MIRA INFORM REPORT

 

 

 

Report Date :

24.07.2008

 

IDENTIFICATION DETAILS

 

Name :

INDOFIL CHEMICAL COMPANY DIVISION OF MODIPON LIMITED

 

 

Registered Office :

Hapur Road, Modinagar - 201204, Ghaziabad, Uttar Pradesh

 

 

Country :

India

 

 

Financials (as on) :

30.09.2007

 

 

Year of Establishment :

19.08.1965

 

 

Com. Reg. No.:

3082

 

 

CIN No.:

[Company Identification No.]

L65993UP1965PLC003082

 

 

TAN No.:

[Tax Deduction & Collection Account No.]

MRTM 00650G

 

 

Legal Form :

Public Limited liability Company.  The Company's shares are listed on the Stock Exchanges.

 

 

Line of Business :

Manufacturing and Marketing of Synthetic Filament Yarn (Nylon and Polyester), Yarn Waste (including derived) and By-Products and Mancozeb Indofil M-45/ other agro formulations, Speciality industrial chemicals and other chemicals.

 

 

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 670000

 

 

Status :

Moderate

 

 

Payment Behaviour :

Slow

 

 

Litigation :

Clear

 

 

Comments :

Subject is an old and established company having moderate track. The company is passing through difficult times and the business shows downward trends. Payments are reported as slow and delayed at times.

 

The company can be considered for small to mediocre business dealings with slight caution initially.

 

 

LOCATIONS

 

Registered Office/

Factory :

Hapur Road, Modinagar - 201 204, Ghaziabad, Uttar Pradesh

Tel. No.:

91-1232-242201 to 242209

Fax No.:

91-1232-242084

E-Mail :

indofil@vsnl.com

Website :

http://www.modipon.com

 

 

Corporate Office :

E-3, 2nd Floor, Kailash Colony, New Delhi – 110 048

Tel. No.:

91-11-41627019

Fax No.:

91-11-41733389

E-Mail :

mpl@modipon.net

 

 

Factory  :

Kolshet, Off. S. V. Road, Sandoz Baug P.O., Thane - 400 607,      Maharashtra

Tel. No.:

91-22-2534 1877

Fax No.:

91-22-2534 3771

 

 

Factory 2 :

Modinagar -  Modipon  Fibres   Company   (Fibres Division)

 

 

Branches :

Nirlon House, Dr. Annie Besant Road, Mumbai - 400 025, Maharashtra

Tel. No.:

91-22-2493 7391 / 2496 0000

Fax No.:

91-22-2493 5667

E-Mail :

indofil@vsnl.com

 

 

DIRECTORS

 

Name :

Mr.M. K. Modi

Designation :

Chairman and Managing Director 

Qualification :

B.Sc. (Chem. Engg.) A.I.C.E., Ph. D.

Date of Appointment :

15.07.1967

 

 

Name :

Mr. Manish K. Modi

Designation :

Director

 

 

Name :

Mr. Avinash Kumar Srivastava, IAS

Designation :

Director (Nominee of UPSIDC)

 

 

Name :

Mr. M. V. S. Rami Reddy, IAS

Designation :

Director (Nominee of UPSIDC)

 

 

Name :

Mr. O. P. Makkar

Designation :

Director

 

 

KEY EXECUTIVES

 

Name :

Me. M. K. Goel

Designation :

Company Secretary

 

 

Name :

Mr. C. S. Panda

Designation :

Company Secretary

 

 

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

 

As on 30.06.2006

 

Names of Shareholders

 

No. of Shares

Percentage of Holding

 

 

 

Shareholding of Promoter and Promoter Group

 

 

Indian

 

 

Individuals/Hindu Undivided Family

3,98,774

5.09

Bodies Corporate

35,90,484

45.81

Public Shareholding

 

 

Institutions

 

 

Mutual Funds/ U T I

7,600

0.10

Financial Institutions/ Banks

275

0

Central Government/ State Government(s)

13,01,974

16.61

Insurance Companies

2,38,453

3.04

Foreign Institutional Investors

3,00,000

3.83

Non-Institutions

 

 

Bodies Corporate

4,54,302

5.80

Individuals :

 

 

(i) Individual Shareholders holding nominal Share Capital upto RS.0.100 Millions

7,09,938

9.06

(ii) Individual Shareholders holding nominal Share Capital in excess of Rs 0.100 Millions

1,66,484

2.12

Any Other (specify) :

 

 

 -NRIs/OCBs

3,32,613

4.24

 -Clearing Members

3,37,160

4.30

Grand Total (A)+(B)+(C)

78,38,057

100.00

 

