MIRA INFORM REPORT

Report Date :

16.11.2007

IDENTIFICATION DETAILS

Name :	TITAN ENERGY SYSTEMS LIMITED
Registered Office :	16, Aruna Enclave, Trimulgherry, Secunderabad - 500 015, Andhra Pradesh
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	13.01.1995
Com. Reg. No.:	01-19206
CIN No.: [Company Identification No.]	U31200AP1995PLC019206
IEC No.:	0995000875
TAN No.: [Tax Deduction & Collection Account No.]	HYDT00913D
PAN No.: [Permanent Account No.]	AAACT8885B
Legal Form :	Closely held public limited liability company
Line of Business :	Manufacturers and Exporter of Titan Solar Photovoltaic Modules

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 452024
Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is well-established company having satisfactory track. Directors are reported as experienced, respectable and resourceful businessmen. Their trade relations are fair. Payments are usually correct and as per commitments. The company can be considered good for normal business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	16, Aruna Enclave, Trimulgherry, Secunderabad - 500 015, Andhra Pradesh, India.
Tel. No.:	91-40-27791085 / 0751
Mobile No.:	91-9391006086
Fax No.:	91-40-27995629
E-Mail :	titan@titansolar.com sankar@hd1.vsnl.net.in finance@titansolar.com info@titan-energy.com sankar@titansolar.com
Website :	http://www.titansolar.com
Area :	400 sq. yds
Location :	Owned
Factory 1 :	P. O. Box No. 6, Ravalkole Village, Medchal – 501 401, Andhra Pradesh
Tel. No.:	Tel. 91-8418-22855
Area :	30000 sq.ft. in 6 acres of land

DIRECTORS

Name :	Mr. C.S.Y.S. Rao
Designation :	Managing Director
Address :	16, Aruna Enclave, Trimulgherry, Secunderabad - 500 015, Andhra Pradesh, India.
Date of Birth/Age :	57 years
Qualification :	B.E.
Experience :	35 Years
Name :	Mr. M. S. Sastry
Designation :	Director
Address :	42, Anand Ngar Colony, New Bavenpally, Secunderabad - 500 015, Andhra Pradesh, India.
Date of Birth/Age :	59 years
Qualification :	M.Com
Experience :	30 years
Name :	Mr. P. Sudheer Kumar
Designation :	Director
Address :	18, New Sainikpuri Colony, E.L.I.L. Secunderabad - 500 015, Andhra Pradesh, India.
Date of Birth/Age :	57 years
Qualification :	B.E.
Experience :	30 years
Name :	Mr. Ravi Chodagam
Designation :	Director
Name :	Mr. M. Veera Raghavulau
Designation :	Director
Name :	Mr. S. Srinivasa Rao
Designation :	Director
Name :	Mr. M. M. Pullam Raju
Designation :	Director
Name :	Mr. Rama mohan Rao
Designation :	Director
Address :	Flat No. C -1. Shilpa Residency Plot no.90, phase -1, Kavur hills, Jubilee hills check post, Hyderabad – 500 033, Andhra Pradesh
Date of Birth/Age :	15.06.1946
Date of Appointment :	01.01.2007
Name :	Mr. Chodagam Santhi
Designation :	Director
Address :	Plot No. 16, Arun enclave, Trimulgherry, Secunderabad – 500 015, Andhra Pradesh
Date of Birth/Age :	29.12.1948
Date of Appointment :	02.02.1995
Name :	Mrs. Aruna Chodagam
Designation :	Director
Address :	Plot No. 16, Arun enclave, Trimulgherry, Secunderabad – 500 015, Andhra Pradesh
Qualification :	BA
Experience :	10 years
Date of Birth/Age :	13.12.1954
Date of Appointment :	02.02.1995

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares
As on 31.03.2005
Titan Consultants Services	440000
Titan Technocrafts Limited	330000
Mr. C. Sasidhar	210400
Mr. C. S. Y. S. Rao	171800
Mr. C. Ravi Kiran	38400
Mrs. C. Aruna	10400
Total	1201000

Equity Shares Breakup (Percentage of Total Equity):

Sr No.	Category	Percentage
1	Foreign Holdings (Foreign Institutional Investor(s), Foreign Companie(S), Foreign Financial Institution(s), Non Resident Indian(s) Or Overseas Corporate Bodies Or Others	10.00
2	Directors or relative of directors	90.00

