Attachment 1

 

Report Update On

19th March, 1999

 

 

Report on

AARTI DRUGS LIMITED

 

 

Registered Office

Plot No. N-198, M.I.D.C., Tarapur, Village – Pamembhi, Taluka Palghar, Dist. Thane – 401 506, Maharashtra, INDIA

 

 

 

 

Attachment 2

 

S U M M A R Y

 

 

Incorporated

1984

Status

Satisfactory

 

 

 

 

Registration No.

55433

Chief Executive

Mr. Prakash M. Patil

 

 

 

 

Capital  (Rs.)

130.242 millions

Payments

Slow but correct

 

 

 

 

Sales   (Rs.)

1,258.752 millions

Litigation

--

 

 

 

 

Net Worth (Rs.)

327.055 millions

Banking Reputation

Satisfactory

 

 

 

 

No. of Employees

1,000

Auditors

Parikh Joshi & Kothare

 

 

 

 

Credit Rating

Ba (See attachment 3)

 

 

 

INDUSTRY

 

Production value of Bulk Drugs and Formulations has grown at 20% and 15% respectively over the last two years. The annual per capita expenditure on drugs continues to be much lower than that in developed countries despite the government's attempts to ensure the availability of essential drugs at affordable prices through price regulations by way of the Drug Price Control Order (DPCO). Presently, the DPCO, 1995 regulates the price of 73 drugs.

 

The structure and dynamics of the Indian Pharma Industry are unique primarily on account of the process patent regime, price controls and exemptions to SSIs. In the developed countries that recognise product patents, R & D Capabilities, ability to develop and launch new products have been the bases for competition. The Indian Patents Act, 1970 (IPA), which recognises process patents, has made it possible for Indian Manufacturers to produce internationally patented drugs by developing an alternate manufacturing process. As a signatory to the World Trade Organisation (WTO), India has agreed to improve legislative protection to Trade Related Intellectual Property Rights (TRIPS) which recognises only product patents.

 

************************

 

ADMINISTRATIVE OFFICE

 

Plot No. 109-D, Mahendra Industrial Estate, Road No. 29, Sion (East), Mumbai – 400 022, INDIA

Tel. No.      91-22-407 2249

Fax No.      91-22-407 3462

 

FACTORY

 

Plot No. N-198, M.I.D.C., Tarapur, Village – Pamembhi, Taluka Palghar, Dist. Thane – 401 506, Maharashtra, INDIA

 

HISTORY

 

The  Company  was incorporated on 28th September 1984 at  Ahmedabad  in  Gujarat  having  Company Registration Number 7302.

 

Registered Office was shifted to Maharashtra state on 26th June 1989 and the Company obtained a fresh Certificate of Incorporation having Company  Registration  Number 55433.

 

LEGAL FORM

 

It is a Public Limited Liability company. The company’s shares are listed on the Stock Exchange.

 

DIRECTORS

 

Chandrakant V. Gogri

Chairman

Manilal P. Savla

Vice Chairman

Prakash M. Patil

Managing Director

Nemjee P. Savla

Joint Managing Director

Satish P. Nachane

Wholetime Director

Harshit M. Savla

Wholetime Director

Harit P. Shah

Wholetime Director

Rajendra V. Gogri

Director

Shantilal T. Shah

Director

 

BUSINESS

 

The  Company  is engaged in manufacture and sale of Bulk Drugs  such  as

Metronidazole, Dimetridazole and Tinidazole.

 

The management states in its latest audited annual report for the period ended 31st March, 1998 that the year under review, the company achieved a turnover of Rs. 1243.953 million (previous year Rs. 990.318 million) registering a growth of over 25%. The profit for the year has shown a substantial improvement of over 81% from Rs. 24.067 million to Rs. 43.588 million.

 

The higher profit have resulted due to establishment of Ranitidine quality, increase in production of Ranitidine, Metronidazole, Metronidazole Benzoate, Diclofenac Sodium, Secnidazole etc. and reduction in cost of finance. The depreciation of India Rupees against US Dollar has also improved the profitability.

 

The company has further improved its export performance by increasing exports turnover from Rs. 346.499 million to Rs. 465.949 million showing an increase of over 34%.

 

Its fixed assets of important value include leasehold  land, building, plant and machinery, office equipment, etc.

