MIRA INFORM REPORT

Report Date :

20.06.2008

IDENTIFICATION DETAILS

Name :	WELSPUN SYNTEX LIMITED
Registered Office :	Survey No. 394 (P), Village Saily, Silvassa, Union Territory of Dadra and Nagar Haveli, Daman and Diu
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	31.03.1983
Com. Reg. No.:	45
CIN No.: [Company Identification No.]	L99999DD1983PLC000045
TAN No.: [Tax Deduction & Collection Account No.]	SRTW00080D MUMW02090E MUMM25361A
PAN No.: [Permanent Account No.]	AAACW0489L
Legal Form :	Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	The Company is engaged in Textiles Processing, Texturising, Draw twisting and Twisting of Polyester yarns

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.	Small

Maximum Credit Limit :	USD 3220000
Status :	Moderate
Payment Behaviour :	Slow but Correct
Litigation :	Clear
Comments :	Financial Position is moderate. Payments are reported as slow and delayed. Trade relations are fair. The company can be considered for moderate business dealings at usual trade terms and conditions with some caution in view of unfavourable financial position.

LOCATIONS

Registered Office :	Survey No. 394 (P), Village Saily, Silvassa, Union Territory of Dadra and Nagar Haveli, India
Tel. No.:	91-260-640599 / 640596
Fax No.:	91-260-640597
E-Mail :	welspun@vsnl.com kaushik_kapasi@welspun.com
Website :	http://www.welspunsyntex.com
Corporate Office :	Kamani Wadi, 1^st Floor, 542, Jagannath Shankar Sheth Road, Chira Bazar, Mumbai – 400 002.
E-Mail :	welspun@bom2.vsnl.net.in welspun@bom5.vsnl.net.in
Website:	www.welspunsyntex.com
Factory 1 :	Palghar Plant: Plot No.14/15, Dewan Industrial Estate, Palghar, District Thane, Maharashtra, India
Tel. No.:	91-2525-52772 / 52662
Fax No.:	91-2525-52988
Factory 2 :	Silvassa plant: Survey No. 394 (P), Village Saily, Silvassa, Dadra and Nagar Haveli, India
Tel. No.:	91-260-640599 / 640596
Fax No.:	91-260-640597
Branches :	MARKETING AND ADMINISTRATIVE HEAD OFFICE: Kamaniwadi, 1^st Floor, 542, Jagannath Shankar Sheth Road, Chira Bazar, Mumbai – 400 002, Maharashtra, India Tel. No.: 91-22-2085242 / 2085362 Fax No.: 91-22-2085305 E-Mail : welspun@vsnl.com Website : http://www.welspunsyntex.com SURAT OFFICE: 3001/3002, Jash Textile Market, Ring Road, Surat – 395 002, Gujarat, India Tel. No.: 91-261-627 863 / 657 215 / 636 125 Fax No.: 91-261-612 604

DIRECTORS

Name :	Mr. B K Goenka
Designation :	Managing Director Cum Vice Chairman
Name :	Mr. G R Goenka
Designation :	Chairman
Name :	Mr. R R Mandawewala
Designation :	Vice Chairman Cum Director
Name :	Mr. Murarilal Mittal
Designation :	Director (Finance)
Name :	Mr. V L Bhutra
Designation :	Director (Operation)
Name :	Mr. Dr. Anil Kane
Designation :	Nominee IDBI
Name :	Mr. G. J. Prasad
Designation :	Nominee IFCI
Name :	Mr. Atul Desai
Designation :	Director
Name :	Mr. Raj Kumar Jain
Designation :	Director
Name :	Mr. M. K. Tandon
Designation :	Director
Name :	Mr. A K Shah
Designation :	Director
Name :	Mr. B A Kale
Designation :	Director
Name :	Mr S K Agarwal
Designation :	Director
Date of Birth/Age :	56 years
Qualification :	B Tech (Chemical)
Experience :	34 years
Date of Appointment :	01.05.1998
Previous Employment	M/s Orkay Polyesters Patalganga

KEY EXECUTIVES

Name :	Mr. K. N. Kapasi
Designation :	Company Secretary

BUSINESS DETAILS

Line of Business :

The Company is engaged in Textiles Processing, Texturising, Draw twisting and Twisting of Polyester yarns

