MIRA INFORM REPORT

Report Date :

22.06.2012

IDENTIFICATION DETAILS

Name :	AVANTEL LIMITED
Registered Office :	Plot No.16, Sector-III, Huda Techno, Enclave, Madhapur, Hyderabad-500081, Andhra Pradesh
Country :	India
Financials (as on) :	31.03.2012
Date of Incorporation :	30.05.1990
Com. Reg. No.:	01-011334
Capital Investment / Paid-up Capital :	Rs. 44.836 Millions
CIN No.: [Company Identification No.]	L72200AP1990PLC011334
TAN No.: [Tax Deduction & Collection Account No.]	HYDA01574G
PAN No.: [Permanent Account No.]	AABCA7382H
Legal Form :	A Public Limited Liability Company. The Company Shares are Listed to the Stock Exchange.
Line of Business :	Manufacturer of Communication Equipments, Filters Accessories.
No. of Employees :	Not Available

RATING & COMMENTS

MIRA’s Rating :

Ba (45)

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

Maximum Credit Limit :	USD 740000
Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is an established company having satisfactory track. Trade relations are reported as fair. Business is active. Payments are reported to be usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and condition.

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 – September 30, 2011

Country Name	Previous Rating (30.06.2011)	Current Rating (30.09.2011)
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 / Corporate Office :	Plot No.16, Sector-III, Huda Techno, Enclave, Madhapur, Hyderabad-500081, Andhra Pradesh, India
Tel. No.:	91-40-23115050 / 51 / 52
Fax No.:	91-40-23112336
E-Mail :	info@avantel.in marketing@avantel.in
Website :	www.avantel.in
Factory :	Sy. No.227 and 229, Plot No.31, Phase-II, IDA, Cherlapally, R.R. District, Hyderabad-500051, Andhra Pradesh, India
Tel. No.:	91-40-27262999 / 64585519
Fax No.:	91-40-27262888

DIRECTORS

AS ON 31.03.2012

Name :	Dr. Rajendra Kumar Bagga, AVSM
Designation :	Chairman
Name :	Dr. A. Vidya Sagar
Designation :	Managing Director
Name :	Mr. N. Naveen
Designation :	Director
Name :	Mr. Y Kishore
Designation :	Director
Name :	Maj Gen (Retd) S S Mohanty
Designation :	Director till 30^th April, 2012
Name :	Mr. M Venkata Rao
Designation :	Director till 13^th October, 2011
Name :	Mr. N Divakar
Designation :	Director (Technical) till 30^th April, 2012

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 31.03.2012

Category of Shareholder	No. of Shares	% of No. of Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	1,517,312	33.85
Sub Total	1,517,312	33.85
(2) Foreign
Total shareholding of Promoter and Promoter Group (A)	1,517,312	33.85
(B) Public Shareholding
(1) Institutions
(2) Non-Institutions
Bodies Corporate	465,307	10.38
Individuals
Individual shareholders holding nominal share capital up to Rs. 0.100 million	1,441,366	32.15
Individual shareholders holding nominal share capital in excess of Rs. 1 0.100 million	1,012,116	22.58
Any Others (Specify)	46,899	1.05
Non Resident Indians	46,586	1.04
Clearing Members	313	0.01
Sub Total	2,965,688	66.15
Total Public shareholding (B)	2,965,688	66.15
Total (A)+(B)	4,483,000	100
(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)	4,483,000	-

BUSINESS DETAILS

Line of Business :

Manufacturer of Communication Equipments, Filters Accessories.

Products :

ITC CODE	PRODUCTS
8529	RF / Microwave Products
8517	Telecom Products
8529	Sitcom Products

GENERAL INFORMATION

Customers :

· Airtel

· BDL

· BEL

· BSNL

· Defence Labs

· ECIL

· Ericsson

· Hutch

· Idea

· Indian Aremy

· Indian Navy

· ISRO Centres

· L3 Communications

· Nokia

· Siemes

No. of Employees :

Not Available

Bankers :

· Canara Bank, Industrial Finance Branch, Kalanjali Building, Hyderabad, Andhra Pradesh, India

Facilities :

Secured Loan	Rs. In Millions 31.03.2012	Rs. In Millions 31.03.2011
Canara Bank OCC	26.118	23.060
(Open Cash Credit and other working capital facilities from Canara Bank are secured by Hypothecation against first charge on Stocks and Books Debts of the Company and Collateral Security of land and Buildings situated at Plot No. 16, Huda Techno Enclave, Madhapur and hypothecation of Plant and Machinery and other fixed assets of the Company and personal Guarantee of the Managing Director of the Company)
Total	26.118	23.060

