MIRA INFORM REPORT

Report No. :	317083
Report Date :	21.04.2015

IDENTIFICATION DETAILS

Name :	SUGNOMAL SDN. BHD.
Registered Office :	29, Jalan Tuanku Abdul Rahman, 50100 Kuala Lumpur, Wilayah Persekutuan
Country :	Malaysia
Financials (as on) :	31.10.2013
Date of Incorporation :	27.08.1993
Com. Reg. No.:	275098-U
Legal Form :	Private Limited
LINE OF BUSINESS :	TRADING OF FABRICS & TEXTILES
No of Employees :	10 [2015]

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 :	No Complaints
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 31, 2014

Country Name	Previous Rating (30.09.2014)	Current Rating (31.12.2014)
Malaysia	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low Risk	A2
Moderate Low Risk	B1
Moderate Risk	B2
Moderate High Risk	C1
High Risk	C2
Very High Risk	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 sustained budget deficits, has forced Kuala Lumpur to begin to address fiscal shortfalls, through initial reductions in energy and sugar subsidies and the announcement of the 2015 implementation of a 6% goods and services tax. Falling global oil prices in the second half of 2014 have shrunk Malaysia’s current account surplus and put downward pressure on the ringgit. The government is also trying to lessen its dependence on state oil producer Petronas. The oil and gas sector supplies about 32% of government revenue in 2013. Bank Negara 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 earlier raised possible revisions to the special economic and social preferences accorded to ethnic Malays under the New Economic Policy of 1970, but retreated in 2013 after he encountered significant opposition from Malay nationalists and other vested interests. In September 2013 NAJIB launched the new Bumiputra Economic Empowerment Program (BEEP), policies that favor and advance the economic condition of ethnic Malays. Malaysia is a member of the 12-nation Trans-Pacific Partnership free trade agreement negotiations and, with the nine other ASEAN members, will form the ASEAN Economic Community in 2015.

Source : CIA

EXECUTIVE SUMMARY

REGISTRATION NO.

:

275098-U

COMPANY NAME

:

SUGNOMAL SDN. BHD.

FORMER NAME

:

N/A

INCORPORATION DATE

:

27/08/1993

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

29, JALAN TUANKU ABDUL RAHMAN, 50100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

BUSINESS ADDRESS

:

29, JALAN TUANKU ABDUL RAHMAN, 50100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

TEL.NO.

:

03-26935039

FAX.NO.

:

03-26930286

CONTACT PERSON

:

JAIKISHIN SUGNOMAL ASWANI ( DIRECTOR )

INDUSTRY CODE

:

46411

PRINCIPAL ACTIVITY

:

TRADING OF FABRICS & TEXTILES

AUTHORISED CAPITAL

:

MYR 5,000,000.00 DIVIDED INTO
ORDINARY SHARE 5,000,000.00 OF MYR 1.00 EACH.

ISSUED AND PAID UP CAPITAL

:

MYR 4,700,000.00 DIVIDED INTO
ORDINARY SHARES 500,000 CASH AND 4,200,000 OTHERWISE OF MYR 1.00 EACH.

SALES

:

MYR 9,040,348 [2013]

NET WORTH

:

MYR 5,085,541 [2013]

STAFF STRENGTH

:

10 [2015]

BANKER (S)

:

AFFIN BANK BERHAD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

FAIR

PAYMENT

:

GOOD

MANAGEMENT CAPABILITY

:

AVERAGE

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 fabrics & textiles.

