MIRA INFORM REPORT

Report Date :

09.02.2007

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
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	28.09.1984
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 3500000
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 :	Mahendra Industrial Estate, Ground Floor, Plot No. 109-D Road No. 29, Sion (East), Mumbai-400 022
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. Ramdas M. Gandhi
Designation :	Director
Name :	Dr. Vilas G. Gaikar
Designation :	Director
Name :	Mr. Bhavesh R. Vora
Designation :	Director
Name :	Mr. Sunil M. Dedhia
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	5994471	51.20 %
Bodies Corporate	601578	5.14 %
NRIs/OCBs	583553	4.98 %
Banks, Financial Institutions	42010	0.36 %
Public	4486938	38.32 %
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	Installed Capacity	Actual Production
Pharmaceuticals	Qty in 000’ Kgs.	24020	17747.84

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

· Standard Chartered Bank

· DBS Bank Limited

· ING Vysya Bank Limited

Facilities :

(Figures are in Rupees Millions)

FACILITIES	31.03.2006
Secured Loans
Fixed Loans
From Financial Institutions	147.654
From Scheduled Banks	161.758
Other Loans
From Financial Institutions	--
From Scheduled Banks	670.147
Total	979.559
Unsecured Loan
From Directors
From Others	7.473
Interest accrued and due thereon	833.853
Directors	--
Others	--
Total	841.326

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
2000000	Equity Shares	Rs. 10/-	Rs.200.000millions

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	31.03.2006	31.03.2005	31.03.2004
SHAREHOLDERS FUNDS
1] Share Capital	117.086	117.086	117.086
2] Reserves & Surplus	755.689	648.608	547.756
NETWORTH	872.775	765.694	664.842
LOAN FUNDS
1] Secured Loans	979.559	920.448	844.984
2] Unsecured Loans	841.326	492.324	223.135
TOTAL BORROWING	1820.885	1412.772	1068.119
DEFERRED TAX LIABILITIES	109.566	100.066	75.066
TOTAL	2803.226	2278.532	1808.027
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]	1496.452	1077.487	820.585
Capital work-in-progress	0.000	226.006	61.791
INVESTMENTS	204.049	14.570	3.145
CURRENT ASSETS, LOANS & ADVANCES
Inventories	625.546	525.742
Sundry Debtors	697.323	612.944
Cash & Bank Balances	59.642	85.234	1492.562
Other Current Assets	12.798	11.770
Loans & Advances	314.539	277.489
Total Current Assets	1709.848	1513.179	1492.562
Less : CURRENT LIABILITIES & PROVISIONS
Current Liabilities	497.148	467.108	615.253
Provisions	132.667	119.534
Total Current Liabilities	629.815	586.642	615.253
Net Current Assets	1080.033	926.537	877.309
MISCELLANEOUS EXPENSES	22.692	33.932	45.197
TOTAL	2803.226	2278.532	1808.027

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Sales Turnover [including other income]	2534.741	2660.649	2386.621
Profit/(Loss) Before Tax	151.090	206.122	170.567
Provision for Taxation	14.304	40.500	13.200
Profit/(Loss) After Tax	136.786	165.622	157.367
Export Value	786.260	705.845	759.810
Import Value	635.277	466.819	455.589
Total Expenditure	2304.470	2454.527	2216.053

QUARTERLY RESULTS

PARTICULARS	30.06.2006	30.09.2006	30.12.2006
Type	1^st Quarter	2^nd Quarter	3^rd Quarter
Sales Turnover	690.900	800.700	696.900
Other Income	01.300	01.100	2.100
Total Income	692.200	801.800	699.000
Total Expenditure	585.700	711.800	627.000
Operating Profit	106.500	90.000	72.000
Interest	31.600	28.400	19.400
Gross Profit	74.900	61.600	52.600
Depreciation	21.100	21.200	21.900
Tax	11.100	02.600	3.000
Reported PAT	38.000	34.000	24.300

200606 Quarter 1 –

EPS is Basic 1. Company is operating as a singe segment Company, engaged in Pharmaceuticals business hence, the disclosure requirement as per AS-17 Segment reporting is not attracted. 2. The figures of the previous periods have been regrouped and rearranged wherever necessary 3. The above results reviewed by the Audit Committee, have been taken on record by the Board of Directors at their meeting held on 31.07.2006. 4. There were no pending complaints at the beginning of the quarter. During the quarter 3 complaints were received and redressed. There was no complaints pending at the end of the quarter.

200609 Quarter 2 –

Net Sales includes Gross Sales Rs 891.30 million Excise Duty & Sales Tax Rs (90.60) million Expenditure Includes (Increase) / Decrease in Stock in Trade Rs 95.80 million Consumption of Raw Materials Rs 484.00 million Staff Cost Rs 18.20 million Other Expenditure Rs 113.80 million Tax Includes Provision for Tax Rs 2.60 million Deferred Tax Rs 3.80 million EPS is Basic Status of Investor Complaints for the quarter ended 30.09.2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 07 Complaints disposed off during the quarter 07 Complaints unresolved at the end of the quarter Nil 1. Company is operating as a singe segment Company, engaged in Pharmaceuticals business hence, the disclosure requirement as per AS-17 Segment reporting is not attracted. 2. The figures of the previous periods have been regrouped and rearranged wherever necessary. 3. The above results reviewed by the Audit Committee, have been taken on record by the Board of Directors at their meeting held on 1910.2006.

200612 Quarter 3

Net Sales includes Gross Sales Rs 766.40 million Excise Duty & Sales Tax Rs (69.50) million Expenditure Includes (Increase) / Decrease in Stock in Trade Rs (22.60)million Consumption of Raw Materials Rs 525.60 million Staff Cost Rs 18.70 million Other Expenditure Rs 105.30 million Tax Includes Provision for Tax Rs 3.00 million Deferred Tax Rs 3.40 million EPS is Basic Status of Investor Complaints for the quarter ended December 31, 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 1. The above results reviewed by the Audit Committee, have been taken on record by the Board of Directors at their meeting held on January 22, 2007. 2. The figures of the previous periods have been regrouped and rearranged wherever necessary. 3. Company is operating as a singe segment Company, engaged in Pharmaceuticals business hence, the disclosure requirement as per AS-17 Segment reporting is not attracted.

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt Equity Ratio	1.97	1.73	1.52
Long Term Debt Equity Ratio	1.29	1.04	0.77
Current Ratio	1.26	1.27	1.27
TURNOVER RATIOS
Fixed Assets	1.54	1.98	2.16
Inventory	4.71	5.16	5.31
Debtors	4.13	4.09	4.16
Interest Cover Ratio	2.42	3.91	4.46
Operating Profit Margin (%)	12.42	13.14	11.66
Profit Before Interest and Tax Margin (%)	9.50	10.44	9.25
Cash Profit Margin (%)	7.62	8.00	7.49
Adjusted Net Profit Margin (%)	4.70	5.30	5.08
Return on Capital Employed (%)	10.69	14.46	14.15
Return on Net Worth (%)	15.54	19.66	19.33

STOCK PRICES

Face Value	Rs. 10/-
High	Rs. 71.00/-
Low	Rs. 70.00/-

LOCAL AGENCY FURTHER INFORMATION

HISTORY

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, subject 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 Limited 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.50.7 Millions /-. 

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.

Dividend

The Directors recommend Dividend of Rs.1.50 ps @ 15% per share for the year ended 31^st March, 2006. Total cash outflow on account of dividend payment including dividend tax will be Rs.20.2 Millions (Previous Year: Rs. 39.8 Millions). The dividend after approval by the shareholders at the Annual General Meeting will be paid on or after 07.08.2006 to the eligible shareholders.

Operations Review

During the year under review, the Company has achieved sales turnover of Rs. 2790.0 Millions (Previous Year: Rs. 2652.7 Millions) registering a growth of 5.18%. The Company has achieved export turnover of Rs. 1040.5 Millions as against Rs. 943.3 Millions in the previous year registering growth of 10%. Operating Profit before Interest, Depreciation & Tax was Rs 307.7 Millions (Previous Year: Rs. 328.3 Millions), registering a decline of 6.27%. Profit after Tax was Rs. 127.1 Millions (Previous Year: Rs. 140.6 Millions), registering a decline of 9.60%. The decline in the profit is mainly on account of higher revenue expenditure incurred in USFDA Compliant Plant, increased crude oil prices and pricing pressures on account of increased competition.

JOINT VENTURE IN CHINA

The Company has entered into joint venture with a Chinese Company engaged in Active Pharmaceutical

Ingredients (APIs) manufacturing to form Huanggang Yinhe Aarti Pharmaceutical Company Limited for manufacturing and selling of APIs in China. The Company will have 26% stake in the said Chinese Joint Venture.

Management Discussion And Analysis

Pharmaceutical Industry - Global & Indian

According to IMS Health (NYSE:RX), the world pharma sales grew by 7 per cent to touch 602 billion dollars in the last calendar year and in the Ten major markets which accounted for 81 per cent of the world market, the audited growth in sales stood at 5.7 per cent as against 7.2 per cent in the previous year.

North America continues to be largest pharmaceutical market followed by Europe and Japan. Asia Pacific and African regions baring Japan also recorded a higher growth of 11 per cent during the year ended on December, 2005 with gross sales of 46.4 billion dollars.

The IMS figures for 2005 indicate a definite shift in pharmaceutical market in the years to come. China, India and Brazil, the three fast growing economies are going to play a decisive role in the pharmaceutical scene in the years to come judging by their current rate of growth and cost advantages as against the relatively slow growth of top ten markets. A notable trend in the world pharma market place is the growing role of generics as increasing number of patients bear their own healthcare costs and the governments are getting sympathetic to their cause. This has to inevitably bring a steady phase of price control pressures on several medications in the years to come in all the markets.

The pharmaceutical industry in India is estimated at US $5.22* billion, growing at a rate of 8.6% annually. Globally, the Indian pharmaceutical industry ranks 4th in terms of volume and 13th in terms of value of the total global sales.

The Indian Pharmaceutical Industry today is in the front rank of India's science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously.

The pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles. The Indian Companies produces the complete range of pharmaceutical formulations, i.e., medicines ready for consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and used for production of pharmaceutical formulations.

Outlook

The Company is well poised to take the challenges of new age pharma industry with its modern technology and skilled human resources with its clear vision to become a leading manufacturer of bulk drugs and high value Active Pharmaceutical Ingredients.

Future Plans of action:

The Company's R&D programmes is currently focused on new product in Non-Steroidal NSAID compounds, Antiparasitic, Calciun antagonist, anti anginal, Laxative, antihistamine, Coronary vasodilator and NO Otropic. Company will continue to do R &D on API's which are off-patents and will work on patents non infringing route systhesis. The R& D team through its intensive research efforts expected to develop many new products in future. And as a result the Company expects substantial commercial benefits in future. After taking initial development in Laboratory scale further development will be carried out on pilot scale at respective plants of the Company at different locations.

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:

v Pfizer Limited

v Searle

v Knoll Pharmaceuticals (formerly Boots Pharma)

v Glaxo

v E Merck

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 and 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.

Subject has attained a total turnover of US $ 189 million in the year April 2003 - March 2004 with flagship companies Aarti Industries Limited (Ail) and Aarti Drugs Limited (ADL) listed on Stock Exchanges. Subject has a Subsidiary Aarti Healthcare Limited (AHCL), which is engaged in manufacturing of Active pharma ingredients ranging from Ace Inhibitors, Broncodialators to Steroids.

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

Recognizing the importance of research, subject 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.

Subject 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. Subject also has representatives in USA & a subsidiary company in UK to provide better services to its Export Customers.

Award and Achievement

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 4th in volume terms and 13th 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, Aarti Drugs Limited 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.

Subject, a part of the US$ 160 million Aarti group of industries, has already established a strong presence in the anti-diarrhea, anti - ulcer and anti inflammatory therapeutic groups with products like tinidazole, metronidazole, secnidazole, ornidazole, diclofenac sodium, ranitidine hcl, nimesulide, rofecoxib, etc. It also manufactures vitamins, anti-asthama, anti-HIV, anti-arthritis, anti-fungal, antibiotics, ACE inhibitors, anti-osteoporosis, anti-diabetic, anti-cholinergic, sedatives and anti-depressant drugs with the help of manufacturing facilities situated at different locations.

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.

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.44.18
UK Pound	1	Rs.86.36
Euro	1	Rs.57.54

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

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