MIRA INFORM REPORT

Report Date :

23.03.2013

IDENTIFICATION DETAILS

Name :	SUNFLAG IRON AND STEEL COMPANY LIMITED
Registered Office :	33, Mount Road, Sadar, Nagpur – 440001, Maharashtra
Country :	India
Financials (as on) :	31.03.2012
Date of Incorporation :	12.09.1984
Com. Reg. No.:	11-034003
Capital Investment / Paid-up Capital :	Rs.1622.000 Millions
CIN No.: [Company Identification No.]	L27100MH1984PLC034003
TAN No.: [Tax Deduction & Collection Account No.]	NGPS06339E/ NGPS02039C
PAN No.: [Permanent Account No.]	AACCS3376C
Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchanges.
Line of Business :	Manufacturing and Sale of Special Steel Rolled Products.
No. of Employees :	1400 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

Ba (50)

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

Maximum Credit Limit :	USD 19000000
Status :	Satisfactory
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a part of Sunflag Group. It is a well established company having a satisfactory track record. There appears sharp dip in the profitability during the current year. However, general financial position of the company appears to be strong. Performance capacity of the company seems to be high. Fundamental appears to be healthy. Trade relations are reported to be fair. Business is active. Payments are reported to be regular and as per commitment. The company can be considered for normal business dealings at usual trade terms and condition.

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	Long term Bank facilities : (CARE) BBB+
Rating Explanation	Having moderate degree of safety regarding timely servicing of financial obligation. It carry moderate credit risk.
Date	September 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.

LOCATIONS

Registered/ Head Office :	33, Mount Road, Sadar, Nagpur – 440001, Maharashtra, India
Tel. No.:	91-712-2524661/ 2520356/ 57/ 58/ 2532901
Fax No.:	91-712-2520360
E-Mail :	investor@sunflagsteel.com mdparakh@sunflagsteel.com
Website :	www.sunflagsteel.com
Factory :	Bhandara Road, District Bhandara – 441905, Maharashtra, India
Tel. No.:	91-7197-285551 to 285555
Fax No.:	91-7184-285570/ 285740
Warehouses :	Located at : Ø Kolkata Ø Chennai Ø Delhi Ø Faridabad Ø Ludhiana Ø Bangalore Ø Kanpur Ø Madurai Ø Jaipur Ø Bhiwadi Ø Mumbai
Branch Offices :	Located at : Ø Delhi Ø Indore Ø Bangalore
Regional Office 1 :	C/O Themco Private Limited, 8-B. T. Road, Belgharia, Kolkata – 700056, West Bengal, India
Tel No. :	91-33-25442429/ 25442430
Fax No. :	91-33-25442431
Regional Office 2 :	Plot No. 12, Sector – 6, Mathura Road, Faridabad- 121006, Haryana, India
Tel. No.:	91-129-4290801-08/ 4290887/ 4290888
Fax No.:	91-129-4061646
Regional Office 3 :	705, 7^th Floor, Challa Mall, 11/ 11A, Sir Thiagaraya Road, T. Nagar, Chennai - 600017, Tamilnadu, India
Tel. No.:	91-44-24341065/ 24342262/ 24342263/ 24323724
Fax No.:	91-44-24347649
Regional Office 4 :	Office No. 65-69, Fifth Floor, 'Sai Kripa Bhavan', Pune - Mumbai Highway, Opposite KSB Pumps, S No 5743, Kharalwadi, Pimpri District Pune – 411018, Maharashtra, India
Tel. No.:	91-20-32940427/ 27425607/ 27424685
Fax No.:	91-20-27423013
Regional Office 5 :	307, Hamilton-B, Hiranandani Business Park, Ghodbunder Road, Thane (West) - 400607, Maharashtra, India
Tel. No.:	91-22-25862294/ 95/ 96/ 25861928
Fax No.:	91-22-25861931
Regional Office 6 :	33, Mount Road, Sadar, Nagpur – 440001, Maharashtra, India
Tel. No.:	91-712-3258442/ 2524661
Fax No.:	91-712-2520360