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

Share Capital History

Date	Authorised Shared Capital	Issue & Paid Up Capital
30/04/2014	MYR 5,000,000.00	MYR 4,700,000.00
13/05/1994	MYR 2,000,000.00	MYR 500,000.00
27/08/1993	MYR 2,000,000.00	MYR 3.00

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

Name	Address	IC/PP/Loc No	Shareholding	(%)
MR. JAIKISHIN SUGNOMAL ASWANI +	29, JALAN TUANKU ABDUL RAHMAN, 50100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.	470214-75-5027 2034641	4,699,999.00	100.00
SAMEER JAIKISHIN ASWANI +	29, JALAN TUANKU ABDUL RAHMAN, 50100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.	7534837A	1.00	0.00
			---------------	------
			4,700,000.00	100.00
			============	=====

+ Also Director

DIRECTORS

DIRECTOR 1

Name Of Subject	:	SAMEER JAIKISHIN ASWANI
Address	:	29, JALAN TUANKU ABDUL RAHMAN, 50100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.
IC / PP No	:	7534837A
Nationality	:	SINGAPOREAN
Date of Appointment	:	18/09/2006

DIRECTOR 2

Name Of Subject	:	MR. JAIKISHIN SUGNOMAL ASWANI
Address	:	29, JALAN TUANKU ABDUL RAHMAN, 50100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.
IC / PP No	:	2034641
New IC No	:	470214-75-5027
Date of Birth	:	14/02/1947
Date of Appointment	:	27/08/1993

MANAGEMENT

1)	Name of Subject	:	JAIKISHIN SUGNOMAL ASWANI
	Position	:	DIRECTOR

AUDITOR

Auditor	:	MESSRS ANANTHAN CHELLIAH & ASSOCIATES
Auditor' Address	:	223-1A & 234-1A, JALAN HARUAN 5/6, PUSAT KOMERSIAL OAKLAND II, 70300 SEREMBAN, NEGERI SEMBILAN, MALAYSIA.

COMPANY SECRETARIES

1)	Company Secretary	:	MR. GERARD THIAGARAJAN A/L RAJARATNAM
	IC / PP No	:	2777408
	New IC No	:	461002-10-5861
	Address	:	12, JALAN SS 12/3A, SS12, 47500 SUBANG JAYA, SELANGOR, MALAYSIA.

BANKING

Banking relations are maintained principally with :

1)

Name

:

AFFIN BANK BERHAD

ENCUMBRANCE (S)

Charge No	Creation Date	Charge Description	Chargee Name	Total Charge	Status
1	19/08/1999	N/A	AFFIN ABNK BERHAD	MYR 2,000,000.00	Satisfied
2	06/09/2002	FIXED AND FLOATING, DEBENTURE	BUMIPUTRA COMMERCE BANK BERHAD	MYR 2,000,000.00	Unsatisfied
3	02/03/2005	LETTER OF SET OFF, DEBENTURE AND LETTER OF INDEMNITY	BUMIPUTRACOMMERCE BANK BERHAD	MYR 500,000.00	Unsatisfied
4	22/02/2012	FIXED AND FLOATING	CIMB BANK BERHAD	MYR 950,000.00	Unsatisfied
5	10/01/2014	FACILITIES AGREEMENT, DEED OF ASSIGNMENT AND POWER OF ATTORNEY	RHB BANK BERHAD	-	Unsatisfied

LITIGATION CHECK AGAINST SUBJECT

* A check has been conducted in our databank against 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.

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

PAYMENT RECORD

SOURCES OF RAW MATERIALS:
Local	:	YES
Overseas	:	YES

Majority of the Subject's fabrics are sourced from overseas suppliers including from Japan, China, India, Taiwan and others. Besides this, the Subject also sources from local suppliers.

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	[	X	]	Average 61-90 Days	[	]
Fair 91-120 Days	[	]	Poor >120 Days	[		]

CLIENTELE

Local	:	YES	Percentage	:	100%
Domestic Markets	:	MALAYSIA
Overseas	:	NO
Credit Term	:	30 - 60 DAYS
Payment Mode	:	CHEQUES

OPERATIONS

Goods Traded

:

FABRICS & TEXTILES

Total Number of Employees:
YEAR	2015	2013
GROUP	N/A	N/A
COMPANY	10	10

Branch

:

NO

Other Information:

The Subject is principally engaged in the (as a / as an) trading of fabrics & textiles.

The Subject sells variety of fabrics from various countries.

The Subject also shows samples of the textiles traded for customers' view.

The Subject sells fabrics such as cotton, linen and others.

CURRENT INVESTIGATION

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client	:	006598197044
Current Telephone Number	:	03-26935039
Match	:	YES
Address Provided by Client	:	29D, JLN TUANKU ABDUL RAHMAN 50100, KUALALAMPUR, MALAYSIA
Current Address	:	29, JALAN TUANKU ABDUL RAHMAN, 50100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.
Match	:	NO
Latest Financial Accounts	:	YES

Other Investigations

We contacted one of the staff from the Subject and he provided some information.

The address provided does not belong to the Subject.

FINANCIAL ANALYSIS

Profitability
Turnover	:	Erratic	[	2009 - 2013	]
Profit/(Loss) Before Tax	:	Increased	[	2009 - 2013	]
Return on Shareholder Funds	:	Acceptable	[	19.99%	]
Return on Net Assets	:	Acceptable	[	29.78%	]
The fluctuating turnover reflects the fierce competition among the existing and new market players. The higher profit could be attributed to the increase in turnover. The Subject's management had generated acceptable return for its shareholders using its assets.
Working Capital Control
Stock Ratio	:	Favourable	[	46 Days	]
Debtor Ratio	:	Unfavourable	[	76 Days	]
Creditors Ratio	:	Favourable	[	1 Days	]
The Subject's stocks were moving fast thus reducing its holding cost. This had reduced funds being tied up in stocks. The high debtors' ratio could indicate that the Subject was weak in its credit control. However, the Subject could also giving longer credit periods to its customers in order to boost its sales or to capture / retain its market share. The Subject had a favourable creditors' ratio where the Subject could be taking advantage of the cash discounts and also wanting to maintain goodwill with its creditors.
Liquidity
Liquid Ratio	:	Acceptable	[	0.86 Times	]
Current Ratio	:	Unfavourable	[	1.07 Times	]
The Subject's liquid ratio was slightly low. This could indicate that the Subject's working capital was slightly deficient. The Subject will have to improve its liquidity position either by obtaining short term financing or increase its paid up capital so that it can meet all its short term obligations as and when they fall due.
Solvency
Interest Cover	:	Acceptable	[	3.40 Times	]
Gearing Ratio	:	Unfavourable	[	1.03 Times	]
The Subject's interest cover was slightly low. If there is no sharp fall in its profit or sudden increase in the interest rates, we believe the Subject is able to generate sufficient income to service its interest and repay the loans. The Subject was highly geared, thus it had a high financial risk. The Subject was dependent on loans to finance its business needs. In times of economic downturn and / or high interest rate, the Subject will become less profitable and competitive than other firms in the same industry, which are lowly geared. This is because the Subject has to service the interest and to repay the loan, which will erode part of its profits. The profits will fluctuate depending on the Subject's turnover and the interest it needs to pay.
Overall Assessment :
Although the turnover was erratic, the Subject had maintained a steady growth in its profit. This indicate the management's efficiency in controlling its costs and profitability. The Subject's liquidity was at an acceptable range. If the Subject is able to obtain further short term financing, it should be able to meet all its short term obligations. The Subject had an acceptable interest cover. If there is no sudden sharp increase in interest rate or fall in the Subject's profit, we do believe the Subject is able to generate sufficient cash flow to service its interest payment. The Subject's gearing level was high and its going concern will be in doubt if there is no injection of additional shareholders' funds in times of economic downturn and / or high interest rates.
Overall financial condition of the Subject : FAIR

