MIRA INFORM REPORT

Report Date :

16^th June 2006

IDENTIFICATION DETAILS

Name :	ARCH PHARMALABS LIMITED
Formerly Known As :	ARCH COMMERZ PRIVATE LIMITED (w.e.f. 02/04/1993)
Registered Office :	Survey No. 323, Gundlamachnoor Village, Hathnoora Mandal, Medak-502296, Andhra Pradesh, India
Country :	India
Financial (as on) :	31/03/2005
Date of Incorporation :	15/11/1996
Com. Reg. No.:	11-103946
TAN No.: [Tax Deduction & Collection Account No.]	MUMA19603D
PAN No.: [Permanent Account No.]	AACCM0306Q
Legal Form :	Public limited liability company. The company’s shares are listed on the stock exchanges.
Line of Business :	Manufacturing of Pharmaceutical Intermediates in Isoxazole Penicillin range with a focus on export market.

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

Maximum Credit Limit :	USD 2500000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and reputed company having satisfactory track. Trade relations are fair. Financial position is satisfactory. Payments are usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office/ Corporate Office :	Saki Vihar Road, Powai, Solaris II, Mumbai, Maharashtra - 400 059
Tel. No.:	91-22-28470555-0564
Fax No.:	91-22-2847 1234/1002
Factory	Survey No. 323, Gundlamachnur Village, Hathnoora Mandal, Medak-502296, Andhra Pradesh, India
Tel. No.:	91-22-28560555/0560
Fax No.:	91-22-28561234/1002
E-Mail :	1. archcom@mtnl.net.in / archfin@vsnl.com / infor@archpharmalabs.com
Website :	http://www.archgroupindia.com
Area :	5500 Sq.ft
Location :	Owned
Plant:	Ø Plot No. T- 84, 85 and 86 MIDC Tarapur, Taluka Palghar, District Thane, Maharashtra Ø Plot No. G-4 Kharvai MIDC, Badlapur, District Thane - 421 503, Maharashtra Ø Vitalifa Laboratories, Village Pathreri, Bilaspur Tauru Road, District Gurgoan – 122 001, Haryana Ø Plot No. W-45 (C) Anand Nagar, Additional Ambernath District Thane - 421 506, Maharashtra Ø V-8, MIDC, Taloja, Raigad, Maharashtra, India
Branch:	Located at:- Ø Sainath, 8-2-120/86/10/2, Muncipal No. 389, Road No. 14, Banjara hills, Hyderabad - 500 034, Andhra Pradesh Ø Shop No.3, Village Pabhat, Chandigarh Road, Zirakpur District, Ropar, Punjab

DIRECTORS

Name :	Mr. Ajit A. Kamath
Designation :	Director & Chief Executive Officer
Address :	404, I la Apartments, Sector 4, R. O. P. 7, Chrkop, Kandivli (West), Mumbai-400067, Maharashtra, India
Age :	34 years
Qualification :	Graduate
Experience :	9 years
Name :	Mr. Manoj Tejraj Jain
Designation :	Deputy Managing Director
Address :	Flat No. 5, Anchorage, 10/12, L. J. Road, Mahim, Mumbai-400016, Maharashtra, India
Age :	34 years
Name :	Mr. T. Mallikarjuna Reddy
Designation :	Vice Chairman
Address :	B-13, Madhura Nagar, Hyderabad-500038, Andhra Pradesh, India
Age :	44 years
Name :	Mr. Manoj T. Jain
Designation :	Deputy Managing Director
Name :	Mr. Shahzaad S. Dalal
Designation :	Nominee Director
Name :	Mr. Aluri S. Rao
Designation :	Nominee Director
Name :	Mr. Rajendra Kaimal
Designation :	Executive Director
Address :	C-411, Janakdeep, J. P. Road, 7 Bunglow, Andheri (West), Mumbai-400061, Maharashtra, India
Age :	31 years
Name :	Mr. B. V. Raju
Designation :	Executive Director
Address :	503, Sagar View Apartments, Begumpet, Hyderabad-400016, Andhra Pradesh, India
Age :	45 years
Name :	Mr. Subhash Mali
Designation :	Non-Executive Director
Address :	F-11/604, Neelam Nagar, Mulund (East), Mumbai-400081, Maharashtra, India
Age :	41
Name :	Mr. Sudhir Ghate
Designation :	Non-Executive Director
Address :	101, ‘Suprabhat’, Bejal-Kapikad, Mangalore –575004
Age :	43 years
Name :	Mr. Rashmikant Choksey
Designation :	Non-Executive Director
Address :	517, Ankita Apartments, 53, Nehru Road, Vile Parle (East), Mumbai-400057, Maharashtra, India
Age :	49 years
Name :	Dr. Shantilal Jain
Designation :	Non-Executive Director
Address :	Medichek, Ground Floor, Gopal Bhawan, Mahim, Mumbai-400016, Maharashtra, India
Age :	41 years
Name :	Mr. Sudhir P. Ghate
Designation :	Non Executive Director
Name :	Mr. Vikas B. Kedia
Designation :	Company Secretary
Name :	Mr. K. S. Baidwan
Designation :	Nominee Director
Address :	House No. 4506, DLF city, Phase-IV, Gurgaon-122002
Age :	61 years
Name :	Mr. Kishore Gotety
Designation :	Nominee Director
Address :	ICICI Venture Funds, Management Company Limited, Stanrose House, Ground Floor, Appasaheb Marathe Marg, Prabhadevi, Mumbai-400025, Maharashtra, India
Age :	32 years

