MIRA INFORM REPORT

 

 

Report Date :

15.12.2007

 

IDENTIFICATION DETAILS

 

Name :

RAJ RAYON LIMITED

 

 

Registered Office :

3A/205, Mittal Industrial Estate, Saki Naka, Andheri (East), Mumbai - 400 059, Maharashtra

 

 

Country :

India

 

 

Financials (as on) :

31.03.2007

 

 

Date of Incorporation :

17.08.1993

 

 

Com. Reg. No.:

11-73489

 

 

CIN No.:

[Company Identification No.]

L17120MH1993PLC073489

 

 

TAN No.:

[Tax Deduction & Collection Account No.]

MUMR14047F

 

 

PAN No.:

[Permanent Account No.]

AAACR7820E

 

 

Legal Form :

Public Limited Liability Company.   The company’s shares are listed on the Stock Exchanges

 

 

Line of Business :

Manufacturer of Polyester Texturised Yarn, Partially Oriented Yarn & Fully Drawn Yarn.

 

RATING & COMMENTS

 

MIRA’s Rating :

A

 

RATING

STATUS

PROPOSED CREDIT LINE

56-70

A

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

Fairly Large

 

Maximum Credit Limit :

USD 3500000

 

 

Status :

Good

 

 

Payment Behaviour :

Regular

 

 

Litigation :

Clear

 

 

Comments :

Subject is a well established company having satisfactory track.  Trade relations are fair.  Payments are usually correct and as per commitments.  Financial position is satisfactory.

 

The company is doing well.  It can be considered good for normal business dealings at usual trade terms and conditions.

 

LOCATIONS

 

Registered Office :

5-C/196 & 197, “Akshay”, Mittal Industrial Estate, Sakinaka,
Andheri (East), Mumbai - 400 059, Maharashtra, India

Tel. No.:

91-22-4034 3434

Fax No.:

91-22-4034 3400

E-Mail :

mumbai@rajrayon.com

rajrayonLimited@vsnl.net

investors@rajrayon.com

Website :

http://www.rajrayon.com

 

 

Factory :

Polyester Texturised Yarn [PTY] Divison :

 

Survey No. 272/1/1, Plot No. 1, Village Dadra, Dadra Demani Road, District Silvassa, Dadra & Nagar Haveli Union Territory – 396230

Tel. No. : 91-260-2668238

Telefax : 91-260-2668632

E-mail : dadra1@rajrayon.com

 

Survey No. 185/1/1, Plot No. 17, Dokmandi, Village Amli, District Silvassa, Dadra & Nagar Haveli Union Territory – 396230

Tel. No. : 91-260-2643332

Telefax : 91-260-3293013

E-mail : amli@rajrayon.com

 

Survey No. 259/12, Parsinath Industrial Estate, Village Dadra, District Silvassa, Dadra & Nagar Haveli Union Territory – 396230

Tel. No. : 91-260-2669076

Telefax : 91-260-2669077 / 3293014

E-mail : dadra3@rajrayon.com

 

Partially Oriented Yarn [POY] Division :

Survey No. 177/1/3 & 4, Village – Surangi, District Silvassa, Dadra & Nagar Haveli Union Territory – 396230

Tel. No. : 91-260-3093038 / 3955475 / 3955476

Fax No. : 91-260-2699222

E-mail : surangi@rajrayon.com

 

 

Branches :

302, Rajhans, J K Tower, Khatodara, Ring Road, Surat – 395002

Tel. No. : 91-261-2351422

Telefax : 91-261- 2707148 / 3014466

 

Office No. 43, 1st Floor, City Palace, Chauri Sarak, Ludhiana

 

E-120, P N B Road, Shastri Nagar, New Delhi 110052, India

 

DIRECTORS

 

Name :

Mr. Gourishankar Poddar

Designation :

Chairman & Managing Director

 

 

Name :

Mr. Rajkumari Kanodia

Designation :

Director

 

 

Name :

Mr. Ashok Trehan

Designation :

Director

 

 

Name :

Mr. Jagdish Chandra Somani

Designation :

Director

 

 

Name :

Mr. Vinod Kumar Jain

Designation :

Director

 

 

Name :

Mr. Neraj Agarwal [up to 5th March 2007]

Designation :

Director

 

 

Name :

Miss. Anjali Agarawal

Designation :

Director [w.e.f. 5th March 2007]

 

KEY EXECUTIVES

 

Name :

Mr. Ajai Singh

Designation :

Chief Financial Officer

 

 

Name :

Mr. N. V. Agandeswaran

Designation :

Company Secretary

 

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

 

As on 30.09.2007

 

Category of Shareholder

No. of Shares

Percentage of Holding

Shareholding of Promoter and Promoter Group2

 

 

Indian

 

 

Individuals/ Hindu Undivided Family

821000

4.82

Bodies Corporate

3955593

23.24

Public shareholding

 

 

Institutions

 

 

Mutual  Funds/ UTI

37962

0.22

Financial Institutions / Banks

205000

1.20

Foreign Institutional Investors

479789

2.82

Non-institutions

 

 

Bodies Corporate

3199449

18.80

Individuals

 

 

Individuals -i. Individual shareholders holding nominal share capital up to Rs 0.100 Million

5921928

34.80

ii. Individual shareholders holding nominal   share capital in excess of Rs. 0.100 Million

1547070

9.09

Any Other (specify)

 

 

Clearing member

174407

1.02

Market Maker

118060

0.69

NRI [Repatriate]

132721

0.78

NRI [Non-Repatriate]

34969

0.21

OCBs / HUF

389752

2.29

Total     

17017700

100.00

 

BUSINESS DETAILS

 

Line of Business :

Manufacturer of Polyester Texturised Yarn, Partially Oriented Yarn & Fully Drawn Yarn.

 

PRODUCTION STATUS

 

Particulars

Unit

 

Actual Production

P.O.Y.

Kgs.

 

17230445.29

Texturised Yarn

Kgs.

 

17831083.799

P.O.Y. and F.D.Y.

Kgs.

 

7777524.803 @

 

 

GENERAL INFORMATION

 

No. of Employees :

1500

 

 

Bankers :
  • State Bank of India
  • State Bank of Indore
  • State Bank of Mysore
  • ICICI Bank
  • HDFC Bank
  • ABN Amro Bank

 

 

Facilities :

SECURED LOANS :

Rs in Millions

As on 31.03.2007

Term Loans from:

 

State Bank of India

 

(Repayable within one year Rs. 86.690 Millions Previous year Rs. 68.000 Millions)

334.108

 

 

State Bank of Mysore

194.429

(Repayable within one year Rs. 12.000 Millions Previous year Rs. 4.800 Millions)

 

 

 

State Bank of Hyderabad

65.270

(Repayable within one year Rs. Nil Previous year NA)

 

 

 

State Bank of Indore

50.000

(Repayable within one year Rs. 12.500 Millions Previous year Rs. Nil)

 

 

 

ICICI Bank

1.148

(Repayable within one year Rs. 0.611 Millions Previous year Rs. 0.709 Millions)

 

 

 

HDFC Bank

0.988

(Repayable within one year Rs. 0.084 Millions Previous year Rs. 0.080 Millions)

 

 

 

Kotak Mahindra Prime Limited

0.722

(Repayable within one year Rs. 0.324 Millions Previous year Rs. 0.245 Millions)

 

 

 

ABN Amro Bank

0.000

(Repayable with in one year NA Previous year Rs. 0.053 Millions)

 

 

 

Working Capital Assistance :

 

Cash Credit Account from:

 

State Bank of India

310.286

State Bank of Indore

9.544

TOTAL

 

 

Notes on nature of security :

 

a) Term Loans are secured by Equitable Mortgage of factory premises of all four units and hypothecation of plant and machineries and other fixed assets of the company in favour of State Bank of India, State Bank of Hyderabad, State Bank of Mysore and State Bank of Indore on pari passu basis.

 

b) Term Loans from Kotak Mahindra Prime Limited, ABN Amro Bank, HDFC Bank and ICICI Bank are secured by Hypothecation of specific vehicles.

 

c) Cash Credit Loans and other non funded facilities are secured by Hypothecation charge (pari passu) on entire current assets of the company and further secured by charge on all the fixed assets of the company on pari pasu basis between State Bank of India and State Bank of Indore.

 

d) Loans including non funded facilities from State Bank of India are further secured by corporate guarantees of Raj Money Market Limited and personal guarantees of Chairman & Managing Director including in the capacity of his HUF and one non executive director of the company.

