MIRA INFORM REPORT

Report Date :

06.09.2008

IDENTIFICATION DETAILS

Name :	WARREN TEA LIMITED
Registered Office :	Deohall Tea Estate, Hoogrijan, Dist : Tinsukia – 786 601, Assam
Country :	India
Financials (as on) :	31.03.2008
Date of Incorporation :	31.05.1977
Com. Reg. No.:	001706
CIN No.: [Company Identification No.]	L01132AS1977PLC001706
TAN No.: [Tax Deduction & Collection Account No.]	CALW00044C
Legal Form :	Public limited liability company. Company’s shares are listed on the Stock Exchange.
Line of Business :	Manufacturer and Exporter of Tea.

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	USD 5100000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and reputed company having fine track. Available information indicates high financial responsibility of the company and its management. Trade relations are fair. General financial position is good. Payments are reported as usually correct and as per commitments. The company can be considered good for any normal business dealings. It can be regarded as a promising business partner in a medium to long-run.

LOCATIONS

Registered Office :	Deohall Tea Estate, Hoogrijan, Dist : Tinsukia – 786 601, Assam, India
Tel. No.:	91-374-2824462
Fax No.:	91-374-2335372
Head Office :	S 35-A, Arvind Marg, Hotel Maurya Palace Annexe, M I Road, Jaipur – 302 001, Rajasthan, India
Tel. No.:	91-141-5101414
Fax No.:	91-141-5104455
Corporate Office :	4B, Hungerfords Street, Kolkata – 700 017, West Bengal, India
Tel. No.:	91-33-22872287
Fax No.:	91-33-22890307 / 22890302
E-Mail :	info@warrensteels.com investors@warrentea.com
Factory 1 :	Plot No. SPI – 4, Sotanala Industrial Area, Behror, Distt. Alwar (Rajasthan), India
Tel. No.:	9214201070
Mobile No.:	91-9352681326
E-Mail :	works@warrensteels.com
Factory 2 :	Warren Travels, 31 Chowringhee Road, Kolkata – 700 071, West Bengal, India

DIRECTORS

Name :	Mr. A K Ruia
Designation :	Chiarman
Name :	Mr. V K Goenka
Designation :	Executive Chairman
Date of Birth/Age :	50 Years
Qualification :	B.Sc. (Hons.) – Botany
Experience :	31 Years
Date of Appointment :	19.04.1983
Other Directorship :	The Eriabarie Tea Company Private Limited
Name :	Mr. S K Ghosh
Designation :	Managing Director
Date of Birth/Age :	16.02.1954
Qualification :	B.com (Hons.) – Calcutta University, F.CA
Date of Appointment :	01.10.2004
Name :	Mr. N Musry
Designation :	Director
Qualification :	M.A. and Barrister-at-Law
Experience :	50 Years
Other Directorship :	· Musry Holdings Limited · Canetti Export (Successors) Company Limited · Textiles and Furnishings (Manchester) Limited · Solville Limited · Clinderford Supplies Limited · D and N Fabrics (Manchester) Limited · Principia Limited · A Webb and Company (Manchester) Limited · M and N Textiles Limited · Century Textiles Limited · Parimbrook Limited · Derrysel Limited · Warren Tea Holdings Limited · G C Newbury and Company Limited · A K Dyson and Company Limited · Wrengate Limited
Name :	Mr. S Bhoopal
Designation :	Director
Qualification :	Commerce Graduate and tea tasting training with J Thomas and Company (Private) Limited
Other Directorship :	· Amarawati Tea Company Limited · Marangi Private Limited · Jalan Pipes Limited · Good Team Investment and Trading Company Limited · Universal Exports · Potodia Consultants Limited · Madoorie Tea Estate Private Limited
Name :	Mr. N Dutta
Designation :	Director
Name :	Mr. S Sharma
Designation :	Director
Name :	Mr. P K Bose
Designation :	Vice Chairman
Name :	Mr. G Bhalla
Designation :	Senior Executive Director - Marketing
Name :	Mr. U C Sarmah
Designation :	Executive Director - Assam
Name :	Mr. U C Arora
Designation :	Executive Director – Marketing
Name :	Mr. R Magotra
Designation :	Executive Director - Travels

KEY EXECUTIVES

Name :	Mr. Siddhartha Roy
Designation :	Company Secretary
Key Executives :	· Mr. S Chanda (Balijan (H) Tea Estate) · Mr. R L Gogoai (Deohall Tea Estate) · Mr. P Buragohain (Hatimara Tea Estate) · Mr. R K Srivastava (Rajah Alli Tea Estate) · Mr. M Tondon (Zaloni Tea Estate) · Mr. R Taylor (Deamoolie Tea Estate) · Mr. H Singh (Dhoedaam Tea Estate) · Mr. B K Barman (Duamara Tea Estate) · Mr. P K Neog (Rupai Tea Estate) · Mr. A N Sinha (Tara Tea Estate) · Mr. A Barua (Tippuk Tea Estate) · Mr. K S Matharu (Balijan North Tea Estate) · Mr. J Borgohain (Sealkotee Tea Estate) · Mr. S Sharma (Thowra Tea Estate)

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

(As on 31.03.2008)

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters’ Holding
Indian Promoters	2993728	27.94
Foreign Promoters	5954071	55.57
Total (A)	8947799	83.51
Non Promoters’ Holding
Institutional Investors
Mutual Funds/ UTI	25	-
Banks, Financials Institutions, Insurance Companies, (Central/State Government Institutions/Non-Government Institutions)	28027	0.26
Sub Total	28052	0.26
Others
Private Corporate Bodies	125572	1.17
Individuals	1612850	15.06
Sub Total	1738422	16.23
Total (B)	1766474	16.49
Grand Total (A+B)	10714273	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer and Exporter of Tea.7

Products :

ITC Code	Product Description
090230.00	Black Tea
847989.19	Travel Agency

Exports:

Countries :

· UK

· Ireland

· Germany

· UAE

· USA

· Iran

· Pakistan.

PRODUCTION STATUS

Particulars	Unit	Actual Production
Tea	Kgs. Thousand	14608

GENERAL INFORMATION

Bankers :	· State Bank of India · Axis Bank Limited · HDFC Bank Limited · Bank of Baroda
Facilities :	SECURED LOAN	31.03.2008 Rs. In Millions
	Working Capital Facilities form Banks (Secured by joint equitable mortgage/ charge on the current assets and fixed assets (movable and immovable ) ranking pari passu first charge amongst the bankis severally and with other lenders for their respective Term Loans which are secured by fixed assets only (movable and immovable)	67.865
	Loan from Housing Development Finance Corporation Limited	20.000
	Loans from Bank (Secured by equitable mortgage of fixed assets only movable and immovable ) ranking pari passu first charge with the banks for working capital facilities)	65.000
	Loan from Bank (Secured by equitable mortgage/ charge on current assets and fixed assets (movable and immovable) ranking pari passu first charge with the Banks for working capital capital facilities)	50.000
	Interest Accrued and due	5.688
	Total	208.553
	UNSECURED LOAN	31.03.2008 Rs. In Millions
	Short term Loan from a Bank	100.000
	Total	100.000

Banking Relations :	Good
Auditors :	Price Waterhouse Chartered Accountants
Branch Auditors :	B M Chatrath and Company Chartered Accountants
Cost Auditors :	Shome and Banerjee Chartered Accountants
Associates/Subsidiaries :	· Warren Industrial Limited · DPIL Limited · Sectra Plaza Private Limited · Suvira Properties Private Limited · Warren Steels Private Limited
Holding Company :	Warren Tea Holdings Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
20000000	Equity Shares	Rs.10/- each	Rs.200.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
10714273	Equity Shares	Rs.10/- each	Rs.107.142 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		107.142	107.142	107.100
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		913.199	989.708	926.200
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		1020.341	1096.850	1033.300
LOAN FUNDS
1] Secured Loans		208.553	245.756	273.500
2] Unsecured Loans		100.000	80.000	70.000
TOTAL BORROWING		308.553	325.756	343.500
DEFERRED TAX LIABILITIES		15.753	64.023	0.000
TOTAL		1344.647	1486.629	1376.800
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1283.168	1283.186	1298.900
Capital work-in-progress		22.729	2.157	0.500
INVESTMENT		41.707	101.083	25.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	121.088	105.159	137.300
	Sundry Debtors	121.539	135.592	127.500
	Cash & Bank Balances	3.918	4.836	15.300
	Other Current Assets	59.051	57.178	0.000
	Loans & Advances	189.491	155.603	200.700
Total Current Assets		495.087	458.368	480.800
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	338.895	198.896	269.200
	Provisions	159.149	159.269	159.200
Total Current Liabilities		498.044	358.165	428.400
Net Current Assets		(2.957)	100.203	52.400
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		1344.647	1486.629	1376.800

