MIRA INFORM REPORT

Report Date :

14.02.2014

IDENTIFICATION DETAILS

Name :	VALMET CO., LTD.
Formerly Known As :	METSO PAPER [THAILAND] CO., LTD
Registered Office :	49/24 Moo 5, Laemchabang Industrial Estate, Thungsukhla, Sriracha, Chonburi 20230
Country :	Thailand
Financials (as on) :	31.12.2012
Date of Incorporation :	27.09.1996
Com. Reg. No.:	0205539006117
Legal Form :	Private Limited Company
Line of Business :	Manufacturing and assembling complete range of industrial machinery, equipment and parts for pulp & paper and fiber industries
No. of Employees :	180

RATING & COMMENTS

MIRA’s Rating :

Ba

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

Status :	Satisfactory
Payment Behaviour :	Slow but correct
Litigation :	Clear

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 – December 01, 2013

Country Name	Previous Rating (30.09.2013)	Current Rating (01.12.2013)
Thailand	B1	B1

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

THAILAND - ECONOMIC OVERVIEW

With a well-developed infrastructure, a free-enterprise economy, generally pro-investment policies, and strong export industries, Thailand achieved steady growth due largely to industrial and agriculture exports - mostly electronics, agricultural commodities, automobiles and parts, and processed foods. Thailand is trying to maintain growth by encouraging domestic consumption and public investment to offset weak exports in 2012. Unemployment, at less than 1% of the labor force, stands as one of the lowest levels in the world, which puts upward pressure on wages in some industries. Thailand also attracts nearly 2.5 million migrant workers from neighboring countries. The Thai government is implementing a nation-wide 300 baht ($10) per day minimum wage policy and deploying new tax reforms designed to lower rates on middle-income earners. The Thai economy has weathered internal and external economic shocks in recent years. The global economic crisis severely cut Thailand's exports, with most sectors experiencing double-digit drops. In 2009, the economy contracted 2.3%. However, in 2010, Thailand's economy expanded 7.8%, its fastest pace since 1995, as exports rebounded. In late 2011 growth was interrupted by historic flooding in the industrial areas in Bangkok and its five surrounding provinces, crippling the manufacturing sector. Industry recovered from the second quarter of 2012 onward with GDP growth at 5.5% in 2012. The government has approved flood mitigation projects worth $11.7 billion, which were started in 2012, to prevent similar economic damage, and an additional $75 billion for infrastructure over the next seven years with a plan to start in 2013

Source : CIA

Company name

VALMET CO., LTD.

[FORMER : METSO PAPER [THAILAND] CO., LTD.]

SUMMARY

BUSINESS ADDRESS : 49/24 MOO 5, LAEMCHABANG INDUSTRIAL ESTATE,

THUNGSUKHLA, SRIRACHA,

CHONBURI 20230, THAILAND

TELEPHONE : [66] 38 401-100-10

FAX : [66] 38 400-972, 38 400-970

E-MAIL ADDRESS : paper.servicethailand@metso.com

REGISTRATION ADDRESS : SAME AS BUSINESS ADDRESS

ESTABLISHED : 1996

REGISTRATION NO. : 0205539006117

TAX ID NO. : 3201058801

CAPITAL REGISTERED : BHT. 100,000,000

CAPITAL PAID-UP : BHT. 100,000,000

SHAREHOLDER’S PROPORTION : FINN : 100%

FISCAL YEAR CLOSING DATE : DECEMBER 31

LEGAL STATUS : PRIVATE LIMITED COMPANY

EXECUTIVE : MR. GIANNI DELLA BOSCA, AUSTRALIAN

MANAGING DIRECTOR

NO. OF STAFF : 180

LINES OF BUSINESS : PAPER ROLLERS AND RELATED PARTS

MANUFACTURER, DISTRIBUTOR AND EXPORTER

CORPORATE PROFILE

OPERATING TREND : STABLE

PRESENT SITUATION : OPERATING NORMALLY

REPUTATION : GOOD WITH NORMAL BUSINESS ENGAGEMENT

MANAGEMENT STANDARD : MANAGEMENT WITH GOOD PERFORMANCE

HISTORY

The subject was established on September 27, 1996 as a private limited company under the originally registered name “Valmet Technology Co., Ltd.” by Finn groups. On June 6, 2001, its registered name was changed to “Metso Paper [Thailand] Co., Ltd.”, and was finally changed to VALMET CO., LTD., on January 2, 2014. Its business objective is to manufacture, import and distribute complete range of machinery, equipment and related products for pulp & paper and fiber industries both domestic and overseas. It currently employs approximately 180 staff.

