Telco Construction Equipment Co Limited 2005

6th ANNUAL REPORT 2004-05
Telcon
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Sixth Annual Report 2004-05

Telco Construction Equipment Company Limited
CONTENTS
Board of Directors
Summarized Balance Sheet and Profit and Loss Account
Financial Statistics
Notice
Directors' Report
Report on Corporate Governance
20
Auditors Report
26
Balance Sheet
31
Profit and Loss Account
32
Cash Flow Statement
33
Schedules to Accounts
34
Significant Accounting Policies
42
Notes to Accounts - Balance Sheet
44
Notes to Accounts - Profit and Loss Account
49
Balance Sheet Abstract and Company's General Business Profile
54
Annual General Meeting on Thursday, June 9, 2005 at the Registered Office at 9.30 am.

BOARD OF DIRECTORS
J. K. Setna (Chairman)
V.R.Mehta
K.CMehra
P.P.Kadle
M. Kimura
H.Arahata
R. Sinha (Managing Director)
M.Tabei (Alternate to M Kimura)
S.lino (Alternate toHArahata)
COMPANY SECRETARY
A.Azhagesan
REGISTERED OFFICE
Jubilee Building
45 Museum Road
Bangalore 560 025
Tel. 080-25583345
Fax. 080-25583343
WORKS
Jamshedpur
Dharwad
AUDITORS
S B Billimoria & Co.

BANKERS
State Bank of India

HDFC Bank Ltd.
Corporation Bank
Standard Chartered Bank
Telcon

SUMMARIZED BALANCE SHEET

(Rupees Crores)
March 31,
2005
WHAT THE COMPANY OWNED
1.
NET FIXED ASSETS
2.
INVESTMENTS
3.
NET CURRENT ASSETS
4.
MISCELLANEOUS EXPENDITURE
5.
TOTAL ASSETS
WHAT THE COMPANY OWED
1
LOANS
2
NETWORTH
Represented by:
Share Capital Rs.lOO Crores (Previous Year Rs.l00 Crores)
Reserves Rs.l28.97 Crores (Previous Year Rs.l 05.31 Crores)
3.
DEFERRED TAX LIABILITY (NET)
4.
TOTAL FUNDS EMPLOYED
March 31,
2004
203.41
3.61
111.09
1.57
319.68
217.80
3.61
113.62
4.78
339.81
71.65
228.97
124.85
205.31
19.06
319.68
9.65
339.81
SUMMARIZED PROFIT AND LOSS ACCOUNT

2004 - 05
INCOME
SALE OF PRODUCTS AND OTHER INCOME
2.
3.
4.
5.
6.
(Rupees Crores)
2003 - 04
934.90
715.94
EXPENDITURE
MANUFACTURING AND OTHER EXPENSES
AMORTISATION OF DEFERRED REVENUE EXPENSES
DEPRECIATION
INTEREST
TOTAL EXPENDITURE
841.18
3.21
21.30
9.02
874.71
635.66
5.59
19.53
17.28
678.06
PROFIT / (LOSS) BEFORE TAX

TAX FOR THE YEAR
(I) CURRENT
(II) DEFERRED
60.19
37.88
10.02
9.41
3.46
13.75
PROFIT/(LOSS) AFTERTAX
BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR
40.76
0.62
20.67
(9.71)
41.38
10.96
2.04
17.10
22.24
4.69
5.64
0.63
41.38
10.96
APPROPRIATIONS
(I) TRANSFERRED TO DEBENTURE REDEMPTION RESERVE
(II) TRANSFERRED TO GENERAL RESERVE
(III) PROPOSED DIVIDEND AND TAX THEREON
(IV) BALANCE CARRIED TO BALANCE SHEET
Telcon

FINANCIAL STATISTICS
FYOO
FY01
FYO2
FY03
FY04
FY 05
CAPITAL ACCOUNTS (Rs. Crores)

(a)
Capital
100.00
100.00
100.00
100.00
100.00
100 .00
(b)
Reserves & surplus
110.50
108.43
74.07
79.91
105.31
128 .97
(c)
Borrowings
184.14
219.77
249.06
190.79
124.85
71 .65
(d)
Gross fixed assets
198.71
239.41
276.32
296.82
301.41
305 .11
(e)
Depreciation
17.64
34.44
50.48
65.72
83.61
101 .70
(f)
Net fixed assets
181.07
204.97
225.84
231.10
217.80
203 .41
(g)
Investments
0.03
3.61
3 .61
(h)
Net working capital
213.57
223.23
188.60
135.48
113.62
111 .09
REVENUE ACCOUNTS (Rs. Crores)

