annual report 2005-06 vindhya tele

Vindhya Telelinks Limited

VINDHYA TELELINKS LIMITEDANNUAL REPORT 2005-06

DIRECTORSSHRI R.S.LODHA ChairmanSHRI J.VEERARAGHAVANSHRI S.K.MISRASHRI R.C.TAPURIAHSHRI D.R. BANSALSHRI H.V.LODHASHRI PRACHETAMAJUMDARSHRI R.G. MUNDRA Managing Director

AUDIT COMMITTEESHRI J.VEERARAGHAVAN ChairmanSHRI S.K.MISRASHRI D.R.BANSALSHRI PRACHETAMAJUMDAR

AUDITORSS.R.BATLIBOI&CO.CHARTERED ACCOUNTANTS

SOLICITORSINTERNATIONAL TRADE LAW CONSULTANTS

BANKERSSTATE BANKOF INDIAUTI BANK LIMITED

REGISTERED OFFICEUDYOGVIHAR,P.O.CHORHATA,REWA-486006(M.P.)

IS.ISO 9001:2000

VINDHYATELELINKS LIMITED

NOTICENOTICE is hereby'given that the Twenty Third Annual General Meeting of Vindhya Telelinks Limited will be held at the Registered Office ofthe Company at Udyog Vihar, P.O.Chorhata, Rewa (M.R) on Wednesday, the 12th July, 2006 at 11 a.m. to transact the following business:-ORDINARY BUSINESS: .

1. To receive, consider and adopt the Audited Balance Sheet of the Company as at 31st March, 2006, Profit and Loss Account for theyear ended on that date, and the Reports of the Directors and the Auditors thereon.

2. To appoint a Director in place of Shri R.C.Tapuriah, who retires by rotation and being eligible, offers himself for re-appointment.

3. To appoint a Director in place of Shri H.V. Lodha, who retires by rotation and being eligible, offers himself for re-appointment.

4. To appoint Auditors to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual GeneralMeeting on such remuneration and reimbursement of out-of-pocket expenses as the Board may decide, based on the recommendationof the Audit Committee.

SPECIAL BUSINESS:

5. To take note of the following special resolution which has been placed before the shareholders for approval through Postal Ballot:

"RESOLVED that pursuant to the provisions of Section 17 and other applicable provisions, if any, of the Companies Act, 1956, theMemorandum of Association of the Company be and is hereby altered and extended by inserting


(b) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTEINSTEAD OF HIMSELF/HERSELF AND PROXY NEED NOT BE A MEMBER OF THE COMPANY. THE PROXY IN ORDER TO BE

COMMENCEMENT OF THE MEETING.(c) A copy of Memorandum and Articles of Association of the Company together with all proposed amendments will be kept open for

inspection at the Registered Office of the Company between 11 A.M. and 1 P.M. on any working day excluding Sundays and Holidaysand will also be available for inspection at the Meeting

(d) The Register of Beneficial Owners, Register of Members and Share Transfer Books of the Company shall remain closed fromThursday, the 6th July, 2006 to Wednesday, the 12th July, 2006 (both days inclusive).

(e) The Members are requested to notify immediately the changes, if any. in their registered address alongwith PINCODE Number- to their Depository Participants in respect of equity shares held in electronic form (Demat Account); and to the. Company or its Registrar and Share Transfer Agents, viz. M/s Intime Spectrum Registry Ltd. (Unit: VindhyaTelelinks Ltd.),

C-13, Pannalal Silk Mills Compound. L.B.S.Marg, Bhandup (West), Mumbai - 400 078 in respect of equity shares held inphysical form.

(f) Dividends which remain unclaimed/unencashed for a period of 7 years from the date of transfer to the Unpaid Dividend Account, willbe transferred by the Company to Investor Education & Protection Fund (IEPF) pursuant to the provisions of Section(s) 205A and205C of the Companies Act, 1956. Further, under the provisions of Section 205C of the Companies Act, 1956, no claims by theshareholders shall lie against the IEPF or the Company for the Unclaimed Dividend transferred to IEPF. Members who have so farnot encashed their dividend warrants for the year(s) ended 31st March, 1999, 2000, 2001 and 2002, are therefore requestedimmediately to write to the Company or Company's Registrar and Share Transfer Agents, viz. M/s Intime Spectrum Registry Limitedfor issuance of demand draft in lieu of Unencashed/Unclaimed Dividend Warrant, if any.

(g) Additional information pursuant to Clause 49 of the Listing Agreement(s) with Stock Exchanges, on Directors recommended forre-appointment at the forthcoming Annual General Meeting, are given in.the Annexure to the Notice.

(h) Members/Proxies are requested to deposit the Attendance Slip duly filled in and signed for attending the meeting.(i) As per Section 192Aof the Companies Act, 1956 read with The Companies (Passing of the Resolution by Postal Ballot) Rules, 2001,

the consent of the Shareholders in respect of Item No,5, is required to be obtained by means of a Postal ballot.ANNEXURE TO NOTICEEXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956_____________The following explanatory statements set out material facts relating to the Special Business of the accompanying Notice dated 29th April, 2006.ITEM NO.5The Company proposes to embark upon additional lines of business like manufacturing of and dealing in various other cables and items usedas raw materials in the manufacture of different types of Cables and also to manufacture and deal in various equipments, accessories andsystems, etc. used under telecom networks with a view to undertake diverse activities relating to diversified products in a more enlarged andexplicit manner. The Directors are of the view that the additional activities covered by the proposed Objects Clause may conveniently andadvantageously be combined with the existing business of the Company and also enable the Company to carry on its business moreeconomically.Accordingly, it is proposed to amend Clause MIC of the Memorandum of Association of the Company as set out in the proposed resolution.Pursuant to Section 17 of the Companies Act. 1956 a Special Resolution is required to be passed by the shareholders for alteration in theObjects Clause of the Memorandum of Association.As required under Section 192Aof the Companies Act, 1956 read with Companies (Passing of the Resolution by Postal Ballot) Rules, 2001a Special resolution under Section 17 of the Companies Act, 1956 for alteration in the object clause of the Memorandum of Association isrequired to be passed through Postal Ballot Notice of Postal Ballot is being sent to the shareholders separately.The result of the Postal Ballot shall be declared at the ensuing Annual General Meeting.The Board of Directors proposes the Resolution for your consideration and recommends the passing of the Special Resolution.None of the Directors of the Company is interested or concerned in the said resolution except to the extent of Shares held by them in thecompany.ITEM N0.6Pursuant to Section 149(2A) of the Companies Act, 1956, commencement of any new Business mentioned under 'Other Objects' ofMemorandum of Association of the Company requires approval of the Shareholders vide special resolution passed on that behalf in theGeneral Meeting. New business as mentioned in Sub-clauses (62) & (63) of Clause MIC of Memorandum of Association maybe commencedby the Company any time after approval of Shareholders is obtained vide proposed special resolution.The Board of Directors proposes the Resolution for your consideration and recommends the passing of the Special Resolution.None of the Directors of the Company is interested or concerned in the said resolution.

Registered Office:Udyog Vihar, By order of the BoardP.O.Chorhata,Rewa-486006(M.R) GautamSharmaApril 23, 2006 Finance Manager & Assistant Secretary


ANNEXURE TO NOTICE

Details of Directors seeking re-appointment in ensuing Annual General Meeting scheduled to be held on12th July, 2006

Name of Director

Date of Birth

Date of Appointment

Expertise in specificfunctional areas

List of outside Directorships held*

Chairman/Member of the Committee of theBoard of Directors of the Company

Chairman/Member of the Committee of theBoard of Directors of other PublicCompany

Shareholding (both own or held by/forother persons on a beneficial basis), ifany, in the paid up equity share capitalof the Company.

Shri R.C.Tapuriah

15.06.1942

19.08.1985

Industrialist with wide experience inBusiness and Industry.

1. Alfred Herbert (India) Ltd.2. Adorn Investments Ltd.3. Birla Ericsson Optical Ltd.4. Bhagwati Pressing Company Ltd.5. Calcutta Investment Company Ltd.6. Maxworth Industrial Services Ltd.7. New India Sugar Mills Ltd.8. United Investment Company Ltd.

-

Member- Audit Committee & ShareTransfer Cum - InvestorGrievance Committee ofNew India Sugar Mills Ltd.

NIL

Shri H.V.Lodha

13.02.1967

05.05.2004

An eminent Chartered Accountant and aPartner of M/s Lodha & Co., CharteredAccountants. He has served variouscommittees and working groups set up byFederation of Indian Chambers of Commerce andIndustry (FICCI); Indian Chambers of Commerce,Kolkata; Department of Company Affairs,Government of India; Reserve Bank of India; apartfrom being a member of the AccountingStandards Board set up by the Institute ofChartered Accountants of India and alternatemember of the National Advisory Committee onAccounting Standards set up by Government ofIndia. He has handled professional advisoryassignments in various fields and has beeninvolved in various Trusts, Educational andCultural Institutions.

1. Alfred Herbert (India) Ltd.2. Birla Corporation Ltd.3. Fenner (India) Ltd.4. Hindustan Gum & Chemicals Ltd.5. OCL (India) Ltd.6. Optic Fibre Goa Ltd.7. Punjab Produce Holdings Ltd.8. Sicpa India Ltd.9. Universal Cables Ltd.

