MIRA INFORM REPORT

Report Date :

11.01.2007

IDENTIFICATION DETAILS

Name :	ITI LIMITED
Registered Office :	45/1, Magrath Road, Bangalore – 560025, Karnataka, India
Country:	India
Financial as on:	31.03.2006
Date of Incorporation :	21.05.1950
Com. Reg. No.:	08-640
CIN No.:	U32202KA1950PTC000640
TAN No.: (Tax Deduction & Collection Account No.)	BLRI01843C BLRI02119F
PAN No.: (Permanent Account No.)	AAAC14625C
Legal Form :	Subject is a public limited liability company owned by Government of India. The company's shares are listed on the Stock Exchanges.
Line of Business :	Manufacturer of telecom equipments, which include telephones, large digital switches, transmission systems, digital microwave, fibre optic systems and satellite communication systems.

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	USD65000000
Status :	Satisfactory
Payment Behaviour :	Slow but Correct
Litigation :	Clear
Comments :	Subject is a well-established Government of India company. Available information indicates high financial respectability of the company. Trade relations are fair. Payments are correct and as per commitments. The company can be considered good for any normal business dealings. It can be regarded as a promising business partner in a medium to long run.

LOCATIONS

Registered Office :	45/1, Magrath Road, Bangalore – 560025, Karnataka, India
Tel. No.:	91-80-25366116/25362338
Fax No.:	91-80-25593188
E-Mail :	1. prakashcr_crp@itiltd.co.in 2. info@itiltd-india.com
Website :	http://www.itiltd-india.com
Regional Office :	Located at: v New Delhi v Bangalore, Karnataka v Kolkata, West Bengal v Lucknow, Uttar Pradesh v Mumbai, Maharashtra v Chennai, Tamilnadu
Factory 1 :	manufacturing unit v Bangalore, Karnataka Mr. P K Bose, General Manager v Electronic City, Near Bangalore v Naini, Near Allahabad, Uttar Pradesh Mr. A K Mahrotra, General Manager v Rae Bareli, Uttar Pradesh Mr. Tejbir Singh, general Manager v Mankapur, Uttar Pradesh Mr. S P tripathi, General Manager v Palakkad, Kerala Mr. Kasi Viswanathan, General Manager v Srinagar, Jammu & Kashmir Mr. I. A. Khan, Deputy Manager NETWORK SYSTEM UNIT Bangalore, Karnataka Mr. D. Shekar Kumar, General Manager BUSINESS CORDINATION UNIT Mr. Rajni K Agarwal, Additional Manager
Research and Development Center:	Located at: - Bangalore, Karnataka Naini and Mankapur Mr. S S Choudhary, General Manager

DIRECTORS

Name :	Mr. Y.K. Pandey
Designation :	Chairman & Managing Director
Name :	Mr. J.K. Verma
Designation :	Director – Production
Date of Ceasing:	31.07.2006
Name :	Mr. Pritam Singh
Designation :	Director - Marketing
Name :	Mr. S.K. Chatterjee
Designation :	Director - Human Resources
Name :	Mr. Mathew George
Designation :	Director - Finance
Date of Appointment:	08.05.2006
Name :	Mr. Ravi Agarwal
Designation :	Director - Production
Date of Appointment:	31.10.2006
Name :	Mr. Y.S. Bhave
Designation :	Director
Qualifications:	IAS
Name :	Mr. Pankaj Agrawala
Designation :	Director
Qualifications:	IAS
Name :	Mr. N P Singh
Designation :	Director
Date of Appointment:	08.03.2006
Name :	Mr. Vijoy Kumar
Designation :	Director
Date of Ceasing:	08.03.2006
Name :	Mr. Davinder Kumar
Designation :	Director
Date of Ceasing:	30.09.2006

Key Executive

Name :	Mr. K. Ramaswamy
Designation :	Company Secretary
Name :	Mr. P. B. O Warjri
Designation :	Chief Vigilance Officer
Qualifications:	IAS
Name :	Mr. S. Samantha
Designation :	Additional Director -PP
Name :	Mr. A. K. Ray
Designation :	Additional Director (IA)
Name :	Mr. R. K. Tikkoo
Designation :	General Manager- Marketing
Name :	Mr. S. S. Choudhary
Designation :	General Manager ( R&D) / QA
Name :	Mr. P. K. Gupta
Designation :	Addl. General Manager
Name :	Mr. I. A. Khan
Designation :	Deputy Manager
Name :	Mr.. Tejbir Singh
Designation :	Addl. General Manager
Name :	Mr. A.K.Mehrotra
Designation :	Addl. General Manager
Name :	Mr. S. P. Tripathi
Designation :	Addl. General Manager
Name :	Mr. M. K. Singh
Designation :	Addl. General Manager
Name :	Mr. D. Shekar Kumar
Designation :	General Manager
Name :	Mr. P. K. Bose
Designation :	General - Manager

MAJOR SHAREHOLDERS

Equity Shares

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters*
- Indian Promoters - Foreign Promoters	267780690 Nil	92.98 Nil
Persons acting in Concert	20219310	7.02
Total	267780690	92.98
Non-Promoters Holding
Institutional Investors
Mutual Funds and UTI	10900	0.00
Banks, Financial Institutions, Insurance Companies
(Central/State Govt. Institutions/Non-government Institutions)	2111412	0.73
FIIs	330900	0.11
Total	2453212	0.85
Private Corporate Bodies	6009434	2.09
Indian Public	11334044	3.94
NRIs/OCBs	422620	0.15
Any other	17766098	6.17
TOTAL	288000000	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer of telecom equipments, which include telephones, large digital switches, transmission systems, digital microwave, fiber optic systems and satellite communication systems.

