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CMC 2004 05


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CMC 2004 05

  1. 1. CMC Limited Twenty ninth annual report 2004 - 2005 Contents Corporate Information 2 Notice 3 Directors’ Report 6 Management Discussion and Analysis 14 Corporate Governance Report 19 Auditors’ Certificate on Corporate Governance 26 Company Secretary’s Responsibility Statement 27 Auditors’ Report 28 Balance Sheet 32 Profit & Loss Account 33 Cash Flow Statement 34 Schedules & Notes on Accounts 35 Balance Sheet Abstract 50 Details of Subsidiary Company 51 Auditors’ Report on the Consolidated Accounts 52 Consolidated Accounts 54 Annual General Meeting on Friday, Proxy/Attendance Sheet 69 June 17, 2005 at 2.30 p.m. at Bhartiya Payment of Dividend by Electronic Clearing Services 71 Vidya Bhavan Auditorium, BVB Hyderabad Kendra No. 5-9-1105, Basheerbagh-King Koti This annual report can be Road, Hyderabad-500029 accessed at 1 CMC-1.p65 1 5/19/2005, 11:57 AM
  2. 2. CMC Limited Twenty ninth annual report 2004 - 2005 CORPORATE INFORMATION Principal Bankers Canara Bank BOARD OF DIRECTORS State Bank of Bikaner & Jaipur ICICI Bank Chairman Audit Committee Mr S Ramadorai Dr KRS Murthy Managing Director & CEO Mr Surendra Singh Mr R Ramanan Mr C B Bhave Directors Share Transfer-cum-Shareholders Grievance Committee Mr Ishaat Hussain Mr Surendra Singh Dr KRS Murthy Mr R Ramanan Mr Surendra Singh Mr Shardul Shroff Mr C B Bhave Mr Vivek Agarwal Mr Shardul Shroff Remuneration Committee Company Secretary & Head - Legal Dr KRS Murthy Mr Vivek Agarwal Mr S Ramadorai Mr C B Bhave Statutory Auditors Ethics and Compliance Committee M/s S.B. Billimoria & Co. Chartered Accountants Mr Surendra Singh Mr R Ramanan Secretarial Auditors Mr Shardul Shroff Chandrasekaran Associates Mr Vivek Agarwal Company Secretaries Registrars & Share Transfer Agents Registered Office M/s Karvy Computershare Private Limited CMC Centre Karvy House, 46, Avenue 4, Street No 1 Old Mumbai Highway Banjara Hills, Hyderabad 500 034 Gachibowli Stock Exchanges where Company’s Hyderabad-500019 (A.P.) Securities are listed Corporate Office The Stock Exchange, Mumbai PTI Building, 5th Floor National Stock Exchange of India Ltd. 4, Sansad Marg The Calcutta Stock Exchange Ass. Ltd. New Delhi-110001 2 CMC-1.p65 2 5/19/2005, 11:57 AM
  3. 3. NOTICE Notice is hereby given that the 29th Annual General Meeting of the Members of CMC Limited will be held on Friday, June 17, 2005 at 2.30 P.M. at the Bhartiya Vidya Bhavan Auditorium, BVB Hyderabad Kendra No.5-9-1105 Basheerbagh-King Koti Road, Hyderabad-500 029, A.P. to transact the following: ORDINARY BUSINESS: To receive, consider and adopt the audited Profit and Loss Account for the year ended 31st March, 2005 and the Balance 1. Sheet as at that date and the Reports of the Board of Directors and the Auditors thereon. 2. To declare a dividend. 3. To appoint a Director in place of Dr KRS Murthy, who retires by rotation and, being eligible, offers himself for re-appointment. 4. To appoint a Director in place of Mr Shardul Shroff, who retires by rotation and, being eligible, offers himself for re- appointment. 5. To appoint Statutory Auditors and to fix their remuneration. BY ORDER OF THE BOARD For CMC LIMITED Mumbai VIVEK AGARWAL April 18, 2005 COMPANY SECRETARY & HEAD - LEGAL Registered Office: CMC Centre Old Mumbai Highway, Gachibowli Hyderabad-500 019 Notes: 1. A Member entitled to attend and vote is entitled to appoint a Proxy to attend and vote at the meeting instead of himself and the Proxy need not be a Member of the Company. The Proxy Form must be deposited at the Registered Office of the Company not later than 48 hours before the commencement of the meeting. 2. The relevant details of item nos. 3 & 4 above pursuant to Clause-49 of the listing agreement are annexed hereto. 3. Members who hold shares in dematerialised form are requested to bring their DP ID and Client ID numbers for easy identification of attendance at the meeting. 4. For the convenience of the Members, attendance slip is enclosed elsewhere in the Annual Report. Members/Proxy Holders/ Authorised Representatives are requested to fill in and affix their signatures at the space provided therein and surrender the same at the venue. Proxy/Authorised Representatives of a Member should state on the attendance slip as ‘Proxy’ or ‘Authorised Representative’ as the case may be. 5. The Register of Members and the Share Transfer Books of the Company will remain closed from Tuesday, June 14, 2005 to Friday, June 17, 2005 (both days inclusive). 3 CMC-1.p65 3 5/19/2005, 11:57 AM
  4. 4. CMC Limited Twenty ninth annual report 2004 - 2005 6. The dividend as recommended by the Board of Directors, if declared at the Annual General Meeting, will be paid at par after June 17, 2005 (i) to those shareholders whose names appear on the Company’s Register of Members after giving effect to all valid share transfers in physical form lodged with the Company on or before June 13, 2005; (ii) in respect of shares held in electronic form to those ‘deemed’ members whose names appear in the statements of beneficial ownership furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Ltd. (CDSL) as at the end of business hours on June 13, 2005. 7. In accordance with SEBI’s directions vide their Circular No. DCC/FITT/Cir-3/2001 dated October 15, 2001, arrangements have been made to credit your dividend amount directly to your bank account through the Electronic Clearing Service (ECS). In case you hold shares in physical form, please furnish your bank details in the ECS Mandate Form enclosed separately together with a xerox copy of your cheque leaf and return to our Registrars, Karvy Computershare Private Limited on or before June 13, 2005. The said details in respect of the shares held in electronic form should be sent to your respective Depository Participant and not to the Registrar as the Registrar is obliged to use only the data provided by the Depository while making payment of dividend. 8. Pursuant to provisions of Section 205A(5) of the Companies Act, 1956, dividends which remain unclaimed for a period of 7 years from the date of transfer of the same to the Company’s unpaid dividend account will be transferred to the Investor Education and Protection Fund established by the Central Government. Shareholders who have not encashed their dividend warrant(s) so far are requested to make their claim to the Registrar & Share Transfer Agents of the Company. The Company has been periodically reminding the shareholders concerned to claim their dividend from the Company. 9. Pursuant to Section 109A of the Companies Act, 1956, shareholders are entitled to make nomination in respect of shares held by them. Shareholders desirous of making nominations are requested to send their requests in Form No. 2B in duplicate (which will be made available on request) to the Registrar & Share Transfer Agents of the Company. 10. As an austerity measure, copies of the Annual Report will not be distributed at the Annual General Meeting. Members are requested to bring their copies to the meeting. 4 CMC-1.p65 4 5/19/2005, 11:57 AM
