MIRA INFORM REPORT

 

 

 

Report Date :

27.10.2008

 

IDENTIFICATION DETAILS

 

Name :

AIRCEL LIMITED

 

 

Registered Office :

5th Floor, Spencer Plaza, 769, Anna Salai, Chennai – 600 002, Tamilnadu

 

 

Country :

India

 

 

Financials (as on) :

31.03.2006

 

 

Date of Incorporation :

20.12.1994

 

 

Com. Reg. No.:

029608

 

 

CIN No.:

[Company Identification No.]

U32201TN1994PLC029608

 

 

TAN No.:

[Tax Deduction & Collection Account No.]

CHES05271A

 

 

PAN No.:

[Permanent Account No.]

AAACS4449J

 

 

Legal Form :

A Closely Held Public Limited Liability Company

 

 

Line of Business :

Providing Cellular Services.

 

 

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 83000000

 

 

Status :

Satisfactory

 

 

Payment Behaviour :

No complaints

 

 

Litigation :

Clear

 

 

Comments :

Subject is yet another company in the highly competitive Indian Cellular Service industry. Trade relations are fair. Business is active. No complaints have been heard from the market sources.

 

The company can be considered for normal business dealings at usual trade terms and conditions.

 

 

LOCATIONS

 

Registered Office :

5th Floor, Spencer Plaza, 769, Anna Salai, Chennai - 600 002, Tamilnadu, India

Tel. No.:

91 - 44 - 2849 0849

Fax No.:

91 - 44 - 2849 6769

Website :

http://www.aircel.com

 

 

Head Office :

Aircel Cellular Limited

No301 (Old No: 193), Poonamallee High road, Kilpauk, Chennai 600 010, Tamilnadu, India

Tel. No.:

91 – 44 - 25324141

Fax No.:

91 – 44 – 25323131

 

 

Corporate Office :

Coimbatore                                                
Arthanari Towers, 3rd floor, No.114, Race Course Road, Coimbatore - 641018.                                                                  

Madurai
Aparna towers, 3rd floor, 2/3, By Pass Road, Madurai - 625 010.

 

Puducherry                                                

Aircel Towers,
No. 284, Kamaraj Salai, Puducherry - 605 008.

 

Salem                                                        
Blossom Plaza, 2nd Floor, Four Roads, Salem - 636 007.

 

Trichy
Lakshmi Complex, 2nd Floor, 73B/1, Salai Road, Thillai Nagar, Trichy - 620 018.

 

 

DIRECTORS

 

Name :

Mr. KVP Baskaran

Designation :

Chief Executive Officer

Address :

Nathan Akshaya, 37-D, Unnamalai Amman Street, North Usman Road, T. Nagar, Chennai – 600 017, Tamilnadu, India.

Date of Birth/Age :

21.07.1961

Qualification :

M.Tech, MBA

Experience :

21 Years

Date of Appointment :

29.08.1997

Date of Ceasing :

21.03.2006

 

 

Name :

Mr. M. Suresh

Designation :

Senior Vice President – Operations

Date of Birth/Age :

21.02.1958

Qualification :

FCA, AICWAI

Experience :

28 Years

Date of Appointment :

31.05.2000

 

 

Name :

Mr. IVJ Pradeep

Designation :

Head – Operations

Date of Birth/Age :

49 Years

Qualification :

MA

Experience :

25 Years

Date of Appointment :

01.03.2006

 

 

Name :

Mr. Jamaludin Bin Ibrahim

Designation :

Director

Address :

247, Jalan Bungor Rosa, Sierramas, 47000 Sungai Buloh, Selangor, Darul Eshan 47000, Malaysia.

Date of Birth/Age :

03.03.1959

Date of Appointment :

06.01.2006

 

 

Name :

Mr. Pottipatti Suneetha Reddy

Designation :

Director

Address :

No.5, Subba Rao Avenue II Street, Nungambakkam, Chennai – 600 006, Tamilnadu, India.

Date of Birth/Age :

03.04.1959

Date of Appointment :

21.03.2006

 

 

Name :

Mr. Jagadish Ganapath Kini

Designation :

Director

Address :

3 K, Orchard Green, 139/ 34, Domlur Layout, Off Intermediate Ring Road, Bangalore – 560 071, Karnataka, India.

Date of Birth/Age :

16.11.1955

Date of Appointment :

08.11.2006

 

 

Name :

Mr. Raghvendra Madhav

Designation :

Director

Address :

A – 154, New Friends Colony, New Delhi – 110 065, India.

