MIRA INFORM REPORT

Report Date :

02.03.2007

IDENTIFICATION DETAILS

Name :	XL TELECOM LIMITED
Registered Office :	335, Chandralok Complex, S. D. Road, Secunderabad - 500 003, Andhra Pradesh, India
Country :	India
Financials (as on) :	30.06.2006
Date of Incorporation :	03.10.1985
Com. Reg. No.:	01-5844
CIN No.: [Company Identification No.]	U31300AP1985PLC005844
TAN No.: (Tax Deduction & Collection Account No.)	HYDX00001B
Legal Form :	A closely held public limited liability company.
Line of Business :	Manufacturing of Telecom Cable Jointing Kits, Heat Shrink type for Jelly Filled Cables.

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 :	USD 3000000
Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is a well-established and reputed company having satisfactory track. Directors are reported as experienced and respectable businessmen. Their trade relations are reported as fair. Payments are reported as usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	335, Chandralok Complex, S. D. Road, Secunderabad - 500 003, Andhra Pradesh, India
Tel. No.:	91-40-27849094/5211
Fax No.:	91-40-27840081
E-Mail :	xltl@hdy.vsnl.net.in, xltl@satyam.net.in
Website :	http://www.xltelecom.net
Factory 1 :	Kits & SPV Division Shed No. 30, 31, 32, IDA, Mallapur, Hyderabad - 500 076, Andhra Pradesh SMPS & UEP Division Plot No. 198/A, IDA Cherlapally, Hyderabad - 500 051, Andhra Pradesh
Branch 1 :	335, Chandralok Complex, SD Road, Secunderabad - 500003, Andhra Pradesh, India.
Tel. No.:	91-40-27849094, 27840109, 27847287
Fax No.:	91-40-27840081
E-Mail :	Info : info@xltelecom.net Sales : sales@xltelecom.net Support : support@xltelecom.net Purchase : purchase@xltelecom.net Careers : careers@xltelecom.net Investor Relations : investorrelations@xltelecom.net
Branch 2 :	105, CENTRE POINT, Andheri Kurla Road, J.B.Nagar, Andheri (East), Mumbai-400 059, India
Tel. No.:	91-22-28251164
Fax No.:	91-22-28251160
E-Mail :	mumbai@xltelecom.net
Branch 3 :	611, New Delhi House, 27, Barakhamba Road, New Delhi-110 001 India
Tel. No.:	91-11-51511419
Fax No.:	91-11-51511418
E-Mail :	delhi@xltelecom.net
Branch 4 :	Forta Import Export S.L. C/ Aragon, 15, 28840 Mejorada Del Campo, Madrid - SPAIN
Tel. No.:	Mr. Juan Jose: 34 630 082 391 Mr. Borja Foret: 34 628 593 539
Telefax No.:	34 91 563 7229
E-Mail :	Spain Office : fortaimex@xltelecom.net

