MIRA INFORM REPORT

Report Date :

09.01.2007

IDENTIFICATION DETAILS

Name :	SI GROUP INDIA LIMITED
Registered Office :	Plot No. 2/1, TTC Industrial Area, Thane Belapur Road, Navi Mumbai – 400073, Maharashtra, India
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	01.07.1963
Com. Reg. No.:	11-12674
CIN No.: [Company Identification No.]	L99999MH1963PLC012674
TAN No.: [Tax Deduction & Collection Account No.]	MUMS04774A
PAN No.: [Permanent Account No.]	AAACH7323L
Legal Form :	Public Limited Liability Company The Company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturer of Heavy Organic Chemicals

RATING & COMMENTS

MIRA’s Rating :

Ba

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

Maximum Credit Limit :	USD5000000
Status :	Satisfactory
Payment Behaviour :	Slow by average 30 days
Litigation :	Clear
Comments :	Subject is an established company having moderate track. Financial position is moderate. Payments are slow by average 30 days. The company can be considered moderate for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Plot No. 2/1, TTC Industrial Area, Thane Belapur Road, Navi Mumbai – 400073, Maharashtra, India
Tel. No.:	91-22-27681153 / 27672038 / 27611901
Fax No.:	91-22-27671848 / 27685653 / 27682589
E-Mail :	SHL.Navi-Mumbai@siigroup.com
Corporate Office :	Air India Building, Nariman Point, Mumbai – 400021, India
Tel. No.:	91-22-22024224
Fax No.:	91-22-22042379
E-Mail :	SHL.Mumbai@siigroup.com
Website :	http://www.herdillia.com
Import / Export Department:	Post Office Box 27, Thane Belapur Road, Navi Mumbai – 400703, India
Tel. No.:	91-22-27683328 / 27681153 / 27681154
Fax No.:	Export : 91-22-27611508 Import : 91-22-27671848 / 27685653
E-Mail :	SHL.Export@siigroup.com
Website :	http://www.herdillia.com

DIRECTORS

Name :	Mr. G C Vasudeo
Designation :	Alternate Director
Name :	Mr. Suresh N Talwar
Designation :	Alternate Director
Name :	Mr. R M Pandia
Designation :	Vice Chairman and Managing Director
Name :	Mr. B Chakrabarti
Designation :	Director
Name :	Mr. A Malcolm MacCormick
Designation :	Director
Name :	Mr. Richard Barlow
Designation :	Director
Name :	Mr. Heather Ward
Designation :	Director
Name :	Mr. B V Bhargava
Designation :	Director
Name :	Mr. P N Ghatalia
Designation :	Additional Director
Name :	Mr. D Paul Tilley
Designation :	Director
Name :	Mr. Ravindra V Nagarkar
Designation :	Additional Director

BUSINESS DETAILS

Line of Business :	Manufacturer of Heavy Organic Chemicals
Products :	Phenol Cumene Acetone Diacetone Alcohol Phthalic Anhydride

GENERAL INFORMATION

No. of Employees :

About 300

Auditors :

