MIRA INFORM REPORT

Report Date :

17.04.2007

IDENTIFICATION DETAILS

Name :	MERCHEM LIMITED

Formerly Known as :	GROVE CHEMICALS PRIVATE LIMITED

Registered Office :	2^nd Floor, Malankara Centre, M. G. Road, Ernakulam – 682 035, Kerala, India.

Country :	India

Financials (as on) :	31.03.2004

Date of Incorporation :	31.01.1994

CIN No.:	U24299KL1994PLC007681

Com. Reg. No.:	09-7681

TAN No.: (Tax Deduction & Collection Account No.)	CHNM00556D

Legal Form :	A Closely Held Public Limited Liability Company.

Line of Business :	The company is Manufacturer of Accelerators, Antioxide, Rubber Processing aids, Agrochemicals, Water treatment Chemicals and Specialty Chemicals.

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	USD 280000

Status :	Good

Payment Behaviour :	Usually Correct

Litigation :	Clear

Comments :	Subject is a well established company having satisfactory track. Trade relations are fair. Payments are reported as correct and as per commitment. General financial position is satisfactory. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	2^nd Floor, Malankara Centre, M. G. Road, Ernakulam – 682 035, Kerala, India.
Tel. No.:	91-484-2381617/ 2374120/2382285
Fax No.:	91-484-2380199/2348809
E-Mail :	merchem@vsnl.com
Website:	http://www.merchem.com
Location:	Rented

Factory 1 :	45 A Development Plot, Kalamassery, Ernakulam 683 104, Kerala, India (Established in 1981 - A Public Limited Company)
Tel. No.:	91-484-532877
Location:	Owned

Factory 2 :	Muthinagam Road, Eloor North, Udyogamandal - 683 501, Enakulam - 683 501, Kerala, India
Tel. No.:	91-484-559457/ 2546526
Location:	Owned

Factory 3 :	4/1 C Development Area, Edayar, P. O. Muppathadam, Ernakulam - 603 102, Kerala, India.
Tel. No.:	91-484-232334/
Location:	Owned

Branch :	G-144, Preet Vihar, Vikas Marg, New Delhi 110 092, INDIA
Tel. No.:	91-11-223 3969
Fax No.:	91-11-223 3969

DIRECTORS

Name :	Mr. Pulinat Ettan Thomas
Designation :	Managing Director
Address :	Pulinat, 50/934, A, Bank Juction, Edappally, Ernakulam - 682 024, Kerala, India.
Date of Birth/Age :	25.04.1949
Date of Appointment :	01.11.1995

Name :	Mr. Pulinat Mathai Raju
Designation :	Whole Time Director
Address :	Pulinat, House No. M. 10/6, Changampuzha Nagar, Ernakulam - 682 033, Kerala, India.
Date of Birth/Age :	20.02.1960
Date of Appointment :	31.01.1994

Name :	Mr. George V. E.
Designation :	Director

Name :	Mr. S. N. Sunderesan
Designation :	Director
Address :	Plot No. 14, Rajiv Gandhi Nagar, Sowripalayam, Coimbatore – 641 028, Tamilnadu, India.
Date of Birth/Age :	13.10.1931
Date of Appointment :	05.08.1996

Name :	Mr. V V Kamath
Designation :	Director
Address :	No. 93, Panchajanya, 13^th Main, Aicoboo Nagar, BTM Layout, Stage 1, Banglore – 560 068, Karnataka, India.
Date of Birth/Age :	13.10.1931
Date of Appointment :	05.08.1996

Name :	Mr. A K Nair
Designation :	Director
Address :	M-10/15, Changampuzha Nagar, Kalamassery Cochin, Ernakulam – 682 033, Kerala, India.
Date of Birth/Age :	27.08.1943
Date of Appointment :	26.02.2001

Name :	Mr. Anitha Venunath
Designation :	Director
Address :	Ashraya, Periyar Nagar, Near Uliyannur Ferry, Thikkattukara P. O. Aluva, Ernakulam – 683 106, Kerala, India.
Date of Birth/Age :	12.02.1956
Date of Appointment :	20.09.2002

Name :	Mr. B Sudhakar Shetty
Designation :	Director
Address :	298, Canara Bank Colony, Nagarbhavi Road, Banglore – 560 072, Karnataka, India.
Date of Birth/Age :	20.03.1950
Date of Appointment :	23.05.2005

Name :	Mr. Bhagawandas. T
Designation :	Nominee of Canara bank Venture Capital Fund Limited

