MIRA INFORM REPORT

Report Date :

23.06.2014

IDENTIFICATION DETAILS

Name :	CENTUM ELECTRONICS LIMITED
Registered Office :	44, KHB Industrial Area, Yelahanka, Bangalore – 560064, Karnataka
Country :	India
Financials (as on) :	31.03.2013
Date of Incorporation :	08.01.1993
Com. Reg. No.:	08-013869
Capital Investment / Paid-up Capital :	Rs.123.652 Millions
CIN No.: [Company Identification No.]	L85110KA1993PLC013869
TAN No.: [Tax Deduction & Collection Account No.]	BLRC00813B
PAN No.: [Permanent Account No.]	AAACC7369P
Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchanges.
Line of Business :	The Company is primarily involved in • Manufacture of Advanced Microelectronics Modules and Resistor Networks catering to the communications, military, aerospace and industrial electronics markets; and • Manufacture of printed circuit board assembly (PCBA) and Repair and Return business catering to the automobile, communications and industrial electronics markets.
No. of Employees :	Information declined by the management

RATING & COMMENTS

MIRA’s Rating :

Ba (52)

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

Maximum Credit Limit :	USD 2600000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a part of the Centum Group. It is a well established company having good track record. Even though company has incurred loss from its operation in year 2012-13. However, overall financial of the company is decent. However, trade relations are reported as trustworthy. Business is active. Payments are reported to be regular and as per commitments. The company can be considered good for business dealings 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 – March 31, 2014

Country Name	Previous Rating (31.12.2013)	Current Rating (31.03.2014)
India	A1	A1

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

INDIAN ECONOMIC OVERVIEW

US investment bank Goldman Sachs  has upgraded its outlook on Indian markets as it expects positive impact of the election cycle.

India’s economy may grow 4.7 % in the current financial year, lower than the official estimate of 4.9 %, Fitch Rating said. The global rating agency expects the economy to pick up in the next two financial years.

Global ratings agency Standard & Poor said increasing focus by India Inc on lowering debt is likely to improve their credit profiles.

Singapore (1.1 million Indian tourists in 2012), Thailand (one million), the United Arab Emirates ().98 million) and Malaysia ().82 million) emerged as the preferred holidays hotspots for Indians. The total figure is expected to increase to 1.93 million by 2017, according to the latest Eurmonitor international report.

There is a $29.34 bn outward foreign direct investment by domestic companies between April and January of 2013/14 which has seen some signs of recovery according to a Care Ratings report.

There are 264 number of new companies being set up every day on average during 2014. Most of them are registered in Mumbai. India had 1.38 million registered companies at the end of January, 2014.

Twitter like messaging service Weibo Corporation has filed to raise $ 500 million via a US initial public offering. Alibaba, which owns a stake in Weibo is expected to raise about $ 15 billion New York this year in the highest profile Internet IPO since Facebook’s in 2012.

Bharti Airtel has raised Rs.2,453.2 crore (350 million Swiss Francs) by selling six-year bonds at a coupon rate of three per cent and maturing in 2020. This is the largest ever bond offering by an Indian company in Swiss Francs. Bharat Petroleum Corporation raised 175 million Swiss Francs by selling five year bonds at 2.98 % coupon rate in February.

Indian Oil Corporation plans to invest Rs 7650 crore in setting up a petrochemical complex at its almost complete Paradip refinery in Odhisha in three to four years. The company board is set to consider the setting up of a 700000 tonne per annum polypropylene plant at an estimated cost at Rs.3150 crore.

Global chief information officers at gathering in Bangalore in April to meet Indian startups at an event called Tech50 Watchout for Little Eye Labs-Facebook type deals in the making.

EXTERNAL AGENCY RATING

Rating Agency Name	CRISIL
Rating	BBB+ (Long Term Rating)
Rating Explanation	Moderate degree of safety and carry moderate credit risk.
Date	15.01.2014

Rating Agency Name	CRISIL
Rating	A2 (Short Term Rating)
Rating Explanation	Have strong degree of safety and carry low credit risk.
Date	15.01.2014

RBI DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available RBI Defaulters’ list.

EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of 31-03-2012.

