MIRA INFORM REPORT

Report Date :

16.11.2007

IDENTIFICATION DETAILS

Name :	ORIENT ABRASIVES LIMITED
Registered Office :	1307, Chiranjiv Tower, 43, Nehru Place, New Delhi -110 019
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	12.11.1971
Com. Reg. No.:	5854
CIN No.: [Company Identification No.]	L24299DL1971PLC005854
TAN No.: [Tax Deduction & Collection Account No.]	RKTO00158 E
PAN No.: [Permanent Account No.]	AAACO0221C
Legal Form :	Subject is a public limited liability company. The company’s shares are listed on Stock Exchanges.
Line of Business :	Subject is engaged in the business as manufacturers of Fused Aluminium Oxide Grains, Calcined Products, Bonded Abrasives, Refractories, Monolithics and Waste.

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 3132012
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and reported track. Financial position is good. Trade relation are fair. Payment are correct & as per commitment. The company can be considered good for normal dealings. It can be regarded as a promising business in a medium to long run.

LOCATIONS

Registered Office :	1307, Chiranjiv Tower, 43, Nehru Place, New Delhi -110 019, INDIA
Tel. No.:	91-11-26449480 / 26462225 / 26425446 / 26425447
Fax No.:	91-286-2242719 / 26443859
E-Mail :	1. oal@ad1.vsnl.net.in 2. info@orientabrasives.com 3. abl@del3.vsnl.net.in 4. ho@oalindia.com
Website :	http://www.orientabrasives.com
Plants :	· High Alumina Raw Materials (Abrasives Grains & Power Division ) GIDC Industrial Area, Porbandar - 360 577, Gujarat Tel. No. 91-286-242913/241788/789/246064 Fax No. 91-286-242719 E Mail : oal@ad1.vsnl.net.in Contact Person : Mr. R. K. Khanna (President) Mr. R. K. Shah (Senior General Manager) Mr. P. M. Samuel (Manager - Marketing) · Bonded Abrasives Division: SP-148A, RIICO Industrial Area, Bhiwadi, District Alwar, Rajasthan · Refractories Division: SP – 148B, RIICO Industrial Area, Bhiwadi, Dist. Alwar, Rajasthan · Salem: 13/1B, Mullathopu, Mamangam Post, Salem - 632 302, Tamilnadu
Regional offices:	Ø Bangalore, Karnataka Ø Mumbai, Maharashtra Ø Kolkata, West Bengal Ø Ludhiana, Punjab Ø Bhadravati

DIRECTORS

Name :	Mr. Rajendra Kumar Rajgarhia
Designation :	Chairman
Name :	Mr. Rama Shankar Bajoria
Designation :	Director
Name :	Mr. Umesh Khaitan
Designation :	Director
Name :	Mr. Tribhuvan Nath Chaturvedi
Designation :	Director
Name :	Mr. Shri Gopal Rajgarhia
Designation :	Managing Director
Date of Birth/Age :	58 years
Qualification :	B. Tech. (Hons.), S. M. (MIT)
Experience :	34 years
Date of Appointment :	01.08.1973
Name :	Mr. Sudhir Kumar Samarendra Narayan
Designation :	Director
Name :	Mr. Prem Prakash Khanna
Designation :	Executive director

KEY EXECUTIVES

Name :	Mr. Deepak C. S.
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares	Percentage of Holding
Promoter group (individuals and trust	28427010	47.52%
Promoter Group (Companies)	2790632	4.67%
UTI / Mutual Fund	2179092	3.64%
Banks and financial institutions	9500	0.02%
Other domestic companies / Trust	3269300	5.47%
NRIs/ FIIs	217257	0.36%
Indian Public	22926809	38.33%
Total	59819600	100.00%

BUSINESS DETAILS

Line of Business :

Subject is engaged in the business as manufacturers of Fused Aluminium Oxide Grains, Calcined Products, Bonded Abrasives, Refractories, Monolithics and Waste.

