MIRA INFORM REPORT

Report Date :

23.05.2007

IDENTIFICATION DETAILS

Name :	ELECTROSTEEL CASTINGS LIMITED
Registered Office :	Rathod Colony, Rajgangpur – 770 017, Dist. Sundergarh, Orissa
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	26.11.1955
Com. Reg. No.:	15-310
CIN No.: [Company Identification No.]	L273100R1955PLC000310
TAN No.: [Tax Deduction & Collection Account No.]	CALE01429B CALE01711D
PAN No.: [Permanent Account No.]	AAACE4975B
Legal Form :	Public limited liability company. The company’s shares are listed on the Stock Exchanges
Line of Business :	Manufacturing of pig iron, steel castings, grinding media, steel ingots / billets, cast-iron spun pipes, cast-iron specials, cast-iron castings and ductile iron spun pipes.

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	USD 30000000
Status :	Satisfactory
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established and reputed company having fine track. Available information indicates high financial responsibility of the company. Financial position of the company is good. Payments are usually correct and as per commitments. The company can be considered good for any normal business dealings. It can be regarded as a promising business partner in a long-run.

LOCATIONS

Registered Office :	Rathod Colony, Rajgangpur – 770 017, Dist. Sundergarh, Orissa, India
Tel. No.:	91-6624-2207008 / 9 / 2287047
Fax No.:	91-6624-22481803
E-Mail :	rladdha@kdhecl.co.in sy.rajagopalan@kdh.ecl.co.in mrbhat@electrosteel.com
Website :	http://www.electrosteel.com
Administrative Office / Head Office :	40 Stephen House 4 B. B. D. Bag (East), Kolkata-700001, India
Factory 1 :	30, B. T. Road, Sukchar, Khardah, 24-Parganas (North) – 743 179, West Bengal
Tel. No.:	91-33-25531892/2987/2991
Fax No.:	91-33-25531893/0588
E-Mail :	materials@kdh.ecl.co.in
Factory 2 :	Gummodipoondi Taluk, P. O. Elavur, MGR, Dist. Chengal – 601 211, Tamilnadu
Factory 3 :	Haldia, Kasberia, P.O. Khanjan Chawk, Haldia, Midnapore (East), West Bengal
Overseas office :	Electrosteel Europe S.A., Sucursal En Espana Edificio Forum La Rotonda, Ctra. Sant Cugat a Rubi, kmtr. 1n40, Piso 2 Departmento 6, Sant Cugat delValles 08190, Barcelona, Spain
Tel. No.:	34 93 583 05 22
Fax No.:	34 93 589 70 93
E-Mail :	electrosteel@eclspain.com

DIRECTORS

Name :	Mr. P. K. Khaitan
Designation :	Chairman
Name :	Mr. Umang Kejriwal
Designation :	Managing Director
Name :	Mr. M. Kejriwal
Designation :	Joint Managing Director
Name :	Mr. B. Khaitan
Designation :	Director
Name :	Mr. Naresh Chnadra
Designation :	Director
Name :	Mr. Jamshed J. Irani
Designation :	Director
Name :	Mr. N. C. Bahl
Designation :	Wholetime Directors
Name :	Mr. S. Y. Rajagopalan
Designation :	Director & Secretary

KEY EXECUTIVES

Name	Mr. N. C. Bahl
Designation	Director
Age	65 years
Qualification	B.Sc. (Engg.) (Mech.)
Experience	43 years
Date of Joining	04.10.1983
Previous Employment	Executive Director – Bhartia Electric & Steel Company Limited (Ballygunge Works)
Name	Mr. M. Kejriwal
Designation	Joint Managing Director
Age	50 years
Qualification	B.Com. (Hons.)
Experience	32 years
Date of Joining	25.01.1977
Previous Employment	Executive Director – Electrocast Sales India Limited
Name	Mr. Umang Kejriwal
Designation	Managing Director
Age	52 years
Qualification	B.Com.(Hons.)
Experience	33 years
Date of Joining	16.02.1975
Previous Employment	Executive Director – Electrocast Sales India Limited

SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters & Associates	1052330	50.68 %
Financial Institutions, Banks & Mutual Funds etc.	3195324	15.39 %
NRI, FIIs, etc.	2983262	14.37 %
Private corporate bodies	773640	3.72 %
Indian public	3288192	15.84 %
Total	11292748	100.00 %

BUSINESS DETAILS

Line of Business :	Manufacturing of pig iron, steel castings, grinding media, steel ingots / billets, cast-iron spun pipes, cast-iron specials, cast-iron castings and ductile iron spun pipes.
Products :	Item Code No. (ITC Code) Product Description 7303.00 C. I. Pipes 7303.00 D. I. Pipes 7201.00 Pig Iron
Exports :
Countries :	Singapore, Malaysia, Ethiopia, Qatar, Bahrain, Bangladesh, Nepal and Sri Lanka

PRODUCTION STATUS

Particulars	Unit	Installed Capacity	Actual Production
C.I. Spun Pipes	Tonnes	165600	55104
D.I. Spun Pipes	Tonnes	250000	181161
D. I. Fittings	Tonnes	5000	2346
Pig Iron	Tonnes	235000	158947
Metallurgical Coke	Tonnes	150000	129272
Sponge Iron	Tonnes	60000	11657

GENERAL INFORMATION

No. of Employees :

1674

Bankers :

Ø Punjab National Bank, Rajgangpur, Orissa

Ø Standard Chartered Grindlays Bank Limited, Rajgangpur, Orissa

Ø BNP Paribas, Rajgangpur, Orissa

Ø ICICI Bank Limited

Ø IDBI Bank Limited

Ø HDFC Bank Limited

Facilities :

SECURED LOANS	Rs in Millions
Debentures	1600.000
External Commercial Borrowing from Banks	250.959
Working Capital facility from Banks:
Indian currency	532.915
Foreign Currency	502.642
1. Debentures are Non-Convertible and secured by pari passu charge on all immovable and movable properties present and future of the Company and consist of : a) 11.85% Privately Placed Debentures of Rs. 10.000 Millions each aggregating to Rs.500.000 Millions, and are Redeemable at par in three annual installments of Rs.3.000 Millions, Rs.4.000 Millions and Rs.3.000 Millions commencing on 17th July, 2005. b) 11.85% Privately Placed Debentures of Rs. 10.000 Millions each aggregating to Rs.500.000 Millions, and are Redeemable at par in three annual installments of Rs.3.000 Millions, Rs.4.000 Millions and Rs.3.000 Millions commencing on 25th July, 2005. c) 6.10 % Privately Placed Debentures of Rs. 1.000 Millions each aggregating to Rs. 900.000 Millions, and are Redeemable at par at the end of 5 years from Deemed Date of Allotment i.e. on 26th August, 2008.
External Commercial Borrowing aggregating to US$ 5.625 million ( Previous Year- US$ 7.5 million) is secured by way of paripassu charge on all immovable and movable properties present and future of the Company and is payable in 4 equal annual installments starting from 29th March, 2006.
Working Capital facility from Banks is secured by way of joint hypothecation of inventories and book debts.

UNSECURED LOANS
Short Term Loans
From State Bank of India	200.000
Buyers Credit
From HSBC Limited	212.693
Packing Credit
From Citibank N.A.	200.000
From HSBC Limited	356.920

Banking Relations :	Satisfactory
Auditors :
Name :	Lodha & Company Chartered Accountants
Address :	14, Government Place East, Kolkata - 700 069, West Bengal
Tel. No.:	91-33-22481507 / 7102 / 6962 / 1111
Fax No.:	91-33-22486960 / 4572
E-Mail :	ahil.ccu@sm9.sprintrpg.ems.vsnl.net.in
Subsidiaries :	Ø Electrosteel Europe SA Ø Electrosteel Algeria SPA Ø Singardo International Pte Limited Ø Chesterfield Ductile Group Limited Ø Elcast Finance Limited Ø Escal Finance Services Limited.
Associates :	Ø Lanco Industries Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
5,00,00,000	Equity Shares	Rs.10/- each	Rs. 500.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
2,07,63,748	Equity Shares [Out of the above 88,76,160 Shares have been allotted as fully paid up bonus shares by capitalisation of Share Premium and General Reserve.]	Rs.10/- each	Rs. 207.637 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		207.637	161.923	161.923
3] Reserves & Surplus		7399.129	5255.924	4599.941
NETWORTH		7606.766	5417.847	4761.864
LOAN FUNDS
1] Secured Loans		2886.516	3355.401	2863.427
2] Unsecured Loans		969.613	1061.790	648.661
TOTAL BORROWING		3856.129	4417.191	3512.088
DEFERRED TAX LIABILITIES		251.202	247.882	261.874
TOTAL		11714.097	10082.920	8535.826
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		3169.803	2169.040	1782.181
Capital work-in-progress		370.327	541.067	288.809
INVESTMENT		2322.726	1955.746	3060.703
DEFERREX TAX ASSETS
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	2176.774	2408.557	1749.930
	Sundry Debtors	4194.654	3967.227	2751.327
	Cash & Bank Balances	107.531	171.983	271.505
	Loans & Advances	1262.425	543.997	442.143
Total Current Assets		7741.384	7091.764	5214.905
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	1546.418	1414.178	1596.600
	Provisions	343.725	260.519	214.172
Total Current Liabilities		1890.143	1674.697	1810.772
Net Current Assets		5851.241	5417.067	3404.133
MISCELLANEOUS EXPENSES		--	--	--
TOTAL		11714.097	10082.920	8535.826

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2006	31.03.2005	31.03.2004
Sales Turnover		9556.900	8903.668	7172.303
Increase in Finished and Process Stocks		416.028	[41.001]
Other Income		460.019	460.666
Total Income		10432.947	9323.333	7172.303
Profit/(Loss) Before Tax		1078.772	1246.782	1085.135
Provision for Taxation		314.294	360.008	348.314
Profit/(Loss) After Tax		764.478	886.774	736.821
Earnings in Foreign Currency :
	Export Earnings	3056.791	1715.864	NA
Total Earnings		3056.791	1715.864	NA
Imports :
	Raw Materials	1688.115	2829.893	NA
	Stores & Spares	102.304	79.085	NA
	Capital Goods	106.477	34.908	NA
Total Imports		1896.896	2943.886	NA
Expenditures :
	Purchase	1400.484	882.890
	Raw Material Consumed	4082.673	3894.622	6087.168
	Manufacturing Expenses	3328.667	2837.197
	Interest	256.733	210.040
	Depreciation & Amortization	285.618	251.802
Total Expenditure		9354.175	8076.551	6087.168

SUMMARISED RESULTS

PARTICULARS	31.03.2007 [FULL YEAR]
Type
Sales Turnover	175.3
Other Income	329.3
Total Income	182.4
Total Expenditure	157.3
Operating Profit	311.9
Interest	(198.3)
Gross Profit	407.9
Depreciation	178.9
Tax	439.2
Reported PAT	388.6

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt-Equity Ratio	0.64	0.78	0.69
Long Term Debt-Equity Ratio	0.40	0.49	0.42
Current Ratio	2.07	1.76	1.49
TURNOVER RATIOS
Fixed Assets	2.38	2.85	2.49
Inventory	4.27	4.47	5.07
Debtors	2.46	2.80	2.89
Interest Cover Ratio	4.12	5.85	16.48
Operating Profit Margin(%)	15.04	15.71	19.09
Profit Before Interest And Tax Margin(%)	12.19	13.04	15.95
Cash Profit Margin(%)	9.37	10.39	13.32
Adjusted Net Profit Margin(%)	6.52	7.71	10.17
Return On Capital Employed(%)	11.48	13.56	15.21
Return On Net Worth(%)	10.05	14.28	16.43

STOCK PRICES

Face Value	Rs.10.00/-
High	Rs.382.95/-
Low	Rs.377.00/-

LOCAL AGENCY FURTHER INFORMATION

History :

Incorporated in 1955 as Dalmia Iron and Steel, Electrosteel Castings (ECL) was promoted by Orissa Cement, Dalmia Cement (Bharat) and G Kejriwal to manufacture grinding media, steel castings and cast iron (CI) spun pipes in Khardah, West Bengal. Commercial production commenced in 1958. In 1963, the management was taken over by the Kejriwal family. It acquired its present name in 1965.  

ECL manufactures cast-iron pipes, ductile iron pipes and steel ingots and billets, and grinding media at its three facilities in Khardah, West Bengal; Elavur in Tamil Nadu; and Ghaziabad. Further the company's business offering includes manufacturing, supplying, laying, operating and transferring complete DI Pipe projects. As a result of this the company also provides techno-economic solutions for water transportation and sewerage management. 

The subsidiaries of the company are Chesterfield Ductile Limited, Singardo International Pte Limited, Electrosteel Europe, ECL Algeria SPA, Elcast Finance Limited and Escal Finance Service Limited  

The company has received the ISO 14001 and ISO 9001:2000 certification during 2003 as a testimony to its sound environment management practices. 

In the CI segment the company is the dominant player and in this segment, it has an edge over its competitors as it offers a wider range in terms of size. Another significant feature which give ECL a competitive edge is its backward integration. The company has its own mini-blast furnace to produce pig iron, the main raw material for DI pipes. This results in power saving as the molten pig iron is directly transferred to its DI unit. In addition to this, it has also set up a 3 MW captive power plant. 

It is relocating the ductile iron plant from Tamil Nadu to Kolhapur in Maharashtra bringing it closer to the Bombay port. Since the process of getting all necessary clearances for the Kolhapur unit is being delayed, the company decided to increase the DI pipe production capacity of Khardah unit from the present 1,00,000 tonnes to 1,75,000 tonnes. The company has also taken up plans to modernise and expand its iron-making capacity to match higher DI production. 

The company has approved the scheme of amalgamation of Calcutta Steel Company Limited (CSCL) with the company. One equity share of the company will be allotted for every 25 equity shares of CSCL held.  

The company has set up a captive coke oven plant at Haldia and this has been commissioned on 1st February 2005 with an installed capacity of 0.15 Millions tonnes per annum. Further the company is setting up a 12 MW Power plant of Haldia which will use the waste gas from coke oven plant to generate power and this is expected to commence its generation from September 2005. 

During 2004-05 the company has entered in Engineering Procurement & Construction Contracts through its infrastructure services division.

Fixed Assets

Ø Land-freehold

Ø Land-leasehold

Ø Buildings

Ø Railway Siding

Ø Plant and Machinery

Ø Furniture and Fixtures

Ø Vehicles

Ø Livestock

It is in trade terms with:

A. K. Engineering Works

Abhaya Precision Industries Private Limited

Aryan Engineering

B. P. Traders & Engineers

B. K. Engineering Works

Ganesh Engineering Works

Industrial Refractories Private Limited

Laxmi Enterprise

Ma-Bishalakshmi Engineering Concern

S & H Manufacturing & Trading Private Limited

Subject has been accredited with ISO 9002 Certification.

Operation: 

During the year the Mini Blast Furnace at Khardah providing liquid metal for Ductile Pipe Plant had undergone a shut-down for a period of 49 days for re-lining. Taking advantage of the routine shut-down the capacity of the furnace was increased from 2,00,000 tonnes to 2,35,000 tonnes. The furnace was re-commissioned on 5.12.2005 and is producing liquid metal at full capacity since then. The production during January-March 2006 quarter improved to 54683 tonnes compared to the total production during the year of 158947 tonnes as against 178442 tonnes in the preceding year. 

Production of DI Pipes was maintained at 181161 tonnes as against 178174 tonnes in the preceding year. The expansion of DI Pipe Plant at Khardah increasing its capacity from 2,00,000 tonnes to 2,50,000 tonnes has been implemented. The production during the quarter January-March, 2006 was 55,460 tonnes as against the total production of 181161 tonnes during the year and 178174 tonnes in the preceding year. 

The production of CI Pipes at Elavur was 55104 tonnes as against 31144 tonnes in the preceding year. 

With the increase in production capacity of both DI Pipe Plant and Mini Blast Furnace, the Company expects to achieve an increased production of 2,25,000 tonnes of DI Pipes during the current year. 

The Company's export has increased to 76780 tonnes as compared to 57089 tonnes in the preceding year and the Company expects to achieve a further increase during the current year.  

The outlook for DI Pipe market is good even though the price realisation has gone down in line with the reduced cost of inputs, particularly hard coke. 

Commercial production from the newly set up Power Plant at Haldia making use of Waste Gas of Coke Oven and Sponge Iron Plants commenced on 20th March, 2006. Pending finalisation of arrangement for wheeling the power to Khardah Plant, the power produced is being sold to WBSEB. 

Pulvarised Coal Injection System in Blast Furnace and Stamp Charging System in Coke Oven Plant are under trial run and will be commissioned for commercial operation by May 2006.  

The Company has received allocation of Parbatpur Coal Block in Jharia Coal Field for mining of coal for captive consumption. It is estimated that capital expenditure involved for operation of the mines will be Rs.2900 Millions exclusive of interest if any payable on money borrowed for executing the project. In addition, the Company has decided to set up a Sintering Plant with a capacity of 850 tonnes per day at Khardah with a view to reduce the cost of liquid metal. The capital cost of the project is estimated at Rs.630 Millions. The Company proposes to finance both the projects by way of issue of Foreign Currency Convertible Bonds to the extent of USD 75 Million.  

 The Company has successfully raised in October, 2005 USD 40 Million through issue of Global Depository Receipts at a price of USD 8.75 per GDR convertible into one equity share per GDR.  

AS PER WEBSITE

Electrosteel castings to raise GDRs

Electrosteel Castings Limited, manufacturer of ductile iron pipes, would raise GDRs to meet capital expenditure plans and part repayment of its existing loans. A company official said that the board would meet on June three to approve the GDR issue, adding that the company plans to raise $ 50 million from this route. The GDRs would be listed on the Luxembourg Stock Exchange. The company plans to expand the Khardah facility in West Bengal for which Rs 1000 Millions was required including working capital. The entire process was likely to be completed by middle of August.

ECL delays commissioning of coke oven plant by 6-months

The originally-scheduled in August 2004 for commissioning of the Rs 1000 Millions new coke oven plant of Electrosteel Castings Limited (ECL) at Haldia with an installed capacity of 0.15 Millions tonnes per annum (tpa), has now been pushed back by six months to January 2005. The project has been delayed owing to a combination of factors such as heavy rains resulting in flooding at plant site, shortage of skilled labour and slowdown in delivery of key raw materials. The coke to be produced from the Haldia plant was expected to replace the requirement of imported coke at ECL’s mother plant at Khardah in West Bengal. The imported coke requirements of the company are now put at 13,500 tonnes per month, and the international prices (averaging $450 per tonne now) have registered a phenomenal increase in the last one and half years, it is pointed out. Mainly the monsoons and the low availability of raw materials such as refractory bricks, mainly procured from Dhanbad and Rajgangpur (Orissa), have contributed to the commissioning delay. Asked on the position of coal imports, sources said, the company was now in the process of rescheduling the quantities and deliveries of imported coal, being imported from Russia, Australia, China and a few other countries. The prices of iron ore and coke, the principal raw materials for manufacture of ductile iron (DI) pipes, increased by 32 per cent and 54 per cent respectively during 2003-04, and the overall price fluctuations for these materials in the global markets have created problems for the company. In order to mitigate this threat of disruption in raw material supplies, ECL was setting up the coke over plant, along with a one-lakh tonne sponge iron facility at Haldia. Imported coal will be converted to coke for feeding the mini blast furnace at Khardah.

1955	:	Electrosteel Castings Limited was incorporated.
1959	:	The company’s first cast iron pipe factory was commissioned at Khardah, near Kolkata.
1982	:	Electrosteel acquired another cast iron pipe manufacturing unit at Elavur, near Chennai, to further augment its pipe production.
1994	:	Electrosteel set up a 60,000 tpa Dl spun pipe plant at Khardah, the first ever in India.
1995	:	Electrosteel was accredited with ISO-9002 certification from Indian Register Quality System, an accredited body of Raad Voor de Certificate of Netherlands, for its Dl pipes.
1996	:	The company obtained Kitemark licence from British Standard Institute (BSI) for its Dl pipes as per ISO 2531, BS EN 545, BS EN 598. It commissioned its own mini-blast furnace with matching capacity for better quality control.
1999	:	Electrosteel received the ISO-9002 accreditation from BSI for Dl pipes and fittings.
2000	:	The company increased its capacity to 120,000 tpa for Dl pipes.
2000	:	Electrosteel obtained Kitemark license from BSI, UK for Dl fittings made at its facilities in Elavur, Chennai as per ISO 2531, BS EN 545, BS EN 598.
2001	:	The company scaled its Dl pipe capacity from 120,000 tpa to 150,000 tpa.
2003	:	Electrosteel received the ISO-14001 and ISO9001-2000 certification as a testimony to its sound environment management practices.
2003	:	Electrosteel received BSI Kitemark license for Dl Fittings at Khardah works, West Bengal.
2003	:	Electrosteel increased its Dl pipe manufacturing capacity from 150,000 tpa to 200,000 tpa

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.40.57
UK Pound	1	Rs.80.64
Euro	1	Rs.54.57

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	8
PAID-UP CAPITAL	1~10	8
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	8
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	8
--CREDIT LINES	1~10	8
--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	NO
TOTAL		72

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