| The Directors have pleasure in presenting the Thirteenth Annual Report
together with the audited statement of Accounts for the financial year
ended 30th June, 1998.
FINANCIAL RESULTS :
1997-98 1996-97
(15 months)
(Rs. in lacs) (Rs. in lacs)
Gross Revenue 843. 41 1497. 06
Less:
Gross Operational Expenditure 1058. 74 2241. 27
Finance charges 110. 29 376. 74
Gross Profit/(Loss) (325. 62) (1120. 95)
Less:
Depreciation 46. 57 110. 62
(372. 19) (1231. 57)
Less:
Prior Period Adjustments -- 448. 97
Profit/(Loss) for the Year/Period (372.19) (1680. 54)
The significant accounting policies on the basis of which accounts have
been drawn and other significant matters have been detailed in the
Notes to the Accounts and are self explanatory.
The Company achieved a gross revenue of Rs. 843.41 lacs for the year
under review as compared to Rs. 1497.06 lacs (for 15 months) in the
previous year. The operational losses during the year under review
were Rs. 325.62 lacs as compared to the loss of Rs. 1120.95 lacs (for
15 months) in the previous year. The net loss for the year under
review after depreciation of Rs. 46.57 lacs (previous year Rs. 110.62
lacs) and prior period adjustments of Rs. NIL (previous year Rs. 448.97
lacs) are Rs. 372.19 lacs as compared to the loss of Rs. 1680.54 lacs
(for 15 months) in the previous year.
The Company's turnover had registered a negative growth of approx. 30%
during the year under review as it lost the confidence of its customers
due to poor quality of its products during the period preceding the
year under review. However, the Directors are pleased to inform that
during the year under review, the Company consistently concentrated on
improving the quality of its products, and as a result thereof, has
been successful in regaining the confidence of its customers. The
improvement in quality of products is reflected in higher turnover
during the current financial year.
SHARE CAPITAL :
During the year under review, there was no change in the Authorised,
Issued and Subscribed Share Capital of the Company.
CURRENT OUTLOOK :
The name of the Company was changed from Sirmour Sudburg Auto Limited
to Sachs India Limited with effect from 17th April, 1998. This highlights the continued commitment of Mannesmann Sachs AG to the Company.
During the year under review, there was a significant improvement in
the quality of the Company's products. The Quality Control systems
have been set up at every stage of production process in line with the
Company's endeavour to maintain high quality standards.
As indicated in our last report, the sales to Original Equipment Manufacturers (OEMs) had a sluggish growth rate until the end of March,
1998. However, in the last quarter of the year under review, there was
an upward trend as a result of higher offtake from the scooters' sector. While the Company continued to enjoy a healthy share at LML Limited, the significant achievement during the year under review had been a regular increase in share of business from Bajaj Auto Limited which is the largest scooter manufacturers in the Country.
During the year under review, regular supplies had also been commenced
to Scooters India Limited and efforts are on to broadbase the OEM
customers, and particularly, in the Motor Cycle segment through Bajaj
Auto Limited and TVS Suzuki.
Consequent to the re-launch of the Company's products under the brand
name of SACHS, there has been an increase in the After Market Sales
which is a very healthy sign.
During the current financial year, the Company's plant was hit by a
flash flood due to sudden heavy rainfall in the adjoining hilly areas
on 10th July, 1998. This affected the production for a few weeks.
However, the Company took immediate corrective actions to contain its
after-effects. Necessary claims have been filed with the insurance
company.
FUTURE OUTLOOK :
In its efforts to break-through in the export market, the Company had
already submitted samples to several European buyers. The sample approval process, though long, is expected to be through shortly and
the exports are likely to commence in early 1999.
Continuing its total support and commitment to the Company, Mannesmann
Sachs had deputed three more German Engineers to supplement product
designing and production supervision.
DIRECTORS :
The following changes have taken place in the directorships of the
Company since our last report.
Mr. Friedhelm Riemenschneider, Mr. Franz Josef Hermes, Mr. Peter
Hormann, Mr. Supriyo Datta, Mr. Debaprasad Ray and Mr. Hermann Sigle in
respect of whom notices u/s 257 of the Companies Act, 1956 were received, were duly appointed as the Directors of the Company at the
last Annual General Meeting held on 31st March, 1998. Mr. Kirnesh Jung
retired by rotation at the last Annual General Meeting.
