MIRA INFORM REPORT

Report Date :

08.12.2008

IDENTIFICATION DETAILS

Name :	SHAKTHI KNITTING LIMITED
Registered Office :	No.1, 3^rd Street, padmanabha Nagar, Adyar, Chennai – 600 020, Tamil Nadu
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	06.05.1991
Com. Reg. No.:	08-20736
CIN No.: [Company Identification No.]	U17301TN1991PLC020736
TAN No.: [Tax Deduction & Collection Account No.]	CHES03313C
Legal Form :	A closely held Public Limited Liability Company
Line of Business :	Manufacturer and Exporter of Readymade Knitted Garments

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 1100000
Status :	Satisfactory
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well – established and reputed company having satisfactory track. Trade relations are fair. Business is active. Payments are reported as usually made as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

INFORMATION PARTED BY

Name :	Mr. Guru Prasad
Designation :	Finance Manager
Date :	06.12.2008

LOCATIONS

Registered Office :	No.1, 3^rd Street, padmanabha Nagar, Adyar, Chennai – 600 020, Tamil Nadu, India
Tel. No.:	91-421-2214464
Fax No.:	91-421-2210764
Email :	guru@shakthiknitting.com
Website :	www.shakthiknitting.com
Location :	Owned
E-Mail :	shakthi@shakthiknitting.com
Websites :	www.shakthiknitting.com
Factory :	Shakthi Centre, Nochipalayam Road, Veerapandi (Po), Tirupur - 641 605, Tamil Nadu, India.
Tel. No.:	91- 421- 5511555
E-Mail :	shakthi@shakthiknitting.com

DIRECTORS

Name :	Mr. S K Vivekananda
Designation :	Director
Name :	Mr. P R Sundaravadivelu
Designation :	Chairman
Name :	Mr. P Vijaya Kumar
Designation :	Director
Name :	Mr. S Vasanth Kumar
Designation :	Joint Managing Director

BUSINESS DETAILS

Line of Business :	Manufacturer and Exporter of Readymade Knitted Garments
Exports :
Countries :	Europe USA
Imports :
Products :	Raw Material
Countries :	China Indonesia Hong Kong
Terms :
Selling :	L/C, Cash and Credit
Purchasing :	L/C, Cash and Credit

GENERAL INFORMATION

Customers :

• Wholesalers

No. of Employees :

2500 (in office) (Contract Workers – 300 )

Bankers :

• State bank of Mysore, Tirupur
• ING Vysya
• IDBI Bank

Facilities :

Secured Loans	31.03.2007 (Rs. In Millions)
Long Term Loan from Bank	262.408
Short Term Loan from banks	278.398
Short Term Loan from others	133.623
Total	674.429

Unsecured Loans	31.03.2007 (Rs. In Millions)
Short Term from Director from others	1.500
From Others	100.000
Total	101.500

Banking Relations :

Satisfactory

Auditors :

Name :

Sri Company

Chartered Accountants

Address :

No. 27 Ramakrishna Street, North Usman Road, T. Nagar, Chennai – 600 017, Tamil Nadu, India

Division :

Colors Burg

Address :

Plot No.18, Sipcot Indus Growth Centre, 5^th Cross Perundurai.

Line of Business :

Manufacturer and Exporter of Readymade Knitted Garments.

CAPITAL STRUCTURE

(As on 31.03.2007):-

Authorised Capital :

No. of Shares	Type	Value	Amount
600000	Equity Shares	Rs. 100/- each	Rs. 60.000 millions
400000	Preference Shares	Rs. 100/- each	Rs. 40.000 millions
		Total	Rs.100.000 millions

Issued Capital :

No. of Shares	Type	Value	Amount
210000	Equity Shares	Rs. 100/- each	Rs. 21.000 millions
300000	Preference Shares	Rs. 100/- each	Rs. 30.000 millions
		Total	Rs.51.000 millions

Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
210000	Equity Shares	Rs. 100/- each	Rs. 21.000 millions
185000	Preference shares	Rs. 100/- each	Rs.18.500 millions
		Total	Rs.39.500 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

Particulars	31.03.2008
Sales Turnover	1300.000

Expected Sales (2008-09) : Rs. 1350.000 Millions

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2007	31.03.2006	31.03.2005
SHAREHOLDERS FUNDS
1] Share Capital		39.500	41.000	51.000
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		171.408	156.793	184.100
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		210.908	197.793	235.100
LOAN FUNDS
1] Secured Loans		674.429	757.700	712.300
2] Unsecured Loans		101.500	21.582	25.700
TOTAL BORROWING		775.929	779.282	738.000
DEFERRED TAX LIABILITIES		60.578	59.792	0.000
TOTAL		1047.415	1036.867	973.100
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		578.229	608.705	496.300
Capital work-in-progress		0.000	0.000	0.000
INVESTMENT		15.721	15.721	0.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	84.702	231.747	387.500
	Sundry Debtors	503.171	256.515	146.300
	Cash & Bank Balances	16.120	9.130	26.400
	Other Current Assets	34.098	45.238	0.000
	Loans & Advances	42.423	10.449	41.400
Total Current Assets		680.514	553.079	601.600
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	227.049	140.638	116.800
	Provisions	0.000	0.000	8.000
Total Current Liabilities		227.049	140.638	124.800
Net Current Assets		453.465	412.441	476.800
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		1047.415	1036.867	973.100

