MIRA INFORM REPORT

Report Date :

26.08.2008

IDENTIFICATION DETAILS

Name :	MERCHEM LIMITED
Formerly Known as :	GROVE CHEMICALS PRIVATE LIMITED
Registered Office :	2^nd Floor, Malankara Centre, M. G. Road, Ernakulam – 682 035, Kerala
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	31.01.1994
CIN No.: [Company Identification No.]	U24299KL1994PLC007681
Com. Reg. No.:	09-7681
TAN No.: (Tax Deduction & Collection Account No.)	CHNM00556D
Legal Form :	A Closely Held Public Limited Liability Company.
Line of Business :	Manufacturer of Accelerators, Antioxide, Rubber Processing aids, Agrochemicals, Water treatment Chemicals and Specialty Chemicals.

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 680000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established company having satisfactory track. Trade relations are fair. Payments are reported as correct and as per commitment. General financial position is satisfactory. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	2^nd Floor, Malankara Centre, M. G. Road, Ernakulam – 682 035, Kerala, India.
Tel. No.:	91-484-2381617/ 2374120/2382285
Fax No.:	91-484-2380199/2348809
E-Mail :	merchem@vsnl.com mail@merchem.com
Website:	http://www.merchem.com
Location:	Rented
Head Office :	Grove Centre, 44, Development Plot, Kalamssery, Cochin – 683 109, Kerala, India
Tel. No.:	91-484-4089300
Fax No.:	91-484-4089310, 2532877
Factory 1 :	45 A Development Plot, Kalamassery, Ernakulam 683 104, Kerala, India (Established in 1981 - A Public Limited Company)
Tel. No.:	91-484-532877
Location:	Owned
Factory 2 :	Muthinagam Road, Eloor North, Udyogamandal - 683 501, Enakulam - 683 501, Kerala, India
Tel. No.:	91-484-559457/ 2546526
Location:	Owned
Factory 3 :	4/1 C Development Area, Edayar, P. O. Muppathadam, Ernakulam - 603 102, Kerala, India.
Tel. No.:	91-484-232334/
Location:	Owned
Branch :	G-144, Preet Vihar, Vikas Marg, New Delhi 110 092, INDIA
Tel. No.:	91-11-223 3969
Fax No.:	91-11-223 3969

DIRECTORS

Name :	Mr. Thomas Ettan Pulinat
Designation :	Managing Director
Address :	Pulinat, 50/934, A, Bank Juction, Edappally, Ernakulam - 682 024, Kerala, India.
Date of Birth/Age :	25.04.1949
Date of Appointment :	01.11.1995
Name :	Mr. Raju Mathai Pulinat
Designation :	Whole Time Director
Address :	Pulinat, House No. M. 10/6, Changampuzha Nagar, Ernakulam - 682 033, Kerala, India.
Date of Birth/Age :	20.02.1960
Date of Appointment :	31.01.1994
Name :	Mr. George V. E.
Designation :	Director
Name :	Mr. S. N. Sunderesan
Designation :	Director
Address :	Plot No. 14, Rajiv Gandhi Nagar, Sowripalayam, Coimbatore – 641 028, Tamilnadu, India.
Date of Birth/Age :	13.10.1931
Date of Appointment :	05.08.1996
Name :	Mr. V V Kamath
Designation :	Director
Address :	No. 93, Panchajanya, 13^th Main, Aicoboo Nagar, BTM Layout, Stage 1, Banglore – 560 068, Karnataka, India.
Date of Birth/Age :	13.10.1931
Date of Appointment :	23.05.2005
Name :	Mr. A K Nair
Designation :	Director
Address :	M-10/15, Changampuzha Nagar, Kalamassery Cochin, Ernakulam – 682 033, Kerala, India.
Date of Birth/Age :	27.08.1943
Date of Appointment :	26.02.2001
Name :	Mr. Anitha Venunath
Designation :	Director
Address :	Ashraya, Periyar Nagar, Near Uliyannur Ferry, Thikkattukara P. O. Aluva, Ernakulam – 683 106, Kerala, India.
Date of Birth/Age :	12.02.1956
Date of Appointment :	20.09.2002
Name :	Mr. B Sudhakar Shetty
Designation :	Director
Address :	298, Canara Bank Colony, Nagarbhavi Road, Banglore – 560 072, Karnataka, India.
Date of Birth/Age :	20.03.1950
Date of Appointment :	23.05.2005
Name :	Mr. Bhagawandas. T
Designation :	Nominee of Canara bank Venture Capital Fund Limited
Name :	Mr. Alexander T.
Designation :	KSIDS Nominee

