MIRA INFORM REPORT

Report Date :

18.06.2007

IDENTIFICATION DETAILS

Name :	UNITED PHOSPHORUS LIMITED
Formerly Name	CHEM INDUSTRIES LIMITED
Registered Office :	3-11, GIDC, Vapi Valsad 396195, Gujarat
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	02.01.1985
Com. Reg. No.:	04-25132
CIN No.: [Company Identification No.]	U24219GJ1995PLC025132
TAN No.: [Tax Deduction & Collection Account No.]	MUMU03710A
PAN No.: [Permanent Account No.]	AABCS1698G
Legal Form :	Subject is a public limited liability company. The company's shares are listed on the Stock Exchanges.
Line of Business :	Manufacturing of Chemicals such as Phosphorus Trichloride, Caustic Soda, Chlorine, etc.

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	USD 43000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	The company has turned the corner and wiped out all its previous losses during the year 2003-04. Directors are reported as experienced and respectable businessmen. Trade relations are fair. Payments are usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions. It can be regarded as a promising business partner in the long-run.

LOCATIONS

Registered Office :	3-11, GIDC, Vapi Valsad 396195, Gujarat, India
Tel. No.:	91-260-2432716 / 232720 / 2400717
Fax No.:	91-22-26435023
E-Mail :	info@uniphos.com shroff@uniphos.com
Website :	http://www.uplonline.com
Administrative Office :	Uniphos House, Madhu Park Centre, Opp. Madhu Park, Chitraker Dhurandar Marg, Khar (West), Mumbai - 400 052, Maharashtra, India
Tel. No.:	91-22-2604111
Fax No.:	91-22-2401823

DIRECTORS

Name :	Mr. R. D. Shroff
Designation :	Chairman & Managing Director
Date of Birth/Age :	66 years
Qualification :	B.Sc.
Date of Appointment :	29.05.1969
Name :	Mrs. S. R. Shroff
Designation :	Vice Chairperson
Date of Birth/Age :	59 years
Date of Appointment :	29.05.1969
Name :	Mr. J. R. Shroff
Designation :	Executive Director
Date of Birth/Age :	35 years
Qualification :	B.Sc.
Date of Appointment :	01.01.1990
Name :	Mr. A. C. Ashar
Designation :	Director – Finance
Qualification:	B.Com, ACA
Last Employment:	Finance Controller Excel Industries Limited
Name :	Mr. K. Banerjee
Designation :	Wholetime Director
Date of Birth/Age :	57 years
Qualification :	B.Tech.
Date of Appointment :	21.10.2003)
Name:	Mr. Pradeep Goyal
Designation:	Director
Name:	Dr. P. V. Krishna
Designation:	Director
Name:	Dr. (Mrs.) R. Ramachandran
Designation:	Director
Date of Appointment:	21.10.2003
Name:	Mr. Pradip Madhavji
Designation:	Director
Date of Appointment:	29.01.2004
Name:	Mr. A. L. Bongirwar
Designation:	Nominee Director
Date of Appointment:	21.10.2003
Name:	Mr. A. A. Panjwani
Designation:	Director
Date of Appointment:	21.10.2003
Name:	Mr. P. N. Devarajan
Designation:	Director
Date of Appointment:	21.10.2003
Name:	Dr. Nitish Sengupta
Designation:	Director
Date of Appointment:	21.10.2003
Name:	Mr. D. A. Anandpura
Designation:	Director
Date of Appointment:	21.10.2003
Deceased On:	4.11.2003
Name:	Mr. Vikram R Shroff
Designation:	Director
Name:	Mr. Vinod Sethi
Designation:	Director
Name:	Mr. Chirayu R Amin
Designation:	Director
Name:	Mr. M B Trivedi
Designation:	Company Sectary
Other Personnel:
Name:	K. R. Srivastva
Designation:	Chief Operating Officer
Qualification:	B.Chem, PGDBMA (IIM), DSM
Last Employment:	Predident- Pharmaceutical Products of India Limited
Name:	Vishnu Bhat
Designation:	President Profit Center
Qualification:	B.Tech (Chemical Engineering)
Last Employment:	CEO-Shaw Wallace Agrochemical Limited

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares	Percentage of Holding
Indian
Individuals/H.U.F	12127290	6.47
Bodies Corporate	40851180	21.78
Foreign
Non Resident Individuals/ Foreign nationals	2427375	1.29
Public Shareholding
Institutions
Mutual Fund/UTI	32081597	17.11
Financial Institutions/Banks	12177	0.01
Insurance Companies	1920631	1.02
Foreign Institutional Investors	62958722	33.57
Non Institutions
Bodies Corporate	7907815	4.22
Individuals
Holding nominal share capital upto Rs. 0.100 Millions	14469921	7.72
Holding nominal share capital in excess of Rs. 0.100 Millions.	4253054	2.27
Any Other
Overseas Corporate Bodies	4339604	2.31
Non Resident Individuals	3673242	1.96

BUSINESS DETAILS

Line of Business :	Manufacturing of Chemicals such as Phosphorus Trichloride, Caustic Soda, Chlorine, etc.
Export to:	Europe, Italy, Korea, Malaysia, South Korea, Sri Lanka, UK and USA.
Import From:	Europe and China.

PRODUCTION STATUS

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Speciality Chemicals	Tonnes	5470	5318	486
Chloro-Alkaline Products	Tonnes NM3	101700	112500	105637
Industrial Chemicals	Tonnes	44600	36720	31097
Power	MW	48.50	48.50	2941 (Lacs KWH)
Pesticides	Tonnes (Nos ) KL LB	34886 -- -- --	36456 -- -- --	27789 -- -- --
Mercury Salts	Tonnes	100	100	--
Pesticides Intermediates	Tonnes KL	24701	25002	15944 323

GENERAL INFORMATION

No of Employees:

1500

Bankers :

v Dena Bank

v Bank of Baroda

v State Bank of India

v Union Bank of India

v Canara Bank, 84, Dr. Annie Besant Road, Worli – 400018, Mumbai

v Indian Overseas Bank. Sir P M Road, P O Box – 354, Mumbai – 400001

v Centurion Bank Limited

v IDBI Bank Limited

v Punjab & Sind Bank

v Global Trust Bank Limited

v Karur Vysya Bank Limited

v UTI Bank Limited

v Andhra Bank Limited

v State Bank of Hyderabad

v Oriental Bank of Commerce

v Export Import Bank of India

v ICICI Bank Limited

v ING Vysya Bank Limited

Facility

SECURED LOANS:	31.03.2006
Secured Redeemable Non-convertible Debentures:
100- 7.2% 7 year	100.000
500 - Floating Rate 7 year	500.000
Rs. 1,00,00,000 each fully paid up
25 (Previous Year Nil) - 6.75%	250.000
From Banks:
On Term Loan Accounts	878.500
Under Vehicle Finance Schemes	35.200
On Cash Credit and Working Capital Demand Loan Accounts	739.600
From Others:
From Technology Information Forecasting and Assessment Council	3.400
From Industrial Development Bank of India	62.200
External Commercial Borrowing from International Finance Corporation	734.900
From C.E.Capital Services India	231.300
UNSECURED LOANS:
Term Loans from Banks	300.000
Term Loans from Companies and Others	503.400
Foreign Currency Convertible Bonds	3623.700
Syndicated Notes	3346.300
From Housing Development Finance Corporation Limited' under Employees Housing Loan Scheme	0.300

Banking Relations :	Good
Auditors :	S. V. Ghatalia And Associates Chartered Accountant
Subsidiaries :	v Agrodan A/S v Biowin Corporation Limited v Enviro Technology Limited v Bharuch Enviro Infrastructure Limited v United Phosphorus De Mexico S.A.DE.C.V. v United Phosphorus Limited, Australia v United Phosphorus Limited, Hong Kong v United Phosphorus Limited, Russia v United Phosphorus Limited, Shanghai v United Phosphorus Inc, USA v United Phosphorus Limited, Japan v United Phosphorus Limited, UK v United Phosphorus Limited, Zambia v United Phosphorus De Argentina S.A. v United Phosphorus Belgium S P R L v United Phosphrous Zimbabwe Limited v United Phosphorus South Africa Limited v United Phosphorus (Korea) Limited v United Phosphorus Limited, New Zealand v PT. United Phosphorus Indonesia v Shroffs United Chemicals Limited v United Phosphorus Limited Gibraltar v Inventa Corporation v Agvalue Enterprise, Inc. v Agvalue, Inc. v Agvalue Etho, LLC v Agvalue D.P, LLC v Agvalue Oryza, LLC v Agvalue Metri, LLC v Agvalue, Bromacil, LLC v Agvalue, Propyzamide, LLC v Agvalue- Propargite, LLC v Agvalue-Picloram, LLC v United Phosphorus Do Brazil Limited v United Phosphorus Limited Gautemala
Associate Company:	Agrinet Solution Limited Uniphos Agro Industries Limited Uniphos Enterprises Limited Nivi Trading Limited Bloom Packaging Private Limited Bloom Industrial Plastics Private Limited Kline Chemicals Private Limited Nerka Chemicals Private Limited Equator Holdings Private Limited Shroff Envirotal Private Limited Ultima Search Jai Research Foundation Vikram Farm
Joint Venture Company:	United Phosphorus Limited Bangladesh
Membership:	Confederation of Indian Industry