Products :

Item Code No.	Product Description
85.17	Electrical apparatus for line telephony or line telegraphy
85.25	Transmission apparatus
85.27	Reception apparatus for radio-telegraphy, radio-telephony, etc.

Exports:

The subject exports C-DOT equipment, Microwave equipment, Magneto, Telephone, Batteries and other spares to countries like Afghanistan, Albania, Bhutan, SriLanka, Myanmar etc.

PRODUCTION STATUS

Particulars	ACCOUNTING Unit	Installed Capacity
Switching Products
OCB 283 LOCAL	KL	1000.00
OCB-TAX / TANDEM	KC	500.00
C-DOT Exchanges	KL	2600.00
SMPS	Rs. Millions	1250.00
Transmission Products
Optic Fibre SDH	NOS	3500.00
Terminal Equipment
Telephones	M NOS	1.20
Solar Panel	NOS	30000.00
New Products
WLL-CDMA	KL	PROJECTED STAGE
GSM-INFRA	KL	6000.00
MLLN	Rs. Millions	PROJECTED STAGE
SIM CARDS	M NOS	10.00
DWDM	NOS	PROJECTED STAGE
DLC-SDH	NOS	PROJECTED STAGE
CDMA-WLL-TML/FWT	K Nos	PROJECTED STAGE
VRLA BATTERY	M AH	25.00

GENERAL INFORMATION

Suppliers :

· Andhra Electronics Private Limited

· Alphatron Components Private Limited

· Bhagyadeep Cables (Private) Limited

· Chandra Packaging Industries, Naini

· Doorvani Cables (Private) Limited

· Filicon Electronics (Private) Limited

· Gayan Cirkirtronics, Lucknow

· Hearwell Products

· Joy Industries

· KV Electronics, Allahabad

· Myageri Electronics Private Limited

· Precision Racks Manufacturing Company

· Semi Conductors Complex

· Shree Krishna Electronics

· Sirago Enterprises

· Telecom Cable Industry

· Unicorp Industries Limited, Haryana

· Viman Multiplug Private Limited

Customers :

· Department of Telecommunications, Government of India

· Bharat Sanchar Nigam Limited

· Mahanagar Telephone Nigam Limited

· Defence Services

· Paramilitary, Police & Internal Security Organisation

· Power, Steel And Oil Sectors

· Railways

· Post Offices, Factories, Offices, Banks

· Corporates

· Hotels

· Serval Sales (Private) Limited, New Delhi

· Maxwell Magnetics

· Limai Electronics

· Deepak Electronics

· Chandra Packaging Industries, Naini, Uttar Pradesh

· Hindustan Enterprises

· Joy Industries

· K. V. Electronics

· Viman Multiplug Private Limited

· Protectron Electromech Private Limited

No. of Employees :

14257

Bankers :

Ø State Bank of India

Ø State Bank of Patiala

Ø State Bank of Bikaner and Jaipur

Ø State Bank of Mysore

Ø State Bank of Hyderabad

Ø State Bank of Travancore

Ø Bank of Baroda

Ø Central Bank of India

Ø Punjab National Bank

Ø Development Credit Bank Limited

Ø Indus Ind Bank Limited

Ø UTI Bank Limited

Ø Vijaya Bank

Ø Indian Bank

Ø Canara Bank

Facilities :

