MIRA INFORM REPORT

Report Date :

31.01.2013

IDENTIFICATION DETAILS

Name :	SETCO AUTOMOTIVE LIMITED
Registered Office :	Baroda – Godhra Highway, District Panchmahals, Kalol – 389330, Gujarat
Country :	India
Financials (as on) :	31.03.2012
Date of Incorporation :	05.05.1982
Com. Reg. No.:	04-005203
Capital Investment / Paid-up Capital :	Rs.176.438 Millions
CIN No.: [Company Identification No.]	L35999GJ1982PLC005203
TAN No.: [Tax Deduction & Collection Account No.]	BRDG00832G
PAN No.: [Permanent Account No.]	AAACG7777K
Legal Form :	A Public Limited Liability company. The company’s Shares are Listed on the Stock Exchanges.
Line of Business :	Manufacturer and Exporter of Clutch Products for the Automotive and Hydraulic Products for Construction Equipment Industry.
No. of Employees :	550 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

Ba (54)

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

Maximum Credit Limit :	USD 4900000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is an well established company having a good track record. Financially, the company performance seems to be strong. Performance capacity appears high. Liquidity position of the company is strong. Trade relations are reported to be fair. Business is active. Payments are reported to be regular and as per commitments. The company can be considered for normal 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 – June 30, 2012

Country Name	Previous Rating (31.03.2012)	Current Rating (30.06.2012)
India	A1	A1

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

INDIAN ECONOMIC OVERVIEW

India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the country's growth, which has averaged more than 7% per year since 1997. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the work force is in agriculture, but services are the major source of economic growth, accounting for more than half of India's output, with only one-third of its labor force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services and software workers. In 2010, the Indian economy rebounded robustly from the global financial crisis - in large part because of strong domestic demand - and growth exceeded 8% year-on-year in real terms. However, India's economic growth in 2011 slowed because of persistently high inflation and interest rates and little progress on economic reforms. High international crude prices have exacerbated the government's fuel subsidy expenditures contributing to a higher fiscal deficit, and a worsening current account deficit. Little economic reform took place in 2011 largely due to corruption scandals that have slowed legislative work. India's medium-term growth outlook is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. India has many long-term challenges that it has not yet fully addressed, including widespread poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, scarce access to quality basic and higher education, and accommodating rural-to-urban migration.

Source : CIA

EXTERNAL AGENCY RATING

Rating Agency Name	CARE
Rating	BBB+ (Long Term Rating)
Rating Explanation	Having moderate degree of safety regarding timely servicing of financial obligation it carry moderate credit risk.
Date	May 2012

RBI DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available RBI Defaulters’ list.

EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of 31-03-2012.

INFORMATION PARTED BY (GENERAL DETAILS)

Name :	Mr. Pundalik
Designation :	Asst Manager Account
Contact No.:	91-22-40755555
Date :	31.01.2013

LOCATIONS

Registered Office :	Baroda – Godhra Highway, District Panchmahals, Kalol – 389330, Gujarat, India
Tel. No.:	91-2676-305600
Fax No.:	Not Available
E-Mail :	contact@setcoauto.com pharyan@setcoauto.com mmehta@setcoauto.com
Website :	www.setcoauto.com
Corporate Office :	2/A, Film Centre Building, Ground Floor, Tardeo Road, Mumbai - 400034, Maharashtra, India
Tel. No.:	91-22-40755555
Fax No.:	91-22-23520754
Factory 1 :	Kalol, Panchmahals, Gujarat, India
Factory 2 :	Sitarganj, Udhamsinghnagar, Uttarkhand, India

DIRECTORS

As on: 31.03.2012

Name :	Mr. Harish Sheth
Designation :	Chairman and Managing Director
Name :	Mr. Arun Arora
Designation :	Director
Date of Birth/Age :	08.08.1945
Qualification :	B.Com, AMP, Business Management, Harvard Business School
Name :	Mr. Ashok Kumar Jha
Designation :	Director
Name :	Mr. Bhalchandra Naik
Designation :	Director
Name :	Mr. Harshal Shah
Designation :	Director
Date of Birth/Age :	16.12.1970
Qualification :	MBA from The Wharton School of Business, two Bachelors' degrees: in Management, and Electrical Engineering and Computer Science, with a Minor in Economics (Truman Gray Scholar from MIT and MIT Sloan School of Management)
Name :	Mr. Satish Deshpande
Designation :	Director
Name :	Mr. Shvetal Vakil
Designation :	Executive Director
Name :	Mr. Udit Sheth
Designation :	Executive Director

