Information Memorandum

August 2011

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This Information Memorandum is being delivered on behalf of Shri Lakshmi Cotsyn Limited(“Company”). The sole purpose of this Memorandum is to assist the recipient in deciding whether toproceed with a further investigation of the Company, in connection with the proposed investment inlisted shares of the Company. This Memorandum does not purport to be all-inclusive or tonecessarily contain all the information that a prospective investor may desire in investigating theCompany.

By accepting this Memorandum, the recipient agrees to keep permanently confidential theinformation contained herein or made available in connection with any further investigation of theCompany. This Memorandum may not be photocopied, reproduced, or distributed to others at anytime without the prior written consent of the Company or Destimoney Securities Private Limited(DSPL). Upon request, the recipient will promptly return all material received from the Company orDSPL (including this Memorandum) without retaining any copies thereof, all in accordance with suchConfidentiality Agreement.

This Memorandum has been prepared for informational purposes relating to this transaction only andupon the express understanding that it will be used for only the purposes set forth above. Neither theCompany nor DSPL makes any express or implied representation or warranty as to the accuracy orcompleteness of the information contained herein or made available in connection with any furtherinvestigation of the Company. Each of the Company and DSPL expressly disclaims any and allliability which may be based on such information, errors therein or omissions there from. Therecipient shall be entitled to rely solely on the representations and warranties made to it by theCompany in any final private placement agreement.

In furnishing this Memorandum, neither the Company nor DSPL undertakes any obligation to providethe recipient with access to any additional information. This Memorandum shall not be deemed anindication of the state of affairs of the Company nor shall it constitute an indication that there hasbeen no change in the business or affairs of the Company since the date hereof. Except whereotherwise indicated, this Memorandum speaks as of the date thereof. The Memorandum includescertain statements, estimates and projections provided by the Company with respect to the anticipatedfuture performance of the Company. Such statements, estimates and projections reflect variousassumptions, which may or may not prove to be correct. No representations are made as to theaccuracy of such statements, estimates or projections.

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Disclaimer

1 Investment Highlights

2 Company Overview

3 Group Structure

4 Management

5 Textiles Portfolio

6 Defense Products Portfolio

7 Existing Capacity and Planned Capex

8 Investment Opportunity

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Contents

Investment Highlights One of the largest textile manufacturers in Northern India with a diverse product range

Shri Lakshmi Cotsyn Limited (SLCL) is a multi-product company involved in the manufacturing of cotton and

blended fabrics, embroidery, quilting, fusible interlining, denim, terry towels, bottom weights, home furnishing etc.

Presence in the high margin, value added textiles segment (Technical and Safety Textiles)

SLCL is manufacturing Water Repellent Bed Linen, Vitamin E bed Linen, Fire Retardant Fabrics, Organic

Bedspread, Water Proof Repellent fabric, Breathable Fabrics, NBC Fabrics, MSCN Fabric, Flex Fabric, Black out &

ECW ( Extreme Cold Weather) Fabric

Presence in the Defence sector

SLCL is an approved supplier to government defence establishments ( Indian Army, Navy, Air Force and State Police)

and is registered with several regulatory agencies. This ensures acceptance of its products

The Company is supplying Bulletproof Jackets, Bullet proof Helmets, as well as 360* protected Armoured Vehicles

State of the Art manufacturing facilities with focus on R&D

Gradual change in revenue mix with high margin business verticals like technical & safety textile and retailing etc

In-house chemical auxiliary unit

Focus on nanotechnology that would enable the company to manufacture smart fabrics.

Value creation from waste products like conversion of RHA into value added products like sodium silicate and

precipitated silica.

Experienced and Professional Management team led by Dr. M.P. Agarwal

Headed by Dr. M.P. Agarwal, CMD, entrepreneur with over thirty-eight years of experience

Supported by an experienced second in line management team

Solid financial performance Over a period of time generating value for shareholders:

SLCL‟s revenues have been growing at a C.A.G.R. of 24.67% over the past 3 yrs. The revenues have increased by

17.12% y-o-y from 15354.8 mn to 17983.8 mn and the profits increased by 15% y-o-y from 916.5 mn to 1052.9 mn. for

the year ended June 2011.