BUSINESS DETAILS

Line of Business :	Manufacturers and Exporter of Titan Solar Photovoltaic Modules
Products :	Ø Crystalline Modules Ø Amorphous Silicon (ASI) Framed Modules
Exports to :	Germany
Imports from :	Germany, Austria
Terms :
Selling :	L/C, Cash and Credit
Purchasing :	L/C, Cash and Credit

PRODUCTION STATUS

Particulars	Unit	Installed Capacity	Actual Production
Crystalline Modules	M.W.	12	4
S P Amorphous	K.W.	10	9.28

GENERAL INFORMATION

Customers :	Retailers
No. of Employees :	239 (In office-14 and in Factory 225)
Bankers :	· State Bank of Hyderabad Address: Overseas Branch, Somajiguda Branch, Hyderabad, Andhra Pradesh Facility: Rs. 44.400 millions · Union Bank Of India Address: Somaji Guda Branch, 6-3-347/9/4, Dwarkapuri Colony, Hyderabad – 500 082, Andhra Pradesh Email ID: bm-khairatabad@hydro.unionbank.com · CITI Bank N.A Address: Hyderabad
Banking Relations :	Satisfactory
Auditors :	P. R. V. Associates Chartered Accountants
Tel. No.:	91-40-23227651/23227114
Address :	3-6-203, Ground Floor, Himayatnagar, Hyderabad – 500029, Andhra Pradesh
Fax No.:	91-40-23223289
Sister Concern :	Ø Titan Consultants and Services Limited 16, Aruna Enclave, Trimulgherry, Secunderabad - 500 015, Andhra Pradesh, India Ø Titan Technocrats Private Limited 16, Aruna Enclave, Trimulgherry, Secunderabad - 500 015, Andhra Pradesh, India
Associates/Subsidiaries :	Nil

CAPITAL STRUCTURE

Authorised Capital :

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

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
2669778	Equity shares	Rs. 10/- each	Rs.26.697 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		26.697	12.014
2] Share Application Money		0.000	11.036
3] Reserves & Surplus		86.309	32.217
4] (Accumulated Losses)		0.000	0.000
NETWORTH		113.006	55.267
LOAN FUNDS
1] Secured Loans		54.280	20.155
2] Unsecured Loans		0.000	0.000
TOTAL BORROWING		54.280	20.155
DEFERRED TAX LIABILITIES		0.000	0.000
SHARE PREMIUM		8.366	0.000
TOTAL		175.652	75.422
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		37.949	27.581
Capital work-in-progress		0.000	0.000
INVESTMENT		0.000	0.000
DEFERREX TAX ASSETS		0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	74.425	18.222
	Sundry Debtors	47.444	32.805
	Cash & Bank Balances	21.803	5.078
	Other Current Assets	12.825	4.163
	Loans & Advances	0.073	0.273
Total Current Assets		156.570	60.541
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	16.524	10.503
	Provisions	2.343	2.197
Total Current Liabilities		18.867	12.700
Net Current Assets		137.703	47.841
MISCELLANEOUS EXPENSES		0.000	0.000
TOTAL		175.652	75.422

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2006	31.03.2005
Sales Turnover		21.308	36.905
Other Income		1.628	2.997
Total Income		22.936	39.902
Profit/(Loss) Before Tax		66.543	40.871
Provision for Taxation		1.000	0.100
Profit/(Loss) After Tax		65.543	40.771
Export Value		594.404	344.412
Expenditures :
	Raw Material Consumed	478.993	299.377
	Salaries, Wages, Bonus, etc.	1.894	1.000
	Managerial Remuneration	1.636	1.396
	Payment to Auditors	0.056	0.035
	Insurance Expenses	2.255	0.720
	Power & Fuel	1.047	0.570
	Depreciation & Amortization	5.036	2.280
	Other Expenditure	59.877	38.063
Total Expenditure		550.794	343.441

KEY RATIOS

PARTICULARS		31.03.2006	31.03.2005
PAT / Total Income	(%)	285.76	102.17
Net Profit Margin (PBT/Sales)	(%)	312.29	110.74
Return on Total Assets (PBT/Total Assets}	(%)	34.20	46.38
Return on Investment (ROI) (PBT/Networth)		0.58	0.73
Debt Equity Ratio (Total Liability/Networth)		0.64	0.59
Current Ratio (Current Asset/Current Liability)		8.29	4.76

LOCAL AGENCY FURTHER INFORMATION

The concern is in trade term with:

v Kernex Micro Systems (India) Limited

Hyderabad,

Tel : 91-40-23113192/94

Mr. Anjencyalu

v ITC

Secunderabad - 500 015, Andhra Pradesh, India.

