The Directors are pleased to present the Thirteenth Annual Report and
the audited accounts for the year ended 31st March, 2008.
This report include the Management Discussion and Analysis.
The highlights of the financial performance of the Company are as
Particulars Year ended Year ended
31st March, 2008 31st March, 2007
Sales 20764.02 27241.80
Other Income 764.56 472.04
Sales and other income 21528.58 27713.84
Earnings Before Interest & Tax (EBIT) 533.97 949.73
Profit/ Loss Before Tax (PBT)
before extraordinary items (69.31) 185.63
Income from Extraordinary Items (Net) 1559.65
Profit Before Tax 1490.34 185.63
Add/(less) Deferred Tax written back 38.23 101.24
Less : Provision for Tax 223.00 101.11
Investment allowance 27.46
Profit After Tax (PAT) 1278.11 185.76
Profit brought forward from previous year 645.64 614.96
Add / (Less): Tax relating to earlier years (168.14)
Total available for appropriations 1755.61 800.72
- Proposed Dividend 176.73 132.55
- Tax on Dividend 30.03 22.53
- Transfer to General Reserve - -
Surplus in Profit and Loss account 1548.85 645.64
The current year financial figures are not comparable due to changes in
business configuration as detailed below. The comparable numbers in
terms of Net Sales and Earnings before Interest and Tax are as under:-
Year ended Year ended
31st March, 2008 31st March, 2007
(A) Net Sales reported 20764 27242
Net Sales from discontinued
businesses during the year* 1335 8645
Net Sales from continuing business 19429 18597
(B) EBIT reported 534 950
Less: EBIT from discontinued
businesses during the year (390) 162
EBIT from continuing business 923 788
Growth from continuing business in terms of sales during the year has
been 4.5%, while in terms of profitability the growth in EBIT has been
Income from Exceptional items during the year represents income arising
out of sale of the Companys CMS Business at Tumkur to INCAP Contract
Manufacturing Services Private Limited, Bangalore on 31st May 2007, net
of expenses incurred on such Sale.
Pursuant to the approval of the shareholders through postal ballot on
9th April 07, the Company has transferred its erstwhile Contract
Customer Support business (CCS) to TVS-E Servicetec Ltd at cost
effective from 1st July07.
The Directors are pleased to recommend dividend of Re 1.00 per share
for the financial year ended 31st March 2008. The dividend if approved
by shareholders, would absorb Rs. 176.73 lakhs (excluding taxes) and be
paid to all the equity holders, whose names appear in the Register of
Members of the Company as on 21st Aug 2008 (beginning of the day) in
case of shares held in electronic form and as on 5th September, 2008 in
respect of shares held in physical form.
REVIEW OF PERFORMANCE
The companys core business is manufacture, sale and distribution of
printers, supplies, keyboards, POS and solution products. The company
has restructured its business last year.
The products on comparison (excluding components and set top boxes) to
last year registered a 3% growth with revenue of Rs. 183.4 Crores
during the year as against Rs. 177.6 Crores during the corresponding
period in previous year. The market share in terms of value for Dot
Matrix Printers was at 37.0% on an average during the year as compared
to 35.5% during the corresponding period in previous year. Volume share
went up from 35.7% to 37.3%. Key board business grew by 11% and
supplies business by 16%.
During the year, a series of new products were launched especially in
the Point of Sale category and key boards. During the year under
review, the process efficiencies were driven hard to yield substantial
cost savings of Rs 5.7 Crores and reduction of working capital. This
enabled the business to sustain its profitability in a fiercely
During the year under review, the company has restructured its debts
and reduced the borrowing substantially over Rs. 43 Cr. This will help
your company in reducing the finance cost and improve the capital
structure in future.
Pursuant to the decision of the board to restructure the business and
to divest the non core activities, following actions have been taken;
A. Sale of Contract Manufacturing Services business;
B. Transfer of Contract Customer Support business, and
C. Sale of non core investment
CONTRACT MANUFACTURING SERVICES (CMS) BUSINESS
As stated last year, the CMS division of the company operating at
Tumkur together with all its assets and business was transferred and
sold for a total consideration of RS 42.42 Cr on May 31, 2007.
CONTRACT CUSTOMER SUPPORT (CCS; BUSINESS
The erstwhile CCS Business of the company, was transferred at cost to
the then wholly owned subsidiary company, TVS-E Servicetec Limited on
1st July 2007.
