MIRA INFORM REPORT

Report Date :

25.10.2008

IDENTIFICATION DETAILS

Name :	NSL TEXTILES (EDLAPADU) LIMITED
Formerly Known As :	DPM TEXTILES LIMITED
Registered Office :	NSL Icon, 8-2-684/2/A, Plot No. 1to 4, 4^th Floor, Road No.12, Banjara Hills, Hyderabad – 500 034, Andhra Pradesh.
Country :	India
Financials (as on) :	31.03.2008
Date of Incorporation :	14.09.2004
Com. Reg. No.:	044154
CIN No.: [Company Identification No.]	U18101AP2004PLC044154
TAN No.: [Tax Deduction & Collection Account No.]	HYDD01655D
PAN No.: [Permanent Account No.]	AACCD0323J
Legal Form :	A Closely held Public Limited Liability Company.
Line of Business :	Manufacturer of Cotton Yarn and Cotton lint.

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 1000000
Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is a well established company having satisfactory track. Trade relations are fair. Payments are usually correct and as per commitments. Financial position is satisfactory. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	NSL Icon, 8-2-684/2/A, Plot No. 1to 4, 4^th Floor, Road No.12, Banjara Hills, Hyderabad – 500 034, Andhra Pradesh, India.
Tel. No.:	91-40-30514444 / 23327939 / 49/ 59
Fax No.:	91-40-23327919
E-Mail :	jvihyd@gmail.com
Factory 1 :	Edlapadu Village and mandal District- Guntur – 522233, Andhra Pradesh, India.
Tel. No.:	91-8647-276061 / 62
Fax No.:	91-8647-276065
E-Mail :	dpmtextiles@gmail.com
Corporate Office :	7D, Surya Towers S.P Road, Secunderabad, Andhra Pradesh, India.

DIRECTORS

Name :	Mr.M.Prabhakar Rao
Designation :	Director
Address :	Flat No. 543, House No.8-2-293/A/82, Road No.26, Jubilee Hills, Hyderabad – 500033, Andhra Pradesh, India.
Date of Birth :	19.01.1959
Din No. :	0009650
Date of Appointment :	14.09.2004
Name :	Mr.D.Purandeswari
Designation :	Director
Address :	H.No.65, Road No.13, Banjara Hills, Hyderabad, Andhra Pradesh, India.
Date of Appointment :	14.09.2004
Name :	Mr. D.Venkateswara Rao
Designation :	Director
Address :	H.No.65, Road No.13, Banjara Hills, Hyderabad, Andhra Pradesh, India.
Date of Birth/Age :	14.12.1953
Din No. :	00012172
Date of Appointment :	16.03.2006
Name :	Mr.Ch.Appa Rao
Designation :	Director
Address :	R/o. Flat No. 203,Royal Palace, Jaya Bharat Nagar, Nizampet Road, Kukatpally, Hyderabad, Andhra Pradesh, India.
Date of Birth :	01.07.1948
Din No. :	00011095
Date of Appointment :	24.12.2004
Name :	Mr.Y.Ashok Babu
Designation :	Director
Address :	128 (8-2-609/7M), Road No.1, Banjara Hills, Hyderabad, Andhra Pradesh, India.
Date of Appointment :	24.12.2004
Name :	Mr.P.Ajay Kumar
Designation :	Director
Address :	1-4-210/49 to 51, Prathampuri ECIL, Hyderabad, Andhra Pradesh, India
Date of Birth/Age :	17.09.1952
Din No. :	00053029
Date of Appointment :	16.03.2006
Name :	Mr.M.Sudarsana Babu
Designation :	Director
Address :	74-21-6, Ashok Nagar, M.G.Road, Vijayawada.
Date of Birth :	23.12.1943
Din No. :	00063559
Date of Appointment :	16.03.2006
Name :	Mr.K.Rama K.Rao
Designation :	Director
Address :	3-6-449, Flat No. 103, Street No.5, Legend Sri Ram Apartments, himayat Nagar, Hyderabad, Andhra Pradesh, India
Date of Birth/Age :	12.11.1956
Date of Appointment :	14.07.2008
Name :	Mr.Gaston Rebilly
Designation :	Director
Address :	44, Avenue Du Prince D, Orange, 1180, Brussels, Belgium
Name :	Mr.Maurice Lauraent
Designation :	Director
Address :	7 Rue Isaac Newton, 93150 Le Blancmesnil, France
Name :	Mr.Michel Lenoir
Designation :	Director
Address :	2, Rue De La Rotisserie, 1211, Geneva 3.

KEY EXECUTIVES

Name :	Mr.Gaston Rebilly
Designation :	Secretary
Address :	44, Avenue Du Prince D, Orange, 1180, Brussels, Belgium

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 08.08.2008

Names of Shareholders	No. of Shares
Nuziveedu Seeds Limited	2483933
Mr.M.Prabhakar Rao	30114544
M.Asha Priya	5500
Mr.M.Venkatrama Choudary	16650
Mr.S.Satish Kumar	1000
Mr.C.Chandra babu	100
Mr.K.Ravi Kumar	100

LIST OF ALLOTTEES AS ON 14.08.2008

Names of Shareholders	No. of Shares
Mandava Cold Storage Private Limited	500000

LIST OF ALLOTTEES AS ON 14.12.2006

Names of Shareholders	No. of Shares
Dr. D.Venkateswara Rao	1933950

AS ON 31.03.2008

Equity Share Breakup	Percentage of Holding
Category
Directors or relatives of directors	99.99
Others	0.01
Total	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer of Cotton Yarn and Cotton lint.

Products :

Item Code No.	Product Description
52.05	Cotton Yarn
52.05	Cotton Lint

PRODUCTION STATUS As on 31.03.2008

Spinning Divison

Installed Capacity - 29,808 Spindles

Particulars	Unit	Actual Production
Yarn	Qtls	15724.49
Cotton / Yarn Waste	Qtls	8267.93
Cotton Lint	Qtls	2857.04
Cotton Seed	Qtls	5457.18

GENERAL INFORMATION

Bankers :

v State Bank of India

Commercial Branch, Kannavarithota, Guntur – 522004, Andhra Pradesh,India.

v Canara Bank

v State Bank Of Travancore

v Indian Bank

v Punjab National Bank

v Andhra Bank

Facilities :

Secured Loans As on 31.03.2008

Particulars	Rs. In Million
Long Term Loans
State Bank of India	267.390
Canara Bank	33.400
Punjab National Bank	25.893
State Bank of Travancore	25.906
Indian Bank	25.902
Andhra Bank	25.699
(payable within 1 year Rs. 36.000 Millions, previous year Rs.36.000 Millions) (The above loans are secured by first charge on all existing and proposed movable and immovable properties of the company and personal guarantee of two Directors)
State Bank of India – Cash Credit Account (The above loan is secured by hypothecation of current assets and extention of charge on fixed assets and personal guarantee of two promoter Directors)	45.402
Total	449.592

Banking Relations :	Satisfactory
Auditors :
Name :	Mastanaiah and Company Chartered Accountant 11/1 Arundelpet, Guntur – 522002, Andhra Pradesh, India. Audit Committee Sri Ch.Appa Rao Sri M.Sudarsana Babu Sri P.Ajay Kumar
Associates/Subsidiaries :	v Nuziveedu Seeds Limited v Jayavenkatrama Industries Limited v Mandava Cold Storage Private Limited v Prabhat Industrial Corporation Limited

CAPITAL STRUCTURE

AS ON 31.03.2008

Authorised Capital :

No. of Shares	Type	Value	Amount
30000000	Equity Shares	Rs. 10/- Each	Rs.300.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
16750000	Equity Shares	Rs. 10/- Each	Rs.167.500 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		167.500	167.500	0.500
2] Share Application Money		100.304	0.304	167.304
3] Reserves & Surplus		8.643	7.104	0.000
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		276.447	174.908	167.804
LOAN FUNDS
1] Secured Loans		449.596	352.189	200.747
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		449.596	352.189	200.747
DEFERRED TAX LIABILITIES		3.918	0.000	7.870
TOTAL		729.961	527.097	376.421
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		416.604	395.851	183.509
Capital work-in-progress		114.569	11.517	106.927
INVESTMENT		0.002	0.001	0.001
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	74.835	77.095	60.411
	Sundry Debtors	7.893	13.560	3.184
	Cash & Bank Balances	32.260	12.318	2.164
	Other Current Assets	0.523	0.372	9.641
	Loans & Advances	111.285	47.482	20.735
Total Current Assets		226.796	150.827	96.135
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	28.010	31.311	17.062
	Provisions	0.000	0.013	0.105
Total Current Liabilities		28.010	31.324	17.167
Net Current Assets		198.786	119.503	78.968
MISCELLANEOUS EXPENSES		0.000	0.225	0.300
Profit and Loss Account		0.000	0.000	6.716
TOTAL		729.961	527.097	376.421

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
Sales Turnover		248.159	190.621	16.152
Other Income		18.734	1.880	0.916
Total Income		266.893	192.501	17.068
Profit/(Loss) Before Tax		4.615	6.780	1.259
Provision for Taxation		3.076	(7.040)	(6.611)
Profit/(Loss) After Tax		1.539	13.820	7.870
Earnings in Foreign Currency :
	Value of Direct Export	11.608	NA	NA
Total Earnings		11.608	NA	NA
Expenditure in foreign currency
Sales Commission		0.120	NA	NA
Imports :
	Raw Materials	0.000	NA	NA
	Stores & Spares	0.654	NA	NA
	Capital Goods	87.834	NA	NA
	Others	0.000	NA	NA
Total Imports
Expenditures :
	Manufacturing Expenses	62.575	47.202	0.000
	Raw Material Consumed	138.734	107.900	17.130
	Purchases made for re-sale	9.640	6.210	0.000
	Increase/(Decrease) in Finished Goods	(7.763)	(11.956)	(10.612)
	Salaries, Wages, Bonus, etc.	0.000	0.000	0.213
	Payment to Auditors	0.000	0.000	0.016
	Interest	0.000	0.000	1.197
	Insurance Expenses	0.000	0.000	0.110
	Power & Fuel	0.000	0.000	5.812
	Depreciation & Amortization	21.323	16.445	0.352
	Other Expenditure	37.769	19.920	1.591
Total Expenditure		262.278	185.721	15.809

KEY RATIOS

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
PAT / Total Income	(%)	0.57	7.17	46.10
Net Profit Margin (PBT/Sales)	(%)	1.85	3.55	7.79
Return on Total Assets (PBT/Total Assets}	(%)	0.60	1.21	0.32
Return on Investment (ROI) (PBT/Networth)		0.01	0.03	0.007
Debt Equity Ratio (Total Liability/Networth)		1.72	2.19	1.29
Current Ratio (Current Asset/Current Liability)		8.09	4.81	5.59

LOCAL AGENCY FURTHER INFORMATION

HISTORY

While JVIL was promoted by Mr M. Prabhakar Rao, Managing Director and Promoter of Nuziveedu Seeds Limited along with his family members and NSL in the year 2002. DPM Textiles was promoted by Mr. Prabhakar Rao in association with Dr. D. Venkateswar Rao. Both the Mills were erstwhile Co-operative Spinning Mills in the names of Paruchuru Cotton Growers  Co-operative Spinning Mills Limited and Chilakaluripeta Cotton Growers Co-operative Spinning Mills Limited plagued by chronic sickness before being put up for sale by Government of AP in the years 2002 and 2004. JVIL and DPM won the bids in both the cases, acquired possession of the mills on “as is where is” basis without any encumbrances, under took complete modernization of the mills by replacing the entire obsolete machinery and converted them into once again vibrant working places with in a short while. Needless to mention that both the mills had the distinction of earning cash profits in the very first year of operations.

DIRECTORS REPORT

Financial Results:

Particulars	2008 (Rs. In Million)
Profit before Depreciation, Interest and Tax	48.457
Less : Depreciation	21.323
Interest	22.518
	43.841
Profit before Taxation and Prior period items	4.616
Prior period items (net)	0.054
Profit before tax after prior periods items	4.670
Add : Tax Credit under Mat	1.339
Deferred Tax Withdrawn	0.000
Less : Tax Expenses
Current Tax	0.520
Direct Taxes relating to earlier years	(0.012)
Deferred Tax	3.918
Fringe Benefit tax	0.043
Profit after Tax	1.540
Profit Brought Forward	7.104
Profit carried to Balance Sheet	8.644

REVIEW OF OPERATIONS

The Directors are pleased to inform you that the Company has produced cotton yarn of 15724.49 qtls during the financial year 2007-08 (previous year 11853-48 qtls) and sold 15600.32 qtls (previous year 11497.89 qtls). These operations yielded a sales turnover of Rs.254.314 Millions (net of excise and other income ) as against Rs.193.620 Millions for the previous year and a profit of Rs. 4.670 Millions as against Rs. 6.773 Millions for the previous year (before tax).

The year 2007-2008 which was started with great expectations by the spinning units would go down as one of the annals of Textile industry for the reasons that the prices of cotton continued to rule high while yarn prices took unprecedented beating through out the year, particularly due to exports becoming less attractive because of rupee appreciation and Dollar depreciation and subdued domestic demand. Further, the industry witnessed an acute labour shortage problem for most part of the year due to workers diverting themselves to more remunerative agriculture activity and civil construction works, though the company, by constant vigil and efforts coupled with paying better wages and creating congenial working environment, was able to overcome this problem to some extent.However, the company, due to judicious management of purchase of quality cotton at very reasonable prices and production of quality yarn, could withstand the vicissitudes of the market was able to remain on the plus side in its operations.

The Directors are now happy to mention that the company has almost overcome worker shortage problem and presently is operating at normal efficiency levels. Since the yarn prices are also slowly looking up, the company expects to do a lot better during the year 2008-2009.

As mentioned in the last Directors Report, the company embarked upon huge expansion programme to set up 33600 x 3 Spinning Units along with Weaving Unit to produce Home Textiles with a capital outlay of Rs.3330.000 Millions out of which debt component constitutes Rs.2650.000 Millions and equity Rs.680.000 Millions. Having achieved the financial closure by August 2007, the company started drawing term loans in proportion to the equity infusion. The construction activity of 33600 PC Unit which was immediately taken up has reached the stage of commissioning. The civil works for second unit are in progress and the work for thired unit and weaving unit alos would be started very soon. The construction work of godown has almost been completed.

Bankers Charges Report as per Registry

Name of the company	DPM TEXTILES LIMITED
Presented By	Sri Ch. Appa Rao, Director
1) Date and description of instrument creating the change	All Agreements dated 22.02.2005 Form C-1 : Agreement of loan for overall limit Form C-2 : Agreement of hypothecation of goods and assets Form C-3 : Agreement of pledge of goods and assets. Form C-5 : Letter regarding the grant of individual limits within the overall limit.
2) Amount secured by the charge/amount owing on the securities of charge	Rs.127.500 Millions one time FLC Limit
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	Hypothecation of Machinery to be imported under LC.
4) Gist of the terms and conditions and extent and operation of the charge.	Ø The LC should be restricted to SBI, Osaka/ Tokyo offices in Japan and SBI, Frankfurt office in Europe Ø The LC will be opened at 15% margin and for usance – 90 days Ø The company should furnish an undertaking stating that they will meet the liability under the LC from its own funds, in the event of delayed sanction/ non sanction of the credit facility requested by it by the Bank.
5) Name and Address and description of the person entitled to the charge.	State Bank of India, Commercial Branch, Guntur
6) Date and brief description of instrument modifying the charge	Nil
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.	Nil

Form 8

This form is for	Modification of charge
Charge identification number of the modified	90259070
Corporate identity number of the company	U18101AP2004PLC044154
Name of the company	DPM TEXTILES LIMITED
Address of the registered office or of the principal place of business in India of the company	7D, Surya Towers S.P Road, Secunderabad, Andhra Pradesh, India.
Type of charge	Immovable Property Book Debts Movable Property (not being pledge)
Particular of charge holder	State Bank of India Commercial Branch, Kannavarithota, Guntur – 522004, Andhra Pradesh,India. Sa.00844@sbi.co.in
Nature of description of the instrument creating or modifying the charge	From No. C-9 (Memorandum of Deposit for creation of charge for Term Loan/over all Limit
Date of instrument Creating the charge	10.03.2007
Amount secured by the charge	Rs.495.000 Millions.
Brief particulars of the principal terms an conditions and extent and operation of the charge	Rate of Interest As Earlier Term of Repayment As Earlier Margin As Earlier Extent and operation of the charge Charge operates full on securities.
Short particulars of the property charged	Hypothecation of all plant and machinery acquired and to be acquired. Hypothecation of all Book Debts. Hypothecation of all land and building together with all structures and super structures constructed and to be constructed there on.
Particulars of the present modification	There is no change in the limits of Rs.495.000 Millions. The limits were secured by additional security by way of Equitable Mortgage of land admeasuring Ac.66.44 Cents situated at Mydavolu Village, Edlapadu Village, Vankayalapadu Village Guntur District together withall structures and super structures constructed and to be constructed there on.

FIXED ASSET AS ON 31.03.2008

Ø Land

Ø Factory Buildings

Ø Non-Factory Buildings

Ø Plant and Machinery

Ø Electrical Installations

Ø Office and Other Equipments

Ø Furniture

Ø Vehicles

Ø Computers

Ø Live Stock

AS PER WEB SITE DETAILS

Ginning Pressing

The Company envisages to purchase Cotton in the State of Andhra Pradesh by tie-up with farmers and supplying them seeds and other inputs and extending services with buy-back guarantees.  Produce of the farmers will be brought to the factories and ginned with TMC approved ginning mills so that the Cotton is of international standards without any contamination and with high uniformity in the fibre.

The Ginning and Pressing  plants of the Company are totally automated.

Spinning

Today, JVIL and DPM together have a capacity of 92,400 spindles and it is being expanded to 240,000 spindles at three locations.  These Spinning Mills are equipped with latest generation machinery right from blow-room to winding along-with testing facilities.  The product would be tested right from cotton stage to final cone to ensure reliability of process and to maintain high standards.  The yarn being produced is aimed at shuttle-less weaving clientele both in India and abroad.  As the total spinning capacity is substantial and also in-house weaving and processing are being set-up with a view to produce home textiles and garments, the product mix would be from 10’s open-end (spun from regenerated comber noil) carded ring spun yarns from 16’s to 30’s, combed ring spun from 20’s to 100’s.  Adequate doubling capacity for producing 2 ply and 3 ply yarns would also be installed.  Approximately, 20% of the capacity would be to produce compact yarn, counts ranging from 30’s combed to 60’s combed as the future trend in apparel market is in this direction.  A substantial quantity of comber noil would be generated.  This will be reused by blending with virgin cotton to spin open end yarn in count ranges 6’s, 16’s weaving.

The count range for yarns in ring spinning would be Ne 20/1 carded to Ne 100/1 combed. Compact yarn would be produced at Veeravalli, with Suessen Elite compact drafting system.

Weaving

The Company is installing 512 looms in modern weaving sheds with latest warping, sizing.  Airjet and rapier looms with cam and dobby shedding motion to produce a wide variety of fabrics from grey and dyed yarn are being procured. Warping machines are of state-of-art Technology Direct Warping Machines with electrical controls and capable of running upto maximum of 1200 meters per minute.  Sectional warping machines for producing yarn dyed qualities like stripes, checks etc. are also being installed.

Sizing machines with twin sow box electrical controls for stretch and moisture control, multi-cylinder drying and wide width head stock for producing beams with one meter dia and above are planned.

Warping and sizing machines are being imported from renowned Swiss Manufacturer, Benninger.

Processing

The Company is installing a processing plant with a capacity of about 35 Million meters per annum, with State-of-art Machinery from world renowned manufacturers to produce high quality dyed, yarn dyed and printed fabrics with special finishes like ‘easy to iron’, ‘wrinkle free’, Teflon coated’, ‘anti-bacterial’ and ‘liquid Ammonia mercerizing’ which give maximum permanent luster, highest DP rating for apparel industry are also being implemented.

Yarn dyeing with a capacity of 7 tons per day , with soft package winding, re-winding and dyeing machines is being set up to meet the demand for yarn dyed apparel fabrics.

Printing

The Company is installing 12-16 Colour Rotary Screen Printing Machines with Laser Engraver, in-house Design Studio for creating a Bank of Designs to cater to the needs of all ranges of customers.

Garmenting

The company is installing about 1000 sewing machines to produce 2.25 million garments capacity with necessary laser cutting, band-saw cutting for producing garments like shirts, leisure-wear and ethnic wear for men women and children.

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.49.95
UK Pound	1	Rs.79.56
Euro	1	Rs.63.65

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	5
--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	YES
--AFFILIATION	YES/NO	NO
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		51

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