MIRA INFORM REPORT

Report Date :

17.09.2013

IDENTIFICATION DETAILS

Name :	READERS DIGEST BOOK AND HOME ENTERTAINMENT (INDIA) PRIVATE LIMITED
Registered Office :	"Sankalp" C-227, Ground Floor, Paryavaran Complex, Westend Marg, Near Garden of Five Senses, New Delhi – 110030
Country :	India
Financials (as on) :	31.03.2012
Date of Incorporation :	02.06.2005
Com. Reg. No.:	55-137072
Capital Investment / Paid-up Capital :	Rs. 20.175 Millions
CIN No.: [Company Identification No.]	U22110DL2005PTC137072
Legal Form :	Private Limited Liability Company
Line of Business :	The main business of" the company is to sell high quality information and education books and music and video products of the Reader's Digest brand.
No. of Employees :	Not Available [We tried to confirm the number of employees but no one is ready to part any information from the company management]

RATING & COMMENTS

MIRA’s Rating :

Ca (15)

RATING		STATUS	PROPOSED CREDIT LINE
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

Status :	Moderate
Payment Behaviour :	Slow
Litigation :	Clear
Comments :	Subject is a part of “RDA Holding”. It is an established company having moderate track record. The company has reported huge accumulated losses which has eroded its networth during 2012. However, Business is active. Payment terms are slow. The company can be considered for business dealings on a safe and secured 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 – March 31^st, 2013

Country Name	Previous Rating (31.12.2012)	Current Rating (31.03.2013)
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

We are living in a world where volatility and uncertainty have become the New Normal. We saw a change of government in countries like Tunisia, Egypt, Libya and Vietnam. Once powerful countries in Europe are now fighting for bankruptcy. We have taken growth in the developing part of the world for granted but economic growth in China and India has begun to slow. Companies that were synonymous with their product categories just a few years ago are now no longer in existence. Kodak, the inventor of the digital camera had to wind up its operations, HMV, the British entertainment retailing company and Borders, once the second largest bookstore have shut down due to their inability to evolve their business models with the changing time. Readers’ Digest, Thomson Register are no more !

There is another megatrend happening. The World order is changing as economic power shifts from West to East. According to McKinsey study, it took Britain more than 100 years to double its economic output per person during its industrial revolution and the US later took more than 50 years to do the same. More than a century later, China and India have doubled their GDP per capital in 12 and 18 years respectively. By 2020, emerging Asia will become the world’s largest consuming block, overtaking North America.

The years after the outbreak of the global financial crisis, the world economy continues to remain fragile. The Indian economy demonstrated remarkable resilience in the initial years of the contagion but finally lost ground last year. GDP growth slowed down. Currency has been weakening. There is a marked deceleration in agriculture, industry and services. Dampening sentiment led to a cut-back in investment as well as private consumption expenditure.  Inflation remained at high levels fuelled by the pressure from the food and fuel sectors. The large fiscal and current account deficit s continued to cause grave concern. It is imperative that India regains its growth trajectory of 8-9 % sooner than later. This is crucially important given the need to create gainful livelihood opportunities for the millions living in poverty as also the large contingent of young people joining the job market every year.

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 DENIED BY

Name :	Mr. Rajesh Mundra
Designation :	Account Department
Contact No.:	91-22-30843611
Date :	03.09.2013

LOCATIONS

Registered Office :	"Sankalp" C-227, Ground Floor, Paryavaran Complex, Westend Marg, Near Garden of Five Senses, New Delhi – 110030, India
Tel. No.:	91-11-29536312
Fax No.:	91-11-29536342
E-Mail :	rajesh_mundra@readersdigest.com
Website :	http://www.readersdigest.co.in

