MIRA INFORM REPORT

 

 

Report Date :

21.02.2014

 

IDENTIFICATION DETAILS

 

Name :

SONIC STEEL INDUSTRIES (M) SDN. BHD.

 

 

Formerly Known As :

SONIC MARKETING (M) SDN BHD

 

 

Registered Office :

16-2, Jalan 1/76c, Desa Pandan, 2nd Floor, 55100 Kuala Lumpur, Wilayah Persekutuan,

 

 

Country :

Malaysia

 

 

Financials (as on) :

31.12.2012

 

 

Date of Incorporation :

19.04.1995

 

 

Com. Reg. No.:

341157-T

 

 

Legal Form :

Private Limited

 

 

Line of Business :

Trading of building & hardware material & provision of services for shearing & slitting of steel coil

 

 

No. of Employees :

10 (2014)

 

RATING & COMMENTS

 

MIRA’s Rating :

Ca

 

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

 

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 – September 30, 2013

 

Country Name

Previous Rating

(30.06.2013)

Current Rating

(30.09.2013)

Malaysia

A2

A2

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

 

MALAYSIA - ECONOMIC OVERVIEW

 

Malaysia, a middle-income country, has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy. Under current Prime Minister NAJIB, Malaysia is attempting to achieve high-income status by 2020 and to move farther up the value-added production chain by attracting investments in Islamic finance, high technology industries, biotechnology, and services. NAJIB's Economic Transformation Program (ETP) is a series of projects and policy measures intended to accelerate the country's economic growth. The government has also taken steps to liberalize some services sub-sectors. The NAJIB administration also is continuing efforts to boost domestic demand and reduce the economy''s dependence on exports. Nevertheless, exports - particularly of electronics, oil and gas, palm oil and rubber - remain a significant driver of the economy. As an oil and gas exporter, Malaysia has profited from higher world energy prices, although the rising cost of domestic gasoline and diesel fuel, combined with strained government finances, has forced Kuala Lumpur to begin to reduce government subsidies. The government is also trying to lessen its dependence on state oil producer Petronas. The oil and gas sector supplies about 35% of government revenue in 2011. Bank Negera Malaysia (central bank) maintains healthy foreign exchange reserves, and a well-developed regulatory regime has limited Malaysia''s exposure to riskier financial instruments and the global financial crisis. Nevertheless, Malaysia could be vulnerable to a fall in commodity prices or a general slowdown in global economic activity because exports are a major component of GDP. In order to attract increased investment, NAJIB has raised possible revisions to the special economic and social preferences accorded to ethnic Malays under the New Economic Policy of 1970, but he has encountered significant opposition, especially from Malay nationalists and other vested interests

 

Source : CIA

 

 

 

 

 EXECUTIVE SUMMARY

 

 

REGISTRATION NO.

:

341157-T

COMPANY NAME

:

SONIC STEEL INDUSTRIES (M) SDN. BHD.

FORMER NAME

:

SONIC MARKETING (M) SDN BHD (16/10/1997)

INCORPORATION DATE

:

19/04/1995

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

16-2, JALAN 1/76C, DESA PANDAN, 2ND FLOOR, 55100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

BUSINESS ADDRESS

:

NO 6, JALAN TIAJ 2/7, TAMAN INDUSTRI ALAM JAYA, 42300 BANDAR PUNCAK ALAM, SELANGOR, MALAYSIA.

TEL.NO.

:

03-60386622

FAX.NO.

:

03-60383399

CONTACT PERSON

:

PREGALATHAN A/L VEERASAMY ( MANAGING DIRECTOR )

INDUSTRY CODE

:

46639

PRINCIPAL ACTIVITY

:

TRADING OF BUILDING & HARDWARE MATERIAL & PROVISION OF SERVICES FOR SHEARING & SLITTING OF STEEL COIL

AUTHORISED CAPITAL

:

MYR 1,000,000.00 DIVIDED INTO
ORDINARY SHARE 1,000,000.00 OF MYR 1.00 EACH.

