MIRA INFORM REPORT

Report Date :

24.07.2012

IDENTIFICATION DETAILS

Name :	VINDHYA TELELINKS LIMITED
Registered Office :	Udyog Vihar, P. O. Chorhata, Rewa - 486 006, Madhya Pradesh
Country :	India
Financials (as on) :	31.03.2012
Date of Incorporation :	27.01.1983
Com. Reg. No.:	10-002134
Capital Investment / Paid-up Capital :	Rs.118.397 Millions
CIN No.: [Company Identification No.]	L31300MP1983PLC002134
TAN No.: [Tax Deduction & Collection Account No.]	JBPV00018E
Legal Form :	A Public Limited Liability company. The company’s Share are Listed on the Stock Exchange.
Line of Business :	Manufacturer of Polyethylene Insulated Jelly Filled Telephone Cables.
No. of Employees :	351 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

Ba (48)

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

Maximum Credit Limit :	USD 8700000
Status :	Satisfactory
Payment Behaviour :	Usually correct
Litigation :	Clear
Comments :	Subject is an established company having satisfactory track. There appears loss in the current year. However, trade relations are reported to be fair. Business is active. Payment are reported to be usually correct and as per commitment. The company can be considered normal for business dealing at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – June 30, 2012

Country Name	Previous Rating (31.03.2012)	Current Rating (30.06.2012)
India	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

LOCATIONS

Registered Office / Factory:	Udyog Vihar, P. O. Chorhata, Rewa - 486006, Madhya Pradesh, India
Tel. No.:	91-7662-400400
Fax No.:	91-7662-400591
E-Mail :	vintele@bom6.vsnl.net.in vintel@sancharnet.in headoffice@vtlrewa.com
Website :	http://www.vtlrewa.com
Marketing Offices :	Located at : Navi Mumbai Bangalore Chennai Vadodara New Delhi Kolkata Bhopal Goa Hyderabad Allahabad

DIRECTORS

As on 31.03.2012

Name :	Mr. Haresh. V. Lodha
Designation :	Chairman
Name :	Mr. J. Veera Raghavan
Designation :	Director
Name :	Mr. S. K. Misra
Designation :	Director
Name :	Mr. R. C. Tapuriah
Designation :	Director
Name :	Mr. D. R. Bansal
Designation :	Director
Name :	Mrs. Pracheta Majumdar
Designation :	Director
Name :	Mr. Y. S. Lodha
Designation :	Managing Director

KEY EXECUTIVES

Name :	Mr. R. Radhakrishnan
Designation :	Senior Vice President and Secretary
Audit Committee :	R. C. Tapuriah (Chairman)
	Mr. J. Veeraraghavan
	Mr. S. K. Misra
	Mr. Pracheta Majumdar

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2012

Category of Shareholder	Total No. of Shares	Percentage of Holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Central Government / State Government(s)	28000	0.24
Bodies Corporate	5129405	43.28
Sub Total	5157405	43.52
(2) Foreign
Total shareholding of Promoter and Promoter Group (A)	5157405	43.52
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	2592	0.02
Financial Institutions / Banks	4254	0.04
Foreign Institutional Investors	1111191	9.38
Sub Total	1118037	9.43
(2) Non-Institutions
Bodies Corporate	990110	8.35
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 million	1183900	9.99
Individual shareholders holding nominal share capital in excess of Rs.0.100 million	2039697	17.21
Any Others (Specify)	1361714	11.49
Societies	1253886	10.58
Non Resident Indians	92612	0.78
Clearing Members	15216	0.13
Sub Total	5575421	47.05
Total Public shareholding (B)	6693458	56.48
Total (A)+(B)	11850863	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	--	--
(1) Promoter and Promoter Group	--	--
(2) Public	--	--
Sub Total	--	--
Total (A)+(B)+(C)	11850863	--

Notes:

1. For determining public shareholding for the purpose of Clause 40A

2. For definitions of Promoter and Promoter Group, refer to Clause 40A.

3. Public shareholding

BUSINESS DETAILS

Line of Business :

Manufacturer of Polyethylene Insulated Jelly Filled Telephone Cables.

