CFL Division:
According to AC Nielsen in its Market Information Report of ACNielsen ORG-MARG Pvt. Ltd dated February 4, 2008, we ranked second in sales volume of CFLs in India in twelve months ended December 2007. We launched our CFL division in Fiscal 2006 and our CFL plant has a current daily production capacity of approximately 200,000 units. We believe that we played a role in raising the consumer awareness about CFLs in the Indian consumer market by introducing CFLs at competitive prices. During fiscal 2009, we expect to complete our backward integration of CFL production by building a manufacturing facility that will allow us to produce, rather than purchase, glass tubes for CFLs. Glass tubes are approximately 45% of CFL component costs, and we believe that manufacturing glass tubes in-house will enable us to reduce our production costs and improve our price competitiveness.
Vitrified Tiles Division:
Our vitrified tile products provide a low-cost, better quality flooring alternative for the Indian consumer market. We produce vitrified tiles in a number of colours and designs. We launched our vitrified tile division in Fiscal 2006, and we have five production lines capable of producing approximately 30,000 square meters of vitrified tiles per day. Our vitrified tiles plant is the largest in India in terms of installed manufacturing capacity (Source: GITCO, January 2008) and contains continuous ball mills, kilns that each measure approximately 205 meters, 48-head polishing machines and 5,000 metric tonne hydraulic presses. In addition, we also have our own coal gasification facility within the plant.
ACP Division:
We launched our ACP division in April 2007. ACPs are used in the building industry for interior and exterior paneling. Our ACP division has the capacity to produce 400,000 square meters of ACP per year.
E-Bikes Division:
We have a manufacturing facility to produce our own E Bikes which are specifically designed and adapted for the Indian market. We had assembled a small number of E-bikes on a trial basis. These E-bikes were assembled by us from parts manufactured by third parties. We determined that going forward it would be in our best interests to manufacture E-bikes in-house. Production will take place in two phases. The first phase of our E-Bike facility will have a capacity of 400 bikes per day (“Phase I”). In phase two, we propose to scale up our production capacity to 2,000 bikes per day (“Phase II”). Phase I production of E-Bikes recently commenced in late March 2008. First production from Phase II is expected to commence by June 30, 2009. Unlike the majority of E-Bike manufacturers in India, who we believe are primarily product assemblers, by the end of Phase II, we plan to manufacture approximately 85% of the components necessary to produce E-Bikes in our own integrated, in-house facility in Gujarat. Batteries constitute approximately 40% of E-Bike component costs. While we currently import batteries, we intend to manufacture batteries in-house with full scale battery production expected by the end of Phase II.
We have an India-wide distribution network for each of our products. We export our CFLs to the United Arab Emirates and our vitrified tiles to the United Arab Emirates, Qatar, Iraq and the West Indies. Similarly, we procure our materials directly from manufacturers and producers, principally in China, Korea, Taiwan and Thailand. We believe that our distribution expertise will assist us in creating and growing a nationwide distribution network for E-Bikes. We plan to sell our E-Bikes under the “OREVA” brand name through our dealer network, initially in western India and gradually all over India.
