MIRA INFORM REPORT

Report Date :

29.05.2008

IDENTIFICATION DETAILS

Name :	FEDDERS LLOYD CORPORATION LIMITED
Registered Office :	C-4, Phase – II, Noida, Distt. Gautam Budh Nagar, Uttar Pradesh – 201305
Country :	India
Financials (as on) :	30.06.2007
Date of Incorporation :	16.01.1957
Com. Reg. No.:	21118
CIN No.: [Company Identification No.]	L29299UP1957PLC021118
TAN No.: [Tax Deduction & Collection Account No.]	DELF00021A
Legal Form :	Public Limited Liability Company. Company's Shares are Listed on the Stocks Exchange
Line of Business :	The company is engaged in manufacturing of Air conditioners and Refrigerators.

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	USD 5100000
Status :	Very Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and reputed company meeting its normal commitments timeously. General financials position is good. Fundamentals are strong and healthy. The company can be considered good for normal business dealings.

LOCATIONS

Registered Office/ Factory :	C-4, Phase – II, Noida, Distt. Gautam Budh Nagar, Uttar Pradesh – 201305, India
Tel. No.:	91-120-2563031
Fax No.:	91-120-2562632
E-Mail :	lloydac@indiatimes.com
Website :	http://fedderslloyd.com
Head Office :	M-13A, Connaught Place, New Delhi - 110 001, INDIA.
Corporate Office :	159, Okhala Industrial Estate, Phase- III, New Delhi- 110020, India
Tel. No.:	91-11-41609457 / 58/ 59
Fax No.:	91-11-41609909
E-Mail :
Factory :	Saketi Road Industrial Area Kala-Amb, Tehsil Nahan Distt. Sirmor, Himachal Pradesh, India
Zonal Offices :	Located At:- Ø New Delhi Ø Mumbai Ø Hyderabad Ø kolkatta
Branches :	Located At :- Ø Ahmedabad Ø Bhopal Ø Chandigarh Ø Chennai Ø Kochi Ø Ghaziabad Ø Jaipur Ø lucknow

DIRECTORS

Name :	Mr. Brij Raj Punj
Designation :	Chairman and Managing Director
Date of Birth/Age :	53 years
Qualification :	B.Tech, Brunell University, UK.
Experience :	29 years
Date of Appointment :	01.09.87
Previous Employment		Lloyd Insulation (India) Private Limited
Name :	Mr. S. S. Kumar
Designation :	Director
Name :	Mr. T. V. P. Punj
Designation :	Director
Name :	Mr. K. Lall
Designation :	Director
Name :	Mr. Sanjay Behari
Designation :	IFCI Nominee Director

KEY EXECUTIVES

Name :	Ms. Purnima Sharma
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 30.06.2007

Names of Shareholders	No. of Shares	Percentage of Holding
Promoter and Promoter Group
a. Individual/HUF	3338453	10.85
b. Bodies Corporate	7990800	25.97
Public Shareholding
Institutions
a. Mutual Funds/UTI	1 09437	0.35
b. Financial Institutions/ Banks	116009	0.38
c. Foreign Institutional Investors	7359597	23.92
Non-Institutions
a. Bodies Corporate	8499060	27.62
b. Individual Shareholders holding nominal share capital up to Rs 0.100 Million	2726575	8.86
c. Individual Shareholders holding nominal share capital in excess of Rs.0.100 Million	202121	0.66
d. Others	427648	1.39
Total	30769700	100.00

BUSINESS DETAILS

Line of Business :

The company is engaged in manufacturing of Air conditioners and Refrigerators.

Products :

Product Description	ITC Code
Air Conditioner	84.15
Refrigerators	84.18

PRODUCTION STATUS

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Air Conditioners		80000(Nos.)	40000(Nos.)	4505(TR)
Refrigerators		20000(Nos.)	20000(Nos.)	Nil

GENERAL INFORMATION

Suppliers :

Ø Kiran Packing Industries

Ø Friends Cable

Ø Jain Polymer

Customers :

Ø Household Segments

Ø Commercial Segments

Ø Corporate Segments

Ø Public Sector Organisation

Ø Government Organisations

Ø Indian Army, Air Force and Navy

Ø Defense Production Units and Test Labs

Ø Indian Railways

No. of Employees :

