MIRA INFORM REPORT

Report Date :

07.01.2013

IDENTIFICATION DETAILS

Name :	SPORTKING INDIA LIMITED
Registered Office :	5/69, Guru Mansion, 1^st Floor, Padam Singh Road, Karol Bagh, New Delhi - 110005
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	15.02.1989
Com. Reg. No.:	55-035050
Capital Investment / Paid-up Capital :	Rs.89.883 Millions
CIN No.: [Company Identification No.]	L17122DL1989PLC035050
PAN No.: [Permanent Account No.]	AAACS3037Q
Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchanges.
Line of Business :	The company is in the business of manufacturer and selling cotton yarn, acrylic yarn and blended synthetic yearn.
No. of Employees :	3000 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

B (34)

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Maximum Credit Limit :	USD 3300000
Status :	Moderate
Payment Behaviour :	Slow but correct
Litigation :	Clear
Comments :	Subject is the flagship company of ‘Sportking Group’. It is an established company having a moderate track record. The latest financials of the company are not made available. As per previous year’s record there appear huge external borrowing recorded by the company. However, trade relations are reported as fair. Business is active. Payment terms are slow but correct. The company can be considered for business dealings with some caution.

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	ICRA
Rating	Fund Based Limited = BB
Rating Explanation	Moderate risk of Default
Date	December 2012

Rating Agency Name	ICRA
Rating	Non - Fund Based Limited = A4
Rating Explanation	Minimal degree of safety and very high credit risk.
Date	December 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 :	5/69, Guru Mansion, 1^st Floor, Padam Singh Road, Karol Bagh, New Delhi – 110005, India
Tel. No.:	91-11-25754885
Fax No.:	Not Available
E-Mail :	sportking@sportking.co.in
Website :	http://www.sportking.co.in
Administrative Office :	178, Col. Gurdial Singh Road, Civil Lines, Ludhiana – 141001, Punjab, India
Factory 1 :	Village Kanech, Near Sahnewal, G.T. Road, Ludhiana – 141120, Punjab, India
Factory 2 :	Village Meharban, Rahon Road, Ludhiana - 141007, Punjab, India
Factory 3:	Village Barmalipur, Near Doraha, G.T. Road, Ludhiana - 141416, Punjab, India
Factory 4:	Village Jeeda, Kotkapura Road, District Bathinda - 151201, Punjab, India

DIRECTORS

As on 29.09.2012

Name :

Mr. Raj Kumar Avasthi

Designation :

Managing director

Address :

172, Col. G.S. Road, Civil Lines, Ludhiana – 141001, Punjab, India

Date of Birth/Age :

18.06.1946

Date of Appointment :

01.10.2009

DIN No.:

01041890

Other Directorship

S.No.	CIN/LLPIN	Name of the Company/ LLP	Current designation of the Director/ Designated Partner	Date of appointment at current designation	Original date of appointment	Date of cessation	Company/ LLP Status	Defaulting status
1	L17122DL1989PLC035050	SPORTKING INDIA LIMITED	Managing director	01-10-09	15-02-89	-	Active	NO
2	U51398DL1993PTC056161	SOBHAGIA SALES PRIVATE LIMITED	Director	22-11-93	22-11-93	-	Active	NO

Name :

Mr. Munish Avasthi

Designation :

Managing director

Address :

172, Col. G.S. Road, Civil Lines, Ludhiana – 141001, Punjab, India

Date of Birth/Age :

26.06.1973

Date of Appointment :

25.10.2007

DIN No.:

00442425

Other Directorship

S.No.	CIN/LLPIN	Name of the Company/ LLP	Current designation of the Director/ Designated Partner	Date of appointment at current designation	Original date of appointment	Date of cessation	Company/ LLP Status	Defaulting status
1	U51398DL1993PTC056161	SOBHAGIA SALES PRIVATE LIMITED	Director	22-11-93	22-11-93	-	Active	NO
2	L17122DL1989PLC035050	SPORTKING INDIA LIMITED	Managing director	01-10-07	25-10-99	-	Active	NO

