MIRA INFORM REPORT

Report Date :

19.05.2007

IDENTIFICATION DETAILS

Name :	K H LEATHER INDUSTRIES PRIVATE LIMITED
Registered Office :	829/1, EVR Periyar High Road, Kilpauk, Chennai – 600 010, Tamilnadu.
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	06.08.1976
Com. Reg. No.:	18-7182
CIN No.: [Company Identification No.]	U19119TN1976PTC007182
TAN No.: [Tax Deduction & Collection Account No.]	CHEK00528D
Legal Form :	Private limited liability company
Line of Business :	Manufacturer of Footwear, Shoe Uppers and Wallets.

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 1210000
Status :	Satisfactory
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established and reputed company having satisfactory track records. Directors are reported as experienced and respectable businessmen. Trade relations are reported as fair. Business is active. Payments are usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered/ Corporate Office :	829/1, EVR Periyar High Road, Kilpauk, Chennai – 600 010, Tamilnadu, INDIA.
Tel. No.:	91-44-26412432 / 26412708 / 2433
Fax No.:	91-44-26423237/26427528
E-Mail :	khgroup@vsnl.com khizaria@md2.vsnl.net.in ahgroup@vsnl.com
Area :	Owned
Factory 1 :	18, Krishnagiri Bypass Road, Ranipet, Vellore District - 632 401, Tamilnadu, India
Tel. No.:	91-4172-225945 / 225946 / 225947 / 948

DIRECTORS

Name :	Mr. M. Akber Hussain
Designation :	Director
Address :	13, Rutland Gate, IV Street, Kilpauk, Chennai - 600 010, Tamilnadu
Date of Birth/Age :	13.10.1970
Date of Appointment :	27.10.1988
Name :	Mr. M. Akther Hussain
Designation :	Director
Address :	13, Rutland Gate, IV Street, Kilpauk, Chennai - 600 010, Tamilnadu
Date of Birth/Age :	03.03.1973
Date of Appointment :	15.03.1991
Name :	Mr. Mohamed Hashim
Designation :	Director
Name :	Mr. Abdul Halim
Designation :	Director
Name :	Mr. G Kaleemulla
Designation :	Director
Name :	Mr. A Mohmed Rafeeq
Designation :	Director

KEY EXECUTIVES

Name :	Mr. G. Sreenivasa Rao
Designation :	Company Secretary
Address :	Flat 1C, Oakland - Front Block, 17, Maloney Road, T. Nagar, Chennai - 600 017, Tamilnadu
Tel No. :	91-44-24346890 / 24333665
Mobile :	91-9840426264
Email :	gsr2020@rediffmail.com

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares
Mr. M. Akbar Hussain	11832
Mr. M. Akther Hussain	11383
Mrs. A. Mohsina Begum	1750

All the shares are held by directors or their relatives.

BUSINESS DETAILS

Line of Business :

Manufacturer of Footwear, Shoe Uppers and Wallets.

Products :

Generic Names of the Principal Products of the company are :

Item Code No.	Product Description
64035101	Leather Shoes
64051000	Leather Shoe Uppers

Brand Names :

"EXTIME"

Imports :

Products :

Raw materials, components & spares and capital goods

Countries :

Japan, Germany, U.K., U.S.A., France and Singapore, Europe and Far East

Terms :

Selling :

--

Purchasing :

L/C, D/A & D/P terms

PRODUCTION STATUS

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Footwear	Pairs	400000	200000	631859
Shoe Uppers	Pairs	400000	450000	--

GENERAL INFORMATION

No. of Employees :	1500
Bankers :	v Indian Bank, Park Town Branch, Chennai - 600 003, Tamilnadu v State Bank of India, International Leather Division, 177/1, Poonawala High Road, Kilpauk, Chennai – 600 010, Tamilnadu.

