moser baer annual report 2008
TRANSCRIPT
Moser Baer’s Tryst with Destiny 2
Vision and Mission 4
Letter to Shareholders 6
Better Storage Solutions 8
Photovoltaics 10
Home Entertainment 12
Year 2007-08 at a Glance 14
Corporate Social Responsibility 16
Board of Directors 22
Management Discussion and Analysis 26
Directors’ Report 52
Corporate Governance Report 60
Moser Baer India Ltd.:
- Auditors’ Report and Financials 80
- Consolidated Financial Statements 116
c o n t e n t s
1
m o s e r b a e r ’s t r y s t w i t h d e s t i n y
“You are today where your thoughts
and your vision have brought you;
you will be tomorrow where
your thoughts and your vision
take you.”
Long years ago, Moser Baer made a tryst with destiny. We wanted to be at the forefront of the technological
revolution that we knew would sweep India in the years to come. Twenty-five years on, it is gratifying to
see that the organisation has redeemed that pledge in substantial measure. We started humbly with
manufacturing time devices, but even those long years back our unifying vision was to catapult India into
the forefront of technological innovation and excellence.
Today, we can say that we are among a handful of Indian companies that have contributed to the
establishment of new global technology standards. We have successfully developed cutting edge
technologies to become the world’s second largest manufacturer of optical media. Riding on our
technology strengths, we have now transformed ourselves from a single business into a multi-business
and technology organization. Diversifications have come in several exciting new areas: solar energy, home
entertainment, IT peripherals and consumer electronics.
We have a presence in as many as 82 countries and have strong relationships with almost all global
technology brands. More than 7,500 full-time employees are working to ensure that Moser Baer goes
from strength to strength. It is they who have helped the sapling grow into a sturdy tree, which in years to
come will blossom into a giant oak.
Proud as we can justifiably feel over what we have achieved over this quarter century, in truth we have
only just begun. The next 25 years of Moser Baer beckon. Our best years lie ahead.
“Touching every life across the globe through high technology products and services” is our vision. Let’s
strive relentlessly towards realizing that vision. For vision without action is merely a dream. Action without
vision just passes the time. Vision with action, however, can change the world.
3
v i s i o n
m i s s i o n
“Touching every life across the globe through high technology products and services”
We will drive growth through our excellence in mass manufacturing. We will move up the value chain through rapid development of technology, products and services. We will leverage our relationships, distribution, cost leadership and “can do” attitude to become a global market leader in every business.
5
d e a r s h a r e h o l d e r s ,
I am delighted to inform you that your Company has completed
25 years in business. In the past 25 years, your Company
has made significant progress and has several achievements
including diversification to new businesses. I thank each one
of the stake holders for standing by the Company during this
eventful 25 years. It gives me great satisfaction to share with you
that many of the events and milestones your Company achieved
during this period are taking us closer to our vision.
With your continued support, I am confident that your Company
will scale new heights through its improved performance in the
existing business and through next generation products and
services.
Despite the difficult market conditions for optical media, the
Company was able to generate INR 3,193.2 million of cash from
operations. Our revenues declined by 5.6% to INR 19,582 million
and profit after tax stood at INR (789.1) million. Further, your
Company also made notable progress in all the new business.
BUSINESS OVERVIEW
Optical Storage Media
The year however was difficult for the optical media business.
The supply of Optical media products was far in excess of
demand causing severe price pressures. Added to appreciation
of the Indian Rupee and increasing prices of inputs in the
petrochemical value chain impacted financial performance. I
can assure you that this temporary phenomenon will soon be
overcome by aggressive initiatives your Company is pursing
to enhance competetiveness. These initiatives include new
products and cost reduction in existing products.
On the technology front, your Company continues its efforts for
staying ahead of competition by leveraging its recent acquisition
of OM &T, B.V, for launching the Blu-ray disc. We are confident
that your Company is prepared to lead the next generation
evolution in the Blue laser based products.
The information explosion continues without any respite and
so does the demand for cost efficient storage. On the back of
the R&D efforts, Moser Baer’s optical media products continue
to be one of the lowest cost per megabyte storage products, a
milestone, which we believe, will drive robust demand for our
products over the foreseeable future
Photovoltaics (PV)
The Photovoltaic domain commenced its commercial operations
during the second quarter of this year. In the very first year of
commercial production your company generated US$ 42 million
revenues in the fast growing PV business.
We are leveraging our core competencies in R & D and
manufacturing to emerge as a significant player in the global PV
industry. The second phase of the crystalline silicon project will
be ready for commissioning in the next quarter. The objective,
in the near future, clearly is to bring down PV electricity costs to
match conventional energy price points. In line with this strategy,
we have already commissioned one of the world’s largest form
factor thin film solar fab. This plant is under trial production and
will soon start commercial operations.
Home Entertainment
Our initiative in this business aims to bring about a paradigm
change in the home video market – a market characterized by
high fragmentation and rampant piracy. With superior quality,
unbeatable price points and a rich library, we are confident
of redefining the home video market in India. Additionally,
this business will allow us to move up the value chain and we
are optimistic of emerging as a leader in this highly exciting
segment.
So far we have launched about 50% of our library and it gives me
great pride to state that the response to this new business has
been overwhelmingly positive. This is just the beginning. In the
home entertainment segment, your Company has commenced
film production in multiple languages. We are confident that this
new business will create significant shareholder value.
Our People
Today, after 25 years, Moser Baer is an organization of strong
leaders and exceptionally talented and dedicated individuals.
People have been central to our success and it is through their
unyielding contribution that Moser Baer will continue to make
a difference to the lives of more people than before. I take this
opportunity to thank all our employees for their dedication and
hard work.
Finally, I want to thank all our Shareholders, Bankers, Suppliers
and Customers for their continued support as we enter into what
we believe to be an even more exciting new era for Moser Baer.
I assure you we will all continue to work hard to get there.
Best Regards
Deepak Puri
Chairman & Managing Director
7
b e t t e r s t o r a g e s o l u t i o n s
With a comprehensive range of optical media products and technology, Moser Baer is among
the world’s largest manufacturers of optical media. A strong R&D thrust has enabled the
Company to lead the technology in the optical media industry, making it one of the few Indian
companies to have contributed to the establishment of new global technology standards. With
Blu-ray disc (BDR) emerging as the front runner in the high definition media format, Moser Baer
enjoys a significant advantage, being the first non-Japanese Company to have developed its
own technology for manufacturing BDR. Moser Baer is also the first storage media Company
in the world to make commercial shipments of HD DVDs. With the Company’s continued
focus on improving manufacturing efficiencies, proprietary technology, growing market share
and our “first to market” position in next generation high definition formats, we are well poised
to benefit from the emerging industry dynamics and its high growth potential.9
s o l a r e n e r g y
Moser Baer has positioned itself to be a significant player in the global photovoltaic (PV)
market by leveraging its high-volume manufacturing expertise, economies of scale and large
commitments of more than US$ 3.2 billion in research, development and manufacturing of
products dedicated to generating solar power. The Company offers turnkey solutions in solar
photovoltaic power generation. Higher energy costs, declining fossil fuel supplies and a thrust
on reducing carbon emissions have ensured that that the worldwide interest in the renewable
energy space, and particularly PV, continues to grow. Moser Baer has:
• A first of its kind 80MW, state-of-the-art fully automated in-line crystalline silicon cell
manufacturing facility.
• A 40MW module manufacturing facility.
• 40MW thin film module manufacturing capacity.
• A high concentrator module manufacturing facility. Multi-million dollar investments in
a number of technology companies across the globe with interest in concentrators, solar
grade silicon and nano-technology.
11
h o m e e n t e r t a i n m e n t
Moser Baer’s unique Home Entertainment business model of high quality content priced
reasonably for indian consumer has been highly successful. With the acquisition of more
than 10,000 video titles and by offering video content in every popular language in India, it
is already India’s largest home entertainment Company. With the rise in disposable incomes,
increased affordability of DVD players the market for home video is expected to show
exponential growth. Moser Baer is releasing video content in the DVD and VCD formats using
Moser Baer’s proprietary and patented technology that ensures the highest quality standards
while providing affordable prices.
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y e a r 2 0 0 7 - 2 0 0 8 a t a g l a n c e
August 31, 2007
Moser Baer launches
Hi-Speed BD-R discs in
IFA-Berlin Show ‘07
July 27, 2007
July 19, 2007
Moser Baer launches its
Bengali home videos in
East
June 7, 2007
MBPV announces
commercial shipment of
solar photovoltaic cells
Moser Baer Photo
Voltaic announces
US $880 mn strategic
sourcing tie-up with the
REC Group
October 19, 2007
Moser Baer raises
USD 100 mn in
its wholly owned
photovoltaic subsidiary
from a consortium
consisting of IDFC
Private Equity, GIC
Special Investments,
IDFC & CDC Group
June 5, 2007
Moser Baer launches US
$150 mn FCCBs
May 2, 2007
April 30, 2007
Moser Baer Q4FY ‘07:
PBT rises by 13x over
corresponding quarter
in FY06
September 10, 2007
Moser Baer forays into
PC peripherals market:
Launches Optical Disk
Drives (ODDs)
April 7, 2007
Moser Baer launches its
Telegu home videos in
South India
Moser Baer announces
1:2 bonus
2008
December 17, 2007November 30, 2007
Moser Baer Photo
Voltaic (MBPV),
signs MoU with
the Government of
Rajasthan for setting up
of a large Solar Power
Project in the State. The
project will be the largest
grid-connected solar
farm in India
Disha–An Employability
Skill Development
Initiative by Moser
Baer Trust successfully
trained 470 youths with
100% placement with
various MNCs
• Moser Baer plans 600 MW Thin
Film PV capacity with an estimated
investment of over $1.5 bn.
• Moser Baer`s subsidiary, PV
Technologies India Limited (PVTIL)
successfully completed deposition
trials for Gen 8.5 a-Si (Amorphous
Silicon) thin film modules this year.
and achieved a global landmark.
• Moser Baer Photo Voltaic Limited
(MBPV) signed an agreement with
China based LDK Solar for sale and
delivery of high quality
multicrystalline silicon wafers to
MBPV.
15
c o r p o r a t e s o c i a l r e s p o n s i b i l i t y 2 0 0 7 - 2 0 0 8
At Moser Baer, we believe that Corporate Social
Responsibility (CSR) is the way to conduct
business that achieves an integration of economic,
environmental and social imperatives while at the same
time addressing stakeholder expectations. Under its
CSR policy, the Company affirms its commitment of
seamless integration of marketplace, workplace, and
environment and community concerns with business
operations. Moser Baer uses CSR as an integral
business process in order to support sustainable
development and constantly endeavors to be a good
corporate citizen and enhance its performance on the
triple bottomline ie. people, planet & profit.
COMMUNITY DEVELOPMENT
Recognizing its developing country context, community
development forms an important element of CSR for Moser
Baer. We have established the Moser Baer Trust - a dedicated
vehicle focusing on the issues of health, livelihoods and digital
literacy in our surrounding areas while we continue to work on
larger issues like recycling of plastics, access to education for
visually challenged children, disaster preparedness, to name
just a few on a broader level. Our community development
programmes are undertaken after a comprehensive dialog
with all the stake holders so that it has strong sustainable
development component. This also ensures that our initiatives
contribute towards achieving the millennium development
goals in our sphere of influence.
DISHA
Rapid industrialization of the Greater Noida region has brought
upon the problems of migration and a lot of underprivileged
youths – specially school drop outs, women, people living
below the poverty line - do not have any chance of a dignified
livelihood because they are not ‘employable’ and lack the
skills required by new economy jobs. A dialogue with all the
stakeholders viz. the local community, civil society groups and
local authorities threw up ‘livelihood generation’ as the most
critical challenge facing the region.
Moserbaer Trust has initiated Disha – a livelihoods generation
programme that aims to create 1000 jobs in the region by
September 2008. Disha envisions development of healthy,
productive and empowered young people in the communities
that we do business in, by directing their energies towards
enhanced employability.
We initially conducted market scans in the region to identify
‘entry level’ job opportunities and the requisite skill sets for
these jobs. Keeping this in view a ‘need based curriculum’ was
designed which intigrates life skills training, basic computer
know-how, communicative english and work readiness.
The technical courses currently being offered are
1) Customer Relation & Sales
2) Office Assistant
3) Hospitality
4) Call Center Training
5) Computer Hardware
6) Desktop Publishing
7) Information Technology Enabled Services
8) Microsoft Unlimited Potential
The Project that was started in September 2007 has already
trained and placed youth from the neighboring communities
with very encouraging results.
AS ON FEBRUARY 2008
A. Total no. of successfully trained candidates: 669
( Male 497 + Female 172)
B. Total no. of successful placements : 566
(Male 434 +Female 132)
C. Total no. of villages covered : 108.
By September 2008, we intend to create 1000 livelihoods.
Its not just about numbers though, our biggest achievement lies
in the way we have been able to touch lives and give a direction
to young people who came from the most disadvantaged
sections. With a sparkle in their eyes, our young friends are
now proud contributers to the well being of their families and
their dignity as valued members of the society.
E-SHIKSHA
Moser Baer Trust, on the request of Greater Noida Industrial
Development Authority, has initiated Project E-Shiksha to bring
digital literacy to underprivileged youth in the area. Amichand
School in Kasna village has provided space to start a computer
lab. Trust has set up a computer Lab with 10 computers at the
school to train young people and teachers as well with the aim
to make them computer literate under E-shiksha mission.
17
Moser Baer Trust has partnered with Microsoft to use their
‘unlimited potential’ training package and has been authorised
to issue Microsoft trained certificates to the trainees. It is a short
term course of 3-months duration involving basic computer
learning which includes – computer fundamentals, Microsoft
Word, Excel, Power Point and Internet. Under the project,
enrolment to the classes is mobilised through road shows, media
publicity & meeting in villages and schools. With an aim to make
the project self sustaining within two years, a nominal fee of Rs.
100 per month is charged from the students.
As of March 2008, a total no. of 50 candidates have successfully
passed the course. The enrollment from April onwards is expected
to go up due to summer vacations and renewed awareness
strategy.
UDAAN
One of the biggest challenges in education of persons with
blindness is to make books available in Braille, e-text or audio
format so that students could read books themselves.
National Association for the Blind (NAB), Delhi has two recordings
studios dedicated to produce text books in a specially developed
DAISY audio format for this purpose. Requirements for production
of talking books are much larger than what they can produce
through their own facility and Moserbaer Trust has joined hands
with NAB to overcome this great challenge.
Many employees and their families have volunteered to
participate in the recording and were auditioned by NAB for this
purpose. Keeping in mind the distance involved, Moser Baer has
set up a recording studio at GN itself so that more employees and
their families could volunteer and the idea has met with a very
enthusiastic response. Through this studio, text books for classes
IX-XII would be recorded. The Company has also designed and
produced 40,000 CDs to be donated for this purpose and these
CDs would be used under project Udaan by visually challenged
children across India.
“ The support extended by Moser Baer has been an important
catalyst in the propagation of Digital Talking Books for the blind
in India. With the assurance of Moserbaer, organisations are not
having to think about the book distribution expenses. This has
helped in upgrading many libraries from the outdated analog
cassettes distribution system to the modern digital technology.
When a blind student gets his book in a CD, he is able to take
advantage of accessible navigation facilities such as jumping
directly to a page or sub section in the book. These features were
not available in talking books which were distributed in audio
cassettes”. Prashant Ranjan Verma, Project Manager, National
Association for the Blind
BALWADI
Moser Baer being a responsible Company understands its
responsibility towards the unorganized sector as well. It initiated
Balwadi, for the Children of over 1500 construction labourers
including many women who were involved in the building works
of the PV plant at Greater NOIDA. Considering the presence of
huge work force for several months and realizing that the children
of these migrant workers needed a safe and healthy environment
away from any hazards the Balwadi was set up within the Plant
Premises and continued to cater to about 108 children during the
period September 2006 to March 2008.
The Balwadi centre which was constructed especially for these
children included a large room with verandah, compound and
toilet facility. Under this project,
• Children upto 14 years were covered in different programmes
such as Creche for 0-3 years, Balwadi (pre-school for
education) for 4-7 years and Non-formal education (NFE) for
8-14 years especially on subjects – Hindi, Maths and English.
Apart from education, games and extra curricular activities
were an integral part of the daily activities.
• Apart from this, the Moser Baer Trust also ran a weekly
Health OPD that reached out not only to children but also
their parents, the OPD also took care of the immunization of
the children
18
• Nutritional needs were taken care of through meals
provided by the canteen of the Company and daily snacks like
biscuits, milk and banana.
• Moser Baer Trust has provided toys, school bags, books,
copies and other stationeries to children.
• In response to an appeal in winters, the Moser Baer
employees donated woolen clothes and collected funds for
blankets for all the children at Balwadi
On an average the students’ strength ranged between 50-60 per
day. During times the strength rose up as high as 100 per day.
With the construction work completed, the Project finally got over
in the mid of March’08. Till March 2008 the Trust has supported
the 108 beneficiaries.
DRISHTI
A project to control Preventable Blindness includes
• Eye health Check ups,
• Referrals for cataract surgery,
• Financial assistance for cataract surgery
• Refractory test for school Children
• Distribution of spectacles
Till date Moser Baer Trust has covered over 186 villages in 3
rural Blocks and has provided services to 1536 patients. It has
assisted 532 patients for cataract surgery.
In addition, the Trust has covered 23 schools where over 12733
students have been examined. Of the 564 students with vision
disorder, 369 were supported and provided spectacles.
SERVICES TO UDYAN CARE
Udyan care is an orphanage at Greater Noida which currently has
39 girl children. Moser Baer provides health services to all the
children through its in-house medical team and also takes care of
emergencies requiring any hospitalization or surgeries.
SWASTHYA UTHAAN –COMMUNITY HEALTH SERVICES
OPD services
• Daily Free OPD Services in surrounding villages of Kakrala,
Tilapta, Kasna.
On an average, 60 patients are attended per day
• Free OPD services for unorganised labour & families involved
in construction work at MBIL
• Serious cases referred to specialty hospitals and costs of
treatment taken up by the Moser Baer Trust
• A dedicated mobile ambulance for reaching out to
communities at their door steps.
• Community awareness meetings on topics like Immunisation,
Pulse polio, family planning, antenatal care, anaemia, TB,
Diarrhoea and AIDS have been held in surrounding villages.
• Community participation - villagers have themselves provided
space and infrastructural support.
• Strong linkage with district Health services,
use of Government PHCs, participation in Pulse Polio
Programme.
School Health Programme
School Health Programme catered to about 3835 students in
NOIDA & Greater NOIDA. Moser Baer Trust Provided Check –up,
treatment and referral Services.19
ENVIRONMENT, OCCUPATIONAL HEALTH & SAFETY REPORT 2007-08
Corporate Strategies on EHS:
We are ISO 14001,OHSAS 18001 and Green Partner Certified,
Needless to say that as a responsible corporate citizen it is our
duty and responsibility to have following things ensured;
• Vision, Mission and Values need to be based on
good business principle to provide strong foundation of
corporate governance and Compliance of all the applicable
EHS Laws of the land.
• Incorporate EHS objectives & targets in annual
business plan and cascade in to the plant operation to
achieve net revenue through EHS improvement projects and
MPs. As regard to Economic Sustainability, we are well ahead
of our Targets and are steady but along with this
Environmental and Social Responsibility are important
strategic drivers for long term sustainable development.
20
EHS Performance Information Overview FY 2007-08
Metrics Comment
• Chemical Mass Balance Reduced 12% total chemical waste generation in absolute terms
• Green House Gas emission Reduced 1.99 tons of Co2 through energy conservation
• Water Consumption Saved 10950 KL of Water through mass balance project
• Regulatory EHS notices Zero for entire financial year, a significant accomplishment
• Weighted accident rate Reduction in overall accident rate 35% over last year
• EHS Training Completed 42415 man hours of EHS training @ 4hrs/employee
• Eco- Innovation Hazardous waste generated through ETP being reused in
Ceramic Industries for tiles manufacturing
• Awards Golden Peacock Awards for Occupational Health & Safety,
Golden Peacock Award for Environmental Eco - innovation
21
b o a r d o f d i r e c t o r s
Deepak PuriManaging Director
He provides strategic direction to the Company.
He is the driving force in creating an environment
of integrity by ensuring fair business practices
and profound respect for Intellectual Property
Rights. It is his ceaseless quest for human
capital development that has helped steer the
Company along a continuous growth path.
A leading spokesman for the Indian industry,
Deepak Puri has never shied from speaking his
mind and sharing his opinions. He is Chairman
of CII’s National Committee on Electronics, IT
Hardware and Peripherals and also chairs FICCI’s
Electronics Hardware Committee. He holds a
Master’s Degree in Mechanical Engineering from
Imperial College, London, and is an alumnus of
St Stephens College and Modern School, New
Delhi.
Arun Bharat RamDirector
He is the Chairman of SRF Ltd. A graduate in
Industrial Engineering from the University of
Michigan, USA, he began his career in 1967
with the Delhi Cloth St General Mills Company
Ltd, (now DCM Ltd). He went on to set up
SRF Ltd in 1971. In his businesses, he has
strongly supported corporate governance
initiatives and professionalism. He has been
on various govt.-industry committees and is
a former President of both the CII and the
Association of Synthetic Fiber Industry.
23
Rajesh KhannaDirector (NomineeWarburg Pincus Singapore LLC)
Bernard GallusDirector
Rajesh KhannaDirector (Nominee Warburg PincusSingapore LLC) Singapore LLC)
Bernard GallusDirector
He has been working with Warburg
Pincus for the last seven years. He
is an MBA from the IIM, Ahmedabad
and a CA. He earlier worked with
leading finance and consulting firms
such as Citibank NA. He is now
the Managing Director of Warburg
Pincus India Private Ltd and also
serves on the Boards of Max New
York Life Insurance Co Ltd., Moser
Baer Photo Voltaic Ltd., Moser
Baer Solar Plc, Max India Ltd, Max
Healthcare Institute Ltd &Max New
York Life Insurance Company Ltd.
He brings with him over four decades
of experience in the international
technology and finance markets. He
was earlier Managing Director and
member of the board of J Bosshard
SA, Lausanne, later taken over by the
manufacturing Company W Moser Baer
AG, Switzerland.
Prakash KarnikDirector
Prakash KarnikDirector
He was a Director at Electra Partners
Asia Private Ltd, one of Asia’s leading
private equity firms. An engineer from the
IIT(Chennai) and a management graduate,
he has over 26 years of experience in
the engineering and finance sectors.
He has worked in senior positions in
both government and private sector
organizations, including Jardine Fleming
India Securities Ltd, UTI & the Economic
Development Corp. of Goa Ltd.
Dr. Vinayshil GautamDirector
He was the first Director of India Institute of
Management (Khozikode) and the first Head
Management Department at IIT, Delhi. He
is currently the Dalmia Chair Professor of
Management at IIT, Delhi and coordinator of
the Institute’s Dalmia Research Programme.
He was a member of various significant
committees of Govt. of India including
the Committee appointed to look into the
efficiencies of promotional processes of 10
senior Positions in Government; Quinquennial
review team of CMFRI, NAARM; Committee
appointed to review the working of NSTEDB,
etc. He is also on the Board of J.K Industries
Ltd, Shivam Auto Tech Ltd and Steel Authority
of India.
Dr. V. GautamDirector
John LevackDirector
Virendra Nath KouraDirector
V. N. KouraDirector
He received his formal legal
education at Lincoln’s Inn, London
and currently is a senior partner
of Koura & Co., a leading firm of
legal consultants in India. He is
also on the Board of Bharti Infotel
Limited, National Cereals Products
Limited, Controls and Switchgear
Contractors Limited and HCL
Infosystems Limited.
John LevackDirector
He has over 20 years of private
equity experience with Electra and 3i
Pic in Asia and Europe, four years of
which have been in India. Levack has
a degree in business administration
from Bath University in the UK. He
is a Director at Zensar Technologies
Ltd, Electra Partners Asia Ltd, Electra
Partners Mauritius Ltd, EP Asia Ltd,
and RT Packaging Ltd.
Nita PuriWhole Time Director
Nita PuriWhole TimeDirector
She is a co-promoter of Moser Baer
India Ltd and a Whole-Time Director of
the Company. A graduate from Calcutta
University, she has over three decades
of experience in managing businesses.
As Director (Administration and HR),
she has been closely involved with the
Company’s growth since its inception.
Ratul PuriExecutiveDirector
He joined Moser Baer in 1994 and has been
Executive Director since 2001. Prior to
assuming this role, he was General Manager
(Business Development). In this capacity,
he was instrumental in setting up plants for
manufacturing Compact Disc-Recordables,
the first to come up in India. He has also
played a pivotal role in reinforcing Moser
Baer’s focus on maximizing shareholder
value. He has a degree in Computer
Engineering from Carnegie Mellon
University, USA and did his schooling from
St Columbus, New Delhi.
Ratul PuriExecutive Director
m a n a g e m e n t d i s c u s s i o n a n d a n a l y s i s
OVERVIEW
2008 marks Moser Baer’s twenty fifth year. It was in 1983, in New
Delhi, that Moser Baer India was founded to manufacture time
devices in technical collaboration with Maruzen Corporation,
Japan, and Moser Baer Sumiswald, Switzerland.
Today Moser Baer ranks among the world’s leading
technology companies operating in distinct business
verticals: optical storage media; solar energy; entertainment;
IT peripherals and consumer electronics. Moser Baer’s
products are sold in over 80 countries and it employs more
than 7,500 people.
Through these 25 years it has been Moser Baer’s endeavour
to achieve technological leadership and operate in all its
business at on internationally competitive global scale.
This has been possible through a carefully-planned and
sustainable business model: low costs, high margins, high
profits, reinvestment and capacity growth.
FY 2007-08 has been a year of growth for Moser Baer. The
Company strengthened its position as a well diversified
organization with presence in high-growth, technology-
driven global scale businesses providing superior returns on
investment (ROI). The year has seen contribution from the
new businesses of Moser Baer growing significantly.
Improving operational efficiencies and optimal use of assets
(fixed and working capital) helped the Company maintain a
positive trend in the face of difficult industry environment in
the optical media.
During the year, the Company maintained its leadership
position in the global optical media industry. The Company
further strengthened its unique technology and IP position
in the Blu-ray format through its own pioneering work,
coupled with strong in-house R&D in development of high
definition formats, giving the Company a strong position as
a technology developer.
OPTICAL STORAGE MEDIA
Driven by a combination of factors, the global blank optical
media Industry went through a difficult period during the
financial year. End consumer demand for CDR continued
to remain flat with early signs of decline in developed
markets. DVDR maintaines a positive growth trend during
the year with robust demand from developed as well as
emerging markets. Flash memory devices had a marginal
impact on the re-writable market in PC Segment (for data
interchange application). The industry witnessed a short
term overcapacity situation with excess inventory in the
supply chain due to patent licensing issues with some of
the other players. This resulted in a downward pressure on
prices. Strategic Marketing & Decisions (SMD) estimates
global demand for blank optical media products to be
over 22 billion units in 2008, representing a strong demand
growth over 2007.
A notable development during the year was the emergence
of Blu-ray disc (BDR) as the future High Definition media
format, with Toshiba announcing the discontinuation of HD
DVD investments in mid-February, 2008. This settlement
will accelerate the adoption of the format by different
stakeholders, including retail, studios, components,
hardware, drive makers, software vendors, line integrators
and media manufacturers. The industry expects exponential
growth for the BDR format in the coming years. Moser
Baer is the first non-Japanese supplier of BDR and this
development will give the Company a significant advantage
in the anticipated growth of the BDR market.
Moser Baer Developments FY 2007-08
(Optical Storage Media)
During the year, the Company evolved into a technology
driven, multiple business transnational by adding high
growth technology driven businesses to its portfolio. These
businesses have the potential to significantly increase
combined revenues and overall returns on invested capital.
FY 2007-08 was a difficult year for the global blank optical
media industry, which has been significantly challenged by
the overall demand-supply situation. Alternative technologies
for data storage also impacted growth in the optical media
sector. The steep appreciation in the rupee also resulted
in margin erosion. At the same time, energy costs faced a
huge escalation driven by steep increase in crude prices,
in turn impacting furnace oil costs. Consequently the
Company’s operating and financial parameters were under
27
severe pressure and clearly below the sustainable levels for
medium to long term.
Margin erosion in the year under review notwithstanding,
the base optical media business remains significantly
cash accretive, driven by higher asset turnover and sharp
improvement in working capital cycles. In overall terms,
growth and returns remain attractive from a long term
perspective.
The High Definition formats are likely to give the Company
a growth edge and with BDR winning the race against
HD DVD, the industry should witness faster penetration
compared to earlier projections, clearly giving the Company
a significant edge.
With the Company’s continued focus on improving
manufacturing efficiencies, growing market share,
proprietary technology and “first to market” position in next
generation Blue-ray laser-based formats, the Company is
well poised to benefit from improved industry dynamics and
high growth potential.
During the year, the Company retained its global position as
one of the largest producer of optical storage media. It also
continues to maintain its lead as a technology developer
through its relentless efforts on R&D and various technology
collaborations.
In FY08, the Company maintained its status as one of the
top rung suppliers of the next generation High Definition
formats through its earlier acquisition of OM&T from Philips
last year, which brought several technologies with it, giving
it a head start over its rivals. The Company’s pioneering
work in Blu-ray phase change technology and a unique IP
position should provide a significant competitive edge to
the Company and enable it to change the cost dynamics
for the format to the consumer. As per Strategic Marketing
& Decisions (SMD) the demand for blue laser based formats
28
is set to exceed over 122 million discs by 2009 from a few
million units at present, and the Company is well positioned
to capture a significant share of this emerging opportunity.
Moser Baer’s acquisition of an 81% stake in OM&T B.V., a
highly specialized technology Company, has started bearing
fruit in terms of exploiting cutting edge technologies. This
acquisition strongly complements the existing research
being done in Moser Baer’s R&D Centre in India and helps
the Company to be at the forefront of technology in both the
optical and solar photovoltaic (PV) segments.
OM&T provided significant contribution to the development
of alternate Blu-ray technology and its commercialization
to enhance the leadership position of Moser Baer in this
format.
The Company’s aggressive strategy over the past year
has started to yield results with fringe players finding it
hard to sustain themselves. Industry consolidation and
increasing demand traction in Blu-ray are the positive cues
to an otherwise sedate industry environment in the near
to medium term. Long term variables still remain healthy
as need for storage and consumer demand continues to
grow. Moser Baer is investing judiciously in new generation
technologies as the optical media business continues to
generate substantial free cash in a difficult environment.
In blank optical media, production was disrupted in mid-
year due to problems in the power plant. The issue was
fully resolved and capacity optimization will be achieved
by mid-2008. Turnover was also impacted during the year
by the strengthening of rupee and the difficult industry
environment.
Overall, aggressive pricing and flat sales volume were the
two major contributory factors affecting earnings; however,
net operating cash flows continue to be strong on the back
of judicious capex spends and working capital control.
The size of the blank optical media market in India is over
one billion discs. The market has grown by 17 per cent year-
on-year. CDR is a predominant format accounting for 80 per
cent of the Indian market. DVDR has grown exponentially by
almost 100 per cent over last year.
The overall Indian market is growing at 15 per cent with
DVD growing at 50% year-on-year. For CDR the market is
expected to be flat. ASP of imports has been very low leading
to price erosion. Antidumping duty has been imposed from
March 2008 for CDR imports from 10 countries, which has
considerably reduced the imports of CDRs. Firming up of
global prices will also help the Company to improve the
realization from the domestic market.
Strategy
Short term
• Leverage “first to market” and IP position in next
generation Blu-ray laser formats
• Leverage existing R&D and technology capabilities in
expanding the product portfolio
• Enhance the contribution of value added products
(Specials).
29
Long Term
• Consolidate global leadership position
• Improve Return on Capital Employed (ROCE) and asset
turnover
• Target “first to market” in near field and holographic
technologies.
Near-term Operational Objectives
Optical
• Further augment technological and cost leadership
• Scale up the contribution of value-added next generation
products and penetrate markets with these products
• Continuously launch new innovative products for
customers, in conjunction with new drive launches
• Drive working capital efficiencies and generate free cash
flows
• Develop strategic alliances for efficient raw material
supplies.
SOLAR PV BUSINESS
Global Industry Scenario
Despite the mid term outlook of high oil and natural gas
prices, global energy demand continious to grow. The most
rapid growth is expected from non OECD* (Organization
for Economic Cooperation and Development members)
member countries due to the strong economic growth in
these countries.
Renewable energy sources like geothermal, solar and wind
constitute approximately 2.2 per cent of the world energy
generation. Solar energy contributes 0.1% of the world’s
total energy needs. Solar energy costs are declining while
base load and retail costs are increasing; indicating that grid
parity could be reached earlier than estimated. Price declines
drive elasticity of demand. A current cost reduction rates, a
bulk of the solar industry will reach grid parity within nearly
30
10 years. Solar generated electricity can be cost competitive
with grid when costs fall to $2.5/watt.
Despite increased availability of polysilicon from new and
existing players, demand from Europe (Spain, Italy, and
Germany) has been very strong. A key trend in the solar
energy sector is the diversification away from the top three
markets—Germany, Japan, and the US—which together
drove almost 85% of solar demand in 2006-07. Progress in
Spain and other European countries form the key variables
for demand in 2008. Progress in Italy and the US remain the
key variables for demand in 2009.
Higher energy costs, declining fossil fuel supplies and a
thrust on reducing carbon emissions have ensured that
that the worldwide interest in the renewable energy space,
and particularly PV, continues to grow. Driven by recent
significant technological advancements, it is estimated that
the solar market will have a 43% CAGR and is poised to
achieve grid parity in the short to medium term. Current
demand projections translate to a market value of US$50-
70 billion by 2010.
Matching these demand projections, incentives from
government led subsidies, and better margins have ensured
that there is global interest from large market participants.
The robust growth in last few years will be further accelerated
by reducing the PV energy costs. Development of disruptive
technologies within the PV space will also contribute to
accelerated cost reduction.
Currently, PV generates less than one percent of the world’s
electricity needs, leaving a massive potential market. The
International Energy Agency (IEA) estimates that governments
and the private sector will invest around US$10 trillion to
expand and upgrade global electricity infrastructure over the
next 30 years.
Apart from the developed world, governments in the Asia
Pacific region are continuing to strengthen their policies
and support for the implementation of technologies that
can produce power with lower emissions than traditional
technologies, such as power plants using coal, gas, or oil as
a fuel source. The Indian and Korean feed in tariff initiatives
are a step in this direction.
Indian Government has recently announced subsidy plans
ranging between US$750/kW (US$0.75/watt) for installed
capacity for residential or commercial use and US$1,250/
kW ($1.25/watt) for community and institutional use. The
Central Government also announced feed-in-tariffs of up
to US$0.30 per kWh for grid connected solar PV capacity
2006 2011
Tota
l Mar
ket
Siz
e 1.
74 G
W
Tota
l Mar
ket
Siz
e 12
-18
GW
Source: Solarbuzz research; Wall Street research
31
of 1 MW and above. Some of the Indian states have also
announced independent programmes to support large size
solar PV installations.
Moser Baer’s Endeavours
The Company aims to distinguish itself as a significant player
in the global photovoltaic market by leveraging its high-
volume manufacturing expertise and planned investments
of nearly US$ 3.2 billion in research, development and
manufacturing of products dedicated to generating solar
power.
The Company realizes that PV markets have different needs
and emerging technologies have to be developed today
to realize the world’s future energy needs. It has already
announced investments in a mix of currently available and
emerging technologies as follows:
• A first of its kind 80 MW, state-of-the-art, fully automated
in-line horizontal crystalline silicon cell manufacturing
facility.
• A 80 MW module manufacturing facility.
• In excess of 600 MW amorphous silicon thin film
module capacity, capable of producing the world’s
largest non-flexible thin film modules.
• A high concentrator photovoltaic (CPV) module
manufacturing facility and multi-million dollar investments
in : Solfocus Inc., a US-based Company and the
developer of the CPV technology in partnership with the
world renowned Palo Alto Research Centre (PARC), California.
The technology is based on gallium arsenide cells,
originally developed for extra-terrestrial solar applications
and environments
• A significant equity stake in Solaria, a US-based
technology Company that has developed a unique form
of low-concentration solar PV technology. It is capable of
producing power equivalent to two to three times the
power produced by conventional PV modules, using the
same amount of silicon material
• A significant minority stake in Stion Corporation, a
nanostructures development Company based in the
Silicon Valley, California, for producing extremely low-
cost solar power generating surfaces
• Acquisition of 40% equity stake in Solar Value,
Proizvodnja d.d, a solar grade silicon production facility in
Slovenia, to provide access and assurance of supply to
low-cost solar grade silicon. The initial test results of the
facility have been encouraging and the development of
commercial scale facilities is underway
• An R&D centre dedicated for the improvement and rapid
commercialization of solar technology products is coming
up in Greater Noida.
In addition to the above, the Company has invested in
strategic partnerships involving the entire value chain,
particularly for strategic sources such as silicon ingots and
wafers, glass, etc. through short-term and long-term supply
agreements.
ENTERTAINMENT & MEDIA INDUSTRY
The Indian Entertainment and Media (E&M) industry report
2008, jointly issued by FICCI and PricewaterhouseCoopers,
says: ‘’Home video rights is becoming a sizeable chunk
of revenue for film producers with the rise in disposable
incomes, increased affordability of DVD players and home
theatre systems and shorter release windows. Further, the
entry of players such as Moser Baer has changed the entire
model prevalent for last several years from rental to a sell
through.’’
The Indian E&M industry has been growing at a healthy rate
in the last few years and the trend is expected to continue
for the next few years. In 2007, the E&M industry recorded
a growth of 17% over the previous year, higher than the
32
forecasted growth of 15% projected in the previous year.
The industry reached an estimated size of Rs. 513 billion in
2007, up from Rs. 438 billion in 2006.
Home video market has also witnessed dynamic changes in
the last four years, having achieved a growth rate of 30 per
cent over the period 2004-2007. Its contribution stands at
8% of the overall film industry revenues in 2007, up from 6%
in 2004. In 2007, the home video market is estimated at Rs.
7.5 billion, up from Rs. 6.5 billion in 2006, translating into a
growth of 15% from the previous year. Year-wise growth of
the Indian film industry in different segments:
Moser Baer Entertainment offers home video titles in various
Indian languages at unmatched prices and is also engaged
in media content creation.
Moser Baer is today India’s largest home entertainment
Company and the first to offer home videos in every popular
language of India. It currently offers home video titles in
Hindi, English, Tamil, Telugu, Malayalam, Kannada, Marathi,
Gujarati, Bengali and non-film categories. Moser Baer
Entertainment has acquired the rights for close to 10,000
titles in all the popular languages and has released almost
4,000 of them in the market.
The Company has established a strong presence across
the country in all major metros, as well as in smaller towns
through an active and well-organized multi-tiered channel.
The Company has released video content in DVD and Video
CD formats using Moser Baer’s proprietary and patented
technology that ensures the highest quality standards and
significantly reduces cost. The movie titles come with world-
class packaging.
CONSUMER ELECTRONICS
Having established itself as a global leader in the high
technology manufacturing space and the global blank optical
storage media industry, Moser Baer is leveraging its existing
synergies, established brand equity and large distribution
network in the domestic market to enter the PC peripherals
market. Moser Baer brand is recognized for high quality
products which the Company extended during the year
In Rs billion 2005 2006 2007 CAGR
2004-07
Box office-Domestic 46.5 52.8 64.0 71.5
% growth - 14% 21% 15%
Box office-Overseas 5.0 5.7 7.0 8.5
% growth - 13% 24% 19%
Home Video 3.4 4.0 6.5 7.5
% growth - 18% 63%* 30%
Ancillary revenues 5.0 5.7 7.0 8.5
% growth - 13% 24% 19%
Total 59.9 68.1 84.5 96.0
% growth - 14% 24% 17%
* Moser Baer entered the Home Video market in 2007
33
into the fast growing PC peripherals market in India. The
Company has entered this market by launching products
in five metros. The product segment launch complements
existing optical media business and leverages Moser Baer’s
strong brand equity.
Currently the IT vertical industry (PCs and notebooks) is
pegged at Rs. 20,000 crore and the PC peripherals industry
is worth Rs. 12,000 crore.
Moser Baer has already established itself as a major player
in the USB drives and memory cards market. Its foray into
PC peripherals in the form of ODDS will further help in
strengthening its position is the industry.
OPPORTUNITIES AND THREATS
Optical Storage Media
Opportunities
1. A first-to-market and unique IP position in the next
generation Blu-ray based formats provides a significant
competitive edge and growth opportunity as demand
for these formats grows exponentially over the next two
or three years. With a first mover advantage in this
segment, the Company is likely to earn high margins on
High Definition formats during the initial stages.
2. The Company has emerged as one of the largest
players in the DVDR/RW formats in the world and
continues to strengthen its position in the global market
which is growing at a healthy clip of over 20% p.a.
3. Domestic market: India is one of the fastest growing
markets for Optical Media. The Company has a strong
Brand and presence in the channel and is well
positioned to dominate this captive market.
Threats
1. Alternative technologies: Given Moser Baer’s presence
in high technology businesses, managing technology
evolution and being at the forefront of the technology
curve assumes prime importance. Threats of technology
obsolescence exist at all times in the optical media
space. However, over the years, the Company has
evolved from a being a technology innovator to
becoming a developer and to emerge as a technology
driven Company, thereby mitigating this threat.
2. Prices of key inputs: Polycarbonate for optical media is
a critical key raw material, and is influenced by a variety
of factors, including crude prices, demand-supply
balance, etc. Any sharp increase in prices or demand-
supply imbalances could adversely impact business.
The Company works on strategic sourcing relationships
and has long term agreements with key vendors for
critical raw materials. This should ease the impact of
any pricing volatility and improve production planning.
3. Anti-dumping and anti-subsidy / government policies:
The Company derives a significant part of its revenues
from international markets. These have seen a growing
protectionist attitude and a tendency by some local
governments to use antidumping and trade protection
tools to provide protection to local businesses.
34
However, the Company continues to keep a close watch
on this front and take necessary steps to minimize any
fallout.
4. Fall in product prices: As products move into the mature
phase in their life-cycle, they start to emulate
commodity type characteristics. Also, optical media
industry has relatively high capital intensity; hence a
sharp fall in prices could severely impact overall
returns. The Company has been consistently improving
its asset turnover by installing more efficient lines,
improving product mix towards higher value added
products, etc. The leadership position in high value next
generation formats should further improve these
returns.
PV Business
Opportunities and Threats – Industry Risks
In the short term, Government subsidies play a significant
role in the development and promotion of solar power
across the globe. The subsidies have to be promoted and
encouraged for the next 4-6 years, until solar achieves grid
parity and becomes cost competitive. Interest rates also
play a key role to ensure good return for investors, thereby
promoting its growth. Moser Baer has been championing
the development of solar energy in India through several
means. The recently announced feed-in-tariff scheme, which
was a cumulative effort of several groups and organizations,
has created on investor friendly regime and will rebuilt in a
significant creation of solar power capacity.
Entertainment & Media Industry
Opportunities:
The new emerging revenue streams like animation, gaming,
merchandise, etc are creating new business opportunities for
E&M Industry. Next-generation technologies will reinvigorate
maturing segments and drive E&M growth. Digital television
and IPTV are replacing analog, thus expanding the potential
market for advertisers and subscribers. Digital distribution
of content in terms of digital music and digital cinema holds
huge opportunities for growth in the entertainment industry,
making content available in even smaller towns where it
cannot currently reach in its physical form. Digital platforms
are also facilitating rollouts of PPV and Video on-demand
services, thereby fueling overall growth. Additionally, DVDs
have revitalized home video, with rapid growth in the sell-
through market. Also, there are enormous opportunities for
the Indian E&M industry in the overseas market.
