FCI OEN CONNECTORS  LTD

Regd.Office:XXIX/2089, Tripunithura Road, Thykoodam, Cochin 682 019

DIRECTORS’ REPORT

We are pleased to present the annual report and accounts for the year 2009

FINANCIAL RESULTS

The financial results are summarised below:

Domestic sales increased by 14% to Rs.978 million (Rs.859 million in 2008).  Export sales went up by 7% to Rs.1545 million (Rs.1450 million in 2008).  Net sales thus grew by 9% to Rs.2522 million in 2009 (Rs.2309 million in 2008).

Other income was Rs.262 million (Rs.299 million in 2008).   Profit Before Interest, Depreciation and Tax (PBDIT) was Rs.526 million (Rs.483 million in 2008).   Net profit was Rs.258 million (Rs.243 million in 2008). Earnings per share was Rs.41.03 (Rs.38.55 in 2008). 

BUSINESS PERFORMANCE

In spite of the negative growth in the connector industry globally, our performance was heartening.  Our sales was low in the first half; but it gathered momentum  towards the last quarter of 2009.

Product transfers from FCI group companies in Europe and USA resulted in higher export sales.  In the domestic front, few design wins increased our sales turnover.

The change in the manufacturing process (GxT Plating) saved us significantly in production cost when gold prices touched new heights.    Material price was soft during the first half of 2009, but increased during the second half and the trend is continuing.  We  did not face any impact on forex fluctuations as the Company’s exports and imports were more or less balanced.

Margins were under pressure due to severe competition as free capacity was available with all competitors.  However, our continued good service levels helped us to retain our existing customers and also get enhanced share of business.

CURRENT YEAR

Going forward, 2010 should be a better year than 2009.  Both domestic and export markets look bright.  The order book is healthy and will hopefully get better.  Govt. of India’s focus on rural connectivity and high-speed internet will boost demand in the telecom sector.

In 2009, several global telecom manufacturers have started manufacturing activities in India for infrastructure equipment and this will benefit us.  Govt. of India’s  anti-dumping duty on SDH (transmission equipments) and their decision to exempt mandatory security clearance of goods manufactured in India will also help us in 2010. 

AWARDS

We won the second position in the engineering category at the annual Safety Awards instituted by the Department of Factories and Boilers in Thiruvananthapuram, Kerala.  

We also received Gold Award from FCI Headquarters in a function held in Budapest, Hungary, for the effective deployment of Customer Focus Training in India.  This Award was given for 100% coverage of employees in the 4 hours training within the scheduled time.

QUALITY

Our Company is certified to the ISO 9001:2008 quality management system and ISO 14001:2004 environment management system.  Product certification includes International approvals like UL, CSA & National approvals like LCSO, CACT, DQQA and DGAQA.  As part of Lean Implementation, tools like QRQC & Red Bin Analysis are used in the manufacturing shops to improve the quality performance.

INDUSTRIAL RELATIONS

Employee-relations was cordial and the Company gets full co-operation from the employees in terms of the safety, productivity improvement techniques, lean implementation etc.   The Union representing the workers submitted their charter of demands from 1^st March 2010; Negotiations for the next long-term settlement with the employee union has commenced.

SHARES

As reported in the previous year, your Company’s shares were delisted from the Indian Stock Exchanges.  The parent Company FCI SA continues to buy shares from the public shareholders at the delisting offer.  Currently FCI holds 97.53% shares of the Company.   This  provides an excellent exit opportunity for the minority shareholders.

RESTRUCTURING PLANS

The proposed demerger of Automotive Division and Tooling Division of FCI Technology Services Ltd. to our Company has been approved by the shareholders and creditors of both the companies in their meeting on 4^th  October 2009.   The application for approval of demerger has been filed with the Hon’ble High Court of Kerala and the final order of demerger is expected soon.

DIVIDEND

In view of the transfer of projects to India and the consequent requirement of additional funds, the Board of Directors have decided not to recommend any dividend to the Shareholders for the year.

SUBSIDIARIES

OCL Infomatics Ltd,  has completed the process of Members’ voluntarily  winding up and is waiting for the order  from the High Court/Official Liquidator.

DIRECTORS

Dr. M V Pylee and Ms. Sylvie Richard  retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for re-election.

DIRECTOR'S RESPONSIBILITY STATEMENT

As per the provisions of Section 217 (2AA) of the Companies Act 1956, the Board confirms that

1. The financial statements are in full conformity with the requirements of the Companies  Act 1956 and applicable accounting standards had been followed along with proper explanation relating to material departures.

