SBI Final Working Capital Assessment Note 2013-14

ANNEXURE - 1

FORMAT: Section A

INDEX

CIRCLE/SBU: MCRO, MUMBAI BRANCH: Backbay Reclamation

COMPANY: ALOK INDUSTRIES LIMITED (ALOK)SECTION -A1

Present Proposal:

Circle/SBU: MCRO, Mumbai Branch: Backbay Reclamation Branch, Mumbai

a) Borrowers Profile:

Name: ALOK INDUSTRIES LIMITED (ALOK)

Segment:

(C&I/MSME/AGL)C& IConstitution (Prop./Partnership/Limited Partnership/Corp. Entity Pvt Ltd/ Ltd Listed/ Unlisted): Public Limited Company (Listed on BSE and NSE)

Location:

(R/SU/U/M/FO)R

ActivityManufacturing [Spinning, weaving, knitting, processing and export of cotton yarn, PET, POY, FDY, roto texturised yarn, cotton apparel fabrics, viscose/polyester blended woven fabrics, knitted fabrics and garments (Composite Textile Mill)]

New unit/Existing unitExistingExisting Connection Yes

If yesBanking with us since1987

Date of last Renewal/ Review 08.11.2012

If Reviewed valid upto28.02.2014*

IRAC Status of1.Advances :

2. Investments :As on 28.02.2014Standard

N.A

b) Credit Limits (Existing and Proposed) : Existing Proposed Change

LimitsSBI%Total ConsSBI%Total ConsSBITotal Cons

CC/WCDL/BD756.2525.003025.001000.0025.004000.00+243.75+975.00

Adhoc CC (a)100.00100.00100.00-------100.00-100.00

Bill discounting(756.25)25.00(3025.00)(1000.00)25.00(4000.00)+(243.75)+(975.00)

EPC/PCFC(437.50)25.00(1750.00)(437.50)25.00(1750.00)----

EBD/DN/PSC(300.00)25.00(1200.00)(300.00)25.00(1200.00)----

Stand by Limit 50.0025.00200.0056.2525.00225.00+6.25+25.00

Short Term CC------250.00100.00(250.00)+250.00---

e-VFS#------(250.00)100.00(250.00)+(250.00)+(250.00)

Total FBWC906.2527.263325.001306.2530.914225.00+400.00+900.00

TL I (161.50)37.5613.89270.5137.5613.89270.51----

TL II (165.00)99.1816.68594.4399.1816.68594.43----

TL III (200.00)161.2521.68743.92161.2521.68743.92----

TL IV (30.00)7.480.651156.377.480.651156.37----

TL V (20.00)6.831.04658.176.831.04658.17----

TL VI----1040.72----1040.72----

TL VII----1788.89----1788.89----

CL I (500.00)405.1644.26915.31405.1644.26915.31----

CL II (250.00)226.0032.46696.17226.0032.46696.17----

CL III (600.00)*600.0040.001500.00600.0040.001500.00----

ECB 84.7516.17524.1984.7516.17524.19----

FCL ----592.47----592.47----

STL----552.30----552.30----

USL----182.14----182.14----

Total TLs (b)1628.2114.5211215.591628.2114.5211215.59----

Total FB2534.4617.4314540.592934.4619.0015440.59+400.00+900.00

NFBWC LC#425.0025.001700.00600.0025.002400.00+175.00+700.00

Short Term LC------175.00100.00(175.00)+175.00---

Adhoc LC (a)150.00100.00150.00----------150.00-150.00

NFBWC BG50.0025.00200.0056.2525.00225.00+6.25+25.00

Total NFBWC625.0030.492050.00831.2530.712625.00+206.25+575.00

Derivative/CEL43.05100.0043.0549.60100.0049.60+6.55+6.55

Total NFB 668.0531.922093.05880.8530.962674.60+212.80+581.55

Total Indebtedness 3202.5119.2516633.643815.3121.0618115.19+612.80+1481.55

Investments (f)----------------

Leasing (g)----------------

Total Exposure3202.5119.2516633.643815.3121.0618115.19+612.80+1481.55

Security for the Term liabilities as Annexure 08.(a) Adhoc WC Facilities sanctioned to be liquidated within 3 months, limits released on 09.12.2013.* The Loan was carved out as FCNR Loan leading to notional outstanding as on Balance Sheet date of Rs. 687.31 crore.

Credit Limits (Company and Group)

ExposureCompanyGroup

ExistingProposedExistingProposed

Fund Based2534.462934.462851.653851.65

Non Fund Based668.05880.85668.05880.85

Total Indebtedness3202.513815.313519.704132.50

Investments------------

Leasing------------

Total Exposure3202.513815.313519.704132.50

Banks Share (%) 19.2521.06------

Banks Share in TL (%)14.5214.52------

Details of Group Exposure with SBI:

Name of the Company

ExistingProposed

FBNFBTOTALFBNFBTOTAL

Alok Industries Ltd.2534.46668.053202.512934.56880.853815.31

Grabal Alok (UK ) Ltd*101.11---101.11101.11---101.11

Alok Infrastructure Ltd. @81.08---81.0881.08---81.08

Ashford Infotech Pvt. Ltd.75.00---75.0075.00---75.00

Ashford Construction Pvt. Ltd.^60.0060.0060.0060.00

TOTAL2851.65668.053519.703251.65880.854132.50

*Availed from SBI, London

@ Alok Realtors Pvt. Ltd. since merged with Alok Infrastructure Ltd.

^ Fresh sanctioned in FY 2013 disbursement of Rs. 41.00 crore.c) Banking Arrangement and Sharing Pattern (proposed):

Financial Arrangement: Consortium Lead Bank: State Bank of India

FB NFBTotal% Share

TLWC

SBI1628.211056.25*705.85*3390.3118.72

Associate Banks1519.191001.53622.273142.9917.35

SBI Group3147.402057.781328.126533.3036.07

Other Banks 8068.212167.221346.4811581.9163.93

Total11215.894225.002674.6018115.19100.00

Top five banks in terms of their Exposure

State Bank of India1628.211056.25705.853477.6018.72

Central Bank of India757.98163.76107.071028.815.68

AXIS Bank759.74126.7592.22978.715.40

State Bank of Hyderabad217.03329.75204.89751.664.15

State Bank of Patiala513.76143.6589.25746.664.12

United Bank of India622.8352.8132.81708.453.91

Total4499.551872.971232.097691.8941.98

* Not considering Short Term loan being proposed within Consortium LimitDetailed working capital sharing pattern is furnished in Annexure -9.SECTION-A2 Performance and financial indicators:(Rs. in Crores) Particulars31.03.11

(Aud)31.03.12

(Aud)31.03.13

(Est.)30.09.13

(Est.*)31.03.14

(Est.)2014Annualised31.03. 15

(Proj.)

12 mths12 mths12 mths18 mths6 mths12 mths12 mths

Net Sales (NS)6388.43

8900.87

(8991.71)12546.5419917.75

(18819.81)7471.7914943.5815327.04

Export Sales(2217.43)

(3029.55)

(3421.70)(3619.39)(5108.91)

(5429.1)(2188.25)(4376.50)(4532.93)

Raw Materials3224.04

5748.34

(4624.58)6347.5113908.87

(9521.27)4311.938623.869155.29

Power & Fuel392.09

656.05

(632.51)756.981130.22

(1135.47)379.46758.92728.67

Direct labour199.75

267.28

(224.18)291.01434.68

(436.52)175.53351.06363.50

SG & A costs 249.71

528.38

(506.84)694.811063.52

(1042.22)542.811085.621154.14

Interest654.37

1116.32

(841.60)1289.542211.56

(1934.31)855.091710.181347.17

Operating Profit669.82

729.32

(778.69)1086.701852.58

(1630.1)462.10924.201342.19

OPM%(OP/ NS )10.48

8.19

7.859.30

(7.85)6.186.188.76

Profit Before Tax (PBT)583.19640.50919.151399.90464.60929.201347.19

PBT/Net Sales (%)9.13

7.20

(8.72)7.907.03

(7.90)6.226.228.79

Profit After Tax (PAT)404.36380.53

(519.90)744.13920.16

(1116.2)308.22616.44893.72

Cash Accruals900.191065.231559.752598.31!(2339.6)739.741479.481784.53

PBDIT1756.352470.253274.194972.23

(4911.3)1799.393598.783633.35

PBDIT / Interest2.682.212.542.25

(2.54)2.102.102.70

PUC787.79

(787.79)826.28

(787.79)1377.131377.13(1377.28)1377.131377.131377.13

TNW3097.58

(3561.33)3655.51

(4232.75)4902.435088.13

(NA^)5348.175348.176193.71

Adjusted TNW*3046.67

(3501.27)3134.61

(3572.18)4402.433620.26

(NA^)3948.173948.175253.71

TOL/TNW

3.59

(3.00)3.94

(3.74)3.223.85

(3.22)3.583.582.73

TOL/Adj. TNW*3.65

(3.22)4.60

(3.85)3.595.41

(3.59)4.854.853.22

Current Ratio1.331.191.341.37

(1.34)1.441.441.60

Net Working Capital1274.53

(1751.35)2591.73

(2131.35)2572.723588.15

(NA^)4055.194055.194774.69

ROCE (%)12.3513.6715.8313.43~

(15.83)7.3514.7015.73

Total Assets (TA)14216.4218068.1120688.0624691.09

(NA^)24478.4924478.4923103.07

Total Current Assets5609.067870.9010185.6513274.15

(NA^)13274.6213274.6212793.19

Total Outside Liablities (TOL)11118.8414412.6015785.6319602.96

(NA^)19130.3216909.3615815.25

(Inventory / Net Sales + Receivables / Gross Sales) 212226250290(250)271271270

* Estimates rationalized for considering effect of extension of Balance Sheet to 18 months

^ Considered as Not Applicable Justification and calculations furnished as Annexure - 16Industry Exposure as on 30.06.2012 for Textiles (as per latest available data):

ParticularsAmount

FB48450.00

NFB8059.00

Total56509.00

Exposure as per prudential norms

To Industry Exposure (%)6.16

To Total Advances (%)0.29

3months results as at 31 December:

Particulars31.12.1231.12.2013 (Prov.)

