MIRA INFORM REPORT

Report Date :

02.04.2012

IDENTIFICATION DETAILS

Name :	GOLDIAM INTERNATIONAL LIMITED
Registered Office :	Gems and Jewellery Complex, MIDC Seepz, Andheri (East), Mumbai – 400096, Maharashtra
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	10.10.1986
Com. Reg. No.:	11-041203
Capital Investment / Paid-up Capital :	Rs.249.460 Millions
CIN No.: [Company Identification No.]	L36912MH1986PLC041203
TAN No.: [Tax Deduction & Collection Account No.]	MUMG08508D
PAN No.: [Permanent Account No.]	AAACG2271J
Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchange.
Line of Business :	Manufacturer of Jewellery and Diamonds.
No. of Employees :	450 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

A (64)

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	USD 6300000
Status :	Good
Payment Behaviour :	Correct
Litigation :	Clear
Comments :	Subject is a well established and reputed company having good track. Financial position of the company appears to be good. Trade relations are reported as fair. Business is active. Payments are reported to be 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

LOCATIONS

Registered Office :	Gems and Jewellery Complex, MIDC Seepz, Andheri (East), Mumbai – 400096, Maharashtra, India
Tel. No.:	91-22-28291893 / 28290396 / 28292397
Fax No.:	91-22-28290418 / 28292885
E-Mail :	goldiam@bom2.vsnl.net.in goldiam@vsnl.com investorrelations@goldiam.com
Website :	http://www.goldiam.com
Factory :	Santacruz Electric Export Processing Zone, Seepz, Andheri (East), Mumbai – 400096, Maharashtra, India
Branch Office :	202, Daver House, D. N. Road, Mumbai – 400001, Maharashtra
Tel. No.:	91-22-22694127
Diamond Procurement Office :	2, Prasad Chambers, Opera House, Mumbai – 400004, Maharashtra, India

DIRECTORS

As on 31.03.2011

Name :	Mr. Manhar R. Bhansali
Designation :	Chairman and Managing Director
Qualification :	Int. Com
Name :	Mr. Rashesh M. Bhansali
Designation :	Vice Chairman and Managing Director
Qualification :	B. Com
Name :	Mr. Ajay M. Khatlawalal
Designation :	Independent Director
Name :	Mr. Rajesh G. Kapadia
Designation :	Independent Director
Name :	Dr. R. Srinivasan
Designation :	Independent Director

KEY EXECUTIVES

Name :	Ms. Rachana V. Vora
Designation :	Company Secretary and Compliance Officer

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.12.2011

Names of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	13,798,100	55.31
Sub Total	13,798,100	55.31
(2) Foreign
Total shareholding of Promoter and Promoter Group (A)	13,798,100	55.31
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	8,000	0.03
Financial Institutions / Banks	400	-
Sub Total	8,400	0.03
(2) Non-Institutions
Bodies Corporate	456,598	1.83
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 Million	4,636,393	18.59
Individual shareholders holding nominal share capital in excess of Rs.0.100 Million	2,371,845	9.51
Any Others (Specify)	3,674,660	14.73
Clearing Members	16,986	0.07
Foreign Corporate Bodies	2,700,000	10.82
Market Maker	10,789	0.04
Foreign Nationals	1,600	0.01
Non Resident Indians	431,433	1.73
Overseas Corporate Bodies	60,000	0.24
Directors & their Relatives & Friends	6,000	0.02
Hindu Undivided Families	447,852	1.80
Sub Total	11,139,496	44.65
Total Public shareholding (B)	11,147,896	44.69
Total (A)+(B)	24,945,996	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)	24,945,996	-

BUSINESS DETAILS

Line of Business :

Manufacturer of Jewellery and Diamonds.

