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Friday, December 28, 2007

NELCO BRIGHT FUTURE AHEAD

NELCO is a Tata Power subsidiary, having 50.12% stake. The company is
engaged mainly into following lines of business :-**

a)       Strategic Electronic - systems and solutions for Defence and
Paramilitary organizations for security and surveillance such as Intrusion
Detection, Integrated Security Systems, Global Positioning Systems,
Automatic Weather Monitoring Systems, Scanners etc.

b)       Energy Network Management Systems - Energy Management, Distribution
Management, Automatic Data Logging Systems and SCADA Systems for
applications in Power, Oil & Gas Industry, Railways etc.

c)       Traction Electronics - Power Electronic equipments for the Indian
Railways for their freight and Passenger Electric and Diesel Locomotives.

d)       Drives System - Integrated AC & DC Drive Systems for Metal, Mining,
Power, Paper and Process Industries for energy optimization, control and
automation.

e)       Building Management Systems - Integrated Building Management
Systems, including HVAC Controls, Fire Alarm, Access Controls and CCTV for
comfort, Energy Saving and Security of buildings.

f)         Tatanet Network Systems - providing solutions for Management of
Network connectivity services and internet services over VSATs for
Corporates, Banking and Financial Institutions and SMEs for them to run ERP
and other online office automation applications.

·         In a recent development, the company has appointed Mr. P. R.
Menon, (present Managing Director of Tata Power) as Chairman of the company,
who joined company's board on 20-07-2007. Mr. M. N. Bhagwat, resigned as
Chairman and also as Director of the company, as he was unable to transform
the company.**

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·         Mr. Ratan Tata is Chairman Emeritus of the company. Inspite of
such a small company of the group, Ratan Tata is still attached to the
company, as he had started his career with NELCO.**

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·         The works and facilities of the company is located at Mahape, Navi
Mumbai on 75,000 sq. ft. area. The sales offices of the company are located
at Mumbai, Bangalore, Chennai, Delhi, Jamshedpur, Kolkata and Secunderabad.*
*

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·         The company has recently changed its accounting year to end in
March, to coincide with its holding company Tata Power. This indicates,
alignment and restructuring of business with Holding company.**

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·         Tata Power had three other businesses. Power System Division was
transferred to Tata Projects Ltd. while Broadband Communication Business was
transferred to VSNL. Strategic Electronic Division having order booking in
excess of Rs.200 crores with status of a Prime Contractor with Ministry of
Defence (MoD) have received Pinaka Multi-Barrel Rocket Launcher contract,
remains with Tata Power. The division fits perfectly with the business
activities of NELCO, as NELCO is also on approved list of MoD. Insiders, say
that Tata Power is deliberating to transfer this division to NELCO.**

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·         If this restructuring takes place, NELCO's, financial performance
would vastly improve. NELCO had total income of Rs.61.95 crores for six
months ended 31-03-07 with PAT of Rs.1.40 crore. Accumulated losses were at
Rs.2.79 crores as at 31-03-07. This is the only company in the Tata group
that has not bounced back with  flying colours, which could happen with
transfer of SED of Tata Power.**

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·         The company has been receiving orders from MoD for Unattended
Ground Sensor laid on border as also supply of Power Converters from
Railway. The company also received orders for supply of MV Drives from a
leading Indian engineering company, among stiff competition with
Multinationals. With realty sector, growing faster than the industrial
sector, demand for Building Management System is growing rapidly. Hence, all
the divisions of the company have an excellent and bright future ahead,
which has a growth visibility of 30% to 40%, over the next 3 - 5 years.**

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·         Share is presently ruling at Rs.112 and with a feel of present
developments, major restructuring of the company is on the cards, which can
take the share price to cross Rs.200 mark, in the next 12 months.**