MIRA INFORM REPORT

Report Date :

03.04.2008

IDENTIFICATION DETAILS

Name :	THE NATIONAL ALUMINIUM COMPANY LIMITED
Registered Office :	Nalco Bhawan, Plot No. – P/1, Nayapalli, Bhubaneshwar – 751 013, Orissa
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	07.01.1981
Com. Reg. No.:	03-920
CIN No.: [Company Identification No.]	L27203OR1981GOI000920
TAN No.: [Tax Deduction & Collection Account No.]	BBNN00046E
PAN No.: [Permanent Account No.]	AAACN7449M
Legal Form :	Public Limited Liability Company The company’s shares are listed on the Stock Exchanges
Line of Business :	Manufacturing and marketing of Bauxite, Alumina Hydrate, Calcined Alumina, Aluminium Ingots, Aluminium Sow Ingots, Aluminium Wire Rods, Aluminium Billets. It is also engaged in generation and sale of Electricity.

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 310000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and reputed company having fine track. Financial position is good. Payments are correct and as per commitments. The company is doing well. The company can be considered good for any normal business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Nalco Bhawan, Plot No. – P/1, Nayapalli, Bhubaneshwar – 751 013, Orissa, India
Tel. No.:	91-674-2442301–08 / 2301988-99 / 231989
Fax No.:	91-674-2300550 / 2442580 / 2442640 / 2442740 / 2442677 / 2300470 / 23005801 / 2300677 / 2300740 / 2300677
E-Mail :	nalcobom@bol.net.in nalco1.nalco@gems.vsnl.net.in knravindra@nalcoindia.com dmrao@nalcoindia.co.in nkmohanty@nalcoindia.co.in bharatsahu@yahoo.com
Website :	http://www.nalcoindia.com
Regional Offices :	Eastern Region Binoy Bhawan, 6th Floor, 27-B, Camac Street, Kolkata - 700 016 Tel. No.: 91-33-22470115/22477360 Fax No.: 91-33-22478936/22810393 E-Mail : rmnalkol@vsnl.net Western Region 215.T.V. Industrial Estate, S.K. Ahire Marg, Worli, Mumbai - 400 025 Tel. No.: 91-22-24939288/24939289 Fax No.: 91-22-24950500 E-Mail : nalcobom@mtnl.net.in Northern Region 303,Mercantile House, 15,Kasturba Gandhi Marg, New Delhi-110 001 Tel. No.: 91-11-23706080/81 Fax No.: 91-11-23721195/23706090 E-Mail : rmsdel@satyam.net.in Southern Region 3E, Century Plaza, 560, Anna Salai, Teynampet, Chennai-600 018 Tel. No.: 91-44-24344162/24349157 Fax No.: 91-44-24343495 E-Mail : rmchn@satyam.net.in
Plants :	Port Facilities Opposite Ore Handling Complex, Visakhapatnam – 530 035, Andhra Pradesh Tel. No. 91-891-2561433 / 2561435 Fax No. 91-891-2561598 Smelter Plant Nalco Nagar – 759 14, Dist. Angul, Orissa Tel. No. 91-6764-220169 Fax No. 91-6764-220132 Captive Power Plant District Angul – 759 112, Orissa Tel. No. 91-6764-220360 Fax No. 91-6764-220646 Telex : 06306-205 CPP IN Mines and Refinery Damanjodi Mines and Refinery Complex, Damanjodi – 763 008, District Koraput, Orissa Tel. No. 91-6853-254201 / 254366 Fax No. 91-6855-254361 / 254214
Warehouse :	· Gupta Warehousing Complex, Godown No. B-9, Dapoda Village, Thane District, Maharashtra Tel. 91-22-276323/276600 · NSIC, 20, Industrial Estate, Pondicherry – 605 013 Tel. 91-413-51109/50276 · C/o, Balmer Lawrie & Company Limited, WH, 1 – Sonapur Road, Kolkata – 700 088, West Bengal Tel. 91-33-24495299 · C/o M/s. Container Corporation of India, Bonded Warehouse No. 2, Inland Container Depot, Bangalore – 560 006, Karnataka Tel. 91-80-28451327/2078/2083 · Haryana State Small Industries & Export Corporation Limited, 17/6, Mathura Road, Faridabad – 121 007, Haryana · Nalco Bhawan, Plot No. P/1, Nayapalli, Bhubaneshwar – 751 013, Orissa Tel. 91-674-2301988 To 2301999
Sales & Marketing Office :	No. 37, 1^st Floor, VVP Nagar, (Jipmer Main Road, Kamaraja Salai, Pondicherry
Tel. No.:	91-674-2301988/2301989
Branch Office :	3^rd Floor, Reshma Complex, 5^th Floor, M. G. Road, Bangalore – 560 001, Karnataka
Tel. No.:	91-80-558 7298 / 558 7086
Fax No.:	91-80-558 6151
Stock Yards :	Located at Bhiwandi Kolkata Bangalore Jaipur Silvassa Faridabad Visakhapatnam Baddi Chennai

DIRECTORS

Name :	Mr. C. Venkataramana
Designation :	Chairman cum Managing Director
Name :	Mr. C. R. Pradhan
Designation :	Director
Name :	Mr. Harbhajan Singh
Designation :	Director
Name :	Mr. V. K. Thakral
Designation :	Director
Name :	Mr. S. C. Chhatwal
Designation :	Director
Name :	Mr. K. K. Mallick
Designation :	Director
Name :	Mr. A. R. Ray
Designation :	Director
Name :	Mr. N. K. Jain
Designation :	Executive Director
Name :	Mr. B. N. Swain
Designation :	Executive Director
Name :	Mr. P. K. Routray
Designation :	Executive Director
Name :	Mr. R. K. Maheswari
Designation :	Executive Director
Name :	Mr. G. K. Behera
Designation :	Executive Director
Name :	Mr. U. B. Patnaik
Designation :	Executive Director
Name :	Mr. P. K. Padhi
Designation :	Executive Director
Name :	Dr. Pradeep Kumar
Designation :	Director
Name :	Mr. P.K. Parida
Designation :	Executive Director
Name :	Mr. B. L. Bagra
Designation :	Director

