MIRA INFORM REPORT

Report Date :

10^th May 2006

IDENTIFICATION DETAILS

Name :	NAHAR INDUSTRIAL ENTERPRISES LIMITED
Registered Office :	Focal Point, Ludhiana - 141 010, Punjab
Country :	India
Financials (as on) :	31.03.2005
Date of Incorporation :	27^th September, 1983
Com. Reg. No.:	16-1821
TAN No.: (Tax Deduction & Collection Account No.)	JLDN00400B / JLDN00758C
PAN No.: (Permanent Account No.)	AAACN7244C
Legal Form :	It is a public limited liability company. The company's shares are listed on the Stock Exchange.
Line of Business :	Subject is engaged in manufacturing and sale of writing and printing paper and vanaspati ghee.

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small

Maximum Credit Limit :
Status :	Moderate
Payment Behaviour :	Slow by + 30 days
Litigation :	Clear
Comments :	The company is expected to register further losses in the current year. Payments are reported as slow but correct. However, in our opinion maximum creditline up to Rs. 90 millions can be granted against some caution.

LOCATIONS

Registered Office :	Focal Point, Ludhiana - 141 010, Punjab
Tel. No.:	91-161-2672591-592
Fax No.:	91-161-2670596/2674072
E-Mail :	msood@owmnahar.com nilldh@owmnahar.com
Website :	http://www.owmnahar.com
Factory :	ARHAM SPINNING MILLS Vill.Udaipur/Khijuriwas, Bhiwadi, Distt. Alwar (Raj.) Vill. SPINNING UNIT Jalalpur, Chandigarh-Ambala Road, Lalru, Distt. Patiala (Punjab) ARHAM SPINNING MILLS Vill. Jalalpur, Chandigarh-Ambala Road, Lalru, Distt. Patiala (Punjab) SAMBHAV SPINNING MILLS Industrial Focal Point, Phase-VIII, Mundian Kalan, Distt. Ludhiana. FABRICS UNIT Vill. Jalalpur, Chandigarh-Ambala Road, Lalru, Distt. Patiala (Punjab) GARMENT UNIT Focal Point, Ludhiana. NAHAR SUGAR Vill. Salana Joon Singh Wala, Amloh, Distt. Fatehgarh Sahib (Punjab) NAHAR STEEL Vill. Salana Jeon Singh Wala, Amloh, Distt. Fatehgarh Sahib (Punjab) OSWAL FATS & OILS Vill. Jalaldiwal, Near Raikot, Distt. Ludhiana (Punjab)

DIRECTORS

Name :	Mr. Jawaharlal Oswal
Designation :	Chairman
Name :	Mr. Kamal Oswal
Designation :	Vice Chairman & Managing Director
Date of Birth/Age :	43 years
Qualification :	B.Com
Experience :	23 Years
Date of Appointment :	01/02/1998
Last Employment:	Vice Chairman-Gum- Managing Director of erstwhile Nahar International Limited Since merged with the Company
Name :	Mr. Dinesh Oswal
Designation :	Director
Name :	Mr. Dinesh Gogna
Designation :	Director
Name :	Mr. N. D. Jain
Designation :	Director
Name :	Mr. S. P. Nijhawan
Designation :	Director
Name :	Mr. O. P. Sahni
Designation :	Director
Name :	Mr. H. K. Bal
Designation :	Director
Name :	Mr. K. S. Maini
Designation :	Director
Name :	Sh. Satish Gupta
Designation :	Nominee ICICI Bankltd.
Name :	Sh Mukesh Sood
Designation :	Company secretary
Name :	Sh. B. Bhushan Gupta
Designation :	Corporate Finance Controller

MAJOR SHAREHOLDERS

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters	16084004	51.99 %
Directors (Others)	286	0.00 %
Mutual Funds &UTI	105483	0.34 %
Banks, Financial Institutions and Insurance Companies	217897	0.70 %
Foreign Holdings (Flls, NRIs, OCBs)	405060	1.31 %
Private Bodies Corporate (Others)	1482744	4.79 %
Indian Public	12643391	40.87 %
Total	30938865	100.00 %

BUSINESS DETAILS

Line of Business :	Subject is engaged in manufacturing and sale of writing and printing paper and vanaspati ghee.
Exports to :	cotton yarn and fabrics to various countries like Hong Kong, U.S.A., U.K., Australia, Mauritius, Belgium, Germany and Korea

