of working capital and fixed assets for improving capital
productivity. Based on a detailed analysis and assessment, a sum of
Rs.31.63 Crores was charged off.
The Company launched Total Cost Management Program to improve cost
productivity by driving efficiencies in manufacturing and supply chain
achieving a savings of Rs.7 Crores during the year.
The Company has transferred its unutilised property at Nandambakkam to
its wholly owned subsidiary, Sravanaa Properties Ltd., for a sum of
Rs.45 crores with a purpose to develop the property in view of
burgeoning real estate market for IT Park in Chennai. This will provide
the economic support for the growth of the existing businesses.
The company has not accepted any fresh deposits and renewals during the
year under review. Unclaimed deposits amounting to Rs.1.27 lakhs at the
end of 31st March, 2006 will be credited to the Investor Education and
Protection Fund after a lapse of seven years.
Mr. Srini Nageshwar and Mr. R R Nair, Directors, retire by rotation at
the ensuing Annual General Meeting and being eligible, offer themselves
During the year, Dr Sridhar Mitta who was co-opted as Additional
Director by the Board on 25th January 2006, in terms of Section 260 of
the Companies Act, 1956, will hold office up to the date of the ensuing
Annual General Meeting of the Company. Notice has been received from a
member of the Company proposing his candidature for the office of the
Director in terms of Section 257 of the Companies Act, 1956.
Mr S Shreenivasa Rao, Director resigned with effect from 31st March,
2006 from the Directorship due to personal reasons. Mr S Shreenivasa
Rao had association of nearly one decade with various TVS Group
Companies. The Board of Directors wish to place on record their deep
sense of appreciation for the valuable contribution made by him.
During the year, the Company acquired 100% of the equity share capital
of Sravanaa Properties Ltd., which is engaged in property development,
by acquiring 50,000 equity shares of Rs.10/- each for cash at par
amounting to Rs.5 lakhs. The reports and accounts of the Subsidiary
Company (Consolidated) along with the Statement pursuant to Section 212
of the Companies Act, 1956 are annexed.
M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai, the
Auditors of the Company retire at the ensuing Annual General Meeting
and are eligible for re-appointment.
EMPLOYEE STOCK OPTION SCHEME
Out of the total obligation of 2,11,000 options issued to the eligible
employees of the Company under the Employees Stock Option Scheme (ESOP)
79,000 options granted to nine employees lapsed on account of their
resignation. 1,32,000 stock options are still in force as at March 31,
2006 and these options were issued at the rate of Rs.70/- per share and
entitles the holder thereof to apply for and be allotted one equity
share of the company of the nominal value of Rs.10/- each on payment of
the exercise price during the exercise period. No fresh ESOP options
have been issued during the financial year ended 31st March, 2006. As
required by the Securities and Exchange Board of India, the details of
the stock option scheme was disclosed in the notice calling the
previous Annual General Meeting of the shareholders for the meeting
held on 8th August, 2005.
Details of the options granted and options in force as required under
Clause 12 of the Securities and Exchange Board of India (Employee Stock
Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999 are
set out in Annexure A to this Report.
As required by the provisions of Section 217 (2A) of the Companies Act,
1956 read with Companies (Particulars of Employees) Rules, 1975 as
amended, the name and other particulars of the employees is set out in
Annexure B to the Directors Report.
AWARDS AND RECOGNITIONS
The company has won many awards and recognitions in 2005-06. This list
amongst others include the following:
* Products & Solutions Business Group has been certified for ISO
9001:2000 Quality Management systems by TUVRheinland (India) Pvt. Ltd
* TVS-E has been ranked among the top 3 India IT Brands-PC Quest
* Bhoomi Brand Award from 360 Magazine for Best Dot Matrix Printers
* Bhoomi Brand Award from 360 Magazine for Best Keyboards 2005.
* VAR INDIA Award for Best Dot Matrix Printers 2005.
* VAR INDIA Award for Best Keyboards 2005.
REPORT ON ENERGY CONSERVATION AND R&D ACTIVITIES
During the year, the Company invested Rs.4.42 Crores which is 2.06% of
its core products sale in Research and Development.
Information relating to energy conservation, foreign exchange earned
and spent and research and development activities undertaken by the
Company in accordance with the provisions of Section 217(1)(e) of the
Companies Act, 1956 read with Companies (Disclosures of particulars in
the report of Board of Directors) Rules, 1988 are given in Annexure C
to the Directors Report.