Name :	Mr. Alexander T.
Designation :	KSIDS Nominee

KEY EXECUTIVES

Name :	Mr. Anilkumar G
Designation :	Secretary
Address :	Satheesh Bhavan, Kidarakuzhy, Parasuvaikal P.O., Thikkattukara – 695 508, Kerala, India
Date of Birth/Age :	27.05.1981
Date of Appointment :	17.06.2004

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders		Percentage of Holding
Government Companies		10.00
Venture Capital		14.00
Bodies Corporate		12.00
Other top 50 shareholders		19.00
Directors or relatives of Directors		45.00
Total		100.00

BUSINESS DETAILS

Line of Business :

The company is Manufacturer of Accelerators, Antioxide, Rubber Processing aids, Agrochemicals, Water treatment Chemicals and Specialty Chemicals.

Products :

v Rubber and Chemicals

v Accelerators

v Antioxidants

v Processing Aids

v Agrochemicals and water treatment chemicals

v Specialty chemicals

PRODUCTION STATUS

Particulars	Installed Capacity	Actual Production
Rubber Chemicals	3000	2361.13

GENERAL INFORMATION

No. of Employees :

Bankers :

v State Bank of India, State Bank Of India, Shanmugham Road, Branch, Ernakulam

v IDBI Bank Limited, Panampilly Nagar, Ernakulam, Cochin-682036, Kerala, India

v State Bank Of Travancore, Industrial Finance Branch, Malankara Center, M. G. Road, Ernakulam – 35.

v State Bank of India, Commercial Branch, Express House, Kaloor, Cochin-682017

Facilities :

Secured Loan	Amount (in Millions)
Term Loans:
From financial Institutions Industrial Development Bank of India	14.538
Working Capitals Loan:
State Bank of India	54.955
State Bank of Travancore	17.858
Loan against Bills / Fixed Deposits	1.751
Hire Purchase Loan	1.005
Total	90.109

Unsecured Loan:
From Directors	6.010
From Others	14.372
TOTAL:	20.384


Banking Relations :	Satisfactory

Auditors :	K. Varghese and Company, Kollam, Kerala, INDIA
Qualification:	Chartered Accountants

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
7000000	Equity Shares	Rs. 10/- each	Rs. 70.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
5200000	Equity Shares	Rs. 10/- each	Rs. 52.000 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2004	31.03.2003
SHAREHOLDERS FUNDS
1] Share Capital		52.000	52.000
2] Share Application Money		0.000	0.000
3] Reserves & Surplus		18.815	11.453
4] (Accumulated Losses)		0.000	0.000
NETWORTH		70.815	63.453
LOAN FUNDS
1] Secured Loans		90.109	83.277
2] Unsecured Loans		20.383	18.364
TOTAL BORROWING		110.492	101.641
DEFERRED TAX LIABILITIES		0.000	0.000

TOTAL		181.307	165.094

APPLICATION OF FUNDS

FIXED ASSETS [Net Block]		87.586	87.915
Capital work-in-progress		1.632	1.613

INVESTMENT		0.000	0.000
DEFERREX TAX ASSETS		3.012	1.313

CURRENT ASSETS, LOANS & ADVANCES
	Inventories	45.400	38.808
	Sundry Debtors	71.178	60.451
	Cash & Bank Balances	4.485	5.128
	Other Current Assets	0.000	0.000
	Loans & Advances	10.012	11.697
Total Current Assets		131.075	116.084
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	42.754	45.208
	Provisions	0.000	0.000
Total Current Liabilities		42.754	45.208
Net Current Assets		88.321	70.876

MISCELLANEOUS EXPENSES		0.756	3.377

TOTAL		181.307	165.094

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2004	31.03.2003
Sales Turnover		337.185	281.126
Other Income		8.991	2.309
Total Income		346.176	283.435

Profit/(Loss) Before Tax		9.332	9.205
Provision for Taxation		(0.963)	(0.666)
Profit/(Loss) After Tax		10.295	9.871

Total Earnings		34.974	30.757

Imports :
	Raw Materials	54.910	29.246
	Others	0.410	0.421
Total Imports		55.320	29.667

Expenditures :
	Cost of Goods Sold
	Manufacturing Expenses	29.352	26.700
	Administrative Expenses	25.375	20.437
	Raw Material Consumed	190.395	145.727
	Salaries, Wages, Bonus, etc.	16.659	14.881
	Financial Charges	15.315	14.730
	Depreciation & Amortization	12.438	11.972
	Other Expenditure	44.690	36.899
Total Expenditure		334.224	271.346