KEY EXECUTIVES

Name :	Mr. Anilkumar G
Designation :	Secretary
Address :	Satheesh Bhavan, Kidarakuzhy, Parasuvaikal P.O., Thikkattukara – 695 508, Kerala, India
Date of Birth/Age :	27.05.1981
Date of Appointment :	07.05.2005

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	Percentage of Holding
Government Companies	10.00
Venture Capital	14.00
Bodies Corporate	12.00
Other top 50 shareholders	19.00
Directors or relatives of Directors	45.00
Total	100.00

List of Allottees 

Names of Allottees	No. of Shares
Canbank Venture Capital Fund Limited	52500
Total	52500

Equity shares Breakup (percentage of total equity)

(As on 30.09.2007)

Category	Percentage
Public financial companies	10.00
Bodies corporate	12.00
Directors or relatives of Director	59.00
Other top fifty (50) shareholders	19.00
Total	100.00

BUSINESS DETAILS

Line of Business :

The company is Manufacturer of Accelerators, Antioxide, Rubber Processing aids, Agrochemicals, Water treatment Chemicals and Specialty Chemicals.

Products :

· Rubber and Chemicals

· Accelerators

· Antioxidants

· Processing Aids

· Agrochemicals and water treatment chemicals

· Specialty chemicals

ITC Code	Product Description
38121000	Rubber Accelarators
38123010	Antioxidents - Rubber

GENERAL INFORMATION

No. of Employees :

80

Bankers :

· State Bank of India State Bank of India, Shanmugham Road, Branch, Ernakulam, Kerala, India · IDBI Bank Limited Panampilly Nagar, Ernakulam, Cochin-682036, Kerala, India · State Bank of Travancore Industrial Finance Branch, Malankara Center, M. G. Road, Ernakulam – 35, Kerala, India · State Bank of India Commercial Branch, Express House, Kaloor, Cochin-682017, Kerala, India · State Bank of India Commercial Branch, 1^st Floor, Venkarath Towers, Bye Pass Junction, Padivattom, Ernakulam – 682 024, Kerala, India · Industrial Development Bank of India Limited Panampilly Nagar, Kochi – 682036, Kerala, India

Banking Relations :	Satisfactory
Auditors :	G Ramachandran Nair Chartered Accountants Address : K Verghese and Company, Parameswaran Pillai Bhavan, Hospital Road, Kollam – 691 001, Kerala, India

CAPITAL STRUCTURE

(As on 30.09.2007)

Authorised Capital :

No. of Shares	Type	Value	Amount
20000000	Equity Shares	Rs.10/- each	Rs.200.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
5200000	Equity Shares	Rs.10/- each	Rs.52.000 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		52.000	52.000	52.000
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		84.324	52.024	28.716
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		136.324	104.024	80.716
LOAN FUNDS
1] Secured Loans		292.197	131.900	109.113
2] Unsecured Loans		21.889	18.256	21.021
TOTAL BORROWING		314.086	150.156	130.134
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		450.410	254.180	210.850
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		101.816	95.642	86.216
Capital work-in-progress		137.006	5.892	2.002
INVESTMENT		0.390	0.390	0.200
DEFERREX TAX ASSETS		2.591	0.501	3.012
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	119.113	79.529	55.781
	Sundry Debtors	171.816	130.518	95.779
	Cash & Bank Balances	34.483	11.803	7.270
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	21.205	14.479	16.326
Total Current Assets		346.617	236.329	175.156
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	112.286	66.899	49.434
	Provisions	26.241	18.271	6.979
Total Current Liabilities		138.527	85.170	56.413
Net Current Assets		208.090	151.159	118.743
MISCELLANEOUS EXPENSES		0.517	0.596	0.677
TOTAL		450.410	254.180	210.850

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		853.395	714.124	508.287
Other Income		1.443	0.705	2.853
Total Income		854.838	714.829	511.140
Profit/(Loss) Before Tax		59.956	43.152	15.510
Provision for Taxation		0.000	2.511	0.000
Profit/(Loss) After Tax		59.956	40.641	15.510
Expenditures :
	Raw Material Consumed	504.158	412.474	297.529
	Increase/(Decrease) in Finished Goods	(22.403)	(6.212)	2.266
	Salaries, Wages, Bonus, etc.	30.016	23.264	17.811
	Payment to Auditors	0.121	0.059	0.047
	Interest	23.544	21.179	17.498
	Insurance Expenses	2.120	1.662	0.984
	Power & Fuel	15.599	15.906	13.298
	Depreciation & Amortization	17.765	15.865	13.648
	Other Expenditure	223.962	187.480	132.549
Total Expenditure		794.882	671.677	495.630

KEY RATIOS

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
PAT / Total Income	(%)	7.01	5.69	3.03
Net Profit Margin (PBT/Sales)	(%)	7.03	6.04	3.05
Return on Total Assets (PBT/Total Assets}	(%)	13.37	12.99	5.93
Return on Investment (ROI) (PBT/Networth)		0.44	0.41	0.19
Debt Equity Ratio (Total Liability/Networth)		3.32	2.26	2.31
Current Ratio (Current Asset/Current Liability)		2.50	2.77	3.10

LOCAL AGENCY FURTHER INFORMATION

INDUSTRY

The chemical industry which had been on a path of high growth since liberalisation, slowed down in FY’97. Year-on-year growth rate in Index of Industrial Production (IIP) for chemical production in FY’96. This slowdown has been attributed to a number of reasons. The overall slowdown in economy, including that of the agriculture sector has bad on impact on the chemical industry. The impact of reforms on the industry has also been severe.

The caustic soda industry, with a size of around Rs.36 bn, comprises around 5% of the chemical process industry in India.

Caustic soda is manufactured/sold in liquid (lye) or solid (flakes) form. It finds usage in diverse applications such as in the manufacture of paper, alumina, man-made and cotton fibres, soaps/detergents and a host of chemicals. Chlorine is a co-product and for every tone of caustic soda manufactured, 0.88 tonnes of chlorine is produced. Chlorine is used in a number of applications such as in the manufacture of PVC and several other organic/inorganic chemicals.

Soda ash, chemically known as Sodium Carbonate is a versatile inorganic chemical with a wide variety of applications. It is largely used in the manufacture of detergents, silicates and several downstream chemicals. The domestic soda ash industry has been facing the onslaught of imports for quite some time.

The industry is likely to continue to be a net importer although imports may be lower in the coming year due to larger capacities in the domestic market. The competitiveness of the industry will be severely tested as import duties on the furnished products come down further and foreign major seek to establish a toehold in the country.

 Form No. 8

Name of the company

MERCHEM LIMITED

Presented By

P E Thomas, Managing Director

1) Date and description of instrument creating the change

Agreement dated 14.02.2006

2) Amount secured by the charge/amount owing on the securities of charge

Rs.80.000 millions

3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given

All present and future goods, book-debts and all other movable assets of the Borrower including but not limited to documents of title to the goods, outstanding moneys, receivables including receivables by way of cash assistance and / or cash incentives under the Cash Incentive Scheme or any other Scheme Claims including claims by way of refund of customs / excise duties under the Duty Drawback Credit Scheme or any other Scheme, bills, invoices documents, Contracts, insurance policies, guarantees, engagements, securities, investments and rights belonging to or in the Borrower wherever lying stored and kept and whether in possession of the Borrower or of the Bank or of any third party whether in India or elsewhere throughout the world (including all such goods, other movable assets as may be in course of shipment transit or delivery).

4) Gist of the terms and conditions and extent and operation of the charge.

Interest and Repayment was determined by the Bank from time to time.

The Loan Limit Rs.80.000 millions consists of

Cash Credit	Rs.34.500 millions
DD/Cheque/Bill Purchase / Discounting	Rs.3.000 millions
Letter of Credit	Rs.32.500 millions
Bank Guarantee	Rs.10.000 millions
Total	Rs.80.000 millions

5) Name and Address and description of the person entitled to the charge.

Industrial Development Bank of India Limited

Panampilly Nagar, Kochi – 682036

6) Date and brief description of instrument modifying the charge

Not Applicable

7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.

Not Applicable

Corporation identity number or foreign company registrations number of the company	U24299KL1994PLC007681
Name of the company	MERCHEM LIMITED
Address	2^nd Floor, Malankara Centre, M. G. Road, Ernakulam – 682 035, Kerala
This Form is for	Modification of charge
Type of Charges	· Immovable property · Book debts · Movable property (not being pledge)
Particular of the charge holder	State Bank of India Commercial Branch, 1^st Floor, Venkarath Towers, Bye Pass Junction, Padivattom, Ernakulam – 682 024, Kerala, India
Nature or description of the instrument creating charge	1. Supplemental Agreement of Hypothecation of goods and assets for increase in the overall limit. 2. Supplemental Agreement of loan for increase in the overall limit. 3. Letter regarding the grant of individual limits within the overall limit. 4. Letter Evidencing extension of equitable mortgage relating to 27 cents and 32 cents 5. Letter Evidencing extension of equitable mortgage relating to 40600 Sq. Mtrs.
Date of the instrument creating charge	17.01.2008
Amount Secure by the charge	Rs.446.000 millions
Brief of the principal terms and conditions and extent and operation of the charge	· Rate of Interest Interest @ of 1.50% above SBAR, currently 14.25% p.a. for CC (stocks and receivables) Interest @ upto 180 days: 3.00% below SBAR, currently 9.75% p.a. for EPC (sub limit of CC). Interest @ 1% above over the regular working capital facilities, currently 15.25% p.a. for SLC. Interest @ upto 365 days: 3.00% below SBAR, currently 9.75% p.a. for FBD (Under LC and Non LC). Interest @ SBAR, currently 12.75% p.a. for TL of Rs.150.000 millions Interest @ 2.00% above SBAR, currently 14.75% p.a. for TL of Rs.20.000 millions · Terms of repayment The Term Loan of Rs.20.000 millions repayable in 59 monthly instalments of Rs.0.333 million each and last instalment of Rs.0.353 million Commencing from 01.01.2009 and ending on 01.12.2013. · Margin · Raw Materials – 25% · Semi-Finished Goods – 25% · Finished Goods – 25% · Any Others (Specify) TL (Rs.20.000 millions) – 32.78% EPC – 25% LC – 15% BG – 25% · Book debts / receivables – 30% (Cover period 90 days)
Particulars of the Property charged	The existing charge on the current assets, book debts and movable assets. Extension of Equitable Mortgage over the Company’s Immovable Property at Kerala namely, 27 cents and 32 cents. Extension of Equitable Mortgage over the Lease hold rights of the Merchem Limited including immovable properties comprising of land and buildings and erections thereon (both present and future) situated at Plot No. 24/1.
Particulars of present modification	On 17.01.2008 the existing loan limit of Rs.304.000 millions was enhanced to Rs.446.000 millions.

Business:

The company uses raw materials like Sulphur, Aniline, Aceton, Carbon Disulphide, Chlorine, Dimethylamine, Diethylamine, Caustici Soda, Morpholine.

The company exports chemicals like Tetramethylthiuram disulphide, 1,2-Dihydro, 2,2,4-trimethylquinoline, 2,2'-Dibenzothiazyl disulphide, Zinc mercaptobenzothiazole, N-Cyclohexyl-2-benzothiazole-2-sulphenamide, Zinc director-n-butyl dithiocarbamate, Thiazole activated.

The company is ISO 9002 certified by BVQI.

FIXED ASSETS:

· Land and Land development

· Building

· Plant and Machinery

· Electrical Installation

· Electrical and Lab Equipment

· Furniture and Fixture

· Library Books

· Vehicles etc.

AS PER WEBSITE:

Started in 1981, Subject is today acknowledged as manufacturers of chemicals and auxiliaries for the rubber industry.

The company's product range include accelerators, antioxidants, rubber processing aids, agrochemicals, water treatment chemicals and specialty chemicals.

Subject caters to premier tyre companies and industries in other sectors, as varied as health, transportation and consumer goods, Subject enjoys a clientele that goes beyond the borders of India. The bulk exports of rubber chemicals from company to South East Asia and European markets are a testimony to its cross-border customer base. Over twenty percentage of the combined installed capacity of 20700MT is exported.

Located in the industrial suburbs of Cochin, Subject employs state-of-the-art facilities, stringent quality control systems and superior technical expertise to achieve customer satisfaction and standards of excellence in both, the domestic and international markets.

The R and D team is continuously finding better ways to meet customer expectations for both better quality products and new product development. Consistency in quality and product parameters is attained by a systematic approach beginning at raw materials and covering the final processing. This approach has held in good stead with the major automobile tyre companies and other customers as indicated in their vendor rating as well as their audits. The Quality and Environmental Management Systems at Merchem comply with the ISO 9001: 2000 and the ISO 14001 standards.

The range of products is shipped in standard packaging as per the ERCA (European Rubber Chemical Association) guidelines. The products are available in pellets/ pastilles/powder form, in HDPE laminated paper bags. Liquid products are sold in barrels.

Milestones

The milestones achieved by the company on the path of success are :

1981 - Subject launched Rubber Processing Chemicals in Indian Market.

1991 - Subject started operations at Edayar with combined installed capacity of
1000 MT per annum.

1994 - Product range broadened by introducing secondary accelerators.

1995 - Started Export to South East Asia.

1997 - Quality Management System accreditation in line with ISO 9001:2000 standards.

1997 - Eloor unit commissioned with initial installed capacity of 3000 MT/annum for
manufacturing Thiazole, Sulfenamide type of accelerators and TQ antioxidant.

2000 - Eloor unit doubled the capacity of Sodium Mercaptobenzothiazole and Quinoline
based Antioxidant resulting in capacity enhancement to 5000 MT/annum.

2000 - Environment Management System accreditation with ISO 14001:1996
certificate.

2002 - Introduced energy efficient and state-of-the art Drying and Pelletisation facilities
for sulphenamides.

2003 - Quality System upgraded in line with the ISO 9001:2000 standards.

2004 - Best Performer award received from Hindustan Organic Chemicals.

2005 - Mercure DCBS and Merdonor DTDM plant commissioned in Eloor.

2005 -Commissioned the first Zero Discharge System in the state of Kerala for Effluent
Disposal by installing Reverse Osmosis and Multistage Evaporator systems.

2006 - Environment Management System in line with ISO 14001:2006 standards.

2006 - An exclusive R and D section set up for upgrading the existing technology and to develop
new products.

2008 - Subject R and D section recognized by the Department of Scientific and Industrial Research (DSIR), Ministry of Science and Technology, Government of India.

Products

Subject mainly caters to rubber-based industries but it has a range of other products too. These find use in agriculture, water treatment, etc. These include accelerators, anti-oxidants, anti-degradants, processing aids, anti-ozonants/ anti-flex cracking agents, water treatment chemicals and agrochemical intermediaries.

