ID E N T IF Y IN G T H E O P P O R T UN IT IE S A N D

M E T H O D O L O G Y O F C O R P O R A T E F IN A N C E
T R A N S A C T IO N S IN T E A A N D G A R M E N T
(S P E C I A L L Y H O S IE R Y ) S E C T O R S
AT
Crystal Research and Consulting Private Limited
Kolkata
By: -
Miss Tanusree Mukherjee
Specializations: - Finance (major)/Marketing (minor)
Roll No: - 071360709201054 of 2007-09
Registration No: - 071360709201054 of 2007-08

Army Institute of Management

Kolkata (AIMK)
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 GUIDANCE-cum-COMPLETION CERTIFICATE

This is to certify that Ms. Tanusree Mukherjee,WBUT Registration NO.

071360709201054 of the year 2007-2008,WBUT Roll No. 071360709054 has
undertaken the project titled “ Identifying The Opportunities And Methodology of
Corporate Finance Transaction in Tea and Garment sector” under our guidance
from 2nd June’08 to 5th August’08 at the Crystal Research and Consulting Pvt.
Ltd. and has complete the said project successfully.

Jhelum Chowdhury
External Guide
Designation: Director

Mousumi Bhattacharya
Internal Guide

Acknowledgement
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I am highly honoured on being given an opportunity to make a brief project report
on the Corporate Finance Transactions Opportunity in two different sectors viz.
Tea and Garment under the company of Crystal research and Consulting Pvt.
Ltd.
I am very thankful to Mr. Jhelum Chowdhury who has helped me in all possible
ways by creating a healthy environment and by providing me all the necessary
data to prepare my project report successfully.
I wish to extend my sincere gratitude towards Ms. Mousumi Bhattacharya, who
was my internal guide and helped me with all the necessary formalities for
completion of the project.

Respectfully submitted by….

Tanusree Mukherjee
Student, Masters in Business Administration
ARMY INSTITUTE OF MANAGEMENT.
KOLKATA

CONTENTS
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CHAPTER TITLE PAGE NO.
SUMMARY 5–8

Executive Summary 6
Observation and Scope 7-8

1. PROFILE OF THE COMPANY 9 - 12

1.1 Company profile

2. THE PROJECT 14 - 17

2.1 Purpose and scope of study 15

2.2 Methodology 16-17

3. COLLECTION & ANALYSIS OF DATA 18 – 55

3.1 Collection of Data
3.2 Analysis of Data

3.1. /2. A. Collection and Analysis of data on PE/VC funds 19-31

3.1. B. Collection of Data on Tea Industry 32-36
3.2. B. Analysis of Data on Tea Industry 37-44
3.1. C. Collection of Data on Garment Industry 45-48
3.2. C. Analysis of Data on Garment Industry 49-55

4. FINDINGS AND RECOMENDATIONS 56– 70

4.1 Conclusion ( Including a Sample of Preliminary 57-68

Information Memorandum)
4.2 Constrains and Limitations 69

4.3 Recommendations 69-70

APPENDIX 71-84
Annexure 1: List of Important Tea Companies 72-77
Annexure 2: List of Important Garment 78-84
Companies

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EXECUTIVE
SUMMARY

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 EXECUTIVE SUMMARY

The company Crystal Research and Consultancy Pvt. Ltd is a financial

consultancy, incepted in the year 2005.though it is based in Kolkata but it has
clientele base all over the world. The company assists in all sorts of financial
advisory as well as it is into financial research.
The core competency of the company is in writing business plans but apart
from that the other thrust areas are corporate finance advisory, project
appraisals, fund raising from primary and secondary markets, wealth
management, valuation and also industry research.
The aim of this project was to identify the opportunities of Corporate Finance
Transaction in today’s globalized financial market in India. Today’s business
process consist of merger, acquisition, valuation of firms and providing the
value--- in all these respect corporate finance plays a vital role.
This project aims at developing a clear vision of the role played by corporate
finance transaction and its market potentiality in India. The focus area were Tea
and Garment (especially Hosiery) sectors to find out whether corporate finance
transaction can take place in these two sector

The reasons behind selecting these two sectors were:

The tea sector was been selected because of the following reasons-
• As West Bengal is a major tea base in India thus it was easier to meet
the companies located in Kolkata during that short tenure of two
months.
• As it was observed that tea is a dying sector so many small and
marginal companies want to divert their business from this sector to
other sectors like hotels and real estates. So there is an opportunity for
the company to penetrate in this sector.

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 • There are some big companies in the tea sector which are doing well
and in a mode of expanding businesses. So there is a high possibility
that some M & A deal can take place in this sector. The world
packaged tea market is worth US $ 20.3 bn and the world ready to
drink market US $ 24.5 bn. Thus all over the world the demand is high
The garment (especially hosiery) was chosen because:
• Hosiery sector is mainly an unorganized sector and there are few
numbers of small and medium enterprises apart from very few
numbers of large entities. Thus it is very likely that M&A transaction
can take place in this sector.
• Hosiery is mainly concentrated in two major location in India one is
Tirupur of Tamil Nadu and other is in and around of Kolkata, West
Bengal. Thus there is a locatioanl advantage in choosing this sector.
• A new Hosiery park is coming up in Howrah(west Bengal) which is
banked by ICICI bank. Thus there is high possibility that new
transaction or fund raising can take place in near future.

OBSERVATION AND SCOPE

1. As tea sector is a sun set sector, so many companies want to divert from
the industry, specially small and marginal companies which are having
operational loss. On the other hand, some big companies are making
profit and are in a stage of acquiring small and marginal companies.
So the Company can penetrate in this sector and can find some good
opportunity to make some M&A activity.
2. It was also observed in the tea sector that small companies want to shift
into the reality sector or hotel industry and want to use their gardens for
realty businesses or hotel businesses. In that regard the Company can
enter the sector to help the companies for Private Equity and Venture
Capital funds.

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3. Govt. subsidy doesn’t reach to the bottom level of the pyramid. Labour
problem is another main problem, faced by this sector.
4. Indian market is facing challenges from global competitors of Kenya
market, Sri Lanka etc. As their production cost is less so India is in a
disadvantage situation. Thus strategic as well as financial advices can be
suggested to those companies who are facing these problems.
5. In India tea is either sold by the company’s own brand name or auctioned
in the Tea Board of India based in Kolkata. Now it was observed during
the project tenure that some small companies want to have their own
brand name to market their product. In this regard the company can help
them in taking some strategic moves.
6. The same trend has also been observed in hosiery sector where
companies want to market their products under big brand names. in both
these sectors Crystal can help them in strategic business planning.
6. There are very few companies which are fully integrated in hosiery
industry (some of them are Sreepati Hosiery Mills, Gopal Hosiery, Kothari
Hosiery etc.), thus different entities are into the whole procedure of the
business of the final goods. So a further study can be done on the value
chain analysis of the business entities in this sector.
7. Speaking about the structure and organization of the garment sector, the
Indian textile industry is dominated by only a few large organized and
numerous small and medium (unorganized) companies. The small and
medium players though competitive yet they have no global presence. The
competitiveness of cost can be attributed to the ready availability of raw
material and low-cost manpower. Many international brands, such as
GAP, Wal-Mart, Tommy Hilfiger, Benetton, G Star, Levi's and Marks &
Spencer, are using India as a sourcing hub. So here also strategic as well
as financial advices can be given to the companies. And this can be
identified as a prospective sector.

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CHAPTER- 1
THE COMPANY

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 1.1 COMPANY PROFILE

Vision

To be the leading consultant in the areas of Strategic Planning and Corporate

Finance.

Mission

Deliver high quality analytical work in the areas of Strategic Planning and
Corporate Finance and work hand-in-hand with the clients in expanding their
businesses.

Company can be useful to:

• Broking Firms, who would like to develop Research Reports for their
clients, or source the in-House Research Reports.
• Financial Institutions, who would like to commission for Research Reports.
• Institutional and Retail Investors, who would like to avail of the in-House
Research Reports.
• Other Intermediaries in the financial market or governmental or quasi-
governmental undertakings, who would like to develop reports for them.

CORPORATE FINANCE:

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Corporate Finance Advisory: The Company can assist in arriving at optimal
Corporate Finance decisions and can also assist in raising funds from the
financial markets.
Project Appraisal: The Company has a core analytical skill in studying the
profitability of new ventures and generating Project Appraisal reports for new
projects, which would be required for taking Investment decisions and also for
making the project bankable for Financial Institutions.

Fund Raising: Assisting in all aspects of fund raising from the Primary and
Secondary Markets.
Wealth Management: We advise clients in finding the best avenues for investing
their money and for tax planning. Innovative investment options providing the
highest returns are available.

STRATEGIC PLANNING
Business Planning: The Company has a core competency in writing Business
Plans and revising it at periodic intervals in keeping with changing business
requirements. It also takes care of strategizing the growth path on behalf of the
clients.
Valuations: Valuing businesses for the purposes of Mergers and Acquisitions,
Divestment of Business and for division/ distribution of Assets are also the thrust
areas of the Company.
Capital Budgeting: Helping in taking the correct Investment decisions for
expanding businesses is another working area of the Company.
Financial Modeling: Financial modeling assignments to model the key attributes
of the businesses and a detailed forecasting of Commodity Prices in the
belonging industry may be a job that the Company can do for the clients.
Benchmarking Exercises: Benchmarking against competition and learn a best
practice to make the business more competitive is another central part of the
Company.

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Industry Research: Generating research report on particular industry and
providing it with the industry data and sound financial analysis and updating the
Research Report at periodic intervals are some major working areas of the
Company.

THE PROJECT

New Businesses: Supporting the clienteles from inception to completion of new

projects and expanding their current operations are among key operating areas
of the Company.

Technology: Choosing the appropriate technology for the business is a vital

decision for any business but Crystal Research can do it easily for its clients.

Processes: Writing the processes and setting up the systems for different areas
of operations can be done by the Company.

Research

Preparing customized Research Reports for Broking Clients as well as for

Institutional and Retail Investors and other intermediaries in the financial
markets.

Company’s Research Reports

• Daily Market Update: Market information, and coverage of some select
stocks.
• Weekly Market Update: Equity Market, Debt Market and Economy Update.
• Indian Financial Markets (Fortnightly): Equity Market, Debt Market and
Economy Update
• Fixed Income Outlook (Fortnightly): Debt Market Analysis

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• Portfolio Update (Customized for the Investor)
• Mutual Fund Outlook (Quarterly)
• Currency Update (Quarterly): International Currency Outlook
• Global Foreign Exchange Update (Quarterly): Global Foreign Exchange
Outlook
• Indian Economics Update (Quarterly): Economy Update
• Company Update (Quarterly)
• Credit Policy Review (Biennially)
• Country Strategy (Annually)
• Budget View (Annually)
• Sector Update (Annually)
• Sector-wise Budget Series (Annually): Industry-wise Budget Impact
• Tax Update (Annually)

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CHAPTER-2
THE PROJECT

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 2.1 PURPOSE AND SCOPE OF STUDY

Objective of the project:-

Identifying opportunities for Corporate Finance transactions in Garment and Tea
Industries:
1. Need for external financing
2. M&A deal-making opportunities
The objective of the project to be carried out is to identifying the opportunities of
Corporate Finance in today’s globalize financial market in India and its
methodology. Today’s business process consist of merger, acquisition, valuation
of firms and providing the value--- in all these respect corporate finance plays a
vital role.
This project aims at developing a clear vision of the role played by corporate
finance transaction and its market potentiality in India. Main industries located in
eastern India are –steel, tea, agro-product, IT, leather, tourism, garment
(especially hosiery), thus our focus is to find out how can corporate finance
transaction take a lead role in these markets.
As for the sake of convenience we have taken into account only two sectors viz.-
Tea and Garment (Hosiery).

