MIRA INFORM REPORT

Report No. :	353263
Report Date :	04.12.2015

IDENTIFICATION DETAILS

Name :	RECRON (MALAYSIA) SDN. BHD.
Registered Office :	Suite 7.01-7.03, Wisma Goldhill, 67, Jalan Raja Chulan, Level 7, 50200 Kuala Lumpur, Wilayah Persekutuan,
Country :	Malaysia
Financials (as on) :	31.12.2014
Date of Incorporation :	20.07.2007
Com. Reg. No.:	781769-K
Legal Form :	Private Limited
Line of Business :	The Subject is engaged in manufacturing of textiles and fibre products.
No. of Employees :	7,500

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 – March 31, 2015

Country Name	Previous Rating (31.12.2014)	Current Rating (31.03.2015)
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. Malaysia is vulnerable to a fall in world commodity prices or a general slowdown in global economic activity.

The NAJIB administration 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. Gross exports of goods and services constitute more than 80% of GDP. The oil and gas sector supplied about 29% of government revenue in 2014. As an oil and gas exporter, Malaysia has previously 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 strained government finances, shrunk Malaysia’s current account surplus and put downward pressure on the ringgit. The government is trying to lessen its dependence on state oil producer Petronas.

Bank Negara Malaysia (the central bank) maintains healthy foreign exchange reserves; a well-developed regulatory regime has limited Malaysia's exposure to riskier financial instruments and the global financial crisis. In order to attract increased investment, NAJIB 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.

:

781769-K

COMPANY NAME

:

RECRON (MALAYSIA) SDN. BHD.

FORMER NAME

:

REAL AIM DEVELOPMENT SDN BHD (20/08/2007)

INCORPORATION DATE

:

20/07/2007

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

SUITE 7.01-7.03, WISMA GOLDHILL, 67, JALAN RAJA CHULAN, LEVEL 7, 50200 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

BUSINESS ADDRESS

:

WISMA GOLDHILL, 67, JALAN RAJA CHULAN, LEVEL 7, LEVEL 8 & LEVEL 9, 50200 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

TEL.NO.

:

03-20316000

FAX.NO.

:

03-20315000

EMAIL

:

ENQUIRY.MARKETING@RECRON.COM

WEB SITE

:

WWW.RECRONMALAYSIA.COM

CONTACT PERSON

:

KULKARNI VINAY RAMCHANDRA ( CEO )

INDUSTRY CODE

:

13990

PRINCIPAL ACTIVITY

:

MANUFACTURING OF TEXTILES AND FIBRE PRODUCTS

AUTHORISED CAPITAL

:

MYR 350,000,000.00 DIVIDED INTO 
ORDINARY SHARE 350,000,000.00 OF MYR 1.00 EACH.

ISSUED AND PAID UP CAPITAL

:

MYR 113,187,500.00 DIVIDED INTO 
ORDINARY SHARES 113,187,500 CASH OF MYR 1.00 EACH.

SALES

:

MYR 3,648,140,000 [2014]

NET WORTH

:

MYR 620,910,000 [2014]

M1000 OVERALL RANKING

:

135[2011]

M1000 INDUSTRY RANKING

:

1[2011]

STAFF STRENGTH

:

7,500 [2015]

BANKER (S)

:

ICICI BANK LTD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

POOR

PAYMENT

:

SLOW BUT CORRECT

MANAGEMENT CAPABILITY

:

AVERAGE

COMMERCIAL RISK

:

LOW

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) manufacturing of textiles and fibre products.

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

According to the Malaysia 1000 publication, the Subject's ranking are as follows:
YEAR	2011
OVERALL RANKING	135
INDUSTRY RANKING	1

The immediate holding company of the Subject is RELIANCE GLOBAL BUSINESS B.V., a company incorporated in NETHERLANDS.

