ENTITY FASTENERS PVT. LTD., WEST BENGAL ... BASE DUE... · Web viewENTITY FASTENERS PVT. LTD., WEST...

ENTITY FASTENERS PVT. LTD., WEST BENGAL 2013

INITIAL BASE DUE DILIGENCE REPORT

Executed By : J. MAITRA & ASSOCIATES , Chartered Accountants , Mumbai & Akola (Maharashtra)


EXECUTED BY

“Baheti Chambers”, Joshi Market, D-Type, D-3, 1:6, B-Wing, Opp. Apna Bazar,

Tower Square, Akola Sector-1, Vashi, Navi Mumbai

Maharashtra Maharashtra

PIN-444 001 PIN-400 703

Tel: +91-724-2422239 Cell: +91- 90 2926 2926

E-mail: [email protected], [email protected]


J. MAITRA & ASSOCIATES

Chartered Accountants

mailto:[email protected]

mailto:[email protected]


CATCH POINTS :

1. We were brought into the entity study with effect from 24th March, 2013.

2. Initial set of documents were provided on 24-03-2013 and factory visit was conducted on 24-03-2013.

3. The initial screening and meeting with the management team were conducted on 24-03-2013.

4. The primary advisor on this proposal were M/s Shriyai Consultancy of New Delhi headed by Managing Partner , Dr.Shantanu Ghosh.

5. Our firm was appointed by M/s Shriyai Consultancy to conduct a in-principle due diligence on the entity and confirm whether a funding can be executed or not.

6. Our firm was allowed 2 working days to conduct a preliminary study and base our conclusions on the proposal. We were not allowed the liberty to conduct a full fledged viability study.

7. We are not able to conduct the normal level of study as warranted in such type of proposals due paucity of time allotted , hence we are conducting a analytical study and issuing a base report for the same , which would give a rough idea as to the worth of the entity in question.

8. We disown ourselves from all responsibility of funding as we are consultants and not channel for funds .

9. Our main thrust is towards M/s Shriyai Consultancy .

10. WE EXPRESS OUR ANALYSIS IN A RESTRICTED WAY



DISCLAIMER

This document and the information contained herein are strictly confidential and are meant solely for the selected recipient to whom it has been specifically made available. This document may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of J. MAITRA & ASSOCIATES

Nothing in this document is intended to constitute legal, regulatory, tax, securities, or investment advice, or an opinion regarding the appropriateness of any investment, or a solicitation of any type. The contents in this document are intended for general information purposes only and should not be acted upon without first obtaining specific legal, tax, and investment advice from a licensed professional concerning your own situation and any specific investment questions you may have before entering into any financial transaction.

The financial or other projections etc. set out in this document have been prepared based upon projections that have been determined in good faith and from sources deemed reliable. There can be no assurance that such projections will be accurate. J. Maitra & Associates does not accept any responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out in this document. The information in this document reflects prevailing conditions and our views as of this date, all of which is expressed without any responsibility on our part and is subject to change. In preparing this document, we have relied upon and assumed, without independent verification, the accuracy and Executed By : J. MAITRA & ASSOCIATES , Chartered Accountants , Mumbai & Akola (Maharashtra)


completeness of all information available from public sources or which was provided to us or which was otherwise reviewed by us.

Past performance cannot be a guide to future performance. No reliance may be placed for any purpose whatsoever on the information contained in this document or on its completeness.The information set out herein may be subject to updating, completion, revision, verification and amendment and such information may change materially.

Accordingly, this document should not form the basis of, and should not be relied upon in connection with, any subsequent investment in the fund/ security. To the extent that any statements are made in this document in relation to the fund/ security, they are qualified in their entirety by the terms of the Offering Memorandum and other related constitutive

ABOUT J. MAITRA & ASSOCIATES

J. Maitra & Associates is a Chartered Accountancy / Management Consulting firm that works with leading business houses and assists them in improving corporate, financial and operational performance by undertaking the role of a facilitating agent. With an industry presence and a network of highly experienced and dynamic consultants, J. Maitra & Associates helps in making businesses more valuable through high –impact solutions. From strategy to execution it works with businesses, government agencies and other public service organization to tap and develop the innate potential needed to outperform in these fast changing and complex times. With its substantial experience and exposure in the areas of strategy, marketing, corporate finance, advisory services, etc, and peopled by an experienced in-house research team.



Headquartered in Mumbai, the financial hub of India, and having second branch in Akola, has the resources, facilities and superlative intellectual talent to cater to the needs of the domestic and international. In J. Maitra & Associates and analyst team, there are chartered accountants, MBA‘s, engineers, economists and editors, the mission of firm is to provide consulting services of the highest quality at the most competitive prices.

Name of the Company : ENTITY FASTENERS PRIVATE LIMITED

Date of Incorporation : 27th July 2006

CIN : U28991WB2006PTC110811

Network Branch office in Delhi, Tirupur, Surat etc.


