MIRA INFORM REPORT

Report Date :

12.10.2007

IDENTIFICATION DETAILS

Name :	TELCO CONSTRUCTION EQUIPMENT COMPANY LIMITED
Registered Office :	Jubilee Building, 45, Museum Road, Bangalore - 560025, Karnataka
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	30.12.1998
Com. Reg. No.:	08-24588
CIN No.: [Company Identification No.]	U29119KA1998PLC024588
TAN No.: [Tax Deduction & Collection Account No.]	BLRT02428G
PAN No.: [Permanent Account No.]	AAACT9077B
Legal Form :	It is a closely held public limited liability company. The company is a subsidiary of Tata Motors Limited
Line of Business :	Manufacturing and sale of construction equipments and earth moving equipments.

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 10000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is an established company of Tata Group. Available information indicates high financial responsibility of the company. The company’s result has improved. Trade relations are fair. Payments are correct and as per commitments. The company can be considered good for normal business dealings. It can be regarded as a promising business partner in a medium to long run.

LOCATIONS

Registered Office :	Jubilee Building, 45, Museum Road, Bangalore - 560 025, Karnataka, India
Tel. No.:	91-80-25588026/25583345/46/53
Fax No.:	91-80-25583343
E-Mail :	bigamudre.murty@telcon.co.in telcon@telcon.co.in
Website :	http://www.telcon.co.in
Area :	15000 sq. ft
Location :	Leased
Administrative office:	27^th Floor, Centre I, World Trade Centre, Cuffe Parade, Mumbai - 400 005, Maharashtra
Tel. No.:	91-22-22160871
Fax No.:	91-22-22185747
Zonal offices :	Located at : Ahmedabad, Aurangabad, Bhubaneswar, Bilaspur, Chandigarh, Chennai, Cochin, Dhanbad, Goa, Gulbarga, Guwahati, Hospet, Indore, Jaipur, Jamshedpur, Kolhapur, Lucknow, Nellore, Pune, Rajkot, Salem, Udaipur, Vijaywada and Vizag.
Overseas office:	Nitol Motors Limited, Nitol Centre, 71 A, Mohakali Commercial Area, Dhaka, 1212, Bangladesh Tel. No. 00880-2-9887074/76 Fax. No. 00880-2-9883121/9887072 E-mail. nita@citechco.net Contact Person - Mr. Mohammad Aytollah / Mr. N. Ramchandran Access Tower, 278 Union Placa, Colombo, Colombo 02, Sri Lanka Tel. No. 0094-1-302302 Fax. No. 0094-1-302333/302346 E-mail. ajitten@access.lk/sumal@access.lk Contact Person - Mr. Sumal Perera Kathmandu, 999 999, Nepal Tel. No. 00977-1-520320/3/526357 Fax. No. 00977-1-26670 E-mail. paka@mos.com.np Contact Person - Mr. Badri Shreshtha
Factory 1 :	v C/O Tata Moters/ Telco Works, Jamshedpur-831010, Bihar, India v KIADB, Block No : 2, Belur Industrial Estate, Mummigatti, Dharwad - 580007, Karnataka, India
Area :	100 acre
Location :	Owned
Branches :	Located at : Bangalore, Kolkata, Hyderabad, Mumbai, New Delhi and Nagpur

