MIRA INFORM REPORT

Report Date :

24.06.2008

IDENTIFICATION DETAILS

Name :	WELSPUN POWER AND STEEL LIMITED
Registered Office :	Survey No, 650, Village Varsamedi, Taluka Anjar, District – Kutch- 370 110, Gujarat
Country :	India
Financials (as on) :	31.03.2008
Date of Incorporation :	03.06.2004
Com. Reg. No.:	044249
CIN No.: [Company Identification No.]	U27109GJ2004PLC044249
TAN No.: [Tax Deduction & Collection Account No.]	RKTW00058C
Legal Form :	A Closely Held Public Limited Liability Company
Line of Business :	Manufacturer of Sponge Iron, Ingots Bilets and TMT bars.

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 3733000
Status :	Satisfactory
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a new company and a part of Welspun group. The company has shown satisfactory performance during the first year of its operations. Directors are reported as experienced and respectable businessmen. Trade relations are fair. Business is active. Payments are usually correct and as per commitment. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Survey No. 650, Village Varsamedi, Taluka Anjar, District Kutch – 370 110, Gujarat, India
Tel. No.:	91-2836-573428/29
Fax No.:	91-2836-247070
E-Mail :	wpspl@welspun.com
Website :	http://www.welspunpowerandsteel.com
Location:	Owned
Corporate Office :	Trade World, B- Wing, 9^th Floor, Kamala Mills Compounds, Senapati Bapat Marg, Lower Parel (West), Mumbai - 400013, Maharashtra, India
Tel. No.:	91-22-56503000/24908000
Fax No.:	91-22-24908020
Factory 1 :	Welspun City, P O Box No. 21, Village – Versamedi, Taluka Anjar, District – Kutch, Gujarat – 370 110, India
Tel. No.:	91-2836-279051, 53, 54, 55, 56
Fax No.:	91-2836-279050
E-Mail :	wpsl@welspun.com

DIRECTORS

Name :	Mr. Balkrishan Goenka
Designation :	Director
Address :	6, Chancellor Court, A/88, Carmicheal Road, Mumbai – 400 026, Maharashtra, India
Date of Birth/Age :	15.08.1965
Date of Appointment :	03.06.2004
Name :	Mr. Braja K. Mishra
Designation :	Director
Address :	AT P. O. Dungripali, District Balangir, Orissa- 767 023, India
Date of Birth/Age :	10.07.1963
Date of Appointment :	30.10.2004
Name :	Mr. Satish Bansal
Designation :	Director
Address :	Hubertus Str. 45, 41812 Erkelnz, Germany
Date of Birth/Age :	13.03.1943
Date of Appointment :	30.10.204
Name :	Mr. S. R. Somani
Designation :	Director
Address :	N8-18, Ganpati Niwas Co Operating Housing Society, Bangur Nagar, Goregaon (West), Mumbai, Maharashtra, India
Date of Birth/Age :	23.01.1948
Date of Appointment :	22.03.2005
Name :	Mr. Sivananda Pradhan
Designation :	Director
Address :	Telanga Bazar, Cuttack, Orissa, India
Date of Birth/Age :	18.02.1942
Date of Appointment :	23.05.2005
Name :	Mr. Lal T. Hotwani
Designation :	Director
Address :	107-D Building, Ramayan Nagar,Dasera Maidan, Ulh Nagar, District Thane – 421 003, Maharashtra, India
Date of Birth/Age :	05.05.1953
Date of Appointment :	28.06.2004
Date of Cessation:	30.10.2004
Name :	Mrs. Deepali Goenka
Designation :	Director
Address :	6, Chancellor Court, A/88, Carmicheal Road, Mumbai – 400 026, Maharashtra, India
Date of Birth/Age :	15.10.1969
Date of Appointment :	03.06.2004
Date of Cessation:	30.10.2004
Name :	Mr. Shailesh Vaidya
Designation :	Director
Address :	801, Sumer Heights, K M Mumshi Marg, Chowpatty, Mumbai – 400 007, Maharashtra, India
Date of Birth/Age :	03.11.1957
Date of Appointment :	10.05.2006
Partnership Held:	Kanya and Company Advocates and Solicitors Address: 43 Veer Nariman road, Mumbai – 400 001, Maharashtra, India
Name :	Mr. Lakhiram Sharma
Designation :	Director
Address :	E – 707, Laksarita Millitary Road, Off Marol Maroshi Road, Andheri (East), Mumbai – 400 059, Maharashtra, India
Date of Birth/Age :	11.09.1940
Date of Appointment :	10.05.2006
Name :	Mr. Gopiram Goenka
Designation :	Director
Address :	Gayatri Villa, Sultanpur Mandi Road, Near Mahrauli, New Delhi 110030, India
Date of Birth/Age :	23.11.1942
Date of Appointment :	01.09.2006
Name :	Mr. Rajesh Mandawewala
Designation :	Director
Address :	Flat No. 71, B Wing, 17^th Floor, Tanna Residecny Bay View, 392 V. S. Road, Prabhadevi, Mumbai 400025, Maharashtra, India
Date of Birth/Age :	05.05.1962
Date of Appointment :	01.09.2006
Directorship held in other companies:	Welspun Gujarat Stahl Rohren Limited CIN No.: L27100GJ1995PLC025609 Welspun Syntex Limited CIN No.: U99999DN1992PLC000045 Welspun India Limited CIN No: L17110GJ1985PLC033271 Welspun Finance Limited CIN No.: U65910DL1987PLC019341 Welspun Zucchi Textiles Limited CIN No.: U18101MH1997PLC107982 Welspun Mercantile Limited CIN No.: U70100MH1989PTC052239 Welspun Wintex Private Limited CIN No.: U17120MH1985PTC035190 Welspun Trading Limited CIN No.: L65910MH1982PLC027984 Krishiraj Investment and Finance Private Limited CIN No.: U65990MH1992PTC065715

