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Zicom Electronic Security Systems Limited Annual Report 2009-10

Zicom Electronic Security Systems Limited

www.zicom.com

ContentsCorporate identity .........................................................................�

2009-10 in retrospect ..................................................................� Page 4

Starting afresh .............................................................................� Page 6

Directors’ profile ...........................................................................� Page 16

Notice ........................................................................................ � Page 18

Directors’ Report ..........................................................................� Page 25

Report on Corporate Governance ....................................................� Page 38

Management discussion and analysis .............................................� Page 56

Standalone financials ................................................................... � Page 63

Consolidated financials .................................................................� Page 85

Forward-looking statement

In this annual report we have disclosed forward-looking information to enable investors to

comprehend our prospects and take informed investment decisions. This report and other

statements – written and oral – that we periodically make contain forward-looking statements

that set out anticipated results based on the management’s plans and assumptions. We have

tried wherever possible to identify such statements by using words such as ‘anticipates’,

‘estimates’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in

connection with any discussion of future performance.

We cannot guarantee that these forward looking statements will be realised, although we

believe we have been prudent in assumptions. The achievement of results is subject to risks,

uncertainties and even inaccurate assumptions. Should known or unknown risks or

uncertainties materialise, or should underlying assumptions prove inaccurate, actual results

could vary materially from those anticipated, estimated or projected. Readers should bear this

in mind.

We undertake no obligation to publicly update any forward-looking statements, whether as a

result of new information, future events or otherwise.

A [email protected]

Company InformationBoard of DirectorsMr. Manohar Bidaye, Chairman

Mr. Pramoud Rao, Managing Director

Mr. Mukul Desai, Director

Mr. Vijay Kalantri, Director

Mr. Achyut Godbole, Director

Dr. B. Samal, Director

Chief Financial OfficerMr. Hemendra Paliwal

Company SecretaryMs. Kunjan Trivedi

Statutory Auditors

P. RAJ & CO.Chartered Accountants

BankersState Bank of India

Union Bank of India

Standard Chartered Bank

Bank of Baroda

Punjab National Bank

Registered Office501, Silver Metropolis,

Western Express Highway,

Goregaon East, Mumbai 400 063.

Tel.: 91-22-4290 4290

Fax: 91-22-4290 4291

Email: [email protected]

Website: www.zicom.com

Registrar and Share Transfer AgentBigshare Services Private Limited

E-2, Ansa Industrial Estate,

Sakivihar Road, Saki Naka,

Andheri (East), Mumbai 400 072.

Tel: (022) 2847 0652, 2847 0653, 2847 3474,

2847 3747 Fax: (022) 2847 5207


1Annual Report 2009-10

Change is the only constant. At Zicom Electronic Security Systems, we have transformed our

business model with a singular objective: to grow our presence

in futuristic business spaces.

In line with this, we divested project-centric businesses that

could have turned unviable and graduated to a futuristic service

driven business – Security as a Service (SaaS).

To make our growth robust and sustainable.

The older order changeth,yielding place to new– Alfred, Lord Tennyson

2 Zicom Electronic Security Systems Limited

Zicom.A change-leader in security.

Parentage • Commenced operations in 1994

• Promoted and headed by Mr. Manohar

Bidaye, Chairman and Mr. Pramoud Rao,

Managing Director

• Promoter group held 18.36% stake in

the Company as on March 31, 2010

Products and Services• Offers a range of products comprising

CCTV surveillance systems, Digital Video

Recorders inclusive of Remote Video

Surveillance, Fire Alarm, Fire Prevention

and fire extinguishing products, Access

Control Systems like Biometric and

Proximity Readers, Finger Print Locks,

Video Door Phones and Home Alarm

Systems including value-added services

like i-Alert, CMS and VMS, among others

Clientele• Caters to the diverse and demanding

needs of private and public sectors

• Clients belong to diverse sectors like

banking, telecom, entertainment, finance,

media, BPO, religious places, industry,

retail, aviation and international projects,

among others

Presence• Headquartered in Mumbai, India

• Fire systems business based out of

Dubai

• Expansive footprint across more than

70 cities and towns across India; products

exported across nations

• Shares traded on the Bombay Stock

Exchange Limited and the National Stock

Exchange of India Limited

Positioning • First Indian listed company in the

electronic security solutions domain

• Pioneered the concept of electronic

security in India

• Pioneered the concept of Central

Monitoring Station in India

• First electronic security systems

company to customize solutions around

specific industry needs

• Introduced India’s first indigenously

manufactured access controller with

software capabilities

• First company in India to introduce

wireless security systems

• First company in India to introduce a

service subscription scheme

• Pioneered the Electronic Security

Shoppe concept where the customer can

touch and test security devices before

owning them


Vision To be the Company you Trust the most,

to Protect what you Value the most

� Promoter’s holding

March 31, 2010

18.36%

� Team size

March 31, 2010

240 members

� Revenue

2009-10

Rs. 2,448 million

� Profit After Tax

2009-10

Rs. 61 million

� Market capitalisation

March 31, 2010

Rs. 1,223 million

Mission • To provide safety to customers by developing and offering new

technologies, innovative products and services

• To foster channel partners by providing profitable avenues of growth

• To maximize shareholders’ wealth

• To adhere to fair practices in dealing with its employees and

business partners

Core values • To stay tuned to the customer 24x7

• To uplift the performance standards continuously

• To work with transparency, integrity and accountability


2009-10 in retrospect

There is profit in security.

Sales grew 41% from Rs. 3,756 million

in 2008-09 to Rs. 5,280 million

EBIDTA grew 6% from Rs. 512 million in

2008-09 to Rs. 545 million

Profit After Tax reduced from Rs. 196

million in 2008-09 to Rs. 150 million

In numbers

Net Sales (Rs. million)

2006

-07

2007

-08

2008

-09

2009

-10

1,54

6

1,64

5

1,95

3

2,44

8

EBIDTA (Rs. million)

2006

-07

2007

-08

2008

-09

2009

-10

169

206

254

273

Profit After Tax (Rs. million)

2006

-07

2007

-08

2008

-09

2009

-10

79

80

99

61


In the facility Commissioned a new unit in Parwanoo (Himachal Pradesh) to

produce and assemble state-of-the-art equipment (installed

capacity 21,000 units a year)

In the Board roomSold two businesses – Building Solutions Group (BSG) and

Special Products Group (SPG) and Business of Zicom CNA – to

Schneider Electric, a France-based electronic company, for

Rs. 2,250 million.

Earning per share (Rs.)

2006

-07

2007

-08

2008

-09

2009

-10

8.49

7.63

7.76

4.77

Book value per share (Rs.)

2006

-07

2007

-08

2008

-09

2009

-10

65

83

89 88

Shareholders’ Fund (Rs. million)

2006

-07

2007

-08

2008

-09

2009

-10

636

1,05

2 1,13

6

1,12

3


Starting afreshThis is the start of a new and

exciting beginning. We have done it

once. We are sure of doing it again.

– Manohar Bidaye, Chairman


What was the Business Transfer Agreement all about?Zicom Electronic Security Systems Ltd signed a Business Transfer Agreement (BTA) with

Schneider Electric India Private Ltd for the transfer, sale or disposal of its Electronic

Security Systems Business comprising of its two groups viz. Building Solutions Group

(BSG) and Special Projects Group (SPG) – as a going concern, team and order book – for

a consideration of Rs. 2,250 million, subject to adjustments on escrow and other

accounts mutually agreed between the Company and Schneider.

Building Solutions Group: This flagship division was responsible for enhancing the Zicom

brand’s visibility in the business of electronic security systems and consequent industry

leadership.

Special Projects Group: This division provides large, comprehensive security solutions to

the government and public sector units against terrorism and anti-social elements on the

one hand and restrictive access to government property and premises on the other. This

Group has executed some of the most prestigious city surveillance projects of this country.

Both groups together contributed 46% to the Group turnover and 51% to the profits for

the financial year 2009-10.

Team: Of the total team of 265 members, 231 operating in the two business divisions

together with 139 indirect associates, were moved to the acquirer.

QA


QA Why was this business transfer necessary?

QA What radical change in the business dynamics made this divestment advisable?Electronic security systems are no

longer simple and standalone; they

represent a complex complement of a

number of competencies. These

systems are warranting holistic,

integrated and intelligent Building

Management Solutions (iBMS)

covering automation, fire and security

management. Not surprisingly,

following the sophistication of these

systems, an increasing number of

projects are being bagged by

companies with strong technical and

iBMS capabilities. Besides, the

evolving nature of the solutions is

encouraging a number of global

players in intelligent building

management, security solutions and

IT solutions to enter this business. As

a result, the security market, as we

know it, is expected to be replaced by

a completely new segment of players

and capabilities, requiring completely

different resources. In view of this, it

made better sense to exit the business

than strain our balance sheet in trying

to achieve international skills and

scale.

QA Why did the Company exit the Special Project Group segment?We exited this business on account of

two reasons – projects and

profitability. Most of the projects in

this segment are capital-intensive and

time-intensive, requiring a large outlay

of working capital on the one hand

and a higher degree of competence on

the other. The second point is

important: this business has evolved

from traditional surveillance to

networked video systems and

analytics. As a result, our experience

is that a number of these projects

consume high debt and drain

profitability. There is another

downside: a number of these projects,

even though awarded, do not see the

light of day. For instance, following

the 26/11 attack on Mumbai,

although the government announced

the setting up of 5,000 surveillance

cameras across Mumbai, and still

the project is to see moment in

this regard.

• For unlocking part of

the value built over the

past 16 years

• For protecting our

viability• For strengthening

our prospective

profitability

• For entering into

emerging businesses


QA Why did the Company divest its profitable businesses? The Company had reached that point

in its existence when it would have

been required to invest a large

amount of capital (estimated

Rs. 1000 million) to grow to the next

level. This would have been done

through two routes – net worth or

debt. To fund the expansion through

net worth, one would have required to

induct fresh shareholders (through

private placement), or ask its existing

shareholders to contribute more cash

(through rights). In view of the

quantum of resources required and

the existing market capitalisation, we

considered it imprudent to mobilize

additional net worth. That left us with

the option of funding our growth

through debt. However, our gearing of

1.82 as on March 31, 2010 made it

inadvisable to load more debt either.

In view of this situation, we were left

with no option but to divest the

business at a time when it was still

possible to do so at a good price

rather than be compelled to divest at

a later date for lower proceeds. In

view of this reality, the decision to sell

this business was most timely and

advisable.

QA Was the business transfer deal struck at right time?It will be important to consider that

following the 9/11 incident, the

security industry has gone through a

sea change the world over. This is

particularly so in the integration space

where Zicom is a dominant brand.

The entire security integration

business is graduating to the next

level, which is IT-driven, capital-

intensive and comprising complex

networks. A pure-play security

company like ours would have

required a large investment to

graduate to the new platform. The

management took a forward

perspective that its dominant position

would be gradually compromised,

eroding shareholder value. The

management considered it prudent to

divest this business for an attractive

value at a time when it was reporting

fair profits and margins. As a result,

the timing of sale can be considered

opportune and in overall shareholder

interests.

QA Zicom pioneered security systems in India and emerged the largest in securityintegration. How did the Company not prepare for this reality?We fully expected the sweeping global

security transformation to reach India

and planned for it (without being able

to derive the required results).

For instance, we entered into an

agreement with CNA Group Ltd.,

Singapore, in November 2008 to

access superior automation

technologies. This marked our foray

into iBMS which, coupled with our

security integration, would enable us to

capitalize on emerging opportunities.

However, this joint venture did not

deliver for some good reasons.

The performance side: CNA products

generally address commercial

buildings and infrastructure creation.

Following the September 2008

slowdown, India’s commercial

property business staggered and a

large number of projects were

stillborn. Since we did not possess an

attractive track record in infrastructure

projects, we could not participate in

government tenders with a

pre-qualification requirement.

The business side: The global

slowdown commenced just when our

joint venture was taking off. Besides,

CNA yielded considerable global

market share following the crisis,

which prompted its management team

to initiate remedial measures. As a

result, their immediate attention on the

joint venture declined and we failed to

make any significant headway.


QA You are parting with a business at a point of industry leadership.How will it help?Zicom is India’s leading independent

electronic security systems integrator,

having completed more than 1,000

medium and large size projects (city

surveillance, railways and airports,

among others), government facilities,

commercial buildings and high-end

hotels. In 2008-09, the BSG

launched branded services in India

with encouraging customer response.

However, even as we are industry

leaders, we realized that from this

point onwards the road would be

more challenging. So, like the

sportsman who exits when people are

still asking ‘why?’ and not ‘why not?’

we made the challenging decision to

exit our profitable businesses for an

attractive price. Some years down the

line, the reality and proceeds would

have been completely different.

QA Was the consideration of Rs. 2,250 million attractive?Absolutely. It would be relevant to

weigh the receivables with what we

divested.

• This business contributed 48% to

our consolidated revenues for the

nine-month period ending

December 31, 2009.

• A Category-I Merchant Banker

valued the businesses under transfer

at Rs. 1,800 million; the price we got

was higher.

• The transfer price was far in excess

of the market capitalisation of around

Rs. 1,400 million on that date,

considering that the retained business

contributed 52% of Group revenue.

• The value of the net assets

transferred was only around

Rs. 560 million; the price we got was

nearly four times as much.

• The multiple applicable to the

EBIDTA of the divested assets was

13x, which can be considered

extremely attractive.

So by any yardstick, Zicom received

excellent value.

Premium justified The Company chose to pay a premium as the replacement costof setting up a similar business in India would be higher.– Olivier Blum, Managing Director of Schneider Electric India.


QA What is the residual value in Zicom following this business transfer?The rumours that Zicom sold out are untrue. We retained retail and fire protection solution businesses (operating from

Dubai), constituting about 52% of our revenue. Moreover, the Company retained the Zicom brand, which will enhance the

recall of our available products, translating into revenues.

Pre-Agreement Post-Agreement

Zicom Electronic Security Systems Ltd.

Electronic Security Solution Business existing in

• Building Solutions Group

• Special Projects Group

Businesstransferred


• Standalone fire business

• Business of CMS and VMS

Zicom Retail Products Pvt. Ltd.

• Providing security solutions for homes,

apartments, commercial establishments, offices

and banks, among others

Zicom Retail Products Pvt. Ltd.

• Providing security solutions for homes,

apartments, commercial establishments, offices

and banks, among others

Unisafe Fire Protection Specialists LLC, Dubai

• Providing fire detection and fire fighting

systems, equipments and services

Unisafe Fire Protection Specialists LLC, Dubai

• Providing fire detection and fire fighting

systems, equipments and services

Zicom CNA Automation Ltd.

• Intelligent Building Management Solutions

Businessmerged with

the parent andtransferred

Zicom CNA Automation Ltd.

Zicom Manufacturing Company (HK) Ltd.

• Facilitating imports of hardware from

international vendors

Zicom Manufacturing Company (HK) Ltd.

• Facilitating imports of hardware from

international vendors


QA The transfer of Zicom employees and associates must have been difficult. Howdid you motivate the team to continue?It was a tough decision for Zicom.

However, this was considered

necessary as those employees and

associates operated respective

businesses. None of them were asked

to leave nor did the business transfer

involve any retrenchment. A number

of meetings between the two

companies, best HR communication

and integration helped even out

hesitations and cultural issues. In

addition, for a smooth transition, the

Managing Director was requested to

support the team for a period of two

years.

QA How will the Company utilize proceeds from the business transfer?We are happy to state that we have

already de-leveraged our balance

sheet. We repaid a major portion of

the Group’s debt, strengthening our

debt-equity ratio. Going ahead, this

will rationalize our interest cost. The

remaining funds will be utilized in

strengthening our existing businesses

and entering new attractive areas.

QA Why observers feel that the Company divested the cream of its businesses andretained Retail business which is incurring losses (cumulative loss of Rs. 192million as on March 31, 2010)?What is apparent is not quite the

actual. The retail business was

initiated in 2007 wherein we

pioneered the concept of the

Electronic Security Shoppe – where

the customer can touch and test

security devices before owning them –

spread across more than 70 cities

and towns. Like all retail businesses,

this retail trade too has a gestation

period and we are optimistic that this

business will turn around in

2010-11. So while the profitability of

the retained businesses is only

expected to improve, that of the

divested businesses would have

declined had we retained them.


QA What factors drive Zicom’s optimism in Retail business?Essentially two. In-house manufacture

and widening reach.

In-house manufacture: Earlier, we

used to import products from China,

Korea and Taiwan. In FY 2009 we

commissioned a factory in tax-friendly

Parwanoo (Himachal Pradesh) to

manufacture security products

(installed capacity 21,000 units a

year). The plant will manufacture

state-of-the-art fire alarm system,

CCTV surveillance system, access

control system, fingerprint locks, video

door phones, wireless alarm systems

and products thereunder. The shift

from imports to in-house manufacture

will strengthen the profitability of our

Retail business.

Widening reach: With security

business driven by IT technology, the

well established IT distribution

channel of India has started accepting

these products for distribution and

installation. This will give the required

depth and spread to our security

business.

QA What was the mindset behind the decision to replace import with in-housemanufacture?Security requirements in India are

different from that of the West or Far

East, so mere import would not have

been advisable for the long-term. In

view of the need for customization,

we concluded that it would be more

appropriate to manufacture

indigenously than import. Besides,

the tax free status enjoyed by

Parwanoo and our engineering

capabilities are superior to a number

of countries. When combined, this

would enhance the acceptability of

our security products.

QA What initiatives will widen the reach of Zicom’s retail product business?We introduced the direct sales

channel for domestic security devices.

We are tapping the IT channel to

market our products to the

mid-market and SOHO companies.

We signed up with regional

distributors, activated about 2,000 IT

resellers and intend to increase this to

5,000 IT resellers as they influence

last mile customer decisions through

technical expertize.

We are scaling our presence in

modern retail and large format stores

and recently marketed our products in

home hardware stores across cities.


QA What other reasons are expected to drive the growth of Zicom’s retail productsegment?The perception of threat, driven

mainly by terror attacks, was till a few

quarters ago thought to affect only

public areas like trains and malls. But

with nuclear families becoming a

norm, care for senior citizens and a

growing need for surveillance in office

areas to prevent crime, harassment

and improve productivity, there is a

convergence of demand across

commercial and residential segments.

Thanks to a rapid advance in

technology, disposable incomes and

acceptable price-levels in the mass

market, along with the positive

convergence, we are creating

awareness regarding security products

at numerous fora, outlining a Rs. 30

million budget for branding and

promotion in 2010-11.

QA Zicom could experience a decline in revenues and profits in 2010-11. How does the Company expect to limit it?Yes, there will be a drop in our

revenue and profit in the current year.

This drop in revenue and profits, will

be made up only partly by the growth

in our retail business. However, we

expect to strengthen our profitability

on account of a lower interest payout

and improved margins in our retail

business. The result is that in the

short-term, we may see a deep curve,

but in the long run, with new

business verticals, we expect to cover

this loss revenue and profits.

QA What kind of business verticals is Zicom looking at?We recognized that we needed to be

in businesses that were largely

recession-proof, uncluttered and

remunerative and in segments

affording scalable presence and

recurring revenues. In view of these

requirements, we selected to position

ourselves in the services space with a

business model – ‘Security as a

Service’ (SaaS) – that allows us to

leverage our domain knowledge and

provide unique services. We are

moving from a completely product-

centric to a service-driven model. So

while our product business will be

sustained on a retail basis, we will

offer services as well in the telecom

and tracking businesses.


QA Which services is Zicom planning to offer, going forward?Going forward, Zicom is looking to

offer services to the telecom sector.

The products and technology

developed by Zicom will help mobile

tower infrastructure companies reduce

operational losses due to theft at Base

Tower Station (BTS) and improve

operational efficiency to reduce

operating costs. In the tracking space,

our services will revolve around the

security of assets and objects.

QA What is the basis of Zicom’s confidence in this space?When we started the electronic

security system business, we were the

pioneers in India who sustained our

leadership. Over the years, we

developed relationships with

corporates and government bodies;

we hope to leverage these

relationships to market our new

concepts with similar success. These

new verticals will take two-three years

to deliver sizeable returns. We will

continue to seek new opportunities for

business growth around our core

competence – security and related

fields.

QA What is your message to shareholders?Keep the faith! We recognize our responsibility to shareholders and want to assure them that Zicom will not stop here.

Rather, this is the start of a new and exciting beginning. We have done it once. We are sure of doing it again.


Manohar Bidaye, Promoter and Chairman

Manohar Bidaye, Promoter and Chairman of Zicom, has done his Masters in Commerce

(M.Com.) from the University of Mumbai. He also holds a General Degree in Law and is

a Member of The Institute of Company Secretaries of India.

He is vastly experienced, having spent 17 years in the fields of corporate planning,

strategy forming, corporate law, finance, taxation and other related areas. He is a proud

recipient of the prestigious “Yashashree 2008” award given by the Maharashtra Times, in

recognition and honour of his achievements across various industry segments.

Pramoud Rao, Promoter and Managing Director

Pramoud Rao, Promoter and Managing Director of Zicom, is a Graduate in Science with

over 20 years of marketing experience in various conceptual product categories. He is

responsible for the day-to-day affairs of the Company and for identifying strategic

international business partnerships, strategy planning and the Company’s overall

marketing and sales functions. He has been awarded the “Bharat Shiromani Award” by

The Indian Institute of Economic Studies.

Mukul Desai, Director

Mukul Desai has been on the Board of Directors of Zicom since 1996 and is also the

Chairman of the Audit Committee. He is a practicing Chartered Accountant since 1982

and has varied experience in the field of Audit & Taxation.

He has developed expertize in matters of corporate law, direct and indirect taxation

law and corporate finance structuring, among others. At present, as a partner of

M/s. Sundarlal Desai and Kanodia, Chartered Accountants, he is responsible for looking

after the Company’s overall conduct of audits and representation before tax authorities.

Board of the Directors


Vijay Kalantri, Director

Vijay G. Kalantri, G.C.D. and Diploma holder in textile, is an industrialist by profession.

He has been actively involved with various industries and Government bodies in different

capacities like President of the All India Association of Industries and Indian Council of

Foreign Trade, among others. He has been honoured with various prestigious awards by

institutions and organisations representing industries, Government bodies and Socio-

economic institutions.

Achyut Godbole, Director

Achyut Godbole is a chemical engineer and possesses over 30 years of experience in

software development in India and the UK in world-renowned companies like IBM,

Hindustan Lever and L&T InfoTech, among others. He has been awarded for excellence

in performance, three times by IBM World Trade Corporation. He has been instrumental

in designing ERP packages and implementing them in many companies across the world.

He was awarded twice for the excellent export performance of his Company, by the Prime

Minister.


Dr. B. Samal is a gold medalist in M.Sc. (Ag.) and holds a Doctorate in Economics. He

also holds a Post Graduate Diploma in bank management. He retired as a Member of the

Securities Appellate Tribunal under the Ministry of Finance Department of Corporate

Affairs, prior to which he held the post of Chairman and Managing Director at Allahabad

Bank and the Industrial Investment Bank of India Limited. He has been awarded “Seva

Ratna” by His Excellency, the Governor of West Bengal.


NOTICE

NOTICE is hereby given that the Sixteenth Annual General Meeting

of the Members of ZICOM ELECTRONIC SECURITY SYSTEMS

LIMITED will be held on Wednesday, the 29th day of September,

2010, at 10.30 a.m., at Mumbai Cricket Association Recreation

Centre, RG – 2, G – Block, Bandra Kurla Complex, Mumbai

400051, to transact the following business:

ORDINARY BUSINESS:1. To receive, consider and adopt the Audited Profit & Loss

Account for the year ended March 31, 2010; the Balance Sheet

as at that date, together with the Reports of the Board of

Directors and the Auditors thereon.

2. To declare dividend on equity shares of the Company for the

financial year ended March 31, 2010.

3. To appoint a Director in place of Mr. Mukul Desai, who retires

by rotation, and being eligible, offers himself for re-appointment.

4. To appoint a Director in place of Dr. B. Samal, who retires by

rotation, and being eligible, offers himself for re-appointment.

5. To appoint Auditors to hold the office from the conclusion of

this Meeting, until the conclusion of the next Annual General

Meeting and to fix their remuneration. In this connection,

Members are hereby informed that M/s. P. Raj & Co., Chartered

Accountants, the present Auditors of the Company, retires at

the ensuing Annual General Meeting. However, they have

conveyed their unwillingness to the Company for their

re-appointment as Statutory Auditors. The Company has

received a Special Notice under Section 225 of the Companies

Act, 1956, proposing following Ordinary Resolution for

appointment of M/s. Walker, Chandiok & Co, Chartered

Accountants, as Auditors of the Company in place of the retiring

Auditors, M/s. P. Raj & Co., Chartered Accountants, which the

Directors recommend for your approval.

“RESOLVED THAT pursuant to the provisions of Sections 224,

225 and other applicable provisions, if any, of the Companies

Act, 1956, M/s. Walker, Chandiok & Co, Chartered

Accountants, Mumbai, be appointed as Statutory Auditors of

the Company, in place of the retiring Auditors M/s. P. Raj &

Co., Chartered Accountants, Mumbai; to hold the office from

the conclusion of this Meeting until the conclusion of the next

Annual General Meeting of the Company, on a remuneration

(including terms of payment) to be fixed by the Board of

Directors of the Company, plus service tax and such other

tax(es), as may be applicable, and reimbursement of all out-of-

pocket expenses in connection with the audit of the accounts

of the Company for the year ending March 31, 2011.”

SPECIAL BUSINESS:6. To consider and if thought fit to pass with or without

modification(s), the following resolution as a Special

Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 198,

269, 309, 311, Schedule XIII and other applicable provisions,

if any, of the Companies Act, 1956 (including any statutory

modification(s) or re-enactment(s) thereof for the time being in

force), and subject to the approval of the Central Government,

if required, the Company hereby approves the terms of

remuneration payable to Mr. Pramoud Rao as the Managing

Director of the Company for a balance period of two years i.e.

from March 1, 2010 till February 29, 2012, as are set out in

the Explanatory Statement to Item No. 6 of this Notice and also

in the Supplemental Agreement dated May 10, 2010 entered

into by the Company with him, which Agreement is hereby

specifically sanctioned with liberty to the Board of Directors /

Remuneration Committee to alter and vary the terms and

conditions of the said Agreement, as may be agreed to between

the Board of Directors / Remuneration Committee and


Mr. Pramoud Rao, or as may be varied by the Members,

subject to the limits, if any, specified in the applicable

provisions of the Companies Act, 1956 and Schedule XIII to

the said Act, or any amendments thereto.

RESOLVED FURTHER THAT in the event of loss or inadequacy

of profits in any financial year of the Company during the tenure

of Mr. Pramoud Rao’s office as the Managing Director; the

remuneration, perquisites and benefits as set out in the

Explanatory Statement to Item No. 6 of this Notice (except

commission) be paid or granted to Mr. Pramoud Rao as the

minimum remuneration, subject to the ceiling limits specified

under Schedule XIII to the Companies Act, 1956; and if the

said remuneration is in excess of the ceiling, necessary approval

of the Central Government be obtained to make up the

shortfalls, without any further reference to the Members.

RESOLVED FURTHER THAT the Board of Directors /

Remuneration Committee of Directors of the Company be and

is hereby authorized to vary the said remuneration, perquisites

/ benefits payable to Mr. Pramoud Rao as the Managing

Director as may be mutually agreed between the Company and

Mr. Pramoud Rao, subject to the applicable statutory provisions

and approval of the Central Government, if required.”

By Order of the Board of Directors

Kunjan Trivedi

Company Secretary

Place: Mumbai

Date: August 14, 2010

Registered Office:

501, Silver Metropolis,


Goregaon (East), Mumbai 400 063.

NOTES:Proxy information:

1. A Member entitled to attend and vote at the Annual General

Meeting is entitled to appoint a proxy to attend and vote

instead of himself and the proxy need not be a Member of the

Company. The form of proxy for the Annual General Meeting

is enclosed. To be valid, the form of proxy should be deposited

at the Registered Office of the Company not less than 48

hours before the time of the Meeting.

2. Corporate Members intending to send their authorized

representative to attend the Meeting are requested to send a

duly certified copy of the Board Resolution authorizing such

representative to attend and vote on their behalf at the Meeting.

Attendance:

3. Members / Proxies should bring with them the attendance slip

duly filled in for attending the Annual General Meeting and

produce the same at the entrance of the meeting hall. Members

who hold shares in dematerialized form are requested to bring

their Client ID and DP ID numbers for easy identification of

attendance at the Meeting.