(a)
Gross revenue
447.18
489.62
450.05
552.05
711.24
926.25
(b)
Net revenue
393.81
423.20
397.39
488.70
629.45
816.83
(c)
Other income
1.83
7.61
3.28
4.47
4.70
8.65
(d)
Manufacturing & other expenses 340.97
374.88
396.53
438.78
553.87
731.76
(e)
Interest & depreciation
42.19
45.91
46.42
45.40
42.40
33.53
(f)
Profit/ (loss) before taxes
12.48
10.02
(42.28)
8.99
37.88
60.19
(g)
Taxes
1.90
0.85
(8.68)
4.86
17.21
19.43
(h)
Profit/ (loss) after taxes
10.58
9.17
(33.60)
4.13
20.67
40.76
5.64
17.10
(i)
Dividend and tax thereon
RATIOS
(a)
Profit after tax to sales (%)
2.36
1 .84
(7.41)
0.74
2.91
4.40
(b)
Earnings per Share (Rs.)
1.06
0 .92
(3.36)
0.41
2.07
4.08
(c)
Net worth per Share (Rs.)
21.05
20 .84
17.41
17.99
20.53
22.90
(d)
Fixed assets turnover (Times)
2.48
2 .43
2.01
2.41
3.27
4,55
(e)
Working capital turnover (Days)
174
1 64
152
89
58
44
-C_4>

jjfelf
NOTICE
Notice is hereby given that the Sixth Annual General Meeting of Telco Construction Equipment
Company Limited will be held on Thursday, the 9th June 2005 at 9.30 Hours at the Registered
Office of the Company at Jubilee Building, 45, Museum Road, Bangalore 560 025 to transact the
following business:
1
To receive, consider and adopt the Audited Profit and Loss Account for the year ended March
31, 2005 and the Balance Sheet as at that date together with the Report of the Directors and
the Auditors thereon;
To appoint a Director in place of Mr. K. C. Mehra, who retires by rotation and, being eligible,
offers himself to be re-appointed;
To appoint a Director in place of Mr. P P Kadle, who retires by rotation and, being eligible,
. .
offers himself to be re-appointed;
To declare a dividend; and
5. To appoint Auditors and fix their remuneration.

NOTE:
(a) A member entitled to attend and vote is entitled to appoint a proxy to attend and vote
instead of himself and the proxy need not be a member.
(b) The dividend as recommended by the directors for the year ended March 31, 2005 will be
payable on or after June 9, 2005 in accordance with the resolution to be passed by the
Members of the Company.
By order of the Board of Directors
Ranaveer Sinha
Managing Director
Mumbai,
May03,2005
Telcon

Revenue Distribution FY05
61%
12%
12%
2% 1%
Materials
I Depreciation
I Excise duty
I Interest
3%
D Personnel
Income Tax
D Operating Exps
Profit After Tax
Revenue Source FY05

86%
1% 1%
I Machines
I Parts
Services
r i Others

DIRECTORS' REPORT
To:
THE MEMBERS OF
TELCO CONSTRUCTION EQUIPMENT COMPANY LIMITED

The Directors have pleasure in presenting the Sixth Annual Report on the operations of your Company
together with the audited Profit and Loss Account for the year ended March 31, 2005 and the Balance
Sheet as of that date.
2.
Financial Results
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
3.
2004-05
2003-04
(Rs. Crores)
711 24
926.25
Gross revenue
Net revenue (excluding excise duty)
Total expenditure
Operating profit
Other income
Profit before interest, depreciation & amortization
Interest (net after capitalization)
Depreciation
Amortization of miscellaneous expenditure
Profit before tax
Provision fortaxation (current and deferred taxes)
Profit after tax
Balance brought forward
Amount available for appropriations
Transferred to Debenture Redemption Reserve
Transferred to General Reserve
Proposed dividend and tax thereon
Balance carried to Balance Sheet
Dividend
In view of the Company's profitable performance,
the Directors recommend the payment of a dividend
of Rs.1.50 per share on 10 Crores Ordinary Shares of
Rs.10/-each for the year 2004-05 (Re.0.50 per share
in 2003-04), if approved by the Members at the
forthcoming Annual General Meeting.
816.83
731.76
85.07
8.65
62945
553 87
75 58
4 69
80 27
17 28
93.72
9.02
21.30
3.21
60.19
19.43
40.76
0.62
19 53
5 59
37 87
17 21
41.38
1095
2066
-9 71
469
2.04
5 64
0 62
17.10
22.24
RsCr
500 am wammmmsm
BMBBB
25
20
450
i
4nn
250 '
FY01
15
10
Ml
Capital employed
ROCE
Telcon

4.
Construction Equipment Industry

The performance of the construction equipment industry recorded about 35 % growth in the
year under review continuing its similar growth rate of the previous year. During the year, the
country's economic conditions indicated high GDP growth, strong Rupee, controlled inflation,
soft interest rates, followed by increased demand for industrial and consumer products. These
indicators coupled with the focused infrastructure development had contributed to the growth tn
the construction equipment industry. The industry witnessed a number of activities in key end-use
segments. Though there was no significant additional investment on Roads sector, the existing
projects required a large number of smaller class of excavators. Irrigation projects announced in
the States of Andhra Pradesh and Gujarat had increased the demand for middle class and smaller
class of excavators respectively. Overall global demand for the iron ore had fuelled the mining
activities in the country, especially in the Karnataka and Orissa belts and thus increased the
expansion of the wheel loader market and the demand for large class excavators. The year had
also witnessed a surge in the demand for cranes, thanks to large infrastructure and power
projects. Housing and urban construction sectors had propelled the growth of market for mini
excavators and backhoe loaders. The industry had however faced inexorable challenges from
influx of cheap imports and used machines, advent of Korean and Chinese competition in key
areas, increase in steel prices, threat to key manpower from competition, and greater customer
expectations.
5.
Infrastructure and Facilities

During the year, the Company's Jamshedpur Plant was equipped with modular Fabrication
Fixtures for certain key components for large
excavators and an hydraulic rolling machine for its RS
cutting shop. It added modular and hydraulically
240
operated machining fixture for booms of middle
class excavators, besides an overhead crane and
additional welding sets. During the year, a plant- 210
in-plant facility was introduced in the Company's
Dharwad Works through a strategic partnership
180
with its suppliers, for providing robotic welding
and horizontal machining facilities for mini
excavators and backhoe loaders. Further, the
transmission sub-assembly operations for the
above products were successfully shifted from
Jamshedpur to the Dharwad Plant. In order to
have better communication between the two
plants and the corporate office at Bangalore, the
150
120
FY01
FY02
FY03
FY04
FY05
| Net fixed assets

- Fixed assets turnover
video conferencing facility was extended to

Dharwad Plant also.
-I 8

Telco Construction Equipment Co Limited 2005

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6th ANNUAL REPORT 2004-05

Sixth Annual Report 2004-05

Summarized Balance Sheet and Profit and Loss Account

Report on Corporate Governance

Profit and Loss Account

Cash Flow Statement

Significant Accounting Policies

Notes to Accounts - Balance Sheet

Notes to Accounts - Profit and Loss Account

Balance Sheet Abstract and Company's General Business Profile

Sixth Annual Report 2004-05

S B Billimoria & Co.

State Bank of India

Sixth Annual Report 2004-05

SUMMARIZED BALANCE SHEET

SUMMARIZED PROFIT AND LOSS ACCOUNT

PROFIT / (LOSS) BEFORE TAX

Sixth Annual Report 2004-05

CAPITAL ACCOUNTS (Rs. Crores)

Reserves & surplus

Gross fixed assets

Net fixed assets

Net working capital

REVENUE ACCOUNTS (Rs. Crores)

Manufacturing & other expenses 340.97

Interest & depreciation

Profit/ (loss) before taxes

Profit/ (loss) after taxes

Dividend and tax thereon

Profit after tax to sales (%)

Earnings per Share (Rs.)

Net worth per Share (Rs.)

Fixed assets turnover (Times)

Working capital turnover (Days)

Sixth Annual Report 2004-05

To declare a dividend; and

5. To appoint Auditors and fix their remuneration.

By order of the Board of Directors

Sixth Annual Report 2004-05

Revenue Distribution FY05

Revenue Source FY05

Sixth Annual Report 2004-05

TELCO CONSTRUCTION EQUIPMENT COMPANY LIMITED

Sixth Annual Report 2004-05

Construction Equipment Industry

Infrastructure and Facilities

| Net fixed assets

video conferencing facility was extended to

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