MIRA INFORM REPORT

Report Date :

20.02.2013

IDENTIFICATION DETAILS

Name :	MODERN THREADS (INDIA) LIMITED MODERN WOOLLENS [A UNIT OF MODERN THREADS (INDIA) LIMITED]

Registered Office :	A-4, Vijay Path, Tilak Nagar, Jaipur – 302004, Rajasthan

Country :	India

Financials (as on) :	31.03.2012

Date of Incorporation :	28.08.1980

Com. Reg. No.:	17-002075

Capital Investment / Paid-up Capital :	Rs. 435.252 Millions

CIN No.: [Company Identification No.]	L17115RJ1980PLC002075

TAN No.: [Tax Deduction & Collection Account No.]	JDHM04263A / JDHM04778E

PAN No.: [Permanent Account No.]	AABCM1850A

Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchanges.

Line of Business :	Manufacturing and Marketing of Grey, Dyed and Fancy Yarns made of Polyester Viscose in various Norms and Applications.

No. of Employees :	Not Available

RATING & COMMENTS

MIRA’s Rating :

RATING

STATUS

PROPOSED CREDIT LINE

<10

Absolute credit risk exists. Caution needed to be exercised

Credit not recommended

Status :	Sick Company

Payment Behaviour :	Slow and delayed

Litigation :	Clear

Comments :	Subject is a part of Modern Group. The company has declared as a sick unit by Board for Industrial and Financial Reconstruction (BIFR). There appears huge accumulated loss recorded by the company. And there is huge external borrowing. However, the company has shown some improvement during the current year. The company has filed a Draft Rehabilitation Scheme with Honorable (BIFR). Business is active. Payments are slow and delayed. The company can be considered for business dealings on a safe and secured trade terms and condition. Note: From last 30 Days there has been no trading done in NSE and BSE.

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

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

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 :	A-4, Vijay Path, Tilak Nagar, Jaipur – 302004, Rajasthan, India
Tel. No.:	91-141-2623431/ 2623432/ 2623433
Fax No.:	91-141-2621382
E-Mail :	modernregd@datainfosys.net modernthreads@yahoo.co.in
Website :	http://www.modern-group.com

Marketing Office :	Protoprima Chambers, 1 - Suren Road, Off Andheri Kurla Road, Andheri (East), Mumbai, Maharashtra, India
Tel. No.:	91-22-28368955/ 28375440/ 28371035
Fax No.:	91-22-28368962/ 28366536
E-Mail :	mthreads@bol.net.in

Plant :	Modern Woollens, P.B. No. 27, Hamirgarh Road, Bhilwara, Rajasthan - 311001, India
Tel. No.:	91-1482-41801/ 2/ 3/ 4
Fax No.:	91-1482-42288
E-Mail :	mwoollen@sancharnet.in

Branch Office 1 :	Modern Woollens, Anand Nagar, Bhadohi – 221401, Uttar Pradesh, India

Branch Office 2 :	Modern Woollens, Shop No. 6, 16-17 Industrial Area ‘A’ Suffain Chowk, Ludhiana, Punjab, India
Tel. No.:	91-161-606161

DIRECTORS

AS ON 21.09.2012

Name :	Mr. Rajesh Ranka
Designation :	Chairman and Managing director
Address :	7^th Floor, Siddharth Building, Dr. R.G. Thadani Marg, Worli, Mumbai – 400018, Maharashtra, India
Date of Birth/Age :	07.10.1966
Qualification :	B.Com., MBA
Date of Appointment :	01.02.2011
DIN No.:	03438721

Name :	Mr. Hiralal Sharma
Designation :	Director
Address :	605-A, Mansarowar Building, Near Chincholi Crossing, Malad (West), Mumbai – 400064, Maharashtra, India
Date of Birth/Age :	03.01.1951
Qualification :	B.Com
Date of Appointment :	24.03.2001
DIN No.:	00352410

Name :	Mr. Ram Ratan Maheshwari
Designation :	Director
Address :	B-405, ballerina, 3^rd Cross Lane, Lokhandwala Complex, Andheri (West), Mumbai – 400053, Maharashtra, India
Date of Birth/Age :	15.05.1946
Qualification :	CA & CS
Date of Appointment :	24.03.2001
DIN No.:	00332293

