MIRA INFORM REPORT

Report Date :

30.03.2007

IDENTIFICATION DETAILS

Name :	SERVALL ENGINEERING WORKS PRIVATE LIMITED
Registered Office :	10-Z, Bharathi Nagar, 7^th Cross, Sai Baba Colony, Coimbatore, Tamilnadu
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	07.08.1989
Com. Reg. No.:	18-02498
CIN No.: [Company Identification No.]	U52110TZ1989PTC2498
TAN No.: [Tax Deduction & Collection Account No.]	CMBS05563F
PAN No.: [Permanent Account No.]	AAECS2949H
Legal Form :	Closely held public limited company
Line of Business :	Manufacture and sale of paper making machinery and it’s spares and accessories

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 :	USD 500000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and reputed company having satisfactory track. Directors are reported as experienced, respectable and resourceful industrialist. Their trade relations are fair. General financial position is good. Payments are correct and as per commitments. The company can be considered good for any normal business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office / Head office :	10-Z, Bharathi Nagar, 7^th Cross, Sai Baba Colony, Coimbatore, Tamilnadu, India
Tel. No.:	91-422-2431284/ 5384613 to 5384616
Fax No.:	91-422-2430077
E-Mail :	sermdsof@md3.vsnl.net.in, natarajan@servall.co.in, ho@servall.co.in
Website :	http://www.servall.co.in
Area :	5250 Sq. ft
Location :	Owned
Factory 1 :	Mettupalayam Road, Kramadai-641104, Coimbatore District, Tamilnadu, India
Tel. No.:	91-4254-272005 / 275229 / 275361
Fax No.:	91-4254-4254-272844
E-Mail :	sales@servallengg.com
Area :	75000 Sq. ft
Location :	Owned
Branches :	Group office at Chennai
Overseas Representatives :	Europe (Germany, Switzerland, Austria, Belgium, Netherlands, France, Poland, Sweden) Mr. Michael Meycke Vertriebsuro, In Der Komm 40, 52391 Vettweisz, Germany. Phone: 0049 2424 1826 Fax    : 0049 2424 2700 Email: M.Meycke-Vertrieb@t-online.de Singapore & Malaysia Chemco Private Limited 15 UBI Crescent, UBI Techpark, Singapore 408575. Phone: 0065 6748 5077 Fax    : 0065 6742 1110, 6745 9521 Contact person: Mr. Quek Wan, Director. Email: quek_wan@chemco.com.sg clement_ong@chemco.com.sg lucy_tang@chemco.com.sg Phillipines M/s. GHV Enterprises P.O.Box 3277, Central Post Office, Manila 1099, Phillipines. Phone: 0063 2454 9639 Fax    : 0063 2456 2233 Contact Person: Mr. Ramon S. De Vera Email: ramaondevera4@pacific.net.ph Indonesia PT Pacific Tirtapersada JL Gembong 2-16, Block B-10, Surabaya 60141, Indonesia. Phone: 0062 31 3727 999 Fax    : 0062 31 3719 999 Contact Person: Mr. Giarta Chaspuri, Technical Director Email: ptptsbyi@rad.net.id

DIRECTORS

Name :	Mr. R Ramaswamy
Designation :	Chairman and Director
Address :	247 B, Alagesan Road, Sai Baba Colony, Coimbatore-641011, Tamilnadu
Date of Birth/Age :	12.03.1939
Qualification :
Experience :
Date of Appointment :	11.05.1999
Name :	Mr. Y Shivaram Prasad
Designation :	Full Time Executive Director
Address :	22, West Club Road, Race Course, Coimbatore-641018, Tamilnadu
Date of Birth/Age :	11.11.1964
Qualification :	B.E.
Experience :	15 years
Date of Appointment :	07.08.1989
Other Directorships :	Servalakshmi Paper and Boards Private Limited Danalakshmi Paper Mills Private Limited Techno Spin Private Limited
Name :	Mrs. Shobana S Prasad
Designation :	Director
Address :	22, West Club Road, Race Course, Coimbatore-641018, Tamilnadu
Date of Birth/Age :	18.06.1966
Date of Appointment :	07.08.1989
Name :	Mrs. Nirupa Sriramulu
Designation :	Director
Address :	247 B, Alagesan Road, Sai Baba Colony, Coimbatore-641011, Tamilnadu
Date of Birth/Age :	23.03.1969
Date of Appointment :	07.08.1989
Name :	Mr. V S Pattabiraman
Designation :	Director
Name :	Mr. D. Muthusamy
Designation :	Director
Address :	Danalakshmi Paper Mills Private Limited, Vilampattai, Nilkottai-624219, Tamilnadu
Date of Birth/Age :	11.09.1949
Date of Appointment :	09.09.2000
Name :	Mr. Balakrishnan Sriramulu
Designation :	Director
Address :	KG House, 126, Arts College Road, Coimbatore-641018, Tamilnadu
Date of Birth/Age :	27.04.1967
Date of Appointment :	11.05.1999
Name :	Mr. Jorg Pesch, Dusseldorf
Designation :	Nominee of. Jagenberg Papiertechnik GMBH
Name :	Mr. Wilhelm Horman Seder Austria
Designation :	Nominee of May Melnhof Karton GMBH
Name :	Dr. Andreas Blaschke Austria
Designation :	Nominee of. Mayr Melnhof Karton GMBH
Name :	Mr. V M Ketkar
Designation :	Nominee of Industrial Credit and Investment Corporation of India Limited
Name :	Mr. B R Shah
Designation :	Nominee of Indus Venture Management Limited Mauritius