BSR and Company Chartered Accountants

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
6,00,00,000	Equity Shares	Rs. 10/- each	Rs. 600.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
4,23,10,000	Equity Shares	Rs. 10/- each	Rs. 423.100 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS	31.03.2006	31.03.2005	31.03.2004
SHAREHOLDERS FUNDS
1] Share Capital	423.100	423.100	241.800
2] Share Application Money	0.000	0.000	0.000
3] Reserves & Surplus	920.100	804.500	280.900
4] (Accumulated Losses)	0.000	0.000	0.000
NETWORTH	1343.200	1227.600	522.700
LOAN FUNDS
1] Secured Loans	761.300	171.000	110.300
2] Unsecured Loans	646.200	1098.100	1215.200
TOTAL BORROWING	1407.500	1269.100	1325.500
DEFERRED TAX LIABILITIES
TOTAL	2750.700	2496.700	1848.200
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]	1338.000	1135.700	1175.000
Capital work-in-progress	109.300	206.000	131.900
INVESTMENT	10.900	11.400	23.500
DEFERREX TAX ASSETS
CURRENT ASSETS, LOANS & ADVANCES
Inventories	1152.700	1257.100	619.000
Sundry Debtors	938.300	1127.700	632.500
Cash & Bank Balances	127.400	28.700	44.400
Other Current Assets	0.000	0.000	0.000
Loans & Advances	563.500	310.300	261.000
Total Current Assets	2781.900	2723.800	1556.900
Less : CURRENT LIABILITIES & PROVISIONS
Current Liabilities	1460.400	1557.800	1000.500
Provisions	29.000	22.400	38.600
Total Current Liabilities	1489.400	1580.200	1039.100
Net Current Assets	1292.500	1143.600	517.800
MISCELLANEOUS EXPENSES	0.000	0.000	0.000
TOTAL	2750.700	2496.700	1848.200

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2006 (12 months)	31.03.2005 (15 months)	31.12.2003 (12 months)
Sales Turnover [including other income]	5851.000	8066.100	4386.600
Profit/(Loss) Before Tax	68.500	317.000	222.300
Provision for Taxation	(50.900)	120.400	94.800
Profit/(Loss) After Tax	119.400	196.600	127.500

QUARTERLY / SUMMARISED RESULTS

PARTICULARS	30.06.2006	31.09.2006
Sales Turnover	1482.700	1492.300
Other Income	10.300	10.300
Total Income	1493.000	1502.600
Total Expenditure	1470.400	1469.800
Operating Profit	22.600	32.800
Interest	23.200	31.700
Gross Profit	(0.600)	1.100
Depreciation	30.900	31.400
Tax	1.500	0.700
Reported PAT	(19.300)	(20.200)

200606 Quarter 1 --------------- Notes Expenditure Includes (Increase)/Decrease in stock in Trade Rs 11.400 million Consumption of Raw Material Rs 1093.500 million Staff Cost Rs 88.900 million Fuel, Power & Water Rs 147.000 million Other expenditure Rs 129.600 million Tax Includes Provision for Fringe Benefit Tax Rs 1.500 million Deferred Tax Rs(13.70)million EPS is Basic & Diluted Status of Investor Complaints for the quarter ended June 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 07 Complaints disposed off during the quarter 07 Complaints unresolved at the end of the quarter Nil 1. The Company's response on the remarks contained in Auditors Report for the year ended March 31, 2006 is as follows: I) In respect of capitalization of Para Tertiary Butyl Phenol (PTBP) Project during the year, the Company is not in agreement with the view of the Auditors. a) The statement that amount of Rs 82.00 million could not be recovered under the insurance claim is factually inappropriate as it did not form part of the insurance claim submitted. b) The appropriateness of the accounting treatment of CWIP amounting to Rs 99.00 million was never qualified by the past Auditors. c) As regards the book value of 'destroyed assets' in excess of the insurance claim amounting to Rs 13.70 million, the same was duly recognized in the Profit & Loss Account and written off. Since the amount of Rs 82.00 million was never apart of asset destroyed, it did not figure in the claim to the insurance company and hence was not required to be written off. d) The Company believes that the CWIP taken over from Schenectady Specialties Asia Pvt Ltd (since merged with the Company) amounting to Rs 99.00 million is valuable to the Company in the recently completed PTBP Project. Accordingly, and also based on an experts opinion, the amount of Capital work in Progress of Rs 99.00 million was capitalized in the books of the Company without any adjustments as per the scheme of Amalgamation approved by the Hon. Bombay High Court in the year 2002. II) During be year under review the Company had claimed and received export benefit amounting to Rs 46.70 million under the Target Plus Scheme of Government of India. The Scheme was notified in June 2005 and the benefit accruing to the Company, is on the basis of incremental export performance during the year 2004-05. Based on the principles of prudence and supported by an expert opinion, the Company had not accrued the benefits in the previous year in line with its accounting policy to accrue benefits only after submission of the relevant applications to the Government and their final acceptance. Hence, the Company has accounted for it during the current year on the same basis and disclosed the same under Other Income. III) As regards the salary paid to the Managing Director and Director-Finance, the company has initiated the process of obtaining the approval of shareholders and the Central Government wherever applicable. IV) The Company has a 'one year revolving line of credit' amounting to Rs 850 million. The revolving line of credit backed by a guarantee from the parent company will continue as long as it is supported by the said guarantee. Apart from providing for working capital needs, the loan is also meant for 'General Corporate Purposes'. Out of the aforesaid amount the Company has used Rs 16.190 million for long term purposes. 2. An amount of Rs 43.60 million being the expenditure incurred towards repairs/replacement of assets at the Company's N.M. plant damaged due to flood, net of n account' payment received from the insurance company, is further receivable by the Company. The Company has initiated arbitration proceedings and accordingly filed a petition in the High Court of Bombay. 3. The statutory auditors have carried out a limited review of the results for the quarter ended June 30, 2006. 4. These results have been reviewed by the Audit Committee of the Board and approved by the Board of Directors of the Company at its meeting held on July 28, 2006. 5. The Company has only one primary segment of activity, namely 'Chemicals'. 6. Previous period figures have been regrouped / rearranged wherever considered necessary. w

