MIRA INFORM REPORT

Report Date :

05.07.2008

IDENTIFICATION DETAILS

Name :	MIRC ELECTRONICS LIMITED
Registered Office :	Onida House, G 1, MIDC, Mahakali Caves Road, Andheri (East), Mumbai – 400093, Maharashtra
Country :	India
Financials (as on) :	31.03.2008
Date of Incorporation :	01.01.1981
Com. Reg. No.:	023637
CIN No.: [Company Identification No.]	L32300MH1981PLC023637
TAN No.: [Tax Deduction & Collection Account No.]	MUMM21150D
PAN No.: [Permanent Account No.]	AAACM8055A
Legal Form :	A Public limited liability Company. The company’s Shares are listed on the stock Exchanges.
Line of Business :	Manufacturing of Television Sets, Video Cassettes, Video Cassette Recorders, Audio and Compact Disc Players

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 12000000
Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is a well-established company having satisfactory track. Their trade relations are reported as fair. General financial position is satisfactory. Payments are usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Onida House, G-1, MIDC, Mahakali Caves Road, Andheri (East), Mumbai - 400 093, Maharashtra, India.
Tel. No.:	91-22-28200435 / 56975777
Fax No.:	91-22-28384499 / 28325068
E-Mail :	info@onida.net response@onida.com
Website :	http://www.onidaworld.com http://www.onida.com
Factory 1 :	Village Kudus, Bhiwadi Wada Road, Taluka Wada, Thane – 421 312, Maharashtra, India
Factory 2 :	B-204/205, Phase – II, Noida – 201 305
Factory 3 :	Khasra No. 158, Vill. Raipur, Pargana, Bhagwanpur, Roorkee, District Haridwar, Uttaranchal, India

DIRECTORS

Name :	Mr. Gulu L. Mirchandani
Designation :	Chairman & Managing Director
Qualification :	B.E. (Mechanical)
Other Directorship	He was President of ‘Consumer Electronics and TV Manufacturers Association’ and Chairman of the Bombay Chapter of the World Presidents’ Organisation (WPO)
Name :	Mr. Vijay J. Mansukhani
Designation :	Whole-time Director
Qualification :	Graduate from the College of Marine Engineering, Mumbai
Experienced:	30 Years
Other Directorship	He is the Managing Director of Adino Telecom Limited, a joint venture with Enkay Telecommunications (India) Limited
Name :	Mr. Manoj K. Maheshwari
Designation :	Director
Qualification :	B.Sc.(Chemistry) and Post Graduate in Industrial Management
Name :	Mr.. Vimal Bhandari
Designation :	Director
Qualification :	Chartered Accountant
Other Directorship	He is currently An Executive Director on the Board of Infrastructure Leasing and Financial Services Limited
Name :	Mr. Harsh Mariwala
Designation :	Director
Qualification :	B.Com
Other Directorship	He is the Chairman and Managing Director of Marico Industries Limited, and is also on the board of various Public Limited Companies
Name :	Mr. Gautam Doshi
Designation :	Director
Qualification :	Chartered Accountant
Other Directorship	He is the Director of Ambit Corporate Finance Re. Limited
Name :	Mr. Ranjan Kapur
Designation :	Director
Qualification :	Masters – English from Delhi University and degree is Advbanced Studies from Advertising Agencies Association of America
Other Directorship :	He is thr Director of Pedilite Industries Limited, Abbott India Limited, Hitech Plast Limited, MIC Electronics Limited, Nimbus Communications Limited.

KEY EXECUTIVES

Name :	Mr. Vinod Verma
Designation :	Company Secretary
Name :	Mr. Anoop Pillai
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

(As on 31.03.2008)

Category Code	Category of shareholder	Total Number of shares	Total shareholding as a percentage of total number of shares
(A)	Shareholding of Promoter and Promoter Group
(1)	Indian
(a)	Individuals / Hindu undivided family	1788231	1.26
(b)	Bodies Corporate	76354590	53.77
	Sub-Total (A) (1)	78142821	55.03
(2)	Foreign	-	-
	Sub-Total (A) (2)	-	-
	Total shareholding of Promoter and Promoter Group (A) = (A) (1) + (A) (2)	78142821	55.03
(B)	Public shareholding
(1)	Institutions
(a)	Mutual Funds / UTI	2750	0.00
(b)	Financial Institutions / Banks	7208	0.01
(c)	Insurance Companies	2583585	1.82
(d)	Foreign Institutional Investors	10912009	7.68
	Sub –Total (B) (1)	13505552	9.51
(2)	Non-Institutions
(a)	Bodies Corporate	13008829	9.16
(b)	Individuals
	i. Individuals shareholders holding nominal share capital upto Rs. 0.100 million	33030015	23.26
	Ii. Individual shareholders holding nominal share capital in excess of Rs. 0.100 million	2183421	1.54
(c)	Any other (specify)
	i. Clearing Members	1388228	0.98
	ii. Non-Resident Indians	740718	0.52
	Sub –Total (B) (2)	50351211	35.46
	Total Public shareholding (B) = (B) (1) + (B) (2)	63856763	44.97
	GRAND TOTAL (A) + (B) + (C)	141999584	100.00