  5. 5. DETAILS OF DIRECTORS RETIRING BY ROTATION AND SEEKING REAPPOINTMENT (In Pursuance of Clause 49 of the Listing Agreement) Name Dr KRS Murthy Mr Shardul Shroff Date of Birth 22.03.1938 01.10.1955 Date of Appointment 16.10.2001 16.10.2001 Doctorate in Business Administration B.Com. (Hons) from Sydenham Qualifications from Harvard Business School, Master College, Mumbai, LL.B. from in Mgmt. from Sloan School, MIT, Government Law College, Mumbai, Gold Medalist of Mysore University. Advocate on Record, Supreme Court. Expertise in specific functional areas Business Management Legal, Project Finance, Mergers & Acquisitions, Insurance, Corporate Finance etc. Directorships in National Stock Exchange- Infrastructure Development other Companies Public Representative Finance Co. Limited Apollo Tyres Limited NIIT Limited BILT Limited Chairman/Member of Committees CMC Limited CMC Limited of the Board of Companies of Audit Committee - Chairman Share Transfer cum Shareholders which he is a Director Remuneration Committee - Chairman Grievance Committee Infrastructure Development Finance Corporation Ltd. Audit Committee Apollo Tyres Limited Share Grievance Committee NIIT Limited Share Grievance Committee Audit Committee BY ORDER OF THE BOARD For CMC LIMITED Mumbai VIVEK AGARWAL April 18, 2005 COMPANY SECRETARY & HEAD - LEGAL 5 CMC-1.p65 5 5/19/2005, 11:57 AM
  6. 6. CMC Limited Twenty ninth annual report 2004 - 2005 DIRECTORS’ REPORT TO THE MEMBERS OF CMC LIMITED Your Directors have pleasure in presenting the Twenty-Ninth Annual Report and the Audited Statement of Accounts for the year ended 31st March, 2005. 1. FINANCIAL RESULTS (Rs. in Crores) Particulars 2004-05 2003-04 Income from Sales and Services 775.67 747.07 Other Income 6.80 16.60 Total Income 782.47 763.67 Operating Expenses 736.14 685.65 Profit before Depreciation, Interest and Tax 46.33 78.02 Depreciation 9.16 8.75 Interest 4.22 3.56 Profit before Tax 32.95 65.71 Provision for Taxation (incl. deferred Income Tax) 9.89 17.72 Profit after Tax 23.06 47.99 Add: Profit brought forward from previous year 130.93 97.14 Amount available for appropriations 153.99 145.13 Appropriations Proposed Dividend 6.82 8.33 Tax on Proposed Dividend 0.96 1.07 Transfer to General Reserve 2.31 4.80 Balance carried to Balance Sheet 143.90 130.93 153.99 145.13 1.1 OPERATING RESULTS The operating revenue for the year at Rs. 775.67 crores registered an increase of 3.8% over the previous year, primarily driven by 32.5% increase in international revenue from Rs. 135.38 crores to Rs. 179.32 crores. The Company’s total revenue for the year at Rs. 782.47 crores registered an increase of 2.5% over the previous year. 6 CMC-1.p65 6 5/19/2005, 11:57 AM
  7. 7. The profit before tax at Rs. 32.95 crores registered a decrease of 49.9% over the previous year, primarily on account of higher write offs and provisioning of bad and doubtful debts by Rs. 19.07 crores and lower other income by Rs. 9.80 crores. The profit after tax stood at Rs. 23.06 crores registering a decrease of 51.9% over the previous year. 2. DIVIDEND Your Directors recommend payment of dividend at 45% of paid-up equity share capital for the year ended March 31, 2005. 3. BUSINESS OPERATIONS 2004-05 2003-04 Others E&T ITES E&T Others 0.5% 3.6% ITES 2.4% 2.4% 1.1% 4.4% SI CS SI CS 28.8% 64.7% 25.0% 67.1% Total Revenue: Rs. 782.47 crores Total Revenue: Rs. 763.67 crores 3.1 Customer Services (CS) Customer Services Strategic Business Unit (SBU) undertakes activities of IT Infrastructure development and management, network design, consultancy and management, storage management, security solutions, business continuity/disaster recovery, third party maintenance and equipment supply and integration. The CS SBU earned revenue of Rs. 506.70 crores during the year compared with Rs. 512.29 crores earned during the previous year registering a decline of 1.1%. The CS SBU faced increased competition in the domestic market resulting in pressure on pricing and margins. The CS SBU continued to be a dominant provider of end-to-end IT solutions and services with strong pan India presence, as your Company executed some of the largest IT infrastructure projects for banks and insurance companies during the year with over 1000 locations across length and breadth of the Country. 3.2 Systems Integration (SI) The SI SBU undertakes the activities of solution deployment that includes software development, software maintenance and support, turnkey project implementation and systems consultancy.The SI SBU earned revenue of Rs 225.68 crores during the current year compared with Rs. 191.15 crores earned in the previous year, registering an increase of 18.1%. The growth in the revenue of SI SBU was primarily driven by strong growth in the international markets. Some of the key solutions and embedded systems offerings of SI SBU got increased acceptance in the international markets. The SI SBU has become one of the leading embedded systems service provider from India to some of the fortune 100 companies worldwide. In the domestic market the SI SBU continues to be dominant player in general insurance sector, securities sector and e-Governance space. 7 CMC-1.p65 7 5/19/2005, 11:57 AM
  8. 8. CMC Limited Twenty ninth annual report 2004 - 2005 3.3 IT Enabled Services (ITES) ITES SBU is a value added service provider providing OMR/ICR based forms processing services, document management services, managed network services, Electronic Data Interchange (EDI) services, web design and hosting services, facility management etc. The ITES SBU earned revenue of Rs 19.18 crores during the current year compared with Rs. 33.85 crores earned in the previous year registering a decline of 43.4%. The ITES SBU is facing increased competition from un-organised sector in domestic market. However the ITES SBU has been able to leverage its experience and expertise in the international markets and position itself for large projects overseas. 3.4 Education & Training (E&T) E&T SBU of the Company offers courses on information technology including professional courses, vendor certified courses, career development courses, through its own and franchisee centers. The E&T SBU turned around during current year with revenue of Rs. 28.12 crores compared with Rs. 18.48 crores registering an increase of 52.2%. The E&T has benefited from general upsurge in E&T market. In addition, the E&T SBU is repositioning itself in corporate training segment and re-orientating its career courses. 3.5 International Operations: Increased focus on international markets has been a part of the core strategy of your Company. The Company increased its International revenue by 32.5% to Rs. 179.32 crores during current year. The international market strategy of the Company revolves around leveraging TCS’s international presence and CMC’s products and solutions. The increase in international revenue is primarily due to 219% increase in revenue from Embedded Systems Services primarily from the customers in the USA and Europe and 46% growth from solutions implementation primarily for the customers in Europe and Middle East & African Region. Your Company suspended work for two international clients following their organizational restructuring. As an abundant precaution your Company has provisioned for Rs. 16.00 crores for their dues. 4. SUBSIDIARY COMPANY Your Company has one wholly owned subsidiary CMC Americas; Inc. in the United States of America. In terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, copies of the Balance Sheet, Profit & Loss Account and Report of the Auditors of the Subsidiary Company have not been attached. The Annual Accounts of the Subsidiary Company and related detailed information will be made available to the Holding and Subsidiary Company Investors seeking such information at any point of time. The Annual Accounts of the Subsidiary Company are also kept for inspection by any investors at the Registered Office of your Company. However, pursuant to Accounting Standard 21 issued by the Institute of Chartered Accountants of India, the Consolidated Financial Statements presented by the Company include the financial information of its Subsidiary. 8 CMC-1.p65 8 5/19/2005, 11:57 AM
