D & B Report - Shri Lakshmi Cotysn, Ltd

BUSINESS SCOPE REPORT

THIS REPORT MAY NOT BE REPRODUCED IN WHOLE OR IN PART IN ANY FORM OR MANNER WHATSOEVER. This report, furnished pursuant to contract for the exclusive use of the subscriber as one factor to consider in connection with credit, insurance, marketing or other business decisions, contains information compiled from sources which Dun & Bradstreet does not control and whose information, unless otherwise indicated in the report, has not been verified. Dun & Bradstreet in no way assumes any part of the user’s business risk, does not guarantee the accuracy, completeness, or timeliness of the information provided, and shall not be liable for

any loss or injury whatsoever resulting from contingencies beyond its control or from negligence.

SHRI LAKSHMI COTSYN LIMITED

D&B D-U-N-S® NUMBER: 67-594-2668

Dun & Bradstreet Information Services India Pvt. Ltd.

ICC Chambers

Saki Vihar Road Powai, Mumbai - 400072

Maharashtra

India

Tel: +91-22-28574190 / 92 / 94

Fax: +91-22-28572060


Shri Lakshmi Cotsyn Limited - 1 -

Scope of the Report

• History and legal background

• Existing operations

• Management background

• Bankers

• Financial statements and analysis

Information Sources

Information given in this report is compiled on the basis of information obtained from the following sources:

• Annual reports

• Corporate communiqués

• Information from website

• Management Discussion

Methodology

Financial information from the audited annual reports of the Company was studied and analyzed for a three year period i.e. FY 2009, FY 2010 and FY 2011. Date: 23rd May 2012 Note: The financial year for the Company is from July to June and the same has been indicated by FY in

the report.



TABLE OF CONTENTS

SUMMARY ..................................................................................................................................................... 4

LINE OF BUSINESS ...................................................................................................................................... 5

RATING KEY ................................................................................................................................................. 6

CURRENT INVESTIGATION ..................................................................................................................... 6

COMPANY PROFILE ................................................................................................................................... 7

FINANCIAL SNAPSHOT .............................................................................................................................. 9

PROVISIONAL FINANCIAL PERFORMANCE .................................................................................... 10

PURCHASES ................................................................................................................................................ 11

REVENUE ..................................................................................................................................................... 11

CUSTOMERS ............................................................................................................................................... 12

SUPPLIERS ................................................................................................................................................... 12

FOREIGN EXCHANGE TRANSACTIONS ............................................................................................. 13

EMPLOYEES ................................................................................................................................................ 13

ACTUAL PRODUCTION AND INSTALLED CAPACITY .................................................................... 13

REGISTRATION DETAILS ....................................................................................................................... 16

CAPITAL DETAILS .................................................................................................................................... 16

STOCK EXCHANGES ................................................................................................................................ 16

SHAREHOLDING PATTERN .................................................................................................................... 17

AUDITORS .................................................................................................................................................... 18

CORPORATE DIRECTORS ...................................................................................................................... 18

EXECUTIVES ............................................................................................................................................... 19

BANK ............................................................................................................................................................. 20

INSURANCE ................................................................................................................................................. 20

HEAD OFFICE LOCATION DETAILS .................................................................................................... 20



BRANCHES .................................................................................................................................................. 21

SUBSIDIARIES ............................................................................................................................................ 22

GROUP ENTITIES ...................................................................................................................................... 23

REGISTRATION .......................................................................................................................................... 23

ISO CERTIFICATION ................................................................................................................................ 23

AWARDS / CERTIFICATES ...................................................................................................................... 24

FINANCIAL ANALYSIS ............................................................................................................................. 25

ANNEXURE I - CORPORATE DIRECTORS .......................................................................................... 34

ANNEXURE II - FINANCIAL STATEMENTS ........................................................................................ 39

ANNEXURE III – RATING RATIONALE ............................................................................................... 43



SUMMARY

---------------------------------------------------------------------------------------------------------------------------------- D&B D-U-N-S® NUMBER : 67-594-2668 COMPANY NAME : SHRI LAKSHMI COTSYN LIMITED

ADDRESS : 19/ X-1, Krishnapuram G.T. Road, Kanpur - 208007 Uttar Pradesh India TELEPHONE : 91- 512-3243033

91- 512-2042893 91- 512-2402733 91- 512-2401492

FAX : 91-512-2402339

WEB PAGE : www.shrilakshmicotsyn.com

www.shrilakshmi.in (Group Website) EMAIL : [email protected]; [email protected] ---------------------------------------------------------------------------------------------------------------------------------- D&B RATING : 5A3 CONDITION : Fair ---------------------------------------------------------------------------------------------------------------------------------- REGISTRATION NUMBER : 09985 START DATE : 31st August 1988 CONTROL DATE : 29th April 1992 HISTORY : Clear EMPLOYEES (TOTAL) : 6,000 IMPORTS : Yes EXPORTS : Yes REVENUE : INR 15,812,338 Thousands for the year ended 30th June 2011 TANGIBLE NETWORTH : INR 5,541,358 Thousands as on 30th June 2011 AUTHORIZED CAPITAL : INR 500,000 Thousands as on 31st March 2012 ISSUED CAPITAL : INR 265,938 Thousands as on 31st March 2012 PAID-UP CAPITAL : INR 265,938 Thousands as on 31st March 2012 LISTED : Bombay Stock Exchange Limited

National Stock Exchange of India Limited U.P. Stock Exchange Limited Singapore Stock Exchange

---------------------------------------------------------------------------------------------------------------------------------- CHIEF EXECUTIVE : Dr. Mata Prasad Agarwal Chairman and Managing Director ----------------------------------------------------------------------------------------------------------------------------------



LINE OF BUSINESS

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The Company is engaged in manufacture of various types of fabrics as well as readymade garments for men and women and other home furnishing products. In addition, it also manufactures fabrics for defense industry like fire retardant fabric, nuclear bio-chemical fabric, bullet proof jackets, helmets etc.