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

[As on 28.09.2005]

Names of Shareholders	No. of Shares
Deepali Goenka	5000
Krishiraj Trading Limited	2120000
Welspun Finance Limited	1000
Welspun Mercantile Limited	2120000
Welspun Trading Limited	2120000
Welspun Wintex Limited	2120000
Methodical Investment & Trading Company Private Limited	500000
Goldan Arch Estates Private Limited	1000000
Radhika Goenka	2500
Vanshika Goenka	2500
Nextgen Far East Limited	5000000

Equity Share Break-up [As on 31.03.2007]	Percentage of Holding
Foreign holdings (Foreign Institutional investor(s), Foreign companie(s), Foreign financial institution(s), Non-resident Indian(s) or Overseas corporate bodies or others	20.00
Bodies Corporate	80.00
Total	100.00

BUSINESS DETAILS

Line of Business :

The company is engaged in manufacturing of Sponge Iron, Ingots Bilets and TMT bars.

Products :

Product	ITC Code No.
Sponge Iron	72-03
Steel Ingots	72-06
Rolled Products	72-13
TMT Bars	72-12

Imports:

Countries :

• South Africa
• Indonesia

Terms :

Selling :

L/C, Cash and Credit

Purchasing :

L/C, Cash and Credit

PRODUCTION STATUS

Particulars	Installed Capacity
Sponge Iron	60000 MT
Billets/ Ingots	26000 MT
TMT Bars	21000 MT

GENERAL INFORMATION

Suppliers :

v Shah Engineering

v Subham Packaging

v Vrushabh Rubbers

Bankers :

Punjab National Bank

Leader of PNB Consortium , lllaco House, Fort, Mumbai

Facilities :

Particulars	As on 31.03.2005 Rs. In Millions
Secured Loans:
From Banks
Term Loans (including interest accrued and due Rs. 1.373) (Term loans from banks are secured by way of mortgage (first charge) on all movable and immovable properties of the company, both present and future, ranking pari passu, and are personally guaranteed by a promoter, director, Further, the said loans are also secured by second charge on current assets subject to prior charge in favour of banks for working capital facilities.)	357.518
Working Capital loans (Secured by hypothecation of stocks and book debts of the Company and second charge on entire fixed assets of the Company and further secured by personal guarantee of a promoter director)	27.199
Total	384.717
Unsecured Loans
Short Term Loan from a Bank (including interest accrued and due Rs. 382.192 Millions)	50.382
Total	50.382

Banking Relations :	Satisfactory
Auditors :
Name :	Suresh Surana and Associates Charted Accountants
Address :	310, Ahura Centre, 82, Mahakali Caves Road, Andheri (East), Mumbai – 400 093, Maharashtra, India
Associates/Subsidiaries :	ð Welspun India Limited Areas of Business: Home Textiles – Terry Towels, Bed Sheets ð Welspun Gujarat Stahl Rohren Limited Areas of Business: LSAW, Spiral and HFIW pipe manufacturing and coatings ð Welspun Syntex Limited Areas of Business: Speciality Polyester Filament Yarn, Texturised and Dyed Yarns. ð Welspun Zucchi Textiles Limited Areas of Business: Joint Venture with Zucchi, Italy to manufacture Bathrobes.