200609 Quarter 2 --------------- Notes Expenditure Includes (Increase)/Decrease in stock in Trade Rs (53.00) million Consumption of Raw Material Rs 1145.80 million Staff Cost Rs 85.10 million Fuel, Power & Water Rs 157.40 million Other expenditure Rs 134.50 million Tax Includes Provision for Fringe Benefit Tax Rs 0.70 million Deferred Tax Rs(10.80)million EPS is Basic & Diluted Status of Investor Complaints for the quarter ended September 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 04 Complaints disposed off during the quarter 04 Complaints unresolved at the end of the quarter Nil 1. The Company's response to the remarks contained in the Auditors Report for the year ended March 31, 2006 is as follows: i) In respect of capitalization of the Para Tertiary Butyl Phenol (PTBP) Project during the year, the Company is not in agreement with the view of the Auditors. a) The statement that the amount of Rs 82.00 million could not be recovered under the insurance claim is factually inappropriate, as it did not form part of the insurance claim submitted. b) The appropriateness of the accounting treatment of CWIP amounting to Rs 99.00 million was never qualified by the past Auditors. c) As regards the book value of 'destroyed assets' in excess of the insurance claim amounting to Rs 13.70 million, the same was duly recognized in the Profit & Loss Account and written off Since the amount of Rs 82.00 million was never a part of the assets destroyed, it did not figure in the claim to the insurance company and hence was not required to be written off. d) The Company believes that the CWIP taken over from Schenectady Specialties Asia Pvt. Ltd. (since merged with the Company), amounting to Rs 99.00 million is valuable to the Company in the recently completed PTBP Project. Accordingly, and also based on an expert opinion, the amount of capital work in progress of Rs 99.00 million was capitalized in the books of the Company without any adjustments as per the Scheme of Amalgamation approved by the Hon. Bombay High Court in the year 2002. ii During the year under review, the Company had claimed and received export benefits amounting to Rs 46.70 million under the Target Plus Scheme of Government of India. The Scheme was notified in June 2005 and the benefit accruing to the Company, is on the basis of incremental export performance during the year 2004-05. Based on the principles of prudence and supported by an expert opinion, the Company had not accrued the benefits in the previous year in line with its accounting policy to accrue benefits only after submission of the relevant applications to the Government and their final acceptance. Hence, the Company has accounted for it during the year 2005-06 on the same basis and disclosed the same under Other Income. iii) The company has initiated the process of obtaining approval of Central Government for salary paid to the Managing Director. In respect of the salary paid to Director- Finance, the Company has obtained the requisite approval of shareholders at the Annual General Meeting held in September 2006. iv) The Company has a 'one year revolving line of credit' amounting to Rs 850.00 million. The revolving line of credit backed by a guarantee from the parent company will continue as long as it is supported by the said guarantee. Apart from providing for working capital needs, the loan is also meant for 'General Corporate Purposes'. Out of the aforesaid amount, the Company has used Rs 640.00 million for long term purposes. 2. An amount of Rs 43.90 million being the expenditure incurred towards repairs/replacement of assets at the Company's N.M. plant damaged due to flood, net of 'on account' payment received from the insurance company, is further receivable by the Company. The Company has initiated arbitration proceedings and accordingly filed a petition in the High Court of Bombay. 3. These results have been discussed by the Audit Committee / Board. The same are subject to limited review by the auditors. 4. The Company has only one primary segment of activity, namely 'Chemicals'. 5. Previous period figures have been regrouped / rearranged wherever considered necessary.

Key Ratio

Year	Mar 06	Mar 05	Dec 03
Debt-Equity Ratio	1.05	1.50	2.96
Long Term Debt-Equity Ratio	0.36	0.23	0.44
Current Ratio	1.14	0.89	0.69
Fixed Assets	2.51	3.00	2.16
Inventory	4.86	6.88	8.78
Debtors	5.66	7.33	7.51
Interest Cover Ratio	(1.72)	3.70	2.95
Operating Profit Margin(%)	(0.86)	6.96	9.80
Profit Before Interest And Tax Margin(%)	(2.70)	5.39	7.67
Cash Profit Margin(%)	(1.45)	4.01	5.03
Adjusted Net Profit Margin(%)	(3.28)	2.44	2.91
Return On Capital Employed(%)	(6.04)	16.07	18.83
Return On Net Worth(%)	(15.02)	18.15	28.02

STOCK PRICES

Face Value	Rs.10/- each
High	Rs.40.50
Low	Rs.39.10

LOCAL AGENCY FURTHER INFORMATION

Promoted in 1965 by EID-Parry (India),Chennai, in collaboration with Distillers Company, UK, and Hercules Power, US, Schenectady Herdillia (SHL) was earlier known as Herdillia Chemicals. It manufactures heavy organic chemicals such as phenol, cumene, acetone, diacetone alcohol, phthalic anhydride, phthalates and their derivatives. In Mar.'65, SHL entered into an agreement with Distillers Company to supply technical information for manufacturing phenol, cumene, diacetone alcohol and phthalates. 

 In 1984, the interests of EID-Parry were taken over by Duncans Agro Industries and it is now a part of the Goenka-Duncan group. In 1994, SHL entered into a strategic alliance with Bayer, Germany, for setting up a facility to produce heat transfer media. The heat transfer media plant was commissioned in Feb.'94. The isophorone plant was commissioned in Apr.'94. The company expanded phenol capacity from 20000 tpa to 22500 tpa in a phased manner.  

 In 1994-95, SHL increased the capacity for IBB from 1000 tpa to 2000 tpa. It received the ISO 9002 certification from BVQI in Dec.'95. 

 During 1995-96, SHL increased the capacity for DPO, phenol and acetone to 3000 tpa, 24000 tpa and 14400 tpa respectively. HCL has set up a greenfield plant to produce 1 lac tpa of phenol and 60000 tpa of acetone at Dahej, Gujarat. 

 SHL further increased the capacities of the Phenol, Acetone, Iso Butyl Benzene and Isophorone plant to 26,500, 16,170, 2,500 and 2,500 MT in the year 96-97. It has set up a captive cogeneration plant. The capacity of Phenol and Acetone plants was increased to 34,000 and 20,400 MT/year respectively in the year 1999-2000.  

