MIC Electronics Ltd

Dear Shareholders,

"Driving Innovation' is not just the tag line in the logo of MIC Electronics Limited. It has been the driving force behind all the endeavors of the company over the last three decades.

Development of ‘Smart' street lighting products, solar powered street lights with integrated advanced battery technologies and non metal casing material, concept proving of ‘Smart' street lights in New Delhi and Hyderabad, development of double layered images in the 3D Holographic systems domain can be stated to be path breaking development efforts of your company in the year under review. Your company has also been awarded patents for LED TV and LED Portable Lantern in addition to LED

DigiPoster in the financial year 2016-17. MIC's work in the area of LED street lighting in Andhra Pradesh has helped position the state to become one of the top ranking states in the Country in the conversion of traditional street lighting to LED street lighting. User communities in the state of Uttar Pradesh have expressed genuine happiness about the quality and efficiency of your company's solar powered street lights deployed in large numbers in that state as part of the Atal Jyoti Yojana. The performance and elegance of MIC's grid based and solar street lights has attracted the attention of several countries and active negotiations are taking place with their representatives for exporting these products to those countries.

The programmes being taken up in the country in the areas of Smart Cities, Networked Display Systems, LED street lighting projects and Rural lighting programmes with solar powered street lighting products offer good business opportunities for your company in the years to come. The country's recent and renewed emphasis on renewable energy sources and energy conservation, specifically smart grid and smart meter efforts as well as electric transportation offer opportunities for the company to participate in these initiatives building on the company's systems integration and machine to machine communications strengths.

The procedures involved and the payment conditions associated with a few large lighting projects taken up by your company in different states of the Country have led to serious cash-flow constraints over the last couple of years. Concentrated and intensive efforts exercised by senior management have begun the process to help resolve these issues. However, it is proving to be a time consuming process. The customer organization, recognizing the ground realities has significantly modified its purchase processes which will. enable a shorter payment cycle, improving your company's cash management ability and the attendant operational flexibility.

MIC is endeavoring to change its business from being a predominantly Government agency based one to a ‘Business to Business' and ‘Business to Customer' based business with the objective of serving a larger market place as well as diversifying its risk away from being largely dependent on one sector or major customer. Management expects that this will also result in a more robust financial and operational capability of the company.

Important pilot programmes have already been launched in association with leading Multi National companies and Indian companies in the area of display projects. These projects position your company well to play an important role in smart city initiatives as well as the retail networked display segments. The company has also begun efforts to protect its Intellectual Property (IP) – the LED TV and Digital poster patents in particular. The company has first publicized this through an advertisement in a national newspaper describing the exclusive nature of the patent rights and indicating to manufacturers, suppliers and users that any use of such devices should only happen through an explicit arrangement with your company. It has also sent notices or otherwise indicated to major buyers that they should not be using such products without an explicit arrangement with your company.

The company continues to make significant progress in its efforts to become a debt free company. Some major initiatives were taken in the course of the year in easing the company's debt position. With the active cooperation of various stakeholders involved such as financial institutions, individual investors and suppliers, the situation has improved considerably. Management continues to work at identifying further means to achieve the debt free goal. Operations improvement efforts also continue to be implemented through pursuit of better, lower cost production sources, reduction or disposal of work in process inventories and through organizational restructuring and resizing efforts.

MIC's pioneering efforts in the field of true colour LED display systems and 3D-Holographic systems will enable to company exploit their potential as effective information dissemination devices in several application areas going beyond event coverage, advertisements and entertainment. Focused efforts and planning are underway to improve penetration and sales in these arenas.

The company is definitely on the path to recovery from the difficult times experienced in the past few years. Sustained focus and effort will continue to be made to reach targeted goals. We began this report citing our tagline of "Driving Innovation". Coming out of these difficult times, this has never been truer. Our future growth and success will depend on our embracing innovative approaches to management, markets and technologies. Management, with your support, is motivated and energized to not only keep this focus but also to generate the additional resources and capabilities required to capture the many market opportunities being presented to the company.

Thanking you all for the continued support and with best wishes,