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Project Output:

1. Database on Investment Banking intermediaries:

a. Private Equity/ Venture Capital Funds
b. Financial Institutions providing Project Finance
c. Other intermediaries
2. Analysis of Tea industry
3. Analysis of Garment industry
4. Specific proposals for Corporate Finance transactions for:
a) External funding
b) M&A opportunities.
2.2 METHODOLOGY

Project Methodology:

1. Data-mining through public information sources

2. Study of Annual Reports
3. One-to-one interviews with CFO/ decision-makers.

Project Work-flow:

1. Preparation of Database on Investment Banking intermediaries:

a) Private Equity/ Venture Capital Funds
b) Financial Institutions providing Project Finance
c) Other intermediaries

2. Study of the Garment/ Hosiery industry:

a) Preparing a macro snapshot of the industry
b) Value chain analysis
c) Identifying the principal players and tabulating financial/ operational
figures

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3. Study of the Tea Industry
a) Preparing a macro snapshot of the industry
b) Value chain analysis
c) Identifying the principal players and tabulating financial/ operational
figures

4. Short-listing important players in both the industries

5. Preparation of questionnaire for interviews.

6. Interviewing their CFOs/ decision-makers to identify Investment Banking

needs:
a) Need for external funding
b) Search for M&A opportunities

7. Preparing specific proposals for identified companies for seeking

Investment Banking mandates for:
a) External funding
b) M&A opportunities

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 CHAPTER-3
COLLECTION & ANALYSIS OF
DATA

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 3.1. COLLECTION OF DATA

3.1/2.A COLLECTION AND ANALYSIS OF DATA ON PE/VC FUNDS

Introduction

Investment basic:-

The money we earn is partly spent and the rest is saved for meeting future
expenses. Instead of keeping the savings idle we may like to use savings in
order to get return on it in the future. This is called Investment.
Now why should one invest?
One needs to invest to:
 Earn return on idle resources.
 Generate a specified sum of money for a specific goal in life

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 Make a provision for an uncertain future
Investment can broadly be classified into long term and short term.

Definition of private equity:-

First we have to define what private equity is? The Private Equity sector is
broadly defined as investing in companies’ securities, through a negotiated
process. As private equity is a long term phenomena thus private equity fund
investment is for those who can afford to have their capital locked in for long
periods of time and who are able to risk losing significant amounts of money.

History and Evolution of Private Equity:-

The seeds of the private equity industry were planted in 1946 when the American
Research and Development Corporation (ARD) decided to form to encourage
private sector institutions to help provide funding for soldiers that were returning
from World War II. While the ARD had difficulty stimulating any private interest in
the enterprise and ended up disbanding, they are significant because this
marked the first recognized time in financial history that an enterprise of this type
had been formed. In addition, they had an operating philosophy that was to
become significant in the development of both private equity and venture capital:
they believed that by providing management with skills and funding, they could
encourage companies to succeed and in doing so, make a profit themselves.
During the course of their unsuccessful journey, ARD did succeed in raising
approximately $7.4 million, and they did have one rousing success; they funded
Digital Equipment Corporation (DEC). By the 1970s such private participation
had permeated into the private enterprise formation, but till in the late 1970s, the
task was being largely carried out by investment arms of a few wealthy families,
such as the Rockefellers and Whitneys. In the 1980’s, FedEx and Apple were
able to grow because of private equity or venture funding, as were Cisco,
Genentech, Microsoft, Avis, Beatrice Foods, Dr. Pepper, Gibson Greetings, and

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McCall Patterns. Despite these successes, through a series of "debt-financed
leveraged buy-outs (LBOs)" of established firms, the PE firms were being seen
with acrimony and being caste as irresponsible corporate raiders- as a threat to
the free capitalist structure.
Most private equity funds are offered only to institutional investors and individuals
of substantial net worth. This is often required by the law as well, since private
equity funds are generally less regulated than ordinary mutual funds.

Role of Private Equity

Private equity is a broad term that refers to any type of non-public ownership
equity securities that are not listed on a public exchange. Private equity
encompasses both early stage (venture capital) and later stage (buy-out,
expansion) investing. In the broadest sense, it can also include mezzanine, fund
of funds and secondary investing.
The Private Equity sector is broadly defined as investing in companies’
securities, through a negotiated process. Investments typically involve a
transformational, value-added, active management strategy.
Private equity firms generally receive a return on their investment through one of
three ways: an IPO, a sale or merger of the company they control, or a
recapitalization. Unlisted securities may be sold directly to investors by the
company (called a private offering) or to a private equity fund, which pools
contributions from smaller investors to create a capital pool.
Considerations for investing in private equity funds relative to other forms of
investment include:
Substantial entry costs, with most private equity funds requiring significant initial
investment (usually upwards of $1,000,000) plus further investment for the first
few years of the fund.

Private equity fundraising:-

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Private equity fundraising refers to the action of private equity firms seeking
capital from investors for their funds. Typically an investor will invest in a specific
fund managed by a firm, becoming a limited partner in the fund, rather than an
investor in the firm itself. As a result, an investor will only benefit from
investments made by a firm where the investment is made from the specific fund
that they have invested in.
The majority of investment into private equity funds comes from institutional
investors. The most prolific investors into private equity funds in 2006 were public
pension funds and banks and financial institutions, which together provided 40%
of all commitments made globally. Other prominent groups investing in private
equity include corporate pension plans, insurance companies, endowments,
family offices and foundations.
Another large investor group in private equity funds is so-called fund of funds,
which are private equity funds that invest in other private equity funds in order to
provide investors with a lower risk product through exposure to a large number of
vehicles often of different type and regional focus.

Liquidity in the private equity market:-

The private equity secondary market (also often called private equity secondary)
refers to the buying and selling of pre-existing investor commitments to private
equity and other alternative investment funds. Sellers of private equity
investments sell not only the investments in the fund but also their remaining
unfunded commitments to the funds. By its nature, the private equity asset class
is illiquid, intended to be a long-term investment for buy-and-hold investors. For
the vast majority of private equity investments, there is no listed public market;
however, there is a robust and maturing secondary market available for sellers of
private equity assets.

Venture Capital:

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Venture Capital is considered a subset of private equity focused on investments
in new and maturing companies. Venture capital is a means of equity financing
for rapidly-growing private companies. Finance may be required for the start-up,
development/expansion or purchase of a company. Venture capital is a means of
equity financing for rapidly-growing private companies. Venture Capital firms
invest funds on a professional basis, often focusing on a limited sector of
specialization (e.g. IT, infrastructure, health/life sciences, clean technology, etc.).
The goal of venture capital is to build companies so that the shares become
liquid (through IPO or acquisition) and provide a rate of return to the investors (in
the form of cash or shares) that is consistent with the level of risk taken.

Venture capital investors are exposed to the risk of the company failing. As a
result the venture capitalist must look to invest in companies which have the
ability to grow very successfully and provide higher than average returns to
compensate for the risk.

Venture capital has a number of advantages over other forms of finance, such
as:

It injects long term equity finance which provides a solid capital base for future
growth.

• The venture capitalist is a business partner, sharing both the risks and
rewards. Venture capitalists are rewarded by business success and the
capital gain.
• The venture capitalist is able to provide practical advice and assistance to
the company based on past experience with other companies which were
in similar situations.
• The venture capitalist also has a network of contacts in many areas that
can add value to the company, such as in recruiting key personnel,
providing contacts in international markets, introductions to strategic

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 partners, and if needed co-investments with other venture capital firms
when additional rounds of financing are required.
• The venture capitalist may be capable of providing additional rounds of
funding should it be required to finance growth.

Although the venture capitalist may receive some return through dividends, their
primary return on investment comes from capital gains when they eventually sell
their shares in the company, typically between three to five years after the
investment.

Venture capitalists are therefore in the business of promoting growth in the

companies they invest in and managing the associated risk to protect and
enhance their investors' capital.

In 2006, total amount of private equity, including venture capital reached US$7.5
billion across 299 deals.

How does it Work?

Venture capital firms typically source the majority of their funding from large
investment institutions such as fund of funds, financial institutions, endowments,
pension funds and banks. These institutions typically invest in a venture capital
fund for a period of up to ten years.

To compensate for the long term commitment and lack of both security and
liquidity, investment institutions expect to receive very high returns on their
investment. Therefore venture capitalists invest in either company with high
growth potential where they are able to exit through either an IPO or a
merger/acquisition. Although the venture capitalist may receive some return
through dividends, their primary return on investment comes from capital gains

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when they eventually sell their shares in the company, typically between three to
five years after the investment.

Venture capitalists are therefore in the business of promoting growth in the

companies they invest in and managing the associated risk to protect and
enhance their investors' capital.

Venture capitalists have differing operating approaches. These differences may

relate to location of the business, the size of the investment, the stage of the
company, industry specialization, structure of the investment and involvement of
the venture capitalists in the companies activities.

Venture capital is not suitable for all businesses, as a venture capitalist typically
seeks: Superior Businesses Venture capitalists look for companies with superior
products or services targeted at large, fast growing or untapped markets with a
defensible strategic position such as intellectual property or patents.
Quality and Depth of Management Venture capitalists must be confident that the
firm has the quality and depth in the management team to achieve its aspirations.
Venture capitalists seldom seek managerial control; rather they want to add
value to the investment where they have particular skills including fund raising,
mergers and acquisitions, international marketing, product development, and
networks.

Appropriate Investment Structure As well as the requirement of being an

attractive business opportunity, the venture capitalist will also seek to structure a
deal to produce the anticipated financial returns to investors. This includes
making an investment at a reasonable price per share (valuation).

The venture capital firm will ask prospective investee companies for information
concerning the product or service, the market analysis, how the company
operates, the investment required and how it is to be used, financial projections,
and importantly questions about the management team.
In reality, all of the above questions should be answered in the Business Plan.

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Assuming the venture capitalist expresses interest in the investment opportunity,
a good business plan is a pre-requisite.

BUSINESS PLAN

The business plan must convince the venture capitalist that the company and the
management team have the ability to achieve the goals of the company within
the specified time. The business plan should explain the nature of the company’s
business, what it wants to achieve and how it is going to do it. The company’s
management should prepare the plan and they should set challenging but
achievable goals.

The key elements of the business plan:

1. Background on the company

2. The product or service
3. Market analysis
4. Marketing
5. The management team
6. Financial projections
Investment process
The investment process begins with the venture capitalist conducting an initial
review of the proposal to determine if it fits with the firm's investment criteria. If
so, a meeting will be arranged with the entrepreneur/management team to
discuss the business plan.

Preliminary Screening: The initial meeting provides an opportunity for the venture
capitalist to meet with the entrepreneur and key members of the management
team to review the business plan and conduct initial due diligence on the project.
It is an important time for the management team to demonstrate their
understanding of their business and ability to achieve the strategies outlined in

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the plan. The venture capitalist will look carefully at the team's functional skills
and backgrounds.

Negotiating Investment: This involves an agreement between the venture

capitalist and management of the terms of the term sheet, often called
memorandum of understanding (MOU). The venture capitalist will then proceed
to study the viability of the market to estimate its potential. Often they use market
forecasts which have been independently prepared by industry experts who
specialize in estimating the size and growth rates of markets and market
segments.

Indian scenario of PE/VC Fund:

Setting the stage - Venture Capital in India

• Phase I - Formation of TDICI in the 80’s and regional funds as GVFL

(Gujarat Venture Finance Limited) & APIDC in the early 90s.
• Phase II - Entry of Foreign Venture Capital funds (VCF) between 1995-
1999
• Phase III - (2000 onwards). Emergence of successful India-centric VC
firms
• Phase IV – (current) Global VCs and PE firms actively investing in India
• 150 Funds active in the last 3 years (Government, Overseas, Corporate,
Domestic)

(Source: TSJ Venture Intelligence India)

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Stages of PE/VC
1. Early Stage
2. Growth Stage
3. Late Stage
4. PIPE (Private investment in public equity)
5. Buyout
6. Others

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PE investment by Stage in India: 2007(First half)
(Source: TSJ Venture Intelligence India)

Stage of Company No. of Deals Amount (US$M)

Early Stage 24 154
Growth Stage 25 1082
Late Stage 67 2162
PIPE 34 1714
Buyout 6 440
Others 6 47

The venture capitalist also studies the industry carefully to obtain information
about competitors, entry barriers, and potential to exploit substantial niches,
product life cycles, and distribution channels. The due diligence may continue
with reports from other consultants. The chart below shows the industry-wise
PE/VC investment.

