MIRA INFORM REPORT

Report Date :

30.08.2011

IDENTIFICATION DETAILS

Name :	THE SOUTH INDIA PAPER MILLS LIMITED
Registered Office :	Chikkayanachatra, P. O. Nanjangud, Nanjangud – 571301, Karnataka
Country :	India
Financials (as on) :	31.03.2010
Date of Incorporation :	06.06.1959
Com. Reg. No.:	08-001352
Capital Investment / Paid-up Capital :	Rs.75.000 Millions
CIN No.: [Company Identification No.]	L85110KA1959PLC001352
TAN No.: [Tax Deduction & Collection Account No.]	BLRT01173E
Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchange.
Line of Business :	Manufacture of Paper and Paper Products.
No. of Employees :	Not Available

RATING & COMMENTS

MIRA’s Rating :

Ba (50)

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

Maximum Credit Limit :	USD 3000000
Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is an established company having satisfactory track. Trade relations are reported as fair. Business is active. Payments are reported to be usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

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 – April 1, 2010

Country Name	Previous Rating (31.12.2009)	Current Rating (01.04.2010)
India	A1	A1

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

LOCATIONS

Registered Office :	Chikkayanachatra, P. O. Nanjangud, Nanjangud – 571301, Karnataka, India
Tel. No.:	91-8221-228264/ 228265/ 266/ 267/ 228898
Fax No.:	91-8221-228270/ 228263
E-Mail :	corporate@sipaper.com marketing@sipaper.com
Website :	http://www.sipaper.com
Corporate and Marketing Office :	# 1205/ 1206, Prestige Meridian II, M. G. Road, Bangalore – 560001, Karnataka, India
Tel. No.:	91-80-41123605-06/ 41241175
Fax No.:	91-80-41512508/ 2205531
Factory :	Printing and Packaging Division, Sy No.18/1-2 25 & 27/1-3 4A, 4B & 28 Thandavapura, Nanjangud – 571302, India
Tel. No.:	91-8221-2283366/

DIRECTORS

(AS ON 31.03.2010)

Name :	Mr. Manish M. Patel
Designation :	Chairman and Managing Director
Qualification :	BE, MBA
Name :	Mr. Dineshchandra C. Patel
Designation :	Director
Qualification :	Barrister-At-Law
Name :	Mr. Jagdish M. Patel
Designation :	Director
Qualification :	DME
Name :	Mr. S. R. Chandrasekara Setty
Designation :	Director
Qualification :	B. Com, FCA, ACS
Name :	Mr. M. G. Mohan Kumar
Designation :	Director
Qualification :	B.Sc., LLB, FCA
Name :	Mr. Ajay D. Patel
Designation :	Director
Qualification :	B.E., MBA

KEY EXECUTIVES

Name :	Mr. N. S. Hegde
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

(AS ON 30.06.2011)

Names of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	4,431,389	29.54
Sub Total	4,431,389	29.54
(2) Foreign
Individuals (Non-Residents Individuals / Foreign Individuals)	2,206,120	14.71
Sub Total	2,206,120	14.71
Total shareholding of Promoter and Promoter Group (A)	6,637,509	44.25
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	23,200	0.15
Financial Institutions / Banks	262,000	1.75
Foreign Institutional Investors	4,000	0.03
Sub Total	289,200	1.93
(2) Non-Institutions
Bodies Corporate	276,741	1.84
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 Million	2,055,638	13.70
Individual shareholders holding nominal share capital in excess of Rs.0.100 Million	5,468,851	36.46
Any Others (Specify)	272,061	1.81
Non Resident Indians	184,399	1.23
Trusts	38,000	0.25
Clearing Members	26	-
Hindu Undivided Families	49,636	0.33
Sub Total	8,073,291	53.82
Total Public shareholding (B)	8,362,491	55.75
Total (A)+(B)	15,000,000	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	-	--
(1) Promoter and Promoter Group	-	--
(2) Public	-	--
Sub Total	-	--
Total (A)+(B)+(C)	15,000,000	100.00

BUSINESS DETAILS

Line of Business :

Manufacture of Paper and Paper Products.

