MIRA INFORM REPORT

Report Date :

11.02.2008

IDENTIFICATION DETAILS

Name :	E I D PARRY (INDIA) LIMITED
Registered Office :	Dare House, 234, NSC Bose Road, Parry’s Corner, Chennai-600 001, Tamilnadu
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	22.09.1975
Com. Reg. No.:	18-6989
CIN No.: [Company Identification No.]	L24211TN1975PLC006989
TAN No.: [Tax Deduction & Collection Account No.]	VPNE00002C / MUME02262B / CHEE00001B / CHEE03226G
PAN No.: [Permanent Account No.]	AAACE0702C
Legal Form :	A Public Limited Liability Company. The Company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturing of Sugar, Sprit, Sanitary ware, Tiles, Ammonium Phosphate Sulphate, Super Phosphate, PPC Products such as liquids, mixed and straight fertilizer, soft fertilizer, soft ferrites, audio magnetic tapes, audio compact cassettes and Acetic Acid.

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 21467000
Status :	Excellent
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a part of Murugappa Group, a well-established and reputed industrial house. Available information indicates high financial responsibility of the company. Financial position of the company is good. Payments are usually correct and as per commitments. Fundamentals of the company are strong and healthy. The company can be considered good for normal business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Dare House, 234, NSC Bose Road, Parry’s Corner, Chennai – 600 001, Tamil Nadu, INDIA
Tel. No.:	91-44-25340251 / 25340257 / 1101/25306789
Fax No.:	91-44-25340858 / 25340723 / 25341609
E-Mail :	info@eidparry.com, eidshares@parry.murugappa.com
Website :	http://www.eidparry.com
Factory 1 :	Sugar Sugar Factory & Distillery, Nellikuppam- 607 105, South Arcot District. Tamil Nadu Sugar Factory, Petthavaithalai, Tiruchirapalli District Pin 639 112 Tamil Nadu Sugar Factory, Pugalur-639 113, Tiruchirapalli District Tamil Nadu Sugar Factory, Kurumbur-614622 Aranthangi Taluk, Pudukottai District. Tamil Nadu Sanitaryware Ceramics Factory Plot No.223 to 226 Matsya Industrial Area Alwar-301 030, Rajasthan Ceramics Factory Dewas Industrial Estate, Industrial Area No.2 A B Road, Dewas 455 001 (M.P.) Ceramics Factory, Ranipet - 632 401, North Arcot District. Tamil Nadu Bio Products Thyagavalli Village, Via Alapakkam Rly. Station, Cuddalore Taluk - 608 803, South Arcot District. Tamil Nadu
Factory 2 :	Product Unit Fertilisers Ennore & Ranipet Pesticides Ranipet & Thane Seeds Kompally & Tiruchi Sugar Nellikuppam, Pudukottai & Pugalur Co-generation Plant Nellikuppam Tissue Calture Nellikuppam & Pugalur Acetic Acid Thyagavalli Sanitarywars & Allied Products Ranipet & Alwar Wall Tiles Karaikal
Branches :	Delhi, Kolkata, Ahmedabad, Akola, Thane, Bellary, Hyderabad, Kurnool, Bangalore, Trichy, Cuddalore, Kottayam, Vizag, Bhubaneswar, Vijayawada, Bhopal, Alwar, etc.

DIRECTORS

Name :	Mr. A Vellayan
Designation :	Chairman
Name :	Mr. P Rama Babu
Designation :	Managing Director
Name :	Mr. Anand Narain Bhatia
Designation :	Director
Name :	Mr. S B Mathur
Designation :	Director
Name :	Mr. R A Savoor
Designation :	Director
Name :	Mr. M M Venkatachalam
Designation :	Director
Name :	Mr. S Viswanathan
Designation :	Director
Corporate Management Team:
Name :	Mr. K Raghunandan
Designation :	President (Sugar)
Name :	Mr. K Ravindran
Designation :	Senior Vice President – Operations (sugar)
Name :	Mr. Sebastian K Thomas
Designation :	Chief Executive (Nutraceuticals)
Name :	Mr. D Kumaraswamy
Designation :	Chief Financial Officer
Name :	Mr. G Jalaja
Designation :	Vice President and Company Secretary.

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.12.2007

Category	No. of Shares	Percentage of Holding
1) Indian
Individuals/HUF	4463830	5.00
Bodies Corporate	32888623	36.85
Any other	47715	0.05
Total	37400168	41.91
2) Foreign
Total Shareholding of promoter and promoter group	37400168	41.91
B) Public Shareholding
1) Institutions
Mutual Funds/ UTI	4294849	4.81
Financial Institutions / Banks	314744	0.35
Insurance Companies	11429757	12.81
Foreign Institutional Investors	13788542	15.45
Total	29827892	33.42
2) Non Institutions
Bodies Corporate	2356565	2.64
Individuals
Individual shareholders holding nominal sharecapital upto Rs.0.100 Millions	11738119	13.15
Individual shareholders holding nominal sharecapital in excess of Rs. 0.100 Millions	4364999	4.89
Any other (Non resident Indians)	453761	0.51
Overseas corporate bodies	539380	0.60
Trust	51995	0.06
Foreign Nationals	138150	0.15
Clearing Members	31521	0.04
Total	19674490	22.04
Total public shareholding B= B(1) + B(2)	495023825	55.47
Total (A+B)	86902550	97.37
Shares held by custodians and against which depository receipts have been issued	2345965	2.63
Grand Total	89248515	100.00

BUSINESS DETAILS

Line of Business :

Manufacturing of Sugar, Sprit, Sanitary ware, Tiles, Ammonium Phosphate Sulphate, Super Phosphate, PPC Products such as liquids, mixed and straight fertilizer, soft fertilizer, soft ferrites, audio magnetic tapes, audio compact cassettes and Acetic Acid.