KEY EXECUTIVES

Name :	Mr. Pundalik
Designation :	Asst Manager Account
Name :	Mr. Mihir Mehta
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on: 30.09.2012

Category of Shareholders	No. of Shares	% of No. of Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	3338076	12.56
Bodies Corporate	13472769	50.69
Sub Total	16810845	63.24
(2) Foreign
Total shareholding of Promoter and Promoter Group (A)	16810845	63.24
(B) Public Shareholding
(1) Institutions
Financial Institutions / Banks	9150	0.03
Foreign Institutional Investors	1230500	4.63
Sub Total	1239650	4.66
(2) Non-Institutions
Bodies Corporate	978674	3.68
Individuals
Individual shareholders holding nominal share capital up to Rs. 0.100 Million	1889083	7.11
Individual shareholders holding nominal share capital in excess of Rs. 0.100 Million	1469604	5.53
Any Others (Specify)	4192958	15.77
Clearing Members	6588	0.02
Non Resident Indians	893870	3.36
Foreign Corporate Bodies	3292500	12.39
Sub Total	8530319	32.09
Total Public shareholding (B)	9769969	36.76
Total (A)+(B)	26580814	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	0	0.00
(1) Promoter and Promoter Group	0	0.00
(2) Public	0	0.00
Sub Total	0	0.00
Total (A)+(B)+(C)	26580814	0.00

BUSINESS DETAILS

Line of Business :	Manufacturer and Exporter of Clutch Products for the Automotive and Hydraulic Products for Construction Equipment Industry.
Exports :
Products :	· Clutch Products · Hydraulic Products
Countries :	· UK · US · Dubai
Imports :
Products :	· Raw Material
Countries :	· Hong Kong · China · Austria
Terms :
Selling :	Cash and Credit
Purchasing :	Cash and Credit

GENERAL INFORMATION

Customers :

End Users

No. of Employees :

550 (Approximately)

Bankers :

· HDFC Bank Limited, Worli Branch, Mumbai, Maharashtra, India

· Bank of Baroda, Baroda Branch, Gujarat, India

Facilities :

(Rs. In Millions)

Secured Loan	As on 31.03.2012	As on 31.03.2011
Term Loans
From Bank	56.464	119.603
From other parties	0.061	0.801
Working Capital Loan(Cash Credit) from Banks	931.195	636.993
Total	987.720	757.397

Note:

Indian rupee term loan from Bank of Baroda is repayable in 16 quarterly installments each of Rs. 7.188 Millions to be repaid by March, 2015. The loan is secured by first pari passu charge on company’s fixed assets (excluding cars/ vehicles) and the second charge on pari passu basis on stocks and book debts as collateral security

Indian rupee term loan from HDFC Bank is repayable in equated monthly installments each of Rs. 0.086 Million, by March 2015, and is secured against the vehicles purchased.

Indian rupee term loan from Kotak Mahindra Prime Limited is repayable in equated monthly installments each of Rs.0.071 Million, by April, 2013 and is secured against the vehicles purchased.

Working Capital Loans are secured by first charge by way of hypothecation of current assets including stocks, book debts etc. and second charge on entire fixed assets of the company.

Banking Relations :	--
Auditors :
Name :	Manesh Mehta and Associates Chartered Accountants
Address :	Vadodara, Gujarat, India
Solicitors :
Name :	Wadia Ghandy and Company
Address :	Mumbai, Maharashtra, India
Associates :	· Western Engineering Works · SE Transstadia Private Limited · Transstadia (Ahmedabad) Private Limited · Transstadia Technologies Private Limited · Setco Engineering Private Limited · Transstadia Capital Private Limited
Subsidiaries :	· Setco Automotive UK Limited, UK · Setco Automotive N.A Inc, USA · WEW Holdings Limited, Mauritius · Setco Global GHBH, Austria
Foreign Subsidiaries :	· Setco Automotive UK Limited (UK) · Setco Automotive N.A. Inc. (USA) · WEW Holdings Limited, Mauritius