  9. 9. 5. FIXED DEPOSIT During the year, the Company has not accepted any fixed deposits under Section 58A of the Companies Act, 1956. 6. LISTING The equity shares of the Company are listed with Calcutta Stock Exchange, The Stock Exchange, Mumbai and National Stock Exchange. 7. DIRECTORS Dr KRS Murthy and Mr. Shardul Shroff are retiring from the Board by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-election. 8. COMMUNITY DEVELOPMENT The Company is committed to improve the quality of the underprivileged community. As a part of fulfilling its social obligations, the Company generates active participation among the staff members so that emphasis shifts from donation to volunteering on the part of its staff members. As part of this, staff members keenly participated in different ways such as blood donation, educating the underprivileged children, conducting Quiz on Science in the schools, imparting skills in tailoring, stitching, etc. to the underprivileged women, arranging exhibition-cum-sale stall for selling the products manufactured by the National Blind Association, etc. CMC staff members made generous financial contribution to the Tata Relief Fund to help the victims of the recent national tragedy resulting from Tsunami. CMC volunteers also visited the Tsunami affected areas and did physical help, distributed materials like clothes etc. 9. BUSINESS EXCELLENCE AND QUALITY INITIATIVES Your Company continued its journey in the Tata Business Excellence Model (TBEM) by signing Brand Equity and Business Promotion (BE-BP) Agreement with Tata Sons Limited during the current year. This agreement entitles your Company to leverage the Tata brand and access to the group resources and expertise. Your Company achieved CMM level 5 certification for its development center at Hyderabad during the year. 10. CORPORATE GOVERNANCE As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as the Auditors’ Certificate regarding compliance of conditions of Corporate Governance forms a part of the Annual Report. 11. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Information as required under the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 in respect of energy conservation, technology absorption and foreign exchange earnings and outgo is given in Annexure-I to this Report. 9 CMC-1.p65 9 5/19/2005, 11:57 AM
  10. 10. CMC Limited Twenty ninth annual report 2004 - 2005 12. DIRECTORS’ RESPONSIBILITY STATEMENT Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors based on the information and representations received from the operating management confirm that: i) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed with no material departures; ii) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2005 and of the profit of the Company for that period; iii) The Directors had taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and iv) The Directors had prepared the Annual Accounts on a ‘going concern’ basis. 13. AUDITORS M/s S B Billimoria & Co., the Statutory Auditors of the Company, hold office until the ensuing Annual General Meeting. The said Auditors have under Section 224(1) of the Companies Act, 1956, furnished the certificate regarding their eligibility for re-appointment. 14. PARTICULARS OF STAFF Information as required under Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, regarding particulars of employees drawing remuneration of Rs. 24 lacs per annum or Rs. 2 lacs per month, as the case may be, is set out in the Annexure – II to this report. The Ministry of Company Affairs has recently amended the Companies (Particulars of Employees) Rules, 1975 to the effect that the particulars of the employees of the companies engaged in Information Technology sector, posted and working outside India, not being directors or their relatives, need not be included in the statement but, such particulars shall be furnished to the Registrar of Companies. Accordingly, the statement included in this report does not contain the particulars of employees who are posted and working outside India. 15. ACKNOWLEDGEMENTS The Directors wish to convey their appreciation to business associates for their support and contribution during the year. The Directors would also like to thank the employees, shareholders, customers, suppliers and bankers for the continued support given by them to the Company and their confidence reposed in the management. For and on behalf of the Board Mumbai S RAMADORAI April 18, 2005 Chairman 10 CMC-1.p65 10 5/19/2005, 11:57 AM
  11. 11. Annexure-I ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO A. CONSERVATION OF ENERGY Your Company is not an Industry as listed in Schedule to rule 2 of the Companies (Disclosure of particulars in the Report of Board of Directors) Rule, 1988. B. TECHNOLOGY ABSORPTION Efforts made in technology absorption - as per Form B given below: FORM B 1. Research and Development (R&D) a. Specific Areas in which Research and Development (R&D) is being carried out by the Company Developing biometric solutions for access control and personal identification for civilian application. Developing Point of Sales Systems using embedded technology Global Positioning System (GPS) based vehicle tracking systems solutions b. Benefits derived as a result of the above efforts: The ability to develop and engineer solutions to meet the complex IT needs of customers is dependent on the pro-active work being carried out in the above areas. This also helps the Company to develop and retain the talent pool, which is an important element of its end-to-end turnkey solutions capability. c. Future Plan of Action Your Company is in the process of exchanging technological advances and developments with its parent Company Tata Consultancy Services Limited. Your Company constantly gives training to its staff to enable them to adapt newer technologies and apply them to the problem domains. d. Expenditure on R&D (Rs. in crores) Particulars 2004-05 2003-04 A Capital 0.23 0.68 B Recurring 9.89 10.86 C Total 10.12 11.54 D Total R&D Expenditure as a Percentage of Turnover 1.29 1.51 11 CMC 11.p65 11 5/19/2005, 11:57 AM
  12. 12. CMC Limited Twenty ninth annual report 2004 - 2005 2. Technology absorption, adaptation and innovation a. Efforts made towards technology absorption, adaptation and innovation Your Company proactively develops technology for its business needs. It also uses available state-of-the-art technology in conceptualizing solutions. Technologies developed by the Company are used extensively for providing solutions to its customers. Projects are executed that span across technology groups such as use of Java & Web technologies for embedded systems, use of FPGA for Finger Print Identification. b. Benefits derived as a result of the above efforts Upgradation of the Company’s product portfolio on new technologies. Social benefits arising out of the use of IT in core sectors and ‘IT-enabling’ the Country-especially in Law and Order. c. Information regarding Imported Technology Your Company has not imported any technology. C. FOREIGN EXCHANGE EARNINGS AND OUTGO 1. Activities Relating to Exports, initiatives to increase exports, Developments of new export markets for products and services & export plan As a part of its core strategy, the Company is focusing on increasing exports of its services by leveraging wide marketing reach of its parent company Tata Consultancy services Limited. The Company has established itself as a major supplier of Embedded System Services and software solution in key industry verticals and e-Governance space. 2. Total Foreign Exchange Earnings & Outgoings The foreign exchange earnings of the Company during the year were Rs. 123.24 Crores while the outgoings were Rs. 71.01 Crores. For and on behalf of the Board Mumbai S RAMADORAI April 18, 2005 Chairman 12 CMC 11.p65 12 5/19/2005, 11:57 AM
