MIRA INFORM REPORT

Report Date :

13.08.2008

IDENTIFICATION DETAILS

Name :	V G PAPER AND BOARDS LIMITED
Registered Office :	Nithya Nilayam, 132 Palani Road, Venkatesa Mills Post, Udamalpet – 642128, Tamilnadu
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	19.09.1986
Com. Reg. No.:	18-1845
CIN No.: [Company Identification No.]	U02102TZ1986PLC001845
TAN No.: [Tax Deduction & Collection Account No.]	CMBV03135G
Legal Form :	A closely held public limited liability company
Line of Business :	Manufacturer of Printing and Writing Paper

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 510000
Status :	Satisfactory
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established and reputed company having satisfactory track. 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 Office :	Nithya Nilayam, 132 Palani Road, Venkatesa Mills Post, Udamalpet – 642128, Tamilnadu, India
Tel. No.:	91-4252-252286
Fax No.:	91-4252-252288
E-Mail :	cbt_asvpm@sancharnet.in , gmf@rlpmills.com
Website :	http://www.vgpb.com
Factory :	Palani Road, Swaminathanpuram, Madhukulam, Coimbatore-642113, Tamilnadu, India
Tel. No.:	91-4252-252286/ 252287/ 252386/ 252344

DIRECTORS

Name :	Dr. Venkatasubba Naidu Gengusamy
Designation :	Chairman
Address :	Door No. 133, Venkata Nilayam, Venkatesa Mills Post, Udumalpet – 642128, Tamilnadu, India
Date of Birth/Age :	04.10.1931
Date of Appointment :	19.09.1986
Name :	Ms. Rajalakshmi Govindaswamy Naidu
Designation :	Director
Address :	Door No. 133, Venkata Nilayam, Venkatesa Mills Post, Udumalpet – 642128, Tamilnadu, India
Date of Birth/Age :	05.11.1934
Date of Appointment :	19.09.1986
Name :	Mr. Raveendran Gengusamy
Designation :	Director
Address :	Door No. 133, Venkata Nilayam, Venkatesa Mills Post, Udumalpet – 642128, Tamilnadu, India
Date of Birth/Age :	17.01.1959
Date of Appointment :	19.09.1986
Name :	Ms. Nandini Raveendran Gengusamy
Designation :	Director
Address :	Door No. 133, Venkata Nilayam, Venkatesa Mills Post, Udumalpet – 642128, Tamilnadu, India
Date of Birth/Age :	30.04.1964
Date of Appointment :	19.09.1986
Name :	Mr. A. Nallamuthu
Designation :	Director
Address :	12, Kalpana Road, Udamalpet, Coimbatore– 612126, Tamilnadu, India
Date of Birth/Age :	20.06.1935
Date of Appointment :	30.09.1993
Name :	Mr. T. Devadas
Designation :	Director
Address :	Vallakundapuram, Ammapati Post, Udumalpet, Taluk
Date of Birth/Age :	13.03.1955
Date of Appointment :	13.02.2001
Name :	Mr. D. Senthilkumar
Designation :	Director
Address :	2/126, Bunglow Thottam, Pethappampatta Post, Udumalpet Taluk
Date of Birth/Age :	03.02.1969
Date of Appointment :	21.06.2002
Name :	Mr. G R Vishnuvardhan
Designation :	Director
Address :	Venkata Nilayam, Venkatesa Mills Post, Udumalpet-642128, Tamilnadu, India
Date of Birth/Age :	16.11.1983
Date of Appointment :	18.01.2007
Other Directorship:	Rajalakshmi Paper Mills Limited U21012TZ1978PLC000814 Inter Yarn Spin India Limited U17111TZ2005PLC011962

KEY EXECUTIVES

Name :	Mr. P. Ratnasapapathy
Designation :	Financial Controller
Email :	fc@rlpmills.com
Name :	Mr. Kadhar Babu
Designation :	Vice - President (Tech)
Email :	vp@vgpb.com