Subject is a wholly owned subsidiary of Metso Paper Inc., Finland.

The subject’s registered address is 49/24 Moo 5, Laemchabang Industrial Estate, Thungsukhla, Sriracha, Chonburi 20230, and this is the subject’s current operation address.

THE BOARD OF DIRECTOR

Name	Nationality	Age
Mr. Jani Antero Laurikainen	Finn	45
Mr. Hannu Tapani Pietila	Finn	51
Mr. Gianni Della Bosca	Australian	55
Mr. Pornpracha Wattanakijsiri	Thai	48

AUTHORIZED PERSON

Anyone of the above directors can sign on behalf of the subject with company’s affixed.

MANAGEMENT

Mr. Gianni Della Bosca is the Managing Director.

He is Australian nationality with the age of 55 years old.

Mr. Pornpracha Wattanakijsiri is the Assistant Managing Director.

He is Thai nationality with the age of 48 years old.

BUSINESS OPERATIONS

The subject is engaged in contracted manufacturing and assembling complete range of industrial machinery, equipment and parts for pulp & paper and fiber industries. Its business included manufacture and supply paper rolls and related equipment, as well as providing installation, maintenance and consulting services for paper machinery.

BRAND NAME

“VALMET”

PURCHASE

Most of raw materials and parts are imported from Finland, Germany, India, France, Republic of China and Taiwan.

MAJOR SUPPLIERS

Metso Paper Inc. : Finland

Valmet Corporation : Finland

SALES/SERVICES

The products are sold and serviced to manufacturers and end-users both local and overseas, such as Japan, Indonesia, Singapore, Korea, Taiwan, India, Republic of China and Australia.

MAJOR CUSTOMERS

Double A [1991] Public Company Limited : Thailand

SCG Paper Group : Thailand

Thai Paper Public Company Limited : Thailand

International Paper Packaging [Thailand] Co., Ltd. : Thailand

Panthong Paper Co., Ltd. : Thailand

SUBSIDIARY AND AFFILIATED COMPANY

The subject is not found to have any subsidiary or affiliated company here in Thailand.

LITIGATION

Bankruptcy and Receivership

There are no litigation on bankruptcy and receivership cases filed against the subject found at Legal Execution Department for the past five years.

Others

There are no legal suits filed against the subject according for the past two years.

CREDIT

Sales are by cash or on the credits term of 30-60 days.

Local bills are paid by cash or on the credits term of 30-60 days.

Imports are by L/C at sight or T/T.

Exports are against L/C at sight or T/T.

BANKING

Bangkok Bank Public Co., Ltd.

EMPLOYMENT

The subject employs approximately 180 staff.

LOCATION DETAILS

The premise is owned for administrative office and factory at the heading address. Premise is located in provincial/industrial area.

COMMENT

Subject’s business performance was slowdown during the year 2013 due to overall domestic industrial sector was contracted. Brisk local sales had seen during the year 2011-2012, however exports were active after the global economy started to recover, and has gradually improved that was helped off-set slow sales in domestic market.

FINANCIAL INFORMATION

The capital was registered at Bht. 100,000,000 divided into 1,000,000 shares of Bht. 100 each with fully paid.