KEY EXECUTIVES

Name :	Mr. G. Kameswara Rao
Designation :	Chief Vigilance Officer
Name :	Mr. K. N. Ravindra
Designation :	Company Secretary

MAJOR SHAREHOLDERS

AS ON 31.12.2007

Category of Shareholder	No. of Shares	Percentage of Holding
Shareholding of Promoter and Promoter Group^2
Indian
Central Government/ State Government(s)	561499635	87.1475
Public shareholding
Institutions
Mutual Funds/ UTI	1760032	0.2732
Financial Institutions ^/Banks	4934146	0.7658
Insurance Companies	28098082	4.3610
Foreign Institutional Investors	26354308	4.0903
Non-institutions
Bodies Corporate	16161682	2.5084
Individuals
Individuals -i. Individual shareholders holding nominal share capital up to Rs 0.100 Million	4503123	0.6989
ii. Individual shareholders holding nominal share capital in excess of Rs. 0.100 Million	296781	0.0461
Any Other (specify)
Hindu undivided Families	174620	0.0271
Trusts	17802	0.0028
Directors and their Relatives	100	0.0000
Foreign Nationals	104210	0.0162
Non Resident Indians	205550	0.0319
Overseas Corporate Bodies	11600	0.0018
Societies	5850	0.0009
Clearing Member	182107	0.0283
Total	644309628	100.0002

BUSINESS DETAILS

Line of Business :

Manufacturing and marketing of Bauxite, Alumina Hydrate, Calcined Alumina, Aluminium Ingots, Aluminium Sow Ingots, Aluminium Wire Rods, Aluminium Billets. It is also engaged in generation and sale of Electricity.

Products :

Item Code No.	Product Description
335000000	Aluminium Ingots
76.06	Cold Rolled Aluminium Strips/Coils/Sheets

Exports to :

Australia, China, Hong Kong, Indonesia, Italy, Japan, Korea, Philippines, Russia, Singapore, Taiwan, Thailand, Turkey, UAE and USA [Alumina and Aluminium]

Imports from :

Canada, Egypt, Iran, Japan, Korea, Netherlands, Saudi Arabia, UK and U.S.A. [Raw Materials, Components, Spare Parts & Construction Materials and Capital Goods]

Terms :

Purchasing :

L/C, D/A, D/P and Credit

PRODUCTION STATUS

Particulars	Installed Capacity [In Tonnes]	Actual Production [In Tonnes]
Bauxite	4800000	4623278
Detergent Grade Zeolite	10000	6952
Aluminium Hydrate	1575000	1475200
Calcined Alumina	1575000	1463300
Special Grade Alumina	20600	7823
Aluminium Metal	345000	358734
Rolled Products	45000	2587
Electricity	960 MW	5968 MU

GENERAL INFORMATION

No. of Employees :	7426 (Executives-1828, Supervisory-892, Skilled/Highly skilled-3561, Unskilled/ Semiskilled-1145)
Bankers :	State Bank of India, Bhubaneshwar, Orissa and India

Banking Relations :	Good
Auditors :	SRB and Associates Chartered Accountants 5^th Floor, IDCO Tower Janpath, Bhubaneswar-751022, Orissa, India Niran & Company Cost Accountants, 440, Sahid Nagar, Bhubaneswar – 751007, Orissa, India
Membership :	Confederation of Indian Industry
Subsidiaries :	International Aluminium Products Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
1300000000	Equity Shares	Rs. 10/- each	Rs. 13000.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
644309628	Equity Shares	Rs. 10/- each	Rs. 6443.096 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		6443.100	6443.100	6443.100
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		70509.100	52483.600	40535.000
4] (Accumulated Losses)		0.000	0.0000	0.000
NETWORTH		76952.200	58926.700	46978.100
LOAN FUNDS
1] Secured Loans		0.000	0.000	0.000
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		0.000	0.000	0.000
DEFERRED TAX LIABILITIES		6127.400	6417.300	6524.500
TOTAL		83079.600	65344.000	53502.600
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		37108.800	39445.100	41390.000
Fixed Assets awaiting disposal		12.000	0.000	0.000
Capital work-in-progress		8404.100	2321.600	2066.100
INVESTMENT		0.000	0.000	0.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	6349.600	5915.800	5290.600
	Sundry Debtors	341.300	294.200	928.100
	Cash & Bank Balances	36865.300	21937.100	7552.100
	Other Current Assets	2120.400	1186.200	820.100
	Loans & Advances	4064.200	3645.500	3519.500
Total Current Assets		49740.800	32978.800	18110.400
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	8720.200	6073.300	6162.500
	Provisions	3465.900	3328.200	1901.400
Total Current Liabilities		12186.100	9401.500	8063.900
Net Current Assets		37554.700	23577.300	10046.500
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		83079.600	65344.000	53502.600

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		59401.900	48519.000	41041.100
Other Income		4140.000	2307.000	2506.500
Total Income		63541.900	50826.000	43547.600
Profit/(Loss) Before Tax		36204.000	24296.400	18702.700
Provision for Taxation		12390.200	85744.000	6354.300
Profit/(Loss) After Tax		23813.800	15622.000	12348.400
Earnings in Foreign Currency :
	Export Earnings	25754.000	23174.700	21458.700
	Other Income	8.000	7.300	10.000
Total Earnings		25762.000	23182.000	21468.700
Imports :
	Raw Materials	1306.600	864.200	936.700
	Stores & Spares	380.900	356.300	333.600
	Capital Goods	1332.700	140.100	266.500
Total Imports		3020.200	1360.600	1536.800
Expenditures :
	Manufacturing Expenses	1526.600	1399.600
	Administrative Expenses	853.700	785.600
	Raw Material Consumed	5575.900	5210.500
	Repairs and Maintenance	2303.400	1919.300
	Increase/(Decrease) in Finished Goods	[151.300]	[539.000]
	Salaries, Wages, Bonus, etc.	3928.800	3387.300	24849.200
	Power & Fuel	8510.200	9378.400
	Depreciation & Amortization	3061.300	3772.400
	Selling and Distribution Expenses	781.000	801.700
	Provisions	52.500	4.600
	Impairment	110.000	0.000
	Other Expenditure	725.500	706.000
Total Expenditure		27277.600	26826.400	24849.200