PRODUCTION STATUS

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Edible Oils (2)	MTs.	10,000	10000
Soap	MTs.	55,000	55000	6088
Fatty Acid (including Stearic Acid)	MTs.	57,000	57000	5704
Glycerine	MTs.	3,000	2000	48
Oxygen Gas	Cb. MTs.	648,000	648000	--
Solvent Extracted Rice Bran Oil (3)	MTs.	60,000	60000	--
Vahaspati	MTs.	N.A.	9900	--
Refined Oil	MTs.	N.A.	9900	--
Yarn	Spindles	223,600	120288	--
Yarn	Rotors	4,848	3080	--
Grey Fabric	Air Jet Looms	306	306	--
Processed Fabric	Meters Per Day	100,000	100000	19958626
Readymade Garments	Pieces	2,000,000	900000	206642
Sugar	TCD	5,000	2500
Steel Ingots	MTs.	30,000	20000	2033
Soap on job work basis	MTs	--	--	6,086
Yarn (3)	MTs	--	--	31,610
Yarn on Job work basis (3)	MTs	--	--	2,530
Grey Fabric (4)	Mtrs	--	--	5,877,143
Read/made Garments on Job work basis (6)	PCS	--	--	61,964
Sugar (8)	Otis	--	--	172,268
Molasses	Qtls	--	--	65,399
Bagasse (9)	Qtls	--	--	489,221
Steel Ingots	MTs	--	--	2,033
RunnerS Risers (10)	MTs	--	--	70

GENERAL INFORMATION

No. of Employees :

3589

Bankers :

Ø State Bank of Patiala

Ø CanaraBank

Ø Punjab National Bank

Ø Allahabad Bank

Ø Punjab & Sind Bank

Ø Bank of Punjab Limited

Ø Indian Overseas Bank

Ø State Bank of India

Ø ICICI Bank Limited

Facilities :

Secured Loan	(Rs in millions)
Working Capital Borrowings from Banks	1589.853
Term Loans	1783.632

1. Working Capital Borrowings are secured by hypothecation of stocks of Raw Materials, Work-in-Process, Finished

Goods, Stores & Book Debts and pledge of Sugar and further secured by 2nd charge on fixed assets of the Company

except in case of Sugar unit which is secured by pari-passu first charge on fixed assets of the unit and also personally

guaranteed by some of the Directors of the Company.

2. Term Loans are secured by hypothecation as pari-passu first charge on whoie of the immovable properties of the

Company situated at Village Jalalpur, Chandigarh Ambala Road, Lalru, Distt. Patiala; Industrial Focal Point, Phase VIII,

Village Mundian, Ludhiana; Village Jaladiwal, Near Raikot, Distt. Ludhiana (Pb.); Village Udaipur / Khijuriwas, Bhlwadi,

Dlstt. Alwar (Rajaethan) and Focal Point, Ludhiana including the Company's movable plant and machinery, machinery

spares and other movables both present and future and subject to the charge or charges created or to be created by

the Company in favour of its Bankers on its mo'vables and corporate guarantees for some of the loans given by the

group companies and also personally guaranteed by some of the Directors of the Company.

Banking Relations :	Satisfactory
Auditors :	Raj Gupta & Company Chartered Accountants, G.T. Road, Miller Ganj, Ludhiana -141 003
Associates/Subsidiaries :	Ø Nahar Fabrics Limited Ø Oswal Woollen Mills Limited Ø Nahar Spinning Mills Limited Ø Nahar Exports Limited Ø Nahar Overseas Limited Ø Nahar Industrial Infrastructure Corporation Limited Ø Vinayak Spinning Mills Limited Ø J.L. Growth Fund Limited Ø Vardhman Investments Limited Ø Atam Vallabh Financiers Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
40000000	Equity Shares	Rs. 10/- each	Rs. 400.000 millions
1000000	7 % Non Cumulative Redeemable Preference Shares	Rs. 100/- each	Rs. 100.000 millions
	Total		Rs. 500.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
18762240	Equity Shares	Rs. 10/- each	Rs. 187.622 millions
	Less : Allotments Money in Arrear		Rs. 3.619 millions
12176625	Equity Shares	Rs. 10/- each	Rs. 121.766 millions
825000	7 % Non Cumulative Redeemable Preference Shares	Rs. 100/- each	Rs. 82.500 millions
	Total		Rs. 388.269 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2005	31.03.2004
SHAREHOLDERS FUNDS
1] Share Capital		388.269	459.003
2] Share Application Money		192.500	0.000
3] Reserves & Surplus		3323.958	1370.303
4] (Accumulated Losses)		(429.341)	0.000
NETWORTH		3475.386	1829.306
LOAN FUNDS
1] Secured Loans		3373.485	1266.609
2] Unsecured Loans		25.700	0.000
TOTAL BORROWING		3399.185	1266.609
DEFERRED TAX LIABILITIES
TOTAL		6874.571	3095.915
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		3003.406	1450.233
Capital work-in-progress		32.764	25.624
INVESTMENT		660.100	474.228
DEFERREX TAX ASSETS
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	2514.971	1143.036
	Sundry Debtors	668.825	414.667
	Cash & Bank Balances	113.972	8.617
	Other Current Assets	18.868	0.000
	Loans & Advances	463.424	204.101
Total Current Assets		3780.060	1770.421
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	614.240	643.218
	Provisions
Total Current Liabilities		614.240	643.218
Net Current Assets		3165.820	1127.203
MISCELLANEOUS EXPENSES		12.481	18.627
TOTAL		6874.571	3095.915