DIRECTORS

AS ON 31.03.2012

Name :	Mr. P. B. Bhardwaj
Designation :	Chairman cum Managing Director
Name :	Mr. Ravi Bhushan Bhardwaj
Designation :	Vice Chairman and Managing Director
Name :	Mr. Pranav Bhardwaj
Designation :	Joint Managing Director
Name :	Dr. E. R. C. Shekar
Designation :	Director
Name :	Mr. S Gajendran
Designation :	Director
Name :	CA Jayesh Madhavji Parmar
Designation :	Director
Name :	Mr. B.W. Ramteke
Designation :	Director (Effective 28th May 2012) Nominee - IDBI Bank Limited
Name :	Mr. Naresh Gwalani
Designation :	Director (Upto 28th May 2012) Nominee - IDBI Bank Limited
Name :	Mr. Surendra Kumar Gupta
Designation :	Whole Time Director

KEY EXECUTIVES

Name :	CA R. Muralidhar
Designation :	Chief Financial Officer - Executive Director (Finance)
Name :	Mr. Mukesh D. Parakh
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 31.12.2012

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	1612140	0.99
Bodies Corporate	8333356	5.14
Sub Total	9945496	6.13
(2) Foreign
Individuals (Non-Residents Individuals / Foreign Individuals)	13217398	8.15
Bodies Corporate	65253582	40.23
Sub Total	78470980	48.38
Total shareholding of Promoter and Promoter Group (A)	88416476	54.51
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	88000	0.05
Financial Institutions / Banks	90270	0.06
Insurance Companies	1100	0.00
Foreign Institutional Investors	150000	0.09
Sub Total	329370	0.20
(2) Non-Institutions
Bodies Corporate	12698920	7.83
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 Million	29210103	18.01
Individual shareholders holding nominal share capital in excess of Rs.0.100 Million	30919071	19.06
Any Others (Specify)	623563	0.38
Non Resident Indians	542696	0.33
Clearing Members	78862	0.05
Trusts	1905	0.00
Overseas Corporate Bodies	100	0.00
Sub Total	73451657	45.29
Total Public shareholding (B)	73781027	45.49
Total (A)+(B)	162197503	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued
(1) Promoter and Promoter Group	0	0.00
(2) Public	0	0.00
Sub Total	0	0.00
Total (A)+(B)+(C)	162197503	0.00

BUSINESS DETAILS

Line of Business :

Manufacturing and Sale of Special Steel Rolled Products.

Products :

ITC Code	Product Descriptions
72262000	Rolled Products
72241000	Billets
72031000	Sponge Iron
72011000	Pig Iron

PRODUCTION STATUS (AS ON 31.03.2011)

Particulars	Unit	Licensed Capacity	Installed Capacity (@)	Actual Production
Direct Reduced Iron	MT	N. A	150000	92774
Mild and Alloy Steel Rolled Products	MT	N. A	200000	311131*
Hot Metal/ Pig Iron	MT	N. A	240000	193992
Sinter	MT	N. A	364000	333201
Captive Power	kWh	N. A	180000000	127620000

Note:

@ As certified by Management, being technical in nature

* Includes outside conversion 19219 MT (Previous year 13001 MT) and re-rolling and coil to rounds inputs 16736 MT (Previous year 2315 MT)

GENERAL INFORMATION

No. of Employees :

1400 (Approximately)

Bankers :

Ø State Bank of India

Ø Bank of India

Ø Canara Bank

Ø Indian Bank

Ø State Bank of Bikaner and Jaipur

Ø IDBI Bank Limited

Facilities :