SHAREHOLDING MORE THAN 1%

 

AS ON 30TH JUNE, 2006

 

Name of the Shareholder

Number
of Shares

Percentage
of Shares

Modi Industries Limited 

7,00,000

8.93

Modi Spg. and Wvg. Mills Company Limited

7,00,000

8.93

Aspen Developers Private Limited 

6,58,000

8.40

K K Modi Inv. and Fin. Ser. Private Limited

4,31,302

5.50

Status Mark Finvest Limited 

3,38,714

4.32

Modi Trading and Indl. Syn. Private Limited

1,75,000

2.23

Modi Care Limited

1,49,110

1.90

Transnational Growth Funds Limited

1,42,522

1.82

Gemini Trade Links Limited

1,28,350

1.64

U. P. State Industrial  Development Corporation Limited 

13,01,974

16.61

Accord Capital Markets Limited

3,47,470

4.43

OHM Stock Brokers Private Limited

3,36,800

4.30

Empire International Holdings Limited

3,30,000

4.21

The Indiaman Fund (Mauritius) Limited

3,00,000

3.83

Life Insurance Corporation of India

1,97,655

2.52

 

 

BUSINESS DETAILS

 

Line of Business :

Manufacturing and Marketing of Synthetic Filament Yarn (Nylon and Polyester), Yarn Waste (including derived) and By-Products and Mancozeb Indofil M-45/ other agro formulations, Speciality industrial chemicals and other chemicals.

 

 

Products :

Product Description

ITC Code

Synthetic Filament Yarns (Nylon and Polyester)

5402

Pesticides

3808

Acrylic Emulsions

3906

 

 

Brand Names :

 

 

 

Agencies Held :

MAS Services Limited, AB-4, Safdarjung Enclave, New Delhi-110029, Maharashtra, India

 

 

PRODUCTION STATUS

 

Particulars

Unit

 

 

Actual Production

FIBERS DIVISION

 

 

 

 

Synthetic Filament Yarns (Nylon)

MT

 

 

4718

Yarn Waste (including derived), By-Products and Others

B

 

 

560

CHEMICALS DIVISION

 

 

 

 

Indofil M-45/Mancozeb

MT

 

 

5673

Other Agro Formulations

KL/MT

 

 

2111

Speciality  Industrial Chemicals

MT

 

 

4667

 

 

GENERAL INFORMATION

 

Suppliers :
  • Amba MechanicalWork
  • Aruna Plastics
  • Bhagwati Plastics
  • Brazewell Engineers
  • ChandraEngineering Works
  • Chaudhary Industries
  • Creative Enterprises
  • Decent PaperMills
  • Deepak Electricals
  • Diamond Chemicals
  • Enka Corporation
  • Gee Aar Chemtech
  • Glenview Plastics Systems
  • Kapson Engineering Company
  •  KumarTextile Industries
  • Laxminarain Visambharnath
  •  Laxmi Containers
  • Maruti Chemical Industries
  • Micro Heating Industries
  • Modi Textile Calendering Works
  • Orgochem India
  •  Peeco Packaging Private Limited
  •  Plamolds
  • Plasma Spray Processors
  •  PraveenPlastics
  • Prominent Aeropack
  • Sagar Cooler and Safe Industries
  • ShiningTools
  • Shreeram Texpin
  • S. K. Packaging
  • Sudhagad Rubber Industry
  • Swastik Rubber Products
  • Saral Packaging
  • Tanwar Rajput
  • Technical Services
  • Tempsens Instruments
  • Trim Engineering
  • Vandana Packaging
  • Vishal Packers
  • V. M. Plastic and Engineers Private Limited

 

 

No. of Employees :

 1000

 

 

Bankers :
  • Abu Dhabi, Commercial Bank Limited
  • Allahabad Bank
  • Bank of Baroda
  • Karnataka Bank Limited
  • Punjab National Bank
  • Union Bank of India
  • State Bank of Hyderabad
  • Development Credit Bank Limited
  • Dhanalakshmi Bank Limited
  • Cosmos Co-operative Bank Limited

 

 

Facilities :

SECURED LOANS

As on 30.09.2007

Rs. In Millions

From Bankts

 

Cash Credit/Working Capital Demand Loan (Secured by hypothecation of Stocks of Raw Material Goods In- Process, Finished Goods, Stores, Spares and Book Debts as First Charge and Second Charge on Block Assets. 'These Loans have become partly unsecured, amount unascertained, In view of ' Inadequate Security) (Note 17 of Schedule 13)

567.045

Hire Purchase Loans (Secured by hypothecation of Vehicles)

