HMT (INTERNATIONAL) LIMITEDhmtindia.com/html/attachments/2012-13/HMT_INTERNATIONAL_2013… · DIRECTORS’ REPORT TO THE MEMBERS, HMT (INTERNATIONAL) ... of slowdown in the global

Annual Report 2012-2013

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HMT (INTERNATIONAL) LIMITED

CONTENTS

Board of Directors ............................................................................................................................. 2

Performance Highlights ....................................................................................................................... 3

Director’s Report ............................................................................................................................. 4

Compliance Certificate ...................................................................................................................... 14

Auditor’s Report ........................................................................................................................... 18

Comments of C & AG ........................................................................................................................ 21

Accounting Policies ........................................................................................................................... 22

Balance Sheet ........................................................................................................................... 24

Statement of Profit & Loss Account ................................................................................................... 25

Notes Forming Part of Balance Sheet ............................................................................................... . 26

Notes Forming Part of Statement of Profit and Loss .......................................................................... 31

Cash Flow Statement ......................................................................................................................... 38


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BOARD OF DIRECTORS

Shri Harbhajan Singh Chairman (From 15.06.2013)

Shri S.G. Sridhar Chairman (upto 14.06.2013)

Shri S. Girish Kumar Managing Director

Shri Sumanta Chaudhuri Director

Shri P. Udaya Sankar Director (International Marketing)

AUDITORS

M/s S. L. Patil & Co.Chartered AccountantsBangalore

BANKERSUCO Bank

Bank of Maharashtra

Indusind Bank

Punjab National Bank

Syndicate Bank

Bank of India

REGISTERED OFFICE

“HMT BHAVAN”59, Bellary RoadBangalore 560 032


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PERFORMANCE HIGHLIGHTS (` in Million)

2012-13 2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04OPERATING STATISTICSSales, Stock accretion & Other Income 415.02 370.44 311.65 325.02 171.76 260.75 342.48 207.69 285.06 274.70Interest Income 29.45 26.79 18.33 21.90 18.96 17.90 12.78 1.76 5.01 5.62

444.47 397.23 329.98 346.92 190.72 278.65 355.26 209.45 290.07 280.32

Purchases 239.85 207.16 180.95 190.71 115.13 185.90 238.42 118.64 209.11 200.05Employees Costs 45.62 48.67 35.19 31.77 20.69 19.95 28.76 22.40 21.27 21.47Other Operating Costs* 88.60 121.95 108.82 82.69 40.23 59.55 69.58 55.29 52.52 46.52Depreciation 1.86 1.86 1.77 1.75 1.84 2.03 2.00 2.15 2.33 2.65

375.93 379.64 326.73 306.92 177.89 267.43 338.76 198.48 285.23 270.69

Gross Profit 68.54 17.59 3.25 40.00 12.83 11.23 16.50 10.97 4.84 9.63Interest 0.04 0.20 0.10 0.40 0.20 1.01 0.15 1.18 4.09 8.30Net Profit Before Taxes (after prior period) 68.50 17.39 3.15 39.60 12.63 10.22 16.35 9.79 0.75 1.33Taxes & Deferred Tax 23.65 3.91 1.07 12.99 2.07 1.75 2.68 3.81 0.68 0.92Profit After Taxes 44.85 13.48 2.08 26.60 10.55 8.47 13.67 5.98 0.07 0.41

FINANCIAL POSITIONCurrent Assets 467.07 488.79 381.93 392.03 320.09 301.16 362.36 261.84 145.87 185.10Current Liabilities & Provision 201.80 258.6 165.03 175.88 127.89 122.09 191.00 96.14 95.24 122.37Net Working Capital 265.27 230.19 216.90 216.15 192.20 179.07 171.36 165.70 50.63 62.73Net Fixed Assets 56.63 48.39 49.67 49.76 50.79 52.63 53.12 55.12 204.55 207.13Investments 0 0 0 0 0 0 0 2.97 2.97 2.97Capital Employed 321.90 278.58 266.57 265.91 242.99 231.70 224.48 223.79 258.15 272.83Borrowings 0 0 0 0 2.18 0 0 5.00 44.54 59.85Deferred Tax Liability 11.70 11.55 11.35 11.09 10.90 10.68 10.24 10.01 9.71 9.13Net Worth 310.20 267.03 255.22 254.82 229.91 221.02 214.24 208.78 203.90 203.85

DATA ON EQUITY CAPITALShare Capital 7.20 7.20 7.20 7.20 7.20 7.20 7.20 4.80 4.80 4.80Reserves 303.00 259.82 248.02 247.63 222.71 213.83 207.04 203.98 199.10 199.04Retained Earnings 43.22 11.84 0.53 25.00 8.88 6.78 5.46 5.87 0.07 -Dividend - Normal 1.44 1.44 1.44 1.44 1.44 1.44 1.44 0.96 - 0.96 - Special - - - - - - 5.76Dividend(%) - Normal 20 20 20 20 20 20 20 20 - 20 - Speical - - - - - - 80

OTHER STATISTICSCash Flow 46.71 15.34 3.85 28.35 12.39 10.50 15.67 8.13 2.40 3.06Turnover / Working Capital Ratio 1.56 1.61 1.44 1.50 0.89 1.46 2.00 1.25 5.63 4.36Return on Capital (%) 21.29 6.31 1.22 15.04 5.28 4.85 7.35 4.90 1.87 3.53Number of Employees 59 60 59 61 61 62 65 68 76 80Per Capita Sales 5.78 5.40 4.73 5.05 2.68 4.03 4.84 2.19 3.71 3.74

* Includes Extra Orinary Item ̀ .32.92 and ̀ .28.33 million during the Financial Year 2010-11 & 2011-12 respectively


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DIRECTORS’ REPORT

TO

THE MEMBERS,HMT (INTERNATIONAL) LIMITED,BANGALORE

Your Directors have pleasure in presenting the Thirty NinthAnnual Report on the business and operations of theCompany together with the Audited Accounts of theCompany for the Financial Year ended 31st March 2013,report of the Statutory Auditors and the comments thereonby the Comptroller and Auditor General of India.

CORPORATE HIGHLIGHTS

PerformancePerformancePerformancePerformancePerformance

During the year under review, your Company has marginallyshown improvement in performance in terms of Turnover.The Turnover during the year at gross levels was ̀ 34.09Crore as against ` 32.40 Crore recorded in the previousyear, i.e.2011-12, registering a growth of 5% year on yearbasis. The Order procurement during the year stood at` 24.10 Crore as against ` 37.98 Crore achieved in thePrevious Year. With the increased Turnover, your Companywas able to generate the Profit Before Tax (PBT) at ̀ 6.85Crore as against ̀ 1.74 Crore in the Previous Year, therebycontinuing the trend of profits. The performance in terms ofTurnover and Net Profit during the Year was better in spiteof slowdown in the global economy and negative growth insectors like engineering affecting delay/shelving ofprocurement plans by customers.

4000

3500

3000

2500

2000

1500

1000

500

02008-09 2009-10 2010-11 2011-12 2012-13

SALES 1636 3080 2788 3240 3409ORDERS 2591 3030 2745 3798 2410PBT 126 396 31 174 685

Financial Position

With the consistent profits recorded over the years, yourCompany is carrying a General Reserve of ` 30.30 Croreand Net worth of ̀ 31.02 Crore

Product-wise Achievements

Machine Tools

During the year, a HMT Heavy Duty Lathe model L70 alongwith Tool-post Grinding attachment, valued at ̀ 1.30 Crore,was supplied to Uganda. Further, Machines & Equipmentvalued at ̀ 1.01 Crore were exported to Bahrain and Kuwait.HMT High-speed precision Lathes NH 22 were exported toOman and Kuwait. A Plate Bending machine was exportedto Bahrain.

A Delegation from the Nigeria Machine Tools (NMT) andDirector General of National Agency for Science &Engineering Infrastructure, Nigeria discussed with HMTITeam for re-establishment and augmentation of productionfacilities at NMT, Nigeria. An order for supply of HMT EconoCNC 26/1500 machines with toolings, valued at ` 3.94Crore, has been secured.

Further, an Order valued at ̀ 60 lakh was received for supplyof ‘Nilfisk’ Mini Ride-on Industrial Sweeper Model SR1900Dto Qatar. The equipment is being supplied by Nilfisk-Advance India Limited, Mumbai.

The Company has secured an order from Hiper MaxCuterlaria E Cosmetics Da Amazonia LTD, Brazil, valuedat ̀ 55 lakh, for supply of HMT Machine Tools and for certainnon-HMT equipment.

Projects & Services

The major thrust area for the Company is the Projects andServices. During the year the Company has successfullyimplemented Vocational Training Centers (VTC) inSri Lanka. Two VTC projects valued `13.47 Crore wereestablished at Vantharamoolai and Onthachimadam atBatticaloa in Sri Lanka. The Center was formallyinaugurated on 20th April 2012 by Smt. Sushma Swaraj,Hon’ble Leader of Opposition in Lok Sabha, Government ofIndia, in the presence of high-level dignitaries. AnotherVTC project valued at ̀ 8.93 Crore established at NuwaraEliya in Sri Lanka was inaugurated on 18th November, 2012wherein high-level dignitaries and Ministers from the


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Government of Sri Lanka and the High Commissioner ofIndia were present to grace the occasion. The Indo-MyanmarIndustrial Training Center (IMITC) project valued ` 18.81Crore, was set up by the Company at Myingyan inMyanmar. Machines, Equipment and Tools have beenshipped and awaiting installation. The project is scheduledfor inauguration during the first half of 2013-14.

The Company has successfully completed the setting upof “Indo-Tajik Modern Engineering Workshop (ITMEW)” atDushanbe, Tajikistan valued at ̀ 3.40 Crore. The Hon’bleVice President of India while on State visit to Tajikistanmade a courtesy visit to ITMEW at Dushanbe on 17th April2013.

The Company is implementing first phase of the project“Upgradation of Rajiv Gandhi School of Production & Art”(RGSPA) at Ulaanbaatar in Mongolia. The project is valuedat ̀ 4.71 Crore.

Order for supply of Computers and peripherals valued at` 3.66 Crore to Botswana was executed.

