MIRA INFORM REPORT

Report Date :

19.09.2007

IDENTIFICATION DETAILS

Name :	PSL LIMITED
Formerly Known As :	PSL HOLDINGS LIMITED
Registered Office :	Kachigam, Daman, Union Territory of Daman and Diu – 396 210
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	24.08.1987
Com. Reg. No.:	2395
CIN No.: [Company Identification No.]	L67120DD1987PLC002395
TAN No.: [Tax Deduction & Collection Account No.]	SRTP01477A
PAN No.: [Permanent Account No.]	AAACP2734K
Legal Form :	Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturer of Line Pipe for Oil and Gas Pipe Lines, Non-Galvanised Corrosion coating, Cranes Designated for Mounting on road vehicles, Epoxy Powder for Anti-Corrosion Treatment.

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	USD 13000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well – established company having fine track. Trade relations are fair. Financial position is good. 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

Registerd Office & Pipe Mill :	Kachigam, Daman, P. O. Box No. 25, (Union Territory) - 396 210, India
Tel. No.:	91-260-2242989 / 2252248 / 2244496
Fax No.:	91-260-2241932
Website :	http://www.pslholding.com
Corporate Office :	PSL Towers, 615, Makwana Road, Marol, Andheri ( East), Mumbai - 400 059
Tel. No.:	91-22- 66447777
Fax No.:	91-22- 66447700/66447711
Corporate Office :	386, Veer Savarkar Marg, Prabhadevi, Mumbai – 400 025, Maharashtra, India
Tel. No.:	91-22-24307023 / 24306476
Fax No.:	91-22-24307365
Marketing offices :	Located at: “PSL House”, B-96, Greater Kailash-I, New Delhi – 110 048, India Meridian House, 8/2, Montieth Lane, Egmore, Chennai - 600008, Tamilnadu
Legal & Secretarial office:	3^rd Floor, 'Punj House', M-13A, Connaught Circus, New Delhi - 110001
Plant Sites:	Pipe mills and pipe coating plants Kachigam, Daman – 396 210, Union Territory of Daman and Diu Survey No. 35/ & 37, Varsana, Anjar, District - Kutch, Gujarat Village Nani Chirai, Taluka Bhachau District - Kutch, Gujarat Kandla Road, Gandhidham, District - Kutch, Gujarat No. 22, Vaiyavur, Taluka Maduranthakam, District - Chengai MGR, Tamilnadu Industrial Development Area, Gurrampalam, Near Pendurthi, Vishakhapatna, Andhra Pradesh Survey No. 38/1,38/2,39,40 & 42, Varsana, Anjar, Kutch, Gujarat Plot No.4 & 5, Sector 12/B, Kandla Road, Gandhidham, Kutch, Gujarat Survey No. 207, Industrial Development Area Gurrampalem, Pendurthi, Survery No.124, Khadat, Pilwai, Towards Mahudi Road, Taluka – Mansa, Distt. Gandhinagar, Gujarat Other plants REBAR COATING DIVISIONS Ø No. 22, Vaiyavur, Taluka Maduranthakam, Distt. Chengai MGR, Tamilnadu Ø Industrial Development Area, Gurrampalam, Near Pendurthi, Vishakhapatna, Andhra Pradesh ANODES & PIPE BENDS DIVISION Ø Plot No. 4 & 5 Sector 12/B, Kandla Road, Gandhidham, Distt. Kutch, Gujarat
Branches :	Located at : Chennai New Delhi

DIRECTORS

Name :	Mr. Y. P. Punj
Designation :	Chairman
Name :	Mr. Ashok Punj
Designation :	Managing Director
Address :	Lfoyd Insulations (India) Private Limited - Joint Managing Director
Qualification :	M. S. Engineering (I. I. T.) USA
Date of Appointment :	24/08/1987
Name :	Mr. Alok Punj
Designation :	Director
Name :	Mr. M.M. Mathur
Designation :	Director
Name :	Mr. G. S. Sauhta
Designation :	Whole Time Director
Qualification :	DME
Date of Appointment :	01.04.1993
Name :	Mr. R. K. Bahri
Designation :	Whole Time Director
Qualification :	B.E. Mech.
Date of Appointment :	01.06.1994
Name :	Mr. D. N. Sehgal
Designation :	Director
Name :	Mr. Prakash Vinayak Apte
Designation :	Director
Name :	Mr. N. C. Sharma
Designation :	Director
Name :	Mr. G. Gehani
Designation :	Vice President & Company Secretary
Qualification :	FCS, M.Com., LLB, DCL, DPM & IR
Date of Appointment :	25.09.1994
Name :	Mr. Harry Harinder Shourie
Designation :	Director
Name :	Mr. Ashok Sharma
Designation :	Director
Name :	Mr. S. P. Bhatia
Designation :	Additional Director
Name :	Mr. C K Goel
Designation :	Additional Director
Name :	Mr. Paresh J Shah
Designation :	Additional Director

