| |
DIRECTORS'
REPORT
Your Directors
have pleasure in presenting herewith the Seventh Annual Report on the
business of your Company for the year ended March 31, 2001.
| 1.
Financial Highlights |
(Rs.
in lakhs)
|
| Particulars |
2001
|
2000
|
| Total
Income |
5371.93
|
3004.30
|
| Total
Expenditure |
4823.27
|
2700.59
|
| Operating
profits (PBIDT) |
548.66
|
303.71
|
| Interest |
151.69
|
93.15
|
| Depreciation |
29.42
|
8.83
|
| Profit
before tax (PBT) |
367.55
|
201.73
|
| Provision
for tax |
12.70
|
56.62
|
| Profit
available for appropriations |
354.85
|
145.11
|
| Appropriations
Dividend
- Recommended |
118.14
|
15.89
|
| Tax
on Dividend |
12.05
|
1.75
|
| Transfer
to General reserve |
26.62
|
Nil
|
| Earnings
per share - (Rs.) |
6.40*
|
9.13
*
|
On
expanded share capital
2.
Review of operations
Your Company recorded a significant increase in the revenue for the year
under reference. The Company's revenue from operations increased to Rs.
5371.93 lakhs from Rs. 3004.30 lakhs for 1999-2000 registering a growth
of 78.80%. Your Company has exceeded the projected turnover of Rs. 5300
lakhs as indicated in prospectus dated March 14, 2000. Profit
after tax rose by 144.53% from Rs. 145.11 lakhs for 1999-2000 and Rs.
354.85 lakhs in 2000-01.
3.
Dividend
Keeping
in view the good performance, your Directors recommend a dividend of 20%
(previous year 10% pro-rata) on the fully paid - up equity shares of Rs.
10/- each for the year ended March 31, 2001 to those members whose names
appear in the Register of Members as on the date of Annual General Meeting.
4.
Utilisation of Funds generated out of Public Issue
As stated in the prospectus dated March 14, 2000, your Company has mobilized
Rs. 2371 lakhs. The Company has utilized Rs. 1957 lakhs till March 31,
2001 towards the implementation of the projects as envisaged in the Prospectus.
Of the amounts spent on the projects, Rs. 400 lakhs was utilised on Surface
Mounted Technology (SMT) Division. This project was not envisaged in the
said Prospectus.
5.
Increase in Equity Share Capital/ Initial Public Offer
Your
Company came out with an IPO on April 6, 2000 which concluded on April
10, 2000 for 1479300 equity shares of Rs. 10 each at a premium of Rs.
50. The IPO was oversubscribed by 5.36 times. The Company had received
an overwhelming response despite sluggishness in the capital market. The
trading in the Company's shares commenced during June 2000 on the Stock
Exchanges at Bangalore, Calcutta and Ahmedabad. After complying with all
the requirements and fulfilling the norms of the Stock Exchange of Mumbai
(BSE), your Company's shares were traded on the said Stock Exchange with
effect from March 12, 2001. As
on March 31, 2001, 21100 shares are partly paid
6.
Software Development centers in India
At
Cerebra, innovative ideas and customized solutions are a way of life.
Your Company's repertoire includes a vast array of IT products, solutions
and services. The base at Bangalore, the Silicon Valley of India,ensures
only the best software minds get to work for the Company. Highly skilled
professionals are implementing software solutions for e-business, e-CRM,
Healthcare, Banking & Finance, WAP & Wireless, Telecom, Network
& Systems Management and Enterprise Application Integration.Quality,
mission critical and deadline bound projects have been a great strength
and is reflected in ISO 9002 certification. Your Company has gone a step
forward for the coveted ISO 9001 and SEI CMM Level-5. Constant research
and development ensures that the Company stay in sync. with the latest
technologies to continually improve our skills and services. Your Company’s
core areas of expertise cover e-business, e-CRM, Healthcare, Telecom
Solutions,WAP & Wireless, Network & Systems Management, Enterprise
Application Integration, Web migration, Banking & Finance Solutions.
Your Company is also the Business Partner and Solution Provider of leading
technology companies like Microsoft, IBM, and Oracle. Both the facilities
are equipped with the best infrastructure conducive for meaningful development
and are manned by professionals spanning almost every area of business
supported by a dynamic team of cream-of-the-top software engineers. Your
Company is in the process of establishing business alliances/ identifying
the strategic partners around the world and intends to have atleast one
partner in most parts of USA, Europe and Asia Pacific Region by the end
of December, 2001.
7.
Overseas Trading offices
Your Company has established overseas liaisoning offices at Maryland and
Oregon in U S A and at Delft in the Netherlands after fulfilling the statutory
requirements and necessary approvals from Reserve Bank of India. The overseas
offices are responsible for marketing, sales and level 1 support at these
places. By end of the current fiscal, your Company plans to start similar
operations in Germany.
8.