A batch of 34 trainees from various African countries weretrained for a period of three weeks in the trades of AdvancedMachining Technology and Advanced Welding Technologyat CTTC, Bhubaneswar. This order from MEA is valued at` 51 Lakh.

The Cashew nut processing plant at Nangade inMozambique was delayed for completion for a long timedue to pending counter-part assistance in civil works fromthe Government of Mozambique. With the initiative takenand assistance extended by the Government ofMozambique, the installation, erection & commissioningof equipment and imparting training to experts has beencompleted. The project has since been handed over to theGovernment of Mozambique.

Field studies have been conducted for establishingVocational Training Centers (VTC) at various places inPalestine. The total value of establishing VTCs is estimatedat ` 19.44 Crore. The project is expected to commenceduring the year 2013-14.

TTTTTractorsractorsractorsractorsractors

During the year, the Company shipped six (6) HMT Tractorsvalued at ` 47 lakhs to Nepal.

Sale of Imports

With a view to give an added thrust to the performance,your Company has sought to increase the portfolio for this

business segment by imports on behalf of customersincluding HMT Group Companies. During the year, productsvalued ` 4.79 Crore was imported and supplied, ascompared to ̀ 4.10 Crore supplied during the Previous Year.

Strategies

The Company will focus on high value orders for machinetools in the target markets, Middle East, African countries,etc. and continue to make aggressive marketing efforts.Besides, the Company will continue to follow differentmarketing strategies to improve the Order book position forwhich various product-wise strategies have been drawn up.

Another strategy being adopted by the Company is topursue for Non-MEA (Non Govt Sponsored) Projects andalso pursue for more share of the MEA projects byidentifying new project opportunities in Countries likeIndonesia, Myanmar, Tajikistan, Zimbabwe, Sri Lanka,Nepal, Bangladesh, Mangolia, etc.

Marketing efforts

The Strategies and Action Plans for different products broadlyencompass:

• To pursue with the manufacturing Units of HMT MTLto upgrade the niche products.

• Remanufacturing & retrofitting of Machine Tools.

• To develop Associates for complementary productswith focus on Small Lathes, Size 1 & 2 Millingmachines.

• Pursue with MEA for more share in the grant in aidprojects

• Aggressive marketing in target markets throughdedicated agents.

• Undertake trading & imports for other PSUs besidesHMT Group Companies.

The Company has planned the following sales promotion/market development initiatives with intent to increase itsmarket presence:

! Explore opportunities for high-value Machine Toolsin Middle-East countries.

! Aggressive marketing efforts through frequent visits.


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! Participate in exhibitions organized in targetcountries.

! To have more representatives in the developingcountries for projects and marketing of products.

! Participate in Joint Commissions, Bi-lateral meetings,Buyer-Seller meetings/visits, etc. organized byGovernment of India, EEPC, CII, FIEO, etc.

! Tie-up with other Industrial Houses and Agencies towiden the basket for taking up of new projects andbuild on the expertise gained in the implementationof Vocational Training Center (VTC) projects.

OPERATING RESULTS / FINANCE

Financial Highlights and Appropriations

Value in ̀ Crore

Particulars 2012-13 2011-12

Sales Turnover

HMT Products & Technical Services 5.73 3.41

Agency & Others 1.03 1.18

Projects & Services 22.54 23.71

Trading

Sale of Imports 4.79 4.10

Total 34.09 32.40

Profit Before Tax after Extra Ordinary /

Exceptional Items

and Prior Period Adjustments 6.85 1.74

Tax provision of earlier years withdrawn - 0.18

Income Tax 2.35 0.55

Deferred Tax 0.02 0.02

Profit After Income Tax 4.48 1.35

Balance Brought Forward 0.01 0.01

Total 4.49 1.36

Appropriations

Transfer from General Reserve - -

Dividend (Including Dividend Tax) 0.17 0.17

Transfer from Foreign Project Reserve - -

Transfer to General Reserve 4.31 1.18

Balance Carried to Balance sheet 0.01 0.01

Total 4.49 1.36

Dividend

Considering the levels of profitability achieved during the

year, the Board of Directors have recommended for

payment of dividend at the rate of 20% ( ` 2/- per equity

share), on the paid up equity share Capital of ` 72 lakh,

subject to tax for the year 2012-13, which is the same as

the last year. The Company has been paying dividend

consistently over the years to the Holding Company.

EXPORT AWARDS

During the year, the Company was awarded the prestigious All

India Export Award ‘Star Performer Award’ in the Machine Tools

and Parts and Accessories (Medium) Product Group for the

year 2011-12 by the EEPC India. The Award was presented by

Mr. Martin Kuba, Minister of Trade & Industry, the Czech

Republic at a function in Mumbai on 15th March 2013. The

Company has so far received fifty seven (57) Awards since

inception for excellence in export performance.

PERSONNEL & EMPLOYEE RELATIONS

The most important dynamics for business is skilled and

committed employees. Human resource is the most

important resource for the Company. The significant

contribution made by the present and past generation of

employees is a tribute to the Company. The total number

of employees as on March 31, 2013 stood at 59 (including

11 Scheduled Castes, 4 Scheduled Tribes).


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None of the employees were covered under Section 217(2A) of the Companies Act 1956 read with the Companies(Particulars of Employees) Rules, 1975 as amended.Hence, the information may be treated as ‘NIL’ in terms ofthe said Rules.

The Company aims at continuous up-gradation of skills toensure that employees at all levels are fully equipped todeliver a wide variety of services to the growing customerbase of your Company. Your Company has undertaken anumber of training initiatives during the year covering Juniorand Middle-level Managers. The programmes for theemployees were aimed to refresh the employees with thecurrent business practices, financial matters, exportmanagement, and programmes on Corporate SocialResponsibility and to promote creativity and innovation.Several employees were also deputed for external trainingprogrammes.

VIGILANCE ACTIVITIES

The Company has adopted a pro-active approach to bringvigilance awareness among employees, vendors andcustomers. A Vigilance Cell is functioning in the Companyto keep a watchful eye from the vigilance angle on the overallactivities of the Company. System improvement andintensive examination of high value contracts and purchasescontinued to be the thrust areas for the VigilanceAdministration during the year. Important procedures werereviewed and wherever required further simplification hasbeen undertaken for faster and transparent decision-making.Guidelines of the Central Vigilance Commission (CVC) arebeing complied with / followed by the Company.

IMPLEMENTATION OF OFFICIAL LANGUAGE

Your Company continued to pursue its efforts in theimplementation of the official language policy of theGovernment. Towards this end, cash awards have beengiven to employees on passing various Hindi examinations.

CONSERVATION OF ENERGY, TECHNOLOGYABSORPTION & FOREIGN EXCHANGE EARNINGSOUTGO AS REQUIRED UNDER THE COMPANIES(DISCLOSURE OF PARTICULARS IN THE REPORT OFBOARD OF DIRECTORS) RULES, 1958

Particulars with respect to ‘conservation of energy andtechnology absorption’ are not furnished since the Companyis not engaged in any manufacturing activity.

FOREIGN EXCHANGE EARNINGS AND OUTGO

The details of foreign exchange earned and the outgo thereofis detailed below :

Rs. Crore

Particulars 2012-13 2011-12

1. Foreign Exchange earnedFOB value of Exports 6.02 3.80Services 0.92 0.85

TOTAL 6.94 4.65

2. Outgo of Foreign ExchangeExpenditure in Foreign Exchangeon professional, consultancy fees,interest and other matters 5.98 5.80

STATUTORY AUDITORS

M/s S.L. Patil & Co., Chartered Accountants, Bangalorewere appointed by the C&AG as Statutory Auditors of theCompany for the financial year 2012-13. Comments bythe Comptroller & Auditor General of India on the accountsfor the year are given separately.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of theCompanies Act, 1956 with respect to Directors’Responsibility Statement, it is hereby confirmed :

I. that in the preparation of the annual accounts for thefinancial year ended 31st March 2013, the applicableaccounting standards had been followed along withproper explanation relating to material disclosures;

II. that the Directors had selected such accountingpolicies and applied them consistently and madejudgments and estimates that were reasonable andprudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financialyear and of the profit or loss of the Company for theyear under review;

III. that the Directors had taken proper and sufficientcare for the maintenance of adequate accountingrecords in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets ofthe Company and for preventing and detecting fraudand other irregularities.


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IV. that the Directors had prepared the accounts for thefinancial year ended March 31, 2013 on a ‘goingconcern’ basis.

COMPLIANCE CERTIFICATE

In terms of the proviso to sub-section (1) of Section 383A ofthe Companies’ Act, 1956, a Certificate of Compliance forthe year ended March 31, 2013 from a Secretary in whole-time practice, is enclosed to this report.

ACKNOWLEDGEMENTS

The Directors are thankful to HMT Limited, the Holdingcompany and its Subsidiaries, various Ministries of theGovernment of India, especially the Ministry of HeavyIndustries & Public Enterprises, Ministry of Commerce,Ministry of External Affairs and Comptroller & AuditorGeneral of India, Principal Director, Commercial Audit,

Statutory Auditors, Internal Auditors, ECGC, Reserve Bankof India, the Company’s Bankers, Agents and the valuedCustomers for their continued support and confidence inthe Company.

The staff of the Company displayed a high level ofcommitment and dedication to the pursuit of businessgrowth. The participative and professional work culture hasconsistently remained a source of strength for the Company.The Directors wish to place on record their appreciation ofthe contributions made by the employees at all levels forthe operations of the Company during the year.

For and on behalf of the Board of Directors

Place: Bangalore (Harbhajan Singh)Date: 17.07.2013 Chairman


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MANAGEMENT DISCUSSION & ANALYSIS

A. EXPORT SECTOR & STRATEGY

India’s exports are witnessing some sort of improvement

even in the current global economic situation. With the

continuance of improvement, India’s exports are expected

to grow by about 10% this fiscal. The exponential growth

of the export sector of Indian economy can be attributed to

the liberal economic policies of the Government of India.

The exports of manufactured goods from India have been

growing moderately. According to reports, productivity

growth rate of Indian economy is estimated to be around

8% and more until Year 2020. At this stupendous growth

of the export sector of Indian economy, it is expected that

India will become the second largest economy in the world

after China.