Dividend:

4. The Register of Members and Share Transfer Books of the

Company will remain closed from Saturday, September 25,

2010 to Wednesday, September 29, 2010 (both days

inclusive) for determining the names of Members eligible for

dividend on Equity Shares, if declared at the Annual General

Meeting.

5. Dividend, for the year ended March 31, 2010, as

recommended by the Directors, if declared at the Annual

General Meeting, will be paid within the prescribed time to:


(i) those Members, whose names appear on the Register of

Members of the Company on September 24, 2010; and

(ii) those whose names appear as beneficial owners as at the

close of business on September 24, 2010 as per details to

be furnished by the Depositories, viz. National Securities

Depository Limited and Central Depository Services (India)

Limited.

6. Members holding shares in electronic form may please note

that:

a) the dividend, when declared, will be credited to their

respective Bank Accounts as furnished to the respective

Depository Participants, through Electronic Clearing Scheme

(ECS), where the facility is available at locations identified by

The Reserve Bank of India from time to time and covers

most of the cities and towns;

b) in other cases, bank details as furnished to the respective

Depository Participants will be printed on the Dividend

Warrants / Demand Drafts as per applicable regulations.

7. Members holding shares in physical form are requested to notify

the change in their respective addresses or bank details to the

Share Department of the Company and always quote their Folio

No. in all correspondence with the Company. In respect of

holdings in electronic form, Members are requested to notify

any change in addresses or bank details to their respective

Depository Participants.

8. To avoid loss of dividend warrants in transit and undue delay

in receipt of dividend warrants, Members holding shares in

physical form and desirous of availing ECS facility are requested

to contact the Company’s Registrar and Share Transfer Agent.

9. Members, who have not encashed their dividend in respect of

dividends for the years 2002-03, 2003-04, 2004-05, 2005-

06, 2006-07, 2007-08 and 2008-09; are requested to

contact the Share Department at the Registered Office of the

Company for re-validation of the Dividend Warrants or issue of

fresh Demand Drafts. Pursuant to Section 205A read with

Section 205C of the Companies Act, 1956; the unclaimed /

unpaid dividend will be transferred on the specified dates to

the Investors’ Education and Protection Fund set up by the

Central Government. Once the dividend is transferred to the

above Fund, no claim shall lie against the Company or the said

Fund in respect of such unclaimed / unpaid dividends.

Inspection:

10. All documents referred to in the accompanying Notice are open

for inspection by the Members at the Registered Office of the

Company on all working days between 11.00 a.m. to 1.00

p.m., upto the date of the Annual General Meeting and during

the time of the Meeting.

Explanatory Statement:

11. An Explanatory Statement pursuant to Section 173(2) of the

Companies Act, 1956, relating to special business to be

transacted at the Meeting is annexed herewith.

Directors:

12. In relation of agenda Item Nos. 3 and 4 in the Notice of Annual

General Meeting, regarding re-appointment of Mr. Mukul Desai

and Dr. B. Samal, Directors liable to retire by rotation at the

Annual General Meeting, have offered themselves for

re-appointment.

Details of the Directors who have offered themselves for

re-appointment at the Annual General Meeting are as follows:

i. Mr. Mukul Desai, FCA (aged 52 years)

Mr. Mukul Desai is a Bachelor of Commerce and is a

Practicing Chartered Accountant since 1982. He has varied

experience in the field of Audit & Taxation. He has expertize

in Corporate Law matters, Direct & Indirect Taxation Laws,

Corporate Finance Structuring, etc. At present, as a Partner

of M/s. Sundarlal Desai and Kanodia, Chartered

Accountants, he is responsible for looking after the

Company’s overall conduct of audits and representation

before Tax authorities.

ii. Dr. B. Samal, M.Sc.(Agriculture), Ph.D.(Economics), P. G.

Diploma - Bank Management (aged 65 years)

Dr. B. Samal is a gold medalist in M.Sc.(Agriculture) and

holds a Doctorate in Economics. He also holds Post


Graduate Diploma in Bank Management. He retired as a

Member of the Securities Appellate Tribunal under the

Ministry of Finance, Department of Corporate Affairs, prior to

which he held the post of Chairman and Managing Director

at Allahabad Bank and the Industrial Investment Bank of

India Limited. He has been awarded “Seva Ratna” by His

Excellency Governor of West Bengal.

The above Directors do not have any financial or family relationships

with any other Directors, senior management or substantial or

controlling shareholders’ of the Company.

Further details of Mr. Mukul Desai and Dr. B. Samal, as required

under Clause 49 of the Listing Agreement, are given in the Corporate

Governance Report forming part of this Annual Report.

Your Directors recommend the appointment of the above Directors.

Request to Members:

13. Members are requested to send their queries, if any, to reach

the Company’s Registered Office atleast 10 days before the

Annual General Meeting, so that the information could be

compiled in advance.

14. 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 of the Annual Report to the

Meeting.


Kunjan Trivedi

Company Secretary

Place: Mumbai


Registered Office:




EXPLANATORY STATEMENTThe following Explanatory Statement, pursuant to Section 173 of

the Companies Act, 1956 (the Act), sets out all material facts

relating to the business mentioned at Item Nos. 5 and 6 of the

accompanying Notice dated August 14, 2010.

Item No. 5This Explanatory Statement is being given in respect of ordinary

business of the Notice at Item No. 5, although not required. M/s. P.

Raj & Co., Chartered Accountants, Mumbai, who had been

re-appointed as Auditors by the Members at their Fifteenth Annual

General Meeting for the year ended March 31, 2010, would be

retiring at the conclusion of the forthcoming Annual General

Meeting. They have conveyed their unwillingness to the Company

for their re-appointment as Statutory Auditors. The Audit Committee

and the Board of Directors have placed on record their appreciation

of the professional services rendered by M/s. P. Raj & Co. during

their association with the Company as its Auditors.

The Company has received a Special Notice as required under

Section 225 of the Companies Act, 1956, proposing the

appointment of M/s. Walker, Chandiok & Co, Chartered

Accountants, Mumbai. As required, the Company has received a

certificate from M/s. Walker, Chandiok & Co, Chartered Accountants,

stating that their appointment as proposed, if made, will be within

the limit specified in sub-section (1B) of Section 224 of the

Companies Act, 1956. They have further confirmed to the Company

that they are no way disqualified to be appointed as Auditors under

Section 226 of the Companies Act, 1956.

The Directors recommend the adoption of the Resolution at Item

No. 5 of the Notice.

No Director is in any way concerned or interested in the Resolution

at Item No. 5 of the Notice.

Item No. 6Pursuant to the resolution passed by the Members through Postal

Ballot, results of which were declared on April 30, 2007,

Mr. Pramoud Rao was re-appointed as Managing Director of the

Company for a period of five years w.e.f. March 1, 2007, i.e. upto

February 29, 2012. The terms of his remuneration were fixed for a


period of three years i.e. from March 1, 2007 till February 28,

2010, in accordance with the applicable provisions of the

Companies Act, 1956 read with Schedule XIII thereto.

As the term of remuneration of Mr. Pramoud Rao as the Managing

Director, fixed for a period of three years i.e. from March 1, 2007

till February 28, 2010, had expired on February 28, 2010; the

Remuneration Committee of Directors and the Board of Directors of

the Company at their respective meetings held on March 25, 2010

and May 10, 2010, have approved the payment of remuneration as

under to Mr. Pramoud Rao for the balance term of his tenure i.e.

from March 1, 2010 to February 29, 2012 (which is on the same

terms as his remuneration for the earlier three years of his tenure as

the Managing Director), and payment of the same remuneration to

him (except commission) as the minimum remuneration in case of

loss or inadequacy of profit in any financial year during the said

balance tenure of his term as the Managing Director, subject to the

applicable provisions of the Companies Act, 1956 and Schedule

XIII to the Act; and also subject to the approval of the Members and

the Central Government (as may be required).

The terms of remuneration of Mr. Pramoud Rao as Managing

Director for the balance term of his tenure i.e. from March 1, 2010

to February 29, 2012 proposed for your approval, are as follows:

Salary & Grade: Rs. 600,000 per month in the grade of

Rs. 500,000 to Rs. 800,000.

Commission: Such remuneration by way of commission in addition

to the salary calculated at the rate not exceeding 2% p.a. of the Net

Profit of the Company in a particular financial year, as may be

determined by the Board of Directors of the Company at the end of

each financial year, subject to the overall ceiling stipulated in

Sections 198 and 309 of the Companies Act, 1956. However, in

case of any loss incurred by the Company in any financial year, no

commission shall be paid to the Managing Director.

Other Perquisites / Benefits to Managing Director are as under:

a. Contribution to Provident Fund, Superannuation Fund and other

Retirement benefits will be in accordance with the rules of the

Company. The Company’s contribution to such funds is not to

be included in the computation of the ceiling on perquisites

stated above to the extent these either singly or put together are

not taxable under the Income Tax Act.

b. Encashment of Leave at the end of the term as per rules of the

Company shall not be considered for the valuation of

perquisites.

c. Gratuity as per the Scheme of the Company provided the

Gratuity payable shall not exceed half a month’s salary for each

completed year of service.

d. Provision of the Company’s owned Car with driver for use of

the Company’s business and telephone at residence and / or

mobile shall not be considered as perquisites. Personal long

distance calls and use of car for private purpose, if any, shall

be billed by the Company to the Managing Director.

e. No sitting fees to be paid for attending Meetings of the Board

of Directors or any of its Committee.

f. Reimbursement of entertainment, traveling and all other actual

expenses properly incurred for the purpose of the Company’s

business; which shall not be considered as remuneration.

In the event of absence or inadequacy of profit in any financial year

during the remaining tenure of two years of Mr. Pramoud Rao as

Managing Director, it is proposed to pay him the aforesaid

remuneration, perquisites / benefits (except commission) as the

minimum remuneration subject to the ceiling limits prescribed under

Schedule XIII and other applicable provisions of the Companies Act,

1956. If the proposed remuneration exceeds the ceiling limits

prescribed under Schedule XIII in case of loss or inadequacy of

profit, necessary approval from the Central Government will be

obtained for making-up of the shortfalls, without any further

reference to the Members.

The Remuneration Committee / Board of Directors after reviewing

the performance of the Company and the Managing Director after

the close of every financial year, may decide on the increment to the

Managing Director within the limits of the salary grade specified

above, subject to the ceiling limits laid down aforesaid and under the

provisions of the Companies Act, 1956, or any modification(s) or

re-enactment(s) thereof.

Mr. Pramoud Rao shall not be liable to retire by rotation during his

tenure as the Managing Director of the Company.


The information required under the sub-clause B (iv) of Para I of Section II, Part II, of the Schedule XIII to the Companies Act, 1956 is given

here below:

I. General Information:

III. Other Information:

1. Nature of Industry Electronic Security Systems

2. Date or expected date of commencement of Commercial Production Not Applicable

3. In case of new companies, expected date of commencement of activities Not Applicable

as per project approved by financial institutions appearing in the prospectus

4. Financial performance based on given indications

(Rs. in Lakhs)

2008-09 2009-10i. Sale 19,525.35 24,476.85

ii. Net Profit After Taxation 985.86 605.37

iii. Export 1.55 231.70

iv. Foreign investments or collaborators, if any - -

i. Background details: Mr. Pramoud Rao is a Promoter and Managing Director of Zicom. He is a Science Graduate and has over 23 years

of marketing experience in various conceptual product categories.

ii. Past remuneration: *Rs. 600,000 per month

iii. Recognition or Awards: Mr. Pramoud Rao has been awarded Bharat Shiromani Award.

iv. Job profile and suitability: He looks after the day to day affairs and management of the Company and is responsible for identifying strategic

international business partners, strategy planning, overall marketing and sales functions.

v. Remuneration proposed: *Rs. 600,000 per month** in the grade of Rs. 500,000 to Rs. 800,000, which may be revised by the Board /

Remuneration Committee within the above grade. In addition to the above, commission @ 2% p.a. of the Net Profit

of the Company will be paid to Mr. Pramoud Rao.

vi. Comparative remuneration profile with respect to industry, size of the Company, profile of the position and person as Whole time

Director are on the same line or on the higher side.

vii. Pecuniary relationship directly or indirectly with the Company, or relationship with the managerial personnel, if any:

Mr. Pramoud Rao is the Promoter of the Company and does not have any relationship with the managerial personnel in the Company.

II. Information about the Managing Director – Mr. Pramoud Rao:

i. Reasons of loss or inadequate profits: Mr. Pramoud Rao was re-appointed as Managing Director of the Company for a period of five years w.e.f.

March 1, 2007 and the terms of his remuneration were fixed for a period of three years i.e. from March 1, 2007 till February 28, 2010, in accordance

with the applicable provisions of the Companies Act, 1956 read with Schedule XIII thereto. As the term of remuneration fixed for a period of three years

had expired on February 28, 2010; the Remuneration Committee of Directors and the Board of Directors of the Company at their respective meetings

held on March 25, 2010 and May 10, 2010, have approved the payment of remuneration to Mr. Pramoud Rao for the balance term of his tenure i.e.

from March 1, 2010 to February 29, 2012 on the same terms as were for his remuneration for the earlier three years of his tenure. During the year

under review, the Company had entered into a Business Transfer Agreement (BTA) with Schneider Electric India Private Limited (Schneider) for the sale

of its Electronic Security Systems Business comprising of its two groups, viz. Building Solutions Group (BSG) and Special Projects Group (SPG) as a

going concern, on slump sale basis.


Although, the remuneration proposed to be paid to him for the balance two years of his tenure ending February 29, 2012, is fixed considering the industry

standard and with that being paid to companies of similar size and scale of business, the same is found to be exceeding the prescribed limits under

the Companies Act, 1956 when calculated with respect to the Net Profits of the Company as per the last audited accounts as at March 31, 2010. While

there has been an improvement in the turnover of the Company over successive years since his re-appointment in March 2007, the profitability could

not improve in the same scale on account of pressure over the margins mainly due to high operating and finance costs.

ii. Steps taken or proposed to be taken for improvement & Expected increase in productivity and Profits: On March 5, 2010 the Company

entered into Business Transfer Agreement (BTA) for sale of its Electronic Security Systems Business comprising of its two groups, viz. Building Solutions

Group (BSG) and Special Projects Group (SPG) as a going concern, on slump sale basis, at a total consideration of Rs. 2,250 million subject to

adjustments on Escrow and other accounts mutually agreed between the Company and Schneider. In the first quarter of the financial year 2010-11,

the Company has successfully effected the business transfer transaction resulting into Net Profit of Rs. 965 million. This transaction has helped your

Company to de-leverage its balance sheet. The Company has repaid major debt portion of itself as well as its subsidiaries, thereby strengthening the

debt-equity ratio. This will help to reduce the interest cost. With the remaining resources Company plans to strengthen its existing business and take

up new business activities. Further, Company has taken steps to source material requirements for its retail business mostly from its newly commissioned

factory at tax-friendly location which will help to reduce material cost. Further, distribution channels are being improved and strengthened to improve

marketing. All these steps are expected to enhance Company’s productivity and profitability.

* Exclusive of Retirement Benefits.

** If required, necessary application will be made to the Central Government for approval of the terms of remuneration.

Mr. Pramoud Rao is interested in the proposed resolution upto the extent of the remuneration, perquisites and benefits that he will receive

as the Managing Director as proposed therein. Except for him, no other Director of the Company is in any way concerned or interested.

The Directors recommend this resolution for your approval.


Kunjan Trivedi

Company Secretary

Place: Mumbai


Registered Office:





Directors' Report

Your Directors presents their Sixteenth Annual Report, together with the Audited Accounts of the Company for the financial year ended

March 31, 2010.

FINANCIAL HIGHLIGHTS (Rs. in million)

Particulars March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009

Consolidated Consolidated Standalone Standalone

Net Sales / Income from Operations 5,279.70 3,757.55 2,447.68 1,952.53

Other Income 6.16 7.05 0.76 4.44

Total Income 5,285.86 3,764.60 2,448.44 1,956.97

Total Expenditure 4,740.76 3,252.36 2,175.06 1,702.99

Gross Profit before Interest and Depreciation 545.10 512.24 273.38 253.98

Interest and Finance Charges 235.92 163.62 148.06 96.97

Gross Profit before Depreciation and Taxation 309.18 348.62 125.32 157.01

Depreciation 121.75 108.40 34.99 25.95

Profit Before Tax 187.43 240.22 90.33 131.06

Provision for Taxation:

Current year 3.00 18.00 3.00 18.00

Deferred 11.68 (3.91) 26.80 12.11

Fringe Benefit Tax Nil 2.70 Nil 1.80

Taxation of earlier years (5.00) 0.56 Nil 0.56

Net Profit After Taxation 177.75 222.87 60.53 98.59

Less: Minority Interest 27.46 26.98 Nil Nil

Profit for the year 150.29 195.89 60.53 98.59

Add: Balance brought forward from previous year 340.19 161.31 315.39 227.20

Profit available for Appropriation 490.48 357.20 375.92 325.79

APPROPRIATIONS:

Transfer to General Reserve 9.33 6.61 6.10 Nil

Provision for Dividend 63.50 8.89 63.50 8.89

Provision for Tax on Dividend 10.54 1.51 10.54 1.51

Dividend including taxes for earlier year Nil Nil Nil Nil

Balance of Profit carried forward to Balance Sheet 407.11 340.19 295.78 315.39

To the Members


OPERATIONAL PERFORMANCEYour Directors are pleased to inform that the year under review

witnessed achievement of milestone by the Company, in terms of its

Total Income, both on standalone and consolidated basis. While

standalone Total Income of Rs. 2,448 million crossed Rs. 2,000

million mark, the consolidated Total Income at Rs. 5,286 million

crossed Rs. 5,000 million mark for the first time in the history of the

Company. The growth in Total Income on standalone and

consolidated basis were 25% and 40% respectively. However, the

profitability could not cope up with this growth, mainly on account

of high operating and finance costs.

As a result, the Profit Before Tax on standalone basis decreased to

Rs. 90 million (previous year Rs. 131 million) and on consolidated

basis the Profit Before Tax decreased to Rs.187 million (previous

year Rs. 240 million). While, Net Profit After Tax on standalone

basis decreased to Rs. 60 million (previous year Rs. 99 million)

and the same on consolidated basis after Minority Interest, was

Rs. 150 million (previous year Rs. 196 million).

The Consolidated Financial Statements include the financial

statements of Zicom Electronic Security Systems Limited (“the

Company”) and its subsidiaries, namely, Zicom Retail Products

Private Limited (“ZRPPL”), Zicom Manufacturing Co. (HK) Ltd.,

Zicom CNA Automation Limited (“Zicom CNA”) and Unisafe Fire

Protection Specialists LLC, Dubai (“Unisafe”) and its subsidiaries.

BUSINESS DEVELOPMENTS AND PROSPECTSAs the Members are aware, on March 5, 2010, the Company had

entered into a Business Transfer Agreement (BTA) with Schneider

Electric India Private Limited (Schneider) for sale, transfer, disposal

of its Electronic Security Systems Business comprising of two groups

viz. Building Solutions Group (BSG) and Special Projects Group

(SPG) and the business of Zicom CNA Automation Limited, as a

going concern on slump sale basis for a total consideration of

Rs. 2,250 million, subject to adjustments on Escrow and other

accounts of Rs. 120 million as mutually agreed between the

Company and Schneider. However, the said transfer excluded the

retail business, business of Central Monitoring Station and Video

Monitoring Station with right to continue the business of fire

detection and suppression on a stand alone basis. The said BTA

received the Members approval through Postal Ballot on April 16,

2010.

Your Directors are pleased to inform that during the current year,

your Company has successfully effected the business transfer

transaction as per terms of the BTA. The transaction resulted into

Net Profit of Rs. 965 million in the first quarter of the financial year

2010-11. The discontinued business contributed Rs. 2,434 million

to the total turnover (99%) and Profit After Tax of Rs. 91 million.

The transaction has not only enabled your Company to repay its

major debt burden and that of subsidiaries, but has also enhanced

its flexibility to grow the retained businesses and pursue new growth

opportunities.

Your Company has decided to move away from project business in

long term perspective. The sale of Electronic Security Systems

Business, being project business of the Company, was first step in

this direction. The Company is bullish on its ability to build a

business of services in the domain of security, such as Central

Monitoring Station services, Video Monitoring Station services, asset

tracking services, education and training in security, etc. Today

many assets and infrastructure such as mobile towers, windmills,

construction sites which are remotely located, are in need of such

security services. Considering the past experience and goodwill

earned, the Company is confident of building this business model

successfully, which will give sustained annuity revenue with higher

margin. In this regard, the Company may opt for both organic and

inorganic growth. Also, the Company will continue to drive its growth

in the remaining business with new enthusiasm.

DIVIDENDIn view of the above, your Directors recommend a payment of

dividend of Rs. 5 (Rupees Five only) per Equity Share of Rs. 10

each (i.e. 50%), as compared to Re. 0.70 per share (7%) declared

in previous year on 12,699,829 Equity Shares (previous year

12,699,829 Equity Shares) of the Company for the financial year

2009-10, thereby entailing the total payout of Rs. 74 million

(previous year Rs. 10 million).


FINANCEDuring the year under review, the Company forfeited and transferred

to Capital Reserve, total sum of Rs. 73.50 million received towards

application money for 3,675,000 warrants issued in the financial

year 2007-08 on preferential basis to Promoters’ Group Companies

and other entities; as they failed to exercise their respective options

to acquire equivalent number of fully paid equity shares of Rs. 10

each at a price of Rs. 200 per share before the prescribed dates.

SUBSIDIARY AND JOINT VENTURE COMPANIESDuring the financial year, the Company had four subsidiaries viz.

Zicom Retail Products Private Limited, Unisafe Fire Protection

Specialists LLC, Dubai, Zicom CNA Automation Limited and Zicom

Manufacturing Co. (HK) Ltd. Information on financials of the

subsidiaries for 2009-10, are provided in Annexure B hereto. In

respect of foreign subsidiary companies, figures in rupees are

converted from applicable respective foreign currencies at

appropriate exchange rate. Brief of each subsidiary company is as

under:

Unisafe Fire Protection Specialists LLC, DubaiUnisafe, subsidiary of the Company in U.A.E., leader in providing

Fire Detection and Fire Fighting systems, equipments and services,

has its presence in Dubai, Abu Dhabi and Qatar, operating for over

a decade. It has proved to be a very promising venture of your

Company in the GCC countries. Unisafe caters to large spectrum of

clientele from government to corporate, refineries, shopping malls,

multi storey buildings and resorts, among others. Offering

comprehensive range of solutions for all Fire Protection needs,

starting from the basic Hydrant and Sprinkler Systems to advance

Analogue Addressable Fire Alarm Systems and specialized Gaseous

Fire Suppression Systems, Unisafe has achieved its milestone in

terms of top line, bottom line and customer satisfaction. It has

performed well and continued to enjoy unstinted confidence from its

clients despite the slowdown in U.A.E. during the year. Also, your

Company acquired additional 1,960 shares of AED 1,000 each,

thereby increasing its investment to 2,450 shares of AED 1,000

each in Unisafe. However, as the other JV partner has also increased

his investment in the Company proportionately the holding ratio of

both JV Partners in Unisafe has remained unchanged.

On consolidated basis, Unisafe has posted Total Income of

Rs. 1,819 million and a Net Profit of Rs. 149 million.

Zicom Retail Products Private Limited Zicom Retail, wholly owned subsidiary, focuses on security needs

of separate verticals of fastest growing Small and Medium Business

(SMB), Retail and Residential segments in the country.

SMB is one of the fastest growing segments in India and as per

available research report; India has the 2nd largest SMB population

compared to peer nations such as Brazil, Russia, China and USA.

Zicom Retail sales in the SMB segment are very healthy and it is

expected to grow rapidly in this segment in the coming years. SMBs

are installing electronic security systems with dual objectives –

productivity monitoring and surveillance.

The other segment which saw increased adoption of electronic

security systems was the mid-format Retail Chains. The expectations

from the customers in this segment are very demanding and Zicom

Retail’s product mix and services portfolio addresses the specific

needs of such customers. The Company had added very big names

during the year to its already huge customer base in the country.

Riding on the back of aggressive growth rates of building and

residential segments during the year, Zicom Retail registered better

growth in the segment.

In its second year of operations, Zicom Retail has achieved Total

Income of Rs. 944 million and incurred a Net Loss of Rs. 12 million.

This was mainly due to higher operating and finance costs incurred

during the year. With various cost cutting measures undertaken, the

Company is expected to break even in the current financial year.

Zicom Manufacturing Co. (HK) Ltd.Zicom Manufacturing Co. (HK) Ltd., a subsidiary of the Company

with 76% of stakeholding, was initiated with a multiple purpose of

promoting international marketing and sale of Zicom branded

products, enabling the Company to source equipments at

competitive prices and supporting customers in India for their

imports who enjoy tax benefits. The growth of this subsidiary

remains stagnant due to change in strategy on procurement. In the

second year of its operations, the subsidiary has posted Net Income


of Rs. 65 million with Net Profit of Rs. 3 million.

In view of the sale of domestic business to Schneider, the utility of

this subsidiary for the growth strategy has been significantly

reduced.

Zicom CNA Automation Limited Zicom CNA Automation Limited, a Company which is a 51%-49%

JV between your Company and CNA Group Ltd., Singapore and its

Associates had access to superior automation technologies. It was

aimed to enable your Company to capitalize on emerging

opportunities into iBMS coupled with security integration. However,

this JV did not deliver as expected, as it took off at the same time

when the global slowdown commenced.

In view of the above, your Company decided to acquire the balance

equity holding of 49% from CNA Group Ltd. and its Associates and

sale and transfer the entire business under BTA dated March 5,

2010 with Schneider. The same has been successfully completed

alongwith the sale and transfer of your Company’s BSG and SPG

business, as informed earlier in this Report.

In its second year of operations, Zicom CNA had achieved Total

Income of Rs. 20 million and incurred a Net Loss of Rs. 6 million.

CONSOLIDATED FINANCIAL STATEMENTSIn accordance with the Accounting Standard (AS) 21 on

Consolidated Financial Statements read with Accounting Standard

(AS) 23 on Accounting for Investments in Subsidiaries, the Audited

Consolidated Financial Statements are provided in the Annual

Report. The Company has been exempted by Central Government

under Section 212 of the Companies Act, 1956, from attaching a

copy of financial statements of Zicom Retail Products Private

Limited, Unisafe Fire Protection Specialists LLC, Dubai, Zicom

Manufacturing Co. (HK) Ltd. and Zicom CNA Automation Limited.

Accordingly, the financial statements of the subsidiaries are not

attached with this Annual Report. The statement on subsidiaries

pursuant to Section 212 (3) of the Companies Act and statement on

financials of the subsidiary pursuant to Central Government’s

approval are attached hereto as Annexure B and Annexure C

respectively. Further, as required by the Central Government, the

Annual Accounts of the subsidiary companies and related

information shall be made available to the investors of the Company

and its subsidiaries seeking such information; and the same are

also available for inspection by any investor at the Registered Office

of the Company and its subsidiaries.

DIRECTORSIn accordance with the provisions of the Companies Act, 1956 and

Article 110 of the Articles of Association, Mr. Mukul Desai and

Dr. B. Samal are the Directors liable to retire by rotation at the

ensuing Annual General Meeting. The brief profile of the Directors

retiring by rotation is given in Notice of Annual General Meeting and

discussed at length in Corporate Governance Report.

Both the above Directors being eligible, have offered themselves for

re-appointment. Your Directors recommend their

re-appointments for your approval.

GROUPAs required under Clause 3 (1) (e) of Securities and Exchange Board

of India (Substantial Acquisition of Shares and Takeovers)

Regulations, 1997, persons constituting “Group” as defined under

the Monopolies and Restrictive Trade Practices (“MRTP”) Act, 1969,

for availing exemption from applicability of provisions of Regulations

10 to 12 of the aforesaid SEBI Regulations are disclosed in

Annexure A to this Report.

AUDITORSThe term of office of M/s. P. Raj & Co., Chartered Accountants and

Statutory Auditors of the Company will expire at the conclusion of

the ensuing Annual General Meeting. However, M/s. P. Raj & Co.

has intimated their unwillingness to be

re-appointed as Statutory Auditors of the Company. The Company

has received a Special Notice for appointment of M/s. Walker,

Chandiok & Co, Chartered Accountants, as Statutory Auditors in

place of the retiring Auditors M/s. P. Raj & Co., to hold the office

from conclusion of ensuing Sixteenth Annual General Meeting of

the Company till conclusion of the subsequent Annual General

Meeting. The Company has also received consent and certificate of

eligibility under Section 224 (1B) of the Companies Act, 1956 from

M/s. Walker, Chandiok & Co, Chartered Accountants. The Directors


recommend the appointment of M/s. Walker, Chandiok & Co,

Chartered Accountants, as Auditors of the Company for your

approval.

