MIRA INFORM REPORT

Report Date :

02.01.2007

IDENTIFICATION DETAILS

Name :	QUIMICA INDIA – DIVISION OF EMTEX INDUSTRIES (INDIA) LIMITED
Registered Office :	413-G, Kalbadevi Road, Mumbai-400002, Maharashtra
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	08.01.1982
Com. Reg. No.:	11-26081
CIN No.: [Company Identification No.]	U17120MH1982PLC026081
TAN No.: [Tax Deduction & Collection Account No.]	MUME04933F
PAN No.: [Permanent Account No.]	AAACE0864D
Legal Form :	A Public Limited Liability Company. The Company’s shares are listed on Stock Exchanges.
Line of Business :	Printing, dying and processing of Fabrics; production of Pharmaceutical Intermediates, particularly salicylic acid and Methyl Salicylate

RATING & COMMENTS

MIRA’s Rating :

C

<10

C

Absolute credit risk exists. Caution needed to be exercised

Credit not recommended

Maximum Credit Limit :
Status :	Poor and Sick Company
Payment Behaviour :	Delayed
Litigation :	Unknown
Comments :	Subject is a Sick Company. It’s ways and means positions are difficult. Payments are slow and delayed The company can be considered for any small business dealings on safe and secured trade terms and conditions.

LOCATIONS

Registered Office :	413-G, Kalbadevi Road, Mumbai-400002, Maharashtra, India
Tel. No.:	91-22-22015922
Fax No.:	91-22-22032106
E-Mail :	maliram@bom3.vsnl.net.in
Factory 1 :	Plot No.F-4, MIDC, Badlapur, Thane-421503, Maharashtra
Tel. No.:	91-251-2690236
Fax No.:	91-251-2692607

DIRECTORS

Name :	Mr. Ganesh Khemka
Designation :	Director
Name :	Mr. Shivprakash Makharia
Designation :	Chairman and Managing Director
Name :	Mr. Pradeep Makharia
Designation :	Executive Director
Name :	Mr. Sundar Rangan
Designation :	Director
Name :	Mr. S. K. Sanghai
Designation :	Nominee Director of IFCI
Name :	Mrs. Shilpita Guha
Designation :	Nominee Director of UTI

BUSINESS DETAILS

Line of Business :

Printing, dying and processing of Fabrics; production of Pharmaceutical Intermediates, particularly salicylic acid and Methyl Salicylate

Products :

v Fabrics

v Chemicals

v Salicylic Acid

v Methyl Salicylate

Product Description	Item Code No. (ITC Code)
Synthetics Fabrics	52 : 5207
Chemicals	29 : 2918

GENERAL INFORMATION

Customers :

Paras Pharmaceuticals

IVP

Zandu

Gargi

No. of Employees :

800

Bankers :

The Akola Urban Co-Op Bank Limited

(Multi State Shedule Bank)

Branch : 77/79, Vitthal Wadi, Kalbadevi Branch, Mumbai-400002, Maharashtra, India

The United Western Bank Limited

State Bank of India

The Bank of Nova Scotia

Canara Bank

Punjab National Bank

Facilities :

Secured Loans :

Particulars	Rs. (in millions)
From Financial Institutions	532.241
Non Convertible Debentures	262.682
From Company’s Bankers	822.346
Total	1617.269

Banking Relations :	Unknown
Auditors :	N. G. Jain & Company Chartered Accountants
Address :	320, Hammersmith Industrial Premises, Narayan Pathare Marg, Mahim (West), Mumbai-400016, Maharashtra, India
Associates/Subsidiaries :	Emtex Industries (India) Limited 413-G, Kalbadevi Road, Mumbai-400002, Maharashtra, India Tel. No.: 91-22-22015922 Fax No.: 91-22-22032106 maliram@bom3.vsnl.net.in

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
10000000	Equity Shares	Rs.10/- each	Rs.100.000 millions
2000000	Preference Shares	Rs.100/- each	Rs.200.000 millions
	Total		Rs.300.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
5125200 Add: 24800	Equity Shares Shares Forfeited (Amount paid-up thereon)	Rs.10/- each	Rs.51.252 millions Rs.0.124 millions
500000	12% Redeemable Cumulative Preference Shares	Rs.100/- each	Rs.50.000 millions
15000	15% Redeemable Cumulative Preference Shares	Rs.100/- each	Rs.1.500 millions
1000000	0% Redeemable Preference Shares	Rs.100/- each	Rs.100.000 millions
	Total		Rs.202.876 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2006	31.03.2005	31.03.2004
SHAREHOLDERS FUNDS
1] Share Capital		202.876	202.876	202.900
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		118.134	118.413	(1231.100)
4] (Accumulated Losses)		(1937.250)	(1544.551)	0.000
NETWORTH		(1616.240)	(1223.262)	(1028.200)
LOAN FUNDS
1] Secured Loans		1617.269	1619.020	1617.700
2] Unsecured Loans		203.054	205.894	205.900
TOTAL BORROWING		1820.303	1824.914	1823.600
DEFERRED TAX LIABILITIES		17.591	17.570	0.000
TOTAL		221.654	619.222	795.400
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		134.925	204.945	279.000
Capital work-in-progress		0.993	1.208	1.500
INVESTMENT		0.000	0.100	0.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	46.676	48.947	48.500
	Sundry Debtors	147.531	452.468	568.400
	Cash & Bank Balances	21.841	5.441	3.000
	Other Current Assets	20.371	13.663	0.000
	Loans & Advances	243.343	262.752	301.200
Total Current Assets		479.762	783.271	921.100
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	377.069	353.552	389.700
	Provisions	16.957	16.650	16.600
Total Current Liabilities		394.026	370.202	406.300
Net Current Assets		85.736	413.069	514.800
MISCELLANEOUS EXPENSES		0.000	0.000	0.100
TOTAL		221.654	619.222	795.400

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2005	31.03.2004	31.03.2004
Sales Turnover [including other income]	400.813	361.653	(215.400)
Profit/(Loss) Before Tax	(64.819)	(117.424)	(402.100)
Provision for Taxation	0.307	0.000	0.000
Profit/(Loss) After Tax	(65.126)	(117.424)	(402.100)
Export Value	0.000	0.000	NA
Import Value	2.042	21.671	NA
Total Expenditure	465.632	479.078	(617.500)

QUARTERLY / SUMMARISED RESULTS

PARTICULARS	30.06.2006 (1^st Quarter)	31.09.2006 (2^nd Quarter)
Sales Turnover	12.32	12.18
Other Income	0.00	0.01
Total Income	12.32	12.19
Total Expenditure	11.81	11.58
Operating Profit	0.51	0.61
Interest	0.00	0.00
Gross Profit	0.51	0.61
Depreciation	1.42	1.82
Tax	0.00	0.01
Reported PAT	(0.91)	(1.22)

200606 Quarter 1

Expenditure Includes Increase / Decrease in Stock in Trade Rs.1.424 million Consumption of Raw Materials Rs.71.392 million Staff Cost Rs.9.764 million Other Expenditure Rs.35.424 million Tax Indicates Provision for Fringe Benefit Tax EPS is Basic & Diluted Status of Investor Complaints for the quarter ended June 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter Nil Complaints disposed off during the quarter Nil Complaints unresolved at the end of the quarter Nil 1. The above Unaudited financial results are approved and taken on record by the Audit Committee and Board of Directors at its meeting held on July 31, 2006. 2. The Company has not provided for interest amounting to Rs.152.056 million for the quarter ended June 30, 2006. 3. The Company has only one reportable segment i.e. Textile. 4. In view of uncertainty of availment of tax benefits on accumulated business losses and unabsorbed depreciation the Company has not recognized deferred tax assets. 5. Financial Results for the quarter ended June 30, 2006 have been subjected to Limited Review by Statutory Auditor.

200609 Quarter 2

EPS is Basic and Diluted Status of Investors complaints for the quarter ended September 30, 2006. Complaints pending at the beginning of the quarter Nil Complaints received during the quarter Nil Complaints disposed off during the quarter Nil Complaints unresolved at the end of the quarter Nil 1. The above unaudited financial results are approved and taken on record of Board of Directors at its meeint held on October 31, 2006. 2. The company has not provided for interest amounting to Rs.153.727 millions for the quarter ended September 30, 2006. 3. The company has only one reportable segment i.e. Textile. 4. In view of uncertainity of availment of tax benefit on accumalated business losses and unaborbed depreciation, company has no recognised deferred tax assets. 5. Figures have been regrouped to make them comparable wherever necessary.

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt-Equity Ratio	0.00	0.00	0.00
Long Term Debt-Equity Ratio	0.00	0.00	0.00
Current Ratio	0.49	0.67	0.85
TURNOVER RATIOS
Fixed Assets	0.50	0.46	0.66
Inventory	8.43	7.72	3.40
Debtors	1.34	0.74	0.81
Interest Cover Ratio	(126.00)	(49.00)	(250.31)
Operating Profit Margin(%)	1.17	(9.74)	(60.28)
Profit Before Interest And Tax Margin(%)	(15.64)	(29.99)	(74.61)
Cash Profit Margin(%)	0.97	(10.35)	(60.58)
Adjusted Net Profit Margin(%)	(15.84)	(30.60)	(74.91)
Return On Capital Employed(%)	0.00	0.00	0.00
Return On Net Worth(%)	0.00	0.00	0.00

STOCK PRICES

Face Value	Rs.10/-
High	Rs.(0.01)
Low	Rs.(0.01)

LOCAL AGENCY FURTHER INFORMATION

The Company’s Fixed assets include Leasehold Land, Building, Plant and Machinery, Electrical Installation, Furniture and Fixtures, Office Equipments, Computers, Vehicles and Staff Quarters

THE TEXTILE INDUSTRY: 

The Textile Industry has been doing well during the year under report, after the quota restrictions were removed under the WTO regime. The data released by DGCIS shows that total textile exports has jumped by over 22% to US$15441 million during the year 2005-06. The break-up shows that cotton textile exports were up by 27%. Their company is an exclusive cotton textile exporter and hence the potential for business growth is substantial. 

According to CRISIL, Indian textiles and apparel-industry can reach US$85 billion by 2010. The govt. has set an export target of US$50 billion by 2010, which calls for annual growth of 20% The investment needed to attain this level is Rs.90,00 millions over a five year period. The industry continues to provide employment to about 0.380 millions people. China continues to be the major threat in the international arena. Their exports are showing significant quantum jump of over 100% since their entry to WTO and liberalization. While the US & European Governments are concerned at the massive imports from China affecting their local industry and started bridling the imports from China, no such restrictive measures are initiated against imports from India. Moreover, India specializes in cotton textiles, which is comparatively costlier. Already, the country's per unit realization has improved by about 12%, thus moving up in value chain. The Indian textile industry stand to gain and can attain high levels of export if investments as projected are made by the industry with necessary support from the governments. 

World retail chains like Wal-Mart, Target, Gap, JC Penny, Macy's, Marks & Spencer, Selfridges and others have big plans for sourcing their requirements in a big way from our country. This is opening up vast opportunities to all quality textile produces like their company. The govt. has already announced a plan to set up 12 apparel parks in centres like New Tirupur in Tamil Nadu at a total cost of Rs.43 millions. 

FEASIBILITY STUDY:

In order to confirm the viability of the company's operations, Stressed Assets Stabilization Fund (SASF) of IDBI had got a Techno Economic Feasibility Study of the Unit conducted by a specialized agency. The said study has confirmed the techno-economic feasibility and viability of the unit after detailed and careful study and evaluation. The said study has also recommended capital investment by way of additional machineries and balancing equipments valued at about Rs. 55 millions.

BIFR: 

As reported in earlier years, their. company had made reference to the Board for Industrial and Financial Reconstruction (BIFR) in 2002. The Hon'ble Board has declared their company sick under Section 3(o) of the Sick Industrial Companies (Special Provisions) Act, 1985, vide its order of 4th January 2006 and IFCI has been appointed as the Operating Agency (OA). In the meanwhile, the company has submitted a proposal for Negotiated Settlement (NS) of its dues to banks and financial institutions under One Time Settlement (OTS) scheme, to Stressed Assets Stabilization Fund (SASF) of IDBI, under whose auspices two rounds of lenders meetings were held on 16th February and 23rd March this year. The proposal given by the company is to settle the entire dues to banks and financial institutions at a consolidates sum. There was a general consensus on this proposal and now approvals from all concerned higher authorities of respective institutions are awaited.

A No Lien account has been opened with IDBI and a sum of Rs 20 millions is deposited in it as stipulated by SASF. Pending this process the company has sought time from BIFR to submit Rehabilitation Scheme to the OA, it is expected that the Negotiated Settlement proposal. would be favourably considered by SASF and others after satisfying themselves about the economic and technical viability of the unit and the company would be able to submit a Rehabilitation Scheme to the OA in the near future. 

OPERATIONS: 

Their company's brand of cotton, textiles is well established in several parts of the world. Hence, the company can avail of the business opportunities if its working capital requirements are met and certain capital expenditure is made to technologically upgrade the plant and machinery. With the approval of Rehabilitation Package by the OA and BIFR, settlement of dues under Negotiated Settlement as mentioned above and investment in additional equipments as recommended in the Feasibility Report, the operational efficiency and viability of the Unit are expected to improve significantly. Moreover, under the NS scheme discussed above, the lenders are required to grant permission for additional borrowing for capex and working capital and the assets created out of such additional borrowing would be free of any lien or charge for existing liabilities. SASF has already granted permission to this effect. These measures are bound to give a positive thrust to the operations and results of their company in the coming months and years.

The company does not foresee any difficulty to secure adequate orders, domestically and internationally. As their company caters to export and upper-end market/products with substantial value addition, the profit margin would also be above normal. There is already stringent control on costs of operation and with improved capacity utilization; there would be definite improvement in the profitability of their company's operations. 

The operational results shown above reveal that there is overall improvement with regard to sales turnover, gross profit and net profit by way of increase or reduction of loss. With settlement of dues, induction of funds by promoters and strategic investors and fresh borrowings from banks/institutions to implement the Scheme of Rehabilitation as directed by BIFR, the company is expected to make rapid progress in its working and results. 

TEXTILE DIVISION: 

The company has been striving to improve the operations of this division in all possible manner The efforts to improve productivity and at the same time reducing cost of operation have also yielded results. 

They have obtained professional expert advice and services of Bombay Textile Research Association who had conducted spot study and evaluated the working of the unit and scope for cutting cost and improving the quality. We have implemented the recommendations relating to energy saving, water conservation, and methods by which to optimally reduce consumption of other materials. The company has implemented several such cost cutting measures during the past year. Additional capex is called for to carry out further improvement. The management plans to undertake a few of such measures in the near future. 

CHEMICAL DIVISION:

 QUIMICA: 

This division has started generating cash profit after a couple of years. The production cycle has been reduced by implementing the recommendations of UDCT, the chemical technology division of Bombay University whose services were availed of to revamp the operations. 

There is good competition from international suppliers of Salicylic Acid and Methyl Salicylate, especially from China. But by optimizing production, cutting costs and good and effective management of inventories, the margin and profitability are getting improved. Furthermore, the turnover of this Division is also steadily improving during the recent past and this trend is expected to continue. Thus, we are looking forward to better days for the chemical division. 

Formerly known as Maliram Makharia Industries, Emtex Industries (EIL) was incorporated in Jan.1982 and converted into a public limited company in Mar.1989. The name was changed to Emtex Industries (India) on 13 Aug.1992. It commenced commercial operations in Jan.1983 to process grey cotton fabrics at MIDC, Badlapur. In 1989, EIL set up facilities to process 7.5 millions metres pa of grey synthetic fabrics. 

The company has been promoted by Shivprakash Makharia, Chairman and Managing Director, along with Pradeep Makharia and Pramod Makharia. EIL came out with a public issue of 2.4 millions equity shares at a premium of Rs 5 aggregating Rs 3600 millions, to part finance the Rs.63.4 millions expansion. The textile processing division is diversifying into the manufacture of salicylic acid and its derivatives like sodium salicylate, benzyl salicylate and methyl salicylate.

EIL chalked out expansion and diversification programmes at a capital outlay of Rs 1380 millions to set up a Rs 580 millions ready-made garment knitting-cum-processing unit with a capacity of 30,000 pcs pd. It also put up a Rs 600 millions aspirin plant at Panoli, Gujarat.

The company increased the installed capacity of its Chemicals division to 713 MT. The production of Salicylic Acid and Methyl Salicylate and its derivatives has received overwhelming response from customers. 

The company ventured into information technology. Unique products, business solutions and database are proposed to be developed for identified customers abroad and in India in due course.

In 2001 a modernisation programme for setting up facilities to process 120" wide fabrics was shelved out. The programme is expected to implement in current financial year.

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.44.20
UK Pound	1	Rs.86.88
Euro	1	Rs.58.53

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	4
PAID-UP CAPITAL	1~10	--
OPERATING SCALE	1~10	1
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	1
--PROFITABILIRY	1~10	--
--LIQUIDITY	1~10	--
--LEVERAGE	1~10	--
--RESERVES	1~10	--
--CREDIT LINES	1~10	--
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		5

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

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
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at their 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 their 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 their breach or non observance of any one, or more of these conditions