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
15000000	Equity Shares	Rs. 100/- each	Rs. 1500.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
25100000	Equity Shares	Rs. 10/- each	Rs. 251.000 Millions

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		251.000	250.000	250.000
2] Share Application Money		0.000	18.100	0.000
3] Reserves & Surplus		495.714	93.792	52.715
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		746.714	361.892	302.715
LOAN FUNDS
1] Secured Loans		654.828	956.786	895.154
2] Unsecured Loans		3433.357	100.086	150.207
TOTAL BORROWING		4088.185	1056.872	1045.361
DEFERRED TAX LIABILITIES		225.765	60.382	20.984
TOTAL		5060.664	1479.146	1369.060
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1287.456	1327.696	815.974
Capital work-in-progress		3160.514	38.369	339.074
INVESTMENT		6.903	0.046	0.020
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	400.844	332.734	241.389
	Sundry Debtors	243.812	114.298	162.168
	Cash & Bank Balances	148.569	89.058	32.347
	Other Current Assets	1.218	1.444	0.317
	Loans & Advances	562.990	161.917	194.704
Total Current Assets		1357.433	699.451	630.925
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	665.912	566.662	408.756
	Provisions	85.730	19.754	8.177
Total Current Liabilities		751.642	586.416	416.933
Net Current Assets		605.791	113.035	213.992
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		5060.664	1479.146	1369.060

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
Sales Turnover		3152.385	2301.621	1338.642
Other Income		58.669	3.187	9.405
Total Income		3211.054	2304.808	1348.047
Profit/(Loss) Before Tax		598.749	88.171	65.412
Provision for Taxation		197.271	34.405	20.973
Profit/(Loss) After Tax		401.478	53.766	44.439
Expenditures :
	Raw Material consumed	2062.537	1765.428	990.069
	Increase or decrease in finished goods, work-in-progress	33.190	[32.719]	[54.677]
	Salaries, wages and bonus	68.639	49.189	29.954
	Payment of Auditors	0.000	0.000	0.701
	Manufacturing Expenses	262.583	283.344	0.000
	Interest	115.150	97.770	31.333
	Insurance Expenses	0.000	0.000	2.582
	Power and Fuel	0.000	0.000	78.494
	Depreciation and amortization	70.206	53.625	27.389
	Other Expenditure	0.000	0.000	176.790
Total Expenditure		2612.305	2216.637	1282.635

KEY RATIOS

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
PAT / Total Income	(%)	12.50	2.33	3.30
Net Profit Margin (PBT/Sales)	(%)	18.99	3.83	4.88
Return on Total Assets (PBT/Total Assets}	(%)	22.64	4.34	4.52
Return on Investment (ROI) (PBT/Networth)		0.80	0.24	0.22
Debt Equity Ratio (Total Liability/Networth)		6.48	4.54	4.83
Current Ratio (Current Asset/Current Liability)		1.81	1.19	1.51

LOCAL AGENCY FURTHER INFORMATION

Trade References:

• Essar Group
• Electro Therm India, Gandhidham
• Reliance

Introduction

The company is incorporated on 03.06.2004 as a Private Limited Company and pursuant to the resolution passed by the then members of the company on 05.08.2004; the company was converted into a Public Limited Liability Company.

The company is in gestation period and yet to establish itself. In view of this the directors suggest that the profit be ploughed back in the company and hence no dividend is recommended

Lease: Lease rentals in respect of properties acquired under operating lease are charged off to the profit and loss account as incurred.

The company’s project for manufacturing Sponge Iron commenced on 10.01.2005, Steel Ingots on 15.01.2005 and TMT Bars on 21.01.2005. The figures in profit & Loss Account pertain to the period after commencement of commercial production till 31.03.2005.