  13. 13. Annexure-II STATEMENT PURSUANT TO SECTION 217(2A) OF THE COMPANIES ACT 1956 AND THE COMPANIES (PARTICULARS OF EMPLOYMENT) RULES, 1975. Name Age Designation/ Remuneration Qualification Experience Date of Last (Yrs.) Nature of Duties (Rs.) (Yrs.) commence- employment ment of held, employment Designation (A) Personnel who are in receipt of remuneration aggregating not less than Rs. 24,00,000 per annum and employed throughout the year. NIL (B) Personnel who are in receipt of remuneration aggregating not less than Rs. 2,00,000 per month and employed for part of the year Jonnavithula Suryaprakash 41 Technical Head- 1,451,998 M Tech- 16 17.11.2004 CISCO - USA XIDC Digital System Notes: i. The above remuneration includes salaries, allowances, contribution to Provident Fund and perquisites valued in accordance with the Income Tax Rules 1962. ii. The company has contributed to the Gratuity Fund an appropriate amount based on actual valuation. For and on behalf of the Board Mumbai S RAMADORAI April 18, 2005 Chairman 13 CMC 11.p65 13 5/19/2005, 11:57 AM
  14. 14. CMC Limited Twenty ninth annual report 2004 - 2005 MANAGEMENT DISCUSSION AND ANALYSIS Overview The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956 and Generally Accepted Accounting Principles (GAAP) in India. There are no material departures from prescribed accounting standards in the adoption of the accounting standards. The management of CMC Limited accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgements used therein. These estimates and judgements 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 the state of affairs and profits for the year. Industry structure and development As per the early estimates of NASSCOM, the Indian IT industry is estimated to have grown about 30% during 2004-05. Domestic IT spends is estimated to have grown by about 25%, whereas exports have estimated to have grown by about 35% during 2004-05. The domestic growth has been driven mainly by increased IT spends by Government, Banks, Financial Services & Insurance, Telecom, Manufacturing/Automotive and Retail. Indians have started outsourcing core area functions, such as finance, supply chain management and procurement to MNCs using IT as a competitive differentiator for conducting business. Software exports from India are clearly demonstrating increased offshore delivery model. Indian Vendors have started expanding their service offerings to include new service lines, such as, package software implementation, integration, R&D Engineering and network management. Opportunity and Threats Opportunity: The Company is strong in providing IT infrastructure setup, support and management as well as in the system integration business in the domestic market, namely in verticals like insurance and banking etc. It also has built up capabilities in back office data conversion and data center applications. The Company is on the threshold of becoming a major provider of embedded systems services from India addressing varied requirements of electronic, telecom, and other high technology industries. The Company now has the extended reach and brand equity of the TATA group to market its products and services in unrepresented geographies and newer customer segments. Services will continue to be a key business area and will be strengthened to improve price performance and market share. Appropriate business alliance will be entered into to compliment internal efforts towards consolidation and growth. Threats: The competition from international IT players in the domestic solutions projects has intensified. Further in some of the areas being addressed by ITES SBU, there is increased competition from un-organised sector, who are able to provide stiff price competition leading to stress on margins. The Company has duality of relationship with its major suppliers. In specific instances the Company partners with the suppliers to offer the most competitive products at optimal prices to its customers and there are many instances where the company ends up competing with them. Financial Performance: Revenues: During the year under review, the Company earned total revenue of Rs.782.47 crores compared with Rs. 763.67 crores during the last year registering a growth 2.5%. The income from sales and services at Rs. 775.67 crores registered a growth of 3.8% compared with Rs. 747.07 crores earned during the last year. Increase in revenue is mainly on account of International and Education & Training business. The share of equipment business in total revenue during the current year declined marginally from 50.5% to 48.8%. The services revenue has increased 14 CMC 11.p65 14 5/19/2005, 11:57 AM
  15. 15. by 7.24% from Rs. 370.24 crores to Rs. 397.05 crores resulting in increase of its share in total revenue from 49.5% to 51.2%. Other income declined by 59% from Rs. 16.60 crores to Rs. 6.80 crores during the year. The segment-wise breakdown of total revenue is given below: (Rs. Crores) Segment 2004-05 2003-04 Domestic - Customer Services 476.86 476.32 - Systems Integration 74.93 85.24 - ITES 16.97 32.34 - Education & Training 27.59 17.79 International 179.32 135.38 Other Income 6.80 16.60 Total 782.47 763.67 Expenditure: During the year under review, the operating expenses at Rs.736.14 crores increased by 7.4% compared with Rs. 685.65 crores incurred in the corresponding last year. These expenses, as a percentage of total revenue, registered an increase from 89.8% to 94.1%. The increase in operating expenses is primarily attributable to higher provisioning of bad & doubtful debts at Rs. 21.55 crores in the year, including an amount of Rs. 16 crores provided against dues from two international clients, compared with Rs. 2.48 crores in the previous year. Manpower cost has increased by 7.7% from Rs.131.72 crores to Rs. 141.86 crores during the year mainly on account of 6% increase in manpower strength from 2985 to 3162, and the impact of normal increases in remuneration due to increments/promotions. The manpower cost as a percentage of revenue has increased from 17.2% to 18.1%. The manpower productivity measured as value addition to manpower ratio has declined from 2.83 to 2.81. Living expenses for employees deployed abroad has increased from Rs. 52.61 crores to Rs. 64.57 crores in line with increased international operations. Living expenses, as a percentage of international revenue, declined from 39% to 36%. The interest cost increased by 18.5% to Rs. 4.22 crores during the year under review compared with Rs. 3.56 crores incurred in the previous year mainly on account of increase in borrowings from Rs. 66.18 crores to Rs. 81.72 crores. Depreciation charge increased from Rs. 8.76 crores to Rs. 9.16 crores primarily due to addition of assets worth Rs. 9.17 crores during the year. As a result, Profit Before Tax (PBT) has declined by 49.9% from Rs. 65.70 crores to Rs. 32.95 crores during the year ended March 2005. PBT as a percentage of total revenue has decreased from 8.6% to 4.2%. The provision for taxation (including deferred tax) declined to Rs. 9.89 crores during the year under review from Rs. 17.72 crores in the previous year, resulting in a reduction of 44.0%, primarily due to lower profits. The effective tax rate has, however, increased to 30% from 27% during the year, mainly on account of decline in export profits due to provision of Rs. 16 crores as doubtful debts from two international clients. As a result, Profit After Tax (PAT) has decreased by 51.9% to Rs. 23.06 crores during year under review compared with Rs. 47.99 crores earned during the previous year. PAT as a percentage of total revenue has