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List of some PE & VC Firms in India:-

1. ICICI Ventures PE & VC

2. CVC International PE & VC
3. UTI Ventures PE & VC
4. Kotak Private Equity Group PE & VC
5. JM Financial PE & VC
6. Evolvence PE & VC
7. New Bridge Financial Advisors (Texas Pacific PE & VC
Group)
8. Carlyle PE & VC
9. Apax PE & VC
10. Blackstone PE & VC

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11. Warburg Pincus PE & VC
12. Temasek Holdings PE & VC
13. General Atlantic PE & VC
14. 3i PE & VC
15. Chrys Capital PE & VC
16. Actis PE & VC
17. Baring PE & VC
18. GW Capital PE & VC
19. Oak Hill Capital PE & VC
20. ILFS PE & VC
21. West Bridge Capital PE & VC
22. Jumpstart UP PE & VC
23. IFC PE & VC
24. Intel Capital PE & VC
25. SIDBI PE & VC
26. GVFL PE & VC
27. GE Capital Services India Ltd. PE & VC
28. Motilal Oswal PE & VC
29. Axis Bank Private Equity PE & VC

Now narrowing down the activities of a VC/PE firms, the project focuses on two
aspects only; viz: M&A Transaction and PE transaction.

M&A Transaction takes place through various processes like:-

1. Interface with the prospective client.
2. Understanding the long-term business goals.
3. Obtain mandate from client for M&A.
4. Prepare Information Memorandum (IM).
5. Shortlist prospective buyers/ sellers
6. Approach prospective buyers/ sellers
7. Upon initial interest send them IM.

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 8. Upon acceptance of IM make detailed presentation.
9. Complete price negotiation.
10. Both parties do due diligence.
11. Agreement is signed.
12. Complete the documentation.

Similarly external PE Transaction goes through various processes, like:

1. Interface with the prospective client.

2. Understand his funding requirements.
3. Shortlist relevant PE Funds/ Financial Institutions
4. Approach short listed PE Funds/ Financial Institutions
5. Obtain Term-sheets
6. Client accepts the Term-sheet.
7. Complete the documentation

As it has been already stated that the objective of the project is to identify the
opportunity of corporate finance transaction in Garment (specially Hosiery) and
Tea sector so now the focus is to try looking into these two sectors as well as
over all investment scenario in India (specially west Bengal).

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3.1.B. COLLECTION OF DATA ON TEA INDUSTRY

TEA INDUSTRY

To identify the corporate finance transaction opportunity and methodology in tea

industry some steps were followed:-
1. Preparing a macro snapshot of the industry
2. Identifying the principal players and tabulating financial/ operational
figures
3. Preparation of questionnaire for interviews.
4. Interviewing the CFOs/ decision-makers to identify VC/PE needs:
a. Need for external funding
b. Search for M&A opportunities
5. Finding the valuation of the company
6. Preparing specific information brochure (IB) and business proposals for
identified companies seeking VC/PE mandates for:
a. External funding
b. M&A opportunities.

Step1: Macro snapshot of the industry:-

Tea is indigenous to India and is an area where the country can take a lot of
pride. This is mainly because of its pre-eminence as a foreign exchange earner
and its contributions to the country's GNP. In all aspects of tea production,
consumption and export, India has emerged to be the world leader, mainly
because it accounts for 31% of global production. It is perhaps the only industry
where India has retained its leadership over the last 150 years. Tea production in
India has a very interesting history to it. The range of tea offered by India - from
the original Orthodox to CTC and Green Tea, from the aroma and flavour of
Darjeeling Tea to the strong Assam and Nilgiri Tea- remains unparalleled in the
world.

Page | 33
Here are some statistical facts about the Indian Tea Industry:

1. The total turnover of the tea industry is around Rs. 10,000 crores.
2. Since independence tea production has grown over 250%, while land area
has just grown by 40%.
3. There has been a considerable increase in export too in the past few
years. Total net foreign exchange earned per annum is around Rs. 1847
crores.
4. The labour intensive tea industry directly employs over 1.1 million workers
and generates income for another 10 million people approximately.
Women constitute 50% of the workforce.

Tea trading in the domestic market is done in two ways- Auction and Private
Selling. Market Reports are received from the six major auction centers in India,
namely, Calcutta, Guwahati, Siliguri, Cochin, Coonoor, Coimbatore and N.I.
teauction.com Bulk trading is done through the auctions held in these centers.

India's tea industry is facing tough times due to labor problems, declining
demand at home and strong price competition abroad. India has traditionally
been the world's largest producer of tea. India's sprawling tea estates that spread
over the eastern Himalayan mountain ranges usually hum with activity at this
time of the year, as laborers pluck the leaves of the blooming tea bushes. West
Bengal is the second largest tea growing State in India. It contributes about 21
percent of the total production of tea in India. Darjeeling and Jalpaiguri are two
northern districts of West Bengal, where most of the tea gardens are located.
Darjeeling tea is the finest tea in the world. Tea industry plays an important role
in the economy of West Bengal. It generates employment in several ways like in
production, processing, distribution, packaging etc. Tea is also an important
source of income through exports. Kolkata port is the biggest tea-handling port in
India as well as Kolkata is the biggest tea auction market in India. Many new
small tea gardens have been set-up in Coochbehar, North Dinajpur, etc.

Page | 34
Step:2 Identifying the principal players and tabulating their
financial/operational figures:- [Follow Annexure 1]

Step: 3 Questionnaire for interviews:-

M&A and External financing

1. What has been the company’s performance?

2. What is the management’s outlook for the future?
3. Does the management wish to be in the Tea business in the long run?

If the answer to Q3 is yes, then:

4. What are their expansion plans?

5. Do they wish to acquire more tea gardens?
6. Do they wish to expand vertically on the value chain?
7. If they do not have packet Tea, do they wish to introduce and market their
own brand of packet Tea?
8. Is there any other ways in which the company wishes to expand?
9. Would they like to appoint Crystal Research and Consulting (P) Ltd. to
write a growth strategy/ advise them on restructuring their business?

If the answer to Q3 is No, then:

10. Do they wish to divest their tea business?

11. Do they wish to diversify into other businesses?
12. Have they spoken to any corporate lawyer on this?
13. Have they approached any Investment banker on this?
14. Have they tried to exit the business in the past?

Page | 35
 15. Do they have a preference of a prospective buyer they would like to sell
to?
16. Would they like to maintain a stake in the sold entity?
17. Would they like to appoint Crystal Research and Consulting (P) Ltd. to
sell/ restructure their tea business?

Step4: Interviewing the CFO s /Decision makers:-

Date Company Brand Owner Overview

12/06/2008 Newar Group A.)Tribhuban Tea Mr. Arvind A.)The company is in
(23/24 Radha B.)Halmira Tea Newar different business, like
Bazar Street C.)Dukenhengra Garments (Kool Kidz
Kolkata-700001) Tea Brand), importing toys
Phn:2242-9110/11 and Children furniture,
apart from main
business of Tea.
B.)The company wants
to expand the tea
business and had
acquired a Tea garden
in Himachal Pradesh
(HP) in 2007.
C.)The challenges the
company is facing are-
Increase in social cost,
competition from Sri
Lanka and Kenya tea
and uncertainty in
Agro-based business.

Page | 36
13/06/2008 R.N.T Plantation A.) Dalgaon Tea Mr.A.Tanti A.)The company
(1 & 2 Old Court B.) Lokwah Tea a wishes to be in Tea
House Corner Industry especially in
Kolkata-700001 Assam Tea) and they
Phn:22308831) wish to acquire new
gardens with green tea
B.)The company wants
to tie-up with small
gardens
C.) Labour problem,
high cost of production
and govt.rules and
regulations leads to
unfair competition in
the market.
16/06/2008 Ryam Commerce No own brand Mr. A.)The company is in
Plantation Prashant tea business for the
Ltd.(4.Indian Kanoria last 30 years.
Exchange Place (MD) B.)though the company
Kolakta-700001 doesn’t have any
acquiring plan but
wants to diversified in
other business like real
estate, hotel industry
etc.
C.)company wants to
have its own brand
D.)Company faces the
problems like labour
problem, international
competition.

Page | 37
3.2. B. ANALYSIS OF DATA ON TEA INDUSTRY

Step5: Valuation of the company:

Valuation of a company has been done on the basis of P/L & BS of the
company.
(Name of the company can’t be mentioned for the sake of business privacy)

Profit & Loss Account of the company:-

Figs in Rs Lacs Unit 2002- 2003- 2004- 2005- 2006-

2003 2004 2005 2006 2007

Sales Rs 16,243 17,754 21,144 21,448 23,959

Misc. Rs 937 1,724 1,159 2,044 1,457
Receipts
Incr. / Decr. In Rs -204 -316 -201 117 27
Stock
Total Income Rs 16,976 19,162 22,102 23,609 25,443
Other Income Rs 0 0 0 0 0

Op. Expenses Rs 16,027 18,017 20,582 21,495 23,673

Raw Materials Rs 3,657 4,515 6,218 6,080 7,984
Stores & Power Rs 2,751 2,878 3,319 3,627 3,703
Salary & Bonus Rs 6,453 6,753 7,047 7,561 7,589
Manufacturing & Rs 1,569 2,259 2,332 2,320 2,160
Other Misc.
Expenditure
Figs in Rs Lacs Unit 2002- 2003- 2004- 2005- 2006-
2003 2004 2005 2006 2007

Page | 38
 2003 2004 2005 2006 2007

Sales Rs 1,582 1,594 1,647 1,884 2,210

Expenditure incl.
Duty and Cess
MD's Rs 15 18 20 23 26
Commission
PBDIT Rs 949 1,145 1,520 2,114 1,770
Operating % 6% 6% 7% 9% 7%
Margin
Depreciation Rs 435 480 547 572 626
Interest Rs 283 406 340 474 621

PBT Rs 231 259 633 1,068 523

Provision for -22 -3 -7 -3 -33
Taxation---
current tax
Deferred Tax --- 346 62 3 0 4
Credit
Excess 244 0 0 0 69
provision for tax
for earlier years
Tax Rs -569 -59 4 3 -40
PAT Rs 800 318 629 1,065 563.26
Loss of 0 -212 0 0 0
amalgamation
Balance of 0 -64 0 0 0
Profit/ Loss of
amalgamation
Figs in Rs Lacs Unit 2002- 2003- 2004- 2005- 2006-
2003 2004 2005 2006 2007

Page | 39
Balance b/f from 125 1,332 1,259 1,577 1,674
previous year
Debenture 688 195 132 136 0
Redemption
Reserve
Balance 1,613 1,570 2,020 2,778 2,237
available for
Appropriation
Appropriation
Transferred to 100 100 200 800 200.00
General
Reserve
Proposed Equity Rs 160 187 213 267 267
Dividend
Tax on Dividend Rs 21 24 30 37 45
Balance carried Rs 1,332 1,259 1,577 1,674 1,725
to balance
sheet
Total Rs 1,613 1,570 2,020 2,778 2,237

Balance Sheet of the company:-

Fig. in Rs. Lacs 2002- 2003- 2004- 2005- 2006-

2003 2004 2005 2006 2007

Page | 40
LIABILITIES

Share Capital Rs 1,067 1,067 1,067 1,067 1,067

Reserves & Rs 12,411 12,071 12,404 13,206 13,512
Surplus
Deferred Tax Rs 812 750 747 747 743
Liability
Total loans Rs 8,105 9,703 11,335 12,514 14,452
Current Liabilities Rs 2,722 3,921 3,208 3,726 2,900
& Provisions

