MIRA INFORM REPORT

Report Date :

01.09.2014

IDENTIFICATION DETAILS

Name :	KHURANA STEELS LIMITED
Registered Office :	Dhandari Khurd, Near Phase Vii, Focal Point, Ludhiana – 141010, Punjab
Country :	India
Financials (as on) :	31.03.2013
Date of Incorporation :	12.07.1990
Com. Reg. No.:	16-010548
Capital Investment / Paid-up Capital :	Rs.4.700 Millions
CIN No.: [Company Identification No.]	U27106PB1990PLC010548
Legal Form :	A Closely Held Public Limited Liability Company
Line of Business :	Manufacturing and dealing in steel billets, steel rods, steel ingots, steel sheets, steel wires and in all kinds of steel products.
No. of Employees :	Information declined by the management

RATING & COMMENTS

MIRA’s Rating :

B (29)

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

Status :	Moderate
Payment Behaviour :	Slow but correct
Litigation :	Clear
Comments :	Subject is an established company having moderate track. Management has reported a low profit margin during FY 2013. However, trade relations seem to be fair. Business is active. Payment terms are reported as slow but correct. The company can be considered for business dealings with 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 1, 2014

Country Name	Previous Rating (31.03.2014)	Current Rating (01.06.2014)
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

N E W S

As per the latest IMF study, the total weigh of emerging markets in the GDP of the world on a purchasing power parity basis has seen a sizeable shift. It highlights how as against 51 % in 2005, the emerging economies now account for close to 56 % of the global purchasing power GDP as per the latest survey. And with the emerging economies growing at a faster rate than their developed counterparts, there are every possibility that the their share goes up further in the coming years.  China may surpass the US over the next few years.

Politics and economics are very intricately connected. They tend to influence each other in ways that could be very complex and far-reaching. The prospects of the India’s economy have been seriously compromised due to political corruption. High inflation, poor standard of living are to a great extent a result of rampant corruption in the country. China on the other hand, seems to be facing diametrically opposite challenge. American hedge fund manager Jim Chanos has been keenly following the political and economic development in the dragon economy and has figured out something that is quite worrying. He is of the view that the Chinese economy could be heading toward trouble on account of new Chinese President Xi Jingping’s very aggressive anti-corruption drive. Chanos believes tat many things such as apartment sales, luxury products, etc. were largely bought with dirty money. And it is now beginning to impact consumption. This may indeed be bad news for an economy that is struggling to transition from an investment-driven export-oriented economy to a domestic consumption-driven economy.

A study published by Firstpost has revealed that asset classes like real estate and equities were the biggest beneficiaries of the liberalization policies.  A firm called Ciane Analytics studied returns from assets including equities, gold, fixed deposits, G-Secs and real estate since 1991. Real estate outperformed every other asset classes during the 23-year period with an annualized return of 20 % ! Equities came in second with annualized return of 15.5 % ! However, while these returns may seem mouthwatering, the fact is that the return from equities adjusted for inflation came down to just 7.1 %.

Some brief news are as under

. R-Power to buy Jaypee’s hydro assets

. Investors await justice in NSEL case

. India seeks MFN status from Pakistan ahead of meeting

. Ukrain’s clashes with rebels hinder MH17 crash investigation

. India exploring merger of state-owned hydro PSUs

..Higher costs weigh down profit growth to slowest in 9 quarters

..Wal-Mart to expand wholesale business in India

. GMR group moves to strengthen balance sheet

. Central Bank to sell 4 % stake to Life Insurance Corporation

. Tata Chemicals plans to raise up to Rs 10000 mn.

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 31-03-2014.

INFORMATION DENIED

Management Non Co-operative (91-161-2673228)

LOCATIONS

Registered Office :	Dhandari Khurd, Near Phase Vii, Focal Point, Ludhiana – 141010, Punjab, India
Tel. No.:	91-161-2673228
Fax No.:	Not Available
E-Mail :	khurana.steels@rediffmail.com

DIRECTORS

AS ON 17.08.2013

Name :

Mr. Charan Singh

Designation :

Director

Address :

335-CX, Model Town Extn-II, Ludhiana, Punjab, India

Date of Birth/Age :

05.04.1949

Date of Appointment :

12.07.1990

DIN No.:

00750847

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	U27106PB1990PLC010548	KHURANA STEELS LIMITED	Director	12/07/1990	12/07/1990	-	Active	NO
2	U27106PB1990PTC010241	TRISHALA ALLOYS Private Limited	Director	31/07/1998	31/07/1998	01/11/2007	Active	NO
3	U27109PB1992PTC012642	NOBLE STEELS PVT LTD	Director	20/08/1999	20/08/1999	-	Active	NO
4	U19201PB1993PTC034172	KHURANA ROLLING MILLS PRIVATE LIMITED	Director	08/04/2011	14/07/2004	16/11/2011	Active	NO
5	U27310PB2004PTC027299	KHURANA CASTINGS PRIVATE LIMITED	Director	14/07/2004	14/07/2004	-	Active	NO
6	U70200PB2008PTC032454	AKP PROJECTS PRIVATE LIMITED	Additional director	04/12/2008	04/12/2008	-	Active	NO