Net Sales3520.813700.24

Exports(709.38)(986.17)

PAT239.8298.29

a. Comments on Performance & Financial Indicators (Comments only on adverse movements in the above):

i) Net Sales:ALOK has achieved net sales of Rs.19917.75 crores for FY 13 (18 months) against an estimate of Rs.12546.54 crores (12 months) normalized to Rs. 18819.81 crore for 18 months, i.e. approx. 105.83% of last years estimates. The Companys turnover has also registered a healthy growth of approx. 49.18% over 2011-12 (12 months comparison). Though the company could achieve 94.10% of the export estimates, exports have increased by about 12.42% to Rs.5108.91 crores (18 months) as compared to Rs.3029.55 crores in 2011-12 (Rs. 4544.33 crores for 18 months). ALOK has estimated Sales of Rs. 7471.79 crore for FY 2014 (6 months) annualized to Rs. 14943.58 crore showing a growth of 19% vis--vis Sales for FY 2013 of Rs.12546.54 crore (12 months).

Sales growth of the Company for FY 2013 includes growth mainly on account of volume of products sold by the Company and to a small extent upon increase in price of its products:FY 2012 (12 months)FY 2013 (18 months)FY 2013 (Annualised)FY 14 (6 m)

DivisionUnitQtyRateAmountQtyRateAmountQtyRateAmountVolume growthPrice growthAmount

Spinningtpa 31779.90 101.41 322.28 12777.78 205.02 261.97 8518.52 101.41 86.39 -73.20 102.17 148.39

Apparel Fabric

WovenLakh metres 3597.71 107.40 3863.94 10121.06 113.67 11504.61 6747.37 107.40 7246.68 87.55 5.84 4040.51

KnittedTPA 8305.15 322.92 268.19 12747.06 339.60 432.89 8498.04 322.92 274.42 2.32 5.17 184.24

Embroidery141.64

Home Textiles

Bed SheetsLac

Sets124.49 875.27 1089.63 206.20 1037.99 2140.32 137.47 875.27 1203.20 10.42 18.59 830.44

Terry TowelsTPA 5198.34 309.31 160.79 14965.89 303.45 454.14 9977.26 309.31 308.61 91.93 (1.89)229.60

GarmentsLac Pieces95.08 228.02 216.81 119.05 236.20 281.20 79.37 228.02 180.97 -16.53 3.59 133.91

Polyester Yarn TPA 321871.22 92.56 2979.24 504373.96 96.00 4841.99 336249.31 92.56 3112.32 4.47 3.72 1763.05

TOTAL 8,900.88 19,917.12 12,412.59 39.45%9.97%7471.78

ALOK has also been able to improve the per unit realization thereby contributing to an improved turnover. The movement in per unit selling price/average realization is given in the following table:Table B: Selling price per unit/Average RealizationCategory2010-112011-122012-132013-142014-15

Spinning123.05101.41205.02200.00200.00

Apparel Fabric

Woven102.59107.40113.67102.90104.56

Knitted295.03322.92339.60330.00330.00

Embroidery---117.82128.04165.72150.12

Home Textiles

Bed Sheets1179.00875.271037.991040.651039.93

Terry Towels380.00309.31303.45350.00350.00

Garments334.06228.02236.20197.51197.67

Polyester Yarn 85.2192.5696.00103.62104.00

ALOK has estimated net sales of Rs. 7471.79 crore for FY 2014 (6 months) annualized to Rs. 14943.58 crore showing a growth of 19% vis--vis Sales for FY 2013 of Rs. 19917.75 crore (Rs.12546.54 crore (12 months)). The increase in estimated turnover is based on the following factors:

a) Net sales for the 3 months period ended 31.12.13 are Rs. 3697.66 crores (provisional) as compared to Rs. 3520.81 crores for the corresponding period in the previous year. The breakup is furnished below:

Particulars31.12.1231.12.2013 (Prov.)Growth

Net Sales3520.813697.665%

Exports(709.38)(983.81)39%

b) The Company has a healthy order book position of Rs.4015.00 crores at end of February 2014 to be executed over the next 3-4 months. Breakup of segment-wise orders is given below:DivisionsDomesticExportTotalMajor Customers

Apparel Fabrics1875.00300.002175.00Overseas Brands, Garment Exporters, Institutions, etc.

Home Textiles50.001000.001050.00Wal-Mart, Target, Ikea, Kohls, JC Penny etc.

Garments25.0055.0080.00Mother Care, Crazy Cat, Domestic Institutions, etc.

Texturized Yarn500.00150.00650.00Yarn traders, Power loom weavers

Cotton Yarn40.0020.0060.00Textile Manufacturers

Total2490.001525.004015.00

Considering the performance till date, orders on hand and the capacities already built and those under implementation, the estimated sales are considered achievable.

ii) Profitability (PBT / NS): PBT of ALOK has increased to Rs.1399.90 crores in 2012-13 (18 months) from Rs.640.50 crores in 2011-12. The PBDIT/Net Sales ratio has declined from 27.75% to 24.96% due to increase in RM cost from 57% to 63%. But, PBT/NS ratio has declined only marginally from 7.20% to 7.03% despite higher recognition of extraordinary expenses of Rs. 463.74 crore (including non-cash expenses on account of MTM) due to reduced interest outgo and depreciation flattening as percentage of Sales.

During 2012-13, ALOK has provided for Rs. 463.74 crores as exceptional expenses including Mark-to- Market of Rs. 317.38 crore which would not impact the cash flows of the Company as against Rs. 121.27 crore in FY 2012. ALOK has estimated PBDIT of Rs.1799.39 crores (6 months), PBT/NS of 6.22% and PAT of Rs. 308.22 crores for 2013-14 (6 months) primarily due to reduction in operating margins and increased outgo as finance cost. The same is considered reasonable and achievable due to the following reasons:a) The estimates are in lines with the past trends.b) The Company has achieved PBT (operating) of Rs. 122.32 and PAT of Rs. 98.29 crore till quarter ended 31.12.2013. The Company is confident of achieving its better PBDIT margins in the Jan14-Mar14 quarter on account of increasing export sales and stability in Raw Material prices. The Company has estimated PAT of Rs. 274.29 crore for FY 2014 including write-back of MTM losses of Rs. 56.21 crore (including Rs. 26.21 crore in Oct 2013 Dec 2013 quarter.c) The Company has R & D activities to develop newer products/product lines and variations to improve its margins.iii) TNW:Particulars2011201220132014

Opening TNW ( excluding SAM $ )2716.193097.583655.515088.13

Share Application Money ------------

Add: PAT404.36380.53920.16308.22

Add: (a) Increase in equity/reserves-0.0192.87560.79---

(b) Increase in share premium---113.26------

Add/Subtract: Change in intangible assets------------

Adjust prior year expenses------------

Deduct Dividend Payment 22.9628.7348.3348.18

Subtract : DTA------------

Closing TNW3097.583655.515088.135348.17

Investments in Associates/ Subsidiaries(A & S)50.91520.901504.871400.00

Long Term Loans to A & S------------

Adjusted TNW3046.673134.613583.263948.17

Comments:

The Company came up with Rights issue of Rs. 550.85 crore in April2013 which was fully subscribed leading to improvement in Networth of the Company. The Company strong profitability in the FY 2013 has also contributed to improvement in Networth. Alok Industries Ltd. has made investment of Rs. 1467.87 crore in Alok Infrastructure Ltd. which is holding Company of its Real Estate and Retail investments namely Grabal Alok (UK) which has led to deterioration of Adj. TNW. The Company has initiated steps to bring back its investments and same are discussed in Page No. 13.iv) TOL / TNW:

The Company has seen infusion of Capital by rights issue of Rs. 550.85 crore which has improved the Networth. During the current FY the Companys WC cycle got elongated primarily due to its increase in receivable levels which was on account of the current liquidity tightness in the domestic market. This led to increase in borrowings by the Company. The Companys existing expansion plans were completed (mostly automation of manufacturing processes) during the current FY which have also resulted in Term Borrowings. The Company has also initiated steps to reduce cost as given below which would improve profitability and strengthen Networth

i. Interest cost reduction measures such as availing export finance, FCNR Loans, etc which would lead to saving of Rs. 80.00 100.00 crore.

ii. Reduction in power & fuel expenses by shifting from gas based to coal based / grid power which will result in saving of about Rs. 200.00 crore.

The Company has shifted its focus to generating free cash flow by reducing Working capital cycle by concentration on exports which would again be used to retire debts availed.

The TOL/TNW of the Company for FY 2013 is 3.85 as against estimated levels of 3.22 during sanction of Corporate Loan. The Company estimates the gearing ratio to be above banks benchmark at 3.58 for FY 2014 but has estimated the same to improve to 2.73 (FY 2015) due to retention of profit in business and cap on capex investment. The Company has planned to monetize its non-core assets which will help bring back its non-core investments and improve leverage. The Companys cash accruals have been used to repay Loan obligations of subsidiaries amounting to Rs. 601.00 crore, interest payments of Rs. 106.00 crore and additions on account of merger of H&A, Alok Apparel, Alok retail & Alok Landholdings of Rs. 240.00 crore. Since, the Commercial real estate market has been performing below expectations; the Company has been unable to meet its estimates from Cash Flows from sale of assets thereby incurring higher interest expenses and repayment obligations. Brief position of investments is given below

Investment profile of Alok Industries Ltd. is as below

FY 2012

(Est.)FY 2013

(Est.)FY 2012

(Aud.)FY 2013

(Aud.)

Investment in Associates, Subsidiaries, sister concerns*50.9175.00520.901504.56

* Break-up of Investments

FY 2012

(Est.)FY 2013

(Est.)FY 2012

(Aud.)FY 2013

(Aud.)

Alok Infrastructure Ltd.50.9175.00437.57^1467.87

Alok Apparel Pvt. Ltd.1.00---

Alok H&A36.05--

Aurangabad Textile & Apparel Parks Ltd.17.25*17.25*

New City of Bombay Mfg. Mills Ltd.75.13*75.13*

Alok Benefit Trust35.3335.33

Others10.951.36

Total50.9175.00520.901504.56

* Considered as Current investment as company has received advance of Rs. 35.49 against sale of investment.^ FDs pledged with banks for loans availed by subsidiary The Company is actively looking to sell its real estate assets. The real estate loans as on date are Rs. 148.55 crores on Peninsula Business Park. The same would be fully repaid by March - April 2014 out of the expected inflows from the sale of properties. The expected Cash Flows are as below

Est. CF at last renewalActual CFRealisation Plan

CF Est. by the CompanyDiff.