Name :

Mr. Sunil Kumar Puri

Designation :

Director

Address :

G-171, B.R.S. Nagar, Ludhiana – 141008, Punjab, India

Date of Birth/Age :

21.03.1951

Date of Appointment :

26.12.2005

DIN No.:

00425213

Other Directorship

S.No.	CIN/LLPIN	Name of the Company/ LLP	Current designation of the Director/ Designated Partner	Date of appointment at current designation	Original date of appointment	Date of cessation	Company/ LLP Status	Defaulting status
1	U29265PB1989PTC009646	TECHKNIT OVERSES PRIVATE LIMITED	Director	28-08-89	28-08-89	-	Active	NO
2	U18100PB2003PTC026613	KALATMIKA DESIGNS PRIVATE LIMITED	Director	12-12-03	12-12-03	-	Active	NO
3	L17122DL1989PLC035050	SPORTKING INDIA LIMITED	Director	26-12-05	26-12-05	-	Active	NO

Name :

Mr. Ajay Chaudhry

Designation :

Director

Address :

76, Green Park, Civil Line, Ludhiana – 141001, Punjab, India

Date of Birth/Age :

19.10.1953

Date of Appointment :

25.04.2006

DIN No.:

00055733

Other Directorship

S.No.	CIN/LLPIN	Name of the Company/ LLP	Current designation of the Director/ Designated Partner	Date of appointment at current designation	Original date of appointment	Date of cessation	Company/ LLP Status	Defaulting status
1	L17122PB1980PLC004242	VARDHMAN POLYTEX LIMITED	Director	08-06-89	08-06-89	-	Active	NO
2	U67120CH2000PLC023244	L S E SECURITIES LIMITED	Nominee director	25-08-11	08-09-05	-	Active	NO
3	L17122DL1989PLC035050	SPORTKING INDIA LIMITED	Director	25-04-06	25-04-06	-	Active	NO
4	U17110PB2006PLC029518	OSWAL F M HAMMERLE TEXTILES LIMITED	Director	22-09-09	07-02-09	-	Active	NO

Name :

Harbhajan Kaur Bal

Designation :

Director

Address :

H. No. 2322, Phase-XI, Mohali – 160055, Punjab, India

Date of Birth/Age :

12.06.1939

Date of Appointment :

25.04.2006

DIN No.:

00008576

Other Directorship

S.No.	CIN/LLPIN	Name of the Company/ LLP	Current designation of the Director/ Designated Partner	Date of appointment at current designation	Original date of appointment	Date of cessation	Company/ LLP Status	Defaulting status
1	L17115PB1988PLC008820	NAHAR POLY FILMS LIMITED	Director	28-09-92	28-09-92	-	Active	NO
2	L17115PB1980PLC004341	NAHAR SPINNING MILLS LIMITED	Director	25-08-00	25-08-00	-	Active	NO
3	L15143PB1983PLC018321	NAHAR INDUSTRIAL ENTERPRISES LIMITED	Director	30-06-01	30-06-01	-	Active	NO
4	L24116PB1986PLC007030	IOL CHEMICALS AND PHARMACEUTICALS LIMITED	Director	27-03-02	27-03-02	21-05-11	Active	NO
5	L17115PB1979PLC003994	SHREYANS INDUSTRIES LIMITED	Director	29-04-03	29-04-03	28-05-11	Active	NO
6	L17122DL1989PLC035050	SPORTKING INDIA LIMITED	Director	25-04-06	25-04-06	-	Active	NO
7	U40300PB1949PLC001522	OSWAL WOOLLEN MILLS LIMITED	Director	29-09-07	01-11-06	-	Active	NO
8	L45202PB2006PLC029968	NAHAR CAPITAL AND FINANCIAL SERVICES LIMITED	Director	29-12-07	12-01-07	-	Active	NO

Name :