Products :

Product Description	Item Code No. (ITC Code)
Uncoated Kraft Paper and Paper Boards Unbleached	480400-00
Cartons	481912-00
Newsprint	480100-00

PRODUCTION STATUS (AS ON 31.03.2010)

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Paper and Paper Boards	Metric Tonnes	NA	56,000	49,452
Cartons/ Corrugated Boards	Metric Tonnes	NA	30,000	12,582

GENERAL INFORMATION

No. of Employees :

Not Available

Bankers :

· Vijaya Bank

Nanjangud, Karnataka, India

Facilities :

Secured Loans	31.03.2010	31.03.2009
	(Rs. In Millions)
Working Capital Loans from Banks (Secured against hypothecation of Inventories and Book Debts and by second charge on fixed assets. The loan is guaranteed by the managing Director of the company)	62.867	106.476
Term Loans from Bank (Secured by first charge on fixed assets of the company by way of deposit of title deeds of land measuring 33 acres and 22 guntas at Thandavapura Village, Chikkayana Chatrahobli, Nanjangud Taluk in Mysore district and first charge on building thereon and hypothecation of plant and machineries and further guaranteed by the Man aging Director of the company)	101.840	131.432
Total	164.707	237.908
Unsecured Loans	31.03.2010	31.03.2009
	(Rs. In Millions)
Fixed Deposits from:
- Directors	--	0.482
- Members	--	3.759
- Others	--	0.488
Interest accrued and due on Fixed Deposits from:
- Directors	--	0.039
- Members	--	0.298
- Others	--	0.042
Security Deposit From Agents and Others	13.819	13.819
Total	13.819	18.927

Banking Relations :	--
Auditors :
Name :	B. S. Ravikumar and Associates Chartered Accountant
Address :	Mysore, Karnataka, India
Associates :	· Bhadra Packaids Private Limited (BPAL)

CAPITAL STRUCTURE

(AS ON 16.09.2010)

Authorised Capital :

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

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
15000000	Equity Share	Rs.10/- each	Rs.150.000 Millions

(AS ON 31.03.2010)

Authorised Capital :

No. of Shares	Type	Value	Amount
10000000	Equity Share	Rs.10/- each	Rs.100.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
7500000	Equity Share	Rs.10/- each	Rs.75.000 Millions

NOTE:

Out of the above 58,75,000 shares of Rs.10/- each are allotted as fully paid by way of Bonus shares out of shares premium A/c General Reserve and Profit and Loss A/c.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2010	31.03.2009	31.03.2008
SHAREHOLDERS FUNDS
1] Share Capital		75.000	75.000	75.000
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		593.591	482.130	425.700
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		668.591	557.130	500.700
LOAN FUNDS
1] Secured Loans		164.707	237.908	181.400
2] Unsecured Loans		13.819	18.927	5.100
TOTAL BORROWING		178.526	256.835	186.500
DEFERRED TAX LIABILITIES		108.400	109.400	0.000
TOTAL		955.517	923.365	687.200
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		607.929	610.538	441.800
Capital work-in-progress		12.311	6.321	99.800
INVESTMENT		5.396	5.396	7.400
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	160.689	120.558	116.000
	Sundry Debtors	167.317	211.734	189.900
	Cash & Bank Balances	33.147	26.728	7.700
	Other Current Assets	0.000	0.000	16.300
	Loans & Advances	124.159	80.576	78.300
Total Current Assets		485.312	439.596	408.200
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditor	84.131	86.139	238.600
	Other Current Liabilities	30.232	24.851
	Provisions	41.068	27.496	31.400
Total Current Liabilities		155.431	138.486	270.000
Net Current Assets		329.881	301.110	138.200
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		955.517	923.365	687.200

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Income	1280.966	1259.806	1223.300
		Other Income	1.915	1.742	10.700
		TOTAL (A)	1282.881	1261.548	1234.000
Less	EXPENSES
		Manufacturing Expenses	878.974	987.760
		Decrease/ (Increase) in Stock of Finished Goods	0.653	(19.535)	1032.600
		Administrative and Selling Expenses	145.021	123.248
		Benefits to employees	10.556	9.577
		TOTAL (B)	1035.203	1101.050	1032.600
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		247.677	160.498	201.400
Less	FINANCIAL EXPENSES (D)		18.618	15.221	18.300
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		229.059	145.277	183.100
Less/ Add	DEPRECIATION/ AMORTISATION (F)		45.707	38.544	32.500
	PROFIT BEFORE TAX (E-F) (G)		183.352	106.733	150.600
Less	TAX (H)		45.653	24.006	31.000
	PROFIT AFTER TAX (G-H) (I)		137.699	82.727	119.600
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		379.887	331.757	NA
Less	APPROPRIATIONS
		Transfer to General Reserve	13.770	8.273	NA
		Proposed Dividend @ 30 %	22.500	22.500	NA
		Dividend Tax Provision	3.737	3.824	NA
	BALANCE CARRIED TO THE B/S		477.579	379.887	NA
	IMPORTS
		Raw Materials	315.802	410.313	NA
		Stores & Spares	7.878	3.161	NA
		Capital Goods	11.335	62.616	NA
	TOTAL IMPORTS		335.015	476.090	NA
	Earnings Per Share (Rs.)		18.36	11.03	15.95

QUARTERLY RESULTS

PARTICULARS	30.06.2010	30.09.2010	31.12.2010	31.03.2011	30.06.2011
Type	1^st Quarter	2^nd Quarter	3^rd Quarter	4^th Quarter	5^th Quarter
Net Sales	487.970	380.120	403.410	394.210	482.520
Total Expenditure	413.600	325.770	338.450	341.050	396.520
PBIDT (Excl OI)	74.370	54.350	64.960	53.160	86.000
Other Income	2.340	1.530	0.360	(0.120)	0.440
Operating Profit	76.710	55.880	65.320	53.040	86.440
Interest	4.900	4.020	2.530	3.290	5.710
Exceptional Items	0.000	0.000	0.000	0.000	0.000
PBDT	71.810	51.860	62.790	49.750	80.730
Depreciation	11.700	11.700	12.750	12.060	12.600
Profit Before Tax	60.110	40.160	50.040	37.690	68.130
Tax	14.500	12.230	12.500	10.040	17.200
Provisions and contingencies	0.000	0.000	0.000	0.000	0.000
Profit After Tax	45.620	27.930	37.540	27.650	50.930
Extraordinary Items	0.000	0.000	0.000	0.000	0.000
Prior Period Expenses	0.000	0.000	0.000	0.000	0.000
Other Adjustments	0.000	0.000	0.000	0.000	0.000
Net Profit	45.620	27.930	37.540	27.650	50.930

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	10.73	6.56	9.69
Net Profit Margin (PBT/Sales)	(%)	14.31	8.47	12.31
Return on Total Assets (PBT/Total Assets}	(%)	16.77	10.16	17.72
Return on Investment (ROI) (PBT/Networth)		0.27	0.19	0.30
Debt Equity Ratio (Total Liability/Networth)		0.50	0.71	0.91
Current Ratio (Current Asset/Current Liability)		3.12	3.17	1.51

LOCAL AGENCY FURTHER INFORMATION

OPERATIONS

Gross sales for the financial year 2009-10 stood at Rs.1342.000 Millions as against 133.98 in the previous year.

Printing and Packaging Division, which commenced production in September 2008, operated at substantially higher volumes. Operating volumes in the paper plant were lower, particularly in the second half mainly on account of maintenance/ up gradation shutdowns. This resulted in lower capacity utilization at 88.31% (last year 90.39%). Though the selling prices were lower during 2009-10 as compared to prices prevailing during first half of 2008-09, operating results were better because of comparatively lower raw material prices, higher realization from conversion operations in the Printing and Packaging Division.

Cash generated after finance charges and taxes was Rs.183.400 Millions during the year as against Rs.121.300 Millions in the preceding year. Finance charges were marginally higher at Rs.18.600 Millions (Rs.15.200 Millions). Net profit increased by 66%.

FINANCES

Capital expenditure and advance includes substantial amounts towards Printing and Packaging Division. The long term Debt to Equity ratio as on 31-03-2010 stands comfortably at 0.17 as against 0.27 as on 31-03-2009. The current ratio as on 31-3-10 is 1.98 compared to 1.68 as on 31-3-09.

There are no overdue deposits or unclaimed matured Fixed Deposits as on 31-3-2010.

CURRENT PROSPECTS

The operating level is steady and overall paper production/ sales volumes are picking up on the back of internal demand from the Printing and Packaging Division, which is seeing an encouraging response from the market. Given this trend, the prospects of increasing Mill capacity by balancing and marginal investment in the near future with the higher operating margins is good.

Overall Turnover and operating profit is better, mainly due to higher value addition through conversion. A matter of concern however is the likely inflationary effect on cost arising from the strong liquidity impetus from the government stimulus package. Input prices are likely to increase as a result of increased demand as the global economy recovers. Real Inflation and a possible hike in interest rates are likely.

During the year 2009-10 overall economic growth was 7.4% as against 6.7% in last year. Manufacturing sector growth registered a steep growth to 10.4% in 2009-10 from 2.8% in the preceding year.

MANAGEMENT DISCUSSION AND ANALYSIS

Industry Structure and Developments

The Indian Paper Industry has been historically segmented on a three dimensional matrix identified by size, grades manufactured and raw materials utilised. Government policies on indirect taxation rates applicable to output have relied on this segmentation. Generally, tariff rates have protected smaller units utilising “unconventional” raw material.

Over the years, the growth of various segments, investment levels in specific segments, technological changes, industry fragmentation and intensity of competition have been significantly influenced by the Government’s tariff policy.

Over 500 players currently populate the industry and the estimated output across all grades is about 9 million metric tonnes per annum (MTPA). Imports still do not supply any significant proportion of the total demand. The three broad segments of the market are Writing and Printing Grades (Cultural), Packaging Grades (Industrial) and Newsprint.

The “Industrial” Segment of the paper market broadly comprises of Corrugated Case Materials (CCM) and Duplex

Boards -white lined and coated or uncoated. Fragmentation is severe in this segment which constitutes about 50% of the total output of Paper and Board. This segment entirely relies upon “unconventional” raw material such as waste paper (imported and domestically sourced) and, to a limited extent, on agricultural residues. The average size of units in this segment is now about 15,000 MTPA and most units cater to local area demand from small semi-auto corrugated box factories and small printers. Although the other segments in the Indian paper industry are also fragmented by international standards, the degree of fragmentation is less severe.

Historically, the bulk of the output of “Cultural” grades - comprising of writing, printing, office stationery paper and speciality paper has been the preserve of the larger producers, who use forest based raw materials in integrated pulping facilities augmented by imported market pulp. This segment has been consistently taxed at higher rates due to its size and use of “conventional” forest based raw material. Investment in plant for these players has also been higher. With a relatively smaller number of players and high import tariff protection, prices of end products, generally perceived to be of higher quality, have been high. “Lower end cultural grades” manufactured by smaller players using unconventional raw materials in low investment, low-tech plants cater to consumers in the price sensitive sub segment of this market. This sub segment has historically depended heavily on the tariff differential based on size and raw material for its viability. Some of the mid-sized players in the writing and printing segment are in the process of expansion and modernization and are installing wider/faster machines with full fledged de-inking plants to produce the higher quality that is increasingly preferred and for which consumers are willing to pay more. Several of the “large-integrated” forest based producers have also recently increased forest based pulping capacities The cultural paper segment contributes about 40% of the annual paper and paperboard production with a current demand growth rate of about 6 to 7% per annum. The high investment levels required and limited “conventional” fiber resources are the major deterrents to growth in this segment for both existing players as well as new entrants.

Newsprint, till about 1994, was the sole preserve of large public sector units and was well protected by high import tariff barriers. Nevertheless, imports contributed to about 40% of the domestic consumption. Since then, new domestic capacity with private investment has been “allowed” to be created. This growth has relied mainly on De-inked waste paper as a source of raw material. Currently, import duty on Newsprint is 5% and domestic manufacture of Newsprint is exempted from excise duty. This tariff structure for Newsprint has seen Indian Newsprint prices closely mapping international prices. Imports still constitute about 25% to 30% of consumption and newsprint constitutes about 10% of the total production of paper and paperboard. The number of players in the newsprint segment is relatively limited and manufacturing capacities are larger than in the packaging grades segment.

The Indian Paper industry which ranks 15th in production, globally, in recent times has registered faster growth rates of about 7%. The domestic demand is expected to grow at about 7 to 8% p.a. Paper industry plays an important role in the socio-economic development of the country.

Despite several infrastructural impediments there is a strong growth in demand in several sub-segments of the Indian Paper Industry. There is perceptible shift in preference for higher quality products in both the Industrial and Cultural Segments and players with the right grade-quality mix are seeing opportunities for profitable growth. As per their assessment, most of the dominant players in each industry segment are operating near to capacity and one can expect a round of capacity additions which will however be circumscribed by factors peculiar to individual units such as the ability to raise funds cost effectively, availability of raw material and low cost energy.

OUTLOOK

The Indian economy has grown by 7.4% during 2009-10 with manufacturing sector growth of 10.4%. Most forecasts for growth in paper industry for 2010 -11 are between 7% and 8%. The depreciating Indian Rupee, inflation and high interest rates have to some extent weakened consumer confidence and consumer purchasing power.

Innovative cost containment and cost cutting will be required by paper mills to not only maintain business volumes but to capture a larger portion of a slowly growing pie.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Printing and Packaging Division, which commenced production in September 2008, operated at substantially higher volumes.

The capacity utilization achieved in paper plant during the year is 88.31% (Prev. yr. 90.39%). During the year, the Company sold 47,567 metric tonnes of paper, corrugated cartons and sheets as against 49,014 metric tonnes during the preceding year. Lower volumes were mainly on account of maintenance/ up gradation shutdowns in the second half of the year.

In the Union Budget for 2010-11, the Government reduced the duty on cartons from 8% to 4% from March 2010 and the same was passed on to the customers.

The co-generation system is working satisfactorily and is delivering the desired output.

The operating profit for the year stands at Rs.247.700 Millions as against Rs.160.500 Millions in the year 2008-09.

The profit before tax after absorbing finance charges and depreciation is Rs.183.400 Millions for 2009-10 as compared to Rs.106.700 Millions for 2008-09. The Company has provided Rs.45.700 Millions for liability towards Income tax as against Rs.23.400 Millions last year.

The net profit after tax for the year is Rs.137.700 Millions as against Rs.82.700 Millions for the year 2008-09.

CONTINGENT LIABILITIES:

(a) Claims not acknowledged as debts:

(i) A sum of Rs.4.795 Millions towards electricity tax on captive consumption of power (Oct 03 to June 04) and interest thereon Rs.3.564 Millions aggregating to a demand of Rs.8.359 Millions is not acknowledged by the Company. (Previous year end - Rs.8.359 Millions) Company is advised that levy is not tenable and has filed writ appeal before the High Court of Karnataka. As per the direction of Hon’ble High Court, the Company has deposited 50% of the original demand amounting to Rs.4.179 Millions. Earlier demand of interest Rs.3.564 Millions got reduced to Rs.2.478 Millions consequent to reworking of interest based on Hon’ble Karnataka High Court decision.

(ii) Turnover tax demanded on sale of newsprint Rs.0.583 Million for 2000-01 is under appeal before Karnataka Appellate Tribunal, Bangalore. This amount has been paid under protest.

(b) Letters of credit issued by Bank on behalf of the Company net of liability on goods received, which has been shown under Sundry creditors Rs.39.323 Millions (previous year 40.160 Millions).

(c) Concession in customs duty availed for imports cleared under Export Promotion on Capital Goods Scheme Rs.27.885 Millions (last year Rs.27.885 Millions)

(d) Counter guarantees given to Bankers against guarantees issued Rs.0.793 Millions (Last year Rs.0.793 Millions)

BUSINESS DESCRIPTION:

Subject operates in the Paper mills sector. The South India Paper Mills Limited is an India-based company engaged in the manufacture of paper and paper products. The Company is also engaged in the generation of power. The Company operates in two segments: Paper and Paper, Products and Power. As of March 31, 2010, the Company had an installed capacity of 56,000 metric tons per annum of paper and paper boards and 30,000 metric tons per annum of cartons/corrugated boards. During the fiscal year ended March 31, 2010, the Company produced 49,452 metric tons per annum of paper and paper boards and 12,582 metric tons per annum of cartons/corrugated boards. The Company's products include uncoated kraft paper and paper boards unbleached, cartons and newsprint. In the complete report available for purchase the company is compared to: Malu Paper Mills Limited, Magnum Ventures Limited and Sree Sakthi Paper Mills Limited.

FIXED ASSETS:

· Land

· Building

· Plant and Machinery

· Furniture, Fixtures and Office Equipments

· Vehicles

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.45.87
UK Pound	1	Rs.75.15
Euro	1	Rs.66.68

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	6
--CREDIT LINES	1~10	5
--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	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		50

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	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	-

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