MIRA INFORM REPORT

Report Date :

23.11.2006

IDENTIFICATION DETAILS

Name :	SHRIRAM FERTILIZERS AND CHEMICALS – DIVISION OF DCM SHRIRAM CONSOLIDATED LIMITED
Registered Office :	6^th Floor, Kanchanjunga Building, 18, Barakhamba Road, New Delhi - 110 001, India
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	06.02.1989
CIN No.:	L74899DL1989PLC034923
Com. Reg. No.:	55-34923
TAN No.: (Tax Deduction & Collection Account No.)	DELD04602D / DELD08433F
PAN No.: (Permanent Account No.)	AAACD0097R
Legal Form :	It is a public limited liability company. The company's shares are listed on the Stock Exchanges.
Line of Business :	The company is engaged in manufacturing of Fertilisers, Urea, Ammonia, Cement, Caustic Soda, Chlorine, HCI, PAC, SBP, Hydrochloric Acid, Calcium Carbide, PVC Resin, Textile Products, Sugar and Energy Management Services.

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	USD 17500000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established and diversified company having satisfactory track records. Directors are reported as experienced, respectable and resourceful industrialists. Their trade relations are reported as fair. Financial position is satisfactory. Payments are reported as slow but correct. The company can be considered good for normal business dealings.

LOCATIONS

Registered Office :	6^th Floor, Kanchanjunga Building, 18, Barakhamba Road, New Delhi - 110 001, India
Tel. No.:	91-11-23316801 / 8069
Fax No.:	91-11-23357803 / 23318072 / 2371 9570
E-Mail :	dscl@giasdl01.vsnl.net.in dscl@dscl.com
Website :	http://www.dscl.com
Corporate Office :	5^th Floor, Kanchenjunga Building, 18, Barakhamba Road, New Delhi - 110 001
Tel. No.:	91-11-23316801
Fax No.:	91-11-23318072
E-Mail :	dscl@dscl.com
Factory 1 :	749, GIDC Industrial Estate, Jhagadia, Dist. Bharuch - 393110, Gujarat Tel. No. 91-2645-220355/226021-27 Fax. No. 91-2645-226037 Shriram Nagar, Kota - 324004, Rajasthan, Tel. No. 91-744-2423391-98 Fax. No. 91-744-2423296 A-315, Road, No. 2, M.I.A., Alwar, Rajasthan Tel. No. 91-144-281915/281916 Village Ajbapur, P. O. Jungbahadur Gang, Lakhimpur Kheri - 361505, Uttar Pradesh Telefax. No. 91-5842-222195/225249 F-91, RIICO Industrial Area, Tonk, Rajasthan Tel. No. 91-1432-243874 Fax. No. 91-1432-243242
Marketing office.:	Kirti Mahal, 19, Rajendra Place, New Delhi - 110 008 Tel. No. 91-11-25713442/25722296 Fax. No. 91-11-25768135 Shivaji Marg, New Delhi - 110 015 Tel. No. 91-11-25104410/25747836 Fax. No. 91-11-25455362/25739816 5^th Floor, Kanchenjunga Building, 18, Barakhamba Road, New Delhi - 110 001 Tel. No. 91-11-23316801-9 Fax. No. 91-11-23318072 Shivaji Marg, New Delhi - 110 015 Tel. No. 91-11-25104410/25747836 Fax. No. 91-11-25455362/25739816
Sales office :	Located at : Kirti Mahal, 19, Rajendra Place, New Delhi - 110 008 Tel. No. 91-11-25713442/25722296 Fax. No. 91-11-25768135 Vaswani Chambers, 3^rd Floor, 264/265, Dr. Annie Besant Road, Prabhadevi, Mumbai - 400 025, Maharashtra Tel. No. 91-22-24303388/24303379/24304922 Fax. No. 91-22-24307954 Crown Aluminium House, 23, Brabourne Road, Kolkata - 700019, West Bengal Tel. No. 91-33-22421101 Meco House, 3^rd Floor, 47, Mount Road, Chennai - 600 002, Tamilnadu Tel. No. 91-44-28536322 74-Ratlam Kothi, Mumbai-Agra Road, Indore - 452 001, Madhya Pradesh Tel. No. 91-731-2523181 Fax. No. 91-731-2515281 Model Housing, 6-3-456/A/1, Panjagutta, Hyderabad - 500 482, Andhra Pradesh Tel. No. 91-40-23356220 Fax. No. 91-40-23356220 M. I. Road, Jaipur - 302 001, Rajasthan Tel. No. 91-141-236778/2372017/2365162 Fax. No. 91-141-2375916 6 South Model Gram, Ludhiana - 141 001, Punbab Tel. No. 91-161-2430740 Jhalawar Road, Kota - 324 002, Rajasthan Tel. No. 91-744-2425278/2420796 Fax. No. 91-744-2425542 A-203, Saket, Meerut - 250 002, Uttar Pradesh Tel. No. 91-121-2647001/2649076 Fax. No. 91-121-2645766 IG-32, Gagan Path, Jawahar Nagar, Sriganganagar - 335001, Rajasthan Tel. No. 91-154-2460307 Fax. No. 91-154-2460307

DIRECTORS

Name :	Mr. Ajay S. Shriram
Designation :	Chairman
Name :	Mr. Vikram S. Shriram
Designation :	Vice Chairman & Managing Director
Name :	Mr. Rajiv Sinha
Designation :	Deputy Managing Director
Name :	Mr. Ajit S. Shriram
Designation :	Director (Sugar)
Name :	Dr. S. S. Baijal
Designation :	Director
Name :	Mr. Arun Bharat Ram
Designation :	Director
Name :	Mr. Pradeep Dinodia
Designation :	Director
Name :	Shri Vimal Bhandari
Designation :	Director
Name :	Shri Sunil Kant Munjal
Designation :	Director
Name :	Shri D. Sengupta
Designation :	Director
Name :	Shri O.V. Bundeliu
Designation :	IDBI Nominee
Name :	Shri S.L Mohan
Designation :	CIC Nominee
Name :	Shri S. C. Bhargava
Designation :	LIC Nominee
Name :	Shri V.P. Agarwal
Designation :	Company Secretary