STATUTORY INFORMATION(a) Conservation of Energy, Technology Absorptionand Foreign Exchange Earnings and OutgoConservation of Energy

The Company is not required to furnish the prescribed information

under Section 217 (1) (e) of the Companies Act, 1956, relating to

the Conservation of Energy and Technology Absorption, as the

Company does not fall under the industries included in Schedule to

the relevant rules. However, your Directors’ report that the operations

of the Company do not involve much use of energy. The Company

makes every possible effort to conserve energy at all levels of its

operations.

Zicom CNA Automation Limited, the Company’s subsidiary, is aimed

to offer solutions to support conservation of energy by users.

Technology Absorption

The Company has not imported any technology and therefore no

information is provided in this regard. However, the Company is

continuously working on improving its indigenous products and

software.

Foreign Exchange Earnings and Outgo and Export MarketDevelopments

The Company has earned Rs. 40 million (previous year

Rs. 8 million) in foreign currency, and has spent Rs. 0.15 million

(previous year Rs. 0.75 million) in foreign exchange during the year

under review. The details of these foreign exchange expenditures

are available at Note Nos. 21 and 22 of Schedule 16, being Notes

forming part of the Accounts.

Export of material and services by the Company has been on a very

moderate scale to the Gulf region and UK. Your Company is

exploring possibilities of developing other export markets. In

addition, the Company through its subsidiary in Dubai is catering to

fire safety related requirements of Gulf region and has registered

very strong presence there.

(b) Particulars of EmployeesThe Company had three employees including Managing Director,

who were in receipt of remuneration of not less than Rs. 2,400,000

during the year ended March 31, 2010 or not less than

Rs. 200,000 per month during any part of the said year. Details in

respect of remuneration paid to employees as required under Section

217 (2A) of the Companies Act, 1956, read with the Companies

(Particulars of Employees) Rules, 1975, as amended, forms part of

this Report. However, in pursuance of Section 219 (1) (b) (iv) of the

Companies Act, 1956, this Report is being sent to all the Members

of the Company excluding the aforesaid information and the said

details will be made available on request, and also made available

for inspection at the Registered Office of the Company. Members

interested in obtaining such particulars may write to the Company

Secretary at the Registered Office of the Company.

(c) Corporate GovernanceIn pursuance of Clause 49 of the Listing Agreement with the Stock

Exchanges, a separate section on Corporate Governance, together

with a certificate from the Company’s Auditors confirming

compliance of the conditions of Corporate Governance as stipulated

under the said Clause, is set out separately as Annexure F forming

part of this Report.

DEPOSITS, LOANS AND ADVANCESYour Company has not accepted any deposits falling within the

purview of Section 58A of the Companies Act, 1956, and as such,

no principal or interest amount was outstanding on the date of the

Balance Sheet. The details of loans and advances, which are

required to be disclosed in the annual accounts of the Company

pursuant to Clause 32 of the Listing Agreement with the Company,

are furnished separately as Annexure E.

HUMAN RESOURCESAs on March 31, 2010, the total strength of the Company along

with its subsidiaries was around 385 employees at various locations

in India and abroad. Subsequent to year end, under BTA with

Schneider, 92 employees of the Company have joined Schneider

on May 1, 2010.


Every year the Company introduces new initiatives. During the year,

the Company introduced a very successful employee engagement

initiative – The 3C Business Promotion Program.

This Program was manned by the HR Department and the intent

was to get all the employees in the Company connected to the

business. Employees were encouraged to contribute potential

business leads under this Program, which were forwarded to the

respective sales team to follow up with the potential customers. On

successful closure of the business lead, the concerned employee

was awarded ‘stars’ which were redeemable for rewards.

Your Company continues to maintain a very diverse workforce which

also manifests a diverse culture to support the successful growth of

various businesses.

EMPLOYEES STOCK OPTION SCHEMEIn accordance with Employees Stock Option Scheme (ESOS) of the

Company, the employees have been offered options as per eligible

criteria fixed under the Scheme. Against each of the above, an

eligible employee is entitled to acquire equal number of equity

shares of Rs. 10 each of the Company at a price as may be decided

by the Board / Compensation Committee. There are two Schemes

of the Company viz. ESOS 2006 and ESOS 2007.

Further as under BTA, 92 employees of the Company have joined

Schneider on May 1, 2010, all the unexercised Stock Options

granted to such employees lapsed, changing substantially the status

of outstanding Employee Stock Option under ESOS 2006 and ESOS

2007 of the Company.

Necessary disclosures required to be given in accordance with

Securities and Exchange Board of India (Employee Stock Option

Scheme and Employee Stock Purchase Scheme) Guidelines, 1999,

for ESOS 2006 and 2007 forms part as Annexure D to this Report.

DIRECTORS' RESPONSIBILITY STATEMENTPursuant to Section 217 (2AA) of the Companies Act, 1956, the

Directors hereby confirm that in preparation of the annual accounts

for the year ended March 31, 2010:

(i) The applicable accounting standards have been followed along

with proper explanation relating to material departures, if any;

(ii) Reasonable and prudent judgment and estimates were made,

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 of the

Company for the year ended on March 31, 2010;

(iii) Proper and sufficient care was taken 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;

(iv) The annual accounts have been prepared on a going concern

basis.

INSURANCEAll the assets of the Company are adequately insured.

CORPORATE GOVERNANCE VOLUNTARYGUIDELINES 2009With a view to enhance economic value of corporate enterprises in

India and also to enhance value for every stakeholders connected

with the Indian corporate world, as also to bring corporate

governance in India at par with global benchmarks, the Ministry of

Corporate Affairs (MCA) had issued Corporate Governance Voluntary

Guidelines in December 2009. MCA has proposed that after

considering the experience and feedback of Indian corporates in

adopting these Guidelines, it would review the Guidelines for further

improvements after one year’s period.

Your Company fully supports this initiative of MCA, which it believes

will greatly help the Indian corporate world to achieve global

standards in Corporate Governance. Your Company strongly believes

in forming and adopting best practices for good Corporate

Governance and its corporate philosophy hovers around the same.

While complying with Corporate Governance practices as prescribed

under Clause 49 of the Listing Agreement with Stock Exchanges,

your Company is already in compliance with some of the

requirements under the Voluntary Guidelines of MCA to the extent

that they are in consonance with the provisions of the Clause 49.


CORPORATE SOCIAL RESPONSIBILITY ANDSUSTAINABILITY – A HUMBLE BEGINNINGThe Ministry of Corporate Affairs has released Voluntary Guidelines

on Corporate Social Responsibility (CSR) in December 2009. The

Company has already been carrying activities in relation to its

responsibility to the society in which it lives and the environment

surrounding it, which also includes the employees with whose

support it is able to conduct its business. Some of the activities

carried out by the Company forms part of its CSR initiatives and

have been briefly described below. Your Company is constantly

evaluating various options to play its role more effectively in its

contribution to the society and sustainability.

Social initiatives – Spreading awareness for security, protection

and care: During the year under review, the Company has initiated

various programs to build awareness amongst the citizens on

disaster management and fire safety. In this regard, the Company

had run an awareness program through Fire and Safety Association

of India to make Ganesh festival in Maharashtra more safe and

secure. Also, during the year, the Company has conducted various

complimentary programs in schools and colleges to help students to

manage any disaster due to fire, earthquake or terrorism. In the

current financial year, Company initiated program to support

students in their career.

At Zicom, we sincerely believe that a corporate cannot grow without

considering the environment, society and economy in which it stays.

All has to grow hand in hand.

Employee Care and Betterment: Best human resource policies are

being followed for the benefit and betterment of its employees. It

includes better work place atmosphere, humanitarian and

personalized approach, development of skill and career through

continuous opportunities for in-house and on the job trainings,

lectures, sessions and seminars. Enlightening and building of team

spirit, unity and involvement amongst employees vis-a-vis with the

Company and its objectives. This is being achieved through

employees participation in various ways like social and occasional

functions, event celebrations, picnics, participation and contribution

in corporate magazines, etc.

Employees are also encouraged to grow the business through a

reward scheme for providing lead to the Company in getting orders

and business. Under the Scheme employees get pre-determined

incentives against successful orders procured through business leads

provided by them. Further, employees are also trained in security

and first aid and provided free medical assistance under insurance

cover.

All the above steps have helped your Company in morale boosting

of its employees and to improve their zeal, enthusiasm and

belongingness, which finally helps your Company in its growth and

prosperity.

Environment and Energy Conservation: Your Company is in the

business of providing total security solutions through electronic

systems and gadgets, which are non-pollutive and consume very

less energy. Its business also caters to energy conservation and

waste management through the concept of green building and

intelligent building solutions under the roof of its subsidiary Zicom

CNA Automation Limited. Further, the security equipments like

sensors, control panels integrated with related software facilitates

energy saving by automatically reducing operations of various

electronic and electrical equipments like air conditioners, lights, etc.

which senses weather conditions, level of light, temperature inside

and outside premises and accordingly adjust the usage, thereby

substantially reducing electricity consumption. These security

systems, equipments and gadgets are made and marketed by your

Company to its various customers thereby helping in energy

conservation at large. At our offices also, with the installation of

such systems, equipments and gadgets, we endeavor to minimize

the energy usage and thereby directly and indirectly help in

environmental protection.

Water Conservation: Water is becoming more scarcer resource with

increasing population, urbanization and industrialization. Water

finds usage in every aspects of human life. Realizing importance of

the water, we at Zicom have taken various initiatives to manage its

usage. Some of them are minimizing consumption by educating

employees to avoid its wastage and conserve water wherever

possible. To inculcate the awareness for water conservation for every

employee we have resorted to educate them to that effect by


displaying graphics, designs and messages at every point of water

usage like water coolers and dispensers, washrooms, basins and

gardens. We feel that we have been successful in our motive,

thereby helping the society at large to conserve the scarce water

resources.

Efficiency in material usage: Material usage is a very important

factor in business cost control. It can lift or sunk an enterprise

depending upon the management of material usage. Effective

material usage facilitates cost controls. However, its implementation

differs from industry to industry, organization to organization and

the same also vary with the size and scale of a unit. Your Company

being in electronic security industry in India, its requirements for

systems, gadgets and equipments are different from that of the other

countries in the world.

As we have been in custom build system integration, automation

and SOHO segment where customized pre-configurated systems are

required to meet the needs of various classes of retail customers,

your Company cannot rely merely on imported material. Keeping

view the long term approach and also to facilitate cost reduction

and strengthening the margin the Company has set up on a

moderate scale a manufacturing unit at Parwanoo in Himachal

Pradesh. This will benefit us in better material management, as we

can have flexibility in timely sourcing of required materials to meet

our customer needs, enable us to take advantage of our engineering

capabilities developed through in-house R&D, avail various benefits

of economies of scale, locational tax benefits and cost cutting due

to in-house manufacturing using material sourced more

economically. Also, to take advantage of better material

management, both at sourcing and distribution ends; we have

reworked our entire channel strategy, with implementation of which,

we are hopeful to have sizable saving in material cost.

Creating job opportunity: Your Company strongly believes that as a

good corporate citizen, it should contribute in well being and

prosperity of the society and people with whom it lives. Even the

business activities of the Company are directed towards this motive.

In this direction, the Company has taken initiatives in setting up an

institute where students will be imparted training in various aspects

of security, so that at the end of the training they can be moulded

as security executive, security officer or expert advisor. This is an

uncultivated job area, where enormous job opportunities lie ahead

in corporates, hotels, malls, offices of public sector enterprises and

places of strategic importance, theatres, stadiums, places of devotion

and other places of public gatherings. Your Company has

contributed to this honest cause by making some initial investment

in setting up of the institute and is closely associated for its further

development.

In furtherance to achieve this objective, your Company has planned to

help needy students by sponsoring their training, providing

scholarships, finding suitable job opportunities, either at its owned

establishment or that of its associates, customers and other

stakeholders. We are confident, that in the long run many families will

be benefited with availability of job opportunities, thereby raising family

income, eradication of poverty and upliftment of standard of living.

ACKNOWLEDGMENTSYour Directors wish to place on record their sincere appreciation

and thanks for the valuable co-operation and support received from

the employees of the Company at all levels, Company’s Bankers,

lenders, suppliers, government authorities, business partners and

Members of the Company and look forward for the same in greater

measure in the coming years.

For and on behalf of the Board of Directors

Place: Mumbai Manohar Bidaye

Date: August 14, 2010 Chairman


Annexure ‘A’ to Directors' ReportFor the purpose of inter se transfer of shares under Regulation 3 (1) (e) of the Securities and Exchange Board of India (Substantial

Acquisition of Shares and Takeovers) Regulations, 1997, the following person constitute “Group” as defined in the Monopolistic &

Restrictive Trade Practices, 1969:

Sr. No. Particulars

1. Zicom Retail Products Private Limited

2. Zicom Manufacturing Co. (HK) Ltd.

3. Unisafe Fire Protection Specialists LLC, Dubai

4. Zicom CNA Automation Limited

5. Baronet Properties and Investments Private Limited

6. Coronet Properties and Investments Private Limited

7. Progressive Equifin Private Limited

8. Success Equifin Private Limited

9. Manohar Bidaye

10. Madhura Bidaye

11. Pramoud Rao

12. Gauri Rao

13. Harish Nayak

14. Laxmi Harish Nayak


Annexure ‘B’ to Directors' Report

1. Ministry of Corporate Affairs (MCA) has exempted the Company fromattaching the financials and other documents for the financial year2009-10 for Zicom Retail Products Private Limited, Unisafe FireProtection Specialists LLC, Dubai, Zicom CNA Automation Limited andZicom Manufacturing Co. (HK) Ltd.

2. The Members can obtain a copy of the financials of the subsidiarycompanies from the Registered Office of the Company. The financialsof the subsidiary companies are also available for inspection duringbusiness hours on any working day from 11.00 a.m. to 1.00 p.m.

Information on the financials of the Subsidiary Companies

(Amount in Rs.)

Sr. Particulars Zicom Retail Products Unisafe Fire Protection Zicom CNA Zicom Manufacturing

No. Private Limited Specialists LLC, Automation Limited Co. (HK) Ltd.

Dubai

Financial year ending on March 31, 2010 March 31, 2010 March 31, 2010 March 31, 2010

Currency INR AED INR HKD

Exchange rate on the last day N.A. 12.20 N.A. 5.77

of the financial year

1 Share Capital (including Share 25,100,000 61,000,000 20,000,000 3,462,000

Application money pending allotment)

2 Reserves 193,452,920 407,622,532 (15,160,298) 10,632,280

3 Liabilities 1,157,808,394 914,260,155 10,002,594 32,243,908

4 Total Liabilities 1,376,361,314 1,382,882,687 14,842,296 46,338,188

5 Total Assets 1,376,361,314 1,382,882,687 14,842,296 46,338,188

6 Investments Nil Nil Nil Nil

7 Turnover 941,200,386 1,815,116,277 20,301,442 65,247,004

8 Profit before taxation (35,915,289) 148,662,954 (2,632,842) 3,468,240

9 Provision for taxation (23,654,982) Nil 3,548,566 Nil

10 Profit after taxation (12,260,307) 148,662,954 (6,181,408) 3,468,240

11 Proposed dividend – Equity Nil Nil Nil Nil

Notes:


Annexure ‘C’ to Directors' ReportStatement pursuant to Section 212 of the Companies Act, 1956, relating to Subsidiary Companies

Name of the subsidiary company Zicom Retail Products Unisafe Fire Protection Zicom CNA Zicom Manufacturing

Private Limited Specialists LLC, Automation Limited Co. (HK) Ltd.

Dubai

Financial year of the subsidiary company ended on March 31, 2010 March 31, 2010 March 31, 2010 March 31, 2010

Extent of interest of Zicom Electronic Security Systems

Limited in its subsidiary companies

The net aggregate of profits, less losses, of the

subsidiary company so far as it concerns the Members

of Zicom Electronic Security Systems Limited:

i) Dealt with in the accounts of Zicom Electronic

Security Systems Limited amounted to:

(a) for the subsidiary’s financial year ended

March 31, 2010

(b) for previous financial years of the subsidiary

since it became subsidiary of Zicom

Electronic Security Systems Limited

ii) Not dealt with in the accounts of Zicom

Electronic Security Systems Limited amounted to:

(a) for the subsidiary’s financial year ended

March 31, 2010

(b) for previous financial years of the subsidiary

since it became subsidiary of Zicom Electronic

Security Systems Limited

Changes in the interest of Zicom Electronic Security

Systems Limited between the end of the subsidiary’s

financial year and March 31, 2010

Number of shares acquired

Material changes between the end of the subsidiaries

financial year and March 31, 2010

(i) Fixed Assets (net additions)

(ii) Investments

(iii) Moneys lent by the subsidiary

(iv) Moneys borrowed by the subsidiary company

other than for meeting current liabilities


Manohar Bidaye Pramoud Rao Mukul DesaiChairman Managing Director Director

Achyut Godbole Dr. B. Samal Vijay KalantriDirector Director Director

Hemendra Paliwal Kunjan Trivedi Mumbai, August 14, 2010 Chief Financial Officer Company Secretary

2,510,000 equity 2,450 shares of 1,020,000 equity 456,000 shares

shares of Rs.10 each AED 1,000 each shares of Rs. 10 each of HKD 1 each

i.e. 100% i.e. 49% i.e. 51% i.e. 76%

Nil Nil Nil Nil

Nil Nil Nil Nil

Rs. (12,260,307) Rs. 119,006,683 Rs. (3,152,518) Rs. 2,636,799

Rs. (179,286,773) Rs. 232,604,082 Rs. (1,191,114) Rs. 5,290,096

Nil Nil Nil Nil

Nil Nil Nil Nil

Nil Nil Nil Nil

Nil Nil Nil Nil

Nil Nil Nil Nil


Annexure ‘D’ to Directors' ReportInformation to be disclosed under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock

Purchase Scheme) Guidelines, 1999:

Sr. Description ESOS 2006 ESOS 2007

No.

1. Total number of Options under the Scheme 400,000 Options [each Option represents 300,000 Options [each Option

1 (one) share] represents 1 (one) share]

2. Options granted during the year 10,000 Options Nil

3. The pricing formula

4. Options vested during the year 41,200 Options 39,200 Options

5. Options exercised during the year Nil Nil

6. Total No. of Shares arising as a result of exercise of Options Nil Nil

7. Options lapsed

As on March 31, 2010 28,000 Options 65,000 Options

As on April 30, 2010 52,000 Options 4,000 Options

8. Variation of terms of Option No variations made No variations made

9. Money realized by exercise of Options N.A. N.A.

10. Total number of Options in force

As on March 31, 2010 85,000 Options 33,000 Options

As on April 30, 2010 33,000 Options 29,000 Options

11. Employee-wise details of Options granted during the year

i) Senior managerial personnel Name of Employee Options Nil

Mr. Sameer Nagpal, 10,000

Chief Executive Officer-BSG

ii) Any other employee who receives a grant in any one

year of Options amounting to 5% or more of Options

granted during that year

iii) Identified employees who were granted Options, during

any one year equal to or exceeding 1% of the issued

capital (excluding outstanding warrants and

conversions) of the Company at the time of grant

12. Diluted Earnings Per Share (EPS) pursuant to issue of

shares on exercise of Options calculated in accordance

with Accounting Standard (AS) 20

Nil Nil

Nil Nil

Rs. 4.76 Rs. 4.76

The exercise price for the purpose of grant

of Options will be decided by the

Compensation Committee subject to a

maximum discount of 25% on latest

available closing price, one day prior to

the date of the meeting of the Board of

Directors / Compensation Committee in

which the Options are granted, on that

Stock Exchange where there is highest

trading volume on the said date.

The exercise price for the purpose of grant

of Options will be decided by the

Compensation Committee subject to a

maximum discount of 25% on latest

available closing price, one day prior to the

date of the meeting of the Board of

Directors / Compensation Committee in

which the Options are granted, on that

Stock Exchange where there is highest

trading volume on the said date.


Sr. Description ESOS 2006 ESOS 2007

No.

13. The Company has calculated the employee compensation

cost using the intrinsic value of the Stock Options, the

difference between the employee compensation cost so

computed and the employee compensation cost that have

been recognized if it had used the fair value of the Options,

the impact of this difference on profits

the impact of this difference on EPS

14. Options whose exercise price either equals or exceeds or is

less than the market price of the stock,

weighted average exercise price

weighted average fair values of Option

15. A description of the method and significant assumptions

used to estimate the fair values of Options, including the

following weighted average information:

i. Risk free interest rate

ii. Expected life

iii. Expected volatility

iv. Expected dividends

v. The weighted average price of the underlying share in

market at the time of Options granted.

Not Applicable Not Applicable



Annexure ‘E’ to Directors' ReportParticulars of loans / advances and investment in its own subsidiaries by listed companies, their subsidiaries, associates, etc., required

to be disclosed in the Annual Accounts of the Company pursuant to Clause 32 of the Listing Agreement.

Loans and advances in nature of loans to subsidiaries:

Name of the Company Balances as on March 31, 2010 Maximum outstanding during the year

Zicom Retail Products Private Limited 702,166,898 702,166,898

Unisafe Fire Protection Specialists LLC, Dubai 68,777,500 113,004,651

Zicom CNA Automation Limited 2,900,000 2,900,000

(Amount in Rs.)

Loans and advances in the nature of loans to firms / companies in which Directors are interested:

Name of the Company Balances as on March 31, 2010 Maximum outstanding during the year

Institute of Advanced Security Training & Management Private Limited 7,236,403 7,236,403

(Amount in Rs.)


Corporate Governance ReportAnnexure ‘F’ to the Directors' Report

I.COMPANY’S PHILOSOPHY ON CORPORATEGOVERNANCECorporate Governance is about commitment to values and ethical

business conduct. It is a set of policies, processes and customs that

are being followed to direct, administer, control or manage the

Company. These include its corporate and other structures, culture,

policies of the Company, and the manner in which it deals with

various stakeholders. At Zicom, we firmly believe that good

governance practice represents the culture and mindset of the

organization and therefore in addition to the compliances with the

statutory requirements, we also adhere to and constantly work

towards improving integrity, fairness, transparency and

accountability in our relationship with our employees, shareholders,

creditors, consumers and dealers; promotion of ethical practices at

work place; satisfaction of the customers and interest of

stakeholders.

II. BOARD OF DIRECTORSA) Composition and category of the BoardThe Board of Directors comprises professionals drawn from diverse

fields, who bring with them a wide range of skills, expertize and

experience. The Non-Executive including the Independent Directors

bring external and wider perception and independence in the

decision making.

As on March 31, 2010, the strength of the Board was six, of which

four were Independent Directors. The Board is structured to maintain

optimum combination of Independent and Non-Independent, as

well as Executive and Non-Executive Directors in compliance with

the requirements of Clause 49 (I) (A) of the Listing Agreement. The

Chairman of the Board, being Promoter of the Company, is a Non-

Executive Director. There are no Institutional / Nominee Directors on

the Board of the Company.

Composition of the Board and category of Directors are as follows

B) Compensation and disclosures of Non-Executive DirectorsThe Company pays sitting fees to all its Non-Executive Directors for

attending the meetings of the Board, Audit Committee and other

Committee of the Company, except to Mr. Manohar Bidaye; who is

paid monthly remuneration for rendering advisory services to the

Company, as approved by the Members and Central Government.

The details of remuneration paid to Mr. Manohar Bidaye and sitting

fees paid to other Non-Executive Directors during the financial year

are given under Para (b) on Remuneration Committee in this Report.

None of the Independent Directors are holding any equity shares in

the Company.

C) Other provisions related to Board andCommittees • Board Meetings held: The Board normally meets once in a

quarter and additionally as and when required. During the year

2009-10, the Board met on seven occasions, i.e. on April 16,

2009; June 29, 2009; July 29, 2009; October 28, 2009;

January 28, 2010; March 5, 2010 and March 8, 2010. The

maximum gap between the two meetings was not more than four

months as prescribed.

Board of Directors of the Company

Name of the Director Category

Mr. Manohar Bidaye, Chairman Non-Executive Director (Promoter)

Mr. Pramoud Rao, Managing Director Executive Director (Promoter)

Mr. Mukul Desai Non-Executive Independent

Mr. Vijay Kalantri Non-Executive Independent

Dr. B. Samal Non-Executive Independent

Mr. Achyut Godbole Non-Executive Independent


• Chairmanship / Membership: All the Directors have confirmed to

the Company that none of them is a member of more than ten

committees, or is chairman of more than five committees across

all companies in which they are acting as Directors. For the

purpose of reckoning the said limit, chairmanships/memberships

of the Audit Committee and the Shareholders’ Grievance

Committee alone are considered.

• Periodical review of Compliance Reports: Reports on

compliance with all statutory laws applicable to the Company

have been periodically placed before the Board for review.

Attendance of Directors at Board Meetings, Audit Committee Meetings, last Annual General Meeting (AGM) and number of other

directorships and chairmanships / memberships of Committees of each Director in various companies:

� Alternate directorships, directorships / committee memberships in private companies, foreign companies, companies under Section 25 of the CompaniesAct, 1956, proprietorships and memberships in governing councils, chambers and other bodies are not included while calculating directorships in abovetable.

� Chairmanships / memberships of only the Audit Committee and Shareholders’ Grievance Committee of all public limited companies have been considered.

� Also includes the committees in which a Director holds position as a Chairman.

As in the last financial year there was no change in the Board, no

replacement of any Independent Director was required to be made.

None of the Directors are related to each other in any way.

RE-APPOINTMENT OF DIRECTORSAs per the provisions of the Companies Act, 1956 and Articles of

Association of the Company, at every Annual General Meeting of

the Company, one-third of the Directors are liable to retire by

rotation. Mr. Mukul Desai and Dr. B. Samal, Directors of the

Company, retire by rotation at the forthcoming 16th Annual General

Meeting of the Company and being eligible; have offered themselves

for re-appointment at the ensuing Annual General Meeting.

As required under Clause 49 (IV) (G) of the Listing Agreement, brief

portrayal of the Directors, alongwith the list of other companies in

which they hold directorships and the memberships of the

Committees of the Board are furnished hereunder:

Particulars of other Directorships�, Attendance

Committee Chairmanships / Memberships�

Directorships Committee Committee Board Audit Committee Last

Name of Director Memberships� Chairmanships Meeting Meeting AGM

Mr. Manohar Bidaye 3 3 2 7 5 Yes

Mr. Pramoud Rao 3 1 - 5 N.A. Yes

Mr. Mukul Desai 5 2 1 7 5 Yes

Mr. Vijay Kalantri 14 4 - 4 5 Yes

Dr. B. Samal 11 10 4 7 N.A. Yes

Mr. Achyut Godbole - - - 5 N.A. No


Name of the Director

Father’s Name

Date of Birth

Date of Appointment

Nationality

Expertize in specific functional areas

Qualification

Number of Directorships in other companies

List of outside directorships held (includes

public, private, foreign companies, companies

under Section 25)

List of other committees in which Director is

member / chairman (includes all

Chairmanships / Memberships of Audit

Committee, Shareholders’ Grievance

Committee and Remuneration Committee of

all public limited companies)

Number of shares held in the Company

Mr. Mukul Desai

Mr. Bharat Kumar Desai

June 14, 1956

April 1, 1996

Indian

Corporate law, Direct and Indirect Taxation law,

Corporate Finance Structuring

B. Com; FCA

6

• Remi Process Plant & Machinery Limited

• Shrinkhala Securities Limited

• A.P. Marketing Private Limited

• Ecoplast Limited

• Zicom Retail Products Private Limited

• Zicom CNA Automation Limited

• Ecoplast Limited – Chairman of Audit

Committee and Remuneration Committee;

Member of Shareholders’ Grievance Committee

Nil

Dr. B. Samal

Mr. Nabaghan Samal

March 2, 1943

June 29, 2006

Indian

Banking, Finance, Economics and laws relating to

securities market. Besides he is a gold medalist in M.Sc.