declined from 6.3% to 3.0%. Financial Position Fixed assets The gross fixed assets as at 31st March, 2005 was Rs. 126.70 crores compared with Rs. 131.05 crores at the beginning of the year primarily due to addition of Rs. 9.58 crores and adjustment/deduction of Rs. 13.93 crores during the year. Working capital Net current assets as at 31st March, 2005 increased to Rs. 198.20 crores compared to Rs. 168.02 crores at the beginning of the year mainly on account of increase in current assets from Rs. 446.65 crores to Rs. 523.99 crores and increase in current liabilities and provision from Rs. 278.63 crores to Rs. 325.80 crores during the year. Increase in current assets is attributable mainly to increase in inventory from Rs. 18.48 crores to Rs. 32.00 crores and increase in sundry debtors (net of provisions) from Rs. 179.82 crores to Rs. 248.38 crores. However, unbilled revenue decreased to Rs. 93.95 crores from Rs. 114.93 crores at the beginning of the year mainly due to focus on faster billing of accrued revenues. As a result, the level of debtors in terms of number of days has increased from 86 days to 116 days. However, the unbilled revenue has declined from 55 days to 44 days. 15 CMC 11.p65 15 5/19/2005, 11:57 AM
  16. 16. CMC Limited Twenty ninth annual report 2004 - 2005 Capital Structure Net worth of the Company as at 31st March, 2005 was Rs. 175.55 crores compared with Rs. 160.64 crores at the beginning of the year resulting in an increase of 9.3% during the year, mainly on account of retained profit after tax earned during the period. Loan funds as at 31st March, 2005 were Rs. 81.72 crores, resulting in an increase of 23.48% during the year primarily due to increase in working capital. As a result the debt equity ratio has increased from 0.41:1 to 0.47:1 during the year. Segment-wise Review: Domestic Market : Customer Services The Customer Services SBU’s revenue of Rs. 476.86 crores remained flat during the current year. The share of CS SBU in total revenue declined from 62.4% to 60.9% during the year. Systems Integration The Systems Integration SBU earned revenue of Rs. 74.93 crores during the current year registering a decline of 12.1% over the previous year. The share of SI SBU in total revenue declined from 11.2% to 9.6% during the year. ITES The ITES SBU earned revenue of Rs. 16.97 crores during the year registering a decline of 47.5% over previous year. The share of ITES SBU in total revenue declined from 4.2% to 2.2% during the year. Education & Training The E&T SBU continues to show strong growth in revenue. It earned revenue of Rs. 27.59 crores during the year, registering an increase of 55.1% over previous year. The share of E&T SBU in total revenue increased from 2.3% to 3.5% during the year. International Market The Company earned International revenues of Rs. 179.32 crores during the year registering an increase of 32.5% over the previous year. The share of international revenue in total revenue increased from 17.7% to 22.9%. Future outlook The Company believes that the domestic IT spends is likely to continue its current upward trend. The domestic IT spend is expected to be driven by banks, financial institutions, telecom, oils and gas, power and government sectors. In addition mid and large size companies feel the need of increased IT spends for process improvements and efficiency enhancement to face global competition. The Company has also experienced increased acceptance of its solutions and embedded systems offerings in the international market. The Company strategy revolves around leveraging its competencies/expertise and its strategic relationship with TCS to exploit these emerging market opportunities. Risk and Concerns A comprehensive and integrated risk management framework forms the basis of all the de-risking efforts of the Company. Formal reporting and control mechanisms ensure timely information availability and facilitate proactive risk management. These mechanisms are designed to cascade down to the level of the line managers so that risks at the transactional level are identified and steps are taken towards mitigation in a decentralised fashion. The Board of Directors is responsible for monitoring risk levels on various parameters and the Managing Director ensures implementation of mitigation measures. The Audit Committee provides the overall direction on the risk management policies. 1. Business risks: Excessive dependence on any single business segment increases risks and needs to be avoided. The Company has adopted prudential norms wherever required, to prevent undesirable concentration in any one vertical technology client or geographic area. 16 CMC 11.p65 16 5/19/2005, 11:57 AM
  17. 17. Excessive exposure to a few large clients has the potential to impact profitability and to increase credit risk. However, large clients and high repeat business lead to higher revenue growth and lower marketing cost. Therefore, the Company needs to strike a balance. Your Company actively seeks new business opportunities and clients to reduce client concentration levels. A high geographical concentration of business could lead to volatility because of political and economic factors in target markets. However, individual markets have distinct characteristics – growth, IT spends, willingness to outsource, costs of penetration, and price points. Cultural issues such as language, work culture and ethics, and acceptance of global talent also come into play. Due to these business considerations, the Company has decided not to impose any rigid limits on geographical concentration. Proactively looking for business opportunities in new geographies and thereby increasing their contribution to total revenues helps manage this risk. Vertical domains relate to the industries in which clients operate. Your Company has chosen to focus on selected vertical segments with a view to leverage accumulated domain expertise to deliver enhanced value to its clients. Being a company exposed to rapid shifts in technology, an undue focus on any particular technology could adversely affect the risk profile of the Company. Given the rapid pace of technological change, Your Company has chosen not to impose rigid concentration limits. Often, industry characteristics and market dynamics determine the choice of technology. 2. Financial risks The debtor recovery cycle of the Company is long due to dominance of Government entities in its customer profile resulting in need to finance higher level of working capital. The Company is broad-basing its client profile in order to reduce debtor’s recovery cycle on one hand and to strengthen the collection efforts on the other hand. In the interim, the Company is confident to have adequate funding to finance its working capital requirements. 3. Legal risks Litigation regarding intellectual property rights, patents and copyrights is significantly high in the software industry. In addition, there are other general corporate legal risks. The management has clearly charted out a review and documentation process for contracts. Legal compliance issues are an important factor in assessing all new business proposals. 