MIRA INFORM REPORT

Report Date :

23.10.2007

IDENTIFICATION DETAILS

Name :	IPCA LABORATORIES LIMITED
Registered Office :	48, Kandivali Industrial Estate, Kandivali (West), Mumbai - 400 067, Maharashtra
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	19.10.1946
Com. Reg. No.:	11-7837
CIN No.: [Company Identification No.]	L24239MH1949PLC007837
TAN No.: [Tax Deduction & Collection Account No.]	MUMI05234F
PAN No.: [Permanent Account No.]	AAACI1220M
Legal Form :	Subject is a public limited liability company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturing and Selling of Pharmaceutical Products such as Tablets/Capsules, Orals/Liquids, Injectables, Basic Drugs/Intermediates and Psyllium Husk.

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	USD 19440800
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established and reputed pharmaceutical company. Famous Cine Artist Amitabh Bachchan disinvested in the company sometime back and now majority shares are held by Mr. Premchand Godha and Mr. M. R. Chandurkar (both Managing Directors of the company). Available information indicates high financial responsibility of the company. General financial position of the company is satisfactory. Payments are usually correct and as per commitments. The company can be considered good for normal business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	48, Kandivali Industrial Estate, Kandivali (West), Mumbai - 400 067, Maharashtra, India
Tel. No.:	91-22-66474444/ 28682270 / 28682253 / 28682271 / 28682275 / 28682030 / 4241 / 28688566
Fax No.:	91-22-28682279 / 28686613 / 28686954
E-Mail :	info@ipca-labs.com
Website :	http://www.ipca-labs.com
Corporate Office :	142-AB, Kandivali Industrial Estate, Kandivali (West), Mumbai - 400 067, Maharashtra, India
Tel. No.:	91-22-28688566 / 4848 / 28684241 / 28687074 / 66474444
Fax No.:	91-22-28686954 / 2875 / 28686613
Domestic marketing Division :	IPCA House, 63-E, Kandivali Industrial Estate, Kandivali (West), Mumbai - 400 067, Maharashtra
Tel. No.:	91-22-8687678 / 2869 / 28683868 / 28684790 / 28686613/ 66474222
Fax No.:	91-22-66474114/28688561/28686613
Research & development center :	123-AB, Kandivali Industrial Estate, Kandivali (West), Mumbai – 400 067, Maharashtra, India
Tel. No.:	91-22-28684787 / 2867 / 28683589 / 28674518 / 66474755
Fax No.:	91-22-28683589 / 66474757
Plant locations:	Registered office: Sejavata, Ratlam - 457 002, Madhya Pradesh Tel. 91-7412-279079 Fax. 91-7412-279083 · Plot No. 89 A-D/90/91, Industrial Estate, Pologround, Indore - 452 003, Madhya Pradesh Tel. 91-731-2421172/422081 Fax. 91-731-2422082 · Plot No. 69 to 72 (B), Sector II, Kandla Free Trade Zone, Gandhidham - 370 230, Gujarat Tel. 91-2836-252385/252389 Fax. 91-2836-2523213 · Plot No. 255/1, Village Athal, (Silvassa) - 396 230, Dadra & Nagar Haveli, Union Territory Tel. 91-260-2640301/0309 Fax. 91-260-2640303 · Plot No. 65 & 99, Danudyog Industrial Estate, Piparia (Silvassa), Dadra & Nagar Haveli (Union Territory) Tel. 91-260-2640850/894 Fax. 91-260-2640646 · H-4, MIDC, Waluj, Aurangabad-431 136, Maharashtra Tel: 91-240-2564993 Fax: 91-240-2564113 · C-6, Sara Industrial Estate, Chakrata Road, Rampur, Dehradun – 248197, Uttaranchal Tel: 91-135-3255544 Fax: 91-135-2728766