ISSUED AND PAID UP CAPITAL

:

MYR 1,000,000.00 DIVIDED INTO
ORDINARY SHARES 1,000,000 CASH OF MYR 1.00 EACH.

SALES

:

MYR 9,835,323 [2012]

NET WORTH

:

MYR (450,089) [2012]

STAFF STRENGTH

:

10 [2014]

BANKER (S)

:

MALAYAN BANKING BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

POOR

PAYMENT

:

POOR

MANAGEMENT CAPABILITY

:

WEAK

COMMERCIAL RISK

:

MODERATE

CURRENCY EXPOSURE

:

MODERATE

GENERAL REPUTATION

:

SATISFACTORY

INDUSTRY OUTLOOK

:

AVERAGE GROWTH

 

 

HISTORY / BACKGROUND

 

The Subject is a private limited company and is allowed to have a minimum of one and a maximum of forty-nine shareholders. As a private limited company, the Subject must have at least two directors. A private limited company is a separate legal entity from its shareholders. As a separate legal entity, the Subject is capable of owning assets, entering into contracts, sue or be sued by other companies. The liabilities of the shareholders are to the extent of the equity they have taken up and the creditors cannot claim on shareholders' personal assets even if the Subject is insolvent. The Subject is governed by the Companies Act, 1965 and the company must file its annual returns, together with its financial statements with the Registrar of Companies.

The Subject is principally engaged in the (as a / as an) trading of building & hardware material & provision of services for shearing & slitting of steel coil.

The Subject is not listed on Bursa Malaysia (Malaysia Stock Exchange).

 

Share Capital History

Date

Authorised Shared Capital

Issue & Paid Up Capital

15/02/2013

MYR 1,000,000.00

MYR 1,000,000.00

 

The major shareholder(s) of the Subject are shown as follows :

 

Name

Address

IC/PP/Loc No

Shareholding

(%)

MS. GUNAVATHI A/P S RAMAKRISHNAN +

49, JALAN BU 7/7, BANDAR UTAMA, 47800 PETALING JAYA, SELANGOR, MALAYSIA.

620720-07-5308 6826170

516,666.00

51.67

MR. PREGALATHAN A/L VEERASAMY +

49, JALAN BU 7/7, BANDAR UTAMA, 47800 PETALING JAYA, SELANGOR, MALAYSIA.

621207-07-5141 6916792

483,334.00

48.33

---------------

------

1,000,000.00

100.00

============

=====

+ Also Director

 

The Subject's interest in other companies (Subsidiaries/Associates) are shown as follow :

 

Local No

Country

Company

(%)

As At

379209M

MALAYSIA

SONIC PROFILES (M) SDN. BHD.

100.00

29/03/2013




 

DIRECTORS

 

DIRECTOR 1

 

Name Of Subject

:

MR. PREGALATHAN A/L VEERASAMY

Address

:

49, JALAN BU 7/7, BANDAR UTAMA, 47800 PETALING JAYA, SELANGOR, MALAYSIA.

IC / PP No

:

6916792

New IC No

:

621207-07-5141

Date of Birth

:

07/12/1962

Nationality

:

MALAYSIAN

Date of Appointment

:

02/02/1996

 

DIRECTOR 2

 

Name Of Subject

:

MS. GUNAVATHI A/P S RAMAKRISHNAN

Address

:

49, JALAN BU 7/7, BANDAR UTAMA, 47800 PETALING JAYA, SELANGOR, MALAYSIA.

IC / PP No

:

6826170

New IC No

:

620720-07-5308

Date of Birth

:

20/07/1962

Nationality

:

MALAYSIAN

Date of Appointment

:

23/12/2002



MANAGEMENT

 

 

 

1)

Name of Subject

:

PREGALATHAN A/L VEERASAMY

Position

:

MANAGING DIRECTOR

 

2)

Name of Subject

:

MOHANASUNDARI A/P S RAJENDRAM

Position

:

HEAD OF PURCHASING

 

 

AUDITOR

 

Auditor

:

CH YAP & CO

Auditor' Address

:

16-1, JALAN 1/76C, DESA PANDAN, 1ST FLOOR, 55100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

 

 

 

COMPANY SECRETARIES

 

1)

Company Secretary

:

MS. ROSEMARY KU MENG LI

IC / PP No

:

H0414917

New IC No

:

620103-12-5656

Address

:

23, JALAN WANGSA BUDI 9, WANGSA MELAWATI, 53300 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

 

2)

Company Secretary

:

MR. CHAN WENG KAM

IC / PP No

:

A0591287

New IC No

:

661113-08-5417

Address

:

E11-2, KONDOMINIUM VILLA DUTA, JALAN MULIA 2/1, BUKTI ANTARABANGSA, 68000 AMPANG, SELANGOR, MALAYSIA.

 

 

 

BANKING


Banking relations are maintained principally with :

1)

Name

:

MALAYAN BANKING BHD

 

 

ENCUMBRANCE (S)

 

Charge No

Creation Date

Charge Description

Chargee Name

Total Charge

Status

1

15/02/2002

N/A

MALAYAN BANKING BERHAD

MYR 3,500,000.00

Unsatisfied

 

LEGAL CHECK AGAINST SUBJECT


* A check has been conducted in our databank againt the Subject whether the subject has been involved in any litigation. Our databank consists of 99% of the wound up companies in Malaysia.

No legal action was found in our databank.

No winding up petition was found in our databank.

 

DEFAULTER CHECK AGAINST SUBJECT


* We have checked through the Subject in our defaulters' database which comprised of debtors that have been blacklisted by our customers and debtors that have been placed or assigned to us for collection since 1990. Information was provided by third party where the debt amount can be disputed. Please check with creditors for confirmation as alleged debts may have been paid since recorded or are being disputed.

No blacklisted record & debt collection case was found in our defaulters' databank.

 

PAYMENT RECORD

 

 

SOURCES OF RAW MATERIALS:

Local

:

YES

Overseas

:

YES

Import Countries

:

KOREA,CHINA


The Subject refused to provide any name of trade/service supplier and we are unable to conduct any trade enquiry. However, from financial historical data we conclude that :

OVERALL PAYMENT HABIT

Prompt 0-30 Days

[

]

Good 31-60 Days

[

]

Average 61-90 Days

[

]

Fair 91-120 Days

[

]

Poor >120 Days

[

X

]



CLIENTELE

 

Local

:

YES

Domestic Markets

:

MALAYSIA

Overseas

:

YES

Export Market

:

ASIA

Credit Term

:

AS AGREED

Payment Mode

:

CHEQUES
CASH

Type of Customer

:

STEEL INDUSTRY,END USERS

 

 

OPERATIONS

 

Goods Traded

:

STEEL COILS AND SHEETS

Services

:

SLITTING, SHEARING OF STEEL

Member(s) / Affiliate(s)

:

MALAYSIAN IRON AND STEEL INDUSTRY FEDERATION (MISIF)

Ownership of premises

:

LEASED/RENTED

 

Total Number of Employees:

 

YEAR

2014

2012

2011

2010

2009

GROUP

N/A

N/A

N/A

N/A

N/A

COMPANY

10

10

10

5

2

 

Branch

:

NO

Other Information:


The Subject is principally engaged in the (as a / as an) trading of building & hardware material & provision of services for shearing & slitting of steel coil.

We were informed that the Subject cuts the steel coils according to the sizes required by its clients.

The steels coils and sheets are mainly used in metal-based manufacturing, engineering, construction and related industries.


CURRENT INVESTIGATION

 

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client

:

N/A

Current Telephone Number

:

03-60386622

Match

:

N/A

Address Provided by Client

:

NO.6, JALAN TIAJ 2/7, TAMAN INDUSTRI ALAM JAYA 42300 BANDAR PUNCAK ALAM SELANGOR DARUL EHSAN

Current Address

:

NO 6, JALAN TIAJ 2/7, TAMAN INDUSTRI ALAM JAYA, 42300 BANDAR PUNCAK ALAM, SELANGOR, MALAYSIA.

Match

:

YES

Latest Financial Accounts

:

YES

 

Other Investigations


we contacted one of the staff from the Subject and she provided some information.


FINANCIAL ANALYSIS

 

 

Profitability

Turnover

:

Decreased

[

0.39%

]

Profit/(Loss) Before Tax

:

Decreased

[

(83.24%)

]

Return on Shareholder Funds

:

Unfavourable

[

31.03%

]

Return on Net Assets

:

Unfavourable

[

2.89%

]

The lower turnover could be due to the unfavourable market conditions.The Subject could be more efficient in controlling its operating costs and had managed to reduce its losses during the year. Although the Subject's returns showed positive figures it is not reflective of the true situation. The Subject incurred losses during the year and its shareholders' funds have turned red. The positive returns on shareholders' funds is the result of losses divided by negative shareholders' funds. The Subject's management was inefficient in utilising the assets to generate returns.

Working Capital Control

Stock Ratio

:

Unfavourable

[

196 Days

]

Debtor Ratio

:

Unfavourable

[

96 Days

]

Creditors Ratio

:

Unfavourable

[

286 Days

]

The Subject could be incurring higher holding cost. As its capital was tied up in stocks, it could face liquidity problems. The Subject's debtors ratio was high. The Subject should tighten its credit control and improve its collection period. The unfavourable creditors' ratio could be due to the Subject taking advantage of the credit granted by its suppliers. However this may affect the goodwill between the Subject and its suppliers and the Subject may inadvertently have to pay more for its future supplies.

Liquidity

Liquid Ratio

:

Unfavourable

[

0.36 Times

]

Current Ratio

:

Unfavourable

[

0.95 Times

]

A low liquid ratio means that the Subject may be facing working capital deficiency. If the Subject cannot obtain additional financing or injection of fresh capital, it may face difficulties in meeting its short term obligations.

Solvency

Interest Cover

:

Unfavourable

[

(0.10 Times)

]

Gearing Ratio

:

Favourable

[

0.00 Times

]

The Subject incurred losses in the year. It did not generate sufficient income to service its interest.  If the situation does not improve, the Subject may be vulnerable to default in servicing the interest. The Subject had no gearing and hence it had virtually no financial risk. The Subject was financed by its shareholders' funds and internally generated fund. During the economic downturn, the Subject, having a zero gearing, will be able to compete better than those which are highly geared in the same industry.

Overall Assessment :

Although the Subject's turnover decreased, its losses also decreased during the year. This could be the result of more efficient control in its operating costs. Due to its weak liquidity position, the Subject will be faced with problems in meeting all its short term obligations if no short term loan is obtained or additional capital injected into the Subject. The Subject's interest cover was negative, indicating that it did not generate sufficient income to service its interest. If its result does not show impressive improvements or succeed obtaining short term financing or capital injection, it may not be able to service its interest and repay the loans. The Subject was a zero gearing company, it was solely dependant on its shareholders to provide funds to finance its business. The Subject has good chance of getting loans, if the needs arises.

Overall financial condition of the Subject : POOR

 

MALAYSIA ECONOMIC / INDUSTRY OUTLOOK

 

Major Economic Indicators:

2009

2010

2011

2012*

2013**

Population ( Million)

28.13

28.35

28.70

29.30

29.80

Gross Domestic Products ( % )

(0.5)

7.2

5.1

5.6

5.3

Domestic Demand ( % )

2.9

6.3

8.2

9.4

5.6

Private Expenditure ( % )

(2.7)

8.1

8.2

8.0

7.4

Consumption ( % )

0.7

6.7

7.1

1.0

5.7

Investment ( % )

(17.2)

17.7

12.2

11.7

13.3

Public Expenditure ( % )

5.2

3.8

8.4

13.3

1.2

Consumption ( % )

3.1

0.2

16.1

11.3

(1.2)

Investment ( % )

8.0

2.8

(0.3)

15.9

4.2

Balance of Trade ( MYR Million )

89,650

118,356

116,058

106,300

110,700

Government Finance ( MYR Million )

(28,450)

(40,482)

(45,511)

(42,297)

(39,993)