(Agriculture)

M.Sc.(Agriculture); Ph.D.(Economics); P.G. Diploma-

Bank Management

12

• Surana Industries Limited

• Mayfair Hotels and Resorts Limited

• Shriram Life Insurance Company Limited

• Industrial Investment Trust Limited

• IIT Investrust Limited

• ARSS Infrastructure Projects Limited

• Indo Green Projects Limited

• Money Matters Financial Services Limited

• Jaiprakash Associates Limited

• Reliance Capital Limited

• Jaypee Infratech Limited

• Jaypee Karcham Hydro Corp Limited

• Mayfair Hotels and Resorts Limited – Member of

Audit Committee

• ARSS Infrastructure Projects Limited – Member of

Audit Committee and Chairman of Shareholders’

Investors Grievance Committee

• Industrial Investment Trust Limited – Member of

Share Transfer & Investor Grievance Committee

• Indo Green Projects Limited – Member of

Shareholders / Investors Grievance & Share Transfer

Committee

• IIT Investrust Limited – Member of Audit Committee

• Money Matters Financial Services Limited – Member

of Audit Committee

• Surana Industries Limited – Chairman of Audit

Committee

• Shriram Life Insurance Company Limited - Chairman

of Audit Committee

• Jaypee Karcham Hydro Corporation Limited –

Chairman of Audit Committee

Nil


D) Code of Conduct The Company has laid down a Code of Conduct for all its Board

members and senior managerial personnel for avoidance of conflicts

of interest and ensuring the highest standard of honesty, dedication

and professionalism in carrying out their functional responsibilities.

The Company’s Code of Conduct is in consonance with the

requirements of Clause 49 of the Listing Agreement. The Code of

Conduct is posted on the Company’s website www.zicom.com. All

Directors and senior managerial personnel affirmed compliance with

the Code of Conduct, for the year under review. In terms of Clause

49 of the Listing Agreement, an annual declaration to this effect

from the Chief Executive Officer (CEO) is annexed to this Report.

III. BOARD COMMITTEESThe Board of Directors constituted several committees, with

adequate delegation of powers, to discharge their functions with

respect to specific matters of the Company. The brief particulars of

Audit Committee, Remuneration Committee and Share Transfer and

Investors’ Grievance Committee, pursuant to Clause 49 of the Listing

Agreement, are mentioned below:

a) Audit CommitteeThe composition, quorum, powers, role, review of information and

scope, etc., of the Audit Committee is in accordance with Section

292A of the Companies Act, 1956, and the provisions of Clause

49 II (A), (B), (C), (D) and (E) of the Listing Agreement. The Audit

Committee acts as a link between the statutory and internal auditors

and the Board of Directors. The Audit Committee inter-alia keeps

checks on the adequacy of internal control systems, financial

disclosures and statutory compliances.

Composition: The Audit Committee comprises of three

Non-Executive Directors, all of them financially literate, and

two-third of them are Independent. The Chief Financial Officer

(CFO), representatives of the Statutory Auditors and Internal Auditors

of the Company are the invitees to be present at the Meeting. The

Company Secretary acts as Secretary to the Committee Meetings.

The Members of the Audit Committee are as follows:

Mr. Mukul Desai, Chairman of Audit Committee, is in practice as a

Chartered Accountant since 1982 and has varied experience in the

field of audit and taxation. He has developed expertise in corporate

law matters, direct and indirect taxation laws, and corporate finance

structuring, among others.

Meetings: During the financial year 2009-10, the Audit Committee

met five times on April 16, 2009; June 29, 2009; July 29, 2009;

October 28, 2009 and January 28, 2010. The maximum time gap

between two meetings did not exceed a period of four months.

Requisite quorum was present at all the Committee meetings held

during the year. The attendance of Members at the Audit Committee

meetings held during the year is given in the table under Para C

above.

Terms of Reference: The terms of reference of the Audit Committee

are wide enough covering the following:

i. Oversight of the Company’s financial reporting process and the

disclosure of its financial information to ensure that the financial

statement is correct, sufficient and credible.

ii. Recommending to the Board, the appointment, re-appointment,

and, if required, the replacement or removal of the Statutory

Auditors and the fixation of audit fees.

iii. Approval of payment to Statutory Auditors for any other services

rendered by the Statutory Auditors.

iv. Reviewing, with the management, the annual financial

statements before submission to the Board for approval, with

particular reference to:

a. Matters required to be included in the Director’s

Responsibility Statement forming part of the Board’s Report

in terms of Clause (2AA) of Section 217 of the Companies

Act, 1956;

Name of Designation Category

Committee Member in Committee

Mr. Mukul Desai Chairman Non-Executive Independent

Mr. Manohar Bidaye Member Non-Executive (Promoter)

Mr. Vijay Kalantri Member Non-Executive Independent


b. Changes, if any, in accounting policies and practices and

reasons for the same;

c. Major accounting entries involving estimates based on the

exercise of judgment by the management;

d. Significant adjustments made in the financial statements

arising out of audit findings;

e. Compliance with listing and other legal requirements relating

to financial statements;

f. Disclosure of any related party transactions;

g. Qualifications in the draft audit report.

v. Reviewing, with the management, the quarterly financial

statements before submission to the Board for approval.

vi. Reviewing with the management the statement of uses /

application of funds raised through an issue (public issue, rights

issue, preferential issue, etc.) the statement of funds utilized

for purposes other than those stated in the offer document /

prospectus / notice and the report submitted by the monitoring

agency monitoring the utilization of proceeds of a public or

rights issue, and making appropriate recommendations to the

Board to take up steps in this matter.

vii. Reviewing, with the management, performance of Statutory and

Internal Auditors, and adequacy of the internal control systems.

viii. Reviewing the adequacy of the internal audit function, if any,

including the structure of the internal audit department, staffing

and seniority of the official heading the department, reporting

structure coverage and frequency of internal audit.

ix. Discussion with Internal Auditors, any significant findings and

follow up thereon.

x. Reviewing the findings of any internal investigations by the

Internal Auditors into matters where there is suspected fraud

or irregularity or a failure of internal control systems of a material

nature and reporting the matter to the Board.

xi. To look into the reasons for substantial defaults in the payment

to the depositors, debenture holders, shareholders (in case of

non-payment of declared dividends) and creditors.

xii. Approval of appointment of CFO after assessing the

qualifications, experience and background, etc. of the

candidate.

xiii. Carrying out any other function as is mentioned in the terms of

reference of the Audit Committee.

b) Remuneration CommitteeComposition: The Remuneration Committee comprises of the

following Directors:

Terms of Reference: It includes the roles, powers and duties as vested

under Schedule XIII to the Companies Act, 1956 and Clause 49 of the

Listing Agreement with Stock Exchanges. It mainly contains decisions

about remuneration payable to managerial personnel from time to time.

Meetings: The Committee met once during the financial year

2009-10 i.e. on March 25, 2010, to approve the remuneration of

Mr. Pramoud Rao as Managing Director, for the balance tenure of two

years of terms covering the period from March 1, 2010 to February

29, 2012. All the Directors were present at the said Meeting.

Remuneration policy: The main objective of the remuneration policy

is to motivate persons and to promote excellence in their

performance, recognize merits and achievements, retain talent in

the Company and finally, to promote the feeling of belongingness.

The Remuneration Committee recommends the remuneration for

Managing Director / other Whole time Directors (as the case may

be), for approval by the Board and Members. Their remuneration is

determined keeping in view the industry benchmark, the relative

performance of the Company to the industry performance, macro

economic situation and review of remuneration packages of

managerial personnel of other organizations.



Mr. Mukul Desai Chairman Non-Executive Independent

Mr. Vijay Kalantri Member Non-Executive Independent

Mr. Achyut Godbole* Member Non-Executive Independent

Dr. B. Samal# Member Non-Executive Independent* Resigned w.e.f. May 10, 2010# Appointed w.e.f. May 10, 2010


Non-Executive Directors are paid sitting fees for attending the

meetings of the Board and Committees, which is determined

keeping in view comparable industry and corporate standards. As

the Chairman is paid monthly remuneration in accordance with

approval of members and Central Government, he is not entitled for

sitting fees.

Remuneration of employees largely consists of basic remuneration,

perquisites and bonus and performance incentives. The components

of the total remuneration vary for different grades and are governed

by industry pattern, qualifications and experience of the employee,

responsibilities handled and individual performance, etc.

Details of remuneration to Directors:

Particulars Remuneration to Managing Director Remuneration to Chairman

(Executive Director) (Non-Executive Director)

Terms of Appointment

Contractual basis

Commission & Fixed Components

The term of Mr. Pramoud Rao, as Managing

Director was renewed for a period of five years vide

Agreement dated March 9, 2007. His terms and

conditions including remuneration were approved

by Members for a period of three years ending

February 28, 2010. Subsequently, the

Remuneration Committee and the Board of

Directors at their respective meetings held on March

25, 2010 and May 10, 2010 have approved to

continue the same terms of remuneration for the

balance period of two years, subject to approval of

Members, and Central Government, (if required). A

Supplemental Agreement has been executed

between the Company and the Managing Director

for continuation of same terms of remuneration for

the balance period of two years. Remuneration paid

during 2009-10 is as under:

Salary Rs. 5,313,000

(including Basic, HRA,

Special Allowance, CCA)

Commission Nil

Medical Rs. 15,000

LTA Rs. 96,000

PF Rs. 9,360

Total Rs. 5,433,360

Appointment of Managing Director is on contractual

basis.

Commission up to 2% of net profits for each

financial year (as may be decided by the Board)

and other fixed components which forms part of

remuneration.

The Central Government has approved the payment

of remuneration to Mr. Manohar Bidaye, Chairman

and Non-Executive Director, for a period of five

years w.e.f. April 1, 2007 with an overall ceiling

limit of Rs. 800,000 per month. During the

financial year ended March 31, 2010, he was paid

a monthly remuneration of Rs. 302,195 i.e. total

remuneration of Rs. 3,626,340 for rendering his

advisory services to the Company.

The appointment is not on contractual basis.

Mr. Manohar Bidaye is not entitled to any

commission on the net profits of the Company.


Remuneration to other Non-Executive Directors:

• Remuneration by way of sitting fees for attending Board and

Committee meetings are paid to Non-Executive Directors (other

than Chairman). Sitting fees vary from type of meetings attended.

• During the year, the Non-Executive Directors were paid sitting

fees for attending the following meetings of the Company as

under:

• Details of sitting fees paid to Non-Executive Director during the

year and shares held by them in the Company are as under:

• None of the Non-Executive Directors has any material pecuniary

relationship or transactions with the Company.

• No Stock Options were granted to any of the Non-Executive

Directors during the financial year ended March 31, 2010.

• None of the Directors are related to each other.

• None of the Directors holds any convertible instruments in the

Company.

Particulars Remuneration to Managing Director Remuneration to Chairman

(Executive Director) (Non-Executive Director)

Notice period for severance

Perquisites

Sitting Fees

Absence or inadequacy of profits

Notice period for severance of Managing Director is

six months. Compensation for severance of services

would be computed in accordance with applicable

provision of Companies Act, 1956.

Mr. Pramoud Rao is entitled to the perquisites, as

per the Agreement.

Mr. Pramoud Rao is not entitled for sitting fees for

attending meetings of the Board of Directors or any

of its Committees.

In the event of absence or inadequacy of profits in

any financial year during the tenure of Managing

Director, he would be entitled for the aforesaid

remuneration, perquisites / benefits as the

minimum remuneration, subject to the ceiling

limits prescribed under Schedule XIII and other

applicable provisions of the Companies Act, 1956;

and if the said remuneration is found to be in

excess of the ceiling, then necessary approval from

the Central Government be obtained for making-

up of the shortfalls.

Notice period for severance of remuneration

payable to Mr. Manohar Bidaye is three months.

Compensation for severance is three months

remuneration.

Mr. Manohar Bidaye is entitled to the perquisites,

as per the Agreement.

Mr. Manohar Bidaye is not entitled for sitting fees

for attending meetings of the Board of Directors or

any of its Committee.

–

Type of Meetings Sitting fees (in Rs.)

Board Meeting 15,000

Audit Committee Meeting 5,000

Share Transfer and Investors Grievances 1,500

Committee Meeting

Other Committees Meetings 2,500

Name of Non-Executive Directors Sitting fees (in Rs.) Shares held

Mr. Mukul Desai 156,000 Nil

Mr. Vijay Kalantri 105,000 Nil

Dr. B. Samal 107,500 Nil

Mr. Achyut Godbole 77,500 Nil

Total 446,000 Nil


• 2,100,000 convertible warrants, were allotted on preferential

basis on January 17, 2008 to Promoters’ Group Companies viz.

Baronet Properties & Investments Private Limited and Coronet

Properties & Investments Private Limited, in which Mr. Manohar

Bidaye and Mr. Pramoud Rao each hold 50% controlling interest

and are also Directors in this Company. However, the said

Companies did not exercise their option to acquire equity shares

against warrants; and as a result, their right to apply for equity

shares lapsed on July 16, 2009 as per terms of the issue, and

all the 2,100,000 warrants were cancelled and the entire

amount received thereon was forfeited.

c) Share Transfer and Investors' GrievanceCommitteeComposition: Share Transfer and Investors’ Grievance Committee

comprises of following three Directors

Terms of Reference: The terms of reference, inter alia, are as

follows:

i) To approve or deal with applications for transfer, transmission,

transposition and mutation of shares and certificates including

duplicate, split, sub-division or consolidation of certificates and

to deal with all related matters.

ii) To approve or deal with all the matters related to

de-materialisation or re-materialisation of shares, change in the

beneficial holders of de-mat shares and granting of necessary

approvals wherever required.

iii) To look into and redress Members / investors’ grievances

relating to

a. Transfer of shares

b. Non-receipt of declared dividends

c. Non-receipt of annual reports

d. All such complaints directly concerning the Members /

investors as stakeholders of the Company; and

e. Any such matters that may be considered necessary in

relation to Members and investors of the Company.

Meetings: The Share Transfer and Investors’ Grievance Committee

generally meets once in a fortnight or month depending on the

frequency of grievances / transfer / duplicate requests received from

the Members. In the financial year 2009-10, the Committee met 14

times. The attendance of each Member at the said meetings is stated

below:

Compliance Officer: During the financial year 2009-10, Ms. Dimple

Mehta, Company Secretary, resigned w.e.f. July 24, 2009 and thus

ceased to be the Compliance Officer of the Company. Ms. Kunjan

Trivedi, was appointed as the Compliance Officer w.e.f. July 27,

2009 and as Company Secretary w.e.f. August 1, 2009 for

complying with the requirements of SEBI Regulations and the Listing

Agreements with the Stock Exchanges.

Investor Grievance Redressal: The Company addresses all

complaints, suggestions and grievances expeditiously and replies

have been sent / issued within 7-10 days except in case of dispute

over facts or other impediments. During the year under review, a

total of three complaints were received which were successfully

resolved. No investor grievances remained unattended / pending for

more than 30 days as on March 31, 2010.



Mr. Manohar Bidaye Chairman Non-Executive Director (Promoter)

Mr. Pramoud Rao Member Executive Director (Promoter)

Mr. Mukul Desai Member Non-Executive Independent

Name of Committee Member No. of meetings attended

Mr. Manohar Bidaye 14

Mr. Pramoud Rao 12

Mr. Mukul Desai 14

No . o f C o m p la in t s R e c e iv e d

0

2

4

6

8

10

12

05- 06 06- 07 07- 08 08- 09 09- 10

F in a n c ia l Y e a r


SUBSIDIARY COMPANIESAs on March 31, 2010, the Company has following four direct

subsidiaries, of which two are Indian subsidiaries and two are

foreign subsidiaries

Although none of the above subsidiaries were material Indian

non-listed subsidiary, the Company nominated three Board

members (including an independent Board member) on the Board

of its Indian subsidiaries; and nominated two Board members on the

Board of its subsidiary at Dubai.

Financial statements, in particular the investment made by the

unlisted subsidiaries, statement containing all significant

transactions and arrangements entered into by the unlisted

subsidiaries forming part of the financials are being reviewed by the

Audit Committee of your Company on a quarterly basis.

Minutes of the meetings of the unlisted subsidiaries are placed

before the Company’s Board, as required.

INVESTORS INFORMATIONGENERAL BODY MEETINGS

In last three years, apart from Annual General Meetings convened

each year, the Company convened and conducted three Postal

Ballots, two Extra-ordinary General Meetings and a Court Convened

Meeting of equity shareholders.

Sr. No. Name of the Subsidiary

1 Zicom Retail Products Private Limited

2 Unisafe Fire Protection Specialists LLC, Dubai

3 Zicom Manufacturing Co. (HK) Ltd.

4 Zicom CNA Automation Limited

Financial Year 2009-10 2008-09 2007-08

Type of Meeting Annual General Meeting Annual General Meeting Annual General Meeting

Date of Meeting August 29, 2009 September 12, 2008 September 28, 2007

Time of Meeting 10.30 a.m. 4.00 p.m. 2.30 p.m.

Place of Meeting Hotel The Mirador, New Link Road, Hotel The Mirador, New Link Road, Hotel Sea Princess, Juhu Beach,

Chakala, Andheri East, Chakala, Andheri East, Mumbai 400 049.

Mumbai 400 099. Mumbai 400 099.

Items of Special Nil Nil • Issue of 300,000 stock options to the eligible

Resolution passed employees, under the “Employee Stock Options

at each Meeting Scheme – 2007”, entitling them to acquire equal

number of equity shares of Rs. 10 each of the

Company.

• Extending the benefit of the “Employee Stock Options

Scheme – 2007” to eligible present and future

employees of existing and future subsidiaries of the

Company.

Details of the last three Annual General Meetings of the Members are as under:

Financial Year 2007-08 2007-08

Type of Meeting Extra-ordinary General Meeting Extra-ordinary General Meeting

Date of Meeting January 17, 2008 December 20, 2007

Time of Meeting 9.30 a.m. 4.00 p.m.

Place of Meeting Hotel Kohinoor Continental, Opp. J.B.Nagar, Andheri Kurla Road, Hotel Tunga International, Central Road, M.I.D.C.,

Andheri East, Mumbai 400 059. Andheri East, Mumbai 400 093.

Items of Special • Issue of 1,575,000 warrants on preferential basis to various • Issue of 2,100,000 warrants on Preferential Basis to

Resolution passed entities other than Promoters’ or Promoters’ Group Companies. Promoters’ Group Companies.

at each Meeting

Details of the last two Extra-ordinary General Meetings of the Members held in last three years:


Details of resolutions passed through Postal Ballot:

Financial Year 2007-08

Type of Meeting Court Convened Meeting at the direction of Hon’ble Bombay High Court

Date of Meeting September 28, 2007

Time of Meeting 4.30 p.m.

Place of Meeting Hotel Sea Princess, Juhu Beach, Mumbai 400 049.

Items of Special Resolution • Approving the Scheme of arrangement between Zicom Electronic Security Systems Limited and Zicom Retail Products

passed at the Meeting Private Limited (ZRPPL).

• Adjustment of the difference between the amounts of assets transferred to the ZRPPL for the purchase consideration

received along with other unrealisable assets of the Company against the security premium account of the Company,

subject to High Court approval.

Details of Court Convened Meeting of Members of the Company:

Financial Year 2010-11 2008-09 2007-08

Type of Meeting

Declaration of results

Time of declaration

of results

Place of declaration

of results

Items of Ordinary / Special

Resolution passed

through each

Postal Ballot

Postal Ballot

April 16, 2010

4.00 p.m.

Results declared at Registered

Office of the Company

• To transfer, sell, assign,

deliver or otherwise dispose

off the Company’s

electronic security system

business, comprising all its

business in respect of the

same including its two

groups viz. Building

Solutions Group (BSG) and

Special Projects Group

(SPG) (Sale Business), as a

going concern on “Slump

Sale” basis.

Postal Ballot

November 24, 2008

4.00 p.m.

Results declared at Registered Office of the Company

• Issue of corporate guarantee in favour of EXIM

Bank to secure the credit limits sanctioned in favour

of Unisafe Fire Protection Specialists LLC, Dubai.

• Issue of corporate guarantee in favour of

Company’s Bankers, to secure the credit limit to be

sanctioned in favour of Unisafe Fire Protection

Specialists LLC, Dubai.

• Investment in securities by way of acquiring shares,

loans, guarantees, inter corporate deposits or any

other form in Unisafe Fire Protection Specialists

LLC, Dubai.



other form in Zicom Retail Products Private

Limited.



other form in Zicom CNA Automation Limited.



other form in Zicom Manufacturing Co. (HK) Ltd.

Postal Ballot

April 30, 2007

4.00 p.m.

Results declared at Registered Office of

the Company

• Increase in the authorized share

capital of the Company and alteration

of Memorandum and Articles of

Association of the Company.

• Issue of securities in India / Abroad

as FCCBs / GDR or in any other form.

• Issue of equity shares on preferential

basis.

• Increase in the borrowing powers of

the Board.

• Payment of monthly remuneration to

Mr. Manohar Bidaye.

• Re-appointment of Mr. Pramoud Rao

as Managing Director and approve

his remuneration.

• Granting of certain powers to

Promoters by altering Articles of

Association of the Company.


Particulars Votes in favour Votes against

of the resolution the resolution

3,389,551 13,588Ordinary resolution under Section 293(1)(a) of the Companies Act, 1956 to transfer, sell, assign, deliver

or otherwise dispose off the Company’s Electronic Security System Business, comprising all its business

in respect of the same including its two groups viz. Building Solutions Group (BSG) and Special Projects

Group (SPG) (Sale Business), more particularly defined in the postal ballot Notice, as a going concern

on “Slump Sale” basis.

Resolutions passed through Postal Ballot:

Subsequent to the financial year 2009-10, a resolution was passed

through Postal Ballot conducted by the Company, details of which

are given in the table below. Mr. Ganesh Narayan was appointed as

Scrutinizer for conducting the Postal Ballot procedure, based on

whose report the Chairman of the Company announced the result

of the Postal Ballot at Registered Office at 4.00 p.m. on April 16,

2010.

Extracts of result of Postal Ballot declared, which were duly assented by requisite majority of the Members, are as under:

Procedure for Postal Ballot:

The Board of Directors decides the item to be passed by the

Members through Postal Ballot and at its meeting approves the

Notice of the resolution along with the explanatory statement thereof,

and the postal ballot form. Calendar of events, required to be

submitted to Registrar of Companies (ROC), is considered and

approved by the Board. The Board authorizes some Directors and /

or Company Secretary to supervise and take necessary steps in

connection with Postal Ballot process. The Board also appoints

Scrutinizer for conducting the Postal Ballot process in fair and

transparent manner and fixes the duration of his appointment and

his remuneration. The postal ballot form alongwith Notice and

explanatory statement thereof is sent to all the Members of the

Company alongwith pre-paid self addressed business reply

envelope. All the Members are requested to send their assent /

dissent to the resolution by the specified time limit. The Scrutinizer,

on the basis of all the postal ballot forms received from the

Members, scrutinizes the same and prepares his report and submits

the same to the Chairman for announcing results of the Postal

Ballot. The results are declared by the Chairman, after which the

same are forwarded to all the concerned authorities for their record.

No special resolution through Postal Ballot is proposed at the

ensuing Annual General Meeting.

INSIDER TRADINGCode of Conduct for prohibition of insider trading:

The Securities and Exchange Board of India (SEBI) has over the

years introduced various amendments to the Insider Trading

Regulations of 1992 which ordain new action steps by corporates

and other market intermediaries for the purposes of prohibition of

insider trading.

Pursuant to the above requirements of SEBI (Prohibition of Insider

Trading) Regulations, 1992 as amended, the Company adopted a

Code of Conduct namely “Zicom Electronic Security Systems Limited

Code of Conduct for Prohibition of Insider Trading” (“Code”). The

Code for prohibition of insider trading is amended from time to time

reflecting the changes brought in by SEBI in the Insider Trading

Regulations. The Code is applicable to all Directors and such

designated employees who are expected to have access to

unpublished price sensitive information relating to the Company.

The Company Secretary has been appointed as the compliance

officer for monitoring adherence to the said Regulations.


DISCLOSURESa. Disclosure on materially significant related party transactions

that may have potential conflict with the interests of the

Company at large

During the year, there were no transactions of materially

significant nature with the Promoters or Directors or the

Management or the subsidiaries or relatives etc. that had

potential conflict with the interests of the Company at large.

The related party transactions are duly disclosed in the Notes

to the accounts.

b. Disclosure of accounting treatment

No treatment different from the accounting standards,

prescribed by the Institute of Chartered Accountants of India,

has been followed in the preparation of financial statements.

c. Risk management

In view of various business risks associated with the Company

in general and certain risks specific to the Company and the

nature of business of the Company and its subsidiaries, risk

management policy of the Company is framed for

implementation by executive management, so as to minimize

such risks. The same is periodically placed before the Board

for its guidance and is modified from time to time to meet the

changing business scenario.

d. Details of non-compliance by the Company, penalties,

strictures imposed on the Company by Stock Exchanges or

SEBI or any statutory authority, on any matter related to

capital markets, during the last three years

The Company complied with all requirements of the Listing

Agreements entered into with the Stock Exchanges as well as

the regulations and guidelines of SEBI. Consequently, there

were no strictures or penalties imposed by either SEBI or the

Stock Exchanges or any statutory authority for non-compliance

of any matter related to the capital markets during the last three

years.

e. Details of compliance with mandatory requirements and

adoption of the non-mandatory requirements

The Company complied with all the mandatory requirements as

stipulated under Clause 49 of the Listing Agreement. The

Company adopted the non-mandatory requirement relating to

Remuneration Committee comprising the Directors as stated

above in this Report.

f. Whistle Blower policy and affirmation that no personnel has

been denied access to the Audit Committee

At present, the Company has not adopted any Whistle Blower

Policy. However, the Company has not denied access to any

personnel to approach the Audit Committee on any issue.

AUDITORS’ CERTIFICATEThe Statutory Auditors certified that the Company complied with the

conditions of Corporate Governance as stipulated in Clause 49 of the

Listing Agreement with the Stock Exchanges and the same is

annexed to this Report.

CERTIFICATE BY CEO AND CFOIn terms of the requirements of Clause 49 (V) of the Listing

Agreement, the Chief Executive Officer (CEO) and the Chief Financial

Officer (CFO) certified to the Board about the financial reporting and

internal controls in the Company. The said certificate was reviewed

by the Audit Committee and taken on record by the Board of

Directors at the respective meetings held on August 14, 2010.

MEANS OF COMMUNICATIONThe Company established procedures to disseminate, in a planned

manner, relevant information to our Members, analysts, employees

and the society at large.

Press releases and presentations: All our press and news releases

are submitted to the Stock Exchanges and are also posted on the

Company’s website at www.zicom.com. The Company did not hold

any meeting / conference of investors or analysts during the year.

Quarterly results: Our quarterly results are published in widely

circulated national newspapers such as The Business Standard (all

editions) and the local daily Sakaal (Mumbai edition).

SEBI EDIFAR and CFDS: Pursuant to Clause 51 of the Listing

Agreement, all data related to quarterly financial results,

shareholding pattern and annual report, among others, were being

duly filed on the Electronic Data Information Filing and Retrieval’s


(EDIFAR) website www.sebiedifar.nic.in maintained by SEBI. With

EDIFAR discontinued by SEBI effective from April 1, 2010, the

necessary filing in respect of quarter ended March 31, 2010

onwards is done with SEBI’s Corporate Filing and Dissemination

System (CFDS) website www.corpfiling.co.in.

Website: The Company’s website www.zicom.com contains a

separate dedicated section “Investors” where Members information

is available. The Annual Report of the Company, press releases,

quarterly and annual results of the Company and on-line share price

information, among others, are also available on the website in a

user-friendly and downloadable form.

Annual Report: Annual Report containing audited standalone and

consolidated financial statements together with Directors’ Report,

Auditors’ Report and other important information are circulated to

Members and others entitled thereto.

MANAGEMENT DISCUSSION AND ANALYSISA Management Discussion and Analysis Report forms part of this

Annual Report and includes discussion on various matters specified

under Clause 49 (IV) (F) of the Listing Agreement.

GENERAL SHAREHOLDERS' INFORMATION

The annual listing fees for the financial year 2010-11, have been paid to Bombay Stock Exchange Limited and National Stock Exchange

of India Limited.