DIRECTORS

Name :	Mr. Dinesh Kumar
Designation :	Managing Director
Address :	Plot No. 1, Lalitha Nagar, West Marredpally, Sec’Bad-500026
Date of Birth/Age :	23/12/1963
Date of Appointment :	15/12/1998
Name :	Mr. Rajeev Kumar Jain
Designation :	Executive Director
Name :	Aneesh Mittal
Designation :	Whole Time Director
Address :	Flat #3, Coromandel Apartment, Ameerpet, Hydesrabad-16
Date of Birth/Age :	05/05/1962
Date of Appointment :	15/12/1998
Name :	Mr. Pramod Kumar Jain
Designation :	Whole Time Director
Address :	36, Vauhini Nagar, Sikh Village, Sec,Bad –11
Date of Birth/Age :	21/06/1966
Date of Appointment :	26/10/2002
Name :	Mr. Wofgang Knop
Designation :	Director
Address :	D-58091, Profil Strabe, Germany
Date of Birth/Age :	17/02/1944
Date of Appointment :	29/10/1997
Name :	Mr. Rajiv Garg
Designation :	Director
Address :	403, Siblee Towers, Mumbai –400018
Date of Birth/Age :	27/06/1955
Date of Appointment :	29/10/1990
Name :	Mr. T. Muralidharan
Designation :	Director
Name :	Mr. Charles Limpens
Designation :	Director
Name :	Ms. Seema Jain
Designation :	Director
Name :	Ms. Renu Mittal
Designation :	Director
Name :	Mr. Ritu Lal Kumar
Designation :	Director
Address :	Plot No. 1, Lalitha Nagar, West Marredpally, Sec’Bad-500026
Date of Birth/Age :	08/11/1965
Date of Appointment :	26/10/2002
Name :	Mr. Sharad S Patil
Designation :	Director
Name :	Mr. K Vasudeva Rao
Designation :	Director
Name :	Dr. R. Srinivasan
Designation :	Chairman
Name :	Mr. Ahsok Kumar Goyal
Designation :	Director

KEY EXECUTIVES

Name :	Ms. Ch. Bhavani
Designation :	Company Secretary and Compliance Officer

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares	Percentage of Holding
ICICI Trusteeship services	250000
IFCI	250000
IDBI	500000
Snehalathalal Family welfare trust	1343915
Corning cable systems	994296
Public financial institution		28.89 %
Foreign holding (FIIs/FCs/FFIs/NRIs/OCBs)		29.72 %
Directors and Relatives		0.036 %
Other top 50 shareholders		40.354 %

BUSINESS DETAILS

Line of Business :	Manufacturing of CDMA Phones, SMPS, Cable Joining kits, Fusion Splicing Machines, Solar photovoltaic Systems, Ethanol
Products :	v Cable Jointing Kits v OFC Accessories v Solar Items v SMPS Systems v Fusion Splicers v CDMA Phones v SMPS v Cable Joining kits v Fusion Splicing Machines v Solar photovoltaic Systems v Ethanol
Customers :	v Bharat Sanchar Nigam Limited (Department of Telecommunications), Government of India v Mahanagar Telephone Nigam Limited v Indian Railways v Departments of Defence v Telecommunications Consultants of India Ltd. v State Nodal Agencies of the Ministry of Non-Conventional Energy Sources v Private sector companies

PRODUCTION STATUS

Particulars	Unit	Installed Capacity
Cable Jointing Kits	Nos.	500000
Mechanical closures	Nos.	50000

GENERAL INFORMATION

Customers :

DOT & MTNL

No. of Employees :

600

Bankers :

v Canara Bank, Mahatma Gandhi Road, Securnderabad, Andhra Pradesh, India

v Vijaya Bank, M G Road, Secunderabad, Andhra Pradesh, India

v The Federal Bank Limited

v Dev Credit Bank Limited

v The Bank of Nova Scotia

v IDBI Bank Limited

v State Bank of Hyderabad, Begumpet Branch, Hyderabad-560016, Andhra Pradesh, India

Facilities :

Secured Loans (Rs. In millions) :

Term Loan
IDBI	24.500
IREDA	0.438
Vijaya Bank	31.116
Interest accrued and due	1.174
Total	57.228
Working Capital Loans :
Canara Bank	133.928
Fedaral Bank	82.871
Vijaya Bank	72.730
State Bank of Hyderabad	40.354
Indian Overseas Bank	41.965
IDBI – Corporate Loan	80.000
IDBI – Short Term Loan	65.000
Total	516.849
Hire Purchase Loans (Net)
ICICI Bank Limited	1.836
Total	1.836
Grand Total	575.914

Banking Relations :	Satisfactory
Auditors :	Satyanarayana & Company, Chartered Accountants Secunderabad, Andhra Predesh
Collaborations :	v Corning v Kyocera v Axess-tel
Associates/Subsidiaries :	v LFM Engineering Private Limited v Lakshmi Telecom Products v Snehlatalal Family Welfare Trust