PRODUCTION STATUS

Particulars	Unit	Licensed Capacity	Actual Production
Dyed / Text and Twisted Polyester Yarn	MT	---	19750.79
POY	MT	---	22580.94
Polyster Yarn ( Texturised , Twisted and Dyed) POY	MT	---	---
- POY / FDY	MT	31400	---
- Dyeing plant	Nos	7200	---
- Texturising Machines	Nos	24	---
- Air Tex	Nos	10	---
- Draw Twisting Machine	Nos	1	---
- TFO Twisting Machine	Nos	28	---

GENERAL INFORMATION

No. of Employees :

1500

Products:

· Polyester Partially Oriented Yarn (Poy)

· Polyester Fully Drawn Yarns (Fdy)

· Polyester Mono Filament Yarns (Pmfy)

· Polyester Filament Yarn (Pfy)

· Polyester Draw Texturised Yarn ( Dty/Pty)

· Air Textured Yarns (Paty)

· Speciality Polyester Filament Yarns (Spfy)

· Nylon Yarns

Product Description	ITC Code
Synthetic Yarn	5402

Bankers :

Ø Bank of Baroda

Ø State Bank of Bikaner and Jaipur

Facilities :

SECURED LOAN	31.03.2007	31.03.2006
	(Rs. in millions)
Debentures	29.455	33.145
Long Terms Loans
Financial institutions
Rupee Term loans	350.606	405.572
Foreign Currency Loans	20.072	29.733
Banks
Rupee Term Loan	62.257	0.000
Foreign currency Loan	130.643	179.252
Vehicle Loan	0.097	0.186
Short Term loan from Bank	100.000	100.000
Working capital Finance
Rupee Term Loan	9.658	30.017
Foreign Currency Loan	154.114	144.965
Interest accrued and due on loan	5.671	0.462
Total	862.573	923.332

Banking Relations :	Unknown
Auditors :
Name :	M. G. Bhandari and Company Chartered Accountants
Associates/Subsidiaries :	· Welspun Plastics Private limited (formerly Known as Jaycee Plastics Industries Private limited) · Nirmal Plastics Industries · Welspun Gujarat Stahl Rohren Limited · Welspun India Limited · Welspun Trading Limited · Welspun Power And Steel Limited · Welspun Retail Limited · Welspun Zucchi Textile limited · Vipuna Trading Limited · Good Value Polyplast Limited · Mertz Securities Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
106700000	Equity Shares	Rs. 10.00 each	Rs. 1067.000 Millions
3300000	Optionally Convertible Cumulative Preference Shares	Rs. 10.00 each	Rs. 33.000 Millions
10000000	Redeemable Preference Shares	Rs. 10.00 each	Rs.100.000 Millions
	Total		Rs. 1200.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
94580109	Equity Shares	Rs. 10.00 each	Rs. 945.801 Millions
1936400	10% Optionally Convertible Cumulative Preference Shares	Rs. 10.00 each	Rs.19.364 Millions
8333300	8% Redeemable Preference Shares	Rs. 10.00 each	Rs.83.333 Millions
	Total		Rs. 1048.498 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2007	31.03.2006	31.03.2005
SHAREHOLDERS FUNDS
1] Share Capital		1048.498	1071.200	1077.834
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		40.043	197.600	144.876
4] (Accumulated Losses)		[442.858]	0.000	0.000
NETWORTH		645.683	1268.800	1222.710
LOAN FUNDS
1] Secured Loans		862.573	923.300	1033.897
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		862.573	923.300	1033.897
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		1508.256	2192.100	2256.607
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1054.456	1660.600	1813.683
Capital work-in-progress		12.554	3.800	1.160
INVESTMENT		225.401	223.400	132.544
DEFERREX TAX ASSETS		0.000	0.000	88.607
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	274.424	322.200	294.764
	Sundry Debtors	176.101	178.900	195.296
	Cash & Bank Balances	32.795	120.500	42.079
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	104.093	92.000	85.233
Total Current Assets		587.413	713.600	617.372
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	344.857	385.200	380.738
	Provisions	28.473	27.500	21.014
Total Current Liabilities		373.330	412.700	401.752
Net Current Assets		214.083	300.900	215.620
MISCELLANEOUS EXPENSES		1.762	3.400	4.993
TOTAL		1508.256	2192.100	2256.607