Chairman- Audit Committee of OCL (India) Ltd.and Sicpa India Ltd.

- Share Transfer & Investor GrievanceCommittee of Birla Corporation Ltd.

Member - Audit Committee of Fenner (India)Ltd.

NIL

Number of other Directorships held by the Directors, as mentioned above, do not include alternate directorships, and directorships heldin foreign companies, Section 25 Companies and Indian private limited companies besides trustee/membership of managingCommittees of various trusts and other bodies, and are based on the latest declarations received from the Directors. The details ofCommittee Membership/Chairmanship is in accordance with revised Clause 49 of the Listing Agreements and reflects the Membership/Chairmanship of the Audit Committee and Shareholders'/Investors' Grievance Committee alone of all other Public Limited Companies.


Directors' ReportTO THE SHAREHOLDERSYour Directors have the pleasure of presenting their Annual Report, together with the Audited Accounts of the Company for the year ended31st March, 2006. ~"~-

FINANCIAL MATTERS

Gross Income for the year rsThe year's working shows a Gross Profit after interest ofOut of which provision has been made for

DepreciationProfit before Exceptional Item, Prior Period Items and TaxAfter deducting

Exceptional Item (Voluntary Retirement Compensation)Prior Period Items

Profit before TaxAfter adjusting

Income Tax for current yearIncome Tax-Credit for earlier years (Net)Deferred Tax CreditFringe Benefit Tax

Net profit for the year is

Credit balance brought forward

There is a total surplus ofwhich has been carried to Balance Sheet

Year Ended31st March, 2006 31st March, 2005

(Rs.in lacs)

479.36

32.09

(2.35)

51.42(14.60)

127.15

32.097.08

48.93

9.5825.80

11569.69440.41

377.6562.76

56.016.75

34.47

171.66

35.38

42.13

42.13

In view of past losses and to conserve cash resources for future requirements, your Directors do not recommend any dividend for the yearunder review.

GENERAL & CORPORATE MATTERSYour Company's performance during the year under review has improved substantially, particularly the operating performance has recordedsignificant improvement during the year compared to the previous year.The gross total income for the year registered an impressive growth at Rs.160.76 Crores compared to Rs.115.70 Crores in previous year ledby volume growth in both Jelly Filled Telephone Cables (JFTC) and Optical Fibre Cables (OFC). The Company achieved significantimprovement in its sale of JFTC to private operators for rollout of their wireline networks. The OFC volume improved due to increased demandfrom both BSNL and private operators mainly for their broadband requirements.The outlook for JFTC would depend much on the order flow from BSNL/MTNL and wireline rollout plans of the private operators.However, due to poor demand scenario, and existence of huge idle capacities for JFTC, operating margins for JFTC are likely to remain underpressure. The profit and operating margins for OFC are expected to be stable during the current year on likely improved scenario for the OFCbusiness.Your Company is taking steps to add further products in its portfolio with an eye on future like Ribbon Fibre Cable and Fibre-To-The-Home(FTTH) network equipments. The Company is jointly participating with world renowned Fujikura Ltd. for the Expression of Interest floated byMTNL/BSNL for FTTH Access Network Technology. The Company is gearing up its facilities in order to achieve the desired results in termsof product quality and productivity.


CORPORATE GOVERNANCEPursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, Management Discussion and Analysis, Corporate GovernanceReport and certificate by the Managing Director (CEO) confirming compliance by all the Board members and Senior Management Personnelwith Company's Code of Conduct and Auditors' Certificate regarding compliance of conditions of Corporate Governance are made a part ofthe Annual Report.

RESPONSIBILITY STATEMENTAs required underaction 217 (2AA) of the Companies Act, 1956, your Directors to the best of their knowledge and belief and according tothe information and explanation obtained by them, state that; in the preparation of the Annual Accounts for the year ended 31st March, 2006, the applicable accounting standards have been followed; the Company has selected such accounting policies, applied them consistently, made judgements and estimates that are reasonable and

prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year 2005-06 and of theprofit for the year ended 31st March, 2006;

proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of theCompanies Act,1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

the attached Annual Statement of Accounts for the year ended 31st March, 2006 have been prepared on a 'going concern' basis.

JOINT VENTUREDespite depressed market conditions, Birla Ericsson Optical Ltd., a venture promoted by your Company in association with Universal CablesLtd. and Ericsson Cables AB, Sweden has shown remarkably improved performance during the year under review. Optic Fibre Goa Ltd.,another venture (also a subsidiary) promoted by your Company in association with Universal Cables Ltd. and Birla Ericsson Optical Ltd. hasalso shown comparatively improved performance during the year under review with its continued efforts on developing newer optical fibres.

INDUSTRIAL RELATIONS & SAFETY

Industrial relations generally remained cordial barring certain instances of indiscipline, disruptive action, concerted go-slow tactics and illegalstrike by a section of workers which are being dealt with as per governing legal provisions.Your Company has been bestowed with the National Safety Award for outstanding performance in industrial safety during the year 2004based on "Lowest Average Frequency Rate" and also "Longest Accident Free Year". The award received during the year under review is avalidation of your Company's efforts to continually improve upon the standards of occupational health and safety at its operations.

DIRECTORSShri R.C.Tapuriah and Shri H.V. Lodha retire from the Board by rotation at the ensuing Annual General Meeting and, being eligible, offersthemselves for re-appointment.

AUDITORSMessrs S.R.Batliboi & Co., Chartered Accountants, retire as Auditors at the ensuing Annual General Meeting and, being eligible, offerthemselves for re-appointment.Messrs S.Gupta & Co., Cost Accountants, have been re-appointed as Cost Auditors for Cost Audit in respect of Cables.

CONSOLIDATED FINANCIAL STATEMENTS. In accordance with Accounting Standard (AS) 21 "Consolidated Financial Statements" read with Accounting Standard (AS) 27 "Financial

Reporting of Interests in Joint Venture", Group Accounts form part of this Annual Report.

SUBSIDIARY COMPANIESIn terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, the documents relating toSubsidiary Companies as provided in Section 212(1) of the Companies Act, 1956 have not been attached with the Balance Sheet of theCompany. The Company wilt make these documents available upon request by any member of the Company interested in obtaining thesame. These documents will also be kept at the Registered Office of the Company and of the respective Subsidiary Companies forinspection by any member of the Company.Optic Fibre Goa Ltd., subsidiary of the Company, has decided to merge with one of its promoter companies with effect from 1st April, 2005and has initiated the process of getting requisite approvals.

PARTICULARS OF EMPLOYEESParticulars of employees in accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies(Particulars of Employees) Rules, 1975, as amended, are not given, as none of the employees qualify for such disclosure.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under Section 217(1)(e) of the Companies Act, 1956 and the Rules made therein, the concerned particulars relating to EnergyConservation, Technology Absorption, Foreign Exchange Earnings and Outgo are given in Annexure, which is attached hereto and formsa part of the Directors' Report.


ACKNOWLEDGEMENTThe Board of Directors would like to thank all employees of the Company and also Company's shareholders, customers, suppliers andbankers for their continued support.

New Delhi, April 29, 2006.

Yours faithfully,

R.S.Lodha

J.Veeraraghavan

S.K.Misra

R.C.Tapuriah

D.R.Bansal

H.V.Lodha

Pracheta MajumdarR.G.Mundra

Chairman

Directors

Managing Director


ANNEXUREPARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOAS PER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 AND THE RULES MADE THEREIN AND FORMING PART OF THEDIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2006.

(A) CONSERVATION OF ENERGYThe Company adopted following measures on energy conservation: Optimization of DG Sets by implementing higher specific energy generation ratio (SEGR). Energy saving by achieving unity Power Factor. Putting off one Transformer by load optimization. Optimization of plant lighting and outdoor lighting. Engineering changes to minimize power consumption on machines.

(B) TECHNOLOGY ABSORPTIONI. Research and Development (R&D)

1. Specific areas in which R&D carried out by the Company (a) Process re-engineering and optimization of processequipment.

(b) Developments of new products for emerging marketrequirements including.Micro Cables and specialitycables.

2. Benefits derived as a result of the above R&D

3. Future plan of action

4. Expenditure on R&D

II. Technology absorption, adaptation and innovation1. Efforts, in brief, made towards technology absorption,

adaptation and innovation.

2, Benefits derived as a result of the above efforts,e.g.product improvement, cost reduction, productdevelopment, import substitution, etc.

(a) Technology upgradation, enhanced flexibility, costoptimization and competitive edge.

(b) Opportunity to compete in International Market.Continue efforts for development of new products, inaddition to other engineering processes and upgrades.

R&D expenditureseparately.

have not been accounted for

The technology used to manufacture variousproducts of the Company in process control, productdevelopment, cost reduction and quality improvementsare being made on continuous basis.New product development,productivity improvement.

cost reduction and

(C) FOREIGN EXCHANGE EARNINGS AND OUTGODetails of foreign exchange earnings and outgo are contained in Schedule 22 [13.2] and [13.3 and 13.4] respectively annexed to andforming part of the Accounts.

