MIRA INFORM REPORT

Report Date :

16.06.2008

IDENTIFICATION DETAILS

Name :	STERLING GELATIN – DIVISION OF STERLING BIOTECH LIMITED
Registered Office :	43 Atlanta Building, Nariman Point, Mumbai - 400021, Maharashtra
Country :	India
Financials (as on) :	31.12.2006
Date of Incorporation :	23.03.1985
Com. Reg. No.:	11-35738
CIN No.: [Company Identification No.]	L51900MH1985PLC035738
TAN No.: [Tax Deduction & Collection Account No.]	MUMS16116C
PAN No.: [Permanent Account No.]	AABCS1946H
Legal Form :	Public Limited Liability Company. Company’s shares are listed on the Stock Exchanges.
Line of Business :	Subject is engaged in the business as Manufacturers and Dealers of Gelatine.

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 40000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and reputed company. Available information indicates high financial responsibility of the company. Directors are reported as experienced, respectable and resourceful businessmen. Their trade relations are reported as fair. Business is active. Payments are usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	43 Atlanta Bldg, Nariman Point, Mumbai - 400021, Maharashtra, India
Tel. No.:	91-22-56306732/56306733
Fax No.:	91-22-22041954
Area :	600 Sq. mtrs. (Large)
Administrative Office :	Sandesara Estate, Kamdhenu Park, Altadra, Padra Road, Vadodara-390012, Gujarat, India
Tel. No.:	91-261-2321720/2321730
Fax No.:	91-261-2335257
Factory 1 :	ECP Road, Village Karakhadi, Taluka Padra, Karakhadi-391450, Gujarat, India
Factory 2 :	Jambusar Road, Village Masar, Tal. Padra, Dlst. Vadodara, Gujarat
Factory 3 :	Sandyanalla, Sholur Gram Panchayat, Ottacamund, Dist. The Nitgirles, Tamilnadu

DIRECTORS

Name :	Mr. Nitin J. Sandesara
Designation :	Chairman and Managing Director
Name :	Mr. C. J. Sandesara
Designation :	Director
Address :	43, Atlanta, Nariman Point, Mumbai – 400021, Maharashtra, India
Name :	Mr. Vilas D. Joshi
Designation :	Director
Name :	Mr. P. B. Mehta
Designation :	Director
Name :	Mr. N. B. Patel
Designation :	Director
Name :	Mr. R. B. Dixit
Designation :	Director
Name :	Mr. Nitin J. Sandesara
Designation :	Chairman and Managing Director

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares	Percentage of Holding
Indian Promoters	70221980	31.58
FIs/MFs/ Banks	19100	0.01
Indian Companies	71662744	32.23
Resident Individuals	39875478	17.93
Clearing Members	1073668	0.48
NRIs/ OCBs/ FIIs/ FCs	11999640	5.39
Underlying shares out of GDR’s	27495339	12.37
Total	222347949	100.00

KEY EXECUTIVES

Name :	Mr Kirtidev J Khatri
Designation :	Company Secretary

BUSINESS DETAILS

Line of Business :	Subject is engaged in the business as Manufacturers and Dealers of Gelatine.
Products :	Gelitna
Imports :
Products :	Raw materials
Countries :	Europe and USA
Terms :
Purchasing :	L/C

GENERAL INFORMATION

No. of Employees :

250

Bankers :

v State Bank of India, Atul, Gujarat

v Standard Chartered Bank, Mumbai

v ICICI Bank, Valsad, Gujarat

Facilities :

Secured Loans (As on 31.12.2006) :

(Rs. In millions)

Term Loans from Banks/FI'S Secured by way of charge created on the fixed assets of the company, on Pari Passu basis	1530.745
External Commercial Borrowings of US$ 100 Million Secured by way of charge created on The fixed assets of the company, on Pari Passu basis.	4526.135
From Banks Cash Credit Account	2005.234
Total	8062.114

Unsecured Loans :