Products :

· Coiled /Straight Cords

· Stranded Copper Wire

· Insulated Cables. Cords, Flexes

· Fiber Ribbon

Product Description	ITC Code
Jelly Filled Telephone Cables	85444990
Optical Fibre Cable	90011000 and 85447090
Aerial Bunch Cables	85446090

PRODUCTION STATUS (As on 31.03.2011)

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Jelly Filled Telephone Cables	CKMs	10700000	7026000	686077
Optical Fibre Cables	KMs	34272	34272	14368
Fibre Ribbon	KMs	75000	75000	--
Quad Jelly Filled Telephone Cable	KMs	1800	1800	36
FRP Rod	KMs	20000	20000	19070
E-Glass Roving	MTs	25	25	4
Tinned Copper Wire	MTs	1036	1036	13
Signalling Cable	KMs	2000	2000	221
Aerial Bunched Cable	KMs	12000	12000	599

GENERAL INFORMATION

No. of Employees :

351 (Approximately)

Bankers :

• State Bank of India, Madama Cama Road, Mumbai – 400021, Maharashtra, India
• Axis Bank
• State Bank of Patiala

Facilities :

(Rs. In Millions)

Secured Loan	As on 31.03.2012	As on 31.03.2011
Cash credit facilities	387.186	173.552
Buyers’ Credit (for operational use)	210.247	122.945
Export packing credit	252.444	90.750
Total	849.877	387.247
Unsecured Loan	As on 31.03.2012	As on 31.03.2011
From bodies corporate (repayable on demand)	100.000	100.000
From related parties (repayable on demand) [Note No. 38 (a)]	270.000	70.000
Total	370.000	170.000

Note:

a) Working capital loans/trade credits from banks being working capital credit facilities, sanctioned by banks are generally renewable within twelve months from the date of sanction or immediately previous renewal, unless otherwise stated. The lender banks have a right to cancel the credit limits (either fully or partially) and, interalia, demand repayment in case of non-compliance of terms and conditions of sanctions or deterioration in the loan accounts in any manner whatsoever, etc.

b) Working capital loans (both fund and non-fund based) from State Bank of India (SBI) and State Bank of Patiala (SBP) are secured by hypothecation of the stock of inventories, cash and other current assets, book debts, outstanding moneys, receivables, claims, bills, invoices, documents, contracts, etc., both present and future, and are further secured by way of hypothecation of moveable fixed assets, both present and future, ranking pari-passu interse and first charge created by way of joint mortgage by deposit of title deeds of immovable properties of the Company. As a collateral security, the credit facilities from SBI are additionally secured by way of pledge of 12,50,000 equity shares and cross corporate guarantee of Birla Ericsson Optical Limited, a joint venture.

Banking Relations :	--
Auditors :
Name :	V. Sanjar Aiyar and Company Chartered Accountants
Address :	New Delhi, India
Solicitors :
Name :	NMS and Company
Address :	New Delhi, India
Subsidiaries :	August Agents Limited Insilco Agents Limited Laneseda Agents Limited
Joint Venture :	Birla Ericsson Optical Limited(BEOL)

CAPITAL STRUCTURE

As on 31.03.2012

Authorised Capital :

No. of Shares	Type	Value	Amount
15000000	Equity Shares	Rs.10/- each	Rs.150.000 Millions

Issued:

No. of Shares	Type	Value	Amount
11852014	Equity Shares	Rs.10/- each	Rs.118.520 Millions

Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
11850863	Equity Shares	Rs.10/- each	Rs.118.509 Millions
	Less: Calls Unpaid		Rs. 0.112 Million
	Total		Rs.118.397 Millions

Note:

a) There is no variation or change in the issued, subscribed and fully paid-up equity share capital structure during the year. Therefore, no separate disclosure of reconciliation of the number of equity share outstanding as at the beginning and at the end of the year is required.

b) The Company has only one class of shares referred to as equity shares having nominal value of Rs.10/-. The holders of equity shares are entitled to one vote per share.

c) Shareholders holding more than 5% shares based on legal ownership in the subscribed share capital of the Company is set out below:

Name of the shareholder	No. of Shares	% held
Universal Cables Limited	3454530	29.15
The Punjab Produce and Trading Company Private Limited	1291374	10.90
Belle Vue Clinic	1164286	9.82
Acacia Partners, LP	643555	5.43