SLCL stock trades at a FY12 P/E of 1.69x, making it a growth stock available at a very low valuation 4

Net Sales (INR Mn) PAT (INR Mn)

EBITDA (INR Mn) EPS

1346.7

1739.2

2057.8

2501.0

0

500

1000

1500

2000

2500

3000

FY2008 FY2009 FY2010 FY2011(Prov.)

577.1629.6

916.4

105.29

0

200

400

600

800

1000

1200

FY2008 FY2009 FY2010 FY2011(Prov.)

9,281

11,580

15,355

17,983.8

-

5,000

10,000

15,000

20,000

FY2008 FY2009 FY2010 FY2011(Prov.)

39 4045

49.92

0

10

20

30

40

50

60

FY 2008 FY 2009 FY 2010 FY 2011(Prov.)

5

Snapshot of Financial Performance

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CMP = Rs. 80.7 (as on Aug 16, 2011) FY11 FY12f

Market Cap INR Mn 1,702

Net Sales Revenue INR Mn 17,984 23,422

EBITDA INR Mn 2,647 3,467

PAT INR Mn 1,053 1,078

EPS INR 49.92 51.11

EPS Growth % 8.70% 8.70%

ROE % 19.70% 18.17%

P/E x 1.62 1.58

SLCL is available at a FY12 P/E of 1.58x which is very low as compared to the underlying fundamentals of the company. – Large size player in value added textiles– Increasing demand for products manufactured by SLCL – home furnishings, shirting, technical

textiles, denim fabric, safety textiles and defence products– Branding of products is expected to improve margins– Emerging player in defence products– Capacity expansion nearing completion and is expected to boost revenues and profitability

This presents a great investment opportunity for a savvy investor

Valuation

Source: CRISIL

Shareholding Pattern

(as on June 2011)

Company Overview Shri Lakshmi Cotsyn was established in 1993 and today is a well established multi-products company

with multi-markets

Core expertise in manufacturing of Denim, Terry Towel, Bottom weight, Home furnishings, Garments and

Technical & Safety textiles

One of the leading manufacturer and supplier of Technical & Safety Textiles and Fabricated items for the

defence sector

Listed on NSE, BSE, UPSE and SGX (Bonds)

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Public, 54.67%

Promoter & Promoter

Group, 41.33%

Institutions, 4%

Commenced production of

Quilted Fabrics(0.4

mmpa)

Commissioned Technical Textiles (6 mmpa)

1993 1995 1998 1999 2002 2005 2006 2007 2008 2009 2010

Capacity Expansion of poly-fibre filled quilted to 0.8 mmpa.

Expansion of Suiting/Shirting to 12 mmpa

Manufacture of Fusible Interlining Fabrics with 10 mmpa

Entered domestic retail through ‘Weaves’

Commenced garment production at Roorkee (6.6 mn pcs)

• Launched DYFI Brand of Garments

• Setup of Spinning unit with 10,000 Spindles.

Commenced production of

suiting/shirting (6 mmpa)

Manufacture of embroidery

fabric (0.8 mmpa)

Expansion of Suiting/Shirting division to 18

mmpa

Expansion of Suiting/Shirting

division to 24 mmpa

Expanded /Diversified to:

Commenced production of 360 degree protected armoured vehicles

Acquired unit at Noida to manufacture comforters (3 lac pieces p.a.)

Setting up 16 Mw co-generation plant for captive use

Wider width fabrics (12 mmpa)

Bottom weight fabrics (6 mmpa)

Terry Towels (3000 tpa)

Denim Fabric (20 mmpa)

Yarn Dyeing (1500 tpa)

Nylon coated fabric (1.25 mmpa)

Home furnishings (5 mmpa)

Milestones

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Locations Headquartered in Kanpur; six manufacturing facilities spread in Uttar

Pradesh, Uttarakhand and Haryana

A strong dealer and distributor network across India with retail presence through 1150 multi-brand outlets (MBO)

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Group Structure – Integrating Growth