(RS. IN MILLIONS )
SECURED LOANS
Cash credit from State Bank of India and other members of the consortium of banks against hypothecation of stocks, stores & raw materials, debts & advances & second charge on all Fixed Assets both movable & immovable except Fixed Assets at Raebareli and third charge on fixed assets both movable & immovable at Raebareli	3063.500
Loan from Pradeshia Industrial Corporation of UP Ltd	7.400
10.50% Government Guaranteed Redeemable Bonds 'G' series of Rs 5.000 millions- each issued in May 2001 redeemable at par in May 2006 with put/call option after 3 years from the date of allotment.	408.000
Government Guaranteed Redeemable Bonds T Series of Rs. 0.500 millions each :- - G Sec + 55 BPS issued in March 2003 redeemable at par in March 2008	100.000
G Sec + 60 BPS issued in May 2003 redeemable at par in May 2008	250.000
6.40% issued in March 2004 redeemable at par in March 2009	150.000
6.40% Government Guaranteed Redeemable Bonds 'J' series of Rs 50.000 millions - each issued in January 2003 redeemable at par in January 2008 with put/call, option after 3 years from the date of allotment.	1500.000
6.50% Government Guaranteed Redeemable Bonds 'L' series of Rs 5.000 millions- each issued in March'2004 redeemable at par in March'2009.	940.000
G SEC+60BPS Government Guaranteed Redeemable Bonds 'M1' series of Rs 1.000 millions - each issued in July 2004 redeemable at par in July 2009 with call option after 1 year from the date of allotment.	555.000
G SEC+75BPS Government Guaranteed Redeemable Bonds 'MIT series of Rs 1.000 millions - each issued in August 2004 redeemable at par in August 2009 with call option after 1 year from the date of allotment.	1825.000
Interest Accrued and due on Bonds Secured by first charge on all fixed assets of the company both movable and immovable present and future and ranking pari passu in favour of bondholders. Charges are created in favour of Canara Bank as agents and trustees of Bond holders.	0.100
UNSECURED LOANS
Public Deposits	0.100
Term Loans from Banks	5101.900
Floating Rate Bonds	2400.000

Banking Relations :	Satisfactory
Auditors :	Ø John Joseph & Mathew Chartered Accountants Bangalore Ø Habibullah and Company Chartered Accountants Gorakhpur Ø Garg Goyal and Company Chartered Accountants Rae Bareli Ø Santosh Kumar and Company Chartered Accountants Naini Ø Ramachandran & Ramachandran Chartered Accountants Palakkad Ø J.S.V.P and Company Chartered Accountants Srinagar
Legal advisers:	Ø Raj and Reddy, Advocates, Bangalore Ø Holla and Holla, Advocates, Bangalore Ø AZB Partners, Advocates, Bangalore Ø Rao and Joshi & Associates, Advocates, Bangalore
Associates/Subsidiaries :	v India Satcom Limited, No. 2, Kadugodi Industrial Area, Whitefield, Bangalore – 560067, Karnataka v Fibcom India Limited, 77-A, Sector – 18, Gurgaon – 122015, Haryana v ITI Communications Private Limited, No. 5, Shenton way, No. 27-01, UIC Building, Singapore - 068808 · All Government of India Undertaking Companies
Membership :	Confederation of Indian Industry

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
30,00,00,000	Equity Shares	Rs.10 each	Rs. 3000.000 Millions
4,00,00,000	Preference Shares	Rs. 100 each	Rs. 4000.000 Millions
Total			Rs 7000.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
28,80,00,000	Equity Shares	Rs.10 each	Rs. 2880.000 Millions
1,00,00,000	8.75% Cumulative Redeemable Preference Shares	Rs. 100 each	Rs. 1000.000 Millions
2,00,00,000	7.00% Cumulative Redeemable Preference Shares	Rs. 100 each	Rs. 2000.000 Millions
Total			Rs. 5880.000 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS	31.03.2006	31.03.2005	31.03.2004
SHAREHOLDERS FUNDS
1] Share Capital	5880.000	5880.000	3880.000
2] Reserves & Surplus	27182.600	643.200	643.200
3] Grant in Aid	1272.100	1550.800	692.200
4] (Accumulated Losses)	(17868.800)	(13581.200)	(10483.000)
NETWORTH	16465.900	(5507.200)	(5267.600)
LOAN FUNDS
1] Secured Loans	11807.200	8799.000	10126.400
2] Unsecured Loans	8000.000	7502.000	7451.900
TOTAL BORROWING	19807.200	16301.000	17578.300
DEFERRED TAX LIABILITIES	----	----	----
TOTAL	36273.100	10793.800	12310.700
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]	28632.900	1966.700	2414.800
Capital work-in-progress	49.800	41.700	12.500
INVESTMENT	4.100	50.100	50.100
DEFERREX TAX ASSETS	0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
Inventories	4122.300	5528.300	6375.300
Sundry Debtors	16624.600	14202.200	11891.500
Cash & Bank Balances	2190.200	1774.100	399.500
Other Current Assets	0.000	0.000	0.000
Loans & Advances	3029.300	2707.400	2274.600
Total Current Assets	25966.400	24212.000	20940.900
Less : CURRENT LIABILITIES & PROVISIONS
Current Liabilities	16650.900	14825.000	13072.400
Provisions	1813.400	982.200	488.000
Total Current Liabilities	18464.300	15807.200	13560.400
Net Current Assets	7502.100	8404.800	7380.500
MISCELLANEOUS EXPENSES	84.200	330.500	2452.800
TOTAL	36273.100	10793.800	12310.700

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Sales Turnover [including other income]	17993.300	18222.200	12041.500
Profit/(Loss) Before Tax	(4275.500)	(3098.200)	(7058.300)
Provision for Taxation	12.100	0.000	0.000
Profit/(Loss) After Tax	(4287.600)	(3098.200)	(7058.300)
Export Value	7.700	65.200	83.600
Import Value	8501.00	6598.500	3603.200
Total Expenditure	20826.600	20967.600	17803.400