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2012	31.03.2011	31.03.2010
SHAREHOLDERS FUNDS
1] Share Capital		118.397	118.397	118.222
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		2078.318	2208.705	2169.834
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		2196.715	2327.102	2288.056
LOAN FUNDS
1] Secured Loans		849.877	387.247	360.508
2] Unsecured Loans		370.000	170.000	150.000
TOTAL BORROWING		1219.877	557.247	510.508
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		3416.592	2884.349	2798.564
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		446.862	472.857	458.917
Capital work-in-progress		2.820	12.418	14.257
INVESTMENT		1176.837	1176.837	1176.837
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	323.468	185.571	231.722
	Sundry Debtors	1757.822	1130.880	1038.692
	Cash & Bank Balances	90.651	145.651	92.768
	Other Current Assets	79.124	2.436	4.337
	Loans & Advances	205.959	192.589	169.769
Total Current Assets		2457.024	1657.127	1537.288
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	528.203	400.400	326.282
	Other Current Liabilities	108.278	8.044	37.713
	Provisions	30.470	26.446	24.740
Total Current Liabilities		666.951	434.890	388.735
Net Current Assets		1790.073	1222.237	1148.553
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		3416.592	2884.349	2798.564

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2012	31.03.2011	31.03.2010
	SALES
		Income	2505.198	1969.754	2008.616
		Other Income	68.196	121.851	84.661
		TOTAL (A)	2573.394	2091.605	2093.277
Less	EXPENSES
		Raw materials consumed	1206.042	733.706	837.111
		Purchase of stock –in-trade	10.709	--	--
		Decrease in inventories	(139.142)	20.584	34.378
		Cost of traded goods sold	0.000	0.120	0.273
		Materials purchased/Subcontract expenses	984.991	733.251	639.199
		Personnel expenses	190.139	171.694	129.772
		Operating and other expenses	282.949	273.634	244.194
		TOTAL (B)	2535.688	1932.989	1884.927
Less	PROFIT/ (LOSS) BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		37.706	158.616	208.350
Less	FINANCIAL EXPENSES (D)		120.158	74.279	50.587
	PROFIT/ (LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		(82.452)	84.337	157.763
Less/ Add	DEPRECIATION/ AMORTISATION (F)		47.576	46.212	42.123
	PROFIT / (LOSS) BEFORE TAX (E-F) (G)		(130.028)	38.125	115.640
Less	TAX (H)		0.318	(0.079)	(0.209)
	PROFIT / (LOSS) AFTER TAX (G-H) (I)		(130.346)	38.204	115.849
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		154.053	115.849	0.000
	BALANCE CARRIED TO THE B/S		23.707	154.053	115.849
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	197.073	286.268	150.034
		Contract Revenue	53.939	141.642	110.147
		Interest	0.466	0.192	NA
	TOTAL EARNINGS		251.478	428.102	260.181
	IMPORTS
		Raw Materials	577.668	351.820	271.703
		Stores & Spares	1.182	5.556	1.230
		Capital Goods	1.440	32.023	20.238
		Traded Goods	7.868	0.513	0.159
	TOTAL IMPORTS		588.158	389.912	293.33
	Earnings/(Loss) Per Share (Rs.)		(11.01)	3.23	9.80

KEY RATIOS

PARTICULARS		31.03.2012	31.03.2011	31.03.2010
PAT / Total Income	(%)	(5.07)	1.83	5.53
Net Profit Margin (PBT/Sales)	(%)	(5.19)	1.94	5.76
Return on Total Assets (PBT/Total Assets}	(%)	(4.48)	1.79	5.79
Return on Investment (ROI) (PBT/Networth)		(0.06)	0.02	0.05
Debt Equity Ratio (Total Liability/Networth)		0.86	0.43	0.39
Current Ratio (Current Asset/Current Liability)		3.68	3.81	3.95

LOCAL AGENCY FURTHER INFORMATION

Sr. No.	Check List by Info Agents	Available in Report (Yes / No)
1]	Year of Establishment	Yes
2]	Locality of the firm	Yes
3]	Constitutions of the firm	Yes
4]	Premises details	No
5]	Type of Business	Yes
6]	Line of Business	Yes
7]	Promoter's background	Yes
8]	No. of employees	Yes
9]	Name of person contacted	No
10]	Designation of contact person	No
11]	Turnover of firm for last three years	Yes
12]	Profitability for last three years	Yes
13]	Reasons for variation <> 20%	--
14]	Estimation for coming financial year	No
15]	Capital in the business	Yes
16]	Details of sister concerns	Yes
17]	Major suppliers	No
18]	Major customers	No
19]	Payments terms	No
20]	Export / Import details (if applicable)	No
21]	Market information	--
22]	Litigations that the firm / promoter involved in	--
23]	Banking Details	Yes
24]	Banking facility details	Yes
25]	Conduct of the banking account	--
26]	Buyer visit details	--
27]	Financials, if provided	Yes
28]	Incorporation details, if applicable	Yes
29]	Last accounts filed at ROC	Yes
30]	Major Shareholders, if available	No
31]	PAN of Proprietor/Partner/Director, if available	No
32]	Passport No of Proprietor/Partner/Director, if available	No
33]	Voter ID No of Proprietor/Partner/Director, if available	No