Shri Lakshmi Group

Shri Lakshmi Cotsyn Limited

Listed

Shri Lakshmi DefenceSolutions Limited

SLCL Overseas (FZC), UAE

100% 100%

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Board of DirectorsDr. M. P. Agarwal,

CMD

•He has been a guiding force behind the sharp rise in Company‟s turnover over the last 18 years

•An ICWAI and Doctorate in Textile Costing

Mr. Pawan Kumar

Agarwal, Jt. MD

•Responsible for production, quality controls and marketing

Mr. Devesh Gupta,

Dy. MD

•A Chemical Engineer by qualification

•He is responsible for looking after technical plant

Mr. Dileep Bajaj, ED •He has more than 31 years of experience in project and financial management especially in textile

industry

Mrs. Sharda Agarwal,

Director

•She is actively involved in Company‟s business and management

Dr. G. N. Mathur,

Independent Director

•An eminent senior scientist and ex-Director Defence Materials and Stores Research and development

Establishment

•He is working on Nano technology and its application in textiles to manufacture smart textiles.

Mr. Ram Sharan

Srivastava, Independent

Director

•A retired IAS Officer. Had been in administration for more than 30 years.

Dr. J. V. Rao,

Independent Director

•He has over 30 years of experience in textile technology

•He is also a director in Northern India Textile Research Association (NITRA) Ghaziabad

Mr. R. K. Garg,

Independent Director

•He has over 30 years of experience and has previously worked with DLF and DCM

Mr. K. D. Gupta,

Independent Director

•A retired IRS Officer

•Ex. Administrator U.P. Stock Exchange Association Ltd.

Mr. S. K. Mangol,

Independent Director

•He has around 40 years of experience in the field of Textile Industry.

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Textiles Defence Production

Legacy Business Suiting and

shirting Embroidered Quilted Fabrics Lace &

embroidery

Export Oriented

Terry Towel Bed Sheets Comforters Pillow Covers

Others

Denim Garments Bottom weight Zippers

Technical Textiles Safety Textiles

Fusible Interlining Black out Fabric Flex Fabric MSCN/IRR Fabric NBC Fabric PU/PVC coated fabric Water Repellent

Fabric Breathable fabric Fire retardant fabric

Bulletproof Jackets

Coat Combat Sleeping bags Infra-red

camouflage nets Ballistic body

armour Bulletproof

helmet Mosquito net

Brand Name Product Launched Specialty

Star Track Fusible interlining fabric 1997 40 varieties of fusible interlining (with zero shrinkage)

Galaxy Embroidery 1997 Range of embroidery like chikan, etc

Alisha Clothing Accessories 2000 Range of clothing accessories, lace, etc

SVL Zippers 2006150 shades with different zippers for garments, bags and luggage

Weaves Home Furnishings 2008Home furnishing – value-added bed sheets, bed covers to terry towels, pillows, cushions, comforters, table covers

“DYFI” Garments 2010 Stitching through technology driven machines

Textiles: Diversified Product Portfolio

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Home furnishings

Product Specialty

Water Repellent Bed Linen

Ideal for nursing mothers

Vitamin E Bed linen Protects body tissue from damage caused by unstable substance

Fire retardant fabric Specialized fabric which does not catch fire

Organic bedspread 100% pure organic materials such as cotton, bamboo, linen and hemp blended together

Technical & Safety Textiles

Product Specialty

Waterproof Repellent Fabric

Protects the soldiers from getting wet

Breathable fabric100% cotton made and carbon coated to make it easily breathable and light weight

Fire retardant fabric Protects soldiers from fire

NBC FabricProtects soldiers in nuclear war. Nitrogen packing enables use even after 10 years

High altitudeSoldiers will feel warm even at -40 degree centigrade

Dual shade fabricCamouflages and prevents enemy detection

Bulletproof jackets and helmets

Officers protection

Infra-red reflector fabric

Cannot be detected by infra-red rays

Sleeping bags Comfortable and portable

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Textiles - Value Added Products

Terry Towels

Commenced production of terry

towels in March 2007 (3,000 TPA)

One of the leading manufacturer of

entire gamut of Terry Towels in

India

High quality ranging from 380 to

800 GSM towels and for bath mat

500 to 2000 GSM

Producing towels in all sizes from

Wash, Guest, Kitchen, Hand, Bath,

Bath sheet, Beach towels, Bath mat

and Bath Robes

Product range is available in

Dobby, Jacquard, Embellished and

Embroidered towels

Bed Linen

Commenced production of bed linen in

October 2007 (12 MMPA)

SLCL has the capacity to

weave, process, embroider and finish

1,60,000 sets every month

The range is available in

cotton, polyester cotton blend, percale

and satin and prints upto 16 colours

SLCL is fast emerging as a preferred vendor partner to global buyers in the home textile space

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Terry Towel and Home Furnishings

Embroidered fabrics & Lace

Computerised multi-needle embroidery machine, imported from Switzerland

Team of designers design the fabrics (both in cotton and tissue) and Lace

Marketed under the brand name of “Alisha Embroidery”

Denim

Product range comprises of cross-hatches, rains satins, drills, tussors, linen, Lycra, ecru and dobby

designs in varied deep indigo and blue black combinations

The products climb the value chain by special treatment of mercerizing, over dyeing etc

To introduce nep denims, chambrey greens cast and vintage fabrics in the future

Garments

SLCL has state of the art technology for manufacturing garments from Italy and Germany

We manufacture knitted t-shirts, skirts, denim jeans and uniform dresses

Fusible interlining

SLCL manufactures Microdot fusible interlining, fusing fabric for shirt collars, cuffs, belt rolls and

Packlets

Marketed under the brand name of “Star Track”

Zippers

Imported the largest zipper manufacturing plant from Taiwan

The product ranges from (a) IFC and CFC zippers used in trousers, (b) concealed invisible zippers

used in salwars, skirts and evening dresses, (c ) Metal Zippers for Jackets and Jeans, and (d) Long

chain zippers used in suitcases, bags and shoes

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Textiles - Others

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Shri Lakshmi in Defence businessSLCL manufactures uniforms, fabrics and fabricated textile items for the armed forces

SLCL‟s subsidiary, Shri Lakshmi Defence Solutions Limited (SLDSL), incorporated in 2006-07, manufactures

the following for the defense and homeland security sector:

•Ballistics

•Body armour

• Bulletproof helmets

• Bomb Blanket

•Bomb Suits

•Composite armour panels for vehicles

•Armoured Vehicles (360* protection)

•DHRUV – Armoured Troop Carrier

•DRONA – Blast and Mine Protection Vehicle

•VIPER – Fast moving attacking armoured vehicle

•SHERPA MK7 – Latest armoured protection vehicle

SLDSL is approved supplier for

Indian Army

Navy

Air Force

SLDSL is registered with

•Directorate General of Supplies & Disposal

•Director General of Quality Assurance

•Forces Ministry of Defence (Navy)

•Defence Material Stores R&D Est

Growth Drivers –

Modernization programs to upgrade the Indian Defence

Recent terrorist attack on India

Threat from terrorists, naxalites, etc. in different parts of the country

Threats from neighbor countries

Strengthening the Indian Army

Protection of VVIPs

Ordnance Factories

All central paramilitary and State Police forces (BSF, CRPF, ITBP, NSG, SSB)

Indian Railways

•Federation of Indian Export Organization

•RDSO (Indian Railways

•Indian Postal Department

Police Vehicles

Army Vehicles

Ambulance & Special Vehicles

Passenger Vehicles

VIP Vehicles

Sports Utility Vehicles

Cash –in Transit Vehicles

Peace keeping force vehicles

Engineering machines for Mine

Blast protector

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Shri Lakshmi Defence Solutions SLDSL has entered into the following agreements with leading players in defense systems

Agreement with Ford India Ltd. for armouring vehicle on Ford chassis.

MOU with RHEIN METALL AIR DEFENCE Switzerland for supply of SKY RANGER air defence system.

Agreement with Adcom Military Industries, Abu Dhabi for marketing the vehicles in Middle East & Africa

The Major markets for SLDSL products include:

India

USA

Canada

Europe

Australia

Middle East

Africa

Asia

SLDSL has developed indigenous manufacturing facilities for technical and security related fabrics for all types of military usage. It has a range of ballistic products and an established network and affiliates around the world, backed

by long-term strategic alliances with local as well as global manufacturers

Ballistic Blanket

Ballistic Shield Sniper SuitFire Resistant

SuitSleeping Bag

Smart Uniforms

Body ArmoursBulletproof

VestsBulletproof

JacketAnti-riot helmets

Sleeping Bag Armour Plates

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Technical and Safety Textiles

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Extremely Cold Weather (ECW) clothingsFire Retardant Fabrics & Suits Nuclear, Biological, Chemical (NBC) Protective Suits and Gear

Multi Spectrum Camouflage FabricConductive Fabrics and Health Monitoring Sensors

Capabilities in Technical and Safety Textiles SLDSL has already developed the capabilities in the following high end technical and safety textiles and gear

Existing CapacityExisting Capacity

Suiting & shirting

QuiltedFabric

Embroidery Fabric

Fusible Interlining

Technical Textile

Denim Bottom Weight

Terry Towel

Wider Width

Nylon coated

Comforters Garments

24 MMPA 0.8 MMPA 0.8 MMPA 12.5 MMPA 6 MMPA 20 MMPA 6 MMPA 3,000 MTPA 12 MMPA 1.25 MMPA 0.3 Mn. Pcs. 6.6 MnPcs.

ExpansionOngoing Expansion

Fusible Interlining Fabric (12.5 mmpa)Technical Textiles (44 MMPA)(Black Out Fabric, Flex Fabric, Nuclear Bio – Chemical Fabric, IRR Fabric

Denim Fabric Expansion (20 mmpa to 40 mmpa)Wider Width Fabric (12 mmpa to 30 mmpa)

December 2011Add value to the

existing operations, with greater margins

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Existing Capacity and Ongoing Capex

December 2011

2008 •Nano Technology - to produce smart textiles e.g. smart caps, vests and bed sheets equipped with Nano Carbon Sensors and manufacturing of value added bed sheets viz water repellent, mosquito repellent, vitamin E etc.

2007•Screen Making Technology with 1600 resolutions

2006•Sets up a Denim manufacturing plant with Rope Dying Technology

2004•Facilities to manufacture Technical Textiles like NBC (Nuclear Bio-Chemical) fabric, IR (Infrared Reflective) fabric

2003 •Signed TOT (Transfer of Technology) agreement with DMSRDE (A DRDO unit) to manufacture Glacier Tents and High Altitude Sleeping Bags

1999•Installed Fusible Interlining plant with Microdot Coating Technology

1998 •Developed an in-house technology to manufacture Textile Auxiliary Chemicals for Captive Consumption resulting in better fabric quality at cheaper rates

1995•Installed 130 " wide Fully Electronic Lockstitch Swiss Quilting machine with 360 degree quilting facilities, first of its kind in India

2009

2010

•Launched WEAVES brand in Home Textile segment

•Acquired a comforter unit at Noida with the capacity of 3 lac numbers per annum.

•Completed Terry Towel Expansion from 3000 TPA to 15000 TPA and launched DYFI brand offering garments stitched through technology driven machines.

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Innovation through the years

Nanotechnology

Working on Nano technology fabrics and smart textiles with NCT technologies under guidance and supervision of Dr. G. N. Mathur Ex- Director of DRDO

To access flexible sensor technology to monitor fatigue stress heart condition and blood pressure

Functional Fabric

Water proof, wind tight, breathable, humidity, transport etc

Optimized material properties e.g. Colour fastness tensile and abrasion resistance,

Heat proof and cold resistant

Smart Intelligent Fabric

Smell release or odour control

Advanced wearing comfort and heating insulation

Microcapsules with phase change materials

Reflection materials

EIV fed protection

UIV Protection

Developments

with additional

electronic

functions.