Banking Relations :	--
Statutory Auditors :
Name :	Ramanatham and Rao Chartered Accountant
Address :	P. B. 2102, Flat No.302, Kala Mansion, Sarojini Devi Road, Secunderabad-500003, Andhra Pradesh, India
Cost Auditors :
Name :	N.V.S. Kapardhi Chartered Accountant
Address :	SRT 148, S. R. Nagar, Hyderabad-500038, Andhra Pradesh, India

CAPITAL STRUCTURE

AFTER 25.08.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
7000000	Equity Shares	Rs.10/- each	Rs. 70.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
4707073	Equity Shares	Rs.10/- each	Rs. 47.071 Millions

AS ON 31.03.2012

Authorised Capital :

No. of Shares	Type	Value	Amount
7000000	Equity Shares	Rs.10/- each	Rs. 70.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
4706473	Equity Shares	Rs.10/- each	Rs. 47.065 Millions
223473	Less -Buy Back	Rs.10/- each	Rs. 2.235 Millions
	Add – Forfeited Shares		Rs. 0.006 Million
	TOTAL		Rs. 44.836 Millions

NOTE:

Terms/rights attached to equity Shares.

The company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

For the year ended 31st March, 2012, an amount of Rs. 2.00 per equity share was recommended by the board as dividend to the shareholders of the Company. (31^st March, 2011: Rs. 1.50).

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		44.836	47.071	47.071
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		142.344	126.720	111.186
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		187.180	173.791	158.257
LOAN FUNDS
1] Secured Loans		26.118	23.060	0.000
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		26.118	23.060	0.000
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		213.298	196.851	158.257
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		87.603	86.343	55.413
Capital work-in-progress		25.825	3.321	0.000
INVESTMENT		0.000	0.000	0.000
DEFERREX TAX ASSETS		1.731	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	46.999	39.662	20.024
	Sundry Debtors	71.356	85.434	66.597
	Cash & Bank Balances	3.765	5.721	11.880
	Other Current Assets	1.687	1.515	0.000
	Loans & Advances	13.772	9.673	35.788
Total Current Assets		137.579	142.005	134.289
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	0.349	0.050	6.115
	Other Current Liabilities	16.184	14.746	6.520
	Provisions	22.907	20.022	18.810
Total Current Liabilities		39.440	34.818	31.445
Net Current Assets		98.139	107.187	102.844
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		213.298	196.851	158.257

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2012	31.03.2011	31.03.2010
	SALES
		Revenue of Operation	260.138	222.612	226.905
		Other Income	0.664	0.848	1.108
		TOTAL (A)	260.802	223.460	228.013
Less	EXPENSES
		Cost of Material Consumed	65.190	82.537	94.828
		Excise duty & Service Tax	0.000	0.000	11.465
		Employee benefit expenses	39.030	34.143	31.171
		Manufacturing Expenses	14.411	16.701	16.154
		Research and development expenses	49.231	29.136	29.998
		Selling and distribution expenses	13.245	9.770	5.237
		Other expenses	21.062	12.522	11.338
		Prior period expenses	0.205	0.187	0.000
		Changes in inventory of finished goods, work-in-progress and stock in trade	(4.915)	(8.362)	0.966
		TOTAL (B)	197.459	176.634	201.157
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		63.343	46.826	26.856
Less	FINANCIAL EXPENSES (D)		4.906	4.063	2.824
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		58.437	42.763	24.032
Less/ Add	DEPRECIATION/ AMORTISATION (F)		11.933	11.469	12.334
	PROFIT BEFORE TAX (E-F) (G)		46.504	31.294	11.698
Less	TAX (H)		7.581	6.734	1.055
	PROFIT AFTER TAX (G-H) (I)		38.923	24.560	10.643
	Short / (Excess) provision relating to earlier years		--	--	(1.699)
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		NA	NA	37.157
Less	APPROPRIATIONS
		Transfer to General Reserve	NA	NA	3.000
		Dividend	NA	NA	4.706
		Tax on Dividend	NA	NA	0.800
	BALANCE CARRIED TO THE B/S		NA	NA	40.993
	EARNINGS IN FOREIGN CURRENCY
		Sales	95.808	14.562	0.000
		Service	0.000	6.713	0.000
	TOTAL EARNINGS		95.808	21.275	0.000
	IMPORTS
		Raw Materials	29.653	53.150	23.076
		Capital Equipments	4.913	11.876	0.000
	TOTAL IMPORTS		34.566	65.026	23.076
	Earnings Per Share (Rs.)		8.68	5.22	2.26

KEY RATIOS

PARTICULARS		31.03.2012	31.03.2011	31.03.2010
PAT / Total Income	(%)	14.92	10.99	4.67
Net Profit Margin (PBT/Sales)	(%)	17.88	14.06	5.15
Return on Total Assets (PBT/Total Assets}	(%)	20.49	13.70	6.17
Return on Investment (ROI) (PBT/Networth)		0.25	0.18	0.07
Debt Equity Ratio (Total Liability/Networth)		0.35	0.33	0.20
Current Ratio (Current Asset/Current Liability)		3.49	4.08	4.27

