MIRA INFORM REPORT

Report Date :

12.01.2012

IDENTIFICATION DETAILS

Name :	ALKEM LABORATORIES LIMITED
Registered Office :	Alkem House, Senapati Bapat Marg, Lower Parel, Mumbai – 400013, Maharashtra
Country :	India
Financials (as on) :	31.03.2010
Date of Incorporation :	08.08.1973
Com. Reg. No.:	11-174201
Capital Investment / Paid-up Capital :	Rs.119.565 Millions
CIN No.: [Company Identification No.]	U00305MH1973PLC174201
TAN No.: [Tax Deduction & Collection Account No.]	PTNA00241D
Legal Form :	A Closely Held Public Limited Liability Company
Line of Business :	Manufacturer of Cifotaxime Sodium Sterile, Ciprofloxacin Hydrochloride, Norfloxacin Hydrochloride.
No. of Employees :	385 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

Aa (73)

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	USD 48000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and a reputed company having fine track. Financial position of the company appears to be sound. Fundamentals are strong and healthy. 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 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.

INFORMATION DECLINED BY

Name :	Ms. Vijaya
Designation :	Finance Executive
Date :	11.01.2012

LOCATIONS

Registered/ Head Office :	Alkem House, Senapati Bapat Marg, Lower Parel, Mumbai – 400013, Maharashtra
Tel. No.:	91-22-39829999
Fax No.:	91-22-24862789
Email:	manishnarang@alkem.com alkemlab@giasbm01.vsnl.net.in alkemlab@vsnl.com alkempatna@alkem.com
Website :	http://www.alkemlabs.com
Factory 1 :	C 6/1, MIDC Industrial Estate, Taloja, District Raigad, Maharashtra, India
Factory 2 :	N. H. No. 8, Village Naugama, Jhagadia, District – Bharuch, Gujarat, India
Factory 3:	333/1, Kachigam, Daman, India
Factory 4:	167/2, Amaliya, Dabhel, Daman, India
Factory 5:	289/290, GIDC, Ankleshwar , District – Bharuch, Gujarat , India
Factory 6:	167/1, Amaliya, Dabhel , Daman, India
Factory 7:	Village Thane – Baddi, Th- Nalagarh, Dist – Solan, Himachal Pradesh, India
Depots :	Mumbai, Maharashtra, India Patna, Bihar, India Kolkata, West Bengal, India Cuttack, Assam Gauhati, Assam Lucknow, Uttar Pradesh, India New Delhi, India
C and F Agents :	Located At : Hyderabad, Andhra Pradesh, India Chennai, Tamilnadu, India Cochin, Kerala, India Bangalore, Karnataka, India Indore, Madhya Pradesh, India Jabalpur, Madhya Pradesh, India Ahmedabad, Gujarat, India Nagpur, Maharashtra, India Jalgaon, Maharashtra, India Pune, Maharashtra, India Jaipur, Rajasthan, India
Other Offices :	Laxmi Insurance Building, 5^thFloor, Sir P. M. Road, Fort, Mumbai – 400 001, Maharashtra, India

DIRECTORS

As on 28.07.2011

Name :

Mr. Samprada Singh

Designation :

Whole-time director

Address :

Budha Colony, Boring Canal Road, Patna – 800001, Bihar, India

Date of Birth/Age :

02.05.1930

Date of Appointment :

08.08.1973

DIN No.:

00760279

Other Directorship :

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
U00305MH1973PLC174201	Alkem Laboratories Limited	Whole-time director	1/04/2011	8/08/1973	-	Active	NO

Name :

Mr. Basudeo Narain Singh

Designation :

Managing director

Address :

Budha Colony, Boring Canal Road, Patna – 800001, Bihar, India

Date of Birth/Age :

20.11.1940

Date of Appointment :

08.08.1973

DIN No.:

00760310

Other Directorship :

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
U00305MH1973PLC174201	Alkem Laboratories Limited	Managing director	1/04/2011	8/08/1973	-	Active	NO
U24232KA2006PTC040295	Enzene Biosciences Private Limited	Additional director	20/10/2011	20/10/2011	-	Active	NO

