MIRA INFORM REPORT

Report Date :

22.11.2012

IDENTIFICATION DETAILS

Name :	HANESBRANDS, INC.

Registered Office :	1000 East Hanes Mill Road, Winston-Salem, NC 27105

Country :	United States

Financials (as on) :	29.09.2012 (Consolidated Balance Sheets)

Date of Incorporation :	30.09.2005

Legal Form :	Public Company

Line of Business :	Subject is engaged in designing, manufacturing, sourcing, and selling a range of basic apparels.

No. of Employees :	53,300 employees

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

Status :	Good
Payment Behaviour :	Regular
Litigation :	Exists

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 – June 30^th, 2012

Country Name

Previous Rating

(31.03.2012)

Current Rating

(30.06.2012)

United States

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

United States - ECONOMIC OVERVIEW

The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $48,100. In this market-oriented economy, private individuals and business firms make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace. US business firms enjoy greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, to lay off surplus workers, and to develop new products. At the same time, they face higher barriers to enter their rivals' home markets than foreign firms face entering US markets. US firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment; their advantage has narrowed since the end of World War II. The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20% of households. Since 1996, dividends and capital gains have grown faster than wages or any other category of after-tax income. Imported oil accounts for nearly 55% of US consumption. Oil prices doubled between 2001 and 2006, the year home prices peaked; higher gasoline prices ate into consumers' budgets and many individuals fell behind in their mortgage payments. Oil prices increased another 50% between 2006 and 2008. In 2008, soaring oil prices threatened inflation and caused a deterioration in the US merchandise trade deficit, which peaked at $840 billion. In 2009, with the global recession deepening, oil prices dropped 40% and the US trade deficit shrank, as US domestic demand declined, but in 2011 the trade deficit ramped back up to $803 billion, as oil prices climbed once more. The global economic downturn, the sub-prime mortgage crisis, investment bank failures, falling home prices, and tight credit pushed the United States into a recession by mid-2008. GDP contracted until the third quarter of 2009, making this the deepest and longest downturn since the Great Depression. To help stabilize financial markets, in October 2008 the US Congress established a $700 billion Troubled Asset Relief Program (TARP). The government used some of these funds to purchase equity in US banks and industrial corporations, much of which had been returned to the government by early 2011. In January 2009 the US Congress passed and President Barack OBAMA signed a bill providing an additional $787 billion fiscal stimulus to be used over 10 years - two-thirds on additional spending and one-third on tax cuts - to create jobs and to help the economy recover. In 2010 and 2011, the federal budget deficit reached nearly 9% of GDP; total government revenues from taxes and other sources are lower, as a percentage of GDP, than that of most other developed countries. The wars in Iraq and Afghanistan required major shifts in national resources from civilian to military purposes and contributed to the growth of the US budget deficit and public debt - through 2011, the direct costs of the wars totaled nearly $900 billion, according to US government figures. In March 2010, President OBAMA signed into law the Patient Protection and Affordable Care Act, a health insurance reform bill that will extend coverage to an additional 32 million American citizens by 2016, through private health insurance for the general population and Medicaid for the impoverished. Total spending on health care - public plus private - rose from 9.0% of GDP in 1980 to 17.9% in 2010. In July 2010, the president signed the DODD-FRANK Wall Street Reform and Consumer Protection Act, a law designed to promote financial stability by protecting consumers from financial abuses, ending taxpayer bailouts of financial firms, dealing with troubled banks that are "too big to fail," and improving accountability and transparency in the financial system - in particular, by requiring certain financial derivatives to be traded in markets that are subject to government regulation and oversight. Long-term problems include inadequate investment in deteriorating infrastructure, rapidly rising medical and pension costs of an aging population, sizable current account and budget deficits - including significant budget shortages for state governments - energy shortages, and stagnation of wages for lower-income families.

Source : CIA

Company name & address

Company name: HANESBRANDS, INC.

Address: 1000 East Hanes Mill Road, Winston-Salem, NC 27105 - USA

Telephone: +1 336-519-8080

Fax: +1 336-714-3620

Website: www.hanesbrands.com

Company summary

Corporate ID#: D10884971

State: Maryland

Judicial form: Public Company (NYSE = HBI)

Date incorporated: 09-30-2005

Stock: As of October 19, 2012, there were 97,859,546 shares of

the registrant’s common stock outstanding.

