MIRA INFORM REPORT

Report Date :

30.07.2008

IDENTIFICATION DETAILS

Name :	BRIGADE ENTERPRISES LIMITED
Registered Office :	Pent House, Brigade Towers, Bridge Road, Bangalore – 560 052, Karnataka
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	08.11.1995
Com. Reg. No.:	019126
CIN No.: [Company Identification No.]	U85110KA1995PLC019126
TAN No.: [Tax Deduction & Collection Account No.]	BLRB00957F
PAN No.: [Permanent Account No.]	AAACB7459F
Legal Form :	Public Limited Liability Company. Company’s Shares are Listed on the Stock Exchange.
Line of Business :	Construction Activities

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 7400000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and reputed company. Trade relations are fair. Business is active. General financial position is good. Payments are reported as usually correct and as per commitments. The company can be considered good normal for business dealings.

LOCATIONS

Registered Office :	Pent House, Brigade Towers, Bridge Road, Bangalore – 560 052, Karnataka, India
Tel. No.:	91-80-41379200
E-Mail :	enquiry@brigadegroup.com
Website :	www.brigadegroup.com
Location :	Owned
Headquarters :	Hulkul Chambers, 82,Lavelle Road, Bangalore – 560 001, Karnataka, India.
Tel. No.:	91-80-41379200, 40467600
Fax No:	91-80-41379320
Branch :	G-5, Brigade Residency, 41, Gokulam Road, V V Mohalla, Mysore – 570 002
Tel. No.:	91-821-4252239
Mobile No:	91-9880405241
E-Mail :	mysore@brigadegroup.com
Branch :	V. Ananthapadmanaban, Gayathri’s-Consultant Realtore, C3-Secound Floor, Ceebros Court, 44 Habibullah Road, T.Nagar, Chennai – 600 017
Tel. No.:	91-44-52124017 / 42124014
Mobile No:	91-9840722374
E-Mail :	Gayathri1@excite.com

DIRECTORS

Name :	Mr. M. R. Jaishankar
Designation :	Managing Director
Date of Birth/Age :	54 years
Qualification :	B Sc , MBA
Experience :	34 years
Date of Appointment :	08.11.1995
Name :	Ms. Githa Shankar
Designation :	Executive Director
Date of Birth/Age :	54 years
Qualification :	BA, MBA
Experience :	29 years
Date of Appointment :	08.11.1995

KEY EXECUTIVES

Name :	Mr. Anil Kumar A.
Designation :	Business Development and Company Secretary
Date of Birth/Age :	40 years
Qualification :	B Com, ACA.Grad.CWA,ACS
Experience :	20 years
Date of Appointment :	07.03.2005
Name :	Ms. Indira Sharma
Designation :	Vice President – Marketing
Date of Birth/Age :	47 years
Qualification :	BBm , MBA
Experience :	26 years
Date of Appointment :	01.07.1988
Name :	Mr. Roshin Matheu
Designation :	Chief Operating Officer – Projects
Date of Birth/Age :	45 years
Qualification :	BTech , MBEM
Experience :	21 years
Date of Appointment :	08.07.2005
Name :	Mr. P. V. Maiya
Designation :	Independent Director
Name :	Mr. M. R. Gurumurthy
Designation :	Non-Executive Director
Name :	Mr. P. M. Thampi
Designation :	Independent Director
Name :	Mr. M. R. Shivaram
Designation :	Non-Executive Director
Name :	Dr. T. N. Subba
Designation :	Independent Director
Name :	Dr. K Kasturirangan
Designation :	Independent Director

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2008

Sr. No.	Category	No of Shares	Percentage
1.	Promoters and their Relatives	61857799	53.33
2.	Mutual Funds	822877	0.73
3.	Banks, Financial Institutions	1267900	1.13
4.	Foreign Institutional Investors	6869273	6.12
5.	Non Resedent Indians	49984	0.04
6.	Indian Companies	2021084	1.80
7.	Indian Public	36345379	32.38
8.	Truest	85367	0.08
9.	Clearing Members	438569	0.39
10.	Total	112251940	100

BUSINESS DETAILS

Line of Business :

Construction Activities

GENERAL INFORMATION

No. of Employees :

328

Bankers :

1. Corporation Bank

2. Indian Bank

3. State Bank of India

4. State Bank of Mysore

5. State Bank of Patiala

6. HDFC Bank Limited

7. IDBI Bank Limited

8. Bank of Maharashtra

9. ICICI Bank Limited

Facilities :

Secured Loan As On 31.03.2007

Es in Millions

Loans and Advances form bank	2954.170
Interest accrued and due	20.740
Other loans / banks overdrafts	0.000
Total	2974.910

Banking Relations :

Good

Associates:

· AEC Infotech private Limited

· Tandem Allied Services Private Limited

· Mysore Holdings

· Brigade Foundation

Subsidiaries :

· Brigade hospitality Services Private Limited

· Tetrarch Holdings Private Limited

· Brigade Estate and Projects Private Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
150000000	Equity Shares	Rs. 10/- each	Rs. 1500.000 Millions

15,00,00,000 Equity Shares of Rs.10/-each (Previous year: 3,00,00,000 Equity Shares of Rs.10/- each).

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
112251940	Equity Shares	Rs. 10/- each	Rs. 1122.520 Millions

11,22,51,940 equity shares of 10/-each (2,69,16,210 equity shares of Rs.10/- each fully paid up for year 2006-07) (of the above 6,72,90,525(nil) equity shares of Rs.10/- each were allotted as fully paid-up Bonds Shares by capitalisation of accumulated profits)

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		1122.520	269.160	269.160
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		8153.940	1202.730	516.690
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		9276.460	1471.890	785.850
LOAN FUNDS
1] Secured Loans		2974.910	2402.030	1007.310
2] Unsecured Loans		0.000	0.000	17.930
TOTAL BORROWING		2974.910	2402.030	1025.240
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		12251.370	3873.920	1811.090
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		742.330	758.680	2098.720
Capital work-in-progress		4043.540	477.940	430.990
INVESTMENT		4052.150	15.370	17.990
DEFERREX TAX ASSETS		15.170	16.760	4.390
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	3022.460	3984.430	900.140
	Sundry Debtors	20.010	169.500	53.040
	Cash & Bank Balances	119.620	175.040	196.250
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	3666.530	1551.820	734.710
Total Current Assets		6828.700	5880.790	1884.140
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	3123.930	2921.590	2561.060
	Provisions	605.610	354.030	64.080
Total Current Liabilities		3729.540	3275.620	2625.140
Net Current Assets		3099.270	2605.170	[741.000]
MISCELLANEOUS EXPENSES		298.910	0.000	0.000
TOTAL		12251.37	3873.920	1811.090

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
Contract and other receipts		4941.530	4019.590	1988.830
Profit/(Loss) Before Tax		1374.050	1068.440	468.650
Provision for Taxation		343.210	338.270	47.340
Profit/(Loss) After Tax		1030.840	730.170	421.310
CIF Value		25.020	0.000	0.000
Expenditures :
	Project Expenses	2860.870	2315.680	1150.080
	Personnel Expenses	360.430	159.430	87.530
	Administrative and Selling Expenses	216.480	282.290	126.600
	Increase/(Decrease) in Finished Goods	[12.280]	[58.060]	6.420
	Interest	35.710	164.570	95.970
	Miscellaneous Expenses Written off	74.730	0.000	0.000
	Depreciation & Amortization	85.540	87.240	53.580
Total Expenditure		3567.480	2951.150	1520.180

FINANCIAL RATIOS :

PARTICULARS	31.03.2008	31.03.2007	31.03.2006
Dept-Equity Ratio	0.50	1.52	1.74
Long Term Dept-Equity Ratio	0.50	1.49	1.65
Current Ratio	1.57	1.02	1.03
Turnover Ratios
Fixed Assets	4.67	2.39	1.39
Inventory	1.75	2.40	1.21
Debtors	48.62	33.99	24.35
Interest Cover Ratio	4.48	7.60	5.88
Operating Profit Margin (%)	40.21	35.37	33.70
Profit Before Interest and tax Margin (%)	38.36	33.06	30.78
Cash Profit Margin (%)	24.20	22.07	25.89
Adjusted Net Profit Margin (%)	22.35	19.76	22.97
Return on Capital Employed (%)	22.33	43.98	33.87
Return on Net Worth (%)	19.16	66.21	69.27

LOCAL AGENCY FURTHER INFORMATION

History

The Company was originally called `Brigade Enterprises', a partnership firm, formed by Mr. M. R Jaishankar and Ms. Githa Shankar, which was subsequently converted into a private limited company called Brigade Enterprises Private Limited on November 8, 1995. 

In 2002, Brigade Developers Private Limited and Brigade Investments and Projects Private Limited, merged with Company with effect from April 1, 2001 and in the year 2005, another company Brigade Constructions Private Limited merged with Company with effect from April 1, 2004. 

The company is engaged in the business of real estate development based in Bangalore, primarily focused on the development of residential, commercial and hospitality properties in South India. Residential properties include integrated lifestyle enclaves and apartment buildings targeted towards middle income and high income customers. Integrated lifestyle enclaves are conceptualised as self-contained, gated communities, which generally include a combination of apartment complexes, commercial and retail space, recreational clubs, parks, schools, convention centres and car parking and which historically have ranged from 1.62 million sq. ft to 7.23 million sq. ft. of Developable Area. The commercial properties include commercial office space, software and IT parks, schools, hospitals and retail malls with entertainment facilities, such as multiplexes. The properties in the hospitality sector include serviced residences, hotels, resorts, spas, recreational clubs and convention centres in Bangalore and other parts of South India.

Contingent Liabilities

Rs. In Millions

Particulars	2007-08	2006-07
Capital Commitments not provided in the books	8436.240	2904.370
Towards counter guarantee to bank for issuing bank guarantee	125.550	11.670
Claims from government departments not acknowledged as debts	18.170	29.590
Total	8579.960	2945.630

Financial Results And Operations

Current Year’s operational result reflects the company achieving greater heights in terms of volume and sales figures. The turnover has grown from Rs. 1982.41 Millions to Rs. 4077.65 Millions, which is an increase of 106 % over the previous year. The profit before tax increased from Rs. 468.65 Millions to Rs. 1068.44 million an increase of 128 % over the previous year.

The total income during the fiscal year 2007 to primarily the overall growth of their real estate development business and particularly from revenue recognized as a result of collections and development of residential properties in Brigade Gateway and Brigade Metropolis, which amounted to Rs. 2031.23 million and Rs. 595.80 million, respectively.

Market

The year 2006-07 has witnessed continued buoyancy in the real estate market, more specifically reflected in line with overall growth of the Indian economy. Since real estate / housing sector is now open to FDI investment opportunities, and an active interest is being shown by overseas real estate / financing companies in the India growth model.

With the company’s high standards in quality and timely delivery without compromising on basic principles of transparency and fairness. It has grown to be a dominant player in Bangalore.

They have recently witnessed a spurt in interest rates in the housing sector in the last few months. However they observe that the interest rates are affordable and the company does feel that this should not affect the along term perspective of the industry.

They intend to expand their scale of operations to various cities and centres in India, keeping in mind and all round growth and demand seen in the real estate sector.

Quality

The quality in construction is in the lifeline of the company and imparted by the company in all aspects of the products and service. The company’s continued commitment to excellence, and its efforts to continually delivery quality in all its projects, has led to being recognized as leaders in its business.

All engineers and site supervisors are regularly imparted training in the newer methodology and also in the use of latest tools and techniques in construction methods.

Contract Revenues

The total Contact Revenues recognized during the year amounts to Rs. 3781.70 Million for which the corresponding contract costs incurred and recognized profit / [Losses] for all contracts in progress during the year amounts to Rs. 2315.68 Millions. The company has retention amount as at end of the year for Rs. 128.93 Millions from suppliers / contractors and the same is included in Sundry creditors amount in the financial statement.

Land Held For Development

Company had acquired certain lands during the preceding years which were grouped under Fixed Assets till last financial year. The same has been regrouped during the current year as Land held for Development and is disclosed as part of inventories in the current financial statement.

Warranty Costs

The company has not recognized warranty cost relating to sale of unit / property, since such cash, if any, are covered by a corresponding warranty from the company’s contractors / vendors. This cost is recognized as and when incurred by the company.

Fixed Assets

• Land and Building
• Interiors, Furniture and Fixture
• Office Equipments, Plant and Machinery
• Computer
• Motor Vehicles

Subject is one of Bangalore's leading property developers, and an ISO 9001-2000 organization. Their website will give the information about their projects which includes luxury apartments, enclaves, townships, offices, software facilities, hotels and resorts.

Brigade has grown with the growth of the real estate industry in Bangalore and Mysore.

Operational Review and Future:

During the year the company has completed a good mix of residential , commercial and hospitality projects. Brigade Gateway at Malleswaram in Bangalore and Brigade. metropolis at Whitefield in Bangalore are part of integrated lifestyle enclaves developed by the company. The Ministry of Commerce, Govt. of India, New Delhi, have approved the company’s Spacial Economic Zone (SEZ) projects focusing on Information Technology to come up on a 25-acre plot in Ganjimutt, Mangalore. Apart form these, the company has signed up agreements for development of hospitality Projects. The revenues from these projects will significantly bolster the financial of the company.

Our pioneering efforts in integrated developments have been will received by our clints and in line with our philosophy of providing a better quality of life. The company intends to use its expertise in developing such projects larger scale in the near future.

Whilst focusing on such integrated developments the company adopts a diverse mix of project, including stands alone residential developments, commercial projects, SEZs and increasing its presence in the Hospitality sector.

The company entered into on agreement with starwood Hotels for the management of a proposed Sheraton Hotel in Mysore.

The company along with throught its subsidiary Brigade Hospitality Services Private Limited, has entered into: (i) a Memorandum of Understanding with AAPC Hotels Management Pte Limited, a member of the Accor Asia Plastic Group, for management of the Mercure Homestead Residences at Koramangala, Bangalore (ii) Hotels Management Agreement with inter Continental Hotels Pvt. Limited for the management of the proposed Holiday Inn hotel at Devanahalli, Bangalore. The company believers that Bangalore and South Indian markets are quite vibrant and provide a conducive environment for hospitality projects including the Serviced Residences.

The company is carefully monitoring the market situation and the land prices, which has increased over the last few years.in the wake of the above the company is following a cautious but optimistic approach to increasing its land bank and its presence in different geographical locations.

Conversion into a Public Limited Company :

The company was converted into a Public Limited Company in the Twelfth Annual General Meeting Held on 20.06.2007. The fresh certificates of incorporation consequent upon charge of name of the company on conversion into a Public Limited Company was issued by the Registrar of companies. Karnataka an 20.06.2007.

Charges in Capital Structure:

During the year the following charges happened in the share capital of the company:

a) Bonus issue of 67290525 Equity Shares of the Company in the ratio of 5:2 was allotted on 20.06.2007

b) The Authorised Shares capital of the company was increased form Rs.300.000 millions only divided into 30.000 millions only Equity share of Rs.10/- each to 1500.000 divided in to 150.000 millions Equity shares of Rs.10 each on 20.06.2007.

c) Public issue of 16624720 Equity share and green shoe option of 1420485 Equity share of Rs.10/- each allotted on 24.12.2007 and 31.01.2008 respectively at a premium of Rs.380/- pre Equity Share.

The paid-up Equity share capital for the company has increased form Rs.269.162 millions to Rs.1122.519 millions due to the aforesaid allotment of Shares.

Initial Public Offering (IPO)

The financial years 2007-08 is important landmark in the history of the Company. Your Company camr out with an intial Public Offering (IPO) during the said financial years. Proceeds From IPO are intended to fund the expansion plans of the company.

The issue was done through a book Building process of 19.118 millions Equity share of Rs. 10/- each at a pre at a premium of Rs. 380/- per Equity Shares including the Green Shoe Option of 2.493 millions offered by Ms. Githa Shankar, one of the Promoters of the company.

This issue was opened for subscription form 10.12.2007 to 13.12.2007.the issue was oversubscribed 10.82 times.

The Equity Shares of the company are listed on the national stock Exchange of India limited and Bbmbay stock Exchange limited with effect from 31.12.2007.

Subsidiaries :

Brigade Hospitality Services Private Limited (BHSPL),a company incorporated on 01.06.2004as a 100% Subsidiaries of the company and is carrying on the business of running and managing clubs, serviced residences

And convention centres. During the financial years 2007-08, BHSPL has registered income from operations amounting to 141.210 millions. Loss incurred during the period amounted to Rs.14.42 millions.

Brigade Hospitality Services Private Limited, Tetrarch Holdings Private Limited and Brigade Properties Private Limited are wholly owned Subsidiaries of the company with main business in the fiels of real estate development. These companies are in the process of being fully operational.

Management Discussion and Analysis Report:

Industry Structure and Developments: 

India's GDP grew by 9.2% in the fiscal year 2007 as compared to 7.5%, 8.1%, 8.4% in the fiscal years 2004, 2005 and 2006 respectively. This strong growth in the Indian economy is, among others, due to vibrant growth of the Information Technology (IT) and Information Technology Enabled Services (ITES) sectors. These sectors benefit from the growing international trend towards off-shoring and the resultant demand for skilled and low-cost English-speaking workers. Indian competitiveness in this area is aided by substantial investment in telecommunications, infrastructure and the phased liberalisation of the communications sector. 

Real Estate Sector in India: 

Historically, the real estate sector in India was unorganised and characterised by various factors that impeded organised dealing. In recent years however, the real estate sector in India has exhibited a trend towards greater organisation and transparency, aided by various regulatory reforms.

These trends have been reinforced by the substantial recent growth in the Indian economy, which has stimulated demand for land and developed real estate across our business lines. Demand for residential, commercial and retail real estate is rising throughout India, accompanied by increased demand for hotel accommodation and improved infrastructure.

In addition, tax and other benefits applicable to Special Economic Zones are expected to result in a new source of demand.

Opportunities: 

The real estate sector in India is assuming growing importance with the liberalisation of economy. Real estate sector is driven by the following factors like more housing units in cities and towns because of faster growth in urban households due to nuclearisation, demand for office space, demand for shopping malls due to growing retail segment, Setting of Special Economic Zones in various sectors etc.

 The Company has been a niche player in the market mainly due to the following: 

 * Innovative projects in the Bangalore region

 * End-to-end competencies 

 * An established brand name and reputation for quality 

 * Significant portfolio of global clientele

 Risks & Threats: 

 Risks are an integral part of any business. The level and types of risks depends / varies from company to company, based on its growth strategy, expansion plans, type of industry and host of various other factors. Some of the prominent risks faced by the Company are as follows:

 * Government Regulations

* Performance of, and the conditions affecting, the real estate market in Bangalore. 

 * Difficulties in expanding business in India

 * Human Resources 

 * Financial Resources 

 * Natural Calamities

We ensure that sufficient risk mitigation measures are taken on a continual basis to overcome / reduce the impact of these risks.

Performance & Outlook:

During the year, the Company has completed residential, commercial & hospitality projects. The Company's standards of innovation, quality & trust have been established and constantly upgraded. These are clearly reflected in the projects completed by the Company. Two Integrated Lifestyle Enclaves were developed by the Company during the year which got a good response from the clients. The Company proposes to do integrated developments on a large scale in the future.

The demand for serviced apartments in South India, especially Bangalore, is high due to the presence of multi-national corporations. We are a niche player in the hospitality sector including serviced residences and would be exploring these opportunities on a large scale in the future.

We are optimistic about delivering superior results in future, based on our experience, land bank and project execution skills. 

Strategy: 

We intend to develop a range of properties in a number of cities in India to meet a diversified business model and to provide for increasing customer demands. The following are the key elements of our business strategy: 

 * Leveraging our expertise in the development of integrated lifestyle enclaves 

 * Focus on hospitality and related ventures

* Expansion into various cities in South India

* Maintain quality standards for residential and commercial development 

 * Outsourcing selectively to increase scale of operations and reduce capital investments 

 * Continued focus on properties in a diverse range of price segments 

Financial Performance: 

Turnover: The Company's turnover has increased from Rs. 4,019.59 Millions to Rs. 4,941.53 Millions, an increase of 18.66% over the previous year.

Net Profit: Net Profit of the Company for the year 2006-07 stood at Rs.1,029.59 Millions as compared to Rs. 747.41 Millions in the previous year, an increase of 27.40% over the previous year. 

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.42.47
UK Pound	1	Rs.84.00
Euro	1	Rs.66.14

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	8
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	6
--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	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		68

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