MIRA INFORM REPORT

Report No. :	347691
Report Date :	30.10.2015

IDENTIFICATION DETAILS

Name :	KL-KEPONG OLEOMAS SDN. BHD.
Registered Office :	Wisma Taiko, 1 Jalan S.P.Seenivasagam, 30000 IPOH, Perak
Country :	Malaysia
Financials (as on) :	30.09.2014
Date of Incorporation :	22.07.2002
Com. Reg. No.:	587027-T
Legal Form :	Private Limited (Limited By Share)
Line of Business :	Manufacturing of Oleochemicals
No. of Employees :	700 [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	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. 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.	:	587027-T
COMPANY NAME	:	KL-KEPONG OLEOMAS SDN. BHD.
FORMER NAME	:	ELVISSA CORPORATION SDN. BHD. (15/10/2002)
INCORPORATION DATE	:	22/07/2002
COMPANY STATUS	:	EXIST
LEGAL FORM	:	PRIVATE LIMITED (LIMITED BY SHARE)
LISTED STATUS	:	NO
REGISTERED ADDRESS	:	WISMA TAIKO, 1 JALAN S.P.SEENIVASAGAM, 30000 IPOH, PERAK, MALAYSIA.
BUSINESS ADDRESS	:	25, JALAN SUNGAI PINANG 5/18, FASA 2D, TAMAN PERINDUSTRIAN PULAU INDAH, 42920 PULAU INDAH, SELANGOR, MALAYSIA.
TEL.NO.	:	03-31012633
FAX.NO.	:	03-31013299
EMAIL	:	ENQUIRY@KLKOLEO.COM.MY
WEB SITE	:	WWW.KLKOLEO.COM
CONTACT PERSON	:	YEOW AH KOW ( DIRECTOR )
INDUSTRY CODE	:	20
PRINCIPAL ACTIVITY	:	MANUFACTURING OF OLEOCHEMICALS
AUTHORISED CAPITAL	:	MYR 150,000,000.00 DIVIDED INTO ORDINARY SHARE 100,000,000.00 OF MYR 1.00 EACH. PREFERENCE SHARE 500,000,000.00 OF MYR 0.10 EACH.
ISSUED AND PAID UP CAPITAL	:	MYR 559,000,000.00 DIVIDED INTO ORDINARY SHARES 100,000,000 CASH OF MYR 1.00 EACH. PREFERENCE SHARES 393,000,000 CASH AND 66,000,000 OTHERWISE OF MYR 1.00 EACH.
SALES	:	MYR 1,470,445,000 [2014]
NET WORTH	:	MYR 855,083,400 [2014]
STAFF STRENGTH	:	700 [2015]
BANKER (S)		AMBANK (M) BHD MALAYAN BANKING BHD
LITIGATION	:	CLEAR
DEFAULTER CHECK	:	CLEAR
FINANCIAL CONDITION	:	FAIR
PAYMENT	:	GOOD
MANAGEMENT CAPABILITY	:	AVERAGE
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 oleochemicals.

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

The immediate and ultimate holding company of the Subject is KUALA LUMPUR KEPONG BERHAD, a company incorporated in MALAYSIA.

Share Capital History

Date	Authorised Shared Capital	Issue & Paid Up Capital
01/07/2013	MYR 150,000,000.00	MYR 559,000,000.00
12/12/2012	MYR 150,000,000.00	MYR 137,650,000.00
08/08/2006	MYR 100,000,000.00	MYR 100,000,000.00
29/07/2002	MYR 100,000.00	MYR 2.00

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

Name	Address	IC/PP/Loc No	Shareholding	(%)
KUALA LUMPUR KEPONG BERHAD	WISMA TAIKO, 1 JALAN S.P. SEENIVASAGAM, 30000 IPOH, PERAK, MALAYSIA.	15043V	223,600,000.00	40.00
KL-KEPONG INDUSTRIAL HOLDINGS SDN. BHD.	WISMA TAIKO, 1, JALAN S.P. SEENIVASAGAM, 30000 IPOH, PERAK, MALAYSIA.	300525M	223,600,000.00	40.00
PALM-OLEO SDN. BHD.	WISMA TAIKO, 1 JALAN S.P.SEENIVASAGAM, 30000 IPOH, PERAK, MALAYSIA.	185886V	111,800,000.00	20.00
			---------------	------
			559,000,000.00	100.00
			============	=====