The Company has identified Projects as a major thrust area

for future growth in turnover. The projects have been

implemented on turnkey basis without cost and time overrun

that involved supply of machines and equipment, installation

& commissioning, training in India in the reputed established

institutions and on-the-job training at project site by HMT(I)

experts besides technical assistance in management.

The Company has requisite experience and capabilities in

the following areas, which are offered to developing and

under-developed countries under MEA assisted

programmes.

1. Entrepreneur & Technical Development Centre

2. Vocational Training Centers

3. Information Technology Centers

4. Small & Medium Enterprises Development Centre

5. Tool Rooms for Engineering manufacturing

establishments

6. Common Facility Centre

7. Workshops/Laboratories for Engineering /

Educational Institutions

8. Agricultural Development Projects

9. Setting up of Mineral water projects

10. Lamp chains

In the area of Technical Training, the Company has carveda niche for itself by setting up various Vocational TrainingCenters, Advanced Training Centers, Entrepreneur TechnicalDevelopment Centers and now IT Training Centers gearedto meet the technical skill and infrastructural needs of theCountry and engineering industry complexes.

TRADING

HMT(I) offers a wide range of bearings, components,workshop equipment, Pumps & Compressors, Laboratoryequipment, X ray films and processing chemicals andcommodities

Its unique approach has resulted (culminated) in internationalrecognition and a global clientele, underlining its increasedreliability and superior quality. HMT International continuesto strive in its endeavour of technical advancement indeveloping world.

B. STRENGTH AND WEAKNESS

STRENGTHS

Products

" Backed up by HMT’s strong technological base andformidable resources over the years, the Company hascome to be recognised as a reliable source for MachineTools, Tractors and Watches.

" Wide experience in exports since three decades.

" Exported more than 18500 Machine tools, 2000 Tractorsand 14 lakh Watches

" Marketing network in 40 countries and exports to over75 countries

" Products are based on technical know-how acquiredfrom world leaders

" Executed major Agricultural Development Project

" Keeping in view the technological trend, the Companyhas been continuously diversifying its activities. Thebusiness portfolio has been expanded to includeagricultural & industrial commodities, constructionmaterials, computer systems & IT services.

" Faster after-sales service and spares supply.


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Projects & Services

" Proven experience in a spectrum of engineering fields,covering manufacturing, maintenance and executionof turnkey projects in the international market. TheCompany offers a comprehensive package ofconsultancy, technical and engineering services fromconcept to commissioning on turnkey basis.

" Backed by technical and skilled manpower from theGroup Companies of HMT.

" Successfully executed projects in areas not entirelywithin HMT’s domain (Fruit Processing, Dairy, Cashewnut processing, manufacture of Water Meter andWelding Rod).

" Core competence in execution of Training and Tool roomProjects

" Technically qualified & experienced team for executionof projects

WEAKNESS

Products

" Market reach is limited by resources

" Lack of competitive edge vis-à-vis low cost countries(China, Taiwan)

" Re-orienting the Company to global market takes timedue to past concentration on Indian market

" Free access to international market directly bymanufacturers and other traders increases competitivepressures

" Higher interest rates still high in relation to developedcountries making our products less competitive

" More response time for enquiries & tenders due tocomplex purchase procedures.

Projects & Services

" Company’s core strengths not known adequatelyabroad

" Company’s network of high level Industrial/commercialcontacts not adequate

" Mainly dependent upon MEA projects

" Lack of aggressive agents in many countries.

OPPORTUNITIES

Products & Projects

" New opportunities in engineering and services exportshave opened up through globalization

" Vast opportunity in Africa for medium technology andmedium priced goods to replace high technologywestern goods

" Presence of Indian managers helps in promotion ofIndian exports

" As protective trade tariffs come down, newopportunities will open up in export of non-traditionalgoods and services such as machine tools, tractorsand agricultural equipment

" Increasing stress on agriculture in African countriesbrings large opportunities for export of Tractors andagricultural equipment

" Stress on industrialization in developing countriesopens up market for export of Machinery andengineering and technical services

" Free trade under WTO regime creates newopportunities

THREATS

" Emergence of China and East European manufacturerswith aggressive marketing is a major threat tocompany’s exports

D Segment wise / Product wise performance

Product wise Performance: The product-wise salesfor the year 2012-13 of the Company is as under-

Sector Val. ` CroreMachine Tools 6.12Watches 0.17Tractors 0.47Projects & Services 22.54Trading & sales of Imports 4.79Total 34.09


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E. Outlook

The Company is currently exporting Machine Tools, whichforms a small quantum of its business, only to Middle East,and African countries. It is necessary for HMT (I) to explorenew markets to increase its sales. South East Asian marketis attractive in terms of export of machine tools. This marketdepends mainly on imports to meet its machine toolsequipment demand. Marketing of Machine Toolsmanufactured by other Indian manufacturers will beconsidered wherever HMT Machine Tools Limited is not ableto meet the technical or commercial requirements. Thecompany would tie-up with export organizations andCompanies to widen the basket for marketing projectexpertise.

F. RISKS AND CONCERNS

# Steep Depreciation of Indian Rupee against US Dollarhas adversely affected the market for Machine Tools,Tractors, Watches and Trading activity, which areextremely price sensitive.

G INTERNAL CONTROL SYSTEM AND THEIR

ADEQUACYThe Company has in place adequate systems of InternalControl commensurate with its size and nature of itsoperations. The salient features of internal control systemare:

• Clear delegation of power with authority limits forincurring capital and revenue expenditure.

• Well laid down corporate policies for accounting,reporting and Corporate Governance.

• Safeguarding assets against unauthorized use orlosses or disposition, and ensuring that thetransactions are authorized, recorded and reportedcorrectly.

• Process for formulating and reviewing annual/aggregateand long term/ strategic business plans have been laiddown.

• Detailed Annual budget giving further break up ofmonthly targets under various Heads.

• Compliance with Laws and Regulations

• Road Map of the Company made for the next 10 years.

H Financial Performance

The Turnover of the Company during the year 2012-13 is

Rs.34.09 Crore as compared to Rs.32.40 Crore of the

previous year. During the year, the Company has generated

a profit of Rs.6.85 Crore as against a profit of Rs.1.74 Crore

during the previous year.

I Human Resources

The manpower of the Company as on 31.03.2013 is 59.

The Company aims at continuous upgradation of skills to

ensure that employees at all levels are fully equipped to

deliver a wide variety of services to the growing customers

base of your Company. The Company has undertaken a

number of training initiatives during the year covering Junior

and Middle-level Managers. The programmes for the

employees were aimed to refresh the employees with the

current business practices, financial matters, export

management, and programmes on Corporate Social

Responsibility.

J CORPORATE SOCIAL RESPONSIBILITY

HMT Group has set up Hospitals, Schools and Playgrounds

at various Manufacturing Units for the benefit of employees

and the local community. The Company make contributions

towards maintenance of these services by HMT, the Holding

Company.

The Company presented watches to the students of HMT

Primary & Secondary Schools in Jalahalli on 1st March 2013

as part of its Corporate Social Responsibility (CSR) initiative

in the field of education.

A provision of Rs.8 Lakh has been provided in the Annual

Operating Plans of the Company for the year 2013-14.

CORPORATE GOVERNANCE

In compliance with the Guidelines on Corporate Governance

for Central Public Sector Enterprises framed by the

Department of Public Enterprises, GOI as applicable to

Government Companies and as per the applicable

provisions of the Companies act, 1956, your Company

hereby submit the report on Corporate Governance. The


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Company is committed to maintain the highest standards

of Corporate Governance and initiated appropriate action

for compliance of the Guidelines on Corporate Governance.

Board of Directors

As on March 31, 2013, the Board of Directors comprised of

Chairman, Managing Director, Director (International

Marketing) and two part-time Official Directors. Currently

the position of part-time Non Official (Independent) Directors

are vacant.

The day-to-day Management of the Company is conducted

by the Managing Director and under the supervision and

control of the Board of Directors.

During the year 2012-13, 4 (Four) Board Meetings were

held on June 15, September 17, December 27, in the

calendar year 2012 and on March 26 in the calendar year

2013.

Brief Resume of Directors appointed during the year2012-13

Shri S.G.Sridhar is the Chairman and ManagingDirector of HMT Limited. He was Director (Operations)of HMT Limited prior to his posting as the Chairman andManaging Director.

He is Mechanical Engineering Graduate with MBA inMarketing, joined HMT as an Engineer Trainee in 1977 aftera brief stint at Kirloskar Electric Ltd. He also has completedspecialized Marketing Management Course from IIM,Ahmedabad.

He has rich experience in Manufacturing, Sales & MarketingManagement, Business Planning and Development as well

Name CategoryAttendance No. of other Directorships andparticulars Committee Member /Chairmanship held

Board General Directorship CommitteeMeeting Meeting

Membership Chairmanship

S.G.Sridhar NENI 4 Yes 7 - -

Harbhajan Singh NENI 4 - 7 - -

Sumanta Chaudhuri NENI 2 - 5 - -

S.Girish Kumar ENI 4 Yes 1 - -

P.Udaya Sankar ENI 4 Yes 2 - -

The compositions of Directors and their attendance at the Board Meetings and at other Meetings during the year are:

C: Chairman & Managing Director, ENI: Executive & Non Independent, NENI: Non Executive & Non Independent, NEI:

Non Executive & Independent, NA: Not Applicable

as in the development of Corporate Strategies, BusinessAlliances and formation of Joint Ventures. He has heldseveral functional responsibilities and rose to the level ofGeneral Manager heading the Machine Tool manufacturingUnits at Bangalore and Pinjore. Just before taking over asCEO of the Company, he held the post of Director,Operations, responsible for overall business operations ofthe Company including strategic planning, implementation,management, supervision and evaluation of all the subsidiarycompanies operations as well as functional control over allthe activities of Corporate Planning & Implementation,Strategic Alliance and Joint Ventures, Projects andTechnology, Marketing policy, Systems and MIS. He hasalso served in HLL Lifecare Limited as General Manager

(Marketing).


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He has attended number of Advanced Management

Programs in the areas of Marketing and General

Management in various institutes of repute in India and

abroad. He has widely travelled on business to USA, Europe

and South Asia.

Shri S.Girish Kumar has joined HMT (International) Ltd

as Managing Director on 23rd December 2010. Shri Girish

Kumar was earlier General Manager in HMT Machine Tools,

Kalamassery.

