MIRA INFORM REPORT

Report Date :

14.05.2012

IDENTIFICATION DETAILS

Name :	BIRLA ERICSSON OPTICAL Limited
Registered Office :	Udyog Vihar, P O Chorhata, Rewa – 486006, Madhya Pradesh
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	30.06.1992
Com. Reg. No.:	007190
Paid-up Capital :	Rs.300.000 millions
CIN No.: [Company Identification No.]	L31300MP1992PLC007190
TAN No.: [Tax Deduction & Collection Account No.]	JBPB01003C
Legal Form :	A Public Limited Liability Company. The Company's Shares are Listed on the Stock Exchanges.
Line of Business :	Manufacturer of Telecom Cables Including Optical Fibre Cables, Jelly Filled Telecom Cables and other items like Insulated Cables, Cords and Flexes.
No. of Employees :	168 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

B (29)

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Maximum Credit Limit :	USD 2455204
Status :	Moderate
Payment Behaviour :	Slow
Litigation :	Clear
Comments :	Subject is an established company having moderate track records. The company has incurred a loss in the current year i.e. 2010-2011. However, Trade relations are reported as fair. Business is active. Payments are reported to be slow. The company can be considered for business dealings with some cautions.

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/ Head Office :	Udyog Vihar, P O Chorhata, Rewa – 486 006, Madhya Pradesh, India
Tel. No.:	91-7662-500580/ 400580/ 242214 – 16 / 240613/ 254318-19/ 220312- 19
Fax No.:	91-7662-400680/ 240614/ 242239/ 254322/ 280680
E-Mail :	headoffice@birlaericsson.com investorservies@birlacables.com beolrewa@bom6.vsnl.net.in
Website :	http://www.birlacables.com
Branch Office :	Located at: · Allahabad · Bangalore · Baroda · Bhopal · Chennai · Goa · Hyderabad · Kolkata · Mumbai · New Delhi

DIRECTORS

AS ON 31.03.2011

Name :	Mr. Mats O. Hansson [Alternate Mr. S. K. Gada]
Designation :	Director
Name :	Mr. D. R. Bansal
Designation :	Managing Director
Name :	Mr. Arun Kishore
Designation :	Director
Name :	Mr. Magnus Kreuger [Alternate Mr. Dinesh Chanda]
Designation :	Director
Name :	Mr. R. C. Tapuriah
Designation :	Director
Name :	Mr. H. V. Lodha
Designation :	Chairman
Name :	Mr. K. Raghuraman
Designation :	Director
Name :	Dr. Aravind Srinivasan
Designation :	Director

KEY EXECUTIVES

Name :	Mr. Y. S. Lodha
Designation :	President
AUDIT COMMITTEE
Name :	Mr. R. C. Tapuriah
Designation :	Director
Name :	Dr. Aravind Srinivasan
Designation :	Director
Name :	Mr. Arun Kishore
Designation :	Director
Name :	Mr. K. Raghuraman
Designation :	Director

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 31.03.2012

Names of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	72241	0.24
Bodies Corporate	10583442	35.28
Any Others (Specify)
Societies	100260	3.33
(2) Foreign
Bodies Corporate	8250000	27.50
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	500	--
Financial Institutions / Banks	2620	0.01
(2) Non-Institutions
Bodies Corporate	1232840	4.11
Individuals
Individual shareholders holding nominal share capital up to Rs. 0.100 million	7276048	24.25
Individual shareholders holding nominal share capital in excess of Rs. 0.100 million	1296341	4.32
Any Others (Specify)
Societies	91240	0.30
Non Resident Indians	85550	0.29
Directors & their Relatives & Friends	7201	0.02
Clearing Members	101717	0.34
(C) Shares held by Custodians and against which Depository Receipts have been issued
(1) Promoter and Promoter Group	--	--
(2) Public	--	--
Total	30000000	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer of Telecom Cables Including Optical Fibre Cables, Jelly Filled Telecom Cables and other items like Insulated Cables, Cords and Flexes.