QUARTERLY RESULTS

PARTICULARS	30.06.2007 1^st Quarter	30.09.2007 2^nd Quarter	31.12.2007 3^rd Quarter
Sales Turnover	11652.300	13081.500	11093.100
Other Income	1310.000	1643.900	1379.500
Total Income	12962.300	14725.400	12472.600
Total Expenditure	5488.300	7396.900	6692.500
Operating Profit	7474.000	7328.500	578.0.100
Interest	1.000	6.100	0.000
Gross Profit	7473.000	7322.400	5780.100
Depreciation	691.500	683.000	662.100
Tax	2314.900	2242.100	1823.600
Reported PAT	4466.600	4397.300	3294.400

KEY RATIOS

PARTICULARS	31.03.2007	31.03.2006	31.03.2005
Debt-Equity Ratio	0.00	0.00	0.08
Long Term Debt-Equity Ratio	0.00	0.00	0.08
Current Ratio	2.40	1.66	0.96
TURNOVER RATIOS
Fixed Assets	0.73	0.60	0.53
Inventory	10.65	9.45	8.79
Debtors	205.41	86.65	45.48
Interest Cover Ratio	79.96	70.78	22.36
Operating Profit Margin(%)	60.86	53.66	54.53
Profit Before Interest And Tax Margin(%)	56.17	46.54	44.14
Cash Profit Margin(%)	41.18	36.62	38.23
Adjusted Net Profit Margin(%)	36.49	29.50	27.84
Return On Capital Employed(%)	53.96	46.54	42.99
Return On Net Worth(%)	35.05	29.50	29.21

LOCAL AGENCY FURTHER INFORMATION

HISTORY :

The company was incorporated on 7^th January, 1981 at Bhubaneshwar in Orissa having Company Registration Number 920.

The company is a Public Sector Non Ferrous giant and a leading player in the Aluminium Industry. The company owns one of the largest deposits of Bauxite together with integrated production facilities thus making it one of the lowest cost producers of aluminium in the world.  

As an integrated player the company owns a bauxite mine (4.800 millions TPA capacity), an Alumina refinery (1.570 millions tpa capacity), an aluminium smelter (0.345 millions tpa) and captive power plants. Further the company have a port facility and was the first Indian company to link domestic prices of its products to the London Metal Exchange (LME). With the advantage of being lowest cost producer of aluminium in the world Nalco derives more than 50% of its sales from exports. 

The company, usually which is not hesitant to expansions if the market demands has completed a series of expansion programme during the year 1998-2001 consisting of expansion of Bauxite mine capacity to 4.800 millions tpa (from 2.400 millions tpa) aluminium refinery to 1.575 millions tpa (from 0.800 millions tpa) with an capital outlay of Rs.42000.00 millions has submitted its second pase of its expansion plan with an capital outlay of Rs.40000.000 millions to Government of India for its approval. This second phase of expansion involves hiking bauxite mine capacity to 6.300 millions tpa, Alumina refinery capacity to 2.100 millions tpa, aluminium smelter capacity to 0.460 millions tpa and the captive power plants capacity. The captive power plant capacity is expanded at a cost of Rs.4800.00 millions funded brom internal accruals and borrowings. This project meet the additional power requirement for the expanded capacity of its aluminium smelter (to 0.345 million tpa). The smelter was expected to be commissioned by Feburary 14, 2004. Dasturco is the consultant for this project. 

International Aluminium Products was amalgamated with the company since November, 2001 and its cold rolling mill was commissioned in March,2002. This has changed the scene in the value added products segment, which is the missing link in the product chain of the company. During the fiscal 2001, it completed the Special Grade Alumina project and Zeolite-A project.

During 2004-05 the company enhanced its installed capacity of Special Grade Hydrate (Aluminium Hydrate), Aluminium Metal & Electricity by 150 Tonnes, 57500 Tonnes and 120 MW respectively. With this expansion the total installed capacity of Special Grade Hydrate(Aluminium Hydrate), Aluminium Metal & Electricity was increased to 7150 Tonnes, 345000 Tonnes and 960 MW respectively. Further the company has included Special Grade Alumina (Calcined Alumina) to its products with an installed capacity of 450 Tonnes. 

In 2004-05 the company has revised the project of rolled production unit at a cost of Rs.3983.5 millions approved by Public Investment Board was received on 27th January 2005 with the stipulation of completion of balance project jobs by 31st July 2005. The mechanical completion of the projects have been completed by 30th July 2005 and commissioning activities are in progress. Caster line 1, 2 & 3 have been already been commissioned and trial runs have been conducted. Caster line 4 is in the stage of commissioning and trial run will be done shortly.

PERFORMANCE HIGHLIGHTS

The Company has achieved the highest ever income of Rs.63540 Millions, as against the income of Rs.51220 Millions during the previous year and also the highest ever Profit After Tax at Rs.23810 Millions, as against Rs.15620 Millions in the previous year, thus registering a growth of 24% in income and of 52% in profit. The Company has achieved the highest ever export earning of Rs.25850 Millions. The main contributing factor for increase in the income and the profit is better sales realization both in domestic and in export markets. 