Products :

Product Description	Item Code No. (ITC Code)
Sugar	170111.00
Insecticides	380810
Algae	12122009

Exports to :

Countries :

Nigeria and Zaire

Imports from :

Countries :

Raw materials, components and spares and capital Goods from Belgium, France, Italy, Japan, Netherlands, Singapore and USA

Terms :

Purchasing :

L/C, D/A or D/P terms

PRODUCTION STATUS

		Licensed Capacity		Installed Capacity		Actual Production
Classes of Goods	Unit	2007	2006	2007	2006	2007	2006
Sugar	CANE MT/DAY	NA	NA	16500	14500	380718	304953
Spirit	KLTS/YEAR	NA	NA	13500	13500	10673	9694
Sanitaryware	MT/YEAR	NA	NA	NIL	34500	NIL	30414
Power	KWH	NA	NA	64500	42500	248533452	147541619
Neem Technicals	KGS/YEAR	NA	NA	7500	7500	5333	5552
Algae	KGS/YEAR	NA	NA	524100	NIL	74415	NIL

GENERAL INFORMATION

No. of Employees :

3261

Bankers :

State Bank of India, Madma Cama Road, Mumbai -400021, Maharashtra

Facilities :

Secured Loans(Rs.in Millions)	31.03.2007	31.03.2006
Term loans from
Government of India-sugar development fund	203.300	36.900
Foreign Currency Loan from Industrial Development Bank of India	--	9.300
Banks- Foreign Currency Loan Rupee Loan	-- 1625.000	359.000 1750.000
Cash Credit From Bank	392.900	157.200
Total	2221.200	2312.400

Unsecured Loans(Rs.in Millions)	31.03.2007	31.03.2006
Fixed Deposits	--	1.700
Short Term loan From – Banks Rupee Loan Other than Banks	1300.000 --	-- 150.000
Sales tax deferral scheme	--	12.500
Security Deposits	2.400	11.400
Total	1302.400	175.600
Repayable within one year	1300.000	164.200

Banking Relations :	Good
Auditors :
Name :	Deloitte Haskins & Sells Chartered Accountants
Address :	Chennai
Associates/Subsidiaries :	Subsidiary Companies v Coromandel Fertilizers Limited v Parry Chemicals Limited v Parry America Inc. v Parrys Investments Limited v Parrys Sugar Limited v Parry Infrastructure Company Private Limited Associates/Joint Venture Companies v Parryware Roca Private Limited (Formerly Parryware Glamourooms Private Limited) v Parry Mosanto Seeds Private Limited v Godavari Fertilizers and Chemicals Limited v Prathyusha Chemicals and Fertilizers Limited v Silkroad Sugar Private Limited (Formerly Parrys Sugars Refineries Private Limited)
Membership.:	Confederation of Indian Industry

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
257500000	Equity Shares	Rs.2/- each	Rs.515.000 Millions
5000000	Preference Shares	Rs.100/- each	Rs.500.000 Millions
		Total	Rs.1015.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
89248515	Equity Shares	Rs.2/- each	Rs.178.500 Millions

Of the above 34474295 Equity Shares of Rs.2 each have been allotted as fully paid up for consideration other than cash.

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		178.500	178.500	178.500
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		5188.400	4694.300	4015.900
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		5366.900	4872.800	4194.400
LOAN FUNDS
1] Secured Loans		2221.200	2312.400	1275.200
2] Unsecured Loans		1302.400	175.600	558.800
TOTAL BORROWING		3523.600	2488.000	1834.000
DEFERRED TAX LIABILITIES		736.700	480.100	507.600
TOTAL		9627.200	7840.900	6536.000
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		4791.500	3187.100	3203.000
Capital work-in-progress		95.100	207.500	26.500
INVESTMENT		1173.600	1116.700	1012.600
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1823.900	318.500	1706.700
	Sundry Debtors	927.100	3120.500	656.200
	Cash & Bank Balances	2466.800	867.500	726.800
	Other Current Assets	22.100	10.400	2.800
	Loans & Advances	679.100	1071.300	635.500
Total Current Assets		5919.000	5388.200	3728.000
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	2211.200	1617.100	1186.100
	Provisions	146.200	458.000	273.900
Total Current Liabilities		2357.400	2075.100	1460.000
Net Current Assets		3561.600	3313.100	2268.000
MISCELLANEOUS EXPENSES		5.400	16.500	25.900
TOTAL		9627.200	7840.900	6536.000

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		5517.200	9261.800	7707.800
Other Income		1554.600	519.800	0.000
Total Income		7071.800	9781.600	7707.800
Profit/(Loss) Before Tax		1703.300	1411.200	1272.600
Provision for Taxation		429.100	252.800	230.000
Profit/(Loss) After Tax		1274.200	1158.400	1042.600
Earnings in Foreign Currency :
	Export Earnings	327.300	1528.900
	Other Earnings	4.000	1.800
Total Earnings		331.300	1530.700	187.700
Imports :
	Raw Materials	0.000	890.900
	Stores & Spares	4.900	3.200
	Capital Goods	2.700	1.000
	Others	5.400	3.500
Total Imports		13.000	898.600	890.400
Expenditures :
	Materials	3414.200	5633.500
	Employee Cost	410.700	566.200
	Other Costs	1236.000	1805.300
	Depreciation	328.700	291.500
	Interest	(21.100)	73.900
Total Expenditure		5368.500	8370.400	6438.300

KEY RATIOS

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
PAT / Total Income	(%)	18.01	11.84	13.52
Net Profit Margin (PBT/Sales)	(%)	30.87	15.23	16.51
Return on Total Assets (PBT/Total Assets}	(%)	28.77	26.19	34.13
Return on Investment (ROI) (PBT/Networth)		0.31	0.28	0.30
Debt Equity Ratio (Total Liability/Networth)		0.43	0.42	0.34
Current Ratio (Current Asset/Current Liability)		1.61	2.04	1.91

LOCAL AGENCY FURTHER INFORMATION

Fixed Assets:

Tangible Assets

v Freehold Land

v Leasehold Land

v Buildings

v Plant and Machinery

v Furniture and Office Equipment

v Vehicles

Intangible Assets

v Patent

Performance

The Company achieved a turnover of Rs.7071.800 Millions including other income of Rs.1554.600 Millions for the year ended 31.03.2007. The Profit before interest and Depreciation grew by 13% to Rs.2010.900 Millions and Earning before tax was up by 21% to Rs.1703.300 Millions. The Profit after tax (PAT) was Rs.1274.200 Millions (10%) compared to that of last year amounting to Rs.1158.400 Millions. The profit for the year includes Rs.1181.200 representing income of a non recurring nature compared to Rs.228.500 Millions in previous year. Excluding this income (Rs.1181.200 Millions) and the tax thereon (Rs.264.000 Millions) the profit before interest and depreciation was Rs.829.700 Millions, profit before tax was Rs.522.100 Millions and the profit after tax (PAT) was Rs.357.000 Millions.

