MIRA INFORM REPORT

Report Date :

04.10.2008

IDENTIFICATION DETAILS

Name :	PANAMA PETROCHEM LIMITED
Registered Office :	Plot No. 3303, GIDC Estate, Ankleshwar – 393 022 Gujarat
Country :	India
Financials (as on) :	31.03.2008
Date of Incorporation :	09.03.1982
Com. Reg. No.:	005062
CIN No.: [Company Identification No.]	L23209GJ1982PLC005062
TAN No.: [Tax Deduction & Collection Account No.]	MUMP21217A
PAN No.: [Permanent Account No.]	AACCP4358D
Legal Form :	It is a Public Limited Liability Company. The company's shares are listed on the Stock Exchanges.
Line of Business :	Manufacturers of Speciality Chemicals

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 2564000
Status :	Good
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is a well established company having satisfactory trade. Directors are reported as experienced, respectable and having satisfactory means of their own. Their trade relations are reported as fair. General financial position is satisfactory. Payments are reported as slow but correct.

LOCATIONS

Registered Office/ Factory 1 :	Plot No.3303 , GIDC ,Ankleshwar - 393 002, Gujarat, India
Tel. No.:	91-2646-221068 , 250281
Fax No.:	91-2646-250281
E-Mail :	ankl@panamapetro.com panama@vsnl.com panamaoils@satyam.net.in
Website :	www.panamapetro.com
Corporate Office :	5, Mahavir Shan , 416 Narshi Natha Street , Mumbai 400009
Tel. No.:	91-22-23427700
Fax No.:	91-22-23428702
E-Mail :	panama@vsnl.com
Overseas Office	20501 Katy Freeway 138D, Katy, TX 77450 USA
Tel. No.:	91-281- 8291500
Fax No.:	91-281- 8291501
Factory 2 :	Plot No. 127/128, Marol Co-op Industrial Estate M.V. Road Saki naka , Andheri (E) Mumbai No. 400059
Tel. No.:	91-2228501486, 28505459
Fax No.:	91-22-28500003
E-Mail :	marol@panamapetro.com
Factory 3 :	Survey No.78/2, Daman Industrial Estate, Unit III, Poly Cab Road Village Kadaiya Dist .Daman (UT)396210
Tel. No.:	91-260-3091311
Fax No.:	91-260-2220449
E-Mail :	daman@panamapetro.com
Factory 4 :	Plot No. H-12, MIDC, Taloja, District Raighad, Maharashtra, India.
Tel. No.:	91-22-27411456

DIRECTORS

Name :	Mr. Badrudin Kasamali
Designation :	Chairman – Directors
Date of Birth/Age :	17.10.1935
Qualification :	Senior Cambridge
Experience :	Mr. Badrudin Kasamali possesses rich experience in Fund Management Business nearly 3 decades. He is well versed in financial and accounting matters and has good analytical skills.
Date of Appointment :	30.09.2005
Membership Held :	Audit Committee, Remuneration Committee and Shareholders Grievance Committee of Subject.
Name :	Mr. Amitali Rayani
Designation :	Managing Director and C.E.O
Name :	Mr. Dilip Phatarphekar
Designation :	Directors
Name :	Mr. Madan Mohan Jain
Designation :	Director
Name :	Mr. M.V. Isani
Designation :	Director
Name :	Mr. Vazirali Rayani
Designation :	Director
Name :	Salimali Rayami
Designation :	Director
Name :	Mr. Amin Rayani
Designation :	Director
Name :	Mr. Samir Rayani
Designation :	Director
Name :	Mr. Mukesh Mehta
Designation :	Director
Date of Birth/Age :	20.07.1958
Qualification :	B.Com
Experience :	Mr. Mukesh Mehta has vast experience in field of export and has good knowledge in formulation of business plans and export strategies.
Date of Appointment :	30.09.2005
Membership Held :	Audit Committee, Remuneration Committee and Shareholders Grievance Committee of Subject.
Name :	Mr. Rajendra Thakker
Designation :	Director
Name :	Mr. S.K. Ukani
Designation :	Director

KEY EXECUTIVES

Name :	Mr. Akberail Rayai
Designation :	Executive –Operation and Sales
Name :	Mr. P.V. Chauhan
Designation :	General Manager
Name :	Mr. D.N. Chauhan
Designation :	Manager – Plant , Ankleshwar
Name :	Mr. Anil Dixit
Designation :	Manager – Plant , Daman
Name :	Mr. S.R. Sawant
Designation :	Manager – Marketing (Lubricants)
Name :	Mr. S.T. Chhatriwala
Designation :	Manager – Marketing (Lubricants)
Name :	Mr. Anil Dhomse
Designation :	Manager – Marketing (Specially Products)
Name :	Ms. Krupali Daru
Designation :	Acs , LLB Company Secretary
Name :	Mr. Sanjaya Khare
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Category of Shareholder	No. of Shares	Percentage of Holding
Shareholding of Promoter and Promoter Group^2
Indian
Individuals/ Hindu Undivided Family	1554055	32.63
Bodies Corporate	288346	6.06
Public shareholding
Institutions
Mutual Funds/ UTI	13800	0.29
Financial Institutions ^/Banks	300	0.01
Foreign Institutional Investors	121397	2.55
Non-institutions
Bodies Corporate	824155	17.31
Individuals
Individuals -i. Individual shareholders holding nominal share capital up to Rs 0.100 Million	1057939	22.22
ii. Individual shareholders holding nominal share capital in excess of Rs. 0.100 Million	846220	17.77
Any Other (specify)
Clearing member	10147	0.21
Non Resident Indians	45641	0.96
GRAND TOTAL	4762000	100.000

BUSINESS DETAILS

Line of Business :

Manufacturers of Speciality Chemicals

Products :

HC Code	Product Description
27101990	PAN OIL
27121090	PETROLEUM JELLY
27101990	TRANSFORMER OILS

Featured Products

· White oil

· Anti Static Coning oil

· Transformer oil

· Petroleun Jelly

· Liquid paraffins

Exports :

Products :

White Oil, Petroleum Jelly, Liquid Paraffin

Countries :

U.S.A, Africa, Middle East

Imports :

Products :

Base Oils

Countries :

Leading International suppliers

PRODUCTION STATUS (As on 31.03.2008)

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Manufactured Goods	MT	69000	69000	59642.598
Traded Goods:
Petroleum Products	MT	--	--	4153.796
Others	CTN/ MT	--	--	2.186

GENERAL INFORMATION

No. of Employees :

About 200

Bankers :

• Development Credit Bank Limited
• Canara Bank
• HSBC Bank
• Standard Chartered Bank
• HDFC Bank
• Citi Bank
• DBS Bank Limited
• ICICI Bank Limited
• Indian Bank

Facilities :

Secured loans :

	As on 31.03.2008  (Rs. In Million)
Term Loans
Financial Institutions (Secured Against Specific Vehicles)	0.398
Government Organisations (Secured Against Specific Leasehold Land)	0.162
Financial From Bank Cash credit (Secured against the hypothecation of stocks, book debts; Pledge of Fixed Deposit Receipts , Equitable Mortgage of Immoveable Property of associate company personal guarantee of 5 directors of the company)	66.280
Total	66.840

Uncured Loans

	As on 31.03.2008  (Rs. In Million)
Short Term Loans
From Others	0.590
Total	0.590

Banking Relations :	Satisfactory
Auditors :
Name :	Habij and Company Chartered Accountants
Associates/Subsidiaries :	Asiatic Corporation Chemifine Express Industries Pickol Fibrotech Diamond Wax Agency Dunhill Development Private Limited Anirudh Distributions Private Limited Ittefaq ICE and Cold Storage Private Limited Mobile Petrochem Private limited Monaco Petroeum Private Limited Panama Petroleum Products Panama Builders and Developers Private Limited Surya Transport Arif Transport Arif Iqbal Rayani Family Trust Iqbal Rayani consultants H.A. Realities Private Limited Ariman Lubricants and Chemicals Private Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
11000000	Equity Shares	Rs.10/- each	Rs.110.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
4762000	Equity Shares	Rs.10/- each	Rs.47.620 millions

Note:

500000 Equity Shares (face value of Rs.10/- each) were allotted to M/s Acme Craft Private Limited at a premium of Rs.143/- per share, on option being exercised to convert share warrants into equivalent number shares.

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		47.620	42.620	42.620
2] Share Application Money		6.375	22.650	0.000
3] Reserves & Surplus		458.759	261.733	171.784
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		512.754	327.003	214.404
LOAN FUNDS
1] Secured Loans		66.840	50.533	72.995
2] Unsecured Loans		0.590	0.590	10.459
TOTAL BORROWING		67.430	51.123	83.454
DEFERRED TAX LIABILITIES		0.000	0.000	0.780
TOTAL		580.184	378.126	298.638
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		60.155	37.439	36.533
Capital work-in-progress		0.000	3.887	0.000
INVESTMENT		0.236	0.237	0.237
DEFERREX TAX ASSETS		0.008	0.103	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	968.980	417.949	285.529
	Sundry Debtors	468.762	480.536	258.230
	Cash & Bank Balances	94.026	120.078	58.179
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	122.344	71.186	39.415
Total Current Assets		1654.112	1089.749	641.353
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	1134.327	753.312	379.529
	Provisions	0.000	0.000	0.000
Total Current Liabilities		1134.327	753.312	379.529
Net Current Assets		519.785	336.437	261.824
MISCELLANEOUS EXPENSES		0.000	0.023	0.044
TOTAL		580.184	378.126	298.638

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
Sales Turnover		2339.122	1969.184	1092.982
Other Income		8.455	6.853	1.530
Foreign Exchange Fluctuation		(0.920)	18.944	0.000
Total Income		2346.657	1994.981	1094.512
Profit/(Loss) Before Tax		168.394	122.762	76.761
Provision for Taxation		20.420	17.854	11.349
Profit/(Loss) After Tax		147.974	104.908	64.412
Earnings in Foreign Currency :
Total Earnings		517.289	363.920	66.725
Imports :
	Raw Materials	1912.570	1552.748	886.439
Total Imports		1912.570	1552.748	886.439
Expenditures :
	Manufacturing Expenses	43.853	28.347	21.298
	Raw Material Consumed	1820.493	1526.577	900.633
	Increase/(Decrease) in Finished Goods	(4.324)	38.933	NA
	Employment Cost	6.779	6.788	NA
	Traded Goods (Net)	122.479	128.130	NA
	Operating and Other Selling Expenses	140.664	103.784	NA
	Financial Expenses	45.546	31.864	NA
	Keyman Insurance Premium	4.906	4.906	NA
	Depreciation & Amortization	3.704	3.200	4.209
	Loss of Material in Transit	0.000	0.358	NA
	Extra Ordinary Items	(5.837)	(0.668)	NA
	Other Expenditure	0.000	0.000	142.848
Total Expenditure		2178.263	1872.219	1068.988

QUARTERLY / SUMMARISED RESULTS

PARTICULARS	30.06.2008
Type	1^st Qtr
Sales Turnover	980.600
Other Income	0.700
Total Income	981.300
Total Expenditure	884.100
Operating Profit	97.200
Interest	12.700
Gross Profit	84.500
Depreciation	1.200
Tax	13.000
Reported PAT	70.300

KEY RATIOS

PARTICULARS	31.03.2008	31.03.2007	31.03.2006
Debt-Equity Ratio	0.15	0.26	0.39
Long Term Debt-Equity Ratio	0.00	0.01	0.02
Current Ratio	1.35	1.35	1.43
TURNOVER RATIOS
Fixed Assets	33.81	34.65	17.84
Inventory	3.81	6.32	4.59
Debtors	5.57	6.02	5.25
Interest Cover Ratio	4.54	4.73	4.66
Operating Profit Margin (%)	8.30	7.14	9.30
Profit Before Interest And Tax Margin (%)	8.16	6.99	8.91
Cash Profit Margin (%)	5.74	4.86	6.35
Adjusted Net Profit Margin (%)	5.60	4.72	5.97
Return On Capital Employed (%)	46.45	47.60	37.16
Return On Net Worth (%)	36.51	40.45	34.48

LOCAL AGENCY FURTHER INFORMATION

HISTORY

Incorporated in 1982 as a private limited company, Subject was converted into a public limited company in Dec.'93. The company was promoted by the Rayanis with trading experience of over three decades in the industry. 

The company manufactures petroleum speciality products like agricultural spray oil, dewatering fluid, white oil, transformer oil and liquid paraffin (I P). Its products are marketed under the Panama brand name. Its manufacturing facilities are situated at Ankleshwar, Gujarat; Bombay and Panvel (Thane district). 

 In Jan.'95, the company came out with a public issue to expand the capacity by nearly four times and to add value added products like liquid paraffin heavy (I P), petroleum jelly and greases. 

The company has a technical collaboration with Lubcon Lubricant Consult, Germany, for developing and marketing new products. In 1995-96, the company introduced petroleum sulphonate and other speciality oils. 

During 2000-01, turnover of the company has registered a growth of 57% over the previous year, as the figures were stood at Rs.426.000 Millions as against Rs.272.700 Millions in the previous year.

