MIRA INFORM REPORT

Report Date :

12.05.2007

IDENTIFICATION DETAILS

Name :	ANDHRA PRADESH HEAVY MACHINERY & ENGINEERING LIMITED
Registered Office :	V.H.R. Shopping cum office complex, 2^nd Floor, Governorpet, Vijaywada – 520002, Andhra Pradesh
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	01.09.1976
Com. Reg. No.:	01-2071
CIN No.: [Company Identification No.]	U29219AP1976SGC002071
TAN No.: [Tax Deduction & Collection Account No.]	HYDA02533G
PAN No.: [Permanent Account No.]	AABCA8915A
Legal Form :	A closely held Government of India Company. The company is a subsidiary of Singareni Colleries Company Limited
Line of Business :	Manufacturers of entire range of castings of all types for any and all Industrial machinery Machine Tools, Printing Machinery and other Industrial products all associated ancillary complementary equipment as well as component plates and spare there of.

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small

Maximum Credit Limit :	USD 330000
Status :	Moderate
Payment Behaviour :	Slow but correct
Litigation :	Clear
Comments :	Subject has improved its performance in last year and shown good profit. However, it has yet to wipe out its previous losses. The company’s payments are reported as slow but correct. The company can be considered for small to mediocre business dealings at usual trade terms and conditions with some caution.

LOCATIONS

Registered Office :	V.H.R. Shopping cum office complex, 2^nd Floor, Governorpet, Vijaywada – 520002, Andhra Pradesh
Tel. No.:	91-866-574770
Fax No.:	91-866-882273
Administrative Office / Factory	Kondapally – 521228, Andhra Pradesh, India
Tel. No.:	91-866-2872241 / 2872242 / 2872243 / 2872285 / 2871360
Fax No.:	91-866-2871350
E-mail :	managing.director@aphmel.com vjwaphmel@sancharnet.in
Factory :	Production Unit 20-2, Industrial Estate, Vijaywada – 520007, Andhra Pradesh, India Vizag Unit A 7-A 10, Autonagar, Visakhapatnam – 530012, Andhra Pradesh, India

DIRECTORS

Name :	Mr. B N Pan
Designation :	Director
Name :	Mr. K S Prasad
Designation :	Chairman
Name :	Mr. M Balarama Krishnaiah
Designation :	Director
Name :	Mr. M Jayarami Reddy
Designation :	Managing Director
Name :	Mr. N P Bhati
Designation :	Director
Name :	Mr. N V Subramaniuam
Designation :	Nominee (SBI)
Name :	Mr. P Krishna Murthy
Designation :	Nominee (IDBI)
Name :	Mr. R V Reddy
Designation :	Nominee (BIFR)
Name :	Mr. S Papa Rao
Designation :	Director
Name :	Mr. Y Nagarjun
Designation :	Director
Name :	Mr. E. Raja Rao
Designation :	Chairman
Name :	Mr. B. Nagabhushana Rao
Designation :	Managing Director
Name :	Mr. B V Rajeswara Rao
Designation :	Director – Nominee [SBI]
Name :	Mr. Y. Suryanarayana
Designation :	Director – Nominee [APIDC]
Name :	Mr. Partha S Bhattacharyya
Designation :	Director
Name :	Mr. C L Srivastav
Designation :	Director
Name :	Mr. G. V. Rami Reddy
Designation :	Director
Name :	Mr. V. V. Koteswara Rao
Designation :	Director
Name :	Mr. N. V. N. M. Murali Rao
Designation :	Director
Name :	Mr. Juvva Seshagiri Rao
Designation :	Director

KEY EXECUTIVES

Name :	Mr. L Narasimha Rao
Designation :	Company sectary
Name :	Mr. V. Venkateswara Rao
Designation :	Company Secretary

BUSINESS DETAILS

Line of Business :

Manufacturers of entire range of castings of all types for any and all Industrial machinery Machine Tools, Printing Machinery and other Industrial products all associated ancillary complementary equipment as well as component plates and spare there of.

Products :

Material Handling Equipments Maintenance spares, overhauling services Mining Equipments Apron Feeder Breakers Armoured Flexible Conveyor & Beam Stage Loaders Conveyors * Belt Conveyors * Chain Conveyors Haulers Lump Breakers Man Riding Systems * Chair Lift Systems * Mine Car Systems Road Headers * AM-50 with Continuous Miner * AH-66 with Continuous Miner Roof Bolts Side Discharge Loaders Reciprocating Feeders W-Straps

GENERAL INFORMATION

No. of Employees :	554
Bankers :	State Bank of India, Hyderabad, Andhra Pradesh, India

Banking Relations :	--
Auditors :
Name :	Narayanan Associates Chartered Accountants
Address :	G-2, Kohinoor Apartments,Kalyan Nagar, Vijayawada –520010, Andhra Pradesh, India

