MIRA INFORM REPORT

Report Date :

23.11.2012

IDENTIFICATION DETAILS

Name :	NAHAR SPINNING MILLS LIMITED
Registered Office :	373 Industrial Area, Phase A, Ludhiana-141003, Punjab
Country :	India
Financials (as on) :	31.03.2012
Date of Incorporation :	16.12.1980
Com. Reg. No.:	16-004341
Capital Investment/ Paid-up Capital:	Rs.180.531 Millions
CIN No.: [Company Identification No.]	L17115PB1980PLC004341
TAN No.: [Tax Deduction & Collection Account No.]	JLDN00362F / JLDN00361E / JLDN00757B
PAN No.: [Permanent Account No.]	AAACN5710D
Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchanges.
Line of Business :	Manufacturer Cotton / Synthetic and Blended Yarns.
No. of Employees:	10590 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

A (57)

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 21950000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is the flagship company of the Nahar group, a business conglomerate which is into spinning, garments and hosiery. It is a well established company having fine track. It has incurred heavy loss from its operations during 2012. However, it has established position in the cotton yarn and knitted garments markets, large – scale and integrated operations and presence across the textile value chain. Trade relations are reported as trustworthy. Business is active. Payments are reported to be regular and as per commitment. The company can be considered good 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 – June 30, 2012

Country Name	Previous Rating (31.03.2012)	Current Rating (30.06.2012)
India	A1	A1

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

INDIAN ECONOMIC OVERVIEW

India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the country's growth, which has averaged more than 7% per year since 1997. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the work force is in agriculture, but services are the major source of economic growth, accounting for more than half of India's output, with only one-third of its labor force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services and software workers. In 2010, the Indian economy rebounded robustly from the global financial crisis - in large part because of strong domestic demand - and growth exceeded 8% year-on-year in real terms. However, India's economic growth in 2011 slowed because of persistently high inflation and interest rates and little progress on economic reforms. High international crude prices have exacerbated the government's fuel subsidy expenditures contributing to a higher fiscal deficit, and a worsening current account deficit. Little economic reform took place in 2011 largely due to corruption scandals that have slowed legislative work. India's medium-term growth outlook is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. India has many long-term challenges that it has not yet fully addressed, including widespread poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, scarce access to quality basic and higher education, and accommodating rural-to-urban migration.

Source : CIA

EXTERNAL AGENCY RATING

Rating Agency Name	CRISIL
Rating	A (Long Term Rating)
Rating Explanation	Adequate degree of safety and low credit risk
Date	18.09.2012

Rating Agency Name	CRISIL
Rating	A1 (Short Term Rating)
Rating Explanation	Very strong degree of safety and lowest credit risk
Date	18.09.2012

RBI DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available RBI Defaulters’ list.

EPF (Employee Provident Fund) DEFAULTERS’’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of 31-03-2012.

LOCATIONS

Registered Office :	Nahar Tower, 373, Industrial Area, Phase A, Ludhiana – 141003, Punjab, India
Tel. No.:	91-161-2600701-05 / 2606977-80/ 2660945/ 2661181/ 2661180
Fax No.:	91-161-2222942 / 2601956 / 601956
E-Mail :	secnsm@owmnahar.com
Website :	http://www.owmnahar.com
Factory 1 :	427, Industrial Area–‘A’, Ludhiana, (Punjab) , India
Factory 2 :	Dhandari Kalan, G.T. Road, Sherpur, Ludhiana-141010 (Punjab) Village, India
Factory 3 :	Village Simrai, Mandideep, District Raisen, Madhya Pradesh, India
Factory 4 :	Jalalpur, District S.A.S. Nagar, (Punjab) , India
Factory 5 :	Village Lalru and Lehli, District S.A.S. nagar, Punjab , India
Factory 6 :	Rishab Spining Mills, Village Jodhan, District, Ludhiana, Punjab, India
Factory 7 :	Nahar Fibres, Jitwal Kalan Malekotla, District Snagrur, India