Secured Loans	31.03.2012	31.03.2011
Term loans	(Rs. In Millions)
- From Banks	2659.100	1794.300
Borrowings for Working Capital from banks	1826.400	1102.700
Total	4485.500	2897.000
a) Term Loans from Banks are secured by a first mortgage of all the Company's immovable properties, both present and future ranking pari passu interse and first charge by way of hypothecation of all Company's movables subject to prior charges created in favour of Company's bankers on inventories, book debts and other movables for securing the borrowings for working capital requirement. b) The Company has not defaulted in either repayment of principal or interest during the year i. Working Capital Borrowings are secured by way of hypothecation of inventories and book debts and further secured by way of second charge ranking pari passu over the fixed assets both present and future, subject to prior charges created by the Company in favour of banks for securing term loan. Working capital borrowings are further secured by the personal guarantee of Shri Ravi Bhushan Bhardwaj, Vice Chairman and Managing Director. ii. The Company has not defaulted in either repayment of principal or interest during the year.

Banking Relations :	--
Statutory Auditors :
Name :	Patel, Shah and Joshi Chartered Accountants
Address :	Mumbai, Maharashtra, India
Cost Auditors :
Name :	G. R. Paliwal and Company Cost Accountants
Address :	Nagpur, Maharashtra, India
Associate Enterprise :	Ø Haryana Television Limited Ø Ridge Farm Developers (Private) Limited
Joint Venture Companies :	Ø Madanpur (North) Coal Company Private Limited Ø C T Mining Private Limited Ø Gujarat State Mining and Resources Corporation Limited
Subsidiary Companies :	Ø Sunflag Power Limited Ø Sunflag Special Steels Limited Ø Khappa Coal Company Private Limited
Enterprise which have significant influence :	Ø Sunflag Limited, Channel Island, UK

CAPITAL STRUCTURE

AS ON 31.03.2012

Authorised Capital :

No. of Shares	Type	Value	Amount
165,000,000	Equity Shares	Rs. 10/- each	Rs.1650.000 Millions
4,000,000	10% Cumulative Preference Shares	Rs. 100/- each	Rs.400.000 Millions
	Total		Rs.2050.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
162,197,503	Equity Shares	Rs. 10/- each	Rs.1622.000 Millions

a) Terms / Voting Rights attached to the Equity Shares

The paid up capital of the Company consists of only equity shares of Rs.10/- each. Every equity shareholder is entitled to one vote per share.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion of the number of the Equity shares held by the Shareholders.

b) Details of Shareholders holding more than 5% shares in the Company

Name of Shareholder	31.03.2012
	Number of Shares held	% of Holding
Sunflag Limited, Channel Islands, UK	65,253,582	40.23
Suhrit Ravi Bhardwaj	13,217,398	8.15
Supra Corporation Limited	8,333,356	5.14

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		1622.000	1622.000	1622.000
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		3318.700	3125.000	2514.000
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		4940.700	4747.000	4136.000
LOAN FUNDS
1] Secured Loans		4485.500	2897.000	1843.200
2] Unsecured Loans		825.600	919.500	1445.000
TOTAL BORROWING		5311.100	3816.500	3288.200
DEFERRED TAX LIABILITIES		558.000	488.100	502.000
TOTAL		10809.800	9051.600	7926.200
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		4169.300	3449.700	3709.400
Capital work-in-progress		2362.500	1893.200	283.500
INVESTMENT		76.500	75.800	75.600
DEFERRED TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	3918.400	2990.300	2548.900
	Sundry Debtors	1496.000	1409.500	1216.900
	Cash & Bank Balances	526.800	345.500	296.400
	Other Current Assets	42.500	7.800	0.000
	Loans & Advances	2250.900	1539.100	1741.200
Total Current Assets		8234.600	6292.200	5803.400
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	1920.200	548.300	114.200
	Other Current Liabilities	987.900	895.300	1205.100
	Provisions	1125.000	1215.700	626.400
Total Current Liabilities		4033.100	2659.300	1945.700
Net Current Assets		4201.500	3632.900	3857.700
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		10809.800	9051.600	7926.200