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		2676.260	3003.700	3168.200
Other Income		10.193	116.900	150.300
Stock Adjustments		0.000	17.000	(26.000)
Total Income		2686.453	3137.600	3292.500
Profit/(Loss) Before Tax		599.707	146.200	8.200
Provision for Taxation		0.677	93.500	5.700
Profit/(Loss) After Tax		600.384	52.700	2.500
Export Value		649.804	362.320	462.492
Import Value		420.135	380.952	249.730
Expenditures :
	Raw Materials	0.000	1757.600	1745.300
	Cost of goods	1770.334	0.000	0.000
	Excise Duty	0.000	326.100	531.900
	Power and Fuel Cost	0.000	198.300	213.200
	Other Manufacturing Expenses	1340.292	266.400	299.400
	Employee Cost	0.000	81.000	97.700
	Selling and Administration Expenses	0.000	111.800	132.700
	Miscellaneous Expenses	0.000	12.900	13.500
	Interest and Financial Charges	76.158	79.100	92.600
	Depreciation	99.376	158.200	158.000
Total Expenditure		3286.160	2991.400	3284.300

QUARTERLY RESULTS

Year	30.06.2007	30.09.2007	31.12.2007
Type	1 Quarter	2 Quarter	3^rd Quarter
Sales Turnover	666.400	680.000	757.700
Other Income	5.300	0.600	43.700
Total Income	671.700	680.600	801.400
Total Expenditure	612.900	627.400	735.800
Operating Profit	58.800	53.200	65.600
Interest	24.100	21.700	24.700
Gross Profit	34.700	31.500	40.900
Depreciation	20.000	19.600	17.700
Tax	0.200	0.200	0.200
Reported PAT	14.500	11.700	23.000

KEY RATIOS

Year	31.03.2007	31.03.2006	31.03.2005
Debt-Equity Ratio	0.93	0.79	0.88
Long Term Debt-Equity Ratio	0.76	0.65	0.72
Current Ratio	1.16	1.17	1.13
TURNOVER RATIOS
Fixed Assets	1.00	1.06	1.12
Inventory	9.57	9.74	9.61
Debtors	16.08	16.05	18.80
Interest Cover Ratio	0.69	1.64	-0.15
Operating Profit Margin(%)	5.70	9.59	4.56
Profit Before Interest And Tax Margin(%)	2.22	4.32	-0.43
Cash Profit Margin(%)	2.46	5.87	1.64
Adjusted Net Profit Margin(%)	-1.02	0.60	-3.35
Return On Capital Employed(%)	0.00	5.85	-0.59
Return On Net Worth(%)	0.00	1.61	-9.75

LOCAL AGENCY FURTHER INFORMATION

HISTORY

Subject was incorporated on 25^th November 1992 at Silvassa in Dadra and Nagar Haveli having Company Registration Number 45.

Company was incorporated on 31^st March, 1983 as Kothari Leasing, and changed its name to Kothari Polyesters on 15^th March, 1991 and to the company (WSL) on 26^th July, 1991. The company was promoted by G R Goenka, B K Goenka and R R Mandawewala.

The company is engaged in texturising, draw twisting and twisting of polyester yarns. It set up a texturising unit at Silvassa in 1988 at a capital outlay of Rs. 15.8 millions. Thereafter, more machines were added for twisting and draw twisting. The company’s other unit is located at Palghar (Thane District), Maharashtra. In June 1995, the company started production of Texturized polyester yarn.

For its expansion cum diversification of polyester texturised yarn the company came into rights issue of Rs. 67.8 millions in 1994.

The company has expanded its activities by installing four texturising machines, three draw twisting machines and a sizing machine at Silvassa. The texturising capacity has been increased from 2500 to 6500 tpa.

The Speciality Polyester Filament Yarn Project at Rakholi, Silvassa is under implementation. In addition to this, 5 Texturising machines with an installed capacity of 3500 MTPA have been installed.