Threats:
The major threat in E&M Industry is rising content price and
piracy.
Industry Risk Factors
35
SEGMENT-WISE AND PRODUCT-WISE PERFORMANCE
Optical Storage Media
CDR/RW
Consumer demand for the CDR/RW Format continues
to grow in BRIC and Middle Eastern markets, somewhat
compensating for the decline in the developed markets.
There are however, certain niche applications and
professional segments, which continue to witness growth in
the CDR space.
Meanwhile global CDR/RW supply continues to consolidate
through some of the capacities being converted to DVDR and
also on account of closure of inefficient capacities around
the world. This may help CDR/RW demand-supply balance
return to equilibrium, thereby providing some stimulus to
arrest the decline in CDR/RW pricing in the medium term.
DVD/RW
Shifting consumer preferences, increasing drive penetration
and improving price-value proposition of DVDR/RW media
continues to lead the growth for the format. As per SMD
global shipments of DVDR/RW Formats rose 20% y/y
in 2008 to 7.5 billion units from the preceding year. SMD
expects DVDR/RW shipments to touch almost nine billion
units in 2008, representing a further 20% growth. The
DVDR/RW media prices are expected to continue to follow
the manufacturing cost curve, enabling reasonable margins
for manufacturers. The DL format gives further opportunities
in coming years, which although smaller in terms of absolute
volumes, has been showing good growth rates.
Solar PV Business
Polysilicon supplies are likely to remain tight until 2010.
Analyst reports and market sentiments suggest that
companies that have secured the most polysilicon supplies
for the next few years are best positioned in the market.
As costs remain relatively stable, industry will continue to
generate attractive returns on the employed capital.
At Moser Baer Photo Voltaic, we continue to secure
polysilicon through long term supply contracts. We believe
that our ongoing contracts with Deutsche Solar, REC, GSM
and now LDK puts us in a comfortable and competitive
position on the supply front.
At current price levels, wafer costs make up to 75% of total
cell costs and hence access to reasonably priced silicon is
essential to maintain healthy margins. Improved conversion
efficiencies and using thinner wafers are key to reducing
costs.
Solar module (panel) prices are more meticulously tracked
than overall system costs. The market in 2008 has been
erratic - an environment that is seeing rising prices for all
products. This situation is mainly due to the rush to meet
project deadlines in Spain before revision of feed-in-tariffs.
However, the industry estimates suggest that over the long
term, the Average Selling Prices (ASP) of the solar energy
equipment is set to fall by 5-7% per annum driving the
enormous demand growth.
The BoS includes all costs other than the module (including
inverter, cabling and the structure; and installation/service)
that go into a solar installation. Despite making up for 40%
of total installation costs (and sometimes much more), the
impact of the BoS costs on module ASPs is often overlooked
and is a major opportunity in the future for cost reduction.
The Company stabilized its first 40 MW of production line
in crystalline silicon cell manufacturing during the year.
Currently, Moser Baer is in the process of scaling up the
initial 40 MW capacity to 80 MW.
36
Thin Films
Various thin-film technologies are in development to reduce
the amount of light absorbing material required to produce
a solar cell. Thin-film PV modules are produced through the
deposition of a light absorbing film on a substrate
(eg, glass).
Some of the advantages of thin film include:
• Reduced dependence on polysilicon
• Lower overall cost as significantly lower active material
(less than 1% vs. conventional)
• Higher energy generation throughout the day compared
with silicon panels, given the ability to generate energy in
low light
• High throughput manufacturing process and equipment.
Currently, there are three main technologies available in the
thin films area:
• Amorphous Silicon (a-Si) Thin Films, (61%)
• Cadmium Telluride (CdTe) Thin Films (34%)
• Copper Indium Gallium Selenide (CIS & CIGS) (5% )
(% in brackets indicates share of technology in current thin
films market)
Rapid scalability, high potential for cost reduction and stable
manufacturing processes made amorphous silicon as the
thin film technology of choice for Moser Baer Photo Voltaic.
MBPV has tied up with Applied Materials Inc. for setting
up the initial 40MW line that is currently undergoing trials.
A road map has been developed to enhance the thin film
capacity to more than 6000MW by 2010.
Lower supply side constraints, higher efficiencies (through
tandem junction technologies), and high product stability
are key growth drivers for Thin Film PV which is estimated to
be 20% of the global PV market by 2010. It is estimated that
with low overall costs, the sub-dollar module cost through
thin films technology may be a reality. MBPV has decided to
participate in this competitive technology segment through
significant investments and is positioned to be among the
market leaders.
Concentrating Photo Voltaics (CPV)
CPV use mirrors and/or lenses to focus sunlight on a small
piece of semiconductor material and use a fraction of the
polysilicon to produce electricity.
Concentrator solar is ideally suited for regions receiving
high levels of solar insolation (exposure to sunlight)
including parts of North America and the tropics. CPV offers
significant potential for rapidly lowering the Levelized Cost
of Electricity (LCOE) to end customer while growth in this
segment will be driven through demonstrated sustenance
of CPV and lower costs. Several countries including Spain
have been promoting CPV growth through specific MW
sized demonstration initiatives.
MBPV through strategic participation in high concentration
(Solfocus) and low concentration (Solaria) seeks to capture
the opportunities offered in this technology space.
The Company started manufacturing High Concentration
SolFocus panels at its facility in Greater Noida during the year
and shipped the panels to various SolFocus installations.
Concentrating Photo Voltaic (CPV)
37
The Company is working closely with SolFocus Inc., USA
to scale up the manufacturing operations and indigenization
of majority of components to drive down the manufacturing
costs of the panels.
PV Systems
PV penetration levels in India – either through off-grid
(110MW aggregated capacity) or on-grid (2MW) have been
low considering India receives good solar insolation for the
majority of the year. In an attempt to boost the PV market
in India, the Government recently announced subsidy driven
tariffs and income tax exemptions. Consequent to this, it
is estimated that the annual market potential in the short
to medium term would be in the range of 150-500MW. The
potential is offered through both off-grid (rural electrification)
and state supported large grid connected projects
With an ability to deploy the appropriate PV technology for
the right market, the MBPV Systems group seeks to build on
the market potential and is working actively towards seeding
the market. The group has recently signed MOU’s with the
Rajasthan and Punjab state governments and is working
closely with financing institutions and other overseas
agencies for cost effective offerings.
OUTLOOKOptical Storage Media
Next generation formats
With the end of High Definition format war, BDR/RE
technology is likely to grow faster than anticipated earlier
and has the potential of significantly mitigating the impact
of slow down in some of the earlier formats. During the
year, commercial shipments of this next generation format
continued from Moser Baer and other major Japanese
manufacturers. The current pricing for these formats
continues to be 20-25 times that of the DVD formats.
As per the US-based Strategic Marketing and Decisions,
the demand for BDR formats is expected at grow sharply to
over 1.7 billion discs over the next three years on account
of increasing applications driven by high definition video
content and improving price value proposition offered by
these formats as their pricing curve approaches the inflection
point required to expand market demand.
Given the complexity and manufacturing capabilities
required to mass produce these formats, only a small select
group of companies will emerge as key players in this high
growth segment, thereby increasing the differentiation
between the technology innovators and developers and the
tier-II companies over the long term.
Solar PV Business
The market outlook for 2008 is very strong and we expect
strong growth due to growth in select regions including US,
Europe and Asia. However, the second half of 2008 will be
carefully observed given the limited demand visibility due
to changes in Spain, Germany and the United States and
uncertainty around the ramp of new polysilicon entrants in
China and elsewhere. The industry seems to be marching
towards rapid growth (3X-4X in the near future) with scale
reduction for the end consumer.
Moser Baer continues to look at the market aggressively
with a mix of technology products capable of addressing
different market needs within the PV applications.
Entertainment and Media Industry
The Indian film industry is projected to grow by 13% CAGR
over the next five years, reaching a size of Rs. 176 billion in
2012 from Rs. 96 billion in 2007.
The home video market is expected to significantly shift in
the next five years given the developments in 2007. Though
38
an overall growth of 15% is projected over the next five
years, in line with the previous years, the current rental
market domination is projected to significantly reduce
to 25% in 2012 from 95% in 2006 in favour of the sell-
through market.
The penetration of home video subscribers is expected
to increase from 10% of the pay-TV homes in 2007 to
25% in 2012. This translates into an addition of 41 million
subscribers over the next five years period. Though the
home video subscribers are expected to increase in the
next five years, the sell-through prices expected to decline
over the forecast period from a current average of Rs. 90
in 2007 to Rs. 50 in 2012.The home video market is thus
projected to double its size to Rs. 15 billion in 2012 from the
current Rs. 7.5 billion in 2007, translating into a cumulative
growth of 15% over the five-year forecast period.
39
r i s k m a n a g e m e n t
RISKS AND CONCERNS
Running a business in any environment has risks that are
as varied as they are copious. Stringent and effective risk
management throughout the organization is imperative to
succeed in the fierce business environment. An effective
risk management framework drives continued competitive
sustainability of an organization as it enables alignment of
operations and activities of the organization to its vision and
values.
At Moser Baer the vision is to establish and maintain
enterprise-wide risk management capabilities for active
monitoring and mitigating the risks on continuous basis.
BUSINESS RISK MANAGEMENT
A strong risk management framework is in place at Moser
Baer that enables active monitoring of the business
environment and identification, assessment and mitigation
of internal or external risks. Given the established processes
and guidelines we already have in place, combined with
strong oversight and monitoring system at the Board, we
believe, we have a robust risk management strategy in
place.
Our senior management team sets the overall tone and
risk culture of the organization through defined and
communicated corporate values, appropriate delegated
authority and a set of processes and guidelines. We
have a process to inform Board members about the risk
assessment and risk minimization procedures. We promote
strong ethical values and high levels of integrity in all our
activities, which in itself is a significant risk litigator.
RISK ENVIRONMENT
Moser Baer is a global leader in the development, manufacture
and supply of technology products across the globe and is
fast transforming into a multi-business technology group. All
three businesses-optical media, photovoltaic and content
distribution-have an inherent risk quotient. These risks
may stem from technology obsolescence, high customer
concentration, commodity cycles and geographical risks,
among others. The Company is, however, well positioned to
manage and mitigate these risks.
A solid entrenchment is observed with CDR, whereby huge
global installed bases of readers and writers have served to
provide the format with considerable staying power even in
the face of existing new options. The versatility of the CD
and DVD format families has served to establish them as a
bridge between the information storage and entertainment
segments, extending their utility and reach. The growth of
DVDs not only maintains backward compatibility with CDs,
but also opens up complementary new video, multi-media,
and game application segments, further strengthening the
global mass appeal of the 120 mm disc formats.
The Company expects these factors to result in stable/
marginal declining market for CDR media, while DVDR and
the next generation Blu-ray laser based media will drive the
growth in the medium to long term.
The Company’s strategy is to transform Moser Baer from
a technology recipient into a technology developer and
innovator. Strong R&D will enable us develop high value
products which will build the differentiation barriers in the
long term. The world is moving towards High Definition
content. This is a significant technology shift in the global
optical media industry and will radically change the
consumer’s viewing experience. According to the US-based
Strategic Marketing and Decisions (SDM), the demand for
the next generation high definition formats is expected to
be two billion discs over the next three years. A notable
development during the year was the emergence of Blu-ray
disc as the clear winner in format rivalry. The Company is in
technology leadership position in the Blu-ray media.
41
This intensive R&D thrust will help us to further consolidate
our global leadership position in the optical media space.
STEPS TAKEN TO MITIGATE TECHNOLOGY RISKS
The Company’s technology-led optic media storage
products being part of a very active market segment are
prone to significant technological risks. These risks exist in a
number of critical areas, all of which can have considerable
commercial implications. As a prudent and forward-looking
organization, Moser Baer has invested substantially in R&D
and engineering to address and mitigate risks in all these
areas, often with multiple degrees of redundancy:
• Strong in-house R&D capabilities enable the Company
to rapidly commercialize new products
• Longstanding strategic partnerships with key
technology providers, allows the Company to access
new technologies
• Cooperative links with all major hardware suppliers
facilitate drive/media compatibility
• Seamlessly future-proofing our capital
investments assure evolutionary capabilities
of manufacturing infrastructure
• Technology collaborations and tech sourcing
arrangements with global technology companies in
emerging areas
• Acquisitions of pioneering companies in optical media
R&D, will enhance the leadership position of Moser
Baer in the next generation optical format race.
OTHER RISKS AND KEY MANAGEMENT INITIATIVES
a) INDUSTRY RISK MANAGEMENT
The Company operates in an industry where technology
trends are constantly changing and evolving which may
jeopardize future growth. The Company, however, faces no
immediate threat from the dynamic environment in which
it operates. On the contrary, it stands to benefit from the
current growth trends in the DVDR format. It also stands
to benefit from the demand for the next generation High
Definition formats, which is expected at two billion discs
over the next three years.
In line with the long term strategy of creating multiple
synergistic businesses, the Company entered into the
entertainment industry through the Indian home video
market last year. This business is identified as an important
value-enhancing, forward integration initiative to the optical
media business. It will de-commoditize the blank optical
media business due to the higher value addition to its
products. The entertainment business is significantly less
capital intensive compared to optical media business
and will contribute to improving the overall returns on
invested capital. The Company has made a foray into film
production.
Additionally, the Company entered into the exciting global
photovoltaic industry, which is growing at a rapid pace. The
PV industry is also significantly less capital intensive than
optical media industry and it is expected to improve the
overall returns on invested capital.
During the year Company further strengthened its position
in IT peripherals market by launching new products. Further,
the Company also entered into the consumer electronics
market and intends launching various products next year.
Entry into these businesses mitigates the risk of exposure
to a single industry.
b) CUSTOMER ATTRITION RISK CONTROL
Over-dependence on a few customers could impact
revenues in the event of attrition. The Company with its
combined value proposition of high quality standards,
42
competitive prices, and excellent service will continue to
expand its customer base. The Company believes the
event of customer attrition and the chances of an adverse
impact on the Company would be low.
c) GEOGRAPHIC RISK MANAGEMENT
Concentration of customers and revenue bases in a
close geographic area may impact growth in case some
of these regions are not performing up to expectations.
A geographically concentrated revenue base may impact
growth in the case of some of these regions not delivering
as per expectations.
The consumer base is primarily addressed through global
technology OEMs which sell products in different continents
across the globe. As we supply to global customers, the
geographical risk is mitigated. Additionally, we continue to
focus on emerging and new markets.
d) PEOPLE RISK MANAGEMENT
Quality of our human resources charts the success and
growth potential of our business.
The Company has managed to keep attrition rates well in
control by imbibing a sense of ownership and pride and
strong HR initiatives geared to nurturing latent talent and
unlocking the power of intellectual capital. The Company
continues to drive organization development and also build
management resources for a multi-business enterprise.
e) COMPETITION DE-RISKING
As installed capacities in global data storage industry have
risen, prices have declined. The Company has addressed
this through an unbeatable price-value proposition: superior
quality, timely delivery, attractive price and introduction of
new value added products.
f) FAILURE TO FORECAST ACCURATELY
Understanding and forecasting emerging trends in
the technology space is critical. The Company has
strengthened its forecasting and S&OP process for high
level production planning and plans for key materials.
g) FAILURE TO ENTER INTO LONG TERM CONTRACTS
FOR CRITICAL RAW MATERIALS AND CONSUMABLES
Sharp commodity cycles and demand-supply imbalances
in critical raw material can severely impact operations.
The Company has entered into long term contracts for
procurement of critical raw material and continues to work
on other long term strategic sourcing arrangements with
key raw material suppliers, to significantly mitigate this
risk.
h) CASH FLOW RISK
Moser Baer operates in a high growth and capital intensive
industry. Hence, it is imperative to efficiently estimate
and manage cash flows in this volatile environment. The
Company’s working capital arrangements are well in place
to guard against any uneven or seasonal factors. We are
set to emerge as a free cash Company aided by improving
margins and better working capital management. The rising
contribution of next generation formats and value added
products to further aid revenue and margin expansion.
Additionally, the Company also entered the exciting
global photovoltaic which is growing at a brisk pace. The
foray into the home entertainment business with value
propositions which will directly discourage the rampant
piracy by facilitating much higher consumption of legal
home video content and expand the markets.
This not only mitigates the risk of exposure to a single
industry, but both these industries are significantly less
43
capital intensive than the optical media industry, it is expected
to improve the overall returns on invested capital.
i) SECURITY/DISASTER RISK MANAGEMENT
Natural, political and economic disturbances could disrupt
operations. To counter balance this, the Company has
implemented an extensive IT disaster recovery plan across
all its facilities. The Company has mapped out all the related
risks on these accounts and put in place sufficient risk
mitigations and control mechanisms which are regularly
updated and monitored.
NEW BUSINESS RISKS
Home Entertainment
This is a new business for the Company and is thus prone to
execution risk, associated with any new venture. Diversity
of offering and the library size will be important business
drivers in this segment. To achieve a leadership position,
a strong presence across all genres is critical. Moser
Baer has acquired copyright/exclusive license/marketing
and distribution rights for around 10,000 titles across all
languages in a short period of time.
The Company has successfully created an entry barrier in the
Home Video industry by acquiring a huge number of titles,
and establishing a strong nationwide distribution network.
The Company’s distribution platform, comprising of 100k
outlets, is designed to target all segments of consumers,
creating incremental spend on home entertainment from
all pockets of disposable income. To augment supply of
titles for its Home Video business, the Company has also
entered into film production, by releasing Vellitherai (the
Company’s first Tamil production) and Shaurya (the first
Hindi production).The Company currently has 3 Hindi and 6
regional movies under production.
The Company is offering its products at the lowest rate as
compared to the prevailing price for the similar legitimate
products. The Company’s disruptive pricing strategy will
boost home video demand by lowering market prices, and
thus killing the price power of pirates.
PV Business
The PV business which is also a part of the Company’s new
business initiatives; is prone to risks on account of being
a new business, project delays, technology risk, shortage
of raw material, availability of Capital for the business and
shortage of manpower.
Project Execution Risk
Delay in execution of the Company’s new projects can
negatively impact the Company’s profitability. Any delay
in the Company’s second phase 40 MW crystalline silicon
or its Thin Film project will certainly impact the financial
projections and return on investments of the Company. The
Company is on track for its various projects and with a right
team in place, it is confident of mitigating the risk of project
delays.
Technology and commercialization risks
PV being a new business and being a high technology driven
business faces the risk of commercialization. Success will
be determined by the right human capital, right technology
and being present at the right time. Moser Baer with its
experience in high tech manufacturing, in achieving rapid
scale and commercializing technology products is poised to
emerge as a global leader in this rapidly growing market. The
Company plans to straddle multiple future technologies and
has made strategic investments in high technology start-
ups and joint development plans and it believes that the risk
is adequately mitigated. Additionally, the OM&T acquisition,
which has brought in world class capabilities in thin film, wet
chemical processing, optics and concentration and testing
procedures, will further reduce the technology risk.
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Raw material shortage risk
A global demand supply imbalance of silicon exists which
can impact the PV industry. The Company has entered
into medium and long term contracts for supply of silicon
wafers. The Company has also made an investment in a
Company as a backward integration measure. The industry
is currently in the ‘pass through’ stage and the Company
believes that any hike in raw material prices can be easily
passed on to its customers.
Funding Risk
The developmental plans of the PV business; envisages
strategic tie ups and technology-intensive capex projects
to be executed requiring the mobilisation of funds. The
Company’s inability to mobilize funds would impact the
business prospects. The Company intends to fund these
projects through debts and internal accruals as a measure
of prudence.
Human capital risk
Human capital is a distinctive business driver as the PV
business is in a nascent stage and is a technology driven
segment requires specialized manpower. The PV space
is an emerging and complex business and challenge is
in getting the right people with a deep understanding,
skills and ability to take the business to the next level. The
Company has put in place key technical and managerial
resources.
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o p e r a t i n g p e r f o r m a n c e r e v i e w
(in INR million)
Particulars FY 08 FY 07
Income from Sales/service 18,997.9 19,824.7
(net of taxes/duties)
Other Income 1,219.0 787.7
Increase in stock of 1,025.1 626.3
Finished Goods/Work in Progress
Total Income 21,242.0 21,238.7
Total Expenditure 15,902.2 15,216.6
Interest & Finance Charges 1,793.6 1,244.9
Depreciation 4,315.9 3,578.7
Profit /(Loss) before Tax (769.6) 1,198.5
Tax Expense:
• Current Tax (1.6) 0.2
• Deferred Tax 2.9 88.7
• Fringe Benefit Tax 18.1 11.7
Net Profit/(Loss) after Tax (789.1) 1,097.9
Add:- Profit carried forward from last year 1,246.3 399.6
Profit available for appropriation 457.2 1,497.5
FINANCIAL ANALYSIS
Overview
The financial statements have been prepared in compliance
with the requirements of the Companies Act, 1956, and
Accounting Standards in India. Our management accepts
responsibility for the integrity and the objectivity of these
financial statements, as well as for various estimates and
judgments used therein. The estimates and judgments
relating to the financial statements have been made on a
prudent and reasonable basis, in order that the financial
statements reflect in a true and fair manner the form and
substance of transactions and reasonably present our
state of affairs and loss for the year.
Revenue Analysis
The gross revenues in fiscal year 2007-08 declined by
5.6% over the previous year to INR 19,582 million, while
declining margins in resulted in loss after tax of Rs.789.1
million. EBIDTA (including other income) at INR 5,339.8
million dropped by 11.3% to 25.1%. Despite the current
industry conditions and impact of appreciating rupee
vis-à-vis US dollar, the Company was able to minimise
decreases in its operating margin through production
efficiencies and control on working capital.
Fully diluted earnings per share for FY 2007-08 were INR
(4.7) against INR 6.5 in FY 07 after adjusting for Bonus
issue. The Company generated gross cash flow of INR
3,526.8 million in FY 2007-08.
Capital Structure
The authorized share capital increased to INR 2,075 million
from 1,425 million and the paid up equity capital post
bonus issue was INR 1,682.3 million as on March 31, 2008
against INR 1,116 million in the previous year.
Reserves
The Company’s reserves declined to INR 18,013.2 million
in FY 08 against INR 19,852.2 million in FY 07. As on 31st
March 2008, Securities premium account comprised 48%
of the total reserves and General Reserves (including loss
for the year) comprised the remaining 52%. There are no
re-valuation reserves as on March 31, 2008.
Loans
Over the years the Company has part funded its ongoing
expansions and investment programs through loans raised
at aggressively at lower costs. We have also tried to build
a prudent basket of currency to hedge against currency
risks and minimize cost. Our currency wise total debt
outstanding is as follows:-
During FY 08 there was a net addition of a debt of INR
8923.2 million mainly for ongoing expansion programmes
of the Company and its investments into Photo Voltaic
and Home Entertainment businesses. We believe that
our current total debt to equity ratio of 1.3:1 and interest
service cover ratio of 3.0 is still good.
FINANCIAL OBJECTIVES, INITIATIVES AND ACHIEVEMENTS
Your Company is taking proactive measures to ensure all
financial costs are effectively reduced to have a positive
impact on the bottomline. The Company continued to
in millions
Currency Amount in Amount in % of Total DebtCurrency Indian Rupees
USD 247.5 9,926.2 38
Euro 14.1 894.8 3
INR 15,352.6 15,352.3 59
Table on Currency-wise Total Debt Outstanding.
47
focus on efficient working capital management to release
cash into the system. The Company generated INR 3,193.2
million of cash from operations as against INR 7,140.0
million in the previous year. The ongoing foreign exchange
risk management policy has been further strengthened
that there is no adverse impact of volatile exchange rates
beyond agreed-upon tolerance levels.
Interest
The outflow on account of interest and finance charges
increased to INR 1,793.6 million in FY 08 from INR 1,244.9
million in FY 07, representing an increase of 44% primarily
on account of rise in overall debt levels as well as interest
costs. However, despite the hardening of interest rate, the
interest cost as a percentage of the average debt for the
Company was maintained at 8.3% in FY 08.
Capital expenditure
Gross block of the Company increased by INR 6,090.4
million during FY 08 to reach INR 45 billion. Majority of this
increment in assets was towards creation of capacities
for next generation formats and new businesses of the
Company. We intend to make further investments in
our Entertainment and Photovoltaic businesses. The
incremental capital expenditure will be funded by a prudent
mix of internal accrual and debt.
Depreciation
Depreciation increased by 20.6% in FY 08 (from INR
3,578.7 million to INR 4,315.9 million) on account of
increase in gross fixed assets. Due to the flexible nature of
the asset base and the relatively long life-cycle of products
in the industry, we believe that the risk of the asset base
becoming obsolete is low
Working capital management
The overall net working capital was 32.7% of gross
revenues in FY 08 which was marginally higher from the
levels of FY 07.
Debtors
The Company has been able to hold its receivable cycle to
58.7 days which is well below the industry levels of 90-120
days. Debt for more than six months reduced significantly
and represents only 3.8% of overall receivables of INR 120
million in FY 08, down from 4.2% and 7.3% of receivables
in FY 07 and FY 06 respectively.
Loans and advances
In FY 08 the loans and advances increased to INR 2,419.2
million against INR 1,186.2 million in FY 07
Capital employed
The capital employed at INR 45,960 million increased by
20% over FY 07. The increase in capital employed is on
account of Photovoltaic and other new businesses of the
Company.
Management of surplus funds
The short term surpluses were invested in low risk financial
instruments that optimized return and protected the
invested principal.
Working FY04 FY05 FY06 FY07 FY08
Capital (INR)
Debtors 3030.2 3315.4 3798.9 3288.4 3,150.6
Days 70.1 89.5 80.1 57.9 58.7
Inventory 1985.0 3435.4 4469.9 5392.9 6,179.8
Days 45.9 92.7 94.2 94.9 115.2
Creditors 2795.4 2253.9 2151.8 3245.2 2,935.8
Days 64.7 60.8 75.5 110.1 99.9
48
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has adequate internal control systems
commensurate with the size of the Company and nature
of its business to provide reasonable assurance regarding
adequacy of safeguard of all assets, effectiveness and
efficiency of operations, reliability of financial controls and
compliance with applicable statues, corporate policies and
code of conduct. The internal controls are continuously
reviewed for effectiveness and are augmented by written
policies and guidelines.
Internal audit activity is carried out in different areas of
Company’s operations by internal audit team as well as by
reputed firms of Chartered Accountants. Post audit reviews
are carried out to ensure that audit recommendations are
implemented. The scope of the internal audit activity is
guided by the annual audit plan, which is approved by the
Audit Committee.
The Audit Committee met four times during the year and
reviewed the audit observations covering the operations
on a quarterly basis and monitored the implementation of
agreed action plan. The Statutory auditors were invited to
attend all the Audit Committee meetings and shared their
views on adequacy of internal controls.
Significant accounting policies
1. Revenue recognition
Revenue from sale of goods is recognized on transfer of
significant risks and rewards of ownership to the customer
and when no significant uncertainty exists regarding
realization of the consideration. Sales are recorded net
of sales returns, rebates and trade discounts and price
differences and are inclusive of duties. Theatrical revenues
from films are recognised as and when the films are
exhibited. Revenues from other rights such as satellite
rights, music rights, overseas assignment rights etc. is
recognised on the date when the rights are available
for exploitation. Service income from SEZ Division is
recognised as and when services are rendered. Interest
is accounted on time proportion basis taking into account
the amount invested and the rate of interest. Dividend
is recognised as and when the right of the Company to
receive the payment is established.
2. Inventory valuation
Finished goods, work in progress, goods held for resale,
raw materials and stores and spares; at lower of cost or
net realizable value. Cost of raw materials, goods held
for resale, packing materials and stores and spares, is
determined on the basis of the weighted average method.
Cost of work in progress and finished goods is determined
by considering direct material, labor costs and appropriate
portion of overheads. Liability for excise duty in respect
of goods manufactured by the Company, other than for
exports, is accounted upon completion of manufacture.
Inventories under production films and films completed and
not released are valued at cost. The cost of released films
is amortized using the individual film forecast method. The
said amortization pertaining to theatrical rights, satellite
rights, music rights, home video rights and others is based
on management estimates of revenues from each of these
rights. The inventory, thus, comprises of unamortized
cost of such movie rights. These estimates are reviewed
periodically and losses, if any, based on revised estimates
are provided in full. At the end of each accounting period,
such unamortized cost is compared with net expected
revenue. In case of net expected revenue being lower than
actual unamortized costs, inventories are written down
to net expected revenue. The purchase cost of the rights
acquire in released films is apportioned between satellite
rights and other rights (excluding home video rights) based
on management’s estimates of revenue potential.
49
3. Fixed assets
Tangible fixed assets are stated at cost less accumulated
depreciation. Cost includes all expenses, direct and
indirect, specifically attributable to its acquisition and
bringing it to its working condition for its intended use.
Expenditure pending allocation are allocated to productive
fixed assets in the year of commencement of the
related project. Intangible assets are stated at cost less
accumulated amortization. The cost incurred to acquire
“right to use and exploit” home video titles, are capitalized
as copyrights/marketing and distribution rights where the
right allows the Company to obtain a future economic
benefit from such titles. Impairment, if any, in the carrying
value of fixed assets is assessed at the end of each
financial year in accordance with the accounting policy on
“Impairment of Assets”.
4. Depreciation and amortization
Depreciation on tangible fixed assets is provided based
on estimated usefull life on a pro-rata basis under the
straight-line method. The depriciation rates are not below
the minimum rate as specified in Schedule XIV to the
Companies Act, 1956. In respect of assets whose useful
life has been revised, unamortized depreciable amount is
charged over the revised remaining useful life. Intangible
assets other than copyrights/marketing & distribution rights
are amortized on an equated basis over their estimated
economiclifenotexceeding10years.Copyrights/marketing
and distribution rights are amortized from the date they are
available for use, at the higher of the amount calculated
on a straight line basis over the period the intangible asset
is available, not exceeding 10 years, and the number of
units sold during the period basis. Leasehold land and
improvement to the leased premises are amortized over
the period of the lease. The assets taken on finance lease
are depreciated over the lease period.
5. Taxation
a) Current Tax
Provision is made for current income tax liability based on
the applicable provisions of the Income Tax Act, 1961, for
the income chargeable under the said Act and as per the
applicable overseas laws relating to the foreign branch.
b) Deferred Tax
Deferred tax assets (DTA) and liabilities are computed
on the timing differences at the Balance Sheet date
between the carrying amount of assets and liabilities and
their respective tax bases. DTA is recognized based on
management estimates of reasonable / virtual certainty
that sufficient future taxable income will be available
against which such DTA can be realized. The deferred tax
change or credit is recognized using the tax rates and tax
laws that have been enacted or substantively enacted by
the Balance Sheet date.
HUMAN RESOURCE / INDUSTRIAL RELATIONS
As we continue to grow into different businesses, we firmly
believe our most important resource are our employees. It
is Moser Baer’s constant endeavour to keep our ready for
the future by proactively looking at their development and
growth. Our comprehensive HR model is aimed at fulfilling
our HR vision of providing our employees a meaningful
professional life and joy of association through work-life
balance. In order to sustain our competitive advantage,
we have given emphasis on employee-engagement across
levels. Individual managers have been given the onus
of enhancing engagement at their local-team level. In
addition, corporate initiatives have been implemented to
enhance employee engagement across the organization.
For example: more than 12 Reward and Recognition
schemes are implemented across the organization through
which employees are appreciated for positive behaviour
and/or exceptional performance. We have also deployed
50
our values successfully in all the businesses. Besides this,
development centres have been implemented to facilitate in
competency-development of our employees. We have also
initiated a 360 degree feedback for senior management. In
addition, there has been focus on training and development.
A comprehensive behavioural-training calendar is being
implemented to help our employees develop various
competencies. All these initiatives have helped to reach
higher levels of employee-engagement across all levels,
locations and businesses.
Like last year, we have also been successful in
implementing the Balanced Scorecard methodology for all
our businesses, and this is used as a base for cascading
respective performance-targets to functions, departments
and employees through our performance management
system. We also have launched fast-track programmes
that help deserving employees grow relatively faster in the
organization.
We are proud that industrial relations have been cordial
in all our manufacturing units, and we ensure that our
Communication and Benefit programmes span across all
levels and locations. Our employee-friendly policies help
to look at employee-involvement through various forums
like Open Houses, Townhall meeting, family get-togethers
family visits, coupled with a host of other communication
forums. We have an open door policy and a structured
grievance-redressal system to help our employees. Besides
a healthy work-life balance and professional work culture,
our employees work in an environment that encourages
innovation and teamwork. We also have various employee-
committees so that there is shared ownership for various
initiatives.
We have also been accredited SA 8000 for manufacturing
locations at Greater Noida, Noida and the corporate office.
As we continue to relentlessly march forward and grow our
businesses while venturing into new areas, our employee
strength has also increased over the last year. During the
year 2007-08, the Company added 284 employees, taking
the total strength to 6,138—up from 5,854 at the end of the
previous financial year.
51
52
Operations
Revenues for FY ‘08 stood at 20,873.1 million, Profit beforedepreciation, interest and tax stood at Rs. 5,339.8 million,and Loss after tax was Rs. 789.1 million. Turnover wasimpacted during the year by the strengthing of rupeeand difficult business environment. Aggressive pricingand flat sales volumes were the two major contributoryfactors affecting the bottom line. However, net operating cashflow continues to be strong at Rs. 3,062.8 million on theback of judicious capex spends and working capital control.
Industry consolidation and increasing demand traction inBlu-Ray are the positive hues to an otherwise sedateindustry environment in near to medium term. Long termvariables still remain healthy as need for storage andconsumer demand continues to grow.
Market Development
Your Company continues its strategy to straddle the valuechain, using innovation and product development to developnew markets. The success of this strategy has been reflectedin the increase in market share with retail private labels andother select distribution channels. This has beenaccompanied by development of new products and productvariants as ‘specials’ and value-added products.
d i r e c t o r s ’ r e p o r t
Dear Shareholder,
Your Directors are pleased to present the 25th Annual Reportand Audited Accounts for the financial year ended March31, 2008. This is a milestone year for Moser Baer being the25th year since the founding of the Company in 1983.
Financial Results(Rupees in Million)
Particulars Year ended March 31,2008 2007
Gross sales and other income 20,873.1 21,533.7
Profit before depreciation, 5,339.8 6,022.1interest and tax but after priorperiod items
Depreciation 4,315.9 3,578.7Interest and finance charges 1,793.6 1,244.9Profit/(Loss) before tax (769.6) 1,198.5Tax expenses 19.4 100.6Profit/(Loss) after tax (789.1) 1,097.9Profit/(Loss) carried forwardfrom last year 1,246.3 399.6Profit/(Loss) available forappropriation 457.2 1,497.5Appropriations:Transfer to profit and loss account 260.1 1,301.6
Dividend (proposed)% 10 15
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New Products
During the year, your Company introduced a number of newProducts, including BDR 1X-6X, DVDR 8X Dual Layer,Double sided recordable discs, “Diamond” CDR and ArchivalMedia. The Company’s in-house product development teamsuccessfully created new products for specialized customers.The Company launched “Professional Select” Media,developed for the professional duplication market and CPRMMedia with content protection for the Japanese Market.
Acquisitions
Last year’s acquisition of OM&T (an erstwhile subsidiary ofPhilips) has added significant value to your Company’sposition. It has enabled us to emerge as a frontrunner in thenext generation BDR formats, given OM&T’s pioneering R&Dwork in the Blu-ray disc technology.
Photo Voltaic Project
Moser Baer Photo Voltaic Limited (MBPV) is moving towardstechnological leadership and sustainable competitive edgein this industry by investing in disruptive technologies. TheCompany has placed itself in a vantage position by spreadingitself across the value chain and by developing expertiseacross multiple existing and future technologies. The globalphotovoltaic market is on a high growth curve and expertsexpect it to be worth US$ 40 billion by 2010.
MBPV achieved revenues of US$ 42.2 million in FY‘08. The40 MW crystalline silicon line is being expanded to 80 MW,as planned, by the end of 2008. The production capacity ofsolar modules has been expanded to 40 MW.
MBPV has tied up significant customer orders and MoUs,including two solar farms in Rajasthan and Punjab. TheCompany is aggressively pursuing tie-ups in several statesto drive grid-connected solar farms to demonstrate theirtechno-economic viability and attractive returns as a sourceof green peaking power. The company is on track to ramp upthe crystalline silicon cell line capacity to 180 MW in FY‘09and is tying up equipment for the 600 MW expansion of thinfilm capacity. The thin film project facility is nearing completionwith commencement of mechanical trials expected in earlyMay 2008.
Content Business
During the financial year, the Company’s entertainment
business achieved break-even and has registered revenuesof US$ 38.5 million for FY07. Your Company releasedShaurya, its first Hindi feature film, and Vellitharai, its firstTamil film, in theatres across India. Emphasis on acquiringnew title releases should give further impetus to the growthof the business, which remains on track to achieve revenuesin excess of US$ 200 million by 2010.
Consumer Electronics
The Company is entering high growth areas in consumerelectronics and launching multiple products. Your Companyoffers the best quality products, which are available at allmajor retail counters and major large format retail chainslike Croma, Reliance, Jumbo, etc. Your Company has got avery god response for DVD Players and digital photo frames.
Your Company has launched the following products underits own brand name:
� Four models of DVD players� A model of home theatre system� A model of Digital Photo Frame (DPF).
Further, your company is in the process of launching thefollowing products:
� Eight models of LCD TVs� MP3 and MP4 players� More DPF models� More DVD players.
Subsidiary Companies
Under the provisions of Section 212(8) of the Companies Act,1956, the Ministry of Corporate Affairs vide its letters dated13/03/2008 and 27/05/2008 granted the exemption underSection 212(8) of the Companies Act, 1956 from attachingthe documents required under Section 212 of the CompaniesAct, 1956. The information required to be published in termsof the provisions of Section 212(1) of the Companies Act,1956 is available for inspection by the investors of the holdingCompany and the subsidiary Companies at the registeredoffice of the Company located at 43B, Okhla Industrial Estate,Phase III, New Delhi – 110 020.
Dividend
Your Directors are pleased to recommend a dividend @10%on the paid-up Equity Share Capital of the Company for the
54
financial year 2007-08. The total payout will be Rs. 19.7 crore,inclusive of dividend tax and surcharge thereon.
Directors
In terms of the provisions of Sections 255 and 256 of theCompanies Act, 1956 and the Articles of Association of theCompany, Mr. Arun Bharat Ram (Director) and Mr. BernardGallus (Director), retire at the ensuing Annual GeneralMeeting and being eligible, have offered themselves forre-appointment.
Auditors
Price Waterhouse, Chartered Accountants, hold office untilthe conclusion of forthcoming Annual General Meeting and,being eligible, offer themselves for reappointment. TheCompany has received intimation to the effect that theirreappointment, if done, will be within the limits laid downunder Section 224(1B) of the Companies Act, 1956.
Bonus Issue
During the Financial Year 2007-08, your Companyannounced an issue of Bonus Equity Shares in the ratio of1:2 (one share for every two shares held) by capitalizing thereserves. As a result 56,077,035 Bonus Equity Shares wereissued to the shareholders who were members or beneficialshareholders at the close of business hours on the recorddate i.e. July 18, 2007.
Stock Options Plans
The shareholders of the Company at the Annual GeneralMeeting held on June 15, 2007, gave their approval to amendthe Directors’ Stock Option Plan (DSOP-2005) to increasethe number of Equity Shares to be issued under DSOP-2005from 450,000 to 1,000,000 and each Non-Executive Directoris now entitled to receive a maximum of 100,000 stockoptions. Thus, 300,000 additional stock options were grantedto the Non-Executive Directors of the Company. Further,pursuant to the declaration of the Bonus Equity Shares, theCompensation Committee of the Board of Directors decidedto extend the benefit of the bonus issue to the employeesand Non-Executive Directors who have the outstanding stockoptions under Employees Stock Option Plan (ESOP-2004)and Directors’ Stock Option Plan (DSOP-2005). Thus, eachemployee and Non-Executive Directors holding outstandingstock options on the record date of bonus issue were grantedbonus stock option in the ratio of 1:2, i.e. one bonus stock
option for every two stock options held.
Foreign Currency Convertible Bonds (FCCB)
Pursuant to approval of the shareholders in the AnnualGeneral Meeting held on June 15, 2007, your Companyraised US$ 150 million through issue of Foreign CurrencyConvertible Bonds (FCCBs) with tenure of five years fromtheir allotment. The issue received overwhelming responsefrom the investor community and was oversubscribed by 2.25times the issue size. The FCCB was issued in two tranches,with Tranche A being US$ 75 million and having a yield tomaturity of 6.10% and a conversion premium of 25% overthe closing price of Rs. 436.75 on the Bombay StockExchange (BSE) on June 4, 2007 and Tranche B being US$75 million with a yield to maturity of 6.75% and a conversionpremium of 40% over the BSE closing price of Rs. 436.75on June 4, 2007. The bonds are listed on the SingaporeExchange Securities Trading Limited.
Particulars of Employees
Particulars of employees, as required under Section 217(2A)of the Companies Act, 1956, read with the Companies(Particulars of Employees) Rules, 1975, as amended, formpart of this report. However, in pursuance of Section219(1)(b)(iv) of the Companies Act, 1956, this report is beingsent to all shareholders of the Company, excluding theaforesaid information and the said particulars are madeavailable at the Registered Office of the Company. Themembers interested in obtaining such particulars may writeto the Company Secretary at the Registered Office of theCompany.
Conservation of energy, research and development,technology absorption, foreign exchange earnings andoutgo
The information pertaining to conservation of energy,technology absorption, foreign exchange earnings and outgo,as required under Section 217(1)(e) of the Companies Act,1956, read with the Companies (Disclosure of particulars inthe report of the Board of Directors) Rules, 1988 is given asper Annexure ‘B’ and forms part of the Directors’ Report.
Fixed Deposits
During the year under review, your Company has notaccepted any deposit under Section 58A of the CompaniesAct, 1956, read with Companies (Acceptance of Deposits)Rules, 1975.
55
Corporate Governance
A report on Corporate Governance, along with a certificatefrom the Statutory Auditors and a certificate from theManaging Director and Group CFO, have been included inthe Annual Report, detailing the compliances of CorporateGovernance norms as enumerated in Clause 49 of the ListingAgreements with the stock exchanges.
Management Discussion and Analysis
The Management Discussion and Analysis Report isattached and forms part of the Directors’ Report.
Directors’ Responsibility Statement
Your Directors state:I. That in the preparation of the annual accounts, the
applicable accounting standards have been followed;
II. That we have selected such accounting policies andapplied them consistently and made judgments andestimates that are reasonable and prudent so as to givea true and fair view of the state of affairs of the Companyat the end of the financial year 2007-2008 and of theprofit of the Company for that year;
III. That we have taken proper and sufficient care for themaintenance of adequate accounting records in
accordance with the provisions of the Companies Act,1956 for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;and
IV. That we have prepared the annual accounts on a goingconcern basis.
Conclusion
Your Company has outperformed the industry in achallenging year and continues to maintain its leadershipposition. It has also been surpassing all international qualityand cost benchmarks and continues to build shareholdervalue. Your Directors look to the future with confidence. YourDirectors place on record their appreciation for theoverwhelming cooperation and assistance received frominvestors, customers, business associates, bankers, vendors,as well as regulatory and government authorities. YourDirectors also thank the employees at all levels, who, throughtheir dedication, cooperation, support and smart work, haveenabled the Company to achieve rapid growth.