GENERAL AND CORPORATE MATTERS

During the year, the Company's revenue from operations was higher than the previous year by 28.49%. This is appreciable given the fact that telecommunications sector in India has been facing considerable uncertainty in the recent past due to unfavourable regulatory environment, which has slowed down the domestic capex cycle of the telecom operators. As a consequence telecommunications cables manufacturers have had to struggle for business with lower volumes and longer credit periods. Despite this major but temporary aberration leading to reduced telecommunications cables consumption during the year, pentup demand is expected to remain strong. However the magnitude and timing will depend upon clarity on major policy issues and consequent resource allocations by the Government and the telecom operators. In addition to this, the liquidity constraints and slow decision making process in the power and telecommunications infrastructure sectors in India where huge upfront investment commitment is a pre-requisite, have led to uninspiring performance by Company's EPC Division as the anticipated growth did not materialize.

The gross revenue from operations for the year increased to Rs. 2627.730 Millions as compared to Rs. 2045.126 Millions during the previous year mainly due to increased revenue from cables business by 55.39% (Rs.1410.029 Millions vs. Rs.907.426 Millions in the previous year) and a modest increase of Rs. 73.608 Millions in EPC Division (Rs.11498.24 Millions vs. Rs. 10762.16 Millions of previous year). The Company's consciously pursued strategy of de-risking the infrastructure of traditional PIJF Cables business by scaling up the production facilities for Quad, Railway Signaling and other speciality copper cables has yielded positive results in terms of increased market share, margin expansions and sustainability. The Company will continue to focus on delivering outstanding and differentiated products and developing customers' loyalty for these products which are witnessing expanding volumes.

However, despite the increase in the overall revenue, the Company suffered a gross loss of Rs.82.452 Millions for the year as against the gross profit of Rs.84.337 Millions during the previous year mainly on account of lower than anticipated volume of business, intense competition leading to compromise on margins, longer working capital cycle due to financial strife faced by the ultimate customers in Power and Telecom sectors, higher finance costs and negative foreign exchange rate fluctuation.

The Directors believe that Government shall decide the final framework of the new telecom policy which will eventually pave the way for speedy implementation of broadband infrastructure projects including laying of a nationwide OFC network to bring more than one million villages into high speed internet. The Company is already geared up to exploit such a huge business opportunity.

The EPC Division sales increased from Rs.1076.216 Millions to Rs.1149.824 Millions, an increase of 6.84% compared to the previous year. During the year the EPC Division's operating performance came under stress due to lower margins, liquidity constraints with the customers and general depression in the business segment it operates. However, the current business verticals of the EPC Division viz. Telecom, Power and Gas distribution pipelines are now geared up for improved performance with change in backlog order composition with enhanced EBITDA margins. The Company also awaits the final outcome of tenders floated by BSNL for supply and laying of a dedicated nationwide alternate communication network for Defence forces in which the Company along with consortium members had emerged as the lowest bidders for two of the packages and also for the Navy OFC Network project where the Company emerged as the lowest bidder.

In view of fast changing trends in the industry, the Company continues to accord priority to control operating costs by deploying contemporary technologies and practices including outsourcing, to keep the business humming. Additionally, planned sourcing of materials and resource optimization across different verticals of EPC Division will eventually ensure higher operating margins. Your Company would continue to accord thrust on development of new products as per evolving industry standards, which will further strengthen its competitive abilities in domestic and overseas market places and improve upon operational performance.

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Company is engaged in the business of manufacturing and sale of Telecommunication cables, other types of wires and cables, FRP rods/ Glass rovings, etc. and Engineering, Procurement and Construction (EPC) business.

The Indian market for copper telecom cable viz. JFTC has been passing through a very difficult phase in the last few years. The number of fixed line telephone subscribers in India is witnessing stagnant or declining trend whereas wireless services continue to grow at a phenomenal pace leading to anemic demand coupled with unremunerative prices for JFTC. The fluctuation in the price of copper and the volatile exchange rate are the other challenges faced by the vendors in the industry. The volatility of copper pricing has been escalating consistently in the last three years. Keeping a steady price for copper products has become a challenge for every cabling vendor.