Value: No par value

Name of manager: Richard KNOLL

ACTIVITIES & OPERATIONS

IST

Business:

Hanesbrands Inc., a consumer goods company, engages in designing, manufacturing, sourcing, and selling a range of basic apparels.

The company offers a portfolio of apparel brands, including Hanes, Champion, Bali, Playtex, Just My Size, L’eggs, barely there, Wonderbra, Gear for Sports, Stedman, Zorba, Rinbros, Sol y Oro, Outer Banks and Duofold. It offers a range of basic apparel, such as T-shirts, bras, panties, men’s underwear, kids’ underwear, casualwear, activewear, socks and hosiery.

The company’s operations are divided into five segments: Innerwear, Outerwear, Hosiery, Direct to Consumer, and International.

Innerwear

The Innerwear segment focuses on core apparel products, such as women’s intimate apparel, men’s underwear, kids’ underwear and socks, marketed under various brands. The company also manufactures and markets men’s underwear and kids’ underwear under the Hanes and Polo Ralph Lauren brand names.

Outerwear

The Outerwear segment offers products in the casualwear and activewear markets through its Hanes, Champion, Just My Size and Duofold brands, where the company sells products, such as T-shirts and fleece to both retailers and wholesalers. The company’s casualwear lines offer a range of clothing for men, women and children marketed under the Hanes and Just My Size brands. The Just My Size brand offers casual apparel designed to meet the needs of plus-size women. In addition to activewear for men and women, Champion provides uniforms for athletic programs and includes an apparel program, C9 by Champion, at Target stores.

The company also licenses its Champion name for footwear and sports accessories.

In its wholesale casualwear category, which the company sometimes refer to as ‘imagewear’, the company supplies its T-shirts, sport shirts and fleece products, including brands such as Hanes, Champion, Outer Banks and Hanes Beefy-T, to customers, primarily wholesalers, who then resell to screen printers and embellishers.

In 2010, the company acquired GearCo, Inc., known as Gear for Sports, a seller of licensed logo apparel in collegiate bookstores and other channels.

Hosiery

The Hosiery segment is a marketer of women’s sheer hosiery in the United States. It markets hosiery products under L’eggs, Hanes and Just My Size brands.

Direct to Consumer

The Direct to Consumer segment operations include the company’s value-based (outlet) stores and Internet operations which sell products from its portfolio of brands. The company sells its branded products directly to consumers through its outlet stores, as well as its Websites operating under the Hanes, One Hanes Place, Just My Size, and Champion names.

The company’s Internet operations are supported by its catalogs.

As of December 31, 2011, the company had 216 outlet stores.

International

The International segment includes products that span across the Innerwear, Outerwear and Hosiery reportable segments and are primarily marketed under the Hanes, Champion, Wonderbra, Playtex, Stedman, Zorba, Rinbros, Kendall, Sol y Oro, Ritmo and Track N Field brands.

It sells in Latin America, Asia, Canada, Europe and Australia. The company’s major international markets are Japan, Canada, Mexico, Europe and Brazil, and it has sales offices in India and China.

The company’s customers include Wal-Mart Stores, Inc.; Target Corporation; Kohl’s Corporation; CVS Caremark Corporation; and SanMar Corporation.

The company has sales offices in India and China.

EIN: 20-3552316

Staff: 53,300

Operations & branches:

At the headquarters, we find a factory, warehouse and office, owned.

SHAREHOLDERS & MANAGERS

Shareholders:

The Company is listed with the NYSE under symbol HBI.

As of 06-29-2012, 94% of the stock was held by institutional and mutual fund owners, including:

WELLINGTON MANAGEMENT COMPANY, LLP	9.52%
FMR LLC	5.70%
SHAPIRO CAPITAL MANAGEMENT COMPANY, INC.	5.13%
VANGUARD GROUP, INC. (THE)	5.12%
STATE STREET CORPORATION	4.41%
TIMES SQUARE CAPITAL MANAGEMENT	3.97%
BARROW, HANLEY MEWHINNEY & STRAUSS, INC.	3.91%

Management:

Richard KNOLL is the Chairman and CEO.

Mr. Richard A. Noll, Rich has been the Chief Executive Officer of Hanesbrands Inc. since April 2006 and Chairman of the Board since January 2009. Mr. Noll served as the Chief Executive Officer of Sara Lee Bakery Group, Inc. of Sara Lee Corp. from July 2003 to July 2005. He served as the President and Chief Operating Officer of DIM, S.A.S. (formerly, Sara Lee Branded Apparel) at Sara Lee Corp. from July 2005 to April 2006.

Mr. Noll served as the Chief Executive Officer of Dim since April 1, 2006. Mr. Noll served as Chief Executive Officer of Sara Lee Legwear, Direct and Mexico Group from July 2001 to July 2002, which included its hosiery, sock and direct retail businesses along with its Mexican apparel operations. From 1992 to 2002, Mr. Noll held a number of management positions with increasing responsibilities while employed by DIM. He served as Chief Operating Officer of Sara Lee Bakery Group from July 2002 to July 2003 and was responsible for the management of the group's worldwide operations, including fresh, refrigerated and frozen baked goods. Mr. Noll served as Senior Vice President of Sara Lee Corp., a holding company of Dim Branded Apparel from December 4, 2002 to September 2006.

He joined Sara Lee in 1992 as Chief Executive Officer of the U.S. sock business, adding international responsibilities in 1998.

He served as Corporate Vice President of Sara Lee Direct since 1999.

Mr. Noll has been an Executive Director of Hanesbrands since September 2005. He served as a Director of American Apparel & Footwear Association. Mr. Noll holds a B.S. in Business Administration from Pennsylvania State University and a Master of Business Administration Degree with distinction from Carnegie-Mellon University.

Gerald W. EVANS Jr. is Co-Chief Operating Officer, President of International Business & Global Supply Chain and President of International

William J. NICTAKIS is Co-Chief Operating Officer and President of US Operations.

Subsidiaries & Partnership:

U.S. SUBSIDIARIES


Name of Subsidiary		Jurisdiction of Formation

BA International, L.L.C.		Delaware

Caribesock, Inc.		Delaware

Caribetex, Inc.		Delaware

CASA International, LLC		Delaware

CC Products, LLC		Delaware

Ceibena Del, Inc.		Delaware

Event 1, LLC		Kansas

GearCo, Inc.		Delaware

GFSI Holdings, Inc.		Delaware

GFSI, Inc.		Delaware

Hanes Menswear, LLC		Delaware

Hanes Puerto Rico, Inc.		Delaware

Hanesbrands Direct, LLC		Colorado

Hanesbrands Distribution, Inc.		Delaware

HBI Branded Apparel Limited, Inc.		Delaware

HBI Branded Apparel Enterprises, LLC		Delaware

HBI Playtex BATH LLC		Delaware

HbI International, LLC		Delaware

HBI Receivables LLC		Delaware

HBI Sourcing, LLC		Delaware

Inner Self LLC		Delaware

Jasper-Costa Rica, L.L.C.		Delaware

Playtex Dorado, LLC		Delaware

Playtex Industries, Inc.		Delaware

Playtex Marketing Corporation (50% owned)		Delaware

Seamless Textiles, LLC		Delaware

UPCR, Inc.		Delaware

UPEL, Inc.		Delaware

NON-U.S. SUBSIDIARIES


Name of Subsidiary		Jurisdiction of Formation

Bali Dominicana, Inc.		Panama/DR

Bali Dominicana Textiles, S.A.		Panama/DR

Bordados Industriales, S. A. de C.V.		Honduras

Canadelle Limited Partnership		Canada

Canadelle Holding Corporation Limited		Canada

Cartex Manufacturera S. de R. L.		Costa Rica

CASA International, LLC Holdings S.C.S.		Luxembourg

Caysock, Inc.		Cayman Islands

Caytex, Inc.		Cayman Islands

Caywear, Inc.		Cayman Islands

Ceiba Industrial, S. De R.L.		Honduras

Choloma, Inc.		Cayman Islands

Confecciones Atlantida S. De R.L.		Honduras

Confecciones El Pedregal Inc.		Cayman Islands

Confecciones El Pedregal S.A. de C.V.		El Salvador

Confecciones del Valle, S. De R.L.		Honduras

Confecciones Jiboa S.A. de C.V.		El Salvador

Confecciones La Caleta		Cayman Islands

Confecciones La Herradura S.A. de C.V.		El Salvador

Confecciones La Libertad, Ltda de C.V.		El Salvador

DFK International Limited		Hong Kong

Dos Rios Enterprises, Inc.		Cayman Islands

GFSI Canada Company		Canada

GFSI Southwest, S. de R.L. de C.V.		Mexico

Hanes Brands Incorporated de Costa Rica, S.A.		Costa Rica

Hanes Caribe, Inc.		Cayman Islands

Hanes Choloma, S. de R. L.		Honduras

Hanes Colombia, S.A.		Colombia

Hanes de Centroamerica S.A.		Guatemala

Hanes de El Salvador, S.A. de C.V.		El Salvador

Hanes Dominican, Inc.		Cayman Islands

Hanes Menswear Puerto Rico, Inc.		Puerto Rico

Hanes Panama Inc.		Panama

Hanesbrands Apparel India Private Limited		India

Hanesbrands Apparel South Africa (Proprietary) Limited		South Africa

Hanesbrands Argentina S.A.		Argentina

Hanesbrands Australia Pty Limited		Australia

Hanesbrands Brasil Textil Ltda.		Brazil

Hanesbrands Canada NS ULC		Canada

Hanesbrands Caribbean Logistics, Inc.		Cayman Islands

Hanesbrands Chile SpA		Chile

Hanesbrands Dominicana, Inc.		Cayman Islands

Hanesbrands Dos Rios Textiles, Inc.		Cayman Islands

Hanesbrands El Salvador, Ltda. De C.V.		El Salvador

Hanesbrands Europe GmbH		Germany

Hanesbrands Holdings		Mauritius

Hanesbrands International (Shanghai) Co. Ltd.		China

Hanesbrands International (Thailand) Ltd.		Thailand

Hanesbrands Japan Inc.		Japan

Hanesbrands (Nanjing) Textile Co., Ltd.		China

Hanesbrands Philippines Inc.		Philippines

Hanesbrands Sourcing (India) Private Limited		India

Hanesbrands (HK) Limited		Hong Kong

Hanesbrands Poland sp. z o.o.		Poland

Hanesbrands ROH Asia Ltd.		Thailand

Hanesbrands UK Limited		United Kingdom

HBI Alpha Holdings, Inc.		Cayman Islands

Hanesbrands (Vietnam) Company Limited		Vietnam

Hanesbrands Switzerland Holdings GmbH		Switzerland

HBI Beta Holdings, Inc.		Cayman Islands

HBI Compania de Servicios, S.A. de C.V.		El Salvador

HbI International Holdings S.à r.l.		Luxembourg

HbI International Holdings S.à r.l., Luxembourg, Zurich Branch		Switzerland

HbI International/ Jordan Limited Liability Company		Jordan

HBI RH Mexico, S. De R.L. de C.V.		Mexico

HBI Manufacturing (Thailand) Ltd.		Thailand

HBI Risk Management Ltd.		Bermuda

HBI Servicios Administrativos de Costa Rica, S.A.		Costa Rica

HBI Socks de Honduras, S. de R.L. de C.V.		Honduras

HBI Sourcing Asia Limited		Hong Kong

HBI Uno Holdings, Inc.		Cayman Islands

H.N. Fibers Ltd (49% owned)		Israel

Indumentaria Andina S.A.		Argentina

Industria Textilera del Este ITE, S.R.L.		Costa Rica

Industrias Internacionales de San Pedro S. de R.L. de C.V.		Mexico

Inversiones Bonaventure S.A. de C.V.		El Salvador

J.E. Morgan de Honduras, S.A.		Honduras

Jasper Honduras, S.A.		Honduras

Jogbra Honduras, S.A.		Honduras

Manufacturera Ceibena S. de R.L.		Honduras

Manufacturera Comalapa S.A. de C.V.		El Salvador

Manufacturera de Cartago, S.R.L.		Costa Rica

Manufacturera San Pedro Sula, S. de R.L.		Honduras

Playtex Puerto Rico, Inc.		Puerto Rico

PT. HBI Sourcing Indonesia		Indonesia

PTX (D.R.), Inc.		Cayman Islands

Rinplay S. de R.L. de C.V.		Mexico

Seamless Puerto Rico, Inc.		Puerto Rico

Servicios de Soporte Intimate Apparel, S. de R.L.		Costa Rica

Socks Dominicana S.A.		Dominican Republic

Texlee El Salvador, Ltda. de C.V.		El Salvador

The Harwood Honduras Companies, S. de R.L.		Honduras

Wonderbra (HK) Limited		Hong Kong

FINANCIALS

On attachment:

- 10K 2011

- 3^rd 10Q 2012

On October 23, 2012, Hanesbrands Inc. reported unaudited consolidated earnings results for the third quarter and nine months ended September 30, 2012.

For the quarter, the company reported net sales of $1,218,681,000 against $1,185,304,000 a year ago.

Operating profit was $156,508,000 against $144,944,000 a year ago.

Income from continuing operations before income tax expense was $120,238,000 against $105,809,000 a year ago.

Income from continuing operations was $111,183,000 or $1.11 per diluted share against $85,070,000 or $0.85 per diluted share a year ago.

Net income was $109,892,000 or $1.09 per diluted share against $90,832,000 or $0.85 per diluted share a year ago. Total EBITDA was $176,182,000 against $166,036,000 a year ago. Free cash flow was $287 million.

For the nine months, the company reported net sales of $3,372,465,000 against $3,333,340,000 a year ago. Operating profit was $287,104,000 against $372,858,000 a year ago.

Income from continuing operations before income tax expense was $175,772,000 against $252,080,000 a year ago.

Income from continuing operations was $154,228,000 or $1.54 per diluted share against $203,797,000 or $2.05 per diluted share a year ago.

Net income was $84,293,000 or $0.84 per diluted share against $225,723,000 or $2.28 per diluted share a year ago.

Total EBITDA was $351,588,000 against $435,748,000 a year ago.

Net cash provided by operating activities was $309,405,000 against net cash used in operating activities of $26,874,000 a year ago.

Capital expenditures were $29,162,000 against $56,085,000 a year ago.

The company revised earnings guidance for the year 2012.

For the period, the company revised guidance for continuing operations of diluted EPS of $2.54 to $2.60, compared with previous guidance of $2.50 to $2.60.

Net sales are expected to increase approximately 2% to approximately $4.52 billion, compared with previous guidance of $4.52 billion to $4.57 billion. Full-year free cash flow is expected to be approximately $500 million, the high end of the previous range of $400 million to $500 million.

For 2012 guidance, net cash provided by operating activities (GAAP) is expected to be approximately $545 million and net capital expenditures are expected to be approximately $45 million, resulting in expectations for non-GAAP free cash flow of approximately $500 million.

The company provided earnings guidance for the fourth quarter of 2012.

For the period, the company's corresponding guidance is net sales of approximately $1.13 billion to $1.17 billion and EPS of $1.00 to $1.06.

The company expects a gross margin percentage in the mid-30s and an operating profit margin of slightly more than 13%.

Interest expense is expected to be approximately $33 million, the effective tax rate is expected to be in the midteens and free cash flow of another $200 million plus.

Banks: Wells Fargo Bank

...

LEGAL FILINGS

Legal filings & complaints:

As of today date, there are numerous cases pending with various Courts involving the Company as plaintiff or defendant.

Secured debts summary (UCC): Numerous UCC files listed.

COMPANY CREDIT HISTORY

Domestic credit history appears as follow:

Monthly Payment Trends - Recent Activity

Date	Balance	Current	Up to 30 DBT	31-60 DBT	61-90 DBT	>90 DBT
05/12	$38,369,400	77%	23%	0%	0%	0%
06/12	$38,125,600	75%	25%	0%	0%	0%
07/12	$30,859,900	81%	18%	1%	0%	0%
08/12	$36,876,700	81%	15%	1%	2%	1%
09/12	$37,002,000	55%	39%	4%	1%	1%
10/12	$35,810,800	84%	11%	4%	0%	1%

According to our credit analysts, during the last 6 months, 76% of trade experience indicates a regular payment.

Payments of imports are currently made with an average of 10 to 20 days beyond terms.

The Company maintains a regular business.

The banks and financial institutions confirmed late payments but remained confident.

The Company is in good standing.

This means that all local and federal taxes were paid on due date.

The risk is low.

Our opinion:

A business connection may be conducted.

Standard & Poor’s

United States of America Long-Term Rating Lowered To 'AA+' Due To Political Risks, Rising Debt Burden; Outlook Negative

Publication date: 05-Aug-2011 20:13:14 EST

· We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating.

· We have also removed both the short- and long-term ratings from CreditWatch negative.

· The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.

· More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

· Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon.

· The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

TORONTO (Standard & Poor's) Aug. 5, 2011--Standard & Poor's Ratings Services said today that it lowered its long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA'. Standard & Poor's also said that the outlook on the long-term rating is negative. At the same time, Standard & Poor's affirmed its 'A-1+' short-term rating on the U.S. In addition, Standard & Poor's removed both ratings from CreditWatch, where they were placed on July 14, 2011, with negative implications.

The transfer and convertibility (T&C) assessment of the U.S.--our assessment of the likelihood of official interference in the ability of U.S.-based public- and private-sector issuers to secure foreign exchange for

debt service--remains 'AAA'.

We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.

Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policymaking uncertainty, consistent with our criteria (see "Sovereign Government Rating Methodology and Assumptions ," June 30, 2011, especially Paragraphs 36-41). Nevertheless, we view the U.S. federal government's other economic, external, and monetary credit attributes, which form the basis for the sovereign rating, as broadly unchanged.

We have taken the ratings off CreditWatch because the Aug. 2 passage of the Budget Control Act Amendment of 2011 has removed any perceived immediate threat of payment default posed by delays to raising the government's debt ceiling. In addition, we believe that the act provides sufficient clarity to allow us to evaluate the likely course of U.S. fiscal policy for the next few years.

The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements,

the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.

Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a 'AAA' rating and with 'AAA' rated sovereign peers (see Sovereign Government Rating Methodology and Assumptions," June 30, 2011, especially Paragraphs 36-41). In our view, the difficulty in framing a consensus on fiscal policy weakens the government's ability to manage public finances and diverts attention from the debate over how to achieve more balanced and dynamic economic growth in an era of fiscal stringency and private-sector deleveraging (ibid). A new political consensus might (or might not) emerge after the 2012 elections, but we believe that by then, the government debt burden will likely be higher, the needed medium-term fiscal adjustment potentially greater, and the inflection point on the U.S. population's demographics and other age-related spending drivers closer at hand (see "Global Aging 2011: In The U.S., Going Gray Will Likely Cost Even More Green, Now," June 21, 2011).

Standard & Poor's takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.'s finances on a sustainable footing.

The act calls for as much as $2.4 trillion of reductions in expenditure growth over the 10 years through 2021. These cuts will be implemented in two steps: the $917 billion agreed to initially, followed by an additional $1.5 trillion that the newly formed Congressional Joint Select Committee on Deficit Reduction is supposed to recommend by November 2011. The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them.

The act further provides that if Congress does not enact the committee's recommendations, cuts of $1.2 trillion will be implemented over the same time period. The reductions would mainly affect outlays for civilian discretionary spending, defense, and Medicare. We understand that this fall-back mechanism is designed to encourage Congress to embrace a more balanced mix of expenditure savings, as the committee might recommend.

We note that in a letter to Congress on Aug. 1, 2011, the Congressional Budget Office (CBO) estimated total budgetary savings under the act to be at least $2.1 trillion over the next 10 years relative to its baseline assumptions. In updating our own fiscal projections, with certain modifications outlined below, we have relied on the CBO's latest "Alternate Fiscal Scenario" of June 2011, updated to include the CBO assumptions contained in its Aug. 1 letter to Congress. In general, the CBO's "Alternate Fiscal Scenario" assumes a continuation of recent Congressional action overriding existing law.

We view the act's measures as a step toward fiscal consolidation. However, this is within the framework of a legislative mechanism that leaves open the details of what is finally agreed to until the end of 2011, and Congress and the Administration could modify any agreement in the future. Even assuming that at least $2.1 trillion of the spending reductions the act envisages are implemented, we maintain our view that the U.S. net general government debt burden (all levels of government combined, excluding liquid financial assets) will likely continue to grow. Under our revised base case fiscal scenario--which we consider to be consistent with a 'AA+' long-term rating and a negative outlook--we now project that net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of sovereign indebtedness is high in relation to those of peer credits and, as noted, would continue to rise under the act's revised policy settings.

Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act. Key macroeconomic assumptions in the base case scenario include trend real GDP growth of 3% and consumer price inflation near 2% annually over the decade.

Our revised upside scenario--which, other things being equal, we view as consistent with the outlook on the 'AA+' long-term rating being revised to stable--retains these same macroeconomic assumptions. In addition, it incorporates $950 billion of new revenues on the assumption that the 2001 and 2003 tax cuts for high earners lapse from 2013 onwards, as the Administration is advocating. In this scenario, we project that the net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021.

Our revised downside scenario--which, other things being equal, we view as being consistent with a possible further downgrade to a 'AA' long-term rating--features less-favorable macroeconomic assumptions, as outlined below and also assumes that the second round of spending cuts (at least $1.2 trillion) that the act calls for does not occur. This scenario also assumes somewhat higher nominal interest rates for U.S. Treasuries. We still believe that the role of the U.S. dollar as the key reserve currency confers a government funding advantage, one that could change only slowly over time, and that Fed policy might lean toward continued loose monetary policy at a time of fiscal tightening. Nonetheless, it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021.

Our revised scenarios also take into account the significant negative revisions to historical GDP data that the Bureau of Economic Analysis announced on July 29. From our perspective, the effect of these revisions underscores two related points when evaluating the likely debt trajectory of the U.S. government. First, the revisions show that the recent recession was deeper than previously assumed, so the GDP this year is lower than previously thought in both nominal and real terms. Consequently, the debt burden is slightly higher. Second, the revised data highlight the sub-par path of the current economic recovery when compared with rebounds following previous post-war recessions. We believe the sluggish pace of the current economic recovery could be consistent with the experiences of countries that have had financial crises in which the slow process of debt deleveraging in the private sector leads to a persistent drag on demand. As a result, our downside case scenario assumes relatively modest real trend GDP growth of 2.5% and inflation of near 1.5% annually going forward.

When comparing the U.S. to sovereigns with 'AAA' long-term ratings that we view as relevant peers--Canada, France, Germany, and the U.K.--we also observe, based on our base case scenarios for each, that the trajectory of the U.S.'s net public debt is diverging from the others. Including the U.S., we estimate that these five sovereigns will have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%. However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015.

Standard & Poor's transfer T&C assessment of the U.S. remains 'AAA'. Our T&C assessment reflects our view of the likelihood of the sovereign restricting other public and private issuers' access to foreign exchange needed to meet debt service. Although in our view the credit standing of the U.S. government has deteriorated modestly, we see little indication that official interference of this kind is entering onto the policy agenda of either Congress or the Administration. Consequently, we continue to view this risk as being highly remote.

The outlook on the long-term rating is negative. As our downside alternate fiscal scenario illustrates, a higher public debt trajectory than we currently assume could lead us to lower the long-term rating again. On the other hand, as our upside scenario highlights, if the recommendations of the Congressional Joint Select Committee on Deficit Reduction--independently or coupled with other initiatives, such as the lapsing of the 2001 and 2003 tax cuts for high earners--lead to fiscal consolidation measures beyond the minimum mandated, and we believe they are likely to slow the deterioration of the government's debt dynamics, the long-term rating could stabilize at 'AA+'.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.55.20
UK Pound	1	Rs.87.79
Euro	1	Rs.70.43

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.