MIRA
INFORM REPORT

Report Date :

20.12.2012

IDENTIFICATION DETAILS

Name :

MEGASTEEL SDN. BHD.

Formerly Known As :

MEGASTEEL INDUSTRIES SDN BHD

Registered Office :

Office Tower, 1 Jalan Nagasari, Off Jalan Raja Chulan, Level 14, 50200
Kuala Lumpur, Wilayah Persekutuan

Country :

Malaysia

Financials (as on) :

30.06.2011

Date of Incorporation :

18.04.1989

Com. Reg. No.:

181104-T

Legal Form :

Private Limited Company

Line of Business :

Manufacturing of hot rolled coils & cold rolled coil

No. of Employees :

2,000 [2012]

RATING & COMMENTS

MIRA’s Rating :

Ca

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 :

---

NOTES:

Any query related to this report can be made
on e-mail: [email-masked]
while quoting report number, name
and date.

ECGC Country Risk Classification List – June 30th, 2012

Country Name

Previous Rating

(31.03.2012)

Current Rating

(30.06.2012)

Malaysia

A2

A2

Risk Category

ECGC
Classification

Insignificant

A1

Low

A2

Moderate

B1

High

B2

Very High

C1

Restricted

C2

Off-credit

D

malaysia - ECONOMIC OVERVIEW

Malaysia, a middle-income country, has transformed itself since the
1970s from a producer of raw materials into an emerging multi-sector economy.
Under current Prime Minister NAJIB, Malaysia is attempting to achieve
high-income status by 2020 and to move farther up the value-added production
chain by attracting investments in Islamic finance, high technology industries,
biotechnology, and services. The NAJIB administration also is continuing
efforts to boost domestic demand and reduce the economy's dependence on
exports. Nevertheless, exports - particularly of electronics, oil and gas, palm
oil and rubber - remain a significant driver of the economy. As an oil and gas
exporter, Malaysia has profited from higher world energy prices, although the
rising cost of domestic gasoline and diesel fuel, combined with strained
government finances, has forced Kuala Lumpur to begin to reduce government
subsidies. The government is also trying to lessen its dependence on state oil
producer Petronas. The oil and gas sector supplies more than 40% of government
revenue. The central bank maintains healthy foreign exchange reserves, and a
well-developed regulatory regime has limited Malaysia''s exposure to riskier
financial instruments and the global financial crisis. Nevertheless, Malaysia
could be vulnerable to a fall in commodity prices or a general slowdown in
global economic activity because exports are a major component of GDP. In order
to attract increased investment, NAJIB has raised possible revisions to the
special economic and social preferences accorded to ethnic Malays under the New
Economic Policy of 1970, but he has encountered significant opposition,
especially from Malay nationalists and other vested interests.

Source : CIA

*
Adopted abbreviations :

SC - Subject Company (the company enquired
by you)

N/A - Not Applicable

EXECUTIVE SUMMARY

REGISTRATION NO.

:

181104-T

COMPANY NAME

:

MEGASTEEL SDN.
BHD.

FORMER NAME

:

MEGASTEEL INDUSTRIES SDN BHD (19/09/1994)

INCORPORATION DATE

:

18/04/1989

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

OFFICE TOWER, 1 JALAN NAGASARI, OFF JALAN
RAJA CHULAN, LEVEL 14, 50200 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

BUSINESS ADDRESS

:

LOT 2319, KAWASAN PERINDUSTRIAN OLAK
LEMPIK, MUKIM TANJUNG 12, 42700 BANTING, SELANGOR, MALAYSIA.

TEL.NO.

:

03-31822200

FAX.NO.

:

03-31822211

EMAIL

:

[email-masked]

WEB SITE

:

www.lion.com.my

CONTACT PERSON

:

WILLIAM CHENG HENG JEM ( CEO )

INDUSTRY CODE

:

27100

PRINCIPAL ACTIVITY

:

MANUFACTURING OF HOT ROLLED COILS &
COLD ROLLED COIL

AUTHORISED CAPITAL

:

MYR 1,000,000,000.00 DIVIDED INTO

ORDINARY SHARE 998,133,300.00 OF MYR 1.00 EACH.

PREFERENCE SHARE 186,670,000.00 OF MYR 0.01 EACH.

ISSUED AND PAID UP CAPITAL

:

MYR 601,866,701.00 DIVIDED INTO

ORDINARY SHARES 535,000,001 CASH AND 65,000,000 OTHERWISE OF MYR 1.00 EACH.

PREFERENCE SHARES 186,670,000 CASH OF MYR 0.01 EACH.

SALES

:

MYR 2,874,548,000 [2011]

NET WORTH

:

MYR 229,751,000 [2011]

M1000 OVERALL RANKING

:

136[2011]

M1000 INDUSTRY RANKING

:

3[2011]

STAFF STRENGTH

:

2,000 [2012]

BANKER (S)

:

AMBANK (M)
BHD

LITIGATION

:

TRACED

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

POOR

PAYMENT

:

POOR

MANAGEMENT CAPABILITY

:

AVERAGE

COMMERCIAL RISK

:

MODERATE

CURRENCY EXPOSURE

:

MODERATE

GENERAL REPUTATION

:

GOOD

INDUSTRY OUTLOOK

:

AVERAGE GROWTH

HISTORY / BACKGROUND

The SC is a private limited company and is allowed to have a
minimum of one and a maximum of forty-nine shareholders. As a private limited
company, the SC must have at least two directors. A private limited company is
a separate legal entity from its shareholders. As a separate legal entity, the
SC is capable of owning assets, entering into contracts, sue or be sued by
other companies. The liabilities of the shareholders are to the extent of the
equity they have taken up and the creditors cannot claim on shareholders'
personal assets even if the SC is insolvent. The SC is governed by the
Companies Act, 1965 and the company must file its annual returns, together with
its financial statements with the Registrar of Companies.

The SC is principally engaged in the (as a / as an)
manufacturing of hot rolled coils & cold rolled coil.

The SC is not
listed on Bursa Malaysia (Malaysia Stock Exchange).

According to the Malaysia 1000 publication, the SC's ranking
are as follows:

YEAR

2011

2009

2008

OVERALL RANKING

136

69

116

INDUSTRY RANKING

3

2

3

The immediate holding company of the SC is LIMPAAYA
SDN.BHD., a company incorporated in MALAYSIA.

The ultimate holding company of the SC is LION CORPORATION
BERHAD, a company incorporated in MALAYSIA.

The major
shareholder(s) of the SC are shown as follows :

Name

Address

IC/PP/Loc No

Shareholding

(%)

LIMPAAYA SDN.BHD.

LEVEL 14,OFFICE TOWER, NO.1,JALAN NAGASARI, (OFF JALAN
RAJA CHULAN), 50200 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

150682

549,003,334.00

69.79

LION DIVERSIFIED HOLDINGS BERHAD

OFFICE TOWER, 1 JALAN NAGASARI, OFF JALAN RAJA CHULAN,
LEVEL 14, 50200 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

9428

237,666,667.00

30.21

---------------

------

786,670,001.00

100.00

============

=====

+ Also Director

The SC interest in
other companies (Subsidiaries/Associates) are shown as follow :

Local No

Company

(%)

As At

MEGASTEEL HARTA (L) LIMITED

100

30/06/2011

201402

SECOMEX MANUFACTURING (M) SDN BHD

100

30/06/2011

DIRECTORS

DIRECTOR 1

Name Of Subject

:

TAN SRI CHENG YONG KIM

Address

:

1103, APARTMENT DESA KUDALARI, LORONG KUDA, JALAN TUN
RAZAK, 50450 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

New IC No

:

500202-66-5029

Date of Birth

:

02/02/1950

Nationality

:

MALAYSIAN

Date of Appointment

:

16/07/1999

DIRECTOR 2

Name Of Subject

:

WANG CHUNG-YU

Address

:

16, LANE 79, ALLEY 179, SECTION 2, NEI-HU ROAD, TAIPEI,
TAIWAN.

IC / PP No

:

P200570446

Date of Birth

:

01/04/1945

Nationality

:

TAIWANESE

Date of Appointment

:

14/08/2003

DIRECTOR 3

Name Of Subject

:

MR. LEE CHAING HUAT

Address

:

4,JALAN TR 6/1, TROPICANA GOLF&RESORT, 47410 PETALING
JAYA, SELANGOR, MALAYSIA.

IC / PP No

:

4487801

New IC No

:

531011-07-5597

Date of Birth

:

11/10/1953

Nationality

:

MALAYSIAN

Date of Appointment

:

09/01/2008

DIRECTOR 4

Name Of Subject

:

TAN SRI RAFIDAH BINTI AZIZ

Address

:

15, JALAN SETIAMURNI 2, BUKIT DAMANSARA, 50490 KUALA
LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

IC / PP No

:

31863981

New IC No

:

431104-08-5438

Date of Birth

:

04/11/1943

Nationality

:

MALAYSIAN MALAY

Date of Appointment

:

03/08/2011

DIRECTOR
5

Name Of Subject

:

TAN SRIWILLIAM CHENG HENG JEM

Address

:

A-16-1, BLOK A, SATU RESIDENSI, NO. 1,
JALAN NAGASARI, OFF JALAN RAJA CHULAN, 50200 KUALA LUMPUR, WILAYAH
PERSEKUTUAN, MALAYSIA.

New IC No

:

430319-71-5033

Date of Birth

:

19/03/1943

Nationality

:

MALAYSIAN

Date of Appointment

:

10/01/1990

MANAGEMENT

1)

Name of Subject

:

WILLIAM CHENG HENG JEM

Position

:

CEO

2)

Name of Subject

:

BENNY LIM

Position

:

ACCOUNTANT

3)

Name of Subject

:

LAI CHIN YANG

Position

:

MARKETING DIRECTOR

4)

Name of Subject

:

TRISTON LIEW

Position

:

MARKETING MANAGER

5)

Name of Subject

:

LEE SENG THIAN

Position

:

GENERAL MANAGER

6)

Name of Subject

:

YOGESWARI

Position

:

HUMAN RESOURCE DIRECTOR

7)

Name of Subject

:

MR STEVEN

Position

:

HUMAN RESOURCE MANAGER

8)

Name of Subject

:

PAN SZE MOOI

Position

:

QUALITY CONTROL DIRECTOR

AUDITOR

Auditor

:

ERNST & YOUNG

Auditor' Address

:

SUITE 11.2, MENARA PELANGI, JALAN KUNING,
TAMAN PELANGI, LEVEL 11, 80400 JOHOR BAHRU, JOHOR, MALAYSIA.

COMPANY SECRETARIES

1)

Company Secretary

:

MS. WONG PHOOI LIN

New IC No

:

651003-10-6046

Address

:

68 JALAN SRI PETALING 1, BANDAR BARU SRI PETALING,
57000 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

2)

Company Secretary

:

MS. CHAN POH LAN

New IC No

:

560707-08-6078

Address

:

6,JALAN CEMPAKA 28, TAMAN CEMPAKA, 68000
KUALA LUMPUR., MALAYSIA.

BANKING

Banking relations are maintained principally
with :

1)

Name

:

AMBANK (M) BHD

The SC enjoys normal banking routine with
above mentioned banker(s). The SC has bank charges with above mentioned
banker(s).

ENCUMBRANCE (S)

ENCUMBRANCE 1

Date of Creation

:

03/01/1997

Description Of Charge

:

N/A

Amount Secured

:

RM700,000,000.00

Description Of Property Affected

:

N/A

Name & Address Of Chargee

:

AMMB INTERNATIONAL (L) LTD

Form 40 Dated

Registered and Numbered 1 In The Register
of Charges

ENCUMBRANCE 2

Date of Creation

:

10/03/1997

Description Of Charge

:

N/A

Amount Secured

:

RM700,000,000.00

Description Of Property Affected

:

N/A

Name & Address Of Chargee

:

AMMB INTERNATIONAL (L) LTD

Form 40 Dated

Registered and Numbered 2 In The Register
of Charges

ENCUMBRANCE 3

Date of Creation

:

21/07/1999

Description Of Charge

:

FOREIGN CURRENCY

Amount Secured

:

N/A

Description Of Property Affected

:

N/A

Name & Address Of Chargee

:

AMBANK (M) BHD

Form 40 Dated

Registered and Numbered 3 In The Register
of Charges

ENCUMBRANCE 4

Date of Creation

:

22/01/2003

Description Of Charge

:

OPEN CHARGE

Amount Secured

:

N/A

Description Of Property Affected

:

N/A

Name & Address Of Chargee

:

AMINTERNATIONAL (L) LTD

Form 40 Dated

Registered and Numbered 4 In The Register
of Charges

ENCUMBRANCE 5

Date of Creation

:

22/01/2003

Description Of Charge

:

N/A

Amount Secured

:

RM280,000,000.00

Description Of Property Affected

:

N/A

Name & Address Of Chargee

:

AMINTERNATIONAL (L) LTD

Form 40 Dated

Registered and Numbered 5 In The Register
of Charges

ENCUMBRANCE 6

Date of Creation

:

27/01/2003

Description Of Charge

:

FOREIGN CURRENCY

Amount Secured

:

N/A

Description Of Property Affected

:

N/A

Name & Address Of Chargee

:

AMINTERNATIONAL (L) LTD

Form 40 Dated

Registered and Numbered 6 In The Register
of Charges

ENCUMBRANCE 7

Date of Creation

:

23/03/2004

Description Of Charge

:

N/A

Amount Secured

:

RM140,000,000.00

Description Of Property Affected

:

N/A

Name & Address Of Chargee

:

BANK PEMBANGUNAN DAN INFRASTRUKTUR
MALAYSIA BHD

Form 40 Dated

Registered and Numbered 7 In The Register
of Charges

ENCUMBRANCE 8

Date of Creation

:

23/03/2004

Description Of Charge

:

N/A

Amount Secured

:

RM140,000,000.00

Description Of Property Affected

:

N/A

Name & Address Of Chargee

:

BANK PEMBANGUNAN DAN INFRASTRUKTUR
MALAYSIA BHD

Form 40 Dated

Registered and Numbered 8 In The Register
of Charges

ENCUMBRANCE 9

Date of Creation

:

24/06/2008

Description Of Charge

:

OPEN CHARGE

Amount Secured

:

N/A

Description Of Property Affected

:

THE PROPERTY & RIGHTS OF THE COMPANY
TO 500,000 ORD SHARES OF RM1 EACH IN SECOMEX, ALL OF WHICH ARE CHARGED &
ARE THE SUBJECT OF THE SECURITY CREATED BY THE CHARGE & INCLUDES ALL
DERIVATIVE ASSETS PURSUANT THERETO

Name & Address Of Chargee

:

AMINTERNATIONAL (L) LTD

Form 40 Dated

Registered and Numbered 9 In The Register
of Charges

ENCUMBRANCE 10

Date of Creation

:

30/12/2010

Description Of Charge

:

CHARGE OVER SHARES

Amount Secured

:

N/A

Description Of Property Affected

:

THE PROPERTY & RIGHTS OF THE COMPANY
TO 500,000 ORD SHARES OF RM1 EACH IN SECOMEX, ALL OF WHICH ARE CHARGED &
ARE THE SUBJECT OF THE SECURITY CREATED BY THE CHARGE & INCLUDES ALL
DERIVATIVE ASSETS PURSUANT THERETO

Name & Address Of Chargee

:

AMINTERNATIONAL (L) LTD

BLOCK 4, OFFICE TOWERS, FINANCIAL PARK LABUAN COMPLEX, JALAN MERDEKA, LEVEL
12(B), 87000 LABUAN, WILAYAH PERSEKUTUAN, MALAYSIA.

Form 40 Dated 11/01/2011

Registered and Numbered 11 In The Register
of Charges

ENCUMBRANCE 11

Date of Creation

:

30/03/2012

Description Of Charge

:

N/A

Amount Secured

:

N/A

Description Of Property Affected

:

N/A

Name & Address Of Chargee

:

AMINTERNATIONAL (L) LTD

Form 40 Dated

Registered and Numbered 12 In The Register
of Charges

LEGAL CHECK AGAINST SC

* A check has been conducted in our databank
against the SC whether the subject has been involved in any litigation.

LEGAL ACTION

Code No

:

52

Case No

:

5881

Year

:

2005

Place

:

KUALA LUMPUR

Court

:

SESSIONS COURT

Solicitor

:

ANAD & NORAINI

Plaintiff

:

ALLIANZ GENERAL INSURANCE MALAYSIA BHD

Defendants

:

MEGASTEEL SDN
BHD (181104)

MENARA
CITIBANK, 165 JLN AMPANG, LEVEL 46, 50450 KUALA LUMPUR, WILAYAH
PERSEKUTUAN, MALAYSIA.

Amount Claimed

:

49,502.54

Nature of Claim

:

LOAN

Remark

:

LIST

Code No

:

22

Case No

:

816

Year

:

2006

Place

:

KUALA LUMPUR

Court No

:

D5

Court

:

HIGH COURT

Solicitor

:

CHEAH TEH & SU

Plaintiff

:

CHYE HUP HENG SDN BHD

Defendants

:

MEGASTEEL SDN
BHD (181104)

MENARA CITIBANK,
165 JLN AMPANG, LEVEL 46, 50450 KUALA LUMPUR, WILAYAH PERSEKUTUAN,
MALAYSIA.

Amount Claimed

:

0.00

Nature of Claim

:

GDS SOLD & DELIVERED

Remark

:

Code No

:

22

Case No

:

1594

Year

:

2007

Place

:

KUALA LUMPUR

Court No

:

D2

Court

:

HIGH COURT

Solicitor

:

PAUL ONG & ASSOCIATES

Plaintiff

:

PERWAJA STEEL SDN BHD

Defendants

:

MEGASTEEL SDN
BHD (181104)

MENARA CITI
BANK, 165 JALAN AMPANG, LEVEL 46, 50450 KUALA LUMPUR, WILAYAH PERSEKUTUAN,
MALAYSIA.

Remark

:

Code No

:

22

Case No

:

285

Year

:

2010

Place

:

PULAU PINANG

Court

:

HIGH COURT

Date Filed

:

22/04/2010

Plaintiff

:

EONMETALL INDUSTRIES SDN BHD

Defendants

:

MEGASTEEL SDN
BHD (181104)

MENARA CITI
BANK, 165 JALAN AMPANG, LEVEL 46, 50450 KUALA LUMPUR, WILAYAH PERSEKUTUAN,
MALAYSIA.

Amount Claimed

:

20,000,000.00

Remark

:

NOTE:

Please check with creditors for
confirmation as alleged debts may have been paid since recorded or are being
disputed. The person wo has been sued has the same name as the subject.
However, we are unable to determine whether the person sued is the one and
the same person.

No winding up petition was found in our
databank

DEFAULTER CHECK AGAINST SC

* We have checked through the SC in our
defaulters' database which comprised of debtors that have been blacklisted by
our customers and debtors that have been placed or assigned to us for
collection since 1990. Information was provided by third party where the debt
amount can be disputed. Please check with creditors for confirmation as alleged
debts may have been paid since recorded or are being disputed.

No blacklisted record & debt collection case
was found in our defaulters' databank.

PAYMENT RECORD

SOURCES OF RAW MATERIALS:

Local

:

YES

Overseas

:

YES

Import Countries

:

ASIA,EUROPE

The SC refused to provide any name of
trade/service supplier and we are unable to conduct any trade enquiry. However,
from financial historical data we conclude that :

OVERALL PAYMENT HABIT

Prompt 0-30 Days

[

]

Good 31-60 Days

[

]

Average 61-90 Days

[

]

Fair 91-120 Days

[

]

Poor >120 Days

[

X

]

CLIENTELE

Local

:

YES

Domestic Markets

:

MALAYSIA

Overseas

:

YES

Export Market

:

AUSTRALIA, ASIA

Credit Term

:

30 - 60 DAYS

Payment Mode

:

CHEQUES,LETTER OF CREDIT (LC),TELEGRAPHIC
TRANSFER (TT)

OPERATIONS

Products manufactured

:

HOT ROLLED COILS
(HRC), COLD ROLLED COIL (CRC), BANDS, PLATES AND STEEL SHEETS

Award

:

1 ) MS ISO 9001 : 2000 Year :2002

Certification of Products

:

1 ) JIS G 3132:1990

Competitor(s)

:

AMSTEEL MILLS SDN BHD

KINSTEEL BHD

LION CORPORATION BHD

LION INDUSTRIES CORPORATION BHD

PERWAJA STEEL SDN BHD

Member(s) / Affiliate(s)

:

FEDERATION OF MALAYSIAN MANUFACTURERS
(FMM)

MALAYSIAN IRON AND STEEL INDUSTRY
FEDERATION (MISIF)

SMALL & MEDIUM ENTERPRISE

Ownership of premises

:

OWNED

Factory Size

:

BUILT-UP AREA OF 1.3 MILLION SQUARE FEET

Shifts

:

3 (24 HOURS)

Total Number of Employees:

YEAR

2012

2011

2010

2009

2008

2007

GROUP

N/A

N/A

N/A

N/A

N/A

N/A

COMPANY

2,000

2,000

1,923

2,000

1,950

1,850

Branch

:

NO

Other Information:

The SC is principally
engaged in the (as a / as an) manufacturing of hot rolled coils & cold
rolled coil.

The SC is a member of The Lion Group, which is
able to produce flat steel products with a capacity of 3.2 million tonnes of
hot rolled coils and 1.45 million tonnes of cold rolled coils per annum.

The SC's mill is fully automated using
state-of-the-art direct current Electric Arc Furnace-Compact Strip Production
(EAF-CSP) process which incorporates the 'Thin Slab Casting' technology.

CSP - Thin Slab Casting technology is recognised
worldwide as the latest technology to produce flat steel. It is able to produce
high quality steel with significantly higher production yield and energy
savings.

In addition, SC is more environment-friendly as
it recycles steel scrap and uses the clean raw material, Hot Briquetted Iron
(HBI) in its EAF process.

Its Cold Rolling Mill facilities included a
Continuous Pickling and Oiling Line, 5-Stand 4-High Tandem Mill, Electrolytic
Cleaning Line, Batch Annealing Furnace, Temper Mill and a Recoiling and Oiling
Line with Tension Leveller.

Besides that the SC also produces hot rolled
coils, picked and oiled. It has commenced production of its cold rolled mill
with a capacity of 0.7million metric tons expandable to 1.45 million metric
tons of cold rolled coils per annum.

All the SC's hot rolled coils are tested to meet
the physical, dimensional and application requirements in accordance with ASTM,
BS, JIS and DIN or other standards.

The SC's products are mainly used in the gas
cylinders, automotive wheels, galvanised pipes and marine cargo.

PROJECTS

No projects found in our databank

RECENT DEVELOPMENT

June 29, 2011

A safeguard petition by Megasteel Sdn Bhd, the
country's sole producer of hot rolled coils (HRC), that asks the Government to
impose additional duty on imported HRC, has received strong objections from
local downstream steel players and foreign HRC exporters.

Megasteel, in its petition, is believed to be
asking for an additional 35% duty imposed on imported HRC, which currently
attracts an import duty of 25%. Should the Government decide to approve
Megasteel's petition, many will suffer, having to pay a hefty import duty of
about 60% for HRC.

23 MARCH 2010

Tan Sri William Cheng has acquired 33.5 million
shares in Lion Industries Corp Bhd, representing 4.69% of the total issued and
paid-up share capital of the company, from SC, a company in which he has a
substantial interest. Lion Industries told Bursa Malaysia yesterday the
acquisition was done at an exercise price of RM1.29 per share. Under the terms
of the proposed disposal, Cheng is required to complete the acquisition of 51
million shares, representing 50% of the 102 million shares under the put
option, by March 31.

04 FEBRUARY 2010

LION DIVERSIFIED HOLDINGS BHD (LDHB) today
completed the acquisition of a 10% stake comprising 60 million shares in SC
from Khazanah Nasional Bhd for RM138 million cash. In a statement, LDHB said
the acquisition was completed with the payment of the final installment of the
purchase consideration and it now owned about 21.1% of Megasteel.

CURRENT INVESTIGATION

Latest fresh investigations carried
out on the SC indicated that :

Telephone Number Provided By Client

:

N/A

Current Telephone Number

:

03-31822200

Match

:

N/A

Address Provided by Client

:

LOT 2319, KAWASAN PERINDUSTRIAN OLAK
LEMPIK, MUKIM TANJUNG 12,42700,BANTING,SELANGOR.

Current Address

:

LOT 2319, KAWASAN PERINDUSTRIAN OLAK
LEMPIK, MUKIM TANJUNG 12, 42700 BANTING, SELANGOR, MALAYSIA.

Match

:

YES

Latest Financial Accounts

:

YES

Other
Investigations

we
contacted one of the staff from the Admin Department, She provided some
information on the SC.

FINANCIAL ANALYSIS

Profitability

Turnover

:

Erratic

[

2007 - 2011

]

Profit/(Loss) Before Tax

:

Decreased

[

2007 - 2011

]

Return on Shareholder Funds

:

Unfavourable

[

<97.37%>

]

Return on Net Assets

:

Unfavourable

[

<13.17%>

]

The fluctuating turnover reflects the
fierce competition among the existing and new market players.The SC incurred
losses during the year due to the inefficient control of its operating costs.
The SC's unfavourable returns on shareholders' funds indicate the
management's inefficiency in utilising its assets to generate returns.

Working Capital
Control

Stock Ratio

:

Unfavourable

[

91 Days

]

Debtor Ratio

:

Favourable

[

3 Days

]

Creditors Ratio

:

Unfavourable

[

208 Days

]

The SC could be incurring higher holding
cost. As its capital was tied up in stocks, it could face liquidity problems.
The favourable debtors' days could be due to the good credit control measures
implemented by the SC. The unfavourable creditors' ratio could be due to the
SC taking advantage of the credit granted by its suppliers. However this may affect
the goodwill between the SC and its suppliers and the SC may inadvertently
have to pay more for its future supplies.

