MIRA INFORM REPORT

Report Date :

03.02.2012

IDENTIFICATION DETAILS

Name :	SALONA COTSPIN LIMITED
Registered Office :	SF No.74/12 and 75/3 Sathy Road, Poongampalli Village, Sathyamangalam – 638402, Tamilnadu
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	18.01.1994
Com. Reg. No.:	004797
Capital Investment / Paid-up Capital :	Rs.52.624 Millions
CIN No.: [Company Identification No.]	L17111TZ1994PLC004797
TAN No.: [Tax Deduction & Collection Account No.]	CMBS03126E
PAN No.: [Permanent Account No.]	AACCS4554N
Legal Form :	Public Limited Liability Company. The Company's shares are listed on the Stock Exchange.
Line of Business :	Manufacturer of Cotton Yarn in Cones, Hosiery Fabrics
No. of Employees :	Not Available

RATING & COMMENTS

MIRA’s Rating :

Ba (45)

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

Maximum Credit Limit :	USD 701532
Status :	Satisfactory
Payment Behaviour :	Usually correct
Litigation :	Clear
Comments :	Subject is an established company having satisfactory track. Trade relations are reported as fair. Business is active. Payments are reported to be usually correct 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 – September 30, 2011

Country Name	Previous Rating (30.06.2011)	Current Rating (30.09.2011)
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 :	Mill Premises, S.F.No. 74/12 & 75/3, Sathy Main Road, Pungampalli, Valipalayam (Post), Sathy Taluk, Erode District, Tamil Nadu, India
E-Mail :	info@salonagroup.com
Factory:	Located at: · Panakudi Village, Tirunelveli District. · Sinjuvadi Village, Pollachi Taluk · Vadambhacherri Village, Palladam Taluk, · Kozhumankondan Village, Palani Taluk.
Administrative Office :	No.9, Ramalinga Nagar, IV-Cross, Saibaba Colony, Coimbatore – 641 011.
Tel No.	91-422-2454415/2454416/2454417
Fax No.:	91-422-2454414

DIRECTORS

Name :	Mr. Shyamlal Agarwala
Designation :	Managing Director
Name :	Mr. Manoj Kumar Jhajharia
Designation :	Joint Managing Director
Name :	Mr. G V S Desikan
Designation :	Director
Name :	Mr. Mahesh Agarwal
Designation :	Director
Name :	Mr. Dulichand Pansari
Designation :	Director
Name :	Mr. SP Sekar
Designation :	Director

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 30.09.2011

Names of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of promoter and Promoter Group
1) Indian
a) Individuals / Hindu Undivided Family	2682860	50.98
b) Bodies corporate	400000	7.60
2) Foreign
(B) Public Shareholdings
1) Institutions
a) Financial Institutions/Banks	38500	0.73
2) Non – Institution
a) Bodies corporate	507414	9.64
b) Individuals
i. Individual Shareholders holding nominal share capital upto Rs.0.100 Million	1175705	22.34
ii. Individual Shareholders holding nominal share capital in excess Rs.0.100 Million	341759	6.49
c) Any other
i) Director and their relatives and friends	13200	0.25
ii) NRI – Repatriable	2475	0.05
iii) Clearing Member	30591	0.58
iv) HUF	69896	1.33
Total	5262400	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer of Cotton Yarn in Cones, Hosiery Fabrics

PRODUCTION STATUS AS ON 31.03.2011

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Spindles		24336	NA	NA
Finished Goods – Cotton Yarn (Cones)		NA	3.877	3.681
Finished Goods – Hosiery Knitted Fabrics		NA	1.704	1.959

GENERAL INFORMATION

No. of Employees :

Not Available

Bankers :

· Union Bank of India

· The Catholic Syrian Bank Limited

· State Bank of India

· Oriental Bank of Commerce

Facilities :