DIRECTORS

Name :	Mr. R. S. Hugar
Designation :	Chairman
Name :	Mr. Premchand Godha
Designation :	Managing Director
Name :	Mr. M. R. Chandurkar
Designation :	Managing Director
Name :	Mr. A. K. Jain
Designation :	Executive Director
Name :	Mr. T. Ramachandran
Designation :	Executive Director
Qualification	B. Com.
Date of Appointment	21.08.1994
Other Directorships :-	1. Haysinth Investments & Traders Private Limited 2. IPCA Pharma Nigeria Limited, Nigeria 3. Solway Investments Limited, Mauritius 4. Sundridge Management Limited, Mauritius 5. National Druggists (Pty) Limited, South Africa
Name :	Mr. Babulal Jain
Designation :	Director
Qualification	C. A.
Profile	He is practicing Chartered Accountant by profession. He is also the Chairman of the Audit Committee of the Company. He has professional experience of over 25 years in the field of Audit, Finance, Company Law and Taxation. His professional knowledge and vast experience will be of immense benefit to the Company.
Name :	Dr. V. V. Subba Rao
Designation :	Director
Qualification	Science Post Graduate in Chemistry and Ph.D.
Other Directorship	Pratista Industries Limited
Profile	He has also carried out post doctoral research in surface Chemistry in USA. He has rich experience of nearly 35 years in the field of science and technology. He retired as Advisor of the Ministry of Science & Technology (DSIR), Government of India. He technical knowledge and vast experience will be of immense benefit to the company. He had been a independent Director on the Board of the Company since September, 2000.
Name :	Mr. V. A. Gore
Designation :	Director – Nominee ICICI
Qualification	B. Com.
Date of Appointment	16.04.2003
Other Directorships:-	1. Apar Industries 2. Gujarat Borosil Limited

KEY EXECUTIVES

Name :	Mr. Harish P. Kamath
Designation :	Company Secretary
Name :	Mr. J. L. Nagori
Designation :	Vice President & Head - Bulk Drugs Business
Name :	Dr. Ashok Kumar
Designation :	Vice President - R & D Chemicals
Name :	Mr. M. D. Sharma
Designation :	Vice President – Domestic Marketing
Name :	Mr. Y. K. Bansal
Designation :	Vice President – R & D (Formulations)
Name :	Mr. Prakash Shanware
Designation :	Vice President – HR
Name :	Mr. B. G. Kini
Designation :	Vice President - Quality
Name :	Mr. Rajesh Srivastava
Designation :	Vice President – Commercial
Name :	Mr. N. Guhaprasad
Designation :	Sr. Vice President - International Marketing
Name :	Mr. Pranay Godha
Designation :	Vice President - Generics

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares	Percentage of Holding
Indian Promoters	13059135	52.24%
Mutual Funds	5520393	22.08%
Banks, Financial Institutions, insurance Companies (Central / state Government Institutions,/ Non Government Institutions)	200	---
FIIs	1768212	7.07%
Public / others	4652060	18.61%

BUSINESS DETAILS

Line of Business :

Manufacturing and Selling of Pharmaceutical Products such as Tablets/Capsules, Orals/Liquids, Injectables, Basic Drugs/Intermediates and Psyllium Husk.

Products :

Item Code No. (ITC Code)	30049031
Product Description	Chloroquine Phosphate
Item Code No. (ITC Code)	30049043
Product Description	Metoclopramide HCL
Item Code No. (ITC Code)	30049054
Product Description	Atenolol

Exports :

Countries :

Australia, Canada, Ethiopia, Germany, Italy, Japan, Sri Lanka, USA, UK, Yemen

PRODUCTION STATUS

Particulars	Unit	Basis	Installed Capacity	Actual Production
Tablets/Capsules	Millions	Single Shift	6072.000	10519.300
Orals/Liquids	Kilo Ltrs.	Single Shift	16.320	29.300
Injectables	Millions	Single Shift	--	60.800
Basic Drugs/ Intermediates	Tonnes	Triple Shift	303.700	275.900

GENERAL INFORMATION

No. of Employees :

4361

Bankers :

· Canara Bank

· Corporation Bank

· State Bank of India

· ICICI Bank

· Exim Bank of India

Facilities :

SECURED LOANS	31.03.2006 (Rs. in millions)
Canara Bank Consortium – Secured by first charge by way of hypothecation of raw materials, packing materials, work in process, finished goods, book debts and second charge by way of mortgage of the immovable properties of the company and hypothecation of machinery of the company	668.387
Foreign Currency Loans:
Export Import Bank of India:-
- Secured by first mortgage on immovable properties except at Kandta and first par! passu charge by way of hypothecation of moveabte fixed assets both present and future	15.238
- Secured by first mortgage on immovable properties except at Kandta and first part passu charge by way of hypothecation of moveable fixed assets both present and future
Cooperative Centrale Raiffeisen – Boerenleen Bank B.A. (Rabobank, Singapore Branch) Secured by first pari passu charge by way of hypothecation of moveable fixed assets both present and future	334.688
ICICI Bank Singapore - ECB Secured by first pari passu charge by way of hypothecation of all the moveable fixed assets both present and future	446.250
ICICI Bank Offshore Banking Unit - ECB - Secured by first charge by way of hypothecation of all the moveable fixed assets both present and future	267.750
UNSECURED LOANS
Short Term Loans from Banks :
- ICICI Bank Offshore Banking Unit	133.875
-Car/on Bank	95.000
Deposits from dealers	3.665
Madhya Pradesh State sates tax loan	4.200