MAJOR SHAREHOLDERS

Names of Shareholders	No. of Shares
Individuals/Hindu Undivided Family	3862190
Bodies Corporate	86645930
Public Shareholding
Mutal Funds/UTI	6862796
Financial Institutions/ Banks	210499
Insurance	20460238
Foreign Institutional Investors	6196985
Non Institution
Bodies Corporate	19619274
Individuals	22045408

BUSINESS DETAILS

Line of Business :

The company is engaged in manufacturing of Fertilisers, Urea, Ammonia, Cement, Caustic Soda, Chlorine, HCI, PAC, SBP, Hydrochloric Acid, Calcium Carbide, PVC Resin, Textile Products, Sugar and Energy Management Services.

Products :

Item Code No.	Product Description
310210.00	Urea
390410.00	Polyvinyl Chloride
281512.00	Caustic Soda

GENERAL INFORMATION

No. of Employees :	6000
Bankers :	Ø Punjab National Bank Ø Bank of Baroda Ø Oriental Bank of Commerce Ø State Bank of India
Facilities :	--

Banking Relations :	Satisfactory
Auditors :	A. F. Ferguson & Company Chartered Accountants
Subsidiaries :	Ø DCM Shriram Credit & Investment Limited Ø DCM Shriram Aqua Foods Limited Ø Ghaghara Sugar Limited Ø DCM Shriram International Limited Ø Trireme Poly Tech Limited (Formerly known as DCM Shriram Exports Limited)
MEMBERSHIPS:	Ø Confederation of Indian Industry

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
49990000	Equity shares	Rs. 10 each	Rs. 499.900 millions
6501000	Cumulative Redeemable Preference shares	Rs. 100 each	Rs. 650.100 millions
			Rs. 1150.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
33340000	Equity shares	Rs. 10 each	Rs. 333.400 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2006	31.03.2005	31.03.2004
SHAREHOLDERS FUNDS
1] Share Capital		333.400	167.500	167.500
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		4880.200	4254.900	3535.600
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		5213.600	4422.400	3703.100
LOAN FUNDS
1] Secured Loans		7436.100	4680.600	3484.400
2] Unsecured Loans		3232.800	2265.100	1101.800
TOTAL BORROWING		10668.900	6945.700	4586.200
DEFERRED TAX LIABILITIES		0.000	961.600	1108.800
TOTAL		15882.500	12329.700	9398.100
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		10048.900	6879.400	5418.700
Capital work-in-progress		2374.800	1517.600	708.600
INVESTMENT		344.900	563.700	741.100
DEFERREX TAX ASSETS		NA	8397	6127.3
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	4405.800	3040.000	2054.700
	Sundry Debtors	4169.700	3036.100	1825.100
	Cash & Bank Balances	325.900	255.000	421.300
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	1591.400	966.100	905.700
Total Current Assets		10492.800	7297.200	5206.800
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	6793.600	3371.100	2346.200
	Provisions	585.300	557.100	330.900
Total Current Liabilities		7378.900	3928.200	2677.100
Net Current Assets		3113.900	3369.000	2529.700
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		15882.500	12329.700	9398.100

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Sales Turnover [including other income]	26242.100	18094.500	14120.300
Profit/(Loss) Before Tax	1651.000	1099.400	1029.800
Provision for Taxation	499.100	55.100	263.000
Profit/(Loss) After Tax	1151.900	1044.300	766.800
Export Value	NA	1.400	0.100
Import Value	NA	584.600	148.600
Total Expenditure	26243.800	15823.500	12173.800

QUARTERLY / SUMMARISED RESULTS

PARTICULARS	30.06.2006 (1^ST Quarter)	30.09.2006 (2^ND Quarter)
Sales Turnover	6805.200	6663.600
Other Income	86.000	95.300
Total Income	6891.200	6758.900
Total Expenditure	6077.100	6204.700
Operating Profit	814.100	554.200
Interest	187.400	194.100
Gross Profit	626.700	360.100
Depreciation	202.600	203.700
Tax	122.700	48.300
Reported PAT	301.400	108.100

