MIRA INFORM REPORT

Report Date :

14.05.2008

IDENTIFICATION DETAILS

Name :	PATSPIN INDIA LIMITED
Registered Office :	3^rd Floor, Palal Tower, Ravipuram, M G Road, Ernakulam, Cochin – 682016, Kerala
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	20.09.1991
Com. Reg. No.:	006194
CIN No.: [Company Identification No.]	L18101KL1991PLC006194
TAN No.: [Tax Deduction & Collection Account No.]	CHNP00626D CHNP00292F
Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchanges.
Line of Business :	Manufacturers and Exporter of Cotton Yarn and Cotton Fabrics

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	USD 2186732
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and reputed company having fine track. Trade relations are fair. Business is active. Payments are reported as 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 :	3^rd Floor, Palal Tower, Ravipuram, M G Road, Ernakulam, Cochin – 682016, Kerala
Tel. No.:	91-484-2371822/2366495/2354708
Fax No.:	91-484-2311007/2370512/2370812
E-Mail :	gtnchn@satyam.net.in cs@patspin.com
Website :	http://www.gtntex.com
Corporate Office :	43, Mittal Chambers, 228, Nariman Point, Mumbai – 400021, Maharashtra, India
Tel. No.:	91-22-22021003/22028246
Fax No.:	91-22-22874144
Factory 1 :	5/345, Patodia Nagar, Para Road, Kanjikode East P.O., Palakkad – 678621, Kerala, India
Factory 2 :	S. F. No. 190 and 191, Tirupur Road, Ponneri, Udumalpet, Tamilnadu, India
Secretarial Office :	5^th Floor, Palal Towers, Ravipuram, M.G. Road, Ernakulam, Kochi – 682016, Kerala, India

DIRECTORS

Name :	Mr. B. K. Patodia
Designation :	Chairman
Date of Birth :	01.01.1945
Qualification :	Engineering Graduate from BITS, Pilani.
Date of Appointment :	20.09.1991
Last employment :	· GTN Textiles Limited · GTN Enterprises Limited · Kerala State Industrial Development Corporation Limited · Hindustan Polyamides & Fibres Limited · India Thermit Corporation Limited · Hind Rectifiers Limited · Patspin Apparels Private Limited · Patodia Exports & Investments Private Limited · Umang Finance Private Limited · Beekaypee Credit Private Limited · Madanlal Brijlal Private Limited
Profile :	Over 38 years of experience in textile industry, yarn marketing and cotton trade. He was Past Chairman of the Indian Cotton Mills Federation (ICMF) and Southern India Mills Association (SIMA). He is also an Executive Member of the Cotton Textiles Export Promotion Council, Mumbai. He is Vice Chairman and Managing Director of GTN Textiles Limited, the flagship company of GTN Group.
Name :	Mr. Umang Patodia
Designation :	Managing Director
Age :	38 Years
Qualification :	Bachelor of Commerce
Experience :	17 Years
Date of Appointment :	04.08.1994
Last employment :	· GTN Textiles Limited
Name :	Mr. N K Bafna
Designation :	Director
Name :	Mr. B L Singhal
Designation :	Director
Name :	Mr. R Rajagopalan
Designation :	Director
Name :	Mr. Rajen K Mariwala
Designation :	Director
Name :	Mr. Yoichi Ikezoe
Designation :	Director – Nominee of ITOCHU Corporation
Date of Birth :	19.06.1959
Qualification :	Textile Engineer
Date of Appointment :	28.10.2006
Last employment :	· ITOCHU Textile Materials (Asia) Limited, Hong Kong
Profile :	Over 25 years of experience in Textile Industry, Yam Marketing and he is the Managing Director of M/s. ITOCHU Textiles Materials (Asia) Limited, Hongkong, Financial collaborator and Promoter of the Company along with GTN Textiles Limited and Kerala State Industrial Development Corporation Limited, Trivandrum.
Name :	Mr. T Okui
Designation :	Director – Alternate to Mr. Y Ikezoe
Name :	Mr. T Pius Joseph
Designation :	Director – Nominee of KSIDC
Name :	Mr. A V S Hameed
Designation :	Director – Nominee of IDBI
Name :	Mr. P C Seksaria
Designation :	Director
Date of Birth :	30.01.1946
Qualification :	Commerce Graduate
Date of Appointment :	11.10.1991
Last employment :	· GTN Textiles Limited
Profile :	Over 38 years of experience in Finance and Administration. He is Chief Executive of GTN Textiles Limited.