TRANSFER SALE OF INVESTMENTS
The shareholdings in TVS-E Servicetec Limited were transferred to TVS
Investments Limited on 11 Oct 2007 at par. The entire shareholdings in
TVS Finance and Services Limited was also sold at cost to TVS
Investments Limited. A part of the shareholdings in Modular Infotech
Private Limited was also transferred at par to TVS Investments Limited.
The focus will be on (a) driving leadership position in the dot-matrix
printer market; (b) growing key boards and supplies business and (c)
establishing Point of Sale (POS) products business. POS has the
potential to be the growth engine for TVS-E and is being resourced
During the year, a new plant was set-up at Sela Qui, near Dehradhun,
Uttarkhand. Within a short period, the plant scaled up to reach the
The company also established a UNIT II near the plant, in Uttarakhand
and has moved the production lines from Kala Amb, Himachal and also
Guindy, Chennai. This will facilitate consolidation of products and
reduction in cost. Eventually the manufacturing operations at Kala
Amb, Himachal and Guindy, Chennai will cease.
The Company has not accepted any fresh deposits and renewals during the
year under review. Unclaimed deposits amounting to Rs. 46,000 at the
end of 31st March 2008 will be credited to Investor Education
Protection Fund, with interest thereon.
Mr. Gopal Srinivasan, Whole-time Director relinquished the position on
22nd April 2008. However, he continues to be a Director on the board.
The board places on record its appreciation for the significant
contributions and leadership provided by Mr. Gopal Srinivasan to the
Mr. H. Lakshmanan and Mr S. R.Vijayakar Directors retire by rotation at
the ensuing annual general meeting, and being eligible, offer
themselves for re-appointment. Mr. R. Ramaraj was appointed as an
additional director and will hold office till this Annual General
Meeting. Notice has been received from one of the members of the
Company under Section 257 of the Companies Act, 1956 along with
requisite deposit signifying his intention to propose the candidature
of Mr R. Ramaraj for appointment as Director.
Necessary resolutions are being placed before the members for approval.
Mr. M. Somasundaram, has been appointed as Manager under the Companies
Act 1956 with the designation of Executive Vice President of the
Company for a period of 3 years effective April 1, 2008. The necessary
resolution in this regard will be placed at the ensuing Annual General
Meeting of the Company for approval by the shareholders.
During the year under review, as part of restructuring the business,
the entire shareholding in Sravanaa Properties Limited was transferred
to TVS Capital Funds Limited on 11 Oct 2007.
The company also promoted Tumkur Property Holdings Limited and Prime
Property Holdings Limited on 24th Oct 2007 and 9th Nov 2007
respectively to acquire the non core assets at Tumkur and Chennai.
The reports and accounts of the subsidiary companies Viz. Prime
Property Holdings Limited and Tumkur Property Holdings Limited
(consolidated) along with the statement pursuant to section 212 of the
Companies Act, 1956 are attached.
M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai, the
auditors of the Company retire at the ensuing Annual General Meeting
and are eligible for re-appointrrent
EMPLOYEE STOCK OPTION PLAN
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)
in 2003 1,60,000 options granted to ten employees lapsed on account of
their resignation. 51000 stock options are still in force as at March
31, 2008 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 at 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, 2008.
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, 1993 are
set out in Annexure A to this Report.
The Board considered issue of ESOP / ESPP to the employees and have
empowered at Remuneration / Compensation Committee of the Board to
decide and recommend.
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 are set out
in the Annexure B to the Directors Report.
REPORT ON ENERGY CONSERVATION AND R&D ACTIVITIES
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 Sec. 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
As required by Sec.217(2AA) of the Companies Act, 1956, the Directors
i) that in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
ii) that 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 fair view of the state
of affairs of the company at the end of the financial year (namely 31st
Mach 2008) and of the profit and loss of the company for that period;
iii) that 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) that the Directors had prepared the annual accounts on a going
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, a Management Discussion and Analysis Report and a Corporate
Governance Report are made a part of this Annual Report.
In compliance with Sec 292A of the Companies Act 1956 read with the
Listing Agreement the Company has set up an audit committee with Mr.
Srini Nageshwar, Mr. S R Vijayakar, Mr. H Lakshmanan and Dr Sridhar
Mitta as its Members.
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
A certificate from the auditors of the Company regarding compliance of
the conditions of Corporate Governance as stipulated by Clause 49 of
the listing agreement is attached to this report.