Total Liabilities Rs 25,117 27,512 28,761 31,259 32,673

ASSETS
1.Fixed Assets Rs
Gross block Rs 15,995 16,505 16,873 17,726 19,075
Less: Depreciation Rs 6,235 6,329 6,685 7,086 7,552
Net Block Rs 9,760 10,176 10,188 10,640 11,522
2.Investments Rs 6,257 7,991 7,893 9,996 10,586
3.Current Assets Rs 8,937 9,230 10,617 10,612 10,565
4.Misc. expenditure Rs 163 115 63 11 1
Total Assets Rs 25,117 27,512 28,761 31,259 32,673

Valuation:-

Page | 41
There are several approaches to valuation. The important ones are the
discounted cash flow (DCF), the comparable company approach, and the
adjusted book value.
Here we will follow the DCF method.
The discounted cash flow approach to corporate valuation involves four broad
steps:
1. Forecast the free cash flow.
2. Compute the cost of capital.
3. Estimate the continuing value.
4. Calculate and interpret results.
Valuation by DCF method can be of two types:-
Valuation by DCF method can be of two types:-

A.> Value of the equity stake in the business:-

Value of equity is obtained by discounting expected cash flows to equity i.e., the
residual cash flow after meeting all expenses, tax obligations and interest and
principal payments, at the cost of equity i.e., rate of return required by the equity
investors in the firm.
B.> Value of the entire business/firm:-
The value of the firm is obtained by discounting expected cash flows to the firm
i.e., the residual cash floes after meeting all operating expenses and taxes, but
prior to debt payments, at the weighted average sot of capital which is the cost of
the different components of financing used by the firm, weighted by their market
value proportions.
Here the emphasis is on the value of the firm.
The steps to be followed in calculating the firm values are:-

Step: 1 > Estimating the discount rate or the rates to be used in the valuation
(Discount rate can be cost of capital, in nominal terms or real terms depending
upon whether the cash flows are real or nominal)

Step: 2 > Estimating the current earnings and cash flows on the assets of the
firm.

Page | 42
Historical Figures of the Company:

Page | 43
 Free Cash Flow=Gross Cash Flow-Gross Investment
2002- 2003- 2004- 2005- 2006-
Year 2003 2004 2005 2006 2007
Fig. In Rs. Lacs Actual
A. Gross Cash Flow

1.EBIT 514.71 665.41 972.77 1,542.08 1,143.41

a.)EBIDT 949.47 1,144.99 1,519.83 2,114.23 1,769.55

i)Total Revenue 16,976.15 19,161.65 22,102.17 23,609.41 25,442.88

ii)Total Operating
expenses 16,026.68 18,016.66 20,582.34 21,495.18 23,673.33

b.)Depreciation 434.76 479.58 547.06 572.15 626.14

2.Taxes on EBIT (568.58) (59.41) 4.30 3.00 (40.37)

3.Net operating profit
less adjusted
taxes:(NOPLAT) 1,083.29 724.82 968.47 1,539.08 1,183.78

Change in CAPEX Rs 509.90 367.71 853.41 1,348.26

Change in WC Rs
292.65 1,387.51 (4.84) (47.75)
Gross Cash
Flow/FCFF 1,518.05 401.85 (239.69) 1,262.66 509.41
Interest Rs
283.24 406.48 339.72 474.07 620.52
FCFE (FCFF -
Interest) 1,234.81 (4.63) (579.41) 788.59 (111.11)
WACC 5.37% Page | 44
 Calculation of WACC:-

Total Debts Rs 14,452

Interest Rs 621
Cost of debt Rs 4.29%
Cost of equity
(On Assumption) Rs 20%
Share Capital Rs 1067
D*COD Rs 620.52
E*COE Rs 213.4
E+D Rs 15,519
WACC Rs 5.37%

Next 7 years projected figures:-

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

Free Cash Flow=
Gross Cash Flow-
Gross Investment

Year 1 2 3 4 5 6 7
Fig. In Lacs Projected
A. Gross Cash Flow

1.EBIT 6,014.85 6,589.89 7,363.49 8,710.22 10,065.05 12,054.41 13,477.61

a.)EBIDT 6,546.79 7,141.27 7,929.22 9,279.69 10,633.98 12,611.90 14,040.21

i) Total Revenue 30,712.41
(5 % sales Growth 26,505.63 27,886.54 29,220.21 32,054.21 33,581.51 35,211.97
Assumed)
ii)Total Operating
expenses 19,958.84 20,745.27 21,290.99 21,432.72 21,420.23 20,969.61 21,171.76
b.)Depreciation(Simple
moving Average) 531.94 551.37 565.73 569.47 568.93 557.49 562.60
Tax Rate Assume Corporate Tax Rate 30%
EBIT (1-Tax Rate%) 4210.40 4612.92 5154.44 6097.16 7045.54 8438.09 9434.33
Change in CAPEX(
Simple Moving
Average) 769.82 834.80 951.57 976.11 883.08 911.39 930.54
Change in WC( Simple
Moving Average) (572.43) 211.03 194.70 (43.86) (51.66) (52.44) 51.55

Page | 45
Gross Cash
Flow/FCFF 4,544.94 4,118.47 4,573.90 5,734.37 6,783.05 8,136.63 9,014.83
Interest( Simple Moving
Average) 424.81 453.12 462.45 486.99 489.58 463.39 471.10
FCFE (FCFF –
Interest) 4,120.14 3,665.35 4,111.45 5,247.38 6,293.47 7,673.24 8,543.73

DCF 4,313.17 3,709.14 3,909.23 4,651.14 5,221.16 5,943.67 6,249.37

TV 3000.00 ( On Assumption)
Present Value 36,996.88

3.1.C. COLLECTION OF DATA ON GARMENT INDUSTRY

Page | 46
 GARMENTS INDUSTRY

Step1: Macro snapshot of the industry: -

India is one of the major producer and exporters of textiles. The current value of
the Indian textile market is $36 billion and it constitutes about 5% of the GDP.
India exported US $ 17 bn in 2006-07. It is expected that by 2010, India's share
in the world textile export would be $40 billion. However its share in the total
global textile trade is just 4.72%. About 35 million people in India are directly
employed in textiles & garments sector and it is the second largest employer
after agriculture. The export basket includes a wide range of items including
cotton yarn and fabric, man-made yarn and fabrics, wool and silk fabrics, made-
ups and a variety of garments. Quota constraints and shortcomings in producing
value-added fabrics and garments and the absence of contemporary design
facilities are some of the challenges that have impacted textile exports from
India.

India’s presence in the international market is significant in the areas of fabrics

and yarn.
1. India is the largest exporter of yarn in the international market and has a share
of 25 percent in the world cotton yarn exports.
2. India accounts for 12 percent of the world’s production of textile fibres and
yarn.
3. In terms of spindle age, the Indian Textile Industry is ranked second, after
China, and accounts for 23 percent if the world’s spindle capacity.
4. Around 6 percent of global rotor capacity is in India.
5. The Country has the highest loom capacity, including handlooms, with a share
of 61 percent in the world loom-age.

Page | 47
To encourage this sector Government of India has allowed 100% FDI through the
automatic route. Speaking about the structure and organization of this sector, the
Indian textile industry is dominated by only a few large (organized and numerous
small and medium (unorganized) companies. The small and medium players
though competitive yet they have no global presence. The competitiveness of
cost can be attributed to the ready availability of raw material and low-cost
manpower .Cotton and synthetic fiber is available in large quantities. Many
international brands, such as GAP, Wal-Mart, Tommy Hilfiger, Benetton, G Star,
Levi's and Marks & Spencer, are using India as a sourcing hub. The domestic
and the export market are expected to grow at a very high rate. According to
estimates, the industry is expected to reach $83 billion in the coming five years.
The domestic market growth is driven by a larger consuming class and
increasing per capita consumption (currently only 3 kgs. of fiber per capita: 1/3rd
of world average). India's cost advantages of manufacturing textiles and
garments derive from- Abundant supply of inputs at competitive prices and Low
cost labor with a range of skill levels - from unskilled labor to fashion design.

Step:2 Identifying the principal players and tabulating their

financial/operational figures:-[Follow Annexure 2]

Step: 3 Questionnaire for interviews:-

Questionnaire – Garment Industry

1. Challenges the company/industry is facing.

2. Problems in staying in this unorganized sector.

3. Management’s look out for future to make it more organized.

4. How the industry is affected by current global/economical problems?

Page | 48
5. Does the management wish to be in the hosiery business in the long run?

If the answer to Q5 is yes, then:

6. What are their expansion plans?

7. Do they wish to acquire more company?

8. Do they wish to expand vertically on the value chain?

9. Is there any other ways in which the company wishes to expand?

10. Would they like to appoint Crystal Research and Consulting (P) Ltd. to
write a growth strategy/ advise them on restructuring their business?

If the answer to Q5 is No, then:

11. Do they wish to divest their hosiery business?

12. Do they wish to diversify into other businesses?

13. Have they spoken to any corporate lawyer on this?

14. Have they approached any Investment banker on this?

15. Have they tried to exit the business in the past?

16. Do they have a preference of a prospective buyer they would like to sell
to?

Page | 49
 17. Would they like to maintain a stake in the sold entity?

18. Would they like to appoint Crystal Research and Consulting (P) Ltd. to
sell/ restructure their tea business?

Step4: Interviewing the CFO s /decision makers:-

Date Company Brand Owner Overview

27/06/2008 Gopal Hosiery Gopal Partnership firm A.)This company is fully
(61,Ibrahimpur Road integrated in production
Kolakta-700032) B.)Rise in yarn price, labour
productivity and threat from
foreign players are major
problems.
C.)Hosiery sector (especially
in west Bengal) is an
unorganized sector.
D.)Though the company has
expansion plan in the future
but they can also go with
some branded players for
marketing their products.
1/07/2008 West Bengal Hosiery - - A.)Manpower cost is high in
Association West Bengal (especially
[Met Hony. Secretary Kolkata) compare to Tripur
Mr.B.D.Kotahri] of T.N.
B.)Infrastructure wise West
Bengal is in poor state than
T.N.
C.)unit capacity is 10-15%
low in W.B. compare to T.N.
as a result per unit cost is
much higher in W.B.

3.2. C. ANALYSIS OF DATA ON GARMNET INDUSTRY

Step-5: Valuation of the company:-

Page | 50
[Note: Crystal Research and Consulting Pvt. Ltd. has got a mandate from a
Hosiery company so the valuation is done on the basis of the B/S and P/L
a/c of that company for a prospective client.]

Profit & Loss A/C and Balance Sheet of the company:-

Note: (Name of the company is not given because for the sake of business
privacy)
Figs in Rs. Unit 2003-2004 2004-2005 2005-2006 2006-2007

Net Sales Rs
Turn over 201,900,000 239,600,000 291,900,000 322,300,000
Growth rate % 14% 16% 18% 9%
Other Income Rs
100,000 14,000,000 700,000 100,000
Incr. / Decr. Rs
In Stock (6,600,000) - 400,000 (1,100,000)
Total Income Rs 195,400,000 253,600,000 293,000,000 321,300,000
Op. Expenses Rs 213,000,000 252,300,000 290,900,000 300,000,000
Figs in Rs. Unit 2003-2004 2004-2005 2005-2006 2006-2007

Figs in Rs. Unit 2003-2004 2004-2005 2005-2006 2006-2007

Raw Materials Rs
237,300,000

150,800,000 170,200,000 222,000,000

Stores & Power Rs
18,600,000 19,300,000 25,900,000 22,700,000
Employee Cost Rs
15,200,000 18,500,000 19,100,000 19,200,000
Other Rs

Page | 51
Manufacturing 6,000,000 4,400,000 4,000,000 4,500,000
Sales Rs
Expenditure
incl. Duty and
Cess 22,400,000 39,900,000 19,900,000 16,300,000
Misc. Rs
Expenditure 3,600,000 3,500,000 3,800,000 4,100,000
Total Rs 216,600,000 255,800,000 294,700,000 304,100,000
Expenditure

PBDIT Rs -21,200,000 -2,200,000 -1,700,000 17,200,000

Operating % -11% -1% -1% 5%
Margin
Depreciation Rs
28,100,000 27,700,000 27,500,000 27,500,000
Interest Rs
38,200,000 13,900,000 15,100,000 33,700,000
Other Written Rs 3,600,000 3,800,000 2,700,000 2,700,000
Off
PBT Rs -91,100,000 -47,600,000 -47,000,000 -46,700,000
Figs in Rs. Unit 2003-2004 2004-2005 2005-2006 2006-2007
Extra Ordinary Rs -12,900,000 -100,000 2,700,000 800,000
Items
PBT(Post Rs -104,000,000 -47,700,000 -44,300,000 -45,900,000
Extra Ord
Items)
Tax Rs -62000000 0 0 0
PAT Rs -42,000,000 -47,700,000 -44,300,000 -45,900,000
Share in 31,684,000 31,684,000 31,684,000 31,684,000
Issues ( In

Page | 52
Lakhs)

Earning Per Rs -1.33 -1.50 -1.39 -1.46

Share

Balance Sheet of the company:-

2003-2004 2004-2005 2005-2006 2006-

2007
LIABILITIES

Share Capital Rs 316,800,000 316,800,000 316,800,000 316,800,0

00
Equity Share Rs 316,800,000 316,800,000 316,800,000 316,800,0
Capital 00
Reserves & Rs
Surplus (324,600,
(186,600,000) (234,200,000) (278,400,000) 000)
Secured Loans Rs 215,400,000 206,700,000 208,800,000 234,200,0
00
Insecure Loans Rs 15,400,000 15,300,000 35,600,000 35,200,00
0
Total loans Rs 230,800,000 222,000,000 244,400,000 269,400,0
00
Current Rs 156,300,000 97,500,000 87,800,000 83,300,00
Liabilities 0

2003-2004 2004-2005 2005-2006 2006-

2007
Provisions Rs 500,000 500,000 500,000 500,000

Page | 53
Total CL & Rs 83,800,00
Provision 156,800,000 98,000,000 88,300,000 0
Total Liabilities Rs 517,300,000 402,100,000 370,600,000 344,900,0
00
ASSETS
1.Fixed Assets Rs
Gross block Rs
538,700,0
536,600,000 537,500,000 538,700,000 00
Less: Depreciation Rs
239,000,0
156,700,000 184,200,000 211,600,000 00
Net Block Rs 379,900,000 353,300,000 327,100,000 299,700,0
00
Capital-Work-in- Rs 2,600,000 2,600,000 2,600,000 2,600,000
progress
2.Investments Rs 100,000 100,000 100,000 100,000
3.Current Assets Rs 30,600,000 24,100,000 24,300,000 30,200,00
0
a.) Inventories Rs
9,600,000 8,600,000 11,300,000 9,600,000
b.) Sundry Debtors Rs
13,900,00
19,100,000 17,500,000 11,300,000 0
c.) Cash & Bank Rs
Balance 1,900,000 (2,000,000) 1,700,000 6,700,000
Loans & Advances Rs 83100000 4700000 6200000 7800000
Fixed Deposits Rs 8000000 8000000 3700000 800000
Total Current Rs 38,800,00
Assets ,Loans & 121,700,000 36,800,000 34,200,000 0

Page | 54
 Advances

4.Misc. Rs 13,700,000 10,000,000 7,300,000 4,500,000

expenditure

Valuation of the company:

Valuation has been done by DCF basis.
7 years historical data

Free Cash Flow= 2003-2004 2004-2005 2005-2006 2006-2007

Gross Cash Flow-
Gross Investment
-
Year
Fig In Rs. Actual

1.EBIT (45,700,000.00) (26,400,000.00) (25,400,000.00) (6,200,000.00)

a.)EBIDT (17,600,000.00) 1,300,000.00 2,100,000.00 21,300,000.00

Total Revenue Rs 195,400,000 253,600,000 293,000,000 321,300,000
Op. Expenses Rs 213000000 252300000 290900000 300000000
Depreciation Rs 28100000 27700000 27500000 27500000
Tax Rate 30%
EBIT (1-Tax Rate %)
2.Tax Rs
-62000000 0 0 0
3.Change in deferred taxes
4.Net operating profit
less adjusted
taxes:(NOPLAT) 16,300,000.00 (26,400,000.00) (25,400,000.00) (6,200,000.00)

Change in CAPEX Rs 900,000.00 1,200,000.00 -

Change in WC Rs
(6,500,000.00) 200,000.00 5,900,000.00

Gross Cash Flow/FCFF 44,400,000.00 6,900,000.00 700,000.00 15,400,000.00

Interest Rs 13,900,000.00
38,200,000.00 15,100,000.00 33,700,000.00

FCFE (FCFF - Interest) 6,200,000.00 (7,000,000.00) (14,400,000.00) (18,300,000.00)

WACC 16.56%

Calculation of WACC:-
WACC
2006-2007

Page | 55
 Total Debts Rs 269,400,000
Interest Rs 33,700,000
Cost of debt Rs 12.51%
Cost of equity Rs 20%
Share Capital Rs 316800000
D*COD Rs 33700000
E*COE Rs 63360000
E+D Rs 586,200,000
WACC Rs 16.56%

7 Years Projected figures of the company:-

Free Cash 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013
Flow= 2013
Gross Cash -
Flow-Gross 2014
Investment

Year 1 2 3 4 5 6 7
Fig In Rs. Projected

63,1
46,7
1.EBIT 64,680,000 3,227,000 13,359,388 24,437,436 35,651,316 48,792,868 44

90,7
42,3
a.)EBIDT 92,380,000 30,827,000 40,934,388 52,031,186 63,268,503 76,389,353 49
Total Rs
Revenue 356,430,000 393,983,000 430,481,300 473,479,430 521,317,373 573,311,610 629,
993,
396

539,
Op. 251,
Expenses Rs 264,050,000 363,156,000 389,546,913 421,448,244 458,048,870 496,922,258 047

27,5
95,6
Depreciation Rs 27,700,000 27,600,000 27,575,000 27,593,750 27,617,188 27,596,484 05

Tax Rate Assume Corporate Tax Rate 30%

45,276,000 44,2
EBIT (1-Tax 02,7
Rate %) 2,258,900 9,351,571 17,106,205 24,955,921 34,155,008 21
Change in
CAPEX Rs (825,000) 318,750 173,438 (83,203) (104,004) 76,245 15,6

Page | 56
 19
Change in Rs
WC (2,900,000) (825,000) 593,750 692,188 (609,766) (37,207) 159,
741

71,6
Gross Cash 22,9
Flow/FCFF 31,425,000 30,365,150 36,159,384 44,090,971 53,286,878 61,712,454 66
Interest Rs
25,225,000 24,6
82,3
21,981,250 24,001,563 26,226,953 24,358,691 24,142,114 30

FCFE 46,9
(FCFF - 40,6
Interest) 6,200,000 8,383,900 12,157,821 17,864,017 28,928,187 37,570,340 36
WACC 16.56%

24,5
05,9
DCF 26,960,945 22,350,903 22,834,971 23,888,503 24,769,621 24,611,140 21
TV
(Assumed) Rs 3,000
Present 169,925,003
Value Rs

Page | 57
CHAPTER- 4
FINDING AND
RECOMENDATIONS

Page | 58
 4.1 CONCLUSION

Preparation of Information Memorandum and Business plan for the

companies seeking VC/PE funding:

Tea Sector

As no physical transaction took place within the short period of two months in
Tea sector, so no Information Memorandum (IM) or Business Plan could be
prepared, but on the basis of the above valuation, IB and Business Plan can be
prepared in future after getting mandate from the prospective clients.

Garment Sector

As the Company has got a mandate from a prospective client, so an Information

Memorandum has been prepared for Hosiery Company.
[Note: Name of the company has been changed for the sake of business privacy]

Below a Preliminary Information Memorandum sample is presented, which

the Company presents to a prospective client after getting a mandate from them.

Page | 59
Sample of Preliminary Information Memorandum

Preliminary Information Memorandum

ON

RC Garments Limited

India

Prepared by

Crystal Research and Consulting Pvt. Ltd.

July 2008

Page | 60
 Important Notice

Purpose of this Preliminary Information Memorandum

This Preliminary Information Memorandum ('Memorandum') is based upon

information provided by the management of RC Garments Limited (“RC” or “the
Company”). This Memorandum is being provided for information purposes to the
investor, who has expressed an interest in investing in the Company.

This Memorandum contains proprietary and confidential information regarding

the Company. It has been prepared by Crystal Research and Consulting Pvt.
Ltd. (“Crystal Consulting”), based on the information provided by the Company,
as well as the other sources referred to in the document, solely to enable the
investor to conduct an initial evaluation of the Company. The Memorandum (and
the information contained herein) does not constitute an offer to sell or an
invitation to purchase any shares in, or any underlying assets of the Company,
nor will it form a part of any investment decision or any decision to enter into any
contract of sale.

Contents of this Preliminary Information Memorandum

Neither “Crystal Consulting” nor any of its associates, nor any of their respective
directors, employees or advisors make any expressed or implied representation
or warranty and no responsibility or liability is accepted by any of them with
respect to the accuracy, completeness or reasonableness of the information set
forth in this Memorandum and nothing contained herein is, or shall be relied upon
as a promise or representation regarding the historic or current position or
performance of the Company or any future events or performance of the

Page | 61
Company. “Crystal Consulting” has not verified any of the information in this
document. Neither “Crystal Consulting” nor RC (or any person connected with
them) owe a duty of care to any recipient of the document, either in relation to the
document or any other information which the party is provided with at any time,
other than as may be agreed in writing between the vendor and the purchaser at
some future date. The information set forth in this document is intended solely
for the preliminary evaluation of the Company by the investor and accordingly the
investor must undertake such investigations as it sees fit before entering into any
contracts.

Confidentiality

The document is furnished on a strictly confidential basis. Any officers,

employees or advisers of the recipient’s company may make no approaches of
any kind to the staff, customers or suppliers of the Company or any of its
subsidiaries without Crystal Consulting’s prior knowledge and written approval.
Neither this Memorandum, nor the information contained herein, may be
reproduced or passed to any person or used for any purpose other than that
stated above. By accepting delivery of this Memorandum, the investors accepts
the terms of this Notice and agrees, upon request, to return all material received
from the Company or Crystal Consulting, including this document without
retaining any copies thereof.

Contents

1. Introduction
2. Business
Quality Control
Production
Marketing
Research & Development

Page | 62
3. Financials
4 Opportunity (Indian Textile Industry)

1. INTRODUCTION:-

A.>Corporate Profile of RC Garments Ltd.:

Established in India’s heart land of natural rubber producing state, RC Garments

Ltd. has been able to monitor the quality of rubber from the Estates. As a part of
backward integration, RC Garment Ltd. has established an in-house Centrifuging
Plant to customize the raw material for quality production.

B.>Achievements

1.) Quality Certification: RC Garment is the first rubber thread plant in the world
to achieve the coveted ISO 9000 quality certification. Currently RIL has been
certified ISO 9001: 2000 by BVQI that covers the entire operations of the facility
including Centrifuging Plant and Covered Rubber Thread plant.

2.) EMS Certification: RC is certified ISO –14000 by BVQI

3.) Export Recognition: Ever since its inception RC has been a trail blazer in the
export of rubber thread from India. For its outstanding export performance and
foreign exchange earnings, RC has been cited with Export Awards instituted by
CAPEXIL (Chemical and Allied Products Export Promotion Council of India),
AIRIA (All India Rubber Industries Association) and ICCI (Indian Chamber of
Commerce and Industry.

4.) Best Pollution Control Measures: RC is committed to preservation of the

environment for the future generation. RC has an advanced Effluent Treatment
Plant and the discharge from the ETP is used for in-house irrigation. The

Page | 63
pollution control and prevention measures of RC have been appreciated by the
State Pollution Control Board.

