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BUSINESS RATING REPORT

Quality Metals FZE

D-U-N-S: 86-434-6031

Report Validity 30 June 2015

Pages 37

Date 26 January 2015

Dun & Bradstreet South Asia Middle East Ltd.

PO Box 72478, National Bank of Fujairah Building,

Level 7, Khalid Bin Walid Road (Bank Street),

Bur Dubai, Dubai,

United Arab Emirates

Tel: +971-4-7027300

Fax: +971-4-7027373

www.dnbsame.com

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Business Rating Report Quality Metals FZE

DISCLAIMER:

This material is confidential and proprietary to Dun & Bradstreet and Quality Metals FZE (hereinafter

referred to as ‘Entity’ or ‘Subject’) and may not be copied or otherwise reproduced, repackaged,

further transmitted, transferred, disseminated, redistributed or resold, or stored for subsequent use

for any such purpose, in whole or in part, in any form or any manner or by any means whatsoever,

by any person without express authorization of Dun & Bradstreet South Asia Middle East Limited

(hereinafter referred to as ‘D&B’) or the General Counsel of Dun & Bradstreet.

All information contained herein is obtained by D&B from sources believed by it to be accurate and

reliable. Although reasonable care has been taken to ensure that the information herein is true,

such information is provided ‘as is’ without any warranty of any kind and D&B, in particular, makes

no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of

any such information. All information contained herein must be construed solely as statements of

opinion and D&B shall not be liable for any loss incurred by users from any use of this report or its

contents.

D&B's information and opinion should not be the only criterion when making business decisions on

subject of report. Data in this report should be considered as an additional factor together with

others in order to reach a decision.

In the course of its work/survey, D&B may have received information from the “Subject Entity’’

being rated or graded, besides the fact that the report may also contain data/information available

in the Public Domain or that made available through Secondary Sources.

Date: 26 January 2015

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Scope of the Report

History and legal background of the “Subject”

Understanding Current Operations

Management background

Bankers Information

Financial Statement & Analysis

D&B Rating

Information Sources

Information given in this report is compiled using the following sources:

Annual reports

Corporate communiqués

Information from website

Management Discussion

Media Articles

Methodology

Financial Information from the audited annual reports of the Entity was studied and analyzed.

Required clarifications were sought from the concerned Entity officials, wherever necessary. Other

value added information was obtained from the relevant publicly available sources.

Inputs about the “Entity” were provided by Viswanth Satheeshan Senior Accountant, of the Entity.

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TABLE OF CONTENTS

Entity Details ............................................................................................................................... 5

D&B Risk Assessment ................................................................................................................... 5

Executive Summary ...................................................................................................................... 7

Operations Synopsis..................................................................................................................... 8

Financial Statements .................................................................................................................... 9

COMPARATIVE FINANCIALS ................................................................................................................ 9

STATEMENT OF COMPREHENSIVE INCOME ..................................................................................... 10

STATEMENT OF FINANCIAL POSITION .............................................................................................. 11

STATEMENT OF CASH FLOWS ........................................................................................................... 13

KEY RATIOS ........................................................................................................................................ 14

Financial Analysis ....................................................................................................................... 15

PROFITABILITY ANALYSIS .................................................................................................................. 15

LIQUIDITY ANALYSIS .......................................................................................................................... 19

EFFICIENCY ANALYSIS ........................................................................................................................ 21

SOLVENCY ANALYSIS ......................................................................................................................... 23

DU PONT ........................................................................................................................................... 25

Bankers ..................................................................................................................................... 26

Director and Executive Details .................................................................................................... 28

Purchase and Sales Details ......................................................................................................... 29

EMPLOYEE STRENGTH ....................................................................................................................... 33

LOCATION.......................................................................................................................................... 33

AMENITIES/ FACILITIES ..................................................................................................................... 33

INSURANCE ....................................................................................................................................... 33

Group Entities ............................................................................................................................ 34

RELATED COMPANIES ....................................................................................................................... 34

The D&B Rating.......................................................................................................................... 35

Financial Ratios Glossary ............................................................................................................ 36

Confidentiality ........................................................................................................................... 37

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Quality Metals FZE D&B D-U-N-S: 86-434-6031

Entity Details

TRADE STYLE : Quality Metals ADDRESS : Office No 405, 4th Floor, Atrium Building, P.O Box 42904, Dubai, UAE CHIEF EXECUTIVE : Pherwani Nitin Gulab & Pherwani Sanjeev Gulab TELEPHONE : (971) (4) (3861012) (971) (50) (3769722) FAX : (971) (4) (3861013) WEBPAGE : www.qualitymetalsfze.com EMAIL : [email protected] EMPLOYEES (Total) : 10 SALES TERRITORY : Local & International SALES : AED 190,731,397 for the year ending December 31st, 2013 NET WORTH (Tangible) : AED 33,300,997 as on December 31st, 2013 D&B Risk Assessment

2A Based on Tangible Networth

3 Fair

1 2 3 4 -

A Financial Strength of USD 2.5 - 12 million ( Based on Tangible Networth) and a Risk Indicator which is Fair.

2A3

Financial Strength

Risk Indicator

Risk Indicator

The Dun & Bradstreet rating of 2A3 indicates:

D&B's Rating consists of 2 parts, the Financial Strength and the Composite Appraisal/Condition. Financial

Strength is an indication of the Tangible Net Worth (that is, the shareholder's funds less any intangible assets).

The Composite Appraisal/Condition is linked to the level of risk and is an overall evaluation of credit

worthiness. It takes into account the financial condition and several factors such as trade reference history,

legal structure, management experience and any adverse listings.

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RATING HISTORY

FINANCIAL YEAR D&B RATING

FY 2012 2A3

REGISTRATION DETAILS

TRADE LICENSE NO : 2195 LEGAL STRUCTURE : Free Zone Entity REGISTERED : 20th September 2005 START DATE : 20th September 2005 REGISTRATION BODY : Ajman Free Zone Authority REGISTERED OFFICE : SM-Office – B1-412 H Ajman Free Zone Ajman, UAE SIC : 5093-0000; 5093-0201

LOB Trading of heavy melting steel (HMS) scrap,

secondary / used Metals, plates and coils

CAPITAL DETAILS

AUTHORIZED CAPITAL : AED 634,845 as on December 31st, 2013

ISSUED CAPITAL : AED 634,845 as on December 31st, 2013

PAID-UP CAPITAL : AED 634,845 as on December 31st, 2013

SHAREHOLDING PATTERN

SR. No Name of the Shareholder Shareholding Pattern (in %)

1 Pherwani Nitin Gulab 100

Total 100.00

Current Investigation

On 9th September 2014, Viswanth Satheeshan (Senior Accountant) provided the relevant

information.

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Executive Summary

Quality Metals FZE was established in the year 2005 as a Free Zone Establishment under

Ajman Free Zone Authority.

The Entity is involved in the business of importing and exporting of HMS (heavy melting

steel) scrap, secondary / used Metals, plates and coils.

The entity sources majority of its products locally as well as imports from Europe, USA, GCC

and Africa. Majority of the sales are routed to India followed by Pakistan and UAE.

The Entity is entirely managed under the leadership of Mr. Pherwani Nitin Gulab and has

been able to create a strong customer base in India.

The Entity has also built strong business relationship with its suppliers which are based in

UAE, Europe, USA, and Africa.

Quality Metals has long relations with all the major shipping companies, which helps it to

handle & deliver materials with proper documentation in stipulated time.

Future Plans

The company is looking forward for business in non–ferrous, aluminum, copper & paper

scrap. They are also planning to operate yards in Dubai & USA and the same are under

negotiation.

The company plans to vertically integrate and put up an induction furnace in Oman.

The company also proposes to diversify into export of commodities such as rice from India

to Africa.

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Operations Synopsis

Quality Metals FZE is engaged in the business of importing, exporting, and trading of scrap products.

It is mainly involved in the trading of HMS (heavy melting steel) scrap, secondary / used Metals,

plates and coils. The Entity has a strong network and presence in markets like UAE, India and

Pakistan thereby ensuring the right sourcing and selling of products at the most competitive price.

SIC CODES

5093-0000

Wholesale trading of Scrap and Waste Material

5093-0201

Wholesales ferrous metal scrap & waste

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Financial Statements

COMPARATIVE FINANCIALS

2009 2010 2011 2012 2013

Current

Assets 13,311,828 18,685,548 24,933,178 37,192,801 48,385,214

Liabilities 1,199,409 1,042,282 3,290,731 11,314,770 15,093,261

Working Capital 12,112,419 17,643,266 21,642,447 25,878,031 33,291,953

Other Tangible Assets 228,098 157,510 109,134 72,548 23,370

Non Current Liabilities 117,388 63,063 27,027 - 14,326

Tangible Net Worth 12,223,129 17,737,713 21,724,554 25,950,579 33,300,997

Revenue 64,956,280 123,984,197 165,443,676 175,756,862 190,731,397

Net Profit 3,830,421 5,672,411 6,317,575 7,914,882 9,619,769

Cash and Cash Equivalents 1,665,272 7,375,678 1,087,256 5,631,176 10,552,002

Trade Receivables 5,112,535 6,495,437 18,846,529 25,658,265 27,673,794

Fixed Assets 228,098 157,510 109,134 72,548 23,370

Trade Payables 823,658 737,645 596,963 249,850 120,059

Operating Cash Flows 732,218 5,909,676 (6,396,763) (119,707) 3,345,319

COMPARATIVE FINANCIALS

United Arab Emirates Dirhams (AED)

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STATEMENT OF COMPREHENSIVE INCOME

STATEMENT OF COMPREHENSIVE 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13

No. of Months 12 12 12 12 12

Revenues 64,956,280 123,984,197 165,443,676 175,756,862 190,731,397

Total Operating Income 64,956,280 123,984,197 165,443,676 175,756,862 190,731,397

Cost of sales 59,535,329 116,055,490 156,511,285 165,353,625 178,385,444

Less: Total Direct Expenditure 59,535,329 116,055,490 156,511,285 165,353,625 178,385,444

Gross Profit (Loss) 5,420,951 7,928,707 8,932,391 10,403,237 12,345,953

Communication cost 57,265 88,215 81,356 72,568 81,123

Rent & accommodation 11,908 11,908 18,133 112,536 112,536

License, professional & legal charges 41,253 98,959 75,682 65,015 64,198

Repairs and maintenance 8,240 20,380 17,235 12,555 13,427

Commission 985,865 1,297,086 1,465,823 1,262,536 1,428,130

Printing and stationary 48,552 88,264 77,685 76,258 67,321

General expenses 63,498 91,202 87,158 65,250 80,134

Salaries and benefits 25,568 60,981 66,533 231,235 259,926

Travelling and vehicle expenses 14,847 85,655 74,568 75,625 81,109

Less: Total Operating Expenses 1,256,996 1,842,650 1,964,173 1,973,578 2,187,904

Profit Before Interest & Depreciation 4,163,955 6,086,057 6,968,218 8,429,659 10,158,049

Less: Depreciation 70,340 48,768 48,376 44,148 49,178

Operating Profit After Depreciation 4,093,615 6,037,289 6,919,842 8,385,511 10,108,871

Other income 65,366 131,743 317,074 405,236 649,014

Profit Before Interest & Tax 4,158,981 6,169,032 7,236,916 8,790,747 10,757,885

Less : Interest on loan 328,560 496,621 919,341 875,865 1,138,116

Profit Before Tax 3,830,421 5,672,411 6,317,575 7,914,882 9,619,769

Profit After Tax 3,830,421 5,672,411 6,317,575 7,914,882 9,619,769

Profit After Extraordinary items 3,830,421 5,672,411 6,317,575 7,914,882 9,619,769

Total Comprehensive Income 3,830,421 5,672,411 6,317,575 7,914,882 9,619,769


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STATEMENT OF FINANCIAL POSITION

ASSETS AS ON 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13

Fixed Assets

Furniture and fittings 392 - - - -

Motor vehicles 215,733 151,277 108,641 66,005 23,369

Office equipments 11,973 6,233 493 6,543 1

Total Fixed Assets 228,098 157,510 109,134 72,548 23,370

TOTAL NON CURRENT ASSETS 228,098 157,510 109,134 72,548 23,370

Current Assets

Cash on hand 758,494 625,952 865,236 985,365 999,741

Cash at bank 906,778 6,749,726 222,020 4,645,811 9,552,261

Due from related parties 3,968,268 2,485,641 2,658,352 2,856,826 4,645,390

Deposit 12,052 12,052 727,052 651,520 651,520

Trade receivables 5,112,535 6,495,437 18,846,529 25,658,265 27,673,794

Prepayments 96,385 52,524 21,348 75,826 8,123

Other receivables 58,980 66,823 50,756 65,620 72,567

Advance to suppliers 2,398,336 2,197,393 1,541,885 2,253,568 4,781,818

Total Current Assets 13,311,828 18,685,548 24,933,178 37,192,801 48,385,214

TOTAL ASSETS 13,539,926 18,843,058 25,042,312 37,265,349 48,408,584

STATEMENT OF FINANCIAL POSITION


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LIABILITIES AND EQUITY AS ON 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13

Equity

Capital & current account 829,366 671,539 340,805 (1,348,052) (1,617,403)

Retained earnings 11,393,763 17,066,174 21,383,749 27,298,631 34,918,400

Total Equity 12,223,129 17,737,713 21,724,554 25,950,579 33,300,997

Non-Current Liabilities

Vehicle loans- non current portion 117,388 63,063 27,027 - -

Provision for employee terminal

benefits - - - - 14,326

Total Non-Current Liabilities 117,388 63,063 27,027 - 14,326

Current Liabilities

Trade payable 823,658 737,645 596,963 249,850 120,059

Bank overdraft - - - 244,655 353,745

Vehicle loans- current portion 44,974 36,036 36,036 - -

Advance from customers 142,856 167,157 18,350 35,682 -

Local bills discounted - - 1,400,000 2,191,549 3,592,437

Usance LC - - - 4,278,267 8,800,166

Trust receipts - - 1,075,111 4,183,749 1,996,730

Accrued expenses 24,758 12,632 24,446 15,725 65,450

Due to related parties 155,683 79,856 135,244 108,658 164,674

Other payables 7,480 8,956 4,581 6,635 -

Total Current Liabilities 1,199,409 1,042,282 3,290,731 11,314,770 15,093,261

TOTAL LIABILITIES 1,316,797 1,105,345 3,317,758 11,314,770 15,107,587

TOTAL LIABILITIES AND EQUITY 13,539,926 18,843,058 25,042,312 37,265,349 48,408,584


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STATEMENT OF CASH FLOWS

STATEMENT OF CASH FLOWS 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13

CASH FLOW FROM OPERATIONS

Net Profit for the Year 3,830,421 5,672,411 6,317,575 7,914,882 9,619,769

Adjustments for:

Depreciation 70,340 48,768 48,376 44,148 49,178

Operating Profit Before Working Capital 3,900,761 5,721,179 6,365,951 7,959,030 9,668,947

Adjustments for:

(Increase)/decrease in trade and other

receivables (1,179,543) (1,390,745) (12,335,025) (7,517,229) (4,483,023)

(Increase)/decrease in due from related

parties (902,471) 1,482,627 (172,711) (198,474) (1,788,564)

Increase/(decrease) in trade and other

payables 193,073 (60,236) (293,864) (336,448) (122,383)

Increase/(decrease) in accruals 5,617 (12,126) 11,814 - -

Increase in staff gratuity provision - - - - 14,326

Increase/(decrease) in Due to related

parties (48,016) (75,827) 55,388 (26,586) 56,016

(Increase)/decrease in other current

assets (1,237,203) 244,804 (28,316) - -

Cash Generated from Operations 732,218 5,909,676 (6,396,763) (119,707) 3,345,319

Net Cash From Operating Activities (A) 732,218 5,909,676 (6,396,763) (119,707) 3,345,319

CASH FLOW FROM INVESTING ACTIVITIES

Net Changes in Fixed Assets - 21,820 - (7,562) -

Net Cash Used in Investing Activities (B) - 21,820 - (7,562) -

CASH FLOW FROM FINANCING

ACTIVITIES

Increase/(decrease) in due to banks - (8,938) 2,475,111 8,360,046 3,844,858

Increase/(decrease) in non current (44,974) (54,325) (36,036) - -

Net changes in current account (1,530,783) (157,827) (2,330,734) (3,688,857) (2,269,351)

Net Cash From Financing Activities(C) (1,575,757) (221,090) 108,341 4,671,189 1,575,507

Net Increase in Cash & Cash Equivalents

(A+B+C+D) (843,539) 5,710,406 (6,288,422) 4,543,920 4,920,826

Cash & Cash Equivalents (Opening

Balance) 2,508,811 1,665,272 7,375,678 1,087,256 5,631,176

Cash & Cash Equivalents (Closing Balance) 1,665,272 7,375,678 1,087,256 5,631,176 10,552,002


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KEY RATIOS

KEY RATIOS 2009 2010 2011 2012 2013

GROWTH RATIOS

Revenue Growth (%) 90.87 33.44 6.23 8.52

Net Profit Growth (%) 48.09 11.37 25.28 21.54

PROFITABILITY RATIOS

Gross Profit Margin (%) 8.35 6.39 5.40 5.92 6.47

Operating Profit Margin (%) 6.41 4.91 4.21 4.80 5.33

Net profit Margin (%) 5.90 4.58 3.82 4.50 5.04

Return on Equity (%) 31.34 31.98 29.08 30.50 28.89

Return on Capital Employed (%) 33.16 34.43 29.66 23.79 22.32

Return On Fixed Assets ( %) 1,679.29 3,601.30 5,788.82 10,909.86 41,162.90

Return on Total Assets (%) 28.29 30.10 25.23 21.24 19.87

LIQUIDITY RATIOS

Quick Ratio (Times) 11.02 17.88 7.57 3.28 3.21

Current Ratio (Times) 11.10 17.93 7.58 3.29 3.21

SOLVENCY RATIOS

Long Term Debt Equity Ratio (Times) 0.01 0.004 0.001 - 0.000

Total Debt to Equity Ratio (Times) 0.11 0.06 0.15 0.44 0.45

Net Debt to Equity (Times) (0.03) (0.35) 0.10 0.22 0.14

EFFICIENCY RATIOS

Interest Coverage Ratio (Times) 12.66 12.42 7.87 10.04 9.45

Collection Period (Days) 29 19 42 53 53

Payment Period (Days) 5 2 1 1 0

Operating Cash flow margin (%) 1.13 4.77 (3.87) (0.07) 1.75

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Increasing trend in revenue with an average growth rate of 35%

Financial Analysis

PROFITABILITY ANALYSIS

Exhibit 1

The Entity generates revenue through trading of HMS (heavy

melting steel) scrap, scrap, secondary / used Metals, plates and

coils.

As observed in Exhibit 1, the revenue has increased constantly

with CAGR (Compounded annual growth rate) of 28% over the

period under review. The revenue has grown at a declining rate. The high growth in FY 2010 was

attributable to access to inventories acquired at a comparatively lower cost and sold at higher prices

to Indian market due to price movement and further due to stronger Indian Rupee. In FY 2011, the

Company recorded a growth of 33% due to stabilization in the industry in terms of volume and price.

Despite growth in traded volume in FY 2012, the revenue growth slowed down to 6% due to steep

decline in global prices of HMS 1 & 2 by approximately 30%. However, the Entity maintained and

improved its profitability in FY 2012 due to strong access to committed supply sources. In FY 2013,

the entity registered a growth of 9%. The management has attributed the growth in FY 2013 to

increased sales volume with existing clients and acquisition of new clients. Competitive pricing

during FY 2012 and FY 2013 has also contributed to positive growth.

Similar to revenue trend, the gross profit has also exhibited an increasing trend over the period

under review. It has increased by 16% in FY 2012 comparatively higher than 13% increase in FY 2011.

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This was mainly due to more than proportionate increase in revenue as compared to increase in

direct costs.

Likewise the above trends, the net profit has also shown an increasing trend during the same period.

The net profit has constantly increased with a CAGR of 26%, due to more than proportionate

increase in revenue coupled with the increases in other income of the Entity.

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Improving trend in profit margins from FY 2011 onwards

Exhibit 2

Unlike the trend observed in revenue, the profit margins have shown a

mixed trend over the period under review. Despite increase in

revenue, the gross profit margin has decreased from 8.35% in FY 2009

to 6.39% in FY 2010 and further to 5.40% in FY 2011. This was mainly

due to increase in direct costs as a percentage of revenue. However,

due to slight control over direct costs in FY 2012 and FY 2013, the

gross profit margin went up to 5.92% in FY 2012 and 6.47% in FY 2013. The decline in direct costs is

led by decline in scrap prices. As

per the management, despite

decline in prices, the Company

maintained and improved its

gross margins due to secure customer base in India with consistent requirement.

Corresponding to a gross profit margin trend, operating profit margin has also exhibited mixed

trend over the period under review. It decreased from 6.41% in FY 2009 to 4.91% in FY 2010 and

marginally by 0.7% in FY 2011, mainly on account of increase in rent & accommodation by 52% as

compared to increase in operating income. However in FY 2012, it increased slightly to 4.80% due

to control on direct and indirect costs as a percentage of revenue. The ability to generate profit

from core operations improved further as the operating margin went up to 5.33% in FY 2013.

Net profit margin has followed a similar trend. Despite decrease in indirect costs as a percentage of

revenue, the net profit margin decreased from 5.90% in FY 2009 to 4.58% in FY 2010 and further to

3.82% in FY 2011. This was mainly due to increase in direct expenditures. The decline in margins was

2009 2010 2011 2012 2013

Direct Costs 91.65 93.61 94.60 94.08 93.53

Direct Costs as a percentage of Revenue

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due to fall in market prices by more than 30%. However, in FY 2012, the net profit margin increased

by 0.68%, due decrease in direct and indirect costs coupled with increase in other income which

comprises of commissions earned

and interest on advances. The net

margin further improved to 5.04%

due to control over direct costs

and increase in other income.

Contrast to the above trends, return on capital employed has also exhibited a decreasing trend since

FY 2010. The declining trend is mainly on account of increase in short-term bank facilities followed

by strengthening equity position, which in turn led to an increase in capital employed.

2009 2010 2011 2012 2013

Indirect Costs 2.55 1.93 1.77 1.65 1.77

Indirect Costs as a percentage of Revenue

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Increasing trend in working capital during the period indicating above average liquidity position

LIQUIDITY ANALYSIS

Exhibit 3

The working capital of the Entity has remained positive through-out the

period and has exhibited an improving trend during the period under

review.

Unlike the trend observed in working capital, the current ratio and

quick ratio both have exhibited a decreasing trend since FY 2010.

Despite the declining trend, the current and quick ratios have remained

healthy. The decline was mainly led by increase in short-term bank

facilities.

AED 2009 2010 2011 2012 2013

Current Assets 13,311,828 18,685,548 24,933,178 37,192,801 48,385,214

Current Liabilities 1,199,409 1,042,282 3,290,731 11,314,770 15,093,261

Growth (%)

Current Assets 40% 33% 49% 23%

Current Liabilities -13% 216% 244% 25%

The quick ratio has followed a similar trend like that of current ratio. The difference between current

and quick ratio is negligible as the Entity does not maintain inventory.

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Current Assets Break-up

2009 2010 2011 2012 2013

Cash on hand 5.70 3.35 3.47 2.65 2.07

Cash at bank 6.81 36.12 0.89 12.49 19.74

Due from related parties 29.81 13.30 10.66 7.68 9.60

Deposit 0.09 0.06 2.92 1.75 1.35

Trade receivables 38.41 34.76 75.59 68.99 57.19

Prepayments 0.72 0.28 0.09 0.20 0.02

Other receivables 0.44 0.36 0.20 0.18 0.15

Advance to suppliers 18.02 11.76 6.18 6.06 9.88

Total Current Assets 100 100 100 100 100

Current Assets Break-up

In %

Trade receivables (57.19 percent), followed by Cash at bank (19.74 percent) and Advance to

suppliers (9.88 percent) formed a major portion of the Total Current Assets in FY 2013. Together

they accounted for 86.82 percent of Total Current Assets.

Current Liabilities Break-up

2009 2010 2011 2012 2013Trade payable 68.67 70.77 18.14 2.21 0.80

Bank overdraft 0.00 0.00 0.00 2.16 2.34

Vehicle loans- current portion 3.75 3.46 1.10 0.00 0.00

Advance from customers 11.91 16.04 0.56 0.32 0.00

Local bills discounted 0.00 0.00 42.54 19.37 23.80

Usance LC 0.00 0.00 0.00 37.81 58.31

Trust receipts 0.00 0.00 32.67 36.98 13.23

Accrued expenses 2.06 1.21 0.74 0.14 0.43

Due to related parties 12.98 7.66 4.11 0.96 1.09

Other payables 0.62 0.86 0.14 0.06 0.00

Total Current Liabilities 100 100 100 100 100

Current Liabilities Break-up

In %

Usance LC (58.31 percent) and Local bills discounted (23.80 percent) account for a significant portion

of the Total Current Liabilities during FY 2013. Together they accounted for 82.11 percent of the

Total Current Liabilities

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Increase in CCC since FY 2010

EFFICIENCY ANALYSIS Exhibit 4

The Company had to relax its credit terms with its customers due

to adverse market conditions. However, long-standing business

relationship with its customers has not adversely affected the

strength of its receivables.

Payment period has remained significantly low and the gap between collection and payment period

has broadened from FY 2010 onwards. As per the management, making cash payments to suppliers

has helped the Company consistently improve its gross margins.

Inventory days have remained minimal during the period due to the conscious decision of not

holding inventory due to erratic price movements. Also, not holding its own stock helps the

Company in choosing from a variety of suppliers. As per the management, holding minimal inventory

does marginally impact the profit margins. It however minimizes the risk of inventory carrying costs

and unsold stocks at times of market collapse.

The Cash Conversion Cycle (CCC) has exhibited an increasing trend since FY 2011 mainly due to

increase in collection period. It decreased from 24 days in FY 2009 to 17 days in FY 2010. However, it

increased substantially by 23 days in FY 2011 and 13 days in FY 2012.

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OPERATING CASH FLOW MARGIN

Exhibit 5

Operating cash flow margin has exhibited a mixed trend till over the period under review. It

increased from 1.13% in FY 2009 to 4.8% in FY 2009. However, it declined and became negative to

3.87% in FY 2011, indicating decreased efficiency to convert sales to cash.

It improved but remained to negative 0.07% in FY 2012. The operating cash flow margin declined

mainly on account of sharp increase in trade receivables. The ability to convert per unit of sales into

cash improved in FY 2013 as the operating cash flow margin went up to 1.75% in FY 2013.

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The Company is majorly dependent upon short term borrowings

SOLVENCY ANALYSIS Exhibit 6

The Entity utilizes both internal and external fund for its capital

requirement. However, we observe that it is more dependent on

internal funds (owner’s funds) for its capital requirements.

Long term debt to equity ratio has decreased from 0.01 times in FY

2009 to zero in FY 2010 and remained at that level due to the

repayment of vehicle loan availed by the Entity.

In FY 2010, total debt to equity declined from 0.11 times in FY 2009 to 0.06 times in FY 2010. From

FY 2010 onwards, it has exhibited an increasing trend mainly led by increase in short-term

borrowings in the form of Usance LC, Trust receipts and bills discounting.

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INTEREST COVERAGE RATIO Exhibit 7

Interest coverage ratio has shown a decreasing trend till FY 2011. It marginally decreased from 12.66

in FY 2009 to 12.42 in FY 2010 and further to 7.87 in FY 2011, due to increase in profit before

interest and tax. However, in FY 2012 it increased to 10.04, due to decrease in interest expense.

Despite improvement in profitability, interest coverage ratio declined marginally to 9.45 in FY 2013

due to more than proportionate increase in interest expense.

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DU PONT

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Bankers

Banking relations are maintained principally with:-

NAME ADCB

BRANCH Karama Branch

ADDRESS

Sheikh Khalifa Bin Zayed Street

Near Karama Metro Station.

P. O. Box 12808

IBAN AE390030000914528020001

TYPE OF FACILITIES Of Credit (Sight/Usance/Local/Foreign), Export Bill Discounting

TELEPHONE (971)(04)(3106885)

NAME Habib Bank

BRANCH Abu Dhabi

ADDRESS Al Falah Branch, AL Falah Street, Abu Dhabi, UAE

IBAN AE090290720311105823444

TYPE OF FACILITIES Trust Receipts, Local Bills Discounting

TELEPHONE (971)(02)(3870700)

NAME First Gulf Bank

BRANCH Dubai

ADDRESS JAFZA, Adjacent to Dubai Chamber Office,

PO Box 17655, Dubai

IBAN AE-320271261001641047018

TYPE OF FACILITIES Letters Of Credit (Sight/Usance/Local/Foreign), Export Bill Discounting

TELEPHONE (971)(02)(6812161)

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NAME Commercial Bank International

BRANCH Dubai

ADDRESS Bur Dubai Branch

IBAN AE13 0220 0001 0007 0105 602

TYPE OF FACILITIES Of Credit (Sight/Usance/Local/Foreign),Export Bill Discounting, Trust

Receipt

TELEPHONE (971)(04)(2608181)

Note: No independent confirmation was received regarding subject’s relationship with the bank(s).

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Director and Executive Details

Name Pherwani Nitin Gulab

Passport No Z1835607

Nationality Indian

Year of Birth 1970

Current Title CEO

Qualification Diploma in Computer Engineering

Active in Daily Operation Yes

Email [email protected]

KEY EMPLOYEES

Name Designation Educational

Qualification Joined the Entity

Sanjeev Pherwani Director Bachelor Of Commerce 2005

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Purchase and Sales Details

PURCHASES LOCAL : 75%

INTERNATIONAL : 25%

PURCHASE FROM UAE : 75%

Africa and Poland : 25%

PURCHASING TERMS

LOCAL PURCHASE TERMS Cash : 65%

Letter of Credit : 25%

PDC/Trust Receipts/Tele Transfer : 10%

IMPORT PURCHASE TERMS

Outward tele transfer : 75%

Trust Receipts/Letter of credit/Cheques : 25%

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SALES

LOCAL : 20%

INTERNATIONAL : 80%

SALES TO UAE : 20%

India : 70%

Pakistan : 10%

SELLING TERMS

LOCAL SELLING TERMS

Cheques : 40%

Letter of Credit (L/C) : 40%

PDC, Trust receipts and Tele transfer : 20%

EXPORT SELLING TERMS

Cash : 5%

Letter of Credit : 80%

CAD : 15%

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Major Customers and Suppliers

CUSTOMERS DETAILS The subject maintains 25-50 customers. MAJOR CUSTOMERS

Sr. No.

Name of the Customer Country % share in Total Sales

1 Mahalaxmi Tmt Pvt Ltd India 25%

2 Rl Steels India 15%

3 Mukesh Udyog Ltd India 5%

4 Mukesh Steels India 5%

5 Shree Vaishnav Wire & Rods India 5%

6 Balbir Alloys Pvt Ltd India 5%

7 Sangham Business Credit Limited India 5%

8 Nidhi Mercantile Pvt Ltd India 5%

9 Surya Ferrous India 5%

10 Amreli Steels Pakistan 5%

11 Wave Industries India 5%

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SUPPLIER DETAILS

The subject maintains 25-50 suppliers.

MAJOR SUPPLIERS

Sr. No. Name of the Supplier Country % share in Total Purchases

1 Gantoot Scrap Co Llc UAE 25%

2 Global One Metals UAE 10%

3 Al Burj Metals Trading Senegal 10%

4 Karachi Metals Trading UAE 10%

5 Qline Electronics Llc UAE 10%

6 Al Fajer Metals UAE 10%

7 Ads International South Africa 10%

8 Al Arshad UAE 5%

9 Vivan Impex Ltd Poland 5%

10 Lahore Metals UAE 5%

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Other Operational Details

EMPLOYEE STRENGTH

EMPLOYEE(s) - CURRENT EMPLOYEE(s) - PREVIOUS

Total Employees : 10 Total Employees : 9

LOCATION

Particulars Location Operated As Rented/ Owned/

Leased Area (Sq. ft.)

Registered

Office Bur Dubai Office Rented 1064.15

MAILING ADDRESS

Office No 405 Atrium Center, Bank Street, Bur Dubai, Dubai P.O. Box 42904 Dubai UAE

AMENITIES/ FACILITIES

Cars : 6 Computes : 8 Offices : 1

AUDITOR DETAILS

SM Joshi

Chartered Accountants

P.O. Box 21708

Dubai

United Arab Emirates

INSURANCE

Zurich Insurance, Dubai Metlife Alico

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Group Entities

RELATED COMPANIES

Name of Company Location Nature % of Shareholding

Qmetco LLC Dubai, UAE Affiliates 49

Quality Shipping Dubai, UAE Affiliates 49

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The D&B Rating

D&B Rating - The D&B rating consists of two parts, the Financial Strength Indicator and the Risk Indicator. For example: in the case of a 2A4 rating, 2A means the financial strength of the business and the 4 is the risk indicator. The Risk Indicator is used in conjunction with the Financial Strength Indicator. The Risk Indicator reflects D&B's opinion of the risk associated with trading with a specific business, notably the likelihood of business continuance or failure over the next 12 months. Created from expert rules systems, the Risk Indicator is refreshed whenever data is loaded onto our databases. The Financial Strength Indicator is based on either the Net Worth or Issued Capital. The table below contains the possible values.

Net worth / Issued Capital (in USD)

Rating based on Net worth (in USD)

Rating based on Issued capital (in USD)

0 – 15,000 H HH

15,000 – 35,000 G GG

35,000 – 60,000 F FF

60,000 – 120,000 E EE

120,000 - 175,000 D DD

175,000 – 345,000 C CC

345,000 – 600,000 B BB

600,000 – 1.2 million A AA

1.2 million – 2.5 million 1A 1AA

2.5 million – 12 million 2A 2AA

12 million – 25 million 3A 3AA

25 million – 60 million 4A 4AA

60 million and above 5A 5AA

Risk Indicator Condition Guide to Interpretation

1 Excellent Proceed with transaction – offer terms required

2 Good Proceed with transaction

3 Fair Proceed with transaction but monitor

4 Poor Take suitable assurances before extending credit

-

Insufficient information to assign a risk indicator

No public information or D&B proprietary information available to indicate trading activity

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Financial Ratios Glossary

Key Business Ratios are used to identify irregularities in the status and future potential of a company.

Name Formula Explanation

Gross Profit Margin (%) Gross Profit/Revenue Gross profit margin measures how much of every dollar of revenue is left over after paying cost of goods sold (COGS).

Operating Profit Margin (%)

EBITDA/Revenue The ratio measures the overall operating efficiency. It incorporates all the operating expenses incurred due to the business activity.

Net profit Margin (%) Net profit before extraordinary items/Revenue

The ratio states the amount of net income after all expenses are settled generated by the company in relative to a dollar of sale.

Return on Equity (%) Net profit before extraordinary items/Total equity

The ratio measures the return generated on per dollar invested by the equity holders

Return on Capital Employed (%)

EBIT/Capital Employed The ratio indicates the profitability and efficiency of a company's capital investments.

Return On Fixed Assets (%)

Net profit before extraordinary items/Fixed Assets

The ratio indicates the return generated per dollar of fixed assets

Return on Total Assets (%)

Net profit before extraordinary items/Total Assets

The ratio indicates the return generated per dollar of total assets

Current Ratio (Times) Current Assets/Current Liabilities The ratio measures the ability to settle short-term obligations if they fall due.

Quick Ratio (Times) (Current Assets-Inventory-Prepayments)/Current Liabilities

The ratio measures the ability to settle short term obligations if they fall due with their most liquid assets

Long Term Debt Equity Ratio (Times)

Total Non-Current Liabilities/Equity The ratio measures the extent the net worth of the entity can offset the long term obligations

Total Debt to Equity Ratio (Times)

Total Liabilities/Equity The ratio measures the extent the net worth of the entity can offset the long and short term obligations

Net Debt to Equity (Times) or Net Gearing

(Total Liabilities- Cash & Cash Equivalents)/Equity

The ratio measures the financial leverage of the entity and indicates the proportion of equity and debt used to finance its assets

Interest Coverage Ratio (Times)

EBIT/Interest The ratio measures the entity's ability to cover its interest obligations

Collection Period (Days) (Receivables/Revenue)*365 The ratio measures the number of days it takes to recover sales proceeds

Payment Period (Days) (Payables/Cost of Sales)*365 The ratio measures the number of days it takes to make payments for the purchases

Inventory Days (Inventory/Cost of Sales)*365 The ratio measures the number of days the inventory is stored before it is sold

Operating Cash flow margin

Net Cash from operations/Sales The ratio indicates how efficiently the company converts its sales to cash.

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Confidentiality

CURRENCY: All amounts in this report are in local currency unless otherwise stated.

This report is forwarded to the Subscriber in strict confidence for the use by the Subscriber as one factor to consider in connection with credit and other business decisions. This report contains information compiled from information which Dun & Bradstreet does not control and which has not been verified unless otherwise indicated in this report. Dun & Bradstreet therefore cannot accept responsibility for the accuracy, completeness or timeliness of the report. Dun & Bradstreet disclaims all liability for any loss or damage arising out of or in any way related to the contents of this report. This material is confidential and proprietary to Dun & Bradstreet and/or third parties and may not be reproduced, published or disclosed to others without the express authorization of Dun & Bradstreet or the General Counsel of Dun & Bradstreet.

COPYRIGHT 2014 DUN & BRADSTREET. THIS REPORT MAY NOT BE REPRODUCED IN WHOLE OR IN PART IN ANY FORM OR MANNER WHATSOEVER.

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