Foreign Currency Convertible Bonds - 2 % "B" Convertible Bonds due 2009 aggregating to US$ Nil (P.Y.: US $ 1.867 Million)	--
Foreign Currency Convertible Bonds - 0.50 % Convertible Bonds due 2010 aggregating to US$ 175 Million (P.Y.: US$ 175 Million) (Convertible into Ordinary shares or Global Depository Receipts representing Ordinary Shares)	7740.250
Short Term Loan	500.000
Total	8240.250

Banking Relations :	Satisfactory
Auditors :
Name :	H. S. Hathi & Company Chartered Accountants
Associates/Subsidiaries :	Sandesara Group

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
50,00,00,000	Equity Share	Rs 1/ each	Rs 500.000 Millions

Issued Capital :

No. of Shares	Type	Value	Amount
228077009	Equity Shares	Rs 1/- each	Rs 228.077 Millions

Subscribed Capital :

No. of Shares	Type	Value	Amount
226071949	Equity Shares	Rs 1/- each	Rs 226.072 Millions

Paid-up Capital :

No. of Shares	Type	Value	Amount
222347949	Equity Shares	Rs 1/- each	Rs 222.348 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS	31.12.2006	31.12.2005	31.12.2004
SHAREHOLDERS FUNDS
1] Share Capital	222.348	221.249	171.300
2] Share Application Money	0.000	450.000	0.000
3] Reserves & Surplus	9904.880	8612.251	3785.300
4] (Accumulated Losses)	0.000	0.000	0.000
NETWORTH	10127.228	9283.500	3956.600
LOAN FUNDS
1] Secured Loans	8062.114	8991.988	4006.600
2] Unsecured Loans	8240.250	8221.396	3132.300
TOTAL BORROWING	16302.364	17213.384	7138.900
DEFERRED TAX LIABILITIES	1083.200	798.200	0.000
TOTAL	27512.792	27295.084	11095.500
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]	13163.038	7459.014	4867.300
Capital work-in-progress	2060.521	5296.183	1710.600
INVESTMENT	50.942	124.000	0.000
DEFERREX TAX ASSETS	0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
Inventories	2613.788	2458.230	2162.100
Sundry Debtors	1419.068	1296.330	1128.600
Cash & Bank Balances	8167.242	10651.458	2393.500
Other Current Assets	0.000	0.000	0.000
Loans & Advances	495.052	303.021	189.700
Total Current Assets	12695.150	14709.039	5873.900
Less : CURRENT LIABILITIES & PROVISIONS
Current Liabilities	347.644	328.628	1331.100
Provisions	319.841	242.784	143.100
Total Current Liabilities	667.485	571.412	1474.200
Net Current Assets	12027.665	14137.627	4399.700
MISCELLANEOUS EXPENSES	210.626	278.260	117.900
TOTAL	27512.792	27295.084	11095.500

PROFIT & LOSS ACCOUNT

PARTICULARS		31.12.2006	31.12.2005	31.12.2004
Sales Turnover		6058.536	4818.269	4165.700
Other Income		177.333	222.851
Total Income		6235.869	5041.121	4165.700
Profit/(Loss) Before Tax		1826.035	1456.514	1138.000
Provision for Taxation		478.075	335.703	355.000
Profit/(Loss) After Tax		1347.960	1120.811	783.000
Total Earnings		1932.932	1524.826	NA
Total Imports		54.474	45.110	NA
Expenditures :
	Manufacturing Expenses	1213.636	1056.737	NA
	Raw Material Consumed	2099.760	1710.636	NA
	Interest	411.670	363.824	NA
	Depreciation & Amortization	620.254	418.173	NA
Total Expenditure		4345.320	3549.370	NA

