MIRA INFORM REPORT

Report Date :

15.06.2007

IDENTIFICATION DETAILS

Name :	TEXMACO LIMITED
Registered Office :	Belgharia, Kolkata – 700 056, West Bengal
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	04.08.1939
Com. Reg. No.:	9800
CIN No.: [Company Identification No.]	L99999WB1939PLC009800
TAN No.: [Tax Deduction & Collection Account No.]	CALT02779A
Legal Form :	It is a public limited liability company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturers of Textile Machinery, tools, Steel Ingots and Castings, Chemical Plant and Boilers.

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 5600000
Status :	Satisfactory
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established and reputed company having satisfactory track. Directors are reported as experienced and respectable businessmen. Trade relations are reported as fair. Business is active. Payments are usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Belgharia, Kolkata – 700 056, West Bengal, India
Tel. No.:	91-33-25391631 / 1202 / 1613 / 1201 / 1713/ 5392448
Fax No.:	91-33-25392448
E-Mail :	texsvpcom@texmaco.in
Website :	http://www.texmacoindia.com
Corporate Office :	Birla Building, 9 /1, R. N. Mukherjee Road, Kolkata - 700 001, West Bengal
Tel. No.:	91-33-2204379
Fax No.:	91-33-2205833
Factory 1 :	Engineering Works v Belgharia, Kolkata, West Bengal v Agarpara, West Bengal v Sodepur, West Bengal v Panihati, West Bengal
Regional Offices:	Located at :- v Mumbai, Maharashtra v Coimbatore v Chennai, Tamilnadu v New Delhi

DIRECTORS

Name :	Dr. K. K. Birla
Designation :	Chairman
Name :	Mr. Saroj Kumar Poddar
Designation :	Executive Vice Chairman
Date of Birth/Age :	60 years
Qualification :	B.Com. (Hons.)
Experience :	37 years
Date of Appointment :	01.01.2006
Previous Employment :	Poddar Heritage Investments Limited
Name :	Shri B. P. Bajoria
Designation :	Director
Name :	Shri H. C. Gandhi
Designation :	Director
Name :	Shri A. C. Chakrabortti
Designation :	Director
Name :	Shri B. Rai
Designation :	Director
Name :	Shri Manish Gupta
Designation :	Director
Name :	Dr. H. Sadhak
Designation :	Director
Name :	Shri A. K. Nanda
Designation :	Whole time Director

KEY EXECUTIVES

Name :	Shri Ramesh Maheshwari
Designation :	President and Chief Executive Officer
Date of Birth/Age :	73 years
Qualification :	M. Com. LLB
Experience :	50 years
Date of Appointment :	01.02.1962
Previous Employment :	F & C Osler (India) Limited and Sitster Concerns
Name :	Shri A. K. Vijay
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters	5424890	52.54
Banks, Insurance Cos., and Fl's	701026	6.79
Mutual Funds and U.T.I	1084172	10.50
Corporate Bodies/Others	1457684	14.11
NRI/OCB	79643	0.77
Indian Public	1578345	15.29
Total	10325760	100.00

BUSINESS DETAILS

Line of Business :

Manufacturers of Textile Machinery, tools, Steel Ingots and Castings, Chemical Plant and Boilers.

Products :

The Generic Names of Principal Products/Services of the Company is:-

Product Description	Wagons
ITC Code	8606

Product Description	Steel Castings
ITC Code	8607

Product Description	Structurals
ITC Code	7308

PRODUCTION STATUS

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Ring frames, doublers and worsted ring frames	Nos.	1035	1173	--
Carding Engines	Nos.	180	300	--
Draw Frames	Nos.	410	410	--
Speed frames	Nos.	--	--	--
Steel Castings & Ingots (including Draft Gear 4000 sets)	MT	9600	9600	12078
Power Tilller/ Reaper	Nos.	--	--	98
Wagons	MT	38400/39000	60000	50147
Water tube boilers and package boilers	Nos.	36	36	3
Sugar mill machinery (complete plant 1200 tons Crushing Capacity)	Nos.	2	2	926 MT
Structurals	MT	20400	20400	3563
Points & Crossings	Sets	--	2000	--
Site Fabrication and Erection	MT	--	--	2936
Pressure Vessels, Heat exch. & Chemical Machineries	MT	1500	1500	244
Diesel Road Rollers	Nos.	400	400	--
Diesel-Powered Forklift Trucks (above 8 tons capacity)	Nos.