Sugar

With a bumper sugarcane crop and increased crushing capacities sugar production in India has recovered in a short span of time to record levels resulting in high inventory build up. Further with untimely government intervention by banning exports of sugar, realization has fallen sharply. Recent sugar price fall below cost of production has forced Government of India to review sugar industry policy comprehensively and the process is on. Unless both the State and Central Governments revise the policy realistically in terms of cane price, taxes thereon and export of Sugar and price and movement of Molasses and Ethanol this industry will be ruined. The country will face large cane payment arrears with consequent effect on the fortunes of the farmers. Please refer to details provided in Management Discussion and Analysis report.

The Steep decline in sugar prices in the second half has restricted the revenue growth to about 22% over the previous fiscal while the operating profits has come down by about 61%. However co-generation facilities and distillery contributed to the bottom-line significantly.

The 18 MW co-generation plant commissioned at Pudukottai in March, 2006 got stabilized and become fully operational during the year. The 22 MW cogeneration power plant at Pugalur commenced commercial operations in March, 2007. The Ethanol and ENA projects at Nellikuppam Distillery is in progress and awaiting final clearance operations from statutory authorities.

The registration of the assets of New Horizon Sugar Mills Limited, Ariyur, Puducherry, acquired from Indian Bank under the SARFAESI Act on 24^th March, 2005 was completed on 24^th August, 2006 and the Ariyur Factory commenced operations during December 2006 and commercial production in March, 2007.

The long term strategy for the sugar division approved by the board includes increasing crushing capacities in existing factories, acquisitions, creation of integrated sugar complexes to extract value from all parts of the cane stick and derisk the sugar business. These includes setting up of a 20MW co-generation plant at Pettavaittalai and increasing the overall crushing capacity to 22000 TCD. On completion of the projects, the annual sugar production would increase to about 6 lakhs tones, popwer generation would be 127 MW and distillery capacity would be 200 KLPD.

Joint Venture with Cargill Asia Pacific Holdings Pte Limited

International, on 8^th December, 2006. Consequent to this, the parties have made an initial subscription to the share capital of Parrys sugars refineries private limited (name since changed to Silkroad Sugar Private Limited). This company will set up a stand alone sugar refinery in Kakinada. The Company holds 50% of the equity capital in the joint venture.

Bio Pesticides

The Bio Pesticides division of the company has emerged as a significant supplier in the Neem based bio-pesticide business and continues to focus on its core product – the NEEMAZAL range of products. The division is concentrating on development of new products like formulation for combined fungicide and insecticide activity.

The Division clocked revenue of Rs.226.100 Millions. Export revenues registered a growth 13% over the previous year, with Americas and Europe continuing to be the major markets. With the launch of AVANA, a neem based bio pesticide granule, the Company is looking forward to gain position in Sugarcane and Rice in domestic Market.

Nutraceuticals

Parry Nutraceuticals Limited (PNL), became a wholly owned subsidiary during the year.

The board considered it desirable to amalgamate PNL with the company with effect from 1^st September 2006, and accordingly approved a scheme of amalgamation between PNL and EID at the board meeting held on 19^th October 2006.

Based on the petition filed by PNL with the hon’ble high court of judicature at madras under sections 391 to 394 of the Companies act, 1956 for sanctioning the Scheme of Amalgamation, the hon’ble high court vide its order dated 17^th April 2007 has approved the scheme of amalgamation as well as dissolved PNL without the process of winding up.

Nutraceuticals is now functioning as a division of the Company.

The products of Nutraceuticals Division are currently exported to 35 countries in the world which continued to grow in all the markets serviced by it. Organic Spirulina, the main product of this business continues to outperform competition in its segment. In the current year the division made inroads into New Zealand selling Organic Spirulina to one of the largest brands of Nutraceuticals worldwide.

The organic spirulina produced by the company is the most certified organic spirulina in the world with 5 quality certifications and 3 organic certifications to its credit. The organic spirulina of the division was certified to meet stringent standards such as US Pharmacopeia, USDA and Naturland – Germany.

For the 7 months period ended 31^st March, 2007 the division registered a turnover of Rs.111.200 Millions.

The performance of the various divisions during the year 2006-07 is given in detail in the Management Discussion and Analysis Report forming a part of this report.

Corporate Developments

Parryware

On 1^st June, 2006 the company transferred 432580 equity shares of Rs.10/- each held by the Company in Parryware Glamourooms Private Limited (PGPL), in favour of ROca Sanitario S.A., of Spain, (Roca) for a consideration of about Rs.1185.500 Millions. The PGPL board also allotted 634840 equity shares of Rs.10/- each PGPL to Roca on the same day.

Consequent to this PGPL ceased to be a subsidiary of EID with effect from 1^st June, 2006 and became a joint venture company in which EID and Roca hold 50% equal stake in the Capital. The name of the company also has been changed to Parryware Roca Private Limited.

Subsidiary Companies

v Coromandel Fertilizers Limited

Coromandel Fertilizers Limited (CFL) achieved a turnover of Rs.20842.200 Millions for the year ended 31^st March 2007 and the profit after tax was Rs.1007.400 Millions. The company’s board has recommended a dividend of 100% for the year.

CFL increased its stake in Godavari Fertilizers and Chemicals Limited (GFCL) from 45.07% to 74.92% and consequently GFCL became a subsidiary of CFL with effect from 12^th April 2007.

v Parry Chemicals Limited

Parry Chemicals Limited, a 100% subsidiary of CFL , achieved a turnover of Rs.8.535 Millions for the year ended 31^st March, 2007. The profit after tax was Rs.0.04 Millions. With the surplus of Rs.7.464 Millions brought forward, the balance of Rs.7.512 Millions was carried to balance sheet.

v Parrys Sugar Limited

During the first year of operations, the company’s turnover was Rs. 1.115 Millions and the Profit after tax was Rs.0.966 Millions.

v Parry Infrastructure Company Private Limited

The company incorporated in January 2006 to engage in infrastructure projects like development of Special Economicx Zones (“SEZ”) etc. became a wholly owned subsidiary during the year. The company proposes to promote a food processing SEZ and is taking necessary steps for implementation of this.

v Parry America Inc.

