MIRA
INFORM REPORT
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Report Date : |
23.06.2008 |
IDENTIFICATION
DETAILS
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Name : |
SUPERHOUSE LIMITED |
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Formerly Known As : |
SUPERHOUSE LEATHERS LIMITED |
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Registered Office : |
150 Feet Road, Jajmau, Kanpur – 208 010, Uttar Pradesh |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
14.01.1980 |
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Com. Reg. No.: |
004910 |
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CIN No.: [Company
Identification No.] |
L24231UP1980PLC004910 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
KNPS01554A |
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Legal Form : |
It is a public limited liability company. The company’s shares are listed on the Stock Exchanges. |
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Line of Business : |
Manufacture and Exports of Shoe Uppers, Chrome Leather, Sole Leather, Shoes, Sole / Cut Soles, Leather Garment, Textile Garments and Leather Goods. |
RATING &
COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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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 |
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Maximum Credit Limit : |
USD 4700000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well-established and reputed company having fine
track. The company is progressing
well. Directors are reported as experienced and respectable businessmen. Trade relations are reported as fair. Payments are usually correct and as per
commitments. Fundamentals are strong and healthy. The company can be considered normal for business dealings at usual
trade terms and conditions. The company can be regarded as a promising business partner in a
medium to long -run |
LOCATIONS
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Registered Office : |
150 Feet Road, Jajmau, Kanpur – 208 010, Uttar Pradesh, India |
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Tel. No.: |
91-512-2351120 / 2351867 / 2450391 / 2450373 / 2450396 / 2450398 / 2463373 / 2461391 |
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Fax No.: |
91-512-2450814 / 2820325 / 2451124 / 2460814 |
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E-Mail : |
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Website : |
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Plants: |
Leather Processing A-1 Site-ll, Industrial Area, Unnao - 209 801 B-15, U.PS.I.D.C. Industrial Area, Site-ll, Unnao-209 801 Fashion Footwear Plot No. A-3, Export Promotion Ind. Park, Agra-282 007 A-5, .RS.I.D.C.Industrial Area, Site-B, Sikandra, Agra-282 007 D-15, U.PS.I.D.C. Industrial Area, Site-ll, Unnao-209 801 Safety Footwear B-6, Site I, Industrial Area, Unnao-209 801 Shoe Upper 150 Feet Road, Jajmau, Kanpur-208 010 71-A, Jajmau, Kanpur-208 010 Textile Garment A-14, Sector 65, Phase III, Noida Leather Garment C-10, Sector 58, Phase III, Noida |
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Division Offices: |
Upper Division Chrome Tannery
Division Goat Tannery Harness & Sole
Tannery Shoe Division Safety Footwear
Division Fashion Shoe Division
I Fashion Shoe Division
II Leather Garments
Division Textile Garments
Division Marketing Office,
Bangalore Marketing Office,
Noida Marketing Office,
Chennai Super Footwear Ltd. Superhouse Shoes Ltd. Amin International
Ltd. |
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Overseas
Offices: |
Amin International
Ltd. US Office Australia Office UAE Office |
DIRECTORS
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Name : |
Mr. Mukhtarul Amin |
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Designation : |
Chairman cum
Managing Director |
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Date of Birth/Age : |
48 years |
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Qualification : |
B.Sc. |
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Experience : |
29 years |
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Date of Appointment : |
01.11.1990 |
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Previous Employment: |
Super Tannery
India Limited, Managing Director |
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Name : |
Mrs. Shahina Mukhtar |
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Designation : |
Wholetime Director |
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Name : |
Mr. Vinay Sanan |
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Designation : |
Executive Director |
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Name : |
Mr. Anil Kumar Agarwal |
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Designation : |
Director Finance |
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Name : |
Mr. Mohd. Shadab |
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Designation : |
Wholetime Director |
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Name : |
Mr. Zafarul Amin |
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Designation : |
Wholetime Director |
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Name : |
Mr. Salman Khurshid |