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
Sales Turnover		1327.352	1362.668	1133.400
Other Income		32.455	33.481	24.700
Total Income		1359.807	1396.149	1158.100
Profit/(Loss) Before Tax		18.905	65.291	(128.100)
Provision for Taxation		2.218	1.774	(3.100)
Profit/(Loss) After Tax		16.687	63.517	(125.000)
Earnings in Foreign Currency :
	Exports on FOB Basis	92.392	96.814	0.000
Total Earnings		92.392	96.814	0.000
Imports :
	Stores & Spares	0.814	0.000	0.000
	Capital Goods	14.381	6.978	0.000
Total Imports		15.195	6.978	0.000
Expenditures :
	Expenses	1226.441	1201.600	279.700
	Administrative Expenses	0.000	0.000	174.000
	Employee Cost	0.000	0.000	657.700
	Increase/(Decrease) in Finished Goods	0.000	0.000	(21.100)
	Interest	36.957	28.870	32.900
	Power & Fuel Cost	0.000	0.000	82.400
	Miscellaneous Expenses	0.000	0.000	0.900
	Depreciation to Stock	3.372	28.497	0.000
	Depreciation & Amortization	74.132	71.891	79.700
Total Expenditure		1340.902	1330.858	1286.200

QUARTERLY RESULTS

PARTICULARS	30.06.2008
Type	1^st Quarter
Sales Turnover	230.500
Other Income	1.900
Total Income	232.400
Total Expenditure	167.600
Operating Profit	64.800
Interest	10.200
Gross Profit	54.600
Depreciation	18.400
Tax	0.600
Reported PAT	38.200

KEY RATIOS

PARTICULARS	31.03.2008	31.03.2007	31.03.2006
Debt-Equity Ratio	0.46	0.48	0.60
Long Term Debt-Equity Ratio	0.25	0.29	0.46
Current Ratio	0.78	0.84	1.21
TURNOVER RATIOS
Fixed Assets	0.71	0.75	0.64
Inventory	11.73	11.24	9.02
Debtors	10.33	10.36	9.56
Interest Cover Ratio	1.51	3.26	(2.89)
Operating Profit Margin(%)	9.79	12.19	(1.37)
Profit Before Interest And Tax Margin(%)	4.21	6.91	(8.40)
Cash Profit Margin(%)	6.84	9.94	(4.00)
Adjusted Net Profit Margin(%)	1.26	4.66	(11.03)
Return On Capital Employed(%)	5.52	9.08	(8.10)
Return On Net Worth(%)	2.42	9.17	(17.29)

LOCAL AGENCY FURTHER INFORMATION

HISTORY

Subject, which has 13 tea gardens in Upper Assam, is an associate of James Warren. In 1993, the Manchester-based G S Ruia group bought James Warren from McLeod Russel, gaining control of Warren Tea. 

The company suffered a minor setback in its working in 1987-88. Its yield per hectare is 2255 kg. Warren Tea, along with its associate companies, has purchased a 24% equity stake in Vegepro Foods & Feeds, which was held by Glaxo. 

The company diversified into the manufacture of sugar and other downstream products as a part of its growth plans. A MoU was signed with the Karnataka Industrial Investment and Development Corporation to set up a 2-mtpa cement plant. Besides the plantation and agro-based segments, the engineering sector has also been identified by the company for diversification. In 1997-98, Warren Metal Industries was amalgamated with the company. 

It is planning to acquire tea gardens in Assam to step up its output level. The company is keen on adding 2-3 million kg to its production.

DIRECTOR’S REPORT

RESUME OF PERFORMANCE

The Profit Before Tax amounting to Rs.18.900 millions for the year has been less than that of the previous year mainly on account of a significant decrease in crop owing to unfavourable climatic conditions over a considerable period of time in spite of better prices fetched for consistent improved quality of tea attracting the buyers.

The Company is optimistic of harvesting a higher weight of crop with emphasis on quality which should increase the profitability of the Company during the current year based on performance till date.

Crop

The Company’s saleable crop was recorded at 14.32 Million kgs. As compared to the previous year’s production of 15.17 Millions kgs.

Comparative Crop figures during the past five years are given below :

Year Ended on	Saleable Crop in Millions kg
31.03.2008	14.32
31.03.2007	15.17
31.03.2006	15.23
31.03.2005	14.41
31.03.2004	17.71

Sales

Proceeds from sale of tea amounted to Rs.1321.500 millions for the year as against Rs.1357.900 millions in the previous year.

Quality

Quality continues to remain the primary focus of the Company along with an emphasis on the production of its own crop only which policy continues to benefit the company in price realisations.

The Directors continue to recognise the attributes of Tea as a Health Drink. All fourteen tea Estates of the company to be HACCP (Hazard Analysis of Critical control Points) certified as well as be participants of the ETP (Ethical Tea Partnership) programme. The company also continues to be fully cognizant of the critical issue of Maximum (Permissible Chemicals) Residue Limits (MRLs) for several years now and has, on its own volition, been conducting precision testing of its produce at internationally Accredited Laboratories, while simultaneously taking every measure to ensure full compliance at all the estates.

Exports

The company’s exports recorded on export turnover of Rs.95.100 millions as compared to the previous year’s turnover of Rs.100.100 millions.

Foreign Exchange Earning and Outgo

Activities relating to exports : The company continues to pursue its activity in exporting teas to UK, Germany, Ireland, North America, Pakistan, Iran and Middle East.

Initiatives taken to increase exports : Quality continues to be the watchword and the company continues to strive to cater to quality conscious markets for both Orthodox and CTC teas.

The company continues with its Integrated Management Policy relating to Agro inputs in conformity with both domestic and global norms.

All fourteen estates of the company continue to be HACC certified as well as continue to be participants of the Ethical Tea Partnership Programme.

Development of new export markets for products and services : In addition to existing exports, efforts are also made to explore new markets and in this direction the company has already taken initiative.

Export plans : The company has always had an eye to improve its exports. Efforts continue with a view to increasing its exports to existing buyer countries as well as to explore new countries where exports could be effected in future.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Industry Structure and Developments

Tea continues to be country’s primary beverage with overwhelming majority of households consuming Tea as a preferred beverage. India is the world’s second largest producer of tea and continues to be largest exporters of tea. Tea plantations directly employ more than one million people and directly more than two million people which necessarily is of telling economic significance for the concerned regions which are relatively underdeveloped.

Though the year showed promises initially, lower crop, mainly on account of adverse climate conditions, have not yielded expected results.

The newly set up Special Purpose Tea Fund would perhaps help the recuperating industry within a span of next few years when the replanted bushes attain maturity.

Opportunities and threats

Input costs both man and materials continue to rise which effect the industry’s performance not only in the domestic markets but also globally. Bought leaf factories sourcing green leaf from small growers continues to sell at lower prices without concern about Tea as a Health Drink thus reducing the competitive edge of organized producers selling quality tea. However, with increased production and improvement in quality with emphasis on ‘Health’, the industry can look forward to more encouraging times.

Segment-wise or Product-wise Performance

As started in Schedule 18 of the Accounts for the year, tea production continues to be the core activity of the company, the performance of which has already been appropriately stated in the Director’s Report of which this Report forms an Annexure. The company continues to operate one other division, namely Warren Travels, which contributes to the overall performance of the Company.

Outlook

Along with the industry the company is looking forward to better times with higher volumes, at the same time maintaining and even improving quality without losing sight of mix of Orthodox and CTC to result in better performance.

Risk and concerns

The company’s focus on both quantity and quality remains unabated despite which on account of vagaries of climatic conditions, unpredictability of market behaviour both domestic and international and shifting consumer preferences in CTC and Orthodox performance is necessarily affected.

Internal Control Systems and their Adequacy

The statutory requirements of Audit Committee are being met and in such meetings of the Audit Committee, the Statutory Auditors, Internal Auditors and Cost Auditors actively participate. All the Auditors also periodically visit various units of the company. Budgetary and other control methods continue to be observed for monitoring plantation activities with a view to deriving improved results.

Financial and Operational Performances

In spite of improved market conditions the company’s performance suffered during the year on account of significantly crop resulting mainly from adverse climatic conditions.

Material Developments in Human Resources / Industrial Relations Front

Continuing education and training of employees at all levels of the company, particularly at its plantations, contribute to human resource development.

FIXED ASSETS

· Land (Freehold)

· Estates and Development (Leasehold)

· Buildings, Roads and Bridges

· Plant and Machinery

· Airconditioners, Refrigerators and Other Equipments

· Furniture and Fixtures

· Vehicles

Intangible Assets

· Tenancy Right

· Excise Duty Relief Right

· Computer Software

NOTES ON ACCOUNTS:

1. (a) Pursuant to the Scheme of Arrangement effectuated from 31.03.2005 between DPIL Limited ( DPIL), Spectra Plaza Private Limited, (SPPL) and the Company and the respective shareholders, as sanctioned by the Hon’ble high Courts at Calcutta and Gauhati earlier, and upon receipt of reqwuisite approval from the designated Stock Exchange, 1014156 Equity Shares of Rs. 10/- each fully paid-up were issued to the eligible members of erstwhile SPPL including those shareholders of DPIL who were entitled to the shares of SPPL in accordance with the Said Scheme during the year; Related Capital Suspense Account shown in Schedule 1 was accordingly adjusted.

(b) Procedural formalities for conclusion of transfer of immovable properties acquired qunder the Scheme are underway.

2. Revaluation of all Plantation Assets depreciable assets was conducted in 2001-02 by approved Valuers appointed by the company. In evaluating such Assets, the Valuers carried out physical inspection, verification, and analysis of plantation areas and valued the same on a conservation basis. The resultant incremental amount of Rs. 362.743 Millions was incorporated in the Accounts as on 31^st March 2002 and credited to the Revaluation Reserve Account.

3. Pursuant to an Agreement dated 8^th October, 2002, Tippuk Tea Estate located in Doom Dooma sub-district in Assam was acquired by the Company as a going concern with effect from 1^st October, 2002 and possession and operations have been taken over by the Company effective from the Same date. Conclusion of the Deed of Conveyance is in process.

4. (a) Depreciation/ Amortisation is provided on Straight Line Method at the following rates:

	%
Building, Roads and Bridge ( Including Tenancy Right)	5.00
Plant and Machinery : Computers including Software	20.0
Others	7.5
Airconditioners, Refrigerators and Other Equipments	7.5
Furniture and Fixtures	7.5
Vehicles	15.0

(b) Amortisation of Excise Duty Relief Right available upto June 2011, subject to periodical review, has been provided to the extent of production of Tea of the respective Tea Estate during the year.

WEB DETAILS

Warren Steels

They are a part of Warren Tea group of companies. Warren Tea is the Fourth largest produced of bulk Teas in India, The Group  turnover is of over 2500.000 Millions.

They are having Investment casting "lost wax” unit in Sotanala Rajasthan (Near Delhi) to produce alloy steel / steel valves, automobile components and similar products.

Profile:

When James Warren decided to create a new Tea Estate in 1850, inspiration set its own metable. Warren,and thereafter his family, wanted teas that evoked beautiful emotions in people all over the world. Today the Warren legacy presents a history so rich in experience and achievement that it has changed the very course of the Indian tea producers’ art. Generations of dedicated and gifted tea people, working with the most popular of nature’s herbs, have transformed Warren from a mere tea company to a House of rare Quality, so very satisfying to the consumers of its produce.

Subject is the flagship of the Warrens group. Being one of the largest bulk tea producers in India and in the world, Warren Tea Limited produces 16 million kgs. of tea annually. With its renowned 14 Tea Estates in Upper Assam spread over Moran, Doom Dooma, Panitola and Tingri Districts, the produce of the Company is savoured across 50 countries around the world. Their regular export markets include quality tea drinking nations like UK, Ireland, Germany, the UAE, USA, Iran and Pakistan. The quality produced at Warrens has not only stood the test of time and palate, but matured and improved with its passage of time. In the great tradition of its founders, the Company believes that the world is its “cuppa” and tries its best to see that the cup “brimmeth over with joy and good cheer and satisfaction”.

The Warrens group has been involved in tea production for over a century  and now is actively looking towards expansion in other industries. “Warren Steels (Private) Limited” is one such diversification where the Company has put up an Investment Casting unit at Sotanala, Behror (Rajasthan). The land for this project was procured from Rajasthan State Industrial Development and Investment Corporation Limited (RIICO) in the year 2005 and started  production within a record time span of  9 months,  in July, 2006. As always, they at Warrens, cherish the fact that not only are they the biggest quality tea producers that they set the standards for the entire industry. This unit is the first step to a long journey ahead. They plan to flourish and continue to set higher standards for their competitors and more importantly for themselves.

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.44.37
UK Pound	1	Rs.78.09
Euro	1	Rs.63.41

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	8
--CREDIT LINES	1~10	8
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		68

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

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