MIRA INFORM REPORT

Report Date :

02.08.2011

IDENTIFICATION DETAILS

Name :	SOUTHERN ACIDS INDUSTRIES SDN BHD

Formerly Known As :	POFACHEM (M) SDN BHD

Registered Office :	9, Jalan Bayu Tinggi 2a/Ks6, Taipan 2, Batu Unjur, 41200 Klang, Selangor

Country :	Malaysia

Financials (as on) :	30.04.2010

Date of Incorporation :	01.11.1990

Com. Reg. No.:	207048-P

Legal Form :	Private Limited Company

Line of Business :	Manufacturing of Oleochemical Products

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 :	USD 558,412.00
Status :	Good
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)

Malaysia

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

Bottom of Form

* Adopted abbreviations : SC - Subject Company (the company enquired by you)

N/A - Not Applicable

EXECUTIVE SUMMARY

REGISTRATION NO.	:	207048-P
COMPANY NAME	:	SOUTHERN ACIDS INDUSTRIES SDN BHD
FORMER NAME	:	POFACHEM (M) SDN BHD
INCORPORATION DATE	:	01/11/1990
COMPANY STATUS	:	EXIST
LEGAL STATUS	:	PRIVATE LIMITED
LISTED STATUS	:	NO
REGISTERED ADDRESS	:	9, JALAN BAYU TINGGI 2A/KS6, TAIPAN 2, BATU UNJUR, 41200 KLANG, SELANGOR, MALAYSIA.
BUSINESS ADDRESS	:	CENTRO TOWER, LEVEL 29, 8 JALAN BATU TIGA LAMA, 41300 KLANG, SELANGOR, MALAYSIA.
TEL.NO.	:	03-32583333
FAX.NO.	:	03-32583300
CONTACT PERSON	:	LOW BOON ENG ( DIRECTOR )
INDUSTRY CODE	:	24290
PRINCIPAL ACTIVITY	:	MANUFACTURING OF OLEOCHEMICAL PRODUCTS
AUTHORISED CAPITAL	:	MYR 50,000,000.00 DIVIDED INTO ORDINARY SHARE 50,000,000.00 OF MYR 1.00 EACH.
ISSUED AND PAID UP CAPITAL	:	MYR 30,000,000.00 DIVIDED INTO ORDINARY SHARES 30,000,000 CASH OF MYR 1.00 EACH.
SALES	:	MYR 310,385,594 [2010]
NET WORTH	:	MYR 183,371,789 [2010]
M1000 OVERALL RANKING	:	860[2005]
M1000 INDUSTRY RANKING	:	45[2005]
STAFF STRENGTH	:	300 [2011]
BANKER (S)		MALAYAN BANKING BHD
LITIGATION	:	CLEAR
DEFAULTER CHECK	:	CLEAR
FINANCIAL CONDITION	:	FAIR
PAYMENT	:	AVERAGE
MANAGEMENT CAPABILITY	:	AVERAGE

COMMERCIAL RISK	:	LOW
CURRENCY EXPOSURE	:	MODERATE
GENERAL REPUTATION	:	GOOD
INDUSTRY OUTLOOK	:	STRONG GROWTH
PROPOSED CREDIT LIMIT	:	USD558,412.00

HISTORY / BACKGROUND

The SC is a private limited company and is allowed to have a minimum of one and a maximum of forty-nine shareholders. As a private limited company, the SC must have at least two directors. A private limited company is a separate legal entity from its shareholders. As a separate legal entity, the SC is capable of owning assets, entering into contracts, sue or be sued by other companies. The liabilities of the shareholders are to the extent of the equity they have taken up and the creditors cannot claim on shareholders' personal assets even if the SC is insolvent. The SC is governed by the Companies Act, 1965 and the company must file its annual returns, together with its financial statements with the Registrar of Companies.

The SC is principally engaged in the (as a / as an) manufacturing of oleochemical products.

The SC is not listed on Bursa Malaysia (Malaysia Stock Exchange).

According to the Malaysia 1000 publication, the SC's ranking are as follows:

YEAR	2005	2004
OVERALL RANKING	860	756
INDUSTRY RANKING	45	36

The immediate and ultimate holding company of the SC is SOUTHERN ACIDS (M) BERHAD, a company incorporated in MALAYSIA.