1.674

From Financial Institutions (Note 14(a)

 

Term Loans

0.000

Interest Accrued and Due

0.000

From Others

 

A Corporate Body (Note 18)

18.100

 

186.819

UNSECURED LOANS;

 

Fixed Deposits

15.953

Interest Accrued and Due (Unclaimed) on Fixed Deposits

1.100

Loan From Subsidiary Company

0.000

From Others

 

Other Corporate Bodies

0.000

Inter-Corporate Deposits

 

Intesest Accrued and due on inter-Corporate Deposits

0.000

Total

77.964

 

Banking Relations :

--

 

 

Auditors :

 

Name :

Messrs P. R. Mehara and Company

Chartered Accountant

Address :

56, Darya Ganj, New Delhi-110002

 

 

Name :

Messrs M. M. Bilimoria and Company

Chartered Accountant

Address :

101, Sharda Chambers, Plot No. 15, Vithaldas Thackersey Marg, Mumbai-400020, Maharashtra, India

 

 

Memberships :

Ø       All India Plastic Manufacturers' Association

Ø       Indian Paint Association

Ø       India Speciality Chemical Manufacturers' Association

Ø       CHEMEXCIL

Ø       Indian Crop Protection Association

Ø       Pesticides Association of India

Ø       Indian Chemical Manufacturers' Association

 

 

 

 

Associates :

Ø       Modi Alkalies and Chemicals Limited

Ø       Spark Plugs Company India Limited

Ø       Ambuja Cement Eastern Limited

Ø       Modi Rubber Limited

Ø       Modi Carpets Limited

Ø       Ashoka Mercantile Limited

Ø       Modi Industries Limited

Ø       Indofil Organic Industries Limited

Ø       Modi Care Limited

Ø       K K Modi Investment and Financial Services Private Limited

Ø       Beacon Travels Private Limited

Ø       Bina Fashions N Food Private Limited

Ø       Exevo India Limited

Ø       Godfrey Philips India Limited

Ø       H. M. A. Udyog Limited

Ø       Modi Entertainment Network Limited

Ø       W. D. India Private Limited

Ø       Premium Merchant Limited

 

 

Subsidiaries

Ø       Quick Investment (India) Limited

Ø       Good Investment (India) Limited

Ø       Sparko Credits Private Limited

Ø       Indofil Organic Industries Limited

Ø       Modipon Estate Private Limited

 

 

CAPITAL STRUCTURE

 

As on 30.09.2007

Authorised Capital :

No. of Shares

Type

Value

Amount

20000000

Equity Shares

Rs. 10/- each

Rs .200.000 Millions

 

Issued, Subscribed & Paid-up Capital :

No. of Shares

Type

Value

Amount

7838057

Equity Shares

Rs.10/- each

Rs. 78.381 Millions

 

Of the above Shares

 

 

 

(I) 12,14,990 Equity Shares were Issued as Partly Paid up to the extent of Rs.3.050 Millions for Consideration other than Cash,

 

 

 

(II) 50,00,000 Equity Shares were allotted as Fully Paid up Bonus Shares by Capitalisation of General

Reserve and

 

 

 

(III) 8,38,057 Equity Shares were Issued to the Shareholders of erstwhile Indofil  Chemicals Limited as Fully Paid up on merger without pay payment being received in Cash

 

 

71,792

15% Redeemable Convertible Cumulative Preference Shares

Rs.100 each /-

Rs. 7.179 Millions

 

Fully Paid up issued to the Shareholders of erstwhile Indofil Chemicals Limited as Fully Paid up on merger without payment being received in Cash

 

 

 

Total

 

Rs. 85.560 Millions

 

 

 

FINANCIAL DATA

[all figures are in Rupees Millions]

 

 

ABRIDGED BALANCE SHEET

 

SOURCES OF FUNDS

 

30.09.2007

18 Months

31.03.2006

12 Months

31.03.2005

12 Months

SHAREHOLDERS FUNDS

 

 

 

1] Share Capital

85.560

85.560

85.600

2] Share Application Money

0.000

0.000

0.000

3] Reserves & Surplus

48.714

280.766

511.900

4] (Accumulated Losses)

0.000

0.000

0.000

NETWORTH

134.274

366.326

597.500

LOAN FUNDS

 

 

 

1] Secured Loans

586.819

1725.304

1583.00

2] Unsecured Loans

77.964

106.939

91.900

TOTAL BORROWING

664.783

1832.243

1674.900

DEFERRED TAX LIABILITIES

0.000

0.000

0.000

 

 

 

 

TOTAL

799.057

2198.569

2272.400

 

 

 