DIRECTORS

Name :	Mr. Jamshed Khurshid Setna
Designation :	Non Executive Chairman
Address :	SB, Saker Apartments, Pochkhanawala Road, Worli, Mumbai – 400025
Date of Birth/Age :	29.08.1928
Date of Appointment :	21.04.2006
Name :	Mr. Ranaveer Sinha
Designation :	Managing Director
Address :	G5, Golmuri Road, Nildih, PO Golmuri, Jamshedpur - 831003
Date of Birth/Age :	09.07.1954
Qualification :	B.E., PGDBM
Experience :	28 years
Date of Appointment :	01.01.2003
Name :	Mr. Kamalesh Chandra Dewan Wazirchand Mehra
Designation :	Non Executive Director
Address :	Flat # 11, Volkart House, 63 Westfield Lane, Bhulabai Desai Road, Mumbai – 400021, Maharashtra, India
Date of Birth/Age :	20.09.1939
Date of Appointment :	29.09.1999
Name :	Mr. T Sakai
Designation :	Director
Date of Appointment:	May 3, 2005
Name :	Mr. Virendraraj Hanwantraj Mehta
Designation :	Non Executive Director
Director :	‘Ganesh Deep’, 373, Anand Vihar, ‘D’ Block, New Delhi – 110092, India
Date of Birth/Age :	12.01.1934
Date of Appointment :	29.09.1999
Name :	Mr. Praveen Purshottam Kadle
Designation :	Non Executive Director
Address :	# 224 NCPA Apartments, Nariman Point, Mumbai – 400021, Maharashtra, India
Date of Birth/Age :	01.01.1957
Date of Appointment :	30.12.1998
Name :	Mr. H. Hamabe
Designation :	Alternate Director
Date of Birth/Age :	46 years
Name :	Mr. A. Ishika
Designation :	Director
Name :	Mr. Hideo Arahata
Designation :	Non Executive Director
Address :	1-154 Tagu – cho, Ushikushi, Ibaraki 300-1236, Japan
Date of Birth/Age :	01.03.1948
Date of Appointment :	03.05.2005
Name :	Mr. Munehiro Kimura
Designation :	Non Executive Director
Address :	1-8-41 Nakashin Juku, Kashiwa, Chiba, Japan
Date of Birth/Age :	05.11.1941
Date of Appointment :	03.05.2005
Name :	Mr. Shoji Lino
Designation :	Alternate Director to Arahata
Address :	3 – 50 Kounoyama Abiko, Chiba, Japan
Date of Birth/Age :	11.07.1957
Date of Appointment :	03.05.2005
Name :	Mr. Mitsohiro Tabei
Designation :	Alternate Director to Kimura
Address :	1001-21-21-8 Chome Machiya, Arakawa – ku, Japan
Date of Birth/Age :	01.03.1952
Date of Appointment :	03.05.2005
Name :	Mr. Toshiaki Takase
Designation :	Alternate Director to Tabei
Address :	1-12-16-207 Tarumachi Kokoku – ku, Yokohama, Japan
Date of Birth/Age :	16.09.1955
Date of Appointment :	15.12.2005
Name :	Mr. Prakash Manjanath Telang
Designation :	Non Executive Director
Address :	Flat # D – 211 Paradise Towers, Plot # 10 Baner Road, Pune – 411045, Maharashtra, India
Date of Birth/Age :	21.06.1947
Date of Appointment :	30.06.2006

KEY EXECUTIVES

Name :	Mr. S. Mazumdar
Designation :	Vice President and Chief Financial Officer
Name :	Mr. Azhagesan Ayyamperumal
Designation :	Company Secretary
Address :	Flat # 308, SMR Castle 29, Banaswadi Main Road, Bangalore – 560043, Karnataka, India
Date of Birth :	27.09.1963
Date of Appointment :	09.01.2001

MAJOR SHAREHOLDERS

Names of Shareholders	No. of Shares
Tata Motors Limited	59749994
Tata Motors Limited	1
Tata Motors Limited	1
Hitachi Construction Machinery Company Limited	40000000
Sheba Properties Limited	250000
Tata Motors Limited	1
Tata Motors Limited	1
Tata Motors Limited	1
Tata Motors Limited	1
Total	100000000

BUSINESS DETAILS

Line of Business :

Manufacturing and sale of construction equipments and earth moving equipments.

Products :

Product Description	Item Code No.
Excavators, Loaders, Mechanical Shovels and parts thereof	8429

Exports to :

Bangladesh, Iraq, Saudi Arabia, Sri Lanka, Nepal, South Africa, Tunisia, and Middle East

Imports from :

Japan and Italy

Terms :

Selling :

Contract + Documents through Bank terms

Purchasing :

L/C and Credit (60 days)

PRODUCTION STATUS

Particulars	Unit	Installed Capacity	Actual Production
Earth Moving Machinery including bull-dozers, dumpers, scrapers, loaders, shovels and draglines (excluding walking draglines)	Nos.	3262	3515
Manufactured components for sale	Millions	--	112.2

GENERAL INFORMATION

Suppliers :

v Hitachi Construction Machinery Company, Japan

v Ital Tractors, Italy

v Kirloskar Cummins Limited/ Cummins Engines, India

v Tata Motors Limited, India

v Wipro Fluid Power, Peenya, Bangalore

Customers :

v Central Public Works Department, India

v State Public Works Departments, India

v Tata Group Companies, India

v North Zone Trader, Srinagar

v Pathankot Excavator, Pathankot

v Super Mover Agencies

No. of Employees :

1055

Bankers :

Ø State Bank of India

Corporate Accounts Group Branch, Express Towers, Nariman Point, Mumbai – 400021, Maharashtra, India

Ø Standard Chartered Grindlays Bank

Bangalore, Karnataka, India

Ø Bank of Baroda

Bangalore, Karnataka, India

Ø Corporation Bank

Bangalore, Karnataka , India

Ø HDFC Bank Limited

Kasturba Road, Bangalore – 560001, Karnataka, India

Facilities :

Secured Loan	(Rs. in millions)
Term Loan from Bank	261.000
Working Capital Foreign Currency Loan
From Bank	269.200

Banking Relations :	Good
Auditors :	S. B. Billimoria and Company Chartered Accountants
Address:	Bangalore, Karnataka, India
Collaborators:	Ø John Deere Industrial Equipment Company, USA Ø Hitachi Construction Machinery Company, Tokyo Ø Euclid Hitachi, USA
Associates:	Ø Tata Associated Cement Companies Limited Ø Hitachi Construction Company Limited Ø Tata Power Company Limited Ø Andhra Valley Power Supply Company Limited Ø The Tata Hydro Electric Power Company limited Ø Tata Consultancy Services Ø Tata BP Solar Limited Ø Tata Sons Limited Ø Tata Industries Limited Ø Tata Iron and Steel Company Limited Ø Tata Davy Limited Ø Tata Share Registry Limited Ø Tata Liebert Limited Ø Tata Tea Limited Ø Tata Infotech Limited Ø Tata Finance Limited Ø Tata Exports Limited Ø Tata Pharma Limited
Subsidiaries:	Ø Tal Manufacturing Solutions Limited Ø Tata Technologies Limited Ø H. V. Transmission Limited Ø H. V. Axles limited
Holding Company:	Tata Motors Limited [Formerly Known as Tata Engineering and Locomotive Company Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
100000000	Equity Shares	Rs. 10/- each	Rs. 1000.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
100000000	Equity Shares	Rs. 10/- each	Rs. 1000.000 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		1000.000	1000.000	1000.000
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		1741.600	1289.705	1053.120
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		2741.600	2289.705	2053.120
LOAN FUNDS
1] Secured Loans		530.200	716.537	1248.506
2] Unsecured Loans		100.000	190.594	0.000
TOTAL BORROWING		630.200	907.131	1248.506
DEFERRED TAX LIABILITIES		106.000	0.000	96.500
TOTAL		3477.800	3196.836	3398.126
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1781.200	1995.855	2131.133
Capital work-in-progress		21.700	38.282	46.888
INVESTMENT		36.300	36.100	36.100
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	2264.400	1910.616	1461.780
	Sundry Debtors	1425.100	996.869	952.385
	Cash & Bank Balances	346.100	167.852	31.783
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	1362.300	502.644	370.055
Total Current Assets		5397.900	3577.981	2816.003
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	2564.800	1956.512	1456.511
	Provisions	1194.500	510.615	223.300
Total Current Liabilities		3759.300	2467.127	1679.811
Net Current Assets		1638.600	1110.854	1136.192
MISCELLANEOUS EXPENSES		0.000	15.745	47.813
TOTAL		3477.800	3196.836	3398.126

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Sales Turnover [including other income]	11599.400	8254.860	6341.454
Profit/(Loss) Before Tax	1367.600	601.944	378.760
Provision for Taxation	499.200	194.314	172.100
Profit/(Loss) After Tax	868.400	407.630	206.660
Export Value	378.800	422.800	1689.047
Import Value	3714.400	409.798	329.316
Total Expenditure	9966.800	7652.916	5962.694

KEY RATIOS

PARTICULARS		31.03.2006	31.03.2005	31.03.2004
PAT / Total Income	(%)	7.48	4.94	3.26
Net Profit Margin (PBT/Sales)	(%)	11.79	7.29	5.97
Return on Total Assets (PBT/Total Assets}	(%)	19.04	10.80	7.66
Return on Investment (ROI) (PBT/Networth)		0.49	0.26	0.18
Debt Equity Ratio (Total Liability/Networth)		1.60	1.47	1.42
Current Ratio (Current Asset/Current Liability)		1.43	1.45	1.68

LOCAL AGENCY FURTHER INFORMATION

Subject is engaged in the business as Manufacturer and Seller of different kinds of Construction Equipments, Excavators, Earth Moving Machinery including Bull Dozers, Dumpers, Scrapers, Loaders, Shovels, Walking Draglines, etc.