The company has taken up an expansion scheme to install 8 nos. Himson SDS 700 texturising machines alongwith related utilities at a cost of Rs. 142.5 millions. Out of these, 3 machines with utilities have come to the site and became operational. The company developed Dope Dyed POY for Air Tex/Texturising Dope Dyed FDY for Mill Sector.

DIRECTOR REPORTS:

OPERATIONS: 
During the year under review, sales / services and Gross Profit/Loss before Interest, Impairment Loss and Depreciation were of Rs. 2676.259 millions and Rs.148.982 millions respectively as compared to Rs. 2671.341 millions and Rs. 369.326 millions respectively for the previous year. 

Cost of production particularly power and raw materials prices have increased which were major reasons for incurring losses during the year under review. The Company has taken various steps for proper utilization of power and to reduce other cost of production during the current year. 

Due to lack of profit margin in local market, the Company concentrated on export market during the financial year. Exports were of Rs.690.900 millions as compared to Rs.416.762 millions of previous year, registering growth of 66%. 

EXPANSION: 
The Company has expanded its texturising capacity by installing Texturising Machinery with total installed capacity of 12542 M.T. p.a. 

The Company is further planning to install Mono Texturising Machines and Texturising Machines during the current year at an estimated project cost of Rs.100.000 millions. This will be financed by Term loans from Banks. 

MANAGEMENT DISCUSSION AND ANALYSIS 

INDUSTRY STRUCTURE, SCENARIO & DEVELOPMENT: 

Indian economy grew a whopping 9.5% in 2006-07 pushing the absolute size of the economic to Rs.4.000 millions or $1 trillion at current market prices.

Investment in textile sector increased due to TUF Scheme made operational for the textile and is further expected to increase due to its further extension by 5 years to 2012. Custom duty on import of POY has decreased from 10% to 7.5%.

Supply of Polyester Filament Yarn in domestic market has increased as compared to its demand during the financial year 2006-07. POY production continue to rise in the current year. While international prices increased marginally, domestic price showed a slight declined given the increased availability. 

Rupee appreciation as compared to USD has affected quantum of exports and margins. 

Moreover, due to Rupee appreciation exports have started offloading into domestic market thus creating a surplus in the market. 

OPPORTUNITY AND THREATS: 

The Company made more of Speciality yarn. Large spinners have now shifted to value added Speciality yarn, since commodities products are not profitable. As a result margin of profits on Speciality yarn are further reduced. 

 Extension of TUF Scheme by further 5 years to 2012 has opened opportunity for further expansion, modernisation in the Textile Sector. 

PRODUCT WISE PERFORMANCE: 

 The Company manufactures Partially Oriented Yarn (POY), Texturised yarn/ Dyed yarn. 

Annual turnover of POY were of Rs. 871.068 millions as compared to Rs. 1037.432 millions of previous year and of Texturised Yarn/ Dyed yarn were of Rs.1926.886 millions as compared to Rs. 1893.734 millions of previous year. 

OUTLOOK: 
With expected growth in Manufacturing and Service sector, overall demand as well as per capita textiles consumption is likely to be improved. 

DISCUSSION ON FINANCIAL PERFORMANCE: 

During the year, sales and services were of Rs. 2676.259 millions as against Rs.2671.341 millions in the previous year. The Company has incurred losses of Rs. 600.384 millions as against net profit of Rs.52.693 millions during the previous year

BUSINESS

Subject is engaged in textiles processing, texturising, and draw twisting and twisting of polyester yarns. The company is a leading conglomerate in every sphere of its operations, be it Yarns, SAW pipes or Terry towels.

The company has following Products:

1. Polyester Partially Oriented Yarn (POY)

Ø Full Dull Raw White POY

Ø Semi Dull Raw White POY

Ø Bright Raw White POY

Ø Dope Dyed Black POY

Ø Dope Dyed Bright POY (Shade Card)

2. Polyester Fully Drawn Yarns (FDY)

Ø Full Dull Raw White FDY

Ø Semi Dull Raw White FDY

Ø Bright Raw White FDY

Ø Bright Dope Dyed FDY (Shade Card)