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
20000000	Equity Shares	Rs.10/- each	Rs. 200.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
10543192	Equity Shares	Rs.10/- each	Rs. 105.432 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2006	30.06.2005	30.06.2004
SHAREHOLDERS FUNDS
1] Share Capital		105.432	33.455	33.455
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		680.556	261.547	190.801
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		785.988	295.002	224.256
LOAN FUNDS
1] Secured Loans		575.914	527.497	376.847
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		575.914	527.497	376.847
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		1361.902	822.499	601.103
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		209.757	221.103	147.017
Capital work-in-progress		0.000	0.000	60.403
INVESTMENT		0.000	0.316	0.316
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	397.850	121.939
	Sundry Debtors	888.805	496.190
	Cash & Bank Balances	120.996	83.421	570.089
	Other Current Assets	0.000	0.000
	Loans & Advances	42.219	21.993
Total Current Assets		1449.870	723.543	570.089
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	229.915	86.929	176.722
	Provisions	67.810	35.534
Total Current Liabilities		297.725	122.463	176.722
Net Current Assets		1152.145	601.080	393.367
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		1361.902	822.499	601.103

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2006	31.03.2005	31.03.2004
Sales Turnover		3954.160	2969.461	2143.120
Other Income		5.367	4.900
Total Income		3959.527	2974.361	2143.120
Profit/(Loss) Before Tax		138.059	107.246	153.350
Provision for Taxation		31.342	47.841	106.560
Profit/(Loss) After Tax		106.717	59.405	46.790
Expenditures :
	Cost of Goods Sold	3479.568	2590.830
	Administrative Expenses	208.207	139.898
	Interest	118.211	123.529	1989.770
	Depreciation & Amortization	15.482	12.857
Total Expenditure		3821.468	2867.114	1989.770

KEY RATIOS

PARTICULARS		31.03.2006	30.06.2005	30.06.2004
PAT / Total Income	(%)	2.69	2.00	2.18
Net Profit Margin (PBT/Sales)	(%)	3.49	3.60	7.16
Return on Total Assets (PBT/Total Assets}	(%)	8.32	11.35	21.38
Return on Investment (ROI) (PBT/Networth)		0.17	0.41	0.68
Debt Equity Ratio (Total Liability/Networth)		1.11	2.20	2.47
Current Ratio (Current Asset/Current Liability)		4.87	5.91	3.23

LOCAL AGENCY FURTHER INFORMATION

The company is also SSI Unit manufacturing Cable Jointing Kits & Mechanical Closures.

The Company’s fixed assets include Buildings, Plant and Machinery, Computers, Vehicles, Furniture and Fixtures and Office Equipments.

The company is having technical collaboration with :

v RXS Schrumpftechnik Garnituren, Germany

v AMP of UK

v Josltn, California, USA

Subject has partnership with Kuocera Wireless Corporation for manufacturing, Sales and distribution of CDMA mobile phones is set to lead the way in retail sale of CDMA mobile phones in cooperative with the leading CDMA operators in India. In addition, Subject is poised to forge alliance and support many other potential business partners to help introduce and promote new technology products through its distribution network. The move into retail promises with consumers, subject is looking forward to cooperate with potential business partners in the area of OEMs/Traders who intend to establish in one of the most promising markets and looking for opportunity for strong partner in distribution of their products, with a vision to-

v Create large set up of Distributors/Retailer/Resellers network across pan India.

v Crete platform to launch new products in India.

v Create Online Customer Supply Relationship Management SCM+CRM.

Commercial Bank SBU IDBI, Hyderabad – 29, dated 01/09/2005

FLC (One off ) Rs. 370.900 millions

Treasury Limit (LER) Rs. 37.100 millions

Website Details :

The telecommunications revolution has increased the need for high-quality back up products. XL Telecom helps to keep the world connected through its range of world-class heat shrink wrap around cable jointing kits.

