MIRA INFORM REPORT

Report Date :

18.02.2011

IDENTIFICATION DETAILS

Name :	PRECOT MERIDIAN LIMITED (w.e.f. 28.12.2006)
Formerly Known As :	PRECOT MILLS LIMITED
Registered Office :	Post Box No. 7161 and 737 Green Fields, Puliakulam Road, Coimbatore-641045, Tamilnadu
Country :	India
Financials (as on) :	31.03.2010
Date of Incorporation :	02.06.1962
Com. Reg. No.:	18-001183
CIN No.: [Company Identification No.]	L17111TZ1962PLC001183
TAN No.: [Tax Deduction & Collection Account No.]	CMBP03135G
PAN No.: [Permanent Account No.]	AABCP3038K
Legal Form :	A Public Limited Liability Company. The company’s Shares are listed on stock exchange.
Line of Business :	Manufacturer and Exporter of Combed Cotton Yarn and Polyester sewing threads.

RATING & COMMENTS

MIRA’s Rating :

A (58)

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	USD 5840000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established company having fine track. Financial position of the company appears to be sound. Trade relations are reported as fair. Business is active. Payments are reported to be regular 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

INFORMATION PARTED BY

Name :	Mr. R. Murali
Designation :	Head Finance And Accounts
Contact No.:	91-422-4321100
Date :	17.02.2011

LOCATIONS

Registered Office/ Factory :	Post Box No. 7161 and 737 Green Fields, Puliakulam Road, Coimbatore-641045, Tamilnadu, India
Tel. No.:	91-422-4321100
Fax No.:	91-422-4321200
E-Mail :	Yarn – Domestic : sales@precot.com Yarn – Exports: exports@precot.com Fabric : wvg@precot.com Investors : secretary@precot.com Careers : hr@precot.com
Website :	http://www.precot.com
Factory :	A Unit : Kanjkode, Palakkad, Kerala B Unit : Kodigenahalli, Hindupur, Andhra Pradesh M Unit : Nanjegoundanpudur, Pollachi, Tamilnadu C and D Units : Chandrapuram, Walayar, Kerala K Unit : Gowribidnur, Kolar, Karnataka Weaving Unit : Vettailaranpudnur, Tamilnadu Dyeing Unit : Perundurai. Tamilnadu

DIRECTORS

As on : 06.08.2010

Name :	Mr. D Sarath Chandran
Designation :	Chairman and Managing Director
Name :	Mr. Ashwin Chandran
Designation :	Joint Managing Director
Name :	Mr. P Sai Prakash
Designation :	President
Name :	Mr. A Ramkrishna
Designation :	Director
Name :	Mr. Jairam Vardaraj
Designation :	Director
Name :	Mr. C N Srivatsan
Designation :	Director
Name :	Mr. Sumanth Ramamurthi
Designation :	Director
Name :	Mr. Vijay Mohan
Designation :	Director
Name :	Mr. Vijay Venkataswamy
Designation :	Director
Name :	Mr. Suresh Jagannathan
Designation :	Director
Name :	Mr. M V Subraman
Designation :	Director
Name :	K. Muthukumaran
Designation :	Director (Nominee of Exim Bank)
Name :	R Murali
Designation :	Company Secretary

KEY EXECUTIVES

Name :	Mr. C Murugesh
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As On : 31.03.2010

Category	No. Of Shares	Percentage Of Holding
Promoters	3837101	55-21
Financial Institute / Banks	550	0.01
Insurance Companies	2267	10.33
Fll	167	0.00
Mutual Funds	459046	6.60
Bodies Corporate	351989	5.07
Non-Resident Indians	34089	0.49
Public	2244387	32.29

BUSINESS DETAILS

Line of Business :	Manufacturer of combed cotton yarn and polyester sewing threads.
Exports :
Products :	Cotton Yarn and Polyester sewing threads
Countries :	Belgium China Italy Japan Malaysia South Korea Turkey U.K.
Terms :
Selling :	L/C, Cash, Credit (30 / 60 / 90 days)
Purchasing :	Cash, Credit (30 / 60 / 90 days)

PRODUCTION STATUS AS ON : 31.03.2010

Particulars	Unit	Licensed Capacity	Installed Capacity
Spindles	Nos.	NA	217632
Rotors	Nos.	NA	1632
Looms	Nos.	NA	117

GENERAL INFORMATION

Customers :

• OEM’s
• End User’s

No. of Employees :

2500 (Approximately)

Bankers :

ICICI Bank, Green Field, Coimbatore, India

Facilities :

SECURED LOAN	31.03.2010 Rs. In Millions	31.03.2009 Rs. In Millions
Term Loans from Banks
In Rupee	1055.392	1148.670
In Foreign Currency	330.554	456.390
Working Capital Facilities from Banks
In Rupee	618.645	408.156
In Foreign Currency	228.444	157.134
Total	2233.035	2170.350
UNSECURED LOAN	31.03.2010 Rs. In Millions	31.03.2009 Rs. In Millions
From Others
Sales tax deferral Loan	28.393	30.284
Total	28.393	30.284

Banking Relations :	--
Auditors :
Name :	M/s. KSG Subramanyam and Company Chartered Accountant
Address :	Coimbatore
Subsidiaries Company :	Suprem Textiles Processing Limited Multiflora Processing Limited Precot Meridian – Energy Limited Benwood Corporation Sdn Bhd

CAPITAL STRUCTURE

As on 31.03.2010

Authorised Capital :

No. of Shares	Type	Value	Amount
9000000	Equity Shares	Rs. 10/- each	Rs. 90.000 Millions

Issued, Subscribed Capital :

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

Paid-up Capital :

No. of Shares	Type	Value	Amount
6950000	Equity Shares	Rs. 10/- each	Rs.69.500 Millions

Note:

a) 2625000 Equity Shares of Rs. 10 each have been issued as fully paid-up bonus shares by capitalization of reserves

b) 550000 Equity Shares of Rs. 10 each were bought back in July 02

c) 1500000 Equity Share of Rs. 10 were issued consequent to merger of Meridian Industries Limited with the company

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		69.500	69.500	69.500
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		1390.354	1173.948	1345.071
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		1459.854	1243.448	1414.571
LOAN FUNDS
1] Secured Loans		2233.035	2170.350	2088.908
2] Unsecured Loans		28.393	30.284	32.557
TOTAL BORROWING		2261.428	2200.634	2121.465
DEFERRED TAX LIABILITIES		166.157	188.699	245.522
TOTAL		3887.439	3623.781	3781.558
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		2043.099	2332.131	2374.549
Capital work-in-progress		22.527	12.102	38.913
INVESTMENT		386.616	296.866	241.936
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1358.225	650.961	791.712
	Sundry Debtors	290.455	251.799	265.167
	Cash & Bank Balances	51.858	47.210	60.959
	Other Current Assets	88.106	69.785	87.219
	Loans & Advances	168.503	255.929	318.924
Total Current Assets		1957.147	1275.684	1523.981
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	163.661	163.920	243.401
	Sundry Creditors	196.198	99.933
	Provisions	162.091	20.149	154.420
Total Current Liabilities		521.950	284.002	397.821
Net Current Assets		1435.197	991.682	1126.160
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		3887.439	3632.781	3781.558

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Income	4366.129	3789.634	3664.876
		Other Income	33.593	107.689	29.858
		TOTAL (A)	4399.722	3897.323	3694.734
Less	EXPENSES
		Administrative Expenses	42.572	153.529	85.008
		Raw material consumed	2155.692	1967.178	1823.787
		Stores	183.043	162.118	176.670
		Repairs and Maintenance	239.036	191.385	195.488
		Increase/Decrease in Finished Goods	0.948	56.416	(33.048)
		Salaries, Wages, Bonus, etc.	424.778	357.998	318.680
		Processing Charges	25.999	23.044	37.213
		Selling Expenses	179.063	182.234	175.072
		Power and Fuel	470.690	440.548	463.137
		TOTAL (B)	3721.821	3534.450	3242.007
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		677.901	362.873	452.727
Less	FINANCIAL EXPENSES (D)		121.999	130.203	110.265
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		555.902	232.670	342.462
Less/ Add	DEPRECIATION/ AMORTISATION (F)		279.166	299.175	271.541
	PROFIT BEFORE TAX (E-F) (G)		276.736	(66.505)	70.921
Less	TAX (H)		119.558	20.631	19.691
	PROFIT AFTER TAX (G-H) (I)		157.178	(87.136)	51.230
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		(8.141)	78.995	NA
Less	APPROPRIATIONS
		Transfer to General Reserve	100.000	--	--
		Dividend	34.750	--	--
		Tax on Dividend	5.772	--	--
	BALANCE CARRIED TO THE B/S		8.515	(8.141)	--
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	949.609	942.721	1143.042
	TOTAL EARNINGS		949.609	942.721	1143.042
	IMPORTS
		Raw Materials	19.199	168.474	46.793
		Components and Spares	4.812	19.937	43.569
		Interest	11.657	26.214	44.615
		Others	0.198	0.544	0.548
		Traveling Expenses	0.144	0.774	0.497
		Quality Claim	0.047	1.907	0.044
		Export Commission	10.442	13.140	10.801
		Capital Goods	--	26.406	80.106
	TOTAL IMPORTS		46.499	257.396	226.973
	Earnings Per Share (Rs.)		22.62	(12.54)	--

Expected Sales (2010-2011) : Rs. 5000.000 millions

QUARTERLY RESULTS

PARTICULARS	30.06.2010	30.09.2010	31.12.2010
Type	1^st Quarter	2^nd Quarter	3^rd Quarter
Sales Turnover	1236.500	1426.100	1534.700
Total Expenditure	1023.700	1180.300	1276.400
PBIDT (Excl OI)	212.800	245.800	258.300
Other Income	3.200	13.800	6.300
Operating Profit	216.000	259.600	264.600
Interest	34.400	31.700	21.900
Exceptional Items	0.000	0.000	0.000
PBDT	181.600	227.900	242.700
Depreciation	65.500	67.200	68.500
Profit Before Tax	116.100	160.700	174.200
Tax	25.900	49.100	52.700
Reported PAT	90.200	111.600	121.500
Extraordinary Items	0.000	0.000	0.000
Prior Period Expenses	0.000	0.000	0.000
Other Adjustments	0.000	0.000	0.000
Net Profit	90.200	111.600	121.500

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	3.57	(2.23)	1.39
Net Profit Margin (PBT/Sales)	(%)	6.33	(1.75)	1.94
Return on Total Assets (PBT/Total Assets}	(%)	6.91	(1.84)	1.82
Return on Investment (ROI) (PBT/Networth)		18.95	(5.34)	0.05
Debt Equity Ratio (Total Liability/Networth)		1.91	1.75	1.78
Current Ratio (Current Asset/Current Liability)		3.74	4.49	3.83

LOCAL AGENCY FURTHER INFORMATION

History:

Promoted by N Damodaran, Precot Mills (PML) (originally floated as Premier Cotton Spinning Mills) was incorporated in 1962 in Palakad, Kerala, to produce cotton yarn with an initial capacity of 12,096 spindles. PML made its maiden issue in 1962. Production of cotton yarn commenced during 1964. The company changed its name to the present one in 1985. PML set up its second mill in Kodigenahalli, Andhra Pradesh, with an installed capacity of 28,800 spindles which was expanded to 51,840 spindles in 1991. In the next year, PML set up a 100% EOU at Walayar, Kerala (inst. cap. 10,080 spindles and 384 rotors). The open end spinning unit of the company was commissioned in Sep.'95 which reached its full capacity of 1152 rotors. It has set up a wholly owned subsidiary in Malaysia to exploit the Asia-Pacific region. During 1996-97, PML has increased the installed capacity of Spindles by 6336 Nos. CGF Investments which was a Subsidiary of the company and now has been merged with Coimbatore General Finance which is another subsidiary of the company with effect from 1st Feb.'97. A new yarn dyeing unit with a capacity of 2 tonnes per day was commissioned in Gauribindur, Karnataka which enabled the company to enhance its sale of value added dyed yarn in the domestic market. The company has taken over its subsidiary company Suprem Textiles Processing Limited for convenience of administrative purpose. A forward integration plan for manufacture of yarn dyed shirting fabrics has been set up a Weaving Unit at Vettaikaranpurdur near Pollachi.This unit commenced its commercial production at a cost of Rs.114.000 Millions in 2001. Under the TUF scheme the company made a capital investment to its Weaving unit and also set up an captive dyeing unit. The project was financed by term loans from Andhra Bank. The company made a buy back of 0.550 Millions equity shares starting from April 2002 to July 2002. After the post buy back the equity capital stands reduced to Rs.54.500 Millions. To reduce energy cost the company installed 4 wind turbines in September 2002 at a cost of RS.116.500 Millions. The company made a capital expenditure to the tune of Rs.350.500 Millions during 2002-03 and the same was financed by term loan from ICICI bank.

Sundry Creditors Details :

(Rs. In Millions )

Particulars	31.03.2010	31.03.2009	31.03.2008
Dues to Micro, Small and Medium Enterprises	--	--	NA
Others	196.198	99.933	NA
Total	196.198	99.933	NA

Industry Overview Textile

The year began with a climate of uncertainty in the economy. Following the financial crisis that spread across the industrialised nations in the second half of 2008-09, there was a significant slowdown in the GDP growth rate in India. The stimulus measures introduced by the Government helped in maintaining liquidity in the financial system and reviving growth in the economy. The real turnaround came in the second quarter of 2009-10 when the economy grew by 7.9 percent. However, a major concern during the year was the rise in inflation which impacted consumer spending. For the textile industry, the year began on a similar note and the company was looking at the future with uncertainty due to the global recession, shortages of power and labour, and fluctuations in foreign exchange rates. The Indian cotton crop of 2009-10 is estimated at 29.200 millions bales, which is a marginal increase from the previous year. However, due to the increase in demand and higher international prices, cotton prices rose sharply in December. With the growth in exports of cotton yarn and apparel from India, sentiments in the domestic market also turned positive and the effect of the increased raw material cost was offset by higher yarn prices. There were improvements on the power front in Kerala and Andhra Pradesh, which helped to improve the Company’s capacity utilisation. However in Tamil Nadu and Karnataka, the power shortages affected utilisation and increased energy costs. The roof repairs at our unit in Pollachi were carried out as planned and production restarted in July in a phased manner with the unit reaching its full capacity in December.

The weaving division of the company recorded an increase of 7% in turnover. However higher yarn prices and power shortages meant that there was only a marginal improvement in the operating profit. This division continues to disappoint in terms of return on investment. The turnover of the company grew by 15% to Rs.4370.000 millions against the corresponding figure of Rs.3790.000 millions in the previous year due to better capacity utilisation and increased sales realisation. This, coupled with improved operational efficiencies enhanced the Operating Profit to Rs.522.000 millions for the year, as against the corresponding figure of Rs.125.000 millions.

Outlook for the current year: 

The steep increase in yarn prices resulted in government intervention to restrict the export of cotton and removal of export incentives for cotton yarn. The adverse effect of this has been negated to a certain extent by the increase in export prices of cotton yarn as demand remains buoyant. The International Cotton Advisory Council has estimated a 7% increase in the cotton production for 2010-11, which they hope will stabilise the cotton prices for the coming year. The predictions of a normal monsoon point towards improved power availability in Kerala and Andhra Pradesh, but the acute shortage is expected to continue in Tamil Nadu. The operating margins in cotton yarn continued to be healthy during the first two months of 2010-11. With the present climate in the economy, they expect the performance of the company to improve in the coming year barring any unforeseen circumstances. The company is looking at various options to improve the weaving division’s performance. A major shift in the market segment might be required to improve price realisation and enhance operational efficiencies.

Subsidiary companies

The Company has four subsidiaries namely

1. Benwood Corporation Sdn Bhd

2. Suprem Textile Processing Limited

3. Multiflora Processing (CBE) Limited and

4. Precot Meridian Energy Limited.

Benwood Corporation Sdn Bhd, a subsidiary incorporated in Malaysia, recorded a turnover of Rs. 130.000 millions for the year ended 31st December 2009 with a Net Profit of Rs 6.700 millions. The operations of the other subsidiaries are not significant. The statement pursuant to section 212 of the Companies Act 1956, containing details of subsidiaries of the Company, forms part of this Annual report. The company has obtained approval from the Ministry of Corporate Affairs, New Delhi vide letter No:47/27/ 2010-CL-III dated 24/02/2010 in terms of Section 212(8) of the Companies act 1956 exempting the company from attaching the Balance sheet and profit and loss account of the subsidiaries namely

1.Suprem Textile Processing Limited

2 Multiflora Processing (CBE) Limited

3. Precot Meridian Energy Limited and

4. Benwood Corporation Sdn Bhd

along with Auditors and Directors report thereon, with the company’s accounts for the year ended 31st March 2010. As per the terms of the exemption order the brief financial statement of subsidiaries is included in the Annual report.

Fixed Assets:

· Land

· Building

· Plant and Machinery

· Office Furniture

· Motor Vehicles

· EPP Expenditure and Software

AS PER WEBSITE

Profile

A word about them

· 4 decades of spinning experience

· Defined set of values and principles

· Symbolizes : Quality, Trust and Commitment

· Turnover : 90 million US dollars

· Installed capacity : 200000 spindles, 1536 Rotors and 124 looms

The group has been accorded the status of ‘Export House’ by The Cotton Textile Export Promotion Council of India (TEXPROCIL). The countries they export the products to include Belgium, China, Italy, Japan, Malaysia, Portugal, South Korea, Turkey and U.K. among others.

Infrastructures:

Spinning

· Blendomat and Unifloc - Latest generation, high productivity, automatic tuft opening and feeding machine

· Contamination cleaners having charge-coupled cameras to reduce polypropylene, jute, hair and colour threads

· Fourth generation cards from Trutzchler GmbH, Germany which individualize the fibres gently and separate the fine trash

· Sophisticated E62 and E7/6 combers from Rieter for coarse and medium counts and Lakshmi Rieter E7/4 combers for fine counts

· Single delivery high production Drawframes from Rieter and LMW fitted with Autolevellers and Quality monitors

· Speed frames from LMW and RIETER incorporated with latest 3-over-3 drafting systems to ensure defect free roving packages for spinning

· State- of- the- Art LR6 Ring Frames monitored by Prowin monitoring systems for consistent performance

· Compact yarn systems from Suessen, Germany

· Savio, Murata and Schlaforst Autoconers incorporated with sophisticated Siro clearers to ensure contamination-less yarn to the customers. Theyt splicers are provided for defect-free Elitwist yarn.

· Yarn Conditioning Equipments to maintain precise moisture levels in the yarn to ensure superior working performance for the customer

· Yarn singeing machines from RITE, Italy to produce quality gassed yarn

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. 45.38
UK Pound	1	Rs. 73.08
Euro	1	Rs. 61.60

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	7
--LEVERAGE	1~10	6
--RESERVES	1~10	7
--CREDIT LINES	1~10	6
--MARGINS	-5~5	----
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		58

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	--

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.