MIRA INFORM REPORT

Report Date :

02.04.2007

IDENTIFICATION DETAILS

Name :	BHARAT HEAVY ELECTRICALS LIMITED
Registered Office :	BHEL House, Siri Fort, Asian Games Village, New Delhi – 110 049
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	13.11.1964
Com. Reg. No.:	55-4281
CIN No.: [Company Identification No.]	L74899DL1964GOI004281
TAN No.: [Tax Deduction & Collection Account No.]	DELB06995C
PAN No.: [Permanent Account No.]	AAACB4146P
Legal Form :	Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturing and sale of Boilers, Hydro Turbines, Gas Turbines etc.

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	USD 292000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is the largest engineering Company in India. It was a wholly owned Government of India Company, but now Government’s equity stake is 68%. The Company is making steady progress in its performance. Trade relations are fair. Payments are correct and as per commitments. It can be considered good for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	BHEL House, Siri Fort, Asian Games Village, New Delhi – 110 049, India
Tel. No.:	91-11-26001010 (15 Lines) / 26493031
Fax No.:	91-11-26493021
E-Mail :	cmdbs@asiad.bhel.co.in
Website :	http://www.bhel.com
Factory 1 :	v Heavy Electrical Equipment Plant, Hardwar v Central Foundry Forge Plant, Hardwar v Heavy Power Equipment Plant, Hyderabad v High Pressure Boiler Plant, Trichy v Heavy Electricals Plant, Bhopal v Transformer Plant, Jhansi v Electronics Division, Bangalore v Boiler Auxiliaries Plant, Ranipet v Industrial Valves Plant, Goindwal v Electro-Porcelains Division, Bangalore v Insulator Plant, Jagdishpur v Component Fabrication Plant, Rudrapur v Heavy Equipment Repair Plant, Varanasi v Electrical Machine Repair Plant, Mumbai

DIRECTORS

Name :	Mr. Ashok K. Puri
Designation :	Chairman & Managing Director
Name :	Mr. Naresh Chaturvedi
Designation :	Director
Name :	Mr. Surajit Mitra
Designation :	Director
Name :	Mr. Vineet Nayyar
Designation :	Director
Name :	Mr. Sanjay M. Dadlika
Designation :	Director
Date of Appointment :	16.11.2005
Name :	Mr. Ashok K. Aggarwal
Designation :	Director
Date of Appointment :	16.11.2005
Name :	Mr. Manish Gupta
Designation :	Director
Date of Appointment :	16.11.2005
Name :	Mr. Shekhar Datta
Designation :	Director
Date of Appointment :	16.11.2005
Name :	Mr. Raman Singh Sidhu
Designation :	Director
Date of Appointment :	04.01.2006
Name :	Mr. Madhukar
Designation :	Director
Date of Appointment :	05.07.2006
Name :	Mr. Ramji Rai
Designation :	Director
Name :	Mr. S.K. Jain
Designation :	Director
Name :	Mr. A. K. Mathur
Designation :	Director
Name :	Mr. K. Ravi Kumar
Designation :	Director (Power)
Name :	Mr. C.S. Verma
Designation :	Director (Finance)
Name :	Mr. N.K. Sinha
Designation :	Company Secretary

KEY EXECUTIVES

OTHER PERSONNEL :
Mr. Ashok K. Puri	Chairman and Managing Director
Mr. Ramji Rai	Engg. Research & Development Corporate Research & Development Corporate Monitoring, Materials Management Investment Planning, Manufacturing Technology
Mr. S.K. Jain	Human Resources Human Resource Development Institute Corporate Information Technology Corporate Communication
Mr. K. Ravi Kumar	Power Business Power Sector Regions-North, East, South & West Spares & Services Business
Mr. A.K. Mathur	Industrial Systems including Captive Power Plants & Products Business Transmission Business Transportation Business Ceramics Business Unit Component Fabrication Plant
Mr. C.S. Verma	Finance Internal Audit & Taxation Financial Services
Mr A. Bhattacharya	Corporate Planning & Development
Mr P.T.Deo	Heavy Electrical Equipment Plant Electrical Machines Repair Plant
Mr. R.K. Belapurkar	International Operations Business
Mr. C.P. Singh	Heavy Power Equipment Plant
Mr. S.K. Gupta	Heavy Electrical Equipment Plant Central Foundry Forge Plant Pollution Control Research Institute
Dr. V. Gopalakrishnan	High Pressure Boiler Plant Seamless Steel Tube Plant Industrial Valves Plant Piping Centre Welding Research Institute
Mr. V.K. Pande	Transmission Business
Mr. S.C. Vig	Power Sector - Marketing
Mr. R.K. Singh	Power Sector- Western Region
Mr. V. Viswanathan	Electronics Division Electronics Systems Division Industrial Systems Group
Mr. D. Indran	Power Sector-Southern Region
Mr. M.L. Sah	Power Sector-Eastern Region
Mr P.S. Kulshrestha	Corporate Human Resource Corporate Communication Corporate Productivity Health, Safety & Environment
Mr. R.K. Bhattacharya	Corporate Engg. & Product Development Advance Research Project Technology IJ censing & Joint Ventures
Mr. S. Sathyanarayanan	Boiler Auxiliaries Plant
Dr. V.K. Jain	Transformer Plant
Mr. Pankaj Sharma	Power Sector-Northern Region
Mr. B.P. Rao	Secretary, Management Committee

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters' Holdings
Indian Promoters i) President of India ii) Nominees of POI	165755000 200	67.72 0.00
Foreign Promoters	--	--
Person Acting in Concert Directors and Relatives	1310	0.00 0.00
Sub Total	165756510	67.72
Non Promoter's Holdings
Mutual Funds and UTI	11732542	4.79
Banks, Financial Institutions and Insurance Companies	6160550	2.52
FIIs	54874330	22.42
Others
Private Corporate Bodies	3354519	1.37
Indian Public	2670383	1.09
NRIs / OCBs /Foreign Others	136036	0.06
Trust	8203	0.00
Shares in Transit	66937	0.03
Grand Total	244760000	100.00

BUSINESS DETAILS

Line of Business :

Manufacturing and sale of Boilers, Hydro Turbines, Gas Turbines etc.

