Credit Rating Report

M/S S.L. Steel (Surveillance)

Particulars BDT 300.0 million aggregate CC(H) BDT 45.0 million aggregate SOD limit BDT 3,180.6 million aggregate short term funded and non fund limit Particulars BDT 200.00million aggregate CC(H) limit* BDT 45.00 million aggregate SOD limit BDT 650.00 million aggregate composite limit BDT 400.00 million aggregate short term non fund based limit Date of Rating: 02 April 2012 Validity: The Loan ratings are valid up to limit expiry date of respective credit facilities or 30 June 2013 whichever is earlier. Rating Based on: Audited financial statements up to 31 December 2011, Management Information, bank liability position as on 29 February 2012, and other relevant quantitative as well as qualitative information up to the date of rating declaration. Auditor: Ahmed Shamim & Co Methodology: CRABs Corporate Rating Methodology (www.crab.com.bd) Analysts: Munir Uddin Ahmed munir@crab.com.bd Mohammad Aiyub Khan aiyub@crab.com.bd Credit Rating Agency of Bangladesh Limited (CRAB) has assigned BB3 (Lr) rating to BDT 200.0 million aggregate cash credit of M/S S.L Steel (hereinafter also referred to as SLS or the Firm). CRAB has also assigned ST-1 rating to BDT 45.0 million aggregate SOD limit and ST-4 to BDT 3,180 million aggregate short-term funded and non funded limits. Major risks involved in the ship breaking industry are price movement of vessels and steel, intense local competition, environmental issues and health safety of the employees. Foreign exchange risk also possesses a threat for the profitability of the industry. Legal pressure by different environmental protection groups and health hazard will be critical factors for the industry. CRAB has performed the present rating assignment based on audited financial statements of December 2011 and other relevant information. The rating also takes into account business profile, past record and Key Rating Findings Proprietorship concern High debt exposure in capital structure Pressured liquidity No standard MIS and Management System Industry reform takes place trend of operating performance, balance sheet strength and loan repayment history. In assessing, the Loan Ratings (Lr) CRAB also considers the security arrangements against each exposure along with the entitys fundamentals. Current Ratings BB2 (Lr) ST-1 ST-4 Previous Ratings BB3 (Lr) ST-1 ST-4 ST-4 Remarks Please see Appendix-1 for details

Lr - Loan Rating; ST Short Term. * Due to its revolving nature, CRAB views Cash Credit (CC) as long-term facility.

Rationale

CRAB I CRAB Ratings on Corporate Credit Digest I 26 July 2012

Page 1 of 3

CRAB Rating Report

Steel

M/s S.L. Steel

S.L. Steel has recycled almost 4 vessels of different sizes and weights up to December 2011. It imports and scraps vessels and sales scrap steel products like MS Plate, GI Pipe, gutters, and furniture, electric equipments, motor and generators to local brokers. As on 31 December 2011, its reported revenue was BDT 1849.5 million and Net Profit after tax was BDT 301.1 million. The Equity of the Firm increased from BDT 460.7 million in 2010 to BDT 2603.2 million in 2011 and Total Debt of the Firm increased from BDT 597.1 million in 2010 to BDT 2599.8 million in 2011 as the Firm started ship breaking business this year. Its Debt/Equity was 1.0x in 2011. Its gross interest coverage (EBIT/ Interest expenses) was 6.1x in 2011 which is moderate in this type of business.

www.crab.com.bd;www.crabrating.com

Page 2 of 3

M/s S.L. Steel

LONG-TERM RATING: LOANS/FACILITIES FROM BANKS/FIS (All loans/facilities with original maturity exceeding one year)
RATINGS AAA (Lr) (Triple A) Highest Safety AA (Lr)* (Double A) High Safety A (Lr) Adequate Safety BBB (Lr) (Triple B) Moderate Safety BB (Lr) (Double B) Inadequate Safety B (Lr) High Risk CCC (Lr) Very High Risk CC (Lr) Extremely High Risk DEFINITION Loans/facilities rated AAA (Lr) are judged to offer the highest degree of safety, with regard to timely payment of financial obligations. Any adverse changes in circumstances are unlikely to affect the payments on the loan facility. Loans/facilities rated AA (Lr) are judged to offer a high degree of safety, with regard to timely payment of financial obligations. They differ only marginally in safety from AAA (Lr) rated facilities. Loan/facilities rated A (Lr) are judged to offer an adequate degree of safety, with regard to timely payment of financial obligations. However, changes in circumstances can adversely affect such issues more than those in the higher rating categories. Loans/facilities rated BBB (Lr) are judged to offer moderate safety, with regard to timely payment of financial obligations for the present; however, changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal than for issues in higher rating categories. Loans/facilities rated BB (Lr) are judged to carry inadequate safety, with regard to timely payment of financial obligations; they are less likely to default in the immediate future than instruments in lower rating categories, but an adverse change in circumstances could lead to inadequate capacity to make payment on financial obligations. Loans/facilities rated B (Lr) are judged to have high risk of default; while currently financial obligations are met, adverse business or economic conditions would lead to lack of ability or willingness to pay interest or principal. Loans/facilities rated CCC (Lr) are judged to have factors present that make them very highly vulnerable to default; timely payment of financial obligations is possible only if favorable circumstances continue. Loans/facilities rated CC (Lr) are judged to be extremely vulnerable to default; timely payment of financial obligations is possible only through external support. Loans/facilities rated C (Lr) are currently highly vulnerable to non-payment, having obligations with payment arrearages allowed by the terms of the documents, or obligations that are subject of a bankruptcy petition or similar action but have not experienced a payment default. C is typically in default, with little prospect for recovery of principal or interest. C (Lr) are typically in default, with little prospect for recovery of principal or interest. D (Lr) Default Loans/facilities rated D (Lr) are in default or are expected to default on scheduled payment dates.

C (Lr) Near to Default

*Note: CRAB appends numerical modifiers 1, 2, and 3 to each generic rating classification from AA through CCC. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.

SHORT-TERM CREDIT RATING: LOANS/FACILITIES OF BANKS/FIS (All loans/facilities with original maturity within one year)
DEFINITION ST-1 Highest Grade ST-2 High Grade ST-3 Adequate Grade ST-4 Marginal ST-5 Inadequate Grade ST-6 Lowest Grade This rating indicates that the degree of safety regarding timely payment on the loans/facilities is very strong. This rating indicates that the degree of safety regarding timely payment on the loans/facilities is strong; however, the relative degree of safety is lower than that for issues rated higher. This rating indicates that the degree of safety regarding timely payment on the loans/facilities is adequate; however, the issues are more vulnerable to the adverse effects of changing circumstances than issues rated in the two higher categories. This rating indicates that the degree of safety regarding timely payment on the loans/facilities is marginal; and the issues are quite vulnerable to the adverse effects of changing circumstances. This rating indicates that the degree of safety regarding timely payment on the loans/facilities is minimal, and it is likely to be adversely affected by short-term adversity or less favorable conditions. This rating indicates that the loans/facilities are expected to be in default on maturity or is in default.

Copyright 2012, CREDI T RATI NG A GENC Y OF BANGLA DESH LIMITED ("CRAB"). All rights reserved. A LL I NFO RMATIO N CO NTAI NED HEREI N I S PRO TEC TED BY COPYRI GHT LAW AND NO NE O F SUCH INFORMA TION MAY BE COPIED OR OTHERWISE REPRO DUC ED, REPACKAGED, FURTHER TRA NSMI TTED, TRA NSFERRED, DISSEMI NATED, REDI STRIBUTED OR RESO LD, OR STORED FO R SUBSEQUENT USE FOR A NY SUC H PU RPOSE, IN W HOLE O R IN PART, IN ANY FORM O R MANNER O R BY ANY M EANS WHA TSO EVER, BY ANY PERSO N WITHOU T CRABS P RIOR W RITTEN CONSENT. All information contained herein is obtained by CRAB from sources believed by it to be accurate and reliabl e. B ecause of the possibility of huma n or mechani cal error as well as other factors, however, such infor mation is provided as is without warranty of any kind and CRAB, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeli ness, complet eness, merchantability or fitness for any particular purpose of any such information. Under no circumstances shall CRAB have any liability to any person or entity for (a) any loss or da mage in whol e or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of CRAB or any of its directors, officers, employees or agents in connection with the procurement, coll ection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental da ma ges whatsoever (incl uding without li mitation, lost profits), even if C RAB is advised in a dvance of the possibility of such da mages, resulting from the use of or inability to use, any such infor mation. The credit ratings and financial reporting analysis observations, if any, constituting part of the infor mation contained herein are, and must be construed sol ely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hol d any securities. NO WARRA NTY, EXPRESS OR IMPLIED, AS TO THE ACCURAC Y, TIMELINESS, COMPLETENESS, MERC HANTABILI TY OR FITNESS FO R ANY PARTICULA R PURPOSE OF A NY SUC H RATI NG OR OTHER OPINION O R I NFORMA TION IS GIVEN O R MA DE BY CRAB IN ANY FORM OR MA NNER WHATSOEVER. Each rating or oth er opinion must be w eighed solely as one factor in any invest ment deci sion made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consi der purchasing, holding or selling.

CRAB I CRAB Ratings on Corporate Credit Digest I 26 July 2012

Page 3 of 3