2. The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company  at the end of the financial year and of the profit or loss of the Company for that period.

3. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this act for safeguarding    the assets of the Company and for preventing and detecting fraud and other irregularities.

4.  The Directors have prepared the annual accounts on a going concern basis.

EMPLOYEES

Directors wish to acknowledge the support and valuable contributions on the part of all employees.

Information pursuant to Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is given in the annexure to the Annual Report.  

AUDITORS

M/s. Lovelock & Lewes, Chartered Accountants, Chennai, statutory auditors of the Company retire at the ensuing Annual General Meeting.  The said auditors intimated the company of their inability to continue as statutory auditors for the ensuing year.  Company received consent letter from M/s. Price Waterhouse, Chartered Accountants, Chennai, for accepting the position of statutory auditor, if the same is approved by the shareholders.

FIXED DEPOSITS

5 deposits amounting to Rs.43,000/- due for repayment before 31 December 2009, were not claimed as on that day. 

APPRECIATION

Directors wish to place on record their appreciation for the continued support received from Shareholders and Banks.  The unstinted support of FCI has greatly contributed to the Company’s performance and growth.  Directors are also grateful to the Company's business partners and customers for their support and patronage.

                                                                                    On behalf of the Board of Directors

Cochin                                                                                          (S.N. TALWAR)

12.03.2010                                                                                        Chairman

ANNEXURE TO THE DIRECTORS' REPORT

STATEMENT CONTAINING PARTICULARS PURSUANT TO THE COMPANIES

(DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS)           RULES,1988 AND FORMING PART OF DIRECTORS' REPORT.

A.    CONSERVATION OF ENERGY

1. Energy conservation measures undertaken:

1)  Installed PLC relay logic in Bruderer- 4,5,6,7 & 11 to avoid the running of sucker motor, Main motor and oil pump during the machine idle time(Tool changing or tool breakdown time)

2)  Reduced energy consumption on plating plant exhaust blowers by replacing  them with energy efficient blowers.

3)  Installed motorized damper in the duct of Centralised A/C plant and restricted the cold air flow from AHU to non working areas during night shifts

4) Conventional type 40 W fluorescent tube and copper choke replaced by electronic ballast with T5 & T8 tubes

5)  Reduced energy consumption in Plating plant compressor air blower by running the air blower by its max rated capacity.

6)  Reduced energy consumption of air condition system by applying sun control film in glass doors and windows.

7)  Stopped air leak in the compressed air system by changing old M.S pipe line to Poly Propylene.

b)    Additional investments and proposals, if any, being implemented for the reduction of consumption of energy.

     1)   Installation of PLC relay logic in all Stamping presses

     2)   Installation of Material Lift to reduce the fork lift diesel consumption

     3)  Installation of packaged air condition system in Assembly 1 and office area to avoid running of old AC compressors

c)    impact of measures (a) & (b) for reduction of energy consumption and consequent impact on the cost of production of goods.

                The power cost per connector  will get reduced

d)  Total energy consumption and energy consumption per unit as prescribed in Form A:

Not applicable

B.    TECHNOLOGY ABSORPTION:

Research & Development

        1.    Specific areas in which R & D carried out by the company:

The R&D division of the company has successfully developed new connectors, accessories and cable assemblies for Communication,  Data & Consumer markets

2.    Benefits derived as a result of the above R & D

        The above new development of products has helped sustain and increase market share and able to add new products and new customer demands.

       3.     Future plan of action

New products with latest technology covering high speed signal transmission requirements  are being developed for Communication,  Data & Consumer markets.

4. 

Technology Absorption, Adaptation and Innovation:

1.    Efforts, in brief, made towards technology absorption, adaptation and innovation.

The company has adapted and upgraded the manufacturing facility with latest production technology from  collaborator's facilities in Europe and USA. The company has implemented latest techniques like lean manufacturing in its factories.

2.     Benefits derived as a result of the above efforts e.g. product improvement, cost reduction, product development, import substitution etc.

The products manufactured with the latest technologies are getting better customer acceptance in the global market with increased market share.

      3.    In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year) following information may be furnished.

             (a) Technology imported  (b) Year of import  (c)  Has technology been fully absorbed?  (d) If not fully absorbed, areas where this has not taken place, reasons therefore and future plans of action:

        Technology imported was in 1992-93 for the manufacture of Circular connectors. Technology has been  absorbed and project completed.  Company has been receiving technology with respect to the new products as well as improvement on existing products on a continuous basis.

1. FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with regard to foreign exchange outgo and earnings appear as item Nos. 15 & 17, being Notes to Accounts as appended to the accounts.