BUSINESS DETAILS

Line of Business :

Manufacturing of Television Sets, Video Cassettes, Video Cassette Recorders, Audio and Compact Disc Players

Products :

Product Description	Item Code No. (ITC Code)
Colour Television Receivers	8528
Air Conditioners	8415
DVD Players	8521

Brand Names :

IGO

PRODUCTION STATUS

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Televisions	Nos.	2300000	3000000	907564
Washing Machines	Nos.	780000	380000	100932
Air-Conditioners	Nos.	300000	100000	77869
Television Components and Spares	Nos.	NA	NA	NA
Electronic Turners		3720000	3720000	1268783

GENERAL INFORMATION

No. of Employees :

2000

Bankers :

v State Bank of India

v Canara Bank

v SBI Commercial & International Bank Limited

v IDBI Bank Limited

v HDFC Bank Limited

v The South Indian Bank Limited

Facilities :

Secured Loans:	31.03.2008 (Rs. In millions)
Cash Credit	907.226
Long Term	130.00
Total	1037.226

Of the above Rs.1027.226 (Previous year : Rs.512.627 is repayable within one year)

Notes :

1) Cash Credit is secured by first pari passu charge in favour of the bankers by hypothecation of Company’s current assets and by second charge on the Company’s immovable and movable properties and further secured by the corporate guarantee of the Holding Company.

2) Long Term Loan from State Bank of India is secured by first charge by way of mortgage on Company’s Fixed Assets at Wada factory.

Un secured Loans:	31.03.2008 (Rs. In millions)
Term Loan From Banks	950.000
From Others – Intercorporate Deposits	7.660
Sales Tax Deferment Loan	0.740
Total	958.400

Of the above Rs.408.400 (Previous year : Rs.455.200 is repayable within one year)

Banking Relations :	Satisfactory
Auditors :
Name :	N. M. Raiji & Company Chartered Accountants
Associates/Subsidiaries :	v Akasaka Electronics Limited v Imercius Technologies India Limited
Holding Company :	Guviso Holdings Private Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
150000000	Equity shares	Rs.1/- each	Rs.150.000 millions
2000000	Preference Shares	Rs.100/- each	Rs.200.000 millions
Total			Rs.350.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
141999584	Equity Shares	Rs.1/- each	Rs.141.999 millions
	Less : Calls in arrears		0.064 millions
	Total		Rs.141.935 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2008	31.03.2007	31.03.2006
SHAREHOLDERS FUNDS
1] Share Capital		141.935	141.935	141.935
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		2400.519	2220.794	2012.768
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		2542.454	2362.729	2154.703
LOAN FUNDS
1] Secured Loans		1037.226	1163.646	1354.496
2] Unsecured Loans		958.400	455.200	307.450
TOTAL BORROWING		1995.626	1618.846	1661.946
DEFERRED TAX LIABILITIES		168.940	195.549	194.118
TOTAL		4707.020	4177.124	4010.767
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1897.363	2060.506	2067.492
Capital work-in-progress		19.380	1.288	0.101
INVESTMENT		260.018	259.977	211.353
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	2925.709	2303.451	1748.806
	Sundry Debtors	1336.880	1042.146	1131.171
	Cash & Bank Balances	194.605	167.571	367.242
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	799.797	764.269	469.153
Total Current Assets		5256.991	4277.437	3716.372
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	2533.382	2393.732	1828.915
	Provisions	193.350	28.352	155.636
Total Current Liabilities		2726.732	2422.084	1984.551
Net Current Assets		2530.259	1855.353	1731.821
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		4707.020	4177.124	4010.767