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2012	31.03.2011	31.03.2010
	SALES
		Income	16181.800	15440.700	13496.300
		Other Income	52.800	56.000	49.600
		TOTAL (A)	16234.600	15496.700	13545.900
Less	EXPENSES
		Cost of Materials Consumed	11226.400	9862.200
		Other Manufacturing Expenses	3228.100	2755.200
		Purchases of Stock-in-Trade	0.000	0.000
		Changes in inventories of finished goods, work-in-progress and Stock-in-Trade	(818.900)	(122.900)	11585.700
		Employee benefits expense	716.400	660.200
		Other expenses	626.200	663.000
		TOTAL (B)	14978.200	13817.700	11585.700
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		1256.400	1679.000	1960.200
Less	FINANCIAL EXPENSES (D)		530.500	374.400	300.400
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		725.900	1304.600	1659.800
Less/ Add	DEPRECIATION/ AMORTISATION (F)		424.400	396.400	378.800
	PROFIT BEFORE TAX (E-F) (G)		301.500	908.200	1281.000
Less	TAX (H)		107.800	202.900	331.900
	PROFIT AFTER TAX (G-H) (I)		193.700	705.300	949.100
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		3099.400	2488.400	1634.200
Less	APPROPRIATIONS
		Proposed Dividend on Equity Shares	0.000	81.100	81.100
		Corporate Dividend Tax	0.000	13.200	13.800
	BALANCE CARRIED TO THE B/S		3293.100	3099.400	2488.400
	EARNINGS IN FOREIGN CURRENCY
		Export at FOB value	1355.900	1151.400	1227.400
	IMPORTS
		Raw Materials	936.000	1295.600	1003.500
		Components & Spares	50.700	26.200	21.100
		Capital Goods	171.000	414.500	78.500
	TOTAL IMPORTS		1157.700	1736.300	1103.100
	Earnings Per Share (Rs.)		1.19	4.35	5.85

QUARTERLY RESULTS

PARTICULARS	30.06.2012	30.09.2012	31.12.2012
Type	1^st Quarter	2^nd Quarter	3^rd Quarter
Net Sales	4317.300	3693.900	3882.000
Total Expenditure	3981.900	3507.800	3640.200
PBIDT (Excl OI)	335.400	186.100	241.800
Other Income	16.000	16.200	10.500
Operating Profit	351.400	202.300	252.300
Interest	206.900	217.500	202.300
Exceptional Items	0.000	0.000	0.000
PBDT	144.500	(15.200)	50.000
Depreciation	133.200	135.800	140.400
Profit Before Tax	11.300	(151.000)	(90.400)
Tax	39.300	0.000	0.000
Provisions and contingencies	0.000	0.000	0.000
Profit After Tax	(28.000)	(151.000)	(90.400)
Extraordinary Items	0.000	0.000	0.000
Prior Period Expenses	0.000	0.000	0.000
Other Adjustments	0.000	0.000	0.000
Net Profit	(28.000)	(151.000)	(90.400)

KEY RATIOS

PARTICULARS		31.03.2012	31.03.2011	31.03.2010
PAT / Total Income	(%)	1.19	4.55	7.01
Net Profit Margin (PBT/Sales)	(%)	1.86	5.88	9.49
Return on Total Assets (PBT/Total Assets}	(%)	2.43	9.32	13.47
Return on Investment (ROI) (PBT/Networth)		0.06	0.19	0.31
Debt Equity Ratio (Total Liability/Networth)		1.89	1.36	1.27
Current Ratio (Current Asset/Current Liability)		2.04	2.37	2.98

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	No
8]	No. of employees	Yes
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	Yes
31]	Date of Birth of Proprietor/Partner/Director, if available	No
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 LOANS

Particulars	31.03.2012	31.03.2011
	(Rs. In Millions)
From Promoters (Interest Free)@	137.500	137.500
Other loans and advances # Interest free Sales Tax Loan	688.100	782.000
Total	825.600	919.500
Note: @ The Unsecured loans comprising interest free loans given by Promoters. There is no stipulation as to the repayment hence there is no default in repayment during the period. # The Unsecured loan comprising interest free Sales Tax loan. The repayment of the Sales Tax loan is made as per the schedule and there is no default in repayment during the period.