The Company exceeded the targets set for production of aluminium and generation of power during the year under report. There was drop in production of bauxite in comparison to the previous year due to unprecedented heavy rainfall near the mines which affected the mining operation. The target for production of Alumina could not be achieved due to technical snag in cooling tower in Refinery which has since been sorted out. 

The Company has achieved the highest sale of 3,56,616 MT of metal during the year 2006-07 surpassing the previous highest of 3,53,841 MT in 2005-06. Similarly, sale of 2,63,494 MT of metal in the domestic market surpassed the previous highest of 2,58,094 MT achieved in 2005-06. 

The system of entering into annual MoU with domestic customers for sale of aluminium metal from plant and stockyards by providing benefits & incentives has helped the Company achieve a growth of approximately 2.1% of sales in domestic market over the previous financial year. The Company signed MoUs with 118 domestic customers in 2006-07 as compared to 112 customers in previous year. 

Sale of 5,374 MT Special Hydrate and 2,858 MT Special Alumina during the year are the highest volumes sold surpassing the previous highs of 5,354 MT and 1,126 MT respectively set in 2005-06. The Company has also started export of Rolled Products from September, 2006 and a favourable feedback has been received from the customers. 

The Company continued to remain a "Zero Debt" Company for the third consecutive year. The Company utilized its internal cash generation to meet its working capital requirement and it had not utilized any working capital borrowing facility during the year. The Company has a surplus cash balance of Rs.35630 Millions as on 31.03.2007 which has been placed in short term deposits to finance the capital expenditure on expansion, which is under progress. 

S&P Complex, Angul 

 - Providing mobile health services consisting of a van along with team of doctors and para-medical staffs with medicines, in close coordination with District Administration and Lions Club of Angul to provide free medical services at door step to the residents of 38 peripheral villages. 

 - Organising 5 Animal Health Camps in identified villages. 

 - Providing drinking water by tankers on a regular basis to 18 water scarcity peripheral villages. 

 - Organising rural sports meet involving 20 High Schools of peripheral villages. 

 - Sanctioning additional funds to the tune of Rs.20 Millions for development of two labour colonies namely, Sahid Lakshman Nayak Nagar and Pandit Raghunath Murmu Nagar Samiti where large numbers of contract labourers working in the Smelter Plant and CPP reside. 

- Development of public utility facilities like tube wells, roads, drains, playgrounds, schools, community centers for their decent living. 

M&R Complex, Damanjodi: 

- Finalisation of 107 nos. of projects which are currently under implementation. 

- Extension of financial support for the annual tribal cultural extravaganza of Koraput District "PARAB-2006". 

- Undertaking several non constructional works like distribution of educational aid to school students, fruit bearing saplings to farmers, play items for the rural youths, sari and warm clothing for the old and destitutes living in the peripheral villages. 

Others: 

- Sponsoring different state level music and cultural festivals and continuing patronage to various socio-cultural, professional and sports events in the state of Orissa to encourage progress and development of Orissa culture. 

- Providing financial assistance to different charitable and educational institutes in and around Bhubaneswar for the benefit of school children. 

- Helping the needy people during the time of distress and natural calamities through financial contribution to Chief Minister's Relief Fund and Prime Minister's National Relief Fund as well as through direct distribution of relief materials. 

AWARDS &RECOGNITIONS: 

Receipt of various awards during the year as detailed below stands ample testimony for the excellent performance of the Company in various fields: 

- Export award from CAPEXIL for the year 2005-06 for the 19th year in succession. 

- 'Niryat Shree' Award for 2003-04 and 2004-05 from Federation of Indian Export Organizations (FIEO). 

- Top Exporter Gold Trophy of EEPC, Eastern Region under large Enterprise category for the year 2004-05. 

- Star Performer Award of EEPC, Southern Region. 

- Dun & Bradstreet - American Express Corporate Award as the top Indian Company in the Non-ferrous Metals Sector. 

- Best Mother Plant Award at EXPO-ORISSA 2006. 

- CII Eastern Region Award for "Best Practices in Safety, Occupational Health & Environment" for Alumina Refinery Complex.

GROWTH PLANS 

Expansion: 

The Company has embarked on an ambitious growth plan under 2nd phase expansion project at an estimated cost of Rs.50.03 Millions (at March, 2007 price level). 

The progress of the work has gained momentum and by the end of June, 2007 orders have been placed for 76 packages for Refinery, 93 packages for Smelter and 19 packages for CPP involving financial commitments of Rs.33050 Millions and actual expenditure is Rs.8910 Millions upto 30,06.2007. The project is scheduled for commission in December, 2008, 

Coal Block: 

The Company has been allotted "UTKAL-E" Coal Block, having a reserve of around 70 million tonnes for its new units at Captive Power Plant by the Government of India. 

Mine Plan has been approved by the Ministry of Coal and Detailed Project Report has been prepared. Land acquisition activities have started. Environmental clearances and forest diversion activities are in progress. Mining operations are scheduled to commence by end of 2008. 

BAUXITE MINE: 

Government of India has reserved bauxite deposits at Pottangi in Orissa for allotment to the Company. Efforts are in hand to obtain minirig lease from the State Government. 

MoU PERFORMANCE: 

The Company's performance was rated "Excellent" in the evaluation of the Memorandum of Understanding (MoU) signed with Government of India for the year 2006-07. 

RAJBHASHA: 

During the year, due emphasis was provided for compliance of Official Language Rules issued by the Government of India and special efforts were made to achieve the target in original correspondence in Hindi. Employees were nominated for Hindi Typing and Stenography and Hindi Computer training under Hindi Teaching Scheme. Hindi Training continued at the sites through correspondence courses. 

Hindi fortnight was observed at all the offices and units of the Company in September, 2006. On this occasion Hindi competitions like essay, calligraphy, debate, self-composed poetry, letter-writing, noting, dictation and slogan etc. were organized, in which large number of employees participated. Prizes were distributed to the winners and participants on the concluding day. At Corporate Office, a special issue of Hindi magazine "Akshar" was released, in which selected articles, poems and stories written in Hindi by employees were published. 