+ Also Director

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

Local No	Country	Company	(%)	As At
629076P	MALAYSIA	KLK BIOENERGY SDN BHD	100.00	26/11/2014

DIRECTORS

DIRECTOR 1

Name Of Subject	:	MR. YEOW AH KOW
Address	:	36, JALAN USJ 5/3, UEP, 47610 SUBANG JAYA, SELANGOR, MALAYSIA.
IC / PP No	:	8391290
New IC No	:	540203-05-5085
Date of Birth	:	03/02/1954
Nationality	:	MALAYSIAN
Date of Appointment	:	24/10/2002

DIRECTOR 2

Name Of Subject	:	MR. PUNG KOK HOOI
Address	:	1, JALAN SS 24/19, TAMAN MEGAH, 47301 PETALING JAYA, SELANGOR, MALAYSIA.
New IC No	:	660414-07-5357
Date of Birth	:	14/04/1966
Nationality	:	MALAYSIAN
Date of Appointment	:	26/12/2008

DIRECTOR 3

Name Of Subject	:	MR. MADHEV A/L BALA SUBRAMANIAM
Address	:	42, PJS 9/10, BANDAR SUNWAY, 46150 PETALING JAYA, SELANGOR, MALAYSIA.
IC / PP No	:	8294889
New IC No	:	600913-71-5115
Date of Birth	:	13/09/1960
Nationality	:	MALAYSIAN
Date of Appointment	:	27/03/2006

DIRECTOR 4

Name Of Subject	:	MR. GOH ENG CHOOR
Address	:	9, LORONG BATU NILAM 20G, BANDAR BUKIT TINGGI 2, 41200 KLANG, SELANGOR, MALAYSIA.
IC / PP No	:	5485745
New IC No	:	571002-10-5199
Date of Birth	:	02/10/1957
Nationality	:	MALAYSIAN
Date of Appointment	:	01/10/2014

MANAGEMENT

1)	Name of Subject	:	YEOW AH KOW
	Position	:	DIRECTOR

2)	Name of Subject	:	JESSI KOH
	Position	:	FINANCE MANAGER

3)	Name of Subject	:	NIZA
	Position	:	ADMINISTRATOR

4)	Name of Subject	:	BRIAN LEE
	Position	:	HUMAN RESOURCE MANAGER

AUDITOR

Auditor	:	KPMG
Auditor' Address	:	KPMG TOWER, 8 FIRST AVENUE, BANDAR UTAMA, LEVEL 10, 47800 PETALING JAYA, SELANGOR, MALAYSIA.

COMPANY SECRETARIES

1)	Company Secretary	:	MS. YAP MIOW KIEN
	IC / PP No	:	A1171235
	New IC No	:	681220-05-5334
	Address	:	12, LINGKARAN MERU VALLEY 1A, LAKEVIEW VILLA, MERU VALLEY GOLF RESORT, JALAN BUKIT MERU, 30250 IPOH, PERAK, MALAYSIA.

2)	Company Secretary	:	MR. PUNG KOK HOOI
	New IC No	:	660414-07-5357
	Address	:	1, JALAN SS 24/19, TAMAN MEGAH, 47301 PETALING JAYA, SELANGOR, MALAYSIA.