Mr. Naresh Kumar Jain

Designation :

Whole-time director

Address :

200/A, Col Gurdial Singh Road, Civil Lines, Ludhiana – 141001, Punjab, India

Date of Birth/Age :

07.08.1954

Date of Appointment :

01.10.2009

DIN No.:

00254045

Other Directorship

S.No.	CIN/LLPIN	Name of the Company/ LLP	Current designation of the Director/ Designated Partner	Date of appointment at current designation	Original date of appointment	Date of cessation	Company/ LLP Status	Defaulting status
1	U67120DL1995PTC065789	NAMOKAR CAPITAL SERVICES PRIVATE LIMITED	Director	24-02-95	24-02-95	-	Active	NO
2	U18104DL1988PTC030356	CLASSIC WEARS PRIVATE LIMITED	Director	21-09-96	21-09-96	-	Active	NO
3	L17122DL1989PLC035050	SPORTKING INDIA LIMITED	Whole-time director	01-10-09	30-07-09	-	Active	NO

KEY EXECUTIVES

Name :	Mr. Videshwar Sharma
Designation :	Secretary
Address :	Village – Joal, Post Office – Dangaar, District Bilaspur – 174023, Himachal Pradesh, India
Date of Birth/Age :	28.06.1976
Date of Appointment :	01.10.2007
PAN No. :	AVFPS5226A
Name :	B.K. Gupta and Associates
Designation :	Company Secretaries
Address :	49/65, Harpal Nagar, Near Hotel Gulmor, Ferozepur Road, Ludhiana -141001, Punjab, India
Tel No.:	91-161-2407500 / 5049700
Mobile No.:	91-9815605702
Email :	bkg.majestic@gmail.com
Name :	Mr. Parveen K. Gupta
Designation :	Chief Financial Officer

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 29.09.2012

SHAREHOLDING DETAILS FILE ATTACHED

As on 29.09.2012

Equity Share Break up (Percentage of Total Equity)

Category	Percentage
Bodies corporate	50.82
Directors or relatives of Directors	13.80
Other top fifty shareholders	6.87
Others	22.89
Total	100.00

BUSINESS DETAILS

Line of Business :

The company is in the business of manufacturer and selling cotton yarn, acrylic yarn and blended synthetic yearn.

Products :

Product Description	ITC Code
Acrylic/ Acrylic Polyester/ PC Yarn	55.09
Cotton Yarn	52.06

PRODUCTION STATUS (As on: 31.03.2011)

Particulars	Unit	Licensed Capacity
Unit-I (SIL)
Acrylic/Viscose/Polyester Yarn	Spindles	10000
Unit-II (Synthetics)
Acrylic/Viscose/Polyester	Spindles	100000
Unit-III (Processor)
Fibre/Yarn Dyeing (Unit-III)	N.A.	N.A.
Unit-IV (Industries)
Cotton Yarn	Spindles	300000
Fibre/Yarn Dyeing	MT	25200

Particulars	Unit	Installed Capacity*
Unit-I (SIL)
Acrylic/Viscose/Polyester Yarn	Spindles	6720
Unit-II (Synthetics)
Acrylic/Viscose/Polyester	Spindles	65904
Unit-III (Processor)
Fibre/Yarn Dyeing (Unit-III)	TPD	8.50
Unit-IV (Industries)
Cotton Yarn	Spindles	28800

Note: * Installed capacity is certified by the management being a technical matter.

Particulars	Unit	Actual Production
Yarn	MT	20391.36
Yarn (Capitalised)	MT	366.20
Waste	MT	4472.11
Waste (Capitalised)	MT	155.37

Note: Production of yarn includes 102.60 MT of grey yarn on Job work basis and yarn processed on own account but on job work basis.