200606 Quarter 1 - Gross Sales Includes Own Products Rs. 5373.000 million Traded Products Rs. 1831.20 million Expenditure Includes Increase/Decrease in stock in Trade - Own Products Rs. 701.00 million - Traded Products Rs. (3.500) million Consumption of Raw Material Rs. 1952.40 million Purchases and related cost - Traded Products Rs. 1818.00 million Power & Fuel Rs 802.10 million Personnel Cost Rs. 332.50 million Other Expenditure Rs. 543.70 million Sugar Off-Season expenses Rs. (69.100) million EPS is Basic and Diluted Status of Investor Complaints for the quarter ended 30.06.2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 90 Complaints disposed off during the quarter 90 Complaints unresolved at the end of the quarter Nl 1. In view of the seasonal nature of the sugar industry, the Company for the purposes of interim results has accounted for off season expenditure on 'Integral approach' basis instead of 'Discrete approach' basis hitherto followed. Accordingly, the off season expenditure aggregating Rs. 69.100 million has been deferred to be included in the cost of sugar to be produced in remaining part of the year. As a result of this, profit after tax for the quarter is higher by Rs. 38.600 million. This change will have no effect on the annual results. 2. In view of Accounting Standard (AS) 15 (revised 2005) 'Employee Benefits', issued by The Institute of Chartered Accountants of India which is applicable w.e.f. 01.04.2006, personnel cost for the quarter ended 30.06.2006 includes additional provision for employee benefits of Rs. 1.200 million. The corresponding figure for the quarter ended June 30, 2005 has not been re-casted as the accumulated liability of employee benefits (including liability for compensated absences, presently actuarially determined on a discounted basis) amounting to Rs. 100.400 million (net of tax) upto 31.03.2006 will be adjusted from surplus in profit and loss account in accordance with the Accounting Standard. 3. Pursuant to notification of the final rates of concession on phosphatic and potassic fertilisers for the period 01.07.2005 to 31.03.2006 issued by the Government of India, Ministry of Chemicals and Fertilisers vide its notification dated 13.06.2006, the Company has reversed revenue credits aggregating Rs. 45.200 million accrued in the previous year. 4. Provision for taxation is made based on the best estimate of weighted average annual income - tax rate. 5. Previous period figures have been recast, wherever necessary. 6. The above results were approved and taken on record by the Board of Directors in their meeting held on 25.07.2006. Limited Review 7. The Limited Review, as required under Clause 41 of the Listing Agreement has been completed by the Statutory Auditors. The Limited Review Report for the quarter ended 30.06.2006, does not have any impact on the above Results and Notes in aggregate except in respect of matter explained in note 1.

200609 Quarter 2 - 1. The Board of Directors has declared Interim Dividend of 20% (last year - 20%) amounting to Rs. 66.400 Millions to equity shareholders of the Company. 2. In order to enable use of LNG as a feedstock in place of naphtha, the Company carried out major modifications in its Fertliser plant necessitating shut down of plant for 45 days during which the Company also carried out overhauling jobs undertaken every two years. Consequently, the Fertliser plant operated only for 47 days during the quarter resulting in adverse effect on the Turnover and Results of the Fertliser segment. However, this loss of Turnover and Profits would be largely recovered in the subsequent quarters of the financial year ending 31.03.2007. 3. In view of the seasonal nature of the sugar industry, the Company for the purposes of interim results has accounted for off season expenditure on 'Integral approach' basis instead of 'Discrete approach' basis hitherto followed Accordingly, the off season expenditure aggregating Rs. 90.800 Millions and Rs. 159.900 Millions for quarter and half year ended 30.09.2006 respectively has been deferred to be included in the cost of sugar to be produced in remaining part of the year. As a result of this, profit after tax for the quarter and half year is higher by Rs. 76.500 Millions and Rs. 115.100 Millions respectively. This change will have no effect on the annual results. 4. Provision for taxation is made based on the best estimate of weighted average annual income - tax rate. 5. Previous period figures have been recast, wherever necessary. 6. During the quarter, 103 Investor complaints were received, which have all been attended to. No complaints werepending at the beginning or at the end of the quarter. 7. The above results were approved and taken on record by the Board of Directors in their meeting held on 25.10.2006. Limited Review The Limited Review, as required under Clause 41 of the Listing Agreement has been completed by the Statutory Auditors. The Limited Review Report for the quarter ended 30.09.2006, does not have any impact on the above Results and Notes in aggregate except in respect of matter explained in note 3

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt Equity Ratio	1.83	1.42	1.27
Long Term Debt Equity Ratio	1.29	1.05	0.99
Current Ratio	1.02	1.06	1.11
TURNOVER RATIOS
Fixed Assets	2.01	2.02	1.95
Inventory	6.65	7.48	10.77
Debtors	6.87	7.84	9.62
Interest Cover Ratio	4.41	5.20	3.49
Operating Profit Margin (%)	11.46	12.19	13.19
Profit Before Interest and Tax Margin (%)	8.62	9.34	9.78
Cash Profit Margin (%)	7.49	9.78	8.60
Adjusted Net Profit Margin (%)	4.65	6.93	5.20
Return on Capital Employed (%)	15.67	18.11	18.64
Return on Net Worth (%)	23.91	32.53	22.46

STOCK PRICES

Face Value	Rs. 10.00/-
High	Rs. 92.80/-
Low	Rs. 92.80/-

LOCAL AGENCY FURTHER INFORMATION

The company is in trade terms with:

DAP, Pesticides, Seeds, SSP, Mixtures, Micro, Nutrients and MOP

The company's fixed assets of important value include land, buildings, plant & machinery, furniture & fittings and vehicles.

History

DCM Shriram Consolidated, incorporated in 1989 is a diversified company having interest in Fertilisers, Chlor Alkalis, Cement, Sugar, PVC & its compounds etc. The company has tie-up with Zeon Kasei Company of Japan for PVC Compounds.

The subsidiaries of DCM are DCM Shriram Credit and Investments Limited, DCM Shriram Aqua Foods Limited, DCM Shriram International Limited, DSCL Energy Services Co Limited, Shriram Bioseed Genetics India Limited, DCM Shriram Infrastructure Limited, Bioseeds Limited, Bioseeds Genetics Vietnam, Bioseed Research Vietnam, Bioseed Research Phillippines and Bioseed Research India Private Limited .

 In 1995, the company commissioned a Chloralkali plant at Bharuch, Gujarat, based on state-of-the-art membrane cell technology from Asahi Chemicals, Japan. The company succesfully commissioned the Chlor Alkali Plant and 18 MW DG set based capative Power palnt in Jun'97. A 100 TPD Caustic Soda Flaking facality was also commissioned in Jan'97. Further the company commissioned a project for establising 2500 TPD crushing capacity Sugar Plant at Ajbapur, UP. 

 During 1999-2000, the Company commissioned a modern solid hazardous waste facility at Bharuch. The Chlor Alkali Units at Bharuch and Kota and the Fertiliser and Cement units have been recommended for being awarded the ISO 14000 certificate by M/s KPMG Peat Marwick for their environment management systems. The company has approved the investment in equity shares of DCM Shriram Exports(changed into Shriram Polytech Limited) as a result became the subsidiary of the company. 

 The company hived off of its Polymer Processing Business to its 91% subsidiary Shriram Polytech Limited(formerly DCM Shriram Exports Limited)., through a Scheme of Arrangement effective from July, 01 at a total consideration of Rs.435.000 Millions and is setting up of a wholly owned subsidiary outside India with capital of upto US $ 3.5 million. 

 The company has entered into MoU with M/s.Zurich Financial Services (ZFS) whereby the company, its promoters companies and other group/associate companies will form a joint venture with ZFS to start Life Insurance Business, Non-life insurance business and related support services in India. Under MoU, DSCL group and ZFS will hold 35.5% and 26% equity stake respectively in the two insurance companies. 

 During 2001-02 the capcity of Chlor Alkali was expanded to 102050 MT. The company is also planning to expand the bottling facility as the revenues from Bharuch unit has increased as compared to previous year. It has secured the BIS certification for its cement plant for 43 grade quality.  

 In the year 2003-04 the company implemented a Scheme of Arrangement approved by the Hon'ble High Court of Delhi for demerger of its Energy business to its subsidiary DSCL Energy Services company Limited and for merger of its subsidiary Ghaghara Sugars Limited into the company w.e.f 01.04. 2003.

 In September 2005 the company has commissioned a new 40 MW coal based captive power facility at Kota. With this expansion the company's captive power capacity at Kota Stands increased to 125 MW. 

 During October 2005 the company has sub-divided its equity share face value from Rs.10/- per share to Rs.2/- per share. Further the copany has issued bonus equity shares to its shareholers in the ratio of 1:1. 

 During the year 2005-2006, the Company has issued and allotted 8,29,51,660 fully paid up Bonus Shares of Rs.2/- each in the ratio of 1 : 1 by capitalizing amount out of Capital Redemption Reserve. 

 During the year the companies production capacity of Calcium Carbide increased from 56100 MT to 112000 MT, PVC Resins capacity expanded from 33000 MT to 61250 MT, Caustic Soda capacity increased from 132500 MT to 176250 MT, Chlorine capacity increased from 80250 MT to 116750 MT, Hydrochloric Acid (100%) capacity increased from 69750 MT to 73250 MT, Sugar capacity increased from 11000 TPD to 14000 TPD, UPVC Windows increased from 36000 MT to 90000 MT. The companies production capacity of Ammonia, Urea, Compressed Hydrogen, Stable Bleaching Powder, Cement, Spindles and PVC Compounds stood at 198000 MT, 330000 MT, 1565 MT, 9900 MT, 400000 TPA, 8880 Nos and 23400 TPA respectively.

DCM Shriram Consolidated Limited (DSCL)

DSCL is a business group with turnover of over Rs. 19000 millions, Profit After Tax above the Rs 1 000 millions mark and has two broad operational thrusts: (i) the energy intensive businesses (chloro-vinyl chain and cement), and (ii) the Agri-businesses that covers Urea, Sugar, Hybrid Seeds and Agri- Merchandised Inputs (DAP, MOP, SSP and pesticides). The Company has recently launched into value-added businesses that include UPVC-based Fenesta™ Building Systems, energy services and a rural retailing initiative called Hariyali Kisaan Bazaar.

Growth defined

Their approach to holistic business growth extends beyond financial performance to cover all aspects of their operations. It includes growing all key stakeholder relationships. Their customers, for whom they create their products and services, their vendors and business associates, who support their initiatives and plans, their employees who are the backbone of their operations and their lenders and shareholders who motivate and encourage us to do better. "Growth Values" guide their initiatives and relationships whereby while furthering the wealth and returns for all stakeholders associated with the Company, they endeavour to make a positive contribution to the community and the environment. Consistent growth over the long term and building globally competitive businesses are integral to their approach towards business. Consider all these aspects together and the result is "Growth Consolidated". Bringing all their businesses under a common strategy and an integrated operating style delivers "Growth Consolidated". At DCM Shriram Consolidated Limited, their business drive can be termed as "Growth Consolidated".

Growth Values

DSCL's core values and beliefs are a reflection of its commitment to build a world class, learning organisation, striving for excellence in all its endeavors.

Customer Focus

• Be sensitive to the needs of the customer, develop superior customer insight.

• A commitment to surpass expectations and deliver superior value.

Innovation & Excellence

• Strive to think differently and promote creativity.

• Make continuous improvement a way of life, drive excellence.

Relationships & Human dignity

.• Value people and partnerships

• Nurture understanding, compassion, trust and respect in all relationships

Team Work

• Work closely as a cohesive, well-knit team

• Inculcate a spirit of openness and collaboration

Business direction and initiatives

 Guided by sectoral dynamics the Company has created a research driven business model, investing both time and resources in creating hybrids that possess robust disease resistance, offer high and stable yields through varied climatic conditions and guarantee high grain quality. The Company has thus far developed 25 new products over the past three years. 

 The Company, keeping with best practices has also created a comprehensive physical infrastructure encompassing a seed conditioning plant, a cold-storage facility besides quality assurance facilities and multiple parent seed farms. That along with an able workforce and process competencies allows DSCL to market its products more profitably. Furthermore, the Company's existing marketing and distribution set up provides a ready platform to sell the hybrid seeds, thus substantially lowering the cost of operations and time-to-market for new products. 

  The Indian sugar industry provides direct employment to over half a million skilled and unskilled workers mainly from the rural area. Besides, over fifty million sugarcane farmers and their dependents are involved in sugarcane cultivation. Due to a large farming community dependent on sugarcane income, the Indian sugar industry has been highly regulated in terms of input cost and release mechanism. The Central Government stipulates a 'Statutory Minimum Price' (SMP) for the purchase of sugarcane throughout the country. While the states are allowed to prescribe their own 'State Advisory Price' (SAP), this price cannot be lower than the SMP at any time. Furthermore, sugar mills are legally bound to purchase the entire crop in their respective 'command areas' at the predetermined price. Such command areas are allocated annually depending upon the mill's track records and capacities. DSCL has about 120,000 cane growers supplying the two mills during the crushing season. To facilitate faster delivery of the cane the Company has set up a network of cane collection centres around its mills. DSCL sugar mills are designed to make above average recoveries, improving the operating efficiencies further. 

 The Company sells 50 and 100 kg bags of sugar to wholesalers throughout parts of Uttar Pradesh and elsewhere in the north-eastern parts of the country and Bhutan. 

 The sugar industry yields two main by-products, molasses and bagasse, which have important applications in other industries. Molasses find usage primarily in the chemicals and liquor industries. Bagasse finds application primarily in the paper products industry and as a fuel for co-generation. The molasses and surplus bagasse generated during the manufacture of sugar is sold after meeting captive needs.

 Business direction and initiatives 

 DSCL operates a modern and highly automated sugar operation that allows it to consistently make higher recoveries, enhance efficiencies and in turn realise better earnings from the business. Further, aided by strong business processes, the Company is able to focus on enhancing its operational parameters continually. Sugar has been identified as one of the growth drivers by the Company with the aim of emerging as one of the most efficient and profitable sugar manufacturers in the country. The company's focus is to work closely with farmers to improve cane production and cane quality, and to continue producing sugar in the most efficient way. 

 DSCL's emphasis on cane development places it ahead of others in fostering a 'trust-based' relationship with the farmers. The Company routinely assists farmers with soil fertility mapping for judicious fertilizer usage, varietals propagation and the replacement of low yield / low recovery varieties. It also plays an active role in popularising the use of bio-fertilizers, modern agri-inputs and associated plant protection measures to increase yields per hectare. The company has even implemented an assured irrigation scheme in its cane area. 

 Additionally, with the objective of facilitating the movement of cane to its mills, the Company has carried out a series of initiatives including construction of roads and providing transportation for the sugarcane. DSCL regards farmers as important and invaluable constituents of its objective of growing the business, and remains committed to raising their economic profile. 

 DSCL also believes in actively managing its product realisations and has made the strategic decision to distribute its sugar in states other than Uttar Pradesh to avoid oversupply and consequent erosion in realisations in its primary market around its mills. Further, as the Company sells its molasses and bagasse production within a 200 km radius of its mills it is able to get better realisations. 

 The Company has started supplying power to the state electricity grid from December 2004 and plans to enhance it further with realisation of energy efficiencies in its processes and a minor enhancement in the co-generation facilities. This activity is expected to augment the Company's earnings going forward. 

 The Company is currently implementing an expansion plan covering both its manufacturing facilities. While Rupapur will witness a capacity, addition of 2000 TCD taking its total capacity to 6,500 TCD. the Ajbapur facility will see a 1000 TCD expansion improving crushing capacity to 7500 TCD. The expansions are expected to be completed on schedule by October 2005. 


 Other Businesses 

 Cement 

 Profile 

 DSCL uses the waste sludge produced during the making of calcium carbide as key input for the cement business. The Company manufactures 400,000 TPA of premium grade cement at its integrated manufacturing complex at Kota, Rajasthan. DSCL's is the only plant in the country to convert waste into high quality, premium grade cement. The use of waste sludge combined with access to economical captive power makes this business a very efficient and competitive operation. 

 Strategy 

 The cement business enjoys the dual advantage of inexpensive captive power and readily available key input. The cement manufactured at its computer process controlled and highly automated facility results in a product that displays a high degree of whiteness and possesses superior strength and quick-setting features. The cement produced by the Company commands premium pricing on account of its superior quality and the 'SHRIRAM' brand name and is recognised as market leader in the areas of distribution. 

 Energy Services/ESCO 

 Profile 

 DSCL operates a reward-sharing model whereby it identifies opportunities for energy savings, realises the savings and then shares the rewards with its clients Through this division the Company provides know-how, maintenance and energy-efficient product design and project customisation through alternative fuel switching. Its scope of activities covers both captive and co-generation facilities and seeks to assist customers in the conservation of energy and use of renewable sources of energy. This division has won a consulting assignment from Asian Development Bank (ADB) for renewable and energy efficiency development project in China. This has been won against steep competition against international energy consulting giants from USA, Canada, U.K. Switzerland, Norway and Australia. 

 Strategy 

 The Company has gained competencies in the erection of effective and efficient energy systems on the back of its experience in managing its own captive and co-generation facilities. The Company has sought to institutionalise these abilities through DSCL Energy Services Company. 


 Real Estate 

 In accordance with the decision of the Hon'ble Supreme Court dated 10th May 1996 and the learned District Court dated 25th February 2005, the Company surrendered the possession of 30.07 hectares of land during the current year to DDA to be kept as green/open area without prejudice to its rights and submissions in the review petitions. The Company has also made substantial progress in vacating the quarters on the land at Najafgarh Road, New Delhi. 

 Growth ideas 

 New Business 

 Fenesta(TM) Building Systems 

 The value-added Ultra PVC (UPVC) window and door systems that DSCL markets under the Fenesta(TM) brand was a natural extension of its PVC Resin, compounding business. The Company has a dedicated plant to manufacture the Fenesta(TM) Building Systems profiles at its integrated manufacturing complex at Kota, having a daily extrusion capacity of 7.2 MT and is backed by captive power supply. 

 UPVC, the un-plasticized variant of PVC besides being environmentally friendly, offers high impact resistance apart from being non-corrosive in nature. The final product provides superior thermal and sound insulation, does not rust and offers high tolerance for extreme weather conditions. Moreover it requires very little upkeep with the product lasting as long as the building; it is installed in, itself. These environmental friendly solutions are rapidly becoming the preferred choice of builders, architects and individual customers. 

 DSCL has in place a dedicated sales team in markets in which it is present. This provides the benefit of close contact with the end-users, mainly the real estate developers community, allowing the Company to promote its range besides servicing actual customer requirements. Complementing the sales set-up is a team of technical experts that advises on customisation options, colour options and other specifications. 

 DSCL's technological edge, contemporary design, end to end customer service and superior infrastructure provides a definitive competitive advantage in a market that is very discerning and sophisticated. The Fenesta(TM) offering is a complete system right from fabrication and design to installation at the customer's site, resulting in consistent quality and better understanding of client's needs. 

 The integrated nature of operations allows the Company to exercise complete control over the entire value chain from blending & extrusion to window fabrication and final installation. DSCL has entered into a technical collaboration with Heywood Williams (HW) Group Plc of U.K. that allows it to better serve the needs of its customers in this line of activity. 

 This business reported revenues of Rs.400.0 millions in the year ended March 31, 2005, the first full year of its operations. 

 Windows and other building components made of UPVC have gained wide popularity across different climatic conditions. UPVC windows have a dominant share in Europe and growing share in the US, Asia and the Middle East. The Universal appeal of UPVC windows have made China one of the fastest growing markets in the world in this segment. The Company believes that in the domestic markets, the demand for its Fenesta(TM) Building Systems would be driven by the growth in the housing sector that has grown 25% over the past two years and IT/ITES led office sectors. The Company has estimated a market potential for window and door systems at Rs.1,0000 millions. Further, the backward linkages that the business enjoys with the established plastics business puts the Company in an advantageous position to leverage the opportunity presented by the product. 

 This year the company embarked upon a strategy to create a pan-India presence and launched Fenesta(TM) Building System in Pune in August '04; in Mumbai and Bangalore in November '04. The fabrication units at Bangalore and Mumbai also commenced operations to serve these new markets. In Delhi, a second launch was made in July '04 to introduce Horizontal Sliding Systems, a new product developed for the Indian market. A profile extrusion plant at Kota also was commissioned during the year to meet the requirements. The Company plans further increase in the number of fabrication facilities across multiple centres closer to its target markets. 

 The response from the markets continues to be encouraging with the company having decided to further increase the penetration of the product. Accordingly sales offices have been opened at Chennai and Hyderabad. Further a fabrication unit is also being set up in Hyderabad, which will commence operation in the second quarter of coming year. The growth strategy being pursued is being supported by extensive sales promotion. Organisation building and capability development continues to be a focus area and the company is committed to grow the business rapidly. The initiatives being undertaken to further promote the acceptance and distribution of the product are expected to give the business a favourable payback period for the capital invested. 

 Hariyali Kisaan Bazaar 

 DSCL, recognising the hitherto untapped rural demand for modern, trustworthy and fair value, retail channels had earlier embarked on a rural retailing initiative called the Hariyali Kisaan Bazaar. The venture has been receiving a tremendous response from its target customers in the rural markets. The business model for HKB is driven by mutual trust, confidence and a strong relationship that they share with the farmers and derives its strength from their ability to provide top-of-the-line products and services at value for money prices at locations close to where they live and work. 

 The rural retail store chain offers a comprehensive range of products including fertilizers, pesticides, seeds, farm implements, irrigation equipment and animal products, and value added services like agronomy and advisory services, output linkages, credit-financing and more to the rural citizenry. The comprehensive offering of agri inputs and relevant agri technology to the farmers is creating a strong bond with the farmers and building trust and reliability for the Hariyali Kisaan Bazaar. 

 The Company currently owns and operates a network of 16 rural stores throughout Punjab, Rajasthan, Haryana and Uttar Pradesh. Each store covers an area of 3-4 acres and is managed by a team of 7-8 people whom the Company trains continuously. The stores have their own dedicated power supply. True to its promise of being a one stop shop for all agricultural needs, Hariyali Kisaan Bazaar also proposes to offer tractor service centres, bank branches and ATM's (to be added shortly). 

 The agronomy services offered at these outlets is manned by a team of qualified agronomists and agri-specialists who are on call round the clock. The team provides support to farmers in selection of right agri-inputs apart from identifying opportunities for crop rotation. The outlets also have veterinarians at hand who assist farmers in their buying decisions for animals. These allied agri-services offered under one roof not only enhance farming efficiency and productivity but also create a strong affinity for the brand that in the end leads to trust and enduring relationships. 

 The Company, after meticulous preparation, has recently begun offering farm output management services aimed at improving realisations and finding markets for more profitable crops. The range of advice covers price discovery, storage, handling and sales. DSCL has identified three new focus areas for Hariyali Kisaan Bazaars namely, contract farming, processing and exports. 

 The Company in conjunction with a public sector oil company launched fuel retailing services at a few locations in the year. Encouraged by the response to this services the Company plans to provide this facility at more outlets going forward. Moreover, the Company also intends to retail LPG through its stores in the coming year. This is intended to address one of the key requirements of a trusted source of farm fuels and diesel in the rural areas. The Company also intends to disburse credit and provide other financial services to farmers through a tie-up with a leading private sector bank. 

 The Company has suitably located the stores at key hinterland roads to capture maximum footfalls. Moreover, DSCL recognises that the key to ensuring high conversions lies in demonstrating the ability to provide top-of-the-line products at value-for-money prices. To make that possible, it sources its merchandise directly from large local vendors after validating for quality. To further enhance the value proposition the Company is planning to sell FMCG products, automobile spare parts and construction-related products (mainly cement and paints from the Hariyali Kisaan Bazaar. 

 An important facet of the customer-trust equation is choice. Each sale is made on a best effort basis, where both 'SHRIRAM' and other brand products are accorded equal importance, without unduly favouring any particular one. Similarly, displays are arranged by application and not brand facilitating an objective assessment on the part of the customer. 

 The usage of modem IT systems allows DSCL to track customer preferences and optimise inventory levels and in the process realise better sales and higher efficiencies. 

 The Hariyali Kisaan Bazaar business had revenues of Rs.29 millions in the financial year 2004-2005. 

 The potential to raise farm productivity and profitability in the country cannot be overstated. Also, the farming community is fast becoming aware of and wants to apply the latest techniques. Rural incomes are rising and there is an increasing need for trusted transactions. The Company believes that based on its rich experience in the agri-sector, it is well placed to create a substantial and sustainable value from this business. 

 The format has been heartily adopted by the farmers as indicated by the substantial number of repeat customers. The Company hopes to consolidate and leverage this trend to its advantage going forward, by offering more choice. Also, the Company plans to capitalise on the first mover advantage it enjoys in this line of activity and expand operations by another 28-30 stores in two years. Over the long term, the Company has envisaged a nationwide presence in a graded manner. 

 The scale of activity after completion of the rollout will allow DSCL to realise dual benefits of lower cost of operation and better bargaining ability with vendors. The extended size of operation will help the Company derive maximum value from this largely ignored opportunity. 

Dividend:  

 The Directors are pleased to recommend total dividend @45% (including the interim dividend @20% paid in November, 2005) on Equity Shares of Rs.2/- each for the year ended 31.03. 2006. 

Performance: 

 The Company attained revenues of Rs.24763.200 Millions against revenues of Rs.19051.900 Millions in previous financial year - a growth of 30%. The operating profit of the Company for the year was at Rs.2837.400 Millions, higher by 25% as compared to operating profit of Rs.2271.000 Milions in the previous year. The Company's profit before tax (excluding exceptional items) increased to Rs.1651.000 Millions from Rs.1385.300 Millions, reflecting a growth of 19%.

 The growth during the year was primarily driven by higher volumes in Chemicals, Plastics and Sugar businesses, better margins in Chemical business in first half of the year and better realisations in Sugar and Cement businesses. The improvement in performance was despite tremendous odds faced due to higher input costs (cane, salt, furnace oil, carbon materials, etc.), sharp reduction in PVC prices (~16%), freeze on reimbursement of conversion cost increases in the urea business, unclear government policy on DAP/MOP subsidy and higher interest costs. 

 The detailed performance of various businesses of the Company for the year ended 31.03. 2006 has been stated in the Management Discussion and Analysis Report, which appears as a separate statement in the Annual Report. 

Subsidiary Companies: 

 A statement pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies is attached to the accounts. 

 In tarms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, the Audited Statements of Accounts and the Auditors' Reports thereon for the year ended 31.03.2006 along with the Reports of the Board of Directors of the Company's subsidiaries have not been annexed. The Company will make available these documents upon request by any member of the Company interested in obtaining the same. However, pursuant to Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company includes the financial information of its subsidiaries. 

 Sub-Division of Equity Shares & Issue of Bonus Shares: 

 Pursuant to the resolution passed by the shareholders by Postal Ballot, the Company had sub-divided the face value of Equity Shares of Rs.10/- each into 5 Equity Shares of Rs.2/- each w.e.f. 18.10.2005. 

 During the year, the Company has issued and allotted 8,29,51,660 fully paid up Bonus Shares of Rs.2/- each in the ratio of 1 : 1 by capitalizing amount out of Capital Redemption Reserve. 

 Finance: 

 The Company continues to enjoy the highest rating of A1+ for its short term borrowings. The Company has been upgraded from LA+ rating to LAA- rating for its long term debt programme implying the rated instrument carries low risk. 

MANAGEMENT DISCUSSION AND ANALYSIS 

 Performance Overview: 

 The company recorded satisfying overall performance in FY 2005-06: 

 The consolidated group turnover of over Rs.25000.000 Millions, an increase of 28% over last year. 

 The operating profit going up to Rs.2950.000 Millions, an increase of about 25% over last year. 

Completion and stabilisation of expansions in the Chlor-alkali, PVC resin and Calcium carbide businesses along with 40 MW thermal power plant. 

Completion of the first phase of expansion in sugar business raising capacity from 11 ,000 TCD to 14,000 TCD and satisfactory progress on two new mills to raise the capacity to 33,000 TCD by November, 2006. 

Substantial progress in their newer initiatives i.e. Hariyali Kisaan Bazaar, Fenesta Building Systems and ESCO businesses. 

 Upgrading of the credit rating of the Company by ICRA from 'A+' to 'AA-'. 

Encouraged by the overall progress of the businesses, the directors announced the company's first Bonus Issue in August 2005 in the ratio of 1:1. The stock market also took note of the company's performance resulting in a growth in market capitalisation by over 100% in this financial year. 

 The year also saw some areas of concerns which includes softening in the selling prices of the ChloroVinyl products, reduction in the custom duty for PVC and Caustic Soda in the Budget for 2006-07, increase in prices of furnace oil which the company uses for generation of power at one of its facilities, delays in payment of subsidy on fertilisers by the Government of India and rising interest costs. 

 The expansion initiatives already completed and planned to be completed in 2006-2007 will contribute to healthy volume growth in the company's businesses in the next two years. This volume growth will also enable the company to minimise the impact of softening in prices of Caustic soda/Chlorine and PVC resin and rising cost pressures. 

 In the coming year, the company proposes to continue with its strategy of expansions in existing businesses, strengthen cost competitiveness and aggressively grow the new businesses i.e. Hariyali Kisaan Bazaar ano Fenesta Building Systems. 

 As you are aware the Company has the following two main lines of business: 

 Agri businesses comprising Agri inputs (manufactured as well as traded) and Sugar. The rural retail business i.e. Hariyali Kisaan Bazaar is a value added activity in the agri area. 

 Chloro-Vinyl businesses comprising Chemicals and Plastics, i.e. PVC Resin, PVC Compounds and Calcium Carbide. Fenesta Building Systems is the latest venture to add value to the Company's Plastics business. 

Besides the above, the company has smaller businesses in cement, textiles and energy services. An analysis of each of the different businesses is provided below. 

 Business-wise performance review and Outlook: 

 Chloro- Vinyl businesses: 

 Chemicals: 

 DSCL's Chemicals business comprises of Caustic Soda (lye and flakes), Chlorine (liquid and Gaseous) and associated chemicals including hydrochloric acid, stable bleaching powder, compressed hydrogen rnd sodium hypochlorite. 

 The manufacturing facilities, located at Kota (Rajasthan) and Bharuch (Gujarat) with a total capacity of 1,76,250 TPA, place the company amongst the top three producers in the Country. Both the facilities have full captive power at Kota based on Coal and in Bharuch on Furnace Oil. These are based on cost efficient, state of the art and environment friendly membrane cell technology. DSCL is amongst the lowest cost manufacturers of Chlor-alkali in India. The contribution of this business to the total Revenue, EBIT and Capital Employed of the company for FY 2006 is as under: 

 Industry overview: 

 The Chlor-alkali industry in India has about 33 operating manufacturers with a combined installed capacity of 2.33 million tonnes per year. The largest producer has 11.6% of total capacity and the top three constitute 28% of the total industry. The industry is characterised by different technologies, vintage and levels of backward and forward linkages and thus different cost structures. 

 The total demand for Caustic Soda and Chlorine in the country is approximately 1.95 million tonnes and 1.7 million tonnes respectively growing at a little below the GDP growth rate. The demand is met primarily through domestic manufacturers with small quantities of imports and exports. The imports/exports are freely permitted with the reduced customs duty level at 12.5%. The prices of Caustic Soda are fully linked to international prices. The prices of Chlorine are also significantly influenced by global price dynamics. 

 Caustic Soda is used in several large industries like, paper, aluminium, dyestuffs, soaps and detergents, textiles, pharmaceuticals and DM water plants. Chlorine, on the other hand, is used in industries like PVC, organic chemicals, inorganic chemicals, pesticides and water treatment. 

 The International prices of Chlor-alkali which witnessed a significant uptrend from March 2004 started to witness a decline in the second half of FY 2005-06. From USD 632/- per tonne in April 2005 the international ECU prices (combined unit of one tonne of Caustic Soda and proportionate chlorine) declined to USD 504/- tonne in January-February 2006. 

 The domestic ECU prices also declined during the second half of the year. After touching a high of Rs.26,000-Rs.27,000 per tonne in the first quarter of the year the prices dropped to as low as Rs.17,000/- per tonne in the second half and then marginally recovered to Rs.18,000-20,000/- per tonne. 

 While DSCL produces caustic soda entirely for the market, it is able to utilise almost a third of the chlorine produced captively for production of chemicals & PVC Resin. The balance chlorine is sold through pipelines to dedicated customers and through tonners in the merchant market. They enjoy long-term and strong relationships with large customers; end users in major Chlor alkali consumuing industries such as aluminium, paper, soap, refrigerant gases etc and have a wide network of distributors in West, Central and north India. 

DCM Shriram Consolidated increases capacity at Kota facility

Thursday, 26.10. 2006

DCM Shriram Consolidated has increased capacities at Kota facility, which is now fully operational and contributing favourably to the performance. The company`s expanded capacities in its Chlor-alkali Plastics (including Calcium Carbide), cement and captive power operations at its Kota complex has made favorable contributions to overall performance during the quarter under review.

The company had completed the chlor-alkali capacity expansion in FY2006 to 510 TPD. Its entire chlor-alkali capacity is now based on modern, environment friendly, efficient, membrane cell technology.

The company expanded its calcium carbide capacity from 190 TPD to 340 TPD and PVC resin capacity from 115 TPD to 175 TPD in FY 2006. It further expanded its PVC resin capacity from 175 TPD to 200 TPD in Q2 FY 2007.

The company has enhanced its captive power capacity at Kota to 125 MW in Q3 FY 2006, which currently operates at above 100% capacity that enables it to sell the surplus power generated to the state electricity board.

The company would complete the sugar crushing capacity expansion to 33,000 TCD by the coming sugar season.

The company’s co-gen power plant commissioning is progressing on schedule and will become operational by the current sugar season 2006-07. This would raise the total power export from sugar business to 27.5 MW.

The company`s rural retailing initiative aims at meeting all the needs of the rural population from farming to consumer goods. During the quarter the company opened 9 new stores.

The number of Hariyali stores now stands at 40, and is expected to increase significantly over the next 2 years.

CMT REPORT [Corruption, Money laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs. 44..64
UK Pound	1	Rs. 86.51
Euro	1	Rs. 58.62

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	7
--LEVERAGE	1~10	7
--RESERVES	1~10	7
--CREDIT LINES	1~10	7
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		64

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions