MIRA INFORM REPORT

Report Date :

23.08.2008

IDENTIFICATION DETAILS

Name :	PANCHMAHAL STEEL LIMITED
Registered Office :	Plot No. 117, GIDC Industrial Estate, Kalol, District Panchmahals – 389 330, Gujarat
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	12.09.1972
Com. Reg. No.:	04 - 002153
CIN No.: [Company Identification No.]	L2710GJ1972PLC002153
TAN No.: [Tax Deduction & Collection Account No.]	BRDP01051B
Legal Form :	Subject is a Public Limited Liability Company. The Company's shares are listed on the Stock Exchanges.
Line of Business :	Manufacturing of Rolled Products, Forged Products, Bright Bars and Steel Billets.

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.		Satisfactory

Maximum Credit Limit :	USD 15000
Status :	Improving
Payment Behaviour :	Slow and delayed
Litigation :	Clear
Comments :	Subject is a well-established and reputed company in its field. Company’s financial position is improving and is expected to wipe-off previous losses, soon. Company’s network has turned positive and they are on the verge of approaching BIFR seeking its exit from the purview of the SICK Industrial Companies Act 1985. Trade relations are fair. Payments are reported as slow but correct. The company can be considered good for normal business dealings.

LOCATIONS

Registered Office / Factory :	Plot No. 117, GIDC Industrial Estate, Kalol, District Panchmahals – 389 330, Gujarat, India
Tel. No.:	91-2676-238999
Fax No.:	91-2676-235738
E-Mail :	psl.kal@rms.sprintrpg.ems.vsnl.net.in panchmahal@panchmahalstee.com sales@panchmahalsteel.com panchmahal@panchmahalsteel.co.in
Website :	http://www.panchmahalstee.com
Head Office :	Kothari Chambers, 3^rd Floor, Kothi Road, District Baroda, Gujarat, India
Corporate Office :	"Landmark", 7^th Floor, Race Course Circle, Baroda - 390 007, Gujarat, India
Tel. No.:	91–265–2343141-49/2310046/42/43/39
Fax No.:	91-265-2343150
Corporate Office:	“Landmark”, 7^th Floor, Race Cource, Circle, Vadodara-390007, Gujarat, India
Tel. No.:	91-265-23431141
Fax No.:	91-265-23431150
Purchase Department:	GIDC Industrial Estate, Kalol, Panchayat-389330, Gujarat, India
Tel. No.:	91-2676-304777
Fax No.:	91-2676-304888/ 304889
E Mail:	purchase@panchmahalsteel.co.in

DIRECTORS

Name :	Mr. Ashok Malhotra
Designation :	Chairman and Managing Director
Date of Birth :	27.08.1952
Date of Appointment :	18.02.1976
Qualification :	B. Com
Other Directorships :	v Honey Vick Enterprises (Private) Limited v Amil Enterprises (Private) Limited
Expertise in specific functional areas :	Business strategic and Development
Name :	Mr. N. K. Bharal
Designation :	Wholetime Director
Name :	Mr. Nilesh B. Mehta
Designation :	Director
Date of Birth :	24.04.1962
Date of Appointment :	26.12.1997
Qualification :	FCA, MBA (IIM-A)
Other Directorships :	v Shaily Engineering Plastics Limited v Transpek Finance Limited v JMC Projects Limited v Jyothy Laboratories Limited v Vikalpa Financial & Management Services (P) Limited v Venture India Advisors (Private) Limited v Infinity India Advisors (Private) Limited v Sky Zen Capital Advisors (Private) Limited v Elindia Venture Fund Limited v Elindia Venture Fund Management Limited v Elindia Venture Holding Company Limited v MD Anywhere Inc
Name :	Mr. Amal Dhru
Designation :	Director
Date of Birth:	17.09.1951
Date of Appointment :	31.01.2004
Qualification :	FCA, MBA (IIM-A)
Other Directorships :	v Sirhind Steel Limited v Comprehensive Finance Services (Private) Limited v Satellite Engineering Limited
Name :	Mr. Mohanraj M. Singhi
Designation :	Director
Date of Birth :	19.12.1939
Date of Appointment :	24.03.1992
Qualification :	B.Com. LLB.
Expertise in specific functional areas :	Renowned Solicitor having expertise in legal counseling and documentation.
Other Directorships :	Vishal Exports Overseas Limited
Name :	Mr. Ambalal C. Patel
Designation :	Nominee of GIIC
Name :	Mr. Hanish Malhotra
Designation :	Director (Marketing)
Name :	Mr. Pradeep Sharma
Designation :	Director (Operation)
Name :	Mr. Milan Shah
Designation :	Additional Director
Date of Birth:	14.02.1960
Qualification:	B.Com, FCA, ACS
Date of Appointment:	01.09.2006
Expertise in specific functional areas :	Finance, Accounts and Taxation
Other Directorship:	Arvind Brands Limited