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2005	31.03.2004
Sales Turnover [including other income]	6400.256	4276.382
Profit/(Loss) Before Tax	220.262	199.272
Provision for Taxation	17.000	0.045
Profit/(Loss) After Tax	203.262	199.227
Export Value	450.741	565.741
Import Value	781.255	680.514
Total Expenditure	6020.884	4077.110

QUARTERLY RESULTS

Particulars	30.06.2005 (1^st Quarter)	30.09.2005 (2^nd Quarter)	31.12.2005 (3^rd Quarter)
Sales Turnover	1742.000	1714.200	1680.800
Other Income	05.200	02.900	14.900
Total Income	1747.200	1717.100	1695.700
Total Expenditure	1409.600	1375.600	1312.300
Operating Profit	337.600	341.500	383.400
Interest	52.800	45.300	44.000
Gross Profit	284.800	296.200	339.400
Depreciation	130.300	132.000	137.300
Tax	12.000	13.500	19.500
Reported PAT	142.500	150.700	182.600

200506 Quarter 1 –

Notes Status of Investors Complaints for the quarter ended June 30, 2005 Complaints pending at the beginning of the quarter NIL Complaints received during the quarter 43 Complaints disposed off during the quarter 43 Complaints unresolved at the end of the quarter NIL 1. The above results have been taken on record by the Board of Directors at its meeting held on July 30, 2005 2. Previous year figures have been regrouped and rearranged wherever necessary. 3. Since the amalgamation of Nahar International Ltd (NINL) and Nahar Sugar & Allied industries Ltd (NSAIL) with the Company is effective from April 01, 2004,consquently the figures forthe quarter ended 30th June 2005 include those of erstwhile NINL and NSAIL.Accordingly for the quarter ended 30th June 2004 have also been compiled inclusives of the figures of erstwhile NINL and NSAIL after making the necessary adjustments/exclusions for intra-company. 4. During the quarter every shareholders ofthe transferor companies holding shares as on the record date i.e. 29th April 2005 fixed for this purpose has been alloted shares in terms of the scheme . The Company has already received in-principle approval from Mumbai Stock Exchange (BSE) regarding listing of these shares. Both depositories i.r, NSDL CDSL have credited the account of the shareholders holding shares in dematerlised form. Corresponding new share certificates ofthe company are being dispacthed to the shareholders holding shares in physcial form,who have surrendered the share certificate of erstwhileNIML and NSAIL.

200509 Quarter 2 –

EPS is Basic Status of Investor Complaints for the quarter ended September 30, 2005 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 73 Complaints disposed off during the quarter 73 Complaints unresolved at the end of the quarter Nil 1. The figures for the quarter/half year ended September 30, 2005 include those of erstwhile Nahar International Ltd (NHL) and Nahar Sugar & Allied Industries Ltd (NSAIL) since amalgamation with the Company with effect from April 01, 2004. Accordingly the figures for the quarter/half year ended September 30, 2004 have also been complied inclusive of the figure of NHL & NSAIL after making the necessary adjustments / exclusions for the intra-company. 2. The Board of Directors of the Company at its meeting held on October 24, 2005 has decided to discontinue the manufacturing activities of the Fats & Oils division. 3. Previous periods figures have been regrouped/rearranged wherever considered necessary. 4. The above results were reviewed by the Audit Committee of Directors and taken on record by the Board of Directors at its meeting held on October 24, 2005.