Products :

Item Code No.	Product Description
840210	Boilers other than parts
85023902	Complete generating sets including hydro turbines
84118206	Gas Turbine of thrust exceeding 115000 KW

PRODUCTION STATUS

BHOPAL

Particulars	Unit	Installed Capacity	Actual Production
Turbo Sets n Steam Turbines n Marine Turbine n Nuclear Turbine n Industrial Turbine	Nos. MW Nos. MW Nos. MW Nos. MW	0.3 36 0.2 2.4 0.1 23.6 0.00 0.00	0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Hydro Sets n Hydro Turbine n Hydro Generator	Nos. MW Nos. MW	1.2 72 1.2 72	0.7 60.6 10 54.6
Large Electrical Machine	Nos.	10	16.4
Traction Machine	Nos.	285	260.8
Power Transformers	Nos. MVA	6.5 1200	11.7 1067.2
Instrument Transformers	Nos.	20	77
Electrical Machines	Nos.	55	60.5
Switchgear	Nos.	300	420.1
Capacitor	MVAR	320	271.4
Industrial Controlgear	Nos.	25	0.00
Traction Controlgear	Set	22	27.6
Control Equipment	Nos.	60	116
Heat Exchangers	Nos. MT	5.2 110	1.8 0.00
Cathodic Protection System	Tonne	270	0.00

JHANSI

Particulars	Unit	Installed Capacity	Actual Production
Power Transformers 33kv/ 132kv	Nos. MVA	6.5/ 400	8.5/ 417.5
Other Transformers n Special Purpose Transformers n Traction Transformers n Instrument Transformers n ESP Transformers	Nos. Nos. Nos. Nos.	18 14 196 *	13.1 13.1 100.5 54.9
Bus Duct	Set	@	0.00
Diesel Shunters	Nos.	1	1.2
AC Locomotives	Nos.	3	0.00

HEEP HARDWAR

Particulars	Unit	Installed Capacity	Actual Production
Turbo Sets	MW	350	188
Hydro Sets	MW	62.5	0.00
Electrical Machines	MW	45	7.4
Gas Turbines	MW	@	30
Super Rapid Guns	Nos.	0.3	0.2

CFFP HARDWAR

Particulars	Unit	Installed Capacity	Actual Production
Steel Castings	MT	600	399.8
Steel Forging n Heavy Forgings n Medium Forgings	MT MT	241 300	74 208.7
Billets and Blooms	MT	400	78.5
N F Casting	MT	25	5.6

HYDERABAD

Particulars	Unit	Installed Capacity	Actual Production
Thermal Sets	MW	0.000	27.2
Industrial Turbines	MW	835	449.9
Gas Turbines and Accessories	MW	0.00	485.4
Compressors	Nos.	0.00	10
Drive Turbines	Nos.	12	11
Pumps	Nos.	137	161
Beakers 132 kv EQU	Nos.	1050 1035xx	64 306.5
Bowl Mills	Nos.	80	85
HP Heaters	Nos.	20	44
De- aerators	Nos.	0.00	15

EDN – BANGALORE

Particulars	Unit	Installed Capacity	Actual Production
Energy Meters	Nos.	600000	68266
Control Equipments	Cubicle	1200	2118
Power Devices	Nos.	30000	11779
Photovoltaics	KWS	2000	1800
Simulators	Sets	0.000	0.000

TRICHY

Particulars	Unit	Installed Capacity	Actual Production
Boilers	MT	108000	208732
Valves	MT Nos.	2712 0.000	4414 61059
Nuclear Steam Generating Equipments	MW	382/500	XX
Armoured Recorvery Vehicles	Nos.	25	0.000

BAP – RANIPET

Particulars	Unit	Installed Capacity	Actual Production
Boiler Auxiliaries	MT	57000	106792

IVP –GOINDWAL

Particulars	Unit	Installed Capacity	Actual Production
Industrial Valves	MT Nos.	788 0.000	835 7887

EPD - BANGALORE

Particulars	Unit	Installed Capacity	Actual Production
Insulators and Bushings	CMT	6250	5695
Assembled Production	MT	0.000	9781
Ceralin	CMT	745	1000
Ceralin (Assembled)	MT	0.000	2622

IP - JAGDISHPUR

Particulars	Unit	Installed Capacity	Actual Production
Insulators	CMT	6000	6658
Ceralin	MT	330	780
Ceralin (Assembled)	MT	0.000	1690

CFP - RUDRAPUR

Particulars	Unit	Installed Capacity	Actual Production
S W H S	Nos.	4000	1871
Solar Lanterns	Nos.	4000	6156

GENERAL INFORMATION

No. of Employees :

46935

Bankers :

v Arab Bank, Jordan

v ABN AMRO Bank NV

v Bank of Baroda

v Canara Bank

v CITI Bank NA

v Deutsche Bank

v HDFC Bank Limited

v Hong Kong & Shanghai Banking Corp. Limited

v ICICI Bank Limited

v IDBI Bank Limited

v Punjab National Bank

v Standard Chartered Bank

v State Bank of Hyderabad

v State Bank of India

v State Bank of Travancore

v Bank Muskat, Oman

v Barclays Bank Limited, Zambia

v Bhumiputra Commerce (Bank of Commerce) Malaysia

v Indo Jambia Bank, Lusaka

v Jamahouria Bank, Libya

v National Bank of Egypt

Facilities :

Secured Loans
Bonds (8.85% Non-convertible, secured, Redeemable Taxable Bonds)	5000.000
Loans and Advances from Banks	--
Cash Credit	--
Total	5000.000
Unsecured Loans
Credits for Assets taken on lease	553.217
Interest accrued and due on :
- State Government Loans	23.329
- Credits for Assets taken on lease	5.858
Total	582.404

Banking Relations :	Good
Auditors :
Name :	J C Bhalla & Company Chartered Accountants
Statutory Auditors :	v Vasan & Sampath Chartered Accountants, Bangalore, Karnataka, India v Bhasin Raghavan & Company Chartered Accountants, New Delhi, India v S. L. Chhajed & Company Chartered Accountants, Bhopal, Madhya Pradesh, India v M. Bhaskara Rao & Company Chartered Accountants, Hyderabad, Andhra Pradesh, India v Bansal & Company Chartered Accountants, New Delhi, India v Raj Gupta & Company Chartered Accountants, Ludhiana, Punjab, India v Mehra Malhotra & Company Chartered Accountant New Delhi v Swamy & Company Chartered Accountants Chennai, Tamilnadu v S. P. Puri & Company, Chartered Accountants, New Delhi, India v V. Ramaswamy Iyer & Company, Chartered Accountants, Vellore, Tamil Nadu, India v Vinay Kant & Associates, Chartered Accountants, Varanasi, Uttar Pradesh, India v Sagar & Associates, Chartered Accountants, Hyderabad, Andhra Pradesh v Dinesh Ashok & Company, Chartered Accountants, Kanpur, Uttar Pradesh v V. Soundrarajan & Company, Chartered Accountants, Chennai, Tamilnadu v P. G. Joshi & Company, Chartered Accountants, Nagpur, Maharashtra v Nundy Roy & Company Chartered Accountants Kolkata, West Bengal v K. L. Banerjee & Company Chartered Accountants Kolkata, West Bengal v D. R. Mehta & Associates Chartered Accountants Mumbai, Maharashtra v Suri & Company Chartered Accountants, Chennai, Tamilnadu
Memberships :	Confederation of Indian Industry
Associates/Subsidiaries :	v All the Government of India Undertaking Companies v Power Plant Performance Improvement Limited v BHEL-GE Gas Turbine Services Limited v SWIL Limited v Tata Refractories Limited v Spectrum Power Generation Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
325000000	Equity Shares	Rs.10/- each	Rs. 3250.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
244760000	Equity Shares	Rs.10/- each	Rs. 2447.600 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		2447.600	2447.600	2447.600
3] Reserves & Surplus		70566.176	57821.300	50511.800
NETWORTH		73013.776	60268.900	52959.400
LOAN FUNDS
1] Secured Loans		5000.000	5000.000	5000.000
2] Unsecured Loans		582.404	369.800	400.263
TOTAL BORROWING		5582.404	5369.800	5400.263
DEFERRED TAX LIABILITIES
TOTAL		78596.180	65638.700	58359.663
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		9822.765	10442.400	10941.409
Capital work-in-progress		1845.718	953.200	1085.574
INVESTMENT		82.926	89.500	289.826
Deferred tax assets		6737.204	0.000	4985.188
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	37443.706	2961.100	21038.836
	Sundry Debtors	71680.649	59721.400	46084.804
	Cash & Bank Balances	41339.754	31778.600	26596.389
	Other Current Assets	844.951	0.000	135.059
	Loans & Advances	11998.730	33991.500	10391.905
Total Current Assets		163307.790	128452.600	104246.993
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	88077.480	72489.900	51969.107
	Provisions	15122.743	28009.100	11399.426
Total Current Liabilities		103200.223	100499.000	63368.533
Net Current Assets		60107.567	54153.600	40878.460
MISCELLANEOUS EXPENSES		0.000	0.000	179.206
TOTAL		78596.180	65638.700	58359.663

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Sales Turnover [including other income]	143166.679	107226.093	85011.724
Profit/(Loss) Before Tax	25643.520	15816.356	10147.528
Provision for Taxation	8851.912	6282.309	3566.012
Profit/(Loss) After Tax	16791.608	9534.047	6581.516
Export Value	5687.105	7643.383	4484.452
Import Value	23571.710	17259.653	12273.978
Total Expenditure	117558.354	91209.526	70272.174

QUARTERLY / SUMMARISED RESULTS

PARTICULARS	30.06.2006 (1^st Quarter)	30.09.2006 (2^nd Quarter)	31.12.2006 (3^rd Quarter)
Sales Turnover	26563.300	33411.500	43396.900
Other Income	1200.900	1698.900	1854.700
Total Income	27764.200	35110.400	45251.600
Total Expenditure	23381.500	28848.300	34104.900
Operating Profit	4382.700	6262.100	11146.700
Interest	131.300	135.500	119.700
Gross Profit	4251.400	6126.600	11027.000
Depreciation	638.600	666.700	662.100
Tax	1246.100	1859.800	3688.400
Reported PAT	2366.700	3600.100	6676.500s

200606 Quarter 1

Expenditure included [Increase] / Decrease in Stock in Trade Rs. (49.00) million consumption of Raw Materials Rs. 15503.90 million Staff Cost Rs. 4708.60 Million other Expenditure Rs. 3218.00 million Tax Includes Provision for taxation [including deferred tax, prior tax and fringe benefit tax and fringe benefit tax] status of investor complaints for the quarter 54 complaints disposed off during the quarter 54 complaints unresolved at the end of the quarter Nil 1. The figures have been regrouped wherever necessary. 2. The Company has an outstanding order book position of about Rs. 393000 millions at the end of the Quarter I. 3. The above results were taken on record by the Board of Directors in their meeting held on 28^th July, 2006. 4. The above results have been reviewed by the Auditors as per clause 41 of the listing agreement.