Liquidity

Liquid Ratio

:

Unfavourable

[

0.07 Times

]

Current Ratio

:

Unfavourable

[

0.31 Times

]

A low liquid ratio means that the SC may
be facing working capital deficiency. If the SC cannot obtain additional
financing or injection of fresh capital, it may face difficulties in meeting
its short term obligations.

Solvency

Interest Cover

:

Unfavourable

[

<0.46
Times>

]

Gearing Ratio

:

Unfavourable

[

3.32 Times

]

The SC incurred losses in the year. It did
not generate sufficient income to service its interest. If the situation does
not improve, the SC may be vulnerable to default in servicing the interest.
The SC was highly geared, thus it had a high financial risk. The SC was
dependent on loans to finance its business needs. In times of economic
downturn and / or high interest rate, the SC will become less profitable and
competitive than other firms in the same industry, which are lowly geared.
This is because the SC has to service the interest and to repay the loan,
which will erode part of its profits. The profits will fluctuate depending on
the SC's turnover and the interest it needs to pay.

Overall
Assessment :

The SC's losses increased but its turnover
showed a fluctuating trend. This indicate the SC was slowly losing its market
share due to its competitors. Due to its weak liquidity position, the SC will
be faced with problems in meeting all its short term obligations if no short
term loan is obtained or additional capital injected into the SC. The SC's
interest cover was negative, indicating that it did not generate sufficient
income to service its interest. If its result does not show impressive
improvements or succeed obtaining short term financing or capital injection,
it may not be able to service its interest and repay the loans. The SC's
gearing level was high and its going concern will be in doubt if there is no
injection of additional shareholders' funds in times of economic downturn and
/ or high interest rates.

Overall
financial condition of the SC : POOR

MALAYSIA ECONOMIC / INDUSTRY OUTLOOK

Major Economic
Indicators:

2008

2009

2010

2011*

2012**

Population ( Million)

27.73

28.13

28.35

28.70

29.10

Gross Domestic
Products ( % )

4.6

<0.5>

7.2

5.5

5.3

Domestic Demand ( % )

6.9

2.9

6.3

4.8

7.6

Private
Expenditure ( % )

7.1

<2.7>

8.1

7.0

8.7

Consumption ( % )

8.4

0.7

6.7

6.3

7.1

Investment ( % )

1.5

<17.2>

17.7

16.2

15.9

Public
Expenditure ( % )

6.5

5.2

3.8

7.6

4.7

Consumption ( % )

11.6

3.1

0.2

8.9

3.0

Investment ( % )

0.7

8.0

2.8

0.6

7.0

Balance of Trade ( MYR Million )

129,563

89,650

118,356

116,058

-

Government Finance ( MYR Million )

<34,462>

<28,450>

<40,482>

<45,511>

<43,021>

Government
Finance to GDP / Fiscal Deficit ( % )

<4.8>

<4.8>

<5.6>

<5.4>

<4.7>

Inflation ( % Change in Composite CPI)

<3.3>

<5.2>

5.1

3.1

-

Unemployment Rate

3.7

4.5

3.9

3.3

-

Net International Reserves ( MYR Billion )

388

331

329

415

-

Average Risk-Weighted Capital Adequacy
Ratio ( % )

1.91

2.87

2.20

3.50

-

Average 3 Months
of Non-performing Loans ( % )

13.24

11.08

15.30

14.80

-

Average Base Lending Rate ( % )

6.72

5.53

6.30

6.60

-

Business Loans Disbursed( % )

11.6

10.5

14.7

15.3

-

Foreign Investment ( MYR Million )

23,261.4

22,156.8

22,517.9

23,546.1

-

Consumer Loans ( % )

-

-

-

-

-

Registration of
New Companies ( No. )

41,599

41,578

44,148

-

-

Registration of New Companies ( % )

<4.0>

<0.1>

6.2

-

-

Liquidation of
Companies ( No. )

27,992

39,075

25,585

-

-

Liquidation of Companies ( % )

23.7

39.6

<34.5>

-

-

Registration of
New Business ( No. )

269,866

312,581

271,414

-

-

Registration of New Business ( % )

-

-

-

-

-

Business
Dissolved ( No. )

18,885

19,345

19,738

-

-

Business Dissolved ( % )

<7.6>

2.4

2.0

-

-

Sales of New Passenger Cars (' 000 Unit )

497.5

486.3

543.6

363.0

-

Cellular Phone Subscribers ( Million )

25.1

30.1

32.8

35.3

-

Tourist Arrival ( Million Persons )

21.5

23.6

24.6

25.3

-

Hotel Occupancy Rate ( % )

68.0

58.0

63.0

51.3

-

Credit Cards Spending ( % )

17.1

12.8

14.1

15.6

-

Bad Cheque Offenders (No.)

34,834

36,667

33,568

27,208

-

Individual Bankruptcy ( No.)

13,907

16,228

18,119

16,155

-

Individual Bankruptcy ( % )

5.1

16.7

11.7

<10.8>

-

INDUSTRIES ( %
of Growth ):

2008

2009

2010

2011*

2012**

Agriculture

3.6

0.4

2.1

4.7

4.1

Palm Oil

7.0

<1.1>

<3.4>

7.3

-

Rubber

<1.1>

<19.8>

9.9

6.4

-

Forestry & Logging

<1.5>

<5.9>

<3.3>

<4.7>

-

Fishing

4.0

5.5

5.6

2.8

-

Other Agriculture

5.9

9.0

7.9

8.5

-

Industry
Non-Performing Loans ( MYR Million )

393.0

413.7

508.4

634.1

-

% of Industry
Non-Performing Loans

<2.0>

1.3

2.1

3.2

-

Mining

<0.8>

<3.8>

0.2

<2.4>

2.5

Oil & Gas

12.7

2.1

0.5

<1.7>

-

Other Mining

-

-

-

-

-

Industry
Non-performing Loans ( MYR Million )

36.0

44.2

49.7

46.5

-

% of Industry
Non-performing Loans

0.1

0.1

0.1

0.1

-

Manufacturing #

1.3

<9.4>

11.4

5.6

4.5

Exported-oriented
Industries

2.7

<19.0>

12.1

2.8

-

Electrical & Electronics

2.4

<30.3>

28.4

<4.9>

-

Rubber Products

4.2

<10.1>

25.3

15.4

-

Wood Products

<6.0>

<24.1>

20.1

<7.3>

-

Textiles & Apparel

1.9

<19.5>

<0.4>

14.8

-

Domestic-oriented
Industries

9.9

<9.8>

16.3

6.3

-

Food, Beverages & Tobacco

9.5

0.2

3.0

4.2

-

Chemical & Chemical Products

1.4

<7.7>

16.2

5.6

-

Plastic Products

6.5

<9.1>

2.4

3.8

-

Iron & Steel

16.8

<32.7>

29.3

2.4

-

Fabricated Metal Products

14.7

<2.5>

14.9

25.2

-

Non-metallic Mineral

8.3

<15.5>

20.2

16.3

-

Transport Equipment

27.1

<13.5>

36.5

<9.4>

-

Paper & Paper Products

8.6

<5.0>

18.7

15.6

-

Crude Oil Refineries

7.8

0.2

<11.4>

9.3

-

Industry
Non-Performing Loans ( MYR Million )

5,729.4

6,007.3

6,217.5

6,537.2

-

% of Industry
Non-Performing Loans

16.8

18.3

23.8

25.7

-

Construction

2.1

5.8

5.1

4.4

7.0

Industry Non-Performing Loans ( MYR
Million )

4,149.8

3,241.8

4,038.5

3,856.9

-

% of Industry
Non-Performing Loans

12.2

9.9

10.7

10.2

-

Services

7.3

2.6

6.5

6.4

6.5

Electric, Gas & Water

5.0

0.4

8.5

5.6

4.8

Transport, Storage & Communication

7.8

1.6

7.7

6.5

7.3

Wholesale, Retail, Hotel & Restaurant

10.0

2.8

4.7

5.2

6.9

Finance, Insurance & Real Estate

9.2

3.8

6.1

6.3

6.5

Government Services

8.6

2.0

6.7

7.6

5.6

Other Services

5.9

4.4

4.2

5.4

5.7

Industry
Non-Performing Loans ( MYR Million )

8,281.4

6,631.3

7,384.6

6,825.2

-

% of Industry
Non-Performing Loans

24.3

20.2

25.7

23.4

-

* Estimate / Preliminary

** Forecast

# Based On Manufacturing Production Index

(Source : Department of Statistics / Economic Report / Bank Negara Report)

INDUSTRY ANALYSIS

MSIC CODE

27100 : Manufacture of basic iron and steel products

INDUSTRY :

MANUFACTURING

The manufacturing sector is expected to be driven by higher value-added
activities in Malaysia.The GDP growth for first quarter 2012 indicating
manufacturing maintain its growth of 4.5%, similar to year 2011.Malaysia
recorded a 12% jump in approved investments in the manufacturing sector in
the first quarter of 2012 compared with the corresponding period 2011.
According to Federation of Malaysian Manufacturers (FMM), manufacturing
sector expected to improve in the third quarter 2012 despite concerns over
external developments and the rising cost of production.

The rubber products sub-sector is expected to remain resilient supported by
continuous improvements in medical and healthcare standards in emerging
markets as well as demand from niche markets such as the oil and gas sector
for rubber hoses. Malaysia rubber exports are forecast to grow at 10%, at the
end of 2012 driven by global demand for medical gloves as well as rubber
tyres and tubes.Rubber glove exports make up 70 % of total rubber shipments
in Malaysia due to hospitals and clinics place more intrest on rising health
and hygiene awareness.

The Malaysia government has growth target of 6.5% for wood based furniture
where estimated to reach up to RM53 billion by year 2020.The government
providing pioneer status for tax exemption and investment tax allowance for
this industry as a boost up step towards produce good quality product and to
meet the world demand.

Chemical production are expected to show 6.2% in year 2012 and 7.5 % in year
2013 inline with Malaysia as one of the largest contributor in world
Chemicals & Chemical industries.

According to Malaysian Iron and Steel Industry Federation, first half of 2012
would remain weak for the local steel industry due to eurozone crisis,
slowdown in China's economy and less robust construction activities in the
developed countries. At first quarter 2012, the average local steel price is
trading atRM2,300 per tonne compared with the average international price of
US$740 (RM2,331) per tonne.

According to the Department of Statistics, Malaysia during the first quarter
2012, the manufacturing output increased due to activities in major
sub-sectors such as petroleum, chemical, rubber and plastic products (10.5
%), and non-metallic mineral products, basic metal and fabricated metal
products (3.9 %). Meanwhile, it's also announced that the manufacturing
sector's sales grew by 10 % in May 2012 to record RM52.5 billion compared
with RM47.7 billion in May 2011. The Industrial Production Index (IPI )
increased 7.6 % in May (2012) due to increases in manufacturing (6.5
%).

Tax and non-tax incentives provided by goverment encourage manufacturers to
move up the value chain of manufacturing industry. The new growth initiatives
by goverment in the manufacturing sector such as solar and medial services
can be important drivers of growth apart from helping to diversify the
manufacturing base and contributing to the resilience of the sector.

OVERALL INDUSTRY OUTLOOK : Average Growth

CREDIT RISK EVALUATION & RECOMMENDATION

Incorporated in 1989, the SC is a Private Limited company, focusing on
manufacturing of hot rolled coils & cold rolled coil. The SC has been in
business for over two decades. It has built up a strong clientele base and
good reputation will enable the SC to further enhance its business in the near
term. The SC is expected to enjoy a stable market shares. Having strong
support from its holding company has enabled the SC to remain competitive
despite the challenging business environment.

Over the years, the SC has penetrated into both the local and overseas
market. The SC has positioned itself in the global market and is competing in
the industry. Its stable clientele base will enable the SC to further enhance
its business in the near term. Being a large entity, the SC has a steady
workforce of 2,000 personnel to support its business operations. Its future
prospects seem to be fairly good as its business operations are running
relatively stable. Overall, we regard that the SC's management capability is
average.

Due to the challenging market conditions, the SC's business performance seems
to be deteriorating and losses incurred. The SC has generated an unfavourable
return on shareholders' funds indicating that the management was inefficient
in utilising its funds to generate return. Due to its weak liquidity
position, the SC may face working capital deficiency in meeting its short
term financial obligations if no fresh capital are injected into the SC. The
high gearing ratio clearly implied that the SC was supported by more debt
than equity. Thus, the SC is exposed to high financial risk. However, given a
positive net worth standing at MYR 229,751,000, the SC should be able to
maintain its business in the near terms.

Without a strong assets backing, the SC may face difficulties in getting
loans for its future expansion and continued growth . The SC's supplier are
from both the local and overseas countries. This will eliminates the risk of
dependency on deliveries from a number of key suppliers and insufficient
quantities of its raw materials. Overall the SC has a good control over its
resources.

The poor payment habit may affect the goodwill between the SC and its
suppliers and the SC may inadvertently have to pay more for its future
supplies.

The industry shows an upward trend and this trend is very likely to sustain
in the near terms. However, the SC has to implement aggressive marketing
strategies in order to capture its own market shares in the market and to
compete with other well established players in the same field.

In view of the above, we only recommend credit be proceeded to the SC with
guarantee.

PROFIT AND LOSS ACCOUNT

THE FINANCIAL
STATEMENTS WERE PREPARED IN ACCORDANCE WITH MALAYSIAN FINANCIAL REPORTING
STANDARDS(FRS)

MEGASTEEL SDN.
BHD.

Financial Year End

30/06/2011

30/06/2010

30/06/2009

30/06/2008

30/06/2007

Months

12

12

12

12

12

Consolidated Account

GROUP

GROUP

GROUP

GROUP

GROUP

Audited Account

YES

YES

YES

YES

YES

Unqualified Auditor's Report (Clean
Opinion)

YES

YES

YES

YES

YES

Financial Type

FULL

FULL

FULL

FULL

FULL

Currency

MYR

MYR

MYR

MYR

MYR

TURNOVER

2,874,548,000

3,532,868,000

2,867,662,000

5,001,389,000

4,389,984,000

Other Income

108,612,000

129,732,000

-

-

-

----------------

----------------

----------------

----------------

----------------

Total Turnover

2,983,160,000

3,662,600,000

2,867,662,000

5,001,389,000

4,389,984,000

----------------

----------------

----------------

----------------

----------------

PROFIT/(LOSS) FROM OPERATIONS

<285,555,000>

107,880,000

<986,263,000>

94,036,000

260,181,000

----------------

----------------

----------------

----------------

----------------

PROFIT/(LOSS) BEFORE TAXATION

<285,555,000>

107,880,000

<986,263,000>

94,036,000

260,181,000

Taxation

61,855,000

<9,838,000>

36,092,000

10,578,000

<9,550,000>

----------------

----------------

----------------

----------------

----------------

PROFIT/(LOSS) AFTER TAXATION

<223,700,000>

98,042,000

<950,171,000>

104,614,000

250,631,000

----------------

----------------

----------------

----------------

----------------

TRANSFER FROM RESERVES

2,458,000

-

-

-

-

RETAINED
PROFIT/(LOSS) BROUGHT FORWARD

As previously reported

<339,334,000>

<437,376,000>

508,527,000

403,913,000

153,414,000

Prior year adjustment

-

-

4,268,000

-

<132,000>

----------------

----------------

----------------

----------------

----------------

As restated

<339,334,000>

<437,376,000>

512,795,000

403,913,000

153,282,000

----------------

----------------

----------------

----------------

----------------

PROFIT AVAILABLE FOR APPROPRIATIONS

<560,576,000>

<339,334,000>

<437,376,000>

508,527,000

403,913,000

----------------

----------------

----------------

----------------

----------------

RETAINED PROFIT/(LOSS) CARRIED FORWARD

<560,576,000>

<339,334,000>

<437,376,000>

508,527,000

403,913,000

=============

=============

=============

=============

=============

INTEREST EXPENSE
(as per notes to P&L)

Bank overdraft

761,000

837,000

1,129,000

698,000

305,000

Bankers' acceptance

3,025,000

2,468,000

-

-

-

Hire purchase

121,000

267,000

320,000

272,000

183,000

Loan from holding company

-

1,717,000

-

-

-

Revolving loans

2,772,000

1,783,000

2,506,000

2,420,000

2,334,000

Term loan / Borrowing

62,408,000

49,322,000

67,946,000

113,630,000

132,007,000

Trust receipts

468,000

423,000

626,000

235,000

28,000

Others

125,455,000

129,830,000

146,175,000

186,605,000

147,109,000

----------------

----------------

----------------

----------------

----------------

195,010,000

186,647,000

218,702,000

303,860,000

281,966,000

BALANCE SHEET

MEGASTEEL SDN.
BHD.

ASSETS EMPLOYED:

FIXED ASSETS

2,450,708,000

2,566,451,000

2,668,919,000

2,687,800,000

2,605,760,000

LONG TERM
INVESTMENTS/OTHER ASSETS

Investments

-

-

117,000,000

117,000,000

117,000,000

Loans & advances - non-current

-

-

-

241,864,000

239,469,000

Deferred assets

300,397,000

238,542,000

248,379,000

212,278,000

201,700,000

Others

-

-

-

2,176,775,000

2,155,223,000

----------------

----------------

----------------

----------------

----------------

TOTAL LONG TERM INVESTMENTS/OTHER ASSETS

300,397,000

238,542,000

365,379,000

2,747,917,000

2,713,392,000

----------------

----------------

----------------

----------------

----------------

TOTAL LONG TERM ASSETS

2,751,105,000

2,804,993,000

3,034,298,000

5,435,717,000

5,319,152,000

CURRENT ASSETS

Stocks

718,218,000

1,397,694,000

729,176,000

1,677,360,000

1,541,782,000

Trade debtors

19,823,000

22,031,000

32,252,000

188,474,000

241,645,000

Other debtors, deposits & prepayments

141,534,000

169,004,000

134,017,000

122,922,000

105,984,000

Short term deposits

-

-

-

11,222,000

6,642,000

Deposits with financial institutions

12,669,000

39,000

-

-

-

Amount due from related companies

24,576,000

57,790,000

32,424,000

142,758,000

140,406,000

Cash & bank balances

8,436,000

62,800,000

33,729,000

38,087,000

38,041,000

Others

947,000

947,000

673,000

418,000

714,000

----------------

----------------

----------------

----------------

----------------

TOTAL CURRENT ASSETS

926,203,000

1,710,305,000

962,271,000

2,181,241,000

2,075,214,000

----------------

----------------

----------------

----------------

----------------

TOTAL ASSET

3,677,308,000

4,515,298,000

3,996,569,000

7,616,958,000

7,394,366,000

=============

=============

=============

=============

=============

CURRENT
LIABILITIES

Trade creditors

1,638,146,000

1,604,805,000

1,247,011,000

632,143,000

556,587,000

Other creditors & accruals

243,901,000

277,208,000

355,703,000

361,617,000

324,610,000

Hire purchase & lease creditors

121,000

932,000

2,044,000

2,511,000

1,227,000

Bank overdraft

8,429,000

-

10,654,000

2,479,000

2,415,000

Short term borrowings/Term loans

442,331,000

311,610,000

1,051,602,000

217,553,000

1,426,322,000

Other borrowings

39,328,000

38,898,000

34,237,000

33,500,000

33,500,000

Deposits from customers

-

9,885,000

-

-

-

Bill & acceptances payable

54,509,000

53,583,000

60,302,000

54,507,000

45,867,000

Amounts owing to holding company

65,691,000

62,679,000

51,829,000

33,457,000

29,562,000

Amounts owing to related companies

2,005,000

975,000

967,000

373,000

816,000

Other liabilities

495,563,000

915,873,000

639,056,000

1,944,995,000

1,246,831,000

----------------

----------------

----------------

----------------

----------------

TOTAL CURRENT LIABILITIES

2,990,024,000

3,276,448,000

3,453,405,000

3,283,135,000

3,667,737,000

----------------

----------------

----------------

----------------

----------------

NET CURRENT ASSETS/(LIABILITIES)

<2,063,821,000>

<1,566,143,000>

<2,491,134,000>

<1,101,894,000>

<1,592,523,000>

----------------

----------------

----------------

----------------

----------------

TOTAL NET ASSETS

687,284,000

1,238,850,000

543,164,000

4,333,823,000

3,726,629,000

=============

=============

=============

=============

=============

SHARE CAPITAL

Ordinary share capital

600,000,000

600,000,000

600,000,000

600,000,000

600,000,000

----------------

----------------

----------------

----------------

----------------

TOTAL SHARE CAPITAL

600,000,000

600,000,000

600,000,000

600,000,000

600,000,000

RESERVES

Revaluation reserve

190,327,000

190,327,000

190,327,000

190,327,000

190,327,000

Retained profit/(loss) carried forward

<560,576,000>

<339,334,000>

<437,376,000>

508,527,000

403,913,000

Others

-

2,451,000

2,430,000

2,320,000

2,011,000

----------------

----------------

----------------

----------------

----------------

TOTAL RESERVES

<370,249,000>

<146,556,000>

<244,619,000>

701,174,000

596,251,000

----------------

----------------

----------------

----------------

----------------

SHAREHOLDERS' FUNDS/EQUITY

229,751,000

453,444,000

355,381,000

1,301,174,000

1,196,251,000

LONG TERM
LIABILITIES

Long term loans

270,834,000

598,585,000

-

903,984,000

-

Hire purchase creditors

29,000

151,000

1,113,000

3,161,000

1,174,000

Others

186,670,000

186,670,000

186,670,000

2,125,504,000

2,529,204,000

----------------

----------------

----------------

----------------

----------------

TOTAL LONG TERM LIABILITIES

457,533,000

785,406,000

187,783,000

3,032,649,000

2,530,378,000

----------------

----------------

----------------

----------------

----------------

687,284,000

1,238,850,000

543,164,000

4,333,823,000

3,726,629,000

=============

=============

=============

=============

=============

Contingent Liabilities

45,000,000

45,000,000

45,000,000

FINANCIAL RATIO

MEGASTEEL SDN.
BHD.

TYPES OF FUNDS

Cash

8,436,000

62,800,000

33,729,000

49,309,000

44,683,000

Net Liquid Funds

7,000

62,800,000

23,075,000

46,830,000

42,268,000

Net Liquid Assets

<2,782,039,000>

<2,963,837,000>

<3,220,310,000>

<2,779,254,000>

<3,134,305,000>

Net Current Assets/(Liabilities)

<2,063,821,000>

<1,566,143,000>

<2,491,134,000>

<1,101,894,000>

<1,592,523,000>

Net Tangible Assets

687,284,000

1,238,850,000

543,164,000

4,333,823,000

3,726,629,000

Net Monetary Assets

<3,239,572,000>

<3,749,243,000>

<3,408,093,000>

<5,811,903,000>

<5,664,683,000>

BALANCE SHEET
ITEMS

Total Borrowings

763,844,000

951,959,000

1,102,156,000

1,165,608,000

1,466,972,000

Total Liabilities

3,447,557,000

4,061,854,000

3,641,188,000

6,315,784,000

6,198,115,000

Total Assets

3,677,308,000

4,515,298,000

3,996,569,000

7,616,958,000

7,394,366,000

Net Assets

687,284,000

1,238,850,000

543,164,000

4,333,823,000

3,726,629,000

Net Assets Backing

229,751,000

453,444,000

355,381,000

1,301,174,000

1,196,251,000

Shareholders' Funds

229,751,000

453,444,000

355,381,000

1,301,174,000

1,196,251,000

Total Share Capital

600,000,000

600,000,000

600,000,000

600,000,000

600,000,000

Total Reserves

<370,249,000>

<146,556,000>

<244,619,000>

701,174,000

596,251,000

LIQUIDITY
(Times)

Cash Ratio

0.00

0.02

0.01

0.02

0.01

Liquid Ratio

0.07

0.10

0.07

0.15

0.15

Current Ratio

0.31

0.52

0.28

0.66

0.57

WORKING CAPITAL
CONTROL (Days)

Stock Ratio

91

144

93

122

128

Debtors Ratio

3

2

4

14

20

Creditors Ratio

208

166

159

46

46

SOLVENCY RATIOS
(Times)

Gearing Ratio

3.32

2.10

3.10

0.90

1.23

Liabilities Ratio

15.01

8.96

10.25

4.85

5.18

Times Interest Earned Ratio

<0.46>

1.58

<3.51>

1.31

1.92

Assets Backing Ratio

0.87

1.57

0.69

5.51

4.74

PERFORMANCE
RATIO (%)

Operating Profit Margin

<9.93>

3.05

<34.39>

1.88

5.93

Net Profit Margin

<7.78>

2.78

<33.13>

2.09

5.71

Return On Net Assets

<13.17>

23.77

<141.31>

9.18

14.55

Return On Capital Employed

<12.96>

23.72

<137.47>

9.17

14.52

Return On Shareholders' Funds/Equity

<97.37>

21.62

<267.37>

8.04

20.95

Dividend Pay Out Ratio (Times)

0.00

0.00

0.00

0.00

0.00

NOTES TO
ACCOUNTS

Contingent Liabilities

45,000,000

45,000,000

45,000,000

0

0

FOREIGN EXCHANGE RATES

Currency

Unit

Indian Rupees

US Dollar

1

Rs.54.74

UK Pound

1

Rs.89.02

Euro

1

Rs.72.48

INFORMATION DETAILS

Report Prepared
by :

MNL

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

----

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%)

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.