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
55000000	Equity Shares	Rs. 10 Each	Rs. 550.000 millions
14000000	Preference Shares	Rs. 10 Each	Rs.1400.000 millions
5000000	Preference Shares	Rs. 10 Each	Rs. 50.000 millions
	Total		Rs.2000.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
187134807	Equity Shares	Rs. 10 Each	Rs. 374.300 millions
117978	7% Non-Convertible Non Cumulative Redeemable Preference Shares	Rs. 10 Each	1.200 Millions
	Total		Rs. 375.500 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2006	31.03.2005 (12 months)	31.03.2004 (12 months)
SHAREHOLDERS FUNDS
1] Share Capital		375.500	369.079	531.199
2] Reserves & Surplus		10329.700	6310.825	3996.555
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		10705.200	6679.904	4527.754
LOAN FUNDS
1] Secured Loans		3535.100	3330.110	3431.996
2] Unsecured Loans		7773.700	2312.156	1375.522
TOTAL BORROWING		11308.800	5642.266	4807.518
DEFERRED TAX LIABILITIES		659.500	423.559	432.270
TOTAL		22673.500	12745.729	9767.542
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		4864.700	4782.234	4937.788
Capital work-in-progress		350.900	368.401	179.924
Intangible Assets		1554.100	1113.008	135.496
INVESTMENT		8597.500	413.596	397.882
DEFERREX TAX ASSETS		40.800	344.282	579.382
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1985.000	1510.662	1004.669
	Sundry Debtors	3873.100	3816.783	3414.538
	Cash & Bank Balances	3419.200	46.502	32.275
	Other Current Assets	451.700	458.467	347.291
	Loans & Advances	2974.800	3963.484	1506.499
Total Current Assets		12703.800	9795.898	6305.272
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	5220.400	3929.356	2656.327
	Provisions	222.500	157.969	151.440
Total Current Liabilities		5442.900	4087.325	2807.767
Net Current Assets		7260.900	5708.573	3497.505
MISCELLANEOUS EXPENSES		4.600	15.635	39.565
TOTAL		22673.500	12745.729	9767.542

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2006	31.03.2005 (12 months)	31.03.2004 (12 months)
Sales Turnover [including other income]	13251.100	10847.465	8399.997
Profit/(Loss) Before Tax	1494.600	972.305	579.930
Provision for Taxation		669.705	537.830
Profit/(Loss) After Tax	329.500	302.600	42.100
Export Value	NA	5941.759	4716.605
Import Value	NA	2176.172	1771.928
Total Expenditure	11756.500	9875.16	7753.929

SUMMARISED RESULTS

PARTICULARS	31.03.2007 Full Year
Sales Turnover	13514.500
Other Income	1037.400
Total Income	14551.900
Total Expenditure	11127.200
Operating Profit	3424.700
Interest	869.600
Gross Profit	2555.100
Depreciation	956.300
Tax	21.500
Reported PAT	1070.400
Dividend	600.000

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt Equity Ratio	1.04	1.01	1.49
Long Term Debt Equity Ratio	0.96	0.88	0.99
Current Ratio	2.00	1.91	1.27
TURNOVER RATIOS
Fixed Assets	1.29	1.21	1.34
Inventory	7.79	8.78	15.04
Debtors	3.54	3.05	4.77
Interest Cover Ratio	2.70	2.28	1.79
Operating Profit Margin (%)	23.21	21.12	23.56
Profit Before Interest and Tax Margin (%)	17.41	15.67	17.52
Cash Profit Margin (%)	14.35	11.51	13.20
Adjusted Net Profit Margin (%)	8.55	6.07	7.17
Return on Capital Employed (%)	13.40	15.41	19.86
Return on Net Worth (%)	13.42	12.00	18.66

STOCK PRICES

Face Value	Rs.2/-
High	Rs.331.05/-
Low	Rs.320.00/-

LOCAL AGENCY FURTHER INFORMATION

History

United Phosphorus Limited(formerly Search Chem Industries Limited), a subsidiary of erstwhile United Phosphorous Limited(presently Unipros Enterprises Limited) is into manufacture of Chlor alkali products, Industrial chemicals and speciality chemicals. The company is a leading manufacturer of chlorine and Phosphorous based industrial chemicals and speciality chemicals like Phosphorus Pentachloride, Phosphorus Trichloride, Phosphorus Oxychloride, HEDP, Tri Phenyl Phosphite, Tri Phenyl Phosphate, ATMP etc. The comapany is also into power generation. The surplus power after captive consumption is sold to Gujarat Electricity Board. 

