MIRA INFORM REPORT

Report Date :

16.06.2011

IDENTIFICATION DETAILS

Name :	ZEE LEARN LIMITED
Registered Office :	Continental Building, 135, Dr. Annie Besant Road, Worli , Mumbai- 400018, Maharashtra
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	04.01.2010
Com. Reg. No.:	198405
Capital Investment / Paid-up Capital :	Rs.122.738 Millions
CIN No.: [Company Identification No.]	U80301MH2010PLC198405
TAN No.: [Tax Deduction & Collection Account No.]	MUMZ01737B
PAN No.: [Permanent Account No.]	AAACZ3977E
Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchanges.
Line of Business :	The company is engaged in the business of education services and other related services.
No. of Employees :	500 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

Ba (48)

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

Maximum Credit Limit :	USD 2601252
Status :	Satisfactory
Payment Behaviour :	Usually correct
Litigation :	Clear
Comments :	Subject is a Essel Group Company. It is a relatively new 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.

INFORMATION PARTED BY (GENERAL DETAILS)

Name :	Mr. Sumeet Mehta
Designation :	Director
Contact No.:	91-22-66971234
Date :	15.06.2011

LOCATIONS

Registered Office :	Continental Building, 135, Dr. Annie Besant Road, Worli , Mumbai - 400018, Maharashtra, India
Tel. No.:	91-22-66971234
E-Mail :	sanghavip@zeenetwork.com
Website :	www.zeelearn.com
Corporate Office:	3^rd Floor, Valecha Chambers, Plot B-6, New Link Road, Andheri (W), Mumbai - 400 053.

DIRECTORS

AS ON 31.03.2011

Name :	Mr. Himanshu Mody
Designation :	Chairman
Name :	Mr. Surjit Banga
Designation :	Independent Director
Name :	Dr. Manish Agarwal
Designation :	Independent Director
Name :	Mr. Sumeet Mehta
Designation :	Whole-time Director

KEY EXECUTIVES

Name :	Mr. Samir Raval
Designation :	Company Secretary
Name :	Mr. Nitin Sangle
Designation :	Business Head – K 12
Name :	Mr. Pradeep Pillai
Designation :	Business Head – Strategic Acquisition Team
Name :	Mr. Subhadarshi Tripathy
Designation :	Head – Content Factory
Name :	Mr. Navneet Anhal
Designation :	Business Head – New Initiatives
Name :	Ms. Nitya Ramaswami
Designation :	Head – Academics and Child Development
Name :	Mr. Santosh Gupta
Designation :	Head – IT
Name :	Mr. Keshab Goswami
Designation :	Head – Human Resources

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 31.03.2011

Names of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of promoter and Promoter Group
1) Indian
a) Individuals / Hindu Undivided Family	1209559	0.99
b) Bodies corporate	29566148	24.09
2) Foreign
a) Bodies corporate	15736036	12.82
b) Institutions	5797315	4.72
(B) Public Shareholdings
1) Institutions
a) Mutual Funds	8557948	6.97
b) Financial Institutions/Banks	14244	0.01
c) Insurance Companies	6850293	5.58
c) Foreign Institutional Investors	19450923	15.85
2) Non – Institution
a) Bodies corporate	12408119	10.11
b) Individuals
i. Individual Shareholders holding nominal share capital upto Rs.0.100 Million	16209383	13.21
ii. Individual Shareholders holding nominal share capital in excess Rs.0.100 Million	6215029	5.06
c) Any other
i) Overseas Corporate Bodies	4.146	--
ii) Foreign Nationals	5301	--
iii) Trust	12212	0.01
iv) NRI	567150	0.57
v) Foreign Corporate Bodies	4702	--
Total	122738599	100.00

BUSINESS DETAILS

Line of Business :	The company is engaged in the business of education services and other related services.
Terms :
Selling :	Cash, Credit (30 days, 60 days)
Purchasing :	Cash, Credit (30 days, 60 days)

GENERAL INFORMATION

No. of Employees :

500 (Approximately)

Bankers :

· ICICI Bank Limited

· Axis Bank Limited

· State Bank of India

Facilities :

SECURED LOAN	Rs. In Millions 31.03.2011
Debentures	500.000
TOTAL	500.000
UNSECURED LOAN	Rs. In Millions 31.03.2011
Inter Corporate Deposit	41.000
TOTAL	41.000

Banking Relations :	--
Auditors :
Name :	M/s MGB and Company Chartered Accountant
Associates/Subsidiaries :	NA

CAPITAL STRUCTURE

AS ON 31.03.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
150000000	Equity Shares	Rs.1/- each	Rs.150.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
122738599	Equity Shares	Rs.1/- each	Rs.122.738 Millions

(Out of the above 122,238,599 Equity shares if Rs.1/- each fully paid up for consideration other than cash as per the Composite Scheme of Arrangement)

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		04.01.2010 To 31.03.2011
SHAREHOLDERS FUNDS
1] Share Capital		122.738
2] Share Application Money		0.000
3] Reserves & Surplus		527.575
4] (Accumulated Losses)		0.000
NETWORTH		650.313
LOAN FUNDS
1] Secured Loans		500.000
2] Unsecured Loans		41.000
TOTAL BORROWING		541.000
DEFERRED TAX LIABILITIES		0.000
TOTAL		1191.313
APPLICATION OF FUNDS
		45.696
FIXED ASSETS [Net Block]		863.585
Capital work-in-progress
		0.005
INVESTMENT		13.254
DEFERREX TAX ASSETS
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	46.151
	Sundry Debtors	30.997
	Cash & Bank Balances	59.680
	Other Current Assets	0.000
	Loans & Advances	322.879
Total Current Assets		459.707
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	91.942
	Other Current Liabilities	92.800
	Provisions	6.192
Total Current Liabilities		190.934
Net Current Assets		268.773
MISCELLANEOUS EXPENSES		0.000
TOTAL		1191.313

PROFIT & LOSS ACCOUNT

	PARTICULARS		04.01.2010 To 31.03.2011
	SALES
		Income	438.981
		Other Income	10.880
		TOTAL (A)	449.861
Less	EXPENSES
		Operational Expenses	124.242
		Personal Cost	129.580
		Administrative and Other Expenses	79.309
		Selling and Distribution Expenses	82.326
		TOTAL (B)	415.457
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		34.404
Less	FINANCIAL EXPENSES (D)		1.455
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		32.949
Less/ Add	DEPRECIATION/ AMORTISATION (F)		7.527
	PROFIT BEFORE TAX (E-F) (G)		25.422
Less	TAX (I)		6.902
	PROFIT AFTER TAX (G-I) (J)		18.520
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		--
	BALANCE CARRIED TO THE B/S		18.520
	IMPORTS
		Capital Goods	2.383
	TOTAL IMPORTS		2.383s
	Earnings Per Share (Rs.)		0.19

KEY RATIOS

PARTICULARS		04.01.2010 To 31.03.2011
PAT / Total Income	(%)	4.12
Net Profit Margin (PBT/Sales)	(%)	5.79
Return on Total Assets (PBT/Total Assets}	(%)	5.03
Return on Investment (ROI) (PBT/Networth)		0.04
Debt Equity Ratio (Total Liability/Networth)		1.13
Current Ratio (Current Asset/Current Liability)		2.41

LOCAL AGENCY FURTHER INFORMATION

DETAILS OF SUNDRY CREDITORS

(Rs. In Millions)

Particulars	04.01.2010 To 31.03.2011
Sundry Creditors
For Goods and Expenses	87.477
For Others	4.465

SHARE CAPITAL AND VESTING OF EDUCATION BUSINESS UNDERTAKING PURSUANT TO THE SCHEME

During the period, the Authorised Share Capital of the Company was sub-divided and increased from Rs.0.500 Millions divided into 50,000 Equity Shares of Rs.10/- each to Rs.150.000 Millions divided into 15,00,00,000 Equity Shares of Rs.1/- each.

The Company was incorporated as a special purpose vehicle with a view to acquire the Education Business Undertaking demerged from Zee Entertainment Enterprises Limited (ZEEL), pursuant to a Composite Scheme of Amalgamation and Arrangement approved by Hon’ble Bombay High Court vide order passed on July 16, 2010. The said Scheme became effective from August 30, 2010 and consequently all assets and liabilities of Education Business Undertaking of ZEEL as at April 1, 2010 (Appointed Date) were transferred to and vested on the Company with effect from Effective Date. In pursuance of the said Demerger, the Company had allotted and issued 12,22,38,599 Equity Shares of ` 1/- each of the Company to the shareholders of ZEEL, in the ratio of 1 (one) Equity Share of Rs.1/- each of the Company for every 4 (four) Equity Shares of Rs.1/- each held in ZEEL. Thereafter the entire issued Equity Shares of the Company were listed and admitted for trading on the Bombay Stock Exchange Ltd. and the National Stock Exchange of India Ltd. with effect from December 20, 2010.

BUSINESS OVERVIEW

During the period, the Company earned revenue of Rs.438.900 Millions and Net Profit after tax of Rs.18.500 Millions. This performance is on the back of over 46,500 enrolments in Kidzee, over 3,700 enrolments in Mount Litera Zee Schools, 1,263 enrolments in Zee Institute of Creative Arts ('ZICA') and 290 enrolments in Zee Institute of Media Arts ('ZIMA'). The Company also added 206 new Kidzees, 33 new Mount Litera Zee Schools and 10 new ZICAs into its franchise system during the period under review. The Company entered the School Solutions segment with Zee Learn School Innovations ('ZLSI'), which offers Zee Learn Gakken Science Academies ('ZLGSA') to schools that want to improve the performance and understanding of their students in Science. During the period under review 51 schools signed up for ZLGSAs.

The Company’s performance during the period makes it the largest chain of preschools in India and one of the fastest growing K-12 school chains. With ZLGSA, the Company is the only organized Activity Based Learning solutions providers to schools in the country.

MERGER OF ESSEL ENTERTAINMENT MEDIA LIMITED WITH THE COMPANY

The Scheme of Amalgamation for merger of Essel Entertainment Media Limited (EEML) with the Company, approved by the Members at the Court Convened General Meeting held on March 28, 2011, awaits approval of Hon’ble Bombay High Court. As per the said Scheme, EEML shall merge with the Company with effect from March 31, 2011 (Appointed Date). However pending receipt of final approval from Hon’ble Bombay High Court, the effect of the Scheme of Amalgamation is not given in the financial statements for the period ended March 31, 2011. Details of Assets and Liabilities of EEML as at March 31, 2011, which will vest on the Company upon effectiveness of the Scheme of Amalgamation is given in Schedule 17B Note 2B of the Notes to Accounts. Upon approval of Hon’ble Bombay High Court and the Scheme becoming effective, the Company would be required to issue 14,00,00,000 equity shares of Rs.1/- each of the Company, to the shareholders of EEML, in ratio of 1 (one) Equity Share of Rs.1/- each of the Company for every 5 (five) Equity Shares of Rs 1/- each of EEML.

With a view to facilitate issuance of further Equity Shares in accordance with the Scheme of Amalgamation, the Directors have subject to the approval, approved a proposal for increase in Authorised Share Capital of the Company from Rs.150.000 Millions divided into 15,00,00,000 Equity Shares of Rs.1/- each to Rs.300.000 Millions divided into 30,00,00,000 Equity Shares of Rs.1/- each. Requisite proposal seeking Members approval for the proposed increase in the Authorised Share Capital forms part of the Notice of ensuing Annual General Meeting.

MANAGEMENT DISCUSSION AND ANALYSIS

Zee Learn Limited (“ZLL”) is an Education company focused on core education with the purpose of Improving Human Capital. They are one of the fast emerging Education players in the largely fragmented and unorganized education space, bringing in innovation and professionalism in this space.

INDUSTRY AND BUSINESS OVERVIEW

INDUSTRY OVERVIEW:

The size of the Indian education space is estimated at USD 25.6 bn, which is slated to grow at a rate of 22% per annum. Growth is expected across segments, most prominently in K-12 and higher education, valued at USD 11.5 bn and USD 8.6 bn, respectively. The growth rates could be higher in case regulatory changes are introduced. (Edelweiss-Indian Education Report, October 2009).

Growth drivers

Demand for education is set to rise in India in the years to come due to the following factors:

Population dividend: As the young country comes of age, India is set to reap a demographic dividend, with the population in the working group set to increase substantially. In many respects, this mirrors the demographic trend of the US from 1970s to 2000, and is likely to be visible in India over the next two decades with a large portion of the population moving into the working and child bearing age group.

Change in GDP structure: The GDP structure is set to change over the next few years with the proportion of agriculture in GDP likely to decline as the economy grows. They are increasingly becoming a knowledge economy. This changing structure creates the need for better education system.

Higher income levels: Increasing income levels lead to higher aspirations. The middle class population is expected to rise 10 fold over the next 15 years as the income distribution graphic moves from being a pyramid to a diamond. This leads to a demand for not just education, but “quality” education. At the same time, it leads to the creation of a population segment that has the capability and willingness to pay for quality education.

Segments in the Education Sector

Segment	Market Size* (2010 Estimated)	Estimated Growth Rate (CAGR)
Pre-school	23.58	31%
K-12	565.20	20%
Higher Education	424.83	19%
Vocational Education	57.12	19%
Test Preparation	36	--
ICT in Schools	98	--
Teacher Training	1.15	15%

*all figures are in Rupees Billion

* Source: Edelweiss Report 2009

BUSINESS OVERVIEW

Zee Learn Limited runs programs in 1) Early Childhood Education, 2) School Education and 3) Vocational Training in Media and Design through partnerships/franchising and through running its own institutes. It also offers School Solutions to other, existing K-12 schools to improve student learning and understanding in various curricular and co-curricular subjects.

Zee Learn owns the following brands in education:

Mount Litera Zee School: Mount Litera Zee Schools aim to provide Learner Centric education with an integrated approach – where the child is at the centre of everything. Mount Litera Zee schools are an endeavor by Zee Learn to bring about a quantum improvement in school education. The purpose is to help children realize their unique potential through their stateof- the-art infrastructure and facilities, well trained teachers, and a proprietary pedagogy; Mount Litera Zee Schools provide holistic and quality education to all its students. There are three critical belief systems at play here:

Every child is unique

· Education should foster real understanding

· Real understanding by every child requires an integrated approach

Zee Learn’s unique, proprietary K-12 education model - Litera Octave provides students with the opportunity to achieve their true, unique potential. Litera Octave is an integrated educational model that has been honed over years of research and development. It integrates various pillars such as content, infrastructure, classroom design, assessment and systems that impact the child during his/her learning and development in school.

Zee Learn partners with local education entrepreneurs, trusts and builders under various operating models to set up and run Mount Litera Zee Schools. The range of services and solutions provided by Zee Learn under these partnerships range from school set up assistance, teacher training, Assessment, teaching materials, Branding to enrolment assistance.

In FY 2010-11, 10 new Mount Litera Zee Schools have started operation and 33 new schools have been signed up taking the total to 77 schools. Eleven more Mount Litera Zee schools are expected to start operation in 2011-12.

Kidzee: With over 750 pre-schools in more than 300 cities across the country, Kidzee is the largest pre-school chain in Asia. Kidzee has touched the lives of more than 1,75,000 children since its inception in 2003.

Its proprietary pedagogy, iLLUME is what sets Kidzee a class apart from other pre-school chains. iLLUME is an approach that helps parents and teachers spot the unique potential in each child and helping them realize it. This new pedagogy was instituted by Kidzee after conducting an action research carried out across 20,000 parents, 2,000 teachers and 1,30,000 children. iLLUME is different from the one size fits all approach followed in most of the preschools, lays before a child diverse pathways. With keen observation, a note is made of the preferred learning style of each child. Once this is concluded, activities are built around his/her preferred learning style. This approach ensures that no pressure is enforced on the child and hence they grow at their own pace. The child learns HOW to think rather than WHAT to think.

Zee Learn offers franchises to local education entrepreneurs, especially women, to run and manage Kidzee preschools.

During FY 2010-11, more than 46500 students have enrolled in Kidzee and 206 new Kidzees have been started taking the total to 756 Kidzee centres across the country.

Zee Institute of Creative Art (ZICA) is the nation's first full-fledged Classical and Digital Animation Training Academy that trains youth in classical 2D and modern 3D animation. For the past six years, this institute has produced some of the best names in the world of animation. The institute has adopted a novel training style and is focused entirely on creating a stimulating environment for its curriculum. ZICA is now operating 31 centres in more than 15 major cities across India including Mumbai, Delhi, Bangalore, Hyderabad, Kolkata, Pune, Lucknow, Chandigarh, Bhubhaneshwar, Ahmedabad etc.

Zee Learn offers ZICA franchises to interested people. During FY 2010-11, 10 new ZICA centres were started.

Zee Institute of Media Arts (ZIMA) is a reputed name in the world of direction, cinematography, editing, sound, film animation, visual effects and the training of other high end software like Autodesk, Smoke and Flame. ZIMA offers the platform and infrastructure supporting the media education, which are carefully engineered and implemented to provide the best quality of education at the highest levels of learning systems for the students fulfilling global standards. As of now, Zee Learn itself runs the only ZIMA in India at Mumbai.

Zee Learn Gakken Science Academy: Zee Learn Gakken Science Academy is a venture of Zee Learn Ltd. and Gakken Educational Co., Japan. It aims to bring the best of Japanese education in the field of science to schools in India. The intention is to improve conceptual understanding and developing scientific temper amongst students by providing handson experiment tools.

ZLGSA is an integrated four level concept builder program for students of class III to VIII. The program runs in schools as supplement to the regular curriculum and brings better understanding and appreciation of the world of Science. Zee Learn Gakken Science Academy has been launched in Andhra Pradesh and Maharashtra in FY 2011. The performance is very encouraging with over 50 schools signed up in FY 2011. As a result Zee Learn Gakken Science Academy would reach 25,000 students.

BUSINESS STRATEGY

The key strategic pillars of Zee Learn Limited operations and growth plans are a combination of expanding their footprint of schools/pre-schools and offering services to existing schools to improve their education delivery.

1. Expansion of footprint:

K-12 Schools: The number of enrolments in primary school is at all time high. There are 13.3 crores (DISE 2009-10) children enrolled in primary schools in the country. However the current infrastructure - number of middle and secondary schools - is not enough to handle this demand. At least 40,000 new private schools are required in the country in the next few years. This requirement of schools backed by demand for quality education spells an invaluable opportunity for a core K-12 education player like Zee Learn.

Pre-schools: Pre-schools have a fairly low penetration in India right now - at about 20%. There are two broad trends that this segment is witnessing. One is the increase in penetration as more and more parents are willing to send their kids to pre-schools at an earlier age than it used to happen earlier. Secondly, there is also a migration taking place from unorganized pre-schools to organised pre-schools as parents are becoming aware that organized pre-schools can add a lot more value. To ride on these trends, it is critical to deepen the geographic spread.

With the country in a growth mode and rapid rate of urbanization, it is imperative for business growth that they increase their penetration by adding more cities to their network. This addition is done after mapping market potential of the cities against their products. Depending upon the market potential, they shall also be looking at partnerships for opening more Mount Litera Schools (both domestic and international boards). They shall continue to franchise Kidzee pre-schools.

Apart from this, they would also be opening more company-owned premium preschools and ZICAs. In the next 5 years, they plan to have over 300 Mount Litera Zee Schools and over 2,400 Kidzees.

2. Constantly improve capacity utilization of their schools and preschools:

To fully utilize the capacity of each of their schools and pre-schools, they ensure that there are enough enrolment activities carried out through the year. Furthermore, synergy between offerings is utilized to achieve this end. They ensure there are enough pre-schools near their schools so that they can provide a continuous solution to the parents for their child’s education from pre-school through senior secondary school. In the next 5 years, they plan to increase the enrolment in Mount Litera Zee Schools to over 90,000 students and in Kidzee to over 1,66,000 students.

Within businesses, they constantly add innovations and products to fulfill a wide range of education needs and increase their share of the parents’ wallet. This in turn increases their revenue potential and return on investment of the real estate assets. Recently launched Dance India Dance academies and Robotics Camps at their existing pre-schools and schools across the country are two such endeavors.

3. Improve education delivery at other, existing schools:

Addition of Zee Learn School Innovations to their portfolio has opened up new customer segments for us. They would be able to reach out to thousands of current schools and provide solutions to benefit their students by sharing their experience of learning and teaching designs, methodologies and practices with these schools.

OUTLOOK

Education routinely figures in top 3 expenditure areas of Indian Middle class, Zee Learn is positioned to ride the growth curve on the basis of the ride of the middle class and its income. Further, the huge demand-supply gap in quality education means that innovators will stand to gain. Zee Learn aims to continue its focus on providing quality education from cradle to career through Kidzee, Zee Schools, ZICA and ZIMA. Further, they aim to drive profitable growth through proactive cost management and strong internal controls.

In order to accelerate growth, Zee Learn has initiated new businesses that have the potential to become the torchbearers of the growth story.

Zee Learn School Innovations:

In addition to opening new schools under its own brand name Mount Litera Zee Schools, Zee Learn aims to improve the education delivery at existing schools through its School Innovations division. With their extensive experience in education and proprietary pedagogy, they are perfectly positioned to provide education solutions to these schools. There are over 1.3 million schools in the country today which translates into a huge opportunity. There are two areas of focus in this division:

Supplemental: They focus on supplemental classes that improve the understanding of children through activity based, hands-on programs. Always at the front of innovation, they have tied up with Gakken Education Co. (Japan) to offer Zee Learn Gakken Science Academy (ZLGSA) to schools in India. This is an integrated four level concept builder program for students of class III to VIII. The programs shall run in schools as supplement to the regular curriculum and would bring better understanding and appreciation of the world of Science.

Core education delivery: They are looking at managing existing schools - both government schools as well as private. With Zee Learn’s experience in running and managing schools with high standards of education delivery and student learning outcomes, this is a logical extension. The intention is to take over the management of a school and improve the teaching learning outcomes there. The need-gaps in these schools shall be assessed and fulfilled through implementation of specific modules e.g. school ERP or teacher training. In such schools, they plan to implement a per child fee model.

They have also ventured into:

Premium Pre-schools: In the wake of the recent increase in disposable incomes in the country and rising awareness of global standards of education amongst parents, there is a demand for international standard pre-schools. To meet this requirement, Zee Learn plans to launch a chain of Premium preschools called Mount Litera World Preschools. These preschools would be company owned or joint ventures with progressive individuals or entities.

FIXED ASSETS:

· Software’s

· Content Development

· Equipments

· Computers

· Vehicles

· Furniture and Fixtures

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.44.68
UK Pound	1	Rs.73.04
Euro	1	Rs.64.29

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--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		48

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.