THE SHAREHOLDERS LISTED WERE : [as at April 30, 2013]

NAME	HOLDING	%
Metso Paper Inc. Nationality: Finn Address : Finland	999,993	100.00
Mr. Visa Allan Kainu Nationality: Finn Address : Finland	1	-
Mr. Reiso Kalevi Louna Nationality: Finn Address : Finland	1	-
Mr. Mti Olavi Letonanz Nationality: Finn Address : Finland	1	-
Mr. Micco Tumu Tapio Zeitari Nationality: Finn Address : Finland	1	-
Mr. Jaral Henrich Burgenklein Nationality: Finn Address : Finland	1	-
Mr. Anurat Teeyaporn Nationality: Thai Address : 59/15-16 Sukhumvit 31 Rd., Klongton, Prakanong, Bangkok	1	-
Mr. Wisith Kanchanopas Nationality: Thai Address : 2142 Phaholyothin Rd., Ladyao, Jatujak, Bangkok	1	-

Total Shareholders : 8

Share Structure [as at April 30, 2013]

Nationality	Shareholders	No. of Share	% Shares
Thai	2	2	-
Foreign	6	999,998	100.00%
Total	8	1,000,000	100.00%

NAME OF AUDITOR & CERTIFIED PUBLIC ACCOUNTANT NO. :

Mr. Sophon Permsiriwallop No. 3182

BALANCE SHEET [BAHT]

The latest financial figures published for December 31, 2012, 2011 & 2010 were:

ASSETS

Current Assets	2012	2011	2010
Cash and Cash Equivalents	53,275,640	140,382,562	180,625,233
Trade Account & Other Receivable	168,988,042	108,541,029	95,576,797
Inventories	155,970,277	179,008,698	133,109,988
Other Current Assets	7,951,565	8,312,995	1,022,268
Total Current Assets	386,185,524	436,245,284	410,334,286
Investment in Related Company	45,888	45,888	45,888
Fixed Assets	165,367,050	154,866,542	119,125,693
Other Non-current Assets	3,746,753	3,183,753	3,031,753
Total Assets	555,345,215	594,341,467	532,537,620

LIABILITIES & SHAREHOLDERS' EQUITY [BAHT]

Current Liabilities	2012	2011	2010
Trade Account & Other Payable	200,030,532	403,586,144	169,722,182
Current Portion of Long-term Loan from Related Company	80,000,000	-	-
Accrued Income Tax	7,570,862	-	23,931,562
Reserve for Goods Warranty	18,917,000	15,058,000	11,222,000
Other Current Liabilities	8,213,023	3,651,877	3,973,524
Total Current Liabilities	314,731,417	422,296,021	208,849,268
Long-term Loan from Related Company - Net of Current Portion	45,000,000	-	-
Reserve for Long-term Employee Benefits	29,139,665	24,799,265	-
Total Liabilities	388,871,082	447,095,286	208,849,268
Shareholders' Equity
Share capital : Baht 100 value authorized, issued and fully paid share capital 1,000,000 shares	100,000,000	100,000,000	100,000,000
Capital Paid	100,000,000	100,000,000	100,000,000
Retained Earning Appropriated for Statutory Reserve	10,000,000	10,000,000	10,000,000
Unappropriated [Deficit]	56,474,133	37,246,181	213,688,352
Total Shareholders' Equity	166,474,133	147,246,181	323,688,352
Total Liabilities & Shareholders' Equity	555,345,215	594,341,467	532,537,620

PROFIT & LOSS ACCOUNT

Revenue	2012	2011	2010
Sales & Service Income	1,042,836,982	1,149,090,424	837,770,857
Other Income	13,848,576	18,917,613	4,300,848
Total Revenues	1,056,685,558	1,168,008,037	842,071,705
Expenses
Cost of Goods Sold & Service	731,765,547	775,193,949	558,148,660
Selling Expenses	78,064,000	178,485,000	57,747,381
Administrative Expenses	97,325,823	67,792,122	55,326,224
Other Expenses - Loss on Exchange Rate	65,375,427	58,025,776	18,506,830
Total Expenses	972,530,797	1,079,496,847	689,729,095
Profit / Loss] before Financial Cost & Income Tax	84,154,761	88,511,190	152,342,610
Financial Cost	[3,031,905]	[576,715]	-
Profit / [Loss] before Income Tax	81,122,856	87,934,475	152,342,610
Income Tax	[20,469,204]	[28,393,141]	[44,935,321]
Net Profit / [Loss]	60,653,652	59,541,334	107,407,289