INFORMATION DECLINED

Management Non co-operative (91-80-41436000)

LOCATIONS

Registered Office / Factory :	44, KHB Industrial Area, Yelahanka, Bangalore-560064, Karnataka, India
Tel. No.:	91-80-28462062 / 30046140
Fax No.:	91-80-28462861 / 30046005
E-Mail :	desikanks@centumelectronics.com ramua@centumelectronics.com
Website :	http://www.centumindia.com

DIRECTORS

As on 31.03.2013

Name :	Mr. Apparao V Mallavarapu
Designation :	Chairman and Managing Director
Name :	Mr. S. Krishnan
Designation :	Director
Name :	Dr. P. Rama Rao
Designation :	Director
Name :	Mr. Manoj Nagrath
Designation :	Director
Name :	Mr. Rajiv C Mody
Designation :	Director
Name :	Mr. Manny Marimuthu
Designation :	Director

KEY EXECUTIVES

Name :	Mr. K S Desikan
Designation :	Chief Financial Officer (CFO)
Name :	Mr. Ramu Akkili
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2014

Category of Shareholder	No. of Shares	% of No. of Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	7577477	60.98
Sub Total	7577477	60.98
(2) Foreign
Total shareholding of Promoter and Promoter Group (A)	7577477	60.98
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	83	0.00
Financial Institutions / Banks	166	0.00
Foreign Institutional Investors	833	0.01
Sub Total	1082	0.01
(2) Non-Institutions
Bodies Corporate	982601	7.91
Individuals
Individual shareholders holding nominal share capital up to Rs. 0.100 Million	1738943	13.99
Individual shareholders holding nominal share capital in excess of Rs. 0.100 Million	2067777	16.64
Any Others (Specify)	57729	0.46
Non Resident Indians	15765	0.13
Clearing Members	41964	0.34
Sub Total	4847050	39.01
Total Public shareholding (B)	4848132	39.02
Total (A)+(B)	12425609	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	0	0.00
(1) Promoter and Promoter Group	0	0.00
(2) Public	0	0.00
Sub Total	0	0.00
Total (A)+(B)+(C)	12425609	0.00

BUSINESS DETAILS

Line of Business :

The Company is primarily involved in

• Manufacture of Advanced Microelectronics Modules and Resistor Networks catering to the communications, military, aerospace and industrial electronics markets; and

• Manufacture of printed circuit board assembly (PCBA) and Repair and Return business catering to the automobile, communications and industrial electronics markets.

Products :

Product Description	Item Code
Hybrid Micro Circuit-Active and Passive	85424000
Printed Circuit Board Assembly	85170000

GENERAL INFORMATION

No. of Employees :

Information declined by the management

Bankers :

• State Bank of India - Specialised Mid-Corporate Branch, Kumarapark West, Bangalore, Karnataka, India
• Citibank N.A., M.G. Road, Bangalore, Karnataka, India

Facilities :

(Rs. In Millions)

Secured Loan	As on 31.03.2013	As on 31.03.2012
Long Term Borrowings
Term loans
- From others	1.665	3.693
Long-term maturities of finance lease obligations	0.021	0.299
Short Term Borrowings
Short term loans from banks
- Cash credit	20.110	77.978
- Packing credit	316.054	275.197
Total	337.850	357.167
NOTES: The term loan from others represents vehicle loan taken from a non banking financial institution and secured by vehicle of the company. The term loan carries an interest rate of 10.45% per annum on the outstanding amount of the loan. The interest is payable monthly along with the principle repayment. The term loan from other is repayable in thirty five equal monthly installments commencing from 1 February 2012. Finance lease obligation is towards laptops and computers purchased on finance lease and secured by the leased assets. The finance lease obligation is repayable in twelve quarterly installments from the date of lease of the leased assets. There is no continuing default in repayment of the principal and interest amount. Cash credit from bank is secured by way of hypothecation on the inventories, book debts and other current assets of the company. Additionally it is secured by way of collateral charge on plant and machinery and an equitable mortgage of land. Packing credit from bank is secured by way of hypothecation of inventories, book debts and fixed assets (present and future) of the company. Additionally, it is secured by way of collateral charge on plant and machinery. There is no continuing default in the repayment of the principal and interest amounts.

Banking Relations :	---
Statutory Auditors :
Name :	BSR and Company Chartered Accountants
Address:	Manuthi Info-tech centre, 11-12/1, Inner Ring Road, Koramangala, Bangalore – 560 071, Karnataka, India
Tel. No.:	91-80-39806000
Fax. No.:	91-80-39806999
Internal Auditors:
Name :	Ernst and Young Private Limited
Subsidiaries :	Centum Rakon India Private Limited
Other related parties where transactions have taken place during the year Parties under common control :	Centum Industries Private Limited

CAPITAL STRUCTURE

As on 31.03.2013

Authorised Capital :

No. of Shares	Type	Value	Amount
15500000	Equity Shares	Rs.10/- each	Rs.155.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
12365183	Equity Shares	Rs.10/- each	Rs.123.652 Millions

NOTES:

Out of the above, 4,933,333 equity shares of Rs 10 each, have been issued for consideration other than cash pursuant to amalgamation of Solectron EMS India Limited with the company effective 1 April 2009.