Focus of SMT division
The Company set up the Surface Mount Technology(SMT) division during September,
2000 under the brand “Kranion” which is one among the most preferred
brands of the system integrators. The motherboard market has been dominated
by Taiwan over the years as every assembler depend mostly on the import
of motherboard from there. The advantage of having a local manufacturer
is that the logistics are handled with less lead time and thus the production,
despatch and support cycle takes place in a shorter duration. This plant
is currently positioned to manufacture about 18,000 motherboards, 10,000
memory modules and 2000 networking cards.
Your Company is also engaged in development of set top boxes, internet
appliances, other specialized add on cards for computers. The set top
boxes have been protyped and are being put under extensive testing. The
future for SMT division looks very attractive as the brand “Kranion”
will be one of the most preferred brands among PC assemblers which will
increase the revenue significantly resulting in higher profit margin.
9.
A view of System Integration division
Your Systems Integration Division continues to be the flag bearer of the
Company and is poised to do much better in the coming years with the introduction
of a range of products like set top boxes, multi color cabinets for PCs,
UPS , Internet Kiosks etc., The division has scope to manufacture 2000
PCs , 100 Note Books, and 200 Nos. of UPS every month.
Server and Work Stations continues to be the technical strength of your
company as well as the preference of customers over MNC brands. Further
MNCs such as Sun Micro, ACER, Silicon Graphics have tied up with your
organization for marketing their products throughout the country. The
Home segment which was the privilege of the assembler markets has begun
to show distinct preference for high quality branded systems. This development
backed by the fact that your Company has 400 channel partners throughout
the country , opens bright opportunities for penetration of Cerebra PCs
to the Home segment.
Your Company has also made forays in the export market and has exported
to South Africa, Australia, Nepal . Export enquiries from Nairobi, Singapore,
Srilanka and Mauritius are under finalization. This will give a boost
to exports of your Company’s products to these countries.
Cerebra Note Book which was launched in the market early last year was
received very well despite this being pitted against world renowned brands.
There has been the market preference for your company’s note book
and we are taking advantage of this development.
10.
Company’s future prospects
System Integration Division - Your Company is one among the pioneers in
Home PC segment since 1995. With this background, your Company aims at
adding two products to the existing range namely Home PC and Gaming PC.
Relaunching of the Home PC will be a very attractive package since this
will be very well accepted in the Market. The Gaming PC market is poised
to explode within the next fifteen months. At present, the Company is
very well placed for grabbing this opportunity for launching the Gaming
PC and new Home PC during September, 2001.
Surface Mounted Technology Divison - This division, at present is engaged
in development of set-top boxes, PDA, Internet appliances and are put
under extensive testing. All these products will be launched at Mumbai
during September, 2001.
Networking and New Products Division - Your Company has recognized the
need and has moved forward to establish a highly technical area of networking
and new products division. This division will cater to the requirements
of networking solutions, and will provide the Total solutions in the areas
like, LAN, WAN, MAN, VPN solutions, Broadband etc., The Company has tied
up with Silicon Graphics, ACER, Sun Micro Systems for usage of their servers
apart from using the Company's own servers. Apart from the above, your
Company is planning to expand AMC Division for undertaking maintenance
contracts of other branded computer systems apart from Company's own brand.
With this, a repair and testing center will be started for all computer
products and will be signing as an Authorised Service Provider (ASP) for
some MNCs manufacturing computers and peripherals. Cerebra has plans to
set up retail outlets in major cities and towns and hope to complete this
by end of December, 2003.
11.
Quality Initiatives and Company's quality policy
Cerebra has obtained the ISO 9002 certification from quality Registrars
KEMA, Netherlands. Your Board of Directors are consciously taking every
effort for getting ISO 9001 certification and the coveted SEI CMM Level
5 certification. The Company continuously work towards providing Total
Solutions in the field of Information Technology comparable best in the
World. Cerebra, with active involvement of all its employees shall strive
to deliver the products and services of the highest quality to Customers,
ensuring thier complete satisfaction. The quality policy shall be understood
and maintained at all levels of the organisation and shall be implemented
through its adherence to specific and measurable quality objectives. With
a good quality policy in place, the Company has been successful in building
`CEREBRA' and `KRANION' into well known and recognizable brands in the
IT market.
12.
Deposits
Your Company has neither accepted nor renewed any Fixed Deposits
during the year under reference.
13.
Compliance of Stock Exchange formalities
Your Company has fully complied with the Listing formalities of all the
Stock Exchanges where the Company's Equity shares are listed. Your Directors
have taken adequate steps in connection with the Guidelines/Regulations
issued by the Securities and Exchange Board of India(SEBI).
14.
Corporate Governance
Your Company has recognized the need for good Corporate Governance. Every
effort is put in to have the policies in place for a desirable Corporate
Governance. The recommendations of Kumar Mangalam Birla Committee on Corporate
Governance constituted by the Securities and exchange Board of India (SEBI)
has become mandatory with effect from 1st April, 2001. Committees
as required under this have been constituted during the current year.