DIRECTORS

AS ON 31.03.2012

Name :	Mr. Jawahar Lal Oswal
Designation :	Chairman
Name :	Mr. Dinesh Oswal
Designation :	Managing Director
Name :	Mr. Kamal Oswal
Designation :	Director
Name :	Mr. Dinesh Gogna
Designation :	Director
Name :	Dr. H.K. Bal
Designation :	Director
Name :	Dr. Om Prakash Sahni
Designation :	Director
Name :	Prof. Kanwar Sain Sharma
Designation :	Director
Name :	Mr. Satish Kumar Sharma
Designation :	Director
Name :	Dr. Suresh Kumar Singla
Designation :	Director
Name :	Dr. Amrik Singh Sohi
Designation :	Additional Director
Name :	Dr. Yash Paul Sachdeva
Designation :	Additional Director

KEY EXECUTIVES

Name :	Mr. Anil Kumar Garg
Designation :	Finance Controllers
Name :	Mr. P.K. Vashishth
Designation :	Finance Controllers
Name :	Mr. Brij Sharma
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 30.09.2012

Category of Shareholder	Total No. of Shares	Percentage of Holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	87591	0.24
Bodies Corporate	23291834	64.58
Sub Total	23379425	64.83
(2) Foreign
Total shareholding of Promoter and Promoter Group (A)	23379425	64.83
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	7666	0.02
Financial Institutions / Banks	3519	0.01
Foreign Institutional Investors	600	0.00
Sub Total	11785	0.03
(2) Non-Institutions
Bodies Corporate	1778280	4.93
Individuals
Individual shareholders holding nominal share capital up to Rs. 0.100 Million	9297985	25.78
Individual shareholders holding nominal share capital in excess of Rs. 0.100 Million	1489450	4.13
Any Others (Specify)	108378	0.30
Non Resident Indians	107208	0.30
Directors & their Relatives & Friends	904	0.00
Trusts	66	0.00
Overseas Corporate Bodies	200	0.00
Sub Total	12674093	35.14
Total Public shareholding (B)	12685878	35.17
Total (A)+(B)	36065303	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	0	0.00
(1) Promoter and Promoter Group	0	0.00
(2) Public	0	0.00
Sub Total	0	0.00
Total (A)+(B)+(C)	36065303	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer Cotton / Synthetic and Blended Yarns.

Products :

Product Description	Item Code No.:
Articles of Apparel Knitted or Crocheted	61.01
Cotton yarn	52.05
Yarn of Synthetic Staple Fibre	55.09

PRODUCTION STATUS

AS ON 31.03.2011

Particulars	Unit	Licensed Capacity
Textile and Hosiery Garments	Pcs	14000000
Spindles / Roters	N.A	--

Particulars	Unit	Installed Capacity
Textile and Hosiery Garments	Not Feasible	--
Cotton/Synthetic Yarn	Spindles Roters	383296 1080
Gas-mercer sing	M. T.	2040
Dyeing and processing-Lalru unit	Not Feasible	--

Particulars	Unit	Actual Productions
Textile and Hosiery Garments	Pcs	7788371
Cotton/Synthetic Yarn	Kgs.	60235337
Gas-mercer sing	Kgs.	1976407
Dyeing and processing yarn/Fabric-Lalru Unit	Kgs.	121588

GENERAL INFORMATION

No. of Employees :

10590 (Approximately)

Bankers :

· Punjab National Bank

· State Bank of India

Facilities :