Reconciliation of equity shares outstanding at the beginning and at the end of the reporting period

PARTICULARS	31.03.2013
	NUMBER	RS. IN MILLIONS
Number and value of shares at the beginning of the year	12,365,183	123.652
Number of shares issued during the year	--	--
Number and value of shares outstanding at the end of the year	12,365,183	123.652

Details of shareholders holding more than 5% shares in the company

NAME OF THE SHAREHOLDER	31.03.2013
	NUMBER	% OF HOLDINGS
Apparao V Mallavarapu	6,604,715	53.41%
Hardik Bharat Patel	826,008	6.68%
Bharat Jayantilal Patel	735,930	5.95%

Rights, preferences and restrictions attached to equity shares

The company has only one class of share referred to as equity share having par value of Rs 10. Each holder of the equity share, as reflected in the of the Company, is entitled to one vote in respect of each share held for all matters submitted to vote in the shareholders' meeting.

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.

During the year ended 31 March 2012, the amount of per share dividend recognized as distributions to equity shareholders was Re 1 (previous year: Re 1). The total dividend appropriation for the year ended 31 March 2012 amounted to Rs 14.371 Millions (previous year: Rs 14.399 Millions) including corporate dividend tax of Rs 2.006 Millions (previous year: Rs 2.051 Millions).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS	31.03.2013	31.03.2012	31.03.2011
I. EQUITY AND LIABILITIES
(1)Shareholders' Funds
(a) Share Capital	123.652	123.652	123.482
(b) Reserves & Surplus	641.147	698.943	660.682
(c) Money received against share warrants	0.000	0.000	0.000
(2) Share Application money pending allotment	0.000	0.000	0.000
Total Shareholders’ Funds (1) + (2)	764.799	822.595	784.164
(3) Non-Current Liabilities
(a) long-term borrowings	1.686	3.992	1.777
(b) Deferred tax liabilities (Net)	0.000	0.000	0.000
(c) Other long term liabilities	0.000	0.000	0.000
(d) long-term provisions	11.631	8.695	7.304
Total Non-current Liabilities (3)	13.317	12.687	9.081
(4) Current Liabilities
(a) Short term borrowings	336.164	353.175	379.174
(b) Trade payables	330.508	191.170	258.933
(c) Other current liabilities	126.802	135.565	128.583
(d) Short-term provisions	27.579	53.819	45.802
Total Current Liabilities (4)	821.053	733.729	812.492
TOTAL	1599.169	1569.011	1605.737
II. ASSETS
(1) Non-current assets
(a) Fixed Assets
(i) Tangible assets	240.006	283.511	319.636
(ii) Intangible Assets	6.098	9.480	13.128
(iii) Capital work-in-progress	0.657	0.000	0.000
(iv) Intangible assets under development	0.000	0.000	0.000
(b) Non-current Investments	28.560	28.560	28.560
(c) Deferred tax assets (net)	31.273	10.119	0.000
(d) Long-term Loan and Advances	100.045	147.020	207.872
(e) Other Non-current assets	22.855	48.633	18.273
Total Non-Current Assets	429.494	527.323	587.469
(2) Current assets
(a) Current investments	0.000	0.000	0.000
(b) Inventories	469.182	357.749	481.398
(c) Trade receivables	586.123	591.947	460.614
(d) Cash and cash equivalents	33.000	7.998	14.578
(e) Short-term loans and advances	81.370	83.994	61.678
(f) Other current assets	0.000	0.000	0.000
Total Current Assets	1169.675	1041.688	1018.268
TOTAL	1599.169	1569.011	1605.737

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2013	31.03.2012	31.03.2011
	SALES
		Income	1807.456	1811.030	1869.291
		Other Income	16.654	14.970	23.167
		TOTAL (A)	1824.110	1826.000	1892.458
Less	EXPENSES
		Cost of materials consumed	1243.936	1182.428
		Changes in inventories of work-in-progress	(37.815)	40.154	1719.003
		Employee benefits expense	284.375	244.629
		Other expenses	305.182	173.501
		TOTAL (B)	1795.678	1640.712	1719.003
Less	PROFIT / (LOSS) BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		28.432	185.288	173.455
Less	FINANCIAL EXPENSES (D)		31.302	33.842	33.741
	PROFIT / (LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		(2.870)	151.446	139.714
Less/ Add	DEPRECIATION/ AMORTISATION (F)		75.819	74.657	74.043
	PROFIT / (LOSS) BEFORE TAX (E-F) (G)		(78.689)	76.789	65.671
Less	TAX (H)		(21.154)	24.523	31.801
	PROFIT / (LOSS) AFTER TAX (G-H) (I)		(57.535)	52.266	33.870
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		288.486	250.591	231.120
Less	APPROPRIATIONS
		Proposed Final Dividend	0.000	12.365	12.348
		Corporate Dividend Tax	0.000	2.006	2.051
	BALANCE CARRIED TO THE B/S		230.951	288.486	250.591
	EARNINGS IN FOREIGN CURRENCY
		Sale of Manufactured Goods	1278.533	1422.317	1146.195
		Service Income	0.000	0.000	0.996
	TOTAL EARNINGS		1278.533	1422.317	1147.191
	IMPORTS
		Raw Materials	1274.257	1093.622	1173.200
		Stores & Spares	0.000	0.028	0.029
		Capital Goods	10.379	4.929	18.743
	TOTAL IMPORTS		1284.636	1098.579	1191.972
	Earnings / (Loss) Per Share (Rs.)		(4.65)	4.23	2.74