For and on behalf of the Board of Directors
Sd/-Place: New Delhi Deepak PuriDate: 22.05.2008 Chairman & Managing Director
56
The Weighted Average of Vesting Period in respect of the Options granted to the Directors under DSOP-2005 were as follows:-
Grants Weighted Average of the Vesting Period1st Grant on 11th August, 2005 2.5 years2nd Grant on 12th December, 2006 2.5 years3rd Grant on 25th January, 2007 2.5 years4th Grant on 19th June, 2007 2.5 years
The Weighted Average of Vesting Period in respect of the Options granted to the employees under ESOP-2004 were as follows:-
Grants Weighted Average of Vesting Period
1st Grant on 9th January, 2004 3 years2nd Grant on 29th November, 2004 2.5 years3rd Grant on 27th January, 2005 2.5 years4th Grant on 24th June, 2005 2.5 years5th Grant on 17th August, 2005 2.5 years6th Grant on 27th October, 2005 2.5 years7th Grant on 24th January, 2006 2.5 years8th Grant on 26th April, 2006 2.5 years9th Grant on 7th June, 2006 2.5 years10th Grant on 27th October, 2006 2.5 years11th Grant on 24th January, 2007 2.5 years12th Grant on 30th April, 2007 2.5 years13th Grant on 11th July, 2007 2.5 years14th Grant on 25th October, 2007 2.5 years15th Grant on 30th January, 2008 2.5 years
Annexure-AINFORMATION REGARDING EMPLOYEES STOCK OPTION PLAN, 2004 (ESOP)
AND DIRECTORS’ STOCK OPTION PLAN, 2005 (DSOP)(AS ON 31ST MARCH, 2008)*
S. No. Particulars ESOP-2004 DSOP-2005
1 Number of Stock Options granted 4,776,300 700,000
2 Pricing Formula (i) Normal allocation: -Rs.125 per Option or prevailing Market Price, whichever is higher. Rs.170 per Option or prevailing(ii) Special allocation: - 50% of the Options at Rs. 125 per Option or prevailing Market Market Price, whichever is higher.
Price, whichever is higher and the balance 50% of the Options at Rs. 170 per Optionor prevailing Market Price, whichever is higher.
3 Number of Options vested 954,075 150,000
4 Number of Options exercised 616,125 25,000
5 Number of shares arising as a resultof exercise of option 616,125 25,000
6 Number of options cancelled/lapsed 1,056,800 50,000
7 Variation of terms of options Nil Nil
8 Money realized by exercise of options Rs. 135,403,076 Rs. 5,707,500
9 Number of options in force 3,103,375 625,000
10 Employee-wise details of Options granted to:
(a) Senior managerial personnel; and a. Ms. Minni Katariya - 6,000 N.A.(b) Any other employee who receives a grant in b. Mr. Deepak Kukreja- 15,000
any one year of options amounting to 5% or c. Mr. V. C. Agerwal- 40,000more of options granted during that year. d. Mr. Vibhas Joshi- 40,000
e. Mr. Rajya Ghei- 20,000f. Mr. R. Sampath- 24,000g. Mr. Giriraj Nyati- 20,000h. Mr. Rajiv Arya- 24,000
11 Identified employees who were granted Optionsduring any one year, equal to or exceeding 1% Nilof the issued capital (excluding outstanding warrantand Conversions) of the Company at the time of grant;
12 Diluted Earnings Per Share (EPS) pursuant toissue of shares on exercise of option, calculated (Rs. 4.70)in accordance with AS 20
13 Method of calculation of employee compensation cost The Company has used intrinsic value method for calculating the employeecompensation cost with respect to the stock options.
14 Difference between the employee compensation costso computed at serial number 13 above and the Rs. 103,042,130employee compensation cost that shall have beenrecognized if it had used the fair value of options
15 The impact of this difference on profits & on EPS Impact on Profit Rs. 103,042,130of the Company Impact on EPS-Basic-(Rs. 5.31), Diluted-(Rs. 5.31)
16 Weighted-average exercise prices and weighted- a. Weighted average exercise price – Rs. 370.23 a. Weighted average exercise Price- Rs. 425.25average fair values of options granted during the year
b. Weighted average fair value of the Options- Rs. 123.52 b. Weighted average fair value of the Options-Rs. 155.
57
Fai
r va
lue
of o
ptio
ns b
ased
on
Bla
ck-S
chol
es’ E
nhan
ced
Mod
el i.
e. E
nhan
ced
FAS
B 1
23 M
odel
for
ES
OP
-200
4
Grant D
ate-
17/8/05
6.74%
(for 5
years,
source-N
SE/
Reuters as
on 16th
Aug
2005)
7 yrs.
1.25 x
61.44%
(based on 5
years stock
data from
NSE)
0.58%
(W
eighted
average
dividend
yield for last
3 financial
years
234.75
Grant
Date-
27/10/05
6.80%
(for
5 years,
source-
NSE/
Reuters as
on 27th
O
ct
2005)
7 yrs.
1.25 x
60.76%
(based on
5 years
stock data
from
N
SE)
0.58%
(W
eighted
average
dividend
yield for
last 3
financial
years)
214.70
Grant D
ate-
24/1/06
6.77%
(for
5 years,
source-
NSE/
Reuters as
on 23rd
Jan
2006)
7 yrs
1.25 x
59.02%
(based on 5
years stock
data from
NSE)
0.58%
(W
eighted
average
dividend
yield for
last 3
financial
years)
196.60
Grant D
ate-
26/4/06
6.96%
(for
5 years,
source-
NSE/
Reuters as
on 25th
Apr 2006)
7 yrs
1.25 x
57.30%
(based on 5
years stock
data from
NSE)
0.58%
(W
eighted
average
dividend
yield for
last 3
financial
years)
229.40
Grant D
ate-
7/6/06
7.37%
(for
4.56 years,
source-
NSE/
Reuters as
on 6th
June
2006)
7 yrs
1.25 x
56.84%
(based on 5
years stock
data from
NSE)
0.58%
(W
eighted
average
dividend
yield for
last 3
financial
years)
201.10
Grant D
ate-
27/10/06
7.54%
(for
4.28 years,
source-
NSE/
Reuters as
on 27th
O
ct
2006)
7 yrs
1.25 x
54.66%
(based on 5
years stock
data from
NSE)
0.46%
(W
eighted
average
dividend
yield for
last 3
financial
years)
238.80
Grant D
ate-
24/1/07
7.73%
(for
4.28 years,
source-
NSE/
Reuters as
on 23rd
Jan
2007)
7 yrs
1.25 x
55.03%
(based on 5
years stock
data from
NSE)
0.46%
(W
eighted
average
dividend
yield for
last 3
financial
years)
315.30
Grant D
ate-
30/04/2007
8.07%
(for
4.25 years,
source-
NSE/
Reuters as
on 27th
April, 2007)
7 yrs
1.25x
56.14%
(based on 5
years stock
date from
NSE)
0.46%
(W
eighted
average
dividend
yield for
last 3
financial
years)
342.50
Grant D
ate-
11/07/2007
7.52%
(for
4.26 years,
source-
NSE/
Reuters as
on 10th
July,
2007)
7 yrs
1.25x
56.19%
(based on 5
years stock
date from
NSE)
0.54%
(W
eighted
average
dividend
yield for
last 3
financial
years)
491.90
Grant D
ate-
25/10/2007
7.91%
(for
4.31 years,
source-
NSE/
Reuters as
on 24th
O
ct,
2007)
7 yrs
1.25x
59.98%
(based on 5
years stock
date from
NSE)
0.54%
(W
eighted
average
dividend
yield for
last 3
financial
years)
301.10
Grant D
ate-
30/01/2008
7.42%
(for
4.28 years,
source-
NSE/
Reuters as
on 29th
January,
2008)
7 yrs
1.25x
59.70%
(based on 5
years stock
date from
NSE)
0.54%
(W
eighted
average
dividend
yield for
last 3
financial
years
221.95
Assum
p-
tions:-
Risk-free
interest
rate
Expected
life
Expected
Multiple
Expected
volatility
Expected
Dividends
Price of the
underlying
share in
market at
the tim
e of
option grant
(in Rs.)
Grant D
ate-
9/1/04
(O
ptions
subsequently
cancelled)
4.21%
(for
6 years,
source-
Reuters as
on 9th Jan
2004)
7 yrs.
1.25 x
70.0%
(based on 5
years stock
data from
NSE)
1.0%
(based on
the
dividend
history for
past 3
financial
years).
342.00
Grant D
ate-
29/11/04
6.79%
(for
4 years,
source-
NSE/
Reuters as
on 29th
Nov 2004)
7 yrs.
1.25 x
70.0%
(based on 5
years stock
data from
NSE)
0.85%
(based on
sim
ple
average of
the
dividend
history of
past 4
financial
years).
224.05
Grant D
ate-
27/1/05
6.55%
(for
5 years,
source-
NSE/
Reuters as
on 27th Jan
2005)
7 yrs.
1.25 x
67.0%
(based on 5
years stock
data from
NSE)
0.85%
(based on
sim
ple
average of
the
dividend
history of
past 4
financial
year)
213.20
Grant D
ate-
24/6/05
6.67%
(for
5 years,
source-
NSE/
Reuters as
on 23rd Jun
2005)
7 yrs.
1.25 x
62.03%
(based on 5
years stock
data from
NSE)
0.85%
(based on
sim
ple
average of
the
dividend
history of
past 4
financial
years).
209.80
58
ANNEXURE B
Information as per Section 217(1)(e) of the Companies Act,1956, read with the Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules, 1988 and formingpart of the Directors’ Report for the year ended 31st March,2008.
A. Conservation of energy
Your Company’s energy requirements continued to increasesignificantly as it commissioned new manufacturing facilitiesand increased production at existing facilities. As an ongoingprocess, the Company undertakes various measures to saveenergy and reduce its consumption. During the financial year2007-08, some of the measures undertaken by the Companyinclude:-
1) Saving of 80 KW of energy resulting in saving of Rs. 42Lacs by removal of HEPA filters by incurring anexpenditure of Rs. 0.11 Lacs for this purpose.
2) Saving of 572.2 KW of energy by increasing the halltemperature, stopping the Air Handling Units (AHU) inJB Area by reducing the exhaust quantity fromproductions machines. This resulted in saving ofRs. 300.7 Lacs.
3) Saving of 104.2 KW of energy and Rs. 54.8 Lacs byreducing the Air Pressure and by incurring Rs. 82 Lacs.
4) Saving of 864 KW of energy and Rs. 454.1 Lacs byinstalling VFDs system in AHUs.
5) Saving of 185.7 KW of energy and Rs. 97.6 Lacs bydecreasing / shutting off lights of non critical areas &
modification in light fittings locations for energy reduction.
6) Saving of 76.68 KW of energy and Rs. 40.3 Lacs byreducing the Air Consumption.
B. Technology absorption, adaptation and innovation,research & development
Technology absorption, adaptation and innovation
Technology plays a big role in our ability to offer a completebasket of products to our customers. Our company thus hasentered agreement to acquire technology and the right touse technology belonging to other third party companies.During the year, a number of agreements were completedto acquire technology belonging to companies whose R&Defforts have been complementary to our technologydevelopment program. This technology has been successfullyincorporated into some of the Company’s products and anongoing effort is being made to improve the utilization of thistechnology and produce newer innovative products basedon this technology.
At the same time our Company is a part of many InternationalForums and R&D initiatives that are dedicated to thedevelopment of future formats like light scribe technology,HD-DVD and Blue-ray. Such participative activities havesignificantly enhanced the image of our Company as anindividual entity and our country as a whole in the mind ofthe International community. Differential ScanningCalorimeter (DSC), Universal Testing Machine (UTM), Micro-injector and Extruder have been installed at IIT BHU whereour collaborative R&D work is under progress. Similarly, the
Fair value of options based on Black-Scholes’ Enhanced Model i.e. Enhanced FASB 123 Model for DSOP-2005
Assumptions Grant Date-11/08/05 Grant Date -12/12/06 Grant Date -25/01/07 Grant Date- 19/06/2007
Risk-free interest rate 6.56% 7.56% 7.68% 7.87%(for 5 years, source-NSE/ (for 4.58 years, source-NSE/ (for 4.58 years, source-NSE/ (for 4.32 years, source NSE/Reuters as on 11th Aug 2005) Reuters as on 12th Dec 2006) Reuters as on 25th Jan 2007) Reuters as on 19th June, 2007)
Expected life 7 yrs 7 yrs 7 yrs 7 yrs
Expected Multiple 1.25 x 1.25 x 1.25 x 1.25x
Expected volatility 61.46% 54.73% 55.03% 56.20%(based on 5 years stock (based on 5 years stock (based on 5 years stock (based on 5 year stockdata from NSE) data from NSE) data from NSE) data from NSE)
Expected dividends 0.58% 0.46% 0.46% 0.54%(Weighted average dividend (Weighted average dividend (Weighted average dividend (Weighted average dividendyield for last 3 financial years) yield for last 3 financial years) yield for last 3 financial years) yield for last 3 financial years)
Price of the underlying share in 228.30 242.60 319.25 425.25market at the time of optiongrant (in Rs.)
*Two Options granted before the record date i.e. 18th July, 2007, under the above plans, entitles the holder to three Equity Shares of the Company.
59
co-sputtering unit has been installed at IIT Delhi which issmoothly working there.
Your Company bagged the first prize awarded by ELCINAfor its R&D efforts made in the field of electronic sector.Further, your Company has been identified by some R&Dinstitutes for collaboration and also in the process ofapproaching Govt. funding agencies through our ownphilosophical R&D projects. One R&D proposal has alreadybeen submitted to Nano Science Initiative Programme inDepartment of Science and Technology.
Research and Development
Research and Development efforts have been implementedin the following areas in order to support existing businessesas well as new futuristic formats and technologies beyondthe optical media.
Innovative R&D efforts under progress:-
1. Co-sputtering has been achieved for the developmentof promising materials composition, having potentialcharacteristics for next generation optical formats.
2. Chemical blends of polymers with sufficiently highermechanical strength have been successfully made.Physical term is under exploration in order to obtainsubstitute for the substrate material for a CD and DVD.
3. Nano-structured materials for the development ofalternate memory device.
4. Nano synthesis of blends for filter application.
5. Basic R&D and its application towards technology/devicedevelopment are under extensive investigations incollaboration with our academia partners IIT Delhi andIIT BHU.
6. Holography- Hardcore technical feasibility is establishedthrough characterization of different kind ofphotopolymers for three dimensional recording.
Future plan of action is to set up holographymanufacturing facility and explore digital holographicrecording.
7. Uniform L*a*b Disc- is invented to uniform the coloracross the data area and the hub area of compact discs.This invention covers the complete idea of a CDRprintable disc(possibly on DVDR), up to the hub area,which can esthetically look better after the printabilityexercise and the end user can print their image uniformly
up to 95% of the disc area (conventional disc’s uniformcoverage area is ~ 80%).
8. Stamper Print- A stamper is made with a printing imagein Stamper Print process and embossed dummy discsare replicated (L1 through this stamper). These discsare bonded with the active parts (L0) as usual. The mediacomes out of replication process with active layer asdata and dummy layer with the customized image, ascomplete product.
Benefits derived as a result of the above R & D
1. As a result of the above R&D Activities, your Companyis gearing-up for future storage media in the industryand gained experience in handling photopolymer fromthe point of view of data storage & further ready to copewith the market requirements in the next generation datastorage.
2. Stamper Print has given the insight of cost savingthrough innovative method. The turn around time to thecustomer will improve with respect to the processingtime. A fully automatic process without any interventionat line during production with a single stop solution.
3. Uniform L*a*b Disc- New product which has the aestheticuniformity across the disc and we are first in the marketwith such a product. This product would be a value addedproduct for the company.
Capital expenditure of Rs. 104.9 million and recurringexpenses of Rs. 16.5 million were incurred during the yeartowards R&D expenses, which is 0.6% of the total turnoverof the Company.
These expenses are part of expenses incurred under variousrevenue or capital heads.
C. Foreign exchange earnings and outgo
Total foreign exchange earned comprising of FOB value ofexports, interest, insurance claim and dividend received wasRs. 13,442.1 million, whereas total foreign exchange used(comprising of CIF value of imports, dividend and otheroutgoings) was Rs. 9,551.7 million.
For and on behalf of the Board of Directors
Sd/-Place: New Delhi Deepak PuriDate: 22.05.2008 Chairman & Managing Director
60
1. COMPANY’S PHILOSOPHY ON CORPORATEGOVERNANCE
Moser Baer believes that “Corporate Governance” refers tothe processes and structure by which the business and affairsof the Company are directed and managed, in order toenhance long term shareholder value through enhancingcorporate performance and accountability, whilst taking intoaccount the interests of all stakeholders. Good CorporateGovernance, therefore, embodies both enterprise(performance) and accountability (conformance).
The Corporate Governance philosophy of the Company isbased on the following principles:
• Satisfaction of the spirit of the law through ethicalbusiness conduct;
• Transparency and a high degree of disclosure levels;• Truthful communication about how the Company is run
internally;• A simple and transparent corporate structure driven solely
by the business needs;• Strict compliance with Clause 49 of the Listing Agreement
as amended from time to time;• Establishment of an efficient corporate structure for the
management of the Company’s affairs;
• Management is the trustee of the shareholders’ capitaland not the owner.
2. BOARD OF DIRECTORS
The present strength of the Board is ten. The Boardcomprises of three Executive Directors and seven Non-Executive Directors. Five Non-Executive Directors of theCompany are independent. The Non-Executive Directorsbring independent judgment in the Board’s deliberations anddecisions.
Definition of ‘Independent Director’ as per Clause 49 of theListing Agreement
‘Independent Director’ shall mean a Non-Executive Directorof the Company who:-
• apart from receiving director’s remuneration, does nothave any material pecuniary relationships or transactionswith the company, its promoters, its directors, its seniormanagement or its holding company, its subsidiaries andassociates which may affect independence of thedirector;
• is not related to promoters or persons occupying
c o r p o r a t e g o ve r n a n c e r e p o r t
61
management positions at the board level or at one levelbelow the board;
• has not been an executive of the company in theimmediately preceding three financial years;
• is not a partner or an executive or was not partner or anexecutive during the preceding three years, of any of thefollowing:
� the statutory audit firm or the internal audit firm that
is associated with the company, and
� the legal firm(s) and consulting firm(s) that have amaterial association with the company.
• is not a material supplier, service provider or customeror a lessor or lessee of the company, which may affectindependence of the director; and
• is not a substantial shareholder of the company i.e.owning two percent or more of the block of voting shares.
COMPOSITION
Directors Category Equity Investors represented Number of Equity Shares and Warrantsheld by the non-executive Directors
Mr. Deepak Puri Promoter and Executive N.A. N.A.
Mr. Harnam D. Wahi* Independent and N.A. 400 Equity SharesNon-Executive
Mr. Arun Bharat Ram Independent and N.A. 37,500 Equity SharesNon-Executive
Mrs. Nita Puri Promoter and Executive N.A. N.A.
Mr. John Levack Non-Executive and Electra Partners Mauritius Limited. NilNominee
Mr. Rajesh Khanna Non-Executive and Bloom Investments Limited (BIL), NilNominee Ealing Investments Limited (EIL),
Randall Investments Limited (RIL)and Woodgreen Investment Ltd (WIL).BIL, EIL, RIL and WIL are affiliatesof Warburg Pincus LLC.
Mr. Prakash Karnik Independent and N.A. NilNon-Executive
Mr. Bernard Gallus Independent and N.A. NilNon-Executive
Mr. Ratul Puri Promoter and Executive N.A. N.A.
Mr. V.N Koura Independent and N.A. NilNon-Executive
Dr. Vinayshil Gautam Independent and N.A. NilNon-Executive
* Demised on 28th May, 2007
62
ATTENDANCE RECORD OF DIRECTORS
Directors Board meetings held Meetings attended Attended last AGMduring the year held on 15th June, 2007
Present Through Audioin person Conferencing
Mr. Deepak Puri 10 10 — YesMr. Harnam D. Wahi* 10 — — —Mrs. Nita Puri 10 9 1 NoMr. Prakash Karnik 10 8 2 NoMr. John Levack 10 7 3 NoMr. Bernard Gallus 10 5 3 NoMr. Ratul Puri 10 10 — NoMr. Arun Bharat Ram 10 6 1 NoMr. V.N Koura 10 8 — NoDr. Vinayshil Gautam 10 7 2 NoMr. Rajesh Khanna 10 3 2 No
*Demised on 28th May, 2007
As per Clause 49 of the Listing Agreement, Committee heremeans Audit Committee and the Investors’ GrievanceCommittee.
The information as required under Annexure I-A to Clause49 of the Listing Agreement is made available to the Board.Adequate information is circulated as part of the agendapapers to enable the Board to take informed decisions.
The Company holds at least five Board meetings in a year,one in each quarter to review the financial results and oneto review the audited annual results of the Company.
The Board met ten times on the following dates during thefinancial year 2007-2008 and the gap between two meetingsdid not exceed four months:
i. 30th April, 2007ii. 1st May, 2007iii. 10th July, 2007iv. 27th July, 2007v. 19th October, 2007vi. 26th October, 2007vii. 20th December, 2007viii. 31st January, 2008ix. 26th March, 2008x. 27th March, 2008
DIRECTORSHIP IN OTHER COMPANIES AND BOARD COMMITTEES :
As per the requirements of the Listing Agreement, none of the Directors of the Board should serve as a member of more than10 Committees or as Chairman of more than 5 Committees.
Name of Director No. of other Directorships (excluding foreign No. of Committee membership companies and private limited companies) (including MBIL’s Committees)
Chairman Member
Mr. Deepak Puri 7 1 1Mr. Arun Bharat Ram 12 1 4Mrs. Nita Puri 5 — 2Mr. John Levack 2 — 1Mr. Rajesh Khanna 5 — 3Mr. Prakash Karnik 5 — 2Mr. Bernard Gallus — — 2Mr. Ratul Puri 7 — 1Mr. V. N. Koura 4 1 –Dr. Vinayshil Gautam 3 1 2
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As Mr. Harnam D. Wahi, the Chairman of the Audit Committeedemised on 28th May, 2007 and no Board Meeting could hadbeen held till the convening of Annual General Meeting,therefore, no Chairman was appointed during that period.
3. BOARD COMMITTEES
Your Company has the following Board Committees:
1. Audit Committee2. Compensation Committee3. Investors’ Grievance Committee4. Corporate Governance Committee5. Capex Committee6. Banking and Finance Committee7. Corporate Social Responsibility Committee
The guidelines for these Board Committees are set out below.
The Board is responsible for constituting, assigning, co-optingand fixing terms of service for the Committee Members ofvarious Committees and delegates these powers to theCommittees. Recommendations of the Committees aresubmitted to the Board of Directors for approval.
The frequency and agenda of meetings of each of theseCommittees is determined by the Chairman of the Board/Executive Director in consultation with the Chairman of theconcerned Committee. These Committees meet as and whenthe need arises.
4. AUDIT COMMITTEE
Composition
Your Company has a qualified and independent AuditCommittee. As, Mr. Harnam D. Wahi demised during the yearthus the Board of Directors appointed Mr. V. N. Koura as theChairman of the Committee. Other members comprise ofMr. Prakash Karnik, Mr.Rajesh Khanna and Mr. BernardGallus. The Company Secretary acts as the Secretary ofthe Committee. Mr. Ratul Puri and Mr. John Levack are thepermanent invitees to the meetings of this Committee.
Primary Objective
The primary objective of the Audit Committee is to monitorand provide effective supervision of the management’sfinancial reporting process with a view to ensure accurate,timely and proper disclosures and transparency, integrity and
quality of financial reporting.
The Audit Committee has the power to do the following:-
a) To investigate any activity within its terms of reference.
b) To seek information from any employee.
c) To obtain outside legal or other professional advice.
d) To secure attendance of outsiders with relevant expertise,if it considers necessary.
Role of the Committee
Pursuant to amendment in Clause 49 of the Equity ListingAgreement vide circular dated 27th December, 2007, role ofthe Audit Committee was amended by inserting a new clauseno. (n) in the ‘Role of Audit Committee’.
a) Oversight of the Company’s financial reporting processand the disclosure of its financial information to ensurethat the financial statements are correct, sufficient andcredible.
b) Recommending to the Board the appointment, re-appointment and, if required, the replacement or removalof the Statutory Auditors and the fixation of audit fee.
c) Approval of payment to Statutory Auditors for any otherservices rendered by the Statutory Auditors.
d) Reviewing, with the management, the annual financialstatements before submission to the Board for approval,with particular reference to:
• Matters required to be included in the Director’sResponsibility Statement to be included in the Board’sreport in terms of Clause (2AA) of Section 217 of theCompanies Act, 1956
• Changes, if any, in accounting policies and practicesand reasons for the same.
• Major accounting entries involving estimates basedon exercise of judgment by management.
• Significant adjustments made in the financialstatements arising out of audit findings.
• Compliance with listing and other legal requirementsrelating to financial statements.
• Disclosure of any related party transactions.
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• Qualifications in draft audit report.
e) Reviewing with the management, the quarterly financialstatements before submission to the Board for itsapproval.
f) Reviewing, with the management, performance ofStatutory and Internal Auditors and adequacy of theinternal control systems.
g) Reviewing the adequacy of internal audit function, if any,including the structure of the internal audit departmentstaffing and seniority of the official heading the department,reporting structure coverage and frequency of internalaudit.
h) Discussing with internal auditors any significant findingsand follow up there on.
i) Reviewing the findings of any internal investigations bythe internal auditors into matters where there is suspectedfraud or irregularity or a failure of internal control systemsof a material nature and reporting the matter to the Board.
j) Discussing with the Statutory Auditors before the auditcommences about the nature and scope of audit as wellas, post-audit discussion to ascertain any area ofconcern.
k) Looking into the reasons for substantial defaults in thepayment to the depositors, debenture holders,shareholders (in case of non-payment of declareddividends) and creditors.
l) To review the functioning of the Whistle Blowermechanism, in case the same is existing.
m) Carrying out any other function as mentioned in the termsof reference of the Audit Committee.
n) Reviewing, with the management, the statement of uses/ application of funds raised through an issue (publicissue, rights issue, preferential issue, etc.), the statementof funds utilized for purposes other than those stated inthe offer document/prospectus/notice and the reportsubmitted by the monitoring agency monitoring theutilisation of proceeds of a public or rights issue, andmaking appropriate recommendations to the Board to takeup steps in this matter.
The Audit Committee has been authorized to mandatorilyreview the following information:
a) Management discussion and analysis of financialcondition and results of operations.
b) Statement of significant related party transactions,submitted by management.
c) Management letters / letters of internal controlweaknesses issued by the Statutory Auditors.
d) Internal audit reports relating to internal controlweaknesses.
e) The appointment, removal and terms of remuneration ofthe Chief Internal Auditor.
Meetings
During the year, the Committee met four times on thefollowing dates:
(i) 30th April, 2007(ii) 26th July, 2007(iii) 25th October, 2007(iv) 30th January, 2008
The gap between two meetings did not exceed four months.
Following are the attendance details of the members at theCommittee meetings:-
Members Committee Meetings Meetingsheld during the year attended
Mr. Harnam D. Wahi* 4 —Mr. V.N. Koura (Chairman) 4 4Mr. Prakash Karnik 4 4Mr. Rajesh Khanna 4 2Mr. Bernard Gallus 4 4
*Demised on 28th May, 2007
5. COMPENSATION COMMITTEE
Composition
Since Mr. Harnam D. Wahi, the Chairman of the Committeedemised during the year, therefore the Board appointed Mr.Prakash Karnik as the Chairman of the Committee. Othermembers of the Committee comprise of Mr. John Levack,Mr. Bernard Gallus, Mr. Rajesh Khanna and Mr. V.N. Koura.
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The Company Secretary acts as the Secretary of theCommittee.
Terms of reference
a) The Compensation Committee discharges the Board’sresponsibilities relating to compensation of theCompany’s Executive Directors.
b) The Compensation Committee has the overallresponsibility for approving and evaluating the ExecutiveDirectors’ compensation plans, policies and programmesof the Company.
c) The Compensation Committee administers theEmployees Stock Option Plan (ESOP) and the Directors’Stock Option Plan (DSOP) of the Company.
Responsibilities and authorities of the CompensationCommittee
a) The Compensation Committee shall review and approvefor the Executive Directors of the Company:-
• The annual base salary,
• Annual incentive bonus, if any,
• Any other benefits, compensation or arrangements.
b) The Compensation Committee shall evaluate, and ifnecessary, amend performance parameters of theExecutive Directors;
c) The Compensation Committee may makerecommendations to the Board in relation to incentiveplans for the Executive Directors; and
d) To administer the ESOP and DSOP schemes of theCompany.
Meetings
During the year, the Committee met four times on thefollowing dates:
(i) 30th April, 2007(ii) 26th July, 2007(iii) 25th October, 2007(iv) 30th January, 2008
Following are the details regarding the Committee meetingsattended by the members:-
Members Committee Meetings Meetingsheld during the year attended
Mr. Harnam D. Wahi* 4 —Mr. Prakash Karnik (Chairman) 4 4Mr. Rajesh Khanna 4 2Mr. John Levack 4 4Mr. Bernard Gallus 4 4Mr. V.N Koura 4 4
*Demised on 28th May, 2007.
REMUNERATION POLICY
a) Executive Directors
The details of the remuneration paid and payable to Mr.Deepak Puri (Managing Director), Mrs. Nita Puri (WholetimeDirector) and Mr. Ratul Puri (Executive Director) during theyear 2007-2008 are as follows:
Particulars Mr. Deepak Puri, Mrs. Nita Puri, Mr. Ratul Puri,Managing Director Director Executive Director
Salaries, allowancesand bonus 2,91,56,250 47,90,178 1,59,41,964PF Contribution 16,98,750 4,39,822 10,13,036Perquisites 1,45,000 1,45,000 1,45,000
TOTAL 3,10,00,000 53,75,000 1,71,00,000
Service Contracts, Notice Period, Severance Fees
Mr. Deepak Puri (Managing Director); Mrs. Nita Puri(Wholetime Director) and Mr. Ratul Puri (Executive Director)
The Company has executed a Service Contract withMr. Deepak Puri, Managing Director, Mrs. Nita Puri,Wholetime Director and Mr. Ratul Puri, Executive Directorwhereby each of them have been appointed for a period offive years with effect from 1st September, 2006, 1st December,2006 and 1st October, 2006, respectively. Each of them isentitled to resign from his/her office at any time upon givingto the Company at least three calendar months’ written notice.No severance fees shall be payable to either of them.
The amount of performance bonus paid to the ManagingDirector, Wholetime Director and the Executive Director isbased on the performance of the Company and of theseDirectors, as approved by the Compensation Committee andconsidered by the Board.
b) Non-Executive Directors
The Company does not have any pecuniary relationship withany of its Non-Executive Directors.
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STOCK OPTIONS
Initially, the shareholders of the Company had passed aresolution to offer the stock options to the Non-ExecutiveDirectors of the company to the maximum of 4,50,000Equity Shares and thereafter, the shareholders passed aresolution and this limit was increased to 10,00,000 EquityShares. Under the terms of approved Directors’ StockOption Plan (DSOP), each Non-Executive Director isentitled to receive upto a maximum of 1,00,000 stockoptions.
Status of stock options accepted under the above mentionedplan is as follows:
Name of No. of stock options grantedDirectors Original Bonus options
Mr. Arun Bharat Ram* 1,00,000 50,000Mr. Prakash Karnik 1,00,000 50,000Mr. John Levack 1,00,000 50,000Mr. Bernard Gallus 1,00,000 50,000Mr. V.N. Koura 1,00,000 50,000Dr. Vinayshil Gautam 1,00,000 50,000Late Shri Harnam D. Wahi 50,000 25,000
Mr. Rajesh Khanna, nominee Director of BIL, EIL, RIL andWIL did not accept stock options offered to him. He alsodoes not charge any Sitting Fees for attending any meetingsof the Board or Committees thereof.
*Out of 1,00,000 original stock options and 50,000 bonusstock options granted, Mr. Arun Bharat Ram exercised 25,000original stock options and 12,500 bonus stock options.
COMMISSION
The shareholders of the Company at the Annual GeneralMeeting held on 3rd August, 2005 passed a resolution to paya commission for a period of 3 years w.e.f. 1 April, 2005 tothe maximum of 0.2% of the Profit after Tax of every financialyear. However, during the year, the shareholders of theCompany passed a resolution through postal ballot andincreased the overall limit of commission payable to the non-executive Directors upto 1% of the Net Profits of the Companycalculated as per the provisions of the Companies Act, 1956,without obtaining the prior approval of the CentralGovernment.
Accordingly, the non-executive Directors have been paidfollowing amount of commission for the Financial Year2006-07:
Sl Name of Director Gross CommissionNo. (Rs.)
1. Harnam D. Wahi* 260,7422. Arun Bharat Ram Nil3. Prakash Karnik 260,7424. Rajesh Khanna Nil5. John Levack 247,0186. Bernard Gallus 247,0197. V.N. Koura 233,2968. Dr. Vinayshil Gautam 192,126
*Demised on 28th May, 2007.
SITTING FEES
During the year 2007-08, the non-executive Directors werepaid a sitting fees of Rs. 20,000 for each Board Meeting andRs.10,000 for each Committee meeting attended by them.
Service Contracts, Notice Period, Severance Fees
Mr. Arun Bharat Ram, Mr. Bernard Gallus, Mr. PrakashKarnik, Mr. V.N Koura and Dr. Vinayshil Gautam are theDirectors liable to retire by rotation. No severance fees willbecome payable to them if they desire not to continue asDirectors of the Company.
Mr. John Levack (non-rotational nominee Director andrepresentative of Electra Partners Mauritius Ltd.) - Noseverance fees will become payable to him if Electra PartnersMauritius Ltd. withdraws his nomination from the Directorshipof the Company.
Mr. Rajesh Khanna (non-rotational nominee Director andrepresentative of BIL, EIL, RIL and WIL – affiliates of WarburgPincus LLC) - No severance fees will become payable tohim if BIL, EIL, RIL and WIL withdraw his nomination fromthe Directorship of the Company.
6. INVESTORS’ GRIEVANCE COMMITTEE
Composition
Since Mr. Harnam D. Wahi, the Chairman of the Committeedemised on 28th May, 2007, therefore the Board appointed
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Mr. John Levack as the Chairman of the Committee. Othermembers of the Committee comprise of Mr. Prakash Karnik,Mr. Deepak Puri, Mr. Bernard Gallus and Mrs. Nita Puri. TheCompany Secretary acts as the Secretary of the Committee.
Terms of reference
The Investors’ Grievance Committee looks into redressal ofshareholders’ and investors’ complaints like transfer ofshares, non-receipt of Annual Reports, non–receipt ofdividend and allied matters.
Meetings
During the year, the Committee met four times on thefollowing dates:
(i) 30th April, 2007(ii) 26th July, 2007(iii) 25th October, 2007(v) 30th January, 2008
Following are the attendance details of the members at theCommittee meetings:-
Members Committee Meetings No. of Meetingsheld during the year attended
Mr. Harnam D. Wahi* 4 —-Mr. John Levack (Chairman) 4 4Mr. Prakash Karnik 4 4Mr. Deepak Puri 4 4Mrs. Nita Puri 4 4Mr. Bernard Gallus 4 4
*Demised on 28th May, 2007.
Name and designation of the Compliance Officer: Mrs. MinniKatariya, Company Secretary.
The transfer / transmission of physical share certificates isapproved by the Company Secretary at least once in afortnight on the basis of recommendations received from theCompany’s Registrar and Share Transfer Agent-MCS Limited.
The investors may lodge their grievances through e-mail [email protected] or contact the Compliance Officerat the following numbers: -
Telephone numbers : 40594444Fax numbers : 41635211/ 26911860
Information regarding complaints received from theshareholders during the period 1st April, 2007 to 31st March,2008.
Nature of the complaints Received Replied Pendingsatisfactorily
Relating to transfer,transmission, etc. 7 7 —-Relating to dematerialization 1 1 —-Relating to dividend 18 18 —-Relating to bonus 22 22 —-Relating to miscellaneousmatters 6 6 —-
TOTAL 54 54 —
No share was pending for transfer as on 31st March, 2008.
7. CORPORATE GOVERNANCE COMMITTEE
Composition
Mr. Rajesh Khanna is the Chairman of the CorporateGovernance Committee. Other members of the Committeecomprise of Mr. Prakash Karnik, Mr. John Levack, Mr. DeepakPuri and Mr. Bernard Gallus. The Company Secretary actsas the Secretary of the Committee.
Terms of reference
a) To evaluate the current composition, organisation andgovernance of the Board and its Committees, as well asdetermine future requirements and makerecommendations in this regard to the Board for itsapproval.
b) To recommend the appointment of such Directors on theBoard who are of proven competence and have adequateprofessional experience.
c) To oversee the evaluation of the Board.
d) To recommend to the Board, Director nominees for eachCommittee of the Board.
e) To co-ordinate and approve Board and Committeemeeting schedules.
f) To make regular reports to the Board on the matters listedherein and on such other matters as may be referred toit by the Board from time to time.
g) To advise the Company on the best business practicesbeing followed on corporate governance issues world-wide and to implement those in the Companyappropriately.
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h) To appoint any outside agency to report on corporategovernance matters.
i) To appoint consultants in this regard and to obtain andimplement their advise, reports or opinions.
j) To recommend to the Board the governance structurefor management of affairs of the Company.
k) To review and re-examine this charter annually and makerecommendations to the Board for any proposedchanges.
l) To annually review and evaluate its performance.
8. CAPEX COMMITTEE
Composition
Since Mr. Harnam D. Wahi, the Chairman of the Committeedemised on 28th May, 2007, therefore, the Board appointedMr. Ratul Puri as the Chairman of the Committee. Othermembers of the Committee comprise of Mr. Prakash Karnik,Mr. John Levack and Mr. Rajesh Khanna. The CompanySecretary acts as the Secretary of the Committee.
Terms of reference
Keeping in view the increasing requirements of theequipments and machineries for the Company and its GroupCompanies, the scope of work of the Capex Committee wasamended w.e.f. 27th July, 2007.
• To direct the Capital Expenditure for whole of the MoserBaer India Limited’s and its Group Companies up to thefollowing limits;
S. Business Budgeted UnbudgetedNo. Unit/Division
CAPEX Internal CAR CAPEX Internal CARCommittee Committee Committee Committee
1 Blank Optical Media, US$ 5 Upto US$ 1.5 UptoMedia & Entertainment million US$ 5 million US$ 1.5Services and or more million or more millionPhotovoltaic:All Assets
2(a) Home Entertainment: Upto US$ 1.5 Upto- All Intangible Assets US$ 2.5 US$ 2.5 million US$ 1.5(Catalogue, New films million million or more millioncopy rights and or moremaketing & distributionrights)
2(b) Home Entertainment:* US$ 1.25 Upto US$ 0.75 Upto- Film production and million US$ 1.25 million US$ 0.75Satellite related or more million or more million
• To review and approve the expansion plans in line withthe Group Companies Business Strategy;
• To review and approve the Annual CAPEX Budget forthe whole of the Group Companies of Moser Baer IndiaLimited;
• To monitor the progress of major Capital projects versusthe Annual Business Plan on a quarterly basis;
• To review and Approve individual Capital AppropriationRequest (CAR) for large projects in excess of US$ 5million per program;
• To review CARs < US$ 5 million and > US$ 1 million ona quarterly basis;
9. BANKING AND FINANCE COMMITTEE
Composition
Mr. Deepak Puri is the Chairman of the Committee. Othermembers of the Committee comprise of Mrs. Nita Puri andMr. Ratul Puri. The Company Secretary acts as the Secretaryof the Committee.
Terms of reference
The Banking and Finance Committee identifies the fund-based and non-fund based requirements of the Companyand approves the availing of these facilities from Banks andFinancial Institutions, as and when the need arises, withinthe limits sanctioned by the Board.
10. CORPORATE SOCIAL RESPONSIBILITYCOMMITTEE
Composition
Mr. Deepak Puri is the Chairman of this Committee. The othermembers of this Committee are the following Directors:Mrs. Nita Puri, Mr. Rajesh Khanna and Mr. Bernard Gallus.
Scope of work and powers of the Committee are as follows:
(a) To interpret the organizational CSR objectives and setup specific goals to be achieved towards these objectives.
(b) To make periodical appraisal of CSR initiatives.
(c) To decide about resource allocation for each of the focusareas from its corpus.
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(d) To prepare and place before the Board the CSR AnnualReport.
(e) To prepare and lay before the Board ‘the Action Plan’ forthe ensuing year.
(f) To set up a Trust and to contribute to the trust such fundsas may be required from the overall corpus for CSRactivity.
(g) To appoint the Standing Committees and otherCommittees or Sub- Committees, as may be necessaryfrom time to time.
(h) To delegate any or all of its powers to the Chairman ofthe Board of Directors, other Committees or Sub-Committees duly appointed.
(i) To select representatives/candidates from among themembers of the Committee for participation in nationaland international seminars/conferences, workshops,study tours and training courses. The cost shall be borneby the Committee from the CSR budget. However, in caseof the Chairman of the Board of Directors, the cost shallbe borne by the Company.
11. COMPLIANCE WITH SEBI (PROHIBITION OF INSIDERTRADING) REGULATIONS, 2002
In pursuance of these regulations, the Company hasformulated Standing Instructions for the Employees and
Directors for dealing in Shares of the Company and theseStanding Instructions were implemented with effect from 9th
September, 2002. Various forms have been designed toreceive periodical information from the employees and theDirectors of the Company, as required in terms of theseregulations. Further, the Trading Window for dealing in sharesof the Company has been closed for the Directors andemployees of the Company as per the following details: -
Dates of closure of Purpose of closuretrading window
Sunday, 1st April, 2007 to Consideration of un-auditedTuesday, 1st May, 2007 financial results for the quarter
ended 31st March, 2007 andaudited annual accounts for theyear ended 31st March, 2007.
Monday, 2nd July, 2007 to Consideration of un-auditedSaturday, 28th July, 2007 financial results for the quarter
ended 30th June, 2007.
Monday, 1st October, 2007 to Consideration of un-auditedSaturday, 27th October, 2007 financial results for the quarter
ended 30th September, 2007.
Wednesday, 16th January, 2008 to Consideration of un-auditedFriday, 1st February, 2008. financial results for the quarter
ended 31st December, 2007.
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12. PARTICULARS OF ANNUAL GENERAL MEETINGS AND EXTRAORDINARY GENERAL MEETINGS HELD DURINGTHE LAST THREE YEARS
General Meeting Date Time Venue Special Resolutions passed
Annual General Meeting 03/08/2005 9.30 A.M. FICCI Golden Jubilee Auditorium, a) For taking note of pricing formula in respect of theFederation House, Tansen Marg, Company’s Employees’ Stock Option Plan.New Delhi- 110 001
b) For approving the Directors’ Stock Option Plan and tooffer a total of 4,50,000 stock options to the non-executiveDirectors.
c) For payment and distribution of commission on net profitsof the Company to all the non executive Directors of theCompany for the period of 3 years from 1st April, 2005 ata maximum rate of 0.2% of the Profit After Tax of everyfinancial year.
Annual General Meeting 19/07/2006 9.30 A.M. FICCI Golden Jubilee Auditorium, a) To pay a remuneration of Rs. 50,00,000 p.a toFederation House, Tansen Marg, Mrs. Nita Puri, Wholetime Director.New Delhi- 110 001
b) Re-appointment of Mr. Deepak Puri, Managing Directorfor a period of five years w.e.f 1st September, 2006.
c) Re-appointment of Mrs. Nita Puri, Wholetime Directorfor a period of five years w.e.f 1st December, 2006.
d) Re-appointment of Mr. Ratul Puri, Executive Director fora period of five years w.e.f 1st October, 2006.
e) Taking note of maximum period within which options shallbe vested in respect of Directors’ Stock Options Plan ofthe Company.