He has done B.Sc. (Engineering) from the College of

Engineering, Trivandrum in 1983, MBA from the Cochin

University and Post Graduate Diploma in Computer

Applications from Model Engineering College, Ernakulam.

He has worked as Lecturer for a short period in Palghat

Engineering College. He joined HMT in 1984 as Specialist

Trainee. He served for about 21 years in the Engineering

Department in HMT Machine Tools, Kalamassery. Looked

after MIS functions for one year in HMT Machine Tools

Directorate, HMT Machine Tools, Bangalore. He was

heading the Sales Engineering Department for four years

in HMT Machine Tools, Kalamassery, before joining HMT

(International) Ltd.

Shri Girish Kumar holds membership in Kerala Management

Association, Institution of Plant Engineers and the Institution

of Standards Engineers.

Committees of the Board

The Audit Committee of the Company has to be

reconstituted and the Remuneration Committee of the

Company to be constituted after the induction of the

Independent directors on the Board of the Company by the

Government. The Company has requested to the

Administrative Ministry for the same.

Remuneration of Directors

An amount of Rs.1,500/- is payable only to independent

Directors for attending each meetings of the Board and

Committees.

General Body Meetings

The last three Annual General Meetings of the Company

were held as under:

Special Resolution, if any

Annual General Meeting for the current year is scheduled

before September 30, 2013 at the Registered Office of the

Company.

Disclosures

There were no transactions of material nature with its

Promoters, the Directors or the Management or their

relatives which may have the potential conflict with the

interest of the Company.

There were no instances of non-compliance by the Company,

penalties, strictures imposed on the Company by statutory

authority, or any matter related to any guidelines issued by

Government, during the last three years. The Company has

not established a whistle Blower Policy for the employees.

However, none of the employee has been denied the access

up to the senior level management.

Means of Communication

Being a wholly owned Subsidiary, Company submits

financial results periodically to M/s. HMT Limited, the

Holding Company. Annual results are also updated on the

Company’s website www.hmti.com.

Financial year Date Time Venue

2009-10 27.08.2010 11.30 A.M At the Registered

Office of the Company

2010-11 26.08.2011 10.30 A.M —do—

2011-12 17.08.2012 10.00 A.M —do—


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To

The MembersM/S. HMT (INTERNATIONAL) LIMITED,BANGALORE.

I have examined the registers, records, books and papersof M/S. HMT (INTERNATIONAL) LIMITED, as required tobe maintained under the Companies Act, 1956, (the Act)and the rules made there under and also the provisionscontained in the Memorandum and Articles of Associationof the Company for the financial year ended on 31.03.2013(financial year). In my opinion and to the best of myinformation and according to the examinations carried outby me and explanations furnished to me by the company,its officers and agents, I certify that in respect of theaforesaid Financial Year

1. The Company has kept and maintained allregisters as stated in Annexure ‘A’ to thiscertificate, as per the provision of the Act and therules made there under and all entries therein havebeen duly recorded.

2. The Company has duly filed the forms and returnsas stated in Annexure ‘B’ to this certificate, withthe Registrar of Companies Regional Director,Central Government, Company Law Board orother authorities within the time prescribed underthe Act and the rules made there under

3. The Company, being a Public Limited Company,has the minimum prescribed paid up Capital.

4. The Company is a Government Company asdefined under Section 617 of the Companies Act,1956. The Board of Directors met 4 timesrespectively on 15.06.2012, 17.09.2012,27.12.2012 and on 26.03.2013 in respect of whichmeetings proper notices were given and theproceedings were properly recorded and signedincluding the circular resolutions passed in theMinutes Book maintained for the purpose.

COMPLIANCE CERTIFICATE

CIN: U33309KA1974PLC002707 AUTHORISED CAPITAL: ̀ 800 LAKHS

5. The Company was not required to close its registerof members during the Financial Year.

6. The Annual General Meeting for the Financial Yearended on 31.03.2012 was held on 17.08.2012 aftergiving due notice to the members of the Companyand the resolutions passed thereat were dulyrecorded in Minutes Book maintained for thepurpose.

7. No Extra-ordinary Meeting was held during theFinancial Year.

8. The Company has not advanced any loans to itsdirectors or persons or firms or Companies referredto under Section 295 of the act.

9. The Company being a Government Company theprovisions of Section 297(1) of the Act is notapplicable.

10. The Company has made necessary entries in theRegister maintained under Section 301 of the Act.

11. As there were no instances falling within thepurview of Section 314 of the Act, theCompany has not obtained any approvals fromthe Board of directors, members or CentralGovernment, as the case may be.

12. The Company has not issued any duplicatecertificates during the financial year.

13. The Company has :-

(i) Delivered all the Certificates on lodgmentthereof for transfer in accordance with theprovisions of the Act.

(ii) Paid the amount of dividend declared includinginterim dividend.

(iii) The company has paid dividends to all themembers within the period of 30 days fromthe date of declaration

(iv) Not applicable

(v) Duly complied with the requirements of section217 of the Act.


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14. The Board of Directors of the Company is dulyconstituted. There was no appointment ofAdditional Directors, Alternate Directors andDirectors to fill casual vacancy during the year.

15. The Company being a Government Company, theprovisions of Section 269 of the Act is notapplicable.

16. The Company has not appointed any Sole SellingAgents during the Financial Year.

17. The Company was not required to obtain anyapprovals of the Central Government,Company Law Board, Regional Director, Registrarof Companies and/or such authorities prescribedunder the various provisions of the Act.

18. The Directors have disclosed their interest in otherfirms/Companies to the Board of Directorspursuant to the provisions of the Act and the rulesmade there under.

19. The Company has not issued any Shares,debentures or other Securities duringthe Financial Year.

20. The Company has not bought back any sharesduring the Financial Year.

21. There was no redemption of preference shares ordebentures during the Financial Year.

22. There were no transactions necessitating thecompany to keep in abeyance the rightsto dividend, rights shares and bonus sharespending registration of transfer of shares.

23. The Company has not invited/accepted anydeposits within the purview of Section 58A duringthe Year.

24. The amount borrowed by the Company formdirectors, members, public, financial institutions,banks and others during the financial year is withinthe borrowing limits of the Company.

25. The Company has not made any loans or advancesduring the financial year.

26. The Company has not altered the provisions ofthe Memorandum with respect to Situation of theCompany’s Registered Office from one State toanother during the year under scrutiny.

27. The Company has not altered the provisions ofthe Memorandum with respect to theObjects of the Company during the year underscrutiny.

28. The Company has not altered the provisions ofthe Memorandum with respect to Name of theCompany during the year under scrutiny.

29. The Company has not altered the provisions ofthe memorandum with respect to Share Capitalof the Company during the year under scrutiny.

30. The Company has not altered its Articles ofAssociation during the Financial Year.

31. There was no prosecution initiated against or showcause notices received by the Company duringthe financial year, for offences under the Act.

32. The Company has not received any money assecurity from its employees during the FinancialYear.

33. The Company has not constituted any separateTrust for its employees and hence the questionof deposit of contribution with prescribedauthorities pursuant to Section 418 of the Act doesnot apply.

Sd/-A. V. Sundaresh

Practicing Company SecretaryC. P. No. 2022

Place : Bangalore No. 147, Malleswaram ArcadeDate : 05.06.2013 Margosa Road, Malleswaram, Bangalore - 560 003


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FORMS AND RETURNS AS FILED BY THE COMPANY WITH REGISTRAR OF COMPANIES,REGIONAL DIRECTOR, CENTRAL GOVERNMENT OR OTHER AUTHORITIES DURINGTHE FINANCIAL YEAR ENDED 31ST MARCH 2013.

ANNEXURE A

Registers as maintained by the Company:-

1. Register of Members u/s 150 of the Act.

2. Register of Directors u/s 303.

3. Register of Directors Shareholding u/s 307

4. Minutes of Board Meetings with Attendance Register.

5. Minutes of Annual General Meetings with Attendance Register.

ANNEXURE B

1. Balance Sheet as on 31.03.2012 Filed on 04.01.2013

2. Annual return as on 17.08.2012 Filed on 09.10.2012

3. Compliance Certificate Filed on 11.09.2012


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CERTIFICATE ON CORPORATE GOVERNANCE

To

The Members of HMT(International)Limited,

We have examined the compliance of conditions of Corporate Governance by HMT(International)Limited, (“the Company”),for the year ended on 31st March 2013, as stipulated in Guidelines on Corporate Governance for Central Public SectorEnterprises.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination waslimited to procedures and implementation thereof, adopted by the company for ensuring the compliance of the conditionsof Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the company.

The full complements of Independent Directors as required under Corporate Governance Guidelines have not been fulfilledand the Audit Committee was not re-constituted.

Subject to the above, in our opinion and to the best of our information and according to the explanations given to us, wecertify that the Company has complied in all material respects with the conditions of Corporate Governance as stipulatedin the above mentioned Guidelines.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiencyor effectiveness with which the management has conducted the affairs of the Company.

For S.L. Patil & Co.,Chartered Accountants

Firm’s Regn. No.: 002606SSd/-

S.L. PatilDate : ProprietorPlace : Bangalore Membership No.: 032810

DECLARATION BY THE MANAGING DIRECTOR

Sub: Code of Conduct - Declaration under Clause 3.4.2

This is to certify that:

In pursuance of the provisions of Clause 3.4.2 of Corporate Governance Guidelines of DPE, a Code of Conduct for theBoard Members and Senior Management Personnel is in place.

The said Code of Conduct has been uploaded on the website of the Company and has also been circulated to the BoardMembers and the Senior Management Personnel of the Company; and,

All Board Members, and the Senior Management Personnel have affirmed compliance of the said Code of Conduct, forthe year ended March 31, 2013.

( S. Girish Kumar)Managing Director

Place: BangaloreDate: 06.06.2013


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INDEPENDENT AUDITOR’S REPORT

ToThe Members ofHMT (International) LimitedBangalore.

We have audited the accompanying financial statementsof M/s. HMT (International) Limited (“the Company”),which comprise the Balance Sheet as at March 31, 2013,and the Statement of Profit and Loss and Cash FlowStatement for the year then ended, and a summary ofsignificant accounting policies and other explanatoryinformation.

We have verified the accounts relating to projects i.e., IMITC– Myanmar, IMITC Myingyan - Myanmar, SMES - Zimbabwe,VTC Batticaloa – Sri Lanka, VTC Nuwara Eliya – SriLanka, VTCCS - Indonesia, ITMEW- Tajikistan and RGSPA- Mangolia as at 31st March 2013, on the basis ofstatements, originals or copies of bills, vouchers and otherdocuments made available to us at the Head Office. Wehave not visited the above projects during our audit.

Management is responsible for the preparation of thesefinancial statements that give a true and fair view of thefinancial position, financial performance and cash flows ofthe Company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of theCompanies Act, 1956 (“the Act”). This responsibilityincludes the design, implementation and maintenance ofinternal control relevant to the preparation and presentationof the financial statements that give a true and fair view andare free from material misstatement, whether due to fraudor error.

Our responsibility is to express an opinion on these financialstatements based on our audit. We conducted our audit inaccordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standardsrequire that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from materialmisstatement. An audit involves performing procedures toobtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected dependon the auditor’s judgment, including the assessment of therisks of material misstatement of the financial statements,whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevantto the Company’s preparation and fair presentation of thefinancial statements in order to design audit proceduresthat are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accountingestimates made by management, as well as evaluating theoverall presentation of the financial statements. We believethat the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.

In our opinion and to the best of our information andaccording to the explanations given to us, the financial

statements give the information required by the Act in themanner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at March 31, 2013;

(b) in the case of the Statement of Profit and Loss, ofthe profit for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cashflows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order,2003 (“the Order”) issued by the Central Government ofIndia in terms of sub-section (4A) of section 227 of theAct, we give in the Annexure a statement on the mattersspecified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a. we have obtained all the information and explanationswhich to the best of our knowledge and belief werenecessary for the purpose of our audit;

b. in our opinion proper books of account as requiredby law have been kept by the Company so far asappears from our examination of those books [andproper returns adequate for the purposes of our audithave been received from branches not visited by us];

c. the Balance Sheet, Statement of Profit and Loss,and Cash Flow Statement dealt with by this Reportare in agreement with the books of account [andwith the returns received from branches not visitedby us];

d in our opinion, the Balance Sheet, Statement of Profitand Loss, and Cash Flow Statement comply withthe Accounting Standards referred to in subsection(3C) of section 211 of the Companies Act, 1956;

e. Being a government Company, the provisions ofsection 274(1) (g) is not applicable.

f. Since the Central Government has not issued anynotification as to the rate at which the cess is to bepaid under section 441A of the Companies Act, 1956nor has it issued any Rules under the said section,prescribing the manner in whic h such cess is to bepaid, no cess is due and payable by the Company.

For S.L. Patil & Co.,Chartered Accountants

Firm’s Regn. No.: 002606S

Sd/-S.L. Patil

Place : Bangalore ProprietorDate : 06/06/2013 Membership No.: 032810


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ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OURREPORT OF EVEN DATE

1. a) The Company has maintained proper records

showing full particulars including quantitative

details and situation of fixed assets;

b) We are informed that the Company has a

procedure for physical verification of fixed

assets once in three years, the physical

verification have been carried out by the

management during the year 2010-11, no

material discrepancies were identified, as per

programme of verification which, in our opinion,

is reasonable having regard to the size of the

company and the nature of its business.

c) There has been no disposal of substantial part

of fixed assets during the year.

2. a) The inventory has been physically verified

during the year by the management at

reasonable intervals. In our opinion, the

frequency of verification is reasonable.

b) The procedures of physical verification of

inventories followed by the management are

reasonable and adequate in relation to the size

of the company and the nature of its business.

c) On the basis of our examination of records of

inventory, we are of the opinion that the

company is maintaining proper records of

inventory. No discrepancies noticed on

verification between the stocks and the book

records.

3. a) As informed, the Company has not granted

any loans, secured or unsecured to

Companies, firms or other parties covered in

the register maintained under section 301 of

the Companies Act , 1956. Accordingly, sub

clauses (a) (b) (c) and (d) are not applicable.

b) As informed, the Company has not taken any

loans, secured or unsecured from Companies,

firms or other parties covered in the register

maintained under section 301 of the

Companies Act, 1956. Accordingly, sub

clauses (e) (f) and (g) are not applicable.

4. a) In our opinion and according to the information

and explanations given to us, there are

adequate internal control systems

commensurate with the size of the Company

and the nature of its business with regard to

purchase of inventory, fixed assets and with

regard to sale of goods and services. During

the course of our audit, no major weaknesses

have been noticed in the internal control

systems and there is no continuing failure to

correct major weakness in the internal control

systems.

5. a) In our opinion and according to the information

and explanations given to us, there are no

transactions that need to be entered in to the

register maintained under section 301 of the

Companies Act, 1956.

b) As there are no comments as indicated

above, the clause (v) (b) of the Order is not

applicable.

6. The Company has not accepted any deposits from

the public; hence in our opinion the provision of

section 58A and 58AA of the Companies Act, 1956

and the rules made there under are not applicable.

7. In our opinion, the Company has an internal audit

system commensurate with its size and nature of

business.

8. Maintenance of cost records under clause (d) of

the sub-section (1) of section 209 of the

Companies Act, 1956 has not been prescribed for

the company.

9. a) According to the records of the Company,

Provident Fund, Investor Education and

Protection Fund, Employees State Insurance,

Income Tax, Sales Tax, Wealth Tax, Service

Tax, Custom Duty, Excise Duty, Cess and any


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other statutory dues have generally been

regularly deposited during the year with the

appropriate authorities.

b) According to the information and explanations

given to us, none of the above undisputed

statutory dues were outstanding as at 31st

March, 2013 for a period of more than 6

months from the date they became payable.

c) According to the information and explanations

given to us, there are no dues in respect of

Sales Tax, Income Tax, Wealth Tax, Service

Tax, Custom Duty, Excise Duty and Cess that

have not been deposited with the appropriate

authorities on account of any dispute.

10. The Company has no accumulated losses as at

31st March, 2013 and it has not incurred any cash

losses in the financial year ended on that date or

in the immediately preceding financial year.

11. The Company has not defaulted in the repayment

of dues to financial institutions or banks or

debenture holders.

12. According to the information and explanations

given to us and the documents and records

produced before us, the Company has not granted

any loans and advances on the basis of security

by way of pledge of shares, debentures and other

securities.

13. In our opinion, the Company is not a chit fund or a

nidhi /mutual benefit fund/ society. Therefore

clause 4(xiii) of Companies (Auditor’s Report)

Order, 2003 is not applicable to the company.

14. Based on our examination of the records and

evaluation of the related internal controls, we are

of the opinion that the company has not dealt in

or traded in shares, securities, debentures and

other investment. Accordingly the provision of the

clause 4 (xiv) of the Companies (Auditor’s Report)

order, 2003 is not applicable to the Company.

15. The Company has not given any guarantees for

loans taken by others from banks or financial

institutions.

16. The Company has not availed any term loans

during the year from the company’s bankers and

therefore the question of purpose for which it is

utilized does not arise.


given to us and on an overall examination of the

balance sheet of the Company, we report that no

funds raised on short term basis have been used

for long term investment.

18. The Company has not made any preferential

allotment of shares to parties and companies

covered in the register maintained in the Section

301 of the Companies Act, 1956.

19. There are no debentures issued by the Company

during the year and hence clause 4 (xix) of the

Companies (Auditor’s Report) Order, 2003 is not

applicable to the Company.

20. During the year the Company has not raised

money by way of public issues and hence clause

4 (xx) of the Companies (Auditor’s Report) order,

2003 is not applicable to the company.


given to us, no fraud on or by the Company during

the year has been noticed or reported during the

course of our audit.

For S.L. Patil & Co.,

Chartered Accountants

Firm’s Regn. No.: 002606S

Sd/-

S.L. Patil

Place : Bangalore Proprietor

Date : 06/06/2013 Membership No.: 032810


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COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION619(4) OF THE COMPANIES ACT, 1956 ON THE ACCOUNTS OF HMT (INTERNATIONAL)LIMITED, BANGALORE FOR THE YEAR ENDED ON 31 MARCH 2013

The preparation of financial statements of HMT (International) Limited, Bangalore for the year ended on 31 March 2013 in

accordance with the financial reporting framework prescribed under the Companies Act, 1956 is the responsibility of the

management of the company. The Statutory Auditor appointed by the Comptroller and Auditor General of India under

section 619(2) of the Companies Act, 1956 is responsible for expressing opinion on these financial statements under

Section 227 of the Companies Act, 1956 based on independent audit in accordance with the Auditing and Assurance

Standards prescribed by their professional body, the Institute of Chartered Accountants of India. This is stated to have

been done by them vide their Audit Report dated 06 June 2013.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under Secton 619(3)

(b) of the Companies Act, 1956 of the financial statements of HMT (International) Limited, Bangalore for the year ended

on 31 March 2013. This supplementary audit has been carried out independently without access to the working papers

of the Statutory Auditors and is limited primarily to inquiries of the Statutory Auditor and company personnel and a

selective examination of some of the accounting regards. On the basis of my audit, nothing significant has come to my

knowledge, which would give rise to any comment upon or supplement to Statutory Auditor’s report under Section 619(4)

of the Companies Act, 1956.

For and on the behalf of theComptroller and Auditor General of India

(N. Karunakaran)Principal Director of Commercial Audit &

Place: Hyderabad Ex-Officio Member, Audit Board,Date : 17 July 2013 Hyderabad


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ACCOUNTING POLICIES

Basis of preparation of financial statements

The financial statements are prepared as of a going concern,under the historical cost convention, on accrual basis ofaccounting and in accordance with the provisions of theCompanies Act, 1956 and comply with the mandatoryAccounting Standards prescribed under Companies(Accounting Standards) Rules, 2006, to the extentapplicable.

A. FIXED ASSETS

i) Own Assets: Fixed Assets are stated at itsacquisition cost.

ii) Assets taken on Financial Lease are capitalizedat fair value/NPV/contracted price. Depreciationon the same is charged at the rate applicable tosimilar type of fixed assets as per AccountingPolicy on “Depreciation”. If the lease assets arereturnable to the lessor on expiry of lease period,the same is depreciated over its useful life orlease period, whichever is shorter. Leasepayments made are apportioned between financecharges and reduction of outstanding liability inrelation to assets taken on lease.