BANKING

Banking relations are maintained principally with :

1)

Name

:

AMBANK (M) BHD

2)

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
Overseas	:	YES
Import Countries	:	INDONESIA,SINGAPORE

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	:	EUROPE UNITED STATES ASIA
Credit Term	:	30 - 60 DAYS
Payment Mode	:	CHEQUES TELEGRAPHIC TRANSFER (TT)
Type of Customer	:	OIL & GAS INDUSTRIES,PETROCHEMICAL INDUSTRIES

OPERATIONS

Products manufactured

:

OLEOCHEMICALS

Product Brand Name

:

PALMEROL , PALMESTER

Competitor(s)

:

EMERY OLEOCHEMICALS (M) SDN BHD
NATURAL OLEOCHEMICALS SDN. BHD.
NYLEX (MALAYSIA) BHD

Member(s) / Affiliate(s)

:

CHEMICAL INDUSTRIES COUNCIL OF MALAYSIA (CICM)

Ownership of premises

:

OWNED

Total Number of Employees:
YEAR	2015	2014	2013	2012	2011	2010
GROUP	N/A	N/A	N/A	N/A	N/A	N/A
COMPANY	700	700	700	500	250	250

Branch

:

NO

Other Information:

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

The Subject is under the Kuala Lumpur Kepong Bhd, a Malaysian multinational company involved in plantation, manufacturing, retailing and property development. Whilst plantation remains KLK's core business, the Group has expanded downstream into resource-based manufacturing, in particular oleochemicals, cocoa processing and rubber processing.

The Subject is one of the world's largest manufacturers of palm-based oleochemical products and their derivatives, with a product portfolio covering fatty acids & glycerine, fatty amides, soap noodles & soap bars, esters, and fatty alcohols. Recent investments and acquisition activities have allowed the Group to venture further downstream into products like methyl ester sulfonate, amines, biodiesel, fine chemicals and surfactants.

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

The Subject's products range includes :-

1. Amides
- PALMOCOL®
- PALMOWAX®

2. Amphoteric Surfactants
- TWINWHALE

3. Anionic Surfactants
- PALMFONATE®
- PALMOSALT®
- TWINWHALE

4. Cationic Surfactants
- FIVE PEAKS
- TWINWHALE

5. Esters
- PALMERE®
- PALMERGY®
- PALMESTER®
- YUANDONG

6. Fatty Acids
- PALMERA®

7. Fatty Alcohols
- PALMEROL®

8. Glycerine
- PALMERA®

9. Nonionic Surfactants
- GREENBENTIN™
- HEDIPIN™
- IMBENTIN™
- KOSTERAN™
- KOTILEN™
- SYMPATENS™

10. Tocotrienols

CURRENT INVESTIGATION

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client	:	603 7809883
Current Telephone Number	:	03-31012633
Match	:	NO
Address Provided by Client	:	25, JALAN SUNGAI PINANG 5118, FASA 2D, TAMAN PERINDUSTRIAN PULAU INDAH, 42920 PELABUHAN KANG, DARUL EHSEN MALAYSIA
Current Address	:	25, JALAN SUNGAI PINANG 5/18, FASA 2D, TAMAN PERINDUSTRIAN PULAU INDAH, 42920 PULAU INDAH, SELANGOR, MALAYSIA.
Match	:	NO
Latest Financial Accounts	:	YES

Other Investigations

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

The address provided is stated as per report and the address provided is incomplete.

The contact number provided at 6037809883 is invalid.

FINANCIAL ANALYSIS

Profitability
Turnover	:	Erratic	[	2010 - 2014	]
Profit/(Loss) Before Tax	:	Decreased	[	2010 - 2014	]
Return on Shareholder Funds	:	Unfavourable	[	0.84%	]
Return on Net Assets	:	Unfavourable	[	5.15%	]
The fluctuating turnover reflects the fierce competition among the existing and new market players.The dip in profit could be due to the stiff market competition which reduced the Subject's profit margin. The unfavourable return on shareholders' funds could indicate that the Subject was inefficient in utilising its assets to generate returns.
Liquidity
Current Ratio	:	Favourable	[	3.13 Times	]
The Subject was in good liquidity position with its current  liabilities  well covered by its current assets. With its net current assets, the Subject should be able to repay its short term obligations.
Solvency
Liability Ratio	:	Acceptable	[	0.91 Times	]
The Subject had an acceptable liabilities ratio indicating that the Subject has an acceptable level of liabilities relative to shareholders' funds.
Overall Assessment :
The Subject recorded lower profits as its turnover showed a erratic trend. The Subject's management was unable to control its costs efficiently as its profit showed a downward trend. 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. The Subject's liabilities were slightly high and its financial risk was also high. If no plans are made to reduce its liabilities, the Subject's performance may deteriorate in the coming year.
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

MALAYSIA ECONOMIC / INDUSTRY OUTLOOK

MSIC CODE
20 : MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS
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 2002, the Subject is a Private Limited company, focusing on manufacturing of oleochemicals. 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. A paid up capital of MYR 559,000,000 allows the Subject to expand its business more comfortably and the Subject is well backed by a listed holding company which would stimulate further growth for the Subject. Hence, the potential growth of the Subject is positive.

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 700 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.

The Subject's business performance showed a reverse trend as both its turnover and pre-tax profit have decreased compared to the previous year. The Subject has generated an unfavourable return on shareholders' funds indicating that the management was inefficient in utilising its funds to generate return. 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. A low liabilities ratio has minimised the Subject's financial risk.

Having a strong assets backing, the Subject possesses latent assets as collateral for further financial extension. Hence, it has good chance of getting loans if the needs arises. 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 promptly.

PROFIT AND LOSS ACCOUNT

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

Financial Year End	2014-09-30	2013-09-30	2012-09-30	2011-09-30	2010-09-30
Months	12	12	12	12	12
Consolidated Account	GROUP	GROUP	GROUP	GROUP	GROUP
Audited Account	YES	YES	YES	YES	YES
Unqualified Auditor's Report (Clean Opinion)	YES	YES	YES	YES	YES
Financial Type	SUMMARY	FULL	FULL	FULL	FULL
Currency	MYR	MYR	MYR	MYR	MYR
TURNOVER	1,470,445,000	1,155,458,000	1,469,149,000	1,472,238,000	703,952,000
Other Income	-	6,983,000	18,234,000	4,920,000	8,284,000
	----------------	----------------	----------------	----------------	----------------
Total Turnover	1,470,445,000	1,162,441,000	1,487,383,000	1,477,158,000	712,236,000
Costs of Goods Sold	-	(1,019,028,000)	(1,412,836,000)	(1,383,005,000)	(652,537,000)
	----------------	----------------	----------------	----------------	----------------
Gross Profit	-	143,413,000	74,547,000	94,153,000	59,699,000
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) FROM OPERATIONS	73,254,000	101,193,000	39,129,000	58,446,000	38,759,000
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) BEFORE TAXATION	73,254,000	101,193,000	39,129,000	58,446,000	38,759,000
Taxation	(1,300,000)	(1,178,000)	(2,403,000)	(628,000)	(150,000)
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) AFTER TAXATION	7,195,400	100,015,000	36,726,000	57,818,000	38,609,000
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) BROUGHT FORWARD
As previously reported	288,888,000	188,873,000	152,147,000	95,638,000	57,029,000
Prior year adjustment	-	-	-	(1,309,000)	-
	----------------	----------------	----------------	----------------	----------------
As restated	288,888,000	188,873,000	152,147,000	94,329,000	57,029,000
	----------------	----------------	----------------	----------------	----------------
PROFIT AVAILABLE FOR APPROPRIATIONS	296,083,400	288,888,000	188,873,000	152,147,000	95,638,000
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) CARRIED FORWARD	296,083,400	288,888,000	188,873,000	152,147,000	95,638,000
	=============	=============	=============	=============	=============
INTEREST EXPENSE (as per notes to P&L)
Bankers' acceptance	-	3,161,000	7,131,000	6,409,000	2,571,000
Loan from holding company	-	-	-	282,000	-
Term loan / Borrowing	-	606,000	1,130,000	1,325,000	1,054,000
Others	-	2,075,000	2,730,000	1,076,000	332,000
	----------------	----------------	----------------	----------------	----------------
	-	5,842,000	10,991,000	9,092,000	3,957,000
	-	=============	=============	=============	=============
DEPRECIATION (as per notes to P&L)	-	30,962,000	30,794,000	28,644,000	21,939,000
AMORTIZATION	-	51,000	51,000	51,000	51,000
	----------------	----------------	----------------	----------------	----------------
	-	31,013,000	30,845,000	28,695,000	21,990,000
	=============	=============	=============	=============	=============

BALANCE SHEET

ASSETS EMPLOYED:
FIXED ASSETS	972,311,000	773,969,000	586,231,000	514,179,000	502,081,000
Others	-	3,115,000	3,166,000	3,217,000	3,268,000
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM INVESTMENTS/OTHER ASSETS	-	3,115,000	3,166,000	3,217,000	3,268,000
Goodwill on consolidation	-	225,000	225,000	225,000	225,000
	----------------	----------------	----------------	----------------	----------------
TOTAL INTANGIBLE ASSETS	-	225,000	225,000	225,000	225,000
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM ASSETS	972,311,000	777,309,000	589,622,000	517,621,000	505,574,000
Stocks	-	219,841,000	223,456,000	348,441,000	223,384,000
Trade debtors	-	118,255,000	148,186,000	221,564,000	126,896,000
Other debtors, deposits & prepayments	-	6,221,000	4,656,000	9,048,000	6,695,000
Short term deposits	-	32,597,000	71,870,000	8,820,000	9,700,000
Amount due from related companies	-	39,746,000	42,268,000	-	-
Cash & bank balances	-	100,419,000	96,986,000	1,598,000	862,000
Others	-	1,951,000	8,306,000	4,471,000	611,000
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT ASSETS	659,854,000	519,030,000	595,728,000	593,942,000	368,148,000
	----------------	----------------	----------------	----------------	----------------
TOTAL ASSET	1,632,165,000	1,296,339,000	1,185,350,000	1,111,563,000	873,722,000
	=============	=============	=============	=============	=============
CURRENT LIABILITIES
Trade creditors	-	51,040,000	43,240,000	80,343,000	93,864,000
Other creditors & accruals	-	31,490,000	25,581,000	55,518,000	12,661,000
Short term borrowings/Term loans	-	8,720,000	11,680,000	11,680,000	2,920,000
Other borrowings	-	39,565,000	64,223,000	35,260,000	44,385,000
Bill & acceptances payable	-	95,669,000	127,123,000	266,208,000	115,674,000
Amounts owing to holding company	-	445,000	66,639,000	-	-
Amounts owing to related companies	-	34,357,000	34,484,000	-	-
Provision for taxation	-	162,000	170,000	-	-
Other liabilities	-	3,687,000	-	12,998,000	-
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT LIABILITIES	210,882,000	265,135,000	373,140,000	462,007,000	269,504,000
	----------------	----------------	----------------	----------------	----------------
NET CURRENT ASSETS/(LIABILITIES)	448,972,000	253,895,000	222,588,000	131,935,000	98,644,000
	----------------	----------------	----------------	----------------	----------------
TOTAL NET ASSETS	1,421,283,000	1,031,204,000	812,210,000	649,556,000	604,218,000
	=============	=============	=============	=============	=============
SHARE CAPITAL
Ordinary share capital	145,900,000	145,900,000	137,650,000	137,650,000	137,650,000
	----------------	----------------	----------------	----------------	----------------
TOTAL SHARE CAPITAL	145,900,000	145,900,000	137,650,000	137,650,000	137,650,000
RESERVES
Share premium	413,100,000	413,100,000	338,850,000	338,850,000	338,850,000
Retained profit/(loss) carried forward	296,083,400	288,888,000	188,873,000	152,147,000	95,638,000
	----------------	----------------	----------------	----------------	----------------
TOTAL RESERVES	709,183,400	701,988,000	527,723,000	490,997,000	434,488,000
	----------------	----------------	----------------	----------------	----------------
SHAREHOLDERS' FUNDS/EQUITY	855,083,400	847,888,000	665,373,000	628,647,000	572,138,000
Long term loans	-	-	8,720,000	20,400,000	32,080,000
Deferred taxation	-	3,394,000	2,546,000	509,000	-
Others	-	179,922,000	135,571,000	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM LIABILITIES	566,199,600	183,316,000	146,837,000	20,909,000	32,080,000
	----------------	----------------	----------------	----------------	----------------
	1,421,283,000	1,031,204,000	812,210,000	649,556,000	604,218,000
	=============	=============	=============	=============	=============

FINANCIAL RATIO

TYPES OF FUNDS
Cash	-	133,016,000	168,856,000	10,418,000	10,562,000
Net Liquid Funds	-	37,347,000	41,733,000	(255,790,000)	(105,112,000)
Net Liquid Assets	448,972,000	34,054,000	(868,000)	(216,506,000)	(124,740,000)
Net Current Assets/(Liabilities)	448,972,000	253,895,000	222,588,000	131,935,000	98,644,000
Net Tangible Assets	1,421,283,000	1,030,979,000	811,985,000	649,331,000	603,993,000
Net Monetary Assets	(117,227,600)	(149,262,000)	(147,705,000)	(237,415,000)	(156,820,000)
PROFIT & LOSS ITEMS
Earnings Before Interest & Tax (EBIT)	-	107,035,000	50,120,000	67,538,000	42,716,000
Earnings Before Interest, Taxes, Depreciation And Amortization (EBITDA)	-	138,048,000	80,965,000	96,233,000	64,706,000
BALANCE SHEET ITEMS
Total Borrowings	-	143,954,000	211,746,000	333,548,000	195,059,000
Total Liabilities	777,081,600	448,451,000	519,977,000	482,916,000	301,584,000
Total Assets	1,632,165,000	1,296,339,000	1,185,350,000	1,111,563,000	873,722,000
Net Assets	1,421,283,000	1,031,204,000	812,210,000	649,556,000	604,218,000
Net Assets Backing	855,083,400	847,888,000	665,373,000	628,647,000	572,138,000
Shareholders' Funds	855,083,400	847,888,000	665,373,000	628,647,000	572,138,000
Total Share Capital	145,900,000	145,900,000	137,650,000	137,650,000	137,650,000
Total Reserves	709,183,400	701,988,000	527,723,000	490,997,000	434,488,000
LIQUIDITY (Times)
Cash Ratio	-	0.50	0.45	0.02	0.04
Liquid Ratio	-	1.13	1.00	0.53	0.54
Current Ratio	3.13	1.96	1.60	1.29	1.37
WORKING CAPITAL CONTROL (Days)
Stock Ratio	-	69	56	86	116
Debtors Ratio	-	37	37	55	66
Creditors Ratio	-	18	11	21	53
SOLVENCY RATIOS (Times)
Gearing Ratio	-	0.17	0.32	0.53	0.34
Liabilities Ratio	0.91	0.53	0.78	0.77	0.53
Times Interest Earned Ratio	-	18.32	4.56	7.43	10.80
Assets Backing Ratio	9.74	7.07	5.90	4.72	4.39
PERFORMANCE RATIO (%)
Operating Profit Margin	4.98	8.76	2.66	3.97	5.51
Net Profit Margin	0.49	8.66	2.50	3.93	5.48
Return On Net Assets	5.15	10.38	6.17	10.40	7.07
Return On Capital Employed	5.15	10.38	6.17	10.39	7.07
Return On Shareholders' Funds/Equity	0.84	11.80	5.52	9.20	6.75
Dividend Pay Out Ratio (Times)	-	0.00	0.00	0.00	0.00
NOTES TO ACCOUNTS
Contingent Liabilities	-	0	0	0	0

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.65.15
UK Pound	1	Rs.99.36
Euro	1	Rs.71.25

INFORMATION DETAILS

Analysis Done by :	KAR
Report Prepared by :	TRU

RATING EXPLANATIONS

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

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

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

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

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

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