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Areas of operation:

One of the largest telecom equipment suppliers

in India Transmission equipment Terminal equipment Access equipment Fibre optic cable Turnkey services to various operators and large multinationals operating in the country

Manufacturing operations Solan in Himachal Pradesh Verna in Goa Penchant for Controversy : Outrageous bids of Rs 86,000 crore to snare 13 telecom circles in 1995 Sukhram Telecom scandal Association with Ketan Parekh Deal with Kerry Packer (Channel 9) Highest Share Price : 2,552.90 ( Year 2000) & Lowest Share Price : 5.95 (Year 2008)

1987: Company Incorporated to manufacture tele communication equipment

1997 : Ventured into cellular handset manufacturing

1998: Enters into IT to offer software solutions to telecom industry

1987 : All shares allocated to Promoters / Directors, HPSEDC

1994: Acquired investment company & Coubndge Construction

2000 -01 : Enters into dotcom space, 45% stake in online shopping mall jaldi.com Promoters acquire stake in IVRCL Infrastructures & Projects Ltd., a construction major

2003 : ICICI Bank converts part of its loan into 12.65% stake in the company 2003: Business restructuring exercise to improve efficiency

1989 : IPO

1994 : Massive expansion cum diversification plan

1991 : Backward Integration to reduce dependence on foreign suppliers

1991: Two new companies: HTL & Microwave Communication Ltd.

JV to set up iSteel India

2002: GTB recalls all short-term loans amounting to Rs.185cr from HFCL

HFCL HTL HFCL Infotel


Connect Broadband Services

HTL

HFCL Infotel

HTL

HFCL Infotel

Connect Broadband Services


Infotel Tower Infrastructure Ltd

Moneta Finance

HTL

HFCL Infotel

Moneta Finance

HTL

Moneta Finance

Strengths Core expertise in telecom equipment manufacturing & services Strong client base

Weaknesses Inability to service liabilities

Liquidity problems
Inadequate WC Strong manufacturing set up Lack of stability Opportunities Govt emphasis on expanding potential & reach of telecommunication (allocation of 3G licenses) Greater shift towards contract manufacturing Threats Change in government policies Intense competition from multinationals and small companies

Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

High
65 50 110 80 180 145 70 25 56.05 692.05

Low
20 15 35 32 52.5 42 11.75 12.55 11 35

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

High
2,552.90 1,409.80 104.25 41 26.1 28.6 49.65 46.85 62.6 17.4 17.4 21.35

Low
646.05 24.9 31.55 11.25 7.2 14.75 18 16.9 5.95 6.65 9.85 7.85

Aggressive expansion and diversification


Higher ratio of alliances / JVs with other companies Stiff competition especially from MNCs & smaller companies Mismanagement of funds, liquidity issues, less WC

Inability to repay the creditors resulting in default

Inability to service interest obligations


Continued losses from operations including subsidiaries leading to rework of the existing CDR Programme

Lack of definite order book size


Mismanagement of working capital


Income

Income from Sales & services ~ expense on COGS & other expenses
Rs 000s 885,526 21,379 Expenditure COGS Manufacturing & other expenses Rs 000s 611,332 249,367

Sales & Services Less: Excise duty

Total

864,147

Total

860,699

Debts outstanding for a period > 6 months ~ Rs 286 crores + other debts (considered good) ~ 47 crores
Waiver of loan & interest ~ Rs 228 crore considered in other income due to which profit of Rs 40 crore is reported

Debt of the Company were earlier restructured under Corporate Debt Restructuring (CDR) mechanism in April 2004 which was subsequently modified in June 2005. The CDR was revised in 2011 as under :

Reduction in existing payable rate of interest Rescheduling & longer period of repayment of loans Conversion of overdue interest into FITL Conversion of ZCPBs, part of their premium into Equity Conversion of WC loans into Equity Conversion of part of WC loan into WCTL Waiver of unpaid dividend on preference shares Waiver of penal interest Additional infusion of funds by promoters

Payment of outstanding principal amount of secured loan amounting to Rs 102.5 crore in 84 monthly installments @ 10% pa from April 2012 to March 2019

WC loan to be converted to WCTL ~ 32 crore to be repaid in 84 monthly installments from April 2012 to March 2019
One time settlement of Funded Interest Term Loans (FITL) at 25 % of the total outstanding, rest has been waived off, i.e. payment of Rs 16.18 crore by 30th September 2011

ZCPBs ~ Rs 195 crores + part of premium accrued ~ 31 crores to be converted into equity Secured WC loan ~ 17 crores to be converted into equity Interest accrued on TL of Rs 79.4 crores is converted into FITL to be repaid in 3 equal installments from 2016 to 2018 There would be no change in the control of the company. The promoters would continue to hold majority stake

Sources of Funds (Rs crores) Total Share Capital

Mar'11 (6 months) 179.74

Post conversion of debt into equity 204.49

Equity Share Capital


Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans

99.24
80.50 222.00 0.00 401.74 278.10 353.88

123.99
80.50 341.54 0.00 546.02 278.10 110.36

Total Debt
Total Liabilities

631.98
1,033.72

388.46
934.48

Conversion into WCTL Secured & unsecured WC loans Existing WCTL Total Repayment

2
240,545 76,406 316,951 84 monthly installments from April 2012 to March 2019 45,279 647,346 485,510 161,837

Outstanding Principal amount of secured loan Secured loan 1,024,584 84 monthly installments Repayment from April 2012 to March 2019 Interest rate 10% Yearly outgo 210,455 New FITL Interest accrued on TL Repayment

Yearly outgo

Existing FITL Amount 75% waived Settlement on OTS basis @ 25% payable on 30th Sept 2011

506,500 3 equal installments from 2016 to 2018

Interest accrued on WC loans


Repayment

287,200
3 equal installments from 2016 to 2018

Immediate liabilities in current financial year due to CDR ~ 42 crore

One WC lender having total outstanding of Rs 16 crore has not agreed to CDR programme Fresh proposal is under discussion with lender

Hive off HTL :


Losses have continued for FY 2010-11 with the accumulated loss at Rs 491 crore Subsidiarys current liabilities exceed its current assets by Rs 238 crore Subsidiary has overdrawn borrowings from banks & also has overdue loans from Government of India Subsidiary is faced with lack of orders Inability to raise working capital required to diversify into new telecom products Subsidiary has already been declared a sick company by the BIFR in 2009

Appoint a professional CEO instead of the promoters holding the day to day reins