Products :

Ø Fused Aluminium Oxide Grains

Ø Calcined Products

Ø Bonded Abrasives

Ø Refractories

Ø Monolithics

Ø Ceramic Paper

Ø Waste

Item Code No.	Product Description
28182002	Fused Aluminium Oxide Grains
69022023	Slide Gate Refractory
68042201	Grinding Wheels

Exports to :

Germany, The Netherlands, USA, Kenya, Iran, Pakistan, Bahrain, Saudi Arabia and Malaysia.

PRODUCTION STATUS

Particulars	Unit	Installed Capacity	Actual Production
Fused Aluminium Oxide Grains	MT	21000	21317
Calcined Products	MT	74250	52497
Bonded Abrasives	MT	3600	1060
Refractories	MT	9000	9494
Monolithics	MT	23200	25127
Ceramic Paper	Pcs	20000	27052
Waste	MT	--	6335

GENERAL INFORMATION

Customers :

Wheel manufacturers, refractory manufacturers, ceramic industries, steel & cement industries and zinc and copper smelters

No. of Employees :

600

Bankers :

Ø UCO Bank, New Delhi

Ø HDFC Bank

Ø State Bank of India

Facilities :

SECURED LOANS :	31.03.2007	31.03.2006
	(Rs. in millions)
Term loan
Rupee Term Loan	55.000	15.504
Foreign Currency Loan	117.774	0.000
Cash credit Facilities from Banks	195.807	195.195
Total	368.581	210.699

Notes:

1. The rupee term loan is secured by first pari passu charge on the movable fixed assets of the Company. The loan is further secured by first pari passu charge on the immovable properties at Abrasives Grains Division at Porbander and to be secured by mortgage of the immovable properties of Refractory Division at Bhiwadi.

2. The Foreign currency term loan is secured by first pari passu charge on the movable fixed assets of the Company. The loan is to be further secured by mortgage of the immovable properties of the Abrasives Grains Division, Porbandar and Refractory Division, Bhiwadi.

3. Cash credit facilities from banks are secured by hypothecation of stocks of raw materials, finished and semifinished goods and book debts of the Company. These facilities are further secured by second charge on all immovable properties of Abrasives Grains Division of the Company.

4. Term Loans and Cash Credit Facilities are also personally guaranteed by Managing Director of the Company.

5. Loans aggregating to Rs. 314.18 (Previous year Rs. 155.04) are repayable within one year.

UNSECURED LOAN	31.03.2007	31.03.2006
	( Rs in millions)
Fixed Deposit from public	16.606	22.307
Short Term Loans from:
Bodies Corporate	65.300	38.000
Director	5.000	0.000
Banks	145.000	15.000
Total	231.906	75.307

Notes :

1. Loans amounting to Rs. 45.000 millions are personally guaranteed by the Managing Director of the Company.

2. Deposits and Short Term Loans aggregating to Rs. 1528.09 (Previous year Rs. 233.66) are repayable within one year.

Banking Relations :

Good

Auditors :

S. R. Batliboi & Company

Chartered Accountants

Associates/Subsidiaries :

Orient Iron & Steel Company

Kolkata, West Bengal

Manufacturer of steel shots

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
400000	6% Redeemable Cumulative Preference shares	Rs. 100/- each	Rs. 40.000 millions
97500000	Equity shares	Rs. 1/- each	Rs. 97.500 millions

Issued, Subscribed :

No. of Shares	Type	Value	Amount
59839600	Equity shares	Rs. 1/- each	Rs.59.839 millions

Paid-up Capital :

No. of Shares	Type	Value	Amount
59819600	Equity shares	Rs. 1/- each	Rs.59.819 millions
Add	Shares Forfeited		Rs. 0.013 millions
		Total	Rs.59.832 millions

Notes:

The Company has redeemed the 400000 Preference Shares of Rs. 100 each aggregating Rs. 40.000 millions on June 1, 2006 pursuant to the decision of the Board of Directors taken in the meeting held on May 29, 2006. Out of above Equity Shares, 44864700 equity shares of Re. 1/- each were allotted in earlier years as fully paid bonus shares by capitalization of Capital Redemption Reserve, Securities Premium and General Reserve.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2007	31.03.2006	31.03.2005
SHAREHOLDERS FUNDS
1] Share Capital		59.833	99.833	99.33
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		723.170	517.650	410.751
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		783.003	617.483	510.584
LOAN FUNDS
1] Secured Loans		368.581	210.699	221.238
2] Unsecured Loans		231.906	75.307	73.051
TOTAL BORROWING		600.487	286.006	294.289
DEFERRED TAX LIABILITIES		33.549	32.348	12.996
TOTAL		1417.039	935.837	817.869
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		454.031	370.469	324.187
Capital work-in-progress		355.163	84.891	33.189
INVESTMENT		0.032	0.034	0.034
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	419.548	298.337	282.132
	Sundry Debtors	428.642	339.845	331.381
	Cash & Bank Balances	22.537	38.517	40.221
	Other Current Assets	2.909	2.645	3.416
	Loans & Advances	100.832	71.086	62.522
Total Current Assets		974.468	750.430	719.672
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	308.227	213.227	203.422
	Provisions	58.428	56.760	55.791
Total Current Liabilities		366.655	269.987	259.213
Net Current Assets		607.813	480.443	460.459
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		1417.039	935.837	817.869

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		1858.334	1608.359	1472.862
Other Income		14.738	18.411	0.000
Total Income		1873.072	1626.770	1472.862
Profit/(Loss) Before Tax		332.421	222.609	270.127
Provision for Taxation		77.455	65.227	64.103
Profit/(Loss) After Tax		254.966	157.382	206.024
Earnings in Foreign Currency :
	Exports at FOB Value	224.413	139.515	NA
	Freight	1.041	0.000	NA
Total Earnings		225.454	139.515	NA
Imports :
	Raw Materials	88.581	57.457
	Stores & Spares	5.801	3.262	94.691
	Capital Goods	48.530	0.393
Total Imports		142.912	61.112	94.691
Expenditures :
	Goods purchase for resale	9.983	3.382
	Raw materials consumed	801.390	585.225
	Personnel Expenses	181.428	161.328
	Operating and other Expenses	731.700	578.360
	(Increase) in Inventories	[88.285]	[1.643]	1202.735
	Deprecation	57.626	47.273
	Financial Expenses	31.373	30.236
	Exceptional Items	[184.564]	0.000
Total Expenditure		1540.651	1404.161	1202.735

QUARTERLY RESULTS

Year	30.09.2007	30.06.2007
Type	2 nd Quarter	1 st Quarter
Sales Turnover	546.200	543.400
Other Income	12.500	6.400
Total Income	558.700	549.800
Total Expenditure	474.800	477.100
Operating Profit	83.900	72.700
Interest	13.900	12.900
Gross Profit	70.000	59.800
Depreciation	16.700	15.300
Tax	0.500	11.600
Reported PAT	37.800	32.900

KEY RATIOS

Year	31.03.2007	31.03.2006	31.03.2005
Debt-Equity Ratio	0.63	0.52	0.54
Long Term Debt-Equity Ratio	0.16	0.12	0.14
Current Ratio	1.26	1.44	1.47
TURNOVER RATIOS
Fixed Assets	2.93	2.89	3.20
Inventory	6.03	6.45	7.34
Debtors	5.63	5.58	5.62
Interest Cover Ratio	5.58	8.15	11.84
Operating Profit Margin(%)	11.07	16.07	19.50
Profit Before Interest And Tax Margin(%)	8.41	13.54	17.26
Cash Profit Margin(%)	7.91	10.93	14.29
Adjusted Net Profit Margin(%)	5.25	8.40	12.06
Return On Capital Employed(%)	15.92	29.68	44.19
Return On Net Worth(%)	16.63	29.58	51.70

LOCAL AGENCY FURTHER INFORMATION

DIRECTOR REPORT :

OPERATIONS REVIEW

The Company divested its Bonded Abrasives Business w.e.f. October 1, 2006 by selling it to Grindwell Norton Limited., the details of which are already known to the members. The said business contributed only about 15 % to the total turnover of the Company with a much lower return on investment as compared to the other two businesses. With the disposal of the bonded abrasives business the Company is now able to focus on its "core businesses namely Abrasive Grains and Refractories and Monolithics. Both Abrasive Grains and Refractories and Monolithics promise significant potential for

growth.

Despite the loss of revenue from the bonded abrasives business for one half of the year, the other two divisions could increase their sales resulting in total turnover of Rs. 2128.200 millions in comparison to Rs. 1850.800 millions in the previous year registering a growth of 15%. The turnover of Abrasives Grains Division increased from Rs. 492.500 millions to Rs. 575.700 millions during the year under review and that of Refractory Division increased to Rs. 1419.400 millions from Rs. 1071.800 millions in the previous year. The division could increase its export turnover also from Rs. 139.500 millions to Rs. 224.400 millions both by consolidating the existing markets and by developing customers in new geographical markets. The Power Division provided uninterrupted supply to the Abrasives Grains Division and met most of the Division's power demand. However the cost of power generation continued to remain high due to high furnace oil costs. The Company was once again unable to absorb the steep increase in manufacturing costs by increasing the selling prices adequately. There was substantial increase in the cost of raw materials and power and fuel which could not be offset by increase in turnover.

The gross profit and net profit from operations were Rs. 147.900 millions and Rs. 116.600 millions respectively excluding the profit of Rs. 202.200 millions on sale of bonded abrasives business and a sum of Rs. 17.600 millions paid as compensation on the voluntary retirement scheme introduced during the year under review. The Company has reorganised its business at the Salem Division by entering into an agreement with a local party to act as a supporting manufacturer for the products made at Salem.

FUTURE OUTLOOK

The performance of abrasive grains is expected to improve significantly in the current year. The thermal power plant which is likely to be commissioned by September 30, 2007 will yield a substantial saving on power costs. Supply of fused products from China has become very erratic which is likely to help the Company in maintaining and increasing the prices of its products. The refractory division will continue to grow in the current year as it has done in the past. Efforts are being made to reduce costs and improve efficiency to increase the profit. The directors are hopeful that the performance of the Company will be better in the current year.

BUSINESS DIVISIONS/SEGMENTS

The Company has two major business segments on the basis of products as i) Fused Aluminium Oxide Grains including Calcined Products and ii) Refractories and Monolithics, manufactured by the following divisions respectively :

Abrasives Grains Division

The Abrasives Grains Division at Porbander is the first manufacturing unit set up by the Company. The Division manufactures calcined bauxite and fused aluminium oxide abrasive grains. Raw bauxite and calcined alumina are the basic raw materials used for the manufacture of abrasive grains. Raw bauxite is procured from mines owned by the Company and others and calcined alumina is purchased from aluminium companies. A portion of these products is captively consumed by the manufacturing divisions at Bhiwadi and are also sold in the domestic market. Some part of alumina grains is also exported but the quantum of export is not considerable when compared to the total turnover.

Refractory Division

The unit manufactures various types of continuous casting and slide gate refractories, low cement castables etc. which are exclusively consumed in the steel plants. The division had a small plant at Salem, Tamilnadu manufacturing monolithics (tundish coating material). But now the Company has reorganised its business at the Salem Division by entering into an agreement with a local party to act as a supporting manufacturer for those products. The Refractory Division exports a fair share of its output to various overseas customers. The major export customers are based in Egypt, Turkey, Indonesia, Pakistan, Kingdom of Saudi Arabia, Sultanate of Oman, Greece, Spain, Nigeria, Azerbaijan, Malaysia, Bulgaria, Thailand, Iran and Austria.

Financials of Segments

Financials of business segments are given in detail in Schedule 23 (notes to the financial statements) of the Annual Report.

FINANCIALS AND INTERNAL CONTROL

The gross turnover of the Company during the year ended March 31, 2007 increased to Rs. 2128.200 millions, representing a growth of about 15 %. Gross profit and net profit were Rs. 332.400 millions and Rs. 255.000 millions respectively. The Company could also not adequately support the steep increase in the price of major raw materials like furnace oil and calcined alumina during the year, by cost control measures in other areas or by increased sale price.

The Company has an adequate internal control system which is commensurate with its size and which adopts the best practices prevalent in the industry. Besides conducting internal audit at regular intervals and implementing the measures suggested from time to time there is a statutory audit committee comprising of independent directors in place to oversee the internal control processes in the Company. The Company has also received ISO 9001 : 2000 certification for the plants at Bhiwadi.

CONCERNS AND FUTURE OUTLOOK

The cost of furnace oil being the basic fuel for the power plant is still very high which remains a matter of concern for the Company. The problem posed by high furnace oil costs is likely to be alleviated in due course of time since the new thermal power plant to be commissioned in Porbander by September, 2007 uses lignite or pet coke which will almost completely replace consumption of furnace oil. The price of other major raw material i.e, calcined alumina was until last year very high but has now got stabilized for which the Company has also entered into necessary agreements with the suppliers. These efforts will help the Company in reducing manufacturing costs substantially. The company shall expand its production capacity of fused alumina products and can generate output at a much lower cost to be able to compete with Chinese suppliers on price with a better quality.

The competition to Company's products at the global level is likely to reduce in the coming years. Supply of fused products from China has become very erratic which is likely to help the Company in maintaining and increasing the prices of its products. The refractory business also shall further improve because of the continued increase in demand in the steel industry with the entry of newer and bigger plants.

It is in trade terms with :-

d Bajaj Chemicals Limited

d Dr. Khan Industrial Consultants Private Limited

d Forace Polymers Private Limited

d Perfect Pac Limited

d S. K. Fabricators Private Limited

d Neuman Auto Industries

d Ashoka Gears

d Glasstex

d Industrial Products

d Ardeek Engineering (Sau) Private Limited

d Ashok Kantilal Mistri

d Harji Kara Hansora and Sons

d Matangi Plastic Industries

d Perfect Gear Industries

d PLT Industries Private Limited

d Shree Chemical and Minerals

d Silverline Plastpacks Private Limited

d Vijay Industries

d Associated Engineers

d Chandra Prabhu Industries

d Patel Industries

d Shree Parvati Metals

d Techno Thermal Treators Private Limited

d Unison Engineers

d Vishwakarma Saw Mill and Gen. Industries

d Benson Engineers

d Dharamveer and Company

d Diamet Enterprises

The company’s fixed assets of important value includes

· Land (Leasehold and Freehold),

· Building,

· Plant and Machinery,

· Electric Installation and Fittings,

· Furniture, Fixture and

· Office Equipments

· Vehicles.

Other information:

The total area of factory is 50 acres. The company has got a very big yard for storage of raw bauxite. There are two rotary kilns division, Klin K1 is of 50 m length and dia 2300 mm and yielding production of 120 MT / day. Kiln II is 30 mm in length and dia 1610 mm and yields production of 60 MT / day.

WEBSITE DETAILS:

Orient Abrasives was set up in 1974, in technical collaboration with Karborundum, Bentueky, Czechoslovakia by the Rajgarhia group of industries as a venture to manufacture Calcined and Fused Alumina products. Today, the Company enjoys the position of being the largest producer of Calcined and Fused Products in India. An ISO 9001 certification and a strong management have led the way for the Company to become a large organization, recognized for its quality offerings.

The Company offers a wide range of Refractory and Monolithic products for the iron and steel industry and enjoy large domestic and international clientele. An in-house R and D facility supports the division’s product development initiatives. This makes SUBJECT the preferred choice for quality products.

Headquartered in New Delhi, India, SUBJECT's manufacturing facilities are located in Porbandar, Gujarat and Bhiwadi, Rajasthan and have the distinction of being ISO - 9001 quality certified.

HIGH ALUMINA RAW MATERIALS

SUBJECT is India’s largest manufacturer of Calcined and Fused Alumina products. We manufacture a wide range of Aluminous raw materials including Brown Fused Alumina, White Fused Alumina, Pink Fused Alumina, White Fused Mullite, Fused Zirconia Mullite (ZIRMUL), Fused Alumina-Magnesia Spinnel, Calcined Bauxite and High Alumina Refractory Cement. All these products cater to the needs of grinding wheel and refractory manufacturers. Fused Alumina is also used for shot blasting and cleaning purposes. This range of products is being manufactured at the Company’s facility in Porbandar (Gujarat).

The key raw materials for these products are Bauxite and Calcined Alumina. Bauxite is sourced primarily from the Company’s own mines located in the Jamnagar and Bhuj districts of Gujarat. Calcined Alumina is sourced from aluminium manufacturing companies.

Customers:
The key Indian customers procuring these raw materials from the Company include:

· Grinding wheel manufacturers including Grindwell Norton (Saint Gobain Abrasives) and Carborundum Universal;

· Refractory manufacturers including Bharat Refractories, Tata Refractories, OCL India, Vesuvius India, Orissa Industries, ACE Refractories, VRW Refarctories, SKG Refractories, IFGL, Sarvesh Refractories and Maithan Ceramics.

REFRACTORY AND MONOLITHICS

The refractory products division forms the core of the Company’s business. This division focuses on providing a wide range of special refractories and monolithics to meet the needs of the iron and steel industry. The product range includes the following:

· Isostatically pressed Continuous Casting Refractories

· Slide gate plates

· Nozzles and Well Blocks

· Tundish Nozzles

· Bottom Purging Refractories and Top Purging Lances

· Slag Arresting Darts

· Basic Spray Mass for Tundish working lining

· Castables

All these products are custom made to suit the casting conditions and grade of steel being cast and are a result of an intensive research and development effort by the Company. To reinforce quality and development of products, the Company has an in-house Research and Development facility that is recognized by the Government of India.

The division has a well trained group of technical specialists at customer sites to service any technical and commercial needs, which enables the Company to sell on a Total Refractory Management basis to a large number of its customers.

Customers:
The refractory division’s marketing efforts are supported by a well established sales and service network across the country.

SUBJECT customers include large domestic integrated steel producers and mini steel plants that include Steel Authority of India, Mukund Steel, Tata Iron and Steel Company, RINL – Vizag, Sunflag Iron, Lloyd Steel, Essar Steel and the Jindal Group. With close to 100 small to medium sized iron and steel producing Indian companies as customers, SUBJECT is a preferred vendor for a large number of steel producers in the country.

The Company also supplies Castables to a large number of cement and non-ferrous companies in India.

SUBJECT has significant presence in the global market place with exports to over 16 countries across the globe including Spain, Turkey, Egypt, Indonesia, Saudi Arabia, Thailand and Greece.

Products

High Alumina Raw materials

· Calcined Bauxite

· Brown Fused Alumina

· White Fused Alumina

· Pink Fused Alumina

· White Fused Mullite

· High Alumina Refractory Cement

· Zirconia Mullite

· Alumina magnesia

Refractory and monolithics

· Isostatically Pressed Continuous Casting Refractories

· Slide Gate Plates

· Nozzles and Well Blocks

· Tundish Nozzles

· Bottom Purging Refractories and Top Purging Lances

· Slag Arresting Darts

· Basic Spray Mass for Tundish Working Lining

· Castables

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.39.34
UK Pound	1	Rs.80.72
Euro	1	Rs.57.71

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	9
--PROFITABILIRY	1~10	7
--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	YES
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
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

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