MALAYSIA ECONOMIC / INDUSTRY OUTLOOK

Major Economic Indicators:	2011	2012	2013	2014*	2015**
Population ( Million)	28.7	29.3	29.8	30.3	30.5
Gross Domestic Products ( % )	5.1	5.6	5.3	6.0	6.0
Domestic Demand ( % )	8.2	9.4	5.6	6.4	6.2
Private Expenditure ( % )	8.2	8.0	8.6	7.9	6.9
Consumption ( % )	7.1	1.0	5.7	6.5	5.6
Investment ( % )	12.2	11.7	13.3	12.0	10.7
Public Expenditure ( % )	8.4	13.3	4.4	2.3	4.2
Consumption ( % )	16.1	11.3	(1.2)	2.1	3.8
Investment ( % )	(0.3)	15.9	4.2	2.6	4.7
Balance of Trade ( MYR Million )	116,058	106,300	71,298	52,314	-
Government Finance ( MYR Million )	(45,511)	(42,297)	(39,993)	(37,291)	-
Government Finance to GDP / Fiscal Deficit ( % )	(5.4)	(4.5)	(4.0)	(3.5)	(3.0)
Inflation ( % Change in Composite CPI)	3.1	1.6	2.5	3.3	4.0
Unemployment Rate	3.3	3.2	3.0	3.0	3.0
Net International Reserves ( MYR Billion )	415	427	-	417	-
Average Risk-Weighted Capital Adequacy Ratio ( % )	3.50	2.20	-	-	-
Average 3 Months of Non-performing Loans ( % )	14.80	14.70	-	-	-
Average Base Lending Rate ( % )	6.60	6.53	6.53	-	-
Business Loans Disbursed( % )	15.3	32.2	-	-	-
Foreign Investment ( MYR Million )	23,546.1	26,230.4	38,238.0	-	-
Consumer Loans ( % )	-	-	-	-	-
Registration of New Companies ( No. )	45,455	45,441	46,321	-	-
Registration of New Companies ( % )	3.0	(0.0)	1.9	-	-
Liquidation of Companies ( No. )	132,485	17,092	26,430	-	-
Liquidation of Companies ( % )	417.8	(87.1)	54.6	-	-
Registration of New Business ( No. )	284,598	324,761	329,895	-	-
Registration of New Business ( % )	5.0	14.0	2.0	-	-
Business Dissolved ( No. )	20,121	20,380	18,161	-	-
Business Dissolved ( % )	1.9	1.3	(10.9)	-	-
Sales of New Passenger Cars (' 000 Unit )	535.1	552.2	576.7	598.4	610.3
Cellular Phone Subscribers ( Million )	35.3	38.5	43.0	43.8	-
Tourist Arrival ( Million Persons )	24.7	25.0	25.7	28.0	-
Hotel Occupancy Rate ( % )	60.6	62.4	62.6	-	-
Credit Cards Spending ( % )	15.6	12.6	-	-	-
Bad Cheque Offenders (No.)	32,627	26,982	28,876	-	-
Individual Bankruptcy ( No.)	19,167	19,575	21,984	-	-
Individual Bankruptcy ( % )	5.8	2.1	12.3	-	-

INDUSTRIES ( % of Growth ):	2011	2012	2013	2014*	2015**
Agriculture	5.8	1.0	2.1	3.8	3.1
Palm Oil	10.8	(0.3)	2.6	6.7	-
Rubber	6.1	(7.9)	(10.1)	(10.4)	-
Forestry & Logging	(7.6)	(4.5)	(7.8)	(4.2)	-
Fishing	2.1	4.3	1.6	2.7	-
Other Agriculture	7.1	6.4	8.2	6.2	-
Industry Non-Performing Loans ( MYR Million )	634.1	-	-	-	-
% of Industry Non-Performing Loans	3.2	-	-	-	-
Mining	(5.4)	1.4	0.9	(0.8)	2.8
Oil & Gas	(1.7)	-	-	-	-
Other Mining	-	-	-	-	-
Industry Non-performing Loans ( MYR Million )	46.5	-	-	-	-
% of Industry Non-performing Loans	0.1	-	-	-	-
Manufacturing #	4.7	4.8	3.4	6.6	5.5
Exported-oriented Industries	4.1	6.5	3.3	5.6	-
Electrical & Electronics	(4.0)	12.7	6.9	13.3	-
Rubber Products	20.7	3.0	11.7	(0.3)	-
Wood Products	(5.1)	8.7	(2.7)	5.1	-
Textiles & Apparel	13.2	(7.1)	(2.6)	11.5	-
Domestic-oriented Industries	10.7	1.7	6.8	9.4	-
Food, Beverages & Tobacco	4.80	2.70	3.60	6.13	6.13
Chemical & Chemical Products	10.0	10.8	5.6	-	-
Plastic Products	3.8	-	-	-	-
Iron & Steel	2.2	(6.6)	5.0	0.1	-
Fabricated Metal Products	21.8	13.8	9.9	2.9	-
Non-metallic Mineral	12.1	2.9	(2.0)	5.4	-
Transport Equipment	12.0	3.4	13.8	22.9	-
Paper & Paper Products	9.5	3.1	1.8	4.7	-
Crude Oil Refineries	9.3	-	-	-	-
Industry Non-Performing Loans ( MYR Million )	6,537.2	-	-	-	-
% of Industry Non-Performing Loans	25.7	-	-	-	-
Construction	4.7	18.6	10.9	12.7	10.7
Industry Non-Performing Loans ( MYR Million )	3,856.9	-	-	-	-
% of Industry Non-Performing Loans	10.2	-	-	-	-
Services	7.1	6.4	5.9	5.9	5.6
Electric, Gas & Water	3.5	4.4	4.2	3.6	3.9
Transport, Storage & Communication	6.50	7.10	7.30	7.50	7.15
Wholesale, Retail, Hotel & Restaurant	5.2	4.7	5.9	6.9	6.5
Finance, Insurance & Real Estate	6.90	9.70	3.70	4.65	4.25
Government Services	12.4	9.4	8.3	6.1	5.6
Other Services	5.1	3.9	5.1	4.8	4.5
Industry Non-Performing Loans ( MYR Million )	6,825.2	-	-	-	-
% of Industry Non-Performing Loans	23.4	-	-	-	-
* Estimate / Preliminary
** Forecast
# Based On Manufacturing Production Index

INDUSTRY ANALYSIS

MSIC CODE
46411 : Wholesale of yarn and fabrics
INDUSTRY :	TRADING
The wholesale and retail trade is expected to increase 7.1% in 2015 (2014: 7.7%) driven by strong domestic consumption and higher tourist arrivals following the Malaysia Year of Festivals 2015. Besides, in 2014, the wholesale and retail trade subsector is expected to increase 7.7% (2013: 6.4%) supported by strong domestic consumption.
According to Retail Group Malaysia (RGM), the pharmacy and personal care sub-sector had slow growth rate of 2.6% for the first quarter of 2014, while "other specialty stores" grew at a rate of 3.5%. During the first quarter of 2014, fashion and fashion accessories recorded a sustainable growth of 6.3% as compared with the same period last year (3.6%).
The retail segment increased 10.1% (January - June 2013: 7.1%) attributed to brisk sales in retail outlets such as hypermarkets and large-scale superstores. Since the launch of the Small Retailer Transformation programme (TUKAR) in January 2011 up to end-July 2014, 1,761 small retailer stores (end-July 2013: 1,381) have been modernized to improve their competitiveness. In addition, the strong growth of the retail segment was supported by 1Malaysia Unified Sales held from 29 June 2014 to 1 September 2014 to attract foreign and local tourists to shop in Malaysia. Meanwhile, the wholesale segment expanded 8.2% (January - June 2013: 4.9%) due to higher sales of non-agricultural intermediate products, such as petrol, diesel, lubricants and household goods. Furthermore, food and beverage outlets, laundry outlets, car wash centres, abd health and beauty outlets took a hit from the water rationing in the Klang Valley since February this year.
On the other hand, in 2014, Malaysia's total trade is expected to grow 5.2% to RM1.44 trillion (2013: 4.5%; RM1.37 trillion) underpinned by recovery in key advanced economies, resilient regional demand, and partly due to the base effect arising from sluggish exports in the corresponding period last year. Gross exports are anticipated to expand 6% to RM762.8 billion while import decreased 4.3% to RM677.2 billion (2013: 2.4%; RM719.8 billion; 7%; RM 649.1 billion). Consequently, the trade surplus is expected to be higher at RM85.6 billion or 7.9% of GDP in 2014 (2013: RM70.7 billion; 7.2%).
Furthermore, gross exports rebounded by 10.7% to RM441.3 billion during the first seven months of 2014 (January - July 2013: -2.8%; RM398.5 billion), with manufactured and mining exports rising at a double digit pace of 11.4% and 12.5%. Shipment of agriculture products grew at a slower pace of 2.7%, primarily due to lower receipts of crude rubber (-24.6%) while export growth of other commodities remained steady. Consequently, exports of manufactured and mining products are expected to grow 6.1% and 6.4% in 2014 (2013: 5.1%; 3.3%). Meanwhile, agriculture exports are expected to rebound sharply by 4.5% in 2014 (2013: -14.4%) despite moderating commodity prices. Malaysia's top 3 trading partners are China, Singapore, and Japan.
Over 60% of Gross Domestic Product (GDP) is contributed by domestic consumption. Therefore the wholesale and retail sector plays a crucial role in driving Malaysia's growth over the next decade despite the ongoing global economic slowdown. By 2020, Malaysia's wholesale and retail sector is expected to boost the country's total Gross National Income (GNI) by RM156 billion, creating 454,190 new jobs.
OVERALL INDUSTRY OUTLOOK : Average Growth