Products :

Product Description	ITC Code
Optical Fibre Cables	854470.90 and 900110.00
Jelly Filled Telephone Cables	854449.90
Insulated Cables Cords and Flexes	854449.30

· Optical Fiber Cables

· Copper Telecom Cables

· Insulated Cables, Cords and Flexes

· Other Speciality Cables

· Automotive Wire

PRODUCTION STATUS (AS ON 31.03.2011)

Particulars	Unit	Licensed Capacity*	Installed Capacity	Actual Production
Optical Fibre Cables (Metal Free/Armoured/Aerial)	KMs	48000	39984	7899
Jelly Filled Telephone Cables	CKMs	4325000	4027000	139102
Insulated Cables, Cords and Flexes	Mtrs	50000000	50000000	9649151
Automotive wires and Cables	KMs	200000	30000	4928
Co-axial Cables	KMs	10000	1000	631

* Capacity for which Memorandum filed pursuant to Scheme of delicensing vide Notification No. 477(E) dated 25th July, 1991, as amended.

GENERAL INFORMATION

Customers :

· Basic and Cellular Services

· Railways

· Information Technology

· Refineries

· Coal Fields

· Defence

· Gas

· Power Utilities

· Cable T.V Operators

· Internet and Other Value Added Services Providers

· Export

No. of Employees :

168 (Approximately)

Bankers :

State Bank of India

Facilities :

Secured Loans	31.03.2011 (Rs. In Millions)	31.03.2010 (Rs. in Millions)
Working Capital Loans from Banks :
Cash Credit	13.668	10.753
Buyers Credit	69.592	15.954
Export packing credit	14.955	28.856
Total	98.215	55.563

Notes:

a) Working Capital Loans/ Credit facilities (fund and non-fund based) and Term Loan from State Bank of India are secured by way of hypothecation of 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 all moveable fixed assets, both present and future, and first charge created by way of joint mortgage by deposit of title deeds of all immovable properties of the company.

Unsecured Loans	31.03.2011 (Rs. In Millions)	31.03.2010 (Rs. in Millions)
Sales tax loans	124.090	185.292
Total	124.090	185.292

Notes :

a) Repayment of dues within next twelve months Rs.122.825 Millions (Rs. 61.202 Millions)

b) Sales Tax Loans are as per scheme of State Government and for administration of these loans, Madhya Pradesh State Industrial Development Corporation Limited (MPSIDC Limited) has been nominated by the State Government. As per the governing scheme, the deferred Sales Tax loan/ liability subsists upto a period of ten years, commencing from the expiry of each financial year and is payable thereafter within 30 days in one installment subject to compliance with the terms and conditions as specified in the scheme.

Banking Relations :	--
Auditors :
Name :	V. Sankar Aiyar and Company Chartered Accountants
Address :	New Delhi
Solicitors :	International Trade Law Consultants
Associates :	· Universal Cables Limited (UCL) · Vindhya Telelinks Limited (VTL) · Ericsson Network Technologies AB, Sweden (ENT) (formerly Ericsson Cables AB)

CAPITAL STRUCTURE

AS ON 31.03.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
42500000	Equity Shares	Rs.10/- each	Rs.425.000 millions
7500000	Preference Shares	Rs.10/- each	Rs.75.000 millions
	Total		Rs.500.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
30000000	Equity Shares	Rs.10/- each	Rs.300.000 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2010	31.03.2009	31.03.2008
SHAREHOLDERS FUNDS
1] Share Capital		300.000	300.000	300.000
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		313.801	357.561	334.741
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		613.801	657.561	634.741
LOAN FUNDS
1] Secured Loans		98.215	55.563	34.820
2] Unsecured Loans		124.090	185.292	232.860
TOTAL BORROWING		222.305	240.855	267.680
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		836.106	898.416	902.421
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		325.514	321.063	263.644
Capital work-in-progress		0.628	7.643	65.057
INVESTMENT		140.619	140.619	140.619
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	147.747	159.337	208.842
	Sundry Debtors	162.245	234.435	220.888
	Cash & Bank Balances	55.567	91.236	111.613
	Other Current Assets	1.847	2.703	3.399
	Loans & Advances	68.307	64.594	61.953
Total Current Assets		435.713	552.305	606.695
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	59.822	85.039	127.271
	Other Current Liabilities	15.835	22.795	30.407
	Provisions	17.711	15.380	15.916
Total Current Liabilities		93.368	123.214	173.594
Net Current Assets		342.345	429.091	433.101
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		836.106	898.416	902.421

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2011	31.03.2010	31.03.2009
	SALES
		Income	664.085	986.655	1180.500
		Other Income	37.117	18.229	15.654
		TOTAL (A)	701.202	1004.884	1196.154
Less	EXPENSES
		Raw Material Consumed	504.656	691.051	917.940
		Cost of traded Goods sold	23.861	60.637	3.198
		Personnel Expenses	69.213	62.844	68.585
		Operating and other Expenses	88.814	107.181	125.274
		Increase or decrease in stock	0.363	10.025	81.232
		TOTAL (B)	686.907	931.738	1196.229
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		14.295	73.146	(0.075)
Less	FINANCIAL EXPENSES (D)		21.615	14.487	19.311
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		(7.320)	58.659	(19.989)
Less/ Add	DEPRECIATION/ AMORTISATION (F)		36.472	35.876	37.083
	PROFIT BEFORE TAX (E-F) (G)		(43.792)	22.783	(57.072)
Less	TAX (I)		(0.032)	(0.037)	0.427
	PROFIT AFTER TAX (G-I) (J)		(43.760)	22.820	(57.499)
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		(2.484)	(25.304)	32.195
	BALANCE CARRIED TO THE B/S		(46.244)	(2.484)	(25.304)
	EARNINGS IN FOREIGN CURRENCY		263.561	229.751	27.771
	IMPORTS
		Raw Materials	239.591	175.995	399.020
		Stores & Spares	0.946	2.898	5.056
		Capital Goods	54.264	15.188	59.108
	TOTAL IMPORTS		294.801	194.081	463.184
	Earnings Per Share (Rs.)		(1.46)	0.76	(1.92)

QUARTERLY RESULTS

PARTICULARS	30.06.2011 1^st Quarter	30.09.2011 2^nd Quarter	31.12.2011 3^rd Quarter	31.03.2012 4^th Quarter
Net Sales	178.320	206.940	144.900	221.290
Total Expenditure	181.900	213.340	159.010	207.730
PBIDT (Excl OI)	(3.580)	(6.400)	(14.110)	13.560
Other Income	3.160	9.390	4.010	5.670
Operating Profit	(0.420)	2.990	(10.100)	19.230
Interest	2.740	6.190	6.870	6.470
Exceptional Items	0.000	0.000	0.000	0.000
PBDT	(3.160)	(3.200)	(16.970)	12.760
Depreciation	9.620	9.500	9.490	9.370
Profit Before Tax	(12.780)	(12.700)	(26.460)	3.3900
Tax	0.000	0.010	0.000	(0.330)
Provisions and contingencies	0.000	0.000	0.000	0.000
Profit After Tax	(12.780)	(12.700)	(26.460)	3.720
Extraordinary Items	0.000	0.000	0.000	0.000
Prior Period Expenses	0.000	0.000	0.000	0.000
Other Adjustments	0.000	0.000	0.000	0.000
Net Profit	(12.780)	(12.700)	(26.460)	3.720

KEY RATIOS

PARTICULARS		31.03.2011	31.03.2010	31.03.2009
PAT / Total Income	(%)	(6.24)	2.27	(4.81)
Net Profit Margin (PBT/Sales)	(%)	(6.59)	2.31	(4.83)
Return on Total Assets (PBT/Total Assets}	(%)	(5.75)	2.61	(6.56)
Return on Investment (ROI) (PBT/Networth)		(0.07)	0.03	(0.09)
Debt Equity Ratio (Total Liability/Networth)		0.51	0.55	0.70
Current Ratio (Current Asset/Current Liability)		4.67	4.48	3.49

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) Constitutions of the firm	Yes
4) Premises details	NO
5) Type of Business	Yes
6) Line of Business	Yes
7) Promoter's background	--
8) No. of employees	Yes
9) Name of person contacted	Yes
10) Designation of contact person	Yes
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	Yes
19) Payments terms	No
20) Export / Import details (if applicable)	--
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

HISTORY

Incorporated on 30 Jun.'92, Subject was promoted by Priyamvada Buta, Universal Cables, Vindhya Telelinks and Ericsson Cables, Sweden (30% stake). 

The company is engaged in the manufacture of optical fibre cables and Jelly Filled Telephone Cables. Optical fibre cables are the latest development in the field of telecommunication cables and are superior to the conventional cables in many aspects such as lower distortion, wider frequency band, no dampening of frequency and no electromagnetic interference. Optical fibre cables are extensively used in the telecom sector in urban area networks for long-distance trunk routes; intra-city exchanges and subscriber networking and also for railway signalling and defence systems. 

As the number of customers are limited and purchases are made through open tenders, the product is to be sold directly. The company proposes to utilise the services of selling agents for providing marketing services. The company will benefit immensely from the experience of the promoter companies. The company commenced commercial production and achieved a turnover of Rs.710.800 millions in the first year of operations. The plant is capable of producing a wide range of telecom cables to meet Indian and international specifications. 

During the year 1999-2000, the company has received SAMMAN PATRA for valuable contribution to the Customs and Central Excise revenue during the financial year 1998-99. 

The company along with Vindhya Telelinks and Universal Cables has promoted a new company called Optic Fibre Goa, for the manufacture of Optical Fibre. The project is under implementation and is expected to be completed by Mar 2002.

GENERAL AND CORPORATE MATTERS

During the year, the Company's domestic sales were adversely affected due to significantly lower sales volume in the traditional Jelly Filled Telephone Cables (JFTC) and also reduced off take of Optical Fibre Cables by a majority of telecom operators. In addition, the sale of Specialty Cables and Automobile Wires also decreased by Rs.113.614 Millions due to sluggish demand. However, more off take from overseas customers has dramatically improved the export sales of JFTC/ Specialty Cables from Rs.38.038 Millions to Rs.144.671 Millions in the year under review. This has been possible since the Company, in a pre-emptive move, has strengthened its presence in the overseas markets to offset the general fall in the volume of domestic market. The Company's renewed focus on overseas markets has already resulted in significant tractions in acquiring new customers, particularly in Middle East and SAARC regions. Market focus has also been extended to specific regions in Africa and Europe continents. These initiatives are expected to yield greater proportion of revenue from exports in the overall turnover of the Company in the years to come.

The gross turnover for the year decreased to Rs.705.523 Millions as compared to Rs.1051.879 Millions last year. As the turnover dropped by almost 33%, the Company had to suffer a gross loss of Rs.7.320 Millions (loss before depreciation) as against the gross profit of Rs.58.659 Millions of the previous year. Despite the lower turnover, general control on material consumption, factory and other overheads along with higher interest income and gain in the exchange rate fluctuations have to a great extent restricted the loss. Several measures were also taken to rationalize costs and improve margins in the highly competitive product categories.

The year under report would have been substantially better with the expectation of a major contract to be awarded by BSNL to the Company and its consortium partner for a Defence OFC Network Project. However, despite of the Company along with its consortium partner being the lowest eligible bidder in one package of the said tender floated by BSNL, due to a multitude of reasons, the placement of orders have been postponed as the concerned tender has not yet been decided.

Despite the Indian telecom cable market being currently depressed, the driving force for future growth will emanate from the proposed new National Broadband Policy, which envisages a massive rollout of nationwide OFC Network down to the village level.

After the auction of 3G Spectrum, the winning companies have failed to undertake the network expansion plan with the speed anticipated by the cable industry. With a progressive increase in 3G usage the necessity of enhanced Optical Fibre connectivity will be felt by the end users. This huge untapped demand of connectivity through Optical Fibre Cable Network along with the announcement of new Broadband Policy and the setting up of National Broadband Network by the Government of India will generate substantial demand of Optical Fibre Cable across the country. The Company having recognized its core business strength has already re-engineered itself by re-thinking its internal business processes and cannibalizing its internal systems using the best-in-class available technologies, to achieve cost reduction and productivity improvement.

During the year, the Company also focused on building differentiated capability and strengthening its sales and technical delivery teams in order to strengthen its capability platform for future growth. Although the economic and business environments have not completely stabilized, yet the Directors are confident of the long term business prospects of the Company.

The Company regularly measures its progress and benchmarks itself against different competitors to change business strategies needed to create new revenue streams in order to keep growing, prioritize innovations and customer experience to be successful in the future. Continuous investment by the Company in contemporary management practices and manufacturing systems has resulted in significant enhancement in quality and productivity.

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Company's operations are predominantly classified into Wire and Cables comprising primarily Optical Fibre Cables (OFC), Polyethylene Insulated Jelly Filled Telephone Cables (JFTC) and other variants of telecom cables.

OFC is mainly used in long distance networks and generally forms the backbone of all telecom networks. Transmission in the telecommunications networks of today is becoming more and more digital and the need for broadband access has resulted in OFC increasingly becoming the transmission medium of choice. With traffic likely to grow in the future, significant investment is expected to flow towards installation of optic fibre enabled network which offers higher bandwidth besides ultra high speed than wireless by many orders of magnitude. The advent of 3G and LTE will make it more important for telecom operators to roll out optic fibre based transmission networks, which have the high bandwidth capabilities necessary to support 3G applications. India is envisaged to become fastest growing OFC market in the world.

The Indian market for copper telecom cable viz. Jelly Filled Telephone Cable (JFTC) has been passing through a very difficult time 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. Presently, the market for JFTC is primarily driven by repair and maintenance activities of the existing telecommunication networks. However, marked acceleration in the take-off of broadband services in India is likely to mean some recovery in demand for copper telecom cables, as provision of broadband connection via DSL over copper pairs requires good quality access lines. There is no material change in the industry structure as was reported last year.

OVERALL REVIEW

BUSINESS REVIEW AND OUTLOOK

The Indian telecommunications industry, which has become second largest in terms of total number of subscribers in the world, boasts of impressive developments in the last decade. With more than 850 million telecom subscribers and a teledensity of over 70%, India is ready to launch Information and Communication Technologies (ICT) services for the masses on this platform.

The year gone by made the country and the whole world notice the enormity of the Indian telecommunication industry. 2010 also saw the 2G spectrum auction scandal hitting the industry, leading to huge loss in credibility leaving citizens yearning for more transparency and accountability. This has also negatively impacted the overall size of the telecom cable industry during the year as majority of telecom operators deferred their network expansion plans due to an unclear roadmap for future business and lack of clarity on regulatory and policy framework. Despite the Indian telecom cable market being currently depressed, the driving force for future growth will emanate from the proposed new National Broadband Policy, which envisagesa massive rollout of nationwide OFC network down to the village level. The Company sees the broadband networks as a new frontier of growth in optical fibre cable business in which it is confident of taking leadership position by providing world class products to be in the forefront. In line with aspirations of future growth, the Company is investing its resources in this core business.

The National Telecom Policy 2011 is likely to be announced shortly and is expected to bring about parity and transparency in the telecom industry.

Optical Fibre Cables (OFC)

The drop in revenue from OFC business at Rs.309.779 Millions as compared to Rs.572.809 Millions in the previous year is mainly due to lower demand from certain key private sector customers. The Company has been constantly looking for export opportunities in order to cope with lower demand in domestic market which is evident from the Company achieving export sales of Rs.92.000 Millions. The momentum in export turnover is expected to continue, based on the encouraging response from the satisfied customers in the overseas markets.

On the backdrop of the government's initiative of finalising the National Broadband Plan which contemplates building a national, open access OFC network connecting all village panchayats in the country, the OFC segment is at the point of inflexion. Despite the increase in demand of OFC, 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.

Jelly Filled Telephone Cables (JFTC)

The Company's domestic sales turnover on account of JFTC reduced from Rs.93.651 Millions in the previous year to Rs.43.507 Millions during the year, mainly due to sharp contraction in demand from BSNL leading to further erosion in margins and profits in the remaining small business from other customers. However, more off take from overseas customers has improved the export sales of JFTC/Specialty Cables from Rs.38.038 Millions to Rs.144.671 Millions in the financial year. This has been possible since the Company over the last few years, has strengthened its presence in the export market to prominent customers in the South Asia and Middle East to offset the general fall in the volume of domestic market.

In future, the Company will be concentrating more on export markets, for which the necessary platform and credentials have already been established in the last few years. The JFTC business has been undergoing the shift to Specialty Cables for wireless and broadband applications that has been predicted for in last few years. In line with the market trends, the Company's overall revenue share from JFTC business has come down in the last 4 years with a significant shift in turnover to Specialty Copper Cables. The up gradation in the production facilities and the capability of producing different variant of copper cables as well as the ability to cater to the stepped-up demand for such products has enabled the Company to spread the customer base in order to offset impact of rapidly declining traditional JFTC business.

Financial Review

(a) The gross sales decreased by 32.93% to Rs.705.523 Millions as compared to Rs. 1051.879 Millions in previous year primarily due to substantial decline in sales of JFTC/OFC both in value and volume terms.

(b) The other income has increased to Rs.37.117 Millions as against Rs.17.478 Millions in the previous year due to substantial increase in interest on inter corporate deposits and increased export benefits.

(c) The raw material consumption and other charges were lower as compared to previous year due to lower production level.

(d) The financial charges increased from Rs.7.054 Millions in previous year to Rs.7.903 Millions mainly due to higher utilization of working capital limits during the year under review. Also, the interest cost has increased to Rs.13.712 Millions (previous year Rs.7.433 Millions) due to extended credit to private sector customers as per evolving industry norms.

(e) Due to reduction in the turnover from Rs.1051.879 Millions to Rs.705.523 Millions in the financial year, the Company has suffered a gross loss (loss before depreciation) of Rs.7.320 Millions as against the gross profit (profit before depreciation) of Rs.58.659 Millions.

(f) There was no change in the capital structure during the year. However, the decrease in Reserves and Surplus of Rs.43.760 Millions is because of the net loss in the current year.

(g) The additions to the fixed assets of Rs.62.224 Millions during the year mainly comprise of Upgradation of Fibre Ribbon Strander, Group Twinner for structured cables, Tandem Skin-Foam-Skin Insulating Line, Upgradatation of TestEquipments for structured cables, etc.

(h) For detailed information on the financial performance with respect to operational performance, a reference may please be made to the financial statements.

OPPORTUNITIES AND THREATS

The year 2010-11 would have gone down as the watershed year for Indian telecommunication cable industry, with the expectation of two major contracts to be awarded from BSNL for Defence and Navy OFC Networks, but due to a multitude of reasons, the placement of orders have to be postponed as the concerned tenders have not yet been decided.

Broadband connectivity is increasingly being seen as an integral driver of improved socio-economic performances. The Government of India strongly believes that all citizens of India should have access to broadband and the transformative opportunities it offers. It has recently finalized the National Broadband Plan to develop a National Optic Fibre Network (NOFN) for providing connectivity to hinterland which will take high speed internet to rural areas. The capital expenditure for the project will be met from Universal Service Obligation Fund. Further an institutional mechanism for management and operation of the NOFN is proposed to be created for ensuring non-discriminatory access to all service providers. This will step up demand for Optical Fibre Cables. In addition to this, 3G Network services have been introduced by the telecom operators and are expected to cover new applications and services as more operators join the fray. This will require installation of optical fibre cables networks to support capacity requirements, which augurs well for the Company. FTTH deployment in the country will also provide a thrust to OFC market for last mile connectivity. Several prominent Pan-India service providers,

open access infrastructure service providers and realty developers are evaluating the techno-commercial benefits of deploying FTTH technology.

The customer base in telecommunication cable industry is relatively concentrated. The Company has, however, been able to retain and expand its customer base in domestic and overseas market places with enlargement of products range and consistent quality. The Company with the excellent brand image apart from the value addition from the Joint Venture Partner viz. Ericsson AB, Sweden, is set to capitalize the surging growth opportunities in exports to a great extent.

Telecom Sector is impacted substantially by government policies and investment. While no reversal in the planned investment is envisaged, prices and demand are definitely subject to changes in policies on tendering and indenting. However, as explained above the Government's ambitious targets for telecommunication expansion and broadband penetration seamlessly upto village levels should see favourable regulatory environment in India.

With the Indian Optical Fibre Cables and LAN Data Cable market now forecast to be set for a period of strong growth, a number of leading international cable manufacturers may enter the market which shall further intensify the cutthroat competition.

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] 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.53.64
UK Pound	1	Rs.86.42
Euro	1	Rs.69.28

INFORMATION DETAILS

Report Prepared by :

SDA

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	4
PAID-UP CAPITAL	1~10	4
OPERATING SCALE	1~10	3
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	3
--PROFITABILIRY	1~10	3
--LIQUIDITY	1~10	3
--LEVERAGE	1~10	3
--RESERVES	1~10	3
--CREDIT LINES	1~10	3
--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		29

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.