MIRA INFORM REPORT

Report Date :

09.09.2011

IDENTIFICATION DETAILS

Name :	HEAVY ENGINEERING CORPORATION LIMITED
Registered Office :	H.E.C. Administrative Building, Plant Plaza Road, Ranchi – 834004, Jharkhand, India
Country :	India
Financials (as on) :	31.03.
Date of Incorporation :	13.12.1958
Com. Reg. No.:	03-000630
Capital Investment / Paid-up Capital :	Rs.6060.788 Millions
CIN No.: [Company Identification No.]	U27100JH1958GOI000630
TAN No.: [Tax Deduction & Collection Account No.]	RCHH00033F
Legal Form :	A Closely Held Public Limited Liability Company
Line of Business :	Manufacturing of equipment and machinery for Iron and Steel Industry.
No. of Employees :	3737 [Approximately]

RATING & COMMENTS

MIRA’s Rating :

Ca [17]

RATING		STATUS	PROPOSED CREDIT LINE
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

Status :	Moderate
Payment Behaviour :	Slow
Litigation :	Clear
Comments :	Subject is a government of India owned company. It is an established company having moderate track. There appears some accumulated losses recorded by the company. However, business is active. Payments are reported to be slow. The company can be considered for business dealings with some cautions.

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 – June 30, 2010

Country Name	Previous Rating (01.04.2010)	Current Rating (30.06.2010)
India	A1	A1

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

LOCATIONS

Registered Office :	H.E.C. Administrative Building, Plant Plaza Road, Ranchi – 834004, Jharkhand, India
Tel. No.:	91-651-2401571
Fax No.:	91-651-2401249
E-Mail :	sect@hecltd.com
Website :	http://www.hecltd.com
Branch Office :	E-84, Masjid Moth, Residential Scheme, Greater Kailash – III, New Delhi-110048, India
Tel. No.:	91-11-29220224
Fax No.:	91-11-29220225
E-Mail :	hecdelhi@hecltd.com
Branch Office :	77, Park Street, Kolkata-700016, India
Tel. No.:	91-33-22172397
Fax No.:	91-33-22291509
E-Mail :	heckolkata@hecltd.com

DIRECTORS

As on 20.12.2010

Name :	Mr. Gopikumar Pillai
Designation :	Managing director
Address :	F/42, Sector III, Dhurwa, Ranchi – 834004, Jharkhand, India
Date of Birth/Age :	18.12.1951
DIN :	01537184
Date of Appointment :	28.05.2007
Name :	Mr. Bharat Prasad
Designation :	Director
Address :	E-150, Sector - 2, Dhurwa, Ranchi – 834004, Jharkhand, India
Date of Birth/Age :	02.10.1951
DIN :	02249545
Date of Appointment :	16.06.2008
Name :	Mr. Ramaballava Misra
Designation :	Director
Address :	F/12, Sector III, Dhurwa, Ranchi – 834004, Jharkhand, India
Date of Birth/Age :	15.12.1954
DIN :	01223196
Date of Appointment :	16.05.2008
Name :	Mr. Harbhajan Singh
Designation :	Nominee director
Address :	6, Lokmanya Tilak Marg, Dalibagh, Lucknow, Uttar Pradesh, India
Date of Birth/Age :	23.11.1955
DIN :	02922092
Date of Appointment :	12.01.2010
Name :	Mr. Saurabh Chandra
Designation :	Nominee director
Address :	D-1/9, Bharti Nagar, New Delhi – 110003, India
Date of Birth/Age :	11.04.1955
DIN :	02726077
Date of Appointment :	09.11.2009

KEY EXECUTIVES

Name :	Mr. Abhay Kumar Kanth
Designation :	Secretary
Address :	Near Tiny Tots (N) School, North Office Para, Doranda, Ranchi – 834002, Jharkhand, India
Date of Birth/Age :	05.06.1972
DIN :	AKUPK6534F
Date of Appointment :	17.11.2005

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 20.12.2010

Names of Shareholders	No. of Shares
President of India	6060785
Gpoikumar Pillai	1
K K Kohli Under secretary to the government of India	1
Harbhajan Singh, Joint Secretary DHI, GOI	1
Total	6060788

As on 20.12.2010

Category	Percentage
Government [Central and State]	100.00

BUSINESS DETAILS

Line of Business :	Manufacturing of equipment and machinery for Iron and Steel Industry.
Products :	Metallurgical Machinery Forging and Forged Rolls Turnkey Project

GENERAL INFORMATION

No. of Employees :

3737 [Approximately]

Bankers :

State Bank of India, Commercial Branch Ranchi, Mecon Campus, P.O. Doranda, Ranchi - 834002, Jharkhand, India

Facilities :

Secured Loan [Rs. in million]	31.03.2010	31.03.2009
Working Capital Loan From Bank [secured by hypothecation of raw materials, finished goods, work in progress, stores and spare parts and book debts]	1120.655	5.483
Total	1120.655	5.483

Banking Relations :	--
Auditors :
Name :	Anjali Jian and Associates Chartered Accountant
Address :	Jain Villa, Guru Nanak School, P P Compound, Ranchi – 834001, Jharkhand, India
Tel. No.:	91-651-2331044
Mobile No.:	91-9334701107
Fax No.:	91-651-2331844

CAPITAL STRUCTURE

As on 31.03.2010

Authorised Capital :

No. of Shares	Type	Value	Amount
10,000,000	Equity Shares	Rs.1000/-each	Rs.10000.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
6,060,788	Equity Shares	Rs.1000/-each	Rs.6060.788 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

Particulars		31.03.2010	31.03.2009	31.03.2008
SHAREHOLDERS FUNDS
1] Share Capital		6060.788	4532.335	4532.335
2] Share Application Money		0.001	1528.454	0.050
3] Reserves & Surplus		1274.658	2111.827	1206.404
4] (Accumulated Losses)		[9413.363]	[10646.136]	[10829.844]
NETWORTH		[2077.916]	[2473.520]	[5091.055]
LOAN FUNDS
1] Secured Loans		1120.655	5.483	819.606
2] Unsecured Loans		0.000	0.000	1409.629
TOTAL BORROWING		1120.655	5.483	2229.235
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		[957.261]	[2468.037]	[2861.820]
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		582.390	608.635	593.473
Capital work-in-progress		249.477	215.161	271.036
INVESTMENT		0.036	0.036	0.036
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1593.078	1230.562	1246.539
	Sundry Debtors	3349.714	2046.021	1452.919
	Cash & Bank Balances	1769.872	553.123	107.708
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	212.326	151.236	152.241
Total Current Assets		6924.990	3980.942	2959.407
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	974.692	595.506	399.488
	Other Current Liabilities	6245.688	5658.212	5216.667
	Provisions	1533.018	1065.522	1135.461
Total Current Liabilities		8753.398	7319.240	6751.616
Net Current Assets		[1828.408]	[3338.298]	[3792.209]
MISCELLANEOUS EXPENSES		39.244	46.429	65.844
TOTAL		[957.261]	[2468.307]	[2861.820]

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Income	4965.603	4173.874	3688.433
		Other Income	669.961	129.340	241.407
		TOTAL (A)	5635.564	4303.214	3929.840
Less	EXPENSES
		Consumption of Raw Materials and Components	1236.960	966.544	1146.443
		Consumption of Stores and Spares	985.025	623.900	637.275
		Research and development expenditure	0.652	0.566	0.603
		Employees remuneration and benefits	1364.417	1016.879	719.378
		Other expenses of manufacturing, administration, selling and distribution	1337.725	1141.477	1073.427
		provisions	77.260	113.919	76.912
		Township and social welfare	103.615	[0.998]	[32.022]
		Misc. losses written off	190.335	4.711	0.000
		TOTAL (B)	5295.989	3866.998	3622.016
Less	PROFIT/LOSS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		339.575	436.216	307.824
Less	FINANCIAL EXPENSES (D)		4.719	204.111	274.699
	PROFIT/LOSS BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		334.856	232.105	33.125
Less/ Add	DEPRECIATION/ AMORTISATION (F)		33.809	36.318	32.043
	Prior Period Income / [Expenditure]		141.660	[8.482]	43.314
	Expenditure under V.R.S		0.006	0.000	0.000
	PROFIT / LOSS BEFORE TAX (E-F) (G)		442.701	187.305	44.396
Less	TAX (I)		0.000	3.597	2.735
	PROFIT / LOSS AFTER TAX (G-I) (J)		442.701	183.708	41.661
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		[10646.136]	[10829.844]	[10899.946]
	Extra Ordinary Items		790.072	0.000	28.441
	BALANCE CARRIED TO THE B/S		[9413.363]	[10646.136]	[10829.844]
	Earnings Per Share (Rs.)		73.04	40.53	9.19

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	7.85	4.27	1.06
Net Profit Margin (PBT/Sales)	(%)	8.91	4.49	1.20
Return on Total Assets (PBT/Total Assets}	(%)	5.90	4.08	1.25
Return on Investment (ROI) (PBT/Networth)		[0.21]	[0.07]	[0.001]
Debt Equity Ratio (Total Liability/Networth)		[4.75]	[2.96]	[1.76]
Current Ratio (Current Asset/Current Liability)		0.79	0.54	0.44

LOCAL AGENCY FURTHER INFORMATION

Performance Highlights

The company has shown an appreciable growth in all the areas in the concluded financial year. The gross turnover has gone up by 16.4% over the last financial year vis-àvis 9.9% achieved during previous year. The gross turnover during the year has been Rs.5285.300 millions against Rs.4538.700 millions during the previous year. Production during the year has increased by 28.2% to Rs.5377.200 millions.

Production and Sales

The production and sales figures for the year as compared to the previous year are as follows:-

(Rs. in crore)

	2009-2010		2008-2009
	MOU	Actual	MOU	Actual
Gross Turnover	5500.000	5285.300	4560.000	4538.700
Production	5258.400	5377.200	4126.000	4194.700

Bankers Charges Report as per Registry

This form is for	Modification of charge
Charge identification number of the modified	90263486
Corporate identity number of the company	U27100JH1958GOI000630
Name of the company	HEAVY ENGINEERING CORPORATION LIMITED
Address of the registered office or of the principal place of business in India of the company	H.E.C.Administrative Bldg.Plant Plaza Rd., Ranchi-4, Plant Plaza Road, Ranchi, Jharkhand, India
Type of charge	Book Debts Movable Property Others
Particular of charge holder	State Bank of India, Commercial Branch Ranchi, Mecon Campus, P.O. Doranda, Ranchi - 834002, Jharkhand, India
Nature of description of the instrument creating or modifying the charge	The instrument creating charge is the Sanction Letter dated 30.03.2009 advising Credit Limits given by State Bank of India, Commercial Branch, Mecon Campus, Doranda - 834002 . Form C-1( Agreement of Loan for overall limit) Form C-2 (Agreement of Hypothecation of Goods and Assets) Form C-5( Letter regarding the grant of individual limits within the overall limit)
Date of instrument Creating the charge	31.03.2009
Amount secured by the charge	Rs.2530.000 millions
Brief particulars of the principal terms an conditions and extent and operation of the charge	Rate of Interest - Working Capital - 2% below SBAR rising and falling thereupon (Current SBAR being 12.25%, present effective rate - 10.25% p.a.) Bank Guarantee Commission - 50% of the extant applicable charges LC Opening Charges- 50% of the extant applicable charges Terms of Repayment - Repayment shall be on demand and in case of default in repayment of the loan/advances or in the payment of the interest thereon or any of the agreed installments of the loan on due date/s by the borrower, the Bank and / or the RBI will have an unqualified right to disclose or publish the borrower's name or the name of the borrower's company/ unit and its directors/partners/proprietors as defaulter in such manner and through such medium as the Bank of RBI in their absolute discretion may think fit. Margin - Raw Material Domestic - 25%, Stock in process - 25%, Finished Goods - 25%, Receivables up to 90 days - 25%, from 91 days to 180 days - 40%, from 181 days to 365 days - 50% Extent and Operation of the charge - The advance is secured by hypothecation charge on the Company's entire stocks of raw material, stock in process, finished goods, consumable stores and spares, book debts and receivables.
Short particulars of the property charged	The stock and debtors are hypothecated against the advances and stock shall be located in Heavy Engineering Corporation Limited, Plant Plaza, Dhurwa, Ranchi - 834004.
Particulars of the present modification	The limit of Rs. 1500.000 millions is increased to Rs.2530.000 millions.

FIXED ASSETS :

• Land
• Building
• Plant and Machinery
• Furniture and Fixtures
• Electrical Installations
• Roads and Bridges
• Railway Lines and sidings
• Water Works and Sewerage
• Vehicles and Locomotives
• Construction and Other Equipment

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.46.17
UK Pound	1	Rs.73.64
Euro	1	Rs.64.95

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	3
PAID-UP CAPITAL	1~10	2
OPERATING SCALE	1~10	2
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	2
--PROFITABILIRY	1~10	1
--LIQUIDITY	1~10	2
--LEVERAGE	1~10	2
--RESERVES	1~10	2
--CREDIT LINES	1~10	1
--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	NO
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		17

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.