MIRA INFORM REPORT

Report Date :

17^th May, 2006

IDENTIFICATION DETAILS

Name :	AARTI DRUGS LIMITED
Registered Office :	Plot No. N – 198, M.I.D.C., Tarapur, Pamtembhi Village, Taluka – Palghar, District Thane – 401 506, Maharashtra, India
Country :	India
Financials (as on) :	31.03.2005
Date of Incorporation :	28^th September 1984
Com. Reg. No.:	11-55433
CIN No.: [Company Identification No.]	U37060MM1990PLC055433
TAN No.: [Tax Deduction & Collection Account No.]	MUMA18926F
PAN No.: [Permanent Account No.]	AAACA4410D
Legal Form :	It is a public limited liability company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturing and selling of pharmaceuticals and bulk drugs.

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 3000000
Status :	Satisfactory
Payment Behaviour :	Slow by average 30 days
Litigation :	Clear
Comments :	Subject is a well established pharmaceutical company having satisfactory track. Directors are reported as experienced, respectable and resourceful industrialist. Their trade relations are reported as fair. Financial position is satisfactory. Payments are slow be average 30 days. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Plot No. N – 198, M.I.D.C., Tarapur, Pamtembhi Village, Taluka – Palghar, District Thane – 401 506, Maharashtra, India
Tel. No.:	91-22-24072249 (5 Lines) / 52571698
Fax No.:	91-22-24073462
E-Mail :	aarti@giasbm01.vsnl.net.in
Website :	http://www.aartigroup.com
Administrative Office :	74, Matru Smruti, Road No. 4, Scheme No. 6, Sion (East) Mumbai - 400022, Maharashtra, India
Tel. No.:	91-22-24072249
Fax No.:	91-22-24073462
Corporate Office :	74, Matru Smruti, Road No. 4, Scheme No. 6, Sion (East) Mumbai - 400022, Maharashtra, India
Tel. No.:	91-22-24072249
Fax No.:	91-22-24073462
Plants :	· Plot Nos N-198, G-60, E-120, K-40, K-41, E-9/3-4 and E-21/22, MIDC Industrial Area, Tarapur, Village Pamtembhi, Taluka Palghar, Thane – 401506, Maharashtra, India · Plot Nos. 2902/2904, GIDC, Sarigam – 396155, District Valsad, Gujarat, India
R and D Centres :	· Plot Nos. N-198 & g-60, MIDC Industrial Area, Tarapur, Village Pamtembhi, Taluka Palghar, Thane – 401506, Maharashtra, India · Plot Nos. D-277/278, TTC Industrial Area, Turbhe, Navi Mumbai, Maharashtra, India

DIRECTORS

Name :	Mr. Chandrakant V. Gogri
Designation :	Chairman
Name :	Mr. Manilal P. Savla
Designation :	Vice Chairman
Name :	Mr. Prakash M. Patil
Designation :	Managing Director
Name :	Mr. Satish P. Nachane
Designation :	Managing Director
Name :	Mr. Harshit M. Savla
Designation :	Joint Managing Director
Name :	Mr. Harit P. Shah
Designation :	Whole Time Director
Name :	Mr. Rashesh C. Gogri
Designation :	Whole Time Director
Name :	Mr. Rajendra V. Gogri
Designation :	Director
Name :	Mr. Shantilal T. Shah
Designation :	Director
Name :	Mr. Uday M. Patil
Designation :	Whole Time Director
Name :	Mr. Nitin N. Prabhu
Designation :	Director
Name :	Mr. P. H. Desai
Designation :	Director

KEY EXECUTIVES

Name :	Mr. Prakash Khedekar
Designation :	Company Secretary

MAJOR SHAREHOLDERS

Names of Shareholders	No. of Shares	Percentage of Holding
Promoter's Holding	7025449	60.00
Bodies Corporate	805230	6.88
NRIs/OCBs	99116	0.85
Banks, Financial Institutions	700	0.01
Mutual Funds	190983	1.63
Public	3587072	30.63
Total	11708550	100.00

BUSINESS DETAILS

Line of Business :

Manufacturing and selling of pharmaceuticals and bulk drugs.