The meetings of Official Language Implementation Committee at units were organized regularly. 

VIGILANCE: 

The Company believes in promoting corruption-free environment in all areas of its operations. In that direction, major thrust is given on preventive vigilance with a view to aid and assist the management in improving the systems and procedures to ensure transparency and efficiency in the decision making process. 

Constant efforts are being made by the Company to introduce e-procurement, e-tendering, e-auctioning and e-payments etc. as per CVC guidelines. 

In the direction of prevention of corruption and malpractices, a compendium consisting CVC circulars/guidelines of CTE on number of issues including observations of internal vigilance based on surprise checks, regular inspections, investigation reports etc. were released for the benefit of officials at different levels, A book on Do's & Don'ts highlighting common irregularities have been published and distributed among the executives of the Company for general awareness. 

A campaign for creating awareness was taken up by organizing Vigilance Awareness Week from 6" November, 2006 at all the units Of The Company in which distinguished guests were invited to share their views on the issues of prevention of corruption. 

Regular training programmes were conducted at different units of the organization for sensitizing the employees about the importance of vigilance in modern day scenario. A refresher course on vigilance was also conducted for the vigilance officers working in different PSUs under the aegis of Ministry of Mines. 

STATEMENT OF PARTICULARS UNDER SECTION 217 OF THE COMPANIES ACT, 1956 AND THE RELEVANT RULES MADE THEREUNDER: 

ENERGY CONSERVATION: 

Various energy conservation measures that have been adopted for optimal utilization of energy resources in different units of the Company during the period under review are given below: 

Mines: 

The Mines Unit has carried out a preliminary energy audit on consumption pattern of HSD, Lubricants and electrical energy for illumination purposes through Petroleum Conservation Research Association in the year 2006-07. The audit findings are being presently analyzed and suggestions have been taken into consideration for implementation. An Energy Conservation Cell has been formed to implement the audit findings / suggestions. The Mines Unit is also exploring for different non-conventional sources of energy like Solar and Wind power. 

Specific energy consumption pattern in the Company is always less than established norm. However, the Company is strongly committed to minimize the specific energy consumption patterns further and is taking up some energy saving projects in different energy intensive areas. 

Alumina Refinery: 

Energy Conservation measures undertaken and in hand in Alumina Refinery are given below: 

 - Installation of hydrate by-pass system in Calciner-B 

Hydrate by-pass system helps calcining a part of hydrate fed from the heat available with hot product, thereby reducing temperature of product alumina and expected saving to the tune of Rs.4.500 Millions per year. Installation of the system is likely to be completed in 2007. 

- Use of Spent liquor for Product Filter O/F line flushing instead of wash filtrate. 

Necessary modification has been carried out to use Spent Liquor for flushing of product filter overflow lines instead of wash filtrate. As soda concentration of spent liquor (153-154gpl) is substantially higher than that of wash filtrate (40-45 gpl), it drastically reduces circuit dilution and evaporation load (MT of water evaporated per MT of production). The effect of the above change is duly reflected on evaporation load. In spite of substantially higher rainfall during the year under review (2.22 metre against 1.46 metre during 2005-06), there has been reduction in evaporation load by 0.03 T/T of production. Considering a steam economy of 2.9 T/T, this is equivalent to steam saving of 0.0103 T/T of production. In monetary term, this works out to Rs.3.700 Millions a year. 

- Reduction in TG trip outs 

Number of TG trip outs has been reduced as a result of the following measures: 

* Taking timely corrective action in case of any process abnormalities. 

* Suitable modification in conventional protection system with new microprocessor based PC connectivity system in TG-3 has avoided the spurious trip outs. 

* Necessary modification was carried out in all three TGs to avoid tripping of TG in case of transient drop in extraction/exhaust pressure due to sudden drawal of steam or any Mill tripping. 

- Operation of Condensate Polishing Unit resulted in the following advantages: 

* Filter water consumption has reduced; burden on DM plant and water intake was therefore less. 

* Higher DM water temperature from CPU enhanced the Boiler cycle efficiency and there is reduction in coal consumption. 

- Other measures: 

* Conversion of conventional fluid coupling to modern variable speed drive in two drives (pump-144 and pump-145) in 06 area. 

* Conversion of three numbers DC drives to AC drive in 06 area. 

* Introducing suitable interlocks for stopping idle running of Kelly filter hydraulic pumps. 

MANAGEMENT DISCUSSION & ANALYSIS REPORT: 

INDUSTRY STRUCTURE & DEVELOPMENTS 

Global Scenario: 

Alumina & Chemicals: 

During the year 2006, the world consumption of Alumina was 66.163 million MT against the world production of 68.308 million MT thus showing a surplus production of 2,146 million MT. The world Alumina production and consumption grew by approx. 11.9% and 6.1% respectively during 2006 over previous year. The Chinese alumina production registered an increase of about 65.2% over previous year production. 

The global alumina market moved into surplus with an increased role of Chinese supply. This resulted in a downward pressure on alumina prices. As a result it is expected that some refineries may curtail output when alumina price goes below refinery's Business Operating Cost on sustained basis. 

Aluminium: 

During the year 2006, the world consumption of primary Aluminium was 34.392 million MT against world supply of 33.899 million MT, showing a deficit of 0.493 million MT. The world supply and consumption grew by approximately 5.6% and 7.2% respectively during 2006 over 2005, In China, consumption is estimated to have risen by 20.6% and production by 18.2% during 2006. North America, Europe, CIS, China, Middle East, Africa, East Asia & India also witnessed favourable demand despite this being the year of high International prices. 

NALCO's Position: 

The Company exported 7,73,573 MT of Alumina and 10,920 MT of Hydrates during the year under review. The total metal sale was 3,56,616 MT which was highest ever achieved. Out of the total metal sales domestic sale was 2,63,494 MT and balance 93,122 MT was exported. 

