MIRA INFORM REPORT

Report No. :	342241
Report Date :	30.09.2015

IDENTIFICATION DETAILS

Name :	JR ENGINEERING AND MEDICAL TECHNOLOGIES (M) SDN. BHD.
Registered Office :	NW-03-33, Cova Square, Jalan Technology, Kota Damansara, Pju 5, 47810 Petaling Jaya, Selangor
Country :	Malaysia
Financials (as on) :	30.09.2013
Date of Incorporation :	11.06.2001
Com. Reg. No.:	549862-H
Legal Form :	Private Limited
Line of Business :	Subject is engaged in manufacturing of Gloves
No. of Employee :	55 [2015]

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Moderate
Payment Behaviour :	Slow
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – 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.	:	549862-H
COMPANY NAME	:	JR ENGINEERING AND MEDICAL TECHNOLOGIES (M) SDN. BHD.
FORMER NAME	:	N/A
INCORPORATION DATE	:	11/06/2001
COMPANY STATUS	:	EXIST
LEGAL FORM	:	PRIVATE LIMITED
LISTED STATUS	:	NO
REGISTERED ADDRESS	:	NW-03-33, COVA SQUARE, JALAN TECHNOLOGY, KOTA DAMANSARA, PJU 5, 47810 PETALING JAYA, SELANGOR, MALAYSIA.
BUSINESS ADDRESS	:	11, JALAN INDAH 2, TAMAN SERENDAH, 48200 RAWANG, SELANGOR, MALAYSIA.
TEL.NO.	:	03-60815081
FAX.NO.	:	03-60814081
CONTACT PERSON	:	GANESAN A/L SUBRAMANIAM ( MANAGING DIRECTOR )
INDUSTRY CODE	:	22193
PRINCIPAL ACTIVITY	:	MANUFACTURING OF GLOVES
AUTHORISED CAPITAL	:	MYR 500,000.00 DIVIDED INTO ORDINARY SHARE 500,000.00 OF MYR 1.00 EACH.
ISSUED AND PAID UP CAPITAL	:	MYR 500,000.00 DIVIDED INTO ORDINARY SHARES 100,000 CASH AND 400,000 OTHERWISE OF MYR 1.00 EACH.
SALES	:	MYR 12,216,259 [2013]
NET WORTH	:	MYR 88,548 [2013]
STAFF STRENGTH	:	55 [2015]
LITIGATION	:	CLEAR
DEFAULTER CHECK	:	CLEAR
FINANCIAL CONDITION	:	POOR
PAYMENT	:	SLOW
MANAGEMENT CAPABILITY	:	AVERAGE
COMMERCIAL RISK	:	MODERATE
CURRENCY EXPOSURE	:	HIGH
GENERAL REPUTATION	:	SATISFACTORY
INDUSTRY OUTLOOK	:	MATURE

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 gloves.

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

Share Capital History

Date	Authorised Shared Capital	Issue & Paid Up Capital
31/12/2013	MYR 500,000.00	MYR 500,000.00
11/06/2011	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	(%)
MR. GANESAN A/L SUBRAMANIAM +	27, JALAN SL 2/2, BANDAR SUNGAI LONG, BATU 11,JALAN CHERAS, 43000 KAJANG, SELANGOR, MALAYSIA.	620905-02-5059	250,000.00	50.00
MR. SUGUMARAN A/L SUBRAMANIAM	46, JALAN 3/9, BUKIT RAWANG JAYA, 48000 RAWANG, SELANGOR, MALAYSIA.	651125-02-5359 A0273433	250,000.00	50.00
			---------------	------
			500,000.00	100.00
			============	=====

+ Also Director

DIRECTORS

DIRECTOR 1

Name Of Subject	:	MR. KUMARASEN A/L SHANMUGANATHAN
Address	:	51, JALAN SETIA DAMAU U13/15F, PRESINT 6, SETIA ALAM, 40170 SHAH ALAM, SELANGOR, MALAYSIA.
IC / PP No	:	7408880
New IC No	:	640909-10-5337
Date of Birth	:	09/09/1964
Nationality	:	MALAYSIAN
Date of Appointment	:	09/04/2015

DIRECTOR 2

Name Of Subject	:	MR. GANESAN A/L SUBRAMANIAM
Address	:	27, JALAN SL 2/2, BANDAR SUNGAI LONG, BATU 11,JALAN CHERAS, 43000 KAJANG, SELANGOR, MALAYSIA.
New IC No	:	620905-02-5059
Date of Birth	:	05/09/1962
Nationality	:	MALAYSIAN
Date of Appointment	:	11/06/2001

MANAGEMENT

1)	Name of Subject	:	GANESAN A/L SUBRAMANIAM
	Position	:	MANAGING DIRECTOR

AUDITOR

Auditor	:	GK & ASSOCIATES
Auditor' Address	:	NW-02-35, COVA SQUARE, JALAN TEKNOLOGI, KOTA DAMANSARA PJU5, 47810 PETALING JAYA, SELANGOR, MALAYSIA.

