MIRA INFORM REPORT

Report No. :	306690
Report Date :	07.02.2015

IDENTIFICATION DETAILS

Name :	BASF PETRONAS CHEMICALS SDN. BHD.
Registered Office :	The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, Level 18, 59200 Kuala Lumpur, Wilayah Persekutuan
Country :	Malaysia.
Financials (as on) :	31.12.2013
Date of Incorporation :	28.10.1997
Com. Reg. No.:	451307-K
Legal Form :	Private Limited (Limited by Share)
Line of Business :	Subject is engaged in manufacturing of chemical products.
No. of Employee :	600

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	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 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. 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.

Source : CIA

EXECUTIVE SUMMARY

REGISTRATION NO.

:

451307-K

COMPANY NAME

:

BASF PETRONAS CHEMICALS SDN. BHD.

FORMER NAME

:

N/A

INCORPORATION DATE

:

28/10/1997

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED (LIMITED BY SHARE)

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

THE GARDENS NORTH TOWER, MID VALLEY CITY, LINGKARAN SYED PUTRA, LEVEL 18, 59200 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

BUSINESS ADDRESS

:

2, JALAN ASTAKA U8/87, SEKSYEN U8, BUKIT JELUTONG, 40150 SHAH ALAM, SELANGOR, MALAYSIA.

TEL.NO.

:

03-78412200

FAX.NO.

:

03-78466624

WEB SITE

:

WWW.BASF-PETRONAS.COM.MY

CONTACT PERSON

:

WAN ZULKIFLEE BIN WAN ARIFFIN ( DIRECTOR )

INDUSTRY CODE

:

20119

PRINCIPAL ACTIVITY

:

MANUFACTURING OF CHEMICAL PRODUCTS

AUTHORISED CAPITAL

:

MYR 2,400,000,000.00 DIVIDED INTO
ORDINARY SHARE 2,375,000.00 OF MYR 1,000.00 EACH.
PREFERENCE SHARE 25,000.00 OF MYR 1,000.00 EACH.

ISSUED AND PAID UP CAPITAL

:

MYR 1,019,420,000.00 DIVIDED INTO
ORDINARY SHARES 1,000,000 CASH OF MYR 1,000.00 EACH.
PREFERENCE SHARES 19,420 CASH OF MYR 1,000.00 EACH.

SALES

:

MYR 2,749,783,000 [2013]

NET WORTH

:

MYR 1,214,765,000 [2013]

M1000 OVERALL RANKING

:

199[2011]

M1000 INDUSTRY RANKING

:

8[2011]

STAFF STRENGTH

:

600 [2015]

BANKER (S)

:

MALAYAN BANKING BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

STRONG

PAYMENT

:

PROMPT

MANAGEMENT CAPABILITY

:

GOOD

COMMERCIAL RISK

:

LOW

CURRENCY EXPOSURE

:

MODERATE

GENERAL REPUTATION

:

GOOD

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 chemical 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	2009	2008	2005	2004
OVERALL RANKING	199	114	109	179	278
INDUSTRY RANKING	8	3	4	3	6

The immediate holding company of the Subject is BASF NEDERLAND B.V., a company incorporated in NETHERLANDS.

The ultimate holding company of the Subject is BASF SE, a company incorporated in GERMANY.

Share Capital History

Date	Authorised Shared Capital	Issue & Paid Up Capital
22/01/2015	MYR 2,400,000,000.00	MYR 1,019,420,000.00
30/05/2013	MYR 2,400,000,000.00	MYR 1,000,000,000.00
06/12/1999	MYR 2,400,000,000.00	MYR 709,180,000.00
30/11/1999	MYR 2,400,000,000.00	MYR 700,000,000.00
14/07/1998	MYR 2,400,000,000.00	MYR 72,000,000.00

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

Name	Address	IC/PP/Loc No	Shareholding	(%)
BASF NEDERLAND B.V.	GRONINGENSINGEL 1, 6835 EA ARNHEM, THE NETHERLANDS, NETHERLANDS.	XLZ00215709	611,652.00	60.00
PETRONAS CHEMICALS GROUP BERHAD	TOWER 1,PETRONAS TWIN TOWERS, KUALA LUMPUR CITY CENTRE, 50088 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.	459830K	407,768.00	40.00
			---------------	------
			1,019,420.00	100.00
			============	=====