DIRECTORS

As on 29.09.2012

Name :	Cherumuttath Mathew Joy
Designation :	Director
Address :	Flat No.201, Samruddhi Tps III, Road No.1, Santacruze (East), Mumbai – 400056, Maharashtra, India
Date of Birth/Age :	30.11.1956
Date of Appointment :	30.09.2010
DIN No.:	03389556
Name :	Lance Kenneth Wright Christie
Designation :	Director
Address :	1, Marina Boulevard #31-40, The Sali Marina Bay, Sinapore, 018988, Singapore
Date of Birth/Age :	02.06.1965
Date of Appointment :	30.09.2010
DIN No.:	03525499
Name :	Mr. Rajesh Mundra
Designation :	Director
Address :	B-501, Panchsheel Heights, Mahavir Nagar, Denukarwadi, Kandivali (West), Mumbai – 400067, Maharashtra, India
Date of Birth/Age :	15.01.1981
Date of Appointment :	29.09.2012
DIN No.:	05187893

KEY EXECUTIVES

Name :	Mr. Rajesh Mundra
Designation :	Account Department

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 29.09.2012

Names of Shareholders	No. of Shares
Readers Digest Association ING, USA	2017449
Readers Digest Association Far East Limited, Hong Kong	1
Total	2017450

As on 29.09.2012

Equity Share Break up (Percentage of Total Equity)

Category	Percentage
Foreign holdings( Foreign institutional investor(s), Foreign companie(s) Foreign financial institution(s), Non-resident Indian(s) or Overseas Corporate bodies or Others	100.00
Total	100.00

BUSINESS DETAILS

Line of Business :

The main business of" the company is to sell high quality information and education books and music and video products of the Reader's Digest brand.

GENERAL INFORMATION

No. of Employees :	Not Available [We tried to confirm the number of employees but no one is ready to part any information from the company management]
Bankers :	State Bank of Patiala, Shop No. 4, Mahapalika Market, MID Chowki, Link Road, Malad (West), Mumbai - 400064, Maharashtra, India

Banking Relations :	---
Auditors :
Name :	S R B C and Company Chartered Accountants
Address :	14th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West) , Mumbai – 400028, Maharashtra, India
Tel. No.:	91-22-61920000
Fax No.:	91-22-61921000
PAN No.:	ABSFS4151K
Holding Company :	Readers Digest Association INC. USA

CAPITAL STRUCTURE

As on 29.09.2012

Authorised Capital :

No. of Shares	Type	Value	Amount
2100000	Equity Shares	Rs.10/- each	Rs.21.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
2017450	Equity Shares	Rs.10/- each	Rs.20.175 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS	31.03.2012	31.03.2011
I. EQUITY AND LIABILITIES
(1)Shareholders' Funds
(a) Share Capital	20.175	20.175
(b) Reserves & Surplus	(112.944)	18.870
(c) Money received against share warrants	0.000	0.000
(2) Share Application money pending allotment	0.000	0.000
Total Shareholders’ Funds (1) + (2)	(92.769)	39.045
(3) Non-Current Liabilities
(a) long-term borrowings	0.000	0.000
(b) Deferred tax liabilities (Net)	0.000	0.000
(c) Other long term liabilities	0.000	0.000
(d) long-term provisions	0.622	0.425
Total Non-current Liabilities (3)	0.622	0.425
(4) Current Liabilities
(a) Short term borrowings	0.000	0.000
(b) Trade payables	444.450	318.432
(c) Other current liabilities	7.287	16.590
(d) Short-term provisions	33.300	25.415
Total Current Liabilities (4)	485.037	360.437
TOTAL	392.890	399.907
II. ASSETS
(1) Non-current assets
(a) Fixed Assets
(i) Tangible assets	0.438	1.280
(ii) Intangible Assets	0.000	0.000
(iii) Capital work-in-progress	0.000	0.000
(iv) Intangible assets under development	0.000	0.000
(b) Non-current Investments	0.000	0.000
(c) Deferred tax assets (net)	0.000	31.246
(d) Long-term Loan and Advances	40.216	34.478
(e) Other Non-current assets	0.000	0.000
Total Non-Current Assets	40.654	67.004
(2) Current assets
(a) Current investments	0.000	0.000
(b) Inventories	161.914	138.470
(c) Trade receivables	164.764	161.121
(d) Cash and cash equivalents	21.123	27.909
(e) Short-term loans and advances	3.811	5.403
(f) Other current assets	0.624	0.000
Total Current Assets	352.236	332.903
TOTAL	392.890	399.907