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 30.12.2004

Names of Shareholders	No. of Shares
Amaravathi Sri Venkatesa Paper Mills Limited	500000
P. Chandrasekaran	16500
Anilkumar Agarwal	2600
Biju Thomas Mathew	2000
T. Esther	2000
V. Genguswamy	687500
M. Jabamani	2000
T. Johnson	1900
Kailash Prasad Agarwal	2800
G. Prasadarao	20000
Rajalakshmi Paper Mills Limited	250000
G. Rajalakshmi	110000
G Raveendran	1232000
C. G. Ramakrishnan	4000
G. Raveendran	1232000
Sunilkumar Agarwal	2600
C. Thirumalaisamy	16500
Vishnuvardhan Paper Mills Private Limited	250000
V. Thirumulanathan	125000
V. Rajeswari	125000

Equity Share Breakup (Percentage of Total Equity)

As on 30.09.2007

Category	Percentage of Holding
Bodies corporate	27.92
Directors or relatives of directors	61.47
Other top fifty shareholders	10.61
Total	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer of Printing and Writing Paper

Products :

ITC Code No	Product Description
4802-6009	Printing and Writing Paper
4801-0009	News Print
4804-4200	M. G. Kraft Paper

PRODUCTION STATUS

Particulars	Unit	Installed Capacity
Paper	M.T.		18500

GENERAL INFORMATION

No. of Employees :	About 500
Bankers :	ICICI Bank Limited, Cheran Plaza, 1090, Trichy Road, Coimbatore – 641018, Tamilnadu, India ICICI Bank Limited, Landmark Race Cource Circle, Alkapuri, Baroda-390015, Gujarat, India

Banking Relations :	Satisfactory
Auditors :
Name :	S. V. Visvanathan and Associates Chartered Accountants
Address :	No. 6, M. S. S. Memorial Building, D. B. Road, R. S. Puram, Coimbatore – 641002, Tamilnadu, India
Associates/Subsidiaries :	Ø Amaravathi Sri Venkatesa Paper Mills Limited Ø Rajalakshmi Paper Mills Limited Ø Vishnuvardhan Paper Mills Private Limited Ø The Sri Venkatesa Mills Limited Ø V. G. Textiles Private Limited Ø Amaravathi Investments Limited Ø Nithya Finance Limited

CAPITAL STRUCTURE

As on 30.08.2007

Authorised Capital :

No. of Shares	Type	Value	Amount
3750000	Equity Shares	Rs. 10/- each	Rs. 37.500 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
3581800	Equity Shares	Rs. 10/- each	Rs. 35.818 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2007	31.03.2006	31.03.2005
SHAREHOLDERS FUNDS
1] Share Capital		35.818	35.818	35.818
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		67.236	88.807	56.311
4] Accumulated Losses		0.000	0.000	0.000
NETWORTH		103.054	124.625	92.129
LOAN FUNDS
1] Secured Loans		32.160	40.314	42.550
2] Unsecured Loans		114.616	118.768	138.231
TOTAL BORROWING		146.776	159.082	180.781
DEFERRED TAX LIABILITIES		58.783	0.000	0.000
TOTAL		308.613	283.707	272.910
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		256.067	244.607	258.986
Capital work-in-progress		0.000	0.000	0.000
INVESTMENT		0.605	0.605	0.605
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	86.447	44.045	69.455
	Sundry Debtors	116.287	69.258	62.221
	Cash & Bank Balances	23.840	26.120	21.861
	Other Current Assets	0.428	0.068	1.786
	Loans & Advances	78.525	69.004	19.499
Total Current Assets		305.527	208.495	174.822
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	183.906	131.948	150.307
	Provisions	69.680	38.641	11.883
Total Current Liabilities		253.586	170.589	162.190
Net Current Assets		51.941	37.906	12.632
MISCELLANEOUS EXPENSES		0.000	0.589	0.687
TOTAL		308.613	283.707	272.910

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		962.594	717.516	299.398
Other Income		6.939	13.188	6.211
Total Income		969.533	730.704	305.609
Profit/(Loss) Before Tax		72.411	59.824	12.537
Provision for Taxation		28.098	28.195	9.800
Profit/(Loss) After Tax		44.313	31.629	2.737
Imports :
	Raw Materials	NA	NA	81.381
	Stores & Spares	NA	NA	1.823
	Capital Goods	NA	NA	0.000
Total Imports		NA	NA	83.204
Expenditures :
	Raw Material Consumed	542.687	390.504	161.085
	Consumption of stores and spare parts	74.974	0.000	0.000
	Increase or decrease in storck	[14.912]	0.000	0.000
	Store Consumed	0.000	0.000	0.000
	Salaries, Wages, Bonus, etc.	14.177	9.314	4.842
	Managerial Remuneration	1.674	1.349	0.673
	Payment to Auditors	0.063	0.074	0.050
	Interest	25.945	33.591	26.895
	Insurance Expenses	1.629	1.439	0.651
	Power & Fuel	109.674	77.244	35.091
	Depreciation	20.779	0.000	0.000
	Other Expenditure	120.432	157.365	63.785
Total Expenditure		897.122	670.880	293.072

