MIRA INFORM REPORT

Report Date :

24.11.2008

IDENTIFICATION DETAILS

Name :	GARDEN SILK MILLS LIMITED
Registered Office :	Garden Silk Mills Complex, Sahara Gate, Surat – 395 010, Gujarat
Country :	India
Financials (as on) :	30.06.2007
Date of Incorporation :	23.071997
Com. Reg. No.:	04-3463
CIN No.: [Company Identification No.]	L17111GJ1979PLC003463
Legal Form :	A public limited liability company. The company's shares are listed on the Stock Exchanges.
Line of Business :	Manufacturing of pure silk and cotton fabrics, prepared yarns and textile machinery like two-for-one uptwisters, rewinders, grey cloth and readymade garments.

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 17900000
Status :	Satisfactory
Payment Behaviour :	Slow but Correct
Litigation :	Clear
Comments :	Subject is an old established company having satisfactory track. Trade relations are fair. Financial position is satisfactory. Payments are reported as slow but correct. The company can be considered normal for business dealing at usual trade terms and conditions.

LOCATIONS

Registered Office :	Garden Silk Mills Complex, Sahara Gate, Surat – 395 010, Gujarat, India
Tel. No.:	91-261-2611197 - 98 / 2611513 / 2611615 / 2647119/2347117
Fax No.:	91-261-2611029 /2611502 – 503/23
E-Mail :	sharedepartment@gardenvareli.com
Website :	http://www.gardenvareli.com
Corporate Office :	Manek Mahal, 90, Veer Nariman road, Churchgate, Mumbai 400020
Tel. No.:	91-22-22873117/19
Fax No.:	91-22-22048112
Factory 1 :	Vareli Complex, Village Vareli, Taluka Palsana. District Surat-394327, Gujarat
Tel. No.:	91-2622-271241-47
Factory 2 :	Village Jolva, Taluka Palsana, District Surat-394305, Gujarat
Tel. No.:	91-2622-271287-89
Registrar and Transfer Agent :	MCS Limited, Nilam Apartment, 88, Sampatrao Colony, Alkapuri, Baroda 390007, Gujarat
Tel No.:	91-265- 2339397/ 2314757
Fax No.:	91-265- 2341639
Email :	mscbaroda@yahoo.com

DIRECTORS

Name :	Mr. Praful A. Shah
Designation :	Chairman & Managing Director
Name :	Mr. Soly J. Bhesania
Designation :	Executive Director
Name :	Mr. Harshad F. Shah
Designation :	Executive Director
Name :	Mrs. Shilpa P. Shah
Designation :	Executive Director
Name :	Mr. Arunchandra N. Jariwala
Designation :	Director
Name :	Mr. J. P. Shah
Designation :	Director
Name :	Mr. Rajen P. Shah
Designation :	Director
Name :	Mr. Sanjay S. Shah
Designation :	Executive Director
Name :	Mr. Ravinder Singh
Designation :	Director (up to 08/06/04)
Name :	Mr. Alok Shah
Designation :	Executive Director
Name :	Mr. Yatish Parekh
Designation :	Director
Name :	Mr. Sunil Sheth
Designation :	Director
Name :	Mrs. Smita Shah
Designation :	Director
Name :	Mr. Mandanlal Lankapati
Designation :	Director
Name :	Mr. Suhail P Shah
Designation :	Director
Name :	Anjan Mukherjee
Designation :	Nominee of LIC of India
Name :	Mr. Y. N. Rammurthy
Designation :	Director

KEY EXECUTIVES

Name :	Mr. Kamlesh B. Vyas
Designation :	Company Secretary
Name :	Mr. Parthv S Shah
Designation :	Key Executive
Name :	Mrs. Sujata V Parsai
Designation :	Key Executive

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 30.06.2007

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters	20650623	53.93
Mutual Funds and UTI	186555	0.49
Banks, Financial Institutions, Insurance Companies	809004	2.11
FIIS	182352	0.48
Private Corporate Bodies	2322281	6.06
Indian Public	1842487	30.20
NRIs/OCBs	11563496	4.81
GDR	688325	1.80
Others :
Trust	500	0.00
Clearing Members	44937	0.12
Total	38290560	100.00