QUARTERLY RESULTS

PARTICULARS	30.06.2007 (1^st Quarter)	30.09.2007 (2^nd Quarter)	31.12.2007 (3^rd Quarter)	31.03.2008 (4^th Quarter)
Sales Turnover	2270.600	2484.600	2613.000	2690.400
Other Income	24.800	25.300	26.300	21.800
Total Income	2295.400	2509.900	2639.300	2712.200
Total Expenditure	1271.000	1402.500	1515.600	1516.700
Operating Profit	1024.400	1107.400	1123.700	1195.500
Interest	96.600	101.900	109.700	117.300
Gross Profit	927.800	1005.500	1014.000	1078.200
Depreciation	201.800	254.100	215.100	246.200
Tax	80.600	85.600	95.700	96.100
Reported PAT	482.900	498.300	493.200	550.900

KEY RATIOS

PARTICULARS	31.12.2006	31.12.2005	31.12.2004
Debt-Equity Ratio	1.77	1.90	1.52
Long Term Debt-Equity Ratio	1.49	1.54	1.02
Current Ratio	3.11	2.60	1.54
TURNOVER RATIOS
Fixed Assets	0.50	0.64	0.75
Inventory	2.39	2.09	1.92
Debtors	4.46	3.97	3.86
Interest Cover Ratio	5.44	5.00	3.59
Operating Profit Margin(%)	47.18	46.46	49.01
Profit Before Interest And Tax Margin(%)	36.94	37.78	40.47
Cash Profit Margin(%)	32.49	31.94	28.62
Adjusted Net Profit Margin(%)	22.25	23.26	20.08
Return On Capital Employed(%)	8.61	9.91	17.56
Return On Net Worth(%)	14.22	17.53	21.81

LOCAL AGENCY FURTHER INFORMATION

Sterling Biotech Limited., formerly known as Sterling Tea & Industries (STIL) is in the business of tea processing and trading. The company was incorporated in the year 1985. The company has chalked out a plan to expand its tea producing facilities. The company diversified into the manufacture of gelatine, a product which is in short supply worldwide. This will enable the company to further strengthen its base and carve a niche in the bio-engineering field. Sterling got into business with Technology from Croda Colloids UK,a Gelatin Major in the Global Market. Gelatin is a pure protein obtained from Animal bone or hide. Today the company has established itself as a major producer of pharmaceutical grade gelatine world over. 

During 1995-96, the company has commenced a new Tea Plant with a installed capacity of 3000 TPA. In 2001-02 the second pharma grade gelatin manufacturing facility was commissioned, doubling the capacity at Vadodara and the Vadodara facility is an Ultra modern world class gelatin manufacturing facility.

The company has completed its acquisition of the Gelatine Division of Rallis India Limited, a TATA Enterprise, at Udhagmandalam in all cash deal for Rs.470 Million and this had a capacity of 2200 MTPA with effect from 1st April 2004. As a result of, this acquisition the total installed capacity of Gelatine has increased to 10400 TPA.  

During March 2005, the company has sub-divided its equity share face value from Rs.2/- per share to Re.1/- per share.

Operations

During the year, sales were at Rs. 6058.500 millions compared to Rs. 4818.200 millions during the revious year, an increase by 25.74%. Total income reached Rs.6235.900 millions as against Rs. 5041.100 millions growth of 23.70%. Gross profit (i.e. EBIDTA) increased to Rs.2922.400 millions as compared to Rs. 2273.700 millions in the previous year, an increase by 28.53%.

During the year, net profit increased to Rs. 1347.900 millions as compared to Rs. 1120.800 millions in the previous year, an increase of 20.26 %. The growth in sales and profitability for the year was attributable to various factors such as- higher realizations, optimum utilization of capacities and resources, economies of scale and strengthening the Company's position in the operating market.

The Company, continues to be a significant player in the international gelatin market through successive expansion of capacities and acquisitions resulting in Y-o-Y growth in capacities. In addition to increased turnover and profitability, Sterling is regarded as supplier of world class quality gelatin producer in the global market.