200609 Quarter 2

Expenditure Includes (Increase)/Decrease in Stock in Trade Rs (2912.20) million Consumption of Raw Materials Rs 21479.50 million Staff Cost Rs 5660.10 million Other Expenditure Rs 4620.90 million Tax Includes Provision for taxation (including deferred tax, prior period tax & Fringe Benefit tax) Status of Investor Complaints for the quarter ended September 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 34 Complaints disposed off during the quarter 34 Complaints unresolved at the end of the quarter Nil 1. The figures have been regrouped, wherever necessary. 2. The company has an outstanding order book position of about Rs 457000 millions at the end of Quarter II. 3. The above results have been reviewed by the Audit Committee and were taken on record by the Board of Directors in their meeting held on October 27, 2006. 4. The above result have been reviewed by the Auditors as per clause 41 of the listing agreement.

200612 Quarter 3

Status of Investor Complaints for the quarter ended December 31, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 69 Complaints disposed off during the quarter 69 Complaints unresolved at the end of the quarter Nil 1. Segment information is given in the annexure hereto. 2.The changes in accounting estimates on account of AS-15(R) on the liability for leave and post retirement medical benefit have been reviewed and considered.In accordance with the transitional provisions prescribed under the AS15(R), Rs. 4412 millions (net of deferred tax) is being adjusted in the opening reserves as on 01.04.2006. 3.The company has an outstanding order book position of about Rs. 467000 millions at the end of Quarter III. 4.The above results have been reviewed by the Audit Committee and were taken on record by the Board of Directors in their meeting held on 25th January, 2007. 5.The above results have been reviewed by the Auditors as per clause 41 of the listing agreement. 6.An interim dividend of Rs. 12.50 per share has been declared by the Board in its meeting on 25.01.2007. Board has also recommended an issue of bonus share in the ratio of 1:1 i.e. one additional equity shares for every one equity share held by the members on the record date to be fixed by the Board

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt Equity Ratio	0.08	0.10	0.11
Long Term Debt Equity Ratio	0.08	0.10	0.11
Current Ratio	1.54	1.57	1.66
TURNOVER RATIOS
Fixed Assets	3.96	2.98	2.60
Inventory	4.43	4.21	4.32
Debtors	2.24	2.00	2.04
Interest Cover Ratio	44.65	20.43	21.67
Operating Profit Margin (%)	19.46	17.82	16.92
Profit Before Interest and Tax Margin (%)	17.79	15.75	14.69
Cash Profit Margin (%)	13.06	11.10	11.11
Adjusted Net Profit Margin (%)	11.39	9.03	8.88
Return on Capital Employed (%)	36.37	26.86	23.55
Return on Net Worth (%)	25.20	16.84	15.58

STOCK PRICES

Face Value	Rs.10/-
High	Rs.2299.00/-
Low	Rs.2250.90/-

LOCAL AGENCY FURTHER INFORMATION

Set up in the late 1950s, Bharat Heavy Electricals (BHEL) was wholly-owned by the Government of India. On liberalization, the government disinvested a portion of its share holding in Dec.'91 and Feb.'92. Unit Trust of India, Bank of India, LIC and some insurance companies purchased the shares. At present government of India's equity stake is 68%.

BHEL is today the largest engineering enterprise of India. Its first plant was set up at Bhopal in 1956 under technical collaboration with AEI, UK followed by three more major plants at Hardwar, Hyderabad and Tiruchirapalli with Russian and Czechoslovak assistance.

These plants have been at the core of BHEL's efforts to grow and diversify and become India's leading engineering company. The company now has 14 manufacturing divisions, 8 service centres and 4 power sector regional centres, besides project sites spread all over India and abroad and also regional operations divisions in various state capitals in India for providing quick service to customers. BHEL manufactures over 180 products and meets the needs of core-sectors like power, industry, transmission, transportation(including railways), defense, telecommunications, oil business, etc. Products of BHEL make have established an enviable reputation for high-quality and reliability.

BHEL has Installed equipment for over 62,000 MW of power generation - for Utilities, Captive and Industrial users. It has supplied 2,00,000 MVA transformer capacity and sustained equipment operating in Transmission & Distribution network upto 400 KV - AC & DC.

This is due to the emphasis placed all along on designing, engineering and manufacturing to international standards by acquiring and assimilating some of the best technologies in the world from leading companies in USA, Europe and Japan, together with technologies from its-own R&D centers. BHEL has acquired ISO 9000 certification for its operations and has also adopted the concepts of Total Quality Management (TQM). BHEL's major clients are State Electricity Boards, NTPC, World Bank aided projects, the Railways and a host of private companies. Its products are exported mainly to the middle-east and the far-east countries.

Recently the company's performance has been affected due to long delays in placement of orders by the clients (on account of paucity of funds and industrial slowdown) and large VRS outgo.

History :

Subject was wholly owned by the Government of India. On liberalisation, the government disinvested a portion of its share holding in December 1991 and February, 1992. Unit Trust of India, Bank of India, LIC and some insurance companies had purchased these shares. At present Government of India’s equity stake is 68%.

This company is the largest engineering enterprise of India. Its first plant was set up at Bhopal in 1956 under technical collaboration with AEI, UK followed by three more major plants at Hardwar, Hyderabad and Tiruchirapalli with Russian and Czechoslovak assistance.

The plants have been at the core of the company’s efforts to grow and diversify and become India’s leading engineering company. The company now has 14 manufacturing divisions, 8 service centres and 4 power sector regional centres, besides project sites spread all over India and abroad and also regional operations divisions in various state capitals in India for providing quick service to customers. The company manufactures over 180 products and meets the needs of core-sectors like power, industry, transmission, transportation (including railways), defense, telecommunications, oil business, etc. The Products of the company have established an enviable reputation for high quality and reliability.