Name :	Mr. Satyabhushan Lal Jain
Designation :	Director
Address :	32, Unira Garden, Near Police Memorial, Jaipur - 302004, Rajasthan, India
Date of Birth/Age :	16.09.1937
Qualification :	BE (Electrical)
Date of Appointment :	29.12.2008
DIN No.:	00002582

Name :	Mr. Pradeep Kumar
Designation :	Nominee director
Address :	C 11/58, Bapa Nagar, New Delhi - 110003, India
Date of Birth/Age :	21.10.1949
Qualification :	IAS
Date of Appointment :	04.02.2011
DIN No.:	00773660

Name :	Mr. Jagdish Prasad Agarwal
Designation :	Whole-time director
Address :	275-A, R K Colony, Bhilwara – 311001, Rajasthan, India
Date of Birth/Age :	06.10.1952
Date of Appointment :	21.09.2012
DIN No.:	02746740

KEY EXECUTIVES

Name :	Mr. Banwari Lal Saini
Designation :	Secretary
Date of Appointment :	01.01.2007
PAN No.:	AFMPS7784Q

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

MAJOR SHAREHOLDERS NOT AVAILABLE

AS ON 21.09.2012

Equity Share Breakup		Percentage of Holding
Category
Government companies		1.79
Public financial companies		9.98
Nationalised or other banks		0.01
Mutual funds		0.05
Foreign holdings [Foreign institutional investors, Foreign Companies, Foreign Financial Institutions, Non-resident Indian or Overseas corporate bodies or others]		1.65
Bodies corporate		69.43
Other top fifty shareholders		0.53
Others		16.56
Total		100.00

BUSINESS DETAILS

Line of Business :

Manufacturing and Marketing of Grey, Dyed and Fancy Yarns made of Polyester Viscose in various Norms and Applications.

Products :

ITC Code	Product Descriptions
55113001	Yarn
51071004	Worsted Carpet Yarn
55095200	Worsted Weaving Yarn

PRODUCTION STATUS (AS ON 31.03.2011)

Licensed Capacity: NA

Particulars	Unit	Installed Capacity
Synthetic Yarn	No. of Spindles	49232
Carpet Yarn	No. of Spindles	220
Worsted Yam	No. of Spindles	13752
Wool Tops	MT	2280

Particulars		Actual Production Qty. (MT)
Yarn (Including outside Conversion)		1861
Wool Tops - meant for sale		1241
Wool Tops-Captive		783

Includes Job -Yarn 178 MT, Wool Top 1190 MT

GENERAL INFORMATION

No. of Employees :

Not Available

Bankers :

Kotak Mahindra Bank Limited, 36-38A, Nariman Bhavan, 227, D Nariman Point, Mumbai – 400021, Maharashtra, India

Facilities :

Secured Loans	31.03.2012	31.03.2011
	(Rs. In Millions)
Non-convertible debentures banks	853.943	961.152
Rupee term loans from banks	1310.792	1389.503
Total	2164.735	2350.655


Banking Relations :	--

Financial Institution :	Ø Invitation Investment Private Limited, 111/115, Dadiseth Agiary Lane, 3^rd Floor, Office No. 30, Mumbai – 400002, Maharashtra, India Ø Rajasthan State Industrial Development and Investment Corp. Limited, Udyog Bhavan, Tilak Marg, Jaipur – 302005, Rajasthan, India

Auditors :
Name :	S.S. Surana and Company Chartered Accountants
Address :	C-94, Lal Kothi Scheme, Jaipur, Rajasthan, India
Income-tax PAN of auditor or auditor's firm :	AAEFS5502P

Associates :	Shubham Corporate Advisory Services Private Limited [U74140MH2003PTC141048]

CAPITAL STRUCTURE

AS ON 31.03.2012

Authorised Capital :

No. of Shares	Type	Value	Amount

185,000,000	Equity Shares	Rs. 10/- each	Rs. 1850.000 Millions
2,000,000	Preference Shares	Rs. 100/- each	Rs. 200.000 Millions
	Total		Rs. 2050.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount

34,775,160	Equity Shares	Rs. 10/- each	Rs. 347.752 Millions
75,000	16.5% Cumulative Redeemable Preference Share	Rs. 100/- each	Rs. 7.500 Millions
800,000	16% Cumulative Redeemable Preference Share	Rs. 100/- each	Rs. 80.000 Millions
	Total		Rs. 435.252 Millions

Note:

1.1 Equity capital includes 19442900 shares allotted in pursuance to the scheme of arrangement for reconstruction / amalgamation.

1.2 Each Equity share holder is entitled to one vote per share.

1.3 In the event of liquidation of the company the holders of the equity shares will be entitled to receive any of the remaining assets of the company after distribution of all preferential amount. The distribution will be in proportion to the number of equity shares held by the share holder.

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		435.252	435.252	435.252
2] Share Application Money		145.000	145.000	145.000
3] Reserves & Surplus		0.000	0.000	941.339
4] (Accumulated Losses)		(2530.806)	(2725.598)	(3706.097)
NETWORTH		(1950.554)	(2145.346)	(2184.506)
LOAN FUNDS
1] Secured Loans		2164.735	2350.655	2575.560
2] Unsecured Loans		14.903	13.444	173.709
TOTAL BORROWING		2179.638	2364.099	2749.269
DEFERRED TAX LIABILITIES		0.000	0.000	0.000

TOTAL		229.084	218.753	564.763

APPLICATION OF FUNDS

FIXED ASSETS [Net Block]		353.613	382.137	387.913
Capital work-in-progress		3.349	0.017	2.254

INVESTMENT		2.345	0.046	0.046
DEFERRED TAX ASSETS		0.000	0.000	0.000

CURRENT ASSETS, LOANS & ADVANCES
	Inventories	187.317	140.742	143.904
	Sundry Debtors	99.810	103.424	59.698
	Cash & Bank Balances	60.998	19.735	43.635
	Other Current Assets	5.745	5.745	0.000
	Loans & Advances	37.572	46.431	210.154
Total Current Assets		391.442	316.077	457.391
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	156.025	160.367	163.456
	Other Current Liabilities	346.610	300.175	99.941
	Provisions	19.030	18.982	19.444
Total Current Liabilities		521.665	479.524	282.841
Net Current Assets		(130.223)	(163.447)	174.550

MISCELLANEOUS EXPENSES		0.000	0.000	0.000

TOTAL		229.084	218.753	564.763

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2012	31.03.2011	31.03.2010
	SALES
		Income	1005.950	886.901	768.707
		Other Income	18.613	13.018	2.356
		TOTAL (A)	1024.563	899.919	771.063

Less	EXPENSES
		Cost of materials consumed	663.008	534.557
		Changes in inventories of finished goods, work-in-progress and stock-in-trade	(39.493)	5.114
		Employee benefit expense	73.615	77.236
		Other expenses	198.120	191.814
		Extraordinary items before tax	(107.634)	(61.845)
		TOTAL (B)	787.616	746.876	625.473

Less	PROFIT/ (LOSS) BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		236.947	153.043	145.590

Less	FINANCIAL EXPENSES (D)		5.692	78.516	81.815

	PROFIT/ (LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		231.255	74.527	63.775

Less/ Add	DEPRECIATION/ AMORTISATION (F)		36.463	35.367	37.578

	PROFIT/ (LOSS) BEFORE TAX (E-F) (G)		194.792	39.160	26.197

Less	TAX (H)		0.000	0.000	0.000

	PROFIT/ (LOSS) AFTER TAX (G-H) (I)		194.792	39.160	26.197

Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		(3666.937)	(3706.097)	(3732.294)

	BALANCE CARRIED TO THE B/S		(3472.145)	(3666.937)	(3706.097)

	EARNINGS IN FOREIGN CURRENCY
		FOB Value of Exports	632.376	566.266	455.600

	IMPORTS
		Raw Materials	428.205	368.846	314.577
		Stores & Spares	14.771	9.979	10.750
		Capital Goods	0.668	8.401	0.000
	TOTAL IMPORTS		443.644	387.226	325.327

	Earnings/ (Loss) Per Share (Rs.)
	Basic		2.51	(0.65)	(1.29)
	Diluted		5.60	1.13	0.75

KEY RATIOS

PARTICULARS		31.03.2012	31.03.2011	31.03.2010
PAT / Total Income	(%)	19.01	4.35	3.40

Net Profit Margin (PBT/Sales)	(%)	19.36	4.42	3.41

Return on Total Assets (PBT/Total Assets}	(%)	26.14	5.61	3.10

Return on Investment (ROI) (PBT/Networth)		(0.10)	(0.02)	(0.01)