CONSTRUCTION EQUIPMENT INDUSTRY:

During the year, the country’s economic conditions remained favorable with impressive growth in construction and mining, leading to healthy demand levels. The GDP growth and exceeded the projected 7% for the year 2005-06 and fueled the growth of the construction equipment industry manifold. The initiatives of the government of India towards the infrastructure development continued during the year under report, resulting in a buoyant 39% growth of the industry, as against 35% in the previous financial year. The requirement of small excavators continued for Roads sector, which gained focus from the government, industry and infrastructure angles. Irrigation projects of the States of Andhra Pradesh, Maharashtra and Gujarat contributed to the increased demand for mid size and smaller excavators. Privatization of mining operations coupled with capacity augmentation of cement industry, enhanced the activities in coal, cement and iron ore sectors and propelled the demand for larger excavators and cranes.

SALES:

During the year, the company sold 3674 machines [2517 in 2004-05]. It recorded a growth rate of 45% in volume over the previous year. The turnover for the year at Rs. 13050 millions accounted for a growth of about 40% over the previous year and included revenue from spare parts amounting to Rs. 1220 millions [Rs. 1120 millions in 2004-05] and other revenue of Rs. 190 millions [Rs. 150 millions]. The company sold 471 machines in the month of March 2006, the highest ever sales achieved in a single month.

EXPORTS:

During the year under report, the company exported 18 machines [ 33 units in 2004-05] to various countries, besides spares and accessories, and the total export turnover amounted to Rs. 79.700 millions [Rs. 137.900 millions]. The export performance was poor in the two new markets of Mongolia and Maldives, which imported 19 machines in the previous year. Maldives showed more interest in the company’s products particularly of larger class, but orders are likely to be received only in the current financial year. During the year, the company focused its attention to the possible markets in Tanzania, and 8 units of diverse equipment were exported to this country. The total exports for the year included three units of dump trucks, eleven excavators, three units of wheeled equipment, and one multi-utility loader, besides spares and accessories. The outlook for the current financial year 2006 – 07 is bright, as the shortfalls of the bygone year are likely to be realized now, while the response from the new markets is also encouraging.

NEW PRODUCTS:

During the year, the company entered its presence in construction, mining and road making equipment. It signed a technical license agreement with Hitachi to manufacture ZX – 450 excavators, as part of its scheme of manufacturing the new generation Z – Axis series of hydraulic excavators in India. Also, an agreement was signed with the German company, Man Takraf Fordertechnik GmbH for marketing its Surface Miners in India. An arrangement was finalized with Bell Equipment of South Africa for productionising the new multi-utility loader for African markets.

Among the new products launched recently, the company sold ten dump trucks, three indigenously developed Motor Graders and one unit each of Asphalt batch – mix plant TAP – 130, vibrating compactor VTA 90 and multi utility loader MUL. The first unit of Asphalt batch mix plant was supplied to one of the company’s key customers and commissioned in Maharashtra. The ‘EX- 350 LCHV Super’ was introduced as an upgrade of the EX – 350 LCH, with a larger bucket, improved aesthetics and other changes. On the large class excavator front, two units of 250 Ton – ultra large mining shovels EX – 2500 were commissioned, while more orders fro additional units received.

JOINT VENTURE INITIATIVES:

During the year 2005-06, the new joint venture company, Telcon Ecoroad Resurfaces Private Limited [TERPL] had, secured a commercial order from Gujarat Toll Road Investment Company Limited for a road – resurfacing project at Vadodara, valued at Rs. 75 millions. TERPL is presently working on the project and expects to complete this in June, 2006. Though selling the new technology has been extremely challenging, TERPL has made substantial improvement towards reaching the idea level of fuel consumption and operating speed and is confident of achieving the levels in future operations. Total income of TERPL for the year 2005 – 06 amounted to Rs. 23.100 millions as against Rs. 10.900 millions in 2004-05, which is estimated to result in an operating profit of Rs. 4.300 millions [Rs. 0.800 million in 2004-05] and a net loss of Rs. 27.900 millions [Rs. 7.300 millions]. TERPL is actively working with various state governments and quasi authorities in order to secure more projects. As part of its marketing initiatives, TERPL invited such authorities to witness the physical operations and its Vadodara site.

