MIRA INFORM REPORT

Report Date :

18.07.2012

IDENTIFICATION DETAILS

Name :	HYDRO S AND S INDUSTRIES LIMITED
Registered Office :	Dhun Building, 3^rd Floor, 827, Mount Road, Chennai-600002, Tamilnadu
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	10.11.1983
Com. Reg. No.:	18-10438
Capital Investment / Paid-up Capital :	Rs.64.097 Millions
CIN No.: [Company Identification No.]	L25209TN1983PLC010438
TAN No.: [Tax Deduction & Collection Account No.]	CHES00014A
PAN No.: [Permanent Account No.]	AAACH0931N
Legal Form :	A Public Limited Liability Company. The Company’s shares are listed on Stock Exchanges.
Line of Business :	Manufacturers of Polypropylene Compounds and Cable Sheathing Compounds.
No. of Employees :	Not Available

RATING & COMMENTS

MIRA’s Rating :

Ba (45)

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	USD 990000
Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is an established company having satisfactory track. Profitability of the company is low. However, networth appears to be satisfactory. Trade relations are reported as fair. Business is active. Payments are reported to be usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – September 30, 2011

Country Name	Previous Rating (30.06.2011)	Current Rating (30.09.2011)
India	A1	A1

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

LOCATIONS

Registered Office :	Dhun Building, Third Floor, # 827, Anna Salai, Chennai-600002, Tamilnadu, India
Tel. No.:	91-44-28521736/ 28520292
Fax No.:	91-44-28520420
E-Mail :	info@hssil.com / secretarial@hssil.com / sales@hssil.com
Website :	http://www.hssil.com
Factory 1 :	15C,SIPCOT Industrial Complex, Pudukkottai-622002, Tamilnadu, India
Factory 2 :	RS No. 38/1, Sedarapet Village, Villiyanur Commune, Pondicherry-605111, India
Factory 3 :	RS15/15,Vazhudavur Road, Kurumbapet, Pondicherry-605009, India
Tel. No.:	91-413-2272155
Fax No.:	91-413-2277430
E-Mail :	ramamurthy@hssil.com
Factory 4 :	G 34, Addl. Jejuri Industrial Area, Jejuri, Taluka Purandar, Pune-412303, Maharashtra, India

DIRECTORS

As on 31.03.2011

Name :	Mr. Murali Venkatraman
Designation :	Vice Chairman
Name :	Mr. V. Srinivasan
Designation :	Director
Name :	Mr. Babulal M. Varma
Designation :	Director
Name :	Mr. V. Thirupathi
Designation :	Director
Name :	Mr. Narayan Sethuramon
Designation :	Director
Name :	Mr. G. Balasubramanyan
Designation :	Director
Name :	Mr. Dinshaw Keku Parakh
Designation :	Director
Name :	Mr. S.K. Subramanyan
Designation :	Director [Finance and Administration]

KEY EXECUTIVES

Name :	Mr. S.K. Subramanyan
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2012

Category of Shareholder	Total No. of Shares	Total Shareholding as a % of total No. of Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	3,239,917	50.57
Bodies Corporate	728,283	11.37
Sub Total	3,968,200	61.93
(2) Foreign
Individuals (Non-Residents Individuals / Foreign Individuals)	292,500	4.57
Sub Total	292,500	4.57
Total shareholding of Promoter and Promoter Group (A)	4,260,700	66.50
(B) Public Shareholding
(1) Institutions
Financial Institutions / Banks	200	-
Sub Total	200	-
(2) Non-Institutions
Bodies Corporate	389,596	6.08
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 Million	1,365,946	21.32
Individual shareholders holding nominal share capital in excess of Rs.0.100 Million	350,146	5.46
Any Others (Specify)	40,616	0.63
Clearing Members	40,061	0.63
Trusts	555	0.01
Sub Total	2,146,304	33.50
Total Public shareholding (B)	2,146,504	33.50
Total (A)+(B)	6,407,204	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	-	-
(1) Promoter and Promoter Group	-	-
(2) Public	-	-
Sub Total	-	-
Total (A)+(B)+(C)	6,407,204	-

BUSINESS DETAILS

Line of Business :

Manufacturers of Polypropylene Compounds and Cable Sheathing Compounds.