The Company has also paid the annual custodial fees for the financial year 2010-11 to National Securities Depository Limited and Central

Depository Services (India) Limited.

i. 16th Annual General MeetingVenue

TimeDayDate

ii. Financial Calendar (tentative) Audited Annual Results of previous year ended March 31, 20101st quarter results for quarter ending June, 20102nd quarter results for quarter ending September, 20103rd quarter results for quarter ending December, 2010Last quarter results for quarter ending March 2011

iii. Financial yeariv. Book closure dates

v. Dividend payment date for financial year 2009-10vi. Listing of equity shares at Stock Exchanges

vii. Stock codes

viii.International Securities Identification Number (ISIN)ix. Corporate Identity Number (CIN)

Mumbai Cricket Association Recreation Centre, RG – 2, G – Block, Bandra

Kurla Complex, Mumbai 400051.

10.30 a.m.

Wednesday

September 29, 2010

Second week of August 2010

Second week of August 2010

Second week of November 2010

Second week of February 2011

Second week of May 2011 (if unaudited) or by end of May 2011 (if audited)

April 1, 2010 to March 31, 2011

Saturday, September 25, 2010 to Wednesday, September 29, 2010 (both

days inclusive)

On or after September 29, 2010

The Bombay Stock Exchange Limited (BSE)

P J Towers, Dalal Street, Fort, Mumbai 400 001.

National Stock Exchange of India Limited (NSE)

Exchange Plaza, Bandra Kurla Complex, Bandra East, Mumbai 400 051.

BSE: 531404

NSE: ZICOM

INE871B01014

L32109MH1994PLC083391


BSE Share price NSE Share price

Month High (Rs.) Low (Rs.) No. of shares traded High (Rs.) Low (Rs.) No. of shares traded

April 2009 97.70 67.40 1,549,643 97.80 66.50 556,106

May 2009 100.00 76.00 594,053 99.40 76.15 610,934

June 2009 104.75 73.10 903,682 104.90 72.65 594,645

July 2009 91.85 69.70 639,848 91.85 67.20 999,405

August 2009 93.90 75.20 1,099,213 94.05 76.70 955,787

September 2009 109.70 84.00 2,039,028 109.40 84.00 2,025,109

October 2009 109.30 88.60 989,939 109.50 88.20 1,413,377

November 2009 108.90 87.00 777,611 108.65 86.90 850,658

December 2009 121.40 95.20 6,115,454 122.40 94.45 9,758,868

January 2010 128.40 102.70 2,305,556 128.95 103.00 3,722,579

February 2010 115.50 100.00 934,418 115.80 99.25 1,914,446

March 2010 134.00 95.00 4,900,765 133.50 95.10 9,949,903

x. MARKET PRICE DATA for the financial year 2009-10

Performance in comparison to broad based indices

BSE price

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BSE Sensex 11492.10 14930.54 15600.30 15732.81 16002.46 17142.52 17493.17 17290.48 17530.94 17790.33 16669.25 17793.01

BSE Price 97.70 100.00 104.75 91.85 93.90 109.70 109.30 108.90 121.40 128.40 115.50 134.00

Apr 09 May 09 Jun 09 J ul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 J an 10 Feb 10 Mar 10


NSE price

xi. Registrar and Share Transfer Agent

Bigshare Services Private Limited




Tel: (022) 2847 0652, 2847 0653, 2847 3474, 2847 3747

Fax: (022) 2847 5207


xii. Share Transfer System

Shares in physical form lodged for transfer with the Company's

Registrar & Share Transfer Agent are normally processed within

fifteen days from the date of lodgement, if the documents are clear

in all respects; and put up for approval before the Share Transfer and

Investors' Grievance Committee generally once in every fortnight.

Share Transfer and Investors' Grievance Committee of the Directors

is empowered to approve transfer of shares and to attend to the

investors grievances, which are not normally resolved by the

Company's Registrar & Share Transfer Agent / Compliance Officer.

In case of shares in electronic form, the transfers are processed by

NSDL / CDSL through respective Depository Participants.

Matters concerning investors' grievances and other miscellaneous

matters relating to change of address, mandates, etc. are processed

by the Company's Registrar & Share Transfer Agent. In compliance

with the Listing Agreement with the Stock Exchanges, a Practising

Company Secretary carries out audit of the System of Transfer and

a certificate to that effect is obtained from him. The Company files

a copy of the certificate with the Stock Exchanges within stipulated

time.

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BSE Sensex 11492.10 14930.54 15600.30 15732.81 16002.46 17142.52 17493.17 17290.48 17530.94 17790.33 16669.25 17793.01

NSE Price 97.80 99.40 104.90 91.85 94.05 109.40 109.50 108.65 122.40 128.95 115.80 133.50

Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10


Promoters 18.36%

Mutual Funds, UTI, Banks, Financial

Institutions & Insurance Companies 9.45%

FIIs 5.90%

Private Corporate Bodies 21.15%

Indian Public 41.85%

NRIs / OCBs 2.63%Others 0.66%

No. of shares Total holders % of total holders Total holding in shares % of total capital

1-500 11,679 86.70 1,595,574 12.56

501-1000 915 6.79 759,544 5.98

1001-2000 377 2.80 580,336 4.57

2001-3000 172 1.28 449,051 3.54

3001-4000 64 0.47 233,899 1.84

4001-5000 67 0.50 319,802 2.52

5001-10000 102 0.76 751,779 5.92

10001-999999999 94 0.70 8,009,844 63.07

Total 13,470 100.00 12,699,829 100.00

xiii. Distribution of Shareholding as on March 31, 2010

Category No. of Shares %

Promoters 2,331,333 18.36

Institutional Investors 1,199,727 9.45

FIIs 749,113 5.90

Private Corporate Bodies 2,686,529 21.15

Indian Public 5,314,484 41.85

NRIs / OCBs 334,235 2.63

Any other (Clearing Member) 84,408 0.66

Total 12,699,829 100.00

xiv. Shareholding Pattern as on March 31, 2010


xv. Dematerialisation of shares and liquidity as on March 31,

2010

Physical shares : 221,206 (1.74 %)

De-materialized shares : 12,478,623 (98.26 %)

Total shares : 12,699,829 (100.00%)

Out of the above de-mat shares, 9,163,157 (73.43%) are held

through National Securities Depository Limited and 3,315,466

(26.57%) are held through Central Depository Securities (India)

Limited.

xvi. Outstanding ADR / GDR / other instruments

During the year under review, the Company did not issue any ADRs

/ GDRs / other instruments, which is convertible into equity shares

of the Company, also as on year end March 31, 2010, no such

instruments were outstanding.

The Company, during the financial year 2007-08, issued

2,100,000 and 1,575,000 warrants on a preferential basis to

Promoters’ Group Companies and to entities other than Promoters’

respectively, as per the SEBI (Disclosure and Investor Protection)

Guidelines, 2000 entitling the warrant holders to apply for

equivalent number of fully paid equity shares of Rs. 10 each at a

price of Rs. 200 per share. In terms of the special resolution, the

said warrants had been issued upon payment of 10% of the

amount. The balance 90% of the amount was payable on or before

July 16, 2009 and July 30, 2009 respectively. The Promoters’

Group Companies and entities other than Promoters’ have not

exercised their option and hence the warrants have lapsed.

Accordingly a sum of Rs. 73,500,000 received towards warrants

has been forfeited.

xvii. Plant Location

Plot No.47, Sector -1,

Parwanoo (H.P.) 173220.

xviii. Registered Office address

Subsequent to the year end, the Company changed its Registered

Office w.e.f. June 28, 2010 to the following address:


Western Express Highway, Goregaon (East),

Mumbai 400063.

xix. Address for correspondence

All correspondence by Members should be made to the Registrar &

Share Transfer Agent or Registered Office of the Company as stated

above. In case of Members holding shares in de-mat form are

requested to intimate change in certain specific personal information

like address and PAN, etc., to their Depository Participant. Others

can send their correspondence to the Registered Office of the

Company or communicate to the Company on

[email protected].

Other information for correspondence

Telephone no. : (022) 4290 4290

Fax no. : (022) 4290 4291

Website : www.zicom.com


Place: Mumbai Manohar Bidaye

Date: August 14, 2010 Chairman


Declaration pursuant to Clause 49 of theListing Agreement

Auditors’ Certificate on Corporate Governance

I, Pramoud Rao, Managing Director and Chief Executive Officer of the Company, do hereby declare that pursuant to requirement of Clause

49 I (D) (ii) of the Listing Agreement, all Board Members and Senior Management Personnel of the Company have given their affirmation

for compliance with their respective Code of Conduct of the Company in respect of the financial year ended March 31, 2010.

Mumbai Pramoud Rao

August 14, 2010 Managing Director & Chief Executive Officer

To the Members of Zicom Electronic Security Systems Limited

We have examined the compliance of conditions of Corporate Governance procedure implemented by Zicom Electronic Security Systems

Limited for the year ended on March 31, 2010 as stipulated in Clause 49 of the Listing Agreements of the said Company with the Stock

Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to review of

the procedures and implementation thereof adopted by the Company for ensuring the compliance of the conditions of the Corporate

Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations provided to us and the representations made by the

Directors and the management, we certify that the Company has by March 31, 2010 complied with:

(a) all the mandatory requirements of the said Clause 49 of the Listing Agreement.

(b) the following non-mandatory requirement of the said Clause 49 – Constitution of Remuneration Committee.

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 P. RAJ & CO.Chartered Accountants

P. S. ShahProprietor

Membership No. 44611Mumbai, August 14, 2010 Firm Registration No. 108310W


Management Discussion and Analysis

During 2009-10, even as major economies were displaced, India

registered a strong recovery, displaying its ability to withstand

extreme external adversities. Double-digit industrial growth saw the

Indian economy expand 7.4% in 2009-10 (6.7% growth in

2008-09), despite a drought and global slowdown. Indian GDP

stood at USD 1,217 billion, 1.96% of the global economy (Source:

World Bank). The Indian economy’s stellar performance was driven

by the manufacturing sector’s robust performance on the back of

government and consumer spending. The sector emerged as the

best performer, growing 10.8% in 2009-10 as against 8.9% in

2008-09, outpacing the previously fastest growing services sector.

Government estimates suggest that the Indian economy will grow

8.5% in 2010-11, driven by better farm output and a global

recovery.

Indian Economy

Global Electronic Security Market

SnapshotMarket size: USD 60 billion

Historical growth: Over 4%

Dominant market: The US (40% of the global market)

Growing security concerns across the globe catalyzed the

deployment of surveillance systems in both commercial and

residential markets.

The global security market, estimated at USD 60 billion, is

historically growing at 4.1% annually. The US and Europe are large

and mature markets growing at about 5% annually. The markets of

Asia, the Middle East and East Europe will continue to drive the

global demand for the electronic security industry, against a

backdrop of aggravated security threats, in these countries. This

market is expected to grow at 9% over the coming years.

This market, dominated by exponentially growing CCTV / video

surveillance, is projected to reach around USD 28 billion by the end

of 2013 at a CAGR of over 22% from 2010, resulting in attractive

opportunities for CCTV manufacturers, operators and distributors.

At the regional level, Asia is expected to dominate the global CCTV

market, with over 53% in value terms by the end of 2013, owing

to the huge population base of India and China, followed by America

and Europe. Besides, sectors like retail, transportation and

healthcare have immense potential to drive the growth of the CCTV

market.

An important technology stride took place in the domain of video

surveillance. CCTV surveillance systems, traditionally used for

postmortems of events, will now be used for generating alerts based

on certain behavior patterns observed on scene. This will open new

opportunities for the world of video analytics.

Biometrics is experiencing rapid adoption by both public and private

sectors worldwide, as an accurate, reliable and cost-saving way to

offer better and advanced security surveillance. This segment is

expected to grow at a CAGR of 18% between 2010 and 2012, with

the Asia-Pacific market being one of the fastest adopters of

biometrics, the biometrics market in this region is expected to grow

at a CAGR of over 27% to USD 2 billion by 2012.

Growth drivers for the security market• Growing terrorist activities across the globe • New legislations, standards and codes • Technological advances (RFID, biometrics and video intelligence,

among others)• Installed base upgrades• Increasing security awareness


Indian Electronic Security Market

SnapshotMarket size: Rs. 2,125 crore

Historical growth: About 23%

Rapidly increasing urbanization, economic liberalization and

criminal activities at different levels of society, posed a challenge to

the average Indian. Additionally the rising incidence of terrorist

attacks prompted the Indian consumer to opt for better and

advanced security, resulting in the rapid growth of the Indian

security market, estimated at about 30% annually.

CCTVs accounted for over a third of this market and are growing

faster than other segments like access control, intrusion or fire

detection alarms. Special events such as the Commonwealth Games

2010 will also trigger the Indian CCTV market, forecasted to grow

at a CAGR of over 34% during 2010-2012.

In India, there are about 5,000 companies in the electronic security

field, around 150 of these are from the organized sector (with ISO

Certification) and account for 80% of the total security solutions

market (by value), the remaining 20% contributed by the

unorganized sector.

Domestic dependence on imported gadgets forms 30-35% of the

total market and is likely to increase to 2.5 billion GBP in the next

two years. India imports mainly from Israel, China, Taiwan, Korea,

the UK and the US, among others. Israel and India are partners in

homeland security.

Challenges in growing the electronic security market

• Lack of awareness about the security concept and the highexpenses involved with security products deter Indian customersfrom implementing them

• There are several mental barriers, which include:

� A watchman is sufficient, although his name, the agency he

comes from, his origins or background are often obscure

� Some member of the house is always at home

� A double-door provides the best security

� Trouble relating to a security breach

• Perception that security spending is a waste of money.• The industry pays a high customs duty of 35-40% and VAT of

12.5% in many locations

The Indian security industry is currently estimated at Rs. 2,125

crore and expected to reach Rs. 3,210 crore by 2012.

Market drivers for security products and solutions

Indian security solution market (Rs. in crore)

ESS industry

Construction(Residential and commercial complexes)

Retail(Malls and multiplexes)

Insurance

Government and Defence

ITeS and software Falling hardware prices

Regulation Banking and financial services

1,150

1,410

1,730

2,125

2010200920082007


Zicom Electronic Security Systems Ltd. is the parent company of the Zicom Group with four subsidiaries, each engagedin unique business.

Zicom Electronic Security Systems Ltd. In 2009-10, the Company’s revenue grew 25% over the previous

year, but Profit After Tax declined 39%. The Company bagged and

executed many prestigious projects successfully during the year.

Subsequent to this, the Company transferred assets, both movable

fixed assets and working capital, worth Rs. 560 million, together

with an unexecuted order as on April 30, 2010. The Company’s

businesses were transferred to Schneider Electric for a consideration

of Rs. 2,250 million (including retention of Rs. 120 million) in the

first quarter of 2010-11.

Zicom Retail Products Pvt. Ltd. The Company’s revenue grew 46% from Rs. 646 million in

2008-09 to Rs. 944 million in 2009-10; it incurred a net loss of

Rs. 12 million in 2009-10 against Rs. 25 million in 2008-09. The

Company expanded its reach by inducting 1,000 new channel

partners and introduced technologically advanced products well

received by its clients during the year under review. To support this

business, the parent Company established a manufacturing unit at

Parwanoo, Himachal Pradesh, a notified backward area. Going

ahead, this in-house manufacture will strengthen margins. Retail

business is expected to register a break-even in the current financial

year.

Unisafe Fire Protection Specialists LLC, DubaiIn 2009-10, the Company achieved a sizeable growth in business

– revenue grew 57% from Rs. 1,157 million in 2008-09 to

Rs. 1,819 million in 2009-10. Despite recession in the Middle East

market, the Company was successful in bagging important projects

in the Gulf region and creating a healthy order book. However, this

growth came with reductions in margins; many projects were

delayed and customers compromised on project features, adversely

affecting the Company’s margins. With the rebound in economic

activity in the Middle East countries, the Company expects to

capitalize on larger opportunities from the region.

Zicom CNA Automation Ltd.This Company was a joint venture between CNA Group Ltd.,

Singapore and Zicom Electronic Security Systems Ltd. to provide

integrated system solutions for infrastructure facilities in India. The

business of this company was transferred to Schneider along with

the business of the parent Company.


Businesses

Building Solutions Group

Special Projects Group

Zicom Retail Products

Pvt. Ltd.BusinessesProviding security solutions forhomes, apartments,commercial establishments,offices and banks amongothers

Zicom CNA Automation

Ltd.BusinessesIntegrated system solutionprovider in infrastructurefacilities

Unisafe Fire ProtectionSpecialists LLC, DubaiBusinessesProviding fire detection and firefighting systems, equipmentand services

Zicom ManufacturingCompany (HK) Ltd.BusinessesFacilitates in sourcing productsfor the parent company


Profit and Loss AccountThe Company reported a subdued performance in 2009-10, largely

on account of inflationary pressures and increased fixed costs

(interest and depreciation). As a result, topline grew 41% but net

profit declined 23%.

Total Income Income from operations grew smartly reflecting the robustness of

demand for the Company’s products and solutions. Every business

contributed to the Company’s growth by recording superior numbers

over the previous year’s benchmarks.

The project business showed commendable growth. This business

was subsequently transferred to Schneider under the Business

Transfer Agreement along with unexecuted orders in the first quarter

of 2010-11. The fire solutions business (based out of Dubai) grew

57% in 2009-10. The retail business registered sizeable growth,

primarily owing to an expanding distribution footprint across India.

Non-core income declined 13% to the non-receipt of rental income

in 2009-10 (Rs. 3.5 million in 2008-09). Miscellaneous income

doubled from the 2008-09 level. Non-core income contributed only

4.10% to the net profit in 2009-10, reflecting strength in the core

business to generate shareholder value.

Total Operating Costs Operating cost increased 46% from Rs. 3,252 million in 2008-09

to Rs. 4,740 million in 2009-10, largely on account of the increase

in business in 2009-10. Material cost increased 55% from

Rs. 2,662 million in 2008-09 to Rs. 4,126 million in 2009-10.

Employee cost declined 3% from Rs. 309 million in 2008-09 to

Rs. 300 million in 2009-10, despite a sizeable growth in business

volume. As a result, revenue per employee increased substantially.

Disciplined cost- optimization across the organization reined growth

in administrative expenses to only 12% from Rs. 281 million in

2008-09 to Rs. 314 million in 2009-10. This increase was

primarily owing to increased provision for doubtful debt and legal

expenses necessitated by the Business Transfer Agreement.

Interest liability increased 44% from Rs. 164 million in 2008-09 to

Rs. 236 million in 2009-10. This increase was primarily owed to

three reasons:

• Increase in interest on funds borrowed for managing workingcapital requirements to execute the increased business

• Loss on account of foreign exchange fluctuations• Support to group businesses

As a result, the debt service cover ratio dropped from 3.13 in

2008-09 to 2.31 in 2009-10. The average cost of debt was 12.5%

in 2009-10 against 11.5% in 2008-09 – largely owing to increase

in unsecured loans availed in 2009-10.

Profits and ProfitabilityIncreased operational costs dampened business profitability. At the

operations level, EBIDTA grew a marginal 6% but EBIDTA margin

dropped 330 basis points from 13.6% in 2008-09 to 10.3% in

2009-10.

Profit Before Tax dropped 22% owing to the increase in interest and

depreciation charges. The Net Profit (post adjustment of minority

interest and goodwill) dropped 23% from Rs. 196 million in

2008-09 to Rs. 150 million in 2009-10.

Financial Statement Analysis (Based on the consolidated financial statements of ZicomElectronic Security Systems Ltd. and its subsidiaries)

2009-10 2008-09

Amount Proportion Amount Proportion Y-o-Y growth

(Rs. million) of total (Rs. million) of total

Projects (institutional and government) 2,448 46% 1,953 52% 25%

Retail business 941 18% 642 17% 47%

Fire solutions business 1,815 34% 1,157 31% 57%

Business-wise revenue contribution


Analysis of the numbers reveals: Profit After Tax from the

discontinued businesses dropped 22% (from Rs. 116 million in

2008-09 to Rs. 91 million in 2009-10) and Profit After Tax from

continuing businesses dropped from Rs. 106 million in 2008-09 to

Rs. 86 million in 2009-10).

Balance Sheet The Balance Sheet weakened marginally as the sources of funds

increased its reliance on external debt to manage business

operations; consequently the debt equity ratio increased over the

previous year level. In terms of fund application, the gross block

strengthened considerably accompanied with a reasonable increase

in the net current assets.

Capital Employed Sources of funds: The capital employed in the business increased

23% from Rs. 2,929 million as on March 31, 2009 to Rs. 3,589

million as on March 31, 2010. This was owing to an increase in net

worth and a sizeable increase in debt.

Shareholders’ funds grew 3.21% from Rs. 1,192 million as on

March 31, 2009 to Rs. 1,230 million as on March 31, 2010 –

consequent to an increase in the reserves and surplus balance

(despite a negative balance of Rs. 15 million in the foreign exchange

translation reserve). The promoters held 18.36% stake in the

Company as on March 31, 2010.

External debt portfolio grew 35%, primarily due to an increase in

unsecured loans to fund business operations; secured loans grew

14% owing to increase in working capital loans. Secured loans

constituted 83% of the total outstanding debt as on March 31,

2010. The increase in debt burden impacted the debt-equity ratio,

which stood at 1.82 as on March 31, 2010 against 1.39 as on

March 31, 2009.

Application of funds: The size of the gross block (any corporate’s

competitive advantage) grew 21% from Rs. 899 million as on

March 31, 2009 to Rs. 1,091 million as on March 31, 2010. The

Company invested Rs. 215 million into fixed assets in 2009-10 –

93% of which on plant and machinery. The net block increased

21% between 2008-09 and 2009-10. The Company provided

depreciation on the Straight Line Method. Consequent to the

increase in fixed assets, the provision for depreciation increased

from Rs. 108 million in 2008-09 to Rs. 122 million in 2009-10.

Net current assets (working capital) increased 20%. Current assets

grew 16% from Rs. 2,856 million as on March 31, 2009 to

Rs. 3,309 million as on March 31, 2010. Stringent inventory

management reduced inventories 26%; which was more than

compensated by a 38% increase in debtors and a 44% increase in

loans and advances. Debtors outstanding for over six months

constituted 26% of the debtors’ balance (largely project related

business with a long repayment cycle). The debtor cycle stood at

129 days as on March 31, 2010 against 126 days as on March 31,

2009.

The considerable increase in the loans and advances segment was

on account of advances to suppliers – it increased more than 700%

from Rs. 22 million as on March 31, 2009 to Rs. 180 million as

on March 31, 2010. These advances are expected to be settled in

the current year.

Current liabilities declined 6% from Rs. 694 million as on March

31, 2009 to Rs. 650 million as on March 31, 2010. An analysis

of the current liabilities reveals interesting facts:

• Sundry creditors grew 42% from Rs. 304 million as on March31, 2009 to Rs. 434 million – similar to the increase in thesundry debtor balance

• Bank overdraft of Rs. 214 million as on March 31, 2009, wassettled

• Deposits with the Company declined 62% (from Rs. 14 millionas on March 31, 2009 to Rs. 5 million as on March 31, 2010)while advances from customers increased 147% (from Rs. 52million as on March 31, 2009, to Rs. 127 million as on March31, 2010)

The current ratio strengthened from 4.06 as on March 31, 2009 to

4.57 as on March 31, 2010 – indicating the Company’s ability to

repay its liabilities. The quick ratio also improved from 3.03 to 3.83

over the same period.


The Company has a well-managed human resource department,

which, in coordination with the Board, frames various policies and

practices to ensure that employees are rewarded based on their

efficiency and productivity.

As on March 31, 2010, the Company, along with its subsidiaries,

employed around 385 employees at various locations in India and

abroad. The Company is looked upon as a trend-setter in the

industry owing to its engagement and implementation of the best HR

policies and practices. The HR department formulated an HR

mantra called ‘MAGIC.’

M - Maximise earning potential

A - Accelerate learning

G - Generate growth opportunity

I - Induce sense of belongingness

C - Create fun work environment

The Company maintains a diverse culture that is progressive and

flexible and values individual contributions made by each Zicomite.

The diversity of thought and experience of each Zicomite is the key

factor that drives the Company’s growth and success.

The HRD department designed performance management systems

to optimize employee resource utilisation, both in terms of time and

efficiency.

The Company focuses on growing the learning curve of each team

member through internal and external training programmes to

enable them to cope with expanding business activities. Training

encompasses technical knowledge and soft skills to groom team

members to operate as entrepreneurs. The Company has a full-time

training centre, providing programmes on technical and personal

skills. The Company facilitated over 50 training programmes during

the year under review.

The Company introduced the Business Promotion Support Plan,

popularly known as the ‘3C Program’, to ensure that employees at

all levels and across various business functions get an opportunity

to engage in organisational success.

This program is manned by the HR team and the intent is to get all

the Companys’ associates connected to the business. Associates are

encouraged to contribute potential business leads under this

program which are forwarded to respective sales teams to follow up

with potential customers. On successful closure of the business lead,

the concerned Associates are awarded ‘stars’ which are redeemable

for awards.

The Company organizes monthly meets of all employees at all

locations. Various programmes are designed, which motivate

employees to participate actively and enhances their skills. The

Company’s forte lies in strong bonding with its employees, reinforced

through a monthly magazine called ‘Sparkle’, depicting the

Company’s monthly achievements, employees and their families.

In 2010-11, 92 employees of the Parent Company have resigned

and joined Schneider as a part of the BTA.

The Company has an internal control system in line with the nature

and size of the business. These systems and processes ensure

smooth functioning of operations, ably supported by an enterprize

resource planning platform for all business processes. Control

mechanisms facilitate:

• Review of long-term business plans, the annual plan and capitalinvestments

• Adherence to all applicable accounting standards and policies• Periodic review and rolling forecasts• Proper accounting and review mechanism

Human Resource

Internal Audit and Control


• Compliance with all applicable statutes, listing requirements andinternal policies and procedures

• Audit on concurrent basis, carried out by an internal audit teamcovering all statutes and compliance requirements

• IT systems with adequate in-built controls and security

The internal auditors ensure that the Company complies with all

statutory requirements and implements corporate policies. The

internal audit function is designed to ensure that the financial and

other records are reliable for preparing financial statements and other

data, and for maintaining accountability of assets. The scope of the

internal auditors cover all the activities of the Company, in particular

scrutiny of work orders, purchases, sales, expenses, inventory and

taxation.

Risk represents uncertainties and adversities that could have a

material impact on the performance and prospects of a company.

The corporate risk mitigation framework identifies a risk factor,

evaluates its importance and formulates an appropriate corporate

response to minimize losses and enhance shareholder value.

Zicom’s safety standards comprise safe operations to protect

employees, the community and the environment, codes of conduct

to ensure regulatory compliance, review committees to verify

important business decisions and organisational frameworks to

prevent authority abuse.The risk management discipline is centrally

formulated, but prudently decentralized, to help managers mitigate

risks at the branch level.

The Company uses risk identification checklists and divisional

monthly reports for risk identification and response. Risks are rated

in terms of business impact, annual earnings and the likelihood of

occurrence.

All corporate decisions at Zicom strike a prudent balance between

risks and rewards, strengthening the brand and revenue-accretive

initiatives. The Company’s strategic decisions are driven by objective

of maximizing shareholder returns.

1) Elimination of two key growth drivers from the Company’s

business portfolio owing the Business Transfer Agreement could

hamper prospects

• The Company has two important businesses in its portfolio,namely retail business for the SOHO market and the subsidiaryin Dubai, which provide a comprehensive range of solutions forall fire protection needs.

• The Company is planning to enter new businesses with security

as its key platform – servicing telecom and other infrastructurecompanies, tracking of assets and objects under service andeducation and training in security. The Company proposes toachieve this objective by both organic and inorganic ways. TheCompany made progress and is evaluating various acquisitionopportunities in these areas. This high-growth and sustainedincome businesses is expected to drive the growth of theCompany over the coming years.

2) The Business portfolio does not comprise profitable businesses,

posing a threat to revenues

• The Company’s fire solution business operates on reasonablemargins – the average EBIDTA margin of this business is over 10%.

• The Company’s retail business, which commenced only in2007, is expected to generate reasonable profits from the currentyear. The significant expansion of the distribution network andthe commissioning of the in-house manufacturing facility (earlierimported) will strengthen business and profitability.

• The Company is adding a service element to its product portfolio,creating an avenue for sustained cash inflow and highprofitability.

3) Inadequate funds to strengthen existing businesses and to

undertake new ventures could dampen prospects

• The Company received Rs. 2,130 million from the BusinessTransfer Agreement with Schneider, of which it utilized a majorportion to reduce the debt burden of the Group.

• The Company intends to use available cash for growth-orientedinitiatives in the current year.

• The Company can leverage its financial statements with its lowdebt equity ratio for adequate low-cost funds over the comingyears, which in turn, will drive its growth plans.