OUTLOOK:

The nation expects to witness a sustained economic growth in the years to come following a high GDP growth of about 8% achieved in the financial year 2005-06. With impetus on infrastructure, rural development and electrification, the construction industry in India is poised to grow further at the rate of around 20% per annum, if not more, for the next few years. The Bharat Nirman Yojana announced by the Central Government covering various projects hereunder relating to irrigation, roads, communication, electrification, housing, etc. has certainly set the industry on the definitive growth track. The Jawaharlal Nehru National Urban Renewal Mission [JNNURM] launched in December, 2005 to develop urban India would boost the demand for backhoe loaders and mini excavators significantly. Capacity expansion planned in the power sector and steel, cement, petroleum and coal industries would render immense advantage to the larger class excavators and cranes. The Road sector continues to be promising, as targets have been set to complete the pending build – operate – transfer [BOT] projects in the II and III phases of NHDP, besides announcing new projects like NHDP Phase – IV and Accelerated North East Road Development [ANERD].

The company's products / services include the following:

Ø Hydraulic Excavators

Ø Crawler Cranes

Ø Wheel Loader

Ø Backhoe Loader

Ø Agency Products

The company is in trade terms with the following:

Ø Industrial Enterprises

Ø Jayashree Enterprises

Ø Maker Castings India (Private) Limited

Ø Model Heavy Fabricators Private Limited

Ø Shyam Enterprises

Ø Savita Chemicals Limited

Ø Vikas Gears (India) Limited

Ø Mayur Bhanj Metals Limited

The company's fixed assets of important value include building, plant, machinery, equipment, water systems and sanitation, furniture, fixtures and office appliances and vehicles and transport.

Form 8 Particular for creation or modification of charges

Name of the company

TELCO CONSTRUCTION EQUIPMENT

COMPANY LIMITED

Presented By

UTI Bank Limited, No. 9, M. G. Road, Bangalore – 560001

1) Date and description of instrument creating the change

a. 27.08.2003: Deed of Hypothecation of machinery and other movable fixed assets CCD – 15.

b. 27.08.200 : Standby Facility Agreement – Agreement for Standby Facility

[The above documents relates to the same and single charge]

2) Amount secured by the charge/amount owing on the securities of charge

Standby facility for issuance of commercial paper of Rs. 400 millions

3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given

Hypothecation of all the movable plant and machinery, furniture’s, fixtures, etc. both present and future being movable properties, now stored at or being stored or which may hereafter be brought into or stored at or at present installed at various locations, and also the plant and machinery, which may at any time hereafter belonging to borrower or borrowers disposal and now or at any time and from time to time hereafter stored or be stored or brought into or up on or in course of transit or awaiting transit by any mode of transport to their factory or premises or at any other place whatsoever and wheresoever in their possession or occupation or at any other premises or place [all of which herein after collectively referred to as the said assets’] to secure as a continuing security.

4) Gist of the terms and conditions and extent and operation of the charge.

Standby By Letter of Credit fees – 0.95% to be charged

5) Name and Address and description of the person entitled to the charge.

UTI Bank Limited

No. 9, M. G. Road, Bangalore – 560001, Karnataka, India

6) Date and brief description of instrument modifying the charge

29.08.2003: Extension of equitable mortgage over company’s immovable property [No separate Instrument executed]. Copy of Memorandum of Entry enclosed.

7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.

The present modifications are as under :

The loan amount of Rs. 400 millions is additionally secured by way of Extension of equitable mortgage over company’s immovable property detailed hereunder, the title deeds having been deposited with State Bank of India, Corporate Accounts Group, 20^th Floor, Express Towers, Nariman Point, Mumbai – 400021 acting as agent for UTI Bank Limited.