Standard Industrial Classification Code (SIC)

2211 - 0212 Manufactures suiting fabrics, cotton 2221 - 0204 Manufactures suiting fabrics, manmade fiber and silk 2211 - 0210 Manufactures shirting fabrics, cotton 2221 - 0203 Manufactures shirting fabrics, manmade fiber and silk 2299 - 0507 Manufactures towels and towelings, linen and linen-and-cotton mixtures 2211 - 0305 Manufactures towels and toweling, cotton 2211 - 0505 Manufactures denims 2241 - 0100 Manufactures lace and decorative trim, narrow fabric 2399 - 0000 Manufactures fabricated textile products 3842 - 0101 Manufactures bulletproof vests 2211 - 1003 Manufactures interlining material, cotton 2326 - 0202 Manufactures industrial garments, men's and boys'



RATING KEY

---------------------------------------------------------------------------------------------------------------------------

D&B’s Rating consists of 2 parts, the Financial Strength and the Composite Appraisal / Condition. Financial Strength is an indication of the tangible networth (that is, the shareholder’s funds less any intangible assets). The Composite Appraisal / Condition is linked to the level of risk and is an overall evaluation of credit worthiness. It takes into account the financial condition and several factors such as trade reference history, legal structure, management experience and any adverse listings. D&B Indicative Risk Rating of 5A3 implies that the Company has a tangible networth of INR 645,950,000 and above as per latest available audited financial statements. Composite appraisal 3 indicates a fair overall status of the Company.

Risk

Indicator Level of Risk Guide to Interpretation

1 Minimal risk May proceed with transaction - offer extended terms if required

2 Low risk May proceed with transaction

3 Slightly greater than average risk

May proceed with transaction but monitor closely

4 Significant level of risk May take suitable assurance before extending credit - e.g. personal guarantees

- Insufficient information to assign a Rating

No public information or D&B proprietory information available to indicate trading activity

CURRENT INVESTIGATION

----------------------------------------------------------------------------------------------------------------------------------

On 21st April 2012, Mr. Rakesh Kumar Srivastava, Chief Financial Officer and Company Secretary provided the relevant information in this report. On 10th May 2012, during the Management Discussion, he provided additional information in this report.



COMPANY PROFILE

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Shri Lakshmi Cotsyn Limited (hereinafter referred to as ‘the Company’ or ‘SLCL’) was incorporated on 31st August 1988 as a private limited company under the name Crafto Fabrics Processors Private Limited. Later, on 29th April 1992, the legal structure was changed to public limited company and the name was changed to Galaxy Indo-Fab Limited. The Company made further changes to its name as below:

Year Event

2002 Name changed to Shrivatsa International Limited

2005 Name changed to Shri Lakshmi Cotsyn Limited

The Company made its initial public issue in April 1993. The Company is engaged in manufacture of various types of fabrics as well as readymade garments for men and women and other home furnishing products. Its textile product range includes the following:

Division Product

Safety Textile Bulletproof jackets, sleeping bags, IR camouflage nets, bulletproof helmet, coat combat, NBC equipments, ballistic body armour and web equipment

Technical Textile

PU coated nylon fabric, breathable fabric, IRR fabric, fire retardant fabric, water proof/repellent fabric, NBC fabric and camouflage printed fabric

Home Textiles Water repellent bed linen, organic bed spread, quilted fabric and vitamin-E-bed linen

Terry Towel Jacquard, sheer towels, embroidered towels, yarn dyed and quilted fabric

Garments Denim jeans, shirts, knitted t – shirts and ladies wear

Apparel Fabrics Fusible interlining and bottom weight

Denim Fabric Stretched Denim, Basic Denim, Mercerize Denim, Coated and over-dyed Denim

Others Lace and embroidery and suiting/shirting

In addition, it also manufactures fabric for defense industry like fire retardant fabric, nuclear bio-chemical fabric, bullet proof jackets and helmets etc. The major brands of the Company include Star track, Galaxy, Alisha, SVL, Weaves and DYFI. The Company controls its activities from its head office located at Kanpur. At present, it has seven manufacturing units of which five are located in Fatehpur, Uttar Pradesh and remaining in the states of Uttaranchal and Haryana each. The Company is in the process of expanding its existing yarn production capacity by installation of additional 35,000 spindles and 5,000 rotors. Production using additional capacity is expected to commence in July 2012. The Company availed a loan of INR 100 crore in FY 2012 for the same. It also has an in-house research and development (R&D) facility for the manufacture of technical textiles and captive co-generation power plant. The Company caters to both domestic and international market. Its international client base includes reputed names like IKEA Trading Hongkong Limited, Li-Fung, Walmart, J. C. Penney, Springs Global, Macys.



The major competitors of the Company include Alok Industries Limited, Welspun India Limited, Trident Limited and SEL Group. SLCL has two wholly owned subsidiaries namely Shri Lakshmi Overseas (Fzc), United Arab Emirates and Shri Lakshmi Defence Solutions Limited, India.

Future Plans

The future plans of the Company include:

� Presently the Company plans to focus more on the products catered to defense industry. � The Company plans to expand its yarn production capacity by installing additional 150,000 spindles

and 10,000 rotors and thereby cater to its entire yarn requirement by itself. The expected cost of project is INR 800 crore. However as informed, no effective steps have been taken towards the same.

Also the Company plans to expand its market internationally through its subsidiary in UAE and its newly established branch in New York, USA. The branch at New York will market the Company’s terry towel and home furnishing items.



FINANCIAL SNAPSHOT

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Comparative Figures (INR in Thousands)

FY 2009 FY 2010 FY 2011

Revenue 10,552,472 13,709,482 15,812,338

Net Profit after Tax 519,882 644,667 751,206

Current Assets 6,645,219 10,236,421 11,844,779

Current Liabilities 3,384,922 6,986,804 7,318,562

Working Capital 3,260,297 3,249,617 4,526,217

Other Tangible Assets 5,259,137 6,213,109 11,353,918

Non-Current Liabilities 5,765,683 5,317,637 10,338,777

Tangible Networth 2,753,751 4,145,089 5,541,358

Total Borrowings 8,237,998 11,183,385 16,271,633

Cash and Bank 402,829 317,884 495,224

Accounts Receivable 3,173,753 3,927,684 3,686,290

Fixed Assets 5,155,838 6,028,651 10,966,143

Accounts Payable 498,188 638,328 716,800

Inventory 2,655,475 3,763,393 4,838,181

KEY RATIOS

FY 2009 FY 2010 FY 2011

Gross Profit Margin (%) 16.71 14.10 16.58

Operating Profit Margin (%) 11.91 10.04 12.32

Return on Revenue (%) 4.93 4.70 4.75

Return on Networth (%) 18.88 15.55 13.56

Return on Capital Employed (%) 12.10 9.46 9.01

Total Debt Equity Ratio (Times) 2.99 2.70 2.94

Interest Coverage Ratio (Times) 2.10 2.16 2.04

Refer Annexure II for details



PROVISIONAL FINANCIAL PERFORMANCE

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Financial Performance (Unaudited) for the nine month period ended 31

st March 2012:

(INR in Thousands)

For the Period Ended 31st March 2012 31

st March 2011

Number of months 9 9

Net Revenue / Income from operations 17,005,700 12,335,500

Net Profit/(Loss) after Tax 841,500 718,900

Net profit margin 4.95 5.83

Source: BSE Website



PURCHASES ----------------------------------------------------------------------------------------------------------------------------------