MANAGEMENT DISCUSSION AND ANALYSIS
As required under Clause 49 of the Listing Agreement, a detailed Report
on Management Discussions and Analysis is given below:
A. The Industry and Trends
The Indian IT market grew by 22% in 2007 driven by 20% growth from PC
industry, 4% growth Printer market which is expected to grow at 9% in
2008. DMP market was 0.4 3 million units, 8% decline from the previous
Transaction printing is growing at a healthy rate - driven by high
investments in retail automation, expansion of con; banking solutions
by all the major banks. The retail sector at 43% clocked the highest
growth in IT in 2007-08 followed by the Utility sector.
With entry of several organized players in the Retail industry and
acceleration of automation by existing players, IT spend by Retail is
expected to grow at healthy rate. DQ - IDC Mega users survey predicts a
growth of 36% in IT spend by retail. IT spend by Banking, Insurance and
Government are expected to continue at healthy rates.
Growth of retail and increased IT spend by the industry throws up large
opportunity for the company in the Point of Sale product category and
solutions space in Banking and E-governance sphere.
B. Review of Performance
Our Transaction products & solutions business group, which includes the
dot matrix printers, key boards, Point of Sale products and supplies,
grew by 3.2% to Rs.183.4Crs. Market share of our company in DMP
category went up from 35.7% to 37.3% in volume terms during the year.
Keyboard business grew by 11% and supplies by 16%.
We entered the Point of Sale category with mini dot- matrix printer in
second half of the year. Subsequently we have expanded the product
portfolio to include thermal printers, bar code readers and electronic
cash registers. A separate sales channel is being set up to realize the
full potential of the business.
DMP category is being revitalized with own designed high speed printers
and refreshing of existing models with USB.
On the operations side, we have commissioned a new factory at
Uttarakhand. Continued focus on Total Cost Management (TCM) yielded Rs
5.7 Crores, which enabled the business to be profitable in a
C. Risks & Opportunities
DMP category, which accounts for substantial part of the revenue of the
business, is not growing due to applications migrating to alternate
technologies. Our company intends to counter this through
(a) driving leadership share in the category;
(b) focusing on POS products, which are growing at 40% + ;
(c) participating in the laser market through remanufactured laser
(d) exploiting export opportunities for DMP and key board.
Price erosion and the commodity cost increase are the other two threats
which can erode the profitability of the business. We have a robust
Total Cost Management program which pro-actively addresses these
D. Internal Control Systems & their adequacy
During the year the company has embarked on identification of key risks
and safe guards / measures as a part of risk management framework.
The Audit Committee of the board reviews the findings and
recommendations of the interal audit reports periodically. The company
has appointed V. Sankar Aiyer & Company, Chartered Accountants as
Internal Auditors to carry out both concurrent and internal audits,
which will help us to deploy adequate safe guards to mitigate the
E. Business Planning and Information Technology
The Companys business planning system with strong ownership and
involvement include medium term strategy formulation, annual and
quarterly plans and periodic reviews which helps TVS-E Operating System
(TOS to achieve its goals.
F. Quality Management
The Company has a TQM vision with a strong focus on essential building
blocks. An exhaustive action plan lias been drawn up to improve the
customer satisfaction significantly covering both product quality and
postseles support. These initiatives are supported by Total Emplo/ee
Involvement (TEI) programs. The Comparys manufacturing plants located
at HP, Guindy and Uttarakhand are ISO 9001 certified.
G. Human Resource Development
Performance and Leadership are the corner stones for HR in the
organization. Significant investment year after year is made on people
through extensive training & development programs. Good amount of time
& money have been invested to drive & embrace Change management
processes across the Organization that will encourage people to go
after the set directions and deliver future business plans. The annual
planning process with goal setting workshops facilitate performance
standards which is supported through digitized performance management
systems for evaluation. In order to encourage employees to continuously
excel in their endeavour, new policy on performance linked compensation
is implemented throughout the organization. The position evaluation and
value operationalization have further built strong HR fundamentals
based on which Career progression plans are being developed through
Session C process for the top talents.
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
I. Corporate Social Responsibility
The company is actively engaged in social welfare activities through
employees, organizing medical Programs like Eye Screening, health check
for poors and under privileged , blood donation camps and village
rehabilitation programs. The company also engaged in using digital
techniques in social transformation at schools and hospitals. Free
education programs and support are also part of our consistent social
The Directors wish to place on record their appreciation for the
committed service of employees for its growth.
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
July 22, 2008 Chairman