Transmission in the networks is becoming more and more digital and the need for broadband access has resulted in OFC increasingly becoming the transmission medium of choice. Year 2011 witnessed drafting and introduction of various new policies such as National Telecom Policy 2011 (NTP-11), the Spectrum Act, merger and acquisition guidelines, national broadband plan, and national optical fiber network (NOFN). Year 2012 will witness rollout of massive broadband networks, national optical fibre network, and strengthening of network particularly in rural and tier-B areas. India is envisaged to become one of the fastest growing OFC market in the world.

The EPC Division of the Company currently concentrates on four business verticals viz. Telecom, Power, Gas distribution Pipeline and Sewage Projects. In Telecom it provides solutions in trenching and laying of optical fibre cables, installation and commissioning of telecom equipments, FTTH installation, civil work and foundation of towers and maintenance of network. In the power domain the services are offered to the power transmission and distribution sector with a focus primarily in the power distribution networks including those in rural India, renovation and augmentation of existing distribution systems, underground transmission, feeder segregation, installation of High Voltage Distribution System (HVDS) and Low Voltage Distribution Systems (LVDS), distribution lines, substation and transmission lines, capacitor banks, lighting projects, and end to end LED solutions, etc. In Gas the Company provides last mile connectivity for city domestic gas distribution projects. The Company has also recently forayed in City Sewage Projects which are proposed to be executed through trenchless technology.

There is no material change in the industry structure as was reported last year

BUSINESS REVIEW AND OUTLOOK

The Indian telecom industry witnessed unprecedented growth for several years. Of late, however, the sector has been losing its sheen. Telecom operators who have been battling cut-throat competition, dwindling margins, falling net profits and spectrum scarcity since 2009, have had to bear the brunt of the 2G spectrum controversy. Moreover, 3G services did not take off as expected.

At the end of the financial year 2011-12, the government has ensured their interest to settle the controversies surrounding the telecom sector. The draft National Telecom Policy lays down an inclusive market oriented agenda for the growth of telecommunications services in India over the next decade. The proposed changes to the licensing framework reflect the government's intention to propel the Indian telecomm sector to new growth horizons.

On the backdrop of the government's initiatives of bringing broadband to every Indian household, and a target of 175 million broadband users by 2017, the telecom cable segment is at the point of inflexion

The XIth Five Year Plan aims at a sustainable GDP growth rate of 9% but there is general consensus that infrastructure inadequacies would constitute a significant constraint in realizing this development potential. To overcome this constraint, an ambitious programme of infrastructure investment, involving both public and private sector, is being developed by the Government. To exploit the emerging opportunities, the Company's EPC Division's strategy is focused on expanding its participation in telecommunications, power and oil and gas distribution verticals given the growth potential by providing high quality services to customers and grow business by leveraging on its strength and synergies.

PRODUCT-WISE PERFORMANCE

Telecommunication Cables

The Company's sales turnover on account of Telecommunication cables, comprising of JFTC, OFC, Quad cables etc. increased from Rs.810.693 Millions in the previous year to Rs.958.644 Millions, during the year, mainly due to increase in demand from private operators and supplies to Railways.

As a strategy, the Company is concentrating more on export markets, for which the necessary platform and credentials have already been established in the last few years and the company is confident of increasing its export sales in the next year.

The increase in revenue from OFC business at Rs.280.901 Millions as compared to Rs.254.254 Millions in the previous year is not very significant. The Company has been constantly looking for export opportunities in this area.

There may not be any significant improvement in the domestic OFC prices as the bargaining power of buyers and the existence of overcapacity will constrain the ability of domestic players to resort to any considerable price hikes in the near future.

Keeping this in view, the Company has taken a strategic decision to participate in turnkey projects which eventually will lead to additional revenue opportunities by cross-marketing its business to the customers besides helping in retention of the customers under the changed business environment.

The draft National Telecom Policy when approved should open huge opportunity in the deployment, operations and maintenance of optical fiber infrastructure which is expected to increase the OFC requirement.