Parry America Inc., the 10% subsidiary based in US, reported an income of US$ 32.20 lakhs for the year ended 31^st March 2007. The profit after tax was US$ 0.94 lakhs. After adjusting the carried forward loss of US$ 0.73 lakhs, the profit carried forward for the year was US$ 0.21 lakhs.

The main business of this company is to market and sell NeemAzal Technical in US markets and trading of technical and formulations in Western Countries.

v Parrys Investments Limited

The company has reported a business income of Rs.0.138 Millions and made a Net Profit after tax of Rs.0.103 Millions for the year ended 31^st March 2007.

v Coromandel Bathware Limited

There was no operation during the year and the loss carried forward for the year was Rs.19.336 Millions.

Review of E.I.D. Parry’s Business

E.I.D Parry (Parry), completed its restructuring during 2005-06 by entering into a Joint Venture with Roca Sanitario S.A. for the sanitaryware business to provide consistent and increasing returns to its shareholders. Parry has now become a sugar focused company to become a dominant player in this sector and in also investing in promising areas like Bio-pesticides and Nutrachemicals. Through its subsidiaries and JV, viz, Coromandel Fertilizers Limited (CFL), Godavari Fertilizers and Chemicals Limited (GFCL) and Parryware Roca Private Limited (PRPL), it retains a significant presence in the fertilizer and the sanitaryware industries respectively. Parry has all its seven manufacturing facilities located in Tamil Nadu and Puducherry.

The turnover for the year 2006-07 was Rs.7071.800 Millions (including other income Rs.1554.600 Millions) with the distributable profits amounting to Rs.1274.200 Miilions.

Sugar

Established : 1842

Revenue 2006-07 : Rs.5560.000 Millions

Proportion of Company’s total income : 94%

Background

Parry has relentlessly made efforts to build on its core competencies of being one of the lowest cost producers of sugar even as it de-risks sugar business by extracting more value from co-products. Around these competencies, Parry is now adding and developing new facilities of cogeneration of power, ethanol, extra neutral alcohol, refined sugar etc. This capacity build-up in products and markets will ensure that the company is well positioned to exploit the large opportunities offered by emerging trends in the sugarcane business.

Parry as a Sugar Major

Parry as a focused entity plans to bring large-scale investments into the sugar business by leveraging its existing assets and strengths in this sector in three broad directions.

Expand existing sugar units capacities.

The company is currently in the process of expanding its capacity from current levels of 16500 TCD to 19500 TCD across its existing manufacturing locations. These projects are estimated to be fully operational by the end of 2007-08. This will help in optimizing the crushing period by the increase in throughput, with improvements in process efficiencies, sugar recovery gains and reduced energy (steam plus power) consumption. The efficiency norms are being benchmarked internationally and should make these united very low cost producers.

The units are also being designed to offer a wide range of products to serve broader and more diverse customer base. The units with built in flexibility will also enable making of customized product offerings to meet key customer accounts.

Value Addition of Co-products

Cogenerated Power: The growing energy consumption in India allows the sugar industry to play an increasingly important role in the energy economy. Additionally, the power generated and exported by the co-generation unit is environment friendly (‘green power’) and made available to rural areas where the mills are located. Thus sugarcane is increasingly becoming a source of energy. This cogen power is in line with clean development mechanism (CDM) methodologies which are now clearly defined and carbon credits are expected to flow soon.

Molasses and Alcohols : The company has started adding manufacturing units to straddle the entire value chain of the distillery from industrial alcohol and rectified spirit to extra neutral alcohol (ENA) and fuel ethanol production. Implementation of Kyoto Protocol by India requires fuel ethanol blending in petrol (EBP) to becoming a reality. The government of India has made 5% blending of ethanol with petrol mendatory which is in the process of being implemented across all states. This proportion is likely to increase to 10% shortly, which will create further potential for the producers. Tamil Nadu Sugar mills have negotiated with oil marketing companies to supply ethanol at about Rs.21.50 per litre (ex-factory). The industry is also discussing with the government to link ethanol prices to the international petroleum prices. Some operational issues are also being worked with the government including considering a policy change to take administrative control of Molasses and Alcohol movements etc., to the centre as India needs to implement Kyoto Protocol as a nation.

Future opportunities

The Company will continue to keep exploring the possibilities for growth throughGreen field and also acquisitions. A 2500 TCD mill in Tamil Nadu is underactive consideration and may be commissioned in record time as soon as the

Government approvals are obtained.

GLOBAL PERSPECTIVE

Growth of Sugar sector

Countries' production levels - surplus across major Sugar countries

The global supply response to high prices in the middle of 2005-06 means that’ sugar supply has grown faster than sugar demand and this has placed downward pressure on prices in 2006-07. The production has surpassed consumption for the first time in past six years.

World is experiencing concurrent peak production by most of the top sugar producing countries with the exception of European Union (EU). It is noteworthy that world production has increased by a large 8 MMT in 2006-07.

Exports from Brazil and India two of the worlds major sugar producing countries are forecast to increase more than what was expected previously as good seasonal conditions have led to higher production in those countries. In contrast the EU is forecast to reduce exports significantly in 2006-07 in order to meet its obligations to the World Trade Organisation.

The fairer trade practices demanded by WTO, high prices of oil, global warming, environmental pressure to reduce dependence on fossil duels and increased use of renewable energy have been directly and indirectly impacting the sugar business across the world. The two major cane producing countries Brazil and India have responded with large scale investments in sugarcane industry (both sugar mills and ethanol plants.). Developed nations as consumers of petrol and diesel have also responded by kick-starting large investments for creating a bio-fuels industry. USA has been building a large ethanol unit based on corn almost every 9 days for 18 months now while EU has been developing a bio-diesel production and distribution system. Other important developments in the world ethanol program include the intended brazil-us ethanol agreement and brazil-japan ethanol talks. All this has fuelled increase in sugarcane, corn and wheat acreages and prices as land is being used for new end-use of crops in the transport energy sector. A new debate has commenced on food versus fuel as the world attempts to re-align its resources between these two sectors. All this will have a significant impact on world sugar availability, price and trade.