A detailed compliance note on these, as per clause 49/51 of the Listing
agreements is attached to this report.
15.
Directors
Mr. V. S. Rajan was co-opted as an additional director on the
Board of your Company during the current year.
A notice has been received from a member proposing his candidature. Mrs.
Chitra Vishwamurthy and Mrs. Medha Hegde, Directors resigned on June 25,
2001 citing personal reasons. The Board places on record the appreciation
for the dedicated services of the said Directors. Mr. T. S.Suresh Kumar,
due to his
pre-occupation ceased to be a whole-time Director with the effect from
27th June, 2001. He is continuing in the Board as a non-excutive
Director.
16.
Auditors
Messrs. M S Reddy & Associates, Chartered Accountants, Bangalore
Auditors of the Company retire at the end of the forthcoming Annual General
Meeting and are eligible for re-appointment.
17.
Promises v/s. Performance
Your Company has achieved the turnover as projected in the Prospectus
for the year ended March 31, 2001 and will continue to excel in the growth
year by year. Your Company's Directors are confident to achieve the turnover
for the current fiscal, despite sluggishness in the IT industry as a whole.
| |
|
(Rs.
in lacs)
|
| Particulars |
Projections
|
Actuals
|
| |
|
|
| Total
Income |
5300.00
|
5371.93
|
| Profit
After Tax |
389.10
|
354.85
|
| Earnings
per Share (Rs.) |
6.58
|
6.40
|
| Dividend
(%) |
18
|
20
|
| Utilisation
of funds |
2371.00
|
1957.00
|
18. Employees Stock Option Plan(ESOP)
In order to retain the best talent in the Company and considering the
industry trends towards issuing the ESOP, an independent ESOP committee
called as compensation committee has been set-up on February 07, 2000
comprising of Independent Non-Executive Directors for recommending, setting
up and administering the ESOP. Your Company’s Board of Directors
believe in not just in human talent, but in an arrangement where each
of the Associates is a partner in the growth and development of the Company.
The eligibility criteria for the employees will be determined by the compensation
committee based on the past and present performance, technical knowledge,
professionalism, length of service, designation, responsibility, Accountability
and such other traits as may deem fit. A total 100153 equity shares of
Rs. 10/- have been gifted by the promoter Directors / their relatives
to the ESOP trust.
No options have been granted during the year under reference.
19.
Human Resources / Industrial Policy
The human resources at your Company is responsible for the management
of the people resource function. The human resources development is about
the optimum utilization of manpower in the organisation. To address these
needs and provide the best talent and match it with the organisation requirements,
select, train and help every individual employee to perform to the expected
levels and contribute to the realisation of Corporate objectives forms
the key functionality for human resources management. Your Company believes
in employing the best available potential in keeping with the industry
practices and offers competitive and attractive remuneration commensurate
with the skills and abilities of the individuals. Individual employees
have been provided with continuing education and training opportunities
towards employees skills improvement and charting their career growth.
Employee motivation and retention are given due emphasis to have a contented
team and provide conducive environment for effective performance of the
respective jobs. The Company’s current retention figures are close
to ninety seven percent. The performance counseling and evaluation methodologies
and systems are consistent with the best across the industry to maximize
employee performance, to recognize and reward their contribution to overall
organizational achievement.
20.
Employees
Your Directors place on record the sincere appreciation of the dedicated
staff at levels. The information required under section 217(2A) of the
Companies (Particulars of Employees) Rules, 1975 and forming part of the
Directors’ Report is not applicable to your Company as none of the
employees was in receipt of Rs. 12.00 lakh and above per annum if employed
through out the year or Rs. 1.00 lakh per month if employed for the part
of the year.
21.
Conservation of Energy, Technology absorption, Foreign Exchange Earning
and outgo
|
–
|
Conservation
of Energy
Information pursuant to Section 217(1) (e) of the Companies, Act,
1956 read with the Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988 is not furnished as the operations
of the Company are not energy intensive. However, the Company has
best endeavoured to conserve consumption wherever feasible. |
|
–
|
Technology
absorption
Your Company’s technical personnel have been successful in adopting
and innovating the applications on the latest product releases. Your
Company has updated and is in line with technological changes and
developments taking
place universally.
In software design, development and implementation, continous efforts
and refinements of methods and techniques, use of estimation process
are on going to enhance the overall quality and productivity.
The Company has successfully designed and developed motherboards which
is first in the country under the brand
name “Kranion”. |
|
–
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Benefits
of the above
The Company could design, develop and manufacture Motherboards, memory
modules and other computer spares and accessories which are import
substitutes resulting in saving of Foreign Exchange outflow of the
Country. |
|
–
|
Foreign
Exchange Earnings and outgo Your Company has taken steps to increase
the foreign exchange earnings during the year under reference. Your
Company during the year has earned USD 62863(Previous year nil), AUD
299894( Previous year nil ) rupee equivalent of Rs. 96.30 lakhs( Previous
year nil) on account of exports. |
|
|