Bankers :

Ø State Bank of India

Ø State Bank of Patiala

Ø State Bank of Hyderabad

Ø The Hongkong and Shanghai Banking Corporation Limited

Facilities :

SECURED LOANS As on 30.06.2007	Rs. In Millions
From Scheduled Banks:	671.469
From Financial Institutions	21.320
(Working capital loans are secured by way of Hypothecation of whole of Current Assets and Second charge on Fixed Assets of the company and Term Loans are Secured by mortgage of all existing and future Fixed Assets of the company)
Interest accrued but not due	1.253
Total	694.042

Banking Relations :	Good
Auditors :
Name :	Suresh C Mathur and Company Chartered Accountant
Address :	64, Regal Building, Connaught Place, New Delhi, INDIA.
Associates/Subsidiaries :	Ø Aiserco private limited Ø Lloyd electrical and engineering Limited Ø Lloyd Insulation (India) Limited, Ø Lloyd Credits Limited

CAPITAL STRUCTURE

As on 30.06.2007

Authorised Capital :

No. of Shares	Type	Value	Amount
50000000	Equity Shares	Rs. 10/- each	Rs. 500.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
30769700	Equity Shares	Rs. 10/- each	Rs. 307.697 Millions

Notes:

a) During the period 10,000,000 Equity Shares of Rs. 10/- each fully paid up were issued to the promoter/ nonpromoter company at a premium of Rs. 20/- per share upon execrising the option of conversion of 10,000,000 Preferential Convertible Warrants into Equity Shares,

b) Include 470000 equity shares of Rs. 107- each alloted as fully paid up by way of bonus shares by capitalisation of General Reserves.

c) Includes 79900 Zero Interest fully convertible debentures of Rs. 1000/- each have been converted on 26-08-1996 into 7990000 equity shares of Rs. 10/- each fully paid up.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		30.06.2007	30.06.2006	30.06.2005
SHAREHOLDERS FUNDS
1] Share Capital		307.697	207.697	207.700
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		977.089	672.150	559.100
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		1284.786	879.847	766.800
LOAN FUNDS
1] Secured Loans		694.042	619.152	282.500
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		694.042	619.152	282.500
DEFERRED TAX LIABILITIES		17.049	13.506	0.000
TOTAL		1995.877	1512.505	1049.300
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		569.593	319.933	252.200
Capital work-in-progress		0.000	0.000	28.800
INVESTMENT		3.204	3.204	3.200
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	630.048	450.648	364.700
	Sundry Debtors	634.251	499.746	334.200
	Cash & Bank Balances	31.493	5.517	3.600
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	428.314	382.030	227.000
Total Current Assets		1724.106	1337.941	929.500
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	0.000	0.000	152.900
	Provisions	318.529	166.076	29.000
Total Current Liabilities		318.529	166.076	181.900
Net Current Assets		1405.577	1171.865	747.600
MISCELLANEOUS EXPENSES		17.503	17.503	17.500
TOTAL		1995.877	1512.505	1049.300

PROFIT & LOSS ACCOUNT

PARTICULARS		30.06.2007	30.06.2006	30.06.2005
Sales Turnover		3483.505	2783.170	2405.900
Other Income		1.112	1.176	1.300
Total Income		3484.617	2784.346	2407.200
Profit/(Loss) Before Tax		210.231	132.412	88.200
Provision for Taxation		27.761	10.767	8.200
Profit/(Loss) After Tax		182.470	121.645	80.000
Earnings in Foreign Currency :
	Export Earnings	1.322	0.000	0.000
Imports :
	Components and Spares	99.124	0.000	0.000
Expenditures :
	Cost of Goods Sold	3231.857	2564.579	0.000
	Raw Materials	0.000	0.000	2205.700
	Excise Duty	0.000	0.000	18.400
	Power and Fuel	0.000	0.000	3.200
	Manufacturing Expenses	25.147	17.711	0.000
	Employee Cost	0.000	0.000	32.500
	Administrative Expenses	69.777	46.086	17.100
	Preliminary Expenses Written off	0.000	0.052	0.400
	Increase/(Decrease) in Finished Goods	[135.548]	[27.265]	[2423.500]
	Interest	59.046	34.043	0.000
	Depreciation & Amortization	24.112	16.726	0.000
Total Expenditure		3274.391	2651.932	2319.000