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Designation : |
Director |
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Name : |
Mr. Anil Soni |
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Designation : |
Director |
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Name : |
Dr. K. K. Agarwal |
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Designation : |
Director |
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Name : |
Mr. M. D. Dalai |
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Designation : |
Director |
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Name : |
Mr. S. M. Rais |
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Designation : |
Director |
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Name : |
Mr. Sartaj Ahmad |
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Designation : |
Director |
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Name : |
Mr. Rizwan Ahmad Khan |
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Designation : |
Wholetime Director |
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Name : |
Mrs. Nausheen Shadab |
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Designation : |
Director |
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Name : |
Mrs. Shada Fatima |
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Designation : |
Director |
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Name : |
Mr. Kamal Agarwal |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr. R. K. Agrawal |
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Designation : |
Company Secretary |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
AS ON 31.03.2007
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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A. Promoter's Holding (1+2) |
3806678 |
41.83 |
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1 |
Promoters |
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Indian promoters |
3806678 |
41.83 |
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Foreign Promoters |
- |
- |
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2 |
Persons acting in Concert |
- |
- |
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Sub-Total |
3806678 |
41.83 |
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B. Non-Promoters Holding (3+4) |
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3 |
Institutional Investors |
5293322 |
58.17 |
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a. |
Mutual Funds and UTI |
4338 |
0.05 |
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b. |
Banks, Financial Institutions, Insurance Companies (Central / State
Government Institutions / Non-Government Institutions) |
5475 |
0.06 |
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c. |
Flls |
- |
- |
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Sub-Total |
9813 |
0.11 |
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4. |
Others |
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a. |
Private Corporate Bodies |
525846 |
5.78 |
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b. |
Indian Public |
4748370 |
52.18 |
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c. |
NRIs / OCBs |
9293 |
0.10 |
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Sub-Total |
5283509 |
58.06 |
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GRAND TOTAL |
9100000 |
100.00 |
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BUSINESS DETAILS
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Line of Business : |
Manufacture and Exports of Shoe Uppers, Chrome Leather, Sole Leather, Shoes, Sole / Cut Soles, Leather Garment, Textile Garments and Leather Goods. |
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Products : |
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Exports to: |
Australia, Canada, England, France, Germany, HongKong, Ireland, Israel, Italy, Malaysia, New Zealand, Portugal, Saudi Arabia, South Africa, South Korea, Spain, U.K. and U.S.A. |
PRODUCTION STATUS
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Class of Goods |
Unit |
Capacity (per Annum) |
Actual
Production |
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Licensed |
Installed |
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Shoe Upper |
Pairs |
1000000 |
912000 |
386978 |
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Leather Hides |
Hides |
Delicenced |
450000 |
450457 |
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Leather skin |
Pcs |
Delicenced |
1000000 |
1207323 |
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Shoes |
Pairs |
2629200 |
1615301 |
2380348 |
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Leather Products |
Pcs |
543000 |
N. A. |
57481 |
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Textile Garment |
Pcs |
750000 |
210000 |
444848 |
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Sole |
Pairs |
N.A. |
480000 |
155055 |
GENERAL INFORMATION
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Suppliers : |
Ø Avadh Engines and Machines Private Limited Ø Kurt’O John Shoe Components Private Limited Ø M I Rubber Industries Ø R.K. Traders Ø Sanghavi Shoe Accessories Private Limited Ø AKI Leather Industries Private Limited Ø Associated Chemicals Private Limited Ø Associated Chemicals Private Limited Ø Anu Chemicals Ø K.N. Chemicals Ø Keuper Laminators Ø Pee Aar Organic and Chemicals Private Limited Ø Roshan Lai |
