MIRA INFORM REPORT

Report Date :

15^th April, 2006

IDENTIFICATION DETAILS

Name :	HUTCHISON ESSAR MOBILE SERVICES LIMITED
Formerly Known As :	HUTCHISON ESSAR TELECOM LIMITED
Registered Office :	C-48, Okhla Industrial Area, Phase – II, New Delhi – 110 020, India
Country :	India
Financials (as on) :	31^st December, 2004
Year of Incorporation :	20^th August, 1997
CIN No.:	L64202DL1997PLC088087
Com. Reg. No.:	55-88087
TAN NO.:	DELS09178B
Pan no:	AAACS4457Q
IEC No.	--
Legal Form :	Closely held Public Limited Liability Company
Line of Business :	Cellular Phone Services Provider.

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small

Maximum Credit Limit :	--
Status :	Moderate
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a joint venture of Essar and Hutchison of Hong Kong. It has huge accumulated losses and shall take few years to wipe out the same. It’s payments are usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions

LOCATIONS

Registered Office :	C-48, Okhla Industrial Area, Phase – II, New Delhi – 110 020, India
Tel. No.:	91-22-26385004 /26388845
Mobile :	91-9811090001/26388845
Fax No.:	91-22-26388850/26338730/26388837
E-Mail :	1. info@hutch.co.in 2. sundeep.kathuria@hutchindia.com 3. care@hutchindia.com
Website :	1. http://www.hutch.co.in 2. http://www.orange.co.in
Location:	Industrial
Administrative Office :	21, Phiroze Gandhi Road Lajpat Nagar III, New Delhi – 110 024, India
Tel. No.:	91-11-26842563 / 9503
Fax No.:	91-11-2684 4370
E-Mail :	contacttelecom@essar.com
Corporate Office :	Ø X-7, Okhla Industrial Area, Phase II, New Delhi – 110 020 Tel. 91-98110 00002 Fax. 91-9811 398002 E-mail. care@hutchindia.com Ø Essar House, 11, Keshavrao Khadya Marg Mahalaxmi, Mumbai – 400 034, India Tele No. 91-22-24950606 / 56601100 Fax No. 91-22-56601809 Email: corporatecommunications@essar.com
Branches :	Prestige Blue Chip, Ground Floor, Block 1, No. 09, Hosur Road, Bangalore – 560 029 Tel. 91-80-51193000 Fax. 91-80-51193010 No. 44, Upper Ground Floor, Laxmibalakrishna Square, Station Road, Hubli 580 020, Karnataka Tel. 91-836-2369853 Fax. 91-836-2369851 Oberle Towers, Balmatta Circle, Balmatta Road, Mangalore 575 001, Karnataka Tel. 91-824-2427789 2959, 2^nd Floor, “Aishwarya” Arcade, 9^th Cross, Kalidasa Road, V. V. Mohalla, Mysore, Karnataka Cell. 91-9886408681 No. 266, 1^st Floor, 1^st Main, Bharat Scouts & Guides Towers, Janatha Bazaar Road, P. J. Extension, Davangere 577 002, Karnataka Tel. 91-8192-259933/44 Gujarat Fascel Limited, 601, Sakar – II, Ellisbridge, Ahmedabad – 380 006, Gujarat Tel. 91-79 -6577228/29/79/6575990 Hutchison Essar South Limited, 6^th Floor, Varun Towers II, Begumpet, Hyderabad – 500 016, Andhra Pradesh Tel. 91-40-2776 4600 Fax. 91-40-2776 4700 Hutchison Essar South Limited, Uttam Towers, LAbbipet, M. G. Road, Vijayawada – 520 010, Andhra Pradesh Tel. 91-866-493113 Fax. 91-866-493117 Hutchison Essar South Limited, Balaji MAngalgirei, VIP Road, Vishakapatnam – 530 003, Andhra Pradesh Tel. 91-891-760777 Fax. 91-891-760995 Hutch, 222, TTK Road, Alwarpet, Chennai – 600 018, Tamilnadu Kolkata Hutchison Telecom East Limited, Constantia Office Complex, 11, Dr. UN BRahmachari Street, Kolkata – 700 017, West Bengal Tel. 91-98300 98241 Orange, Hutch House, Peninsula Corporate Bank, Ganpatrao Kadam Marg, Lower, Mumbai – 400 013, Maharashtra Tel. 91-22-56645000 Fax. 91-22-56661200 Rajasthan Gaurav Towers, Malviya Nagar, Jaipur, Rajasthan Kunjpura Road, Karnal – 132 001, Haryana Tel. 91-9813098130 205-206, Chintels House, 16, Station Road, Lucknow, Uttar Pradesh Tel. 91-9839098390

DIRECTORS

Name :	Mr. Dennis Lui,
Designation :	Director
Address:	Duplex 5, Dynasty Villa, 8 Dynasty Heights, Beacon Hill, Kowloon, HongKong
Date of Birth/Age :	2^nd December, 1947
Date of Appointment :	21^st November, 2001
Name :	Mr. Asim Ghosh, Foreigner
Designation :	Director
Address:	64,NCPA Appartments, “B” Win, Opposite Oberoi, Nariman Point, Mumbai 400021
Date of Birth/Age :	7^th December, 1947
Date of Appointment :	31^st January, 2000
Name :	Mr. Frank John Sixt, Hong Kong
Designation :	Director
Address:	Flat G/B Knights Bridge Court, No.28, Barker Road, The Peak, Hongkong
Date of Birth/Age :	29^th January, 1951
Date of Appointment :	31^st January, 2000
Name :	Mr. Canning Fok Kin Ning, Hong Kong
Designation :	Director
Date of Birth/Age :	15^th October, 1950
Date of Appointment :	31^st January, 2000
Name :	Mr. Ting Yu Chan, Hong Kong
Designation :	Director
Date of Birth/Age :	15^th October, 1950
Date of Appointment :	31^st January, 2000
Name :	Mr. B. David Johnson
Designation :	Director
Date of Birth/Age :	17^th February, 1943
Date of Appointment :	31^st January, 2000
Name :	Mr. D. Geoffery Carrolan, Foreigner
Designation :	Director
Address:	12^th Floor, Urmi 65 Worli Sea Face, Mumbai 400024
Date of Birth/Age :	13^th March, 1966
Date of Appointment :	21^st November, 2001
Name :	Mr. Anushuman Ruia
Designation :	Additional Director
Date of Birth/Age :	11^th March, 1971
Date of Appointment :	21^st November, 2001
Name :	Mr. Vikash Sarey
Designation :	Director
Address:	2-B, Saker Apartments, 71 Pochkhanwala Road, Worli, Mumbai 400025
Date of Birth/Age :	18^th December, 1968
Date of Appointment :	21^st November, 2001
Other Personnel :-
Name :	Mr. Sundeep Kathuria
Designation :	Company Secretary and Regional Director
Address :	X-7, Okhla Industrial Area, New Delhi – 110 020 Tel. 91-9811144444 Fax.91-9811398002
Date of Birth/Age :	14^th January, 1965
Date of Appointment :	22^nd December, 2000

KEY EXECUTIVES

Name :	Mr. Sankara Narayanan
Designation :	Vice President, Finance

MAJOR SHAREHOLDERS

Names of Shareholders	No. of Shares
Mr. Sandip Das	1
Hutchison Max Telecom Limited
Mr. Asim Ghosh	1
Hutchison Max Telecom Limited
Mr. Christopher J Foll	1
Hutchison Max Telecom Limited
Mr. Groffrey Carolan	1
Hutchison Max Telecom Limited
Mr. Sundeep Kathuria	1
Hutchison Max Telecom Limited
Neha Sharma	1
Hutchison Max Telecom Limited
Mr. Sankara Narayanan	1
Hutchison Max Telecom Limited
Mr. Aseem Mohan	1
Hutchison Max Telecom Limited
Hutchison Max Telecom Limited, Hutch House, Penninsula Corporate Park, Lower Parel, Mumbai 400 013	1
Central Depository Services Limited	1

BUSINESS DETAILS

Line of Business :

Cellular Phone Services Provider.

GENERAL INFORMATION

Customers :