Government Finance to GDP / Fiscal Deficit ( % )

(4.8)

(5.6)

(5.4)

(4.5)

(4.0)

Inflation ( % Change in Composite CPI)

(5.2)

5.1

3.1

1.6

2.5

Unemployment Rate

4.5

3.9

3.3

3.2

3.0

Net International Reserves ( MYR Billion )

331

329

415

427

-

Average Risk-Weighted Capital Adequacy Ratio ( % )

2.87

2.20

3.50

2.20

-

Average 3 Months of Non-performing Loans ( % )

11.08

15.30

14.80

14.70

-

Average Base Lending Rate ( % )

5.53

6.30

6.60

6.53

-

Business Loans Disbursed( % )

10.5

14.7

15.3

32.2

-

Foreign Investment ( MYR Million )

22,156.8

22,517.9

23,546.1

26,230.4

-

Consumer Loans ( % )

-

-

-

-

-

Registration of New Companies ( No. )

41,578

44,148

45,455

45,441

-

Registration of New Companies ( % )

(0.1)

6.2

3.0

(0.0)

-

Liquidation of Companies ( No. )

39,075

25,585

132,476

-

-

Liquidation of Companies ( % )

39.6

(34.5)

417.8

-

-

Registration of New Business ( No. )

312,581

271,414

284,598

324,761

-

Registration of New Business ( % )

-

-

-

-

-

Business Dissolved ( No. )

19,345

19,738

20,121

-

-

Business Dissolved ( % )

2.4

2.0

1.9

-

-

Sales of New Passenger Cars (' 000 Unit )

486.3

543.6

535.1

552.2

-

Cellular Phone Subscribers ( Million )

30.1

32.8

35.3

38.5

-

Tourist Arrival ( Million Persons )

23.6

24.6

24.7

25.0

-

Hotel Occupancy Rate ( % )

58.0

63.0

60.6

62.4

-

Credit Cards Spending ( % )

12.8

14.1

15.6

12.6

-

Bad Cheque Offenders (No.)

36,667

33,568

32,627

26,982

-

Individual Bankruptcy ( No.)

16,228

18,119

19,167

19,575

-

Individual Bankruptcy ( % )

16.7

11.7

5.8

2.1

-

 

INDUSTRIES ( % of Growth ):

2009

2010

2011

2012*

2013**

Agriculture

0.4

2.1

5.9

0.6

2.4

Palm Oil

(1.1)

(3.4)

10.8

(2.8)

-

Rubber

(19.8)

9.9

6.1

(0.6)

-

Forestry & Logging

(5.9)

(3.3)

(7.6)

(2.2)

-

Fishing

5.5

5.6

2.1

(0.7)

-

Other Agriculture

9.0

7.9

7.1

6.4

-

Industry Non-Performing Loans ( MYR Million )

413.7

508.4

634.1

-

-

% of Industry Non-Performing Loans

1.3

2.1

3.2

-

-

Mining

(3.8)

0.2

(5.7)

1.5

2.7

Oil & Gas

2.1

0.5

(1.7)

-

-

Other Mining

-

-

-

-

-

Industry Non-performing Loans ( MYR Million )

44.2

49.7

46.5

-

-

% of Industry Non-performing Loans

0.1

0.1

0.1

-

-

Manufacturing #

(9.4)

11.4

4.7

4.2

4.9

Exported-oriented Industries

(19.0)

12.1

2.8

4.1

-

Electrical & Electronics

(30.3)

28.4

(4.9)

1.6

-

Rubber Products

(10.1)

25.3

15.4

3.6

-

Wood Products

(24.1)

20.1

(4.9)

4.6

-

Textiles & Apparel

(19.5)

(0.4)

14.8

(7.1)

-

Domestic-oriented Industries

(9.8)

16.3

6.5

8.6

-

Food, Beverages & Tobacco

0.2

3.0

4.2

-

-

Chemical & Chemical Products

(7.7)

16.2

5.5

9.9

-

Plastic Products

(9.1)

2.4

3.8

-

-

Iron & Steel

(32.7)

29.3

2.4

-

-

Fabricated Metal Products

(2.5)

14.9

25.2

-

-

Non-metallic Mineral

(15.5)

20.2

27.1

6.6

-

Transport Equipment

(13.5)

36.5

(10.4)

13.7

-

Paper & Paper Products

(5.0)

18.7

14.8

(7.8)

-

Crude Oil Refineries

0.2

(11.4)

9.3

-

-

Industry Non-Performing Loans ( MYR Million )

6,007.3

6,217.5

6,537.2

-

-

% of Industry Non-Performing Loans

18.3

23.8

25.7

-

-

Construction

5.8

5.1

4.4

15.5

11.2

Industry Non-Performing Loans ( MYR Million )

3,241.8

4,038.5

3,856.9

-

-

% of Industry Non-Performing Loans

9.9

10.7

10.2

-

-

Services

2.6

6.5

6.4

5.5

5.6

Electric, Gas & Water

0.4

8.5

5.6

4.8

-

Transport, Storage & Communication

1.6

7.7

6.5

7.3

-

Wholesale, Retail, Hotel & Restaurant

2.8

4.7

5.2

6.9

-

Finance, Insurance & Real Estate

3.8

6.1

6.3

6.5

-

Government Services

2.0

6.7

7.6

5.6

-

Other Services

4.4

4.2

5.4

5.7

-

Industry Non-Performing Loans ( MYR Million )

6,631.3

7,384.6

6,825.2

-

-

% of Industry Non-Performing Loans

20.2

25.7

23.4

-

-

* Estimate / Preliminary

** Forecast




 

INDUSTRY ANALYSIS

 

MSIC CODE

46639 : Wholesale of other construction materials, hardware, plumbing and heating equipment and supplies n.e.c.

INDUSTRY :

CONSTRUCTION

The construction sector consists of four subsectors: residential, non-residential, civil engineering and special trade works. During a period of rapid economic expansion, the sector generally outperforms Gross Domestic Product (GDP) growth.

Construction's contribution to gross domestic product (GDP) is expected to fall to 11.2% in 2013 from 15 % in 2012, with all subsectors registering steady growth. The sector is expected to benefit from the acceleration of ongoing construction activities, particularly from the Economic Transformation Programme (ETP) and Second Rolling Plan (RP2) construction-related projects. Of significance, exploration activities in O&G industries and major projects such as the electrified double-tracking between lpoh -Padang Besar, LPT2 Jabur - Kuala Terengganu, MRT and the River of Life are expected to drive the growth of the civil engineering subsector. The non-residential subsector is expected to expand spurred by the industrial building segment and the commencement of construction of the Tun Razak Exchange (TRX). The residential subsector is also projected to expand, albeit at a moderate pace, after recording several years of strong growth. Key housing development projects, particularly in Sungai Buloh and Bandar Malaysia in Sungai Besi, which are expected to commence in 2013, will support residential construction activities. According to the Minister of Finance, the domestic demand is expected to grow at 5.6% and will remain the main driver of growth in 2013 underpinned by strong private sector expenditure.

The industry is set to receive a further boost from a wave of new developments earmarked for 2013, including rail projects worth an estimated $52 billion that should be launched in the coming year. It was predicted that the growth in other sectors will largely drive Malaysia's economy but the construction sector's contribution to GDP could still remain stable. However, while the construction sector is expected to have a solid 2013, it remains hampered by a shortage of skilled labourers, with rapid growth in recent years triggering a drain on its workforce. In late November of 2012, the Builders Association Malaysia (MBAM) request the government to do more to facilitate the training of building workers or run the risk of supplyside bottlenecks delaying new projects.

OVERALL INDUSTRY OUTLOOK : Average Growth



CREDIT RISK EVALUATION & RECOMMENDATION

 


Incorporated in 1995, the Subject is a Private Limited company, focusing on trading of building & hardware material & provision of services for shearing & slitting of steel coil. Having been in the industry for over a decade, the Subject has achieved a certain market share and has built up a satisfactory reputation in the market. It should have received supports from its regular customers. With a weak shareholders' backing, the Subject's capital position is weak. Inadequate capital may be a constraint to the Subject as it limits its ability to expand its business in future.

Over the years, the Subject has penetrated into both the local and overseas market. The Subject has positioned itself in the global market and is competing in the industry. Its stable clientele base will enable the Subject to further enhance its business in the near term. Being a small company, the Subject's business operation is supported by 10 employees. Overall, we regard that the Subject's management capability is weak. Without capable management, the Subject is unlikely to be successful and often contribute to unacceptable levels of accountability. Weak management can affect productivity, profitability, sales growth and ultimately can result in the failure of a business.

Due to the challenging market conditions, the Subject's business performance seems to be deteriorating and losses incurred. The Subject has generated an unfavourable return on shareholders' funds indicating that the management was inefficient in utilising its funds to generate return. Due to its weak liquidity position, the Subject may face working capital deficiency in meeting its short term financial obligations if no fresh capital are injected into the Subject. The Subject's unfavourable financial performance over the years has wiped out its shareholders' funds to a deficit of MYR 450,089. Therefore, the Subject as a going concern is much dependent on its ability to generate sufficient cash flow and obtain additional financing to meet its future obligations.

Without a strong assets backing, the Subject may face difficulties in getting loans for its future expansion and continued growth. The Subject's supplier are from both the local and overseas countries. This will eliminates the risk of dependency on deliveries from a number of key suppliers and insufficient quantities of its raw materials.

The poor payment habit may affect the goodwill between the Subject and its suppliers and the Subject may inadvertently have to pay more for its future supplies.

The industry shows an upward trend and this trend is very likely to sustain in the near terms. Hence, the Subject is expected to benefit from the favourable outlook of the industry. However, the Subject does not take any advantage from this favourable condition as it is making losses in this few years. The Subject should adopt more competitive strategies to retain its business position in the market.

In view of above and due to its red shareholders' fund, we do not recommend any credit be granted to the Subject.

 



PROFIT AND LOSS ACCOUNT

 

 

THE FINANCIAL STATEMENTS WERE PREPARED IN ACCORDANCE WITH MALAYSIAN FINANCIAL REPORTING STANDARDS(FRS)

SONIC STEEL INDUSTRIES (M) SDN. BHD.

 

Financial Year End

2012-12-31

2011-12-31

Months

12

12

Consolidated Account

Company

Company

Audited Account

YES

YES

Unqualified Auditor's Report (Clean Opinion)

YES

YES

Financial Type

FULL

FULL

Currency

MYR

MYR

TURNOVER

9,835,323

9,874,214

----------------

----------------

Total Turnover

9,835,323

9,874,214

Costs of Goods Sold

(9,455,573)

(9,815,958)

----------------

----------------

Gross Profit

379,750

58,256

----------------

----------------

PROFIT/(LOSS) FROM OPERATIONS

(139,681)

(833,349)

----------------

----------------

PROFIT/(LOSS) BEFORE TAXATION

(139,681)

(833,349)

Taxation

-

291,501

----------------

----------------

PROFIT/(LOSS) AFTER TAXATION

(139,681)

(541,848)

----------------

----------------

RETAINED PROFIT/(LOSS) BROUGHT FORWARD

As previously reported

(1,310,408)

(768,560)

----------------

----------------

As restated

(1,310,408)

(768,560)

----------------

----------------

PROFIT AVAILABLE FOR APPROPRIATIONS

(1,450,089)

(1,310,408)

----------------

----------------

RETAINED PROFIT/(LOSS) CARRIED FORWARD

(1,450,089)

(1,310,408)

=============

=============

INTEREST EXPENSE (as per notes to P&L)

Others

126,656

262,177

----------------

----------------

126,656

262,177

=============

=============

 

 

 

BALANCE SHEET

 

 

SONIC STEEL INDUSTRIES (M) SDN. BHD.