Secured Loan	As on 31.03.2012 (Rs. in Millions)	As on 31.03.2011 (Rs. in Millions)
LONG TERM BORROWINGS
TERM LOAN
FROM STATE BANK OF INDIA	354.743	812.968
The Term Loans of Nahar Spinning Mills Limited are secured by first charge by way of Hypothecation on the entire fixed assets of the units situated at Mandideep, Lalru (except of unit - III at Lairu) and Ludhiana on pari -passu basis with member consortium banks. The Term Loan of Textile units of erstwhile Nahar Exports Limited is secured by first charge by way of hypothecation on the entire fixed assets of said units. The charge referred above rank Pari-Passu basis with existing charge holders. Further Term Loan of Rs.1900.000 Millions is secured by first charge by way of hypothecation on the entire fixed assets of the company on pari - passu basis with member consortium banks. The Term loans are personally guaranteed by three Directors of the company.
FROM STATE BANK OF PATIALA	694.431	83.626
Secured by hypothecation of movable and immovable assets of units at Mandideep / Ludhiana / Lalru (except of unit - III at Lalru) Pari-passu with the company's bankers for working capital Borrowings and also personally guaranteed by three Directors of the Company.
FROM PUNJAB NATIONAL BANK	344.706	470.068
Sanctioned Term Loan of Rs. 240.000 Millions from PNB is secured by first Charge by way of hypothecation of entire block of assets of the company's unit situated at Jodhan. The charged referred above rank Pari-Passu with the other term lenders of erstwhile Nahar Exports Limited. Further Sanctioned Term Loan of Rs.755.000 Millions from PNB is secured by first Pari-passu Charge on the units of Mandideep, Lalru (except unit - III) and Ludhiana and also personally ^guaranteed by three Directors of the Company.
FROM ORIENTAL BANK OF COMMERCE	1554.383	1312.918
Sanctioned Term Loan of Rs.1240.000 Millions of erstwhile Nahar Exports Limited is secured by first charge on specific fixed assets i.e. Hypothecation of Plant and Machinery to be purchased under the project of estimated cost of Rs.1557.100 Millions of the units situated at Jodhan and Jitwal Kalan. Sanctioned Term Loans is personally guaranteed by a Director of the Company. Sanctioned Term Loan of Rs.750.000 Millions is secured by first Pari-Passu charge on the Units of Mandideep, Lalru (except unit - III) and Ludhiana. Further term loan of Rs.1300.000 Millions is secured by first charge on fixed assets of the company (Except assets exclusively financed by State Bank of India) on pari - passu basis with member consortium banks The Term Loans are personally guaranteed by three Directors of the Company.
FROM CANARA BANK	194.656	272.519
Sanctioned Term Loan of Rs.700.000 Millions From Canara Bank is secured by first charge on specific fixed assets of the units situated at Jodhan. It is further secured by Pari-Passu second charge on existing fixed assets of erstwhile Nahar Exports Limited. alongwith other banks. The Term Loan is personally guaranteed by three Directors of the Company.
FROM IDBI BANK LIMITED	892.500	752.200
Sanctioned Term Loan of Rs.1100.000 Millions of IDBI Bank is secured by first Pari passu Charge (hypothecation) on fixed assets on all fixed movable assets and Negative Lien on Immovable fixed assets (land and Building) The Term Loan Is personally guaranteed by three Directors of the Company.
FROM ALLAHABADBANK
Sanctioned Term Loan of Rs. 2820.000 Millions is secured by first Pari-Passu charge on the entire fixed assets of the Company both present and future and second pari passu charge on the current assets of the Company with other member Bankers. -Term Loan is repayable in quarterly installments & last installment due on 30.09.2019	2.514	0.000
SHORTTERMBORROWINGS
Loans repayable on Demand (Secured) Working Capital Borrowings From Banks
Secured by ( I ) Hypothecation of entire present and future movable assets of the company such as Stock of Materials, Work in process, Finished Goods, Goods in transit, Stores and Spares, Book Debts etc. ( II ) 2nd Charge (on pari passu basis) over entire plant and machinery, present or future, of all the units of the company and also personally Guarantee by Chairman, Managing Director and one Director of the Company.	7319.043	9022.408
Total	11356.976	12726.707

Banking Relations :	--
Auditors :
Name :	Gupta Vigg and Company Chartered Accountants
Address :	101, Kismat Complex, G.T. Road, Miller Ganj, Ludhiana-141003, Punjab, India
Associates :	· Nahar Capital and Financial Services Limited · Nahar Poly Films Limited · Nahar Industrial Enterprises Limited · Oswal Woollen Mills Limited · Vanaik Spinning Mills Limited · Abhilash Growth Fund Private Limited · Atam Vallabh Financers Limited · Bermuda Insurance Brokers Private Limited · Kovalam Investment and Trading Company Limited · Ludhiana Holdings Limited · Monica Growth Fund Private Limited · Nagdevi Trading and Investment Company Limited · Nahar Growth Fund Private Limited · Ogden Trading and Investment Company Private Limited · Ruchika Growth Fund Private Limited · Sankeshwar Holding Company Limited · Vanaik Investors Limited · Verdhman Investment Limited · J.L. Growth Fund Limited · Jawahar Lal and Sons · Crown Star Limited · Monte Carlo Retail (India) Limited

