MIRA INFORM REPORT

Report Date :

22.07.2011

IDENTIFICATION DETAILS

Name :	METHANOL CHEMICAL COMPANY LTD (CHEMANOL)

Formerly Known As :	SAUDI FORMALDEHYDE CHEMICAL COMPANY LTD (SFCCL)

Registered Office :	Al Moujil Building, Al Dhahran Street, P O Box 3139, Dammam 31471

Country :	Saudi Arabia

Financials (as on) :	31.12.2010

Date of Incorporation :	31.07.1989

Com. Reg. No.:	2055001870, Dammam

Legal Form :	Saudi Joint Stock Company

Line of Business :	Producers of Formaldehyde and derivative 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 :	US$ 1,500,000
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 – December 31, 2010

Country Name

Previous Rating

(30.09.2010)

Current Rating

(31.12.2010)

Saudi Arabia

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

SUMMARY

Company Name : METHANOL CHEMICAL COMPANY LTD (CHEMANOL)

Previously Known As : SAUDI FORMALDEHYDE CHEMICAL COMPANY LTD (SFCCL)

Country of Origin : Saudi Arabia

Legal Form : Saudi Joint Stock Company

Registration Date : 31^st July 1989

Commercial Registration Number : 2055001870, Dammam

Chamber Membership Number : 405

Issued Capital : SR 1,206,000,000

Paid up Capital : SR 1,206,000,000

Total Workforce : 530

Activities : Producers of Formaldehyde and derivative products.

Financial Condition : Fair

Payments : Nothing detrimental uncovered

Operating Trend : Steady

Recommended Credit Limit : US$ 1,500,000

COMPANY NAME

METHANOL CHEMICAL COMPANY LTD (CHEMANOL)

PREVIOUSLY KNOWN AS

SAUDI FORMALDEHYDE CHEMICAL COMPANY LTD (SFCCL)

company ADDRESS

Registered & Physical Address

Building : Al Moujil Building

Street : Al Dhahran Street

PO Box : 3139

Town : Dammam 31471

Country : Saudi Arabia

Telephone : (966-3) 8342397 / 8338831 / 8337317 / 3589905

Facsimile : (966-3) 8342283

Email : sfccl@saudiform.com / fawaz@chemanol.com

Premises

Subject operates from a medium sized suite of offices that are rented and located in the Central Business Area of Dammam.

Branch Office (s)

Location Description

· Tareeq 198 Secondary Industries Park Owned factory premises

Section P, Block 5, Lot No. 4 & 6

PO Box: 2101 / 7953

Jubail 31951

Tel: (966-3) 3584616 / 3581048

Fax: (966-3) 3583592

KEY PRINCIPALS

Name Position

· Abdullah Mohamed Al Mazrouie Managing Director

· Khalid Al Zamil Director

· Adeeb Al Zamil Director

· Bader Kanoo Director

· Abdul Mohsen Al Nafsi Director

· Sami Jalal Director

· Hamad Al Manae Director

· Khalid Bin Ibrahim Al Rabiah General Manager

· Fawaz Al Abbad Administration Manager

LEGAL FORM & OWNERS

Date of Establishment : 28/12/1409 Hijri (corresponding to 31^st July 1989). Production began in 1991

History : Subject was established in 1989 under the name of “Saudi Formaldehyde Chemical

Company Ltd (SFCCL)”. However in March 2007, and in order to reflect its expansion into methanol production the subject was re-registered under the new name of “Methanol

Chemical Company Ltd (Chemanol)”

Legal Form : Saudi Joint Stock Company

Commercial Reg. No. : 2055001870, Dammam

Chamber Member No. : 405

Issued Capital : SR 1,206,000,000

Paid up Capital : SR 1,206,000,000

Name of Shareholder (s) Percentage

· Abdullah A Kanoo Co 11%

· Zamil Group Holding Co 11%

· Mazen Khalif Ahmed Al Naeimi & Sons Co 8%

· Mohammad Jalal & Sons Co 5%

· Al Mazrouie Holding Co 5%

· Members of the general public & private investors 60%

AFFILIATED COMPANIES

· United Gulf Steel Mill Co Ltd

PO Box: 35344

Dammam

Tel: (966-3) 8343853

Fax: (966-3) 8346627

OPERATIONS

Activities: Engaged in the production of premium grade Formaldehyde and derivative products, including Formalin,

Melfores, Paraformaldehyde and Ufores.

Subject’s current product range comprises the following chemicals in 26 grades:

- Aqueous Formaldehyde Solutions (AF-37 / Formalin)

- Urea Formaldehyde Concentrate (UF-85 / Formurea)

- Hexa Methylene Tetramine (HMT / Hexamine)

- Paraformaldehyde (Paraform)

- Melamine & Urea Formaldehyde Resins (Spray Dried)

- Glazing Powder

- Methanolic / Butanolic Solutions of Formaldehyde

- Sulphonated Naphthalene & Melamine based Superplasticizers (SNF/SMF)

Production Capacity: 200,000 tonnes per annum

Import Countries : Germany and the United States of America.

Export Countries: More than 80% of its production capacity is exported to more than 50 countries in the Middle East,

Indian Subcontinent, Africa, Europe, Asia, Australia and North America.

Operating Trend : Steady

Subject has a workforce of approximately 530 employees.

FINANCIAL DATA

Financial highlights provided by local sources are given below:

Currency: Saudi Riyals (SR)

Balance Sheet 31/12/10 31/12/09

Assets

Current assets

Cash 136,169,510 270,440,656

Trade receivables 219,157,155 156,633,148

Inventories 83,242,482 57,023,125

Total current assets 438,569,147 484,096,929

Non current assets

Property, plant and equipment 2,598,882,383 2,509,585,187

Intangible assets 15,750,000 -

Deferred charges 7,696,356 2,170,350

Long term prepaid expenses 31,874,992 36,875,000

Total non current assets 2,654,203,731 2,548,630,537

Total assets 3,092,772,878 3,032,727,466

Liabilities and shareholders’ equity

Current liabilities

Trade payables 159,168,513 153,369,024

Short term loans 41,606,587 58,000,000

Current portion of long term bank debts 449,283,766 38,443,219

Current portion of long term obligations 5,250,000 -

Zakat provision 4,579,858 2,916,385

Total current liabilities 659,888,724 252,728,628

Non current liabilities

Long term bank debts 988,934,068 1,351,160,994

Long term obligations 7,900,000 -

Employees’ end of service benefits 21,274,205 18,257,901

Total non current liabilities 1,018,108,273 1,369,418,895

Total liabilities 1,677,996,997 1,622,147,523

Shareholders’ equity

Share capital 1,206,000,000 1,206,000,000

Share premium 72,850,071 72,850,071

Statutory reserve 17,522,617 16,918,519

Retained earnings 118,403,193 114,811,353

Total shareholders’ equity 1,414,775,881 1,410,579,943

Total liabilities and shareholders’ equity 3,092,772,878 3,032,727,466

Statement of Income

Sales 589,495,283 402,302,427

Cost of sales (470,579,263) (304,954,337)

Gross profit 118,916,020 97,348,090

Selling and distribution expenses (57,516,506) (45,338,746)

General and administrative expenses (19,170,756) (19,894,521)

Amortisation of deferred charges (2,184,240) (1,413,216)

Operating income 40,044,518 30,701,607

Other income 1,052,119 1,699,631

Financial charges (29,007,407) (8,047,592)

Income before Zakat 12,089,230 24,353,646

Zakat (6,048,248) (2,298,657)

Net income 6,040,982 22,054,989

Local sources consider subject’s financial condition to be Fair.

BANKERS

· National Commercial Bank

PO Box: 13

Dammam 31411

Tel: (966-3) 8331188

Fax: (966-3) 8336058

· Arab National Bank (ANB)

King Street

PO Box: 18

Dammam 31411

Tel: (966-3) 8323440

Fax: (966-3) 8337829

PAYMENT HISTORY

No complaints regarding subject’s payments have been reported.

GENERAL COMMENTS

During the course of this investigation nothing detrimental was uncovered regarding subject’s operating history or the manner in which payments are fulfilled. As such the company is considered to be a fair trade risk.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.43
UK Pound	1	Rs.71.89
Euro	1	Rs.63.41

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.