MIRA INFORM REPORT

Report Date :

03.10.2008

IDENTIFICATION DETAILS

Name :	IOL CHEMICALS AND PHARMACEUTICALS LIMITED
Registered Office :	Trident Complex, Raikot Road, Barnala – 148 101, Punjab
Country :	India
Financials (as on) :	31.03.2008
Date of Incorporation :	29.09.1986
Com. Reg. No.:	7030
CIN No.: [Company Identification No.]	L24116PB1986PLC007030
TAN No.: [Tax Deduction & Collection Account No.]	JLDI00254C
Legal Form :	Public limited liability company. Company’s shares are listed on the Stock Exchange.
Line of Business :	Manufacturer of Industrial Chemicals and Bulk Drugs

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 4200000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established company having fine track. Trade relations are fair. Payments are correct and as per commitments. The company can be considered good for any normal business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Trident Complex, Raikot Road, Barnala – 148 101, Punjab, India
Tel. No.:	91-1679-244701-07 / 285285
Fax No.:	91-1679-244708 / 285292
E-Mail :	contact@iolcp.com rkthukral@iolcp.com
Website :	http://www.iolcp.com
Head Office :	85 Industrial Area A, Ludhiana – 141 003, Punjab, India
Tel. No.:	91-161-2225531-35
Fax No.:	91-161-2608184 / 2608784 / 2226929
E-Mail :	varindergupta@iolcp.com nkpundir@iolcp.com
Factory :	Village Fatehgarh Chhana, Mansa Road, Barnala – 148 101, Punjab, India
Tel. No.:	91-1679-285285-86
Fax No.:	91-1679-285292
Branch Office :	102, 1^st Floor, Royal Grace, Road No. 2, Lokmanya Tilak Colony, B/H Swaminarayan Mandir, Dadar (East), Mumbai – 400 014, Maharashtra, India
Tel. No.:	91-22-24166656 / 24146654
Mobile No.:	91-9820302660

DIRECTORS

Name :	Mr. Varinder Gupta
Designation :	Chairman and Managing Director
Name :	Dr. M A Zahir
Designation :	Director
Name :	Mr. Chandra Mohan
Designation :	Director
Name :	Dr. (Mrs.) H K Bal
Designation :	Director
Name :	Mrs. Dimple Gupta
Designation :	Director
Name :	Mr. Ravi Pratap Singh
Designation :	Director
Name :	Mr. R K Thukral
Designation :	Executive Director
Audit Committee :	· Dr. M A Zahir – Chairman · Dr (Mrs.) H K Bal · Mrs. Lalita Kapur
Investor’s Grievance Committee :	· Dr. (Mrs.) H K Bal – Chiarman · Dr. M A Zahir · Mrs. Dimple Gupta
Remuneration Committee :	· Dr. M A Zahir – Chairman · Dr (Mrs.) H K Bal · Mrs. Lalita Kapur

KEY EXECUTIVES

Name :	Mrs. Lalita Kapur
Designation :	IDBI Nominee
Name :	Mr. Krishnan Singla
Designation :	Senior Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

(As on 30.06.2008)

Category of Shareholders	No. of Shares	Percentage of Holding
Shareholding of Promoter and Promoter Group
Individuals/ Hindu Undivided Family	1156630	8.64
Bodies Corporate	5381323	40.22
Public shareholding
Institutions
Mutual Funds/ UTI	11000	0.08
Non-institutions
Bodies Corporate	3081645	23.03
Individuals
Individuals -i. Individual shareholders holding nominal share capital up to Rs 0.100 Million	1444539	10.80
ii. Individual shareholders holding nominal share capital in excess of Rs. 0.100 Million	900047	6.73
Any Other (specify)
NRI	74816	0.56
Foreign Companies	1330000	9.94
Total	13380000	100.00

Note

1. The Foreign Shareholding in the Company is 1404816 shares consisting 10.5% of total paid-up Capital of the Company

2. There is no ADR/GDR

BUSINESS DETAILS

Line of Business :

Manufacturer of Industrial Chemicals and Bulk Drugs

Products :

Product Description	ITC Code
Acetic Acid Glacial	291521
Ethyl Acetate	291590
Acetic Anhydride	291524
Ibuprofen	2942

PRODUCTION STATUS

(As on 31.03.2008)

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Acetic Acid	MT	75000	50000	50851**
Ethyl Acetate	MT	36000	33000	28074
Acetic Anhydride	MT	22000	12000	11413
Ibuprofen	MT	7500	3600*	2331

Note

1. *The annual Installed capacities of Ibuprofen Plant on account of expansion undertaken during the current financial year have been increased from 1800 TPA to 3600 TPA w.e.f. 30th September, 2007.