LOCAL AGENCY FURTHER INFORMATION

Check List by Info Agents	Available in Report (Yes / No)
1. Year of Establishment	Yes
2. Locality of the firm	Yes
3. Constructions of the firm	Yes
4. Premises details	No
5. Type of Business	Yes
6. Line of Business	Yes
7. Promoter’s background	No
8. No. of Employees	No
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	No
17. Major suppliers	No
18. Major customers	Yes
19. Payments terms	No
20. Export / Import details	Yes
21. Market information	------
22. Litigations that the firm / promoter involved	------
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

MANAGEMENT DISCUSSION AND ANALYSIS:

MACRO-ECONOMIC OVERVIEW:

India is expected to grow at 6.1 per cent in calendar 2012, similar to the pace recorded in the fourth quarter of 2011, according to the Ernst and Young report .Growth should be picking up in H2, 2012, provided the global economy does not experience a further shock. Over the medium term, they expect a strong recovery in investment, which will help lift overall GDP growth over 9 per cent by 2014. India's domestic demand-driven growth model is acting as a catalyst for attracting foreign investments into the country. Although the ongoing global uncertainty may have prompted global investors to become more cautious, India's inherent advantages and proven resilience to counter-act macroeconomic challenges generally outweighs these concerns.

DEFENCE OVERVIEW

The Indian defence industry has evolved and has been developing capabilities in land, naval and air systems. After the introduction of defence Offset Policy, India is gradually becoming a key outsourcing hub for the global defence industry

The Union Budget 2012 allocated Rs. 19.300 Millions ($41 billion) for defence spending. It constitutes 1.90 per cent of GDP (estimated to be Rs. 101598840.000 Millions). The increase in outlay was more than 17 per cent in India's defence expenditure for the last year's Rs. 16.400 Millions ($36 billion).Out of total Rs. 1934070.000 Millions allocated, Rs. 1138290.000 Millions were for revenue (net) expenditure and Rs. 795780.000 Millions for capital expenditure, which includes modernization related expenditure. The Budget allocation for defence in the Union Budget has to be seen not as proportion of the total outlay or ratio to the GDP, but as per the security and defence requirements of the nation.

The continuous revisions of the Defence Equipment Procurement Procedures in the recent past suggest the intent of the Indian Government to streamline the procedures and make the system more transparent. The revised Defence Offset Guidelines (DOG) approved by the MoD's apex Defence Acquisitions Council (DAC) provides clarity to the offset policy by explicitly stating its objectives. Its threefold purpose is "to leverage capital acquisitions to develop Indian defence industry by

(i) Fostering development of internationally competitive enterprises

(ii) Augmenting capacity for Research, Design and Development related to defence products and services

(iii) Encourage development of synergistic sectors like civil aerospace and internal security."

ACCOMPLISHMENTS:

Developed and delivered the Mobile Satellite Service (MSS) System to M/s. Boeing for the P-8I Maritime Reconnaissance Aircraft of the Indian Navy. The MSS equipment for the P-8I was produced in compliance with Boeing aerospace and Directorate General of Aeronautical Quality Assurance (DGAQA) standards and has been qualified by the Centre for Military Airworthiness and Certification (CEMILAC).

· Developed and implemented Satellite based Automatic Train Tracking System for Indian Railways

· Developed Satellite based Voice and Data Communication Terminals for Indian Navy.

· Developed and supplied ship borne Integrated Data Communication terminals for Indian Navy.

· Successfully demonstrated MSS terminals on MR Aircrafts of Indian Navy.

· Developed 30 MHz Transmit and Receive systems for NARL, ISRO.

OVERVIEW OF OPERATIONS

During the year, the Company has achieved a turnover of Rs. 260.802 Millions as against Rs. 223.460 Millions for the previous year. The Company has earned a net profit before taxation of Rs. 46.504 Millions as against Rs. 31.294 Millions during the previous year.

OUTLOOK AND STRATEGY FOR CURRENT YEAR:

The Company has developed Mobile Satellite Services based products and UHF Systems and continue to offer solutions for various applications and is looking for growth in this segment by offering integrated solutions for Airborne, as well as Underwater Platforms. The Company is also developing Hybrid Automatic Identification Systems for Coastal Surveillance and also progressing on the development of satellite based Real Time Train Tracking Information System for the Indian Railways using MSS and GPRS.

FIXED ASSETS

· Land

· Building

· Furniture and Fixtures

· Plant and Machinery

· Computers

· Office Equipments

· Vehicles

· R and D 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 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. 56.41
UK Pound	1	Rs. 88.44
Euro	1	Rs. 71.52

INFORMATION DETAILS

Information Gathered by :	--
Report Prepared by :	DPT

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	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	NO
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		45

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.