KEY RATIOS

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
PAT / Total Income	(%)	4.57	4.33	0.90
Net Profit Margin (PBT/Sales)	(%)	7.52	8.34	4.19
Return on Total Assets (PBT/Total Assets}	(%)	12.89	13.20	2.89
Return on Investment (ROI) (PBT/Networth)		0.70	0.48	0.14
Debt Equity Ratio (Total Liability/Networth)		3.88	2.65	3.72
Current Ratio (Current Asset/Current Liability)		1.20	1.22	1.08

LOCAL AGENCY FURTHER INFORMATION

Fixed Assets

Ø Land

Ø Buildings

Ø Machinery

Ø Electric Machinery

Ø Wind Mill

Ø Furniture and Office Equipments

Ø Motor Vehicles

Contingent Liabilities no provided for Bills Discounted with Bank : Rs. 18.831 Millions

Bankers Charges Report as per Registry

Name of the company	V G PAPER AND BOARDS LIMITED
Presented By	V G PAPER AND BOARDS LIMITED
Date and description of instrument creating the change	Deed of Hypothecation dated the 09.12.2004 executed by V G PAPER AND BOARDS LIMITED in favour of ICICI Bank Limited
Amount secured by the charge/amount owing on the securities of charge	Working capital facilities not exceeding Rs. 76.000 Millions extended / granted to the Borrower
Gist of the terms and conditions and extent and operation of the charge.	Covenant by the Borrower to comply / to ensure compliance with all the terms and conditions set out in the Master facility agreement dated 09.12.2004 entered between the borrower and ICICI as modified amended from time to time The borrower shall pay / repay all amounts in respect of the facilities and pay interest and all others monies in the manner set out in the agreement and the other Transaction Documents The assets were thereby hypothecated inter alia to ICICI as and by way of exclusive as specified in annexure as security for and be charged with the repayment of the facilities all interest and other monies payable by the borrower to ICICI as specified in the agreement and other transaction documents. The borrower to keep the assets in marketable and good conditions and also insured as provided in the deed of hypothecation / the agreement. Power of entry, power to take charge and / or possession of, seize, recover, receive, appoint receivers of and remove and / or sale by auction or private contract, dispatch for realization or otherwise dispose of or deal with all or any part of the assets etc. as provided in deed of hypothecation. All other terms and conditions as contained in the deed of hypothecation.
Name and Address and description of the person entitled to the charge.	ICICI Bank Limited Cheran Plaza 1090, Trichy Road, Coimbatore – 641018
Date and brief description of instrument modifying the charge	No instrument was executed but on the 09.12.2004 a mortgage was created by the company in favour of ICICI by deposit of title deeds with ICICI in respect of company’s immovable properties situate at 1. Tirupur in Udumalpet Taluk, 2. Pushpathur Village, Palani Taluk, 3. Shankaramanallur Udumalpet Taluk and Ramakulam Ayacut, West Komaralingam Village, Tamilnadu in order to create a security thereon as and by way of mortgage by deposit of title deeds pursuant to the resolution passed by the committee of directors of the company on 29.11.2004.
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.	The facility together with interest thereon at the respective agreed rates, additional interest, liquidated damages, commitments charges, premia on prepayment, costs, charges and other expenses payable by the company to ICICI in respect thereof secured under the abovementioned deed of hypothecation is also now secured inter alia, by the said mortgage by deposit of title deeds in respect of the company’s immovable properties situate at 1. Tirupur in Udumalpet Taluk, 2. Pushpathur Village, Palani Taluk, 3. Shankaramanallur Udumalpet Taluk and Ramakulam Ayacut, West Komaralingam Village, Tamilnadu together with all buildings and structures thereon and all plant and machinery aattached to earth or permanently fastened anything attached to the earth.

This form is for	Modification of charge
Charge identification number of the modified	90004521
Corporate identity number of the company	U02102TZ1986PLC001845
Name of the company	V G PAPER AND BOARDS LIMITED
Address of the registered office or of the principal place of business in India of the company	Nithya Nilayam, 132 Palani Road, Venkatesa Mills Post, Udamalpet – 642128, Tamilnadu, India
Type of charge	Immovable Property
Particular of charge holder	ICICI Bank Limited, Landmark Race Cource Circle, Alkapuri, Baroda-390015, Gujarat, India
Nature of description of the instrument creating or modifying the charge	Declaration in the matter of mortgage by deposit of title deeds in respect of immovable properties.
Date of instrument Creating the charge	18.05.2007
Amount secured by the charge	Rs. 145.000 Millions
Brief particulars of the principal terms an conditions and extent and operation of the charge	Rate of Interest I) Cash Credit : IBAR + CC Premia – 2.50% + applicable Interest tax/ statutory levy if any. II) Inland Bills Purchased / Discounted : IBAR +Term Premia – 1.80% + applicable Interest tax/ statutory levy if any. Terms of Repayment Repayable on Demand Margin Inventory – Uniform Margin of 25% against all components of inventory Book Debts – Cover Period not exceeding 90 days margin – 25% Extent and Operation of the charge First Charge on all the company’s immovable and movable properties both present and future.
Short particulars of the property charged	Factory land and building situated at Sankarmanallur, South Village Udumalpet Taluk, Pushpathur Village, Swaminathpuram, Palani Taluk, Land at Ramakulam Ayacut West Komaralingam Village, Udumalpet Taluk. Details as per Declaration attached,
Date of latest modification prior to the present modification	12.05.2006
Particulars of the present modification	Enhancement of total working capital facilities form Rs. 110.000 Millions to Rs. 145.000 Millions

AS PER WEBSITE

Profile:

The biggest company of The Sri Venkatesa Group. Having a turnover in excess of 1.2-Billion INR. It has production facility in two places. Unit-1, at Madathukulam, Tamilnadu makes quality Newsprint, first started in 1989, now this unit supplies Super-Deluxe 47 & 50GSM, newsprint to all leading South Indian Dailies. Its Unit-2, started in 1999, an import from Sweden is a state of the art machine. This unit too manufactures Newsprint paper, primarily 48gsm, and could boast of nearly all Indian Regional Vernacular Newspaper as its customers. The support of its Valued customers, suppliers, bankers, staffs and the workforce have made this company a very successful one with a monthly production of 4500Metric Tonnes.

The two units of V.G.Papers have their windmills and give employment to a workforce of 550-employees, thus enabling rural employment. Also the company now is planning aggressive but calculated growth and aims to be one of the top producers of Newsprint in India. A little bit of exports is also being made, but predominantly it caters to the needs of the domestic newspapers. Currently V.G.Papers is the 4th largest producer of Newsprint in the country.

Infrastructure

Unit-I

1. High Consistency pulper
2. Imported de-inking plant
3. PM1, 2.4meter deckle, 320.MPM, 45TPD
4. Refiners, screens
5. Rewinder and cutters
6. Low Pressure Thermax Boiler
7. Klienweifer Calender

Unit-II

1. High Consistency Voith Pulper
2. Voith De-Inking Plant
3. Krima Cellwood Hot Dispersion plant
4. Dorr Oliver thickeners
5. Roningen petter water recycling plant
6. Low pressure CVL boiler
7. Albia centri cleaning system
8. KMW 4.8meter deckle, 340MPM, Combination machione, 105.TPD
9. Jagenberg Combi Blade coating system
10. Measurex Quality Control System
11. Edward Kusters Vario Calender
12. Duplex cutter
13. Jagenberg Rewinder

Products being manufactured

Variety	GSM RANGE
Cream wave	47-70
White Printing	47-70
Snow white wave	47-70
Computer stationary	60-80
Economy varieties of the above	47-70
Standard Newsprint Special	48-52
Standard Newsprint Super Deluxe	48-52
Standard Newsprint Deluxe	48-52

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.42.40
UK Pound	1	Rs.80.54
Euro	1	Rs.62.96

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	7
--PROFITABILIRY	1~10	5
--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		54

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