Despite telecommunication cables market having temporarily shrunk, the Company believes that in the longer term the proposed new National Telecom Policy and National Broadband plan will lay a foundation for massive rollout of Optical Fibre Cable network across the country boosting demand for the company's product. The biggest challenge for broadband growth in India has been last mile access, i.e. the high-speed connection required between the nearest broadband access Point-of-Presence (PoP) to the home. So far, wireless access technologies have been far more successful in connecting customers in India compared to wireline or fixed access technologies. However, since a large chunk (70% or more) of Internet bandwidth globally is consumed by peer-to-peer file sharing applications, used mainly for downloads of music, games and video content, the volume of data requires a judicious mix of both wireless and last mile fibre technologies.

Other Wires and Cables

Also, there was a significant increase in other wires and cables sales from Rs.96.733 Millions to Rs.451.385 Millions in this year, mainly on account of supply of Signaling cables to Railways. With reasonable order backlog at the end of financial year, for supply of Signaling cables, the company's immediate sales prospects appears to be bright in this business.

EPC Contracting/Turnkey Services

Pending the finalization of a new Telecom policy and due to the gloomy business environment in the Telecom sector, there was a dearth of orders for the Company's Telecom division during the year. The company has been timely executing all the pending projects and is also venturing into other opportunities with better profitability. The company has initiated its first IP1 project for which ground work has been completed and the network rollout will begin by the middle of First quarter of next financial year. More such rollouts are being planned as the Telecom companies are showing considerable interest in this model. Various government telecom projects like NOFA, Defence project, 4G rollout by private operators are likely to generate big business opportunities in the coming 3 - 5 years. The company has also ventured into Sewage projects to be laid through trenchless technology (HDD method) and expect good volumes through this line also. In the Power division, the company has a reasonably good order book. Most of the projects which were targeted and won last year at low margins in order to build credentials for the company, are nearing completion and are likely to be over by the First quarter. This would give the EPC Division a bigger platform to participate in a number of forthcoming projects adding to its top line with improved profitability.

Well experienced employees within the organization have been deployed to ensure effective monitoring over web enabled software systems. Also the Company has identified the acute shortage of trained manpower for both the roll out and subsequent operation and maintenance of the OFC/ FTTx networks as a business opportunity and has established a Telecom Training Academy

OVERALL REVIEW

In the year 2011-12 the Company's performance has been inadequate. Despite a higher turnover in cables division, the division suffered losses on account of un-remunerative prices, increased material cost, interest and foreign exchange losses. Also the EPC division could not sustain the momentum, as the projects in power sector did not fetch the desired margins and in the telecom sector no major tenders were opened due to the situation prevailing in the telecom sector.

FINANCIAL REVIEW

· The revenue from operations (gross) increased by approx. 28.49% to Rs.2627.730 Millions in 2011-12 as compared to Rs.2045.126 Millions in the previous year.

· The aggregate other income decreased to Rs.68.196 Millions as against Rs.108.151 Millions compared from the previous year mainly due to lower dividend income on investments and lower non operating income.

· The Company suffered loss before depreciation of Rs.82.452 Millions as against profit before depreciation of Rs.84.337 Millions as compared to previous year mainly due to lower contribution from both the Divisions, lower dividend income and higher finance costs and foreign exchange losses.

· The finance costs are higher at Rs.120.158 Millions (previous year Rs.73.591 Millions) due to higher utilization of working capital limits, and foreign exchange rate fluctuation.

· There was no change in the capital structure during the year. However, the decrease in Reserves and Surplus by Rs.130.346 Millions is because of the net loss in the current year.

The additions to the fixed assets of Rs.13.371 Millions during the year mainly consist of capital expenditure incurred for modernization and upgradation, installation of balancing equipments and new testing facilities and certain additions to the furniture, office equipment/ vehicles.

· The inventory has increased to Rs.323.468 Millions as on March 31, 2012 from Rs.185.571 Millions as at the end of the previous year mainly due to increase in work-in-progress.

· The trade receivables level at Rs.1757.822 Millions as on March 31, 2012 as compared to Rs.1024.755 Millions as on March 31, 2011has increased due to higher sales in the telecommunication cables division in the last quarter and extended credit to customers and retention money withheld by the customers of EPC Division as per the governing terms of the contracts awarding to the Company and/or as per evolving industry norms.

OPPORTUNITIES, THREATS AND BUSINESS OUTLOOK

India's telecom sector has been the centerpiece of its growth story, contributing significantly to the economy. From less than one million subscribers in 1998, the industry has grown exponentially to connect over 900 million subscribers as of January 2012. This rapid growth has been achieved through entrepreneurship, dynamic strategies and expert talent. However, some of that sheen seems to be wearing off now. Last year's 2G scam is taking a serious toll on the sector, which has been battling dwindling margins, declining revenues and falling quarter-on-quarter profits since 2009.

