MIRA INFORM REPORT

Report Date :

02.02.2007

IDENTIFICATION DETAILS

Name :	PUDUMJEE PULP AND PAPER MILLS LIMITED
Registered Office :	Jatia Chambers, V.B. Gandhi Marg, Mumbai- 400023, Maharashtra
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	19.11.1964
Com. Reg. No.:	11-13058
CIN No.: [Company Identification No.]	U21012MH1964PLC013058
TAN No.: [Tax Deduction & Collection Account No.]	PNEP07501E
Legal Form :	Public Limited Liability company. The company’s shares are listed on the Stock Exchanges
Line of Business :	Manufacturing and sale of paper like opaque laminating base paper, kraft paper and glassine paper.

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 4000000
Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is a well-established and reputed company having satisfactory track. Directors are reported as experienced, respectable and having satisfactory means of their own. Their 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/ Administrative Office/ Branch :	Jatia Chambers, V.B. Gandhi Marg, Mumbai- 400023, Maharashtra, India
Tel. No.:	91-20-27275380-6
Fax No.:	91-20-27273294
E-Mail :	sk@pune.pudumjee.com rsr@mumbai.pudumjee.com
Website :	http://www.pudumjee.com
Plant :	Thergaon, Pune - 411 033, Maharashtra

SOLE PROPRIETOR/PARTNERS/DIRECTORS

Name :	Mr. M. P. Jatia
Designation :	Chairman & Managing Director
Name :	Mr. V. O. Somani
Designation :	Director
Name :	Mr. O. P. Gupta
Designation :	Director
Name :	Mr. V. K. Jatia
Designation :	Joint Managing Director
Date of Ceasing :	01.04.2001
Name :	Mr. J. P. Shaw
Designation :	Director
Name :	Mr. K. D. Pudumjee
Designation :	Director
Date of Ceasing :	23.06.2001
Name :	Mr. R. N. Sethna
Designation :	Director
Name :	Mr. V. P. Leekha
Designation :
Name :	Mr. A. K. Jatia
Designation :	Director
Name :	Mr. S. M. Chitnis
Designation :	Additional Director
Date of Appointment :	24.01.2001

KEY EXECUTIVES

Name :	Mr. S. K. Bansal
Designation :	Company Secretary & Senior General Manager (Finance)
Name :	Mr. M. P Jatia
Designation :	Chairman and Managing Director
Address :
Date of Birth/Age :	70 years
Experience :	45 years experience in Business Administration and Finance
Date of Appointment :	01.03.1975
Other Directorships :	Chem Mach Private Limited – Whole Time Director
Name :	Mr. V. K. Jatia
Designation :	Joint Managing Director
Date of Birth/Age :	43 years
Qualification :	B.Com.
Experience :	25 years experience in Business Administration and Finance
Date of Appointment :	01.07.1991
Other Directorships :	Hard Castle & Waud Manufacturing Company Limited – Executive Director

MAJOR SHAREHOLDERS

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters	4602162	56.12
Banks/ Institution	740963	9.04
Bodies Corporate	557171	6.80
Public	2299704	28.04
Total	8200000	100.00

BUSINESS DETAILS

Line of Business :

Manufacturing and sale of paper like opaque laminating base paper, kraft paper and glassine paper.

PRODUCTION STATUS

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Paper	MT	Not Applicable	38,500	22811
Pulp	MT	--	--	17680

GENERAL INFORMATION

No. of Employees :

800

Bankers :

Ø State Bank of India, Pune, Maharashtra

Ø The United Western Bank Limited, Pune, Maharashtra

Ø Citibank N.A., Pune, Maharashtra

Ø HDFC Bank Limited, Pune, Maharashtra

Ø Centurion Bank Limited, Pune, Maharashtra

Ø Bank of India, Pune, Maharashtra

Facilities :

Secured Loans

Particulars	Rs. (In Millions)
Debentures
10% Debentures	40.002
13% Debentures	27.200
From Banks
Term Loan (Secured By The Hypothecation Of Assets Purchased Therefrom)	40.114
Other Term Loan	200.000
Other Loans (Against Hypothecation Of Stocks, Stores & Book Debts)
Cash Credit	97.837
From Financial Institutions
Term Loan	120.000
Total	525.153

Unsecured Loans

Particulars	Rs. (In Millions)
Fixed Deposits	75.315
Unclaimed Interest On Fixed Deposits	0.211
Short Term Loans & Advances
From Bank	100.000
From Others	3.106
Total	178.632

Banking Relations :	Satisfactory
Auditors :	Khare & Company Chartered Accountants
Associates/Subsidiaries :	Associates Ø Pudumjee Agro Industries Limited Ø Kimberly Clark Pudumjee Limited Ø Pudumjee Plant Laboratories Limited Subsidiaries Ø Pudumjee Investment & Finance Company Limited Ø Gresham Investments & Finance Limited Ø Darjeeling Pulp & Paper Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
9,500,000	Equity Shares	Rs. 10/- each	Rs. 95.000 millions
50,000	14% (free of company’s tax but subject to deduction of tax at source at the prescribed rates) Redeemable Cumulative Preference Shares	Rs. 100/- each	Rs. 5.000 millions
	Total		Rs. 100.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
8,200,000	Equity shares	Rs. 10/- each	Rs. 82.000 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2006	31.03.2005	31.03.2004
SHAREHOLDERS FUNDS
1] Share Capital		82.000	82.000	82.000
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		930.622	896.696	856.500
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		1012.622	978.696	938.500
LOAN FUNDS
1] Secured Loans		525.153	306.940	375.700
2] Unsecured Loans		178.632	117.433	144.900
TOTAL BORROWING		703.785	424.373	520.600
DEFERRED TAX LIABILITIES		224.500	225.800	230.800
TOTAL		1940.907	1628.869	1689.900
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1035.005	1046.432	1035.500
Capital work-in-progress		143.271	5.247	26.500
INVESTMENT		21.180	21.184	22.500
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	432.181	453.366	282.200
	Sundry Debtors	184.206	139.939	218.700
	Cash & Bank Balances	15.187	13.072	21.500
	Other Current Assets	0.047	0.109	0.089
	Loans & Advances	436.835	226.563	347.700
Total Current Assets		1068.456	833.049	870.189
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	291.982	254.462	224.900
	Provisions	44.318	35.619	47.589
Total Current Liabilities		336.300	290.081	272.489
Net Current Assets		732.156	542.968	597.700
MISCELLANEOUS EXPENSES		9.295	13.038	7.700
TOTAL		1940.907	1628.869	1689.900

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Sales Turnover [including other income]	1284.740	1251.144	1123.600
Profit/(Loss) Before Tax	65.152	61.049	25.200
Provision for Taxation	17.800	4.000	2.100
Profit/(Loss) After Tax	47.352	57.049	23.100
Export Value	18.389	12.618	13.141
Import Value	447.727	449.625	2697.25
Total Expenditure	1256.960	1251.431	2239.341

QUARTERLY RESULTS

PARTICULARS	30.06.2006	30.09.2006
Sales Turnover	597.700	494.200
Other Income	16.000	00.500
Total Income	613.700	494.700
Total Expenditure	577.400	462.200
Operating Profit	36.300	32.500
Interest	4.600	5.200
Gross Profit	31.700	27.300
Depreciation	20.800	21.200
Tax	1.500	0.700
Reported PAT	7.000	3.400

200606 Quarter 1

Notes

Expenditure Includes (Increase) / Decrease in Stock in Trade Rs 73.00 million Consumption of Raw Materials Rs 120.70 million Goods purchased for Resale's Rs 241.00 million Consumption of stores, chemicals, etc Rs 28.50 million Consumption of fuel, Power & Water Rs 60.10 million Staff Cost Rs 24.30 million Other Expenditure Rs 28.90 million Tax Includes Provision for Current Tax Rs 1.50 million Deferred Tax Rs 2.40 million EPS is Basic Status of Investor Complaints for the quarter ended June 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 14 Complaints disposed off during the quarter 14 Complaints unresolved at the end of the quarter Nil l. During the quarter ended June 30, 2006 there was a shut down for 1341 machine hours of one of the Paper making machines, for modernization. 2. Other income for the quarter ended June 30, 2006 includes Rs 15.50 million being depreciation written back in respect of reduction in cost of one of the equipment, consequent upon compensation received from supplier. 3. Extra ordinary Items relate to termination benefits paid to the employees, to the extent written off. 4. There was no reportable segment for earlier periods. 5. The auditors have carried out limited review of the results for quarter ended June 30, 2006. 6. The figures for previous period have been recast and regrouped wherever necessary to conform to current period's presentations.

200609 Quarter 2

Notes

Expenditure Includes (Increase) / Decrease in Stock in Trade Rs 30.60 million Consumption of Raw Materials Rs 105.70 million Goods purchased for Resale's Rs 177.90 million Consumption of stores, chemicals, etc Rs 29.60 million Consumption of fuel, Power & Water Rs 62.80 million Staff Cost Rs 22.40 million Other Expenditure Rs 32.20 million Tax Includes Provision for Current Tax Rs 0.70 million Deferred Tax Rs 2.00 million EPS is Basic Status of Investor Complaints for the quarter ended September 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 04 Complaints disposed off during the quarter 04 Complaints unresolved at the end of the quarter Nil l. During the quarter ended September 30, 2006 there was a planned shut down for one of paper making machines for 55 days (total 111 days during the half year ended on that date) to carryout its modernization, which has been successfully completed during the said quarter and targeted results are being achieved. 2. Extra ordinary items relate to termination benefits paid to the employees, to the extent written off. 3. The auditors have carried out limited review of the results for quarter ended September 30, 2006. 4. There was no reportable segment for earlier periods. 5. The figures for previous period have been recast and regrouped wherever necessary to conform to current period's presentations.

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt-Equity Ratio	0.57	0.49	0.65
Long Term Debt-Equity Ratio	0.39	0.39	0.58
Current Ratio	1.33	1.38	1.59
TURNOVER RATIOS
Fixed Assets	0.69	0.71	0.64
Inventory	3.22	3.79	3.62
Debtors	8.81	7.79	6.76
Interest Cover Ratio	2.26	2.13	1.54
Operating Profit Margin(%)	14.17	14.04	16.18
Profit Before Interest And Tax Margin(%)	8.20	8.23	9.52
Cash Profit Margin(%)	9.29	9.89	8.87
Adjusted Net Profit Margin(%)	3.32	4.08	2.22
Return On Capital Employed(%)	7.56	8.09	7.74
Return On Net Worth(%)	4.76	5.95	2.96

STOCK PRICES

Face Value	Rs.100.00/-
High	Rs.90.50
Low	Rs.89.00

LOCAL AGENCY FURTHER INFORMATION

HISTORY

The company commenced production in January, 1968 at its plant at Pune. In 1972 the company commenced the manufacture of chemical pulp from straw and bagasse for making specialty papers with a capacity of 6000 tonnes per annum. In 1988, the company adopted the anaerobic digestion process for treatment of its waste water by installation of a plant for pulp and paper industry.

Subject is the flagship company of the Jatia Group manufacturing speciality papers, security papers and tissue papers. The company has its own pulping capacity of 20000 tonnes per annum, producing bagasse pulp and cotton pulp. The present capacity is 40000 tonnes per annum. The company has under erection another paper machine which would increase its capacity by further 24000 tonnes per annum. The total capacity would thus be 64000 tonnes per annum.

The company has evolved a technology for cleaner manufacture of pulp from bagasse which is the main raw material. This method is solvent-based and has been patented as the company process.

During 1997-98, the imported second hand paper making machinery has been installed and trail runs are in progress.

During 1998-99, the tissue paper making machine and power plant commenced commercial production.

With the view of reducing cost of raw material, the company has installed during the year 1999-2000, waste paper recycling plant of capacity of 75 tonnes per day. The British Standards Institution has granted the company certificate under ISO 14001, in view of the commitment of the company to environmental protection.

The Jatia Group of Companies is a diversified group with interests in various industries including the manufacture of specialty papers, security papers, tissue papers, spinning, real estate, agro commodities, floriculture and environmental engineering.

Company’s fixed assets include Land, Building, Machinery, Laboratory Equipments, Furniture and Fixtures and Vehicles

OPERATIONS

Some of the products of the Company face intense pressure of competitive imports primarily because of spiralling cost of fuel, power and raw materials. Despite this adversity the Company had been able to maintain its profit as was achieved last year. The Directors are conscious of the fact that such competitive imports may continue and therefore are taking necessary steps to contain effect of such events by way of change in product mix, value additions and cost reduction.

The Company's programme to modernize one of its papermaking machines, which was progressing as per schedule has been temporarily interrupted by the workers Union resulting in stoppage of production on that machine with a view to exert pressure on the Management to accept their demand of rise in pay beyond what is offered by the management for a wage settlement due with effect from 01.04.2005. The Directors are hopeful of an early resolution of the impasse.

Further the Company is in the process of installation of a Waste Paper Recycling cum De-inking Plant at a cost of about Rs. 110 millions with a view to achieve more flexibility in raw material usage and thereby to reduce cost.

The Company intends to commence business of Real Estate development initially by developing the Company's land of about 49,000 sq. mtrs at Thergaon, Pune jointly with another developer of repute, for which purpose plans are under consideration, for constructing residential and / or commercial units thereon, subject to all regulatory compliances.

The Directors are pleased to state that long pending litigation in respect of excise matters involving a demand of Rs.1024.1 millions has come to an end as the Commissioner has dropped the Show Cause cum Demand Notice who had reheard the matter pursuant to the decision of the Customs, Excise and Service Tax Appellate Tribunal, Mumbai.

The Company has contributed an amount of Rs.53 millions being Company's contribution for the construction of dam on the river from which it draws water thus entitling it to continue to draw water at a concessional rate thereby resulting in withdrawal of demand by the Irrigation Department for their past claims. 128 Fixed Deposits amounting to Rs.2.071 millions which had matured for payment as at the close of 31.03.2006 were not claimed by the deposit holders. Out of this amount 33 deposits of the value of Rs.0.625 millions have been claimed upto 12.06.2006.

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.44.11
UK Pound	1	Rs.86.79
Euro	1	Rs.57.44

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	4
--LIQUIDITY	1~10	4
--LEVERAGE	1~10	5
--RESERVES	1~10	5
--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		53

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
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

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