FY 13FY 14FY 13

(18 m)FY 14

Till date2015

(Est)2016

(Est)2017

(Est)2018

(Est)2019

(Est.)Total

Peninsula Business Park 1055.00597.1452.02272.86---------922.02-127.98

Peninsula Corporate Park---12.3512.35+12.35

Ashford Centre120.0042.32---77.68---------120.00---

Ashford Royale Res (50% stake)300.00------------200.00200.00-100.00

Lotus Corporate Park Goregaon20.25------20.00---------20.00--

Ashford - Napean Sea (30% stake)250.00------60.00---------60.00-190.00

Land at Silvassa300.00200.0047.88---200.12150.00140.00150.00562.001250.00+750.00

Land at Vapi25.00---------50.00------50.00+25.00

Total1495.25775.00687.3464.37630.54200.00340.00150.00562.002634.37+369.37

The Company has downgraded its realizations from its Real Estate assets. The Company has kept more non-core properties and land on block for Sale, whose realization is expected in future. Reasons for delay in monetization of investments Real Estate markets have been subdued and cash crunch of buyers have attributed to delay in receipt of payment.

The Company has large land holdings in Silvassa and Vapi which is industrial in nature. However in the current economic scenario, investment activity is subdued and hence the current demand for large land tracts is muted. Investment profile of Retail business 1. The Company has invested about USD 260.00 Mn in Grabal Alok (UK) by raising debt of USD 252 Mn at the subsidiary level through its step-down subsidiaries Alok Industries International (BVI) & Grabal Alok International (BVI), wholly owned subsidiaries of Alok Infrastructure Ltd. Grabal Alok (UK) Ltd. is a retail company operating in UK operating under the brand name STORE TWNETY ONE and has 198 stores. This debt has been guaranteed by ALOK. The gross turnover for the year FY 2012-13 for GAUK was GBP 115 mn.

2. H&A Retail has been merged with Alok Infrastructure Ltd and the Company is in process of closing its stores. It has recognised impairment loss on investment made in H&A Retail.

Companys Plan to monetize Retail business-1. The company has given a mandate to Edelweiss and IL&FS to sell its GAUK retail business. The Company expects to monetize the same before June 2014.

2. The estimated inflow from the sale of business is about USD 65.00 Mn or approximately Rs. 400.00 crore. The proceeds would be used to retire the debt associated with the said retail business and losses on the sale of the retail business would be set-off against profits from the sale of non-core realty business as discussed above. The Company has estimated its gearing to improve as given below

(Rs. in Crores)

ParticularsStandaloneConsolidated

20142015201620172014201520162017

Total Outside Liabilities19,130.3216,909.3615,815.2514,145.2022,509.5719,834.5818,286.4416,132.35

Equity Share Capital1,377.131,377.131,377.131,377.131,377.131,377.131,377.131,377.13

Reserves & Surplus3,971.034,816.595,922.907,187.942,387.133,260.284,446.325,901.76

Tangible Networth5,348.166,193.727,300.038,565.073,764.264,637.415,823.457,278.89

TOL/TNW3.582.732.171.655.984.283.142.22

v) TOL / Adj. TNW:

2. The Companys TOL/Adj. TNW is at 5.41 due to investments made by the Company in its subsidiaries to the tune of Rs. 1504.56 crore as on Balance Sheet date. 3. Investment made is primarily in Alok Infrastructure Ltd. which is the holding Company for all its real estate and retail businesses. 4. The Company has strategically decided to exit all its non-core businesses. The Company has reduced its real estate debt from a peak level of Rs. 950.00 crore to Rs. 189.88 crore presently. The Companys further sale of real estate / retail properties would bring back its investments which would be used to repay its Liabilities. 5. The Company has estimated cash inflow of Rs. 114.50 crore (FY 2014) and Rs. 630.54 crore (FY 2015) which will be used to liquidate investments made by the Company. vi) Current Ratio & NWC: The current ratio of the Company has improved from 1.19 in 2012 to 1.37 in 2012-13. The improvement is on account of infusion of rights issue proceeds and as the Company used the proceeds of Corporate Loan for Current Asset build-up. The Current ratio is estimated to improve to 1.44 in the current year. NWC is also expected to improve from Rs. 3588.15 crore in FY 13 to Rs. 4055.19 crore in FY 14 following retention of capital in business, infusion of long-term debt/ ECB of Rs. 1650.00 crore as projected by the company which will be utilized to repay its high cost RTL. b. Movement of Long Term Funds:ParticularsActuals

(2012)Actuals

(2013)Estimated

(2014)Projected

(2015)

Long Term Sources

a) Cash Accruals1167.842277.07

(1434.69)787.921832.71

b) Equity Funds206.13560.79*

(550.00)----

c) Increase in term Liabilities927.822100.73(1608.84)----

d) Others----(474.92)233.38455.00

TOTAL2301.794938.59(4068.45)1021.302287.71

Long Term Uses

a) CAPEX 1904.901448.18

(568.92)500.01500.00

b) Decrease in term Liabilities----

(2115.74)6.071020.03

c) Others472.261128.46

(23.47)----

d) Dividend paid28.7348.33

(43.12)48.1848.18

TOTAL2405.892624.97

(2751.25)554.261568.21

Long term Surplus / Deficit-104.102313.62

(1317.20)467.04719.50

*

ParticularsAmount

Capital raised during 2012-13 #550.85

Changes in other reserves9.94

Increase in capital & reserves560.79

# Represents equity infusion through Rights issue.

Comments:

Long term surplus in 2013 is due to sanction Corporate Loan of Rs. 1500.00 crore for shoring up of NWC by the Banks, infusion of capital through Rights issue and retention of profits in business.c. Synopsis of Balance Sheet:LIABILITIES 20122013

CURRENT LIABILITIES

Short Term Bank Finance (A) 2364.823894.70

Other Current Liabilities ( B)

( Total of i, ii, iii & iv )4231.555791.30

i. Sundry Creditors470.93921.89

ii. Advance Payments received187.3782.09

iii. TL inst. Repayable in 12 months (incl FCCB)870.82381.45*

iv. Others (Refer Table 2 below)2702.434405.87*

TOTAL CURRENT LIABILITIES (C) (A+B) 6596.379689.00

v. Term Loans - SBI 720.571715.50

vi. Term Loans - Others 5492.496569.97

vii. Debentures, Redeemable Pref. Shares (< 12 years), FCCB etc800.00800.00

viii. Unsecured Loans ------

ix. Other Term Liabilities (Long term provisions)176.40167.35

x. Deferred Tax Liability626.77664.14

TOTAL TERM LIABILITIES (D)(Total of v to x ) 7816.239916.96

TOTAL OUTSIDE LIABILITIES (E) (TOL = C+D) 14412.6019602.96

xi. PUC826.281377.13

xii. Reserves & Surplus (Other than revaluation reserves )2829.233711.00

xiii Share Application Money------

Net Worth ( NW ) (F) (Total of xi, xii and xiii) 3655.515088.13

TOTAL LIABILITIES (G) (E + F ) 18068.1124691.09

ASSETS20122013

CURRENT ASSETS

i) Cash & Bank Balances502.40725.11

ii) LC/BG Margins & liquid investments 281.51152.43

iii) Receivables( < 6 Months)2124.364953.10

iv) Investments (Other than long term)60.6396.39

v) Total inventory3379.915726.47

vi)i) Other current Assets- Dues from

Associates /Subsidiaries---

i) ii) Other Current Assets- Others1522.091620.65

TOTAL CURRENT ASSETS (A) (Total of i, ii, iii & iv )7870.9013274.15

FIXED ASSETS

Gross Block12021.7213469.90

Less: Cumulative Depreciation2374.433731.34

Net Block (excl revaluation reserves) (B)9647.299738.56

Investment in Associates, Subsidiaries, sister concerns etc (Note 1)520.901504.56

Other investments------

Receivables > 6 months27.7972.86

Others 1.23100.96

DTA------

Non-Current Assets (C) 549.921678.38

Total Tangible Assets [A+B+C = (D)]18068.1124691.00

Intangible Assets, including DTA (E) ------

Total Assets (D+E)18068.1124691.00

* Term Loan Current Liabilities have been re-classified taking into account repayment means. A portion of Current liabilities of Long Term Loans would be repaid by Companys internal accruals and rest from other means. Reconciliation of term loans with CMA: Annexure - 15d. Comments on adverse movements only in the above (Not to exceed 5-6 lines):i)Comments on any change in capital structure.PUC of ALOK has increased from Rs.826.88 crores to Rs.1377.13 crores in 2013 due to issue of equity shares pursuant to Rights Issue of the Company in April 2013.

ii)Comments on Short Term borrowings, if not commensurate with increase in value of inventory & receivables.Increase in short term bank finance is commensurate with increase in value of inventory and receivables. The inventory levels have increased as SIP holding levels of the Company have increased, while levels of receivables have also increased. The inventory/receivables vis--vis Bank Borrowing levels are furnished in Table 1.

iii)Movement of Unsecured Loans (quasi equity)Not Applicable.

iv)Change in investments in Group companies / others Investment in Group companies have increased from Rs. 520.90 crore to Rs. 1504.56 crore. This is primarily on account of Investments made in Alok Infrastructure Ltd. which has inturn made investments in Real Estate and Retail (through Grabal Alok UK).

v)Comments on Sundry Debtors beyond 6 months - present positionSundry debtors outstanding beyond 6 months have increased from Rs.27.79 to Rs. 104.14 crores, i.e. approx. 1.47% of the total debtors.

vi)Loans and advances to group companies.---

viii)Others, if any Inventory is higher (Rs.5726.47 crores in 2013 as against Rs.3379.91 crores in 2012) as the Companys operations are completely integrated and inventory is usually maintained according to the order book position. Higher inventory is mainly on account of higher stock in process as all intermediary products are classified as stock in process.

The Company has been sanctioned Corporate Loan of Rs. 1500.00 crore in FY for shoring of NWC which has been used for CA build-up.

Table 1: Movement of Inventory/Receivables vis--vis Bank Borrowings:Particulars20122013

Bank Borrowings2364.823894.70

Raw Material435.08288.23

Stock In Process2223.504849.46

Finished Goods641.86525.04

Receivables Domestic1771.744666.23

Receivables Export352.62286.87

TOTAL5424.8010615.83

Table 2: Breakup of Others in Current Liabilities:Particulars20122013

Provision for tax2.63221.40

Dividend payable28.8148.83

Other statutory liabilities138.12---

Interest accrued but not due9.3520.98

Debentures due within 1 year/ CPs438.00---

Short term loans/others (Refer Table 3 below)2085.524115.16

TOTAL2702.434406.37

Table 3: Breakup of Short term loans/others:Particulars20122013

Working Capital Loans591.85585.07

Secured Short term loans720.00160.00

Inter Corporate Deposits11.750.94

Other repayments due within a year761.922002.68^

Advances from related parties---1318.87*

Creditors for Capital Goods---33.24

Short Term provision for employee benefits---7.53

Others---6.83

TOTAL2085.524115.16

^ Current Liabilities of Term Loans proposed to be repaid by other means* Advances made by subsidiaries of Alok Industries Ltd., Alok Singapore Pte (Rs. 586.58 crore) and Alok Middle East (FZE) (Rs. 732.29 crore) to Alok Industries Ltd. secured against future export receivables.Table 4: Breakup of Other Current Assets:

Particulars20122013

Advances to Suppliers933.27 1011.19#

Advance tax17.6231.83

MAT Credit entitlement66.27---

Investments in JV60.6396.39

Others*504.93577.63

TOTAL1582.721717.04

# Advances given for suppliers of raw materials (including cotton, dyes & chemicals, fabric, diesel, polyester, etc) to ensure timely execution of domestic and export orders. The Companies to which advances / loans given include Shreenathji Cot. Link Pvt. Ltd., Suminter India Organics Pvt. Ltd., Louis Dreyfus Commodities India Pvt, Manjeet Cotton Pvt. Ltd., Raghunath Agrotech Pvt. Ltd., Poddar Pigments Ltd., Embassy Silicones (I) Pvt. Ltd., National Peroxide Ltd., Parikrama Textiles Pvt. Ltd., Swet Exim Pvt. Ltd., Bhagyalaxmi Fashion Pvt. Ltd., Soham Energy International, Kraftex Trading Private Limited, Pratham Papers, C. J. Corporation, Mcc Pta India Corp. Private Limited, Autefa Filaments Division, Shimadzu (Asia Pacific) Pte Ltd, Sojitz Corporation, Bp Asia Limited, Sanathan Textiles Pvt. Ltd., Spectrum International Pvt. Ltd., Century Yarn (100% E.O.U.), IOCL, Klj Resources Ltd, Sabic Asia Pacific Pte Ltd., etc.*Include interest subsidy receivable, balances with govt. authorities, prepaid expenses, Loans and advances to related parties etc.e. Activity-wise Cash Flow Analysis:Particulars20122013

Cash Flow from Operating Activities

Net Profit Before Tax 640.501,399.90

Adjustments for:

Depreciation / Amortization713.431,360.77

Exchange rate difference124.47318.44

Dividend Income(2.57)(3.40)

Employee Stock option outstanding2.27(2.27)

Interest Paid (net)1,032.102,039.06

(Profit)/loss on sale of fixed assets (net)(9.65)(0.72)

Profit on sale of current investments (net)(0.12)37.12

Share Issue expenses---6.32

Provision16.63114.86

Operating Profit before working capital changes2,517.065,270.08

Adjustments for

(Increase) in Inventories(1,331.29)(2346.56)

(Increase) in Trade Receivables(368.99)(2935.95)

(Increase)/Decrease in Loans & Advances(935.85)(1563.09)

Increase in Current Liabilities and Provisions136.141395.21

Cash generated from operations17.07(180.31)

Income taxes paid(132.46)(171.54)

Net cash (used)/generated from operating activities(115.39)(351.85)

Cash flow from Investing Activities

Purchase of fixed assets(1499.37)(1345.06)

Sale of fixed assets17.867.20

Purchase of Investments(116.74)(50.29)

Sale of Investments162.48162.48

Fixed Deposits & earmarked balances matured/(placed) 285.66599.62

Dividends received2.573.40

Interest received33.2342.28

Inter Corporate deposits refunded (Net)1.26(34.35)

Net cash (used) in Investing Activities(1113.05)(725.18)

Cash flow from Financing Activities

Proceeds from issue of Equity Share Capital (Net) 61.20550.85

Proceeds from Term borrowings2353.706287.73

Repayment of Term Borrowings(926.47)(3,702.23)

Proceeds from Short Term Borrowings (Net)1123.94272.99

Dividend Paid (Including Tax thereon)(22.89)(28.78)

Interest Paid (Net)(1073.57)(2109.78)

Share Issue Expenses---(6.32)

Net cash generated from Financing Activities1,515.911264.46

Net Increase/(Decrease) in Cash and Cash equivalents 286.42187.43

Cash and Cash equivalents at the beginning of the year108.29541.71

Cash and Cash equivalents pursuant to amalgamation147.00-

Cash and Cash equivalents at the end of the year541.71729.14

Comments:The Company has reported negative cash flows from operations for 2012-13, mainly due to increase in current assets, especially inventory (on account of higher SIP) and receivables at the year end. This is due to increase in scale of backward integration of operations which results in higher level of Stock-in-process. The inventory holding period as a function of sales has increased from 139 days in 2012 to 157 days in 2013. The inventory levels are estimated to be high at 145 days for FY 2014.The receivable holding levels have also increased from 89 days in FY 2012 to 121 as the Company had to give higher credit due to difficult economic scenario and competition. The Company on advise of Bank has improved the recovery mechanism and toned up marketing efforts and thus has reduced receivables from Rs. 5808.41 crore as on 31.03.2013 (Prov.) to Rs. 5025.96 crore as on 30.09.13 (Audited). The Company is taking all possible measures to reduce its inventory and debtors cycle, which would result in improving cash flow from operating activities. Position is estimated to improve in 2014.

The Term Liabilities availed include CL for shoring up of NWC and Term Loan for creation of fixed assets. The Company had been availing Short-Term borrowings for financing of CA build-up, now with Corporate Loan being sanctioned the same has been repaid. Notes to Cash Flow Statement:

Cash and Cash equivalents include the following:

Particulars2011-122012-13

Cash and Bank balance as per books1294.84882.65

Less: Earmarked balances/deposits with bank*716.17153.51

Less: Deposit with maturity period of more than 3 months**36.96--

Cash and Cash equivalents 541.71729.14

* Earmarked balances/deposits with bank include balances/deposits held as margin or security against borrowings, guarantees and other commitments, which, being restricted in use, have been excluded from cash and cash equivalents and grouped under investment activity.

**Fixed deposits with maturity period of more than three months have been excluded from cash and cash equivalents and grouped under investment activity.Consolidated Data:i) Key Financial Indicators:As at 31st March2012

Audited (Estd.)2013Audited

(Estd.)

12 months18 months

Gross Sales (value)10018.6721845.09

Net Sales (value)9784.7221388.36

(Exports)(3813.27)(6523.68)

Raw Materials6910.2911449.28

Power and Fuel667.251148.76

Direct labour312.84686.92

SG & A costs 697.77361.21

Interest1234.702495.62

Operating Profit(OP) after interest392.571319.35

OPM%(OP/ NS )4.016.17

PBT*366.81778.97

PBT / Net Sales%3.753.64

PAT92.91294.65

Cash Accruals842.051712.85

PBDIT2350.654692.79

Interest Coverage Ratio1.901.88

PUC826.281377.13

TNW2199.243225.88

Adj. TNW613.751884.86

TOL/TNW8.327.04

TOL/ Adj.TNW 8.667.24

Current Ratio0.891.15

NWC-1025.371794.86

* includes expenses classified as exceptional items of Rs. 634.38 crore including MTM losses of Rs. 317.39 crore and Impairment Loss in respect of Goodwill on consolidation of Rs. 316.99 crore based on prudent assessment of recoverable value of its subsidiary GAUK.Reconciliation of standalone PAT with consolidated PAT together with the steps taken by the Company to improve the profitability at the group level is furnished in Annexure 10.

ii) Synopsis of Consolidated Balance Sheet:LIABILITIES 20122013

CURRENT LIABILITIES

Short Term Bank Finance (A) 2740.464365.62

Other Current Liabilities (B) (Total of i, ii, iii & iv )

i. Sundry Creditors605.231277.10

ii. Advance Payments received68.86200.99

iii. TL inst. Repayable in 12 months (incl FCCB)1193.50570.50

iv. Others4365.185363.49

TOTAL CURRENT LIABILITIES (C) (A+B) 7623.2311777.70

v. Term Loans - SBI ------

vi. Term Loans - Others 8516.9610075.99

vii. Debentures, Redeemable Pref. Shares (< 12 years), FCCB etc------

viii. Unsecured Loans ------

ix. Other Term Liabilities (Long term provisions)176.71194.67

x. Deferred Tax Liability627.07664.48

TOTAL TERM LIABILITIES (D)(Total of v to x ) 9320.7410935.14

TOTAL OUTSIDE LIABILITIES (E) (TOL = C+D) 18293.9722712.84

x. PUC826.281377.13

xi. Reserves & Surplus (Other than revaluation reserves )2033.112108.03*

xii Share Application Money------

Net Worth ( NW ) (F) (Total of x, xi, xii) 2859.393485.16

TOTAL LIABILITIES (G) (E + F ) 21153.3626198.00

ASSETS20122013

CURRENT ASSETS

i) Cash & Bank Balances644.57799.34

ii) LC/BG Margins & liquid investments ------

iii) Receivables( < 6 Months)2122.395118.10

iv) Investments (Other than long term)3.943.20

v) Total inventory3697.126038.45

vi)i) Other current Assets- Dues from

Associates /Subsidiaries------

ii) ii) Other Current Assets- Others1479.841613.47

TOTAL CURRENT ASSETS (A) (Total of i, ii, iii & iv )8701.0913914.63

FIXED ASSETS

Gross Block12338.8814142.56

Less: Cumulative Depreciation2603.304038.36

Net Block (B)9735.5810104.20

Investment in Associates, Subsidiaries, sister concerns etc87.3390.00

Other investments1502.08^1255.81

Receivables > 6 months81.6150.44

Others 1142.61902.83

DTA9.0211.39

Non-Current Assets (C) 2069.411932.99

Total Tangible Assets [A+B+C = (D)]21143.0425987.23

Intangible Assets, including DTA (E) 647.27210.77

Total Assets (D+E)21153.5626198.00

* Reserves and Surplus includes revaluation reserve of Rs. 776.51 crore of Alok Infrastructure Ltd to recognize appreciation in value of immovable properties of the transferee Company which has used to off-set provision of loss by the transferee Company of Rs. 690.08 crore as at 01.04.2012, arising from term sheet entered into by one of the transferor companies Alok Realtors Ltd.^ Including investments in properties and land

iii) Consolidated Cash Flow Statement:Particulars20122013

Cash Flow from Operating Activities

Net Profit Before Tax 366.81778.97

Adjustments for:

Depreciation / Amortization749.141418.20

Diminution in value of investment8.88---

Provision for impairment of fixed assets---6.99

Provision for impairment of goodwill---316.99

Provision for doubtful debt/advance19.78105.34

Employee Stock option outstanding2.27(2.27)

Exchange rate difference3.89316.95

Dividend Income(0.60)(0.20)

Share Issue expenses---6.32

Interest Expense (net)1108.772249.52

(Profit)/loss on sale of fixed assets (net)(34.88)2.98

(Profit) / loss on sale of current investments (net)0.127.17

Operating Profit before working capital changes2224.185216.95

Adjustments for

(Increase) in Inventories(1381.63)(2302.18)

(Increase) in Trade Receivables(300.74)(2980.15)

(Increase)/Decrease in Loans & Advances(961.06)(94.26)

Increase/ (Decrease) in Current Liabilities93.09360.63

Cash (used in)/ generated from operations(321.06)200.98

Income taxes paid(129.40)(187.36)

Net cash (used)/generated from operating activities(450.46)13.63

Cash flow from Investing Activities

Purchase of fixed assets(1551.10)(1717.79)

Sale of fixed assets49.4023.14

Purchase of Investments(341.57)(133.91)

Sale of Investments135.57623.13

Fixed Deposits & earmarked balances matured/(placed) 236.57461.36

Dividends received0.600.20

Interest received35.8644.78

Inter Corporate deposits Given(4.49)(64.10)

Inter Corporate deposits refunded---29.75

Net cash (used) in Investing Activities(1439.16)(733.44)

Cash flow from Financing Activities

Proceeds from issue of Equity Share Capital (Net) 61.19550.85

Share issue expenses---(6.32)

Share Application money received/(repaid) (Net)350.00(350.00)

Proceeds from Term borrowings2430.537219.68

Repayment of Term Borrowings(954.59)(4518.56)

Proceeds from Short Term Borrowings (Net)1428.24329.29

Dividend Paid (Including Tax thereon)(24.52)(30.27)

Interest Paid (Net)(1130.38)(2284.47)

Net cash generated from Financing Activities2160.47910.20

Net Increase/(Decrease) in Cash and Cash equivalents 270.85190.37

Cash and Cash equivalents at the beginning of the year165.98589.27

Cash and Cash equivalents pursuant to amalgamation152.44---

Cash and Cash equivalents at the end of the year589.27779.66

Comments: Cash flows from operating activities are positive as cash flow genereated from operations has been used for Current Asset build-up. The Company has utilized funds from Financing activities for Investing Activities. The Group has also seen infusion of Capital by Rights issue which has been used for Investing activities and build-up of CA. The Company has undertaken monetization of non-core assets in the Group which will generate funds which will be used for reduction of Liabilities at Group level.The consolidated data shown above includes the financial information pertaining to the following Companies:

No.Name of the Company

1. Alok Infrastructure Limited

a.Alok Land Holdings Private Limited #

b.Alok Realtors Private Limited #

c.Alok Retail (India) Limited #

d.Alok Apparels Private Limited #

e.Alok H&A Limited #

2. Alok New City Infratex Private Limited *

3. Alok Aurangabad Infratex Private Limited *

4. Alok HB Hotels Private Limited *

5. Alok HB Properties Private Limited *

6. Alok Industries International Limited

7. Alok Inc. (closed during the period)

8. Alok International Inc.

9. Mileta, a. s.

10. Alok European Retail, s.r.o. (closed during the period)

11. Springdale Information and Technologies Private Limited @

12. Kesham Developers & Infotech Private Limited @

13. Aurangabad Textile and Apparel Park Limited

14. New City of Bombay Mfg. Mills Limited

15. Grabal Alok (UK) Limited

16. Grabal Alok International Limited

17. Alok Singapore Pte

18. Alok International (Middle east) FZE

19. Alok Worldwide Limited

* Pursuant to the plan of exiting real estate business, such companies were liquidated during the previous year@ Liquidation under process

# Amalgamated with Alok Infrastructure Limited during the periodf. Inter-firm Comparison:i) Finance related: Sl.

No.Name of Co.FB Lts$NFB Lts$YearSalesCRCash CycleNet ProfitPBT/ NSTOL/

TNW

1.Alok Industries Limited12-13(18 m)19917.75920.16

2.JBF Industries Limited12-135404.090.9257.480.642.32

3.Bombay Rayon Fashions Limited12-133194.790.94188.7611.252.14

4.Welspun India12-133042.95171.412.51

5. Garden Silk 12-133697.25(100.70)4.18

($ wherever available either from our own data or external source)Comments: The financial performance of ALOK, except for liquidity and gearing ratios is better than that of its peers. Sales and net profit of ALOK are better than that of its competitors. ALOK is an integrated textile Company and has been carrying out substantial capex to augment its capacity. Gearing ratio is much higher than other players as the Company had financed its capacity expansions majorly through debt. Current ratio is lower due to classification of FDs pledged with banks towards loan availed by subsidiaries as non-current assets.

ii) Market related:Sl. No.Name of Co.PEMarket CapShare PriceEPS of 2013

HLC

1.Alok Industries Limited1.51908.9010.63(14.02.13)5.87(13.08.13)6.60(14.02.14)6.68

2.JBF Industries Limited446.7464.10

116.5058.20(14.02.14)6.78

3.Bombay Rayon Fashions Limited2699.40151.95(02.01.14)274.00(08.03.13)200.40(14.02.14)14.02

4.Welspun India952.5794.90(12.02.14)46.50(06.08.13)94.85(14.02.14)17.14

5. Garden Silk 138.8262.60(06.03.13)31.00(03.09.13)34.85(14.02.14)-ve

(Source: moneycontrol.com as on 14.02.2014)Comments: Despite better performance in most of the parameters, the share price and market cap of ALOK are lower than its peers. The share prices have been under pressure as the Company has not been able to monetize its real estate portfolio as envisaged. SECTION- A3i) External Rating:Rating AgencyCARERating Obtained(Previous Rating)CARE BBB/A3

(CAREA/CARE A1)

Date and Amount of Rating07.10.2013LT 9780.46 crore

ST 1805.50 crore

NCDs 1000.00 croreRating valid upto:06.10.2014

Rating Rationale in briefThe ratings of Alok Industries Ltd (Alok) are revised on account of moderation in liquidity position on account of increase in receivables during 15M period ended June 30, 2013 resulting into full utilization of working capital limits, delay in monetization from non-core real estate sector and sizable debt repayment obligations.The ratings continue to derive strength from the extensive experience of the promoters and the management in the textile business, integrated operations across the textile value chain and well established position in the textile industry being one of the leading players in the industry.

The ratings however continue to be constrained by dependence on external borrowings leading to leveraged capital structure and debt coverage indicators, exposure to group companies which are yet to break-even and elongated working capital cycle. Further, the ratings also are constrained by fluctuation in the prices of raw materials and forex movements imparting volatility to the profitability and intense competition from large number of organized as well as unorganized players in the sector.

Ability of Alok to improve its capital structure as well as cash flow position and reduce exposure to the real estate sector as well as other non-core businesses remain key rating sensitivities.

ii) Statutory dues/other contingent liabilities:DetailsAmount as

per Balance

Sheet

(Rs in Lacs)Probability

of Invocation/

Claim /

Impact (%)Amount

assessed to be at

Default

(Rs. in Lacs)Impact on TNW of unit

(%)

A. Contingent Liabilities------------

(a) Claims against disputed tax liabilities / Excise Duties

(b) Claims against the Company not acknowledged as debts.99550%498

(c) Pending legal issues like suit filed against the Company and the financial impact on the borrowing company.193450%967

(d) Notices issued by Regulatory authorities like Income Tax & Sales Tax for realization of dues---------

(e) Lock out/strike/unrest in the factory in the last two years and its financial impact ---------

(f) Corporate guarantees given with or without Banks permission /approval (Details as Annexure -11)2642485%13212

B. Auditors qualifying remarks having impact on financials /profitability---------

C. Accounting policies

(i) valuation of inventory

(ii) capitalization,

(iii) depreciation and

(iv) revaluation---------

D. Any other factor---------

Total Amount at Default in Column I146772.88

Comments, in brief, if the impact is significant: The Corporate Guarantee has been extended by the Company in favour of financial institutions for facilities being availed by its associates. We have assumed risk of invocation at 5% due to ability of Group to raise external credit and asset base of its Group concerns including Land and Real Estate assets.

RiskMitigations

Significant investment and exposure to group companies operating in real estate and retail businesses

Real Estate Business

The Company has made progress in monetization its investments in Real Estate business. The estimated realizations from Real Estate Business are Rs. 2620.00 crore. Out of the above portfolio of real estate, the company has achieved deals worth Rs. 993.53 crores of which Rs. 751.71 crore has been already been received by the Company, while total debt on real estate stands at Rs. 189.88 crore.

Retail Business

With regards to its overseas retail chain Store Twenty One in UK, the company has decided to exit the same and have given a mandate to merchant bankers to sell the said business. It is expected to monetize the investment before March 2014.

Highly Leveraged Financial Risk Profile

1. Restriction of capex: The major capex of the company was over in March 2013 and the Management has decided to restrict capex to Rs. 500 crores p.a. for the next 5 years till FY 2019.

2. Monetization of non-core assets3. Interest Reduction: The average cost of borrowings is about 10% and annual outgo on account of the same is about Rs. 1700 crores. With a view to reduce the cost of borrowings, the company has already initiated following measures:

Avail packing credit in Rupee which gives give benefit of interest subvention of 3%

Avail PCFC in US Dollars against exports where the cost of borrowing is at about 5%

Avail FCNR(B) loans to reduce rates on existing Rupee Term Loans, where the cost of borrowing is at about 5%

4. Reduction in Power & Fuel Cost: At Vapi location, the company has converted all its gas based boilers to coal based. At Silvassa, the Company has installed 220 KVA sub-station and are now directly connected to the national grid. The power cost at Silvassa is about Rs. 4 per unit. So about 40% of power which was generated through gas based power plants (@ Rs. 7.26/Unit) has now been replaced with grid power (@ Rs. 4.27/Unit). Both these power saving measures are expected to save about Rs. 200 crores p.a. from FY 2014 onwards.

5. The company is raising USD denominated loans, to replace High-cost Rupee Debt of the Company. In this regard, the company has taken following steps.

ECB of USD 275 mn: The company has received approval from RBI vide letter dated 24 July 2013 to raise ECB of USD 275 mn (Rs. 1700 crores) to repay RTL availed for capex. This is a 7 year 6 months facility with a moratorium of 3 years. The all in cost will be LIBOR+500 bps p.a leading to saving in interest cost of Rs. 120 crores p.a. and would also give company good moratorium in line with its future cash flows.