Lease rentals in respect of operating leasearrangements including assets taken onoperating lease are recognized as expense inthe Statement of profit & loss on accrual basis.

B. INVENTORY

Inventories are valued at lower of cost or net realizablevalue.

The diminution in the value of obsolete, unserviceableand surplus stores and spares is ascertained on reviewand provided for.

C. DEFERRED REVENUE EXPENDITURE

Lump sum compensations paid for VoluntaryRetirement is charged off in the year of Retirement.

D. INTEREST ON DEFERRED CREDITS

Interest on deferred credits included in the value ofpromissory notes received/issued are accounted foronly to the extent of actual accrual.

E. FOREIGN CURRENCY TRANSLATION

Foreign Currency translations relating to assets andliabilities are treated in the accounts as under:

1 Investment

Investments in ventures outside India are stated atthe Rupee cost as on the date of Investment.

2. Current Assets & Liabilities

i) Current Assets:

a) Debtors and related transactions (likesales, overseas agency commission etc.)are accounted at the rate of exchangeprevailing on the date of transaction andadjusted at the closing rate of exchange.

b) Other Current assets are accounted at therate prevailing on the date of transactionand adjusted at the closing rates ofexchange.

ii) Current Liabilities:

c) Creditors and related transactions (likepurchases) are accounted at the rate ofpredetermined on the date of transactionand adjusted at the closing rates ofexchange.

d) Current liabilities are accounted at the rateof prevailing on the date of transaction andadjusted at the closing rate of exchange.

The net exchange difference resulting from the abovetranslation is recognized in the revenue.

3. Foreign Branches/ Offices/ Projects

The transactions and balances of foreign branches/offices and projects are translated to Indian Rupeesas under:

i) Fixed Assets

a) In respect of assets held as at 31.03.1991,the assets will be retained at the Rupeevalue stated in the books as on 31.03.1991.

b) In respect of assets acquired after31.03.1991, in the foreign branches andat offices and projects, at the applicablerates of exchange on the date of acquisition.

ii) Inventories

a) Opening inventories at the opening ratesof exchange.

b) Closing Inventories at the closing rates ofexchange.

iii) Depreciation

Depreciation on fixed assets is charged at theapplicable rates with respect to costs arrived atas specified in (i) above.

iv) Other transactions

Assets (other than fixed assets & inventories),liabilities, income and expenditure (other than


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depreciation) are transferred at the closing ratesof exchange.

v) The net exchange difference resulting from thetranslation of items in the financial statementsof foreign branches /offices/ projects isrecognized in the revenue.

F. DEPRECIATION

Depreciation on fixed assets is provided on straightline method at the rates specified in Schedule XIV tothe Companies Act, 1956. Depreciation on additionsto / deductions from fixed assets during the year ischarged on pro rata basis from/upto the date in whichthe asset is available for use/disposal. Assets costingup to ` 5000/- are fully depreciated in the year ofacquisition. Fully depreciated fixed assets areretained in the books of accounts at the value of` 1/-.

G. WARRANTIES

Warranty provision in respect of goods exported bythe company is set up based on the past experienceand is provided in the year of sale.

In case, where company accepts additional warranty,beyond the normal warranty period, such contractualobligations is provided in the year of sale on case tocase basis.

With regard to turnkey projects implemented by thecompany, a warranty provision at the rate of 2% of thepurchase value will be provided in the books ofaccounts.

H. REVENUE RECOGNITION

1. The company recognizes revenue fromconsultancy agreements / contracts using thepercentage of completion method of accounting,which involves calculating the percentage ofservices provided during the reporting periodcompared with the total estimated services tobe provided over the duration of the agreement /contract.

2. The company records transactions as saleswhere the delivery of the goods and services arecomplete as per the terms of the contract. Inrespect of execution of project works awardedby Government of India, under its Aidedprogramme, is accounted based on the goodsshipped to the customers and periodical billingfor technical services.

I. EMPLOYEES BENEFITS

Provident fund is provided for, under a defined benefitscheme. The Contributions are made to the Trustadministered by the Company.

Leave encashment is provided for under a definedbenefit scheme based on actuarial valuation.

Gratuity is provided for under a defined benefit scheme,to cover the eligible employees, liability beingdetermined by actuarial valuation conducted by LIC ofIndia and is remitted to the Approved Trust.

Settlement allowance is provided for, under a definedbenefit scheme, to cover the eligible employees,liability being determined on actuarial valuation.

Pension is provided for under defined contributions,contributions are made to the Pension Fundadministered by the Government.

J. INCOME TAX

Current Tax

Current tax provision is made annually based on thetax liability computed in accordance with provisionsof the Income Tax Act 1961.

Deferred Taxes

Deferred tax liability or asset is recognized for timingdifferences between the profits/losses offered forIncome taxes and profits/losses as per the financialstatements. Deferred tax assets and liabilities aremeasured using the tax rates and tax laws that havebeen enacted or substantively enacted at the balancesheet date. The effect on deferred tax assets andliabilities of a change in tax rates is recognized in theyear that includes the enactment date.

Deferred tax assets in respect of losses carried forwardare recognized only to the extent that there is virtualcertainty that sufficient future taxable income will beavailable against which such deferred tax assetscan be realized. Other deferred tax assets arerecognized only if there is a reasonable certainty thatsufficient future taxable income will be availableagainst which such deferred tax assets can be realizedand are reassessed for the appropriateness of theirrespective carrying values at each balance sheet date.

K. EARNINGS PER SHARE

Basic earnings per share is determined by consideringthe net profit after tax, inclusive of the post tax effecton extraordinary items, if any and the number of sharesoutstanding on a weighted average basis.


24

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BALANCE SHEET AS AT 31ST MARCH 2013 (` in lakhs)

Figure as at the Figure as at the PARTICULAR Note end of current end of previous No. reporting period reporting period

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

Share capital B1 72.00 72.00

Reserves and surplus B2 3,029.99 2,598.25

NON-CURRENT LIABILITIES

Deferred tax liabilities (Net) B3 117.02 115.47

Long-term provisions B4 40.70 48.64

CURRENT LIABILITIES

Trade paybles B5 495.98 703.33

Other current liabilities B6 658.70 1,143.36

Short-term provisions B7 822.64 690.72

TOTAL 5,237.03 5,371.77

ASSETS

NON-CURRENT ASSETS

Fixed assests:-

Tangible assets B8 566.28 483.89

Other Non Current Assets B9 - -

CURRENT ASSETS

Inventories B10 1.81 40.89

Trade receivables B11 1,156.00 1,640.70

Cash and cash equivalents B12 2,454.80 2,096.84

Short-term loans and advances B13 1,058.14 1,109.45

TOTAL 5,237.03 5,371.77

See accompanying notes to the financial statements.

Additional Information to Balance Sheet B14

Accounting Policies form part of the accounts

For and on behalf of the Board As per our report of even dateFor S. L. Patil & Co.

Chartered Accountants(Firm Registration No.002606S)

S.G. SRIDHAR S.GIRISH KUMAR P. UDAYA SANKAR S. L. PATILChairman Managing Director Director Proprietor

(International Marketing) M. No. 032810

Place : Bangalore M. C. ASHOK KUMARDate : 06-06-2013 Asst. General Manager, Finance


25

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Figure for Figure for PARTICULAR Note the current the previous No. reporting period reporting period

Revenue from operations P1 3,408.76 3,240.26Other Income P2 1,035.92 731.40Total Revenue 4,444.68 3,971.66

Expenses:Cost of sales, services and works P3 3,065.69 2,832.84Employees benefits expense P4 456.15 486.65Depreciation 18.60 18.61Finance costs P5 10.92 (4.14)Other expense P6 208.29 181.15Total Expenses 3,759.65 3,515.11Profit / (Loss) Before Adjustment for Prior Period, Exceptional,Extraordinary Items and Tax 685.03 456.55Add: Prior Period Adjustment (PPA) P7 - 0.63

Profit / (Loss) Before Extraordinary Items and Tax 685.03 457.18

Less: Exraordinary Items P8 - 283.27

Profit / (Loss) Before Tax 685.03 173.91Add: Tax provision of earlier years with drawn - 17.81Less: Tax expense:Current Tax expense for the current year 235.00 55.00Deffered Tax 1.55 1.92Profit / (Loss) for the year 448.48 134.80Balance brought forwarded from the previous year 0.39 0.33

448.87 135.13Proposed Dividend 14.40 14.40Tax on Dividend 2.34 2.34Trasfer to General Reserve 431.00 118.00Balance carried to Balance Sheet 1.13 0.39Earnings Per Equity Share:Equity shares of par value ` 10/- eachBefore Extra Ordinary itemsBasic/Diluted 95.14 63.50After Extra Ordinary itemsBasic / Diluted 95.14 18.72No. of equity shares used in computing earnings per shareBasic / Diluted 7.20 7.20See accompanying notes to the financial statementsAdditional Information to Statement of Profit and Loss P9Accounting Polices form part of the Accounts.

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31.03.2013 (` in lakhs)



S.G. SRIDHAR S.GIRISH KUMAR P. UDAYA SANKAR S. L. PATILChairman Managing Director Director Proprietor

(International Marketing) M. No. 032810



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NOTES FORMING PART OF BALANCE SHEET (` in lakhs)

B1 SHARE CAPITAL

AUTHORISED

80 lakh (previous year 80 lakh) Equity Shares of .

`10 each with voting rights 800.00 800.00

ISSUED, SUBSCRIBED & PAID UP CAPITAL WITH VOTING RIGHTS 72.00 72.00

7.20 Lakh (previous year 7.20 lakh) Equity shares of ̀ 10 each

held by the Holding Company and its nominee.