2. ** Includes 34073 MT (Previous year 24011 MT) Acetic Acid has been consumed for captive consumption, out of which 19737 MT (Previous Year 12208 MT) has been consumed for Ethyl Acetate process and 14336 MT (Previous Year 11803 MT) in Acetic Anhydride process.

3. Licensed and installed capacity is on annual basis.

4. Installed capacity has been certified by the Management and not verified by the Auditors, being a technical matters

GENERAL INFORMATION

Customers :

· Ranbaxy Labs

· CIPLA

· Flex Industries

· ICI Paints

· Asian Paints

· Pidilite

· Rallis India

· Hindustan Polymide

· Gujarat Super Phosphate

· Avon Organics Limited

No. of Employees :

704

Bankers :

· Punjab National Bank

· Oriental Bank of Commerce

· Allahabad Bank

· IDBI Bank Limited

Facilities :

Secured Loans	(As on 31.03.2008) Rs. In Millions
Loan From Banks :
Working Capital Loans	* 169.213
Term Loans	** 563.994
Vehicle Loans	*** 3.582
Term Loans From :
Financial Institutions	** 124.831
Total	861.620

* Cash Credit from the banks is secured by way of first charge on all present and future finished goods, work-in-process, raw materials, stores & spares and book debts and futher secured by personal guarantee of the Promoters Directors.

** Term loans from the Financial Institution and the Banks are secured by way of equitable mortgage of all the present and future immovable properties of the Company rank pari passu and hypothecation of all the Company’s movable properties, save and except Book Debts but including movable machinery, spares, tools and accessories both present and future subject to prior charges created /to be created in favour of the Company’s Bankers on specified movable properties for securing borrowings for working capital requirements.The term loans are further secured by the personal guarantee of the Promoter Directors. Term Loan from IDBI Ltd. is further secured by letter of comfort by a company.

*** The vehicle loans are secured by hypothecation of vehicles.

Unsecured Loans	(As on 31.03.2008) Rs. In Millions
From :
Directors	0.277
Others	131.349
Total	131.626

Banking Relations :	Satisfactory
Statutory Auditors :
Name :	K K Kapoor and Associates Chartered Accountants
Address :	Ludhiana
Cost Auditors :	Ramanath Iyer and Company Chartered Accountants
Name :	New Delhi

CAPITAL STRUCTURE

(As on 31.03.2008)

Authorised Capital :

No. of Shares	Type	Value	Amount
25000000	Equity Shares	Rs.10/- each	Rs.250.000 millions
5000000	Preference Shares	Rs.10/- each	Rs.50.000 millions
	Total		Rs.300.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
13380000	Equity Shares	Rs.10/- each	Rs.133.800 millions
5000000	7% Non Cumulative Redeemable Preference Shares	Rs.10/- each	Rs.50.000 millions
	Total		Rs.183.800 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		183.800	144.500	130.500
2] Reserves & Surplus		478.047	185.811	47.300
3] 10% Fully Convertible Debentures		140.000	0.000	0.000
4] Equity Warrants		47.210	0.000	0.000
NETWORTH		849.057	330.311	177.800
LOAN FUNDS
1] Secured Loans		861.619	815.778	388.600
2] Unsecured Loans		131.625	208.327	158.400
TOTAL BORROWING		993.244	1024.105	547.000
DEFERRED TAX LIABILITIES		42.163	3.283	0.000
TOTAL		1884.464	1357.699	724.800
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1267.116	775.313	358.200
Capital work-in-progress		262.152	356.389	167.700
INVESTMENT		0.000	0.000	0.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	347.289	303.049	212.200
	Sundry Debtors	322.593	186.799	129.700
	Cash & Bank Balances	37.338	33.822	24.100
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	173.742	107.115	116.400
Total Current Assets		880.962	630.785	482.400
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	528.349	410.101	286.000
	Provisions	0.000	0.000	1.800
Total Current Liabilities		528.349	410.101	287.800
Net Current Assets		352.613	220.684	194.600
MISCELLANEOUS EXPENSES		2.583	5.313	4.300
TOTAL		1884.464	1357.699	724.800