BUSINESS DETAILS

Line of Business :	Manufacturing of pure silk and cotton fabrics, prepared yarns and textile machinery like two-for-one uptwisters, rewinders, grey cloth and readymade garments.
Products :	Woven Fabrics of Synthetic Filament Yarn - 5406 Synthetic Filament Yarn - 5402
Brand Names :	‘GARDEN’ and ‘VARELI’
Exports to :	UAE, UK, Singapore, Spain, Portugal and USA

PRODUCTION STATUS (AS ON 30.06.2007)

Particulars	Unit	Production Capacity	Installed Capacity
Polyester Chips/ Melt	TPA	162301	180000
Polyester Fi;ament Yarn	MT	99267	115200
Looms	NO.	324.29	1280

The installed capacity is as certified by a director and being a technical matter is accepted by the auditors without verification.

GENERAL INFORMATION

No. of Employees :

2000

Bankers :

v Bank of Baroda, Surat, Gujarat

v Allahabad Bank, Surat, Gujarat

v State Bank of Saurashtra, Surat, Gujarat

v Bank of India, Surat, Gujarat

v State Bank of Patiala

v Corporation Bank

v Union Bank of India

v Landesbank Baden-Wurttemberg

Facilities :

SECURED LOANS	30.06.2007 Rs. In millions
Loans and advances from banks
Cash Credit Facilities	1315.402
Term Loans :
Rupee Loans	3619.093
Foreign Currency Loans	514.689
Other loans and advances
Rupee Term Loans from financial institutions	450.000
Secured Redeemable Non Convertible Debentures	450.000
TOTAL	6349.184
UNSECURED LOANS
Short Term Loans and advances
Commercial Paper	600.000
Other Loans and advances
From a foreign Bank	467.230
TOTAL	1067.230

Banking Relations :

Satisfactory

Auditors :

M/s. Natvarlal Vepari & Company

Chartered Accountants

Address :

Located at Surat

Associates/Subsidiaries :

• Aloysha Investments
• Saska Investments
• Armorax Business Center Private Limited Liability Company Limited
• Aliance Investments
• Starlight Investments
• Tissue Textile (India) Private Limited

CAPITAL STRUCTURE

AS ON 30.06.2007

Authorised Capital :

No. of Shares	Type	Value	Amount
60000000	Equity shares	Rs. 10/- each	Rs. 600.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
38290560	Equity shares	Rs. 10/- each	Rs. 382.906 millions

Note:

Of the above equity share

(a) 2590000 equity shares of rs.10 each issued as fully paid bonus shares by capitalization from general reserve.

(b) 10308150 equity shares allotted pursuant to the schemes of amalgamation sanctioned by the Hon’ble High Court of Gujarat

(c) 2200000 equity shares of rs.10 each fully paid up issued on conversion of fully paid up 12.5% secured redeemable convertible debentures in terms of prospectus dated 5^th August, 1987

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		30.06.2007	30.06.2006	30.06.2005
SHAREHOLDERS FUNDS
1] Share Capital		382.906	382.906	382.906
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		3206.831	3041.431	2885.878
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		3589.737	3424.337	3268.784
LOAN FUNDS
1] Secured Loans		6349.184	4932.199	4849.687
2] Unsecured Loans		563.161	1458.587	1067.230
TOTAL BORROWING		6912.345	6390.786	5916.917
DEFERRED TAX LIABILITIES		707.297	521.272	437.046
TOTAL		11209.379	10336.395	9622.747
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		7062.299	7250.974	4306.401
Capital work-in-progress		159.747	249.608	2879.175
INVESTMENT		1293.630	728.635	747.302
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1300.259	970.808	658.539
	Sundry Debtors	647.415	484.493	296.300
	Cash & Bank Balances	194.183	284.430	313.644
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	1245.278	1032.964	991.439
Total Current Assets		3387.135	2772.695	2259.922
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	477.493	542.615	462.725
	Provisions	225.380	139.875	130.226
Total Current Liabilities		702.873	682.490	592.951
Net Current Assets		26.842	2090.205	1666.971
MISCELLANEOUS EXPENSES		9.441	16.973	22.898
TOTAL		11209.379	10336.395	9622.747