[Of the above,

500 Equity Shares of ̀ 10 each were allowed as fully paid-up

for cash 29.500 Equity Shares of ` 10 each were alloted as fully

paid - up (otherwise in consideration for cash) and

690.000 Equity Shares of ` 10 each were alloted as fully paid-up

bonus shares by capitalisation of reserves]

72.00 72.00

B2 RESERVES AND SURPLUS

Particulars As at Additions Withdrawals

01.04.2012

General Reserve 2597.86 431.00 - 3,028.86 2,597.86

Surplus/(Deficit) in Statement of Profit and Loss 1.13 0.39

3,029.99 2,598.25

NON CURRENT LIABILITES

B3 DEFFERRED TAX LIABILITIES (NET)

Defferred tax liabilities arising on account of Depreciation 117.02 115.47

117.02 115.47

B4 LONG TERM PROVISIONS

Earned Leave Encashment 32.17 38.75

Settlement Allowance 8.53 9.89

40.70 48.64

CURRENT LIABILITIES

B5 TRADE PAYABLES

Acceptance,

Dues towards Goods supplied & Services received 362.73 645.79

Dues to Micro, small and Medium Enterprises 133.25 57.54

495.98 703.33

Figure as at the Figure as at the

NoteParticulars end of current end of previous

No.

reporting period reporting period


27

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NOTES FORMING PART OF BALANCE SHEET

B6 OTHER CURRENT LIABILITIES

Due to the Holding Company 16.87 14.54

Unpaid salaries 324.56 667.62

Advance received against sales 281.97 407.81

Employees recovery Remittances 7.73 8.62

Earnest Money Deposits 11.21 19.34

Retention Money from Suppliers 5.17 -

Others 11.19 25.43

658.70 1,143.36

B7 SHORT TERM PROVISIONS

Taxation 419.58 191.00

Dividend and tax on dividend 16.74 16.74

Gratuity 15.75 109.48

Earned Leave Encashment 16.75

Settlement Allowance 3.26

Provision for contingencies 254.05 283.10

Provision for warranties 69.71 78.10

Others 26.80 12.30

822.64 690.72



No.



28

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NON-CURRENT ASSETSB9 OTHER NON CURRENT ASSETS

INVENTORIESNon moving Stock-in-trade at lower of cost or net realisable value 46.86 47.54Less : Provision for obsolescence 46.86 47.54

- -CURRENT ASSETS

B10 INVENTORIESStock-in-trade at lower of cost or net realisable value 1.81 40.89

1.81 40.89B11 TRADE RECEIVABLES

UNSECUREDTrade receivalbes outstanding for a period less than six months from thedate they are due for payment:

Considered good 892.19 1,503.67Trade receivalbes outstanding for a period exceeding six monthsfrom the date they are due for payment:

Considered good 263.81 137.03(Include ̀ 451.66 lakh due from Group Company’s under the samemanagement) 1,156.00 1,640.70

B12 CASH AND CASH EQUIVALENTS(a) Balances with banks

(i) In current accounts 594.74 202.84(ii) In EEFC accounts 89.61 26.30(iii) In earmarked accounts

Balances held as margin money or security against guaranteesand other Commitments 1,719.00 1,863.00

(b) Others Deposits with maturity of more than 3 months but less than 12 months 51.45 4.70

2,454.80 2,096.84B13 SHORT TERM LOANS AND ADVANCES

SECURED, CONSIDERED GOOD Advances recoverable in cash or in kind or value to be received 3.56 3.56UNSECURED, CONSIDERED GOOD(a) Loans and advances to related parties 630.00 630.00(b) Security Deposit 10.05 26.16(c) Loans and advances to employees 10.97 14.83(d) Prepaid expenses 4.49 14.59(e) others -

Advances paid to suppliers / services providers 5.65 42.59Interest recoverable on Deposits with Banks 12.52 13.45Claims receivables 53.14 25.53Export Incentives receivables 3.63 3.25Advance Tax:

Tax Deducted at Source for the current year 26.79 39.01Advance Income Tax for the current year 75.00 20.00Income Tax Assessment Pending 222.34 276.48

1,058.14 1,109.45

NOTES FORMING PART OF BALANCE SHEET (` in lakhs)



No.



30

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Note As at As atNo. Particulars 31.03.2013 31.03.2012

B14 ADDITIONAL INFORMATION TO BALANCE SHEET1 The company is contingently liable for:

1.1 Guarantees & Counter Guarantees and Letter of Credits issued to various partiesby the Company’s bankers. 699.55 1,240.18

1.2 Estimated amount of commitment remaining to be executed on capital account and

not provided for the cost of Stamp duty, Registration and other charges for Building (5th Floor, HMT Bhavan) - 78.95

2 The company is pursuing a claim from EIC, Ethiopia, which is backed by Sovereign

Guarantee of Government of Ethiopia for dues outstanding since 1991. The estimatedpresent value of the claim is as follows:

a. Supplies and interest ( as per Schedule of Payment due from EIC). - 5,307.76

b. Overdue Interest due from Feb ’91, which has not been accounted for in the books. - 6,428.843 Trade Paybles

Disclosure regarding dues to Micro & Small Enterprises based on the information available with the Company

a. Dues to Micro & Small Enterprises remaning unpaid as at the end of the yeari. Principal 133.25 57.54

ii. Interest due thereon - -

b. Amount of interest paid along with the amounts of payment made to the supplier beyond the appointed day during the year. - -

c. Amount of interest due and payable for the period of delay in making the payment ( which have been paid but beyond the appointed day during the year but without adding the interest

under MSMED Act, 2006. - -

d. Amount of interest accrued and remaining unpaid as at the end of the accounting period. - -e. Amount of further interest remaining due and payable even in the succeeding year, until such

date when the interest dues as above are actually paid to the small enterprises - -

4 Advances (Long Term / Short Term) include4.1 Amount recoverable from employees advances, bonus etc pending adjudication/negotiations 0.02 0.03

4.2 Adhoc payments to employees towards Wage/Salary, DA arrears, if any, pending adjustment &

provision to this extent has been made in the accounts 10.50 10.895 The company has initiated recovery actions against certain Parties viz., Koluthara Exports Ltd., Kerala, Nawab Cashew Packers, Kerala and Nucor Wires

Ltd., Bangalore, for non payment of dues / breach of contractual obligations, by initiating Arbitration proceedings and for executionof the Award through the

jurisdictional Civil Courts involving an amount of ̀ 116 lakh plus 9% interest from 01.06.2001 to the date of settlment, ̀ 69.23 lakh Plus 18% interest from03.02.2003 to the date of settlment and ̀ 65.50 lakh from the respective party, and the same are pending in various stages of court process. The Company

is hopeful of early recovery of these dues based on the Arbitration Awards / recovery suits, obtained in favour of the Company.

6 Provision for Taxation has been made under provisions of the Income Tax Act, 1961.7 Balances under Trade Receivables, Loans & Advances, Trade Payables are subject to confirmation, although confirmation has been sought in most of the

cases.

(` in lakhs)NOTES FORMING PART OF BALANCE SHEET


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NOTES FORMING PART OF PROFIT AND LOSS STATEMENT

P1 REVENUE FROM OPERATIONSSale of products 1,501.68 855.56Technical services 74.67 9.62Project sales and services 1,825.34 2,371.18Export assistance 7.07 3.90

3,408.76 3,240.26P2 OTHER INCOME

Interest on Deposits with banks 189.17 179.62 (TDS for the year ` 19.03 (Previous year ` 19.21 lakh)Interest on Inter corporate loan 66.00 66.00 (TDS for the year ` 5.41 lakh (Previous year ` 4.30 lakh)Interest recovery on advances & others 39.29 22.29Provision no longer required 246.26 454.33Earlier Bad Debts written off realised now 412.97 -Profit on sale of asset 0.84 -Discount Received 0.38 -Miscellaneous income 81.01 9.16

1,035.92 731.40P3 COST OF SALES, SERVICES AND WORKS

Purchases 2,358.73 2,095.52Changes in inventories of finished goods, work-in-progress andStock-in-Trade (Schedule P3.1) 39.76 (23.88)Freight on export 45.38 22.62Insurance on exports 7.03 1.91ECGC Premium 0.69 0.79Clearing, handling and inspection 34.23 140.33Agency Commission paid to agents 0.31 9.08Erection & Commissioning charges 12.37 8.64Warranties 35.41 35.08Contingencies 164.82 247.15Other expenses (Schedule P6.1) 366.96 297.94FOB charges recovered - (2.34)

3,065.69 2,832.84 P3.1 CHANGES IN INVENTORIES OF STOCK IN TRADE,

WORK IN PROGRESSStock-in-TradeOpening stock:Finished goods 88.43 64.55

88.43 64.55Less: Closing Stock:Finished goods 48.67 88.43

48.67 88.43 39.76 (23.88)

Figures for the Figures for theNote Particulars current reporting previous reportingNo.

period period

(` in lakhs)


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P4 EMPLOYEES BENEFIT EXPENSESSalaries, Wages, Bonus and other benefits 335.90 294.22House Rent Allowance 22.49 18.67Gratuity Premium 15.75 116.47Contribution to Provident Fund & Family Pension Scheme 36.78 33.04Welfare Expenses 45.23 24.25

456.15 486.65P5 FINANCE COSTS

Interest Expense 0.39 2.03Gain/loss on foreign currency transaction and translation (net) 10.53 (6.17)

10.92 (4.14)P6 OTHER EXPENSES

Rent 5.58 5.05Rates and taxes 0.36 0.70Office Maintenance 9.33 7.42Printing & stationery 3.64 3.75Royalty 18.89 16.35Books periodical & membership 2.86 1.35Electricity & water 0.30 0.26Advertisement & Publicity 1.91 3.03Exhibitions 7.89 0.76Communication 13.55 11.94Audit fee: Statutory audit (including applicable taxes) 0.49 0.45 Tax audit (including applicable taxes) 0.15 0.13Travelling & Conveyance 58.11 43.16Delegation & export promotion 8.63 9.09Repairs & Maintenance other than building & machinery 3.09 3.41Insurance general 0.39 0.45Training, seminars & conferance 0.87 0.60Vehicle maintenance 2.02 1.83Professional and legal 1.50 1.30Bank charges 6.37 5.22Fees for services rendered 9.18 13.50Charges paid to Holding Co. 41.30 41.68Loss on Assest sold - 1.35Loss sustained by PF Trust - 0.22Corporate Social Responsibility (CSR) 0.42 -Miscelleneous 11.46 8.15

208.29 181.15


period period

(` in lakhs)