KEY EXECUTIVES

Name :	Mr. A. Anuradha
Designation :	Assistant Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

(As on 31.03.2007)

Names of Shareholders	No. of Shares	Percentage
Promoters and Associates	20096718	65.00
Indian Financial Institutions, Banks, Mutual Funds	7500	0.02
Foreign Institutional Investors / NRIs	291437	0.94
Others	10524345	34.04
Total	30920000	100.00

BUSINESS DETAILS

Line of Business :

Manufacturers and Exporter of Cotton Yarn and Cotton Fabrics

Products :

Products Descriptions	Item code No
Cotton Yarn/Processed Yarn	52.05
Knitted Fabric	60.20

Exports:

Countries :

· Japan

· Italy

· Korea

· Taiwan

· Thailand

· UK

· Hong Kong

· Israel

GENERAL INFORMATION

Bankers :

· Central Bank of India

· The Karur Vysya Bank Limited

· State Bank of India

· State Bank of Travancore

· IDBI Bank Limited

· Export – Import Bank of India

· Oriental Bank of commerce

· Canara Bank

· Bank of Maharashtra

· ING Vysya Bank Limited

Facilities :

Secured Loans	31.03.2007 Rs. In Millions
Term Loan
From Financial Institutions --Rupee Loans --Foreign Currency Loans (b) From Banks --Rupee Loans	243.017 15.537 381.897
Hire Purchase Loans From Banks	1.904
WORKING CAPITAL LOANS From Banks	221.395
Total	863.750

Note:

Term loans from Financial Institutions and banks are secured by a first charge, by way of equitable mortgage, on all the immovable assets of the Company, both present and future, ranking pari-passu, and hypothecation of all movable assets (excluding assets purchased on hire purchase basis) of the Company. Subject to prior charges in favour of banks for working capital, ranking pari passu, interse.

2. Hire Purchase loans from banks are relating to vehicles and are secured by hypothecation of respective vehicles costing Rs.5.032 Millions (Previous year Rs. 4.034 Millions

Banking Relations :	Satisfactory
Auditors :
Name :	M. S. Jagannathan and Visvanathan Chartered Accountants
Address :	Coimbatore, Tamilnadu, India
	Corporate Advisors
Name :	Lodha and Company
Address :	Mumbai, Maharashtra, India
	Legal Advisors
Name :	Menon and Pai
Address :	Kochi, Kerala, India
Associates/Subsidiaries :	· GTN Group of Companies · GTN Textiles Limited · Purav Trading Limited · GTN Enterprises Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
40000000	Equity Shares	Rs.10/- each	Rs.400.000 Millions
2500000	Redeemable Preference Shares	Rs.100/- each	Rs.250.000 Millions
	Total		Rs.650.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
30920000	Equity Shares	Rs.10/- each	Rs.309.200 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		309.200	309.200	309.200
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		237.483	240.024	217.800
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		546.683	549.224	527.000
LOAN FUNDS
1] Secured Loans		863.750	542.264	538.600
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		863.750	542.264	538.600
DEFERRED TAX LIABILITIES		218.232	199.009	0.000
TOTAL		1628.665	1290.497	1065.600
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		963.568	861.700	894.600
Capital work-in-progress		107.994	33.903	8.100
INVESTMENT		0.032	0.031	0.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	204.272	295.980	246.800
	Sundry Debtors	97.532	39.888	50.600
	Cash & Bank Balances	93.830	24.824	39.100
	Other Current Assets	0.313	0.096	0.000
	Loans & Advances	251.296	134.526	109.700
Total Current Assets		647.243	495.314	446.200
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	68.467	72.246	255.000
	Provisions	21.705	28.205	28.300
Total Current Liabilities		90.172	100.451	283.300
Net Current Assets		557.071	394.863	162.900
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		1628.665	1290.497	1065.600

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		1371.096	1059.423	1014.900
Other Income		11.368	0.106	6.100
Increase/(Decrease) in Stock		(8.736)	7.586	(26.500)
Total Income		1373.728	1067.115	994.500
Profit/(Loss) Before Tax		41.787	61.240	40.000
Provision for Taxation		6.091	32.711	3.500
Profit/(Loss) After Tax		35.696	28.529	36.500
Export Value		1162.281	786.865	NA
Expenditures :
	Cost of Goods Sold	847.129	571.816	523.900
	Manufacturing Expenses	172.749	179.155	3.300
	Personnel Expenses	62.301	60.516	122.900
	Sales and Distributors Expenses	73.016	51.450	46.200
	Interest	48.206	30.243	52.900
	Depreciation & Amortization	90.600	35.442	73.600
	Other Expenditure	37.940	77.253	131.700
Total Expenditure		1331.941	1005.875	954.500

QUARTERLY RESULTS

PARTICULARS	30.06.2007 1^st Quarter	30.09.2007 2^nd Quarter	31.12.2007 3^rd Quarter
Sales turnover	267.000	335.500	349.000
Other income	0.000	0.000	0.000
Total income	267.000	335.500	349.000
Total expenditure	228.400	289.700	324.700
Operating profit	38.600	45.800	24.300
Interest	18.200	18.100	23.600
Gross profit	20.400	27.700	0.700
Depreciation	26.300	30.300	33.100
Tax	0.100	0.200	0.300
Reported PAT	(4.500)	(0.700)	(17.400)

KEY RATIOS

PARTICULARS	31.03.2007	31.03.2006	31.03.2005
Debt Equity Ratio	1.28	1.00	1.12
Long Term Debt Equity Ratio	0.83	0.52	0.63
Current Ratio	1.03	0.85	0.87
TURNOVER RATIOS
Fixed Assets	0.83	0.70	0.68
Inventory	5.43	3.92	3.40
Debtors	19.78	23.52	19.17
Interest Cover Ratio	1.72	2.57	2.17
Operating Profit Margin (%)	13.99	16.67	14.70
Profit Before Interest and Tax Margin (%)	7.32	9.41	7.30
Cash Profit Margin (%)	8.08	12.00	11.00
Adjusted Net Profit Margin (%)	1.41	4.74	3.60
Return on Capital Employed (%)	7.95	9.28	6.72
Return on Net Worth (%)	3.50	9.37	7.03

LOCAL AGENCY FURTHER INFORMATION

HISTORY

The company was promoted by GTN Textiles under the leadership of B. K. Patodia as its Chairman and Umang Patodia as its Managing Director.

The company has set up a 100% EOU to manufacture medium and fine counts, combed or gassed yarn, with financial assistance from kItochu Corporation, Japan and Kerala State Industrial Development Corporation. The company tapped the capital market in November, 1993 to part-finance the project.

The company has undertaken a two-phase expansion project which includes diversification into twisting, knitting and other value-added products with the available infrastructure. In 1996, the second phase of expansion of 2016 spindles was fully implemented. It also completed the expansion of capacity in Unit “B” by 16128 spindles in December 1996. This expansion with 100% combing capacity is being set up at the cost of Rs. 500.000 millions.

The company exports to Japan, Italy, Israel, The UK, Mauritius, etc. It has made applications for recognition as an Export House. In 1996, the company received the coveted ISO 9002 (IS-14002) certification from Bureau Veritas Quality International (BVQI).

During 1999-2000, the textile ministry has launched Textile Upgradation Fund which provides 5% interest subsidy on the loans eligible and hence the company has undertaken the project at a cost of Rs. 106.500 millions for both modernisation and upgradation of technology.

Compact Spinning Technology, a new technology which was introduced during the last year has been well received in International Markets due to this the company continues to expand its capacity in the current yea (2001) also.

PERFORMANCE REVIEW: 

The financial year, sales have gone up from Rs1059.500 millions to Rs.1382.400 millions. This increase has been mainly on account of increase in the volume of merchant exports in pursuance of the company's strategy of seeding the market keeping in view the various expansion projects which the company has undertaken. 

At operating profit level, the profit has gone up from Rs.168.700 millions to Rs.180.600 millions. This includes Wind Mill income of Rs.11.300 millions, and as far as profit from operations are concerned, the same has been maintained at previous year's level. However, profit before tax is at Rs.41.800 millions as compared to Rs.61.200 millions of the previous year on account of increased interest burden consequent to the increase in the interest rates on working capital loans, besides higher charge of depreciation on account of Wind Mills. After providing provision for current tax, deferred tax and FBT of Rs.22.600 millions as against Rs.10.800 millions for the previous year, the Profit After Tax is at Rs.19.200 millions as against Rs.50.400 millions. 

EXPANSION AND MODERNISATION PLANS:

As mentioned in their earlier report, the Scheme undertaken to modernize its plant under Technology Upgradation Fund Scheme Phase-III at a cost of Rs.159.000 millions is almost at the final stage of completion. The company has incurred Rs.150.400 millions as on 31st March, 07.

Company has also undertaken substantial expansion-cummodernisation plans under Technology Upgradation Fund Scheme Phase-IV at an outlay of Rs.1798.600 millions, including installation of 4 Wind Mills. The scheme comprises the following: 

· Setting up of a new project with 30,000 spindles (including 10,800 compact spindles) at Ponneri, Udumalpet, Tamilnadu, at a project cost of Rs.1014.100 millions. 

· Expansion of spindleage by 16,800 spindles (including 8400 compact spindles) at the existing plant at Palakkad, at a Project cost of Rs.385.000 millions. 

· Windmills with a total capacity of 5.8 MW, at a cost of Rs.331.200 millions, at Tamilnadu. 

· Modernisation and expansion of capacities for value added products at Palakkad factory at a cost of Rs.68.300 millions.

Financial tie-up for the above project has already been completed in January, 2007.

The project at Ponneri, Udumalpet is progressing as planned and the entire project is expected to be completed by June, 2008. Modernisation plans at Palakkad is also under way and will be completed as envisaged. 

The company has incurred an amount of Rs.634.600 millions, including Wind Mills, as on date. The company has also undertaken an expansion Project under Technology Upgradation Fund Scheme Phase-V at an outlay of Rs.935.000 millions. The financial closure for this project also has been completed in March, 2007. The project envisages the following: 

· Expansion of Plant at Ponneri, Udumalpet, Tamil Nadu from 30,000 spindles to 62,400 spindles (including 25,200 compact spindles) involving an outlay of Rs.676.400 millions. 

· Installation of Twisting and Gassing capacities at Ponneri, Udumalpet, involving an outlay of Rs.258.600 millions to produce value added products.

The company has already incurred an amount of Rs.50.700 millions for the project, as on date. Civil works are progressing as planned. The project is expected to be completed by March, 2009. On completion of the above projects, the aggregate spinning capacity of the company would be about 128000 spindles, including 57,000 Compact Spindles.

The company's production is predominantly exported and as such its profitability, to some extent, depends on movement in exchange rates of various currencies. Towards the end of the last financial year, Indian Rupee made substantial gains against US Dollar and reached a nine year high during April 2007. This sudden exchange rate movement was unprecedented in the last 3 decades or so. Inspite of company's foreign exchange hedging policy, such a sharp strengthening of Rupee against Dollar is likely to affect company's future sales realizations and profitability for the time being, as is the case across various industries. On the other hand, since the company imports substantial requirement of its cotton, Rupee's strengthening will help to reduce its raw material cost as well, thus partially relieving pressure on margins. 

The company is taking all possible steps to mitigate the adverse effect of currency appreciation and will also endeavour to complete the expansion-cum-modernisation envisaged under various schemes, so that the benefit starts accruing in the current year itself. 

MANAGEMENT DISCUSSION & ANALYSIS: 

INDUSTRY STRUCTURE & DEVELOPMENTS: 

The Indian textile industry in the country is now in a much stronger position than it was in the past. This has come about on account of buoyant domestic demand; conducive Government policies like rationalization of fiscal duties, huge investments made by the industry towards modernization and technology upgradation under TUFS and higher export performance after elimination of quotas by developed countries of USA and European Union. The Indian textile industry has a strong base of diverse raw materials, encompassing all the natural, synthetic and man-made fibres and filament yarns. It has the unique position of being self-reliant and complete in value chain from raw materials to fashion garments.

The textile industry plays a crucial role in the Indian economy. It contributes about 14 per cent to the industrial production of the country. As regards employment, it is the second largest after agriculture, accounting for 20 per cent of the total work-force of the nation. Its contribution to forex earnings is around 17 per cent. 

As of end December 2005, the world’s total installed spindleage was 187.64 million. With 37.5 million spindles, India accounted for 20 per cent of the world's spindleage. As of February 2007, India's installed spindleage has expanded to 39.3 million. Likewise, the number of installed rotors has reached the figure of 600 thousand. However, the operative spindles are in the region of 30 million.

India has the second largest spinning capacity in the world after China. In fact, after the expiry of Agreement on Textiles and Clothing, a number of existing units have undertaken significant expansion of their spinning capacity. These apart, new spinning units, particularly in the Southern region have come into existence and more are in the pipeline. The capacity expansion is taking place both in the organized and small-scale sectors. 

As regards spinning, about 90 per cent of installed capacity is in the organized sector and 10 per cent in the small-scale sector. The weaving capacity in the powerloom sector has been progressively expanding. As per the latest data, the number of powerlooms, which was Rs.1.931 Millions in December, 2005 has since risen to Rs.1.962 Millions as of November, 2006. The weaving capacity in the handloom sector continues at Rs.3.89 million looms.

The production of spun yarn was stagnant at around 3100 million kgs for a period of five years between 1999-2000 and 2003-04. In 2004-05, the production of spun yarn increased to 3223 million kgs from 3052 million kgs in 2003-04, registering a growth of six per cent. Similarly, the production of spun yarn in 2005-06 increased to 3458 million kgs, recording a rise of over 7 per cent. For 2006-07, the production is projected to reach around 3827 million kgs. This means a growth of about 11 per cent as compared to the previous year. 

Of the total spun yarn, the share of cotton yarn accounts for 74 per cent. In the last three years, cotton yarn production has escalated from 2272 million kgs in 2004-05 to 2836 million kgs in 2006-07. This has come about on account of comfortable availability of quality cottons at competitive prices. 

The Vision Statement of Textile Industry envisages the growth in the total market size for textiles and garments from 52 billion USD in 2006 to 110 billion USD by March, 2012, the terminal year of the Eleventh Five Year Plan. To achieve this target, the Vision Statement has, among other things, estimated that 29 million additional spindles would be required - 20 million for capacity expansion and 9 million for modernization. Therefore, the future scope for capacity expansion and modernization is promising.

COTTON SCENARIO:

The Cotton Advisory Board has estimated the Indian cotton crop for the season 2005-06 at 244 lakh bales and for 2006-07 at Rs.27.000 Millions bales. The per hectare yield which was 478 kgs in 2005-06 has ascended to 501 kgs. This is mainly on account of higher production of hybrids and Bt. cottons. It may be mentioned that the average yield in 2006-07 at global level was 744 kgs per hectare. Currently, cotton prices have displayed a firm trend in line with international prices. 

According to International Cotton Advisory Committee (ICAC), the global cotton production in 2006-07 is estimated at 25.31 million tons and for the 2007-08 seasons the production is projected at 25.22 million tons. The world consumption of cotton is estimated at 26.19 million tons in 2006-07 and 26.70 million tons in 2007-08. Since the consumption is outstripping the production, ending stocks have been depleting over the years. Consequently, the average cotton price for the season 2006-07 is estimated at 58 cents per pound, which is expected to rise to 62 cents per pound in 2007-08. 

MARKETING: 

Exports of cotton yarn during 2004-05 were 448 million kgs, which rose to 552 million kgs in 2005-06. As per the latest available data, exports of cotton yarn during April - September, 2006 have aggregated to 300 million kgs. On an annualized basis, exports of cotton yarn are projected at 600 million kgs during 2006-07. This would be India’s highest export of cotton yarn on record. 

Pakistan during the last two years has overtaken India in terms of quantum of cotton yarn exports. However, since Pakistan's exports of cotton yarn are largely of coarse and medium counts, India continues to hold the number one position in terms of value. 

OPPORTUNITIES AND THREATS: 

The health of textile units is primarily dependant on adequate availability of quality cottons at competitive prices. With the augmented supply of quality seeds and larger production of hybrids and Bt. cottons, the production and productivity of cotton in India have been increasing. Therefore, the supply of quality cotton is expected to be comfortable. This augurs well for the future growth of the textile industry. 

The growth and development of textile industry in the past was stunted because of distorted fiscal structure, which favoured fragmentation and tax evasion. This lacuna has been removed and the level playing field has been provided. Government is carrying this policy forward, especially for cotton products. Besides, continuation of Technology Upgradation Fund Scheme during the Eleventh Plan announced in this year's Budget would go a long way in improving competitiveness of textile industry. This will also boost the demand for quality yarns from downstream sectors. 

OUTLOOK: 

The Company continues to be a significant player in the fine and superfine segment in the world cotton yarn market and is continuously innovating new value added products, like compact yarns and other speciality yarns. 

There are good prospects for increasing exports of cotton yarn to Asian and European countries, especially to China where imports of cotton yarn are rising substantially in view of acute shortage of raw cotton in that country. Their Company continues to make special efforts to tap new markets, apart from traditional markets. 

RISKS AND CONCERNS: 

(i) Raw Cotton, an agricultural product, is the key raw material used for the manufacture of cotton yarn and is dependant on monsoon. Adequate availability of raw cotton at the right prices is crucial for the Company. Any disruption in the supply and / or violent changes in the cost structure could affect the profitability of the Company.

(ii) The recent RBI monetary policies have resulted in unprecedented increase in the rate of interest on their borrowings from banks and financial institutions. Since most of their loans are linked to bank's prime lending rates, increase in the interest rates mentioned above leaves an element of uncertainty, in interest costs. 

(iii) The company follows an efficient inventory management system and a well-crafted strategy of procuring raw materials through a mix of spot and long-term contracts. The company's conscious efforts on maintaining a judicious mix of markets for its sales and thrust on specialty products have also proved to be effective. 

(iv) Volatility in foreign currency exchange rates vis-a-vis Indian Rupee is another area of concern. The Company's production is predominantly exported and as such its profitability, to some extent, depends on movement in exchange rates of various currencies. Recently, Indian Rupee made substantial gains against US Dollar and reached a nine-year high during April, 2007. However, company has in place various Management Information Systems, which enable the management to take decisions on exposures relating to exports, imports, foreign currency loans, etc. The company continues to strengthen these systems to minimize the risk involved due to adverse movement of exchange rates. 

(v) The company has a system of assessing the risks on an ongoing basis. This includes an effective internal control and management reporting system. Further, the framework also captures the existing practices to manage commodity price risk, interest rate risk, and foreign exchange risk etc. An important aspect of this framework is to promote a balanced approach that considers risk and return. 

(vi) Apart from the intensification of international competition, the areas of concern are poor infrastructure resulting in higher transaction cost, inadequate Drawback rates, which do not fully refund unrebated taxes, high cost of power and Government's reluctance to introduce labour reforms. However, since Government is alive to the aforesaid problems, it is hoped that satisfactory solutions will be found soon. Another area of concern is Government’s recent announcement of liberalized tariff concessions offered to Least Developed countries like Bangladesh, Nepal and Bhutan under SAFTA. 

Fixed Assets:

· Land Freehold

· Buildings Plant and Machinery

· Wind Turbine

· Electrical Installations

· Furniture

· Office Equipments

· Vehicles

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No 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.42.16
UK Pound	1	Rs.82.28
Euro	1	Rs.65.54

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	8
--LEVERAGE	1~10	8
--RESERVES	1~10	8
--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	YES
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		66

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

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