PROFIT & LOSS ACCOUNT

PARTICULARS		30.06.2007	30.06.2006	30.06.2005
Sales and Job Charge		13933.139	9548.595
Income from Financial Operations		12.473	6.400	6549.486
Other Income		66.277	46.906
Total Income		14011.889	9601.901	6549.486
Profit/(Loss) Before Tax		500.922	318.771	97.620
Provision for Taxation		268.325	97.726	9.724
Profit/(Loss) After Tax		232.597	221.045	87.896
Earnings in Foreign Currency :
	Export Earning	141.497	26.624
	Commission Earnings	54.572	41.379	2.757
	Other Earnings	11.574	25.881
Total Earnings		66.146	67.26	2.757
Imports :
	Raw Materials	416.420	527.081
	Stores & Spares	43.149	47.931	2064.678
	Capital Goods	103.874	56.697
	Others	199.223	0.000
Total Imports		762.666	631.709	2064.678
Expenditures :
	Manufacturing Expenses	2363.814	2093.327
	Raw Material Consumed	9929.616	6277.175
	Purchases made for re-sale	455.821	129.929	5927.583
	Interest and Financial Charge	514.926	402.011
	Other Expenditure	246.790	380.688
Total Expenditure		13510.967	9283.130	5927.583

SUMMARISED RESULTS

PARTICULARS	30.06.2008
Type	Full Year
Sales Turnover	16773.400
Other Income	127.900
Total Income	16901.300
Total Expenditure	15069.700
Operating Profit	1831.600
Interest	570.200
Gross Profit	1261.400
Depreciation	574.000
Tax	81.500
Reported PAT	400.000
Divident (%)	150.000

QUARTERLY

PARTICULARS	30.09.2008
Type	1^st Quarter
Sales Turnover	4279.600
Other Income	25.800
Total Income	4305.400
Total Expenditure	3917.100
Operating Profit	388.300
Interest	127.300
Gross Profit	261.000
Depreciation	139.700
Tax	10.900
Reported PAT	106.500

KEY RATIOS

PARTICULARS	30.06.2007	30.06.2006	30.06.2005
Debt-Equity Ratio	1.90	1.84	1.40
Long Term Debt-Equity Ratio	1.49	1.38	1.03
Current Ratio	1.11	0.96	0.95
TURNOVER RATIOS
Fixed Assets	1.40	1.21	1.07
Inventory	13.34	13.26	9.93
Debtors	26.76	27.66	19.45
Interest Cover Ratio	1.88	1.69	1.34
Operating Profit Margin(%)	10.86	11.75	8.30
Profit Before Interest And Tax Margin(%)	7.06	7.24	3.52
Cash Profit Margin(%)	5.34	6.55	5.58
Adjusted Net Profit Margin(%)	1.54	2.05	0.80
Return On Capital Employed(%)	10.54	8.25	3.41
Return On Net Worth(%)	6.63	6.60	1.85

LOCAL AGENCY FURTHER INFORMATION

Fixed Assets

• Freehold Land
• Building
• Plant and Machinery
• Furniture and Equipments
• Vehicles.

The units in the cotton textile industry can be differentiated in terms of capital or labor intensity and use of handloom/ powerloom technology.

The emerging trends in India in the last decade are:

· A regional shift from western India to southern India, and to some extent, northern India.

· A shift from large integrated companies to smaller partially integrated companies.

· A shift in fabric production from the organized sector to the decentralized sector.

DIVIDEND:

Keeping in view the ongoing and future expansions and the desire to finance this growth through internal accruals to the extent possible, the Directors have recommended maintaining the dividend at 15% on the paid-up equity share capital of Rs.382.9 Millions, for the year ended 30th June, 2007 and seek the approval for the same. 

The total payout on dividend (including corporate tax thereon) will be Rs.67.197 Millions as against Rs.65.492 Millions in the previousyear. 

REVIEW OF OPERATIONS: 

The Company has posted a healthy performance for the year under review. The turnover at Rs.15134.2 millions registered a 40% increase over the previous year. The EBIDTA rose by 32% to Rs.1591.5 millions. 