 

e) Receivable Factoring Facilities (with recourse) from SBI Factors and Commercial Services Private Limited is secured against the assignment of debts of the company and personally guaranteed by Chairman & Managing Director and one non executive director of the company

 

UNSECURED LOANS

 

Inter-Corporate Deposits/Loans

59.000

 

 

 

Banking Relations :

Satisfactory

 

 

Auditors :

 

Name :

R. S. Agrawal & Associates

Chartered Accountants

 

CAPITAL STRUCTURE

 

Authorised Capital :

No. of Shares

Type

Value

Amount

300,00,000

Equity Shares

Rs. 10/- each

Rs. 300.000 millions

 

Issued, Subscribed & Paid-up Capital :

No. of Shares

Type

Value

Amount

170,17,700

Equity Shares

Rs. 10/- each

Rs. 170.177 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

170.177

170.177

85.177

2] Share Application Money

0.000

0.000

0.000

3] Reserves & Surplus

714.960

714.488

169.370

4] (Accumulated Losses)

0.000

0.000

0.000

NETWORTH

885.137

884.665

254.547

LOAN FUNDS

 

 

 

1] Secured Loans

966.496

618.413

362.977

2] Unsecured Loans

59.000

1.000

91.757

TOTAL BORROWING

1025.496

619.413

454.734

DEFERRED TAX LIABILITIES

87.313

45.612

42.094

 

 

 

 

TOTAL

1997.946

1549.690

751.375

 

 

 

 

APPLICATION OF FUNDS

 

 

 

 

 

 

 

FIXED ASSETS [Net Block]

1179.464

897.767

467.920

Capital work-in-progress

214.147

92.786

51.757

Pre-Operative Expenses

0.000

0.000

17.832

 

 

 

 

INVESTMENT

38.809

65.474

5.101

DEFERREX TAX ASSETS

0.000

0.000

0.000

 

 

 

 

CURRENT ASSETS, LOANS & ADVANCES

 

 

 

 

Inventories
261.605
120.785

84.097

 

Sundry Debtors
465.391
241.996

238.567

 

Cash & Bank Balances
19.133
11.033

26.781

 

Other Current Assets
0.000
0.000

0.000

 

Loans & Advances
268.212
253.198

99.871

Total Current Assets

1014.341
627.012

449.316

Less : CURRENT LIABILITIES & PROVISIONS

 
 

 

 

Current Liabilities
403.510
129.634

217.771

 

Provisions
45.305
39.815

23.742

Total Current Liabilities

448.815
169.449

241.513

Net Current Assets

565.526
457.563

207.803

 

 

 

 

MISCELLANEOUS EXPENSES

0.000

36.100

0.962

 

 

 

 

TOTAL

1997.946

1549.690

751.375

 

PROFIT & LOSS ACCOUNT

 

PARTICULARS

 

31.03.2007

31.03.2006

31.03.2005

Sales Turnover

2809.100

1777.200

1890.200

Other Income

10.400

15.700

13.700

Total Income

2819.500

1792.900

1903.900

 

 

 

 

Profit/(Loss) Before Tax

92.400

110.400

62.600

Provision for Taxation

32.200

13.300

10.900

Profit/(Loss) After Tax

60.200

97.100

51.700

 

 

 

 

Earnings in Foreign Currency :

 

 

 

Total Earnings

37.448

0.000

0.000

 

 

 

 

Imports :

 

 

 

 

Raw Materials

146.404

26.784

 

Capital Goods

53.396

24.694

71.356

 

Others

11.175

12.296

 

Total Imports

210.975

63.774

71.356

 

 

 

 

Expenditures :

 

 

 

 

Raw Materials

2155.300

1345.000

1309.000

 

Stock Adjustments

[104.100]

[30.200]

[10.900]

 

Excise Duty

161.100

122.100

349.900

 

Power & Fuel Cost

164.300

78.900

69.300

 

Other Manufacturing Expenses

121.700

46.500

42.500

 

Employee Cost

23.400

9.300

6.800

 

Selling and Administration Expenses

14.700

9.200

5.900

 

Miscellaneous Expenses

3.800

2.800

0.400

 

Interest & Financial Charges

73.200

37.700

24.300

 

Depreciation

113.700

61.200

44.100

Total Expenditure

2727.100

1682.500

1841.300

 

QUARTERLY RESULTS

 

PARTICULARS

 

 

30.06.2007 [1st Quarter]

30.09.2007 [2nd Quarter]

 Sales Turnover

 

681.100

733.100

 Other Income

 

0.000

4.600

 Total Income

 

681.100

737.700

 Total Expenditure

 

606.600

648.100

 Operating Profit

 

74.500

89.600

 Interest

 

20.500

33.600

 Gross Profit

 

54.000

56.000

 Depreciation

 