Products :

PRODUCT DESCRIPTION	ITEM CODE
Polymer Compounds	39020000

PRODUCTION STATUS [AS ON 31.03.2011]

Particulars	Unit	Installed Capacity	Actual Production
Plastic Compounds	MTS	25000	15799
FRP Pultruded Profiles	KGS	-*	84220
Goods Traded (High Sea/Agency)	MTS	-*	66

NOTE: * Subject to specifications

GENERAL INFORMATION

No. of Employees :

Not Available

Bankers :

· State Bank of India, Chennai-600001, Tamilnadu, India

· Canara Bank, Chennai-600002, Tamilnadu, India

Facilities :

SECURED LOAN	As on 31.03.2011 [Rs. in Millions]	As on 31.03.2010 [Rs. in Millions]
From Banks
Cash Credit	247.394	169.737
Buyer’s Credit in Foreign Currency	47.326	48.367
Rupee Term Loan	130.851	133.164
Total	425.571	351.268
UNSECURED LOAN
Hire Purchase Finance	2.009	1.801
Total	2.009	1.801

Banking Relations :	--
Auditors :
Name :	P. Srinivasan and Company Chartered Accountants
Address :	Chennai-600017, Tamilnadu, India
Associates :	W.S Industries (India) Limited

CAPITAL STRUCTURE

As on 31.03.2011

Authorised Capital :

No. of Shares	Type	Value	Amount
18000000	Equity Shares	Rs.10/- each	Rs.180.000 Millions
300000	16% Cumulative Redeemable Preferences Shares	Rs.100/- each	Rs.30.000 Millions
	Total		Rs.210.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
6407204	Equity Shares	Rs.10/- each	Rs.64.072 Millions
	Forfeited Shares		Rs.0.025 Million
	Total		Rs.64.097 Millions

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		64.097	64.097	65.129
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		184.817	178.818	181.636
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		248.914	242.915	246.765
LOAN FUNDS
1] Secured Loans		425.571	351.268	357.257
2] Unsecured Loans		2.009	1.801	2.392
TOTAL BORROWING		427.580	353.069	359.649
DEFERRED TAX LIABILITIES		32.516	33.116	35.116
TOTAL		709.010	629.100	641.530
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		312.961	309.957	318.925
Capital work-in-progress		5.302	4.438	9.448
INVESTMENT		2.416	9.123	23.165
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	210.674	154.767	158.746
	Sundry Debtors	345.292	244.124	183.042
	Cash & Bank Balances	11.899	10.807	11.614
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	53.538	46.883	71.223
Total Current Assets		621.403	456.581	424.625
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	198.873	126.210	83.014
	Other Current Liabilities	24.096	22.355	18.457
	Provisions	10.103	2.434	33.162
Total Current Liabilities		233.072	150.999	134.633
Net Current Assets		388.331	305.582	289.992
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		709.010	629.100	641.530

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2011	31.03.2010	31.03.2009
	SALES
		Income	1397.109	1092.150	1183.322
		Other Income	5.268	3.577	3.573
		TOTAL (A)	1402.377	1095.727	1186.895
Less	EXPENSES
		Cost of Goods Sold	1139.168	880.426	1000.669
		Employee Cost	64.050	53.573	47.915
		Others Costs	107.690	90.586	95.353
		TOTAL (B)	1310.908	1024.585	1143.937
Less	PROFIT / (LOSS) BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		91.469	71.142	42.958
Less	FINANCIAL EXPENSES (D)		51.516	47.526	48.298
	PROFIT / (LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		39.953	23.616	(5.340)
Less/ Add	DEPRECIATION/ AMORTISATION (F)		26.873	25.768	20.565
	PROFIT / (LOSS) BEFORE TAX (E-F) (G)		13.080	(2.152)	(25.905)
Less	TAX (H)		2.600	(2.000)	(7.575)
	PROFIT / (LOSS) AFTER TAX (G-H) (I)		10.480	(0.152)	(18.330)
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		14.484	15.668	34.150
Less	APPROPRIATIONS
		Transfer to General Reserve	10.000	0.000	0.000
		Transfer to Special General Reserve	0.250	0.000	0.000
		Transfer to Capital Redemption Reserves	0.000	1.032	0.152
		Proposed Dividend on Equity Shares	3.844	0.000	0.000
		Proposed Dividend Tax on Distributable Profits	0.638	0.000	0.000
	BALANCE CARRIED TO THE B/S		10.232	14.484	15.668
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	0.427	1.933	0.906
		Commission Earnings	3.471	1.375	0.113
	TOTAL EARNINGS		3.898	3.308	1.019
	IMPORTS
		Raw Materials	329.529	192.685	262.131
		Capital Goods	5.079	0.752	5.998
	TOTAL IMPORTS		334.608	193.437	268.129
	Earnings / (Loss) Per Share (Rs.)		1.64	(0.02)	(2.82)

QUARTERLY RESULTS

PARTICULARS	30.06.2011	30.09.2011	31.12.2011	31.03.2012
Type	1^st Quarter	2^nd Quarter	3^rd Quarter	4^th Quarter
Net Sales	403.630	343.060	350.710	403.590
Total Expenditure	372.630	320.780	332.560	386.460
PBIDT (Excl OI)	31.000	22.280	18.150	17.130
Other Income	0.070	0.080	0.120	1.170
Operating Profit	31.070	22.360	18.270	18.300
Interest	17.360	15.860	13.720	18.630
PBDT	13.710	6.500	4.550	-0.330
Depreciation	7.190	6.820	5.630	6.150
Profit Before Tax	6.520	(0.320)	(1.080)	(6.480)
Tax	2.000	(0.900)	(1.300)	(1.400)
Profit After Tax	4.520	0.590	0.220	(5.080)
Net Profit	4.520	0.590	0.220	(5.080)

KEY RATIOS

PARTICULARS		31.03.2011	31.03.2010	31.03.2009
PAT / Total Income	(%)	0.75	(0.01)	(1.54)
Net Profit Margin (PBT/Sales)	(%)	0.94	(0.20)	(2.19)
Return on Total Assets (PBT/Total Assets}	(%)	1.40	(0.28)	(3.48)
Return on Investment (ROI) (PBT/Networth)		0.05	(0.01)	(0.10)
Debt Equity Ratio (Total Liability/Networth)		2.65	2.07	2.00
Current Ratio (Current Asset/Current Liability)		2.67	3.02	3.15

LOCAL AGENCY FURTHER INFORMATION

Check List by Info Agents	Available in Report (Yes / No)
1) Year of Establishment	Yes
2) Locality of the firm	Yes
3) Constitutions of the firm	Yes
4) Premises details	No
5) Type of Business	Yes
6) Line of Business	Yes
7) Promoter’s background	No
8) No. of employees	No
9) Name of person contacted	No
10) Designation of contact person	No
11) Turnover of firm for last three years	Yes
12) Profitability for last three years	Yes
13) Reasons for variation <> 20%	--
14) Estimation for coming financial year	No
15) Capital in the business	Yes
16) Details of sister concerns	Yes
17) Major suppliers	No
18) Major customers	No
19) Payments terms	No
20) Export / Import details (if applicable)	No
21) Market information	--
22) Litigations that the firm / promoter involved in	--
23) Banking Details	Yes
24) Banking facility details	Yes
25) Conduct of the banking account	--
26) Buyer visit details	--
27) Financials, if provided	Yes
28) Incorporation details, if applicable	Yes
29) Last accounts filed at ROC	Yes
30) Major Shareholders, if available	No

BUSINESS OPERATIONS:

Sales in terms of value increased by 28% over the previous year, whilst the volume improved by 21%. The Company had to deal with the challenge of high PP prices throughout the year with particularly sharp increase during the last quarter of the financial year. In addition, restrictions on power usage in Tamil Nadu and poor quality of power in Puducherry were also irritants impacting production optimization.

The Company took multiple steps to tackle these issues which has resulted in improvement in margins. A new line at Jejuri was commissioned during the year. Capacity utilisation was however restricted there in view of power inadequacy, which is being addressed.

The Pultrusion Division however had to face the challenges of declining prices during the year due to surplus capacity pressures which resulted in a lower performance as compared to the previous year. The Company has provided for taxation under Minimum Alternate Tax (MAT) after considering the carry over losses of the earlier years.

MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT:

BUSINESS SCENARIO:

The sluggish market conditions carried over from the previous year well into the first quarter. Input costs continued to be at a high. PP, the major input continued to be volatile with distinctly upward spikes in pricing. PP price remained steady between July - Dec 2010 period but shot up by over 12-13% in the last quarter. Domestic demand for cars grew steadily and remained strong during the year. However, some of the small cars had volatility in production leading to anomalies in purchase of material. The overall increase in demand is reflected in the sales for the year which shows an increase of 21% year on year.

COMPANY PERFORMANCE:

The year 2010-2011 started on a positive note with increased vehicle production and start up having stabilized at the new plant at Saanand for NANO Production. Since NANO Production was to peak by Q2 of 2010-2011, the Company added a new line with a capacity of 6000T at Jejuri, Pune in expectation of this projection.

SOME KEY PERFORMANCE HIGHLIGHTS ARE DETAILED BELOW:

OPERATIONS:

The Company's net sales represent an increase of over 28% in value terms over the previous year. The volumes increased by 21%. The sales would have been even higher if the production of Nano's were as per projections. The new line at Jejuri plant is running satisfactorily. The Company successfully implemented a VRS Scheme in Pudukottai. This would greatly improve manpower efficiency across the facility. Power situation in Pudukottai showed no improvement. There has also been a delay by MSEB to provide additional power for the new line at Jejuri which is being resolved.

BUSINESS INITIATIVES:

Company continued its efforts on spreading its business across all the OEM's. Over the last 2 years, they have added additional OEM's to our portfolio and are hence better placed to absorb swings in the market place. NANO volumes have improved considerably in Q4 of this financial year and they are hopeful that the volumes would go up even further in the coming year. They are also present in the scheduled new launches of Indian and Transnational OEM's for the year. The company is well positioned to ride with the new models scheduled for launch this year. Trading activity more than doubled the volumes in 2010-2011 and are well placed to repeat the strong performance for the coming year too.

FINANCIAL PERFORMANCE:

REVENUES:

The Sales Revenue of the Company grew by 28% over the previous year even though volumes grew by 21%. Trading volumes more than doubled during the year, reflecting appropriately on the top-line. The Pultrusion Division performance was below the previous year and have been impacted by Sustained competition for end products from international competitors.

INPUT COSTS:

Whilst the prices of Polypropylene remained firm during the first half of the financial year, the last quarter of the year witnessed very high spiking. Besides the PP prices, prices of various other ingredients like Additives, Elastomers and Pigments have also been in the uptrend, in view of the severe international shortage of base chemicals. However, the overall Input cost efficiency improved by optimizing formulations and use of multiple sourcing. The higher usage of self-generation to meet the increased production volumes, besides not being able to derive the full benefit of the wind power produced on account of the power cut in Tamil Nadu, resulted in higher power outlay. With regard to the outgo on account of the VRS Scheme, in line with the Income Tax Act, only 1/5th of the sum has been charged to the current year's account and the balance is being carried forward.

FINANCIAL COSTS:

The continuous hardening of interest rates during the year resulted in higher outgo during the year. Besides, usage of working capital funds was more to meet the higher level of activity during the year all of which resulted in increase under this head. Further the Company had also borrowed to partly meet cost of putting up an additional line at Jejuri. The Company continues to optimally use Buyer's Credit funds for Working Capital. Rating Agency ICRA Limited, maintained its short term A2+ rating of the Company and reaffirmed the long term rating at LBBB for the captioned line of credit in view of the turnaround achieved by the Company over the last two years.

ONGOING INITIATIVES AND FUTURE OUTLOOK:

a) The improving trend in offtake of vehicles, if sustained, resulting in volume increases and management of supply chain and logistics should help in bettering margins during the current year subject of course to the price behavior of Polypropylene and other crude oil based inputs.

b) New commercial vehicles call for increased usage of interior parts in PP compounds and the Company is already working with major companies in this segment to benefit from this approach.

c) Control of receivables and inventory and improved process efficiency, should also contribute to the reduction of working capital requirement leading to a reduction in interest costs.

CONTINGENT LIABILITIES NOT PROVIDED FOR:

PARTICULARS	31.03.2011 (Rs. in millions)	31.03.2010 (Rs. in millions)
Letters of credit	99.696	35.957
Letters of guarantee	0.200	0.010
Commitment on capital accounts	1.840	1.918
Customs duty on materials-in-bond	0.338	1.052
Custom duty disputed in appeals	2.678	2.678
Income Tax disputed in appeals	1.694	0.605
Service Tax disputed in appeals	0.556	0.082
Total	107.002	42.302

FIXED ASSETS:

• Freehold Land
• Buildings
• Leasehold Land
• Plant and Machinery
• Research and Development
• Electrical Installation
• Technical Know-How
• Furniture Fixtures and Office Equipments
• 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.55.15
UK Pound	1	Rs.86.30
Euro	1	Rs.67.73

INFORMATION DETAILS

Report Prepared by :

TPT

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	5
--CREDIT LINES	1~10	4
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	NO
--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	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		45

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

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

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

RATING EXPLANATIONS

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

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.