The company has installed equipment for over 62,000 MW of power generation – for Utilities, Captive and Industrial users. It has supplied 2,00,000 MVA transformer capacity and sustained equipment operating in Transmission and Distribution network upto 400 KV-AC & DC.

This is due to the emphasis placed all along on designing, engineering and manufacturing to international standards by acquiring and assimilating some of the best technologies in the world from leading companies in USA, Europe and Japan together with technologies from its-own Research and Development Centres. The company has acquired ISO 9000 certification for its operations and has also adopted the concepts of Total Quality Management. Company’s major clients are State Electricity Boards, NTPC, World Bank aided projects, the Railways and a host of private companies. Its products are exported mainly to the Middle East and the far-east countries.

Recently the company’s performance has been affected due to long delays in placement of orders by the clients (on account of paucity of funds and industrial slowdown) and large VRS outgo.

Business :

The company is serving the country as supplier of wide range of equipment, systems and service to the core sectors of the Indian economy. Its areas of operation broadly covers conversion, transmission, utilisation and conservation of energy in the power industry and transportation sectors, thus fulfilling a vital infrastructure need of the economy. The company has 14 manufacturing divisions, 9 service centres and 4 power sector regional centers, besides project sites spread all over India and abroad. Its operations are organized along three business sectors, viz. Power, Industry and International operations.

Performance Highlights

The company has completed another successful year in 2005-06 and has registered a net profit of Rs. 16792 million. Net worth of the company has gone up from Rs. 60269 million in 2004-05 to Rs. 73014 million in 2005-06 registering an increase of 21.15%. NAV per share has increased from Rs. 246.24 in 2004-05 to Rs. 298.31 in 2005 06.

Rating Of Bhel Vis-A-Vis Mou Targets

Performance of the Company for the year 2004-05 has been rated as 'Excellent' in terms of MoU signed with the Government of India. The MoU rating for 2005-06 is under finalization by the Government.

Financial Operations

Turnover for the year has touched a new high for the fifth year in succession thereby reaching the figure of Rs. 145255 million against Rs. 103364 million in 2004-05, an increase of 40.53%. Value addition for the year 2005-06 stood at Rs. 56828 million as against Rs. 42540 million for the year 2004-05, registering an increase of 33.58%. Profit before tax for the year stood at Rs. 25644 million and is higher by 62.14% as compared to profit before tax of Rs. 15816 million in 2004-05. Gross margin as a percentage of value of production (net of excise duty) increased to 20.98% as against 18.76% in 2004 05. Profit before tax as a percentage of value of production (net of excise duty) increased from 15.77% in 2004-05 to 18.75% in 2005-06. Profit after tax at Rs. 16792 million has increased by 76.13% over the previous year's Profit after tax of Rs. 9534 million. Net working capital (other than cash and bank balances) increased by Rs. 1576 million during 2005-06 over the previous year. The factors contributing to the increase are:

a) Increase in Sundry Debtors by Rs. 11960 million.

b) Increase in Inventory by Rs. 8283 million.

c) Increase in Other Current Assets and Loans and Advances by Rs. 74 million.

However, increase in Current Liabilities and Provisions by Rs. 18741 million has offset the increase in Current Assets thereby making marginal impact on the working capital over that of previous year. Sundry Debtors increased from Rs. 59721 million in 2004-05 to Rs. 71681 million in 2005-06, an increase of 20.03%. In terms of number of sales days, Sundry debtors decreased from 211 days in 2004-05 to 180 days in 2005-06. Inventory increased by 28.40% over previous year, i.e. from Rs. 29161 million in 2004-05 to Rs. 37444 million in 2005-06. Inventory, in number of days of turnover, decreased from 103 days in 2004-05 to 94 days in 2005-06. Cash and bank balances, including short term deposits, at the year-end stood at Rs. 41340 million as against Rs. 31779 million at the end of last year. Equity remained at Rs. 2448 million. Net worth increased by Rs.12745 million to Rs. 73014 million. Debt-Equity Ratio declined from 0.09 in 2004-05 to 0.08 in 2005-06

Corporate Profile

Bharat Heavy Electricals Limited (BH EL) is the largest engineering and manufacturing enterprise of its kind in India and is one of the leading international companies in the field of power equipment manufacture. The first plant of BHEL, set up at Bhopal in 1956, signalled the dawn of the Heavy Electrical Industry in India. In the sixties, three more major plants were set up at Haridwar, Hyderabad and Tiruchirapalli that form the core of the diversified product range, systems and services that BHEL offers today. BHEL's range of services extends from project feasibility studies to after-sales-service, successfully meeting diverse needs through turnkey capability. The company has 14 manufacturing units, 4 power sector regions, 8 service centers and 18 regional offices, besides project sites spread all over India and abroad. BHEL has a well recognized track record of performance, making profits continuously since 1971-72 and paying dividends since 1976-77. BHEL manufactures over 180 products under 30 major product groups and caters to core sectors of the Indian economy viz., Power Generation and Transmission, Industry, Transportation, Renewable Energy, Defense, etc. The quality and reliability of its products is due to the emphasis on design, engineering and manufacturing to international standards by acquiring and adapting some of the best technologies from leading companies in the world, together with technologies developed in its own R&D centers. The Company has been constantly adapting itself to face the challenges thrown-up by the new business environment. BHEL has already attained ISO 9000 certification for quality management and all the manufacturing units /divisions have been upgraded to the latest ISO 9001-2000 version. BHEL has also secured ISO 14001 certification for environmental management systems & OHSAS,-18001 certification for occupational health and safety management systems for all its major units/divisions. BHEL is continuing its journey towards Business Excellence. BHEL has committed to support the Global Compact & the set of core values enshrined in its ten principles in the areas of human rights, labour standards and environment.