GENERAL INFORMATION

No. of Employees :

3000 (Approximately)

Bankers :

· State Bank of India, SCB, Miller Ganj, Pahwa Hospital Complex, (Mid Corporate Sales Hub), Miller Ganj, Ludhiana, Punjab, India

· State Bank of Patiala, Commercial Branch, Aarti Complex, Miller Ganj, Ludhiana, Punjab, India

· Punjab National Bank, International Banking Branch, Industrial Area-A, Ludhiana, Punjab, India

· Allahabad Bank, 818, Industrial Area-B, Link Road, Ludhiana, Punjab, India

· Central Bank of India, Mid Corporate Office, Miller Ganj, G.T. Road, Ludhiana, Punjab, India

· HDFC Bank Limited

· ICICI Bank Limited

· IndusInd Bank

Facilities :

(Rs. In Millions)

Secured Loan	As on 31.03.2011	As on 31.03.2010
Rupee term loans banks secured	1386.600	871.301
Working capital loans banks secured	1461.177	782.945
Loans taken for vehicles secured	21.151	21.234
Interest accrued due other debt secured	16.780	8.065
Total	2885.708	1683.545
Unsecured Loan	As on 31.03.2011	As on 31.03.2010
Rupee term loans others unsecured	10.000	0.000
Total	10.000	0.000

Banking Relations :	--
Auditors :
Name :	Rawla and Company Chartered Accountants
Address :	504, Surya Kiran Building, 19, K.G. Marg, New Delhi - 110001, India
PAN No. :	AAAFR1524Q
Associate Concerns :	· N.R.S. Knitwear's · Sportking Knitwears · Sobhagia Clothing Company · Darling Demons · Fashionable Attire · Nagesh Classic · Sobhagia Sales Private Limited · Classic Wears Private Limited · Aradhana Fabrics Private Limited · Marvel Dyers and Processors Private Limited · N.T.M. Shawls Private Limited · Namokar Capital Services Private Limited

CAPITAL STRUCTURE

As on 29.09.2012

Authorised Capital :

No. of Shares	Type	Value	Amount
5000000	Equity Shares	Rs.10/- each	Rs.50.000 Millions
20000000	Redeemable Preference Shares	Rs.10/- each	Rs.200.000 Millions
	Total		Rs.250.000 Millions

Issued and Subscribed Capital :

No. of Shares	Type	Value	Amount
3561000	Equity Shares	Rs.10/- each	Rs.35.610 Millions
8516200	5% Redeemable Non-cumulative Preference Shares	Rs.10/- each	Rs.85.162 Millions
	Total		Rs.120.772 Millions

Paid-up Capital :

No. of Shares	Type	Value	Amount
3364080	Equity Shares	Rs.10/- each	Rs.33.641 Millions
8516200	5% Redeemable Non-cumulative Preference Shares	Rs.10/- each	Rs.85.162 Millions
	Total		118.803 Millions

As on: 31.03.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
5000000	Equity Shares	Rs.10/- each	Rs.50.000 Millions
10000000	Redeemable Preference Shares	Rs.10/- each	Rs.100.000 Millions
	Total		Rs.150.000 Millions

Issued and Subscribed Capital :

No. of Shares	Type	Value	Amount
3561000	Equity Shares	Rs.10/- each	Rs.35.610 Millions
5624200	5% Redeemable Non-cumulative Preference Shares	Rs.10/- each	Rs.56.242 Millions
	Total		Rs.91.852 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
3364080	Equity Shares	Rs.10/- each	Rs.33.641 Millions
5624200	5% Redeemable Non-cumulative Preference Shares	Rs.10/- each	Rs.56.242 Millions
	Total		Rs.89.883 Millions

NOTE:

5624200, 5% Redeemable Non-cumulative Preference Shares of Rs. 10/- each are redeemable within a period of 20 years from the date of allotment.