Advance Against Future Exports: In light of the strong potential for exports, the company is considering availing an export advance from overseas trading companies for up to USD 2 billion. The said advance will be repaid / serviced through export receivables over a period of next ten years. These proceeds are proposed to be utilized to repay existing Rupee debt of the company. The company has applied to RBI for approval for the long term export advance facility.

Foreign Currency Fluctuation Risk

The Company has exports of Rs.5108.91 crores for the FY 2012-13 (18 months). The company estimates exports to increase to Rs. 4500 crores and then to about Rs. 6000 crores per annum. Hence there is adequate natural hedge against its forex liabilities. The forward contracts entered by the company are phasing out and there would not be any obligations from FY 2014-15 onwards.

Working Capital intensive nature of operations

In the current year, owing to the tight liquidity conditions prevailing in the domestic market, the Domestic Receivables were stretched to 180 days in June 2013. It has since come down to present holding levels of 150 days.

The Company is also looking at increasing export businesses for following reasons:

To reap benefits of large volumes To take advantage of depreciating rupee To improve WC cycle as export credit period is about 45 60 days.

Procurement /Raw Material prices ALOK buys cotton to the extent of sale of its fabrics and other products, which is normally 3-4 months.

The Company buys during cotton crop season, when quality, availability and costs are favourable.

Price movement of cotton being a global phenomenon; it is able to pass on the increase /decrease in prices to the customer.

Polyester yarn is increasingly becoming a major business for ALOK. PTA and MEG are the major raw materials that go into the manufacture of POY and polyester yarn. Prices of PTA and MEG uctuate in line with uctuations in crude oil prices. Also, PTA and MEG prices move in tandem with the cotton prices. In case of polyester also, ALOK is trying to keep its inventory level matched with its sales order book.

Market risk The US continues to be a major export market for ALOK. A slowdown in the US economy translates to lower consumer spending and a consequent risk of lower textile exports to that market. The Company is looking to mitigate this risk by diversifying into other markets, especially in Central Europe, Africa, Asia and South America, thereby broadening its export client base; which together have a 49% share of exports. Africa, also offers growth opportunities in the export market.

ALOK has further become a critical supplier to customers due to its large size, integrated operations and broad range of products offered by them.

Competition Risk The Company has been diversifying into newer product segments, especially value added products through design and product development to remain ahead of the competition.

The Company has also been ramping up production capacities to global levels in order to improve competitiveness. The Company is now operating in value added segments like work wear segment, yarn dyed fabrics, organic cotton products and specialty finishes.

SECTION- A4

Proposed Pricing: ITEMBase Rate (%)Existing RateCard rateProposed rate

Spread (%)Effective Rate (%)Spread (%)Effective Rate (%)Spread (%)Effective Rate (%)

Int. on WC10.001.7011.701.7011.701.7011.70

Int. on TL I10.002.9012.903.9013.902.9012.90

Int. on TL II10.002.9512.953.9513.952.9512.95

Int. on TL III10.002.9512.953.9513.952.9512.95

Int. on TL IV10.002.9512.953.9513.952.9512.95

Int. on TL V10.002.9512.953.9513.952.9512.95

Int. on CL I10.005.2515.253.8513.853.8513.85

Int. on CL II10.002.7512.753.8513.852.7512.75

Int. on CL-III10.002.8012.803.9513.952.8012.80

FCNB loansLIBOR + 4.00% (for borrowers with ECR BBB)

SECTION-A6.

SYNOPTIC APPRAISAL MEMORANDUM FOR TERM LOAN:CIRCLE/SBU:MCRO, MUMBAI

BRANCH:Backbay Reclamation Branch

COMPANY:ALOK INDUSTRIES LIMITED (ALOK)

No term loan proposed for sanction.SECTION- A7

a) Justification for the proposal (Only bullet points): ALOK is one of the largest and amongst the fastest growing vertically integrated textiles solutions provider in India.

The Company has a blue-chip international customer base comprising of world renowned retailers, importers and brands including Walmart, IKEA, Li and Fung, Kohls, M&S, Target Sourcing, Pantaloons, Wills Lifestyle, Madura Garments, Raymonds, etc.

Key financial parameters are satisfactory.

External rating of ALOK is CARE BBB.

The performance of the Company is improving on a y-o-y basis. ALOK is also increasing its presence in the global markets and now exports to over 90 countries including Australia, Canada, France, USA, etc. The Company has been awarded at various forums taking into cognizance its manufacturing capabilities and foreign exchange earnings, a few are mentioned below

Gold Trophy (Medium) for the Highest Exports of Bed Linen/ Bed Sheets/ Quilts in Made-ups under the category III by TEXPROCIL,

Gold Trophy (Medium) for the Highest Exports of Bleached/Dyed Yarn Dyed/Printed Fabrics in the category III by TEXPROCIL,

Gold Trophy (Small) for Highest exports of Other Fabrics including Embroidered Fabrics, Laces in the Category II by TEXPROCIL,

Silver Trophy (Medium) for Second Highest Global Exports(Overall) by TEXPROCIL. Largest Exporter Mill Sector fabrics by Ministry of Textile,

Largest Producer made Ups and Home Textiles by Ministry of Textile, etc.

The track record of the Company is satisfactory.

It is a fair banking risk.

i) Working Capital:Sl NoParticularsLast Sanction2014(Estd.)

6 mnths2015(Proj.)

Estimated2013*Actual201318 mths

1Net sales12546.5419917.757471.1915327.04

2Inventory/Net Sales + Receivables/ Gross Sales (days)250290271270

3Net Sales to Total Tangible Assets0.610.810.620.66

4ABF/ TCA (%)29.7029.3431.8230.66

5S Cr/ TCA (%)9.316.958.209.09

6OCL/ TCA (%)50.4636.6829.4320.56

7NWC/ TCA (%)10.5327.0330.5537.32

8FBWC3025.003894.704250.004250.00

9NFB WC1900.00600.662400.002400.00

* Estimates based on CMA for of sanction of CLComments:

Company has achieved net sales of Rs.19917.75 crores against estimated turnover of Rs.12546.54 crores (Rs. 18819.81 crore 18 months), i.e. about 105.83% of the estimates. Working capital cycle has increased to 290 days as against estimate of 250 days for the FY and 226 days for FY 2012. The increase is due to backward integration of manufacturing process by the Company which requires it to maintain high level of inventory primarily SIP and high receivable holding levels due to difficult economic condition and competition. The Company is making conscious efforts to bring down CA level and has estimated holding levels at 270 days. Proportion of OCL to TCA is higher as it includes TL instalments due within one year, advance against export funding and deposits with Statutory bodies. Contribution of NWC to TCA has improved as the Company was sanctioned Corporate Loan for shoring up of NWC and is further expected to increase in FY 14 following infusion of long-term debt/ ECB of Rs. 1650.00 crore as projected by the company. Increase in WC limits is recommended to cater to increased activity levels.ii) Other sanctions: a) Renewal with enhancement of Stand-by limit under SBI Exporters Gold Card Scheme from Rs. 50.00 crores to Rs.56.25 crores.As per the provisions of the Gold Card Scheme, a standby limit of 20% may be sanctioned over and above the assessed limits (FB+NFB) to facilitate credit demands arising out of receipt of sudden orders or any unforeseen operational exigencies. The Company has now requested enhancement in SLC limit to Rs.225.00 crores (our share: Rs.56.25 crores) from Rs. 200.00 crores under the scheme. Compliance with guidelines is furnished below:Norms/GuidelinesCompliance

Standby limit will be 20% over and above the assessed fund based and non-fund based limits.Complied with. Assessment of limits is furnished in Section B2 of the proposal.

Standby limit will be sanctioned to all Gold Card holders along with sanction of assessed credit limits. Complied with.

Exporters to avail stand-by limit for a maximum period of 180 days in one instance.Will be stipulated as a part of terms and conditions.

Assessment of limits is furnished in Section B2 of the proposal.b) Renewal of Forward Contract limits of Rs.49.60 crores with current credit exposure of Nil and potential future exposure of Rs.49.60 crores, entailing credit exposure limit of Rs.49.60 crores on a notional amount of Rs.2480.15 crores for hedging exchange rate risk.Assessment of limits furnished in Annexure 2 of the proposal.c) Short Term Working Capital Loan of Rs. 250.00 crore within ABF for a period of 6 months from the date of disbursement, pending tie-up of limits with other Banks at 1% p.a. above applicable rate for CC.d) Short Term Letter of Credit of Rs. 175.00 crore within ABF for a period of 6 months from date of establishing LC. The Companys WC Consortium comprise of 30 banks who would start processing the proposal only on receipt of assessment note of Lead Bank and time would elapse. The Company levels of operations have increased which has necessitated requirement for additional funding, same has been acknowledged in Adhoc Limits sanctioned to the Company in December 2013.

Based on the above, we recommend sanction of Short Term Loan as Cash Credit of Rs. 250.00 crore within ABF for a period of 6 months and Letter of Credit of Rs. 175.00 within ABF for a period of 6 months from date of establishing LC.iii) Approvals:

a) Improved pricing for Term Loan-I at 2.90% above Base Rate, present effective rate of 12.90% p.a. with monthly rests and reset after every year, as against applicable pricing of 3.90% above Base Rate, i.e. 13.90% p.a. and existing pricing of 2.90% above Base Rate i.e. 12.90% p.a. (including term tenor of 0.15%) for a borrower with CRA of SB-08 and ECR of BBB.b) Improved pricing for Term Loan-II/III/IV/V at 2.95% above Base Rate, present effective rate of 12.95% p.a. with monthly rests and reset after every year, as against applicable pricing of 3.95% above Base Rate, i.e. 13.95% p.a. and existing pricing of 2.95% above Base Rate i.e. 12.95% p.a. (including term tenor of 0.20%) for a borrower with CRA of SB-08 and ECR of BBB.c) Improved pricing for Corporate Loan -II at 2.75% above Base Rate, present effective rate of 12.75% p.a. with monthly rests and reset after every year, as against applicable pricing of 3.85% above Base Rate, i.e. 13.85% p.a. and existing pricing of 2.75% above Base Rate i.e. 12.75% p.a. (including term tenor of 0.10%) for a borrower with CRA of SB-08 and ECR of BBB.d) Improved pricing for Corporate Loan -III at 2.80% above Base Rate, present effective rate of 12.90% p.a. with monthly rests and reset after every year, as against applicable pricing of 3.95% above Base Rate, i.e. 13.95% p.a. and existing pricing of 2.80% above Base Rate i.e. 12.80% p.a. (including term tenor of 0.20%) for a borrower with CRA of SB-08 and ECR of BBB. ALOK has long standing relationship with the Bank. The Companys external rating is BBB.

The Company is operating at thin margin as the clientele are of big brands who can source the material at very competitive price and lower interest rate would help improve its liquidity management.

The income from ALOK and other Group companies to the Bank are substantial.

The Company is making efforts to reduce its interest cost and has identified avenues including WC loans in foreign currency, ECB loans for repayment of existing high cost RTL, PCFC, etc.

The Company has requested for continuation of existing pricing for its Term Liabilities. In view of the above, same maybe considered favourably.e) Continuation of export credit limits under SBI Exporters Gold Card Scheme.ALOK complies with the guidelines for sanction of facilities under the Gold Card Scheme and the same is furnished below:Norms/GuidelinesCompanys position

Account classified as a Standard Asset continuously for a period of last three years.Complied with. The account is a standard asset for the last three years.

No irregularities/ adverse features observed in the conduct of the accountComplied with. Conduct of the account is satisfactory.

The exporter has not been blacklisted by ECGC and/or included in RBI Defaulters List/Caution List.Complied with. ALOK has not been blacklisted by ECGC nor is included in any defaulters list.

The unit has not incurred losses during the past three years.Complied with. The Company has not incurred losses in any of the past three years.

Overdue export bills of the unit are not in excess of 10% of the previous years turnover.Complied with. Overdue bills do not exceed 10% of previous years turnover.

In case of units where the projected domestic turnover exceeds Rs.25.00 crores, the combined limit or sub-limit for export activity will be assessed as per the PBS/Cash budget method. However, the benefits under the scheme will be extended for the portion of export credit.Complied with. Limit for export activity has been assessed as per the PBS method. Benefit under the scheme is being extended only for the export portion.

f) Continuation of one-way interchangeability from FBWC limits to NFBWC limits to the extent of 20% of FBWC limits.g) Continuation of full interchangeability between LC and BG limits.Interchangeability from FBWC limits to NFBWC limits and between LC and BG limits may be continued to be permitted in view of the following:

To ensure smooth operations and to meet any operational exigencies likely to arise.

Provide flexibility to the company and for better utilization of the limits.

Majority of the consortium members have sanctioned similar terms to the Company.

There are been few instances of LC devolvement during the last 18 months due to liquidity strain, but no cases of invocation has been observed. Synopsis of Debt profile of the Company Quarter-on-Quarter

Particulars31.12.1231.03.1330.06.1330.09.13

Loans under First Pari-Passu Charge 4,365.42 4,961.51 5,737.83 7,138.83

Loans under Exclusive Charge 1,164.93 1,235.51 1,169.87 1,160.92

Loans under Subservient Charge 3,802.27 3,924.02 3,862.73 3,133.26

Working Capital Limits 3,177.21 3,619.37 3,814.80 4,001.93

Short Term Loans 1,594.90 1,313.13 930.25 577.85

Unsecured Loans 104.72 88.14 95.44 97.53

Total 14,209.45 15,141.69 15,610.92 16,110.32

The overall increase in Debt of the Company is primarily on account of Corporate Loan of sanctioned to the Company.

In view of the above, the same may be approved.

h) Release of enhanced Working capital limits on standalone documents pending: (i) Creation/extension of hypothecation/ mortgage charge for regular WC Limits which will be created within 6 months from the date of first disbursement i.e. upto 30.09.2014.

(ii) Creation of second charge on fixed assets for regular WC Limits which will be created within 3 months from the date of joint documentation i.e. upto 31.12.2014. The assets of the company are charged to us on paripassu basis with the other banks in the consortium.

The extension of second charge on existing and proposed fixed assets of the company for the proposed enhancement in working capital limits is time consuming as it may take 5-6 months for receipt of sanction from other banks and for the execution of joint documents thereafter.

This could result in a delay in the release of enhanced limits and impact the operations of the company.

In view of above, we recommend permitting 6 months for creation of hypothecation charge on current assets of the company and extension of second charge on fixed assets offered to the working capital bankers within 3 months from the execution of joint hypothecation documents. In the interim, the enhanced limits may be released after executing individual documents pending creation/ execution of mortgage/ hypothecation charge. i) Extension of time upto 31.05.2014 for creation of second charge on fixed assets for regular WC Limits as against earlier approved time line upto 31.03.2014, with additional interest of 1.00% p.a. The Consortium of ALOK comprises of 30 banks, the tie-up of enhanced limit took time after our sanction was shared with the Consortium. The first charge for WC Limits could only be completed by 24.02.2014. The creation of second charge on fixed assets would take joint documentation for which further 3 months are required as the landed property includes MIDC properties obtention NOC for which normally takes 2 months time. The draft joint documents have been circulated with the Banks and on receipt of approval from legal departments of respective banks, the execution of the same will happen and the hypothecation / mortgage charge would be extended for the enhanced limits. In view of above, we seek extension of time from 31.03.2014 to 31.05.2014 for creation of second charge.b) Recommended for sanction / approval / confirmation.State Bank of India

Backbay Reclamation Branch

Mumbai 400 021

Date:

SECTION-A8

PROFILE OF THE BORROWER:a) CIF No, Addresses & Locations of the company:CIF No(s)

Registered Office (Full Address)17/5/1, 521/1, Village Rakholi/Sayli, Silvassa -396230 Union Territory of Dadra and Nagar Haveli

Administrative Office (Full Address)Peninsula Tower B, 2nd & 3rd Floor, Peninsula Business Park, G.K. Marg, Lower Parel, Mumbai 400013

Factories/ Production Centres (Full Addresses)412, Saily, U.T. of Dadra & Nagar Haveli

17/5/1 & 521/1, Rakholi/Saily, Silvassa, U.T. of Dadra & Nagar Haveli.

209/1 & 209/4, Dadra, U.T. of Dadra & Nagar Haveli.

Babla Compound, Kalyan Road, Bhiwandi Dist. Thane

254,261,268, Balitha, Taluka Pardi, Dist. Valsad, Gujarat.

C-16/2, Village Pawane, TTC Industrial Area, MIDC, Navi Mumbai, Dist. Thane

103/2, Rakholi, Silvassa, U.T. of Dadra & Nagar Haveli.

374/2/2, Village Saily, Silvassa Khanvel Road, U.T. of Dadra & Nagar Haveli.

273/1/1, Hingraj Industrial Estate, Atiawad, Daman

149/150, Morai Taluka, Pardi, Dist. Valsad, Gujarat

263/P1 and 251/2P1 Balitha, Taluka Pardi, Dist. Valsad, Gujarat.

b) Names & Addresses of the Promoters / Directors:

Sl. No.NameDesign.IdentifiersFull Address

DINPANPassportOthers

1Ashok JiwrajkaChairman00168350AACPJ3610KZ1892017---Raheja Legend, Flat No.401 & 402, 28th Floor, Plot No.254A, Dr. Annie Beasant Road, Worli, Mumbai-400 018

2Dilip JiwrajkaMD00173476AAGPJ8756JF1214886---Villa Orb 15th Floor, Opp. Manzoni Showroom, Darabshaw Lane, Off. N.S.RD, Mumbai 400 006

3Surendra JiwrajkaJt. MD00173525AACPJ4316LG3634723---901/902, Palm Beach, 9th Floor, 67A, Sir Pochkhanwala Road, Worli, Mumbai -25

i) Details of Share-holding pattern of Promoter Directors (As on 31.03.2013):S.No.Name of the Promoter/ DirectorNo. of Shares heldValue of Shares held% of share holding

1Ashok Jiwrajka3378447333.782.45

2Dilip Jiwrajka3417842134.172.48

3Surendra Jiwrajka3611487136.112.62

ii) Shareholding Pattern:Description % of Holding

31.03.201230.09.2013

Promoters/Promoter group31.7838.22

Pvt. Corporate Bodies7.5617.36

Indian Public24.1529.59

NRI/OCB8.310.93

Mutual Funds0.300.00

Banks / Financial Institutions11.009.37

Foreign Institutional Investors and others15.163.87

Others1.740.66

Total100.00100.00

Comments: There has been change in shareholding of the Company pursuant to successful Rights issue of Rs. 550.85 crore in May 2013. The break-up of major shareholders of the Company is as below Arum Investments Private Limited500000003.63

Axis Bank Limited378161882.75

LIC351641362.55

IFCI214408231.56

IDBI Bank Limited178881611.30

Comment on change in shareholding pattern, if any, subsequent to previous sanction: There has been change in shareholding of the Company pursuant to successful Rights issue of Rs. 550.85 crore in May 2013. The shareholding pattern shows increase in shareholding of promoter/promoter group. FII holding has come down as Caledonia Investment PLC holding 7.31% stake has exited from the Company. Pledge of promoters/promoter groups shares: The promoters of the Company have pledged their shares in favour of banks/financial institutions for the various loans availed by the Company/promoters/promoter group. The Company has submitted that ALOK is a first generation enterprise promoted by the Jiwrajka family. The promoters had to pledge their shares to raise funds as and when money was required to be infused in the Company. Also, the promoters had to provide top-up margin when the price of the Companys shares came down. 73.30% of promoters shares were pledged as on 31.03.2012 and the ratio has now gone up to 98.42% as on 30.09.2013. The Company had committed to pledge 50% of promoters shares as on 31.03.2012, i.e. 15.89% of total shares of the Company, equivalent to 13,13,08,259 shares to the consortium in a phased manner by 30.09.2013, as mentioned below:

By 31.03.20134,37,69,420

By 30.06.20134,37,69,420

By 30.09.20134,37,69,419

TOTAL13,13,08,259

But the Company has been able to pledge only 5,47,59,420 shares. The plan of Company to pledge shares as stipulated in the last sanction is as below

The promoters have availed Loans against pledge of shares from various Financial Institutions which has been infused in the Company as promoters contribution. The promoters intend to repay loans availed by Financial Institutions and the shares released would be pledged in favour of the Consortium. The promoters would utilize dividends proceeds / salaries / commission and other sources for repayment of liabilities with Fis. The Company has informed that the same would be completed by 31.03.2015.c) Brief Background of the company / Group & Management (To include competence / reputation/ corporate governance etc):A. Brief about the Company: Alok Industries Limited (ALOK) was incorporated on 12.03.1986 as a private limited company, Alok Textile Private Limited. The name of the Company was changed to Alok Textiles Industries Private Limited on 17.11.1992 and the Company was converted into a public limited company on 11.02.1993. Subsequently, w.e.f. 8.11.2000, the name of the Company was changed to Alok Industries Limited. It is an established, profit making, dividend paying and professionally managed textile Company. ALOK is one of Indias largest vertically integrated textile companies, covering the entire textile value chain from spinning to home textiles / garments and foray into retailing. The Companys core competency lies in apparel fabrics, home textiles and polyester yarn segments. The Company is headquartered in Mumbai and has 15 manufacturing units which are strategically situated at Navi Mumbai, Vapi and Silvassa in the states of Gujarat and Maharashtra. With over two decades of experience, ALOK is today a vendor of choice for quality textile products at internationally competitive prices and dependable delivery schedules. The Company has constantly adopted new technologies and widened its product range. A well-planned expansion programme has made ALOK a leading player in each of the product segments it operates in. The major export markets for the Company are US, Europe, Latin America, Asia and Africa. The Company is expanding its operations in more geographies and is today exporting to more than 90 countries. ALOKs key customers in the overseas market include WalMart, JC Penney, GAP, Target, Marks & Spencer, Kohls, etc. Among the major domestic customers, the Company supplies its products to Pantaloons, Wills Lifestyle, Zodiac, Madura Garments, Raymonds, Gokaldas Exports Limited, etc. Besides these, ALOK also supplies specialized fabrics to institutional segments like defence, hotels, aviation industry, refineries, etc. With its expansion programmes nearing completion, ALOK would be looking to consolidating its operations with a focus on maximizing Return on Capital Employed (ROCE), effective utilization of capacities and cost control. It would be looking at increasing its asset turnover by concentrating on value added products on the cotton side and increasing capacities on polyester side. It would also be looking at expanding its market by increasing its geographical reach.

The Company has been intensifying its efforts to exit the real estate business and the status as on date is given below:Name of the propertyNo. of floors soldTotal ConsiderationAmount Received

Peninsula Business Park16.50 floors

(out of 20 floors)819.73649.16

Ashford Centre3 floors

(out of 8 floors)42.3242.32

Land at Silvassa64.18 acres47.8847.88

Peninsula Corporate Park30,218 sq. ft.64.5012.35

TOTAL974.43751.71

The Company changed its Balance Sheet date from 31.03.2013 to 30.09.2013, the reasons for delay in Balance Sheet are as below The company intended to come up with rights issue in the FY 2012-13 with a view to reducing its highly leveraged position, but the proposed issue could be completed only by May 2013. The company decided to push its Audited Balance Sheet date so that Rights Issue is reflected in the Balance Sheet. The Company filed a merger scheme with the Honorable Bombay High Court for consolidating all domestic subsidiaries into one wholly owned subsidiary viz Alok Infrastructure Ltd for real estate and retail ventures. As, the High Court order was pending, the company had extended the accounting year end to September 2013 so as to avoid preparation of two sets of audited financial statements pre-merger and post-merger. Hence to prevent multiple financial statements being circulated, the accounting year was extended by the Company. The Court order approving merger of Alok Infrastructure Ltd. was received on 11.10.2013. The merger of all subsidiaries into Alok Infrastructure Ltd. will be reflected from 01.04.2012.

Details of share prices:

The shares of the Company are listed on the BSE and NSE. Details of share prices are given below:

ParticularsBSENSE

CMP Rs.6.60Rs.6.59

52 week LowRs.5.87Rs.5.85

52 week HighRs.10.63Rs.10.63

B. Snapshot of share price movements over the last 12 months:

Source: moneycontrol.comC. List of Directors:ALOK is a professionally managed company. The following is the list of Board of Directors of the Company:

Name & Designation Designation

Ashok B. JiwrajkaExecutive Chairman

Dilip B. JiwrajkaManaging Director

Surendra B. JiwrajkaJoint Managing Director

Ashok G. RajaniIndependent Director

Timothy IngramIndependent Director

Thankom T. MathewNominee Director of LIC of India

M. V. Muthu Nominee Director of IFCI Ltd.

Sunil O. KhandelwalExecutive Director

K. H. Gopal Executive Director

Samuel JosephNominee Director of Exim Bank

Lalita SharmaNominee Director of IDBI Bank Ltd.

d) Brief write up on the Industry/ Sector and the Companys standing (Comments on domestic/ international standing, market share, business strategies, competitive advantage etc. The para to conclude with the outlook for the unit ): The Textile industry is crucial to the Indian economy in terms of its contribution to the GDP and employment. It contributes about 4% to the GDP, accounts for about 14% of total industrial production and contributes around 12% of the gross export earnings. The sector is the 2nd largest employment provider after the agriculture sector, employing over 35 million people directly, which mainly comprises of weaker sections of the society. Thus, the growth of this industry has a significant bearing on the overall development of the Indian economy.

The Indian Textiles and apparel markets, both domestic and exports, continues to grow. In 2010, the total Indian textiles and apparels market was estimated to be around Rs.3,68,000 crores and is estimated to grow at a CAR of 11% to reach Rs.10,32,000 crores by 2020. Within this industry, the domestic apparel industry is growing by 10%, while home textiles demand is growing by around 12%.

The Indian textile and apparel industry accounts for around 4% of the global textile and apparel trade. India is the worlds second largest producer of textiles and garments, and also the second largest cotton producer. Almost two-thirds of the total Indian apparel and textile industry is from domestic consumption. The Indian government plays a major role in promoting and encouraging the industry growth through the Scheme for Integrated Textile Parks (SITP), Technology Upgradation Fund Scheme (TUFS), increase in Duty Entitlement Passbook Scheme (DEPB), duty drawback rates and reduction in exporter interest rates, continuous import duty reductions on textile machinery, among others. Going forward, domestic demand will dominate the cotton yarn market.

India is one of the few countries that have a presence across the entire textile value chain starting from raw material (fibre), spinning, weaving / knitting, processing to value added products such as garments and made ups. Technical Textiles offer a huge opportunity in India for both local consumption as well for exports. Based on current usage patterns the Domestic Consumption market alone is expected to exceed Rs. 62000 crs by 2012-13. The technical textiles segment is expected to grow by 11% per annum till 2012-13.SECTION-B1APPRAISAL MEMORANDUM FOR TERM LOAN

CIRCLE/SBU:MCRO, MUMBAI

BRANCH:Backbay Reclamation Branch

COMPANY:ALOK INDUSTRIES LIMITED (ALOK)

SECTION-B2

CIRCLE/SBU:MCRO, MUMBAI

BRANCH:Backbay Reclamation Branch

COMPANY:ALOK INDUSTRIES LIMITED (ALOK)

ASSESSMENT OF WC FACILITIES(If the assessment of the WC limits is based on any other parameters, like Cash Budget method, Nayak Committee- Turnover Method, please specify them along with an explanation)a) Inventory & receivable levels (Amount and Days):

Inventory/PaymentsActuals

31.03.2012Estimated

31.03.2013Actuals30.09.2013

(18 months)Estimates31.03.2014

(6 months)Projected

31.03.2015

Raw material

Imported Amount---------------

Days---------------

Domestic Amount435.08501.63288.23614.81680.55

Days3638123030

SIP Amount2223.502318.784849.464332.684364.83

Days12196177128134

FG Amount641.86758.54525.04945.47984.69

Days3632203030

Receivables (Domestic) Amount1771.742156.404666.234278.234308.20

Days106104168142140

Receivables (Export) Amount352.621349.07286.67847.06936.66

Days42106317075

S Creditors

Amount470.93848.97921.891088.031163.22

Days2947364545

Other Current Assets Amount2366.632127.242442.152034.841288.01

Comments:

Inventory: The operations of the Company are integrated right from cotton to garments / home textiles and in polyester from Continuous Polymerization to Texturised yarn / Fully Drawn Yarn. As a result, the inventory cycle is high. Cotton, being the primary raw material, is procured and stored. The cotton inventory is usually about 3 months which is equal to the order book cycle. ALOK commences manufacturing only on receipt of confirmed orders. The Company works on a Make-to-Order business model wherein it supplies its products, primarily apparel fabrics and home textiles, to its customers across the globe. Hence, the entire inventory is against sales orders that have been contracted. In the polyester segment, the inventory cycle is about 75 days as the process is shorter and RM holding is lower due to the nature of raw materials, i.e. PTA and MEG. The inventory cycle in relation to sales has increased from 139 days in 2011-12 to 158 days in 2012-13.

Raw material holding level was 12 days in 2013 as against 36 days in 2012. The position depicted above is as on the date of the balance sheet. We have estimated holding levels of 30 days in line with past trends.

The level of SIP has increased considerably (177 days) as compared to the estimates and also against the position in 2012 (121 days). Being an integrated textile company, the finished goods are essentially garments or home textiles or apparel fabrics in the cotton segment and texturised yarn and fully drawn yarn in the polyester segment. All intermediate products like yarn, yarn at weaving, fabric at processing and fabric at stitching are categorized as stock in process. This leads to a high level of SIP. Further, the Companys level of backward integration and scale of operations have also increased resulting in higher in-process inventory. The Company has submitted that fabric manufacturing involves the following processes:

Main ActivityProcessDays

SpinningBlow Room, Carding, Combing, Spinning, Winding30-35

Yarn conditioning

Yarn Twisting

WeavingWarping60-70

Sizing

Weaving

Checking

Packing

ProcessingSingeing and Desizing50-55

Scouring and Bleaching

Mercerising

Stentering

Dyeing and Printing

Finishing

Packing

Made ups / Home TextilesCutting and Sorting30-35

Stitching

Inspection and Packing

Total170-195

The timeline for carrying out the entire spectrum of activities ranges from 170-195 days in case of cotton products. The polyester cycle is shorter of about 75 days. Hence, we have assumed a SIP level of 128 days for our assessment. In view of the nature of operations, the position may be accepted.Finished goods: Holding level of finished goods is around 1 month as majority of inventory is treated as SIP owing to the integrated nature of operations. The level is estimated at 30 days, which may be accepted.Inventory/ Sales is estimated to decrease to 145 days in the current year in view of the following.

Alok was expanding capacities and looking at growing its markets. The marketing team was working to get more and more customers under the supply chain. Thus the number of qualities being manufactured by the company was very high. This lead to slower movement of inventory as machine changeover was high. Going forward, the company proposes to restrict the number of qualities, as order book positions are very good and customers are looking at increa