COMPANY SECRETARIES

1)	Company Secretary	:	MR. KUMARASEN A/L SHANMUGANATHAN
	IC / PP No	:	7408880
	New IC No	:	640909-10-5337
	Address	:	51, JALAN SETIA DAMAU U13/15F, PRESINT 6, SETIA ALAM, 40170 SHAH ALAM, SELANGOR, MALAYSIA.

2)	Company Secretary	:	MR. KWAN WAI KEIN
	IC / PP No	:	A3747719
	New IC No	:	770606-14-5783
	Address	:	A-06-12, DAMANSARA SUTERA APT, PERSIARAN KIP UTAMA, DAMANSARA KIPARK, 52200 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

BANKING

No Banker found in our databank.

ENCUMBRANCE (S)

Charge No	Creation Date	Charge Description	Chargee Name	Total Charge	Status
1	17/05/2004	N/A	RHB BANK BERHAD	MYR 600,000.00	Unsatisfied
2	17/05/2004	DEED OF DEBENTURE	CREDIT GUARANTEE CORPORATION MALAYSIA BERHAD	MYR 600,000.00	Unsatisfied
3	27/05/2005	FACILITIES AGREEMENT, CHARGE ANNEXURE, LETTER OF GUARANTEE	PUBLIC BANK BERHAD	MYR 272,000.00	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	Percentage	:	100%
Overseas	:	NO	Percentage	:	0%

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

OVERALL PAYMENT HABIT
Prompt 0-30 Days	[	]	Good 31-60 Days	[	]	Average 61-90 Days	[	X	]
Fair 91-120 Days	[	]	Poor >120 Days	[	]

CLIENTELE
Local	:	NO
Overseas	:	YES	Percentage	:	100%
Export Market	:	THAILAND INDIA INDONESIA UNITED STATES SWITZERLAND
Credit Term	:	30 DAYS
Payment Mode	:	LETTER OF CREDIT (LC) ELECTRONIC TRANSFER

OPERATIONS

Products manufactured

:

GLOVES

Total Number of Employees:
YEAR	2015	2013
GROUP	N/A	N/A
COMPANY	55	50

Branch

:

NO

Other Information:

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

The Subject manufactures Medical and Industrial grade disposable latex, nitrile and polychloroprene gloves.

Within the Medical sector, the Subject manufacture Exam gloves, Dental gloves, High-Risk (EMS) gloves and surgical gloves.

Within the Industrial segments, the Subject produce latex and latex-free gloves to end-markets that include household, safety, chemical protection and laboratory services.

The variety of products enables the company to satisfy different customer segments while generating value added service.

CURRENT INVESTIGATION

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client	:	N/A
Current Telephone Number	:	03-60815081
Match	:	N/A
Address Provided by Client	:	NO 11, JALAN INDAH 2, TAMAN SERENDAH INDAH, 48200 SERENDAH SELANGOR
Current Address	:	11, JALAN INDAH 2, TAMAN SERENDAH, 48200 RAWANG, SELANGOR, MALAYSIA.
Match	:	YES
Latest Financial Accounts	:	YES

Other Investigations

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

The Subject refused to disclose its bankers.

