MIRA INFORM REPORT

Report Date :

25.09.2008

IDENTIFICATION DETAILS

Name :	GROHE PACIFIC PTE LTD
Registered Office :	438 Alexandra Road #06-01/04, Alexandra Point, 119958
Country :	Singapore
Financials (as on) :	31.12.2007
Date of Incorporation :	^25.06.1994
Com. Reg. No.:	^199404485W
Legal Form :	^Pte Ltd
Line of Business :	^Distribution of Faucets, Showers, Overflow and other Sanitary Fittings

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

Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear

Subject Company

GROHE PACIFIC PTE LTD

Line Of Business 

^{DISTRIBUTION OF FAUCETS, SHOWERS, OVERFLOW AND OTHER SANITARY FITTINGS.}

Parent Company

^{GROHE INTERNATIONAL GMBH}

(PERCENTAGE OF SHAREHOLDING: 100.00%)

Financial Elements

FY 2007

COMPANY

Sales : US$49,437,085

Networth : US$10,979,759

Paid-Up Capital : US$ 4,981,761

Net result : US$ 5,671,280

Net Margin(%) : 11.47

Return on Equity(%) : 51.65

Leverage Ratio : 0.95

COMPANY IDENTIFICATION

^{Subject Company : GROHE PACIFIC PTE LTD}

^{Former Name :}

^{Business Address : 438 ALEXANDRA ROAD}

^#06-01/04

^{ALEXANDRA POINT}

^{Town : SINGAPORE}

^{Postcode : 119958}

^{County :}

^{Country : Singapore}

^{Telephone : 6738 4500}

^{Fax : 6738 0855}

^{ROC Number : 199404485W}

^{Reg. Town :}

SUMMARY

^{All amounts in this report are in : USD}

^{Legal Form : Pte Ltd}

^{Date Inc. : 25/06/1994}

^{Previous Legal Form : -}

^{Summary year : 31/12/2007}

^{Sales : 49,437,085}

^{Networth : 10,979,759}

^{Capital : -}

^{Paid-Up Capita l : 4,981,761}

^{Employees : 25}

^{Net result : 5,671,280}

^{Share value : -}

^{Auditor : ERNST & YOUNG LLP}

^{BASED ON ACRA'S RECORD}

^{NO OF SHARES CURRENCY AMOUNT}

^{ISSUED ORDINARY 700,000 SGD 6,100,000.00}

^{ISSUED PREFERENCE 200,000 SGD 2,000,000.00}

^{PAID-UP ORDINARY - SGD 6,100,000.00}

^{PAID-UP PREFERENCE - SGD 2,000,000.00}

REFERENCES

^{Litigation : No}

^{Company status : TRADING}

^{Started : 25/06/1994}

PRINCIPAL(S)

^{TAN YING LIN JESMIN S6937532D Director}

DIRECTOR(S)

^{TAN YING LIN JESMIN S6937532D Director}

^{Appointed on : 19/11/2007}

^{Street : 30 KISMIS AVENUE}

^{CHENG SOON GARDEN}

^{Town: SINGAPORE}

^{Postcode: 598207}

^{Country: Singapore}

^{DETLEF SCHMITZ Director}

^{Appointed on : 31/01/2008}

^{Street : SCHUTZENSTRASSE 1161}

^{Town: BOTTROP}

^{Postcode: 46242}

^{Country: Germany}

^{RAINER MUES Director}

^{Appointed on : 05/09/2007}

^{Street : AUF DEM BRAUCK 14}

^{Town: HEMER}

^{Postcode: 58675}

^{Country: Germany}

^{M SIVAANANTHAN S0181790F Company Secretary}

^{Appointed on : 01/10/1998}

^{Street : 101B LORONG 2 TOA PAYOH}

^#06-09

^{Town: SINGAPORE}

^{Postcode: 311101}

^{Country: Singapore}

FORMER DIRECTOR(S)

^{VOLKHARD SPLITTGERBER 3334030118}

^{FRANZ DROGE 3563005857}

ACTIVITY(IES)

^{PLUMBING And HEATING SUPPLIES - RETAIL Code:17140}

^{BASED ON ACRA'S RECORD}

^{1) PLUMBING, HEATING [ NON-ELECTRIC] & AIR-CONDITIONING}

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

No Premises/Property Information In Our Databases

SHAREHOLDERS(S)

^{GROHE INTERNATIONAL GMBH 300,000 Company}

^{Street : AKTIENGESELLSCHAFT POSTFACH}

^{1361 58653 HEMER}

^{Town: HEMER}

^Postcode:

^{Country: Germany}

HOLDING COMPANY

^{GROHE INTERNATIONAL GMBH UF12381G % : 100}

SUBSIDIARY(IES)

^{GROHE (SHANGHAI SANITARY PRODUCTS CP., LTD}

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality : AVERAGE}

^{Liquidity : SUFFICIENT}

^{Payments : REGULAR}

^{Trend : LEVEL}

^{Financial Situation : AVERAGE}

FINANCIAL ELEMENTS

^{All amounts in this report are in : USD}

^{Audit Qualification: UNQUALIFIED (CLEAN) UNQUALIFIED (CLEAN)}

^{Date Account Lodged: 09/06/2008}

^{Balance Sheet Date: 31/12/2007 31/12/2006}

^{Number of weeks: 52 52}

^{Consolidation Code: COMPANY COMPANY}

^{--- ASSETS ---}

^{Preliminary Exp 6,688 65,906}

^{Tangible Fixed Assets: 553,090 618,040}

^{Total Fixed Assets: 559,778 683,946}

^{Inventories: 5,590,739 6,100,614}

^{Receivables: 10,087,364 14,260,075}

^{Cash,Banks, Securitis: 4,838,197 1,533,947}

^{Other current assets: 349,662 889,021}

^{Total Current Assets: 20,865,962 22,783,657}

^{TOTAL ASSETS: 21,425,740 23,467,603}

^{--- LIABILITIES ---}

^{Equity capital: 4,981,761 4,981,761}

^{Profit & lost Account: 5,997,998 6,326,718}

^{Total Equity: 10,979,759 11,308,479}

^{Trade Creditors: 2,682,344 1,325,358}

^{Prepay. & Def. charges: 6,013,201 3,729,102}

^{Advanced payments: 342,254 244,633}

^{Provisions: 1,330,676 2,387,894}

^{Other Short term Liab.: 77,506 4,472,137}

^{Total short term Liab.: 10,445,981 12,159,124}

^{TOTAL LIABILITIES: 10,445,981 12,159,124}

^{--- PROFIT & LOSS ACCOUNT ---}

^{Net Sales 49,437,085 43,305,064}

^{NET RESULT BEFORE TAX: 6,996,189 7,877,033}

^{Tax : 1,324,909 1,901,954}

^{Net income/loss year: 5,671,280 5,975,079}

^{Interest Paid: 71,544}

^{Depreciation: 284,238 222,904}

^{Dividends: 6,000,000 11,500,000}

^{Directors Emoluments: 667,391 1,265,901}

^{Wages and Salaries: 5,668,423 5,408,583}

^{Financial Income: 147,090 86,638}

RATIOS

^{31/12/2007 31/12/2006}

^{Turnover per employee: 1977483.40 1732202.56 Net result / Turnover(%): 0.11 0.14 Stock / Turnover(%): 0.11 0.14 Net Margin(%): 11.47 13.80 Return on Equity(%): 51.65 52.84 Return on Assets(%): 26.47 25.46 Dividends Coverage: 0.95 0.52 Net Working capital: 10419981.00 10624533.00 Cash Ratio: 0.46 0.13 Quick Ratio: 1.43 1.30 Current ratio: 2.00 1.87 Receivables Turnover: 73.46 118.55 Leverage Ratio: 0.95 1.08}

^{Net Margin : (100*Net income loss year)/Net sales}

^{Return on Equity : (100*Net income loss year)/Total equity}

^{Return on Assets : (100*Net income loss year)/Total fixed assets}

^{Net Working capital : (Total current assets/Total short term liabilities)/1000}

^{Cash Ratio : Cash Bank securities/Total short term liabilities}

^{Quick Ratio : (Cash Bank securities+Receivables)/Total Short term liabilities}

^{Current ratio : Total current assets/Total short term liabilities}

^{Inventory Turnover : (360*Inventories)/Net sales}

^{Receivables Turnover : (Receivable*360)/Net sales}

^{Leverage Ratio : Total liabilities/(Total equity-Intangible assets)}

FINANCIAL COMMENTS

^{THE FINANCIAL CONDITION OF THE COMPANY WAS SEEN TO BE FAIR IN VIEW OF THE FOLLOWING:}

^{NET WORTH:}

^{THE BALANCE SHEET WAS CONSIDERED PASSABLE ALTHOUGH NET WORTH DROPPED BY 2.91% TO US$10,979,759 (2006: US$11,308,479). THIS WAS ATTRIBUTED TO A FALL IN ACCUMULATED PROFITS BY 5.20% TO US$5,997,998 IN FY 2007 FROM US$6,326,718 IN FY 2006.}

^LEVERAGE:

^{IN THE SHORT-TERM, SUBJECT WAS LARGELY FINANCED BY PREPAYMENT AND DEFERRED CHARGES WHICH MADE UP 57.56% (2006: 30.67%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO US$6,013,201 (2006: US$3,729,102). BREAKDOWN WAS AS FOLLOWS:}

^{* ACCRUED SALES INCENTIVE - 2007: US$69,941 (2006: US$90,747)}

^{* ACCRUED OPERATING EXPENSES- 2007: US$4,617,902 (2006: US$3,638,355)}

^{TRADE CREDITORS ROSE BY 1.02 TIMES AND AMOUNTED TO US$2,682,344 (2006: US$1,325,358). CONSISTED OF THE FOLLOWING:}

^{* TRADE CREDITORS - 2007: US$1,619 (2006: US$5,408)}

^{* DUE TO ULTIMATE HOLDING COMPANY (TRADE) - 2007: US$1,629,294 (2006:}

^US$332,027)

^{* DUE TO RELATED COMPANIES (TRADE) - 2007: US$1,051,431 (2006:}

^US$987,923)

^{OVERALL, THE LEVERAGE RATIO HAD IMPROVED TO 0.95 TIMES (2006: 1.08 TIMES), INDICATING THAT THE COMPANY'S TOTAL LIABILITIES WERE LESS SUBSTANTIAL IN RELATION TO ITS TOTAL EQUITY.}

^LIQUIDITY:

^{IN GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS CONSIDERED PASSABLE AS SEEN FROM NET WORKING CAPITAL AND LIQUIDITY RATIOS. BOTH CURRENT AND QUICK RATIOS ROSE TO 2.00 TIMES (2006: 1.87 TIMES) AND 1.43 TIMES (2006: 1.30 TIMES) RESPECTIVELY.}

^{HOWEVER, NET WORKING CAPITAL DECREASED SLIGHTLY BY 1.93% FROM US$10,624,533 IN FY 2006 TO US$10,419,981 IN FY 2007.}

^{CASH AND CASH EQUIVALENTS ROSE BY 2.15 TIMES FROM US$1,533,947 IN FY 2006 TO US$4,838,197 IN FY 2007. BREAKDOWN WAS AS FOLLOWS:}

^{* CASH AT BANK AND ON HAND - 2007: US$838,197 (2006: US$933,947)}

^{* SHORT TERM DEPOSITS - 2007: US$4,000,000 (2006: US$600,000)}

^{PROFITABILITY:}

^{SUBJECT POSTED AN INCREASE IN REVENUE OF 14.16% WHICH AMOUNTED TO US$49,437,085 (2006: US$43,305,064). HOWEVER, NET PROFIT DROPPED SLIGHTLY BY 5.08% WHICH AMOUNTED TO US$5,671,280 (2006: US$5,975,079). AS A RESULT, NET MARGIN FELL TO 11.47% (2006: 13.80%).}

^{DEBT SERVICING:}

^{DEBT SERVICING PROBLEMS MIGHT NOT BE EXPECTED IF REVENUE AND EARNINGS CAN BE MAINTAINED OR IMPROVED AND PAYMENTS BY TRADE DEBTORS ARE FORTHCOMING.}

^{IT WAS NOTED THAT AVERAGE COLLECTION PERIOD HAS SHORTHENED TO 73 DAYS (2006: 119 DAYS).}

^{NON-CURRENT ASSETS:}

^{* DEFERRED TAX ASSETS OF US$6,688 (2006: US$65,906) WERE CLASSIFIED UNDER PRELIMINARY.}

^{NOTES TO FINANCIAL STATEMENTS:}

^{* BANKERS'UARANTEES:}

^{AS AT 31 DECEMBER 2007, THE COMPANY HAS OUTSTANDING BANKERS'}

^{GUARANTEES WHICH AMOUNT TO APPROXIMATELY US$40,066 (2006: US$242,073)}

^{IN THE NORMAL COURSE OF BUSINESS.}

^{* COMMITMENTS AND CONTINGENCIES:}

^{LETTER OF FINANCIAL SUPPORT:}

^{DURING THE YEAR, THE COMPANY HAS ISSUED A LETTER OF FINANCIAL SUPPORT TO THE SUBSIDIARY, WHICH STATES THE INTENTION OF THE COMPANY TO CONTINUE TO PROVIDE FINANCIAL SUPPORT TO ENABLE THE SUBSIDIARY TO MEET ITS FINANCIAL OBLIGATIONS AS AND WHEN THEY FALL DUE.}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 25/06/1994 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS PRESENT NAMESTYLE AS "GROHE PACIFIC PTE LTD".}

^{THE COMPANY HAS AN ISSUED AND PAID-UP CAPITAL OF 700,000 ORDINARY SHARES, OF A VALUE OF S$6,100,000 AND 200,000 PREFERENCE SHARES OF VALUE OF S$2,000,000.}

^{PRINCIPAL ACTIVITIES:}

^{SUBJECT IS REGISTERED WITH THE ACCOUNTING AND CORPORATE REGULATORY AUTHORITY (ACRA) TO BE PRINCIPALLY ENGAGED IN THE BUSINESS OF:}

^{1) PLUMBING, HEATING [ NON-ELECTRIC] & AIR-CONDITIONING}

^{THE COMPANY WAS LISTED IN THE SINGAPORE LOCAL DIRECTORIES UNDER THE CLASSIFICATION OF: BATHROOM FIXTURES & ACCESSORIES-RETAIL}

^{DURING THE FINANCIAL YEAR(S), UNDER REVIEW, SUBJECT'S PRINCIPAL ACTIVITIES ARE THE DISTRIBUTION OF FAUCETS, SHOWERS, OVERFLOW AND OTHER SANITARY FITTINGS. THE PRINCIPAL ACTIVITY OF THE BRANCH AND THE REPRESENTATIVE OFFICER IS THE PROVISION OF MARKETING SERVICES TO THE COMPANY.}

^{FROM THE RESEARCH DONE, THE FOLLOWING INFORMATION WAS GATHERED:}

^BACKGROUND:

^{GROHE AG IS EUROPE'S LARGEST AND THE WORLD'S LEADING SINGLE-BRAND MANUFACTURER AND SUPPLIER OF SANITARY FITTINGS, HOLDING ROUGHLY EIGHT PERCENT OF THE WORLD MARKET. AS A GLOBAL BRAND FOR SANITARY PRODUCTS AND SYSTEMS, GROHE EMPHASISES THE PERFECT AND INDIVIDUAL WATER FLOW TOGETHER WITH AN EXTREMELY LONG DURABILITY OF THE PRODUCTS.}

^{WITH ITS HEADQUARTERS IN HEMER AND DÜSSELDORF, THE COMPANY CURRENTLY EMPLOYS SOME 5.100 PEOPLE WORLDWIDE, INCLUDING 2.600 IN GERMANY. IN 2007, THE COMPANY'S KITCHEN AND BATHROOM FITTINGS AND SHOWERS, AUTOMATIC FITTINGS FOR THE COMMERCIAL AND CONTRACT SECTORS, AND INSTALLATION AND FLUSHING SYSTEMS GENERATED SALES OF EUR 1.017 MILLION.}

^{GROHE HAS SIX PRODUCTION PLANTS, OF WHICH THREE ARE LOCATED ABROAD, NAMELY IN PORTUGAL, THAILAND AND CANADA. THE COMPANY GENERATES 84 PERCENT OF ITS SALES OUTSIDE GERMANY.}

^ACTIVITIES:

^{* MANUFACTURER OF BATHROOM FIXTURES & ACCESSORIES}

^{GROHE PACIFIC, THE CORPORATION'S REGIONAL HEADQUARTERS IS STRATEGICALLY LOCATED IN SINGAPORE. GROHE MAINTAINS A MANUFACTURING FACILITY IN THAILAND, AND A GROWING BASE IN CHINA. THE CHINA OPERATIONS INCLUDE REPRESENTATIVE OFFICES IN HONG KONG, SHANGHAI, BEIJING, GUANGZHOU AND CHENGDU, AND AN ASSEMBLY PLANT IN SHANGHAI.}

^{PRODUCTS OR SERVICES:}

^{* BATHROOM ACCESSORIES & SERVICES}

^{* BATHROOM FITTINGS}

^{* BATHROOM FIXTURES & ACCESSORIES : RETAIL}

^{* SANITARY FITTINGS}

^{* SANITARYWARE, SANITARY PRODUCTS & SERVICES}

^{* SHOWER FITTINGS}

^BRANDNAMES:

^{* CHIARA}

^{* GROHE}

^{* SENTOSA}

^{* TARON}

^{TERMS OF PAYMENT:}

^{* TRADE AND OTHER RECEIVABLES: 30-90 DAYS TERM}

^{* TRADE AND OTHER PAYABLES : 60 DAYS TERM}

^{FROM THE TELE-INTERVIEW CONDUCTED, SUBJECT CONFIRMED ITS BUSINESS ADDRESS, CONTACT NUMBERS AND LINE OF BUSINESS. SUBJECT ALSO REVEALED THAT THEY HAVE ABOUT 25 EMPLOYEES. FURTHER ENQUIRIES WERE REJECTED. NO OTHER TRADE INFORMATION WAS AVAILABLE}

^{NUMBER OF EMPLOYEES:}

^{* 20 - AS OF 2006}

^{THE IMMEDIATE HOLDING COMPANY IS GROHE INTERNATIONAL GMBH, INCORPORATED IN GERMANY. THE INTERMEDIATE HOLDING COMPANIES ARE GROHE WATER TECHNOLOGY AG & CO KG AND GROHE BETEILIGUNGS GMBH BOTH INCORPORATED IN GERMANY. THE ULTIMATE HOLDING COMPANY IS GROHE HOLDING GMBH, INCORPORATED IN GERMANY.}

^{REGISTERED AND BUSINESS ADDRESS:}

^{438 ALEXANDRA ROAD}

^#06-01/04

^{ALEXANDRA POINT}

^{SINGAPORE 119958}

^{DATE OF CHANGE OF ADDRESS: 28/07/2008}

^{- RENTED PREMISE}

^{- PREMISE OWNED BY: FCL ALEXANDRA POINT PTE. LTD.}

^{ADDRESS PROVIDED BY CLIENT:}

^{260 ORCHARD ROAD}

^{#08-03/04 THE HEREN}

^{SINGAPORE 238855}

^{- SUBJECT'S PREVIOUS ADDRESS (AS CONFIRMED VIA TELE-INTERVIEW)}

^{OTHER BUSINESS ADDRESS:}

^{GROHE PACIFIC - BRANCH OFFICE SHANGHAI}

^{UNIT 1806 RAFFLES CITY SHANGHAI OFFICE TOWER}

^{268 XIZANG ROAD CENTRAL}

^{SHANGHAI 200001}

^{TEL: (86) 21 6340 4988}

^{FAX: (86) 21 6340 4998}

^{Email: info@grohe.com.cn}

^{Website: http://www.grohe.cn}

^{GROHE PACIFIC - BRANCH OFFICE HONG KONG}

^{UNIT 3909 39/F AIA TOWER}

^{183 ELECTRIC ROAD NORTH POINT}

^{HONG KONG}

^{TEL: (852) 2802 0611}

^{FAX: (852) 2805 1102}

^{Email: info@grohe.com.hk}

^{Website: http://www.grohe.hk}

^{WEBSITE: http://www.grohe.com.sg}

^{EMAIL : info@grohe.com.sg}

MANAGEMENT

^{THE DIRECTORS AT THE TIME OF THIS REPORT ARE:}

^{1) DETLEF SCHMITZ, A GERMAN}

^{- BASED IN GERMANY}

^{2) RAINER MUES, A GERMAN}

^{- BASED IN SINGAPORE}

^{3) TAN YING LIN JESMIN, A SINGAPOREAN}

^{- HOLDS NO OTHER DIRECTORSHIPS AS RECORDED IN OUR DATABASE.}

Singapore’s Country Rating 2007

Investment Grade

IN SINGAPORE, THE POLITICAL SITUATION REMAINS STABLE.

SINGAPORE BOASTS THE BEST GOVERNANCE IN ASIA, WITH AN EFFECTIVE LEGAL SYSTEM FACILITATING DEBT COLLECTION AND TO A HIGH DEGREE OF FINANCIAL TRANSPARENCY.

EXTERNAL ACCOUNTS HAVE REMAINED SUBSTANTIALLY IN SURPLUS, CONTRIBUTED TO THE DYNAMISM OF THE ELECTRONICS AND PHARMACEUTICALS SECTORS AND TO REPATRIATION OF PROFITS FROM SINGAPORE INVESTMENTS. THE FINANCIAL AND TOURISM SECTORS HAVE ALSO CONTRIBUTED TO THE LARGE CURRENT ACCOUNT SURPLUS.

SINGAPORE CONTINUES TO KEENLY WELCOME FOREIGN INVESTMENT AND OFFERS A VERY OPEN AND WELL-PLANNED ECONOMIC AND POLITICAL ENVIRONMENT. IT HAS BEEN IMPLEMENTING AMBITIOUS DIVERSIFICATION STRATEGY, FOCUSED PARTICULARLY ON THE CHEMICALS AND PHARMACEUTICAL SECTORS.

THE GOVERNMENT USES FOREIGN DIRECT INVESTMENT TO DEVELOP PRIORITY SECTORS (ELECTRONICS, CHEMICALS, BIOTECHNOLOGY). THE AIM IS TO ENCOURAGE THE GROWTH OF HIGH ADDED-VALUE ACTIVITIES AND TURN SINGAPORE INTO A REGIONAL HUB FOR FOREIGN INVESTORS INTERESTED IN ASIA.

CERTAIN SECTORS (MEDIA, LEGAL AND FINANCIAL SERVICES) ARE HOWEVER ONLY PARTIALLY OPEN TO FOREIGN INVESTMENT. THESE SECTORS ARE SLOWLY OPENING UP, BUT THE PROGRESS IS SLOW.

AFTER HIGH GROWTH IN 2006, BUOYED BY THE DYNAMISM OF BOTH EXPORTS AND HOUSEHOLD CONSUMPTION, A SLOWDOWN IS EXPECTED IN 2007.

ASSETS

• MAJOR EXPORTER OF CAPITAL IN ASIA, NOTABLY VIA THE STATE-OWNED TEMASEK HOLDING COMPANY.
• HIGH QUALITY COMPETITIVENESS IN ASIA
• EXCELLENT BUSINESS CLIMATE
• POLITICAL STABILITY.

WEAKNESSES

• SKILLED MANPOWER HAS BEEN LACKING IN THE SECTORS TARGETED FOR DEVELOPMENT.
• AN AGEING POPULATION COULD, ULTIMATELY, AFFECT ECONOMIC PERFORMANCE.
• GROWING INEQUALITY AND THE EMERGENCE OF LONG-TERM UNEMPLOYMENT AMONG THE LEAST SKILLED COULD GENERATE SOCIAL TENSIONS.
• BEING THE WORLD’S MOST OPEN ECONOMY, IT HAS BEEN VULNERABLE TO WORLD ECONOMIC DOWNTURNS.

MANUFACTURING SECTOR

PAST PERFORMANCE

THE MANUFACTURING SECTOR ROSE BY 12.0% IN 1Q 2008, SIGNIFICANTLY HIGHER THAN THE 0.2% GROWTH IN 4Q 2008. IT WAS BOOSTED BY THE BIOMEDICAL MANUFACTURING CLUSTER WHICH EXPANDED 49.0%.

THE BIOMEDICAL MANUFACTURING CLUSTER EXPANDED SIGNIFICANTLY, REVERSING THE 25.0% DECLINE IN OUTPUT IN 4Q 2007.

THE ELECTRONICS, TRANSPORT ENGINEERING AND CHEMICALS CLUSTERS GREW SLOWER AT 4.6%, 4.0% AND 1.1% RESPECTIVELY WHILE THE PRECISION ENGINEERING CLUSTER DIPPED BY 1.7%.

PHARMACEUTICALS OUTPUT ROSE SUBSTANTIALLY BY 52.0% WITH HIGHER VALUE ACTIVE PHARMACEUTICAL INGREDIENTS PRODUCED IN THE MAJOR PLANTS.

THE MEDICAL TECHNOLOGY SEGMENT ALSO ROSE BY 21.0% WITH HIGHER PRODUCTION TO MEET DELIVERIES OF VARIOUS MEDICAL DEVICES AND APPLIANCES IN THE US AND EUROPEAN MARKETS.

NEWS

CAUTIOUS OPTIMISM OVER RISE IN JULY’S PMI

THE ECONOMY RECEIVED A SPOT OF GOOD NEWS YESTERDAY WITH AN EARLY INDICATOR SHOWING THAT A REBOUND IN THE KEY MANUFACTURING SECTOR MAY BE GATHERING MOMENTUM.

THE PURCHASIGN MANAGERS’ INDEX (PMI) ROSE ONE POINT TO 51.6 FOR JULY, SHOWING A SECOND STRAIGHT MONTH OF GROWTH IN FACTORY ACTIVITY. A READING ABOVE 50 SIGNALS AN EXPANSION WHILE ONE BELOW SUGGESTS CONTRACTION.

JULY’S READING WAS THE HIGHEST SINCE LAST NOVEMBER AND WAS DRIVEN BY STRONGER DOMESTICS ORDERS, PRODUCTION AND INVENTORY OF RAW MATERIALS AND MANUFACTURING INTERMEDIATES.

BUT WHILE IT WAS ENCOURAGING, ANALYSTS REMAIN CAUTIOUS, CITING GATHERING CLOUDS OVER THE GLOBAL ECONOMY. THEY ALSO NOTE THAT BEYOND THE PMI FIGURE, THERE WERE WORRYING INDICATIONS AMONG SUB-INDICES. THE EMPLOYMENT INDEX, FOR EXAMPLE, DIPPED FURTHER INTO NEGATIVE TERRITORY, WHERE IT HAS BEEN FOR THE PAST SEVEN MONTHS, WITH A READING OF 48.7.

LAST MONTH’S PMI IS UNEXPECTEDLY BETTER BUT I’M NOT VERY SURE HOW MUCH JOY WE SHOULD TAKE IN IT,” SAID OCBC BANK ECONOMIST SELENA LING. “WHILE IT’S QUITE ENCOURAGING TO SEE A SECOND MONTH OF EXPANSION, IT RUNS AGAINST THE CURRENT GLOBAL MANUFACTURING SENTIMENT.

INDUSTRIAL OUTPUT SHRANK SHARPLY IN APRIL AND MAY BEFORE CLOCKING UP A MODEST RECOVERY IN JUNE.

LAST MONTH’S PMI SUGGESTS THAT POSITIVE MOMENTUM IS BUILDING. “THE INCREASE COULD IMPLY A ‘NOT-TOO-BAD’ OUTLOOK FOR THE MANUFACTURING ECONOMY,” SAID MS JANICE ONG, EXECUTIVE DIRECTOR OF THE SINGAPORE INSTITUTE OF PURCHASING AND MATERIALS MANAGEMENT, WHICH COMPILES THE MONTHLY INDEX.

BUT ANALYSTS NOTED THAT THE SECTOR WILL NEED A REALLY ROBUST EFFORT TO BEAT LAST JULY’A OUTPUT, WHICH WAS THE HIGHEST FOR THE WHOLE OF LAST YEAR.

INDICATIONS FROM ELSEWHERE IN THE WORLD LEND LITTLE COMFORT. A SIMILAR INDICATOR IN THE US HAS SLIPPED TO THE 50 POINT THRESHOLD BETWEEN EXPANSION AND CONTRACTION, WHILE THOSE FOR EUROPE AND CHINA HAVE GONE INTO NEGATIVE TERRITORY.

ECONOMISTS ALSO QUERIED THE DRIVERS FOR LAST MONTH’S PMI, NOTING THAT DOMESTIC ORDERS AND INVENTORY ACCUMULATION ARE NOT CLEAR SIGNS FOR AN UPCYCLE. EXPORT ORDERS, USUALLY A MORE IMPORTANT FACTOR, CONTRACTED AGAIN LAST MONTH.

CIMB-GK ECONOMIST SONG SENG WUN WAS CONCERNED THAT THE ELECTRONICS INDEX, WHICH CAME IN AT 51.1, HAD SLIPPED. “THIS IS NOT GOOD WHEN WE ARE HEADING TOWARDS THE PEAK PRODUCTION PERIOD.” SAID MR SONG, WHO ALSO NOTED THAT THE ELECTRONICS EMPLOYMENT INDEX, AT 43.8, WAS AT ITS LOWEST SINCE DECEMBER 2001.

“MANUFACTURING NUMBERS IN THE COMING MONTHS WILL BE VOLATILE, POSSIBLY WEAKENING RATHER THAN REBOUNDING STRONGLY GOING INTO PEAK PRODUCTION MONTHS,” SAID MR SONG.

OUTLOOK

THE MANUFACTURING SECTOR IS CAUTIOUS ABOUT BUSINESS CONDITIONS FOR THE PERIOD ENDING SEPTEMBER 2008. A NET WEIGHTED BALANCE OF 7% OF MANUFACTURERS FORECAST SLOWER BUSINESS IN THE COMING MONTHS. A WEIGHTED BALANCE OF 67% OF MANUFACTURERS FORECAST BUSINESS TO REMAIN THE SAME IN THE COMING MONTHS, GIVING A TOTAL WEIGHTED 80% OF FIRMS EXPECTING THE OUTLOOK TO IMPROVE OR REMAIN THE SAME IN THE COMING MONTHS.

SENTIMENTS IN THE GENERAL MANUFACTURING CLUSTER ARE THE MOST UPBEAT, WITH A NET

WEIGHTED BALANCE OF 11% OF FIRMS IN THE CLUSTER EXPECTING BUSINESS TO IMPROVE IN THE MONTHS ENDING SEPTEMBER 2008, OVER THE SEASONALLY WEAKER FIRST QUARTER. MANUFACTURERS IN THIS CLUSTER SUPPLYING TO THE CONSTRUCTION INDUSTRY ALSO EXPECT DEMAND TO HOLD UP.

THE BIOMEDICAL MANUFACTURING CLUSTER HAS THE WEAKEST OUTLOOK FOR THE SAME PERIOD. THIS IS LARGELY DUE TO THE PHARMACEUTICALS SEGEMENT, WHICH ANTICIPATES SLOWER BUSINESS IN THE COMING MONTHS.

THE TRANSPORT ENGINEERING CLUSTER IS THE MOST POSITIVE. SHIPYARDS’ ORDER BOOKS REMAIN STRONG, WITH RIG BUILDERS EXPECTING DEMAND FOR OIL RIGS TO INCREASE IN VIEW OF HIGH OIL PRICES, AND BOTH THE SHIP REPAIR AND CONVERSION MARKET REMAINING FAVOURABLE.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

EDB SINGAPORE

THE STRAITS TIMES

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.46.25
UK Pound	1	Rs.85.92
Euro	1	Rs.68.11

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

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%)

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