Mr. Satvinder Singh and Mr. V. k. Bansal retire by rotation at the
forthcoming Annual General Meeting and being eligible offer themselves
for re-appointment.
AUDITORS :
M/s. Bharat S. Raut & Co., Chartered Accountants, Auditors of the
Company, retire and have confirmed that their appointment, if made,
will be within the limits specified in Section 224(1-B) of the
Companies Act, 1956.
AUDITORS' OBSERVATIONS/QUALIFICATIONS :
The Auditors observations and/or qualifications are detailed in the
Auditors' Report annexed hereto and are self explanatory and be read
together with the Notes to the Accounts in Schedule 'M' annexed to the
Accounts.
EMPLOYEES :
Information pursuant to Section 217(2A) of the Companies Act, 1956 read
with the Companies (Particulars of Employees) Rules, 1975 is annexed
(as Annexure-I) and forms part of this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO :
The information relating to conservation of energy, technology
absorption and foreign exchange earnings and outgo, as required under
Section 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988, is annexed (as Annexure-II) and forms part of this Report.
ANNEXURE II TO THE DIRECTORS' REPORT :
Disclosure of particulars with respect to conservation of energy,
technology absorption and foreign exchange earnings & outgo :
A. Conservation of energy :
(a) energy conservation measures taken;
The Company's operations involve low energy consumption. There are no
major areas wherein energy conservation measures can be taken.
However, efforts have been made to conserve and optimise use of energy
through improved operational methods, machinery and other means.
(b) Additional investments and proposals, if any, being implemented for
reduction of consumption of energy;
None.
(c) Impact of the measures at (a) and (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods;
Not Applicable.
(d) total energy consumption and energy consumption per unit of
production as per Form A of the Annexure in respect of industries
specified in the Schedule thereto.
Not Applicable.
B. Technology absorption :
(e) Efforts made in technology absorption as per Form B of the
Annexure.
FORM B (See Rule 2)
Form for disclosure of particulars with respect to absorption :
Research and Development (R & D) :
1. Specific areas in which R & D carried out by the company :
Development of different Shock Absorbers for new applications in the OE
and After Market segments.
2. Benefits derived as a result of the above R & D :
Some of the above developments have resulted in regular commercial
production towards the end of the year under review. Full results are
expected during the current year.
3. Future plan of action :
The R & D activities are being focussed on improving ride comfort and
safety through improved design of Shock Absorbers to be used in the
Motor Cycle and Scooters segment. Investment plans have been initiated
on high quality machinery for testing and performance monitoring.
Expenditure on R & D :
(a) Capital : NIL
(b) Recurring : NIL
(c) Total : NIL
(d) Total R & D expenditure as a : NOT APPLICABLE
percentage of total turnover
Technology absorption, adaptation and Innovation :
1. Efforts, in brief, made towards technology absorption, adaptation
and innovation:
Five German Engineers who are specialists in their respective fields
have joined to introduce the superior technology of Mannesmann Sachs AG
in the designs, manufacturing processes, quality and process control
systems as well as in materials management systems of the Company.
2. Benefits derived as a result of the above efforts, e.g. product
improvement, cost reduction, product development, import substitution,
etc.
The benefits derived shall reflect in the coming years.
3. In case of imported technology (imported during the last 5 years
reckoned from the beginning of the financial year), following
information may be furnished :
(a) Technology imported.
(b) Year of import.
(c) Has technology been fully absorbed?
(d) If not fully absorbed, areas where
this has not taken place, reasons
therefor and future plans of action.
NOT APPLICABLE
C. Foreign Exchange earnings and outgo :
(f) Activities relating to exports; initiatives taken to increase
exports; development of new export markets for products and services;
and export plans;
In its efforts to break-through in the export market, the Company has
already submitted samples to several European buyers. The sample
approval process is expected to be through shortly and the exports are
likely to commence in early 1999.
(g) Total foreign exchange used and earned :
Foreign Exchange earnings - NIL(previous year - NIL).
Foreign Exchange Outgo - Rs. 46,71,540(previous year - Rs. 1,98,408)
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