FINANCE

The Company has ended the financial year with a profit after tax of Rs. 193.700 Millions. After taking into account the brought forward profit of Rs. 3099.400 Millions, the Company has carried forward an amount of Rs. 3293.100 Millions.

OPERATIONS

i. During the year:

a) A new Direct Reduction Plant (DRP-II) was commissioned on 24th June 2011. The total production of Direct

Reduction Plant (I+II) was 142,444 MT as against 92,774 MT of the previous year.

b) The total production was 302,532 MT in Steel Melt Shop as against 304,936 MT of the previous year.

c) The total production of Rolled products was 303,732 MT as against 311,131 MT of the previous year. (These production includes outside conversion of 7,624 MT of the current year and 19,219 MT of the previous year).

d) The total production of Hot Metal / Pig Iron was 205,089 MT as against 193,992 MT of the previous year.

e) The total production of Sinter Plant was 339,900 MT as against 333,201 MT of the previous year.

ii. The power plant generated 171.421 Millions kWh as compared to 127.620 Millions kWh of the previous year.

iii. The total coal production at Belgaon Coal Block was 159,905 MT as against 114,000 MT of the previous year.

PROJECTS

Steel Plant:

The Company has commissioned its Direct Reduction Plant (DRP-II) with a capacity of 350 TPD together with WHRGS boiler to generate 8 MW power for captive consumption. Besides, the commercial production of Blooming Mill was commissioned on 1st April 2012.

These new projects will add wider product range, value addition and more competitive products and in particular, achieve economy in the cost of production.

Subsidiary Companies:

Sunflag Power Limited : Requisites approvals are being sought for the implementation of Hydro Power Project at Hanol-Tuini in the state of Uttarakhand.

Sunflag Special Steels Limited : The management is exploring the business opportunities for the Company.

Khappa Coal Company Private Limited : The Company has initiated various ancillary activities and applied for various government approvals in accordance with the schedule itemized in the allocation letter issued by the Ministry of Coal.

The Company has procured plots of land for the purpose of incline drivage and other civil construction. The Company is striving harder to pave its way to success and the operations of the Khappa & Extension Coal Block in the state of Maharashtra are expected to start within the scheduled time line.

Joint Venture Companies:

Madanpur (North) Coal Company Private Limited : Various approvals / clearances are being sought from the concerned authorities for effective implementation of the Madanpur (North) Coal project in the state of Chhattisgarh.

C T Mining Private Limited : Various approvals / clearances are being sought from the concerned authorities for effective implementation of the Choritand - Taliya Coking Coal project in the state of Jharkhand.

Gujarat State Mining and Resources Corporation Limited : Requisite approval is sought from the concerned authoritiesm for allocation of Coal Block for development of integrated coke oven plant in the state of Gujarat.

MANAGEMENT DISCUSSION AND ANALYSIS

Sunflag Iron and Steel Company Limited (SUNFLAG STEEL) has set up a ‘state of the art’ integrated steel plant at Warthi, Bhandara Road in the state of Maharashtra to produce high quality Special Steel with manufacturing facilities like Sponge Iron Plant, Mini Blast Furnace, Sinter Plant and Captive Power Plant.

SUNFLAG STEEL has established itself as a major global force. With the modern complex pulsating with world class technology, expert human resources and a commitment to excellence, SUNFLAG STEEL has become a reputed supplier in Flat Bars, Round Bars, Bright Bars and Wire Rods of Alloy Steel, Spring Steel and Stainless Steel and captured better position in these market segments. SUNFLAG STEEL is also embarking on an export thrust and is regularly supplying to various customers in South East Asian, African, Middle East and South American countries.

GLOBAL AND INDIAN ECONOMIC SCENARIO

FY 2011-2012 was a challenging year. The developments over the last year in major economies of the world have not been encouraging. The global economy, barely a year after recession, witnessed lower economic growth, resulting primarily from the Euro Zone debt crisis and high oil prices, which were fuelled by uncertainties of supply. Rising unrest in the Middle East and North Africa resulted in unprecedented levels of crude oil volatility. There is an apprehension that the process of global economic recovery that began after financial crisis of 2008 is beginning to stall and the sovereign debt crisis in the Euro Zone area may persist for a while. The European economies stagnated and the US witnessed a downgrade in its credit rating, while the growth engines of the global economy, China and India were forced to tighten; LK liquidity to tame rising inflation. In addition, civil unrest in Libya and the tsunami in Japan posed further challenges.

As per the International Monitory Fund (IMF), the global economy is expected to grow by 3.3 per cent in 2012 as compared to 3.8 per cent in 2011. The Gross Domestic Product (GDP) growth in advanced economies declined to 1.6 per cent in 2011 compared to 3.2 per cent in 2010 and is expected to be even lower at 1.2 per cent in 2012.

The road to recovery from the great recession is proving to be long, winding and rocky. After a year of fragile and uneven recovery, growth of the world economy started to decelerate. The slowdown is expected to continue in 2012-2013. The outlook is shrouded in great uncertainty and serious downside risk remains globally. Better outcomes may be expected only through strengthened international policy coordination.

The growth in the India’ Gross Domestic Product (GDP) during the current fiscal has been pegged at 6.9%. The GDP growth had decelerated to 6.1% in the third quarter from 6.9% in the second quarter of the current fiscal.

The growth rate of investment in the economy is estimated to have declined significantly; borrowing costs up due to a sharp increase in the interest rates. High borrowing costs and increase in other costs affecting profitability and internal accruals.

Slowdown in Indian economy is largely due to global factors, as also because of domestic factors like tightening of monetary policy, high inflation and slower investment and industrial activities.

STEEL, AUTOMOBILE AND AUTO COMPONENT INDUSTRY

In India, the Steel industry plays a significant role in the economic growth. India is the fifth largest producer at the global front. The major contribution of the steel industry focuses on strengthening the sectors such as infrastructure, constructions, automobile, transportation, industrial applications etc.

Steel prices have recovered from the lows reached in December last year with increased buying activity seen across regions. However, the momentum seems to have lost steam and with the economic conditions in many parts of the world not looking strong, steel capacity utilisation remains below 80%. Seaborne iron ore and coking coal prices have shown resilience at lower levels and are expected to continue in the coming months. In view of this, the extreme mismatch of steel price and raw material costs seen in the previous year is expected to recur in the current year, although the margins for steelmakers worldwide continue to remain under pressure. This represents below 80% of the pre-crisis demand levels. Chinese steel demand growth is expected to be moderate as the government pursues economic restructuring.

As such, steel demand in China is projected to grow by 4% every year in the next two years. Indian steel demand growth is expected to remain subdued due to slowdown in investments and delayed start-up of industrial projects.

There has been a diversification in the product mix of the steel industry in India towards sophisticated value steel used in the automotive sector, heavy machinery and infrastructure. In 2011, the industry was faced with stiff challenges due to rising inflationary pressures and deteriorating global growth conditions. The multiple hikes in interest rates by the central bank also impacted the industry’s growth in rate sensitive key user industries.

The Automobile sector posted poor volumes, largely on the expected line, amid slowdown in economic activity and negative consumer sentiments fuelled by higher inflation and increasing cost of ownership. The slowdown in demand is now clearly evident across most product segments, which continues to impact overall growth.

UNAUDITED FINANCIAL RESULTS FOR THE SECOND QUARTER ENDED 30^TH SEPTEMBER, 2012

(Rs. in millions)

Particular	3 Months ended 30.09.2012	3 Months ended 30.06.2012	6 Months ended 30.09.2012
	Unaudited	Unaudited	Unaudited
Income from Operations
Net Sales/Income from Operations	3693.900	4317.300	8011.200
Other Operating Income	0.000	0.000	0.000
Total Income from operations (net)	3693.900	4317.300	8011.200
Expenses
(a) Cost of material consumed	2317.700	2911.000	5228.700
(b) Purchase of stock in trade	--	--	--
(c) Changes in inventories of finished goods, work in progress and stock in trade	55.200	(228.600)	(173.400)
(d) Employee benefit expenses	185.900	183.100	369.000
(e) Depreciation and amortization expenses	135.800	133.200	269.000
(f) Other Expenses	949.000	1116.400	2065.400
Total Expenses	3643.600	4115.100	7758.700
Profit from Operations before Other Income, Finance costs and Exceptional item	50.300	202.200	252.500
Other Income	16.200	16.000	32.200
Profit/ Loss from Ordinary Activities before Finance costs and Exceptional item	66.500	218.200	284.700
Finance costs	217.500	206.900	424.400
Profit/ Loss from Ordinary Activities after Finance costs but Exceptional item	(151.000)	11.300	(139.700)
Exceptional item	--	--	--
Profit/ Loss from Ordinary Activities before tax	(151.000)	11.300	(139.700)
Tax Expenses
- Current Tax	--	(2.300)	(2.300)
- Deferred Tax Liability/ Assets	--	(37.000)	(37.000)
- Short/ Excess Provisions for Current Tax of earlier years	--	--	--
Net Profit/ Loss from Ordinary Activities after tax	(151.000)	(28.000)	(179.000)
Extraordinary Items	--	--	--
Net Profit for the period	(151.000)	(28.000)	(179.000)
Paid- up Equity Share Capital (Face value of the share – Rs. 10)	1622.000	1622.000	1622.000
Reserves excluding revaluation reserves as per balance sheet of Previous Accounting Year
Earnings per share (before extraordinary items) (of Rs. 10/- each) (not annualized)	(0.93)	(0.17)	(1.10)
Earnings per share (after extraordinary items) (of Rs. 10/- each) (not annualized)	(0.93)	(0.17)	(1.10)
PARTICULARS OF SHAREHOLDING
1. Public shareholding
Number of Shares	73781027	73781027	73781027
Percentage of Shareholding	45.49	45.49	45.49
2. Promoters and promoter group shareholding
a) Pledged/Encumbered
- Number of Shares	--	--	--
- Percentage of Shares (as a % of the Total Shareholding of promoter and promoter group)	--	--	--
- Percentage of Shares (as a % of the Total Share Capital of the Company)	--	--	--
Non - encumbered
- Number of Shares	88416476	88416476	88416476
- Percentage of Shares (as a % of the total shareholding of promoter and promoter group)	100.00	100.00	100.00
- Percentage of Shares (as a % of the total share capital of the company)	54.51	54.51	54.51

STANDALONE STATEMENT OF ASSETS AND LIABILITIES (AUDITED)

(Rs. in Millions)

Particulars		6 Months ended 30.09.2012
A. EQUITY AND LIABILITIES		Unaudited
1. Shareholders Funds
a] Share Capital		1622.000
b] Reserves and Surplus		3139.700
Sub-total – Shareholders’ funds		4761.700
2. Non-current Liabilities
a] Long term Borrowings		2972.000
b] Deferred Tax Liabilities		595.000
c] Other current liabilities		9.200
d] Long term provisions		377.100
Sub-total - Non-current Liabilities		3953.300
3. Current Liabilities
a] Short term Borrowings		2259.500
b] Trade Payables		2917.800
c] Other Current Liabilities		910.800
d] Short Term Provision		777.000
Sub-total - Current Liabilities		6865.100
TOTAL - EQUITY AND LIABILITIES		15580.100
B ASSETS
1. Non-current assets
a] Fixed assets		6733.100
b] Non-current investment		76.600
c] long Term loans and Advances		578.000
d] Other non-current assets		--
Sub-total – Non- current assets		7387.700
2. CURRENT ASSETS
	Inventories	4101.300
	Trade Receivables	2051.600
	Cash & Bank Balances	506.100
	Short Term loans and advances	1477.200
	Other Current Assets	56.200
Sub-total – Current Assets		8192.400
TOTAL - ASSETS		15580.100

Notes:

1. After reviewed by the Audit Committee, the above financial results were approved by the Board of Directors at their meeting held on 9^th November, 2012.

2. The capital employed as on 30^th September 2012 is Rs. 9993.100 Millions.

3. The company has not provided current tax expenses during the quarter, as there is no tax liability. However, this will be reviewed in the subsequent quarter and shall be provided accordingly.

4. The company is primarily engaged in the business of rolled products and grouped as single segment as per the Accounting Standard (AS) – 17 dealing with segment report issued by ICAI.

5. During the quarter, 3 investors’ complaints were received and all the complaints were attended to by the Company/ Share transfer Agent. At the end of the quarter, no complaints were pending.

6. The figures of previous periods have been re-grouped/ re-arranged, wherever necessary.

CONTINGENT LIABILITIES

(Rs. in millions)

Particulars	31.03.2012	31.03.2011
a) Unexpired Letter of Credit	674.000	503.400
b) Guarantees issued by Company's Bankers on behalf of the Company	266.600	180.000
c) Bonds / Under Takings given by the Company under Duty Exemption Scheme to the Custom Authorities	278.200	340.800
d) Bills Discounted	336.700	293.500
e) Excise Duty & Custom Duty against which Company has preferred an Appeal	10.000	10.300
f) Sales Tax Liability against which Company has preferred an Appeal	0.000	0.000
g) Income Tax Liability eventhough paid against which Company has preferred an Appeal	132.400	36.400
h) Corporate Guarantee issued to Banks on behalf of Subsidiaries	40.000	40.000

FIXED ASSETS

Ø Freehold Land

Ø Leasehold Land

Ø Buildings

- Factory Building

- Non – Factory Building

- Office Building

- Township

- Welfare Building

- Roads

- Boundary wall and fencing

Ø Railway Siding

Ø Plant and Machinery

Ø Furniture and Fixture

Ø Heavy Vehicles

Ø Light Vehicles

Ø Development of Mines

WEBSITE DETAILS

PROFILE:

Subject is a prestigious unit of the SUN FLAG GROUP. It has set up a state-of-art integrated plant at Bhandara, IndiaThe plant has a capacity to produce 200,000 tonnes per annum of high quality special steel using iron ore and non coking coal as basic inputs.

The plant comprises a 1,50,000 tonnes per annum Direct Reduction Plant, to produce sponge iron for captive consumption in the Steel Melting Shop. This shop comprises a 50/60 tonnes ultra high power Electric Are Furnace with Eccentric bottom arrangement; a Ladle auto mould level controller and electromagnetic stirrer. The billets produced at the steel melting shop are rolled at the Mannesmann Demag Designed ultra modern 18 stand Continous mill.This mill has a walking hearth reheating furnace, quick roll-changing facilities, a 65 metres long walk and wait type modern cooling bed and above all computerised process control linking and controlling the various stages.

Within a short period of its inception in 1989, the SUNFLAG STEEL has established itself as a major global force. This modern complex pulsating with world-class technology, expert human resources and a commitment to excellence, has created a distinct niche in spring steel and attained the position of market leader in the segment. Today SUNFLAG STEEL has also embarked on an export thrust and is regularly receiving prestigious orders from Japan and many other Far East, Afro-Asian and Middle-East countries.

The ASM commenced production in the year 1997, enabling Sunflag to expand their product range upto 90 mm dia Rounds; 75 mm RCS and upto 120x25 mm Flats. Production capacity of rolled product is also enchanced by 60, 000 MT. per annum. In order to save energy, a captive Power Plant of 30 MW capacity has already been comissioned using waste gases.

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 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. 54.39
UK Pound	1	Rs. 88.76
Euro	1	Rs. 72.19

INFORMATION DETAILS

Report Prepared by :

BVA

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--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	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		50

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.