SECURED LOAN	Rs. In Millions 31.03.2011	Rs. In Millions 31.03.2010
Term Loans From Banks: Union Bank of India State Bank of India Oriental Bank of Commerce	112.940 59.814 124.387	117.830 59.798 74.187
Cash Credit From Banks: Union Bank of India, Union Bank of India Packing Credit Union Bank of India FCL Loan The Catholic Syrian Bank Ltd., The Catholic Syrian Bank Ltd., FCNRB Loan State Bank of India State Bank of India FCNRB Loan Oriental Bank of Commerce Axis Bank – Key Loan	55.766 29.603 0.000 63.072 10.112 25.649 9.702 11.311 29.973	30.315 5.739 50.760 14.468 0.000 25.864 9.724 17.669 0.000
Foreign Bills Purchased by Banks: Union Bank of India (FDBP A/c) Union Bank of India (UDBP A/c)	10.905 0.000	14.910 0.950
Hire Purchase Finance From ICICI Bank Limited From Union Bank of India	0.364 0.691	0.500 0.000
Interest accrued and due on Term Loans	2.266	1.364
TOTAL	546.558	424.082
UNSECURED LOAN	Rs. In Millions 31.03.2011	Rs. In Millions 31.03.2010
IFST Deferral Scheme	43.717	53.121
TOTAL	43.717	53.121

Banking Relations :	--
Auditors :
Name :	VKS Aiyer and Company Chartered Accountant
Address :	Meeheri Manor, No.2, S R Iyer Layout, Near Air, Trichy Road, Coimbatore -641045, India
Associates/Subsidiaries :	NA

CAPITAL STRUCTURE

AS ON 31.03.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
6000000	Equity Shares	Rs.10/- each	Rs.60.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
5262400	Equity Shares	Rs.10/- each	Rs.52.624 Millions
	Add: Forfeited Shares		Rs.0.665 Millions

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		53.289	53.289	53.289
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		122.094	83.496	67.058
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		175.383	136.785	120.347
LOAN FUNDS
1] Secured Loans		546.558	424.082	281.576
2] Unsecured Loans		43.717	53.121	58.446
TOTAL BORROWING		590.275	477.202	340.022
DEFERRED TAX LIABILITIES		43.600	40.590	41.560
TOTAL		809.258	654.577	501.929
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		380.024	371.263	290.666
Capital work-in-progress		0.341	1.335	0.530
INVESTMENT		0.278	0.278	0.286
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	387.796	190.189	95.920
	Sundry Debtors	63.782	70.166	64.799
	Cash & Bank Balances	17.415	20.587	15.169
	Other Current Assets	7.135	7.759	12.305
	Loans & Advances	21.666	34.587	30.730
Total Current Assets		497.794	323.288	218.923
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	60.670	38.174	11.986
	Other Current Liabilities	0.760	0.606	0.613
	Provisions	10.845	6.522	0.211
Total Current Liabilities		72.275	45.302	12.810
Net Current Assets		425.519	277.986	206.113
MISCELLANEOUS EXPENSES		3.096	3.715	4.334
TOTAL		809.258	654.577	501.929

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2011	31.03.2010	31.03.2009
	SALES
		Income	796.193	552.898	499.389
		Other Income	2.212	1.558	1.439
		TOTAL (A)	798.405	554.456	500.828
Less	EXPENSES
		Raw Material Consumed	554.093	345.376	320.301
		Purchase of Trading Goods - Yarn	47.427	7.691	11.556
		Manufacturing Charges	52.336	50.447	43.969
		Salaries, Wages and Other Benefits	18.972	16.796	13.302
		Repairs & Maintenance	27.331	19.369	13.694
		Remuneration to Directors	3.182	2.369	1.338
		Administrative & Other Expenses	9.418	8.281	5.786
		Selling and Distribution Expenses	17.527	7.848	7.358
		Change in stock	(97.126)	(3.124)	2.713
		TOTAL (B)	633.160	455.053	420.017
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		165.245	99.403	80.811
Less	FINANCIAL EXPENSES (D)		45.989	28.486	25.947
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		119.256	70.917	54.864
Less/ Add	DEPRECIATION/ AMORTISATION (F)		59.403	44.714	43.607
	PROFIT BEFORE TAX		59.853	26.203	11.257
Add	EXCESS PROVISION FOR TAXES WRITTEN BACK		0.007	0.000	0.002
Less	TAX		15.145	3.629	9.987
	PROFIT AFTER TAX		44.715	22.574	1.272
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		83.495	67.058	65.786
	BALANCE CARRIED TO THE B/S		128.210	89.632	67.058
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	128.721	32.144	49.832
	TOTAL EARNINGS		128.721	32.144	49.832
	Earnings Per Share (Rs.)		8.50	4.29	--

QUARTERLY

PARTICULARS	30.06.2011	30.09.2011
Type	1^st Quarter	2^nd Quarter
Sales Turnover	226.020	189.160
Total Expenditure	242.600	202.670
PBIDT (Excl OI)	(16.580)	(13.510)
Other Income	0.060	0.370
Operating Profit	(16.540)	(13.140)
Interest	12.540	12.170
Exceptional Items	0.000	0.000
PBDT	(29.060)	(25.310)
Depreciation	15.360	9.880
Profit Before Tax	(44.420)	(35.180)
Tax	0.000	0.000
Reported PAT	(44.420)	(35.180)
Extraordinary Items	0.000	0.000
Prior Period Expenses	0.000	0.000
Other Adjustments	0.000	0.000
Net Profit	(44.420)	(35.180)

KEY RATIOS

PARTICULARS		31.03.2011	31.03.2010	31.03.2009
PAT / Total Income	(%)	5.60	4.07	0.25
Net Profit Margin (PBT/Sales)	(%)	7.52	4.73	2.259
Return on Total Assets (PBT/Total Assets}	(%)	6.82	3.77	2.21
Return on Investment (ROI) (PBT/Networth)		0.34	0.19	0.09
Debt Equity Ratio (Total Liability/Networth)		3.78	3.82	2.93
Current Ratio (Current Asset/Current Liability)		6.89	7.13	17.09

LOCAL AGENCY FURTHER INFORMATION

REVIEW OF OPERATIONS:

During the year, the Sales turnover increased to Rs. 793.603 Millions as against Rs.548.556 Millions in the previous year due to increase in capacity to 24336 spindles and increase in cotton and Yarn prices. On account of increase in spindles capacity, the yarn production increased to 38.77 Lacs Kgs, as against 36.81 Lacs Kgs in last year. The Mill has produced knitted fabrics of 17.04 Lacs Kgs as against 19.59 Lacs Kgs in last year. There was power cut and frequent power interruptions which affected the spinning production during the year .The Wind Mill generated 84.62 Lacs units of wind electricity as against 55.73 Lacs unit in the previous year. The wind electricity was captivity consumed by use in the Textile Mill.

OUT LOOK FOR THE IMMEDIATE FUTURE:

Due to steep increase in Cotton prices and poor demand for Yarn and fabrics sales on account of closure of dyeing units in Tirupur due to Pollution Control Problem, the off take of finished products slackened. The company hopes that the newly established Government of Tamilnadu will take necessary steps to find out suitable solution to solve the problems of the dyeing units in near future. Moreover the Company has been pursuing cost reduction and efficiency improvements in productions and hence, it is optimistic to perform still better in the coming years.

FINANCES:

During the year under review, the Reserves and Surplus, representing the credit balance in the Profit and Loss account stood at Rs. 122.095 Millions (Rs. 83.496 Millions.) The Liability for interest free sales Tax deferred credit stood at Rs.43.717 Millions. (Rs. 53.121 Millions). The Company met all financial commitments to the Bankers on account of Term Loan and Working Capital Credit.

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.49.12
UK Pound	1	Rs.77.84
Euro	1	Rs.64.74

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	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		45

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.