Name :

Mr. Prabhat Narain Singh

Designation :

Whole-time director

Address :

103, Shriram Place, East Boring, Canal Road, Patna – 800001, Bihar, India

Date of Birth/Age :

13.10.1952

Date of Appointment :

25.01.1983

DIN No.:

00739296

Other Directorship :

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
U00305MH1973PLC174201	Alkem Laboratories Limited	Whole-time director	1/04/2011	25/01/1983	-	Active	NO

Name :

Mr. Nawal Kishore Singh

Designation :

Whole-time director

Address :

Budha Colony, Boring Canal Road, Patna – 800001, Bihar, India

Date of Birth/Age :

09.03.1951

Date of Appointment :

29.09.2001

DIN No.:

00758505

Other Directorship :

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
U00305MH1973PLC174201	Alkem Laboratories Limited	Whole-time director	1/04/2011	29/09/2001	-	Active	NO

Name :

Mr. Dhananjay Kumar Singh

Designation :

Whole-time director

Address :

Flat No 16, 16^th Floor, Vasudha Apartment, Worli, Mumbai – 400025, Maharashtra, India

Date of Birth/Age :

29.07.1962

Date of Appointment :

25.10.1988

DIN No.:

00739153

Other Directorship :

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
U00305MH1973PLC174201	Alkem Laboratories Limited	Whole-time director	1/04/2011	25/10/1988	-	Active	NO
U85100MH2010NPL206161	Alkem Foundation	Director	31/07/2010	31/07/2010	-	Active	NO

Name :

Mr. Mritunjaykumar Singh

Designation :

Whole-time director

Address :

3-31, Suraiya Apartment, Sir Pochkhanwala Road, Worli, Mumbai – 400025, Maharashtra, India

Date of Birth/Age :

04.11.1963

Date of Appointment :

11.02.2008

DIN No.:

00881412

Other Directorship :

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
U24230MH1986PTC039692	Indchemie Health Specialities Private Limited	Director	2/11/2002	2/11/2002	-	Active	NO
U00305MH1973PLC174201	Alkem Laboratories Limited	Whole-time director	1/04/2011	11/02/2008	-	Active	NO

Name :

Mr. Ennapadam Narayanan Shankar

Designation :

Director

Address :

26A Venus, Worli Sea Face, Mumbai – 400018, Maharashtra, India

Date of Birth/Age :

15.01.1935

Date of Appointment :

20.03.2008

DIN No.:

02118438

Other Directorship :

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
U00305MH1973PLC174201	Alkem Laboratories Limited	Director	30/09/2008	20/03/2008	-	Active	NO

Name :

Mr. Balmiki Prasad Singh

Designation :

Whole-time director

Address :

1^st Floor, Room No. 101, Westmore II, Pochkhanwala Road, Worli, Mumbai – 400018, Maharashtra, India

Date of Birth/Age :

26.12.1954

Date of Appointment :

25.10.1988

DIN No.:

00739856

Other Directorship :

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
U00305MH1973PLC174201	Alkem Laboratories Limited	Whole-time director	1/04/2011	25/10/1988	-	Active	NO
U85100MH2010NPL206161	Alkem Foundation	Director	31/07/2010	31/07/2010	-	Active	NO

Name :

Mr. Mangaldas Chhaganlal Shah

Designation :

Director

Address :

D-34/310, MIG Gandhi Nagar, Bandra (East), Mumbai – 400051, Maharashtra, India

Date of Birth/Age :

04.07.1933

Date of Appointment :

20.02.2007

DIN No.:

01353574

Other Directorship :

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
U00305MH1973PLC174201	Alkem Laboratories Limited	Director	26/09/2007	20/02/2007	-	Active	NO