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P6.1 OTHER EXPENSES (COST OF SALES, SERVICES AND WORKS)Printing & stationery 0.69 0.67Advertisement & Publicity 4.94 1.89Communication 0.55 0.07Travelling & Conveyance 64.09 61.91Delegation & export promotion 2.85 5.47Training, seminars & conferance 149.95 73.02Bank charges 5.96 9.07Fees for services rendered 137.65 145.45Miscelleneous 0.28 0.39

366.96 297.94P7 PRIOR PERIOD ADJUSTMENTS (PPA)

Expenditure Other Expenses - -Less : Income Export Incentives - 0.63 Sales of products -

0.63P8 EXTRA ORDINARY ITEMS

1997 pay / wage revision arrears of separated employees - 283.27

- 283.27

Year ended Year ended31.03.2013 31.03.2012

P9 ADDITIONAL INFORMATION TO STATEMENT OF PROFIT AND LOSS

1 Revenue from operations includes

Project Works including services executed under an agreement with Government of

India against which physical exports have been completed up to 31.03.2013 1,825.34 2,371.18

2 Other Income Includes -

a) Earlier Bad Debts written off realised now ( EIC, Ethiopia) 412.97 -

b) Miscellaneous Income -

Old unclaimed advances treated as income 71.39 -

3 Employee Benefit expenses include

i) Provision for Earned Leave encashment made based on Actuarial valuation

of Earned Leave at credit as at the year end 22.14 11.73

ii) Provision for Settlment Allowance made based on Acturial Valuation 1.68 1.36

iii) Gratuity has been provided for/paid under Group Gratuity Policy with Life

Insurance Corporation of India on the basis of acturial valuation conducted

by the LIC of India. 15.75 116.47


period period

(` in lakhs)


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NOTES FORMING PART OF STATEMENT OF PROFIT AND LOSS (` in lakh)

Note Year ended Year endedNo. 31.03.2012 31.03.2011 Particulars

vi) Payments relation to Directors ( including Managing Director)

Salaries 18.92 18.45

Provident Fund 2.08 1.87

Gratuity Premium 0.86 0.76

Welfare 0.39 0.44

4 Consequent to the Implementation of 1997 pay/wage revision vide GOI, MHI & PE,

DPE, Order No. 05-III(5)2009-P.E.X dated 15.06.2011, accounting of arrears

from 01.01.1997 to 31.03.2009 has resulted in reduction in profit to the extent of - 283.27

5 Other expense include

a) Travelling expenses of Directors 20.04 14.49

b) Company’s Share of loss sustained by PF Trust - 0.22

6 Additional information required under Part-II of schedule VI to the companies Act,1956

I. Consumption of Raw materials, components, spares & accessories:

Improted 20% 486.58 20% 410.14

Indigenous 80% 1,911.91 80% 1,661.50

TOTAL 100% 2,398.49 100% 2071.64

II. CIF Value of Imports:

Components & Accessories 478.53 418.19

III. Earnings in Foreign Exchange

a) FOB Value of Exports 602.22 380.06

b) Technical Services 92.19 84.83

TOTAL 694.41 464.89

IV Particulars of turnover: Qty. Nos. VALUE Qty. Nos. VALUE

Machine tools, spares & accessories 16 1,040.97 12 843.01

Tractors / Automobiles 11 47.44 0 0.14

Watches 2629 16.64 2810 12.41

Project supplies 83 1,427.56 115 1,961.58

Income from Technical services 472.45 419.22

Trading 29.96 -

Computers & software 742 366.67 -

Export Incentives 7.07 3.90

TOTAL 3481 3,408.76 3,240.26

The turnover includes Highseas Sales ̀ . 478.53 (Previous year ̀ .410.14)

V Expenditure in Foreign Currency:

Travelling Expenses 51.34 37.29

Others 546.95 542.90


35

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1 Rconciliation of changes in respect of obligationsPresent Value of obligation as at the beginning of the year 324.23 200.38Interest cost 25.94 16.03Current Service Cost 6.72 6.68Benefits paid (3.58) (3.91)Actuarial (gain) / loss on obligation 10.24 105.05Present Value of obligation as at the end of the year 363.55 324.23

2 Reconciliation of change in the fair value of plan assetsFair value of plan assets at the beginning of the year 222.02 193.85Expected return of plan assets 27.37 18.87Contributions 108.92 13.21Benefit paid (3.58) (3.91)Actuarial Gain / (Loss) on Plan assets - -Fair value of plan assets at the end of the year 354.73 222.02

3 Reconciliation of fair value of the plan assetsFair value of plan assets at the beginning of the year 222.02 193.85Actual return on plan assets 27.37 18.87Contributions 108.92 13.21Benefit paid (3.58) (3.91)Fair value of plan assets at the end of the year 354.73 222.02Funded status 8.82 102.21

4 Acturial Gain / Loss recognisedActuarial (gain) / loss for the year - obligation (10.24) (105.05)Acturial (gain) / loss for the year - plan assets - -Total (gain) / loss for the year 10.24 105.05Actuarial (gain) / loss recognised in the year 10.24 105.05

5 Amounts recognised in the Balance Sheet and Profit & Loss AccountPresent Value of obligation as at the end of the year 363.55 324.23Fair value of plan assets at the end of the year 354.73 222.02Funded status (8.82) (102.21)Net asset / (liability) recognised in the balance sheet 8.82 102.21

6 Expenses Recognised in statement of Profit & Loss AccountCurrent Service Cost 6.72 6.68Interest Cost 25.94 16.03Expected return on plan assets (27.37) (18.87)Net Actuarial (gain)/loss recognised in the year 10.24 105.05Expenses recognised in statement of Profit and Loss 15.53 108.89

DICLOSURE REQUIRMENT AS PER ACCOUNTING STANDARD - 15 (REVISED)

The Grauity has been provided by the Company under a Defined Benefit Plan to cover eligible employees, the liabilitybeing determined on actuarial valuation done by LIC using Projected Unit Method. The Company has taken a Policyunder Group Gratuity Scheme with LIC and annual contribution are made to the extent required, to the separate Trustconstituted and administered by LIC of India for the full coverage.The actuarial valuation has been made based on the following assumptions: 1 Retirement age 60 Years 60 Years 2 Future Salary escalation 7% p.a 7% p.a 3 Rate of Discount 8% p.a 8% p.a 4 Attrition rate 1to 3% depending on the age 5 Mortality rate LIC (1994-96) UltimateDefined Benefit Plan (` in Lakhs)

Grauity (Funded)

2012-13 2011-12


36

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DICLOSURE REQUIRMENT AS PER ACCOUNTING STANDARD - 1

Conseqent to modification in accounting policies in respect of Fixed Assets, Inventory, Deferred Revenue Expenditure,

Depreciation, Revenue Recognition and Employees Benefits, there would not be any significant impact on account of

these modifications as the company was accounting as per the requirements.

SEGMENT REPORTING AS PER ACCOUNTING STANDARD - 17The company is carrying out the business of export of goods & services and Setting up projects overseas, wherein the

supply of goods & services are integral part of Product as well as projects, consequently the primary business of the

company is same during the year. There exits no distinguishable segments to be reported upon.

DICLOSURE REQUIRMENT AS PER ACCOUNTING STANDARD - 22

- Depreciation (` in lakh)

Deferred Tax Assets / (Liabilities) as at 01.04.2012 (115.47)

Charged / (credit) during the year (1.55)

Deffered Tax Assets / (Liabilities) as at 31.03.2013 (117.02)

DICLOSURE REQUIRMENT AS PER ACCOUNTING STANDARD - 29- Provisions and Contingent Liabilities (`̀̀̀̀ in Lakh)

Sl Opening Additions Used during the year ClosingNo. Nature of Provision Balance as on during the Amount Amount Balance as on

01.04.2012 year Utilised with drawn 31.03.2013

1 Provision for Contigencies 283.10 164.82 0.99 192.88 254.05

2 Provision for Erection & Commissioning 2.05 2.72 0.55 1.50 2.72

3 Provision for Gratuity 109.48 15.75 109.48 - 15.75

4 Provision for Earned Leave Encashment 41.65 22.14 14.87 48.92

5 Provision for Settlement Allowance 10.36 1.68 0.25 11.79

6 Provision for Warranties 78.10 35.41 1.07 42.73 69.71

TOTAL 524.74 242.52 127.21 237.11 402.94


37

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(` in lakhs)

A. CASH FLOW FROM OPERATNG ACTIVITIESNet Profit before tax and dividend 685.03 173.91Adjustment forDepreciation 18.60 18.61Profit on Sale of Fixed Assets (Net) (0.84) 1.35Interest income (Net) (294.07) (265.88)Operating Profit / (loss) before working capital changes 408.72 (72.01)Adjustment for (increase) / decrease in operating assetsInventories 39.08 (40.89)Trade Receivables 484.70 (1,126.61)Short-term loans and advances 51.31 (101.96)Cash Generated from Operations 983.81 (1,341.47)Adjustment for for increase / (decrease) in operating liabilitiesTrade paybles (207.35) 507.08Other current liabilities (484.66) 404.68Short-term provisions 131.92 28.50Long-term provisions (7.94) (4.47)Net Cash from / (used in) operating Activities (A) 415.78 (405.68)

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (101.11) (7.13)Sale proceeds of Assets and investments 0.96 -Income Tax (paid) / refunds (235.00) (55.00)Income Tax provision of earlier years withdrawn - 17.81Net Cash used in Investing Activities (B) (335.15) (44.32)

C. CASH FLOW FROM FINANCING ACTIVITIESDividend paid (14.40) (14.40)Tax on dividend (2.34) (2.34)Interest income (Net) 294.07 265.88Net cash flow from / (used) financing activities ( C) 277.33 249.14Net Increase / (decrease) in cash & cash equivalents (A+B+C) 357.96 (200.86)Opening Cash and Cash Equivalents 2,096.84 2,297.70Closing Cash and Cash Equivalents 2,454.80 2,096.84Net Increase/Decrease(-) in cash & Cash Equivalents 357.96 (200.86)

Year ended Year ended Particulars 31.03.2013 31.03.2012

CASH STATEMENT FOR THE YEAR ENDED 31.03.2013



Sd/-S.G. SRIDHAR S.GIRISH KUMAR P. UDAYA SANKAR S. L. PATIL

Chairman Managing Director Director Proprietor(International Marketing) M. No. 032810


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