DIRECTORS’
REPORT
The
Members of
WALCHAND
CAPITAL LIMITED
Your
Directors present herewith the 83rd Annual Report together with the Audited
Statement of Accounts for the year ended March 31, 2003.
1.
FINANCIAL RESULTS
(Rs.
In Lacs)
|
|
2002-03 |
2001-02 | ||
|
Profit/(Loss)
before interest, depreciation and taxation |
|
(395.75) |
|
46.57 |
|
Less:
Interest |
0.03 |
|
2.20 |
|
|
Depreciation |
26.45 |
|
27.17 |
|
|
Provision
for Taxation-current/earlier years |
6.06 |
|
3.67 |
|
|
- Deferred |
- |
|
6.43 |
|
|
|
|
32.54 |
|
39.47 |
|
Net
Profit /(Loss) |
|
(428.29) |
|
7.10 |
|
Add:
Balance brought forward |
|
1003.53 |
|
997.85 |
|
Less:
Transferred to Reserve Fund |
|
- |
|
(1.42) |
|
Total |
|
575.24 |
|
1003.53 |
|
Appropriations |
|
|
|
|
|
Dividend |
|
- |
|
- |
|
Dividend
Tax |
|
- |
|
- |
|
Balance
carried forward |
|
575.24 |
|
1003.53 |
|
Total |
|
575.24 |
|
1003.53 |
2.
DIVIDEND
The
Board of Directors do not recommend any dividend for the year in view of the
losses incurred.
3.
MANAGEMENT
DISCUSSION AND ANALYSIS
a)
Industry
Structure and Development
The
year 2002-03 has been a mixed year for the Indian economy. It was adversely
affected by the poor agriculture output due to monsoon failure, global economic
slow down and geo-political tension on account of Iraq crisis. India’s GDP
growth for 2002-03 was down to 4.4%, well below the target of 6.7% and the 5.6%
growth registered in 2001-02. This is mainly on account of the poor performance
of the agricultural sector which showed negative growth of 3.1%. While the
services sector continued its strong growth (7.1%), what was heartening was the
performance of the Industrial sector that is estimated to have shown a growth of
6.1%. The main contribution to this has been the infrastructure segment.
Although the Indian economy looks better poised to stage good recovery with the
continuous recording a current account surplus and foreign reserves at a record
level, there is a lot to be achieved in terms of real growth. This has resulted
in softening of interest rates. The soft interest rate policy is set to continue
as per the present government policy. The Capital market continued to remain
very depressed and subdued during the year. This weakness coupled with
continuous downward trend in the interest rates significantly affected the
performance of the Company.
b) Opportunities and
Threats:
Your
Company has been continuously evaluating its core business model and growth
prospects under the changing financial and economic scenario. As part of this,
your company has decided to phase out its NBFC operations and focus its
activities in the growing and specialized sector of Training and Development
dedicated to capacity building among corporates, institutions and professionals.
In continuation of that process, the company has entered into an exclusive
arrangement with Dale Carnegie & Associates, Inc., U.S.A. for providing
their world-class training programmes in India. Dale Carnegie is recognized
internationally as the leader in behavioral and soft skills training. The
institution has a presence in more than 55 countries throughout the world and
more than 2700 instructors present Dale Carnegie Training programs in more than
25 languages. Your company will work as a franchisee of Dale Carnegie in India
through its newly formed division “Dale Carnegie Training - India” and offer
these courses through its trained and certified faculty. We expect the
commencement of the training operations during the final quarter of the current
year.
Various
estimates for The Training sector in India peg the market size between Rs. 1500
– 2500 crores. With the services sector growing exponentially in India and the
globalisation of the manufacturing sector, the need for soft-skills and global
behavior training is also growing manifold. Today, the Training market is
dominated by many individual trainers and small training consultancies and there
is big need gap for Training of global benchmark quality. With the launch of
Dale Carnegie Training- India, we will, for the first time in India, establish
the Training services of an internationally acclaimed business leader. Your
company therefore, has a good potential to achieve market
leadership in a short period of time.
c)
Outlook, Risks
and Concerns
The
growing training needs of the industry in coming years present a positive
outlook for your company. The growth of ITES, Insurance, Telecommunications and
other service sectors will only fuel the need of the industry for globalised
training.
The
expanding business in the sector is likely to attract more corporate players in
this sector and therefore, the competition is expected to grow in the coming
years. The management is aware and does expect that other international players
may enter the markets in India. The management therefore has planned an
effective marketing strategy to leverage the first-mover advantage in the long
run and use innovative marketing strategies and strategic alliances to achieve
and then retain the market leadership.
The
key challenge for your Company is to maintain delivery of benchmark training
standards. For this your Company intends ensuring selective development of
individual trainers who would undergo a rigorous process of training, approval
and certification by the Company in order to be able to conduct Dale Carnegie
Training programmes.
d) Segmentwise
Performance
The Company’s main business during the year related to investment and it
did not carry out any other business activities. The investment related
activities were adversely affected substantially due to the prolonged depressed
capital market conditions resulting in diminution in valuation of its
investments.
e) Internal Control Systems and their
adequacy
The Company has adequate and
effective control systems, commensurate its size and nature of business,
to ensure that assets are efficiently used and the interest of the Company is
safe guarded and the transactions are authorised, recorded and reported
correctly. Checks and balances are in place to determine the accuracy and
reliability of accounting data. The preventive control systems provide for well
documented policy, guidelines, authorization and approval
procedures.
f) Financial Performance with respect to operational
performance
Total income during the year under review was Rs. 109.98 lacs as against
Rs. 240.27 lacs in the previous year. This was due to the fact in the previous
year the Company earned income from the sale of investments to the extent of
125.68 lacs whereas during the year this income was only Rs. 1.08 lacs. Loss
before taxation suffered by the Company during the year amounted to Rs. 422.23
lacs as against the profit of Rs.
17.21 lacs in the previous year. This was substantially affected mainly due to
provision for diminution in value of investments to the extent of Rs. 292.52
lacs as against 1.75 lacs in the previous year. After providing for taxation of
Rs. 6.06 lacs during the year (Rs.10.10 lacs in previous year), the net loss
suffered by the Company arrived at Rs. 428.29 lacs as against net profit of Rs.
7.10 lacs as in the previous year. The financial performance of the Company
reflects the generally weak market scenario in the financial sector during the
year and a lower liquidity with the Company leading to reduced market exposure.
The improving capital market conditions alongwith the Company’s strategy to
focus on new business sectors are expected to yield better performance in the
coming year.
g) Human
Resources
Your
Company considers its manpower as most valuable asset. Personnel policies of
your Company are designed to ensure fairness to and growth of all individuals in
the organisation and continuously strives to provide a challenging work
environment. The Company’s total
manpower strength stands presently at 14. With the launch of our Dale Carnegie
Training operations, the team strength will expand during the current year.
4.
INVESTMENTS
During
the year under report the outstanding position in the investment of shares and
debentures of various companies were to the tune of Rs.623.39 lacs as compared
to the last year’s investment of Rs. 946.67 lacs. This is due to current year
provision for diminution amounting to Rs. 292.51 lacs.
The
Book value of the quoted investments for the year under review was 774.05 lacs
(previous year Rs. 800.82 lacs) and its market valuation was Rs.244.64 lacs
(previous year Rs. 295.69 lacs).
5.
SUBSIDIARIES
The
annual accounts of Vikhroli Metal Fabricators Limited, Walchand.Com Ltd and
Walchand Securities Limited for the year ended March 31, 2003 are annexed to
this report as required under the Companies Act, 1956.
6.
CONSOLIDATED FINANCIAL STATEMENTS
In
accordance with Accounting Standard 21 – “Consolidated Financial Statements”
Issued by the Institute of Chartered Accountants of India, the audited
Consolidated Financial Statements of the Group are annexed. These Group accounts
have been prepared on the basis of audited financial statements received from
the Subsidiaries Companies, as approved by their respective Boards.
7. FIXED DEPOSITS
Your
Company had stopped accepting / renewing fixed deposits since February 1998. The
Company after obtaining necessary approval from the Reserve Bank of India had
offered to repay the entire fixed deposits to all the deposit holders, who were
holding the deposits as on August 31, 1999, including the interest
thereon.
As at
March 31, 2003, the outstanding liability from 9 fixed depositors were Rs.0.69
Lac. The entire outstanding liability is on account of matured fixed deposits
which remained unclaimed. ICRA Credit rating for this Scheme is “MA+”, which
indicates adequate safety for timely payment of interest and
principal.
Pursuant
to clause 49 of the Listing Agreement with the Stock Exchanges, a compliance
report on Corporate Governance together with a Certificate from the Statutory
Auditors is annexed as part of the Annual Report.
To
the best of their knowledge and belief and according to the information and
explanation obtained by them, your Directors make the following statement in
terms of Section 217(2AA) of the Companies Act, 1956 :
a)
that
in the preparation of the Annual Accounts for the year ended March 31, 2003, the
applicable accounting standards have been followed alongwith proper explanation
relating to material departures, if any.
b)
that
the Directors have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and prudent
so as to give a true and fair view of the state of affairs of the Company at the
end of the financial year ended March 31, 2003 and of the profit of the Company
for that year.
c)
that
the Directors have taken proper and
sufficient care for the maintenance of adequate accounting records in accordance
with the provisions of the Companies Act,1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities
d)
that the Directors have prepared the Annual Accounts for the year ended
March 31, 2003, on a going concern basis.
10.
DIRECTORS
Mr.
Vivek Sekhar has resigned from the Directorship of the Company with effect from
30-8-02. The Board places on record its appreciation of valuable services
rendered by him.
In
accordance with the Articles & Association of the Company and provisions of
the Companies Act, 1956 Ms. Pallavi Jha and Mr. Sanjay Jha retire by rotation at
the ensuing Annual General Meeting and being eligible, offer themselves for
re-election. Your Directors recommend
their re–appointment.
11.
STATUTORY AUDITORS
You
are requested to appoint Auditors for the current year and fix their
remuneration. The Auditors of the Company, Messrs K. S. Aiyar & Co.
Chartered Accountants retire at ensuing Annual General Meeting of the Company
and have given their consent for re-appointment. The Company has also received a
certificate from them under Section 224 (1–B) of the Companies Act,
1956.
12.
CONSERVATION OF
ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND
OUTGO.
The
provisions of Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 are not applicable.
During
the year under review, the Company utilised and earned foreign exchange
amounting to Rs. 90891/- and Rs. Nil respectively.
13.
DELISTING OF EQUITY SHARES FROM PUNE STOCK
EXCHANGE
The
equity shares of your Company are presently listed on the Stock Exchanges at
Mumbai (BSE) and Pune (PSE) respectively. With the extensive networking of BSE
and terminus to the other cities as well, investors have access to online
dealings in the Company’s share across the Country. As per the information
received, there had been no trading at all in the Company’s shares at Pune Stock
Exchange during the last five years. Continued listing at the Pune Stock
Exchange therefore neither serves the interest of the Members / Investors nor
that of the Company. Accordingly it is proposed to voluntarily delist equity
shares of the Company from the Pune Stock Exchange. For this purpose a Special
Resolution seeking your approval is appearing in the Notice convening the
83rd Annual General Meeting. Your Directors recommend the Special Resolution for your
approval.
14.
SHARE REGISTRY ACTIVITIES
In
compliance with the SEBI directive to have share registry work at single point,
your Company has appointed M/s. Computech Sharecap Limited, Fort, Mumbai as its
new Registrar & Transfer Agents for both physical & demat segments with
effect from 1-4-2003.
15.
PARTICULARS OF EMPLOYEES
The
Company has no employee in the category specified under Section 217(2A) of the
Companies Act,1956.
For and on behalf of the
Board of Directors
Date
:July 25, 2003
PALLAVI
JHA
Place
:Mumbai.
CHAIRPERSON & MANAGING DIRECTOR
1,
Construction House,
Walchand
Hirachand Marg,
Ballard
Estate, Mumbai 400
001.