Local : 95% International : 5% Purchase Terms

Local Terms Open Account : 30 days Import Terms Open Account : 60 – 90 days Letter of Credit Source: As provided by the management

REVENUE

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Local : 87.39% International : 12.61% Sales Terms

Local Terms Open Account : 82 days Export Terms Open Account / Letter of Credit : 60 – 90 days

Source: As provided by the management



CUSTOMERS

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The Company maintains more than 100 customers. Major Customer Types

� Manufacturer � Wholeseller � Department Stores � Buying Agents � Government Bodies � End-Users

Major Customer Names

Name of Customer Country % of total

Revenue

Length of

Relationship

(Years)

Ikea Trading Hongkong Limited Hong Kong 4.57 4

MOD / Para Milatrey Force India 3.59 6

Yogesh Trading Company India 2.82 4

Niki Internation Inc USA 2.13 2

Synergy Global Home Inc USA 1.56 3

Sunham Home Fashions LLC USA 1.29 2

Upvan Systex Private Limited India 1.22 4

SUPPLIERS

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Name of Supplier Country % of total

Purchases

Length of

Relationship

(Years)

Mukesh Textiles India 6.71 7

Trident Limited India 4.84 5

BST Textile Mills Private Limited India 4.07 4

Pratap Spintex Limited India 3.39 5

J.S Traders India 3.32 6

Punjab Spintex Limited India 3.17 4

Amit Traders India 3.03 4

Source: As provide by the management



FOREIGN EXCHANGE TRANSACTIONS

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(INR in Thousands)

Particulars FY 2009 FY 2010 FY 2011

Total outgo in Foreign Exchange 786,543 733,411 2,129,639

Total FOB Value of Exports 875,709 820,428 2,301,146

Source: Annual Reports

EMPLOYEES

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Total Employees : 6,000 ACTUAL PRODUCTION AND INSTALLED CAPACITY

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PRODUCT NAME : Suiting & Shirting


Actual Production (In Meters) 24,207,958 27,658,505

29,422,947 Installed Capacity (In Meters) 24,000,000 24,000,000 24,000,000

Capacity Utilization (%) 100.87 115.24 122.60

PRODUCT NAME : Technical Textile Fabric


Actual Production (In Meters) 6,585,215 10,165,021 14,394,032

Installed Capacity (In Meters) 6,000,000 6,000,000 12,000,000


PRODUCT NAME : Fusible Interlining Fabric







PRODUCT NAME : Nylon Fabric





PRODUCT NAME : Quilt Fabrics


Actual Production (In Meters) 128,020 710,537 191,981

Installed Capacity (In Meters) 400,000 400,000 400,000


PRODUCT NAME : Embroidery Fabrics


Actual Production (In Meters) 771,779 1,119,298 637,374

Installed Capacity (In Meters) 800,000 800,000 800,000


PRODUCT NAME : Bottom Weight





PRODUCT NAME : Towel


Actual Production (In Tones) 4,350,158 5,151,966 9,562,405

Installed Capacity (In Tones) 3,000,000 3,000,000 15,000,000




PRODUCT NAME : Sheeting





PRODUCT NAME : Denim





PRODUCT NAME : Garments


Actual Production (In Numbers) 126,419 501,325 556,669

Installed Capacity (In Numbers) 6,600,000 6,600,000 6,600,000


PRODUCT NAME : Quilts/Comforters


Actual Production (In Numbers) 10,085 128,856 99,595

Installed Capacity (In Numbers) 300,000 300,000 300,000


Note: As informed, the installed capacity pertains to single shift as well as triple shift capacity. The Company operates a few plants on three shifts basis and therefore the capacity utilization is more than

100%.

Source: Annual Accounts and as provided by the management.



REGISTRATION DETAILS

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LEGAL STRUCTURE : Public Limited Company INCORPORATED : 31st August 1988 REGISTRATION BODY : Registrar of Companies REGISTRATION NUMBER : 9985 REGISTERED OFFICE : 19/X-1, Krishnapuram, Kanpur - 208007 Uttar Pradesh India LAST AGM DATE : 30th December 2011 LAST ANNUAL RETURN DATE : 28th February 2012 LAST FINANCIAL STATEMENT DATE : 30th June 2011 CAPITAL DETAILS

----------------------------------------------------------------------------------------------------------------------------------

AUTHORIZED CAPITAL : INR 500,000 Thousands as on 31st March 2012 ISSUED CAPITAL : INR 265,938 Thousands as on 31st March 2012 PAID-UP CAPITAL : INR 265,938 Thousands as on 31st March 2012

ORDINARY SHARES : 26,593,835 equity shares at par value of INR 10 each

Source: BSE Website

STOCK EXCHANGES

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The Company’s shares are listed on the following Stock Exchanges: � Bombay Stock Exchange Limited � National Stock Exchange of India Limited � U.P. Stock Exchange Limited � Singapore Stock Exchange



SHAREHOLDING PATTERN

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Particulars Shares held % Held

A Shareholding of Promoter and Promoter Group:

Nutech Steels Limited 1,300,000 4.89

Gautam Budh Impex Private Limited 1,300,000 4.89

Sarvamangla Industrial Enterprises Private Limited 1,284,400 4.83

Mac Glasses Private Limited 1,260,000 4.74

Raj Rajeshwari Techno Fab Private Limited 1,000,000 3.76

Galaxy Capital Finance Limited 860,435 3.24

Jayant Textiles Private Limited 840,000 3.16

Asian Pacific Continental Private Limited 839,996 3.16

Scorpio Biotechnology Private Limited 550,000 2.07

Navchetna Merchantiles Limited 394,300 1.48

Dr. Mata Prasad Agarwal 350,300 1.32

Sharda Agarwal 284,500 1.07

Other Promoters 1,953,900 7.33

Sub Total (A) 12,217,831 45.94

B Public Shareholding:

Institutions

Financial Institutions / Banks 150,000 0.56

Central Government / State Government(s) 10 0.00

Foreign Institutional Investors 3,499,620 13.16

Non Institutions

Bodies Corporate 6,458,492 24.29

Individual shareholders holding nominal share capital of upto INR 1 Lakh

1,539,260 5.79

Individual shareholders holding nominal share capital in excess of INR 1 Lakh

2,389,697 8.99

Others 3,38,925 1.27

Sub Total (B) 14,376,004 54.06

Total (A + B) 26,593,835 100.00

Total number of Shareholders : 9,237 Shareholding as on : 31st March 2012

Note: 5.15% of promoter shareholding has been pledged. Source: BSE Website



AUDITORS ----------------------------------------------------------------------------------------------------------------------------------

