MIRA INFORM REPORT

Report Date :

13.09.2007

IDENTIFICATION DETAILS

Name :	PUNJAB CHEMICALS AND CROP PROTECTION LIMITED
Formerly Known As :	PUNJAB CHEMICALS AND PHARMACEUTICALS LIMITED
Registered Office :	SCO 417-418, Sector 35C, Himalaya Marg, Chandigarh – 160 022
Country :	India
Financials (as on) :	31.03.2007
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 :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large

Maximum Credit Limit :	USD 3200000
Status :	Good
Payment Behaviour :	Regular
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 info@punjabchemicals.com
Website :	http://www.peplsts.com
Corporate Office :	Oberoi Chambers - II, 4^th & 5^th Floor, Plot No. 645 / 646,New Link Road, Andheri (West), Mumbai 400 053, India.
Tel. No.:	91-22-2674 7900 (30 lines)
Fax No.:	91-22-2673 6193 / 78 / 26736013
E-Mail :	enquiry@punjabchemicals.com
Website:	www.punjabchemicals.com
Group Company:	Sintesis Quimica S A I C Parana Street 755, 4^th Floor, (C1017aao) Buenos Aires (Argentina) Tel / Fax No.: 54-11-43716339 Website: www.sintesisquimica.com.ar/con_inst/eng/index.htm SD Agchem (Europe) NV Uitbreidingstraat, 84/3, 2600, Antwerpen Berchem, Belgium Tel No.: 32-35425722 Fax No.: 32-32323735 E-Mail: fborges@sdagchem.be
Factory 1 :	Agrochemicals Division Derabassi, Derabassi, Punjab; 250 km north of New Delhi, India’s capital.
Area :	12 Hectares
Factory 2 :	Pharmaceutical Division, Lalru, Lalru, Punjab, India
Area :	10 Hectares
Factory 3 :	Industrial Chemicals Division, Pune, Pimpri, Pune; 180 km south-east of Mumbai (Bombay), India
Factory 4 :	Industrial Chemicals Division, Tarapur, Tarapur, 100 km north of Mumbai (Bombay), India
Factory 5 :	Agro-Formulations Division, Chiplun, Chiplun, 300 km south of Mumbai (Bombay), India
Factory 6 :	Excel Phospho Chem-l, Pharma Division - Unit Alpha Drug, Villages: Kolimajra & Samalheri, P.O.: Lalru, Distt. Mohali, Punjab, India
Tel. No.:	91-1762-275210, 275519
Fax No.:	91-1762-275308
E-Mail :	pharmainfo@chd.pcplsts.com
Branches :	1012, 10^th Floor, Ansal Bhawan, K.G. Marg, New Delhi 110 001, India 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, India 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, India Tel. 91-40-27800292 / 27805662 Fax. 91-40-27806943 E-Mail : pcplhyd@hd2.vsnl.net.in Supath – Ii, Complex, Ashram Road, Near Vadaj Bus Terminus, Ahmedabad

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

As on 30.06.2007

Names of Shareholders	No. of Shares	Percentage of Holding
Shareholding of Promoter and Promoter Group
Indian
Individuals/ Hindu Undivided Family	1049523	15.92
Bodies Corporate	2050552	31.10
Foreign
Individuals (Non-Residents Individuals/ Foreign Individuals)	2500	0.04
Public shareholding
Institutions
Mutual Funds/ UTI	6979	0.11
Financial Institutions ^/Banks	1493	0.02
Central Government/ State Government(s)	122027	1.85
Insurance Companies	56012	0.85
Foreign Institutional Investors	3913	0.06
Non-institutions
Bodies Corporate	454351	6.89
Individuals
Individuals -i. Individual shareholders holding nominal share capital up to Rs 0.100 Millions	2302344	34.92
ii. Individual shareholders holding nominal share capital in excess of Rs. 0.100 Millions	512877	7.78
Any Other (specify)
Trust	150	0.00
Non Resident Indian	30171	0.46
TOTAL (A)+(B)	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:

Countries :

Japan and UK

Imports:

Countries :

Europe and Far East

Terms :

Purchasing :