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		1282.740	1049.690	887.800
Other Income		0.000	0.000	54.600
Total Income		1282.740	1049.690	942.400
Profit/(Loss) Before Tax		18.270	9.220	44.900
Provision for Taxation		0.240	1.300	13.000
Profit/(Loss) After Tax		18.030	7.920	31.900
Export Value		602.670	755.970	NA
Import Value		23.060	58.010	NA
Expenditures :
	Manufacturing Expenses	NA	NA	86.300
	Administrative Expenses	NA	NA	22.400
	Raw Material Consumed	NA	NA	740.100
	Increase/(Decrease) in Finished Goods	NA	NA	[208.500]
	Salaries, Wages, Bonus, etc.	NA	NA	37.300
	Interest	61.010	52.520	53.900
	Power & Fuel	NA	NA	25.400
	Depreciation & Amortization	39.870	38.020	32.100
	Other Expenditure	1163.590	949.930	108.500
Total Expenditure		1264.470	1040.470	897.500

KEY RATIOS

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
PAT / Total Income	(%)	1.41	0.75	3.38
Net Profit Margin (PBT/Sales)	(%)	1.42	0.88	5.06
Return on Total Assets (PBT/Total Assets}	(%)	1.43	0.78	4.09
Return on Investment (ROI) (PBT/Networth)		0.09	0.05	0.19
Debt Equity Ratio (Total Liability/Networth)		4.76	4.65	3.67
Current Ratio (Current Asset/Current Liability)		2.99	3.93	4.82

LOCAL AGENCY FURTHER INFORMATION

Operations:-

During the year, the company achieved an improved turnover of Rs. 1282.74 millions as against Rs. 1049.69 millions in the previous year. After providing for interest, depreciation and income Tax the company has earned surplus to the tune of Rs. 86.25 millions as against the surplus available for appropriation is Rs. 71.73 millions in the previous year. The company has achieved better performance in spite of Rupee Appreciation against USD and stiff competitions at the National as well as International Markets. The company is highly committed to the customer satisfaction by providing quality products and timely delivery and also are maintaining the standard norm as suggested in the WRAP and ISo certifications.

The company has started a new business venture to supply “Ready to Cut” Fabric to manufacturer of Garments. This segment has picked up very well and produced impressive results.

Future

The company is committed to achieve greater heights in future by focussing on high yield orders at the international level and supplying “Ready to cut” Fabric at the National level. In addition, the company is explor5ing the possibility of promoting own Garment Brands for local market and also diversification in new fields.

Finance

The company has undertaken a restructuring of its financial mix, which has resulted in the reduction of secured loans. During the company has repaid Term Loan to the extent of Rs. 71.12 millions

Technology Upgradation

The company has succeeded in the integration of all its production facilities for the production of garments. The adoption of new Technology has resulted in the following advantages

· Highest customer satisfaction and obtaining repeat orders from them

· Elimination of human and communication errors in the process stage

· Consistency in quality and thus eliminating rejections/ reprocessing, which improves profitability

· Maximized productivity yield larger volumes at reduced cost of operation.

fixed ASSETS:-

· Land

· Building

· Plant and Machinery

· Computer

· Office equipments

· Furniture and Fittings

· Vehicles

TRADE REFERENCES

Ø Networth Clothing Company Private Limited, Tirupur

Ø Penaissan Rtw Asia Private Limited, Tirupur

PRESS RELEASES:

Coimbatore, April 26

THE Tirupur-based Shakthi Knitting Ltd, a 100 per cent knitted garment exporting unit, has set up an independent textile processing unit called `Colorsburg' at the Perundurai Sipcot Industrial Estate near Erode.

The modern dyeing and finishing plant, set up at a cost of Rs 300 millions, is fitted with advanced dyeing and finishing machinery, including a soft-flow dyeing machine from Sclavos, with central dye-house management software and dye dispensing machinery.

The processing house is also equipped with fabric finishing machinery that handles tubular and open-width processing and compacting, heat setting and raising machinery, besides pre/post-dyeing (colour monitoring) instruments.

Said to be the first plant in the Tirupur area capable of processing 3.2-metre width fabric, Colorsburg will meet 90 per cent of the company's in-house processing requirements.

With an installed capacity to process 13 tonnes per day, the dye house, which has commenced commercial operation, processes 10 tonnes of knitted fabrics. Over 70 per cent of the processing is for captive use by the parent company, which mostly exports garments to the EU.

According to the Managing Director, Shakthi Knitting, Mr S. K. Vivekananda, Colorsburg was set up as a backward integration step to the company's garmenting operation, as it found that outsourcing fabric processing in sensitive knitted garmenting was costlier, both in terms of meeting quality parameters and adhering to delivery schedules.

Garment exporters spent two-thirds of the lead-time prescribed by the importers on fabric processing, including fabric engineering, Mr Vivekananda said. Shakthi Knitting achieved an export turnover of Rs 350 millions as of end-March 2001.

The company has been accredited as a `preferred' vendor by Du Pont, the US synthetic fibre company for its garmenting facility.

The Austrian fibre manufacturers, Lenzing AG, which is on the look out for a textile processing house to process man-made cellulosic fibre-based fabric, recently visited the company's new dyeing and finishing plant at Perundurai.

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.49.69
UK Pound	1	Rs.72.96
Euro	1	Rs.63.46

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	NO
--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.	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