MIRA INFORM REPORT

Report Date :

30.05.2011

IDENTIFICATION DETAILS

Name :	DIFFUSION ENGINEERS LIMITED
Registered Office :	T 5 and 6, MIDC, Hingna Industrial Area, Nagpur - 440 038, Maharashtra
Country :	India
Financials (as on) :	31.03.2010
Date of Incorporation :	10.02.2000
Com. Reg. No.:	11-124154
Capital Investment / Paid-up Capital :	Rs.37.375 millions
CIN No.: [Company Identification No.]	U99999MH2000PTC124154
TAN No.: [Tax Deduction & Collection Account No.]	NGPD02549B
Legal Form :	A closely held Public Limited Liability Company
Line of Business :	Manufacturing, Importing and Exporting of all type of Engineering and Allied Products.
No. of Employees :	More than 350 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

Ba (51)

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

Maximum Credit Limit :	USD 1200000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and a reputed company with good track. Directors are reported to be respectable and experienced businessmen. Trade relations are reported as fair. Business is active. Payments are usually correct and as per commitments. The company can be considered good for normal business dealings under 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. Jain
Designation :	Director
Date :	27.05.2011

LOCATIONS

Registered Office / Head Office / Factory 1:	T 5 and 6, MIDC, Hingna Industrial Area, Nagpur - 440038, Maharashtra, India
Tel. No.:	91-7104-236046 / 232084 / 234727 / 232084 / 234727
Fax No.:	91-7104-232085 / 232085
E-Mail :	diffeng@nagpur.dot.net.in info@diffusionengineers.com diffugp@sanchar.net
Website :	http://www.diffusionengineers.com
Location :	Owned
Factory 1 :	N - 78 and 79, MIDC, Hingna Industrial Area, Nagpur – 440016, Maharashtra, India
Tel. No.:	91-7104-236036
Factory 2 :	Plot No. T-12, MIDC, Hingna Industrial Area, Nagpur – 440016, Maharashtra, India
E-Mail :	info@diffusionengineers.com
Branches :	Located at: Chennai Faridabad Jamshedpur Pune Raipur Secunderabad Vadodara

DIRECTORS

As on : 09.08.2010

Name :	Mr. Narendra K Garg
Designation :	Joint Managing Director
Address :	803, Jai Kalpana, Ramdass Peth, Nagpur, Maharashtra
Date of Birth :	10.02.1950
Date of Appointment :	12.08.1983
Din No:	00049074
Name :	Mrs. Renuka Garg
Designation :	Director
Address :	3, Pawanbhumi, Somalwada, Wardha Road, Nagpur – 440025, Maharashtra, India
Date of Birth :	18.08.1975
Date of Appointment :	22.08.2009
Din No.:	02815373
Name :	Mr. Ajay Jain
Designation :	Director
Address :	Flat No. 802, 8^th Floor, Building No. 6, Halley Wing E, Evershine Millesnnium, Thakur Villege, Kandivali (East), Mumbai – 400101, Maharashtra, India
Date of Birth :	02.07.19.65
Date of Appointment :	22.08.2009
Din No.:	02815416
Name :	Mr. Dayal Gupta
Designation :	Director
Address :	No. 9 Adan Bagh Colony, Dayal Bagh, Agra – 282 005, Uttar Pradesh, India
Date of Birth :	16.11.1993
Date of Appointment :	06.08.1995
Din No.:	00049240
Name :	Mr. Prashant Garg
Designation :	Director
Address :	3 Pawan Bhoomi Layout, Somalwada Wardha Road, Nagpur – 440 025, Maharashtra, India
Date of Birth/Age :	08.05.1983
Date of Appointment :	09.11.2003
Din No.:	00049106
Name :	Mrs. Tulsi Gurudas
Designation :	Director
Address :	Flat No. 802, 8^th Floor, Building No. 6, Halley Wing E, Evershine Millesnnium, Thakur Villege, Kandivali (East), Mumbai – 400101, Maharashtra, India
Date of Birth :	23.08.1943
Date of Appointment :	22.08.2009
Din No.:	02817213
Management Team :
Name :	Mr. Vivek Kulkarni
Name :	Mrs. Seetal Batra
Name :	Mr. Anuj Goel
Name :	Mr. Sameer Khaladkar
Name :	Mr. Ravidra Deshpande
Name :	Mr. Dhananjay Dhange
Name :	Mr. Chitra Chandrasekhar
Name :	Mrs. Kalpana Phalak
Name :	Mr. Ravi Gharote

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 09.08.2010

Names of Shareholders	No. of Shares
N.K.Garg	1305019
N.K.Garg [HUF]	240770
Nitin Garg	58876
Nitin Garg	55013
Chitra Garg	762390
Prashant Garg	52262
Manfred Kluge	797601
M.Chandrashekara	506
S.P.Deshpande	5036
Nitranjan D. Pawar	2518
Prem Dayal Gupta	2400
Rakesh K Malvi	415
Ajay Malvi	800
D.R.Choudhary	3035
Chitra Chandrashekhar	4257
S. Chandrasekaran	700
Vijaya C. Randhir	3000
Jayanta Bose	20626
Satya Priya Roy	2321
Rajesh Shah	38137
Bishwa Nath Kedia	4230
C.K. Prashanth	2436
Sushil Punyani	9374
Manisha Kalpesh Belani	2422

AS ON 09.08.2010

Category	Percentage
Foreign holdings( Foreign institutional investor(s), Foreign companie(s) Foreign financial institution(s), Non-resident Indian(s) or Overseas Corporate bodies or Others	23.85
Directors or relatives of Directors	66.20
Other top fifty shareholders	9.95
Total	100.00

BUSINESS DETAILS

Line of Business :	Manufacturing, Importing and Exporting of all type of Engineering and Allied Products.
Products :	Cobalt and Tungsten Carbide Alloys Cold Repair Products Colmonoy Powders and Coated Electrodes Flux Cored Wires Gas Welding Alloys Lo Temp and Antiwear Welding Electrodes Sop-Containing the Unique Ultrahard Chromium Borides Super Spray System For Thermal Spraying Tig-Mig Filler Wires Tubular Products Wear Plates
Agencies Held :	Lotemp Tubaloy Corodur
Exports :
Country :	Ø Europe Ø Spain Ø Asian Countries Ø Gulf Countries
Imports :
Products :	Raw Materials
Country :	Ø China Ø Taiwan Ø Germany
Terms :
Purchasing :	Depends

GENERAL INFORMATION

Customers :

Ø Others

Ø Industries

No. of Employees :

More than 350 (Approximately)

Bankers :

Ø Syndicate Bank, 90, Canal Road, Ramdaspeth, Nagpur – 440010, Maharashtra, INDIA

Ø IDBI Bank Limited, 58 Mission Road, Bangalore - 560 027, Karnataka

Ø State Bank of India, Hill Road (Bandra) Branch, Mumbai – 400 050

Ø HDFC Bank

Facilities :

Particulars (Rs. In millions )	31.03.2010	31.03.2009
Term Loan	18.570	35.405
Secured Overdraft	84.683	68.089
Overdraft against deposits	18.639	6.765
Total	121.892	110.259

Banking Relations :

--

Auditors :

Name:

P R Bhuta and Company

Chartered Accountants

Address :

2-I, Jeevan Sahakar, Sir P. M. Road, Fort, Mumbai – 400001, Maharashtra, India

Associates/Subsidiaries :

Ø Diffusion Super Conditioning Services Private Limited

CIN No.: U51503MH1990PTC124545

Ø Nowelco Industries Private Limited

CIN No.: U29309CT1999PTC013276

CAPITAL STRUCTURE

As on : 31.03.2010

Authorised Capital :

No. of Shares	Type	Value	Amount
5000000	Equity Shares	Rs. 10/- each	Rs.50.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
3737467	Equity Shares	Rs. 10/- each	Rs.37.375 millions

Note :

Of the above 1974426 Equity Shares are issued as fully paid bonus shares by way of capitalization of the General reserves.

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		37.375	37.374	30.888
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		259.989	207.618	170.144
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		297.364	244.992	201.032
LOAN FUNDS
1] Secured Loans		121.892	110.259	137.300
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		121.892	110.259	137.300
DEFERRED TAX LIABILITIES		0.594	2.503	2.459
TOTAL		419.850	357.754	340.791
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		141.189	144.806	102.662
Capital work-in-progress		0.000	0.000	35.603
INVESTMENT		29.487	17.944	32.433
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	103.948	79.561	96.060
	Sundry Debtors	160.499	118.097	93.285
	Cash & Bank Balances	49.605	47.197	29.776
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	125.637	107.020	72.054
Total Current Assets		439.689	351.875	291.175
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	40.007	35.502	28.885
	Sundry Creditors	30.082	18.387	27.270
	Provisions	120.426	102.982	64.927
Total Current Liabilities		190.515	156.871	121.082
Net Current Assets		249.174	195.004	170.093
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		419.850	357.754	340.791

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Income	605.403	610.928	611.739
		Other Income	7.245	7.156	4.524
		TOTAL (A)	612.648	618.084	616.263
Less	EXPENSES
		Cost of materials consumed, purchases and manufacturing expenses	311.470	321.893	380.716
		Selling and Administrative Expenses	91.550	82.437	74.822
		Personnel Expenses	74.665	70.529	59.597
		Increase / Decrease in Stock	(13.281)	8.193	(15.722)
		Prior Period Items	1.859	0.406	(0.616)
		TOTAL (B)	466.263	483.458	498.797
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		146.385	134.626	117.466
Less	FINANCIAL EXPENSES (D)		9.466	12.924	10.570
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		136.919	121.702	106.896
Less/ Add	DEPRECIATION/ AMORTISATION (F)		23.687	21.994	15.657
	PROFIT BEFORE TAX (E-F) (G)		113.232	99.708	91.239
Less	TAX (I)		38.998	36.203	31.459
	PROFIT AFTER TAX (G-I) (J)		74.234	63.505	59.780
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		114.797	78.421	45.445
Less	APPROPRIATIONS
		Transfer to General Reserve	7.423	6.350	(5.000)
		Interim Dividend	9.343	8.417	10.810
		Proposed Dividend	9.343	9.343	(7.722)
		Tax on Dividend	3.175	3.018	(3.149)
	BALANCE CARRIED TO THE B/S		159.744	114.797	78.421
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	29.944	2.128	NA
	TOTAL EARNINGS		29.944	2.128	NA
	Earnings Per Share (Rs.)		20.36	17.15	15.96

Particulars	31.03.2011
Sales Turnover (Approximately)	690.000

The above information has been parted by Mr. Jain.

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	12.11	10.27	9.60
Net Profit Margin (PBT/Sales)	(%)	18.48	16.32	14.81
Return on Total Assets (PBT/Total Assets}	(%)	34.13	20.07	19.62
Return on Investment (ROI) (PBT/Networth)		0.38	0.40	0.45
Debt Equity Ratio (Total Liability/Networth)		1.05	1.09	1.29
Current Ratio (Current Asset/Current Liability)		2.30	2.24	2.40

LOCAL AGENCY FURTHER INFORMATION

Sundry Creditors Details :

(Rs. In Millions )

Particulars	31.03.2010	31.03.2009	31.03.2008
Due to Micro, Medium and Small Enterprises	9.924	6.684	16.631
Others	20.158	11.702	10.638
Total	30.082	18.387	27.270

History:

Subject was incorporated as a Private Limited company in the State of Maharashtra, bearing Company No. 28644 dated 05-11-82. The registered office of the company has been shifted from the state of Maharashtra to the State of Karnataka under the CLB, Western Bench order dated 20^th November 1987. Accordingly the office has been shifted to Bangalore w.e.f. 03-03-88 and the company was assigned Company Registration No. 8957. It was converted as a Public Limited Company under section 31 of the companies Act 1956, w.e.f. 17^th May 1995.

Again the registered office of the company has been shifted to the State of Maharashtra and the ROC file has been transferred on 1^st December, 1999. The office of the company has been shifted to its Nagpur factory.

REVIEW OF BUSINESS OPERATIONS :

During the year, the Sales turnover of the company has gone down to Rs. 642.432 millions as against Rs. 673.424 millions during the previous year. Reason has been recessionary trend in market as well as reduction in prices. But the company is able to maintain better profitability.

Form : 8 

Corporate identity number of the company	U99999MH2000PLC124154
Name of the company	DIFFUSION ENGINEERS LIMITED
Address of the registered office or of the principal place of business in India of the company	T-5 and 6, MIDC, Hingana, Nagpur – 440038, Maharashtra, INDIA
This form is for	Modification of charge
Type of charge	Immovable property Book debts Movable property (not being pledge) Any interest in immovable property
Particular of charge holder	Syndicate Bank, 90, Canal Road, Ramdaspeth, Nagpur – 440010, Maharashtra, INDIA
Nature of instrument creating charge	1) Composite Hypothecation Agreement 2) Confirmation of Creation of Second/Subsequent Equitable Mortgage (Collectively Constitute Single Charge)
Date of instrument Creating the charge	10.10.2009
Amount secured by the charge	Rs. 850.000 millions
Brief of the principal terms an conditions and extent and operation of the charge	Rate of interest Interest @ 10.25% p.a. Terms of repayment The Borrower shall on demand pay the whole amount due to the Bank with interest and cost. Margin Margin - SODH - 25% for Book Debts of over 90 days 40% Bank Guarantee - 10% Cash Margin Extent and operation of the charge Security to cover principal amount together with interest, costs, charges and expenses etc. Other Details of Credit Facilities as under :- 1) SODH - Rs.60.000 millions 2) CDD - Rs. 5.000 millions 3) DBD/DATBD (LC) - Rs. 5.000 millions 4) Bank Guarantee - Rs.15.000 millions ---------------------- Total Rs.85.000 millions
Short particulars of the property charged (Including location of the property)	1.First and exclusive charge security by way of hypothecation of present and future stocks in trade consisting of raw materials viz. wire, chemicals, alloys, chromium etc., work in progress, raw 2.materials, finished goods, stores and spares, welding electrodes, gas welding rods etc. and book debts, existing plant and machineries, work shop equipments, laboratory equipments, furniture and fixtures, 3.vehicles, extender stone conveyer system etc. 4.Equitable Mortgage of immovable properties being, 1) Plot No. T - 5 and 6 adm. 2000 sq.mtrs. approx. in Nagpur Industrial Area with in the Village limit of Nildoh outside the limits of NMC, Tal. Hingna, 5.Dist. Nagpur 2) Plot No. N-78 adm. 5520 sq.mtrs. and Plot No.N-79 in Nagpur Industrial Area within the Village limit of Village Nildoh outside the limit of NMC, Tal. Hingna, Dist. Nagpur.
Date of instrument modifying the charge	21.07.2009
Particulars of the present modification	Charge reduced from Rs.100.000 millions to Rs.85.000 millions

FIXED ASSETS :

Ø Air Conditioners

Ø Buildings

Ø Computer

Ø Furniture and Fixtures

Ø Land

Ø Office Equipments

Ø Plant and Machinery

Ø Projected

Ø Vehicles

Ø Weighing Machines

Ø Technical Know-how Fees

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs. 45.21
UK Pound	1	Rs. 74.30
Euro	1	Rs. 64.40

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	7
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	7
--CREDIT LINES	1~10	7
--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	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		61

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.