L/C / D/A / D/P

PRODUCTION STATUS

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Oxalic Acid & other Oxalates	MT	23600	15850	15792
Agro Chemicals & their Intermediates	MT	8300	7570	6965
Speciality Chemicals	MT	1175	1383	604
Phosphorous based compounds	MT	--	16200	9013
Organic Phosphates	MT	--	960	255
Inorganic Phosphates	MT	--	2040	439
Bulk Drug	MT	--	240	186
Other Chemicals	MT	8600	3912	4618
By-products	MT	10960	0	19212

GENERAL INFORMATION

Suppliers :

• Aggarwal Packaging Private Limited
• Baku Oil Company
• Nipso Polyfabriks Limited
• Cal Micro System
• Chemtron Engineering Private Limited
• North Street Cooling Towers Private Limited
• Pap Flon Enterprises
• Prominent Scientific & Engineering Industries
• P CI Services
• Saurav Chemicals Limited
• Star Scientific Glass Company
• Super Scientific Glass Company
• Samrat Pharma Chemicals Limited
• Bhargva Poly Packers
• Euro Container
• Surya Engineering Works
• Delcray Cable Private Limited
• Vihita Chem
• Gupta Scientific Works
• Calmicro System
• Kaveri Instrument
• Lucky Chemicals Industries
• Kaushal Polyplas

No. of Employees :

925

Bankers :

• Bank of Baroda
• Axis Bank
• State Bank of India
• HDFC Bank Limited
• IDBI Bank Limited

Facilities :

SECURED LOANS	As on 31.03.2007 Rs in Millions
1. FROM BANKS
a) On Term Loan Accounts	265.743
b) On Cash Credit and Working Capital Demand Loan Accounts	902.889
c) Under Vehicle Finance Scheme	7.561
Add : Interest Accrued and due on Term Loans	1.455
2. FROM OTHERS
a) From Housing Development Finance Corporation Limited	8.051
b) Under Vehicle Finance Scheme	1.748
Notes: 1] Term Loan of Rs.6.648 Millions from Centurion Bank of Punjab Limited is secured by pledge of 1,45,700 Equity Shares of Excel Industries Limited and 1,45,700 equity shares of Excel Crop Care Limited 2] Term Loan from ICICI Bank Limited amounting to Rs. 13.295 Millions is secured by a first charge by way of mortgage of residential flat situated at Mumbai. 3] Term Loans from Axis Bank Limited are secured as under: Loan of Rs.106.362 Millions is secured by an equitable mortgage of office premises situated at Mumbai. Out of the above loans, loans aggregating to Rs.106.060 Millions is further secured by a pari passu charge on the remaining fixed assets situated at Mumbai, Tarapur and Pune locations of the esrtwhile STS Chemicals Limited. Loan of Rs.25 Millions is secured by a first charge by way of equitable mortgage on land and hypothecation of other immovable assets situated at Bhankharpur, Derabassi and first charge by way of hypothecation of specified movable plant and machinery, furniture and fixtures and other fixed assets purchased from the loan. Loan of Rs.43.750 Millions is secured by a first charge by way of equitable mortage on land situated at Bhankharpur, Derabassi and first charge by way of hypothecation of specified movable plant and machinery, furniture and fixtures and other assets purchased from the loan. Loan of Rs.40 Millions is secured by a first charge by way of hypothecation of plant and machinery, equipments, furniture and fixtures, tools, dies etc. lying placed, located, installed, fitted, fixed, kept at the borrowers factories, offices, godowns, warehouses or whereeverelse. Term loan of Rs.10 Millions is secured by an equitable mortgage byway of deposit of title deed of property acquired. Loan of Rs.20.688 Millions is secured by exclusive charge by way of hypothecation of all the machinery and other movable fixed assets of the erstwhile Alpha Drug India Limited and exclusive first charge on the immovable properties of the Company situated at villages Kolimajra and Samalheri. 4] Loans from Banks on Cash Credit and Working Capital Demand Loan are secured as under: Loans from Bank on Cash Credit Accounts in respect of erstwhile STS Chemicals Limited are secured by a second charge by way of hypothecation of all movable assets comprising of plant and machinery, machinery spares, tools and accessories, furniture and fixtures, office equipments, inventories, vehicles and book debts, both present and future and an equitable mortgage of the plot at Tarapur Unit. The credit limits with State Bank of India are secured by first charge by way of hypothecation of the Borrowers entire goods, movable and other assets present and future and second charge by way of equitable mortgage on land and hypothecation of other immovable assets situated at Bhankharpur, Derabassi. The loan of Rs. 76.242 Millions from IDBI Bank is secured by hypothecation of subsequent and subservient charge on Current Assets of the Company. The credit limits with Axis Bank in respect of erstwhile Alpha Drugs India Limited are secured by exclusive first charge by way of Hypothecation of Current Assets and Machinery and other movable fixed assets of the Erstwhile Alpha Drug India Limited and exclusive first charge on the immovable properties of the Company situated at villages Kolimajra and Samalheri. 5] Loans from HDFC Bank Limited and ICICI Bank Limited under Vehicle Finance Schemes amounting to Rs.5.662 Millions and Rs.1.899 Millions respectively, are secured by a exclusive charge by way of hypothecation of vehicles purchased under the said Schemes. 6] Loan from Housing Development Finance Corporation Limited is secured by equitable mortgage by way of the deposit of the title deeds of the properties of respective employees who have availed the loan under the scheme. 7] Loan from Kotak Mahindra Primus Limited under Vehicle Finance Scheme amounting to Rs. 1.748 Millions is secured by an exclusive charge by way of hypothecation of vehicle purchase under the said Scheme.
UNSECURED LOANS
FIXED DEPOSITS:	39.824
From Selling Agents	11.436
Inter-corporate Deposits	25.000
Short Term Loan from HDFC Bank	50.000
Loan from Housing Development Finance Corporation Limited. (Loans are guaranteed by the Director of the Company)	0.827

Banking Relations :	Satisfactory
Auditors :
Name :	J. R. Khanna & Company Chartered Accountants Chandigarh, India S. V. Ghatalia and Associates Chartered Accountants Mumbai
Subsidiaries :	STS Chemicals (UK) Limited I.A.& I.C.Chem Private Limited S D Agchem (Europe) NV Pauraj Chemicals Private Limited Sintesis Quimica. S.A.I.C., Argentina
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
6607925	Equity Shares	Rs. 10/- each	Rs. 66.079 millions

Subscribed & Called up Capital :
6592892	Equity Shares	Rs. 10/- each	Rs. 65.929 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		65.929	43.113	43.113
2] Share Application Money		0.000	22.816	0.000
3] Reserves & Surplus		738.298	689.999	262.889
4] Equity Convertible Warrants		18.473	0.000	0.000
NETWORTH		822.700	755.928	306.002
LOAN FUNDS
1] Secured Loans		1187.447	1125.399	352.844
2] Unsecured Loans		127.087	70.299	96.208
TOTAL BORROWING		1314.534	1195.698	449.052
DEFERRED TAX LIABILITIES		149.728	118.373	67.641
Government Grant		3.361	3.500	3.500
TOTAL		2290.323	2073.499	826.195
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		783.915	780.132	298.746
Capital work-in-progress		301.321	184.260	6.496
INVESTMENT		62.273	43.948	49.640
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	552.765	553.826	243.272
	Sundry Debtors	748.084	684.069	248.481
	Cash & Bank Balances	99.193	58.414	37.004
	Other Current Assets	59.493	66.348	0.000
	Loans & Advances	395.983	260.774	125.796
Total Current Assets		1855.518	1623.431	654.553
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	657.095	494.098	199.718
	Provisions	55.609	64.174	44.023
Total Current Liabilities		712.704	558.272	243.741
Net Current Assets		1142.814	1065.159	410.812
MISCELLANEOUS EXPENSES		0.000	0.000	60.501
TOTAL		2290.323	2073.499	826.195

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		3089.104	2517.436	1644.308
Other Income		170.262	279.586
Total Income		3259.366	2797.022	1644.308
Profit/(Loss) Before Tax		112.034	137.061	122.005
Provision for Taxation		36.992	[2.755]	39.855
Profit/(Loss) After Tax		75.042	139.816	82.150
Earnings in Foreign Currency :
	Export Earnings	1421.563	1293.026
	Other Earnings	30.707	34.532
Total Earnings		1452.270	1327.558	1051.618
Imports :
	Raw Materials	578.099	685.335
	Capital Goods	2.495	10.092
Total Imports		580.594	695.427	265.528
Expenditures :
	Manufacturing Expenses	2953.958	2497.722
	Interest	123.047	97.214	1531.168
	Depreciation & Amortization	70.327	65.025
Total Expenditure		3147.332	2659.961	1531.168