 

APPLICATION OF FUNDS

 

 

 

 

 

 

 

FIXED ASSETS [Net Block]

256.461

1053.675

1145.900

Capital work-in-progress

0.000

0.000

18.000

 

 

 

 

INVESTMENT

0.284

3.478

11.400

DEFERREX TAX ASSETS

0.000

0.000

0.000

 

 

 

 

CURRENT ASSETS, LOANS & ADVANCES

 

 

 

Inventories
 

 

1100.800

 

Sundry Debtors
101.121

2675.201

995.700

 

Cash & Bank Balances
 

 

316.800

 

Other Current Assets
 

 

0.000

 

Loans & Advances
 

 

722.700

Total Current Assets
101.121

2675.201

3136.000

Less : CURRENT LIABILITIES & PROVISIONS

 

 

 

Current Liabilities
654.763

1608.211

1907.600

 

Provisions
 

 

139.200

Total Current Liabilities
654.763

1608.211

2046.800

Net Current Assets
[553.642]

1066.990

2046.800

 

 

 

 

MISCELLANEOUS EXPENSES

1095.954

74.426

7.900

 

 

 

 

TOTAL

799.057

2198.569

2272.400

 

PROFIT & LOSS ACCOUNT

 

PARTICULARS

 

30.09.2007

18 Months

31.03.2006

12 Months

31.03.2005

12 Months

 

 

 

 

Sales Turnover

3356.006

4189.822

5489.200

Other Income

0.000

0.000

523.800

Total Income

3356.006

4189.822

6013.000

 

 

 

 

Profit/(Loss) Before Tax

[705.786]

[222.650]

169.700

Provision for Taxation

[16.175]

[0.020]

58.700

Profit/(Loss) After Tax

[689.611]

[222.670]

111.000

 

 

 

 

Earnings in Foreign Currency :

 

 

 

 

Export Earnings

377.614

544.258

820.706

 

 

 

 

Imports :

 

 

 

 

Raw Materials

521.113

571.562

 

Stores & Spares

4.552

3.043

684.330

 

Capital Goods

0.000

2.223

 

 

Others

0.000

0.000

 

Total Imports

525.665

576.828

684.330

 

 

 

 

Expenditures :

 

 

 

 

Material, manufacturing and Others Expenses

2716.409

2991.817

471.100

 

Raw Material

0.000

0.000

2657.900

 

Excise Duty on Stocks

[2.265}

2.074

692.200

 

Power and fuel

0.000

0.000

334.800

 

Employees Cost

0.000

0.000

365.500

 

Personnel

314.623

350.126

0.000

 

Administrative Expenses

631.279

942.948

1006.500

 

Miscellaneous Expenses

0.000

0.000

28.500

 

Interest and Financial Charges

0.000

0.000

136.900

 

Managerial Remuneration

1.500

1.800

0.000

 

Depreciation & Amortization

115.517

147.038

149.900

 

Exceptional items

284.729

2976.669

0.000

Total Expenditure

4061.792

7412.472

5843.300

 

QUARTERLY / SUMMARISED RESULTS

 

PARTICULARS

 

 

31.12.2007

1st Quarter

31.03.2008

2nd Quarter

 Sales Turnover

 

 1.900

 0.900

 Other Income

 

 0.300

 1.100

 Total Income

 

 2.200

 2.000

 Total Expenditure

 

 10.400

 12.100

 Operating Profit

 

 [8.200]

 [10.100]

 Interest

 

 1.900

 2.500

 Gross Profit

 

 [10.100]

[12.600]

 Depreciation

 

 16.000

 0.000

 Tax

 

 0.200

 0.200

 Reported PAT

 

 [26.300]

 [12.800]

 

 

 

 

 

KEY RATIOS

 

PARTICULARS

 

30.09.2007

18 Months

31.03.2006

12 Months

31.03.2005

12 Months

Debt-Equity Ratio

0.00

5.27

4.61

Long Term Debt-Equity Ratio

0.00

3.00

2.79

Current Ratio

0.74

1.13

1.15

TURNOVER RATIOS

 

 

 

Fixed Assets

0.81

1.42

1.58

Inventory

4.95

4.78

6.34

Debtors

4.87

4.93

6.02

Interest Cover Ratio

[2.04]

[0.77]

2.24

Operating Profit Margin(%)

[4.54]

0.61

8.32

Profit Before Interest And Tax Margin(%)

[7.73]

[2.40]

5.59

Cash Profit Margin(%)

[7.87]

[2.51]

4.75

Adjusted Net Profit Margin(%)

 [11.06]

[5.52]

2.02

Return On Capital Employed(%)

0.00

[5.74]

14.27

Return On Net Worth(%)

0.00

[82.97]

29.41

 

 

 

 

 

LOCAL AGENCY FURTHER INFORMATION

 

HISTORY

 

Modipon was established in 1965 as a joint venture between the Modi group and Rohm and Haas (RandH), Philadelphia, US. Indofil Chemicals was amalgamated with Modipon with effect from Jul.'82. Initially, the company manufactured only synthetic yarn (nylon and polyester filament yarn). Subsequent to the amalgamation, Modipon entered into the field of leather chemicals, agro-chemicals and other industrial chemicals, previously manufactured by Indofil.

