MIRA INFORM REPORT

Report Date :

19.11.2011

IDENTIFICATION DETAILS

Name :	KITEX GARMENTS LIMITED
Registered Office :	P b No. 5, Kizhakkambalam, Alwaye, Ernakulam – 683 562, Kerala
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	29.05.1992
Com. Reg. No.:	09-6528
Capital Investment / Paid-up Capital :	Rs.47.500 millions
CIN No.: [Company Identification No.]	l18101kl1992plc006528
TAN No.: [Tax Deduction & Collection Account No.]	CHNK01383E
PAN No.: [Permanent Account No.]	AABCK0714F
Legal Form :	Public Limited Liability Company. The Company's shares are listed on the Stock Exchange.
Line of Business :	Manufacturer and Exporter of Garments.
No. of Employees :	2609 Approximately

RATING & COMMENTS

MIRA’s Rating :

Ba (49)

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

Maximum Credit Limit :	USD 2944972
Status :	Satisfactory
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well – established and a reputed company having satisfactory track. Trade relations are reported as fair. Business is active. Payments are reported as fair. Business is active. Payments are reported to be regular and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – April 1, 2010

Country Name	Previous Rating (31.12.2009)	Current Rating (01.04.2010)
India	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

LOCATIONS

Registered Office / Factory :	P b No. 5, Kizhakkambalam, Alwaye, Ernakulam – 683 562, Kerala
Tel. No.:	91-484-2682200 / 2682201 / 2682202
Fax No.:	91-484-2680604
E-Mail :	finance@kitexgarments.com sumit.mittal@sarvpriya.in hr@kitexgarments.com sect@kitexgarments.com
Website :	www.kitexgarments.com
Corporate Office :	Kitex House 3^rd Floor, Shenoy Chambers, Shanmugham Road, Kochi – 682031, Kerala

DIRECTORS

AS ON 31.03.2011

Name :	Mr. Sabu M Jacob
Designation :	Chairman and Managing Director
Name :	Mr. M C Jacob
Designation :	Director
Name :	Mr. C Mohan
Designation :	Director
Name :	Mr. Benni Joseph
Designation :	Director
Name :	Mr. M P Kuriakose
Designation :	Director

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 30.09.2011

Category of Shareholder	Total No. of Shares	% of total No. of Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Bodies Corporate	7,106,500	14.96
Any Others (Specify)	18,214,950	38.35
Directors/Promoters & their Relatives & Friends	18,214,950	38.35
Sub Total	25,321,450	53.31
(2) Foreign
Total shareholding of Promoter and Promoter Group (A)	25,321,450	53.31
(B) Public Shareholding
(1) Institutions
(2) Non-Institutions
Bodies Corporate	5,505,327	11.59
Individuals
Individual shareholders holding nominal share capital up to Rs. 0.100 million	8,367,057	17.61
Individual shareholders holding nominal share capital in excess of Rs. 0.100 million	8,021,123	16.89
Any Others (Specify)	285,043	0.60
Clearing Members	9,265	0.02
Hindu Undivided Families	33,042	0.07
Non Resident Indians	241,936	0.51
Directors & their Relatives & Friends	800	-
Sub Total	22,178,550	46.69
Total Public shareholding (B)	22,178,550	46.69
Total (A)+(B)	47,500,000	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	-	-
(1) Promoter and Promoter Group	-	-
(2) Public	-	-
Sub Total	-	-
Total (A)+(B)+(C)	47,500,000	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer and Exporter of Garments.

PRODUCTION STATUS

AS ON 31.03.2011

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Garments	Nos.		65000000	50335188

GENERAL INFORMATION

No. of Employees :

2609 Approximately

Bankers :

· State Bank of India

· Punjab National Bank

· The Federal Bank Limited

Facilities:

Rs. In Millions

SECURED LOAN	31.03.2011	31.03.2010
From Bank
Term Loans	428.431	610.319
Working Capital	654.590	80.450
Form Others
Hire Purchase Credits (Net)	4.086	6.140
TOTAL	1087.107	696.909

Banking Relations :

---

Auditors :

Name :

Kolath and Company

Chartered Accountants

Address:

41/3951 A, ORS Road, Kacheripady, Kochi 682018, Kerala, India

Associates/Subsidiaries :

NIL

CAPITAL STRUCTURE

AS ON 31.03.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
50000000	Equity Shares	Re. 1 each	Rs. 50.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
47500000	Equity Shares	Re. 1 each	Rs.47.500 millions

Note:

Of the above 9,37,500 shares of Re. 1/- each are issued for consideration other than cash.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2011	31.03.2010	31.03.2009
SHAREHOLDERS FUNDS
1] Share Capital		47.500	47.500	47.500
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		688.743	504.563	336.200
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		736.243	552.063	383.700
LOAN FUNDS
1] Secured Loans		1087.107	696.909	1378.800
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		1087.107	696.909	1378.800
DEFERRED TAX LIABILITIES		156.933	143.540	130.800
TOTAL		1980.283	1392.512	1893.300
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1223.120	1186.622	1230.300
Capital work-in-progress		9.430	8.087	6.900
INVESTMENT		0.052	0.044	0.000
DEFERREX TAX ASSETS		0.000	0.000	4.100
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	565.863	222.626	241.400
	Sundry Debtors	392.938	51.867	553.100
	Cash & Bank Balances	63.945	81.080	28.600
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	243.569	279.180	76.900
Total Current Assets		1266.315	634.753	900.000
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	329.020	235.866
	Current Liabilities	60.939	58.908	183.900
	Provisions	128.675	142.220	64.100
Total Current Liabilities		518.634	436.994	248.000
Net Current Assets		747.681	197.759	652.000
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		1980.283	1392.512	1893.300

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2011	31.03.2010	31.03.2009
	SALES
		Sales	2422.846	2474.191	1823.900
		Other Income	190.549	260.045	201.000
		TOTAL (A)	2613.395	2734.236	2024.900
Less	EXPENSES
		Manufacturing Expenses	259.836	327.492	41.500
		Administrative Expenses	141.987	125.058	47.200
		Raw Material Consumed	1304.960	1353.355	1128.800
		Increase/(Decrease) in Finished Goods	3.655	(5.020)	(15.000)
		Salaries, Wages, Bonus, etc.	368.308	437.692	385.700
		Power & Fuel	0.000	0.000	50.600
		Other Expenditure	0.000	0.000	2.400
		TOTAL (B)	2078.746	2238.577	1641.200
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		534.649	495.659	383.700
Less	FINANCIAL EXPENSES (D)		148.851	152.211	162.500
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		385.798	343.448	221.200
Less/ Add	DEPRECIATION/ AMORTISATION (F)		68.859	65.546	60.800
	PRIOR PERIOD EXPENSES		4.506	0.000	0.000
	PROFIT BEFORE TAX (E-F) (G)		312.429	277.902	160.400
Less	TAX (H)		106.103	92.855	60.800
	PROFIT AFTER TAX (G-H) (I)		206.326	185.047	99.600
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	1713.796	2365.948	1792.407
	IMPORTS
		Raw Materials	223.656	262.167	NA
		Stores & Spares	15.261	6.488	NA
		Capital Goods	46.987	53.885	NA
	TOTAL IMPORTS		285.904	322.540	NA
	Earnings Per Share (Rs.)		4.34	3.90	--

QUARTERLY RESULTS

PARTICULARS	30.06.2011	30.09.2011
	1^st Quarter	2^nd Quarter
Net Sales	807.680	675.150
Total Expenditure	663.290	545.720
PBIDT (Excl OI)	144.390	129.430
Other Income	22.220	19.850
Operating Profit	166.610	149.280
Interest	44.640	51.450
Exceptional Items	0.000	0.000
PBDT	121.970	97.830
Depreciation	18.680	18.750
Profit Before Tax	103.290	79.090
Tax	33.510	27.080
Provisions and contingencies	0.000	0.000
Profit After Tax	69.770	52.010
Extraordinary Items	0.000	0.000
Prior Period Expenses	0.000	0.000
Other Adjustments	0.000	0.000
Net Profit	69.770	52.010