GENERAL INFORMATION

Suppliers :

v Bright Engineering Industry

v Bhola Trading

v FABCO

v Laxminarayan Engineering works

v Lalbaba Industrial Corporation

v Main Engineering Concern

v Mamoni Industries

v P.D Engineering Concern

v Rajendranath Kundu & Sons

v Saket Enterprises

v Spares & Equipments

v S.S Enterprises

v Star Electric

v Sas Industries and Weldmen Synergic Private Limited

No. of Employees :

4000

Bankers :

State Bank of India

Facilities :

Secured Loans (Rs. In millions):

From Banks : Secured by hypothecation of Finished Goods and part of Raw Materials, Stock-in-Process, Stores, Book Debts, etc. and second charge on Fixed Assets Cash Credit Accounts / WCDL / FCNR (B)	277.492
Term Loans : Secured by first equitable mortgage/charge on the immovable/movable properties both present and future of Belgharia, Agarpara and Sodepur Units of the Company created/to be created except exclusive first charge by way of hypothecation in favour of the respective Financial Institutions on the Plant & Machinery acquired/ to be acquired under their Equipment Finance Scheme and Working Capital loan From Industrial Development Bank of India	35.625
Secured by Letter of Credit opened by the Buyer from State Bank of India	81.923
Project Loans :
From State Bank of India	57.967
From Landesbank Wutterberg, Germany	79.895
Loan from Others - Secured by Bank Guarantee under Subsidised Industrial Housing Scheme	0.168
Total	533.070

Unsecured Loans :

From Body Corporates	4.499
Fixed Deposit from employees/ex-employees	3.669
Advance against sale of land	75.000
Total	83.168

Banking Relations :	Satisfactory
Auditors :
Name :	K. N. Gutgutia & Company Chartered Accountants
Address :
Associates/Subsidiaries :	v High Quality Steels Limited v Shree Export House Limited v Macfarlane& Company Limited v Texmaco Machines Pvt. Limited v Neora Hydro Limited - 50% Joint Venture.

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
14000000	Equity Shares	Rs.10/- each	Rs.140.000 millions
40000	Preference Shares	Rs.100/- each	Rs.4.000 millions
60000	Shares	Rs.100/- each	Rs.6.000 millions
	Total		Rs.150.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
10325760	Equity Shares	Rs.10/- each	Rs.103.257 millions
Add :	Forfeited Shares		Rs.0.001
	Total		Rs.103.258 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		103.258	103.258	51.600
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		1298.336	1152.679	924.500
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		1401.594	1255.937	976.100
LOAN FUNDS
1] Secured Loans		533.070	382.624	487.200
2] Unsecured Loans		83.168	110.986	180.700
TOTAL BORROWING		616.238	493.61	667.900
DEFERRED TAX LIABILITIES		15.632	18.294	0.000
TOTAL		2033.464	1767.841	1644.000
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		750.120	762.300	770.200
Capital work-in-progress		179.626	0.596	0.000
INVESTMENT		550.187	470.062	469.300
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	361.086	613.932	520.400
	Sundry Debtors	636.090	555.665	441.600
	Cash & Bank Balances	177.225	316.189	68.500
	Other Current Assets	7.950	9.068	0.000
	Loans & Advances	1102.827	406.196	256.100
Total Current Assets		2285.178	1901.05	1286.600
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	1560.695	1267.422	866.500
	Provisions	192.317	119.067	31.200
Total Current Liabilities		1753.012	1386.489	897.700
Net Current Assets		532.166	514.561	388.900
MISCELLANEOUS EXPENSES		21.365	20.322	15.600
TOTAL		2033.464	1767.841	1644.000

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2006	31.03.2005	31.03.2004
Sales Turnover		3115.327	2279.683	1693.600
Other Income		25.930	22.606	240.800
Total Income		3141.257	2302.289	1934.400
Profit/(Loss) Before Tax		287.316	190.462	208.700
Provision for Taxation		90.615	15.190	20.800
Profit/(Loss) After Tax		196.701	175.272	187.900
Total Earnings		95.717	134.567	NA
Imports :
	Raw Materials	21.294	0.000	NA
	Stores & Spares	109.404	177.938	NA
Total Imports		130.698	177.938	NA
Expenditures :
	Manufacturing Expenses	NA	NA	897.100
	Administrative Expenses	NA	NA	18.700
	Raw Material Consumed	NA	NA	284.200
	Miscellaneous Expenses	NA	NA	44.100
	Salaries, Wages, Bonus, etc.	NA	NA	239.700
	Interest	22.891	45.905	87.000
	Power & Fuel	NA	NA	96.600
	Depreciation & Amortization	42.758	39.738	32.400
	Other Expenditure	2788.292	2026.184	25.900
Total Expenditure		2853.941	2111.827	1725.700

