Annual report - MIRC Electronics Limited - 2009-2010

MIRC ELECTRONICS LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

We are delighted to present the 29th Annual Report on our business and
operations together with the audited accounts of the Company for the
financial year ended 31st March, 2010. The financial highlights for the
year under review are as under:



Results of Operations
(Rs. in crores)
Particulars 2009-10 2008-09

Turnover 1568.35 1517.72
Profit before tax 22.65 10.15
Provision for taxation 4.28 1.20
Profit after tax 18.37 8.95
Profit available for appropriation 173.29 163.25
Final dividend on equity shares -
(proposed) 13.46 5.68
Dividend on preference shares 0.51 0.67
Tax on dividend 2.37 1.08
Transfer to General Reserve 1.84 0.90
Transfer to Capital Redemption
Reserve 18.91 -
Surplus carried to balance sheet 136.21 154.92

Performance:

During the year under review the turnover of the Company increased from
Rs.1517.72 crores to Rs.1568.35 crores. The Profit before tax increased
from Rs. 10.15 crores to Rs.22.65 crores registering an increase of 123%
and the Profit after tax increased from Rs.8.95 crores to Rs.18.77 crores
registeringan increase of 105%. Your Directors are confident of improving
the performance in the ensuing year.

Redemption of Preference Shares

Pursuant to the scheme of amalgamation of Guviso Holdings Private Limited
(Transferor Company) with Mirc Electronics Limited (Transferee Company), as
sanctioned by the Hon'ble High Court of Bombay, Company had allotted
1891512, 5% Cumulative Redeemable Preference Shares of Rs. 100/- each to
the shareholders of Transferor Company, which were liable to be redeemed on
or after 15th October, 2009. Consequently the same were redeemed on 15th
October, 2009. The effect of redemption of preference shares has been given
in the annual accounts of the Company for this financial year.

Dividend

Your Directors are pleased to recommend payment of dividend on equity share
for the financial year ended 31st March, 2010 at Re. 0.95 paise per equity
share on the face value of Re. 1/- per share subject to the approval of
members of the Company in the ensuing Annual General Meeting.

In respect of 5% Cumulative Redeemable Preference Share, the Board had
recommended dividend of Rs. 2.70 per preference share of Rs. 100/- each,
for the period from 1st April, 2009 to 14th October, 2009 (i.e. upto the
date of redemption). Your ratification is required on the above payment of
dividend to the preference shareholders.

Transfer to reserves

Your Directors have proposed to transfer Rs. 183.71 lacs (previous year Rs.
89.54 lacs) to the general reserves out of the profits of Company for the
year 2009-10.

Subsidiary Company

The audited statement of accounts of Company's subsidiary viz. Akasaka
Electronics Limited together with the Report of Directors and Auditors as
required under Section 212 of the Companies Act, 1956, are attached to this
report.

Consolidated Financial Statements

In accordance with Accounting Standard 21 on Consolidated Financial
Statements read with Accounting Standard 23 on Accounting for Investments
in Associates, and the Listing Agreement entered into with the Stock
Exchanges, the audited Consolidated Financial Statement for the financial
year ended 31st March, 2010 are provided in this Annual Report.

Cash Flow Statement

In conformity with the provisions of Clause 32 of the Listing Agreement
with the Stock Exchanges, the Cash flow statement for the year ended 31st
March, 2010 is annexed hereto.

Directors

In terms of provisions of Section 255 and 256 of the Companies Act, 1956,
read with the Articles of Association of the Company, Mr. Vimal Bhandari,
Non-Executive and Independent Director, retires by rotation and being
eligible offers himself for re-appointment at the ensuing annual general
meeting of the Company. A brief resume of Mr. Vimal Bhandari as required
under Clause 49 of the Listing Agreement, is provided in the notice
convening the Annual General Meeting of the Company.

The tenure of Mr. Gulu L. Mirchandani, Chairman & Managing Director will be
expiring on 30th November, 2010. In view of his excellent performance, your
Directors propose re-appointment of Mr. Gulu L. Mirchandani as Chairman &
Managing Director of the Company for a further period of 3 years with
effect from 1st December, 2010 to 30th November, 2013 on the existing terms
and conditions subject to the approval of Central Government.

Directors' Responsibility Statement:

In terms of Section 217(2AA) of the Companies Act, 1956, your Directors
confirm that:

a) In the preparation of the annual accounts for the year ended 31st March,
2010, the applicable accounting standards have been followed and no
material departures have been made from the same;

b) They have selected such accounting polices and applied them consistently
and 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 at the end
of the financial year and of the profit of the Company for the year under
review;

c) They have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities;

d) They have prepared the annual accounts on a going concern basis.

Corporate Governance

Your Company believes in adopting effective Corporate Governance practices.
Clause 49 of the Listing Agreement deals with the Corporate Governance
Requirements which every listed company is required to comply with. The
Company has accordingly taken effective steps to comply with the
requirements of the Clause 49 of the Listing Agreement with the Stock
Exchanges.

A separate section on the Corporate Governance forming part of the
Directors' Report and the certificate from the Company's Auditors M/s. N.
M. Raiji & Co., Chartered Accountants, Mumbai confirming compliance with
the conditions of Corporate Governance as stipulated under the clause 49 of
the Listing Agreement, is annexed to this report for your persual.

The Chief Executive Officer's declaration regarding compliance of Code of
Business Conduct and Ethics for Board members and senior management
personnel forms part of the Report on Corporate Governance.

Management Discussion and Analysis

A detailed review of operations, performance and future outlook of the
Company and its business, as stipulated under Clause 49 of the Listing
Agreement is presented in a separate section forming part of Annual Report
under the head Management Discussion and Analysis'.

Group

Pursuant to intimations received from Promoters, the names of the Promoters
and entities comprising group' as defined under the Monopolies and
Restrictive Trade Practices (MRTP) Act, 1969 is disclosed separately in the
Annual Report for the purpose of the SEBI (Substantial Acquisition of
Shares and Takeovers) Regulation 1997, as amended.

Fixed deposits

The Company has neither invited nor accepted any public deposit within the
meaning of Section 58A of the Companies Act, 1956 and rules made
thereunder, during the year under review.

Electronic filing

In terms of SEBI notifications and Listing Agreement, the Company had been
complying with the provisions of Clause 51 of the Listing Agreement
pertaining to the Electronic Data Information Filing and Retrieval System
[EDIFAR]. The Company is also uploading the same information on its website
viz. www.onida.com within the prescribed time limit.

However in view of deletion of Clause 51 of the Listing Agreement vide SEBI
circular No. CIR/CFD/DCR/3/2010 dated 16.04.2010, Company shall be
uploading the relevant information as per Clause 52 of the Listing
agreement under Corporate Filing and Dissemination System (CFDS) going
forward. The said information can also be accessed on the company's website
viz. www.onida.com.

Listing fees

The equity shares of the Company are listed on the The Bombay Stock
Exchange Limited and The National Stock Exchange of India Limited. The
Company has paid the applicable listing fees to the above Stock Exchanges
up to date. The Company's equity shares are also traded in the
dematerialized segment for all investors compulsorily and the Company has
entered into agreements with The Central Depository Services (India)
Limited and The National Securities Depository Limited for trading in
electronic form.

Transfer of Unpaid and Unclaimed Dividend to IEPF

Pursuant to provisions of Section 205A(5) of the Companies Act, 1956, the
declared dividend which remained unpaid or unclaimed for a period of 7
years [viz. dividend declared for the F.Y. 2001-02] have been transferred
by the Company to

Investor Education and Protection Fund (IEPF) established by the Central
Government pursuant to Section 205C of the said Act.

For the purpose of benefiting our shareholders who have not claimed the
dividend for the financial year 2002-03, which is due for transfer to IEPF
on or after 25th September, 2010, we shall be posting separate letters
requesting them once again to claim their unclaimed dividend amount of the
said financial year. Such shareholders are requested to write to the
Company Secretary for claiming their unpaid/ unclaimed dividend.

Auditors

M/s. N. M. Raiji & Co., Chartered Accountants, the Statutory Auditors of
the Company, holds office upto the conclusion of the forthcoming Annual
General Meeting and have given their consent for re-appointment as
statutory auditors of the Company. It is proposed to re-appoint them as
auditors for the financial year 2010-11 and fix their remuneration.

The Company has received a written confirmation from M/s. N. M. Raiji & Co.
to the effect that their appointment, if made, would be in conformity with
the limits prescribed in Section 224 (1B) of the Companies Act, 1956. The
report of the auditors on audited accounts for the financial year 2009-10,
is self-explanatory and does not require any further explanation.

The Auditors have further confirmed that they are being subject to Peer
Review as per ICAI requirement.

Audit Committee

In accordance with Clause 49 of the Listing Agreement read with Section
292A of the Companies Act, 1956, the Company has constituted an Audit
Committee, which consists of three Independent and Non-Executive Directors
of the Company viz. Mr. Vimal Bhandari, Chairman, Mr. Ranjan Kapur and Mr.
Manoj Maheshwari. The Audit Committee functions in terms of the role and
powers delegated by the Board of Directors keeping in view the provisions
of Clause 49 of the Listing Agreement and Section 292A of the Companies
Act, 1956.

Employee relations and particulars of Employees

Relations between employees and the management continued to be cordial
during the year except for a brief period when the management had to
declare a lockout in one of its plants due to an illegal strike commenced
by workmen of the said plant. In terms of provisions of Section 217(2A) of
the Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975, the particulars of employees are set out in Annexure to this
Report. However, as per the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, the Annual Report excluding the aforesaid information
is being sent to all members of the Company and others entitled thereto.
Any member interested in obtaining such particulars may write to the
Company Secretary at Registered Office of the Company.

Research and Development

Mirc recognises that a vigorously intelligent research initiative enables
in not only cost reduction through effective process improvement but also
value-addition through sustained ability to put innovative and customised
products in line with customer requirements.

We are proud to have a team of dedicated engineers at the Onida Research
and Development Centres in Mumbai and Delhi, who facilitate in making
state-of-the-art technology products, satisfying customer expectations.

This team conducts research in the areas of:

* Embedded Software

* Industrial Design

* Mechanical Engineering

* Electrical Engineering

* Model Shop etc.

Conservation of Energy, research and development, technological absorption,
foreign exchange earnings and outgo

The particulars as prescribed under Section 217(1) (e) read with Rule 2 of
the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are set out in the Annexure forming part of this
report.

Acknowledgement

We thank our customers, vendors, investors and bankers for their continued
support during the year and we place on record our appreciation to the
contribution made by our employees at all levels.

We thank the Government of various countries, where we have operations. We
also thank the Government of India particularly the Income Tax Department,
the Customs and Excise Departments, Ministry of Commerce, Ministry of
Finance, the Reserve Bank of India, the State Governments and other
government agencies for their support and look forward for their continued
support in the future.

On behalf of the Board of Directors

Place : Mumbai G. L. Mirchandani
Date : 3rd May 2010 Chairman and Managing Director

Particulars pursuant to the Companies (Disclosure of Particulars in the
Report of the Board of Directors) Rules, 1988

1. Conservation of Energy

Your Company is conscious about its responsibility to conserve energy,
power and other energy sources wherever possible. It lays great emphasis
towards a safe and clean environment and continues to adhere to all
regulatory requirements and guidelines. During the FY 2009-10, your Company
has implemented innovative measures at Wada factory, to save the
environment and to reduce energy consumption, by introducing Solar Panel
for process heating, installation of Poly carbonate transparent sheet for
Natural light. This has resulted in 10% reduction in energy consumption.
For further reduction of energy consumption, your Company has ambitious
plans to install Solar LED Street lights, replacement of old Reciprocating
compressors with energy efficient Rotary Compressors.

Further, your Company has started procuring P.C.M. (Pre Coated Materials)
to avoid printing process with a view to save energy, pollution and reduce
water consumption at Noida factory. The production team under the able
guidance of expert engineers from the Research and Development Centre of
the Company continuously monitor and devise various means to conserve
energy and identify methods for the optimum use of energy without affecting
productivity. This is ensured through the adoption of the latest techniques
of production which helps in better productivity levels, timely maintenance

and upgradation of machines and equipments to ensure that energy
consumption is at the minimal level possible, on-the-job training to
production team members is also given in order to conserve energy. Your
Company's endeavour to introduce energy efficient electronic products has
met with success and the Bureau of Energy Efficiency [BEE] has awarded 5-
star rating to one of the category of Airconditioners.

2. Research and Development

At the Research and Development Centre, new, innovative and quality
products in the field of consumer electronics are developed to provide
better value for money. Products are developed through customer research
and customer-centric innovation.

Products are developed with research in all areas of consumer concern like
quality, safety, reliability, performance, aesthetics and ease of operation
by implementing the latest technologies. Implementation of new and
innovative technological ideas in the products developed has given a young,
vibrant and innovative brand image in the consumer market. To enhance the
same, new technologies in various product categories like entertainment,
home appliances etc., for consumers are introduced, for enhancement in
consumer experience and to give value for money.

a) Specific areas in which Research and Development was carried out by the
Company:

Green Initiative

A strong initiative was undertaken by the R & D Centre during 2009-10 to
meet the stringent requirements of Bureau of Energy Efficiency (BEE) for
reducing power consumption. The effort met with very good success and ten
LCD TV models qualified for five star rating by BEE. A 32' Diamond LCD TV
model was developed with innovative painting technique applied to
transparent frontcabinet.

Two Colour TV Models were developed to meet 3 star ratings.

Similarly, air-conditioners were also designed to reduce power consumption
and increase the efficiency and a total of 25 models in split ACs qualified
for two/ three/four/ five star and 1 Ton Window AC Model also qualified for
two star rating by BEE.

Fully automatic Washing machine was developed and introduced in the market.
This model was developed with various options including the curved glass
design. One model with innovative user-friendly animated moving display was
also developed.

Microwave ovens have been designed for health conscious people with the
introduction of unique Calorie meter and were made more user friendly for
Indian customer by the introduction of 123 Indian regional menu.

b) Benefits derived as a result of the above Research and Development:

The Research and Development initiatives taken by the Company helped in
introducing energy efficient products with superior technology. As stated
above products were designed keeping in view customers requirements. Such
in-house efforts facilitate all round savings in costs as well.

c) Future plan of action:

The Company has plans to expand the entire range of LCD televisions in all
the categories, which are emerging- technology products gaining popularity
in the Indian market. The Company also plans to introduce exciting fully
automatic washing machines of advanced technology as this market segment is
growing very rapidly. Besides the above, the Company has aggressive growth
plan for the recently launched Induction Cooker in the kitchen appliance
segment.

d) Expenditure on research and development

(Rs. in lacs)
Particulars of expenditures 2009-10 2008-09

1. Capital 20.27 44.12

2. Recurring 1007.92 1103.24

3. Total 1028.19 1147.36

4. Percentage of research &
development as expenditure to total turnover 0.66 0.76

3. Technological Absorption:

Your Company has not imported any technology. However, the management
believes that information technology can be extensively used in all spheres
of its activities to improve productivity and efficiency levels. The
Company has already implemented SAP, a customised ERP module, at all its
branches and manufacturing facilities. As regards product technologies the
Company would like to state as follows:

a) Efforts, in brief, made towards technology absorption, adaptation and
innovation:

The Company believes in offering world-classtechnological products to its
valued customers. With this objective, the Research and Development
personnel of the Company periodically visit foreign exhibitions and trade
shows to understand the latest technology used in electronic products.
Besides the Research and Development team also works closely with world-
class technology developers to understand their technology.Efforts are also
made by the team to bring in immaculate features in the products which are
consumer-centric.

b) Benefits derived as a result of above efforts:

The efforts made by the Company towards technology absorption have resulted
in the introduction of innovative energy efficient products at competitive
costs, which are likely to enlarge the market share of the Company in the
future. The Company's focus has been to develop state-of-the-art products
and be a leader in new technological areas.

4. Foreign Exchange Earnings and Outgo

(Rs. in lacs)
Year 2009-10 2008-09

Foreign exchange earnings 2596.06 1924.06
Foreign exchange outgo
(including capital goods and
imported software packages) 78177.67 55827.55


MANAGEMENT DISCUSSION AND ANALYSIS

The management has pleasure in presenting this report in adherence to the
Code of Corporate Governance enacted by the Securities and Exchange Board
of India under Clause 49 of the Listing agreement.

Economic Review:

Having withered the global recession India's economy is poised for growth
at a faster pace in 2010-11 than earlier expected, supported by a global
recovery, domestic demand and a double-digit expansion in factory output.

Such expansion is expected to generate greater inflation than previously
expected, requiring a steady series of rate rises from the Reserve Bank of
India. Asia's third-biggest economy is expected to grow at annual rates
above 8 per cent in coming quarters.

According to a study by the McKinsey Global Institute (MGI), Bird of
Gold': The Rise of India's Consumer Market', Indian incomes are likely to
grow three-fold over the next two decades and India will become the world's
fifth largest consumer market by 2025.

I. Industry structure and developments

The consumer durables industry consists of durable goods used for domestic
purposes such as televisions, LCD TVs, air conditioners, DVD players,
washing machines, refrigerators, microwave ovens etc. The growth in the
consumer durables sector has been driven primarily by factors such as boom
in the real estate/housing industry, higher disposable income, emergence of
the retail industry in a big way coupled with rising affluence levels of a
large section of the population.

A shift in consumer preferences towards higher-end, technologically
advanced branded products has been quite discernable. This shift can be
explained by narrowing differentials between the prices of branded and
unbranded products added with the high quality of after sales service
provided by the branded players. The shift has also been triggered by the
availability of foreign branded products in India owing to lower import
duties coupled with other liberal measures as introduced by the government.

A combination of changing lifestyles, higher disposable income, greater
product awareness and affordable pricing have been instrumental in changing
the pattern and amount of consumer expenditure leading to strong growth in
the consumer durables industry.

Consumer durables grew at a robust rate of 31.6 percent in January 2010 as
against a nominal 2.1 percent posted in the same time last year. In fact,
along with the manufacturing sector for capital goods, the manufacturing
sector for consumerdurables were prime contributors to the robust growth in
the Index of Industrial Production (IIP), which grew by 16.7 percent in
January 2010.

II. Opportunities and Threats

The key growth drivers for the Indian consumer durables industry:

* Rise in the share of organised retail: Approximately 315 hypermarkets are
expected to come into existence in Tier-I and Tier-II cities across India
by the end of 2011, according to a joint study by consultancy firm KPMG and
industry body ASSOCHAM named Reinventing India's Retail Sector'.
Consultancy firm Technopak has said that the organised modern retail
segment in India will grow by over three times during the next five years
(from 2010), to reach a figure of US$ 80 billion. Hence there is great
opportunity for growth in this sector in view of the positivedevelopments
in organized retail sector.

* Availability of newer variants of a product: Consumers are spoilt for
choice when it comes to choosing products. Newer variants of a product help
a company in gettingthe attention of consumers who look for innovation in
products.

* Rise in disposable income: The demand for consumer electronics has been
rising with the increase in disposable income coupled with more and more
consumers falling under the double income families. The growing Indian
middle class is an attraction for companies who are out to woo them.

* Product pricing: The consumer durables industry is highly price
sensitive, making price the determining factor in increasing volumes, at
least for lower range consumers. For middle and upper range consumers, it
is the brand name, technology and product features that are important.

* Availability of financing schemes: Availability of credit and the
structure of the loan determine the affordability of the product. Sale of a
particular product is determined by the cost of credit as much as the
flexibility of the scheme.

* Innovative advertising and brand promotion: Sales promotion measures such
as discounts, free gifts and exchange offers help a company in
distinguishing itself from others.

* Festive season sales: Demand for colour TVs usually pick up during the
festive seasons. As a result most companies come out with offers during
this period to cash in on the festive mood. This period will continue to be
the growth driver for consumer durable companies.

* Emergence of nuclear families.

* Growth of entertainment and Media and the flurry of television channels
and the rising penetration of cinemas.

* Electrification in rural India and increasing aspirations of people in
rural India.

The consumer durables market in India has seen a proliferation of brands
and product categories in recent years. All the major international brands
from Japan, Korea, US, Europe and China have launched in India with varying
degrees of success. Most brands are still trying to build a pan-India
dealer network.

In the times to come the Consumer durables sector is poised for a quantum
leap due to technological improvements, falling prices due to competition,
aggressive marketing and declining import tariffs.

The changing dynamics of consumer behaviour indicate that luxury goods are
now being perceived as necessities with higher disposable incomes being
spent on lifestyle products.

In response to the aforesaid opportunities the Company expanded its scope
from a single product to a multi-product portfolio, resulting in enhanced
possibility to occupy a larger shelf space. It prudently invested its
resources to drive its innovation and promote its products.

Threats

* With stiff competition, the consumer durables industry faces a persistent
pressure on margins due to its inability to pass on input cost rises to
consumers. Hence, thecompany's future profitability may come under
pressure.

* Rising inputs costs of raw materials viz. copper and steel will put huge
pressure on the margins. Further with the recent increase in excise duties
the pressure will be on manufacturers to pass on the burden to consumers
which may lead to reduced demand.

* Exchange schemes and pricing could have a negative industry impact.

* The entry of cheap Chinese products through organized retail continues to
be a threat to the domestic players like ONIDA. Amid hyped media reports on
the invasion of Chinese goods, the consumer is likely to get confused
thereby resulting in temporary loss of market share and revenues. However,
brand building continues to be the competitive edge in which the Chinese
products seem to lag behind. They don't have much experience in brand
building, especially in the international context. Therefore, their entry
into India as brands have been very diffident and that hasn't worked in the
extremely competitive market like India.

* The focus of consumers is shifting to energy efficient appliances and
providing such appliances at a competitive price will be a challenge.

* Margins are under pressure in view of increase in cost of marketing,
advertising and after-sales services.

* Cyclicality has triggerred an industry recession.

* The Company faces stiff competition from South Korean companies like LG
and Samsung. In last few years, they have been increasing their market
share in India. Going forward, they are expected to give tough competition
to Indian manufacturers with newer high-end technologies.

III. Product-wise performance

There was 11% growth in sale of Onida Air-conditioners during the year
under review. The sale of Washing machines registered a growth of 5% and
the sale of Microwave ovens registered a growth of 8%. The sale of Mobile
registered a growth of 26% and the sale of other electronics products
registered a growth of 11%. During the year under review, the Company
witnessed a moderate de-growth in sales of Colour Televisions and LCDs of
2%. The performance in Mobiles, Air Conditioners and Washing Machine
segments marks the advancement of the Company towards becoming a complete
home solutions provider.

IV. Outlook

In the times to come, Brand strength, product mix, a well-established
distribution network, after-sales service, and technological superiority
would be factors which will determine the competitive advantage of industry
players. Market shares are expected to consolidate; however, the pace of
consolidation would decline. While major industry players would continue to
focus on prices in the low-medium range, advertising and promotional spends
would continue to be an integral part of the players' expenses.

The Company has extended its offerings under the Onida brand across
products as well as geographical boundaries.The Company expects to increase
its presence in these products and emerge as a leading solutions provider
for electronic home improvement goods. The Company has also positioned an
exclusive brand IGO' for the rural market to capture the potential demand
from the rural areas, which is growing aggressively.

On the export front the Company intends to aggressively capitalize its
export potential and has invested considerably in research and development
initiatives to create products for diverse geographies. Over the time the
management expects Onida to emerge as a global brand in the consumer
durables industry in India as well as internationally.

V. Risks and concerns

At MIRC, we have recognized that managing business risk is an integral part
of generating substantial and sustainable shareholder value. This positive
interpretation of risk reflects the new understanding of the connection
between well-managed risk and improved performance. That is, where the
management seeks to mobilize the linkage between risk management,
achievement of corporate goals and reduced volatility of outcomes. A more
dynamic approach to risk management is critical to deliver superior
performance and superior returns to shareholders. To this end, the
management has always been proactive on risk identification and mitigation.

As part of a comprehensive de-risking strategy, the Company initiated an
organized system of forecasting and cost budgeting leading to an optimal
utilization of resources. The Company expects to enhance its global
presence to rationalize its significant dependence on the Indian geography.

VI. Internal control systems and their adequacy

The management periodically reviews the internal control systems and
procedures leading to the orderly and efficient conduct of its business.
The internal control structure is adequately designed to ensure
effectiveness of its operations in the utilization of funds, safeguarding
of assets against unauthorized use or disposition, true and fair reporting
and compliance with all the applicable regulatory laws and company rules.

Internal Audit is conducted on a regular basis by external auditors to
monitor and report on the effectiveness of the internal control in the
organization.

Significant findings of the Internal Audit are brought to the notice of the
Audit Committee as well as to the Board of Directors of the Company and
corrective measures recommended for implementation. Reports of the Internal
Auditor are also continuously reviewed by the management and corrective
action initiated to strengthen the controls and enhance the effectiveness
of the existing systems.

VII. Operational and financial performance

During the year under review the turnover of the Company increased from
Rs.1517.72 crores to Rs.1568.35 crores. The Profit before tax increased
from Rs. 10.15 crores to Rs.22.65 crores registering an increase of 123%
and the Profit after tax increased from Rs.8.95 crores to Rs.18.37 crores
registering an increase of 105%.

VIII. Material developments in Human Resources/ Industrial Relations front,
including number of people employed

At MIRC, human capital is considered to be the most valuable resource,
since people deliver results. People are nurtured, developed, motivated and
rewarded to ensure business growth. The H.R. Cell ensures that the Company
attracts right competency, develop them continuously, and keep its
employees motivated through implementation of various HR processes.

The objective of the Human resource initiative at Mirc is that all ONIDIANS
shall collectively perform to realize the goals of the company and catapult
the organization to the elite league of companies which grace the hall of
fame of the corporate world.

The Company's H.R. Cell takes a proactive role in responding to genuine
grievances of employees to foster a warm positive relationship between the
management and employees, increase job satisfaction and ensure that
employees can add value to their lives.

The Human resource approach of the Company embodies the following:

* Empowering our employees to innovate in an open, informed and challenging
work place. Encouraging the richness of ideas, approaches and points of
view within a work environment conducive to both superior performance and
personal fulfillment.

* Conducting and facilitating need-based training empowered by structured
career plans that optimize individual potential.

* A unique variable pay plan linked to company's profitability for
executives.

* A highly conducive and enabling work atmosphere. A well-designed safe
campus

* Stress upon lateral thinking across all levels.

The management is continuously working on the development of human capital
to enhance responsiveness, efficiency and effectiveness in an ever-changing
business environment. Employee performance is continuously evaluated
against agreed KRAs as well as feedback on behavioral competencies. The
company had about 1858 employees on its roll as on 31st March, 2010.

IX. Material financial and commercial transactions involving Senior
management

The Company has in place a Code of Corporate Governance which stipulates
that senior management personnel shall make disclosures to the Board of
Directors regarding any material financial and/or commercial transactions
in which they are interested which may have a potential conflict with the
interest of the Company. In terms of the said Code senior management
personnel have confirmed to the Board that they had no such
dealings/transactions with the Company during the financial year ended 31st
March, 2010.

X. Cautionary Statement

The Statements made in this report describing the Company's projections,
expectations and estimations may be forward looking within the meaning of
applicable securities laws and regulations. These statements are based on
certain assumptions and expectation of future events. The actual results
may differ from those expressed or implied in this report due to the
influence of external and internal factors beyond the control of the
Company.

The Company assumes no responsibility in respect of forward looking
statements herein which may undergo changes in future on the basis of
subsequent developments, information or events.

On behalf of the Board of Directors

Date : 3rd May, 2010 Gulu L. Mirchandani
Place : Mumbai Chairman and Managing Director