KEY RATIOS

PARTICULARS		31.03.2004	31.03.2003
PAT / Total Income	(%)	2.97	3.48

Net Profit Margin (PBT/Sales)	(%)	2.70	3.25

Return on Total Assets (PBT/Total Assets}	(%)	4.18	4.45

Return on Investment (ROI) (PBT/Networth)		0.13	0.15

Debt Equity Ratio (Total Liability/Networth)		2.16	2.31

Current Ratio (Current Asset/Current Liability)		3.07	2.57

LOCAL AGENCY FURTHER INFORMATION

INDUSTRY

The chemical industry which had been on a path of high growth since liberalisation, slowed down in FY’97. Year-on-year growth rate in Index of Industrial Production (IIP) for chemical production in FY’96. This slowdown has been attributed to a number of reasons. The overall slowdown in economy, including that of the agriculture sector has bad on impact on the chemical industry. The impact of reforms on the industry has also been severe.

The caustic soda industry, with a size of around Rs.36 bn, comprises around 5% of the chemical process industry in India.

Caustic soda is manufactured/sold in liquid (lye) or solid (flakes) form. It finds usage in diverse applications such as in the manufacture of paper, alumina, man-made and cotton fibres, soaps/detergents and a host of chemicals. Chlorine is a co-product and for every tone of caustic soda manufactured, 0.88 tonnes of chlorine is produced. Chlorine is used in a number of applications such as in the manufacture of PVC and several other organic/inorganic chemicals.

Soda ash, chemically known as Sodium Carbonate is a versatile inorganic chemical with a wide variety of applications. It is largely used in the manufacture of detergents, silicates and several downstream chemicals. The domestic soda ash industry has been facing the onslaught of imports for quite some time.

The industry is likely to continue to be a net importer although imports may be lower in the coming year due to larger capacities in the domestic market. The competitiveness of the industry will be severely tested as import duties on the furnished products come down further and foreign major seek to establish a toehold in the country.

Business:

The company uses raw materials like Sulphur, Aniline, Aceton, Carbon Disulphide, Chlorine, Dimethylamine, Diethylamine, Caustici Soda, Morpholine.

The company exports chemicals like Tetramethylthiuram disulphide, 1,2-Dihydro, 2,2,4-trimethylquinoline, 2,2'-Dibenzothiazyl disulphide, Zinc mercaptobenzothiazole, N-Cyclohexyl-2-benzothiazole-2-sulphenamide, Zinc director-n-butyl dithiocarbamate, Thiazole activated.

The company is ISO 9002 certified by BVQI.

Performance of the Company

The gross turnover of the company for the financial year ended 31.03.2004 increased to Rs. 337.200 Millions compared to Rs. 281.000 Millions in the previous year, registering a growth a of 20%. Despite the upward trend in raw material costs due to hardening of crude oil petroleum feed stock prices and the continuous downward trend in the selling price of products, the company maintained its net profit at the same level.

Exports:

The company has achieved an export turnover of Rs. 35.000 Millions during the period under review. The company’s products were well received by tyre majors and substaintial increase in the business is expected in the coming years.

Dividend:

The Directors recommended payment of 5% dividend as done in the last year. Though the company is capable of paying more to its share holders, wish to be conservative taking in to account the prevailing high crude oil price.

Contingent Liability :

(Rs. In millions)

Particulars	2003-04	2002-03
Income Tax liability in respect of Assessment year 1997-98 (Appeal in pending before CIT (A) in respect of A Y 1997-98)	4.837	6.331

FIXED ASSETS:

Land and Land development, Building, Plant & Machinery, Electrical Installation, Electrical & Lab Equipment, Furniture & Fixture, Library Books, Vehicles etc.