Subject's large state-of-the-art manufacturing facility in India boasts of the finest in every sphere of activity. Backed by sophisticated equipment, the production is totally automated and adheres to the most stringent parameters. With only five persons controlling the process, the fully electronic functioning allows no room for human error. The factory has a large production capacity of about 1000 meters per shift in eight hours - enabling the company to meet both delivery schedules and budgets without any hiccups.

Subject's strength also lies in the expert team of highly qualified and experienced managers and workers who work in tandem with a comprehensive quality control department to assure excellence at every stage of manufacture.

The results are products that serve as the backbone of the telecommunications industry and are instrumental in bringing the future to our doorsteps.

Subject was incorporated at Hyderabad as a private limited company in 1985 and became a public limited company in 1990. The company is partnered by Corning, Inc., and Kyocera Inc. of USA.

Products :

CDMA Mobile Phones

XL Telecom manufactures the top-flight, high quality Kyocera CDMA 2000 1X, RTT mobile phones for sale in India at their state-of-the-art facility located at picturesque Cherlapally on the outskirts of Hyderabad.The plant is equipped with the latest CDMA mobile phone testing machinery which is capable of simulating all the phones' functionality.The environment within the plant is completely controlled and static free. Personnel working within the plant are specially trained in the manufacture and testing of the Kyocera CDMA phones.

Fixed Wireless Desktop Phones & Terminals

XL Telecom has active technical collaboration with a leading multinational company Axesstel Inc. for the assembly, manufacture & sale of fixed wireless handsets. XL Telecom will assemble these kits, load the required software into phones, test the products and distribute to various BSNL depots. XL is a dedicated supplier of telecom products to telecom operators and service providers like TATA, Reliance, BSNL, MTNL and international clients like MTML and Telelinks as well as network integrators like Nortel and Ericsson

XL Telecom LTD., Leaders in manufacturing of Telephone Jointing Kits is bringing its expertise to manufacture Switch Mode Power supply systems in 48V in modules of 25A & 100A for powering the telecommunications networks.

In technical collaboration with SMPS DE, Austria, XL Telecom produces 25 – 200 AMPS SMPS power plants including power electronic accessories like AC–DC-AC Converters/ Invertors.

Fusion Splicing Machines

Fusion splicing machines made by Corning Cable Systems are sold and serviced by XL Telecom in India. Fully qualified engineers, trained by Corning Cable Systems, Inc., USA, service and maintain all types of optical fusion splicing machines and fibre optic cable accessories and closures.

Cable Jointing Kits/Mechanical Closures

XL Telecom's heat shrink wrap-around sleeves are an effective and quick way of joining cables. With merely the even application of a soft propane based flame around the sleeve, the spliced cable can be joined and insulated smoothly and quickly. XL Telecom's plant at Hyderabad, India, has been installed in technical collaboration with Corning Cable Systems, Inc of USA. The plant is capable of producing 500,000 cable jointing kits annually. Solar Photo-Voltaic Systems

Harnessing the power of the Sun, XL Telecom has a manufacturing facility which can produce solar photo-voltaic cells of up to 2 MW capacity. These are used as power plants for rural exchanges and include plants producing as much as 25 KW to power entire villages besides solar home lighting systems and street lighting systems.

XLTL is the current market leader in solar power lighting systems.

Ethanol Division

XL has ventured into the arena of launching its fuel ethanol plant in an innovative plan aimed at simultaneously bolstering security of energy supplies and improving farm incomes.

XL's state-of-the-art ethanol production plant set up at Nanded is the largest stand alone plant in India and has the capacity to produce 0.15 million litres of ethanol per day through the molecular sieve method.

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.44.28
UK Pound	1	Rs.86.62
Euro	1	Rs.58.32

RATING EXPLANATIONS

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
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

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