Developments with

new raw materials

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From Functionality to “Intelligent” textiles

Received an award from Community of

International Sewing Machine Industry , India

(CISMI) by GARTEXMA for valuable support in

apparel and home textiles machine industry (11th

October, 2010).

Ranked 319th among the top 500 companies of

India, published in ET-500, October 2010 issue.

Ranked 117th among the top 400 manufacturing

companies in India (source : Dalal Street Journal –

Mid Cap 400 issue 2011)

Ranked 231th among the top 500 manufacturing

companies Technology Management (Source:

Industry 2.0 – Technology Management for

Decision makers, September 2009).

Possessing certificates like ISO 9001-2008,ISO

14001-2004, OHSAS – 18001-2001, GOTS, OE-

100, Oelotex and Reach

Ranked Star Export House by the office of the

Joint Director-General of Foreign Trade, Ministry

of Commerce and Industry.

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Accreditations and Accolades

Integrated Textile Player

Completely integrated from yarn dyeing to processing to garmenting and retailing giving it cost benefit

Diversified product portfolio

High margin and value added products in each product segment

Established brands through distributors and MBO

Manufacturing Capabilities backed by innovation

Six manufacturing facilities strategically located in Uttar Pradesh and Haryana

In house chemical auxilliaryunit to enhance colours and designing capabilities and captive power plant for cost efficiencies

Continuous R & D in nanotechnology to bring in innovative fabrics like ‘smart farics’ and value added products across segments

Capitalize on opportunities in the Defence Sector

Plethora of opportunities – grown from uniforms to ballistics to Armoured Vehicles

Increase in use of Armored Vehicles due to increase in terrorist activities and demand from defence sector

R & D in the field of ballistics, blast protection and development of unique vehicle models for military use

Registered with many organisations like army state police forces etc.

Embarking on a large expansion strategy

Terry Towel division-capacity expanded to 15000 TPA in view of pending orders and future demand from international buyers

Diversification of product portfolio in Technical Textiles (Black out fabrics, flex fabrics, carbon fabrics and infra red fabrics

Backward integration in Spinning or cost and quality benefits

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SLCL is poised for high growth

(in INR Million)

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Consolidated Financial Performance

SLCL has delivered high growth in revenues despite economic downturn

It is a large size player in value added textiles segment

In FY11, the EBITDA margins have improved over the previous year

The revenues are expected to increase post completion of the expansion plan in December 2011

SLCL is an undervalued stodgy player in textiles and defence sector. It is poised fro high growth on account of

increase in capacities, more visibility of its brands and launch of new brands, increased demand for technical and safety

textiles and increased demand for defence products.

FY 2008 FY 2009 FY 2010 FY 2011 (Prov.) CAGR

Profit & Loss Account

Net Sales 9,281 11,580 15,355 17,984 25%

Growth 44% 25% 33% 17%

Other Income 89 114 113 146 18%

Total Expenditure 8,590 10,317 11,418 15,483 22%

EBITDA 1,347 1,739 2,058 2,647 25%

Margin 14.5% 15.0% 13.4% 14.7%

Interest 441 680 738 1,058 34%

Depreciation 224 252 270 295 10%

EBT 682 807 1,050 1,294 24%

Tax 104 174 133 241 32%

PAT 577 630 917 1,053 22%

Margin 6.2% 5.4% 6.0% 5.9%

Balance Sheet

Share Capital 148 156 200 211

Share Warrant 220 1,280 847

Reserves and surplus 2,176 2,839 3,995 4,874

Total Debt 6,314 8,239 11,289 16,454

Net Fixed Assets 4,188 4,360 4,455 7,663

Capital Work in Progress 500 796 1,709 2,295

Current Assets 4,528 6,940 10,369 12,640

Current Liabilities 390 527 811 857

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Contact Details

R. Ranjan

EVP & Head- Investment Banking

Destimoney Securities Private Limited

Phoenix House, „B‟ Wing, 2nd floor,

Senapati Bapat Marg, Lower Parel (W),

Mumbai 400013

M : +919820481548

L : +91 22 67484700 : Ext 714

F: +91 22 67484710

Email: rajesh.ranjan@destimoney.com

Contact Details