5.) Best Materials Management Practices: RC has implemented scientific

Materials Management techniques for smarter turn around of inventory and
healthier bottom lines. The practices adopted by RC have been cited in several B
schools and was also recognized by the Indian Institute of Materials
Management.

C.>Industrial Relation:

The Industrial Relations climate continues to remain harmonious and congenial.

The Management and the Trade Unions entered into a wage settlement
agreement for a period of 3 years till 31/3/2008.

D.>Group Companies

As per SEBI (Substantial Acquisition of Shares and Takeover) Regulation- 1997

as amended by SEBI (Substantial Acquisition of Shares and Takeovers) (Second
Amendment) Regulations, 2002, the parent company is a Malaysian based
company.

Page | 64
 2. Business

2.1 QUALITY CONTROL:

At RC, the buzz words are Quality and Customer Delight. RC ensures consistent
quality products to the customer by a three pronged quality approach – control of
inputs, control of process and quality control of outputs. RC has a chemical lab
installed with advanced testing equipments and the lab personnel work round the
clock to monitor and control the quality of the inputs to the process.
The process parameters are monitored on an hourly basis to ensure that the
process is within control and thereby assuring a consistent quality to the
customer. DCS systems with SCADA are installed to measure and monitor the
process parameters.
The quality of the output is measured and monitored by a physical lab again with
a committed crew that works round the clock. They ensure that the quality of the
output is as per global standards.

2.2 PRODUCT APPLICATION

A.>Hosiery Application:
Prime use of the Rubber Thread is in hosiery applications. Latex Rubber threads
are primarily used to manufacture various types of elastic tapes mainly for
foundation garments (briefs, trunks, panties, brassieres), shorts, pants, skirts,
sportswear, sock tops etc. They are also used in elastic tapes for diapers, shoe
uppers, headbands and wristband for sportsmen and travel goods.
B.>Special Applications:
Rubber threads are also used to make fishing baits and in Pole fishing. Colored
rubber threads are used for these applications. Colored rubber threads also used
for making toys like koosh balls and doll hair etc.

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 Medical nettings, braids, laces, cords, catheter manufacturing and webbing for
furniture are other applications of rubber thread.

CHARACTERISTIC OF RC THREADS
GREEN
TENSILE ELONGATION SCHWARTZ
MODULUS HEAT
VARIETY COUNT STRENGTH AT BREAK VALUE
300% RESISTANCE
(Gms/Sq.mm) (%) Gms/Sq.mm)
(Gms/Sq.mm)
HIGH 20-86 2.5 – 4.0 >30 >650 > 100
50
ELONGATION 90-105 2.5 – 4.0 >30 >700 > 100
FURNITURE
20 - 28 3.5 – 5.0 >30 >600 > 150 50
GRADE
FOOD
20 - 32 2.75 -3.50 >30 >700 > 135 <10
GRADE
FISHING
11 – 19 2.0 – 3.5 >20 >650 >100 50
GRADE
DIAPER
38-50 2.5-3.5 >30 >700 >100 50
GRADE
SUPER
34 - 40 3.0 – 3.5 >30 >675 > 135 >85
EXTRUDED
Tolerance ± 5% ± 10% ± 15% ± 10% ± 10%

2.3Market:
A.>Domestic Market:
RC Garments Ltd. is the undisputed market leader in India. RC has marketing
offices at Tirupur, Mumbai and New Delhi for effective customer support and
service. RC is a mere hundred kilometers away from the major textile cluster city
of Tirupur. By close location, RC has been able to provide a very responsive
supply chain partnership to the customers in Tirupur.
B.>Export Market:

Page | 66
RC Garments Ltd. has a strong international presence with exports to more than
twenty five countries including the United States of America and the European
Union. RC has been able to carve a unique position in the International Market
owing to its ability to produce a wide variety of quality products. Quality of the
product is acknowledged as one of the best in the world.

2.4 RESEARCH & DEVELOPMENT:

RC believes in continual product improvement and product innovation. Both
these have been achieved by a dedicated R & D. The R & D crew are a team of
dedicated Polymer Scientists, hand picked by the Management and trained at the
facilities of Malaysian parent company.

3. Financial
From the last few years Annual report of RC Garments Ltd. a clear picture can be
depicted that the company’s turnover has improved as compared to the previous
year. The steady increase in latex price was transferred to the finished product
and this phenomenon was witnessed world over. In view of the delay in
implementation of the CDR Package, the company continued to operate on a low
capacity this year
also and the operations had resulted in a net loss of Rs. 461.33 lacs during the
period under review. Company’s turnover has increased to Rs. 3165.19 lacs from
the last year’s Rs.2022.32 lacs from the Domestic Sales and Rs. 1142.87 lacs
from the Exports.
Since the company was not supported with the Working Capital Facilities,
company could not operate its full capacity due to which commitments on
installments / interest dues to banks could not be fulfilled.
3.1 Net Sales Figure (In Cr.)
INR

2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

12.81 20.19 23.96 29.19 32.20

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Net Income Figure (In Cr.)INR

2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

12.24 19.54 25.36 29.30 32.10

The last 5 years steady growth in sales has lead to a steady growth in income.
From the trend analysis it can also be depicted that future sales growth rate
would be as same as past 5 years, as well as the Net Income.
3.2 PROFIT FIGURES (IN CR.)
INR

2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Operating 1.99 -2.13 -1.62 -0.24 1.68

Profit

PBDIT 0.70 -2.12 -0.22 -0.17 1.69

PBDT -1.67 -5.94 -1.61 -1.68 -1.68

PBT -3.10 -10.40 -4.77 -4.43 -4.43

PAT -5.57 -4.20 -4.77 -4.43 -4.62

3.3 FINANCIAL SCENARIO:

A.>Reported BIFR:
The Company’s accumulated losses as on 31st March 07 is Rs.3255.38 lac
which is exceeding the Share Capital of Rs. 3168.37 lacs and free reserves of
Rs. 9.89 lacs. As the accumulated losses have exceeded to its net worth, the

Page | 68
Company be registered with Board for Industrial and Financial Reconstruction
under section 15 (1) of Sick Companies (Special Provisions) Act, 1985.
B.>Auditor’s Report:
Auditors have reported that the Company has charged interest at 5% for 2004-
05; 6% for 2005 - 06 and 14% for 2006 - 07 as per the CDR Package. Since the
package has not been implemented till date, effect of the differential interest
amounting to Rs.623.25 lacs in respect of the above three years will have an
impact on the profit and loss account of the Company.

4. OPPORTUNITY
India is one of the major producer and exporters of textiles. The current value of
the Indian textile market is $36 billion and it constitutes about 5% of the GDP.
Indian textile exports grew by 14% in 2004-05 over 2003-04. It is expected that
by 2010, India's share in the world textile export would be $40 billion. About 35
million people in India are directly employed in textiles & garments sector and it is
the second largest employer after agriculture.
Speaking about the structure and organization of this sector, the Indian textile
industry is dominated by only a few large (organized and numerous small and
medium (unorganized) companies. The small and medium players though
competitive yet they have no global presence. The competitiveness of cost can
be attributed to the ready availability of raw material and low-cost manpower.
Many international brands, such as GAP, Wal-Mart, Tommy Hilfiger, Benetton, G
Star, Levi's and Marks & Spencer, are using India as a sourcing hub.
The domestic and the export market are expected to grow at a very high rate.
According to estimates, the industry is expected to reach $83 billion in the
coming five years. The domestic market growth is driven by a larger consuming
class and increasing per capita consumption
India is hoping to become the second largest exporter of apparel among LCCs by
2010, next only to China. India's cost advantages of manufacturing textiles and
garments derive from- Abundant supply of inputs at competitive prices and Low
cost labor with a range of skill levels - from unskilled labor to fashion design.

Page | 69
Special Economic Zones will build on these advantages by:

• Absence of domestic taxes or import duties.

• 5 year income tax holiday followed by income taxes at 50% of the normal rate
for as long as 10 years.

• Reduced transaction costs.

• Better infrastructure

Government is also planning to set up 25 integrated textile parks. There are over
$30 billion worth investment opportunities for capacity expansion and
modernization.

Page | 70
 4.2 CONSTRAINTS & LIMITATIONS

A clear picture can be depicted after interviewing CFOs and decision makers,
that the total process of getting a mandate from any company is a long time
taking process.
And the whole process of M&A transaction and PE transaction is a long term
process and needs a thorough systematic analysis before the final deals take
place.

4.3 RECOMMENDATIONS
1. Based on the IM and Valuation done for the companies further M&A activity
can take place in future.
2. As tea sector is a sun set sector, so many companies want to divert from the
industry, specially small and marginal companies which are having operational
loss. On the other hand, some big companies are making profit and are in a
stage of acquiring small and marginal companies.
So the Company can penetrate in this sector and can find some good opportunity
to make some M&A activity.
3. It was also observed in the tea sector that small companies want to shift into
the reality sector and want to use their gardens for realty businesses or hotel
businesses. In that regard the Company can enter the sector to help the
companies for Private Equity and Venture Capital funds.
4. Hosiery sector has two main hubs-one in Tirupur of Tamil Nadu and another is
in Kolkata. The hosiery sector is an unorganized sector especially in West
Bengal, and in this competitive market scenario where global players are

Page | 71
emerging in the market, so the small companies are facing threat. In that regard
some companies may want to merge with global players (as revealed by
interviewing a CFO) for their promotion or branding or for technology. So the
Company can constantly keep an eye watch to find an opportunity to go through
the sector.
5. Some big branded players like Reliance are interested to emerge in this
sector, so there is good opportunity to make M&A deal in the sector.
6. The domestic and the export market of garment are expected to grow at a very
high rate. According to estimates, the industry is expected to reach $83 billion in
the coming five years. The domestic market growth is driven by a larger
consuming class and increasing per capita consumption
7. India is hoping to become the second largest exporter of apparel among by
2010, next only to China. India's cost advantages of manufacturing textiles and
garments derive from- Abundant supply of inputs at competitive prices and Low
cost labor with a range of skill levels - from unskilled labor to fashion design.
8. There are very few companies which are fully integrated in hosiery industry
(some of them are Sreepati Hosiery Mills, Gopal Hosiery, Kothari Hosiery etc.),
thus different entities are into the whole procedure of the business of the final
goods. So a further study can be done on the value chain analysis of the
business entities in this sector.

SWOT Analysis of Crystal Research and Consulting Pvt. Ltd.

Strengths: - The Company has a strong networking base and has a high
potentiality to sustain and grow in the globally competitive business scenario.
Weakness:- As the company is in a growing stage and emerging as a new
player, so it is not formally structured yet.
Opportunities: As there are very few Financial Consultancy firms based in
Eastern India, so the company can penetrate easily in this area apart from
approaching world wide companies and can take the lead role in near future.

Page | 72
Threats:- There is a threat from other players in the sector.

APPENDICES &
ANNEXURES

Page | 73
 Annexure:-
Annexure: 1 List of important players in Tea sector
Company details of the identified players:-
Name Promoter Address Tea Gardens
Group/Owner Area(Hector)
Ryam commerce & Prashant Kanoria 4,Indian Exchange Place 979.06 S.Assam(1)
Plantation Ltd. – MD 3 rd Floor.
Kolkata-700001
Phn:2220-6201/6206
Borjalingha Tea Mr.S.M.Jain 12,Indian Exchange 275.00 Assam(1)
Co.Pvt.Ltd Place
Kolkata-700001
Phn:22208977/9683 Assam(1)
Burnie Braes Tea 270.00
Co.Ltd.
Barooah & Associates Mr.H.P.Barooah 113,Park Street.Kolkata- 119.01 S.Assam(3)
Pvt.Ltd 700016 106.60
Phn-22295098/22299034 248.50
Total=474.11
Bhaskar Tea Co.Ltd Mr.S.V.Mohta 2,B.T.M Sarani S.Assam(3)
562.00
Kolkata-700001
334.00
Phn:2225-4215/6/7/8
377.00
Total=1273
W.B.(1)
Aliporeduar Enterprise
Ltd. 450.00
W.B.(1)
Arihant Plantation Ltd.
410.00
Darshanlal Anand Mr.Sudhir Prasad 41,Chowringhee 450.74 S.Assam(3)
Prakash & Sons. Road.Kolkata-700071
Phn:2288-3970/2
Tribhuban Associates Mr.Arvind Newar 23/24 Radhabazar Street 217.00 S.Assam(2)
Pvt.Ltd Kolkata-700001
Phn:-2242-9110/11
Halmira Estate Tea 345.43
Pvt.Ltd. S.Assam(1)

Page | 74
 Dukenhengra Tea 632.05
Co.Pvt.Ltd. S.Assam(1)
Gillander Arbuthnot & Mr.A.K.Kothari/Mr. C-4 Gillander House. 287.00 S.Assam(6)
Co.Ltd. S.S.Rathor N.S.Road 235.00 N.Assam(1)
Kolkata-700001 592.00 W.B.(2)
Phn:2242-9141/42/2230- 425.00
2331/4182 545.00
465.00
490.00
665.00
270.00
Total:3974
Sree BishnuTea 1540.00 Assam(2)
Co.Ltd.
Darjeeling Duars Mr.Sashank Nicco House 650.00 W.B.(1)
Plantation Ltd. Prasad 2,Hare street.5 th floor
Kolkata-700001
Cheviot Agro Inds.Ltd. Mr.H.V.Kanoria 24,Park Street(9th Floor) 490.00 Assam(1)
Kolkata-700016
Phn:30919624/25
R.D.Tea Ltd. Mr.V.Dhandhania 4,Middleton Street 650.00 W.B.(1)
Kolkata-700017
Phn:22809874
Makalbari Kanoi Tea Mr.O.P.Kanoi 8/1A, Middleton Road 560.00 S.Assam(1)
Estate Pvt.Ltd Kolkata-700071
Phn:30228000/1
Sree Kamakhya Tea Mr.R.K.Kanoi 4,Hastings Park Road 248.00 S.Assam(2)
Co.Pvt.Ltd Kolkata-700027 446.00
Phn:24791045/1688 Total=694.00
Kanoi Plantation Ltd. 540.00 N.Assam(1)

Hoograjuli(Assam)Tea Mr.S.K.Kanoi 7,Church Lane(4 th Floor) 372.00 N.Assam(2)

Co.Ltd. Kolkata-700069 360.00
Phn:22485551/52 Total:732.00
Panbari Tea Co.Ltd Mr.P.D.Kanoi 7,Church Lane(4 th Floor) 406.00 N.Assam(1)
Kolkata-700069
Phn:22485551/52
All India Tea & Mr.H.P.Kanoi 22,Ballygunj Park Road 140.00 Assam(2)
Trading Co. Kolkata-700019 230.00
Phn:22474541 Total:370.00
Hirajuli Tea Co.Ltd Mr.J.K.Thirani 33A,Chowringhee Road. 338.00 S.Assam(2)
Kolkata-700071 487.00 N.Assam(1)
Phn:22263118/22 540.00
Total:1365.00
R.N.T Plantation Ltd. Mr.A.Tantia 1&2 Old Court House 384.00 S.Assam(2)
Corner 168.00 W.B.(1)
Kolkata-700001 450.00
Phn:22308831 Total:1002.00
SPBP Tea Plantation Mr.D.Kumar 1,Crooked Lane 300.00 S.Assam(1)
Ltd Kolkata-700001 300.00 N.Assam(1)
Phn:22483068/6996 Total:600.00
Hanuman Tea Co.Ltd Mr.S.N.Bagla/ 234/3A, AJC Bose Road. 555.00 N.Assam(1)
Ayush Bagla Kolkata-700020
Phn:22873206

Page | 75
 Chengmari Tea Mr.R.Kejriwal 37, Shakespeare Sarani. 750.00 W.B.(1)
Co.Ltd. Kolkata-700017
Phn:22409834
Sublime Agro Ltd. Mr.Gaurav Jalan 7/1 Lord Sinha Road 780.00 N.Assam(1)
Kolkata-700016
Phn:22822191/1709
The Bijni Duars Tea Mr.S.Nahata 8,Camac Street(4 th 175.00 N.Assam(2)
Co.Ltd. Floor) 340.00
Kolkata-700016 Total:515.00
The Eastern Duars Phn:22829303 527.00 N.Assam(1)
tea Co.Ltd.
Bhagatpore Tea Mr.Sanjay Maloo 11, R.N.Mukherjee Road. 910.00 W.B.(1)
Co.Ltd. Kolkata-700001
Phn:22427293
Hindustan Tea Mr.C.P.Agarwal 12,Camac Street 410.00 Assam(1)
Co.Ltd. Kolkata-700017
Phn:22402709
Manipur Tea Co.Ltd. Mr.D.K.Mantri 15 A,Hemant Bose 250.00 Assam(1)
Sarani
Kolkata-700001
Phn:22430407/8
Ruttonpore Tea Ltd. Mr.D.K.Mantri 15 A,Hemant Bose 300.00
Sarani
Kolkata-700001
Phn:22430407/8
Bhaubandhar Tea Mr.P.Ganweriwal 14/2 Clive Row.Kolkata- 440.00 Assam(1)
Co.Ltd 700001
Phn:22477583
Basantipur Tea Mr.R.K.Lohia 3 B,National Library Road 870.00 Assam(1)
Co.Ltd Kolkata-700027
Phn:24567203/7205
Goombira Tea Mr.S.P.Singhania 33 A, J.L.Nehru Road. 600.00 Assam(1)
Co.Pvt.Ltd. Kolkata-700071
Phn:22293391
The North Western Mr.N.K.Bagla 16 A,B.R.B.Bose Road 291.00 Assam(3)
Cachar Tea Co.Ltd. Kolkata-700001 220.00
Phn:22351251/2 430.00
Total:941.00
Agarmet NA 58D, 4th Floor NA NA
Corporation Netaji Subhas Road
Kolkata, WB - 700001
Email :
agarmettea@vsnl.com
Phone : +91-33-
22429603/22433645
Fax : +91-33-22422886
Apple Valley NA Kavanad NA NA
Group Quilon, KL - 691003
Email :
appletea@sancharnet.in
Phone : +91-474-
771049/771378
Fax : +91-474-
712859/712870

Page | 76
 Camellia NA D-2 Saheed Nagar; NA Assam(3)
Overseas Bhubaneswar, OR -
751007. Email :
omfed@yahoo.com
Phone : +91-674-
2544576, 2546030
Fax : +91-674-2540974
The Tingamira Tea Bajoria Group NA Data not NA
Seed Co. available
Eastern Tea Estates Data not
Pvt. Ltd. available
Rajabhat Tea Co.Ltd Mr.N.K. Bajoria McLeod House 325.00 W.B.(1)
3,Netaji Subhas Road
Kolkata-700001
The Bormah Jan Tea Bajoria Group McLeod House 370.00 Assam(2)
Company 3,Netaji Subhas Road
Kolkata-700001
Roopacherra Tea 280.00 W.B(1)
Company Limited 400.00 Assam(1)
Total:680.00
Pahargoomiah Tea R.K.Goenka HMP House 530.00 W.B.(1)
Association Limited 4,FAIRLIE PLACE
Kolkata-700001
Nandavita Tea Private R.K.Goenka NA Data not NA
Ltd. available
Tyroon Tea Company A.K.Jalan McLeod House Data not
3,Netaji Subhas Road available
Kolkata-700001
Luxmi Tea Company Mr.D.Chatterjee/ NA Data not
Tapan Chowdhury available
- Dir. Finance
(9831011823/
22489091/ 4437/
4227)
Apeejay Group Apeejay Group Data not
available
Typhoo Tea Data not
available
Jayshree Tea B K Birla Industry House(15 th 1346.39 S.Assam(3)
Industries Floor) 694.87 WB
10,Camac Street 827.96 South India
Kolkata-700017
Phn:(033)22827531-34
Duncan Industries G P Goenka Duncan House NA NA
Limited 31 N.S.Road
kolkata-700001
Phn:(033)22300962/2185
Cygnet 8A, 3rd Floor NA NA
India Wood Street
Kolkata, WB - 700016
Email :
cygnetindia@vsnl.com
Phone : +91-33-
2477549/7561
Fax : +91-33-2800283

Page | 77
 Lochan 2nd Mile, Sevoke Road NA S.Assam(3)
Tea Siliguri WB
Darjeeling, WB - 734001 South India
Email :
lochantea@sancharnet.in
Phone : +91-9434052084
Fax : +91-353-2540652
North Western 16A Brabourne Road NA NA
Cacher Tea Kolkata, WB - 700001
Email :
norcatea@cal2.vsnl.net.in
Phone : +91-33-
22351251/1252/9181
Fax : +91-33-22215891
Subodh 7th Floor, Nilhat House, NA NA
Brothers 11R.N.Mukherjee Road
Kolkata, WB - 700001
Email :
teapeople@vsnl.com
Phone : +91-33-
22439516
Fax : +91-33-23340045
Tata Tea Tata Group 1Bishop Lefroy Road NA NA
Kolkata, WB - 700020
Email :
ttl.ho@tatatea.co.in
Phone : +91-33-
22813891/4747
Fax : +91-33-22811199
Williamson Magor B M Khaitan Four Mangoe Lane NA NA
Group Surendra Mohan Ghosh
Sarani
Kolkata, WB - 700001
Email : info@wmtea.com
Phone : +91-33-2435391
Fax : +91-33-2484690
Andrew & Yule Government of 8,Dr,Rajendra Prasad NA NA
Company India Sarani,Kolkata-700001
Methoni Tea Co. Ltd. NA NA NA NA

Warren Tea Ltd. NA NA NA NA

Goodricke Group NA NA NA NA

Dhunseri Tea and Mr.C..Dhanuka 4A,Woodburn Park 284.41 S.Assam(3)

Industries Ltd. Kolkata-700020 141.09 N.Assam(1)
Phn:2287-1702/2280- 247.06
1950-5 470.00
Total=1142.56
Tezpore Tea Co.Ltd. Mr.S.S.Gadhoke 4A,Woodburn Park 380.00 N.Assam(2)
Kolkata-700020 439.00
Phn:22801951/52 Total:819.00

Page | 78
 Production Details of some identified players (Yr:2006-07):-
Regist Total Gross Gross Net Profit Divid
ered Production Assets(INR) Turnover Export Profit(INR) end
Name of Stock (Kgs) - [2006-07] Turn paid
the excha 2006-07 Over
Company nge
The Bormah CSE 13,27,539 18,31,29,106
Jan Tea kgs
Company

Roopacherr 28.87lacs 35,65,81,394 17,90,93,992 ___ 1,62,95,871 1,57,61,442 Nil

a Tea
Company
Limited
Pahargoomi 12,15,28,491 6,74,33,571 ___ 1,19,832 1,03,332 Nil
ah Tea 976,705
Association
Limited
Tyroon Tea BSE,C 14.19 lacs 10,85,80,079 10,94,10,128 36,68,304 35,33,778 Nil
Company SE kgs

Jayshree BSE,N 32673.34 lacs 2,77,87,21 203.86 12,56.35,484 22,37,08 2.50

Tea SE,CS 19,090,000 m.kgs /shar
Industries E e
Duncan BSE,N 135.06 lacs
Industries SE,CS 1,011,141,00
Limited E 0

Production Details of some identified players (Yr:2005-06):-

Total Gross Turnover Export Gross Profit Net
Production Assets[2005-06] Turn [2005-06] Profit[2005-
Name of (Kgs) - Over 06]
the Company 2005-06
The Bormah Jan 17,90,39,978
Tea Company

Page | 79
 Roopacherra 33,88,60,219 15,69,81,862 ___ (25,14,7020) (3,67,39,874)
Tea Company gross loss gross loss
Limited
Pahargoomiah 12,70,28,491 5,62,59,950/- ___ (88,30,901) gross (88,54,001)
Tea Association 836,375 loss gross loss
Limited
Tyroon Tea 10,17,82,287 9,42,37,821 (1,02,70,203) (1,03,97,793)
Company Gross loss gross loss

Jayshree Tea 20,190,000 31259.34 lacs 21447.55 lacs 199.05 17,04,05,981 2777.93lacs
Industries m.kgs

Annexure: 2 List of important players in Garment (Hosiery) sector

Company details of the identified players:-
Name Transacti Main Corporate Office Address/ Promoter CFO/Decision Maker Listing on
on Product Phone/ E-mail Group/O Stock
Opportun wner Exchanges
ity
Rubfila Seller Heat New Industrial Development Public J R Rasiah(rubfila BSE,NSE
International Resista Area Limited @vsnl.com)
nt Latex Kanjikode, Palakkad - 678 company
Rubber 621
Thread Kerala, INDIA
Regd Office:
Nida,Menon Para Road
Kanjikode,Palakhand-40005
Kerala,Tel:+91-491-2567261
Fax:+91-491-2567260
Premco Global Seller Premco House, Street No. 3, BSE
MIDC, Andheri (East),
Mumbai - 400 093. INDIA.
Tel: 91 22-28223232 Fax: 91-
22-28351812.
Email:admin@premcoglobal.c
om

Arrow Webtex 101, MIDC, 19th BSE,NSE

Page | 80
 Street,Satpur , Nashik - 422
007, Maharashtra, India,
Phone:(91)253-
3918200,Fax:(91)253-
396220, Email:
solusionprovider@arrowwebt
ex.com,
Website:arrowwebtex.com
Bala Techno Seller/ P-22, C.I.T. Road, Scheme - Yashpal Managing Director- NA
Synthetics Buyer 55, Kolkata - 700014, West Mehra(Dir Asok Mehra
Bengal (INDIA). ctor), Director/Chairman-
Telephone: +91-33- Ashok Chandra Prakash
22452431, 22451329, Mehra Mehra
22447971, 22441504 (D) Company Secretary-
Facsimile:+91-33-22452863 T.K.Das
E-mail:
info@balatechnosynthetics.c
om
Pacific Cotspin Seller/ P-22, C.I.T. Road, Scheme - Yashpal BSE
Buyer 55, Kolkata - 700014, West Mehra
Bengal (INDIA).
Telephone: +91-33-
22452431, 22451329,
22447971, 22441504 (D)
Facsimile:+91-33-22452863
E-mail:
info@balatechnosynthetics.c
om
Maxwell Apparel Maxwell Industries Ltd. Mr. BSE,NSE
Industries (Spinning Division) S.B.Samant(President)
Kolappalur : 638 456
Gobichettipalayam
Tamil Naidu
India
+91-4285-223530, 223548,
223549
+91-4285-222890
info@maxwellgobi.com
Rupa & Co. Ltd. Buyer 1, Ho Chin Minh Sarani,8th Prahlad Ravi CSE,Jaipur
floor, Metro towers,Kolkata- Rai Agarwal(ravi@rupa.co. Stock
700071 Agarwal in) Exchange

Page | 81
 Phn:22177317 Vikash
Agarwal(vikash@rupa.
co.in)
Kothari Hosiery Fully 29, STRAND ROAD, 2ND Mr. Mr. M. Kothari
Factory Integrat FLR., KOLKATA - 700001, B.D.Kotah
ed WEST BENGAL, INDIA ri
Hosiery Phone:91-33-
22439371/75/22825290
Fax:91-33-22433109
TT Ltd. Buyer 879 Master Prithvi Nath Marg, Dr. Sanjay Jain ( Joint
Opp Ajmal Khan Park, Karol Rikabhcha MD)
Bagh, New Delhi 110005 Tel: nd Jain/ sjain@tttextiles.com
(0091)11-4154-5881-82, Sanjay
Fax:(0091) 11-23632283, E- Jain
mail: tttextiles.com, Website:
www.tttextiles.com
Super Spinning Yarn "ELGI TOWERS " PB BSE,NSE
Mills #7113, green fields, 737-D
puliakulam road, Coimbatore
-641 045 tel:+91 (422)
2311711 /4511 fax :+91
(422) 2311611 E-mail:
seethapathy@ssh.saraelgi.co
m, super@ssh.saraelgi.com
Precot Meridian Yarn Green Fields, Puliakulam BSE,NSE
Ltd Road, Coimbatore - 641045,
Tamilnadu, India Phone No.
+914224321100, Fax:
+914224321200 E-mail:
hr@precot.com,
sales@precot.com,secretaty
@precot.com,
wvg@precot.com, Website:
www.precot.com
Chestlind Yarn No. 147, 12th Main, 3rd NA
Block,
Koramangala, Bangalore -
560 034. INDIA
Tel +91 - 80 - 25538622
Fax +91 - 80 - 25538559
E-mail cheslind@vsnl.com

Page | 82
 Regd. Office & Mill:
Falta Industrial Growth
Center
Sector-IV,24 Parganas
West Bengal, India
Phn/fax:+91-3172-22284
+91-3172-22252
Maral Overseas Yarn Mr. Sunil Taneja
Asstt. Vice President (Export)
Ph: 91-120-2541810 extn.
417
Mobile: 09810077327
Fax: 91-120-
2531648/2531745
Email: suniltaneja@lnjb.com
H.P. Cotton 1E/12, Jhandewalan
Textile Mills Ltd. Extension, New Delhi –
110055 (India), Phone:
+911123636663,23541076,
e-mail:info@hpthrear.com
Mahavir Spinning Threads 212, Deen Dyal Upadhyay
Marg, Urdu Ghar, NEW
DELHI 110002
Malwa Cotton Threads EAST OF KAILASH NEW
DELHI
110065
t: 26448851
http://www.malwaoswal.com
e: Email MALWA COTTON
SPINNING MILLS limited

Madura Coats Threads 144,MGRdBlr-1 M G ROAD

BANGALORE
560001
KARNATAKA
t: 25584121
Gopal Fully 61, Ibrahimpur Road, Partnershi Mr. Sudip Ghosh
Integrat Jadavpur, p Firm Mr. D. B. Ghosh
ed Kolkata 700032, West Mr. G. Ghosh
Hosiery Bengal, India
Phn:24121448

Page | 83
 Email:gophos@cal.vsnl.net.in
/
marketing@gopalhosiery.com
Raju Fully JHILMIL INDL AREA NEW
Integrat DELHI
ed 110095
Hosiery t: 22582194

Prithvi Fully
Integrat
ed
Lux Hosiery Buyer 31, Kailash Tagore Street,
Ganesh Takiz, Barah Bazar
West Bengal Silk Association of India, Mr.B.D.Kotahri (Honbl.
Garment West Bengal Hosiery Secrt)
Manufactures Association, Park Mansion,
and Dealers 2nd Floor, Flat No.9, 57A,
Association, Park Street
Kolkata-700016
Phn:22295148
Eastern India 19, Synagogue
Garment Street,Kolkata-700001
Manufacturers Phn:22485460
and Exporter
Federation
Bengali Hosiery 219, Bipin Behari Ganguly Sreemoy
Manufactures Street,(1st Floor) Banerjee(President)
Association Kolkata-700012 Subir Mukherjee
Phn:22377102/32931951
Email:benhomason@yahoo.c
om

Sreepati Hosiery Fully 12, GRANT LANE. Kolkata- Sreemoy Banerjee

Mills Integrat 700012.
ed Phn:22152566/267606/22348
Hosiery 570(D)
D.D. Hosiery 17, Hara Chandra Mullick
Private Limited street, Hatkhola.
Kolkata-700005
Near Shova Bazar Metro
Station

Page | 84
 Phn:25543731,25543732
Spika Seller 22/2 Hadaspara Industrial
Estate
Tel:912026870051/26870053
/55
Dharampal Zone No. 1, Khaitian No. 2,
Satyapal Industrial Growth
Centre,Bodhjung Nagar India

Bnnari Amman Yarn 252, Mettupalayam Road,

Coimbatore 641 043, India.

Production Details of some identified players (Yr:2006-07):-

Name Total Gross Export Gross Profit Net Profit Earnings Equity
Assets(INR) Turnover Turnover Per Share Dividend
Rubfila 2,61,900,000 3,21,000,000 1,14,287,00 -46,200,000 -46,100,000 -1.46 0%
Internati 0
onal
Premco 1,59,100,000 231,000,000 10,700,000 78,000,000 2.57 8%
Global
Arrow 1,091,200,000 207,100,000 201,200,000 18.22 50%
Webtex 398,500,000
Bala 315,011,147.30 17.97 lacs 9,874,000 3,350,000 2.02
Techno 476,543,493.17 export
Syntheti earning
cs
Pacific 1,578,400,000 9,500,000 10,100,000 0.44 0%
Cotspin 1,414,300,000
Maxwell 1,617,200,000 1,948,000,000 1,33,800,000 9,0,300,000 1.02 20%
Apparel
Industri
es
Rupa & 1,73,97,22,902 2,93,36,46,270 15,11,61,784 9,77,11,163 21.34
Co. Ltd.
Kothari NA NA NA NA NA NA NA
Hosiery
Factory
TT Ltd. 1,953,076,742 85,418,000 54,516,000 3.37 20%
5,987,578,000 4,740,786,0
00
Super 3,863,100,000 4,074,200,000 2,20,900,000 1,44,200,000 2.62 50%

Page | 85
Spinnin
g Mills
Precot 3,362,600,000 3,500,700,000 2,56,000,000 1,88,900,000 50%
Meridia 27.18
n Ltd

Production Details of some identified players (Yr:2005-06):-

Name Total Gross Export Gross Profit Net Profit Earnings Equity
Assets(INR) Turnover Turnover Per Share Dividend
Rubfila 2,83,000,000 2,93,000,000 -44,300,000 44,200,000 -1.39 0%
Internati
onal
Premco 1,84,100,000 206,000,000 9,600,000 7,000,000 2.30 0%
Global
Arrow 1,039,300,000 1.25 0%
Webtex 519,000,000 30,200,000 13,100,000
Bala 294,587,464.09 3.28
Techno 755,518,258.2 16,948,00 27,900,000 13,140,000
Syntheti 0 0
cs
Pacific 1,510,900,000 1.78 0%
Cotspin 1,159,000,00 44,300,000 41,200,000
0
Maxwell 1,237,900,000 1,841,200,00 1,39,500,0 8,4,700,000 1.54 15%
Apparel 0 00
Industri
es
Rupa & 2,97,01,84,030 10,03,11,19 6,69,68,164 14.59
Co. Ltd. 2
Kothari NA NA NA NA NA NA NA
Hosiery
Factory
TT Ltd. 1,185,535,217 3.94 NA
3,562,625,000 2,251,763, 70,076,000 45,726,000
000
Super 3,372,400,000 3,816,900,000 336,300,000 335,900,000 40.69 80%
Spinnin
g Mills
Precot 2,103,700,000 2,428,000,000 2,16,900,00 1,50,200,000 27.56 60%
Meridia 0
n Ltd

Page | 86
BIBLIOGRAPHY

Page | 87
 BIBLIOGRAPHY

1. Websites:
www.indiavca.org
www.indiacatalog.com
2. Books:
Aswath Damodaran: Principles of Corporate Finance
Copland Weston: Financial theory and Corporate Policy
Richard A. Brealey; Stewart C.Myres; Franklin Allen; Pitabas
Mohanty :Principles of Corporate Finance
3 .Annual Reports:
Tea
Duncan Tea Industries
Jayasree Tea & Industries Ltd.
The Bormahja Tea Company
Roopcherra Tea Company
Tycoon Tea Industries

Page | 88
Garment
Arrow Webtex Ltd.
Maxwell Apparel Industries
Premco Global
Pacific Cotspin
Precot Merdian Ltd.
Rupa & Co. Ltd
Super Spinning Mills.
T.T Ltd.

Page | 89