Pradeep & Associates 27/78 A, Gagan Deep Complex, Ground Floor, Birhana Road, Kanpur-208001 Uttar Pradesh India CORPORATE DIRECTORS

----------------------------------------------------------------------------------------------------------------------------------

Name of Directors Current Title

Dr.Mata Prasad Agarwal Chairman and Managing Director

Pawan Kumar Agarwal Joint Managing Director

Devesh Narain Gupta Deputy Managing Director

Dileep Bajaj Executive Director Head - Finance

Sharda Agarwal Executive Director

Rakesh Kumar Garg Independent Director

Dr. Gyanesh Narayan Mathur Independent Director

Juturu Venkata Rao Independent Director

Krishna Das Gupta Independent Director

Ram Sharan Srivastava Independent Director

Refer Annexure I for details



EXECUTIVES

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Name of Executives Current Title

Rakesh Kumar Srivastava Chief Financial Officer and Company Secretary

Alok Agarwal Executive Director – Operation

B.R. Garg President – Operation

Sanjay Gupta President - Retail Division

Mandeep Sethi President – Marketing

Guru Pal Singh Senior Vice President - Engineering

Dr. S. K. Agarwal Vice President - Total Quality Management

Arvind B. Pandey Vice President - Denim division

B.G.K. Nair Vice President – Exports

Sudhir Kumar Asthana Vice President – Fabric

S. D. Yadav General Manager – HRD

K.K. Jindal Head – Administration

K.K. Das Vice President – Processing

Sanjay Sharma Head - Information Technology

Ajit Nigam Vice President – Marketing

Mr. Prashant Kumar SA Workers Representative




BANK

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NAME : Syndicate Bank BRANCH : Corporate Finance Branch,

New Delhi The Company also has banking relations with the following banks: NAME : Central Bank of India Bank of Baroda Union Bank of India Canara Bank Punjab National Bank State Bank of Patiala Allahabad Bank Indian Bank IDBI Bank Exim Bank State Bank of Travancore Saraswat Co-operative Bank State Bank of Mysore Andhra Bank

Note: Bankers letter received from Syndicate Bank. The bank has classified the Company’s account as a

standard asset and has confirmed the dealings of/with the Company to be satisfactory. However, no

information as to observation of any dishonor of cheque, issued by the Company, has been provided by the banker.

INSURANCE

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The Company has taken insurance coverage on its assets from the United India Insurance Company Limited and Cholamandalm MS General Insurance Company Limited. HEAD OFFICE LOCATION DETAILS

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SIZE OF PREMISES : 5177.01 square feet TYPE OF OCCUPATION : Rented PREMISES USED AS : Registered Office



BRANCHES

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Address Location Type Type of

Occupation

Size of

Premises

(Square meter)

UPSIDC Industrial Area Malwan Housing Colony Fatehpur Uttar Pradesh India

Manufacturing Unit

Owned 19,951.82

Godhraully Aung, G.T. Road, Fatehpur Uttar Pradesh India

Manufacturing Unit

Owned 16,048

Abhaypur, G. T. Road Fatehpur Uttar Pradesh India

Manufacturing Unit

Owned 82,000

Village & Post – Rewari Bujurg Pargana & Tehsil - Bindki Fatehpur Uttar Pradesh India

Manufacturing Unit

Owned 77,644

Village Rahsupur Tehsil Bindki Fatehpur Uttar Pradesh India

Manufacturing Unit

Owned 17,970

Dev Bhoomi Industrial Estate, Village Banta Kheri, Tehsil Roorke Haridwar, Uttaranchal India

Manufacturing Unit

Owned 7,910

Village Libaspur Sonepat Haryana India

Manufacturing Unit

Owned 3,000

UPSIDC Industrial Area Malwan District Fatehpur – A-7, A-8, B-35 to B-40

Office Owned 189,078



Plot No. C-40, Block – C, Sec.57, Gautam Budh Nagar, Noida - 201301 Uttar Pradesh India

Corporate & Marketing Office

Owned 1800

Suite # 627-629, 7 West, 34th Street, NewYork , NY-10016

U.S. Office Rented 316


SUBSIDIARIES

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Name of the

Subsidiary Address

Number of

Shares held

%

Held

Shri Lakshmi Overseas (Fzc)

Saif Zone P.O.8000 Sharjah United Arab Emirates

200,000 Equity Shares of AED 10/- each

100%

Shri Lakshmi Defence Solutions Limited

Rahsoopur Gate No. 133 Tehsil Bindki Industrial Area, G.T.Road Fatehpur Uttar Pradesh India

10,000,000 Equity Shares of INR 10/- each

100%

Source: Annual Report-2011



GROUP ENTITIES

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Name of Entity Legal Structure

Shri Lakshmi Overseas (FZC) Limited Liability Company

Shri Lakshmi Defence Solutions Limited Public Limited Company

Galaxy Capital Finance Limited Public Limited Company

Shri Lakshmi Infrastructure Limited Public Limited Company

Shri Lakshmi Power Limited Public Limited Company

Shri Lakshmi Nano Technologies Limited Public Limited Company

Sarvamangla Industrial Enterprises Private Limited

Private Limited Company

Raj Rajeshwari Techno-Fab Private Limited Private Limited Company


REGISTRATION

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� Permanent Account Number : AAICS9582J � Tax deduction and collection account Number : KNPS02097E ISO CERTIFICATION

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� The Company has been awarded SA 8000:2008 Certification by TÜV NORD CERT GmbH for

occupational health and safety management system for manufacture and supply of denim, bottom weight & sheeting fabrics, terry towels and home furnishing made-ups Certificate number : 44 114 100768 Valid from : 8th June 2010 Valid till : 7th June 2013

� The Company has been awarded ISO 9001:2008 Certification by MSA Certification Co. Limited. for

quality management system for manufacture and supply of denim, bottom weight & sheeting fabrics, terry towels and home furnishing made-ups Certificate number : KorQ-107840 Valid from : 23rd July 2011 Valid till : 22nd July 2012



� The Company has received the certificate SA-8000 of Conformity from the FLO-CERT Gmbh for foreign trade standard & FLO – Cert Certificate number (ID) : 22837 Valid from : 1st April 2011 Valid till : 1st April 2015

AWARDS / CERTIFICATES

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� Received an award for valuable support in apparel and home textiles machine industry from Community

of International Sewing Machine Industry (CISM) organized by GARTEXMA.

� Received an award for accelerating market driven sustainability from Indian Carbon Outlook.

� Ranked 117th among the top 400 Mid-Cap companies in the year 2011 in India.

� Ranked 319th among the top 500 manufacturing companies in India.

� Ranked as Star Export house from the office of the Joint Director General of Foreign Trade, Ministry of Commerce and Industry.

� The Company has received the award from the National Productivity Council jointly with Merchant

Chamber of Uttar Pradesh, Kanpur Management Association (KMA) and National Institute of Personnel Management (NIPM).

Physical certificates were not available for verification




FINANCIAL ANALYSIS

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� Revenue and Net Profit

The Company is engaged in manufacture of various types of fabrics as well as readymade garments for men and women and other home furnishing products. In addition, it also manufactures fabric for defense industry like fire retardant fabric, nuclear bio-chemical fabric, bullet proof jackets, helmets etc. Revenue of the Company increased by 29.92% in FY 2010 and further by 15.34% in FY 2011 mainly on account of increase in domestic revenue from denim, terry towel and home furnishing products as well as export sales during the period under study. As informed by the management, the Company plans to concentrate on sale of higher margin products viz technical textile products, terry towels, denim and home furnishing.

10,552,472

13,709,482

15,812,338

0

4,500,000

9,000,000

13,500,000

18,000,000

2009 2010 2011

INR (In '000)

Revenue

Revenue

519,882

644,667

751,206

0

225,000

450,000

675,000

900,000

2009 2010 2011INR (In '000)

Net Profit

Net Profit



Geographical and Segment Wise Revenue Classification:

Particulars

FY 2009 FY 2010 FY 2011

% of total

revenue

Amount

INR in

Thousands

% of

total

revenue

Amount

INR in

Thousands

% of

total

revenue

Amount

INR in

Thousands

Domestic

Suiting & Shirting 15.25 1,609,049 15.43 2,115,541 9.37 1,482,059

Technical Textile Fusible Interlining Nylon fabric

31.69 3,343,779 35.62 4,883,714 30.91 4,886,843

Quilting & Embroidery 1.32 138,927 0.80 109,675 0.76 120,759

Denim 16.72 1,764,884 15.96 2,188,668 16.03 2,534,549

Terry Towel 7.32 772,920 8.62 1,181,539 10.91 1,725,193

Home Furnishing 12.15 1,282,112 11.51 1,577,379 13.24 2,093,052

Bottom Weight 6.52 688,465 5.04 691,369 4.35 688,208

Garments 0.05 5,139 0.06 8,381 0.18 28,963

Miscellaneous Sales - - 0.07 9,468 0.07 11,836

Total Domestic Sales (A) 91.02 9,605,275 93.12 12,765,734 85.83 13,571,462

Export Sales (B) 8.98 947,197 6.88 943,748 14.17 2,240,876

Total (A+B) 100.00 10,552,472 100.00 13,709,482 100.00 15,812,338

29.92

15.34

24.00

16.53

0.00

10.00

20.00

30.00

40.00

2010 2011

Percentage

Revenue and Net Profit Growth

Revenue Growth Net Profit Growth

0.00

4.50

9.00

13.50

18.00

2009 2010 2011

Margins

Gross Profit Margin Operating Profit Margin

Net Profit Margin

%



PROFIT

Gross profit margin

Gross profit margin of the Company declined from 16.71% in FY 2009 to 14.10% in FY 2010 on account of increase in cost of materials consumed as a percentage of revenue from 77.31% in FY 2009 to 80.31% in FY 2010. However, the gross profit margin increased to 16.58% in FY 2011 on account of decline in cost of materials consumed as a percentage of revenue to 76.98% in FY 2011. Operating Profit margin

Operating profit margin of the Company declined from 11.91% in FY 2009 to 10.04% in FY 2010 mainly on account of decline in gross profit margin. However, the operating profit margin of the Company increased to 12.32% in FY 2011 on account of increase in gross profit margin coupled with sharp increase other operating income viz. duty drawback. Net profit margin

Net profit margin of the Company declined from 4.93% in FY 2009 to 4.70% in FY 2010 on account of decline in operating profit margin. Despite a significant increase in operating profit margin, due to a significant increase in interest expenses coupled with a decline in miscellaneous income earned by the Company, the net profit margin increased marginally to 4.75% in FY 2011.



� Tangible Networth and Capital Employed

Tangible networth includes equity capital, reserves and surplus less intangible assets, miscellaneous expenditure and accumulated losses, if any. Tangible networth of the Company increased in both FY 2010 and FY 2011 on account of retention of profits in the business coupled with issue of additional equity shares in both FY 2010 & FY 2011. In addition to above, the Company received share warrant application money amounting to INR 485,879 Thousand in FY 2010 and INR 235,349 Thousand in FY 2011. The Company allotted 4,384,905 equity shares of face value INR 10 each in FY 2010. Out the above, 1,378,500 equity shares were allotted at a premium of INR 90 per share and 1,975,000 equity shares were allotted at a premium of 46 per share. Further, it allotted 1,130,430 equity shares of face value INR 10 each in FY 2011 at a premium of INR 98.41 per share. Capital employed comprises of tangible networth and total debt. Capital employed by the Company increased in FY 2010 on account of increase in tangible networth coupled with increase in short term loans and working capital loans from banks. It further increased in FY 2011 on account of increase in tangible networth and sharp increase in long term loans.

Composition of Sources of Funds

(In Percentage)


Tangible Networth 25.05 27.04 25.40

Total Debt 74.95 72.96 74.60

Capital Employed 100.00 100.00 100.00

2,753,751

4,145,089

5,541,358

0

1,750,000

3,500,000

5,250,000

7,000,000

2009 2010 2011

INR (In '000)

Tangible Networth

Tangible Networth

10,991,749 15,328,474

21,812,991

0

7,000,000

14,000,000

21,000,000

28,000,000

2009 2010 2011

INR (In '000)

Capital Employed

Capital Employed



Composition of Borrowed Funds

(In Percentage)


Short Term Loans 33.67 55.31 39.27

Long Term Loans 66.33 44.69 60.73

Total Debt 100.00 100.00 100.00

Short term loans comprised short term loan (project) and working loan facility availed from bank. Long term loans comprised term loan from banks, mezzanine debt, foreign currency convertible bonds (FCCBs), debentures, other secured loan and unsecured loan from others. Composition of Borrowed Funds

(In Percentage)


Secured Loan 88.50 96.88 96.52

Unsecured Loan 11.50 3.12 3.48

Total Debt 100.00 100.00 100.0



� Return on Networth and Return on Capital Employed

Return on tangible networth decreased in both the years i.e. FY 2010 and FY 2011 on account of increase in tangible networth being more than growth in profit.

(In Percentage)

Particulars FY 2010 FY 2011

Growth in Profit 24.00 16.53

Increase in Tangible Networth 50.53 33.68

Return on capital employed decreased in FY 2010 as well as FY 2011 on account of increase in capital employed being more than growth in EBIT. (In Percentage)


Growth in EBIT 9.02 35.57

Increase in Capital Employed 39.45 42.30


Interest Expenses (INR in Thousands) 632,143 671,839 965,150

Average Total Debt (INR in Thousands) - 9,710,691 13,727,509

Average Cost of Borrowed Funds (%) - 6.92 7.03


18.88 15.55

13.56

0.00

7.50

15.00

22.50

30.00

2009 2010 2011

Percentage

Return on Tangible Networth

Return on Tangible Networth

12.10

9.46

9.01

0.00

4.00

8.00

12.00

16.00

2009 2010 2011

Percentage

Return on Capital Employed

Return on Capital Employed



� Total Debt Equity Ratio and Interest Coverage Ratio

Total debt equity ratio is calculated as total debt divided by tangible networth. It decreased in FY 2010 on account of increase in tangible networth being more than growth in total debt. However, it increased in FY 2011 on account of growth in total debt being more than increase in tangible networth. (In Percentage)


Increase in Tangible Networth 50.53 33.68

Growth in Total Debt 35.75 45.50

Interest coverage ratio indicates the adequacy of EBIT of the Company to cover its interest obligations. It increased marginally in FY 2010 on account of growth in EBIT being more than growth in interest expenses. However it decreased in FY 2011, on account of growth in interest expenses being more than growth in EBIT. (In Percentage)


Growth in Interest Expenses 6.28 43.66

Growth in EBIT 9.02 35.57

2.99 2.70

2.94

0.00

1.25

2.50

3.75

5.00

2009 2010 2011

Tim

es

Total Debt Equity Ratio

Total Debt Equity Ratio

2.10 2.16 2.04

0.00

1.00

2.00

3.00

4.00

2009 2010 2011

Tim

es

Interest Coverage Ratio

Interest Coverage Ratio



� Liquidity Ratios

Composition of current assets and current liabilities are as given below: Composition of Current Assets

(In Percentage)


Inventory 39.96 36.76 40.85

Accounts Receivable 47.76 38.37 31.12

Other Loans and Advances 3.84 19.94 21.96

Cash and Bank 6.06 3.11 4.18

Other Current Assets 2.38 1.82 1.89

Total 100.00 100.00 100.00

Other current assets mainly comprised of security deposits and TDS and advance taxes.

1.18

0.93

0.96

1.96

1.47

1.62

0.00

0.75

1.50

2.25

3.00

2009 2010 2011

Tim

es

Liquidity

Quick Ratio Current Ratio

54%

16%

106%

5%

0%

30%

60%

90%

120%

2010 2011

y-o-y growth

Change in Current Assets & Current

Liabilities

Current Assets Current Liabilities

0

60

120

180

240

2009 2010 2011

Receivable Days

Payable Days

Inventory Turnover Days

Working Capital Cycle

Days

Working Capital Cycle



Composition of Current Liabilities (In Percentage)


Bank Loan 81.95 88.53 87.30

Accounts Payables 14.72 9.14 9.79

Other Current Liabilities 3.33 2.33 2.91

Total 100.00 100.00 100.00

Other current liabilities mainly comprised provision for income tax, provision for dividend and other payables / accruals



ANNEXURE I - CORPORATE DIRECTORS

----------------------------------------------------------------------------------------------------------------------------------

Name : Dr.Mata Prasad Agarwal Address : 19/X-1, Krishnapuram Krishnanagar, Chakeri

Kanpur - 208007 Uttar Pradesh India Date of Birth : 13th July 1949 Passport Number : G9205413 Director Identification Number : 00311806 Current Title : Chairman cum Managing Director Started with the Company : 31st August 1988 Appointed to Present Position : 31st August 1988 Education : Member of Institute of Cost and Work Accountant of India Doctorate in Textile Costing Related Experience since : 1988 Active in Daily Operations : Yes Founder of the Company Name : Pawan Kumar Agarwal Address : 19/X-1, Block Krishnapuram, Krishnanagar, Chakeri

G.T. Road Kanpur - 208007 Uttar Pradesh India Date of Birth : 24th March 1973 Passport Number : Z1652145 Director Identification Number : 00311954 Current Title : Joint Managing Director Started with the Company : 6th April 1992 Education : Bachelor of Science Diploma in Computer Application Active in Daily Operations : Yes



Name : Devesh Narain Gupta Address : 117/396/O-Block

Geeta Nagar Kanpur – 208005

Uttar Pradesh India Date of Birth : 10th June 1953 Passport Number : E6921126 Director Identification Number : 00311995 Current Title : Deputy Managing Director Started with the Company : 25th April 1992 Appointed to Present Position : 25th April 1992 Education : Bachelor of Engineering (Chemical) Bachelor of Technology Related Experience since : 1984 Active in Daily Operations : Yes Name : Dileep Bajaj Address : Villa 63, Block 1, Ground Floor Erose Garden, Suraj Kund Road Faridabad - 121009 Haryana India Date of Birth : 27th April 1952 Passport Number : Z040867 Director Identification Number : 00351499 Current Title : Executive Director Head - Finance Started with the Company : 25th July 2005 Appointed to Present Position : 25th July 2005 Education : Bachelor of Engineering (Chemical) Bachelor of Technology Related Experience since : 1981 Active in Daily Operations : Yes



Name : Sharda Agarwal Address : 19/X-1, Krishnapuram Krishnanagar, Chakeri Kanpur - 208007 Uttar Pradesh India Date of Birth : 10th May 1955 Passport Number : F5920802 Director Identification Number : 00311884 Current Title : Executive Director Started with the Company : 31st August 1988 Appointed to Present Position : 31st August 1988 Active in Daily Operations : Yes Founder of the Company Name : Rakesh Kumar Garg Address : D-2 ST-D, Panchsheel Enclave Hauz Khas, New Delhi - 110017 Delhi India Date of Birth : 11th September 1950 Passport Number : B0795916 Director Identification Number : 00312052 Current Title : Independent Director Started with the Company : 25th July 2005 Appointed to Present Position : 25th July 2005 Education : Master of Science Graduate in Management Related Experience since : 1982



Name : Dr. Gyanesh Narayan Mathur Address : 117/H-11, Kda Colony, Block - N, Kakadeo Kanpur - 208025 Uttar Pradesh India Date of Birth : 15th November 1944 Passport Number : F3564497 Director Identification Number : 00525324 Current Title : Independent Director Started with the Company : 18th April 2005 Appointed to Present Position : 18th April 2005 Education : Bachelor of Science Master of Technology (Chemical Engineering) M.A. SC. In Chemical Engineering Doctorate in Engineering Name : Juturu Venkata Rao Address : F-8 49 I P EXTN, Madhu Vihar Patpar Ganj Delhi - 110092 Delhi India Date of Birth : 3rd May 1948 Passport Number : F0822226 Director Identification Number : 00470381 Current Title : Independent Director Started with the Company : 31st July 2006 Appointed to Present Position : 31st July 2006 Education : Master of Technology Doctorate Related Experience since : 1981



Name : Krishna Das Gupta Address : Flat # 104, Ratan Bhawan, 7/108A, Swaroop Nagar Kanpur - 208002 Uttar Pradesh India Date of Birth : 7th October 1942 Passport Number : E2420094 Director Identification Number : 00374379 Current Title : Independent Director Started with the Company : 25th January 2010 Appointed to Present Position : 25th January 2010 Education : Bachelor of Law Master of Commerce Master of Philosophy (Social Science) Diploma in Public Administration Name : Ram Sharan Srivastava Address : 1325, 'Y' Block, Kidwai Nagar, Kanpur - 208011 Uttar Pradesh India Date of Birth : 2nd March 1936 Passport Number : B5929862 Director Identification Number : 02404258 Current Title : Independent Director Started with the Company : 31st December 2008 Appointed to Present Position : 31st December 2008 Education : Bachelor of Law Master of Commerce

Source: Annual Return



ANNEXURE II - FINANCIAL STATEMENTS

----------------------------------------------------------------------------------------------------------------------------------

Fiscal Balance Sheet as on 30th June 2011 (INR in Thousands)

Cash and Bank 495,224 Accounts Payable 716,800

Inventory 4,838,181 Bank Loans 6,389,081

Deposit-Short Term 95,831 Other Payables / Accruals 24,136

Accounts Receivable 3,686,290 Provision for Income Tax 112,231

Prepayments 1,967 Provision for Dividends 74,037

Loans and Advances 2,601,176 Due to Directors / Shareholders 2,277

Other Current Assets 31,800

TDS and Advance Tax 94,310

Total Current Assets 11,844,779 Total Current Liabilities 7,318,562

Land and Buildings 1,148,139 Loans Secured 505,342

Plant and Equipment 6,534,014 Loans Unsecured 566,984

Transportation Vehicles 30,925 Bank Loans 8,558,701

Furniture, Fixtures and Fitting 31,264 Debentures & Bonds 251,525

Office Equipment 36,369 Deferred Taxation 456,225

Assets in Construction 3,185,432

Total Fixed Assets 10,966,143 Total Non-Current Liabilities 10,338,777

Other Investments 387,775 Capital 210,938

Share Premium 1,061,837

Retained Earnings 3,184,935

Other Equity 1,082,429

Capital Grants and Subsidies 1,219

Total Investment 387,775 Total Equity 5,541,358

TOTAL ASSETS 23,198,697 TOTAL LIABILITIES AND

EQUITY 23,198,697



Profit and Loss Account (INR in Thousands)

For the year ended 30-Jun-09 30-Jun-10 30-Jun-11

Number of months 12 12 12

Fiscal Fiscal Fiscal

Revenue 10,552,472 13,709,482 15,812,338

Less: Cost of Revenue (8,789,640) (11,775,920) (13,190,810)

Gross Profit 1,762,832 1,933,562 2,621,528

Other Operating Income 40,254 39,730 131,436

General Operating Expenses (294,604) (333,769) (440,688)

Depreciation (251,986) (263,204) (364,445)

Net Operating Profit after Depreciation and

before Interest 1,256,496 1,376,319 1,947,831

Other Non-Operating Income 73,291 73,450 17,605

Total Finance Expenses (632,143) (671,839) (965,150)

Net Profit Before Taxation 697,644 777,930 1,000,286

Income Tax (177,762) (133,263) (249,080)

Net Profit After Tax 519,882 644,667 751,206

Less: Transfer to Reserves (100,000) (100,000) -

Less: Dividend (36,452) (70,068) (74,037)

Transfer from reserves - - 300,000

Plus Retained Earnings B/F 1,349,737 1,733,167 2,207,766

Retained Earnings C/F 1,733,167 2,207,766 3,184,935

Accounts are audited by Pradeep & Associates.



� Contingent liabilities for the year ended 30

th June 2011 (Consolidated financial statements)

• Letter of Credit outstanding INR 483,823 Thousands



KEY RATIOS

FY 2009 FY 2010 FY 2011

GROWTH TREND

Revenue Growth (%) - 29.92 15.34

Net Profit Growth (%) - 24.00 16.53

LIQUIDITY

Quick Ratio (Times) 1.18 0.93 0.96

Current Ratio (Times) 1.96 1.47 1.62

SOLVENCY

Interest Coverage Ratio (Times) 2.10 2.16 2.04

Current Liabilities to Inventory (%) 127.47 185.65 151.27

Current Liabilities to Networth (%) 122.92 168.56 132.07

LEVERAGE

Total Debt Equity Ratio (Times) 2.99 2.70 2.94

Total Liabilities to Networth (%) 332.30 296.84 318.65

Fixed Assets to Networth (%) 187.23 145.44 197.90

EFFICIENCY

Collection Period (Days) 110 105 85

Revenue to Inventory (Times) 3.97 3.64 3.27

Assets to Revenue (%) 112.81 119.99 146.71

Revenue to Net Working Capital (Times) 3.24 4.22 3.49

Account Payable Days 21 19 20

PROFITABILITY

Gross Profit Margin (%) 16.71 14.10 16.58

Operating Profit Ratio (%) 11.91 10.04 12.32

Return on Revenue (%) 4.93 4.70 4.75

Return on Networth (%) 18.88 15.55 13.56


Return on Assets (%) 4.37 3.92 3.24



ANNEXURE III – RATING RATIONALE

----------------------------------------------------------------------------------------------------------------------------------

Rating Assigned : 5A3

Tangible Networth: INR 5,541,358 Thousand as on 30th June 2011 D&B Indicative Risk Rating of 5A3 implies that the Company has a tangible networth of INR 645,950,000 and above as per latest available audited financial statements. Composite appraisal 3 indicates a fair overall status of the Company. Key strengths: � Experienced management � Diversified product portfolio � Demographic pattern and rising income level � Opportunities in the Technical Textiles � Opportunities from Union Budget 2012-2013

Key constraints:

� High reliance on external debt together with FCCB repayment scheduled in September 2012

� Low return on Capital employed coupled with a declining trend in RONW � Long shelf life of textile products affecting fresh demand � Government Regulations � Intense Competition � Availability of raw materials dependant on weather conditions � Foreign exchange rate fluctuation risk



Key Strengths

� Experienced management

The Company is managed by Dr. Mata Prasad Agarwal, Chairman and Managing Director of the Company having an experience of over three decades in the textile industry. Rest of the management of the Company is also experienced and has on an average of more than 15 years of experience in the related field. This relevant experience and business networking facilitates in driving the business of the Company.

� Diversified product portfolio

The Company is engaged in manufacture of wide range of products viz. denims, terry towels, variety of fabrics, home furnishings etc and further caters to different industries like textile industry, defense sector, and mining industry. Majority of revenue in FY 2011 was derived from technical textile contributing 27.23% to the revenue, followed by 15.35% from home furnishings, 14.55% from terry towels and 14.36% from denims. This helps in mitigating the product concentration risk.

� Demographic pattern and rising income level

Increased urbanization, growing young and fashion savvy population coupled with increase in female working population will drive the demand for ready-made garments which will in turn boost the demand for the Company’s products. Further as per industry experts, salaries in India have been growing in the range of 10%-15% on a y-o-y basis thereby increasing disposable incomes which will drive the demand for the textile products.

� Opportunities in the Technical Textiles

The Company has come up with products in technical textile like flex fabric, black out fabric, nuclear biochemical fabric and multi-spectrum camouflage net which are high margin products and find application in military, industrial, medical, mining and high technology areas. The market size of technical textiles in India is estimated at INR 63, 202 crore during the year 2011-12. It has grown from INR 41,756 crore in FY 2007-08 with a growth rate of 11% on y-o-y basis. It is expected that the technical textile industry market size will reach INR 158,540 crore by FY 2016-17 with a growth rate of 20% on y-o-y basis. At present, technical textiles comprise of around 28% of total revenue of the Company. Moreover, the Company is focusing to increase the revenue from this segment. This indicates an increase in the top line as well as bottom line of the Company.

� Opportunities from Union Budget 2012-2013

The Government in the recent union budget 2012-2013 has declared an exemption from basic custom duty to aramid yarn and fabric, the raw materials used for the manufacture of bullet proof helmets. In addition, the Government has also extended the TUFS (Technological Up-gradation Fund) scheme to the twelfth five year plan. Availing the TUFS scheme will provide the Company with a subsidy of 10% on capital goods purchased and 5% subsidy on interest payable. This will boost the bottom line of the Company.



Key Constraints

� High reliance on external debt together with FCCB repayment scheduled in September 2012

The Company consistently had a high debt equity ratio during the period under study. The debt equity ratio stood at 2.94 times as on 30th June 2011 indicating high dependence on borrowed funds. Further, the Company availed a loan of INR 100 crore in FY 2012 for installation of additional 35,000 spindles and 5,000 rotors. This led to a further increase in the debt equity ratio which stood at 3.12 times as on 31st March 2012. In addition, the Company plans to expand its yarn production capacity by installation of additional 150,000 spindles and 10,000 rotors. The expected cost of project is INR 800 crore. However as informed, no effective steps have been taken towards the same. Further, as informed by the management, the Company is positive of repaying the balance amount due on FCCB i.e. USD 6.5 million (which at present amounts to INR 516,308 Thousand including premium, at a conversion rate of INR 54.9 per USD) not converted into equity shares, in September 2012. Although no concrete plan was provided, it was informed that the repayment of the same would be funded through short term loans thereby further increasing the cost of borrowing and impacting the margins as well as the cash flows. However, the management also added that the Company plans to issue GDRs and once the issue is through it will reduce the debt equity ratio of the Company. Given the debt equity ratio of 3, any increase in the interest rates will lead to an immediate impact on the margins and the cash flows going ahead.

� Low return on Capital employed coupled with a declining trend in RONW

Return on tangible networth of the Company showed a declining trend during the period under study whereas the return on capital employed showed an uneven trend. Return on networth stood at 13.56% in FY 2011 whereas return on capital employed stood at 9.01% in FY 2011. This indicates need to improve returns on funds invested.


Return on Tangible Networth (%) 18.88 15.55 13.56


� Long shelf life of textile products affecting fresh demand

The Company manufactures denims, terry towels, technical textile products and various other textile products which have a long shelf life. This affects fresh demand of the product and thus the revenue of the Company.

� Government Regulations

The Company operates primarily in the textile industry which is directly affected by Government regulations and policies. Any change or introduction of a new legislation / regulation and any review of tariff and provisions, including taxation policy in the country may have an impact on the textile industry and therefore will affect the operations and financial performance of the Company.



� Intense Competition

The domestic market for the textile sector is dominated by players in the unorganized sector or small manufacturers. Further, the Company also faces stiff competition from its peers like Trident Limited, Alok Industries Limited etc. This would keep a constant pressure on the product pricing of the Company and thereby would affect the bottom line.

� Availability of raw materials dependant on weather conditions

The major raw material being an agro product is subject to uncertainties of weather. Any shortage of raw materials due to changes in weather conditions may increase the cost of raw materials and consequently the cost of production. This would adversely impact the profitability of the Company in the event of the Company being unable to pass on the entire increase in cost to its customers.

� Foreign exchange rate fluctuation risk

The Company earns around 12% of its revenue from exports and procures around 5% of its raw material requirements through imports thus exposing itself to foreign exchange rate fluctuation risk. Further, the Company is also expected to repay the balance amount on FCCB i.e. USD 6.5 million, not converted into equity shares, in September 2012. Any adverse movement in currency rates could affect the margins as well as cash flow of the Company.



CURRENCY: All amounts in this report are in local currency unless otherwise stated. -----------------------------------------------------------------------------------------------------------------------------

COPYRIGHT (2012) WITH DUN & BRADSTREET

THIS REPORT MAY NOT BE REPRODUCED IN WHOLE OR IN PART IN ANY FORM OR MANNER WHATSOEVER. ALL RIGHTS RESERVED.

-----------------------------------------------------------------------------------------------------------------------------

This report is forwarded to the Subscriber in strict confidence for the use by the Subscriber as one factor to consider in connection with credit and other business decisions. This report contains information compiled from information which Dun & Bradstreet does not control and which has not been verified unless otherwise indicated in this report. Dun & Bradstreet therefore cannot accept responsibility for the accuracy, completeness or timeliness of the report. Dun & Bradstreet disclaims all liability for any loss or damage arising out of or in any way related to the contents of this report. This material is confidential and proprietary to Dun & Bradstreet and/or third parties and may not be reproduced, published or disclosed to others without the express authorization of Dun & Bradstreet or the General Counsel of Dun & Bradstreet.

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