Risk Management


Auditors’ Report

1) We have audited the attached Balance Sheet of Zicom ElectronicSecurity Systems Limited as at March 31, 2010, related Profitand Loss Account and the Cash Flow statement for the yearended on that date annexed thereto. These financial statementsare responsibility of the Company's management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

2) We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those standards require that weplan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accountingprinciples used and significant estimates made by themanagement, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3) Without qualifying our report, we draw attention to Note no. 10of Schedule 16 of the financial statement. As on March 31,2010, the Company has Equity Investment of Rupees 4,101Lacs in it's wholly owned subsidiary Zicom Retail ProductsPrivate Limited and has advanced unsecured loan of Rupees7,022 Lacs. The Said Subsidiary Company is incurring Lossesand its accumulated losses as of March 31, 2010 is Rs. 1,915Lacs. As explained by the management, that they are confidentof generating greater business and improving profitability by theretail expansion and creation of Retail Electronic Security Brand.Accordingly management considers such diminution to betemporary in nature and hence no provision is required fordiminution in the value of investments and in respect ofUnsecured Loan.

4) As required by the Companies (Auditors’ Report) Order, 2003(“the Order”) issued by the Central Government of India in termsof sub-section (4A) of section 227 of the Companies Act, 1956,we enclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said Order.

5) Further to our comments in the Annexure referred to above, wereport that:

a) We have obtained all the information and explanationswhich, to the best of our knowledge and belief, were

necessary for the purposes of our audit;

b) In our opinion, proper books of account as required by lawhave been kept by the Company so far as appears from ourexamination of those books;

c) The Balance Sheet, Profit and Loss Account and the CashFlow statement dealt with by this report are in agreementwith the books of account;

d) In our opinion, the Balance Sheet, Profit and Loss Accountand the Cash Flow statement dealt with by this reportcomply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

e) On the basis of written representations received from thedirectors, as on March 31, 2010 and taken on record bythe Board of Directors, we report that none of the directorsis disqualified as on March 31, 2010 from being appointedas a director in terms of clause (g) of sub-section (1) ofsection 274 of the Companies Act, 1956;

f) In our opinion, and to the best of our information andaccording to the explanations provided to us, the saidfinancial statements read with the notes thereon, give theinformation required by the Companies Act, 1956, in themanner so required and give a true and fair view inconformity with the accounting principles generally acceptedin India:

i) in the case of Balance Sheet, of the state of affairs of theCompany as at March 31, 2010;

ii) in the case of Profit and Loss account, of the profit for theyear ended on that date; and

iii) in case of the Cash Flow statement, of the cash flows forthe year ended on that date.




To the Members of Zicom Electronic Security Systems Limited


Annexure referred to the Auditors’ Report

1) The Company has maintained proper records showing fullparticulars, including quantitative details and situation of fixedassets.

The fixed assets have been physically verified by themanagement as per a phased programme of verification, exceptfixed assets having net block value of Rupees 31,936,961,installed at customers’ place, which are not physically verified.In our opinion, the frequency of verification is reasonable havingregard to the size of the Company and the nature of its fixedassets. The discrepancies noticed on such verification were notmaterial and have been properly dealt with in the books ofaccounts.

Fixed assets disposed off during the year were not substantialand therefore do not affect the going concern assumption.

2) The management has conducted physical verification ofinventory at reasonable intervals.

In our opinion, the procedures of physical verification ofinventory followed by the management are reasonable andadequate in relation to the size of the Company and the natureof its business.

The Company is maintaining proper records of inventory. Thediscrepancies noticed on such verification between physicalinventories and the book records were not material in relation tothe operations of the Company and the same have been properlydealt with in the books of account.

3) According to the information and explanations provided to usand as per the records examined by us, the Company hasgranted unsecured loans to four parties covered in the registermaintained under Section 301 of the Companies Act, 1956amounting to Rupees 781,080,801. The Maximum balanceoutstanding during the year was Rupees 825,361,558.

In our opinion rate of interest and other terms and conditions arenot prima facie prejudicial to the interest of the Company.

In absence of repayment schedule of principal and interest, weare not able to comment on the regularity of the same.

The Company has not taken any loan secured or unsecured fromcompanies, firms or other parties covered in the registermaintained under section 301 of the Companies Act, 1956.

4) In our opinion and according to the information and explanationsprovided to us, having regards to the explanations that some of

the items of Plant and Equipments purchased are of specialnature and suitable alternative sources do not exist for obtainingcomparable quotations, the internal control procedures arecommensurate with the size of the Company and the nature ofits business, for the purchase of inventory, fixed assets and forthe sale of goods and services. During the course of our audit,no major weakness has been noticed in the internal controls.

5) Based on the audit procedures applied by us and according tothe information and explanations provided by the management,we are of the opinion that all the particulars of contracts orarrangements that need to be entered into the registermaintained under section 301 of the Companies Act, 1956have been so entered.

In our opinion and according to the information and explanationsprovided to us, the transactions made in pursuance of suchcontracts or arrangements have been made at reasonable priceshaving regard to the prevailing market prices at the relevant time.

6) In our opinion and according to the information and explanationsprovided to us, the Company has not accepted any depositsfrom the public within the meaning of Section 58A, 58AA orany other relevant provisions of the Companies Act, 1956 andthe rules framed thereunder.

7) The Company has internal audit system commensurate with thesize and nature of its business; however same needs to bestrengthened.

8) According to the information and explanations given to us, theCentral Government has not prescribed for the maintenance ofthe cost records under Section 209(1) (d) of the Companies Act,1956, for any of the products of the Company.

9) According to the information and explanations provided to usand on the basis of our examination of the books of account, theCompany has been generally regular in depositing undisputedstatutory dues including Provident Fund, Investor Education andProtection Fund, Employees' State Insurance, Income-tax, SalesTax, Customs Duty, Wealth Tax, Service Tax, Cess and otherstatutory dues during the year with the appropriate authorities.As on March 31, 2010, there are no undisputed dues payablefor a period of more than six months from the date they becamepayable.

As at March 31, 2010, according to the records of the Companyand the information and explanation given to us, the following

(Referred to in paragraph 4 of our report of even date)


10) The Company does not have accumulated losses at the end ofthe financial year and it has not incurred cash losses in thecurrent and immediately preceding financial year.

11) Based on our audit procedures and as per the information andexplanations provided by the management, we are of theopinion that, during the year the Company has not defaulted inrepayment of dues to any financial institution or bank. Nodebentures were issued or were outstanding during the year.

12) Based on our audit procedures and according to the informationand explanations provided to us, the Company has not grantedloans and advances on the basis of security by way of pledgeof shares, debentures and other securities.

13) In our opinion and according to the information andexplanations provided to us, the nature of activities of theCompany does not attract any special statute applicable to chitfund and nidhi / mutual benefit fund / societies.

14) In our opinion and according to the information andexplanations provided to us, the Company is not dealing ortrading in shares, securities, debentures and other investments.Accordingly, the provisions of clause 4 (xiv) of the Companies(Auditor’s Report) Order, 2003 (as amended) are not applicableto the Company.

15) According to the information and explanations provided to usand the records examined by us, the Company has givenguarantee for loan taken by two of its subsidiaries from bank.In our opinion, terms and conditions of guarantee are notprejudicial to the interest of the Company.

16) According to the information and explanations provided to usand the records examined by us, in our opinion, the term loans

were applied by the Company for the purpose for which theywere obtained.

17) According to the information and explanations provided to usand on an overall examination of the records and cash flowstatement of the Company, in our opinion, the funds raised onshort-term basis have not been used for long-term investment.

18) During the year, the Company has not made any preferentialallotment of shares to parties and companies covered in theRegister maintained under Section 301 of the Companies act,1956.

19) According to the information and explanations provided to usand the records examined by us, no debentures were issued orwere outstanding during the year.

20) During the year, the Company has not raised any moneythrough public issue.

21) Based upon the audit procedures performed and theinformation and explanations provided by the management, wereport that no fraud on or by the Company has been noticed orreported during the course of our audit.




are the particulars of disputed dues on account of Sales Tax that have not been deposited:

Name of the Statute Nature of Dues Amount in Rupees Period to which the Forum where the amount relates dispute is pending

Sales Tax Act Classification Dispute 21,561 2002 – 2003 Deputy Commissioner AppealsSales Tax Act Non-submission of 68,967 2002 – 2003 Deputy Commissioner Appeals

statutory formsSales Tax Act Levy of Penalty 137,778 2002 - 2003 Assistant Commissioner AppealWorks Contract Tax Disallowance of 164,296 2002 – 2003 Deputy Commissioner (Appeals)

WCT certificateWorks Contract Tax Disallowance of 430,999 2002 – 2003 Deputy Commissioner Appeal

WCT certificate 2003 – 2004


Balance Sheet as at March 31, 2010

As per our report of even date For and on behalf of the Board of Directors

For P. RAJ & CO. Manohar Bidaye Pramoud Rao Mukul DesaiChartered Accountants Chairman Managing Director Director

P. S. Shah Achyut Godbole Dr. B. Samal Vijay KalantriProprietor Director Director DirectorMembership No. 44611Firm Registration No. 108310W Hemendra Paliwal Kunjan TrivediMumbai, August 14, 2010 Chief Financial Officer Company Secretary

(Amount in Rs.)Particulars Schedule March 31, 2010 March 31, 2009SOURCES OF FUNDSShareholders’ FundsShare Capital 1 126,998,290 126,998,290 Share Warrants 1A – 73,500,000 Reserves and Surplus 2 995,898,039 935,906,628

1,122,896,329 1,136,404,918 Loan FundsSecured Loans 3 882,703,179 796,470,453 Unsecured Loans 4 386,301,321 –

1,269,004,500 796,470,453Deferred Tax Liability 5 45,354,149 18,560,111 Total 2,437,254,978 1,951,435,482APPLICATION OF FUNDSFixed Assets 6 Gross Block 491,511,723 293,137,310 Depreciation 89,104,182 58,177,188 Net Block 402,407,541 234,960,122 Capital Work-in-Progress – 540,000

402,407,541 235,500,122 Investments 7 602,191,637 574,959,570 Current Assets, Loans and Advances 8 Inventories 118,560,104 249,536,529 Sundry Debtors 514,030,660 503,454,406 Cash and Bank Balances 166,431,707 283,682,306 Loans and Advances 983,702,917 421,478,203

1,782,725,388 1,458,151,444 Current Liabilities and Provisions 9 Liabilities 276,024,029 306,774,939 Provisions 74,045,559 10,400,715

350,069,588 317,175,654 Net Current Assets 1,432,655,800 1,140,975,790 Total 2,437,254,978 1,951,435,482Notes forming part of the Accounts 16


Profit and Loss Account for the year ended March 31, 2010




(Amount in Rs.)Particulars Schedule March 31, 2010 March 31, 2009

INCOME

Sales & Services 2,447,684,977 1,952,534,596

Other Income 10 755,668 4,436,512

Total 2,448,440,645 1,956,971,108

EXPENDITURE

Materials 11 2,005,902,979 1,515,489,032

Employee Cost 12 72,204,588 91,812,028

Administrative Expenses 13 96,954,773 95,688,022

Finance Cost 14 148,054,656 96,971,939

Depreciation 34,992,641 25,948,860

Total 2,358,109,637 1,825,909,881

Profit Before Tax 90,331,008 131,061,227

Profit (Loss) from Continuing Operation (45,843,631) (23,523,360)

Tax Expenses 15 (15,120,687) (5,828,721)

Profit (Loss) After Tax Continuing Operation (30,722,944) (17,694,639)

Profit Before Tax from Discontinuing Operation 136,174,639 154,584,587

Tax Expense 15 44,914,725 38,303,646

Profit After Tax from Discontinuing Operation 91,259,914 116,280,941

Net Profit after Tax 60,536,970 98,586,302

Balance brought forward from previous year 315,390,185 227,204,598

Profit Available for Appropriations 375,927,155 325,790,900

APPROPRIATIONS

Transfer to General Reserve 6,100,000 –

Provision for Dividend 63,499,145 8,889,880

Provision for Tax on Dividend 10,546,414 1,510,835

Balance carried to Balance Sheet 295,781,596 315,390,185

Basic Earnings Per Share of Rupees 10/- each 4.77 7.76

Diluted Earnings Per Share of Rupees 10/- each 4.76 7.76

Notes forming part of the Accounts 16


Cash Flow Statement for the year ended March 31, 2010




(Amount in Rs.)Particulars March 31, 2010 March 31, 2009A. CASH FLOW FROM OPERATING ACTIVITIES

NET PROFIT BEFORE TAX 90,331,008 131,061,227 Depreciation 34,992,641 25,948,860 Finance Cost 148,054,656 96,971,939Sundry Balance Written Off / (Written Back) (3,244,144) 1,203,794 Employee Stock Compensation – (3,539,573)Loss on Sale / Discard of Fixed Assets 1,662,930 4,664,038 Operating Profit Before Working Capital Changes 271,797,091 256,310,285 (Increase)/Decrease in Trade and Other Receivable 4,327,674 (107,250,757)(Increase)/Decrease in Inventories 130,976,425 (150,612,974)Increase/(Decrease) in Trade Payable (23,963,236) 147,085,310 Cash Generated from Operations 383,137,954 145,531,864 Direct Taxes (9,787,674) (26,303,374)Net Cash Flow from Operating Activities 373,350,280 119,228,490

B. CASH FLOW FROM INVESTING ACTIVITIES Acquisition of Fixed Assets (204,062,989) (96,129,597)Acquisition of Investments (27,232,067) (166,200,000)Loans to Subsidiaries and Other Body Corporate (573,884,499) 160,438,287 Sale of Fixed Assets 500,000 –Interest Received 13,976,239 15,706,954 Net Cash Flow from Investment Activities (790,703,316) (86,184,356)

C. CASH FLOW FROM FINANCING ACTIVITIES Increase in Secured Loans 86,232,726 282,583,576 Increase in Unsecured Loans 386,301,321 –Fluctuation Gain / (Loss) (14,752,753) 22,261,719 Interest Paid (147,278,142) (134,940,612)Dividend and Dividend Tax Paid (10,400,715) (14,858,165)Net Cash used in Financing Activities 300,102,437 155,046,518Net Increase in Cash and Cash Equivalents (117,250,599) 188,090,652Cash and Cash Equivalents (Opening Balance) 283,682,306 95,591,654Cash and Cash Equivalents (Closing Balance) 166,431,707 283,682,306


Schedules forming part of the Accounts as at March 31, 2010(Amount in Rs.)

Particulars March 31, 2010 March 31, 2009

Authorized25,000,000 (25,000,000) Equity Shares of Rs. 10/- each 250,000,000 250,000,000 Issued, Subscribed & Paid-up12,699,829 (12,699,829) Equity Shares of Rs. 10/- each 126,998,290 126,998,290 Total 126,998,290 126,998,290

SCHEDULE 1 SHARE CAPITAL

– 73,500,000Total – 73,500,000

SCHEDULE 1A SHARE WARRANTS

Bank 386,301,321 –Total 386,301,321 –

SCHEDULE 4 UNSECURED LOANS

Securities Premium Account As per last Balance Sheet 604,516,443 604,516,443

Capital Reserve Transfer from Warrant Forfeitures 73,500,000 –

General Reserve As per last Balance Sheet 16,000,000 16,000,000 Transfer from Profit & Loss Account 6,100,000 –

22,100,000 16,000,000 Surplus Balance in Profit & Loss Account 295,781,596 315,390,185 Total 995,898,039 935,906,628

SCHEDULE 2 RESERVES AND SURPLUS

1) Term Loan from Bank 350,000,000 375,000,000 2) Working Capital Loan from Banks 532,703,179 421,470,453 Total 882,703,179 796,470,453

Notes: A. Term loan referred in (1) above is secured by the first charge on Plant & Machinery, Office Equipment and Equitable Mortgage of Land

& Building at Bandra (West), Mumbai and Office at Bangalore and second charge by way of hypothecation of entire Stock, Book Debtsand current assets.

B. Working capital loan referred in (2) above and banking facilities mentioned in clauses 2(a) and 2(b) of schedule 16 are secured by thefirst charge ranking pari passu on the entire Stock, Book Debts and current assets, and second charge on Plant & Machinery, OfficeEquipment and Equitable Mortgage of Land & Building at Bandra (West) Mumbai and Office at Bangalore. Further Secured by TermDeposit Receipt of Rs. 124 Lacs of the company.

SCHEDULE 3 SECURED LOANS

NIL (3,675,000) Warrants (Each Warrant carries option / entitlement to subscribe to one equity share of Rs. 10/- each at a price of Rs. 200 per share of which 2,100,000 warrants to be subscribed on or before July 16, 2009 and 1,575,000 warrants to be subscribed on or before July 30, 2009)




Arising on account of Timing Difference in– Depreciation 45,653,401 18,764,252 – Losses (299,252) (204,141)

Total 45,354,149 18,560,111

SCHEDULE 5 DEFERRED TAX LIABILITY

Trade, Long Term, Unquoted Investment in Subsidiaries 2,510,000 (2,510,000) Equity Share having face Value Rs. 10 Per Share in Zicom Retail Products Private Limited 410,100,000 410,100,000 (10 Share held in the name of Director on behalf of the company) 2,450 (490) Share having face Value AED 1000 Per Share in Unisafe Fire Protection Specialists LLC, Dubai 172,152,067 146,120,000 456,000 (456,000) Share having face Value HKD 1 Per Share in Zicom Manufacturing Co. (HK) Limited 2,539,570 2,539,570 1,020,000 (1,020,000) Share having face Value Rs. 10 Per Share in Zicom CNA Automation Limited 10,200,000 10,200,000 Investment in Others 120,000 (NIL) Share having face Value Rs. 10 Per Share in Institute of Advanced Security Training & Management Private Limited 1,200,000 –Non Trade, Long Term, Quoted 200,000 (200,000) Equity Share having face Value Rs. 10 Per Share in Vintage Cards & Creation Ltd. 6,000,000 6,000,000 [Market Value Rs 3,450,000/- (Previous Year Rs. 2,650,000/-)] Total 602,191,637 574,959,570

SCHEDULE 7 INVESTMENTS (AT COST)

SCHEDULE 6 FIXED ASSETSGROSS BLOCK DEPRECIATION NET BLOCK

Particulars As on Additions Deductions/ As on Up to For the Deductions/ Up to As at As at

April 1, 2009 Adjustment March 31, 2010 March 31, 2009 Year Adjustment March 31, 2010 March 31, 2010 March 31, 2009

Tangible

Land - Freehold 16,982,508 – – 16,982,508 – – – – 16,982,508 16,982,508

Buildings 28,295,174 – – 28,295,174 4,870,192 613,647 – 5,483,839 22,811,335 23,424,982

Plant & Machinery 177,648,662 199,064,899 – 376,713,561 22,011,504 26,136,522 – 48,148,026 328,565,535 155,637,158

Office Equipments 33,530,816 2,712,156 – 36,242,972 9,492,134 4,139,158 – 13,631,292 22,611,680 24,038,682

Vehicles 8,248,278 – – 8,248,278 1,962,869 741,441 – 2,704,310 5,543,968 6,285,409

Furniture and Fixtures 28,431,872 2,285,934 5,688,576 25,029,230 19,840,489 3,361,873 4,065,647 19,136,715 5,892,515 8,591,383

Total 293,137,310 204,062,989 5,688,576 491,511,723 58,177,188 34,992,641 4,065,647 89,104,182 402,407,541 234,960,122

Previous Year 244,146,537 96,129,597 47,138,824 293,137,310 74,703,113 25,948,860 42,474,785 58,177,188 234,960,122 169,443,424




A: CURRENT ASSETS Inventories (As taken, valued and certified by Management) Materials 104,751,116 231,912,888 Work-in-progress 13,808,988 17,623,641 Total 118,560,104 249,536,529Sundry Debtors Unsecured and considered good: Debts outstanding over six months 187,905,509 87,924,157 Other Debts 326,125,151 415,530,249 Total 514,030,660 503,454,406 Cash and Bank Balances Cash in hand 744,902 984,549 Balance with Scheduled Banks: In Current Accounts (including Cheque in Hand Rs. NIL (Rs. 1,495 Lacs) 15,176,343 153,521,043 In Fixed Deposit Receipts - Margin Money 115,589,294 90,413,796 Balance with Other Banks: Current Account 222,364 550,418 In Fixed Deposit Receipts - Margin Money 34,698,804 38,212,500 Total 166,431,707 283,682,306B : LOANS AND ADVANCES Unsecured and Considered Good: Advances recoverable in cash or in kind or for value to be received 146,257,967 165,449,342 [Rs. 7,236,403 (Rs. NIL) Given to Company in which directors are interested ] Loans to Subsidiary Companies 776,674,727 210,026,631 Advance to suppliers 34,932,583 19,621,347 Other Deposits 25,837,640 26,380,883

983,702,917 421,478,203 Total 1,782,725,388 1,458,151,444

SCHEDULE 8 CURRENT ASSETS, LOANS & ADVANCES

A: CURRENT LIABILITIES Sundry Creditors :

– Micro Small & Medium Enterprises – –– Others 218,609,036 123,303,500 – Due to Subsidiary Company 4,006,963 4,241,426

Book Overdraft – 141,349,848 Other Liabilities 11,304,809 18,383,949 Taxation net of Payment (153,631) 6,634,043 Advances from customers 40,866,602 11,509,005 Investor Education & Protection fund shall be credited by following amount when due Unclaimed Dividend 1,390,250 1,353,168

276,024,029 306,774,939 B: PROVISIONS Dividend and Tax thereon 74,045,559 10,400,715

74,045,559 10,400,715 Total 350,069,588 317,175,654

SCHEDULE 9 CURRENT LIABILITIES & PROVISIONS


Schedules forming part of the Accounts for the year ended March 31, 2010(Amount in Rs.)


Rent Income [Tax Deducted at Source Rs. NIL (Rs. 793,100)] – 3,500,000 Miscellaneous Income 755,668 936,512 Total 755,668 4,436,512

SCHEDULE 10 OTHER INCOME

Opening StockMaterials 231,912,888 75,483,670 Work-in-Progress 17,623,641 20,347,632 Material in Transit – 3,092,253 Total 249,536,529 98,923,555 PurchasesMaterials and Related Expenses 1,874,926,554 1,666,102,006 Total 1,874,926,554 1,666,102,006Closing StockMaterials 104,751,116 231,912,888 Work-in-progress 13,808,988 17,623,641 Total 118,560,104 249,536,529

2,005,902,979 1,515,489,032

SCHEDULE 11 MATERIALS

Employees Remuneration and Benefits :Salaries, Wages and Bonus 67,970,126 89,583,709 Contribution to Provident and Other Funds 1,237,696 2,152,115 Employee Stock Compensation /(Written Back) – (3,539,573)Workmen & Staff Welfare Expenses 3,236,369 3,780,585 Total 72,444,191 91,976,836Less: Recovered from Subsidiary Company 239,603 164,808 Total 72,204,588 91,812,028

SCHEDULE 12 EMPLOYEE COST


Schedules forming part of the Accounts for the year ended March 31, 2010(Amount in Rs.)


Advertisement Expenses (Net of Recovery of Rs. 195 Lacs (Rs. 191 Lacs)) 493,973 1,122,426 Auditor's Remuneration 728,195 614,976 Bank Charges, Guarantee Commission etc. 9,401,053 3,836,535 Commission & Brokerage 455,500 862,330 Directors' Sitting Fees 446,000 450,000 Donation 59,151 85,500 Insurance Charges 1,363,080 1,850,321 Legal and Professional Fees 20,959,691 14,913,216 Membership & Subscription 84,376 144,386 Miscellaneous Expenses 6,791,887 3,661,931 Postage, Telephone and Telex 6,337,410 9,258,153 Power and Fuel 6,673,974 6,669,132 Printing & Stationery 3,014,396 3,487,164 Rates and Taxes 3,910,313 3,614,775 Rent and Compensation 29,676,647 28,671,644 Repairs and Maintenance - Building 217,027 224,030 Repairs and Maintenance - Plant & Machinery 348,202 643,679 Repairs and Maintenance - Others 2,240,263 1,713,824 Sales Promotion Expenses 549,743 2,405,447 Staff Training & Recruitment 1,727,764 1,649,335 Sundry Balances Written off / (Written Back) (Net) (3,244,144) 1,203,794 Traveling and Conveyance 14,449,349 17,094,091 (Profit) / Loss on Sale/Discard of Fixed Assets 1,662,930 4,664,038 Subtotal 108,346,780 108,840,727Less: Recovered from Subsidiary Companies 11,392,007 13,152,705 Total 96,954,773 95,688,022

SCHEDULE 13 ADMINISTRATIVE EXPENSES

INTERESTTerm Loan 46,903,249 41,656,719 Working Capital 81,847,096 78,862,263 Others 18,527,797 14,421,630 Exchange Fluctuation (Gain) / Loss 14,752,753 (22,261,719)

162,030,895 112,678,893 Less :Interest Income

– From Bank (Tax Deducted at Source Rupees 621,073/- (Rupees 884,927/- )) 6,198,739 7,449,683 – From Subsidiary 7,777,500 8,257,271

Total 148,054,656 96,971,939

SCHEDULE 14 FINANCE COST

Corporate Tax 3,000,000 18,000,000 Deferred Tax 26,794,038 12,117,898 Fringe Benefit Tax – 1,800,000 Earlier Years – 557,027 Total 29,794,038 32,474,925

SCHEDULE 15 TAX EXPENSES


Notes forming part of the Accounts for the year ended March 31, 2010

1. Significant Accounting Policies:The financial statements are prepared to comply in all material aspects with the applicable accounting principles in India, the accountingStandards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956. Thesignificant accounting policies are as follows:

a) Basis of Accounting:The Financial statements are prepared in accordance with the historical cost convention.

b) Use of Estimates:The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) in India requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure ofcontingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reportingperiod. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in currentand future periods.

c) Fixed Assets / Capital Work-in-Progress:Expenditure, which is of capital nature, is capitalized. Such expenditure includes purchase price, import duties, levies and any directattributable cost of bringing the asset to its working condition.

Capital Work-in-Progress is carried at costs, comprising direct cost related incidental expenses and interest on borrowings thereagainst.

d) Depreciation / Amortisation:Tangibles:Depreciation on fixed assets is provided on straight-line method in accordance with the rates specified in Schedule XIV of theCompanies Act, 1956.

Capital Expenditure/ Improvements incurred on Rented Premises are written off over a period of three years.

Intangibles:These are amortized over their useful life, not exceeding five years.

e) Investments:Investments are stated at ‘cost’. A Provision for diminution is made to recognize a decline, other than temporary, in the value oflong term investments.

An investment in the shares of Subsidiary Companies outside India is stated at cost by converting at the rate of exchange at thetime of their acquisition.

f) Valuation of Inventories:Materials, Stores and Spares valued at cost on First In First Out Basis.

Work-in-Progress, Finished goods and trading goods are valued at cost or realizable value whichever is lower.

Goods-in-transit are valued at cost. In respect of goods undergoing customs clearance, no provision has been made for the customsduty liability. However, this practice does not have any impact on the profit for the period.

g) Foreign Exchange Fluctuations :Transactions in Foreign currency are recorded at the Exchange rate prevailing on the date of transaction. Monetary assets andliabilities relating to foreign currency transactions remaining unsettled at the end of the year are translated at the year-end rates.The differences in translation of monetary assets and liabilities and realized gains and losses on foreign exchange transactions arerecognized in the Profit and Loss account.

h) Revenue Recognition:Sales are recognized when goods are supplied in accordance with the terms of sale and are recorded net of trade discounts, rebatesand sales tax. Income from services is accrued as per terms of relevant agreement.