Banking Relations :	Satisfactory
Auditors :
Name :	S. Dhanyakumar and Company Chartered Accountants
Address :	Old No.3, New No.5, South Boag Road, Thyagaraya Nagar, Chennai-600017, Tamilnadu.
Associates/Subsidiaries :	v K. H. Arind Limited v Solar Soles Private Limited v Sara Leather Industries v Sara Shoes v Khizaria Leathers

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
50000	Equity Shares	Rs.100/- each	Rs.5.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
24965	Equity Shares	Rs.100/- each	Rs.2.496 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		2.496	2.496	2.496
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		301.825	267.752	266.823
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		304.321	270.248	269.319
LOAN FUNDS
1] Secured Loans		0.000	0.000	0.000
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		0.000	0.000	0.000
DEFERRED TAX LIABILITIES		0.267	0.267	0.267
TOTAL		304.588	270.515	269.586
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		100.400	96.735	81.366
Capital work-in-progress		0.000	0.000	0.000
INVESTMENT		8.495	12.733	12.733
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	30.840	48.032	65.066
	Sundry Debtors	264.969	159.613	163.612
	Cash & Bank Balances	2.732	24.113	26.076
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	40.188	14.539	38.093
Total Current Assets		338.729	246.297	292.847
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	140.761	83.250	115.360
	Provisions	2.275	2.000	2.000
Total Current Liabilities		143.036	85.250	117.360
Net Current Assets		195.693	161.047	175.487
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		304.588	270.515	269.586

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2006	31.03.2005	31.03.2004
Sales Turnover		628.805	607.220	492.362
Other Income		0.000	23.909	3.192
Total Income		628.805	631.129	524.287
Profit/(Loss) Before Tax		34.073	0.928	16.145
Provision for Taxation		0.275	0.000	2.000
Profit/(Loss) After Tax		33.798	0.928	14.145
Total Earnings			586.038	477.910
Imports :
	Raw Materials		189.552	264.534
	Stores & Spares	145.686	1.399	2.928
	Capital Goods		6.971	25.722
	Others		0.000	5.866
Total Imports		145.686	197.922	299.050
Export Value :		613.733	586.038	-----
Expenditures :
	Manufacturing Expenses		20.079	34.068
	Administrative Expenses		8.616	5.630
	Raw Material Consumed	594.732	535.225	359.541
	Increase/(Decrease) in Finished Goods		(1.406)	1.749
	Salaries, Wages, Bonus, etc.		13.314	8.715
	Depreciation & Amortization		8.665	15.116
	Other Expenditure		45.708	83.321
Total Expenditure		594.732	630.201	508.141

KEY RATIOS

PARTICULARS		31.03.2006	31.03.2005	31.03.2004
PAT / Total Income	(%)	5.37	0.15	2.70
Net Profit Margin (PBT/Sales)	(%)	5.41	0.15	3.08
Return on Total Assets (PBT/Total Assets}	(%)	7.75	0.27	4.31
Return on Investment (ROI) (PBT/Networth)		0.11	0.00	0.98
Debt Equity Ratio (Total Liability/Networth)		0.47	0.31	0.43
Current Ratio (Current Asset/Current Liability)		2.37	2.89	2.49

LOCAL AGENCY FURTHER INFORMATION

Form 8 Particular for creation or modification of charges

Name of the company	K H LEATHER INDUSTRIES PRIVATE LIMITED
Presented By	THIRU A HABEEBUR REHMAN, DIRECTOR
1) Date and description of instrument creating the change	Mortgaged deed dated 29.01.1986 executed by the company in favour of State Industries Promotion Corporation of Tamilnadu Limited (SIPCOT) for the term loan of Rs.0.100 millions our of the term loan of Rs.7.200 millions sanctioned by SIPCOT.
2) Amount secured by the charge/amount owing on the securities of charge	Term loan of Rs.0.100 millions from the State Industries Promotion Corporation of Tamilnadu Limited (SIPCOT), Chennai-600006
3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given	All and singular the land, buildings and premises situated at Pingi Village Ranipet, Wallajah Taluk, North Arcot District, Tamilnadu, the particulars whereof are described in first schedule all and singular the machinery (whether attached to the said premises or not) Plant, stocks, fixtures, utensils, articles and things now being or which shall at any time hereafter during the continuance of this security be in or upon or belonging to the said premises or used in connection therewith particulars thereof are described in the second Schedule, and which belong to the company or are capable of being transferred by the company but excluding stock in process, finished goods and raw materials intended for manufacturing purposed and all the estate right, title, interest claim and demand of the company into or any of them or any part thereof.
4) Gist of the terms and conditions and extent and operation of the charge.	Convened by the company to the SIPCOT to repay to SIPCOT the said sum of Term Loan of Rs.0.100 millions in 10 half yearly installments of Rs.0.010 millions each. The rate of interest will be 3.5% over the IDBI rates for refinance with a minimum of 14%, which shall be the rate for prompt payment of commitment charges and for prompt repayment of the installments of the principle amount and punctual payment of interest, payable quarterly on the last day of quarter of each year per annum will be levied, over an above the normal rate on the entire outstanding amounts and also to pay all costs, charges and expenses and agreeing to comply with other conditions, SIPCOT has a right to recall the entire loan and/or principal or for breach of covenants in the mortgage. Under the aforesaid mortgage, SIPCOT has a right to take possession and sell the mortgaged property without the intervention of the court, appoint a receiver in respect thereof and has also all right to transfer the mortgaged premises on lease or sale and to take over the management of the company. The company is liable to pay all costs, expenses, charges as mentioned in the mortgaged deed and the same will be charged on the mortgaged assets mentioned above.
5) Name and Address and description of the person entitled to the charge.	State Industries Promotion Corporation of Tamilnadu Limited (SIPCOT) No.51 and 52, Greams Road, Thousand Lights Chennai-600006
6) Date and brief description of instrument modifying the charge	Inter Sa pari passu arrangement dated 24.02.1986 among State Industries Promotion Corporation of Tamilnadu Limited and Tamilnadu Industrial Investment Corporation Limited (TIIC).
7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.	Inter Sa pari passu arrangement dated 24.02.1986 among State Industries Promotion Corporation of Tamilnadu Limited and Tamilnadu Industrial Investment Corporation Limited (TIIC) wherein the charge in favour of SIPCOT under English mortgage dated 29.01.1986 for the term loan of Rs.7.200 millions and the charge in favour of the SIPCOT under the joint equitable mortgage and hypothecation dated 28.12.1978 and 29.01.1986 Rs.2.200 millions and additional term loan of Rs.7.100 millions out of the term loan of Rs.7.200 millions, charging the movable and immovable properties of the TIIC under joint equitable mortgage hypothecation dated 28.12.1978 and hypothecation dated 28.12.1978 and 29.01.1986 for the term loan of Rs.2.200 millions charging the movable and immovable properties of the company shall rank pari passu without priority of one over an the other, irrespective of their dates of creatin of the charges.

Name of the company	K H LEATHER INDUSTRIES PRIVATE LIMITED
Presented By	Mr. Abdul Halim, Managing Director
1) Date and description of instrument creating the change	An agreement for bills purchased engrossed on 25.10.1983 on non judicial stamp paper of Rs.5/- between the company and Indian Bank, Chennai-3 for foreign bills purchased for Rs.4.500 millions.
2) Amount secured by the charge/amount owing on the securities of charge	Foreign bills purchased and negotiation limit of Rs.4.500 millions.
3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given	The company guarantees to the banks all bills railway receipts Bill of lading and documents of title to goods etc.
4) Gist of the terms and conditions and extent and operation of the charge.	The company guarantees to the Indian Bank, that the usance bills that may be negotiated and or discounted and purchased by Bank will be promptly padi and expenses duet there on by the drawee thereof tend default in payment the company irrevocable and unconditionally agrees and undertake to make goods to the bank on demand.
5) Name and Address and description of the person entitled to the charge.	Indian Bank, Park Town Branch, Chennai-600003.
6) Date and brief description of instrument modifying the charge	N.A.
7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.	N.A.

BUSINESS

The company is engaged in manufacturing and exporting of men's and women's leather shoes, leather shoe uppers and leather gift articles such as casual shoes, dress shoes and shoe uppers.

Company’s fixed assets include Land, Building (Old and New), Plant and Machinery, Vehicles and Furniture and Fittings.

The company has been registered as 100% EOU on 10.10.2003.

Contingent Liabilities :

Particulars	2004-05	2003-04
Guarantees given by Bank	2.000	2.000

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.41.29
UK Pound	1	Rs.82.30
Euro	1	Rs.56.20

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	7
--PROFITABILIRY	1~10	4
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	6
--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	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		52

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