The Company's Continuous Polymerization (CF) plant was in operation at optimum capacity, which is reflected in the production and turnover figures of chips manufactured and sold during the year. This was possible largely due to the full availability of raw materials, the shortage of which affected the performance in the previous year. This optimum utilization was the major contributor to the increase in operating profits due to lower costs and higher volumes. Chips sales increased substantially from 7923 tons in 2005-06 to 79268 tons in 2006-07. Yarn sales of 99752 tons continued to reflect full utilization of spinning capacities. 

The Company increased its draw-winding capacity by doubling the capacity of each draw-winder with in-house technology. This innovation will halve the energy cost per/kg of draw-wound material. The Company increased its draw-twisting capacity in the year under review. 

The Company's fabric divisions faced a lowering of margins and volumes owing to competitive pressures and fashion changes. The fabric division's focus on high-value differentiated products make it less vulnerable to downturns but more vulnerable during fashion shifts. Fabric sales reduced from 558 lac meters in 2005-06 to 427 lac meters in 2006-07. 

The Company's continuous improvement program has made it a quality and price leader across its entire product range of fabrics and yarns. 

Apart from investing surplus funds in business and expanding manufacturing capacities in polyester, the Company is also pursuing related business opportunities by building up its stock in trade of art and artefacts during the year. 

EXPANSION PROGRAM: 

The Company holds a position amongst the leading PFY manufacturers in the country. With a view to consolidate and maintain its position in the fast growing PFY industry, the Company is setting up a new 600 tons per day (TPD) Continuous Polymerisation (CP) plant. Further the Company is putting up an additional capacity of 70 TPD FDY and 82 TPD of POY. Excess polymer will be sold as textile grade polyester chips. 

The Company is presently putting up additional texturising machines to further increase the capacity by 64 TPD. 

These projects of the Company will be supported by adequate captive power generation capacities. 

The Company has adequate infrastructure for marketing chips and yarn, which can be leveraged by the proposed expansion. The proposed projects would consolidate the Company's position as a significant player in the polyester market, particularly in the chips and downstream drawn flat yarn and texturising businesses. 

The proposed expansion of the Company in Surat district, the heart of the polyester filament fabric industry is close to end users as well as their raw material source. This will provide the Company the advantage of lower working capital requirements, lower transportation and packing costs as well as closer communication with customers. 

CREDIT RATING: 

The Company continues to enjoy "PR1+" (PR One Plus) rating by Credit Analysis and Research Ltd. (CARE) in respect of its Commercial Paper/ Mibor-linked Short-Term unsecured NCD / fixed rate short term unsecured NCD programme of Rs.125 crore for a maturity upto six months. This rating indicates strong capacity for timely repayment of short-term debt obligations and carry forward credit risk. The Company utilises the short term rating for better cash flow management. 

MANAGEMENT DISCUSSION AND ANALYSIS: 

INDUSTRIAL STRUCTURE AND SCENARIO: 

World fiber consumption (natural + man-made) grew by 3.80l0 in 2006. Of this cotton grew by 2.5% and polyester (PSF + PFY) by 4.4%. Polyester filament yarn, the fastest growing major fiber category, and the industry in which the Company operates, grew by 6.5% worldwide. 

China and India are the world's largest PFY producers. Moreover, PFY growth is completely dominated by these 2 countries. This domination is expected to continue. The world PFY growth, excluding China and India, is strongly negative. India's PFY industry is still a little over a tenth of the size of China but their growth is expected to be faster. 

India's economy has been growing at an unprecedented rate of 8.6% p.a. over the last 4 years. Manufacturing has been a great contributor, growing at 9.5% p.a. The accelerated growth of the economy has substantially impacted the PFY industry growth as well, which has outperformed the real GDP growth. After a lull for a few years the industry grew dramatically last year, eliminating the oversupply that industry observers had predicted would last for a few years more. While capacity grew by 38% to over 2 million TPA, production grew even faster, The growth was due to both export demand as well as domestic consumption. 

The Indian cotton crop is growing owing to the rapid increase in yields made possible by increased use of BT cotton and improved water management. However, this is not expected to impact the Indian polyester industry since the global shortage of cotton should imply high cotton prices. 