INDIAN PERSPECTIVE

Current Situation in the Domestic Market

The Global situation has been more or less reflected in India. The rebound of the cane crop and the enthusiastic response to higher cane prices has resulted in substantial surplus for the Sugar Season 2006-07. Latest production estimates are around 27 MMT for this Sugar year against the estimated consumption of

19.5 MMT.

The situation of bumper stock was further aggravated by a Sugar Export ban effective June 2006 by the Government of India (GOI) (made applicable even or the mandatory exports under the Advanced Licence Scheme).

As a result, the domestic price of sugar plummeted in the second half of the year. Simultaneously during this period, the international prices of sugar also crashed from $ 400 per MT levels to less than $ 320 per MT. The strengthening of the Indian Rupee further aggravated the sugar exportersí plight. By the time GOI finally removed the export ban the net realisation was unremunerative.

The present prices both domestic and export is now below manufacturing cost since cane prices were fixed based on high prices of sugar ruling at early part of last year. There were imminent possibilities of cane arrears mounting. The GOI finally accepted the Industryís pleas and agreed to a series of immediate term measures for stabilising the sugar prices. The GOI has now announced subsidies at Rs. 1350 per MT (for a Coastal state) to encourage exports. The Government of India has also announced a creation of Buffer stock of 2 MMT to ease the pressure on sugar prices.

Meanwhile alarmed by the deteriorating situation on prices, the amount of standing cane remaining and possibility of arrears in cane payment, major cane producing State Governments have stepped in with relief measures. Leading in this effort is Maharashtra state, which has announced an export subsidy of its own of Rs. 1000 per MT, over and above the Central Government subsidy besides a slew of other measures. These include a decrease in cane price for recovery drops for late season crushing and purchase tax waiver for the entire season, insurance payment of Rs. 25,000 per acre of standing crop on arrival of monsoon etc. Karnataka has followed with similar relief packages and Andhra Pradesh and Madhya Pradesh are expected to follow. Tamil Nadu has so far not taken any action to help the mills in the state.

The Way Ahead for Indian Sugar Industry

The policy changes on exports represented a dramatic turnaround in the Government position but was as usual, only reactive, rather than proactive. The situation in exports swung through a full cycle of no exports to one of restrained exports (only ALS obligations) to a export ban and to free exports, all within one year. This flip-flop has hurt Indiaís reputation, as a sugar exporter, in the world trade circles and markets.

Even as major policies are being modified on an ad-hoc basis, a plethora of controls and administrative measures by the Central and State Governments continue to impact the industry and its overall performance on account of

unresolved contradictions and decision based on political considerations. These include:

1. Release Order Mechanism: This measure was designed to manage stocks and prices during times of scarcity and food insecurity. It has lost its relevance in the current context of assured abundance. It has also become ineffective due to the ability of the mills to sell above the release orders through court orders.

2. Reacting to prices in domestic Market by Banning Exports: It must be noted that only 10% of sugar is now required by the Below Poverty Line consumers with the balance being sold as Free Sale Quota. More than 2/3rd of this is consumed by Processed Food and Beverages sector. Thus, the Govtís role to ìcontrolî prices seems more a concern to manage WPI since Sugar retains a very high (and unduly so) weightage in this Index.

3. Cane Pricing: Cane pricing is at both the State (State Advised Prices- SAPs) and Central (Statutory Minimum Price- SMP) Governments level. The State Governments announce cane prices without any way of linking it to Sugar prices. There needs to be a proper linkage between cane price and sugar price realisations.

4. Fuel ethanol industry is emerging and its policy framework is just evolving: It is necessary that a fair and progressive framework is evolved to encourage further investments into the sector. In fact, it is this sector that plays a larger role in energy security and economic development of the country. There appears to be conflict of interest between State and Central Govt. in the area of revenue generated by this sector. While Alcohol sold to Potable Liquor is excisable by State and forms an important revenue source, Alcohol used to convert into Ethanol is a revenue for Centre. Thus for the nationís larger cause, the Central and State Governments need to develop a clear path for Ethanol. These contradictions have to be resolved soon. All controls on this industry must

be removed and Central Government must play a role only to manage strategic reserve stock to allay its concern on sugar availability and prices in ration shops.

As a country we need to take a long term view of sugar exports to carve out a credible and sustainable share in the world sugar trade. The Indian sugar industry has demonstrated its ability to keep up supplies even in the drought years and the bogey of food security should not be used to restrain the industry.

Tamil Nadu - a Comparative Advantage assessment

Over 85% of Indian Sugar production is concentrated in and around five states ñ UP, Maharashtra, Tamil Nadu, Karnataka and Andhra Pradesh.Tamil Nadu (TN) has several specific advantages which are as follows:-

v Favourable agro climatic conditions and a two monsoons system leading to longer availability of cane. Thus several mills in TN crush for about 270 days as against the other states average of about 160 days. The longer crushing season also provides for a profitable investment in cogeneration which further increases the overall profitability of operation in TN.

v The sugarcane yield per hectare is significantly higher compared to the other states and this helps in ensuring higher availability of cane at an optimal cost as well as sustained farmersí interest in the crop.

v Two good ports in the State provide easy access to the export market especially, South and South East Asia.

v Good infrastructure including linking roads, agri-credit through Banks, power supply for irrigation etc.

v Progressive farmers and a strong R&D support from the Sugarcane Breeding Institute, Tamil Nadu Agricultural University at Coimbatore.

However, the long crushing season is partially offset by low recovery period of crushing and the distance from sugar deficit markets of India (except Kerala) and high purchase tax on cane neutralises the above advantages thus decreasing our competitiveness.

Movement of surplus molasses out of Tamil Nadu to other deficit states and export is subject to several administrative controls besides payment of export administrative service fee. On account of this, the producers in Tamil Nadu are unable to realise better prices at the opportune time.

Current Situation of the State

Tamil Nadu is expected to produce a record high of 2.5 MMT of sugar this year ñ a substantial jump from the previous year production of 2.17 MMT. Coming in along with the national surplus, the pressure on prices is felt acutely here too. SISMA has represented to the State Government for relief measures similar to

that offered by other states, and is awaiting response.

Performance review

Execution of the Growth and de-risking strategy:-

1. The companyís fifth sugar plant at Puducherry has commenced operations and achieved the rated production capacity within a short period of time. The projects to increase throughputs in the four sugar units in Tamil Nadu are progressing well and the capacity is likely to be increased to 19500 TCD by the year end. The Company is also planning another green-field unit in Tamil Nadu to be completed in record time to increase the overall capacity to 22000 TCD.