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		89.883	66.883	66.883
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		759.833	410.466	317.716
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		849.716	477.349	384.599
LOAN FUNDS
1] Secured Loans		2885.708	1683.545	1296.285
2] Unsecured Loans		10.000	0.000	0.000
TOTAL BORROWING		2895.708	1683.545	1296.285
DEFERRED TAX LIABILITIES		121.300	87.500	39.900
TOTAL		3866.724	2248.394	1720.784
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		2039.697	1115.517	1103.843
Capital work-in-progress		772.063	77.512	45.141
INVESTMENT		0.000	0.000	0.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1639.493	853.378	322.234
	Sundry Debtors	457.350	380.812	325.909
	Cash & Bank Balances	47.336	42.150	35.338
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	384.879	240.945	192.292
Total Current Assets		2529.058	1517.285	875.773
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	1231.442	315.768	29.933
	Other Current Liabilities	157.039	108.811	261.140
	Provisions	85.613	37.341	12.900
Total Current Liabilities		1474.094	461.920	303.973
Net Current Assets		1054.964	1055.365	571.800
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		3866.724	2248.394	1720.784

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2011	31.03.2010	31.03.2009
	SALES
		Income	4029.262	3075.735	2664.754
		Other Income	147.575	123.387	(37.265)
		TOTAL (A)	4176.837	3199.122	2627.489
Less	EXPENSES
		Consumption materials changes inventories	2745.600	2228.745
		Manufacturing service costs	322.309	290.904	2504.670
		Employee related expenses	190.359	165.320
		Administrative selling other expenses	182.495	106.846
		TOTAL (B)	3440.763	2791.815	2504.670
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		736.074	407.307	122.819
Less	FINANCIAL EXPENSES (D)		151.431	137.506	128.277
	PROFIT / (LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		584.643	269.801	(5.458)
Less/ Add	DEPRECIATION/ AMORTISATION (F)		138.956	127.601	122.943
	PROFIT / (LOSS) BEFORE TAX (E-F) (G)		445.687	142.200	(128.401)
Less	TAX (H)		153.821	49.450	(41.510)
	PROFIT / (LOSS) AFTER TAX (G-H) (I)		291.866	92.750	(86.891)
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		237.811	146.723	235.381
Less	Income tax relating to Previous Years		0.000	0.000	0.105
Less	APPROPRIATIONS
		Transfer to General Reserve	2.812	1.662	1.662
		Dividend
		Tax on Dividend
	BALANCE CARRIED TO THE B/S		526.865	237.811	146.723
	EARNINGS IN FOREIGN CURRENCY
		FOB Value of Exports	2073.497	1318.394	1080.338
		Interest	0.000	0.844	0.000
	TOTAL EARNINGS		2073.497	1319.238	1080.338
	IMPORTS
		Raw Materials	376.237	245.741	137.516
		Stores & Spares	19.157	13.914	18.220
		Capital Goods	423.240	17.336	43.632
		Dyes & Chemicals	1.145	4.107	1.501
	TOTAL IMPORTS		819.779	281.098	200.869
	Earnings/ (Loss) Per Share (Rs.)		81.89	25.81	(24.43)

KEY RATIOS

PARTICULARS		31.03.2011	31.03.2010	31.03.2009
PAT / Total Income	(%)	6.99	2.90	(3.31)
Net Profit Margin (PBT/Sales)	(%)	11.06	4.62	(4.82)
Return on Total Assets (PBT/Total Assets}	(%)	9.75	5.44	(6.49)
Return on Investment (ROI) (PBT/Networth)		0.52	0.30	(0.33)
Debt Equity Ratio (Total Liability/Networth)		5.14	4.49	4.16
Current Ratio (Current Asset/Current Liability)		1.72	3.28	2.88

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	Yes
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	No
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	Yes

MANAGEMENT'S DISCUSSION AND ANALYSIS

BUSINESS REVIEW:

The global economy kicked off a sputtering growth in FY 2010-11 with developed economies showing faint signs of revival. The main engine of global growth, the United States, moved into a recovery mode with employment coming off highs and retails sales growing month on month, albeit slightly, and consumer confidence improving. This growth was accompanied by a huge surge in world commodity prices, with the Continuous Commodity Index (CCI) surging more than 42% during the year. This rise was mainly attributed to the $600 billion of Quantitative Easing part Deux (QE2) by the Federal Bank of America which released unprecedented amounts of liquidity. This liquidity got channeled into commodities and prices soared. This also gave rise to supply side inflation and fast growing economies in Asia bore the brunt. Their economies had barely recovered from the financial crises of FY 2008-09 and raising rates at this juncture would have meant putting a spanner in the way of growth. Most Asian economies therefore held off raising interest rates till the second half of the year and then a series of quick rate hikes followed, more particularly in China and India, who have clearly indicated that they don't mind sacrificing growth at the altar of inflation control. As a result, the earnings growth is expected to be hit in the current fiscal. In anticipation, the commodities have already come off their lifetime highs.

COTTON AND YARN:

Cotton prices were buoyed by strong global fundamentals, with US Department of Agriculture (USDA) reports forecasting a 6% y/y reduction in end season stocks to 41.5 million bales (of 480 lbs). This compares with 43.9 million bales (mb) in 2009-10 and 60.5 mb in 2008-09.

Although global cotton demand dipped by around 1.3% y/y in 2010-11, import demand from China rose by 37% y/y over the same period. Both developments were mainly due to supply constraints and global price rationing following a 8% decline in China's cotton output. China traditionally accounts for 30% of global cotton production. Extremely tight global end season stocks underpinned prices; the stocks-to-use ratio at 35% will be the tightest since the 1993-94 season. In order to curtail the rise in cotton yarn prices, the Indian Government had imposed a limit of 720 mln kgs on cotton yarn to be exported in FY 2010-11.

OUTLOOK FOR COTTON PRICES:

These high prices are not expected to sustain, in part on expectations of increased acreage, particularly in US, China and Africa. China's import demand is also expected to slow down on a combination of high market prices, stronger output and competition from synthetic fibres. China has also planned a cotton purchase-and-reserve policy in 2011 with a view to stabilising prices in the new season. Pakistan, where floods devastated cotton crops in the 2010-11 season, is another market which is likely to see a substantial increase in cotton output from previous year. Overall, the world market is expected to remain structurally tight (although better than FY 2010-11), but this will not be fully apparent until later in the season when the new crop stocks are drawn down. Global cotton production is expected to increase by about 13% from 24.5 million tonnes in cotton season 2010-11 (Oct to Sept) to 27.5 million tonnes in cotton season 2011-12. The closing stock of 2011-12 is expected to be around 10.5 million tons which is higher than last 2 years but still lower than normal closing stock levels in the past. The stock-to-use ratio is expected to improve to about 42% but will still be lower than the normal 48-52% in the past (excluding last 2 years).

In anticipation of a bumper cotton crop this year, global cotton prices as of now have already come off their previous highs. The Dec New York future is significantly lower than the current New York future. Global yarn prices are decreasing in line with the cotton prices. Overall, this year is likely to be turbulent and may have adverse impact on the operations of the Industry at large. However because of prudent cotton buying practices and conservative financial norms, Technology Upgradation Fund Scheme (TUFS): TUFS had been suspended temporarily by the government in June 2010. The Scheme has now been re-instated with a few changes; (i) Capital subsidy will now be available on looms for weaving as well. (ii) a 5% interest reimbursement may be given to the spinning units (against 4% earlier) if the unit is set up with matching downstream capacity in weaving/processing. (iii) A cap of Rs.19820.000 Millions has been put on the total subsidy which will be given for the next one year. This has been allocated between various sectors. The sunset clause of the scheme remains unchanged at March 31, 2012. All loans sanctioned till that date will be eligible for subsidy for the life of the loan. The government of India has also restored the export benefit of DEPB on cotton yarn retrospectively with effect from 1st April 2011.