Share Capital History

Date	Authorised Shared Capital	Issue & Paid Up Capital
02/06/2015	MYR 350,000,000.00	MYR 113,187,500.00
24/09/2013	MYR 200,000,000.00	MYR 113,187,500.00
25/03/2008	MYR 50,000,000.00	MYR 1,443,450.00
22/03/2008	MYR 50,000,000.00	MYR 2,500,000.00
28/08/2007	MYR 100,000.00	MYR 100,000.00
20/07/2007	MYR 100,000.00	MYR 2.00

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

Current Shareholder(s) :

Name	Address	IC/PP/Loc No	Shareholding	(%)
RELIANCE GLOBAL BUSINESS B.V.	CLAUDE DEBUSSYLAAN 18, 1082, MD AMSTERDAM, NETHERLANDS.	B.V.1477065/KVK34298	113,187,500.00	100.00
			---------------	------
			113,187,500.00	100.00
			============	=====

+ Also Director

Former Shareholder(s) :

Name	Country	IC/PP/Loc No	Shareholding	Last Updated
NG LUI KENG	MALAYSIA	480514-04-5106	N/A	N/A
RELIANCE NETHERLANDS B.V.	N/A	XLZ00211083	1,443,448.00	25/03/2009
TAN WANG TIANG	MALAYSIA	450211-04-5048	N/A	N/A

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

Local No	Country	Company	Status	(%)	As At
	BRAZIL	RELIANCE DO BRASIL INDUSTRIA E COMERCIO DE PRODUTOS TEXTIES, QUIMICOS, PETROQUIMICOS E DERIVADOS LTDA	-	100.00	31/12/2013

DIRECTORS

DIRECTOR 1

Name Of Subject	:	UDESHI RAJEN DWARKADAS
Address	:	502, SHANTI APARTMENTS, 98, WALKESHWAR ROAD, BOMBAY - 400 006, INDIA.
IC / PP No	:	Z21705096
Nationality	:	INDIAN
Date of Appointment	:	22/08/2007

DIRECTOR 2

Name Of Subject	:	PATIL VASANT KRISHNAJI
Address	:	PT 4309, JALAN TS 1/16, TAMAN SEMARAK, 71800 NILAI, NEGERI SEMBILAN, MALAYSIA.
IC / PP No	:	H6748797
Date of Appointment	:	10/04/2014

DIRECTOR 3

Name Of Subject	:	MR. KULKARNI VINAY RAMCHANDRA
Address	:	N-8-1, SURIA STONOR CONDOMINIUM, 2, LORONG STONOR, 50450 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.
IC / PP No	:	501336910
Nationality	:	BRITISH
Date of Appointment	:	26/04/2011

DIRECTOR 4

Name Of Subject	:	RAJBANSHI ANIL KUMAR
Address	:	A-402, CHAITANYA TOWERS, APPASAHAB MARATHE, MARG, PRABHADEVI, MUMBAI-40002, INDIA.
IC / PP No	:	Z1877333
Nationality	:	INDIAN
Date of Appointment	:	05/02/2008

DIRECTOR 5

Name Of Subject	:	PENDSE SHREE MUKUND
Address	:	A-13-08, SUASANA SENTRAL CONDOMINIUM, JALAN STESEN SENTRAL 5, KL SENTRAL, 50470 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.
IC / PP No	:	G9958726
Date of Appointment	:	10/04/2014

MANAGEMENT

1)	Name of Subject	:	KULKARNI VINAY RAMCHANDRA
	Position	:	CEO

2)	Name of Subject	:	SHAREE PENDSEE
	Position	:	FINANCE MANAGER

3)	Name of Subject	:	AMIR SAXINA
	Position	:	HEAD OF HUMAN RESOURCE

AUDITOR

Auditor	:	PRICEWATERHOUSECOOPERS
Auditor' Address	:	1, SENTRAL, JALAN TRAVERS, KUALA LUMPUR SENTRAL, PO BOX 10192, LEVEL 15, 50706 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

COMPANY SECRETARIES

1)	Company Secretary	:	MS. SHAHNIZA ANOM BINTI ELIAS
	IC / PP No	:	A1172646
	New IC No	:	680929-01-5802
	Address	:	26, JALAN UNGU, U9/35, SUNWAY KAYANGAN, SEKSYEN U9, 40150 SHAH ALAM, SELANGOR, MALAYSIA.

2)	Company Secretary	:	MS. TIA HWEI PING
	New IC No	:	820813-10-5728
	Address	:	118, JALAN SENTOSA 63, KAWASAN 19, 41050 KLANG, SELANGOR, MALAYSIA.

