MIRA INFORM REPORT

Report Date :

02.05.2011

IDENTIFICATION DETAILS

Name :	THAL LIMITED

Registered Office :	4^th Floor, House of Habib, 3-Jinnah Cooperative Housing Society, Sharea Faisal, Karachi, Pakistan

Country :	Pakistan

Financials (as on) :	30.06.2010

Date of Incorporation :	1966

Com. Reg. No.:	0002197

Legal Form :	Public Limited Company

Line of Business :	Manufacture of Jute Goods, Engineering Goods, Papersack and Laminate Sheets.

RATING & COMMENTS

MIRA’s Rating :

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

Status :	Satisfactory
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)

Pakistan

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

Business Name

THAL LIMITED

Full Address

Registered Address

4^th Floor, House of Habib, 3-Jinnah Cooperative Housing Society, Sharea Faisal, Karachi, Pakistan

Tel #	92 (21) 34312030, 34312185
Fax #	92 (21) 34312318, 34390868
Website	www.thallimited.com

Short Description Of Business

Nature of Business	Company is engaged in the manufacture of jute goods, engineering goods, papersack and laminate sheets.
Year Established	1966
Registration #	0002197

Factories Location

The jute operations is located at Muzaffargarh, engineering operations at Karachi, Papersack operations at Hub and Gadoon and Laminate operations located at Hub.

Auditors

Ernst & Young Ford Rhodes Sidat Hyder & Co.

(Chartered Accountants)

Legal Status

Subject Company was incorporated as a Public Limited Company in 1966

Details of Management

Names

Designation

Mr. Rafiq M. Habib

Mr. Sohail P. Ahmed

Mr. Ali S. Habib

Mr. Mohamedali R. Habib

Mr. S. Z. Kazmi

Mr. Mazhar Valjee

Mr. Shahid Mahmood Khan

Chairman

Vice Chairman & Chief Executive

Director

Shareholders

Categories

Shareholding (%)

Individuals

Investment Companies

Joint Stock Companies

Directors, Chief Executive Officers, Their Spouses & Minor Children

Executives

NIT / ICP

Associated Companies

Public Sector Companies & Corp

Banks, DFI’s, Modaraba & Mutual Funds

Foreign Investors

Co-operative Societies

Charitable Institutions

Others

38.66

0.01

3.61

8.17

---

4.36

2.82

---

14.14

26.06

0.01

1.42

0.73

Associates

A. Subsidiary

None

B. Associated Companies

(1) Indus Motor Company Limited, Pakistan.

(2) Agriauto Industries Limited, Pakistan.

(3) Dynea Pakistan Limited, Pakistan.

(4) Baluchistan Laminates Division, Pakistan.

(5) Noble (Pvt) Limited, Pakistan.

(6) Shabbir Tiles & Ceramics Limited, Pakistan.

(7) Auvitronics Limited, Pakistan.

(8) Pakistan Papersack Corporation Limited, Pakistan.

(9) Habib Insurance Company Limited, Pakistan.

(10) Noble International Holdings Limited, Pakistan.

(11) Horn Plastic Inc, Canada.

(12) Thal Limited, Pakistan.

Business Activities

Company is engaged in the manufacture of jute goods, engineering goods, papersack and laminate sheets.

Number of Employees

More than 1,200

Annual Production Volume

Engineering Operation Jute Operation Papersack Operation

Units Units M.Tons M.Tons Nos (000) Nos (000)

2010 2009 2010 2009 2010 2009

Annual Capacity

Jute - - 33,800 33,800 - -

Auto Air Conditioners 90,000 90,000 - - - -

Paper bages - - - - 140,000 140,000

Actual Production

Jute - - 29,353 35,197 - -

Auto Air Conditioners 65,754 43,770 - - - -

Wire harness 64,957 43,203 - - - -

Paper bags - - - - 98,019 79,181

Note:

The capacity of wire harness could not be determined as it is dependent on product mix. The production capacity of Laminate Operations cannot be determined as this depends on the relative proportion of various types of products.

Annual Sales Volume

Years

In Pak Rupees

2009

2010

8,262,982,000/-

11,253,047,000/-

Clientele

Mainly Automobile Companies, Engineering Companies, Private Organizations etc

Bankers

Albaraka Islamic Bank, Pakistan.
Bank Al-Habib Limited, Pakistan.
Barclays Bank PLC, Pakistan.
Habib Bank Limited, Pakistan.
HSBC Bank Middle East Limited, Pakistan.
Habib Metropolitan Bank Limited, Pakistan.
National Bank of Pakistan.
Standard Chartered Bank, Pakistan.
The Royal Bank of Scotland, Pakistan.
(10) United Bank Limited, Pakistan.

Engineering segment

After a very difficult fiscal 2009, there was a marked improvement during the year under review in the automotive sales. The sale of cars improved by 51.6%, of LCVs by 42.6%, of two-wheelers by 49.5% (PAMA members only), whilst the truck and bus sector increased by 11.9%. The segment sales increased to Rs. 6.304 billion (last year Rs. 3.927 billion) and the earning of the segment increased to 1.504 billion as compared to Rs. 694 million last year. Whilst the growth looks substantial when compared with the past year, the sales volume is nowhere near the peak it had reached 3 years back in fiscal 2007. However we are hopeful and breathing easier.

Thermal

During the year we added aluminum radiator to our portfolio of products and thus changed the name of the Aircon to Thermal. We are the first and the only Company in Pakistan to make Aluminum Radiators. During the year Denso evaluated our quality twice, once at the start up and then six months later, on the basis of which they have confirmed their approval for our going into Phase II, work on which has begun. In the aftermarket our sales grew as well under the CoolSonic brand. We successfully developed and sold Dual Aircon for fire fighting vehicles, and also added Ghandhara Industries as a customer for truck air conditioners. Our sale of Heat Exchangers also grew significantly but the numbers pale in comparison to our OEM sales. We have reorganized the Aftermarket’s operations and expect an evident growth in the ensuing years, on the back of our newly introduced “Coolsonic” brand.

Wiring Harness

The sales of Wiring Harness touched a high in 2010. It would have continued its upward journey goingforward but for the recent floods which will have adverse affect on vehicle sales. The Wiring Harness factory set up at Sundar, Lahore is currently vacant. All the machinery which was of recent vintage has been brought to Karachi and has helped to improve the productivity at the korangi plant. The operations at Sundar will start up once vehicle manufacturing in that area increases. It is more economical, at present volumes, to produce harnesses at Karachi plant.

Future Outlook

The new fiscal year started with a threat of 10% FED on air conditioners which thankfully the government clarified that it was not applicable to automotive air conditioners. We are beholden to FBR for this clarification. Though the Trade Policy for the year is still awaited, it is well known that certain ministries are recommending increase in the age limit of used cars from currently 3 to 5 years, as well as increase in depreciation rate of used cars from 1% per month to 2% per month. This is against the industry and if implemented will have a negative impact on local car sales and allied vendor industry. The Rupee continues to devalue, the interest rates are not coming down, fuel and power costs are going up, the energy crises continues unabated and per capita income is not improving. Obviously the fundamentals of the economy have not improved. There are no beacons which show us the true path and hence it is difficult to predict how the coming year will be. The flood has added to the woes of the Country. Substantial wealth has flown down the rivers into the sea. Survival of many must get the priority. This will naturally affect sale of cars, our primary customers. The aftermarket which is about Rs. 30 billion worth is only serviced to a maximum of 10% to 12% by the local manufacturers. The rest is provided by the unscrupulous. This is a major market which is denied to the ethical tax paying documented industry. Yet more levies are imposed on us making us more and more uncompetitive against the unethically inclined who rule the roost in after market.

Memberships

· Federation Pakistan Chamber of Commerce & Industry.(FPCCI)

Foreign Exchange Rates

Currency	Unit	Pakistani Rupee
US Dollar	1	Rs. 84.45
UK Pound	1	Rs. 124.20
Euro	1	Rs. 140.20

Comments

Habib Group of Companies enjoys good credibility in the Pakistan Business Circle. All the directors of the Company are reported as qualified, experienced and resourceful businessmen. Payments are usually correct and as per commitments. Company can be considered for normal business dealings at usual trade terms and conditions.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.38
UK Pound	1	Rs.73.88
Euro	1	Rs.65.83

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%)

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