FINANCIAL ANALYSIS

ITEM	UNIT	2012	2011	2010
LIQUIDITY RATIO
CURRENT RATIO	TIMES	1.23	1.03	1.96
QUICK RATIO	TIMES	0.71	0.59	1.32
ACTIVITY RATIO
FIXED ASSETS TURNOVER	TIMES	6.31	7.42	7.03
TOTAL ASSETS TURNOVER	TIMES	1.88	1.93	1.57
INVENTORY CONVERSION PERIOD	DAYS	77.80	84.29	87.05
INVENTORY TURNOVER	TIMES	4.69	4.33	4.19
RECEIVABLES CONVERSION PERIOD	DAYS	59.15	34.48	41.64
RECEIVABLES TURNOVER	TIMES	6.17	10.59	8.77
PAYABLES CONVERSION PERIOD	DAYS	99.77	190.03	110.99
CASH CONVERSION CYCLE	DAYS	37.17	(71.27)	17.70
PROFITABILITY RATIO
COST OF GOODS SOLD	%	70.17	67.46	66.62
SELLING & ADMINISTRATION	%	16.82	21.43	13.50
INTEREST	%	0.29	0.05	-
GROSS PROFIT MARGIN	%	31.16	34.18	33.89
NET PROFIT MARGIN BEFORE EX. ITEM	%	8.07	7.70	18.18
NET PROFIT MARGIN	%	5.82	5.18	12.82
RETURN ON EQUITY	%	36.43	40.44	33.18
RETURN ON ASSET	%	10.92	10.02	20.17
EARNING PER SHARE	BAHT	60.65	59.54	107.41
LEVERAGE RATIO
DEBT RATIO	TIMES	0.70	0.75	0.39
DEBT TO EQUITY RATIO	TIMES	2.34	3.04	0.65
TIME INTEREST EARNED	TIMES	27.76	153.47	-
ANNUAL GROWTH
SALES GROWTH	%	(9.25)	37.16
OPERATING PROFIT	%	(4.92)	(41.90)
NET PROFIT	%	1.87	(44.56)
FIXED ASSETS	%	6.78	30.00
TOTAL ASSETS	%	(6.56)	11.61

ANNUAL GROWTH : ACCEPTABLE

An annual sales growth is -9.25%. Turnover has decreased from THB 1,149,090,424.00 in 2011 to THB 1,042,836,982.00 in 2012. While net profit has increased from THB 59,541,334.00 in 2011 to THB 60,653,652.00 in 2012. And total assets has decreased from THB 594,341,467.00 in 2011 to THB 555,345,215.00 in 2012.

PROFITABILITY : SATISFACTORY

PROFITABILITY RATIO

Gross Profit Margin	31.16	Deteriorated	Industrial Average	110.78
Net Profit Margin	5.82	Satisfactory	Industrial Average	7.60
Return on Assets	10.92	Impressive	Industrial Average	10.72
Return on Equity	36.43	Impressive	Industrial Average	27.31

Gross Profit Margin used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. The company's figure is 31.16%. When compared with the industry average, the ratio of the company was lower. This indicated that company may have problems with control over its costs.

Net Profit Margin is the indicator of the company's efficiency in that net profit takes into consideration all expenses of the company. A low profit margin indicates a low margin of safety, higher risk that a decline in sales will erase profits and result in a net loss. The company's figure is 5.82%. When compared with the industry average, the ratio of the company was lower.

Return on Assets measures how efficiently profits are being generated from the assets employed in the business when compared with the ratios of firms in a similar business. A low ratio in comparison with industry averages indicates an inefficient use of business assets. Return on Assets ratio is 10.92%, higher figure when compared with those of its average competitors in the same industry, indicated that business was an efficient profit in a dominant position within its industry.

Return on Equity indicates how profitable a company is by comparing its net income to its average shareholders' equity, ROE measures how much the shareholders earned for their investment in the company. Return on Equity ratio is 36.43%, higher figure when compared with those of its average competitors in the same industry, indicated that business was an efficient profit in a dominant position within its industry.

