MIRA INFORM REPORT

Report Date :

11.02.2008

IDENTIFICATION DETAILS

Name :	SARA TEXTILES LIMITED
Registered Office :	A-31, Sara House, Hauz –Khas, New Delhi – 110 016
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	26.12.2003
Com. Reg. No.:	123708
CIN No.: [Company Identification No.]	U18101DL2003PLC123708
IEC No.:	0504003275
TAN No.: [Tax Deduction & Collection Account No.]	DELS21005F
PAN No.: [Permanent Account No.]	AAHCS9602C
Legal Form :	A Closely held Public Limited Liability Company
Line of Business :	Manufacturers of Towels, Bathrobe, Beach Towels etc.

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.	Small

Maximum Credit Limit :	USD 879932
Status :	Moderate
Payment Behaviour :	Slow
Litigation :	Clear
Comments :	Subject is an established company having moderate track records. Company’s profitability is under severe pressure. It has huge accumulated losses. Payments are however reported as slow but correct. The company can be considered for small to mediocre business dealings with slight caution initially.

INFORMATION PARTED BY

Name :	Mr. Deepit Singh
Designation :	Director (Finance)
Contact No.:	91-9810494444
Date :	11.02.2008

LOCATIONS

Registered Office :	A-31, Sara House, Hauz –Khas, New Delhi – 110 016, India
Tel. No.:	91-11-26851340 /26517138 / 26517241
Mobile No:	91-9810494444
Fax No.:	91-11-26851340 / 26517127
E-Mail :	ravigupta@sara-intl.com / info@saratextiles.com
Website :	www.saratextiles.com
Area :	6000 sq.fts
Location :	Owned
Factory :	Village – Bhatian, Pargana Palasi, Tehsil Nalagarh, District Solan, Himachal Pradesh, India
E-Mail :	info@saratextiles.com
Area :	200000 sq.fts
Location :	Owned

DIRECTORS

Name :	Mr. Deepit Singh
Designation :	Director
Address :	S-99, Panchsheel Park, New Delhi – 110017
Date of Birth/Age :	13.10.1978
Qualification :	BA (Hons), MA, IIFT Engineer, MBA
Experience :	27 years
Date of Appointment :	26.12.2003
Name :	Mr. Devinder Pal Singh
Designation :	Director
Address :	S-99, Panchsheel Park, New Delhi – 110017
Date of Birth/Age :	07.12.1952
Date of Appointment :	26.12.2003
Name :	Mr. Shyam Mohan Dwivedi
Designation :	Whole Time Director
Address :	I-4, 1^st Floor, Janpura –B, Delhi, India
Qualification :	B Tech (Text)
Experience :	15 years
Date of Birth/Age :	04.02.1966
Date of Appointment :	26.12.2003
Name :	Mr. Surender Lal Kapoor
Designation :	Director
Address :	161-A, Western Avenue, Sainik Farms, New Delhi
Qualification :	MA, LLB, IAS
Experience :	43 years
Date of Birth/Age :	07.03.1937
Date of Appointment :	02.02.2005
Name :	Mr. Satnam Arora
Designation :	Director
Address :	Farm House, 248, Saidulajaib Village, Western Marg, Opp. CISF Camp, New Delhi
Qualification :	MA
Experience :	25 years
Date of Birth/Age :	23.01.1949
Date of Appointment :	02.02.2005
Name :	Mr. Ram Anuj Mishra
Designation :	Director
Address :	82/6 B, Gandhi Gram, Harjender Nagar, Kanpur , Uttar Pradesh, India
Qualification :	M Tech, MBA
Experience :	40 years
Date of Birth/Age :	15.03.1946
Date of Appointment :	02.02.2005

KEY EXECUTIVES

Name :	Mr.G. P. Gupta
Designation :	Secretary
Address :	C-5/91, Yamuna Vihar, Delhi- 110053
Date of Birth/Age :	08.04.1978
Date of Appointment :	10.10.2006

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares
Shree Deepit Singh	810000
Smt. Abha Singh	1100000
Shree Devinder Pal Singh	1250000
Mr. Iskander Sultan Khwaja	1095381
Smt. Indra Banga	6769000
Shree Tushar Singh	4318859
Sara International Limited	4250000

Equity Share Breakup

Sr. No.	Category	Percentage
1.	Foreign holdings (Foreign institutional investor, Foreign companies, Foreign Financial institution, Non resident Indian or Overseas corporate bodies or others	60.00
2.	Bodies corporate	21.00
3.	Directors or Relatives of Directors	18.00
	Total	100 %