Business Sectors

BHEL's operations are organized around three business sectors, namely Power, Industry including Transmission, Transportation & Renewable Energy, and International Operations. This enables BHEL to have a strong customer orientation and respond quickly to the changes in the market.

Power Sector 

Power is the focal area for BHEL and comprises thermal, nuclear, gas, diesel and hydro businesses. BHEL has taken India from a position of total dependence on overseas sources to complete self-reliance in power plant equipment. Today, BHEL Sets account for nearly 65% of the total installed capacity in the country. BHEL has contracted for boilers and auxiliaries, turbo generator sets and associated controls, piping and station Control & Instrumentation of up to 500 MW unit rating and has the technology and capability to produce thermal sets up higher unit ratings including 1000 MW.- BHEL has access to technology for higher size gas turbines and can supply gas turbines up to 270 MW unit size. It engineers and constructs custom built combined cycle power plants, Hydro sets of Francis, Pelton, Kaplan and bulb types for different head - discharge combinations, with matching generators, are also designed and manufactured by BHEL. To give a thrust to refurbishing and modernization for plant performance improvement of old fossil fuel power plants and repair and service of GE design gas turbines, two joint venture companies have been floated with Siemens and GE respectively, which have completed eight full financial years of successful commercial operation. With a focus to provide a single window facility to the customers for services & spares of power generation equipments, a 'Spares & Services Business Group' has been created.

Industry Sector

BHEL manufactures and supplies major capital equipment and systems like captive power plants, centrifugal compressors, drive turbines, industrial boilers and auxiliaries, waste heat recovery boilers, gas turbines, pumps, heat exchangers, electric machines, valves, heavy castings and forgings, electrostatic precipitators, ID/FD fans, seamless pipes etc. These serve a number of industries like metallurgical, mining, cement, paper, fertilizers, refineries and petro-chemicals, etc. in addition to power utilities. BHEL has also emerged as a major supplier of controls and instrumentation systems, especially distributed digital control systems for various power plants and industries.

Industry Sector

Industrial output, as measured by Index of Industrial Production (IIP) is progressing steadily. Index of capital goods production under use-based classification has registered double digit growth in the first six months of 2004-05. With India's industrial activity picking up in recent years, companies are using up their capacities which could trigger capital investments in an effort to build size and improve efficiencies. 

There are signs of increased activity in Infrastructure, Oil & Gas, Steel, Petro-chemicals, Cement, Sugar, etc. The principal sectors in which investments could be made are metals, petroleum products, synthetic textiles, fertilizers, paper & paper products, among others, such as food products, drugs & pharmaceuticals, organic chemicals, etc. The Captive Power segment of the industry, has been witnessing expansion of capacities and the trend is likely to continue.

Manufacturing Sector is looking at investments to scale up the production capacities as heavy industries like oil, cement, steel and aluminum have increased their capacity utilization and are now looking at future demand. Along with mega infrastructure projects underway, the revival of private investment is expected to give a further boost to the multipliers in the economy. 

Joint Ventures

The two Joint Venture Companies promoted by BHEL viz. "BHEL-GE Gas Turbine Services Limited" (BGGTS) with GE, USA for repair & servicing of GE designed Gas Turbines and "Powerplant Performance Improvement Limited" (PPIL) with Siemens AG, Germany for plant performance improvement of old fossil fuel power plants, have now completed eight full financial years of operation. During the year, PPIL successfully completed PG Test on 120 MW Korba East - Unit 5 and the unit was handed over to CSEB for commercial operation. O&M supervision for BOP was also organised for CSEB, Korba in line with the contract. PPIL has so far successfully uprated four units of Kothagudem TPS (4x11 OMW) and also enhanced performance of five units of DPL Durgapur (3x77MW, 2x30MW) and two units of Korba (East) TPS. The total income of PPIL during 2005-06 was Rs. 13.39 million (unaudited). BGGTS achieved a sales turnover of Rs. 2703 million during the year 2005-06 with a profit after tax of Rs. 282 million. Orders for Rs. 3029 million were booked by BGGTS during the year. During the year BGGTS successfully executed Mark VI Controls retrofits for IFFCO, Aonla and Essar Power besides bagging CMU/Value pack orders from IFFCO/Phulpur, Indo-Gulf & Nagarjuna Fertilisers. BGGTS also secured its biggest ever export order of Rs. 240 million from RPC, Bangladesh for rehabilitation of Frame 6 DLN Gas Turbine. BGGTS has already paid an interim dividend of 225% for the year 2005-06 in Dec, 2005. The board of BGGTS has recommended a further dividend of 225% for the year 2005- 06 in May, 2006.

Awards :

Awards won by BHEL Units and Employees during 2003-04 were as under :

Ø BHEL Excel Awards 

Ø Prime Minister’s Shram Awards

Ø Vishwakarma Rashtriya Puraskars

Ø National Safety Awards

Ø National Award for Excellence in Energy Management

Ø National Design Award

Ø CII Energy Excellence Award 

Ø Indian National Suggestion Schemes' Association Award (INSAAN Award)

Ø Padma Shree

The company has joint venture with: -

· Powerplant Performance Improvement Limited

· BHEL-GE Gas Turbine Services Limited

· SWIL Limited

· Tata Refractories Limited

· Spectrum Power Generation Limited

The company is in trade terms with:-

v 2M Company

v 21^st Century Fabricators

v A Bond Strands Private Limited

v A-1 Industries

v AB Metal Formers (Private) Limited

v Acme Forgings Private Limited

v Aerovent Projects Private Limited

v Ag Measurematics Private Limited

v Agile Heavy Engineering Private Limited

v Ahsanali Engineering Workshop

v Aishu Castings Private Limited

v Ajantha Fabrication Works

v Ajmer Minerals & Grinding Company

v Alert Engineering Enterprises

v Aliasons Industries

v Allied Rubber Products

v Altec Fabricators

v Alcoat Aplicators Private Limited

v Browns Hitech Structures Private Limited

v Aishyu Castings Private Limited

v G. S. Alloys Castings Private Limited

v GEI Godavari Engineering Limited

v Hyderabad Heavy Engineering Private Limited

v T. M. Private Limited

v Krishna Engineering Company (Private) Limited

v SOL Engineers Limited

v Patny Systems Private Limited

v Rama Ferro Alloys & Finance Private Limited

v Thermopads Private Limited

v Vikas Machino Fabs (Private) Limited

v Voltamp Transformers Private Limited

v Vansanti Heavy Machining (Private) Limited

v Trimech Engineering Private Limited

v Uppar Ferrocast Private Limited

v Sri Balamurgan Engineering Works Private Limited

v G. B. Engineering Enterprises Private Limited

v Ghaziabad Ispat Udyog (Private) Limited

v Chhari Electricals (Private) Limited

v Hydropack (India) Private Limited

v Acme Forgings (Private) Limited

v Popular Swichtgear (Private) Limited

v M. P. Electricals Limited

v M. J. Patel (India) Limited

v Pearl Insulations Limited

v Rajasthan Coach Builders Private Limited

v Super Forgings & Steels Limited

v Benchmark Electronics Systems Limited

v Associated Cables Limited

v V. Valves Limited

v Reva Industries Limited

v Techno Electric & Engineering Company Limited

v Techno Fab Engineering Limited

v Spirax Marshall Limited

Subject has been accredited with ISO 9001 and ISO 9002 Certifications.

The company’s fixed assets of important value includes freehold land, leasehold land, roads, bridges and culverts, buildings, railway siding, plant and machinery, construction equipment, electrical installations, vehicles, furniture and fixtures, office and other equipments, trade marks, patents and designs, electronic data processing equipments, etc.

AS PER WEBSITE

Press Release

16-Sep-2005

BHEL employees bag three Vishwakarma National Awards; Manufacturing plants win five National Safety Awards.

For their innovations, employees of Bharat Heavy Electricals Limited (BHEL) have once again bagged several 'Vishwakarma Rashtriya Puraskars', among a host of public & private sector companies in the country.

Various innovations and modifications in manufacturing systems and processes undertaken by these awardees have resulted in a cumulative saving of more than Rs. Ten Million to the company.

In addition, five 'National Safety Awards' have been won by BHEL's manufacturing plants at Trichy and Bangalore, for outstanding achievements in terms of longest accident free period and lowest accident frequency rate at their works.

Significantly, BHEL and its employees have been winning both these prestigious national awards, instituted by the Government of India, Ministry of Labour, consistently, since their inception.

Three Vishwakarma Rashtriya Puraskars, under different categories, have been shared by seven employees from BHEL’s units at Haridwar and Hyderabad, for their innovative suggestions leading to cost reduction, higher productivity, import substitution etc.

Notably, the team of Mr. Sumant Nagar, Mr. Karan Singh Chauhan and Mr. Satish Kumar re-designed and renovated a Putty-filling machine for stators of 500 MW Turbine Generators resulting in increased efficiency and productivity, reduced manpower requirement and savings of valuable foreign exchange.

Similarly, Mr. Gulam Ahmed, a Vishwakarma award winner, developed an improved process for overlaying of stainless steel material on heat exchanger tube sheets leading to reduction in cycle time and improved quality. His efforts resulted in enhanced customer satisfaction and significant recurring savings.

The awards will be presented by the Union Minister for Labour & Employment, Mr. K. Chandrashekhar Rao, at a function, to be organized here on September 17, ’2005.

Press Release

5-Sep-2005

BHEL becomes first PSU to win ‘Best of its Class Distinction’ from the International Asia Pacific Quality Organization.

Bharat Heavy Electricals Limited (BHEL) has added another feather in its cap by becoming the first Public Sector as well as the first engineering and manufacturing organization in the country to have won the coveted ‘Best of its Class Distinction’ from the International Asia Pacific Quality Organization (APQO).

BHEL’s Ranipet plant has won the recognition in the big manufacturing category as part of the International Asia Pacific Quality Award (IAPQA – 2005), wherein more than 50 countries participated. The Award will be presented during the 11th APQO Conference, being organized in Hanoi, Vietnam on October 27 & 28, 2005.

The award has been instituted by APQO adopting the criterion of ‘Malcom Baldrige National Award’ in USA and is administered by APQO’s ‘Walter L Hurd Foundation.’

Significantly, only those companies that have won quality awards at a national level in their respective countries are eligible to apply for this prestigious award. BHEL Ranipet participated as it had won the coveted ‘IMC Ramakrishna Bajaj National Quality Award 2004’, where again BHEL was the first Public Sector and the first engineering and manufacturing organization in the country to have got the award.

Prior to that, four manufacturing units of BHEL located at Haridwar, Trichy, Bhopal and Hyderabad besides its Power Sector-Northern Region were conferred the coveted CII Exim, Commendation Certificate 2004 for business excellence conforming to global standards.

A quality conscious organization with a strong customer focus, BHEL has acquired ISO-9001 (2000 version), ISO-14001 and OHSAS-18001 certification for all its operations. BHEL initiated TQM in 1995 at its Trichy Unit. Later, the concept was extended company-wide and a road map for business excellence was evolved. TQM concepts deployed under the ‘Movement towards Business Excellence’, focused on benchmarking and improving its products and internal processes to global standards

As a result of its thrust on quality and technology, BHEL today enjoys national and international recognition, in the form of certification of products by international bodies like ASME, API etc. Most of the manufacturing plants of BHEL are equipped with state-of-the art testing and calibration labs, which are duly accredited by the National Accreditation Board for Calibration and Testing Labs (NABL).