Annual General Meeting 15/06/2007 9:30 A.M. FICCI Golden Jubilee Auditorium, a) To issue FCCBs/ GDRs/ ADRs and/or Equity SharesFederation House, Tansen Marg, through depository receipt mechanism and/or otherNew Delhi- 110 001 financial instruments convertible into or linked to Equity
Shares, etc for a value upto US dollars 150 million.
b) To pay Rs. 57,50,000 p.a. to Mrs. Nita Puri, WholetimeDirector.
c) To consider the matter relating to increasing the numberof Equity Shares to be issued under Director StockOption Plan-2005 of the Company to 10,00,000.
d) To consider the matter relating to capitalizing of reservesof the Company for the purpose of issuing bonus EquityShares in the ratio of 1:2.
e) To consider the matter relating to alteration of Articlesof Association of the Company.
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During the Financial Year 2007-08, the following resolutionswere passed as Special Resolutions through PostalBallot:
I. To alter the Memorandum of Association of theCompany:
“RESOLVED THAT pursuant to the provisions of Section 17of the Companies Act, 1956, consent of the Company beand is hereby accorded to alter the Main Objects Clause ofthe Memorandum of Association of the Company bychanging Clause number 1 and by introducing Clausenumber 3 and 4 so that the amended Main Objects Clauseshall now read as follows:-
(A) THE MAIN OBJECTS TO BE PURSUED BY THECOMPANY ON ITS INCORPORATION:
1. To carry on in India or elsewhere all or any of the businessor businesses of electrical engineers and manufacturers/buyers/sellers of, dealers in, hirers, repairers, cleanersand stores of all kinds of electronics, electrical, optical,magnetic, semi-conductor based non-volatile memorydevices plant, machinery, equipments, appliances,apparatus, media, components, accessories and storageand other similar devices and scientific and otherequipments (including in particular electric/electronicclocks and time recording systems, whether analogic ordigital or otherwise and whether operated by electronicimpulses or otherwise) and such other articles, products,by-products and things of a character similar or analogousto the foregoing or any of them or connected therewithand capable of being used for or in connection withapplication of electricity or other forms of energy or power,whether for lighting, heating, sound, communications(including telecommunications), data storage andretrieval or otherwise for industrial, domestic oragricultural purposes.
2. To render as principals, agents, contractors or otherwiseconsultancy services in the field of leasing, corporatefinancial counselling and for know-how in electronic andelectrical engineering, including the provision of facilitiesfor manufacture, hire and use of electronic dataprocessing equipments and devices, for commercialexploitation thereof and of any patents or privileges forthe time being acquired by or belonging to the Companyin relation to all or any of the said businesses.
3. To carry on in India or elsewhere the business orbusinesses of production, financing, exhibition,distribution of the content through satellite/ digital/ cable/wireless mechanism / future technologies, agency ofIndian or foreign movies, serials, audio products,documentaries, other audio- visual medium products, andother similar or analogous programmes.
4. To carry on in India or elsewhere the business orbusinesses of acquiring, selling, or otherwisecommercially exploiting the rights, titles and othercommercial interests in Indian or foreign movies, serials,audio products, documentaries, other audio- visualproducts and other similar or analogous programmes,or replicating, developing, using or otherwise dealing inthe titles of Indian or foreign movies, serials, audioproducts, documentaries, other audio visual mediumproducts and other similar or analogous programmes.
Details of Voting Pattern
Number of valid postal ballot forms received 449
Votes in favour of the Resolution 72,18,708
Votes against the resolution 575
Number of invalid postal ballot forms received. 85
The Resolution has therefore been approved by theshareholders with the requisite majority.
II. To alter the Employee Stock Option Plan (ESOP-2004)of the Company:
“RESOLVED THAT in accordance with the provisions of theSEBI (Employee Stock Option Scheme and Employee SharePurchase Scheme) Guidelines, 1999 the consent of theshareholders of the Company be and is hereby granted toamend the Clause No. 5 of the Employee Stock Option Plan(ESOP-2004) to increase the total number of equity sharesavailable for issue of options from 44,00,000 to such numberof Equity Shares of Rs. 10 each so as to grant one (1)additional bonus stock option for every two (2) stock optionsheld by the employees of the Company and employees ofthe subsidiaries of the Company as on the record date ofthe bonus issue.
RESOLVED FURTHER THAT the terms of the issue of bonusoptions as approved by the Compensation Committee of theBoard of the Directors of the Company, as follows:
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a) For every two (2) options an Employee of the Companyor employees of the subsidiaries of the Company will beentitled to one (1) additional bonus option.
b) The vesting period of additional bonus options shall bethe same as for the original option.
c) The Employee of the Company or employees of thesubsidiaries of the Company will not have to pay anyadditional amount for the additional bonus options.
As a result of the above, the option holder’s rights willsubstantially proportionate to the rights existing prior to thebonus issue.
RESOLVED FURTHER THAT in terms of Section 81(1A)and subject to such regulatory approvals as may be required,the consent of the shareholders of the Company be and ishereby granted to increase the total number of Equity Sharesof Rs. 10 each for grant of options to Employee of theCompany or employees of the subsidiaries of the Companyunder ESOP-2004 from 44,00,000 equity shares to suchnumber of equity shares that would be calculated accordingto the outstanding number of stock options as on the recorddate for the bonus issue and the Company do hereby approvethe issue and allotment of such number of equity shares toEmployee of the Company or employees of the subsidiariesof the Company and to implement the grant of bonus optionsto Employee of the Company or employees of thesubsidiaries of the Company.”
Details of Voting Pattern
Votes in favour of the Resolution 97.32%
Votes against the resolution 2.68%
III. To alter the Director Stock Option Plan (ESOP-2004)of the Company:
“RESOLVED THAT in accordance with the provisions ofthe SEBI (Employee Stock Option Scheme and EmployeeShare Purchase Scheme) Guidelines, 1999, the consent ofthe shareholders of the Company be and is hereby grantedto amend the Clause No. 5 of the Directors Stock OptionPlan (DSOP-2005) to increase the total number of equityshares available for issue of options from 10,00,000 to suchnumber of Equity Shares of Rs. 10 each so as to grant one(1) additional bonus stock option for every two (2) stockoptions held by the non executive Directors of the Companyas on the record date of the bonus issue of the Company.
RESOLVED FURTHER THAT the terms of the issue ofbonus options as approved by the Compensation Committeeof the Board of the Directors of the Company, as follows:
a) For every two (2) options a non executive Director will beentitled to one (1) additional bonus option.
b) The vesting period of additional bonus options shall bethe same as for the original option.
c) The non executive Directors of the Company will not haveto pay any additional amount for the additional bonusoptions.
As a result of the above, the option holder’s rights willsubstantially proportionate to the rights existing prior to thebonus issue.
RESOLVED FURTHER THAT in terms of Section 81(1A)and subject to such regulatory approvals as may be required,the consent of the shareholders of the Company be and ishereby granted to increase the total number of Equity Sharesof Rs. 10 each for grant of options to non-executive Directorsof the Company under DSOP-2005 from 10,00,000 equityshares to such number of equity shares that would becalculated according to the outstanding number of stockoptions as on the record date for the bonus issue and theCompany do hereby approve the issue and allotment of suchnumber of equity shares to non executive Directors of theCompany and to implement the grant of bonus options tonon-executive Directors of the Company.”
Details of Voting Pattern
Votes in favour of the Resolution 97.31%
Votes against the resolution 2.69%
IV. To approve payment and distribution of commissionon net profits of the Company:
“RESOLVED THAT, in supersession of the resolution passedby the shareholders at the meeting held on 3rd August, 2005,pursuant to the provisions of Section 309 read with theprovisions of Section 198 and other applicable provisions, ifany, of the Companies Act, 1956 and Article 94 of the Articlesof Association of the Company, consent of the Company beand is hereby accorded to payment and distribution ofcommission on net profits of the Company to all of the non-executive Directors of the Company calculated in accordancewith the provisions of Sections 198, 349 and 350 of the
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Companies Act, 1956 for a period of 3 years with effect from1 April, 2007 at a rate which shall not exceed 1% of the netprofits of the Company.
RESOLVED FURTHER THAT the amount of Commissionpayable to each non-executive Director shall be determinedby the Board of Directors on such basis as it may deemappropriate in this regard”.
Details of Voting Pattern
Votes in favour of the Resolution 99.88%
Votes against the resolution 0.12%
Person who conducted the postal ballot exercise - TheCompany had appointed Mr. D.P Gupta, Practicing CompanySecretary as the Scrutinizer for conducting the postal ballotprocess in a fair and transparent manner.
13. DISCLOSURES
a) Disclosures on materially significant related partytransactions, i.e. transactions of the Company of materialnature, with its Promoters, Directors or the management,their subsidiaries or relatives, etc. that may have potentialconflict with the interest of the Company at large - NIL.
b) Details of non-compliance by the Company, penalties,strictures imposed by Stock Exchange or SEBI or anystatutory authority, on any matter related to capitalmarkets, during the last three years- NIL
14. MEANS OF COMMUNICATION
a) The Company ensures that its quarterly and annualfinancial results are sent to the concerned StockExchanges immediately after the same have beenconsidered and taken on record by the Board of Directors.The Company also ensures that its quarterly financialresults are also published in the following newspapers.
(i) The Economic Times(ii) Business Standard(iii) The Times of India(iv) Navbharat Times(v) The Financial Times(vi) The Financial Express(vii) Hindustan Hindi(viii) Mumbai Mirror(ix) Hindu Business Line
b) The Company also ensures that these results arepromptly and prominently displayed on the Company’swebsite:- www.moserbaer.in
c) The Company also complies with SEBI regulationsregarding filing of its financial results under the EDIFARsystem.
d) The Company’s official news releases are also displayedon the Company’s web site.
e) Management Discussion and Analysis Report (MD & A)is a part of the Annual Report of the Company for theyear 2007-08.
15. CODE OF CONDUCT
As per Clause 49 of the listing agreement, the company hasformulated a Code of Conduct each for the Directors andSenior Management and the same have been placed on thewebsite of the Company. The declaration of the ManagingDirector regarding the compliance with the Codes of Conductby Directors and the senior managerial personnel is given inthe Annual Report.
16. GENERAL SHAREHOLDER INFORMATION
a) 25th ANNUAL GENERAL MEETINGDate : 23rd July, 2008Time : 9.30 A.MVenue : FICCI Golden Jubilee Auditorium, Federation
House, Tansen Marg, New Delhi- 110 001
b) FINANCIAL CALENDAR : 1st April to 31st March
c) BOOK CLOSURE : Thursday, 31st July, 2008 toFriday, 1st August, 2008
d) DIVIDEND PAYMENT DATE : The dividend for the year2007-08 as recommended by the Directors and ifdeclared at the forthcoming Annual General Meeting, willbe paid on or before 22nd August, 2008 to those memberswhose names appear:-
(i) as beneficial owners as at the closure of the businesshours on Friday, 1st August, 2008 as per the list beingfurnished by National Securities Depository Limitedand Central Depository Services (India) Limited inrespect of the shares held in electronic form; and
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(ii) as members in the Register of Members of theCompany as at the closure of business hours onFriday, 1st August, 2008.
e) LISTING
The Equity Shares of the Company are listed at thefollowing Stock Exchanges:
i) Bombay Stock Exchange Limited at PhirozeJeejeebhoy Towers, Dalal Street, Mumbai- 400 001.
ii) National Stock Exchange of India Limited at‘Exchange Plaza’, Bandra - Kurla Complex, Bandra(East), Mumbai- 400 051.
The Company has paid the Annual Listing Fees for theyear 2008-09 to Bombay Stock Exchange Limited andto National Stock Exchange of India Limited.
f) STOCK CODE
The Stock Code at:i) Bombay Stock Exchange Limited is: 517140
ii) National Stock Exchange India Limited is:MOSERBAER
The Company has got the approval for Voluntary Delistingof Equity Shares of the Company from Calcutta StockExchange vide their letter dated September 26, 2007.
g) TOP TEN SHAREHOLDERS AND THE SHAREHOLERSHOLDING MORE THAN 1% OF SHARE CAPITAL
Top Ten Shareholders of the Company as on 31st March,2008
1 Woodgreen Investments Ltd. 22,050,000 13.11
2 Mr. Ratul Puri 16,143,753 9.603 International Finance Corporation 15,076,791 8.964 Electra Partners Mauritius Ltd. 9,960,345 5.925 Ealing Investments Ltd. 9,600,000 5.716 Bloom Investments Ltd. 9,600,000 5.717 Randall Investments Ltd. 9,600,000 5.718 HSBC Global Investment Fund A/c HSBC
Global Funds Mauritius Limited 7,490,472 4.459 Mr. Deepak Puri 5,762,973 3.4310. Elm International Limited 5,634,855 3.35
Shareholders holding 1% and more shares as on 31st March,2008
1 Woodgreen Investments Ltd. 22,050,000 13.112 Mr. Ratul Puri 16,143,753 9.603 International Finance Corporation 15,076,791 8.964 Electra Partners Mauritius Ltd. 9,960,345 5.925 Ealing Investments Ltd. 9,600,000 5.716 Bloom Investments Ltd. 9,600,000 5.717 Randall Investments Ltd. 9,600,000 5.718 HSBC Global Investment Fund A/c
HSBC Global Funds MauritiusLimited Funds Mauritius Limited 7,490,472 4.45
9 Mr. Deepak Puri 5,762,973 3.4310 Elm International Ltd. 5,634,855 3.3511 T Rowe Price International Inc. A/c
T Rowe Price New Asia Fund 5,164,384 3.0712 Winterfall Ltd. 4,339,572 2.5813 Ms. Nita Puri 3,434,631 2.0414 The Master Trust Bank of Japan Ltd 2,856,974 1.7015 LB India Holdings Cayman II Ltd 2,218,231 1.3216 Goldman Sachs Investments
(Mauritius) I Ltd 2,150,238 1.2817 Morgan Stanley Mauritius
Company Limited 2,046,477 1.2218 Macquarie Bank Limited 2,058,630 1.2219 Reliance Capital Trustee Company
Limited A/c Reliance Growth 1,942,654 1.1520 Talma Chemical Industries Pvt. Ltd. 1,830,561 1.0921 T Rowe Price International Inc A/c
T Rowe Price International DiscoveryFund 1,741,675 1.04
g) STOCK PRICE DATA
Stock Market Data at BSE and NSE for the period 1st
April, 2007 to 31st March, 2008.
Monthly high and low quotations of shares traded atBombay Stock Exchange Limited (BSE) and NationalStock Exchange of India Ltd. (NSE) are as follows: -
MONTHS BSE NSEHighest Lowest Highest Lowest
April, 2007 369.30 288.10 369.80 290.05May, 2007 471.90 347.55 471.95 347.15June, 2007 477.50 415.35 477.35 410.50July, 2007 514.40 294.00 514.75 292.10August, 2007 309.90 235.65 323.40 236.65September, 2007 336.00 296.35 336.60 297.30October, 2007 336.00 260.00 340.00 238.60November, 2007 295.00 250.00 290.00 250.00December, 2007 311.00 271.00 311.30 270.50January, 2008 344.80 177.00 345.00 165.00February, 2008 215.00 164.00 217.90 150.05March, 2008 176.85 119.45 176.70 119.00
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h) STOCK PERFORMANCE IN COMPARISON TO NSEINDEX (S&P CNX 500):-
k) SHARE TRANSFER SYSTEM
The application for transfer, transmission andtransposition of shares are received by the Company atits registered office or at the office of Registrar and ShareTransfer Agent- M/s. MCS Limited.
Following is the procedure of transfer of physical sharecertificates:-
i) Entry of share certificate details and particulars ofthe transferee in the computer on receipt thereof inthe office.
ii) Scrutiny of transfer deeds.
iii) Tallying of transferor’s signature with the specimensignature available with the Registrar and ShareTransfer Agent.
iv) Data entry of transfer deeds.
v) Preparation of objection memos and notices inrespect of un-transferred shares.
vi) Generation of checklist for valid transfer deeds.
vii) Correction of data in the computer system on thebasis of changes marked in the checklist.
viii)Recording of transfer of shares in the computersystem.
ix) Endorsement and signatures on the reverse side ofthe share certificates.
x) Generation of covering letters for the transferred sharecertificates and dispatch of transferred sharecertificates, objection memos and notices byregistered post.
Following is the procedure for dematerialization ofshares–
i) Entry of the share cer tificates and thedematerialization request form in the computer.
ii) Scrutiny of the share certificates and thedematerialization request form in the computer.
iii) Tallying of signature of the shareholder on thedematerialization request form with the specimensignature available with the Registrar and ShareTransfer Agent.
iv) Data entry of dematerialization request forms.
v) Generation of checklist.
i) DISTRIBUTION OF SHAREHOLDING AS ON 31ST
MARCH, 2008
No. of Equity No. of %age No. of %ageShares held shareholders shares
Upto 5,000 55,670 99.37 10,469,430 6.22
5,001 to 10,000 160 0.29 1,172,385 0.70
10,001 to 20,000 66 0.12 918,450 0.55
20,001 to 30,000 24 0.04 603,320 0.36
30,001 to 40,000 19 0.03 648,288 0.39
40,001 to 50,000 9 0.02 405,993 0.24
50,001 to 100,000 20 0.04 1437,560 0.85
100,001 & above 53 0.09 152,575,678 90.69
Total 56,021 100 168231104 100
j) REGISTRAR AND SHARE TRANSFER AGENT
MCS Limited is the Registrar & Share Transfer Agent ofthe Company and its office is located at W-40, OkhlaIndustrial Area, Phase-II, New Delhi – 110 020. ContactPerson is Mr. Anirudh Mitra. He can be contacted at thefollowing numbers:-Phone numbers : 41406149/ 41406151/ 41406152/
41709885/ 41609386Fax number : 41709881E-mail address : [email protected]
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vi) Change of shares from physical to dematerializedmode.
vii) Send confirmation to NSDL and CDS(I)L.
l) DEMATERIALISATION OF SHARES AND LIQUIDITY
The Equity Shares of the Company are actively tradedat major Stock Exchanges in dematerialized mode. Ason 31st March 2008, 86.25% of the shares were held indematerialized mode by 95.45% of the total shareholdersof the Company.
j) PLANT LOCATIONS
i) 66, NSEZ, Noida, District- Gautam Budh Nagar U.P.
ii) A-164, Sector 80 Noida- II, Distt. Gautam Budh NagarU.P.
iii) 66, Udyog Vihar Industrial Area, Greater Noida, U.P.
k) As on 31st March, 2008, no Global Depositary Receiptswere outstanding for conversion into an equal number ofEquity Shares.
l) ADDRESS FOR CORRESPONDENCE
i) All correspondence regarding transfer anddematerialization of share certificates should beaddressed to our Registrar and Share Transfer Agent-MCS Limited located at W-40, Okhla Industrial Area,Phase-II, New Delhi – 110 020. Following are thecontact numbers:
Telephone numbers – 41406149/ 41406151/41406152/ 41709885/41609386
Fax number – 41709881E-mail address – [email protected]
ii) For any other information, the shareholders maycontact the Company Secretary at the RegisteredOffice of the Company located at 43-B, OkhlaIndustrial Estate, New Delhi 110020. Following arethe contact nos.:-
Telephone numbers: 40594444Fax numbers: 41635211/26911860E-mail address: [email protected]
17. OTHER INFORMATION
a) In terms of the provisions of Section 205C of theCompanies Act, 1956, unclaimed equity dividend for theyear 1995-96, 1996-97, 1997-98, 1998-99 and1999-2000 has been transferred to the Investor Educationand Protection Fund.
b) The Company will transfer the amount remaining unpaidin its dividend account for the year 2000-2001 to theInvestor Education and Protection Fund by Tuesday,2nd December, 2008. Those members who have not yetencashed their dividend warrants for the said year mayrefer the matter along with relevant details to theCompany Secretary at the Registered Office of theCompany located at 43-B, Okhla Industrial Estate, NewDelhi-110020 latest by Saturday, 1st November, 2008 toclaim their unpaid dividend.
18. ADOPTION OF NEW CORPORATE GOVERNANCECLAUSE
Compliance with mandatory and non-mandatory list of items:-
Your Company ensures that it complies with all the mandatorylist of items mentioned in the Corporate Governance Clause.It will endeavor, in future, to comply with the following non-mandatory list of items provided in the Corporate GovernanceClause wherever applicable.
1. The Board
As the Company does not have a Non-ExecutiveChairman, the requirement that Non-Executive Chairmanmay be entitled to a Chairman’s office at the Company’sexpense and also be allowed reimbursement of expensesincurred in performance of his duties is not applicable tothe Company because the Company has an ExecutiveChairman.
2. Remuneration Committee.
The Company’s Remuneration Committee is functioningaccording to these recommendations. The Chairman ofthe Remuneration Committee was present at the previousAnnual General Meeting to answer the shareholders’queries.
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3. Shareholders Rights
The Company publishes its quarterly results in the leadingnewspapers and regularly uploads the results at theEDIFAR of SEBI. Further, it always ensures to regularlyupdate the financial statements and key events on itswebsite. However, the Company does not send thedeclaration of the half yearly financial performance or asummary of significant events to each shareholder of theCompany.
4. Audit Qualifications
The Company has a proven track record of unqualifiedfinancial statements.
5. Training of Board Members
The Company endeavors to organize trainingprogrammes for its Board members
6. Mechanism for evaluating Non-Executive Boardmembers.
The performance evaluation of Non-Executive Directorswill be done in the due course of time.
Compliance with the Code of EthicsThis is to certify that, to the best of my knowledge and belief,for the financial year ended on 31
st March, 2008, all Board
members and Senior Management Personnel have affirmedcompliance with the code of ethics for Directors and SeniorManagement respectively
Sd/-Place: New Delhi Deepak PuriDate: 22.05.2008 Chairman & Managing Director
7. Whistle Blower Policy:
The Company has formulated a code of conduct for itsDirectors and senior managerial personnel which allowsthem to report any matter relating to unethical conductor conflict of interest to their immediate supervisor.However, the Company does not have any formal whistleblower policy but the employees are free to report anymatter relating to misconduct to their superiors.
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We, Deepak Puri, Managing Director and Yogesh Mathur, Group CFO of Moser Baer India Limited certify to the Board that:
(a) We have reviewed financial statements and the cash flow statement for the financial year ended on 31st March, 2008,and that to the best of their knowledge and belief:
(i) these statements do not contain any materially untrue statement or omit any material fact or contain statements thatmight be misleading;
(ii) these statements together present a true and fair view of the company’s affairs and are in compliance with existingaccounting standards, applicable laws and regulations.
(b) There are, to the best of our knowledge and belief, no transactions entered into by the company during the year which arefraudulent, illegal or violative of the company’s code of conduct.
(c) We accept responsibility for establishing and maintaining internal controls for financial reporting and we have evaluatedthe effectiveness of internal control systems of the Company pertaining to financial reporting and we have disclosed tothe auditors and Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which theyare aware and the steps we have taken or propose to take to rectify these deficiencies.
(d) We have indicated to the Auditors and the Audit committee:-
(i) significant changes, if any, in internal control over financial reporting during the year:
During the financial year ended on 31st March, 2008, there were no significant changes in internal control overfinancial reporting.
(ii) significant changes, if any, in accounting policies during the year and that the same have been disclosed in the notesto the financial statements.
During the financial year ended on 31st March, 2008 there were no significant changes in accounting policies.
(iii) instances of significant fraud of which we have become aware and the involvement therein, if any, of the managementor an employee having a significant role in the company’s internal control system over financial reporting.
During the financial year ended on 31st March, 2008, there were no instances of the above nature.
Sd/- Sd/-Date: 22.05.2008 Deepak Puri Yogesh MathurPlace: New Delhi Managing Director Group CFO
m a n a g i n g d i r e c t o r a n dg r o u p c h i e f f i n a n c i a l o f f i c e r c e r t i f i c a t i o n
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To the Members of Moser Baer India Limited
We have examined the compliance of conditions of CorporateGovernance by Moser Baer India Limited, for the year endedMarch 31, 2008 as stipulated in Clause 49 of the ListingAgreement(s) of the said Company with stock exchange(s)in India.
The compliance of conditions of Corporate Governance isthe responsibility of the Company’s management. Ourexamination was carried out in accordance with the GuidanceNote on Certification of Corporate Governance (as stipulatedin Clause 49 of the Listing Agreement), issued by the Instituteof Chartered Accountants of India and was limited toprocedures and implementation thereof, adopted by theCompany for ensuring the compliance of the conditions ofCorporate Governance. It is neither an audit nor anexpression of opinion on the financial statements of theCompany.
a u d i t o r s ’ c e r t i f i c a t e r e g a r d i n gc o m p l i a n c e o f c o n d i t i o n s o f c o r p o r a t e g o v e r n a n c e
In our opinion and to the best of our information and accordingto the explanations given to us, we certify that the Companyhas complied with the conditions of Corporate Governanceas stipulated in the above mentioned Listing Agreement(s).
We state that such compliance is neither an assurance as tothe future viability of the Company nor the efficiency oreffectiveness with which the management has conductedthe affairs of the Company.
Anuradha TuliPartner
Membership Number F 85611For and on behalf of
Place : Gurgaon Price WaterhouseDate : 22.05.2008 Chartered Accountants
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1. We have audited the attached Balance Sheet of Moser Baer India Limited, as at March 31, 2008, and the related Profitand Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signedunder reference to this report. These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report) (Amend-ment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of ‘TheCompanies Act, 1956’ of India (the ‘Act’) and on the basis of such checks of the books and records of the Company as weconsidered appropriate and according to the information and explanations given to us, we further report that:
(i) (a) The Company is maintaining proper records showing full particulars including quantitative details and situationof fixed assets.
(b) The fixed assets are physically verified by the management according to a phased programme designed tocover all the items over a period of three years, which in our opinion, is reasonable having regard to the size ofthe Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has beenphysically verified by the management during the year and no material discrepancies between the book recordsand the physical inventory have been noticed.
(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assetshas not been disposed off by the Company during the year.
(ii) (a) The inventory (excluding stocks with third parties) has been physically verified by the management during theyear. In respect of inventory lying with third parties, these have substantially been confirmed by them. In ouropinion, the frequency of verification is reasonable.
(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonableand adequate in relation to the size of the Company and the nature of its business.
(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining properrecords of inventory. The discrepancies noticed on physical verification of inventory as compared to book recordswere not material.
(iii) The Company has not taken/granted any loans, secured or unsecured, from/to companies, firms or other par-ties covered in the register maintained under Section 301 of the Act. As the Company has not taken/granted anyloans, secured or unsecured, from/to companies, firms or other parties covered in the register maintained underSection 301 of the Act, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f) and (iii)(g) of paragraph 4 of the Companies (Auditor’sReport) Order, 2003, as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004 are notapplicable to the Company for the current year.
(iv) In our opinion and according to the information and explanations given to us, having regard to the explanationthat certain items purchased are of special nature for which suitable alternative sources do not exist for obtain-ing comparative quotations, there is an adequate internal control system commensurate with the size of theCompany and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods andservices. Further, on the basis of our examination of the books and records of the Company, and according to
a u d i t o r s ’ r e p o r t t o t h em e m b e r s o f m o s e r b a e r i n d i a l i m i t e d
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the information and explanations given to us, we have neither come across nor have been informed of anycontinuing failure to correct major weaknesses in the aforesaid internal control system.
(v) (a) According to the information and explanations given to us, there have been no contracts or arrangementsreferred to in Section 301 of the Act during the year to be entered in the register required to be maintained underthat section. Accordingly, commenting on transactions made in pursuance of such contracts or arrangementsdoes not arise.
(b) As there are no contracts or arrangements referred to in Section 301 of the Act that need to be entered in theregister required to be maintained under that section, clause (v)(b) of paragraph 4 of the Companies (Auditor’sReport) Order, 2003, as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004 is not appli-cable to the Company for the current year.
(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA orany other relevant provisions of the Act and the rules framed there under.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.
(viii) The Central Government of India has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act for any of the products of the Company.
(ix) (a) According to the information and explanations given to us and the records of the Company examined by us, inour opinion, the Company is regular in depositing undisputed statutory dues including provident fund, investoreducation and protection fund, employees’ state insurance, income-tax, sales-tax, wealth tax, service tax, cus-tom duty, excise duty, cess and any other statutory dues with the appropriate authorities.
(b) According to the information and explanations given to us and the records of the Company examined by us, theparticulars of dues of income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess as atMarch 31, 2008 which have not been deposited on account of a dispute, are as follows -
Name of the statute Nature of dues Amount (Rs.) Period to which Forum wherethe amount the dispute
relates is pending
Tax on Entry of Entry tax imposed on 106,059,645 1999-01 Supreme Court of IndiaGoods Act, 2000 purchase of capital goods
Entry tax imposed on 13,789,964 2004-05 High Court, Lucknowpurchase of diesel and cement (1,255,028)
Entry tax imposed on purchase 960,678 2003-04 Trade Tax Tribunal, Noidaof diesel and cement (686,502)
Entry tax imposed on purchase 1,994,006 2005-06 Joint Commissioner, Noidaof diesel and cement
Central Excise Act, Customs duty levied on import 2,761,250 2002-04 Customs, Excise and1944 and Customs of aluminium sheets, toughened Service Tax Appellate TribunalAct, 1962 glass, steel doors etc.
Excise duty levied on the amount of 2,255,310 2001-02 Customs, Excise and Serviceroyalty charges for replicating CD-ROM. (500,000) Tax Appellate Tribunal
Customs duty levied on import of 1,841,000 1999-00 Supreme Court of Indiaaluminium sheets, toughened glass,steel doors etc.
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Additional Customs duty levied on 313,107,965 2006-07 Commissioner, Customs &sales from Export Oriented Unit to 2007-08 Central Excise, NoidaDomestic Tariff Area
Service Tax Service tax levied on services 824,004 2000-02 Commissioner (Appeals),(Finance Act, 1994) provided by foreign supplier Customs & Central
Excise, Noida
64,247,396 2000-02 Commissioner, Customs &2003-04 Central Excise, Noida
5,440,788 1999-00 Deputy Commissioner,Customs & CentralExcise, Noida
Service Tax paid on Intellectual 31,658,382 2005-06 Commissioner, Customs &Property Rights being availed as Central Excise, Noidacenvat credit
Central Sales Tax Central Sales Tax 2,771,837 2002-03 High Court, AllahabadAct, 1956 55,657,804 2003-04 Joint Commissioner,
(4,597,150) 2004-05 (Appeals), Noida2006-07
19,642,778 2005-06 Joint Commissioner, Noida
UP Trade Tax Local Sales Tax 663,116 2003-04 Joint Commissioner,Act, 1948 (Appeals), Noida
1,750,579 2005-06 Joint Commissioner, Noida
Income Tax Act, 1961 Demands under 67,695,160 A.Y. 2004-05 to Commissioner of Incomesection 201/201(1A) (24,500,000) 2007-08 Tax (Appeals)
Notes:1. The above details exclude Departmental Appeals to higher authorities as there is no stay on the order of lower authority favouring the
Company and the amount is not ascertainable.2. The figures in brackets represent amounts deposited under protest and demands shown against them are net of such deposits.
(x) The Company has no accumulated losses as at March 31, 2008 and it has not incurred any cash losses in thefinancial year ended on that date or in the immediately preceding financial year.
(xi) According to the records of the Company examined by us and the information and explanation given to us, theCompany has not defaulted in repayment of dues to any financial institution or bank or debenture holders as atthe balance sheet date.
(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares,debentures and other securities.
(xiii) The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/societies are not appli-cable to the Company.
(xiv) In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.
(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of theguarantees given by the Company, for loans taken by others from banks during the year, are not prejudicial tothe interest of the Company.
(xvi) In our opinion, and according to the information and explanations given to us, on an overall basis, the term loanshave been applied for the purposes for which they were obtained.
(xvii) On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to theinformation and explanations given to us, there are no funds raised on a short-term basis which have been usedfor long-term investment.
Name of the statute Nature of dues Amount (Rs.) Period to which Forum wherethe amount the dispute
relates is pending
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(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in theregister maintained under Section 301 of the Act during the year.
(xix) As the Company has not issued any debentures during the year and no debentures are outstanding as at theyear end, clause (xix) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003, as amended by theCompanies (Auditor’s Report) (Amendment) Order, 2004 is not applicable to the Company for the current year.
(xx) The management has disclosed the end use of money raised by public issue during the year (Refer Note 18(b)of Schedule 21 Part-B) and the same has been verified by us.
(xxi) During the course of our examination of the books and records of the Company, carried out in accordance withthe generally accepted auditing practices in India, and according to the information and explanations given tous, we have neither come across any instance of fraud on or by the Company, noticed or reported during theyear, nor have we been informed of such case by the management.
4. Further to our comments in paragraph 3 above, we report that:
(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were neces-sary for the purposes of our audit;
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears fromour examination of those books;
(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreementwith the books of account;
(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this reportcomply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;
(e) On the basis of written representations received from the directors, and taken on record by the Board of Directors intheir meeting held on April 30, 2008, none of the directors is disqualified as on March 31, 2008 from being appointedas a director in terms of clause (g) of sub-section (1) of Section 274 of the Act.
(f) In our opinion and to the best of our information and according to the explanations given to us, the said financialstatements together with the notes thereon and attached thereto give in the prescribed manner the informationrequired by the Act and give a true and fair view in conformity with the accounting principles generally accepted inIndia:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008
(ii) in the case of the Profit and Loss Account, of the loss for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
Anuradha TuliPartnerMembership Number F 85611For and on behalf of
Place: Gurgaon Price WaterhouseDate: May 22, 2008 Chartered Accountants
84
This is the Balance Sheet referred to in our The schedules referred to above form anreport of even date. integral part of the Balance Sheet.
By order of the Boardfor and on behalf of MOSER BAER INDIA LIMITED
Anuradha Tuli Deepak Puri Ratul Puri Minni KatariyaPartner Chairman and Executive Director Company SecretaryMembership Number-F-85611 Managing DirectorFor and on behalf ofPRICE WATERHOUSEChartered Accountants
Yogesh Mathur R. SampathGroup CFO Vice President -
Place: New Delhi Financial Planning andDate: May 22, 2008 Control
MOSER BAER INDIA LIMITEDBALANCE SHEET AS AT MARCH 31, 2008
Schedule As at 31.03.2008 As at 31.03.2007Rs. Rs.
SOURCES OF FUNDS:
SHAREHOLDERS’ FUNDS:Capital 1 1,682,311,040 1,116,011,840Reserves and Surplus 2 18,013,183,183 19,852,166,547
19,695,494,223 20,968,178,387LOAN FUNDS:Secured Loans 3 16,124,959,395 17,250,156,997Unsecured Loans 4 10,048,336,904 -
Deferred Tax Liability (Net) 91,604,469 88,704,743(Refer Note 9 of Schedule 21 Part-B)
TOTAL 45,960,394,991 38,307,040,127
APPLICATION OF FUNDS:FIXED ASSETS: 5Gross Block 45,083,565,754 38,993,210,542Less: Depreciation 18,427,656,720 14,176,569,180
Net Block 26,655,909,034 24,816,641,362Capital Work-in-progress 5 1,720,931,582 2,867,810,187
28,376,840,616 27,684,451,549
INVESTMENTS 6 3,708,932,454 2,418,149,733
CURRENT ASSETS, LOANSAND ADVANCES:Inventories 7 6,179,827,946 5,392,849,971Sundry Debtors 8 3,150,595,741 3,288,431,321Cash and Bank 9 6,387,455,317 2,438,886,139Other Current Assets 10 134,220,182 174,255,467Loans and Advances 11 2,419,178,019 1,186,189,538
18,271,277,205 12,480,612,436
Less: CURRENT LIABILITIESAND PROVISIONS: 12Current Liabilities 3,673,446,996 3,878,522,754Provisions 723,208,288 397,650,837
4,396,655,284 4,276,173,591
Net Current Assets 13,874,621,921 8,204,438,845
TOTAL 45,960,394,991 38,307,040,127
SIGNIFICANT ACCOUNTING POLICIES AND 21NOTES TO ACCOUNTS
85
This is the Profit and Loss Account referred to in our The schedules referred to above form anreport of even date. integral part of the Profit and Loss Account.
By order of the Boardfor and on behalf of MOSER BAER INDIA LIMITED
Anuradha Tuli Deepak Puri Ratul Puri Minni KatariyaPartner Chairman and Executive Director Company SecretaryMembership Number-F-85611 Managing DirectorFor and on behalf ofPRICE WATERHOUSEChartered Accountants Yogesh Mathur R. Sampath
Group CFO Vice President -Place: New Delhi Financial Planning andDate: May 22, 2008 Control
MOSER BAER INDIA LIMITEDPROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008
Schedule Year ended 31.03.2008 Year ended 31.03.2007Rs. Rs.
INCOME:Gross Sales (Refer Note 2 of Schedule 21 Part-A) 19,581,981,692 20,740,303,073Less: Excise Duty 13 656,129,508 528,187,777Less: Countervailing duty (Refer Note 22 of Schedule 21 Part-B) - 393,030,092
Net Sales 18,925,852,184 19,819,085,204Services (Refer Note 16 of Schedule 21 Part-B) 14 72,036,610 5,650,111
18,997,888,794 19,824,735,315Other Income 15 1,219,042,612 787,705,332Increase in stock of Finished Goods,Work in Progress, Traded Goods and Film Rights 16 1,025,059,456 626,317,667
21,241,990,862 21,238,758,314EXPENDITURE:Purchase of Traded Goods and Film Rights 557,849,953 73,104,898Cost of Film Production 17,779,847 -Raw Materials and Components Consumed 7,164,286,143 7,937,548,252Packing Material Consumed 2,000,195,769 1,777,496,746Stores, Spares and Tools Consumed 988,103,080 960,466,064Personnel Expenses 17 1,893,094,072 1,392,032,116Administration & Other Expenses 18 3,280,885,764 3,076,046,204Interest & Finance Charges 19 1,793,571,165 1,244,854,884Depreciation/ Amortisation 20 4,315,866,215 3,578,703,374
22,011,632,008 20,040,252,538(Loss)/ Profit before Tax (769,641,146) 1,198,505,776Tax Expense: (Refer Note 11 of Schedule 21 Part-A)Current Tax [net of provision written back in respect of earlieryears of Rs. 2,399,128 (Previous year Rs. Nil) and includingWealth Tax Rs 236,361 (Previous Year Rs. 105,595)] (1,581,367) 179,966Fringe Benefit Tax (Includes Rs. 1,286,727 for previous year) 18,130,666 11,756,496Deferred Tax (Refer Note 9 of Schedule 21 Part-B) 2,899,726 88,704,743
Net (Loss)/ Profit after Tax (789,090,171) 1,097,864,571Add:- Profit carried forward from last year 1,246,335,112 399,587,249
Profit available for appropriation 457,244,941 1,497,451,820
APPROPRIATIONS:Proposed Dividend:-on Equity Shares (including Rs.266,751 (previous year Rs. Nil) 168,497,855 167,401,776paid for previous year)Corporate Tax on Proposed Dividend (including Rs. 45,334 28,636,210 28,449,932(previous year Rs. Nil) paid for previous year)Transferred to General Reserve - 55,265,000Balance carried to Balance Sheet 260,110,876 1,246,335,112
Total 457,244,941 1,497,451,820Earnings Per Share (Face Value of Rs. 10 each)Basic (4.70) 6.56Diluted (4.70) 6.52(Refer Note 14 of Schedule 21 Part-B)SIGNIFICANT ACCOUNTING POLICIES AND 21NOTES TO ACCOUNTS
86
MOSER BAER INDIA LIMITEDCASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008
Year ended 31.03.2008 Year ended 31.03.2007Rs. Rs.
Cash flow from operating activities:Net (Loss)/ Profit after prior period items but before tax (769,641,146) 1,198,505,776
Adjustments for:Depreciation 4,315,866,215 3,578,703,374Interest Expense 1,725,638,577 1,175,316,642Interest Income (366,052,596) (158,276,157)Income from Investment - Dividends - (15,977,055)(Profit)/ Loss on Fixed Assets sold (6,063,986) 227,244(Profit)/ Loss on sale of Investment in Subsidiary Company (199,652,336) -(Profit)/ Loss on sale of Current Investments (5,023,500) -Debts/ Advances Written off 8,018,215 3,775,949Provision for Bad & Doubtful Debts 3,504,621 120,522,719Provision for Doubtful Advances 9,373,975 -Liability no longer required written back (34,387,971) (18,533,320)Provision for doubtful debts written back (10,994,000) -Provision for Gratuity & Leave Encashment (8,986,313) 38,840,916Stock written off 24,501,334 22,770,095Provision for Warranty Expenses 1,000,000 -Unrealised foreign exchange (gain) /loss (380,992,268) 44,675,993Prior Period (Income)/ Expenses (Net) (3,232,668) -
Operating profit before working capital changes 4,302,876,153 5,990,552,176
Adjustments for changes in working capital :(Increase)/Decrease in Sundry Debtors 298,612,074 352,915,450(Increase)/Decrease in Other Receivables (592,968,190) 506,300,462(Increase)/Decrease in Inventories (811,479,309) (945,755,824)Increase/(Decrease) in Trade and Other Payables (3,852,020) 1,236,979,453
Cash generated from operations 3,193,188,708 7,140,991,717
Taxes (Paid) / Received (Net of TDS) (133,618,816) (71,051,060)Prior Period Income/ (Expenses) (Net) 3,232,668 -Net cash from operating activities 3,062,802,560 7,069,940,657
Cash flow from Investing activities:
Purchase of Fixed assets (5,241,009,841) (5,037,946,065)Proceeds from Sale of Fixed assets 64,401,904 4,357,043Proceeds from Sale of Investment in Subsidiary Company 1,010,500,000 -Proceeds from Sale of Current Investments 399,023,500 -Purchase of Current Investments (983,500,000) -Loans and advances to Subsidiary Companies (348,690,811) (133,065,488)Investment in Subsidiary Companies (1,567,621,561) (1,538,675,563)Purchase of investment - Others (5,100,000) -Interest Received 345,602,906 159,091,928Dividend Received - 15,977,055
Net cash used in investing activities (6,326,393,903) (6,530,261,090)
Contd...
87
Cash flow from financing activities:
Proceeds from issue of Share Capital (including Securities Premium) 121,119,433 19,409,383Receipts, excludes Gain on account of exchange fluctuation of Rs.132,519,341 3,298,580,500 3,415,974,795[Previous year Loss Rs.133,337,119] on reinstatement of foreign currency loanReceipts, Zero Coupon Foreign Currency Convertible Bonds 6,106,500,000 -Repayment of Long Term Loans (3,118,722,025) (2,957,401,594)Proceeds from Short Term Borrowings (Net) 2,869,832,547 (122,931,911)Interest Paid (1,765,131,483) (1,165,567,652)Dividend Paid (168,146,331) (111,837,650)Dividend Tax Paid (28,495,266) (15,639,690)Issue expenses of Foreign Currency Convertible Bonds (103,376,854) -Net cash used in financing activities 7,212,160,521 (937,994,319)
Net Increase/(Decrease) in Cash & Cash Equivalents 3,948,569,178 (398,314,752)
Cash and cash equivalents at beginning of the year 2,438,886,139 2,837,200,891
Cash and cash equivalents at end of the year 6,387,455,317 2,438,886,139
Cash and cash equivalents compriseCash, Cheques & Drafts (in hand) and Remittances in transit 199,658,713 465,433,872Fixed Deposits 5,957,475,885 1,571,229,236Balance with Scheduled Banks 229,855,871 402,223,031Balance with Non-scheduled Banks 464,848 -
Notes :1. The above Cash flow statement has been prepared under the indirect method set out in AS-3 issued by the Institute of Chartered
Accountants of India.2. Figures in brackets indicate cash outgo.3. Previous period figures have been regrouped and recast wherever necessary to conform to the current period classification.4. Cash and cash equivalents includes Rs. 772,731,960 (Previous Year Rs. 886,294,851) which are not available for use by the
Company. (Refer Schedule 9 in the account)
MOSER BAER INDIA LIMITEDCASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008
Year ended 31.03.2008 Year ended 31.03.2007Rs. Rs.