The Company's other value added products such as Special Grade Alumina and Special Grade Hydrate and Zeolite-A have established a good market presence and have been well received. 

The first export consignment of rolled product from the Company was made in September, 2006 and the Company has received favourable feedback from the customers. Various strategic actions are being taken to increase sale of Rolled Products both in domestic and overseas markets. The other value added products such as Special Hydrate, Special Alumina, Zeolite-A and other products saw good demand. 

Business Development: 

The Company examined a number of proposals during the year for setting up overseas joint venture projects for making aluminium based products on its surplus alumina to the tune of 1.2 million tonnes expected to be available once its 2nd phase expansion is complete. Efforts were also made for exploring the possibility of setting up of backward integration projects. The Company has plans for undertaking a few backward integration projects for catering its raw material requirements and for insulating itself from their price escalations and uncertainties of timely supply by vendors. These proposals are being actively pursued by the Company and final view shall be taken in the coming year. During the year, the Company associated itself actively with professional bodies viz. AA(, CII, FICCI, Utkal Chamber of Commerce and Industry and Confederation of Captive Power Plants of Orissa etc. and contributed on its own capacity for further interest of industry. 

Opportunities and Threats: 

The Company's 2nd phase expansion project is under way, funded by its own internal resources and also exploring the overseas market for External Commercial Borrowing. The availability of surplus alumina with the Company after 2nd phase expansion and the sustaining demand for Alumina and Aluminium in the global market has put it in a advantageous position and offers attractive opportunities for entering into lucrative business deals for acquisition and for participating in the Joint Ventures in overseas smelters where energy is available at relatively lesser cost. 

The threat perceptions for the company includes price instability at LME, possible continuous rising of crude oil prices in the global market, possible halt to the peace initiatives with neighbouring countries, terrorism, hardening of interest rates, bad monsoon, competition from substitute materials particularly the plastics, progressive reduction in aluminium import tariffs, poaching of its key manpower by competitors for their green field projects and levy of antidumping duties on its raw material import like Caustic Soda. 

Risks & Concerns: 

The upward trend of crude oil prices in the global market may impact the operational cost of the company. Any continuous depreciation of US$ against rupee shall have bearing on the export realisation of the Company, as it is a key player in the export market. Risk lies in possible international disturbances caused by terrorist strikes, polarisation of trade blocks and sudden appearance of unhealthy trends in the international scenario arising out of political uncertainty in global context. 

Probability of imposition of antidumping duties and other allied taxes on its imported raw material like caustic soda and its cost fluctuations may add to the existing concern. However, the Company with its professional approach is confident of delivering continued excellent operating performance on the back of improved cost competitiveness and technological edge and thus enjoys a natural hedge against these concerns.  

The anticipated downward trend in the LME prices of aluminium, the projected surplus in the alumina market & strengthening rupee are causes for concern. 

Outlook for the Industry: 

The Company expects that present high growth trend in the economy shall continue for the coming years and general prevalence of business confidence and optimism in the Indian economy with the emergence of multi-nationals on the Indian Aluminium scene and the aggressive position of some of the domestic players, the Company expects a much greater competition in the future, for both domestic and export markets. 

Outlook for the Company: 

The Company aims to anticipate changes and take proactive measures for survival and higher growth in the business. After consolidating its position firmly in the field of alumina and aluminium, the Company is strengthening its position in newly entered areas like special grade alumina, zeolite, gallium and rolled products etc. Apart from maintaining its consistent track record in capacity utilisation, quality management and gaining customers confidence now it is moulding with new management and quality concepts. 

 In its future strategic growth plans, the Company is to concentrate more on its core competence areas with further expansion of the capacities in Mines, Refinery, Smelter and Captive Power Plant with certain backward and forward integration. Its strategic plans are also directed towards meaningful utilisation & redeployment of resources depending on the situations and full capacity utilisation of existing operations with proactive financial management and with qualitative focus on human resource development. 

The Company has its own plans & designs to enter the market in a big way in the coming years to market its value added products like rolled products, special grade alumina and zeolite both in the domestic and international markets. 

Domestic Market Outlook: 

The domestic aluminium supply will continue to witness higher volumes from the expanded capacities of the producers. It is expected that the country's production of aluminium would be about 1.2 million MT in 2007-08. The domestic demand is expected to continue its strong showing, on the back of a robust industrial growth, during 2007-08. It is anticipated that market will grow at about 8%. 

International Market Outlook: 

Alumina: 

In 2007 world alumina production is expected to grow by 7.6% and the consumption is expected to grow by 10.1%. The Chinese alumina production is expected to be approximately 18 million MT, an increase of about 41% over previous year. Overall, the world market for alumina would be marginally in surplus. 

Aluminium: 

IMF has projected the Global Economy to grow by about 4.9% in 2007 which is slightly lower than the robust growth of 5.4% achieved in 2006. IMF sees the US economy & Euro-area expanding at 2.5% & 2.2% respectively. The 2007 IMF projections for Japan, China & India are 2.3%, 10% & 8.4% respectively. In 2007, world aluminium production is expected to grow by 7.7% and the consumption is expected to grow by 4.8% respectively. The world aluminium market is expected to show a surplus of metal which may 'have softening impact on pricing: The Chinese aluminium production & consumption are expected to be approximately 11.8 million MT & 10 million MT respectively. 

CORPORATE PLANNING: 

The present robust global metal industry scenario and rapid changes in the business environment followed by steady implementation of new economic policies of the Government have necessitated review, renewal and repositioning the Corporate goals. Keeping in view the changing economic scenario, emerging trends and to keep pace with rapid changes in global business environment, the Company is in the process of appointing a reputed global consultant to study and frame a Corporate Growth Plan for the Company for chalking out the Future Road Map for the next 10 to 15 years. Once the plans and programmes put forwarded by the above study are approved in principle, The Company will evolve suitable strategies and internal systems for implementation and monitoring of plans and review of the targeted activities within the time parameters. 