KEY EXECUTIVES

Name :	Mr. Deepak Nagar
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2007

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters / Promoters Group	12000000	85.78
FIIs	1500	0.01
NRIs	605	0.00
Mutual Funds and Banks	8500	0.06
Bodies Corporate	1073055	0.67
Public	905640	6.48
Total	13989300	100.00

BUSINESS DETAILS

Line of Business :

Manufacturing of Rolled Products, Forged Products, Bright Bars and Steel Billets.

Products :

ITC Code	Product Description
72221100	Rolled Products
72222000	Bright Bars
73261910	Forged Products
72189910	Steel Billets

Purchasing :

PRODUCTION STATUS

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Steel Billets	MT	150000	50000	35311
Bars, Rods, Coils and Wires	MT	150000	72000	35458
Forged Products	MT	6000	4200	1011
Oxygen Gas	M3	3000000	3000000	2255190
Nitrogen Gas	M3	10000000	10000000	1600380

GENERAL INFORMATION

No. of Employees :

7000

Bankers :

² State Bank of India

² State Bank of Saurashtra

Facilities :

SECURED LOAN	31.03.2007 (Rs. In Millions)
A Term Debts
i. Assets Reconstruction company (India) Limited (ARCIL)	985.064
ii. Gujarat Industrial Investment Corporation Limited ( GIIC)	167.062
iii. Life Insurance Corporation of India ( LIC)	80.300
iv. State Bank of Saurashtra (SBS)	0.000
v. Interest outstanding	6.444
	1238.870
B Working Capital Advances
i. State Bank of India ( SBI_
Cash Credit	85.246
Interest Outstanding	0.000
	85.246
Ii State Bankof Saurashtra (SBS):
Cash Credit	51.581
Bills Discounting	78.490
Export Packing Credit	12.500
Interest Outstanding	0.101
	142.672
	227.918
Total	1466.788

Notes:

1. All Team Loans are secured by first joint equitable mortgage over all the immovable properties situated at the Registered Office of the Company at Kalol, District Panchamahals ( Gujarat) and are also secured by first charge by way of hypothecation of movable properties, subject to the prior charge of Bankers over current assets for working capital advances.
2. Working Capital Advances form SBI and SBS are secured by first charge over the current assets, second charge over the immovable properties and is further guaranteed by a Director of the Company.

UNSECURED LOAN	31.03.2007 (Rs. In Millions)
i. Inter Corporate Deposits	17.500
ii. Interest Outstanding	1.086
Total	18.586

Financial Institutions:

K ICICI Bank Limited

Facilities : Term Loan : Rs. 266.593 millions

Other Loans : Rs. 239.500 millions

K Gujarat Industrial Investment Corporation Limited

Facility : Term Loan : Rs. 98.000 millions

K Life Insurance Corporation of India

Facility : Term Loan : Rs. 49.000 millions

NOTES:

All term loans are secured by first charge by way of hypothecation of movable properties, subject to the prior charge of bankers over current assets for working capital advances.

All term loans are also secured by first joint equitable mortgage over all the immovable properties situated at the Registered office of the company at Kalol District Panchmahal, Gujarat except for an erstwhile Corporate Rupee Loan of Rs. 150.000 millions, now comprised in Foreign Currency Loan.

Terms loans from SBI, SBS and foreign currency loan from ICICI Bank Limited are guaranteed by Director of the company.

Working capital advances from SBI and SBS are secured by first charge over the current assets, second charge over the immovable properties and is further guaranteed by Director of the company.

Funded interest on term loan for new SMS Project represents the amount of interest deferred upto 31.03.2004 in respect of loans from ICICI Bank Limited and upto 31.03.2001 in respect of loan from LIC as per their respective sanctions for the rehabilitation plan of the company. In respect of other term loan providers, the sanction of the revised rehabilitation plan is awaited and therefore the amount of interest arrears on those loans is shown under Interest Outstanding.

Banking Relations :	Satisfactory
Auditors :
Name :	K V Thakkar and Company Chartered Accountants
Address :	Mumbai, Maharashtra, India
Memberships:	v All India Stainless Steel Industry Association v Indian Institute of Metals v International Stainless Steel Forum v Association of Indian Forging Industry v Engineering and Export promotion Council v Export Import Club of India v Indian Stainless Steel Association v Indo American Chamber of Commerce v Indo German Chamber of Commerce v Southern Africa Stainless Steel Development Association v Australian Stainless Steel Development Association
Associates/Subsidiaries :	² Amil Enterprises Private Limited ² Honeyvick Enterprises Private Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
2,00,00,000	Equity Shares	Rs. 10/- each	Rs. 200.000 millions
20,00,000	Preference Shares	Rs. 100./- each	Rs. 200.000 millions
	TOTAL		Rs. 400.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
1,39,89,300	Equity Shares of each	Rs. 10/- each	Rs. 139.893 millions
Add :	Forfeited Equity Shares
	5600 Equity Shares (Paid up)	Rs. 3/- each	Rs. 0.017 million
	4600 Equity Shares (Paid up)	Rs. 6/- each	Rs. 0.028 million
	500 Equity Shares (Paid up)	Rs. 7/- each	Rs. 0.003 million
	TOTAL		Rs. 139.941 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		139.941	139.941	139.900
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		177.093	177.093	(432.400)
4] (Accumulated Losses)		[36.449]	[331.542]	0.000
NETWORTH		280.582	[14.508]	(292.500)
LOAN FUNDS
1] Secured Loans		1466.788	1477.349	1716.900
2] Unsecured Loans		18.586	8.373	34.800
TOTAL BORROWING		1485.374	1485.722	1751.700
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		1765.959	1471.214	1459.200
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		503.695	454.405	455.900
Capital work-in-progress		762.328	731.476	755.000
INVESTMENT		0.008	0.008	0.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1284.082	698.051	753.100
	Sundry Debtors	320.476	259.994	226.700
	Cash & Bank Balances	36.790	27.225	21.900
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	106.808	105.696	92.600
Total Current Assets		1748.156	1090.966	1094.300
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	1165.723	799.367	841.300
	Provisions	82.505	6.274	4.700
Total Current Liabilities		1248.228	805.641	846.000
Net Current Assets				248.300
		499.928	285.325
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		1765.959	1471.214	1459.200

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		4318.095	2957.771	3249.500
Other Income		2.821	7.017	52.200
Total Income		4320.916	2964.788	3301.700
Profit/(Loss) Before Tax		426.453	157.721	(183.000)
Provision for Taxation		131.360	120.250	0.000
Profit/(Loss) After Tax		295.093	277.971	(183.000)
Export Value		1784.514	996.816	986.800
Import Value		2366.733	1219.948	1369.600
Expenditures :
	Raw Materials	3212.179	2085.842	2041.100
	Excise Duty	26.344	21.867	245.700
	Power and Fuel Cost	0.000	0.000	305.400
	Other manufacturing Expenses	584.771	492.444	223.800
	Employee Cost	110.700	105.664	99.100
	Selling and Administration Expenses	115.034	89.200	93.100
	Increase or decrease in stock	[257.975]	[77.832]	[7.200]
	Miscellaneous Expenses	0.300	0.000	365.300
	Interest and Financial Charges	66.841	55.073	83.800
	Depreciation	36.869	34.809	34.600
Total Expenditure		3894.463	2807.067	3484.700

SUMMARISED RESULTS

PARTICULARS	31.03.2008 (Full Year)
Sales Turnover	1280.500
Other Income	0.600
Total Income	1281.100
Total Expenditure	1200.200
Operating Profit	80.900
Interest	30.900
Gross Profit	50.000
Depreciation	20.600
Tax	3.500
Reported PAT	25.900

KEY RATIOS

PARTICULARS	31.03.2007	31.03.2006	31.03.2005
Debt Equity Ratio	11.17	0.00	0.00
Long Term Debt Equity Ratio	9.87	0.00	0.00
Current Ratio	1.18	1.15	0.98
TURNOVER RATIOS
Fixed Assets	4.53	3.32	3.52
Inventory	4.69	4.45	4.62
Debtors	16.03	13.26	15.15
Interest Cover Ratio	7.38	3.77	2.95
Operating Profit Margin	11.38	7.53	8.67
Profit Before Interest and Tax Margin	10.59	6.46	7.60
Cash Profit Margin	7.14	5.79	6.09
Adjusted Net Profit Margin	6.34	4.71	5.02
Return on Capital Employed	27.34	12.77	0.00
Return on Net Worth	93.09	1241.63	0.00

LOCAL AGENCY FURTHER INFORMATION

HISTORY

Subject was incorporated on 12^th September 1972 at Panchmahal in Gujarat having Company Registration Number 2153.

Subject was incorporated as a private limited liability company to manufacture 18000 tpa of mild steel ingots. Subsequently it was converted into a public limited liability company.

It became a sick unit and a winding up petition was filed by the creditors. In February, 1976 the Gujarat High Court sanctioned the takeover of the company by Mr. R. L. Malhotra and Mr. Ashok Malhotra from the previous management.

After the takeover, the company turned around. Rolling facilities were set up in 1982 and secondary refining facilities were commissioned in 1986. The company switched over from production of mild steel to carbon, alloy and stainless steel.

The company has facilities to manufacture 750000 tpa of steel billets and 120000 tpa of rolled products at the GIDC Industrial Estate, Panchmahal District, Gujarat.

The first stage of technological upgradation and expansion of the rolling mill division commenced commercial production in March, 1994, while the second stage was commissioned in March, 1995. The capacity of the forgings division had also been expanded from 1800 tpa to 4200 tpa in 1994-95.

The company is putting up a modern steel melting shop with a capacity to produced 0.2 million tpa of stainless steel billets.

Company exports had registered a growth of 20% during the year 2000-01, as the figures stood at Rs. 493.000 millions in the previous year.

The company’s quality system had been accredited with ISO 9002 certification during the year 2000-01.

OPERATIONS 

There has been considerable improvement in the performance of the Company. The Company achieved a turnover of Rs.4320.900 Millions as against Rs.2964.800 Millions in the previous year. The operating profits increased to Rs.529.900 Millions as compared to Rs. 247.600 Millions in the previous year. The Company continues to concentrate on manufacture of value added Stainless Steel long products and strengthening the customer base. The Company plans to enhance its capacity for production of bright bars and wires. The global demand for stainless steel continues to grow inspite of unprecedented increase in the prices of nickel, a major input in production of stainless steel.  