 

ASSOCIATES

 

K                 Aarti Industries Limited

K                 Alchemie Financial Services Limited

K                 Aarti Biotech Limited

K                 Salvigor Laboratories Limited

 

BANKERS

 

K                 Union Bank of India, Mumbai

K                 Bank of Maharashtra, Mumbai

K                 Bank of Baroda, Mumbai

K                 Bank of India, Mumbai

K                 Times Bank Limited, Mumbai

 

AUDITORS

 

K                 Parikh Joshi & Kothare

Chartered Accountants

49/2341, M.H.B. Colony, Gandhi Nagar, Bandra (East), Mumbai – 400 051, INDIA

 

FINANCIAL INFORMATION

 

The company's latest financial information for the period ended 31st March, 1998 is enclosed herewith.

 

CAPITAL STRUCTURE

 

Authorised Capital :

13,009,500

Equity Shares of Rs.10/- each

Rs.130.095 millions

6,990,500

Preference Shares of Rs.10/- each

Rs.  69.905 millions

GRAND TOTAL

Rs.200.000 millions

 

Issued, Subscribed & Paid-up Capital :

13,009,500

Equity Shares of Rs.10/- each

Rs.130.095 millions

 

COMMENTS

 

Subject is a well-established and reputed pharmaceuticals company. Directors are reported as experienced, respectable and having satisfactory means of their own. Their trade relations are reported as fair. Financial position of the company is satisfactory. Payments are reported as slow but correct.

 

The company can be considered normal for business dealings at usual trade terms and conditions.

 

Your proposed business dealings of US$ 2,600,000 can be considered against D/A or D/P terms.

 

ABRIDGED BALANCE SHEET AS ON 31ST March, 1998

[figures are in Rupees Millions]

 

SOURCES OF FUNDS

 

 

31.03.1998

31.03.1997

SHAREHOLDERS FUNDS

 

 

 

1] Share Capital

 

130.095

130.095

2] Share Application Money

 

0.147

0.147

3] Reserves & Surplus

 

196.812

166.400

 

 

 

 

LOAN FUNDS

 

 

 

1] Secured Loans

 

450.223

322.718

2] Unsecured Loans

 

54.016

62.080

 

 

 

 
GRAND TOTAL

 

831.293

681.440

 

 

 

 

APPLICATION OF FUNDS

 

 

 

 

 

 

 

FIXED ASSETS [Net Block]

 

452.532

371.842

Capital work-in-progress

 

10.428

45.809

 

 

 

 

INVESTMENTS

 

5.527

5.206

 

 

 

 

CURRENT ASSETS, LOANS & ADVANCES

 

 

 

Total Current Assets, Loans & Advances

 

647.906

492.807

Less :

 

 

 

Current Liabilities & Provisions

 

289.334

238.662

Net Current Assets

 

358.572

254.145

 

 

 

 

MISCELLANEOUS EXPENSES

 

4.234

4.438

 

 

 

 
GRAND TOTAL

 

831.293

681.440

 

IMPORTANT FINANCIAL INFORMATION FOR LAST TWO PERIODS

[figures are in Rupees Millions]

 

PARTICULARS

 

 

31.03.1998

31.03.1997

Sales Turnover

 

1,258.752

1,015.341

[including other income]

 

 

 

 

 

 

 

Profit/(Loss) Before Tax

 

48.598

25.739

Provision for Taxation

 

5.010

3.620

Profit/(Loss) After Tax

 

43.588

22.119

 

 

 

 

Dividend

 

11%

Nil

 

 

 

 

Earnings in Foreign Currency :

 

 

 

Export Earnings

 

465.949

346.499

Other Earnings

 

0.000

0.000

Total Earnings

 

465.949

346.499

 

 

 

 

Imports

 

213.882

212.153

 

Attachment 3

 

 

SCORE SHEET

 

SCORE

CREDIT 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. Maybe drawn to slightly difficult position as unfavourable conditions arise. Minimal assurance for timely payment on interest and principal sums

Moderate

26-40

B

Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively limited or considered not known. Capability to pay both interest and principal sums is doubtful

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

 

Attachment 4

 

 

INDIA

 

In 1998, the Hindu-nationalist party, the BJP was elected and formed a new Government. Soon after, however, both India and Pakistan conducted nuclear tests and tension in Kashmir grew. 1999 is not likely to be much calmer with regard to neighbouring Pakistan, but it is believed that the tensions will be more loud than physical in nature. India is growing at a healthy 5% pace and is expected to continue its level for the coming year. Inflation has been high however and was 16.3% for the year, as of the end of September, 1998. 1999 inflation is expected to be reduced to 9.3%, still high. Foreign reserves have grown by $2.1 billion to $26.5 billion as of November, in comparison to one year earlier. The trade deficit and current account balance remain in red.

 

Ranked among the ten most corrupt nations in the world, the parallel economy is conservatively estimated to be Rs.300,000 millions – roughly equal to the Gross Domestic Product.