MIRA INFORM REPORT

Report Date :

29.11.2011

IDENTIFICATION DETAILS

Name :	VALSON INDUSTRIES LIMITED
Registered Office :	Unit No.28, Sanjay Building No.6, Udit Mittal Industrial Estate, Andheri Kurla Road, Andheri (East), Mumbai-400059, Maharashtra
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	02.06.1983
Com. Reg. No.:	11-030117
Capital Investment / Paid-up Capital :	Rs. 76.608 Millions
CIN No.: [Company Identification No.]	L17110MH1983PLC030117
TAN No.: [Tax Deduction & Collection Account No.]	MUMV07780D
Legal Form :	Public Limited Liability Company. The Company Shares are listed to the Stock Exchanges.
Line of Business :	Manufacturer and Exporter of Yarn.
No. of Employees :	350 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

Ba (45)

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

Maximum Credit Limit :	USD 820000
Status :	Satisfactory
Payment Behaviour :	Usually correct
Litigation :	Clear
Comments :	Subject is an established 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.

ECGC Country Risk Classification List – September 30, 2011

Country Name	Previous Rating (30.06.2011)	Current Rating (30.09.2011)
India	A1	A1

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

INFORMATION PARTED BY

Name :	Mrs. Hetal
Designation :	Senior Accountant
Contact No.:	91-22-40661000
Date :	24.11.2011

LOCATIONS

Registered Office :	Unit No.28, Sanjay Building No.6, Udit Mittal Industrial Estate, Andheri Kurla Road, Andheri (East), Mumbai-400059, Maharashtra, India
Tel. No.:	91-22-66772901
Fax No.:	91-22-40661199
E-Mail :	hetal@velsonindia.com
Website :	www.velsonindia.com
Location :	Owned
Factory 1 :	Plot No. 8/9, Silvassa Industrial Co-operative Society, 66 KVA Sub-Station Road, Village Amli, Silvassa, Dadra and Nagar Haveli-396230, Union Territory, India
Factory 2 :	Plot No. 113/2/10, Tirupati Industrial Estate, Near 66 KVA Sub-Station Road, Village Amli, Silvassa, Dadra and Nagar Haveli-396230, Union Territory, India
Factory 3 :	Plot No. 7, Survey No. 207, Near Dadra Check Post, Dadra, Dadra and Nagar Haveli-396230, Union Territory, India
Factory 4 :	Survey No. 122/1, Village Silli, Dadra and Nagar Haveli-396230, Union Territory, India
Factory 5 :	Plot No. 1204 and 1705, GIDC Phase III, Vapi-396195, Gujarat, India

DIRECTORS

AS ON 31.03.2011

Name :	Mr. Suresh N. Mutreja
Designation :	Chairman and Managing Director
Name :	Mr. Lalit N. Mutreja,
Designation :	Executive Director
Name :	Mr. Ram Kumar Sharma
Designation :	Independent Director
Name :	Mr. Chandan Gupta
Designation :	Independent Director
Name :	Mr. Surendra Kumar Suri
Designation :	Independent Director

KEY EXECUTIVES

Audit Committee :	· Mr. Chandan Gupta, Chairman · Mr. Surendra Kumar Suri · Mr. Lalit N. Mutreja
SHAREHOLDERS/INVESTORS’ GRIEVANCES COMMITTEE :	· Mr. Suresh N. Mutreja · Mr. Lalit N. Mutreja · Mr. Surendrakumar Suri
Name :	Mrs. Hetal
Designation :	Senior Accountant

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 30.09.2011

Category of Shareholder

No. of Shares

% of No. of Shares

(A) Shareholding of Promoter and Promoter Group

(1) Indian

Individuals / Hindu Undivided Family

3,756,200

49.03

Sub Total

3,756,200

49.03

(2) Foreign

Total shareholding of Promoter and Promoter Group (A)

3,756,200

49.03

(B) Public Shareholding

(1) Institutions

(2) Non-Institutions

Bodies Corporate

163,293

2.13

Individuals

Individual shareholders holding nominal share capital up to Rs. 0.100 million

1,713,036

22.36

Individual shareholders holding nominal share capital in excess of Rs. 0.100 million

1,601,767

20.91

Any Others (Specify)

426,504

5.57

Clearing Members

43,905

0.57

Market Maker

1,162

0.02

Non Resident Indians

119,210

1.56

Hindu Undivided Families

262,227

3.42

Sub Total

3,904,600

50.97

Total Public shareholding (B)

3,904,600

50.97

Total (A)+(B)

7,660,800

100

(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)

7,660,800

-

BUSINESS DETAILS

Line of Business :

Manufacturer and Exporter of Yarn.