Income and Expenditure are accounted on an accrual basis. Dividend income is recognized when the right to receive dividend isestablished

SCHEDULE 16



SCHEDULE 16

Amount received from the customers for admitting them as member of Company’s various schemes are credited to revenue accountin the year in which membership is allotted.

i) Retirement Benefits:i. Contribution to defined contribution schemes such as Provident Fund and Employer’s Pension scheme is charged to the Profit

and Loss Account.

ii. Payments to the employees’ Gratuity Trust Fund, after taking into account the funds available with the trustees of the GratuityFund, is based on actuarial valuation carried out at the end of the year.

iii. Provision for leave encashment has been accrued and provided for at the end of the financial year, on the basis of actuarialvaluation.

j) Taxation :i. Provision for Income Tax is made under the liability method after availing exemptions and deductions at the rates applicable

under the Income Tax Act, 1961.

ii. Deferred tax resulting from timing difference between book and tax profits is accounted for using the tax rates and laws thathas been enacted as of the balance sheet date.

iii. Deferred tax assets arising on the temporary timing differences are recognized only if, there is reasonable certainty of realization.

k) Impairment of Assets:The carrying amount of assets is reviewed periodically for any indication of impairment based on internal/external factors. Animpairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amountis the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows arediscounted to their present value at the weighted average cost of capital. Post impairment, depreciation is provided on the revisedcarrying value of the asset over its remaining useful life.

l) Borrowing Costs Interest and other costs in connection with the borrowing of the funds to the extent related / attributed to the acquisition / constructionof qualifying fixed assets are capitalized upto the date when such assets are ready for its intended use and other borrowing costsare charged to the Profit & Loss Account.

m) Provisions for contingencies:A provision is recognized when:i. The Company has a present obligation as a result of a past event;

ii. It is probable that an outflow of resources embodying economic benefits which will be required to settle the obligation; and

iii. A reliable estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probablywill not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflowof resources is remote, no provision or disclosure is made.

The Company provides for warranty cost based on a technical estimate of the costs required to be incurred for repairs, replacement,material cost, servicing and past experience in respect of warranty costs. It is expected that this expenditure will be incurred overthe contractual warranty period.

n) Accounting of Lease: i. Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified

as operating leases. Operating lease payments are recognized as an expense in the profit and loss account on a straight-linebasis over the lease term unless there is another systematic basis which is more representative of the time pattern of theLease.

ii. Assets given under operating leases are included in Fixed Assets. Lease income is recognized in the Profit and Loss Accounton Straight Line Basis over the lease term, unless there is another systematic basis which is more representative of the timepattern of the Lease.



SCHEDULE 16

o) Accounting of Employee Stock Option Scheme:In respect of options granted during any accounting period, intrinsic value (excess of market price of share over the exercise priceor the option) is treated as employee compensation in the financial statements of the company which is amortized on a straight-line basis over the vesting period.

2. Contingent liabilities not provided for in respect of: (Amount in Rs.)Particulars March 31, 2010 March 31, 2009

a. Letters of Credit by Bank 12,793,493 44,080,084 b. Guarantees issued by Bank (Gross) 115,307,573 66,855,016c. Corporate Guarantee and Indemnities 2,363,025,700 1,771,373,400

Facility Not availed / Not Utilised Rs. 886,000,000 (Rs. 680,000,000)d. Estimated amount of contracts remaining to be executed on capital account

and not provided for (net of advances) NIL NILe. Sales Tax Matters 823,601 823,601f. In respect of Borrowing by Employees, where Company is co-applicant NIL 304,725g. Claim Lodged by Customers Not Acknowledged as Debt 653,365 698,990


A. Remuneration to Managing DirectorSalaries 5,019,000 6,918,600Commission on profit NIL NILPerquisites 15,000 15,000Retirement Benefit 9,360 9,360

5,043,360 6,942,960B. Remuneration to Non-executive Director (as per approval of Central Government) 3,626,340 4,697,201C. Directors Sitting Fees 446,000 450,000D. Computation of Net Profit in accordance with section 349 of

the Companies Act, 1956Profit Before Tax 90,331,008 131,061,185 Add: Managerial Remuneration 8,669,700 11,640,161Directors Sitting Fees 446,000 450,000(Profit) / Loss on Sale/Discard of Fixed Assets 1,662,930 4,664,038Sundry Balance Written Off NIL 1,203,836 Net Profit as per Section 349 of the Companies Act, 1956 101,109,638 149,019,220Commission payable to Managing Director @ 2% of 2,022,193 2,980,384the Net Profit as calculated above Restricted to NIL NIL

3. Managerial Remuneration


Audit fees 575,000 475,000Corporate Governance and Other Certification Matters 152,500 139,000Out of pocket expenses 695 976

4. Payments to Auditors: (Net of Service Tax)



SCHEDULE 16


Closing Balance HSBC Bank PLC, London 151,462 172,177Citibank N.A., Singapore 70,902 80,600 Maximum Balance HSBC Bank PLC, London 151,462 172,177Citibank N. A., Singapore 70,902 80,600

5. Balance with non schedule bank is as under:


Employer’s Contribution to Provident Fund 311,572 356,865Employer’s Contribution to Pension Fund 708,606 808,204


Gratuity Leave Gratuity Leave Encashment Encashment

I. Change in Defined Benefit Obligation (D.B.O)Opening Defined Benefit Obligation 2,297,048 957,343 1,327,660 3,350,336Service cost for the Year 488,560 393,255 506,750 396,315Interest cost for the year on opening DBO 166,396 44,745 99,437 215,498Actuarial Losses (gains) (363,297) 266,920 366,875 (2,050,753)Benefit Paid (156,870) (721,482) (3,674) (954,053)Closing defined benefit Obligation 2,431,837 940,781 2,297,048 957,343

II. Fair Value of Plan AssetOpening fair value of plan assets 2,415,295 NIL 1,681,819 NILExpected return on Plan Assets 210,300 NIL 178,300 NILActuarial gains (losses) 934 NIL (43,772) NILContribution by employer NIL 721,482 602,622 954,053Benefit Paid (156,870) (721,482) (3,674) (954,053)Closing balance of fair value of plan assets 2,469,659 NIL 2,415,295 NIL

III. Actual Return on Plan AssetExpected return on Plan Assets 210,300 NIL 178,300 NILActuarial gains (losses) 934 NIL (43,772) NILActual Return on Plan Asset 211,234 NIL 134,528 NIL

IV. Amount recognized in Balance SheetLiability at the end of Year 2,431,837 940,781 2,297,048 957,343Fair Value of Plan Assets at the end of the Year 2,469,659 NIL 2,415,295 NILDifference 37,822 NIL 118,247 NILFunded status 37,822 (940,781) 118,247 (957,343)Amount recognized in Balance Sheet ## (940,781) ## (957,343)

6. Unsecured loans are secured by personal guarantee of one of the directors of the Company.

7. Disclosure pursuant to Accounting Standard – 15 (revised) ‘Employee Benefits’: Defined Contribution Plans

Defined Benefit PlansAmount of Rs. 80,425 (Rs. 838,534) in respect of Gratuity and Rs. 704,920 (Rs. -1,438,940) in respect of leave is recognized asexpense and included in Employee Cost (Schedule No. 12) in the Profit and Loss Account

(Amount in Rs.)



SCHEDULE 16

General Description of significant defined plansI. Gratuity Plan

Gratuity is payable to all eligible employees on the completion of five years of service in the event of resignation, retirement,permanent disablement or death.

II. Leave PlanEligible employees can carry forward the leaves as per the leave policy of the Company and is payable at separation on accountof retirement, permanent disablement or death.

Broad Category of plan assets relating to Gratuity as a percentage of total plan assets


Gratuity Leave Gratuity Leave Encashment Encashment

V. Amount recognized in Income StatementCurrent Service Cost 488,560 393,255 506,750 396,315Interest on Obligation 166,396 44,745 99,437 215,498Expected return on Plan Assets (210,300) NIL (178,300) NILNet actuarial losses (gains) recognized (364,231) 266,920 410647 (2,050,753)Expenses recognized in Profit and Loss 80,425 704,920 838,534 (1,438,940)

VI. Balance Sheet ReconciliationOpening Net Liability (118,247) 957,343 (354,159) 3,350,336Expenses as Above 80,425 704,920 838,534 (1,438,940)Employee Contribution NIL (721,482) (602,622) (954,053)Amount recognized in Balance Sheet ## 940,781 (118,247) 957,343

VII. Actuarial Assumptions: for the YearDiscount Rate as on March 31, 8.00% 8.00% 7. 50% 7. 50%Withdrawal Rates 0.80% 0.80% 0.80% 0.80%Expected Rate of Return on Plan AssetsAnnual Increase in Salary Cost 4.00% 4.00% 4.00% 4.00%

## - Conservatively, no Asset has been recognized in the Balance Sheet.

Defined Benefit Plans (Contd.)


Government of India Securities NIL NILHigh Quality Corporate bonds NIL NILEquity Shares of Listed Companies NIL NILProperty NIL NILPolicy of Insurance 100 % 100 %Total 100 % 100 %

8. Discontinuing OperationsAs per Business Transfer Arrangement dated March 5, 2010 entered with Schneider Electric India Private Limited (SE), the companyhas transferred assets and liabilities of Electronic Security Systems business of the company comprising of its two division BuildingSolution Group and Special Project Group Business to SE with effect from April 30, 2010, as approved by the shareholder of theCompany through postal ballot as per section 192A of the Companies Act, 1956 read with the Companies (Passing of Resolution bythe postal ballot) Rules 2001. This transfer excludes the retail business, business of Central Monitoring Station and Video MonitoringStation and right to continue the business of fire detection and suppression on a stand alone basis.

Information pursuant to the Discontinuing operations in accordance with “AS 24 – Discontinuing Operations” issued by the Instituteof Chartered Accountants of India is as follows:

The carrying amount as total Assets and total Liabilities relating to the discontinuing operation held for disposal as on March 31, 2010Rs. 7,594 Lacs and Rs. 10,680 Lacs respectively.

(Amount in Rs.)



SCHEDULE 16

9. During the year the company has set up manufacturing facility at Parwanoo Specially Exempted Area under General notification byCentral Government in Himachal Pradesh to manufacture various parts and components of security products, Equipment and systems.

10. The Company has an Equity Investment of Rs. 4,101 Lacs (Previous Year Rs. 4,101 Lacs) in its wholly owned subsidiary ZicomRetail Products Private Limited and has also advanced unsecured loan amounting to Rs. 7,022 Lacs (Rs. 1,092 Lacs) as on March31, 2010. Said Subsidiary Company has accumulated losses of Rs. 1,915 Lacs (including Loss of Rs. 123 Lacs in current year). Themanagement is confident of generating greater business and improving profitability by the retail expansion and creation of RetailElectronic Security Brand. Accordingly management considers such diminution to be temporary in nature and hence no provision isrequired for diminution in the value of investments and in respect of Unsecured Loan.

11. Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from October 2, 2006, certaindisclosures are required to be made relating to Micro, Small & Medium Enterprises. The Company is in the process of compiling relevantinformation from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, nodisclosures have been made in the accounts. However, in view of the management, the impact of interest, if any, that may be payablein accordance with the provisions of this Act is not expected to be material.

12. Lease:Disclosure as required by “Accounting Standard 19 Leases“ issued by The Institute of Chartered Accountants of India are as follows:

Operating Lease:The Company’s significant leasing arrangements are in respect of office premises and residential flats taken on lease. The arrangementsare generally from 11 month to 36 month. Under these agreements, generally refundable interest-free deposits have been given. Inrespect of above arrangements, lease rentals payable are recognized in the Profit and Loss Account for the year and included underRent and Compensation (Disclosed under Schedule 13).


Gross Revenue 2,435,220,677 1,939,984,276Total Expenditure 2,299,046,038 1,785,399,689Profit Before Tax 136,174,639 154,584,587Tax Expenses 44,914,725 38,303,646Profit after Tax 91,259,914 116,280,941

The Profit (Loss) attributable to Discontinuing business is as follows:


Cash Generated from Activity:Operating 266,965,186 116,908,421Investing 5,706,511 3,808,585Financing (54,769,114) 147,642,964Net Cash Inflows / Out Flows 217,902,583 268,359,970

The above disclosure relating to discontinuing operation is given to the extent information available.

The net cash flow attributable to Discontinuing business is as follows:


Not later than one year 22,675,038 22,476,463Later than one year and not later than five years 877,500 21,937,500 Later than five years NIL NILLease Payment made during the year recognized in the statement of profit and loss account 29,695,647 28,671,644

Future minimum lease payments under non cancellable operating lease:

(Amount in Rs.)

(Amount in Rs.)



SCHEDULE 16

14. Related Party Disclosure:Information in accordance with the requirements of Accounting Standard 18 on Related Party Disclosures issued by the Institute ofChartered Accountants of India:

A. Related Parties with whom transactions have taken place:i. Key Management Personnel:

Mr. Manohar BidayeMr. Pramoud Rao

ii. Subsidiary Companies:Unisafe Fire Protection Specialists LLC, Dubai (subsidiary by virtue of control of the composition of Board)Zicom Manufacturing Co. (HK) LimitedZicom Retail Products Pvt. LimitedZicom CNA Automation Limited (with effect from November 26, 2008)

iii. Companies in which company or its directors / relatives of director have substantial interest:Baronet Properties and Investments Private LimitedCoronet Properties and Investments Private Limited Institute of Advanced Security Training & Management Private Limited (w.e.f. June 30, 2009)

Particulars Year ended Year endedMarch 31, 2010 March 31, 2009

A. Net Profit for Basic 60,536,970 98,586,302Diluted 60,536,970 98,586,302

B. Weighted Average No. of Equity SharesBasic 12,699,829 12,699,829Diluted 12,722,746 12,699,829

C. Earning Per shareBasic 4.77 7.76Diluted 4.76 7.76

13. Earnings Per Share (EPS): Equity Shares of Rupees 10/- fully paid up

B. Transactions during the year with Related Parties mentioned above:Key Management Personnel

Remuneration Paid – As disclosed in Note No. 3. A & 3. B of Schedule 16Personal Guarantee given by one of the directors for unsecured loan taken by the company

(Amount in Rs.)Particulars March 31, 2010 March 31, 2009

Investment in Shares 26,032,067 160,200,000 Advance recoverable in Cash or Kind (Net) 556,040,267 237,757,398Interest charged on loan 7,777,500 8,257,271 Purchase (excluding Taxes) 1,691,185 7,306,281Sale (excluding Taxes) 8,153,132 21,573,026Corporate Guarantee 635,100,000 1,439,750,000Common Overheads Allocated / Expenses Re-Charged (excluding Taxes) 33,686,921 32,436,491

Subsidiary Companies

Companies in which company or its directors / relatives of director have substantial interest:Forfeitures of Warrant application money Rupees 42,000,000/- (Rupees NIL)Investment in Shares Rs. 1,200,000/- (Rs. NIL) Advance recoverable in cash or kind Rs. 7,236,403 (Rs. NIL)

(Amount in Rs.)



SCHEDULE 16

(Amount in Rs.)Particulars Transaction Type March 31, 2010 March 31, 2009

Key Management Personnel Personal Guarantee 386,301,321 NILAdvance Recoverable 390,000 NIL

Subsidiary Companies Loans (including Interest) 773,844,398 210,026,631Purchase 6,837,292 4,241,426

Companies in which company or its directors / Advance recoverable in 7,236,403 NILrelatives of director have substantial interest. cash or kind

C. Balance with Related Parties:

Name of the Company As at Maximum As at Maximum March 31, 2010 Balance for the year March 31, 2009 Balance for the year

ended on ended on

March 31, 2010 March 31, 2009

Zicom Retail Products Private Limited 702,166,898 702,166,898 109,222,943 382,815,667 Unisafe Fire Protection Specialists LLC, Dubai 68,777,500 113,004,651 100,803,688 100,803,688Zicom CNA Automation Limited 2,900,000 2,900,000 NIL NIL

15. Loans and Advance in the nature of Loans given to subsidiaries:

16. Segment Reporting: The Company has only one reportable segment namely “Security Systems and Automation”.

17. Details of uncovered foreign currency exposures:

18. Employee Stock Option Scheme (ESOS)In accordance with two ESOS schemes viz. ESOS 2006 and ESOS 2007 of the Company, the employees of the Company and theemployees of the subsidiaries have been offered options as per respective eligible criteria fixed under the aforesaid schemes. Againsteach of the above options, eligible employee is entitled to acquire one equity share of Rupees 10/- of the company at a price mentionedagainst each series of option. Against each option 40% can be exercised by the end of first year from the date of grant of option, 30%can be exercised at the end of second year from the date of grant of the options and balance 30% can be exercised at the end of thirdyear from the date of grant of the options.

Particulars Currency March 31, 2010 March 31, 2009

Trade Receivable & Deposits USD 52,232 791,323AED 5,637,500 7,288,769Euro 1,598 NIL

Trade Payable USD 259,064 308,244

ESOS Scheme 2006

Summary as on March 31, 2010 Grant V Grant VI

Exercise Price 85.00 86.15Options outstanding at the beginning of the year 103,000 NILGranted during the year NIL 10,000Exercised during the year NIL NILForfeited/ Surrendered/Lapsed during the year 18,000 10,000Outstanding at the end of the year 85,000 NIL



SCHEDULE 16

ESOS Scheme 2007 (issued to employees of subsidiary companies)

Summary as on March 31, 2010 Grant I

Exercise Price 85.00Options outstanding at the beginning of the year 98,000Granted during the year NILExercised during the year NILForfeited/ Surrendered/Lapsed during the year 65,000Outstanding at the end of the year 33,000

19. Additional information pursuant to the provisions of the Companies Act, 1956.(i) Licensed and Installed Capacities and Actual Production:

Description Units Licensed Capacity Installed Capacity Actual Production

Electronic Component Nos. Not Applicable 21,000 990(NA) (NA)

(ii) Turnover:

Description Qty March 31, 2010 March 31, 2009

A. Electronic Security Systems /Equipment (includes Access * 988,695,107 882,548,752

Control Systems and Software, C. C. T. V., Fire Alarm,

Intrusion, Smart Cards, Electronic Article Surveillance etc)

B. Electronic Equipments, Components, Software and Accessories * 1,347,781,905 967,851,015

C. Software Services # 11,400,000 16,550,000

D. Service Income # 99,807,965 85,584,829

* Due to various equipments, components /accessories involved therein, quantities are not practically determinable.

# In respect of development and maintenance of software, the production and sale cannot be expressed in any generic unit,

and hence it is not practicable to give quantitative information.

* Due to various components / accessories involved therein, quantities are not practically determinable.

# Material consumption includes Foreign Exchange Fluctuation Gain of Rupees 2,492,478/- (Previous Year Rupees 1,681,670/-)

(iii) Purchases of Trading Goods:

Description Unit Quantity Value (Rupees)

Electronic Equipments, Component and Accessories Nos. 20,166 1,220,213,331(9,843) (1,094,075,740)

(iv) Materials consumed:

Description Quantity Value (Rupees)

Electronic Security Systems /Equipment (includes Access Control Systems and * 670,119,384#Software, C. C. T. V., Fire Alarm, Intrusion, Smart Cards, Electronic Article Surveillance etc) (545,032,812)

(Amount in Rs.)



SCHEDULE 16

(v) Consumption of materials, components and spare parts and its percentage to total:

23. Previous Year’s figures have been regrouped and re-arranged, wherever necessary.

24. Balances of Sundry Debtors, Sundry Creditors, Loans and Advances and Others are as per books and subject to confirmations andreconciliation, if any.

Year Ended March 31, 2010 March 31, 2009

Value (Rupees) Percentage Value (Rupees) Percentage

Material

Imported 93,085,502 14% 133,197,246 24%

Indigenous 577,033,882 86% 411,835,565 76%

Spare Parts

Imported NIL NIL NIL NIL

Indigenous NIL NIL NIL NIL

(Amount in Rs.)


20. Value of Imports on C.I.F. basis:

Materials and Finished goods 61,553,794 150,877,364

21. Earnings in Foreign Currency:

Export / Merchandise Trade Sales 23,170,282 154,880

Services 18,112,033 NIL

Interest 7,777,500 8,257,271

22. Expenditure in Foreign Currency:

(On payment basis)

Travelling 147,176 743,676

Bank Charges 4,360 15,556





Balance Sheet abstract and Company’s General Business Profile


Manohar Bidaye Pramoud Rao Mukul DesaiChairman Managing Director Director

Achyut Godbole Dr. B. Samal Vijay KalantriDirector Director Director

Hemendra Paliwal Kunjan TrivediMumbai, August 14, 2010 Chief Financial Officer Company Secretary

I. Registration Details

Registration No. 8 3 3 9 1

II. Capital Raised during the year (Amount in Thousand)

Public Issue N I L Right Issue N I L

III. Position of mobilization and Deployment of Funds (Amount in Thousand)

Total Liabilities 2 7 8 7 3 2 5 Total Assets 2 7 8 7 3 2 5

Bonus Issue N I L Private Placement N I L

Sources of Funds

Paid-up capital 1 2 6 9 9 8 Reserves & Surplus 9 9 5 8 9 8

Secured Loans 8 8 2 7 0 3

Deferred tax liability 4 5 3 5 4

Unsecured loans 3 8 6 3 0 1

IV. Performance of Company (Amount in Thousand)

Turnover 2 4 4 8 4 4 1

V. Generic Names of Three Principal Products/Services of the Company (as per Monetary terms)

Product Description Item Code No. (ITC Code)

8 5 3 7 . 1 0Control Panel & Switcher

8 5 2 5 . 3 0Cameras

9 0 3 1 . 9 0Access Readers

Total Expenditure 2 3 5 8 1 1 0

Profit before tax 9 0 3 3 1

Earning per share 4 . 7 7 Dividend Rate % 5 0 %

Profit / (Loss) after tax 6 0 5 3 7

Application of Funds

Net Fixed Assets 4 0 2 4 0 8 Investments 6 0 2 1 9 2

Net Current Assets 1 4 3 2 6 5 6 Misc. Expenditure N I L

State Code(Refer code list)

1 1

Balance Sheet Date March 31, 2010


Auditors’ Report on Consolidated Financial Statements

We have audited the attached Consolidated Balance Sheet of Zicom

Electronic Security Systems Limited, its subsidiaries Zicom

Manufacturing Co. (HK) Limited, Zicom Retail Products Private

Limited, Unisafe Fire Protection Specialists LLC, Dubai

(Consolidated) and Zicom CNA Automation Limited as at March 31,

2010, the Consolidated Profit and Loss Account and the

Consolidated Cash Flow Statement for the year ended on that date.

These financial statements are the responsibility of the Company's

management. Our responsibility is to express an opinion on these

financial statements based on our audit.

We conducted our audit in accordance with the auditing standards

generally accepted in India. Those standards require that 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 financial reporting framework and are

free of material misstatements. An audit 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, as well as evaluating the overall financial statement

presentation. We believe that our audit provides a reasonable basis

for our opinion.

The financial statements of the subsidiary companies, Zicom

Manufacturing Co. (HK) Limited, Unisafe Fire Protection Specialists

LLC, Dubai (Consolidated) and Zicom CNA Automation Limited for

the year ended March 31, 2010, have been audited by other

auditors whose reports have been furnished to us and whose

financial statements reflect total assets (net) of Rupees

592,859,837 and cash flows of Rupees 64,367,040. The

Company’s share of net worth with respect to said subsidiary

companies as at March 31, 2010 and profit for the year ended

March 31, 2010 is Rupees 367,839,054 and Rupees

118,490,964 respectively. The financial statement and other

financial information of the above subsidiaries have been audited by

other auditors whose reports have been furnished to us, and our

opinion, in so far as it relates to the amounts included in respect of

the subsidiaries is based solely on the report of those auditors.

We report that the Consolidated Financial Statements have been

prepared by the Company in accordance with the requirements of

Accounting Standard 21, “Consolidated Financial Statements”

notified by the Companies (Accounting Standards) Rules, 2006, on

the basis of separate audited financial statements of Zicom

Electronic Security Systems Limited and its Subsidiary Companies

included in the Consolidated Financial Statements.

On the basis of information and explanations given to us and on the

consideration of the separate audit reports of other auditors on

individual audited financial statements of the Company and its

aforesaid subsidiaries, we are of opinion that said consolidated

financial statements read with the notes thereon, give a true and

fair view in conformity with the accounting principles generally

accepted in India;

1) in the case of the Consolidated Balance Sheet, of the state of

affairs of Zicom Electronic Security Systems Limited and it’s

subsidiaries as at March 31, 2010;

2) in the case of Consolidated Profit and Loss Account, of the profit

for the year ended on that date; and

3) in the case of Consolidated Cash Flow Statement, of the cash

flows for the year ended on that date.




To the Board of Directors of Zicom Electronic Security Systems Limited


Consolidated Balance Sheet as at March 31, 2010




(Amount in Rs.)Particulars Schedule March 31, 2010 March 31, 2009SOURCES OF FUNDSShareholders’ FundsShare Capital 1 126,998,290 126,998,290 Share Warrants 1A – 73,500,000 Reserves and Surplus 2 1,102,981,424 991,238,373

1,229,979,714 1,191,736,663 Loan FundsSecured Loans 3 1,854,583,070 1,620,101,717 Unsecured Loans 4 386,301,321 40,678,746

2,240,884,391 1,660,780,463Minority Interest 118,388,587 76,047,826 Total 3,589,252,692 2,928,564,952APPLICATION OF FUNDSFixed Assets 5 Gross Block 1,090,786,161 898,801,672 Depreciation 307,670,037 204,522,961 Net Block 783,116,124 694,278,711 Capital Work-in-Progress 145,250,000 540,000

928,366,124 694,818,711 Investments 6 7,200,000 6,000,000 Deferred Tax Assets 7 68,906,659 75,594,281 Current Assets, Loans and Advances 8 Inventories 531,756,469 720,824,046 Sundry Debtors 1,832,940,916 1,330,026,665 Cash and Bank Balances 339,698,578 384,486,214Loans and Advances 604,874,896 420,717,795

3,309,270,859 2,856,054,720 Current Liabilities and Provisions 9 Liabilities 650,445,391 693,502,045 Provisions 74,045,559 10,400,715

724,490,950 703,902,760 Net Current Assets 2,584,779,909 2,152,151,960 Total 3,589,252,692 2,928,564,952Notes forming part of the Accounts 16


Consolidated Profit and Loss Account for the year ended March 31, 2010




(Amount in Rs.)Particulars Schedule March 31, 2010 March 31, 2009INCOMESales & Services 5,279,705,769 3,757,552,335 Other Income 10 6,162,177 7,044,839 Total 5,285,867,946 3,764,597,174EXPENDITUREMaterials 11 4,125,871,225 2,661,921,892 Employee Cost 12 300,441,558 308,976,043 Administrative Expenses 13 314,445,976 281,465,034 Finance Cost 14 235,924,743 163,615,716 Depreciation 121,748,121 108,398,415 Total 5,098,431,623 3,524,377,100Profit Before Tax 187,436,323 240,220,074Profit (Loss) from Continuing Operation 51,261,684 85,635,487Tax Expenses 15 (35,227,103) (20,959,805)Profit (Loss) After Tax Continuing Operation 86,488,787 106,595,292Profit Before Tax from Discontinuing Operation 136,174,639 154,584,587 Tax Expense 15 44,914,725 38,303,646 Profit After Tax from Discontinuing Operation 91,259,914 116,280,941 Net Profit after Tax 177,748,701 222,876,233 Less : Minority Interest (27,458,822) (29,353,846)Less : Pre Acquisition Profit Adjusted towards Goodwill – 2,374,533 Profit for the Year 150,289,879 195,896,920Balance brought forward from previous year 340,189,792 161,307,273 Profit Available for Appropriations 490,479,671 357,204,193APPROPRIATIONSTransfer to General Reserve 6,100,000 – Transfer to Legal Reserve 3,223,850 6,613,686 Provision for Dividend 63,499,145 8,889,880 Provision for Tax on Dividend 10,546,414 1,510,835 Balance carried to Balance Sheet 407,110,262 340,189,792Basic Earnings Per Share of Rupees 10/- each 11.83 15.43 Diluted Earnings Per Share of Rupees 10/- each 11.81 15.43 Notes forming part of the Accounts 16


Consolidated Cash Flow Statement for the year ended March 31, 2010




(Amount in Rs.)Particulars March 31, 2010 March 31, 2009A. CASH FLOW FROM OPERATING ACTIVITIES

NET PROFIT BEFORE TAX 187,436,323 240,220,074 Depreciation 121,748,121 108,398,415 Finance Cost 235,924,743 163,615,716Employee Stock Compensation – (3,539,573)Sundry Balance Written off (4,990,766) 10,566,029 Provision for Doubtful Debt 75,080,240 –Loss on Discard of Assets 3,509,687 18,739,039 Operating Profit Before Working Capital Changes 618,708,348 537,999,700 (Increase)/Decrease in Trade and Other Receivable (749,842,809) (641,501,797)(Increase)/Decrease in Inventories 189,067,577 (482,580,501)Increase/(Decrease) in Trade Payable (43,056,654) 209,436,294Cash Generated from Operations 14,876,462 (376,646,304)Direct Taxes (10,318,018) (27,502,289)Net Cash Flow from Operating Activities 4,558,444 (404,148,593)

B. CASH FLOW FROM INVESTING ACTIVITIES Acquisition of Fixed Assets (215,104,778) (190,483,809)Sale of Fixed Assets (143,700,442) –Investments (1,200,000) (6,000,000)Interest Received 5,812,336 7,515,905 Net Cash Flow from Investment Activities (354,192,884) (188,967,904)

C. CASH FLOW FROM FINANCING ACTIVITIES Minority Interest in Subsidiary Companies 14,881,939 19,609,315 Foreign Currency Translation Reserve (38,001,269) 25,103,069 Increase in Secured and unsecured Loans 580,103,928 1,010,631,864 Fluctuation Gain (14,758,948) 22,261,719 Interest Paid (226,978,131) (193,393,340)Dividend & Dividend Tax Paid (10,400,715) (14,858,165)Net Cash used in Financing Activities 304,846,804 869,354,462Net Increase in Cash and Cash Equivalents (44,787,637) 276,237,965Cash and Cash Equivalents (Opening Balance) 384,486,214 108,248,249Cash and Cash Equivalents (Closing Balance) 339,698,578 384,486,214


Schedules forming part of the Consolidated Accounts as at March 31, 2010(Amount in Rs.)