KEY RATIOS

PARTICULARS		31.03.2011	31.03.2010	31.03.2009
PAT / Total Income	(%)	7.89	6.76	4.91
Net Profit Margin (PBT/Sales)	(%)	12.89	11.23	8.79
Return on Total Assets (PBT/Total Assets}	(%)	12.55	15.25	7.52
Return on Investment (ROI) (PBT/Networth)		0.42	0.50	0.41
Debt Equity Ratio (Total Liability/Networth)		2.39	2.31	4.58
Current Ratio (Current Asset/Current Liability)		2.44	1.45	3.62

LOCAL AGENCY FURTHER INFORMATION

Company HistoRy

Subject is in the business of manufacturing and exporting garments. The Company manufactures different types of garments, such as hosiers, shirts, pants, jackets, innerwear and outerwear. During the fiscal year ended March 31, 2010, the export sales mainly consisted of infant and children's wear and jackets intended for the United States market. During the fiscal year ended March 31, 2010, the Company produced 87,779,618 readymade garments. For the nine months ended 31 December 2010, Kitex Garments Limited’s revenues decreased 16% to RS1.72B. Net income decreased 35% to Rs. 113.3 M. Revenues reflect a decrease in income from operations, lower other operating income and decreased other income. Net income also reflects an increase in depreciation expenses, a rise in power and fuel expenses, higher other expenditure and lower gross profit margins.

PERFORMANCE REVIEW

The total turnover for the year is Rs 2422.847 millions against the previous year turnover of Rs.2474.192 millions. The spurt in the price of yarn in the market and its consequent effect in the price of their product had affected the export in the first half of the financial year. However the revival of export sales in the second half year and the increase in sales in domestic market helped the company in maintaining the turnover at this level. The profit after tax is Rs.206.327 millions against previous year profit after tax of Rs.185.048 millions which shows an increase of 11.5% . This could be achieved by optimizing all operations.

FUTURE PROSPECTS

Despite escalating prices of yarn and stiff competition from other countries, international buyers show preference

to the company's product for its quality and timely delivery and hence the Directors are confident of achieving better working results in the coming years.

MANAGEMENT DISCUSSION AND ANALYSIS

OVERALL REVIEW OF OPERATIONS

The company is in the business of manufacturing and exporting garments. The Company had achieved a turnover

of Rs. 2613.300 millions though there is a reduction in export of garments. The operational profits has improved on account of optimizing all the operations of the company.

INDUSTRY

The Indian textile industry plays a vital role in the economy of the country by contributing to GDP, generating employment and earning foreign exchange.

OPPORTUNITIES AND THREATS

The big business houses in America and Europe manufacturing and dealing in textiles and garments will be forced to depend upon India, China and the neighbouring countries to get the required output at the lowest possible cost either by outsourcing or contracting, due to availability of the raw materials and skilled labour in these countries. However they perceive threats by way of competition from the neighbouring countries like China, Pakistan and Srilanka. Although the competition is hectic they have an edge over others with their quality and timely execution of orders. The more transit time due to geographical position and appreciation of the rupee are major concerns for the growth of the industry.

OUTLOOK

The company is taking all efforts to improve the quality and productivity to get more orders at competitive rates. Due to the addition of the new processing plant the company is able to quote better rates and maintain high quality and productivity in the finished goods manufactured. Barring unforeseen circumstances the company is confident of achieving better results in the current year.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has a proper and adequate internal control system to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and those transactions are authorised, recorded and

reported correctly. The internal control is exercised through documented policies, guidelines and procedures. It is supplemented by an extensive program of internal audits conducted by in house trained personnel. The audit observations and corrective action taken thereon are periodically reviewed by the audit committee to ensure effectiveness of the internal control system. The internal control is designed to ensure that the financial and other records are reliable for preparing financial statements and other data, and for maintaining accountability of persons.

FIXED ASSETS:

· Land

· Building

· Plant and Machinery

· Furniture and Fixtures

· 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.51.35
UK Pound	1	Rs.80.97
Euro	1	Rs.69.26

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	5
--RESERVES	1~10	6
--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	no
--AFFILIATION	YES/NO	no
--LISTED	YES/NO	yes
--OTHER MERIT FACTORS	YES/NO	yes
TOTAL		49

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	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
--	NB	New Business	--

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

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.