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 217(2AA) of the Companies Act, 1956, the Directors
hereby state that
i) in the preparation of the annual accounts, the applicable Accounting
Standards had been followed along with proper explanation relating to
ii) the Directors had selected such Accounting Policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and a fair view of the state of
affairs of the Company at the end of the financial year (namely 31st
March, 2006) and of the profit of the Company for that year;
iii) the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
(iv) the Directors had prepared the annual accounts on a going concern
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges
where the shares of the company are listed, Corporate Governance Report
is made part of the Annual Report.
In compliance of Section 292A of the Companies Act, 1956 the company
has constituted the Audit Committee consisting of Mr. Srini Nageshwar,
Mr. S R Vijayakar and Mr. H Lakshmanan as its members. During the year.
Dr Sridhar Mitta was appointed member of the Audit Committee in the
meeting held on 25th January 2006.
The Company has constituted an Investors Grievance Committee to deal
with complaints and grievances of the Investors. The Company has also
constituted a Remuneration/Compensation Committee consisting of
four Directors of which Mr. R R Nair, Mr. Srini Nageshwar, Mr. S R
Vijayakar are independent Directors and Mr H Lakshmanan as its Member.
The members of the remuneration committee also acts as the compensation
committee which administers and superintends the stock option plan of
MANAGEMENT DISCUSSION AND ANALYSIS
As required under Clause 49 of the Listing Agreement, a detailed Report
on Management Discussions and Analysis is given below:
1. The Industry and Trends
The Indian personal computer market continues its robust growth and is
growing at the rate of 20% this year. The sales of PCs in India was 4.6
Mn units during the year as compared to 3.6 Mn units during the
previous year. Compounded Annual Growth Rate for the PC market is
likely to be 23% for the next 5 years. Similarly DMPs market was 5 Mn
units during the year as compared to 4.3 Mn units during the previous
year growing by 16%. Similarly T4+ market is predicted to grow in
excess of 30% for DMR
The key growth drivers are expansion in retail automation, e-governance
initiatives by both Central and State Governments, banking automation,
e-learning and rural ICT (Information Communication & Technology). The
total IT spend for the coming year is estimated at Rs.35 Billion for
Banking & Financial Services Institution (BFSI) as per DQ-IDC annual
mega spenders survey. This translates into opportunity for transaction
printers and Point of Sale printers. The Company will benefit by these
trends, as demands for its products will continue to grow. The Company
is also exploring entry into non-impact printer market.
The Companys field support extends to as much as 300 towns through its
500 strong Authorised Service Partners. As computerization is reaching
even the smaller towns, the company is poised to expand its customer
service net work to benefit from this demand for services.
In contract manufacturing, large foreign Electronic Manufacturing
Service (EMS) companies have made significant investments in India with
facilities at global scale. We are challenged in generating new
customers meeting our profit criteria. Therefore the effort is on
scoping ways and means to leverage economic benefit based on the
2. Review of Performance
Our company continues to maintain its leadership in Dot Matrix Printer
segment with a market share of over 41 % in value terms during the
year. The DMP market grew by 16% in volume terms during the year as
against 13% in previous year. Our company has been recently ranked as
No.2 by Gartner in the Asia Pacific Dot Matrix Printer market and as
one of the fastest growing companies in Asia Pacific region comprising
India Sub continent, China, ASEAN countries and Australia-New Zealand.
The keyboard business also rode the market growth and generated revenue
of Rs. 22 Crores against Rs.16 Crores last year. TVS-E mechanical key
boards continue to hold a dominant market share and enjoys Brand
preference by customers.
Our geographic expansion drive in T3+ market has resulted in sales
value growth in excess of 40% during the year.
A technology group has been formed to focus on creating products for
growth. Significant investment has been made for new product
development to support market demand and growth.
The customer support business continues to acquire new clients in IT
and Telecom sectors. The field support business grew by over 50% as
compared to the previous year.
The drive on internal efficiencies resulted in cost savings in excess
of Rs.7 Crores and the migration to Himachal Pradesh during the year
was successful as a result of meticulous planning and execution by
3. Risks & Opportunities
The major risk for DMP products is from the non impact printers and we
are responding by constantly improving the print quality and speed
coupled with our entry into non impact printing during the forthcoming
year. The presence of foreign companies in the IT hardware products
poses a global competitive scenario for us in India and we are
challenged in the market for our products and services.
The continuous fall in prices for DMP products poses a tough challenge
for the organisation and we are geared to meet the same through
rigorous cost management projects year on year. The price increase of
base metals and plastics continue to exert pressure on profitability
which we have to face in the coming year. The organisation has been
responding to these challenges through global sourcing and also
migrating to Himachal Pradesh to support profitable growth.
The sustained growth in PC products and introduction of VAT in 23
States has given a tremendous boost to the printing business as the
need for more invoice and bill printing will drive demand for dot
matrix printers. Large scale departmental automation by the Indian
Government and implementation of core-banking solutions by all the
large banks offer wide scope for Dot Matrix Printers.
We continue to strategise products and services in the areas of non
impact printing; special printing solutions and explore growth outside
India during the coming years.
As far as contract manufacturing is concerned the organisation is
exploring ways and means of realising economic value from the current
4. Internal Control Systems & their adequacy
The organisation has a well established system of internal control with
schedule of authority and powers, besides operating policy guidelines.
The system of internal controls and internal audit ensures not only
compliance but also acts as a measure of performance. The audit
committee of the Board reviews the findings and recommendations of the
internal audit report periodically.
5. Business Planning and Information Technology
In order to achieve the overall corporate goals, the company has a
robust process of business planning system ensuring active involvement
and ownership, ultimately leading to achievement of planned business
results. The processes include medium term strategy formulation, annual
and quarterly plans and periodic reviews driving the organisation on
weekly axis supported by dashboard and scorecards
The introduction of SAP an Enterprise Resource Planning (ERP) system
during the year under review has facilitated effective and efficient
information dissemination for decision making.
6. Quality Management
The company has a TQM vision with a strong focus on road map of
essential building blocks. The investment in Six Sigma during earlier
years continues to drive the process improvements. Efforts are on in
the area of New Product Development thereby building robustness and
speed for New Product Introduction. The projects for improving the
Customer Satisfaction Index (CSI) directly contribute to business
success. The Total Employee Involvement (TEI) program supports the
drive for quality. The companys manufacturing plants located at
Tumkur and Guindy are ISO 9001 certified.
7. Human Resource Development
Performance and Leadership are the corner stones for HR in the
organisation. Significant investment year after year is made on people
through extensive training programs. The annual planning process with
goal setting workshops facilitate performance standards which is
supported through digitised performance management systems for
evaluation. In order to encourage employees to continuously excel in
their endeavour, performance linked compensation is implemented
throughout the organisation. The position evaluation and value
operationalisation have further built strong MR fundamentals.
Safety of products to customers and safe manufacturing practices are
critical part of our value system. Continuous training and audits are
conducted during the year. We maintain our consistent track record in
terms of zero reportable accidents in the factories for several years
9. Corporate Social Responsibility
We are actively engaged in corporate social responsibilities through
employees, organising medical programs, blood donation camps and
village rehabilitation programs. We impart digital techniques in social
transformation at schools and hospitals. Free education program and
medical services are part of our consistent social commitment.
In recognition of the humanitarian services, the Government of India
has conferred on the Company with `Nirmal Gram Puraskar Award towards
implementation of sanitation program in Thiruvidanthai. The Rotary Club
of Bangalore recently conferred the Company with `Best Corporate
The Directors wish to place on record their appreciation for the
committed service of employees of the Company for its success.
The Directors would also like to express their grateful appreciation
for the assistance and co-operation received from the customers, dealer
partners, bankers, financial institutions, business partners and its
Group Companies TVS Investments Limited and Sundaram-Clayton Limited
during the year.
The Directors thank the shareholders for the continued confidence and
trust placed by them with the Company.
For and on behalf of the Board
Chennai VENU SRINIVASAN
June 28, 2006 Chairman
The Statements made in the Management Discuss/on and Analysis section
of the above Report describing the Companys objectives, expectations
or predictions may be forward looking within the meaning of applicable
securities laws and regulations. Actual results may differ materially
from those expressed in the statement. Important factors that could
influence Companys operations include global/domestic supply and
demand conditions affecting selling prices of finished goods, input
availability and prices, changes in government regulations, tax laws,
economic developments within the country and other factors such as
litigation and industrial relations.
Annexure `A to the Directors Report for the year ended 31st March,
Statement as at 31.3.2006 pursuant to Clause 12 (Disclosure in the
Directors Report) of the SEBI (ESOP & ESPS) Guidelines, 1999.