Authorized25,000,000 (25,000,000) Equity Shares of Rs. 10/- each 250,000,000 250,000,000 Issued, Subscribed & Paid-up 12,699,829 (12,699,829) Equity Shares of Rs. 10/- each 126,998,290 126,998,290 Total 126,998,290 126,998,290

SCHEDULE 1 SHARE CAPITAL

– 73,500,000Total – 73,500,000

SCHEDULE 1A SHARE WARRANTS

Legal ReserveAs per Last Balance Sheet 6,613,686 – Transfer During the year 3,223,850 6,613,686

9,837,536 6,613,686Securities Premium Account As per last Balance Sheet 604,516,443 604,516,443

Capital Reserve Transfer from Warrant forfeiture 73,500,000 –

Foreign Currency Translation Reserve (14,082,817) 23,918,452

General Reserve As per Last Balance Sheet 16,000,000 16,000,000 Transfer from Profit & Loss Account 6,100,000 –

22,100,000 16,000,000 Balance in Profit & Loss Account 407,110,262 340,189,792 Total 1,102,981,424 991,238,373

SCHEDULE 2 RESERVES AND SURPLUS

1) Term Loan from Bank 350,000,000 375,000,000 2) Term Loan from Bank 160,000,000 180,000,000 3) Working Capital Loan from Bank 532,703,179 421,470,453 4) Working Capital Loan from Bank 205,633,233 129,960,198 5) Working Capital Loan from Bank 606,246,658 513,671,066 Total 1,854,583,070 1,620,101,717

Notes:

A. Term loan referred in (1) above is secured by the first charge on Plant & Machinery, Office Equipment and Equitable Mortgage of Land &Building at Bandra (West), Mumbai and Office at Bangalore and second charge by way of hypothecation of entire Stock, Book Debts andcurrent assets.

B. Term loan referred in (2) above is secured by the first charge on all the fixed assets of the company and Working capital loan referred in above(4) and Letter of Credit and Bank Guarantee referred in Note no. 2 of Schedule 16 is secured by the first charge on entire current assets andan extended charge on Fixed Assets. These facilities are further secured by pledge of 725,000 Equity Shares by a promoter group company.

SCHEDULE 3 SECURED LOANS

NIL (3,675,000) Warrants (Each Warrant carries option / entitlement to subscribe to one equity share of Rs. 10/- each at a price of Rs. 200/- per share of which 2,100,000 warrants to be subscribed on or before July 16, 2009 and 1,575,000 warrants to be subscribed on or before July 30, 2009)


Schedules forming part of the Consolidated Accounts as at March 31, 2010


Bank 386,301,321 –Inter Corporate Loans – 40,678,746Total 386,301,321 40,678,746

SCHEDULE 4 UNSECURED LOANS


Trade, Long Term, Unquoted 120,000 (NIL) Share having face Value Rs. 10 Per Share in Institute of Advanced Security Training & Management Private Limited 1,200,000 – Non Trade, Long Term, Quoted 200,000 (200,000) Share having face Value INR 10 Per Share in Vintage Card & Creations Ltd. 6,000,000 6,000,000 [Market Value Rs 3,450,000 (Previous Year Rs. 2,650,000)] Total 7,200,000 6,000,000

SCHEDULE 6 INVESTMENTS (AT COST)

(Amount in Rs.)SCHEDULE 5 FIXED ASSETS

C. Working capital loan referred in (3) above and banking facilities mentioned in clauses 2(a) and 2(b) of schedule 16 are secured by the firstcharge ranking pari passu on the entire Stock, Book Debts and current assets, and second charge on Plant & Machinery, Office Equipmentand Equitable Mortgage of Land & Building at Bandra (West) Mumbai and Office at Bangalore, further secured by Term Deposit Receipt ofRs. 124 Lacs of the company.

D. Secured loan referred in (5) above is secured by charge on inventories, assignment of contract receivables from certain customers,lien on FDR held with banks, pledge of 200,000 equity shares, personal guarantees of two directors of the Company.

GROSS BLOCK DEPRECIATION NET BLOCK

Particulars As on Additions Deductions/ As on Up to For the Deductions/ Up to As at As at

April 1, 2009 Adjustment March 31, 2010 March 31, 2009 Year Adjustment March 31, 2010 March 31, 2010 March 31, 2009

Tangible

Land - Freehold 16,982,508 – – 16,982,508 – – – – 16,982,508 16,982,508

Buildings 28,295,174 – – 28,295,174 4,870,192 613,647 – 5,483,839 22,811,335 23,424,982

Plant & Machinery 464,847,990 200,812,024 – 665,660,014 74,965,583 62,781,957 – 137,747,540 527,912,474 389,882,407

Office Equipments 76,882,623 3,204,076 – 80,086,699 15,066,306 8,865,712 – 23,932,018 56,154,681 61,816,317

Vehicles 19,589,565 7,862,900 3,294,000 24,158,465 10,742,732 3,188,876 3,249,189 10,682,419 13,476,046 8,846,833

Furniture and Fixtures 127,426,332 3,225,778 19,826,289 110,825,821 66,261,464 29,820,181 15,351,856 80,729,789 30,096,032 61,164,868

Intangible

Goodwill on 164,777,480 – – 164,777,480 32,616,684 16,477,748 – 49,094,432 115,683,048 132,160,796

Consolidation as per

AS – 21

Total 898,801,672 215,104,778 23,120,289 1,090,786,161 204,522,961 121,748,121 18,601,045 307,670,037 783,116,124 694,278,711

Previous Year 780,147,086 193,094,592 74,440,006 898,801,672 151,825,513 108,398,415 55,700,967 204,522,961 694,278,711 628,321,573


Schedules forming part of the Consolidated Accounts as at March 31, 2010

A: CURRENT ASSETS Inventories (As taken, valued and certified by Management) Materials 392,429,513 525,441,506 Work-in-progress 139,326,956 195,382,540 Total 531,756,469 720,824,046Sundry Debtors Unsecured and considered good : Debts outstanding over six months 479,528,269 236,958,126 Other Debts 1,446,704,823 1,115,902,242 Total 1,926,233,092 1,352,860,368Provision for Doubtful Debts (93,292,176) (22,833,703)Total 1,832,940,916 1,330,026,665Cash and Bank Balances: Cash in hand 3,152,055 2,466,777 Balance with Scheduled Banks: In Current Accounts (including Cheque in Hand Rs. NIL (Rs. 1,495 Lacs)) 24,743,668 154,394,368 In Fixed Deposit Receipts including Margin Money 115,589,294 96,479,480 Balance with Other Banks: Current Account 99,557,630 70,887,654 In Fixed Deposit Receipts 96,655,931 60,257,935 Total 339,698,578 384,486,214B : LOANS AND ADVANCES Unsecured and Considered Good: Advances recoverable in cash or in kind or for value to be received 355,175,750 349,148,661 Advance to suppliers 180,072,537 21,589,863 Other Deposits 69,626,609 49,979,271 Total 604,874,896 420,717,795Total 3,309,270,859 2,856,054,720

SCHEDULE 8 CURRENT ASSETS, LOANS & ADVANCES


Arising on account of Timing Difference in – Depreciation (44,104,257) (37,724,441)– Losses 99,731,862 113,318,722 – Expenses 13,279,054 –Total 68,906,659 75,594,281

SCHEDULE 7 DEFERRED TAX ASSETS/(LIABILITIES)


Schedules forming part of the Consolidated Accounts for the year ended March 31, 2010

Schedules forming part of the Consolidated Accounts as at March 31, 2010(Amount in Rs.)


A: CURRENT LIABILITIES Sundry Creditors :

– Micro Small & Medium Enterprises – –– Others 433,658,703 304,416,030

Book Overdraft – 214,719,167 Other Liabilities 84,111,254 101,675,910 Taxation net of Payments (1,300,363) 6,306,467 Advances from customers 127,436,336 51,519,657 Deposit and others 5,149,211 13,511,646 Investor Education & Protection fund shall be credited by following amount when due Unclaimed Dividend 1,390,250 1,353,168

650,445,391 693,502,045B: PROVISIONS Dividend and Tax thereon 74,045,559 10,400,715

74,045,559 10,400,715 Total 724,490,950 703,902,760

SCHEDULE 9 CURRENT LIABILITIES & PROVISIONS

Opening StockMaterials 368,415,852 171,469,591 Work-in-Progress 17,623,641 64,366,841 Material in Transit – 3,092,253 Total 386,039,493 238,928,686PurchasesMaterial consumed 1,347,767,297 657,843,569 Purchase of Materials and Related Expenses 2,798,302,936 2,151,189,130 Total 4,146,070,233 2,809,032,699Closing StockMaterials 392,429,513 368,415,852 Work-in-progress 13,808,988 17,623,641 Total 406,238,501 386,039,493

4,125,871,225 2,661,921,892

SCHEDULE 11 MATERIALS


Rent Income [Tax Deducted at Source Rs. Nil (Rs. 793,100)] – 3,500,000 Miscellaneous Income 6,162,177 3,544,839 Total 6,162,177 7,044,839

SCHEDULE 10 OTHER INCOME


Schedules forming part of the Consolidated Accounts for the year ended March 31, 2010(Amount in Rs.)


Employees Remuneration and Benefits :Salaries, Wages and Bonus 294,953,092 304,196,050 Contribution to Provident and Other Funds 1,796,372 3,696,666 Employee Stock Compensation /(Written Back) – (3,539,573)Workmen & Staff Welfare Expenses 3,692,094 4,622,900 Total 300,441,558 308,976,043

SCHEDULE 12 EMPLOYEES COST

Advertisement Expenses 29,342,633 32,411,712 Auditor's Remuneration 1,740,159 1,581,247 Bank Charges, Guarantee Commission etc. 10,671,164 10,919,655 Commission & Brokerage 2,247,947 2,140,749 Directors' Sitting Fees 446,000 450,000 Donation 59,151 85,500 Freight & Forwarding 2,315,445 825,372 Insurance Charges 10,942,281 6,596,259 Legal and Professional Fees 34,732,059 27,244,424 Membership & Subscription 104,376 144,386 Miscellaneous Expenses 15,850,672 12,328,793 Postage, Telephone and Telex 11,174,934 14,703,223 Power and Fuel 10,863,191 10,282,910 Printing & Stationery 4,506,961 5,450,849 Rates and Taxes 8,620,239 9,634,557 Rent and Compensation 58,917,765 70,718,244 Repairs and Maintenance - Building 286,815 680,021 Repairs and Maintenance - Plant & Machinery 802,564 943,355 Repairs and Maintenance - Others 2,549,979 3,875,920 Sales Promotion Expenses 1,984,402 3,957,813 Staff Training & Recruitment 3,261,896 2,657,735 Sundry Balances Written off / (Written Back) (Net) (4,990,766) (874,137)Provision for Doubtful Debt 75,080,240 11,440,166 Traveling and Conveyance 28,240,107 34,493,104 (Profit) / Loss on Sale/Discard of Fixed Assets 3,509,687 18,739,039 Preliminary Expenses Written Off – 34,138 Overheads allocated by Holding Company 1,186,075 –Total 314,445,976 281,465,034

SCHEDULE 13 ADMINISTRATIVE EXPENSES


Schedules forming part of the Consolidated Accounts for the year ended March 31, 2010

Notes forming part of the Consolidated Accounts for the year ended March 31, 2010


INTERESTTerm Loan 66,313,528 61,066,998 Working Capital 137,708,601 113,476,507 Others 22,956,002 18,849,835 Exchange Fluctuation (Gain) / Loss 14,758,948 (22,261,719)

241,737,079 171,131,621 Less:Interest Income 5,812,336 7,515,905 – From Bank (Tax Deducted at Source Rupees 898,245 (Rupees 660,214/- ))Total 235,924,743 163,615,716

SCHEDULE 14 FINANCE COST

1. Significant Accounting Policies:The financial statements are prepared to comply in all material aspects with the applicable accounting principles in India, the accountingStandards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956. Thesignificant accounting policies are as follows:

a) Basis of Accounting:The Consolidated Financial statements are prepared in accordance with the historical cost convention.

b) Use of Estimates:The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) in India requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure ofcontingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reportingperiod. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in currentand future periods.

c) Principles of Consolidation:The consolidated financial statements include the financial statements of Zicom Electronic Security Systems Limited (the parentcompany) and its subsidiaries Zicom Manufacturing Co. (HK) Limited, Zicom Retail Products Private Limited, Zicom CNAAutomation Limited and Unisafe Fire Protection Specialists LLC, Dubai, (Consolidated).

The consolidated financial statements have been prepared on the basis of AS 21 – “Consolidated Financial Statements”, as notifiedby the Companies (Accounting Standards) Rules 2006.

SCHEDULE 16

Corporate Tax 3,000,000 18,000,000 Deferred Tax 11,680,400 (3,913,186)Fringe Benefit Tax – 2,700,000 Earlier Years (4,992,778) 557,027 Total 9,687,622 17,343,841

SCHEDULE 15 TAX EXPENSES



SubsidiariesThe excess of cost to the parent company of its investment in the subsidiaries over its portion of equity in the subsidiaries at therespective dates on which investment in such subsidiaries was made is recognized in the financial statements as goodwill. Theparent company‘s portion of equity in such subsidiaries is determined on the basis of book values of assets and liabilities as perthe financial statements of the subsidiaries as on the date of investment and if not available, the financial statements for theimmediately preceding period adjusted for the effects of significant transactions.

The financial statements of the parent company and its subsidiaries have been combined on a line-by-line basis by adding togetherthe book values of like items of assets, liabilities, income and expenses after eliminating Intra-group balances/transactions andresulting unrealized profits in full. Unrealized losses resulting from Intra-group transactions are also eliminated except to the extentthat recoverable value of related assets is lower than their cost to the group.

The amounts shown in respect of reserves comprise the amount of the relevant reserves as per the balance sheet of the parentcompany and its share in the post-acquisition increase in the relevant reserves of the subsidiaries. Goodwill arising on consolidationis amortized over its estimated useful life i.e. ten years. Consolidated financial statements are prepared using uniform accountingpolicies for transactions and other events in similar circumstances except where it is not practicable to do so. Minority interest’sshare of net profit is adjusted against the income to arrive at the net income attributable to shareholders. Minority interest’s shareof net assets is presented separately in the balance sheet.

The following subsidiary companies are considered in the consolidated financial statements:

The financial statements are prepared to comply in all material aspects with the applicable accounting principles in India, theaccounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act,1956. The significant accounting policies are as follows:

d) Fixed Assets / Capital Work-in-Progress:Expenditure, which is of capital nature, is capitalized. Such expenditure includes purchase price, import duties, levies and any directattributable cost of bringing the asset to its working condition.

Capital Work-in-Progress is carried at costs, comprising direct cost related incidental expenses and interest on borrowings thereagainst.

e) Depreciation / Amortisation:Tangibles:Depreciation on fixed assets is provided on straight-line method in accordance with the rates specified in Schedule XIV of theCompanies Act, 1956.

Capital Expenditure/ Improvements incurred on Rented Premises are written off over a period of three years.

SCHEDULE 16

Sr. No. Name of the Subsidiary Company Country of Incorporation % of holding as at March 31, 2010

1. Zicom Retail Products Private Limited India 100 % 2. Zicom Manufacturing Co. (HK) Limited Hong Kong 76 %3. Zicom CNA Automation Ltd. India 51 %4. Unisafe Fire Protection Specialists LLC, Dubai (U.A.E.) 49% in Equity and Profit Sharing in

Dubai, (Consolidated) the Ratio of 80% to Company : 20% to Minority(Subsidiary by virtue of control over composition of Board of Directors)



Intangibles:These are amortized over their useful life, not exceeding five years. Goodwill on consolidation is written off in ten years.

f) Investments:Investments are stated at ‘cost’. A provision for diminution is made to recognize a decline, other than temporary, in the value oflong term investments.

g) Valuation of Inventories:Materials, Stores and Spares valued at cost on First In First Out Basis.Work-in-Progress, Finished goods and trading goods are valued at cost or realizable value whichever is lower. Goods-in-transit are valued at cost. In respect of goods undergoing customs clearance, no provision has been made for the customsduty liability. However, this practice does not have any impact on the profit for the period.

h) Revenue Recognition:Sales are recognized when goods are supplied in accordance with the terms of sale and are recorded net of trade discounts, rebatesand sales tax. Income from services is accrued as per terms of relevant agreement.

Contract Revenue is recognized by reference to the stage of completion of the contract activity at the balance sheet date as measuredby the proportion of the contract cost incurred for the work performed to the estimated total contract cost. Variations in the contractwork, claims and incentive payments are included to the extent they have been agreed with the customer.

Income and Expenditure are accounted on an accrual basis. Dividend income is recognized when the right to receive dividend isestablished.

Amount received from the customers for admitting them as member of Company’s various schemes are credited to revenue accountin the year in which membership is allotted.

i) Retirement Benefits:i. Contribution to defined contribution schemes such as Provident Fund and Employer’s Pension scheme is charged to the Profit

and Loss Account.

ii. Payments to the employees’ Gratuity Trust Fund, after taking into account the funds available with the trustees of the GratuityFund, is based on actuarial valuation carried out at the end of the year.

iii. Provision for leave encashment has been accrued and provided for at the end of the financial year, on the basis of actuarialvaluation.

j) Impairment of Assets:The carrying amount of assets is reviewed periodically for any indication of impairment based on internal/external factors. Animpairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amountis the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows arediscounted to their present value at the weighted average cost of capital. Post impairment, depreciation is provided on the revised

In the following foreign subsidiaries, depreciation is provided on straight line method at rates which are higher than the rates givenin Schedule XIV to the Companies Act, 1956:

SCHEDULE 16

Assets Unisafe Fire Protection Zicom Manufacturing Specialists LLC, Dubai Co. (HK) Limited

Furniture, Fixtures and Equipment 20% 20%Heavy Equipment and Machineries 20% N.A.Motor Vehicles 33.33% N.A.Computer Equipment N.A. 30%



SCHEDULE 16

carrying value of the asset over its remaining useful life.

k) Borrowing Costs:Interest and other costs in connection with the borrowing of the funds to the extent related / attributed to the acquisition / constructionof qualifying fixed assets are capitalized upto the date when such assets are ready for its intended use and other borrowing costsare charged to the Profit & Loss Account.

l) Provisions for contingencies:A provision is recognised when:

i. The Company has a present obligation as a result of a past event;

ii. It is probable that an outflow of resources embodying economic benefits which will be required to settle the obligation; and

iii. A reliable estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probablywill not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflowof resources is remote, no provision or disclosure is made.

The Company provides for warranty cost based on a technical estimate of the costs required to be incurred for repairs, replacement,material cost, servicing and past experience in respect of warranty costs. It is expected that this expenditure will be incurred overthe contractual warranty period.

m) Accounting of Lease: Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classifiedas operating leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basisover the lease term.

Lease income is recognised on accrual basis in accordance with the terms of lease agreement.

n) Taxation :

i. Provision for Income Tax is made under the liability method after availing exemptions and deductions at the rates applicableunder the Income Tax Act, 1961 or applicable foreign tax law in case of foreign subsidiaries.

ii. Deferred tax resulting from timing difference between book and tax profits is accounted for using the tax rates and laws thathas been enacted as of the balance sheet date.

iii. Deferred tax assets arising on the temporary timing differences are recognized only if, there is reasonable certainty of realization.


a. Letters of Credit by Bank 39,837,854 58,540,002b. Guarantees issued by Bank (Gross) 272,353,513 271,298,014 c. Sales Tax Matters 823,601 823,601d. In respect of Borrowing by Employees, where Company is co-applicant NIL 304,725e. Claim Lodged by Customer not acknowledged as Debt 1,695,315 698,990

2. Contingent Liabilities not provide for in respect of


Audit fees 1,445,570 1,395,830Corporate Governance and Other Certification Matters 152,500 184,441Out of pocket expenses 695 976

3. Auditor’s Remuneration



SCHEDULE 16


Closing Balance HSBC Bank PLC, London 151,462 172,177Citibank N.A., Singapore 70,902 80,600 Maximum Balance HSBC Bank PLC, London 151,462 172,177Citibank N. A., Singapore 70,902 80,600

4. Balance with non schedule bank is as under

5. Lease:Disclosure as required by Accounting Standard 19 (AS-19) issued by The Institute of Chartered Accountants of India are as follows:

Operating Lease:The Company’s significant leasing arrangements are in respect of office premises and residential flats taken on lease. The arrangementsare generally from 11 month to 36 month. Under these agreements, generally refundable interest-free deposits have been given. Inrespect of above arrangements, lease rentals payable are recognised in the Profit and Loss Account for the year and included underRent and Compensation (Disclosed under Schedule 13)

6. Discontinuing Operations:As per Business Transfer Arrangement dated March 5, 2010 entered with Schneider Electric India Private Limited (SE), the companyhas transferred assets and liabilities of Electronic Security Systems business of the company comprising of its two division BuildingSolution Group and Special Project Group Business to SE with effect from April 30, 2010, as approved by the shareholder of theCompany through postal ballot as per section 192A of the Companies Act, 1956 read with the Companies (Passing of Resolution bythe postal ballot) Rules 2001. This transfer excludes the retail business, business of Central Monitoring Station and Video MonitoringStation and right to continue the business of fire detection and suppression on a stand alone basis.

Information pursuant to the Discontinuing operations in accordance with “AS 24 – Discontinuing Operations” issued by the Instituteof Chartered Accountants of India is as follows:

The carrying amount as total Assets and total liabilities relating to the discontinuing operation held for disposal as on March 31, 2010Rs. 7,594 Lacs and Rs. 10,680 Lacs respectively.


Not later than one year 21,166,126 23,817,233 Later than one year and not later than five years 877,500 21,967,170 Later than five years NIL NILLease Payment made during the year recognised in the statement of profit and loss account 58,917,765 70,718,244

Future minimum lease payments under non cancellable operating lease


Income 2,435,220,677 1,939,984,276Expenditure 2,299,046,038 1,785,399,689Profit Before Tax 136,174,639 154,584,587Tax 44,914,725 38,303,646Profit after Tax 91,259,914 116,280,941

The Profit (Loss) attributable to Discontinuing business is as follows:



SCHEDULE 16

The above disclosure relating to discontinuing operation is given to the extent information available.


Cash Generated from Activity:Operating 266,965,186 116,908,421Investing 5,706,511 3,808,585Financing (54,769,114) 147,642,964Net Cash Inflows / Out Flows 217,902,583 268,359,970

The net cash flow attributable to Discontinuing business is as follows:


A. Net Profit for Basic Earning Per share as per Profit & Loss Account 150,289,879 222,876,233 B. Weighted Average No. of Equity Shares:

Basic 12,699,829 12,699,829 Diluted 12,722,746 12,699,829

C. Earning Per shareBasic 11.83 15.43Diluted 11.81 15.43

7. Earnings Per Share (EPS): Equity Shares of Rupees 10/- fully paid up

8. Related Party Disclosure:Information in accordance with the requirements of Accounting Standard 18 on Related Party Disclosures issued by the Institute ofChartered Accountants of India:

A. Related Parties with whom transactions have taken place:i. Key Management Personnel:

Mr. Manohar BidayeMr. Pramoud Rao

ii. Companies in which company or its directors / relatives of director have substantial interest:Baronet Properties and Investments Private LimitedCoronet Properties and Investments Private LimitedInstitute of Advanced Security Training & Management Private Limited (with effect from June 30, 2009)

B. Transactions during the year with Related Parties mentioned above:

Key Management Personnel

(Amount in Rs.)

(Amount in Rs.)

(Amount in Rs.)Remuneration March 31, 2010 March 31, 2009

Managing DirectorSalaries 5,019,000 6,918,600Commission on profit NIL NILPerquisites 15,000 15,000Retirement Benefit 9,360 9,360

5,043,360 6,942,960Non-executive Directors(as per approval of Central Government) 3,626,340 4,697,201



SCHEDULE 16

Personal Guarantee given by one of the directors for unsecured loan taken by the company.

Companies in which company or its directors / relatives of director have substantial interest.Forfeitures of Warrant application money Rupees 42,000,000/- (Rupees NIL)Investment in Shares Rs, 1,200,000/- (Rs. NIL)Advance recoverable in cash or kind Rs. 7,236,403 (Rs. NIL)725,000 (200,000) Equity Shares owned by related parties referred in 8 (A) (ii) above, pledged against Loan taken by thecompany

Particulars Transaction Type Unit March 31, 2010 March 31, 2009

Key Management Personnel Personal Guarantee Rupees 386,301,321 NILAdvance Recoverable Rupees 390,000 NIL

Companies in Which company or Advance recoverable Rupees 7,236,403 NILits directors / relatives of directors in cash or kindhave substantial interest Pledge of Equity share for Numbers 725,000 200,000

Loan taken by the company

C. Balance with Related Parties:

9. Balances of Sundry Debtors, Sundry Creditors, Loans and Advances and Others are as per books and subject to confirmations andreconciliation, if any.

10. Previous Year’s figures have been regrouped and re-arranged, wherever necessary.




(Amount in Rs.)

ContentsCorporate identity .........................................................................� Page 2

2009-10 in retrospect ..................................................................� Page 4

Starting afresh .............................................................................� Page 6

Directors’ profile ...........................................................................� Page 16

Notice ........................................................................................ � Page 18

Directors’ Report ..........................................................................� Page 25

Report on Corporate Governance ....................................................� Page 38

Management discussion and analysis .............................................� Page 56

Standalone financials ................................................................... � Page 63

Consolidated financials .................................................................� Page 85

Forward-looking statement

In this annual report we have disclosed forward-looking information to enable investors to

comprehend our prospects and take informed investment decisions. This report and other

statements – written and oral – that we periodically make contain forward-looking statements

that set out anticipated results based on the management’s plans and assumptions. We have

tried wherever possible to identify such statements by using words such as ‘anticipates’,

‘estimates’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in

connection with any discussion of future performance.

We cannot guarantee that these forward looking statements will be realised, although we

believe we have been prudent in assumptions. The achievement of results is subject to risks,

uncertainties and even inaccurate assumptions. Should known or unknown risks or

uncertainties materialise, or should underlying assumptions prove inaccurate, actual results

could vary materially from those anticipated, estimated or projected. Readers should bear this

in mind.

We undertake no obligation to publicly update any forward-looking statements, whether as a

result of new information, future events or otherwise.

A [email protected]

Company InformationBoard of DirectorsMr. Manohar Bidaye, Chairman

Mr. Pramoud Rao, Managing Director

Mr. Mukul Desai, Director

Mr. Vijay Kalantri, Director

Mr. Achyut Godbole, Director


Chief Financial OfficerMr. Hemendra Paliwal

Company SecretaryMs. Kunjan Trivedi

Statutory Auditors

P. RAJ & CO.Chartered Accountants

BankersState Bank of India

Union Bank of India

Standard Chartered Bank

Bank of Baroda

Punjab National Bank

Registered Office501, Silver Metropolis,


Goregaon East, Mumbai 400 063.

Tel.: 91-22-4290 4290

Fax: 91-22-4290 4291


Website: www.zicom.com

Registrar and Share Transfer AgentBigshare Services Private Limited




Tel: (022) 2847 0652, 2847 0653, 2847 3474,

2847 3747 Fax: (022) 2847 5207


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Zicom Electronic Security Systems Limited Annual Report 2009-10

Zicom Electronic Security Systems Limited

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