R.S.Lodha Chairman

J.Veeraraghavan

S.K.Misra

R.C.Tapuriah

D.R.Bansal

H.V.Lodha

Pracheta MajumdarNew Delhi, April 29,2006. R.G.Mundra Managing Director

Directors

Management Discussionand Analysis

V1NDHYATELELINKS LIMITED

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Company is in the business of manufacture and sale of telecom cables comprising of Jelly Filled Telephone Cables (JFTC), Optical FibreCables (OFC) including Fibre Ribbon.JFTC made its foray as a substitute for the dry core paper cables. The capacities were built up since the mid-nineties leading to installedcapacity of approx. 1650 Lac Conductor Kilometers (LCKM) with around 1000-1100 LCKM being operational today. However, as a result ofthe increasing preference for deployment of wireless networks and popularity of mobile services, the JFTC industry has shrunk at 120 LCKMper annum level resulting in abysmally low capacity utilisation by nearly 40 companies that manufacture JFTC.OFC has increasingly enabled the deployment of large backbone networks across the country in view of its higher capacity to transmit voiceand data. The preference of deploying OFC in intercity and subscriber access networks has also enabled the OFC sector to grow in India.There are nearly 20 OFC manufacturers having an installed capacity of around 7 million fibre kilometers (FKMs) with current size of thedomestic market being estimated at approx. 2.25 million FKM p.a.

PRODUCT-WISE PERFORMANCE, OPPORTUNITIES, THREATS & BUSINESS OUTLOOK

Jelly Filled Telephone CablesThe Company achieved a sales volume of 19.70 LCKM of JFTC compared to 15.19 LCKM in the previous year reflecting an increase ofalmost 30%. The turnover value reached Rs.12137.98 lacs compared to Rs.8660.87 lacs in the previous year amid continuously spirallingcopper prices. The improvement in turnover was primarily due to the supply of JFTC to BSNL against the annual tender floated in previousyear and increased demand from private operators.The demand for JFTC is expected to be driven mainly by new wireline connections, regular replacement of old copper cables and replacementof old wirelines to make them broadband enabled, and some quantum of exports. The overall outlook for JFTC appears uncertain for thecurrent year depending upon the order flow from BSNL/MTNL and the wireline rollout plans of the private operators. Even after the reportedrestructuring of JFTC plants by certain JFTC manufacturers, the idle capacities are huge. The export market also does not have significantupside potential. Given the poor demand scenario and the existence of large idle capacities, the Company is making all out efforts forincreasing operational efficiency, cost control and development of newer market.

Optical Fibre CablesThe OFC turnover of 5769 KM valued at Rs.2537.26 lacs during the year represented a significant increase over the previous year turnoverof 4809 KM valued at Rs.1153.64 lacs. The total turnover in terms of fibre kilometer during the year reached at 221258 fkm (including theFibre Ribbon) compared to 71640 fkm during the previous year.The demand for OFC in current year is expected to grow mainly driven by the rollout of broadband networks, interconnection of mobilenetworks using OFC, and laying of national long distance networks. In the backdrop of significant over capacity, the OFC prices are expectedto be stable.

The increased off take of OFC is also fuelled by the growing demand from private operators for their national long distance services. Withthe increase in telecom traffic, the mobile networks would require increased OFC to inter connect. There is an increasing adoption of fibre-based networks by the cable TV operators to offer Ethernet Local area network and also by the large government owned utilities and theinfrastructure providers. The rollout of Fibre-To-The-Home (FTTH) Networks expected to begin in current year could provide another fillip tothe OFC demand.

Subsequent to the abolition of customs duty on OFC last year, the domestic OFC prices have become competitive with the imports.However, due to insignificant market share of India in the world OFC trade and the improvement in global demand of OFC, the threat fromimports does not appear significant.

The Company had to discontinue the sale of Ericsson make Fusion Splicer Equipments during the year owing to discontinuation of theparticular model by Ericsson, which had contributed significantly to the profitability in previous year. The Company has successfully addedFibre Ribbon in its product portfolio strengthening its competitive edge by achieving a turnover of 2293 KM valued at Rs.138.87 lacs in thefirst full year of operations. The Company is taking steps to add further products in its portfolio both with a view to integrate its operationsand also to better its capacity utilization including tie-up with Fujikura Ltd. to collaborate in the Expression of Interest for FTTH Access NetworkTechnology floated by MTNL/BSNL.Overall Review

The year 2005-06 has been a come back year of sorts for the telephone cable industry after a gap of 4 years. Plagued by huge capacities,the industry witnessed revival of demand. The decline in domestic as well as international bandwidth prices is driving subscriber growth, whichis expected to encourage enhanced capital outlay for access network expansion. The growing triple play demand from Broadband subscribersfor telephony, internet access and broadcast television has endured the scope of fixed line telephony. However the Broadband connectionsat a level of 13.10 lacs as at 31st March, 2006 are way below the target set by the Government leaving a huge demand gap to fill. Theteledensity has steadfastly reached at 12.73 at the end of March, 2006, but which has still higher potential in view of the huge untapped ruralmarket in the country. Coupled with one of the lowest tariffs in the Country, ONE INDIA Plan becoming a reality still holds out scope for theindustry. However, price levels are expected to be range bound in view of the large idle capacities in the telephone cable industry.


FINANCIAL REVIEW The Gross turnover increased by almost 47% to Rs.15381.66 lacs in 2005-06 compared to Rs.10449.61 lacs in the previous year mainly

due to increase in turnover of JFTC to private operators coupled with copper led higher prices and of OFC to BSNL as well as privateoperators.

The aggregate other income decreased to Rs.694.01 lacs during the year 2005-06 as against Rs.1120.08 lacs in the previous year mainlybecause of lower one time credit of Rs.99 89 lacs in 2005-06 compared to the credit of Rs.332.77 lacs during the previous year resultingfrom prepayment of certain deferred sales tax loans/liabilities and also due to lower interest income compared to the previous yearconsequent to deployment of funds for the working capital requirements.

The Company achieved a gross profit before depreciation at Rs.606.51 lacs during the year as against the gross profit of Rs.440.41 lacsin the previous year even after significant reduction in other income during the year as enumerated above. The sale of Fusion SplicerEquipments was discontinued due to discontinuation of particular model by Ericsson during the year which had contributed significantlyto the profitability in the previous year. This signifies better operating performance due to increased business volumes and better pricerealisations during the current year

The financial expenses increased due to availment of foreign currency loan (Buyer's credit and FCNRB loan) in the current year andhigher bank charges on account of increased imports of raw materials during the year.

The additions to the fixed assets of Rs.202.70 lacs (including Rs.56.81 lacs capital work in progress) during the year mainly consist ofcapital expenditure incurred for modernisation and upgradation, installation of balancing equipments and new testing facilities and certainadditions to the furniture and office equipments/vehicles.

The inventory value increased to Rs.2309.64 lacs as on 31st March, 2006 from Rs.1745.30 lacs as at the end of the previous year dueto increase in raw material inventory and higher work in progress. On the expectations of duty cut on raw materials in the FinanceBudget, 2005, the Company had maintained lower levels of inventory as at 31st March, 2005.

The Debtors level at Rs.3057.26 lacs as at 31st March, 2006 as compared to Rs.1570.61 lacs as at 31st March, 2005 has increasedsubstantially in view of comparatively higher sales during last quarter of the financial year.

RISKS AND CONCERNS

The Company is exposed to a variety of risks. Some risks are general to our industry while others are specific. Over time, the Companyhas countered the risks with relevant, appropriate and commensurate management. Some of the major risks to which the Company isexposed and the Company's policy to reduce the adverse impacts of the same are:

Technological Risk:

Across the world, Foam skin insulated cable are steadily replacing Solid Polyethylene (PE) insulated cables. While being cost effective, thefoam skin cable retains all its technical characteristics and, as such has become acceptable in many countries all over the world. Althoughthe major buyers of JFTC in India currently purchase solid PE insulated cable but with its inherent technical and economic advantages, foamskin cable may be a product of the future. The Company has sufficient capacity of foam skin cable and has also executed orders for suchcable.

Foreign Exchange Exposure Risk:

The Company is exposed to transactions in foreign currency due to imports. As a matter of prudent foreign exchange management, all foreigncurrency exposures are closely monitored for risk in exchange rate fluctuations and forward covers are taken, where deemed appropriate.

Regulatory Risk:

Telecommunication is a regulated industry and regulatory changes affect both our customers and us. However, the Government's ambitioustargets for telecommunication expansion should see favourable regulatory environment in India. The Company has reduced costs andimproved efficiency and has thus established better flexibility to cost effectively accommodate fluctuations in demand.

Litigation Risk:

We are party to various Law Suits in the normal course of our business. We, however, do not expect any significant liability arising againstthe Company as legally advised. The Company has been addressing the litigations on the legal advise of experts.

Customer Concentration Risk:

The customer base in telecommunication cable industry is relatively concentrated. The Company's major customer over the years has beenBSNL. The Company has, however, been able to retain and expand customers in Private Sector.

Competition Risk:

As a result of low capacity utilisation in the industry, the company faces stiff competition from other players in the industry. The Company,has over the years established its name in the market because of its quality product and customer support.

Raw Material Price Fluctuation Risk:

The prices of certain raw materials based on metals and polyethylene fluctuate according to the international trends in supply and demand.In order to minimise the impact of risks on account of such price volatility, an effective research based purchase policy has been put in place.