QUARTERLY / SUMMARISED RESULTS

PARTICULARS	30.09.2007 1^st Quarter	31.12.2007 2^nd Quarter	30.03.2007 3^rd Quarter
Sales Turnover	1140.000	1246.400	919.600
Other Income	1.300	1.600	0.200
Total Income	1141.300	1248.000	919.800
Total Expediture	1049.000	1155.600	846.600
Operating Profit	92.300	92.400	73.200
Interest	11.500	14.300	17.000
Gross Profit	80.800	78.100	56.200
Depreciation	8.100	8.300	8.400
Tax	7.600	7.500	5.100
Reported PAT	65.100	62.300	42.700

KEY RATIOS

PARTICULARS	31.06.2007	31.06.2006	31.06.2005
Debt-Equity Ratio	0.69	0.66	0.53
Long Term Debt-Equity Ratio	0.00	0.00	0.07
Current Ratio	1.65	1.75	2.03
TURNOVER RATIOS
Fixed Assets	6.52	6.68	6.24
Inventory	6.48	6.87	6.95
Debtors	6.17	6.71	7.23
Interest Cover Ratio	4.28	4.49	3.27
Operating Profit Margin(%)	8.52	6.68	6.08
Profit Before Interest And Tax Margin(%)	7.84	6.08	5.28
Cash Profit Margin(%)	5.90	4.94	4.12
Adjusted Net Profit Margin(%)	5.21	4.34	3.33
Return On Capital Employed(%)	17.29	15.22	14.09
Return On Net Worth(%)	19.27	17.74	13.28

LOCAL AGENCY FURTHER INFORMATION

History

The company was incorporated in 16^th January, 1957 as a Private Limited Company. The company was later on concerted into a Public Limited Company w.e.f. 28^th January 1989 in New Delhi having Company Registration No. 21118.

Company Profile

In 1957 realizing the conceptual demand and future business prospects in India for climate control equipment especially in the field of air conditioners. Fedders Lloyd promoted by Punj Family started the trading business of AC Units and subsequently commenced the manufacturing of AC Units in India. The product was designed specially to meet the tropical and adverse climatic conditions of India. The AC Units were initially inducted in the metropolitan cities and the target clientele was niche business houses and top government officials. At present the company has presence in all type of air-conditioning needs except for Central AC Systems and the target clientele is all the users spread across the nation.

EMPLOYEE PROFILE

Fedders Lloyd is managed by a team of young professionally qualified and committed group of people drawn reputed management and engineering institutions, with varied experience in Design, Development, Manufacturing, Marketing and Servicing of all type of AC Products. The company has an overall strength of over 350 employees. We consider theirselves a highly people driven organization.

The Organisation

Fedders Lloyd is one of leading company in overall product range and No. 1 in the customized AC Units Headquartered at NOIDA (U.P.) with modern manufacturing facilities at NOIDA, KALA-AMB and GUWAHATI, the current turnover of Fedders Lloyd is about Rs.1700 million and is targeted to reach Rs.5000 million by 2005 thus showing a growth rate of 35%pa. Fedders Lloyd has 22 branch offices and representatives in different parts of India.

THE TECHNOLOGY

Fedders Lloyd has a full fledged design and development department, thus making the products truly value based. Time to time FLC seeks professional guidance from faculty of Premier Engineering Institute(s) of India and certain typical tests are conducted through most renowned testing labs. Fedders Lloyd has been accredited as ISO - 9001. Fedders Lloyd was the first air-conditioning company to manufacture Roof Mounted Package AC Unit for Indian Railways (Rolling Stock) and Rugged AC Units of various models for Mobile Vehicles of Indian Defense Services.

THE PRODUCTS

Standard AC:

• Window and Split AC 1.0 TR to 3.0 TR
• Packaged / Ductable AC 3.0 TR to 15 TR
• Water Cooler 40/40 to 150/150 Ø

Customized AC's for Railways and Defense:

• Roof Mounted Package AC Unit for Railway Coaches
• Military Graded Window / Split / Slip On Models for Mobile Vehicles of Defense 1.0 TR to 2.5 TR
• Milk and Vegetable Chilling Units for Milk and Vegetable Shops

New Ventures:

• Bus AC 10 Seater to 35 Seater
• Transport Refrigeration
• Walk in Cold Rooms
• Cold Storage (Freezer and Chiller)
• Chillers for Process Cooling 2.0 TR to 60 TR

FUTURE PLANS

Under their present expansion plans FLC have commenced production of Standard AC Units from newly set up Guwahati Plant which is likely to yield a turnover of over RS.100 Million in the first year. They have also planned to set up Transport AC and R and Cold Storage Business. In order to get into Chiller Business for Comfort (Air and Water Cooled), they are looking forward o enter into a long term distributorship agreement with one of premier company across the globe, who can not only offer best product and service but also competitive rates.

THE PHILOSOPHY

The corporate philosophy is to maximize CUSTOMER SATISFACTION through innovative and quality products supported by efficient after sales service. Today Fedders Lloyd is committed to quality and has been accredited with ISO - 9001 certification and the highly successful implementation of Baan ERP Package duly supported with After Sales Service Software has made the operations quite successful. The Quality Movement in the entire organization has following salient features:- ü Reduced Supervision ü Power shift in the organization from supplier function to customer function ü A greater sense of oneness in the organization and hence a greater sense of team spirit. In addition to this, the new wave sweeping through Fedders Lloyd is business Process Reengineering. Reengineering teams have been formed in all the departments of the organization, to look at areas requiring radical change. They are moving towards:- v An organization resplendent with processes and not functional areas. The functional areas of the organization such as Marketing, Finance etc. will now give way to processes and sub-processes i.e. the spotlight is now on the processes carried out by each department. v All employees will now be a part of the organization structure as process and sub-process owners. v The functional areas of the department have now been categorized into processes and each of the processes are being taken apart by the reengineering teams to bring them down to ideal, efficient, cost effective and least time consuming processes. v By the time they move towards the implementation stage, they would be looking at a delivered organization, lean (with excess fat sliced off) employees from cross-functional departments forming part of the processes, each contributing towards the end goal, which could be "ORDER to RECEIPT of Products by the Customer". Thus the purpose of reengineering is to look at the processes across the functions that are performed by the company and to simplify them to achieve dramatic advantage in cost and efficiency. The final task is to provide empotheyrment to people for quick decision making.

Director’s Report

RESULTS OF OPERATIONS 

 Turnover for the year has increased by 25.07 per cent from Rs. 2798.66 millions in the previous year to Rs. 3500.30 millions, registering an impressive growth. During the year, the Company has recorded a net profit of Rs. 182.47 millions as compared to Rs. 121.64 millions in the previous year, evidencing a growth of 50% 

 BUSINESS OPERATIONS 

 The company is a well established name in Indian HVAC Industry which is trusted by generations. The company is having a niche in providing customized AC solutions for institutional clients like railways, defense, telecom and other commercial clients. Continuing its growth trend, the company entered into the following business segment during the year: 

Entry in Retail Segment 

 This year the company has forayed into consumer electronics and home appliances segment. The Company offers a wide range of products under the "Lloyd" brand with `Crystal Wave Technology' which includes Air Conditioners, Microwave ovens, DVD players, and LCD TVs. The size of the Indian consumer durables industry in the retail sector stands at US$ 4.5 billion. The product range offered by the Company assures perfection in design and engineering, best quality and services with latest technology and providing value for money to its valued customers. 

 The consumer durable Industry in India is highly competitive and has seen a proliferation of national as well international brands and product categories in recent years. To capture the ever growing and highly potential consumer durable market, the company is focusing on creating an extensive dealers and distribution network in major cities across the country. The Company is looking forward to enter into distributorship agreement with national/international entities to explore and confine the astounding potential of the consumer durable market. 

Industry Overview 

  The Indian economy appears to have decidedly `taken off' and moved from a phase of moderate growth to a new phase of high growth. The Indian Economy grew by 9.4% during the year 2006-07, simultaneously; the Indian HVACandR industry has also grown exponentially in terms of volume, quality, state of the art, technology and eco-friendliness of its products and services. The real estate boom in India has also raised the demand for cooling and ventilation products. Simultaneously, the food producing and processing industry, and the retail sector have become more concerned of reducing spoilage, effective processes, stores, transport and display food effectively, which has also contributed to the growth of Indian HVAC Industry. The market size for air-conditioning in India is estimated to be around Rs. 75000.000 Millions The commercial air-conditioning market catering to corporate and commercial establishments is estimated to be around Rs. 50000.000 Millions

 The Company has entered into the retail segment of electronics items and home appliances' under the brand "Lloyd". This industry has an annual turnover of approximately Rs. 190 billions. The consumer electronic items include home entertainment products like TVs, DVD players, etc. while the home appliances include air conditioners, microwave ovens, washing machines, refrigerators, etc. The growth drivers of `electronics items and home appliances' industry is increase in disposable income levels, increase in affordability, increase in demand for consumer goods, acceptance of these products as utility products rather than luxurious items.

Business during the year

 Fedders Lloyd Corporation Limited is a well established name in Indian AC Industry, with strong product innovation abilities and having a niche in providing customized AC Solutions for institutional clients like railways, defense, telecom and other commercial clients like Mother dairy, BHEL, IOC, MTNL, etc. Recently, the company has ventured into retail segment of electronics and home appliances under the brand "Lloyd", which includes Air conditioners, Microwaves Ovens, DVD players and LCD TVs. The Consumer durable market is high potential market, whereby the Company endeavors to build and enhance the brand equity through its brand "Lloyd". 

 The Company's performance during 2006-07 reflects the improved business performance. The Company's total turnover recorded a growth of 25% and profits after tax increased by 50%, recording an impressive growth. The total turnover during the year was Rs. 3500.30 millions as against Rs.2798.66 millions in the previous year. The net profit during the year amounted to Rs. 182.47 Millions as against Rs. 121.64 Million in the previous year. 

 The Company's management is committed to provide the best solutions to its customers and achieve customers' satisfaction, ensure the highest standards of Corporate Governance. The Company has sound financial practices and is managed by the efficient, transparent and highly Professional Team supported by valued engineers, technicians and project managers. The management of the Company foresees and endeavors further improvement in business practices and enhancement in Shareholders' Value in the years to come. 

Outlook 

 The Company aims at achieving excellence in product quality, service, and safety and to maintain the trust and confidence of its all stake holders. The Company adopts and implements best practices and ensures transparency in all aspects of interactions and dealings. Since its inception the Company has created goodwill amongst the customers and is further taking steps towards providing best solutions to its customers. As stated earlier, the Company has recently entered into retail segment under the "Lloyd" brand; these initiatives will further help the Company to strengthen the brand value. 

 The company is commited to work for:- 

 * Customers' satisfaction by providing quality products, great services, best technology and value for money.

* Enhancement in shareholders' value through best business practices and good corporate governance. 

Risks and concerns: 

 The Company is exposed to risks of market fluctuation in commodity prices, foreign exchange rates and interest rates. This volatility in Indian market is also an area of concern for the Company. The other area of concern is the inherent nature of Company's business being the cyclic one. The Company has entered into retail segment through the products including Microwaves Ovens, DVD players, LCD TVs and Washing Machines which have a huge market potential through out the year, however the cosumer industry is highly competitive and needs strong network penetration. 

 The other areas of risks and concerns include changes in government policies, changes in fiscal policies, domestic and international trade agreements, rise in the cost of raw materials, natural calamities, etc.

Overall the Company foresees to sustain its growth level in years to come. 

Fixed Assets :

Ø Land

Ø Building-Factory

Ø Office Premises

Ø Furniture and Fixture

Ø Plant and Machinery

Ø Dies

Ø Generator

Ø Gas Cylinder

Ø Computer

Ø Duplicating Machine

Ø Typewriters

Ø Office Equipments

Ø Electrical Equipments

Ø Canteen Equipments

Ø Air –Conditioner

Ø Refrigerator

Ø Fan

Ø Motor Car

Ø Jeep

Ø Scooter and Motor Cycle

Ø Cycles

Ø Fork Lifter

Ø Tools

Ø Flat

CMT REPORT (Corruption, Money Laundering and 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.42.85
UK Pound	1	Rs.84.74
Euro	1	Rs.67.36

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	9
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	9
--LEVERAGE	1~10	9
--RESERVES	1~10	8
--CREDIT LINES	1~10	8
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		72

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