Products :

Item Code Number	7113.19
Product Description	Jewellery

PRODUCTION STATUS AS ON 31.03.2011

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Jewellery	Kgs	N. A.	N. A.	193.44

GENERAL INFORMATION

No. of Employees :

450 (Approximately)

Bankers :

· The Hongkong and Shanghai Banking Corporation Limited

· YES Bank Limited

· Standard Chartered Bank

· Punjab National Bank

Facilities :

Secured Loan	As on 31.03.2011 (Rs. in Millions)	As on 31.03.2010 (Rs. in Millions)
Preshipment Credit in Foreign Currency with YES Bank Limited	78.384	0.000
Post Shipment Credit in Foreign Currency with YES Bank Limited (Secured by first pari passu charge on present and future Inventories, Receivables)	6.391	0.000
Total	84.775	0.000

Banking Relations :	--
Auditors :
Name :	Pulindra Patel and Company Chartered Accountants
Subsidiaries :	· Diagold Designs Limited · Goldiam Jewellery Limited · Goldiam Jewels Limited · Goldiam USA, Inc.
Associates :	· Diagold Designs Limited · Goldiam Jewellery Limited · Goldiam Jewels Limited · Goldiam USA, Inc.

CAPITAL STRUCTURE

As on 31.03.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
31000000	Equity Shares	Rs.10/- each	Rs.310.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
24945996	Equity Shares	Rs.10/- each	Rs.249.460 Millions

Notes:

1) Out of which 2,25,24,600 Equity Shares of Rs.10/- each allotted as fully paid up by way of Bonus Shares capitalized from Security Premium and Reserves and Surplus.

2) During the year the Company bought back from the open market through stock exchanges Nil equity shares of Rs.10/- each and paid Rs. Nil by way of premium and the same including face value of shares bought back has been debited to Security Premium and General Reserve 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		249.460	249.460	255.460
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		1333.443	1299.094	1294.274
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		1582.903	1548.554	1549.734
LOAN FUNDS
1] Secured Loans		84.775	0.000	0.000
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		84.775	0.000	0.000
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		1667.678	1548.554	1549.734
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		94.900	92.634	100.213
Capital work-in-progress		0.000	0.000	0.000
INVESTMENT		862.251	898.368	617.639
DEFERREX TAX ASSETS		10.783	13.485	4.923
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	316.947	282.101	331.699
	Sundry Debtors	429.506	258.484	313.777
	Cash & Bank Balances	29.476	26.809	108.442
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	61.294	135.109	245.782
Total Current Assets		837.223	702.503	999.700
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	132.354	122.170	189.775
	Other Current Liabilities	3.028	2.342	8.543
	Provisions	2.097	33.924	4.011
Total Current Liabilities		137.479	158.436	202.329
Net Current Assets		699.744	544.067	797.371
MISCELLANEOUS EXPENSES		0.000	0.000	29.588
TOTAL		1667.678	1548.554	1549.734

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2011	31.03.2010	31.03.2009
	SALES
		Income	786.222	593.517	559.397
		Profit on Sale of Assets	0.000	0.175	0.000
		Other Income	50.312	82.016	59.652
		TOTAL (A)	836.534	675.708	619.049
Less	EXPENSES
		Increase/ (Decrease) in stock	(7.454)	9.266	23.180
		Cost of Materials	559.939	355.488	373.561
		Purchase for Trading	113.840	79.472	95.992
		Manufacturing and other expenses	70.771	170.080	246.673
		Loss on sale of Assets	0.508	0.000	1.382
		TOTAL (B)	737.604	614.306	740.788
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		98.930	61.402	(121.739)
Less	FINANCIAL EXPENSES (D)		4.847	2.068	1.407
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		94.083	59.334	(123.146)
Less/ Add	DEPRECIATION/ AMORTISATION (F)		13.698	12.257	16.345
	PROFIT BEFORE TAX (E-F) (G)		80.385	47.077	(139.491)
Less	TAX (H)		16.947	(4.046)	(3.260)
	PROFIT AFTER TAX (G-H) (I)		63.438	51.123	(136.231)
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		737.717	715.683	851.914
Less	APPROPRIATIONS
		Interim Dividend	24.946	0.000	0.000
		Tax on Interim Dividend	4.143	0.000	0.000
		Proposed Dividend	0.000	24.946	0.000
		Provision for tax on Proposed Dividend	0.000	4.143	0.000
	BALANCE CARRIED TO THE B/S		772.066	737.717	715.683
	EARNINGS IN FOREIGN CURRENCY
		FOB Value of Exports	718.792	515.608	479.962
	TOTAL EARNINGS		718.792	515.608	479.962
	IMPORTS
		Raw Materials	275.244	169.979	254.147
		Consumables stores	0.771	2.186	2.986
		Capital Goods	2.082	0.000	0.000
	TOTAL IMPORTS		278.097	172.165	257.133
	Earnings Per Share (Rs.)
	Basic		2.54	2.05	(5.33)
	Diluted		2.54	2.01	(5.24)

QUARTERLY RESULTS

PARTICULARS	30.06.2011 1^st Quarter	30.09.2011 2^nd Quarter	31.12.2011 3^rd Quarter
	UnAudited	UnAudited	UnAudited
Net Sales	245.050	250.980	294.810
Total Expenditure	230.900	227.860	275.880
PBIDT (Excl OI)	14.150	23.120	18.930
Other Income	13.800	17.130	11.990
Operating Profit	27.950	40.250	30.920
Interest	1.430	2.030	2.420
Exceptional Items	0.000	0.000	0.000
PBDT	26.520	38.220	28.500
Depreciation	3.050	3.310	3.570
Profit Before Tax	23.470	34.920	24.930
Tax	2.530	9.540	5.870
Provisions and contingencies	0.000	0.000	0.000
Profit After Tax	20.940	25.380	19.060
Extraordinary Items	0.000	0.000	0.000
Prior Period Expenses	0.000	0.000	0.000
Other Adjustments	0.000	0.000	0.000
Net Profit	20.940	25.380	19.060

KEY RATIOS

PARTICULARS		31.03.2011	31.03.2010	31.03.2009
PAT / Total Income	(%)	7.58	7.56	22.00
Net Profit Margin (PBT/Sales)	(%)	10.22	7.93	24.94
Return on Total Assets (PBT/Total Assets}	(%)	8.62	5.92	12.68
Return on Investment (ROI) (PBT/Networth)		0.05	0.03	0.09
Debt Equity Ratio (Total Liability/Networth)		0.14	0.10	0.13
Current Ratio (Current Asset/Current Liability)		6.08	4.43	4.94

LOCAL AGENCY FURTHER INFORMATION

OPERATIONS:

The operations of the Company have shown considerable improvement as compared to the previous year. The Company has achieved a turnover of Rs.786.222 Millions during the year as compared to Rs.593.517 Millions during the previous year reflecting a growth of 32.47% over the previous year. The profits of the Company have also shown a remarkable increase with the Company earning a net profit of Rs.63.439 Millions after tax as compared to a net profit after tax of Rs.51.123 Millions for the previous year registering an increase of 24.09%.

SUBSIDIARY COMPANIES:

In accordance with the General Circular no. 2/2011 File no. 51/12/2007-CL-III dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India, granting general exemption to the companies under Section 212(8) of the Companies Act, 1956, the Balance Sheet, Profit and Loss Account and other Reports and statements of the subsidiary companies are not being attached with the Balance Sheet of the Company. The Company will make available the annual accounts of the subsidiary companies and the related detailed information to any shareholder of the Company seeking such information at any point of time. The annual accounts of the subsidiary companies are also available for inspection by any shareholder at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements of the Company and all the subsidiaries duly audited by the Statutory Auditors of the Company are presented in the Annual Report of the Company. A summary of the financial information of the subsidiary companies is also attached to the Annual Report of the Company.

During the year, one of the subsidiaries, Diagold Designs Limited, had initiated the process for de-bonding its unit as a 100% Export Oriented Unit (EOU) and has subsequently been de-bonded. This would enable the Company to offer its products to the ever growing domestic jewellery market. Diagold Designs Limited has, during the year, divested its entire stake in its Russian subsidiary company “OOO Tiara Jewels” and its Joint Venture Company in Malaysia, Goldiam Jewels SDN BHD, has closed its business and its name has been struck off as per the provisions of the country of incorporation.

MANAGEMENT DISCUSSION AND ANALYSIS

Industry Structure and developments:

India is gaining prominence as an international sourcing destination for high quality designer jewellery and is one of the largest exporters of gems and jewellery and is the diamond polishing capital of the world. Indian Gems and Jewellery Industry can be classified into various sub-segments like diamonds, coloured stones, gold and silver jewellery, pearls, etc. However, the two major segments in India are gold and diamonds. India dominates the diamond processing trade with 11 out of 12 diamonds being cut and polished in India. India also dominates the gold and silver consumption globally with consumption of approximately 700 tonnes (gold) p.a. A major foreign exchange earner, the industry is also notable in providing employment to 1.5 million people directly and indirectly. The Industry is characterised by a significantly large unorganised sector, labour-intensive operations, high working capital and raw material intensiveness, gold price volatility and export orientation.

The Gems and Jewellery Industry is a significant contributor to the steady growth of the Indian economy. Gems and Jewellery sector accounted for 16.67% of India’s total merchandise exports. India has several well recognized strengths which have made it a significant force in the global Gems and Jewellery business, viz. highly skilled yet low-cost labour, established excellence in manufacturing jewellery and diamond polishing, the most technologically advanced diamond cutting center in the world and an ability to leverage India’s strengths to address the demands of the global markets.

According to the Gems and Jewellery Export Promotion Council (GJEPC), the volume of exports for the financial year 2010-2011 have shown a remarkable increase over the previous financial year. The exports for the financial year 2010-2011 stood at US$ 43,139.24 million as compared to US$ 29,358.49 million thus indicating an increase of 46.89%. Further, the Council indicates that India’s Gems and Jewellery exports are expected to grow at a whopping 15%-20% in the financial year 2011-2012.

Opportunities and Threats:

The Company anticipates that the economic growth in emerging markets like Europe, Hong Kong, Russia and Middle-East, with increasing dispensable incomes, conscious marketing efforts, rising young population with the urge to spend on jewellery since it’s regarded as fashion accessory will lead to an increase in demand of diamond studded jewellery. The resurgence of the established global economies will provide a further impetus to the demand for jewellery. The Company’s manufacturing excellence, high skilled labour, creation of exquisite designs and ability to manufacture high volumes at low cost will also enable the Company to leverage the opportunities.

Increasing efforts to climb the value chain by the neighbouring countries have posed a threat. China is fast emerging as a significant competitor for the Indian Gems and Jewellery Industry with economical labour, modern and automated factories for manufacturing high quality, competitively priced jewellery. Also, the absence of any substantially favourable Government policy, incentive or stimulus for the jewellery industry and in particular the exporters, will reduce India’s competitive position as diamond and jewellery exporter.

Segment-wise Performance:

The Company has two segments viz. jewellery manufacturing and investment activity. The Company has achieved a turnover of Rs.795.433 Millions in the jewellery segment and of Rs.41.102 Millions in investment activities.

Outlook:

The outlook for the Gems and Jewellery Industry looks extremely positive. The revival of the global economies has helped resurrect the demand for jewellery world over and is expected to continue the upward trend. According to the Gems and Jewellery Export Promotion Council (GJEPC), India’s Gems and Jewellery exports are expected to grow at a whopping 15%-20% in the financial year 2011-2012. The Company is well placed to cater to the growing demands.

Financial Performance:

The resurgence of the global economies and the persistent efforts of the Company to sustain its trade relations besides expanding its base to other markets have helped the Company to show a considerable improvement in its performance during the year as compared to the previous year. The Company has achieved a turnover of Rs.786.222 Millions during the year as compared to RS.593.517 Millions during the previous year reflecting a growth of 32.47% over the previous year. The profits of the Company have also shown a substantial increase with the Company earning a net profit of Rs.63.439 Millions after tax as compared to a net profit after tax of RS.51.123 Millions for the previous year registering an increase of 24.09%. The consolidated turnover of the Company, its Subsidiaries and Joint Ventures has increased from Rs.1787.114 Millions in the previous year to Rs.2390.670 Millions during the year recording a growth of 33.77%. The consolidated net profit after tax has also shown a remarkable increase of 161.13% from Rs.71.486 Millions in the previous year to Rs.186.669 Millions in the year.

