CREDIT RISK GRADING SCORE SHEET

Reference No.: Date: 12-Mar-04

Borrower
Group Name (if any) Aggregate Score: 87
Branch:
Industry/Sector Risk
Good
Date of Financials 31-Dec-03 Grading:
Completed by
Approved by NIAZ HABIB
Number Grading Short Score
1 Superior SUP Fully cash secured, secured by government
2 Good GD guarantee/international
85+ bank guarantee
3 Acceptable ACCPT 75-84
4 Marginal/Watchlist MG/WL 65-74
5 Special Mention SM 55-64
6 Substandard SS 45-54
7 Doubtful DF 35-44
8 Bad/Loss BL <35

Score
Criteria Weight Parameter Score Actual Parameter Obtained
A. Financial Risk 50%
1. Leverage: (15%) Less than 0.25× 15 0.53 12
Debt Equity Ratio (×) - Times 0.26× to 0.35 x 14
Total Liabilities to Tangible Net worth 0.36× to 0.50 x 13
0.51× to 0.75 x 12
All calculations should be based on 0.76× to 1.25 x 11
annula financial statements of the 1.26× to 2.00 x 10
borrower (audited preferred) 2.01× to 2.50 x 8
2.51× to 2.75 x 7
More than 2.75× 0
2. Liquidity: (15%) Greater than 2.74× 15 54.00 15
Current Ratio (×) -Times 2.50× to 2.74 x 14
Current Assets to Current Liabilities 2.00× to 2.49 x 13
1.50× to 1.99 x 12
1.10× to 1.49 x 11
0.90× to 1.09 x 10
0.80× to 0.89 x 8
0.70× to 0.79 x 7
Less than 0.70× 0
3. Profitability: (15%) Greater than 25% 15 78.00% 15
Operating Profit Margin (%) 20% to 24% 14
(Operating Profit/Sales) X 100 15% to 19% 13
10% to 14% 12
7% to 9% 10
4% to 6% 9
1% to 3% 7
Less than 1% 0
4. Coverage: (5%)
Interest Coverage Ratio (×) - Times
Earning before interest & tax (EBIT) More than 2.00× 5 10.00 5
Interest on debt More than 1.51× Less than 2.00× 4
More than 1.25× Less than 1.50× 3
More than 1.00× Less than 1.24× 2
Less than 1.00× 0
Total Score- Financial Risk 50 47
 CREDIT RISK GRADING SCORE SHEET

Reference No.: Date: 12-Mar-04

Borrower

B. Business/ Industry Risk 18%

1. Size of Business (in BDT crore) > 60.00 5 75.00 5
30.00 – 59.99 4
The size of the borrower's business 10.00 – 29.99 3
measured by the most recent year's 5.00 - 9.99 2
total sales. Preferably audited numbers. 2.50 - 4.99 1
< 2.50 0
2. Age of Business > 10 Years 3 10 2
> 5 - 10 Years 2
The number of years the borrower 2 - 5 Years 1
engaged in the primary line of business < 2 Years 0
3. Business Outlook Favorable 3 Favorable 3
Critical assesment of medium term Stable 2
prospects of industry, market share Slightly Uncertain 1
and economic factors. Cause for Concern 0
4. Industry Growth Strong (10%+) 3 No Growth (<1%) 0
Good (>5% - 10%) 2
Moderate (1%-5%) 1
No Growth (<1%) 0
5. Market Competition Dominant Player 2 Dominant Player 2
Moderately Competitive 1
Highly Competitive 0
6. Entry/Exit Barriers Difficult 2 Difficult 2
Average 1
Easy 0
Total Score- Business/Industry 18 12
Risk
C. Management Risk 12%
1. Experience More than 10 years in the related 5 More than 10 years in the 5
Quality of management based on total line
5–10ofyears
business
in the related line of 3 related line of business
# of years of experience of the senior business
1–5 years in the related line of 2
management in the Industry. business
No experience 0
2. Second Line/ Succession Ready Succession 4 Succession within 2-3 years 2
Succession within 1-2 years 3
Succession within 2-3 years 2
Succession in question 0
3. Team Work Very Good 3 Very Good 3
Moderate 2
Poor 1
Regular Conflict 0
Total Score- Management Risk 12 10
 CREDIT RISK GRADING SCORE SHEET

Reference No.: Date: 12-Mar-04

Borrower

D. Security Risk 10%

1. Security Coverage (Primary) Fully Pledged facilities/substantially 4 Registered Hypothecation (1st 3
cash covered / Reg. Mortg. for HBL Charge/1st Pari passu Charge)
Registered Hypothecation (1st 3
Charge/1st Pari passu Charge)
2nd charge/Inferior charge 2
Simple hypothecation/Negative lien 1
on assets
No security 0
2. Collateral Coverage (Property Registered Mortgage on Municipal 4 Registered Mortgage on 3
Location) corporation/Prime Area property Pourashava/Semi-Urban area
property
Registered Mortgage on 3
Pourashava/Semi-Urban area
property
Equitable Mortgage or No property 2
but Plant and Machinery as collateral

Negative lien on collateral 1

No collateral 0
3. Support (Guarantee) Personal Guarantee with high net 2 Personal Guarantee with high 2
worth or Strong Corporate net worth or Strong Corporate
Guarantee Guarantee
Personal Guarantees or Corporate 1
Guarantee with average financial
strength
No support/guarantee 0
Total Score- Security Risk 10 8
E. Relationship Risk 10%
1. Account Conduct More than 3 years Accounts with 5 More than 3 years Accounts 5
faultless record with faultless record
Less than 3 years Accounts with 4
faultless record
Accounts having satisfactory 2
dealings with some late payments.
Frequent Past dues & Irregular 0
dealings in account
2. Utilization of Limit More than 60% 2 65.00% 2
(actual/projection) 40% - 60% 1
Less than 40% 0
3. Compliance of Covenants / Full Compliance 2 Full Compliance 2
Conditions Some Non-Compliance 1
No Compliance 0
4. Personal Deposits Personal accounts of the key 1 Personal accounts of the key 1
business Sponsors/ Principals are business Sponsors/ Principals
maintained in the bank, with are maintained in the bank,
significant deposits with significant deposits
No depository relationship 0
Total Score- Relationship Risk 10 10

Grand Total - All Risk 100 87