BANKING

Banking relations are maintained principally with :

1)

Name

:

ICICI BANK LTD

ENCUMBRANCE (S)

Charge No	Creation Date	Charge Description	Chargee Name	Total Charge	Status
1	25/10/2010	DEBENTURE	ICICI BANK LIMITED, SINGAPORE BRANCH	USD 25,000,000.00	Unsatisfied
2	25/10/2010	MEMORANDUM OF CHARGE OVER DEPOSITS	ICICI BANK LIMITED, SINGAPORE BRANCH	-	Unsatisfied
3	11/10/2011	CHARGE	MALAYAN BANKING BERHAD	USD 30,000,000.00	Unsatisfied
4	07/12/2012	CHARGE	MALAYAN BANKING BERHAD	USD 10,625,000.00	Unsatisfied

LITIGATION 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.

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

PAYMENT RECORD

SOURCES OF RAW MATERIALS:
Local	:	YES
Overseas	:	YES
Import Countries	:	ASIA

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
Domestic Markets	:	MALAYSIA
Overseas	:	YES
Export Market	:	ASIA AFRICA MIDDLE EAST UNITED STATES EUROPE
Credit Term	:	30 - 90 DAYS
Payment Mode	:	CHEQUES TELEGRAPHIC TRANSFER (TT)
Type of Customer	:	TEXTILES AND GARMENT INDUSTRIES

OPERATIONS

Products manufactured

:

TEXTILES AND FIBRE PRODUCTS

Ownership of premises

:

OWNED

Total Number of Employees:
YEAR	2015	2014	2013	2012	2011
GROUP	N/A	N/A	N/A	N/A	N/A
COMPANY	7,500	7,500	7,500	7,500	7,500

Branch

:

YES

No of Branches

:

2

Branch(es)

:

LOT 2322, TANGGA BATU INDUSTRIAL ESTATE, 76400 TANJONG KLING, MELAKA, MALAYSIA.

Tel No: 06-3511190

Fax No: 06-3511176

PT 1886, 1891, 1892, 7927, 7928, KAWASAN PERINDUSTRIAN NILAI, 71800 NILAI, NEGERI SEMBILAN, MALAYSIA.

Tel No: 06-7992855

Fax No: 06-7992872

Other Information:

The Subject is principally engaged in the (as a / as an) manufacturing of textiles and fibre products. 

The Subject is one of largest integrated polyester and Textile Company with world class manufacturing facilities at Nilai and Melaka in Malaysia.

The Subject's products ranges are as follows:

1) Polyester Polymer Production
2) Nylon Polymer Production
3) Polyester Staple Fibre
4) Spun Yarns
5) Polyester Filament Yarns
6) PET bottle grade Resins
7) Fabrics

The Subject produces annually over 500,000 tons of Polyester Products, 36,000 tons of Nylon Products and 500 million meters of Fabrics.

The products are used for making ready made garments, home furnishings, curtain materials and others.

The Subject's vertically integrated production units have state of art machines and equipment. Its biggest asset is its highly skilled and dedicated work force. 

RECENT DEVELOPMENT

We have checked with the Malaysian National News Agency's (BERNAMA)database, but no latest development was noted in our investigation. 

CURRENT INVESTIGATION

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client	:	N/A
Current Telephone Number	:	03-20316000
Match	:	N/A
Address Provided by Client	:	LEVEL 9, WISMA GOLDHILL, 67, JALAN RAJA CHULAN 50200 , KUALA LUMPUR,
Current Address	:	WISMA GOLDHILL, 67, JALAN RAJA CHULAN, LEVEL 7, LEVEL 8 & LEVEL 9, 50200 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.
Match	:	NO
Latest Financial Accounts	:	YES

Other Investigations

We contacted on of the staff from the Subject and she provided some information on the Subject.

The address provided is incomplete.