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
Sales Turnover		15283.839	15139.027	9413.265
Other Income		36.961	40.649	0.000
Total Income		15320.800	15179.676	9413.265
Profit/(Loss) Before Tax		405.512	514.159	531.799
Provision for Taxation		59.655	173.007	93.760
Profit/(Loss) After Tax		345.857	341.152	438.039
Earnings in Foreign Currency :
	Export Earnings	278.750	272.247	303.010
Imports :
	Raw Materials	5403.532	3204.878	0.000
	Capital Goods	55.827	59.091	0.000
Total Imports		5459.359	3263.969	1613.638
Expenditures :
	Cost of Goods Sold	5421.960	5450.053	0.000
	Personnel Expenses	660.022	660.736	0.000
	Financial Expenses	231.828	202.802	0.000
	Raw Material Consumed	6382.222	6143.327	0.000
	Increase/(Decrease) in Finished Goods	(169.799)	(84.729)	0.000
	Depreciation & Amortization	239.357	197.393	0.000
	Other Expenditure	2149.698	2095.935	0.000
Total Expenditure		14915.288	14665.517	8744.873

KEY RATIOS

PARTICULARS	31.03.2008	31.03.2007	31.03.2006
Debt-Equity Ratio	0.74	0.73	0.9
Long Term Debt-Equity Ratio	0.41	0.41	0.71
Current Ratio	1.34	1.28	1.52
TURNOVER RATIOS
Fixed Assets	4.84	4.99	4.34
Inventory	6.33	8.15	7.9
Debtors	13.91	15.19	13.17
Interest Cover Ratio	2.75	3.52	3.83
Operating Profit Margin(%)	5.3	5.54	6.77
Profit Before Interest And Tax Margin(%)	3.85	4.34	5.09
Cash Profit Margin(%)	3.54	3.26	4.13
Adjusted Net Profit Margin(%)	2.09	2.07	2.45
Return On Capital Employed(%)	14.96	18.38	17.55
Return On Net Worth(%)	14.1	15.1	15.99

LOCAL AGENCY FURTHER INFORMATION

History

Incorporated as a private limited company by Gulu Mirchandani, Vijay Mansukhani and Sonu Mirchandani of the Onida group, MIRC Electronics manufactures the well-known Onida brand of colour televisions (CTVs) and video cassette recorders. Other group companies are Onida Saka, Onida Savak and Monica Electronics. 

MEL tapped the capital market to finance its CTV expansion, and diversification into the audio segment. Commercial production at the expanded capacity started from Jul.'95. The company has opened Onida Arcades, exclusive retail shops, and introduced state-of-the-art wide-vision TVs and audio systems. MEL was awarded the ISO 9001 certification during 1994-95

The company concentrated on reinforcing and improving the penetration of its sales and after sales support infrastructure. During 1997-98, the company came out with a new range of products christened 'Techno Value', which has been launched with considerable success. In 1998-99, it introduced the WEBCRUISER - the world's first internet TV, the trendy TV and PIP in the 25" segment. In 1999-2000, the company introduced multi-coloured Candy in the 14 inch TV segment.

 In the fiscal 2001, it came out with 29KY Thunder series which was amongst the first 650 watt television set in the world and has embarked on the process to launch a plasma display tube television in collaboration with Fujitsu. With effect from 1st April,2001 Onida Infotech Serivces Ltd was merged with MIRC Electronics Ltd. In 2001-02 it had launched the 29 inch Home Theatre,the first to convert a mono recording into a 5.1 output surround sound.

Financial performance: 

During the financial year 2007-08, the turnover of the Company stood at Rs.16550.000 millions as against Rs.16510.000 millions in the previous year. The profit before tax stood at Rs.405.000 millions as against Rs.514.200 millions in the previous financial year. The profit after tax for the financial year ended March 31, 2008 stood at Rs.345.900 millions as against Rs.341.200 millions in the previous financial year. The directors are confident of improving their performance in the ensuing year. In this direction the company has launched an exclusive world class LCD under the XARIA range. The company has also added to its product portfolio state-of-the art Onida Mobile Phones. These initiaves taken by the management are likely to accelerate the pace of growth of the company and consequently its performance in the coming years.

Susidiary Company

The audited statement of accounts of Company’s subsidiary viz. Akasaka Electronics Limited together with the Report of Directors and Auditors as required under section 212 of the Companies Act, 1956.

Industry Structure and developments

The electronics industry in India is going through a dynamic change and the Indian consumer is a direct recipient of this change. Curved is out and slim is in be it in Digital Audio Players or Digital Televisions.