Debt Equity Ratio (Total Debt/Networth)		(1.12)	(1.10)	(1.26)

Current Ratio (Current Asset/Current Liability)		0.75	0.66	1.62

LOCAL AGENCY FURTHER INFORMATION

Sr. No.	Check List by Info Agents	Available in Report (Yes / No)
1]	Year of Establishment	Yes
2]	Locality of the firm	Yes
3]	Constitutions of the firm	Yes
4]	Premises details	No
5]	Type of Business	Yes
6]	Line of Business	Yes
7]	Promoter's background	Yes
8]	No. of employees	No
9]	Name of person contacted	No
10]	Designation of contact person	No
11]	Turnover of firm for last three years	Yes
12]	Profitability for last three years	Yes
13]	Reasons for variation <> 20%	--
14]	Estimation for coming financial year	No
15]	Capital in the business	Yes
16]	Details of sister concerns	Yes
17]	Major suppliers	No
18]	Major customers	No
19]	Payments terms	No
20]	Export / Import details (if applicable)	No
21]	Market information	--
22]	Litigations that the firm / promoter involved in	--
23]	Banking Details	Yes
24]	Banking facility details	Yes
25]	Conduct of the banking account	--
26]	Buyer visit details	--
27]	Financials, if provided	Yes
28]	Incorporation details, if applicable	Yes
29]	Last accounts filed at ROC	Yes
30]	Major Shareholders, if available	Yes
31]	Date of Birth of Proprietor/Partner/Director, if available	Yes
32]	PAN of Proprietor/Partner/Director, if available	No
33]	Voter ID No of Proprietor/Partner/Director, if available	No
34]	External Agency Rating, if available	No

UNSECURED LOANS

Unsecured Loans	31.03.2012	31.03.2011
	(Rs. In Millions)
Loans repayable on demand from others	14.903	13.444
Total	14.903	13.444

OPERATIONS

The Woollen division of the Company has been operating reasonably over past few years despite of stiff competition in the domestic and international markets. During the year under review the turnover of the Woollen division of the Company was about Rs. 1010.000 millions as against Rs. 890.000 millions in previous year inspite of sluggish demand of worsted yarn from major European countries. The performance of the woollen division has improved during the year on account of gain in export realizations due to continuous rupee depreciation, lesser interest cost and booking of wool at low rates. Your company has been able to generate net profit of Rs. 87.200 millions during the year as against net loss of Rs. 22.700 millions in previous year. In view of accumulated losses, your directors are unable to declare any dividend for the year.

FUTURE PROSPECTS

Although the general outlook for the Textile Industry is not promising in view of stiff competition from China, reduction in custom duty on wool tops in the recent budget but due to ongoing efforts of management for improving operational efficiency, the cost reduction and inherent strengths in the field of manufacturing and marketing capabilities, future of Woollen division looks optimistic. The worsted yarn segment of Textile Industry is moving ahead and likely to grow fast in coming years.

CONTINGENT LIABILITIES NOT PROVIDED FOR

(Rs. in millions)

Particulars	31.03.2012	31.03.2011
i. Bank Guarantees	0.268	0.268
ii. Disputed demands of Sales Tax Cases under appeal. (Amount paid 0.180 Million Previous year 0.180 Million)	24.994	25.118
iii. Disputed demand of Excise cases under appeal. (Amount paid 0.516 Million Previous year 0.516 Million)	8.030	8.030
iv. Other disputed demands by Government departments (Amount paid 0.473 Million Previous year 0.423 Million)	6.500	6.500
v. Disputed liabilities and claims not acknowledged as debts	136.133	92.649

FIXED ASSETS:

Ø Leasehold Land

Ø Freehold Land

Ø Buildings

Ø Plant and Machinery

Ø Furniture and Fixtures

Ø Office Equipments

Ø 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 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 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. 54.29
UK Pound	1	Rs. 84.09
Euro	1	Rs. 72.44

INFORMATION DETAILS

Report Prepared by :

BVA

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.

MIRA INFORM REPORT

187.317

143.904

99.810

59.698

60.998

43.635

5.745

0.000

37.572

210.154

391.442

457.391

156.025

163.456

346.610

99.941

19.030

19.444

521.665

282.841

(130.223)

174.550

19.01

19.36

26.14

(0.10)

(1.12)

0.75

Unit