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Customers : |
v
Shoe House v
Prime International |
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No. of Employees : |
1240 |
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Bankers : |
· Punjab National Bank, Kanpur, Uttar Pradesh Tel. No. 91-512-2317986 / 2362117 / 2311577 Fax No. 91-512-2311232 · State Bank of India, Overseas Branch 15/54-B, Civil Court Road, Civil Lines, Kanpur, Uttar Pradesh Tel. No. 91-512-2354990 / 2368174 Fax No. 91-512-2313474 |
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Facilities : |
Of the above
Term loans worth Rs. 67.210 millions (Previous year Rs.56.082 millions) are
repayable within one year. Working Capital Loans
from banks include USD nIL (Previous Year USD 7,00,000) Foreign Currency
Demand Loan Secured by
hypothecation of specific current assets and movable assets of the Company
both present and future and personal guarantee of two directors and includes
Rs. Nil (Previous year- Rs.1.657 millions) secured by documentary bills. Secured by
equitable mortgage of specific fixed assets and hypothecation of Plant and
Machineries and personal guarantee of two directors and includes Rs. 9.798
millions (Previous year Rs. 9.941 millions) secured by hypothecation of
specific assets. Secured by
equitable mortgage of specific Land & Building and hypothecation of
specific Fixed Assets and personal guarantee of two directors. |
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Banking
Relations : |
Good |
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Auditors : |
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Name : |
Kapoor Tandon and Company Chartered Accountants |
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Address : |
Kanpur, Uttar Pradesh, India |
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Associates/Subsidiaries : |
Subsidiaries · Amin International Limited · Superhouse (UK) Limited, U.K. · Superhouse (U.S.A.) Internatina Inc. , U.S.A. · Superhouse Australia Pty. Limited, Australia ASSOCIATES · Super Tannery (India) Limited · Superhouse Overseas Limited · Superhouse Shoes Limited · Chowdhary Overseas Limited · Unnao Tanneries Pollution Control Company · Super Footwear Limited · Tritan Leather Works Private Limited · Prime International · Shoe House · Nigar Talkies Limited |
CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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15000000 |
Equity Shares |
Rs. 10.00 each |
Rs. 150.000
millions |
Issued, Subscribed Capital :
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No. of Shares |
Type |
Value |
Amount |
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13047718 |
Equity Shares |
Rs. 10.00 each |
Rs. 130.477 millions |
Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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9100000 |
Equity Shares |
Rs. 10.00 each |
Rs. 91.000 millions |
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3947718 |
Add: forfeited Equity Shares |
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Rs. 3.948 millions |
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Total |
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Rs. 94.948 millions |
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Of the above 4214542 Equity shares were allotted as fully
paid Share pursuant to the Scheme of Amalgamation without payments being
received in cash. 810135 Shares allotted as fully paid shares during
the year on conversion of 606718 preferential warrants. |
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FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
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SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
94.948 |
92.191 |
82.881 |
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2] Preferential Warrant Money |
26.908 |
0.000 |
0.000 |
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3] Reserves & Surplus |
818.622 |
767.491 |
717.240 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
940.478 |
859.682 |
800.121 |
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LOAN FUNDS |
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1] Secured Loans |
760.368 |
539.380 |
509.556 |
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2] Unsecured Loans |
0.000 |
0.000 |
0.000 |
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TOTAL BORROWING |
760.368 |
539.380 |
509.556 |
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DEFERRED TAX LIABILITIES |
74.523 |
70.623 |
69.455 |
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TOTAL |
1775.369 |
1469.685 |
1379.132 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
752.534 |
628.992 |
595.554 |
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Capital work-in-progress |
22.165 |
32.422 |
26.159 |
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Advances for Capital Expenditure |
29.650 |
12.540 |
4.316 |
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INVESTMENT |
45.559 |
52.657 |
50.599 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
773.719
|
584.959
|
491.959 |
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Sundry Debtors |
590.369
|
468.047
|
453.676 |
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Cash & Bank Balances |
126.020
|
50.100
|
59.191 |
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Other Current Assets |
72.542
|
50.661
|
47.501 |
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Loans & Advances |
77.690
|
55.050
|
53.891 |
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Total
Current Assets |
1640.340
|
1208.817 |
1106.218 |
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
706.885
|
449.381
|
399.280 |
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Provisions |
7.994
|
16.362
|
4.528 |
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Total
Current Liabilities |
714.879
|
465.743 |
403.808 |
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Net Current Assets |
925.461
|
743.074 |
702.410 |
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.094 |
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TOTAL |
1775.369 |
1469.685 |
1379.132 |
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PROFIT & LOSS
ACCOUNT
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PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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Sales Turnover |
3246.033 |
2309.910 |
2207.546 |
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Other Income |
24.222 |
10.228 |
16.075 |
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Change in stock of Finished Goods and
work-in-process |
74.926 |
58.090 |
(12.738) |
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Total Income |
3345.181 |
2378.228 |
2210.883 |
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Profit/(Loss) Before Tax |
110.607 |
78.599 |
79.382 |
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Provision for Taxation |
39.942 |
31.168 |
22.364 |
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Profit/(Loss) After Tax |
70.665 |
47.431 |
57.018 |
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Earnings in Foreign Currency : |
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Export Earnings |
2457.211 |
1784.2354 |
1651.372 |
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Other Earnings |
1.166 |
0.223 |
0.904 |
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Total Earnings |
2458.377 |
1784.458 |
1652.276 |
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Imports : |
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Raw Materials |
188.113 |
91.587 |
101.706 |
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Stores & Spares |
187.725 |
149.875 |
149.407 |
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Capital Goods |
24.103 |
20.430 |
24.970 |
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Finished Goods |
0.142 |
0.456 |
0.000 |
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Total Imports |
400.083 |
262.348 |
276.083 |
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Expenditures : |
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Materials consumed |
2354.096 |
1615.733 |
1515.912 |
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Manufacturing, Administrative,
selling and Distribution Expenses |
821.259 |
635.413 |
571.853 |
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Depreciation |
59.219 |
48.483 |
43.736 |
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Total Expenditure |
3234.574 |
2299.629 |
2131.501 |
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QUARTERLY
|
PARTICULARS |
30.06.2007 (1st
Quarter) |
30.09.2007 (2nd
Quarter) |
31.12.2007 (3rd
Quarter) |
31.03.2008 (4th
Quarter) |
|
Sales Turnover |
714.600 |
889.300 |
706.500 |
950.300 |
|
Other Income |
2.900 |
5.300 |
2.200 |
0.000 |
|
Total Income |
717.500 |
894.600 |
708.700 |
950.300 |
|
Total Expenditure |
680.900 |
850.400 |
665.000 |
896.800 |
|
Operating Profit |
36.600 |
44.200 |
43.700 |
53.500 |
|
Interest |
16.700 |
19.500 |
18.400 |
13.300 |
|
Gross Profit |
19.900 |
24.700 |
25.300 |
40.200 |
|
Depreciation |
15.200 |
18.400 |
17.900 |
16.400 |
|
Tax |
1.600 |
3.800 |
5.500 |
15.000 |
|
Reported PAT |
1.800 |
2.600 |
2.300 |
7.900 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity Ratio |
|
0.80 |
0.70
|
0.72 |
|
Long Term Debt-Equity Ratio |
|
0.23 |
0.21
|
0.19 |
|
Current Ratio |
|
1.23 |
1.31
|
1.27 |
|
TURNOVER RATIO |
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Fixed Assets |
|
2.67 |
2.27
|
2.26 |
|
Inventory |
|
4.10 |
3.75
|
3.76 |
|
Debtors |
|
5.26 |
4.38
|
4.41 |
|
Interest cover Ratio |
|
2.61 |
2.52
|
2.62 |
|
Operating Profit Margin |
(%) |
8.57 |
8.85
|
9.27 |
|
Profit Before Interest and Tax Margin |
(%) |
6.44 |
6.45
|
6.91 |
|
Cash Profit Margin |
(%) |
4.67 |
4.75
|
5.43 |
|
Adjusted Net Profit Margin |
(%) |
2.54 |
2.35
|
3.07 |
|
Return on Capital Employed |
(%) |
12.30 |
10.26
|
10.92 |
|
Return on Net Worth |
(%) |
8.75 |
6.37
|
8.33 |
LOCAL AGENCY
FURTHER INFORMATION
Financial
Performance:
The company has achieved the sales and other Income of Rs. 3270.255 Millions against Rs. 2320.138 Millions reported last year. The Profit after Tax was Rs.70.665 Millions during the year as compared to Rs.47.431 Millions reported during the previous year.
Recognition:
Council for Leather Exports:
Mr. Mukhtarul Amin, Chairman and Managing Director of the company has
been unanimously elected as Chairman of Council for Leather Exports, a body
functioning under Ministry of Commerce and Industries, Government of India, for
the period 2007-2009.
Gold Trophy:
The company has once again bagged the most prestigious Golden Peacock Award for
the best performance in Overall Export in leather industry. The companies with
total FOB export turnover of leather and leather products of Rs. 1000.000
Millions and above are eligible for considering this award. In addition to Gold
Trophy, the company has also claimed five other outstanding awards for Brand
Promotion, Export of non-leather harness and saddlery, maintaining high
standard for environment production and adhering to International Standard of
quality, health and safety.
Amalgamation with Super Footwear Limited
and Allen Shoes Limited:
M/s Super Footwear Limited and M/s Allen Shoes Limited have been amalgamated
with the company during the year. The combined financial and other resources of
all the three companies have resulted in better and more profitable utilization
of these sources and the company has been better placed for further profitable
growth.
MANAGEMENT DISCUSSION
AND ANALYSIS
Macroeconomic Overview:
Vigorous growth with strong macroeconomic fundamentals has characterized
developments in the Indian economy in 2006-07 so far. However, there are some
genuine concerns on the inflation front. Growth of 9.0 per cent and 9.2 per
cent in 2005-06 and 2006-07, respectively, by most accounts, surpassed
expectations. While the up-and-down pattern in agriculture continued with
growth estimated at 6.0 per cent and 2.7 per cent in the two recent years, and
services maintained its vigorous growth performance.
Entrenchment of the higher growth trends, particularly in manufacturing, has boosted sentiments, both within the country and abroad. The overall macroeconomic fundamentals are robust, particularly with tangible progress towards fiscal consolidation and a strong balance of payments position.
There were distinct signs of sustained improvements on the
industrial front. Growth of industrial sector, from a low of 2.7 per cent in
2001-02, revived to 7.1 per cent and 7.4 per cent in 2002-03 and 2003-04,
respectively, and after accelerating to over 9.5 per cent in the next two
years, touched 10.0 per cent in 2006-07.
A notable feature of the current growth phase is the sharp rise in the
rate of investment in the economy. Investment, in general being a forward
looking variable, reflects a high degree of business optimism. The revival in
gross domestic capital formation (GDCF) that commenced in 2002-03 has been
followed by a sharp rise in the rate of investment in the economy for four
consecutive years. This sharp increase in the investment rate has sustained the
industrial performance and reinforces the outlook for growth.
India's exports (in US dollar terms and customs basis) have been growing
at a high rate of more than 20 per cent since 2002-03. During 2005-06, with
growth of 23.4 per cent, India's exports crossed the US$100 billion mark.
During 2006-07, after a slow start, exports gained momentum to grow by an estimated 36.3 per cent in the first nine months to reach US$89.5 billion.
Buoyancy of exports was driven by the resurgence in the manufacturing sector and sustained demand from major trading partners.
Industry Structure and Developments:
The leather industry is spread in different segments, namely, Finished
Leather Footwear, Footwear Components, Leather Garments and Leather Goods
including Bags, Saddlery, Harness and Leather Gloves etc. The major production
centers for leather and leather products are located at Chennai, Ambur,
Ranipat, Vaniyambadi, Trichi and Dindigul in Tamilnadu, Kolkata in West Bangal,
Kanpur, Unnao and Agra in Uttar Pradesh, Jalandhar in.
Punjab, Bangalore in Karnataka, Mumbai in Maharashtra and Hyderabad in
Andra Pradesh. The leather industry is mainly concentrated in small and medium
sector.
The composition of export of leather and leather products from India has
undergone a structural change during the last three decade, from merely an
exporter of raw materials in the sixties to that of value added finished
products in the nineties. The value added finished products presently
constitute around 80% of total export from the industry, which was mere 7% in
1956-57.
Realizing the growth potential of the leather industry, the Government of India has been making significant efforts to promote rapid advancement of the industry. On june 30, 2005, the Cabinet Committee on Economic Affairs (CCEA) decided to implement a Rs. 2.9 billion scheme for the integrated development of the leather sector. Under this scheme, existing tanneries are being modernized and new units are being set up for footwear, components and leather products. This scheme is resulting in gains in terms of productivity, right-sizing of capacity, cost-cutting, and design-development.
Opportunities and Threats:
Council for Leather Exports introduced a vision document for 2010-11
which was presented to Hon'ble Minister of State, Commerce and Industry, Govt.
of India with the object to analyze the growth pattern of leather exports and
formulate intervention strategies with and object to enhance the exports to $ 7
Billion by 2010-11 from the present export at USD 2.39 Billion by creating
additional one million jobs in the sector. Council estimated 42% of value as
additional exports is required to meet the target of USD 7 Billion. To achieve
the target, major growth is required in Footwear i.e.
25%, Finished Leather i.e. 14%, Garments i.e. 12% and Leather Goods i.e.
18%. Council has also estimated requirement of finished leather is 4 Billion Sq. ft. out of 2 Billion Sq. Ft. is available at present for achieving the USD 7 Billion export target.
Performance
Overview:
Subject is one of the leading leather exporters with certification from
Government of India. The company has 12 units spread across Kanpur, Unnao,
Noida and Agra. Superhouse is engaged in production of Leather garments, shoes,
bags, accessories, fashion garments and riding garments. Equipped with some of
the most modern machineries and specialized workforce, the company produces all
types of leather and value added finished leather items, which are accepted and
appreciated all over the world.
The Company also has made its foray into the Indian retail sector and
owns the retail brand in the name of Allen Cooper with exclusive stores at
Lucknow, Allahabad, Varanasi, Kanpur, Ghaziabad and several other cities.
The company is one of the major suppliers to GAP, DKNY, Miss Sixty, Dolcis, C&A, Next PLC, Liz, Steve Maidden, Euro Shoes, Spapino, Burton's, Andre, Heckel Security, Kramer Pferdesport, Hooks, J.D. Williams, Cipesz ES, Cofra SRL, Heba, M-Tech, PT Alasmas Berkat, Punto FA, and Tesco. The company is among the largest footwear exporters from the country to France. It has also forayed into Germany, Holland, South Africa and Australia with safety shoes.
The company is committed to produce quality products for its customers
and has acquired IS09001-2000, ISO-14001-2004 & OHSAS-18001-1999
certification.
It also has the distinction of quality certification under
British, Australia, USA and Canadian standards also.
Today Superhouse, is major exporter to European countries including UK,
France, Italy, Germany, Denmark and Netherland. Apart from European countries
the company also exports to USA, China, Hong Kong, South Africa, Australia
& New Zealand and Middle East countries.
During FY07, the company recorded total consolidated revenue of Rs
3337.300 Millions, an increase of 42% y-o-y. The consolidated net profit
increased 57% y-o-y to Rs 77.100 Millions. There was a slight dip in the
operating margin to 6.83% from 7.13% on account of depreciation of rupee
towards the end of fiscal. The EPS for the year was Rs 8.67 as against Rs 6.21
at the end of FY06.
Business:
Subject has plans to ramp up its capacity, both by organic and inorganic
routes. For this, they are setting up two new shoe factories with a capacity of
5,000 pairs a day at Agra and Kanpur, which are expected to start production by
the end of the current fiscal. The company is also expanding its tannery
capacity to three million sq ft a month from two million sq ft currently.
Through a Rs 500.000 Millions expansion plan, the company has a target of
increasing its turnover to about, Rs 4000.000 Millions. The new capacity is to
primarily cater to the US and European markets.
Handling Industry Issues:
The company is dealing with the issue of appreciation of rupee towards
the end of FY07 by reducing wastage and overhead expenses. The appreciation
will affect only the orders booked before rupee appreciation. Moreover, the
government has now increased the drawback/DEPB and lowered interest rates on
exports, which will make the scenario better for the industry and the
company.
Industry Outlook:
During 2006-07 the leather industry has registered very impressive growth
of 21.33% as against previous year growth of 7.98%. The trend of positive
growth is continuing during the current year. The company has demand of its
products from all over the world. The company has achieved export growth rate
of 37.72% and thereby surpassing the industry growth rate of 21.33% during
2006-07. It is expected that the company will maintain the growth rate during
2007-08.
Risk and Concerns:
The major raw material for leather industry is raw hide/skins.
Leather is a natural product and its prices and availability are changing from
time to time. The company is having vast experience in sourcing the raw
materials for its tanneries and leather products divisions from India and
outside which help in keeping the prices and availability under control. The
output of raw hides/skins are also depend upon person skill of the purchasers
and technicians, which are being properly taken care-off by the experienced
personnel of the company. The substantial revenue of the company is being
generated in foreign exchange. The adverse foreign exchange rates may effect
the profitability of the company. The experienced professional of the company
are keeping close watch over movement in currency rates. The company has
regularly hedged and is keeping part of the proceeds in EEFC accounts for
imports in foreign currency.
Cautionary Statement:
Statement in the Management Discussion and Analysis describing the Company's
objectives, projections, estimates, expectation or prediction may be
`forward-looking statement' within the meaning of applicable securities laws
and regulations. Further, the performance of the company is also dependent on
domestic and global economic conditions, government and regulatory policies on
which company is not having any control.
Internal Control System and their
Adequacy:
The company has a proper and adequate system of internal controls to
ensure that all assets are safeguarded and protected against loss from misuse
or disposition and that transactions are authorized, recorded and reported
correctly. Proper checks and controls have been introduced for all the incoming
and outgoing materials. The Audit Committee and Internal Audit Department
regularly review the financial and operating controls at all location of the
Company. The internal control is designed to ensure that the financial and
other records are reliable for preparing financial statements and other data,
and for maintaining accountability of assets.
Financial Performance with Respect
to Operational Performance:
The financial statements have been prepared in compliance with the
requirements of the companies Act, 1956 and Generally Accepted Accounting
Principals in India. The company has achieved the sales and other income of Rs.
3270.255 Millions against Rs. 2320.138 Millions reported last year. The profit
after tax was Rs. 70.665 Millions during the year as compared to Rs. 47.431
Millions reported during the previous year. The gross block of the company as
at 31.03.2007 was Rs. 1222.400 Millions against Rs. 1017.300 Millions as at
31.03.2006. The net current assets as at 31.03.2007 was Rs. 925.400 Millions as
against Rs. 743.000 Millions as at 31.03.2006. The detailed information of
financial performance is given in the attached annual financial statements.
|
Contingent
Liabilities |
31.03.2007 |
|
Guarantees issued by the Bank |
5.626 |
|
Corporate Guarantee(s) to bank(s) against credit facilities extended to
wholly owned subsidiary in U.K and UAE and a Society |
111.143 |
|
Letter of Credit opened and outstanding |
246.237 |
|
Duty on Export obligation pending |
106.846 |
|
Electricity demand pending litigation |
1.214 |
|
Uncalled Liability on Shares partly paid |
4.000 |
In accordance with the Scheme, the entire business and all the properties and assets, entitlements, duties, liabilities and obligation of every kind, nature and description of SFL and ASL stands transferred and vested in the company i.e. SHL. Pursuant to the Scheme, in consideration of the said transfer and after considering the extinguishment of share capital held by SHLin SFL, theSHLhas issued 392 (three hundred ninety two) fully paid up Equity Share of Rs. 10 each of SHL against 100 (one hundred) fully paid up Equity Shares of Rs. 100 each ofSFLand240 (two hundred forty) fully paid up Equity Share of Rs. 10 each of SHL against 100 (one hundred) fully paid up Equity Shares of Rs. 10 each of ASL. Accordingly 396,483 Equity Shares were alloted as fully paid up during the year without the payment being received in cash.
Fixed Assets:
v
Land
v
Building
v
Plant and machinery
v
Furniture and Fittings
v
Vehicles
v
Computer
Website details attached
Introduction
From
a single tannery in the 80’s producing finished leather, Subject has emerged as
one of the biggest players in the industry. It started with a commitment to
excel, achieve and deliver the very best. Here, they engineer, optimize and
control every phase of manufacturing process from raw material to finished
products to ensure that end products are of highest quality and also best value
for money.
A
US $50 million group, subject has 15 units, with workforce of over 3000 and has
its presence in over 35 countries. Their commitment to quality is approved by
ISO 9002 certification. Stringent norms of EN 345 make them one of the most
respected manufacturers amongst the importers from European countries. Being
equipped with requisite infrastructure and strict adherence to high standard of
quality, they are able meet CSA, ANZ & SABS standard.
A
perfect blend of highly technical, skilled & semi-skilled work force and
competent executives has helped them in carving an enviable position for
theirselves in the global market.
Three
state-of-art units involved in manufacturing of footwear are ably backed by
their marketing offices strategically located in USA, UK, and UAE &
Australia.
To
add on, they are approved vendors to world-wide brands such as Wal-mart,
Filanto, Auchan, Andre, Shoe Fayre, Hudson Bay, Heckel Securite, Secura and
many more.
Their
existence in the trade for over three decades has given them a wealth of
knowledge, which allows them to offer their customers the maximum in choice,
value & quality.
It’s
their in-house tanneries sole division provide them with finest quality leather
Soles for their foot wears. To meet the exacting demand of clients they also
import leather from Brazil, Italy and Columbia.
Honours and Awards
The
Company has the distinguished Awards. All having been awarded scores of
Performance Awards, some of which are listed below :
Export Award from Council for Leather Exports for creditable export performance
during year 2004-2005 under the category Saddlery & Harness (Above
US$1 million) - Plaque.
RajyaNiryat Puraskar Trophy ( First Position ) 1988-89 Medium size Industry by
Government of Uttar Pradesh.
RajyaNiryat Puraskar Trophy ( Second Position ) 1990-91 Medium size Industry by
Government of Uttar Pradesh.
RajayaNiryat Puraskar Trophy ( First Position } 1991-92 Medium size Industry by
Government of Uttar Pradesh.
RajyaNiryat Puraskar Trophy ( Second Position ) 1995-96 Medium size Industry by Government
of Uttar Pradesh.
Small
Industries of Export Promotion Department, Government of Uttar Pradesh
Trophy ( Second Prize ) for commendable performance in Exports in 1995-96.
Letter
of Appreciation, International Shoe Fare, 1996.
Certificate
of Merit awarded by C.L.E. Chennai, for commendable performance in
Exports in 1997-98.
Certificate
and Trophy for showing commendable export performance in 1998-99 in leather
Footwear.
Certificate
and Trophy for showing commendable performance for Footwear components.
Certificate and Trophy for showing commendable performance in finished Leather.
C.L.E. Certificate
of Merit for commendable performance in exports for US.$ LOO million to 5,00
million in 1998-99,
Certificate
and Trophy - Rajya Niryat Puraskar, 1998-99 ( First Prize ) by
Government of Uttar Pradesh.
International
Institute of Education and Management /International Udyog Excellence Award,
2000.
Life
time Achievement Award to Mr. Mukhtarul Amin for outstanding Achievement
in achieving Trophy - Certificate and Trophy National and International
Compendium July, 2000.
213i
Century Millenium Award to Mr. Mukhtarul Amin by International Institute
of Education and Management.
C.L.E.
Certificate and Trophy for Exports 1.00 million to 5.00 millions US.$ In
1997-98 in Leather Goods.
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. 42.97 |
|
UK Pound |
1 |
Rs. 84.75 |
|
Euro |
1 |
Rs. 66.72 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
7 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
7 |
|
--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 |
|
64 |
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 |
|