This is the Cash Flow Statement referred to in our By order of the Boardreport of even date. for and on behalf of MOSER BAER INDIA LIMITED
Anuradha Tuli Deepak Puri Ratul Puri Minni KatariyaPartner Chairman and Executive Director Company SecretaryMembership Number-F-85611 Managing DirectorFor and on behalf ofPRICE WATERHOUSEChartered Accountants
Yogesh Mathur R. SampathGroup CFO Vice President -
Place: New Delhi Financial Planning andDate: May 22, 2008 Control
88
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2008
As at 31.03.2008 As at 31.03.2007Rs. Rs.
SCHEDULE 1 - CAPITAL:
Authorised:207,500,000 (Previous Year 142,500,000) Equity Shares of Rs.10 each 2,075,000,000 1,425,000,000
750,000 (Previous Year 750,000) Preference Shares of Rs.100 each 75,000,000 75,000,000
2,150,000,000 1,500,000,000Issued, Subscribed and Paid-up:168,231,104 (Previous year 111,601,184)Equity Shares of Rs.10 each fully paid 1,682,311,040 1,116,011,840(Refer Note below and Note 11 of Schedule 21 Part-B)
TOTAL 1,682,311,040 1,116,011,840
Note:56,077,035 Equity Shares of Rs. 10 each issued as fully paid BonusShares during the year 2007-08 by capitalisation of General Reserve(Refer Note 10 of Schedule 21 Part-B)
SCHEDULE 2 - RESERVES AND SURPLUS:
Capital Reserve:As per last Balance Sheet 181,440,000 181,440,000
181,440,000 181,440,000Securities Premium Account:As per last Balance Sheet 8,910,146,987 8,891,620,004Addition during the year (Refer Note 11 of Schedule 21 Part-B) 116,172,343 18,526,983Less:- Provision for redemption of Zero Coupon Foreign CurrencyConvertible Bonds (Refer Note 18 of Schedule 21 Part-B) 304,784,267 -Less:- Issue expenses of Zero Coupon Foreign Currency ConvertibleBonds (Refer Note 18 of Schedule 21 Part-B) 103,376,854 -
8,618,158,209 8,910,146,987
Profit and Loss Account Balance 260,110,876 1,246,335,112
General Reserve:As per last Balance Sheet 9,514,244,448 9,460,751,072Add: Transferred from Profit and Loss Account - 55,265,000Less: Utilised during the year (Refer Note 10 of Schedule 21 Part-B) 560,770,350 -Less: Amounts transferred on implementation of Accounting Standard-15 (Revised) - - 1,771,624Employee Benefits (Refer Note 17 of Schedule 21 Part-B)
8,953,474,098 9,514,244,448
TOTAL 18,013,183,183 19,852,166,547
89
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2008
As at 31.03.2008 As at 31.03.2007Rs. Rs.
SCHEDULE 3- SECURED LOANS:
Term Loans (Refer notes below)
From Banks:Rupee Loans 11,110,549,089 9,673,634,926Interest Accrued and Due on Rupee Loans 46,433,456 53,572,069Foreign Currency Loans 1,748,104,714 2,881,191,742
12,905,087,259 12,608,398,737From Others:Foreign Currency Loans 158,643,750 434,175,000
13,063,731,009 13,042,573,737Other Loans:
Short Term Loans from Banks: (Refer notes below)Secured by hypothecation of stock-in-trade and book debts 2,897,384,418 3,717,929,750Interest Accrued and Due 342,862 16,530,283
Secured by lien on Fixed Deposits 163,501,106 473,056,689
From Others:Secured by hypothecation of specific vehicles - 66,538
3,061,228,386 4,207,583,260
TOTAL 16,124,959,395 17,250,156,997
Notes:
1 Loans from State Bank of India, Canara Bank, Federal Bank, Union Bank ofIndia, Syndicate Bank, United Bank of India, State Bank of Saurashtra, IndianBank, State Bank of Mysore, State Bank of Indore, Vijaya Bank, Punjab Na-tional Bank, Oriental Bank of Commerce, UCO Bank, State Bank of Patiala,Bank of Baroda, Bank of Maharashtra, Jammu and Kashmir Bank, State Bankof Bikaner and Jaipur and Foreign Currency Loans from Banks/Financial In-stitutions are secured by way of first mortgage and charge on all the immov-able and movable fixed assets, present and future, of the company (subject toprior charge on specified movables as otherwise stated, including in favour ofthe company’s bankers by way of security for the borrowing of working capi-tal), ranking pari-passu with charges for the Term Loans.
2 Short Term loans from Citi Bank, Punjab National Bank, State Bank ofSaurastra, Vijaya Bank, The Bank of Nova Scotia, State Bank of India andUnion Bank of India are further secured by way of second charge on all theimmovable properties.
3 Term Loans repayable within one year Rs. 4,155,892,532 (Previous year Rs.3,825,385,609). Others Loans repayable within one year Rs. Nil (Previous yearRs. 66,538).
SCHEDULE 4 - UNSECURED LOANS:
Short term loans from Banks:Rupee Loan 4,000,000,000 -Interest Accrued and Due 12,793,655 -
4,012,793,655 -Other Loans:
Foreign Currency Convertible Bonds: (Refer Note 18 of Schedule 21 Part-B)Zero Coupon Tranche A Convertible Bonds Due 2012 USD 75,000,000 3,008,250,000 -Zero Coupon Tranche B Convertible Bonds Due 2012 USD 75,000,000 3,008,250,000 -
6,016,500,000 -VAT Deferment Loan 19,043,249 -(Repayable after a period of 5 years)
TOTAL 10,048,336,904 -
90
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91
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2008
As at 31.03.2008 As at 31.03.2007
Rs. Rs. Rs. Rs.SCHEDULE 6 - INVESTMENTS:
(Refer Note 5 of Schedule 21 Part-A and Note 7 of Schedule 21 Part-B)
Long Term - Unquoted (Trade):Investment in Subsidiaries:
European Optic Media Technology GmbHShare Capital of 2,025,000 (Previous Year 2,025,000) 222,953,546 214,257,701Includes share application money of Rs. 111,689,796(Previous Year Rs. 102,993,951)
Peraround Limited1,184,994 (Previous year 1,152,830) Ordinary Shares of 1.71each (Previous Year C £ 1 each) 115,981,682 112,886,06315,866 (Previous Year Nil) Zero Coupon Redeemable PreferenceShares of 100 each at a premium of 990 each 880,423,997 -
Moser Baer Infrastructure LtdNil (Previous Year 260,000) Equity Shares of Rs. 10/- each - 2,600,000(Ceased to be subsidiary w.e.f 11.05.2007)
Moser Baer Photo Voltaic LtdNil (Previous Year 28,500,000) Equity Shares of Rs. 10/- each - 285,000,000(Sold during the Year to PV Technologies India Ltd)86,500,000 (Previous Year 82,851,150) 9% p.aCumulative, Convertible, Redeemable Series A PreferenceShares of Rs. 10 each 865,000,000 828,511,500Nil (Previous Year 55,568,850) 9% p.a Cumulative,Redeemable Series B Preference Shares of Rs. 10 each - 555,688,500(Sold during the Year to PV Technologies India Ltd)24,774,966 (Previous Year Nil) 9% p.a Cumulative,Redeemable Series B1 Preference Shares of Rs. 10 each 247,749,660 -(29,050,000 Preference Shares acquired during the yearout of which 4,275,034 have been sold to PV TechnologiesIndia Ltd. during the year.)33,887,760 (Previous Year Nil) 9% p.a Cumulative, RedeemableSeries B2 Preference Shares of Rs. 10 each 338,877,600 1,451,627,260 - 1,669,200,000
Moser Baer SEZ Developer Ltd250,000 (Previous Year 250,000) Equity Shares of Rs. 10/- each 2,500,000 2,500,000
Moser Baer Entertainment Ltd70,000 (Previous Year Nil) Equity Shares of Rs. 10/- each 700,000 -
Moser Baer Investments Ltd600,000 (Previous Year 350,000) Equity Shares of Rs. 10/- each 6,000,000 3,500,000
Investments in Others:CAPCO Luxembourg S.a.r.l.1 Equity share of Euro 125 each 4,961 4,96163,366 Preferred Equity Certificates of Euro 125 each 320,668,823 320,673,784 320,668,823 320,673,784
Global Data Media FZ-LLC (Associate)7,194 Shares of AED 1,000 each 92,532,185 92,532,185
Moser Baer Infrastructure Ltd (Associate)3,170,000 (Previous Year Nil) Equity Shares of Rs. 10/- each,Rs. 2/- paid up 260,000 (Previous Year Nil) Equity Shares ofRs. 10/- each 8,940,000 -
Moser Baer Projects Private Ltd510,000 (Previous Year Nil) Equity Shares of Rs. 10/- each 5,100,000 -
Current - Unquoted (Non-Trade):Investment in 1 Year USD Yield Enhance Certificate ofRabobank with maturity date of November 12, 2008 601,500,000 -
TOTAL 3,708,932,454 2,418,149,733
92
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2008
As at 31.03.2008 As at 31.03.2007
Rs. Rs. Rs. Rs.SCHEDULE 7 - INVENTORIES:(Refer Note 6 of Schedule 21 Part-A)
Stores and spare parts 917,821,691 747,621,090including in transit Rs. 14,935,447 (Previous Year Rs. 64,086,857)-net of provision for non-moving stock Rs. 232,201(Previous Year Rs. 232,201)
Raw Materials and Components 1,136,336,198 1,639,431,928including in transit Rs. 381,565,282 (Previous Year Rs. 370,750,644)
Packing Material 150,217,756 153,982,867including in transit Rs. 13,234,870 (Previous Year Rs. 32,639,129)-net of provision for non-moving stock Rs. 8,003,246(Previous Year Rs.8,003,246)
Work in Progress 2,003,604,753 906,604,141Manufactured Finished Goods 1,735,871,295 1,938,539,814Traded Goods 65,316,046 6,670,131including in transit Rs. 65,301,969 (Previous Year Rs. Nil)Film Released less amortisation 3,220,153 -Films Completed and not released 49,532,202 -Films under Production 27,447,124 -Rights of Films (Theatrical and Other Commercial Rights) 90,460,728 -
TOTAL 6,179,827,946 5,392,849,971
SCHEDULE 8- SUNDRY DEBTORS:(Unsecured - Considered Good, unless otherwise stated):
Debts outstanding for a period exceeding six months:Considered Good 120,361,488 138,238,294Considered Doubtful 176,390,786 170,860,703
296,752,274 309,098,997Less: Provision for Doubtful Debts 176,390,786 120,361,488 170,860,703 138,238,294
Other Debts:Considered Good 3,030,234,253 3,150,193,027Considered Doubtful 485,653 -
3,030,719,906 3,150,193,027Less: Provision for Doubtful Debts 485,653 3,030,234,253 - 3,150,193,027
TOTAL 3,150,595,741 3,288,431,321
SCHEDULE 9 - CASH AND BANK:
Cash on hand including cheques/drafts 27,913,220 23,880,441Remittance in Transit 171,745,493 441,553,431
Balances with Scheduled Banks:Current Accounts 225,932,693 397,088,691Fixed Deposit Accounts (Refer Note 1 below) 5,957,475,885 1,571,229,236Unpaid Dividend Account 3,791,342 4,269,146E.E.F.C Accounts 131,836 6,187,331,756 865,194 1,973,452,267
Balances with Other Banks:Current Accounts with UBS AG (Refer Note 2 below) 464,848 -
TOTAL 6,387,455,317 2,438,886,139
Notes:1) Includes -
a) Rs. 768,940,618 (Previous Year Rs. 882,025,705) whichare subject to lien with the bankers.
b) Rs. 2,732,952,784 (Previous Year Rs. Nil) out of proceedsof Zero Coupon Foreign Currency Convertible Bonds.
2) Maximum balance outstanding at any time during the year wasRs. 1,979,392,060 (Previous year Rs. Nil)
93
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2008
As at 31.03.2008 As at 31.03.2007Rs. Rs. Rs. Rs.
SCHEDULE 10- OTHER CURRENT ASSETS:Interest Accrued on Fixed Deposits (Refer Note below) 45,404,901 35,130,560Other Receivables 88,815,281 138,039,770Fixed Assets Held for Sale (at net book value or estimatednet realisable value, whichever is lower) - 1,085,137TOTAL 134,220,182 174,255,467Note:Includes interest accrued on Fixed Deposits out of proceeds ofZero Coupon Foreign Currency Convertible Bonds of Rs. 6,954,463(Previous Year Rs. Nil).
SCHEDULE 11- LOANS AND ADVANCES:(Unsecured - Considered Good, unless otherwise stated):Advances and Loans to Subsidiaries (Refer Note 2 Below) 610,946,879 159,878,117Advances recoverable in cash or kind or for value to be received 915,139,191 561,811,559Considered Doubtful 9,373,975 -
924,513,166 561,811,559Less: Provision for Doubtful Advances 9,373,975 915,139,191 - 561,811,559Balance with Excise Authorities 124,038,585 116,168,577Earnest Money/ Security Deposits 380,089,683 115,401,695Advance Tax/ Tax Deducted at Source 388,963,681 232,929,590TOTAL 2,419,178,019 1,186,189,538
Notes:1) Amount due from a Director as at March 31, 2008 - Rs. Nil
(Previous year Rs. Nil). Maximum balance due at any timeduring the year from Director and Officer of the Company wasRs. 55,851 (Previous year Rs. 92,894)
2) Maximum balance due at any time during the year from sub-sidiary companies was Rs. 1,486,031,543 (Previous year Rs.159,878,117)
SCHEDULE 12- CURRENT LIABILITIES AND PROVISIONS:
A. Current Liabilities:(Refer Note 21 of Schedule 21 Part-B)Acceptances 535,817,463 649,693,809Sundry Creditors- Total outstanding dues of micro enterprises and small
enterprises 213,604 -- Total outstanding dues of creditors other than micro
enterprises and small enterprises 2,399,747,159 2,399,960,763 2,595,541,067 2,595,541,067Advances from Customers 22,438,395 715,892Share Application Money Pending Allotment - 581,760Advance Against Sale of Fixed Assets - 6,640,000Unclaimed Dividend * 3,788,998 4,266,802Other Liabilities 203,954,082 206,275,869Security Deposits 492,978,462 392,172,833Interest accrued but not due on Loans 14,508,833 22,634,722Total 3,673,446,996 3,878,522,754* The above amount will be credited to Investor Education andProtection Fund as and when due.
B. Provisions:(Refer Notes 1B, 9 and 11 of Schedule 21 Part-A)Taxation- Current Tax [including Wealth Tax Rs.504,251
(Previous Year Rs.254,512)] 90,340,551 91,805,159- Fringe Benefit Tax 55,248,399 145,588,950 24,994,566 116,799,725Premium on Redemption of Zero Coupon ForeignCurrency Convertible Bonds 304,784,267 -(Refer Note 18 c) of Schedule 21 Part-B)Proposed Dividend 168,231,104 167,401,776Corporate tax on Proposed Dividend 28,590,876 28,449,932Staff Benefit Schemes 76,013,091 84,999,404TOTAL 723,208,288 397,650,837
94
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,2008
As at 31.03.2008 As at 31.03.2007
Rs. Rs. Rs. Rs.
SCHEDULE 13- EXCISE DUTY:Excise Duty paid 674,508,788 541,079,948Less: Excise duty on Closing Stock 37,407,532 19,028,252Add: Excise duty on Opening Stock 19,028,252 6,136,081
TOTAL 656,129,508 528,187,777
SCHEDULE 14- SERVICES:Lease Rent 21,598,250 373,500Service Charges 50,438,360 5,276,611
TOTAL 72,036,610 5,650,111
SCHEDULE 15- OTHER INCOME:(Refer Notes 2 and 10 of Schedule 21 Part-A)
Interest Received (Gross):a) On Deposits with banks 301,046,645 158,276,157b) On loan to Subsidiaries
(including prior period income of Rs. 341,049) 54,830,602 -c) On Income Tax Refunds 10,175,349 -[Tax Deducted at Source Rs. 39,382,602(Previous Year Rs. 35,468,598)] 366,052,596 158,276,157
Excess provisions and unclaimed credit balances written back(including prior period income of Rs. 8,716,426) 34,387,971 18,533,320Exchange Fluctuation (Net) 168,284,523 361,694,633Profit on cancellation of forward contracts (Net) 5,829,107 120,617,065Profit on sale of Fixed Assets (Net) 6,063,986 -Profit on sale of Investment in Subsidiary Company 199,652,336 -Profit on sale of Current Investment (others) 5,023,500 -Dividend from Long Term Investments (associate) - 15,977,055Refund of Countervailing duty 187,514,298 -Provision for doubtful debts written back 10,994,000 -Miscellaneous Income(including prior period income of Rs. 2,397,818) 235,240,295 112,607,102
TOTAL 1,219,042,612 787,705,332
SCHEDULE 16-INCREASE IN STOCKOF FINISHED GOODS, WORK IN PROGRESS,TRADED GOODS AND FILM RIGHTS:
Closing Stock:Finished Goods 1,735,871,295 1,938,539,814Work in Progress 2,003,604,753 906,604,141Traded Goods and Film Rights 155,776,774 3,895,252,822 6,670,131 2,851,814,086
Less: Opening Stock:Finished Goods 1,938,539,814 1,304,059,683Work in Progress 906,604,141 899,748,788Traded Goods 6,670,131 2,851,814,086 8,795,777 2,212,604,248
Excise duty on Finished Goods (18,379,280) (12,892,171)
TOTAL INCREASE 1,025,059,456 626,317,667
95
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,2008
Year ended 31.03.2008 Year ended 31.03.2007
Rs. Rs.
SCHEDULE 17- PERSONNEL EXPENSES:Salaries, Allowances and Bonus 1,638,014,705 1,193,056,009Contribution to Provident and other funds 109,560,545 90,314,008Employee Welfare Expenses 139,931,539 108,686,508Leave Encashment 34,727,563 19,680,848Less: Charged to Subsidiary Companies* 29,140,280 19,705,257
TOTAL 1,893,094,072 1,392,032,116
* Net of Service Tax Rs. Nil (Previous Year Rs. 2,287,904)
SCHEDULE 18- ADMINISTRATION & OTHER EXPENSES:(Refer Note 12 of Schedule 21 Part-A)
Power and Fuel 1,355,014,288 1,064,774,673Commission on Sales 2,340,852 4,666,817Rent (Including Lease Rent) 100,150,160 80,669,782(Refer Note 6(A)(a) of Schedule 21 Part-B)Repairs & Maintenance:- Building 5,114,175 1,347,835- Plant & Machinery 67,194,411 33,702,449- Others 60,178,387 41,271,871Freight and Forwarding (Net) 483,153,648 593,814,695Insurance 127,651,005 116,977,996Rates and Taxes 5,141,978 5,545,313Director’s Sitting Fees 1,560,000 1,650,000Commission to Non-executive Directors - 2,195,729Donation 15,467,169 509,500Remuneration to Auditors (Refer Note 12.7 of Schedule 21 Part-B) 17,403,648 17,260,500Royalty 369,198,145 357,967,023Travelling and Conveyance 77,515,806 115,564,931Bad Debts - 200,864Advances Written Off 8,018,215 3,575,085Provision for doubtful debts 3,504,621 120,522,719Provision for doubtful advances 9,373,975 -Research and Development Expenses 2,181,238 2,895,078Miscellaneous Expenses (including prior period expenses of Rs. 8,222,625) 546,222,709 487,936,005Stock Written Off 24,501,334 22,770,095Loss on sale of Fixed Assets (Net) - 227,244
TOTAL 3,280,885,764 3,076,046,204
SCHEDULE 19- INTEREST & FINANCE CHARGES:(Refer Note 8 of Schedule 21 Part-A)
Interest:On Fixed Loans 1,381,756,480 882,935,670Others 343,882,097 292,380,972
Finance Charges 16,151,710 25,238,172Bank Charges 51,780,878 44,300,070
TOTAL 1,793,571,165 1,244,854,884
SCHEDULE 20- DEPRECIATION/ AMORTISATION:(Refer Note 4 of Schedule 21 Part-A)
Depreciation on Fixed Assets (Refer Schedule 5) 4,319,102,078 3,581,189,458Less: Depreciation on assets used for trial run/ testing for
new intangible assets capitalized/ under development 3,235,863 2,486,084
Depreciation charged to Profit and Loss 4,315,866,215 3,578,703,374
96
Part-A SIGNIFICANT ACCOUNTING POLICIES
1A METHOD OF ACCOUNTING
The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, theapplicable accounting standards notified under section 211(3C) of the Companies Act, 1956 and the relevant provisions of theCompanies Act, 1956.
1B USE OF ESTIMATES
The preparation of financial statements requires the management of the Company to make estimates and assumptions that affectthe reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financialstatements and reported amounts of income and expenses during the period. Example of such estimates include provisions fordoubtful debts, employee retirement benefit plans, warranty, provision for income taxes and the useful lives of fixed assets.
2 REVENUE RECOGNITION
Revenue from sale of goods is recognised on transfer of significant risks and rewards of ownership to the customer and when nosignificant uncertainty exists regarding realisation of the consideration. Sales are recorded net of sales returns, rebates, tradediscounts and price differences and are inclusive of excise duty and upto the previous year countervailing duty imposed by thecouncil of European Union.
Theatrical revenues from films are recognised as and when the films are exhibited.
Revenue from other rights such as satellite rights, music rights, overseas assignment rights etc. is recognised on the date when therights are available for exploitation.
Service income of SEZ Division is recognised as and when services are rendered.
Interest is accounted for based on a time proportion basis taking into account the amount invested and the rate of interest.
Dividend is recognised as and when the right of the company to receive payment is established.
3 FIXED ASSETS
Tangible Fixed Assets are stated at cost less accumulated depreciation. Cost includes all expenses, direct and indirect, specificallyattributable to its acquisition and bringing it to its working condition for its intended use.
Expenditure pending allocation, are allocated to productive fixed assets in the year of commencement of the related project.
Intangible assets are stated at cost less accumulated amortisation. The cost incurred to acquire “right to use and exploit” homevideo titles, are capitalized as copyrights/marketing and distribution rights where the right allows the company to obtain a futureeconomic benefit from such titles.
Impairment, if any, in the carrying value of fixed assets is assessed at the end of each financial year in accordance with theaccounting policy given below on “Impairment of Assets”.
4 DEPRECIATION / AMORTISATION
Depreciation on tangible fixed assets is provided based on the estimated useful life on a pro-rata basis under the straight-linemethod. The depreciation rates are not below the minimum rate as specified in Schedule XIV to the Companies Act, 1956.
In respect of assets whose useful life has been revised, the unamortised depreciable amount is charged over the revised remaininguseful life.
Intangible assets other than copyrights/marketing and distribution rights are amortised on equated basis over their estimatedeconomic life not exceeding 10 years.
Copyrights/marketing and distribution rights are amortized from the date they are available for use, at the higher of the amountcalculated on a straight line basis over the period the intangible asset is available, not exceeding 10 years, and the number of unitssold during the period basis.
Leasehold Land and improvement to the leased premises are amortised over the period of the lease.
The assets taken on finance lease are depreciated over the lease period.
5 INVESTMENTS
Long term investments are stated at cost of acquisition inclusive of expenditure incidental to acquisition. A provision for diminutionis made to recognise a decline, other than temporary in the value of long term investments.
Current investments are stated at lower of cost and fair value determined on an individual basis.
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
97
6 INVENTORY VALUATION
Finished Goods, Work in progress, Goods held for resale At lower of cost and net
Raw Materials, Packing Materials and Stores and Spares realisable value
Cost of Raw material, goods held for resale, packing materials and stores and spares is determined on the basis of weightedaverage method.
Cost of Work in progress and finished goods is determined by considering direct material cost, labour costs and appropriate portionof overheads
Liability for excise duty in respect of goods manufactured by the company, other than for exports, is accounted upon completion ofmanufacture.
Inventories of under production films and films completed and not released are valued at cost.
The cost of released films is amortized using the individual film forecast method. The said amortization pertaining to theatricalrights, satellite rights, music rights, home video rights and others is based on management estimates of revenues from each ofthese rights. The inventory, thus, comprises of unamortized cost of such movie rights. These estimates are reviewed periodicallyand losses, if any, based on revised estimates are provided in full.
At the end of each accounting period, such unamortized cost is compared with net expected revenue. In case of net expectedrevenue being lower than actual unamortized costs, inventories are written down to net expected revenue.
The purchase cost of the rights acquired in released films is apportioned between satellite rights and other rights (excluding homevideo rights) based on management’s estimates of revenue potential.
7 GOVERNMENT GRANTS
Grants in the nature of contribution towards capital cost of setting up projects are treated as Capital Reserve and grants in respectof specific fixed assets are adjusted from the cost of the related fixed assets.
8 BORROWING COSTS
Borrowing costs directly attributable to the acquisition of qualifying assets are capitalised as part of the cost of assets till the date ofcommencement of commercial use of the asset. All other borrowing costs are charged to the Profit and Loss Account.
9 EMPLOYEE BENEFITS
The Company has Defined Contribution plans for post employment benefits namely Provident Fund which is recognized by theincome tax authorities. These funds are administered through Regional Provident Fund Commissioner and the Company’scontributions thereto are charged to revenue every year. The Company’s contributions to State plans namely Employee’s StateInsurance Fund and Employee’s Pension Scheme 1995 are charged to revenue every year.
The Company has Defined Benefit plans namely Leave Encashment and Gratuity for all employees, the liability for which is determinedon the basis of an actuarial valuation at the end of the year. Gratuity Fund is administered through Life Insurance Corporation of India.Short term compensated absences are recognised at the undiscounted amount of benefit for services rendered during the year.
Termination benefits are recognised as an expense immediately. Actuarial gains and losses comprise experience adjustments andthe effects of changes in actuarial assumptions and are recognised immediately in the Profit and Loss Account as income orexpense.
In the year of transition (i.e. 2006-07), the difference between transitional liability and the liability that would have been recognizedat the beginning of the transitional year under the Company’s previous accounting policy has been adjusted against the openingrevenue reserves of that year in accordance with Accounting Standard 15 (revised 2005) ‘Employee Benefits’.
10 FOREIGN CURRENCY TRANSACTIONS
Transactions in foreign currency are converted at the exchange rate prevailing at the date of the transaction. Foreign currencymonetary assets and liabilities not covered by forward exchange contracts are restated at the year end rates and the resultant gainsor losses are recognised in the Profit and Loss account. Non-monetary items are carried in terms of historical cost denominated inforeign currency using the exchange rates at the date of transaction.
In respect of foreign branches, all revenues, expenses, monetary assets/liabilities and fixed assets are accounted at the exchangerate prevailing on the date of the transaction. Monetary assets and liabilities are restated at the year end rates and resultant gainsor losses are recognised in the Profit and Loss Account.
Premium on foreign exchange forward contracts are recognised in the Profit and Loss Account over the life of the contract. Anyprofit or loss arising on cancellation of a forward contract is recognised as income or expense for the period.
}
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
Part-A SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
98
11 TAXATION
Current Tax:
Provision is made for current income tax liability based on the applicable provisions of the Income Tax Act, 1961 for the incomechargeable under the said Act and as per the applicable overseas laws relating to the foreign branch.
Deferred Tax:
Deferred tax assets (DTA) and liabilities are computed on the timing differences at the balance sheet date between the carryingamount of assets and liabilities and their respective tax bases. DTA is recognised based on management estimates of reasonable/virtual certainty that sufficient future taxable income will be available against which such DTA can be realised. The deferred tax chargeor credit is recognised using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
12 LEASES
Assets acquired under finance leases are recognised as an Asset and a Liability at the lower of the fair value of the leased assetsat inception of the lease and the present value of minimum lease payments. Lease payments are apportioned between the financecharge and the reduction of the outstanding liability. The finance charge is allocated to periods during the lease term so as toproduce a constant periodic rate of interest on the remaining balance of the liability and charged to the profit and loss account.
Payment made under operating leases are charged to Profit and Loss Account on a straight line basis over the period of the lease.
13 STOCK OPTION PLANS
Stock options grants to the employees and to the non-executive Directors who accepted the grant under the Company’s StockOption Plan are accounted in accordance with Securities and Exchange Board of India (Employees Stock Option Scheme andEmployees Stock Purchase Scheme) Guidelines, 1999. The Company follows the intrinsic value method and accordingly, theexcess, if any, of the market price of the underlying equity shares as of the date of the grant of the option over the exercise price ofthe option, is recognised as employee compensation cost and amortised on straight line basis over the vesting period.
14 IMPAIRMENT OF ASSETS
At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired. If such indicationexists, the Company estimates the recoverable amount and where carrying amount of the asset exceeds such recoverable amount,an impairment loss is recognised in the profit and loss account to the extent the carrying amount exceeds recoverable amount.Where there is any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist ormay have decreased, the Company books a reversal of the impairment loss not exceeding the carrying amount that would havebeen determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior accountingperiods.
Part -A SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
99
1 Contingent Liabilities
In respect of:-
1.1 Corporate guarantees given on behalf of the Subsidiary Companies: Rs.13,642,815,000 (Previous Year Rs. 3,520,000,000).Against these guarantees loan amounts of Rs.9,051,763,955 (Previous Year Rs. 1,251,452,840) have been availed by thesubsidiary companies. (Refer Note 13.3 b) below)
1.2 Disputed demands (Gross) in respect of:- 2007-08 2006-07 (Rs.) (Rs.)
Entry tax 124,745,823 110,391,986[Amount paid under protest Rs. 1,941,530 (Previous Year Rs.1,686,502 ) ;paid through bank guarantee Rs. NIL (Previous Year Rs.2,646,016)]
Service tax 106,090,662 68,825,596Sales Tax 85,083,264 7,307,205[Amount paid under protest Rs. 4,597,150 (Previous Year Rs. 72,864) ; paid throughbank guarantee Rs. 26,596,226 (Previous Year Rs. 2,049,747)]Custom duty and Excise duty 320,465,525 5,516,560[Amount paid under protest Rs.500,000 (Previous Year Rs. Nil).
Trade Tax - 22,230,117Income Tax 92,195,160 85,294,174[Amount paid under protest Rs. 24,500,000 (Previous Year Rs. 5,000,000)]
Total 728,580,434 299,565,638
1.3 Claims against the Company not acknowledged as debts: Rs. 20,059,830 (Previous Year Rs. 20,078,421).
The amount shown in 1.1 above represents guarantees given in the normal course of the Company’s operations and are notexpected to result in any loss to the Company on the basis of the beneficiary fulfilling its ordinary commercial obligations.
The amounts shown in 1.2 and 1.3 above represent the best possible estimates arrived at on the basis of available information.The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which havebeen invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. TheCompany engages reputed professional advisors to protect its interests and has been advised that it has strong legal positionsagainst such disputes.
2 In February 2003, Moser Baer India Limited (Moser Baer), and Imation Corporation Inc., USA (Imation), formed an associatecompany called Global Data Media FZ LLC (GDM). GDM is owned 51% by Imation, and 49% by Moser Baer. On October 27, 2006,Imation filed a suit in Minnesota, USA against Koninkiljke Philips Electronics NV (Philips) seeking a Declaratory Judgement on thevalidity of the Cross License Agreement (CLA) entered into with Minnesota Mining and Manufacturing Co. (3M) and its assignmentto Imation and its subsidiaries (including GDM). Moser Baer supplies recordable media to GDM and Imation under the ambit ofCLA.
Philips filed a suit against Moser Baer in The Hague, Netherlands challenging the status and validity of the CLA under whichsupplies of recordable media have been made to Imation and its subsidiaries. With a view to reinforce its stand on the CLA (an issuewhich is currently pending in the US courts), Imation joined the proceedings in the Netherlands as a party, to contest the suit.
In order to protect the rights arising out of various patent license agreements executed between Moser Baer and Phillips, MoserBaer filed a suit against Philips challenging the default notices issued by Philips thereby pre-empting any possibility of terminationof the aforementioned license agreements. This matter is currently subjudice at the Delhi High Court.
Based on legal advise received relating to the strength of Moser Baer case and the indemnity available, the company believes thatno provision is necessary in the financial statements as at 31st March 2008.
3 A search and seizure operation was carried out by the State of Kerala, DGP and the Nodal officer at the premises of distributorsstocking home video CDROM’s and DVDROM’s in various cities of Kerala for alleged infringement of Section 52(A) of the CopyrightAct. The Company has filed a writ petition against such police action and has received a favourable interim order. On the basis ofadvice obtained from external legal council, the Company does not expect any adverse results on issuance of the final order.
4 The Company has received claims relating to infringement of copyrights in relation to the home entertainment business activitiescarried on by it. In the opinion of the management, no material liability is likely to arise on account of such claims.
Part -B NOTES TO ACCOUNTS
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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5 5.1 Estimated value of contracts remaining to be executed on capital account and not provided for (net of advances): Rs.1,086,322,605 (Previous Year Rs. 1,694,114,742)
5.2 Letters of Credit opened by banks on behalf of the Company: Rs. 469,066,986 (Previous Year Rs. 664,284,646).
6 (A) Lease Obligations
a) Total of minimum future lease payments under non-cancellable operating leases for various periods are as follows:-
2007-08 2006-07Rs. Rs.
Amount payable not later than one year 18,824,650 18,521,226
Amount payable later than one year but not later than five years 64,676,256 80,469,321
Amount payable later than five years - 5,962,809
Total 83,500,906 104,953,356
Total lease payments recognized in the statement of Profit and Loss Account: Rs. 46,001,614 (Previous year Rs. 46,304,700).
The company has entered into operating leases for its offices and employees’ residences that are renewable on a periodicbasis and cancellable at company’s option. The total rent recovered on sub lease during the year is Rs. 360,090 (Previousyear Rs.714,622).
b) Reconciliation of minimum lease payments and their present value in respect of vehicles taken on finance lease, is as under:
Minimum Lease Present value of Lease chargespayments minimum lease
paymentsRs. Rs. Rs.
Amount paid upto 31.3.2008 5,412,083 3,814,781 1,597,302
Amount payable not later than one year - -
Total 5,412,083 3,814,781 1,597,302
Previous year 5,412,083 3,814,781 1,597,302
Total cost of leased vehicles and their carrying amount as at 31st March 2008 are Rs. Nil (Previous Year Rs. 810,495) andRs. Nil (Previous Year Rs. 319,450) respectively.
(B) Assets given on operating lease
The company has provided building on lease to units operating in its SEZ division. Gross carrying amount of buildingsprovided on lease as on 31.03.2008 is Rs. 691,748,218 (Previous Year Rs.112,057,351) and accumulated depreciation as on31.03.2008 is Rs.10,783,123 (Previous Year Rs.317,874).
Total depreciation expense recognized in the statement of Profit and Loss Account: Rs. 10,465,248 (Previous yearRs.317,864).
7 Movements in Other Investments
2007-08 2006-07
Current Investments (Unquoted) No. Cost (Rs.) No. Cost (Rs.)
(Cash and Money Market Instrument)
Acquired and sold during the year
UBS Trend Accrual Bill (USD 10 Million) 10,000 403,750,000 - -
Total 10,000 403,750,000 - -
Acquired during the year andoutstanding as at 31.03.2008
Rabobank Note (USD 15 Million) 1 589,500,000 - -
Total 1 589,500,000 - -
Part -B NOTES TO ACCOUNTS (CONTD.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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8 Expenditure pending allocationDetails of expenditure pending allocation are as follows:
As at 31.03.2008 As at 31.03.2007Rs. Rs.
Salaries and Wages 3,178,560 1,468,323
Freight and Cartage 15,217,462 50,814,125
Interest 7,539,708 19,182,847
Difference in exchange rate * (155,888) 9,912,090
Raw Material cost- Trial run 1,082,719 39,220,167
Manpower cost 128,832 1,180,555
Power & Fuel 141,674 978,585
Stores spares & consumables 3,798,727 174,926
Legal and Professional 9,214,486 31,342,703
LC Charges 388,020 2,774,060
Loss on cancellation of Forward Contract * 9,669,233 49,812,674
Installation & Commissioning Charges 1,214,290 -
Total 51,417,823 206,861,055
* These amounts pertain to foreign exchange fluctuations capitalised as part of expenditure pending allocation as of March 31,2007.
9 Taxation
Provision for taxation has been made based on the relevant provisions of the Income Tax Act,1961.
Deferred tax in respect of timing differences for undertakings enjoying tax holiday period under section 10A and section 10B of theIncome Tax Act, 1961 have been recognised in the year in which they originate, to the extent that such differences reverse after thetax holiday period.
Accordingly, the Break up of net deferred tax liability is as under: (Amount in Rupees)
Particulars of Timing Differences As at Movement As atMarch 31, 2007 during the year March 31, 2008
Deferred tax Liability
Depreciation 1,531,665,021 179,345,370 1,711,010,391
Deferred tax Assets
Unabsorbed Depreciation 1,351,098,738 223,648,247 1,574,746,985
Brought Forward Losses 4,747,648 (433,778) 4,313,870
Tax impact of expenses (net) charged in the financial 87,113,892 (46,768,825) 40,345,067statements but allowable as deduction in future yearsunder the Income Tax Act, 1961
Total 1,442,960,278 176,445,644 1,619,405,922
Net deferred tax liability 88,704,743 2,899,726 91,604,469
Previous year - 88,704,743 88,704,743
10 During the year the Company issued fully paid bonus shares to the equity shareholders of the Company in the ratio of one bonusshare for two existing fully paid shares by capitalising the sum standing to the credit of Company’s general reserve. Consequentlythe Company has allotted 56,077,035 equity shares which also includes 127,975 equity shares against options exercised after therecord date i.e. 18th July 2007.
Part -B NOTES TO ACCOUNTS (CONTD.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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11 Employees Stock Option Plan (ESOP) and Directors’ Stock Option Plan (DSOP)
a) The company has granted options to its non-executive directors and employees of the Company and its subsidiaries, to besettled through issue of equity shares, at exercise prices that are equal to the market price of the share on the date of thegrant. The Options granted vest over a period of maximum of four years from the date of grant.
Two options granted before the record date under the above plans entitles the holder to three equity shares of the Company.
Number of options granted, exercised and 2007-08 2006-07cancelled/lapsed during the year Number Weighted Number Weighted
Average AveragePrice (Rs.) Price (Rs.)
Options outstanding at beginning of year 3,262,960 228.89 2,977,700 221.10
Add: Options Granted 1,280,600 383.12 1,022,200 244.65
Less: Options Exercised 552,885 220.12 88,240 219.96
Options Cancelled 160,700 270.29 546,700 222.92
Options Lapsed 101,600 223.90 102,000 199.95
Options outstanding at the end of year 3,728,375 280.95 3,262,960 228.89
Option exercisable at the end of year 1,104,075 226.43 939,260 221.27
The options outstanding at the end of year had exercise prices in the range of Rs. 196.60 to Rs. 491.90 (Previous Year Rs.196.60 to Rs. 319.25) and a weighted average remaining contractual life of 2.49 years (Previous Year 2.62 years).
During the year 552,885 (Previous Year 88,240) options were exercised resulting in a premium of Rs. 116,172,343 (PreviousYear Rs. 18,526,983) which is the excess of exercise price of the options and nominal value of shares allotted.
b) The impact on the Profit of the Company for the year ended March 31, 2008 and the basic and diluted earning per share hadthe company followed the fair value method of accounting for stock options is set out below:
2007-08 2006-07Rs. Rs.
(Loss)/ Profit after tax as per Profit and Loss Account (a) (789,090,171) 1,097,864,571
Add: Employee Stock Compensation Expenses as per Intrinsic Value method - -
Less: Employee Stock Compensation Expenses as per Fair Value method 103,042,130 68,290,648
(Loss)/ Profit after tax recomputed for recognition of employee stock compensation (892,132,301) 1,029,573,923
expenses under fair value method
Earning Per Share based on earning as per (a) above: (Refer Note 14 below)
- Basic (4.70) 6.56
- Diluted (4.70) 6.52
Earning Per Share had fair value method been employed for accounting ofemployee Stock options:
- Basic (5.31) 6.15
- Diluted (5.31) 6.13
Fair values used for above computations have been calculated by taking into account the weighted average vesting periodof the options.
Part -B NOTES TO ACCOUNTS (CONTD.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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12 ADDITIONAL INFORMATION PURSUANT TO REQUIREMENTS OF PART II OF SCHEDULE VI TO THE COMPANIES ACT,1956 AND OTHER DISCLOSURES
12.1 Licensed Capacity Not Applicable for any product of the company
12.2 Installed Capacity *Installed Capacity Actual Production
2007-08 2006-07 2007-08 2006-07
Storage Media ( Nos.) 5,150,752,802 4,602,416,185 3,694,599,272 3,635,982,005
(Inclusive of installed capacities for jewel box cake boxes and stamper)
* (As certified by the management and on which auditors have placed reliance, this being a technical matter.)
12.3 In terms of order no.46/34/2008-CL-III. dated 09.05.2008 issued by Department of Company Affairs under Section 211(4) ofthe Companies Act, 1956 disclosure has not been made for the quantitative details for the accounting year 2007-08, inrespect of details pursuant to paras 3(i)(a), 3(ii)(a) and 3(ii)(b) of part II of Schedule VI to the Companies Act, 1956 (asamended vide Notification No GSR 494 (E) dated 30th October,1973).
12.4 Composition of raw material, packing materialstores, spares and consumables consumed:
Raw Material and Packing Material Stores, Spares and Tools
2007-08 2006-07 2007-08 2006-07
Imported
Percentage 70.11 64.37 70.44 70.86
Value (Rs.) 6,425,133,640 6,253,834,080 695,978,199 680,624,494
Indigenous
Percentage 29.89 35.63 29.56 29.14
Value (Rs.) 2,739,348,272 3,461,210,918 292,124,881 279,841,570
Total 100 100 100 100
9,164,481,912 9,715,044,998 988,103,080 960,466,064
12.5 Foreign Currency Transactions:
12.5.1 Value of Imports on CIF Basis: 2007-08 2006-07Rs. Rs.
Purchase of Finished Goods - -
Raw Material, including in transit Rs. 392,211,438 (Previous year Rs. 369,813,623) 6,118,361,886 5,993,028,697
Capital Goods, including in transit Rs. 35,528,010 (Previous Year Rs. 49,385,099) 1,291,918,972 3,662,008,982
Stores, Spares and Consumables, including in transit Rs 14,498,231(Previous Year Rs. 65,666,016) 967,585,607 1,069,228,866
Packing Material, including in transit Rs. 14,028,624 (Previous Year Rs. 33,318,365) 430,521,802 733,260,007
Total 8,808,388,267 11,457,526,552
Part -B NOTES TO ACCOUNTS (CONTD.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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12.5.2 Expenditure in foreign currency (on payment basis) : 2007-08 2006-07Rs. Rs.