Name of the company

MERCHEM LIMITED

Presented By

Mr. Pulinat Ettan Thomas, Managing Director

1) Date and description of instrument creating the change

14.05.1997. Deed of Hypothecation of Goods and Assets in favour of State Bank of India (SBI)

2) Amount secured by the charge/amount owing on the securities of charge

The Loan of Rs. 33.500Millions

3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given

For Term Loan of Rs. 33.500Millions

All present and future goods book debts and all other movables assets of the borrower including documents of title goods outstanding moneys, receivables including receivables by way of cash assistance and /or cash incentives under the cash Incentive scheme or any other scheme claims including claims by way of refund customs/exice duties under the Duty Draw back Credit scheme, or any other scheme, bills, invoice, documents, contracts, insurance, policies, guarantee, engagements, securities, investments, and rights and the present machinery listed in the scheduled hereunto and all future machinery belonging to or in the possession or under the control of the borrower wherever lying stored and kept and whether in possession of the borrower or of the bank or of any third party whether in India or elsewhere throughout the world (including all such goods, other movable assets as may be in course of shipment transit or delivery) (hereinafter referred to as ‘the said goods and assets”) shall stand hypothecated to the bank by way of first charge.

4) Gist of the terms and conditions and extent and operation of the charge.

Facilities granted / advance of Rs. 33.500 Millions

Charge created on 14.05.1997 operates as security for the repayment by the company to State Bank of India for its loan of Rs. 33.500 Millions with all interest at the respective agreed rates, additional interest, liquidated damages, premium on prepayment or on redemption cost, charges, expenses and other monies payable by the company to State Bank of India in terms of Loan Agreement dated 14.05.1997.

The charges in favour of State Bank of India under the said Hypothecation is on the company’s stock of raw materials, semi finished and finished goods and consumable stores and such other movables as may be specifically permitted to by the lender for securing the said loan.

The company has undertaken at its expense to kept the said goods in marketable and good conditions and insure the same in joint names of the borrower and lenders.

5) Name and Address and description of the person entitled to the charge.

State Bank Of India

Shanmugham Road, Branch, Ernakulam.

6) Date and brief description of instrument modifying the charge

Supplemental Agreement of loan for increase in the overall Limit in form C.1. A dated 31.01.2002.

Supplemental Agreement of Hypothecation of goods and Assets for increase in the overall limit in form C.2 – A dated 31.012.2002

Letter regarding the grant of Individual limits with in the overall limit dated 31.01.2002.

7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.

On 31.01.2002 the existing loan limits of Rs. 35.000 Millions was enhanced to Rs. 56.000 Millions as follows:-

	Existing Limits	Received Limits
(Rs in Millions)
Term Loan	20.000	20.000
CC (HYP)	4.000	9.000
CC (Book Debts)	7.500	18.000
DDP (Chq)	2.000	1.500
Bank Guarantee	1.500	0.000
Inland Bills	0.000	1.500

Non Fund Based
Letter of Credit	0.000	6.000

The existing charge on the goods and assets were extended to the enhanced loan limits of Rs. 56.000 Millions

Interest rate was revised to 3.50% over SBAR.

Name of the company

MERCHEM LIMITED

Presented By

Mr. Pulinat Ettan Thomas, Managing Director

1) Date and description of instrument creating the change

14.05.1997. Deed of Hypothecation of Goods and Assets in favour of State Bank of India (SBI)

2) Amount secured by the charge/amount owing on the securities of charge

The Loan of Rs. 33.500 Millions

3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given

For Term Loan of Rs. 33.500 Millions

All present and future goods book debts and all other movables assets of the borrower including documents of title goods outstanding moneys, receivables including receivables by way of cash assistance and /or cash incentives under the cash Incentive scheme or any other scheme claims including claims by way of refund customs/excise duties under the Duty Draw back Credit scheme, or any other scheme, bills, invoice, documents, contracts, insurance, policies, guarantee, engagements, securities, investments, and rights and the present machinery listed in the scheduled hereunto and all future machinery belonging to or in the possession or under the control of the borrower wherever lying stored and kept and whether in possession of the borrower or of the bank or of any third party whether in India or elsewhere throughout the world (including all such goods, other movable assets as may be in course of shipment transit or delivery) (hereinafter referred to as ‘the said goods and assets”) shall stand hypothecated to the bank by way of first charge.

4) Gist of the terms and conditions and extent and operation of the charge.

Facilities granted / advance of Rs. 33.500 Millions

The company has undertaken at its expense to kept the said goods in marketable and good conditions and insure the same in joint names of the borrower and lenders.

5) Name and Address and description of the person entitled to the charge.

State Bank Of India

Shanmugham Road, Branch, Ernakulam.

6) Date and brief description of instrument modifying the charge

Supplemental Agreement of loan for increase in the overall Limit in form C.1. A dated 08.11.2002.

Supplemental Agreement of Hypothecation of goods and Assets for increase in the overall limit in form C.2 – A dated 08.11.2002

Letter regarding the grant of Individual limits with in the overall limit dated 08.11.2002.