CONTINGENT LIABILITIES NOT PROVIDED FOR (AS ON 31.03.2011):

a) The Company has outstanding performance guarantee of Rs.10.019 Millions as on the Balance Sheet date, executed in favour of Deputy Commissioner of Customs

b) The Municipal Corporation of Greater Mumbai has preferred an appeal in the High Court of Judicature at Bombay against the order of Small Causes Court rejecting the claim of Municipal Corporation of Greater Mumbai for an amount of Rs.13.697 Millions on account of property tax.

c) The Company has executed Bank Guarantee of Rs.200.000 Millions favouring The Hongkong and Shanghai Banking Corporation Limited and of Rs.100.000 Millions favouring YES Bank Limited, Mumbai for its wholly owned subsidiary, Goldiam Jewellery Limited, Mumbai.

d) Commitment under contribution agreement with Kotak Alternate Opportunities (India) Fund is Rs.Nil

FIXED ASSETS

· Factory Building

· Office Premises

· Furniture and Fixtures

· Office Equipment

· Plant and Machinery

· Computer

· Air Conditioner

· Electrical Installation

· Vehicles

DIAMOND INDUSTRY – INDIA

- From time immemorial, India is well known in the world as the birthplace for diamonds.  It is difficult to trace the origin of diamonds but history says that in the remote past, diamonds were mined only in India. Diamond production in India can be traced back to almost 8^th Century B.C.  India, in fact, remained undisputed leader till 18^th Century when Brazilian fields were discovered in 1725 followed by emergence of S. Africa, Russia and Australia.

- The achievement of the Indian diamond industry was possible only due to combination of the manufacturing skills of the Indian workforce and the untiring and unflagging efforts of the Indian diamantaires, supported by progressive Government policies.

- The area of study of family owned diamond businesses derives its importance from the huge conglomerate of family run organizations which operate in the diamond industry since many generations.

- Some of the basic traits of family run business enterprises include spirit of entrepreneurship, mutual trust lowers transaction costs, small, nimble and quick to react, information as a source of advantage and philanthropy.

- Family owned diamond businesses need to improve on many fronts including higher standard of corporate governance, long-term performance – focused strategies, modern management and technology.

- The diamond jewellery industry in India today may be more than Rs.60000 mil and is rated amongst the fastest growing in the world. Indi ranks third in the world in domestic diamond consumption.

- Utmost caution is to be exercised while dealing with some medium and large diamond traders which are usually engaged in fictitious import – export, inter-company transactions, financially assisted by banks. In the process, several public sector banks lost several hundred million rupees. They mostly diverted borrowed money for diamond business into real estate and capital markets.

- Excerpts from Times of India dated 30^th October 2010 is as under –

DIAMOND SAGA – DIRTY DOZEN STUCK WITH 2K CR DEBT

This could be the biggest credibility crisis the Indian diamond industry has ever faced. Fifteen banks run the risk of losing Rs.200.000 Millions lent to a dozen diamond firms in Surat. Until about two months ago, they had not repaid these dues. Bankers believe many diamantaires borrowed money during the economic downturn two years ago and diverted funds to businesses like real estate and capital markets. Many of themselves made money from these businesses but their diamond companies have gone sick and declared insolvency.

- Most of the money borrowed from the banks in the name of their diamond business has been diverted in real estate and the share market. The banks are not in a position to seize their properties because in many cases, these were purchased in the name of their relatives and friends.

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.51.16
UK Pound	1	Rs.81.80
Euro	1	Rs.68.34

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	7
--LIQUIDITY	1~10	7
--LEVERAGE	1~10	7
--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	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		64

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

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