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
Sales Turnover		3179.429	2025.940	1744.800
Other Income		3.618	1.575	2.100
Total Income		3183.047	2027.515	1746.900
Profit/(Loss) Before Tax		163.667	86.993	97.300
Provision for Taxation		40.034	11.485	24.700
Profit/(Loss) After Tax		123.633	75.508	72.600
Earnings in Foreign Currency :
	Export of Goods	454.279	210.760	0.000
Total Earnings		454.279	210.760	0.000
Imports :
	Raw Materials	21.754	11.349	0.000
	Capital Goods	0.000	2.079	0.000
Total Imports		21.754	13.428	0.000
Expenditures :
	Manufacturing Expenses	339.983	213.693	17.800
	Administrative Expenses	28.303	20.649	51.500
	Raw Material Consumed	2306.768	1584.901	1150.000
	Personnel Expenses	82.422	39.107	0.000
	Excise Duty	0.000	0.000	215.000
	Increase/(Decrease) in Finished Goods	(70.148)	(82.645)	(58.900)
	Employee Cost	0.000	0.000	32.200
	Selling and Distribution Expenses	124.434	60.313	0.000
	Financial Expenses	129.585	66.463	55.500
	Miscellaneous Expenses Written Off	2.730	3.081	3.000
	Power & Fuel	0.000	0.000	156.200
	Depreciation & Amortization	74.289	34.894	27.300
	Other Expenditure	1.014	0.066	0.000
Total Expenditure		3019.380	1940.522	1649.600

QUARTERLY RESULTS

PARTICULARS	30.06.2008
Type	1st Quarter
Sales Turnover	828.700
Other Income	0.800
Total Income	829.500
Total Expenditure	739.500
Operating Profit	90.000
Interest	38.400
Gross Profit	51.600
Depreciation	24.500
Tax	8.000
Reported PAT	19.100

KEY RATIOS

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
PAT / Total Income	(%)	3.88	3.72	4.16
Net Profit Margin (PBT/Sales)	(%)	5.15	4.29	5.58
Return on Total Assets (PBT/Total Assets}	(%)	7.62	6.19	11.58
Return on Investment (ROI) (PBT/Networth)		0.19	0.26	0.55
Debt Equity Ratio (Total Liability/Networth)		1.79	4.34	4.70
Current Ratio (Current Asset/Current Liability)		1.67	1.54	1.68

LOCAL AGENCY FURTHER INFORMATION

PERFORMANCE REVIEW

There was overall improvement in the performance of the Company in production, consumption norms and profitability in comparison to the previous year’s performance. The net sales and other income of the Company has increased by 57% from Rs 2027.515 millions to Rs 3183.046 millions due to increase in the capacities of all plants. The Profit before interest and depreciation has increased by 95.61% to Rs 368.554 millions during the review against Rs 188.417 millions during the previous year due to efficient use of resources. The net profit has increased by 63.74% from Rs 75.508 millions during the previous year to Rs 123.633 millions during the year.

FUTURE EXPANSIONS

The Company has further undertaken the expansion cum forward and backward integration project with a capital

outlay of Rs 2160 millions consisting of expansion of Acetic Acid plant capacity from 50,000 TPA to 75,000 TPA, Ethyl Acetate plant capacity from 33,000 TPA to 36,000 TPA, Acetic Anhydride plant capacity from 12,000 TPA to 18,000 TPA, Ibuprofen plant capacity from 3,600 TPA to 6,000 TPA and Cogeneration power capacity from 4 MW to 17 MW. In addition to this as backward and forward integration project, the Company has undertaken the setting up of manufacturing facilities of value added products that is Acetyl Chloride with capacity of 4,800 TPA and Mono Chloro-acetic Acid with a capacity of 6,600 TPA and Iso Butyl Benzene with a capacity of 6,000 TPA. While these products will be used as major raw materials for the manufacture of Ibuprofen, Acetic Acid and Acetic Anhydride will be used as raw material for the manufacture of Acetyl Chloride and Mono Chloro-Acetic Acid. The Company is hopeful to complete the project by February, 2010.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

EXPORTS AND IMPORTS

During the period of nineties, India was a net importer of chemicals and petrochemical products, but now India has become a net exporter of chemicals because of implementation of several large scale petrochemical plants, and tremendous growth of exports in sectors like bulk drugs and pharmaceuticals, pesticides, and dyes and intermediates. The plastic products, miscellaneous chemical products and pharmaceuticals constitute the main items of exports and imports.