Employees Stock Option Scheme 2003 (ESOP-2003)
a) Options Granted : 2,11,000 options granted on 1.1.2003.
b) Pricing Formula : Average of the market price quoted in the National
Stock Exchange three months preceding the date of grant, rounded off to
the nearest rupee.
c) Options Vested : 2,05,933
d) Options Exercised : Nil
e) The total no. of ordinary shares arising as a result of exercise of
options : Nil
f) Options lapsed : 79,000
g) Variation of terms of options : Nil
h) Money realized by exercise of options : Nil
i) Total no. of options in force : 1,32,000
j) (i) Details of options granted to Senior Managerial Personnel during
the year : Nil
(ii) Any other employee who receives a grant in any one year of option
amounting to 5% or more of options granted during the year : Nil
(iii) Identified employees who were granted options, during any one
year, equal to or exceeding 1 % of the issued capital (excluding
outstanding warrants & conversions) of the Company at the time of grant
k) Diluted earnings per share (EPS) pursuant
to issue of shares on exercise of option calculated in accordance with
the International Accounting Standard (IAS 33) : Not Applicable
For and on behalf of the Board
Chennai VENU SRINIVASAN
June 28, 2006 Chairman
1. Years of experience include experience prior to joining the company
2. Remuneration comprises of salary, dearness allowances wherever
applicable, house rent allowance, special allowance, conveyance
allowance. Contribution to Provident Fund. Super-Annuation Fund,
Medical Insurance Premia, Leave travel assistance and other benefits
but does not include onetime compensation paid under Voluntary
3. Besides, the above employees are entitled to Gratuity as per Rules
4. Employee Stock Options as approved by Compensation Committee in
terms of SEBI (Employee Stock Opation Scheme and Employee Stock
Purchase Scheme) Guidelines 1999 have been issued to certain employees
of the company,
5. Terms of employment of all the employees mentioned above are
6. None of the above employees is related to any of the directors.
7. None of the employees either individually or together with spouse or
children holds more than two percent of the equity shares of the
For and on behalf of the Board
Chennai VENU SRINIVASAN
28th June, 2006 Chairman
Annexure C to the Directors Report
Annexure C to the Directors Report for the year ended 31st March,
Information as required under Section 217(1) (e) of the Companies Act,
A. CONSERVATION OF ENERGY
(a) Measures taken:
a. Timer Units and Energy Savers have been installed to control and
optimise energy consumption in most of the electrical appliances at the
b. Introduced new type of Motors for use with Dot Matrix Printers which
saves upto 40% of the power compared to the earlier versions of the
c. Introduced Optimised design in UPS to save battery discharge during
no load conditions.
(b) Proposed measures:
a. Development of new series of Printers with energy save mode in High
Speed Dot Matrix Printers.
b. New design (switched mode design) to provide faster charging which
improves the efficiency.
B. TECHNOLOGY ABSORPTION
1. Specific areas in which R&D was carried out by the Company:
i) Dot Matrix Printers
* Print Heads Design and Development of new high speed 9 Wire & 24 Wire
* New carriage Motor driver 1C for 30% faster printing speeds
* Design and Development of Entry level Transaction printer for small
print width applications-Miniprinters
* Development of new type Ribbon cassettes for non black printing
ii) Retail Computer System
* Customisation of POS system for INDIAN markets with local language
content and support.
As a part of value enhancement, the company has successfully:
* Completed the implementation of built in UNICODE emulation for 9
Indian Languages for its MSP 4XX series of printers.
* Developed the capability to design new heat sinks for optimising the
thermal performance of the print head to meet the customer requirements
and exceed competitor printer specifications.
2. Future plan of action
New product launches are planned this year, to offer higher value
performance for our customers through in house design which meets
international standards of quality and reliability.
* Printers-High Speed Dot Matrix Printers and Miniprinters.
* Consumables-New Print Heads and Ribbons
3. Expenditure on R&D
Capital Expenditure : Rs. 128.58 Lakhs
Revenue Expenditure : Rs.313.24 Lakhs
Total expenditure as a percentage of total turnover : 1.70 %
4. Technology absorption, adoption and Innovations
a) Efforts in brief
All R&D Personnel have been trained in NPI program for new product
development and also in their respective domain by experts in the field
of print head manufacturing.
b) Benefits derived as a result of the above efforts
During the year new competencies have been built in the following
- New driver ICs for Bipolar stepper motor
- Design of new heat sinks for print head optimisation
- Design of electro magnets for optimisation of power and temperature
in print head
- Development of printers to meet UNICODE standards
- Design of miniprinters for transaction printing segments
c) Technology absorption
The company has been focusing on developing in-house strengths for the
design and manufacturing of printers, print heads, ribbon consumables,
Retail Computer System. All the products developed in-house confirms to
all international product quality certifications to establish the
leadership position in the respective category.
C. EXPORT ACTIVITIES
The Company exported Un-interruptible power systems & Printers.
(a) Total Forex earned : Rs. 3,675.61 Lakhs
(b) Total Forex used : Rs.10,120.26 Lakhs
For and on behalf of the Board
Chennai VENU SRINIVASAN
June 28, 2006 Chairman