FINANCIAL ANALYSIS

Profitability
Turnover	:	Increased	[	2.45%	]
Profit/(Loss) Before Tax	:	Increased	[	(46.52%)	]
Return on Shareholder Funds	:	Unfavourable	[	(24.12%)	]
Return on Net Assets	:	Unfavourable	[	(20.81%)	]
The higher turnover could be attributed to the favourable market condition.Higher losses before tax during the year could be due to the higher operating costs incurred. The Subject's unfavourable returns on shareholders' funds indicate the management's inefficiency in utilising its assets to generate returns.
Working Capital Control
Stock Ratio	:	Acceptable	[	55 Days	]
Debtor Ratio	:	Favourable	[	13 Days	]
Creditors Ratio	:	Favourable	[	20 Days	]
The Subject kept adequate stocks to meet its normal business transactions without incurring excessive storage costs. The favourable debtors' days could be due to the good credit control measures implemented by the Subject. 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	:	Unfavourable	[	0.11 Times	]
Current Ratio	:	Unfavourable	[	0.56 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	[	(7.79 Times)	]
Gearing Ratio	:	Unfavourable	[	1.32 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 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 Subject's turnover increased its profits however showed a reverse trend. The losses could be due to the management's failure to maintain its competitiveness in the market. 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'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 : POOR

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	3.2	4.0
Unemployment Rate	3.3	3.2	3.0	2.9	3.0
Net International Reserves ( MYR Billion )	415	427	-	417	-
Average Risk-Weighted Capital Adequacy Ratio ( % )	3.50	2.20	-	4.00	-
Average 3 Months of Non-performing Loans ( % )	14.80	14.70	-	-	-
Average Base Lending Rate ( % )	6.60	6.53	6.53	6.85	-
Business Loans Disbursed( % )	15.3	32.2	-	56.0	-
Foreign Investment ( MYR Million )	23,546.1	26,230.4	38,238.0	43,486.6	-
Consumer Loans ( % )	-	-	-	-	-
Registration of New Companies ( No. )	45,455	45,441	46,321	49,144	-
Registration of New Companies ( % )	3.0	(0.0)	1.9	6.1	-
Liquidation of Companies ( No. )	132,485	17,092	26,430	21,753	-
Liquidation of Companies ( % )	417.8	(87.1)	54.6	(17.7)	-
Registration of New Business ( No. )	284,598	324,761	329,895	332,723	-
Registration of New Business ( % )	5.0	14.0	2.0	1.0	-
Business Dissolved ( No. )	20,121	20,380	18,161	21,436	-
Business Dissolved ( % )	1.9	1.3	(10.9)	18.0	-
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	63.2	-
Credit Cards Spending ( % )	15.6	12.6	-	13.5	-
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)	-	-	3.0	-
Other Mining	-	-	-	46.6	-
Industry Non-performing Loans ( MYR Million )	46.5	-	-	-	-
% of Industry Non-performing Loans	0.1	-	-	-	-
Manufacturing #	4.7	4.8	3.4	6.4	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	1.4	-
Plastic Products	3.8	-	-	2.7	-
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	-	-	13.0	-
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
13990 : Manufacture of other textiles n.e.c.
INDUSTRY :	MANUFACTURING
The manufacturing sector is expected to grow by 5.5% in 2015. It will be bolstered by strong domestic and export-oriented industries in line with growing investment activities and favorable external demand. Moreover, in 2014, the manufacturing sectors have spearheading growth. The manufacturing sector is estimated to grow at a faster pace in 2014 on higher exports of electronics and electrical (E&E) products as external demand improves.
The manufacturing sector expanded strongly during the first half of 2014, the highest growth in three years, spurred by higher global semiconductor sales. Value-added of the manufacturing sector expanded 7.1% during the first half of 2014. Production of the sector rose 6.6% in the first seven months of 2014 supported by resilient domestic demand and recovery in the external sector during the first seven months of the years. The sales value of manufactured products rebounded by 7.7% in the first seven months of 2014. The strong performance of the sector was on account of higher output at 9.4% from the domestic-oriented industries, particularly transport equipment, food and beverage.
The manufacturing sector continued to attract domestic and foreign investment with investment approved by Malaysian Investment Development Authority (MIDA) totaling RM47.4 billion during the first six months of 2014, mainly from Japan, China and Germany. Meanwhile, the capacity utilization rate remained steady at 80.4% during the second quarter of 2014 while average wage per employee and productivity improved to RM2,772 per month and 5.9%, respectively during the first seven months of 2014. Boosted by favorable domestic economic activity and recovery in the external sector, the manufacturing sector is expected to record a better performance with growth of 6.4% in 2014.
In the meantime, production of wood products rebounded by 5.1% largely supported by higher output in the saw-milling and planning of wood segment at 25.9% during the first seven months of 2014. The positive performance was attributed to vibrant residential and commercial construction activities which contributed to increased use of timber frame and glued laminated timber for cost savings compared to the use of concrete and steel. Increased demand from major export destination such as the US, Japan and Australia for Malaysian made furniture contributed to the higher output, particularly wooden and cane furniture which rebounded by 2.2%.
Production of rubber products contracted 0.3% in the first seven months of 2014 on account of slower demand for rubber gloves and rubber tyres. The decline in rubber tyres for vehicles was due to the weaker external demand from the automotive industry, particularly from China. Output of other rubber products contracted 3.8% following the product shift from rubber-based to plastics, silicones and metal alloys in the manufacture of medical devices.
Besides, exports of manufactured products are expected to grow 6.1% in 2014 boosted by the growing demand from advanced economies. However, during the first seven months of 2014, manufactured exports surged 11.4%. The robust growth was buoyed by strengthening demand in the US and EU, reflecting significant exposure of Malaysian exports to the economic performance in the advance economies. The strength in export was broad-based with robust growth in both E&E and non- E&E subsectors.
Under budget 2015, the Government will provide incentive in the form of capital allowance on automation expenditure to encourage automation in the manufacturing sector, which may help in the manufacturing sector.
OVERALL INDUSTRY OUTLOOK : Average Growth

CREDIT RISK EVALUATION & RECOMMENDATION

Incorporated in 2007, the Subject is a Private Limited company, focusing on manufacturing of textiles and fibre products. Having been in business for more than 5 years, the Subject has established a remarkable clientele base for itself which has contributed to its business growth. The Subject is a large entity with strong capital position of MYR 113,187,500. We are confident with the Subject's business and its future growth prospect. Having strong support from its holding company has enabled the Subject to remain competitive despite the challenging business environment. 

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 large entity, the Subject has a steady workforce of 7,500 personnel to support its business operations. Its future prospects seem to be fairly good as its business operations are running relatively stable. 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 higher turnover, the Subject suffered pre-tax losses which reflected a highly competitive business environment. 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 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 620,910,000, the Subject should be able to maintain its business in the near terms. 

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)

RECRON (MALAYSIA) SDN. BHD.

Financial Year End	2014-12-31	2013-12-31	2012-12-31	2011-12-31	2010-12-31
Months	12	12	12	12	12
Consolidated Account	GROUP	GROUP	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	FULL	FULL
Currency	MYR	MYR	MYR	MYR	MYR
TURNOVER	3,648,140,000	3,561,050,000	3,106,020,000	3,807,050,000	3,192,020,000
Other Income	600,000	56,170,000	1,260,000	5,430,000	88,430,000
	----------------	----------------	----------------	----------------	----------------
Total Turnover	3,648,740,000	3,617,220,000	3,107,280,000	3,812,480,000	3,280,450,000
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) FROM OPERATIONS	(190,950,000)	(130,320,000)	(115,700,000)	44,290,000	144,620,000
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) BEFORE TAXATION	(190,950,000)	(130,320,000)	(115,700,000)	44,290,000	144,620,000
Taxation	41,160,000	45,210,000	47,940,000	(8,250,000)	(21,810,000)
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) AFTER TAXATION	(149,790,000)	(85,110,000)	(67,760,000)	36,040,000	122,810,000
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) BROUGHT FORWARD
As previously reported	68,090,000	153,200,000	220,960,000	184,920,000	62,110,000
	----------------	----------------	----------------	----------------	----------------
As restated	68,090,000	153,200,000	220,960,000	184,920,000	62,110,000
	----------------	----------------	----------------	----------------	----------------
PROFIT AVAILABLE FOR APPROPRIATIONS	(81,700,000)	68,090,000	153,200,000	220,960,000	184,920,000
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) CARRIED FORWARD	(81,700,000)	68,090,000	153,200,000	220,960,000	184,920,000
	=============	=============	=============	=============	=============
INTEREST EXPENSE (as per notes to P&L)
Bank overdraft	16,200,000	10,920,000	10,570,000	8,260,000	11,160,000
Term loan / Borrowing	5,530,000	6,750,000	8,270,000	8,130,000	9,020,000
	----------------	----------------	----------------	----------------	----------------
	21,730,000	17,670,000	18,840,000	16,390,000	20,180,000
	=============	=============	=============	=============	=============
DEPRECIATION (as per notes to P&L)	95,420,000	94,400,000	91,340,000	84,690,000	81,520,000
AMORTIZATION	45,930,000	45,920,000	45,920,000	45,920,000	45,930,000
	----------------	----------------	----------------	----------------	----------------
	141,350,000	140,320,000	137,260,000	130,610,000	127,450,000
	=============	=============	=============	=============	=============