34.100

35.700

 Tax

 

2.400

2.400

 Reported PAT

 

18.100

14.200

 

 

KEY RATIOS

 

PARTICULARS

 

31.03.2007

31.03.2006

31.03.2005

Debt-Equity Ratio

0.93

0.94

1.62

Long Term Debt-Equity Ratio

0.65

0.66

0.92

Current Ratio

1.31

1.31

1.00

TURNOVER RATIOS

 
 
 

Fixed Assets

2.09

1.97

3.28

Inventory

14.69

17.35

27.30

Debtors

7.94

7.39

9.43

Interest Cover Ratio

2.26

3.93

3.58

Operating Profit Margin(%)

9.94

11.78

6.93

Profit Before Interest And Tax Margin(%)

5.90

8.33

4.60

Cash Profit Margin(%)

6.19

8.91

5.07

Adjusted Net Profit Margin(%)

2.14

5.46

2.74

Return On Capital Employed(%)

9.80

13.61

14.21

Return On Net Worth(%)

6.80

17.05

22.12

 

 

LOCAL AGENCY FURTHER INFORMATION

 

Management's Discussion and Analysis Report: 

Management's Discussion and Analysis Report for the year under review, which also deals with the opportunities, challenges and the future outlook for the company, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange in India, is presented in a separate section forming part of the Annual Report. 

Expansion Plans: 

(a) Expansion of PTY Capacity: 

During the year under review, the company has embarked upon an expansion plan in the area of PTY business and the Board of Directors of the company has initiated steps to expand the PTY capacity by installing 12 additional texturising Machines with an installed capacity of 14400 T.P.A. In this connection, the company has received eight (8) machines till March 2007 and trial runs on these eight (8) machines are on; the balance four (4) machines are yet to be received. 

(b) Conversion of POY Lines into FDY Lines: 

During the year, the company has converted 5 lines of POY into (Fully Drawn Yarn) FDY Lines for better commercial realization and commercial production has started on the FDY lines in the month of March 2007.

While benefits from such expansion will accrue in the future years, its progress is periodically monitored. 

MANAGEMENT'S DISCUSSION AND ANALYSIS 

Forward-Looking Statements: 

This report contains forward-looking statements, which may be identified by their use of words like 'plans', 'expects', 'will', 'anticipates', 'believes', 'intends', 'projects', 'estimates' or other words of similar meaning. All statements that address expectations or projections about the future, including but not limited to statements about the company's strategy for growth, product development, market position, expenditures, and financial results, are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The company cannot guarantee that these assumptions and expectations are accurate or will be realized. The company's actual results, performance or achievements could thus differ materially from those projected in any such forward-looking statements. The company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events. 
 
Overview: 
 
Landmark Events: 

The year 2006-07 was a year in which they continued to expand our activities.

Conversion of 5 lines of POY out of 18 lines and installation of eight (8) texturising machines out of the proposed twelve (12) additional texturising machines with a (capacity of 14400 T.P.A. )- based on Average Denier was undertaken and completed. 

Earlier, the company's shares were listed only on Bombay Stock Exchange; now the company's shares also stand listed on National Stock Exchange effective from January 4, 2007 giving the investors a wider range to deal in their shares. 

This year the company has penetrated into foreign markets by exporting its products to countries like Brazil, Peru, Mexico, Egypt, Poland and several other countries. 

Industry outlook: 

The continuation of the TUF Scheme with increased budgetary support at Rs 9.1 billion in 2007-08 as against Rs 5.3 billion in 2006-07 and increased budgetary support of Rs 4.85 billion in 2007-08 as against Rs 1.9 billion in 2006-07 for promoting integrated textile parks, would boost investments.

The global production of polyester continued to rise in 2006 and touched 74.7 Million Tonnes as against 71.10 Million Tonnes, in the previous year.

The industry outlook, in general, is bright. Man Made Fibres (MMF) recorded an increase in production by 6.2% in 2006 over 2005. In volume terms the output moved to 41.2 Million Tonnes from 38.8 Million Tonnes in the previous year. This translates MMF Share to 55% of total fibre base as against that of 54% in the previous year. Within Man Made Fibres, Polyester Fibre Segment has been on the rise and the trend continued in 2006 also. In the year 2006, the share of Polyester in MMF was 67%, up by 2% from that in 2005. 

Opportunities: 
 
When the GDP growth rate of the country is ranging between 7% to 9%, there are ample opportunities available almost in all sectors including that of textile yarns. The sensivity of the sector towards government policy is high, and the same being favourable, large scale investments in spinning weaving, garmenting, knitting and processing are taking place and are also planned upto future. The high prices for cotton, declining raw material prices of PTA & MEG, resulting in low price of Polyester, would result in higher competitiveness. 

Business Review: 

 

For financial reporting, the company has defined three segments such as Polyester Yarn (Textile), Trading activities, and Others. However the key business segment of the company is manufacturing of Polyester Yarns. POY, PTY & FDY having same risk & return and as such the same has been treated as single segment 'Polyester Yarn'. 
 
Productwise Performance: 


Total Net sales of Polyester Yarn (Textile) were 1861.809 Millions, Trading Activities were Rs.791.167 Millions and others were Rs. 1042 Millions. 

 

FIXED ASSETS

 

 

 

WEBSITE DETAILS

 

PROFILE

 

The Company was incorporated on August 17 1993 as public limited company with one Texturising machine of PTY having manufacturing capacity of 600 T.P.A (capacity based on manufacturing Polyester Texturised Yarn of 80 Denier).

 

The production capacity of PTY is 25500 Tons / Annum (product mix of 80 & 150 Denier, 70% of 80 Denier and 30% of 150 Denier). Further with backward integration they are now producing POY & FDY.

           

The Company is a professionally managed organization, which functions under the Board of directors and Qualified Professionals.

 

The promoters are well-experienced, dynamic and matured industrialist and are running the company on profitable lines right from beginning.

           

MILESTONE

 

Financial Year Event

1993-94

 

1994-95

 

1995-96

 

1996-97

 

1997-98

 

1998-99

 

1999-00

 

2001-02

 

2002-03

 

2003-04

 

2004-05

 

2005-06

 

2006-07

 

INFRASTRUCTURE

 

The Company was set up in 1993 with an annual production capacity of producing 600 Tons of Polyester Textured Yarn. Gradually by year 2004, capacity increased to 25500 Tons / Annum (product mix of 80 & 150 Denier, 70% of 80 Denier and 30% of 150 Denier).

 

Their company has installed a POY plant of 60,000 Tons per Annum capacity at Silvassa. The plant is designed to produce various types of yarn and specialty yarns. The project has made company's finished product more cost competitive and profitable.

 

Company has an objective to grow globally through its cost competitive and aggressive marketing strategies.

 

Company is supplying various types of Polyester filament yarns through out India and endeavors to achieve total customer satisfaction and brand image.

 

NEWS

 

Date : 04/01/2007

 

In pursuance of Regulation 3.1.1 of the National Stock Exchange (Capital Market) Trading Regulations Part A, it is hereby notified that the list of securities further admitted to dealings on the National Stock Exchange (Capital Market segment) with effect from January 4, 2007.

 

The equity shares of Raj Rayon Limited (Symbol: RAJRAYON) shall be traded in the Normal Market segment (Rolling Settlement) in compulsory demat for all investors.

 

 

Date : 17/04/2007

RRL are currently recruiting for the following positions:

 

Account Assistants

 

Minimum 2 years of experience in related field with sound knowledge of computers. Preferable B.Com / Inter CA / Inter ICWA.

 

Receptionist

 

Excellent and Smart personality, Fluency and strong English language skills is a must.

 

 

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.39.37

UK Pound

1

Rs.79.47

Euro

1

Rs.56.83

 

 

SCORE & RATING EXPLANATIONS

 

SCORE FACTORS

 

RANGE

POINTS

HISTORY

1~10

7

PAID-UP CAPITAL

1~10

7

OPERATING SCALE

1~10

7

FINANCIAL CONDITION

 

 

--BUSINESS SCALE

1~10

9

--PROFITABILIRY

1~10

6

--LIQUIDITY

1~10

8

--LEVERAGE

1~10

8

--RESERVES

1~10

7

--CREDIT LINES

1~10

7

--MARGINS

-5~5

--

DEMERIT POINTS

 

 

--BANK CHARGES

YES/NO

YES

--LITIGATION

YES/NO

NO

--OTHER ADVERSE INFORMATION

YES/NO

NO

MERIT POINTS

 

 

--SOLE DISTRIBUTORSHIP

YES/NO

NO

--EXPORT ACTIVITIES

YES/NO

YES

--AFFILIATION

YES/NO

YES

--LISTED

YES/NO

YES

--OTHER MERIT FACTORS

YES/NO

YES

TOTAL

 

66

 

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