Tel : 91-40-27801024-274(Ext.)

Mr. Vamidrishna

v Enoar Systems Marketing Private Limited

Tel : 91-80-232888555

Mr. Pradeep

Form 8:-

Corporation identity number or foreign company registrations number of the company

U31200AP1995PLC091206

Name of the company

TITAN ENERGY SYSTEMS LIMITED

Address

16, Aruna Enclave, Trimulgherry, Secunderabad - 500 015, Andhra Pradesh, India.

This Form is for

Creation of charge

Type of Charges

· Immovable property

· Book debts

· Movable property

Particular of the charge holder

Union Bank Of India

Address: Somaji Guda Branch, 6-3-347/9/4, Dwarkapuri Colony, Hyderabad – 500 082, Andhra Pradesh

Email ID: bm-khairatabad@hydro.unionbank.com

Nature or description of the instrument creating charge

· Composite Hypothecation Deed

· Letter of guarantee

· Hypothecation by way of first charge in favour of the bank

Date of the instrument creating charge

22.02.2007

Amount Secure by the charge

Rate of interest

Particulars	Rs,. in millions	Interest
Packing Credit	40.000	8.25%
W/W CC (H)	10.000	BPLR +2.50 i.e 15%
FDBP against LC	60.000	8.25%
Imp LC (DP)	50.000	Usual
W/W LG	15.000	Usual

Terms of repayment:

22nd February 2007: -on demand Titan Energy systems limited promises to pay to Union Bank of India or order sum of Rs. 10.000 millions only together with interest on such sum at the rate of 15% with monthly rests, for value received

8^th March 2007: - on Demand promise to pay or order sum of Rs. 60.000 millions only together with interest on such items sums at the rate of 8.25% with monthly rests for value received.

Margin:

Packing Credit	25%
W/W CC (H)	25
FDBP against LC	Nil
Imp LC (DP)	10% Cash
W/W LG	10% Cash

Extent and operation o charge :

Exclusive charge

Shorts particulars of the Property charged

Hypothecation of plant and machinery, raw material, finished goods stored at factory premises, titan Energy Systems Limited in S.No. 753/F Ravalakole Village, Medhchal Mandal and at regd Office 16, Arun enclave, Trimulghrery , Secunderabad and BD . Houser property art Plot No. 16 Arun Enclave, Trimulgherry, Secunderabad – Agl land of 1 acre and 20 guntas located at 753 /B and 753 /F at ravalkole village

Factory Land and buildings admeasuring 1 acre 39 guntas located at S. No. 753/C Ravalkole Village

Name of the company	M/s TITAN ENERGY SYSTEMS LIMITED
Presented By	Mr. C.S.Y.S Rao
1) Date and description of instrument creating the change	Goods security agreement dated 05.08.2005Term loan agreement dated 05.08.2005 Memorandum of Entry dated 05.08.2005 (all facility are secured by common security) Executed by M/s Titan Energy System Limited (Hereinafter referred to as “the company”) in favour of Citibank NA hereinafter referred to as “the Lender”)
2) Amount secured by the charge/amount owing on the securities of charge	Total working capital credit Facilities Rs. 85.000 millions Total Term loan facilities of Rs. 20.000 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	The whole of movable assets, including plant and machinery, both present and future, stocks of raw materials, goods in process of manufacture , semi finished goods and articles together with all stores, component and spares which now belongs to and pertains to , or may hereafter from time to time during the continuance of this security belong to and pertains to. The borrower and which are shall or may be brought into stored or be in or upon or about the borrower factory godowns and / to their premises wherever else the same may be situated , stored, or lying or being including any such raw materials, inventories, article or goods, any stored spares land components or other similar movable assets in course of transit or delivery to the borrower and all of the borrower present and future book debts, outstanding monies, receivables, claims, bills, investments, rights to or on movable properties and movable assets forming part of current and movable fixed assets which are now due owing or payable or belonging to or pertaining to the borrower or which may at any time hereafter during the continuance of this security become due , owing payable or belonging to or pertaining to the borrower in the course of its business and together with all benefits, advantage and legal incidence thereof Immovable properties being land and building / Land and all immovable plant and machinery embedded to earth owned by the borrower located at Survey no. 753/F, Ravalkole Village, Medhchal, Andhra Pradesh Survey No. 753/G , Ravalkole Village, Medchal, Andhra Pradesh
4) Gist of the terms and conditions and extent and operation of the charge.	In consideration of the lender having agreed to lend advance to the company , said working capital and term loan credit facilities agreement and declaration by the company, interalia, as follows: Covenant by the company to repay the working capital facility at above and pay interest and all other monies in the manner set out in the said goods security agreement between the company and the lender and to comply with the terms and conditions of the said agreement i.e, to be repayable on demand at an interest rate of 9% per annum Covenant by the company to repay the said term loan facility at above and pay interest and all other monies in the manner set out in the said Term Loan agreement between the company and the lender and to comply with the term and conditions of the said agreement i.e to be repayable within 3 years in quarterly installments from the date of drawdown at an interest rate of 9% per annum The said current assets and fixed assets hypothecated to the lender by way of first exclusive charge created in favour the bank, as security for and be charged with the repayment of the working capital and term loan facilities with all interest, liquidated, damages, premia on prepayment or on redemption, cost, charges, and other expenses payable by the company to the lender in respect thereof. The company to keep the said assets in marketable and good condition and also incurred as provided therein Power of entry, power to take charge and / or possession of seize, recover, receive appoint and sell, contract, dispatch for realization or otherwise dispose of deal with all or any part of the said goods; etc, as provided therein.
5) Name and Address and description of the person entitled to the charge.	CITI Bank N.A Address: Hyderabad

WEBSITE DETAILS:

SUBJECT has the expertise in making Crystalline and Amorphous Solar Photovoltaic Modules of power rating 2 – 300 Wp. These modules are reputed for its use in Off-grids and On-grid applications all over the world and have the certification as per IEC 61215:2005 standards. 

The company an ISO certified company, is the leading Indian manufacturer and exporter of Solar Photovoltaic (SPV) Modules. It is the only company of its kind in India to have established International credibility in the manufacture of Modules using Crystalline,Thin film and CIGS based Technologies. SUBJECT has over 11 years of experience of manufacturing the Solar Photovoltaic Modules of all types.

SUBJECT exports Solar Photovoltaic Modules and Systems to various countries like USA, Canada, Germany, Italy, Spain, United Kingdom, South Africa, Australia and South East Asian Countries from the last 8 years.          

Titan Energy Systems is one of India’s largest and oldest manufacturers and exporter of Solar Photovoltaic (SPV) Modules and specialty solar products. With a track record of over 16 years, Subject has demonstrated strengths in manufacturing products of high quality that comply with various international reliability and quality standards.

Subject primarily sells its products in Europe and USA. Its products are also sold in Africa, South East Asia, Australia and India.

Subject is the only module manufacturer with proven expertise in making modules using various solar cell technologies - Crystalline, Amorphous-Silicon and CIGS.

Subject's state of the art manufacturing center is located in Hyderabad, India, a leading solar hub in India. Subject has an installed moduling capacity of 50MW and is currently expanding to 200MW by end of 2008.

The business was originally established in 1990 under the name “Titan Consultants and Services Limited” to undertake solar power system integration and telecommunication consultancy services. In 1995, the promoters started yet another company that was incorporated under the name “Titan Energy Systems Limited” and ventured into manufacturing of Solar Modules with a 3 MWp module manufacturing plant. Subject was one of the early entrants in the Indian solar photovoltaic module manufacturing space. During this period, the Company served the domestic solar energy market mainly providing products to Government supported subsidy schemes. The Company made its inroads in the international market in 1998.

“Over the years, the Company has built strong customer relationships and a brand-image that has helped it enjoy robust growth rates. Currently Subject has an installed module capacity of 50MWp with plans underway to achieve a scale of 500MWp by 2010."

Product profile

The company designs, manufactures and sells solar photovoltaic modules using crystalline cells and thin film plates. The company manufactures standard and customized crystalline, amorphous and CIGS modules in both standard and customized configurations. As of 2007, nearly 80% of Subject’s total sales came from crystalline modules. The Company expects crystalline modules to continue to be its largest selling product family in coming years and has plans to invest significantly in this product line to meet the demand. In the Indian market, Subject also does some business as a systems integrator for some major projects from private and government firms.

Subject’s products are certified to meet IEC 61215 and Safety Class II standards by European certification agencies. Subject is the only Indian company to have received certification for power modules with a rating upto 240Wp; a product which meets the demanding requirement of the European Solar market. Company is also in the process of obtaining approvals from the Underwriter’s Laboratories of USA, which will help the company to launch its products in the United States

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.39.35
UK Pound	1	Rs.80.52
Euro	1	Rs.57.56

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	5
--CREDIT LINES	1~10	5
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		45

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