In 2010-11, the cotton crop in China and Pakistan was damaged by bad weather and the lobal production fell. This led to an increase in cotton prices. The boom in prices was also fuelled by speculative trading in commodities which increased prices beyond fundamentals. India had exported 8.5 million bales of cotton in 2009-10. In September 2010, the Government of India announced a cap of 5.5 million bales of cotton for exports, around 18% of the estimated production of 31.5 million bales (of 375 lbs) in the current cotton season (CS) 2010-11. This lead to lesser availability of cotton for trade and with high import demand from China, international prices rose during the month. Prices in India also increased. The Cotlook A index rose by 133% from $1 per pound in September, 2010 to about $2.33 per pound in March, 2011 due to limited availability for exports on the back of restrictions by India coupled with robust demand from China and traditional importing countries. Indian Shankar 6 rose in tandem from Rs.0.037 Million candy in Sept 2010 to Rs.0.062 Million candy in March 2011. In line with cotton prices, cotton yarn prices also continued to remain high. This increase was in fact more than the increase in cotton prices due to pent up demand in the system where the pipeline of yarn stocks was at very low levels and also due to increased demand from a recovering global economy. Cotton yarn prices touched a high of $6.50/kg. To look at this in perspective, the average of the last 20 years was around $3/kg, with $4.5/kg being the previous all time high in cotton yarn prices. These prices have since corrected.

PRODUCTION / SALES REVIEW

During the year, their company achieved a production of 20757 M.T. as compared to 20981 MT in the previous year, almost at equal level. The company achieved a gross turnover/operating income of Rs. 4176.800 Millions as compared to Rs. 3199.100 Millions in the previous year showing a growth of 30.56%. The exports increased to Rs. 2073.500 Millions against Rs. 1321.300 Millions in the previous year showing a growth of 56.93% owing better market penetration. The Company is recognized as 'Trading House' and has been awarded silver "Niryat Shree" Bronze Trophy for outstanding export performance in the category of textile and textile products including RMG-non-MSME for the year 2008-09.

PROFITABILITY

The company earned a gross profit of Rs. 715.400 Millions having profitability/sales ratio of 17.13 % as compared to Rs.393.600 Millions having profitability/sales ratio of 13.30 % in the previous year which have improved due to increase in prices of finished goods, prudent purchase of raw cotton, production of polyster blended dyed synthetic yarn to substitute high priced acrylic yarn, prudent forex forward contracts to ward off fluctuations in foreign exchange rates, full year in part of purchase of power from open market at low rates, etc.

The interest cost increased to Rs. 131.100 Millions as compared to Rs. 122.800 Millions in the previous year. The company earned gross cash profit of Rs. 584.300 Millions against Rs. 270.800 Millions in the previous year. After making provision of depreciation of Rs. 139.000 Millions (Previous Year Rs 127.600 Millions), Income Tax of Rs. 119.900 Millions (Previous Year Rs. 3.700 Millions), and after providing for deferred tax liability of Rs. 33.800 Millions (Previous Year Rs.47.600 Millions) there was a net profit of Rs. 291.900 Millions against previous year net profit of Rs. 92.700 Millions. After transfer of Rs. 2.800 Millions to Capital Redemption Reserve, the surplus in the Profit and Loss Appropriation Account stands at Rs. 526.900 Millions. The said profits have been invested in the business.

EXPANSION PROJECT

Further the company is also adding 61536 spindles and a dye house at Bathinda for the manufacture of polyester cotton blended / cotton / mélange yarn, the detailed project report of which has already been approved by the banks and the required term loans have also been sanctioned. The company is expected to commission 24000 spindles for the manufacture of polyester cotton yarn in the current financial year 2011-12 and balance spindles and dye house is expected to be commissioned in the FY 2012-13.

FIXED ASSETS

· Land

· Building

· Plant and Machinery

· Vehicles

· Furniture and Fixture

AS PER WEBSITE DETAILS:

PRESS RELEASE

SPORTKING TO INVEST 50 CR ON EXPANSION PLANS

Ludhiana, February 8

The Sportking, a Ludhiana-based textile and spinning company would invest over Rs.50.000 Millions this year to expand its production capacity. The company would also open to its new outlets in North India.