 

ASSETS EMPLOYED:

FIXED ASSETS

3,542

8,077

----------------

----------------

TOTAL LONG TERM ASSETS

3,542

8,077

CURRENT ASSETS

Stocks

5,278,070

4,500,775

Trade debtors

2,573,937

2,567,743

Other debtors, deposits & prepayments

48,038

438,616

Amount due from director

221,502

224,185

Cash & bank balances

325,828

439,055

----------------

----------------

TOTAL CURRENT ASSETS

8,447,375

8,170,374

----------------

----------------

TOTAL ASSET

8,450,917

8,178,451

=============

=============

CURRENT LIABILITIES

Trade creditors

7,418,760

7,097,734

Other creditors & accruals

1,463,200

1,369,396

Amounts owing to director

19,046

21,729

----------------

----------------

TOTAL CURRENT LIABILITIES

8,901,006

8,488,859

----------------

----------------

NET CURRENT ASSETS/(LIABILITIES)

(453,631)

(318,485)

----------------

----------------

TOTAL NET ASSETS

(450,089)

(310,408)

=============

=============

SHARE CAPITAL

Ordinary share capital

1,000,000

1,000,000

----------------

----------------

TOTAL SHARE CAPITAL

1,000,000

1,000,000

RESERVES

Retained profit/(loss) carried forward

(1,450,089)

(1,310,408)

----------------

----------------

TOTAL RESERVES

(1,450,089)

(1,310,408)

----------------

----------------

SHAREHOLDERS' FUNDS/EQUITY

(450,089)

(310,408)

----------------

----------------

(450,089)

(310,408)

=============

=============

 

 

FINANCIAL RATIO

 

SONIC STEEL INDUSTRIES (M) SDN. BHD.

 

TYPES OF FUNDS

Cash

325,828

439,055

Net Liquid Funds

325,828

439,055

Net Liquid Assets

(5,731,701)

(4,819,260)

Net Current Assets/(Liabilities)

(453,631)

(318,485)

Net Tangible Assets

(450,089)

(310,408)

Net Monetary Assets

(5,731,701)

(4,819,260)

BALANCE SHEET ITEMS

Total Borrowings

0

0

Total Liabilities

8,901,006

8,488,859

Total Assets

8,450,917

8,178,451

Net Assets

(450,089)

(310,408)

Net Assets Backing

(450,089)

(310,408)

Shareholders' Funds

(450,089)

(310,408)

Total Share Capital

1,000,000

1,000,000

Total Reserves

(1,450,089)

(1,310,408)

LIQUIDITY (Times)

Cash Ratio

0.04

0.05

Liquid Ratio

0.36

0.43

Current Ratio

0.95

0.96

WORKING CAPITAL CONTROL (Days)

Stock Ratio

196

166

Debtors Ratio

96

95

Creditors Ratio

286

264

SOLVENCY RATIOS (Times)

Gearing Ratio

0.00

0.00

Liabilities Ratio

(19.78)

(27.35)

Times Interest Earned Ratio

(0.10)

(2.18)

Assets Backing Ratio

(0.45)

(0.31)

PERFORMANCE RATIO (%)

Operating Profit Margin

(1.42)

(8.44)

Net Profit Margin

(1.42)

(5.49)

Return On Net Assets

2.89

184.01

Return On Capital Employed

2.89

184.01

Return On Shareholders' Funds/Equity

31.03

174.56

Dividend Pay Out Ratio (Times)

0.00

0.00

NOTES TO ACCOUNTS

Contingent Liabilities

0

0

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.62.28

UK Pound

1

Rs.103.84

Euro

1

Rs.85.70

 

 

INFORMATION DETAILS

 

Report Prepared by :

NIS

 

 

RATING EXPLANATIONS

 

RATING

STATUS

 

 

PROPOSED CREDIT LINE

>86

Aaa

Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums

 

Unlimited

71-85

Aa

Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums

 

Large

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

 

Fairly Large

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

 

Satisfactory

26-40

B

Capability to overcome financial difficulties seems comparatively below average.

 

Small

11-25

Ca

Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity

 

Limited with full security

<10

C

Absolute credit risk exists. Caution needed to be exercised

 

 

Credit not recommended

--

NB

New Business

 

--

 

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

 

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

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

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.