INTERNAL CONTROL SYSTEMS

The Company has an adequate system of internal control in place which assures of:

Authorization, recording and reporting of transactions.

Recording and safeguarding of assets.

Maintenance of accounting records and reliability of financial information.

Key elements are :

Clear and well defined organisation structure and limits of financial authority.

Corporate policies for financial reporting, accounting, information security, investment appraisal and corporate governance.

Annual budgets and business plan, identifying key risks and opportunities.

External firm of Chartered Accountants to carry out internal audit of all functions including physical verification of inventories. Audit Committee of the Board which monitors and reviews all risk and control issues and financial matters.

Computerised and integrated financial and accounting functions, information feedback system of process parameters and backtracing from finished products to raw material stage.

Routine evaluation of all financial, operating and information technology systems.

Laying down risk minimization procedures and regular review of the same.

INDUSTRIAL RELATIONS, HUMAN RESOURCE DEVELOPMENT AND SOCIAL RESPONSIBILITIES

Company sees its relationship with its employees as critical to the future and its employee relations agenda focuses on ensuring thatemployees feel valued, on managing change constructively, and on creating an environment and culture within which every employee canmaximize his contribution.Company is committed in providing the necessary development and training opportunities to equip our people with skills they will need in thefuture. Our approach integrates development and training with business objectives, job performance and personal development needs.Since inception, relationship with all the employees have been generally cordial barring certain instances of indiscipline, disruptive action andconcerted go-slow tactics adopted, by the workers which are being dealt with as per governing legal provisions. The Company employed 300number of permanent employees as on 31st March, 2006.The Industrial Training Institute established by the Company with the help of M.P.Birla Foundation Educational Society for providingvocational training to students from surrounding villages continues to get encouraging response and students passing out from this Instituteare either self employed or have been successfully employed in various industries nation wide.

CAUTIONARY STATEMENT

The Management Discussion and Analysis Report may contain certain statements that might be considered "forward looking statements".These statements are subject to certain risks and uncertainties. Actual results may differ materially from those expressed or implied in theStatement as important factors could influence the Company's operations such as demand supply conditions, Government policies, local,political and economic development, industrial relations, risks inherent to the Company's growth and such other factors. The Company doesnot undertake any obligation to publicly update, inform or revise such statements, whether as a result of developments, events or actualmaterialization. Market data and product analysis contained in this report has been taken from internal company reports, industry & researchpublications, but their accuracy and completeness are not guaranteed and their reliability can not be assured.

10

CorporateGovernance Report


The detailed report on Corporate Governance in accordance with Clause 49 of the Listing Agreements with the Stock Exchanges isset out below:

1. CORPORATE GOVERNANCE PHILOSOPHYGood Corporate Governance is an integral part of the Company's Management and Business Philosophy.The importance of Corporate Governance lies in its contribution both to business prosperity and to accountability. CorporateGovernance envisages commitment of the Company towards the attainment of high levels of transparency, accountability andbusiness prosperity with the ultimate objective of realising long term shareholder value, whilst taking into account the interest of all otherstakeholders for wealth creation.The Company will continue its efforts towards raising its standard in Corporate Governance and will also review its systems andprocedures constantly in order to keep pace with the changing economic environment.

2. BOARD OF DIRECTORSThe present strength of the Board of Directors is Eight (8). The Company has a Non-Executive Chairman. The number of IndependentDirectors on the Board is Four (4), which is more than 1 /3rd of the total number of Directors and the number of Non-Executive Directorsis Seven (7). which is more than 50% of the total number of Directors, as laid down under Clause 49.None of the Directors is a member of more than 10 committees or acts as chairman of more than 5 committees (as specified in Clause49), across all the companies in which he is a Director. The necessary disclosures regarding Committee memberships/chairmanshipshave been made by the Directors.During the financial year ended 31st March, 2006, four Board Meetings were held on 26th May, 2005, 25th July, 2005, 26th October,2005 and 24th January, 2006. The maximum time gap between any two meetings was not more than four months.The composition and category of the Directors on the Board, their attendance at the Board Meetings during the year and at the lastAnnual General Meeting, as also the number of Directorships and Committee Memberships/Chairmanships held by them in othercompanies are given below :;N,aj^ &;bf:|he::pjr^ ;tcif::||

Shri R.S.Lodha(Chairman)Shri J.Veeraraghavan

ShriS.K.Misra

Shri R.C.Tapuriah

Shri D.R.Bansal

ShriH.V.Lodha

Shri Pracheta Majumdar

ShriR.G.Mundra(Managing Director)

iSseSt^ iory,;::??::;;:

Non IndependentNon-ExecutiveIndependentNon-ExecutiveIndependentNon-ExecutiveIndependentNon-ExecutiveNon IndependentNon-ExecutiveNon IndependentNon-ExecutiveIndependentNon-ExecutiveNon IndependentExecutive

:::::;g4::::::AttendanceSs::::;:S;:::;:;:?Sftairttc:t)iars. -'-S;;::;;S.-:;Ss:::::iBparci:s:;ijMe^ipgs;

4

3

3

3

4

4

3

4

':;.;.iiast.?s::::$$& J;JA

No

No

No

No

Yes

No

No

Yes

:. ::*::::V:::::.>Nov.:of;:otfiKf;pjSii(iifiMpa ''^ i^ iri^ ib^sS'iSsSi;.

:: : ;; ;:?^ :: ;::^ :^ ::;;:::ivlei^ l^ i^ ij[i>i^:';;::ffii':*(*e*!S;s;'i;i&rfeejofsihifj?!:;:

13

None

1

8

3

9

1

4

:i:::':?::':


The Board has laid down a Code of Conduct for all Board Members and Senior Management Personnel of tho Company and the samehas been posted on the website of the Company. 'A brief resume, expertise in specific functional areas, list of outside directorship held, membership/eh..'rr>anship ut the Committees ofthe Board of Directors of the Company and other public companies and shareholding of directors retiiing u> lotation and eligible forre-appointment at the ensuing Annual General Meeting (AGM) of the Company are given in the Notice of AGM. annexed to this AnnualReport.

i. AUDIT COMMITTEEThe present Audit Committee consists of three Independent Non-Executive Directors and one Non-Executive Director the detailedcomposition of the members of the Audit Committee is given below:(a) Shri J.Veeraraghavan : Chairman (Independent Non-Executive Director)(b) ShriS.K.Misra : Member (Independent Non-Executive Director)(c) Shri D.R.Bansal : Member (Non Independent Non-Executive Director^(d) Shri Pracheta Majumdar : Member (Independent Non-Executive Director)All the members of the Audit Committee are financially literate and have vast experience in their respective fields Shri D R.Bansaland Shri Pracheta Majumdar have accounting or related financial management expertise.The Secretary of the Company as appointed within the meaning of Section 383A of the Companies Act, 1956 is the Secretary of theAudit Committee.The Terms of Reference stipulated by the Board to the Audit Committee are as contained in Clause 49 of the I. isting Agreement as wellas Section 292A of the Companies Act, 1956 and broadly are as follows:(i) Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial

statement is correct, sufficient and credible,(ii) Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor

and the fixation of audit fees and also approval of payment for any other services rendered by the statutory auditors.(iii) Reviewing, with the management, the annual and quarterly financial statements before submission to the Board tor approval(iv) Reviewing, with the management, performance of statutory and internal auditors, adequacy of (tie internal control systems(v) Reviewing the adequacy of internal audit function and discussion with internal auditors any significant findings and follow

up thereon,(vi) Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or

irregularity or a failure of internal control systems of a material nature arid reporting the matter to the board.(vii) Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post audit

discussion to ascertain any area of concern.(viii)To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of nori

payment of declared dividends) and creditors(ix) To review mandatorily the following informations -

Management discussion and analysis of financial condition and results of operations: Statement of significant related party transactions (as defined by the audit committee) submitted by management Management letters/letters of internal control weaknesses issued by the statutory auditors, Internal audit reports relating to internal control weaknesses; and The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by tho Audit

Committee. The financial statements, in particular, the investments made by the unlisted Subsidiary Companies

Details of meetings held during the year and attendance thereof are given below:Name of Member t)f theAudit Cpfiimittee :

Shri J.VeeraraghavanShriS.K.MisraShri D.R.BansalShri Pracheta Majumdar

:; -i; : Meetings held and attendance particulars: ; ^iiiZSt^MayydS:: ; ; :

YesYesYesNo

ZSlb July, 05Yes

YesYesYes

6th October, 0$Yes

YesYesNo

24th January, 06No

YesYos

Yes

The necessary quorum was present at all the above meetings.The Audit Committee regularly invites such Executives as it considers appropiiate including the Head ol Finance function and therepresentatives of Statutory, Internal and Cost Auditors to be present at the meeting of the Committee

4. REMUNERATION COMMITTEEThe Remuneration Committee constituted in pursuance of the provisions of the Listing Agieement and Schedule XI I I to theCompanies Act, 1956. consisting of all three Independent Non-Executive Directors viz. (i) Shri Pracheta M.ijumdar: (ii) Shii J Veoraraqlnvan.and (iii) Shri S.K.Misra.