CAPITAL STRUCTURE

As on: 17.09.2012

Authorised Capital : Rs.500.000 Millions

Issued, Subscribed & Paid-up Capital : Rs.265.818 Millions

As on: 31.03.2012

Authorised Capital :

No. of Shares	Type	Value	Amount
30000000	Equity Shares	Rs.10/- each	Rs.300.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
17643760	Equity Shares	Rs.10/- each	Rs.176.438 Millions

a. The company has only one class of equity shares having a par value of Rs. 10 per share. Each shareholder of equity share is entitled to one vote per share. The company declares and pays dividends in Indian rupees; the dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuring Annual General Meeting.

b. During the year ended 31st March 2012, Dividend of Rs. 4/- per share (Previous year Rs. 4/- per share) is recognized as amount distributable to equity share holders.

c. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

Reconciliation of number of shares outstanding at the beginning and at the end of the reporting period

	31 March 2012
Equity Shares	Number	Rs. In Millions
As at the beginning of the year	17643760	176.438
Add : Bonus shares Issued during the year	--	--
	17643760	176.438
Less : Changes, if any during the year	--	--
Outstanding at the end of the year	17643760	176.438

Details of Shareholders holding more than 5% shares in the company

	31 March 2012
Name of the shareholders	Number of Equity shares	% Holding
Equity Shares of Rs. 10 each fully paid
Setco Engineering Private Limited (Promoter Group)	8761846	49.66
New Vernon Equity Private Limited	2195000	12.44

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2012	31.03.2011	31.03.2010
SHAREHOLDERS FUNDS
1] Share Capital		176.438	176.438	88.219
2] Share Application Money		4.892	0.000	0.000
3] Reserves & Surplus		1051.636	704.346	545.121
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		1232.966	880.784	633.340
LOAN FUNDS
1] Secured Loans		987.720	757.397	752.060
2] Unsecured Loans		110.000	50.000	62.750
TOTAL BORROWING		1097.720	807.397	814.810
DEFERRED TAX LIABILITIES		55.566	49.836	40.836
TOTAL		2386.252	1738.017	1488.986
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		838.370	746.253	691.407
Capital work-in-progress		44.042	4.619	0.000
INVESTMENT		405.152	276.152	197.651
DEFERREX TAX ASSETS		0.000	0.000	0.000
OTHER NON CURRENT ASSETS		0.000	0.170	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	476.192	345.129	250.820
	Sundry Debtors	901.603	660.628	352.829
	Cash & Bank Balances	71.909	18.371	18.658
	Other Current Assets	0.170	0.170	0.000
	Loans & Advances	375.158	268.454	211.569
Total Current Assets		1825.032	1292.752	833.876
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	458.874	299.899	164.040
	Other Current Liabilities	168.944	172.667	23.100
	Provisions	98.526	109.363	49.168
Total Current Liabilities		726.344	581.929	236.308
Net Current Assets		1098.688	710.823	597.568
MISCELLANEOUS EXPENSES		0.000	0.000	2.360
TOTAL		2386.252	1738.017	1488.986

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2012	31.03.2011	31.03.2010
	SALES
		Income	3708.015	3026.508	2114.923
		Other Income	35.313	11.763	10.554
		TOTAL (A)	3743.328	3038.271	2125.477
Less	EXPENSES
		Cost of Materials and Components consumed	2296.085	1776.886
		Purchase of Traded Goods	0.000	9.595
		Changes in Inventories of Finished Goods and Work in Progress- (Increase)	(54.070)	-12.684
		Employee Benefits Expense	242.874	187.809
		Miscellaneous Expenditure Amortised	0.170	2.020
		Other Expenses	560.487	475.530
		Exceptional Items	28.440	0.000
		TOTAL (B)	3073.986	2439.156	1731.299
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		669.342	599.115	394.178
Less	FINANCIAL EXPENSES (D)		165.537	100.916	88.389
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		503.805	498.199	305.789
Less/ Add	DEPRECIATION/ AMORTISATION (F)		80.645	74.066	62.199
	PROFIT BEFORE TAX (E-F) (G)		423.160	424.133	243.590
Less	TAX (H)		(1.043)	95.370	65.534
	PROFIT AFTER TAX (G-H) (I)		424.203	328.763	178.056
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		550.880	354.141	224.752
Less	APPROPRIATIONS
		Proposed Dividend	NA	70.575	26.466
		Corporate Tax on Dividend	NA	11.449	4.396
		Transferred to General Reserve	NA	50.000	17.805
	BALANCE CARRIED TO THE B/S		NA	550.880	354.141
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	222.118	178.545	113.999
		Interest from Foreign subsidiary	2.796	2.154	0.000
	TOTAL EARNINGS		224.914	180.699	113.999
	IMPORTS
		Raw Materials, Components and Spares arts	479.825	425.125
		Capital Goods	22.514	0.029
	TOTAL IMPORTS		502.339	425.154	471.897
	Earnings Per Share (Rs.)
	Basic		24.04	18.63	10.09
	Diluted		24.01	18.61	10.09

