MIRA INFORM REPORT

Report Date :

30.01.2008

IDENTIFICATION DETAILS

Name :	ARORA FIBRES LIMITED
Registered Office :	Survey No. 213, Piparia Industrial Estate, Silvassa, Dadar and Nagar Haveli - 396230
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	14.10.1993
Com. Reg. No.:	54-0054
CIN No.: [Company Identification No.]	U17119DN1993PLC000054
TAN No.: [Tax Deduction & Collection Account No.]	MUMA21697E / MUMA08671F
PAN No.: [Permanent Account No.]	AAACA5008P
Legal Form :	A Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturers of Hollow Fibre and Fine Denier Fibre

RATING & COMMENTS

MIRA’s Rating :

Ca

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	USD 308800
Status :	Moderate
Payment Behaviour :	Slow and delayed
Litigation :	Unknown
Comments :	The company’s performance remained poor having substantial accumulated losses. Payments are reported as slow and delayed. The company’s near future appears to be in dark. The company can be considered for any business dealings on safe and secured trade terms and conditions.

LOCATIONS

Registered Office/ Factory :	Survey No. 213, Piparia Industrial Estate, Silvassa, Dadar and Nagar Haveli – 396230, India
Tel. No.:	91-22-26785018 / 7385 / 26041313 / 260-2641036 / 3252053
Fax No.:	91-22-26494657 / 23423388
E-Mail :	arora@bom.vsnl.net.in
Corporate Office :	Arora House, 16, Golf Link, Union Park, Khar (West), Mumbai-400 052, Maharashtra, India
Tel. No.:	91-22-26041313
Fax No.:	91-22-26494657
Factory :	Survey No. 213, Piparia Industrial Estate, Silvassa -396 230, Dadra and Nagar Haveli, India

DIRECTORS

Name :	Rupinder Singh Arora
Designation :	Chairman
Name :	A. Gopalan
Designation :	Executive Director/Company Secretary
Name :	Sunil Marwah
Designation :	Whole- Time Director
Name :	S. M. Gupta
Designation :	Director
Name :	M. Girijan Nair
Designation :	Director
Name :	Mr. Navin Marwah
Designation :	Director

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters' Shareholding	5666670	37.684%
Non-Resident Indians/Overseas Corporate Bodies	1589723	10.572%
Mutual Funds and Unit Trust Of India	56400	0.375%
Banks	1000	0.007%
Bodies Corporate	606333	4.032%
Indian Public	7108274	47.271%
Clearing Members	8900	0.059%
Total Shares	15037300	100.000

BUSINESS DETAILS

Line of Business :

Manufacturers of Hollow Fibre and Fine Denier Fibre

Products :

Item Code No. (ITC code)	Product Description
55032000	Polyester Staple Fibre
39079102	Polyester Chips
39081002	Nylon chips

PRODUCTION STATUS

(As on 31.03.2007):-

Particulars	Unit	Licensed Capacity	Installed Capacity
Polyester Staple Fibre HoWow/Finer denier Polyester	MT	6000	6000
Staple Fibre	MT	6000	6000
Polyester Chips	MT	5000	2500
Nylon Chips	MT	2000	1000
Polypropylene Fibre	MT	1000	1000

GENERAL INFORMATION

No. of Employees :

200

Bankers :

Corporation Bank

Facilities :

SECURED LOANS	31.03.2007	31.03.2006
	( Rs. in millions)
From Banks . Term Loan — Secured by Hypothecation of Stock/Book-debts both present and future and Fixed Assets of the Company comprising of plant and machinery, furniture and 'fixtures and others. Assets of the Company both present and future by way of exclusive first charge in favour of the Bank. (Includes interest accrued and due NIL; previous year NIL.)	----	27.963
Cash Credit secured by hypothecation of present and future stock of raw materials, stock-in-process, stores and spares, books debts and personal guarantee by a Director. (Includes interest accrued and due Rs. NIL; previous year Rs. NIL.)	19.960	20.304
Vehicle Loan from Bank — Secured by hypothecation of vehicle (Includes interest accrued and due Rs. NIL; previous year Rs. NIL. Principal repayable within one year Rs. 0.350 millions previous year Rs. 5.017millions.)	1.008	0.769
Total	20.968	49.036
UNSECURED LOANS	31.03.2007	31.03.2006
	( Rs. in millions)
From a Director	54.213	31.670
From Other	---	1.000
Total	54.213	32.670

Banking Relations :

Unknown

Auditors :

Name :

M/s. A. M. Joshi and Company

Chartered Accountants

Address :

Sukrita, 127, Shivaji Park, Dr. M. B. Raut Road, Dadar, Murribai-400 024, Maharashtra, India

Associates/Subsidiaries :

Arora Corporation (Proprietor Rupinder Singh Arora)

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
35000000	Equity Shares	Rs. 10/- each	Rs.350.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
15037300	Equity Shares	Rs. 10/- each	Rs.150.373 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		150.400	150.400	150.400
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		[73.200]	[78.700]	[47.500]
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		77.200	71.700	102.900
LOAN FUNDS
1] Secured Loans		21.000	49.000	50.800
2] Unsecured Loans		54.200	32.700	15.500
TOTAL BORROWING		75.200	81.700	66.300
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		152.400	153.400	169.200
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		97.200	103.900	55.900
Capital work-in-progress		0.000	0.000	59.400
INVESTMENT		0.000	0.000	0.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	22.100	28.200	24.200
	Sundry Debtors	18.900	14.800	11.700
	Cash & Bank Balances	0.500	0.900	0.600
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	23.500	26.600	30.500
Total Current Assets		65.000	70.500	67.000
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	9.000	20.300	12.500
	Provisions	0.800	0.700	0.600
Total Current Liabilities		9.800	21.000	13.100
Net Current Assets		55.200	49.500	53.900
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		152.400	153.400	169.200

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		201.600	112.000	115.900
Other Income		3.500	0.200	1.300
Total Income		205.100	112.200	117.200
Profit/(Loss) Before Tax		3.533	[30.418]	[16.600]
Provision for Taxation		[1.900]	0.790	[0.200]
Profit/(Loss) After Tax		5.433	[31.209]	[16.400]
Expenditures :
	Selling & Administrative Expenses			6.100
	Raw Material Consumed	131.024	92.035	69.900
	Excise Duty	11.882	8.697	12.300
	Personnel Cost	9.834	8.689	0.000
	Miscellaneous expenses	0.000	0.000	19.400
	Interest & Financial Charges	4.698	5.247	1.400
	Increase/(Decrease) in Finished Goods	0.000	0.000	[15.400]
	Employee cost	0.000	0.000	6.300
	Power & Fuel	0.000	0.000	10.400
	Depreciation & Amortization	0.000	0.000	6.100
	Other Expenditure	29.249	21.102	17.300
Total Expenditure		186.687	135.770	133.800

QUARTERLY RESULTS

Year	30.09.2007	30.06.2007
Type	2^nd Quarter	1^st Quarter
Sales Turnover	42.000	41.700
Other Income	0.000	1.800
Total Income	42.000	43.500
Total Expenditure	42.400	43.000
Operating Profit	-0.400	0.500
Interest	0.800	0.700
Gross Profit	-1.200	-0.200
Depreciation	2.000	2.100
Tax	0.000	0.000
Reported PAT	-3.200	-2.300

KEY RATIOS

Year	31.03.2007	31.03.2006	31.03.2005
Debt-Equity Ratio	1.05	0.85	0.42
Long Term Debt-Equity Ratio	0.78	0.62	0.28
Current Ratio	1.91	1.87	2.89
TURNOVER RATIOS
Fixed Assets	1.31	0.84	1.03
Inventory	8.02	4.27	4.97
Debtors	11.96	8.45	10.78
Interest Cover Ratio	1.79	-4.88	1.00
Operating Profit Margin(%)	8.18	-16.52	6.47
Profit Before Interest And Tax Margin(%)	4.17	-22.68	1.21
Cash Profit Margin(%)	6.75	-21.70	5.44
Adjusted Net Profit Margin(%)	2.73	-27.86	0.17
Return On Capital Employed(%)	4.29	0.00	0.00
Return On Net Worth(%)	4.69	0.00	0.00

LOCAL AGENCY FURTHER INFORMATION

DIRECTORS’ REPORT

WORKING:

The working has resulted in a profit of Rs. 54.330 millions - after providing for depreciation of Rs. 8.143 millions. The carried forward loss is Rs. 854.498 millions as against Rs. 908.828 millions brought forward from previous year. The Company has made a cash profit of Rs. 116.774 millions during the year against cash loss of Rs. 207.457 millions during the previous year. There is a good improvement.

OTHER INFORMATION:

Contingent Liabilities Not Provided For

As on As on

31st March, 2007 31st March, 2006

Rs in millions Rs in millions

(a) Counter guarantees -given to bankers for

guarantees issued by the bankers. 3.825 3.825

(b) The Settlement Commission, Customs and Central Excise, Mumbai, has decided that interest on concessional Customs duty on unfulfilled export obligation against machinery imported under EPCG Scheme is not payable. The Company has paid the duty settled by The Commission asking the Company to pay duty of Rs. 123.335 millions as settled by the Customs. The Commission has also levied a penalty of Rs. 5.000 millions on the ground that the Company has not made full and true disclosure of all facts and the disclosure is not consistent. The Company has filed a writ petition in the High Court of Mumbai disputing the decision of The Commission. The High Court, after considering the merits of the application, has admitted the same. The Company has also received a provisional demand from D.G.F.T. Delhi for Rs. 150.999 millions as interest from the date of first import 6f machinery, i.e. 16.09.1994 to 30.10.2000 on Customs duty on unfulfilled export obligation. In the said demand notice, the office of the D.G.F.T. has mentioned that import license shall not be given to the Company till the demand notice is complied with.

This is also disputed on the advice of the leading solicitors that since the DGFT's claims arises out of and is dependent on the. liability to pay Customs Duty, it is covered by the settlement by the Settlement Commission. The contention of the DGFT that the liability to pay interest arises out of an independent undertaking is hyper technical and unsustainable, However, the customs Department, Mumbai, has in the meantime, filed a writ petition in the High Court of Mumbai to make the settlement commission's order referred above invalid. Subsequently, vide Policy Circular No. 25/2004-2009, dt. 30.03.2005 the DGFT has decided that the decisions of the Settlement Commission, in so far as Customs Duty and Interest thereon are concerned may be complied with by the Licensing Authority in cases of EO default under intimation to the Adjudicating Authority for regularization purpose. The interest has already been waived by the Settlement Commission.

In Trade Terms with :

· Universal Engineering Company

· Unique Wire Industries

FIXED ASSETS

· Plant and Machinery,

· Building,

· Office Equipments,

· Computers,

· Furniture and Fixtures

· Vehicles

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.39.43
UK Pound	1	Rs.78.45
Euro	1	Rs.58.26

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	3
PAID-UP CAPITAL	1~10	3
OPERATING SCALE	1~10	3
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	3
--PROFITABILIRY	1~10	-
--LIQUIDITY	1~10	-
--LEVERAGE	1~10	3
--RESERVES	1~10	-
--CREDIT LINES	1~10	3
--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	NO
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		18

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