12


The terms of reference of the Remuneration Committee are as per the guidelines of the Central Government/Listing Agreement withStock Exchanges. The Committee did not meet during the financial year ended 31st March, 2006. The remuneration package of ShriR.Q.Mundra on his re-appointment as Managing Director for a period from 4th November, 2005 to 3rd November, 2006 has beenapproved by a resolution passed by circulation by the members of the Remuneration Committee on 29th October, 2005.The Company does not have any policy for payment of remuneration to non-executive directors including non-executive independentdirectors except by way of sitting fees at the rate of Rs.50007- for each meeting of the Board and/or Rs.2000/- for each meeting ofthe Committee thereof attended by any such director as fixed by the Board of Directors in terms of the authority granted by theArticles of Association of the Company. The details of remuneration paid to Directors/Managing Director for the financial year ended31st March, 2006, are set out below:

(a) Non-Executive Directors:g|;|||fanri^ g|)|e::|i;riisii3r:;:; :|:||||

Shri R.S.LodhaShri J.VeeraraghavanShriS K.MisraShri R.C.TapuriahShri D.R.BansalShriH.V.LodhaShri Pracheta Majumdar

:::;:::;;;;;;;;;:;;^;;^ ::::?;|;;^

0.200250.230.150320.200 19

(b) Managing Director: (Rs.in lacs)

Notes:(1)(2)(3)

ShriR.G.Mundra 9.67 1.57 0.20 11.44

Sitting fees includes fees paid for attending Committee Meetings.The above remuneration excludes contribution/provision for gratuity and provisions for pension/leave encashment.The terms of remuneration of the Managing Director and other conditions on his re-appointment with effect from 4th November,2005 have been approved by the Remuneration Committee and confirmed by the shareholders in the Extra Ordinary GeneralMeeting held on 16th December, 2005.

(4) As per the terms of the Agreement, for the purpose of Gratuity, Pension and other benefits, the services of the Managing Directorwill be considered continuous with the Company from the date he joined the services of Universal Cables Limited or thisCompany in any capacity from time to time and termination of agreement followed by immediate renewal(s) of agreement, willnot be considered as any break in the service. However, in case any benefit including pension and gratuity is already paid byUniversal Cables Limited or the Company, the same shall be deducted from the final amount payable.

(5) All appointments are non-contractual except that of the Managing Director which is for one year with effect from 4th November,2005. The re-appointment of the Managing Director is conditional upon and subject to termination by three calendar months noticein writing on either side but no severance fees of any other kind is payable.

(6) The Company does not have any scheme for grant of Stock Options to its Directors, Managing Director or other employees.5. SHARE TRANSFER-CUM-INVESTORS' GRIEVANCE COMMITTEE

The Share Transfer-Cum-lnvestors' Grievance Committee acts in accordance with the terms of reference specified by the Board fromtime to time which, interalia, include overseeing and reviewing, all matters connected with investors' complaints and redressalmechanism besides approval or authorisations for share transfer/transmission/refusal of transfer/consolidation/sub-division/dematerialisation or rematerailisation, issue of duplicate share certificate(s), etc. as per applicable statutory and regulatory provisions.The Chairman of the Committee is Shri J.Veeraraghavan, an Independent Non-Executive director and Shri D.R.Bansal, a Non-Executive director with Shri Pracheta Majumdar, an Independent Non-Executive director as its members. The Board also designatedShri Gautam Sharma, Finance Manager & Assistant Secretary of the Company as Compliance Officer.During the financial year ended 31 st March, 2006, two Share Transfer-Cum-lnvestor Grievance Committee Meetings were held on 30thApril, 2005 and 25th October, 2005. Shri J.Veeraraghavan and Shri D.R.Bansal were present in all the two meetings. Shri PrachetaMajumdar did not attend any meeting.During the year, complaints (excluding those correspondences which are not in the nature of complaints) were received fromshareholders and investors, directly or through regulatory authorities, details of which are given below:SN&S&.ejgE^g^^

Share Transfer MattersNon-receipt of Dividend WarrantsNon-receipt of Annual ReportOthers (excluding those specified above)TOTAL

iS^u l^wfgpfiBoSriiaiSfteiB&cfeivecJ:::123325

43

:;:;:;: ::^ )jrT)& ;^:a :^6Sriipa t^S^B|3fleda^dy!eiiiix;s1233

25

43

13


All the complaints have been attended/resolved to the satisfaction of the complainants during the year except for disputed cases andsub-judice matters, which would be resolved on final disposal of the cases by the judicial and other authorities. No request for transferwas pending for approval as on 31st March, 2006.

GENERAL BODY MEETINGS

Location and time where General Body Meetings were held in the last three years is given below:

11^ 1^*8^ :2002-03

2002-032003-042003-042004-052004-05

;i;3ji!isiii!iai8;i$Registered Office of the Company -Udyog Vihar, RO.Chorhata,Rewa (M.R) - 486 006Same as aboveSame as aboveSame as aboveSame as above

::S;:;;;f^ p;i::6t;:iv1 r^tg::::H:::?::SAGM

EGMAGMEGMAGMEGM

||;!^ ;il|ja(e;i|||f:;|;:i|1 0th July, 2003

19th December, 200320th July, 200417th December, 200419th July, 200516th December, 2005

llllli;iiSlll||:|:.::11 a.m.

11 a.m.11 a.m.11 a.m.11 a.m.11 a.m.

All the resolutions set out in the respective notices of the above mentioned meetings were passed by the members as ordinaryresolutions except one special resolution concerning voluntary delisting of equity shares from Madhya Pradesh Stock Exchange,Indore and The Calcutta Stock Exchange Association Ltd., Kolkata which was passed on show of hands. There were no specialresolution passed by the Company through postal ballot in any of the above meetings. In the ensuing Annual General Meeting, theCompany has proposed a Special Resolution related to alteration of Objects Clause of the Memorandum of Association of theCompany for approval by Postal Ballot. The Postal Ballot is conducted as per the procedures laid down in the Companies (Passingof the Resolution by Postal Ballot) Rules, 2001.

7. DISCLOSURES

(a) There are no materially significant related party transactions i.e. transactions of the Company of material nature, with itspromoters, the directors or the management, their subsidiaries or relatives, etc. that may have potential conflict with the interestsof the Company at large. Transactions with the related parties during the year have been disclosed in Note 4 of Schedule 22 tothe financial statements in the Annual Report.

(b) There has been no instance of non-compliance by the Company on any matter related to capital markets during the last three yearsand no penalties or strictures have been imposed on the Company by the Stock Exchange(s) or SEBI or any statutory authority.

(c) The Company has generally complied with all the mandatory requirements as specified in the revised Clause 49 to the extent theseapply and extend to the Company.

(d) None of the subsidiary companies of the Company is a material non-listed Indian subsidiary as defined in Clause 49. The AuditCommittee of the Company periodically reviews the financial statements, in particular, the investments made by the unlistedsubsidiary companies. The Minutes of the Board Meetings of all the unlisted subsidiary Companies are placed at the Board Meetingof the Company.

(e) In the preparation of the financial statements, the Company has followed the Accounting Standards issued by the ICAI Thesignificant accounting policies applied in preparation and presentation of financial statements have been set out in Schedule 23forming part of the financial statements.

(f) The Company has laid down the procedures to inform the Board members about the risk assessment and minimization procedurescovering the entire gamut of business operations of the Company and the same have been reviewed by the Board during the year.

(g) The designated Senior Management Personnel of the Company have disclosed to the Board that no material, financial andcommercial transactions have been made during the year under review in which they have personal interest, which may have apotential conflict with the interest of the Company at large.

(h) The CEO (Managing Director) and the CFO (Vice President (Commercial)) have furnished a Certificate to the Board for the yearended 31st March, 2006 in compliance with the revised clause 49.V of the Listing Agreement(s) as amended.

(i) In accordance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations. 1992, as amended, ShriGautam Sharma, Finance Manager & Assistant Secretary has been designated as the Compliance Officer of the Company underthe Company's Code of Conduct for Prevention of Insider Trading. He is responsible for adherence to the Code by the Companyand its designated employees. The Company also adheres to the disclosure practices for Prevention of Insider Trading asspecified in the aforesaid SEBI Regulations.

(j) The Company has presently not adopted the non-mandatory requirements in regard to maintenance of Non-Executive Chairman'soffice, tenure of independent directors, sending half-yearly declaration of financial performance to each household ofshareholders, unqualified financial statements, training of Board Members, mechanism for evaluating non-executive BoardMembers and establishment of whistle blower policy, etc. However, the Company has a Remuneration Committee consisting ofthree non-executive independent directors.

14


8. MEANS OF COMMUNICATION

(a) Quarterly Results :Quarterly results after being reviewed by the Audit Committee are taken on record by the Board of Directors and submitted tothe Stock Exchanges as per requirements of the Listing Agreements. At present, Half Yearly report is not sent to eachhousehold of shareholders.

(b) Newspapers wherein results are normally published :English Newspaper - Financial Express (All editions)Vernacular Newspaper-Dainik Jag ran (Rewa edition)

(c) Any website, where displayed :www.vtlrewa.comIn addition, as required by SEBI and the listing agreement, the company has been regularly filing the required financial and otherinformafion on the Electronic Data Information Filing and Retrieval (EDIFAR) system at website www.sebiedifar.nic.inmaintained by SEBI / National Informatics Centre.

