MIRA INFORM REPORT

Report Date :

23^RD June, 2006

IDENTIFICATION DETAILS

Name :	DIVI’S LABORATORIES LIMITED
Formerly Known As :	DIVI'S RESEARCH CENTRE PRIVATE LIMITED
Registered Office :	Divi Towers, 3^rd Floor, 7-1-77/E/1/303, Dharam Karan Road, Ameerpet, Hyderabad 500 016, Andhra Pradesh, India
Country :	India
Financials (as on) :	31.03.2005
Date of Incorporation :	12.10. 1990
Com. Reg. No.:	01-11854
CIN No.: [Company Identification No.]	L24110AP1990PLC011854
Legal Form :	A public limited liability company. The company’s shares are listed on the Stock Exchanges
Line of Business :	Manufacturers of Bulk Drugs and Intermediates like Naproxen, Dextra Methorphane Hydro Bromide, Diltiazem Hydro Chloride, Nabomethone, Ipamidol, etc.

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 11000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established company having fine track records. Available information indicates high financial responsibility of the company. Financial position is good. Payments are usually correct and as per commitments. The company can be considered good for any normal business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Divi Towers, 3^rd Floor, 7-1-77/E/1/303, Dharam Karan Road, Ameerpet, Hyderabad 500 016, Andhra Pradesh, India
Tel. No.:	91-40-23731318/23731760/23731761
Fax No.:	91-40-23733242
E-Mail :	divis@hd1.vsnl.net.in, info@divislaboratories.com, mail@divislaboratories.com
Website :	http://www.divislaboratories.com
Area :	296 Sq. ft
Location :	Rented
Factory 1 :	unit i : Lingojigudem Village, Choutuppal Mandal, Nalgonda District - 508 252, Andhra Pradesh unit II (Proposed) : Chippada Village, Bheemunipatnam Mandal, Vishakhapatnam District, Andhra Pradesh.
r & d cENTERS	v C-26, Industrial Estate, Sanathnagar, Hyderabad – 500018, Andhra Pradesh Tel. 91-40-23704657 v Lingojigudem Village, Choutuppal Mandal, Nalgonda District, Andhra Pradesh Tel. 91-40-272092/272260 v Chippada Village, Bheemunipatnam Mandal, Visakhapatnam District – 531162, Andhra Prades v DRC – Vizag Village Chippada, Bheemunipatnam, Vishakapatnam – 530 010, Andhra Pradesh

DIRECTORS

Name :	Mr. Murali K. Divi
Designation :	Chairman & Managing Director
Age	52 years
Qualification	M. Pharm.
Experience	28 years
Date of Joining	10.10.1994
Previous Employment	Cheminor Drugs Limited - Managing Director
Name :	Mr. N. V Ramana
Designation :	Executive Director
Age	46 years
Qualification	B.Sc.(Chem.)
Experience	18 years
Date of Joining	26.12.1994
Previous Employment	Enmark Exim Services Private Limited - President
Name :	Mr. Madhusudhana Rao Divi
Designation :	Director - NRI (Kuwait) (Projects)
Name :	Mr. Kiran S. Divi
Designation :	Director (Business Development)
Age	27 years
Qualification	B. Pharm.
Experience	1 year
Date of Joining	10.08.2001
Name :	Dr. P Gundu Rao
Designation :	Director (R & D)
Name :	Dr. K. Satyanarayana
Designation :	Non Executive Director
Name :	Mr. G. Venkata Rao
Designation :	Non Executive Director
Name :	Prof. C. Ayyana
Designation :	Non Executive Director
Name :	Mr. S. Vasudev
Designation :	Director (IDBI Nominee)
Name :	Mr. G. Suresh Kumar
Designation :	Non Executive Director
Name :	Mr. L. Kishore Babu
Designation :	Chief Financial Officer

KEY EXECUTIVES

Name :	Mr. A. Narendra
Designation :	Company Secretary

MAJOR SHAREHOLDERS

Names of Shareholders	No. of Shares	Percentage of Holding
Indian Promoters	6913441	53.93
Mutual Funds and DTI	878651	6.85
Banks	7815	0.06
Flls	2407772	18.78
Private Corporate Bodies	596698	4.65
Indian Public	1748701	13.65
NRIs/OCBs	195573	1.53
Clearing Members	18233	0.14
Trusts	766	0.01
Directors (Independent and not in control of the Company)	51050	0.40

BUSINESS DETAILS

Line of Business :

Manufacturers of Bulk Drugs and Intermediates like Naproxen, Dextra Methorphane Hydro Bromide, Diltiazem Hydro Chloride, Nabomethone, Ipamidol, etc.

