MIRA INFORM REPORT

Report Date :

01.08.2011

IDENTIFICATION DETAILS

Name :	P.T. INDO BHARAT RAYON

Registered Office :	Menara Batavia, 16^th Floor, Jalan K.H. Mas Mansyur Kav. 126, Jakarta 10220

Country :	Indonesia

Date of Incorporation :	05.09.1980

Com. Reg. No.:	No. AHU-AH.01.10-19117

Legal Form :	Limited Liability Company

Line of Business :	Viscose Rayon Staple Fibre and Acrylic Fibre Industry

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	US$ 22,000,000

Status :	Satisfactory

Payment Behaviour :	No Complaints

Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – March 31^st, 2011

Country Name

Previous Rating

(31.12.2010)

Current Rating

(31.03.2011)

Indonesia

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

Bottom of Form

Name of Company

P.T. INDO BHARAT RAYON

Company Address

Head Office

Menara Batavia, 16^th Floor

Jalan K.H. Mas Mansyur Kav. 126

Jakarta 10220

Indonesia

Phones - (62-21) 5722452 (Hunting)

Fax - (62-21) 5722417

E-mail - jktoff@adityabirla.com

Building Area - 20 storey

Office Space - 230 sq. meters

Region - Commercial

Status - Rent

Factory

Desa Cilangkap

Purwakarta

West Java

Indonesia

Phones - (62-22) 202041-44

Fax - (62-22) 201349

E-mail - arun.khosla@adityabirla.com

Land Area - 600,000 sq. meters

Building Area - 230,000 sq. meters

Region - Industrial Zone

Status - Owned

Date of Incorporation

5 September 1980

Legal Form

P.T. (Perseroan Terbatas) or Limited Liability Company

Company Reg. No.

The Ministry of Law and Human Rights

- No. AHU-AH.01.10-12520

Dated 7 August 2009

- No. AHU-AH.01.10-19117

Dated 28 July 2010

Company Status

Foreign Investment (PMA) Company

Permit by the Government Department :

a. The President of the Republic of Indonesia

No. B-22/Pres/6/1980

Dated 3 June 1980

b. The Capital Investment Coordinating Board

- No. 16/I/PMA/1983

Dated 24 June 1983

- No. 39/II/PMA/1983

Dated 8 December 1983

- No. 415/III/PMA/1991

Dated 1 July 1991

- No. 207/III/PMA/1992

Dated 16 March 1992

- No. 95/II/PMA/1993

Dated 21 September 1993

- No. 227/II/PMA/2002

Dated 22 October 2002

- No. 129/II/PMA/2004

Dated 11 August 2004

- No. 80/II/PMA/2005

Dated 31 March 2005

- No. 25/II/PMA/2007

Dated 25 January 2007

c. The Department of Industry

No. 427/Sk/X/1977

Dated 24 October 1977

d. The Department of Finance (Directorate General of Tax)

NPWP No. 01.002.087.3-092.000

Related Company :

A Member Company of the ADITYA BIRLA Group (see attachment)

CAPITAL AND OWNERSHIP

Capital Structure :

Authorized Capital : US$ 13,000,000

Issued Capital : US$ 10,000,000

Paid up Capital : US$ 10,000,000

Shareholders/Owners :

a. LONDON EUROPEAN ASSOCIATES Ltd., of Mauritius - US$ 4,500,000.-

b. HART GLOBAL Ltd., of Mauritius - US$ 4,220,000.-

c. GRASIM INDUSTRIES Ltd. of India - US$ 500,000.-

d. CHARMNOX Ltd., of Hong Kong - US$ 380,000.-

e. GRAND ISLAND Ltd., of Mauritius - US$ 300,000.-

f. MAHASMUTH INVESTMENT Pte., Ltd., Singapore - US 100,000.-

BUSINESS ACTIVITIES

Lines of Business :

a. Viscose Rayon Staple Fibre and Acrylic Fibre Industry

b. Investment Holding

Production Capacity :

a. Viscose Rayon Staple Fibres - 150,000 tons p.a.

b. Anhydrous Sodium Sulphates - 100,720 tons p.a.

c. Carbon Bi-Sulphates - 25,400 tons p.a.

d. Sulphuric Acids - 87,050 tons p.a.

e. Acrylic Fibres - 12,000 tons p.a.

f. Electric Power - 28 MW

g. Export Import of Viscose Staple Fiber and others

Total Investment :

a. Equity Capital - US$ 10.0 million

b. Reinvested Profit - US$ 38.0 million

c. Loan Capital - US$ 267.3 million

d. Total Investment - US$ 315.3 million

Started Operation :

1982

Brand Name :

IBR

Technical Assistance :

ADITYA BIRLA of India

Number of Employee :

1,230 persons

Marketing Area :

Export - 80%

Local - 20%

Main Customer :

Buyers in Srilanka, India, Bangladesh, Australia, South Korea, Japan etc.

Market Situation :

Very Competitive

Main Competitors :

a. P.T. INDONESIA TORAY SYNTHETICS

b. P.T. SOUTH PACIFIC VISCOSE

c. P.T. SUSILA INDAH SYNTHETIC FIBERS

d. P.T. POLYSINDO EKA PERKASA Tbk

Business Trend :

Growing

BANKER, AUDITOR & LITIGATION

Bankers :

a. P.T. Bank MANDIRI Tbk

Jalan M.H. Thamrin No. 5

Jakarta Pusat

Indonesia

b. CITIBANK, Jakarta Branch

Landmark Building

Jalan Jend. Sudirman No. 1

Jakarta 12910

Indonesia

c. Hongkong and Shanghai Banking Corp., Ltd.

World Trade Center, 3rd Floor

Jalan Jend. Sudirman Kav. 29-31

Jakarta Selatan

Indonesia

Auditor :

Internal Auditor

Litigation :

No litigation record in our database

FINANCIAL FIGURE

Annual Sales (estimated) :

2008 – Rp. 3,326.3 billion

2009 – Rp. 3,420.0 billion

2010 – Rp. 3.500.0 billion

Net Profit (estimated) :

2008 – Rp. 345.0 billion

2009 – Rp. 366.0 billion

2010 – Rp. 371.0 billion

Payment Manner :

Almost Promptly

Financial Comments :

Satisfactory

KEY EXECUTIVES

Board of Management :

President Director - Mr. Sudhir Venkatesh Kulkarni

Directors - a. Mr. Janardan Das Maru

b. Mr. Halim Setiono

c. Mr. Ajay Kumar Gupta

d. Mr. Vishnu Prakash Sharma

e. Mr. Chaplendu Kumar Dutta

f. Mr. Arun Khosla

g. Mr. Ashok Saboo

Board of Commissioners :

President Commissioner - Mr. Krishna Kishore Maheshwari

Vice President Director - Mr. Chandru Hassaram Mahtani

Commissioners - a. Mr. Prakash Maheshwari

b. Mr. Shailendra Kumar Jain

c. Mr. Kumar Mangalam Birla

d. Mr. Rajashree Birla

e. Mr. Neerja Birla

Signatories :

President Director (Mr. Sudhir Venkatesh Kulkarni) or one of Directors (Mr. Janardan Das Maru, Mr. Halim Setiono, Mr. Ajay Kumar Gupta, Mr. Vishnu Prakash Sharma, Mr. Chaplendu Kumar Dutta, Mr. Arun Khosla or Mr. Ashok Saboo) which must be approved by Board of Commissioners.

CAPABILITIES

Management Capability :

Good

Business Morality :

Good

Credit Risk :

Average

Credit Recommendation :

Credit should be proceeded with monitor

Proposed Credit Limit :

Small amount – periodical review

Maximum Credit Limit :

US$ 22,000,000 on 90 days D/A

OVERALL PERFORMANCE

P.T. INDO BHARAT RAYON (P.T. IBR) was incorporated in September 1980 with an authorized capital of US$ 8,422,000 entirely was issued and paid up. Initially the founding shareholders of the company were Birla AG of Switzerland, International Industrial Management and Investment Corporation of Panama, Mirapa Ltd., of Liechtenstein, Thakral Holdings (HK) Ltd., of Hong Kong, The Gwalior Rayon Silk Mfg. Co. Ltd., of India, Hong Kong Indonesia Group Inc., of Hong Kong, Charmnox Ltd., Hong Kong, A.T.E. Maskapai Private Ltd., of Singapore (all companies are the members of the BIRLA Group based in India) and P.T. BEKLANI. In 1983, its authorized capital was raised to US$ 32,000,000 wholly was issued and paid up. In May 2001 the authorized capital was decreased to US$ 13,000,000 issued capital of US$ 10,000,000 entirely paid up. The latest shareholders of the company are LONDON EUROPEAN ASSOCIATES Ltd., of Mauritius (45%), HART GLOBAL Ltd., of Mauritius (42.2%), GRASIM INDUSTRIES Ltd., of India (5%), CHARMNOX Ltd., of Hong Kong (3.8%), GRAND ISLAND Ltd., of Mauritius (3%) and MAHASMUTH INVESTMENT Pte., Ltd., Singapore (1%).

The deed of amendment was made by DR. A. Partomuan Pohan, SH, LLM, (a public notary in Jakarta) was approved by the Ministry of Law and Human Right in its Decision Letter No. AHU-48195.AH.01.02.TH.2008, dated August 6, 2008. Then in July 2009, the board of directors of the company has been changed (see profile of this report). The revision of notary deed was approved by the Ministry of Law and Human Rights in its Decision Letter No. AHU-AH.01.10-12520, dated August 07, 2009. The latest in July 2010 the board of directors and the board of commissioners had been changed (see profile of this report). The deed of amendment was made by Dr. A. Partomuan Pohan, SH., LLM., a public notary in Jakarta and was approved by the Ministry of Law and Human Rights in its decision letter No. AHU-AH.01.10-19117 Dated July 28, 2010.

P.T IBR is a member of the BIRLA INDONESIA Group, a large business group based in India, and in Indonesia the Group set up several companies like P.T. SUNRISE BUMI TEXTILES, P.T. ELEGANT TEXTILE INDUSTRY both engaged in spinning mills, P.T. INDO BHARAT RAYON in viscose rayon fiber and acrylic fiber industry and P.T. INDO RAYA KIMIA in carbon disulfhide manufacturing.

P.T. IBR is a Foreign Capital Investment (PMA) company, engaged in viscose rayon staple fibre, acrylic fibre industry and side-product of chemicals like anhydrous sodium suphates, carbon bi-sulphates and sulphuric acids. Its plant is located at Desa Cilangkap, Purwakarta, West Java, on a land of some 60.0 hectares. The plant commenced production in 1982 and its operation has kept on expanding and its production capacity has been increasing for a couple of times. The plant produces some 150,000 tons of viscose rayon staple fibers, 10,720 tons of anhydrous sodium sulphates, 25,400 tons of carbon bi-sulphates, 87,050 tons of sulphuric acids and 12,000 tons of acrylic fibers respectively per annum. Besides, the company also owned and manages a power plant by producing 28 MW of power plant. The plant has absorbed a total investment of US$ 315.3 million, coming from own capital of US$ 10.0 million, reinvested profit of US$ 36.5 million and rest from loans. The company's products are 20% sold locally to P.T. INDO LIBERTY TEXTILE, P.T. SUNRISE BUMI TEXTILE, and P.T. ELEGAN TEXTILE INDUSTRI. Besides, the products is also supplied to paper industries and detergent industries and also distributed through distributor P.T. AKR CORPINDO Tbk. Some 80% exported to India, Srilanka, Bangladesh, Australia, South Korea and other countries. Besides, P.T. IBR also engaged in investment holding by controlling some 40% shares of P.T. INDO RAYA KIMIA engaged in carbon disulphide manufacturing.

At present P.T. IBR has production capacity of 192,000 tons of viscose staple fibre per annum. Mostly of basic material like pulp supplied through its subsidiary ADITYA BIRLA which operates in Canada and South Africa. Meanwhile, carbon di-sulphide supplied by sister company P.T. INDO RAYA KIMIA. The occurring of the economic crisis and sharp Rupiah depreciation against the US$ Dollar, Japanese Yen, Poundsterling, EUR and other hard currencies has positive impact on P.T. IBR's operation for some 80% of its products are exported. But, on the contrary, the prolonged economic crisis and sharp Rupiah depreciation has bad impact on P.T. IBR's business performance due to the upswing its supported materials and sharp rise in production cost. We see that P.T. IBR operation has been growing in the last five years.

The demand for textile viscose rayon staple fiber and anhydrous sodium sulphate tended to be fluctuating within the last five years in line with the fluctuating of Indonesian textile industry in general. According to the Department of Industry, the Indonesian viscose rayon staple fiber production in 2006 amounted to 835,904 tons increased to 976,000 tons in 2007 and rose again to 1,008,106 tons in 2008. The capacity, production and utility of the national viscose rayon staple fiber are picture on the following table.

Description	2005	2006	2007	2008	2009 *
Capacity (tons)	1,077,615	1,105,255	1,105,255	1,218,765	1,218,765
Production (tons)	808,211	835,904	976,000	1,008,106	600,000
Utility (%)	75.0	75.63	88.31	82.71	49.23

Source: Depperin, processed

The country’s garment industry is facing serious marketing problem not only in the country but also abroad. According to the Central Bureau of Statistics (BPS) the Indonesian garments export in 2002 amounted to 333,100 tons (US$ 3,887.2 million) to 339,000 tons (US$ 4,037.9 million) in 2003 to 327.300 tons (US$ 4,351.9 million) in 2004 to 369.500 tons (US$ 4,967.0 million) in 2005 to 399,600 tons (US$ 5,608.1 million) in 2006, to 399,800 tons (US$ 5,712.9 million) in 2007 and to 417,600 tons (US$ 6,092.2 million) in 2008 declined to 393.400 tons (US$ 5,735.6 million) in 2009. The Indonesia textile products export in 2002 amounted to 1,425.9 tons (US$ 3,075.9 million) to 1,307.5 tons (US$ 3,064.6 million) in 2003 to 1,300.4 tons (US$ 3,354.6 million) in 2004 to 1,427.3 tons (US$ 3,704.0 million) in 2005 to 1,477.8 tons (US$ 3,908.6 million) in 2006 to 1,473.6 tons (US$ 4,178.0 million) in 2007 and to 1,312.2 tons (US$ 4,127.9 million) in 2008 rose to 1,369.6 tons (US$ 3,602.8 million) in 2009.

The domestic textile producers are pessimism the textile export in 2009 could match the export numbers in 2008. The blow of the global economic crisis is resulted in the reduced of demand from the export destination countries like the United States (U.S.), Japan, and European Union region. The Export Textiles and the Textile Products (TPT) in 2009 is predicted to fall to 10.2 percent compared to the last year. In the year 2008 the export value reached 10.8 billion US dollars. While this year’s the exports expected fall into US$ 9.7 billion. The Chairman of the Indonesian Textile Association (API), Mr. Benny Soetrisno said that the decline in global purchasing power caused of the demand in the Indonesian textile products could not be able to grow as tight as 2008. The export volume and value of the national TPT products in 2002 to 2009 are pictured on the following table.

Year

Garment

Textile Products

(Thousand Ton)

(US$ Million)

(Thousand Ton)

(US$ Million)

2002

2003

2004

2005

2006

2007

2008

2009

333.1

339.9

327.3

369.5

399.6

399.8

417.6

393.4

3,887.2

4,037.9

4,351.9

4,967.0

5,608.1

5,712.9

6,092.2

5,735.6

1,425.9

1,307.5

1,300.4

1,427.3

1,477.8

1,473.6

1,312.2

1,369.6

3,075.9

3,064.6

3,354.6

3,704.0

3,908.6

4,178.0

4,127.9

3,602.8

Source: Central Bureau of Statistic

Until this time P.T. IBR has not been registered with Indonesian Stock Exchange, so that they shall not obliged to announce their financial statement. The management of P.T. IBR is very reclusive towards outsiders and rejected to disclose its financial condition. We observed that total sales turnover of the company in 2008 amounted to Rp. 3,326.3 billion rose to Rp. 3,420.0 billion in 2009 increased to Rp. 3,500.0 billion in 2010 and projected to go on rising by at least 5% in 2011. The operation in 2010 yielded an estimated net profit of at least Rp. 371.0 billion and the company has an estimated total networth of at least Rp. 492.0 billion. We observe that P.T. IBR is supported by foreign partner with has financially strong and sound behind it. So far, we did not heard that the company having been black listed by the Central Bank (Bank Indonesia). The company usually pays its debts punctually to suppliers.

The management of P.T. IBR is led by Mr. Sudhir Venkatesh Kulkarni (60), a professional manager with 26 years experience in viscose rayon staple fiber and acrylic fiber manufacturing and distribution. In daily activities he is assisted by seven directors namely Mr. Janardan Das Maru (58), Mr. Halim Setiono (56), Mr. Ajay Kumar Gupta (45), Mr. Vishnu Prakash Sharma (36), Mr. Chaplendu Kumar Dutta (44), Mr. Arun Khosla (50) and Mr. Ashok Saboo (56). The management is well experienced and handled by professional managers in the above business. They have wide relation with home and overseas private businessmen as well as with the government sector. So far, we did not hear that the management of the company being filed to the district court for detrimental cases or involved in any fraudulent dealings. We observed that management’s reputation in said business is sufficiently fairly good. P.T. INDO BHARAT RAYON is sufficiently fairly good for business transaction.

Attachment:

List of the BIRLA INDONESIA Group Members

· ELEGANT TEXTILE INDUSTRY, P.T. (Spinning Mills)

· INDO BHARAT RAYON, P.T. (Viscose Rayon Staple Fiber and Acrylic Fiber Industry and

Investment Holding)

· INDO LIBERTY TEXTILE, P.T. (Spinning Mills)

· INDO RAYA KIMIA, P.T. (Specialty Chemical Manufacturing)

· SUNRISE BUMI TEXTILE, P.T. (Spinning Mills)

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.16
UK Pound	1	Rs.72.10
Euro	1	Rs.63.10

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	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
----	NB	New Business	----

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%)

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