SUMMARISED RESULTS

Particulars	30.06.2007 1^st Quarter
Sales Turnover	802.400
Other Income	21.100
Total Income	823.500
Total Expenditure	754.400
Operating Profit	69.100
Interest	33.500
Gross Profit	35.600
Depreciation	18.900
Tax	6.800
Reported PAT	9.700

200706 Quarter 1 –

Other Income Includes Export Benefit Rs 8.30 million Other Income Rs 12.80 million Expenditure Includes (Increase) / Decrease in Stock in Trade Rs (12.90) million Consumption of Raw Materials Rs 571.20 million Staff Cost Rs 61.50 million Other Expenditure Rs 134.20 million Tax Includes Provision for Current Tax Rs 3.20 million Deferred Tax Rs 0.20 million Fringe Benefit Tax Rs 1.00 million MAT Credit Entitlement Rs 2.60 million EPS is Basic Status of Investor Complaints for the quarter ended June 30, 2007 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 20 Complaints disposed off during the quarter 20 Complaints unresolved 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 July 25, 2007. 2. The Board of Directors of the Company in their meeting held on July 25, 2007 has approved the following, subject to approval of the shareholders and other authorities: (a) The proposal for meeting the funding requirements for exploring various possibilities and opportunities to issue Foreign Currency Convertible Bonds / Global Depository Receipts / American Depository Receipts / Private Equity / Structured Debt / QIP / Other debt instruments, etc. for an aggregate amount not exceeding Rs 4000 million or equivalent thereof. (b) Increased in the investment limit of Foreign Institutional Investors in the Company from 24% to 49% under the Foreign Exchange Management Act. 3. In respect of application for amalgamation of I A & I C Chem Private Limited and Pauraj Chemicals Private Limited (the wholly owned subsidiaries) with the Company, the Hon'ble High Court of Punjab & Haryana at Chandigarh vide order dated July 03, 2007 has dispensed with the holding of meetings of shareholders, unsecured creditors and secured creditors of the Company and has also exempted the Company from filing a second petition. Final order sanctioning the petition for amalgamation is awaited from the Hon'ble Bombay High Court. 4. The Company's Auditors had made a qualification in the Auditors' Report on the Accounts for the Financial Year ended March 31, 2007 and in the Limited Review Report for the quarter ended June 30, 2007 that the Company has not made a provision for diminution in the value of long term investment, the cost of which amounts to Rs 23.763 million. The Board is of the opinion that the diminution in the value of long term investment is not of a permanent nature and accordingly no provision is considered necessary. 5. The Statutory Auditors have carried out, the Limited Review of the Results for the quarter ended June 30, 2007

KEY RATIOS

PARTICULARS	31.03.2007	31.03.2006	31.03.2005
Debt Equity Ratio	1.60	1.54	1.49
Long Term Debt Equity Ratio	0.46	0.52	0.58
Current Ratio	1.04	1.09	1.12
TURNOVER RATIOS
Fixed Assets	2.20	2.69	3.41
Inventory	5.89	6.70	7.39
Debtors	4.55	5.72	8.02
Interest Cover Ratio	1.80	2.78	3.82
Operating Profit Margin (%)	9.86	10.44	11.05
Profit Before Interest and Tax Margin (%)	7.71	8.01	9.76
Cash Profit Margin (%)	4.46	7.67	6.14
Adjusted Net Profit Margin (%)	2.30	5.24	4.85
Return on Capital Employed (%)	12.32	15.76	25.51
Return on Net Worth (%)	9.71	26.73	29.59

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

Incorporated in 1975, Punjab Chemicals & Pharmaceuticals (PCAPL) was promoted by Excel Industries and the Punjab State Industrial Development Corporation. Commercial production commenced in Oct.'78. The promoters have interests in other companies such as Transpek Industries and United Phosphorus. 

PCAPL came out with a rights issue in Apr.'89 to part-finance its expansion and to set up a 100% EOU to manufacture oxalic acid. 