In the last budget, import duties on PFY and its raw materials PTA and MEG were reduced from 10% to 7.5%. During the year under review, excise duty on MEG was reduced from 16% to 12% which continues to be much higher than the 8% on PFY and remains an unfortunate anomaly. 

Despite higher crude oil prices, raw material costs for the Indian PFY industry remained stable during the year under review compared to the previous year, partly due to the rise in the Rupee and the lowering of customs duties on PTA and MEG. 

OPPORTUNITIES AND STRENGTHS: 

The Company operates across the entire polyester chain from polyester chips to finished fabrics. This partly insulates it from temporary oversupply in any one component of the chain. It also gives the Company valuable information about final consumer and raw material trends. It also enables it to sense and respond to market movements quickly. Mostly, however, it allows for great synergies in product development that give the Company an edge in product innovation and quality. The Company's leadership in product differentiation, product quality and thus price realization gives it the opportunity and justification to grow rapidly in the fast growing PFY industry. The Company has been regularly modernizing and expanding its facilities so as to remain globally competitive in quality and cost.  

The PFY market is the largest synthetic yarn market in India and accounts for over 50% of the total demand for synthetic yarn. Surat and its outskirts provide the largest market for PFY, being the heart of the polyester filament weaving and processing industry, The Company's manufacturing units have a locational advantage being situated in the heart of the polyester textile industry. It's location gives it proximity to both raw material suppliers as well as end users. The Surat area is also the most innovative textile center which gives the Company a natural outlet for its specialty fabrics and yarns.

Since the Company's primary market is Surat, the ongoing and proposed expansion plans involve considerable production of final downstreamed/drawn yarn, in particular fully-drawn yarn and texturised yarn. 

Most of the polymer production of the Company has been and will continue to be used for captive consumption to make polyester yarn. In turn, most of the yarn produced by the Company has been and will continue to be for captive downstreaming (texturising, draw-twisting, draw-winding and draw-warping) and FDY production. This reduces the pressure on the Company to sell commodity chips and POY and focus on specialties as far as possible. 

The Company enjoys a strong brand for its fabrics and yarns that has been built over the years. Its fabric distribution network is strong and spread across the country. Its fabric engineering and design capability is second to none in the country. 

BUSINESS OUTLOOK: 

During 2007 pressures on account of the international prices of raw material (fibre intermediates) are likely to remain high on account of high crude oil prices and MEG shortages. Yet, the situation is expected to ease in the following year. In India raw material prices are largely driven by international prices, yet the surplus of PTA in the country from next year is expected to put downward the pressure on local PTA prices. India will be short of MEG, however adequate supplies of international MEG will prevent any shortages. 

High economic growth is leading to high growth in disposable income. Increased consumer finance is increasing spending power. Moreover the growth in organized retail bodes well for textiles and apparel consumption which forms the largest component of organized retail. The increase in housing is helping the home textile industry which is growing very rapidly. Increased urbanization and increased participation of women in the workforce is increasing the ability and desire of women to buy polyester textiles and apparel. Superior attributes of durability, crease-resistance, wash-and-wear properties, improved drape, colour-fastness, versatility, great variety of product (including cationic yarns; bicomponent yarns; various lustres; unlimited yarn weight, softness and twist possibilities; and unlimited combinations of these and other yarns; unlimited fabric finishing possibilities) and relatively low colt, make polyester filament a preferred fiber for the poor and rich alike. Consequently, the PFY industry in the country is growing quickly indeed. 

Large new capacities have recently been created and utilized. Reduced new supply is expected to result in improved margins for the industry as demand increases. This implies that FY 2007-08 should be better than the year under review. 

The government has recognized the great contribution of textiles to industrial growth and its enormous employment potential. Excise and customs duties on yarn have been reduced. Excise duty and sales tax on fabric have been effectively removed. 100% Foreign Direct Investment in the textile sector is allowed under the automatic route. Textile and apparel parks have been encouraged. The Technology Upgradation Fund (TUF) has been extended till the end of the Eleventh Plan period so as to encourage the upgradation of plants and processes. They are hopeful the government will continue its support of the textile industry. 

The Company is now in the midst of a sizable investment program, the full impact of which shall be visible from third quarter of 2008-09. The Company is putting up a 600 tons per day (TPD) CP plant. Further the Company is putting up an additional capacity of 70 TPD FDY and 82 7PD of POY. The Company is presently putting up additional texturising machines to further increase the capacity by 64 TPD. 