Banking Relations :

Satisfactory

Auditors :

Natvarlal Vepari & Company

Chartered Accountants,

Associates:

· Kaygee Investments Private Limited

· Chandurkar Investments Private Limited

· Halewood Laboratories Private Limited

· Harleystreet Pharmaceuticals Private Limited

· Ipca Surgical Specialities Private Limited

· Makers Laboratories Limited

· Mexin Medicaments Private Limited

· Paschim Chemicals Private Limited

· Win Laboratories Private Limited

Subsidiaries :

· Solway Investments Limited, Mauritius

· Sundridge Management Limited, Mauritius

· Laboratories Ipca Do Brasil Ltd

· IPCA Pharmaceuticals, Inc. USA

· IPCA Laboratories U.K. Limited

· IPCA Pharma Nigeria Limited Nigeria

· National Druggists (Pty) Limited South Africa

· Exon Laboratories Private Limited

· CCPL Software Private Limited

Other Related Parties:

· Nipra Industries Private Limited

· Oasis Packaging Private Limited

· Orbit Packaging Private Limited

· Keymed

· Oscar Industries

· Priti Packaging Private Limited

· Mr.Pranay Godha

· Mrs. Usha R Godha

· Kaygee Papers Private Limited

· Trimurthi Developers

· Vandhara Resorts Private Limited

· Jain Packaging Private Limited

· Great Heights Trade lines Private Limited

Joint Venture Company :

Active Pharmaceuticals [FZC]

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
45000000	Equity Shares	Rs. 10/- each	Rs. 450.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
25000000	Equity Shares	Rs. 10/- each	Rs. 250.000 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2007	31.03.2006	31.03.2005
SHAREHOLDERS FUNDS
1] Share Capital		250.000	250.000	250.000
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		4610.200	3608.900	3125.900
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		4860.200	3858.900	3375.900
LOAN FUNDS
1] Secured Loans		2153.900	1732.300	2198.000
2] Unsecured Loans		235.500	236.700	9.400
TOTAL BORROWING		2389.400	1969.000	2207.400
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		7249.600	5827.900	5583.300
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		3744.800	3438.000	2942.900
Capital work-in-progress		570.000	297.200	281.700
INVESTMENT		249.200	139.300	102.900
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	2322.100	1833.200	1738.700
	Sundry Debtors	1809.800	1429.400	1571.500
	Cash & Bank Balances	55.700	36.700	41.700
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	433.400	340.700	306.100
Total Current Assets		4621.000	3640.000	3658.000
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	1761.200	1556.400	1287.600
	Provisions	174.200	130.200	114.600
Total Current Liabilities		1935.400	1686.600	1402.200
Net Current Assets		2685.600	1953.400	2255.800
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		7249.600	5827.900	5583.300

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		9744.900	8098.900	7211.300
Other Income		275.200	140.900	204.400
Stock Adjustments		204.000	[1.600]	230.500
Total Income		10224.100	8238.200	7646.200
Profit/(Loss) Before Tax		1511.900	783.400	1044.800
Provision for Taxation		289.600	143.600	237.700
Profit/(Loss) After Tax		1222.300	639.800	807.100
Export Value		0.000	3857.659	3909.674
Import Value		0.000	115029.900	865.246
Expenditures :
	Raw material	4309.800	3550.000	3230.400
	Excise duty	342.400	400.200	261.900
	Power and Fuel	324.100	296.300	252.100
	Other manufacturing expenses	354.600	299.100	292.800
	Employee cost	1027.400	895.800	812.300
	Selling and Administration Expenses	1845.500	1581.200	1358.200
	Miscellaneous Expenses	17.400	65.300	121.000
	Interest and financial Charges	243.400	157.100	121.000
	Depreciation	247.600	209.800	151.700
Total Expenditure		8712.200	7454.800	6601.400