4. Internal process risks The key resource for the Company is its people. Our inability to attract and retain IT professional can have adverse impact on the business of the Company. Risk management processes at the operational level are a key requirement for reducing uncertainty in delivering high-quality software solutions to clients within budgeted time and cost. Adoption of quality models such as the Software Engineering Institute’s Capability Maturity Model (SEI-CMM) has ensured that risks are identified and measures are taken to mitigate these at the project plan stage itself. The company evaluates technological obsolescence and the associated risks on a continuing basis and makes investments accordingly. Internal control systems and their adequacy The Company has an adequate system of internal controls implemented by the management towards achieving efficiency in operations, optimum utilisation of resources and effective monitoring thereof and compliance with applicable laws. The system is continuously reinforced with analysis of data to strengthen it to meet the changing requirements. The system comprises well defined organisation structure, pre-identified authority levels and documented policy guidelines and manuals for delegation of authority. A qualified and independent Audit Committee of the Board of Directors reviews the internal audit reports and the adequacy of internal controls. Human Resources The Company recognizes human resource as the backbone for its long-term success and has tried continuously to provide a challenging work environment thereby adding value to their professional growth. The Company’s key focus has been to change the mindset from ‘human resource utilization’ to ‘nurturing and leveraging talent’. Towards this, your Company has initiated the C-change initiative. C-change is the new internal change-for-betterment initiative meant to empower every employee to actively participate in making of a better Company. 17 CMC 11.p65 17 5/19/2005, 11:57 AM
  18. 18. CMC Limited Twenty ninth annual report 2004 - 2005 In support of its business objectives, during the financial year, your Company has added significantly to its talent pool in high technology and niche areas like embedded systems, real time systems etc. thereby building capacity to deliver solutions/services in the medium and long term. The compensation structure has also been further modified to include premium for niche technical skills and domain expertise so as to attract and retain required talent. The staff strength of the Company as on March 31, 2005 was 3162 as compared to 2985 as on March 31, 2004. Cautionary Statement Statements in the Management Discussion and Analysis describing the Company’s objectives, expectations or predictions may be forward looking within the meaning of applicable securities, laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company’s operations include change in Government regulations, tax laws, economic & political developments within and outside the country and such other factors. 18 CMC 11.p65 18 5/19/2005, 11:57 AM
  19. 19. CORPORATE GOVERNANCE REPORT Company’s philosophy on Corporate Governance As part of the Tata Group, CMC’s philosophy on Corporate Governance is founded upon a rich legacy of fair and transparent governance practices. The Corporate Governance philosophy has been further strengthened with the adoption, three years ago, by the Company of the Tata Business Excellence Model and Tata Code of Conduct and the adoption of the requirements under Clause 49 of the Listing Agreement with the Stock Exchanges. Board of Directors (a) Composition The present Board consists of one executive Director and six non-executive Directors. Out of the non-executive Directors, four are Independent Directors and the other two represent the Promoters. The non-executive Directors with their diverse knowledge, experience and expertise bring in their independent judgment in the deliberations and decisions of the Board. Apart from the sitting fees paid for attending Board/ Committee Meetings, the non-executive Directors did not have any material pecuniary relationship or transactions with the Company during the year 2004-05. The Company has a non-executive Chairman and the number of Independent Directors is more than one-third of the total number of Directors. The number of non-executive Directors is more than 50% of the total number of Directors. The Company, therefore, meets with the requirements relating to the composition of Board of Directors. (b) Attendence of each Director at the Board Meetings/Annual General Meeting During the year 2004-05, 5 meetings of the Board of Directors were held on April 26, July 17, October 11 in 2004 and on January 12 and March 21 in 2005. The 28th Annual General Meeting of your Company was held on August 30, 2004. None of the Directors of the Board serve as Members of more than 10 Committees nor are they Chairman of more than 5 Committees, as per the requirements of the Listing Agreement. A detailed explanation in the form of a table is given below: Name Category Board Attendance No. of outside No. of outside Directorships* Meetings at the Committee attended AGM held Positions held during the on 30.08.2004 Indian Foreign Member Chairman year Mr S Ramadorai Promoter 4 Yes 11 07 07 02 (Chairman) Non-executive Mr R Ramanan Promoter 5 Yes 01 01 01 _ Executive Mr Ishaat Hussain Promoter 5 Yes 15 - 07 03 Non-executive Dr KRS Murthy Independent 4 Yes 01 _ - 02 Non-executive Mr Shardul Shroff Independent 2 No 04 _ 05 _ Non-executive Mr Surendra Singh Independent 3 Yes 06 _ 04 03 Non-executive Mr C B Bhave Independent 5 No 03 _ 04 - Non-executive *This does not include directorships in Private Limited Companies. • Audit Committee The Company complies with the provisions of Section 292A of the Companies Act, 1956, as well as per listing agreement pertaining to the Audit Committee and its functioning. The scope of the Committee includes: • review of the Company’s financial reporting process, the financial statements and financial/risk management policies. • review of the adequacy of the internal control systems in the Company. • review of the internal audit report forwarded by the internal auditors. • discussions with the management and the external auditors, the audit plan for the financial year and a joint post-audit review of the same. • Review the Annual financial statements before submission to the Board. • Review of the Statutory and Internal Auditors Remuneration. 19 CMC 11.p65 19 5/19/2005, 11:57 AM
  20. 20. CMC Limited Twenty ninth annual report 2004 - 2005 During the year, 5 Audit Committee meetings were held on April 26, July 17, October 11 in 2004 and on January 12 and March 21 in 2005. The Audit Committee meetings are held both at Corporate Office and other locations and attended by the Chief Financial Officer, representatives of Internal Auditors and Statutory Auditors. The Company Secretary acts as the Secretary to the Audit Committee. The Chairman of the Audit Committee was also present at the last Annual General Meeting of the Company. The Composition of the Audit Committee and number of meetings attended by the Members are given below: Name of Member Composition of the Audit Committee Number of meetings attended Dr KRS Murthy Chairman - Independent Director 4 Mr CB Bhave Independent Director 5 Mr Surendra Singh Independent Director 3 Pursuant to Clause-49(II) of the Listing Agreement, Mr CB Bhave is having requisite financial and accounting knowledge. MANAGERIAL REMUNERATION a. Remuneration Committee The Company is having a Remuneration Committee consisting of non-executive Directors, with the Chairman being an Independent Director. The members of the Remuneration Committee are as follows: - Dr KRS Murthy .. Chairman - Mr S Ramadorai - Mr CB Bhave During the year, one meeting of the Remuneration Committee has been held on August 05, 2004 which was attended by all the members. The scope and function of the Remuneration Committee is to review and fix the remuneration payable to the executive Directors and other senior employees of the Company. Mr R Ramanan is working as the Managing Director & Chief Executive Officer of the Company. The Non-Executive Directors are entitled for sitting fee only for