Products :

ITC CODE	PRODUCT
5402	Synthetic Filament Yarn

Exports :

Products :

Yarn

Countries :

· Egypt

· UK

Terms :

Selling :

L/C, Cash, Credit

Purchasing :

L/C, Cash, Credit

PRODUCTION STATUS (AS ON 31.3.2011)

Particulars	Unit	Installed Capacity		Actual Production
		Vapi	Silvassa	Own	Job Work
Texturising	MT	--	4500	4171	71
Twisting	MT	--	3900	2757	38
Dyeing	MT	6100	--	2690	1436

GENERAL INFORMATION

Suppliers :

· Reliance Industries Limited

Customers :

Wholesalers and Retailers

· Arviva Industries

· Euro Vista India Limited

No. of Employees :

350 (Approximately)

Bankers :

· Bank of India

· IDBI Bank

Facilities :

Secured Loan	Rs. In Millions 31.03.2011	Rs. In Millions 31.03.2010
TERM LOAN FROM BANK OF INDIA	20.233	27.433
TERM LOAN FROM IDBI	38.992	30.692
(Secured by First charge on Pari Passu basis between BOI and IDBI of Immovable properties situated at various manufacturing locations and further secured by Hypothecation of Movable assets of the company both present and future (Save and except Book-debts) subject to prior charge on certain movable assets created in favour of Bank of India for securing working capital requirements.)
Note: The amount repayable within a year Bank of India Term Loan Rs. 7.200 millions (Previous Year Rs. 7.200 millions) IDBI Term Loan Rs. 12.700 millions (Previous Year Rs. 12.700 millions).
Bank of India - Over draft	9.553	0.000
Cash Credit Account
- with Bank of India (secured by hypothecation of stock and book debts of the Company and personal guarantee of the deposits of promoters)	26.466	13.967
VEHICLE LOAN - FROM HDFC BANK	0.949	0.520
VEHICLE LOAN - FROM ICICI BANK	0.074	0.494
VEHICLE LOAN - FROM KOTAK MAHINDRA BANK	0.445	0.000
(Secured by hypothecation of specific assets) Note : The amount repayable within a year HDFC Bank Car Loan Rs. 0.536 million (Prev. 0.246 million), ICICI Bank Car loan Rs. 0.074 million (Prev. year Rs. 0.420 million) Kotak Mahindra Car loan Rs. 0.142 million (Previous year Rs. Nil))
Total	96.712	73.106
Unsecured Loan	Rs. In Millions 31.03.2011	Rs. In Millions 31.03.2010
Fixed Deposits	36.272	10.000
(Including Interest Accrued but Rs. 1.572 millions (Previous Year Rs. Nil) (From Directors maximum oustanding Rs.1.031 millions including Accrued Interest (Previous year Rs. 0.534 million))
Total	36.272	10.000

Banking Relations :	--
Auditor :
Name:	Mehta Chokshi and Shah Chartered Accountants
Address :	Mumbai, Maharashtra, India

CAPITAL STRUCTURE

AS ON 31.03.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
12000000	Equity Shares	Rs.10/- each	Rs. 120.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
7660800	Equity Shares	Rs.10/- each	Rs. 76.608 Millions

Note: (out of above 750,000 shares are alloted as fully paid up bonus shares in 1994 and 3830400 shares are alloted as fully paid up bonus shares on 9th December 2009 by way of capitalisation of Share Premium Account)

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2011	31.03.2010	31.03.2009
SHAREHOLDERS FUNDS
1] Share Capital		76.608	76.608	38.304
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		129.014	111.087	138.114
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		205.622	187.695	176.418
LOAN FUNDS
1] Secured Loans		96.712	73.106	81.443
2] Unsecured Loans		36.272	10.000	19.306
TOTAL BORROWING		132.984	83.106	100.749
DEFERRED TAX LIABILITIES		37.246	36.346	37.307
TOTAL		375.852	307.147	314.474
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		253.278	237.173	242.906
Capital work-in-progress		43.070	16.038	14.092
INVESTMENT		0.127	0.127	0.127
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	69.227	39.436	38.583
	Sundry Debtors	61.743	59.294	45.197
	Cash & Bank Balances	3.367	5.195	7.517
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	24.669	18.771	21.739
Total Current Assets		159.006	122.696	113.036
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	60.289	46.294	34.988
	Other Current Liabilities	9.677	7.768	7.941
	Provisions	9.663	14.825	12.758
Total Current Liabilities		79.629	68.887	55.687
Net Current Assets		79.377	53.809	57.349
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		375.852	307.147	314.474

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2011	31.03.2010	31.03.2009
	SALES
		Income	819.228	677.760	591.187
		Other Income	0.929	1.704	1.509
		TOTAL (A)	820.157	679.464	592.696
Less	EXPENSES
		Raw Materials Consumed	522.202	400.350	353.415
		Manufacturing Expenses	192.797	164.340	148.295
		Administrative Expenses	53.129	46.337	40.918
		Increase / (Decrease) in Finished Goods	(16.172)	1.982	2.130
		TOTAL (B)	751.956	613.009	544.758
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		68.201	66.455	47.938
Less	FINANCIAL EXPENSES (D)		5.747	4.151	5.071
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		62.454	62.304	42.867
Less/ Add	DEPRECIATION/ AMORTISATION (F)		22.568	25.144	18.605
	PROFIT BEFORE TAX (E-F) (G)		39.886	37.160	24.262
Less	TAX (H)		13.100	12.439	8.641
	PROFIT AFTER TAX (G-H) (I)		26.786	24.721	15.621
	Adjustment for taxation of earlier years		0.044	0.000	0.000
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		67.887	58.110	55.355
Less	APPROPRIATIONS
		Transfer to General Reserve	1.500	1.500	1.500
		Proposed Dividend on Equity Shares	7.661	11.491	9.576
		Proposed Dividend on Preference Shares	0.000	0.000	0.143
		Tax on Dividend on Equity Shares	1.243	1.953	1.627
		Tax on Dividend on Preference Shares	0.000	0.000	0.020
	BALANCE CARRIED TO THE B/S		84.313	67.887	58.110
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	7.811	11.777	8.000
	TOTAL EARNINGS		7.811	11.777	8.000
	IMPORTS
		Plant & Machinery Spares Parts	0.000	0.053	0.600
	TOTAL IMPORTS		0.000	0.053	0.600
	Earnings Per Share (Rs.)		3.50	3.23	4.04

Expected Sales (2011-2012) : Rs. 850.000 Millions

The above information has been parted by Mrs. Hetal .

QUARTERLY RESULTS

PARTICULARS	30.06.2011	30.09.2011
	1^st Quarter	2^nd Quarter
Net Sales	188.810	212.870
Total Expenditure	173.390	202.120
PBIDT (Excl OI)	15.420	10.750
Other Income	0.000	0.000
Operating Profit	15.420	10.750
Interest	1.690	1.480
Exceptional Items	0.000	0.000
PBDT	13.730	9.270
Depreciation	5.180	5.170
Profit Before Tax	8.550	4.100
Tax	2.600	1.100
Provisions and contingencies	0.000	0.000
Profit After Tax	5.950	3.000
Extraordinary Items	0.000	0.000
Prior Period Expenses	0.000	0.000
Other Adjustments	0.000	0.000
Net Profit	5.950	3.000

KEY RATIOS

PARTICULARS		31.03.2011	31.03.2010	31.03.2009
PAT / Total Income	(%)	3.27	3.64	2.64
Net Profit Margin (PBT/Sales)	(%)	4.87	5.48	4.10
Return on Total Assets (PBT/Total Assets}	(%)	9.67	10.33	6.82
Return on Investment (ROI) (PBT/Networth)		0.19	0.20	0.14
Debt Equity Ratio (Total Liability/Networth)		1.22	1.00	1.10
Current Ratio (Current Asset/Current Liability)		2.00	1.78	2.03

LOCAL AGENCY FURTHER INFORMATION

BUSINESS OPERATIONS :

The Company continues to retain its leadership in the dyed yarns segment.

During the year the Company has achieved substantial improvement both in turnover and operating Profit after Tax. The Turnover increased to Rs. 819.227 millions from Rs. 677.760 millions - a growth of 20.9% and the Net Profit after tax increased to Rs. 26.786 millions from Rs. 24.721 millions in the previous year - a growth of 8.3%.

SEGMENT-WISE PERFORMANCE:

Since the Company operates only in one segment as the Manufacturer of Polyester Dyed Yarn and Processors of

Cotton and other fancy Dyed Yarn, no further analysis is required and the operational results are mentioned elsewhere in this report.

MANAGEMENT DISCUSSION AND ANALYSIS

OVERVIEW OF THE ECONOMY :

India is today rated as one of the most attractive investment destinations across the globe. The UNCTAD World Investment Report (WIR) 2010, in its analysis of the global trends and sustained growth of Foreign Direct Investment (FDI) inflows, has reported India to be the second most attractive location for FDI for 2010-2012. Moreover, India attracted FDI equity inflows of US$ 1,274 million in February 2011. The cumulative amount of FDI equity inflows from April 2000 to February 2011 stood at US$ 193.7 billion, according to the data released by the Department of Industrial Policy and Promotion (DIPP). The humungous increase in investment mirrors the foreign investors' faith in the Indian markets.

The services sector comprising financial and non-financial services attracted 21 per cent of the total FDI equity inflow into India worth US$ 2,987 million during the period April 2010 - January 2011, while telecommunications including radio paging, cellular mobile and basic telephone services attracted the second largest amount of FDI worth US$ 1,332 million during the same period. Automobile industry was the third highest sector attracting FDI worth US$ 1,191 million followed by Housing and Real Estate sector which garnered US$ 1,048 million during the period April-January 2011.

The buoyancy in capital inflows continued during the second quarter of 2010-11 driven by large inflows under FII investments along with steady inflows under short-term trade credits and external commercial borrowings (ECBs), according to the report, "Macroeconomic and Monetary Developments Third Quarter Review 2010-11", released by RBI. As per preliminary data, the net capital flow from April 2010 - September 2011 is projected to reach US$ 36.7 billion.

Textile Industry is providing one of the most basic needs of people and the holds importance; maintaining sustained growth for improving quality of life. It has a unique position as a self-reliant industry, from the production

of raw materials to the delivery of finished products, with substantial value-addition at each stage of processing; it is a major contribution to the country's economy. The Valson is planning up-gradation, modernization and expansion in Texurising, Twisting and dyeing, process capacities to build on economies of scales and develop capabilities to serve the global market.

FORWARD LOOKING STATEMENTS:

Forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, but not limited to, statements as to

future operating results and plans that involve risks and uncertainties. They use words such as "expects", "anticipates", "believes", "estimates", the negative of these terms and similar expressions to identify forward looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or achievements expressed or implied by those projected in the forward-looking statements for any reason.

COMPANY'S BUSINESS

The prominent business of the Company is manufacturing of Polyester Texturised, Twisted and Dyed Yarn and also dyeing of Cotton and other fancy Yarns which are used for making fabrics for Shirting, Suiting Upholstery, Knitting, Labels and Curtains etc.

INDUSTRY STRUCTURE AND DEVELOPMENTS:

The Textile industry occupies an important place in the Economy of the country because of its contribution to the

industrial output, employment generation and foreign exchange earnings. The textile industry encompasses a range of industrial units, which use a wide variety of natural and synthetic fibres to produce fabrics. On a yearon-

year basis, cotton textile industry has posted a growth of around 14.8% followed by the products produced by textile industry with a growth rate of above 11%. The textile sub-sector involved in the production of silk, wool and man-made fibres has also seen a steep increase in its growth amounting to 8.2% on a yearly basis. by textile industry with a growth rate of above 11%. The textile sub-sector involved in the production of silk, wool and man-made fibres has also seen a steep increase in its growth amounting to 8.2% on a yearly basis.

OUTLOOK:

With the setting up of new unit at Silli Village, the Company is expected to achieve substantial growth both in terms of turnover and profitability. It will also have an edge over others with large variety of products under one roof.

During the current year, the Company will concentrate on optimum utilisation of capacity along with seeing the better conversion created during the last year and also try for trial runs for further capacities being created during

the current year. The Company will expand its network and widen the area of sales by capturing new upcoming Domestic as well as International Markets. They are committed to continuous improvement with Long-term goals rather than short term goal. Management has to inform you that the company has started export to U.A.E., U.K., Egypt and Turkey and the Company sees good future in international market as government is also giving the benefits to Textile Industry. The Company shall direct all its efforts and resources towards a strong and healthy shareholders wealth creation.

TRADE REFERENCES:

· Arviva Industries

· Euro Vista India Limited

· Reliance Industries Limited

FIXED ASSETS

· Land

· Factory Building

· Office Premises

· Staff Quarters

· Plant and Machinery

· Electrical Installation

· Utility Equipments

· Office Equipments

· Vehicles

· Computer

· Software

· Furniture and Fixtures

WEBSITE DETAILS

BUSINESS DESCRIPTION

Subject is an India-based company. The Company operates in the textile industry. The Company is engaged in manufacturing dyed and texturised yarn. The Company manufactures polyester texturised, twisted and dyed yarn, and dyeing of cotton and other fancy yarns. These products are used for making fabrics for shirting, suiting upholstery, knitting, labels and curtains. The Company's principal product includes synthetic filament yarn. During the fiscal year ended March 31, 2010 (fiscal 2010), the Company manufactured 3,736 million tons of texturising and 2,491 million tons of dyeing. Its plants are located in Silvassa, Dadra and Vapi. For the nine months ended 31 December 2010, Subject revenue increased 17% to RS595.5M. Net income increased 9% to RS20.9M. Revenues reflect higher income from the operations. Net income was partially offset by an increase in raw materials consumed, an increase in power costs, an increase in staff costs, an increase in other expenditure and an increase in interest. The Subject is an Indian based Company

NEWS

ICRA RATES FUND BASED LIMITS OF VALSON INDUSTRIES AT LBBB

24 February 2011

(ADPnews) - February 24, 2011 - ICRA assigned yesterday a LBBB- rating to the fund based limits of Valson Industries Limited (BOM:530459), while rating the non-fund based limits of the company at A3.

The agency issued the following press release:

Rating History

Instrument Amount Outstanding Rating

In millions In millions As on February 2011

Fund-based limits 13.39 N.A LBBB-

Non-fund-based limits 1.00 N.A A3

ICRA has assigned an LBBB- (pronounced as L triple B minus) rating to the Rs. 133.900 millions fund-based limits and A3 (pronounced as A three) rating to the Rs. 10.000 millions non fund based bank facilities of Valson Industries Limited (VIL). The outlook assigned to the long term rating is Stable.

The ratings, favourably factor in the promoters established track record, the company diversified client base and the fiscal benefits accrued in the form of sales tax exemption and interest subsidies, which has enabled it to maintain steady margins. The ratings also derive comfort from the moderate capital structure of the company and comfortable liquidity position.

However the execution and funding risks associated with the capex plans of VIL are likely to impinge on the debt servicing capabilities of the firm in the short term. The ratings further incorporate VIL modest scale of operations in an industry which has several large and established players. Also, the profitability remains vulnerable to fluctuations in its key raw materials i.e., POY although the risk is partially mitigated by raw material pass on arrangement with major customers.

About the Company

Valson Industries Limited (VIL) is a flagship company of Mutreja Group. VIL was incorporated as private Limited company on 2nd June 1983 and converted to a public company on 20th September 1994.Equity shares of VIL are listed in Bombay Stock Exchange. VIL holds ISO 9001-2008 certification issued from AGSI certification Private Limited. The company has its Registered Office at Mittal Estate, Andheri Mumbai and five manufacturing units setup in Vapi (2 units), Silvassa (2units), Dadra (1unit) with around 170 laborers.

Recent results:

Valson Industries Limited has reported a profit of Rs. 20.900 millions on an operating income of Rs. 595.500 millions for the year ending 31th December 2010, as per third quarter unaudited figures.

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. 51.98
UK Pound	1	Rs. 80.58
Euro	1	Rs. 69.12

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	5
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	5
--CREDIT LINES	1~10	4
--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	YES
--AFFILIATION	YES/NO	NO
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		45

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	-

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