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares
Jagenberg Papier Technikm GMBH, Germany	351829
Y Shivaram Prasad	46517
R Ramaswamy Industries	482961
Nirupa Sriramaulu	100
Shobana S Prasad	568256
Shobana S Prasad for Master Sriman Ram Prasad Y. Shivaramprasad	87796
Mr. R. Jeevanlatha	250440
R. Ramaswamy HUF	758451
Mr. B. Sriramalu	100

BUSINESS DETAILS

Line of Business :	Import, Export and Manufacture and sale of paper making machinery and it’s spares and accessories
Products :	Components and Spares
Exports :
Countries :	Germany, Holland, Sweden, Indonesia, Italy, Malaysia and Turkey
Imports :
Countries :	Germany or Sweden (50%), Singapore or Japan or UK or Canada (50%)
Terms :
Selling :	L/C + Documents through Bank
Local :	Contract + Credit Upto 15 days
Purchasing :	L/C + Suppliers’ Credit Upto 60 Days
Local :	Contract + Credit : 30 / 45 days

PRODUCTION STATUS

Particulars	Unit	Actual Production
Paper Machinery / Parts	Qty	205
	sets	41
Pulp Mill Equipments	Nos	9
Finished House Equipments	Nos	15
Others	Nos	166
Erection Receipts
Drying Cylinders	Nos	113
Graded C. I. Castings	Kgs.	62544.08

GENERAL INFORMATION

Suppliers :

v Siemens Limited, Coimbatore/Siemens, Germany

v Festo Controls Limited, Coimbatore

v Shanthi Gears Limited, Coimbatore

Customers :

v Tamilnadu Newsprint Limited

o Trichy District, Tamilnadu, India

v Sri Venkatesa Paper and Boards Limited

o Udumalpet, Tamilnadu, India

v Shreyans Paper Mills Limited

v - Punjab, India

No. of Employees :

250 Totally (Group about 1400 including subject)

Banker 1 :

Indian Overseas Bank

Branch Address:

Ramalinga Nagar, Coimbatore-641011, Tamilnadu, India

Banker 2 :

State Bank of India

Branch Address:

Ganapathy, Coimbatore-641012, Tamilnadu, India

Banker 3 :

State Bank of India

Branch Address:

Commercial Branch, 1443 Trichy Road, Coimbatore-641018,

Tamilnadu, India

Facilities :

Secured Loan		Rs. In millions
From scheduled banks
Term loan from Nationalised Bank
State Bank of India		19.985
Indian Overseas Bank		1.257
Open Cash Credit from Nationalised Banks
Open cash Credit		23.419
Packing Credit		20.048
SBI FCNR (B) Loan		8.143
HP Finance From Kotak Mahindra Primus Limited	0.269
Less: Unmatured financial Charges	0.034	0.235
Total		73.087

