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Suresh Rathi
R E P O RT 0 8 0 9 / 0 0 7
30 JUNE 2008

Reporting-

Opto Circuits (I) Ltd.

Capitalizing on theory of Inorganic Growth...

9, Parekh Vora Chambers

66 N.M. Road, Fort
Mumbai - 400023

Phone: +91-22-22666178
Fax: +91-22-66344007
E-mail: rahulb@srspl.com
Suresh Rathi
Opto Circuits (I) Ltd.
Capitalizing on theory of Inorganic Growth

Research Report No 0809/007 Overview

30 June 2008 OPTO CIRCUITES established by Mr. Vinod Ramnani, the driving force behind Opto
Circuits. Having worked with Organizations in India and abroad, Mr. Ramnani had a
wealth of experience to back him, when in 1990, he along with Thomas Dietikar (the
CMP: Rs. 290/-
American co-promoter of Opto Circuits) decided to establish M/s Elekon Industries
Pre Ltd. in Singapore. Thereafter, Mr. Ramnani initiated a move to shift the
manufacturing facilities to the Silicon Valley of India (Bangalore) and Opto Circuits
was formed in 1992.
At A Glance
Equity (Rs Cr.) 94.17 It manufactures products like Optical Sensors, Medical Electronics, Security Systems
Book Value 33.91 and Chip-on-Board Assemblies. The company has two manufacturing units located in
EPS 12.63 Bangalore which have 100% EOU status and it is also listed with Federal Drug
PE Ratio 24.10 Authority, USA. It manufactures two categories of optoelectronic components and
Market Cap (Rs Cr.) 2732.28
assemblies, namely, the standard products and customized products, the products
52 Week High/Low 581/ 241
are customized critical care medical sensors used in operation theatres, ICU, X-Ray
Dividend Yield (%) 1.64
Last Dividend (%) 50.00 Machines and CAT Scans. From initial stage of design and development of
prototypes, the company works closely with its customers to the testing and
completion of the finished products.

Share Holding Pattern The company executes projects and services, for clients in USA through its associate
(%) as on 31 March 2008 company & channel partners. It is catering to worldwide customers like - Agilent
Foreign 34.69 Technologies Inc., USA, (formerly known as Hewlett Packard), Criticare Systems Inc.,
Institutions 4.50 USA, Logitech International, S.A., Switzerland, Nellcor Puritan Bennett, Nonin Medical
Non Promoter Hold 10.83
Inc., USA, EPIC Medical Equipments Inc., USA, etc.
Promoters 30.39
Public & Others 19.59
Total 100 It is the sole manufacturer of opto - electronic based medical equipment in the
country. On a standalone basis, OCIL manufactures non-invasive electronic patient
care products and markets them through its business associates in Europe and the
US and subsidiaries in India and the US. OCIL has adopted an Inorganic Business
Model (growth in the operations of a business that arises from mergers or takeovers,
rather than an increase in the companies own business activity. Firms that choose to
grow inorganically can gain access to new markets and fresh ideas that become
available through successful mergers and acquisitions) for gaining better market
access for its products and increasing its product lines in the growing health care
segment. It acquired a majority stake in the listed Advance Micronic Devices (AMDL)
in 2001 for marketing its products in the country. In 2002, the company acquired the
patient monitoring system of US-based Palco Labs, later renamed Mediaid and now a
100% subsidiary of the company in US. Currently Mediaid is responsible for selling
OCIL’s products in the US and other parts of the world.

The company came out with an initial public issue in 2001 for 27.02 lakh equity
shares with a face value of Rs 10/- at a premium of Rs 40/- per share to finance the
cost of enhancing the infrastructural facility of the company, meet the cost for
completion of additional building at the existing site, set up marketing office in
Aashish Chitlangi London, UK, at an estimated total project cost of Rs 15.50 cr.
Institutional Desk:
inst@srspl.com The company has been maintaining strict quality control by benchmarking the
+91-9820186491 facilities and the products to the international standards. Accordingly the company
has been accredited with ISO 9001 certification since 1995 by RVA, Netherlands,
through STQC Directorate, Govt. of India. In 2004, OCIL acquired a 100% stake in
Rahul Bhandawat Altron, an electronic manufacturing concern in Bangalore. The company recently
Research Desk:
diversified into invasive healthcare products by purchasing the Germany-based stent
rahulb@srspl.com manufacturing company EuroCor.
+91-9321413828

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 Opto Circuits (I) Ltd.