Acquisition

As informed in the last Director's Report, Sterling has signed and has entered into a Memorandum of Understanding (MOD) with Torrent Gujarat Biotech Limited to purchase the manufacturing facility at Masar, Dist. Baroda, Gujarat, as an asset sale, for a consideration of Rs. 55 millions, in an atl cash deal. The Company has acquired the unit with effect from 1^st April 2006 on payment of consideration. This facility is being used by Sterling to develop a range of products including CoQIO, a health supplement product aimed at the US market. The Company has also got its unit at Masar registered as 100% EOU. Commercial production in this unit commenced in March 2007.

Subsidiary companies

During the year, the Company formed a 100% subsidiary company, China Gelatin Limited, under the laws of Hong Kong Special Administrative Region of the People's Republic of China on 26^th September, 2006. China Gelatin Limited also formed a 100% subsidiary company, Hebei Gai Le Ting Gelatin Co., Ltd. in Hebei Province, China. Since both these companies were formed in later part of the year 2006 and there have been no commercial activities thereafter, accounts of both these companies will be drawn in the year 2007. Hence, audited statements of accounts together with reports of the Directors and Auditors are not required to be annexed hereto

pursuant to the provisions of Section 212 of the Companies Act, 1956.

Accolades

Sterling has been awarded with the CAPEXIL Award for the sixth year in succession. The Company owes this award to the faith of Its global clients which include a few Fortune 500 Companies. As a One Star Export House, the Company has an ultra modem world class gelatin manufacturing facility at Vadodara and one at Ooty recently acquired. Gelatin produced is at par with that produced in the USA, Europe and Japan. The pharmaceutical gelatin produced by-Sterling is used for capsules, tablets, vitamins, blood plasma expander, surgical aids and for treatment of arthritis, bleeding disorders and cartilage related diseases.

The very high standards of quality maintained by Sterling has earned it major quality certification like the Hazardous Analysis and Critical Control Point Certification (HACCP), ISO 9001, ISO 14001 and European Directorate For Quality of Medicine Certification (EDQM).

Industrial Perspective

Gelatin

Gelatin is sourced from the natural protein of birds, fish and animals. Commercially, it is produced from pigs, cattle and fish. This specialized product is manufactured to exacting specifications and used In a

wide variety of applications. The principal end-users Of gelatin are in the food and nutraceutlcal, pharmaceutical, and photographic Industries,, with uses in technical applications

Gelatin Applications

The gelatin industry at present consists of three large players who account for more than two-thirds of the global market share and a small group of about 25 to 30 companies who share the balance of the world market. The global gelatin market has achieved a CAGR of 2.94 percent over the past five years, the total world market for gelatin In 2006 to be around 315,000 tons, GWE has estimated that the world gelatin market will grow at 2 to 3 percent per annum. The largest market for gefatin is the food and food processing Industry, The consumption of gelatine for this industry (edible gelatine) is estimated to constitute 61 percent (about 192,000 mtpa) of the total market. This market also Includes the outraceutical segment, which Is the market for health supplements, vitamin capsules and tablets. The second largest market for gelatine Is the pharmaceutical industry with an estimated consumption of around 21;, percent (about 96,OfiQ mtpaj of the total market. In addition t».aie "food arid pharmaceutical industries, > gelatin ts also used; extensively in the photography industry, A small percent of the global gelatin production also 'finds technical applications, C6Q10 ' Coenzyme Q10 (CoQIO) is a fat soluble vitamin substance which is produced naturally in the human body. It serves as a coenzyme for several of the key enzymatic steps in the production of energy and has anttoxldant effects. As a dietary supplement, CoQIO has been shown to be effective in improving memory, boosting immunity and energy as well as enhancing exercise performance.

