MIRA INFORM REPORT

Report Date :

30.11.2007

IDENTIFICATION DETAILS

Name :	SARDA ENERGY AND MINERALS LIMITED
Registered Office :	73/A, Central Avenue, Shri Ram Niketan, Nagpur – 440 018, Maharashtra
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	23.06.1973
Com. Reg. No.:	11-16617
CIN No.: [Company Identification No.]	L27100MH1973PLC016617
TAN No.: [Tax Deduction & Collection Account No.]	NGPR00172E
PAN No.: [Permanent Account No.]	AAACR6149L
Legal Form :	A Public Limited Liability. The Company’s Shares are listed on the Stock Exchanges.
Line of Business :	Producing Sponge Iron, Mild Steel Ingots, Billets and Rolled Products

RATING & COMMENTS

MIRA’s Rating :

A

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

Fairly Large

Maximum Credit Limit :	USD 8330000
Status :	Good
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is a well established company having fine track. Trade relations are fair. Financial position is good. Payments are usually correct and as per commitments. The company is doing well. It can be considered good for any normal business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	73/A, Central Avenue, Shri Ram Niketan, Nagpur – 440 018, Maharashtra
Tel. No.:	91-712-2727509/ 2660071/ 5616707
Fax No.:	91-712-2728207/ 2641171
E-Mail :	rasl_fin@rediffmail.com cs@raslindia.com
Website :	http://www.raslindia.com
Head Office/ Works :	Industrial Growth Center, Siltara, Raipur – 493 111, Chhattisgarh, India
Tel. No.:	91-7721-403925-29/ 264204-09
Fax No.:	91-7721-403924, 264214
Branch :	125-B, Mittal Court, B-Wing, Nariman Point, Mumbai – 400 021, Maharashtra, India
Tel. No.:	91-22-22880080-81
Fax No.:	91-22-22826680

DIRECTORS

Name :	Mr. Kamal Kishore Sarda
Designation :	Chairman and Managing Director
Qualification :	B.E (Mechanical)
Profile :	He has three decades of industrial experience and has a brilliant track record. He has also completed course on Strategic Management from IIM, Ahmedbad. He has traveled extensively across the world to study new developments and trends in industry. He was Chairman of Confederation of Indian Industry (CII), Chhattisgarh Chapter for the year 2005-06. He is also the Chairman of Chattisgarh Electricity Company Ltd., a closely held public limited company, which generates Power and manufactures Ferro Manganese and Silico Manganese.
Name :	Mr. G K Chhanghani
Designation :	Executive Director
Qualification :	B.E (Mechanical)
Profile :	He has nearly three decades of experience in the steel and power sectors and is associated with the compnay for more than two decades. He is incharge for day to day operations of the company's production facilities.
Name :	Mr. G D Mundra
Designation :	Whole Time Director
Profile :	Mr. G. D. Mundra is a senior chartered accountant with two decades of experience in finance and strategic management. He also has vast experience and exposure to capital / money market
Name :	Mr. Rakesh Mehra
Designation :	Director
Qualification :	FCWA
Profile :	Ex-General Manager of MPAVN. He is a financial consultant and serves as a professional director on the board.
Name :	Mr. A K Basu
Designation :	Director
Profile :	Mr. A. K. Basu is a B.M.E with rich experience in the field of finance. He is Ex Chief General Manager of IDBI.
Name :	Mr. P R Tripathi
Designation :	Director
Qualification :	Mining Engineer
Profile :	Ex CMD of National Mineral Development Corporation. He has rich senior management experience in mining and steel industry.

KEY EXECUTIVES

Name :	Mr. P K Jain
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares
Promoters ( Including persons acting in concert)	7990379
Institutional Investors	1484549
Corporate Bodies	1075555
NRIs/ OCBs	20346
General Public	2509171
Total	13080000

BUSINESS DETAILS

Line of Business :	Producing Sponge Iron, Mild Steel Ingots, Billets and Rolled Products
Products :	v Steel Ingot v Sponge Iron v Trading Goods

PRODUCTION STATUS

Particulars	Installed Capacity	Actual Production
Steel ingots/ Rubber Riser	40000	29800
Steel Billets	100000	30979
Sponge Iron	210000	139283
Iron Ore	N A	152713
Ferro Alloys	66000	52263
Power (MW/KWH)	48 MW	329444218 KWH
Fly Ash Bricks, Blocks and Tiles	-	3157260 Nos.