Products :

Item Code No. (ITC Code)	Product Description
293329-02	Metronidazole
293329-01	Tinidazole
293329-02	Metronidazole Benzoate

Exports to :

Germany, Switzerland, France, etc.

PRODUCTION STATUS

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Pharmaceuticals	Kgs.	NA	21695	18022.54

GENERAL INFORMATION

Customers :

Some of its major customers are as under:-

· Renbaxy Labs Limited

· Cipla Limited

· Glaxo GSK

· Pfizer

· E Merck

· Alkem Lab

· Nicholas Piramal

· Aristo Pharma

· Zydus Cadila

· Cadila Healthcare

· DRL

· Hindustan Lever

· Dadur India

· Micro Lab

· F. D. C. Limited

No. of Employees :

Around 737

Bankers :

· Union Bank of India, Union Bank Bhavan, 239 Vidhan Bhavan Marg, Nariman Point, Mumbai – 400 021, India

· Bank of Baroda, Vadodara – 396 006, Gujarat, India

· Bank of Baroda, Overseas Branch, Nariman Point, Mumbai – 400 021, India

· Bank of India

· State Bank of India

· Citibank N.A.

· Corporation Bank

Facilities :

(Figures are in Rupees Millions)

FACILITIES	31.03.2005	31.03.2004
Secured Loans
Fixed Loans
From Financial Institutions	215.072	207.302
From Scheduled Banks	252.945	100.821
Other Loans
From Financial Institutions	0.764	45.545
From Scheduled Banks	451.666	491.316
Total	920.448	844.984
Unsecured Loan
From Directors	7.473	7.273
From Others	484.836	210.555
Interest accrued and due thereon
Directors	--	0.645
Others	0.015	4.662
Total	492.324	223.135

Banking Relations :	Satisfactory
Auditors :	Parikh Joshi & Kothare Chartered Accountants
Address :	49/2341, M. H. B. Colony, Gandhi Nagar, Bandra (East), Mumbai – 400 051, Maharashtra, India
Associates :	v Aarti Healthcare Limited v Perfect Enviro Control System Private Limited v Aarti Industries Limited v Alchemie Pharmachem Limited v Gogri & Sons Investment Private Limited v Valiant Chemicals Corporation v Suyash Chemicals v Rupal Drugs Limited v Alchemie Europe Limited, 7-9, ST. Mary’s Place, Bury Lanes, BL 9, ODZ, England v Aarti Pharmacare Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
13,009,500	Equity Shares	Rs. 10/-	Rs.130.095 millions
6,990,500	Preference Shares	Rs. 10/-	Rs. 69.905 millions
	GRAND TOTAL		Rs.200.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
1,30,09,500	Equity Shares	Rs. 10/-	Rs. 130.095 millions
	Less: 13,00,950 Equity Shares bought back	Rs. 10/-	Rs. 13.009 millions
	GRAND TOTAL		Rs. 117.086 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	117.086	117.086	117.086
2] Reserves & Surplus	648.608	547.756	467.571
NETWORTH	765.694	664.842	584.657
LOAN FUNDS
1] Secured Loans	920.448	844.984	712.668
2] Unsecured Loans	492.324	223.135	122.844
TOTAL BORROWING	1412.772	1068.119	835.512
DEFERRED TAX LIABILITIES	100.066	75.066	38.466
TOTAL	2278.532	1808.027	1458.635
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]	1077.487	820.585	719.473
Capital work-in-progress	226.006	61.791	0.000
INVESTMENTS	14.570	3.145	13.255
CURRENT ASSETS, LOANS & ADVANCES	1513.179	1492.562	1069.852
Total Current Assets	1513.179	1492.562	1069.852
Less : CURRENT LIABILITIES & PROVISIONS
Current Liabilities & Provisions	586.642	615.253	344.837
Total Current Liabilities	586.642	615.253	344.837
Net Current Assets	926.537	877.309	725.015
MISCELLANEOUS EXPENSES	33.932	45.197	0.892
TOTAL	2278.532	1808.027	1458.635

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2005	31.03.2004	31.03.2003
Sales Turnover [including other income]	2660.649	2386.621	1929.836
Profit/(Loss) Before Tax	206.122	170.567	138.222
Provision for Taxation	40.500	13.200	16.718
Profit/(Loss) After Tax	165.622	157.367	121.504
Export Value	705.845	759.810	524.083
Import Value	466.819	455.589	385.564
Total Expenditure	2454.527	2216.053	1791.614

QUARTERLY RESULTS

PARTICULARS	30.06.2005	30.09.2005	31.12.2005
Type	1^st Qtr	2^nd Qtr	3^rd Qtr
Sales Turnover	607.700	617.100	669.200
Other Income	2.400	1.400	1.200
Total Income	610.100	618.500	670.400
Total Expenditure	528.200	543.000	590.200
Operating Profit	81.900	75.500	80.200
Interest	14.000	20.300	24.800
Gross Profit	67.900	55.200	55.400
Depreciation	18.600	19.800	19.900
Tax	6.200	1.700	4.500
Report PAT	40.900	30.600	30.200

200506 Quarter 1 :-- Net Sales includes Gross Sales/ Income from Operations Rs 666.40 million Excise Duty & Sales Tax Rs (58.70) million Expenditure includes (Increase)/Decrease in stock in Trade Rs (50.30) million Consumption of Raw Material Rs 461.70 million Staff Cost Rs 16.20 million Other expenditure Rs 100.60 million Tax Includes Provision for Current Tax Rs 6.20 million Deferred Tax Rs 2.20 millions.

200512 Quarter 3 :-- Net Sales Includes Gross Sales/ Income from Operations Rs 748.70 million Excise Duty & Sales Tax Rs (79.50) million Expenditure Includes (Increase)/Decrease in stock in Trade Rs (17.80) million Consumption of Raw Material Rs 488.00 million Staff Cost Rs 15.70 million Other expenditure Rs 104.30 million Tax Includes Current Tax Rs 4.50 million Deferred Tax Rs 0.80 million EPS is Basic Status of Investor Complaints for the quarter ended December 31, 2005 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter Nil Complaints disposed off during the quarter Nil Complaints unresolved at the end of the quarter Nil 1. The diluted Earnings Per Share (EPS) has been calculated strictly in accordance with the Accounting Standard (AS)-20 on 'Earnings per share' by taking into account any event of contingency which may require conversion of FCCBs into equity shares on exercise of option by the bondholders. 2. The Company has incurred currency exchange loss of Rs 11.00 million during the current quarter as against currency exchange gain of approx Rs 23.80 million in the corresponding quarter in the previous year.

KEY RATIOS

PARTICULARS	31.03.2005	31.03.2004	31.03.2003
Debt Equity Ratio	1.73	1.52	1.32
Long Term Debt Equity Ratio	1.04	0.77	0.59
Current Ratio	1.27	1.27	1.28
TURNOVER RATIOS
Fixed Assets	1.98	2.16	1.97
Inventory	5.16	5.31	5.87
Debtors	4.09	4.16	4.42
Interest Cover Ratio	3.91	4.46	3.17
Operating Profit Margin (%)	13.14	11.66	13.15
Profit Before Interest and Tax Margin (%)	10.44	9.25	10.49
Cash Profit Margin (%)	8.00	7.49	8.61
Adjusted Net Profit Margin (%)	5.30	5.08	5.95
Return on Capital Employed (%)	14.46	14.15	15.04
Return on Net Worth (%)	19.66	19.33	19.78

STOCK PRICES

Face Value	Rs. 10/-
High	Rs. 90.00
Low	Rs. 87.00

LOCAL AGENCY FURTHER INFORMATION

HISTORY

The company was incorporated on 28^th September 1984 at Mumbai in Maharashtra having Company Registration Number 55433.