KEY EXECUTIVES

Name :	Mr. Manish Abnashi Lal Narang
Designation :	Secretary
Address :	B-603, 6^th Floor, Mercury Building, Suncity Apartments, Powai, Mumbai – 400076, Maharashtra, India
Date of Birth/Age :
Date of Appointment :	16.12.2006
PAN No.:	AAHPN6263D
Name :	Ms. Vijaya
Designation :	Finance Executive

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 28.07.2011

Names of Shareholders	No. of Shares
Samprada Singh	399400
Samprada Singh (On behalf of Smprada Singh HUF)	15080
Kishore Nawal Singh	480420
Prasad Balmiki Singh	525020
Kumar Satish Singh	241720
Nanhamati Singh	482780
Anju Singh	296220
Manju Singh	132460
Premlata Singh	101220
Narain Basudeo Singh	1191990
Kumar Dhananjay Singh	569826
Kumar Mritunjay Singh	569826
Rekha Singh	704610
Archana Singh	119840
Madhurima Singh	290424
Seema Singh	290424
Ranjan Rajeev Singh	365160
Kumar Rajesh Singh	365680
Jayanti Sinha	857300
Narain Prabhat Singh	414440
Krishna Singh	175080
Kumar Lalan Singh	301282
Sandeep Singh	318320

Equity Share Break up (Percentage of Total Equity)

As on 28.07.2011

Category	Percentage
Directors or relatives of Directors	78.20
Other top fifty shareholders	2.80
Total	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer of Cifotaxime Sodium Sterile, Ciprofloxacin Hydrochloride, Norfloxacin Hydrochloride.

Products :

Item Code No. (ITC Code)	Product Description
300420.19	Cefotaxime Sodium Sterile
300410.03	Cefixime Trihydrate
300410.30	Clavulanate Potasium+Amoxycillin Sodium

PRODUCTION STATUS AS ON 31.03.2010

Particulars	Unit	Installed Capacity	Actual Production
Tablets	Nos.	4335240	1787005
Capsules	Nos.	1146120	99444
Dry Syrup	Bottles	40572	30958
Liquid Orals	Bottles	--	27909
Injectables	Vials/Ampoules	199320	176659
Bulk drugs	Kgs.	2576	833
Others		NA	533

Notes :

(a) Installed Capacity is as certified by the management and not verified by the auditors, this being a technical matter.

(b) Actual production includes production at loan license locations but excludes goods manufactured for third parties on loan licence basis, physician samples and mfg for research and development activities.

(c) Licensed capacity is not indicated as industrial licensing for all bulk drugs, intermediates and their formulation stands abolished in terms of press Note No.4 (1994 series) dates 25^th October, 1994 issued by the Department of Industrial Development, Ministry of Industry, Government of India.

GENERAL INFORMATION

No. of Employees :

385 (Approximately)

Bankers :

• State Bank of India, Industrial Finance Branch, Shivsagar Estate, Worli, Mumbai – 400018, Maharashtra, India
• The Saraswat Co-operative Bank Limited
• Citi Bank N .A.
• Kotak Mahendra Bank Limited
• HDFC Bank Limited
• BNP Paribas, 20, Collyer Quay, #01-01, Tung Centre, Singapore – 049319

Facilities :

Secured Loan	As on 31.03.2010 (Rs. in Millions)	As on 31.03.2009 (Rs. in Millions)
Working Capital Loans from Banks Rupee Loans	101.871	3576.306
Total	101.871	3576.306
Unsecured Loan	As on 31.03.2010 (Rs. in Millions)	As on 31.03.2009 (Rs. in Millions)
Working Capital Loans from Banks
Rupee Loan	593.593	456.486
Foreign Currency Loans
Other Loans and Advances
From directors and shareholders
From Others
Total	593.593	456.486

Banking Relations :	--
Auditors :
Name :	R S Sanghai and Associates Chartered Accountants
Address :	A/403, Raj Kaman Heights, Raj Kamal Marg, Dr. S S Rao Marg, Lower Parel, Mumbai – 400012, Maharashtra, India
PAN.:	AAHPS2141R
Subsidiaries :	· Alkem Laboratories (NIG) Limited · Alkem Laboratories (PTY) Limited · Alkem Laboratories Do Brasil Limiteda · Alkem Laboratories Corporation · Alkem Pharma GmbH · Alkem Pharma FZC · Alkem Laboratories B V · Pharmacor Limited

CAPITAL STRUCTURE

As on 31.03.2010

Authorised Capital :

No. of Shares	Type	Value	Amount
15000000	Equity Shares	Rs.10/- each	Rs.150.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
11956500	Equity Shares	Rs.10/- each	Rs.119.565 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2010	31.03.2009	31.03.2008
SHAREHOLDERS FUNDS
1] Share Capital		119.565	119.565	119.565
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		11933.712	9727.886	8344.752
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		12053.277	9847.451	8464.317
LOAN FUNDS
1] Secured Loans		101.871	3576.306	2573.292
2] Unsecured Loans		593.593	456.486	302.891
TOTAL BORROWING		695.464	4032.792	2876.183
DEFERRED TAX LIABILITIES		302.000	319.700	259.000
TOTAL		13050.741	14199.943	11599.500
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		3921.652	3900.070	3717.673
Capital work-in-progress		83.214	61.356	132.572
INVESTMENT		196.859	262.048	1925.069
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1757.039	1959.187	2058.042
	Sundry Debtors	1168.099	1064.007	983.459
	Cash & Bank Balances	6615.556	7278.779	2741.311
	Other Current Assets	0.000	0.000	258.815
	Loans & Advances	1851.027	1427.001	954.551
Total Current Assets		11391.721	11728.974	6996.178
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors			794.508
	Current Liabilities	1744.141	1150.113	32.985
	Provisions	798.564	602.392	344.499
Total Current Liabilities		2542.705	1752.505	1171.992
Net Current Assets		8849.016	9976.469	5824.186
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		13050.741	14199.943	11599.500

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Income	13439.162	11603.217	9759.347
		Other Income	784.107	589.338	477.808
		TOTAL (A)	14223.269	12192.555	10237.155
Less	EXPENSES
		Cost of Materials	6082.941	5700.669	4809.414
		Personnel Costs	2055.518	1386.312	1070.115
		Other Expenses	3195.771	3052.303	2622.297
		Prior Period Expenses	0.000	8.122	0.000
		TOTAL (B)	11334.230	10147.406	8501.826
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		2889.039	2045.149	1735.329
Less	FINANCIAL EXPENSES (D)		204.020	147.416	150.085
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		2685.019	1897.733	1585.244
Less/ Add	DEPRECIATION/ AMORTISATION (F)		234.312	208.380	200.050
	PROFIT BEFORE TAX (E-F) (G)		2450.707	1689.353	1385.194
Less	TAX (H)		100.189	107.582	(65.500)
	PROFIT AFTER TAX (G-H) (I)		2350.518	1581.771	1450.694
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		222.649	339.515	278.706
Less	INCOME TAX OF EARLIER YEARS		(30.164)	23.781	0.000
Less	APPROPRIATIONS
		Interim Dividend	149.456	149.456	119.565
		Corporate Dividend Tax Paid	25.400	25.400	20.320
		General Reserve	1500.000	1500.000	1250.000
	BALANCE CARRIED TO THE B/S		928.475	222.649	339.515
	EARNINGS IN FOREIGN CURRENCY
		Export of Goods (F.O.B)	1185.779	996.219	735.079
		Other Earnings	41.625	37.175
	TOTAL EARNINGS		1227.404	1033.394	735.079
	IMPORTS
		Raw Materials	287.517	254.338	198.084
		Stores & Spares	20.872	5.698	6.281
		Capital Goods	56.378	56.973	125.927
	TOTAL IMPORTS		364.767	317.009	330.292
	Earnings Per Share (Rs.)		197	132	106

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	16.53	13.63	14.17
Net Profit Margin (PBT/Sales)	(%)	18.23	14.56	14.19
Return on Total Assets (PBT/Total Assets}	(%)	16.00	10.81	12.93
Return on Investment (ROI) (PBT/Networth)		0.20	0.17	0.16
Debt Equity Ratio (Total Liability/Networth)		0.27	0.59	0.48
Current Ratio (Current Asset/Current Liability)		4.48	6.69	5.97