Auditors :
Name :	T Nagarajan & Company Chartered Accountants
Address :	Uppilipalayam, Coimbatore- 641015, Tamilnadu, India
Associates/Subsidiaries :	· Servall Engineering Industries lIMITED · Servall Engineering Foundry Private Limited · Dhanlakshmi Paper Mills Limited · Technospin Private Limited · Servalakshmi Paper and Boards Private Limited * Monarch Machine Tools Private Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
3000000	Equity shares	10/-	Rs. 30.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
2546450	Equity shares	10/-	Rs. 25.464 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2006	31.03.2005
SHAREHOLDERS FUNDS
1] Share Capital		25.465	25.465
2] Share Application Money		3.295	3.295
3] Reserves & Surplus		105.367	98.064
4] (Accumulated Losses)		0.000	0.000
NETWORTH		134.127	126.824
LOAN FUNDS
1] Secured Loans		68.656	88.570
2] Unsecured Loans		4.275	4.275
TOTAL BORROWING		72.931	92.845
DEFERRED TAX LIABILITIES		19.812	17.053
TOTAL		226.870	236.722
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		117.084	113.542
Capital work-in-progress		0.489	9.556
INVESTMENT		16.056	16.056
DEFERREX TAX ASSETS
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	90.305	123.806
	Sundry Debtors	25.601	48.288
	Cash & Bank Balances	5.778	6.567
	Other Current Assets	0.000	0.000
	Loans & Advances	35.202	37.965
Total Current Assets		156.886	216.626
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	74.693	122.339
	Provisions	1.307	0.407
Total Current Liabilities		76.000	122.746
Net Current Assets		80.886	93.880
MISCELLANEOUS EXPENSES		0.000	0.000
Revenue Expenses		12.355	3.688
TOTAL		226.870	236.722

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2006	31.03.2005
Sales Turnover		256.746	165.573
Other Income		0.000	0.000
Total Income		156.746	165.573
Profit/(Loss) After Tax		12.338	0.524
Earnings in Foreign Currency :
Total Earnings		66.680	20.272
Expenditures :
	Interest	7.970	10.301
	Depreciation & Amortization	10.503	12.258
	Other Expenditure	225.935	142.490
Total Expenditure		244.408	165.049

KEY RATIOS

PARTICULARS		31.03.2006	31.03.2005
PAT / Total Income	(%)	7.87	0.31
Debt Equity Ratio (Total Liability/Networth)		0.56	0.96
Current Ratio (Current Asset/Current Liability)		2.06	1.76

LOCAL AGENCY FURTHER INFORMATION

Form 8 Particular for creation or modification of charges

Name of the company

SERVALL ENGINEERING WORKS PRIVATE LIMITED

Presented By

SERVALL ENGINEERING WORKS PRIVATE LIMITED

1) Date and description of instrument creating the change

Letter of hypothecation dated 10.04.2000 executed by Servall Engineering Works Limited (now known as Servall Engineering Works Private Limited) (therein and hereinafter referred to as the borrower) in favour of Indian Overseas Bank, (therein and hereinafter referred to as IOB)

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

Working capital facility of Rs.66.000 millions as follows :

Hypothecation cash credit	Rs.24.000 millions
Inland/Foreign Letter of credit	Rs.24.000 millions
Letter of Guarantee	Rs.18.000 millions
Total	66.000 millions

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

Hypothecation of raw materials, work in progress, finished goods, spares and receivables.

Documents of title to goods/ hypothecation of stocks, accepted hundies.

First charge on the block assets, other than the assets having exclusive charge on pari passu basi with SBI.

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

The company should not avail any finance from other financial institutions/banks/finance companies without prior approval of existing banks.

Company should undertake in writing to maintain minimum current ratio 1.33:1 at all times.

Company should undertake not to make fresh investments/loan to its associate companies without approval from the bank.

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

Indian Overseas Bank

Ramalinya Nagar Branch,

Saibaba Colony

Coimbatore-641011

6) Date and brief description of instrument modifying the charge

Joint deed of hypothecation dated 01.03.2004

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

Now the total facility of Rs.118 millions were further modified by executing a joint deed of hypothecation dated 01.03.2004 with Indian Overseas Bank (IOB) and State Bank of India na d the security for the above limits are as follows :

For the working capital facility of Rs.94.5 millions- first charge on the entire current assets of the company on pari passu basis with SBI

For the term loan facility of Rs.4.5 millions and Rs.19 millions exclusive first charge on the assets acquired/ to the acquired out of the term loan and a first charge on other block assets of the company on pari passu basis with SBI.

Corporation identity number or foreign company registrations number of the company	U52110TZ1989PTC2498
Name of the company	SERVALL ENGINEERING WORKS PRIVATE LIMITED
Address	10-Z, Bharathi Nagar, 7^th Cross, Sai Baba Colony, Coimbatore, Tamilnadu
This Form is for	Modification of charge
Type of Charges	Immovable Property Book debts Movabke property
Particular of the charge holder	Indian Overseas Bank Ramalinya Nagar Branch, Saibaba Colony Coimbatore-641011
Nature or description of the instrument creating charge	Charge created on 08.05.2000 against Hypothecation Deed dated 10.04.2000 for Rs.66 millions has been modified on various dates. Present charge takes the total charge to Rs.171.5 millions from Rs.126.5 millions for the additional term loan of Rs.45 millions sanctioned by IOB and concerned documents executed on 09.09.2006
Date of the instrument creating charge	09.09.2006
Amount Secure by the charge	Rs.171.500 millions
Brief of the principal terms and conditions and extent and operation of the charge	Rate of Interest : 11.00% Terms of Repayment : Repayable in 60 monthly installments of Rs.7.500 millions each commencing from 01.10.2007 Margin : 25% Extent and Operation of charge : Total charge on both fixed and current assets of the company increased from Rs.126.5 millions to Rs.171.5 millions
Modification charge Charge identification number of the charge to be modified	90001061
Particulars of the Property charged	Land, Building, Machinery and Current asssets in Billichi Village in Coimbatore district referred to in letter of confirmation dated 09.09.2006
Particulars of present modification	Total facilities increased from Rs.126.5 millions to Rs.171.5 millions by term loan no.4 for Rs.45.0 millions, all other limits remaining the same.

Operation

Total Sales during the year was reasonably good. Net Sales during the year under consideration was Rs. 245.400 millions against Rs. 285.200 millions during the previous year. export turnover was Rs. 61.279 millions. Net Profit was Rs. 4.130 millions

Finance

The company has availed term loan to the extent of Rs. 4.500 million from Indian Overseas Bank and Open Cash Credit facilities were enhanced from Rs. 27.000 millions to Rs. 36.000 millions by Indian Overseas Bank. Enhancement of Working Capital limit from Rs. 18.000 millions by State Bank of India is under Consideration.

- Exports (30%) Part of production

Has Absorbed Technology From:-

· Jagenberg Papiertechnik GMBH, Germany

· Mayr Melnhof Karton GMBH, Austria

- Subject generally does not provide information

Fixed Assets :

Goodwill

Land

Buildings

Plant And Machinery

Furniture And Fittings

Electrical Fitting

Vehicles

Temporary Wooden Structures

Office Appliances

As per the Website:

Corporate Profile

Subject has been a major partner in the paper and pulp industry worldwide, answering its need for high-performance, futuristic machinery. Subject can pride itself on achieving a unique status of a “complete manufacturer”. It has successfully executed complete paper machinery upto 250 TPD capacity. This electrifying growth has been spurred by the inherent quest for excellence in Quality, Design and Engineering. At Subject, the quest for excellence is never-ending, driving the company to innovate, upgrade and develop.

Quality Policy

Subject’s Quality Policy states, “Total customer satisfaction through customer specific, reliable products and timely services”. Subject believes in “value-added quality”, going beyond the ordinary boundaries of quality to offer the customer something more substantial. Be it top-level management or shop floor personnel, raw material sourcing or packaging, the need to make quality processes an intrinsic part of the organization is appreciated and practiced by each member of the Subject family.

Each section at Subject has drawn up its own quality policy and objectives based upon the company’s 3C formula: Continuous Improvement, Customer Satisfaction and Compliance with legal requirements. Regular reviews of the performance by management are conducted to evaluate achievements.

Subject offers you Total Solutions: Total Project management and turnkey solutions, right from Concept and Design to Engineering, Erection, Execution and Commissioning. We also specialise in dismantling and custom rebuilding of existing paper plants and machinery.

PRODUCTS

Subject manufactures the entire range of stock preparation system for treatment of waste paper, starting from density pulper upto Fine Screening and cleaning equipment. Under an agreement with M/s. Cellwood Machinery AB, Sweden, Subject also manufactures components for Krima Hot Dispersing Systems and Disc Filters.

Complete Range of Equipments from Pulper to Finishing House

State of the art technology and equipment for processing different raw materials and for end-products like

o Newsprint

o Writing & Printing Grades

o Brown / Kraft Varieties 

o Folding Box Boards

History:

- April 4, 1989, Under the name of “SERWELL REIHANSAL PRIVATE LIMITED”

- Name Changed to “SERVALL ENGINEERING WORKS PRIVATE LIMITED’’ from 19^th March

1998

- Took Over the engineering division of Servall Engineering Industries Limited, Pursuant to

approval date: 13.11.1998, from High Court of Chennai

- The Word “Private” Deleted from 26^th March 1999

-Reconverted to Private Limited During 2001-2002.

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.43.47
UK Pound	1	Rs.85.36
Euro	1	Rs.57.89

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	6
--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	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		54

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