GENERAL INFORMATION

No. of Employees :	About 600
Bankers :	v Union Bank of India v UTI Bank Limited v Bank of Baroda

Banking Relations :	Satisfactory
Auditors :
Name :	M M Jain and Company Chartered Accountants
Address :	Shreemohini, Kingsway, Nagpur, Maharashtra, India
Group Company :	v Chhatisgarh Electricity Company Limited v Chhattisgarh Investment Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value		Amount
35000000	Equity Shares	Rs. 10/- each	Rs. 350.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value		Amount
13080000	Equity Shares	Rs. 10/- each	Rs. 130.800 millions

As on 31.03.2007

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
29570000	Equity Shares	Rs. 10/- each	Rs. 295.700 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2007	31.03.2006	31.03.2005
SHAREHOLDERS FUNDS
1] Share Capital		295.700	130.800	130.800
2] Reserves & Surplus		1785.900	568.300	477.900
NETWORTH		2081.600	699.100	608.700
LOAN FUNDS
1] Secured Loans		1925.100	864.300	565.500
2] Unsecured Loans		162.300	170.500	173.600
TOTAL BORROWING		2087.400	1034.800	739.100
TOTAL		4169.000	1733.900	1347.800
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1955.300	861.200	807.300
Capital work-in-progress		946.500	366.100	68.600
INVESTMENT		218.500	1.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	682.800	335.900	283.300
	Sundry Debtors	482.500	196.300	300.000
	Cash & Bank Balances	214.500	10.300	12.200
	Loans & Advances	364.200	153.100	150.100
Total Current Assets		1744.000	695.600	745.600
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	691.600	187.500	167.600
	Provisions	8.700	29.800	110.900
Total Current Liabilities		700.300	217.300	278.500
Net Current Assets		1043.700	478.300	467.100
MISCELLANEOUS EXPENSES		5.000	27.300	4.800
TOTAL		4169.000	1733.900	1347.800

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		4117.600	2411.900	2422.700
Other Income		294.700	133.400	3.000
Total Income		4412.300	2545.300	2419.700
Profit/(Loss) Before Tax		507.700	145.000	295.100
Provision for Taxation		82.000	24.800	113.800
Profit/(Loss) After Tax		425.700	120.200	181.300
Expenditures :
	Manufacturing Expenses	251.300	74.700	39.200
	Administrative Expenses	180.300	50.700	85.200
	Raw Material Consumed	2520.400	1699.700	1652.600
	Excise Duty	475.600	255.400	149.700
	Salaries, Wages, Bonus, etc.	72.000	40.500	31.800
	Interest	134.900	59.200	26.900
	Power & Fuel	24.800	136.300	82.400
	Depreciation & Amortization	225.600	66.000	42.700
	Other Expenditure	26.500	17.800	14.100
Total Expenditure		3911.400	2400.300	2124.600

QUARTERLY / SUMMARISED RESULTS

PARTICULARS	30.06.2007	30.09.2007
Type	1^st Quarter	2^nd Quarter
Sales Turnover	1126.200	1332.800
Other Income	8.800	29.200
Total Income	1135.000	1362.000
Total Expediture	873.300	1011.800
Operating Profit	261.700	350.200
Interest	14.600	28.300
Gross Profit	247.100	321.900
Depreciation	54.500	53.300
Tax	25.100	27.900
Reported PAT	167.500	240.700

KEY RATIOS

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
PAT / Total Income	(%)	9.65	4.72	7.49
Net Profit Margin (PBT/Sales)	(%)	12.33	6.01	12.18
Return on Total Assets (PBT/Total Assets}	(%)	10.43	7.53	18.19
Return on Investment (ROI) (PBT/Networth)		0.24	0.20	0.48
Debt Equity Ratio (Total Liability/Networth)		2.34	2.79	2.67
Current Ratio (Current Asset/Current Liability)		2.49	3.20	2.67

LOCAL AGENCY FURTHER INFORMATION

HISTORY

Earlier known as Raipur Wires and Steel, Raipur Alloys and Steel was promoted in December 1977 by the Tejpaul Group, Bombay. The Sanda Group purchased it in 1979 and renamed it Raipur Alloys and Steel in 1985. It produces sponge iron, for its captive use to convert it into rolled products for sale. 

The company came out with an issue of fully convertible debentures in December 1992 to part-finance the sponge iron project and meet part of the long-term working capital requirements. The products of the company, mild steel and carbon steel billets, are used by re-rollers. 

To make its sponge iron plant self-sufficient, it has identified areas in Madhya Pradesh having good deposits of iron ore and has applied for leases in these areas. This will reduce the cost of iron ore, resulting in a lower cost of sponge iron. The company started commercial production in the second kiln in its sponge iron plant, from September 1995. 