The major shareholder(s) of the SC are shown as follows :

Name	Address	IC/PP/Loc No	Shareholding
SOUTHERN ACIDS (M) BHD	9, JALAN BAYU TINGGI 2A/KS6, TAIPAN 2, BATU UNJUR, 41200 KLANG, SELANGOR, MALAYSIA.	64577	30,000,000.00
			---------------
			30,000,000.00
			============

+ Also Director

DIRECTORS

DIRECTOR 1

Name Of Subject	:	MR. WONG FOK GEE
Address	:	127 LEBOH TAMARIND, SOUTHERN PARK, 41200 KLANG, SELANGOR, MALAYSIA.
IC / PP No	:	3961461
New IC No	:	510227-10-5967
Date of Birth	:	27/02/1951

Nationality	:	MALAYSIAN CHINESE
Date of Appointment	:	30/09/1999

DIRECTOR 2

Name Of Subject	:	MR. LEONG KIAN MING
Address	:	35, JALAN USJ 11/3K, 47620 SUBANG JAYA, SELANGOR, MALAYSIA.
IC / PP No	:	5233298
New IC No	:	570602-06-5069
Date of Birth	:	02/06/1957

Nationality	:	MALAYSIAN CHINESE
Date of Appointment	:	11/06/2009

DIRECTOR 3

Name Of Subject	:	MDM. LEONG SO SEH
Address	:	12A, JALAN 14/54, 46100 PETALING JAYA, SELANGOR, MALAYSIA.
IC / PP No	:	4281632
New IC No	:	520228-10-5589
Date of Birth	:	28/02/1952

Nationality	:	MALAYSIAN CHINESE
Date of Appointment	:	11/06/2009

DIRECTOR 4

Name Of Subject	:	DATO' LOW BOON ENG
Address	:	125 JALAN SS15/5A, 47500 SUBANG JAYA, SELANGOR, MALAYSIA.

New IC No	:	500506-10-5653
Date of Birth	:	06/05/1950

Nationality	:	MALAYSIAN CHINESE
Date of Appointment	:	11/06/2009

DIRECTOR 5

Name Of Subject	:	MR. LIM KIM LONG
Address	:	28 JALAN ISTANA, 41000 KLANG, SELANGOR, MALAYSIA.
IC / PP No	:	6056368
New IC No	:	600929-10-5717
Date of Birth	:	29/09/1960

Nationality	:	MALAYSIAN CHINESE
Date of Appointment	:	11/06/2009

MANAGEMENT

1)	Name of Subject	:	LOW BOON ENG
	Position	:	DIRECTOR

2)	Name of Subject	:	SIEW
	Position	:	FINANCE MANAGER

3)	Name of Subject	:	TIONG CHUU LING
	Position	:	MARKETING MANAGER

4)	Name of Subject	:	S K CHAN
	Position	:	ASSISTANT HUMAN RESOURCE MANAGER

5)	Name of Subject	:	WONG FOK GEE
	Position	:	PRODUCTION DIRECTOR

6)	Name of Subject	:	LEONG KIAN MING
	Position	:	CEO

AUDITOR

Auditor	:	DELOITTE KASSIM CHAN
Auditor' Address	:	UPTOWN 1, 1 JALAN SS21/58, DAMANSARA UPTOWN, LEVEL 19, 47400 PETALING JAYA, SELANGOR, MALAYSIA.

COMPANY SECRETARIES

1)	Company Secretary	:	MR. PAUL IGNATIUS STANISLAUS
	IC / PP No	:	1195610
	New IC No	:	480731-10-5697
	Address	:	138-H, JALAN KEMBOJA, TAMAN GEMBIRA, 41100 KLANG, SELANGOR, MALAYSIA.

2)	Company Secretary	:	MS. LIM KING HUA
	IC / PP No	:	5647163
	New IC No	:	581217-10-5670
	Address	:	3, JALAN PALAS, SOUTHERN PARK, 41200 KLANG, SELANGOR, MALAYSIA.