REHABILITATION AND FINANCIAL RESTRUCTURING

The Company was registered with the Board of Industrial and Financial Reconstruction (BIFR) in the year 2001. The Directors are pleased to report that as a result of continuous improvement in the performance of the Company and on account of restructuring of debt by the secured lenders, the Company has generated a positive net worth at the end of the year under reference and have approached BIFR seeking its exit under from the purview of the Sick Industrial Companies (Special Provision) Act, 1985. 

The Company has filed a Scheme of Compromise and/or Arrangement between the Company and its Secured Lenders and Equity Shareholders under Section 391 of the Companies Act, 1956 in the High Court of Gujarat at Ahmedabad to give effect to the financial restructuring of secured debt by the lenders. The Hon'ble High Court has ordered conveying of meetings of the Secured Lenders and the Equity Shareholders of the Company on 28th December 2007 for approval of the said Scheme. 

NEW SMS PROJECT 

The Directors are pleased to report that the work on the new Steel Melting Shop project is nearing completion and the project is planned for commissioning during January-March 2008

MANAGEMENT DISCUSSION AND ANALYSIS 

Industry Structure and Development and Outlook 

 The country is witnessing an unprecedented industrial growth. The Government's emphasis is now on faster development of infrastructure and public utilities. India is becoming a manufacturing hub for various industry sectors viz. automobile, capital goods, engineering components etc. This is leading to large consumptions of steel. New steel capacities are being planned to meet the growing demand in the next decade. Strong opportunities are emerging for growth in consumption of stainless steel in all sectors - infrastructural, consumer durables, general engineering, automobiles, transportation etc. 

In order to avail of the emerging opportunities, the Company is continuously improving its balancing facilities for increased production of high value stainless steel products in the form of bright bars and wires. New grades of stainless steel are introduced to meet the various customers' special requirements. The marketing strategies are also designed to have strong bonds with the customers. The company is gradually building a strong presence in this segment of the industry, both domestic and internationally. 

 Opportunities and Threats 

The Company is primarily engaged in production of stainless steel long products in the form of wire rods, wires and bright bars. These products find usage in a wide range of applications viz. capital goods, consumer durables, environment control equipments, public infrastructure, construction and various kinds of industrial applications. This provides an opportunity to the company for a wider market base independent of economic effects on a particular industry segments.

However, the costs of major grades of stainless steel are directly linked to the global pricing of nickel. The volatility in nickel prices may have adverse impact on the company's financial performance. 

Contingent Liabilities:

(Rs. In Millions)

a) Guarantee given to Suppliers by Company’s banker	3.000
b) Company has executed legal undertaking for export of goods against the Machinery Imported under Export Promotion Capital Goods Scheme	49.554
c) estimated amount of contracts remaining to be executed on capital account and not provided (Net of Advances)	119.903

BIFR AND REHABIITATION SCHEME:

The Company was registered with Board for Industrial and Financial Reconstruction (BIFR) on 20^th September 2001 as a sick undertaking within the meaning of Section 3(1) (0) of the sick Industrial Companies (Special Provisions) Act, 1985 (SICA)

All secured lenders other than GIIC Limited had sanctioned the restructuring scheme which is subject to final agreement between the Company and lenders and compliance of sipulated terms and conditions. The Company is continuing to make the payments in accordance with the scheme. The Company is still pursuing with GIIC Limited for their approval of the restructuring scheme.

As a result of consistent performance of the Company over the years after becoming the sick and on account of restructuring of debts by the secured lenders, the Company’s net worth has become positive at the end of the year. The Company is approaching BIFR, seeking its exist from the purview of the Sick Industrial Companies (Special Provisions) Act, 1985.

The company is in trade terms with:

˜ Ajay Metachem Limited, Nagpur, Maharashtra

˜ Anant Refractories Private Limited

˜ Apex Engineers and Contractors

˜ Assomac Machines Limited

˜ Joglekar Refractories and Ceramics Private Limited

˜ Metech Engineering

˜ Metaflux Company Private Limited

˜ Metallurgical Services

˜ Metropolitan Equipments Consultants

˜ National Engineering Corporation

˜ Neo Power Electronics and Projects

˜ Patel Furnace and Forgings Private Limited

˜ Pratap Enterprises

˜ Polycab Industries

˜ Radha Swami Industries

˜ Radsun Enterprises

˜ Shubham Minerals and Chemicals

˜ Surat Ammonia Supply Co

˜ S I T Hydraulic Engineers

˜ Spare Age India Private Limited

˜ Calcium Chemicals

˜ Deep Engineering Corporation

˜ Dogra Chemical Company (Private) Limited

˜ Encon Furnace Private Limited

˜ G. S. Gases Private Limited

˜ Jaina Industries

˜ Jatan Engineers

˜ Khurana Wire Drawing Dies

˜ Midfield Steels Private Limited

˜ Neo Power Electronics and Project

˜ Niketa Insulators Private Limited

˜ Suony Fibre Glass (India) Private Limited

Fixed Assets

· Leasehold Land

· Land and Development

· Buildings

· Plant and Machinery

· Furniture and Fixtures

· Motor Vehicles.

AS PER WEBSITE

Profile:

Subject was established in 1972 and is a leading Stainless Steel focused long product manufacturer. The product range includes Austenitic, Martensitic, Ferritic and Precipitation Hardening grades in various sizes and finishes in the form of billets, wire rod, hot rolled bars, cold finished bars (bright bars) and wires .

With state-of-the-art production facilities they are the only company in India to manufacture all products, from billets to cold finished bars and wires, at a single location allowing them to provide flexible service and on-time deliveries to customers across the globe.

UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED ON 31.03.2008

(Rs. In Millions)

Particulars	31.03.2008 (Unedited)
1. Gross: Sales/ Income form operations	5583.216
Less: Excise Duty	[493.564]
Net Sales/ Income form Operations	5089.652
2 Other Income	4.635
Total Income	5094.287
3 Total Expenditure
a. (Increase ) / Decrease in Stock- in Trade	108.656
b. Consumption of Raw Materials	3615.038
c. Staff Cost	146.489
d. Power and Fuel	372.476
e. Consumption of Stores and Spares	219.342
f. Other Expenditure	145.642
Total	4607.643
4. Profit before Depreciation, Interest and Tax	486.644
5. Depreciation	41.758
6. Interest, Finance Charges and Exchange Variation	47.544
7. Profit before Tax	397.342
8. Provision for Taxation:
a. Decrease current Tax	45.126
b. Consum Fringe Benefit Tax	0.935
9. Net Profit after Taxes	351.281
10. Paid up Equity Share Capital (Face value per share Rs. 10/- each)	139.941
11. Reserves excluding Revaluation Reserve	177.094
12. Balance in Profit and Loss Account Credit / (Debit)	314.832
13. EPS Basic and Diluted (Rs.)	2.510
14. Aggregate of Non- Promoter Sharholding
No.of shares	1989300
% of holding	14.22%

Notes:

• The above financial results have been reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on 30^th April, 2008 and is subject to limited review by the statutory auditors.
• The Company has successfully commissioned the New Steel Melting Shop on 18^th March, 2008. This would increase in Stainless/ Special steel making capacity form 50000 M.T. 150000 M.T. per annum
• The company is discharged from the purview of Sick Industrial Companies Act, 1985 (SICA) with immediate effect vide order dated 27^th March, 2008 issued by the Board for industrial and Financial Reconstruction (BIFR)
• During the quarter ended 31^st March, 2008,4 investor complaints were received and attended to by the Company. No investor complaints were pending at the end of the quarter.

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 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 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. 43.38
UK Pound	1	Rs. 81.34
Euro	1	Rs. 64.55

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	4
--LIQUIDITY	1~10	7
--LEVERAGE	1~10	7
--RESERVES	1~10	4
--CREDIT LINES	1~10	4
--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		52

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