QUARTERLY RESULTS

PARTICULARS	31.06.2006	31.09.2006
Sales Turnover	1652.300	1957.800
Other Income	116.300	268.900
Total Income	1768.600	2226.700
Total Expenditure	2582.900	3087.100
Operating Profit	(814.300)	(860.400)
Interest	486.800	500.900
Gross Profit	(1301.100)	(1361.300)
Depreciation	90.000	93.900
Tax	0.000	2.700
Reported PAT	(1391.100)	(1457.900)

200606 Quarter 1 --------------- Notes EPS is Basic & Diluted Status of Investor Complaints for the quarter ended 30.06.2006. Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 02 Complaints disposed off during the quarter 02 Complaints unresolved at the end of the quarter Nil 1. The above results were taken on record by the Board of Directors at their meeting held on July 28 2006 2. Previous Year/ Quarter figures have been regrouped wherever necessary. 3. The Company is engaged in the Business of Manufacture and Sale of Telecommunication Equipments and there are no separate reportable segments as per Accounting Standard 17 issued by the Institute of Chartered Accountants of India. 4. The EPS has been computed in accordance with the Accounting Standard 20 issued by ICAI. 5. All mandatory Accounting Standards issued by ICAI and the same set of accounting policies and practices adopted in the previous year have been followed in the finalisation of results for the quarter ended June 30, 2006. 6. The disclosure/ accounting requirements under AS-18, Related Party, AS-27 Financial reporting of interest in Joint Ventures, issued by ICAI will be made in the accounts of current financial year. 7. Consequent upon company having been referred to BIFR the company has presented the revival package approved by the Govt to BIFR. 8. The Company during March 2006 disposed off the shares in M/S Fiocom Ltd a Joint venture of the company

200609 Quarter 2 --------------- NOTES 1. The above results were taken on record by the Board of Directors at their meeting held on 31.10.2006 2. Previous year/Quarter figures have been regrouped wherever necessary. 3. The Company received No complaints during the quarter. 4. The Company is engaged in the Business of Manufacture and sale of Telecommunication Equipments and there are no separate reportable segments as per Accounting Standard 17 issued by the Institute of Chartered Accountants of India. 5. The EPS has been computed in accordance with the Accounting Standard 20 issued by ICAI. 6. All mandatory Accounting Standards issued by ICAI and the accounting policies and practices adopted in the previous year have been followed in the finalisation of results for the quarter ended 30.09.2006. 7. The disclosure/ accounting requirements under A$-18, Related Party, AS-27 Financial reporting of interest in Joint Ventures, issued by ]CAI will be made in the accounts of current financial year. 8. Consequent upon the company having been referred to BIFR, the company has presented the revival package approved by Govt. to BIFR.

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
PAT / Total Income	(23.82)	(17.00)	(58.62)
Net Profit Margin(PBT/Sales)	(23.76)	(17.00)	(58.62)
Return on Total Assets(PBT/Total Assets}	(7.83)	(11.83)	(30.22)
Return on Investment (ROI)(PBT/Networth)	(0.12)	(0.56)	(1.34)
Debt Equity Ratio(Total Liability/Networth)	1.11	5.83	5.91
Current Ratio(Current Asset/Current Liability)	1.40	1.53	1.54

STOCK PRICES

Face Value	Rs. 10.00/-
High	Rs. 46.75/-
Low	Rs 45.65/-

LOCAL AGENCY FURTHER INFORMATION

NEW PRODUCTS

During 2005-06, ITI has manufactured a number of new products such as GSM-BTS, Edge TRU, Conversion Kits, DLC Broadband, New generation STM-SDH, SSTP, ADSL-DSLAM. ITI is planning to manufacturer STM-64, WIMAX and WiFI products. The production has also started to shelter, tower. ITI would be manufacturing Antenna and Microwave equipment for GSM technology. Further in Power Sector, Energy Saving Devices and Power Distribution Automation Projects have also been inducted.

TECHNOLOGY ALLOIANCE

ANTENNA

MOU has been signed with MOBI, China for manufacture of Antenna and SAF TEHNIKA AS, Latvia for manufacture of Microwave equipment for GSM.

SIM CARDS

A manufacturing capacity of 10 Million numbers per annum has been established in Palakkad in collaboration with G & D, Germany

AUTOMATED INTEGERATED MANAGEMENT SYSTEM (ENERGY SAVING DEVICE)

Education orders have been executed which are under evaluation by BSNL. Regular orders will be executed by Rae Bareli in technology alliance with Adunik Power Systems.