SOURCES OF FUNDS		31.03.2010
SHAREHOLDERS FUNDS
1] Share Capital		20.175
2] Share Application Money		0.000
3] Reserves & Surplus		34.526
4] (Accumulated Losses)		0.000
NETWORTH		54.701
LOAN FUNDS
1] Secured Loans		0.000
2] Unsecured Loans		0.000
TOTAL BORROWING		0.000
DEFERRED TAX LIABILITIES		0.000
TOTAL		54.701
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		2.783
Capital work-in-progress		0.000
INVESTMENT		0.000
DEFERREX TAX ASSETS		26.840
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	189.814
	Sundry Debtors	144.978
	Cash & Bank Balances	26.002
	Other Current Assets	0.000
	Loans & Advances	30.707
Total Current Assets		391.501
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	327.138
	Other Current Liabilities	12.822
	Provisions	26.463
Total Current Liabilities		366.423
Net Current Assets		25.078
MISCELLANEOUS EXPENSES		0.000
TOTAL		54.701

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2012	31.03.2011	31.03.2010
	SALES
		Income	493.155	596.497	559.977
		Other Income	0.977	3.913	0.941
		TOTAL	494.132	600.410	559.977
Less	EXPENSES
		Office Expenses
		Administrative Expenses	595.368	620.473	537.979
		Advertising Expenses
		TOTAL	595.368	620.473	537.979
	PROFIT / (LOSS) BEFORE TAX		(101.236)	(20.063)	21.998
Less	TAX		30.577	(4.406)	4.881
	PROFIT / (LOSS) AFTER TAX		(131.813)	(15.657)	17.117
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		18.869	34.526	17.409
	BALANCE CARRIED TO THE B/S		(112.944)	18.869	34.526
	EARNINGS IN FOREIGN CURRENCY
		Export F.O.B. Value	0.342	1.967	2.351
		Recovery Earnings		3.502	7.997
	TOTAL EARNINGS		0.342	5.469	10.348
	IMPORTS
		Trading Goods	210.489	172.976	204.246
		Promotion Material	0.147	4.486	5.219
	TOTAL IMPORTS		210.636	177.462	209.465
			2017450
	Earnings / (Loss) Per Share (Rs.)		(65.34)	(7.76)	NA

KEY RATIOS

PARTICULARS		31.03.2012	31.03.2011	31.03.2010
PAT / Total Income	(%)	(26.68)	(2.61)	3.06
Net Profit Margin (PBT/Sales)	(%)	(20.53)	(3.36)	3.93
Return on Total Assets (PBT/Total Assets}	(%)	(25.77)	(5.44)	5.58
Return on Investment (ROI) (PBT/Networth)		1.09	(0.51)	0.40
Debt Equity Ratio (Total Debt /Networth)		0.00	0.00	0.00
Current Ratio (Current Asset/Current Liability)		0.73	0.92	1.07

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	No
9]	Name of person contacted	No
10]	Designation of contact person	No
11]	Turnover of firm for last three years	Yes
12]	Profitability for last three years	Yes
13]	Reasons for variation <> 20%	----------------------
14]	Estimation for coming financial year	No
15]	Capital in the business	Yes
16]	Details of sister concerns	Yes
17]	Major suppliers	No
18]	Major customers	No
19]	Payments terms	No
20]	Export / Import details (if applicable)	No
21]	Market information	----------------------
22]	Litigations that the firm / promoter involved in	----------------------
23]	Banking Details	Yes
24]	Banking facility details	Yes
25]	Conduct of the banking account	----------------------
26]	Buyer visit details	----------------------
27]	Financials, if provided	Yes
28]	Incorporation details, if applicable	Yes
29]	Last accounts filed at ROC	Yes
30]	Major Shareholders, if available	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	No

Note:

The registered office of the company has been shifted from C-88/89, Paryavaran Complex, New Delhi – 110030, India to present address w.e.f. 01.01.2010

NATURE OF OPERATIONS

Subject was incorporated on June 2. 2005. The Company has received the foreign Investment promotion Board's (FIPB") approval on November 23. 2004 for the equity investment from its holding company. The main business of" the company is to sell high quality information and education books and music and video products of the Reader's Digest brand.