200512 Quarter 3 –

EPS is Basic Status of Investor Complaints for the quarter ended December 31, 2005 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 50 Complaints disposed off during the quarter 50 Complaints unresolved at the end of the quarter Nil 1. The figures for the Quarter / Nine months period ended December 31, 2005, include those of erstwhile Nahar International Ltd (NINL) and Nahar Sugar & Allied Industries Ltd (NSAIL) since amalgamated with the Company with effect from April 01, 2004. Accordingly the figures for the quarter ended December 31, 2004 have also been compiled inclusive of the figures of NINL and NSAIL after making necessary adjustments exclusions for the intra-Company. 2. The equity shares of the Company have been listed vide Securities Symbol-NAHARINDUS at The National Stock Exchange of India Ltd (NSE) on December 15, 2005. 3. Previous periods figures have been regrouped / rearranged wherever considered necessary. 4. The above results were review by the Audit Committee of Directors and taken on record by the Board of Directors at its meeting held on January 14, 2006.

KEY RATIOS

PARTICULARS	31.03.2005	31.03.2004
Debt Equity Ratio	0.93	0.72
Long Term Debt Equity Ratio	0.49	0.43
Current Ratio	1.47	1.42
TURNOVER RATIOS
Fixed Assets	1.16	1.16
Inventory	3.43	3.79
Debtors	11.57	9.66
Interest Cover Ratio	2.11	2.69
Operating Profit Margin (%)	16.77	23.63
Profit Before Interest and Tax Margin (%)	9.45	8.03
Cash Profit Margin (%)	11.91	20.64
Adjusted Net Profit Margin (%)	4.59	5.04
Return on Capital Employed (%)	11.78	10.02
Return on Net Worth (%)	11.36	12.59

STOCK PRICES

Face Value	Rs. 10.00/-
High	Rs. 194.60/-
Low	Rs. 183.60/-

LOCAL AGENCY FURTHER INFORMATION

Fixed Assets :

Ø Free Hold Land

Ø Lease Hold Land

Ø Building

Ø Plant and Machinery

Ø Furniture and Fixture

Ø Office Equipments

Ø Vehicles

Ø Computer Software

History

Nahar Industrial Enterprises (NIEL) was promoted by the OSM Group in Sep.'83, as a public limited company, as Oswal Fats and Oils. To begin with, the company installed a fatty acid unit with an annual capacity of 10,500 tpa and the plant was commissioned in Feb.'85. The main products were hard oil, fatty stearic acid and distilled glycerine. NIEL installed, in Feb.'87, a plant for production of oxygen with an annual capacity of 6,48,000 cubic mtr. It integrated backward by installing a solvent extraction plant during 1987. Subsequently, the company expanded its facilities as well as diversified into the manufacture of toilet soaps.  

 The company went public in Jan.'93 to part-finance the setting up of a writing and printing paper manufacturing unit and a vanaspati ghee manufacturing plant. However, the paper project has not yet been commissioned, whereas the vanaspati ghee plant has been set up with a capacity of 19,800 tpa which is being expanded to 33,000 tpa. The company's spinning units for cotton and blended yarn (cap.: 50,000 spindles) are under installation at Latru and Mundian Kalan, near Ludhiana. In 1994-95, its name was changed to Nahar Industrial Enterprises. During the year 1997-98, Nahar Fabrics Ltd. has been amalgamated with the company. 

 During 1998-99, the company commenced commercial production of its spinning unit at industrial focal point, phase-VIII. It has also finalised an expansion scheme by installing additional 80 Nos Picanol Airjet Looms at a total cost of Rs 369.5 millions. 

 The Hon'ble High Court of Punjab & Haryana at Chandigarh has given order for convening the meeting of Equity Shareholders, Secd. Creditors, Unsecd. Creditors on 27.10.01 to consider Scheme of Amalgamation of Oswal Cottom Mills with the company. 

 The Company has amalgamated Nahar International Ltd with itself w.e.f.29th April 2005. According to the Scheme of Amalgamation, the company has allotted THREE equity shares of Rs.10/- each for every TWELVE equity shares of Rs.10/- each held by the shareholders of Nahar International Ltd. 

 The Company has also amalgamated Nahar Sugar & Allied Industries Ltd with itself from 29 April 2005. As per the Scheme of Amalgamation the company has allotted THREE Equity Shares of Rs.10/- each for every TEN Equity Shares of Rs.10/- each held by the shareholders of Nahar Sugar & Allied Industries Ltd.