FINANCIAL REVIEW AND ANALYSIS

Net sales and operating revenues for the year 2006-07 increased by 46% yoy on the back of higher volume. 

Manufacturing and other expenses increased by 13% to Rs.2364.6 Millions in FY 2006-07 from Rs.2093.3 Millions in FY 2005-06. These were 17% of net turnover for the year as compared to 22% for the previous year. 

Other income of Rs.6.63 crore was higher largely due to higher interest income and increased yield on treasury investment as compared to previous year. 

Profit before Interest, Depreciation and Tax (PBIDT) increased by 32% to Rs.1591.5 Millions from Rs.1207.4 Millions in FY 2005-06. 

The Company's interest costs rose during the year by more than 28% primarily due to the commencement of the charge of the project loans to the Profit and Loss Account, increase in the rate of interest and higher level of working capital deployed during the year pursuant to the completion of expansion projects. Interest costs as a percentage to net sales remained at 3.69% in the financial year 2006-07 as compared to 4.21 in the previous financial year. 

Depreciation charges increased by 18% to Rs.575.7 Millions owing to full year depreciation charges on projects commissioned during 2005-06, as compared to previous year. It represents 4.13% of net turnover as compared to 5.10% for FY 200506. 

Profit before tax of the Company increased by 59% to Rs.500.9 Millions from Rs.318.8 Millions in FY 2005-06. The total tax provision for current year and deferred tax was at Rs.268.3 millions as compared to Rs.97.7 millions in FY 2005-06. 

Gross debts stood at Rs.6912.3 Millions as on June 30, 2007 as compared to Rs.6390.8 Millions as on June 30, 2006. 

As per website

Garden Silk Mills (GSML), incorporated in 1979, belongs to the Garden Vareli group (one of the leading manufacturers of synthetic textiles). It was formed as a result of the amalgamation of Garden Silk Mills Private Limited Liability Company Limited Prabhat Silk and Cotton Mills, Garden Print Centre and Special Weaves with Vareli Weaves in 1987 under the name Garden Silk Mills. It is engaged in the manufacture of pure silk and cotton fabrics under the brand name Garden and Vareli, prepared yarns and textile machinery like two-for-one uptwisters, rewinders, grey cloth and readymade garments. 

GSML has set up, in collaboration with NOY-VAL Lesina, Switzerland, a polyester filament yarn (PFY) project of multi-filament and micro-filament yarn. It has also diversified into cotton spinning. The unit is at Vareli near surat. 

Garden Finance Limited and Garden Securities Limited was amalgamated with the company with effect from July, 1997. Pursuant to the scheme of amalgamation, In Jul.'99 the company allotted 2250000 Equity shares of Rs. 10/- each fully paid up to the erstwhile shareholders of transferor Company, Garden Finance Limited

The company's Captive Power Project of 5.5 MW capacity was commissioned at Village Jalwa. The company also set up a Natural Gas based Captive Power Project of 6.6 MW capacity at Vareli Complex.Both of these projects have commenced commercial production from March 2001. 

The company has further undertaken an expansion project at a total cost of Rs.1300.000 Millions involving expansion of POY capacity by 25000 TPA,installing 12 nos Draw Winders and a Captive Power Project for the additional power requirements. The expansion of POY spinning lines to 32200 MT p.a was completed as per schedule and the production started from November, 2003. The second phase is under implementation and is expected to completed during the current year.

Press Release

GGCL ENTERS INTO GAS SALE AGREEMENT WITH GARDEN SILK MILLS

Gujarat Gas Company Limited (GGCL) has signed an agreement with Garden Silk Mills Limited, Surat in South Gujarat for supply of 0.166 Millions standard cubic meters of gas per day (scmd). GGCL would commence supply of 70,000 scmd in March 2004 and would ramp up the remaining supply of 96,000 scmd of gas in March - August 2005. The agreement is valid upto 31 March 2008.

Background

GGCL is engaged in transmission and distribution of natural gas.

