MIRA INFORM REPORT

Report Date :

11.07.2008

IDENTIFICATION DETAILS

Name :	JAY SHREE TEA AND INDUSTRIES LIMITED
Registered Office :	Industry House, 15^th Floor, 10 Carnac Street, Kolkata – 700 017, West Bengal.
Country :	India
Financials (as on) :	31.03.2008
Date of Incorporation :	27.10.1945
Com. Reg. No.:	12771
CIN No.: [Company Identification No.]	L15491WB1945PLC12771
TAN No.: [Tax Deduction & Collection Account No.]	CALJ00002C
PAN No.: [Permanent Account No.]	AAACJ7788D
Legal Form :	Public Limited Liability Company. Company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturers of Sod Silico Fluoried, Black Tea, Claims, Cryolite, Green Tea Leaf, Semi Finished Swan Timber and Veneer etc.

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 7989000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and reputed company meeting its normal commitments timeously. Trade relations are fair. Business is active. General financial position is good. The company can be considered good for normal business dealings.

LOCATIONS

Registered Office :	Industry House, 15^th Floor, 10 Carnac Street, Kolkata – 700 017, West Bengal, India.
Tel. No.:	91-33-22827531-34
Fax No.:	91-33-22479635
E-Mail :	info@jayshreetea.com birlatea@giasc101.vsnl.net.in
Website :	http://www.jayshreetea.com

DIRECTORS

Name :	Mr. B M Khaitan
Designation :	Director
Name :	Mr. G P Goenka
Designation :	Director
Name :	Mr. S S Kothari
Designation :	Director
Name :	Mr. S K Tapuriah
Designation :	Director
Name :	Ms. Jayashree Mohta
Designation :	Director
Name :	Mr. D M Jain
Designation :	Managing Director

KEY EXECUTIVES

Name :	Mr. B K Birla
Designation :	Chairman
Name :	Mr. Asis Bandyopadhyay
Designation :	Nominee (GIPSA)
Name :	Mr. R K Ganeriwala
Designation :	President and Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2008

Category of Shareholder	Total No. of Shares	Percentage of Holding
Shareholding of Promoter and Promoter Group
Indian:
Individuals / Hindu	43554	0.41
Bodies Corporate	3948538	37.01
Any Other (specify) Trust	176808	1.66
Public Shareholding
Institutions:
Mutual Funds/ UTI	112898	1.06
Financial Institutions/ Banks	1389719	13.03
Non – Institutions:
Bodies Corporate	828446	7.76
Individuals
i) Individuals shareholders holding nominal sharecapital upto Rs.1 lakh	2804589	26.29
ii) Individuals shareholders holding nominal sharecapital in excess of Rs.0.100 million	555554	5.21
Any other (specify) NRI	55346	0.52
OCB	752472	7.05
TOTAL	10667924	100

BUSINESS DETAILS

Line of Business :	Manufacturers of Sod Silico Fluoried, Black Tea, Claims, Cryolite, Green Tea Leaf, Semi Finished Swan Timber and Veneer etc.
Products :	· Sod Silico Fluoried · Black Tea · Claims · Cryolite · Green Tea Leaf · Semi Finished Swan Timber · Veneer

GENERAL INFORMATION

No. of Employees :	About 10000
Bankers :	· Standard Chartered Grindlays Bank · Hong Kong Bank · American Express Bank
Banking Relations :	Good
Auditors :	M/s. Singhi and Company Chartered Accountants
Associates/Subsidiaries :	NIL

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2008	31.03.2007	31.03.2006
SHAREHOLDERS FUNDS
1] Share Capital		106.800	106.700	106.700
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		1491.000	1351.200	1320.600
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		1597.800	1457.900	1427.300
LOAN FUNDS
1] Secured Loans		1251.500	1052.500	800.900
2] Unsecured Loans		260.000	392.700	450.400
TOTAL BORROWING		1511.500	1445.200	1251.300
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		3109.300	2903.100	2678.600
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1445.400	1053.100	1045.100
Capital work-in-progress		19.600	99.100	18.900
INVESTMENT		946.800	1058.600	999.600
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	374.600	344.200	348.400
	Sundry Debtors	258.800	200.000	198.400
	Cash & Bank Balances	254.800	127.800	156.400
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	367.200	451.200	460.900
Total Current Assets		1255.400	1123.200	1164.100
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	356.300	308.700	429.900
	Provisions	201.600	122.300	120.300
Total Current Liabilities		557.900	431.000	550.200
Net Current Assets		697.500	692.200	613.900
MISCELLANEOUS EXPENSES		0.000	0.100	1.100
TOTAL		3109.300	2903.100	2678.600

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
Sales Turnover		2735.000	2423.300	2171.500
Other Income		229.700	188.700	240.500
Total Income		2964.700	2612.000	2412.000
Profit/(Loss) Before Tax		113.200	52.300	106.800
Provision for Taxation		(1.300)	(4.000)	0.300
Profit/(Loss) After Tax		114.500	56.300	106.500
Expenditures :
	Manufacturing Expenses	253.900	243.000	252.800
	Administrative Expenses	276.500	268.400	229.500
	Raw Material Consumed	883.600	798.400	607.900
	Increase/(Decrease) in Finished Goods	18.400	(2.700)	(11.700)
	Power & Fuel	205.600	206.100	202.300
	Excise Duty	58.700	29.200	31.000
	Employee Cost	841.200	692.700	688.000
	Miscellaneous Expenses	150.800	177.100	178.700
	Depreciation & Amortization	69.300	62.600	57.200
	Other Expenditure	93.500	84.900	69.700
Total Expenditure		2851.500	2559.700	2305.200

QUARTERLY / SUMMARISED RESULTS

PARTICULARS	30.06.2007	30.09.2007	31.12.2007	31.03.2008
Sales Turnover	446.900	669.800	752.200	758.900
Other Income	59.500	37.400	44.700	16.500
Total Income	506.400	707.200	796.900	775.400
Total Expenditure	439.100	530.100	704.000	868.100
Operating Profit	67.300	177.100	92.900	(92.700)
Interest	19.700	17.200	14.000	23.600
Gross Profit	47.600	159.900	78.900	(116.300)
Depreciation	15.000	17.300	17.300	17.600
Tax	3.200	8.900	6.400	(12.000)
Reported PAT	29.400	133.700	55.200	(114.700)

KEY RATIOS

Year	31.03.2008	31.03.2007	31.03.2006
Debt-Equity Ratio	1.04	1.02	0.94
Long Term Debt-Equity Ratio	0.58	0.63	0.48
Current Ratio	1.04	1.15	1.04
TURNOVER RATIOS
Fixed Assets	1.43	1.46	1.36
Inventory	7.61	7.00	6.24
Debtors	11.92	12.17	11.05
Interest Cover Ratio	1.39	1.14	0.92
Operating Profit Margin(%)	7.29	6.57	5.58
Profit Before Interest And Tax Margin(%)	4.76	3.99	2.94
Cash Profit Margin(%)	4.12	3.34	2.38
Adjusted Net Profit Margin(%)	1.58	0.76	-0.26
Return On Capital Employed(%)	4.50	3.61	2.60
Return On Net Worth(%)	3.06	1.38	-0.44

LOCAL AGENCY FURTHER INFORMATION

BUSINESS

Subject is engaged in manufacturing of Sod Silico Fluoried, Black Tea, Claims, Cryolite, Green Tea Leaf, Semi Finished Swan Timber and Veneer.

Subject is a part of B. K. Birla Group of Company.

Subject is a leading business house – catering for best possible tea at the most competitive prices, it has already created its own niche in the market.

The company’s customers are not only in India but also in Germany, Japan, UK, Middle East and the CIS.

WEBSITE DETAILS:

Scheme of amalgamation and demerger:

During the year, the Company has pursuant to the provisions of Sections 391 to 394 of the Companies Act, 1956 and with the approvals of the shareholders and the Hon'ble High Court at Kolkata, has amalgamated Darjeeling Consolidated Tea Company Limited. and Marionbarie Tea Company Limited. with effect from 1st April 2007. Under the said scheme of arrangement, the entire undertakings/ businesses pertaining to Sungma and Turzum Tea Estates and all the assets, properties, investments and benefits of Birla Tea Limited, (BTL) (excluding North Tukvar Tea Estate) stands demerged from BTL and amalgamated with the Company with effect from the said date. Further, the Infotech Division of the Company shall stand transferred to and vest in Jay Shree IT Consultants Limited. (JSICL) formed for the purpose with effect from 1st September 2007. Upon the scheme being operative, the Company shall issue and allot to the members of BTL, one (1) equity share of Rs.10/- each for every 20 (twenty) equity shares of Rs.10/- each held in the said Company. Similarly, JSICL shall issue and allot 9.50 lac equity shares of Rs.10/- each at a premium of Rs.40/- per share to the Company for the value of assets being transferred to them. The scheme for amalgamation and demerger is expected to strengthen the position of the Company and should have beneficial results for the shareholders, employees and all concerned. 

 The financial results of the company after giving effect to the said scheme of amalgamation and demerger for the year ended 31.3.2008 are enumerated below and hence not comparable with the figures of the previous year: 

Review of Performance: 

As compared to the previous year, the result for the current year is slightly better as: 

The better cultivation practices adopted in your tea estates helped in improving quality in Upper Assam, Cachar and Dooars area. 

Prices improved due to increase in domestic demand and the better quality teas consistently met with enquiry at remunerative prices. 

Timely procurement of raw materials in fertilizer units helped in improved profitability despite very high increase in cost thereof. 

Tea Estates: 

 Indian crop at 945 m.kgs. in the year 2007 saw a deficit of 11 mn. kgs.

Over the figure of 956 m. kgs. in 2006 because of lower crop both in North and South India. Total production of company was 184.99 lac kg. during 2007-08 against 197.94 lac kg. last year. The lower crop was because the company reduced its bought leaf production from 39.02 lac kgs. last year to 24.29 lac. kgs. this year as the prices of green leaf continued to remain unattractive in some of the areas. The own crop was higher at 160.70 lac kgs. as against 159.14 lac kg. last year. The Company increased its production of Orthodox tea in Assam as the demand for this variety of tea from international market was higher. A robust economy and the increase in spending power of the Indian consumer was reflected in the strong demand for good and best quality teas which fetched premium prices throughout the year. However, the common tea prices suffered a setback during the period of June to September after which the prices improved. and well-made teas were in favour with the buyers. Though the general tea market has improved, it is far below the prices achieved during 1998-99. 

 Modernisation and Development Programmes of Tea Estates:

Tea estates follow the up-to-date field practices, to improve upon the quality standards. Regular uprooting and replanting / rejuvenation of old bushes is being done in their Assam, Cachar and Dooars Gardens. Latest energy saving machineries have been installed to reduce cost of production. The emphasis is to produce quality teas catering to the needs of domestic as well as international buyers. The certification for HACCP & SQF for the Assam Estates is in final stage. As reported earlier, two gardens in Darjeeling have adopted Bio-Organic conversion practices which should improve price realisation in future. Based on the results, we are planning to adopt this conversion process in two more gardens. 

The tea estates continue to maintain stringent control under quality management system and have taken precautions to ensure strict conformity with various norms to market the tea under retail chain in India and abroad. Various measures have been taken to ensure hygiene in all its work places. 

 The tea estates have undertaken various social and welfare activities including afforestation, sports meet, health camp, pulse polio programme, literacy drive for workers, cleanliness and adult education programmes. 

 The Jay Shree Chemicals & Fertilisers, Khardah:

The production of Single Super Phosphate was curtailed as the international prices of raw materials, rockphosphate and sulphur were skyrocketing with no revision in subsidy. The Government authorities are aware of the plight of the industry and hopefully something positive will be announced in the near future. The Sulphuric Acid produced by the unit achieved better realization and the year recorded its highest ever sales. This coupled with timely procurement of raw materials helped in improving the profitability of the unit. 

The Jay Shree Chemicals & Fertilisers, Gurgaon: 

The unit achieved higher sales realization from the sale of Sulphuric Acid resulting in improved profitability. The rising cost of Sulphur and availability of by-product acid from smelters in nearby areas are cause of concern. 

The unit manufactured 32010 M.T of acid compared to 31982 M.T. last year and sold 30901 M.T. compared to 32499 M.T. last year. 

Export of Tea: 

All India exports suffered a set back and was one of the lowest in recent years. It was pegged at 957 m. kgs. as against 219 m. kgs (as revised by Tea Board) last year. South Indian tea export accounted for the bulk of this deficit. In value terms the realization was higher than last year.

There was sharp decline in shipments to Iraq due to payment problem and lower offtake by Kenya and Pakistan. The CIS countries continued to be the major importers of Indian teas. With vigorous marketing efforts your company increased its presence in CIS countries and added Egypt to its new list of customers. The F.O.B. value of current year export was higher by 20% at Rs.486.000 millions compared to Rs.406.200 millions last year. 

Subsidiary:

Under the scheme for overall restructuring of its subsidiaries and other businesses, Birla Tea Ltd., retained its status of subsidiary to the Company and Jay Shree IT Consultants Ltd, became wholly owned subsidiary of the company. 

As per requirements of Clause 32 of the Listing Agreement, the Consolidated Financial Statements of the said subsidiaries duly audited by the Statutory Auditors of the Company are annexed to the Annual Report. 

Revaluation:

Rs.3.360 millions representing depreciation for the current year on the enhanced value of fixed assets and Rs.0.027 million lying credited to Revaluation Reserve for Assets sold ! discarded / retired during the year have been written back from the Revaluation of Fixed Assets Reserve. 

Prospects: 

In absence of any carry forward stocks, the markets started with a strong note. The production of Orthodox teas is poised to increase on the back of the anticipated strong export enquiry from CIS and Middle East countries.

The shortfall in crop and increase in domestic consumption year after year should lead to improvement in prices. The Government of India is aware of the social burden on tea industry. The committee formulated by it has submitted its recommendations for sponsoring of social schemes in tea garden areas. This is a long pending demand of the industry and has to be met by the government, sooner the better, to make the cost competitiveness of Indian tea in international arena. With opening up of electronic auction system and expansion of retail outlets, the major packeteers are expected to source teas in a more competitive environment. So, after a long spell of downward trend, the tea industry can took forward to future with optimism. 

OVERVIEW:

Indian Tea production in 2007 was lower at 945 m.kgs. compared to 956 m.kgs. in 2006 i.e. a decrease of 11 m.kgs. The world crop was higher by around 52 m.kgs. mainly due to increase in crop in Kenya. The Company produced 184.99 lac kgs. tea against 197.94 lac kgs. last year. The company produced lower quantity of tea from bought leaf as the prices of bought leaf was unremunerative. The Company's initiatives helped in increasing the export by around 19.87% in value terms and 27.82% in quantity terms. 

SEGMENT ANALYSIS AND REVIEW:

The Company is engaged in the manufacture of tea, chemicals & fertilisers, besides tea warehousing and investment activities. The core business of the Company is TEA. This accounts for 74.63% of gross turnover during 2007-08.

The other segments i.e. Chemicals & Fertilisers account for 24.55% and others 0.82% of the gross turnover. 

 TEA: 

 The Company's districtwise production compared to All India production is enumerated below: 

OUTLOOK:

The domestic demand for teas is increasing year after year. In absence of any carry forward stock in the current year market should start with strong note. The production of orthodox teas is increasing because of strong enquiries from overseas buyers. This shift in production. pattern will tighten availability of CTC Tea in the market and should boost up prices with Kenyan political imbroglio, the export demand should also improve. So after a long period of diminishing return, we can look forward to the future with renewed optimism. 

CHEMICALS & FERTILISERS: 

REVIEW OF OPERATIONS: 

At Khardah plant the cost of raw materials and other posts for manufacturing Single Super Phosphate are increasing every year, and the issue of rational fixation of subsidy remain unsettled. The future of the industry depends upon the policies of the Central Government for upward revision in subsidy and unless corrective and effective measures are taken, it will be difficult for Super phosphate industry to survive. During the year, the realization from sale of sulphuric acid was better in the Khardah plant and with effective cost control, than profitability was sustained to some extent. In Haryana plant, the prices of sulphuric acid increased and with better inventory management profitability has improved. 