3. Polyester Filament Yarn (PFY)

Ø Semi Dull Raw White PFY

Ø Bright Raw White PFY

Ø Semi Dull Dope Dyed PFY

Ø NSY (Non-Sizeing Yarn With High Nips) PFY

4. Polyester Draw Texturised Yarn (DTY / PTY)

Ø Full Dull Raw White PTY

Ø Semi Dull Raw White PTY

Ø Semi Dull Dope Dyed Black PTY

Ø Bright Dope Dyed PTY (Shade Card)

5. Package / Yarn Dyed Polyester Filament Yarn

Ø Full Dull Dyed PTY

Ø Semi Dull Dyed PTY

Ø Bright Dyed PTY

Ø Twisted and Dyed PTY

Ø Twisted and Dyed Bright PFY

6. Speciality Polyester Filament Yarns (SPFY)

Ø Discat Disperse and Cationic Dyeable Melange PTY

Ø Black and White Melange PTY

Ø Micro Denier PTY

Ø EDY-Elastic Drawn Yarn

Ø Thick and Thin Yarn

Ø PSY – Peach Skin Yarn

Ø BI-Shrinkage Yarn

Ø Wool Like Yarn

Ø Non-Torque Yarn

INFRASTRUCTURE

Today, company has two state-of-the-art plants at Silvassa and Palghar.

Silvassa Plant

The location of Silvassa plant is perfectly poised between the two most important Textiles States of India, Gujarat and Maharashtra. This ideal geographical positioning helps subject to deliver its finished products to its customers in India and overseas. Its proximity to the most advanced and important sea ports in India, JNPT and Mumbai, makes it possible to deliver the finished products and receive the imported raw materials within a matter of few hours to and from the ports.

The Silvassa plant is equipped with the latest technology indigenously redesigned for optimum production capacity and flexible manufacturing system to produce a very wide product range in POY and processed polyester filament yarns which includes Micro deniers, cationic dyeable, dope dyed, flame retardant, easy dyeable, trilobal, octolobal, hollow, semidul and bright and many more Speciality yarns which are continuously researched and upgraded into newer qualities.

Palghar Plant

It is from this town that, subject started its first manufacturing activity. Today, Palghar Plant houses one of the most advanced dyeing plants of polyester yarns in India. It boasts of state-of-the-art computerized Colour Matching system and Dyeing Technology.

Palghar plant enjoys the advantages of ideal geographical location to efficiently handle all the logistics to facilitate prompt shipments to the Indian and overseas customers. The product range and process parameters are designed to optimize the production capacity and minimize the cost of production without compromising on quality and offer the best value for money.

It includes package dyed polyester Texturized yarns, dyed and twisted bright trilobal polyester filament flat yarns, polyester Texturized yarns twisted or untwisted on perforated polyproplene dyeing tubes, twisted raw white\bright trilobal polyester Texturized and flat yarns, shrunk wrapped dyeing tubes for optimization of productivity of customers, small weights and precision wound dyed yarns upto 500gms/bobbin etc.

FIXED ASSETS

· System Software

· Freehold Land

· Buildings

· Plant and Machinery

· Vehicles

· Furniture and Fixture

· Equipments

· Computers

WEBSITE DETAILS ATTACHED:

Perfection is what they stand for, and their financial results vouch for their achievements. Subject is a leading conglomerate in every sphere of its operations, be it Yarns, SAW pipes or Terry towels.

Each of their endeavor is committed, keeping one thing in mind - what you wear is unequivocal identifier of what you are. So, the next time when you make a fashion statement, consider the fact that the attire may have come from a US$ 440 million business house with customers in more than forty countries. If this is not enough, they furnish the stylists with 200 new colours every month.

Spinning dreams into reality vis-à-vis yarns. Subject is relocating the fashion capital of the world. No wonder subject is one of the largest exporters of Polyster Texturized Filament Yarn from India. Additionally, the company is the leading manufacturer of specialty polyester filament yarn from India. Complete customer satisfaction is the mantra of unbridled success for Subject.

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 records 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] 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. 42.93
UK Pound	1	Rs. 84.17
Euro	1	Rs. 66.82

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	3
OPERATING SCALE	1~10	3
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	3
--PROFITABILIRY	1~10	3
--LIQUIDITY	1~10	3
--LEVERAGE	1~10	3
--RESERVES	1~10	3
--CREDIT LINES	1~10	3
--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	YES
--AFFILIATION	YES/NO	NO
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		29

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