* The Authorised Share Capital aggregating to Rs. 500 MILLIONS has been reclassif ied in the Extra Ordinary General Meeting of the

company held on 10th January, 2005. After reclassification, the Authorised Share Capital of Rs. 500 millions is divided into 4,00,00,000 Equity Shares of Rs. 101- each and 10,00,000 - 7% Non Cumulative Redeemable Preference Shares of Rs. 1001- each. Of the above Shares

i) 15,99,360 Equity Shares allotted as fully paid up by way of bonus shares during the year 1992-93 by capitalisation of share premium.

ii) Allotment of 13,300 (Previous Year 13,300) Equity Shares kept in abeyance,

iii) 29,33,280 Equity Shares were allotted as fully paid up during the year 1997-98 pursuant to scheme of amalgamation with received in cash, iv) The Board of Directors in its meeting held on 8th December, 2004 has redeemed 19,25,000 - 7% Non Cumulative Redeemable Preference Shares of Rs. 100/- each at par. Remaining 8,25,000 - 7% Non Cumulative Redeemable Preference Shares of Rs. 10O/- each are redeemable as per present terms & conditions of ttw issue.

CONTINGENT LIABILITIES NOT PROVIDED FOR:

a) Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs. 520.751

Millions (Previous Year Rs. 35.112 Millions).

b) Letter of Credits in favour of suppliers and others Rs. 98.346 Millions (Previous Year Rs. 372.002 Millions).

c) Bank Guarantees in favour of suppliers and others Rs. 92.150 Millions (Previous Year Rs. 90.081 Millions).

d) Sales tax demands against which the company has preferred appeals Rs. 24.554 Millions (Previous Year Rs. 12.605 Millions).

e) The Central Excise Authorities have issued show cause notices to the Company for Rs. 80.420 Millions on various matters under the rules of Central Excise Act (Previous Year Rs. Nil). The Company has filed suitable replies to the concerned authorities.

f ) Punjab State Electricity Board Has raised a demand of Rs. 10.763 millions towards paralleling operation charges for the captive power generation by the Company. The Company has already protested the same in the Hon'ble Courts.

g) The Company has executed bonds for aggregate amount of Rs. 597.290 Millions in favour of the President of India for fulfillment of the obligation under the rules of Central Excise Act, 1944 and Customs Act, 1962 (Previous Year Rs. 222.378 Millions).

III. The Company has executed legal agreements for a sum of Rs. 4849.300 Millions (Previous Year Rs. 5145.100 Millions) with the Central Government to export goods against the issuance of import licences for the import of capital goods. Out of this, export obligations of Rs. 2280.445 Millions (Previous Year Rs. 1519.320 Millions) have already been fulfilled upto 31st March, 2005.

IV. AMALGAMATION OF NAHAR INTERNATIONAL LIMITED AND NAHAR SUGAR & ALLIED INDUSTRIES LIMITED:

Pursuant to the Scheme of Amalgamation approved by the Hon'ble Punjab and Haryana High Court, Chandigarh vide order dated March 04,2005, erstwhile Nahar International Limited (NINL) and erstwhile Nahar Sugar & Allied Industries Limited (NSAIL), both being the transferor companies, have been amalgamated with Nahar Industrial Enterprises Limited (NIEL) being the transferee company. The amalgamation is in the nature of merger. The scheme of amalgamation is effective with effect from 1st April, 2004. All the assets liabilities and reserves of the transferor companies have become, after amalgamation, the assets, liabilities and reserves of the transferee company. Other particulars regarding amalgamation are as under :

.a) Nature of business of the transferor companies :

1. NINL was engaged in the business of manufacturing of Yarn and trading of textile goods etc.

2. NSAIL was engaged in the business of manufacturing of White Crystal Sugar, Steel Ingots etc.

After amalgamation, the business of the transferor companies is being carried on by the transferee company.

Amalgamation: 

 As you are already aware that Nahar International Limited (NINL) and Nahar Sugar & Allied Industries Limited (NSAIL) have been amalgamated with the company vide order dated 4th March, 2005 passed by Hon'ble High Court of Punjab and Haryana, Chandigarh.  

 Pursuant to the scheme of amalgamation the entire business, all assets and all liabilities of erstwhile NINL and NSAIL vests in the company w.e.f. 1st April, 2004. 

 The amalgamation of NINL and NSAIL with the company would have manifold positive effects on the working of the company. The company would be in a better position to operate on a large scale with the help of increased resources and facilities.  

 Financial analysis & review of operations: 

 Since the amalgamation of NINL and NSAIL is effective from 1st April, 2004, consequently figures for the current year include the figures of erstwhile NINL and NSAIL which have been amalgamated with the company and are therefore not comparable with the figures of the previous year ended 31st March, 2004. 

 During the year under review, the performance of the company has remained satisfactory. The company has achieved total income of Rs.6400.3 millions as against Rs.4020.8 millions in the previous year. The company's activities are classified under five segments namely Yarn, Fabrics/Garments, Sugar, Fats & Oils and Steel as per accounting standard AS-17 issued by the Institute of Chartered Accountants of India. The business wise performance of each segment is as under: 

 Textile Division: 

 The textile division of the company (Yarn, Fabrics and Garments) is the largest in terms of sales revenue and capital employed amongst the business segments of the company. This division accounts for approximately 86% of the total turnover of the company for the year ended 31st March, 2005. 