(d) Whether it also displays official news releases : No(e) The presentations made to institutional investors or to the analysts : Nil

9. GENERAL SHAREHOLDER INFORMATION

9.1 Annual General Meeting:

Date, Time and Venue

9.2

9.3

9.4

9.5

9.6

9.7

Financial Calendar (2006-07):(tentative)Quarterly Results :Ending June 30,2006Ending September 30, 2006Ending December 31,2006Ending March 31, 2007

Book Closure date(s)

Dividend Payment date

Listing on Stock Exchanges

12th July, 2006 at 11 A.M.Registered Office of the Company atUdyog Vihar, RO.Chorhata, Rewa (M.P.) - 486 006.

Last week of July, 2006Last week of October, 2006Last week of January, 2007Last week of April, 2007

Thursday, 6th July, 2006 to Wednesday, 12th July, 2006(both days inclusive)Not Applicable

(a)

(b)

Bombay Stock Exchange Ltd., (BSE)Phiroze Jeejeebhoy Towers,Dalai Street, Fort, Mumbai - 400 001

National Stock Exchange of India Ltd. (NSE)Exchange Plaza, C-1, Q.BIock.Bandra-Kurla Complex,Bandra (East), Mumbai - 400 051

The Company has paid the Annual listing fees for the financial year 2005-06 to BSE & NSE.

Stock Code - Physical : BSE, Mumbai -517015

NSE, Mumbai - VINDHYATEL BE

Demat ISIN Number for NSDL & CDSL : INE707A01012

Stock Market Data :Monthly high and low quotations of shares and volume of Equity Shares traded on Bombay Stock Exchange Ltd., Mumbai(BSE) and National Stock Exchange of India Ltd., Mumbai (NSE) are as follows :

15


April, 2005

May, 2005

June, 2005

July, 2005

August, 2005

September, 2005October, 2005

November, 2005December, 2005January, 2006

February, 2006March, 2006

iiiiiiiiiiM:g:g|l*aiijS:;:;;;::?j!iK:fiSp?::

79.10

134.55

186.45

172.90

206.00

194.55

182.00

151.10

165.30

165.85

169.00

178.00

iiiiiiii69.60

70.40

144.75

144.05

150.90

179.75

.140.70

128.90

148.35

148.15

148.20

142.90

;:ii;Va!;Bini6S;:S;:;S':S;i{itiS;lSJ:|s:xH

78.95

132.10

187.05

171.70

205.30

193.55

182.00

150.00

165.10

166.00

169.05

177.35

111111111111111111.-.....,-.-.......-.-.........-.-,-,... ....-......,-.-.-.-.......-.-.-.......,,-

69.75

70.00

145.00

149.05

151.95

180.00

136.00

129.10

147.55

148.00

151.00

143.50

ii^ iyiSjUilSiSSSls;;5ss(Sfi4f?iit>iSiJHf;?S;

53994

571627

273769

142796

509178

280317

42821

94950

84658

60607

98195

73621

Share price performance in comparison to broad based indices - BSE Sensex :

Sham Price (Monthly High & Low) vs. BSL Sensox Relative F'rlorniaru.:fi ol Monthly Clowinc) Sham F'r

|SfiflKBX-

9.9 Registrar and Share Transfer Agents

9.10 Share Transfer System :

M/s Intime Spectrum Registry Ltd.C-13, Pannalal Silk Mills CompoundL.B.S.Marg, Bhandup (West)Mumbai-400078Phone:+91-22-25963838Fax :+91-22-25946969Email :[email protected]

Trading in equity shares of the Company is permitted only in dematerialised form for all classes of investors as per notificationissued by the Securities & Exchange Board of India (SEBI).All matters pertaining to share transfer and related activities are handled by the Registrar and Share Transfer Agents of theCompany who are fully equipped to carry out the transfers of shares and redressal of investors' complaint. All transactions inconnection with transfer, transmission, etc. are processed by them on fortnightly basis and is sent to the Company for placingbefore the Committee of Directors/Committee of Officers, as the case may be for approval. With a view to expedite theprocess of share transfer in physical segment, the Board of Directors has delegated the authority to a Committee of Officersfor approving transfer upto 1000 equity shares in each request. The average time taken for processing share transfer requestsin physical form including despatch of share certificates is generally three weeks, on receipt of duly completed documents in allrespects, while the request for dematerialisation of equity shares is confirmed/rejected within an average period of 15 days. TheCompany obtains from a Company Secretary in practice half-yearly certificate of compliance with the share transfer formalitiesas required under Clause 47(c) of the Listing Agreement with Stock Exchanges and files a copy of the certificate with the StockExchanges.

16


The Company's representatives visit the office of the Registrar and Share Transfer Agents from time to time to monitor,supervise and ensure that there are no delays or lapses in the system.

9.11 (a) Distribution of Shareholding as on 31st March, 2006 :

1 - 500

501 - 1000

1001 - 2000

2001 - 3000

3001 - 4000

4001 - 5000

5001 - 10000

10001 and aboveShares in transit(NSDL/CDSL)GRAND TOTAL

Physical ModeElectronic Mode

;:::::;i':::>ii-:':;i:::::::::::::::::::i:":":""::':':':::::':^:: : ; ' : j : ; : i:5*.n;Wrln CwQ.TS?: : : : : : : ::

7992

482

190

66

23

24

20

52-

8849

3240

5609

90.31

5.45

2.15

0.74

0.26

0.27

0.23

0.59-

100.00

36.61

63.39

1186453

373530

284349

171265

79486

113348

130895

95044867051

11850863

6595685

5255178

!i!!iillli!i!ii10.01

3.15

2.40

1.45

0.67

0.96

1.10

80.200.06

100.00

55.66

44.34

(b) Category of Shareholders as on 31st March, 2006 :::::&jti!^ i[i^ :::^^ :^ ^:^^ :^ ^^^^^?^Kf^mmsiy^^Mssm?mmmmif>ifSmiSm^

Indian Promoter(s)/Persons acting in concertResident Individuals & Corporates

Financial Institutions/Insurance Companies/Banks/Mutual Funds

NRIs/Flls/Foreign Bank

Shares in Transit (NSDL/CDSL)

GRAND TOTAL

illlililitl;sHS f^ro|aSiS;:i:

26

8389

24

410

-

8849

iiiiiiiiilgSHiSejwijBbrS;

0.29

94.80

0.27

4.64

-

100.00

iiiiiiiffiiiliijsiijMii6406243

4250095

362016

825458

7051

11850863

iiiiiiii$iiiiSHareholdirtg:

54.06

35.86

3.05

6.97

0.06

100.00

9.12 Dematerialisation of Shares and liquidity : 5255178 Equity Shares representing 44.34% of total Equity Capital of the Companyare held in dematerialised form with National Securities Depository Limited (NSDL) and Central DepositoryServices (India) Limited (CDSL) as on 31st March, 2006.Company's shares are reasonably liquid and are quite actively traded on the Bombay Stock Exchange Ltd., (BSE) and NationalStock Exchange of India Ltd.(NSE). Relevant data for the approximate average daily turnover in terms of volume for thefinancial year 2005-06 is given below

mmmm^mmmm::;:::::::::::::::::::::::::'x::9v?K::::::::::;:;::: :::::x:x::::::16084

iliiiiii^ illiii9146

lll^ ilw l^llll25230

The Secretarial Audit Report from a Company Secretary in practice confirming that the total issued capital of the Company is inagreement with the total number of equity shares in physical form and the total number of dematerialised equity shares held withNSDL and CDSL, is placed before the Board on a quarterly basis. A copy of the Audit Report is submitted to the stock exchangeswhere the equity shares of the Company are listed.

9.13 Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, Conversion date and likely Impact on equity :The Companyhas not issued any of these instruments so far.

9.14 Plant Location :Udyog Vihar Industrial Area, P.O. Chorhata, Rewa (M.P.) - 486 006

17


9.15 Address for Correspondence :M/s Intime Spectrum Registry Ltd. Share DepartmentC-13, Pannalal Silk Mills Compound Vindhya Telelinks LimitedL.B.S.Marg , Bhandup (West) Udyog Vihar, P.O. ChorhataMumbai - 400 078 OR Rewa(M.P.)-486006Phone :+91-22-25963838 Phone:+91-7662-400400Fax : +91-22-25946969 Fax : +91-7662-400591Email : [email protected] Email : [email protected]

CERTIFICATE OF COMPLIANCE WITH THE CODE OF CONDUCTAs provided under Clause 49 of the Listing Agreement relating to Corporate Governance with the Stock Exchanges, all the Board Membersand the Senior Management Personnel of the Company have affirmed compliance with the Company's Code of Conduct during the financialyear 2005-06.

For Vindhya Telelinks Limited

R.G.Mundra-Jew Delhi, 29th April, 2006 Managing Director

AUDITOR'S CERTIFICATEToThe Members of Vindhya Telelinks Limited

We have examined the compliance of conditions of corporate governance by Vindhya Telelinks Limited fdr the year ended on March 31,2006, as stipulated in Clause 49 of the Listing Agreement of the said Company with stock exchange(s).The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to proceduresand implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It isneither an audit nor an expression of opinion on the financial statements of the Company.In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has compliedwith the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectivenesswith which the management has conducted the affairs of the Company.

