MIRA INFORM REPORT

Report Date :

02.05.2007

IDENTIFICATION DETAILS

Name :	PUNJAB CHEMICALS & CROP PROTECTION LIMITED
Formerly Known As :	PUNJAB CHEMICALS & PHARMACEUTICALS LIMITED
Registered Office :	SCO 417-418, Sector 35C, Himalaya Marg, Chandigarh – 160 022
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	01.12.1975
Com. Reg. No.:	53-3603
CIN No.: [Company Identification No.]	L24231CH1975PLC003603
TAN No.: (Tax Deduction & Collection Account No.)	PTLP10387G
Legal Form :	Public Limited Liability company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturer of chemicals like Oxalic Acid, Diethyl Oxalate and Sodium Nitrite, etc.

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 3000000
Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is a well established company engaged in manufacturing and marketing of chemicals viz. oxalic acid and other oxlates, agro chemicals and their intermediates and speciality chemicals. The company is an ISO 9001-2000 and ISO 14001 certified company. Directors of the company are well experienced and resourceful industrialists. Their trade relations are reported as fair. Payments are usually correct and as per commitments. Financial position of the company is satisfactory. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	SCO 417-418, Sector 35C, Himalaya Marg, Chandigarh – 160 022, India
Tel. No.:	91-172-2600955/2603120/2604127
Fax No.:	91-172-2603621
E-Mail :	pcpl_chd@satyam.net.in scschem@bom3.vsnl.net.in info@chd.pcplsts.com
Website :	http://www.peplsts.com
Corporate Office :	Plot No.: 645-646,4th/5th Floor, Oberoi Chambers II, New Link Road, Andheri (West), Mumbai-400 053
Tel. No.:	91-22-2674 7900 (30 lines)
Fax No.:	91-22-2673 6013,2673 6193
E-Mail :	stschem@bom3.vsnl.net.in
Factory :	Agro Chemicals Division Milestone-18, Ambala Kalka Road, P. O. Bhankharpur, Distt.n Patiala (Punjab)140201 Tel. No. : 91-1762-280086, 280094, 282654 Fax No. : 91-1762-280070 Email: info@chd.pcplsts.com Industrial Chemicals Division E-51, Ml DC Industrial Area, Tarapur, Boisar, Distt. Thane. Tel. No.: 91-2525-274664-65 Fax No. : 91-2525-272590 Excel Phospho Chem-l Pharma Division - Unit Alpha Drug Villages: Kolimajra & Samalheri, P.O.: Lalru, Distt. Mohali, Punjab. Tel. No.: 91-1762-275210, 275519 FaxNo. : 91-1762-275308 Email: pharmainfo@chd.pcplsts.com Industrial Chemical Division - Excel Phospho Chem- Site No. I & II, H.A. Limited, Compound, Pimpri, Pune-400018 Tel. No. : 91-20-27425647-9 Fax No. : 91-20-27425652 Email: epcos@bsnl.net , epc@pcplsts.com
Branches :	1012, 10^th Floor, Ansal Bhawan, K.G. Marg, New Delhi 110 001 Tel. 91-11-23314867 / 23312406 Fax. 91-11-23314890 E-Mail : pcpldel@satyam.net.in Excel Estate, S.V. Road, Goregaon (West), Mumbai - 400 062, Maharashtra Tel. No. 91-22-28723865 / 28723866 Fax No. 91-22-28725119 / 28735743 E-Mail : stschem@bom3.vsnl.net.in 414, Navketan Complex, Opp. Clock Tower, 52, S. D. Road, Secunderabad, Andhra Pradesh Tel. 91-40-27800292 / 27805662 Fax. 91-40-27806943 E-Mail : pcplhyd@hd2.vsnl.net.in

DIRECTORS

Name :	Mr. Shalil Shroff
Designation :	Managing Director
Date of Birth/Age :	36 years
Qualification :	B. Com.
Experience :	13 years
Date of Appointment :	15.01.1992
Previous Employment	STS Chemicals Limited, Director
Name :	Mr. G. Narayana
Designation :	Chairman
Name :	Mr. A. G. Shroff
Designation :	Director
Name :	Mr. Vijay Rai
Designation :	Director
Name :	Mr. Gurucharan Singh (Upto 06.04.2006)
Designation :	Director
Name :	Mr. Umesh Sanghvi (Upto 06.04.2006)
Designation :	Director
Name :	Mr. Avtar Singh
Designation :	Director (Operations & Business Development)
Name :	Mr. Punit K. Abrol
Designation :	Company Secretary & Vice President (Finance)
Name :	Mr. Mukesh D. Patel
Designation :	Director
Name :	Mr. Jagdish R. Naik
Designation :	Director
Name :	MR. Jagdish R Naik
Designation :	Director
Name :	Mr. Ajit R Sanghvi (01.01.2006)
Designation :	Director
Name :	Mr. Jai Parkash Bhambhani (w.e.f. 06.04.2006)
Designation :	Director
Name :	Capt. S.S. Chopra (Retd.)
Designation :	Director
Name :	Mr. Shiv Shanker Tiwari, (w.e.f. 06.04.2006)
Designation :	Whole Time Director
Name :	Mr. Rupam Shroff, (w.e.f. 06.04.2006)
Designation :	Whole Time Director
Name :	Mr. Vipul Joshi
Designation :	Chief Financial Officer

MAJOR SHAREHOLDERS

Names of Shareholders	No. of Shares	Percentage of Holding
Individuals/ Hindu Undivided Family	1049523	15.92 %
Bodies Corporate	2003163	30.38 %
Individuals (Non-Residents Individuals/ Foreign Individuals)	2500	0.04 %
Institutions
Mutual Funds/ UTI	260175	3.95 %
Financial Institutions ^/Banks	1493	0.02 %
Central Government/ State Government(s)	122027	1.85 %
Insurance Companies	56012	0.85 %
Foreign Institutional Investors	4098	0.06 %
OCB	370	0.01 %
Non-institutions
Bodies Corporate	353035	5.35 %
Individuals -i. Individual shareholders holding nominal share capital up to Rs 0.1 Millions	2258876	34.26 %
ii. Individual shareholders holding nominal share capital in excess of Rs. 0.1 Millions	442842	6.72 %
Any Other (specify)
Trust	150	0.00 %
Non Resident Indian	38628	0.59 %
Total	6592892	100.00 %

BUSINESS DETAILS

Line of Business :

Manufacturer of chemicals like Oxalic Acid, Diethyl Oxalate and Sodium Nitrite, etc.

Products:

Product	Item. No.
Oxalic Acid	29171101
Diethyl Oxalate	29171109
Sodium Nitrite	28341001

Exports to :

Japan and UK

Imports from :

Europe and Far East

Terms :

Purchasing :

L/C, D/A and D/P terms.

PRODUCTION STATUS

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Oxalic Acid & other Oxalates	MT	23600	15700	15649
Agro Chemicals & their Intermediates	MT	7750	6790	5878
Speciality Chemicals	MT	1175	1359	426
Phosphorous based compounds	MT	--	16200	7711
Organic Phosphates	MT	--	960	306
Inorganic Phosphates	MT	--	2040	524
Bulk Drug	MT	--	240	168
Other Chemicals	MT	8600	3845	4817
By-products	MT	10960	00	18079

GENERAL INFORMATION

No. of Employees :

400

Bankers :

• Bank of Baroda
• UTI Bank
• State Bank of India

Facilities :

SECURED LOANS	31.03.2006
Term Loan
Bank of Punjab (The loan is secured by pledge of 145700 equity shares of Excel Industries limited and 145700 equity shares of Excel Crop Care Limited)	16.656
ICICI Bank Limited Balance of loan taken over as per Scheme of Amalgamation from erstwhile STS Chemicals Limited The documentation is pending transfer in the name of Company. (The loan is secured by way of first charge by mortgage of residential flat situated at Mumbai.)	14.596
UTI Bank Limited (Term loan of Rs.100.0 Millions secured by hypothecation of movable plant and machineries, furniture & fixture etc. acquired under the loan. Term loan of Rs.20.0 Millions secured by equitable mortgage by way of deposit of title deed of property acquired.)	102.500
Balance of loan taken over as per Scheme of Amalgamation from erstwhile STS Chemicals Limited The mortgage is pending transfer in the name of Company. (Secured by equitable mortgage of office premises situated at Mumbai and out of above Rs.10606 Millions is further secured by paripassu charge on remaining Fixed assets of the Company situated at Mumbai and by way of Corporate Guarantee given by Company. Out of the above loans a loan of Rs.17.1 Millions is further secured by a pari passu charge on remaining fixed assets of the Company.)	121.060
Balance of loan taken over as per Scheme of Amalgamation from erstwhile Alpha Drug India Limited. The mortgage is pending transfer in the name of Transferee Company. (Secured by charge on fixed assets of the Company)	32.869
Interest Accrued and due on Term Loans	1.808
WORKING CAPITAL LIMITS From Banks. (The credit limits are secured by first charge by way of Hypothecation of the Borrowers entire goods, movable and other assets present and future.) (The loan of Rs. 50.334 Millions from IDBI Bank is secured by hypothecation of subsequent and subservient charge on Current Assets of the Companies)	607.229
Balance taken over as per Scheme of Amalgamation from erstwhile STS Chemicals Limited. The mortgage is pending transfer in the name of Transferee Company.(Loans from Bank are secured by a second charge by way of hypothecation of all movable assets comprising of plant and machinery spares. tools and accessories. furniture and fixtures, office equipments, inventories, vehicle and book debt. both present and future and an equitable mortgage of the plot at Tarapur Unit and are guaranteed by the Directors of the Company.)	126.187
Balance taken over as per Sheme of Amalgamtion from erstwhile Alpha Drug India Limited. The mortgage is pending transfer in the name of the Transferee Company. (Loans from bank are secured by charge on entire Current Assets and Fixed Assets of the Company)	78.176
UNDER VEHICLE FINANCE SCHEME From ICICI Bank Limited, HDFC Bank Limited and other Non Banking Finance Companies (Secured by hypothecation of vehicles acquired under the said schemes)	4.326
Balance taken over as per Scheme of Amalgamation from erstwhile STS Chemical Limited and Alpha Drug India Limited. The mortgage is pending transfer in the name of Transferee Company (Secured by hypothecation of vehicles acquired under the said schemes)	10.456
OTHERS Housing Development Finance Corporation Limited. (Under their line of credit scheme for funding housing loan scheme of the employees - secured by equitable mortgage by way of the deposit of title deeds of the properties of respective employees who have availed the loan under the scheme.)	9.536

Banking Relations :	Satisfactory
Auditors :	J. R. Khanna & Company Chartered Accountants Chandigarh
Subsidiaries :	STS Chemicals (UK) Limited I.A. & I.C.Chem Private Limited S D Agchem (Europe) NV
Associates :	Eftech Shroff (India) Limited Hemsil Trading & Manufacturing (Private) Limited Caliber Infotech

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
14800000	Equity Shares	Rs. 10/- each	Rs. 148.000 millions
20000	9.8% Redeemable Cumulative Preference Shares	Rs. 100/- each	Rs. 2.000 millions
	Total		Rs. 150.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
4326357	Equity Shares	Rs. 10/- each	Rs. 43.264 millions
Subscribed & Called up Capital :
4311324	Equity Shares	Rs. 10/- each	Rs. 43.113 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		43.113	43.113	21.557
2] Share Application Money		22.816	0.000	0.000
3] Reserves & Surplus		689.999	262.889	223.825
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		755.928	306.002	245.382
LOAN FUNDS
1] Secured Loans		1125.399	352.844	280.481
2] Unsecured Loans		70.299	96.208	98.348
TOTAL BORROWING		1195.698	449.052	378.829
DEFERRED TAX LIABILITIES		118.373	67.641	50.781
Government Grant		3.500	3.500	0.000
TOTAL		2073.499	826.195	674.992
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		780.132	298.746	222.158
Capital work-in-progress		184.260	6.496	33.629
INVESTMENT		43.948	49.640	49.640
DEFERREX TAX ASSETS
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	553.826	243.272	214.254
	Sundry Debtors	684.069	248.481	173.560
	Cash & Bank Balances	58.414	37.004	68.194
	Other Current Assets	66.348	0.000	0.000
	Loans & Advances	260.774	125.796	110.716
Total Current Assets		1623.431	654.553	566.724
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	494.098	199.718	195.249
	Provisions	64.174	44.023	28.759
Total Current Liabilities		558.272	243.741	224.008
Net Current Assets		1065.159	410.812	342.716
MISCELLANEOUS EXPENSES		0.000	60.501	26.849
TOTAL		2073.499	826.195	674.992

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Sales Turnover [including other income]	2664.819	1644.308	1232.717
Profit/(Loss) Before Tax	137.061	122.005	72.590
Provision for Taxation	[2.755]	39.855	20.479
Profit/(Loss) After Tax	139.816	82.150	52.111
Export Value	1293.026	1051.618	786.325
Import Value	695.427	265.528	182.820
Total Expenditure	2527.758	1531.168	14.820

QUARTERLY RESULTS

Particulars	30.06.2006 1^st Quarter	30.09.2006 2^nd Quarter	31.12.2006 3^rd Quarter
Sales Turnover	636.800	835.200	845.600
Other Income	24.300	32.600	34.600
Total Income	661.100	867.800	880.200
Total Expenditure	605.500	800.200	785.200
Operating Profit	55.600	67.600	95.000
Interest	24.500	30.600	28.700
Gross Profit	31.100	37.000	66.300
Depreciation	16.600	17.100	17.100
Tax	1.000	7.400	9.200
Reported PAT	9.500	9.000	33.300

200606 Quarter 1 –

I . The above results were reviewed by the Audit Committee and approved by the Board of Directors at their respective meetings held on 31^st July. 2006. 2. The Board of Directors of the Company has approved: I. The acquisition (by the Company itself and its wholly owned subsidiaries) of balance 49 % shares held by Excel industries (Europe) NV in SD Agchem (Europe) NV to make it wholly owned subsidiary of the Company for consideration of Euro 100000. II. The acquisition of total share holding of Pauraj Chemicals Private Limited before its amalgamation into the Company for consideration of Rs.1.250 Millions net of all acquisition liabilities. 3. As approved by the shareholders in the Extra Ordinary General Meeting held on 30^th May, 2006 &, the Allotment Committee of the Board of Directors has allotted 8,03,175 Preferential Equity Convertible Warrants to Promoters and certain associates on 19th June 2006. 4. Earning Per Share for the current year and the previous year have been calculated (in view of the sanction of the scheme of amalgamation) with reference to the increased share capital of Rs.65.9 Millions. 5. i. purusant to the scheme of Amalgamation approved by the Honable Courts the Board of Director of the Company has allotted & issued 2281568 new equity shares to the shareholders of erstwhile Alpha Drug India Limited & STS Chemicals Limited in its meeting held on 5 5.2006 in lieu of their shareholding on the record date i.e. 28^th April, 2006 as per the swap ratio approved by the respective Hon'ble Courts. As an date the total paid up share capital of the Company is Rs.65.9 Millions consisting of 6592892 equity shares of Re.10 each fully paid up, The Company has also got trading approval for 2271726 equity shares out of the new issued shares from the Stock Exchange, Mumbai. The application filed for obtaining trading approval for Ludhiana Stock Exchange Limited & Delhi Stock Exchange Assn. Limited, is under process, ii. The figures for the quarter ended 30^th June, 2006 are not comparable with the corresponding figures of the same period last year However the figures for the year ended 31^st March 2006 include the figures of the said Amalgamating Companies. 6. Status of Investors' complaints as on 30. 06.2006 is as under: Complaints received : 8 Complaints Resolved/Replied : 8, Pending: Nil

200609 Quarter 2 –

Other Income includes Export Benefits Rs 12.40 million Other Income Rs 20.20 million Expenditure Includes (Increase) / Decrease in Stock in Trade Rs (38.90) million Consumption of Raw Materials Rs 667.00 million Staff Cost Rs 48.80 million Other Expenditure Rs 122.00 million Tax Includes Provision for Current Tax (Including reversal of Mat credit) Rs 6.80 million Deferred Tax Rs 3.50 million Fringe Benefit Tax Rs 0.60 million EPS is Basic Status of the Investors Complaints for the quarter ended September 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints received during the quarter 56 Complaints disposed off during the quarter 56 Complaints unsolved at the end of the quarter Nil 1. The above results were reviewed by the Audit Committee and approved by the Board of Directors at their respective meetings held on October 16, 2006. 2. The Company is taking necessary steps for filing petition in the respective jurisdiction courts for obtaining their sanction to the scheme of amalgamation of Pauraj Chemicals Private Limited, and I.A. & I.C. Chemicals Private Limited, both wholly owned subsidiaries with the Company. 3. Pursuant to the Scheme of Amalgamation approved by the Hon'ble Courts, the Board of Directors of the Company has allotted & issued 2281568 new equity shares to the shareholders of erstwhile Alpha Drug India Limited & STS Chemicals Limited in its meeting held on May 05, 2006 in lieu of their shareholding on the record date i.e. April 28, 2006 as per the swap ratio approved by the respective Hon'ble Courts. As on date, the total paid up share capital of the Company is Rs 65.90 million consisting of 6592892 equity shares of Rs 10/- each fully paid up. The Company has also got trading approval for 2271726 equity shares out of the new issued shares from the Mumbai & Ludhiana Stock Exchanges. The application filed for obtaining trading approval from Delhi Stock Exchange Limited is under their consideration. 4. In view of the amalgamation of erstwhile Alpha Drug India Limited & STS Chemicals Limited with the Company, the figures for the quarter and half year ended September 30, 2006 are not comparable with the corresponding figures for the same period last year. 5. The Statutory Auditors have carried out the limited review of the results for the half year ended September 30, 2006.

200612 Quarter 3

NOTES:

1.The above results were reviewed by the audit committee and approved by the Board of Directors at their respective meetings held on 31.01.2007. 2.The company is in the process of filing petition in the respective jurisdiction for the sanction to the scheme of amalgamation of Pauraj Chemicals Private Limited and I.A. & I.C Chemicals Private Limited both wholly owned subsidiaries of the company. 3.SD Agchem (Europe) NV (a 100% subsidiary of the company) has entered into Share Purchase Agreement to acquire the 100% shareholding of SINTESIS QUIMICA a company has acquired 85% shareholding in SINTESIS QIOMICA. SINTESIS QUIMICA has two state of art manufacturing facilities in the outskirts of Buenos Aires and is engaged in manufacture of Agro chemicals, Formulations and Industrial Products. 4.In view of the amalgamation of erstwhile Alpha Drug India Limited & STS Chemicals Limited with the company the figures for the quarter and nine months period ended 31.12.2006 are not comparable with the corresponding figures for the same period last year. 5.The statutory auditors have carried out the limited review of the results for the quarter ended 31.12.2006. 6.Status of the investors complaints as on 31.12.2006 is as under: Complaints received-68 Complaints resolved-68 Pending-NIL

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt Equity Ratio	1.54	1.49	1.40
Long Term Debt Equity Ratio	0.52	0.58	0.56
Current Ratio	1.09	1.12	1.11
TURNOVER RATIOS
Fixed Assets	2.69	3.41	2.88
Inventory	6.70	7.39	6.44
Debtors	5.72	8.02	7.74
Interest Cover Ratio	2.78	3.82	3.28
Operating Profit Margin (%)	10.44	11.05	9.95
Profit Before Interest and Tax Margin (%)	8.01	9.76	8.29
Cash Profit Margin (%)	7.67	6.14	5.79
Adjusted Net Profit Margin (%)	5.24	4.85	4.13
Return on Capital Employed (%)	15.76	25.51	19.99
Return on Net Worth (%)	26.73	29.59	23.10

STOCK PRICES

Face Value	Rs.10.00/-
High	Rs.132.80
Low	Rs.122.00

LOCAL AGENCY FURTHER INFORMATION

Fixed Assets:

• Land
• Building
• Plant & Machinery
• Furniture, Fixture and Equipments
• Vehicles
• Computer Software

History :

The company was promoted by Excel Industries and the Punjab State Industrial Development Corporation. It commenced commercial production in October 1978. The promoters also have interests in other companies such as Transpek Industries and United Phosphorus.

The company came out with a rights issue in April 1989 to part finance its expansion and to set up a 100% Export Oriented Unit to manufacture oxalic acid.

The company developed new products during the year 2001-2002.

From its inception in 1975 the company was promoted as a joint sector project by Punjab State Industrial Development Corporation and Excel Industries Limited, Mumbai. The company's nature of being people and service oriented approach, coupled with dynamism and foresightedness of its team has enabled it to be positioned in the 'top bracket', both in the local and international market.

In the year 1998-99 company exports has jump of 63% from Rs. 351.100 millions to Rs. 573.200 million. Product of company continues to enjoy all round acceptance in the world market. Company also looking out the manufacturing of speciality chemicals for some international reputed companies. Company declared dividend for the year 1998-99 of 50% compared to 35% previous year.

The company is planning to develop new products during the year 2001-2002.

Amalgamation

The amalgamation of erstwhile Alpha Drug India Limited (ADIL) and STS Chemicals Limited (SCL) with the Company ('the scheme1) was approved by the Shareholders, Unsecured Creditors and Secured Creditors in their respective meetings convened by the Hon'ble High Court of Punjab and Haryana, Chandigarh and by the Hon'ble High Court of Bombay. The same has been approved by the High Court of Punjab and Haryana at Chandigarh on 10.03.2006 (delivered on 23^rd March, 2006) and High Court of Bombay on 21^st March, 2006 (delivered on 27^th March, 2006). Accordingly, both of these Companies have been amalgamated with the Company with effect from 1^st April, 2004 (the appointed date). Therefore, the financial results of the Company for the year 2005-06 have been prepared after taking effect of the approved scheme of amalgamation as presented in this report.

The activities of the Company are now divided into the following Divisions:

1. Derabassi Plant-Agro Chemicals Division.

2. Lalru Plant-Pharma Division-Alpha Drug.

3. Tarapur Plant- Industrial Chemical Division - Excel Phospho Chem -1

4. Pimpri Plant-Industrial Chemical Division Excel Phospho Chem - II

5. International Trading Division.

6. Formulation of Agra Chemicals.

The Directors feel that the amalgamation of ADIL and SCL with the Company will provide the benefit of economies of scale, lower operating cost, diversifying business risks, technological development, integrated marketing strategies and integrated R&D activities, etc.

Operations

During the year under review, the gross sales turnover of the Company after amalgamation was Rs. 2670 Millions as compared to Rs. 1690 Millions in the previous year (standalone basis). The profit before tax during the year 2005-06 was Rs. 137.1 Millions against Rs. 122.0 Millions in the previous year (standalone basis). However, after providing of taxes for the current year and writing back of the taxes of earlier years, the net profit stood at Rs. 167.1 Millions. After making adjustments on account of alignment of Accounting policies, brought forward profit/loss of erstwhile ADIL and SCL and Deferred Tax Liability on account of amalgamation, the profit available for appropriation for the year was Rs. 218.1 Millions.

Subsidiary Companies

IA & 1C Chem Private Limited and STS Chemicals (U.K.) Limited are the subsidiary companies and the audited Financial Statements of IA & 1C Chem Private Limited for the financial year 2005-06 pursuant to section 212 of the Companies Act, 1956 are annexed to this Annual Report. SD Ag Chem Private Limited, another subsidiary company was incorporated on 14th October, 2005 and the audited Financial Statements of this Company forthe period ending within 6 months of the date of the consolidated financial statements are not available as the first accounting year of this Company would end on 31^st March, 2007.

Finance

The term loans of the Company as on 31^st March, 2006 now stands at Rs. 289.5 Millions, which include Rs. 168.5 Millions balance taken over as per the scheme of amalgamation stated above. The working capital limit availed as on 31^st March, 2006 was. 811.6 Millions, which include Rs. 204.4 Millions balance taken over as per the scheme of amalgamation.

BUSINESS REVIEW

Business Segment -Agro Chemicals and Other Chemicals

Industry Structure and Development

For the growth of the Indian Economy, more productivity in the agriculture sector, industrialization and increased exports are the key requirement. India, predominantly, being a agriculture country with large population, has huge requirement of agriculture products. Therefore, use of agro chemicals has become the necessity of the farmers to save crops to increase the productivity. In view of this, the requirement of agro chemicals in a big way has enabled the industry to create manufacturing capacities in the country. The Government policies to develop agriculture sector and encouragement to set up the industry have improved the prospects. Therefore, the supply of high quality products with competitive prices, development of new products / formulations and registration in Indian and Overseas market help to sustain the growth. The domestic industry is continuously striving to increase the export by providing the best quality products at competitive prices on time. In view of this, the chemical and agrochemical industry in the country is likely to have a sustainable growth.

Opportunities & Threats

The Company has strengthened its presence in the Chemicals, Speciality Chemicals, phosphorous based compounds and Agrochemicals including formulated branded agro chemicals. The requirement of agrochemicals for the domestic agriculture sector coupled with the requirement in the export market have increased the business opportunities. The Company has obtained various registrations from Central Insecticides Board of India and other global registrations for some of the products for increasing the market size. The division of formulated Agrochemical business has been set up to establish the brand name in the local market and to provide solutions to the end users with more product range. International and domestic policies on the production and marketing of these products and extended credit period due to seasonality of agriculture products are the limited threats. The Company is, however, optimistic and taking steps to obtain more overseas registrations to meet the requirement of export market. The options available for working capital facilities are properly studied before resorting to any required borrowings and

the same are regularly monitored. The Company has also got registered few patents for some of the products, which are going to give further benefit.

Segmentwise performance and outlook

The Company is a competitive force in chemicals basically in agro, speciality chemicals and phosphorous based compound with value added services. The Company is a value driven, dependable and reliable to the customers in this era of competition. The people and service oriented approach coupled with dynamism and foresightedness of the TEAM -PCCPL has positioned it in the "top bracket", both in the local and international market. During the year, the Company has entered into the formulation business of the agro-chemicals. Necessary infrastructure for sale of formulated products in the different parts of the country are being created. The outlook for the coming years appears to be reasonably bright, barring unforeseen circumstances. The Company has set up International Trading Division to meet the diversified range of products with a thrust on niche products for the sun rise industry in the field. This division has been able to tap the different countries across the globe, which are now a market for the small entrepreneurs in India, who produces highly advanced quality molecules but are not exposed to those markets. The good relations with the business partners, where the company is selling its own manufactured products give an edge to supply various products through out sourcing from those small entrepreneurs. The Company has available infrastructure of offices, manpower and warehouses at major industrial locations.

TEAM - PCCPL always value re-engineering in chemicals which helps in reducing raw material costs by going in for forward and backward integration processes. The quality control and consistency in the product are the back bone of the product ideas while adhering strictly to delivery schedules and supply of top quality products as perceived by the customers.

Risks and concerns

The performance of agriculture in the country largely depend upon the weather condition, which can affect the demand of agro chemicals. The Company plans to take necessary measures to educate the users of formulated agro-chemical products. The fluctuation of prices of some basic raw materials like yellow phosphorous, alcohol, sugar and solvents based on petro products or otherwise may affect the margins of the products. The concerned manufacturing divisions have duly recognised these concerns and try to address them and limit the impact thereon.

Change of name of the company

Of late, the company’s activities are focused on manufacture of agro chemicals which are required for crop protection. Therefore, the Board of Directors after due consideration has decided that the company’s name be changed to Punjab Chemicals and Crop Protection Limited. This change of name shall be subject to the approval of the members and the Central Government under 5 section 21 of the companies Act, 1956.

Financial Performance & Analysis

During the year under review, the gross sales turnover of the Company after amalgamation was Rs. 2670 Millions as compared to Rs. 1690 Millions in the previous year (standalone basis). The profit before tax during the years 2005-06 was Rs. 137.1 Millions against Rs. 122.0 Millions in the previous year (standalone basis). However, after providing of taxes for the current year and writing back of the taxes of earlier years, the net profit stood at Rs. 167.1 Millions. After making adjustments on account of alignment of Accounting policies, brought forward profit/loss of erstwhile ADIL and SC and Deferred Tax Liability on account of amalgamation, the profit available for appropriation for the year was Rs. 218.1 Millions.

It is in trade terms with:-

˜ Abhitech Energycon Services Private Limited

˜ Chemtron Engineers Private Limited

˜ Dimple Drums & Barrels Limited

˜ Gupta Scientific Industries

˜ Mass Sealing Systems (Private) Limited

˜ North Street Cooling Towers Private Limited

˜ Alcon Wires & Cables Industries

˜ Amar Equipments Private Limited

˜ Cal Micro System

˜ Delta Finocem Private Limited

˜ Hadifield Steels and Alloys

˜ J. S. Chemicals

˜ Kavery Instruments Company

˜ Kewalson

˜ Prominent Scientific & Engineering Industries

˜ Saurav Chemicals Limited

˜ Star Scientific Glass Company

˜ Super Scientific Works Private Limited

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.41.18
UK Pound	1	Rs.82.02
Euro	1	Rs.56.07

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	6
--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		51

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		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

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