CREDIT RISK EVALUATION & RECOMMENDATION

Incorporated in 1993, the Subject is a Private Limited company, focusing on trading of fabrics & textiles. The Subject has been in business for over two decades. It has built up a strong clientele base and satisfactory reputation will enable the Subject to further enhance its business in the near term. The Subject is expected to enjoy a stable market shares. A paid up capital of MYR 4,700,000 allows the Subject to expand its business more comfortably. We considered that the Subject's business position in the market is much dependent on the efforts of its directors.

Over the years, the Subject should have build up its clientele base and received supports from its regular customers. Investigation revealed that the Subject's interest lies mostly in the local market. Thus, any adverse changes to the local economy might have a negative impact on the Subject's business performance. Being a small company, the Subject's business operation is supported by 10 employees. Overall, we regard that the Subject's management capability is average. This indicates that the Subject has greater potential to improve its business performance and raising income for the Subject.

Despite the lower turnover, the Subject's pre-tax profit have increased compared to the previous year. The higher profit could be due to better control of its operating costs and efficiency in utilising its resources. Return on shareholders' funds of the Subject was at an acceptable range which indicated that the management was efficient in utilising its funds to generate income. The Subject managed to maintain an adequate liquidity level, indicating that the Subject has the ability to meet its financial obligations. The high gearing ratio clearly implied that the Subject was supported by more debt than equity. Thus, the Subject is exposed to high financial risk. Given a positive net worth standing at MYR 5,085,541, the Subject should be able to maintain its business in the near terms.

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. Overall the Subject has a good control over its resources.

Overall, the Subject's payment habit is good as the Subject has a good credit control and it could be taking advantage of the cash discounts while maintaining a good reputation with its creditors.

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.

Based on the above condition, we recommend credit be granted to the Subject normally.

PROFIT AND LOSS ACCOUNT

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

SUGNOMAL SDN. BHD.

Financial Year End	2013-10-31	2012-10-31	2011-10-31	2010-10-31	2009-10-31
Months	12	12	12	12	12
Consolidated Account	Company	Company	Company	Company	Company
Audited Account	YES	YES	YES	YES	YES
Unqualified Auditor's Report (Clean Opinion)	YES	YES	YES	YES	YES
Financial Type	FULL	FULL	FULL	SUMMARY	SUMMARY
Currency	MYR	MYR	MYR	MYR	MYR
TURNOVER	9,040,348	14,482,820	13,794,159	9,691,085	10,860,155
	----------------	----------------	----------------	----------------	----------------
Total Turnover	9,040,348	14,482,820	13,794,159	9,691,085	10,860,155
Costs of Goods Sold	(7,766,398)	(12,078,425)	(11,026,601)	-	-
	----------------	----------------	----------------	----------------	----------------
Gross Profit	1,273,950	2,404,395	2,767,558	-	-
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) FROM OPERATIONS	1,077,868	276,282	234,408	275,659	207,814
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) BEFORE TAXATION	1,077,868	276,282	234,408	275,659	207,814
Taxation	(61,170)	(69,723)	(66,181)	(107,603)	(76,190)
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) AFTER TAXATION	1,016,698	206,559	168,227	168,056	131,624
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) BROUGHT FORWARD
As previously reported	308,843	102,284	(65,943)	(233,999)	(365,623)
	----------------	----------------	----------------	----------------	----------------
As restated	308,843	102,284	(65,943)	(233,999)	(365,623)
	----------------	----------------	----------------	----------------	----------------
PROFIT AVAILABLE FOR APPROPRIATIONS	1,325,541	308,843	102,284	(65,943)	(233,999)
DIVIDENDS - Ordinary (paid & proposed)	(940,000)	-	-	-	-
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) CARRIED FORWARD	385,541	308,843	102,284	(65,943)	(233,999)
	=============	=============	=============	=============	=============
INTEREST EXPENSE (as per notes to P&L)
Bank overdraft	196,588	199,261	195,205	-	-
Hire purchase	8,417	10,384	9,438	-	-
Term loan / Borrowing	16,971	132,644	187,472	-	-
Others	226,300	189,158	212,076	-	-
	----------------	----------------	----------------	----------------	----------------
	448,276	531,447	604,191	-	-
	=============	=============	=============	-	-
DEPRECIATION (as per notes to P&L)	55,149	73,734	78,975	-	-
	----------------	----------------	----------------	----------------	----------------
	55,149	73,734	78,975	-	-
	=============	=============	=============

BALANCE SHEET

SUGNOMAL SDN. BHD.

ASSETS EMPLOYED:
FIXED ASSETS	4,731,378	5,301,485	5,298,480	5,321,943	5,179,118
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM ASSETS	4,731,378	5,301,485	5,298,480	5,321,943	5,179,118
Stocks	1,142,751	1,702,681	3,822,577	-	-
Trade debtors	1,890,745	2,919,221	4,046,238	-	-
Other debtors, deposits & prepayments	2,223,570	1,258,013	65,683	-	-
Amount due from director	348,228	98,222	-	-	-
Cash & bank balances	4,127	4,925	18,132	-	-
Others	42,557	12,288	16,838	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT ASSETS	5,651,978	5,995,350	7,969,468	7,013,493	7,782,144
	----------------	----------------	----------------	----------------	----------------
TOTAL ASSET	10,383,356	11,296,835	13,267,948	12,335,436	12,961,262
	=============	=============	=============	=============	=============
CURRENT LIABILITIES
Trade creditors	19,625	-	1,719,330	-	-
Other creditors & accruals	27,283	354,069	85,091	-	-
Hire purchase & lease creditors	28,219	32,040	37,127	-	-
Bank overdraft	2,442,545	2,038,032	2,321,188	-	-
Short term borrowings/Term loans	-	773,880	702,415	-	-
Other borrowings	2,741,219	2,736,517	2,098,511	-	-
Amounts owing to director	-	-	158,153	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT LIABILITIES	5,258,891	5,934,538	7,121,815	5,478,535	6,399,698
	----------------	----------------	----------------	----------------	----------------
NET CURRENT ASSETS/(LIABILITIES)	393,087	60,812	847,653	1,534,958	1,382,446
	----------------	----------------	----------------	----------------	----------------
TOTAL NET ASSETS	5,124,465	5,362,297	6,146,133	6,856,901	6,561,564
	=============	=============	=============	=============	=============
SHARE CAPITAL
Ordinary share capital	4,700,000	4,700,000	4,700,000	4,700,000	4,700,000
	----------------	----------------	----------------	----------------	----------------
TOTAL SHARE CAPITAL	4,700,000	4,700,000	4,700,000	4,700,000	4,700,000
Retained profit/(loss) carried forward	385,541	308,843	102,284	(65,943)	(233,999)
	----------------	----------------	----------------	----------------	----------------
TOTAL RESERVES	385,541	308,843	102,284	(65,943)	(233,999)
	----------------	----------------	----------------	----------------	----------------
SHAREHOLDERS' FUNDS/EQUITY	5,085,541	5,008,843	4,802,284	4,634,057	4,466,001
Long term loans	-	264,034	1,196,855	-	-
Hire purchase creditors	38,924	89,420	146,994	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM LIABILITIES	38,924	353,454	1,343,849	2,222,844	2,095,563
	----------------	----------------	----------------	----------------	----------------
	5,124,465	5,362,297	6,146,133	6,856,901	6,561,564
	=============	=============	=============	=============	=============

FINANCIAL RATIO

SUGNOMAL SDN. BHD.

TYPES OF FUNDS
Cash	4,127	4,925	18,132	-	-
Net Liquid Funds	(2,438,418)	(2,033,107)	(2,303,056)	-	-
Net Liquid Assets	(749,664)	(1,641,869)	(2,974,924)	1,534,958	1,382,446
Net Current Assets/(Liabilities)	393,087	60,812	847,653	1,534,958	1,382,446
Net Tangible Assets	5,124,465	5,362,297	6,146,133	6,856,901	6,561,564
Net Monetary Assets	(788,588)	(1,995,323)	(4,318,773)	(687,886)	(713,117)
PROFIT & LOSS ITEMS
Earnings Before Interest & Tax (EBIT)	1,526,144	807,729	838,599	-	-
Earnings Before Interest, Taxes, Depreciation And Amortization (EBITDA)	1,581,293	881,463	917,574	-	-
BALANCE SHEET ITEMS
Total Borrowings	5,250,907	5,933,923	6,503,090	-	-
Total Liabilities	5,297,815	6,287,992	8,465,664	7,701,379	8,495,261
Total Assets	10,383,356	11,296,835	13,267,948	12,335,436	12,961,262
Net Assets	5,124,465	5,362,297	6,146,133	6,856,901	6,561,564
Net Assets Backing	5,085,541	5,008,843	4,802,284	4,634,057	4,466,001
Shareholders' Funds	5,085,541	5,008,843	4,802,284	4,634,057	4,466,001
Total Share Capital	4,700,000	4,700,000	4,700,000	4,700,000	4,700,000
Total Reserves	385,541	308,843	102,284	(65,943)	(233,999)
LIQUIDITY (Times)
Cash Ratio	0.00	0.00	0.00	-	-
Liquid Ratio	0.86	0.72	0.58	-	-
Current Ratio	1.07	1.01	1.12	1.28	1.22
WORKING CAPITAL CONTROL (Days)
Stock Ratio	46	43	101	-	-
Debtors Ratio	76	74	107	-	-
Creditors Ratio	1	0	57	-	-
SOLVENCY RATIOS (Times)
Gearing Ratio	1.03	1.18	1.35	-	-
Liabilities Ratio	1.04	1.26	1.76	1.66	1.90
Times Interest Earned Ratio	3.40	1.52	1.39	-	-
Assets Backing Ratio	1.09	1.14	1.31	1.46	1.40
PERFORMANCE RATIO (%)
Operating Profit Margin	11.92	1.91	1.70	2.84	1.91
Net Profit Margin	11.25	1.43	1.22	1.73	1.21
Return On Net Assets	29.78	15.06	13.64	4.02	3.17
Return On Capital Employed	20.09	10.87	9.86	4.02	3.17
Return On Shareholders' Funds/Equity	19.99	4.12	3.50	3.63	2.95
Dividend Pay Out Ratio (Times)	0.92	0.00	0.00	-	-
NOTES TO ACCOUNTS
Contingent Liabilities	0	0	0

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs. 62.56
UK Pound	1	Rs. 93.56
Euro	1	Rs. 67.49

INFORMATION DETAILS

Analysis Done by :	RSM
Report Prepared by :	DPT

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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