KEY RATIOS

PARTICULARS		31.03.2013	31.03.2012	31.03.2011
PAT / Total Income	(%)	(3.15)	2.86	1.79
Net Profit Margin (PBT/Sales)	(%)	(4.35)	4.24	3.51
Return on Total Assets (PBT/Total Assets}	(%)	(5.11)	5.02	4.16
Return on Investment (ROI) (PBT/Networth)		(0.12)	0.09	0.08
Debt Equity Ratio (Total Debt /Networth)		0.52	0.43	0.49
Current Ratio (Current Asset/Current Liability)		1.42	1.42	1.25

FINANCIAL ANALYSIS

[all figures are in Rupees Millions]

DEBT EQUITY RATIO

Particular	31.03.2011	31.03.2012	31.03.2013
	(Rs. In Millions)	(Rs. In Millions)	(Rs. In Millions)
Share Capital	123.482	123.652	123.652
Reserves & Surplus	660.682	698.943	641.147
Net worth	784.164	822.595	764.799
long-term borrowings	1.777	3.992	1.686
Short term borrowings	379.174	353.175	336.164
Total borrowings	380.951	357.167	337.850
Debt/Equity ratio	0.486	0.434	0.442

YEAR-ON-YEAR GROWTH

Year on Year Growth	31.03.2011	31.03.2012	31.03.2013
	(Rs. In Millions)	(Rs. In Millions)	(Rs. In Millions)
Sales	1869.291	1811.030	1807.456
		(3.117)	(0.197)

NET PROFIT MARGIN

Net Profit Margin	31.03.2011	31.03.2012	31.03.2013
	(Rs. In Millions)	(Rs. In Millions)	(Rs. In Millions)
Sales	1869.291	1811.030	1807.456
Profit	33.870	52.266	(57.535)
	1.81%	2.89%	(3.18%)

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	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	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	Yes
31]	Date of Birth of Proprietor/Partner/Director, if available	No
32]	PAN of Proprietor/Partner/Director, if available	No
33]	Voter ID No of Proprietor/Partner/Director, if available	No
34]	External Agency Rating, if available	Yes

INDEX OF CHARGES

S.No.	Charge ID	Date of Charge Creation/Modification	Charge amount secured	Charge Holder	Address	Service Request Number (SRN)
1	10255829	16/07/2013 *	200,000,000.00	CITIBANK N. A.	2ND FLOOR, NO.5, M. G. ROAD, BANGALORE, KARNATAKA - 560001, INDIA	B80534266
2	80013742	26/06/2013 *	634,000,000.00	STATE BANK OF INDIA	SPECIALISED MID CORPORATE BRANCH, NO. 136, RAILW  AY PARALLEL ROAD, KUMARAPARK WEST, BANGALORE, KARNATAKA - 560020, INDIA	B79600573

* Date of charge modification

INDEX OF CHARGES: NO CHARGES EXIST FOR THE COMPANY

BACKGROUND

Subject was incorporated as a public limited company on 8 January 1993 and commenced commercial production in 1994.

The Company is primarily involved in

• Manufacture of Advanced Microelectronics Modules and Resistor Networks catering to the communications, military, aerospace and industrial electronics markets; and

• Manufacture of printed circuit board assembly (PCBA) and Repair and Return business catering to the automobile, communications and industrial electronics markets.

PERFORMANCE

During the current year of operations, the company has registered revenue of Rs. 1824.100 million and posted Profit / (Loss) before Taxes of Rs. (78.689) million.

During the year, significant contributions were made in the Strategic Electronic programs. The investments made in the global sales and marketing initiatives have started to yield results during the year in the form of new customers and new product introductions. These will result in higher revenues in the coming years.

The company has received the below awards during the year:

1. Best Electronics Manufacturing Industry award for the year 2012 from the India Electronics and Semiconductor Association (IESA).

2. High Growth in Electronic Hardware exports award from the Soft Technology Park of India (STPI).

MANAGEMENT DISCUSSION AND ANALYSIS

COMPANY BACKGROUND

Subject designs, manufactures and also exports electronic products. These include subsystems, modules, box builds, besides complex electronic components.

Centum serves customers engaged in mission critical solutions with advanced tailor-made technologies. These range from Strategic Electronics (Space, Defense and Aerospace) to Industrial, Communications, and Medical.

Centum has been steadily increasing its product and service range, geographical reach and catering to increased industry segments in its goal to expand its offerings and become the sophisticated one stop shop OEMs are seeking.

With extensive design and development expertise and leading-edge enabling technologies Centum is now the industry leader in India in electronics solutions and components.

The strategy over the years has been consistent and is based on high customer focus with competent people, state of the art technology and high quality products.

Centum’s vision is “To Create Value by contributing to the Success of its Customers, by providing best-in-class Electronics Design and Manufacturing Solutions in high technology areas”.

INDUSTRY STRUCTURE AND DEVELOPMENT

Broadly, the electronics industry is categorized under Consumer, Medical, Strategic Electronics, Communications, Automotive and Industrial segments.

Government of India has recognized the importance of Electronic industry and announced the National Electronics Policy (NEP) http://deity.gov.in. The demand of the Indian market is expected to reach USD 400 Billion by 2020. At the current growth rate, the domestic production is expected to reach USD 100 Billion leaving a gap of USD 300 Billion. The Government’s vision is to create a globally competitive Electronics System Design and Manufacturing (ESDM) industry to meet the country’s needs and serve the international markets. To meet this vision, the Government has introduced a scheme for Electronics Manufacturing Cluster (EMC) to ensure world class infrastructure and facilities to be provided to attract investments. Accordingly, the Government has decided to offer financial support in the formation of EMCs. Further to attract investments, the Government has introduced Modified Special Incentive Package Scheme (MSIPS) http://deity.gov.in for new and expansion of existing units. This scheme offers an incentive up to 25% of the value of investment in Plant and Machinery. They hope the focus given by the Government of India will create many more opportunities in the ESDM sector.

As a company they operate in Strategic Electronics, Communication, Industrial and Medical industry segments.

STRATEGIC ELECTRONICS

a. Defense

The Indian Defense Budget is increasing year on year both in terms of the total value and also as a percentage of the budget allocation itself. Of the total defense budget, the percentage of expenditure towards Capital head is increasing every year creating an even bigger opportunity for the defense market. Also studies show that Indian defense market is one of the most attractive defense markets in the world.

The Armed forces, till recently, procured their requirements either from direct imports or products developed by DRDO labs and productionized by defense PSUs or the Ordnance factories. Due to Government of India’s focus on self reliance, new opportunities are emerging in this sector.

To accelerate the process of self reliance, DRDO labs are partnering with private industries in designing new products and also willing to transfer technologies of complex products which hitherto were partnering only with PSUs or Ordnance Factories.

Till recently, the indigenous defense manufacturing was restricted to Defense Public Sector Units and Ordnance Factories only. However, in the recent past, the Government is encouraging the private industry participation. Due to increasing requirements, the Defense PSUs and the Ordnance Factories who have huge order book (BDL order book Rs. 190000.000 Millions and revenue 2011-12 Rs.9590.000 Millions, BEL order book Rs. 257480.000 Millions and revenue 2011-12 Rs. 57030.000 Millions, and HAL revenue 2011-12 Rs. 126930.000 Millions), should more actively work with the private industry to fulfill the requirements. However due to legacy issues of being vertically integrated, the PSUs still do not involve the private industry as much as they should, to be mutually successful.

The Defense Procurement Policy (DPP) of Government of India has created a huge opportunity for Indian industries. Due to this policy the international suppliers of defense products to India are actively looking to procure from high quality companies in the defense segment to meet their offset obligations. Also in some cases, the DPP calls for Buy and Make requirements, due to which many multinational companies are planning to manufacture the products in India either thro’ licensing agreement or joint ventures. Also, the latest DPP provides for offset credits for the technologies transferred (TOT) to Indian companies, which will encourage the foreign companies to transfer know how, thereby creating more opportunities to Indian companies.

b. Space

India has a space program which is very vibrant and successful. The Government of India has given the Indian Space Programme a special status and the budget allocation in the 12th Plan period is 151% higher than the 11th Plan period.

The number of satellite launches by the Indian Space Agency has been increasing steadily in the last few years and ISRO plans to launch eight satellites per year in the near future. Until recently ISRO manufactured the systems and subsystems in-house or imported them. However, due to the increased requirements coupled with Government’s focus on self reliance ISRO, is actively involved in developing the private industry in meeting their increasing requirements.

Due to increased financial and other controls by the Government of India, the sales cycle in this sector has increased significantly and in some cases by years.

COMMUNICATIONS

This market comprises of Terminal equipments such as the mobile phones, PDA etc. and the infrastructure equipments such as Base Station, Transmission equipments etc. Centum Rakon manufactures Frequency Control Products (FCP) to primarily cater to the infrastructure equipment companies. After consolidation in the past few years, this market is dominated by companies like Ericsson, Nokia Siemens, Alcatel – Lucent, Huawei etc. Although the Telecom market worldwide is increasing, the market is highly competitive and companies are looking for high quality suppliers from the emerging countries to make their products competitive in the market place. They see this as a growing market for their FCP products.

INDUSTRIAL

This sector comprises of segments like Power, Process Automation, Instrumentation, Energy etc. Industrial sector is one of the late entrants to the concept of outsourcing their electronic hardware compared to Telecom and IT sectors. This was due to the stringent quality requirements and long product lifecycles. The large multinationals in this industry segment are focusing on low cost countries like India for their outsourcing requirements due to the design, engineering and testing skills required to manufacture these products. This is growing market for their products and services.

They also see a trend of multinational companies starting green field projects or acquiring companies in India. To make their products competitive these Indian Units, are creating a supply chain eco system in the country.

STRATEGIES AND BUSINESS OUTLOOK

The company’s strategy focuses on industry segments, technology and geographies.

• To ensure that the company is not dependent on any one industry segment, it operates in Space, Defense, Aerospace (Strategic Electronics), Industrial, Communication and Medical Electronics.
• The strategy of the company is to operate in high technology areas in the above mentioned industry segments.
• The strategy of the company is to address the global markets. They have segmented their markets as North America, Europe, India, and rest of Asia. This is to ensure that any economic down turn in any one region, has limited impact on the company.

The products and services that the company offers can be classified broadly into “Built to Specification” (BTS) and “Built to Print” (BTP) opportunities.

BUSINESS OUTLOOK:

STRATEGIC ELECTRONICS

The company has established itself as a major player in the Strategic Electronics arena. The strategy will be, to continue to consolidate and grow this business thro’ innovation, design, technology, quality and overall competitiveness. Over the years, the company has designed and manufactured systems and modules for the Strategic Electronic industry by delivering advanced and complex products many of which are, for the first time by an Indian company.

• Their strategy for this business has been and will continue to co-develop new products with ISRO and DRDO Labs. The advantage of this approach is the company’s product will get designed in and will have good potential when the final product goes into production phase. In this initiative, they are already working with ISRO and DRDO labs. The risk of this strategy is, in case the project/program does not fructify for any reason, then the RandD effort may go waste.
• The other approach for this business is to indigenize products that are currently being imported and the advantage with this is that once the product is developed it immediately goes into production quantities. Here again, they are developing and have seen some excellent results. The risk of this strategy is, the incumbent overseas supplier may slash the price just to keep the competition out since the Govt., of India procurement rules favour only the lowest bidder.
• The other opportunity in the Strategic Electronics is that of “off-set” and they see significant potential in this. They have already received orders for off-set and off-set business will be a significant part of Strategic Electronics business. The company has made a strategic decision to enter the RF domain and has made significant investment in terms of human resource, software and plant and machinery.

INDUSTRIAL ELECTRONICS

The Company’s strategy for this market is to focus on high mix medium-to-low volume opportunities which need very high quality products and also have long product life cycles. This segment has very unique and demanding requirements. The company over the past many years has developed special processes, created specialized infrastructure and human resources and has strong domain knowledge to meet these requirements and make it as a very attractive supplier to the global OEMs. The Company is already well entrenched into this sector and seeing good growth rates from existing customers and also adding new customers both from within India and outside.

COMMUNICATIONS;

The company’s subsidiary, Centum Rakon manufactures Frequency Control Products (FCP) a critical component in the Telecom Infrastrucutre business segment. The subsidiary has been delivering high quality products at competitive prices, because of which they are seeing a significant increase in the market share. Last year they started to manufacture the key component, “Crystal”, which was imported from Rakon till then. This development made the subsidiary even more competitive, thereby able to increase the market share significantly. The company is already one of the top 3 OCXO manufactures in the world and they hope to further increase their position.

STATEMENT OF STANDALONE AUDITED RESULTS FOR THE QUARTER AND YEAR ENDED 31 MARCH 2014

Rs. in Millions

Sr. No.	Particular	Quarter ended		Year ended
		31.03.2014 (Audited)	31.12.2014 (unaudited)	31.03.2014 (Audited)
1.	Income from Operations
	Net Sales	843.545	759.838	2917.725
	Other Operating Income	--	--	--
	Net Sales/Income from Operations	843.545	759.838	2917.725
2.	Expenditure
	Cost of Material Consumed	539.945	476.319	1821.424
	Change in Inventories of Finished Goods, Work-In-Progress and Stock In Trade	52.661	11.364	34.584
	Employee Benefits Expenses	91.029	87.762	334.456
	Depreciation and Amortization Expenses	17.502	18.628	71.592
	Other Expenses	65.717	56.815	291.616
	Bad Debts Written Off	--	--	--
	f) Total	766.854	650.888	2553.672
3.	Profit From Operations before Other Income, Interest and Exceptional Items (1-2)	76.691	108.950	364.053
4.	Other Income	3.272	10.270	64.095
5.	Profit Before Interest and Exceptional Items (3+4)	79.963	119.220	428.148
6.	Interest	11.617	4.347	40.319
7.	Profit After Interest but before Exceptional Items (5-6)	68.346	114.873	387.829
8.	Exceptional Items	--	--	--
9.	Profit from Ordinary Activities before Tax (7+8)	68.346	114.873	387.829
10.	Tax Expense
	a) Current tax	0.703	36.067	77.480
	b) Deferred tax	9.356	1.503	5.429
11.	Net Profit from Ordinary Activities after Tax (9-10)	58.287	77.303	304.920
12.	Extraordinary Item (net of expense)	--	--	--
13.	Net Profit for the period (11-12)	58.287	77.303	304.920
14.	Paid-up Equity Share Capital (Face Value of Rs.10/- Each)	124.256	123.688	124.256
15.	Reserves Excluding Revaluation Reserve	--	--	917.426
16.	Basic and Diluted Earning Per Share (EPS) (Rs.)-Not Annualised
	a) Basic and diluted EPS before extraordinary items	4.71	6.25	24.64
	b) Basic and diluted EPS after extraordinary items	4.63	6.19	24.20
17.	Public Shareholding
	-Number of Shares	4,848,132	4,791,372	4,848,132
	- Percentage of Shareholding	39.02%	38.74%	39.02%
18.	Promoters and Promoter Group Shareholding
	a) Pledged/Encumbered
	- Number of Shares	Nil	Nil	Nil
	- Percentage of Shares (as a % of the Total Shareholding of promoter and promoter group)	N.A.	N.A.	N.A.
	- Percentage of Shares (as a % of the Total Share Capital of the Company)	N.A.	N.A.	N.A.
	b) Non Encumbered
	- Number of Shares	7,577,477	7,577,477	7,577,477
	- Percentage of Shares (as a % of the Total Shareholding of Promoter and Promoter Group)	100.00%	100.00%	100.00%
	- Percentage of Shares (as a % of the Total Share Capital of the Company)	60.98%	61.26%	60.98%

STATEMENT OF ASSETS AND LIABILITIES IS GIVEN BELOW:

Rs. In Millions

Particulars	As at 31.03.2014
EQUITY AND LIABILITIES
Shareholders' funds
Share capital	124.256
Reserves and surplus	917.426
	1041.682
Non-current liabilities
Long term borrowings	--
Long term provisions	12.169
	12.169
Current liabilities
Short term borrowings	313.770
Trade payables	333.575
Other current liabilities	250.219
Short term provisions	49.292
	946.856
	2000.707
ASSETS
Non-current assets
Fixed assets	364.736
Non-current investments	28.560
Deferred tax assets (net)	25.844
Long term loans and advances	130.672
Other non current assets	20.551
	570.363
Current assets
Inventories	519.400
Trade receivables	730.464
Cash and bank balances	87.966
Short-term loans and advances	92.514
	1430.344
	2000.707

Notes:

1. The above results have been reviewed by the Audit Committee of the Board and approved by the Board of Directors of the Company at their meeting held on 29 May 2014.

2. Figures for the three months ended 31 March 2014 and 31 March 2013 are the balancing figures between audited figures in respect of full financial year and the published year to date figures up to the previous quarter of the respective year. Also the figures up to the period ended 31 December 2013 and 31 December 2012 were only reviewed and not subjected to audit. The statutory auditors have issued unqualified audit report. The audit report has been filed with the stock exchange and is also available on the company's website.

3. The Board of Directors, at their meeting held on 29 May 2014, have recommended a final dividend of 15% (Rs 1.50 per equity share on a par value of Rs 10 each) subject to the approval of shareholders.

4. During the previous year ended 31 March 2013, the Company has written off debts, amounting to Rs 113.307 Millions, which are under litigation.

5. The Company operates through two segments, Products and Electronic Manufacturing Services.

6. Financial results for the quarter and year ended (consolidated information):

Sl. No.	Particulars	Quarter ended		Year ended
		31.03.2014 (Audited)	31.12.2014 (unaudited)	31.03.2014 (Audited)
a.	Net sales / income from operation	112.137	1121.333	4251.817
b.	Profit from ordinary activities before tax	102.632	181.573	616.982
c.	Profit after tax before minority interest	85.934	120.194	441.885
d.	Profit after tax after minority interest	72.706	99.089	346.718
e.	Basic earning per share	5.87	8.01	28.01
f.	Diluted earning per share	5.77	7.93	27.52

7. The number of investor complaints received, resolved and pending during the quarter are as follows:

Number of complaints pending at the beginning of the quarter	Nil
Number of complaints received during the quarter	4
Number of complaints resolved during the quarter	4
Number of complaints pending at the end of the quarter	Nil

8. Previous period's figures have been regrouped and reclassified, wherever necessary to conform to current period's presentation.

SEGMENT WISE REVENUE, RESULTS AND CAPITAL EMPLOYED

Rs. In Millions

Sl. No.	Particulars	Quarter ended		Year ended
		31.03.2014 (Audited)	31.12.2014 (unaudited)	31.03.2014 (Audited)
	Segment Revenue
	Products	110.770	142.544	554.107
	Electronics Manufacturing Services	721.225	605.747	2317.444
	Unallocable	11.550	11.550	46.200
	Total	843.545	759.841	2917.751
	Less : Inter Segment Revenue	--	0.300	0.026
	Net Sales / Income from Operation	843.545	759.838	2917.725
2	Segment Results
	Products	21.258	43.087	159.458
	Electronics Manufacturing Services	77.624	72.812	220.366
	Total	98.882	115.899	379.824
	Less :Interest	11.617	4.347	40.319
	Less : Other Unallocable Expenses and Extra Ordinary Items	18.919	(4.736)	(48.324)
	Total Profit Before Tax	68.346	64.990	387.829
3	Capital Employed
	Products	343.216	285.554	343.216
	Electronics Manufacturing Services	425.816	280.221	425.816
	Unallocable	272.650	199.024	272.650
	Total	1041.682	764.799	1041.682

FIXED ASSETS

• Freehold Land
• Leasehold Improvements
• Building
• Plant and Machinery
• Electrical Installation
• Computer
• Office Equipments
• Furniture and Fixtures
• Vehicles
• Computer Software

AS PER WEBSITE

PRESS RELEASES

PRIVATE SECTOR MANUFACTURING OF DEFENCE EQUIPMENT HAS BOOMED IN THE LAST THREE YEARS. NOW PRODUCTS ARE BEING MADE, NOT JUST COMPONENTS AS BEFORE.

MAR 2, 2014

In 2012, Centum Group, a Bangalore-based provider of aerospace and defence electronics, broke into the select group of contractors supplying to US-based defence solutions provider Thales. Centum became the first Indian company to ink a sweeping pact with Thales. It can now supply directly to any of the 70-plus sub-groups that make up Thales's diversified business, from military communications in combat management systems for ships to integrated air defence systems for the US military.

Separately, in late 2011, Tata Power Strategic Engineering Division (SED) - an unlisted Tata group company - won a $186 million (Rs 9500.000 Millions) contract from the Indian Army to manufacture two electronic warfare systems to be deployed in mountainous regions. Tata Power SED narrowly beat Israeli firm Elta to bag the deal. A few months earlier, Tata Power SED had also won a $260 million (around Rs 11700.000 Millions) contract to modernise 30 Indian Air Force bases. It was preferred over Selex ES, an Italian arm of Finmeccanica which also owns AgustaWestland, most recently in the news for the cancelled deal to supply choppers to India.

Indeed, as the above examples illustrate, Indian private sector companies are making inroads in the defence equipment market - both globally and locally. For long considered a set of obscure contractors making small parts, Indian manufacturers are coming of age. "In the last three years, Indian private companies have developed adequate real capabilities," says G. Balachandran, Consulting Fellow at the Institute of Defence Studies and Analysis.

Besides Centum and Tata Power SED, several small companies - such as Dynamatic Technologies, Avasarala Technologies, DefSys, Ravilla and Taneja Aerospace - have in the past three years acquired advanced technological capabilities and are just a step or two away from creating whole systems, as opposed to parts.

STEP BY STEP

In defence contracting, there are three distinct phases of manufacturing. The first, "build-to-print", is the most basic capability. Here contractors manufacture according to designs provided by an external client. In 2010, 92 per cent of the private sector's order inflow in India was build-to-print, which requires the least technical proficiency. In 2014, experts estimate it to have shrunk to about 80 per cent of the orders.

The second, "build to specifications", is where the executor of the project can own intellectual property. Here, the client comes with an idea of a product, and asks the executor if it can be manufactured. Often, these products require developing new intellectual property that may belong to the Indian contractor. The third part is developing products from scratch, either to create new capabilities for a particular defence need or upgrade an existing product. Indian manufacturers have now started building capabilities in the second phase, say defence experts.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.60.28
UK Pound	1	Rs.102.77
Euro	1	Rs.82.12

INFORMATION DETAILS

Information Gathered by :	NYA
Analysis Done by :	RAS
Report Prepared by :	NTH

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	6
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
DEFAULTER
--RBI	YES/NO	NO
--EPF	YES/NO	NO
TOTAL		52

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.