OUTLOOK: 

 The concerned authorities of the Govt. of India are aware of the situation of SSP industry and further upward revision in subsidy rate is under consideration of the government. The sooner it is done, it will be better as it will help the industry as well as poor farmers who are dependent on SAP to maintain production and quality of soil. 

RISKS AND CONCERNS:

 (a) Vagaries of nature on which production depends. 

 (b) Emergence of local brand operation. 

 (c) Uncertainty of green leaf prices for manufacturing tea from bought leaf. 

 (d) Currency movements and foreign exchange risk in relation to export revenue. 

  (e) Stiff competition in export with countries having lower cost of production. 

The Government and the industry are aware of the risks & concerns but till now the measures are not effective enough to bring the tea industry out of trouble. 

FINANCIAL REVIEW AND ANALYSIS: 

The guiding principles of our investment strategies are of prudence. The company continued to manage its treasury to minimise working capital requirement and cost of fund and invested accretion of surpluses in mutual funds under debt and equity schemes. As the market was fluctuating at the end of the year, the returns were not as expected, but were marginal. The investment profile is well balanced and market value of the portfolio should improve in near future. So the investment should give reasonable return in the current year. 

Incorporated on the 27th of October, 1945 subject, a well diversified conglomerate of B.K. Birla Group of Companies, acquired a growing number of tea estates in both North and South India and initiated innovative, intensive and integrated field development work on all fronts. The company  has adopted a marketing  strategy to provide GARDEN FRESH TEA to all its clients.

GROWTH FACTORS

TEA ESTATES UNDER OUR FOLD
1946	1966	1986	1996	2006	2008
1	6	15	19	19	20

AREA UNDER TEA
1946	1976	1986	1996	2006	2008
660 Hectares	6,153 Hectares	6,395 Hectares	7,283 Hectares	8,456 Hectares	8,788 Hectares
PRODUCTION
1946	1976	1986	1996	2006	2008
0.49 Million Kgs	8.44 Million Kgs	13.5 Million Kgs	13.9 Million Kgs	20.48 Million Kgs	18.57 Million Kgs

EXPORTS
YEAR	QUANTITY(Kgs)	VALUE (in Million Rs)
2007-2008	57,96,958	486.00
2006-2007	45,35,406	405.33
2005-2006	21,60,585	248.39
2004-2005	16,08,767	220.01
2003-2004	9,90,609	147.31

Besides tea, the Company manufactures Single Super phosphate and Sulphuric Acid in its Chemical Plants at Khardah (setup in 1961) and Gurgaon (setup in 1987) . The company is also engaged in Warehousing activities at Calcutta and Kochi. It has also developed prestigious residential and commercial complexes at Calcutta and Bangalore.

Jay Shree  Tea and Industries Limited, is a well diversified conglomerate of  B. K. Birla Group-- a well reputed industrial house of India.

The company has under its fold  19 tea estates including two estates in its subsidiary spread all over India and manufactures around 15 million Kgs of tea per annum. Total area under tea is around 8000 Hectares. The Company produces around 10% of total Darjeeling teas produced in the country.

The company's efforts to improve tea productivity and quality have been recognized at various levels and numerous awards and prizes have been awarded to it . Most of the tea estates of the company are ISO-9002 certified.

The company manufactures Superphosphate and Sulphuric Acid at its two plants at Khardah in North 24-Parganas, West Bengal and one plant at Pataudi in Gurgaon district, Haryana. The annual installed capacity is 2,25,721 M.T. Superphosphate and 95,710 M.T. of Sulphuric acid and production of 1,31,964 M.T. of Superphosphate and 76,438 M.T. of Sulphuric acid during 1999-2000.

In its Real Estate Division the company has developed commercial complexes and  residential apartments at Calcutta and Bangalore. It is in the process of developing residential complexes in the heart of Calcutta through its subsidiary Shiva's Group Limited. All these properties are in prime areas and we stress on high quality constructions.

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.43.16
UK Pound	1	Rs.85.51
Euro	1	Rs.67.95

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	9
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	8
--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	YES
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		69

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