TOTAL QUALITY MANAGEMENT: 

Quality Management System of Alumina Refinery was successfully recertified to ISO 9001:2000 for a further period of 3 years, while those of Smelter Plant, Captive Power Plant & Bauxite Mines successfully underwent Surveillance Audits during the year. 

Total Productive Maintenance (TPM) implementation at Captive Power Plant went into full-fledged implementation phase from August, 2006. TPM implementation work at Alumina Refinery continued with thrust on Autonomous Maintenance & Focussed Improvement. 

Quality Circles from different units selected through Chapter level competitions participated in the National Convention for Quality Circles organised by Quality Circle Forum of India. Based on their Quality Circle projects, two Quality Circles, "Sapphire" and "Rasayana" of Alumina Refinery of the Company participated in the International Convention in Indonesia held in November, 2006. 

In order to encourage Quality efforts, the Company organised All Orissa Quality Circle Convention and Competition for NALCO Trophy in April, 2006 for the eleventh consecutive year. 25 Quality Circles drawn from different organisations in the State participated. This event is widely recognised as the biggest effort in the quality movement in the State, using the employee involvement route. 

SPORTS: 

The Company takes active interest in promotion of various sports at State and National level. In that direction, the Company in collaboration with different Sports bodies organized various championship events like Ali Orissa NALCO Cup Hockey Championship, All Orissa NALCO Cup Basketball Championship, All Orissa NALCO Open Tennis Tournament and NALCO Cup East Zone Golf tournament. 

The Company organized an All India Public Sector Football Tournament at Angul. Eight teams participated in that tournament and NALCO team emerged as champion in the tournament. 

Shri S.P. Das of the Company led the Indian Badminton team to Israel for participating in the Israel Open Badminton championship for Disabled and bagged two bronze medals. 

The Company's women sports persons Ms. Anuradha Biswal in athletics, Ms. Sradhanjali Samantray and Ms. Rantija Mohanty in women football represented the State at National level championships and also made the Company proud by representing the country at international level events. 

Shri Debasis Mohanty and Shri Shiv Sunder Das, employees of the Company represented the Nation in past and represented the State in Ranji Trophy Cricket and also represented the East Zone cricket in this *season. 

Further, to encourage budding sports talents, the Company felicitated 5 sports persons with citations and cash awards during Utkal Divas celebration. 

The Year at Glance

	Unit	2007
Bauxite Mining	MT	4623278
Alumina Hydrate Production	MT	1475200
Aluminium Production	MT	358734
Power Generation [net]	In Million units	5968

	Unit	2007
Export Turnover	Rs. In Millions	25852
Gross Sales	Rs. In Millions	65150
Profit Before Tax	Rs. In Millions	36200
Profit After Tax	Rs. In Millions	23810
Earnings per share	In Rs.	36.96
Book value per share	In Rs.	119.43
Dividend	In %	75

FIXED ASSETS

The company’s fixed assets of important value include freehold land, leasehold land, buildings, roads, bridges & culverts, railway sidings, water supply, drainage and sewerage, power supply, drainage and sewerage, power supply, distribution and lighting, plant & machinery, office equipments, furniture & fitting and vehicles.

PRESS BRIEF

NALCO PAYS 45% INTERIM DIVIDEND

Bhubaneswar, 10.03.2008: National Aluminium Company Limited (NALCO) – India’s leading manufacturer and exporter of alumina and aluminium, under Ministry of Mines – paid an interim dividend of 45% on the paid-up capital of Rs.6443.100 Millions, amounting to Rs.2899.400 Millions for the financial year 2007-08.

The dividend cheque for Rs.2526.700 Millions on the 87.15% shares held by the Govt. of India was handed over to Shri Sis Ram Ola, Union Minister of Mines, by Shri C.R. Pradhan, CMD, Nalco, in New Delhi today, in the presence of Shri J.P. Singh, Secretary, Ministry of Mines, Shri B.L. Bagra, Director (Finance), Nalco, Shri Joy Varghese, Director (P&A), Nalco, and other senior officials of the Ministry and the Company. The balance amount of Rs.372.700 Millions has been disbursed to other shareholders of the Company like banks, financial institutions and individual shareholders.

NALCO BAGS EEPC GOLD TROPHY

Bhubaneswar, 29.02.2008: National Aluminium Company Limited (NALCO), India’s leading producer and exporter of alumina and aluminium, has bagged the EEPC (Engineering Export Promotion Council, Eastern Region)’s Gold Trophy, as Top Exporter in the Large Enterprise Category, for outstanding contribution to engineering exports during the year 2005-06.

On behalf of the company, the award was received by Mr P.K. Parida, Executive Director (Marketing), from Mr Guenter Wehrman, Council General, Consulate General of Federal Republic of Germany, in the presence of Mr Manabendra Mukherjee, Minister in-charge of Micro & Small Scale Enterprises, Textiles and Tourism, Govt. of West Bengal, at a function held in Kolkata yesterday.

Nalco has played a pioneering role in the export of alumina and aluminium from India. Since inception, the company has been constantly increasing its exports and forex earnings. During the Financial Year 2005-06, the company exported 0.862 Millions tonnes of alumina and 95,747 tonnes of aluminium, earning a foreign exchange of Rs.23070 Millions. It may be mentioned that during the Financial Year 2006-07 also, Nalco achieved a record export earning of Rs.25860 Millions.

Nalco products are exported to more than 30 countries. It is the first Indian company to be registered with London Metal Exchange and has ISO-9000-2001 and ISO-14001 Certifications for all its units like Mines, Alumina Refinery, Aluminium Smelter and Power Plant.