Travel 6,919,175 9,978,226
Interest 58,047,006 119,591,493
Royalty/Technical Know-how Fees (including advance royalty) 440,371,381 337,902,885
Directors Sitting Fees 570,000 585,000
Legal and Professional 23,676,064 48,437,999
Other expenditure 112,838,906 38,235,167
Expenditure of Foreign Branch/Liaison Office:
Staff Welfare 542,205 645,897
Rent/Lease Rent 5,178,847 4,168,080
Legal and Professional Expenses 6,044,559 16,603,448
Miscellaneous Expenses 44,219,495 56,812,227
Insurance 1,942,080 449,614
Salaries and Wages 41,443,951 50,475,486
Repairs and Maintenance 1,266,596 835,152
Total 743,060,265 684,720,674
12.5.3 Earnings in Foreign Exchange: 2007-08 2006-07Rs. Rs.
Value of Exports on FOB basis 12,965,334,621 15,892,362,635
Interest 178,653,897 1,682,026
Others:
-Insurance Claim Received 2,245,737 589,902
-Dividend - 15,977,055
-Other Miscellaneous Income 290,871,766 -
-Profit on Sale of Investment (Trend Accrual Bill) 5,023,500 -
12.5.4 Amount remitted in Foreign Currencies for Dividend :
Dividend remitted on fully paid - up equity shares of Rs.10 each 2007-08 2006-07
Number of Non Resident Shareholders 1 1
Number of Shares held 135,000 135,000
Year to which it relates 2006-07 2005-06
Dividend remitted in (Rs.) 202,500 135,000
Part -B NOTES TO ACCOUNTS (CONTD.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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12.6 Managerial Remuneration :
(figures in bracket are for the previous year) (Amount in Rupees)
DEEPAK PURI NITA PURI RATUL PURI Total
12.6.1 Managing Whole time Whole timeDirector Director Director
Salaries, allowances and bonus 29,156,250 4,790,178 15,941,964 49,888,392
(33,156,250) (4,415,178) (15,011,964) (52,583,392)
Contribution to provident Fund 1,698,750 439,822 1,013,036 3,151,608
(1,698,750) (439,822) (1,013,036) (3,151,608)
Perquisites 145,000 145,000 145,000 435,000
(145,000) (145,000) (145,000) (435,000)
Total 31,000,000 5,375,000 17,100,000 53,475,000
(35,000,000) (5,000,000) (16,170,000) (56,170,000)
1. In terms of order nos. 12/180/2008-CL.VII, dated 13.02.2008, 12/160/2008-CL.VII dated 03.03.2008, 12/179/2008-CL.VIIdated 03.03.2008 issued by the Ministry of Corporate affairs under Section 310, 198/309(3) and 673AA of the CompaniesAct, 1956, the Company has paid managerial remuneration as shown above.
2. Provision for leave encashment: Rs. 2,161,038 (Previous year Rs. 2,885,257) and Gratuity: Rs. 928,993 (Previous yearRs. 877,781) made during the year have not been included above.
3. Total remuneration for Deepak Puri and Ratul Puri shown above includes Rs. 3,491,612 (Previous year Rs.3,520,000) inrespect of remuneration charged to subsidiary Companies.
12.6.2 Commission to Directors:Computation of Net Profits in accordance with the provisions of Section 349 of the Companies Act,1956
2007-08 2006-07
Net (Loss)/ Profit Before Tax as per Profit & Loss Account (769,641,146) 1,198,505,776
Add: Directors’ Remuneration 53,475,000 58,365,729
Depreciation as per books 4,315,866,215 3,578,703,374
Loss on sale of Fixed Assets - 227,244
Directors sitting Fees 1,560,000 1,650,000
3,601,260,069 4,837,452,123
Less: Profit on sale of Investments 204,675,836 -
Depreciation as per Section 350 of the Companies Act,1956 4,315,866,215 3,578,703,374
Profit on sale of Fixed Assets 6,063,986 -
Net (Loss)/ Profit in terms of section 349 (925,345,968) 1,258,748,749
Net (Loss)/ Profit for the purpose of Section 309 (925,345,968) 1,258,748,749
Commission to non-executive Directors u/s 309(4) @ 1% - 2,195,729(For the Previous Year restricted to 0.2% of Profit after tax)
12.7 Remuneration To Auditors: 2007-08 2006-07Rs. Rs.
For Statutory Audit 10,000,000 8,600,000
For Limited Review 5,800,000 5,200,000
For Certification / Other Reports 4,000,000 3,240,000
For Reimbursement of out of pocket expenses and service tax 3,092,591 598,554
Total 22,892,591 17,638,554
Part -B NOTES TO ACCOUNTS (CONTD.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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13 Related Party Transactions:In accordance with the requirements of Accounting Standard - 18 ‘Related Party Disclosures’ the names of the related party wherecontrol/ability to exercise significant influence exists, along with the aggregate amount of transactions and year end balances withthem as identified and certified by the management are given below:
13.1 Name of the related party Nature of relationship Share Holding
European Optic Media Technology GmbH Subsidiary 100%
Omega Optical Media Technologies Subsidiary 100%
Moser Baer SEZ Developer Limited Subsidiary 100%
Solar Research Limited Subsidiary 100%
Moser Baer Energy Limited Subsidiary 100%
Moser Baer Entertainment Limited Subsidiary 100%(Formerly known as Moser Baer Media Limited)
Moser Baer Infrastructure and Developers Limited Subsidiary 100%
Moser Baer Investments Limited Subsidiary 100%
Photovoltaic Holdings Plc Subsidiary 100%
Moser Baer Solar Plc Subsidiary 100%
PV Technologies India Limited Subsidiary 100%
Moser Baer Photovoltaic Limited Subsidiary 100%
Perafly Limited Subsidiary 100%
Dalecrest Limited Subsidiary 100%
Nicofly Limited Subsidiary 100%
Perasoft Limited Subsidiary 100%
Crownglobe Limited Subsidiary 100%
Peraround Limited Subsidiary 100%
Advoferm Limited Subsidiary 100%
Cubic Technologies BV Subsidiary 100%
OM&T B.V. Subsidiary 81%
Global Data Media FZ LLC Associate Company 49%
Moser Baer Infrastructure Limited* Associate Company 26%
Solar Value Proizvodjna d.d. Joint Venture 40%
Moser Baer Trust Trust -
Key Management Personnel
Mr. Deepak Puri Managing Director
Mrs. Nita Puri, Mr.Ratul Puri Whole Time Directors
*Subsidiary till May 10, 2007.
Part -B NOTES TO ACCOUNTS (CONTD.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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13.2 Details of Transactions with the Related Parties in the ordinary course of business:(figures in brackets are for the previous year)
(Amount in Rupees)
Particulars Associates Subsidiaries Key Moser TotalManagement Baer
Personnel Trustand theirRelatives
Sales of Finished goodsGlobal Data Media FZ LLC 5,263,622,958 - - -
(8,609,612,874) ( - ) ( - ) ( - )European Optic Media Technology GmbH - 27,261,022 - -
( - ) (712,749,846) ( - ) ( - )O M & T BV 151,215,027 - - 5,442,099,007
( - ) ( - ) ( - ) (9,322,362,720)Purchase of Semi Finished goods/ RawMaterialO M & T BV - 10,596,112 - - 10,596,112
( - ) ( - ) ( - ) ( - ) ( - )Expenses incurred on behalf of other companiesGlobal Data Media FZ LLC 13,695,082 - - -
(28,992,875) ( - ) ( - ) ( - )Moser Baer Photovoltaic Limited - 108,720,071 - -
( - ) (48,285,116) ( - ) ( - )Others - 2,555,470 - - 124,970,623
( - ) (529,751) ( - ) ( - ) (77,807,742)Services rendered to related partyMoser Baer Photovoltaic Limited - 59,689,553 - -
( - ) (26,256,546) ( - ) ( - )PV Technologies India Limited - 19,889,086 - - 79,578,639
( - ) ( - ) ( - ) ( - ) (26,256,546)Reimbursement/ Recovery of expenses/ service chargesMoser Baer Photovoltaic Limited - 162,800,000 - - 162,800,000
( - ) ( - ) ( - ) ( - ) ( - )Lease rent charged to related partyMoser Baer Photovoltaic Limited - 8,968,160 - -
( - ) (373,500) ( - ) ( - )PV Technologies India Limited - 12,270,000 - - 21,238,160
( - ) ( - ) ( - ) ( - ) (373,500)Interest IncomePeraround Limited - 10,258,336 - -
( - ) ( - ) ( - ) ( - )Moser Baer Photovoltaic Limited - 23,269,562 - -
( - ) ( - ) ( - ) ( - )PV Technologies India Limited - 21,302,704 - - 54,830,602
( - ) ( - ) ( - ) ( - ) ( - )Interest ReceivedMoser Baer Photovoltaic Limited - 23,220,532 - -
( - ) ( - ) ( - ) ( - )PV Technologies India Limited - 20,706,957 - - 43,927,489
( - ) ( - ) ( - ) ( - ) ( - )Expenses charged by other companiesGlobal Data Media FZ LLC 11,637,958 - - -
(19,521,354) ( - ) ( - ) ( - )Moser Baer Photovoltaic Limited - 608,523 - - 12,246,481
( - ) (2,281,285) ( - ) ( - ) (21,802,639)Dividend received - - - - -Global Data Media FZ LLC (15,977,055) ( - ) ( - ) ( - ) (15,977,055)Miscellaneous Income 5,080,128 - - - 5,080,128Moser Baer Infrastructure Ltd ( - ) ( - ) ( - ) ( - ) ( - )Directors Remuneration(Refer Note 12.6 above) - - 53,475,000 - 53,475,000
( - ) ( - ) (56,170,000) ( - ) (56,170,000)
Part -B NOTES TO ACCOUNTS (CONTD.)
(Contd.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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Part -B NOTES TO ACCOUNTS (CONTD.)
(Amount in Rupees)
Particulars Associates Subsidiaries Key Moser TotalManagement Baer
Personnel Trustand theirRelatives
Sale of Fixed AssetsMoser Baer Photovoltaic Limited - 613,549 - - 613,549
( - ) ( - ) ( - ) ( - ) ( - )Purchase of Fixed AssetsOM&T B.V. - 3,053,539 - - 3,053,539
( - ) ( - ) ( - ) ( - ) ( - )Share Application MoneyEuropean Optic Media Technology GmbH - 8,695,845 - - 8,695,845
( - ) (8,989,500) ( - ) ( - ) (8,989,500)InvestmentsMoser Baer Photovoltaic Limited - 665,866,100 - -
( - ) (1,408,700,000) ( - ) ( - )Peraround Limited - 883,519,616 - -
( - ) (112,886,063) ( - ) ( - )Moser Baer Entertainment Limited - 700,000 - -
( - ) ( - ) ( - ) ( - )Moser Baer Investments Limited - 2,500,000 - -
( - ) ( - ) ( - ) ( - )Moser Baer Infrastructure Ltd - 6,340,000 - -
( - ) ( - ) ( - ) ( - )Others - - - - 1,558,925,716
( - ) (8,100,000) ( - ) ( - ) (1,529,686,063)Sale of InvestmentsPV Technologies India Limited - 1,083,091,176 - - 1,083,091,176
( - ) ( - ) ( - ) ( - ) ( - )Loan GrantedPeraround Limited - 249,628,396 - -
( - ) (60,185,775) ( - ) ( - )PV Technologies India Limited - 1,044,640,293 - -
( - ) ( - ) ( - ) ( - )Moser Baer Photovoltaic Limited - 892,600,000 - - 2,186,868,689
( - ) ( - ) ( - ) ( - ) (60,185,775)Loan RepaidPV Technologies India Limited - 1,013,985,239 - -
( - ) ( - ) ( - ) ( - )Moser Baer Photovoltaic Limited - 875,007,340 - - 1,888,992,579
( - ) ( - ) ( - ) ( - ) ( - )Security Deposit receivedMoser Baer Photovoltaic Limited - - - - -
( - ) (300,000,000) ( - ) ( - ) (300,000,000)Deferred RevenueMoser Baer Infrastructure Ltd 1,016,026 - - - 1,016,026
( - ) ( - ) ( - ) ( - ) ( - )DonationMoser Baer Trust - - - 15,467,169 15,467,169
( - ) ( - ) ( - ) (500,000) (500,000)Outstanding receivables-In respect of SalesGlobal Data Media FZ LLC 1,760,747,582 - - -
(1,993,092,485) ( - ) ( - ) ( - )European Optic Media Technology GmbH - 3,253,749 - -
( - ) (89,016,469) ( - ) ( - )OM&T B.V. - 75,603,748 - - 1,839,605,079
( - ) ( - ) ( - ) ( - ) (2,082,108,954)
(Contd.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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(Amount in Rupees)
Particulars Associates Subsidiaries Key Moser TotalManagement Baer
Personnel Trustand theirRelatives
-In respect of LoanPeraround Limited - 338,819,688 - -
( - ) (60,185,775) ( - ) ( - )
PV Technologies India Limited - 30,655,054 - -( - ) ( - ) ( - ) ( - )
Moser Baer Photovoltaic Limited - 17,592,660 - - 387,067,402( - ) ( - ) ( - ) ( - ) (60,185,775)
-In respect of expenses/ service chargesGlobal Data Media FZ LLC 37,390,680 - - -
(23,695,598) ( - ) ( - ) ( - )Moser Baer Photovoltaic Limited - 100,717,808 - -
( - ) (99,051,803) ( - ) ( - )PV Technologies India Limited - 22,323,939 - -
( - ) ( - ) ( - ) ( - )Others - 4,500 - - 160,436,927
( - ) (350,852) ( - ) ( - ) (123,098,253)-In respect of Lease RentPV Technologies India Limited - 9,489,618 - -
( - ) ( - ) ( - ) ( - )Moser Baer Photovoltaic Limited - 7,225,660 - - 16,715,278
( - ) (289,687) ( - ) ( - ) (289,687)- In respect of InterestPeraround Limited - 11,039,457 - -
( - ) ( - ) ( - ) ( - )PV Technologies India Limited - 449,400 - -
( - ) ( - ) ( - ) ( - )Moser Baer Photovoltaic Limited - 37,919 - - 11,526,776
( - ) ( - ) ( - ) ( - ) ( - )- In Respect of Sale of InvestmentPV Technologies India Limited - 72,591,176 - - 72,591,176
( - ) ( - ) ( - ) ( - ) ( - )Outstanding payable-In respect of Security DepositMoser Baer Photovoltaic Limited - 300,000,000 - - 300,000,000
( - ) (300,000,000) ( - ) ( - ) (300,000,000)-In respect of expenses 29,970,152 - - - 29,970,152
(18,332,194) ( - ) ( - ) ( - ) (18,332,194)-In respect of purchasesOM&T B.V. - 1,585,938 - - 1,585,938
( - ) ( - ) ( - ) ( - ) ( - )-In respect of Managerial RemunerationDeepak Puri - - 10,520,409 - 10,520,409
( - ) ( - ) (19,603,947) ( - ) (19,603,947)Ratul Puri - - 5,420,195 - 5,420,195
( - ) ( - ) (7,012,332) ( - ) (7,012,332)Nita Puri - - 983,792 - 983,792
( - ) ( - ) (973,179) ( - ) (973,179)
13.3 Other Arrangements:
a) Detail of corporate guarantees provided on behalf of subsidiary companies (Amount in Rupees)
Particulars Rs. Total
Moser Baer Photovoltaic Limited 9,476,875,000(3,520,000,000)
PV Technologies India Limited 4,165,940,000 13,642,815,000( - ) (3,520,000,000)
b) Moser Baer India Limited (‘MBIL’) has issued a comfort letter in favor of Global Data Media FZ LLC (‘GDM’) to provide 49% ofsuch financial support as may be required to enable it to meet its debts and liabilities. As of date MBIL has not incurred anyobligation/ made payment against such comfort provided.
Part -B NOTES TO ACCOUNTS (CONTD.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
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14 Earnings per share
a) Calculation of Weighted Average number of equity shares
1. For Basic EPS 2007-2008 2006-2007No. of Shares at the beginning of the year 167,401,776 167,269,416Total number of equity shares outstanding at the end of the year 168,231,104 167,401,776Weighted Average number of equity shares outstanding during the year 167,922,040 167,288,8132. For Diluted EPSWeighted Average number of equity shares outstanding during the year ascomputed above 167,922,040 167,288,813Weighted average number of stock options outstanding during the year 318,997 1,131,791Weighted Average number of equity shares outstanding during the yearfor Diluted EPS 168,241,037 168,420,604
b) Net (loss)/ Profit after tax available for equity shareholders (789,090,171) 1,097,864,571Earnings per share (face value per share Rs. 10 each)Basic (4.70) 6.56Diluted (4.70) 6.52
Note: Due to the issue of bonus shares during the year 2007-08, the Earnings Per Share for financial year 2006-07 has beenrecomputed/restated.
15 Segment information
The company is primarily in the business of manufacture and sale of Optical Storage Media. The other activities of the companycomprise creation/replication and distribution of content, sales of consumer electronic products and operation and maintenance ofsector specific Special Economic Zone for non-conventional energy. The segment revenues, results and assets of the other activitiesdo not constitute reportable segments under AS-17 and accordingly no disclosure is required.
16 Service Income shown in the profit and loss account includes income earned by the SEZ division of the Company in the form oflease rental for assets given on lease and utility services provided to the entities situated in the SEZ.
17 The Company has adopted Accounting Standard 15 (revised 2005) ‘Employee Benefits’ during the last year i.e. year ended March31, 2007. Accordingly, the transitional adjustment aggregating to Rs. 1,771,624 (net of deferred tax asset Rs. Nil) has been chargedagainst the general reserves as at April 1, 2006. The details of the transitional adjustment is as follows
- Leave Encashment / Compensated Absences Rs. 1,771,624
(Also Refer Schedule 2)The Company has classified the various benefits provided to employees as under -
I Defined Contribution PlansProvident Fund
During the year, the Company has recognised the following amounts in the Profit and Loss Account -
2007-08 2006-07
Employers’ Contribution to Provident Fund * 26,111,484 28,338,871
II State Plans
a. Employers’ Contribution to Employee’s State Insurance Act, 1948
b. Employers’ Contribution to Employee’s Pension Scheme, 1995
During the year, the Company has recognised the following amounts in the Profit and Loss Account
2007-08 2006-07
Employers’ Contribution to Employee’s State Insurance Act, 1948 * 11,050,285 9,508,344
Employers’ Contribution to Employee’s Pension Scheme, 1995 *38,513,817 21,062,330
* Included in Contribution to Provident and Other Funds under Personnel Expenses (Refer Schedule 17)
Part -B NOTES TO ACCOUNTS (CONTD.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
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III Defined Benefit Plans
a) Contribution to Gratuity Funds – Life Insurance Corporation of India
b) Leave Encashment
In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the aforesaid defined benefitplans based on the following assumptions:-
Leave Encashment (Unfunded) Employee’s Gratuity Fund
Particulars 2007-08 2006-07 2007-08 2006-07
Discount Rate (per annum) 8% 8% 8% 8%
Rate of increase in Compensation levels 9% 9% 9% 9%
Rate of Return on Plan Assets Nil Nil 9.25% 8.50%
Expected Average remaining working lives ofemployees (years) 12.70 14 12.70 14
Changes in the Present Value of Obligation
Leave Encashment (Unfunded) Employee’s Gratuity Fund
Particulars 2007-08 2006-07 2007-08 2006-07
Present Value of obligation (Opening) 31,789,100 26,585,078 73,150,011 47,111,141
Interest Cost 3,530,540 1,974,324 7,361,534 3,678,846
Current Service Cost 14,326,705 7,937,445 20,487,740 14,368,902
Settlement Cost/Credit - - - (213,868)
Benefits paid (3,968,119) (3,812,054) (3,237,150) (2,251,142)
Actuarial (gain)/loss on obligations 14,350,670 (895,693) 5,525,488 10,456,132
Present Value of obligation (Closing) 60,028,896 31,789,100 103,287,623 73,150,011
Changes in the Fair value of Plan Assets
Employee’s Gratuity Fund
Particulars 2007-08 2006-07
Fair Value of plan Assets (Opening) 32,671,570 29,604,822
Expected Return on plan assets 6,484,789 2,541,538
Contributions 66,790,353 2,776,352
Benefits Paid (3,237,150) (2,251,142)
Fair Value of Plan Assets (Closing) 102,709,562 32,671,570
Reconciliation of present value of defined benefit obligation and the fair value of assets
Employee’s Gratuity Fund
Particulars 2007-08 2006-07
Present value of funded obligation (Closing) 103,287,623 73,150,011
Fair Value of Plan Assets as at the end of the 102,709,562 32,671,570period funded status
Present value of unfunded obligation (Closing) 578,061 40,478,441
Unfunded Net Liability recognized in Balance Sheet* 578,061 40,478,441
* Included in Staff Benefit Schemes (Refer Schedule 12 B)
Part -B NOTES TO ACCOUNTS (CONTD.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
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Expenses recognised in the Profit and Loss Account
Leave Encashment (Unfunded) Employee’s Gratuity Fund
Particulars 2007-08 2006-07 2007-08 2006-07
Current Service Cost 14,326,705 7,937,445 20,487,740 14,368,902
Interest Cost 3,530,540 1,974,324 7,361,534 3,678,846
Expected Return on Plan Assets - - (6,484,789) (2,541,538)
Net actuarial (gain)/loss recognized in the period 14,350,670 (895,693) 5,525,488 10,456,132
Total Expenses recognized in theProfit & Loss Account **32,207,915 **9,016,076 *26,889,973 *25,962,342
* Included in Contribution to Provident and other funds (Refer Schedule 17)** Included in Personnel Expenses (Refer Schedule 17)
In respect of the Employee’s Gratuity Fund, constitution of Plan Assets is not readily available from the Life Insurance Corporation ofIndia.
18 Foreign Currency Convertible Bonds
a) On 20th June 2007 the Company (‘Issuer’) issued Zero Coupon Foreign Currency Convertible Bonds (‘Bonds’ or ‘FCCB’)aggregating US $ 150 million in two tranches namely tranche “A” and “B” of US$ 75 Million each. The Bonds are convertible atany time on or after 31 July 2007 and up to the close of the business on 11 June 2012 by the holders of the Bonds (‘theBondholders’) into newly issued equity shares of the Company with full voting rights with par value of Rs 10 each (‘Shares’) atan initial conversion price (as defined in Terms and Conditions of the Bonds) of Rs 545.94 and Rs. 611. 45 per share for trancheA and tranche B respectively with a fixed rate of exchange on conversion of Rs 40.27=US$ 1.
The conversion price is subject to adjustment in certain circumstances. The Bonds are listed on the Singapore ExchangeSecurities Trading Limited (‘SGXST’).
The Bonds may be redeemed, in whole but not in part, at the option of the Issuer at any time on or after 20th June 2010 subjectto satisfaction of certain conditions. Unless previously redeemed, converted or purchased or cancelled, the bonds will beredeemed in US Dollars on June 21, 2012 at 135.07 percent of their principal amount for tranche “A” and at 139.39 percent ofthe principal amount for tranche “B”.
As at 31 March 2008 there has been no conversion of the Bonds into Shares.
b) The utilisation of the proceeds of USD 150,000,000 Zero Coupon Foreign Currency Convertible Bonds issued up to 31 March,2008 is as under:
Actual funds usedParticulars up to 31.03.2008
USD Rs.
Funds available 150,000,000 6,106,500,000*
Less: Capital Equipment 27,287,860 1,091,894,643
Investment in overseas subsidiary companies through loans/capital 27,338,896 1,106,096,697
Repayment of ECB loan 13,532,234 538,312,285
FCCB issue expenses ** 2,313,590 94,186,249
70,472,580 2,830,489,874
Add: Interest received 3,736,537 156,582,577
Unutilized Issue Proceeds in Deposits 83,263,957 3,338,884,676#
* Issue proceeds converted at Rs.40.71= 1USD
** Excludes issue expenses paid without utilising FCCB funds
# Reinstated as at year end rate
Part -B NOTES TO ACCOUNTS (CONTD.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
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c) Premium on redemption of FCCB
Particulars 31.03.2008 31.03.2007
Opening Balance - -
Add Provision for the year 304,784,267 -
Amount Utilised During the year - -
Utilized Amount reversed during the year - -
Closing Balance 304,784,267 -
Premium payable on redemption of FCCB accrued up to March, 31, 2008 calculated on prorate basis Rs. 304,784,267 hasbeen fully provided for and charged to Securities Premium Account. In the event that the conversion option is exercised by theholders of FCCB in the future, the amount of premium charged to the Securities Premium Account will be written back toSecurity Premium Account.
19 Warranty provisions relates to the estimated outflow in respect of warranty for products sold by the Company. Due to very nature ofsuch costs, it is not possible to estimate the timing/uncertainties relating to their outflows as well as expense from such estimates
2007-08 2006-07
Rs. Rs.
Balance as at the beginning of the year - -
Additions during the year 1,390,507 -
Utilised during the year 390,507 -
Balance as at the end of the year 1,000,000 -
20 Pursuant to the issuance of the Companies (Accounting Standard) Rules, 2006 by the Central Government on December 7, 2006,exchange gain amounting to Rs.118,876,637 on payables for fixed assets in foreign currency has been credited to Profit and Lossaccount.
21 Based on the information available with the company, the company has identified 8 vendors as Micro and small enterprises asdefined in the Micro, Small and Medium Enterprises Development Act, 2006. The balance due to such vendors as at 31.03.2008has been disclosed separately under “Current Liabilities and Provisions” (Refer Schedule 12).
Disclosure relating to dues Outstanding to Micro & Small Enterprises as defined in Micro Small & Medium EnterprisesAct 2006
2007-08
a) Amount remaining unpaid to Micro & Small Enterprises at the end of year Rs.
Principal Amount 213,604
Interest thereon 5,865
Total 219,469
b) Amount of Payments made to Micro & Small Enterprises beyond the appointed date during the year
Principal Amount 224,433
Interest Actually Paid u/s 16 of the Act. Nil
Total 224,433
c) Interest due & Payable (excluding interest u/s 16 of the Act) to Micro & Small Enterprises for delayed payments
Interest accrued during the year as per agreed terms. Nil
Interest payable during the year as per agreed terms. Nil
d) Interest accrued (including interest u/s 16 of the Act) and remaining unpaid at the end of the year
Interest accrued during the year. 5,865
Interest remaining unpaid during the year. 5,865
Part -B NOTES TO ACCOUNTS (CONTD.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
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22 Based on the results of the review of the countervailing duties imposed by the European Union, the European Commission hasannounced termination of the current countervailing duties on CD-Rs and allowed for their refund with effect from November 5,2006. Accordingly the Company has recognized the refund due for the period November 6, 2006 to March 31, 2007 amounting toRs.187,514,298 as ‘other income’, out of which Rs.173,236,343 has been subsequently realised.
23 Corresponding figures for the previous year have been regrouped/rearranged, wherever necessary to conform to current yearclassification.
By order of the Boardfor and on behalf of MOSER BAER INDIA LIMITED
Deepak Puri Ratul Puri Minni Katariya Yogesh Mathur R. SampathChairman and Executive Director Company Secretary Group CFO Vice President -Managing Director Financial Planning and Control
Place : New DelhiDate : May 22, 2008
Part -B NOTES TO ACCOUNTS (CONTD.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
115
MOSER BAER INDIA LIMITEDBALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I Registration Details
Registration No : 15418 State Code: 55Balance Sheet Date: 31.03.2008
II Capital Raised during the year (Amount in Rs.Thousands)
Public Issue : NIL Right Issue : NILBonus issue : 560,770 Private Placement: 5,529
III Position of Mobilisation and Deployment of Funds (Amount in Rs.Thousands)
Total Liabilities: 45,960,395 Total Assets: 45,960,395
SOURCE OF FUNDS:
Paid up Capital: 1,682,311 Reserves & Surplus : 18,013,184Share Warrant: - Unsecured Loans : 10,048,337Secured Loans : 16,124,959 Deferred Tax Laiblity: 91,604
APPLICATION OF FUNDS:
Net Fixed Assets : 28,376,841 Investments : 3,708,932Net Current Assets : 13,874,622 Misc.Expenditure : -Accumulated Losses: -
IV Performance of Company (Amount in Rs.Thousands)
Turnover : 20,873,061 Total Expenditure : 21,642,702Profit Before Tax : (769,641) Profit After Tax : (789,090)Earning per share in Rs: (4.70) Dividend Rate : 10%
V Generic Names of Three Principal Products/Services of the Company (as per monetary terms)
Item Code No: (ITC Code) 852320Product Description: MAGNETIC DISKItem Code No: (ITC Code) 852390Product Description: COMPACT DISK RECORDABLEItem Code No: (ITC Code) 847193.09Product Description: STORAGE UNITS
By order of the BoardDeepak Puri Ratul Puri Minni Katariya Yogesh Mathur R. SampathChairman and Executive Director Company Secretary Group CFO Vice President -Managing Director Financial Planning
and Control
Place: New DelhiDate: May 22, 2008
116
1. We have audited the attached Consolidated Balance Sheet of Moser Baer India Limited and its subsidiaries, joint ventureand associates (the “Group”), as at March 31, 2008, and the Consolidated Profit and Loss Account and ConsolidatedCash Flow Statement for the year ended on that date annexed thereto. These consolidated financial statements are theresponsibility of Moser Baer India Limited’s management. Our responsibility is to express an opinion on these financialstatements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are prepared,in all material respects, in accordance with an identified reporting framework and are free of material misstatements. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis forour opinion.
3. We did not audit the financial statements of certain subsidiaries, joint venture and associates of Moser Baer IndiaLimited. The financial statements of these subsidiaries reflect total assets of Rs. 250,464,012 as at March 31, 2008, totalrevenues and net cash outflow from operating activities of Rs. 281,481,234 and Rs. 219,957,521 respectively, for theyear ended on that date. The financial statements of the joint venture have been prepared for the year ended December31, 2007 and reflect total assets of Rs. 312,959,524 as at December 31, 2007, total revenues and net cash outflow fromoperating activities of Rs. 6,127,227 and Rs. 17,859,849 respectively, for the period October 10, 2007 to December 31,2007. The financial statements of one associate have been prepared for the year ended December 31, 2007 and theother for the year ended March 31, 2008 and collectively reflects the Group’s share of loss for the years ended on therespective dates of Rs. 57,234,908. These financial statements have been audited by other auditors whose report hasbeen furnished to us, and our opinion, in so far as it relates to the amounts included in respect of these subsidiaries, jointventure and associates, is based solely on the report of the other auditors.
4. We report that the consolidated financial statements have been prepared by the Company in accordance with therequirements of Accounting Standard 21, ‘Consolidated Financial Statements’, Accounting Standard 23, ‘Accounting forInvestments in Associates in Consolidated Financial Statements’ and Accounting Standard 27, ‘Financial Reporting ofInterests in Joint Ventures’ issued by the Institute of Chartered Accountants of India and on the basis of the separateaudited financial statements of Moser Baer India Limited, its subsidiaries, joint venture and associates included in theconsolidated financial statements.
5. On the basis of information and explanations given to us and on consideration of separate audit reports on individualaudited financial statements of Moser Baer India Limited and its aforesaid subsidiaries and associate, in our opinion, theconsolidated financial statements give a true and fair view in conformity with accounting principles generally accepted inIndia:
(i) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at March 31, 2008;
(ii) in the case of the Consolidated Profit and Loss Account, of the consolidated results of operations of the Groupfor the year ended on that date; and
(iii) in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the Group for the yearended on that date.
Anuradha TuliPartnerMembership Number F 85611For and on behalf of
Place: Gurgaon Price WaterhouseDate: May 22, 2008 Chartered Accountants
a u d i t o r s ’ r e p o r t t o t h e b o a r d o f d i r e c t o r s o nc o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
117
MOSER BAER INDIA LIMITEDCONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008
Schedule As at 31.03.2008 As at 31.03.2007Rs. Rs.
SOURCES OF FUNDS:SHAREHOLDERS’ FUNDS:Capital 1 1,682,311,040 1,116,011,840Preference Shares Issued By Subsidiary Companies 2 3,930,249,931 -Reserves and Surplus 3 16,395,036,772 19,354,897,405
22,007,597,743 20,470,909,245
Minority Interest (Refer Note 28 of Schedule 21 Part-B) - 12,278,010
LOAN FUNDS:Secured Loans 4 20,668,998,550 18,389,266,007Unsecured Loans 5 11,172,953,960 113,022,000Deferred Tax Liability (Net) 91,604,469 88,704,743(Refer Note 14 of Schedule 21 Part-B)
TOTAL 53,941,154,722 39,074,180,005
APPLICATION OF FUNDS:FIXED ASSETS: 6Gross Block 47,183,098,195 39,484,798,991Less: Depreciation 18,996,463,093 14,565,852,707
Net Block 28,186,635,102 24,918,946,284Capital Work-in-progress 6 5,303,696,232 3,892,084,093
33,490,331,334 28,811,030,377
Goodwill on Consolidation 322,760,711 50,551,009(Refer Note 2.5 of Schedule 21 Part-A and Note 2 of Schedule 21 Part-B)
INVESTMENTS 7 3,768,485,167 899,339,632
CURRENT ASSETS, LOANS AND ADVANCES:Inventories 8 7,247,478,532 6,130,628,467Sundry Debtors 9 3,767,537,933 3,341,747,029Cash and Bank 10 8,210,382,338 2,697,268,545Other Current Assets 11 159,264,791 178,165,685Loans and Advances 12 2,821,408,293 1,450,580,731
22,206,071,887 13,798,390,457
Less: CURRENT LIABILITIES AND PROVISIONS: 13Current Liabilities 5,095,820,862 4,084,961,509Provisions 750,673,515 400,169,961
5,846,494,377 4,485,131,470
Net Current Assets 16,359,577,510 9,313,258,987
TOTAL 53,941,154,722 39,074,180,005
SIGNIFICANT ACCOUNTING POLICIES 21AND NOTES TO ACCOUNTS
This is the Balance Sheet referred to in our The schedules referred to above form anreport of even date. integral part of the Balance Sheet.
By order of the Boardfor and on behalf of MOSER BAER INDIA LIMITED
Anuradha Tuli Deepak Puri Ratul Puri Minni KatariyaPartner Chairman and Executive Director Company SecretaryMembership Number-F-85611 Managing DirectorFor and on behalf ofPRICE WATERHOUSE Yogesh Mathur R. SampathChartered Accountants Group CFO Vice President -
Financial Planningand Control
Place: New DelhiDate: May 22, 2008
118
MOSER BAER INDIA LIMITEDCONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008
Schedule Year Ended 31.03.2008 Year Ended 31.03.2007Rs. Rs.
INCOME:Gross Sales (Refer Note 4 of Schedule 21 Part-A) 21,356,228,177 20,799,295,503[Includes share of Joint Venture Rs.365,319]Less: Excise Duty 14 656,129,508 528,187,777Less: Countervailing duty (Refer Note 25 of Schedule 21 Part B) - 430,736,604
Net Sales 20,700,098,669 19,840,371,122Other Income 15 1,068,850,740 766,148,355Increase in stock of Finished Goods, Work in Progress,Traded Goods and Film Rights 16 1,269,527,982 624,177,030
23,038,477,391 21,230,696,507EXPENDITURE:Purchase of Finished Goods and Film Rights 404,386,713 73,104,898Cost of Film Production 17,779,847 -Raw Materials and Components Consumed 9,085,961,998 7,948,753,955[Includes share of Joint Venture Rs. 581,137]Packing Material Consumed 2,009,985,621 1,777,496,746Stores, Spares and Tools Consumed 1,006,667,197 960,466,064Personnel Expenses 17 2,379,644,249 1,500,362,835Administration and Other Expenses 18 3,555,950,485 3,241,837,154Interest and Finance Charges 19 2,074,793,855 1,263,348,810Depreciation/ Amortisation 20 4,458,372,460 3,582,234,151
24,993,542,425 20,347,604,613(Loss)/ Profit before Tax (1,955,065,034) 883,091,894Tax Expense: (Refer Note 13 of Schedule 21 Part-A)Current Tax [net of provision written back in respect of earlier yearsof Rs. 2,399,128 (Previous year Rs. Nil) and including Wealth TaxRs 253,198 (Previous Year Rs. 105,595)] (1,043,106) 260,214Fringe Benefit Tax (Includes Rs. 1,286,727 (Previous Year Rs. 308,518)provision made for earlier years) 20,994,358 12,722,790Deferred Tax (Refer Note 14 of Schedule 21 Part-B) 2,899,726 88,704,743
Net (Loss)/ Profit after Tax (1,977,916,012) 781,404,147Minority Interest (Share in Loss) (Refer Note 28 of Schedule 21 Part-B) 12,278,010 9,646,113Share in Loss of Associate (57,234,908) (2,782,493)
Net (Loss)/ Profit for the year (2,022,872,910) 788,267,767APPROPRIATIONS:Proposed Dividend:-on Equity Shares (including Rs.266,751 (Previous Year Rs. Nil) 168,497,855 167,401,776paid for previous year)Corporate Tax on Proposed Dividend (including Rs. 45,334 28,636,210 28,449,932(Previous Year Rs. Nil) paid for previous year)Transferred to General Reserve (1,434,732,662) 55,265,000
Balance carried to Balance Sheet (785,274,313) 537,151,059Earnings Per Share (Face Value of Rs. 10 each)Basic (12.05) 4.71Diluted (12.05) 4.68(Refer Note 19 of Schedule 21 Part-B)
SIGNIFICANT ACCOUNTING POLICIES 21AND NOTES TO ACCOUNTS
This is the Profit & Loss Account referred to in our The schedules referred to above form anreport of even date. integral part of the Profit and Loss Account.
By order of the Boardfor and on behalf of MOSER BAER INDIA LIMITED
Anuradha Tuli Deepak Puri Ratul Puri Minni KatariyaPartner Chairman and Executive Director Company SecretaryMembership Number-F-85611 Managing DirectorFor and on behalf ofPRICE WATERHOUSE Yogesh Mathur R. SampathChartered Accountants Group CFO Vice President -
Financial Planningand Control
Place: New DelhiDate: May 22, 2008
119
MOSER BAER INDIA LIMITEDCONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008
Year Ended 31.03.2008 Year Ended 31.03.2007Rs. Rs.
Cash flow from operating activities:Net (loss)/ profit before tax (1,955,065,034) 883,091,894Adjustments for:
Depreciation 4,458,372,460 3,582,234,151Interest Expense 1,983,489,340 1,188,974,786Interest Income (374,979,832) (165,014,114)Income from Investment - Dividends (26,956,938) -(Profit)/ Loss on Fixed Assets Sold (5,939,384) 227,244(Profit)/ Loss on Sale of Current Investments (5,045,108) -Debts/ Advances Written off 8,343,968 3,775,949Provision for Bad and Doubtful Debts/ Advances 18,521,647 120,522,719Liability no longer required written back (45,826,037) (18,533,320)Provision for doubtful debts written back (10,994,000) -Provision for Gratuity & Leave Encashment 11,974,380 40,439,752Provision for warranty expenses 3,720,265 -Stock Written-off 24,501,334 22,770,095Goods damaged in transit 1,509,749 -Project Expenses Written-off - 29,368,080Unrealised foreign exchange (gain)/ loss (207,103,464) 28,085,648Prior Period (Income)/Expenses (Net) (2,891,619) -
Operating profit before working capital changes 3,875,631,727 5,715,942,884
Adjustments for changes in working capital:(Increase)/Decrease in Sundry Debtors (246,426,818) 349,252,829(Increase)/Decrease in Other Receivables (1,158,202,160) 140,661,925(Increase)/Decrease in Inventories (1,131,757,551) (1,668,391,642)Increase/(Decrease) in Trade and Other Payables 243,878,446 1,347,711,064
Cash generated from operations 1,583,123,644 5,885,177,060Taxes (Paid) / Received (Net of TDS) (144,811,959) (73,092,591)Prior Period Income/(Expenses) (Net) 2,891,619 -
Net cash from operating activities 1,441,203,304 5,812,084,469
Cash flow from Investing activities:Purchase of Fixed Assets (8,298,810,009) (5,864,067,345)Proceeds from Sale of Fixed Assets 63,788,355 4,357,044Proceeds from Sale of Current Investments 3,112,410,586 -Purchase of Investments (6,021,745,921) (521,520,000)Interest Received 343,664,545 161,938,742Dividend Received 26,956,938 15,977,055Amount Paid on Acquisition of Interest in Joint Venture (557,845,000) -Amount Paid on Acquisition of Subsidiary - (111,220,539)
Net cash used in investing activities (11,331,580,506) (6,314,535,043)
(Contd...)
120
This is the Cash Flow referred to in our By order of the Boardreport of even date. for and on behalf of MOSER BAER INDIA LIMITED
Anuradha Tuli Deepak Puri Ratul Puri Minni KatariyaPartner Chairman and Executive Director Company SecretaryMembership Number-F-85611 Managing DirectorFor and on behalf ofPRICE WATERHOUSE Yogesh Mathur R. SampathChartered Accountants Group CFO Vice President -
Financial Planningand Control
Cash flow from financing activities:Proceeds from issue of Share Capital (including Share Premium) 121,119,433 19,409,383Proceeds from issue of Preference shares by subsidiary companies 3,930,249,931 -Receipts, excludes (Gain) on account of exchange fluctuation of Rs107,713,958 5,954,198,889 3,415,974,795[Previous year Loss Rs.133,337,119] on reinstatement of foreign currency loanRepayment of long term loans (3,122,246,276) (2,508,496,943)Receipts, Zero Coupon Foreign Currency Convertible Bonds 6,106,500,000 -Proceeds from Short Term Borrowings (Net) 4,430,795,180 664,512,334Interest Paid (2,072,632,742) (1,175,806,278)Dividend Paid (168,146,331) (111,837,650)Dividend Tax Paid (28,495,266) (15,639,690)Issue expenses of Foreign Currency Convertible Bonds (103,376,854) -
Net cash from financing activities 15,047,965,964 288,115,951
Net Increase/ (Decrease) in Cash & Cash Equivalents 5,157,588,761 (214,334,623)
Cash and cash equivalents at beginning of the year 2,697,268,545 2,899,984,934Cash and Cash Equivalents acquired on acquisition of Joint Venture 355,525,031 -Cash and Cash Equivalents acquired on acquisition of Subsidiary - 11,618,234
Cash and cash equivalents at end of the year 8,210,382,338 2,697,268,545
Cash and cash equivalents compriseCash, Cheques & Drafts (in hand) and Remittances in transit 217,934,702 465,713,892Call Account 416,556 -Fixed Deposits 7,462,033,866 1,694,821,820Balance with Scheduled Banks 523,368,891 536,732,833Balance with Non-Scheduled Banks 6,628,323 -
8,210,382,338 2,697,268,545
Notes :1. The above Cash flow statement has been prepared under the indirect method set out in AS-3 issued by the Institute of Chartered
Accountants of India.2. Figures in brackets indicate cash outgo.3. Previous period figures have been regrouped and recast wherever necessary to conform to the current period classification.4. Cash and cash equivalents includes Rs. 1,418,263,875 (Previous Year Rs.947,928,851) which are not available for use by the Company.
(Refer schedule 10 in the accounts)
ACCOUNTING POLICIES AND NOTES ON ACCOUNTS(Form an integral part of the Cash Flow Statement)
MOSER BAER INDIA LIMITEDCONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008
Year Ended 31.03.2008 Year Ended 31.03.2007Rs. Rs.
Place: New DelhiDate: May 22, 2008
121
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31,2008
As at 31.03.2008 As at 31.03.2007Rs. Rs.