The Gelatin Manufacturers of Europe (GME) estimated The market for CoQIO as a dietary supplement is growing In the United States, Japan and Europe, There are several products built around CoQlO. Nlvea, for example^ has introduced Nivea cream with QIO. Coca Cola Ltd, recently launched Coke with QiO. Also, toothpaste with QIO has been launched in the USA, There is a huge demand for the product, but due to unavailability and limited availability of QIO, the market Is unable to achieve high growth rates given the supply constraints, Company Overview The Company Is in the business of manufacturing healthcare products Including gelatin and Co-enzyme

Q10. It has manufacturing capacities at Vadodara in Gujarat and Ooty in Tamil Nadu and now Sn China Products

Gelatin Sterling Biotech is the leading manufacturer of gelatin In India. Its principal product, pharmaceutical grade gelatin, has a wide range of applications such as capsules, tablets, health supplements, surgical aids, suppositories, as a blood plasma expander and in the treatment of arthritis, Weeding disorders and cartilage related diseases.

CoQlO

Company has already started commercial production for CoQlO at its Masar Facility in March 2007. Sterling has the advantage of being a low cost producer and expects scale up this business and also to boost its performance. USFDA has approved CoQlO as a dietary supplement

Key Strengths

High quality production techniques and products

Sterling's production process at the Vadodara facilities is certified under ISO 9001, ISO 14001 and has received Hazardous Analysis and Critical Control Point ("HACCP") certification. The gelatin produced has been certified by the European Directorate for the Quality of Medicine ("ED'QM").

Lower production costs

The Company operates in a low cost environment and will continue to exploit its lower production costs vis-a-vis its global peer group. The location of the Company's facilities in Vadodara enables it to take advantage of the regular and low cost supply of raw materials.

Additionally, Sterling sells DCP (Oicalcium Phosphate),a by-product of the gelatin manufacturing process, to poultry feed manufacturers in India, who use It In poultry feed to protect poultry against rickets. DCP may also be used in products such as talcum powder, fertilizers and toothpaste.

At present, Sterling Biotech is Asia's largest pharmaceutical grade gelatin producer operating (n a premium niche market with relatively no substitute, it has a leadership position in India and since its entry into the gelatin industry, the Company has consolidated its position as a major producer of pharmaceutical grade gelatin by investing in capacity and quality standards.

Sterling Biotech has achieved a significant presence and a rapidly growing market position by developing high quality production techniques and products, leveraging its low production costs relative to producers in the North America, Europe and Japan and increasing its production capacity through organic growth and acquisitions.

Facilities

The Company's manufacturing facilities are situated in the Western Indian state of Gujarat and in the state of Tamil Nadu.

Quality Certifications

In accordance with the Company's policy to achieve and maintain the highest standards of quality the Company has the following quality certifications.

Kosher Certifications - this certifies that the Jewish population can consume Sterling's gelatin and that the inputs used for gelatin production are in accordance with the religious standards of the Jewish community.

Ifanka Certification - this is'required for Halal certification, which certifies that the gelatin is manufactured using Halal-defined processes and can be used by the Muslim population.

HACCP (Hazardous Analysis and Critical Control Point) Certification - certifies the manufacturing process with the highest and most consistent quality and safety of product.

ISO 9001 - this certifies that the production process is in accordance with standards laid down by the International Standards Organizations.

ISO 14001 - this certifies that the environment management system conforms to the Environmental Management System Standard.

EDQM (European Directorate for the Quality of Medicine) - this is a certification issued by the European Directorate for the Quality of Medicine that Is essential for selling pharmaceutical gelatin in the European Union, Financial Review During the year under review, Sterling witnessed a 25.74 percent increase in sales, primarily driven by the expansion of capacities and acquisitions, The Company, over the past year, increased its production

capacity 28.13 percent to 16,400 mtpa compared to the previous year. The increase in capacity propelled Sterling into the fourth position among international gelatin producers.

The Company has its facilities approved as an Export Oriented Unit (EOU). Additionally, Sterling formed a 100 percent subsidiary company, China Gelatin Limited, which in turn formed a 100 percent subsidiary company, Hebei Gai Le Ting Gelatin Co., Ltd, in Hebei Province, China.