+ Also Director

DIRECTORS

DIRECTOR 1

Name Of Subject	:	DR TORSTEN PENKUHN
Address	:	34, DAKOTA CRESCENT, 19-01 DAKOTA, RESIDENCE, 399936, SINGAPORE.
IC / PP No	:	C4KH5HP60
Nationality	:	SINGAPOREAN
Date of Appointment	:	16/01/2012

DIRECTOR 2

Name Of Subject	:	MR. SAZALI BIN HAMZAH
Address	:	80, 9/4 JALAN SERI PUTRA, BANDAR SERI PUTRA, BANGI, 43000 KAJANG, SELANGOR, MALAYSIA.
IC / PP No	:	A0396634
New IC No	:	660501-01-5491
Date of Birth	:	01/05/1966
Nationality	:	MALAYSIAN
Date of Appointment	:	19/05/2014

DIRECTOR 3

Name Of Subject	:	PROFESSOR DR. RAINER DIERCKS
Address	:	PHILIPP-MELANCHTHON-STRABE 21, SPEYER, 67346, GERMANY.
IC / PP No	:	225206719
Nationality	:	GERMAN
Date of Appointment	:	24/02/2010

DIRECTOR 4

Name Of Subject	:	GOPALAN PILLAY
Address	:	FLAT A, 33/F, TOWER 2, 23 OLD PEAK ROAD, DYNASTY COURT, MID LEVELS, HONG KONG, HONG KONG.
IC / PP No	:	M00042411
Nationality	:	SOUTH AFRICAN
Date of Appointment	:	07/05/2013

DIRECTOR 5

Name Of Subject	:	DR.STEFAN FRANZ BECKMANN
Address	:	UNIT A-9-1, ONE MENERUNG, 1, JALAN MENERUNG, BANGSAR, 59100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.
IC / PP No	:	C8X06VM3C
Date of Appointment	:	01/03/2014

DIRECTOR 6

Name Of Subject	:	MR. WAN ZULKIFLEE BIN WAN ARIFFIN
Address	:	5, JALAN 14/1, TAMAN TAR, 68000 AMPANG, SELANGOR, MALAYSIA.
IC / PP No	:	5995503
New IC No	:	600819-07-5545
Date of Birth	:	19/08/1960
Nationality	:	MALAYSIAN
Date of Appointment	:	13/08/2010

MANAGEMENT

1)	Name of Subject	:	WAN ZULKIFLEE BIN WAN ARIFFIN
	Position	:	DIRECTOR

2)	Name of Subject	:	NORASHIKIN MOKHTAR
	Position	:	SENIOR FINANCE MANAGER

3)	Name of Subject	:	VOLKER SEIDL
	Position	:	MARKETING DIRECTOR

4)	Name of Subject	:	SURAYA
	Position	:	ASSISTANT HUMAN RESOURCES DIRECTOR

5)	Name of Subject	:	ELIZABETH
	Position	:	CORPORATE COMMUNICATIONS MANAGER

6)	Name of Subject	:	JASON CHOI KAM HENG
	Position	:	MAINTENANCE MANAGER

AUDITOR

Auditor	:	KPMG DESA MEGAT & CO.
Auditor' Address	:	KPMG TOWER, 8 FIRST AVENUE, BANDAR UTAMA, 47800 PETALING JAYA, SELANGOR, MALAYSIA.

COMPANY SECRETARIES

1)	Company Secretary	:	MR. IZAM ISKANDAR BIN ISMAIL
	IC / PP No	:	A2141565
	New IC No	:	720409-13-5839
	Address	:	117, JALAN 2, AMPANG JAYA, 68000 AMPANG, SELANGOR, MALAYSIA.

BANKING

Banking relations are maintained principally with :

1)

Name

:

MALAYAN BANKING BHD

ENCUMBRANCE (S)

No encumbrance was found in our databank at the time of investigation.

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	Percentage	:	80%
Overseas	:	YES	Percentage	:	20%

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	[	X	]	Good 31-60 Days	[	]	Average 61-90 Days	[	]
Fair 91-120 Days	[		]	Poor >120 Days	[	]

CLIENTELE

Local	:	YES	Percentage	:	60%
Domestic Markets	:	MALAYSIA
Overseas	:	YES	Percentage	:	40%
Export Market	:	AUSTRALIA INDIA NEW ZEALAND ASIA
Credit Term	:	30 - 60 DAYS
Payment Mode	:	CHEQUES TELEGRAPHIC TRANSFER (TT) LETTER OF CREDIT (LC)

OPERATIONS

Products manufactured

:

CHEMICAL PRODUCTS OF ACRYLIC MONOMERS, PLASTICIZERS, OXO ALCOHOL, BUTANEDIOL & DERIVATIVES

Member(s) / Affiliate(s)

:

FEDERATION OF MALAYSIAN MANUFACTURERS (FMM)

MALAYSIAN PLASTICS MANUFACTURERS ASSOCIATION (MPMA)

SMI ASSOCIATION OF MALAYSIA

SMALL & MEDIUM ENTERPRISE

MALAYSIAN INTERNATIONAL CHAMBER OF COMMERCE AND INDUSTRY (MICCI)

CHEMICAL INDUSTRIES COUNCIL OF MALAYSIA (CICM)

Ownership of premises

:

OWNED

Factory / Premises

:

LOT 139,JALAN GEBENG 2/1, KAWASAN PERINDUSTRIAN GEBENG,, 26080 KUANTAN, PAHANG, MALAYSIA.
Tel No: 09-5855000
Fax No: 09-5834623

Total Number of Employees:
YEAR	2015	2014	2013	2012	2011
GROUP	N/A	N/A	N/A	N/A	N/A
COMPANY	600	600	600	610	900

Branch

:

NO

OTHER INFORMATION:

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

The Subject is partners with BASF ASIA PACIFIC in Germany.

The Subject is a well-known name in the chemical industry and it produces and markets a wide range of essential chemical products.

The Subject owns a world-class integrated Chemical site in Gebeng, Pahang. It has an annual production output of approximately 1 million metric tonnes, which makes the site one of the largest integrated chemical sites in the Asia-Pacific region.

This 'verbund' (integrated) chemical production facility sited in Gebeng, Kuantan, Pahang Darul Makmur is the first such facility for BASF in the Asia Pacific, manufacturing acrylic, oxo-products and butanediol.

The Subject's plants can be categorised into:
1) Plant 1 - Acrylic O Complex
2) Plant 2 - OXO Complex
3) Plant 3 - BDO Complex

The Subject processes and refines petrochemical products and the end products are raw materials and ingredients for general purposes.

The Subject's product is Petrochemicals which is ethylene and propylene ( for plastic products),oxygenated, halogen-free are essential to the production of many pharmaceutical, paints and cosmetic products.

The end-products are among others plastics, adhesives, paints, lacquers, paper, diapers, automobile and industrial coatings, pharmaceuticals, fine chemicals, textiles, leather and personal care materials.

The Subject utilizes advanced automated and semi-automated machineries to ensure production of high quality products.

CURRENT INVESTIGATION

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client	:	N/A
Current Telephone Number	:	03-78412200
Match	:	N/A
Address Provided by Client	:	2, JALAN ASTAKA U8/87, SEKSYEN U8, BUKIT JELUTONG,40150,SHAH ALAM,SELANGOR.
Current Address	:	2, JALAN ASTAKA U8/87, SEKSYEN U8, BUKIT JELUTONG, 40150 SHAH ALAM, SELANGOR, MALAYSIA.
Match	:	YES
Latest Financial Accounts	:	YES

Other Investigations

On 5th February 2015 we contacted one of the staff from the Subject and she provided some information.

FINANCIAL ANALYSIS

Profitability
Turnover	:	Decreased	[	2009 - 2013	]
Profit/(Loss) Before Tax	:	Decreased	[	2009 - 2013	]
Return on Shareholder Funds	:	Acceptable	[	26.41%	]
Return on Net Assets	:	Favourable	[	37.16%	]
The continuous fall in turnover could be due to the lower demand for the Subject's products / services.The Subject's profit fell sharply because of the high operating costs incurred. The Subject's management had generated acceptable return for its shareholders using its assets.
Working Capital Control
Stock Ratio	:	Favourable	[	31 Days	]
Debtor Ratio	:	Favourable	[	32 Days	]
Creditors Ratio	:	Favourable	[	4 Days	]
The Subject's stocks were moving fast thus reducing its holding cost. This had reduced funds being tied up in stocks. 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	:	Favourable	[	2.74 Times	]
Current Ratio	:	Favourable	[	3.61 Times	]
A minimum liquid ratio of 1 should be maintained by the Subject in order to assure its creditors of its ability to meet short term obligations and the Subject was in a good liquidity position. Thus, we believe the Subject is able to meet all its short term obligations as and when they fall due.
Solvency
Interest Cover	:	Favourable	[	121.42 Times	]
Gearing Ratio	:	Favourable	[	0.00 Times	]
The interest cover showed that the Subject was able to service the interest. The favourable interest cover could indicate that the Subject was making enough profit to pay for the interest accrued. 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 :
The Subject's performance deteriorated over the years with lower turnover and profit. The Subject was in good liquidity position with its total current liabilities well covered by its total current assets. With its current net assets, the Subject should be able to repay its short term obligations. With the favourable interest cover, the Subject could be able to service all the accrued interest without facing any difficulties. 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 : STRONG

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
20119 : Manufacture of other basic chemicals 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 1997, the Subject is a Private Limited company, focusing on manufacturing of chemical products. With its long establishment in the market, the Subject has received strong support from its stable customers base. Its business position in the market is quite stable and it is expected to enjoy better market shares over its rivals. The Subject is a large entity with strong capital position of MYR 1,019,420,000. 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 established an extensive clientele base in the market. Besides catering to the local market, the Subject has penetrated into other countries. With the contribution of both local and overseas customers, the Subject is likely to be exposed to lower commercial risk. Hence, we believe that the Subject has better business expansion opportunities in the future. Being a large entity, the Subject has a steady workforce of 600 personnel to support its business operations. Its future prospects seem to be fairly good as its business operations are running relatively stable. The Subject has a good  management capability. Its capable management team has enabled the Subject to keep its business on going. Hence, the future prospect of the Subject is bright.

The Subject's business performance showed a reverse trend as both its turnover and pre-tax profit have decreased compared to the previous year. Return on shareholders' funds of the Subject was at a favourable range which indicated that the management was efficient in utilising its funds to generate income. The Subject is in good liquidity position with its current liabilities well covered by it current assets. Hence, it has sufficient working capital to meet its short term financial obligations. Being a zero geared company, the Subject virtually has no financial risk as it is mainly dependent on its internal funds to finance its business. Given a positive net worth standing at MYR 1,214,765,000, 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.

We regard that the Subject's overall payment habit is prompt. The Subject had a favourable creditors' ratio as evidenced by its favourable collection days.

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 promptly.

PROFIT AND LOSS ACCOUNT

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

BASF PETRONAS CHEMICALS SDN. BHD.

Financial Year End	2013-12-31	2012-12-31	2011-12-31	2010-12-31	2009-12-31
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	FULL	FULL
Currency	MYR	MYR	MYR	MYR	MYR
TURNOVER	2,749,783,000	3,095,278,000	3,453,945,000	3,427,887,000	1,947,889,000
	----------------	----------------	----------------	----------------	----------------
Total Turnover	2,749,783,000	3,095,278,000	3,453,945,000	3,427,887,000	1,947,889,000
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) FROM OPERATIONS	449,513,000	804,062,000	1,196,972,000	1,294,401,000	237,782,000
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) BEFORE TAXATION	449,513,000	804,062,000	1,196,972,000	1,294,401,000	237,782,000
Taxation	(128,724,000)	(176,085,000)	(196,161,000)	24,239,000	(2,621,000)
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) AFTER TAXATION	320,789,000	627,977,000	1,000,811,000	1,318,640,000	235,161,000
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) BROUGHT FORWARD
As previously reported	395,304,000	417,327,000	666,516,000	361,876,000	114,250,000
Prior year adjustment	-	-	-	-	22,465,000
	----------------	----------------	----------------	----------------	----------------
As restated	395,304,000	417,327,000	666,516,000	361,876,000	136,715,000
	----------------	----------------	----------------	----------------	----------------
PROFIT AVAILABLE FOR APPROPRIATIONS	716,093,000	1,045,304,000	1,667,327,000	1,680,516,000	371,876,000
TRANSFER TO RESERVES - Statutory	-	-	-	-	(10,000,000)
TRANSFER TO RESERVES - General	-	-	-	(4,000,000)	-
DIVIDENDS - Ordinary (paid & proposed)	(315,000,000)	(650,000,000)	(1,250,000,000)	(1,010,000,000)	-
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) CARRIED FORWARD	401,093,000	395,304,000	417,327,000	666,516,000	361,876,000
	=============	=============	=============	=============	=============
INTEREST EXPENSE (as per notes to P&L)
Lease interest	3,732,000	3,380,000	2,947,000	-	-
Others	1,000	3,000	5,000	5,000	4,000
	----------------	----------------	----------------	----------------	----------------
	3,733,000	3,383,000	2,952,000	5,000	4,000
	=============	=============	=============	=============	=============

BALANCE SHEET

BASF PETRONAS CHEMICALS SDN. BHD.

ASSETS EMPLOYED:
FIXED ASSETS	520,276,000	442,923,000	533,463,000	485,844,000	730,936,000
Deferred assets	8,500,000	20,258,000	32,612,000	26,254,000	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM INVESTMENTS/OTHER ASSETS	8,500,000	20,258,000	32,612,000	26,254,000	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM ASSETS	528,776,000	463,181,000	566,075,000	512,098,000	730,936,000
Stocks	231,374,000	211,972,000	180,323,000	166,595,000	132,345,000
Trade debtors	237,739,000	262,533,000	495,733,000	319,348,000	177,847,000
Other debtors, deposits & prepayments	9,450,000	4,906,000	7,121,000	10,672,000	11,745,000
Short term deposits	193,736,000	114,631,000	215,640,000	255,643,000	365,103,000
Amount due from related companies	278,526,000	289,909,000	2,971,000	397,421,000	216,504,000
Cash & bank balances	3,424,000	13,019,000	725,000	13,425,000	5,023,000
Others	914,000	274,000	-	13,000	8,264,000
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT ASSETS	955,163,000	897,244,000	902,513,000	1,163,117,000	916,831,000
	----------------	----------------	----------------	----------------	----------------
TOTAL ASSET	1,483,939,000	1,360,425,000	1,468,588,000	1,675,215,000	1,647,767,000
	=============	=============	=============	=============	=============
CURRENT LIABILITIES
Trade creditors	27,177,000	11,945,000	114,936,000	23,415,000	7,144,000
Other creditors & accruals	77,364,000	77,085,000	63,740,000	83,173,000	57,447,000
Hire purchase & lease creditors	-	-	8,160,000	-	-
Amounts owing to holding company	15,295,000	6,483,000	2,488,000	3,794,000	-
Amounts owing to related companies	129,167,000	96,155,000	5,511,000	4,122,000	8,558,000
Provision for taxation	8,553,000	3,961,000	24,105,000	1,497,000	1,672,000
Lease payables	6,777,000	7,138,000	-	-	-
Other liabilities	-	6,682,000	21,310,000	153,949,000	117,587,000
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT LIABILITIES	264,333,000	209,449,000	240,250,000	269,950,000	192,408,000
	----------------	----------------	----------------	----------------	----------------
NET CURRENT ASSETS/(LIABILITIES)	690,830,000	687,795,000	662,263,000	893,167,000	724,423,000
	----------------	----------------	----------------	----------------	----------------
TOTAL NET ASSETS	1,219,606,000	1,150,976,000	1,228,338,000	1,405,265,000	1,455,359,000
	=============	=============	=============	=============	=============
SHARE CAPITAL
Ordinary share capital	1,000,000,000	1,000,000,000	1,000,000,000	1,000,000,000	1,004,000,000
	----------------	----------------	----------------	----------------	----------------
TOTAL SHARE CAPITAL	1,000,000,000	1,000,000,000	1,000,000,000	1,000,000,000	1,004,000,000
RESERVES
Share premium	-	-	-	-	196,000,000
Exchange equalisation/fluctuation reserve	(200,328,000)	(269,920,000)	(221,114,000)	(275,251,000)	(116,517,000)
Retained profit/(loss) carried forward	401,093,000	395,304,000	417,327,000	666,516,000	361,876,000
Capital redemption reserve	14,000,000	14,000,000	14,000,000	14,000,000	10,000,000
	----------------	----------------	----------------	----------------	----------------
TOTAL RESERVES	214,765,000	139,384,000	210,213,000	405,265,000	451,359,000
	----------------	----------------	----------------	----------------	----------------
SHAREHOLDERS' FUNDS/EQUITY	1,214,765,000	1,139,384,000	1,210,213,000	1,405,265,000	1,455,359,000
Lease obligations	4,841,000	11,592,000	18,125,000	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM LIABILITIES	4,841,000	11,592,000	18,125,000	-	-
	----------------	----------------	----------------	----------------	----------------
	1,219,606,000	1,150,976,000	1,228,338,000	1,405,265,000	1,455,359,000
	=============	=============	=============	=============	=============

FINANCIAL RATIO

BASF PETRONAS CHEMICALS SDN. BHD.

TYPES OF FUNDS
Cash	197,160,000	127,650,000	216,365,000	269,068,000	370,126,000
Net Liquid Funds	197,160,000	127,650,000	216,365,000	269,068,000	370,126,000
Net Liquid Assets	459,456,000	475,823,000	481,940,000	726,572,000	592,078,000
Net Current Assets/(Liabilities)	690,830,000	687,795,000	662,263,000	893,167,000	724,423,000
Net Tangible Assets	1,219,606,000	1,150,976,000	1,228,338,000	1,405,265,000	1,455,359,000
Net Monetary Assets	454,615,000	464,231,000	463,815,000	726,572,000	592,078,000
BALANCE SHEET ITEMS
Total Borrowings	4,841,000	11,592,000	26,285,000	0	0
Total Liabilities	269,174,000	221,041,000	258,375,000	269,950,000	192,408,000
Total Assets	1,483,939,000	1,360,425,000	1,468,588,000	1,675,215,000	1,647,767,000
Net Assets	1,219,606,000	1,150,976,000	1,228,338,000	1,405,265,000	1,455,359,000
Net Assets Backing	1,214,765,000	1,139,384,000	1,210,213,000	1,405,265,000	1,455,359,000
Shareholders' Funds	1,214,765,000	1,139,384,000	1,210,213,000	1,405,265,000	1,455,359,000
Total Share Capital	1,000,000,000	1,000,000,000	1,000,000,000	1,000,000,000	1,004,000,000
Total Reserves	214,765,000	139,384,000	210,213,000	405,265,000	451,359,000
LIQUIDITY (Times)
Cash Ratio	0.75	0.61	0.90	1.00	1.92
Liquid Ratio	2.74	3.27	3.01	3.69	4.08
Current Ratio	3.61	4.28	3.76	4.31	4.77
WORKING CAPITAL CONTROL (Days)
Stock Ratio	31	25	19	18	25
Debtors Ratio	32	31	52	34	33
Creditors Ratio	4	1	12	2	1
SOLVENCY RATIOS (Times)
Gearing Ratio	0.00	0.01	0.02	0.00	0.00
Liabilities Ratio	0.22	0.19	0.21	0.19	0.13
Times Interest Earned Ratio	121.42	238.68	406.48	258,881.20	59,446.50
Assets Backing Ratio	1.22	1.15	1.23	1.41	1.45
PERFORMANCE RATIO (%)
Operating Profit Margin	16.35	25.98	34.66	37.76	12.21
Net Profit Margin	11.67	20.29	28.98	38.47	12.07
Return On Net Assets	37.16	70.15	97.69	92.11	16.34
Return On Capital Employed	37.16	70.15	97.04	92.11	16.34
Return On Shareholders' Funds/Equity	26.41	55.12	82.70	93.84	16.16
Dividend Pay Out Ratio (Times)	0.98	1.04	1.25	0.77	0.00
NOTES TO ACCOUNTS
Contingent Liabilities	0	0	0	0	0

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs. 61.73
UK Pound	1	Rs. 94.65
Euro	1	Rs. 70.79

INFORMATION DETAILS

Analysis Done by :	KAR
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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