QUARTERLY RESULTS

Particulars	30.06.2007
Type	1^st Quarter
Sales Turnover	2466.100
Other Income	6.100
Total Income	2472.200
Total Expenditure	1909.400
Operating Profit	562.800
Interest	47.900
Gross Profit	514.900
Depreciation	76.200
Tax	81.500
Reported PAT	347.200

KEY RATIOS

Year	31.03.2007	31.03.2006		31.03.2005
Debt-Equity Ratio	0.50	0.58		0.61
Long Term Debt-Equity Ratio	0.26	0.32		0.28
Current Ratio	1.45	1.48		1.51
TURNOVER RATIOS
Fixed Assets	2.03		1.94	2.25
Inventory	4.69		4.53	4.45
Debtors	6.02		5.40	4.87
Interest Cover Ratio	7.21		5.99	9.63
Operating Profit Margin(%)	20.55		14.20	18.27
Profit Before Interest And Tax Margin(%)	18.01		11.61	16.17
Cash Profit Margin(%)	15.08		10.49	13.30
Adjusted Net Profit Margin(%)	12.54		7.90	11.19
Return On Capital Employed(%)	26.84		16.48	23.58
Return On Net Worth(%)	28.04		17.69	26.32

LOCAL AGENCY FURTHER INFORMATION

DIRECTOR REPORTS:

MANAGEMENT DISCUSSION AND ANALYSIS:

Industry Structure and Development, Opportunities, threat and concerns:

The Indian pharmaceutical industry today is amongst the front ranks of the country's science based industries with wide ranging capabilities in the complex field of drug manufacture and technology. India is fast emerging as a preferred manufacturing location. Attractive opportunities are also emerging for Indian pharma companies in the generics markets of developed economies. 

Strong low cost Active Pharmaceutical Ingredients (APIs) manufacturing capabilities, large number of Drug Master File Registrations and Regulatory approved manufacturing facilities for APIs and formulations are driving the growth in the international business of Indian pharma companies. 

Though Indian pharmaceutical market is growing at a healthy growth rate of around 14%, poor public healthcare funding and infrastructure, poor public healthcare insurance schemes, low per capita consumption of medicines and drug price control regime are a few causes of concern. 

Financial Performance and Operations Review: 

The Company had another successful financial year with a net total income of Rs.9212.400 millions as against Rs.7528.200 millions in the previous year, a growth of 22%. 

The Company's focus on formulations business resulted into increase in the overall formulation sales to Rs.6272.400 millions, an increase of 25% over previous year formulations sales of Rs.5012.900 millions. 

The overall increase in the formulation sales is mainly on account of aggressive brand building activities undertaken by the Company in the promotional markets of India, CIS, Africa and South East Asia. Substantial improvement in generic formulations business in the United Kingdom also contributed to the growth in the formulations business. 

The company further expanded its therapeutic coverage with introduction of new formulations, both in the domestic and export markets, especially in the fast growing life style related segments such as cardiovasculars, pain management, CNS and dermatology. 

The Directors are pleased to inform that the Company's formulation brand Zerodol which was launched in the financial year 2003-04 achieved net sales of over Rs.250.000 millions in the domestic market during the year under report. The company is aggressively promoting this brand in several countries of Africa and South East Asia. 

The business operations have resulted in substantial improvement in net profit at Rs.1222.300 millions during the financial year under report as against a net profit of Rs.639.800 millions in the previous financial year, a growth of 91%. 

Break-up of pharmaceutical sales: Rs. millions (net of excise duty and sales tax) A B C D E F G H 

Formulations 354.03 273.21 627.24 25% 291.31 209.98 501.29 12% 

 APIs and Intermediates 70.65 211.25 281.90 14% 55.91 191.85 247.76 8% 

 Net Total Sales 424.68 484.46 909.14 21% 347.22 401.83 749.05 11% 

 Growth 22% 21% 21% 30% -2% 11%  

A = 2006-07 - Domestic B = 2006-07 - Exports C = 2006-07 - Total D = 2006-07 - GrowthE = 2005-06 - Domestic F = 2005-06 - ExportsG = 2005-06 - Total H = 2005-06 - Growth  

OTHER INFORMATION:

Its’ products range includes:-

· Antimalarials

· Antiemetics

· Antibiotics

· Analgesics

· Antidiabetics

· Cardiac Care Products

· Cough and Cold Therapy Products

Subject is a Government Recognized Trading House.

The company imports raw materials, capital goods, traded goods, hospital products and machine components from Europe and Far East against L/C terms.

The Athal plant's total land area is approximately 103200 sq.mtrs. It has also been recommended by SGS-IGS for ISO 9001 certification.

The company is in trade terms with:

• Adam Fibrepack Industries
• Atlas Fibrepack Industries
• Blue Circle Speciality Chemicals
• Budhraja Containers
• Daman Polymers
• D. M. Printers
• Excelarts Private Limited
• Gemini Data Loggers (India) Private Limited
• Hiral Chemical Industries
• Indian Scientific Glass
• Laxmi Print Art
• Lucid Prints
• Mono Lisa Printers
• Nipra Industries Private Limited
• Perfect Packaging
• Priti Packaging Private Limited
• Radiant Plastruders (India)
• Reliance Industrial Products
• Roto Polymers India
• Shantilal and Company
• Span Packers Private Limited
• Swastik Flexipack Private Limited
• Uni Packs (India)
• Vial Seal Industries
• Harleystreet Pharmaceuticals Limited
• Kishor Industries
• Klasspack Private Limited
• Modern Corrugators
• Niranjan Plastics
• Shakti Packers
• Shakti Plastics
• Shantilal and Company
• Universal Medicaps Limited

FIXED ASSETS:

· Freehold and Leasehold Land,

· Buildings,

· Plant and Machinery,

· Effluent Treatment Plant,

· Furniture and Fixtures,

· Vehicles

· RandD Assets: Building,

· Equipments and Furniture

WEBSITE DETAILS:

MILESTONES

· 2005

Merger of Innotech Pharma Limited with IPCA

Laboratories Limited in August, 2005.

IPCA enters in to Joint Venture with Holley Group of China for marketing Artemisinin based API and Formulation.

Joint Venture setup in SAIF Zone, Sharjah, U.A.E. and named as ACTIVA Pharmaceuticals FZC.

Acquires Cardiac brand ISORDIL from Wyeth Limited.

Forbes Asia, a leading US business magazine selected IPCA, for the third consecutive year as one among the first 200 'Best under a Billion Company' in Asia.

· 2006

Subject launches fixed dose ACT combination and stops manufacturing of single ingredient Oral Artemisinin derivatives.

Subject enters into strategic alliance with Ranbaxy Pharmaceuticals Inc. for the U.S market.

Ipca's new plant at Dehradun commenced operation on 5th May, 2006.

· September 14, 2007:   Ipca's anti-malarial product - Artesunate tablets 50 mg pre-qualified by WHO

The company has received approval for its Anti-malarial finished product formulation, Artesunate Tablets 50mg under WHO's Prequalification Programme. The product is now listed in the WHO Pre-qualification product list, dated 30 August, 2007.

Artesunate 50 mg Tablets is an artemisinin based formulation which is recommended by WHO to be used in combination with other Anti-malarials, such as:

1.  Amodiaquine;

2.  Mefloquine; or

3.  Sulfadoxine + Pyrimethamine

The Prequalification Programme was created by the World Health Organisation in 2001. It aims to increase access to priority medicinal products that meet unified standards of acceptable quality, safety and efficacy, currently focusing on those medicines used, for treatment of diseases such as Malaria.

The list of prequalified medicinal products is used principally by United Nations agencies - including UNAIDS and UNICEF - to guide their procurement decisions. But, the list has become a vital tool for any agency or organisation involved in bulk purchasing of medicines, be this at country level, or at international level, as demonstrated by the Global Fund, to fight diseases such as Malaria.

1st Quarter at a glance
(Rs. Millions)
1st Quarter ended	30.06.2006	30.06.2005	Growth
Net Total Income	2221.8	2074.8	7%
Export Income	1048.3	1050.9	-
Profit before tax	299.4	349.8	(14%)
Net Profit	243.4	258.6	(6%)
Earnings per share (Rs.)	97.4	103.4	(6%)

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.39.51
UK Pound	1	Rs.81.16
Euro	1	Rs.56.76

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	8
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	7
--PROFITABILIRY	1~10	7
--LIQUIDITY	1~10	7
--LEVERAGE	1~10	7
--RESERVES	1~10	7
--CREDIT LINES	1~10	7
--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		64

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

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