OPPORTUNITIES AND THREATS

Opportunities

1. Technically trained manpower.

2. Large domestic market, with good potential for growth.

3. Backward and Forward Integration of Products.

Threats:

1. Cost of Power and Cost of Finance in India is very high as compared to prevailing in developed countries.

2. Infrastructure facilities are not of world class. Transport and Communications are complex resulting in delays and slow movement of goods.

Business Segment Performance

The Company deals in main two segments i.e. Chemicals and Pharmaceuticals. While under chemical division the Company manufactures Acetic Acid, Ethyl Acetate and Acetic Anhydride and under pharmaceuticals division, the Company manufactures bulk drug i.e. Ibuprofen.The segment wise performance is given below:

Acetic Acid

The production of Acetic Acid has increased from 39566 MT during the previous year to 50851 MT during the year showing an increase of 28.52% and its sale has increased by 8.52% from 15523 MT to 16845 MT during the year. The Company has captively consumed 34075 MT of Acetic Acid in the process of Ethyl Acetate and Acetic Anhydride during the year against 24011 MT during the previous year.

Ethyl Acetate

The production of Ethyl Acetate has increased from 17127 MT to 28074 MT showing an increase of 63.92% and its sale also increased by 64.53 % from 17177 MT to 28262 MT during the year.

Acetic Anhydride

The production of Acetic Anhydride has increased from 9492 MT during the previous year to 11413 MT during the year showing an increase of 20.24% and its sale has increased by 25.12% from 9312 MT to 11651 MT during the year.

Ibuprofen

The production of the Ibuprofen has increased from 873 MT to 2331 MT recording an increase of 167% and its sale has increased from 844 MT to 2134 MT during the year signifying a growth of 152.84%.

Future Prospects

A growing Indian economy, particularly in the increasing manufacturing sector, will continue to drive the growth of the country’s chemical industry for the next decade. A sharp rise in per capita income will also be a factor. Since 2006, the Indian chemical industry as grown at 12 percent per year, and that rate could increase to as much as 16 percent annually by 2010. Pharmaceuticals and biotechnology are leading the way with growth rates of 18 percent per year. With a 14 percent annual growth rate, the petrochemical sector is also receiving significant investment dollars. In 2007, the government announced its plans for investing more than $9 billion over the next five years and a policy to create several designated petroleum, chemicals, and petchem investment regions (PCPIR) throughout the country. Analysts expect India to become a major global player in specialties and polymers, in addition to pharma, biotech and petrochemicals. Rising feedstock costs, reduced credit availability and shortages of skilled engineers and construction equipment could, however, delay projects planned for the near future.

The changing dynamics of the global pharmaceutical industry, especially that of the regulated markets like USA and Europe, have presented a number of opportunities for Indian Pharmaceutical Industry (IPI) to capitalize on. Some of the major concerns facing the global pharmaceutical industry are higher healthcare costs, competition from generics, patent expires of block buster drugs, drying R and D pipelines and increasing R and D costs. These translate into a significant growth opportunity for IPI in the form of exports of generics to regulated markets and contract manufacturing / research for global pharmaceutical companies. It is estimated that the IPI, which has been growing between 7-15% over the last five years, is expected to grow at a CAGR of about 11-13% over the next five years. It is forecasted to reach a market size of around US$ 9.5 Bn in 2010, from its present level of about US$ 5.7 Bn. It is estimated that by the year 2010, the Indian pharmaceutical Industry has the potential to achieve over Rs 1000000 millions production of formulations and bulk drugs.

FINANCIAL PERFORMANCE

Overview

There was overall improvement in the performance of the Company in production, consumption norms and profitability in comparison to the previous year’s performance. The net sales of the Company has increased by 56.94% from Rs 2025.940 millions to Rs 3179.429 millions due to increase in the capacities of all plants and improvement and modification of the existing plant structure.The profit before interest and depreciation has increased by 95.61% to Rs 368.554 millions during the year against Rs 188.417 millions during the previous year.

Exports

During the year, export turnover of the Company has registered substantial improvement over the last year. The exports of the Company on FOB value has been increased by 115.54% to Rs 454.279 millions as compared to previous year’s exports of Rs 210.760 millions. As percentage to net sales it has increased from 10.40% to 14.29% during the year.