Registered Office

Kolkata -700 029 (West Bengal )

Factory Address

Ruiya , Kolkata – 700 119

Overseas Branch Office

ENTITY FASTNERS PVT LTDYiwu City – 322 000, Zhejiang Province, China


Nature of Business : Manufacturers , Suppliers and Exporters of All Kind of Plastic, Metal & Nylon Zippers and Sliders & Pullers etc.

Management Team

Sr.No.

NAME Designation Residential Address

1 Mr. Sudip Mukherjee Managing Director4/1, Kanjungo Park, P.O. Ganguli Bagan, PS Jadavpur, Kolkata- 700 084

2 Mrs. Mousami Mukherjee Director 123, Barada Avenue, Kolkata – 700 084

3 Mr. Rajkumar Damani Director 22/1, Alipore Road, Kolkata – 700 027

4 Mr. Rahul Damani Director 5A, Abhisarika, 118 Souhern Avenue, Kolkata- 700 029

Core Operational Team

Mr.Rahul Damani MBA-Finance Director- FinanceMr. Srikant Chatterjee MBA-Human

Resource Vice President-HR

Mr. Amitava Gupta B.Sc.(Chem), D.H.R.A

General manager-Productions

Mr.Debdatta Chatterjee D.I.S.M, M.C.A Manager-SystemsMr.Bishnupada

MukherjeeB. Com(Hons.) Manager-Accounts

Mr.Samar Das B.Com Manager-AccountsMr.Amit Banerjee B.Com Manager-Logistics

Mr.Rajeev Ranjan Nirala B.Sc.(Silk Tech.) Manager-ProductionsMr.Ajay Srivastava B.A, I.T.I Manager-Quality Control

Mr.Chayan Bhattacharjee P.G.P.R.M -HR Manager- HR & Administration



Shareholding Pattern (as on 31 st January 2013 certified by Chartered Accountants Mr. Rajesh K Gupta)

Sr.No.

Name of Shareholders Number of Shares

Value of Shares (Nominal Value Rs.10 Each)

Percentage of Shareholding

1 Mr. Sudip Mukherjee 1013500 1,01,35,000 /- 43.74 %2 Mrs. Mousami Mukherjee 326500 32,65,000 /- 14.09 %3 Other Shareholder 977100 97,71,000 /- 42.17 %

TOTAL 2317100 2,31,71,000 /- 100 %

GROUP COMPANIES

JAP STRECH PRIVATE LIMITED

Jap Stretch Private Limited, offer a line of premier grade machines & equipments for the garment & textile sector. The company is a trustworthy importer & supplier of high quality needle looms & zipper making machines. Our Comprehensive line of products includes Automatic High Speed Needle Looms, Jacquard Needle Looms, Zipper Plants & Machineries, High Speed Sewing Machines, Embroidery Yarns, Garment Accessories & many more items.

The Company sources its products from authentic & reliable vendors of the market. They are working with the sole motto of providing the world's best range of products at competitive prices to our patrons. High on every aspect of efficiency & performance, our zipper making machines & looms are capable of rendering years of hassle free services at a minimum possible operating & maintenance cost. Our import markets are centered in China & Taiwan.

JAP Strech Private Ltd is now in the way keeping its foot in the manufacturing field by setting up a new project in the name & style of ENTITY FASTNERS PRIVATE LIMITED which is 20 KM away from Kolkata. The project is having an area of 17,000 sq feet with solid / ethnic building structure .The entire Plant / Machineries will be indented from our Parent company at China. The product mix will be Nylon Zipper Plastic & Metal Zippers, which are mainly consumed in the Textile Apparel segments & in the Leathers market. The new company is aiming to achieve a quality product with zero defects & evolving a system of quality circle will export 50% of the production to the European, Asian, Middle East Countries.



The company has undertaken a manufacturing process at Tirupur, Asia's biggest hosiery hub where elastics of different counts / quality are being manufactured.

ENTITY Company Products:-

1. FINISHED ZIPPERS

The provide to clients a huge assortment of Sliders and Zippers in various types. These come in different colors and sizes to suit the various customer demands. Our Zippers are highly durable in nature with sturdy lock mechanism. Zippers are used in bags, clothes and various other products and are offered at cost effective prices.

i) Brass ZippersThe Company bring forth for clients an exclusive range of Metal Zippers ,which is designed using superior quality brass and aluminum. Owing to the high strength and durability these zippers are extensively used in jeans, trousers and fancy bags segment. Our range is offered in a variety of styles & finishes and can be customized to fit the client’s varied requirements.



ii) Nylon ZippersDesigned using superior quality raw material, our range of Nylon Zippers (CFC) is used in bags, luggage and apparel segments. Our range zipper is offered in various sizes, types and standards like CFC (Coil Zippers). Moreover, the company also offer these types of all zippers in vibrant colour to suit the apt requirements of the garment industries.

iii) Plastic Zippers

The Company also offering a wide Range of Plastic Zippers , which finds extensive application in apparels, jackets and raincoat segments. Highly demanded in fashion industry, these types of zippers are appreciated for light in weight and strong designing. Further, our range is available in a wide variety of colors & sizes and can be custom designed as per the client’s requirements.

2. SLIDERS & PULLERSIn order to give an extra appeal to the fashion, we offering an extensive range of Sliders & Pullers. These sliders are designed using high-quality raw material and are available in various sizes, designs and shapes. Owing to the varied exclusive features such as aesthetic designs, perfect finish and polish.



Details of the Present Exposure with the Banks

Secured Loan with Dena Bank –Khardaha Branch

a) Term Loan :- Rs. 552.00 Lakhsb) Cash Credit Facility: Rs. 700.00 Lakhs

Secured Loan with UBI – Gariahat Branch in the name of JAP Stretch

a) Cash Credit Facility :- Rs. 290.00 Lakhsb) LC Limit :- Rs. 100.00 Lakhs

NEW PROPOSAL OF THE ENTITY :

Manufacturing of POLYESTER MONOFILAMENT (PMF) is the new expansion project that the existing entity is coming up with. PMF is the main component in the CFC Zipper quality and about 50% of the total weight of the polyester zipper. The zipper pricing is mainly influenced by the price of this raw material.

There are a few manufacturers of PMF in India like Filatex India, Kash Industries, Namo fibres, so there is always shortage of supply which affects the regular production and the quality of the supplies also is average . Imports of PMF also is not east with various rules and price fluctuations.



The transit costs also do not warrant that the entity purchases from outside suppliers. Most of the suppliers are located in the northern part of India, hence the transport charges are huge .

If the present entity gets into manufacturing its own PMF then the above hardships can be avoided totally. PMF has the following advantages :

1. High tensile strength2. High heat resisting property3. High electric resisting property 4. Low moisture absorption property5. USAGE : Zipper, wire for electric resistance , canvas textures, brush , safety belt, conveyer belt

, etc.

STAGES OF MANUFACTURING :

WARPINGIn this you can prepare beams for the looms to produce tapes for raw material s involved in Polyester roto yarn.

WEAVINGIn this process zipper tapes can be produced by means of high speed needle looms by using two sets of yarns

MONOFILAMENT MANUFACTURING Monofilament is the most essential raw material for making polyester zips , which can be produced in this machine . Raw material involved is Polyester chips .

COIL FORMING MACHINEThe zipper chain , the portion of the zipper containing of teeth which inter lock or separate to fasten or unfasten the zipper is made by a single machine which spins polyester fiber monofilaments to ultimately form two separate chains of teeth. They are automatically zipped together and expelled as a single by means of coil forming machines that can be made of different sizes and pitches so as to meet the requirement .

STITCHING SECTION Executed By : J. MAITRA & ASSOCIATES , Chartered Accountants , Mumbai & Akola (Maharashtra)


The zipper coils from coils from coiling section and laces from the weaving section are stitched together to prepare the long chain of zippers. The machines used for this is the high speed sewing machines .

DYEING The long chain zippers from the stitching section are dyes into different colours as per the requirement.

HEAT SETTING (FINISHING)Zipper tapes are fed into the calendaring machines (heat setting machines) to give stiffness to the tapes. So the final product will finish with the long chain of zippers

MEASURING AND WINDINGIn this the long chains of finished zippers are measured and wound on to rolls of desired lengths. Machines involved measuring and winding machine.

INSPECTION , PACKING AND DESPATCHIn this, the rolls of finished zippers are inspected , packed into plastic packs and then weighed and finally dispatched to the consumers.

COST OF PROJECT of New Plant for Manufacturing of POLYSTER MONOFILMANT

Detail of New Plant Capital Expenditure

A ) COST OF PROJECT

MONOFILAMENT TOTAL MARGINPROMOTERS CONTRIBUTION

LOANS FINANCE

Land and Land Development 95.00

95.00 100% 95.0

0 -

Civil & Interior Works 330.00

330.00 20% 66.0

0 264.00

Plant & Machinery 485. 485. 20% 97.0 388.



00 00 0 00

Other Assets 115.00

115.00 20% 23.0

0 92.00

Furniture & Fixtures 55.00

55.00 20% 11.0

0 44.00

Computer System 35.00

35.00 20% 7.0

0 28.00

Pre-Operative Expenses 20.00

20.00 100% 20.0

0 -

Working Capital 300.00

300.00

- - 300.

00

TOTAL 1,435.00

1,435.00

319.00

1,116.00

Cost of Project 1,435.00

B ) MEANS OF FINANCE

1 Promoters Contribution 319.00

2 U/s Loan Finance 1,116.00

Total Means of finance 1,435.00

FINANCE REQUIRED FOR :

1. Takeover of all existing bank facilities = Rs. 17.50 Crores2. Proposed New Unit Under Construction = Rs. 11.00 Crores

TOTAL FINANCE REQUIRED = RS. 28.50 Crores



The repayment of proposed finance would look like as follows :

Assuming :

a. The annual rate of interest would be 7%b. The tenure of the finance would be 7 yearsc. The repayment would be monthlyd. The annual interest rates would be reducing.e. The company pays back the loan amount considering EMI structure.f. This base has been taken into consideration so that the potential of the entity

repaying the loan is known.

LOAN REPAYMENT

YKZ ZIP FASTENERS PVT. LTD.

Loan Amount: 285,000,000 Annual Interest Rate: 7.00% Length of Loan (in Years): 7 Number of Payments Per Year: 12 Total Number of Periods: 84 Payment Per Period: 4,301,413.79 Total Interest Paid: 76,318,758.77 Total Payments: 361,318,758.77

Period Payment Principal Interest Total Interest

PaidNew Payoff

Amount 1 4,301,413.79 2,638,913.79 1,662,500.00 1,662,500.00 282,361,086.21 2 4,301,413.79 2,654,307.46 1,647,106.34 3,309,606.34 279,706,778.75 3 4,301,413.79 2,669,790.92 1,631,622.88 4,941,229.21 277,036,987.83 4 4,301,413.79 2,685,364.70 1,616,049.10 6,557,278.31 274,351,623.13 5 4,301,413.79 2,701,029.33 1,600,384.47 8,157,662.78 271,650,593.80 6 4,301,413.79 2,716,785.33 1,584,628.46 9,742,291.24 268,933,808.47 7 4,301,413.79 2,732,633.25 1,568,780.55 11,311,071.79 266,201,175.22 8 4,301,413.79 2,748,573.61 1,552,840.19 12,863,911.98 263,452,601.62 9 4,301,413.79 2,764,606.95 1,536,806.84 14,400,718.82 260,687,994.67 10 4,301,413.79 2,780,733.83 1,520,679.97 15,921,398.79 257,907,260.84 11 4,301,413.79 2,796,954.77 1,504,459.02 17,425,857.81 255,110,306.07



12 4,301,413.79 2,813,270.34 1,488,143.45 18,914,001.26 252,297,035.72 13 4,301,413.79 2,829,681.09 1,471,732.71 20,385,733.97 249,467,354.64 14 4,301,413.79 2,846,187.56 1,455,226.24 21,840,960.21 246,621,167.08 15 4,301,413.79 2,862,790.32 1,438,623.47 23,279,583.68 243,758,376.76 16 4,301,413.79 2,879,489.93 1,421,923.86 24,701,507.55 240,878,886.83 17 4,301,413.79 2,896,286.96 1,405,126.84 26,106,634.39 237,982,599.87 18 4,301,413.79 2,913,181.96 1,388,231.83 27,494,866.22 235,069,417.91 19 4,301,413.79 2,930,175.52 1,371,238.27 28,866,104.49 232,139,242.39 20 4,301,413.79 2,947,268.21 1,354,145.58 30,220,250.07 229,191,974.17 21 4,301,413.79 2,964,460.61 1,336,953.18 31,557,203.25 226,227,513.56 22 4,301,413.79 2,981,753.30 1,319,660.50 32,876,863.75 223,245,760.26 23 4,301,413.79 2,999,146.86 1,302,266.93 34,179,130.68 220,246,613.40 24 4,301,413.79 3,016,641.88 1,284,771.91 35,463,902.60 217,229,971.52 25 4,301,413.79 3,034,238.96 1,267,174.83 36,731,077.43 214,195,732.56 26 4,301,413.79 3,051,938.69 1,249,475.11 37,980,552.54 211,143,793.87 27 4,301,413.79 3,069,741.66 1,231,672.13 39,212,224.67 208,074,052.20 28 4,301,413.79 3,087,648.49 1,213,765.30 40,425,989.97 204,986,403.71 29 4,301,413.79 3,105,659.77 1,195,754.02 41,621,743.99 201,880,743.94 30 4,301,413.79 3,123,776.12 1,177,637.67 42,799,381.67 198,756,967.82 31 4,301,413.79 3,141,998.15 1,159,415.65 43,958,797.31 195,614,969.67 32 4,301,413.79 3,160,326.47 1,141,087.32 45,099,884.63 192,454,643.20 33 4,301,413.79 3,178,761.71 1,122,652.09 46,222,536.72 189,275,881.49 34 4,301,413.79 3,197,304.49 1,104,109.31 47,326,646.03 186,078,577.00 35 4,301,413.79 3,215,955.43 1,085,458.37 48,412,104.39 182,862,621.57 36 4,301,413.79 3,234,715.17 1,066,698.63 49,478,803.02 179,627,906.40 37 4,301,413.79 3,253,584.34 1,047,829.45 50,526,632.47 176,374,322.06 38 4,301,413.79 3,272,563.58 1,028,850.21 51,555,482.69 173,101,758.48 39 4,301,413.79 3,291,653.54 1,009,760.26 52,565,242.94 169,810,104.94 40 4,301,413.79 3,310,854.85 990,558.95 53,555,801.89 166,499,250.09 41 4,301,413.79 3,330,168.17 971,245.63 54,527,047.51 163,169,081.92 42 4,301,413.79 3,349,594.15 951,819.64 55,478,867.16 159,819,487.77 43 4,301,413.79 3,369,133.45 932,280.35 56,411,147.50 156,450,354.32 44 4,301,413.79 3,388,786.73 912,627.07 57,323,774.57 153,061,567.60 45 4,301,413.79 3,408,554.65 892,859.14 58,216,633.72 149,653,012.94 46 4,301,413.79 3,428,437.89 872,975.91 59,089,609.62 146,224,575.06 47 4,301,413.79 3,448,437.11 852,976.69 59,942,586.31 142,776,137.95 48 4,301,413.79 3,468,552.99 832,860.80 60,775,447.12 139,307,584.96 49 4,301,413.79 3,488,786.22 812,627.58 61,588,074.70 135,818,798.75 50 4,301,413.79 3,509,137.47 792,276.33 62,380,351.02 132,309,661.28 51 4,301,413.79 3,529,607.44 771,806.36 63,152,157.38 128,780,053.84 52 4,301,413.79 3,550,196.81 751,216.98 63,903,374.36 125,229,857.02 53 4,301,413.79 3,570,906.30 730,507.50 64,633,881.86 121,658,950.73 54 4,301,413.79 3,591,736.58 709,677.21 65,343,559.07 118,067,214.15 55 4,301,413.79 3,612,688.38 688,725.42 66,032,284.49 114,454,525.77 56 4,301,413.79 3,633,762.39 667,651.40 66,699,935.89 110,820,763.37 57 4,301,413.79 3,654,959.34 646,454.45 67,346,390.34 107,165,804.03 58 4,301,413.79 3,676,279.94 625,133.86 67,971,524.20 103,489,524.09 59 4,301,413.79 3,697,724.90 603,688.89 68,575,213.09 99,791,799.19 60 4,301,413.79 3,719,294.97 582,118.83 69,157,331.92 96,072,504.22



61 4,301,413.79 3,740,990.85 560,422.94 69,717,754.86 92,331,513.37 62 4,301,413.79 3,762,813.30 538,600.49 70,256,355.35 88,568,700.07 63 4,301,413.79 3,784,763.04 516,650.75 70,773,006.10 84,783,937.02 64 4,301,413.79 3,806,840.83 494,572.97 71,267,579.07 80,977,096.19 65 4,301,413.79 3,829,047.40 472,366.39 71,739,945.46 77,148,048.79 66 4,301,413.79 3,851,383.51 450,030.28 72,189,975.75 73,296,665.28 67 4,301,413.79 3,873,849.91 427,563.88 72,617,539.63 69,422,815.37 68 4,301,413.79 3,896,447.37 404,966.42 73,022,506.05 65,526,368.00 69 4,301,413.79 3,919,176.65 382,237.15 73,404,743.20 61,607,191.35 70 4,301,413.79 3,942,038.51 359,375.28 73,764,118.48 57,665,152.84 71 4,301,413.79 3,965,033.74 336,380.06 74,100,498.54 53,700,119.10 72 4,301,413.79 3,988,163.10 313,250.69 74,413,749.24 49,711,956.00 73 4,301,413.79 4,011,427.38 289,986.41 74,703,735.65 45,700,528.62 74 4,301,413.79 4,034,827.38 266,586.42 74,970,322.06 41,665,701.24 75 4,301,413.79 4,058,363.87 243,049.92 75,213,371.99 37,607,337.37 76 4,301,413.79 4,082,037.66 219,376.13 75,432,748.12 33,525,299.71 77 4,301,413.79 4,105,849.55 195,564.25 75,628,312.37 29,419,450.16 78 4,301,413.79 4,129,800.34 171,613.46 75,799,925.83 25,289,649.82 79 4,301,413.79 4,153,890.84 147,522.96 75,947,448.79 21,135,758.99 80 4,301,413.79 4,178,121.87 123,291.93 76,070,740.71 16,957,637.12 81 4,301,413.79 4,202,494.25 98,919.55 76,169,660.26 12,755,142.87 82 4,301,413.79 4,227,008.79 74,405.00 76,244,065.26 8,528,134.08 83 4,301,413.79 4,251,666.35 49,747.45 76,293,812.71 4,276,467.73 84 4,301,413.79 4,276,467.73 24,946.06 76,318,758.77 0.00

KEY PAST FINANCIAL INDICATORS

YKZ ZIP FASTENERS PVT. LTD.

AMOUNT IN RS. CRORESSr. Particulars Actuals for

2012Provisional for 2013

Projected for 2014

1 Turnover 20.16 25.00 45.002 Profit Before Depreciation 1.76 2.86 5.003 Share Capital 2.29 2.29 2.294 Reserves And Surplus 3.83 5.15 8.005 Long Term Borrowings 1.78 5.14 28.006 Short Term Borrowings (Banks) 6.35 7.14 NIL7 Fixed Assets 8.50 12.25 25.008 Working Capital 1.50 3.16 7.009 Stock And Receivables 10.00 12.00 15.00

JAP STRETCH PRIVATE LIMITED



Sr. Particulars Actuals for 2012

Provisional for 2013

Projected for 2014

1 Turnover 17.31 22.00 30.002 Profit Before Depreciation 37.00 37.50 75.003 Share Capital 0.89 0.89 0.894 Reserves And Surplus 1.94 2.08 4.005 Long Term Borrowings 0.06 0.02 0.006 Short Term Borrowings (Banks) 2.06 2.11 4.007 Fixed Assets 1.07 1.00 2.508 Working Capital 3.00 3.50 5.009 Stock And Receivables 5.67 6.01 7.50

NETWORTH OF KEY PROMOTERS :

AMOUNT IN RS. LAKHS

Sr. Description MR. SUDIP MUKHERJEE

MRS. MOUSUMI MUKHERJEE

1 Assets of Individual including moveable assets , immoveable assets and shares 525.32 150.27

2 Liabilities of individual 30.00 13.003 NETWORTH OF INDIVIDUAL 495.32 137.27

ASSETS AVAILABLE WITH COMPANY ( Comparison Chart )

Property Mortgaged at

United Bank Of India

Property Mortgaged at Dena Bank Collateral Security

Available to Mortgage

FACILITY - I FACILITY - II FACILITY - III

FACILITY

CASH CREDIT :- 290.00 lacs LETTER OF

CREDIT :- 100.00 Lacs

CASH CREDIT :- Rs. 7.00 Crore

Term Loan I (Review at the

existing limit Of Rs. 1.67 Crores

Term Loans II (Fresh Sanction ) Rs. 6.00 Crores

PRIMARY SECURITY

Hypothecation 1st Charge on Stock & Book debts as on 31.01.2011 as per

1) Hypothecation of Stocks of raw materials, semi finished goods,

Equitable Mortgage of Land & Building

to be constructed at the new site Dag no.

Machinery in Existing Factory Value of Rs.

12,00,00,000/-



Stock Statement Submitted by the

Company

finished goods and stock in transit, stock in trade,

packing materials along with all the current assets of

present and future additions if any

547 & 553 in RS Khatian no. 136 at

Mouza admeasuring area of 32 Kattah in the name of ENTITY

Fasteners Pvt Ltd

2) All books debts & Receivables

Equitable Mortgage of

Factory Land & Building situated at Mouza Ruiya , J.L.No. 20 Touzi No. 172, R,S &

LR dag no. - 551 under Khatian

no. 493, LR Khatian No. 665,

PS Khardaha Borth 24 PGS in

the name of ENTITY

Fasteners Pvt Ltd.

Hypothecation of additional

machineries and all other fixed assets

proposed to be procured with the

proposed term loan at the factory site

ADDITIONAL

Extension of equitable mortgage of land and building in the name of N.K.

Mukherjee, Mr. Pradipta Mukherjee

% Mr. Sailen Mukherjee of Burning Ghat, Bhatpara, 24

Parganas ( North) Value of Rs. 74.62

Lacs.

-

Equitable Mortgage of Residential Flat No. 169, NSC Bose

road Sherwood Estate Block C Flat

no. 4U admeasuring Super built up area of 1330 Sq Ft in the name of Mr Sudip Mukherjee & Mrs.

Mousami Mukherjee value of Rs. 46.00 lack as per

valuation Report Dated 27/09/2010

Fully Equipped Flat at Sherewood Estates

Narendrapur 24 PGS(S) in the name of Mr. Sudip Mukherjee & Mousami

Mukherjee Area of 1500 Sq Ft. value of Rs.

75,00,000 /-

Extension of equitable mortgage of land and building in the name of Mr. Sudip Mukherjee,

Mrs.Mousami Mukherjee at 126,

Baroda Avenue, Garia Kolkata- 700

084 Value Of Rs. 22 .74 Lacs

-

Personal Guarantee

of Mr. Sudip Mekherjee

1 Fully Equipped Flat at at 126 Baroda Avenue,

Baishnabghata , Kolkata - 700 084 in the name of

the Mr. Sudip Mukherjee & Mrs. Mousami

Mukherjee are of 1000 Sq Ft. Value of Rs.

40,00,000 /-



Equitable mortgage of flat in the name of M/s JAP Strech

Private Ltd. at 56/4, Jorabagan Road,

P.O. Naktala Kolkata- 700 047,

with car parking no. 4 Value Of Rs.

11.07 Lacs

-

1 Fully Equipped Flat at Pranabananda

Apartment, Ground Floor, 56/4 Jorabagan

Road, Naktala Kolkata - 700 041 in the name of JAP Strech Pvt Ltd Area Of 800 Sq Ft., Value of

Rs. 20,00,000/-

Equitable mortgage of flat in the name

of Mr. Sudip Mukherjee at Adya

Maa bhaban Flat No. 3-D 3rd

floor,37/14 Central Road, Titagarh Kolkata- 700 122,Value Of Rs.8.49 Lacs

-

1 Fully Equipped Flat Pranabananda

Apartment, 3rd Floor, 56/4 Jorabagan Road Naktala Kolkata - 700

041 in the name of JAP Strech Pvt Ltd Area of 500 Sq Ft., Value of Rs.

10,00,000 /-

Equitable Mortgage of 2 stories building at Ruiza, Azamtolla,

P.O Patulia , Khardaha Dst 24

PGS (South), in the name of JAP Strech

Private Limited Area of 1560 Sq. Ft (Value as declared

by company )

-

2 Storied Building Ruiza Azamtolla P.O Patulia P.S

Khardaha Dst. 24 PGS ( North) in the name of JAP STRETCH PVT LTD

are of 1850 Sq Feet Value of Rs,30,00,000 /-

Equitable mortgage of fully furnished

flat at jolly residency, Building no. "L" Flat No. L

1101, Veer Narmada South,

Gujarat University Road, VESU Surat

City road Admeasuring 1805 Sq ft in the name of JAP Strech Pvt Ltd.(Value as declared

by company )

-

Land At Bhatpara Naihati in the name of JAP

Strech Pvt Ltd. Value of Rs. 2,25,00,000/-

Assignments of LIP for 7.29 Lacs in the name of Mr. Sudip

Mekherjee &

-

NEW ANNEXED LAND - YKZ at Ruiya Patulia in

the name of YKZ Fasteners Pvt Ltd value



Mousami Mukherjee of Rs. 1,75,00,000 /-

All the Plant & Machinery farming

part & partial of fixed assets both

present & future of the company

valued at Rs. 78.79 Lacs

-

Building on New Land in the name of YKZ

Fasteners Pvt Ltd a value of Rs. 40,00,000 /-

RD of Rs.50000/- PM to be opened in

the name of the company for a

period of five years

-

1 Fully Equipped Flat at Barrackpore 24 Parganas (N), Kol-122 in the name of Mr. Sudip Mekherjee Area of 472 Sq Ft.,Value

of Rs. 10,00,000 /-

Personal Guarantee of Directors Mrs.Sudip

Mukherjee & Mrs. Mousami

Mukherjee

-

Plant & Machinery at new factory in the name of YKZ Fasteners Pvt Ltd value of Rs. 40,00,000 /-

Corporate Guarantee of TEJ UDYOG PRIVATE

LIMITED backed by Board Resolution

-

FRESH ORDERS IN HAND : Apart from existing turnover

Export Orders : INR 25 Crores

Domestic Order : INR 10 Crores

COMPETITORS IN KOLKATA

1) KCCL Zipall India Private Limited

The Company Incorporated in the year 2005, one of the major manufacturers of Zips, Zip Sliders, Chain, buckles and zip pullers.



The KCCL leader in the zippers industry has achieved high standards & Set up a Most Modern manufacturing plant, equipped with latest imported Automatic Japanese and Taiwanese machines.

The Company have Joint Ventures with some companies in China, Hong Kong and others parts of the world.

2) RANSUN ZIPPERS

The Company incorporated in the year, 1994 The Company is a Prominent Manufacturer, Supplier, Exporter of Zip Pullers, Zippers and also Magnetic Buttons, Wallets frames etc. it is a prime Exporter and supplier in garment industry and home furnishing industry The Company Covered Market in Taiwan, Japan, Hong Kong, China

3) YKK INDIA PRIVATE LIMITED

YKK India Private Limited was incorporated in 1995 in India by the YKK Corporation of Japan which Registered office at Gurgaon, Haryana to for the manufacture of Metallic and non-Metallic Zippers

The Company Produces high quality range of popular zippers ,Metal zippers. Subsequently the range has been expanded with Invisible Coil zippers. Metal zippers are produced in Aluminium, Golden Brass, Antique Brass and Antique Silver finishes.

The Company Manufacturing and supplying their products in Kolkata, Mumbai, Delhi etc.

COMPETITORS IN INDIA

1. ZIP INDUSTRIES LIMITED ( ZEE ZEEPERS )

ZIP Industries Limited, being the pioneer in India, have maintained the reputation of quality leadership through continuous improvement and innovation in Zipper Manufacturing. Being the leader in this business, we understand that the cost of zipper is a small factor in the total cost of article into which it is sewn and used and hence we never sacrifice quality to cut cost.

The produce all varieties of zippers namely Metal, Polyester Circular Coil, Polyester Ladder Coil, Invisible and Plastic Moulded.



The companies have Networked in Mumbai, Delhi , Kochi etc. and in the Overseas Colombo & Dhaka

2. SANGHI ZIP FASTNERS PRIVATE LIMITED

The SZFPL is established in 1981 by Sanghi Group which is leading Industrial group in South India, Andhra Pradesh. Sanghi Zip Fasteners was the first unit to successfully manufacture every tape of non-metallic zip fasteners in India.

The product range includes zip fasteners for various uses – in garments, luggage, sport equipment, packaging, etc. Sanghi’s huge range of zip fasteners come in varied, attractive colors, their versatility adding color to every surface material they zip. Not just for aesthetic appeal, Sanghi Zip Fasteners are also famed for their durability and strong resistance to daily wear and tear.The Company offering to the high product quality and competitive pricing, this company has not only carved a handsome share in the domestic market but has also made impressive headway in exports.

3. TEX CORP LIMITED

The TEX Corp Limited is one of the largest and leading manufacturer and exporter of Zippers / Sliders in India in the state of Haryana.

The Zippers and slide fasteners are manufactured in a stateof the of the art facility, with through quality checks that ensure flawless product.

The TEX Corp is an ISO 9001:2008 certified company and Tex Zippers and slide fastners surpass British quality standards by as much as 2:1 in some testThe TEX Corp is also the only Indian manufacturer having production facilities in Turkey and Bangladesh



CRITICAL FACTORS :

1. The exposure in United Bank Of India is also covered by a Corporate Guarantee Of TEJ UDYOG PRIVATE LIMITED. We have to see whether this is a group concern, if yes then the preliminary due diligence has to be conducted as to the credit facilities enjoyed by this entity. Also we have to see in what manner is YKZ Zip Fasteners Private Limited linked to Tej Udyog Private Limited.

2. The company is holding raw materials of more than 3 months at a time . This is risky as the entity is using the cash credit facility from banks which is interest cost bearing funds.

3. The overall turnover of the company projected for 2014 is approximately Rs. 75 Crores, which means that the proposed lending is 37% of the turnover. Going as per the regular repayment schedule the company should be able to just pay off the lenders adequately, as the proposed interest rates are quite low . This should not ,however, hamper the other expenditures of the company.

4. There are two entities in the same group, having same directors and same operational address, so there is no additional location advantage of maintaining the loan in two companies.

5. Both the company’s exposures have to be liquidated at the same time so that the entire assets are mortgaged with the proposed lenders. The Directors are common in both companies.

6. The main directors of the entity have less than 51% holding due to many shareholders inducted into the company. Due to this the holding percentage is low in books. The entity has applied for enhancement of capital and then due to further issue , the holding percentage would rise.



7. There are many properties mortgaged with both the banks. We have provided a comparative chart above for perusal of proposed investors. The sorting has to be done as to which assets would be mortgaged with the proposed investors.

8. The shareholding of the company is at cross purposes and needs dilution in one way or the other .

9. The company’s WB.VAT (West Bengal Value Added Tax) [Sales Tax] has not been checked in detail as the reports are not the same that has been filed with the Income Tax Department. This practice is risky as it may lead to litigations in future. This practice should totally be stopped.

10. Central Excise records were not made available for checking hence we have not commented on the same for report purposes.

OBSERVATIONS AND RECOMMENDATIONS :

1. The entity can be funded as it is a fully operational entity running at 100% capacity in 3 shifts. Turnover is not a problem at all and order position is also good. Amount of finance is totally the discretion of the proposed lenders as we cannot comment on the same in absence of a full fledged viability report.

2. The proposed lenders have to take mortgage of all the properties lying with the company’s bankers. A undertaking also has to be taken that in case a default arises in repayment of the finance amount , the promoters would hand over the entire assets to the lenders.

3. The entity would be advanced a term loan by the proposed lenders, hence the issue of working capital would arise. From where will the promoters arrange cash credit facilities is a major issue. Then LC / BG limits also are required as exports are existing in the entity. This issue has to be addressed by the lenders and the promoters. The working capital finance would form the back bone of the entity for day to day operations.

4. The shares also are being kept as mortgage by the proposed lenders. For this purpose a Extraordinary General Meeting has to be called for and a resolution passed regarding the proposed finance (in whatever fashion) . The consent for pledging the shares has to be taken in the board meeting vetted by the Extraordinary General Meeting .



5. The consent and undertaking of all the directors has to be taken towards the accepting liability for the proposed finance amount.

6. One member of the proposed lenders’ group be inducted into the board as independent director and this director shall not undertake any financial liability. For this a MOU be signed between the member and promoters.

7. Excess shareholders be hived off gradually from books , so that the shareholding of the key promoters increases gradually to a majority stakeholding , capable of taking major decisions.

8. A quarterly review system be installed to monitor the progress of the company .

9. TEJ UDYOG PRIVATE LIMITED, has provided corporate guarantee for the company in United Bank of India exposure. Verify the directors in this company and likewise obtain a corporate guarantee from them if at all required.

10. A corporate guarantee of YKZ and JAP be obtained by the proposed lenders for the entire amount of finance.

11. The terms of repayment of the finance amount be inked , between the proposed lenders and promoters.

12. All Directors be signatory to the finance agreement.

13. There is substantial unstructured turnover in the group, this turnover also be recorded for future growth purposes.

14. The entity should reduce stock holding to one month’s stock as it is currently blocking substantial working capital funds.

15. The income tax reports and WB.VAT reports should be on the same page. These reports should not be different at all.

16. Fire fighting facilities should be increased as the products are combustible totally and labourers face a risk in routine operations and the unit is capital intensive unit.

17. The floor space of the building is congested and space should be created for free movement of man and materials.

18. The proposed lenders should obtain proforma invoices of new machineries which are being procured for unit expansion.



19. A internal excise and VAT audit be conducted to see the tax set off available so that fund flow management is inculcated in day to day business operations.

20. The entire lending would be term lending , so working capital issues needs to be addressed.

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