SHAREHOLDING PATTERN

As on 30.06.2007

Names of Shareholders	No. of Shares	Percentage of Holding
Promoter's Holding
a. Indian Promoters	17031810	49.63
b. Foreign Promoters	nil	nil
c. Persons Acting in Concert	3621100	10.55
SUB TOTAL (a) + (b) + (c)	20652910	60.19
Non-Promoter's Holding
1. Institutional Investors
a. Mutual Funds & UTI	723641	2.11
b. Banks, Financial Institutions,   Insurance companies, Central/State Govt. institutions/Non-Govt. institutions	153330	0.45
c. FIIs	7338799	21.39
SUB TOTAL (a) + (b) + (c)	8215770	23.94
2. Others
a. Private Corporate Bodies	2997778	8.74
b. Indian Public	2346771	6.84
c. Nris/OCBs	100890	0.29
SUB TOTAL (a) + (b) + (c)	5445439	15.87
TOTAL (1 + 2)	13661209	39.81
GRAND TOTAL (A) + (B)	34314119	100.00

BUSINESS DETAILS

Line of Business :

Manufacture of Line Pipe for Oil and Gas Pipe Lines, Non-Galvanised Corrosion coating, Cranes Designated for Mounting on road vehicles, Epoxy Powder for Anti-Corrosion Treatment.

Products :

Product Description	Item Code No.
Other Tubes, Pipes and Hollow Profiles in Spira or Straight Welded Seam of Dia 300 MM & Above and made out of Iron Steel of all type	3319
External and Internal Coating of Line Pipes	3450
Anti-Corrosion Coatings of Re-Enforced Rebars	3450

PRODUCTION STATUS

Particulars	Unit	Installed Capacity
Spiral Arc Welded Pipes	MT	1100000
Coating on Steel Pipes	--	NA
Anode	MT	1500
Wire Mesh	Sqm	720000
Outer Wrap	Sqm	2500000
HSAW Pipes	--	NA

GENERAL INFORMATION

No. of Employees :	4000
Bankers :	Ø ICICI Bank Limited Ø State Bank of India Ø Standard Chartered Bank Ø Export Import Bank of India Ø IDBI Bank Limited Ø Axis Bank Ø BNP Paribas Ø State Bank of Patiala Ø State Bank of Hyderabad Ø Indian Overseas Bank Ø Union Bank of India Ø Hongkong & Shanghai Banking Corporation Limited

Banking Relations :	Satisfactory
Auditors :
Name :	Ø Statutory Auditors: Suresh C. Mathur & Company Chartered Accountants, New Delhi Ø Internal Auditiors: R. Devarajan & Company Chartered Accountants Mumbai, Maharashtra
Associates :	Ø Broken Hills Industries Limited Ø Broken Hills International Limited Ø Punj International Limited Ø Punj Investments Limited Ø PSL International Limited Ø Eurocoustic Products Limited
Subsidiaries :	PSL Corrosion Control Services Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
100000000	Equity Shares	Rs. 10/- each	Rs. 1000.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
34060000	Equity Shares	Rs. 10/- each	Rs. 340.600 millions

