MIRA INFORM REPORT

Report Date : 06-06-2008

IDENTIFICATION DETAILS

Name :	DHAMM STEEL SERVICES PRIVATE LIMITED
Formerly Known As :	DHAMM INFOTECH PRIVATE LIMITED
Registered Office :	Simplex Mills, Compound, 1^st Floor, K.K. Marg, Mumbai 400011, Maharashtra
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	22.02.2000
Com. Reg. No.:	124398
CIN No.: [Company Identification No.]	U72200MH2000PTC124398
Legal Form :	Private Limited Liability Company
Line of Business :	Manufacturer of Wire Rod and Hot Rolled products

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 280000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established reputed company meeting its normal commitments timeously. Trade relations are fair. Business is active. The company can be considered good for normal business dealings

LOCATIONS

Registered Office :	Simplex Mills, Compound, 1^st Floor, K.K. Marg, Mumbai 400011, Maharashtra, India
E-Mail :	dmoondhra@trailokay.com
Website :	www.dhamm.com
Corporate Office :	1^st Floor, Onlooker Building, Sir P. M. Road, Fort, Mumbai 400001, Maharashtra, India
Tel. No.:	91-22-40696111 / 40696131 / 40696222
Fax No.:	91-22-40696199
E-Mail :	info@dhamm.com dmoondra@dhamm.com
Sales Office:	Khaitan Chambers, 3^rd Floor, 143/145, Mody Street, Fort, Mumbai 400001, Maharashtra, India
Tel. No.:	91-22-40696111
Fax No.:	91-22-40696199
Location :	Rented

DIRECTORS

Name :	Mr. Dewrat Sriratan Moondhra
Designation :	Director
Address :	121, Laxmi Vilas, 87, Nepeansea Road, Mumbai 400006, Maharashtra, India
Date of Birth/Age :	18.12.1984
Date of Appointment :	01.04.2006
Name :	Mr. Ratan Devkishan Moondhra
Designation :	Director
Address :	121, Laxmi Vilas, 87, Nepeansea Road, Mumbai 400006, Maharashtra, India
Date of Birth/Age :	09.05.1953
Qualification :	Bachelor of Science
Date of Appointment :	01.04.2006
Name :	Mr. Dhruv Moondhra
Designation :	Director [Administrative/Purchasing/ Human Resources]
Address :	121, Laxmi Vilas, 87, Nepeansea Road, Mumbai 400006, Maharashtra, India
Date of Birth/Age :	17.02.1977
Qualification :	Bachelor of Arts [Economics]
Previous Employment:	Bain Capital
Date of Appointment :	22.02.2000
Name :	Mrs. Kusum Moondhra
Designation :	Director
Address :	121, Laxmi Vilas, 87, Nepeansea Road, Mumbai 400006, Maharashtra, India
Date of Birth/Age :	20.02.1953
Qualification :	Bachelor of Arts
Date of Appointment :	22.02.2000
Directorship held in other companies:	Kusum International Private Limited Troika Estates Private Limited

KEY EXECUTIVES

Name :	Mr. Rajeev Gandhi
Designation :	General Manager – Finance
Name :	Mr. Haren Negandhi
Designation :	Vice President – Alloys and Special Steel
Name :	Mr. Rajneesh
Designation :	General Manager – Plates and Processing

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

[As on 31.03.2007]

Names of Shareholders	No. of Shares
Dhruv Moondhra	193884
Kusum Moondhra	93885
Chaitanya Kejriwal	1
Total	287770
Equity Share Break-up [As on 31.03.2007]	Percentage of Holding
Directors or relatives of the Directors	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer of Wire Rod and Hot Rolled products

Products :

Product	Application
Hot Rolled Plates / Hot Rolled Sheets	Boiler and Pressure Vessel, Hydro Power Sector, Thermal Power Sector, Oil Refinery, API Pipes, Ship Building
Wire Rod	Construction, Fasteners and Component
Tin Plate	Packaging
Hot Rolled Coils	White Good, Construction, Machinery Equipment

Agencies Held :

Arcelor Mittal

Exports :

Countries :

• Indonesia
• United Arab Emirates
• Hong Kong

Imports :

Countries :

• United States
• Kazakhastan
• Romania
• China

Terms :

Selling :

L/C

GENERAL INFORMATION

Suppliers :

• Mittal Steel Galati SA
• Mittal Steel Termitau
• Ziangtan
• Hariyana International Private Limited
• Guardian Steels Private Limited

Customers :

• Shah Brothers
• Bharat Heavy Electrical Limited
• Jindal Saw Limited
• Welspun Gujarat Stahl Rohren Limited
• Thermax Limited
• Alstom Projects India Limited
• Shradha Steel Industries

No. of Employees :

19

Bankers :

• ICICI Bank Limited

ICICI Centre, 163, H. T. Parekh Marg, Backbay Reclamation, Churchgate, Mumbai 400020, Maharashtra, India

• HDFC Bank
• Bank of India
• Bank of India
• State Bank of India
• 3i Infotech Trusteeship Services Limited

3^rd to 6^th Floor, International Infotech Park, Tower No. 5, Vashi Railway Station Complex, Vashi, Navi Mumbai 400703, Maharashtra, India

Facilities :

Total Bank Facilities

Loan Amount Rs. 360.000 Millions

Particulars	Amount sanctioned	Amount Disbursed
Cash Credit	40.000	40.000
Letter of Credit	320.000	320.000
Buyers of Credit	[250.000]	[250.000]
Total	360.000	360.000

SECURED LOANS	As on 31.03.2007 [Amount Rs. In Millions ]
ICICI Bank	20.484
Car Loan	0.677
Total	21.161
UNSECURED LOANS
From Directors
Kusum Moondhra	0.787
Dhruv Moondhra	0.162
Total	0.949

Banking Relations :	Satisfactory
Auditors :
Name :	Swapnil Modi Chartered Accountants
Address :	G. R. Modi and Company, 12, Laxminarayan Shopping Centre, Poddar Marg, Malad [East], Mumbai 400097, Maharashtra, India
Memberships :	Engineering Export Promotion Council
Group Company:	Kusum International Private Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
300000	Equity Shares	Rs. 10/- each	Rs. 3.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
287770	Equity Shares	Rs. 10/- each	Rs. 2.877 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2007	31.03.2006
SHAREHOLDERS FUNDS
1] Share Capital		2.878	2.878
2] Share Application Money		0.000	0.000
3] Reserves & Surplus		53.307	33.921
4] (Accumulated Losses)		0.000	0.000
NETWORTH		56.185	36.799
LOAN FUNDS
1] Secured Loans		21.161	1.171
2] Unsecured Loans		0.949	4.332
TOTAL BORROWING		22.110	5.503
DEFERRED TAX LIABILITIES		0.000	0.000
TOTAL		78.295	42.302
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		2.341	2.168
Capital work-in-progress		0.000	0.000
INVESTMENT		9.205	11.550
DEFERREX TAX ASSETS		0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	35.791	0.000
	Sundry Debtors	73.747	12.191
	Cash & Bank Balances	0.081	0.039
	Other Current Assets	0.000	0.000
	Loans & Advances	91.671	50.308
Total Current Assets		201.290	62.538
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	111.860	19.720
	Provisions	22.681	14.234
Total Current Liabilities		134.541	33.954
Net Current Assets		66.749	28.584
MISCELLANEOUS EXPENSES		0.000	0.000
TOTAL		78.295	42.302

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006
Sales Turnover		250.526	67.382
Other Income		2.590	0.730
Total Income		253.116	68.112
Profit/(Loss) Before Tax		35.895	32.855
Provision for Taxation		11.377	11.421
Profit/(Loss) After Tax		24.518	21.434
Expenditures :
	Purchases	211.771	0.000
	Direct Expenses	24.488	28.337
	Office and Administration	7.836	3.670
	Sales and Marketing	3.593	2.230
	Financial Expenses	5.083	0.880
	Depreciation	0.240	0.140
	Increase/(Decrease) in Finished Goods	[35.790]	0.000
Total Expenditure		217.221	35.257

KEY RATIOS

PARTICULARS		31.03.2007	31.03.2006
PAT / Total Income	(%)	9.68	31.47
Net Profit Margin (PBT/Sales)	(%)	14.32	48.75
Return on Total Assets (PBT/Total Assets}	(%)	17.62	50.77
Return on Investment (ROI) (PBT/Networth)		0.64	0.89
Debt Equity Ratio (Total Liability/Networth)		5.98	1.08
Current Ratio (Current Asset/Current Liability)		1.50	1.84

LOCAL AGENCY FURTHER INFORMATION

Fixed Assets

• Computers
• Motor Car
• Furniture and Fixtures
• Office Equipments
• Electrical Installations
• Plant and Machinery

Profile

Subject was established in the year 2000 as Dhamm Infotech Private Limited, a software development company. In January, 2003, the company changed its operations to act as an agent for Arcelor Mittal for steel products. This move was due to losses sustained in the software development business. The company earns indenting commission in this business and from the year 2007 has also initiated stocking and back to back sale in steel. The Moondhra family has been in the steel agency and distribution business for over 100 years. In the past the promoters have represented British Steel and have also been agents of the Japanese Steel makers.

As agents, the Company sells hot rolled plates, hot rolled sheets, wire rod, tin plate and hot rolled coils in India. They also stock and distribute alloy steel, wire rod from Thyssenkrupp AG, Germany, Bao Steel, China, Xiangtan, China and other manufacturers.

It provided goods and agency services to the following sectors:

• Engineering [Boiler and Pressure Vessel
• Energy [Hydro Power, Thermal Power]
• Oil Refinery and Oil Shoring
• API Pipes
• Infrastructure Projects
• Ship Building
• Fasteners
• Components

FINANCIAL ANALYSIS

Revenue and Profit

The company is engaged as an agent distributor or Wire Rod, Tin Plate, Hot Rolled Plates, Hot Rolled Coils and other steel products. The Company was established in FY 2000 as a software development company. In January 2004, the Company changed the line of business to act as an agent for Arcelor Mittal. The company earns a commission of 1% on sales. From November, 2006, it ventured into stocking and back to back sales of steel since the profits are higher in this activity as compared with the agency commission.

The Company recognize agency revenue on the basis of shipment of goods from the suppliers. For the distribution activity, revenue is recognized after transportation of goods from the warehouse to customer. In FY 2007, there was a decline in agency charges on account of delay in shipment of a batch of goods that therefore got reflected in the next financial year. Also there was a shift of some customers to the distribution activity that was newly started in the FY 2007.

Profit attar tax has been on a rise for the period under review. The rise in Profits in FY 2006 was due to a rise in indenting commission income in that year. However, in spite of an increase in Revenue by 105.77% in FY 2006. Profits increased only by 40.87 as compared to the previous year due to a rise in cost of Sub Brokerage on indenting by 238% and Employee cost by 209.78%. FY 2006 being the initial year for the Company in the agency business, it needed to establish itself. So, additional commission was paid to the sub agents that resulted into a significant increase in the sub brokerage charges in that year. Also in order to position itself for future growth in the distribution business, the company made significant investments in the human resources during the year.

In the FY 2007, the company commenced distribution business achieving a turnover of Rs. 196.679 Millions from distribution business alone. Agency revenue declined during the year on account of a delay in shipment of a batch of goods that got reflected in the next financial year. Even so, Profits increased by 14.38%. The reason for the same is as follows:

• Rise in Finance Expenses from Rs. 0.902 Millions in FY 2006 to Rs. 6.683 Millions in FY 2007 on account of investments to scale up the distribution business.

• Rise in General operating cost in FY 2007 by 132.50% in order to pursue business growth prospects for which realization would accrue in the coming year.

• In FY 2007, the Company commenced its distribution business. This led to an increase in the revenue base as the commission for the same was not recognized directly in the books as was earlier done exclusively for agency business. This in turn led to a significant decline in the net profit margin in FY 2007.

Tangible Networth and Capital Employed

Tangible Networth includes Equity Capita, Reserves and Surplus less Intangible Assets, Miscelleneous Expenditure and Accumulated Losses.

Tangible Networth increased during the period under study. This increase in Tangible Networth was on account of profits being retained in the business. The retention ratio of the Company was 77.04% in FY 2006 and 79.07% in FY 2007.

Capital Employed comprises of Tangible Networth and total debt. It also moved up during the period under study. In FY 2007, it increased due to a rise in Tangible Networth and Short Term Debt. During FY 2007, the Company availed cash credit loan from the Bank to facilitate the distribution business.

As on 31.03.2007, Total Debt outstanding consisted of cash credit loan from Banks amounting to Rs. 20.484 Millions car loan from Bank amounting to Rs. 0.677 Million and Unsecured Loan from Directors amounting to Rs. 0.950 Millions.

Return on Tangible Networth declined for the period under study. This was mainly due to a sharp rise in Tangible Networth. Tangible Networth of the Company increased by 81.40% during FY 2006 and 52.88% during FY 2007 whereas Profits increased only by 40.87% during FY 2006 and 14.38% during FY 2007.

Return on Capital employed increased in FY 2006 due to a 78.78% increase in Earnings before interest and Tax. However, it declined in FY 2007 as Earning before interest and Tax increased by 7.76% whereas Capital employed increased by 80.87% as compared to FY 2006 on account of additional funds availed to finance the distribution business. The high returns during the period under study were on account of indenting business on which direct commission was earned.

Debt Equity Ratio and Interest Coverage Ratio

Total Debt Equity Ratio is calculated as Total Debt dived by Tangible Networth.

The decline in Debt Equity Ratio in FY 2006 was mainly due to a rise in Tangible Networth in FY 2006. The rise in the ratio in FY 2007 was due to an increase in the Short Term Debt.

Interest Coverage Ratio indicates the adequacy of the Earnings before interest and tax of the Company to cover its interest cost. In FY 2005, the Directors provided interest free unsecured loans to the Company. Therefore the interest Coverage ratio is not applicable for this year.

For FY 2006 and 2007, the Company took additional interest bearing loans from Banks and for both these years, the Directors also charged interest on unsecured loans. The interest Coverage ratio increased to 79.64 in FY 2007 on account of a decline in Interest Cost.

Short Term Liquidity position is indicated by Current and Quick ratio.

The Current and Quick Ratio were same for FY 2005 and FY 2006 as the Company acted only as an agent and received Indenting Commission and therefore carried no stock in its books.

In FY 2005, Total Current Assets primarily consisted of Cash and Bank balance and Loans and Advances. In FY 2006, Current Assets of the Company increased by 122%. However the increase in Current Liabilities was higher

[397%] due to the increase in provision for tax and other payables. This led to a decrease in Current Ratio to 1.84. In FY 2007, a substantial increase in Sundry Creditors led to a proportionately higher increase in Current Liabilities as compared to Current Assets. This resulted in a further decrease in current ratio.

There has been an increase in the outstanding balances of Debtors and Creditors in FY 2007 due to a large order worth Rs. 97.300 Millions received by the Company in February and March 2007. This also resulted in a rise in the Collection period as well as payable days for FY 2007.

Strengths

v Diversified Customer base

v Diversified Client type

v Reputed Supplier Base

v Experienced Management

Weakness

v Inability to maintain higher margins making the business highly volume dependent

v Concentrated supplier base

Opportunities

v Growth in infrastructure, shipbuilding, heavy earth moving equipment and petrochemical sectors will drive the demand for Steel

v The plans to enter processing of steel could unveil huge opportunities for the Company.

Threats

v Volatile Prices of Steel may affect the margins

v Competition from unorganized players as well as new entrants

Form 8

Bankers Charges Report as per Registry

This form is for	Creation of charge
Corporate identity number of the company	U72200MH2000PTC124398
Name of the company	DHAMM STEEL SERVICES PRIVATE LIMITED
Address of the registered office or of the principal place of business in India of the company	Simplex Mills, Compound, 1^st Floor, K.K. Marg, Mumbai 400011, Maharashtra, India
Type of charge	Others
Particular of charge holder	3i Infotech Trusteeship Services Limited 3^rd to 6^th Floor, International Infotech Park, Tower No. 5, Vashi Railway Station Complex, Vashi, Navi Mumbai 400703, Maharashtra, India
Nature of description of the instrument creating or modifying the charge	Deed of hypothecation
Date of instrument Creating the charge	05.10.2007
Amount secured by the charge	Rs. 140.000 Millions
Brief particulars of the principal terms an conditions and extent and operation of the charge	[a[ Rate of interest The interest shall be 3.25% p.a. below the sum of I-BAR and the Cash Credit Risk Premium prevailing on each day, plus applicable interest tax. I-BAR as on date is at 15.75% p.a, cash credit premia is 0.5% p.a. [b] Margin Inventory – Uniform margin of 25% against all components of inventory Book Debts – Cover period of 90 days and margin 25% [c] Extent and operation of the charge Exclusive charge on the entire stocks of raw materials, goods in process, semi finished and finished goods, consumable stores and spares and such other movables, including book debts, bills, whether documentary or clean, outstanding monies, receivables both present and future of the company.
Short particulars of the property charged	The whole of the company’s stocks of raw materials, goods in process, semi finished and finished goods, consumable stores and spares and such other movables, including book debts, bills, whether documentary or clean, outstanding monies, receivables both present and future.

OTHER INFORMATION:-

PARAMETER	DETAIL
Statutory Approval
Income Tax Registration	AABCD0558L
Central Sales Tax Registration	27730552301C
Import Export Code	0306031973

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. 42.86
UK Pound	1	Rs. 83.58
Euro	1	Rs. 66.17

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	7
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	6
--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	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		54

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