Research and Development

R and D is one of the most important factors that aid a manufacturing company's growth. Especially so, in case of rubber chemicals where the aim is to develop low cost avant-garde products that exhibit good performances consistently and over a long period of time.

Subject has a centralized R and D facility that carries out research in rubber processing chemicals, pharmaceutical raw materials, industrial water treatment chemicals and pesticides. The efforts are directed towards developing new processes for products and continuous improvement of existing processes. Aimed at cycle-time reduction, cost-efficiency and minimization of waste generated, the R and D has been successful in developing processes for environment friendly, Nitrosoamine-free accelerators, hindered phenolic antioxidants and antiozonants, leather chemicals and water treatment chemicals.

Subject takes pride that Mercure TBBS (Sulphenamide Accelerator) was the first TBBS to be produced in India. Similarly, Merdonor DTDM (Sulphur Donor) and Mercure AHB (Special Purpose Accelerator) were also indigenously produced by Merchem. A new product from the R&D team is MERNOX L.

The Process Development research carried out at the R and D helps Merchem to deliver customized products. Equipped with state-of-the-art technology, the R and D maintains global standards. The cutting edge equipments include high performance liquid chromatograph, high pressure autoclave, ultra cryostat, moisture analyzer and all relevant equipments for carrying out research in specialty organic chemicals.

Subject's R and D facility is now recognized by Department of Scientific and Industrial Research (DSIR), Ministry of Science and Technology, Government of India, New Delhi. 

Technology

Subject utilizes the latest technologies to deliver superior quality chemicals for rubber and other industries. Subject since its inception has realized that only technological competence backed by a strong Research and Development programme would help the company in meeting its present and future challenges. Understanding the ever-changing and demanding requirements of the customers and society, and integrating them into the activities has been the key to their technological developments.

The technology developments comprises of activities like process improvements to develop low-cost processes by the way of yield improvements, cycle-time reductions, tactful management of cost/energy intensive operations etc., and transferring the benefits to the customers.

The process developments that could lead to quality products having excellent stability, particularly in the area of intrinsically less stable Sulfenamide accelerators.

The inclination towards development of greener processes has lead to using eco-friendly raw materials as well as developing environmental friendly nitrosamine-free rubber chemicals. Waste has been minimized by developing efficient processes and recycling wastes to the extent possible by using appropriate recycling procedures.

Application Research on existing as well as new products to meet requirements of the customers is carried out in the exclusive R and D labs. 

Manufacturing

Subject’s main plant is situated in the Eloor industrial area. Apart from this, there are two other functional units in Kerala and an upcoming one in the state of Gujarat. The state-of-the-art plants are well equipped to meet the customized needs of customers in a time-bound manner. The technical team at the plants adheres to strict quality standards and ensures that the finished product delivers. The product range includes accelerators, anti-degradants, processing aids, sulphur donor, agro chemical intermediaries and water treatment chemicals. All the plants work 24-hours a day, in three shifts.

Customer Focus

Subject has tasted success only due to its customers and the relationship it enjoys with them. Being aware of the specific product specifications required by various clients and finding ways to achieve the desired product parameters adds to the special relationship.

A team of highly trained staff of engineers, chemists and technicians work closely with the technical sales force and the customers. The needs and requirements of our customers are integrated into new products development at the very beginning.

The range of chemicals continues to grow with increased customer demand and production capabilities. As Subject forays into new domestic and international markets, the goodwill earned and the environment friendly attitude will accentuate growth in a dynamic world.

The product range include different forms like powders, pellets, pastilles with controlled particle size, density and surface area. The products in pellets/pastilles/powder forms are available in HDPE laminated paper bags and liquid products are packed in barrels.

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 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.43.58
UK Pound	1	Rs.80.31
Euro	1	Rs.64.16

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	8
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	7
--LEVERAGE	1~10	7
--RESERVES	1~10	7
--CREDIT LINES	1~10	7
--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	NO
--AFFILIATION	YES/NO	NO
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		63

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