SCHEDULE 1 - CAPITAL:Authorised:207,500,000 (Previous Year 142,500,000) Equity Shares of Rs.10 each 2,075,000,000 1,425,000,000750,000 (Previous Year 750,000) Preference Shares of Rs. 100 each 75,000,000 75,000,000
2,150,000,000 1,500,000,000Issued, Subscribed and Paid-up:168,231,104 (Previous year 111,601,184) Equity Shares of Rs.10 each fully paid 1,682,311,040 1,116,011,840(Refer Note below and Note 16 of Schedule 21 Part-B)
TOTAL 1,682,311,040 1,116,011,840
Note:56,077,035 Equity Shares of Rs. 10 each issued as fully paid Bonus Shares during thethe year 2007-08 by capitalisation of General Reserve (Refer Note 15 of Schedule 21 Part-B)
SCHEDULE 2- PREFERENCE SHARES ISSUED BY SUBSIDIARY COMPANIES:23,784,606 Fully Convertible Preference shares of GBP 1 each fully paid in cash (Refer 1,965,749,931 -Note 4(a) of Schedule 21 Part-B)
196,450,000 Non-Cumulative, Fully Convertible Re.1 Dividend Bearing Preference shares of 1,964,500,000 -Rs. 10 each fully paid in cash (Refer Note 4(b) of Schedule 21 Part-B)
TOTAL 3,930,249,931 -
SCHEDULE 3 - RESERVES AND SURPLUS:Capital Reserve:As per last Balance Sheet 181,440,000 181,440,000
181,440,000 181,440,000
Share Premium Account:As per last Balance Sheet 8,910,146,987 8,891,620,004Addition during the year (Refer Note 16 (a) of Schedule 21 Part-B) 116,172,343 18,526,983Less:- Provision for redemption of Zero Coupon Foreign Currency Convertible Bonds 304,784,267 -(Refer Note 22(c) of Schedule 21 Part-B)Less:- Issue expenses of Zero Coupon Foreign Currency Convertible Bonds 103,376,854 -(Refer Note 22(b) of Schedule 21 Part-B)
8,618,158,209 8,910,146,987Profit and Loss Account Balance:As per last Balance Sheet 785,274,313 248,123,254Additions during the year (785,274,313) 537,151,059
- 785,274,313Foreign Currency Translation Reserve:As per last Balance Sheet (25,638,067) 1,445,687Additions during the year 112,905,470 (27,083,754)
87,267,403 (25,638,067)General Reserve:As per last Balance Sheet 9,503,674,172 9,450,180,796(Less)/ Add: Transferred from Profit & Loss Account during the year (1,434,732,662) 55,265,000Less: Utilised during the year (Refer Note 15 of Schedule 21 Part-B) 560,770,350 -Less: Amounts transferred on implementation of Accounting Standard-15 (Revised)- Employee Benefits (Refer Note 21 of Schedule 21 Part-B) - 1,771,624
7,508,171,160 9,503,674,172
TOTAL 16,395,036,772 19,354,897,405
122
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31,2008
As at 31.03.2008 As at 31.03.2007Rs. Rs. Rs. Rs.
SCHEDULE 4 - SECURED LOANS:(Refer Note 12 of Schedule 21 Part-A)
Term Loans (Refer notes below):From Banks:Rupee Loans 12,619,923,292 10,128,280,420Interest Accrued and due on Rupee Loans 52,361,921 12,672,285,213 56,313,415 10,184,593,835
Foreign Currency Loans 2,445,947,599 2,881,191,742Interest Accrued and due on Foreign Currency Loans 1,021,149 2,446,968,748 - 2,881,191,742
15,119,253,961 13,065,785,577From Others:Foreign Currency Loans 1,061,118,750 434,175,000
16,180,372,711 13,499,960,577Other Loans (Refer notes below):
Short Term Loans from Banks:Secured by hypothecation of stock-in-trade and book debts 3,787,684,420 4,398,973,748Interest Accrued and Due 749,662 3,788,434,082 17,208,455 4,416,182,203
Foreign Currency Loan 535,508,610 -Interest Accrued and Due 1,182,041 536,690,651 - -
Secured by lien on Fixed Deposits 163,501,106 473,056,689
From Others:Secured by hypothecation of specific vehicles - 66,538
4,488,625,839 4,889,305,430
TOTAL 20,668,998,550 18,389,266,007
Notes:
1 Term Loans from State Bank of India, Canara Bank, Federal Bank, Union Bank of India, SyndicateBank, United Bank of India, State Bank of Saurashtra, Indian Bank, State Bank of Mysore, StateBank of Indore, Vijaya Bank, Punjab National Bank, Oriental Bank of Commerce, UCO Bank, StateBank of Patiala, Bank of Baroda, Bank of Maharashtra, Jammu and Kashmir Bank, State Bank ofBikaner and Jaipur and Foreign Currency Loans from Banks/ Financial Institutions are secured byway of first mortgage and charge on all the immovable and movable fixed assets, present and future,of the company (subject to prior charge on specified movables as otherwise stated, including infavour of the company’s bankers by way of security for the borrowing for working capital), rankingpari-passu with charges for the Term Loans.
2 Rupee Term loan from EXIM Bank, Foreign Currency Term Loans from Indian Overseas Bank andUnion Bank of India and Short Term loan from State Bank of India are secured by first pari passucharge by way of hypothecation over the entire moveable fixed assets (both present and future) ofthe company.
3 Rupee Term loan from Punjab National Bank and Foreign Currency Term Loan from InternationalFinance Corporation are secured by way of first pari passu charge on all the moveable fixed assets(both present and future) of the company.
4 Short Term loans from Citi Bank, Punjab National Bank, State Bank of Saurashtra, Vijaya Bank, TheBank of Nova Scotia, State Bank of India and Union Bank of India are further secured by way ofsecond charge on all the immovable properties.
5 Short term loan from Oriental Bank of Commerce is secured by hypothecation of stock-in-tradeincluding all current assets of the Company on pari-passu basis and further secured by way ofsecond pari-passu charge over the fixed assets of the Company.
6 Short term loan from State Bank of Saurashtra, UCO Bank and Bank of Baroda are secured by afirst charge by way of hypothecation, on pari-passu basis on all the present and future current assetsof the company and further secured by way of a second charge on pari-passu basis on all themoveable fixed assets of the company.
7 Term Loans repayable within one year Rs.4,276,726,532 (Previous year Rs. 3,875,385,609). OtherLoans repayable within one year Rs. Nil (Previous year Rs. 66,538).
123
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31,2008
As at 31.03.2008 As at 31.03.2007Rs. Rs. Rs. Rs.
SCHEDULE 5 - UNSECURED LOANS:(Refer Note 12 of Schedule 21 Part-A)
Short term loans from Bank:Rupee Loan 5,000,000,000Interest Accrued and Due 14,920,701 5,014,920,701 -
Foreign Currency Loan 90,033,613 113,022,000
Other Loans:Foreign Currency Convertible Bonds(Refer Note 22 of Schedule 21 Part-B)Zero Coupon Tranche A Convertible Bonds Due2012 USD 75,000,000 3,008,250,000 -Zero Coupon Tranche B Convertible Bonds Due2012 USD 75,000,000 3,008,250,000 -
VAT Deferment Loan 19,043,249 -(Repayable after a period of 5 years)
11,140,497,563 113,022,000Share in Joint Venture 32,456,397 -
TOTAL 11,172,953,960 113,022,000
SCHEDULE 6 - FIXED ASSETS:(Refer Notes 5, 6, 9, 10, 14 and 16 of Schedule 21 Part-A)
DESCRIPTION GROSS BLOCK DEPRECIATION/ AMORTISATION NET BLOCK
As at Additions/ Deductions As at As at For the Deductions As at As at As at01.04.2007 Adjustments* 31.03.2008 01.04.2007 Year * 31.03.2008 31.03.2008 31.03.2007
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.Tangible AssetsLesehold Land (Refer Note 3 below) 273,666,570 - - 273,666,570 14,406,983 2,966,302 - 17,373,285 256,293,285 259,259,587Buildings (Refer Note 3 below) 2,767,211,210 1,109,263,300 111,880 3,876,362,630 399,273,563 104,981,496 111,880 504,143,179 3,372,219,451 2,367,937,647Leasehold Improvements 27,373,143 2,775,655 - 30,148,798 10,399,412 3,873,780 - 14,273,192 15,875,606 16,973,731Plant & Machinery, Electrical Installationsand Other Equipments 35,668,214,550 5,328,842,558 129,447,067 40,867,610,041 13,902,037,349 3,983,315,295 65,391,093 17,819,961,551 23,047,648,490 21,766,177,201(Refer Notes 1,2 and 3 below)Furniture, Fixtures and 194,651,363 62,871,252 - 257,522,615 60,527,609 19,762,154 - 80,289,763 177,232,852 134,123,754Office Equipments(Refer Note 3 below)Computers 129,833,149 38,823,972 - 168,657,121 67,473,138 22,863,459 - 90,336,597 78,320,524 62,360,011Vehicles 24,258,183 7,961,474 1,275,538 30,944,119 7,793,145 2,598,172 883,066 9,508,251 21,435,868 16,465,038Intangible AssetsSoftware 36,707,385 7,892,171 - 44,599,556 18,834,659 8,132,268 - 26,966,927 17,632,629 17,872,726Technical Knowhow 154,223,015 139,524,578 - 293,747,593 69,409,067 20,702,225 - 90,111,292 203,636,301 84,813,948Copyrights 60,458,375 1,020,467,941 - 1,080,926,316 2,999,947 244,523,336 - 247,523,283 833,403,033 57,458,428Marketing and Distribution Rights 147,391,553 27,683,201 - 175,074,754 12,206,790 65,252,884 - 77,459,674 97,615,080 135,184,763Leased AssetsVehicles (Refer Note 11 (b) of 810,495 - 810,495 - 491,045 278,925 769,970 - - 319,450Schedule 21 Part—B)
39,484,798,991 7,746,106,102 131,644,980 47,099,260,113 14,565,852,707 4,479,250,296 67,156,009 18,977,946,994 28,121,313,119 24,918,946,284Share in Joint Venture - 83,838,082 - 83,838,082 - 18,516,099 - 18,516,099 65,321,983 -
TOTAL 39,484,798,991 7,829,944,184 131,644,980 47,183,098,195 14,565,852,707 4,497,766,395 67,156,009 18,996,463,093 28,186,635,102 24,918,946,284
Capital Work in Progress:Capital Work in Progress, includingcapital advances of Rs. 715,093,443(Previous Year Rs.416,543,482) 5,066,490,861 3,415,412,684Expenditure pending allocation 201,261,523 460,869,445(Refer Note 13 of Schedule 21 Part-B)Intangible Assets Under Development - 15,801,964TOTAL 5,267,752,384 3,892,084,093Share in Joint Venture 35,943,848 -
Grand Total 39,484,798,991 7,829,944,184 131,644,980 47,183,098,195 14,565,852,707 4,497,766,395 67,156,009 18,996,463,093 33,490,331,334 28,811,030,377
Previous Year ** 34,936,740,065 4,666,517,881 118,458,955 39,484,798,991 10,617,357,936 4,062,369,438 113,874,667 14,565,852,707 28,811,030,377
Notes:1. Gross Block and additions to Plant and Machinery have been increased by Rs. Nil (Previous Year increased by Rs. 195,147,567) on account of foreign exchange differences.2. Borrowing Costs capitalised during the period Rs. 135,029,745 (Previous Year Rs. 29,045,221).3. Gross Block of fixed assets include Rs. 1,587,630,345 (Previous Year Rs. 399,283,081) relating to the SEZ division of the Company.* Additions/ Adjustments to fixed assets and current year depreciation and amortization include Rs.44,958,979 (Previous Year Rs.Nil) and Rs.36,158,072 (Previous Year Rs.Nil) respectively on account of translation of
functional currency into reporting currency.** Additions to the block of assets and depreciation includes Rs. 493,732,169 and Rs. 477,649,203 of a subsidiary company acquired during the previous year.
124
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31,2008
As at 31.03.2008 As at 31.03.2007Rs. Rs. Rs. Rs.
SCHEDULE 7 - INVESTMENTS:(Refer Note 7 of Schedule 21 Part-A and Note 12 ofSchedule 21 Part-B)
Long TermInvestments in Others (Trade and unquoted):
CAPCO Luxembourg S.a.r.l.1 Equity share of Euro 125 each 4,961 4,96163,366 (Previous Year 63,366) Preferred Equity Certificatesof Euro 125 each 320,668,823 320,673,784 320,668,823 320,673,784
The Solaria Corporation6,153,846 Shares Series B Preferred Stock of USD 0.001 each 185,293,200 173,840,0003,516,606 Shares Series C Preferred Stock ofUSD 0.001 each* 198,454,978 -1,018,866 Shares Series C 1 Preferred Stock ofUSD 0.001 each* 57,498,346 441,246,524 - 173,840,000* acquired during the year
Stion Corporation1,000,000 Shares of Series A Preferred Stock ofUSD 0.0001 each 45,302,150 43,460,00082,912 Shares of Series B-1 Preferred Stock ofUSD 0.0001 each (acquired during the year) 7,693,234 52,995,384 - 43,460,000
Sol Focus, Inc.7,000,000 (Previous Year 7,000,000) Shares of Series APreferred Stock of USD 0.0001 each 327,047,185 304,220,0004,950,495 (Previous Year Nil) Shares of Series BPreferred Stock of USD 0.0001 each 470,579,375 797,626,560 - 304,220,000
Sol Focus Europe, Inc.4,357,298 (Previous Year Nil) Shares of Series APreferred Stock of USD 0.0001 each 282,195,375 -
Skyline Solar Inc.8% Convertible Promissory Note(Refer Note 3 of Schedule 21 Part-B) 9,925,000 -
Global Data Media FZ-LLC (Associate)7,194 (Previous Year 7,194) Shares of AED 1,000 each - 57,145,848
Moser Baer Infrastructure Ltd (Associate)3,170,000 (Previous Year Nil) Equity Shares of Rs.10/- each,Rs.2/- paid up 6,340,000260,000 (Previous Year Nil) Equity Shares of Rs.10/- each 2,291,086 8,631,086 -
Moser Baer Projects Private Ltd.510,000 (Previous Year Nil) Equity Shares of Rs 10/- each 5,100,000 -
Short Term
Current (Non-Trade and unquoted)
Investment in 1 Year USD Yield Enhance Certificate ofRabobank with maturity date of November 12, 2008 601,500,000 -
Investments in Mutual funds 1,248,591,454 1,850,091,454 - -
TOTAL (aggregate value of unquoted investments) 3,768,485,167 899,339,632
125
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31,2008
As at 31.03.2008 As at 31.03.2007Rs. Rs. Rs. Rs.
SCHEDULE 8 - INVENTORIES:(Refer Note 8 of Schedule 21 Part-A)
Stores and spare parts 990,826,510 761,147,633including in transit Rs. 18,279,333 (Previous Year Rs. 64,086,857)-net of provision for non-moving stock Rs. 232,201(Previous Year Rs. 232,201)
Raw Materials and Components 1,868,189,372 2,350,674,839including in transit Rs. 448,959,047 (Previous Year Rs. 482,851,194)
Packing Material 152,516,857 153,982,867including in transit Rs. 13,365,789 (Previous Year Rs. 32,639,129)-net of provision for non-moving stock Rs. 8,003,246(Previous Year Rs.8,003,246)
Work in Progress 2,044,167,868 906,604,141Manufactured Finished Goods 1,952,785,748 1,951,548,856Traded Goods 65,316,046 6,670,131including in transit Rs. 65,301,969 (Previous Year Rs. Nil)Film Released less amortisation 3,220,153 -Films Completed and not released 49,532,202 -Films in Production 27,447,124 -Rights of Films (Theatrical and Other Commercial Rights) 90,460,728 -
7,244,462,608 6,130,628,467Share in Joint Venture 3,015,924 -
TOTAL 7,247,478,532 6,130,628,467
SCHEDULE 9- SUNDRY DEBTORS:
Debts outstanding for a period exceeding six monthsConsidered Good - Unsecured 226,685,026 138,238,294Considered Doubtful - Unsecured 182,286,693 170,860,703
408,971,719 309,098,997Less: Provision for Doubtful Debts 182,286,693 226,685,026 170,860,703 138,238,294
Other DebtsConsidered Good - Secured 321,249,074 -Considered Good - Unsecured 3,204,640,848 3,203,508,735Considered Doubtful - Unsecured 485,653 -
3,526,375,575 3,203,508,735Considered Doubtful 485,653 3,525,889,922 - 3,203,508,735
3,752,574,948 3,341,747,029Share in Joint Venture 14,962,985 -
TOTAL 3,767,537,933 3,341,747,029
126
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31,2008
As at 31.03.2008 As at 31.03.2007Rs. Rs. Rs. Rs.
SCHEDULE 10 - CASH AND BANK:Cash on hand including cheques, drafts and travellers’ cheques 28,773,272 24,160,461Remittance in Transit 189,161,430 441,553,431
Balances with Scheduled Banks:Current Accounts 519,414,426 531,598,493Fixed Deposit Accounts (Refer Note 1 below) 7,271,592,801 1,694,821,820Unpaid Dividend Account 3,791,342 4,269,146Call Account 416,556 -E.E.F.C Accounts 163,123 7,795,378,248 865,194 2,231,554,653
Balances with Other Banks (Refer Note 2 below):Current Account with UBS AG 464,848 -Current Account with Tatra Banka, a.s. 383,741 -Current Account with Uni Credit Banka Slovenija d.d. 3,357,660 -Current Account with Royal Bank of Scotland International 2,422,074 -
8,019,941,273 2,697,268,545Share in Joint Venture 190,441,065 -
TOTAL 8,210,382,338 2,697,268,545
Notes:1) Includes -
a) Rs. 1,414,472,533 (Previous Year Rs. 943,659,705) whichare subject to lien with the bankers.
b) Rs. 2,732,952,784 (Previous Year Rs. Nil) out of proceeds ofZero Coupon Foreign Currency Convertible Bonds.
2) Maximum balances outstanding at any time during the year were:- UBS AG Rs. 1,979,392,060 (Previous year Rs. Nil)- Tatra Banka, a.s. Rs. 383,741 (Previous year Rs. Nil)- Uni Credit Banka Slovenija d.d. Rs. 341,002,531 (Previous yearRs. Nil)- Royal Bank of Scotland International Rs. 2,477,247 (Previousyear Rs. Nil)
SCHEDULE 11- OTHER CURRENT ASSETS:Interest Accrued on Fixed Deposits (Refer Note below) 70,342,918 39,040,778Other Receivables 88,815,281 138,039,770Other Interest Accrued 106,592 -Fixed Assets Held for Sale (at net book value or estimated netrealisable value, whichever is lower) - 1,085,137
TOTAL 159,264,791 178,165,685
Note:Includes interest accrued on Fixed Deposits out of proceeds of ZeroCoupon Foreign Currency Convertible Bonds of Rs. 6,954,463(Previous Year Rs. Nil).
SCHEDULE 12- LOANS AND ADVANCES:(Unsecured - Considered Good, unless otherwise stated)
Advances recoverable in cash or kind or for value to be received 1,909,544,045 983,803,819Considered Doubtful 9,373,975 -
1,918,918,020 983,803,819Less: Provision for Doubtful Advances 9,373,975 1,909,544,045 - 983,803,819Balance with Excise Authorities 124,758,090 116,168,577Earnest Money/Security Deposits 381,619,683 115,631,695Advance Tax/Tax Deducted at Source 402,212,756 234,976,640
2,818,134,574 1,450,580,731Share in Joint Venture 3,273,719 -
TOTAL 2,821,408,293 1,450,580,731
Note:Amount due from a Director as at March 31, 2008 - Rs. Nil (Previousyear Rs. Nil). Maximum balance due at any time during the yearfrom Director and Officer of the Company was Rs. 55,851 (Previousyear Rs. 92,894)
127
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31,2008
As at 31.03.2008 As at 31.03.2007Rs. Rs. Rs. Rs.
SCHEDULE 13- CURRENT LIABILITIES AND PROVISIONS:
A. Current Liabilities:(Refer Note 24 of Schedule 21 Part-B)
Acceptances 671,561,507 798,892,548Sundry Creditors- Total outstanding dues of micro enterprises andsmall enterprises 213,604 -- Total outstanding dues of creditors other thanmicro enterprises and small enterprises 3,897,354,932 3,897,568,536 2,949,272,941 2,949,272,941Advances from Customers 27,342,981 715,892Share Application Money Pending Allotment - 581,760Advance Against Sale of Fixed Assets - 6,640,000Unclaimed Dividend * 3,788,998 4,266,802Other Liabilities 228,533,187 208,971,313Book Overdraft 1,188,832 809,058Security Deposits 193,173,461 92,176,473Interest accrued but not due on Loans 32,181,465 22,634,722
5,055,338,967 4,084,961,509Share in Joint Venture 40,481,895 -
TOTAL 5,095,820,862 4,084,961,509
* The above amount will be credited to Investor Educationand Protection Fund as and when due.
B. Provisions:(Refer Notes 3, 11 and 13 of Schedule 21 Part-A)
Taxation- Current Tax [(including Wealth Tax Rs. 525,214(Previous Year Rs.258,638)] 90,967,944 91,885,407- Fringe Benefit Tax 59,092,812 25,975,287Premium on Redemption of Zero Coupon ForeignCurrency Convertible Bonds 304,784,267 -(Refer Note 22 (c) of Schedule 21 Part-B)Proposed Dividend 168,231,104 167,401,776Corporate tax on Dividend 28,590,876 28,449,932Staff Benefit Schemes 99,006,512 86,457,559
TOTAL 750,673,515 400,169,961
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MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,2008
Year Ended 31.03.2008 Year Ended 31.03.2007Rs. Rs. Rs. Rs.
SCHEDULE 14- EXCISE DUTY:Excise Duty paid 674,508,788 541,079,948Less: Excise duty on Closing Stock 37,407,532 19,028,252Add: Excise duty on Opening Stock 19,028,252 6,136,081
TOTAL 656,129,508 528,187,777
SCHEDULE 15- OTHER INCOME:(Refer Notes 4 and 12 of Schedule 21 Part-A)
Interest Received (Gross):a) On Deposits with banks 363,652,784 165,014,114b) On Income Tax Refunds 10,175,349 -c) On Others 106,592 -Tax Deducted at Source Rs. 34,134,323(Previous Year Rs. 36,795,558) 373,934,725 165,014,114
Excess provisions and unclaimed creditbalances written back (including priorperiod income of Rs.8,716,426) 45,826,037 18,533,320Exchange Fluctuation (Net) 149,935,223 349,376,754Profit on cancellation of forward contracts (Net) - 120,617,065Profit on sale of Fixed Asset 5,939,384 -Profit on sale of Current Investment (others) 5,045,108 -Dividend from Current Investments (others) 26,956,938 -Refund of Countervailing duty 187,514,298 -Provision for doubtful debts written back 10,994,000 -Miscellaneous Income (including prior periodincome of Rs.2,397,818) 256,943,119 112,607,102
1,063,088,832 766,148,355Share in Joint Venture 5,761,908 -
TOTAL 1,068,850,740 766,148,3550
SCHEDULE 16-INCREASE/ (DECREASE) IN STOCKOF FINISHED GOODS AND WORK IN PROGRESS:
Closing Stock:Finished Goods 1,952,785,748 1,951,548,856Work in Progress 2,044,167,868 906,604,141Traded Goods and Film Rights 155,776,774 6,670,131
4,152,730,390 2,864,823,128
Less: Opening StockFinished Goods 1,951,548,856 1,319,209,362Work in Progress 906,604,141 899,748,788Traded Goods 6,670,131 8,795,777
2,864,823,128 2,227,753,927
Excise duty on Finished Goods (18,379,280) (12,892,171)
TOTAL INCREASE 1,269,527,982 624,177,030
SCHEDULE 17- PERSONNEL EXPENSES:Salaries, Allowances and Bonus 2,028,657,725 1,268,120,897Contribution to Provident and other funds 152,048,580 98,792,487Employee Welfare Expenses 155,299,131 113,009,741Leave Encashment 38,609,938 20,439,710
2,374,615,374 1,500,362,835Share in Joint Venture 5,028,875 -
TOTAL 2,379,644,249 1,500,362,835
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MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,2008
Year Ended 31.03.2008 Year Ended 31.03.2007Rs. Rs.
SCHEDULE 18- ADMINISTRATION & OTHER EXPENSES:(Refer Note 14 of Schedule 21 Part-A)
Power and Fuel 1,355,722,421 1,059,498,062Commission on Sales 3,393,808 4,666,817Rent (Including Lease Rent) 100,248,985 80,757,110(Refer Note 11 (a) of Schedule 21 Part-B)Repairs & Maintenance:- Building 5,114,175 1,347,835- Plant & Machinery 67,194,411 33,702,449- Others 68,112,177 48,015,570Freight and Forwarding (Net) 501,101,628 631,068,780Insurance 144,816,197 120,826,238Rates and Taxes 19,137,974 10,819,520Director’s Sitting Fees 2,282,385 2,333,190Commission to Non Executive Directors - 2,195,729Donation 15,467,169 509,500Remuneration to Auditors 22,731,960 20,140,697Royalty 371,705,020 357,967,023Travelling and Conveyance 104,103,961 125,170,745Bad Debts 325,753 200,864Advances Written Off 8,018,215 3,575,085Provision for doubtful debts 9,147,672 120,522,719Provision for doubtful advances 9,373,975 -Research and Development Expenses 11,398,438 2,895,078Miscellaneous Expenses (including prior periodexpenses of Rs.8,222,625) 678,833,242 563,258,724Stock Written Off 24,501,334 22,770,095Project Expenses Written off (Refer Note 26 of Schedule 21 Part-B) - 29,368,080Preliminary Expenses 22,500 -Loss on sale of Fixed Assets (Net) - 227,244Loss on cancellation of forward contracts (Net) 2,844,859 -
3,525,598,259 3,241,837,154Share in Joint Venture 30,352,226 -
TOTAL 3,555,950,485 3,241,837,154
SCHEDULE 19- INTEREST & FINANCE CHARGES:(Refer Note 10 of Schedule 21 Part-A)
Interest:On Fixed Loans 1,478,557,210 883,286,606Others 503,253,870 305,688,180
Finance Charges 21,419,213 25,658,150Bank Charges 69,822,928 48,715,874
2,073,053,221 1,263,348,810Share in Joint Venture 1,740,634 -
TOTAL 2,074,793,855 1,263,348,810
SCHEDULE 20- DEPRECIATION/ AMORTISATION:(Refer Note 6 of Schedule 21 Part-A)
Depreciation on Fixed Assets [Including share of Joint Venture] 4,461,608,323 3,584,720,235(Refer Schedule 6)Less: Depreciation on assets used for trial run/
testing for new intangible assets under development 3,235,863 2,486,084
Depreciation charged to Profit and Loss 4,458,372,460 3,582,234,151
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MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
Part - A SIGNIFICANT ACCOUNTING POLICIES
1 BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements (CFS) of the Company (Parent), its subsidiaries, associates and the jointly controlled enterprise(Joint Venture) (the ‘Group’) are prepared to comply in all material aspects with all the applicable accounting principles in India, theapplicable accounting standards notified under section 211(3C) of the Companies Act, 1956 and the relevant provisions of theCompanies Act, 1956.
2 CONSOLIDATION PROCEDURE
2.1 The CFS are prepared in accordance with Accounting Standard (AS-21) “Consolidated Financial Statements” issued by the Instituteof Chartered Accountants of India (ICAI). The financial statements of the Parent and its subsidiaries are combined on a line by linebasis by adding together sums of like nature, comprising assets, liabilities, income and expenses and after eliminating intra-groupbalances/ transactions.
2.2 The Financial Statements of certain foreign subsidiaries, associate and the joint venture, are prepared by them on the basis ofgenerally accepted accounting principles, local laws and regulations as prevalent in their respective countries and such financialstatements are considered for consolidation. The effect of adjustments on account of variance in accounting policies of suchassociate and joint venture vis -à-vis those of the parent is not material, and accordingly, not considered. Also, refer notes 20 and21 below.
2.3 Subsidiaries are consolidated on the date on which effective control is transferred to the Group and are no longer consolidatedfrom the date of disposal.
2.4 The financial statements of the subsidiaries have been drawn for the period from 1st April, 2007 or date of incorporation/ acquisitionto 31st March, 2008, as mentioned in note 1 of Schedule 21 Part - B.
2.5 The Parent’s cost of its investment in its subsidiaries has been eliminated against the Parent’s portion of equity of each subsidiaryas on the date of investment in that subsidiary. The excess is recognised as ‘Goodwill’. Negative goodwill is recognised as ‘CapitalReserve’.
2.6 Investment in Joint Venture undertaking over which the company exercises joint control is accounted for using proportionateconsolidation as per Accounting Standard 27 ‘Financial Reporting of Interests in Joint Ventures’ issued by the Institute of CharteredAccountants of India. The excess of the investment on the Joint Venture over its net assets on the date on which the interest in thejointly controlled entity is acquired is recognised as goodwill. Negative goodwill is recognised as ‘Capital Reserve’.
2.7 For the purpose of compilation of the CFS the foreign currency assets, liabilities, income and expenditure are translated as perAccounting Standard (AS-11) on ‘Accounting for the Effects of Changes in Foreign Exchange Rates’, issued by the Institute ofChartered Accountants of India. Exchange differences arising are recognised in the Consolidated Profit and Loss account or in theForeign Currency Translation Reserve classified under Reserves and Surplus as applicable, under the above mentioned AccountingStandard.
2.8 Investment in associates are accounted for under the Equity Method as per AS-23 “Accounting for Investments in Associates”issued by The Institute of Chartered Accountants of India based on the financial statements of the associates upto the year endedmentioned below. The different reporting date of Global Data Media FZ LLC has been consistently used from period to period.
Associate Year ended
Global Data Media FZ LLC December 31, 2007
Moser Baer Infrastructure Ltd. March 31, 2008
3 USE OF ESTIMATES
The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect thereported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statementsand reported amounts of income and expenses during the period. Example of such estimates include provisions for doubtful debts,employee retirement benefit plans, warranty, provision for income taxes and the useful lives of fixed assets.
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4 REVENUE RECOGNITION
Revenue from sale of goods is recognised on transfer of significant risks and rewards of ownership to the customer and when nosignificant uncertainty exists regarding realisation of the consideration. Sales are recorded net of sales returns, rebates, trade discountsand price differences and are inclusive of excise duty and upto the previous year countervailing duty imposed by the council of EuropeanUnion.
Theatrical revenues from films are recognised as and when the films are exhibited.
Revenue from other rights such as satellite rights, music rights, overseas assignment rights etc. is recognised on the date when therights are available for exploitation.
Interest is accounted for based on a time proportion basis taking into account the amount invested and the rate of interest.
Dividend is recognised as and when the right of the company to receive payment is established.
5 FIXED ASSETS
Tangible Fixed Assets are stated at cost less accumulated depreciation. Cost includes all expenses, direct and indirect, specificallyattributable to its acquisition and bringing it to its working condition for its intended use.
Expenditure pending allocation, are allocated to productive fixed assets in the year of commencement of the related project.
Intangible assets are stated at cost less accumulated amortisation. The cost incurred to acquire “right to use and exploit” home videotitles, are capitalized as copyrights/marketing and distribution rights where the right allows the company to obtain a future economicbenefit from such titles.
Impairment, if any, in the carrying value of fixed assets is assessed at the end of each financial year in accordance with the accountingpolicy given below on “Impairment of Assets”.
6 DEPRECIATION / AMORTISATION
Depreciation on tangible fixed assets is provided based on the estimated useful life of the fixed assets on a pro-rata basis under thestraight-line method. The depreciation rates are not below the minimum rates as specified in Schedule XIV to the Companies Act, 1956.
In respect of assets whose useful life has been revised, the unamortised depreciable amount is charged over the revised remaininguseful life.
Intangible assets, other than Copyright/Marketing and distribution rights, are amortised on equated basis over their estimated economiclife not exceeding 10 years.
Copyrights/marketing and distribution rights are amortized from the date they are available for use, at the higher of the amount calculatedon a straight line basis over the period the intangible asset is available, not exceeding 10 years, and the number of units sold during theperiod basis.
Leasehold Land and improvement to the leased premises are amortised over the period of the lease.
The assets taken on finance lease are depreciated over the lease period.
7 INVESTMENTS
Long term investments are stated at cost of acquisition inclusive of expenditure incidental to acquisition. A provision for diminution ismade to recognise a decline, other than temporary in the value of long term investments.
Current investments are stated at lower of cost and fair value determined on an individual basis.
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
Part - A SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
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8 INVENTORY VALUATION
Finished Goods, Work in progress, Goods held for resale, At lower of cost and netRaw Materials, Packing Materials and Stores and Spares realisable value
Cost of Raw material, goods held for resale, packing materials and stores and spares is determined on the basis of weighted average method.
Cost of Work in process and finished goods is determined by considering direct material costs, labour costs and appropriate portion ofoverheads.
Liability for excise duty in respect of goods manufactured by the company, other than for exports, is accounted upon completion ofmanufacture.
Inventories of under production films and films completed and not released are valued at cost.
The cost of released films is amortized using the individual film forecast method. The said amortization pertaining to theatrical rights,satellite rights, music rights, home video rights and others is based on management estimates of revenues from each of these rights.The inventory, thus, comprises of unamortized cost of such movie rights. These estimates are reviewed periodically and losses, if any,based on revised estimates are provided in full.
At the end of each accounting period, such unamortized cost is compared with net expected revenue. In case of net expected revenuebeing lower than actual unamortized costs, inventories are written down to net expected revenue.
The purchase cost of the rights acquired in released films is apportioned between satellite rights and other rights (excluding home videorights) based on management’s estimates of revenue potential.
9 GOVERNMENT GRANTS
Grants in the nature of contribution towards capital cost of setting up projects, are treated as Capital Reserve and grants in respect ofspecific fixed assets are adjusted from the cost of the related fixed assets.
10 BORROWING COSTS
Borrowing costs directly attributable to the acquisition of qualifying assets are capitalised as part of the cost of assets till the date ofcommencement of commercial use of the asset. All other borrowing costs are charged to the Profit and Loss Account.
11 EMPLOYEE BENEFITS
The Company has Defined Contribution plans for post employment benefits namely Provident Fund which is recognized by the incometax authorities. These funds are administered through Regional Provident Fund Commissioner and the Company’s contributions theretoare charged to revenue every year. The Company’s contributions to State plans namely Employee’s State Insurance Fund and Employee’sPension Scheme 1995 are charged to revenue every year.
The Company has Defined Benefit plans namely Leave Encashment, Gratuity and Pension for all employees, the liability for which isdetermined on the basis of an actuarial valuation at the end of the year. Gratuity Fund is administered through Life InsuranceCorporation of India. Pension Fund, applicable to a subsidiary, is administered through insurance company Interpolis. Short termcompensated absences are recognised at the undiscounted amount of benefit for services rendered during the year.
Termination benefits are recognised as an expense immediately. Actuarial gains and losses comprise experience adjustments and theeffects of changes in actuarial assumptions and are recognised immediately in the Profit and Loss Account as income or expense.
In the year of transition (i.e. 2006-07), the difference between transitional liability and the liability that would have been recognized at thebeginning of the transitional year under the Company’s previous accounting policy has been adjusted against the opening revenuereserves of that year in accordance with Accounting Standard AS 15 (revised 2005) ‘Employee Benefits’.
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
Part - A SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
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12 FOREIGN CURRENCY TRANSACTIONS
Transactions in foreign currency are converted at the exchange rate prevailing at the date of the transaction. Foreign currency monetaryassets and liabilities not covered by forward exchange contracts are restated at the year end rates and the resultant gains or losses arerecognised in the Profit and Loss account. Non-monetary items are carried in terms of historical cost denominated in foreign currencyusing the exchange rates at the date of transaction.
In respect of foreign branches, all revenues, expenses, monetary assets/liabilities and fixed assets are accounted at the exchange rateprevailing on the date of the transaction. Monetary assets and liabilities are restated at the year end rates and resultant gains or lossesare recognised in the Profit and Loss Account.
Premium on foreign exchange forward contracts are recognised in the Profit and Loss Account over the life of the contract. Any profit orloss arising on cancellation of a forward contract is recognised as income or expense for the period.
13 TAXATION
Current Tax:Provision is made for current income tax liability based on the applicable provisions of the Indian Income Tax Act, 1961 and the relevantincome tax laws of other countries in which the branch/ other entities of the Group are incorporated.
Deferred Tax:Deferred tax assets (DTA) and liabilities are computed on the timing differences at the Balance sheet date between the carrying amountof assets and liabilities and their respective tax bases. DTA is recognised based on management estimates of reasonable/ virtualcertainty that sufficient future taxable income will be available against which such DTA can be realised. The deferred tax charge or creditis recognised using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
14 LEASES
Assets acquired under finance leases are recognised as an Asset and a Liability at the lower of the fair value of the leased assets atinception of the lease and the present value of minimum lease payments. Lease payments are apportioned between the finance chargeand the reduction of the outstanding liability. The finance charge is allocated to periods during the lease term so as to produce aconstant periodic rate of interest on the remaining balance of the liability and charged to the profit and loss account.
Payment made under operating leases are charged to Profit and Loss Account on a straight line basis over the period of lease.
15 STOCK OPTION PLANS
Stock options granted to the employees and to the non-executive Directors who accepted the grant under the Company’s StockOption Plan are accounted in accordance with Securities and Exchange Board of India (Employees Stock Option Scheme andEmployees Stock Purchase Scheme) Guidelines, 1999. The Company follows the intrinsic value method and accordingly, the excess,if any, of the market price of the underlying equity shares as of the date of the grant of the option over the exercise price of the option,is recognised as employee compensation cost and amortised on straight line basis over the vesting period.
16 IMPAIRMENT OF ASSETS
At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired. If such indicationexists, the Company estimates the recoverable amount and where carrying amount of the asset exceeds such recoverable amount, animpairment loss is recognised in the profit and loss account to the extent the carrying amount exceeds recoverable amount. Where thereis any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased,the Company books a reversal of the impairment loss not exceeding the carrying amount that would have been determined (net ofamortisation or depreciation) had no impairment loss been recognised for the asset in prior accounting periods.
17 WARRANTY CLAIMS
The Company provides up to 5 year limited warranty that the crystalline silicon solar photo voltaic modules (the ‘Modules’) are free fromdefects in materials and workmanship, a 12 year limited warranty of 90 percent power output and a 25 year limited warranty of 80percent of power output of its modules.
The Company accrues 0.5% of its module revenues during the year, as warranty costs, at the time revenue is recognized.
Actual warranty costs are accumulated and charged against the accrued warranty liability. To the extent that actual warranty costs differfrom the estimates, the Company will prospectively revise its accrual rate.
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
Part - A SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
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18 SEGMENT REPORTING
The accounting policies adopted for segment reporting are in line with the accounting policies adopted in consolidated financial statementswith the following additional policies for segment reporting:
a) Inter segment revenue have been accounted for based on the transaction price agreed between segments with reference to cost,market prices and business risks, with an overall optimisation objective for the Company.
b) Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.
Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis, have beenincluded under Unallocated expenses/ incomes.
19 PRELIMINARY EXPENSES
Preliminary expenses are charged to the Profit and Loss Account in the year when these are incurred.
20 ACCOUNTING POLICIES OF ASSOCIATE
The accounting policy adopted by Global Data Media FZ LLC in preparation of its annual accounts which is not in consonance with thepolicy of the parent company on valuation of traded inventory is as follows:
Traded inventory has been valued at First In First Out (FIFO) basis. However, inventory in CFS has been valued after adjusting theimpact of unrealised gain thereon.
21 ACCOUNTING POLICIES OF JOINT VENTURE
Following are the accounting policies adopted by the Joint Venture in preparation of their annual accounts which are not in consonancewith the policies followed by the Company:
Solarvalue Proizvodnja d.d.
InventoriesThe consumption of inventories of raw material and material is calculated per last purchase prices (LIFO). Final monthly inventories ofraw material and material are revaluated per the last monthly average prices, and for the difference, the shown costs of raw material andmaterial are increased or reduced by established differences in the same costs items in which they were originally shown. At the end ofthe year, the value of inventories is aligned with market prices.
Fixed AssetsTangible fixed assets are valued per their purchase value. Actual purchase value of a fixed asset is comprised of its purchase price andall costs that can be directly attributed to preparing the asset for the intended use.
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
Part - A SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
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MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
Part B - NOTES TO ACCOUNTS
1 Subsidiaries, Associates and Jointly Controlled Enterprise (Joint Venture):
1.1 The CFS comprise the results of the Parent, its subsidiaries, associates and Joint Ventures:
1.1.1 Subsidiaries:The particulars of subsidiaries considered in the CFS are as under:
Name of Country of Proportion of Date ofSubsidiary Incorporation Ownership Incorporation/
Acquisition*
European Optic Media Technology GmbH Germany 100% 30th Jan. 2003
Moser Baer Photo Voltaic Limited (MBPV) India 100% 7th Dec. 2005
PV Technologies India Limited (PVTIL) India 100% 6th Mar. 2007
Moser Baer SEZ Developer Limited India 100% 20th Feb. 2006
Advoferm Limited Cyprus 100% 25th May 2006
Omega Optical Media Technologies Slovakia 100% *13th June 2006
Peraround Limited Cyprus 100% 3rd July 2006
Perafly Limited Cyprus 100% 3rd July 2006
Nicofly Limited Cyprus 100% 4th July 2006
Perasoft Limited Cyprus 100% 6th July 2006
Dalecrest Limited Cyprus 100% 8th August 2006
Moser Baer Entertainment Limited India 100% 14th Sept. 2006(Formerly known as Moser Baer Media Limited)
Moser Baer Infrastructure Limited (upto May 10, 2007) India 100% 16th Sept. 2006
Moser Baer Energy Limited India 100% 27th Sept. 2006
Solar Research Limited India 100% 28th Sept. 2006
Crownglobe Limited Cyprus 100% 17th Nov. 2006
OM&T B.V. The Netherlands 81% *1st Jan. 2007
Moser Baer Investments Limited India 100% 18th Jan. 2007
Photovoltaic Holdings PLC Isle of Man 100% 16th Feb. 2007
Cubic Technologies B.V. The Netherlands 100% *6th Mar. 2008
Moser Baer Infrastructure and Developers Limited India 100% 7th Dec. 2007
Moser Baer Solar PLC Isle of Man 100% 16th Feb. 2007
The first financial statements of PV Technologies India Ltd has been prepared for the period March 6, 2007 to March 31,2008 since the first financial period of the Company ends on March 31, 2008, which have been considered forconsolidation.
1.1.2 Joint Venture:The particulars of Joint Venture considered in the CFS are as under:
Name of Country of Proportion of Reporting date Date ofJoint Venture Incorporation Ownership used for Incorporation/
Consolidation Acquisition*
Solarvalue Proizvodnja d.d. Slovenia 40% December 31, 2007 *October 10, 2007
There are no significant events or transactions that require adjustment in respect of the different reporting date of the jointventure.
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1.1.3 Associates:The particulars of associates considered in the CFS are as under:
Name of Associate Country of Incorporation Proportion of Ownership
Global Data Media FZ LLC Dubai, United Arab Emirates 49%
Moser Baer Infrastructure Ltd (from May 11, 2007) India 26%
Adjustments have been made for significant transactions between Moser Baer India Limited and Global Data Media FZLLC between the latter’s reporting date (December 31, 2007) and March 31, 2008.
1.2 Particulars of Investment in Associates:
Global Data Media FZ LLC Moser BaerInfrastructure Ltd
S. Particulars As at 31.03.2008 As at 31.03.2007 As at 31.03.2008No. (Rs.) (Rs.) (Rs.)
Cost of investment 92,532,185 92,532,185 8,940,000
(a) Carrying value of the investment at thebeginning of the year/ at the date of transaction 57,145,848 75,905,396 2,380,146
(b) Investment made during the year 6,340,000
(c) Add: Share of post acquisition (loss)/ profits (Net) (57,145,848) (2,782,493) (89,060)
(d) Less: Dividend Received — 15,977,055 —
(e) Carrying value at the end of the year — 57,145,848 8,631,086
Pursuant to Accounting Standard - 23 on Accounting for Investments in Associates in Consolidated Financial Statements,investment in GDM has been reported at NIL.
2 The goodwill has been arrived at as follows:
a) On Acquisition of 4800 ordinary shares of Euro 4 each of Solarvalue Proizvodnja d.d:
Amount (Rs.) Amount (Rs.)
Consideration paid for acquisition of 40% of the equity shares 557,845,000
Less: Shares in Equity on the date of investment:
Share Capital 315,066,344
Accumulated Losses 24,147,647 290,918,697
Goodwill (A) 266,926,303
b) On Acquisition of 146 ordinary shares of Euro 100 each of OM&T B.V.:
Amount (Rs.) Amount (Rs.)
Consideration paid for acquisition of 81% of the equity shares 161,385,000
Less: Shares in Equity on the date of investment:
Share Capital 90,564,087
Reserves 15,008,451 105,572,538
Goodwill (B) 55,812,462
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
Part - B NOTES TO ACCOUNTS (CONTD.)
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c) On Acquisition of 50,000 ordinary shares of Rs.10 each of Moser BaerInfrastructure and Developers Limited:
Amount (Rs.) Amount (Rs.)Consideration paid for acquisition of 100% of the equity shares on December 7, 2007 500,000Less: Shares in Equity on the date of investment:
Share Capital 500,000
Accumulated Losses 21,946 478,054Goodwill (C) 21,946
Amount (Rs.)Total Goodwill (A+B+C) 322,760,711
3 During the period under review, Moser Baer Solar Plc made an investment of USD 250,000 in Skyline Solar, Inc, USA in the form ofPromissory Notes and Warrants.
Convertible Promissory Note: Interest is payable on principal amount at 8% per annum, compounded annually. The purchase price ofeach Note is equal to 100% of the principal amount of such note. The entire amount, including accrued interest (if any) would beconverted into preference shares of the Company issued and sold at the close of the Company’s next equity financing in a singletransaction of at least US$ 6,000,000.
4 During the year Moser Baer Solar Plc and PV Technologies India Limited (PVTIL) allotted the following Fully Convertible PreferenceShares:
(a) Moser Baer Solar Plc allotted 23,784,606 Fully Convertible Preference Shares of GBP 1 each to Indivest Pte Limited and CDCGroup Plc. The shares are compulsorily convertible into Equity Shares on November 11, 2011.
(b) PVTIL allotted 196,450,000 Fully Convertible Re.1 dividend bearing Preference Shares of Rs.10 each to IDFC Private Equity FundII and Infrastructure Development Finance Company Limited. The shares are compulsorily convertible into Equity Shares of PVTILor, subject to receipt of regulatory approvals, to be swapped with Equity Shares of Moser Baer Solar Plc on November 11, 2011.
5 The board of directors of MBPV, vide their resolution passed at a meeting of the board, held on August 29, 2006, authorised MBPV toinvest in certain entities, through its wholly-owned subsidiaries, with a view to form strategic technology alliances in the field of solartechnology. Accordingly, during the previous year, MBPV had invested USD 7 million in M/s Sol Focus, INC.,USA; USD 4 million inM/s The Solaria Corporation, USA; and USD 1 million in M/s Stion Corporation, USA. During the current year, the board of directors ofMBPV, vide their resolution passed at a meeting of the board, held on July 10, 2007, authorised the MBPV to further invest USD 6.33million in M/s The Solaria Corporation, USA; and USD 0.19 million in M/s Stion Corporation, USA.
6 Contingent Liabilities:
In respect of:
6.1 Corporate guarantees given Rs.13,642,815,000 (Previous Year Rs. 3,520,000,000). Against these guarantees loan amount ofRs.9,051,763,955 (Previous Year Rs. 1,251,452,840) have been availed.
6.2 Bank guarantees given Rs.1,604,400,000 (Previous Year Rs. Nil)
6.3 Disputed demands (Gross) in respect of:- 2007-08 2006-07(Rs.) (Rs.)
Entry tax 124,745,823 110,391,986[Amount paid under protest Rs. 1,941,530 (Previous Year Rs.1,686,502);paid through bank guarantee Rs. NIL (Previous Year Rs.2,646,016)]
Service tax 106,090,662 68,825,596
Sales Tax 85,083,264 7,307,205[Amount paid under protest Rs. 4,597,150 (Previous Year Rs. 72,864);paid through bank guarantee Rs. 26,596,226 (Previous Year Rs. 2,049,747)]
Custom duty and Excise duty 320,465,525 5,516,560[Amount paid under protest Rs.500,000 (Previous Year Rs. Nil).
Trade Tax - 22,230,117
Income Tax 92,195,160 85,294,174[Amount paid under protest Rs, 24,500,000 (Previous Year Rs. 5,000,000)]
Total 728,580,434 299,565,638
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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6.4 Claims against the Company not acknowledged as debts: Rs.20,059,830 (Previous Year Rs. 20,078,421).
The amount shown in 6.1 and 6.2 above represents guarantees given in the normal course of the Company’s operations and arenot expected to result in any loss to the Company on the basis of the beneficiary fulfilling its ordinary commercial obligations.
The amounts shown in 6.3 and 6.4 above represent the best possible estimates arrived at on the basis of available information. Theuncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have beeninvoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engagesreputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes.
7 In February 2003, Moser Baer India Limited (Moser Baer), and Imation Corporation Inc., USA (Imation), formed an associatecompany called Global Data Media FZ LLC (GDM). GDM is owned 51% by Imation, and 49% by Moser Baer. On October 27,2006, Imation filed a suit in Minnesota, USA against Koninkiljke Philips Electronics NV (Philips) seeking a Declaratory Judgementon the validity of the Cross License Agreement (CLA) entered into with Minnesota Mining and Manufacturing Co. (3M) and itsassignment to Imation and its subsidiaries (including GDM). Moser Baer supplies recordable media to GDM and Imation under theambit of CLA.
Philips filed a suit against Moser Baer in The Hague, Netherlands challenging the status and validity of the CLA under which supplies ofrecordable media have been made to Imation and its subsidiaries. With a view to reinforce its stand on the CLA (an issue which iscurrently pending in the US courts), Imation joined the proceedings in the Netherlands as a party, to contest the suit.
In order to protect the rights arising out of various patent license agreements executed between Moser Baer and Phillips, Moser Baerfiled a suit against Philips challenging the default notices issued by Philips thereby pre-empting any possibility of termination of theaforementioned license agreements. This matter is currently subjudice at the Delhi High Court.
Based on legal advise received relating to the strength of Moser Baer case and the indemnity available, the company believes that noprovision is necessary in the financial statements as at March 31, 2008.
8 A search and seizure operation was carried out by the State of Kerala, DGP and the Nodal officer at the premises of distributors stockinghome video CDROM’s and DVDROM’s in various cities of Kerala for alleged infringement of Section 52(A) of the Copyright Act. TheCompany has filed a writ petition against such police action and has received a favourable interim order. On the basis of advice obtainedfrom external legal council, the Company does not expect any adverse results on issuance of the final order.
9 The Company has received claims relating to infringement of copyrights in relation to the home entertainment business activitiescarried on by it. In the opinion of the management, no material liability is likely to arise on account of such claims.
10 10.1 Estimated value of contracts remaining to be executed on capital account and not provided for (net of advances): Rs. 1,436,198,285(Previous Year Rs. 1,816,013,171).
10.2 Letters of Credit opened by banks on behalf of the Company: Rs.544,942,962 (Previous Year Rs. 664,284,646).
11 Lease Obligations:
a) Total of minimum future lease payments under non-cancellable operating leases for various periods are as follows:-
Amount (Rs.) Amount (Rs.)2007-08 2006-07
Amount payable not later than one year 18,824,650 18,521,226
Amount payable later than one year but not later than five years 64,676,256 80,469,321
Amount payable later than five years - 5,962,809
Total 83,500,906 104,953,356
Total lease payments recognized in the statement of Profit and Loss Account: Rs.66,399,774 (Previous year Rs. 46,633,200).Lease payments capitalised and included in ‘Expenditure pending allocation’ (Refer Schedule 6): Rs.1,599,000.
The company has entered into operating leases for its offices and employees’ residences that are renewable on a periodic basisand cancellable at company’s option. The total rent recovered on sub lease during the year is Rs. 360,090 (Previous year Rs.386,122).
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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b) Reconciliation of minimum lease payments and their present value in respect of vehicles taken on finance lease, is as under:
Minimum Lease Present value of Lease chargespayments minimum
lease payments
Rs. Rs. Rs.
Amount paid upto 31.3.2008 5,412,083 3,814,781 1,597,302
Amount payable not later than one year - -
Total 5,412,083 3,814,781 1,597,302
Previous year 5,412,083 3,814,781 1,597,302
Total cost of leased vehicles and their carrying amount as at March 31, 2008 are Rs. Nil (Previous Year Rs. 810,495) and Rs. Nil(Previous Year Rs. 319,450) respectively.
12 Movements in Other Investments:
(Mutual fund units are of the face value of Rs.10 each except for units in DSP Merill Lynch Mutual Fund which are of Rs.1,000 each)
2007-2008 2006-2007
Current Investments (Unquoted): No. Cost (Rs.) No. Cost (Rs.)
(Cash and Money Market Instrument)
Acquired and sold during the year:
UBS Trend Accrual Bill (USD 10 Million) 10,000 403,750,000 - -
ABN AMRO Money Plus Institutional Plan-Daily Dividend 50,216,419 502,169,212 - -
DSP Merrill Lynch Liquid Plus Institutional Plan-DailyDividend 370,378 370,497,237 - -
G50 Grindlays Floating Rate Fund-LT-Inst Plan B-DailyDividend 50,110,148 501,377,089 - -
HDFC Cash Management Fund-Savings PlusPlan-Wholesale-Daily Dividend 58,247,456 584,309,351 - -
Franklin Templeton Investments 50,446,776 505,012,589 - -
TFLD TATA Floater Fund-Daily Dividend 24,911,316 250,000,000 - -
Total 234,312,493 3,117,115,478 - -
Acquired during the year and outstandingas at 31.03.2008:
Rabobank Note (USD 15 Million) 1 589,500,000 - -
28Q ICICI Prudential-Flexible Income PlanDividend-Daily-Reinvest Dividend 27,243,462 288,058,745 - -
TFLD TATA Floater Fund-Daily Dividend 25,415,118 255,055,961 - -
DWS Credit Opportunities Cash Fund-Weekly Dividend Plan 50,289,071 505,476,747 - -
27 ICICI Prudential Flexible Income Plan-Growth 13,517,075 200,000,000 - -
Total 116,464,727 1,838,091,453 - -
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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13 Expenditure pending allocation:
Details of expenditure pending allocation are as follows:As at 31.03.2008 As at 31.03.2007
(Rs.) (Rs.)
Salaries and Wages 41,125,523 31,577,674
Travelling Expenses 1,048,973 5,332,623
Freight and Cartage 16,806,103 50,814,125
Interest and Bank Charges 106,789,067 42,714,570
Difference in exchange rate * (155,890) 62,484,173
Raw Material Cost- Trial run 17,157,150 173,947,916
Manpower cost 128,832 1,180,555
Power & Fuel 5,887,717 6,255,196
Stores, Spares & Consumables 4,501,428 1,318,670
Legal and Professional 9,214,486 32,334,148
LC Charges 388,020 2,774,060
Loss on cancellation of Forward Contract * 9,669,233 49,812,674
Miscellaneous Expenditure 25,131 103,762
Equipment Hire Charges 1,599,000 -
Machines and Equipment Movement Charges 3,885,406 -
Insurance 4,304,685 219,299
Installation & Commissioning Charges 1,214,290 -
Less: Sales During Trial Run (22,327,631) -
Total 201,261,523 460,869,445
* These amounts pertain to foreign exchange fluctuations capitalised as part of expenditure pending allocation as of March 31, 2007.
14 Taxation:
Provision for taxation has been made based on the relevant provisions of the Indian Income Tax Act,1961 and the income tax laws asapplicable to the foreign subsidiaries.
Deferred tax in respect of timing differences for undertakings enjoying tax holiday period under section 10A, section 10AA and section10B of the Income Tax Act, 1961 have been recognised in the year in which they originate, to the extent that such differences reverseafter the tax holiday period, and there is reasonable/virtual certainty of realisation of deferred tax assets.
Accordingly, the Break up of net deferred tax liability is as under:
(Amount in Rupees)
Particulars of Timing Differences As at March Movements during As at March31, 2007 the year 31, 2008
Deferred tax LiabilityDepreciation 1,531,726,021 218,510,712 1,750,236,733
Deferred tax AssetsUnabsorbed Depreciation 1,351,159,738 262,813,589 1,613,973,327
Brought Forward Losses 4,747,648 (433,778) 4,313,870
Tax impact of expenses charged in the financial statementsbut allowable as deduction in future years under theIncome Tax Act, 1961 87,113,892 (46,768,825) 40,345,067
Total 1,443,021,278 215,610,986 1,658,632,264
Net deferred tax liability 88,704,743 2,899,726 91,604,469
Previous Year - 88,704,743 88,704,743
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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15 During the year the Company issued fully paid bonus shares to the equity shareholders of the Company in the ratio of one bonus sharefor two existing fully paid shares by capitalising the sum standing to the credit of Company’s general reserve. Consequently the Companyhas allotted 56,077,035 equity shares which also includes 127,975 equity shares against options exercised after the record date i.e.18th July 2007.
16 Employees Stock Option Plan (ESOP) and Directors’ Stock Option Plan (DSOP):
a) The company has granted options to its employees and non-executive directors, to be settled through issue of equity shares, atexercise prices that are equal to the market price of the share on the date of the grant. The Options granted vest over a period ofmaximum of four years from the date of grant.
Two options granted before the record date under the above plans entitles the holder to three equity shares of the Company.
Number of options granted, exercised and cancelled/ lapsed during the year:
2007-08 2006-07
Number Weighted Number WeightedAverage Price Average Price
(Rs.) (Rs.)
Options outstanding at beginning of year 3,262,960 228.89 2,977,700 221.10
Add : Options Granted 1,280,600 383.10 1,022,200 244.65
Less : Options Exercised 552,885 220.12 88,240 219.16
Options Cancelled 160,700 270.29 546,700 222.92
Options Forfeited 552,885 220.12 - -
Options Lapsed 101,600 223.90 102,000 199.95
Options outstanding at the end of year 3,728,375 280.95 3,262,960 228.89
Options exercisable at the end of year 1,104,075 226.43 939,260 221.27
The options outstanding at the end of year had exercise prices in the range of Rs. 196.60 to Rs. 491.90 (Previous Year Rs. 196.60to Rs. 319.25) and a weighted average remaining contractual life of 2.49 years (Previous Year 2.62 years).
During the year 552,885 (Previous Year 88,240) options were exercised resulting in a premium of Rs. 116,172,343 (Previous YearRs.18,526,983) which is the excess of exercise price of the options and nominal value of shares allotted.
b) The impact on the Profit of the Company for the year ended March 31, 2008 and the basic and diluted earning per share had thecompany followed the fair value method of accounting for stock options is set out below:
March 31, 2008 March 31, 2007Rs. Rs.
(Loss)/ Profit after tax as per Profit and Loss Account (a) (2,022,872,910) 788,267,767
Add:Employee Stock Compensation Expenses as per Intrinsic Value method - -
Less: Employee Stock Compensation Expenses as per Fair Value method 103,042,130 68,290,648
Profit/ (Loss) after tax recomputed for recognition of employee stock compensationexpenses under fair value method (2,125,915,040) 719,977,119
Earning Per Share based on earning as per (a) above: (Refer Note 19)– Basic (12.05) 4.71
– Diluted (12.05) 4.68
Earning Per Share had fair value method been employed for accounting ofemployee Stock options:– Basic (12.66) 4.30
– Diluted (12.66) 4.28
Fair values used for above computations have been calculated by taking into account the weighted average vesting period of theoptions.
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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17 Managerial Remuneration:(figures in bracket are for the previous year) (Amount in Rupees)
DEEPAK PURI NITA PURI RATUL PURI
Managing Whole time Whole time TotalDirector Director Director
Salaries, allowances and bonus 29,156,250 4,790,178 15,941,964 49,888,392
(33,156,250) (4,415,178) (15,011,964) (52,583,392)
Contribution to Provident Fund 1,698,750 439,822 1,013,036 3,151,608
(1,698,750) (439,822) (1,013,036) (3,151,608)
Perquisites 145,000 145,000 145,000 435,000
(145,000) (145,000) (145,000) (435,000)
Total 31,000,000 5,375,000 17,100,000 53,475,000
(35,000,000) (5,000,000) (16,170,000) (56,170,000)
1. In terms of order nos. 12/180/2008-CL.VII, dated 13.02.2008, 12/160/2008-CL.VII dated 03.03.2008, 12/179/2008-CL.VII dated03.03.2008 issued by the Ministry of Corporate affairs under Section 310, 198/309(3) and 673AA of the Companies Act, 1956, theCompany has paid managerial remuneration as shown above.
2. Provision for leave encashment: Rs. 2,161,038 (Previous year Rs. 2,885,257) and Gratuity: Rs. 928,993 (Previous year Rs. 877,781)made during the year have not been included above.
18 Related Party Transactions:
As required by Accounting Standard 18 - ‘Related Party Disclosures’ issued by the Institute of Chartered Accountants of India, since theCFS presents information about the Parent and its subsidiary as a single reporting enterprise, it is not necessary to disclose intra-grouptransactions.
In accordance with the requirements of Accounting Standard - 18 ‘Related Party Disclosures’ the names of the related party wherecontrol/ability to exercise significant influence exists, along with the aggregate amount of transactions and year end balances with themas identified and certified by the management are given below:
18.1 Nature of relationship Name of the related party Share Holding
Associate Global Data Media FZ LLC 49%
Associate Moser Baer Infrastructure Ltd* 26%
Joint Venture Sloarvalue Proizvodnja d.d. 40%
Trust Moser Baer Trust -
* Subsidiary upto May 10, 2007.
18.2 Key management Personnel
Managing Director Mr. Deepak Puri
Whole Time Directors Mrs. Nita Puri, Mr.Ratul Puri
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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18.3 Details of transactions with the related parties in the ordinary course of business:(figures in brackets are for the previous year) (Amount in Rupees)
Particulars Global Solarvalue Moser Key Management Moser TotalData Media Proizvodnja Baer Personnel Baer
FZ LLC d.d. (Joint Infrastructure Ltd and their Trust(Associate) Venture) (Associate) Relatives
Sales of Finished goods 5,263,622,958 - - - - 5,263,622,958(8,609,612,874) (-) (-) (-) (-) (8,609,612,874)
Expenses incurred onbehalf of other companies 13,695,082 - - - - 13,695,082
(28,992,875) (-) (-) (-) (-) (28,992,875)
Expenses charged byother companies 11,637,958 - - - - 11,637,958
(19,521,354) (-) (-) (-) (-) (19,521,354)
Dividend received - - - - - -(15,977,055) (-) (-) (-) (-) (15,977,055)
Miscellaneous Income - - 5,080,128 - - 5,080,128(-) (-) (-) (-) (-) (-)
Deferred Revenue - - 1,016,026 - - 1,016,026(-) (-) (-) (-) (-) (-)
Investment - 557,845,000 6,340,000 - - 564,185,000(-) (-) (-) (-) (-) (-)
Directors Remuneration(Refer Note 12.6 above) - - - 53,475,000 - 53,475,000
(-) (-) (-) (56,170,000) (-) (56,170,000)
Donation - - - - 15,467,169 15,467,169(-) (-) (-) (-) (500,000) (500,000)
Outstanding receivables-In respect of Sales 1,760,747,582 - - - - 1,760,747,582
(1,993,092,485) (-) (-) (-) (-) (1,993,092,485)
-In respect ofexpenses/ service charges 37,390,680 - - - - 37,390,680
(23,695,598) (-) (-) (-) (-) (23,695,598)
Outstanding payable-In respect of expenses 29,970,152 - - - - 29,970,152
(18,332,194) (-) (-) (-) (-) (18,332,194)
-In respect of ManagerialRemuneration
Deepak Puri - - - 10,520,409 - 10,520,409(-) (-) (-) (19,603,947) (-) (19,603,947)
Ratul Puri - - - 5,420,195 - 5,420,195(-) (-) (-) (7,012,332) (-) (7,012,332)
Nita Puri - - - 983,792 - 983,792(-) (-) (-) (973,179) (-) (973,179)
Moser Baer India Limited (‘MBIL’) has issued a comfort letter in favor of Global Data Media FZ LLC (‘GDM’) to provide 49% ofsuch financial support as may be required to meet its debts and liabilities. As of date MBIL has not incurred any obligation/made payment against such comfort provided.
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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19 Earnings per share:
a) Calculation of Weighted Average number of equity shares
1. For Basic EPS 2007-2008 2006-2007
No. of Shares at the beginning of the year 167,401,776 167,269,416
Total number of equity shares outstanding at the end of the year 168,231,104 167,401,776
Weighted Average number of equity shares outstanding during the year 167,922,040 167,288,813
2. For Diluted EPS
Weighted Average number of equity shares outstanding during the 167,922,040 167,288,813year as computed above
Weighted Average number of stock options outstanding during the year 318,997 1,131,791
Weighted Average number of equity shares outstanding during the year 168,241,037 168,420,604for Diluted EPS
b) Net (Loss)/ Profit after tax available for equity shareholders (2,022,872,910) 788,267,767
Earnings per share (face value per share Rs. 10 each)
Basic (12.05) 4.71
Diluted (12.05) 4.68
20 Segment Information:
The Company is organized into following business segments, namely:Storage Media Products : Compact disk, Magnetic disk and Storage unitsSolar Products : Photovoltaic Cells and Modules
Information about Primary Business Segments
A. Financial information about business segments for the year ended 31 March 2008 is as follows:
(Amount in Rupees)
Storage Media Solar Other Eliminations TotalProducts Products Operations
Revenue:External 17,078,388,981 1,694,979,324 1,926,730,364 - 20,700,098,669Inter-segment 722,826,638 - 71,676,519 (794,503,157) -Total Revenue 17,801,215,619 1,694,979,324 1,998,406,883 (794,503,157) 20,700,098,669Result:Segment Result 244,097,806 (475,506,556) 2,208,794 - (229,199,954)Interest expense (net of interest/dividend income) 1,668,496,994Unallocated corporate expenses(net of other income) 57,368,086(Loss)/ Profit before tax (1,955,065,034)Provision for Taxation 22,850,978(Loss)/ Profit after Tax (1,977,916,012)Minority interest (share in loss) 12,278,010Share in Loss / (Profit) of Associate 57,234,908Net (Loss)/ Profit for the year (2,022,872,910)
(Contd.)
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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(Amount in Rupees)
Storage Media Solar Other Eliminations TotalProducts Products Operations
Other Information:Segment Assets 34,524,937,309 7,701,099,446 4,737,166,740 (36,446,815) 46,926,756,680Unallocated corporate assets 12,860,892,419Total assets 59,787,649,099Segment Liabilities 2,780,339,671 1,644,350,392 770,613,662 (36,446,815) 5,158,856,911Unallocated corporate liabilities 32,621,194,445Total liabilities 37,780,051,356Capital Expenditure 4,081,634,980 1,546,144,511 2,182,122,663 - 7,809,902,154Unallocated capital expenditure 20,042,030Total Capital expenditure 7,829,944,184Depreciation/ Amortisation 3,948,594,172 121,545,020 369,452,757 - 4,439,591,949Unallocated Depreciation/ Amortisation 18,780,511Total Depreciation/ Amortisation 4,458,372,460
B. Financial information about business segments for the year ended 31 March 2007 is as follows:(Amount in Rupees)
Storage Media Solar Other Eliminations TotalProducts Products Operations
Revenue:External 19,697,844,607 - 142,526,515 - 19,840,371,122Inter-segment 40,435,996 - 5,650,111 (46,086,107) -Total Revenue 19,738,280,603 - 148,176,626 (46,086,107) 19,840,371,122Result:Segment Result 2,303,295,561 (148,828,801) (120,057,277) - 2,034,409,483Interest expense(net of interest income) 1,098,334,696Unallocated corporate expenses(net of other income) 52,982,894Profit/ (Loss) before tax 883,091,894Provision for Taxation 101,687,747Profit/ (Loss) after Tax 781,404,147Minority interest (share in loss) 9,646,113Share in Loss / (Profit) of Associate 2,782,493Net Profit/ (Loss) for the year 788,267,767Other Information:Segment Assets 36,238,580,043 2,164,609,196 1,137,215,837 - 39,540,405,077Unallocated corporate assets 4,018,906,400Total assets 43,559,311,477Segment Liabilities 3,596,835,879 23,463,094 216,622,590 - 3,836,921,564Unallocated corporate liabilities 19,251,480,666Total liabilities 23,088,402,230Capital Expenditure 4,021,171,592 10,082,297 617,126,389 - 4,648,380,278Unallocated capital expenditure 18,137,603Total Capital expenditure 4,666,517,881Depreciation/ Amortisation 3,546,205,775 919,287 18,748,495 - 3,565,873,557Unallocated Depreciation/Amortisation 16,360,594Total Depreciation/ Amortisation 3,582,234,151
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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Information about Secondary Geographical Segments:
A Sales Revenue by Geographical Market Current Year Previous YearRs. Rs.
India 5,897,443,836 3,346,972,108
Outside India 14,802,654,833 16,493,399,014
Total 20,700,098,669 19,840,371,122
B Assets and addition to tangible and Addition to Fixed assets and Carrying amount ofintangible fixed assets by Intangible Assets Segment Assetsgeographical area Current Year Previous Year Current Year Previous Year
Rs. Rs. Rs. Rs.
India 7,664,026,133 4,074,977,673 43,201,765,852 35,180,658,299
Outside India 145,876,021 573,402,605 3,724,990,828 4,359,746,778
Total Segment assets 7,809,902,154 4,648,380,278 46,926,756,680 39,540,405,077
Unallocated Corporate assets 20,042,030 18,137,603 12,860,892,419 4,018,906,400
Total assets 7,829,944,184 4,666,517,881 59,787,649,099 43,559,311,477
21 Employee Benefits:
The Company has adopted Accounting Standard 15 (revised 2005) ‘Employee Benefits’ during the last year i.e. year ended March 31,2007. Accordingly, the transitional adjustment aggregating to Rs. 1,771,624 (net of deferred tax asset Rs. Nil) has been charged againstthe general reserves as at April 1, 2006. The details of the transitional adjustment is as follows:– Leave Encashment / Compensated Absences Rs. 1,771,624 (Also Refer Schedule 3)
The Company has classified the various benefits provided to employees as under -
I. Defined Contribution PlansProvident FundDuring the year, the Company has recognised the following amounts in the Profit and Loss Account -
2007-08 2006-07Rs. Rs.
Employers’ Contribution to Provident Fund * 31,190,111 29,448,830
II. State Plans
a) Employers’ Contribution to Employee’s State Insurance Act, 1948b) Employers’ Contribution to Employee’s Pension Scheme, 1995
During the year, the Company has recognised the following amounts in the Profit and Loss Account
2007-08 2006-07
Employers’ Contribution to Employee’s State Insurance Act, 1948 * 11,553,565 9,557,631
Employers’ Contribution to Employee’s Pension Scheme, 1995 * 40,227,808 21,320,252
* Included in Contribution to Provident and Other Funds under Personnel Expenses (Refer Schedule 17)
III. Defined Benefit Plans
a) Contribution to Gratuity Funds – Life Insurance Corporation of Indiab) Leave Encashmentc) Pension Provisions
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
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In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the aforesaid defined benefitplans based on the following assumptions:-
Particulars Leave Encashment Employee’s Gratuity Pension(Unfunded) Fund Fund
2007-08 2006-07 2007-08 2006-07 2007-08
Discount Rate (per annum) 8% 8% 8% 8% 4.87%
Rate of increase in Compensation levels 9% 9% 9% 9% 2%
Rate of Return on Plan Assets Nil Nil 9.25% 8.50% 4.87%
Expected Average remaining working lives ofemployees (years) 12.70 14 12.70 14 15.70
Changes in the Present Value of Obligation:
Particulars Leave Encashment Employee’s Gratuity Pension(Unfunded) Fund Fund
2007-08 2006-07 2007-08 2006-07 2007-08Rs. Rs. Rs. Rs. Rs.
Present Value of obligation as at April 1, 2007 32,268,521 26,643,509 73,799,452 47,187,514 3,363,248
Interest Cost 3,792,121 1,978,738 7,528,401 3,684,956 1,522,980
Current Service Cost 17,244,560 8,294,048 21,924,137 14,823,866 27,730,928
Settlement Cost/Credit - - - (213,868) -
Benefits paid (4,223,164) (3,818,554) (3,237,150) (2,251,142) -
Actuarial (gain)/loss on obligations 14,845,789 (829,221) 7,671,428 10,568,126 (7,932,188)
Present Value of obligation as at March 31, 2008 63,927,827 32,268,520 107,686,268 73,799,452 24,684,968
Changes in the Fair value of Plan Assets:
Particulars Employee’s Gratuity PensionFund Fund
2007-08 2006-07 2007-08Rs. Rs. Rs.
Fair Value of plan Assets (Opening) 32,671,570 29,604,822 -
Expected Return on plan assets 6,484,789 2,541,538 1,015,320
Actuarial Gains and Losses - (10,724,318)
Contributions 66,790,353 2,776,352 24,113,850
Benefits Paid (3,237,150) (2,251,142) -
Additional charges (3,617,078)
Fair Value of Plan Assets (Closing) 102,709,562 32,671,570 10,787,774
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
Part - B NOTES TO ACCOUNTS (CONTD.)
148
Reconciliation of present value of defined benefit obligation and the fair value of assets:
Particulars Employee’s Gratuity PensionFund Fund
2007-08 2006-07 2007-08Rs. Rs. Rs.
Present value of funded obligation (Closing) 107,686,268 73,799,452 24,684,968
Fair Value of Plan Assets as at the end of the period funded status 102,709,562 32,671,570 10,787,774
Present value of unfunded obligation (Closing) 4,976,706 41,127,882 13,897,194
Unfunded Net Liability recognized in Balance Sheet* 4,976,706 41,127,882 13,897,194
* Included in Staff Benefit Schemes (Refer Schedule 13 B)
Expenses capitailsed and included in ‘Expenditure pending allocation’ (Refer Schedule 6):
Particulars Leave Encashment Employee’s Gratuity(Unfunded) Fund
2007-08 2006-07 2007-08 2006-07Rs. Rs. Rs. Rs.
Current Service Cost 178,557 - 308,346 -
Interest Cost 14,285 - 24,668 -
Total Expenses 192,842 - 333,014 -
Expenses recognised in the Profit and Loss Account
Particulars Leave Encashment Employee’s Gratuity Pension(Unfunded) Fund Fund
2007-08 2006-07 2007-08 2006-07 2007-08Rs. Rs. Rs. Rs. Rs.
Current Service Cost 17,066,003 8,294,048 21,615,791 14,823,866 27,730,928
Interest Cost 3,777,836 1,978,738 7,503,733 3,684,956 1,522,980
Expected Return on Plan Assets - - (6,484,789) (2,541,538) (1,015,320)
Additional charges 3,617,078
Net actuarial (gain)/loss recognized in the period 14,845,789 (829,221) 7,671,428 10,568,126 2,792,130
Total Expenses recognized in theProfit & Loss Account **35,689,628 **9,443,565 *30,306,163 *26,535,410 *34,647,796
* Included in Contribution to Provident and Other Funds (Refer Schedule 17)** Included in Personnel Expenses (Refer Schedule 17)
In respect of the Employee’s Gratuity Fund and Pension Fund administered by Life Insurance Corporation of India and Interpolisrespectively, constitution of Plan Assets is not readily available.
22 Foreign Currency Convertible Bonds:
(a) On 20th June, 2007 the Company (‘Issuer’) issued Zero Coupon Foreign Currency Convertible Bonds (‘Bonds’ or ‘FCCB’) aggregatingUS $ 150 million in two tranches namely tranche “A” and “B” of US$ 75 Million each. The Bonds are convertible at any time on orafter 31 July 2007 and up to the close of the business on 11 June 2012 by the holders of the Bonds (‘the Bondholders’) into newly
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
Part - B NOTES TO ACCOUNTS (CONTD.)
149
issued equity shares of the Company with full voting rights with par value of Rs 10 each (‘Shares’) at an initial conversion price (asdefined in Terms and Conditions of the Bonds) of Rs 545.94 and Rs. 611. 45 per share for tranche A and tranche B respectively witha fixed rate of exchange on conversion of Rs 40.27=US$ 1.
The conversion price is subject to adjustment in certain circumstances. The Bonds are listed on the Singapore Exchange SecuritiesTrading Limited (‘SGXST’).
The Bonds may be redeemed, in whole but not in part, at the option of the Issuer at any time on or after 20th June 2010 subject tosatisfaction of certain conditions. Unless previously redeemed, converted or purchased or cancelled, the bonds will be redeemedin US Dollars on June 21, 2012 at 135.07 percent of their principal amount for tranche “A” and at 139.39 percent of the principalamount for tranche “B”.
As at 31 March 2008 there has been no conversion of the Bonds into Shares.
(b) The utilisation of the proceeds of USD 150,000,000 Zero Coupon Foreign Currency Convertible Bonds issued up to 31 March,2008 is as under:
Particulars Actual funds used up to 31.03.2008
USD Rs.
Funds available 150,000,000 6,106,500,000*
Less: Capital Equipment 27,287,860 1,091,894,643
Investment in overseas subsidiary companies through loans/capital 27,338,896 1,106,096,697
Repayment of ECB loan 13,532,234 538,312,285
FCCB issue expenses** 2,313,590 94,186,249
70,472,580 2,830,489,874
Add: Interest received 3,736,537 156,582,577
Unutilized Issue Proceeds in Deposits 83,263,957 3,338,884,676#
* Issue proceeds converted at Rs.40.71= 1USD** Excludes issue expenses paid without utilising FCCB funds# Reinstated as at year end rate
(c) Premium on redemption of FCCB
Particulars 31.03.2008 31.03.2007
Opening Balance Nil Nil
Add Provision for the year 304,784,267 NA
Amount Utilised During the year Nil NA
Utilized Amount reversed during the year Nil Nil
Closing Balance 304,784,267 Nil
Premium payable on redemption of FCCB accrued up to March, 31, 2008 calculated on prorate basis Rs. 304,784,267 has beenfully provided for and charged to Securities Premium Account. In the event that the conversion option is exercised by the holders ofFCCB in the future, the amount of premium charged to the Securities Premium Account will be written back to Security PremiumAccount.
23 Warranty provisions relates to the estimated outflow in respect of warranty for products sold by the Company. Due to very nature ofsuch costs, it is not possible to estimate the timing/uncertainties relating to their outflows as well as expense from such estimates.
2007-08 2006-07Rs. Rs.
Balance as at the beginning of the year - -
Additions during the year 4,110,772 -
Utilised/Reversed during the year 390,507 -
Balance as at the end of the year 3,720,265 -
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
Part - B NOTES TO ACCOUNTS (CONTD.)
150
24 Based on the information available with the company, the company has identified 8 vendors as Micro and Small enterprises as definedin the Micro, Small and Medium Enterprises Development Act, 2006. The balance due to such vendors as at 31.03.2008 has beendisclosed separately under “Current Liabilities and Provisions” (Refer Schedule 13).
Disclosure relating to dues Outstanding to Micro & Small Enterprises as defined in Micro Small & Medium Enterprises Act. 2006
2007-08(a) Amount remaining unpaid to Micro & Small Enterprises at the end of year Rs.
Principal Amount 213,604
Interest thereon 5,865
Total 219,469
(b) Amount of Payments made to Micro & Small Enterprises beyond the appointed date during the year
Principal Amount 224,433
Interest Actually Paid u/s 16 of the Act. Nil
Total 224,433
(c) Interest due & Payable (excluding interest u/s 16 of the Act) to Micro & Small Enterprises for delayed payments
Interest accrued during the year as per agreed terms Nil
Interest payable during the year as per agreed terms Nil
(d) Interest accrued (including interest u/s 16 of the Act) and remaining unpaid at the end of the year
Interest accrued during the year 5,865
Interest remaining unpaid during the year 5,865
25 Based on the results of the review of the countervailing duties imposed by the European Union, the European Commission has announcedtermination of the current countervailing duties on CD-Rs and allowed for their refund with effect from November 5, 2006. Accordinglythe Company has recognized the refund due for the period November 6, 2006 to March 31, 2007 amounting to Rs.187,514,298 as ‘otherincome’, out of which Rs.173,236,343 has been subsequently realised.
26 During the previous year, the remaining balance of project expenses amounting to Euro 504,000 incurred by European Optic MediaTechnology GmbH (a subsidiary company) for setting up of manufacturing facility in Europe, had been written off.
27 Pursuant to the issuance of the Companies (Accounting Standard) Rules, 2006 by the Central Government on December 7, 2006, ex-change gain amounting to Rs.112,628,134 on payables for fixed assets in foreign currency has been credited to Profit and Loss account.
28 An amount of Rs.12,278,010 representing minority’s share of loss in the consolidated profit and loss account, is the share of loss in asubsidiary to the extent of the minority interest as at March 31, 2007. Loss amounting to Rs. 40,432,761 has been absorbed by MBIL asthe share of loss of minority in excess of the minority’s equity as there is no binding obligation on the minority interest holder’s part tomake good such losses.
29 Other Disclosures:In terms of Accounting Standard Interpretation-15 issued on Accounting Standard - 21 ‘Consolidated Financial Statements’ by theInstitute of Chartered Accountants of India, additional information pursuant to requirements of Part II of Schedule VI to The CompaniesAct, 1956, have not been disclosed in these notes to the CFS.
30 Corresponding figures for the previous year have been regrouped/rearranged, wherever necessary to conform to current year classification.
By order of the Boardfor and on behalf of MOSER BAER INDIA LIMITED
Deepak Puri Ratul Puri Minni Katariya Yogesh Mathur R. SampathChairman and Executive Director Company Secretary Group CFO Vice President -Managing Director Financial Planning and Control
Place : New DelhiDate : May 22, 2008
MOSER BAER INDIA LIMITEDSCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (CONTD.)
Part - B NOTES TO ACCOUNTS (CONTD.)
151
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200
8M
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8E
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100
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31st
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Pera
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Adv
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Nil
N.A
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Nil
N.A
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Dev
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Mos
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Man
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152
Mos
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Lim
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2,8
67,8
66,1
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85,5
90,6
42)
7,2
69,5
02,7
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(506
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(509
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,338
) -
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3,7
42,4
25,0
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22,1
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6,0
27,4
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99 2
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- 4
2,58
6,08
4 (1
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152
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(156
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28,
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Mos
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(For
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700
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(123
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-(5
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(59,
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-(2
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(21,
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500
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(94,
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469
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64,
530
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(21,
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- (2
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Sol
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500
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468
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62,
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(21,
200)
- (2
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Mos
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(268
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Pho
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9.82
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129
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- 2
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1,19
7,73
8,30
5 (1
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9,72
6) 1
,192
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,436
5,7
70,8
57 -
(7,2
62,3
20)
- (7
,262
,320
) -
Nic
ofly
Lim
ited,
Cyp
rus
299,
547
439
,768
,042
441
,195
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1,1
27,7
67 4
41,2
46,5
24 -
(1,8
87,5
06)
- (1
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) -
Pera
soft
Lim
ited,
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rus
298,
946
51,
677,
093
53,
092,
221
1,1
16,1
82 5
2,99
5,38
4 -
(1,8
32,1
96)
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) -
Dal
ecre
st L
imite
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s 3
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20 3
24,3
28,1
22 3
25,7
35,9
98 1
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327
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) -
(1,8
30,4
87)
-C
row
nglo
be L
imite
d, C
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s29
4,01
8 3
34,9
27,9
12 3
36,4
57,9
78 1
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332
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3,4
91,9
19 (6
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) 5
21,4
25 (7
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) -
OM
&T
B.V
., N
ethe
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s (8
1%)
63.
44 8
18,6
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203
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389
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- 2
27,9
99,8
00 (2
24,7
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ubic
Tec
hnol
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Net
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63.
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) 1
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267
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- -
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) -
Eur
opea
n O
ptic
Med
ia T
echn
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mbH
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111
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966,
377)
45,
989,
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9,6
91,6
76 -
44,
316,
295
14,
148,
159
- 1
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Ger
man
yO
meg
a O
ptic
al M
edia
Tec
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lova
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63.
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82,7
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383
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857
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- 7
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(414
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) -
(414
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) -
Mos
er B
aer P
roje
cts
Priv
ate
Lim
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0,00
0 2
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82,
137,
110
74,
426,
072
- 2
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56,6
70)
45,
330
(4,7
02,0
00)
-(F
orm
erly
kno
wn
as P
aran
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Com
Priv
ate
Lim
ited)
(51%
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oser
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r Hyd
ro E
lect
ric P
ower
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500
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14,0
59)
29,
481,
383
37,
095,
442
- -
(8,1
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59)
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) -
Mos
er B
aer I
ndus
trial
Infra
stru
ctur
e lim
ited
500
,000
(40,
992)
476
,625
17,
617
--
(40,
992)
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0,99
2) -
Mos
er B
aer I
ndus
trial
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elop
men
t Lim
ited
500
,000
(39,
823)
476
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16,
417
--
(39,
823)
- (3
9,82
3) -
* D
etai
ls o
f Inv
estm
ents
:
Nam
e of
the
Sub
sidi
ary
Com
pany
Part
icul
ars
of In
vest
men
tsN
atur
e of
Inve
stm
ent
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ount
in R
s.
Nic
ofly
Lim
ited
The
Sol
aria
Cor
pora
tion
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res
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ies
B P
refe
rred
Sto
ck 1
85,2
93,2
00S
hare
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erie
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Pre
ferr
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tock
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res
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ies
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498,
346
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soft
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n C
orpo
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res
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ecre
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ol F
ocus
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roun
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olar
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e P
roiz
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ol F
ocus
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tock
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us E
urop
e, In
c.S
hare
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ferr
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tock
282
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Mos
er B
aer S
olar
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Sky
line
Sol
ar In
c.8%
Con
vert
ible
Pro
mis
sory
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e 9
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e:In
term
s of
app
rova
l by
the
Cen
tral G
over
nmen
t und
er S
ectio
n 21
2(8)
of t
he C
ompa
nies
Act
, 195
6, a
cop
y of
the
Bal
ance
She
et, P
rofit
& L
oss
Acc
ount
, Rep
ort o
f the
Boa
rdof
Dire
ctor
s’ a
nd th
e R
epor
t of t
he A
udito
rs’ o
f the
Sub
sidi
ary
Com
pani
es h
ave
not b
een
atta
ched
with
Ann
ual R
epor
t of t
he C
ompa
ny. T
he C
ompa
ny w
ill m
ake
avai
labl
eth
ese
docu
men
t and
the
rela
ted
deta
ils u
pon
requ
est b
y an
y in
vest
or o
f the
Com
pany
and
of i
ts S
ubsi
diar
ies.
The
se d
ocum
ents
will
als
o be
ava
ilabl
e fo
r ins
pect
ion
by a
nyin
vest
or a
t the
Hea
d O
ffice
of t
he C
ompa
ny a
t 43B
, Okh
la In
dust
rial E
stat
e, N
ew D
elhi
-110
020,
and
that
of t
he S
ubsi
diar
y C
ompa
nies
con
cern
ed.
Nam
e of
the
Sub
sidi
ary
Com
pany
Clo
sing
exc
hang
eC
apita
lR
eser
ves
Tota
lTo
tal
Inve
stm
ents
Turn
over
Pro
fit/(l
oss)
Pro
visi
on fo
rP
rofit
/(los
s)P
ropo
sed
rate
aga
inst
Indi
an(in
clud
ing
asse
tslia
bilit
ies
(exc
ept i
n ca
se(in
clud
ing
befo
re ta
xatio
nta
xatio
naf
ter
taxa
tion
divi
dend
Rup
ee a
s on
bala
nce
inof
inve
stm
ent i
not
her
inco
me)
Mar
ch 3
1, 2
008
prof
it in
loss
subs
idia
ry)*
acco
unt)
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
MO
SER
BA
ER IN
DIA
LIM
ITED
FIN
AN
CIA
L D
ETA
ILS
OF
THE
SUB
SID
IAR
Y C
OM
PAN
IES
FOR
TH
E YE
AR
EN
DED
MA
RC
H 3
1, 2
008
For a
nd o
n be
half
of th
e bo
ard
Sd/
-D
ate:
May
22,
200
8D
eepa
k P
uri
Pla
ce: N
ew D
elhi
Cha
irman
and
Man
agin
g D
irect
or