BUSINESS DETAILS

Line of Business :	Manufacturers of Towels, Bathrobe, Beach Towels etc.
Products:	· Terry Towel · Yarn · Bed Linen · Bath Mat · Kitchen Linen
Exports :
Products :	Terry Towel, Bed Linen
Countries :	Australia, USA, Crotia, Cerbia
Terms :
Selling :	L/C, Credit (30 Days)
Purchasing :	Cash, Credit (30 Days)

PRODUCTION STATUS:

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Terry Towel	MT	NA	11 MT per day	9 MT per day

GENERAL INFORMATION

Customers :

Wholesalers, Retailers

No. of Employees :

475 (15 in Office and 460 in Factory )

Bankers :

• Punjab National Bank

Address: International Banking Branch, Barakhamba Road, New Delhi

Credit Limit: Fund Based 37.500 millions , Non Fund Based Rs. 5.000 millions, Term Loan Rs. 216.900 millions

• Corporation Bank

Overseas Branch, M -93, Connaught Place, New Delhi

Credit Limit: Fund Based – Rs. 50.000 millions, Non Fund Based Rs. 50.000 millions, Term Loan Rs. 216.900 millions

Financial Institutions:

General Manager District Industries Centre Solan

DIC Chambaghat, Solan – 173213, Himachal Pradesh, India

Facilities :

Secured Loans Term Loans i) Punjab National Bank (Secured as first charge against fixed assets i.e. equitable mortgage of land and building and hypothecation of plant and machinery, furniture and fixture etc. of the company and personal guarantee of the Directors and corporate guarantee given by the group company, on pari pasu basis along with corporation bank) (Installment Due Within One Year Rs. Nil) ii) Corporation Bank (Secured as first charge against fixed assets i.e. equitable mortgage of land and building and hypothecation of plant and machinery, furniture and fixture etc. of the company and personnal guarantee of the directors and corporate guarantee given by the group company, on pari-passu basis along with Punjab National Bank ) (Installment Due Within One Year Rs. Nil)

(Rs. in Millions ) 65.508 20.363

Total

85.871

Banking Relations :

Satisfactory

Auditors :

Name :

Sunil K. Khanna And Company

Chartered Accountant

Address :

606, Chiranjiv Tower, 43, Nehru Place, New Delhi – 110019

Tel. No.:

91-22-41608766

Fax No.:

91-22-41608767

E-Mail :

sunilkhanna_ca@hotmail.com

Associates :

· Sara International Limited.

Address: A -31, Hauz Khas, New Delhi – 110 016, India

Activity: Government Recognized Trading House

· Sara Universal Private Limited

· Gopalpur Ports Limited.

· Magnum India  

· Sara Traders and Distributors

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
25000000	Equity Shares	Rs. 10/- Each	Rs.250.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
19860741	Equity Shares	Rs. 10/- Each	Rs.198.600 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2008 (Projected)	31.03.2007	31.03.2006
SHAREHOLDERS FUNDS
1] Share Capital		248.600	248.607	198.607
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		0.000	0.000	0.000
4] (Accumulated Losses)		(15.000)	(28.624)	(7.349)
NETWORTH		233.600	219.983	191.258
LOAN FUNDS
1] Secured Loans		405.600	408.278	346.000
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		405.600	408.278	346.000
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		639.200	628.261	537.258
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		591.100	497.177	517.346
Capital work-in-progress		0.000	34.220	0.000
INVESTMENT		0.000	0.000	0.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	102.500	97.139	37.945
	Sundry Debtors	87.100	35.869	3.168
	Cash & Bank Balances	6.700	24.788	7.920
	Other Current Assets	3.300	0.000	0.000
	Loans & Advances	28.300	24.977	18.828
Total Current Assets		227.900	182.773	67.861
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	179.600	11.655	13.332
	Provisions	0.400	74.254	34.617
Total Current Liabilities		180.000	85.909	47.949
Net Current Assets		47.900	96.864	19.912
MISCELLANEOUS EXPENSES		0.200	0.000	0.000
TOTAL		639.200	628.261	537.258

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2008 (Projected)	31.03.2007	31.03.2006
Sales Turnover		523.800	244.900	35.998
Other Income		33.900	5.000	31.754
Total Income		557.700	281.1307	67.752
Profit/(Loss) Before Tax		(13.100)	(21.400)	(6.571)
Provision for Taxation		0.000	0.000	0.000
Profit/(Loss) After Tax		(13.100)	(21.400)	(6.571)
Export Value		450.000	94.400	NA
Import Value		NA	12.200	NA
Expenditures :
	Cost of Goods Sold	420.800	191.100	0.000
	Administrative Expenses	43.000	32.200	0.000
	Raw Material Consumed	0.000	0.000	38.052
	Consumption of stores and spares parts	0.000	0.000	13.171
	Salaries, Wages, Bonus, etc.	0.000	0.000	2.319
	Managerial Remuneration	0.000	0.000	0.000
	Payment to Auditors	0.000	0.000	0.174
	Interest	35.000	24.600	4.766
	Insurance Expenses	0.000	0.000	0.078
	Power & Fuel	0.000	0.000	7.882
	Depreciation & Amortization	45.600	23.100	5.463
	Other Expenditure	0.000	0.000	2.418
Total Expenditure		544.400	271.000	74.323

KEY RATIOS

PARTICULARS		31.03.2008 (Projected)	31.03.2007	31.03.2006
PAT / Total Income	(%)	(2.34)	(7.27)	(9.69)
Net Profit Margin (PBT/Sales)	(%)	(2.50)	(8.67)	(18.25)
Return on Total Assets (PBT/Total Assets}	(%)	(1.59)	(3.12)	(1.12)
Return on Investment (ROI) (PBT/Networth)		(0.05)	(0.09)	(0.03)
Debt Equity Ratio (Total Liability/Networth)		2.50	2.25	2.05
Current Ratio (Current Asset/Current Liability)		1.26	2.12	1.41

LOCAL AGENCY FURTHER INFORMATION

Trade References:-

· M/s Domtex

Mr. Manoj Bhatia, Country Head

Email: manoj@domtexindia.com

· The Cambridge Towel Corp, USA

Mr. Hugh Thomson, CEO

Email: hthomson@rogers.blackberry.net

· M/s Indus Merchandising

Email: rahul.b@indusmerc.com

· Tekstil Promet DD

· FIS Doo Vitez

Fixed Assets:-

• Furniture and Fittings
• Office Equipment
• Land and Building
• Plant and Machinery

Form 8:-

Corporate identity number (CIN) Foreign company registration number	U18101DL2003PLC123708
Name of the Company	SARA TEXTILES LIMITED
Address	A-31, Sara House, Aauz –Khas, New Delhi – 110 016
This form is for	Creation of Charge
Type of Charge	Immovable Property Movable Property
Particulars of the charge holder	General Manager District Industries Centre Solan DIC Chambaghat, Solan – 173213, Himachal Pradesh Email ID : GMDICSLN-HP@NIC.IN
Nature or description of the instrument creating or modifying the charge	Agreement of hypothecation for centre capital investment subsidy Agreement for availing centre capital investment subsidy letter of paripassu
Amount secured by the charge	Rs.3.000 Millions
Short particulars of the property charged	Hypothecation of plant and machinery situated at vill. Bhatian The Nalagarh, Dist Solan in the State of Himachal Pradesh
Date of Instrument Creating	21.05.2007

OTHER INOFRMAITON:

The company (M/S Sara textile Limited) having its registered office at A – 31, Hauz Khas, New Delhi was incorporated on 26.12.2003 and registered with Registrar of Companies, NCT of Delhi and Haryana on 26.12.2003. The Company has also been issued Certificate of Commencement of Business on 08.01.2004. M/s Sara Textiles Limited is a group company of m/s Sara International Limited. M/s Sara International Limited is the flagship company of Sara Group having presence in commodities, minerals (iron ore, steel, chrome, concentrate), textile items, ports, etc.

The Sara Group is in the line of trading of textile goods for about 5 years with some exposure to sale Terry Towels. Sara Group got motivated from the demand and scope of the Terry Towels in international markets, so its promoters decided to install their own unit to manufacture terry towels and has set up a terry towel manufacturing plant at Nalagarh Himachal Pradesh with 28 Looms in all (16 Dobby and 12 with Jacquard structures) at project cost of Rs. 516.300 millions. The location of the project i.e Nalagarh Himachal Pradesh was choosen because of the various incentives is being offered by the Central / State Government for new units coming up in this area. This project was duly appraised under TUFF Scheme by SBI Capital Markets limited as well as by PNB Technical Cell at HO for technology economic viability. The commercial production started in January 2006. The company also expanded its production capacity by installing additional 8 looms (dobby) at a project cost of Rs. 130.000 millions. As on date, the company is having installed capacity of 11 MT per day. The project has been financed by consortium of Punjab National Bank (Lead Bank) and Corporation Bank.

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.39.60
UK Pound	1	Rs.77.85
Euro	1	Rs.58.04

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	4
PAID-UP CAPITAL	1~10	3
OPERATING SCALE	1~10	2
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	--
--LIQUIDITY	1~10	4
--LEVERAGE	1~10	4
--RESERVES	1~10	2
--CREDIT LINES	1~10	2
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		26

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