 * Yarn segment has total turnover (including inter-segment) of Rs.4155.9 millions as against Rs.1386.8 millions in the previous year. 

 * Fabrics/Garments segment has total turnover (including inter-segment) of Rs.2267.2 millions as against Rs.2021.1 millions in the previous year. 

 Particulars Current Year Previous year Production* Sales Production* Sales 

 Yarn (MTs) 34140 34941 10144 10459 

 Fabrics/Garments: 

 Grey Fabrics 58.77 50.63 31.39 26.70(meters in millions) 

 Processed Fabrics 199.59 209.90 184.15 189.85(meters in millions) 

 Garments (pcs) 268606 327034 311565 340883 

 * Excluding captive consumption. 

 Sugar: 

 During the year, the company has produced 17227 MTs of sugar (sugar recovery 10.12%) and sold 34782 MTs of sugar. This segment has total turnover of Rs.598.2 millions which accounts for approximately 8% of the total turnover of the company for the year ended 31st March, 2005. 

 Fats & Oils: 

 Earlier in the toilet soap unit, the company was doing job work for branded soap manufacturers. The Central/State Government has offered investment incentives to the industries in the neighboring States like Himachal Pradesh and Jammu & Kashmir. It is no longer remain beneficial for all the parties to get their product manufactured from the industry located in Punjab. Consequently the profitability of this division has been adversely affected.  

 During the year under review the company has produced 8081 MTs of soap and sold 8435 MTs as against production of 15655 MTs and sale of 15298 MTs of  

 soap in the previous year. This segment has a total turnover of Rs.399.5 millions as on 31st March, 2005 as against Rs.1031.3 millions in the previous year. 

 The company does not intend to go a long way in this segment. 

 Steel: 

 We wish to mention that the erstwhile Nahar Sugar and Allied Industries Limited (NSAIL) since amalgamated with the company, had set up a steel division in order to use the extra power generated in the process of manufacturing of sugar and thereby increase the profitability of the company. During the year under review the company had produced 2033 MTs of steel ingots and sold 1766 MTs of steel ingots. This segment has a total turnover of Rs.43.8 millions. 

 Profitability: 

 During the year under review, the company has earned profit before financial expenses, depreciation & non-cash expenditure, extraordinary item and tax amounting to Rs.1125.1 millions as against Rs.940.5 millions in the previous year. The company has earned profit after tax amounting to Rs.203.3 millions as against Rs.199.2 millions in the previous year. The company has also acquired Rs.674.8 millions as debit balance of profit and loss account (on amalgamation of Nahar International Limited) and after all adjustments, carried deficit amounting to Rs.429.3 millions to the balance sheet as against surplus amounting to Rs.199.3 millions in the previous year. Barring any unforeseen circumstances the financial year 2005-2006 is expected to be much better than the previous year and the members can look forward to a rewarding future ahead.  

 Expansion Plans: 

 According to the textile ministry, India needs huge investments to enable the Indian textile industry to successfully compete with China. The country has also set up an export target of $50 billion by 2010. Some of the measures announced in the last couple of union-budgets is encourging new investments in the textile industry which would enhance India's share of world trade to 8-10%. According to Center for Monitoring Indian Economy (CMIE) textile industry is expected to continue its buoyant performance with cotton textile index growing at 10%. 

 Being inspired by the prevalent market opportunities available in domestic and international markets supplemented by government policies the company has embarked upon expansion programme in the textile division. 

 During the year under review the company has installed 130 weaving looms and 1872 rotors. The Company has also installed continuous dyeing range mercerizing machine commissioned during July, 2005 which will increase the processed fabrics production capacity substantially. 

 Installation of additional: 

 * 120 weaving looms; 

 * 20400 spindles at Spinning Unit, Lalru; 

 * 18000 spindles at Spinning Unit, Mundian Kalan, Ludhiana and 

 * 720 rotors 

 under implementation which is likely to be completed by January, 2006. Besides, the company is putting up:  

 * 12 MWs co-generation captive power project at its textile complex, Lalru and 

 * 8MWs bagasse based power project at its sugar plant, Amloh which is expected to be completed by March, 2006 and this will enable the company to cut its operative expenditure. 

 The expanded capacities will further add to the profitability of the company and the same will be reflected in the working of the company for the year 2006-2007. 