HIGHLIGHTS OF THE PRODUCTION PLANTS

BANGALORE PLANT 

 The Plant has achieved a despatch performance of Rs. 5340.000 Millions (with ED). A record supply of 1344 KL of WLL CDMA infra and 277.5K Nos. of IFWT was made to BSNL. The above turnover includes 100.5 KL of OCB CSN Exchange, 1052 Nos. of C-DOT AN RAX equipment, MUX equipment for Rs.155.400 Millions, 43335 Nos. of Field Telephone for Defence, Antenna for SATCOM Rs.50.000 Millions, other secrecy equipment for Defence worth Rs.299.000 Millions and ASCON equipment for Army Rs.793.800 Millions. The Plant has successfully executed installation and commissioning of more than 1 million lines of WLL CDMA infra during the year. The Plant is planning to manufacture BTS Antenna, Microwave equipment for GSM Project and WiMAX equipment in next year. 

 MANKAPUR PLANT 

 The Plant has achieved a despatch value of Rs.4870.00 Millions (with ED). The Plant has achieved CKD level manufacturing of GSM Infrastructure equipment. 

 The plant has despatched 2253 nos. BTS, 1790 nos. TRX and Rs.2854.000 Millions worth of GSM Infrastructure equipment for GSM Project and Rs.312.600 Millions worth of C-DOT equipment. 

 RAE BARELI PLANT: 

 The Plant achieved a despatch value of Rs.1020.000 Millions (with ED). The plant has achieved CKD level manufacturing of GSM Infrastructure equipment. 

 The Plant has supplied 544 nos. of BTS, 334 nos. of Shelter, 125 nos. of Roof Top Towers, Rs.105.900 Millions worth of Switch Mode Power Supply to GSM Project. Rs.199.500 Millions worth of Switch Mode Power Supply was made to BSNL Circles. Further, the Plant has made a turnover of Rs.303.300 Millions from GSM franchise. The Plant is equipped to supply Power system automation equipment and the educational orders are being executed. 

JOINT VENTURES 

 1. INDIA SATCOM LIMITED 

During the year 2005-2006, India Satcom Limited has achieved a Sales turnover of Rs.61.000 Millions (including services & other income) and reported a Net Profit of Rs. 1.300 Millions. 

 2. FIBCOM INDIA LIMITED 

 During the year all the existing partners of Fibcom India Limited had divested their equity stake in favour of a strategic partner viz., Prima Tel. The Company realized an amount of Rs.116.000 Millions as against original equity investment of Rs.46.000 Millions. 

 3. ITI COMMUNICATIONS PTE. LTD, SINGAPORE 

 We have received communication from the Official Receiver, Singapore that the name of ITI Communications Singapore has been recommended for strike off to Registrar of Companies, Singapore. 

MANPOWER 

Employee’s strength at the end of the year 31.03.2006 was 14257 compared to 14635 at the end of the previous year. 

FIXED ASSETS 

· Land

o Free Hold

o Lease Hold

· Land and Development Expenses

· Building

· Plant, Machinery and Equipments

· Office Manufacturing and Equipment

· Furniture, Fixture and Fittings

· Vehicles

· Assets given on Lease

INTANGIBLE ASSETS

Internally Generated

• Technical Knowhow
• Project Development Expense
• Others

Externally Generated

• Technical Knowhow
• Others

PRESS CLIPPING

The telecom equipment major ITI has recorded a 26%  increase in sales at Rs.17490.000 Millions during    2005-06 over that of the previous year.  This performance, achieved in the face of growing competition and lack of financial resources, represents a 40% jump over the 2003-04 turnover when ITI faced the brunt of steep crash in equipment prices.  “The year proved significant for ITI by virtue of its rapid strides in technology acquisition.  The  Company saw a spurt in its manufacturing activities during the year with supplies of GSM mobile infrastructure equipment manufactured indigenously at its two new facilities at Mankapur and Rae Bareli yielding Rs.5000.000 Millions against an order of 3 million lines worth Rs. 9000.000 Millions for the West Zone”. Shri Pritam Singh, Incharge CMD told  the Company’s shareholders addressing the 56^th AGM here today.   

Shri Singh stated that so far entire supplies have been delivered for this order.  With all equipment in place and  about two million lines RF capacity already generated, BSNL has released around  2.2 million lines to subscribers.  Subsequently, an order for 2 million lines has also been received which  the  Company hopes to complete in the ensuing year, he disclosed.  This, he clarified,  is in addition to an order for 750 KL received  from MTNL for Mumbai.  ITI would also receive orders worth more than Rs.3000.000 Milliions for  2.1  million lines of CDMA-WLL.   In a first major initiative in the country to manufacture and service GSM equipment for export markets,  Shri Singh said  ITI has secured an LOI  from Alcatel  for two million lines. Under this, an initial order for supply of 600 BTS (Base Transceiver System) and 900 TRX (Transceiver) has been received, he elaborated. 