Date of Birth/Age :

26.05.1961

Date of Appointment :

21.03.2006

 

 

Name :

Mr. Beng Chee Chan

Designation :

Director

Address :

3, Jalan TR 6/1. Trop ICA, NA Golf and Country Clu. B - 47410, Petaling Jaya, Selangor Darul Ehsan, Malaysia – 47410.

Date of Birth/Age :

23.08.1955

Date of Appointment :

06.01.2006

 

 

Name :

Mr. V. Srinivasan

Designation :

Director

Address :

Flat 2-B, KG Central Court, 9-11, Jagadambal Street, T. Nagar, Chennai – 600 017, Tamilnadu, India.

Date of Birth/Age :

15.05.1957

Date of Appointment :

29.11.2002

 

 

Name :

Mr. A Subramanian

Designation :

Director

Address :

D-2, 3rd Floor, Sree Kalki Apartments, 21, Bazullah Road, T. Nagar, Chennai – 600 017, Tamilnadu, India.

Date of Birth/Age :

02.02.1945

Date of Appointment :

29.08.1997

Date of Ceasing :

21.03.2006

 

 

Name :

Mr. V. Selvaraj

Designation :

Director

Address :

33, Chockalingam Nagar, Behind DMS Office, Chennai – 600 086, Tamilnadu, India.

Date of Birth/Age :

04.08.1939

Date of Appointment :

21.02.1995

Date of Ceasing :

21.03.2006

 

 

Name :

Mr. Chin Chun Yean

Designation :

Director

Address :

30, Jalan Bulah Perindu, Taman Sa, Bukit Dama Nsara, 59000, Kuala Lumpur, Malaysia – 59000.

Date of Birth/Age :

07.01.1944

Date of Appointment :

18.05.2006

 

 

Name :

Mr. MP Radhakrishnan

Designation :

Director

Address :

3/462, I Street, Kazura Garden, East Coast Road, Neelankarai, Chennai – 600 041, Tamilnadu, India.

Date of Birth/Age :

27.01.1939

Date of Appointment :

10.03.2004

 

 

KEY EXECUTIVES

 

Name :

Mr. Sivakumar Thyagarajan

Designation :

Company Secretary

Address :

Bhardwaj, B-4, IV Floor, Jambuthri Apartments, 18th Avenue, Ashok Nagar, Chennai – 600 083, Tamilnadu, India.

Date of Birth/Age :

24.02.1963

Date of Appointment :

08.11.2006

E-Mail :

tsk@aircel.co.in

 

 

Name :

Mr. Ramanathan Mahesh

Designation :

Manager

Address :

B – 1, Cee Dee Yes Apartments, 33 VOC Main Road, Kodambakkam, Chennai – 600 024, Tamilnadu, India.

Date of Birth/Age :

09.11.1969

Date of Appointment :

18.08.2006

E-Mail ;

mahesh.ramanathan@aircel.co.in

 

 

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

 

As on 01.09.2006

 

Names of Shareholders (Equity Shares)

No. of Shares

Global Communication Services Holdings Limited

158108108

Deccan Digital Networks Private Limited

85135135

Total

243243243

 

 

Names of Shareholders (Debentures)

No. of Shares

 

 

Unit Trust of India

1050000

Infrastructure Development Finance Company Limited

2501307

Infrastructure Leasing and Financial Services Limited

1158024

Total

4709331

 

As on 01.09.2006

 

Equity Share Breakup

 

Percentage of Holding

Category

 

 

Foreign holdings [Foreign institutional investors, Foreign Companies, Foreign Financial Institutions, Non-resident Indian or Overseas corporate bodies or others]

 

65.00

Bodies corporate

 

35.00

 

 

100.00

 

 

BUSINESS DETAILS

 

Line of Business :

Providing Cellular Services.

 

 

Products :
  • Cellular Mobile Telecom

 

 

 

 

GENERAL INFORMATION

 

Bankers :
  • ING Vysya Bank Limited
  • IDBI Bank Limited
  • Canara Bank
  • Development Credit Bank Limited

 

 

Facilities :

Particular

31.03.2006

(Rs. In millions)

Secured Loans

 

Debentures

 

Non Convertible Debentures

515.784

Loans and Advances from Bank

 

Term Loans from Banks

(Amount repayable within one year Rs.596.431 Millions Previous Year Rs.597.704 Millions)

1185.665

Total

1701.449

 

 

 

Banking Relations :

---

 

 

Auditors :

 

Name :

Price Waterhouse

Chartered Accountants

Address :

32, Khader Nawaz Khan Road, Nungambakkam, Chennai – 600 006, Tamilnadu, India.

 

 

Associates :
  • AIWO Limited
  • Fresh and Honest Café Limited
  • Siva Comulink Limited
  • Barista Coffee Company Limited
  • Dishnet Wireless (Mauritius) Limited
  • Sterling Futures and Holidays
  • IQ Investments Limited
  • Sterling ETH Trust
  • Siva Limited
  • Westgrove International Holdings Limited
  • Sterling Telecom and Net Systems Limited
  • Maxis Mobile Sdn Berhad
  • Malaysian Mobile Services Sdn Berhad
  • Maxis Broadband Sdn Berhad
  • Maxis International Sdn Berhad
  • Maxis Collections Sdn Berhad
  • Maxis Multimedia Sdn Berhad
  • Maxis Management Services Sdn Berhad
  • Rawa Utara Sdn Berhad
  • Castle Rock Equity Sdn Berhad
  • Advanced Wireless Technologies Sdn Berhad
  • Maxis Mobile (L) Limited
  • Teleglobal Investments B.V.
  • Maxis Online Sdn Berhad
  • Deccan Digital Networks Private Limited
  • UMTS (Malaysia) Sdn Berhad
  • PT Natrindo Telepon Seluler

 

 

Subsidiaries :
  • Dishnet Wireless Limited
  • Aircel Cellular Limited

 

 

Fellow Subsidiaries
  • South Asia Communications Private Limited

 

 

Ultimate Holding Companies :
  • Maxis Communications Berhad, Malaysia
  • Sterling Infotech Limited

 

 

Holding Companies :
  • Global Communication Services Holding Limited, Mauritius
  • Siva Ventures Limited (formerly Aircel Televentures Limited)

 

CAPITAL STRUCTURE

 

Authorised Capital :

No. of Shares

Type

Value

Amount

250000000

Equity Shares

Rs.10/- Each

Rs.2500.000 Millions

 

 

 

 

 

Issued, Subscribed & Paid-up Capital :

No. of Shares

Type

Value

Amount

243243243

Equity Shares

Rs.10/- Each

Rs.2432.432 Millions

 

 

 

 

 

Of the above 158108108 shares of Rs.10/- each (constituting 65% of total share capital) is held by Global Communications Services Holdings Limited, Mauritius, which became the holding company, effective March 21, 2006. (Previous year 180000000 equity shares of Rs.10/- each held by the erstwhile holding company, Aircel Televentures Limited (now renamed as Siva Ventures Limited) and its nominees.) 

 

Debenture breakup:

 

No. of Debenture

Type

Value

Amount

4709331

Non convertible

Rs.100/- Each

Rs.470.933 Millions

 

FINANCIAL DATA

[all figures are in Rupees Millions]

 

ABRIDGED BALANCE SHEET

 

SOURCES OF FUNDS

 

 

31.03.2006

31.03.2005

SHAREHOLDERS FUNDS

 

 

 

1] Share Capital

 

2432.432

1800.000

2] Share Application Money

 

0.000

0.000

3] Reserves & Surplus

 

14209.808

1017.106

4] (Accumulated Losses)

 

0.000

0.000

NETWORTH

 

16642.240

2817.106

LOAN FUNDS

 

 

 

1] Secured Loans

 

1701.449

1818.034

2] Unsecured Loans

 

0.000

180.000

TOTAL BORROWING

 

1701.449

1998.034

DEFERRED TAX LIABILITIES

 

75.554

0.000

 

 

 

 

TOTAL

 

18419.243

4815.140

 

 

 

 

APPLICATION OF FUNDS

 

 

 

 

 

 

 

FIXED ASSETS [Net Block]

 

4820.817

4288.637

Capital work-in-progress

 

1540.427

594.144

 

 

 

 

INVESTMENT

 

4838.130

0.500

DEFERREX TAX ASSETS

 

0.000

0.000

 

 

 

 

CURRENT ASSETS, LOANS & ADVANCES

 

 

 

 

Inventories
 

14.625

15.715

 

Sundry Debtors
 

390.264

464.304

 

Cash & Bank Balances
 

6897.533

525.335

 

Other Current Assets
 

63.826

3.587

 

Loans & Advances
 

3091.750

187.669

Total Current Assets
 

10457.998

1196.610

Less : CURRENT LIABILITIES & PROVISIONS
 

 

 

 

Current Liabilities
 

3189.146

1261.932

 

Provisions
 

48.983

2.819

Total Current Liabilities
 

3238.129

1264.751

Net Current Assets
 

7219.869

(68.141)

 

 

 

 

MISCELLANEOUS EXPENSES

 

0.000

0.000

 

 

 

 

TOTAL

 

18419.243

4815.140

 

 

 

PROFIT & LOSS ACCOUNT

 

PARTICULARS

 

 

31.03.2006

31.03.2005

Sales Turnover

 

5015.043

3656.249

Other Income

 

32.759

0.662

Total Income

 

5047.802

3656.911

 

 

 

 

Profit/(Loss) Before Tax

 

1528.713

860.400

Provision for Taxation

 

211.403

67.541

Profit/(Loss) After Tax

 

1317.310

792.859

 

 

 

 

Earnings in Foreign Currency :

 

 

 

 

Roaming charges

 

28.586

31.333

Total Earnings

 

28.586

31.333

 

 

 

 

Imports :

 

 

 

 

Capital Goods

 

196.472

416.950

Total Imports

 

196.472

416.950

 

 

 

 

Expenditures :

 

 

 

 

Purchases made for re-sale

 

49.722

69.416

 

Salaries, Wages, Bonus, etc.

 

111.121

81.334

 

Managerial Remuneration

 

3.480

2.853

 

Payment to Auditors

 

0.700

0.400

 

Interest

 

107.512

346.882

 

Insurance Expenses

 

3.938

5.384

 

Power & Fuel

 

141.332

112.838

 

Depreciation & Amortization

 

682.039

587.195

 

Other Expenditure

 

2419.245

1590.209

Total Expenditure

 

3519.089

2796.511

 

KEY RATIOS

 

PARTICULARS

 

 

 

31.03.2006

31.03.2005

PAT / Total Income

(%)
 

26.10

21.68

 

 
 

 

 

Net Profit Margin

(PBT/Sales)

(%)
 

30.48

23.53

 

 
 

 

 

Return on Total Assets

(PBT/Total Assets}

(%)
 

7.06

14.15

 

 
 

 

 

Return on Investment (ROI)

(PBT/Networth)

 
 

0.09

0.31

 

 
 

 

 

Debt Equity Ratio

(Total Liability/Networth)

 
 

0.30

1.16

 

 
 

 

 

Current Ratio

(Current Asset/Current Liability)

 
 

3.23

0.95

 

 

LOCAL AGENCY FURTHER INFORMATION

 

Contingent Liabilities:

 

Description

31.03.2006

(Rs. In millions)

(Estimated)

Sales Tax

36.552

Customs Duty (Rs.2.157 Millions paid under protest grouped under loans and advances)

31.596

Customs Duty paid under protest (grouped under loans and advances)

0.574

DOT License Fee paid under protest (grouped under loans and advances)

7.403

 

 

Fixed Assets:

 

 

Financial Results:

 

The Directors reported that the company has achieved Gross Revenue of Rs.5015 Millions recording a growth of 37% over last year. The EBIDTA and Net Profit After Tax (PAT) for the year was Rs.2285 Millions and Rs.1317 Millions respectively representing a growth of 27% and 66% respectively.

 

The net debt for the year was lower at Rs.1701 Millions against Rs.1998 Millions last year. The company was able to successfully renegotiate the interest on some of its loans and avail the benefit of lower interest thereby reducing the interest cost. The company had also repaid Rs.418 Millions against its loans to Institutions.

 

Operations

 

Network

 

During the year, the company embarked upon a major expansion of its network to cater to the needs of the growing subscriber base. The company added three more Mobile Switching Centers (MSC) to its network during the year. The total switch capacity of the company also increased to 66650 Erlangs from 39200 Erlangs during the year.

 

The ongoing capacity expansion helped the company to increase its network coverage to additional 119 towns, thus increasing the towns covered to 449 as at the year end. The Directors reported that the company’s network presently extends over 700 towns in the Tamilnadu Telecom Circle.

 

The Directors reported that the company continues to be the market leader in the Tamilnadu Telecom Circle for the sixth year in succession, with a market share of 31% in the total mobility market and net subscriber base of 1684267 as at the year end as against 1214010 during the last year, thus registering an increase of 39%.

 

Marketing

 

The year continued to be dominated by Pre-paid market. The company moved towards single brand for all its products and the Pre-paid brand “EASYDEAL” was withdrawn during October 2005. Offer of attractive tariff plans and customer loyalty program in both post-paid and pre-paid segments helped the company to effectively face the stiff competition witnessed in the market.

 

Acquisition of Aircel Cellular Limited and Dishnet Wireless limited

 

During December 2005, the company acquired Aircel Cellular Limited (ACL) and Dishnet Wireless Limited (DWL), the erstwhile associate companies of the company. ACL is the market leader in Chennai Metro Telecom circle and DWL is providing Cellular Mobile Services in North Eastern Circle, Aasam, West Bengal, Orissa and Jammu and Kashmir Telecom Circles. DWL is also offering Enterprises Data Services. The company acquired 100% stake in these companies from Aircel Televentures Limited (ATVL), which was the sole stakeholders of these two companies.

 

The net subscriber base of ACL as at the year end was 712291 and that of DWL was that of 215156.

 

Application of License for New Circles

 

During January’ 06 and February’ 06, the company had applied for Universal Access Services Licenses (UASL) in the telecom circles of Mumbai, Maharashtra, Rajasthan, Karnataka, Delhi, Andhra Pradesh and Gujarat and the same are under active consideration of the Department of Telecommunications (DoT).

 

Change in Ownership and Management

 

During the year, the company witnessed a change in its ownership and management. In one of the biggest telecom acquisitions in the country, Maxis Communications Berhad, Malaysia, (Maxis) market leader in Telecommunication in Malaysia and part of Usaha Tegas SDN. BHD a conglomerate having varied business interests, through its subsidiary/ associate companies, viz., Global Communication Services Holdings Limited (“GCSHL”) and the Indian joint venture partner viz., Deccan Digital Networks Private Limited (“DDNL”), acquired the shares of the company held by Aircel Televentures Limited (“ATVL”), the erstwhile sponsors of the company. The acquisition included the company’s wholly-owned subsidiaries, viz. Aircel Cellular Limited and Dishnet Wireless Limited.

 

The acquisition was concluded in March 2006, on receipt of approval from the Foreign Investment Promotion Board (FIPB), the Lenders of the company and all other applicable approvals. GCSHL, a wholly owned subsidiary of Maxis, subscribed to 26% of the increased to 26% of the increased Share Capital of the Company and also acquired 39% of the equity from ATVL, thus making its total holdings to 65% of the Capital of the Company. The Indian joint venture partner DDNL, part of the Apollo Hospital Group of Companies, acquired the remaining 35% stake in the company.

 

The directors believe that the change in the ownership benefit the company in its expansion plans and help to fulfill its pan India foray. The experience and expertise of Maxis in various areas like technology, marketing and other fields of operation would also help the company in its operations and improving Aircel Brand.

 

Consequent to the change in ownership of the company, the Board of Directors of the company was reconstituted with nominees of GCSHL and DDNL being appointed on the Board of Directors. The Directors representing the erstwhile promoters viz. Sterling Infotech group resined from the Board of the Company.

 

Export Obligation

 

The Company has imported capital goods at confessional rate of customs duty under the Export Promotion Capital Goods (EPCG) Scheme against submission of Bank guarantees. In terms of the scheme, the company is obligated to export goods/ services of certain FOB value as specified in the said scheme. As at the year end, the company is committed to export goods/ services to a tune of Rs.42.566 Millions (previous year Rs.42.566 Millions). In the opinion of the management, the obligation can be met within the specified period, and no liability is anticipated on this account.

 

Note: Show cause notices received from various Government agencies pending formal demand have not been considered as contingent liabilities

 

This amount is based on demands raised by Sales Tax authorities on the ground that Activation charges are liable to sale tax. An amount of Rs.7.607 Millions has been paid under protest. The said matter is being contested by the company before the Honorable Madras High Court and an interim stay order has been granted by the High Court. The Cellular Operators Association of India had also contested the matter before the Honorable Supreme Court of India vide its judgment in March 2006 has upheld the contention of the Cellular operators that activation is only sale of service and not sale of goods liable to attract sales tax. Consequent to the above, no further claims are anticipated in this regard.

 

On January 06, 2006 the company made fresh issue of 63243243 equity shares of Rs.10 each at a premium of Rs.187.77 per share on a preferential basis to Global Communications Services Holdings Limited, (GCSHL) Mauritius. Further on March 21, 2006 GCSHL acquired 94864865 equity shares that were held by Aircel Televentures Limited (now renamed as Siva Ventures Limited) and its nominees, thereby directly holding 65% of the company’s shares after obtaining necessary approvals.

 

On March 21, 2006 85135135 (35%) shares of the company that were held by Aircel Televentures Limited (now renamed as Siva Ventures Limited) and its nominees were acquired by Deccan Digital Networks Private Limited.    

 

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]         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

6

OPERATING SCALE

1~10

6

FINANCIAL CONDITION

 

 

--BUSINESS SCALE

1~10

7

--PROFITABILIRY

1~10

5

--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

YES

--EXPORT ACTIVITIES

YES/NO

NO

--AFFILIATION

YES/NO

YES

--LISTED

YES/NO

NO

--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