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		340.600	319.545	289.207
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		3021.400	2305.150	1386.666
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		3362.000	2624.695	1675.873
LOAN FUNDS
1] Secured Loans		4989.000	5109.640	6490.418
2] Unsecured Loans		1708.700	1700.800	0.000
TOTAL BORROWING		6697.700	6810.440	6490.418
DEFERRED TAX LIABILITIES		0.000	31.830	34.381
TOTAL		10059.700	9466.965	8200.672
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		3874.100	3381.831	2649.130
Capital work-in-progress		743.300	146.118	102.441
INVESTMENT		554.300	114.218	114.218
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	6219.200	5195.386	4586.632
	Sundry Debtors	2173.300	4199.984	3099.879
	Cash & Bank Balances	1121.300	1132.415	1736.189
	Loans & Advances	1119.900	1145.689	685.636
Total Current Assets		10633.700	11673.474	10108.336
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	5153.100	5511.849	4606.992
	Provisions	592.600	336.827	166.461
Total Current Liabilities		5745.700	5848.676	4773.453
Net Current Assets		4888.000	5824.798	5334.883
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		10059.700	9466.965	8200.672

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		15832.100	15390.600	14405.300
Other Income		250.800	176.100	158.300
Stock Adjustments		773.300	67.100	2210.900
Total Income		16856.200	15633.800	16774.500
Profit/(Loss) Before Tax		861.900	668.900	440.200
Provision for Taxation		240.400	177.000	120.100
Profit/(Loss) After Tax		621.500	491.900	320.100
Earnings in Foreign Currency :
Total Earnings		NA	4831.203	9054.365
Imports :
Total Imports		NA	1429.594	1373.073
Expenditures :
	Raw Materials	10120.500	10107.400	11484.500
	Excise Duty	1550.300	1058.100	442.900
	Power & Fuel Cost	18.900	3.600	3.400
	Other Manufacturing Expenses	2409.300	2017.100	2688.100
	Employee Cost	409.500	286.400	256.400
	Selling and Administration Expenses	242.800	287.500	369.300
	Miscellaneous Expenses	240.900	177.400	208.900
	Interest & Financial Charges	562.900	688.800	647.300
	Depreciation	439.200	338.600	233.500
Total Expenditure		15994.300	14964.900	16334.300

QUARTERLY RESULTS

PARTICULARS	30.06.2007
Type	1st Qtr
Sales Turnover	4101.300
Other Income	44.300
Total Income	4145.600
Total Expenditure	3695.000
Operating Profit	450.600
Interest	94.300
Gross Profit	356.300
Depreciation	130.000
Tax	55.000
Reported PAT	171.300

200706 Quarter 1 –

1. The above results were taken on record by the Board of Directors in its meeting held on 31st July, 2007. 2. The Audited figures for the year ended 31st March, 2007 in column(3) are subject to consideration and adoption by the Shareholders in their for the coming Annual General meeting scheduled to be held on Thursday 27th September, 2007. 3. The Accounting Standard (AS 17) relating to Segment Reporting' has been complied with. As the Gross income and Profit from the other segments are below the norms prescribed in AS-17, separate disclosure have not been made. 4. During the quarter under review the company has received 27 investors complaints all of which were disposed off within the quarter itself. 5. In accordance with the requirements of clause 41 of listing agreement with the Stock Exchanges, the financial results of the first quarter ended 30th June, 2007 were reviewed by the Audit Committee and they shall now be subjected to limited review by the Statutory Auditors of the Company.

KEY RATIOS

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
PAT / Total Income	(%)	3.69	3.15	1.91
Net Profit Margin (PBT/Sales)	(%)	5.44	4.35	3.06
Return on Total Assets (PBT/Total Assets}	(%)	5.94	4.44	3.45
Return on Investment (ROI) (PBT/Networth)		0.26	0.25	0.26
Debt Equity Ratio (Total Liability/Networth)		3.70	4.82	6.72
Current Ratio (Current Asset/Current Liability)		1.85	2.00	2.12

LOCAL AGENCY FURTHER INFORMATION

HISTORY

PSL Limited (Formerly PSL Holdings Limited), the flagship of PSL group incorporated in August 1987 as a Private Limited company and later it was transformed into a Public Limited company in September 1994. Other group companies are PSL Pipe Coaters, Broken Hills Industries, Punj International, etc. 

PSL is a market leader in Steel Pipes products in India. The company has ten pipe mills at strategically coast based locations in Chennai, Kandla and Daman to cater its customer needs. It produces the pipes in different size varying from 16' dia to 120' dia with wall thickness from 5mm to 25mm. It manufactures and supplies SPIRAL WELD PIPES certified to API (American Petroleum Institute) standards for Oil, Gas and Water Transmission as well as Structural and Piling Applications for both Onshore and Offshore sector. It is a premier induction pipe pending company with an expertise that spans over two decades. The company's activities include protective coatings for steel pipes, epoxy coatings for reinforcement bars, manufacture of epoxy powder paint and galvalum range of aluminum sacrificial anodes and the processing of iron ore.  

The company has technical collaborations with Commercial Resins, US; Lilly Powder Coating, US; Oronzio De Nora, Switzerland; and Abbey Resources, UK. It enhances the company to give its customer international standard products. 

The company came out with a initial public offer aggregating Rs. 138.700 Millions in February 1995, to part finance its pipe coating project at Vishakhapatnam and a mobile coating plant. To cater to the Reliance Refinery project the company has set up a new coating facility at Jamnagar and sourced new and diverse technologies to meet the RPL project's specifications. 

During the period 2000-02, witnessed a important year for the company. In this period company's pipe mill division doubled its capacity from the existing level. Consequently, the aggregate pipe manufacturing capacity of the company increased to 525,000 MT per year. The company modernized its Polyethylene Coating plants at Vizag, Daman and Kandla. Based on customer requirement, Internal Cement Mortar Lining plants were added at Daman and Chennai. In the same period, EPC & N division after getting full pledged experience in expansion programme carried out in its Pipe Mill and Pipe Coating Divisions, took initiatives to enter the international arena as an exporter of turnkey pipe mills and pipe coating plants. 

The company has established an ERW process pipe manufacturing unit in order to cater to pipe requirement in the small and medium dia range for both oil and gas needs. The year 2003 witnessed the full commissioning of the Varsana unit and the installed capacity of SWP had commenced its operations. An additional bending machine has been installed at the company's Kandla factory to cater the small diameter pipelines ranging from 4' to 20'. 

The Vishakhapatnam plant has executed M/s. Gas Authority of India Limited, pipeline project. The timely completion of the project by the company made much impressive to GAIL and as a result they once again placed their next prestigious High Pressure Gas Pipeline Project namely - Dahej Vijaipur Pipeline Project.

The company has expanded the installed capacity of Spiral Arc Welded Pipes during the year 2003-04 by 45000 MT and with this expansion, the total capacity of this segment increased to 675,000 MT. 

The company has bagged an prestigious contract on export front during December 2004 from an Kazakhstan company promoted by Ispat Karmet, a constituent company of well known international steel giant, L N Mittal Global Steel. The company has not only been entrusted with supervision responsibilities of Design, Engineering, Key equipment supply, Erection and Commissioning of the entire US $ 25 million project, but also it has been awarded with a letter of intent for US $ 9 million worth of equipment to be shipped from India for the steel pipe manufacturing facility proposed to be set up in Kazakhstan.  

During 2005-2006, a state-of-the-art Two-Step Pipe Mill has been established at Varsana in Gujarat. This Mill (which has already commenced production) when fully operational will be able to produce 3,50,000 MT of pipes as against a mere 75,000 MT intalled capacity of a conventional Pipe Mill. The said Pipe Mill which has costed Rs.1500 Millions approximately has helped in enhancing the total annual production capacity of the company from 7,50,000 MT to 11,00,000 MT. 

The companies production capacity of Spiral Arc Welded Pipes expanded from 1025000 Mt to 1100000 Mt.

FIXED ASSETS

v Free Hold Land

v Lease Hold Land

v Office Building

v Factory Building

v Furniture & Fixture

v Plant & Machinery

v Office Equipment

v Lab Equipment

v Computer

v Motor Car

v Commercial Vehicles

v Cycle

AS PER WEBSITE

PSL has expertise in the Design, Manufacture, Supply, Erection and Commissioning of Plants, Machinery and Equipments catering to the Pipeline Industry.

PSL is fully geared to set up Pipe Manufacturing and Pipe Coating Plants. PSL's fully-equipped  and adequately manned in-house Project Engineering department has Technical Collaboration with renowned Design and Engineering firms from Germany and Italy.

PSL is one of the largest pipe manufacturers in India with 10 Pipe Mills at strategically coast based locations in Chennai, Kandla and Daman with an annual capacity exceeding 1,000,000 MT of size varying from 16" dia to 120" dia with wall thickness from 5mm to 25mm. 

PSL manufactures and supplies SPIRAL WELD PIPES certified to API (American Petroleum Institute) standards for Oil ,Gas and Water Transmission as well as Structural and Piling Applications for both Onshore and Offshore sector. 

PSL is equipped, to provide the Best in Yard Coating for large Onshore and Offshore Projects. PSL has over the years successfully demonstrated its capability to manage, simultaneously multiple coating assignments, qualitatively and timely, both within and outside the country. The Pipe Coating Yard today provides a wide range of Coating Services as per International Technical Specifications by Leading Consultants.

PSL - a Premier Induction Pipe Bending Company with an expertise that spans over 2 decades – meet diverse high quality requirements in accordance with ASTM,. API, DIN, BS, ANSI, ASME PFI and other international technical specifications.

PSL’s state-of-the-art plant at Kandla has mechanized foundry with induction Furnace and spectrometer for carrying out spectrographic analysis and is equipped to manufacture in excess of 2500 Metric tones per annum of Sacrificial Anodes for cathodic protection system.  It has a  well-equipped R&D centre and Computerized Design and Engineering Division to study cathodic protection design calculations, detailed engineering design and drafting for turnkey projects.

Fusion Bonded Epoxy is ideally suited for protective coating on the complex surface configuration of a reinforcing steel bar. The coating can withstand any hazardous environmental condition. The flexibility of the coating enables the FBE coated rebars to be as flexible as the original bars, with moderate additional care while handling.

Press release

Psl Limited Topline Surges By 60%

Half-yearly turnover nears the annual turnover for the previous year

21.10.2003

PSL Limited, the largest capacity steel pipe manufacturer in the country with Pipe Mills located in Kandla, Chennai and Daman announced its unaudited financial results today for the quarter ended September 30, 2003.

Quarterly growth comparison

The company has registered a total income of Rs 2201.900 Millions, an increase of 60%, compared to Rs. 1382.100 Millions in the corresponding period last year. Correspondingly, the gross profit rose to Rs 110.000 Millions for the quarter ended 30.09.2003, up from Rs. 74.700 Millions, a phenomenal growth of 47%.

Half yearly growth comparison

Most importantly, gross profit for the first half of the current fiscal FY'04 touched Rs 170.400 Millions, which is almost equivalent to the entire FY'03 gross profit of Rs 172.200 Millions. Total income in the first half of current fiscal, was up to Rs 3598.300 Millions as compared to Rs 2098.900 Millions in the corresponding period last year, and Rs 4000.000 Millions for the entire last year, thus registering a phenomenal rise of 71%. Correspondingly gross profit rose by 46% as compared to Rs116.200 Millions last year.

Commenting on the H1-FY'04 results Ashok Punj, Managing Director, PSL Limited. " They are on track to record 70 to 80% topline growth this fiscal, as is reflected in their growth in the first two quarters and also their strong order book position. Profitability levels are also consistent with the strong income growth".

The improvement in topline is also attributed to higher capacity utilization leading to improved profits, apart from the strong order book position. PSL Limited has an order backlog of over Rs 7000.000 Millions along with projects received and under execution.

About PSL Limited:

PSL Limited, the flagship company of the PSL group, is engaged in various types of pipe coating and pipe manufacturing at Daman, Kandla, Nani Chirai, Chennai and Vishakhapatnam.

PSL Limited had virtually doubled the earlier existing capacity of its pipes division during FY'02- FY'03 with a capacity addition of three new pipe mills. Consequently, the aggregate pipe manufacturing capacity of PSL Limited now stands at a proud 5,25, 000 m/t per year, making the company, the largest capacity pipe manufacturer in the country, with additional capacity expected to come online in the current year.

In its coating business, the company undertakes coal tar enamel coating, internal epoxy coating and three layered polyethylene coating. These coated pipes are used for transportation of gas, oil, water and petroleum. PSL also manufactures Spirally Submerged Arc Welded pipes (SSAW). The list of PSL's clientele includes ONGC, GAIL, HPCL, BPCL and IOC among others.

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.39.87
UK Pound	1	Rs.80.11
Euro	1	Rs.56.19

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	6
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		57

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.	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