OPERATIONS 

The performance of the Company during the financial year 2007-08 has shown an improvement over the previous financial year 2006-07. The Company has achieved a sales turnover of Rs.2339.122 Millions as against Rs.1969.184 Millions in the financial year 2006-07 thereby showing a growth in turnover of 19% (approx.). 

With the increase in sales, the Profit after Tax for the year 2007-08 has gone up to Rs.147.975 Millions as against Rs.104.908 Millions in the year 2006-07. The Company has achieved a growth in Profit after tax of 41%. This increase is mainly due to the improved sales, addition of the new customers, improved marketing conditions and strategic management decisions. 

DIVIDEND 

In view of the continuous satisfactory performance of the Company during the Financial Year 2007-08, the Directors are to recommend a dividend @ 40% for the year ended March 31, 2008. Subject to approval of the members in the Annual General meeting. The outgo on account of this dividend will absorb Rs.22.285 Millions (including dividend tax payable Rs.3.237 Millions). 

CARE RATING 

The Directors are glad to announce that the Company has conducted the credit rating from one of the leading credit rating agency CARE and is assigned a 'CARE A+' rating to the Long Term Facilities and 'PR1+' rating to the Short Term Facilities.

MERGER AND AMALGAMATION 

A Scheme of Arrangement for De-merger of Investment Division of Mobil Petrochem Private Limited to Ittefaq Ice and Cold Storage and Co. Private Limited and Merger of Residual Business of Mobil Petrochem Private Limited with Subject, has been proposed by the Board of Directors of these Companies. The scheme has been approved by Bombay Stock Exchange Limited vide their letter dated 6th June 2008. However, the said scheme is subject to the approval of the Honorable High Court of Mumbai and Ahmedabad and other competent authorities, if any. 

MANAGEMENT DISCUSSION AND ANALYSIS 

Industry Structure and Development 

Subject is one of the growing companies in the field of various grades of petroleum specialty. The Company manufactures specialty petroleum products for diverse user industries like printing, textiles, rubber, pharmaceuticals, cosmetics, power and other industrial oil. The Product Portfolio of the Company consists of Transformer Oil, Liquid Paraffin, Petroleum Jelly, Cable Jelly, Ink Oil, Rubber Process Oil, and Antistatic Coning Oil. 

The demand for Transformer Oil depends on the development of power projects and industrialization in the country. The development of Liquid Paraffin and Petroleum Jelly business depends on the growth of cosmetics, pharmaceuticals and related fields. The Cable Jelly is used as a filling and flooding compound in the telecom cables. The demand for the Ink Oil is based on conditions in the Printing Ink and Resin manufacturing business.

The Rubber Process Oil is used for processing of rubber for automobile tyres, tube and various rubber products. The Antistatic Coning Oil is required in texturing the synthetic yarn like viscose, nylons and polyesters. With the overall improvement in the Indian economy since past two years, the general demand for petroleum products has been steadily improving. The Company has captured a significant share in the market for the various grade of petroleum specialty. 

The Company manufactures more than 80 product variants used across 6-7 broad industry segments. Over the years, the Company has nurtured strong relationships with the leaders in their respective segments. The Company's clientele includes Bharat Petroleum Corporation, Micro Inks, Alok Industries, Merck, Cipla and Government Ordinance factories. The products are usually manufactured according to the client's individual specifications, thus enhancing the probability of reoeat orders from the clients. 

Opportunities:

With increasing industrialization, focus on infrastructure development, quota free regime in textiles and out sourcing boom, the demand for the petroleum products manufactured by the company is likely to further improve in the coming years. The relationship established by the company with the above said clientele would augur further growth in its business. Moreover, the company has been increasing its presence in the export markets of USA, Africa, Europe and Asia. 

The Company has developed a new product called Mining Oil. This product is still in its testing stage and will than be introduced in the market for the consumption in the Mining Industries. 

Future Outlook 

The Company is planning to expand its operations to withstand against the negative market forces. During the year 2007-2008, the Company has achieved a remarkable increase in the turnover. There are considerable profits from all the four plants of the company and the Company is hopeful to override the adverse effects of the price fluctuations in the petroleum industry by resorting to bulk purchases and cost control measures. 

Contingent Liabilities 

	As on 31.03.2008  (Rs. In Million)
Disputed Income-Tax Liability in Appeal	0.105
Bank Guarantee	5.774
Letter of Credit Facility	776.300

Fixed Assets:

• Freehold land
• Leasehold land
• Factory Building
• Office Building
• Plant and Machinery
• Air Conditioner
• Office Equipment
• Laboratory Equipments
• Computers
• Furniture and Fixtures
• Laboratory Equipments
• Electrical Installation
• Vehicles
• Intangible Assets - Software

AS PER WEBSITE:

PROFILE:

Subject, is one of India’s leading manufacturers and exporters of petroleum specialty products. Their focus is to consistently provide quality services, and they have been doing so right since 1975. Their petroleum products are in great demand for various industries like Inks and Resins, Textiles, Rubber, Pharmaceuticals, Cosmetics, Power, Cables and other different industrial purposes. Subject is also listed on the Mumbai Stock Exchange.

Subject manufactures more than 80 product variants vital for nearly six to seven industry segments. They are in league with the giants of each industry. They are in collaboration with Lubcon, Germany for distribution of their specialized products . Last but certainly not the least, they also furnish various Power Generation Boards and Atomic Research Centers with their required products. Since they realize how significant every client is to us, they keep in mind each client’s specifications and needs, ensuring customer satisfaction and an excellent rapport. This policy that they follow guarantees little scope for dissatisfaction from the customer’s end.

Since they believe that ‘Change is the only constant force’, it is their constant effort to endeavor something new. This is accomplished through their fully equipped R&D Center at their Ankleshwar unit where they are continuously putting their efforts to formulate new and value-added products. Their specialization and expertise is their strength so that they continuously add new and more value-added products in their list so as to serve the niche market and stay always abreast of their competitors. They have procured all the required statutory approvals that permit us to supply their various oil products to the different industries. Their clients have complete faith in the quality of each of their products, which is why they have received a great response from customer’s end.

By exploring international markets, Subject continuously aims to bring about a rise in the exports. They export a variety of their products like Petroleum Jelly, Liquid Paraffin, Transformer Oil and Rubber Process Oil to different countries like USA, UK, Europe, Middle East, Australia, African Sub-continent, South East Asia etc . Good infrastructure for the company and their state-of-the-art Research and Development Center help us to simultaneously cater to domestic and international needs.

Their business is spread across India in the form of ftheir manufacturing plants at Ankleshwar(Gujarat), Daman(Union Territory), Marol (Mumbai) and Taloja (Dist. Raigadh). They are delighted that Subject is progressing every day, and their increasing turnover and better results period after period proves this.

To conclude, they would like to say that none of their products violate the International Environmental and Safety Norms. Their Petrolatum and White Minerals Oils abide by the rules and standards laid down by FDA (India) and complies to international pharmacopias such as BP and USP for specific users. They make every effort to manufacture products suitable for both, their clients and the specified norms. That is why, their clients are eager to do business with us, as they are, with them. So, to cut a long story short, let’s just say they amalgamate quality, consistency and economy to give you the best!

BUSINESS:

Subject is one of the leading manufacturers and exporters of petroleum specialty products. They have consistently providing quality services since 1975. They have four manufacturing units in India namely in Ankleshwar(Gujarat), Daman(Union Territory), Marol (Mumbai) and Taloja (Dist. Raigadh) having infrastructure, with state-of-the-art technology and storing capacities. They are listed on the Stock Exchange of Mumbai.

Take a comprehensive look at all their products and services on the site, complete with specifications of each product.

The Product range includes the following:

Automotive Lubricating Oils:

Crankcase Oils	Premium Engine Oils
Gear Oils	Two Stroke Engine Oil
Automotive Greases

Industrial Lubricating Oils

Turbine Oils	Circulating and Hydraulic Oils
Spindle Oils	Machine Oils
Machine Oils	Textile Machinery Oils
Gear Oils	Compressor Oils
General Purpose Machinery Oils	Ink Oil
Quenching Oils	Vacuum Pump Oil
Seam Cylinder Oils	Heat Transfer Oils
Cutting Oils (Soluble)	Glass Mould Oil
Wood Batching Oil	Straight Cutting Oils
Stationary Diesel Engine Oils	Sugar Mill Roll Bearing Oils

INDUSTRIAL GREASES

General Equipment and Machinery Greases	Complex Greases
Chain Grease	Graphite Greases

PETROLEUM SPECIALTIES

Petroleum Jelly	Liquid Paraffins
Petroleum Sulphonates	Transformer Oil
Agricultural Sparay Oils and White Oils	Antistatic Coning Oils

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.46.88
UK Pound	1	Rs.82.97
Euro	1	Rs.64.99

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	YES
--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/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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