 
Modipon has entered into a technical collaboration with NOY Engineering, Italy, for the latest technology in nylon and polyester filament yarns. 

 
It undertook an expansion programme of its fibres division which will increase the production capacity of synthetic filament yarn by 7500 TPA. The chemicals division is carrying on a debottlenecking and technological upgradation programme which will increase the capacity to manufacture mancozeb fungicide at its Thane plant while controlling effluent and pollution levels at the plant. 

 
The Fibres Division has become the first manufacturing unit in synthetic Filament Yarn industry to get ISO 9001:2000 certifications during 2000-01.

 

RESTRUCTURING OF THE BUSINESS OF THE COMPANY 

 
 As approved by the Members under Section 293(t)(a) of the Companies Act, 1956, Chemicals business of the Company alongwlth certain specified assets ("[CC Division) had been transferred to Indofil Organic Industries Limited (TOIL) as a going concern on Slump Sale basis with effect from tat October, 2006 at a Value of Rs.1246.600 Millions In leans of the Slump Sale Agreement and the Resolution passed by the shareholders of the Company, part consideration amounting to As. 489.900 Millions has been applied for allotment end distribution of 1,17,57,086 Equity Shares of Rs. 10/each by TOIL directly to the Equity Shareholders of the Company in the ratio of 3 Equity Shares of IOIL for every 2 Equity Shares held In the Company. The shares had been duly allotted by TOIL to the Shareholders of the Company on 28.03.2007.

 
 
 SCHEME OF ARRANGEMENT 


  As advised, the Company has, post re-structuring, filed a Scheme of Arrangement U/s 391/393/394 of the Companies Act, 1956 before Hon'ble Allahabad High Court seeking Its approval to the accounting treatment to the direct allotment of shares of TOIL by TOIL to the shareholders of the Company in part discharge of the purchase Consideration. Hon'ble High Court has, on 28.01.2008 passed an Order for holding a meeting of the Shareholders of the Company on 08.03.2008. 


 
 CHANGE IN ACCOUNTING YEAR 

 
 The Company had decided to extend, the current Accounting Year by six months. Accordingly, the current Accounting Year has ended on 30th September, 2007 (18 months period) Instead of 31st March, 2007. The next Accounting Year will close on 31st December, 2008. Thereafter the Accounting Year of the Company will close on 31st March every year. 

 

OPERATIONS 
 
 During the year, the Company registered total revenue of Rs.2997.843 Millions lace and Loss afterTax and Write Back of Excess Provision forTaxatlon of Rs.689.611 Millions. The Sales and Production Volume of Nylon Filament Yarn were 4,866 M.Tons and 4,718 M.Tons as against 6,596 M.Tons and 6,215 M.Tons respectively in the Previous Year. 


 
 EXPORTS 
 
 The Exports (FOB Value) of the Fibres Division for the year were Rs. 87.000 Millions as against Rs.58.800 Millions In the Previous Year. 


 

 

CONSERVATION OF ENERGY

 

(a)     Energy Conservation measures taken:

 

FIBRES DIVISION

 

1. Increase in Polymerisation capacity has resulted in reduction of Power consumption per M.Ton Chips production.

2. D G Set energy audit resulted into lower fuel consumption.CHEMICAL DIVISION

 

CHEMICAL DIVISION

 

During the period the Division has received full bonus subsidy by achieving the power factor.

 

(b)     Energy Consumption and Energy Consumption per unit of Production:

 

SUBSIDIARY COMPANIES

 

The Company had acquired entire Equity Share Capital of M/s Sparko Credits Private Limited Liability Company Limited [Name changed to Modipon Estates Pvt. Limited (MEPL)] on 9th May, 2007 and consequently, MEPL has become a wholly-owned Subsidiary of the Company.

 

During the year the Company has sold its entire investment in Equity Shares of two wholly owned subsidiaries i.e. Good Investment (India) Limited and Quick Investment (India) Limited w.e.f. 1 st October, 2006 on account of Slump Sale of ICC Division. Accordingly, these two subsidiaries are no longer subsidiaries of the company as at

the year end i.e. 30th September, 2007.

 

The Company had received without any consideration 50,000 Equity Shares of Rs. 10/- each of Indofil Organic Industries Limited (IOIL) on 28" October, 2006 which resulted in IOIL becoming wholly-owned subsidiary. Subsequently, consequent upon allotment of further Equity Shares by IOIL to the shareholders of the Company on 28'" March, ,2007, IOIL ceased to be the subsidiary of the Company.

 

MANAGEMENT DISCUSSION and ANALYSIS REPORT

 

The performance of Nylon and Polyester Yarn Industry has in general remained dismal and sluggish during the Financial Year. There has also been competition from Import of Yarn at cheaper rates, which resulted into under utilization of capacities. On account of continuous losses incurred in the past, the Company has laced acute financial shortage and had to operate with negative working capital which has deteriorated the performance of the Company to a level beyond rectification. The Company has been finding it difficult to service the interest liability of the Banks and was forced to suspend the manufacturing operations w.e.f. 19th May, 2007. The outlook has not been very bright with the ever increasing input costs, having no reflection in sales realisation. Therefore, it was thought expedient to permanently close down the manufacturing operations;of the Company. Accordingly,after seeking approval from the Govt. of Uttar Pradesh under U. P. Industrial Disputes Act, 1947 tine manufacturing operations of the company have been permanently closed w.e.f. 8th September, 2007 and accordingly the account have not been prepared on going concern basis.

 

 

Notes :

 

Particulars

30.09.2007

31.03.2006

Depreciation on Machinery Spares

0.249 Millions

0.166 Millions

Cops Written off

5.329 Millions

2.581 Millions

 

2. Amount kept with IFCI Limited in No-lien Deposit Account received during the year.

 

3. The Company has sold its Chemicals Division alongwlth certain Other Immovabl Properties and Investments in the Shares of its two Wholly-owned Subsidiaries ("ICC Division") as a going concern w.e.f. 1st October, 2006 to Indofil Organic Industries Limited (IOIL) for a total Consideration of Rs. 1246.600 Millions (arrived at by aggregating Tax Written Down Value in case of Depreciable Assets and Net Book Values for Other Assets/Liabilities). Sale Consideration has been discharged by IOIL by way of (a) Payment of Rs. 178.300 Millions by Cheques; (b) taking over the Liabilities of Fibres Division of Rs.578.400 Millions due to the Financial Institutions and (c) Subscription to 1,17,57,086 Fully Paid up Equity Shares of Rs. 10 each of IOIL for Rs.489.900 Millions (Note 8 of Schedule 13).

 

4. Proceeds from/Payment of Long/Short Term Borrowings does not include Renewal of Public Deposits due after One year.

 

5. Cash and Cash Equivalents exclude Fixed Deposits pledged with Banks Rs.17.493 Millions Previous year (Rs.17.493 Millions).

 

6. In view of the Sale of the Chemicals Division, as stated in Note 3 above and Closure of the Manufacturing Operations of the Fibers Division w.e.f. 19th May, 2007 (Closure has become Operative from 8th September, 2007), the above Cash Flow Statement fully represent Cash Flows of Discontinued Operations since the Company was operating in two Segments only. ' .

 

7. (a)ln view of Notes 3 and 6 above and Current Year's Period of 18 Months, the figures are not comparable with the Previous year's figures of 12 Months Period

 

(c)     Previous year's figures have been regrouped/recast wherever necessary.

 

 "Since the Slump Sale of Chemicals Division as a going concern w.e.f. 1st October. 2006 has been shown as "Cash Flow from Investing Activities", the adjustments of Working Capital Changes and Cash Flows from Investing/Financial Activities include Adjustments/Cash Flows of the Chemicals Division for Six Months Period ended 30th September, 2006 .which have been arrived at by comparing Opening Assets and Liabilities as on 1st April, 2006 with Closing Balance as on 30th  September,2006 of Division

 

Contingent Liabilities and Notes

 

  1.  (a) Claims against the company not acknowledged as debts (excluding unascertainable amounts) in respect of:

 

Particulars

As on 30.09.2007

Rs. In Millions

Sales Tax/Excise/Customs Duty

8.621

Electricity Dues

0.000

Water Tax

0.711

Income Tax

16.545

Others

36.857

The Following are the particulars of above Dues on account of Sales Tax, Excise Duty, Customs duty, water tax, and income tax as at 30th September 2007 that have been disputed by the company in Appeals pending before the Appellate Authorized.