FINANCIAL ANALYSIS

Profitability
Turnover	:	Erratic	[	2010 - 2013	]
Profit/(Loss) Before Tax	:	Decreased	[	2010 - 2013	]
Return on Shareholder Funds	:	Unfavourable	[	(160.39%)	]
Return on Net Assets	:	Unfavourable	[	(6.11%)	]
The fluctuating turnover reflects the fierce competition among the existing and new market players.The Subject could be more efficient in controlling its operating costs and had managed to reduce its losses during the year. 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	:	Favourable	[	13 Days	]
Debtor Ratio	:	Favourable	[	21 Days	]
Creditors Ratio	:	Favourable	[	16 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	:	Acceptable	[	0.83 Times	]
Current Ratio	:	Unfavourable	[	1.17 Times	]
The Subject's liquid ratio was slightly low. This could indicate that the Subject's working capital was slightly deficient. The Subject will have to improve its liquidity position either by obtaining short term financing or increase its paid up capital so that it can meet all its short term obligations as and when they fall due.
Solvency
Interest Cover	:	Unfavourable	[	(0.63 Times)	]
Gearing Ratio	:	Unfavourable	[	6.64 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 :
The Subject's turnover showed a volatile trend but its losses were lower when compared to the previous corresponding period. This could suggest that the Subject was more efficient in its operating cost control and was more competitive. The Subject's liquidity was at an acceptable range. If the Subject is able to obtain further short term financing, it should be able to meet all its short term obligations. The Subject'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
22193 : Rubber remilling and latex processing
INDUSTRY :	NATURAL RUBBER
Malaysia is currently the world's fourth largest producer of Natural Rubber (NR) after Thailand, Indonesia and Vietnam. The output of rubber in year 2015 is expected to reach 800,000 tonnes, up from the forecasted 792,000 tonnes in 2014. However, over the first half in 2014, the rubber sector declined 13.3% due to lower output and prices. Production of natural rubber dropped 13.2% mainly due to the hot weather conditions during the first quarter of the year. Nevertheless, due to the stable prices and improved weather conditions during the second half of 2014, the output of rubber is expected to achieve the estimated production of 792,000 tonnes.
Furthermore, based on the information from Malaysian Rubber Export Promotion Council (MREPC), the production of natural rubber had declined by 10.6% to 826,421 tonnes in year 2013 from 922,798 tonnes in year 2012. Besides, in September 2014, the price of natural rubber has dropped. It was partly due to sluggish demand from China's automobile industry following measures to restrict production of new cars to reduce air pollution and traffic congestion. Hence, rubber price are expected to remain low and average RM5/kg in 2014 (2013: RM7.81/kg). Even so, exports recorded a positive year-on-year growth of 2.6% for the same period.
Over the first six months in the year 2014, Malaysia exported 390,222 tonnes of natural rubber. There were 847,090 tonnes of natural rubber exported by Malaysia in year 2013. China remained the largest markets for Malaysian natural rubber, accounting for more than 40% of Malaysia's total exports of natural rubber. Out of the overall natural rubber exports from Malaysia, 47.6% of natural rubber was exported to China over the first six months of year 2014, and 46.3% in year 2013.
The natural rubber imported by Malaysia was 426,502 tonnes over the first six months. However, Malaysia imported 1,004,805 tonnes of natural rubber in the year of 2013. Additionally, out of the overall natural rubber imports by Malaysia, 216,628 tonnes (50.8%) natural rubber were imported from Thailand over the first six months and 515,283 tonnes (51.3%) in year 2013.
Malaysia remains the world seventh largest consumer of natural rubber (NR) in the year 2013. The other countries in the top ten ranking include China, the USA, Japan, India, Thailand, Brazil, Indonesia, Germany and the Russian Federation. Malaysia's natural rubber consumption over the first six months in year 2014 was 220,570 tonnes. The natural rubber consumption in the year 2013 was 434,192 tonnes and it slightly decreased compare to 441,400 tonnes in 2012.
Prime Minister Datuk Seri Najib Tun Razak, in tabling Budget 2015, said the Malaysian Rubber Board (MRB) would get a RM100 million allocation to implement a price regulation mechanism at the farm level. According to Minister of Plantation Industries and Commodities, the incentives were aimed at reducing the smallholders' economic burden by increasing their revenue amid the volatility in rubber prices. Thus, starting January 1, 2015, rubber smallholders will be eligible for assistance should rubber prices fall below certain levels.
Other than that, according to Deputy Minister of Plantation Industries and Commodities, the Malaysian rubber-based industry is expected to contribute RM52.9 billion to the country's gross national income by 2020 through targets set under the National Key Economic Area. She said that the development of income projection since 10 decades ago has shown that the rubber industry's contribution would continue to be important and relevant for the long-term, and become among the key income sources for Malaysians, particularly the rural folks.
OVERALL INDUSTRY OUTLOOK : Mature

CREDIT RISK EVALUATION & RECOMMENDATION

Incorporated in 2001, the Subject is a Private Limited company, focusing on manufacturing of gloves. Having been in the industry for over a decade, the Subject has achieved a certain market share and has built up a satisfactory reputation in the market. It should have received supports from its regular customers. With an issued and paid up capital of MYR 500,000 contributed by individual shareholders, the Subject may face difficulties in its attempt to further expand its business in the future. Thus, the Subject should put more efforts on its business to gain higher market share while competing aggressively in the market.

The Subject focuses only on overseas market. This global approach has enabled the Subject to generate a better growth sales.  Being an export-oriented company, the Subject however is subjected to certain inherent risk of global economy slowdown, foreign currencies fluctuations and stiff competition in the international market. Being a moderate size company, the Subject has a total workforce of 55 employees in its business operations. 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. The Subject managed to maintain an adequate liquidity level, indicating that the Subject has the ability to meet its financial obligations. The high gearing ratio clearly implied that the Subject was supported by more debt than equity. Thus, the Subject is exposed to high financial risk.

We noted that the Subject's supplies are solely sourced from local market. Being highly dependent on a limited number of suppliers could lead to delays, lost of revenue and increased costs if such resources become unavailable or shortage.

The Subject's payment habit is average. With its adequate working capital, the Subject should be able to pay its short term debts.

The industry has reached its optimum level and is generally stable. It is saturated and very competitive. Thus, the Subject's growth prospect is very much depends on its capacity in sustaining its performance in the market.

Based on the above unfavourable condition, we regard granting credit to the Subject to be quite risky. Hence, credit is not recommended.

PROFIT AND LOSS ACCOUNT

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

JR ENGINEERING AND MEDICAL TECHNOLOGIES (M) SDN. BHD.

Financial Year End	2013-09-30	2012-09-30	2011-09-30	2010-09-30
Months	12	12	12	12
Consolidated Account	Company	Company	Company	Company
Audited Account	YES	YES	YES	YES
Unqualified Auditor's Report (Clean Opinion)	YES	YES	YES	YES
Financial Type	FULL	FULL	SUMMARY	SUMMARY
Currency	MYR	MYR	MYR	MYR
TURNOVER	12,216,259	10,199,153	11,595,404	14,836,317
Other Income	66,610	8,400	-	-
	----------------	----------------	----------------	----------------
Total Turnover	12,282,869	10,207,553	11,595,404	14,836,317
Costs of Goods Sold	(11,322,858)	(9,462,279)	-	-
	----------------	----------------	----------------	----------------
Gross Profit	960,011	745,274	-	-
	----------------	----------------	----------------	----------------
PROFIT/(LOSS) FROM OPERATIONS	(142,023)	(252,308)	193,583	299,038
	----------------	----------------	----------------	----------------
PROFIT/(LOSS) BEFORE TAXATION	(142,023)	(252,308)	193,583	299,038
Taxation	-	-	(19,647)	-
	----------------	----------------	----------------	----------------
PROFIT/(LOSS) AFTER TAXATION	(142,023)	(252,308)	173,936	299,038
	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) BROUGHT FORWARD
As previously reported	(269,429)	(17,121)	(191,057)	(490,095)
	----------------	----------------	----------------	----------------
As restated	(269,429)	(17,121)	(191,057)	(490,095)
	----------------	----------------	----------------	----------------
PROFIT AVAILABLE FOR APPROPRIATIONS	(411,452)	(269,429)	(17,121)	(191,057)
	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) CARRIED FORWARD	(411,452)	(269,429)	(17,121)	(191,057)
	=============	=============	=============	=============
INTEREST EXPENSE (as per notes to P&L)
Hire purchase	10,491	6,141	-	-
Term loan / Borrowing	33,849	33,653	-	-
Others	42,966	47,254	-	-
	----------------	----------------	----------------	----------------
	87,306	87,048	-	-
	=============	=============	-	-
DEPRECIATION (as per notes to P&L)	136,753	211,651	-	-
	----------------	----------------	----------------	----------------
	136,753	211,651	-	-
	=============	=============

BALANCE SHEET

JR ENGINEERING AND MEDICAL TECHNOLOGIES (M) SDN. BHD.

ASSETS EMPLOYED:
FIXED ASSETS	347,021	315,878	450,661	498,520
Investment properties	320,000	320,000	-	-
	----------------	----------------	----------------	----------------
TOTAL LONG TERM INVESTMENTS/OTHER ASSETS	320,000	320,000	320,000	320,000
	----------------	----------------	----------------	----------------
TOTAL LONG TERM ASSETS	667,021	635,878	770,661	818,520
Stocks	450,134	514,962	-	-
Trade debtors	700,256	481,504	-	-
Other debtors, deposits & prepayments	121,643	50,103	-	-
Cash & bank balances	291,780	59,251	-	-
	----------------	----------------	----------------	----------------
TOTAL CURRENT ASSETS	1,563,813	1,105,820	1,319,178	1,651,439
	----------------	----------------	----------------	----------------
TOTAL ASSET	2,230,834	1,741,698	2,089,839	2,469,959
	=============	=============	=============	=============
CURRENT LIABILITIES
Trade creditors	502,297	132,754	-	-
Other creditors & accruals	728,362	407,617	-	-
Hire purchase & lease creditors	37,663	30,889	-	-
Short term borrowings/Term loans	46,951	40,951	-	-
Provision for taxation	19,647	19,647	-	-
	----------------	----------------	----------------	----------------
TOTAL CURRENT LIABILITIES	1,334,920	631,858	602,148	1,024,763
	----------------	----------------	----------------	----------------
NET CURRENT ASSETS/(LIABILITIES)	228,893	473,962	717,030	626,676
	----------------	----------------	----------------	----------------
TOTAL NET ASSETS	895,914	1,109,840	1,487,691	1,445,196
	=============	=============	=============	=============
SHARE CAPITAL
Ordinary share capital	500,000	500,000	500,000	500,000
	----------------	----------------	----------------	----------------
TOTAL SHARE CAPITAL	500,000	500,000	500,000	500,000
Retained profit/(loss) carried forward	(411,452)	(269,429)	(17,121)	(191,057)
	----------------	----------------	----------------	----------------
TOTAL RESERVES	(411,452)	(269,429)	(17,121)	(191,057)
	----------------	----------------	----------------	----------------
SHAREHOLDERS' FUNDS/EQUITY	88,548	230,571	482,879	308,943
Long term loans	485,276	541,848	-	-
Hire purchase creditors	18,130	53,101	-	-
Others	303,960	284,320	-	-
	----------------	----------------	----------------	----------------
TOTAL LONG TERM LIABILITIES	807,366	879,269	1,004,812	1,136,253
	----------------	----------------	----------------	----------------
	895,914	1,109,840	1,487,691	1,445,196
	=============	=============	=============	=============

FINANCIAL RATIO

JR ENGINEERING AND MEDICAL TECHNOLOGIES (M) SDN. BHD.

TYPES OF FUNDS
Cash	291,780	59,251	-	-
Net Liquid Funds	291,780	59,251	-	-
Net Liquid Assets	(221,241)	(41,000)	717,030	626,676
Net Current Assets/(Liabilities)	228,893	473,962	717,030	626,676
Net Tangible Assets	895,914	1,109,840	1,487,691	1,445,196
Net Monetary Assets	(1,028,607)	(920,269)	(287,782)	(509,577)
PROFIT & LOSS ITEMS
Earnings Before Interest & Tax (EBIT)	(54,717)	(165,260)	-	-
Earnings Before Interest, Taxes, Depreciation And Amortization (EBITDA)	82,036	46,391	-	-
BALANCE SHEET ITEMS
Total Borrowings	588,020	666,789	-	-
Total Liabilities	2,142,286	1,511,127	1,606,960	2,161,016
Total Assets	2,230,834	1,741,698	2,089,839	2,469,959
Net Assets	895,914	1,109,840	1,487,691	1,445,196
Net Assets Backing	88,548	230,571	482,879	308,943
Shareholders' Funds	88,548	230,571	482,879	308,943
Total Share Capital	500,000	500,000	500,000	500,000
Total Reserves	(411,452)	(269,429)	(17,121)	(191,057)
LIQUIDITY (Times)
Cash Ratio	0.22	0.09	-	-
Liquid Ratio	0.83	0.94	-	-
Current Ratio	1.17	1.75	2.19	1.61
WORKING CAPITAL CONTROL (Days)
Stock Ratio	13	18	-	-
Debtors Ratio	21	17	-	-
Creditors Ratio	16	5	-	-
SOLVENCY RATIOS (Times)
Gearing Ratio	6.64	2.89	-	-
Liabilities Ratio	24.19	6.55	3.33	6.99
Times Interest Earned Ratio	(0.63)	(1.90)	-	-
Assets Backing Ratio	1.79	2.22	2.98	2.89
PERFORMANCE RATIO (%)
Operating Profit Margin	(1.16)	(2.47)	1.67	2.02
Net Profit Margin	(1.16)	(2.47)	1.50	2.02
Return On Net Assets	(6.11)	(14.89)	13.01	20.69
Return On Capital Employed	(5.86)	(14.49)	13.01	20.69
Return On Shareholders' Funds/Equity	(160.39)	(109.43)	36.02	96.79

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.66.18
UK Pound	1	Rs.100.46
Euro	1	Rs.74.61

INFORMATION DETAILS

Analysis Done by :	DIV
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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