“In a fitting testimony, your Company continues to hold the numero uno position as India’s top telecom turnkey solutions provider, having received the 7^th Annual  Voice & Data 100 Award  2006 for the third time”,  Shri Singh observed.    Expressing confidence that the Company has geared  itself  up to   meet   requirements   of  emerging  markets  with  turnkey  solutions  for  GSM   networks,  WLL-CDMA, CDMA-IFWT (Integrated Fixed Wireless Terminals) and  Defence projects,  Shri Singh remarked that the successful completion of the mammoth ASCON Phase III Network for the Indian Army which was recently inaugurated, underlines ITI’s ability in standing up  to the challenge  of making critical communication possible by means of efficient project management.  He said among the products which have been developed and successfully productionised are Wireless Siren System with Simultaneous Voice  Broadcast facility, IDR (Intermediate Data Rate) Modem, etc.  Pointing out that ITI’s diversification into  non-telecom products has thrown up a wide range of  bank mechanizing gadgets, SMPS power supplies and solar panels,   he   revealed    that   projects    such   as    ADSL   (Asymmetric  Digital   Subscriber  Line) networks,  NGN(New Generation Networks) known as soft switch, broadband networks, WiMAX (Worldwide Interoperability of  Microwave Access),  antenna and  microwave equipment for GSM, GPON (Gigabit Passive Optical Networks), e-governance are on the anvil for which technologies have already been inducted.  These include smart cards and the  Company has bagged a trial order for a pilot project on National ID Cards.  “The manufacture of  the aforesaid products will lead to substantial increase in value addition and effective utilization of manpower”,  Shri Singh told shareholders.  

Outlining the saving  measures,  he said the Company’s continuing endeavour to cut costs has borne fruit – material cost was brought down to 70%  of  sales value  including Excise Duty and financial expenses were reduced to  13% of sales including ED.  Cost savings of Rs.50 Millions were made on controllable expenses out of which Security cost savings  accounted for  a  major  chunk.  Value addition on  production excluding ED went up to Rs.3040 Millions.  Over 400 employees opted for VR during the year in the rightsizing exercise which has seen a total exit of 13,213 staffers since the Scheme’s inception in 1991.  “The Company is tackling its surplus manpower by redeploying and retraining.  While over 900 personnel were engaged in installation and commissioning work of GSM turnkey project in  West Zone, around 200 were put on  WLL-CDMA and MLLN projects”, he added. 

On the Company’s outlook for the current year, Shri Singh said that  with the  confirmed orders  on hand worth Rs. 18390 Millions and further APOs (Advance Purchase Orders)  of Rs. 5680 Millions, the  Company is eyeing a turnover target  exceeding Rs.20000 Millions  for FY 2006-07.   

FUTURE OUTLOOK

The Company is a technology-driven, customer oriented business enterprise which is combining its core strength in manufacturing with that its prowess in turnkey services

to provide total solutions though diversification of its portfolio. It plans to sustain its premier status in the telecom sector by constantly striving to acquire new technology in order to fulfill the demands of customers for better products and services in the convergence era. Some of the strategies adopted by the Company to be competitive in the market and to retain market share

include:

• Long term alliance with BSNL/ MTNL.

• Expansion of Product Portfolio - New Product / Projects.

• Entering into manufacture of Mobile Communication equipment like GSM and CDMA-WLL INFRA and Terminals.

• IT Solutions like MPLS, Internet Infrastructure etc.

• Upgradation of Technology to meet the Market demand.

• Building Total Solution Business.

• Reduction of Manpower and skill building in the new business areas by re-training and re-deployment.

• Entry into Services Business like Installation & Commissioning, External Plant work, Annual

Maintenance Contract with customer for the product supplied.

• Expansion of the business portfolio with Defence / Railways etc.

The company has technical collaboration and alliances with:-

· ALCATEL, France: Large Digital Switches, DLC (SDH)

· C-Dot, India : Small, Medium and Large Digital Switches

· NERA, Norway : Microwave Equipment (SDH)

· Tellab, Denmark : PDH/SDH Fibre Optic Systems

· ASCOM, Switzerland : Switch Modes Power Supply

· Lucent, U.S.A. :WLL, GSM

· Ericsson, Sweden : Voice over IP

· Compaq : Billing Software Fraud Management

· SAGEM, France : DLC (PDH)

· Sun Micro Systems : Software Development Partner

· Oracle Corporation : Software Development Partner

· Microsoft Corporation : Software Development Partner

The company's fixed assets of important value include freehold land, leasehold land, land development, building, plant, machinery & equipments, office equipments, furniture, fixture & fittings, vehicles, etc.

2004-05 PERFORMANCE

ITI OPENS SECOND LINE FOR GSM GEAR.

TO ENTER BROADBAND EQPT SEGMENT, CDMA PRODUCTION SOON

Bangalore, November 30, 2005:

ITI has set a landmark in the country’s indigenous production by successfully commissioning the GSM cellular mobile equipment manufacturing facilities at its two plants in UP--Mankapur and Rae Bareli--in collaboration with its longstanding partner, Alcatel of France.

Chairman & Managing Director Mr. Y K Pandey told shareholders at the Company’s 55^th AGM here today that ITI, the only PSU manufacturing GSM mobile equipment in India, would become the country’s first 3G equipment manufacturer next year, putting India on the world map of select countries manufacturing 3G GSM technology. He said the initial capacity of RB Plant which is three million lines per year would be doubled to six million in the coming year, thus augmenting the total capacity of two lines at Mankapur and Rae Bareli to more than ten million.