7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.

On 31.01.2002 the existing loan limits of Rs. 35.000 Millions was enhanced to Rs. 56.000 Millions as follows:-

	Existing Limits	Received Limits
(Rs in Millions)
Term Loan	20.000	20.000
CC (HYP)	9.000	0.000
CC (Book Debts)	18.000	0.000
DDP (Chq)	1.500	2.500
Inland Bills	1.500	2.500
CC (stock)	0.000	15.000
CC (receivables)	0.000	25.000
Receivables

Non Fund Based
Letter of Credit	6.000	10.000

The existing charge on the goods and assets were extended to the enhanced loan limits of Rs. 75.000 Millions

Interest rate was revised to 3.50% over SBAR present rate effective being 14.5%p.a.

Name of the company

MERCHEM LIMITED

Presented By

Mr. Pulinat Ettan Thomas, Managing Director

1) Date and description of instrument creating the change

14.05.1997. Deed of Hypothecation of Goods and Assets in favour of State Bank of India (SBI)

2) Amount secured by the charge/amount owing on the securities of charge

The Loan of Rs. 33.500Millions

3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given

For Term Loan of Rs. 33.500Millions

4) Gist of the terms and conditions and extent and operation of the charge.

Facilities granted / advance of Rs. 33.500 Millions

The company has undertaken at its expense to kept the said goods in marketable and good conditions and insure the same in joint names of the borrower and lenders.

5) Name and Address and description of the person entitled to the charge.

State Bank Of India

Shanmugham Road, Branch, Ernakulam. (Transferred to State Bank of India Commercial Branch, Express House, kaloor Cochin – 682 017 w. e. f. 14.08.2000 )

6) Date and brief description of instrument modifying the charge

Supplemental Agreement of Hypothecation of goods and Assets for increase in the overall limit in form C.2 – A dated 11.12.2004

Letter regarding the grant of Individual limits with in the overall limit dated 11.12.2004.

7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.

On 11.12.2004 the existing loan limits of Rs. 75.000 Millions was enhanced to Rs. 90.000 Millions as follows:-

	Existing Limits	Received Limits
(Rs in Millions)
CC (stock & Receivables)	50.000	50.000
DDP (Chq)	2.500	2.500
Inland Bills	5.000	5.000
Foreign Bills Discounting	2.000	4.500

Non Fund Based
Letter of Credit	20.000	27.500

The existing charge on all present and future goods book debts, and other movable assets were extended to the enhanced loan limits of Rs. 90.000 Millions.

Name of the company	MERCHEM LIMITED
Presented By	Mr. Pulinat Ettan Thomas, Managing Director
1) Date and description of instrument creating the change	Memorandum of Deposit of Title Deeds on 11.05.2001. Agreement of Hypothecation of Goods and Assets dated 11.05.2001. Letter Regarding the grant of individual limits within the overall Limit dated 11.05.2001.
2) Amount secured by the charge/amount owing on the securities of charge	Rs. 6.000Millions (Bank Gurantee)
3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given	Collateral Security of company’s immovable properties namely, 59 cents of land in sy. No. 94/22 pt. And 23 pt. In Edayar Kara, Kadungallur Village, North parur Taluk, Alwaye Sub _ District Ernakulam District together with all buildings existing and /or to be constructed. The movable Current Assets of the company’s viz. all present and future goods book debts and all other movables assets of the borrower including documents of title goods outstanding moneys, receivables including receivables by way of cash assistance and /or cash incentives under the cash Incentive scheme or any other scheme claims including claims by way of refund customs/exice duties under the Duty Draw back Credit scheme, or any other scheme, bills, invoice, documents, contracts, insurance, policies, guarantee, engagements, securities, investments, and rights and the present machinery namely :- v NaMBT Plant v Sulphenamide Plant v Thiazole Plant v Antioxidant Plant v Electrical Installation v Boiler with accessories v Pollution Control devices v Stroge Tanks v Generator v Inverter v Lab Equipment v Transformer v Furniture & Fittings v Chilled Water Plant v Edayar Plant All future machinery belonging to or in the possession or under the control of the borrower wherever lying stored and kept and whether in possession of the borrower or of the bank or of any third party whether in India or elsewhere throughout the world (including all such goods, other movable assets as may be in course of shipment transit or delivery)
4) Gist of the terms and conditions and extent and operation of the charge.	Interest rate was determined by the bank from time to time. Repayable on demand.
5) Name and Address and description of the person entitled to the charge.	State Bank Of Travancore, Industrial Finance Branch, Malankara Center, M. G. Road, Ernakulam – 35.
6) Date and brief description of instrument modifying the charge	Not Applicable
7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.	Not Applicable

Name of the company

MERCHEM LIMITED

Presented By

Mr. Pulinat Ettan Thomas, Managing Director

1) Date and description of instrument creating the change

Memorandum of Entry No. 131 dated 14.08.2000 relating to Eloor Property.

Memorandum of Entry No. 131 dated 14.08.2000 relating to Edayar Property.

Declaration and Undertaking in the matter of Joint Mortgage by deposit of Title Deeds on 14.08.2000 of Edayar Property

Declaration and Undertaking in the matter of Joint Mortgage by deposit of Title Deeds on 14.08.2000 of Eloor Property

2) Amount secured by the charge/amount owing on the securities of charge

Rs. 1.000Millions (Bill Discounted)

3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given

2^nd Charge on all those pieces and parcels of the land admeasuring 6 acres and 74 cents (7 acres 69 cents as per documents) Situate at Eloor Village, Paravur Taluk, Ernakulam in the state of Kerala bearing the following survey numbers and the extents mentioned against them:-

Sl. No.	Survey No.	Extent
Sl. No.	Survey No.	Acres	Cents
	187/17	0		21
	187/18	0		76
	187/16A	0		24
	187/16B	1		67
	185/11A	0		21
	185/11B	2		25
	185/12	0		22
	185/13	0		82
	185/17	0		30
	187/16B	0		06

(1 acres 71 cents as per documents)

together with all buildings and structures and all Plant & Machinery attached to the earth or permanently fastened to anything attached to the earth.

2^nd Charge on all those pieces and parcels of Edayar Land admeasuring 70 cents Situate at Edayar Village, Paravur Taluk, Ernakulam in the state of Kerala bearing the following survey numbers and the extents mentioned there against:

Survey No.	Extent in cents
91/1- A-3 pt.
94/21-1 pt.	50
93/3B pt.	20
Total	70

Together with all buildings and structures and all Plant & Machinery attached to the earth or permanently fastened to anything attached to the earth.

4) Gist of the terms and conditions and extent and operation of the charge.

Interest rate at the rate of 4% above SBTPLR minimum 16% p.a. plus interest tax.

Repayable on Demand

5) Name and Address and description of the person entitled to the charge.

State Bank Of Travancore,

Industrial Finance Branch, Malankara Center, M. G. Road, Ernakulam – 35.

6) Date and brief description of instrument modifying the charge

Memorandum of Deposit of Title Deeds on 11.05.2001.

Agreement of Hypothecation of Goods and Assets dated 11.05.2001.

Letter Regarding the grant of individual limits within the overall Limit dated 11.05.2001

7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.

On 11.05.2001 the existing loan limit of Rs. 1.000 Millions was enhanced to Rs. 2.000 Million

Collateral Security of company’s immovable properties namely, 59 cents of land in sy. No. 94/22 pt. And 23 pt. In Edayar Kara,Kadungallur Village, North parur Taluk, Alwaye Sub _ District Ernakulam District together with all buildings existing and /or to be construcred.

The movable Current Assets of the company’s viz. all present and future goods book debts and all other movables assets of the borrower including documents of title goods outstanding moneys, receivables including receivables by way of cash assistance and /or cash incentives under the cash Incentive scheme or any other scheme claims including claims by way of refund customs/exice duties under the Duty Draw back Credit scheme, or any other scheme, bills, invoice, documents, contracts, insurance, policies, guarantee, engagements, securities, investments, and rights and the present machinery namely :-

v NaMBT Plant

v Sulphenamide Plant

v Thiazole Plant

v Antioxidant Plant

v Electrical Installation

v Boiler with accessories

v Pollution Control devices

v Stroge Tanks

v Generator

v Inverter

v Lab Equipment

v Transformer

v Furniture & Fittings

v Chilled Water Plant

v Edayar Plant

all future machinery belonging to or in the possession or under the control of the borrower wherever lying stored and kept and whether in possession of the borrower or of the bank or of any third party whether in India or elsewhere throughout the world (including all such goods, other movable assets as may be in course of shipment transit or delivery) were extended to the extended Loan Limit.