SUMMARISED RESULTS

PARTICULARS	31.03.2007 (Full year)
Sales Turnover	3739.600
Other Income	32.000
Total Income	3771.600
Total Expenditure	3266.900
Operating Profit	504.700
Interest	28.500
Gross Profit	476.200
Depreciation	52.300
Tax	132.300
Reported PAT	284.800
Dividend (%)	400.000

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt-Equity Ratio	0.47	0.61	1.04
Long Term Debt-Equity Ratio	0.25	0.42	0.70
Current Ratio	1.13	1.19	1.11
TURNOVER RATIOS
Fixed Assets	2.87	2.28	1.27
Inventory	8.04	5.36	3.51
Debtors	6.58	6.09	4.53
Interest Cover Ratio	4.42	3.23	1.83
Operating Profit Margin(%)	10.34	9.51	11.34
Profit Before Interest And Tax Margin(%)	9.25	8.20	9.42
Cash Profit Margin(%)	5.94	6.47	5.77
Adjusted Net Profit Margin(%)	4.85	5.16	3.86
Return On Capital Employed(%)	21.28	16.47	10.99
Return On Net Worth(%)	16.24	16.50	9.14

STOCK PRICES

Face Value	Rs.10.00/-
High	Rs.939.80
Low	Rs.915.00

LOCAL AGENCY FURTHER INFORMATION

HISTORY

The company was incorporated in the year 1939 at Kolkata in West Bengal having Company Registration Number 9800.

The hard times of company began in 1987-88 when the company started incurring losses. The losses started accumulating, as a result the BIFR declared the company as a sick unit. ICICI worked out a rehabilitation package for the company.

In 1994-95, the company managed to come out of the red, and wrote-off a part of its term loans by transferring the cement division to the Zuari Agro Chemical division. During the same year Subject earned foreign exchange worth Rs. 236.700 millions of which export of goods accounted for Rs. 66.700 millions. Company is negotiating a joint venture in collaboration with Hawa Machinery, Japan, which has been supplying technology to the company for the past five years.

In 1998-99, the company bagged a prestigious order from Noell Stahl-und Maschinenbau GmbH, Germany for supply of hydraulic gates and allied equipments to Kali Gandaki H E P project in Nepal, which progressed satisfactorily and is nearing completion.

BUSINESS

The company is engaged in the business of manufacturing of Ring frames, Doublers and Worsted Ring Frames, Carding Engines, Draw Frames, Speed Frames, Combers & Lap Formers, Steel Castings and Ingots, Wagons, Water Tube Boilers and Package Boilers, Sugar Mill Machinery, Structurals, Points and Crossings, Pressure Vessels, Heat Exchangers and Chemical Machineries, Diesel Road Rollers, Diesel Powered for Klift Trucks and Miscellaneous.

The company manufactured and import substitute – cotton spinning machinery. That set the company rolling on the growth path. After that, the company began putting in the market, railway wagons, industrial boilers, road rollers, hydraulic steel structures, pressure vessels and heat exchangers. Besides, it is engaged in textiles, shipping and cement.

The company import technology from :

Howa Machinery Limited, Japan

High Speed Comber, Model “KZ 3”, and Super Lap Former Model

“DY. NO.5”

Combstion Systems Limited, UK

FBC Water Tube Boiler

The company’s fixed assets of important value include land, buildings, roads, railway siding, plant & machinery, electrical machinery, office and ancillary equipments, furniture & fittings, and vehicles.

During the year under review, the improvement in the Company's working has been sustained with the Gross Turnover registering an increase of 29% at Rs.3921.700 Millions compared to Rs. 3037.200 Millions in the previous year. The turnover does not include the value of free-supply inputs including steel and components of over Rs. 2000 Millions provided to the Company by Indian Railways and other clients for some large value contracts.