Moreover, the operator's heavy investments in acquiring 3G licences are yet to pay off with service uptake still slow, contrary to operator expectations. The operators also face the prospect of having to pay heavy penalties for allegedly violating various regulatory directives. Clearly, all's not well with the Indian telecom sector. This started becoming apparent by mid-2011.

In the wage of the 2G controversy and the resultant uncertainty, the country's telecom sector remained subdued over the past year. Only a handful of managed services contracts and equipment deals were finalized in 2011. Most operators, not surprisingly, were hesitant to enter into any major partnerships. However, 2012 seems to have started on a better note.

With the revised National Telecom Policy expected to be announced shortly, the sector expects greater clarity on the policy and regulatory fronts going forward.

The Government's ambitious plan to lay a nationwide OFC network to bring the country's 1,20,000 villages into the high-speed Internet fold will result in an explosive growth of OFC business. Optical backhaul networks can support robust access connectivity and track rising bandwidth demands. This proves to be true for a country like India, where there are clusters of DSL, deployments that need to be connected by fiber backhaul. Hence, the next level of demand for bandwidth for data and video can only be met by fiber

Fiber to the home (FTTH) is finally emerging into the mainstream and is set to transform the telecom environment worldwide over the next decade. FTTH represents the first major upgrade to the access network since the deployment of cellular infrastructure in the 1980s and 1990s, and like cellular, it is likely to have a deep impact on the entire supply chain, including technology venders and network operators.

In access networks, fiber-to-the x (FTTx) network is poised to play a major role till the subscribers replace copper altogether, thereby, driving the fiber demand to higher levels. This should be a positive sign for telecom cable industry. Over the next 15-20 years, copper access networks worldwide are expected to be largely replaced by a fibre access network, creating massive opportunities for venders, network builders, and service providers. For detailed information on the financial performance with respect to operational performance, a reference may please be made to the financial statements.

The overall trend of the technologies is focused on data and converged services, and making the solutions more robust. This is bolstered by the fact that there has been a constant rise in Copper prices in the last few years driven primarily due to the shortage of the supply, thereby shifting the focus of the market to Optical Fibre Cables. Bandwidth is a major constraint in the Indian market which has further fuelled the increase in demand for Optical Fibre Cables.

Telecommunication is a regulated industry and regulatory changes affect both there customers and us. However, as explained above the Government's ambitious targets for telecommunication expansion should see favourable regulatory environment in India.

The customer base in telecommunication cable industry is relatively concentrated. The Company's major customer over the years has been BSNL and MTNL. The Company has, however, been able to retain and expand customers in Private Sector and is striving hard to expand its footprint in the lucrative export market.

CONTINGENT LIABILITIES:

i) Claims against the Company not acknowledged as debts Rs.0.617 Million (Rs.0.617 Million).

ii) Pending cases with income tax appellate authorities where income tax department has preferred appeals – liability not ascertainable.

iii) Appeals preferred by the Company against the claim/levy of differential sales tax due to timely non-submission of declaration forms for concessional sales tax. The demand(s)/levy on merits of the cases have been stayed and are pending before the appellate authorities, liabilities against which are unascertainable until final outcome in the pending cases.

iv) Bills of exchange under letter of credit discounted with a bank and outstanding at the end of the year Rs. 4.772 Millions (Nil) (Since received Rs. 2.382 Millions).

v) Cross corporate guarantee given by the Company as a collateral security against working capital credit facilities aggregating to Rs.540.000 Millions (outstanding as on March 31, 2012 Rs. 281.927 Millions) sanctioned by a bank to Birla Ericsson Optical Limited, a joint venture.

The future cash outflow in respect of items (i) to (iii) above is determinable only on receipt of the decisions/judgments in the cases pending at various forums and authorities concerned.

FIXED ASSETS

Tangible Assets

• Land
• Building
• Plant and E
• Furniture and Fixture
• Office Equipment
• Vehicles
• Leasehold
• Improvements

Intangible Assets

· Computer Software

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.55.76
UK Pound	1	Rs.86.80
Euro	1	Rs.67.43

INFORMATION DETAILS

Report Prepared by :

VRN

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	6
--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	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		48

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	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
-	NB	New Business	-

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

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.