2. The 22 MW Cogeneration unit has been commissioned in Pugalur. This, in addition to the existing two units with a total capacity of 43 MW is a 50 % increase in cogeneration capacity. Another cogeneration plant is currently under construction in Pettavaittalai and will be commissioned by the year end.

3. The existing Distillery at Nellikuppam is being converted into a multiproduct unit with ENA and Ethanol production facilities. The Unit is also likely to be expanded and with two more distilleries planned, the Company will be able to value-add all the Molasses it produces (currently only 1/3rd).

The Company crushed 41.95 lakh tonnes (25.97) of cane with Y-O-Y growth of 62% with a recovery of 8.93% (8.80%), thus sugar production has increased to 3.81 LMT (3.05). The Company continued to make substantial revenues from co-products, its export to grid were at 1630 lakh units (943) with a Y-O-Y growth of 73%.

Sugar Score Card (Rs. In Millions)

	2003-04	2004-05	2005-06	2006-07
Revenue	4151.700	5525.400	7246.300	5559.200
EBIDT	551.000	892.800	990.900	576.400
EBIT	345.800	701.200	796.700	308.000
Capital Employed	3391.200	3463.100	4008.200	5142.700
ROCE	10%	20%	20%	6%

Significant amount of insulation is provided from Cogen and Distillery operations, which do not follow the sugar cycles. This is leading to a change in the overall mix of revenues and profitability of the Sugar Division. The profitability of an integrated sugar model is thus not dependent solely upon sugar prices.

This change in the product mix lends greater stability and predictability to the financial performance of the Company. With the completion of new investments in Co-products, the share of the profitability from Co-products will increase substantially in the coming years and thus de-risking from Sugar cycles.

EID Parry - USPs

Parry has been able to achieve a position of leadership in Tamil Nadu and also be a player of national importance with the help of several business practices and innovations. These practices span all areas of operations.

Sugarcane:

1. Cane R&D:

a. Parry is the only sugar Company in India to run an exclusive R&D wing and breeding program which has generated several promising new high yielding cane varieties with higher sucrose-content and more pest resistance, matching the local soil conditions.

b. Satellite mapping: Parry is involved in conducting soil survey and map the same with the help of satellite imageries by developing farm land database.

c. Drip irrigation systems: Parry is enabling the farmers to use low cost drip irrigation system with estimated water savings of about 40%. With the Tamil Nadu State Govtís recently announced capital subsidies,

the Company expects to increase cane acreage under drip irrigation to at least 10 %.

2. Cane Development:

a. Extension: Parry gives extensive support to the farmers in managing their cane through its Cane Extension team. The team has been further strengthened by employing Agri-graduates from premier universities. The team works closely with the farmers to help them in better farming practices, monitoring the crop throughout the year, crop protection from pests and diseases and increasing the land productivity.

b. Farmer Services: Parry transfers good farm management from labto- land through demos,farmer training sessions for better yield improvements; offers its cane growers agri credit through Banks and unique insurance policies covering both the crop at the individual plot level and personal accident at the grower level. Parry organises internet kiosks called ìParrys Cornerî to help the farmers avail cane services at their doorsteps. Banking services available at their doorstep are special services offered for better business partnership.

Marketing:

The Company offers now a wider range of Sugar to broader & more diverse Customer base. Parry also specialises in making tailor-made products to suit customer needs. This diversification effort is not restricted only to Sugar, but has been further extended to include ENA, Ethanol etc. This allows Company to extract the inherent & intrinsic value of every part of the stick of Sugarcane.

Expansions:

Taking forward its expansion plans, the Company has operationalised the newly acquired Puducherry unit at Ariyur, stabilised Pudukottai Cogeneration Unit, commissioned Pugalur Cogeneration unit and is poised for growth in the entire segment in coming years.

Refinery Joint Venture

E.I.D.-Parry (India) Ltd and Cargill International S.A. have entered into a joint venture to set up a port-based stand-alone sugar refinery in Kakinada, Andhra Pradesh. With an ultimate capacity to produce one million tons of refined sugar per year, this refinery set up in Kakinada will be the largest in the South Asian region. The joint venture will be setting up the refinery close to the Kakinada port. The refinery will be a processing operation, importing the entire raw material, raw sugar, adding value by refining it, and exporting its entire production. Parry holds 50% in the joint venture.

Risk Management

The Company continues to practise risk management to increase the probability of the Company achieving its set Goals and Objectives. And Risk Management, though often called as a Process, it is actually a Practice

in the Organisation.

The following are the major risks associated with the sugar business:

Raw material risk: Sugarcane is the main raw material for sugar and any disturbance on its timely availability will have a substantial impact on operational cost. This is likely to be caused by the following reasons:

Climatic conditions: The crop and availability of cane in TN is influenced by both the monsoon (South-West and North-East). Local weather conditions over the crop cycle affects both the quantity and quality of cane

available.

Cane Economics: The profitability of alternative crops will influence the area of planting under cane; pests and disease and availability of farm labour also impact the cost incurred by the cane grower.

Mitigation Measure: The Company has always maintained an amicable relationship with its farmers. It has paid up all dues on time, despite the arrears having been on the rise in the industry as a whole. With its goodwill and the time tested policy of ethical dealings, the Companyís risk of a raw material short supply will be mitigated with the farmers in the addressable area continuing to plant sugar cane. Further, with experiments in farm mechanisation, drip irrigation, improved cane varieties (developed through the Research and Development facility), carefully monitored scheduling of cane planting and harvesting, the Company is confident of mitigating the risk.

Policy risk: The policies on cane are regulated by both the Central and State Government and they currently have a considerable hold on this industry by being able to fix the raw material price and to influence the sugar selling price. Further the control of the Governments (State and Central) include:-

v Exports (Permission / incentives)

v Imports ( Permission/tariffs)

v Sugar pricing (Release orders and Levy)

v Command Area demarcation from time to time

v Molasses movement control

Mitigation Measure: The Company works closely with ISMA and SISMA towards developing an industry point of view and appropriate policy recommendations to have dialogue with the Government. These include formulation of policy on Ethanol doping, review of cogeneration policy, Decontrol of Sugar, review of sugar weightage in WPI etc.

Price risk: The cyclicality of Sugar business does have a final call on the sugar prices and thus affecting profitability.