BALANCE SHEET

RECRON (MALAYSIA) SDN. BHD.

ASSETS EMPLOYED:
FIXED ASSETS	1,310,990,000	1,389,860,000	1,478,190,000	1,547,530,000	1,481,940,000
Deferred assets	39,010,000	-	-	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM INVESTMENTS/OTHER ASSETS	39,010,000	-	-	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM ASSETS	1,350,000,000	1,389,860,000	1,478,190,000	1,547,530,000	1,481,940,000
Stocks	554,600,000	546,950,000	381,210,000	465,570,000	452,260,000
Trade debtors	125,450,000	116,790,000	78,470,000	136,750,000	136,800,000
Other debtors, deposits & prepayments	12,390,000	77,290,000	15,870,000	15,560,000	48,500,000
Short term deposits	-	-	3,820,000	3,970,000	3,870,000
Cash & bank balances	800,000	500,000	400,000	120,000	1,400,000
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT ASSETS	693,240,000	741,530,000	479,770,000	621,970,000	642,830,000
	----------------	----------------	----------------	----------------	----------------
TOTAL ASSET	2,043,240,000	2,131,390,000	1,957,960,000	2,169,500,000	2,124,770,000
	=============	=============	=============	=============	=============
CURRENT LIABILITIES
Trade creditors	196,500,000	127,000,000	140,930,000	117,000,000	132,460,000
Other creditors & accruals	49,270,000	40,420,000	55,920,000	45,840,000	48,130,000
Bank overdraft	320,350,000	222,550,000	204,910,000	183,460,000	128,540,000
Short term borrowings/Term loans	104,850,000	98,440,000	91,750,000	95,310,000	661,610,000
Other borrowings	204,080,000	244,550,000	121,090,000	103,950,000	100,000,000
Amounts owing to holding company	125,710,000	171,100,000	7,830,000	-	-
Amounts owing to related companies	229,340,000	129,620,000	2,270,000	-	-
Other liabilities	-	-	97,220,000	117,320,000	6,450,000
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT LIABILITIES	1,230,100,000	1,033,680,000	721,920,000	662,880,000	1,077,190,000
	----------------	----------------	----------------	----------------	----------------
NET CURRENT ASSETS/(LIABILITIES)	(536,860,000)	(292,150,000)	(242,150,000)	(40,910,000)	(434,360,000)
	----------------	----------------	----------------	----------------	----------------
TOTAL NET ASSETS	813,140,000	1,097,710,000	1,236,040,000	1,506,620,000	1,047,580,000
	=============	=============	=============	=============	=============
SHARE CAPITAL
Ordinary share capital	113,190,000	113,190,000	2,500,000	2,500,000	2,500,000
	----------------	----------------	----------------	----------------	----------------
TOTAL SHARE CAPITAL	113,190,000	113,190,000	2,500,000	2,500,000	2,500,000
Capital reserve	589,420,000	635,350,000	681,270,000	727,190,000	773,110,000
Retained profit/(loss) carried forward	(81,700,000)	68,090,000	153,200,000	220,960,000	184,920,000
	----------------	----------------	----------------	----------------	----------------
TOTAL RESERVES	507,720,000	703,440,000	834,470,000	948,150,000	958,030,000
	----------------	----------------	----------------	----------------	----------------
SHAREHOLDERS' FUNDS/EQUITY	620,910,000	816,630,000	836,970,000	950,650,000	960,530,000
Long term loans	192,230,000	278,930,000	351,710,000	460,670,000	-
Deferred taxation	-	2,150,000	47,360,000	95,300,000	87,050,000
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM LIABILITIES	192,230,000	281,080,000	399,070,000	555,970,000	87,050,000
	----------------	----------------	----------------	----------------	----------------
	813,140,000	1,097,710,000	1,236,040,000	1,506,620,000	1,047,580,000
	=============	=============	=============	=============	=============

FINANCIAL RATIO

RECRON (MALAYSIA) SDN. BHD.