3)	Company Secretary	:	MS. LIM KUI SUANG
	IC / PP No	:	5619100
	New IC No	:	580616-02-5788
	Address	:	10, JALAN 8/24A, WANGSA MELAWATI, SETAPAK, 53300 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

BANKING

Banking relations are maintained principally with :

1)	Name	:	MALAYAN BANKING BHD

The SC enjoys normal banking routine with above mentioned banker(s). No adverse record was found during our investigation.

ENCUMBRANCE (S)

No encumbrance was found in our databank at the time of investigation.

LEGAL CHECK AGAINST SC

* A check has been conducted in our databank against the SC whether the subject has been involved in any litigation. Our databank consists of 99% of the wound up companies in Malaysia.

No legal action was found in our databank.

No winding up petition was found in our databank.

DEFAULTER CHECK AGAINST SC

* We have checked through the SC in our defaulters' database which comprised of debtors that have been blacklisted by our customers and debtors that have been placed or assigned to us for collection since 1990. Information was provided by third party where the debt amount can be disputed. Please check with creditors for confirmation as alleged debts may have been paid since recorded or are being disputed.

No blacklisted record & debt collection case was found in our defaulters' databank.

PAYMENT RECORD

SOURCES OF RAW MATERIALS:
Local	:	YES	Percentage	:	40%
Overseas	:	YES	Percentage	:	60%

The SC refused to provide any name of trade/service supplier and we are unable to conduct any trade enquiry. However, from financial historical data we conclude that :

OVERALL PAYMENT HABIT

Prompt 0-30 Days

[

]

Good 31-60 Days

[

]

Average 61-90 Days

[

]

Fair 91-120 Days

[

]

Poor >120 Days

[

]

CLIENTELE

Local	:	YES	Percentage	:	40%
Domestic Markets	:	MALAYSIA
Overseas	:	YES	Percentage	:	60%

Credit Term	:	30 DAYS

Payment Mode	:	CHEQUES,TELEGRAPHIC TRANSFER (TT)

OPERATIONS

Products manufactured

OLEOCHEMICALS

Competitor(s)

BP CHEMICALS (MALAYSIA) SDN BHD
EMERY OLEOCHEMICALS (M) SDN BHD
KL-KEPONG OLEOMAS SDN BHD
NATURAL OLEOCHEMICALS SDN BHD
NYLEX (MALAYSIA) BHD

Ownership of premises

OWNED

Factory / Premises

GOLCONDA ESTATE, BATU 10, JALAN KAPAR, 42200 KAPAR, SELANGOR, MALAYSIA.
Tel No: 03-32508723
Fax No: 03-32507406

Shifts

24 HOURS (3 SHIFTS)

Total Number of Employees:
YEAR	2011	2010	2009	2008	2007	2006

GROUP	N/A	N/A	N/A	N/A	N/A	N/A
COMPANY	300	310	320	340	340	331

Branch

Other Information:

The SC is principally engaged in the (as a / as an) manufacturing of oleochemical products.

The SC is mainly involved in manufacturing of oleochemicals such as glycerine and fatty acids.

The products are supplied to different industrial sectors such as cosmetics, fertilizers , rubber, plastics and tyres, both locally and overseas.

The SC is capable of producing about 8000 to 9000 tonnes per month.

The SC has production workers from overseas especially from Myanmar and Nepal.

PROJECTS

No projects found in our databank

RECENT DEVELOPMENT

We have checked with the Malaysian National News Agency's (BERNAMA)database, but no latest development was noted in our investigation.

CURRENT INVESTIGATION

Latest fresh investigations carried out on the SC indicated that :

Telephone Number Provided By Client	:	N/A
Current Telephone Number	:	03-32583333
Match	:	N/A

Address Provided by Client	:	LEVEL 29, CENTRO TOWER NO-8, JALAN BATU TIGA LAME, 41300 KLANG,
Current Address	:	CENTRO TOWER, LEVEL 29, 8 JALAN BATU TIGA LAMA, 41300 KLANG, SELANGOR, MALAYSIA.
Match	:	NO

Latest Financial Accounts	:	YES

Other Investigations

We contacted one of the SC staff Ms Ifa and she provided some information regarding to the SC.

The address provided is incomplete.

FINANCIAL COMMENTS

Profitability:

Turnover	:	Decreased	[	2008 - 2010	]
Profit/(Loss) Before Tax	:	Decreased	[	2008 - 2010	]
Return on Shareholder Funds	:	Unfavourable	[	1.63%	]
Return on Net Assets	:	Unfavourable	[	2.17%	]

The continuous fall in turnover could be due to the lower demand for the SC's products / services. The management had succeeded in turning the SC into a profit making company. The profit could be due to better control of its operating costs and efficiency in utilising its resources. The unfavourable return on shareholders' funds and net assets could indicate that the SC's management was inefficient in utilising its assets to generate returns.

Working Capital Control:

Stock Ratio	:	Acceptable	[	61 Days	]
Debtors Ratio	:	Favourable	[	0 Days	]
Creditors Ratio	:	Favourable	[	26 Days	]

The SC kept adequate stocks to meet its normal business transactions without incurring excessive storage costs. The favourable debtors' days could be due to the good credit control measures implemented by the SC. The SC had a favourable creditors' ratio as evidenced by its favourable collection days. The SC could be taking advantage of the cash discounts and also wanting to maintain goodwill with its creditors.

Liquidity:

Liquid Ratio	:	Favourable	[	4.90 Times	]
Current Ratio	:	Favourable	[	6.91 Times	]

A minimum liquid ratio of 1 should be maintained by the SC in order to assure its creditors of its ability to meet short term obligations and the SC was in a good liquidity position. Thus, we believe the SC is able to meet all its short term obligations as and when they fall due.

Solvency

Interest Cover	:	Nil	[	0.00 Times	]
Gearing Ratio	:	Favourable	[	0.00 Times	]

The SC's interest cover was nil as it did not pay any interest during the year. The SC had no gearing and hence it had virtually no financial risk. The SC was financed by its shareholders' funds and internally generated fund. During the economic downturn, the SC, having a zero gearing, will be able to compete better than those which are highly geared in the same industry.

Overall Assessment:

Although the SC's turnover decreased, its losses also decreased during the year. This could be the result of more efficient control in its operating costs. The SC was in good liquidity position with its total current liabilities well covered by its total current assets. With its current net assets, the SC should be able to repay its short term obligations. The SC did not make any interest payment during the year. The SC was dependent on its shareholders' funds to finance its business needs. The SC was a zero gearing company, it was solely dependant on its shareholders to provide funds to finance its business. The SC has good chance of getting loans, if the needs arises.

Overall financial condition of the SC : FAIR

ECONOMIC / INDUSTRY OUTLOOK

Major Economic Indicators:		2007		2008		2009		2010*		2011**

Population ( Million)		27.17		27.73		28.31		28.88		29.13
Gross Domestic Products ( % )		6.3		4.6		<0.5>		6.9		5.8
Domestic Demand ( % )		9.0		6.9		2.9		4.6		4.8
Private Expenditure ( % )		8.6		7.1		<2.7>		8.1		7.0
Consumption ( % )		9.0		8.4		0.7		6.7		6.3
Investment ( % )		7.1		1.5		<17.2>		15.2		10.2
Public Expenditure ( % )		10.1		6.5		5.2		3.8		2.8
Consumption ( % )		10.8		11.6		3.1		0.2		4.6
Investment ( % )		9.3		0.7		8.0		8.3		0.6

Balance of Trade ( MYR Million )		100,340		129,563		89,650		118,356		116,058
Government Finance ( MYR Million )		<19,948>		<34,462>		<28,450>		<40,482>		-
Government Finance to GDP / Fiscal Deficit ( % )		<3.2>		<4.8>		<4.8>		<5.6>		<5.4>
Inflation ( % Change in Composite CPI)		2.0		<3.3>		<5.2>		5.1		-
Unemployment Rate		3.2		3.7		4.5		3.9		-

Net International Reserves ( MYR Billion )		336		388		331		394		-
Average Risk-Weighted Capital Adequacy Ratio ( % )		3.04		1.91		2.87		2.20		-
Average 3 Months of Non-performing Loans ( % )		13.30		13.24		11.08		15.30		-
Average Base Lending Rate ( % )		6.72		6.72		5.53		5.70		-
Business Loans Disbursed( % )		9.1		11.6		10.5		14.7		-
Foreign Investment ( MYR Million )		33,426.0		23,261.4		22,156.8		22,517.9		-
Consumer Loans ( % )		-		-		-		-		-

Registration of New Companies ( No. )		43,337		41,599		41,578		-		-
Registration of New Companies ( % )		13.2		<4.0>		<0.1>		-		-
Liquidation of Companies ( No. )		22,629		27,992		39,075		-		-
Liquidation of Companies ( % )		161.5		23.7		39.6		-		-

Registration of New Business ( No. )		227,410		269,866		312,581		-		-
Registration of New Business ( % )		-		-		-		-		-
Business Dissolved ( No. )		20,431		18,885		19,345		-		-
Business Dissolved ( % )		<61.4>		<7.6>		2.4		-		-

Sales of New Passenger Cars (' 000 Unit )		442.9		497.5		319.4		369.7		-
Cellular Phone Subscribers ( Million )		23.3		25.1		30.1		32.8		-
Tourist Arrival ( Million Persons )		20.9		21.5		23.6		24.0		25.0
Hotel Occupancy Rate ( % )		70		68		58		63		-

Credit Cards Spending ( % )		20.1		17.1		12.8		15.1		-
Bad Cheque Offenders (No.)		30,004		34,834		-		-		-
Individual Bankruptcy ( No.)		13,238		13,907		-		-		-
Individual Bankruptcy ( % )		<2.6>		5.1		-		-		-
INDUSTRIES ( % of Growth ):	2007		2008		2009		2010*		2011**

Agriculture	3.1		3.6		0.4		3.4		4.5
Palm Oil	<0.6>		7.0		<1.1>		1.3		-
Rubber	1.0		<1.1>		<19.8>		9.9		-
Forestry & Logging	2.8		<1.5>		<5.9>		<1.3>		-
Fishing	5.2		4.0		5.5		4.1		-
Other Agriculture	7.0		5.9		9.0		6.6		-
Industry Non-Performing Loans ( MYR Million )	487.3		393.0		413.7		508.4		-
% of Industry Non-Performing Loans	1.1		<2.0>		1.3		2.1		-

Mining	3.3		<0.8>		<3.8>		1.0		2.9
Oil & Gas	2.2		12.7		2.1		4.9		-
Other Mining	-		-		-		-		-
Industry Non-performing Loans ( MYR Million )	42.2		36.0		44.2		49.7		-
% of Industry Non-performing Loans	0.1		0.1		0.1		0.1		-

Manufacturing #	3.1		1.3		<9.4>		10.8		6.7
Exported-oriented Industries	<1.9>		2.7		<19.0>		12.1		-
Electrical & Electronics	3.0		2.4		<30.3>		27.4		-
Rubber Products	8.0		4.2		<10.1>		25.3		-
Wood Products	3.3		<6.0>		<24.1>		19.7		-
Textiles & Apparel	<10.1>		1.9		<19.5>		<1.3>		-
Domestic-oriented Industries	5.3		9.9		<9.8>		16.3		-
Food, Beverages & Tobacco	5.6		9.5		0.2		3.0		-
Chemical & Chemical Products	9.2		1.4		<7.7>		20.4		-
Plastic Products	<3.6>		6.5		<9.1>		2.4		-
Iron & Steel	17.5		16.8		<32.7>		30.0		-
Fabricated Metal Products	26.2		14.7		<2.5>		14.9		-
Non-metallic Mineral	6.6		8.3		<15.5>		20.2		-
Transport Equipment	<19.0>		27.1		<13.5>		36.5		-
Paper & Paper Products	14.9		8.6		<5.0>		20.5		-
Crude Oil Refineries	8.6		7.8		0.2		<11.4>		-
Industry Non-Performing Loans ( MYR Million )	6,366.2		5,729.4		6,007.3		6,217.5		-
% of Industry Non-Performing Loans	14.1		16.8		18.3		23.8		-

Construction	4.6		2.1		5.8		4.9		4.4
Industry Non-Performing Loans ( MYR Million )	5,116.7		4,149.8		3,241.8		4,038.5		-
% of Industry Non-Performing Loans	11.3		12.2		9.9		10.7		-

Services	9.7		7.3		2.6		6.5		5.3
Electric, Gas & Water	4.6		5.0		0.4		8.5		5.6
Transport, Storage & Communication	7.60		7.80		1.60		7.15		7.55
Wholesale, Retail, Hotel & Restaurant	11.6		10.0		2.8		4.7		5.2
Finance, Insurance & Real Estate	10.7		9.2		3.8		6.0		5.2
Government Services	4.6		8.6		2.0		6.7		1.9
Other Services	5.0		5.9		4.4		4.2		5.4
Industry Non-Performing Loans ( MYR Million )	10,207.8		8,281.4		6,631.3		7,384.6		-
% of Industry Non-Performing Loans	22.6		24.3		20.2		25.7		-


* Estimate / Preliminary
** Forecast
# Based On Manufacturing Production Index (Source : Department of Statistics / Economic Report / Bank Negara Report)

INDUSTRY COMMENTS

MSIC CODE
24290 : Manufacture of other chemical products n.e.c

INDUSTRY :	CHEMICAL
The chemicals industry is one of Malaysia's key industries, catering not only for its own national requirements but also exporting to a number of countries worldwide. The Malaysian chemicals and chemical products industry has become the second largest contributor to the manufactured exports sector, after the electrical and electronics industry.
The chemicals industry is important in Malaysia on account of the nation's substantial oil and gas feedstock. The Chemicals Industries Council of Malaysia (CICM) was established in 1978 as an industry group under the aegis of the Federation of Malaysian Manufacturers, to focus on the development of the chemicals industry. The primary objective of the CICM was to organise the chemicals industry in Malaysia into a cohesive group to represent Malaysia's interest at the ASEAN Chemicals Industries Club (ACIC).
The Malaysian chemicals industry witnessed 37% growth in domestic sales value in 2004 and sustained solid growth up until mid-2008. It expanded rapidly and had been forecast to reach sales figures of MYR60,816mn by 2009.
Malaysia's balance of trade for the year January to December 2008 was MYR114,883mn. In the first five months of 2008, total trade was 11.2% up on the same period last year. These impressive figures were short-lived however, with significant decreases observed in the latter half of 2008 and early 2009, due to the impact of global economic crisis. The Industrial Production Index (IPI) in January 2009 was 20.2 % lower than it was in January 2008, following a sharp decline of 15.9% in December 2008.
The biggest drop was witnessed by chemicals and chemical products, which saw output contract by 29.9%. This is partly because the chemicals industry tends to be more sensitive to the economic cycle and so fares disproportionately badly in recessions.
Total exports are down from MYR100,115mn (US$27,858.48mn) in January-February 2008 to MYR77,856mn (US$21,662mn) in the same period of 2009. Similarly, there has been a fall in imports, with total incoming sales falling from MYR81,289mn (US$22,617mn) in January-February 2008 to MYR57,778mn (US$16,705mn) in January-February 2009.

OVERALL INDUSTRY OUTLOOK : Strong Growth

COMMENTS & RECOMMENDATION

The SC is principally engaged in the manufacturing and marketing of oleochemical products since 1990. Being a private limited company, the SC has RM30 million in issued and paid up capital. With a large capital, the SC's business has been expanding comfortably over the years. Moreover, strongly supported by its well-established holding company, Southern Acids (M) Bhd, the SC is expected to enjoy timely financial and technical support should the needs arise.

Its good reputation built up through its holding companies has given the SC an edge when competing in the industry. In order to further grow the business, the SC has ventured into the overseas markets. The SC's receptiveness towards globalization has led to its growth and sales worldwide. Such wide market coverage has minimised its business risk and its future growth prospect remains bright. Operating in a large scale, the SC has total workforce of 300 in its operation. The SC's overall management capability is considered average.

During the financial year ended 2009, despite the lower turnover of RM310.38 million, the SC's pre-tax profit grew to RM4.02 million. The SC has generated an unfavourable return on shareholders' funds indicating that the management was inefficient in utilising its funds to generate return. Fortunately, the SC is in good liquidity position with its current liabilities well covered by it scurrenbt assets. Hence, it has sufficient working capital to meet its short term financial obligations. Being a lowly geared company, the SC is exposed to low financial risk as it is mainly dependent on its internal funds to finance its business needs. Given a positive net worth standing at RM183.37 million, the SC should be able to maintain its business in the near terms.

The SC exposed to high forex risk as 60% of its raw materials are sourced from overseas suppliers. With its long presence in the market, it should have developed a strong supplier. Thus, it eliminates the risk of dependency on deliveries from a number of key suppliers and insufficient quantities of its raw materials.

Overall, the SC's payment habit is average. With its adequate working capital, the SC should be able to pay its short term debts. Based on our databank, the SC is clear of any litigation action

The chemical industry remains robust with continuing strong global demand for its products. With the positive outlook from these industries, the SC's business opportunity in the future should be bright. The competition however is very tight due to large number of similar companies operating in the country. The SC should employ more competitive strategies in order to retain its share market.

Based on the above condition, we recommend a fairly large amount of credit be granted to the SC promptly.

PROFIT AND LOSS ACCOUNT

THE FINANCIAL STATEMENTS WERE PREPARED IN ACCORDANCE WITH MALAYSIA ACCOUNTING STANDARD.
SOUTHERN ACIDS INDUSTRIES SDN BHD
For The Year Ended 30-April-2010
	2010	2009	2008
	MYR	MYR	MYR


TURNOVER	310,385,594	316,284,119	339,288,832
	==========	==========	==========
PROFIT/(LOSS) FROM OPERATIONS	4,026,498	<14,622,650>	23,595,901

	------------	------------	------------
PROFIT/(LOSS) BEFORE TAXATION	4,026,498	<14,622,650>	23,595,901
Taxation	<1,041,473>	3,616,910	<6,714,364>
PROFIT/(LOSS) AFTER TAXATION	------------ 2,985,025	------------ <11,005,740>	------------ 16,881,537
PROFIT/(LOSS) BEFORE EXTRAORDINARY ITEMS	------------ 2,985,025	------------ <11,005,740>	------------ 16,881,537

PROFIT/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS RETAINED PROFIT/(ACCUMULATED LOSS) BROUGHT FORWARD	------------ 2,985,025	------------ <11,005,740>	------------ 16,881,537
As previous reported	150,386,764	161,392,504	150,510,967

As restated	------------ 150,386,764	------------ 161,392,504	------------ 150,510,967
	------------	------------	------------
PROFIT AVAILABLE FOR APPROPRIATIONS	153,371,789	150,386,764	167,392,504

DIVIDENDS - Ordinary (paid & proposed)	-	-	<6,000,000>


RETAINED PROFIT/(ACCUMULATED LOSS) CARRIED FORWAD	------------ 153,371,789 ==========	------------ 150,386,764 ==========	------------ 161,392,504 ==========
RETAINED BY: The Company	153,371,789	150,386,764	161,392,504


	------------ 153,371,789 ==========	------------ 150,386,764 ==========	------------ 161,392,504 ==========
INTEREST EXPENSE (as per notes to PL)

Bank overdraft	-	-	1,881
	------------ - ==========	------------ - ==========	------------ 1,881 ==========

BALANCE SHEET

SOUTHERN ACIDS INDUSTRIES SDN BHD
As At 30-April-2010

		2010	2009	2008
		MYR	MYR	MYR

ASSET EMPLOYED:
FIXED ASSETS		27,011,765	27,145,112	26,153,212
LONG TERM INVESTMENTS/OTHER ASSETS










Deffered assets		7,244,107	8,285,580	4,668,670





TOTAL LONG TERM INVESTMENTS/OTHER ASSETS		------------ 7,244,107	------------ 8,285,580	------------ 4,668,670












TOTAL LONG TERM ASSETS		------------ 34,255,872	------------ 35,430,692	------------ 30,821,882

CURRENT ASSETS


	Stocks	51,681,274	46,900,542	66,395,727

	Trade debtors	-	147	729,960
	Other debtors, deposits & prepayments	329,075	599,408	548,776










	Amount due from holding company	122,675,402	120,039,300	115,264,719




	Cash & bank balances	2,619,974	1,516,525	-

	Tax recoverable	37,227	37,227	37,227




TOTAL CURRENT ASSETS		------------ 177,342,952	------------ 169,093,149	------------ 182,976,409

CURRENT LIABILITIES
	Trade creditors	21,852,835	18,200,941	15,549,695
	Other creditors & accruals	3,773,515	3,421,877	3,191,803

	Bank overdraft	-	-	681,440











	Amounts owing to related companies	35,207	80,676	97,342









TOTAL CURRENT LIABILITIES		------------ 25,661,557	------------ 21,703,494	------------ 19,520,280
NET CURRENT ASSETS/(LIABILITIES)		------------ 151,681,395	------------ 147,389,655	------------ 163,456,129
TOTAL NET ASSETS		------------ 185,937,267 ==========	------------ 182,820,347 ==========	------------ 194,278,011 ==========

FINANCED BY:

SHARE CAPITAL
	Ordinary share capital	30,000,000	30,000,000	30,000,000

TOTAL SHARE CAPITAL		------------ 30,000,000	------------ 30,000,000	------------ 30,000,000

RESERVES







	Retain profit/(Accumulated loss) carried forward	153,371,789	150,386,764	161,392,504





TOTAL RESERVES		------------ 153,371,789	------------ 150,386,764	------------ 161,392,504
SHAREHOLDERS' FUNDS/EQUITY		------------ 183,371,789	------------ 180,386,764	------------ 191,392,504


LONG TERM & DEFERRED LIABILITIES & PROVISIONS







	Retirement benefits provision	2,565,478	2,433,583	2,885,507












TOTAL LONG TERM & DEFERRED LIABILITIES & PROVISIONS		------------ 2,565,478	------------ 2,433,583	------------ 2,885,507
		------------	------------	------------
		185,937,267	182,820,347	194,278,011
		==========	==========	==========

FINANCIAL RATIOS

SOUTHERN ACIDS INDUSTRIES SDN BHD
As At 30-April-2010
		2010	2009	2008
		MYR	MYR	MYR


TYPES OF FUNDS
	Cash	2,619,974	1,516,525	0
	Net Liquid Funds	2,619,974	1,516,525	<681,440>
	Net Liquid Assets	100,000,121	100,489,113	97,060,402
	Net Current Assets/(Liabilities)	151,681,395	147,389,655	163,456,129
	Net Tangible Assets	185,937,267	182,820,347	194,278,011
	Net Monetary Assets	97,434,643	98,055,530	94,174,895

BALANCE SHEET ITEMS
	Total Borrowings	0	0	681,440
	Total Liabilities	28,227,035	24,137,077	22,405,787
	Total Assets	211,598,824	204,523,841	213,798,291
	Net Assets	185,937,267	182,820,347	194,278,011
	Net Assets Backing	183,371,789	180,386,764	191,392,504
	Shareholders" Funds	183,371,789	180,386,764	191,392,504
	Total Share Capital	30,000,000	30,000,000	30,000,000
	Total Reserves	153,371,789	150,386,764	161,392,504

LIQUIDITY(Times)
	Cash Ratio	0.10	0.07	0
	Liquid Ratio	4.90	5.63	5.97
	Current Ratio	6.91	7.79	9.37

WORKING CAPITAL CONTROL (Days)
	Stock Ratio	61	54	71
	Debtors Ratio	0	0	1
	Creditors Ratio	26	21	17

SOLVENCY RATIOS (Times)
	Gearing Ratio	0	0	0
	Liabilities Ratio	0.15	0.13	0.12
	Times Interest Earned Ratio	0	0	12.00

PERFORMANCE RATIO (%)
	Operating Profit Margin	1.30	<4.62>	6.95
	Net Profit Margin	0.96	<3.48>	4.98
	Return On Net Assets	2.17	<8.00>	12.15
	Return On Capital Employed	2.17	<8.00>	12.10
	Return On Shareholders' Funds/Equity	1.63	<6.10>	8.82
	Dividend Pay Out Ratio (Times)	0	0	0.36

NOTES TO ACCOUNTS
	Contingent Liabilities	0.00	0.00	0.00

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.05
UK Pound	1	Rs.72.40
Euro	1	Rs.63.46

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%)

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

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.