Interesting:

ü The board of directors in their meeting on 27-05-08 have recommended to

issue bonus shares of 7 shares for every 10 shares held.

Price Chart ü Company is all set to acquire the US-based Criticare Systems in a USD 70
million deal Criticare Systems is in the business of manufacturing vital sign
monitors, anesthesia monitors and pulse Oximeters.
ü Opto Circuits (India) is targeting revenues of over Rs 8 billion in 2008-09
Revenues are likely to get boosted by the growth of the company’s product
business.
ü Has acquired EuroCOR GmbH in Germany. Deal valued at €11 million; gives
access to 26 countries globally.
ü Company has huge expansion, R&D and Acquisitions plans.
ü Opto products approved for American defense supplies. FDA approved Spo2
Sensors and Patient Monitoring Devices awarded access to America’s
Defense healthcare business.
ü Opto Circuits is accorded 2-Star Trading House status.
ü Opto Circuits keeps on breaks new ground in healthcare technology by it’s
products in-house R&D develops world-class Thermal Printer, Multi-
Parameter Monitor, Waveform - enabled Pulse Oximeter at economical
prices.
ü On a consolidated basis, OCIL has a focused presence in the growing
healthcare market and has a global marketing presence through its associate
companies.
ü Due to its EOU status (valid till 2009) and manufacturing presence in India,
OCIL enjoys better-cost advantages compared with its global competitors.
This ensures growing manufacturing outsourcing by global peers as well. In
this context, the R&D expansion to supply products as per the needs of the
original equipment manufacturers is a positive step.

Pulse Oximeter Multi parameter Monitors

Digital Thermometer Cholesterol Monitors

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 Opto Circuits (I) Ltd.

Equity History:

Photo Sensor, Detector
and Emitter Assemblies
Management of the Company is clear about the growth of company. It has given an
excellent return to the share holders. It has declared minimum 30% dividend &
Bonus Issue every year since 2001. According to simple calculation if any one bought
100 shares in 2001 at Rs. 50 per share (31st March 2001) (Investment Equivalent to
Rs. 5,000) has now become 768 shares till 25/10/2008 and current value (768*304)
is near about Rs. 2, 33,472. Company has one more Bonus Issue in the pipeline; the
boards of directors in their meeting on 27-05-08 have recommended a bonus issue
of 7 shares for every 10 shares held.

R.D. Equity Purpose Premium Ratio Dividend

Capital (%)

T.B.A. 94.17 Bonus Issue 0 7:10 50

25/10/2007 94.17 Bonus Issue 0 1:2 50
30/10/2006 61.62 Bonus Issue 0 1:1 40
19/04/2006 30.81 Public Issue 260 -
16/08/2005 26.81 Bonus Issue 0 1:2 35
20/10/2004 17.88 Bonus Issue 0 3:10 30
10/11/2003 13.75 Bonus Issue 0 02:10 30
Infra Red Detectors 14/01/2003 11.48 Bonus Issue 0 01:10
31/03/2002 10.44 -- 0 -- 30
31/03/2001 10.44 Public Issue 0 00:00 30

Concerns:

ü Due to the typical characteristic of its products and the batch manufacturing
process, the company has to maintain high inventory level.

ü None of the products of the companies or subsidiaries acquired are patented

and will have to fight it out on cost and service.

Stents ü OCIL’s strategy of inorganic growth increases its risk profile.

ü EuroCor, OCIL’s recent acquisition, is a loss-making company and its cash

flow has been negative since the past five years.

Synopsis:

Opto Circuits India operates in a niche area of manufacturing of healthcare

Pulse Oximeter Sensors
equipment in India. It has got near monopoly in the field of medical electronic
devices and monitoring products that employ sensing and detection techniques. Its
recently launched DIOR, a unique drug eluding catheter, which can be used in the
treatment of coronary disease in stent promises to be a potential winner. Its strong
distribution network through its subsidiaries has proven & will continue to prove a
boon in this competitive industry. It has received a formal approval from the central
government to set up a SEZ (special economic zone). Opto`s net sales and profits
are expected to grow at CAGR of 45% and 40% respectively from FY08E to FY10E.

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 Opto Circuits (I) Ltd.

Results

LATEST RESULTS (Rs in Cr.)

Quarter Ended Year Ended
Particulars Mar-08 Mar-07 % Var Mar-08 Mar-07 % Var
Sales 95.39 64.19 48.6 328.69 201.64 63
Other Income 10.75 0 - 11.83 2.67 343.1
PBIDT 40.25 26.61 51.3 130.58 79.72 63.8
Interest 3.02 1.41 114.2 8.77 4.98 76.1
PBDT 37.23 25.2 47.7 121.81 74.74 63
Depreciation 1.19 0.44 170.5 2.59 1.59 62.9
PBT 36.04 24.76 45.6 119.22 73.15 63
Tax 0.39 0.89 -56.2 0.43 0.97 -55.7
PAT 35.65 23.87 49.4 118.79 72.18 64.6

Key Financial Ratios: (Based on audited results of 31-03-2007)

Ratios 0703
Return on net worth (RONW) % 50.57
Return on capital employed (ROCE) % 39.80
Cash profit margin % 36.59
Current Ratio % 2.07
Debt Equity Ratio % 0.38
Interest Cover % 15.69
Long Term Debt-Equity Ratio % 0.11
APATM % 35.80

Stock Return (%):

-Exchange Closing Price 30 Days 3Months 6 Months 1 Year

BSE 304.15 -9.69 -6.79 -37.71 18.72
Average Volume 51442 51174 44338 63965
NSE 304.25 -9.52 -6.70 -37.23 18.51
Average Volume 99791 97393 94973 118313

Quarterly Results at a Glance (Rs in Cr)

Particulars 200712 200612 VAR % 200709 200609 VAR % 200706 200606 VAR %
Net Sales 90.43 55.23 63.7 81.28 51.12 59 61.6 31.1 98.1
Other Income 1.05 1.68 -37.5 0 1.38 0 1.09 0.16 581.3
PBIDT 34.34 21.21 61.9 30.84 19.73 56.3 25.16 12.18 106.6
Interest 2.29 0.89 157.3 1.94 1.18 64.4 1.52 1.51 0.7
PBDT 32.05 20.32 57.7 28.9 18.55 55.8 23.64 10.67 121.6
Depreciation 0.48 0.42 14.3 0.47 0.39 20.5 0.46 0.34 35.3
Tax 0.02 0.05 -60 0.01 0.02 -50 0 0 0
PAT 31.55 19.85 58.9 28.42 18.14 56.7 23.17 10.33 124.3

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 KEY LOCATIONS

-: REGISTERED OFFICE :-
Lalit Mundra
11 & 12 ‘A’ Mithila C.H.S. J.B.Nagar, Andheri (E), Mumbai – 400059.
Tel: 022-28354000, 28216446 Fax: 022-28205533
Email: mumbai@srspl.com

-: CORPORATE OFFICE :-
Kailash Sarda
Mahesh Hostel Complex, Opp Bombay Motors,
Chopasni Road, Jodhpur – 342003
Tel: 0291-2654000 Fax: 0291-2430913
Email: jodhpur@srspl.com

-: INSTITUTIONAL SALES :-
Aashish Chitlangi
9, Parekh Vora Chambers, 66 N.M.Road, Fort, Mumbai – 400023.
Tel: 022-22666178, 22691103 Fax: 022-56344007
Email: fort@srspl.com

For details visit our website at www.srspl.com

Report Prepared by:

Rahul Bhandawat
Research Department

Disclaimer: This document has been prepared and distributed by SURESH RATHI SECURITIES PVT LTD. The information in the document
has been compiled by the research department. Due care has been taken in preparing the above document. However, this document is not,
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