TYPES OF FUNDS
Cash	800,000	500,000	4,220,000	4,090,000	5,270,000
Net Liquid Funds	(319,550,000)	(222,050,000)	(200,690,000)	(179,370,000)	(123,270,000)
Net Liquid Assets	(1,091,460,000)	(839,100,000)	(623,360,000)	(506,480,000)	(886,620,000)
Net Current Assets/(Liabilities)	(536,860,000)	(292,150,000)	(242,150,000)	(40,910,000)	(434,360,000)
Net Tangible Assets	813,140,000	1,097,710,000	1,236,040,000	1,506,620,000	1,047,580,000
Net Monetary Assets	(1,283,690,000)	(1,120,180,000)	(1,022,430,000)	(1,062,450,000)	(973,670,000)
PROFIT & LOSS ITEMS
Earnings Before Interest & Tax (EBIT)	0	(112,650,000)	(96,860,000)	60,680,000	164,800,000
Earnings Before Interest, Taxes, Depreciation And Amortization (EBITDA)	(27,870,000)	27,670,000	40,400,000	191,290,000	292,250,000
BALANCE SHEET ITEMS
Total Borrowings	821,510,000	844,470,000	769,460,000	843,390,000	890,150,000
Total Liabilities	1,422,330,000	1,314,760,000	1,120,990,000	1,218,850,000	1,164,240,000
Total Assets	2,043,240,000	2,131,390,000	1,957,960,000	2,169,500,000	2,124,770,000
Net Assets	813,140,000	1,097,710,000	1,236,040,000	1,506,620,000	1,047,580,000
Net Assets Backing	620,910,000	816,630,000	836,970,000	950,650,000	960,530,000
Shareholders' Funds	620,910,000	816,630,000	836,970,000	950,650,000	960,530,000
Total Share Capital	113,190,000	113,190,000	2,500,000	2,500,000	2,500,000
Total Reserves	507,720,000	703,440,000	834,470,000	948,150,000	958,030,000
LIQUIDITY (Times)
Cash Ratio	0	0	0.01	0.01	0
Liquid Ratio	0.11	0.19	0.14	0.24	0.18
Current Ratio	0.56	0.72	0.66	0.94	0.60
WORKING CAPITAL CONTROL (Days)
Stock Ratio	55	56	45	45	52
Debtors Ratio	13	12	9	13	16
Creditors Ratio	20	13	17	11	15
SOLVENCY RATIOS (Times)
Gearing Ratio	1.32	1.03	0.92	0.89	0.93
Liabilities Ratio	2.29	1.61	1.34	1.28	1.21
Times Interest Earned Ratio	(7.79)	(6.38)	(5.14)	3.70	8.17
Assets Backing Ratio	7.18	9.70	494.42	602.65	419.03
PERFORMANCE RATIO (%)
Operating Profit Margin	(5.23)	(3.66)	(3.73)	1.16	4.53
Net Profit Margin	(4.11)	(2.39)	(2.18)	0.95	3.85
Return On Net Assets	(20.81)	(10.26)	(7.84)	4.03	15.73
Return On Capital Employed	(14.93)	(8.53)	(6.72)	3.59	14.01
Return On Shareholders' Funds/Equity	(24.12)	(10.42)	(8.10)	3.79	12.79
Dividend Pay Out Ratio (Times)	0	0	0	0	0
NOTES TO ACCOUNTS
Contingent Liabilities	0	0	0	0	0

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.66.75
UK Pound	1	Rs.99.61
Euro	1	Rs.70.67
MYR	1	Rs. 15.94

Note : Above are approximate rates obtained from sources believed to be correct

INFORMATION DETAILS

Analysis Done by :	KAS
Report Prepared by :	ASH

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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