LOCAL AGENCY FURTHER INFORMATION

DETAILS OF SUNDRY CREDITORS

(Rs. In Millions)

PARTICULARS	31.03.2010	31.03.2009	31.03.2008
Sundry Creditors
Due to Micro and Small Enterprises	NA	NA	103.136
Others			691.372
Total	NA	NA	794.508

OPERATIONS

The Company’s sales (Gross) has increased to Rs.13625.992 Millions as against Rs.11842.139 Millions for the previous year resulting in an increase of 15.06% over the previous year.

FORM 8

Corporate identity number of the company	U00305MH1973PLC174201
Name of the company	ALKEM LABORATORIES LIMITED
Address of the registered office or of the principal place of business in India of the company	Alkem House, Senapati Bapat Marg, Lower Parel, Mumbai – 400013, Maharashtra, India Email Id : manishnarang@alkem.com
This form is for	Creation of charge
Type of charge	Movable property (not being pledge)
Particular of charge holder	BNP Paribas, 20, Collyer Quay, #01-01, Tung Centre, Singapore – 049319 Email Id : narendra.pendharkar@asia.bnpparibas.com
Nature of instrument creating charge	Deed of hypothecation dated 28th January, 2011 covering all movable fixed assets of the borrower including its movable plant and machinery, machinery, spares, tools and accessories and other movables, both present and future, together with all spares, tools, accessories, fixtures, electrical equipments and/or plant and machinery at factories, premises and godowns situated at Mandva, Kachigam, Betalacutum, Ankleshwar and Taloja- R and D Centre
Date of instrument Creating the charge	28.08.2011
Amount secured by the charge	Rs.678.000 Millions
Brief of the principal terms an conditions and extent and operation of the charge	Rate of Interest 1.4% per annum above the LIBOR rate Terms of repayment 3 equal annual installments payable at the end of 2nd, 3rd and 4th year from the date of the first drawdown Margin Not Applicable Extent and operation of the charge Hypothecation of all movable fixed assets of the borrower including its movable plant and machinery, machinery, spares, tools and accessories and other movables, both present and future, together with all spares, tools, accessories, fixtures, electrical equipments and/or plant and machinery at factories, premises and godowns situated at Mandva, Kachigam, Betalacutum, Ankleshwar and Taloja- R and D Centre
Short particulars of the property or asset(s) charged (including complete address and location of the property)	Hypothecation of all movable fixed assets of the borrower including its movable plant and machinery, machinery, spares, tools and accessories and other movables, both present and future, together with all spares, tools, accessories, fixtures, electrical equipments and/or plant and machinery at factories, premises and godowns situated at Mandva, Kashigam, Betalacutum, Ankleshwar and Taloja- R and D

Contingent Liabilities not provided for As on 31.03.2010

Letter of credit opened by the Bank – Rs.49.810Millions

Outstanding Bank Guarantees – Rs.16.580 Millions

Central Excise demand disputed in appeal – Rs.40.712 Millions

Sales tax demand disputed in appeal – Rs.22.384 Millions

Estimated amount of contracts remaining to be executed on Capital Account (advances paid Rs.19.938 Millions (Previous Year Nil) – Rs.37.468 Millions

Pending Export Obligation under advance licence/ EPCG Scheme – Rs.11.453 Millions

Claims against the Company not acknowledged as debts for non supply of goods – Rs.171.090 Millions

FIXED ASSETS

· Freehold Land

· Building

· Plant, Machinery and Equipments

· Furniture and Fixtures

· Vehicles

· Trade Mark and Patents

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.51.75
UK Pound	1	Rs.80.01
Euro	1	Rs.65.99

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	9
--LIQUIDITY	1~10	9
--LEVERAGE	1~10	8
--RESERVES	1~10	9
--CREDIT LINES	1~10	8
--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	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		73

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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