Name of the company

MERCHEM LIMITED

Presented By

Mr. Pulinat Ettan Thomas, Managing Director

1) Date and description of instrument creating the change

14.05.1997. Deed of Hypothecation of Goods and Assets in favour of State Bank of India (SBI)

2) Amount secured by the charge/amount owing on the securities of charge

The Loan of Rs. 33.500Millions

3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given

For Term Loan of Rs. 33.500Millions

All present and future goods book debts and all other movables assets of the borrower including documents of title goods outstanding moneys, receivables including receivables by way of cash assistance and /or cash incentives under the cash Incentive scheme or any other scheme claims including claims by way of refund customs/excise duties under the Duty Draw back Credit scheme, or any other scheme, bills, invoice, documents, contracts, insurance, policies, guarantee, engagements, securities, investments, and rights and the present machinery listed in the scheduled hereunto and all future machinery belonging to or in the possession or under the control of the borrower wherever lying stored and kept and whether in possession of the borrower or of the bank or of any third party whether in India or elsewhere throughout the world (including all such goods, other movable assets as may be in course of shipment transit or delivery) (hereinafter referred to as ‘the said goods and assets”) shall stand hypothecated to the bank by way of first charge.

4) Gist of the terms and conditions and extent and operation of the charge.

Facilities granted / advance of Rs. 33.500 Millions

The company has undertaken at its expense to kept the said goods in marketable and good conditions and insure the same in joint names of the borrower and lenders.

5) Name and Address and description of the person entitled to the charge.

State Bank Of India

Shanmugham Road, Branch, Ernakulam.

(Transferred to State Bank of India, Commercial Branch, Express House, Kaloor, Cochin-682017 w.e.f. 14.08.2000)

6) Date and brief description of instrument modifying the charge

Supplemental Agreement of Hypothecation of goods and Assets for increase in the overall limit in form C.2 – A dated 23.01.2006.

Letter regarding the grant of Individual limits with in the overall limit dated 23.01.2006.

7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.

On 23.01.2006 the existing loan limits of Rs. 90.000 Millions was enhanced to Rs. 95.500 Millions as follows:-

	Existing Limits	Received Limits
(Rs in Millions)
CC (Stock and Receivables)	55.000	55.000
(EPC Sub Limit of CC DDP Chq)	--	(15.000)
DDP (Chq)	2.500	2.500
Inland Bills	0.500	--
Foreign Bill Discounting	4.500	5.000
Standby line of credit	--	5.500
Letter of credit	27.500	27.500
Total	90.000	95.500

The existing charge on the goods and assets were extended to the enhanced loan limits of Rs. 95.500 Millions.

Corporation identity number or foreign company registrations number of the company	U24299KL1994PLC007681
Name of the company	MERCHEM LIMITED
Address	2^nd Floor, Malankara Centre, M. G. Road, Ernakulam – 682 035, Kerala, India.
This Form is for	Modification of charge
Type of Charges	Immovable property
Particular of the charge holder	IDBI Bank Limited Panampilly Nagar Ernakulam Cochin-682036 Kerala, India
Nature or description of the instrument creating charge	No instrument was executed. An equitable mortgage by deposit of title deeds by way of constructive delivery was created by the company in favour of IDBI by depositing the title deeds with IDBI in respect of all the immovable properties of the company admeasuring 6.74 acres in Eloor village and 70% in Kadungalloor Village.
Date of the instrument creating charge	30.09.2006
Amount Secure by the charge	Rs.80.000 millions
Brief of the principal terms and conditions and extent and operation of the charge	Rate of interest As determined by the Bank from time to time Terms of repayment Repayable on demand Margin As determined by the Bank Extent and operation of the charge The WC facilities aggregating to Rs.80.000 millions together with interest compound interest additional interest liquidated damages, cost charges expenses and all other money payable by the said deed of hypothecation being the original charge is now also secured by the said joint mortgage by deposit of title deeds by deposit of title deeds by way of constructive delivery created by the company on 30.09.2006 in favour of IDBI on 2^nd charge basis.
Particulars of the Property charged	All those pieces and parcels of land admeasuring 6 Acres and 74 Cents (7 Acres 69 Cents as per document) in Sy. Nos. 187/17, 187/18, 187/16A, 187/16B, 185/11B, 185/12, 185/13, 185/17, 187/16B situate at Eloor Village, Paravur Taluk, Ernakulam in the state of Kerala and All those pieces and parcels of Edayar land admeasuring 70 cents in Sy. Nos.93/1A-3 Pt., 94/21-1 Pt. situate at Edayar, Kadungalloor village, Paravoor Taluk, Ernakulam District in the state of Kerala.
Particulars of present modification	The IDBI working capital facilities of Rs.80.000 millions together with interest, compound interest, additional interest, liquidated damages, costs, charges, expenses and all other moneys payable by the company to IDBI in terms of the Loan agreement which is secured by the said Deed of hypothecation dated 14.02.2006 being the original charge has been modified now so as to be additionally secured by mortgages by deposit of title deeds created on 30.09.2006 inter alia in favour of IDBI.

AS PER WEBSITE:

Subject is one of the leading manufacturers of Rubber Chemicals & Auxillaries in India , enjoying a vast customer base since 1981. They manufacture a wide range of Accelerators, Antioxidants, Rubber processing aids, Agrochemicals, Water treatment Chemicals and Specialty Chemicals.

Subject is one of the leading manufacturer of rubber chemicals & auxillaries in India enjoying a vast customer base since 1981.

They manufacture a wide range of Accelerators, Antioxidants, Rubber Processing aids, Agrochemicals, Water treatment Chemicals and Specialty Chemicals.

Their customer base include all the premier tyre companies in India and other non- tyre clients in India and abroad. They export large quantities of rubber chemicals to South East Asia and European markets.

Subject located in the industrial suburbs of Cochin employ state of the art facilities, stringent quality control systems and unmatched technical expertise to gain wide acceptance of their products in the domestic and international markets.

Their Research & Development activities are geared to meet customer expectations for both quality products and new product development.

Quality & product consistency are attained by a comprehensive system covering raw materials and processing. Their systems have been consistently rated par excellence by the major automobile tyre companies and other customers in their vendor rating as well as their audits. Their Quality and Environmental Management systems comply with the ISO 9001: 2000 and the ISO 14001 standards

Their products are shipped in standard packing as per the industry norms. The products in pellets/ pastilles/powder form are available in HDPE laminated paper bags and liquid products in barrels

Quality Management

Their Goals for Quality is relatively simple: set high standards for products and service, consistently meet those standards and work for continuous improvement in every one of their systems and processes.

They maintain high standards of quality and product consistency with a comprehensive monitoring system covering raw material procurement, production processes and end product handling.

Their manufacturing operations are audited and certified for ISO 9001-2000 standards by Bureau Verities Quality International.

Their systems are also regularly audited by major automobile tyre companies and other quality conscious customers and have always been accorded excellent ratings by them.

Their success has been built on the simple premise of providing the highest quality rubber chemicals and specialty chemicals backed up by technical expertise and sales support

Environment Management

Environmental, Safety and Health Policies

Subject has always recognized its responsibility to its employees, customers, community and the environment.

They have put in place a well defined Environment Management System incorporating elements of the ISO 14000 standards , whereby process improvements and effluent discharge parameters are continuously monitored and improved.

Their manufacturing units are audited and certified for ISO 14001 standards by the Bureau Veritas Quality International.

Production Management

Subject has two units producing a range of rubber chemicals and auxiliary products in the industrial suburbs of Cochin, Kerala, India.

Their State of the Art Technology, stringent quality management systems and unmatched technical expertise have enabled us to gain wide acceptability of their products in both the domestic and international markets.

Their customers include the major players in the tyre industry both in India and abroad and all the major non- tyre rubber goods manufacturers.

They export large quantities of their products to European and Asian countries.

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.41.99
UK Pound	1	Rs.84.22
Euro	1	Rs.57.22

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	5
--CREDIT LINES	1~10	5
--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	NO
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		45

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

MIRA INFORM REPORT

RATING

NETWORTH

TOTAL BORROWING

TOTAL

APPLICATION OF FUNDS

FIXED ASSETS [Net Block]

Capital work-in-progress

INVESTMENT

DEFERREX TAX ASSETS

CURRENT ASSETS, LOANS & ADVANCES

Inventories

Sundry Debtors

Cash & Bank Balances

Other Current Assets

Loans & Advances

Total Current Assets

Less : CURRENT LIABILITIES & PROVISIONS

Current Liabilities

Provisions

Total Current Liabilities

Net Current Assets

MISCELLANEOUS EXPENSES

TOTAL

PAT / Total Income

(%)

Net Profit Margin

Return on Total Assets

Return on Investment (ROI)

Debt Equity Ratio

Current Ratio

Unit