Name :

Mr. Harpreet Singh

Designation :

Director

Address :

335-CX, Model Town Extn-II, Ludhiana, Punjab, India

Date of Birth/Age :

05.09.1976

Date of Appointment :

29.06.1998

DIN No.:

00750912

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	U27106PB1990PLC010548	KHURANA STEELS LIMITED	Director	29/06/1998	29/06/1998	-	Active	NO
2	U27310PB2004PTC027299	KHURANA CASTINGS PRIVATE LIMITED	Director	14/07/2004	14/07/2004	-	Active	NO
3	U19201PB1993PTC034172	KHURANA ROLLING MILLS PRIVATE LIMITED	Director	14/07/2004	14/07/2004	01/06/2008	Active	NO
4	U27106PB1990PTC010241	TRISHALA ALLOYS Private Limited	Director	15/11/2004	15/11/2004	01/11/2007	Active	NO
5	U27109PB1992PTC012642	NOBLE STEELS PVT LTD	Director	06/12/2004	06/12/2004	-	Active	NO

Name :

Mr. Inderpreet Kaur

Designation :

Director

Address :

335-CX, Model Town Extn-II, Ludhiana, Punjab, India

Date of Birth/Age :

01.01.1980

Date of Appointment :

12.03.2001

DIN No.:

00935139

MAJOR SHAREHOLDERS

AS ON 17.08.2013

Names of Shareholders	No. of Shares	% of Holding
S. Charan Singh S/o S. Sohan Singh	24300	51.70
S. Charan Singh and Sons HUF	2500	5.32
S. Jasmeet Singh S/o S. Charan Singh	3750	7.98
S. Harpreet Singh S/o S. Charan Singh	7400	15.74
Smt. Inderpreet Kaur w/o S. Harpreet Singh	7350	15.64
Smt. Shashi Khurana W/o S. Charan Singh	1500	3.19
Harpreet Singh HUF	200	0.43
Total	47000	100.00

Equity Share Break up (Percentage of Total Equity)

AS ON 17.08.2013

Category	Percentage
Directors or relatives of Directors	100.00

BUSINESS DETAILS

Line of Business :

Manufacturing and dealing in steel billets, steel rods, steel ingots, steel sheets, steel wires and in all kinds of steel products.

GENERAL INFORMATION

No. of Employees :

Information declined by the management

Bankers :

· Karnataka Bank Limited, Sona Complex, Miller Ganj, Ludhiana – 141005, Punjab, India

· The Karnataka Bank Limited, Miller Ganj, Ludhiana – 141007, Punjab, India

Facilities :

SECURED LOANS	31.03.2013 Rs. In Millions	31.03.2012 Rs. In Millions
Short Term Borrowings
From Banks	45.331	41.406
Total	45.331	41.406

Banking Relations :	--
Auditors :
Name :	Arora Vohra and Company Chartered Accountants
Address :	ADJ. Jandu Tower, G. T. Road, Miller Ganj, Ludhiana – 141001, Punjab, India
PAN No.:	AABFA9054D
Associates :	· Noble Steels Private Limited · Khurana Rolling Mills Private Limited
Enterprises over which key management personnel are able to exercise significant influence :	Khurana and Company

CAPITAL STRUCTURE

AS ON 17.08.2013

Authorised Capital :

No. of Shares	Type	Value	Amount
50000	Equity Shares	Rs.100/- each	Rs.5.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
47000	Equity Shares	Rs.100/- each	Rs.4.700 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS	31.03.2013	31.03.2012	31.03.2011
I. EQUITY AND LIABILITIES
(1)Shareholders' Funds
(a) Share Capital	4.700	4.700	4.700
(b) Reserves & Surplus	19.527	18.509	14.964
(c) Money received against share warrants	0.000	0.000	0.000
(2) Share Application money pending allotment	0.000	0.000	0.000
Total Shareholders’ Funds (1) + (2)	24.227	23.209	19.664
(3) Non-Current Liabilities
(a) long-term borrowings	0.000	0.000	0.000
(b) Deferred tax liabilities (Net)	0.326	0.194	0.428
(c) Other long term liabilities	0.000	0.000	0.000
(d) long-term provisions	0.000	0.000	0.000
Total Non-current Liabilities (3)	0.326	0.194	0.428
(4) Current Liabilities
(a) Short term borrowings	45.331	41.406	39.127
(b) Trade payables	29.964	21.620	5.977
(c) Other current liabilities	6.444	6.255	1.982
(d) Short-term provisions	0.335	1.280	0.357
Total Current Liabilities (4)	82.074	70.561	47.443
TOTAL	106.627	93.964	67.535
II. ASSETS
(1) Non-current assets
(a) Fixed Assets
(i) Tangible assets	11.085	8.999	11.249
(ii) Intangible Assets	0.000	0.000	0.000
(iii) Capital work-in-progress	0.000	0.000	0.000
(iv) Intangible assets under development	0.000	0.000	0.000
(b) Non-current Investments	1.000	1.000	1.000
(c) Deferred tax assets (net)	0.000	0.000	0.000
(d) Long-term Loan and Advances	5.579	6.354	1.910
(e) Other Non-current assets	0.000	0.000	0.000
Total Non-Current Assets	17.664	16.353	14.159
(2) Current assets
(a) Current investments	0.000	0.000	2.965
(b) Inventories	11.293	26.650	25.508
(c) Trade receivables	52.233	28.555	12.306
(d) Cash and cash equivalents	4.721	1.587	0.518
(e) Short-term loans and advances	19.926	20.436	11.998
(f) Other current assets	0.790	0.383	0.081
Total Current Assets	88.963	77.611	53.376
TOTAL	106.627	93.964	67.535

