MIRA INFORM REPORT

Report Date :

15.03.2007

IDENTIFICATION DETAILS

Name :	INDOFIL CHEMICAL COMPANY DIVISION OF MODIPON LIMITED
Registered Office :	Hapur Road, Modinagar - 201 204, Ghaziabad, Uttar Pradesh
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	19.08.1965
Com. Reg. No.:	20-3082
CIN No.: [Company Identification No.]	L65993UP1965PLC003082
TAN No.: [Tax Deduction & Collection Account No.]	MRTM 00650G
Legal Form :	Public Limited liability Company. The Company's shares are listed on the Stock Exchanges.
Line of Business :	Manufacturing and Marketing of Synthetic Filament Yarn (Nylon & Polyester), Yarn Waste (including derived) & By-Products and Mancozeb Indofil M-45/ other agro formulations, speciality industrial chemicals and other chemicals.

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	USD 1250000
Status :	Good
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is an established company having satisfactory track. The company has seen ups and downs in the past. It has improved its performance and doing well. Trade relations are fair. Payments are correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Hapur Road, Modinagar - 201 204, Ghaziabad, Uttar Pradesh
Tel. No.:	91-1232-242201 to 242209
Fax No.:	91-1232-242084
E-Mail :	indofil@vsnl.com
Website :	http://www.modipon.com
Corporate Office :	E-3, 2^nd Floor, Kailash Colony, New Delhi – 110 048
Tel. No.:	91-11-41627019
Fax No.:	91-11-41733389
E-Mail :	mpl@modipon.net
Factory 1 :	Kolshet, Off. S. V. Road, Sandoz Baug P.O., Thane - 400 607, Maharashtra
Tel. No.:	91-22-2534 1877
Fax No.:	91-22-2534 3771
Factory 2 :	Modinagar - Modipon Fibres Company (Fibres Division)
Branches :	Nirlon House, Dr. Annie Besant Road, Mumbai - 400 025, Maharashtra
Tel. No.:	91-22-2493 7391 / 2496 0000
Fax No.:	91-22-2493 5667
E-Mail :	indofil@vsnl.com

DIRECTORS

Name :	Mr. K. K. Modi
Designation :	President and Managing Director
Qualification :	B.Sc.
Date of Appointment :	25.09.1967
Name :	Mr. Mahendra K. Modi
Designation :	Managing Director
Qualification :	B.Sc. (Chem. Engg.) A.I.C.E., Ph. D.
Date of Appointment :	15.07.1967
Name :	Mr. Atul Kumar Gupta, IAS
Designation :	Director
Name :	Ms. Charu Bhartia
Designation :	Director
Name :	Mr. Manish K. Modi
Designation :	Director
Name :	Mr. L. Mishra
Designation :	Director
Name :	Mr. C. K. Tewary, IAS
Designation :	Director
Name :	Mr. Santosh K. Aggarwal
Designation :	Director
Name :	Mr. K. N. Modi
Designation :	Director
Name :	Mr. S. B. Lal
Designation :	Director
Name :	Mr. R. Loonkar
Designation :	Director (Nominee IFCI)
Name :	Mr. Rajive Kumar
Designation :	Director (Nominee (UPSIDC)
Name :	Mr. Ravindra Singh, IAS
Designation :	Director (Nominee of UPSIDC)
Name :	Mr. Ravi Mathur, IAS
Designation :	Director
Name :	Mrs. Lata Singh
Designation :	Director (Nominee of UPSIDC)

KEY EXECUTIVES

Name :	Mr. C. S. Panda
Designation :	Company Secretary
Name :	Mr. A. K. Goel
Designation :	Company Secretary

SHAREHOLDING PATTERN

As on 30.06.2006

Names of Shareholders	No. of Shares	Percentage of Holding
Individuals/Hindu Undivided Family	398774	5.09 %
Bodies Corporate	3590484	45.81 %
Public Shareholding
Institutions
Mutual Funds/ U T I	7600	0.10 %
Financial Institutions/Banks	275
Central Government/ State Government(s)	1301974	16.61 %
Insurance Companies	238453	3.04 %
Foreign Institutional Investors	300000	3.83 %
Non-Institutions
Bodies Corporate	454302	5.80 %
Individuals :
(i) Individual Shareholders holding nominal Share Capital upto Rs. 0.1 Millions	709938	9.06 %
(ii) Individual Shareholders holding nominal Share Capital in excess of Rs. 0.1 Millions	166484	2.12 %
Any Other (specify) :
-NRIs / OCBs	332613	4.24 %
-Clearing Members	337160	4.30 %
Total	7838057	100.00 %

BUSINESS DETAILS

Line of Business :

Manufacturing and Marketing of Synthetic Filament Yarn (Nylon & Polyester), Yarn Waste (including derived) & By-Products and Mancozeb Indofil M-45/ other agro formulations, speciality industrial chemicals and other chemicals.

Products :

Product Description	Item Code No.
Synthetic Filament Yarns (Nylon & Polyester)	5402
Pesticides	3808
Acrylic Emulsions	3906

PRODUCTION STATUS

The company’s production status for the year ended 31^st March, 2005 was as under :-

Class of Goods	Unit	Installed Capacity	Actual Production
Fibres Division
Synthetic Filament Yarns (Nylon)	MT	19940	9321
Synthetic Filament Yarn (Polyester)	MT		31
Yarn Waste (including derived) & by-products	MT	----	1580 (B)
Chemicals Division
Mancozeb / Indofil M-45	MT	12000	12894
Other Agro Formulation	KL	Based on 2600 MT of Technical Material	4096
Speciality Industrial Chemicals	MT	9000	9373

GENERAL INFORMATION

No. of Employees :	1000
Bankers :	Ø Punjab National Bank Ø Union Bank of India Ø State Bank of Hyderabad Ø Bank of Baroda Ø Allahabad Bank Ø Karnataka Bank Limited Ø Abu Dhabi Commercial Bank Limited Ø Development Credit Bank Limited Ø Dhanalakshmi Bank Limited Ø Cosmos Co-operative Bank Limited

Banking Relations :	Satisfactory
Auditors :	Ø P. R. Mehra & Company Chartered Accountants 56, Darya Ganj, New Delhi – 110 002 Ø M. M. Billimoria & Company Chartered Accountants 101, Sharda Chambers, Plot No. 15, Vithaldas Thackersey Marg, Mumbai 400 020, Maharashtra
Membership :	Ø All India Plastic Manufacturers' Association Ø Indian Paint Association Ø India Speciality Chemical Manufacturers' Association Ø CHEMEXCIL Ø Indian Crop Protection Association Ø Pesticides Association of India Ø Indian Chemical Manufacturers' Association
Associates :	Ø Modi Alkalies & Chemicals Limited Ø Spark Plugs Company India Limited Ø Ambuja Cement Eastern Limited Ø Modi Rubber Limited Ø Modi Carpets Limited
Subsidiaries :	Ø Quick Investment (India) Limited Ø Good Investment (India) Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
20,000,000	Equity Shares	Rs. 10/- each	Rs. 200.000 millions
500,000	Preference Shares	Rs. 100/- each	Rs. 50.000 millions
	Total		Rs. 250.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
7,838,057	Equity Shares	Rs. 10/- each	Rs. 78.381 millions
71,792	15% Redeemable Convertible Cumulative Preference Shares	Rs. 100/- each	Rs. 7.179 millions
	Total		Rs. 85.560 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		85.600	85.600	85.600
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		280.800	511.900	388.900
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		366.400	597.500	474.500
LOAN FUNDS
1] Secured Loans		1625.900	1583.00	1794.100
2] Unsecured Loans		206.300	91.900	77.600
TOTAL BORROWING		1832.200	1674.900	1871.700
DEFERRED TAX LIABILITIES
TOTAL		2198.600	2272.400	2346.200
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1053.200	1145.900	1291.100
Capital work-in-progress		0.500	18.000	3.300
INVESTMENT		3.500	11.400	11.400
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	946.200	1100.800	631.500
	Sundry Debtors	992.000	995.700	826.800
	Cash & Bank Balances	259.500	316.800	308.600
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	477.400	722.700	481.500
Total Current Assets		2675.100	3136.000	2248.400
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	1487.300	1907.600	1124.200
	Provisions	120.800	139.200	94.300
Total Current Liabilities		1608.100	2046.800	1218.500
Net Current Assets		1067.000	1089.200	1029.900
MISCELLANEOUS EXPENSES		74.400	7.900	10.500
TOTAL		2198.600	2272.400	2346.200

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2006	31.03.2005	31.03.2004
Sales Turnover		4895.100	5489.200	4535.000
Other Income		142.100	523.800	79.700
Total Income		5037.200	6013.000	4614.700
Profit/(Loss) Before Tax		[222.700]	169.700	41.700
Provision for Taxation		0.000	58.700	0.000
Profit/(Loss) After Tax		[222.700]	111.000	41.700
Earnings in Foreign Currency :
Total Earnings		NA	684.330	554.315
Imports :
Total Imports		NA	820.706	2024.321
Expenditures :
	Raw Materials	2266.300	2657.900	1896.600
	Excise Duty	610.800	692.200	539.400
	Power & Fuel Cost	318.200	334.800	285.500
	Other Manufacturing Expenses	362.500	471.100	379.900
	Employee Cost	350.100	365.500	327.000
	Selling and Administration Expenses	1032.800	1006.500	802.100
	Miscellaneous Expenses	19.200	28.500	23.100
	Interest & Financial Charges	152.700	136.900	161.000
	Depreciation	147.300	149.900	158.400
Total Expenditure		5259.900	5843.300	4573.000

QUARTERLY RESULTS

PARTICULARS	30.06.2006	30.09.2006	31.12.2006
Type	1st Qtr	2nd Qtr	3rd Qtr
Sales Turnover	793.000	1312.100	276.100
Other Income	2.200	6.900	39.600
Total Income	795.200	1319.000	315.700
Total Expenditure	831.000	1285.100	368.000
Operating Profit	[35.800]	33.900	[52.300]
Interest	33.700	36.900	19.700
Gross Profit	[69.500]	[3.000]	[72.000]
Depreciation	38.100	37.900	18.900
Tax	0.000	3.500	0.600
Reported PAT	[109.800]	[44.400]	[91.500]

200606 Quarter 1 –

Expenditure Includes (Increase) / Decrease in Stock in Trade Rs (39.163) million Consumption of Raw Materials Rs 471.234 million Staff Cost Rs 95.790 million Other Expenditure Rs 303.136 million Tax Includes Provision for Deferred Tax EPS is Basic 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 03 Complaints disposed off during the quarter 03 Complaints unresolved at the end of the quarter Nil 1. The above results were taken on record and approved by the Board of directors of the Company in their meeting held on July 31, 2006 and are subject to a Limited review by the Statutory Auditors of the company. 2. The figures of the Corresponding quarter/ previous year have been regrouped / recast wherever necessary.

200609 Quarter 2 –

Expenditure Includes (Increase) / Decrease in Stock in Trade Rs (67.934)million Consumption of Raw Materials Rs 880.840 million Staff Cost Rs 94.205 million Other Expenditure Rs 377.979 million Tax Includes Provision for Fringe Benefit Tax EPS is Basic Status of Investor Complaints for the quarter ended September 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 05 Complaints disposed off during the quarter 05 Complaints unresolved at the end of the quarter Nil 1. The above results were taken on record and approved by the Board of Directors of the Company in their meeting held on October 28, 2006 and are subject to a limited review by the Statutory Auditors of the company. 2. In the Fibres Division, no Interest has been provided on the Dues of IDBI as the Division has received an approval for One Time Settlement which is under implementation. Further, in line with the past practice, no Interest has been provided on Loans of IFCI Limited Amount of unprovided Interest etc. is unascertained. As regards Auditors' Qualification in this respect for the Year ended March 31, 2005 the status remains unchanged. Further, the Division is hopeful to repay / settle the Financial Institutions liabilities by disposing of its Non-productive Assets presently under litigation in the Court. In view of various funding options under consideration of the Management, the Accounts have been prepared on a going concern basis. 3. In view of the increase in Unabsorbed Depreciation and substantial Losses incurred by the Company, the recognition of Deferred Tax Assets (Net) is being postponed on consideration of prudence. 4. As per various Loan Agreements with the Financial Institutions (FIs), Restructuring of the Business require prior approval of the FIs including IFCI. Keeping this in view, the Board of Directors of the Company approved the Restructuring Proposal envisaging the Sale of the Chemical Business and certain other specified Assets of the Company w.e.f. October 01, 2006 to Indofil Organic Industries Limited (IOIL) subject to approval of the IFCI and Shareholders and such other approvals as may be necessary. In part discharge of the consideration, IOIL shall allot 3 Equity Shares for every 2 Equity Shares. 5. The figures of the Corresponding quarter / Half-year / Previous Year have been regrouped / recast wherever necessary.

200612 Quarter 3 –

Expenditure Includes (Increase) / Decrease in Stock in Trade Rs (0.072)million Consumption of Raw Materials Rs 168.114 million Power & Fuel Rs 42.921 million Staff Cost Rs 34.642 million Other Expenditure Rs 66.644 million Tax Includes Provision for Fringe Benefit Tax EPS is Basic Status of Investor Complaints for the quarter ended December 31, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 06 Complaints disposed off during the quarter 06 Complaints unresolved at the end of the quarter Nil 1. The above Results have been taken on record and approved by the Board of Directors at its Meeting held on February 09, 2007 and the same are subject to a limited review by the Statutory Auditors of the Company. 2. (a) The Board of Directors and the Shareholders of the Company have approved the sale of the Company's Chemicals Division on slump sale basis alongwith certain specified assets (ICC Division) with effect from October 01, 2006 to Indofil Organic Industries Limited (IOIL) for a total consideration of Rs 1246.60 million. Part sale consideration of Rs 489.80 million is applied for allotment of 3 Equity Shares of IOIL for every 2 Equity Shares of the Company to the Equity Shareholders of the Company. (b) In pursuance of the Sale of ICC Division, the entire issued Capital of IOIL had been acquired by the Company on October 28, 2006 and as such IOIL continues to be a Wholly-owned Subsidiary of the Company till the allotment of Equity Shares of IOIL. (c) Considering the fact that the closure of slump sale of ICC Division has taken place on January 25, 2007 and February 16, 2007 has been fixed as the record date for allotment of Equity Shares of IOIL, the accounting for part discharge of total consideration towards the value of Equity Shares to be allotted by IOIL to the Equity Shareholders of the Company on pro-rata basis alongwith write back of Rs 154.70 million on account of One Time Settlement with the Financial Institutions shall be accounted for in the Quarter ending on March 31, 2007. (d) Based on the Opinion covering Taxation on slump sale of ICC Division, the Provision for Tax has not been made. 3. In terms of the slump sale of ICC Division with effect from October 01, 2006 the figures for the Quarter and Nine months period are not comparable with the figures of the Corresponding previous periods. With effect from October 01, 2006 the Company is operating in Single Segment only. Accordingly, Segmentwise Results are not being furnished. The previous periods' figures have been regrouped, wherever necessary. 4. Extra-Ordinary Items include - (a) Loss on Sale of ICC Division Rs 55.70 million ; (b) Profit on Settlement of Insurance Claims Rs 37.50 million.

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt Equity Ratio	5.27	4.61	6.05
Long Term Debt Equity Ratio	3.15	2.79	3.70
Current Ratio	1.15	1.15	1.11
TURNOVER RATIOS
Fixed Assets	1.42	1.58	1.32
Inventory	4.78	6.34	6.81
Debtors	4.93	6.02	6.10
Interest Cover Ratio	[0.61]	2.24	1.26
Operating Profit Margin (%)	1.12	8.32	7.96
Profit Before Interest and Tax Margin (%)	[1.89]	5.59	4.47
Cash Profit Margin (%)	[2.00]	4.75	4.41
Adjusted Net Profit Margin (%)	[5.01]	2.02	0.92
Return on Capital Employed (%)	[4.53]	14.27	9.49
Return on Net Worth (%)	[75.38]	29.41	14.01

STOCK PRICES

Face Value	Rs.10.00/-
High	Rs.95.00/-
Low	Rs.90.30/-

LOCAL AGENCY FURTHER INFORMATION

HISTORY

Modipon was established in 1965 as a joint venture between the Modi group and Rohm & Haas (R&H), Philadelphia, US. Indofil Chemicals was amalgamated with Modipon with effect from Jul.'82. Initially, the company manufactured only synthetic yarn (nylon and polyester filament yarn). Subsequent to the amalgamation, Modipon entered into the field of leather chemicals, agro-chemicals and other industrial chemicals, previously manufactured by Indofil.

Modipon has entered into a technical collaboration with NOY Engineering, Italy, for the latest technology in nylon and polyester filament yarns. 

It undertook an expansion programme of its fibres division which will increase the production capacity of synthetic filament yarn by 7500 tpa. The chemicals division is carrying on a debottlenecking and technological upgradation programme which will increase the capacity to manufacture mancozeb fungicide at its Thane plant while controlling effluent and pollution levels at the plant. 

The Fibres Division has become the first manufacturing unit in synthetic Filament Yarn industry to get ISO 9001:2000 certification during 2000-01.

OPERATIONS: 

During the year, the Sales of Nylon Filament Yarn (NFY) was Rs.1339.354 Millions as against Rs.1909.313 Millions in the Previous year. The Sales and Production Volume of NFY were 6,596 M.Tons and 6,215 M.Tons as against 9,360 M.Tons and 9,321 M.Tons respectively in the Previous year. The reduction in Sales and Production was mainly due to negative contribution in commodity products because of high Raw Material cost, high Power cost and dumping of NFY by some Asian Countries. Because of lower margin (due to dumping of NFY and high Raw Material cost) and higher working capital requirements (due to higher Raw Material cost and higher Power cost) the Division could not fully utilise its production capacity. Driven by high Crude prices, price of Caprolactam (Raw Material) remained at a high level. Also, due to the same reasons, the price of FIFO (Fuel) increased substantially due to which Captive Power cost (Rs./Kwh) has increased by 30%. 

The Union Budget 2006-07 did not bring much relief to the NFY Industry. The Government reduced Excise Duty on NFY from 16% to 8% without reducing the Excise Duty on Caprolactam which is today at 16%. Though, subsequently Excise Duty on Intermediates of Polyester Yarn (PTA & DMT) and Acrylic Yarn (Acrylonitrile) has been reduced from 16% to 8%, Excise Duty on Caprolactam was not reduced. This has resulted in accumulation of CENVAT in the NFY Industry, which is blocking precious working capital. Industry has made representations to the Government about it and it is expected that the anomaly of inverted Duty structure in Nylon will be corrected soon. 

Though the dumping of NFY from Asian Countries had reduced from the level of last year, it was still very significant during the year. Major success was achieved by the Industry in countering the dumping when the Government imposed provisional Anti-dumping Duty in March, 2006 and definitive Anti-dumping Duty in August, 2006 on China, Korea, Taiwan, Malaysia, Thailand and Indonesia. This has reduced the dumping of goods substantially in the past six months. During the year, the Sales of the Chemicals Division was Rs.3219.146 Millions as against Rs.3282.154 Millions during the Previous year. The Sales and Production Volume of the Chemicals for the year were 23,194 M.Tons/KL and 21,379 M.Tons/KL as against 26,066 M.Tons/KL and 26,365 M.Tons/KL respectively in the Previous year. 

EXPORTS: 

The Exports of the Fibres Division for the year was Rs.58.800 Millions as against Rs.33.200 Millions in the Previous year resulting in a growth of 77%. The Export strategy of the Division is to continue the Exports of only Value-added products. The Exports of the Chemicals Division for the year was Rs.509.800 Millions as against Rs.690.900 Millions in the Previous year. The Division has taken steps to register its Products in many more Countries and is expected that the major part of the improved capacity for the manufacture of Mancozeb will be exported in future. 

MODERNISATION: 

The Fibres Division continued its thrust on Conservation of Energy. Many successful measures have been taken at the Plant level leading to saving of Energy. 

The Chemicals Division is continually pursuing its efforts to achieve Technological Innovations as well as development/modifications of its Products for Customer satisfaction in the context of global competition for its Products in the Country and elsewhere in the World. Several process automation projects were completed optimising usage of Fuel, Electricity and Water. 

FIXED DEPOSITS: The Company has not made any default in repayment of Deposits or part thereof or any Interest thereupon (including for small Depositors within the meaning of Section 58AA of the Companies Act, 1956). The aggregate amount of Fixed Deposits as on 31st March, 2006 was Rs.79.314 Millions, out of which Rs.3.119 Millions relating to 21 Depositors remained Unclaimed as on that date. Out of this, Deposit of Rs.1.000 Millions relating to 2 Depositors has since been repaid/transferred to Investors Education and Protection Fund. 

RESTRUCTURING OF THE BUSINESS OF THE COMPANY: 

The Business Environment in the Country is becoming increasingly competitive and specialised. With the intent to provide focus on the two lines of the Business of the Company-(i) Fibres Business and (ii) Chemicals Business and to enhance Shareholders' Values, the Board of Directors has decided to segregate the existing Business into two separate Entities effective from 1st October, 2006. Keeping this in view, the Board of Directors approved the Restructuring Proposal envisaging the Sale of the Chemicals Division along with certain specified Assets ('ICC Division') to Indofil Organic Industries Limited (IOIL) subject to necessary approvals of the IFCI Limited and the Shareholders and such other approval(s), as may be necessary. 

A Notice together with the Explanatory Statement and Ballot Paper under Section 192A(2) of the Companies Act, 1956 read with Rule 4 of the Companies (Passing of a Resolution by Postal Ballot) Rules, 2001 is being sent separately to all the Shareholders seeking their consent under Section 293(1)(a) of the Companies Act, 1956 to sale and transfer or otherwise disposal of the 'ICC Division' as a going concern on a slump sale basis with effect from 1st October, 2006 at a Value of Rs.1246.6 Millions subject to the condition that part of consideration being applied for allotment and distribution by IOIL directly to the Equity Shareholders of the Company in the ratio of 3 Equity Shares of [OIL for every 2 Equity Shares held in the Company. 

MANAGEMENT DISCUSSION AND ANALYSIS: 

FIBRES DIVISION: 

Overview: 

Synthetic Fibres have continued their increasing share in the Textile fibre-mix. Government has continued its fiscal reforms in the Textile Industry though some disparities still remain to be addressed. Demand for Indian Textiles is increasing due to removal of WTO Textile Quota restrictions and restriction on Textile Exports by China to EU and USA. Nylon's consumption is growing rapidly in India, more particularly in Textile application and Engineering plastic applications. Modipon Fibres Company (MFC) is uniquely placed to face the challenge and grow.  

Industry Structure and Development: 

Nylon Filament Yarn (NFY) Industry (Textile end-use) has been experiencing high growth in India in recent years. However, growth in 2005-06 was moderate at 3.5%. There are total 6 operational Companies in the Industries including MFC. The major applications include Weaving, Knitting and Semi-Industrial (like Fish Net). Weaving is the most dominant sector (60% of total), followed by Knitting (20% of total). Knitting is experiencing higher growth and likely to take more of the pie in future. 

Dumping was a major threat to the Industry for the last few years. However, now with Provisional anti-dumping duty in March, 2006 and definitive anti-dumping duty in August, 2006 on China, Korea, Taiwan, Malaysia, Thailand and Indonesia, the threat no longer exists. 

The Union Budget 2006-07 has created an anomaly of inverted Duty structure in Nylon. While Excise Duty on NFY was reduced from 16% to 8%, Excise Duty on Caprolactam remains at 16%. Though this anomaly has been corrected for Polyester and Acrylic industry, correction is yet to be done in case of Nylon Industry. This is blocking working capital for the Nylon Industry (because of unutilized CENVAT) and thus puts this Industry at a disadvantage vis-a-vis Polyester and Acrylic industries. Also, in the Current Budget 4% SAD was imposed on Imports, which is cenvatable against Excise Duty. Since the Industry is having unutilised CENVAT, the Duty paid against SAD is also adding to the unutilised CENVAT For both the above cases Industry has represented to Government requesting them to reduce Excise Duty on Caprolactam from 16% to 8% and remove SAD or make it cenvatable against Sales Tax. 

Opportunities and Threats: 

The Industry expects that NFY (in Textile) will grow at 15% for the next 3 years based on the factors given below: 

Increasing use of Nylon in Blends with Cotton, Acrylic, Viscose and Lycra. 

Use of Nylon with Dyed Polyester where Nylon is Pot dyed in hank form. 

Increasing popularity of Swim wears and Sports wears. 

Increasing consumption of Nylon in Jan covering. 

Increasing consumption of Nylon in Intimate wears. 

Increasing use of Embroidery in Saree. 

Growth of Retailing and Branding. 

Inter-fibre competition (mainly with Polyester and PP) can dent the Nylon market unless Nylon Industry takes pro-active steps. There is strong need to promote Nylon in the value-chain as well as among the Consumers. High Raw Material and Fuel Cost is eroding the profitability of the Industry. 

Outlook: 

As discussed earlier, the Industry foresees a high growth of NFY at 15% per annum in the next 3 years. The NFY (Textile) Industry plans to expand in near future and can thus consolidate its position. Risks and Concerns Though it is easier for Caprolactam producers to pass on the rise in Benzene (its input) price to NFY producers, the same does not hold true for the latter. The way to counter this is by increasing new and value-added products in the product portfolio. MFC is well placed because of its strength in R&D. 

Non-imposition of VAT in U. P. has resulted into higher cost for the Division. This puts the Division at a disadvantage vis-a-vis its competitors who are located in Gujarat and Maharashtra where VAT has been imposed. 

CHEMICALS DIVISION: 

AGRO CHEMICALS: 

Industry Structure and Development: 

The Crop Protection is becoming more relevant as the available land is limited and food demand increasing with the explosion in population. To save the Crop produce from various losses caused by pests and diseases is of utmost importance. With the changing scenario i.e. new product development, release of new crop varieties is however making a shift in the Plant Protection measures. Cotton and Rice are now dominating and taking share of more than 50% in Agro Chemicals Industry. The Division is well equipped and has a commanding position of these crops. So while Industry struggles to maintain Sales, the Division is showing growth with right products in the range and the right strategies to promote them. Introduction of BT Cotton has totally shifted attention from the Insecticides market, however the Division's new launch (an Insect Growth Regulator) is making waves as it is effective against the new insect pest (Spodoptera) damaging the BT Cotton. 

Opportunities and Threats: 

The Indian Agro Chemicals Industry is dominated by the Multinationals and few Indian players. They have in their armory good range of specialty products and strength of field work. Other International Companies are also looking for partnership for the launch of new products in the Indian Market. The Division has attracted their attention with strength of the field force, distribution and the successful experience of launching highly specialised expensive products. During the past year, Industry Sales have actually dipped by 13% over the previous year, due to adverse climate, change pest scenario and change in cropping pattern. The Division was however one of the few who have maintained Sales. 

Outlook: 

The Division is consolidating its position by introducing newer products and their combinations to have a long lasting effect. Novel ways of promotion and special developmental project identified will not only ensure that the Division achieves its plans, but actually surpasses them once again. Keeping abreast with latest trends, the Division is also strengthening its presence in Organic and Bio Products. 

Export prospects are also bright. The Division is only one from India, who is defending generic fungicide in Europe, which should impact significantly its Exports during the coming year. 

SPECIALITY AND PERFORMANCE CHEMICALS: 

The Speciality and Performance Chemicals Division which caters to the requirements of Leather, Textile, Coatings, Construction and PVC Processing industries, witnessed a drop of 20% in quantity terms and a drop of 8% in value terms compared to the year 2004-05. This drop in terms of value was due to a continuous fall in the Raw Material prices which had to be passed on to the market. In the year 2005-06, the Division shed several under performing product portfolios and hence a drop in volume was intentionally taken to align the product range in terms of achieving sustainable growth volumes where margins are reasonable. 

The Leather Chemicals business witnessed stagnating conditions due to non availability of raw hides and lower competitiveness of the Indian Exporter in the World Market as a result of the increasing Raw Material prices. 

In the Textile sector, the capacity utilisation was low, resulting in a drop in volumes as well as Net Sales value. 

The Coatings business registered a decline in the Sales in both value and volume as they realigned Customer and Product groups. 

The PVC additives business witnessed sharp upsurge in demand and saw a growth of 65% in terms of volume and 85% in value terms. This was partly due to increased production of PVC processing plants and our competitiveness due to strengthening of US$. 

Industry Structure and Development: 

LEATHER: 

The Leather Industry is spread throughout India with concentration in Tamil Nadu, Kolkata, Kanpur and Jalandhar. European Leather Manufacturers are also planning to shift their base of production to India. 

Government of India has decided to focus sharply on the Export of Leather and Leather Goods which is expected to fetch some 4 Billion US$ by 2009/2010 compared to the Exports of 2 Billion US$ in the current year. 

TEXTILE: 

The Textile Industry which contributes some 8% to India's GDP and 30% of Export earnings is second largest in the World. The Industry is spread throughout India and is poised for rapid growth in the Woven as well as Non-woven sectors. 

COATINGS: 

The Indian Paint Industry is registering a steady growth of some 7% to 8% over the last few years. With the growth of Automobile, Housing, Infrastructure, the Industry is expected to retain the momentum. The Paint Industry is characterised by few Majors and a Horde of small scale units, numbering over 2000. 

PVC: 

The PVC Processing Industry is likely to sustain momentum with the thrust on Infrastructure, Telecommunication, need for Water management and growing packaging culture. The enhancement of PVC resins capacity in India will support the growth. 

CONSTRUCTION: 

The Construction sector which is estimated to be some Rs.2300000 Millions is growing at the rate of 7% to 8%. The focus on Infrastructures and Housing will ensure a handsome growth in the coming years. 

Business Outlook and Strategy: 

The outlook for Speciality Chemicals is promising despite the presence of a large number of players. The low per capita consumption in India for almost all products and the rising real incomes will be the drivers of growth for the Speciality Chemicals Industry. The strategy would be to continually identify the growth areas and provide comprehensive and timely solutions to anticipated needs and problems of Customers. The Divisions is also working to expand itself in its areas of core competency and emerge as a stronger player in the future. 

Opportunities: 

All the Strategic Business Units of Speciality and Performance Chemicals Division offer opportunities for Market expansion and new product introductions. The Leather sector is poised for rapid Exports, the dismantling of Quota Regime in Textiles, the increased stress on Infrastructure and Housing, and the growth of Packaging Industry will be key prime movers for the growth. 

Exports in particular will offer the biggest growth opportunity. Positioning the Division as solution providers will go a long way in exploiting the Market potential. 

The company is in trade terms with :

Ø A B C Corporation

Ø A I C Chemicals

Ø Agarwal Containers

Ø R K Corporation

Ø Purab Printers

Ø Asiatic Chemicals

Ø Atcon Engg.

Ø Namdev Silicates

Ø Laxmi Sales

Ø Nova Plast

Ø Versatile Chem

Ø S B Enterprises

The company's fixed assets of important value include goodwill, land (freehold & leasehold), factory buildings, non-factory buildings, plant & machinery, electric installations, furniture & fixtures, live stock, vehicles, office & other equipments, library and leased out assets.

March 1962 saw the genesis of Indofil Chemicals Company at Mumbai through a Joint Venture. Indofil's growth gained momentum just three years later with the commissioning of a manufacturing plant at Thane ( near Mumbai). With a present manpower compliment of over 375 well-trained, disciplined and motivated go-getting professionals, the future of Indofil is well secured.

The Company has state-of-the-art manufacturing facilities, recognized in-house R&D laboratory recognised by the Department of Science & Technology, a large domestic distribution base and a recognized Export House status conferred by DGFT.

The Company has already established it’s reputation in the field of agrochemicals, Construction, leather, textiles, paints, paper adhesives, petroleum industry across the world through new products, Enterprised-wide Resource Planning, customised packing and speedly delivery.

QUALITY STATEMENT

In pursuit of its mission to achieve consistent customer satisfaction, Indofil has established and implemented a Quality Management System as per ISO-9001 certified by Det Norske Veritas. Indofil is among the few companies in the Agrochemical Business Sector in India, to have been certified under ISO 9001.
As an extension of its pursuit of excellence, Indofil has embarked on establishing Environment Management System as per ISO-14001, which is presently being adopted.

INDOFIL VALUES

Customers
Anticipate and understand our customer including distributor needs, provide quality products and best possible service.

Innovation
Stimulate people to seek and seize opportunities to create new businesses and new approaches to existing business.

People
"Indofil fosters a work culture that allows full realization of an individual's potential and encourages team spirit, participation and innovation."

Social and Moral Responsibility

Indofil is committed to be a good corporate citizen as perceived by people in and around our working environment.

Indofil launches Grip-CC

Grip-CC is a plant growth retardant having chlormequat chloride as active ingredient.

Grip-CC is used in crops like grapes, cotton, chilli and other fruit vegetable crops for restricting the vegetative phase and increasing reproductive growth of plants.

MODIPON’s DIVISIONS :

MODIPON FIBRES COMPANY (called as the FIBRES DIVISION)

An ISO 9001 : 2000 Company

Manufacturing :
 -Synthetic Filament Yarns (Nylon and Polyester)

Works and Office :
Hapur Road, Modinagar, District : Ghaziabad (U. P.), PIN 201 204

Tel. : 91-1232-242201 to 242209

Fax : 91-1232-242084

Website : http://www.modipon.com

INDOFIL CHEMICALS COMPANY (called as the CHEMICALS DIVISION)

An ISO 9001 & ISO 14001 Company

Manufacturing :
    -Agricultural Chemicals
    -Speciality & Performance Chemicals
    -Construction Chemicals

Works :
Off S. V. Road, Azad Nagar, Manpada, Sandoz Baug P.O., Thane (West), Thane 400 607, Maharashtra
Tel. : 91-22-55999100-01

Fax : 91-22-25898357/9

Office :
Nirlon House, 3rd Floor, Dr. Annie Besant Road, Worli, Mumbai 400 030

Tel. : 91-22-24960000/56637373

Fax : 91-22-24935667

Website : http://www.indofilcc.com

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 records 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.44.17
UK Pound	1	Rs.85.58
Euro	1	Rs.58.67

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	5
--CREDIT LINES	1~10	5
--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	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		48

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 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