GGCL, along with its subsidiary GTCL, is selling in excess of 2.300 Millions scmd of gas procured from a number of sources including Cairn's Lakshmi gas field and GSPCL's Hazira gas field. In addition, GGCL has also contracted transportation of 3.150 Millions scmd of gas for third parties. GGCL, along with its subsidiary GTCL, is supplying gas to a number of bulk consumers in Gujarat which include Searchchem, KRIBHCO and Essar Steel and also to approx. 460 small and medium sized industries and 145, 600 commercial and domestic consumers. GTCL has also entered into an agreement with GSFC for supply of 0.150 Millions scmd of gas.

Garden Vareli to enter Sri Lanka, Bangladesh

Purvita Chatterjee

MUMBAI, May 9

GARDEN VARELI, the saree and fabric brand belonging to Garden Silk Mills Limited is planning to tap the markets in the neighbouring countries of Sri Lanka and Bangladesh.

The company which manufactures yarn and fabric at Surat, intends exporting its brand within a year. The Chairman and Managing Director, Garden Silk Mills Ltd, Mr Praful Shah, told Business Line, "The purpose is to be present in these countries before the WTO agreement comes into effect. We should be there within a year''.

In the past, the company had taken its fabrics to countries in the Gulf and Soviet Union, but this is the first time that its sarees brand will be travelling to the neighbouring countries where it already enjoys a strong equity.

"There have been importers who have been buying our brand and supplying it to these markets but now we intend doing it ourselves,'' states Mr. Shah.

Registering a turnover of Rs5000.000 Millions, the company floated a yarn division in 1994 and continues to supply to weavers. Its fabrics division comprises the retail, bargain and wholesale units.

Recording a turnover of Rs350.000 Millions for its Garden brand, the company has been relying on its bargain sales in places where it does not have a strong retail presence. "usually have more of our sales in north India since we do not have a strong retail presence in these parts,'' says Mr. Shah.

Holding its discount sales nearly two times a year in smaller cities such as Chandigarh and Kanpur, the company wants to reach out to those markets where it still lacks adequate retail presence.

The company has also ventured into the readymade segment with shirts and salwar kameezes. "We believe the readymade market is still disorganised and difficult and we will be present only in a limited way,'' says Mr Shah. Operating through franchisee operations with almost 200 retail outlets across the country, there are also a limited number of company-owned stores. Garden's Rs.4.000 Millions (proposed) ad account lies with the Mumbai-based agency, Ambience D'Arcy

Projects

The company’s captive power project of 5.5 MW capacity was commissioned at village Jolva in Gujarat. At the company’s Vareli complex, the company has set up a natural gas based captive power project of 6.6 MW capacity. Both the projects have commenced commercial production from March 2001.

The company has further undertaken an expansion project at a total cost of Rs. 1300.00 millions involving expansion of POY capacity by 25000 tonnes, installing 12 nos. draw winders and a captive power project for the additional power requirements.

The company has entered into an agreement and opened letter of credit in favour of the overseas suppliers for 2 POY spinning lines of 25000 TPA capacity, to match with the capacity for value-added yarn processing equipments like draw twister, draw warpers, etc. The company has already imported 12 nos. second hand draw winders. The civil work for the project is progressing. For the captive power project, the company is setting up an environmental friendly as well as fuel-efficient power plant. The company has already incurred a total expenditure of Rs.204.00 millions out of its internal accruals.

The company has collaboration with NOY-VAL Lesina, Switzerland for a polyester yarn project of multi-filament and micro-filament year. It has also diversified into cotton spinning. For this purpose, a cotton spinning plant has been set up at its industrial complex at Vareli near Surat.

The company plans to set up a gas or naphtha based power project of 300 MW to be supplied to the state electricity board.

Garden Finance Limited and Garden Securities Limited was amalgamated with the company with effect from July 1997. Pursuant to the scheme of amalgamation, in July 1999 the company allotted 2250000 equity shares of Rs. 10/- each fully paid to the erstwhile shareholders of transferor company, Garden Finance Limited.

The company's plant at Vareli has been accredited with ISO 9002: 1994 Certification.

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.50.03
UK Pound	1	Rs.74.42
Euro	1	Rs.62.71

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	5
--CREDIT LINES	1~10	5
--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	NO
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		47

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