Mitigation Measure: The company has taken the following measures to insulate itself against the price risk by two ways ñ

1. Focusing on value added products like Pharma grade refined sugar,

high quality plantation white sugar and retail packs to derive a better

margin.

2. Direct supplies to large Institutions and retail chains.

Outlook summary:

Indian sugar industry is going through a very critical phase where within a short period of time the situation has turned from one of ìshort supply and high pricesî to one of ìexcess supply and low pricesî. While part of this is due to Government interventions, some of them are due to increased alignment with world scenario. While in the short term, relief measures have been announced to bring back stability of sugar prices, the long term outlook for sugar remains positive and promising for the following reasons:-

v ï Growing demand for sugar especially internal consumption led strong GDP growth and changing food habits

v ï Opportunity from Fuel Ethanol blending program

v ï Opportunity from Cogeneration of Power

v ï Opportunities for India to become a structural Sugar exporter and participate in the South Asian Sugar market provided an enabling conducive policy framework is put in place by GOI

v ï Important developments in the World Ethanol program and its impact on World Sugar availability.

Bio Products

A. Bio Pesticides

Established : 1994

Revenue, 2006-07 : Rs.26 Million

Proportion of Companyís total Income : 4%

Exports : Rs 180.000Millions

Highlights 2006-07

v AVANA - Neem based bio pesticide granule was launched successfully for controlling pests in the Sugarcane and Paddy in the domestic market.

v With new registrations, export sales opened up in the markets like Columbia, Brazil, Korea and Australia.

v Parry America Inc., wholly owned subsidiary of Parry, is taking all efforts to establish significant presence in the Home & Gardens segment in America.

Divisional Performance

ï Revenue at Rs.26 Millions & Aza Technical sales volumes at 4 MT remained more or less at the last year's level.

The Bio Pesticides division of the Company has emerged as a significant supplier in the Neem based bio-pesticide business and continues to focus on its core product - the NEEMAZAL® range of products.

Industry Scenario and Development

The Global Bio pesticide market is estimated at Mn. 672 $ accounting for 2% of global pesticide sale with the remaining 98% being markets for Synthetic pesticides.

Neem based bio pesticides come under the category of ëPlant extractsí based bio pesticides which accounts for Mn.60 $. The sale of Aza based products is valued to be Mn. 25 $.

By 2010, Global Bio pesticide is estimated to grow to Mn 1075 $ at a CAGR of 10%. On these growth projections, the Plant Extracts business will be at Mn.160 $ and the business for Aza based products will be at Mn. 67 $.

The Bio pesticide market is distributed in Americas (45%), Europe (35%) and rest of the world (20%). Asia offers the highest growth potential because of the size of the prospective market.

Performance

Export Sales and Revenues registered a growth over the previous year, with America and Europe continuing to be the major markets. China and Korea registered sales as planned.

During the year, Sales in the domestic markets did not grow due to unfavourable seasonal conditions and change in Sales and Distribution Model from Trade Channel to Institution. This one time correction of shifting to

Institutional model coupled with the season failure has resulted in reduced sales in the Domestic markets.

During the year, Thyagavalli unit reached a landmark of achieving 1000 kg production in a month demonstrating the potential to reach the name plate capacity.

Outlook

The Division is operating in the ëPlant Extractsí segment of Bio pesticide industry, which is projected to grow to Mn.160 $ by 2010. The demand for organic and residue free food is continuing to grow worldwide. The Companyís products command a premium over its competitors, both in the domestic and export markets.

The Division is constantly working through its R&D team to continuously come out with totally new and modified products. This will facilitate the business to address the growing and diversified customer requirements across the global markets.

Going forward, the divisionís prospects are expected to be on the growth path.

B. Nutraceuticals

Parry Nutraceuticals Ltd. merged with Parry effective 1st September, 2006 and is currently functioning as a division of your Company.The Nutraceuticals division clocked a turnover of Rs. 111.200 millions for the 7 months

period ended 31st March, 2007. The products of this business continued to grow in all the markets and is currently exported to 35 countries. Organic Spirulina, the main product of this business continue to outperform competition in its segment. In the current year the Company made inroads into New Zealand by selling Organic Spirulina to one of the largest brands of Nutraceuticals worldwide. The Company also got the prestigious account of Cosway, Malaysia for its Organic Spirulina.

The Organic Spirulina produced by your Company is the most certified Organic Spirulina in the world with 5 quality certifications and 3 Organic Certifications to its credit. The Organic Spirulina of the division was certified to meet stringent standards such as US Pharmacopeia, USDA and Naturland - Germany.

Nutraceuticals division

Business Established : March 2000

Merged with EID Parry : 1st Sep 2006

Revenues from 1st Sep 06 to 31st Mar 07 : Rs 11.12 Million

Proportion of Company's total Income : 2%

Exports : Rs 90.700Millions

Highlights 2006-07

During the year, two new strains of Algae were successfully experimented in small scale for commercial production of Omega 3 EPA and DHA. Additional ponds have been built to expand and commence limited commercial production. The products from these Algae would cater to heart health and brain health and is expected to hit the market in the 2nd half of the FY 2007-08.

Industry Scenario and Development

The size of the global Nutraceutical industry is estimated well over US $ 15 billion per annum growing at 10% per annum. With increasing medical care costs and aging population in the west, Nutraceuticals as a category of preventive health care is bound to grow at a steady pace. Within the category, the Microalgal segment estimated at US $ 300 million and is growing at 7-8 % per annum covering Spirulina, Carotenoids like beta carotene, Astaxanthin and the fast growing omega 3 fatty acids.

The Nutraceutical industry is increasingly being regulated world wide for standardisation and product claims. Much money is being spent by leading players in the Nutraceutical industry establishing product claims through clinical studies. There is also a clear trend of Nutraceutical integrating with food and thereby establishing a fast growing segment called Functional foods.

The Division currently produces 3 different types of microalgae ñ Organic Spirulina, Dunaliella (Natural Mixed Carotenoids) and Haematococcus (Astaxanthin) at its Oonaiyur facility. The Company is also developing

technologies for the production of Omega 3 fatty acids EPA and DHA from 2 new strains of microalgae.

Performance

The Division has emerged as a global leader in Organic Spirulina business and is continuing with its R&D efforts to research new strains of algae to widen its product basket.