Press Release

3-Sep-2005

Mr. C S Verma appointed Director (Finance), BHEL.

On his appointment as Director on the Board of Bharat Heavy Electricals Limited (BHEL), Mr.CS Verma has assumed charge as Director (Finance) of India's Navratna Public Sector engineering and manufacturing enterprise, here today.

Prior to this, he served as Director (Finance) on the Board of ITI, the country’s premier telecom company under the administrative control of the Department of Telecommunications, Ministry of Communications & IT, Government of India.

Mr. Verma holds a Master’s degree in Commerce, a Master’s degree in Management and a Bachelor’s degree in Law. He is a Fellow Member of the Institute of Company Secretaries of India and also an Associate Member of the Institute of Cost & Works Accountants of India.

During his tenure of more than three years in the Telecom major, through adroit management of funds and strategic deployment of scarce resources, Mr. Verma lent the much-needed financial muscle required for ITI to operate in the highly competitive telecom markets.

With over two decades of professional experience behind him, he is credited to be an expert in funds mobilisation having raised huge resources for the Indian Railway Finance Corporation where he served as Group General Manager before taking over as Director Finance in ITI in February 2002.

Mr. Verma has handled a number of foreign issues, swap transactions and derivative products. His earlier assignments include a stint in Delhi Stock Exchange (DSE) as its General Manager where he worked for about 4 years and in a Financial Institution where he worked for about 9 years. He has widely traveled abroad and has visited a number of countries.

Press Release

11-Aug-2005

BHEL wins contract for World Bank-funded Project; Once again beats Chinese Companies to make foray in Ethiopia.

Bharat Heavy Electricals Limited (BHEL) has achieved a major breakthrough on the export front by making a foray into the Ethiopian market. Outbidding Chinese and other multinational companies, the company has secured its first ever order from Ethiopia for setting up 230 kV substations on EPC basis.

Valued at around Rs. 260 Million, the World Bank-funded contract has been placed on BHEL by Ethiopian Electric Power Corporation (EEPCO).

The project is a part of the rural electrification programme initiated by the Ethiopian Government. BHEL’s scope of work in the project includes design, supply, erection, civil construction and commissioning of 230 KV Nefas-Mewucha and Gashena substations, apart from the expansion of Couitebe substation. The substations are to be completed in a schedule of 14 months.

On energisation, these substations will provide electrification to 17 towns in Nefas-Mewucha and 11 towns in Gashena. This project is significant for the ongoing rural electrification activities in Ethiopia. In addition to the 28 towns to be electrified, the project has been particularly designed to support the agro industry and other developmental activities in the area.

Under its power development programme, EEPCO has identified a series of substation and generation projects in the country. BHEL is working towards securing these businesses and associate with EEPCO in their power development programme on a long-term basis, which will benefit the people of Ethiopia in getting uninterrupted power supply.

BHEL has identified overseas business as a major thrust area. The company has achieved significant successes during the current financial year and is poised to achieve a quantum growth in its export business by consolidation in existing markets and widening its export base through expansion of existing basket of products and services and entering new markets.

23-Oct-2006

BHEL pays all-time high 145% dividend for fiscal 2005-06

Bharat Heavy Electricals Limited (BHEL) has paid the highest ever equity dividend of 145% for fiscal 2005-06 as against 80%, in the year before, maintaining its track record of paying dividends uninterruptedly for the last 30 years.

A cheque for the payment of the final dividend for the year, on the equity (67.72%) held by the Government of India, was presented here to Mr. Sontosh Mohan Dev, Hon’ble Union Minister for Heavy Industries & Public Enterprises by Mr. Ashok K. Puri, CMD, BHEL in New Delhi. With this, BHEL has made a total dividend payout of Rs.2403.4 Million for the year 2005-06, to the Government of India.

Senior officials of the Department of Heavy Industries & Public Enterprises and BHEL were also present on this occasion.

During the year 2005-06, BHEL recorded an all-time high turnover of Rs. 145250 Million, notching a growth of nearly 41% on top of 19% and 16% top line growth achieved in 2004-05 and 2003-04, respectively. This is also the highest year-on-year growth in the last three decades. In the same period, net profit soared over 76% to Rs. 16790 Million.

Significantly, in line with its vision -‘committed to enhancing stakeholder value‘, BHEL recorded a surge in Economic Value Addition (EVA), which catapulted to Rs. 10790 Million from Rs. 504 Million for the year before

BHEL is building Capacity and Capability for the future to contribute fully for meeting the power forecast for the 11^th Plan and beyond. For this, the company is investing more than Rs. 16000 Million for holistic modernization and capacity expansion of its facilities from 6,000 MW per annum at present to 10,000 MW per annum, which will be available in 2007. BHEL will be more than willing to enhance it further as required by the country’s power sector in future. These programmes are in the nature of brown field expansions and have strong economic rationale in terms of time and cost benefits. BHEL has large reserves in addition to leveraging its capacity and can fully meet the resource requirements for its expansion on its own.

BHEL has already taken necessary steps to cater to the likely demand for the next higher rating 800 MW Thermal sets and is actively looking at opportunities in Ultra Mega projects with various project developers. In addition, the company is shoring up its capability for higher rating Hydro sets and advanced class Gas Turbines to cater to upcoming market requirements.

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 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.43.59
UK Pound	1	Rs.85.53
Euro	1	Rs.58.14

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	9
PAID-UP CAPITAL	1~10	9
OPERATING SCALE	1~10	9
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	9
--LIQUIDITY	1~10	9
--LEVERAGE	1~10	9
--RESERVES	1~10	9
--CREDIT LINES	1~10	9
--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	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		81

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 EXPLANATIONS

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
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

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