CAPITAL STRUCTURE

As on 31.03.2012

Authorised Capital :

No. of Shares	Type	Value	Amount
60000000	Equity Shares	Rs.5/- each	Rs.300.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
36065303	Equity Shares	Rs.5/- each	Rs.180.327 Millions
	Share Forfeited Account (Amount originally paid up)		Rs. 0.204 Million
			Rs.180.531 Millions

TERMS/RIGHTS ATTACHED TO EQUITY SHARES

The company has only one class of shares having par value at Rs. 5/-per share. Each holder of equity shares is entitled to one vote per share

RECONCILIATION OF NUMBER OF SHARES

Particular	2012	2011
Number of shares at the beginning of the Financial year	36065303	36065303
Add: Shares Issued During the year	-	-
Less: Share buy back during the year	-	-
Number of shares at the end of the Financial year	36065303	36065303

DETAIL OF SHAREHOLDERS HOLDING

more than 5% shares

	2012
Name of the Shareholder	Number of Shares	%
Nahar Capital and Financial services Limited	10257384	28.44
Nahar Poly Films Limited	6611332	18.33
Nahar Industrial Enterprises Limited	2356930	6.54

FORFEITED SHARES (AMOUNT ORIGINALLY PAID UP)

Particular	2012	2011
Amount Paid Up
Rs.2.50 per Share	80298	80298
Rs.5.00 per Share	710	710

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2012	31.03.2011	31.03.2010
SHAREHOLDERS FUNDS
1] Share Capital		180.531	180.531	180.531
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		5307.123	6479.135	5365.697
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		5487.654	6659.666	5546.228
LOAN FUNDS
1] Secured Loans		11356.976	12726.707	8459.875
2] Unsecured Loans		0.000	0.000	99.280
TOTAL BORROWING		11356.976	12726.707	8559.155
DEFERRED TAX LIABILITIES		6.500	568.000	555.750
TOTAL		16851.130	19954.373	14661.133
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		8375.418	7483.159	6472.430
Capital work-in-progress		395.758	556.737	411.750
INVESTMENT		142.329	170.617	109.451
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	4689.345	8052.649	4884.736
	Sundry Debtors	3817.850	3722.969	2454.148
	Cash & Bank Balances	117.777	111.152	182.633
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	1165.914	2378.250	1340.162
Total Current Assets		9790.886	14265.020	8861.679
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	428.637	561.280	169.494
	Other Current Liabilities	1423.999	1323.548	793.100
	Provisions	0.625	636.332	231.583
Total Current Liabilities		1853.261	2521.160	1194.177
Net Current Assets		7937.625	11743.860	7667.502
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		16851.130	19954.373	14661.133

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2012	31.03.2011	31.03.2010
	SALES
		Income	16965.308	13946.614	11104.695
		Other Income	93.161	115.538	103.539
		TOTAL	17058.469	14062.152	11208.234
Less	EXPENSES
		Cost of materials consumed	10963.658	7997.411
		Purchase of Stock-in-Trade	56.263	133.219
		Employee benefit expense	1117.102	1081.716
		Other expenses	3908.519	3114.296	9253.175
		Difference of excise duty on Stocks	0.662	0.541
		Changes in inventories of finished goods, work-in-progress and Stock-in-Trade	801.117	(1334.257)
		TOTAL	16847.321	10992.926	9253.175
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION		211.148	3069.226	1955.059
Less	FINANCIAL EXPENSES		1101.219	486.272	450.397
	PROFIT /(LOSS)BEFORE TAX, DEPRECIATION AND AMORTISATION		(890.071)	2582.954	1504.662
Less/ Add	DEPRECIATION/ AMORTISATION		844.415	697.794	698.611
	Amount of Foreign Exchange Hedging Loss Settled During the year		0.000	105.846	0.000
	PROFIT/(LOSS) BEFORE TAX		(1734.486)	1779.314	806.051
Less	TAX		560.875	564.750	271.129
	PROFIT/(LOSS) AFTER TAX		(1173.611)	1214.564	534.922
Less	APPROPRIATIONS
		Disputed Liability Reserve			0.000
		Proposed Divided			54.098
		Tax on Divided	NA	NA	8.985
		Foreign Exchange Contingent Disputed Liability Reserve			14.927
		General Reserve			456.912
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	11209.723	9508.868	7082.707
		Discount/Rent/Interest Received/Others	5.689	5.395	3.096
		Carbon Credit	0.000	12.153	13.259
	TOTAL EARNINGS		11215.412	9526.416	7099.062
	IMPORTS
		Raw Materials	138.414	32.141	64.415
		Stores & Spares	92.835	108.273	72.551
		Capital Goods	491.682	508.940	132.312
	TOTAL IMPORTS		722.931	649.354	269.278
	Earnings Per Share (Rs.)		32.50	33.20	14.83

QUARTERLY RESULTS

PARTICULARS	30.06.2012	30.09.2012
	1^st Quarter	2^nd Quarter
Net Sales	4967.180	4967.180
Total Expenditure	4162.010	4162.010
PBIDT (Excl OI)	805.170	805.170
Other Income	16.210	16.210
Operating Profit	821.380	821.380
Interest	268.790	268.790
Exceptional Items	0.000	0.000
PBDT	552.590	552.590
Depreciation	219.590	219.960
Profit Before Tax	332.630	332.630
Tax	108.000	108.000
Provisions and contingencies	0.000	0.000
Profit After Tax	224.630	224.630
Extraordinary Items	0.000	0.000
Prior Period Expenses	0.000	0.000
Other Adjustments	0.000	0.000
Net Profit	224.630	224.630

KEY RATIOS

PARTICULARS		31.03.2012	31.03.2011	31.03.2010
PAT / Total Income	(%)	(6.88)	8.64	4.77
Net Profit Margin (PBT/Sales)	(%)	(10.22)	12.76	7.26
Return on Total Assets (PBT/Total Assets}	(%)	(9.55)	8.18	5.26
Return on Investment (ROI) (PBT/Networth)		(0.32)	0.27	0.15
Debt Equity Ratio (Total Liability/Networth)		2.41	2.29	3.14
Current Ratio (Current Asset/Current Liability)		5.28	5.66	7.42

LOCAL AGENCY FURTHER INFORMATION

Check List by Info Agents	Available in Report [Yes/No]
Year of Establishment	Yes
Locality of the Firm	Yes
Constitution of the firm	Yes
Premises details	No
Type of Business	Yes
Line of Business	Yes
Promoters background	No
No. of Employees	Yes
Name of Person Contacted	No
Designation of contact person	No
Turnover of firm for last three years	Yes
Profitability for last three years	Yes
Reasons for variation <> 20%	-
Estimation for coming financial year	No
Capital the business	Yes
Details of sister concerns	Yes
Major Suppliers	No
Major Customers	No
Payment Terms	No
Export / Import Details [If Applicable]	No
Market Information	-
Litigations that the firm / promoter involved in	-
Banking Details	Yes
Banking Facility Details	Yes
Conduct of the banking account	-
Buyer visit details	-
Financials, if provided	Yes
Incorporation details, if applicable	Yes
Last accounts filed at ROC	Yes
Major Shareholders, if applicable	Yes
Date of Birth of Proprietor/Partner/Director, if available	No
PAN of Proprietor/Partner/Director, if available	No
Voter ID No of Proprietor/Partner/Director, if available	No
External Agency Rating, if available	Yes

PERFORMANCE REVIEW

The Institute of Chartered Accountants of India, company's activities can be classified under two segments namely "Yarn Segment" and "Garment Segment". Before reviewing overall performance of the company.

YARN SEGMENT

They are pleased to inform you that during the year the company fully implemented expansion plans and thus increased its spindlage capacity to 432256 spindles and 1080 Rotors.

Yarn Segment though achieved a Revenue of 1583.11 Millions as against 1273.20 Millions showing an increase of 24.34 % over the previous year but it suffered a heavy loss of 86.25 Millions as against profit (before Tax and Interest) of 222.05 Millions in the previous year. The sudden crash of Raw cotton prices in the first quarter of the Financial year 2011-2012 coupled with decline in the prices of finished goods in the domestic and overseas markets severely affected the financial performance of the segment. Moreover untimely restrictions by the Government, in the last few months of the immediate preceding year affected the circle of demand and supply and thus resulted piling up of finished stocks at Mills level. Though this embargo on export was lifted after a short span of time but it had the turbulences in the Textile industry. The accumulated stock of finished goods at Mill's level, when entered into the markets caused a crash of cotton yarn prices by more than 30% within a span of month. In order to remain in the Global markets and to clear piling of finished goods inventory, company had to sell its products at prevailing cheap prices resulting heavy losses to the company.

However in the Current Financial Year things have started moving in the right direction and it is expected that the segment will improve its performance in the current year.

GARMENTSEGMENT

During the year, the segment went through a challenging phase due to volatility in the prices of raw material and economic slowdown in the US and European Union. But inspire of the above, the segment improved its performance and achieved a revenue of Rs.191.28 Millions with a profit (before interest and tax) of Rs.16.95 Millions.

The company has been awarded Golden Trophy by the Apparel Export Promotion Council for the highest export of Cotton Garments for the year 2009-2010. Sh. Anand Sharma, Hon'ble Union Minister of Commerce, Industry and Textile awarded the Golden Trophy on 14th November, 2011 at a function organized by AEPC at New Delhi.

OVERALL PERFORMANCE

From the above it is evident that the year by gone was the worst year for the spinning industry and the company's performance was also affected in the year . Though company's operating income increased to Rs.16914.200 Millions from Rs.13887.500 Millions showing an impressive increase of 17.89% over the previous year but it suffered a heavy loss of Rs.1172.000 Millions during the year . As the members are aware that cotton being a seasonable crop is purchased by the spinning mills for its full year requirements, during the cotton season but the cotton prices went up steeply during the season 2010-2011 due to export of huge quantity of cotton during the peak cotton season. Thus the Spinning Mills were forced to buy good quality cotton at abnormally higher prices during the season. However in April, 2011 the sudden crash of raw cotton prices coupled with decline in the prices of finished goods in the domestic as well as overseas markets severely affected the financial performance of the company. The mounting pressure of piling up of finished goods at Mills level pushed the companies to sell its yarn at cheaper prices which in turn affected company's financial performance. To add problems for the spinning industry, Reserve Bank of India also tightened the monitory policy resulting increase in the lending and borrowing rates. This measure of Reserve Bank of India resulted into a higher outgo of Rs.1101.200 Millions towards Finance Cost as against 486.200 Millions in the previous year and thus affected company's financial performance during the year.

However in the current year, things have started moving in the right direction. It is expected that revival of economy in U.S. and European Union will propel the growth of the Textile industry. The Management is putting whole heartedly all its efforts in cost reduction, quality management, better product mix etc. so as to improve the efficiencies which in turn will help the company in meeting the challenges ahead. Beside the Management also expect that the Government will also lend its helping hand through its policies initiatives so that the spinning industry could survive in this difficult period.

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY STRUCTURE AND DEVELOPMENTS:
 
Though Indian Textile Industry is one of the oldest manufacturing Industry but it is one of the major sector of the Indian economy contributing towards the growth of the Country`s Industrial Sector. It occupies a unique place in the economy as it is a self relied industry from production of raw material to fabrics and garments and provides direct employment to about 35 millions people. The Textile is the second highest industry after the agriculture sector and contribute about 14% of industrial production, 4% of National GDP and 10.63% of Country`s export  earnings 
 
The Textile industry`s growth started galloping after the opening of the sector through liberalization policies as initiated by the Government of India. In a short span, Textile industry successfully made its place in the World as the second largest producer of Textile and Garments after China. To attain this position the Industry took full advantages of the several policies initiated by the Central Government and modernized as well as expanded its capacities so as to become a global player and achieve economies of scale which in turn helped the industry to achieve competitive edge in terms of cost as well as quality. In globally competitive environment, these crucial factors play an important role in determining the sourcing base for the International buyers. These developments lead to India becoming a sourcing hub for several reputed Global buyers.
 
In line with the Global trends and to remain competitive, the company too expanded its capacities both in Yarns as well as in Garments. Presently the company has 432256 spindles and 1080 Rotors for the manufacturer of Cotton, synthetic and blended yarns. The Company`s garment manufacturing capacity has increased to 125 Million Pcs. per annum. The company has positioned itself as India`s one of the leading integrated textile player.
 
Them would also like to share with you that last year has been the worst year for the textile industry. Though the fact regarding the recession through out the World was the common knowledge for every one but the effect of the same to the respective industries was known to the respective sectors only. The overall World recession has the worst effect in the Textile industry as it was coupled with the Currency fluctuations as well as sudden downward trend in the prices of finished products. Moreover untimely restrictions by the Government, in the last few months of the immediate preceding year affected the circle of demand and supply and thus resulted piling up of finished stocks at Mills level. Though this embargo on export was lifted after a short span of time but it had the turbulences of the same in the Textile industry in the succeeding year. Though the Industry will take some more time to come back on the same path of growth but growth in the industry is imperative.
 
In addition, the Textile industry has always got proper attention from the Central Government because of its importance in the economy. To give further push for the revival of the industry, the Union Minister of Commerce, Industry and Textile Sh. Anand Sharma announced the Annual supplement 2012-13 to the Foreign Trade policy 2009-2014 whereby a series of measures including extension of interest rate subvention scheme till 31st March, 2013 and expansion of the scheme covering more products to boost exports, were offered to the Industry. The addition of items, products and rates under the Focus Market Scheme has also enabled the industry to tap the new export markets. These measure have provided a little bit of relief to the Industry and them are quite hopeful that the said measures would ease the pressure on the industry and will help in facing the challenges ahead.
 
FUTURE OUTLOOK
 
During the year , several factor like volatile Cotton prices, High rate of interest, tightening of the monitory policy, Exchange Rate fluctuations and power crisis adversely affected the textile industry.
 
Besides economic slow down in the US, European Union and Asia has lowered the demand for the textile products resulting fall in the International prices. The global buyers have resorted to a system similar to Global Tendering which is taking its toll on Indian Garments Export. The orders are gained or lost by very thin margin. Unless the manufacturers are able to compete by overall cost competitiveness, orders goes to other countries. Thus earning a reasonable margins has become a challenging task. The continuous presence of several adverse factors, as mentioned in para above, has made the industry strong enough to face all the turbulence and learn to survive in a competitive environment.
 
They are looking at the future with optimism and hope that revival of economy in U.S. and European Union will propel the growth of the Textile industry. They also expect that the Government through its Policies will take suitable remedial measures to strengthen the hands of the textile industry. Last year the export of huge quantity of raw cotton, during the peak season, pushed the prices of cotton to higher levels which severely impacted the textile industry. In the current year it is estimated that the availability of raw cotton will be in short supply by 50 lacs bales, as compared to the last year, because of delay in the monsoon. The delayed as well as shortfall of monsoon has resulted into lower area under cotton cultivation and low yield of crop which in turn will affect the supply of raw cotton for the textile industry.
 
In view of the above, they expect that the Government will take a cautious approach in allowing the export of raw cotton and will take the industry into confidence before devising a policy of export for raw cotton.
 
FINANCIAL/OPERATION PERFORMANCE:
 
The year 2012 has been the worst year for the spinning industry. Inspite of difficult year, the company has been able to increase its top line to Rs.16914.200 Millions but it bottom line suffered because of the several factors which has already been mentioned above. The company suffered a heavy loss of 1172.000 Millions during the year. The detailed performance has already been discussed in the Directors Report under the column `Company`s performance`.

FIXED ASSETS:

· Land and Building

· Plant and Machinery

· Furniture and Fixtures

AS PER WEB DETAILS

PROFILE

Spinning a web of pure enchantment seems to be the aim and objective of Nahar Spinning, reckoned to be the blue-chip in the NAHAR firmament.

Starting out as a tiny worsted spinning and hosiery unit in Ludhiana, it was incorporated as Private Limited company in December 1980 and became a Public Limited company in 1983. The steady growth in manufacture and export of woolen/cotton hosiery, knitwears and woolen textiles enabled the company to earn the recognition as an “Export House” followed by a “Recognized Trading House” by the Government of India in a short span of 8 years. Its turbo-charged performance brought them a host of fresh laurels… they include the “National Export Trophy” by the Apparel Export Promotion Council. The latest is the prestigious Status of “Golden Trading House” in recognition of its continuously outstanding performance accorded by the Government of India.

In 1992, as a measure of backward integration, the company diversified into the Spinning Industry. Today it has an installed spindlage of 335000 spindles.

Simultaneously the company also established an ultra modern facility to manufacture 12.5 Million pieces of Hosiery Garments. Today Nahar Spinning’s T-shirts are being exported to reputed international brands such as GAP, Arrow, Old Navy, Pierre Cardin, Philips Van Heusen, Izod, Quicksilver, Price Costco…

As a measure of further value addition subject has put up a plant for the manufacture of fine count mercerized yarn and fabrics catering to both, the domestic hosiery garment market as well as export markets.

To make use of the emerging opportunities on the Global Textile Scenario and also to have a focused business approach, the company went in for the Scheme of demerger and arrangement to restructure its businesses. The Scheme has already been approved by the Hob’ble Punjab and Haryana High Court vide its Order dt. 21st December, 2006. As per the scheme, company’s Investment Activities stand demerged and transferred to Nahar Capital and Financial Services Limited. This has drawn a visible line between two segment i.e., One Industrial (Textile) business and Secondly Investment and Financial Activities.

Further as per the scheme “Textiles Business” of Nahar Exports Limited stand demerged and transferred to the company (post demerger of investment business) in accordance with the terms of the scheme. Thus upon implementation of the Scheme the spindlage capacity of the company stand increased to 0.345 millions spindles.

The Company's mantra "World is our markets" is truly reflected in its operations. The Company is one of the largest integrated textile player in India. The Management vision coupled with company's inherent strength in terms of cost and quality has enabled the company to become the second largest Cotton Yarn manufacturer in India.

MILESTONE

Their Achievements

Installed Capacity of 93408 spindles | ISO-9002 certified | Golden Trading House

New Expansions

Mercerizing plant - 2040 MT | Garments – 9.000 millions pieces licensed capacity

1980- Incorporated as a Private Limited Company

1984- Recognized as an Export House by Govt. of India

1985-Raises funds through maiden Public Issue to finance modernisation and expansion

1988-Recognized as a Trading House by Govt. of India

1991-92-Turnover crosses the Rs.1000 millions mark

1992-Decides to set up a Spinning Unit with 50400 spindles. Raises capital through a Rights Issue.

1994-Decides to raise the spindlage by another 25000 spindles

1995-96-Turnover crosses the Rs.2000 millions mark

1996-Receives ISO-9002 certification

1996-97-Turnover crosses the Rs.3000 millions mark

1999-Accorded Golden Trading House Status by Government of India

1999-2000-Mercerizing-cum-dyeing plant and a 100% EOU Spinning Unit with 28224 spindles under implementation

2003-2004-The Cotton Textile Export Promotion Council awarded Texprocil Silver Trophy to the company for its outstanding Export performance in yarns

2006-2007-The apparel export promotion council awarded AEPC achievement award to the company for achieving highest exports in garment.

2008 Apparel Export promotion council awarded Gold Trophy for achieving highest Export of Cotton Garments.

2009 The Cotton Textiles Export Promotion Council (Texprocil) awarded Gold Trophy for highest export of Cotton Yarn (Counts 50s and below)

2009 Turnover crosses Rs.10000.000 Millions mark.

2010 Decides to increase capacity by adding another 90000 spindles.

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 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.55.16
UK Pound	1	Rs.88.03
Euro	1	Rs.70.86

INFORMATION DETAILS

Report Prepared by :

BYI

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	7
--PROFITABILIRY	1~10	3
--LIQUIDITY	1~10	7
--LEVERAGE	1~10	7
--RESERVES	1~10	8
--CREDIT LINES	1~10	8
--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	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		57

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.