 

Claims from two suppliers towards Interest on late payments amounting to Rs.115.329 Millions upto 31st March, 2007 (Previous year Rs.93.521 Millions), the amount not ascertained tor the period form 1st April, 2007 to 30th September, 2007. The Management has taken up the matter for waiver of the above amounts and is of the opinion that no provision In respect of above is called for in view of the representations made by the Company.

 

(a) Pursuant to Slump Sale of Chemicals Division, as mentioned in Note 8 below and Closure of Manufacturing Operations of the Fibres Division's Plaint with effect from 19th May, 2007, the figures for the Current year {18 Months Period) ended 30th September, 2007 are not comparable with the Previous year's figures of 12 Months Period.

 

Undertakings given to certain Financial Institutions and/or Banks :

 

(a) ln respect of Lords Chloro Alkali Limited and Spark Plugs Company (India) Limited to procure funds jointly/severally with others to meet

 

(i) any shortfall in financing their Projects and/or for Working Capital and

(ii) Cash Losses in case of Spark Plugs Company (India) Limited. The funds made available/to be made available can only be withdrawn with the prior approval of the said Institutions and shall not involve any charge or lien on the Assets of the said Companies.

 

(b) Who have given Loans to Modi Carpets Limited and Lords Chloro Alkali Limited that the Company shall not transfer, assign, pledge, hypothecate or otherwise dispose off in any manner its Shareholding in the Capital of these Companies without their prior consent in writing. However, in view of the Slump Sale Agreement, 1,00,000 Equity Shares of Rs. 10 each of Modi Carpets Limited were transferred to IOIL.

 

With the Intention of restructuring (he Operations, the Company vide Agreement dated 28th October, 2006 has sold its Chemicals Division alongwith certain other . Immovable Properties and Investments in the Shares of Quick Investment (India) Limited and Good Investment (India) Limited, the two Wholly-owned Subsidiaries of the Company ("ICC Division") as a .going concern with effect from 1st October, 2006 to Indofil Organic Industries Limited (IOIL) for a total consideration of Rs.1246.000 Millions (arrived at by aggregating Tax Written Down Value in case of depreciable Assets and Net Book Values for other Assets/Liabilities) pursuance to the Resolution passed at its Board Meeting held on 28th October, 2006 and subsequent approval of its Shareholders by Postal Ballots on 23rd December, 2006. Sale consideration has been discharged by IOIL by way of : (a) Payment of Rs.178.300 Millions by Cheques; (b) taking over the Liabilities of Fibres Division of Rs.578.400 Millions due to the Financial Institutions and (c) Subscription to 1,17,57,085 Fully Paid up Equity Shares of Rs.10 each of IOIL for Rs.489.900 Millions i.e. at a Premium of Rs.372.000 Millions which were issued and distributed directly to the Equity Shareholders of the Company. The Company legally advised that the issue and distribution of above Shares to its Shareholders don't tantamount to Payment of Dividend under the Companies Act, 1956. The Shareholders of the Company has approved the abovetransaction of Sale of ICC Division and Issue of Equity Shares of IOIL to themselves under sections 293 (1 )(a) and 293(3) respectively of the Companies Act, 1956. The Company has huge accumulated Losses i.e. no distributable Profits. Keeping this in view, the Company has also now sought approval under Section 391 of the Companies Act, 1956 of the Hon'ble Allahabad High Court for treating Rs.489.900 Millions as "Goodwill" in the Books of Account for which the approval of the Court is yet to be received. Pending final determination of the matter by Hon'ble Allahabad High Court, the above amount of Rs.489.900 Millions has been shown as "Eiquity Shares of IOIL issued to Shareholders" on the face of the Balance Sheet under the head "Miscellaneous Expenditure (to the extent not,written off or adjusted)". The accounts for the year have been prepared without giving effect to the above state. Consequent adjustments in the accounts i.e. the above amount of Rs.489.900 Millions wilt be charged to Revenue as per Accounting Standard (AS) 26 i.e. Intangibl  Assets on receipt of the final approval of Hon'ble Allahabad High Court for treating/ accounting Rs.489.900 Millions as Goodwill in the Books of account.

 

The Manufacturing Operations of the Fibres Division's Plant have been closed with effect from 19th May, 2007 and the Company had applied on 7th June, 2007 to the Government of Uttar Pradesh for Closure Permission under Section 6-W of the Uttar Pradesh Industrial Disputes Act, 1947 which had been approved by the Board of Directors of the Company in their Meeting held on 23rd June, 2007. In terms of the provisions of the Uttar Pradesh Industrial Disputes Act, 1947, the Closure has become operative from the date of expiration of tha period of 90 days from the date of application i.e. on 8th September, 2007.