FUTURE OUTLOOK

As a fuil-tledged production hub of the parent company the Company is expected to continue to play an important role in the future plans of the parent company. As the operations of the parent company increase the company would also expand with additional hiring to meet additional delivery demands.

INDEX OF CHARGES

S.No.	Charge ID	Date of Charge Creation/Modification	Charge amount secured	Charge Holder	Address	Service Request Number (SRN)
1	10406593	28/01/2013	6,500,000.00	STATE BANK OF PATIALA	SHOP NO. 4, MAHAPALIKA MARKET, MID CHOWKI, LINK ROAD, MALAD (WEST), MUMBAI - 400064, MAHARASHTRA, INDIA	B69026797

* Date of charge modification

FIXED ASSETS

• Furniture and Fixture
• Motor Car
• Computer Equipment
• Office Equipment

AS PER WEBSITE

PRESS RELEASE

READER’S DIGEST FILES FOR BANKRUPTCY AGAIN

February 18, 2013

The parent company of the publisher of 91-year-old Reader’s Digest magazine has filed for its second bankruptcy in four years, as it seeks to slash $465m in debt amid wider pressure on print publications.

RDA Holdings, which went public in 1990, was taken private by investors led by private equity group Ripplewood Holdings in 2007 for $1.6bn and the assumption of about $800m in debt. RDA filed for bankruptcy in August 2009, blaming weaker advertising revenues and the debt load incurred in the take-private deal.

RDA said it has more than $1.1bn in assets and about $1.2bn in liabilities in Chapter 11 documents filed on Sunday in a US bankruptcy court in New York. One person close to the company said it was triggered by a cash flow issue. The company will continue publishing during its bankruptcy.

More than 70 per cent of its secured bondholders agreed to convert $465m of remaining senior notes to equity under a “prearranged” restructuring deal, which it hopes to complete within six months. This would enable the company to exit Chapter 11 with $100m in gross debt – an 80 per cent reduction.

Bob Guth, chief executive, said in a statement: “The Chapter 11 process, which will facilitate a significant debt reduction, will enable us to continue to redefine our business by focusing our resources on our strong North America publishing brands, which have shown a new vitality.”

RDA, which publishes 75 magazines globally including Reader’s Digest, a staple of doctor’s waiting rooms, was founded in 1922 by DeWitt and Lila Bell Wallace.

Plagued by the underperformance at its lifestyle and entertainment divisions, RDA hired bankers in 2011 to explore a sale. Instead Mr Guth – the company’s third chief executive since it emerged from that previous bankruptcy – divested individual publications to raise money, including the $175m sale of Allrecipes.com to Meredith Corporation last year and Weekly Reader to Scholastic Corporation.

In its latest quarterly earnings release, RDA blamed a decline in revenue – down more than 26 per cent year over year – on weaker European and Asian markets, as well as fewer customers buying its books and other home entertainment offerings.

In December, rating agency Moody’s downgraded the company, citing weak performance driven by economic conditions as well as the likely increase in leverage “that may lead to an unsustainable capital structure”. A Fitch report in August named RDA among 31 US companies that have previously defaulted and are at a risk of another as they struggle to resolve operating cost issues and reduce their debt load.

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.62.48
UK Pound	1	Rs.99.66
Euro	1	Rs.83.50

INFORMATION DETAILS

Report Prepared by :

NTH

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	2
PAID-UP CAPITAL	1~10	1
OPERATING SCALE	1~10	3
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	3
--PROFITABILIRY	1~10	1
--LIQUIDITY	1~10	2
--LEVERAGE	1~10	1
--RESERVES	1~10	1
--CREDIT LINES	1~10	1
--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	NO
--OTHER MERIT FACTORS	YES/NO	YES
DEFAULTER
--RBI	YES/NO	NO
--EPF	YES/NO	NO
TOTAL		15

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

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.