Financial Performance

Income

The total income of Sterling increased 23.7 percent from Rs. 5041.100 millions for the year ended 31 December, 2005 to Rs. 6235.900 millions for the year ended 31 December 2006. The growth in total income was attributable to increased sales and factors such as higher realizations and optimum utilization of capacities and resources.

Expenditure

The total expenditure of Sterling increased 22.43 percent from Rs. 3549.400 millions for the year ended 31 December, 2005 to Rs. 4345.300 millions for the year ended 31 December 2006.

Profit before Taxes

December, 2005 to Rs. 1890.500 millions for the year ended 31 December 2006.

Net Profit

Sterling's net profits increased 20.26 percent from Rs, 1120.800 millions for the year ended 31 December, 2005 to Rs. 1347.900 millions for the year ended 31 December 2006,

Opportunities

The various opportunities the Company plans to leverage are:

Increased demand for pharmaceutical grade gelatin driven by growth in global and local markets;

-.Customer requirements for quality gelatin produced according to certain specifications;

- Surplus demand in the nutraceutical industry, especially for Coenzyme Q10, a fat soluble vitamin substance that is produced naturally in the human body.

Fixed Assets :

v Land & Development

v Building

v Plant & Machinery

v Office Equipments & Furniture

v Vehicles

profile

In 1995, Sterling Gelatin and CRODA Colloids, a world leader in Gelatin technology, entered into collaboration agreement to set up brand new Gelatin manufacturing facility in India. The company since then set up the most modern world class facility employing the latest innovations in technology for manufacture of Gelatin managed by high caliber professionals in the industry.

Subject is a major operating division of the diversified Sandesara Group of companies. Its core business is the manufacture of gelatin for pharmaceutical and edible uses where it has established a worldwide reputation for supplying high quality products against very demanding specifications.

Note :

v The Company has acquired manufacturing facilities of Torrent Gujarat Biotech Limited at Masar, Dist. Baroda, Gujarat as an asset sale for a consideration of Rs.550 Million in an all cash deal.

v Estimated amount of contracts remaining to be executed on capital account and not provided for as on 31^st December, 2006 is Rs. 1914.968 Millions [Previous year RS. 616.087 Millions].

v Contingent liabilities not provided for on account of letters of credit as on 31st December, 2006 are of Rs.108.721 Millions [Previous year Rs. 227.604 Millions].

v During the year under review, the Company formed a 100% subsidiary company, China Gelatin Limited, under the Laws of Hong Kong Special Administrative Region of the People's Republic of China on 26th September, 2006.

China Gelatin Limited also formed a 100% subsidiary company, Hebei Gai Le Ting Gelatin Co. Ltd. in Hebei Province, China. Since both these companies were formed in the later part of the year 2006 and there have been no commercial activities thereafter, accounts of both these companies will be drawn in the year 2007. Hence audited statements of accounts together with reports of the Directors and the Auditors are not required to be annexed hereto pursuant to the provisions of Section 212 of the Companies Act, 1956.

Sterling Biotech bags Rs 55.000 Millions order from US co

MUMBAI, Jan. 1

STERLING Biotech, one of the leading gelatin makers in the country, has received a Rs 55.000 Millions order for supply of gelatin to Cardinal Health Inc, US. The latter is the largest producer of healthcare products and services in the world, with annual sales of $40 billion.

According to a press release, Sterling Biotech has also received approval from the European Directorate of Quality Medicines (EDQM), a department of the European Union Government.

The approval is required for selling pharmaceutical products in the European countries.

Quoting the Sterling Biotech Chairman, Mr Nitin Sandesara, it said: "They are delighted to be associated with Cardinal Health, a Fortune 500 company. They are confident of making further inroads into the US market.

The approval from the European Directorate of Quality Medicine will enable us to expand their market in the EU."

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.42.87
UK Pound	1	Rs.83.41
Euro	1	Rs.66.11

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
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	6
--LEVERAGE	1~10	6
--RESERVES	1~10	9
--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	YES
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		64

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

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