The Chairman disclosed that ITI has already received an order from BSNL for three million lines in West Zone which is currently under execution. An APO for additional two million lines is expected shortly. Besides, MTNL has released an APO to ITI for two million lines. In fact, GSM equipment orders form the backbone of the Company’s revival strategy. The indigenous mobile equipment manufactured by ITI, besides meeting the domestic requirements, will also have potential for overseas markets, particularly SAARC and Afro-Asian countries. The Chairman said post-expansion, ITI will have the possibility of producing two million lines for export to Alcatel’s projects in Africa.

The Government, the Chairman stated, had decided to gradually induct more sophisticated technology at all the Company locations to adapt to future market requirements. Around Rs.800.000 Millions have already been invested in Mankapur and RB to upgrade its existing infrastructure to produce GSM equipment. He said the success of technology upgradation and induction, which is a major platform for the Company’s turnaround, is evident across all locations of ITI: Next Generation Soft Switch and STP (Signalling Transfer Point) are slated for production at the Palakkad Plant which is already producing SIM Cards. The Naini Plant has taken up production of SDH (Synchronous Digital Hierarchy) as also DWDM (Dense Wavelength Division Multiplexing) optical equipment besides DLC (Digital Loop Carrier) equipment. Shortly it will enter the broadband equipment segment. The infrastructure would enable the Company to manufacture the DSLAMS and offer network solutions. Geared to provide all equipment for total network solutions and specialised communication needs of Defence forces, the Bangalore Plant is into CDMA infra equipment and IFWTs (Integrated Fixed Wireless Terminals). Soon ITI would upgrade its existing switching from OCB to E10MM. The upgraded version will have advanced features in landline switching with much higher capacity and lower operating costs. This switch will be subsequently upgraded to mobile applications.

ITI continues to make inroads in the telecom turnkey services segment, in which it has proven competence firmly established. The commissioning of the strategic broadband satellite network in Kolkata recently for the Indian Army is a fine example of ITI’s capability in setting up secure communication networks. The Company, the Chairman said, has struck a strategic alliance with BSNL for building a V-SAT based network in Ku band for broadband services. Thus ITI has made its debut into revenue sharing with the country’s largest operator in the new area of IP-based satellite broadband services. The CDMA-WLL turnkey project that ITI has completed for TCIL in Afghanistan is a boost to the Company’s export business, the Chairman stated. A large part of the Company’s manpower resources are being redeployed for turnkey services considering that more than half of ITI’s revenues flow from turnkey solutions, he added. With a view to serving customers better, the Chairman said, the Company has increased its Regional Offices from ten to twelve and is about to open more number of Regional and Area Offices.

Thanking the Government for its support, the Chairman said the Company is in a better position today to tackle competition. ITI has registered an improved performance over the previous year by increasing the turnover to Rs.13890.000 Millions (Rs.12570.000 Millions) and paring down the losses considerably to Rs.3100.000 Millions (Rs.7060.000 Millions). There are sufficient orders on hand—in excess of Rs. 24000.000 Millions – to take ITI’s turnover during the current financial year to a healthy figure, he indicated.

2003-04 PERFORMANCE 

ITI MAINTAINS LEAD IN TURNKEY SERVICES.

BANKS ON MOBILE GEAR FOR REVIVAL.

TAPS NEW STREAMS OF REVENUE. 

Bangalore, September 29, 2004:

State-owned telecom equipment major ITI has emerged the country's top telecom turnkey service company for the second year in succession, firmly establishing its new found status as a total solutions provider in the convergence space. 

Addressing shareholders at the Company's 54^th Annual General Meeting in Bangalore today, Chairman & Managing Director Mr. Y K Pandey disclosed that the number of steps the Company had initiated over the past two years for revival, have begun to bear fruit. The most significant is the acquisition of new technologies like GSM, CDMA, SIM Cards, etc which are slated to bring in the desired increase in sales turnover and regain ITI's lost position as the largest producer of equipment. "The noteworthy trend is that the mobile phone subscription in India may outstrip fixed line connections by the end of this year, creating a huge market for mobile infrastructure equipment that your Company is geared to provide" he said pointing out that ITI finds an important place in the Government's scheme of things to retain primacy in the country's telecom infrastructure sector by developing the Company as a hub for manufacturing.

The Chairman stated that the orders for 4 million GSM lines received for West Zone, of which 1 million are currently under supply, 1 million CDMA-WLL (Code Division Multiple Access – Wireless in Local Loop) lines and over 8 million SIM (Subscriber Identity Module) Cards have bolstered the Company's order book which today stands at excess of Rs.1,6000 mil. The SDH (Synchronous Digital Hierarchy) family of products, DWDM(Dense Wavelength Division Multiplexing and FWT (Fixed Wireless Terminal) have been revitalised. The revival of rural switching with option for 'always on' internet and very low power dissipation resulting in the possibility of deploying solar power, has been worked out. While an alliance has been struck for broadband V-SAT (Very Small Aperture Terminal) services on revenue share with BSNL, a new proposal is being offered for WIMAX (Wireless Interoperability for Microwave Access) solution. On the project front, a tremendous improvement has been witnessed leading to hopes of early closure of many prestigious projects. The recent overseas assignment won by the Company for setting up communication network in Afghanistan for TCIL has given a boost to ITI's export business. "As public sector companies continued to corner the largest share in the telephony services market with BSNL and MTNL leading the list of communication service providers, your Company's stress on strategic alliance with them is meaningful", he emphasised.