It would create direct employment opportunities for at least 500 persons besides indirect jobs, says Mr. Raj Awasthi, Chairman-cum-Managing Director of the company.

In an interview to the TNS, Mr. Awasthi said, “We are eagerly awaiting for the end of quota system by next year, and are gearing ourselves to explore the export market. Though we are skeptical about the end of quota system, as the USA and European union may adopt non-trading barriers to curb the Indian exports, yet if allowed we will divert towards exports.”

He admitted that since exports from Bangladesh, Sri Lanka, Nepal and some countries in South African countries were not constrained by quota system, the Indian manufacturers were finding it hard to increase their exports despite the competitive edge. Stiff competition and fall in dollar value had adversely affected the profit margin of exporters.

However, he said, due to growing incomes, good monsoon, and growing consciousness for branded garments, the manufacturers were finding it more attractive to sell their garments in the domestic market.

The company had so far registered an average growth rate of 12 per cent in sales during the past many years, he said. The company was expecting a substantial increase in growth rate this year.

Mr. Awasthi disclosed that the Sportking had recently tied up with the Disney Group of the USA to sell their garments under Disney’s 14 brands. Another agreement had been signed with the Warner Brothers Group to use their brand name for the domestic market. “We expect sales of our garments under these foreign brands to touch Rs 2 Millions by the end of this year. Since the Warner Group has plans to launch its own 24 cartoon network channel in India soon, we expect a major jump in sales under that brand.”

In North India, the company was selling garments under Sportking and Mentor brands in middle-income group. In comparison to high-end brands like Adidas, Nike and other brands, the company was selling its readymade garments at a lower price.

The company’s turnover had increased from around Rs.100.000 Millions to over Rs.3000.000 Millions within a decade. It was exporting garments worth Rs.100.000 Millions annually to the European and US markets.

The group had employed around 5,000 employees at its three plants in Ludhiana, one dyeing unit, yarn unit and 26 outlets spread across all the major towns in North India. The Sportking had set up exclusive showrooms in Delhi, Noida, Ludhiana, Jalandhar and Jaipur. The company had plans to open four new outlets, including one at Chandigarh by April this year, he said.

The group was currently manufacturing all sorts of readymade garments for kids, women and men, besides yarn for other manufacturers. The product range included inner thermal wear, T-shirts, trousers, track suits, pullovers, shorts, casual dresses, jackets and other garments. The company had its in-house designing team and RandD centre that worked on new designs and products.

About the problems being faced by the company Mr. Awasthi said, “We do not face any major problems, except that due to low quality of life, the professional engineers and designers do not want to stay here for long. For instance, we recruited 35 designers from NIFT institutes in Delhi, Hyderabad and other cities. Within an year all except four left the company and the city as well. ”

He lamented that despite competitive pay packages in the industry, the manufacturers at Ludhiana found it difficult to retain good professionals.

“If I could find a good team of designers, the total turnover of our garment division would have increased by ten times,” he added.

High level of pollution, traffic congestion, lack of night life and other basic amenities in the region were the main hurdles in attracting good employees to the region, he said.

Regarding the financing of its expansion project, Mr. Awasthi said,“We have no plans to enter the primary market, rather we will use internal resources and bank loans. Since we are successfully brining the cost of production down by 5 to 7 per cent every year, there is no dearth of financial sources.”

With an annual advertising budget of about Rs.10.000 Millions, the company was making efforts to strengthen its brand in the market, said Mr. Awasthi.

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.54.85
UK Pound	1	Rs.88.16
Euro	1	Rs.71.54

INFORMATION DETAILS

Report Prepared by :

NTH

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	4
PAID-UP CAPITAL	1~10	4
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	4
--LIQUIDITY	1~10	3
--LEVERAGE	1~10	3
--RESERVES	1~10	3
--CREDIT LINES	1~10	3
--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		34

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.