PCAPL is the largest manufacturer and exporter of di-ethyl oxalate (DEO) and oxalic acid. Its export earnings in 1994-95 amounted to Rs 71.700 Millions, with DEO being exported to Japan and the UK. It has also set up a plant in Derabassi, Punjab, to manufacture silica. PCAPL was awarded IS/ISO 9002 for manufacture and supply of oxalic acid, diethyl oxalate and sodium nitrite. Company commenced the production of Ethyl Phenyl Gly Oxalate (EPGO) and Phenyl Gly Oxalic Acid Hydrazide Acetyl Hydrazone (MMH). 

In the year 1998-99 company exports has jump of 63% from Rs.351.100 Millions to 573.200 Millions. 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 name of the company has been changed during November 2004,from Punjab Chemicals & Pharmaceuticals Limited to Punjab Chemicals & Crop Protection Limited

OPERATIONS

During the year under review, the income of the Company on standalone basis, was Rs. 3260 Millions as compared to Rs. 2790 Millions in the previous year. The profit before tax was Rs. 112 Millions against Rs. 137.100 Millions. However, after making provision for taxes and previous period adjustments, the net profit stood at Rs. 67.800 Millions against Rs. 167.100 Millions of previous year, when erstwhile Alpha Drug India Limited (ADIL) and STS Chemicals Limited (SCL) were merged with the Company.

Consolidated income of the Company (alongwith subsidiary companies) was at Rs. 3660 Millions against Rs. 2670 Millions of previous year while the net profit after tax was at Rs.70.400 Millions against Rs. 1 09.700 Millions. In view of the acquisition of the Sintesis Quimica S.A.I.C., Pauraj Chemicals Private Limited and purchase of remaining shares in SD Agchem (Europe) NV to make it a wholly owned subsidiary during the current year, the current year figures are not comparable with those of the previous year.

The fall in profitability in the year 2006-07 was due to pressure on margins, due to lower realizations, increase in major raw material costs and increase in interest cost, coupled with less export realization due to rupee appreciation. However, the Directors are confident of improved performance during the year by taking full benefit of the economies of scale of operations, reducing operating cost, and with integrated marketing strategy. Further, the Director are taking necessary steps to mitigate the effect of appreciation of dollar. The steps to make all the manufacturing units and divisions of the Company as self-sufficient and profitable are being implemented.

AMALGAMATION

The Board has approved the scheme of Amalgamation of IA & 1C Chemicals Private Limited and Pauraj Chemicals Private Limited, both wholly owned subsidiaries with the Company subject to the sanction of the Hon'ble jurisdictional High Courts. Accordingly, the petition was filed in the jurisdictional High Courts, which is presently under consideration.

ACQUISITIONSANDJOINTVENTURE

During the year under review, the Company has acquired the balance 49% shares of SD AgChem (Europe) N.V., (SD), a marketing Company in Belgium alongwith wholly owned subsidiary of STS Chemicals (UK) Limited (STS), and accordingly, SD has become a wholly owned subsidiary.

During the year under review, SD AgChem (Europe) N.V., (SD) a wholly owned subsidiary of the Company has acquired 85% shareholding of SINTESIS QUIMICA S.A.I.C. (SQ), a company in Argentina with an investment of USD 10 million subject to the terms and conditions of the shares purchase agreement (SPA). SQ has, therefore, become the subsidiary of the Company. The remaining shareholding of the Company will also be purchased by SD as per the terms and conditions of the shares sale and purchase agreement. SQ has two state of art manufacturing facilities in the outskirts of Buenos Aires and is engaged in Agro Chemicals, Agro Biological, Fungicides, Wood preservatives and Formulations of Agro-chemical business. With this, the Company has become a global Company.

The Company has given a corporate guarantee for USD 7 million to State Bank of India, Antwerp for providing a loan to SD for purchase of shareholding of SQ.

During the year, the Company has also acquired the entire shareholding of Pauraj Chemicals Private Limited for a consideration of Rs. 125 Millions net of all acquisitions liabilities and made it a wholly owned subsidiary of the Company. The Company is mainly engaged in the business of manufacturing, preparing

and selling organic and basic chemicals.

To augment the business of agrochemicals in USA, the Board of Directors has approved to enter into a Joint Venture Agreement with Source Dynamics, LLC, having office in Delaware, USA to set up a new Company namely PSD Chemicals LLC - limited liability Company in USA with 40% membership interest.

The Directors feel that the aforesaid acquisitions and joint ventures undertaken by the Company will bring fruitful results in the future and enhance net worth of

the Company.

NEW PROJECTS/EXPANSION/IMPROVEMENTS

The upgradation of the plants for improvement in the process for better efficiencies of the products are continuously undertaken in all the divisions. In Industrial Chemical Division, Tarapur, a new multipurpose plant for high value speciality chemicals is under implementation and the commercial production is expected in the current financial year.

In the Agrochemical Division, Derabassi, production of some new agrochemicals are expected to be commenced in this year by making required additions and modifications in the plant. The Research and Development Laboratory has also been upgraded to carry out new research activities and improve the existing process.

In Pharma Division, the efforts to develop new molecules and process optimization of the existing products are continuing. Further, one project sponsored by US based Company and work on some more drug intermediates have been undertaken. The management is confident that continuous efforts of the Pharma Division team will bring turnaround in the near future. The contract manufacturing facility has been upgraded for continuing the job work of one of the Indian Multi National Company. The upgradation of R&D facility and installation of new boiler and chilling unit would bring cost effectiveness and better efficiency in processes.

The formulation division is maturing and expected to improve performance during the year. The appointment of C&F agents and arranging of required approvals for the formulation business in various parts of the country are in progress. The addition of more branded formulations are expected to increase

business.

The efforts are continuing to increase the share in the overseas markets for the principal products, and to find out new market.

FINANCE

a. The term loans of the Company as on 31^st March, 2007 now stands at Rs. 265.700 Millions. During the year, the Company has availed a term loan of Rs. 40 Millions from UTI Bank Limited and short term loan of Rs. 50 Millions from HDFC Bank for the purpose of meeting the cost of expansion. The Company has also availed additional working capital limits from State Bank of India and IDBI Bank Limited, to meet its working capital requirement and total utilization was to the tune of Rs. 902.800 Millions as on 31^st March, 2007. The Company has paid all the due instalments of the loans during the year.

b. The Company has issued 8,91,000 Preferential Convertible Share Warrants to the promoters group and others to be converted into equity shares in one or more trenches at a price of Rs. 230/- at the option of such warrant holders.

c. The Company for the organic and inorganic growth and in order to part fund the capital expenditure and possible acquisition opportunities may pursue various options to issue fresh capital including but not limited to FCCB/ADR/GDR/Private Equity/ Other debt investments, etc. in consultation with the Advisors.

Further in view of the active interest shown by FlI's in the Company's stock and in case of FCCB/Depository Receipts, etc. their shareholding may exceed 24% of the paid up capital of the Company. Therefore, the Board of Directors recommend increasing of the said limit to 49%, subject to the approval of members in the ensuing Annual General Meeting and any other approval, if required.

BUSINESS REVIEW

Business Segment-Agro Chemicals and Other Chemicals

Industry Structure and Development:

India has become a major supplier of chemicals and agrochemicals to the world with a significant contribution to the Indian economy, which is based predominantly on agriculture sector. The Indian economy expanded 9.4% for the financial year upto 31^st March, 2007 to remain the second fastest growing economy behind China. The manufacturing and service sectors were the key performers of the growing economy. The dominance of domestic consumption in view of huge population is the key driver for our economy. The performance of the agriculture sector was not as per the expectation in the year 2006-07, which has cautioned the government. It is, therefore, necessary that manufacturing and distribution of agro-chemical products including formulated products should grow for improvement in agriculture sector.

The industry has built up a huge capacity in formulation business resulting in high level of competition. Due to the seasonal nature of the business and dependency upon rain, large inventories are required to be maintained. The efforts to add new products, formulations and obtaining new registrations to become stronger in the formulation business are the key areas of concentration in the Company.

The manufacturing of basic, speciality and other chemicals would also play vital role in the Indian economy as these have the strong export opportunities and huge domestic consumption. The export market remained the key business segment and strengthened during the year with addition of new products and business. The contribution of associated companies in the Europe and Latin America will be witnessed in near future. The exports realisation have been affected due to variation in exchange rate. However, this is partially offset with the cost of imported raw material.

Opportunities & Threats:

There are opportunities in introducing new products in the agrochemicals manufacturing, which were under testing in the last few years and addition of more and more branded formulations to cater to huge market.

The stiff domestic and international competition in the branded formulated products and the variation in the exchange rates are the main areas of threat and uncertainty.

However, the Company has maintained its standing in Chemicals, Speciality Chemicals, Phosphorous based Compounds and Agrochemicals due to economic size capacities, superior technology and reputation with customers established after long period for quality and reliability, which will continue to provide growth opportunities to the Company. 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 also other global registrations for increasing the market size.

International and domestic policies on the production and marketing of various chemicals and agrochemicals with increased cost of borrowing and credit period due to seasonality of agriculture products are few threats. The Company is, however, careful for this and taking possible steps to overcome this problem.

Segmentwise performance and outlook

The Company remains a competitive force in agrochemicals, speciality chemicals and phosphorous based compounds due to its better quality and services to meet the requirement in today's competitive world. The attitude is to satisfy the need and provide required help to the customers. The company's formulation business commenced last year has picked up in different states with extensive dealers network. The strength of the Company remains in reengineering of chemicals manufacturing and reducing raw material cost with forward and backward integrated processes. The quality control and reliability of supply are on top priority to make the customer more confident. The international trading division of the company continues to trade in diversified range of products.

The focus of the Company continues on developing products that can offer the desired protection without compromising either on economic efficiency or disturbing the environmental balance.

As a natural extension to the existing range of Agro Technicals, Branded Bulks, the Company has launched a range of branded pesticide formulations to serve the Indian farming community. It's the endeavour of the Company to offer wide variety of products through vast network of channel partners at right prices and provide required support to the farmer community at the right time and place. The company is in the process of adding more variety of formulations in the near future. The Industrial Chemical Division has the manufacturing facilities for various derivatives of phosphoric acid and phosphorous based products. The division has also added speciality chemicals to its portfolio. 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.

Risks and concerns:

The weather conditions, which are key factors for the demand of agro products, fluctuation of prices of raw materials and appreciation of rupee against the foreign currency are some of the matters of concern.

However, the Company is fully aware of these concerns and take appropriate possible actions as and when required.

Business Segment-Pharma

Industry Structure and Development

The Company entered into a pharma business in 2003 after acquisition of erstwhile Alpha Drug India Limited (ADIL), which is now merged in the Company. The pharma manufacturing unit has added some new products and increased its turnover to almost three times. The unit despite facing various hinderances like severe floods in 2004, has come up with the confidence and hard work of its employees. The contract manufacturing is continued which is providing logistic knowledge, experience and exposure to the employees.

Opportunities and Threats

In the highly competitive international pharmaceutical market, the need to remain at the forefront for new products and on going research and development are the basic requirements of any pharma unit. The team has to develop the advanced and efficient process technology for the manufacturing of fine chemicals & API and also for the contract manufacturing. The strengthening of the available infrastructure with additional investment is required alongwith the regulatory framework.

Risks and Concerns

The competition from the domestic industry and import may affect the margins. One portion of the plant is still dedicated to the contract manufacturing, which gives the limited monetary return, though giving better experience to the manpower for handling the crucial and important materials for the manufacturing of API.

ACQUISITION/AMALGAMATION/JOINT VENTURE

During the year, in order to become global, the Company has acquired Sintesis Quimica, S.A.I.C. (SQ) a Company in Argentina through SD Agchem (Europe) NV, wholly owned subsidiary of the Company at purchase price of USD 10 Million subject to the terms and conditions of the agreement. SQ is in the field of chemical specialties for the industry and the products of biological origin for the farming sector and wood preservatives. SQ is in the process of enhancing its manufacturing capacities and obtaining registrations of various products, which will help the Company to further develop its export market and promote the formulated and branded products.

During the year, the Company have acquired the entire shareholding of Pauraj Chemicals Private Limited Thereafter, the Board approved the scheme of Amalgamation of IA & 1C Chemicals Private Limited and Pauraj Chemicals Private Limited with the Company subject to the sanction of the Hon:ble jurisdictional Court. Accordingly, the petition was filed in the jurisdictional High courts, which is under consideration of the Hon'ble Courts.

To strengthen the business activities of the Company in USA for sale and distribution of agrochemicals, the Board of Directors has approved the Joint Venture & operative agreement with Source Dynamics, LLC, a Delaware limited liability company to constitute PSD Chemicals LLC under the Delaware LLC laws with 40% membership interest.