The company incorporated as Vishwanath Commercials on 02.01.1985 was originally promoted by Debisingh Shekhawat, Lalit Kumar Sharma and Associates and went public in Feb 1985.  

R D Shroff (alongwith his family and investment companies), acquired majority stake in erstwhile Viswanath Commercials in Feb 1994 and changed its name to Search Chem Inds Limited. As a result of reorganisation with in the group, United Phosphorus(UPL) acquired 75% equity in Search Chem in March 1995 and UPL acquired further shares in August 1995 and became the promoter of the company. 

The company until the takeover was engaged in the business of trading in shares/debentures. Subsequent to takeover it diversified into manufacture of chemicals. The company's plants are located at Vapi and Jhagadia in Gujarat. The company entered into manufacture of Chlor-alkali products by commercialisation of Phase I of its Caustic and Chlorine and Phosphorus Trichloride plants in 1995-96. During 1998-99, the company has installed a new plant to manufacture POCI (Phosphorus Oxychloride) and also installing a plant to manufacture Elemental Phosphorus, which is main input of the company. 

The company has entered an agreement with General Electric Energy Plant Operations LP for operation and maintenance of power plant.  

The company has been referred to BIFR as the networth was fully eroded. The capacity utilisation of both Speciality Chemicals and Industrial Chemicals was higher compared to 1999-2000.  

In attempt to restructure the business in the group, the manufacturing facilities of erstwhile United Phosphorous is transferred to this company (formerly Search Chem Industries Limited). The High Court of Gujarat has approved this scheme of demerger effective from March 31, 2003. According to the scheme of demerger the company has reduced its share capital and has issued to its shareholders one equity share of Rs.10/- each for every twelve equity share of Rs.10/- each held by them in the company. Further one equity share or 14 preference shares of Rs.10/- each of the company were alloted to the shareholders of Uniphos Enterprises Limited for every one equity share of Rs.10/- each held by them in Uniphos Enterprises Limited. 

During the 2004-05 the company has enhanced its installed capacity of Pesticides and Pesticides Intermediates by 9940 Tonnes and 890 Tonnes. With this expansion the total installed capacity of Pesticides and Pesticides Intermediates has increased to 28040 Tonnes and 17546 Tonnes respectively. 

 In June 2005 the company has acquired 100% stake of SWAL (Formerly known as Shaw Wallance Agrochemicals Limited) for a consideration of Rs.234 Million and also acquired CEQUISA, a distributor and registrant of crop-protection products located in Barcelona Spain & its subsidiaries . In October 2005 the company sub-divided its equity share face value from Rs.10/- per share to Rs.2/- per share. Further the company has acquired 100% stake through its UK subsidiary of REPOSO S.A.I.C. (REPOSO) a manufacturer and distributor of crop protection products located in Buenos Aires, Argentina. The company has also acquired Agvalue in USA during November 2004.

OPERATIONAL PERFORMANCE

During the year under review, rainfall had been very good in India. In fact, in some parts, there were heavy floods. U.S.A. suffered two devastating hurricanes. The bountiful rains resulted in increase in agriculture activity throughout the world. Rabi and Kharif crops yielded more agriculture output. The local sales of agrochemicals and other chemicals increased and stood at Rs.6009.200 Millions. Like last year, the exports again surged ahead to Rs. 7154.100 Millions. The increase in sales was about 34%. Sale of caustic soda and chlorine were higher. In the later part of the year the prices of caustic soda and chlorine came down. However, in the current year, it has again started moving up. The Company's total sales stood at Rs. 13621.200 Millions, Profit before taxes were at Rs. 1494.600 Millions which is 50% higher as compared to last year.

FUTURE OUTLOOK

The preliminary weather forecast indicate almost normal monsoon in India for the year 2006-2007. This is a good indication and near-normal monsoons should result into overall better performance of the Company. Exports are also expected to go up significantly. With the new acquisitions in recent times, the Company expects that exports should go up in next year. The Company has recently ventured into seeds business. There is a very good demand for genetically developed seeds and it is expected that this business will also do very well. Overall, barring unforeseen circumstances, the Company should perform well in the year 2006-2007.

SUB-DIVISION OF SHARES

The face value of the Company's equity share was Rs.10 per share. In order to facilitate easy accessibility to the Company's equity shares by the small investors and to enhance the liquidity of the shares on the stock exchanges, the Company has sub-divided its equity shares from a face value of Rs.10.per share to Rs.2 per share. The Record Date for the sub-division was kept on 05.10.2005

DIVIDEND

The Directors have recommended dividend of Re.1/- per Equity Share of Rs. 21- each and paise 70 per Preference Share on 1,17,978 - 7 % Preference Shares of Rs. 107-each for the financial year ended 31.03.2006, which if approved at the forthcoming Annual General Meeting, will be paid to (i) all those Equity and Preference Shareholders of the Company whose names appear in the Register of Members as on 19.09.2006 and (ii) to those Equity and Preference Shareholders of the Company whose names appear as beneficial owners as per list furnished by National Securities Depository Limited and Central Depository Services (India) Limited.

FINANCE

It has always been constant endeavour on part of the Company to save interest cost by availing of low-cost debt and replacing the same in place of debts carrying higher interest burden. During the year the Company issued Foreign Currency Convertible Bonds of US $ 150 million. Of this, bonds worth US $ 70 million have been converted into equity shares. This issue was made for raising finance for acquiring overseas businesses / registrations, working capital requirements of overseas subsidiaries and meeting capital expenditure requirements of the Company.

SAFETY, HEALTH PERFORMANCE AND ENVIRONMENT

The Company has taken initiatives at all its units in protection of environment and to keep safe working environment. All units are certified under Environmental Management System standards ISO 14001. During the year, some of the units have availed re-certification. Focus in the environmental management system is on reduction on waste generation and recovery, reuse of available resources, etc. In all the manufacturing units, the Company has achieved considerable reduction in the consumption of raw materials and utilities which is helpful in better environmental compliance and helps in achieving sustainable growth. The Company has upgraded pollution treatment system provided at various units as per requirements. The entire incinerable wastes generated at the Company's units which need thermal treatment are sent to the Common Incineration system at Ankleshwar. The Company is having valid Consent / Authorization from Pollution Control Board for all the units. All statutory returns like Environmental Statement and Hazardous Waste Return ace submitted well in time. Solar evaporation ponds are avoided and Forced Evaporation System / Multiple Effect Evaporation System have been introduced. The Company's associate viz. Bharuch Enviro Infrastructure Limited (BEIL) has streamlined the operation of the Common Incineration System. The Common Incineration System is first of its kind in India and as per international standards. This facility is helpful to various industries in the region in treafingthe organic wastes generated by them. BEIL has also taken possession of additional 50 acres of land for expansion and the land has been notified. Enviro Technology Limited (Common Effluent Treatment Plant) at Ankleshwar has adopted energy efficient Diffused Aeration System and replaced the surface aerators. All the manufacturing sites are certified under Occupational Health and Safety Assessment Standards OHSAS 18001. In all the units, emergency rescue teams are available in all shifts which are helpful in case of any emergency situation in the Company's units or outside the units. Company's ERT team performance in emergency situation of flood situation in Damanganga river at Vapi was appreciated by District Collertor also. The Company has received award from Gujarat Safety Council for 1 million accident free man-hours. It also bagged National Energy Conservation award at the hands of President of India Dr. A P J Kalam.

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY STRUCTURE AND DEVELOPMENT

The core business of United Phosphorus Limited (UPL) is agrochemicals. UPL is the biggest player in this field in India. Globally, it is among the first five companies of generic agrochemical manufacturers. UPL also manufactures industrial chemicals and specialty chemicals. Apart from this, it has a chlor-alkali plant. At UPL chlorine is mainly used for captive consumption and caustic soda is sold off through dealers. UPL also has a captive power generation plant, having capacity of 53 MW. Power generated is mainly used in chlor-alkali and white phosphorus plants. Surplus power is sold off to Gujarat Electricity Board. With changes in power policy on anvil in Gujarat, it may be possible for UPL to sell power to other companies directly. UPL's area of operations is spread throughout the world. It has business activities in more than 100 countries in the world. Agrochemicals usage is there throughout the world. The consumption of agrochemicals is very high in countries like USA, UK, Japan, etc. as compared to India. UPL's manufacturing plants are at Vapi, Ankleshwar, Jhagadia, Halol and Jammu. Some of the subsidiaries have manufacturing facilities at Haldia and Bangalore (India), Sandbach (U.K), Argentina, Australia, Thailand, etc. Monsoons play an important role for agrochemical industry. Good rainfalls in the country and in the world result into substantial increase in the activity of agrochemical business. For sale of agrochemicals, registrations are required. UPL holds product registrations for various products throughout the world. UPL has made some of the acquisitions in the recent past and thereby got new product registrations. This will help in pushing its products in new markets. UPL's endeavour is to provide complete solution to all the requirements of the farming community. It has now ventured into seeds business, and seeds germplasm. This business has tremendous growth potential. At present, UPL is trying to develop seeds for rice, sunflower and cotton. To increase its exports, UPL has entered into various strategic alliances in different parts of the world. In domestic markets, innovative ways to enhance the sales are followed. Superior quality, full customer satisfaction, providing complete solution for agro issues, farmers education and advisory services, new product development, introducing new compounds, etc are steps taken by the company to achieve commendable growth in business in last few years. Agrochemical industry in India was predominantly the domain of few multinational companies. However, UPL has strived hard to become leader in this field, becoming one of the biggest Indian multinational company.