During 1997-98, the Indian Bureau of Mines, Government of India has granted its approval to the company for mining lease in 100 hectares in Dongarbor in Rajnandgaon district of Madhya Pradesh. In 1998-99, the Company applied for additional area of about 125 Hectares for iron ore mining and expects to get Prospecting License in the near future. It has received mining lease for iron ore in 2001-02. The company has planned for major expansion of both sponge iron and Steel in the near future. 

MERGER: 
As approved by the members in the General Meeting held on 15th February 2007, the merger of Chhattisgarh Electricity Company Limited and Raipur Gases Private Limited with the Company is completed which is effective from 1st April 2006. As such the figures for the financial year 2006-07 includes the performance of merging companies.

CHANGE IN NAME:

The name of the Company has also been changed from Raipur Alloys and Steel Limited to Sarda Energy and Minerals Limited with a view to truly reflect the vision and mission of the Company. The focus of the Company is on harnessing of natural resources, particularly minerals and energy to produce value added products. The Company is creating core competencies in this field.

The all-round operational and financial performance of the Company has shown a definite improvement over the previous year.

EXPORTS: 
The merged company enjoys status of Star Export house and is a leading exporter of ferro alloys in the country. During the year under review the company exported 18656 MTs of ferro alloys valued at Rs.594.700 millions as against 6466 MTs of Rs.172.500 millions. The Company's product has been well accepted across the globe because of quality. Majority of the Company's exports are to the developed countries. To take advantage of goodwill created, during the year Company also started merchant export with a quantity of 4000 MTs. 

PROJECTS: 
 As informed in the last Report, the Company has taken up installation of two more induction furnaces of 15 Tonnes each and will be ready by 3rd quarter of the current financial year as per schedule. 

The Company has also taken up expansion projects of Rs.4500 millions which included Sponge Iron Plant, Iron Ore Pelletisation Plant, Thermal Power Plant, Coal Mining, Coal Washery and Infrastructure facilities. The financial closure for the projects has already been achieved and work on the projects has already been started The Sponge Iron Project is in advance stage of installation and is expected to be commissioned by the end of current financial year. The Pellet Plant is being put up in technical collaboration with SDM, China. The project is expected to be commissioned in the next financial year. The coal mines are expected to become operational during the current financial year. 

FINANCE: 
The above expansion projects undertaken by the Company are proposed to be financed at a debt equity ratio of 2:1. Axis Bank, Singapore has sanctioned External Commercial Borrowing equivalent to USD 66 Million. To maintain the pace of the projects, during the year the Company was sanctioned a short-term loan of Rs.600 millions by State Bank of India, repayable within one year. 

During the year under review, the Company repaid term loan of Rs.240.900 millions and Non Convertible Debentures of Rs.225.000 millions. The Company met all its Loan repayment and interest payment commitments on time. 

During the current financial year, the Company has issued 4473684 Equity Shares of 85.10/- each at a premium of Rs.180/- per share on preferential basis to LB India Holdings Mauritus II Limited (LB) and Infrastructure Development Finance Company Limited (IDFC), thus raising Rs.850 millions to part finance the expansion projects. The Company has also issued 263158 Equity Share Warrants, which entitles the warrant holder to subscribe one equity share for each warrant at the same price at which shares have been issued on preferential basis. 

INVESTMENTS:
The Company has identified Hydro Power as a potential area of growth. The Company has made investments in companies whom Hydel Projects have been allotted in Uttaranchal, Sikkim and Chhattisgarh. The hydro power project of Uttaranchal will be operational during current year. During the year, the company has also promoted a joint venture company M/s. Madanpur South Coal Company Limited, an SPV, for mining of coal block allotted in consortium, where the Company has got a share of 36 million tonnes. 

MINES: 
During the year under review the Company produced 1,52,713 MTs of iron ore as against 1,69,820 MTs produced during the previous year. The Company is taking steps to increase the production of iron ore from captive iron ore mines. The fines generated in the mines will be utilized after commissioning of Company's Pelletisation Plant. 

All approvals required to start operation in the coal mine of the Company have been received. The Company plans to start development of the mine after rainy season in the 3rd quarter of the current financial year. The Company expects to start getting coal during the current year. 

The Company has also received Prospecting Licence and Resonance Permits for iron ore and manganese ore mines at different locations to meet future requirements of the Company. The exploration work is going on. 

The Company has acquired manganese ore and iron ore mines in Goa also. Steps have been taken for acquisition of more mines to ensure long term sustainable & uninterrupted availability of raw materials. 

MANAGEMENT DISCUSSION AND ANALYSIS: 

INDUSTRY STRUCTURE AND DEVELOPMENT: 

The Company operates into steel and ferro alloys industry backed by power plant, mainly to meet the captive power requirement. In steel, the Company has got captive iron ore mines, coal mines, sponge iron plant and steel ingot and billet making facility. In ferro alloys, the Company produces manganese based alloys i.e. silico manganese and ferro manganese. 

Sponge Iron and Steel Industry: 

The sponge iron (direct reduction) route of making steel is most suitable and economical in Indian conditions because of availability of high grade iron ore and non-coking coal in the country. Difficult and reduced availability of Steel Melting scrap in the international and domestic markets and limited reserves of coking coal for making steel through blast furnace route has made the steel industry turn to sponge iron for metallic.

This is reflected in the growth recorded by the industry during the year under review as tabulated hereunder. 

The export of the sponge iron was 55,603 MTs as against 41,454 MTs in the previous year which is quite negligible in overall production / consumption. High growth achieved and projected by the steel industry promises good demand growth for the sponge iron industry. 

The global steel production during the year 2006 rose by 9% from 1.137 billion MTs to 1.238 billion MTs with China contributing 1/3rd of total global output at 421.50 million metric tonnes against 355.8 MnMts in 2005, recording a growth of 18%. India has been ranked at 7th position (previous year 8th position) with a total output of 44 million metric tonnes recording a growth of 8%. In India major capacity addition has come up in the sponge iron and secondary steel-making route. The industry still remains largely fragmented in relation to its suppliers of raw materials and end consumers. Consolidation in Europe, and strong demand growth (primarily from China) have reduced the impetus to close unviable capacities and instead propelled most steel manufacturers into a capacity expansion mode. India, contributing approximately 3.5% to overall steel demand, has attracted global attention not only due to its huge demand potential but also as one of the major suppliers of iron-ore to the global steel industry. With concerns on availability of iron-ore and coal and the associated volatility in their prices, most Indian manufacturers of secondary steel propose to integrate backwards to have greater control over these scarce commodities. Consequently, a large proportion of capital outlays are directed towards backward integration projects while others towards moving up the value chain and ramp up existing capacities to meet the targeted 100mtpa domestic consumption estimates of the Ministry of Steel. 

The international price of iron ore was increased by 71% for the year 2005-06 and 19% in the year 2006-07. This year again annual contracts have been signed with an increase of 9%. The growth in the iron ore production has not been able to keep pace with growth in production of steel, resulting into pressure on supply of iron ore. As per indications the prices will again be increased by 10 to 20% in the next year. The prices of sponge iron grade iron ore saw sharper increase with increase in demand and control over supplies. Demand for sponge iron and steel is likely to pick up in the coming years in line with the revised domestic steel production and consumption of 80 million tonnes by 2011 and 120 million tonnes by 2020 projected by JPC / Ministry of Steel. 

Consolidation is taking place in the steel industry across the globe. The merger of Arcellor with Mittal and takeover of Corus by Tata Steel has accelerated the process of consolidation. India is also no exception. The existing plants are integrating their operations and also expanding their capacities. Posco and Tatas have planned huge capacity builtup in Orissa, Jharkhand and Chhattisgarh. The secondary steel producers are also increasing capacities and going for backward integration to meet the increased demand of long products for fast growing infrastructure sector. 

The industry is also facing a severe shortage of good quality coal. Coal blocks have been allotted to the sponge iron plants but it will take time to get all the approvals in place and to develop the blocks. Coal imported from Indonesia is also being blended but economically that is costlier. 

Steel being a bulk product requires strong logistic support. The port and inland transport infrastructure has not been able to cope up with the increased demand and has proved to be a major bottleneck in growth of the industry. Railway racks are not available for movement of the iron ore.

Industries are going for their own wagons but the supply time of wagons is also quite long. 

Ferro Alloys Industry: 

The Ferro Alloys industry in the country is divided into two major segments, manganese based ferro alloys and chrome alloys. Your Company is a leading player in manganese based alloys The manufacturing facilities of the ferro alloys plants in the country are located in concentrated pockets where power is conveniently available at affordable prices. Most of the manganese ore reserves are controlled by the Public Sector Undertakings i:e. Manganese Ore (India) Limited and Orissa Mining Development Corporation Ltd. The demand of manganese ore in the country is far more than the production and industry's dependence on imported ore is increasing. Tatas & Rungtas have stopped supply of manganese ore in the market. During the current year, the prices of manganese ore have gone up drastically from USD 2.5 to 3 per DMTU to USD 6.5 to 7 per DMTU. Coke requirement is also met, mainly through imported coke. The prices of coke have also seen upward trend due to restrictions placed by China on export of coking coal / coke. 