Fixed Assets

ð Freehold Land

ð Buildings

ð Plant and Machinery

ð Office Equipments

ð Furniture and Fixtures

ð Vehicles

Form 8

This form is for	Modification of charge
Charge identification number of the modified	80011715
Corporate identity number of the company	U27109GJ2004PLC044249
Name of the company	WELSPUN POWER AND STEEL LIMITED
Address of the registered office or of the principal place of business in India of the company	Survey No, 650, Village Varsamedi, Taluka Anjar, District – Kutch- 370 110, Gujarat
Type of charge	immovable Property
Particular of charge holder	Punjab National Bank, leader of PNB Consortium , lllaco House, Fort, Mumbai 400001 E-mail: ilacopnb@vsnl.com
Nature of description of the instrument creating or modifying the charge	No instrument was executed. An additional charge on second charge basis by way of Joint Mortgage by deposit of title deeds was created on 26.07.2006.
Date of instrument Creating the charge	26.07.2006
Amount secured by the charge	Rs. 680.000 Millions
Brief particulars of the principal terms an conditions and extent and operation of the charge	Rate of Interest As per sanction letter of respective Banks Terms of Repayment As per sanction letter of respective Banks Margin As per sanction letter of respective Banks Extent and Operation of the charge The charge operates as second charge to secure the aggregate working capital facilities of Rs. 680.000 Millions together with interest, additional interest, cost, charges, penal interest, commission, expenses payable by the company to the lenders viz. Punjab National Bank, Andhra Bank and State Bank of India
Short particulars of the property charged	All the immovable properties of the company situated at Survey No. 650, 652 paiki, 653 and 655 in Village Varsamedi, Taluka Anjar, District Kutch Gujarat 370116 in the State of Gujarat, together with buildings and structures thereon and all plant and machinery attached to the earth or permanently fastened to anything attached to the earth.
Date of latest modification prior to the present modification	21.02.2006
Particulars of the present modification	A second charge by way of joint mortgage by deposit of title deeds was created by the company on 26.07.2006 interalia in favour of Punjab National Bank by deposit of title deeds with Punjab National Bank, Punjab National Bank acting for itself and as agent of Andhra Bank and State Bank of India in respect of all the immovable properties of the company situated at Survey No, 650, 652, paiki 653 and 655 in Village Varsamedi, Taluka Anjar, District – Kutch- 370 110, Gujarat

Name of the company (hereinafter referred to as “the company”)	Welspun Power and Steel Limited
Presented By
1) Date and description of instrument creating the change	16/02/2005. Deed Of hypothecation executed in favour of Punjab National Bank leader of consortium, Andhra Bank, State Bank of India, State Bank of Indore (“PNB Consortium”)
2) Amount secured by the charge/amount owing on the securities of charge	Term Loan of Rs. 828.100 Millions sanctioned by PNB Consortium
3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given	The whole of the movable properties of the Borrower including its movable Plant &Machinery, Machinery Spares, Tools & Accessories and other movables, both present & future whether installed or not and whether now lying loose or incase or which are now lying or stored in or about or shall hereafter from time to time during the continuance of the security of these present brought in to or upon or to be stored or be in or about all the Borrower’s factories, premises and godowns wherever situated, or wherever else the same may be or be held by any party to the order or disposition of the borrower or in the course of transit or on high seas or on order or delivery, howsoever and wheresoever in the possession of the borrower and either by way of substitution of addition
4) Gist of the terms and conditions and extent and operation of the charge.	The charge operates as security by way of First Charge for due repayment and discharge by the Company to the lenders for securing the Term Loan of Rs. 828.100 Millions together with interest, additional interest, costs, charges, penal interest, commission, expenses payable by the company to the lenders. The company has undertaken to keep the goods in marketable and good condition at its own costs and shall keep the goods fully insured.
5) Name and Address and description of the person entitled to the charge.	Punjab National Bank, leader of PNB Consortium , lllaco House, Fort, Mumbai
6) Date and brief description of instrument modifying the charge	Not Applicable
7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.	Not Applicable

Name of the company (hereinafter referred to as “the company”)	Welspun Power and Steel Limited
1) Date and description of instrument creating the change	16/02/2005. Joint Deed Of hypothecation executed in favour of working capital lenders Punjab National Bank leader of consortium, Andhra Bank, State Bank of India, State Bank of Indore (“PNB Consortium”)
2) Amount secured by the charge/amount owing on the securities of charge	Working Capital facility of Rs. 266.000 Millions sanctioned by PNB Consortium
3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given	The whole of the Current Assets of the Borrower namely, Stocks of raw materials, Stock in process, Semi finished Goods and Stores and Spares not relating to Plant & Machinery (Consumable Stores and Spares), Export / Local Bills Receivable and Book Debts and advance to supplier for raw material, stores, spares, and consumables and all other movables, both present & future whether installed or not and whether now lying loose or incase or which are now lying or stored in or about or shall hereafter from time to time during the continuance of the security of these present brought in to or upon or to be stored or be in or about all the Borrower’s factories, premises and godowns wherever situated, or wherever else the same may be or be held by any party to the order or disposition of the borrower or in the course of transit or on high seas or on order or delivery, howsoever and wheresoever in the possession of the borrower and either by way of substitution of addition
4) Gist of the terms and conditions and extent and operation of the charge.	The charge operates as security by way of First Charge for due repayment and discharge by the Company to the Working Capital lenders for securing Rs. 266.000 Millions together with interest, additional interest, costs, charges, penal interest, commission, expenses payable by the company to the Working Capital lenders. The company has undertaken to keep the goods in marketable and good condition at its own costs and shall keep the goods fully insured.
5) Name and Address and description of the person entitled to the charge.	Punjab National Bank, leader of PNB Consortium, lllaco House, Fort, Mumbai
6) Date and brief description of instrument modifying the charge	Not Applicable
7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.	Not Applicable

Name of the company (hereinafter referred to as “the company”)	Welspun Power and Steel Limited
Presented By
1) Date and description of instrument creating the change	16/02/2005. Joint Deed Of hypothecation executed in favour of working capital lenders Punjab National Bank leader of consortium, Andhra Bank, State Bank of India, State Bank of Indore (“PNB Consortium”)
2) Amount secured by the charge/amount owing on the securities of charge	Working Capital facility of Rs. 266.000 Millions sanctioned by PNB Consortium
3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given	The whole of the Current Assets of the Borrower namely, Stocks of raw materials, Stock in process, Semi finished Goods and Stores and Spares not relating to Plant & Machinery (Consumable Stores and Spares), Export / Local Bills Receivable and Book Debts and advance to supplier for raw material, stores, spares, and consumables and all other movables, both present & future whether installed or not and whether now lying loose or incase or which are now lying or stored in or about or shall hereafter from time to time during the continuance of the security of these present brought in to or upon or to be stored or be in or about all the Borrower’s factories, premises and godowns wherever situated, or wherever else the same may be or be held by any party to the order or disposition of the borrower or in the course of transit or on high seas or on order or delivery, howsoever and wheresoever in the possession of the borrower and either by way of substitution of addition
4) Gist of the terms and conditions and extent and operation of the charge.	The charge operates as security by way of First Charge for due repayment and discharge by the Company to the Working Capital lenders for securing Rs. 266.000 Millions together with interest, additional interest, costs, charges, penal interest, commission, expenses payable by the company to the Working Capital lenders. The company has undertaken to keep the goods in marketable and good condition at its own costs and shall keep the goods fully insured.
5) Name and Address and description of the person entitled to the charge.	Punjab National Bank, leader of PNB Consortium , lllaco House, Fort, Mumbai
6) Date and brief description of instrument modifying the charge	Not Applicable
7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.	Not Applicable

AS PER WEBSITE DETAILS

Profile

The Welspun Group is an icon of trust, an umbrella of care and reliability, an image of continual growth, a wealth of resources and an affluence of opportunities. Incepted in 1985, with a small texturising unit, it has now grown and multiplied into a steadfast corporation with five diverse business units, with an aggregate turnover of over US $ 500 million.

The Welspun group has an established track record in varied fields. From terry towels to billets, from saw pipes to bathrobes, all output is attested with Welspun quality.

With a mission towards continual improvement and a vision to excel in each of its endeavours, Welspun is the perfect example of a modern day conglomerate.

Subject is a part of the US $ 500 million Welspun Group, has set up a state-of-the-art facility to manufactured ribbed thermo mechanically treated (TMT) rebars. The heat treatment process ensure that the rebars meet stringent quality standards and exhibit higher strength, better ductility, bend ability and weldability over the conventional bars used in the construction industry.

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. 42.97
UK Pound	1	Rs. 84.72
Euro	1	Rs. 66.99

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	4
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	5
--CREDIT LINES	1~10	5
--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		45

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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