Outlining the turnaround strategy, the Chairman said that notwithstanding decreasing margins the gameplan is to capture a large share of open tenders. The Company has also moved to profitably utilise the existing facilities by employing them for contract manufacturing jobs, to meet its own as well as external requirements of the market. Forays into non-telecom products such as bank mechanising gadgets, inverters, patch panel antenna, shelters and towers, have opened new streams of revenue. The cost cutting measures have generated substantial savings---Rs.880 millions in 2002-03 and nearly Rs.1200 mil during 2003-04 --- and the employee cost has been brought down by a sizeable Rs.700 mil from the last Voluntary Retirement Scheme. As downsizing is a major plank of the revival exercise, plans of offering further rounds of VR to shed surplus manpower will mitigate the wage burden, lowering fixed costs. Opportunities are being pursued to raise funds through disposal of surplus assets. The successful merger of Electronic City Plant with the Bangalore Plant, reducing the cost of establishment in the process, represents a decisive step in the restructuring of operations and rational allocation of products amongst the units. "The task on hand is to reach a turnover of at least Rs.24000 millions so that we can minimise our losses this year", the Chairman added.

ITI TO DELIVER RS.12330.000 Million ORDER FOR GSM NETWORK .

MOBILE EQUIPMENT MANUFACTURE BEGINS AT MANKAPUR.

NEW TECHNOLOGY INDUCTION ACROSS ALL PLANTS.

Bangalore, July 12, 2005:

The turnaround efforts of telecom equipment major ITI have received a fillip with a large chunk of mobile network business flowing its way. The Company has received an order estimated at Rs. 12330 mil for setting up GSM mobile network of 4 million lines in West Zone comprising four BSNL Circles of Maharashtra, Gujarat, MP and Chattisgarh.

Under this order, 3 million lines will be installed and commissioned within the next 10 months by ITI on a turnkey basis with complete responsibility. The role of the technology partner, Alcatel CIT of France, will be that of equipment supplier. An order for 1 million lines valued at Rs. 3000 mil which was received last year is currently in the advanced stage of completion. While BTS (Base Transceiver System), power plants, roof top towers and shelters will come from ITI accounting for 54% of the order value including installation and commissioning, Alcatel will contribute MSC (Mobile Switching Centre), BSC(Base Station Controller), TC (Transcoder) and OMC(Operation and Maintenance Centre). Other third party items will be outsourced. 

The facility for manufacture of GSM mobile equipment was commissioned at the Mankapur Plant of ITI on July 7^th making it the country’s first indigenous source, as an outcome of the collaboration agreement with its longstanding partner--Alcatel. The technology used is state-of-the-art, GPRS(General Packet Radio System) and EDGE(Enhanced Data Rate for GSM Evolution) -compliant. With this, ITI joins the league of world class manufacturers of GSM equipment with an initial capacity of 1 million lines to be enhanced to 3 million lines. This infrastructure has been created by upgrading the existing facility with an incremental investment of Rs. 430.000 Millions. A similar facility is being set up at the Rae Bareli Plant of ITI which will augment the manufacturing capacity to 6 million lines per year. Together these Plants will serve the BSNL order for 3 million lines comprising 3100 nos of Base Station equipment to be installed against this order. Rae Bareli Plant is geared to supply shelters and power plants. Fabrication of roof top towers is also being taken up here. Manufacture of MSC and BSC is on the anvil at Palakkad Plant which is already producing batteries.

The establishment of GSM mobile equipment manufacturing base is part of the Company’s revival exercise the major plank of which has been the acquisition of new technology having a huge market potential. The success of the technology upgradation and induction is visible across all locations of ITI: Next generation soft switch and STP (Standalone Signal Transfer Point) are slated for production at Palakkad Plant where SIM Cards are being produced. Naini Plant has already taken up production of SDH (Synchronous Digital Hierarchy) range ---STM 1, 4, 16 and 64 as also DWDM (Dense Wavelength Division Multiplexing). Shortly, it will enter the DSL (Digital Susbscriber Line) broadband equipment segment. Bangalore Plant is into CDMA infra equipment and IFWTs assembly.  

The Company’s prospects look bright with orders of Rs.15000 mil on hand. ITI has plans to manufacture and supply nearly 5 million lines of GSM during 2005-06 taking the projected total turnover of the Company to over Rs. 30000 mil during the year.

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 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. 44.53
UK Pound	1	Rs. 86.29
Euro	1	Rs. 57.80

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	4
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	6
--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	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		47

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