attending the Board/Committee Meetings. b. Remuneration Policy The remuneration of the executive directors/ senior managers is decided by the remuneration committee based on criteria such as industry benchmarks, the Company’s performance vis-à-vis the industry, performance track record of the executive director/ appointee(s). The Company pays remuneration by way of salary, perquisites and allowances consisting of fixed and variable component. A sitting fee of Rs 10,000 per meeting of the Board and Audit Committee and Rs. 5,000 per meeting of the Remuneration Committee, Share Transfer-cum-Shareholders Grievance Committee and other committees is paid for attendance at the meetings to the non- executive Directors. c. Remuneration to Directors • Non-Executive Directors Name of Director Sitting Fee paid (Rs.) Mr. S. Ramadorai 45,000 Mr. Ishaat Hussain 50,000 Dr. K. R. S. Murthy 85,000 Mr. Surendra Singh 1,45,000 Mr. C. B. Bhave 1,05,000 Mr. S Shroff 75,000 • Executive Director The salary and perquisites paid to Mr. Ramanan, Managing Director & CEO during the year 2004-05, Rs. 561360 and Rs. 222126 respectively. Share Transfer-cum-Shareholders Grievance Committee The Share Transfer cum Shareholders Grievance Committee is constituted to consider and approve various requests for transfer, sub-division, consolidation, renewal, exchange, issue of new Certificates in replacement of old ones and redressal of the grievances of the Shareholders as may be received from time to time. 20 CMC 11.p65 20 5/19/2005, 11:57 AM
  21. 21. The present composition of the Share Transfer cum Shareholders Grievance Committee is as under: Mr Surendra Singh .. Chairman Mr R Ramanan .. Member Mr Shardul Shroff .. Member Mr Vivek Agarwal .. Member The Committee has had 16 Meetings during the year ended March 31, 2005 on April 14, April 26, June 08, July 17, August 03, September 16, October 11, November 08, November 30, December 14, December 21 in 2004 and January 10, February 2, February 21, March 07 and March 21 in 2005 and a total of 142 Meetings till March 31, 2005 have taken place since its constitution. Mr Vivek Agarwal, Company Secretary & Head - Legal, is the Compliance Officer and can be contacted at: CMC Limited Tel: 91-11-23736151 PTI Building, 5th Floor Fax:91-11-23736159 4, Sansad Marg E-mail:; New Delhi-110001 5527 investors’ complaints/queries were received during the year under review and 02 complaints/queries were pending as on March 31, 2005. COMMITTEE OF DIRECTORS In addition to the above Committees, the Company has an Ethics and Compliance Committee for the following purpose: – Set forth the policies relating to and oversee the implementation of the code of conduct for prevention of insider trading and code of corporate disclosure practices. – Take on record the status reports prepared by the compliance officer dealing in securities by the specified persons on monthly basis. – Decide penal action in respect of violation of the SEBI Regulations/code by any specified person. During the year ended March 31, 2005, two meetings of Ethics & Compliance Committee were held on April 14, 2004 and May 17, 2004, respectively. The Composition of the Ethics and Compliance Committee and number of meetings attended by the Members are given below: Name of Member Composition of the Ethics Number of meetings attended & Compliance Committee Mr Surendra Singh Chairman 02 Mr R Ramanan Member - Mr Shardul Shroff Member 02 Mr Vivek Agarwal Member 02 Company Secretary & Head - Legal GENERAL BODY MEETINGS Location and time of General Meetings held in the last 3 years: Year Type Date Venue Time 2002 AGM 29.08.2002 CMC Centre, Gachibowli 2.30 p.m. Old Mumbai Highway, Hyderabad 2003 AGM 31.07.2003 - do - 2.30 p.m. 2004 AGM 30.08.2004 Bhartiya Vidya Bhavan Auditorium, 2.30 p.m. BVB Hyderabad Kendra No. 5-9-1105, Basheerbagh-King Koti Road, Hyderabad – 500 029, A.P. 21 CMC 11.p65 21 5/19/2005, 11:57 AM
  22. 22. CMC Limited Twenty ninth annual report 2004 - 2005 Whether Special Resolutions: (a) Were put through postal ballot last year - No Details of voting pattern - N.A. Persons who conduct the postal ballot exercise- - N.A. (b) Are proposed to be conducted through - No postal ballot – • Disclosures i) During the year under review, there were no materially significant related party transactions with its promoters, directors, management and subsidiaries that had a potential conflict with the interest of the Company at large. ii) The Company has complied with all rules and regulations prescribed by the Stock Exchanges, Securities and Exchange Board of India or any other Statutory Authority relating to the capital markets during the last three years. No penalties or strictures have been imposed by them on the Company. • Means of Communication Half-yearly report sent to each household : The results of the Company are published in the of shareholders newspapers. Quarterly results and in which newspaper : Results are normally published in Business Standard normally published in. and in Eenadu (Telugu – Hyderabad edition). Any website where displayed. : Yes, the results are displayed on the Company’s website Whether it also displays official news releases : Yes Whether the website displays the presentation : Yes, the Company holds an Analysts Meet after the made to the institutional investors and to quarterly, half yearly and Annual Accounts, have been the analysts. adopted by the Board of Directors, where information is disseminated and analysed. Whether Management Discussion and Analysis : Yes, Management Discussion and Analysis forms part of is a part of Annual Report or not. Annual Report. Compliance Officer Mr Vivek Agarwal Company Secretary & Head - Legal. Address: CMC Limited, PTI Building, 5th Floor 4, Sansad Marg New Delhi-110 001 Phone: +91-11-23736151-58 Ext 632 +91-11-23738075 (Direct) Fax : +91-11-23736159 e-mail : & General Shareholder Information Annual General Meeting: Date and time : Friday, June 17, 2005 at 2.30 p.m. Venue : Bhartiya Vidya Bhavan Auditorium Basheerbagh Hyderabad-500029 22 CMC 11.p65 22 5/19/2005, 11:57 AM
  23. 23. Financial Calendar : 1st April to 31st March Financial reporting for a) Quarter ending June, 30, 2005 : July, 2005 b) Quarter ending Sept. 30, 2005 : October, 2005 c) Quarter ending Dec. 31, 2005 : January, 2006 d) Quarter ending March, 31 2006 : April/May, 2006 Date of Book Closure : Tuesday, June 14, 2005 to Friday, June 17, 2005 (both days inclusive) Dividend Payment Date: : The dividend warrants will be posted on and after June 17, 2005. Listing: The Stock Exchanges on which the Company’s shares are listed: The Stock Exchange, The Calcutta Stock The National Stock Exchange Mumbai, Phiroze Exchange Association Ltd. Association of India Ltd. Exchange Plaza, 5th Floor Jeejeebhoy Towers 7, Lyons Range Dalal Street Kolkata-700001 Plot No.C/1, G Block Mumbai-400001 Bandra-Kurla Complex Bandra (E), Mumbai-400051 The Company has already applied for delisting of its shares from Calcutta Stock Exchange Association Limited and its approval is awaited. Listing Fees There are no arrears on account of payment of listing fees to the Stock Exchanges. Stock Code The Stock Exchange, Mumbai : 517326 The National Stock Exchange : CMC • Market price information The reported high and low closing prices during the year ended March 31, 2005 on the National Stock Exchange and the Stock Exchange, Mumbai, where your Company’s shares are frequently traded, are given below: National Stock Exchange The Stock Exchange, Mumbai Month High (Rs.) Low (Rs.) High (Rs.) Low (Rs.) April-04 569.80 483.20 569.00 490.50 May-04 520.00 374.95 520.00 385.00 June-04 497.70 423.05 495.00 419.45 July-04 597.00 438.00 596.25 375.00 Aug-04 710.00 500.00 708.90 587.00 Sept-04 736.00 657.00 735.00 661.00 Oct-04 751.90 621.10 750.00 640.10 Nov-04 755.00 676.00 750.00 644.00 Dec-04 740.00 700.10 742.00 701.00 Jan-05 752.00 602.00 755.00 615.00 Feb-05 688.85 647.15 687.00 640.30 Mar-05 689.95 581.00 690.00 620.55 23 CMC 11.p65 23 5/19/2005, 11:57 AM