The company was promoted by Alchemie Group.

Subject is a Rs. 2380 millions pharmaceutical company is a leading manufacturer of bulk drugs in some of the popular therapeutic groups as also speciality chemicals, having acquired class expertise in the development and manufacturing of basic bulk drugs and their intermediates. Steadily growing since its inception 1984, it has spread its exports to over 65 countries and worldwide with a wide range of active pharmaceutical ingredients.

Its products basically used in treating diarrhoea and curing tuberculosis, enjoying a perennial demand. Its customers include Pfizer, Searle, Knoll Pharmaceuticals (formerly Boots Pharma), Glaxo, E Merck, etc. The entire production of its veterinary products, dimetridazole, is exported. Except metronidazole, none of its products is under the DPCO. Its bulk drugs are exported to Germany, Switzerland, France, etc.

The second phase of its backward integration project to set up facilities for glyoxal (the main raw material for imidazoles) was implemented successfully. Meanwhile, as a step towards environment-friendly technology, it has successfully commissioned a plant to recover and market ammonium sulphate derived from plant effluents. Rupal Chemical Industries, a group company engaged in bulk drug manufacture, was amalgamated with the company.

The company has been given the status of “Export House” by the Government of India. The company’s projects to manufacture secnidazole and dichlofenac sodium were implemented and their production has started.

Company’s board has approved the amalgamation of Alchemic Organics Limited with company.

During 2002-03 the company made a buy back of equity shares of 1300950 shares of 1300950 shares @Rs. 39 /- per share. The total pay out on account of buy back was Rs. 50.700 millions.

The company has expanded the installed capacity of Bulk Drugs during the year 2003-04 by 588000 Kg and with his expansion the total capacity has risen to 18018000 Kg.

Biodata

Incorporated in 1984, Aarti Drugs (ADL) is promoted by the Alchemie group. ADL's products, basically used in treating diarrhoea and curing tuberculosis, enjoy a perennial demand. Its customers include Pfizer, Searle, Knoll Pharmaceuticals (formerly Boots Pharma), Glaxo, E Merck, etc. The entire production of its veterinary products, dimetridazole, is exported. Except metronidazole, none of its products are under the DPCO. Its bulk drugs are exported to Germany, Switzerland, France, etc.  

The second phase of its backward integration project to set up facilities for glyoxal (the main raw material for imidazoles) was implemented successfully. Meanwhile, as a step towards environment-friendly technology, ADL has successfully commissioned a plant to recover and market ammonium sulphate derived from plant effluents. Rupal Chemical Industries, a group company engaged in bulk drug manufacture, was amalgamated with the company.  

ADL was awarded a certificate of merit by Chemexcil for its outstanding performance in exports. The company has been given the status of Export House by the Government of India. The company's projects to manufacture secnidazole and dichlofenac sodium were implemented and their production has started. 

Company's Board has approved the amalgamation of Alchemic Organics ltd with the company. During 2002-03 the company made a buy back of equity shares of 1300950 shares @ Rs.39/- per share. The total pay out on account of buy back was Rs.5.07 crores/-. 

The company has expanded the installed capacity of Bulk Drugs during the year 2003-04 by 588000 Kg and with this expansion the total capacity has risen to 18018000 Kg.

Financial Results

(Rs. in millions)

	31.03.2005	31.03.2004
Gross Sales / Income from Operations	2652.700	2377.000
Less : Excise Duty & Sales Tax	237.800	207.500
Net Sales / Income from operations	2414.900	2169.500
(Increase) / Decrease in stock in trade	10.100	(49.000)
Consumption of Raw Materials	1629.400	1508.000
Staff Cost	62.100	63.500
Other Expenditure	385.000	390.200
Total Expenditure	2086.600	1912.700
Operating Profit Before Interest, Depreciation & Tax	328.300	256.800
Non Operating Income	7.900	9.600
Profit before Interest. Depreciation & Tax	336.200	266.400
Interest	58.600	38.600
Depreciation	71.500	57.200
Profit Before Tax & Extra-ordinary Items	206.100	170.600
Provision for taxation - Current - Deferred	40.500 25.000	13.200 36.600
Profit After Tax	140.600	120.800
Add : Profit brought forward - previous year	468.500	400.400
Profit available for appropriation	609.100	521.200
Appropriations:
Tax For earlier years	--	0.900
Transfer to General Reserve	14.100	12.100
Interim Dividend (14%)	16.400	14.100
Proposed Dividend (16%)	18.700	21.100
Tax on Dividend	4.600	4.500
Balance carried to Balance Sheet	555.300	468.500
Earning Per Share (Rs.)	1.201	1.032

Dividend

Your Company had paid interim dividend of Rs.1.40 ps. («/ 14% per equity share of Rs.10/- each. Your

Directors are pleased to recommend a Final Dividend of Rs.1.60 ps @ 16% per share for the year ended 31^st March, 2005. Total.Dividend for the year 2004-2005 would thus be Rs. 3/- (<>-• 30% per share (Previous year : Rs.3/- (a 30%) subject to declaration of final dividend at the forthcoming Annual General Meeting (AGM). Total cash outflow on account of total dividend payment including dividend tax will be Rs.39.770 millions (Previous year: Rs. 39.681 millions). The final dividend after approval by the shareholders at the AGM will be paid on or after 12th August, 2005 to the eligible shareholders.

Operations Review

During the year under review, the Company has achieved Sales turnover of Rs. 26527 lakhs (Previous Year : Rs. 23770 lakhs) registering a growth of 12%. Operating Profit before Interest, Depreciation & Tax was Rs 3283 lakhs (Previous Year : Rs. 2568 lakhs), registering a growth of 28%. Profit after Tax was Rs.1406 lakhs (Previous Year : Rs. 1208 lakhs), registering a growth of 16%. During the years the company has achieved an export turnover of Rupees 9116 lakhs. The Company has been exporting its products to more than 80 countries. Strategic initiatives are being considered and planned to achieve quantum growth more particularly in regulated and untapped markets. The Company's initiatives for growth have resulted in the following achievements :

(i) Negotiations are on with some key USA companies to finalize deals on contract manufacturing for a

Number of new molecules.

(ii) The Company has shortlisted reliable partners to setup or acquire manufacturing facilities to serve

the local Chinese market.

(iii) More than 30 new molecules have already been launched by the Company. Additionally, another 10

new molecules are planned to be commercialized.

(iv) The Company has already started commercial production at its newly setup Intermediate Plant at

Tarapur. Production at the USFDA Compliant plant is expected to start in July, 2005. The Company

proposes to file at least 6 to 8 DMF during current year.

(v) Capital expenditure is planned for Debottlenecking and Balancing Equipments to expand existing

capacities for Ciprofloxacin/ Metformin/ Nimesulide and for new aquisitions. The new Research &

Development facility at Turbhe has been developed to commercialize new products.

(vi) Focus is now being shifted from old commodity products to new molecules which are high value which

would substantially improve the profitability.

Management Discussion And Analysis

Pharmaceutical Industry - Global & Indian

The Indian Pharmaceutical industry ended the year 2004 with estimated sales of over Rs, 206 billion,

growth of 6.5% over the previous year. After a growth of just 5% in 2003, the Industry seems to be on a

recovery path and recorded good growth. However, this trend has been impacted in the first quarter of 2005

primarily due to reduced buying by the trade on account of proposed introduction of Value Added Tax (VAT) from April, 2005.

For Indian bulk drug manufacturers, the high impact opportunities present themselves in two forms -

export of off-patent bulk drugs to regulated market of US and Europe, and contract manufacturing of

patent-protected bulk drugs for patent/license holders. India offers the advantage of its low production

cost, quality production, and abundant skills in chemistry. More and more Indian pharmaceutical companies are going for the US FDA compliant plants and this has resulted in increased volume, margins, and profits.

The US is the biggest market for Indian pharmaceutical exports followed by Germany, Russia, UK, and China. India's skills in chemistry and cost competitiveness along with quality facilitate exports. Over the last 2-3 years, India has emerged as a country with maximum number of US FDA approved plants outside the US.

India has emerged as a preferred source for quality medicines at affordable prices. In addition to opportunities in the domestic market, there are various opportunities for exporting to regulated and unregulated markets. India offers a competitive advantage in outsourcing due to its abundance of scientific and technical manpower, large and diverse patient pool for conducting clinical trials and technical capability of producing active pharmaceutical ingredients as well as finished dosage forms, All these services will be highly cost competitive and they offer several opportunities to small as well as mid-sized pharmaceutical companies.

Introduction of product patents from 2005 presents an opportunity for the growth of the pharmaceuticals

industry, depending on the implementation and enforcement of the product patent regime. It is hoped that

this will facilitate speedier introduction of new research products, attracts investment in research and lead

to development of the industry and market. This coupled with India's growing population and increasing

health awareness should further open up the avenues for growth of industry.

The proposed New Drugs Policy and Price Control Order promised reduced span of price control and an

opportunity for the industry to invest and grow the market. The implementation of this new Policy has

been pending for the past over two years. The absence of a clear objective and transparent policy on drug price control is impacting the overall industry direction.

Business Strategy - In order to translate the above into reality for the Comp my, we plan to harness our existing strengths and implement the following strategy:

> In addition to the existing established molecules, Aarti Drugs Limited (ADL) is now focusing on selected value-added molecules from therapeutic segments like cardio-vascular, anti-diabetes, anti-fungal, antibiotics, anti-allergic, anti- arthritis, etc. as the choice of molecules and composition of product portfolio would be critical to the future growth of the company.

> Concentration on niche markets like China along with increased presence in the regulated markets will continue to remain an area of priority. It has already filed for import drug permit for Tinidazole and Nimesulide with China FDA so that ADL will be freely allowed to sell the product in the Chinese market.

> The Company has already started commercial production at its newly setup Intermediate Plant at Tarapur. Production at the USFDA Compliant plant is expected to start in July, 2005. The Company proposes to file at least 6 to 8 DMF during current year. Acquisitions of synergic projects or mergers would remain another focus area.

The company’s fixed assets of important value include leasehold land, building, trademark, plant & machinery, office equipments, furniture and vehicles.

Subject exports its entire production of veterinary products and dimetridazole.

It is in trade terms with:

· Pfizer Limited

· Searle

· Knoll Pharmaceuticals (formerly Boots Pharma)

· Glaxo

· E Merck

The second phase of its backward integration project to set up facilities for glyoxal (the main raw material for imidazoles) is under implementation. Meanwhile, as a step towards environment-friendly technology, the company has successfully commissioned a plant to recover and market ammonium sulphate derived from plant effluents.

The company’s projects to manufacture secnidazole and dichlofenac sodium were implemented and its production has started.

The company was awarded a certificate of merit by CHEMEXCIL for its outstanding performance in exports.

future prospects/OPPORTUNITIES

The Company has taken up various initiatives, which are as under:

· Negotiations are on with some key US companies to finalize deals on contract manufacturing for number of new molecules.

· Arrangements have been finalized with fixed time table for supply of key pharma intermediates to Japanese market.

· Negotiations/exploration of opportunities to enter Chinese market are under active consideration.

· More than 30 new products have already been launched by the Company. Additionally, another 10 new products are planned to be commercialized.

· The Company has initiated process to set up and obtain US FDA and other overseas approvals for some of its plant facilities.

· Capital expenditure is planned for Debottlenecking and Balancing Equipments to expand existing capacities for Ciprofloxacin/Metformin/Nimesulide/Celecoxib/Rofecoxib. Capital expenditure is also planned to acquire Research and Development facility with a view to develop and commercialize new products.

· Focus is now being shifted from old commodity products to new molecules of lifestyle diseases which are high value and will substantially improve the profitability.

US FDA and other Overseas Approvals:

The Company is strong in non-regulated market. To strengthen its presence in regulated markets, the company has initiated steps to obtain overseas approvals. The company has received Certificate of Suitability (COS) for six products and expects to receive further approval for three products. The company is in the process of setting up USFDA approved plant and preparing to file Drug Master file (DMF) for US market.

Contract Manufacturing:

The Company is negotiating to for contract manufacturing and contract research with some of the US and European Companies.

New Bulk Drug Products:

More than 30 new products have already been launched by the Company. Additionally, another 10 new products were being planned to be commercialized soon.

Company’s strengths

The Company enjoys market leadership in 10 out of 15 principal products manufactured by it with substantial market share in new molecules.

awards and achievements

The pharmaceutical industry in India today, estimated at US$ 3.8 billion is one of the largest and most advanced among developing countries. Globally, it ranks 4^th in volume terms and 13^th in value terms. It manufactures about 350 bulk drugs belonging to several major therapeutic groups. Novel innovative process routes and synthetic organic chemistry are its main strengths in research and development. 250 manufacturers of the organized sector represent 70% of its production. Leading in some of the popular therapeutic group, is the US$ 44 million public limited pharmaceutical company, the company Steadily growing since its inception in 1984, it has spread its exports to over 65 countries across the globe. It was Chosen by the Chemexcil (Basic chemical & pharmaceutical export promotion Council of India) for its First award in the drugs and pharmaceuticals category, it was also voted as the Best Vendor by OPPI. (Organization of pharmaceuticals Producers of India) for the year 2001. Its core competence lies in development of cost effective synthesis routes for bulk drugs and intermediates.

The manufacturing-units are of ADL GMP certified. It is also in the process of securing ISO 9002 compliance for all its units and one of the units has already been approved. Moreover, the facilities have been audited and approved by MNCs such as Pfizer, Rhone Poluenc, Merck, etc. as also by many of its overseas buyers.

About Aarti Group

The first unit of AARTI group, ALCHEMIE LABORATORIES, commenced commercial production of DIMETHYL SULPHATE (DMS) in the year 1975. Today, AARTI has acquired world-class expertise in the development and manufacturing of basic bulk chemicals, dyes & pigment intermediates, pharmaceuticals & agrochemicals along with their intermediates, rubber chemicals, surfactant intermediates and speciality chemicals. AARTI is amongst the largest producers of Benzene based basic and intermediate chemicals in India.

AARTI has attained a total turnover of US $ 189 million in the year April 2003 - March 2004 with flagship companies AARTI INDUSTRIES LIMITED (AIL) & AARTI DRUGS LIMITED (ADL) listed on Stock Exchanges. AARTI has a Subsidiary AARTI HEALTHCARE LIMITED (AHCL), which is engaged in manufacturing of Active pharma ingredients ranging from Ace Inhibitors, Broncodialators to Steroids.

AARTI has manufacturing sites at Gujarat, India (Vapi, Sarigam & Jhagadia) and at Maharashtra, India (Tarapur & Dombivli).

Recognizing the importance of research, AARTI has established three full-fledged DSIR (Dept. of Scientific & Industrial Research)-Government of India recognized R & D centers, which carry innovative product and process development work.

AARTI has the privilege of catering to the requirements of leading manufacturers of dyes, pigments, pharmaceuticals, agrochemicals and rubber chemicals in countries such as USA, UK, Germany, Spain, Italy, Switzerland, Belgium, Japan, Korea, China, Russia, etc. Aarti also has representatives in USA & a subsidiary company in UK to provide better services to its Export Customers.

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.45.46
UK Pound	1	Rs.85.94
Euro	1	Rs.58.32

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	5
--CREDIT LINES	1~10	5
--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		47

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