Trend of the average competitors in the same industry for last 5 years

Return on Assets Uptrend

Return on Equity Uptrend

LIQUIDITY : ACCEPTABLE

LIQUIDITY RATIO

Current Ratio	1.23	Acceptable	Industrial Average	1.67
Quick Ratio	0.71
Cash Conversion Cycle	37.17

The Current Ratio is to ascertain whether a company's short-term assets are readily available to pay off its short-term liabilities. The company's figure is 1.23 times in 2012, increased from 1.03 times, then it is generally considered to have good short-term financial strength. When compared with the industry average, the ratio of the company was lower.

The Quick Ratio is a liquidity indicator that further refines the current ratio by measuring the amount of the most liquid current assets there are to cover current liabilities. The company's figure is 0.71 times in 2012, increased from 0.59 times, then the company has not enough current assets that presumably can be quickly converted to cash for pay financial obligations.

The Cash Conversion Cycle measures the number of days a company's cash is tied up in the production and sales process of its operations and the benefit from payment terms from its creditors. It meant the company could survive when no cash inflow was received from sale for 38 days.

Trend of the average competitors in the same industry for last 5 years

Current Ratio Uptrend

LEVERAGE : ACCEPTABLE

LEVERAGE RATIO

Debt Ratio	0.70	Acceptable	Industrial Average	0.56
Debt to Equity Ratio	2.34	Risky	Industrial Average	1.30
Times Interest Earned	27.76	Impressive	Industrial Average	-

Debt to Equity Ratio a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. A lower the percentage means that the company is using less leverage and has a stronger equity position.

Times Interest Earned measuring a company's ability to meet its debt obligations. Ratio is 27.76 higher than 1, so the company can pay interest expenses on outstanding debt.

Debt Ratio shows the proportion of a company's assets which are financed through debt. The company's figure is 0.7 greater than 0.5, most of the company's assets are financed through debt.

Trend of the average competitors in the same industry for last 5 years

Debt Ratio Uptrend

Times Interest Earned Stable

ACTIVITY : IMPRESSIVE

ACTIVITY RATIO

Fixed Assets Turnover	6.31	Impressive	Industrial Average	-
Total Assets Turnover	1.88	Impressive	Industrial Average	1.41
Inventory Conversion Period	77.80
Inventory Turnover	4.69	Satisfactory	Industrial Average	4.73
Receivables Conversion Period	59.15
Receivables Turnover	6.17	Impressive	Industrial Average	5.30
Payables Conversion Period	99.77

The company's Account Receivable Ratio is calculated as 6.17 and 10.59 in 2012 and 2011 respectively. This ratio measures the efficiency of the company in managing its trade debtors to generate revenue. A lower ratio may indicate over extension and collection problems. Conversely, a higher ratio may indicate an overtly stringent policy. In this case, the company's A/R ratio in 2012 decreased from 2011. This would suggest the company had deteriorated in the management of its debt collections.

Inventory Turnover in Days Ratio indicates the liquidity of inventory. It estimates the number of days that it will take to sell the current inventory. Inventory is particularly sensitive to change in business activities. The inventory turnover in days has decreased from 84 days at the end of 2011 to 78 days at the end of 2012. This represents a positive trend. And Inventory turnover has increased from 4.33 times in year 2011 to 4.69 times in year 2012.

The company's Total Asset Turnover is calculated as 1.88 times and 1.93 times in 2012 and 2011 respectively. This ratio is determined by dividing total assets into total sales turnover. The ratio measures the activity of the assets and the ability of the firm to generate sales through the use of the assets.

Trend of the average competitors in the same industry for last 5 years

Fixed Assets Turnover Stable

Total Assets Turnover Uptrend

Inventory Turnover Uptrend

Receivables Turnover Uptrend

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.62.27
UK Pound	1	Rs.103.46
Euro	1	Rs.84.87

INFORMATION DETAILS

Report Prepared by :

PDT

RATING EXPLANATIONS

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

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

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

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

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