Capital Structure: 

 The share capital of the company as on 31st March, 2005 comprises of equity share capital of Rs.309.4 millions [which includes Rs.121.8 millions the amount of equity share capital pending for allotment to the shareholders of erstwhile Nahar International Limited and Nahar Sugar and Allied Industries Limited] (Previous year Rs.187.6 millions) and Preference Share Capital of Rs.82.5 millions (Previous year Rs.275.0 millions). 

 During the year under review the company has redeemed 19,25,000-7% Non Cumulative Redeemable Preference Shares of Rs.100/- each at par. The board of directors of the company has also allotted 36,17,000 Warrants-A and 45,75,000 Warrants-B on preferential basis to the promoters and their associates in accordance with SEBI guidelines. The warrant holders have the option of subscribing for one equity share of the company of Rs.10/- each per warrant at a price of Rs.65.78 per equity share. 

 Issue of Shares: 

 Pursuant to the order of Hon'ble Punjab and Haryana High Court, Chandigarh and in terms of the approved scheme of amalgamation, the board of directors of the company in its meeting held on 21st May, 2005 has issued 1,21,76,625 equity shares of Rs.10/- each fully paid up, to the shareholder of erstwhile Nahar International Limited and Nahar Sugar and Allied Industries Limited. These shares are paripassu in all respect with the existing equity shares of the company.  

 Utilization of Preferential Issue Proceeds: 

 The company has received an amount of Rs.192.5 millions from warrant holder against allotment of Warrants-A and Warrants-B in terms of clause 13.1.2.3 (a) of SEBI [guidelines for Preferential Issues] which has been utilised for the company's existing business/working capital requirements. 

MANAGEMENT DISCUSSION & ANALYSIS REPORT 

 The operations of the company are classified in five main business segments namely: 

 * Yarn* Fabrics/Garments* Sugar* Steel* Fats & oil 

 Among these, textile division (Yarn, Fabrics and Garments) is the largest in terms of sale revenue and capital employed. The textile division accounts for 86%, Sugar division 8% while Oil & Fats and steel division collectively accounts for 6% of the total turnover of the company for the year ending 31st March, 2005. 

 Textile Industry- Industry structure and Developments: 

 The textile industry is one of the largest and most prominent sector of Indian economy in terms of output, foreign exchange earnings and employment generation. It has also been in the fore front of generating substantial tax revenues and incomes upstream and downstream such as agriculture activities, machine manufacturing, packaging, transport, domestic trade and export etc. 

 The quota regime in the textile sector is history and the textile and clothing industry in a resurgent mood. The industry is vigorously expanding its capacities, upgrading its production, technology and including competitiveness to face new challenges, opportunities with confidence. Government Policy is supplementing these effort and initiative which include the launch of the Technology mission on cotton (TMC) for strengthening the raw material base and the technology up gradation fund scheme (TUFS) to encourage modernization.  

 Opportunity/Risks/Concerns/Threats: 

 The size of our textile and apparel industry is about $35 billion and according to the industry vision, it has the potential to achieve a $85 billion size by 2010. This growth can be fuelled by both exports and by raising domestic consumptions. The export leap would be driven by opening of global markets consequent upon dismantling of the quota system's, providing a distinct opportunity for countries with a competitive advantage from labour, technology and raw material. At the domestic level, the fast growing economy and even faster growing middle class, with higher disposable income has the potential to increase per capita consumption. To reduce the risk of sourcing from only one country, US importers are looking at India as the main alternative to China. 

 We would like to share our concern with regard to textile industry. China offers a credible threat to exporters across the world as it has build high economies of scale and has increased its share of textile exports. Beside China there will be competition from other suppliers whose economies are heavily dependent on textiles. Following the removal of quantitative restrictions on imports of textiles and clothing, the developed countries would not likely to miss any opportunity to place obstacles on imports from India and other textile exporting countries. From the trends we could expect the increased use of trade defence measures - anti dumping/anti subsidy action and discrimination among developing countries and linking with non trade issues such as social clauses and environmental issues in the name of sustainable development.  

 Though India is one of the major producer of cotton yarn and fabric, the yield-productivity of cotton has been found to be lower than many countries. The level of productivity in China, Turkey and Brazil is over 1 tonne/ha; while in India it is only about 0.3 tonne/ha. 

 Cotton is the most important segment of the industry. Of late industry has witness a trend of widely fluctuating raw cotton and cotton yarn prices. Fluctuation in the prices of cotton can affect the performance of the Company. Besides erratic supply of power and water, availability of adequate road connectivity in adequacies in port facilities and other export infrastructure have been adversely affecting the competitiveness of Indian textile sector. Being inspired by the prevalent market opportunities available in domestic and international markets supplemented by Govt. policies your company is expanding its manufacturing activities and is all set to take advantage of the business conditions in the times to come and is able to meet challenges.  

