ZYLOG-SYS-2012-2013.Pdf
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TABLE OF CONTENTS Corporate Information 1 Notice of AGM 2 Directors’ Report 5 Management’s Discussion and Analysis 15 Report on Corporate Governance 17 Financial Statements Auditors’ Report 30 Balance Sheet 36 Statement of Profit and Loss Account 37 Cash Flow Statement 38 Notes Forming Part of the Financial 40 Statements Consolidated Financials Auditors’ Report 61 Balance Sheet 63 Statement of Profit and Loss Account 64 Cash Flow Statement 65 Notes Forming Part of the 67 Consolidated Financial Statements CORPORATE INFORMATION Board of Directors Statutory Auditors SUDARSHAN VENKATRAMAN M/s. Ramadoss & Company Chairman and CEO Registered Office RAMANUJAM SESHARATHNAM 155, Thiruvalluvar Salai Managing Director and COO Kumaran Nagar Sholinganallur M GAJHANATHAN Chennai 600119 Director USA Headquarters Mr K S SUBRAMANIAN 85, Lincoln Highway Director Edison, NJ 08820 P SRIKANTH Branches Executive Director Hyderabad, India (Resigned during FY 2013-14) Bangalore, India Mumbai, India Mr. M.P.MEHROTRA Fairfax, Virginia Director New York, New York (Appointed during FY 2012-13 & Chicago, Illinois Resigned during FY 2013-14) Houston, Texas Fremont, California Bankers Union Bank of India Syndicate Bank ICICI Bank Ltd PNC Bank Wachovia Bank Commerce Bank JP Morgan Chase Bank CITI Bank HSBC Registrars & Transfer Agents M/s. Cameo Corporate Services Limited “Subramanian Buildings” No.1, Club House Road, Chennai -600002, India Email:[email protected] Website: www.zsl.com NOTICE OF AGM ZYLOG SYSTEMS LIMITED Regd. Off. : 155, Thiruvalluvar Salai, Kumaran Nagar, Sholinganallur, Chennai - 600119 NOTICE Notice is hereby given that the Eighteenth Annual General Meeting of Zylog Systems Limited will be held on Thursday, April 10, 2014 at 9.00 a.m. at the Registered office of the company to transact the following business: ORDINARY BUSINESS 1. To receive, consider and adopt the Audited Statement of Profit and Loss for the year ended March 31, 2013 and the Balance Sheet as at that date together with the Notes attached thereto, along with the Reports of the Board of Directors’ and Auditors’ thereon. 2. To appoint a Director in place of Mr. M.Gajanathan who is liable to retire by rotation and is eligible for re-appointment. 3. To appoint Auditors of the Company to hold office from the conclusion of this meeting until the conclusion of the next Annual General Meeting and to fix their remuneration. M/s. Ramadoss & Co., Chartered Accountants, Chennai the retiring auditors, are eligible for re- appointment. SPECIAL BUSINESS 4. To consider and if thought fit to pass with or without modification the following resolution as Ordinary Resolution: “RESOLVED THAT Mr. K.S. Subramanian who was appointed as an Additional Director on February 14, 2014 on the Board of the Company in terms of Section 161 of the Companies Act, 2013 and who holds office upto the date of this Annual General Meeting and in respect of whom notice has been received from a member in writing, under section 257 of the Companies Act, 1956, proposing his candidature for the office of the Director be and is hereby appointed as Director of the Company whose period of office will not be subjected to retirement by rotation.” By the order of the Board For Zylog Systems Limited -s/d- Date: February 14, 2014 Ramanujam Sesharathnam Place: Chennai Managing Director & COO Notes: (a) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE ANNUAL GENERAL MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF/HERSELF AND SUCH PROXY NEED NOT BE A MEMBER OF THE COMPANY. A PROXY IN ORDER TO BE EFFECTIVE MUST REACH THE REGISTERED OFFICE OF THE COMPANY ATLEAST 48 HOURS BEFORE THE SCHEDULED TIME OF THE MEETING. A BLANK PROXY FORM IS ATTACHED. (b) Members/ proxies should bring duly-filled Attendance Slips sent herewith to attend the meeting. (c) The Register of Members and Transfer Books of the Company has already been closed from December 21, 2013 to December 24, 2013 (both days inclusive) for the purpose of Annual General Meeting, hence no fresh book closure require to be fixed. (d) The Explanatory Statement pursuant to Section 102 of the Companies Act, 2013, relating to Special Business to be transacted at the meeting, is annexed hereto. (e) The relevant details as required by Clause 49 of the Listing Agreements entered with the Stock Exchanges, of person seeking re-appointment as Director under Item no.4 of the Notice is given below. Information pursuant to Clause 49 of the Listing Agreement for appointment of Director Item No.4: Mr.K.S. Subramanian, appointed as on February 14, 2014 and posses knowledge in the field of Cost Accounting with experience in the field for more than 35 years. Mr. K.S.Subramanian holds NIL shares in the company. By the order of the Board For Zylog Systems Limited -s/d- Date: February 14, 2014 Ramanujam Sesharathnam Place: Chennai Managing Director & COO ANNEXURE TO NOTICE EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013 ITEM NO.4 Mr.K.S.Subramanian was appointed as the Additional Director by the Board of Director in the Board meeting held on February 14, 2014 in accordance with the provisions of section 260 of the Companies Act, 1956. Pursuant to Section 161 of the Companies Act, 2013 he holds office upto the date of this Annual General Meeting. In this regard the Company has received request in writing from a member proposing his candidature for appointment as Director of the Company in accordance with the provisions of section 257 and other applicable provisions of the Companies Act, 1956. None of the Directors or key managerial personnel of the company or their relatives are interested in this resolution. By the order of the Board For Zylog Systems Limited -s/d- Date: February 14, 2014 Ramanujam Sesharathnam Place: Chennai Managing Director & COO DIRECTORS’ REPORT To the Members, The Directors submit the Annual Report of the Company along with the audited financial statements for the financial year ended March 31, 2013. FINANCIAL RESULTS AND REVIEW OF OPERATION During FY 2012-13, the company has posted a muted financial performance, both at the standalone and consolidated level. Net Profit at the consolidated level has come down from ` 204.40 crores in the previous year to ` 2.99 crores. At standalone level, our loss after tax amounted to ` 8.09 crores as against the previous year profit of ` 173.89 crores. On consolidated basis, our profit after tax amounted to ` 2.99 crores as against ` 204.40 crores. This is principally due to three factors. Increase in Finance (interest) Costs to the tune of ` 63 Crores when compared to FY 2012. Increase in Depreciation/Amortization Charges to the extent of ` 118 crores & Bad debts written off to the tune of ` 20 Crores. These three factors coupled with losses suffered due to foreign currency fluctuation dealt a severe flow to P&L account. The Indian rupee which was at levels of ` 42 to a US dollar in October 2011 started to depreciate sharply to levels of ` 55 within a short period and again from ` 55 it steadily depreciated to levels Rs 68 before settling to current levels of ` 62 to a USD. The working capital PCFC loan limits was fixed in INR but availment & repayment was in USD. Steep Rupee depreciation caused overdrawn situation in the account. Banks either adjusted or sent letters to adjust the overdrawn immediately without any delay irrespective of whether the receivables are overdue or not, thus the Rupee depreciation effected in PCFC limit shrinkage. This explains the huge ` 200 crores forex loss suffered by the company cumulatively during the period starting from October 2011 until September 2013 ie spread over 3 financial years of FY 2012, FY 2013 & FY 2014. The company had no option but to request the bank either to fix the limits in US$ or increase the limit by the depreciated portion as the availment has always been PCFC as majority of expenses being in US$. Unfortunately, both the requests were not considered and thus leading to overdrawn situation. Due to prior customer contractual commitments, the company had to borrow outside consortium by way of unsecured loan from banks/NBFCs to tie up the WC deficit. This created an increased expense in interest costs. Further lot of capex items which were in WIP the previous year went on stream this year for which Depreciation/amortization expenses had to be taken. The net worth of the company has decreased to ` 819.53 crores from ` 827.61 crores whereas the group net worth has increased to ` 911.57 crores from ` 909.00 crores. The EPS stood at -2.46 (` 52.86 PY) for standalone and ` 0.91 (` 62.14 PY) for the group for the FY ending 31st March 2013. CORPORATE DEBT RESTRUCTURING (CDR) The Board of Directors are striving hard to bring out the Company from the present severe financial crises through CDR. The Directors are in the process of approaching the Consortium bankers on this matter through the Professional Consultants. SUBSIDIARIES The Company has 8 Subsidiaries as on March 31, 2013. There has been no material change in the nature of the business of the Subsidiaries. A statement containing brief financial details of the subsidiaries is included in the Annual Report. As required under the Listing Agreements entered into with the Stock Exchanges, a consolidated financial statement of the Company and all its subsidiaries is attached. The Consolidated financial statements have been prepared in accordance with the relevant accounting standards as prescribed under Section 211(3C) of the Act. These financial statements disclose the assets, liabilities, income, expenses and other details of the Company and its subsidiary companies. Pursuant to the provision of Section 212(8) of the Act, the Ministry of Corporate Affairs vide its circular dated February 8, 2011 has granted general exemption from attaching the balance sheet, statement of profit and loss and other documents of the subsidiary companies with the balance sheet of the Company.