Attachment 1

Report Update On	1^st July, 2000
Report on	ANIL CHEMICALS & INDUSTRIES LIMITED
Formerly Known As	ANIL CHEMICALS LIMITED
Registered Office	J-18 MIDC Industrial Area, Chikhalthana, Aurangabad – 431 210, Maharashtra, INDIA
Tel. No.	91-240-484961 / 484962 / 484963 / 484964
Fax No.	91-240-485027
E-Mail	--
Telex	--

Attachment 2

SUMMARY

Incorporated	1980	Status	Poor
Registration No.	22746	Chief Executive	Mr. Arvind Machhar
Capital (Rs.)	74.5 millions	Payments	Slow and Delayed
Sales (Rs.)	41.2 millions	Litigation	--
Net Worth (Rs.)	(-) 79.3 millions	Banking Reputation	Moderate
No. of Employees	250	Auditors	Rathi & Bangad
Credit Rating	C (See attachment 3)

INDUSTRY

Chemical industry has been the fastest growing industry in India, since independence. Today, it has occupied a very important position in the national economy, ranking fourth after Iron & Steel, Engineering & Textiles. The basic inorganic and organic chemicals produced in the industry provide the basic building blocks for several downstream industries such as drugs, paper, synthetic rubber, dyestuff, plastics, polyesters, pesticides, paints, detergents, fertilisers, etc. The chemical process industry has a share of about 12% in the total manufacturing output of the country and close to 15% by value in the gross industrial production.

Chlor-Alkali industry, with a turnover of Rs.53 bn and accounting for over Rs.90 bn of investments, is perhaps the oldest segment of the chemicals process industry in the country. Over the last five decades, the industry has demonstrated an impressive track record of serving as a mother industry to development and growth of several downstream components. Caustic soda/ chlorine and soda ash are the two principal components of the industry, with caustic soda alone accounting for more than 75% of the sector.

Caustic soda is a general utility chemical and constitutes one of the important segments of the chemical process industry in India. The caustic soda industry in India, with a Rs.36 bn turnover, accounts for about 5% of the output of the chemical industry.

Chlorine is generated as a co-product along with caustic soda. It is a toxic and hazardous chemical is used in the manufacture of PVC, pulp & paper, bleaching powder and many other chemical compounds.

Soda ash is a versatile inorganic chemical with a vide variety of applications. It is largely used in the manufacture of detergents, glass, silicates and several downstream chemicals. It is known as Sodium Carbonate in chemical terms.

The industry is likely to continue to be a net importer although imports may be lower in the coming year due to larger capacities in the domestic market. The competitiveness of the industry will be severely tested as import duties on the furnished products come down further and foreign major seek to establish a toehold in the country.

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

FACTORY

Located at :

K Chikalthana, Aurangabad, Maharashtra, India

K Bharuch, Gujarat, India

K Sidhi, Madhya Pradesh, India

K Khultabad, Aurangabad, Maharashtra, India

K Jharsuguda, Orissa, India

BRANCH

Nil

HISTORY

The company was incorporated on 24^th June, 1980 at Aurangabad in Maharashtra having Company Registration Number 22746 under the name & style of ANIL CHEMICALS LIMITED.

The name of the company was subsequently changed to present.

LEGAL FORM

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

DIRECTORS

Mr. Anil Machhar	Chairman
Mr. Arvind Macchar	Managing Director
Mr. Sandeep Machhar	Whole-time Director
Mr. Y. N. Mishra	Whole-time Director
Mr. Ravi Machhar	Executive Director
Mr. J. S. Bhatnagar	Director

BUSINESS

The company is engaged in manufacturing and sale of Explosives, Ammonium Nitrate, Water Proofing Chemicals, etc.

OPERATIONS

During the year under report, the company has record sales of Rs.147.5 millions, as compared to earlier years sales of Rs.201.8 millions. Company could not achieve projected turnover due to the acute recession in the market. Due to the losses sustained by the company, part of the interest and repayment of term loan to the Financial Institutions and Bank could not be repaid as stipulated.

Serious efforts are being taken to revive the company by cutting measures specially in manpower and selling and administrative expenses. The nest loss of Rs.176.709 millions for the year ended 31^st March, 1999 has resulted in erosion more than 100% peak net worth of the company during the immediately preceeding Four Financial Years. Therefore, the company has become a sick company in terms of Sick Companies (Special Provision) Act, 1985.

Ammonium Nitrate Division

During the year under report, the production of this division has declined to 3,900 MT from previous year to 4,650 MT. This decline is due to the stiff competition. Besides the stiff competition the prilled Ammonium Nitrate unit at Chikalthana is quite old, which requires total revamping and modernisation. Due to the current high cost of production, plant was operated only for a part of the year. Presently, the production activities at Chikalthana are temporarily suspended.

Emulsion Info Division

Waidhan plant of this division has performed satisfactorily during the year. However due to the delay in finalising of tender by Coal India Limited, the company was forced to curtail its supplies on account of uneconomic price consideration. The plant situated at Jharsuguda, Orissa has performed well during the year showing encouraging performances.

Co-Ex Tubes Division

The production of co-extruded tubes division was satisfactorily stabilised during the year. However, in view of the general recession the company was unable to realise the desired prices for its finished products.

REFERENCE TO BOARD OF INDUSTRIAL & FINANCIAL RESTRUCTION (bufr)

In view of the loss report in the audited accounts of the company as at 31^st March, 1999 which exceeds its net worth, the company has become sick industrial company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985. The company is been referred to the BIFR for rehabilitation and necessary action us being taken in this regard.

BORROWINGS

In view of the delay in stabilisation of the Co-extruded tubes division and general recession prevailing in the industry, the company could not generate sufficient cash surplus and was unable to repay the instalments of term loans and interest. The company has therefore made an application to Financial Institutions for reschedulement of instalments of loan and funding/remission of interest which is under consideration.

TECHNICAL COLLABORATIONS

The company has Technical Collaborations with the following companies :

K Blasting Products Inc., U.S.A.

K Automize Material Inc., U.S.A.

EMPLOYEES

The company employs around 250 persons in its set-up.

SISTER CONCERNS

Nil

MEMBERSHIPS

K Indian Chemical Manufacturers Association

K All India Alcohol Based Industries Development Association

BANKERS

K Union Bank of India

K Punjab National Bank

AUDITORS

K Rathi & Bangad

Chartered Accounts

FINANCIAL INFORMATION

The company's latest financial information for the 9 months period ended 31^st December, 1999 is enclosed herewith.

CAPITAL STRUCTURE

Authorised Capital :

Not Available

Issued, Subscribed & Paid-up Capital :

Rs.74.5 millions

COMMENTS

Subject is a Sick Industrial Unit and has been referred to Board of Industrial & Finance Reconstruction in 1999.

Ways and means of the company are difficult. The company’s payments are slow and delayed.

It can be considered for any business dealings on safe and secured trade terms and conditions, only.

No clean credit may be granted.

ABRIDGED BALANCE SHEET AS ON 31^ST DECEMBER, 1999

[figures are in Rupees Millions]

SOURCES OF FUNDS	31.12.1999 (9 mnth)	31.03.1999 (12 mnth)	31.03.1998 (12 mnth)
SHAREHOLDERS FUNDS
1] Share Capital	74.5	74.5	74.5
2] Reserves & Surplus	0.0	0.0	74.5
LOAN FUNDS
1] Secured Loans	363.0	288.9	247.6
2] Unsecured Loans	0.4	39.8	37.9
GRAND TOTAL	437.9	403.2	434.5
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]	267.6	284.3	291.5
Capital work-in-progress	0.0	1.5	14.3
INVESTMENTS	5.8	5.6	11.9
CURRENT ASSETS, LOANS & ADVANCES
Inventories	10.1	12.6	28.0
Sundry Debtors	14.1	18.5	46.2
Cash & Bank Balances	3.9	2.5	5.6
Loans & Advances	34.6	40.9	46.8
Total Current Assets	62.7	74.5	126.6
Less :
Current Liabilities	56.2	65.7	75.6
Provisions	0.2	0.1	0.2
Net Current Assets	6.3	8.7	50.8
MISCELLANEOUS EXPENSES	4.4	5.0	66.0
PROFIT & LOSS ACCOUNT	153.8	98.1	0.0
GRAND TOTAL	437.9	403.2	434.5

IMPORTANT FINANCIAL INFORMATION FOR LAST Three PERIODS

[figures are in Rupees Millions]

PARTICULARS	31.12.1999 (9 mnth)	31.03.1999 (12 mnth)	31.03.1998 (12 mnth)
Sales Turnover	41.2	143.4	202.2
[including other income]
Profit/(Loss) Before Tax	(55.7)	(172.6)	(15.7)
Provision for Taxation	0.0	0.0	0.0
Profit/(Loss) After Tax	(55.7)	(172.6)	(15.7)
Dividend	0.0	0.0	0.0
Earnings in Foreign Currency :
Export Earnings	NA	NA	NA
Other Earnings	NA	NA	NA
Total Earnings	NA	NA	NA
Imports :
Raw Materials	NA	NA	NA
Components & Spares	NA	NA	NA
Capital Goods	NA	NA	NA
Total Imports	NA	NA	NA
Expenditures :
Raw Materials	15.5	100.5	141.0
Excise Duty	5.5	8.1	3.4
Power & Fuel Cost	2.7	5.8	6.0
Other Manufacturing Expenses	2.5	8.5	6.5
Employee Cost	6.3	12.7	13.3
Selling & Administrative Expenses	3.6	7.0	6.1
Miscellaneous Expenses	5.7	100.1	7.7
Total Expenditures	41.8	242.7	184.0

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

INDIA, a Union of States, is a Sovereign Socialist Secular Democratic Republic with a Parliamentary System of government. It covers an area of 3287263¹ sq. km. Population, as on 1^st March, 1991 (last counted) stood at 846.30 millions.

The value of total foreign trade increased to Rs.2,778,392.8 millions in 1997-98. During 1997-98, it’s total exports amounted to Rs.1,262,857.6 millions and imports increased to Rs.1,515,535.2 millions.

As on 20^th April, 1999, Standard and Poor’s affirmed its ratings for India and said the country’s outlook was stable despite weak coalition governments. S&P affirmed its BB foreign currency and the BBB local currency ratings for India. The B foreign currency and A3 local currency short-term issuer credit ratings were also affirmed. The outlook is stable. Official foreign exchange reserves cover about 165 percent of total government, public sector and private sector external principal-repayment obligations due within the next 12 months. At $32.6 billion as on April 7, 1999, they mitigate the risk of a sudden loss of external confidence even as exports decelerate and the trade gap widens, the agency said.

LEADING EONOMIC INDICATORS

	Outstanding As On		% Variation Over
Banking, M3 & Forex (Rs. mlns.)	Feb. 26, 1999	End-March 1998	Financial Year So Far		Year Ago
			1997-98	1998-99
Aggregate Deposits	6,983,380	6,054,100	15.3	15.3	19.8
Demand Deposits	1,029,500	1,025,130	0.2	0.4	13.4
Time Deposits	5,953,880	5,028,970	18.7	18.4	20.9
Investments	2,519,660	2,187,050	12.3	15.2	17.7
Government Securities	2,203,170	1,869,570	14.2	17.8	21.4
Other Approved Securities	316,490	317,480	2.7	-0.3	-2.3
Bank Credit	3,547,420	3,240,790	12.4	9.5	13.3
Food Credit	167,320	124,850	62.4	34.0	35.6
Non-food Credit	3,380,110	3,115,940	11.0	8.5	12.4
Money Supply M3 (Feb. 26, 1999)	9,455,060	8,253,890	13.4	14.6	18.8
Net Bank Credit to Government	3,868,200	3,306,190	11.4	17.0	20.3
Reserve Bank Credit to Government	1,543,690	1,351,600	5.1	14.2	18.3
Bank Credit to Commercial Sector	4,651,290	4,321,900	11.8	7.6	10.6
FOREX (US$ mln.) March 19, 1999	312,350	293,670	7.0	6.4	10.5
Foreign Currency Assets	282,560	259,750	11.1	8.8	13.7

FOREIGN INSTITUTIONAL INVESTMENT IN INDIA

Financial Year	Gross Purchases (Rs. mlns.)	Gross Sales (Rs. mlns.)	Net Investment (Rs. mlns.)
1992-93	175	40	135
1993-94	55,927	4,665	51,262
1994-95	76,310	28,354	47,966
1995-96	96,930	27,520	69,420
1996-97	155,540	69,804	85,746
1997-98	186,948	127,373	59,577
1998-99	161,150	176,993	-15,844
Total	732,980	434,749	298,262

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.75
UK Pound	1	Rs.68.27
Euro	1	Rs.42.81

Attachment 5

ACKNOWLEDGEMENT

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