Anti dumping duty of 36% imposed by European union on Chinese ferro silicon has landed support to the prices of manganese alloys. China has imposed export duty of 100l0 on export of ferro alloys, resulting into increase in the prices of manganese alloys in the international market. This has boosted the demand of ferro alloys from India. The export realizations were under pressure because of strengthening of the Indian Rupee vis-a-vis US Dollar but the same was compensated by better prices. During the current year, the Central Govt. has also increased the DEPB benefit from 3% to 6% maintaining the value cap. This has boosted exports and domestic prices have also improved because of reduced availability of the product for the domestic market. The long-term domestic supply contracts for the current year have been signed at much better prices. 

OPPORTUNITIES & THREATS: 

The high growth rate of GDP and increased emphasis on development of infrastructure has given impetus to the steel industry and the Company is well placed to take advantage of the situation. 

The Company has consolidated and integrated its operations over the years. Post merger the Company has emerged stronger and vibrant. Company has secured reasonable control over raw material requirement for near future.

The Company has also developed good infrastructure to support emerging opportunities. Sound investors have shown keen interest in the Company and have made substantial investments in the Company. 

Any adverse change in consumption of steel in China and resulting export / dumping there from may put pressure on prices, however, China's dependence on imported iron ore will work as deterrent. Delay in implementation of infrastructure projects and substantial capacity addition in the country may result into demand supply mismatch, which may affect realisations, but the control over raw material resources and sound infrastructure give competitive advantage to the company. 

OUTLOOK: 
During current year, prices of finished goods have firmed up and demand in export market is also buoyant. The margins have improved. The sponge iron expansion project and coal mining will also start in near future, which will add to the top-line & bottom-line. The Company will move up in the value chain and the sale of sponge iron will gradually be replaced by the value added products. Barring unforeseen circumstances, the outlook of the segments in which the Company is operating is positive. 

Website Details Attached:

Profile:

Raipur Alloys and Steel Limited, is an integrated steel plant involved in Iron Ore Mining and producing Sponge Iron, Mild Steel Ingots, Billets and Rolled products located in Raipur, Chhattisgarh, India.

It was setup in 1975 with a 18,000 MT Per Annum Ingot making capacity, and today, it operates with a 2,10,000 TPA sponge iron and 40,000 TPA steel ingots and 1,00,000 TPA of Billets manufacturing capacity. The Company has its own iron ore mines, and power, the other key input, is supplied by an associate company, Chhattisgarh Electricity Company Limited (CECL).

RASL is the flagship of the Rs 400 Crore RASL Group. CECL, the second major company in the group, is one of the leading manufacturer and exporter of ferro-manganese and silico-manganese besides power generation in India.

Group Profile:

The Group, besides RASL, consists of two other major companies - Chhattisgarh Electricity Company Ltd. (CECL) and Chattisgarh Investments Ltd. The combined turnover of the Group is around 4000 millions.

Chhattisgarh Electricity Company Limited

Subject is one of the largest manufacturer of ferro-manganese and silico-manganese besides power generation in India. It was incorporated in 1998 as a closely held public limited company. CECL has scaled rapidly and achieved a turnover of Rs 1000 millions in 2003-04 with 190 millions Exports and moving towards 2000 millions turnover in 2004-05 and doubling its exports close to 400 millions.

Chhattisgarh Investments Limited

Chhattisgarh Investments Limited is the holding company of the Group. It was incorporated about two decades ago as a closely held public limited company.

The Company has interests in socio-forestry and horticulture, with over 800 acres agricultural estate at Kharora, about 40 Kms. from Raipur. About one million trees of various species such as Teak, Hybrid Eucalyptus, Sobabul, Khamar, Bamboo etc have been planted. Besides, it has also planted banana, mango, drumsticks, tamarind and custard apples etc. The plantation employs the latest horticultural techniques and has won awards in regional fairs.

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. 39.67
UK Pound	1	Rs.81.78
Euro	1	Rs.58.46

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	7
--PROFITABILIRY	1~10	7
--LIQUIDITY	1~10	7
--LEVERAGE	1~10	7
--RESERVES	1~10	7
--CREDIT LINES	1~10	7
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		63

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.	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