It bears mention that there has been a change in the system of contracting and billing of Bogies and Couplers produced at the Company's Steel Foundry for wagons against contracts of Indian Railways. As a result, the Company's Wagon Division's invoicing has stood decreased by approx. Rs. 140 Millions.

There was an appreciable all round improvement in the Company's operations resulting in gross profit (PBDT) showing an increase of 43% at Rs. 330.100 Millions against Rs. 230.200 Millions, and profit before tax (PBT) showing an increase of 63% at Rs. 280.800 Millions against Rs. 171.800 Millions in the previous year.

The net profit at Rs.190.100 Millions was higher by 21% compared to Rs.156.600 Millions in the previous year. The Tax liability for the year was Rs.90.500 Millions against only Rs.17.000 Millions in the previous year. The Company had Tax set offs available in the previous year which had reduced the tax liability. In the current year full tax liability has been provided. The Deferred Tax Asset for the year has been created in the Profit and Loss Account in accordance with the Accounting Standard 22 "Accounting for taxes on Income", issued by the Institute of Chartered Accountants of India,

HEAVY ENGINEERING DIVISION

ROLLING STOCK

The Company received an order for 2537 FWus only from Indian Railways in 2005-06, which was barely 45% of the order for 5548 FWus received during the previous year. Besides, there was unprecedented delay by Indian Railways in placement of orders, which were released as late as in mid-January 06.

Notwithstanding such delay, the Company managed to execute approx. 60% of the order within just about two months by the close of the year on March 31,06. Overall the Company managed to achieve a total wagon production of 5310 FWus during the year, which was made up of substantial production against special orders from other industrial users

In this back drop, it is heartening that the Indian Railways have intimated the Industry about their plan to procure the largest ever number of wagons viz, 12,000 VUs or 30,000 FWs in the current year to meet their new freight target. The Company expects to receive the largest share of the Railway orders based on its consistent record of being the best performing unit in the Industry over the years. The Company has, however, requested the Railway Board for awarding remunerative prices of wagons and arranging timely supply of contractual matched free-inputs for smooth and economic run of production. In particular, the shortage of wheelsets sourced from Rail Wheel Factory, Bangalore, is a major bottleneck in the current wagon production.

The Directors are happy to report further that the outlook for the current year, and hopefully for the next few years, has turned quite optimistic with the slew of measures announced by the Ministry of Railways to promote Public-Private Partnership in freight movement. The company has received substantial orders and there is a spate of enquiries for wagons from industrial users under Wagon Investment Scheme and several private parties entering into containerised freight segment. The Company is fully geared to execute the orders flowing in from the Private Sector.

The Railways have also come up with an exciting Rs. 220000 Millions (Approx US $ 5 bl) 'Dedicated Freight Corridor' plan, which will indeed revolutionize the Rail transport. The Company is engaged in a serious dialogue with the Railways, along with its worldrenowned foreign associates, to upgrade the wagon designs to build a modern fleet for the proposed Dedicated Freight Corridor.

HYDRO-MECHANICAL EQUIPMENT & STRUCTURALS

The performance of this Division was just about maintained with Turnover of Rs.52.99 Millions. There were various constraints in the execution of some of the pending contracts due to abnormal increase in price of steel and non-availability of erection fronts at the project sites, etc. The prestigious contract taken up by the Company for JBIC funded 900 MW Purulia Pumped Storage Project under WBSEB is nearing completion. It involved fabrication and erection of around 10,OOOT of steelwork for Hydro-mechanical equipment, which has been done in a record time ahead of schedule.

Another major contract for Hydro-mechanical equipment for 1020 MW Tala Hydroelectric Project (Bhutan) is under completion.

This job had to be executed in an extremely difficult hilly terrain and harsh climate conditions. It has earned the Company valuable experience and will add to its credentials. The work on other Hydro-mechanical packages under NHPC viz. 510 MW Teesta Stage-V Hydroelectric Project (Sikkim), Parbati Hydel Project (Himachal Pradesh), Sewa Hydel Project (J&K), and Teesta Low Dam Project (West Bengal) are progressing as per project requirements. The Division is well poised to receive a large value contract for a mega project shortly. The business potential in the Hydropower sector holds a big promise for this Division in the years to come.

PROCESS EQUIPMENT DIVISION

The Turnover of this Division increased threefold to Rs.439.300 Millions during the year. The Division continued to consolidate its position in the pressure vessels market by booking orders and manufacturing a large number of Cryogenic Vessels. The Company is currently executing orders for a Boiler of 120 TPH capacity, a high pressure boiler of 90 TPH at 67 Kg/cm2g, and also 3 Nos. Morton Spheres for Indian Space Research Organisation (ISRO). The current buoyancy in the Sugar Industry augurs well for the Company and the Company expects to receive substantial orders for Boilers and Sugar Milling Plants in the current year.

Process Equipment Division

STEEL FOUNDRY

In keeping with the Directors' expectation as reported in the previous year, the Steel Foundry Division maintained its upward growth trajectory and scaled a new production peak of 12078 MT with a record turnover of Rs. 1031.600 Millions against Rs.82.16 Millions in the previous year. The change in product-mix and rigorous cost controls contributed handsomely to profits in the Division. Beside meeting the captive requirement of its Wagon Division, the Steel Foundry was a major supplier of Bogies and Couplers to other wagon builders. It is the largest supplier of Bogies and Couplers for Indian Railways with a market share of approx. 32% and 42% respectively during the year.

Steel Foundry Division

The new State of Art Foundry being set up by the Company with equipment supplied by the renowned German manufacturer, M/s. KunkelWagner Prozesstechnologie GmbH, is on schedule and is expected to be commissioned by July this year. Being an export oriented hi-tech project, it will entail some time for trial runs and to secure approval of the overseas customers and Inspection Authority. Therefore, the commercial run is expected in the 3rd quarter of the current year. Hopefully, the successful operation of this Foundry will gain for the Company an international recognition and significantly contribute to the Company's revenues.

AGRO MACHINERY

The performance of the Division has shown an improvement over last year inspite of stiff competition from the cheap Chinese Power Tillers. The Company's Power Tiller, "Texmaco Dhanwan" is gaining market acceptability steadily. The Division is in active negotiation with an Engineering Research Institute for manufacture and marketing of a small low-priced Tractor to meet the needs of middle class farmers and thus expand its product range.

MINI HYDEL POWER PROJECT

The Company's 3 MW Mini Hydel Power Project on river Neora in District Darjeeling, West Bengal, in joint venture company 'Neora Hydro Ltd.' has been commissioned successfully. This is the first mini hydel project commissioned in Private Sector in Eastern India. The project has started generating power and is expected to fully stabilise once adequate water is available with the onset of monsoon.

EXPORTS

The Company has made satisfactory progress in its negotiations with overseas buyers for the export of Steel Castings from its new State of Art Foundry, which will be on stream shortly. There are fair possibilities for export of wagons, for which the Company has made necessary tie-ups with leading export houses. The exports of the Company during the year, both physical and deemed, were approx. Rs.623.100 Millions.

REAL ESTATE

Regarding Birla Mill Land at Delhi, the Company is still awaiting the decision of the Hon'ble Supreme Court of India in respect of certain legal issues where after the Management will proceed with the development plans of the property. The Company has acquired in April'06 in an auction by Hon'ble High Court, Kolkata, ownership of its Panihati factory premises on B. T. Road, Kolkata, which was hitherto under tenancy.

When Subject was set up in 1939 by the Birlas, it manufactured an import substitute -- cotton spinning machinery. That set the company rolling on the growth path. After that, Subject began putting in the market, railway wagons, industrial boilers, road rollers, hydraulic steel structures, pressure vessels and heat exchangers. Besides, it is engaged in textiles, shipping and cement. The hard times of Subject began in 1987-88 when the company started incurring losses. The losses started accumulating, as a result the BIFR declared Subject as a sick unit. ICICI worked out a rehabilitation package for the company.  

In 1994-95, Subject managed to come out of the red, and wrote-off a part of its term loans by transferring the cement division to the Zuari Agro Chemical division. During the same year Subject earned foreign exchange worth Rs 236.700 millions of which export of goods accounted for Rs 66.700 millions. Subject is negotiating a joint venture in collaboration with Hawa Machinery, Japan, which has been supplying technology to the company for the past five years.

In 1998-99, the company bagged a prestigious order from Noell Stahl-und Maschinenbau Gmbh, Germany for supply of hydraulic gates and allied equipments to Kali Gandaki H E P project in Nepal which progressed satisfactorily and is nearing completion.

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.40.97
UK Pound	1	Rs.80.73
Euro	1	Rs.54.56

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	9
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	4
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	8
--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		59

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