FINANCIAL PERFORMANCE & ANALYSIS

During the year, the income of the Company on stand alone basis was Rs. 3260 Millions as compared to Rs. 2790 Millions in the previous year. The earning in foreign currency was Rs. 1420 Millions against Rs. 1290 Millions. The profit before tax during the year 2006-07 was Rs. 112 Millions against Rs. 137.100 Millions in the previous year (standalone basis), whereas the consolidated income was Rs. 3650 Millions against Rs. 2670 Millions with a profit before tax of Rs. 117.200 Millions against Rs. 132.300 Millions.

Rs in Millions

Contingent Liabilities:
In respect of bills discounted	227.771
Claims against the Company not acknowledged as debts:
a) Excise duty matters in dispute or under appeal	3.890
b) Income Tax matters in dispute or under appeal	7.222
Labour laws matters in dispute or under appeal	0.765
d) Demand raised by previous land owners	23.718
iii) Estimated amount of contracts remaining to be executed on capital account and not provided for	11.692
iv) Counter Guarantees given to Banks	50.945
v) Letter of Credits for imports	43.741
vi) Corporate Bank Guarantee given on behalf of Subsidiary Companies	350.895

Website Details:

On The Global Map

Subject is based in Mumbai, the commercial hub of India with excellent communication facilities. Regional offices in India are located at Chandigarh, Pune and Tarapur. Overseas offices are in West Yorkshire (United Kingdom) and Antwerp (Belgium).

Subject offers its services and products on a global scale, reaching sixty countries in five continents.

Subject's size—neither too big to intimidate the small Indian manufacturer, nor too small to be overlooked by the giant multi-nationals—plays a very crucial part in winning the confidence of customers. Their pledge to secrecy to protect client interest and fair business practices further strengthen the bond. No wonder, subject is fast carving out a niche in the global market as a "Preferred Indian Partner" for global companies interested in doing business in India.

RESEARCH AND DEVELOPMENT

Subject believes in research as a primary objective to start with. Product innovation and change are what makes clients they serve 'leaders' in their fields. Here they have a short say of what they mean: "The first product developed was Malathion (technical) the production of which was successfully commenced in 1975 and In 1980's the Oxalic Acid Plant was set up with a capacity of 1 TPD which has now grown to 50 TPD. Later, another product was developed - Diethyl Oxalate".

The early 90's saw the company giving research its due importance. The research wing has now come up with better and newer products like Ethyl Oxalyl Chloride, Ethyl Phenyl Glyoxalate and a herbicide - Metamitron among others. Other Oxalates that have been developed at their center includes Ammonium Oxalate and Ferric Ammonium Oxalate.

PCCPL now successfully manufacture intermediates and agrochemicals. It has the capability to manufacture chemicals 'On Demand'.

EXPORT – IMPORT

Export: The Export Division monitors the growing needs of their customers worldwide and cater to their specific demands, with efficiency and effectiveness. To keep in touch with the worldwide scene, this division regularly participates in all major International Trade Fairs and keeps in-touch with Indian manufactures to export their products to Overseas customers and places a special emphasis on export of Industrial Chemicals, Photographic Chemicals, Dyes and Pigments among others.

Import: In their endeavour to provide the best to their customers, the import division proves an effective catalyst by regularly participating in major Exhibitions and Trade Fairs and keeps an on-going and continuously relation with Overseas manufacturers and have managed to built up a huge database of foreign suppliers. Emphasis on offering solutions for peculiar and non standard requirements of local clients and matching them through exhaustive list of products and services on offer by foreign suppliers is the paramount task undertaken by this division.

The Import division also keep a primary focus on developing new systems, products and processes in arrangement with foreign manufacturers to satisfy the ever-growing demand from the local consumers.

PRODUCTS

• API
• Agrochemicals
• Pharmaceutical Intermediates
• Oxalic Acid & Its Derivatives
• Phosphorous Compound
• Photographic Chemicals
• Fine Chemicals
• Biological Stains & Indicators
• Various Phospates & Phospites
• Natural Products
• Drugs & Intermediates

CMT REPORT [Corruption, Money laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.40.44
UK Pound	1	Rs.82.01
Euro	1	Rs.56.20

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	8
PAID-UP CAPITAL	1~10	8
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	7
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	8
--CREDIT LINES	1~10	8
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		72

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING		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