Contribution to National Exchequer

The Company has contributed a sum of Rs 430.506 millions as compared to Rs 291.154 millions during the previous year to the National Exchequer by way of central excise duty in addition to contribution through other direct and indirect taxes.

FIXED ASSETS

· Land

· Freehold

· Leasehold

· Buildings

· Plant and Machinery

· Furniture and Fixtures

· Vehicles

WEB DETAILS

About Company

· Innovative Strengths and Strong Growth have made them the market leaders.

· They have built up the expertise responding to diverse customer requirements

· The products cater to the key industrial sectors of Textiles, Pharmaceutical and Packaging

· Efficient teamwork and strong associations have guided them to success.

· Accolades for the environmental policies have come from the highest levels of power.

Through an unwavering focus on Quality, Commitment and Delivery, they have charted the way to success in the operations and have won the admiration of the customers. The success is built on the strong pillars of innovation, quality, and dedicated customer service. By incorporating these and other business strengths, they have boosted the capabilities to maintain the leading edge in the industry and earn the loyalty of the customers.

Profile

Subject is a organic chemicals manufacturers and suppliers. They are Indian manufacturer of industrial chemicals and bulk drugs for over two decades, by pursuing and implementing the highest standards of excellence in the operations, they have nurtured the capabilities. By delivering consistent results have earned the admiration of customers and stakeholders alike.

Market Leaders

The market leadership in the organic chemical range and strong presence in the alcohol based industry, has been a result of an unwavering focus on quality and innovation. By adapting advanced technologies, refining processes and exploring wider applications, them aim to secure the position in the present day as well as future.

Strong Infrastructure

By interacting with customers, they have been able to understand and respond to their dynamic needs. These responsive abilities have come from a parallel growth in the capabilities and capacities. The expertise comes from the long experience that they have in the industry and the advanced technologies that they employ in the facilities.

Success Orientation

The team of able and goal-oriented institutional builders, entrepreneurs, associates and skilled workers and technicians have been the driving force behind the success. With the management systems and tools optimized for sustainability, they create value for the clients and the partners in business. While at the same time, the measures ensure that we fulfill the diverse needs of customers. They view this in terms of long-term competitive advantage they achieve by providing superior products for wider applications from both economic and environmental viewpoints.

Environment Policy

Subject are in the business of manufacturing Industrial Chemicals and Active Pharmaceutical Ingredients. In consequence to this, the management is wholly committed for the protection and preservation of the environment with in and outside of the premises through following ways:

• Incorporate Environmental management in all the business processes and practices.
• Strive to minimize adverse environmental impact by controlling emission, effluents and waste generation in order to prevent pollution.
• Optimum utilization of resources through the practices - Recovery of solvents, improvement in the yields, energy and water.
• Continuously upgrade the operating standards and EMS and to comply with applicable legalization and regulations.
• Create awareness about the EMS.
• Policy shall be reviewed periodically.

Technology and Research

• Consistent Innovation. Driving Progress
• Well-Equipped Research Facilities.
• Use of advanced simulation software -Chem CAD.
• Strong Environmental Safeguard Policies.
• Enhancing Capabilities.

At subject, quality is not just an indefinite and abstract ideal but the result of a conscious and concentrated effort to elicit high standards of excellence in every operation. From adopting modern technologies to enhancing process and quality control, excellence is imbibed in everything they do.

Research & Development

Equipped with cutting edge tools and facilities, the research and development process is managed by a highly trained and motivated team of experts. The vast capabilities in research and breakthrough developments have allowed us to undertake in-house development of technologies required in the manufacturing process.

Today this thirst for perfection has equipped them with the capability to produce anything from single to multi-kilogram quantities and manufacture them as per the exact specifications of the customers.

Product Specifications

• Acetic Acid, the flagship product is a significant chemical reagent around the world.
• Ethyl Acetate
• Acetic Anhydride
• Ibuprofen

The portfolio of products includes a wide range of significant industrial chemicals and bulk drugs such as Ibuprofen. They are committed to providing the customers with the high quality products at the most competitive prices in the industry. With innovative practices and a never-ending quest for excellence, they are dedicated to enhancing the quality of the products in a sustained and consistent manner. In doing so, they seek to consolidate the market leadership and offer products that increase the productivity and profitability of the customers operations.

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] 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.46.96
UK Pound	1	Rs.83.91
Euro	1	Rs.66.36

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	6
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	NO
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		54

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

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

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

RATING EXPLANATIONS

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

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions