MIRA INFORM REPORT

Report Date :

18.05.2011

IDENTIFICATION DETAILS

Name :	JK PAPER LIMITED
Registered Office :	P. O. Central Pulp Mills Fort Songadh, District Tapi-394660, Gujarat
Country :	India
Financials (as on) :	31.03.2010
Date of Incorporation :	04.07.1960
Com. Reg. No.:	018099
Capital Investment / Paid-up Capital :	Rs. 783.499 Millions
CIN No.: [Company Identification No.]	L21010GJ1960PLC018099
TAN No.: [Tax Deduction & Collection Account No.]	SRTJ00098A
Legal Form :	Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturer of Paper and Paper Related Products
No. of Employees :	500 (Approximately)

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 19000000
Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is an established company having satisfactory track records. 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

Name :	Mr. Anil Samuel
Designation :	Purchase Manager
Contact No.:	91-9328921075
Date :	16.05.2011

LOCATIONS

Registered Office / Factory 1 :	P. O. Central Pulp Mills Fort Songadh, Surat-394660, Gujarat, India
Tel. No.:	91-2624-220228 / 220278-220280
Fax No.:	91-2624-220138
E-Mail :	scgupta@jkmail.com
Website :	http://www.jkpaper.com
Head / Administration Office :	Nehru House, 3^rd Floor, 4 Bahadur Shah Zafar Marg, New Delhi-110002, Delhi, India
Tel. No.:	91-11-23311112 / 41011116
Fax No.:	91-11-23712680
E-Mail :	marketing@jkmail.com vikasgupta@jkmail.com amitdatta@jkmail.com
Factory 2 :	JK Paper Mills, Jaykapur-765017, Rayagada, Orissa-765017, India
Tel. No.:	91-6856-233303 / 233770 / 233171
Fax No.:	91-6856-222238
Zonal Offices :	Located at : New Delhi Chennai Mumbai Kolkata

DIRECTORS

As on 31.03.2010

Name :	Mr. Hari Shankar Singhania
Designation :	Chairman
Name :	Mr. Harsh Pati Singhania
Designation :	Managing Director
Name :	Mr. Om Prakash Goyal
Designation :	Whole time Director
Name :	Mr. Arun Bharat Ram
Designation :	Director
Name :	Mr. Dhirendra Kumar
Designation :	Director
Name :	Mr. M. H. Dalmia
Designation :	Director
Name :	Mr. R. V. Kanoria
Designation :	Director
Name :	Mr. Shailendra Swarup
Designation :	Director
Name :	Mr. Shailesh Haribhakti
Designation :	Director
Name :	Mr. S. K. Pathak
Designation :	Director
Name :	Mr. Udayan Bose
Designation :	Director
Name :	Mr. Vinita Singhania
Designation :	Director

KEY EXECUTIVES

Name :	Mr. S. C. Gupta
Designation :	Secretary

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
Individuals / Hindu Undivided Family	600,000	0.77
Bodies Corporate	30,299,539	38.77
Sub Total	30,899,539	39.54
(2) Foreign
Total shareholding of Promoter and Promoter Group (A)	30,899,539	39.54
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	215,050	0.28
Financial Institutions / Banks	122,600	0.16
Insurance Companies	3,478,855	4.45
Foreign Institutional Investors	551,604	0.71
Any Others (Specify)	7,690,000	9.84
Any Other	7,690,000	9.84
Sub Total	12,058,109	15.43
(2) Non-Institutions
Bodies Corporate	3,702,881	4.74
Individuals
Individual shareholders holding nominal share capital up to Rs. 0.100 million	7,672,931	9.82
Individual shareholders holding nominal share capital in excess of Rs. 0.100 million	6,987,097	8.94
Any Others (Specify)	16,829,382	21.53
Non Resident Indians	3,195,448	4.09
Overseas Corporate Bodies	2,500,000	3.20
Trust & Foundation	11,133,934	14.25
Sub Total	35,192,291	45.03
Total Public shareholding (B)	47,250,400	60.46
Total (A)+(B)	78,149,939	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)	78,149,939	-

BUSINESS DETAILS

Line of Business :

Manufacturer of Paper and Paper Related Products

Products :

Product Description	Item Code No.
Paper and Board	4907.00

Exports :

Products :

Photocopy Products and Packaging Boards.

Countries :

• Sri Lanka
• Philippines
• UK
• Qatar, UAE
• Yeman
• Maldives
• Kenya
• Sudan
• Nigeria
• Mauritius
• Egypt
• Jordan
• Singapore
• Mozambique

Imports :

Products :

Raw Material

Countries :

• Japan
• China

Terms :

Selling :

L/C, Cash and Credit (30 / 60 / 90 days)

Purchasing :

L/C, Cash and Credit (30 / 60 / 90 days)

PRODUCTION STATUS As on 31.03.2010

Particulars	Unit	Installed Capacity	Actual Production
Paper and Board including Pulp for sale	Tones	240000	273755*

* includes 19618 MT transferred to Packaging Board (Previous year 18238MT)

GENERAL INFORMATION

Customers :

OEM’s

End users

No. of Employees :

500 (Approximately)

Bankers :

• State Bank of India, Bahadur Shah Zafar Marg, New Delhi, Delhi, India
• Axis Bank
• Canara Bank
• IDBI Bank

Facilities :

Secured Loans	31.03.2010 (Rs. in Millions)	31.03.2009 (Rs. in Millions)
Term Loans from Financial Institutions	781.258	996.561
Term Loans from Banks	2849.638	3984.095
Working Capital Loans form Banks	290.584	453.495
Short – Term Loan from Bank	0.000	200.000
Total	3921.480	5634.151

Notes :

A (i) Term Loans of Rs. 2.624 Millions (FIs – NIL, Banks Rs. 2.624 Millions) are secured by first pari passu mortgage / charge created on the immovable and movable assets of Unit - JKPM and movable assets acquired after 1.4.2000 of Unit - CPM of the Company.

(ii) Terms Loans of Rs 3547.894 Millions (FIs – Rs. 761.161 Millions, Banks Rs. 2786.733 Millions) are secured by means of first pari passu mortgage/charge created/to be created on the fixed assets of the Company save and except specific assets exclusively charged in favour of specified lenders as mentioned in clause B. Out of the above Term Loan, Rs. 1409.044 Millions (FIs - Rs. 659.044 Millions, Banks Rs. 750.000 Millions) are further secured / to be secured by second charge on the current assets of the Company.

B Term Loan of Rs. 60.281 Millions from banks and Direct Discounting Facility (equipment) of Rs. 20.097 Millions from Financial Institution are secured by an exclusive charge by way of hypothecation on the specified assets of the Company.

C Working Capital Loans are secured by hypothecation of Stores, Raw Materials, Finished Goods, Stock-in-Process and Book Debts. The same are further secured / to be secured by a second charge on the movable and immovable assets of the Company.

D Instalments of Term Loans repayable within one year - Rs. 878.750 Millions.

E Terms loans from Financial Institutions and Banks include Rs. 1273.312 Millions foreign currency loans.

Unsecured Loans	31.03.2010 (Rs. in Millions)	31.03.2009 (Rs. in Millions)
Fixed Deposits	285.114	159.774
1.25% Foreign Currency Convertible Bonds Due 2011 (FCCB’s)	225.700	254.750
Foreign Currency Term Loan from Bank	42.918	60.553
Short Term Loans from Banks	900.000	550.000
Buyers Credit facilities from Bank	106.893	299.375
Total	1560.625	1324.452

Notes :

(a) The bondholders have an option to convert FCCB’s into equity shares at an initial conversion price of Rs. 95 per equity share at a fixed rate of exchange of Rs. 44.69 = US $ 1, from April 4, 2006 to March 17, 2011. The bonds are redeemable on March 30, 2011 at 130.441 percent of the principal amount, unless previously converted or purchased and cancelled. Premium on redemption, if any, will be provided in the year of redemption.

(b) Includes Commercial paper of Rs. 250.000 Millions (Previous year Nil), maximum outstanding balance during the year was Rs. 250.000 Millions (Previous year Rs. 150.000 Millions).

Banking Relations :	-
Auditors :
Name :	Lodha and Company Chartered Accountant
Address :	New Delhi, Delhi, India
Name :	S. S. Kothari Mehta and Company Chartered Accountant
Address :	New Delhi
Associates/Subsidiaries :	JK Enviro-Tech Limited

CAPITAL STRUCTURE

AS ON 31.03.2010

Authorised Capital :

No. of Shares	Type	Value	Amount
200000000	Equity Share	Rs.10/- Each	Rs. 2000.000 Millions
30000000	Redeemable Preference Shares	Rs.100/- Each	Rs. 3000.000 Millions
	Total		Rs. 5000.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
78149939	Equity Share	Rs.10/- Each	Rs. 781.499 Millions
20000	10% Cumulative Redeemable Preference Shares	Rs.100/- Each	Rs. 2.000 Millions
	Total		Rs. 783.499 Millions

Note:

(a) These shares were allotted as fully paid-up pursuant to the Scheme sanctioned by the Hon'ble High Courts of Orissa and Gujarat.

Company has redeemed 10% Cumulative Redeemable Preference Shares (Series D) of Rs.2.100 Millions with premium of Rs. 54.500 Millions Series E of Rs.1.100 millions is redeemable on 30th day of June, 2010 along with premium on redemption of Rs.54.600 millions. Series F and G of Rs.0.600 million and Rs. 0.300 Million are redeemable on 30th day of June, 2011 and 2012 respectively along with premium on redemption of Rs. 54.600 Millions with each Series.

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		783.500	785.600	789.600
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		3973.900	3303.000	3136.200
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		4757.400	4088.600	3925.800
LOAN FUNDS
1] Secured Loans		3921.500	5634.100	5835.400
2] Unsecured Loans		1560.600	1324.500	1377.800
TOTAL BORROWING		5482.100	6958.600	7213.200
DEFERRED TAX LIABILITIES		1345.600	1099.400	942.800
TOTAL		11585.100	12146.600	12081.800
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		8795.800	9287.100	9494.600
Capital work-in-progress		208.000	139.600	162.300
INVESTMENT		419.400	27.500	27.500
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1268.900	1171.100	1203.400
	Sundry Debtors	1044.900	1071.500	1108.700
	Cash & Bank Balances	78.700	342.200	35.000
	Other Current Assets	0.000	0.000	417.000
	Loans & Advances	1609.800	1622.400	1317.400
Total Current Assets		4002.300	4207.200	4081.500
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	1157.113	979.269
	Other Current Liabilities	1585.400	1261.467	1437.525
	Provisions	257.700	268.033	273.375
Total Current Liabilities		1843.100	1529.500	1710.900
Net Current Assets		2159.200	2677.700	2370.600
MISCELLANEOUS EXPENSES		2.700	14.700	26.800
TOTAL		11585.100	12146.600	12081.800

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Income	12531.500	12004.200	6829.500
		Other Income	119.400	164.900	171.900
		TOTAL (A)	12650.900	12169.100	7001.400
Less	EXPENSES
		Raw Material	3307.700	3963.100	2072.200
		Power and Fuel	1184.900	1229.400	631.900
		Employee Cost	1196.900	997.900	676.600
		Other Expenditure	2412.800	2450.400	1440.300
		Selling and administration Expense	1571.00	1308.000	825.000
		Miscellaneous Expenses	350.400	380.500	177.800
		Increase / (Decrease) in Finished Goods	89.500	(69.700)	(40.900)
		TOTAL (B)	10113.200	10259.600	5782.900
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		2537.700	1909.500	1218.500
Less	FINANCIAL EXPENSES (D)		568.000	671.800	410.700
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		1969.700	1237.700	807.800
Less/ Add	DEPRECIATION/ AMORTISATION (F)		700.400	696.900	458.600
	PROFIT BEFORE TAX (E-F) (G)		1269.300	540.800	349.200
Less	TAX (H)		359.000	160.700	2.100
	PROFIT AFTER TAX (G-H) (I)		910.300	380.100	347.100
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		1119.500	939.000	737.800
Less	APPROPRIATIONS
		Dividend	156.300	136.800	117.200
	BALANCE CARRIED TO THE B/S		1745.100	1119.500	939.000
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	290.543	424.195	129.102
		Interest	0.000	1.017	0.000
	TOTAL EARNINGS		290.543	425.212	129.102
	IMPORTS
		Raw Materials	1081.053	856.322	385.368
		Stores & Spares	149.419	126.271	82.283
		Capital Goods	77.671	114.978	74.232
		Others	245.200	466.408	0.000
	TOTAL IMPORTS		1553.343	1563.979	541.883
	Earnings Per Share (Rs.)		11.31	4.86	4.43

Particulars	31.03.2011
Sales Turnover	13000.000

Expected Sales ( 2011-2012 ) : Rs.13500.000 Millions

The above information has been parted by Mr. Anil Samuel

QUARTERLY / RESULTS

PARTICULARS	30.06.2010 1^st Quarter	30.09.2010 2^nd Quarter	31.12.2010 3^rd Quarter	31.03.2011 4^th Quarter
Net Sales	2911.800	3133.000	3137.700	3150.400
Total Expenditure	2246.500	2482.900	2515.300	2568.300
PBIDT (Excl OI)	665.300	650.100	622.400	582.100
Other Income	5.600	6.700	7.900	8.200
Operating Profit	670.900	656.800	630.300	590.300
Interest	83.900	84.100	88.200	91.400
Exceptional Items	0.000	0.000	0.000	0.000
PBDT	587.000	572.700	542.100	498.9000
Depreciation	177.100	179.100	181.900	178.100
Profit Before Tax	409.900	393.600	360.200	320.800
Tax	118.800	102.800	109.100	89.600
Provisions and contingencies	0.000	0.000	0.000	0.000
Profit After Tax	291.100	290.800	251.100	231.200
Extraordinary Items	0.000	0.000	0.000	0.000
Prior Period Expenses	0.000	0.000	0.000	0.000
Other Adjustments	0.000	0.000	0.000	0.000
Net Profit	291.100	290.800	251.100	231.200

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	7.20	3.12	4.96
Net Profit Margin (PBT/Sales)	(%)	10.13	4.51	4.99
Return on Total Assets (PBT/Total Assets}	(%)	9.92	4.00	2.57
Return on Investment (ROI) (PBT/Networth)		0.27	0.13	0.09
Debt Equity Ratio (Total Liability/Networth)		1.54	2.08	2.27
Current Ratio (Current Asset/Current Liability)		2.17	2.75	2.39

LOCAL AGENCY FURTHER INFORMATION

SUNDRY CREDITORS DETAILS :

(Rs. in Millions)

Particulars	31.03.2010	31.03.2009	31.03.2008
Sundry Creditors	1157.113	979.269	NA
Total	1157.113	979.269	NA

Company History:

Subject (formerly Central Pulp Mills), a member of HS Singhania group is originally promoted by Parkhe Group of Pune to manufacture Paper and Paper products. The company which fell sick and referred to BIFR was taken over by JK Corp limited of the HS Singhania Group in 1992. JK Corp. holds 44.76% in the equity of this company as on Nov 6, 2003. The company has turnaround in a short period of time with the rehabilitation package by HS Singhania Group companies JK Corp LimitedK Industries. Subject today has an combined installed capacity of 150000 tpa with two integrated Paper Mills at Mills, Orissa(Inst. Cap 100000 tpa) and Central Pulp Mills, Gujarat(Inst. Cap 50000 tpa). The company's paper mills are operating with an health average capacity utilisation of 115%. Further the company has purchased a Pulp Drying Plant from Finland in 2001 to increase the output and realisation of market pulp.The plant was commissioned during the year itself. J K Paper has also been consistenly exporting its products to markets such as Sri Lanka, Bangladesh and several West Asian Countries. The company is the first paper mill in India to have been accredited with ISO 14001. The company enjoys the locational advantage inrespect of sourcing raw material. It sources all its bamboo requirements with in the 200 kms radius of the plant. Further for long term continuous source of raw material the company is running social forestry and farm forestry programmes in 11 districts of Orissa and 3 districts of Andhra Pradesh, covering a total area of over 20,000 Ha. In 2001-02 it has distributed 27 million saplings, covering over 5200 hectares under plantations in Orissa, AP, Gujarat. J K Paper has been a pioneer in every field related to the manufacture and marketing of paper. It has the distinction of being the Largest manufacturer of branded copier paper in India.; First to introduce surface sized maplitho in India.; First to introduce high quality bond paper 'Finesse' in A4 size consumer friendly retail packs of 100 sheets. ; First to introduce laser paper in India. The company has introduced two new value added products i.e. MICR Cheque Paper and Cup-stock Board and both of them have well recieved in the market. The company which is well known for its success in creating brand in paper industry with having top two paper brand(i.e JK Copier[contributing 140 cr. to co's turnover in FY02-03] and JK Easy Copier) in its basket the company has initiated outsourcing of paper products in india. This outsourcing activity was kick started in the end of 2001-02 and gathered momentum last year. The company has outsources JK Cote(positioned in upper art paper segment) from an international producer who produces as per the specification of JK Paper. The company outsourcers domestically JK Eco Cote(caters to price consious Chrome paper segment) and 'JK Eco Print'. The Scheme of Compromise and/or Arrangement between JK Corp Limited and The Central Pulp Mills Limited was approved and sanctioned by the High Court of Orissa and High Court of Gujarat and become effective on 5th November,2001. Subsequent to this the name of the company was changed to subject from The Central Pulp Mills Limited Latest Development: subject is planning to upgrade over half of its paper manufacturing capacity to manufacture coated paper. The upgradation (Conversion from non-coated to coated) to cost around Rs.600.000 Millions.

PERFORMANCE REVIEW:
 
The Company's Gross Sales during the year was Rs.129.957 Millions, the Operating Profit (PBIDT) was Rs.2454.600 Millions (an increase of 35% over previous year) and PAT stood at Rs.910.300 Millions as against Rs.380.100 Millions during the previous year, an increase of 140%. These represent the highest ever Gross Sales, PBIDT and PAT achieved by the Company.
 
The Company's production increased to 273,755 tonnes (previous year 254,816 tonnes, an increase of 7.4% over previous year) and sales stood at 265,044 tonnes as against 256,918 tonnes in previous year. Overall, plant capacity utilization was 114% and it is heartening to note that the recently started Packaging Board plant operated at 118% in its second full year of operations. The Company, however, cut back its outsourced volumes due to volatility in the international markets and difficulty in getting supplies domestically.
 
The growth in Operating Profit (PBIDT) was possible due to increased capacity utilization in all the production lines, sales of more value added products in Packaging Board, strategic purchase of imported pulp at lower prices, and soft crude oil prices which made several petroleum based chemicals rule easy. Government's stimulus package also helped the industry in containing the effect of the slow down in demand in the early part of 
year. Interest expense came down significantly to Rs.484.900 millions from Rs.584.700 Millions during the previous year, a decrease of 17%. This was possible due to large re-payment of loans out of cash generation, tighter credit and stocking policies leading to a reduction in working capital funds. The PAT consequently was higher by 140%, despite a higher provision for taxes at Rs.359.000Millions (previous period Rs.160.700 millions). After the turmoil in the financial markets during the previous year, the year saw the beginnings of a recovery in the world economy, even if unevenly across geographies. India was one of the earliest to recover from the crisis and its monetary and fiscal management before and during the crisis has been acclaimed widely. Despite a year of drought, industrial activity exhibited growth. This was reflected in Paper industry as well. Although, there was some sluggishness in output prices during the early part of the year due to cost cutting measures by several Government Departments and the corporate sector and new paper capacities coming on stream, prices recovered in the last quarter due to smart demand pick up.
 
Low per-capita consumption, increasing GDP growth rates, increased emphasis on education and literacy, growth in organized retail and demand for better quality papers and boards augur well for the sustained growth of the 
industry.
 
The Company is well positioned to take advantage of this growth due to its presence in all high value added segments. All the three major segments - Copier, Coated and Virgin Fibre based Packaging Boards - have grown for the last 4-5 years at double digit rates. Positive growth continued even during the turmoil seen in the last 18 months. The Company's extensive distribution reach and depth helps it in tackling competitive and price pressures.
 
The demand for the Company's flagship copier papers is linked to the performance and growth of the industrial sector, levels of activity in the service sector, besides use in the household and education sector. Although it had a modest start, the overall annual growth rate for the segment clocked double digits. During the last quarter most of the pipeline inventories got cleared, leading to hardening of prices. The Company 
continues to be the market leader in the segment with offerings across the entire spectrum with its well known brands such as JK Copier, JK Easy Copier, JK Copier Plus, Sparkle, and Cedar. Besides this, the Company also focuses on niche segments through specialty products like JK Excel Bond, MICR Cheque papers etc. 
 
Coated paper prices were volatile during the first half of the financial year, tracking international prices and increased imports of coated paper. However, subject was able to improve its performance through improved efficiency and lower chemical cost, even though realization fell marginally. The outlook for JK Cote, the Company's coated paper remains favourable especially as prices in the international market have moved up 
due to surge in paper price. 
 
The Packaging Board business achieved substantial growth and turned in a strong performance. Production reached 118% of installed capacity with the entire production being high value added virgin fibre based boards by the middle of the year. You would be happy to note that all major brands - JK TuffCote, JK Ultima, and JK PureFil are now widely recognized and well received by the end consumers. Most of the end user industries using value added Packaging Boards such as the grades marketed by Subject are growing at a fast clip which should translate into better growth and profit performance for the segment. 
 
During the year, the prices of imported pulp fell sharply. The Company increased its stock levels and resorted to strategic buying of pulp when the international prices touched their lowest levels in several years. This contributed significantly to profitability in the packaging board business. However, towards the end of the year, the pulp prices have once again risen sharply due to demand pick-up in China, restrictions in global wood supply and temporary capacity shuts in Chile due to the earthquake in February 2010. As a result, the Company has had to pass on part of these increases to its end customers.
 
While input costs remained under control, the availability of adequate quantity of linkage coal continues to pose problems. 
Availability of raw material (wood) of appropriate quality at affordable prices will govern the growth and profitability of the paper industry. To ensure continued availability the Company continued to pursue farm forestry during the year with renewed focus on plantation within a 100 km radius of factory locations. However, plantation activity for the entire industry suffered due to emergence of gall disease leading to destruction of saplings and trees and resultant reduction in new plantation acreage. The industry hopes to recover from this in the coming year. The share of wood sourced from Subject farm forestry is steadily increasing and has touched 76% during the year.
 
EXPANSION:
 
As mentioned previously, the Copier segment is growing steadily every year. In order to maintain the Company's leadership in this segment, Subject has embarked upon a major expansion programme. The programme envisages installation of a new paper machine of 150,000 tpa and pulp mill of 200,000 tpa along with utilities. This will help the Company in taking advantage of newer and more efficient pulping technology, besides upgrading the quality of its copier paper. A dedicated team of qualified professionals have een put in place to work out the details of implementation. The Company will finance the project through an appropriate mix of debt, internal accruals and equity.
 
CUSTOMER SATISFACTION AND QUALITY:
 
Any product is built on quality and the key is consistency in features and its performance. This in turn works as the key differentiator in developing a Brand' USP delivering a positive consumer experience. The Company's Quality Policy is to actively engage with the customer and provide them with desired quality products. For this it has dedicated technical service teams which work on providing end-to-end solutions. This intrinsic strength of Subject has enabled it to produce winning brands and stay ahead in the quality race in the Indian paper industry.
 
Keeping this philosophy in mind, the Company introduced high bright copier paper with brightness in the range of 97 degree ISO. The packaging board brands likes Endura, JK Club Card etc. introduced this year are testimony to the Company's policy of tailoring its offerings to meet the constantly evolving needs of its consumers.
 
This is supplemented through constant market feedback and in-house research. The Company conducts periodic customer satisfaction surveys through inhouse as well as independent agencies, which provides it with directions for product development, and service levels.
 
Subject constant obsession towards excellence resulted in its winning the TPM Consistent Commitment Award this year, taking it a level up from winning the TPM Excellence Award-First Category previously. 
 
AWARDS AND RECOGNITION:
 
Unit JKPM was awarded 'National Energy Management Award - 2009' by Confederation of Indian Industry (CII), and 'Best Practices in Industrial Relations - 2009' award by Hooghly Chamber of Commerce and Industry, Collate. For promoting water conservation through recycling and reuse, this unit has also been awarded the prestigious 'Ground Water Augmentation' award (Bhumijal Samvardhan Puraskar), from the Ministry of Water Resources, Government of India. The Directorate of Factories and Boilers, Government of Orissa, Bhubaneswar, has given 'State Safety Award' to one of their employees for saving human life. 
 
Unit CPM was awarded the 'National Energy Conservation Award - 2009' by Bureau of Energy, Government of India, in appreciation of the efforts in Resource Conservation in Pulp and Paper Sector. The unit has also won, 'Greentech Environment Excellence Gold Award - 2009' as well as 'Greentech Safety Silver Award - 2009' from Greentech Foundation. 
 
During the year, both the units were also awarded 'Excellence in Consistent TPM Commitment Award - 2009' by Japan Institute of Plant Maintenance. 

MANAGEMENT DISCUSSION AND ANALYSIS:
 
OVERVIEW:
 
Post-Meltdown Economic Scenario:
 
The credit crisis, which hit the Global economy in late 2008 and plunged the World into the most severe recession after World War II, mellowed down during the year. Severity of the global economic slowdown declined especially towards the second half of 2009. Governments across various countries were quick to act and lend liquidity support to the financial system, which stemmed the spread of the crisis. However, the pace and strength of the recovery has been gradual and uneven.
 
Performance of global paper and board industry is dependent, among other things, on economic growth and in particular on industrial growth. Thus pulp and paper industry was adversely affected, particularly in the first half of 2009-10, because of slow down in global economic activities. The industry witnessed a decline in output and prices of both pulp and paper were lower for most part of the year. 
 
The industry, in developed regions such as North America and Europe, has also been hit by increasing competition from growing electronic communication such as Internet and high production costs and energy prices.
 
The financial crisis accelerated capacity closures in several countries in the West. At the same time, producers and converters cut down on their inventories drastically, which added to the severity of the price declines. This, together with a sharp fall in final demand for pulp and paper, led to price decline in the first half of 2009.
 
The 3rd and 4th Quarters of 2009, however, saw some recovery, as demand began to pick up in advanced countries in line with gradual overall economic recovery.
 
The demand pick-up, strong growth in economies like China and recent natural calamities like the Chilean earthquake have added to the pulp price spirals. These factors have combined to push the Global pulp and paper prices to levels higher than pre-crisis levels. It is expected that global pulp prices will decline marginally only towards end of 2010 or early 2011. 
 
There is an increasing demand for wood from bio-fuel segment in recent years. This implies tightening of the wood market and hence hardening of wood prices. This trend has to be watched.
 
Impact on Indian Pulp and Paper Industry:
 
The effective way the Government along with RBI handled the situation falling out of the crisis has been acclaimed across the World. This has played a large part on softening the impact on their economy. Even in the crisis India achieved 6.7% GDP growth in 2008-09, and in 2009-10 it has grown at 7.4%.
 
The growth slowdown had an adverse impact on Indian Paper Industry only for a brief span in 2009-10. Growth slowdown in paper demand was primarily due to cost cutting steps taken up by corporate sector, financial institutions and Government departments. Along with additional supplies from new capacities, this led to slow down in movements of stocks during the 2nd and 3rd quarters. The last few months have seen demand revival and in Feb and March 2010 most paper mills were able to liquidate their excess stocks.
 
The rise in global pulp and paper prices and better growth prospects have helped prices firm up in Indian market. Capacity additions by various Indian mills, however, have dampened the rising trends in prices.
 
Supply-demand scenario in Indian Paper and Board Industry:
 
Demand for Paper and Board grew by about 8.5% per annum in the last 4 years but likely to be little lower in 2009-10. 
 
The outlook in the medium and long term is, however, positive. Paper industry is expected to get back to its annual growth of 8 to 9% in the near future.
 
Recent initiatives like Right to Education Act, Rashriya Madhyamik Shiksha Abhiyan and the general thirst for infotainment as a fall out of Sarva Shiksha Abhiyan are some significant factors that would help boost demand 
for paper in the cultural segment.
 
Paper based packaging has been gaining increasing acceptance in India due to life style changes and changing socio-economic factors. 
 
Demand for better quality packaging for FMCG products marketed through organized retail, increasing health care spends and over the counter medicines, and growing preference for ready to eat food (which demands food grade packaging) have become the key drivers for high growth rates in value-added packaging boards.
 
MARKET FOR COMPANY'S PRODUCTS:
 
The general approach of the Company has been to develop brands with clearly identified superior deliverables in an industry otherwise known for its commodity orientation. This approach promotes Customer Loyalty and helps deliver superior value to the customers. Value added and branded products today account for nearly the whole of production of the Company.
 
The Company's choice of product lines is based on the long term expected growth rates, the levels of Returns on Capital Employed and how the products complement each other in delivering a whole package of benefits and products to the customers. The company, with its presence in both consumer segments (Copier range) and Industrial segment (Packaging Board and Coated paper), balances the cyclicality even while being present in all fast growing value added segments in the Indian paper industry. 
 
Copier and Business Communication Paper:
 
The market of Copier Paper has grown in 2009-10 at around 12% in the premium segment and 16% in the economy segment. 
 
The future seems very strong for the Company in this segment with the continuous trend of corporate sector and Small Office and Home Office (SOHO) opting for better quality paper and Branded premium products. 
 
Business communication papers have shown good growth as a result of a growing e-ticketing business, with railways being a big new entrant, mobile billing, growth in  internet connectivity, growth in real estate and 
automobile sectors etc. 
 
Despite difficult market situation, the Company recorded a growth of 7% in JK Copier and 17% in JK Easy Copier - the two biggest brands in the Indian market space. 
 
The company's growth, especially in premium segment, was lower than market growth due to capacity constraints. They ould, however, maintain their price premium over competition throughout the year. Chances of any significant imported material coming in this segment are dim - particularly when theysee hardening trends in global prices. 
 
The current positive trends in uncoated segment have enabled most Indian mills to raise paper prices during the first quarter of the current year. 
 
In pursuit of their continued strategy of moving up the value chain, the company continued its focus on Value added products like JK Excel Bond (Watermarked Bond paper), JK Copier Plus (80 GSM High end Copier) and Cedar (100 GSM DO paper). The Company also strengthened its position in the niche market that it created for itself in the customer segments like Screen printers, Colour photo-copiers and High end corporate usage.
 
Coated Paper:
 
Coated Paper segment remained volatile during the first half of the year mainly due to large imports from international market. 
 
Demand for Coated Paper has grown by 12% during the last year. The outlook for Coated Paper remains bullish due to rising prices of Pulp in overseas market that will translate into higher paper prices in near future.
 
JK maintained its market share as well as price through out the financial year. This was made possible by Sarvashiksha Abhiyan orders and other tender orders where customers found a clear value proposition in using JK Cote.
 
Packaging Board:
 
The Company has recently established its production facilities in Unit CPM which is ideally located close to largest consumption centre. Their team has been able to stabilize the production quickly and reach 100% virginfibre production within a short span of 18 months. The product quality has been accepted well by the enduser industries and their products are at par with the best available quality domestically.
 
The Company also exports some quantities to overseas markets to get feedback from the discerning overseas users and this has been the basis for constant up-gradation of quality.
 
JK Ultima and JK Tuffcote have become popular amongst the end users. The Company has, during the year, introduced a higher value-added product, JK Neo Purefil, to supplement its popular brand for cup stocks - JK Purefil. The company has also introduced JK Club Card for the playing card segment. Both these products have done well at the market place.
 
Outsourcing:
 
Company's plans for outsourcing paper from non-integrated paper mill within the country fell short of their targets due to the domestic shortage of pulp. Further, floods in the factory premises of the outsourcer forced the 
supplier mill to close its operation. This resulted in a steep fall in the quantity outsourced. The shortfall, however, was partially offset by outsourcing Copier Paper from a leading international paper manufacturer.
 
In view of capacity constraints, the Company is unable to offer a wider range of products from its own production to its customers and distributors. Outsourcing, besides bridging this limitation, will also help us to subsequently build up volumes to absorb future capacity addition.
 
New Products:
Continuing their customer centric approach, theyhave introduced New Sparkle with International design in Indian market and the market feed back for the product has been very encouraging. This is a high quality paper with high brightness and ideal for desktop and laser jet printing. The product is distributed to some selected distributors in 40 different markets across India and they plan to expand the same in future.
 
The Company signed a technical agreement for upgrading the specifications of its core products with the help of internationally acclaimed technology. They are confident of introducing these products during the first half of the 
current year in the market place and thus retain their quality leadership so as to face the emerging competition.
 
OPPORTUNITIES and STRENGTHS OF THE COMPANY:
 
India is emerging as a major player in global pulp and paper industry. More importantly, as a result of rising consumerism and need for sophisticated products, there has been a discernible shift in product mix towards branded and value added products. 
 
This provides a good opportunity for the company since it is either the leader or second biggest player in each of these segments. 
 
The Company has carefully chosen its segments to be in both industrial and consumer segments and this provides stability to cash-flows and margins. The company is positioned both in the import sensitive coated paper, and Copier where domestic prices have not fluctuated much with overseas prices. Also these segments are the fastest growing segments in domestic paper industry.
 
The focus that they have been placing on quality has been constantly strengthened through technical upgradation and process innovation. This has helped us to further consolidate their position in the market place. The end consumer sees a significant value in their products in terms of cost efficiency and lower downtime of the machines. 
 
Along with the constant product development and upgrading of specifications, the Company has been making all out efforts to upgrade its service levels further by aggressive marketing efforts.
 
These include, among other things, constant customer interactions, dealer meets, road-shows, long term corporate tie-ups with commitments of price and quantities, etc. The wide dealer / distributor network the company has built over the years helps it reach end-consumers across length and breadth of the country. It has also made their brands available in the shelves of stationers even in B-class and C-class towns and rural areas.
 
Today Subject has 4700 distributors who act much like business partners across the country and this soft asset is perhaps the most difficult to replicate by new entrants or competitors. 
 
Also, the fragmented nature of domestic market, under developed infrastructure and geographical characteristics is hindering the entry of large multinational paper companies into India.
 
While the international pulp prices fluctuate periodically the company does not get impacted by these fluctuations. Both their Paper Mills are fully integrated with Pulp facilities to meet their requirements.
 
MAJOR CONCERNS:
 
The industry depends on supply of good quality wood fibre at reasonable prices for long term sustenance.
 
While there has been a gradual decline in long term prices, in recent years, capacity closures especially in the West and the explosive growth in China have weighed heavily on the international pulp prices. The Packaging Board mill is dependent on imported pulp of certain varieties, which are not manufactured in India. 
 
Also, the Indian Government policies do not allow corporate farming, placing the industry in a seriously disadvantageous position vis-a-vis countries in South East Asia.
 
If the present restrictive policies of the Government continue it will result in higher cost of domestic pulp which will overshoot landed prices of imported pulp, thereby seriously eroding competitiveness of the domestic paper industry.
 
It has become necessary for the company to quickly gain long term access to sources of wood supply on a proprietary basis, to maintain growth and long term profitability.
 
As mentioned earlier there are significant capacity additions that will take place in the Indian Paper industry in most segments in which the company participates, between now and 2011-12. While the demand growth is robust, the heavy bunching of investments and capacity additions would still mean a period of excess capacity and lesser capacity utilization creating pressures on margins.
 
The current high international ruling paper prices have made it easy for the current supplies to be absorbed leaving the domestic prices reasonably buoyant. Any serious price correction in the international paper prices may divert the exportable surpluses into the domestic markets. The company however is hopeful that excess supply scenario will correct itself by mid-2012.
 
The Government has been tightening credit to check food price inflation. This is likely to push up the interest rate for the industry. 
 
The Company is in the process of tying up its funds for long term for its expansion. Any interest rate spikes might hike the project costs, besides affecting short term profitability. The World is also seeing some renewed financial turmoil in parts of Europe which could affect capital mobility. Raising Equity during turbulent times may lead to inappropriate pricing.
 
The Government of India has signed a free trade agreement with the ASEAN countries which entails reduction of import duties on paper from the current 10% to NIL in 4 years beginning Jan 2010. The infrastructure both soft (labour laws, training etc.) and physical segment like roads, power, ports are far more efficient in the counter-party countries. While the industry is doing its best in internal efficiency parameters, it may still not prove enough to counter all the costs of domestic disadvantages. 
 
The Government has also proposed introduction of Goods and Services Tax (GST) across the country to replace much of the indirect taxes currently applicable. While GST has several advantages, paper industry being of vital significance for both employment in remote and rural areas and for supplying paper for thrust areas like education and literacy enjoys some duty concessions. If the GST dilutes these concessions, the margins of the industry will suffer.
 
India is among the fastest growing market in the global paper industry and hence attracts serious attention from overseas players. This can make it attractive for short term dumping of paper, which happens from time to time from China, and for setting up fresh capacities by overseas players. If these players have the back up of pulp in low cost manufacturing locations, it could pose a serious threat to domestic industry.
 
Given the steep growth within the industry and quick capacity additions in a relatively short time there is likely to be a scramble for the limited talent pool. Retention of existing managerial strength and continuity are key risks which need to be addressed by proactive human resource management.
 
RAW MATERIAL AND OTHER PURCHASES:
 
The long term sustainability of pulp and paper industry is largely based on the sustainability of its wood resources.
 
The Company continued its aggressive efforts on progressively increasing the development of its raw material sources in the mills' catchment areas. The pulpwood plantation area covered, to-date, by farm forestry under the Company's schemes is over 75000 Ha in the states of Orissa, Andhra Pradesh, Gujarat and Maharashtra.
 
The additional farm forestry area covered during 2009-10 was over 4200 Ha. utilising over 20 million seedlings/plants involving about 5870 farmers.
 
The new farm forestry development was less than envisaged during the year due to erratic rains, drought like situation in some parts of Orissa and Andhra Pradesh and the prevalence of gall disease in certain areas. 
However, the response to Subabool plantations in Gujarat and Maharashtra has been encouraging.
 
The Company has decided to further increase its emphasis on sourcing of forest based cellulose raw materials from within 200 km of each mill to reduce the cost of transportation of its raw material.
 
Response to the direct purchase schemes launched two years back has been encouraging and the farmers have been bringing more and more under-utilised lands under farm forestry. 
 
This will help the Company to further reduce the expenses on transporting wood to mills and also reducing the carbon foot print of its operations. 
 
The emphasis on plantation of multiple species of pulpwood was continued while in the past, farm forestry was dominated by eucalyptus. They are developing new disease resistant, high yielding clones with intensified research efforts in their Research Centre for distribution to farmers in their catchment areas for productivity improvement. 
 
The Company continues to raise and distribute bamboo rhizomes for replanting of blank patches in the forest areas through Govt. Agencies and NGOs in order to increase the productivity of bamboo bearing forest areas. 
 
All these efforts on farm forestry front will help improving long term competitiveness of the Company. 
 
The year that has gone by witnessed a mixed scenario in the price trend of major inputs. The year started with a very depressed level of prices of all varieties of pulp. The down cycle continued for first 3 to 4 months of the year. They have used this opportunity to purchase major requirement of pulp, sometimes covering upto six months of requirement, to take advantage of the situation.
 
Second half of the year, however, witnessed a steep rise in pulp prices. This was further aggravated by the Chilean earthquake in March 2010, causing closure of some large pulp mills. Global pulp prices are expected 
to ease only after end 2010. The price variation from beginning to the end of the year was as high as 100% i.e. starting from US$ 400 per MT during April, 2009 to US$ 800 per MT during March, 2010. The pulp situation continues to be tight. 
 
Apart from pulp, chemicals constitute major part of paper making expenses. Generally the prices were depressed during the year due to comparatively lower prices of petro-chemicals and low demand from most chemical related industries and Textiles. 
 
Surplus capacities were seen in various industries namely Chloro-Alkali, Hydrogen Peroxide and Optical Brightening Agent. However, few agro related products like Maize and Tapioca Starches went up sharply due to drought conditions affecting yield of agro commodities. Petro chemicals have since started getting stronger and 2010-11 may see a steep rise in chemical prices.
 
Packaging items are also set to witness a sharp price rise due to increase in input prices. Engineering items including spare parts are expected to be costlier due to growing demand.
 
FINANCIAL HIGHLIGHTS:
 
Production at 2,73,755 tonnes and Sales excluding internal transfers at 2,65,044 tonnes achieved by the company during the year are the higest ever for the Company. Sales of Own manufactured goods went up by 9.8% over the previous year while there was a sharp fall of 65% in the sales of third party products, the reasons of which have been explained before. Operating Profit (PBIDT) went up 35% and PBDT by 59%.
 
The margin improvements have been possible due to strong demand, better product mix in the Packaging Board segment, lower prices of imported pulp, besides lower interest due to repayment of loans during the year. The net Profit after Tax (PAT) was Rs 91.03 cr which is 140% more than the previous year. 
 
The Company finances its operations through cash generated from business and a mix of short and medium term credit facilities, bank loans, and commercial papers. In this way, the company avoids over reliance on any particular liquidity source.
 
Strong cash flows from operating activities complemented by working capital savings have improved the liquidity position of the company. The ratio of total debt excluding Deferred Tax Liability to Equity has come down from 
1.73 on 31st March 2009 to 1.17 on 31st March 2010. 
 
The Indian rupee appreciated against the US dollar by 11% from the March 09 level. The Company's hedging policy has helped minimize the impact from currency fluctuation. The Company hedges underlying interest rate and foreign exchange rate exposures in an efficient, commercial and structured manner to reduce the potential unfavourable changes in foreign exchange. 
 
During the year, the company has been sanctioned a USD 3 million loan by IFC - Washington under their Cleaner Production Programme. The IFC. supported cleaner production assessment enabled the company to identify projects that would reduce energy and water consumption as well as costs.
 
ENVIRONMENT and NEIGHBOURHOOD:
 
The company's philosophy is to pursue growth with responsibility towards the ecology, safe and clean environment around it towards its employees and other stakeholders. Reflecting the growing recognition of this in the corporate sector, the company has thought it wise to include a separate section 'Corporate Social Responsibility' which is attached to this report. The report covers the guidelines circulated by the GOI and the several initiatives the Company has been working on which are beyond the scope of the Guidelines.

AUDITED FINANCIAL RESULTS

FOR THE YEAR ENDED 31^ST MARCH 2011

(Rs. in Millions)

SR. NO.	PARTICULARS	Fourth Quarter Ended	Year Ended
		31.03.2011 (Unaudited)	31.03.2011 (Audited)
1	Gross Sales	3633.200	14329.700
	a) Net Sales (Net of excise)	3135.500	12307.200
	b) Other Operating Income	14.900	25.700
	Total Income	3150.400	12332.900
2	Expenditure
	a) Increase)/Decrease in Stock in Trade and WIP	20.100	104.700
	b) Consumption of Raw Materials	846.800	3342.700
	c) Purchase of Traded Goods	139.400	333.500
	d) Power, Fuel and Water	329.700	1360.800
	e) Consumption Of Stored, Spares and Chemicals	722.600	2729.900
	f) Employees Cost	332.900	1300.100
	g) Depreciation	178.100	716.200
	h) Other Expenditure	154.600	528.900
	Total	2724.200	10416.800
3	Profit from operations before Other Income and Interest and Exceptional Items (1-2)	426.200	1916.100
4	Other Income	7.700	25.400
5	Profit before Interest and Exceptional Items (3+4)	433.900	1941.500
6	Interest and Financial Charges:
	a) Interest Charges	91.400	350.000
	b) Redemption Premium on FCCB’s	20.300	77.700
	c) Forex:
	- Forward Premium / Realised Foreign Exchange Loss (Gain)	(0.500)	30.200
	-Unrealised Foreign Exchange Loss (Gain)	1.900	(0.900)
7	Profit after Interest but before Exceptional Items (Loss) (5-6)	320.800	1484.500
8	Exceptional Items	--	--
9	Profit from Ordinary Activities Before Tax (7-8)	320.800	1484.500
10	Tax Expenses :
	-Provision for Current Tax	62.800	436.600
	-MAT Credit Entitlement	--	--
	-Provision for Deferred Tax	26.800	(16.300)
11	Net Profit from Ordinary Activities After Tax (9-10)	231.200	1064.200
12	Extraordinary items (net of tax expenses)	--	--
13	Net Profit for the Period (11-12)	231.200	1064.200
14	Paid up Equity Share Capital (Face value Rs. 10/-)	781.500	781.500
15	Reserves excluding Revaluation Reserve	--	--
16	Earnings Per Share (Rs.) (before/after extraordinary items, not annulised)
	a) Basic	2.96	13.62
	b) Diluted	2.96	13.62
	c) Cash	5.58	22.57
17	Public Shareholding
	-No. of shares	47250400	47250400
	-Percentage of shareholding	60.46	60.46
18	Promoters and Promoter Group Shareholding
	a) Pledged/Encumbered
	-Number of shares	--	--
	-Percentage of shares	--	--
	b) Non-encumbered
	-Number of shares	30899539	30899539
	-Percentage of shares (as a % of the shareholding of promoter and promoter group)	100.00	100.00
	-Percentage of shares (as a % of the total share capital of the company)	39.54	39.54

AUDITED STATEMENT OF ASSETS AND LIABILITIES

Particulars	31.03.2011
Shareholder’s Funds
(a) Capital	782.400
(b) Reserves & Surplus	5106.600
Loan Funds	5383.600
Deferred Tax Liability	1284.000
Total	12556.600
Fixed Assets	9383.500
Investments	827.700
Current Assets, Loans and Advances
(i) Inventories	1275.300
(ii) Sundry Debtors	1078.700
(iii) Cash and Bank Balances	308.900
(iv) Loans and Advances	1717.800
Less : Current Liabilities and Provisions
(v) Liabilities	1977.700
(vi) Provisions	67.000
Misc. Expenditure (Not Written Off)	9.400
Total	12556.600

TRADE REFERENCE :

• Navneet Publications (I) Limited
• Titan Industries Limited
• Reliance Industries Limited

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] 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.45.07
UK Pound	1	Rs.72.97
Euro	1	Rs.63.57

SCORE & RATING EXPLANATIONS

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

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.