MIRA INFORM REPORT

Report Date :

08.11.2007

IDENTIFICATION DETAILS

Name :	GRANULES INDIA LIMITED
Registered Office :	8-2-293/A/A/2, Plot # 227, Road No. 2, Banjara Hills, Hyderabad – 500 033, Andhra Pradesh
Country :	India
Financials (as on) :	30.06.2006
Date of Incorporation :	18.03.1991
Com. Reg. No.:	01-12471
CIN No.: [Company Identification No.]	L24110AP1991PLC012471
TAN No.: [Tax Deduction & Collection Account No.]	HYDG00432F
PAN No.: [Permanent Account No.]	AAACG7369K
Legal Form :	Public Limited Liability company. The company’s shares are listed on the Stock Exchanges
Line of Business :	Manufacturers and marketers of Bulk Drugs, Granulations and Tablets.

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 3300000
Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is a well established company having satisfactory track. Directors are reported as experienced, respectable and having resourceful businessmen. Their trade relations are fair. Payments are usually correct and as per commitments. The company can be considered normal for business dealing at usual trade terms and conditions.

LOCATIONS

Registered Office/ Factory :	8-2-293/A/A/2, Plot # 227, Road No. 2, Banjara Hills, Hyderabad – 500 033, Andhra Pradesh, India.
Tel. No.:	91-40-23747093 / 23748834 / 23740425 / 23744135 / 23742541 / 23553266 / 23550884
Fax No.:	91-40-23745478 / 23547894
E-Mail :	companysec@granulesindia.com granules.hq@gnhyd-gil.globalnet.ems.vsnl.net.in info@granulesindia.com mail@granulesindia.com
Website :	http://www.granulesindia.com
Factory :	Plot No. 15A/1, Phase III, I.D.A. Jeedimetla, Hyderabad – 500 055, Andhra Pradesh

DIRECTORS

Name :	Mr. C Nageswara Rao
Designation :	Chairman
Name :	Mr. C Krishna Prasad
Designation :	Managing Director
Name :	Mr. N R Ganti
Designation :	Director
Name :	Mr. L S Sarma
Designation :	Director
Name :	Mr. A P Kurian
Designation :	Director
Name :	Mr. Stephen R Olsen
Designation :	Nominee Director

KEY EXECUTIVES

Name :	Mr. Sachin Guha
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 30.06.2007

Names of Shareholders	No. of Shares	Percentage of Holding
Indian
Individuals / Hindu	5718691	29.40
Foreign
Individuals [Non Resident Individuals / foreign]	61300	0.32
Public Shareholding
Institutions
Mutual Funds/ UTI	181221	0.93
Financial Institutions ^/Banks	2500	0.01
Insurance Companies	6356	0.03
Foreign Institutional Investors	1946407	10.0
Non-institutions
Bodies Corporate	855458	4.40
Foreign Bodies	6448845	33.16
Individuals
Individuals -i. Individual shareholders holding nominal share capital up to Rs 0.100 Million	3032975	15.59
ii. Individual shareholders holding nominal share capital in excess of Rs. 0.100 Million	669719	3.44
Any Other (specify)	527122	2.71
Total	19450594	100.00

BUSINESS DETAILS

Line of Business :	Manufacturers and marketers of Bulk Drugs, Granulations and Tablets.
Products :	Bulk Drugs
Exports :
Countries :	U.S.A., Germany, Spain, Mexico, Hong Kong, Australia, Europe, etc

PRODUCTION STATUS

Particulars	Unit	Installed Capacity
APIs	Metric tones	3713.280
PFIs	Metric tones)	6480.000
Tablets ( in 1000 Nos )		1 72800

GENERAL INFORMATION

Customers :	v Roussel Corporation, U.S.A. v Granueltec, U.S.A. v Helm NY Chemicals, U.S.A. v Welding GmbH & Company, Germany v Flavine Espanasa, Spain
No. of Employees :	478
Bankers :	Andhra Bank, Somajiguda Branch, Hyderabad, Andhra Pradesh. Standard Chartered Grindlays Bank Limited, Hyderabad, Andhra Pradesh Citibank NA, Hyderabad, Andhra Pradesh State Bank of Hyderabad, Gun Foundry, Hyderabad – 500 177, Andhra Pradesh.