The LCD television segment id showing an exponential growth in the Indian market and is fast becoming the new face of the television market worldwide. According to available industry figures, global LCD market is stated to be around 92 million units in 2008. It is estimated to grow by over 15% this year to touch around 115 million units in 2009 and touch 139 million in 2010. The burgeoning LCD sales can be attributed to the growing cost efficiencies in LCD panels enhancing the cost competitiveness, technology advancement in this sector and the benefits communicated to customers. All of these are in turn, serving to fuel the consumer interest in this category.

The consumer durable sector is poised for a quantum leap over the next few years, thanks to the improving technology, falling prices due to competition, aggressive marketing initiatives and declining import tariffs.

Future Outlook

The worldwide electronics industry is experiencing phenomenal and remarkable changes these days. It is distinguished by fast technological advances and has grown rapidly than most other industries over the past 30 years. Voluminous production is slowly and gradually moving towards low cost destinations, which in turn are the markets which offer the most long term potential. In today’s age of competition , electronic products manufacturers are under constant pressure to develop new and innovative products in shorter time cycles, at reduced cost, and with improved quality.

The global electronics industry is driven by demand for the products, which are durable, lighter, cheaper and better than the ones they replace. To meet up the growing market demands, industry is slowly and gradually shifting its base to Asia Pacific countries, which is now the prominent source of electronic goods and is soon going to turn out to be the primary destination for consumer electronics. There is an estimation that within 20 years, two thirds of the electronics industry will be four times as big as today and half of it will move into Asia.

The Company has extended its offerings under the Onida Brand across products, as well as geographical boundaries. The Company expects to increase its presence in these products and emerge as a leading solutions provider for electronic home improvement goods. The Company has also introduced a high-tech world class LCD which is considered the best in the industry.

The company has also positioned IGO-its exclusive brand customized for the rural market, which is growing aggressively at a pace of 25% annually.

Operational and Financial performance

During the financial year 2007-08 under review, the turnover of the Company increased from Rs.16509.900 millions in the previous year to Rs.16550.600 millions. The profit before tax stood at Rs.405.500 millions as against Rs.514.200 millions in the previous financial year. The profit after tax for the financial year ended March 31, 2008 stood at Rs.345.900 millions as against Rs.341.200 millions in the previous financial year.

Profile

Subject is the maker of the Onida brand of TVs has grown a number of connectivity options in its backyard. There are VSAT links, leased lines, VPN links, ISDN links, RF (Radio Frequency) links, and dial up links. The company is now able to share its SAP R/3 data among 140 users across 38 locations nationwide without the fear of losing valuable transaction and operations data in a communications breakdown.

Since MEL runs an ERP which demands data be available all the time and has users sprinkled in multiple locations nationwide, it had to ensure multiple connectivity options. And the initiative has paid off very well.

Subject was founded in 1981 and began computerization five years ago by deploying LANs at various locations with CAT 5 structured cabling. RF links were deployed in a couple of years between its offices in Mumbai and Thane to share information.

The RF links connect the HO (Head Office) to two locations in Mumbai, the Mumbai branch office and the Onida Infotech building. Bandwidth of the RF links is 1.5 Mbps and they are backed up with dialup links. The RF equipment includes wireless transceivers and wireless modems from Wi-LAN.

The Company uses HCL Infinet’s network to support a 64 Mbps leased line which connect to 20 branch offices nationwide. Each link is backed up with 128K ISDN links. The company also uses the service provider’s VPN for security. A firewall sits between the mail server at the HO and the Internet. A 128K DSL and a back up 64K DSL link help make the connection.

The Company earlier had a PAMA link between the HO and the New Delhi office. It has recently migrated the link to a VPN. The bandwidth is 32 Kbps and will soon be doubled due to expected higher data traffic.

Contingent Liabilities

(Rs. In Million)

Particulars	31.03.2008
Guarantees given to Bank against which Rs. Nil (Previous year Rs. Nil) has been deposited as margin money	12.349
Guarantees given to bank on behalf of subsidiary companies Akasaka Electronics Limited	187.000
Income tax demands in respect of which appeals have been filed	206.480
Excise and Custom Duty in respect of which appeals have been filed	33.939
Claims made against the Company not acknowledged as debts	496.002

Fixed Assets

· R and D Software

· Leasehold land

· Freehold land

· Buildings

· Plant and Machinery and Electrical Fittings

· Furniture, Fixtures and Equipments

· Motor Vehicles

· R and D - Building

· R and D- Plant and Machinery and Electrical Fittings

· R and D – Furniture, Fixture and Equipments

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.43.21
UK Pound	1	Rs.85.72
Euro	1	Rs.67.92

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	5
--CREDIT LINES	1~10	5
--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		46

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.	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