The company is currently implementing its 2nd phase expansion programme, at an investment of Rs.40920 Millions, which will be completed by this year end.

Nalco has recently signed an MoU with the Govt. of Indonesia, to set up a 0.5- Million tonne Smelter and a 1250 MW Captive Power Plant in that country. Nalco plans to invest around 3.4 billion US dollars (approx. Rs.140000 Millions) in this greenfield project.

NALCO TO PAY ENHANCED INTERIM DIVIDEND OF 45%

Bhubaneswar, 06 February 2008: National Aluminium Company Limited (NALCO) – India’s leading manufacturer and exporter of alumina and aluminium – has announced an enhanced interim dividend of 45% on a paid-up capital of Rs.6443.100 Millions, amounting to Rs.2899.400 Millions for the 2007-08 fiscal. About a week back, the company had announced an interim dividend of 40%, which has now been enhanced by 5%. The Govt. of India holds 87.15% shares of this flagship company under the Ministry of Mines, while the balance shares are held by various individuals, banks, financial institutions etc.

NALCO ACHIEVES RS 3294.400 MILLIONS NET PROFIT IN 3RD QUARTER OF 2007-08

Bhubaneswar , 29 January 2008: National Aluminium Company Limited (NALCO), the flagship PSU of the Ministry of Mines, and India’s largest manufacturer and exporter of alumina and aluminium, has reported its results for the 3rd quarter ended December 2007.

According to the unaudited financial results for the 3rd quarter of the financial year 2007-08, taken on record in the Board of Directors meeting held in Bhubaneswar on January 29, the company has achieved a net profit of Rs.3294.400 Millions, with a sales turnover of Rs.12209.700 Millions. However, during the 3rd quarter of previous fiscal, the figures were up at Rs.5726 Millions and Rs.15880.700 Millions respectively.

The net profit and sales turnover for the 9 months ended December 2007 work out to Rs.12158.300 Millions and Rs.39402.100 Millions respectively, as against the corresponding figures of Rs.17899 Millions and Rs.47915.400 Millions achieved during the first 9 months of the previous fiscal. However, the alumina sales during the 9 months of this fiscal have gone up to 0.627 Million tonnes as against 0.488 Million tonnes achieved during the comparable period of 2006-07. On the other hand, the metal sales have gone down to 0.261 Million tonnes from 0.266 Million tonnes during the comparable 9 months of the two fiscals.

The lower sale and profit are primarily because of lower global alumina & aluminium prices and importantly, a rising rupee. Alumina export price averaged 266 dollars per tonne this quarter as against 393 dollars last year during the comparable period. Similarly, at the London Metal Exchange, the average aluminium price went down to 2444 dollars per tonne from 2724 dollars during the comparable quarters of the two fiscals. Also, the dollar-rupee rate slumped to Rs.39.55 from Rs.44.83 during the comparable quarters. Supply of coal, a major raw material, was also adversely affected during the 3rd quarter, which resulted in an additional expenditure of Rs.428.600 Millions during the quarter, owing to use of more expensive coal imported from abroad and from BCCL.

SHRI S. VIJAY KUMAR INDUCTED TO NALCO BOARD

Bhubaneswar , 29 January 2008: Shri Subramanyam Vijay Kumar, Additional Secretary, Ministry of Mines, Govt. of India has been inducted as Part-time Official Director of National Aluminium Company Limited (NALCO). An IAS Officer of HP cadre of 1976 batch, Shri Vijay Kumar brings along rich experiences in Parliamentary Affairs, Rural Development and Administrative Reforms.

NALCO REACHES OUT TO SENIOR CITIZENS THROUGH HELPAGE INDIA

Bhubaneswar , 28 January 2008: Nalco donated a Mobile Medicare Unit, costing Rs.0.825 Million, to HelpAge India, to reach out to the doorsteps of needy senior citizens. On behalf of the company, Shri C.R. Pradhan, CMD, handed over the keys to Ms Rashmi Mohanty, Deputy Director, HelpAge India, Orissa & Chhattisgarh, in the presence of Shri Joy Varghese, Director (P&A), Shri B.L. Bagra, Director (Finance) and other senior officers of Nalco, on the Republic Day at Nalco Bhavan.

NALCO SIGNS MOU WITH GOVT OF INDONESIA

Bhubaneswar , 11 January 2008: National Aluminium Company Limited (NALCO), a leading PSU under Ministry of Mines, Govt. of India, has signed an MoU with the Govt of Indonesia in Jakarta today, to set up a 0.5 Million tonne Smelter and a 1250 mw Captive Power Plant in that country. The MoU was signed between Shri B.L. Bagra, Director (Finance), representing NALCO and Prof. H. Mahyuddin, Vice Governor, South Sumatra Province, representing the Indonesian Govt., in the presence of Shri J.P. Singh, Secretary (Mines), and Shri V.K. Thakral, Joint Secretary (Mines), Govt. of India.

NALCO plans to invest around 3.4 billion US dollars in this greenfield project, which works out to around 140000 Millions INR. The proposed plants will be set up in two phases. In the 1st phase, the company shall have a 0.25- Million tonne capacity Smelter and a 750 mw Power Plant.

Besides Indonesia, NALCO is also exploring the possibilities of setting up plants in Iran, Saudi Arabia and South Africa.

Closer home, NALCO is trying to set up an Aluminium Park for upstream and downstream industries, in Angul, as a joint venture with Orissa Industrial Infrastructure Development Corporation (IDCO). For this 500 acres of land is being acquired. NALCO & IDCO shall take care of basics like infrastructure, communication and power supply. The proposed upstream industries shall go for products like Caustic Soda, Aluminium Fluoride, CT Pitch and CP Coke; while downstream industries shall explore the possibilities of Castings, Extrusions, Aluminium Conductor, Aluminium Plates & Rounds, besides other products.

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.40.37
UK Pound	1	Rs.80.43
Euro	1	Rs.54.74

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	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

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