 Outlook: 

 According to several recent studies India is going to emerge as an alternative source of supply to China. India's growth in exports will be driven by value added made-ups and apparel, as India has comparative advantages over its competitors on availability of relatively inexpensive skilled work force, design expertise, a large production base of basic raw material like home grown cotton, yarn and fabric and availability of wide range of textiles. The success in the post quota regime would depend upon overall competitiveness, economies of scale, quality, prices, and adherence to delivery schedules. 

 India's textile industry has the potential to contribute more to our GDP growth. The support we give it now would yield a whooping dividend in the years to come. No doubt the intense competition in the global market is affecting the domestic market. Nevertheless, we believe that long term prospects for the textile industry remain good for our country. 

 Sugar Industry-structure and developments: 

 The Indian sugar industry is the second largest agro processing industry in the country. In the global sugar economy, the Indian sugar industry has achieved a number of milestones (a) second largest area under cane/cane production (b) second lowest with its field cost (sugar cane) despite small land holding and productivity (c) fourth efficient processor of sugar despite low capacity of its sugar plants as compared to very large size plants in other parts of the world. Sugar is one of the most regulated of all Indian industries. However, over the last few years the government has progressively deregulated the industry evident in the reduction of the ratio of levy to free sugar from 40:60 a few years ago to 10:90 presently. 

 Opportunity/Risk/Concern/Threat: 

 Favorable demand supply situation would lead to strengthening of sugar prices. Indian Sugar industry is amongst the most diversified industry in the world. Production of ethanol, bagasse and co-generation of power holds a lot of potential.  

 We would like to share our concern with regard to Sugar industry. The cane crop is cyclic in nature and is a monsoon - dependent crop which makes the business particularly vulnerable to a bad season. The government still stipulates the price that sugar companies must pay farmers for the cane, arrived at more through political rather than economic considerations. In a business with a high raw material cost even a small variation can potentially impact profitability. Lower cane realization can prompt farmers to shift to alternative crops. Your company has planned for the next year to achieve higher capacity utilization by ensuring availability of sugarcane during the entire season and preventive maintenance to avoid breakdown during the crushing season. Your company is also making all efforts for sugarcane development in the cane area allotted to it. 

 Outlook: 

 In the past, the sugar industry has been reeling under the pressure of rising sugarcane prices with non-commensurate increase in sugar prices. A lower production in the preceding two seasons help the industry to liquidate its surplus inventory, as a result of which sugar prices are expected to remain firm in 2005-2006. India's production of sugar is expected to rebound from 12.6 millions tones in season 2004-2005 to 17.5 millions tones in season 2005-2006. While consumption is expected to grow from its current estimates 18.5 millions tones. The industry should take advantage of the sops being offered for gainful utilization of by-products. It is believed that unless the sugar mills are converted into integrated multi products units, their viability will periodically come under question. 

Established in 1983 under the name of OSWAL FATS & OIL LTD. it underwent a total change over to become Nahar Industrial Enterprises a decade letter in 1994

The company has to divisions under its umbrella namely ,Oil & Soap Division and the textile division

The oil and soap division has two units. The fatty Acid unit is engaged in the manufacture of Fatty Acids Stearic Acid and Distilled Glycerin. The soap unit is engaged in the production of Toilet & Laundry Soap

In the textile division the company has two Spinning units and a weaving unit. The frost spinning unit, a100% EOU, is Engaged in the manufacture of cotton yarn is exporting its yarn to Europe , Hong Kong ,Singapore Taiwan ,Mauritius ,Malaysia and Australia

The second unit ,namely Sambav Spinning Mills,is engaged in the manufacture of cotton yarn. The aggregate installed spindlage in both the units is 38000 spindels. Nahar fabric the weaving unit is equipped with 176 Picanol Air Jet Weaving Machines(Cam/Repair/Dobby)

The facilities are backed by a weaving design studio where the time tested handloom is used for product development activity in consonance with market needs

The preparatory is equipped with Benningers Warping & Sizing Machines .Inspection is equipped with automatic inspection with rolling machine from la Maccanica Italy. Nahar fabrics has already produced more then 200 different constructions in Grey Fabric for in House needs and World Markets

CMT REPORT [Corruption, Money laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs. 45.05
UK Pound	1	Rs. 84.96
Euro	1	Rs. 57.98

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions