MIRA INFORM REPORT

Report Date :

23.02.2012

IDENTIFICATION DETAILS

Name :	KANEKA CORPORATION

Registered Office :	3-2-4 Nakanoshima Kitaku Osaka 530-8288

Country :	Japan

Financials (as on) :	31.03.2011

Date of Incorporation :	September 1949

Com. Reg. No.:	1200-01-059628 (Osaka-Kitaku)

Legal Form :	Limited Company

Line of Business :	Manufacturer of chemicals, foodstuffs, electronic materials

No. of Employees :	8,400

RATING & COMMENTS

MIRA’s Rating :

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 :	Yen 16,269.6 Million
Status :	Good
Payment Behaviour :	Regular
Litigation :	--

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)

Japan

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

Company name and address

KANEKA CORPORATION

REGD NAME: Kaneka KK

MAIN OFFICE: 3-2-4 Nakanoshima Kitaku Osaka 530-8288 JAPAN

Tel: 06-6226-5050 Fax: 06-6226-5117

* The is its Tokyo Head Office

URL: http://www.kaneka.co.jp/

E-Mail address: info@kaneka.co.jp

ACTIVITIES

Mfg of chemicals, foodstuffs, electronic materials

BRANCHES

Tokyo (as given), Nagoya

OVERSEAS

Belgium, Singapore, Malaysia, Australia, USA, China, other

FACTORIES

Takasago (Hyogo), Settsu (Osaka), Otsu (Shiga), Kashima (Chiba)

CHIEF EXEC

KIMIKAZU SUGAWARA, PRES

Yen Amount: In million Yen, unless otherwise stated

SUMMARY

FINANCES FAIR A/SALES Yen 453,826 M

PAYMENTS REGULAR CAPITAL Yen 33,046 M

TREND STEADY WORTH Yen 261,828 M

STARTED 1949 EMPLOYES 8,400

COMMENT

MFR OF PVC RESINS & CAUSTIC SODA.

FINANCIAL SITUATION COSIDERED FAIR AND GOOD FOR ORDINARY BUSINESS ENGAGEMENTS.

MAX CREDIT LIMIT: YEN 16,269.6 MILLION, 30 DAYS NORMAL TERMS

Forecast (or estimated) figures for 31/03/2012 fiscal term

HIGHLIGHTS

The subject company was established on the basis of a mfg division separated from the former Kanebo Ltd, apparel, cosmetic mfr, Tokyo, in order to mfg PVC for the first time in Japan. Now has grown to be a leading chemical mfg firm with top level engineering development capacity. Strength in high polymer, synthesizing, and fermentation technologies. Holds one of world’s largest market shares in MBS resin and MS polymer. Expanding into pharmaceutical intermediates, electronic materials, synthetic fibers & bio-chemicals. The company set up a subsidiary each in S Korea and Taiwan to enhance relations with local firms. It will release a newly-developed conductive film for touch panel in spring 2012. It is considering withdrawing a PVC materials mfg JV in Kashima.

FINANCIAL INFORMATION

The sales volume for Mar/2011 fiscal term amounted to Yen 453,826 million, a 10% up from Yen 412,490 million in the previous term. The global economy generally remained on a recovery track, supported by various countries’ economic stimulus measures and economic growth in China and the rest of the Asian region. Sales rose in all segments. By divisions, Chemicals up 7.4% to Yen 5,916 million, supported by a recovery in demand from Japan and Asian markets, sales volume for PVC resins were firm; Functional Plastics up 14.5% to Yen 8,856 million, as demand for modifiers recovered in Asia, Europe and US; Expandable Plastics up 7.8% to Yen 4,265 million; Foodstuffs up 3.3% to Yen 4,000 million; Life Science up 21.3% to Yen 8,330 million, as medical device sales and income increased; Electronics down 13.0% to Yen 4,750 million, as sales volumes increased for ultra heat-resistant polyimide film; Synthetic Fiber up 23.7% to Yen 5,21730,687 million. The recurring profit was posted at Yen 20,983 million and the net profit at 11,625 million, respectively, compared with Yen 16,341 million recurring profit and Yen 8,406 million net profit, respectively, a year ago.

(Apr/Dec/2011 results): Sales Yen 351,907 million (up 3.6%), operating profit Yen 9,450 million (down 44.4%), recurring profit Yen 9,044 million (down 47.3%), net profit Yen 3,005 million (down 71.2%). (% compared with the corresponding period a year ago).

For the current term ending Mar 2012 the recurring profit is projected at Yen 13,000 million and the net profit at Yen 5,500 million, on a 3.68% rise in turnover, to Yen 470,000 million. Material costs increases are passed onto chemical products overall. Medical equipment sales are rising, but resin sales volume is sluggish. Profitability of foods is worsening. Operating profit will be revised down and fall, hit by the impact of higher Yen.

The financial situation is considered FAIR and good for ORDINARY business engagements. Max credit limit is estimated at Yen 16,269.6 million, on 30 days normal terms.

REGISTRATION

Date Registered:　Sept 1949

Regd No.: 1200-01-059628 (Osaka-Kitaku)

Legal Status: Limited Company (Kabushiki Kaisha)

Authorized: 750 shares

Issued: 350 shares

Sum: Yen 33,046 million

Major shareholders (%): Nippon Life Ins (5.4), Japan Trustee Services T (5.3), Master Trust Bank of Japan T (4.9), SMBC (4.4), Japan Trustee Services T4 (3.8), Meiji Yasuda Life Ins (3.7), MUFG (3.2), Company’s Treasury Stock (3.1), Japan Trustee Services T9 (1.9); foreign owners (21.7)

No. of shareholders: 16,782

Listed on the S/Exchange (s) of: Tokyo, Osaka, Nagoya

Managements: Masatoshi Takeda, ch; Kimikazu Sugawara, pres; Masatoshi Haatori, v pres; Tetsuro Hara, s/mgn dir; Masao Nakagawa, s/mgn dir; Hirosaku Nagano, s/mgn dir; Nobuyuki Koyama, mgn dir; Shigeu Kamemoto, mgn dir; Masami Kishine, mgn dir; Toshio Nakamura, mgn dir; Minoru Tanaka, mgn dir; Akira Iwazawa, mgn dir

Nothing detrimental is known as to the commercial morality of executives.

Related companies: Kaneka Belgium, Kaneka Texas, Showa Kasei, other

OPERATION

Activities: Manufactures PVC resins, soda, foods, other (--100%):

(Sales Breakdown by Divisions):

Chemicals (19%): Polyvinyl chloride (PVC), rigid PVC compounds, caustic soda, paste PVC, hydrochloric acid, flexible PVC compounds, chlorinated PVC;

Functional Plastics (15%): modifier, heat-resistant ABS resins, self-extinguishing ABS resins, modified silicone polymer (MS Polymer), Alkyl terminated, polyisobuthylenes;

Expandable Plastics & Products (13%): extruded polystyrene foam boards, insulating PVC sash windows, polystyrene foam sheets, polyolefin foam (boards & moldings), expandable polystyrene;

Foodstuffs (27%): margarine & shortening, confectionary fats, bakery yeast;

Life Science Products (10%): ubidecarenone (Coenzyme Q10), anti-hypertensive drug intermediates, intermediates for antibiotics, liposorber system (LDL-cholesterol adsorption system), adsorption column for dialysis-related amyloidosis);

Electronic Products (10%): ultra heat-resistant polyimide film, bonded magnets, magnet wire, PVC pipes for underground cables, solar cells, optical films;

Synthetic Fibers, Others (5%): modacrylic fibers, others;

Clients: [Mfrs, wholesalers] Mitsui & Co, Mitsubishi Corp, Kubota Corp, Kyowa Hakko Kogyo, Mitsubishi Plastics, Showa Chemical Ind, other

No. of accounts: 1,000 – 2,000

Domestic areas of activities: Nationwide

Suppliers: [Mfrs, wholesalers] Mitsui & Co, Mitsubishi Corp, Mitsui Chemical, other

Payment record: Regular

Location: Business area in Osaka. Office premises at the caption address are owned and maintained satisfactorily.

Bank References:

SMBC (Osaka-Chuo)

MUFG (Osaka)

Relations: Satisfactory

FINANCES

(In Million Yen)

FINANCES: (Consolidated in million yen)
			Terms Ending:		31/03/2011	31/03/2010
INCOME STATEMENT
	Annual Sales				453,826	412,490
	Cost of Sales				339,381	310,250
	GROSS PROFIT				114,444	102,239
	Selling & Adm Costs				93,209	84,734
	OPERATING PROFIT				21,235	17,505
	Non-Operating P/L				-252	-1,164
	RECURRING PROFIT				20,983	16,341
	NET PROFIT				11,625	8,406
BALANCE SHEET
	Cash				37,685	41,465
	Receivables				103,891	93,993
	Inventory				68,152	61,993
	Securities, Marketable				322	422
	Other Current Assets				12,375	10,262
	TOTAL CURRENT ASSETS				222,425	208,135
	Property & Equipment				163,065	161,432
	Intangibles				7,199	1,859
	Investments, Other Fixed Assets				62,451	61,453
	TOTAL ASSETS				455,140	432,879
	Payables				60,771	53,493
	Short-Term Bank Loans				21,176	19,769

	Other Current Liabs				44,619	34,196
	TOTAL CURRENT LIABS				126,566	107,458
	Debentures				15,143	20,000
	Long-Term Bank Loans				26,095	24,204
	Reserve for Retirement Allw				19,228	19,232
	Other Debts				6,279	4,811
	TOTAL LIABILITIES				193,311	175,705
	MINORITY INTERESTS
	Common stock				33,046	33,046
	Additional paid-in capital				34,836	34,836
	Retained earnings				197,462	191,250
	Evaluation p/l on investments/securities				6,677	8,147
	Others				(433)	(506)
	Treasury stock, at cost				(9,760)	(9,599)
	TOTAL S/HOLDERS` EQUITY				261,828	257,174
	TOTAL EQUITIES				455,140	432,879
CONSOLIDATED CASH FLOWS
				Terms ending:	31/03/2011	31/03/2010
	Cash Flows from Operating Activities				34,932	57,412
	Cash Flows from Investment Activities				-34,933	-25,621
	Cash Flows from Financing Activities				-4,342	-16,825
	Cash, Bank Deposits at the Term End				36,978	40,513
ANALYTICAL RATIOS Terms ending:					31/03/2011	31/03/2010
		Net Worth (S/Holders' Equity)			261,828	257,174
		Current Ratio (%)			175.74	193.69
		Net Worth Ratio (%)			57.53	59.41
		Recurring Profit Ratio (%)			4.62	3.96
		Net Profit Ratio (%)			2.56	2.04
		Return On Equity (%)			4.44	3.27

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.49.24
UK Pound	1	Rs.76.75
Euro	1	Rs.65.16

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%)

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