MIRA INFORM REPORT

Report Date :

17.02.2012

IDENTIFICATION DETAILS

Name :	AUDCO INDIA LIMITED
Registered Office :	L and T House, Ballard Estate, Mumbai - 400001, Maharashtra
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	23.11.1961
Com. Reg. No.:	11-12188
Capital Investment / Paid-up Capital :	Rs.156.326 Millions
CIN No.: [Company Identification No.]	U74999MH1961PLC012188
TAN No.: [Tax Deduction & Collection Account No.]	CHEA07789F/CHEA00336A
PAN No.: [Permanent Account No.]	AAACA9647E
Legal Form :	A Closely Held Public Limited Liability Company
Line of Business :	Manufacturing and Marketing of Industrial Valves, Actuators and Accessories, Offshore and Onshore Drilling Systems and Equipments and Safety Systems and Equipments.
No. of Employees :	2000 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

A (66)

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 10920000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established and reputed company having fine track. Financial position of the company appears to be sound. Directors are reported be experienced and respectable businessman. Trade relations are reported as fair. Business is active. Payments are reported to be regular and as per commitments. The company can be considered normal for business dealing 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.

INFORMATION DECLINED BY

Name :	Mr. Muthu Kumar
Designation :	Finance Executive
Contact No.:	91-44-22492323
Date :	16.02.2012

LOCATIONS

Registered Office :	L and T House, Ballard Estate, Mumbai 400001, Maharashtra, India
Tel. No.:	91-22-67525656
Fax No.:	91-22-67525893/ 67525858
E-Mail :	rn@audcoindia.com krp@audcoindia.com pvs-sec@lth.ltindia.com parthasarathy.kr@larsentoubro.com prasad.shanbhag@larsentoubro.com
Website :	www.audcoindia.com www.ailvalves.com
Factory 1 :	Mount Poonamalle Road, Manapakkam, Chennai - 600089, Tamilnadu, India
Tel. No.:	91-44-22342323 / 22492323
Fax No.:	91-44-22345055 /22495055 /22494055
E mail:	Id.valves@audocoindia.com valves@audcoindia.com
Factory 2 :	B – 8, MMDA Industrial Area, Maraimalai Nagar, Chennai - 603209, Tamilnadu, India
Factory 3:	Enathur Village, Kancheepuram - 631552, Tamilnadu, India
Factory 4:	Malumichampatti Village, Coimbatore 641021, Tamilnadu, India

DIRECTORS

AS ON 25.07.2011

Name :

Mr. Jagdish Pandurang Nayak

Designation :

Director

Address :

Gilder House, 2^nd floor, 67 F, Bhulabhai Desai Road, Mumbai 400026, Maharashtra, India

Date of Birth/Age :

13.11.1943

Date of Appointment :

07.06.2004

DIN No.:

00001644

Other Directorship :

S.No.	CIN	Name of the Company	Current designation of the director	Date of appointment at current designation	Original date of appointment	Date of cessation	Company Status	Defaulting status
1	L99999MH1946PLC004768	Larsen and Toubro Limited	Whole-time director	13-11-08	03-03-95	31-03-11	Active	NO
2	U29119MH1997PLC109700	Landt-Komatsu Limited	Director	29-07-97	29-07-97	-	Active	NO
3	U74999MH1961PLC012188	Audco India Limited	Director	29-07-99	29-07-99	-	Active	NO
4	U74999MH1962PLC012315	Ewac Alloys Limited	Director	10-08-99	10-08-99	-	Active	NO
5	U28920MH1952PLC008893	Tractor Engineers Limited	Director	19-08-99	19-08-99	-	Active	NO
6	L26940MH2000PLC128420	Ultratech Cement Limited	Director	24-08-00	24-08-00	15-06-09	Active	NO
7	U45200AP2003PLC041893	Nac Infrastructure Equipment Limited	Director	17-11-03	17-11-03	21-08-10	Active	NO
8	U25209MH2000PLC127268	L and T Plastics Machinery Limited	Director	07-06-04	07-06-04	17-12-10	Active	NO
9	U22111WB2000PTC162530	Voith Paper Technology (India) Private Limited	Director	12-05-06	12-05-06	30-09-09	Active	NO
10	U31501MH2007PLC176667	L and T Electricals And Automation Limited	Director	12-12-07	12-12-07	02-08-10	Active	NO
11	U74900MH2008PLC182601	L and T Natural Resources Limited	Director	23-05-08	23-05-08	06-12-10	Active	NO

Name :

Mr. Thomas Louis Pajonas

Designation :

Director

Address :

917, Parkview Lane, South Lake, Texas, US

Date of Birth/Age :

16.10.1955

Date of Appointment :

06.08.2004

DIN No.:

00167306

Other Directorship :

S.No.	CIN	Name of the Company	Current designation of the director	Date of appointment at current designation	Original date of appointment	Date of cessation	Company Status	Defaulting status
1	U74999MH1961PLC012188	Audco India Limited	Director	06-08-04	06-08-04	-	Active	NO
2	U85110KA1996PTC021388	Flowserve India Controls Private Limited	Director	03-11-05	03-11-05	01-01-08	Active	NO

Name :

Mr. John Robert Lenander

Designation :

Director

Address :

7004, David Lane, Colleyville – 76034, U.S.A.

Date of Birth/Age :

07.07.1956

Date of Appointment :

07.12.2007

DIN No.:

02133034

Name :

Mr. Raghavan Sadagopan

Designation :

Director

Address :

Flat No 302, Emarald Green, Apartments, 108, 6^th Main, 8^th Cross Malleswaran, Karnataka – 560003, India

Date of Birth/Age :

25.03.1946

Date of Appointment :

27.05.2008

DIN No.:

00002647

Other Directorship :

S.No.	CIN	Name of the Company	Current designation of the director	Date of appointment at current designation	Original date of appointment	Date of cessation	Company Status	Defaulting status
1	U29240MH1998PTC117183	Case New Holland Construction Equipment (India) Private Limited	Director	22-03-04	22-03-04	31-03-11	Active	NO
2	U65990MH1994PLC083147	L and T Finance Limited	Director	04-05-06	04-05-06	-	Active	NO
3	U29119MH1997PLC109700	Landt-Komatsu Limited	Director	23-06-06	12-05-06	-	Active	NO
4	U28920MH1952PLC008893	Tractor Engineers Limited	Director	20-04-07	23-12-06	-	Active	NO
5	U22111WB2000PTC162530	Voith Paper Technology (India) Private Limited	Director appointed in casual vacancy	31-07-07	31-07-07	30-09-09	Active	NO
6	U25209MH2000PLC127268	L and T Plastics Machinery Limited	Director	23-09-09	18-09-07	-	Active	NO
7	U74999MH1961PLC012188	Audco India Limited	Director	27-05-08	27-05-08	-	Active	NO
8	U74999MH1962PLC012315	Ewac Alloys Limited	Director	25-04-09	30-08-08	-	Active	NO
9	U29253MH2010PTC210325	L and T Kobelco Machinery Private Limited	Director	25-11-10	25-11-10	-	Active	NO

Name :

Mr. Subrahmanyam Srinivasan Chandilya

Designation :

Director

Address :

New No. 1, Old No. 6, 13th East Street, Kamraj Nagar Thiruvanmiyur, Chennai – 600041, Tamilnadu, India

Date of Birth/Age :

05.08.1948

Date of Appointment :

17.07.2009

DIN No.:

02726962

Name :

Mr. Gopinath Sivasankar

Designation :

Director

Address :

Villa 83, Phase 1, Palm Meadows, Airport, Whitefield Road, Ramagondanahalli, Bangalore 560066, Karnataka, India

Date of Birth/Age :

26.05.1946

Date of Appointment :

21.09.2002

DIN No.:

00328624

Other Directorship :

S.No.	CIN	Name of the Company	Current designation of the director	Date of appointment at current designation	Original date of appointment	Date of cessation	Company Status	Defaulting status
1	U29120KA1996PTC020335	Flowserve Microfinish Valves Private Limited	Director	21-08-02	21-08-02	-	Active	NO
2	U74999MH1961PLC012188	Audco India Limited	Director	21-09-02	21-09-02	-	Active	NO
3	U85110KA1996PTC021196	Flowserve Microfinish Pumps Private Limited	Director	03-11-03	03-11-03	-	Active	NO
4	U18209TN1987PLC014838	Flowserve Sanmar Limited	Director	01-04-04	01-04-04	-	Active	NO
5	U85110KA1996PTC021388	Flowserve India Controls Private Limited	Director	10-02-05	10-02-05	05-03-08	Active	NO

KEY EXECUTIVES

Name :	Mr. Muthu Kumar
Designation :	Finance Executive
Name :	Mr. Nelepally Venkatachalam Venkatasubramaniam
Designation :	Manager
Address :	6D, K.G. Towers, 30 and 30A, 100 Feet by Pass Road, Velacherry, Chennai – 600042, Tamilnadu, India
Date of Birth/Age :	24.05.1960
Date of Appointment :	01.07.2009
Pan No.:	AADPV6183C
Name :	Mr. Rajavel Sundaresan
Designation :	Secretary
Address :	No.5, Forth Cross, Gupta Layout, Ulsoor, Bangalore – 560008, Karnataka, India
Date of Birth/Age :	27.05.1960
Date of Appointment :	09.12.2010
Pan No.:	AAPPR3224A

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 25.07.2011

Names of Shareholders	No. of Shares
Larsen and Toubro Limited, India	781626
Audco Limited, India	781626
Shivsankar Gopinath and Audco Limited, New York	1
Nayak Pandurang Jagdish and Larsen and Toubro Limited, India	1
Pajonas L Thomas and Audco Limited, New York	1
Narayanswamy Hariharan and Larsen and Toubro Limited, India	1
J. R. Lenander and Audco Limited, New York	1
S. Raghavan and Larsen and Toubro Limited, India	1
Chandilya Srinivasan Subrahmanyam and Larsen and Turbo Limited, India	1
Samuel Barrett and Audco Limited, New York	1
Total	1563260

AS ON 25.07.2011

Equity Share Break up (Percentage of Total Equity)

Category	Percentage
Foreign holdings( Foreign institutional investor(s), Foreign companie(s) Foreign financial institution(s), Non-resident Indian(s) or Overseas Corporate bodies or Others	50.00
Bodies corporate	50.00
Total	100.00

BUSINESS DETAILS

Line of Business :

Manufacturing and Marketing of Industrial Valves, Actuators and Accessories, Offshore and Onshore Drilling Systems and Equipments and Safety Systems and Equipments.

Products :

Item Code No. (ITC Code)	84 81 8003
Product Description	Industrial Valves

Item Code No. (ITC Code)	90 32 8100
Product Description	Actuators

Item Code No. (ITC Code)	84 81 4000
Product Description	Safety Relief Valves

PRODUCTION STATUS

AS ON 31.03.2011

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Industrial Valves	Nos.	378584	978584	525271
Actuators & Accessories	Nos.	NA	10000	1853
Safety Systems & equipments	Nos.	4700	2500	NA
Offshore and Onshore drilling systems and equipments	Nos.	4010	1500	NA

NOTES

* Excludes 900000 Nos. in respect of Entrepreneur's Memoranda filed with Government of India, of which 627000 Nos. is installed.

# Licensing not applicable Installed capacity is based on Entrepreneur's Memoranda filed with Government of India.

1 The installed capacities are as certified by a Director on which certificate the Auditors have placed reliance.

2 Turnover of Rs. 22.397 millions of Actuators and Accessories is included in respective class of goods (Previous year Rs.40.929 millions).

GENERAL INFORMATION

No. of Employees :

2000 (Approximately)

Bankers :

Ø Bank of Baroda,

Mount Road Branch, 1, Club House Road, Chennai 600002, Tamilnadu, India

Ø State Bank of India,

Guindy, Chennai 600002, Tamilnadu, India

Ø Indian Bank,

Guindy, Chennai 600032, Tamilnadu, India

Ø Standard Chartered Bank,

19, Rajaji Salai, Chennai 60001, Tamilnadu, India

Ø ABN AMRO Bank N V,

74, Sakhar Bhavan, 7^th Floor, Nariman Point, Mumbai 400021, Maharashtra, India

Facilities :

Secured Loans	31.03.2011	31.03.2010
	(Rs. In Millions)
Rupee Term Loan Bank	70.460	118.652
Working Capital Loan Bank	81.932	141.731
Total	152.392	260.383
Unsecured Loans	31.03.2011	31.03.2010
	(Rs. In Millions)
Finance Lease Obligation	0.961	1.886
Total	0.961	1.886

Banking Relations :	--
Auditors :
Name :	Sharp and Tannan Chartered Accountants
Address :	Parsn Manere, A Wing, 602, Anna Salai, Chennai – 600006, Tamilnadu, India
Tel. No.:	91-44-28274368/ 28229534/ 28228386
Fax No.:	91-44-28266858
E-Mail :	sharp@vsnl.com chennai@sharpandtannan.com
PAN.:	AAAFS2512D
Membership :	Confederation of Indian Industry
Holding Company :	· Larsen and Toubro Limited, India – Shareholder 50% · Audco Limited, U.K., India – Shareholder 50%
Associates :	· L and T Komatsu Limited
Subsidiaries :	· L and T Infotech Limited
Ultimate Holding Company of Audco Limited, U.K:	· Flowserve (GB) Limited, U.K
Group Companies Flowserve :	· Flowserve AHAUS GMBH, Germany · Flowserve Sulphur Springs, U.S.A. · BTR Flow Control SA (Pty) Limited, South Africa · Flowserve Corporation, Cookeville, U.S.A. · Flowserve Flow Control Private Limited, Australia · Flowserve Inc, Canada · Flowserve Private Limited, Singapore · Flowserve Fluid Motion and Control, China · Flowserve Controls Private Limited, Bangalore · Flowserve Limitorque, U.S.A.

CAPITAL STRUCTURE

AS ON 31.03.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
1800000	Equity Shares	Rs.100/- each	Rs.180.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
1563260	Equity Shares	Rs.100/- each	Rs.156.326 Millions

NOTES:

1563260 equity Shares of Rs.100 each fully paid of which 781630 equity shares held by L and T Limited and 781630 held by Audco Ltd. U.K.

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		156.326	156.326	180.000
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		2573.493	2448.232	2652.032
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		2729.819	2604.558	2832.032
LOAN FUNDS
1] Secured Loans		152.392	260.383	382.105
2] Unsecured Loans		0.961	1.886	4.153
TOTAL BORROWING		153.353	262.269	386.258
DEFERRED TAX LIABILITIES		47.990	63.246	67.966
TOTAL		2931.162	2930.073	3286.256
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		828.048	831.570	1321.610
Capital work-in-progress		0.000	7.861	110.697
INVESTMENT		0.000	0.000	0.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	954.434	582.248	459.271
	Sundry Debtors	2811.470	3363.969	3023.610
	Cash & Bank Balances	0.596	0.675	0.324
	Other Current Assets	0.018	0.117	1.896
	Loans & Advances	657.069	608.983	1109.548
Total Current Assets		4423.587	4555.992	4594.649
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	2003.582	2143.687	2088.800
	Other Current Liabilities	0.292	0.385	1.297
	Provisions	316.599	321.278	650.603
Total Current Liabilities		2320.473	2465.350	2740.700
Net Current Assets		2103.114	2090.642	1853.949
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		2931.162	2930.073	3286.256

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2011	31.03.2010	31.03.2009
	SALES
		Income	4581.014	3700.880	7266.425
		Other Income	173.132	151.630	110.668
		TOTAL (A)	4754.146	3852.510	7377.093
Less	EXPENSES
		Consumption Material Changes Inventories	3361.321	2444.374	5311.282
		Manufacturing Services Costs	129.619	137.586	0.000
		Employee Related Costs	528.144	507.329	553.457
		Administration Selling other Expenses	190.030	174.601	336.710
		TOTAL (B)	4209.114	3263.890	6201.449
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		545.032	588.620	1175.644
Less	FINANCIAL EXPENSES (D)		0.000	0.000	0.000
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		545.032	588.620	1175.644
Less/ Add	DEPRECIATION/ AMORTISATION (F)		73.743	105.115	90.032
	PROFIT BEFORE TAX (E-F) (G)		471.289	483.505	1085.612
Less	TAX (H)		145.509	166.474	377.627
	PROFIT AFTER TAX (G-H) (I)		325.780	317.031	707.985
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		759.846	474.518	357.125
Less	APPROPRIATIONS
		Transfer to General Reserve	233.097	31.703	358.942
		Interim Dividend	0.000	0.000	72.000
		Proposed Dividend	0.000	0.000	126.000
		Tax on Dividend	0.000	0.000	33.650
	BALANCE CARRIED TO THE B/S		852.529	759.846	474.518
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	666.271	722.473	1470.356
		Deemed exports of goods	214.024	181.266	40.019
	TOTAL EARNINGS		880.295	903.739	1510.375
	IMPORTS
		Raw Materials	137.715	91.773	146.880
		Stores & Spares	319.476	204.697	325.689
		Capital Goods	57.110	4.769	150.346
	TOTAL IMPORTS		514.301	301.239	622.915
	Earnings Per Share (Rs.)		208.40	176.62	393.32

KEY RATIOS

PARTICULARS		31.03.2011	31.03.2010	31.03.2009
PAT / Total Income	(%)	6.85	8.23	9.59
Net Profit Margin (PBT/Sales)	(%)	10.29	13.06	14.94
Return on Total Assets (PBT/Total Assets}	(%)	8.97	18.35	18.35
Return on Investment (ROI) (PBT/Networth)		0.17	0.38	0.38
Debt Equity Ratio (Total Liability/Networth)		0.91	1.10	1.10
Current Ratio (Current Asset/Current Liability)		1.91	1.68	1.68

LOCAL AGENCY FURTHER INFORMATION

SUNDRY CREDITORS DETAILS:

Particulars	31.03.2011	31.03.2010	31.03.2009
	(Rs. In Millions)
Sundry Creditors
- Creditors due small micro enterprises	0.000	0.000	0.000
- Creditors due others	2003.582	2143.687	2088.800
Total	2003.582	2143.687	2088.800

SALES AND OTHER INCOME

Income from sales and other sources amounted to Rs 4581.014 millions for the year ended 31^st March, 2011 against Rs.3700.880 millions the previous year.

CAPITAL EXPENDITURE

As at 31^st March, 2011, the gross fixed assets stood at Rs 1631.432 millions and the net fixed assets at Rs. 828.048 millions Additions during the year amounted to Rs.71.456 millions

FORM 8

Corporate identity number of the company	U74999MH1961PLC012188
Name of the company	AUDCO INDIA LIMITED
Address of the registered office or of the principal place of business in India of the company	L and T House, Ballard Estate, Mumbai 400001, Maharashtra, India
This form is for	Creation of charge
Type of charge	Movable property (not being pledge)
Particular of charge holder	ABN AMRO Bank N V, Address: 74, Sakhar Bhavan, 7^th Floor, NAriman Point, Mumbai 400021, Maharashtra, India Email: reenabang@rediffmail.com
Nature of instrument creating charge	Deed of Hypothecation of Movable Assets
Date of instrument Creating the charge	29.07.2008
Amount secured by the charge	Rs. 215.000 millions
Brief of the principal terms an conditions and extent and operation of the charge	Rate of interest Term Loan USD 4 Mn and Buyers Credit USD 1 Mn. Interest / Commission - As agreed by and with the Bank from time to time. Terms of repayment As agreed by and with the Bank from time to time. Margin As applicable, if any. Extent and operation of the charge The Banks are having first charge on the security offered by the Company. Other The Bank sanctioned the total facility in USD 5 Mn which is equivalent to Rs.215.000 millions. (USD 1 = INR 43)
Short particulars of the property charged (Including location of the property)	Hypothecation by way of first charge on entire movable plant and machinery including all the spare parts and all other movable assets such as furniture, fixture, fittings, vehicles, equipment (both present and future).

FIXED ASSETS

Ø Freehold Land

Ø Building

Ø Plant and Machinery

Ø Furniture and Fixtures

Ø Vehicles

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.49.25
UK Pound	1	Rs.77.45
Euro	1	Rs.64.89

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	8
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	7
--RESERVES	1~10	8
--CREDIT LINES	1~10	7
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		66

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
-	NB	New Business	-

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