  24. 24. CMC Limited Twenty ninth annual report 2004 - 2005 • Performance in Comparison to BSE Sensex The performance of the Company’s scrip on the BSE as compared to the Sensex is as under: Month BSE Sensex CMC LIMITED High Low High (Rs.) Low (Rs.) April 2004 5979.25 5599.12 569.00 490.50 May 2004 5772.64 4227.50 520.00 385.00 June 2004 5012.52 4613.94 495.00 419.45 July 2004 5200.85 4723.04 596.25 375.00 August 2004 5269.22 5022.29 708.90 587.00 September 2004 5638.79 5178.57 735.00 661.00 October 2004 5803.82 5558.14 750.00 640.10 November 2004 6248.43 5649.03 750.00 644.00 December 2004 6617.15 6176.09 742.00 701.00 January 2005 6696.31 6069.33 755.00 615.00 February 2005 6721.08 6508.33 687.00 640.30 March 2005 6954.86 6321.31 690.00 620.55 • Registrars & Share Transfer Agents The Company has changed its Registrars and Transfer Agents from M/s MCS Limited to M/s Karvy Computershare Private Limited with effect from April 01, 2005. The members are requested to correspond with the Company’s Registrars & Share Transfer Agents – M/s Karvy Computershare Private Limited quoting their folio number at the following address: M/s Karvy Computershare Private Limited Karvy House, 46, Avenue 4, Street No. 1, Banjara Hills, Hyderabad 500 034 Tel: 040- 23312454/23320251 Fax: 040-23311968 Email: • Share Transfer System Shares lodged for transfer at the Registrar’s address are normally processed and approved by Share Transfer cum Shareholders Grievance Committee on a fortnight basis. All requests for dematerialisation of shares are processed and the confirmation is given to the Depositories within 15 days. Grievances received from Members and other miscellaneous correspondence on change of address, mandates etc. are processed by the Registrars within 30 days. • Distribution of shareholding Distribution of shareholding as on March 31, 2005: No. of shares No. of % of Total no. of % of holding shareholders shareholders shares 1-500 52415 99.47 947199 6.25 501-1000 154 0.29 118023 0.78 1001-2000 43 0.08 63210 0.42 2001-3000 16 0.03 40050 0.26 3001-4000 10 0.02 36023 0.24 4001-5000 4 0.01 19924 0.13 5001-10000 11 0.02 86846 0.57 10001 & above 40 0.08 13838725 91.34 Total 52693 100.00 15150000 100.00 Physical Mode 82 0.16 14687 0.10 Electronic Mode 52611 99.84 15135313 99.90 24 CMC 11.p65 24 5/19/2005, 11:57 AM
  25. 25. • Shareholding pattern Shareholding pattern as on March 31, 2005: Category No. of shares Percentage of issued held share capital Tata Group of Companies 7785661 51.39 Mutual Funds and UTI 2323033 15.33 Banks 4124 0.02 Financial Institutions/ Insurance Companies 1974731 13.03 FIIs 1322188 8.74 NRIs/Foreign Nationals 19358 0.13 Bodies Corporates 448224 2.95 Indian Public 1272681 8.41 Total 15150000 100.00 • Dematerialisation of shares and liquidity 99.90% of the equity shares have been dematerialised by about 99.84% of the total shareholders as on March 31, 2005. The Company’s shares can be traded only in dematerialised form as per SEBI notification. The Company has entered into Agreement with NSDL and CDSL whereby shareholders have the option to dematerialise their shares with either of the depositories. Equity shares are actively traded in BSE and NSE. • Outstandings GDRs/ADRs/Warrants or any convertible instruments, conversion date and likely impact on equity The Company has not issued any GDRs/ADRs/Warrants or any convertible instruments. Plant locations Your Company is not a manufacturing unit and thus not having any Plant. However, our offices are located in almost all metropolitan cities in India. Address for correspondence The Company Secretary & Head-Legal CMC Limited PTI Building, 5th Floor 4, Sansad Marg New Delhi-110001 Tel.: 91-11-23736151-58 Fax : 91-11-23736159 Email:; • Electronic Clearing Service (ECS) The Company is availing of the ECS facility to distribute dividend to those Members who have opted for it, through the ECS facility in metropolitan cities. • Non-mandatory requirements The Company at present has not adopted the non-mandatory requirements in regard to maintenance of non-executive Chairman’s office, sending of half-yearly performance to the shareholders to their residence. 25 CMC 11.p65 25 5/19/2005, 11:57 AM
  26. 26. CMC Limited Twenty ninth annual report 2004 - 2005 AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE TO THE MEMBERS OF CMC LIMITED 1. We have examined the compliance of conditions of Corporate Governance by CMC Limited, for the year ended on 31 March, 2005, as stipulated in clause 49 of the Listing Agreement of the said Company with the stock exchanges. 2. The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has been limited to a review of the procedures and implementations thereof, adopted by the Company for ensuring compliance with the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. 3. In our opinion and to the best of our information and according to the explanations given to us, and the representations made by the Directors and the management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement. 4. As required by the Guidance Note issued by the Institute of Chartered Accountants of India, we have to state that while the Share Transfer cum Shareholders’ Grievance Committee has not maintained records to show the investor grievances pending for a period of one month against the Company, the Registrars of the Company have certified that as of 31 March, 2005 there were two investor grievances that remained pending for more than 30 days. 5. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. For S.B. Billimoria & Co. Chartered Accountants Mumbai Jitendra Agarwal Partner April 18, 2005 Membership No. 87104 26 CMC 11.p65 26 5/19/2005, 11:57 AM
  27. 27. COMPANY SECRETARY’S RESPONSIBILITY STATEMENT The Company Secretary confirms that the Company has: i) maintained all the books of accounts and statutory registers required under the Companies Act, 1956 (“the Act”) and the rules made thereunder; ii) filed all the forms and returns and furnished all the necessary particulars to the Registrar of Companies and/or authorities as required by the Act; iii) registered all the particulars relating to charges in favour of Banks with the Registrar of Companies; iv) issued all notices required to be given for convening of Board Meetings, Committee Meetings and Annual General Meeting within the time limit prescribed by Law; v) conducted the Board Meetings, Committee Meetings and Annual General Meeting as per the Act; vi) complied with all the requirements relating to the Minutes of the proceedings of the Meetings of the Board of Directors, Committees and the Shareholders; vii) made the disclosures required under the Act including those required in pursuance of the disclosures made by the Directors; viii) obtained necessary approvals of the Directors, Shareholders and other Authorities as per the requirements; ix) effected share transfers and despatched the certificates within the statutory time limits; x) not exceeded its borrowing powers; xi) paid dividend amounts to the shareholders within the time limit prescribed; xii) complied with the requirements of the Listing Agreement entered into with the Stock Exchanges. The Company has also complied with other statutory requirements under the Companies Act, 1956 and other related Statutes. For CMC LIMITED Mumbai Vivek Agarwal April 18, 2005 Company Secretary & Head - Legal 27 CMC 11.p65 27 5/19/2005, 11:57 AM