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2013	31.03.2012	31.03.2011
	SALES
		Income	346.610	361.363	242.248
		Other Income	1.803	4.919	0.775
		TOTAL (A)	348.413	366.282	243.023
Less	EXPENSES
		Cost of Materials Consumed	265.261	280.519	187.559
		Changes in Inventories of finished goods, work-in-progress and stock-in-trade	2.641	6.623	(9.926)
		Employee Benefits Expenses	4.716	3.926	3.661
		Other Expenses	66.549	64.132	56.684
		TOTAL (B)	339.167	355.200	237.978
	PROFIT/(LOSS) BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		9.246	11.082	5.045
Less	FINANCIAL EXPENSES (D)		6.967	5.102	3.074
	PROFIT/(LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		2.279	5.980	1.971
Less	DEPRECIATION/ AMORTISATION (F)		0.794	1.390	1.322
	PROFIT/(LOSS) BEFORE TAX (E-F) (G)		1.485	4.590	0.649
Less	TAX (H)		0.466	1.045	0.148
	PROFIT/(LOSS) AFTER TAX (G-H) (I)		1.019	3.545	0.501
	Earnings Per Share (Rs.)		21.67	75.42	10.67

KEY RATIOS

PARTICULARS		31.03.2013	31.03.2012	31.03.2011
PAT / Total Income	(%)	0.31	0.30	0.46
Net Profit Margin (PBT/Sales)	(%)	0.43	1.27	0.27
Return on Total Assets (PBT/Total Assets}	(%)	1.41	4.94	0.98
Return on Investment (ROI) (PBT/Networth)		0.06	0.20	0.03
Debt Equity Ratio (Total Debt /Networth)		1.87	1.78	1.99
Current Ratio (Current Asset/Current Liability)		1.08	1.10	1.13

FINANCIAL ANALYSIS

[all figures are in Rupees Millions]

DEBT EQUITY RATIO

Particular	31.03.2011	31.03.2012	31.03.2013
	Rs. In Millions	Rs. In Millions	Rs. In Millions
Share Capital	4.700	4.700	4.700
Reserves & Surplus	14.964	18.509	19.527
Share Application money pending allotment	0.000	0.000	0.000
Net worth	19.664	23.209	24.227
long-term borrowings	0.000	0.000	0.000
Short term borrowings	39.127	41.406	45.331
Total borrowings	39.127	41.406	45.331
Debt/Equity ratio	1.990	1.784	1.871

YEAR-ON-YEAR GROWTH

Year on Year Growth	31.03.2011	31.03.2012	31.03.2013
	Rs. In Millions	Rs. In Millions	Rs. In Millions
Sales	242.248	361.363	346.610
		49.171	(4.083)

NET PROFIT MARGIN

Net Profit Margin	31.03.2011	31.03.2012	31.03.2013
	Rs. In Millions	Rs. In Millions	Rs. In Millions
Sales	242.248	361.363	346.610
Profit	1.125	1.100	1.084
	0.46%	0.30%	0.31%

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

INDEX OF CHARGE:

Sr. No.	Charge ID	Date of Charge Creation/Modification	Charge amount secured	Charge Holder	Address	Service Request Number (SRN)
1	10167314	30/08/2013 *	75,000,000.00	KARNATAKA BANK LTD.	SONA COMPLEX, MILLER GANJ, LUDHIANA, PUNJAB - 141005, INDIA	B85672905
2	90169257	14/03/2012 *	50,000,000.00	THE KARNATAKA BANK LIMITED	KARNATAKA BANK LIMITED,REGD. AND HEAD OFFICE, MILLER GANJ, LUDHIANA, PUNJAB - 141007, INDIA	B35780006

*Date of modification Charges

FIXED ASSETS:

· Land

· Building

· Plant and Machinery

· Computer

· Vehicles

· Furniture and Fixture

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.60.47
UK Pound	1	Rs.100.35
Euro	1	Rs.79.86

INFORMATION DETAILS

Information Gathered by :	NYA
Analysis Done by :	SUB
Report Prepared by :	NKT

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	4
PAID-UP CAPITAL	1~10	3
OPERATING SCALE	1~10	3
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	4
--PROFITABILIRY	1~10	3
--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	NO
--OTHER MERIT FACTORS	YES/NO	YES
DEFAULTER
--RBI	YES/NO	NO
--EPF	YES/NO	NO
TOTAL		29

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.