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
8000000	Equity Shares	Rs. 10/- each	Rs. 80.000 millions
200000	11% Redeemable Cumulative Preference Shares	Rs. 100/- each	Rs. 20.000 millions
	TOTAL		Rs. 100.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
17270000	Equity Shares	Rs. 10/- each	Rs. 172.700 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		172.700	172.700	172.700
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		0.000	0.000	0.000
4] (Accumulated Losses)		[88.900]	[247.100]	(282.900)
NETWORTH		83.800	[74.400]	(110.200)
LOAN FUNDS
1] Secured Loans		29.000	59.600	54.900
2] Unsecured Loans		76.100	72.500	66.200
TOTAL BORROWING		105.100	132.100	121.100
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		188.900	57.700	10.900
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		26.200	26.400	29.900
Capital work-in-progress		0.000	0.000	0.000
INVESTMENT		0.000	0.000	0.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	166.000	198.300	79.900
	Sundry Debtors	123.500	92.500	55.400
	Cash & Bank Balances	6.300	4.700	4.400
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	29.900	18.500	93.900
Total Current Assets		325.700	314.000	233.600
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	124.300	245.400	230.200
	Provisions	38.700	37.300	26.700
Total Current Liabilities		163.000	282.700	256.900
Net Current Assets		162.700	31.300	[23.300]
MISCELLANEOUS EXPENSES		0.000	0.000	4.300
TOTAL		188.900	57.700	10.900

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2006	31.03.2005	31.03.2004
Sales Turnover		734.200	652.600	403.900
Stock Adjustments		18.800	14.200	[4.600]
Other Income		30.400	57.900	3.700
Total Income		783.400	724.700
Profit/(Loss) Before Tax		160.100	40.100	13.400
Provision for Taxation		1.900	4.300	0.000
Profit/(Loss) After Tax		158.200	35.800	13.400
Earnings in Foreign Currency :
	Export Earnings	9.547	N.A.	N.A.
	Commission Earnings	0.000	N.A.	N.A.
	Other Earnings	0.000	N.A.	N.A.
Total Earnings		9.547	N.A.	N.A.
Expenditures :
	Manufacturing Expenses	67.700	80.700	10.300
	Administrative Expenses	14.000	19.700	1.200
	Raw Material Consumed	347.700	373.600	272.300
	Excise Duty	88.900	77.300	0.000
	Salaries, Wages, Bonus, etc.	78.900	72.800	62.700
	Interest	9.200	15.200	16.500
	Power & Fuel	6.300	6.300	6.000
	Depreciation & Amortization	1.500	1.500	1.500
	Other Expenditure	9.100	37.500	19.100
Total Expenditure		623.300	684.600	389.600

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt Equity Ratio	25.23	0.00	0.00
Long Term Debt Equity Ratio	3.24	0.00	0.00
Current Ratio	0.98	0.83	0.82
TURNOVER RATIOS
Fixed Assets	5.00	4.43	2.73
Inventory	4.03	4.69	5.41
Debtors	6.80	8.82	8.34
Interest Cover Ratio	18.40	3.92	1.81
Operating Profit Margin (%)	23.26	9.36	7.77
Profit Before Interest and Tax Margin (%)	23.06	9.13	7.40
Cash Profit Margin (%)	21.75	6.30	3.69
Adjusted Net Profit Margin (%)	21.55	6.07	3.32
Return on Capital Employed (%)	58.12	38.28	[271.82]
Return on Net Worth (%)	91.60	126.72	[11.31]

LOCAL AGENCY FURTHER INFORMATION

The Company recorded a Net Profit of Rs.158.196 Millions during the current financial year i.e. 2005-06 as against Rs. 35.799 Millions during the previous year. With the patronization extended by SCCL through order as well as working capital support to execute the orders, the performance of the Company has been encouraging. 

The Company achieved its targeted production of Rs. 600 millions, and is continuing its performance in upward trend by showing improvement in the turnover for the year 2005-06 to Rs. 645.321 millions against the turnover of previous year of Rs. 575.269 millions. 

PRESENT STATUS OF BIFR CASE 

AAIFR in its order dated 5-09-2005 has set aside the winding up orders issued by the BIFR and remanded the case to the BIFR. BIFR in its order dated 20-01-2006 has directed the company to submit a fully tied up proposal to State Bank of India, which has been appointed as the Operating Agency (OA) by the BIFR. The Draft Rehabilitation Scheme (DRS) was submitted to Operating Agency on 22.03.2006. The Hon'ble BIFR has conducted the first review hearing on 18-05-2006 and after considering the submissions of the company along with the facts of the case on record, has directed the Operating Agency to submit the Modified Draft Rehabilitation Scheme. State Bank of India has submitted the same to BIFR on 31-05-2006. Date of next hearing is yet to be fixed by the BIFR. 

WEBSITE DETAILS

Subject is a diversified engineering products and services company in the southern state of Andhra Pradesh in India. Subject designs and manufactures products for mining, petroleum, agriculture, cement, fertilizer, construction, steel and power sectors. The company has one of the best manufacturing facilities in southern India.

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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 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.40.87
UK Pound	1	Rs.80.99
Euro	1	Rs.55.39

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	4
OPERATING SCALE	1~10	3
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	3
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	4
--LEVERAGE	1~10	5
--RESERVES	1~10	-
--CREDIT LINES	1~10	4
--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	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		35

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