For S.R. BATLIBOI & CO.Chartered Accountants

Per ANIL GUPTAPartner

Membership No. 87921

Place : New DelhiDate : April 29, 2006

18


Auditors' ReportTO THE MEMBERS OF VINDHYATELELINKS LIMITED

1. We have audited the attached balance sheet of VINDHYA TELELINKS LIMITED as at March 31, 2006 and also the profit and lossaccount and the cash flow statement for the year ended on that date annexed thereto. These financial statements are theresponsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on ouraudit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by the Central Government of India in terms ofsub- section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in Para 3 above, we report that;

(i) We have obtained all the information and explanations, which, to the best of our knowledge and belief, were necessary for thepurpose of our audit.

(ii) In our opinion, proper books of account, as required by law, have been kept by the Company so far as appears from ourexamination of these books.

(iii) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books ofaccount;

(iv) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with theaccounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

(v) On the basis of written representations received from the Directors as on March 31, 2006 and taken on record by the Board ofDirectors, we report that none of the Directors is disqualified as on March 31, 2006 from being appointed as a Director in termsof Section 274 (1) (g) of the Companies Act, 1956;

(vi) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts give theinformation required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March, 2006,b) in the case of the Profit & Loss Account, of the profit of the Company for the year ended on that date, andc) in the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date.


Per ANIL GUPTAPlace : New Delhi PartnerDate : April 29, 2006 Membership No. 87921

19


Annexure referred to in paragraph (3) of our report of even dateRe : Vmdhya Telelinks Limited(ix (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified onsuch verification.There was no substantial disposal of fixed assets during the year.

(iii)

(o)(a)(b)

(c)(a)

(e)

(iv)

(v)

(vi)(vii)

The management has conducted physical verification of inventory at reasonable intervals during the year.

The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to thesize of the Company and the nature of its business.

The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification.

As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in theregister maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of clause 4 (iii) (b), (c) and (d) ofthe Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in theregister maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of clause 4 (iii) (f) and (g) of theCompanies (Auditor's Report) (as amended) Order, 2003 are not applicable to the Company.

In our opinion and according to the information and explanations given to us, there is an adequate internal control systemcommensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and forthe sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system inrespect of these areas.

Based on the audit procedures applied by us and according to information and explanations provided by the management, we are ofthe opinion that there are no transactions that need to be entered into the register maintained under Section 301 of the Companies Act,1956. Therefore, the provisions of clause 4 (v) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to theCompany.

The Company has not accepted any deposits from the public.

In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Governmentfor the maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956 in respect to the products to which the saidrules are applicable, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a)

(b)

(c)

The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investoreducation and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, exciseduty, cess and other material statutory dues applicable to it.

According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investoreducation and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, exciseduty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from thedate they became payable.

According to the records of the Company, the dues outstanding of income-tax , sales-tax, wealth-tax, service tax, custom duty,excise duty and cess on account of any dispute, are as follows:

Siiiir^ :ot;*lw:S*StiirtS;?:::;:::::S;s5s;BSSSSSSS:;:;:;:^

Central Excise Act, 1944

||||||||||!||||||||^Demand in case of valuation forcaptive consumption of Machinesfor the period 1993-94

IlllAJinSUimlill;;:|g:;:RMfh:;:ffi&:;S;;i

0.71

:!Ji:;(f.iii^ h^^ ::a^ (ifg:;iS!:!;;!i::;S:s;s:

Central Excise Service Tax caseAppellate Tribunal, New Delhi.

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current year andimmediately preceding financial year.

(xi) Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that,the Company has not defaulted in repayment of dues to bank. We have been informed that the Company has not issued anydebenture nor availed any loan from any financial institution during the year.

(xii) .According to the information and explanations given to us and based on the documents and records produced to us, the Company hasnot granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

20


(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) ofthe Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In respect of dealing/trading in units of Mutual Funds, in our opinion and according to the information and explanations given to us,proper records have been maintained of the transactions and contracts and timely entries have been made therein. The shares,securities, debentures and other investments have been held by the Company, in its own name.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others frombank or financial institutions.

(xvi) The Company did not have any term loans outstanding during the year.(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet and cash flow statement

of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained underSection 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.(xx) The Company has not raised any money through a public issue during the year.(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per

the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reportedduring the course of our audit.


Per ANIL GUPTAPlace : New Delhi PartnerDate : April 29, 2006 Membership No. 87921

21

BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

BALANCE SHEET AS AT 31ST MARCH, 2006


SOURCES OF FUNDS

SHAREHOLDERS' FUNDSShare CapitalReserves and Surplus

LOAN FUNDSSecured LoansUnsecured Loans

REFERRED TAX LIABILITIES (NET)

APPLICATION OF FUNDS

FIXED ASSETS

Gross blockLess: depreciationNet blockCapital work-in-progress

INVESTMENTS

CURRENT ASSETS, LOANS AND ADVANCESInventoriesSundry debtorsCash and bank balancesOther current assetsLoans and advances

LESS: CURRENT LIABILITIES AND PROVISIONSCurrent liabilitiesProvisions

NET CURRENT ASSETS

NOTES TO THE ACCOUNTSThe schedules referred to above and notes to the accounts

As per our attached report of even date.

For S.R.BATLIBOI & CO.Chartered Accountants

Per ANIL QUPTAPartnerMembership No.87921

New Delhi, April 29, 2006

iiiiiiieiiiiiflSiiiiiiii

12

34

Total

5

6

7891011

1213

Total22

form an integral part of the E

R.S.LodhaJ.VeeraraghavanS.K.MisraR.C.TapuriahD.R.BansalH.V.LodhaPracheta MajumdarR.G.Mundra

Gautam Sharma

New Delhi, April 29

22

:llll;;!!:;:a!^ i^|s:l!ll!ll!!!;!!:p2i^ f|fi:::;::i;:i:;|i;:;:;:ir|S:::;in;;;JHCs::i;S;:;

1182.0920901.2422083.33

1341.462207.293548.75

53.97

25686.05

13343.449140.404203.04

56.814259.85

11868.37

2309.643057.263404.33

60.471517.12

10348.82

598.04192.95790.99

9557.83

25686.05

alance Sheet.

Chairman

\ Directors

Managing DirectorFinance Manager &

2006

iiHsSi;;;;;;;;S|;iii:fiiSfe|;;:S:::|;|||||||||||9CJ|;;|:s;i;:i;;;i:;:;:;iisiiii;:j|?s|x:

1181.3220770.5521951.87

1858.872509.784368.65

105.39

26425.91

13314.108741.654572.45

4572.45

12072.28

1745.301570.613803.73215.66

3003.9610339.26

363.56194.52558.08

9781.18

26425.91

Assistant Secretary

VINDHYATELELINKS LIMITEDPROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2006

INCOMETurnover (Gross)Less:- Excise dutyTurnover (Net)Other income

EXPENDITURERaw materials consumedCost of traded goods soldPersonnel expensesOperating and other expenses(Increase) in inventoriesFinancial expenses

PROFIT BEFORE DEPRECIATION, EXCEPTIONAL ITEM,PRIOR PERIOD ITEMS AND TAXDepreciationPROFIT BEFORE EXCEPTIONAL ITEM, PRIOR PERIODITEMS AND TAXExceptional item (Voluntary retirement compensation)Prior period items (Refer Note No. 11 of Schedule 22)PROFIT BEFORE TAXIncome tax for current yearIncome tax credit for earlier years (Net)Deferred tax (Credit)Fringe benefit taxTotal tax (Income)NET PROFIT FOR THE YEARCredit balance brought forwardSurplus carried to Balance SheetEarnings per share (EPS)Weighted average number of equity shares in calculating basicBasic and Diluted (Nominal value of shares Rs.10/- each (Rs.

NOTES TO THE ACCOUNTS

The schedules referred to above and notes to the accounts foAs per our attached report of even date

For S.R.BATLIBOI &CO,Chartered Accountants

Per ANIL GUPTAPartnerMembership No. 87921


I^ iliillliliii

14

15

16

17181920

21

and diluted EPS107- each))

22

m an integral part of the I

R.S.LodhaJ.VeeraraghavanS.K.MisraR.C.TapuriahD.R BansalH.V.LodhaPracheta MajumdarRG.Mundra

Gautam Sharma

New Delhi, April 29

23

1111 iiiphiijiiiiIII! llplilttll!l!!il!l;Jl!teii

15381.662144.63

13237.03694.01

13931.04

11029.4910.23

577.741826.41(255.64)136.30

13324.53

606.51479.36

127.15-

32.09

95.062.35

-

(51.42)14.60

(34.47)129.53

42.13171.66

118508631.09

3rofit & Loss Account.

Chairman

Directors

,

Managing Director

Finance Manager &

2006

llllliaiiiiiiiilllllllill|i!i|||l

10449.611384.279065.341120.08

10185.42

7789.70200.60506.37

- 1366.46(198.18)

80.069745.01

440.41377.65

62.767.08

48.936.75

-

(9.58)(25.80)

-

(35.38)42.13

-

42.13

118508630.36

Assistant Secretary

VINDHYATELELINKS LIMITEDCASH FLOW STATEMENT FOR THE YEAR ENDED 31 ST MARCH, 2006SWraWftW:::*:::^^

A Cash flow from operating activities

Net Profit before tax

Adjustments for :Depreciation

Loss on disposal of fixed assets (Net)(Profit) on sale of current investmentsProvision for diminution in the value of current investments

Interest income

Dividend income

Interest expense

Operating Profit/(Loss) before working capital changes

Movement in working capital:

Decrease/increase) in sundry debtorsDecrease/flncrease) in inventories

Decrease/(lncrease) in loans and advances

Increase in current liabilities and provisions

Cash generated from/fused in) operations

Direct taxes refund received

Net cash from/(used in) operating activities

B. Cash flows from investing activities

Purchase of fixed assets

Proceeds from sale of fixed assets

Purchase of investments

Sale of investments

Deposits with bodies corporate & others

Interest received

Dividend received

Net cash from investing activities

::::::::::::::x::::X-x;xX::;:X::|XX,j^ :-xX r^:::x:x::;:::::::: : x-XxX-XxX-x-Xx: x-x-x x-r ':::::::.:::xSSSXxXj; : Xx:Xx;xXxendeSl[::3:1.St;:;::::::x:.

95.06

479.36

3.70

(19.99)

(27.12)

(318.42)

(129.06)

67.91 56.38

151.44

(1486.65)

(564.34)

(113.88)

223.38 (1941.49)

(1790.05)

83.77

(1706.28)

(202.70)

30.18

(350.00)

601.02

1500.00

473.61

129.06

2181.17

111111111

377.65

7.91

(6.30)

47.07

(525.48)

(135.91)

55.95

309.62

792.60

55.14

102.34

(255.95)

25.45

(935.36)

590.68

550.00

665.79

135.91

PitfSirie^ySaf s*x-i-x-x-x-x-x-'-x-x-x-x :::::x^ttQS&sUStxxXx:

imimiii

6.75

(179.11)

(172.36)

1259.70

1087.34

195.40

1282.74

776.52

24


CASH FLOW STATEMENT FOR THE YEAR ENDED 31 ST MARCH, 2006 (Contd.)C. Cash flow from financing activities

Proceeds from share capital

Proceeds from share premium

Repayment of short term borrowings

Repayment of long term borrowings

Interest paid

Dividend paid

Net cash (used in) financing activities (874.29)Net (decrease) in cash and cash equivalents (399.40)

Cash and cash equivalents at the beginning of the year 3803.73

Cash and cash equivalents at the end of the year. 3404.33

Components of cash and cash equivalents as at 31st March

Cash and cheques on hand 87.05

With schedule banks

- on current accounts 478.38

- on deposits accounts 2815.08

- cash credit account 23.82

3404.33

(313.43)

(3018.70)

(52.22)

(2.27)

(3386.62)

(1327.36)

5131.09

3803.73

159.50

Notes: (a) The Cash Flow Statement has been prepared under the 'Indirect method' as set out in Accounting Standard-3 on CashFlow Statements issued by the Institute of Chartered Accountants of India,

(b) Negative figures have been shown in brackets.

As per our attached report of even date.

For S.R.BATLIBOI & CO.Chartered Accountants

Per ANIL GUPTAPartnerMembership No.87921


R.S.Lodha ChairmanJ.VeeraraghavanS.K.MisraR.C.TapuriahD.R.BansalH.V.LodhaPracheta MajumdarR.G.Mundra

Gautam SharmaNew Delhi, April 29, 2006

, Directors

Managing DirectorFinance Manager & Assistant Secretary

25


SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AS AT 31 ST MARCH, 2006 ANDPROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON THAT DATE

^m^mmmm^^mm^^m^/^^^ii^ff^fw^^Mi^^mliilllllll!!!^iililllllill!!^

SCHEDULE 1 : SHARE CAPITAL

Authorised1,50,00,000 equity shares of Rs.10/- each

Issued1,18,52,014 equity shares of Rs.10/- each

Subscribed1,18,50,863 equity shares of Rs.10/- each fully paid upLess: Calls unpaid

Total

1500.00

1185.20

1185.093.00

1182.09

1500.00

1185.20

1185.093.77

1181.32

SCHEDULE 2 : RESERVES AND SURPLUSCapital ReserveOn revaluation of plant and machineryBalance as per last account

Less: Adjustment in respect of disposal of fixed assetsLess: Transferred to Profit and Loss Account being difference of depreciation on

revalued cost of assets and that on the original cost

Securities Premium AccountBalance as per last accountAdd : Received during the year

General ReserveBalance as per last account

Profit and Loss Account

Total

9.27

0.01

2.05

7.21

3873.633.22

3876.85

16845.52

171.66

20901.24

11.59

0.10

2.22

9.27

3873.63

3873.63

16845.52

42.13

20770.55

SCHEDULE 3 : SECURED LOANSLoans from BanksCash credit facilities from State Bank of India (SBI)Foreign currency working capital loan (SBI)Loans against fixed deposit receiptsInterest accrued and dueSales Tax Loans

Notes: 1.Total

from Bank

12.63 31.73573.58

1067.46

3.73755.25 755.95

1858.871341.46

against f ixed deposit receipts due within next twelveRepayment of sales tax loans, loansmonths Rs.497.71 lacs (Rs.1067.46 lacs).Cash credit borrowings including foreign currency loan (covered by forward exchange contracts) (fund and non fund based) fromSBI are secured by hypothecation of the Company's entire goods, movable and other assets, present and future, includingdocuments of title to goods and other assets such as book-debts, outstanding moneys, receivables, claims,bills, invoices, documents, contracts, engagements, securities, investments and rights and all machinery,present and future and further secured by deposit of all title deeds of the existing immovable properties of theCompany as and by way of collateral security and are further secured by way of pledge of 12,50,000 equityshares of Birla Ericsson Optical Limited.

26


SCHEDULE 3 : SECURED LOANS (Contd.)3. Loans from Banks against fixed deposit receipts are secured by way of pledge of fixed deposit receipts of

Rs. 150.00 lacs (Rs.1680.00 lacs).

4. Sales tax loans are as per scheme of State Government and for administration of these loans, MadhyaPradesh State Industrial Development Corporation Limited (MPSIDC) has been nominated by the StateGovernment.

5. Sales tax loans from MPSIDC are secured by way of hypothecation of Company's all movable plant andmachinery, spares, tools and accessories and other movable assets, both present and future, rankingsubsequent and subservient to all charge(s) created/to be created in favour of SBI and are further secured orto be secured by way of joint mortgage (on residual charge basis) created/to be created by deposit of titledeeds of all immovable properties of the Company.

SCHEDULE 4 : UNSECURED LOANS

Sales Tax Loans (Refer Note No.4 of Schedule 3) 2207.29 2509.78(Due within next twelve months Rs. 1257. 55 lacs (Rs.Nil))

SCHEDULE 5 : FIXED ASSETS

iji&iyeiiili;;;;;;^Jfiiii&'&s!^ .;.^ :;^ ^x::::i::::::: :::: ::;Xx ::::: : ::::::::::;: :;::x :':': 1 1::; !:::::: : ''' |::i--i|;2CJ05::-:^::::dWif^ 1^^:^A^St^ eStS:::;:::3^>3.2006-:-::::::::;::::::::::: :;:::: ;: :::-: :: : :::: :;:::^ ! ;, .::^.^^ ^y^--^/:^:^. y:^^^-^:^^.^: '^-:.\ ' : : : : : ' ' ' ' . ;;:::::.'::::::: x

LAND

Free Hold ' 103.19 - - 103.19

Lease Hold 36.60 - - 36.60

BUILDINGS 1985.57 0.94 - 1986.51

PLANT & MACHINERY 10882.17 102.33 71.27 10913.23

FURNITURE & OFFICEEQUIPMENT 218.15 25.41 5.27 238.29

VEHICLES 88.42 17.21 4001 65.62

TOTAL 13314.10 145.89 116.55 13343.44

CAPITAL WOR K-IN-PROG RESS

Rs. in lacs:;;;:5::;:;SS;:S mm^s-^^^HiM^ '^^M?M^fiK^lMi^^^^ff^^

;;-:taii^ !?;8SrJiitS;;;;:^ j^ ^mmiM^^if^!l. ^ immmiim^MiiM

- 103.19

4.75 0.37 - 5.12 31.48

816.80 52.53 - 869.33 1117.18

7716.33 412.92 56.38 8072.87 2840.36

146.55 12.33 3.21 155.67 82.62

57.22 3.26 2307 37.41 28.21

8741.65 481.41 82.66 9140.40 4203.04

56.81

4259.85

!ili$!.$!

103.19

31.85

1168.77

3165.84

71.60

31.20

4572.45

4572.45

PREVIOUS YEAR 13300.21 255.95 242.06 13314.10 8570.38 379.87 208.60 8741.65 4572.45

Notes: (1) Freehold land includes Rs.5.47 lacs (Rs.5.47 lacs) given on lease.(2) Fixed assets of the value of Rs.25.59 lacs (WDV of Rs. 0.64 lac) have been discarded during the year.(3) Gross block of Plant and Machinery include Rs. 905.70 lacs (Rs. 906.63 lacs) on account of addition on revaluation during

the year ended March 31

annual report 2005-06 vindhya tele

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