QUARTERLY RESULTS

PARTICULARS	30.06.2012 1^st Quarter	30.09.2012 2^nd Quarter
Net Sales	743.100	753.000
Total Expenditure	631.400	643.000
PBIDT (Excl OI)	111.700	110.000
Other Income	19.100	34.500
Operating Profit	130.800	144.500
Interest	41.700	41.500
Exceptional Items	0.000	0.000
PBDT	89.100	103.000
Depreciation	21.300	21.900
Profit Before Tax	67.800	81.100
Tax	5.600	18.000
Provisions and contingencies	0.000	0.000
Profit After Tax	62.200	63.100
Extraordinary Items	0.000	0.000
Prior Period Expenses	0.000	0.000
Other Adjustments	0.000	0.000
Net Profit	62.200	63.100

KEY RATIOS

PARTICULARS		31.03.2012	31.03.2011	31.03.2010
PAT / Total Income	(%)	11.33	10.82	8.37
Net Profit Margin (PBT/Sales)	(%)	11.41	14.01	11.52
Return on Total Assets (PBT/Total Assets}	(%)	15.89	20.80	15.97
Return on Investment (ROI) (PBT/Networth)		0.34	0.48	0.38
Debt Equity Ratio (Total Debt/Networth)		0.89	0.92	1.29
Current Ratio (Current Asset/Current Liability)		2.51	2.22	3.53

LOCAL AGENCY FURTHER INFORMATION

Sr. No.	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	Yes
8]	No. of employees	Yes
9]	Name of person contacted	Yes
10]	Designation of contact person	Yes
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	Yes
20]	Export / Import details (if applicable)	Yes
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	Yes
31]	Date of Birth of Proprietor/Partner/Director, if available	Yes
32]	PAN of Proprietor/Partner/Director, if available	No
33]	Voter ID No of Proprietor/Partner/Director, if available	No
34]	External Agency Rating, if available	Yes

UNSECURED LOAN

(Rs. In Millions)

Unsecured Loan	As on 31.03.2012	As on 31.03.2011
Working Capital Loan(Cash Credit) from Banks	110.000	50.000
Total	110.000	50.000

AUTOMOTIVE INDUSTRY

Rs.1600 billion Indian Auto Component Industry witnessed moderation in revenue growth and decelerated sales volume growth. This was mainly on account of increase in interest costs, high inflation on the domestic front, fuel price rise and to an extent European Crisis. The Automotive Industry registered a growth of 13.7 % in 2011-12. This growth was driven by approx 19% growth in commercial vehicle segment.

While the outlook of the industry still remains strong for the long run, the industry faced strong challenges in the form of threat of low cost imports, currency volatility and ability to invest on product development to be able to move up the value chain.

Despite macro-economic challenges like inflation, high interest rates and rising fuel prices, the Company still drove double digit revenue growth at 20 % on consolidated and 22% on standalone basis in 2011-12, which was mainly supported by

(i) Expanding product portfolio;

(ii) Changing product mix in favour of higher realization products;

(iii) Exports to Europe for CV applications supported by a favourable exchange rate scenario;

(iv) increased sales to domestic replacement market;

(v) diversifying into light commercial vehicle segment.

BOARD OF DIRECTORS

Harish Sheth

Chairman and Managing Director

Mr. Sheth is the founder of Setco Automotive. A core visionary of the Company, Mr. Sheth has been instrumental in transforming the Company from a single product/ single location to a multiple product/ multi location Company, catering towards a remarkable presence for the Company in the international market as well. Mr. Sheth has a Bachelors degree in Mechanical Engineering from the University of Michigan, Ann Arbor and an MBA (Finance) from the Columbia University, New York.

Ashok Kumar Jha

IAS (Retired), Independent Director

Mr. Jha retired as the Finance Secretary, Ministry of Finance, Government of India. He has also served extensively in the Ministry of Economic Affairs. Post retirement, he joined the industry as President of Hyundai Motors. Mr. Jha is a graduate from St. Stephen’s college in Economics and holds a Masters degree from the Delhi school of Economics. He also holds a Masters Degree in Development Economics from the Australian National University, Canberra.

Arun Arora

Independent Director

Mr. Arora has been Executive Chairman with Edvance Learning Private Limited and Edvance Pre- Schools Private Limited. He is also the former CEO of Economic Times and President, Bennett and Coleman. Mr. Arora also holds an Advanced Management Programme Degree from the Harvard Business School.

Harshal Shah

Non-Executive Director

Mr. Shah is a President at Reliance Capital Limited and has a rich experience of 15 years of playing diverse roles while being associated with known brand as IBM Global Strategy (USA), Northstar Global Partners (USA), Infostakes, Inc. (USA and India), and Accenture (USA, Singapore and Hong Kong). Mr. Shah is an MBA from the Wharton School of Business. He holds two Bachelor’s degrees in Electrical Engineering as well as Computer Science, from MIT.

Shvetal Vakil

Executive Director

Mr. Vakil has over 39 years of diverse experience ranging from Greenfield projects, setting up JVs, strategizing M and As etc. In his career path, Mr. Vakil has also been associated with Hindustan Unilever wherein he was extensively involved with the setting up of the export business of Agri Products of the Company. He has also been the Director and Vice President in Bunge India Private Limited, an American Transnational and Global Leader in Veg. Oils and Oilseeds. Mr. Vakil holds a Bachelors’ degree from Mumbai University and has also pursued an Advanced Management Programme from IIM, Ahmedabad.

Satish Deshpande

Independent Director

Mr. Deshpande has been a consultant with the Tata Economic Consultancy and is associated with various manufacturing industries in various renowned capacities, inclusive of a CEO of an export oriented engineering company. Presently Mr. Deshpande functions as the Vice President and advisor with New Vernon Advisory Services Private Limited, Mumbai for Equity investment opportunities in India. A guest lecturer with Symbiosis

Institute of Management - Pune, he also holds a Green Belt – Six Sigma from General Electric Power Systems USA. Mr. Deshpande holds Management degrees from the prestigious IIM, Ahmedabad as well as ISB Hyderabad.

Udit Sheth

Executive Director

Mr. Sheth started his career at Setco in 2002. A strategist by temperament, he has been responsible for Strategy and Business Development for Group Information Technology and the Joint Ventures of the Company. A key member within the M and A team, he has contributed to the Company’s U.K. and USA acquisitions. Mr. Sheth has a Bachelor’s Degree in Science with a specialization in Finance and MIS from Purdue University and has completed an Executive Education program from MIT, Cambridge-Boston, USA.

MANAGEMENT DISCUSSION AND ANALYSIS

Overview FY 2011-12

Within a short span of time following the global financial meltdown in FY 2008-09, the Indian economy showed signs of revival and the momentum continued until FY 2010-11. The growth rate that had dropped to 6.7% was expected to touch 9% in FY 2011-12. However few months into FY 2011-12, there were strong indications that growth rate was slowing down and it would be close to 6%. Some of the reasons attributed for this slow down are global factors like Euro zone crises which also lead to the recession in Europe, sluggish growth rates in countries like USA and the Middle East crises which resulted in the rise of international crude oil which somehow has a direct impact on the Indian economy.

To curtail the increasing inflation rate, Reserve Bank of India increased the interest rates several times between March 2010 to January 2012 by 3.75%. As a result the year witnessed a sharp rise in borrowing costs.

Though the economy is not at its best, the Reserve Bank of India has cut the short-term lending rate for the first time in more than two years, signaling lower rates of finance that will boost both consumption and production. The Prime Minister’s Economic Advisory Council recently projected 7.5%-8.0% GDP growth in 2012-13 although the Asian Development Bank (ADB) has pegged it at 7%.

Auto Industry

The Indian automotive industry grew by 13.7% to produce more than 20 million vehicles in the year ended March

2012. The overall commercial vehicles segment registered a growth of 18.9%. While medium and heavy commercial vehicles (M and HCVs) grew 7.9%, sales of light commercial vehicles increased 27.4%.

The M and HCV sales growth was lower due to a slowdown in industrial production and trade activity, as well as increase in interest rates. Several transport service providers cut their fleet expansion plans due to slowing industrial activity and tough operating environment where freight rates remained stagnant despite increasing operating costs.

OEM segment

Over the years the company evolved as India’s largest manufacturer and supplier of clutches to the Medium and Heavy Commercial Vehicles (M and HCV) segment. The company caters to approx 85% of the demand in the OEM segment. In addition to catering to the requirements of the existing OEM’s the company is also working closely to meet the requirements of some of the new Global Commercial Vehicle manufacturers that have ventured into India.

During the year the company commenced supplies to OEM’s of Light Commercial Vehicles (LCVs). The LCV segment continues to grow at a rate faster than the M and HCVs. During FY2011-12 the LCV segment grew by 27.4%.

A sizable growth potential is projected in this segment with many global commercial vehicle manufacturers making an entry into India. All these companies are looking to increase localisation and source their parts from domestic suppliers, to manufacture global quality products at competitive costs.

With its strong brand and reputation and being a preferred supplier to all the Indian commercial vehicle manufacturers, Setco has generated interest from these global players. In fact, the company has already been approved as a preferred source to Bharat Benz (Indian subsidiary of Daimler– Germany) for their requirement of clutches for their trucks that will be on the Indian roads in early part of 2012-13.

SUBSIDIARIES

Setco Automotive (UK) Limited (SAUL)

The European automotive industry is a key contributor to the European economy and society. The company has growth plans in the entire Europe, which has huge potential for growth. However, the year 2011 has witnessed continuous recessionary conditions in the European economy and as expected this has taken a huge toll on the European automotive industry.

Decline in the general buying trend, reduction of manufacturing of new Commercial Vehicles has had its impact on their English Subsidiary. Net Sales declined by 23% at £2.73M against £3.54M in the previous year. However, their ability to adapt to the crises situation helped us to work towards effective cost engineering across the board, which resulted in an increase of Net Profit by 57% at £ 33K.

This subsidiary continues to remain a strong R and D contributor for the group and it continues its thrust on development of new products for the commercial vehicle clutch market. With the availability of new products and their increased penetration into the existing European market will help this subsidiary to grow in the European market.

Setco Automotive (NA) Inc. (SANAI)

The American economy struggling under economic slowdown caused by the FY 2008 – 09 subprime financial crises has been unable to revive itself.

Despite these depressed sentiments, SANAI recorded a 14% increase in Net Sales at $9.25M compared to $8.08M in the previous year. This was the result of an aggressive and focused approach towards marketing of their products and penetrating into newer territories in America.

Increased revenue coupled with various cost engineering initiatives has brought back the American subsidiary on track resulting in it posting a Net Profit of $523K compared to $69K in the previous year, a growth of approx 8 times.

OUTLOOK

Though the immediate future has some uncertainties, there are some signs of easier monetary policy and the government hinting at some austerity measures to spur growth, the momentum is picking up and the India growth story is expected to remain intact despite the Euro zone crisis.

Also, with India remaining one of the fastest-growing economies in the world and is poised to bridge its huge infrastructure gaps by building roads and expressways to take development to more people across the country and meet the growing demand of an ever-expanding middle class, the long-term growth prospect is intact.

In addition, the entry of global vehicle manufacturers will ensure India remains as the favourable destination for global sourcing. According to a recent ACMA report, the Indian auto-component industry is expected to become a USD $113 bn industry by FY 2020 – 21 from USD $40 bn in FY 2010 – 11, a growth of approx 1890%. In another report on the commercial vehicle industry, credit rating agency ICRA said that the demand for medium and heavy commercial vehicles will continue to grow in the long term, although near-term risks have increased. It projected long term growth outlook for M and HCV of 9.5-11.5% CAGR over the next five years.

CONTINGENT LIABILITIES:

i) Guarantees given by the bank on behalf of the Company Rs. 2.135 Millions (Rs. 2.463 Millions).

ii) Guarantee given to ICICI Bank Limited, U.K. for ultimate subsidiary’s credit facilities Rs.189.106

(Rs. 167.026 Millions) (£2.3 million).

iii) Guarantee given to ICICI Bank Limited, Singapore. for ultimate subsidiary’s credit facilities Rs.33.423 Millions

(Rs. Nil ) ($ 0.65 million).

iv) Guarantee given to Bank of Baroda, New York, USA for ultimate subsidiary’s credit facilities Rs.308.263 Millions (Rs. 269.535 Millions) ($ 5.995 million).

v) Bills Receivable discounted with the Bank

vi) Warranty Claims raised by Customer but not acknowledged of Rs. 11.858 Millions (Rs.5.114 Millions).

FIXED ASSETS:

Tangible Assets

· Land

· Buildings

· Plant and Machinery

· Furniture and Fixtures

· Office Equipments

· Pollution Equipments

· Computers

· Electric Fittings

· Vehicles

Intangible Assets

· Goodwill

· Product Development

· Technical Know how

· Computer Software

· Web Site Development

Unaudited Standalone Financial Results for the Quarter and Half Year ended September 30, 2012

(Rs. In Millions)

Sr. No.	Particulars	Quarter Ended		Half Year Ended
		30-Sep-12	30-Jun-12	30-Sep-12
		(Unaudited)	(Unaudited)	(Unaudited)
1a.	Net Sales / Income from Operations (net of excise duty)	753.000	743.100	1496.100
1b.	Other Operating Income	-	-	-
1	Total Income from operations [1a. + 1.b]	753.000	743.100	1496.100
2	Expenses
a.	Cost of materials consumed	466.700	483.000	949.700
b.	Purchases of stock-in-trade	-	-	-
c.	Changes in inventories of finished goods, work-in-progress and stock-in-trade	(26.400)	(45.300)	(71.700)
d.	Employee benefits expense	67.100	58.000	125.100
e.	Depreciation and amortisation expense	21.900	21.300	43.200
f.	Other expenses	135.600	135.700	271.300
	Total Expenses	664.900	652.700	1317.600
3	Profit from operations before other income, finance costs and exceptional items (1-2)	88.100	90.400	178.500
4	Other Income	34.500	19.100	53.600
5	Profit from ordinary activities before finance costs and exceptional items (3+4)	122.600	109.500	232.100
6	Finance costs	41.500	41.700	83.200
7	Profit from ordinary activities after finance costs but before exceptional items (5-6)	81.100	67.800	148.900
8	Exceptional Items - credit/(charge)	-	-	-
9	Profit from ordinary activities before tax (7+8)	81.100	67.800	148.900
10	Tax expense	19.500	17.400	36.900
11	Mat credit availed	(1.500)	(11.800)	(13.300)
12	Net Profit from ordinary activities After Tax [9-10-11]	63.100	62.200	125.300
13	Extraordinary Items	-	-	-
14	Net Profit for the period (12-13)	63.100	62.200	125.300
15	Paid up Equity Share Capital (Face Value f. 10/- per equity share)	265.800	177.200	265.800
15	Reserves excluding Revaluation Reserve as per balance sheet of previous accounting year	-	-	-
17	i. Earnings Per Share (EPS) before extraordinary items (of Rs. 10/- each) (not annualised):
	(a) Basic – Rs.	2.38	2.34	4.72
	(b) Diluted - Rs.	2.37	2.34	4.71
	i. Earnings Per Share (EPS) after extraordinary items (of Rs.10/- each) (not annualised):
	(a) Basic - Rs.	2.38	2.34	4.72
	(b) Diluted - Rs.	2.37	2.34	4.71

Part II : Select Information for the quarter / Half year Sept 30, 2012

A.	PARTICULARS OF SHAREHOLDING
1	Public Shareholding
	- Number of Shares	9769969	6508791	9769969
	- Percentage of Shareholding	36.76%	36.74%	36.76%
2	Promoters and Promoter Group Shareholding
	a) Pledged/Encumbered
	- Number of shares	700500	467000	700500
	- Percentage of shares (as a % of the total shareholding of promoter and promoter group)	4.17%	4.17%	4.17%
	- Percentage of shares (as a % of the total share capital of the company)	2.63%	2.64%	2.63%
	b) Non-Encumbered
	- Number of shares	16110345	10740230	16110345
	- Percentage of shares (as a % of the total shareholding of promoter and promoter group)	95.83%	95.83%	95.83%
	- Percentage of shares (as a % of the total share capital of the company)	60.61%	60.62%	60.61%

B	INVESTOR COMPLAINTS	Quarter ended September 30, 2012
	Pending at the beginning of the quarter	-
	Received during the quarter	21
	Disposed of during the quarter	21
	Remaining unresolved at the end of the quarter	-

Unaudited Financial Results for the half year ended September 30, 2012

(Rs. In Millions)

	Statement of Assets and Liabilities		As on 30-Sep-12
		Particulars	Unaudited
A		EQUITY AND LIABILITIES
	1	Shareholders' funds
		(a) Share capital	265.800
		(b) Reserves and surplus	1095.400
		Sub-total - Shareholders' funds	1361.200
	2	Share application money pending allotment	-
	3	Non-current liabilities
		(a) Long-term borrowings	77.600
		(b) Deferred tax liabilities (net)	62.500
		(c) Other long-term liabilities	-
		(d) Long-term provisions	6.200
		Sub-total - Non-current liabilities	146.300
	4	Current liabilities
		(a) Short-term borrowings	1153.100
		(b) Trade payables	373.300
		(c) Other current liabilities	136.500
		(d) Short-term provisions	12.100
		Sub-total - Current liabilities	1675.000
		TOTAL - EQUITY AND LIABILITIES	3182.500
B		ASSETS
	1	Non-current assets
		(a) Fixed assets	8960.300
		(b) Non-current investments	388.100
		(c) Deferred tax assets (net)	-
		(d) Long-term loans and advances	149.900
		(e) Trade receivables	1.400
		(f) Other non-current assets	-
		Sub-total - Non-current assets	1435.700
	2	Current assets
		(a) Current investments	-
		(b) Inventories	574.800
		(c) Trade receivables	700.100
		(d) Cash and cash equivalents	104.800
		(e) Short-term loans and advances	367.000
		(f) Other current assets	0.100
		Sub-total - Current assets	1746.800
		TOTAL - ASSETS	3182.500

Notes

1 During the quarter ended September 30, 2012, the company has allotted 4,522 equity shares of Rs 10/- each to Stock Option Grantees on exercise of their stock options under the company's Employees' Stock Option Scheme, 2010.

2 The Company issued and allotted 8860271 equity shares of face value of Rs. 10/- each fully paid up on August 20, 2012 in the ratio of 1 bonus share for every 2 shares held, by capitalizing its Securities Premium and General Reserves. Consequently, the Share Capital of the Company has increased to 26580814 equity share.

3 Pursuant to issue of bonus shares, Earnings per Share has been restated for the previous periods in terms of Accounting Standard - 20 of Companies (Accounting Standard) Rules, 2006.

4 Other income inter-alia includes a.) dividend of Rs. 8.896 Millions from its wholly owned ultimate foreign subsidiary company; b.) dividend of Rs. 15.210 Millions from its associate concern and c.) Management Service Fee of Rs. 2.617 Millions charged to its wholly owned foreign subsidiary company.

5 The Company is primarily engaged in business of clutch manufacturing and accordingly there are no separate reportable segments.

6 Figures for the previous period have been regrouped, reclassified wherever necessary.

7 The above financial statements were reviewed and recommended by the Audit Committee and were approved by the Board of Directors at their meeting held on November 9, 2012 and were subjected to limited review by Statutory Auditors.

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 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] 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.53.57
UK Pound	1	Rs.84.37
Euro	1	Rs.72.23

INFORMATION DETAILS

Information Gathered by :	SVA
Report Prepared by :	VRN

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	6
--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	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		54

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.