OPPORTUNITIES AND THREATS:

Agrochemical industry in India has lots of potential for growth. In India, there is a pool of very good scientists and engineers. It is in a position to manufacture some of the most complicated products at very economical prices and having few superior quality. This is the main reason for increase in country's exports of agrochemicals for last years. In India, every year crops worth crores of rupees is lost due to pest and disease attack. If this trend has to stop, farmers are required to be trained and properly educated. As consumption of agrochemicals is much less in India, lots of opportunities are available for growth outside India, the Indian agrochemicals industry can capture a much larger market share in the world. The seeds business also provides very good opportunities. It is set to change the pattern of farming in India. UPL's venturing into this business should also turn out to be a big opportunity for growth in this field. Another threat is from manufacturers in China. Substandard material is supplied by them at ccynpetitive prices in big volumes. In India, the manufacturers have taken various step to adjust to these threats. Another threat is vagaries of monsoon - either too much or too little resulting in floods or droughts. Agrochemicals usage can be less in both the situations. However, increase in exports will provide a hedge to this threat. Another threat is negative perception in the minds of the people and government about the industry. This is further fuelled by some environmentalists. The industry is taking all steps, legal or otherwise, to give right picture of usefulness of the persticide industry. Renowned scientists have also opined that pesticides are blessings for human race and green revolution could not have taken place in the absence of pesticides.

BUSINESS OUTLOOK:

Business outlook is favourable for the company. Last year, monsoon in India had been fairly widespread and this year too, it is expected to be good. This should augur well for the company. There is a good demand for company's products in India and abroad. There is good network of dealers in India. The company is entering into strategic alliances, coupled with global acquisitions. Overseas subsidiaries are marketing arms and they have also performed well. Company is carrying on research in few new products, especially herbicides. This will help in introduction of new products in India and abroad. Overall, the -business outlook is very encouraging.

RISKS AND CONCERNS:

Adequate risk management steps are taken by various departments. The agrochemical industry has inherent risks such as weather conditions, or regulatory restrictions on manufacture or use of certain agrochemicals. At UPL, the global operations provide protection against vagaries of nature. Broad product portfolio enables the company to manage the risks effectively. Health, Safety and Environment is another area of risk. The same is managed by not only compliance of all regulations but also upgrading the system beyond regulatory needs, Constant safety audits are carried out. Treasury management risks are taken care of by monitoring receivables, proper credit control, credit insurance cover of all domestic and international receivables, non-recourse factoring and efficient supply chain management. Foreign exchange fluctuations are taken care by future covers and other derivatives continuously. As company's export goes up year after year, it provides adequate natural cover for servicing its external borrowings. Product and public liability insurance covers are taken by the company.

FINANCIAL AND OPERATIONAL PERFORMANCE:

The year 2005-2006 was another year of excellent performance.

The turnover of the company increased from Rs.11041.400 Millions to Rs. 13621.200 Millions, registering a growth of 23%. Profit before taxes went up by 54% from Rs.972.300 Millions to Rs. 1494.600 Milions. On the export front also the performance was excellent. During the year, export on FOB basis were Rs.7154.100 Millions as against Rs.5925.300 Millions.

Website details are attached herewith:

United Phosphorus Limited (formerly Search Chem Industries Limited), a subsidiary of erstwhile United Phosphorous Limited(presently Unipros Enterprises Limited) is into manufacture of Chlor alkali products, Industrial chemicals and speciality chemicals. The company is a leading manufacturer of chlorine and Phosphorous based industrial chemicals and speciality chemicals like Phosphorus Pentachloride, Phosphorus Trichloride, Phosphorus Oxychloride, HEDP, Tri Phenyl Phosphite, Tri Phenyl Phosphate, ATMP etc. The company is also into power generation. The surplus power after captive consumption is sold to Gujarat Electricity Board. 

The company incorporated as Vishwanath Commercials on Jan 2, 1985 was originally promoted by Debisingh Shekhawat, Lalit Kumar Sharma and Associates and went public in Feb 1985.  

 R D Shroff ( alongwith his family and investment companies), acquired majority stake in erstwhile Viswanath Commercials in Feb 1994 and changed its name to Search Chem Inds Limited. As a result of reorganisation with in the group, United Phosphorus(UPL) acquired 75% equity in Search Chem in March 1995 and UPL acquired further shares in Aug 1995 and became the promoter of the company. 

The company until the takeover was engaged in the business of trading in shares/debentures. Subsequent to takeover it diversified into manufacture of chemicals. The company's plants are located at Vapi and Jhagadia in Gujarat. The company entered into manufacture of Chlor-alkali products by commercialisation of Phase I of its Caustic and Chlorine and Phosphorus Trichloride plants in 1995-96. During 1998-99, the company has installed a new plant to manufacture POCI (Phosphorus Oxychloride) and also installing a plant to manufacture Elemental Phosphorus, which is main input of the company. 

The company has entered an agreement with General Electric Energy Plant Operations LP for operation and maintenance of power plant.  

The company has been referred to BIFR as the networth was fully eroded. The capacity utilisation of both Speciality Chemicals and Industrial Chemicals was higher compared to 1999-2000.

In attempt to restructure the business in the group, the manfufacturing facilities of erstwhile United Phosphorous is transferred to this company(formerly Search Chem Industries Limited). The High Court of Gujarat has approved this scheme of demerger effective from March 31, 2003.

EPS is Basic Status of Investor Complaints for the quarter ended June 30, 2005 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 198 Complaints disposed off during the quarter 198 Complaints unresolved at the end of the quarter Nil 1. The above Unaudited Financial Results were reviewed by the Audit Committee and thereafter approved at the Meeting of the Board of Directors held on July 22, 2005. The Statutory Auditors have carried out a Limited Review for the quarter ended June 2005. 2. The Company made an issue of Foreign Currency Convertible Bonds (FCCB's), aggregating to US $ 75 million on October 06, 2004, Bond holders holding FCCB's aggregating to US $ 58.23 million have converted Bonds into equity shares resulting into increase in the paid up capital of the Company to Rs 335.20 million. 3. During the quarter, the Company has acquired, through it subsidiary, the business of M/s CEQUISA, located in Spain, for a price of Euro 11.50 million. 4. During the quarter, the Company has acquired all the shares of M/s SWAL Corporation Limited (formerly known as Shaw Wallace Agrochemicals Limited) for a consideration of Rs 234 million. 5. The Board of Directors have recommended sub-division of 1(one) Equity Share of Rs 10/- each to 5 (five) Equity Shares of Rs 2/- each. 6. Previous period / year's figures have been regrouped / rearranged wherever necessary.

FIXED ASSETS

The company's fixed assets of important value include leasehold land, factory building, plant & machinery, furniture, fixtures & office equipment and vehicles.

UNITED PHOSPHORUS LIMITED ACQUIRES ADVANTA’S SEED BUSINESS FROM FOX PAINE & COMPANY

Mumbai, India (February 14, 2006) United Phosphorus Limited (UPL) announced today that its subsidiary, Biowin Corporation Limited based in Mauritius, has acquired Advanta Netherlands Holdings BV, based in the Netherlands, in an all cash transaction from the US-based private equity firm, Fox Paine & Company, LLC. UPL will finance the transaction with funds raised through the recent foreign currency convertible bond (FCCB) issues and bank borrowings. YES Bank served as the exclusive financial and strategic advisor to UPL.

Advanta is a leading supplier of seeds and seed technologies to major global and regional markets, providing added value to farmers, downstream industries and consumers by combining superior genetics with essential technologies and techniques. With operations in Australia, Asia and South America, the Company’s research and development consists of superior breeding programs and bioscience techniques that have driven the development of a portfolio of elite, proprietary and highly differentiated germplasm. Advanta had total sales of EUR 61 million in [FY] 2005. Established in 1996 through the combination of Royal Vanderhave Group of the Netherlands and Zeneca Seeds of the United Kingdom, Advanta’s corporate heritage extends back to the 19^th century with important R & D programs in rice, maize, sunflower, sorghum and canola. Commenting on the transaction, Mr. Jai Shroff, Executive Director of UPL, said, “The acquisition of Advanta allows UPL to jump start their entry in the high end of the seeds business where the future of agriculture growth lies. This transaction not only makes us the largest player in some segments but also gives us leadership position in many important products. At the same time, it allows us further their relationship with distributors and farmers in these markets. They welcome the Advanta employees to the UPL family of companies, and will look for a smooth, quick integration.” Mr. Kevin Schwartz, Managing Director of Fox Paine, said, "They believe the combination of Advanta and UPL will help both companies accelerate their corporate strategies for growth. This transaction successfully concludes their investment work with Advanta, which was to develop and invest in its market positions, product portfolio and technologies and ultimately find the strategic acquirers best positioned to further develop Advanta's diverse global business units. The success of this endeavor is due to the substantial efforts of many people within Advanta and Fox Paine who shared this vision."

United Phosphorus Limited (UPL) is the largest Indian agrochemical company and among the top five generic companies globally in this industry. It is engaged in research, manufacture and distribution of agrochemicals and specialty chemicals across the globe. The Company’s revenue’s for the last 12 months ending Dec 2005 were in excess of USD 375 mm.(Rs. 16610.000 Millions)

About UPL

Through acquisitions, strategic alliances and network of over 36 subsidiaries, UPL has built a marketing network across the globe and its international revenues account for over 70% of its total revenues. It exports to over 100 countries, with primary markets in Europe and North America. UPL has over 2400 employees and has 10 operating plants (8 in India and 1 in UK and Argentina) all of them are ISO compliant to the highest standards of Quality, Safety, Environment and Occupational Health.

UNITED PHOSPHORUS LIMITED (UPL) SIGNS AGREEMENT FOR PRODUCTION OF CERTAIN AGROCHEMICALS WITH ISHIHARA SANGYO KAISHA LIMITED. (ISK)

Ishihara Sangyo Kaisha, LIMITED (ISK) has signed the agreement for the production of certain agrochemicals with United Phosphorus LIMITED (UPL) Mumbai, India and furthermore is exploring the possible business alliance of distribution in India and certain other countries.

UPL has been entrusted by ISK with manufacture of certain products developed by ISK . ISK, UPL and Mitsui & Co., Limited.(Mitsui) have a plan to establish a joint venture company for the development, registration and distribution of ISK products in India. In addition, the companies continue the discussion about the possible co-operation in the countries other than India.

ISK is intending to continue to focus on the Research and Development, especially creating the new novel molecules and more than ninety (90) percentage of the total turnover for agrochemical sales (turnover of 41.0 Billion Japanese Yen and net earning of 8 Billion in March, 2006 as consolidated basis) is coming from their proprietary products. ISK’s target for its agrochemical business is turnover of 48.0 Billion Japanese Yen and net earning of 9 Billion Japanese Yen on a consolidated basis in March 2009 expecting contribution of new products (IKF-916/cyazofamid and IKI-220/flonicamid). ISK has commenced on full-scale development work of its new fungicide (powdery mildew fungicide) IKF-309 ( a common name to be proposed).

With this venture, ISK will be able to access the world class manufacturing base of UPL as well as UPL’s domestic marketing network. UPL presently has 8 manufacturing facilities in India, one each in UK and Argentina. UPL currently has a 8% market share in India.

This partnership will continue to allow UPL to grow organically, inorganically and through business alliances. Current revenue of UPL for the year, 2005-2006 have been USD 480 million.

As stated by Mr. Jai Shroff, CEO of United Phosphorus Limited “They believe that this alliance is of strategic importance and this business model will differentiate UPL from other generic companies as being the most cost competitive manufacturer with an access to new patented chemistries which can be leveraged by the global distribution network set up by us. This will also compliment some of the recent brand acquisitions”

ISK intends to implement their new manufacturing business model for their agrochemicals products as their one of the business strategies in addition to the R & D aiming at increasing its global competitiveness and profitability.

ISK, therefore, is strengthening the stability and global competitiveness of their production through establishing the multi- production sites of technical materials. Most of its agrochemical products already have been locally produced not only in Japan but also in Europe, North America, Korea, China and Brazil.

　

It is currently estimated that 70 percentage of total products used globally are off-patent products while the cost of the development and commercialization with new molecule have been increased significantly. UPL has been recognized as one of the most competitive producer of agrochemicals in India and the fastest growing Generic company in Agrochemical industry with direct presence in 35 countries and a sales in more than 80 countries

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 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.40.76
UK Pound	1	Rs.80.67
Euro	1	Rs.54.58

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	8
PAID-UP CAPITAL	1~10	8
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	8
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	8
--CREDIT LINES	1~10	8
--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		72

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