Products :

Product Description	Item Code Number
CIS (+) Hydroxy Lactum	2909.00
Dextromethorphan HBR	2902-00
Lopamidol	2942.00

Exports to :

UK, Switzerland, Canada, USA, Mexico and Germany

Imports from :

Germany

PRODUCTION STATUS

Particulars	Unit	Installed Capacity	Actual Production
Active Pharma Ingredients and Intermediates	MTS	2000	1331.43

GENERAL INFORMATION

No. of Employees :

300

Bankers :

v State Bank of India, Overseas Branch, ABIDS, Hyderabad, Andhra Pradesh

v State Bank of Hyderabad, IFC Branch, Panjagutta, Hyderabad, Andhra Pradesh

v The Lakshmi Vilas Bank Limited, K. P. H. B. Colony, Kukatpally, Hyderabad, Andhra Pradesh

v Industrial Development Bank of India, Hyderabad, Andhra Pradesh

v IDBI Bank Limited, Hyderabad, Andhra Pradesh

v UTI Bank Limited, Hyderabad, Andhra Pradesh

Facilities :

SECURED LOANS:	31.03.2005
WORKING CAPITAL LOANS:
From Banks (Secured by equitable mortgage of the immovable properties of the Company and further secured by first charge of all the movables (Save and except book-debts) including movable machinery, machinery spares, tools and accessories, present and future and further Secured by Hypothecation stocks, book debts and receivables of the Company and guaranteed by the Chairman and Managing Director of the Company)	627.840
OTHER LOANS •.
From Banks (Secured by hypothecation of Vehicles acquired against the Loan)	0.956
Total	628.796
UNSECURED LOANS:
Interest Free Sales Tax Loan	32.108
Total	32.108

Banking Relations :	Good
Auditors :	M/s. P.V.R.K. Nageswara Rao & Co. Chartered Accountants
Address:	109, Metro Residency, 6-3-1247, Rajbhavan Road Hyderabad - 500 082.
Associates/Subsidiaries :	Cheminor Drugs Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
15000000	Equity Shares	Rs 10/- each	Rs. 150.000 millions
500000	Redeemable Preference Shares	Rs. 100 each	Rs. 50.000 millions
	Total		Rs. 200.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
13000000	Equity Shares	Rs 10/- each	Rs. 130.000 millions
1,28,18,700	Equity Shares	Rs 10/- each	Rs. 128.187 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		128.187	128.187	128.187
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		2708.412	2163.774	1551.031
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		2836.599	2291.961	1679.218
LOAN FUNDS
1] Secured Loans		628.796	582.252	412.831
2] Unsecured Loans		32.108	77.011	20.955
TOTAL BORROWING		660.904	659.263	433.786
DEFERRED TAX LIABILITIES		250.323	222.875	178.117
TOTAL		3747.826	3174.099	2291.121
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1815.439	1663.243	1459.255
Capital work-in-progress		4.157	26.477	14.272
Advance for Capital Works		6.727	28.752	36.944
INVESTMENT		0.000	0.575	0.249
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1390.488	1075.952	671.179
	Sundry Debtors	1021.692	867.489	566.472
	Cash & Bank Balances	44.878	71.921	44.919
	Other Current Assets	1.371	0.939	1.250
	Loans & Advances	258.222	98.889	130.633
Total Current Assets		2716.651	2115.190	1414.453
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	678.216	532.206	634.052
	Provisions	116.932	127.932
Total Current Liabilities		795.148	660.138	634.052
Net Current Assets		1921.503	1455.052	780.401
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		3747.826	3174.099	2291.121