MAJOR SHAREHOLDERS

Names of Shareholders	Pre Issue Equity Holding	Percentage of Holding	Post Issue Equity Holding	Percentage of Holding
Promoters Holdings
Promoters	4681959	34.21	4681959	29.12
Persons Acting in concert	693095	5.06	693095	4.31
Sub Total (I)	5375054	39.27	5375054	33.43
Non Promoters Holdings
Swisstec Venture	2045455	14.95	2045455	12.72
ICICI Venture	1214073	8.87	1214073	7.55
IL and FS Group	2040000	14.91	2040000	12.69
Olympus Medica Holding Limited, Mauritius	Nil	Nil	2390000	14.87
MFs/FLs/Bank	4115	0.03	4115	0.03
Private Corporate Bodies	238123	1.74	238123	12.04
Indian Public	1930069	14.10	1930069	1.48
NRIs/OCBs	839585	6.13	839585	5.22
Sub Total (II)	8311420	60.73	10701420	66.57
Total I + II	13686474	100.000	16076474	100.00

BUSINESS DETAILS

Line of Business :	Manufacturing of Pharmaceutical Intermediates in Isoxazole Penicillin range with a focus on export market.
Products :	· CMIC Chloride : 3 - (2 Chlorophenyl)-5-Methyl Isoxazole - 4 - Carbonyl Chloride · DICMIC Chloride : 3 - (2,6 Dichlorophenyl)-5-Methyl Isoxazole-4-Carbonyl Chloride · FCMIC Chloride : 3-(2 Chloro. 6-Flurophenyl)-5-Methyl Isoxazole-4- Carbonyl Chloride. PMIC Chloride : 3 –Phenyl-5-Methyl Isoxazole-4-Carbonyl Chloride
Exports to :	Europe, Latin America, Middle East and South Asia
Imports from :	Japan, China, Germany, Switzerland, U.A.E., Belgium and South Korea

PRODUCTION STATUS

Particulars	Capacity	Production
CMIC Chloride	180 tons	300 tons
DCMIC Chloride	60 tons	100 tons
FCMIC Chloride	60 tons	60 tons
PMIC Chloride	12 tons	20 tons

GENERAL INFORMATION

Suppliers :	Ø BASF Aktiengesellschaft, Germany Indenting Agent BASF India Limited Rhone-Poulence House, Sudam Kalu Ahire Marg, Mumbai-400025, Maharashtra Tel. No. 91-22-4930703 Fax No. 91-22-4950512 Contact Person: Mr. Udipt Agarwal Ø Changzhou Foreign Economic Technical and Trading (Group) Corporation 12-D Midsouth Tower, 33 West, Guanhe Road, Changzhou, Jiangsu, China Tel. No. +86-5196626038 Fax No. +86-519-6609289 E-Mail: htchem@public.cz.js.cn Contact Person: Mr. Fu-Qiang Sun Ø Zhejiang Medicines & Health Products Imports & Exports Corporation 2188, Ti Yu Chang Road, Hangzhou 310003, China Fax No. (571) 5100777 / 5105518 Ø Clariant GmbH-Kundenbuchhaltung D-65840, Sulzbach, Germany Tel. No. + 49 (6196) 75760 SWITCHBOARD Fax No. +49 (6196) 7578856 Representative Office: Colour-Chem Limited Mumbai-Agra Road, Balkaum, Thane-400608 Tel. No. 91-22-5345060 Fax No. 91-22-5349629 Contact Person: Mr. A. K. Roy Ø Nissho Iwai Corporation Fine and Bio Chemicals, Japan Representative Office Nissho Iwai Corporation (Bombay Liaison Office) Dalamal House, 8^th Floor, Nariman Point, Mumbai-400021, Maharashtra Tel. No. 91-22-2837685 Fax No. 91-22-2024138 Contact Person: Mr. Saikat Bhowmik Ø Tessenderlo Chemie S. A., Belgium Representative Office: Finorga (India) Private Limited 105-A, Neelam Centre, 249 B, Hind Cycle Road, Worli, Mumbai-400025, Maharashtra Tel. No. 91-22-4934627/4933310 Fax No. 91-22-4950504/4937925 Contact Person: Mr. Manish Vasaiwala Ø OG Corporation 8-7, Nihonbashi - Honcho 2 - Chome, Chuo-Ku, Tokyo, 103 – 8417, Japan Tel. No. +81 3 3665 - 8311 Fax No. +81 3 3665 - 8365 Ø Uwe Gers Chemie Handels GmbH Romerweg 1, D - 67117, Limburgerhof, Germany Tel. No. + 49 6236465032 Fax No. + 49 623648191 E Mail : ug-chemie@t-online.de Ø Benzo Petro International Limited 5, Welcome Shopping Centre, Opp Punit Nagar, Old Padra Road, Vadodara-390007, Gujarat Tel. No. 91-265-333302 / 342395 Fax No. 91-265-342395 / 330640 Contact Person: Mr. D. C. Gami Ø Search Chem Industries Private Limited Uniphos House, 11^th Road, Madhu Park, Khar (West), Mumbai-400052, Maharashtra Tel. No. 91-22-6041111/6000700 Fax No. 91-22-6041010 Contact Person: Mr. Sanjay Singhania Ø Adani Exports Limited 7^th Floor, “The Eagle’s Flight”, Suren Road, Andheri (East), Mumbai-400093, Maharashtra Tel. No. 91-22-6836969 Fax No. 91-22-6833838 Contact Person: Mr. Ashish Tawakley / Mr. Uday Mehta Ø Tata Chemicals Limited 57, Luz Lane, Mylapore, Chennai-600004, Tamilnadu Tel. No. 91-44-4996882 Fax No. 91-44-4981023 Contact Person: Mr. M. Vellodi – Regional Manager Ø Alkyl Amines Chemicals Limited 401-407, Nirman Vyapar Kendra, Plot No. 10, Sector 17, Vashi, Navi Mumbai-400703, Maharashtra Tel. No. 91-22-7890632 Fax No. 91-22-7890631 Contact Person: Mr. Sameer Ardekar Ø Haresh Kumar and Company 23, Anant Building, 217, Shamaldas Gandhi Marg, Mumbai-400002, Maharashtra Tel. No. 91-22-8375382 /83 Fax No. 91-22-8254417 Contact Person: Mr. Kailash Kasat Ø Chemplast Sanmar Limited 8, Cathedral Road, Chennai - 600 086, Tamilnadu Tel. No. (Chennai) 91-44-822 7739 (Mumbai) 91-22-5973390/91 Fax No. (Chennai) 91-44-822 1545 (Mumbai) 91-22-5973395 Contact Person: Mr. Subramanium
Customers :	Manufacturer
No. of Employees :	275
Bankers :	Karnataka Bank Limited, Overseas Branch, 2 Firuz Ara, 160, M.K. Road, Cooperage, Mumbai - 400 021 Tel. No. 91-22-22885016/17 Fax No. 91-22-22020463 Facilities: Rs. 60 millions (Fund Based) UTI Bank Limited, Universal Insurance Building, Sir P. M. Road, Fort Branch, Mumbai-400001, Maharashtra Tel. No. 91-22-22835782/84/87/89 Fax No. 91-22-22844113 Facilities: Rs. 90 millions (Fund Based) Export import bank of India HDFC Bank Limited IL & FS Limited India Bank State Bank of India State Bank of Indore State Bank of Mysore State Bank of Patiala The Greater Bombay Co-operative Bank Limited The Karur Vysya Bank Limited
Facilities :	Secured Loans	Rs. in millions
	a) Term Loan
	From Bank	539.790
	From Institution	100.000
	b) Working Capital Loans	419.409
	c) Loans under Hire purchase arrangements	9.537
	Total	1068.736
	Unsecured Loans
	Non Convertible Debentures	10.00
	Convertible Debentures – OFCD	6.300
	Interest Free Sales Tax Deferment	2.126
	Inter Corporate Deposits	4.700
	Total	23.126

Banking Relations :	Satisfactory
Auditors :	Nayak and Rane Chartered Accountants Mumbai
Sister Concern:	Ø Arch Financial Services (Bom) Private Limited - Engaged in providing financial services Ø Arch Phytochemicals Private Limited - Engaged in Preparing Registration Dossiers for Homeopathic medicines

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
1,60,00,000	Equity shares	Rs. 10 each	Rs. 160.000 millions
140,00,000	Preference Share	Rs. 10/- each	Rs. 140.000 millions
	Total		Rs. 300.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
13171019	Equity shares	Rs. 10/- each	Rs. 131.710 millions
1960000	Cumulative Convertible Preference Shares	Rs. 10/- each	Rs. 19.600 millions
	Total		Rs. 151.310 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2005	31.03.2004	31.03.2003
SHAREHOLDERS FUNDS
1] Share Capital		151.310	177.337	52.337
2] Share Application Money		0.00	2.193	35.000
3] Reserves & Surplus		514.422	163.262	74.280
NETWORTH		665.732	342.792	161.617
LOAN FUNDS
1] Secured Loans		1068.736	290.674	231.057
2] Unsecured Loans		23.126	15.126	23.993
TOTAL BORROWING		1091.862	305.800	255.050
DEFERRED TAX LIABILITIES		39.171	8.176	4.187
TOTAL		1796.765	656.768	420.854
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1022.612	281.532	187.241
Capital work-in-progress
INVESTMENT		0.582	0.582	0.582
DEFERREX TAX ASSETS
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	518.960	246.311	169.461
	Sundry Debtors	472.537	217.606	146.122
	Cash & Bank Balances	62.033	38.904	23.117
	Other Current Assets	--	--	--
	Loans & Advances	125.720	60.277	48.826
Total Current Assets		1179.250	563.098	387.526
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	393.023	172.886	138.423
	Provisions	29.274	22.267	17.422
Total Current Liabilities		422.297	195.153	155.845
Net Current Assets		756.954	367.945	231.681
MISCELLANEOUS EXPENSES		16.617	6.709	1.350
TOTAL		1796.765	656.768	420.854

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2005	31.03.2004	31.03.2003
Sales Turnover [including other income]	1560.328	967.701	695.535
Profit/(Loss) Before Tax	161.389	101.279	64.754
Provision for Taxation	59.056	11.965	11.109
Profit/(Loss) After Tax	102.332	89.314	53.645
Export Value	1155.356	--	408.700
Import Value	251.633	--	132.823
Total Expenditure	1398.939	866.422	633.781

QUARTERLY RESULTS

PARTICULARS	30.06.2005 (1^st Quarter)	30.09.2005 (2^nd Quarter)	31.12.2005 (3^rd Quarter)
Sales Turnover	449.900	582.600	664.900
Other Income	0.800	1.600	1.300
Total Income	450.700	584.200	666.200
Total Expenditure	355.000	473.700	537.900
Operating Profit	95.700	110.500	128.300
Interest	29.900	35.100	44.400
Gross Profit	65.800	75.400	83.900
Depreciation	18.000	22.900	25.100
Tax	9.000	9.400	7.500
Reported PAT	34.800	38.000	43.800

200506 Quarter 1

Status of Investors Complaints for the quarter ended Complaints pending at the beginning of the quarter Nil Complaints received during the quarter 77 Complaints disposed off during the quarter 77 Complaints unresolved at the end of the quarter Nil 1. The above results were taken on record by the Board at their meeting held on 4th August, 2005. 2. The figures for the previous period have been regrouped and reclassified to confirm the classification of the current period wherever necessary. 3. The Company operates in a single Pharmaceutical Segment and hence Accounting Standard 17 on Segment Reporting is not applicable. 4. The limited review of the above financial results of the company for the quarter and quarter ended 30th June, 2005 has been completed by the Statutory Auditors of the Company.

200509 Quarter 2

Expenditure Includes (Increase)/Decrease in Stock in Trade Rs (15.337) million Materials Consumption Rs 384.134 million Staff Cost Rs 25.782 million Other Expenditure Rs 79.115 million Tax Includes Provision for Current Tax Rs 9.400 million Deferred Tax Rs 5.100 million EPS is Basic & Diluted Status of Investor Complaints for the quarter ended September 30, 2005 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 51 Complaints disposed off during the quarter 51 Complaints unresolved at the end of the quarter Nil 1. The above results have been reviewed by the Audit Committee and were taken on record by the Board, at their meeting held on October 28, 2005. 2. The figures for the previous period have been regrouped and reclassified to confirm the classification of the current period, wherever necessary. 3. The Company operates in a single ''Pharmaceutical Segment'' and hence Accounting Standard-17 on Segment Reporting is not applicable. 4. The ''Limited Review'' of the above financial results of the company for the quarter and half year ended September 30, 2005, has been completed by the Statutory Auditors of the Company.

200512 Quarter 3

1. The above results were taken on record by the Board, at their meeting held on 30th January, 2006. 2. The figures for the previous period have been regrouped and reclassified to confirm the classification of the current period, wherever necessary. 3. The Company operates in a single 'Pharmaceutical Segment' and hence Accounting Standard-17 on Segment Reporting is not applicable. 4. Investors complaints and correspondence received and resolved during the quarter ended 31st December, 2005: Particulars Quarter ended 31st December, 2005 Pending at the beginning of the quarter Nil Received during the quarter 73 Resolved during the quarter 73 Lying unresolved at the end of the quarter Nil

KEY RATIOS

PARTICULARS	31.03.2005	31.03.2004	31.03.2003
Debt-Equity Ratio	1.39	1.20	4.34
Long Term Debt-Equity Ratio	0.81	0.59	2.93
Current Ratio	1.39	1.38	1.14
TURNOVER RATIO
Fixed Assets	2.70	4.07	4.05
Inventory	4.18	4.78	8.30
Debtors	4.63	5.47	9.77
Interest Cover Ratio	2.75	2.64	2.27
Operating Profit Margin (%)	17.92	17.51	16.20
Profit Before Interest And Tax Margin (%)	15.86	16.41	15.48
Cash Profit Margin (%)	8.46	10.08	8.26
Adjusted Net Profit Margin (%)	6.40	8.98	7.53
Return On capital Employed (%)	21.29	32.00	41.22
Return On Net Worth (%)	20.81	47.19	103.67

STOCK PRICES

Face Value	Rs.10/-
High	Rs.7.50/-
Low	Rs.7.11/-

LOCAL AGENCY FURTHER INFORMATION

Financing

The company during the year under review has raised Rs. 237.100 millions by way of issur of equity shares / convertible instruments on private placement basis.

The company has issued 2040000 equity shares at premium of Rs. 80 per shares to the funds managed by IL & FS Investment Managers Limited representing 14.95% of the paid up equity capital of the company. The total amount invested amounted to Rs. 183.600 millions, However, part of the above equity was allotted on the conversion option exercised during the current financial year 2005-06.

The promoters infused funds amounting to Rs. 33.800 millions by subscribing to 300000 equity shares at a premium of Rs. 102.50 per share aggregating to an investment of Rs. 33.800 millions

“India Advantage Fund-II” represented by “ICICI Venture Funds Management Company Limited” exercised their option to covert 567324 warrants into equivalent number of equity shares at a pre-determined premium of Rs. 2.865 per share.

The term borrowing of the company as on 31^st March 2005 stood at Rs. 666.200 millions i.e. an increase of Rs. 519.500 millions as compared to the previous year. The working capital borrowing stood at Rs. 419.400 millions i.e. an increase of Rs. 260.300 millions as compared to the previous year.

The fund raised from the issue of equity / term borrowing have been utilized for acquisition and expansion over various locations.

Wholly Owned Subsidiaries

The management is also pleased to announce the incorporation of the wholly owned subsidiaries in the United Kingdom (U. K.) and the United States of America . the UK subsidiary has been formed with the primary objective of facilitating logistics for our European customers.

The US subsidiary has been formed with the primary objective of acting as the beachhead for all our US based initiatives. Mr. Stuart Needleman, a marketing professional coupled with a Chemical Engineering background, has been appointed as the president of the US subsidiary. We are confident that our US initiative will gain further momentum by incorporation of the subsidiary and the appointment of Mr. Needleman.

The company has acquired the Vita life Laboratories division from Apollo International Ltd w.e.f 16.12.2004

FIXED ASSETS

The company's fixed assets of important value include land and factory building, electrical installation, plant & machinery, furniture & fixtures, computers, ERP Software, office equipment and vehicles.

Generic Names of the Principal Products of the company are :

Item Code No.	Product Description
29159000	CMIC - Chloride
29159000	DICMIC - Chloride
29159000	FCMIC - Chloride

QUARTERLY RESULTS

Status of Investors Complaints for the quarter ended Complaints pending at the beginning of the quarter Nil Complaints received during the quarter 77 Complaints disposed off during the quarter 77 Complaints unresolved at the end of the quarter Nil 1. The above results were taken on record by the Board at their meeting held on 4th August, 2005. 2. The figures for the previous period have been regrouped and reclassified to confirm the classification of the current period wherever necessary. 3. The Company operates in a single Pharmaceutical Segment and hence Accounting Standard 17 on Segment Reporting is not applicable. 4. The limited review of the above financial results of the company for the quarter and quarter ended 30th June, 2005 has been completed by the Statutory Auditors of the Company.

BIODATA

Incorporated on 2 Apr.'93 as Merven Drug Products Pvt Ltd, Merven Drug Products (MDPL) was converted into a public limited company on 13 Sep.'93. It was originally promoted by T V Raghava Reddy, Rajgopala Reddy and P Vijayalakshmi. The company is been engaged in the business of bulk drugs. 

In Oct.'94, MDPL came out with a public issue of 4.160 millions equity shares at par, aggregating Rs. 41.600 millions, to part-finance the Rs.147.500 millions project to manufacture basic and bulk drugs with an installed capacity of 135 tpa. The production facility is planned in accordance with the US FDA standards. The company is the first in the country to make certain speciality products such as fluoxetine, esmolol and roxythromycin. The project is located in Medak district of Andhra Pradesh. Commercial production commenced in 1995. It also doubled the capacity which became opertional by Dec.'95. It started production with CMIC chloride, an intermediate and a raw material for cloxacillin sodium. 

The company has an exclusive technical tie-up with Applied Chemtech, India. The company has entered into arrangements to undertake conversion work on job order basis in order to improve the plant capacity utilisation. 

Cash cruch and slow down in the bulk drugs industry has resulted in losses and the net worth being eroded. As such, the company has become a sick company. 

The company is currently engaged in only job work for other companies,as the company could not produce its products due to non-availability of working capital facility

OPERATIONS 

The company is engaged in production of Pharmaceutical Intermediates and Active Pharmaceutical Ingredients (API). Your company has fared exceedingly well in the Isoxazole Penicillins Side Chains segment where it has achieved Global Leadership. Your company has also recently forayed into manufacturing of Intermediates for the Cardiovascular and Psychotropic segments with a long term view to de-risk the product and customer profile. 

The performance of your company continues to be impressive. The net sales of the company have grown by 38.88% to Rs.964.579 millions with direct exports of Rs.722.140 millions. The profit after tax has increased by 66.49% to Rs.89.315 millions. 

 Continuous focus on the quality standards, operational efficiency and cost reduction measures has contributed to the strong all round growth. 

 The company through its focused business strategy perceives itself as a "Non-competing" manufacturer/ supplier. 

Website details are attached herewith

Quickly. Now. That is how Ajit A. Kamath, the 36-year-old chairman and managing director of Arch Pharmalabs does things. If you ask him a question he can't answer, he picks up the phone to talk to someone who can. And if you request a document or a photo, he handles it with similar urgency.

Moving Soon Arch Pharmalabs chemists will move later this year to a new lab that the company is building.

An accounting graduate who says he always wanted to be an entrepreneur, Kamath started his first company, a financial services provider, at the age of 22, when all he could put together as capital was $100. Later, with two friends who were also financiers, he switched his attention to the opportunities offered by the Indian pharmaceutical industry. They formed Arch in 1999.

Their firm is a rising star that has been growing at 50% annually since then. Sales amounted to a modest $50 million in the latest fiscal year. But the company already employs 1,100, it is building a large R&D lab, and it is boosting its orders with new customers. Its main businesses are producing active pharmaceutical ingredients (APIs) and advanced intermediates and providing custom manufacturing services. About two-thirds of sales are to foreign customers.

Arch's formula is a simple one. It buys loss-making pharmaceutical chemical plants. It then turns them around by putting them in the hands of experienced managers. To finance Arch's first years, Kamath and his partners attracted $9 million from three key investors, including an initial $2 million from Swisstec, which is the venture capital arm of the Swiss government.

Arch operates facilities at six locations across India. Three sites were acquired, one was built by Arch, and two others are Arch's under a long-term leasing arrangement.

Kamath says his plants are "quite new." The sellers were companies that strayed into pharmaceuticals. "They had been sold on the attractiveness of the pharma business, usually by a relative who had a degree in the field," he says. For example, Vitalife Laboratories, which Arch bought in 2004, belonged to a tire manufacturer.

Owing to contractual obligations and also to avoid having to lay off workers, some plants are still being used to make bulk APIs sold to a number of generic drug manufacturers. Kamath isn't especially fond of this business because of limited growth opportunities and also because it can bring Arch in competition with potential customers. But for now, bulk generics remains a substantial business for Arch; for example, the company calls itself the world's leading producer of isoxazole penicillin side chains.

Kamath is striving to make Arch better known for its custom pharmaceutical chemical manufacturing business. "Our plan A is to have a company with no product list, no 'à la carte menu' of the things we make," he says, envisioning that bulk generics production will be phased out within two years. "We prefer to sell our competencies and the quality of our production facilities." For the near future, he expects that most customers of Arch's custom manufacturing business will be generic drug producers that require tailor-made drug intermediates or APIs.

One key manager at Arch is Anand Prabhu, head of quality assurance, who did postdoctoral work at Georgia Institute of Technology. With a career spanning 30 years as a quality auditor at GlaxoSmithKline and Abbott Laboratories, Prabhu is a key asset in convincing customers that Arch takes its quality seriously, Kamath says. "He's the biggest challenge our production team faces, but customers love him."

Earlier this year, Arch hired Ganesh Pai to head its R&D activities. Pai holds a Ph.D. from the National Chemical Laboratories in Pune, India, and did postdoctoral work at Purdue University under Chemistry Nobelist Herbert C. Brown. He later worked for more than two decades in the Indian pharmaceutical industry, most recently for a start-up company that was failing to grow. Pai's new domain will be a 40,000-sq-ft R&D facility that Arch is building in Taloja, a city near Mumbai.

Managers at companies that do business with Arch have good things to say. Christopher Bluemel, head of basic and fine chemicals at Lanxess in Mumbai, says Arch is a buyer of the German company's o-chlorotoluene. Most Indian companies prefer to take their chances on the spot market, he says, but Arch signed a one-year supply contract. "If you want to be a world player, it's better to have a secure source of raw materials," Bluemel notes.

California biotechnology firm Codexis is both a supplier and a buyer. Under a deal signed in October, Codexis licensed Arch biocatalytic technology to make an undisclosed pharmaceutical intermediate. Codexis then buys the intermediate from Arch and sells it to customers in the generic drug industry.

Kamath recalls that when he first met Alan Shaw, the British-born chief executive officer of Codexis, Shaw frowned and asked, "Arch? Why have I never heard of you?"

Kamath expects that Arch's days of remaining unknown are coming to an end. He manages European sales and says that talks with several multinational corporations are going well. He will soon be seeking $30 million from private investors to finance near-term growth. And in three years, he wants to list Arch on a stock market. For a company launched only seven years ago, that is as good as a long-term strategic plan.

CNBC-TV18 & ICICI Bank Emerging India Awards felicitates India's most promising SMEs for 2005

Source : Company Release
Date : May 5^th, 2006

Arch Pharmalabs Limited has won the prestigious "ICICI-CNBC TV18 Emerging India Award (2006)" in Pharma and Chemicals category conducted by ICICI Bank, India's largest Private Sector and Second Largest Bank, CNBC-TV18, the undisputed leader in the business news space and CRISIL, India's leading Credit Rating Agency. The Award was announced at a grand presentation ceremony held in Mumbai on May 2, 2006.

The ICICI-CNBC TV18 'Emerging India Award' initiative aims at recognizing the most sustainable Value Creators among SMEs in the country. Indian SMEs with a maximum net worth of Rs 75 crore, were eligible for entry to the ICICI - CNBC TV18 'Emerging India Awards', India largest recognition platform.

CNBC-TV18 and ICICI Bank's Emerging India Series is India's first and only platform for recognizing and promoting India's small and medium enterprises. The CNBC-TV18 and ICICI Bank Emerging India Initiative is a series of forums that have culminated into the Emerging India Awards, which was introduced last year.

The series, which has returned this year with a fresh new line up of Emerging India forums, will tour the country once again.

The Emerging India Awards for 2005 posted a record number of entries, a total of 35,000. This is an achievement no recognition platform prior to this has been able to claim in India. With the maximum number of entries received from the state of Maharashtra, it was no surpsise when it walked away with 2 awards in the categories of ICE & ITES and Pharma & Chemicals. Mr. Ajit Kamath, MD, Arch Pharmalabs accepted the Emerging India Award for Pharma and Chemicals category while Mr. Anupam Mittal, MD, People Interactive Ltd. accepted the Emerging India Award for ICE and ITES.

The economic reforms brought about the end of control regimes, de-licensing and de-reservation of industries ensured that the small and medium enterprises were allowed to grow. Statistically the SMEs make up over 90 percent of the Indian economy and provide employment to a robust 70 per cent of the Indian working population.

Speaking on the landmark achievement of receiving 35,000 nominations for the award, Mr. K.V Kamath, MD & CEO, ICICI Bank, said "The future for Indian SMEs looks bright across all Industry sectors. Policy initiatives can take the economy growth rate to a much higher level than 8.1%. To take advantage of this growth, it is important for the SMEs to make changes to consolidate and modernize their businesses, adopt best practices and bring in enhanced transparency - the Emerging India Awards initiative emphasizes these aspects and recognizes the companies that epitomize them."

Speaking on this initiative Mr. Haresh Chawla-CEO-CNBC-TV18 said "In its second year, the Emerging India Awards has become not just the benchmark for recognizing the best performing enterprises from the SME space but it has also emerged as India's (and one of the world's) largest business awards! A true testimony to the power of the SME story. We are extremely proud to partner with ICICI Bank and CRISIL in this initiative. What is also extremely heartening that SMEs are raring to go and willing to take on challenges & opportunities thrown in by globalization! We will continue to take up the SME cause at the TV18 network "

Evaluation Process

The Emerging India Initiative was conceptualised to reward entrepreneurship and innovation in addition to business and financial performance. The evaluation process was a rigorous 8 stage program designed to select the best, sustainable value creator amongst the small and medium enterprises. CRISIL, India's premier credit ratings agency was called upon to execute the evaluation process.

The first round of selection for the CNBC-TV18 'Emerging India Awards' involved a review of Financial Statements of the nominees by CRISIL. The evaluation was based on the performance of the company over the last four years to ensure consistency of performance.

During the second round of the screening, 25 short-listed entities in each category provided detailed information on:

Audited financial statements, verification from lead banker, any relevant references from industry associations/ key large clients

Comprehensive write-up on business

Future plans and strategies

Management background, experience and track record

Brief write-up and summarized financial performance on affiliate / group companies

CRISIL also used the following factors to evaluate the nominated SME's:

Market position, competitive strengths

Business strategy, growth plans and future prospects

Management vision, quality, experience and depth

The second round of screening resulted in the shortlisting of 3 entities per category. Each of the 3 shortlisted entries made a final round of offsite presentations about their respective businesses to a jury of independent experts, comprising of BVR Subbu, President, Hyundai Motor India Ltd., Arun Nanda, M&M, ED, Mahindra & Mahindra Ltd, D.D Rathi, CFO, Grasim, Dilip Choksi, India head, Deloitte and Nilesh Patel , MD, Heinz The jury selected the winners in each category after evaluating the SME's overall business, financial and management strengths and their ability for sustainable value creation for key stakeholders.

Mr. R Ravimohan, Managing Director & Chief Executive Director, CRISIL added, "The vital role played by SMEs has so far gone largely unnoticed. We are delighted to be a part of this initiative which acknowledges and celebrates the best-performing SMEs"

About CNBC-TV18

CNBC-TVI8 is India's No.1 business medium. CNBC Asia Pacific holds a strategic equity stake in the Indian registered broadcaster; Television 18. CNBC-TV18 is the undisputed leader in the business. The channel's benchmark coverage extends from corporate news, financial markets coverage, expert perspective on investing and management to industry verticals and beyond. CNBC-TV18 has been constantly experimenting with new genres of programming that helps make business more relevant to different constituencies across India. CNBC-TV18 is currently available in over 18 million households in India.

About ICICI Bank

ICICI Bank, India's second largest bank, provides a broad spectrum of financial services to individuals and companies. ICICI Bank today services a growing customer base of more than 10 million customer accounts through a multi-channel access network including over 480 branches and extension counters, over 1,800 ATMs and telephone, mobile and Internet banking (www.icicibank.com).

SME banking is a high growth area for ICICI Bank. ICICI Bank's Small Enterprises Group is focused on providing complete banking solutions to SMEs including term loans, working capital, trade finance and transaction banking services. These services are provided by a dedicated team of over 500 professionals spread across 100 cites. The Bank leverages its network of over 480 interconnected branches and strong technology platform to provide state- of-the-art customized banking solutions to the SMEs. Some of its widely accepted products in the SME space are the Roaming Current Account which provides the convenience of anytime -anywhere banking and the Channel Finance facilities for meeting the financing needs of the channel partners of its corporate customers.

ICICI Bank has pioneered innovative credit-evaluation techniques, which goes beyond just the evaluation of SME firm's financials and involves deep understanding of the SME business and the industry. This approach has substantially improved turnaround time for its customers. ICICI Bank's SME business has grown substantially over the past few years.

About CRISIL

CRISIL is India's leading Ratings, Financial News, Risk & Policy Advisory company. CRISIL leverages its core strengths of credibility and analytical rigour to deliver opinions and solutions that help clients mitigate and manage their business and financial risks, make markets function better and help shape public policy. CRISIL supports these through its unique width of product and service offerings.

Mr.Ajit Kamath, Chairman & Managing Director, Arch Pharmalabs Ltd, receives the Emerging India Award in the Pharma & Chemicals Category

Arch Pharmalabs (USA) Inc. names Dr. Raj Iyer as President

Source : San Francisco, CA
Date : April 3, 2006

Arch Pharmalabs Limited, Mumbai, India, announces that effective April 15, 2006, Raj Iyer Ph.D. becomes the President of their US subsidiary, Arch Pharmalabs (USA) Inc. Dr. Iyer will lead Arch's strategic, commercial and marketing initiatives aimed at the North American pharmaceutical and biotech sectors with a goal of building a world-class provider of active pharmaceutical ingredient and drug intermediate manufacturing services across the product life cycle and creating winning partnerships within these sectors. He will be based in the San Francisco Bay area.

In making the appointment, Ajit Kamath, Chairman and Managing Director of Arch Pharmalabs Limited, said, "Dr. Iyer brings several years of product, business development and program management experience to Arch. He has an excellent understanding of the regulatory process and industry models, and is adept at delivering cost-effective, customer-focused solutions across product life cycles from development through commercialization and genericization. We believe he will strengthen Arch's foothold in the dynamic and innovative North American market because of his established relationships within large, specialty pharma and biotech communities."

Prior to this new position, Dr. Iyer was the Director of Business Development at Rhodia Pharma Solutions, Inc. where he spearheaded the company's business initiatives for the North American specialty pharmaceutical and biotech markets and significantly expanded market share, while crafting value-added deals with several well-known players in these sectors. Dr. Iyer has also been employed by Dey LP where he contributed to development of two respiratory care, niche-market 505(b)(2) - based products which generate annual sales in excess of USD 200 million. He began his professional career with Pfizer, Inc (formerly Parke-Davis Pharmaceutical Research).

"I'm excited about joining Arch," Dr. Iyer explained. "With the emergence of India as a global scientific powerhouse and her Parliament's ratification of the WTO-sponsored Trade-Related Aspects of Intellectual Property (TRIPS) Agreement in 2005, Arch is poised to achieve global recognition as a customer-centric provider of custom active ingredient and intermediate manufacturing services across the product life cycle. We will work hard to empower our customers and partners with cost-advantaged, timely and quality-focused manufacturing solutions in support of product development, launch and line extension efforts with innovation, transparency and integrity. Arch will strive to bridge the gap between product conceptualization, development and marketing approval by helping our customers achieve more milestones / goals within finite budgets through the India Advantage and an unwavering commitment to quality and delivery."

Dr. Iyer holds both a Bachelor of Science and a Master of Science from the University Institute of Chemical Technology in Mumbai, India. He received his Ph.D. in analytical biochemistry from George Washington University in Washington, DC. and was a Post Doctoral Research Fellow in Psychiatry & Neuroscience at Yale University School of Medicine in New Haven, CT.

About Arch Pharmalabs Limited and Arch Pharmalabs (USA).

With more than 600 employees in 4 locations across India, Arch Pharmalabs is a leading supplier of APIs and Intermediates to the pharmaceutical and biotech industry. Created in 1999 through the lease and subsequent purchase of Merven Drug Products Ltd., Arch Pharmalabs now operates multiple manufacturing and R&D facilities with a total asset value of more than $18MM USD. The company is recognized as a global leader in isoxazole penicillin side chains, and maintains a product portfolio that supports numerous therapeutic segments including antibiotics, psychotropics, cardiovascular, antiulcerants, antihistamines and antifungals.

Arch Pharmalabs is supported by a number of marquee investors, including the SwissTec Venture Capital Fund, sponsored by the Swiss government; and ICICI Venture, owned by India's second largest bank. The company has also recently announced that an additional $40MM USD will be raised through private equity funding.

Steady growth has been demonstrated through the company's history. Since FY02, Arch Pharmalabs has averaged approximately 60% in annual revenue growth and approximately 20% in EBITDA margin. For 2005, Arch Pharmalabs forecasts total worldwide revenues of more than $36MM USD.

Arch Pharmalabs (USA) was established in September 2005 as the company's United States subsidiary. Arch Pharmalabs (USA) is uniquely positioned to offer the US pharmaceutical and biotech market a combination of North American market expertise and Indian research and manufacturing technology. This subsidiary office will help allow Arch Pharmalabs to enhance its status as a preferred supplier of APIs and Intermediates and grow the company's custom synthesis business.

From its commencement of business in 1999, Arch Pharmalabs Limited. Is engaged in the production and marketing of Pharma Intermediates. The company recently commenced manufacturing of APIs in GMP approved plants under exclusivity arrangements with major Pharma companies.

We are the Global Market Leaders in the Isoxazole Pencillins Side-chains business

One of our key business strategies has been to maintain a No competing supplier positioning

Its Production Capacity is  over 1500 tpa. Spread over Four manufacturing locations viz. , near Hyderabad (Southern India), Tarapur and Badlapur (both near Mumbai) and at Gurgoan (Near New Delhi).

CMT REPORT [Corruption, Money laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.45.09
UK Pound	1	Rs. 80.08
Euro	1	Rs. 54.31

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	6
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		54

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%)

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	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	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

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