MIRA INFORM REPORT

Report Date :

05.05.2008

IDENTIFICATION DETAILS

Name :	LNJ DENIM - UNIT OF RSWM LIMITED
Formerly Known As :	RAJASTHAN SPINNING AND WEAVING MILLS LIMITED
Registered Office :	Kharigram, P. O. Gulabpura, District Bhilwara – 311 021, Rajasthan
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	1960
Com. Reg. No.:	55-6678
CIN No.: [Company Identification No.]	U17111DL1973PLC006678
TAN No.: [Tax Deduction & Collection Account No.]	JDHR02676C
PAN No.: [Permanent Account No.]	AAACR9700M
Legal Form :	A public limited liability company. The company’s shares are listed on the Stock Exchanges
Line of Business :	Manufacturers and Sellers of Polyester Viscose, Blended Yarn, Blended Fabric, Cotton Yarn, etc.

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	USD 12200000
Status :	Satisfactory
Payment Behaviour :	Usually correct
Litigation :	Clear
Comments :	Subject is a well established company having satisfactory track. Directors are reported as experienced, respectable and resourceful businessmen. Their trade relations are fair. Payments are usually correct and as per commitments. The company can be considered good for normal business dealings at usual trade terms and conditions

LOCATIONS

Registered Office :	Kharigram, P. O. Gulabpura, District Bhilwara – 311 021, Rajasthan, INDIA
Tel. No.:	91-1482-223144 To 50
Fax No.:	91-1482-223361
E-Mail :	molfin@lnjb.com, info@bhilwara.com
Website :	http://www.bhilwara.com
Corporate Office :	Bhilwara Towers, A-12, Sector –1, Post Box No. 185, Noida – 201 301, Uttar Pradesh, INDIA
Tel. No.:	91-120-2541810 (EPABX)
Fax No.:	91-120-2531648 / 22531745
E-Mail :	molfin@lnjb.com / skg@lnjb.com
Administrative Office:	Bhilwara Bhawan, 40 -41, Community Centre, New Friends Colony, New Delhi – 110 065, India
Overseas marketing offices	Located at Italy, Belgium and UK
Factory:	· Kharigram, P. O. Gulabpur – 311 021, District Bhilwara, Rajasthan, India · Lodha, P. O. Banswara – 327 001, Rajasthan, India · Mandpam, Bhilwara – 311 001, Rajasthan, India
Regional Offices:	Located at : · Mumbai, · Kolkata · Bangalore

DIRECTORS

Name :	Mr. Shekhar Agarwal
Designation :	Vice Chairman and Managing Director
Date of Birth/Age :	50 years
Qualification :	B.Tech. (M.E.), M. Sc. (Chicago)
Experience :	21 years
Date of Appointment :	13.02.1984
Previous Employment	Shashi Commercial Limited – Chief Executive
Name :	Mr. J. C. Laddha
Designation :	Executive Director
Date of Birth/Age :	53 years
Qualification :	B.Com., F.C.A.
Experience :	30 years
Date of Appointment :	01.01.1988
Previous Employment:	Bhilwara Spinners Limited
Name :	Mr. L. N. Jhunjhunwala
Designation :	Chairman Emeritus
Name :	Mr. Ravi Jhunjhunwala
Designation :	Chairman
Name :	Dr. Kamal Gupta
Designation :	Director
Name :	Mr. A. R. Garde
Designation :	Director
Name :	Mr. S. K. Srivastava
Designation :	Director - Nominee LIC
Name :	Mr. Riju Jhunjhunwala
Designation :	Director
Name :	Mr. A K Churiwal
Designation :	Director
Name :	Mr. D N Davar
Designation :	Director

Name :	Mr. R P Khaitan
Designation :	Director
Name :	Mr. Pradeep Dinodia
Designation :	Director

KEY EXECUTIVES

Name :	Mr. Surender Gupta
Designation :	Company Secretary
	Corporate Office Mr. D. P. Mangal Executive Director (Corporate Affairs) Mr. R. S. Dugar Executive Director Mr. P. S. Puri President (Corporate Finance) Mr. T. Dev Joshi President (HR & OD) Mr. M. L. Jhunjhunwala Sr. Vice President, Mumbai Business Heads Mr. J. C. Laddha Chief Executive (Dyed Yarn Business) Mr. Prakash Maheshwari Chief Executive (Grey Yarn Business) Mr. S. C. Garg Chief Executive (Melange Yarn Business) Project Heads Mr. Haresh Israni President (Operations - Denim Business)

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters, Directors, relatives and associates	12037742	52.00
Foreign institutional investors/ mutual	199178	0.86
Public financial institutions/ State Financial Corporation	2206321	9.53
Mutual funds (Indian)	740702	3.20
Nationalised and other banks	14636	0.06
NRIs/OCBs (Other than Promoters)	536239	2.32
Public	7413871	32.03
Total	23148689	100.00

BUSINESS DETAILS

Line of Business :

Manufacturers and Sellers of Polyester Viscose, Blended Yarn, Blended Fabric, Cotton Yarn, etc.

Products :

Item Code No. (ITC Code)	Product Description
551100	Polyester Viscose / Blended Yarn
551500	Polyester Viscose / Blended Fabric
520500	Cotton Melange Yarn

Brand Names :

"MAYUR"

GENERAL INFORMATION

No. of Employees :	6204
Bankers :	v State Bank of Bikaner and Jaipur, Dr. D. N. Road, Mumbai – 400 001, Maharashtra, India v State Bank of India, Commercial Branch, Pur Road, Bhilwara, Rajasthan, India v Bank of Baroda, Bhilwara, Rajasthan, India v Punjab National Bank v The Bank of Rajasthan Limited, Bhilwara, Rajasthan, India v ICICI Bank Limited, Bhilwara, Rajasthan, India v Axis Bank Limited, Sir P. M. Road, Mumbai – 400 001, Maharashtra, India
Banking Relations :	Satisfactory
Auditors :
Name :	S. Bhargava Associates Chartered Accountants, Jaipur, Rajasthan, India L. Chechani and Company Chartered Accountants, Bhilwara, Rajasthan, India
Associates/Subsidiaries :	v Bhilwara Infotech Limited v Bhilwara Melba de Witte Limited v Bhilwara Processors Limited v Bhilwara Spinners Limited v BSL Limited v Escribe India Private Limited v HEG Limited v Indo Canadian Consultancy Services Limited v Malana Power Company Limited v Maral Fashions v Maral Overseas Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
34000000	Equity Shares	Rs. 10/- each	Rs. 340.00 millions
3100000	Cumulative Redeemable Preference Shares	Rs. 100/- each	Rs. 310.00 millions
	Total		Rs. 650.00 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
23150000	Equity Shares	Rs. 10/- each	Rs. 231.500 Millions
3750000	Cumulative Redeemable Preference Shares	Rs. 100/- each	Rs. 375.000 Millions
	Total		Rs. 606.500 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		606.500	606.500	219.200
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		2446.200	2055.000	1774.200
4] Warrants		0.000	18.800	0.000
5] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		3052.700	2680.300	1993.400
LOAN FUNDS
1] Secured Loans		8724.900	4440.500	3786.600
2] Unsecured Loans		0.400	1.400	102.000
TOTAL BORROWING		8725.300	4441.900	3888.600
DEFERRED TAX LIABILITIES		0.000	347.700	256.800
TOTAL		11778.000	7469.900	6138.800
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		5158.300	4027.700	2740.100
Capital work-in-progress		3247.900	279.000	794.700
INVESTMENT		464.600	267.800	407.600
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1649.700	1292.200	1169.900
	Sundry Debtors	1006.700	1118.000	621.500
	Cash & Bank Balances	166.000	45.700	65.700
	Other Current Assets	0.000	865.800	446.300
	Loans & Advances	1107.900	212.500	363.800
Total Current Assets		3930.300	3534.200	2667.200
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	1043.600	528.600	391.000
	Provisions	0.400	126.700	93.900
Total Current Liabilities		1044.000	655.300	484.900
Net Current Assets		2886.300	2878.900	2182.300
MISCELLANEOUS EXPENSES		20.900	16.500	14.100
TOTAL		11778.000	7469.900	6138.800

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		10558.700	9877.800	7555.400
Other Income		187.200	115.800	272.000
Total Income		10745.900	9993.600	7827.400
Profit/(Loss) Before Tax		647.200	390.100	209.900
Provision for Taxation		206.500	119.300	25.800
Profit/(Loss) After Tax		440.700	270.800	184.100
Earnings in Foreign Currency :
	Export Earnings	NA	4175.675	3020.996
Total Earnings		NA	4175.675	3020.996
Imports :
	Raw Materials	NA	333.944	552.753
Total Imports		NA	333.944	552.753
Expenditures :
	Manufacturing Expenses	551.600	503.600	567.200
	Administrative Expenses	738.300	742.300	594.000
	Raw Material Consumed	5902.300	5457.000	4344.700
	Salaries, Wages, Bonus, etc.	782.900	692.000	508.200
	Interest	269.100	231.900	155.000
	Power & Fuel	1190.200	1077.100	660.600
	Other Expenditure	124.000	118.400	139.700
Total Expenditure		9558.400	8822.300	6969.400

QUARTERLY

PARTICULARS	30.06.2007 [1^ST Quarter]	30.09.2007 [2^nd Quarter]	31.12.2007 [3^rd Quarter]
Sales Turnover	2543.200	2955.500	2981.500
Other Income	37.400	19.700	13.100
Total Income	2580.600	2975.200	2994.600
Total Expenditure	2289.900	2654.600	2702.600
Operating Profit	290.700	320.600	292.000
Interest	82.800	105.100	106.600
Gross Profit	207.900	215.500	185.400
Depreciation	140.300	164.500	175.600
Tax	9.400	7.200	3.300
Reported PAT	50.500	28.900	4.000

KEY RATIOS

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
PAT / Total Income	(%)	4.10	2.70	2.35
Net Profit Margin (PBT/Sales)	(%)	6.02	3.90	2.68
Return on Total Assets (PBT/Total Assets}	(%)	7.12	5.15	3.88
Return on Investment (ROI) (PBT/Networth)		0.21	0.14	0.10
Debt Equity Ratio (Total Liability/Networth)		3.20	1.90	2.19
Current Ratio (Current Asset/Current Liability)		3.76	5.39	5.50

LOCAL AGENCY FURTHER INFORMATION

HISTORY

The company was originally incorporated in the year 1960 at West Bengal. The Registered Office of the company was transferred from West Bengal to Bhilwara in Rajasthan with effect from 11.04.1994 It's Company Registration No. is 8216.

Subject was promoted by the Bhilwara Group which has interest in various group companies. The company is managed by Chairman, Mr. L. N. Jhunjhunwala and Vice-Chairman and Managing Director, Mr. Shekhar Agarwal.

Subject came out with a Rs. 1570.000 millions Euro issue in 1994 to finance its plans to increase spindleage by 18800, add 24 looms at each of the units and to set up a process house at its Banswara unit with a capacity of processing 15.6 million mtrs. of fabric per annum. The product-mix of the company include blends like polyester/viscose, 100% viscose, 100% polyester, polyester sewing threads, 100% acrylic, polynosic blends, silk blends, viscose/flax, polyester/cotton, 100% cotton melange yarn.

During 1993-1994, it signed a MOU with Hydro Quebec International, Canada to implement 86 MW Malana and 192 MW Allain Duhangan Projects in Himachal Pradesh. It markets its products under the well-known “Mayur” brand in India and exports its products to the European and the USA markets.

Subject has opened marketing offices in Italy, Belgium and UK.

The company had received the Rajasthan's prestigious Export Excellence Award for the year 1994-95.

During the year 1997-98, Bhilwara Melba De Witte Limited, a joint venture project promoted by the company with Australian and Belgian partners, had established its leadership in the market for automotive furnishing fabric. In 1998-99, it increased the installed capacity of spindles and looms to 131376 nos. and 157 nos. respectively and commissioned 4.2 MW each of power plant for captive consumption.

During the year 1999-2000, the company's process house at Mordi, District Banswara had been sold.

The company had finalised plans for modernisation/upgradation of existing equipment under Technology Upgradation Funs Scheme at a cost of Rs. 485.000 millions. Term loan upto Rs. 400.000 millions had been sanctioned and the modernisation scheme had already commenced.

Term Loan upto Rs. 240.000 millions has been sanctioned from PNB for Yarn Dyeing project at Mandpam, Looms at Gulabpura and the modernisation scheme has already commenced. The Board of the company has approved for acquiring Rishabhdev Textile Mills unit of HEG Limited and the company is taking steps for giving effect to this proposal. The 2.8 ME at Mandpam at cost of Rs. 100.000 millions was installed in 2002-03 and operations has commenced during the year itself.

FIXED ASSETS

· Land (Freehold and Leasehold),

· Roads and Buildings,

· Plant and Machinery,

· Electric Fittings and

· Water Supply Installations,

· Furniture and Fixtures and

· Other Equipments and

· Vehicles.

Press Releases

LNJ Bhilwara presents the new face of The Company As a corporate makeover company unveilsnew logo-reflecting dynamism and growth

Noida, Monday, 11.09.2006 - The Company, a leading integrated player in the textiles sector in India, now becomes the company. Corporate makeover initiative comes and after the final approval by the ROC on 31.07.2006.

Since it's inception in 1961, the company has gone from strength to strength. Incorporating the far sighted vision of the founder, it has moved from core strengths and specialties like grey, dyed and melange yarn to widen the portfolio and expand into Fabric (Mayur Suiting), Technical textiles like Flame Retardant Fabric, Ready to wear garments and now Denim.

Said Mr. Riju Jhunjhunwala Jt. MD The company " Apart from merely broadening their inventory base, they have consciously been incorporating best industry practices and strategizing towards keeping a step ahead of developments in both technology as well as markets. The company has benchmarked the industry, as one of the earliest and largest exporters to high fashion markets like Europe and USA. As forward integration the company has stepped into the next dimension, by creating a new and dynamic image. This meant a new logo and a name that is founded on its proud heritage, along with an open, generic attitude, to cater to the Company's ambitious and rock-solid expansion plans".

The three Crescents in ascending sizes strongly connote the growing nature of the company . The crescent shape is symbolic of superlative quality, purity in nature and global (in fact cosmic) stature. The color Black connotes the strong heritage the Company enjoys, along with unity and reliability, while the color Gold reflects passion, excellence, superlative quality and the diverse expansion in the product range. The fine, international font used symbolizes compactness, along with unity and strong bonds.

"The three colours of the crescent represent different values: Black is the beginning of everything. It predates all that is new. Thence emerges light and colour. Thus black is also the umbilical cord that links us to their heritage. Gold stands for wealth - of knowledge, achievement, material gains - it takes us forward with passion and excellence and also connotes the diverse expansion of the group" Mr. Jhunjhunwala further added.

The company

The company has an annual capacity to deliver 75000 MT of yarn, with plans already firmed to double the capacity by 2009. The in-house fabric weaving and processing facilities, with an installed capacity of 12 million metres per annum are being integrated and modernized in the current fiscal year, which help us to achieve better realizations for the fabric manufactured. The production capacity, at the state-of-the-art garment unit will be ramped up from the current level of 3000 units per day to 8000 units per day within next six months. The company is looking for more opportunities in the garment business for global customers and feels that there are considerable avenues for growth in this segment. Other ongoing endeavors include setting up a 27 million meter /p.a denim facility and a captive power plant.

And these are not the only developments that have been steadily directed over the years. With the passage of time their strong sense of commitment to deliver the best in everything they touch has become deeply engrained in all the facets of their functioning. Within the company, they implement exacting standards for quality at power with the best in the world and ensure holistic development of their family members through varied cutting edge HR practices. But never the least they are irrevocably committed to developing and delivering the best to their clients from the smallest local to the largest global player. Their strong sense of social commitment has found newer avenues to grow into through their initiatives in the area of corporate social responsibility.

Profile

Rajasthan Spinning and Weaving Mills Ltd. the flagship Company of the LNJ Bhilwara Group. The Company is primarily engaged in the manufacture of synthetic, blended, melange and speciality yarns and fabrics.

The Company is a premier company of the Group, with a turnover of Rs.7750.00 Millions (US$ 177 million). The Company is exporting a complete range of yarn and fabric to over 60 countries worldwide, giving The Company a markedly visible presence across the textile world.

The manufacturing capacity of the Company is upwards of 81,000 MT of Yarn per annum from its Five Units - Gulabpura, Banswara, Mandpam, Rishabhdev And Ringas Located In Rajasthan. The Company also manufactures 12 million metres of fabric per annum at its Gulabpura unit.

All the plants are equipped with state-of-the-art machines and Captive Power Generation facilities. The Company is the first composite textile mill in India to be accorded the ISO Certification. The Company also enjoys a prestigious ‘Three Star Export House’ status and, over the years, has received several Export Awards from SRTEPC.

The company’s leadership in the textile industry is exemplified in the equity that its brand enjoy in the Indian market - place - ‘ Mayur Suitings ‘.

The Company is in the process of modernization drive and increase of spindles of its all the manufacturing units. The Company will soon introduce ready -to-wear Apparels. To enhance its operating capacity, The Company has acquired Jaipur Polyspin Ltd. for manufacturing of Synthetic Blended Yarn. The Company has also acquired a state-of-the-art process house at Mordi, Banswara, Rajasthan..

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.40.55
UK Pound	1	Rs.80.20
Euro	1	Rs.62.74

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	8
--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		63

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