 The company was renamed Schenectady Herdillia consequent to acquistion of 81.19% of equity capital by Schenectady (India) Holdings Ltd during April 2002. Consequent to the approval by Hon'ble Bombay High Court, Schenectady Specialities Asia Private Ltd was merged with the company with effect from 28th Noember,2002 and the appointed date was 27th September,2002

OPERATIONS REVIEW: 

 The sales turnover at Rs. 5850.000 Millions was lower by 9% on an annualized basis than that of the previous year. The decrease in turnover was mainly due to the unprecedented floods caused by torrential rains in July 2005, resulting in the suspension of operations at Navi Mumbai from July 26, 2005 until the phased commencement over a period ending mid September 2005. Apart from this loss of production, the volumes of Alkyl Phenol sales were also affected due to lower exports. 

DIVIDEND: 

 After taking into consideration the financial results of the year, planned capital expenditure at Navi Mumbai and Rasal Units and the recent steep increase in the costs of petroleum based feedstocks, the Directors are unable to recommend any dividend for the year under review. 

PRODUCTION: 

 In respect of the Navi Mumbai unit, total production during the year ended March 31, 2006 was 97,888 MT, being lower by 14% compared to 1,13,242 MT during the previous period on an annualized basis. As stated earlier, the operations were adversely affected by floods caused by heavy rains in July 2005. 

 New production records were established in respect of Diacetone Alcohol, Isobutyl Benzene, Alpha Methyl Styrene, Alpha Methyl Styrene Dimers, and Acetophenone. During the year, Trimethyl Cyclohexanone was successfully launched as a new product. 

 Exports from Rasal were impacted by the acute competition faced by your Company from South-East Asian suppliers. The Lote unit continued its encouraging performance and the volumes showed an upward trend from 1,311 MT to 2,576 MT, an increase of 97%. 

 The combined production at the Navi Mumbai, Rasal and Lote units was 1,19,888 MT as against 1,36,782 MT in the previous period, recording a decrease of 12% on an annualized basis. 

SALES AND EXPORTS: 

 During the year under review, prices of some of the Company's major products fell steeply on account of new larger capacities which came up in Asia. With high prices of raw materials, driven by high crude oil prices, the margins were under severe pressure. 

 During the year, exports were at Rs. 1001.700 Millions FOB. 

 FINANCE: 

Your Company did not accept any fresh deposits or renew any existing deposits from the public or shareholders during the year. As of March 31, 2006, 80 deposits aggregating Rs. 1.019 Millions had

matured for payment but not been claimed by the depositors. 

 In view of the extensive damage caused by the floods on July 26, 2005, the Company had lodged its claim with the insurance company under the 'Loss of Profit' policy and the fire policy for damage to equipment and property. 

 The 'Loss of Profit' claim has been settled by the insurance company for Rs.80.280 Millions. As regards the property damage claim, the same is being pursued with the Insurance Company. 

 In line with the Memorandum of Understanding signed for transfer of part of the leasehold land at Navi Mumbai, the Company received the entire consideration of Rs. 335.200 Millions and the same has been accounted as of March 31, 2006. 

 The following products of the Company, viz. Phenol, Acetone, Diacetone Alcohol and Performance Resins, come under the purview of Cost Accounting Records (Chemical Industries), Rules, 1987. However, cost audit in respect of only Acetone, Diacetone Alcohol and Performance Resins is applicable to the year under reference. The Company has maintained relevant records and the cost audit is in progress.

CMT REPORT [Corruption, Money laundering & Terrorism]

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

1] INFORMATION ON DESIGNATED PARTY

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

2] Court Declaration :

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

3] Asset Declaration :

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

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

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

Charges or investigation registered against subject: None

7] Criminal Records

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

8] Affiliation with Government :

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

9] Compensation Package :

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

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

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

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

CONTRAVENTION

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

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.53
UK Pound	1	Rs.86.29
Euro	1	Rs.57.80

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	4
OPERATING SCALE	1~10	4
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	4
--PROFITABILIRY	1~10	4
--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	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		41

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