 

 

The Company has lodged Claim for Recovery of Rs.23.587 Millions being un-utilised CENVAT Credit available. The Management is hopeful to recover the same and shown as "CENVAT Receivable" in the Balance Sheet and accordingly, no provision for Doubtful is considered necessary at this stage.

 

Discontinuing Operations : The Company was operating in two Segments i.e. Chemicals and Synthetic Filament Yarns. As the Company vide Agreement dated 28th October, 2006 has sold its Chemicals Division alongwith certain Other Immovable Properties and Investments in the Equity Shares of two Wholly-owned Subsidiaries ("ICC Division") as a going concern with effect from 1st October, 2006.

 

Further, as stated in Note 13 above, the Company has closed the Manufacturing Operations of the Synthetic Filament Yarns Plant with effect from 19th May, 2007 and the Closure has become operative from 8th September, 2007.

 

Since .the operations of both the above Segments are discontinued during the current year, carrying amount of total Assets to be disposed off, total Liabilities to be settled as on 30th September, 2007, Revenues and Expenses and Cash Flows appearing in the Annual Accounts are of the discontinuing operations and ' accordingly no separate disclosure is required to be furnished.

 

CONSOLIDATED FINANCIAL STATEMENTS

 

a.       The company (Parent Company) had two wholly-owned Subsidiaries as on 1st April 2006 i.e. Quick Investment (India) Limited and Good Investment (India) Limited. Further, these wholly-owned Subsidiaries also held Investments in two Associates i.e. Modern Home Care Products Limited and International Research Park Laboratories Limited as on 1st April, 2006. Consolidated Financial Statements of the Group i.e. above two Subsidiaries and two Associates along with the Parent Company were presented till the previous year.

b.       During the current year the Company has sold its entire Investments in Equity Shares of these two Subsidies w.e.f.1st October, 2006 on account of Slump sale of ICC Division. Accordingly, these two Subsidiaries as well as two Associates as stated in Para (a) Above are no longer Subsidiaries / Associates of the Parent Company as at the year-end i.e. 30th September 2007

c.       The Company had received without any Consideration 500000 Equity Shares of Rs. 10 each of Indofil Organic Industries Limited (IOIL) on 28th October, 2006 which resulted in IOIL becoming wholly-owned Subsidiary. Subsequently Consequent upon allotment of further Equity Shares by IOIL to the Shareholders of the Company on 28th March, 2007, IOIL ceased to be the Subsidiary of the Company.

d.       The company acquired the entire Equity Share Capital of Sparko Credits Private Limited (Name changed Modipon Estate Private Limited i.e. MEPL) on 9th May 2007. The above Subsidiary is operating under severe long term restrictions which significantly impair its ability to transfer funds to the Parent. In view of changed circumstances i.e. Sale of Land and Residential Buildings to MEPL by the Company during the year ended 30th September 2007 and reversal of this Sale transaction ab initio, the Management is also now considering  disposal of these Equity Shares during the Accounting year ending on 31st December 2008

 

In view of the above facts and the changed circumstances as stated above, as permitted by Accounting Standard (As-21) i.e Consolidated Financial Statements, the Company is not required to prepare Consolidated Financial Statements for the Year (18 Months Period) ended 30th September 2007.

 

FIXED ASSETS:

 

The company is in trade terms with:

 

Ø       A B C Corporation

Ø       A I C Chemicals

Ø       Agarwal Containers

Ø       R K Corporation

Ø       Purab Printers

Ø       Asiatic Chemicals

Ø       Atcon Engg.

Ø       Namdev Silicates

Ø       Laxmi Sales

Ø       Nova Plast

Ø       Versatile Chem

Ø       S B Enterprises

 

 

 

 

CMT REPORT (Corruption, Money Laundering and 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.42.33

UK Pound

1

Rs.84.32

Euro

1

Rs.66.75

 

 

SCORE and RATING EXPLANATIONS

 

SCORE FACTORS

 

RANGE

POINTS

HISTORY

1~10

7

PAID-UP CAPITAL

1~10

4

OPERATING SCALE

1~10

3

FINANCIAL CONDITION

 

 

--BUSINESS SCALE

1~10

5

--PROFITABILIRY

1~10

2

--LIQUIDITY

1~10

4

--LEVERAGE

1~10

4

--RESERVES

1~10

3

--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

YES

--AFFILIATION

YES/NO

YES

--LISTED

YES/NO

YES

--OTHER MERIT FACTORS

YES/NO

YES

TOTAL

 

32

 

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