Banking Relations :	Satisfactory
Auditors :
Name :	Kumar and Giri Chartered Accountants
Subsidiaries :	Granules USA, Inc.

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
20000000	Equity Shares	Rs.10/- each	Rs. 200.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
12369400	Equity Shares	Rs.10/- each	Rs. 123.694 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		30.06.2006 [12 Months]	30.06.2005 [12 Months]	30.06.2004 [15 Months]
SHAREHOLDERS FUNDS
1] Share Capital		123.700	123.266	83.100
3] Reserves & Surplus		702.000	629.995	225.151
NETWORTH		825.700	753.261	308.251
LOAN FUNDS
1] Secured Loans		1164.000	884.368	624.811
2] Unsecured Loans		107.500	55.926	77.517
TOTAL BORROWING		1271.500	940.294	702.328
DEFERRED TAX LIABILITIES		0.000	38.928	25.751
TOTAL		2097.200	1732.483	1036.330
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1187.300	533.177	544.754
Capital work-in-progress		236.900	365.717	54.679
INVESTMENT		5.400	4.415	5.219
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	209.000	201.510	158.095
	Sundry Debtors	616.500	457.251	307.179
	Cash & Bank Balances	47.200	222.157	34.162
	Other Current Assets	0.000	1.862	0.493
	Loans & Advances	122.400	102.938	96.098
Total Current Assets		995.100	985.718	596.027
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	325.700	160.248	159.638
	Provisions	19.000	17.557	14.399
Total Current Liabilities		344.700	177.805	174.037
Net Current Assets		650.400	807.913	421.990
MISCELLANEOUS EXPENSES		17.200	21.261	9.688
TOTAL		2097.200	1732.483	1036.330

PROFIT & LOSS ACCOUNT

PARTICULARS		30.06.2006 [12 Months]	30.06.2005 [12 Months]	30.06.2004 [15 Months]
Sales Turnover		1815.800	1375.900	1276.600
Other Income		5.200	8.700	17.600
Total Income		1821.000	1384.600	1294.200
Profit/(Loss) Before Tax		113.400	82.700	85.000
Provision for Taxation		20.900	16.100	29.100
Profit/(Loss) After Tax		92.500	66.600	55.900
Earnings in Foreign Currency :
Total Earnings		1333.811	917.325	NA
Imports :
Total Imports		NA	420.178	4.934
Expenditures :
	Raw Materials	1071.200	879.300	839.100
	Excise Duty	53.100	31.700	49.900
	Power & Fuel Cost	57.900	38.900	45.200
	Other Manufacturing Expenses	57.200	48.100	43.900
	Employee Cost	76.100	59.400	67.300
	Selling and Administration Expenses	180.300	128.600	114.900
	Miscellaneous Expenses	13.500	9.500	10.300
	Interest & Financial Charges	102.500	88.800	76.800
	Depreciation	52.100	32.200	29.300
	Stock Adjustments	43.700	[14.600]	[67.500]
Total Expenditure		1707.600	1301.900	1209.200

QUARTER RESULTS

PARTICULARS	31.08.2007
Type	1 Qtr
Sales Turnover	50.03
Other Income	0.08
Total Income	50.11
Total Expenditure	42.34
Operating Profit	7.77
Interest	2.68
Gross Profit	5.09
Depreciation	2.33
Tax	0.29
Reported PAT	2.02
Dividend (%)	0.000

KEY RATIOS

PARTICULARS	30.06.2006 [12 Months]	30.06.2005 [12 Months]	30.06.2004 [15 Months]
Debt-Equity Ratio	1.40	1.56	2.01
Long Term Debt-Equity Ratio	0.73	0.76	1.14
Current Ratio	1.22	1.25	1.14
TURNOVER RATIOS
Fixed Assets	1.71	1.99	2.15
Inventory	8.85	7.65	8.06
Debtors	3.38	3.60	4.45
Interest Cover Ratio	2.11	1.93	2.11
Operating Profit Margin(%)	14.76	14.80	14.97
Profit Before Interest And Tax Margin(%)	11.89	12.46	12.67
Cash Profit Margin(%)	7.96	7.18	6.67
Adjusted Net Profit Margin(%)	5.09	4.84	4.38
Return On Capital Employed(%)	11.52	12.87	16.64
Return On Net Worth(%)	11.74	12.65	17.01

LOCAL AGENCY FURTHER INFORMATION

History

Incorporated as a private limited company in 1991, Granules India (GIL) was converted into a public limited company in Feb.'93. It commenced its operations in Apr.'91 as a merchant exporter of bulk drugs like paracetamol, guaifenesin and chloro pheniramine maleate.  

The company exports to the US, Europe, Mexico and Hongkong. Since 1992, GIL concentrated on export of paracetamol powder. In Aug.'94, GIL took over Triton Laboratories (TL), a group company from which GIL was procuring the drugs for exports. GIL also acquired a sick unit which was manufacturing bulk drugs, from the Andhra Pradesh State Financial Corporation (APSFC) in Mar.'94.  

GIL implemented the ongoing project taken over from TL to manufacture bulk drugs like folic acid, salbutamol sulphate, brom pheniramine maleate and direct compression (DC) blends of paracetamol, through the process of granulation. The unit, an EOU, is located at Hyderabad, Andhra Pradesh. Commercial production of folic acid commenced in Aug.'95. It came out with a public issue in Sep.'95 to part-finance this project. 

Company has completed expansion of Guaifenesin capacity from 100 Mts to 240 Mts per annum. Company had developing new products like Brom Pheniramine Maleate & Chloro Pheniramine Maleate, & is in process of developing new bulk drug for the export market. Company is very much hopeful about company's performance due to expansion of project will be completed in the current year. 

The Company set up a 100% marketing subsidiary in US to enhance its exposure in the large pharmaceutical market in the world. The Gagillapur plant commences its commercial production of Line II(installed capacity 3200 MT) which was commenced its July,2003 and the remaining 4000 MTPA is expected to go on stream in the first half of 2003-04. The total project cost is Rs.300 millions.

Fixed Assets :

• Land
• Buildings
• Plant & Machinery
• Lab equipment
• Material Handling equipment
• Electrical Installations
• Office equipment
• Furniture & Fixtures
• Computers
• Vehiclesw

Subject has presence in over 27 countries

The company’s facilities have been inspected and certified by :

v Australian TGA (Therapeutic Goods Administration)

v German Health Authority

v Certificate of Suitability (European Department for the Quality of Medicines, Strasbourg)

v USFDA (General GMP)

Changes in Share Capital 

During the financial year 2005-06, 42,820 equity shares were issued and allotted to the employees and independent directors consequent to the exercise of the stock options issued by the Company resulting in the paid-up equity share capital of the Company increasing from Rs.123.265 Millions to Rs.123.694 Millions. In accordance with the resolution passed by the shareholders at the 14th Annual General Meeting held on 5 December 2005, the Committee of the Board allotted 13,55,000 warrants at Rs.102.50 per warrant convertible into equity shares of Rs.10/- each to Mr. C. Krishna Prasad, Managing Director of the company. On the said warrants, 10% of the value i.e., Rs.13.888 Millions - was received towards application money. As on 30 June 2006, the entire 13,55,000 warrants were outstanding. 

Funding 

 The Company had started the implementation of the Tablet Project and completed the API Project during the year under review. The Company funded these projects partly through GAR issue, which was completed in the previous year and mobilised loans for these projects during the year under review. The total amount of loans mobilised during the year under review is Rs.362.600 Millions. The Company continued to service repayments and interest obligations to banks and financial institutions from the funds generated from operations. 

Directors 

Pursuant to Article 51 of the Articles of Association of the company, Shri. A. P. Kurian, Director, retires by rotation during the forthcoming Annual General Meeting and, being eligible, offers himself for re-appointment as Director. 

A brief resume of Shri. A. P. Kurian, the nature of his expertise in specific functional areas and the names of companies in which he holds directorships and memberships/Chairmanships of Committees of the Board, as stipulated under Clause 49 of the Listing Agreement with the stock exchanges, have been provided in the section on Corporate Governance in this Annual Report. 

Corporate Governance Report and Management discussion and analysis statement  

A report on Corporate Governance is attached to this report as also a Management Discussion and Analysis statement. 

Directors' Responsibility Statement 

Pursuant to the requirement of Section 217 (2AA) of the Companies Act, 1956 ('Act') and based on the representations received from the operating management, the Directors hereby confirm that: 

i. the applicable accounting standards issued by the Institute of Chartered Accountants of India have been followed; 

ii. appropriate accounting policies have been applied consistently. Judgement and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profits of the Company for the year. 

iii. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and j detecting fraud and other irregularities. 

iv. the annual accounts have been prepared on a going concern basis. 

Subsidiary Company 

GRANULES USA INC. 

Granules USA Inc., a wholly owned subsidiary company, operates for the marketing requirements of the Company in USA. The turnover of the subsidiary Company has increased considerably from Rs. 345.600 Millions to Rs. 558.500 Millions showing a growth of 62%. 

MANAGEMENT DISCUSSION AND ANALYSIS 

Industry overview 

Over-the-Counter (OTC) drug 

An OTC drug is a product marketed for use by the consumer without the intervention of a healthcare professional to obtain it. This makes it is a non-prescription drug. 

OTC drug marketed under monographs 

The OTC monograph represents regulatory standards for the marketing of non-prescription drugs not covered by new drug applications (NOAs) and abbreviated new drug applications (ANDAs). These standards provide the marketing conditions for some OTC drugs including the active ingredients, labeling, and other general requirements. If the standards of the applicable monograph are met, pre-clearance by the FDA is not required for marketing of such OTC products. 

OTC drugs marketed after approval of ANDAs (Prescription to OTC switch) 

Prescription to OTC switch refers to over-the-counter marketing of a product that was once a prescription drug for the same indication, strength, dose, duration of use, dosage form, population, and route of administration. Such OTC products require ANDA approvals before marketed for tie use of consumers. 

OTC drugs marketed after approval of NDAs 

All OTC drugs apart from OTC monographs require a pre-clearance from the USFDA before it is marketed to the consumers. The clearance is given on the basis of new drug applications filed with the above regulatory authority with relevant and exhaustive details on the safety and effectiveness of the drug. 

The OTC industry scenario 

- The top 10 manufacturers account for more than 55% of total sales in 2005. 

- In 2005, Johnson & Johnson, Wyeth, Pfizer and Bayer were the leading companies. 

- With the announced acquisition of Pfizer's OTC unit by Johnson & Johnson, the top 10 companies will be even larger and more powerful in the years to come. 

- Some of the therapeutic areas where the OTC drugs play a significant role are allergic rhinitis, analgesics, asthma/respiratory conditions, benign prostatic hypertrophy, gastroesophageal reflux disease, glaucoma, hypertension, nicotine addiction and osteoporosis. 

- Drug stores are the primary outlets where OTC drugs are sold. 

- Alternative outlets like warehouse clubs, dollar stores and online retailers continue to gain in prominence. 

The OTC pharmaceuticals market in the US 

The US market for select OTC drugs at the manufacturer level, is estimated at over USD 10 billion. This will increase to approximately USD 13 billion by 2007. OTC drugs are becoming increasingly important in the US healthcare system. More than 80 therapeutic categories of OTC drugs are on the market ranging from acne drugs to weight control products. 

The OTC pharmaceuticals market in the UK 

In the UK it is estimated that the OTC pharmaceuticals market is worth pound 2.1 billion in 2005, a rise of 3.7% on 2004. Key Note forecasts that future annual growth in the market will rise year on year from 4.5% in 2006 to 6.5% by 2010. 

The OTC pharmaceuticals market in developing countries 

Populous Asia Pacific markets such as Indonesia, China and India, are expected to show rapid growth due to increasing populations, evolution of their middle class, improving economic conditions, increased health awareness, demand for smoking cessation aids and stress relief products as well as the need to reduce the cost of public healthcare provision for ageing populations. 

Growth drivers in the OTC industry 

Growth in this segment is expected to come from several factors, for instance: 

Ageing populations: Problems associated with ageing, including arthritis and osteoporosis, are driving the demand for products such as analgesics, digestive remedies and dietary supplements in the developed economies of North America, Japan, Western Europe and also in the emerging markets, such as Eastern Europe and Asian markets including China, Indonesia, India and the Philippines. 

 Self-medication: Health awareness is expected to underpin the continuing consumer trend towards self-medication, as preventative medicine is deemed the more economic and convenient option over the increasingly high costs associated with visits to healthcare professionals. 

 Prescription to OTC switches: Prescription-to-OTC switches are expected to regain momentum both in the US and UK markets through a more streamlined delisting process, relaxation of regulations and the entry of new products into the OTC market. 

 Retail outlets: Through a relaxation of regulations, a greater variety of retail outlets are being permitted to sell OTC products like warehouse clubs, dollar stores, online retailers and direct sales through non-pharmacy channels in order to improve access to the general public. 

 Smoking restrictions; Restriction on tobacco advertising and smoking in public places is expected to increase the number of consumers electing to give up the habit, consequently driving the growth of smoking cessation aids. 

 Charging lifestyles: Increasingly hectic and stressful modern lifestyles will provide the backdrop for dynamic sales of stress relief, calming and sleeping products. 

 Higher disposable incomes: Increased disposable incomes among middle-aged consumers are also expected to lead to a greater emphasis on lifestyle OTC products, resulting in a sales growth in products such as hair loss treatment and smoking cessation aids, health drinks etc. 

Granules India in the OTC space 

Granules India has established itself as the preferred outsourcing partner in the international pharmaceutical industry. Though it is partnering other pharmaceutical companies in the manufacturing and development of prescription products, the Company has a more prominent presence in the manufacture and development of OTC products. In the OTC space, Granules has consolidated itself totally and has a marked presence in every level of the OTC value pyramid. 

Demand constraints in the OTC space 

While increasing segmentation, such as the development of products targeted at niche consumer groups - children, men, women, or the elderly - is expected to add value to the global market, particularly in the most mature markets, the rise in popularity of competing products such as reimbursable prescription (Rx) medicines and homeopathic remedies is expected to inhibit OTC growth. Euromonitor reports that increasingly health-conscious and prosperous consumers are seeking more efficacious or holistic remedies through prescription drugs or homeopathic products. 

However, if the Government were to take certain actions, such as limiting the availability of free prescriptions, market growth could alter significantly. 

OTC industry: Outlook 

The most likely forecast for sales of the non-prescription drugs industry is an average 2.4% growth per year to reach USD 18.6 billion in 2010. Future Rx-to-OTC switches, new product introductions, the ageing of the population, high levels of advertising support and a focus on core brands by large companies will drive growth. The year 2006 looks set to see the launch of products with greater potential in the OTC market with the advent of Sanofi-Aventis' Acomplia for the treatment of obesity and smoking cessation. 

The global pharmaceutical industry and its charging environment  

The US leads global pharmaceutical sales with over one-third of the global market, followed by Europe (23.5%) and Japan (15.9%) (based on 1999 figures). 

In addition to USA being the largest consumer of drugs, it also leads the global pharmaceutical R&D, accounting for 36% of global research as well as global drug development, accounting for 45% of major drugs developed between 1975 and 1994. 

In recent times, the global pharmaceutical industry has been witnessing a striking change in its business environment. A host of generic drugs have entered the market after the expiry of their respective product patents. This has resulted in increasing competition and declining drug prices in the whole industry, further aggravated by a governmental pressure on price reduction. Thus, margins of most pharmaceutical companies have eroded rapidly in the last few years. 

Besieged by the ever-increasing cost pressures, shorter product life cycles and numerous regulatory challenges in the West, the industry is increasingly shifting/outsourcing its manufacturing and Research and Development (R&D) activities to other low cost developing nations especially India and China. 

Operational review 

API Division 

The API facilities of the Company are located at Jeedimetla and Bonthapally. Its single plant at Jeedimetla has a capacity of manufacturing about 1,000 tons of APIs annually while its two plants located at Bonthapally together have an annual capacity of manufacturing 12,000 tons of APIs. The plant at Jeedimetla primarily manufactures APIs like Guaifenesin and Metformin etc., while the Bonthapally plants manufacture Paracetamol / Acetamenophen. 

Performance during the year 

During the year ended June 2006, the API division of the Company recorded a revenue of Rs.52 cr and manufactured over 5,000 tons of API. The percentage contribution of the division towards the overall revenues of the Company was 30%. 

Outlook 

Armed with large-scale facilities for APIs, PFIs and Finished Dosages, all capable of going through any regulatory requirement, Granules is all set to emerge as a world leader in pharmaceutical outsourcing and strengthen its presence the value chain across the foreseeable future. 

AS PER WEBSITE

Subject is a fully integrated pharmaceutical formulations manufacturer.

Offering one-stop solutions to pharmaceutical companies. From the manufacture of several strategic APIs to multiple PFIs to finished dosages of tablets and capsules. Facilitating global pharmaceutical companies to offer affordable medicines to their consumers

At Granules, it is not just important to be profitable for the moment, but to be on a sustainable basis. This sustainability is no longer an economic requirement, but an environmental one as well.

In view of this, the company has embarked on a number of environment-management initiatives like the following:

The implementation of 'Environmental Best Practices' at the company's Gagillapur plant (recognised by CII).

Delegation of eco-friendlyDelegation of eco-friendly measures to employee levels.

The use of sophisticated equipment to collect the dust generated during process activities and material transfer.

Conversion of the entire plant into a non-smoking area.

Activities

The company's robust environment management comprises the following:

Wastewater analyses on effluent samples.

A frequent test and monitor of the ground water, soil, ambient air, stacks and noise levels.

Over the years, the company expects to strengthen its environment standards: a common effluent treatment plant will be reinforced by a cleaner technology to minimise liquid effluent, gaseous emission and solid waste.

Liquid effluents

They are separated into high TDS-high COD effluents and low TDS-low COD effluents

High TDS-high COD effluents are collected separately at generation plants. Following primary treatment, they are evaporated; the residue is sent to the Hyderabad Waste Management Project for safe disposal.

Low COD effluents are collected in a common sump. Following homogenisation and pH adjustments, they are discarded to the CETP for onward treatment and disposal.

Hazardous solid waste management

Hazardous solids from various production stages and effluent collection tanks are sent to the Hyderabad Waste Management Project for safe disposal.

Gaseous emissions

Gaseous emissions are scrubbed, cleaned and made harmless with suitable chemical reagents before they are released.

Green belt development

The planting of a green belt around the plant has helped neutralise pollution. They plan to construct a green building comprising natural light, natural cooling through roof garden on the terrace, use of environment-friendly fly ash cement and solar energy

Promoter

The Managing Director, Mr. Krishna Prasad, is the chief promoter of Granules, bringing with him rich experience of over two decades in setting up and the management of pharmaceutical (bulk drugs) manufacturing units.

In 1984-85, he set up a small-scale unit for manufacturing of Acetaminophen/ Paracetamol that went on to become one of the largest Indian manufacturers of Acetaminophen/paracetamol and was an exporter to the US markets since 1988. Mr. Prasad, while marketing the product in US realized the potential for selling a value added version of the bulk active, known as Directly Compressible product.

Mr. Prasad had anticipated, way back in late 80's that major global pharmaceutical companies would outsource their manufacturing activities to countries like India with inherent cost advantages coupled with regulatory compliance skills and a vast pool of trained manpower.

Granules India was incorporated in 1991 with an objective of becoming a preferred outsourcing partner for major pharmaceutical companies in the regulated market and there was no looking back since then.

Mr. Prasad, as the CEO and the Marketing chief at Granules, pioneered and popularized the concept of Pharmaceutical Formulations Intermediates (PFIs) as a cost efficient and extremely convenient product for the global formulations manufacturers. These PFIs are pre-processed blends of single or multiple APIs, ready to be compressed into tablets or filled into capsules. They represent an intermediate stage between APIs and formulations and their manufacture is referred to as granulation.

Board of Directors

Dr. C. Nageswara Rao

Chairman, Medical practitioner

Dr. C. Nageswara Rao, Chairman, is a leading medical practitioner. He is the Chairman of the AP Medical Council, he has been a member of the All India Medical Council and was also on the Board of Hindustan Antibiotics Limited.

Mr. C. Krishna Prasad

Managing Director

Granules India is promoted by Mr. C. Krishna Prasad, a technocrat with several years of experience in the pharmaceutical industry. Mr. Krishna Prasad is the Managing Director and is supported by an experienced Board of Directors.

Mr. N.R.Ganti

Director, Management Consultant

Mr. N.R.Ganti, is a management consultant with over 30 years of experience in banking and management. He is an MBA specialising in strategy and finance. He is a member of the team responsible for the company's long-term goals and objectives.

Mr. L.S.Sarma

Director, Financial Expert

Mr. L.S Sarma is an ex senior banker at IDBI. He has vast experience in financial matters and has also served on the board of Dena Bank. He is currently on the boards of other reputed companies.

Mr. A.P Kurian

Director, Investment Banker

Mr. AP Kurian is an eminent investment banker and is currently the Chairman of the Association of Mutual Funds of India. He also serves on the boards of a few well-known companies.

Mr. Stephen R Olsen

Nominee Director, ISP Investco LLC

Mr. Olsen has been Senior Vice President of Sales (America), Global Marketing and Research & Development of International Specialty Products Inc. (“ISP”), which is the indirect parent company of ISP Investco LLC, and certain of its subsidiaries, including ISP Chemco LLC (“Chemco”), which is the holding company for ISP’s operating subsidiaries, since January 2006 and has been a director of Chemco since June 2005. He was previously Senior Vice President North America Sales and Marketing of ISP and Chemco and some of its subsidiaries from September 2004 until January 2006.

News

Matchland Pty Limited and G I L signing an Outsourcing Agreement (05.03.2007)

Monday, March 05, 2007

Matchland Pty Limited, (trading as New Products Development) and Granules India Limited are pleased to announce the signing of an Outsourcing Agreement where New Products Development agrees to outsource its finished dosage manufacturing requirement to Granules India for the Australian market.

Initially five products have been identified for manufacturing and this list is expected to grow as the relationship progresses. The agreement is in the nature of the partnership where New Products Development will compensate Granules for all the costs incurred in connection with the manufacture of the product and provide a transparent profit margin. This would be New Products Development’s first Outsourcing Agreement with any Indian Company and complements Granules strategy of expansion into lesser explored markets like Australia and New Zealand.

Commenting on the deal, Mr.C.Krishna Prasad, Managing Director said, they are planning to use their TGA approved pilot manufacturing capabilities to kickstart the manufacturing as soon as possible.

About New Products Development

Established in 1988, New Products Development has grown to become a major provider in the pharmaceutical contract manufacturing industry, and is licensed by the Therapeutic Goods Administration (TGA) to manufacture non-sterile therapeutic goods for human use. New Products Development is an independent contract manufacturer with the capacity and capability to manufacture and pack unscheduled medicinal products in tablet, capsule and powder dosage form.

About Granules India Limited,

(BSE: 532482, NSE: GRANULES, Reuters: GRAN.BO)

Granules India Limited is a fully integrated pharmaceutical formulations manufacturer with the world’s largest ‘granulation’ capacity. The company manufactures several strategic Active Pharmaceutical Ingredients (APIs) and multiple Pharmaceutical Formulation Intermediates (PFIs), which are distributed in 35 countries. It is foraying into manufacturing of tablets with a capacity of 6 billion tablets per annum. This facility will strengthen its presence in the pharma outsourcing space as it will have capabilities of offering a wide range of products beginning from APIs to finished dosages (coated/uncoated).

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.39.27
UK Pound	1	Rs.81.24
Euro	1	Rs.57.48

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	4
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	4
--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	NO
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		45

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.	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