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2005	31.03.2004	31.03.2003
Sales Turnover [including other income]	3645.248	3172.829	2597.206
Profit/(Loss) Before Tax	1023.142	1019.625	693.265
Provision for Taxation	362.830	291.194	144.232
Profit/(Loss) After Tax	660.312	728.431	549.033
Export Value	3081.961	2614.319	2209.121
Import Value	679.448	578.566	617.764
Total Expenditure	2622.106	2153.204	1902.270

SUMMARISED RESULTS

PARTICULARS	31.03.2006 Full Year
Sales Turnover	3811.100
Other Income	106.300
Total Income	3917.400
Total Expenditure	3644.300
Operating Profit	1273.100
Interest	55.800
Gross Profit	1217.300
Depreciation	148.200
Tax	333.100
Reported PAT	704.700
Dividend	1000.000

KEY RATIOS

PARTICULARS	31.03.2005	31.03.2004	31.03.2003
Debt Equity Ratio	0.26	0.28	0.32
Long Term Debt Equity Ratio	0.02	0.04	0.13
Current Ratio	1.53	1.34	1.32
TURNOVER RATIOS
Fixed Assets	1.47	1.49	1.55
Inventory	2.85	3.52	4.45
Debtors	3.72	4.28	4.57
Interest Cover Ratio	24.79	31.35	16.58
Operating Profit Margin (%)	34.64	38.60	33.26
Profit Before Interest and Tax Margin (%)	30.35	34.29	29.69
Cash Profit Margin (%)	23.09	28.02	25.66
Adjusted Net Profit Margin (%)	18.80	23.71	22.09
Return on Capital Employed (%)	33.06	41.59	40.64
Return on Net Worth (%)	25.75	36.69	39.99

STOCK PRICES

Face Value	Rs.10/-
High	Rs.1270.00/-
Low	Rs.1250.00/-

LOCAL AGENCY FURTHER INFORMATION

History

Divi's Laboratories Limited was established in 1990 as a Research & Development company to develop processes for API & Intermediates and to provide turnkey solutions to the industry. In 1994 the name of the company was changed to Divi's Laboratories Limited. The company is headed by Murali K Divi as Chairman & Managing Director. In 1995,the company's first manufacturing unit was built on a 300 acre site comprising of 11 multi-purpose production blocks. 

 The company's plant at Choutuppal Mandal,Nalgonda District is having 11 multi-purpose production blocks primarily manufacturing active pharmaceutical ingredients and intermediates for generics,advanced intermediates for discovery compounds,cartenoids,protecting agents and building blocks for peptide chemistry and nucleotide chemistry. 

 During 1991 the company successfully developed commercial processes for intermediates and bulk actions & supply to manufacturing enterprises. In 2000 the company was awarded ISO 9001 certification by SGS-Yarsley. 

 The Company product portfolio has about 90 products covering Generic Products and New Chemistries comprising Custom Synthesis of APIs & Intermediates for MNC, Peptide Building Overseas and Carotenoids etc. The company is the first company to develop and manufacture synthetic carotenoids and also the largest manufacturer of some peptide reagents and protected amino acids world-wide. 

 The company has taken up a development of a new site in 2002 at Chippada village 35 KM from Visakhapatnam. The commercial production is slated to commence by March 2003. The total estimated outlay on this facility was Rs.402.200 Millions . The above plant will not only increase the capacity of API and also provide comfort to the company's multinational customers for assured supply of products. 

 The company is coming out with an IPO through book building route and the offer size is 3.205 Millions equity shares of Rs.10 each comprising fresh issue of 1.270 Millions shares and an offer for sale of 1.935 Millions shares. The floor price has been fixed at Rs.130 per share and the issue is open from February 17,2003 to February 21,2003. After the public issue the total equity has increased to Rs.128.200 Millions from Rs 115.500 Millions  

 The company has increased its installed capacity of Active Pharma Ingredients & Intermediates by 200 MTs and with this expansion the total installed capacity of Active Pharma Ingredients & Intermediates has increased to 2000 MTs. 

 The company has invested an amount of Rs.303.521 Millions towards capital expenditure at its manufacturing facilities at Choutuppal (Unit-I) and Chippada (Unit-II) for additional machinery installed at both Unit-I and Unit-II for enhancing he production capacity. Further the company has commissioned a new pilot plant at Unit-2 and also a new Research Centre with 60 work stations, which became fully operational during the year. The company has also installed additional Laboratory instruments at the Research centres.  

 The company is in the process of setting up an Export Oriented Unit with a capital investment of Rs.35 crores at its Unit-2.

DIVIDEND: 

 The Directors recommend a dividend of Rs.8.00 per equity share of Rs.10/- each for the year 2004-05 subject to approval of the Members at the ensuing Annual General Meeting. 

PERFORMANCE AND OPERATIONS REVIEW: 

 During the year, Divi achieved a turnover of Rs.3473.783 Millions as against Rs. 3028.314 Millions during the previous year reflecting a growth of 15%. Exports constituted 88% of total turnover and exports to advanced markets comprising Europe and America accounted for 62% of Company's business. Other Income earned during the year stood at Rs.171.465 Millions as against Rs. 144.515 Millions in the previous year. Profit after Tax (PAT) came to Rs.660.312 Millions as against Rs. 728.431 Millions during the previous year. Earnings Per Share for the year works to Rs.51.51 per share as against Rs.56.83 last year. 

 Lower profitability during the year is due to the movement of certain products with higher material costs and increase in prices of petroleum and molasses based solvents besides incidence of higher taxation consequent to withdrawal of exemption on export profits. Some of the Custom Synthesis projects are going through a longer development phase resulting in delayed sales. The first Manufacturing facility of the company at Choutuppal near Hyderabad was successfully inspected by US-FDA in May, 2004 without any Form-483 observations. The company currently has 19 DMFs for the US market. 

 During the year, the company has completed trials of a speciality ingredient for a large MNC company and the product has been well received by the customer. The project is in the process of commercialization for which the company is building a production facility to cater to the worldwide requirement of the speciality ingredient exclusively for this customer. 

 During the year, Divi has added 17 products to its product portfolio for generics APIs, future generics and custom synthesis. 

 TAXATION: 

 Divi has made an Income-tax provision this year (including prior year adjustment) of Rs.335.382 Millions as against Rs.246.437 Millions during the previous year. An amount of Rs.27.448 Millions has been provided during the year towards Deferred Tax Liability for the year as required under Accounting Standard AS-22 relating to 'Accounting for Taxes on Income'. Deferred Tax Liability provision during the previous year was Rs.44.757 Millions . 

 FINANCE: 

 During the year, Divi has cleared the outstanding FC loan to SBI. Divi has availed higher working capital limits, a bulk of these in foreign currency at competitive rates to cater to increased working capital requirements. Divi has been regular in payments of interest and other obligations with the Banks. Divi continues to avail the Sales Tax Deferment facility. 

RESEARCH AND DEVELOPMENT: 

 During the year, technologies for some of the future generic APIs were developed and sampled to customers. With the commissioning of the 4th Research Centre (DRC) of Divi with 60 work stations at Unit-2 and addition of new Laboratory instruments including certain special equipment like NMR, LCMS, GC-MS at other Centres, Divi is able to take up more projects both in custom synthesis and future generics. Currently, 180 scientists are deployed at the 4 Research Centres of the company. The company has so far filed 7 patents for process novelty. 

 FUTURE OUTLOOK: 

 Divi has 19 DMF filings with US-FDA and this is expected to increase to about 25 by end of the year. Divi is working on 15 future generic compounds to have a strong pipeline to percolate revenues as and when the patents expire. Four of the Active Pharma Ingredients also have Certificate of Suitability (CoS) from Europe. Divi has successfully completed trials of a speciality ingredient jointly with a large MNC company. To commercialise this opportunity, Divi is in the process of setting up an Export Oriented Unit with a capital investment of Rs.350.000 Millions at its Unit-2. 

 Divi continues to have a unique positioning in the generic and custom synthesis businesses due to its respect for IPR, R&D capabilities, cGMP manufacturing facilities, cost competitiveness and non-competing business model. 

 Global therapeutic peptides market is currently valued at around $ 1 billion and is estimated to double by 2010. The rising need for new therapeutic approaches combined with the potential of peptides as active pharma ingredients for effective drug formulation is contributing to rapid market development. Divi is the largest producer of peptide building blocks and will benefit from the world-wide growth in peptide business.  

 Carotenoids have already been developed by the company to commercial scale that are still to realise their commercial potential. 

HUMAN RESOURCES: 

 Divi continues to have cordial and harmonious relationship with the employees. 

 Particulars of employees required to be furnished under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are given in the Annexure attached and forms part of the Report. 

RESEARCH AND DEVELOPMENT (R&D): 

 1. Specific areas in which : Process development for ActiveR&D is carried out by Pharmaceutical Ingredients andthe Company. intermediates.  

 2. Benefits derived as a : Developed new products and result of the above R&D achieved cost and process efficiencies on existing products. 

 3. Future plan of action : To develop processes for newer products and intermediates.  

 4. Expenditure on R&D: Amount (Rs. in lakhs) 

 Particulars 2004-05 2003-04 

 Capital 205.72 79.78Recurring 740.16 679.20Total 944.96 758.98 

 Total R&D Expenditureas a percentage of Sales 2.72% 2.51% 

Overview: 

 The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956 and Generally Accepted Accounting Principles (GAAP) in India. The management of Divi's Laboratories accepts responsibility for the integrity and objectivity of these financial statements as well as for various estimates and judgments used therein. These estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order that the statements reflect, in a true and fair manner, the state of affairs and profits for the year. This report may also contain certain statements that the company believes are or may be considered to be 'forward looking statements' which are subject to certain risks and uncertainties. 

Industry and Structure: 

 The global pharma industry is still on a growth path of about 5 to 7% and consequently there is a demand for API as well. However, the industry is undergoing a lot of structural changes viz., 

 * more out-sourcing of early stage development and late life cycle products 

 * segregation of supply lines based on competitive positioning between existing integrated players and potential integrated players 

 * alignment of players without any API capability with pure API producers. 

 On a macro level, there are several pointers which clearly show that pharma business out of Asia is on a growth track mainly to supply to developed countries like US and Europe. There is, of course, a lot of churning because of a lot of capacity in Europe that will be rendered empty. 

Opportunities and Threats: 

 From the beginning of this year, India has moved to a compliance on the patent regime as required under WTO. The implementation mechanism, though not quite clear, the new environment has set in a more conducive atmosphere for out-sourcing by big pharma companies. The company, with its track record of compliance and respecting IPR even without the law in place, stands to gain further from increased custom synthesis opportunities. 

 For several developed countries, it has become an economic neccessity to reduce their healthcare costs and consequently the cost of medicines and this is driving manufacturing towards Asia. Divi, with its infrastructure already acceptable to FDA standards, the regulatory mechanism in place and its experience of these markets, stands to benefit further in the generic business as well.  

Risks and Concerns: 

 The company manufacturers Active Pharmaceutical Ingredients and Intermediates which are either Generics or custom manufactured for its customers. Some of these products are subject to regulatory approvals by the governments of user countries and the non-approval or withdrawal of existing approval may impact business. However, the company has a well spread product portfolio across a wide range of therapeutic uses, the largest product having sales of 22%, the top 5 products contributing about 50% of revenue and the top five customers account for 39% of its revenue. 

 The company manufactures various products that are subject to intellectual properties. The company's philosophy is to respect intellectual properties and hence always develop processes and offer products that are patent non-infringing and avoid violating intellectual properties. This process is carried out by in-house due diligence team and, as and when necessary, expert opinion of external patent Attorney firms is obtained. Currently, the company has no issues in this area. 

 Being predominantly into exports constituting over 88% of total sales, the company's business carries risk of any negativity towards purchases from India and exchange risks. The company exports to several countries and the highest sales to a single country is 28% of revenue. 

 The company currently on a net basis operates in the following currencies: 

 USD 78%Euro 2%Sterling Pound & Others 9% 

 Some of the company's raw materials and transportation is dependant on the prices of crude and petroleum based products. The company has always been making efforts to pass on the increased costs. The company operates across varying value added products and makes efforts to balance the proportion of impact. 

 The company operates manufacturing facilities which uses various chemicals of varying hazards of handling. The company is always pursuing best operating conditions including ISO 18001 certification and dedicated safety teams. The company maintains adequate insurance coverage for both fixed and current assets. 

milestones

2003

The company receives Certificate of Substantiability from the council of European Countries.

Appointed Mr. A. Narendra as Company Secretary and compliance officer of the company (in place of outgoing Company Secretary Mr. M. P. Sudarshan) who has joined the organisation.

2004

The company has informed that the manufacturing facility of company choutuppal near Hyderabad was successfully inspected by US-FDA in May 2001.

achievements

˜ It has grown multi-fold from the time of its inception.

˜ It has been the recipient of prestigious awards over the past years.

˜ IDMA 1996 (Indian Drug Manufacturers Association) For Excellence in Quality

˜ It had been inspected by USFDA in September, 2000

˜ ISO 14001 Certified in the year 2000

˜ ISO 9001 Certified in the year 1998

˜ The Director General of Foreign Trade rated the company first among the top 10 exporters from Andhra Pradesh in the year 1996-97.

˜ FAPCCI 1997 (Federation of Andhra Pradesh Chambers of Commerce & Industry) (For Best Export Effort in the State of Andhra Pradesh)

˜ FAPCCI 1996 (Federation of Andhra Pradesh Chambers of Commerce & Industry) (For Best Technological Development in Research & Development by an Industrial / Scientific Organisation)

˜ ICMA 1996 (Indian Chemical Manufacturers Association) (For Achieving Outstanding Quantum of Exports)

˜ IDMA 1996 (Indian Drug Manufacturers Association) (For Excellence in Quality)

The company is in trade terms with :

˜ Atofina

La Defence 10, Cedex 42, 92091, Paris, La Defence, France

˜ Bayer AG

Ch-M/GF 30, D-51368 Leverkusen Bayerwerk, Germany

˜ DSM Fine Chemicals Austria GmbH

St. Peter Strabe 25, P. O. Box 296, A-4021, Linz, Austria

˜ Great Lakes Sales (Europe) GmbH

Juchstrabe 45, Ch-8501, Frauenfeld, Switzerland

˜ Hawk Petroleum Pte Limited

Level 36, Hong Leong Building, 16, Raffles Quay, Singapore 048581

˜ Nagase & Company Limited

5-1, Nihonbashi, Kobunacho, Chou-Ku, Tokyo 103, Japan

˜ Rohm & Hass B.V.

P. B. 32, NL 3800 AA Amersfoort, The Netherlands

˜ Saurefbrik Schweizerhall (Switz)

Ch-4133 Prattein 1, Switzerland

˜ SQM Europe N.V.

Sint Pietersvlier 7, Bus 8, Precambuilfing 2000, Antwerpen 1, Belgium

˜ Sinochem Jiangsu Imp. & Exp. Corporation

50 Zhonghua Road, Nanjing, China

Subject has been accredited with ISO 9001 and ISO 14001 Certifications.

press clipping

AUGUST 10, 2004

The Financial Express

The company has reported a net profit of Rs. 730 million on a total income of Rs. 3170 millions. During the year, its research centres had developed eight new products, one of them being Levitiracetam for which the company was the first to file DMF for USA market. The comapny has also five patents during the year for process novelty. Further the company has projected an income of Rs. 4000 millions for the year 2004-05.

The Hindu Business Line – Published

The company has projected a turnover of Rs. 4000 million for the financial year 2004-05. The company achieved a turnover of Rs. 3170 million in a fiscal year 2003-04, with a net profit of Rs. 730 millions.

Giving the highlights of the company’s performance at the 14^th Annual General Body Meeting on Monday, Mr. Murali K. Divi, Chairman, said eight new products were developed, including Levitiracetam, for which the company was first to the Drug Master File for the USA market.

Fixed Assets

v Land and development

v Buildings

v Plant & machinery

v Laboratory equipments

v Furniture and fixtures

v Data processing equipments

v Vehicles

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.46.34
UK Pound	1	Rs.84.27
Euro	1	Rs.57.96

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	YES
--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 EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	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