During 2006-07, the acceptance of the Companyís products continued to grow in all the markets serviced by it.

Outlook

The Nutraceutical industry is set to play a significant role in managing increasing health care costs and improving the quality of life in aging population world wide, with increasing shift in customer preferences to natural alternate

ingredients to synthetic components with emphasis on disease prevention rather than disease treatment. The Company is set to participate in a very significant segment of Omega 3 fatty acids which is currently the fastest growing segment backed by scientific claims and studies. The Food Safety and Standards Bill 2006 will trigger the growth of this nascent industry in India.

As per web details

Established in the year 1788, Parry is presently engaged in a wide galaxy of diversified activities. It became a member of the Murugappa group in the year 1981 and thereafter the story has been one of turnaround and of steady growth. 

Currently, subject has evolved into one of the largest business groups in the country. It is engaged in the manufacture and marketing of a wide-range of products that can be broadly divided into the following two groups:

v Parryware – Ceramic Sanitary ware 

v Sugar, Bio-Products & Chemicals  –  Sugar, Alcohol, Power, Bio-products.

The company has been a pioneer in many fields, including setting up of India's first chemical fertiliser plant - at Ennore, Sugar plant - at Nellikuppam and Sanitaryware plant - at Ranipet.

A strong sense of commitment and adherence to business ethics has helped  subject succeed in bringing

to life the larger picture and to ‘Go Beyond’ in all their ventures.

Awards

Subject has always been a pioneer- be it in developing and introducing quality products in the market or conforming to environmental standards even before they become mandatory. Given below are some of the prestigious awards and achievements won by the company: 

SUGAR DIVISION:

Nellikuppam has been recognized as a Zero-waste plant with a strict adherence to quality and high productivity. They have been the recipients of several awards and certifications with the course of time. Some of the most significant achievements by the company are: 

v ISO 14001 certification in Pudukottai & Nellikuppam

v The recipients of the Green Tech Award on Safety 

v Instrumental in organizing a SHE event at the Murugappa Group level 

PARRYWARE:

ISO 14001-1996

Adding to its long list of firsts, Parryware, India’s number one Sanitaryware brand has become the first and only Indian company in the Sanitaryware industry to be conferred ‘Superbrand of India’ status for the year 2003.

All Parryware manufacturing plants at Ranipet, Alwar & Dewas have been accorded ISO14001: 1996 Environmental Management system certifications by British Standards Institute (BSI) an internationally renowned certification agency incorporated in UK by Royal Charter.

With this certification, the entire Parryware & Johnson Pedder ranges of sanitary ware manufactured by EID Parry (India) Limited are to be manufactured in plants that follow environmentally responsible practices.

Parryware’s environmental management system policy commits the business to prevention of pollution, optimal utilization of resources and reduction in generation of wastes. 

The  quality management system certification is an assertive statement of their intent to become a more customer focused, responsive & learning organization

Press Release

The turnover of subject for the quarter ended 31^st December 2007 was Rs.1972.800 Millions(Rs. 1542.800Millions). A loss of Rs. 163.200 Millions (gross profit of Rs.31.500 Millions) after absorbing depreciation of Rs. 110.300 Millions was incurred at the operating level. After absorbing interest cost of Rs.68.500 Millions (interest income of Rs. 9.200 Millions) the loss for the quarter was Rs.231.700 Millions (profit of Rs. 40.700 Millions)

Low dometic and international prices, rupee appreciation making exports unattractive and high inventory carrying cost have resulted in a net loss of Rs.233.300 Millions. The selling price of sugar prevailing now is lower than the cost of production.

Sugar Division

During the quarter the company crushed 5.16 lakhs tones of cane compared to 6.11 lakh tones in the corresponding period of 2006-07. The overall production of sugar was 43784 MT(49827 MT). The average sugar realization per MT for the quarter was Rs.12535 compared to Rs. 15985 for the corresponding period of 2006-07. The company exported 503 lakh units to the TNEB grid compared to 221 lakhs units for the corresponding period of 2006-07.

During the quarter the company exported 83688 MT, including 52691 MT of raw sugar.

The sugar Segment reported a loss of Rs.281.200 Millions for the quarter (loss Rs. 6.100 Millions). The loss consists of Rs.320.200 Millions for the quarter for sugar (loss of Rs. 22.700 Millions) while the PBIT for the cogeneration segment was Rs.22.600 Millions (Rs.7.800 Millions) and the distillery segment Rs. 16.400 Millions(Rs. 8.800 Millions.

Bio-Product Division

Both the Neem based pesticides and the Nutraceuticals performed better than the corresponding quarter of 2006-07.

While the Bio-Pesticides segment reported a profit of Rs. 22.000 Millions for the quarter (profit Rs.17.100 Millions) the loss for the Nutraceuticals segment was Rs. 0.400 Millions(profit Rs.3.200 Millions).

Interest

Higher Level of Inventory and higher rate of interest have resulted in higher interest cost of Rs. 68.500 Millions for the quarter compared to previous year.

Addition to the Board

The board of directors have appointed Mr. K Raghunandan , president (sugar) as deputy Managing Director of the Company with effect from 1^st February 2008.

About Them

Subject is a member of Murugappa Group. Headquartered in Chennai, the USD 2 Billion (Rs.85000.000 Millions) Murugappa Group is India’s leading business conglomerate. Market leaders in diverse areas of business including engineering, abrasives, finance, general insurance, sanitaryware, cycles, sugar, farm inputs, fertilizers, plantations, bio-products and nutraceuticals, its 29 registered companies have manufacturing facilities spread across 14 states in India. The organization fosters an environment of professionalism and has a workforce of over 30000 Employees.

The group has forged strong joint venture alliances with leading international companies like GOa, Cargill, DBS Bank, Mitsui Sumitomo and Groupe Chimique Tunisien and has consolidated its status as one of the fastest growing diversified business houses in India.

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.39.73
UK Pound	1	Rs.77.34
Euro	1	Rs.57.80

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	9
PAID-UP CAPITAL	1~10	9
OPERATING SCALE	1~10	9
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	10
--PROFITABILIRY	1~10	8
--LIQUIDITY	1~10	9
--LEVERAGE	1~10	9
--RESERVES	1~10	9
--CREDIT LINES	1~10	9
--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	YES
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		81

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