- All that piece of land in Sy. No’ set out below in the Belur Industrial Area within the village limits of Neeralkatti, Mummigatti, Gungaragatti, Hobli Gang, Dharwad, Taluk Dharwad District, containing by admeasurements 118.76 acres or thereabouts and bounded as follows that it to say :

on or towards the North : by private land

on or towards the South : by National Highway No. 4

on or towards the East : by Garag Road

on or towards the West : by Walmi Land

Survey Number – wise area under possession of Telco Construction Equipment Company Limited

Sr. No.	Survey No.	Areas [In acres]
1	163	4.00
2	164	4.36
3	165 (P)	3.32
4	166	11.14
5	167	1.37
6	168	2.23
7	169	1.36
8	170	4.02
9	171	2.38
10	172	2.06
11	173	4.29
12	179 (P)	11.24
13	180	8.30
14	181	8.48
15	182 (P)	4.21
16	183 (P)	3.03
17	184 (P)	6.20
18	185/1 (P)	3.02
19	187	4.06
20	188	3.34
21	189	4.06
22	190	5.07
23	191	4.11
24	195 (P)	3.11
25	255 (P)	3.00
26	256	7.00
	TOTAL	118.76

And all the plant and machinery attached to the earth or permanently fastened to anything attached to the earth, fixed plant and machinery, fixtures and fittings, constructed, erected or installed thereon or to be constructed, erected or installed thereon [both present and future] [the “Mortgaged Property”.

WEBSITE DETAILS

ABOUT US

Subject is a joint venture company between Indian automobile giant Tata Engineering Limited, Mumbai and world leaders in hydraulic technology, Hitachi Construction Machinery Company Limited, Japan.

Starting operations in 1961 with the manufacture of friction machines in collaboration with P&H, USA, today Subject is a market leader in India. The product range includes hydraulic excavators, crawler cranes, wheel loaders, backhoe loaders, off-highway dumpers, motor graders, skid steer loaders, cane loaders and truck loader cranes. It is now spreading its reach overseas and has already supplied equipment to some Asian, African and Middle Eastern countries.

Subject's credentials lies together in its Design capabilities, in its associations with world leaders such as Hitachi, John Deere, Euclid, Tadano, ZF and the like, state-of-the-art manufacturing facilities is Jamshedpur and Dharwad and excellent and wide-spread customer support, the key to smooth running of capital equipment is well taken care of by its network of more than 30 offices and many more service associates.

Vision:

Maximize value creation for all its stakeholders by offering world class CONSTRUCTIVE SOLUTIONS in harmony with the environment.

Press Release

Tata Motors, Hitachi, Telcon Sign New Agreement

Tata Motors, Hitachi Construction Machinery Company Limited (HCM) and Telco Construction Equipment Company Limited (Telcon), an 80:20 joint venture company between Tata Motors and HCM, on 9th December, 2005 signed an agreement, expanding their scope of cooperation and partnership with HCM increasing its stake in Telcon from 20% to 40%. HCM is a leading Construction Equipment manufacturer with a turnover of around US$ 5 billion. Widely accepted as the foremost in excavator technology, HCM has its own manufacturing operations in Japan, China, Indonesia, Netherlands, France and USA; and distribution network worldwide. Their participation reflects their confidence in the fast growing Indian market and their desire to be a part of the infrastructure building in the country as also to strengthen the relationship with the Tata Group. The agreement was signed by Mr. R.N. Tata, Chairman of Tata Motors, Mr. S. Dazai, President and CEO of HCM and Mr. J.K. Setna, the contemporary Chairman of Telcon.

Telcon Excavators for Disaster Relief

Telcon supplied three EX200LCs with Rock Breakers through DMRC to Disaster Management Cell of MCD last financial year. On 24 Sept. 2005, the three excavators together with other equipment valued around Rs. 9.50 crores were formally inducted into the Disaster Management Cell of MCD by Lt. Governer of Delhi, Mr. B L Joshi. The top brass of MCD including the Commissioner, Mr. Rakesh Mehta and members of the press & media were present on the occasion. The event was organised to demonstrate preparedness to meet unforeseen disasters. MCD has identified three locations for stationing this Disaster Management equipment, viz, Raghubir Nagar, Okhla Industrial Area Phase-II, and Shastri Park.

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. 39.33
UK Pound	1	Rs. 79.74
Euro	1	Rs. 55.74

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--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	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		55

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 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

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