7.2 million Mobile user under the Hutch and Orange Brands

No. of Employees :	400
Bankers :	Bank of America Limited Rs. 2000.000 millions & USD 20.000 millions – availed with Bank of America Limited against Hypothecation of all the book debts outstanding monies receivable claims and bills and stocks of Cellular Handsets, Accessories, SIM Cards and other stocks of raw materials finished and semi finished goods. ABN Amro Bank, DLF Centre, Sansad Marg, New Delhi 110001, Hong Kong and Shanghai Banking Corporation IL and FS Trust Company Limited, IL and FS Financial Centre, Plot No. C-22, G Block, BA Kurla Complex, Bandra Complex, Bandra East, Mumbai 400051 State Bank of India, Delhi, India Deutsche Bank Global Trust Bank Bank of America
Banking Relations :	Dead Hypothecation executed by the company in the favor of IL and FS trust company limited vide hypothecation agreement dated 21^st February, 2006. Amount secured by charge Rs. 67100.000 Millions. It is secured against the Hypothecation of Plant and machinery , Furniture and Fixture. Stock in trade, Book Debts, Vehicles, fixed deposits and Intangible Assets. Rs. 2000.000 Millions with the above mentioned Banks as per Agreement of Hypothecation dated 29^th October, 2004. It is secured against the whole of the movable properties of the company including it’s movable plant and machinery spares, tools and accessories and other movables both present and future
Auditors :	M/s Price Waterhouse Chartered Accountants, New Delhi, India
Associates :	Hutchison Whampoa Limited (HWL) Subject is a leading international corporation committed to innovation and technology with businesses spanning the globe. Its diverse array of holdings range from some of the world's biggest retailers to property development and infrastructure to the most technologically-advanced and marketing-savvy telecommunications operators. HWL reports consolidated turnover of approximately HK$145 billion (US$18,660 million) and HK$81 billion (US$10,420 million) for the year ended 31 December 2003 and for the six months ended 30 June 2004 respectively. With operations in 42 countries and more than 180,000 employees worldwide, Hutchison has five core businesses - ports and related services, telecommunications, property and hotels, retail and manufacturing, and energy and infrastructure. Airtel Digilink India Limited Essar Shipping Limited Essar Technologies Limited Mobilvest Limited
Subsidiaries :	Hutchison Essar South Limited
Parent Company :	Essar Tele Holdings Limited, India

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
274200000 200000 5920	Equity Shares 0.1% Non Convertible redeemable Preference Shares (on Hutchison Essar South Limited, Subsidiary Company) Equity Sharesof M/s Karthik Financial Services Limited	Rs.10/- each Rs.10/- each Rs.10/- each	Rs.2742.000Millions Rs 2.000Millions Rs. 0.059 Million

Issued, Subscribed & Paid-up Capital :

No. of Shares		Type	Value	Amount
274200000 200000 5920	Equity Shares 0.1% Non Convertible redeemable Preference Shares (on Hutchison Essar South Limited, Subsidiary Company) Equity Sharesof M/s Karthik Financial Services Limited		Rs.10/- each Rs.10/- each Rs.10/- each	Rs.2742.000Millions Rs 2.000Millions Rs. 0.059 Million

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.12.2004	31.12.2003
SHAREHOLDERS FUNDS
1] Share Capital		1.997.170	1997.170
2] Share Application Money		0.000	0.000
3] Reserves & Surplus		6794.130	6794.130
4] (Accumulated Losses)		(3057.090)	(4673.440)
NETWORTH		5734.210	4117.860
LOAN FUNDS
1] Secured Loans		2130.000	1944.920
2] Unsecured Loans		914.550	914.550
TOTAL BORROWING		3044.550	2859.470
DEFERRED TAX LIABILITIES		86.920	0.000
TOTAL		8865.680	6977.330
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		5490.690	4879.440
Capital work-in-progress		199.170	525.620
INVESTMENT		2762.060	2762.060
DEFERREX TAX ASSETS		0.000	95.850
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	0.000	0.010
	Sundry Debtors	478.050	271.640
	Cash & Bank Balances	289.940	264.780
	Other Current Assets	0.000	0.000
	Loans & Advances	2223.270	722.450
Total Current Assets		2991.260	1258.880
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	2461.910	2537.230
	Provisions	115.590	7.290
Total Current Liabilities		2577.500	2544.520
Net Current Assets		413.760	(1285.64)
MISCELLANEOUS EXPENSES		0.000	0.000
TOTAL		8865.680	6977.330

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2004	31.03.2003
Sales Turnover [including other income]	9271.550	7057.530
Profit/(Loss) Before Tax	1931.050	1285.230
Provision for Taxation	0.500	124.22
Profit/(Loss) After Tax	1616.350	1161.010
Export Value (Airtel Roaming Revenue)	167.750	183.100
Import Value	842.990	1217.960
Total Expenditure	5920.520	4542.990

KEY RATIOS

PARTICULARS		31.12.2004	31.12.2003
PAT / Total Income	(%)	17.92	1.66
Net Profit Margin (PBT/Sales)	(%)	20.93	4.42
Return on Total Assets (PBT/Total Assets}	(%)	9.05	1.51
Return on Investment (ROI) (PBT/Networth)		0.15	0.03
Debt Equity Ratio (Total Liability/Networth)		0.58	0.63
Current Ratio (Current Asset/Current Liability)		0.56	0.86

LOCAL AGENCY FURTHER INFORMATION

The name of the company has been changed to the present w.e.f. 8^th August, 2002

It established its presence in India in 1994, through a joint venture with Max India Limited. In 1995, Hutchison Max Telecom became the first operator in India to launch its cellular service.

Subject is one of the largest providers of cellular services in India with presence in all the major regions – Orange in Mumbai and Hutch in Delhi, Karnataka, Andhra Pradesh, Chennai, Kolkata, Gujarat, Haryana, Rajasthan, Uttar Pradesh (East) and Uttar Pradesh (West).

It is part of the Hong Kong based multinational conglomerate Hutchison Whampoa Limited, a Fortune 500 company, and one of the largest companies listed on the Hong Kong Stock Exchange. Its operations span 41 countries across the Asia Pacific Region, Europe and the Americas.

Subject affiliates jointly account for the largest number of cellular subscriber in India numbering over 6 millions.

The company sells its products under the brand name ‘HUTCH - ORANGE’.

It’s technology is GSM 900/1800.

It imports telecommunication equipments and accessories.

It exports its products and also provides telecommunication services in India.

It is covered by Mahanagar Telephone Nigam Limited in Delhi.

It providing fixed line services, internet services, fiber optics, mobile telephony (voice and data), trunked mobile radio and radio broadcasting. But is main interest internationally is in providing mobile telephony.

The company joint venture between Essar and the Hutchison Group is one of the four licensees offering cellular services in Delhi and the satellite towns of Ghaziabad, Noida, Faridabad and Gurgaon. Under a joint venture management contract, Essar holds 49% of the company’s equity while Hutchison Whampoa is responsible for operational management. Commencing operations in January 1996, the company already has a base of over 500000 satisfied customers. It was the first to launch pre-paid services through ‘Speed’, a mobile cash card packed with breakthrough features such as call metering, remote recharging and pre-activated long-distance facilities. It was also the first to offer national and international roaming services as well as fax, data, messaging and mobile banking services.

The company’s Roaming Partners are: -

q Belgacom Mobile (Proximus) – Belgium

q DST Communications Sdn Bhd (DST Com) – Brunei, Darussalam

q CYTAGSM – Cyprus

q TDC Mobil A/S – Denmark

q The Egyptian Company for Mobile Services (ECMS – MobiNil)

q AS EMT (EMT GSM) – Estonia

q Vodafone Fiji Limited - Fiji

q Sonera Corporation - Finland

q Orange France – France

q T – Mobile Deutschland GmbH (D1) – Germany

q Hong Kong CSL Limited GSM 900/1800 (CSL GSM 900/1800) – Hong Kong

q Iceland Telecom Limited (Landssiminn) – Iceland

India

q Aircel Digilink India Limited (Aircel Digilink India Limited – Uttar Pradesh East)

q Aircel Digilink India Limited (Aircel Digilink India Limited – Rajasthan)

q Aircel Digilink India Limited (Aircel Digilink India Limited – Haryana)

q Bharti Mobile Limited (Airtel)

q BPL Cellular Limited (BPL Mobile – Maharashtra/Goa)

q BPL Cellular Limited (BPL Mobile – Tamil Nadu/Pondichery)

q BPL Cellular Limited (BPL Mobile – Kerala)

q BPL Mobile Communications Limited (BPL – Mobile – Mumbai)

q Bharti Mobile Limited (Airtel – Karnataka)

q Bharti Mobile Limited (Airtel – Andhra Pradesh)

q Bharti Mobile Limited (Airtel – Punjab)

q Bharti Mobile Limited (Airtel – City of Madras)

q Bharti Telenet Limited (Airtel – Himachal Pradesh Circle)

q Escotel Mobile Communications Limited (Escotel Haryana)

q Escotel Mobile Communications Limited (Escotel Uttar Pradesh (West))

q Escotel Mobile Communications Limited (Escotel Kerala)

q Vodafone Ireland Plc. – Ireland

q Latvian Mobile Telephone Company (LMT GSM) – Latvia

q P+T Luxembourg (LUXGSM) – Luxembourg

q Digi Telecommunications Sdn Bhd – Malaysia

q Cellplus Mobile Comms – Mauritius

q Netcom As Telenor Mobil – Norway

q Polkomtel S.A. (Plus GSM) – Poland

q Orange Romania SA – Romania

q KB Impuls (Bee Line GSM) – Russia

q Megafon, Open Joint Stock Company – Russia

q Singapore Telecom Mobile Pte. Limited GSM 900 (SingTel ST-GSM 900)-Singapore

q Singapore Telecom Mobile Pte. Limited GSM 1800 (SingTel ST-GSM 1800)-Singapore

q Orange Sovensko a.s (Orange S.K) – Solvak Republic

q South Africa

MTN (Pty) Limited

Vodacom Group Pty Limited

q Telefonica Moviles Espana S.A. (Movistar) – Spain

q MTN Networks (Private) Limited (Dialog GSM) – Sri Lanka

q Vodafone Sverige AB – Sweden

q Swisscom Mobile Limited (SWISS GSM) – Switzerland

q ETISALAT – United Emirates

q United Kingdom

Orange PCS Limited

T-Mobile (UK) Limited

Vodafone Limited

Profile

Hutchison Telecommunications Limited

Subject is a wholly owned subsidiary of Hutchison Whampoa Limited. It operates a wide range of integrated telecommunications services in over 17 countries. It was formed in 1985 to run a cellular network in Hong Kong and now has become a formidable force in mobile communications. It has business interests in fixed line services, internet services, fiber optics, mobile telephony (voice and data), trunked mobile radio and radio broadcasting. But its main interest internationally is in providing mobile telephony.

Hutchison Telecom has a successful track record in identifying potential countries and technologies, developing them and creating shareholder value over a long term. One of its key success stories was developing the first consumer brand in telecom – Orange. It is one of the largest 3G players worldwide. Hutchison 3G has been given licenses to operate in UK, Italy, Israel, Denmark, Sweden, Austria, Ireland, Australia and Hong Kong. Hutchison is the first operator to offer 3G services in Australia, Italy, the UK and Sweden.

About Hutchison Essar

The subject is a part of the Hutchison Group, one of the largest cellular operators in India and among the world’s leading telecommunications companies. Hutchison Telecom is a part of Hutchison Whampoa Limited (HWL), a Hong Kong based Fortune 500 company operating in 41 countries spread across the Asia Pacific region, Europe and America. Hutchison Telecom is recognised as one of the first cellular operators in the world.

In India, Hutchison Telecom operates its cellular services in 13 circles : Orange in Mumbai and Hutch in Delhi, Karnataka, Andhra Pradesh, Chennai, Kolkata, Gujarat, Haryana, Rajasthan, Uttar Pradesh (East), Punjab, West Bengal, Sikkim and Uttar Pradesh (West). The Hutchison network covers almost 25% of the national footprint and 70% of national purchasing power, with a subscriber base that now exceeds 6 million.

In Bangalore the subject has installed over 180 towers to facilitate better communications and coverage. The provide value added services to its customers. These include the following.

• National and International Roaming facilities spanning over 130 countries and 1200 cities, towns and highways in India, infotainment services from HutchAlive
• SMS – Based Services
• Voice Messaging Service
• Voice Response Service
• Voicemail
• Fax and Data Services
• Unifies Messaging Services in Karnataka

Press Clippings

Mumbai, February 4, 2005: (Source : India Infoline)

Hutchison Essar Consolidates India operations

The Hutchison Essar group of companies has consolidated its various mobile interests in India (which operate under the Hutch and Orange brands) under a single entity. All requisite Indian government and regulatory approvals, consent and permissions for effecting the consolidation have been obtained.

The shareholders of Hutchison Essar Telecom Limited (Delhi), Fascel Limited (Gujarat), Hutchison Telecom East Limited (Calcutta) (which wholly owns Aircel Digilink India Limited (UP East, Rajasthan, Haryana)) and, Hutchison Essar South Limited (AP, Karnataka, Chennai, Punjab, UP West, West Bengal) and Aircel Digilink India Limited (UP East, Rajasthan, Haryana) have transferred all their shares in these companies to Hutchison Max Telecom (HMTL) in return for the issue of new shares in HMTL, making HMTL the holding company for all the cellular operations of the Hutchison Essar Group and migrating all shareholder interests to HMTL.

Accordingly, the shareholders of HMTL will now be Hutchison Telecom International, the Essar Group, Kotak Mahindra/Hutchison Telecom International joint ventures, the Hinduja Group, and Max India. It is intended to rename HMTL as Hutchison Essar Limited as soon as possible.

The consolidation has created one of the largest mobile operations in the country with a footprint comprising 13 circles, which is expected to derive many operating synergies, including more efficient management and a more effective use of resources and funds between the various operating companies. In addition, management believes that the new consolidated company will be better placed to access the debt and equity markets in India.

Subject employs about 400 persons in it’s set up comprising of office staff, sales staff and others.

Subject operates from caption rented office premises of area admeasuring 1000 sq. meters., which is situated in industrial area.

Disputes:

• The company has received notices from customs department demanding additional duties amounting to Rs. 87.960 Million (Previous year Rs. 87.96 Million) on account of rate differences. The company has decided to contest the demands and has not paid the amount till date.

• Damages claims by customers for Rs. 10.370 million (previous year Rs. 5.780 million) pending in litigation.

• The company has received a show cause notice under services tax act, levying services tax amounting to Rs. 5.41 million (previous year Rs. 5.41 million) on the sale of SIM cards made in the previous years. The company, contending the sales tax on the same under the Delhi Sales tax has been paid, has filed an appeal with additional Commissiner (Appeals).

• The company has received damand from authorities under the Delhi sales tax Act, levying sales tax totaling to Rs. 40.050 Million(previous year Rs. 40.050 million) for the assessment year 1997-98 to 1999-00 on the sale of prepaid cards. The company is contending that service tax is payable and has been paid on the airtime , has disputed the demands and filed an appeal with the Appellate Tribunal (Delhi Sales Tax) and against the demands.

• The company has also received notices from Excise and Taxation officer, Karnal, Haryana levying sales tax on the post oaid card, Airtime, prepaid card and recharchable coupon totaling Rs. 146.260 million (previous year nil) for the assessment year 2001-2002 and 2002-2003. The company contending that service tax is payble and has been paid on the sale of airtime contained in the cards and on post paid rentals has disputed the damands filed a writ petition with the Chandigarh High Court against the damand.

• The company has received damands from Uttar Pradesh Trade Tax Department, levying sales tax totaling Rs. 52.530 million (previous year Rs. 52.530) for the assessment years 1997-1998 to 2002-2003 and for the month April 2003 to August 2003 on post paid rentals and on the sale of prepaid SIM cards and recharge coupons in Noida abnd Ghaziabad. The company, Contending that service tax is payable and has been paid on the sale of airtime contained in the cards and on the post rentals, has disputed the demands and filed a writ petition with the Uttar Pradesh High Court against the demand.

• The company has received Bills from Bharti INFOTEL for the month of august 2004 and September 2004 for IUC on National SMS and Location update amounting to Rs. 42.260 million (previous year nil). The company has not accepted these invoices and has disputed the same with Bharati INFOTEL, as it is of the opiniopn that the same is not accordance with the agreement.

Of the above details of the unpaid amounts together with forum where dispute is pending as at 31^st December, 2004 is given below:

Name of the statue	Nature of Dues	Amount (Rs. in million)	Period to which the amount relates	Forum where the dispute is pending
Custom Act	Custom Duty	14.120	1996-97 to 1997-98	The Deputy commissioner of custom, New Delhi
Custom Act	Custom Duty	73.840	1997-98	The Assistance commissioner of Custom, New Delhi
Delhi Sales Tax Act 1971	Sales Tax	40.450	1997-98 to 2002-03	High Court
UP Trade Act 1948	Sales Tax	52.520	1997-98 till May 2004	High Court
Haryana Value Added Act 2003	Sales Tax	146.260	2001-02 to 2002-03	High Court
Service Tax Act 1994	Service Tax	5.410	1996-97 to 1998-99	Additional commissioner of Central excise
Income Tax Act 1961	Income Tax	5.920	1999-2000	Appeal pending before ITAT

Related Parties- Subsidiary Company

HUTCHISON ESSAR SOUTH LIMITED (HESL), the subsidiary of the company, providing the celluar mobile telephone services in Andhra Pradesh, chennai, Karnataka, Punjab, Uttar Pradesh(West), and west Bengal

Financials- M/s HUTCHISON ESSAR SOUTH LIMITED

CMT REPORT [Corruption, Money laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs. 45.30
UK Pound	1	Rs. 78.45
Euro	1	Rs. 54.88

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	4
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	3
--PROFITABILIRY	1~10	3
--LIQUIDITY	1~10	4
--LEVERAGE	1~10	4
--RESERVES	1~10	4
--CREDIT LINES	1~10	4
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		38

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions