MIRA INFORM REPORT

Report Date :

11.02.2008

Tel No:

91-40-23543010

IDENTIFICATION DETAILS

Name :	SHANTHA BIOTECHNICS LIMITED
Registered Office :	Plot No. 822-A, Road No. 40, Jubilee Hills, Hyderabad – 500 033, Andhra Pradesh
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	10.03.1993
Com. Reg. No.:	01-15470
CIN No.: [Company Identification No.]	U24110AP1993PTC015470
TAN No.: [Tax Deduction & Collection Account No.]	HYDS07760E
PAN No.: [Permanent Account No.]	AAECS6982Q
Legal Form :	A Closely held Public Limited Liability Company.
Line of Business :	Manufacturing of Hepatitis B Vaccine, Alpha Interferon, Restriction Enzymes, etc.

RATING & COMMENTS

MIRA’s Rating :

A

RATING			STATUS		PROPOSED CREDIT LINE
56-70		A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums		Fairly Large
	Maximum Credit Limit :			USD 3630000
	Status :			Good
	Payment Behaviour :			Regular
	Litigation :			Clear
	Comments :			Subject is a well – established and reputed company having satisfactory track. Trade relations are fair. Business is active. Payments are reported as usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Plot No. 822-A, Road No. 40, Jubilee Hills, Hyderabad – 500 033, Andhra Pradesh, India
Tel. No.:	91-40-23543010/ 23548507/ 266364225 / 23643010
Fax No.:	91-40-23541713
E-Mail :	rajasekar@shanthabiotech.co.in shanta@hdl.vsn1.net.in info@shanthabiotech.co.in
Website :	http://www.shanthabiotechnics.com
Corporate Office :	8-2-334, Serene Chambers, 3^rd Floor, Road No. 5, Banjarahills, Hyderabad – 500 034, Andhra Pradesh
Tel. No.:	91-40-23543010 / 23548507 / 23608843
Fax No.:	91-40-23548476
E-Mail :	info@shanthabiotech.com
Factory :	PB No.4, Medchal – 501401, R. R. District, Andhra Pradesh, India
Tel. No.:	91-418-2222922 / 2222693 / 2222694 / 2222695
Fax No.:	91-418-2222656
Regional Office 1 :	208 Parkway Drive, Roslyn Heights, New York 11577, USA
Tel. No.:	91-516 859 3010
Fax No.:	91-516 626 3032
E-Mail :	srao@shanthabiotech.com
Regional Office 2 :	11211 Sorrento Valley Road, Suite C, San Diego, CA 92121, USA
Tel. No.:	91-858- 6589450
Fax No.:	91-858- 6589230
E-Mail :	shanthawest@shanthabiotech.com
Branches :	Located at · G-1, Saikamala Nivas, Padmarao Nagar, Secunderabad – 500 003, Andhra Pradesh Tel. 91-40-26211372 · 3^rd Floor, Serene Chambers Road No. 7, Banjara Hills, Hyderabad – 500 034, Andhra Pradesh Tel. 91-40-26502866 / 26502868 · Flat No. 101, Gayatri (West), Srinagar Colony, Hyderabad – 500 034, Andhra Pradesh Tel. 91-40-26570215 · 203, Ridge Wood Residency (West), Maredpally, Secunderabad – 500 026, Andhra Pradesh Tel. 91-40-26211285 · 202, Maithri Nivas, B. S. Maktha, Begumpet, Hyderabad – 500 016, Andhra Pradesh Tel. 91-40-26502867 · Survey No. 274, Athevelli Village, Medchal - 501 401, Ranga Reddy District, Andhra Pradesh, India

DIRECTORS

Name :	Mr. Khalil Ahmed
Designation :	Executive Director
Address :	Plot No. 387, Road No. 22, Jubilee Hills, Hyderabad – 500 033, Andhra Pradesh, India
Date of Birth/Age :	19.01.1958
Date of Appointment :	Initially appointed 21.02.1994 and revised w.e.f. 06.08.2004
Name :	Dr. Kodandarami Reddy T.
Designation :	Director
Address :	1002, Spring View Point, Cincinati, Ohio 45224, USA
Date of Appointment :	15.10.1996
Name :	Mr. H E Sheikh Ghassan I Shaker
Designation :	Director
Address :	Flat No. 11, 17 Grossvenor Square, London WIX 9LD, UK
Date of Birth/Age :	20.06.1937
Date of Appointment :	28.04.1998
Name :	Mr. Sabu M Kota
Designation :	Director
Address :	72, Wessan Terrace, North Boro Mass 01532, USA
Date of Birth/Age :	02.05.1945
Date of Appointment :	30.09.2002
Name :	Mr. K I Varaprasad Reddy
Designation :	Director
Name :	Mr. Georges Hibon
Designation :	Director
Name :	Mr. Alain Merieux
Designation :	Director
Name :	Mr. Johannes Burlin
Designation :	Director
Address :	5100 Cathedral Ave, NW, Washington 20016
Date of Birth/Age :	24.11.1964
Date of Appointment :	07.11.2006
Name :	Mr. Philippe Sans
Designation :	Director
Address :	23 Chemin De La Boucle Lentilly 69, France
Date of Birth/Age :	18.11.1958
Date of Appointment :	07.11.2006
Name :	Mr. Abhey Yograj
Designation :	Director
Address :	N -94, Panchsil Park, New Delhi – 110 017, India
Date of Birth/Age :	01.09.1943
Date of Appointment :	07.11.2006
Name :	Mr. K Sravanthi
Designation :	Director
Name :	Ms. Harsha Bangri
Designation :	Director
Address:	1102, Aditya Akruti Tower, Sleater Road, Grant Road (West), Mumbai – 400 007, Maharashtra, India
Date of Appointment :	22.06.2005
Name :	Mr. Yousuf Bin Alawi Al Ibrahim
Designation :	Director
Address:	P O Box 2553, PC, Ruwi 112
Date of Birth/Age :	01.01.1942
Date of Ceasing :	07.11.2006
Name :	Mr. Fatma Yousuf Alawi Al Ibrahim
Designation :	Director
Address :	P O Box 2553, PC, Ruwi 112
Date of Birth/Age :	13.08.1972
Date of Appointment :	07.11.2006
Name :	Mr. Al Sheikh Shaker Ghassan Ibrahim
Designation :	Director
Address :	Flat No. 11, 17, Grossvenor Square, London
Date of Birth/Age :	20.06.1937
Date of Ceasing :	07.11.2006
Name :	Mr. Koduru Iswara Varaprasad Reddy
Designation :	Director
Address :	Plot No. 822, Road No. 40, Jubilee Hills, Hyderabad – 500 033, Andhra Pradesh, India
Date of Birth/Age :	30.06.1947
Date of Appointment :	10.03.1993

KEY EXECUTIVES

Name :	Mr. N Rajasekar
Designation :	Vice President (Finance ) and Secretary
Address :	105, Maitri Enclave, Raja Sham Karan Road, Ameerpet, Hyderabad – 500 016, Andhra Pradesh, India
Date of Birth/Age :	14.08.1961
Date of Appointment :	23.04.2001

SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares
Mr. K I Varaprasad Reddy	807000
Mrs. K Vasantha	81000
Mrs. K Shanthamma	102300
Mr. K P Sharma	15000
Mr. M S Sastry	15000
SVAS Investments Private Limited	673500
Mrs. N Sangeeta	180000
Stock Holding Corporation of India Limited, A/c State Bank of India Mutual Fund	343000
HDFC Bank Limited, A/c State Bank of India Mutual Fund, Umbrella Pharma Fund	3000
Stock Holding Corporation of India Limited, A/c State Bank of India Mutual Fund, Magnum Equity linked Savings Scheme 1995	13500
Stock Holding Corporation of India Limited, A/c State Bank of India Mutual Fund, Magnum Global Fund 1994	13500
State Bank of India Capital Markets Limited, A/c Indian Magnum Fund N V Mutual Fund	150000
Morgan Stanley Mutual Fund, A/c Morgan Stanley Growth Fund	250000
Mrs. K Sravanthi	53700
Mrs. Janani K Krishna	10000
Mr. Bedapudi Venkateswara Prasad	11000
State Bank of India Mutual Fund, A/c Magnum Balanced Fund	60000
Mr. Subu M Kota	802200
Mr. Shankar N Planjery	811500
Mr. Vijaya Sekhar T reddy	17400
Dr. Kodandarami Reddy T	248750
Dr. (Mrs.) Vimala A Majeti	85200
August Holding	375000
Canam Investment Limited	25000
Mr. Rajeev Tummuru	100000
Ms. Prasanthi Tumurru	100000
Mr. Ramesh C Tumurru	69750
Koduru Sravanthi	37300
Rass Investments Limited	1520400
Mr. Bedapudi Prakash	39000
Mr. Ramachandra Rao Nemani	50000
Mr. Radhakisan Sohanlal Baheti	10000
Mrs. Padma Radhakisan Baheti	10000
United Overseas Investment Limited	6750000
Sheikh Ghassan I Shaker	67000
Morgan Stanley Investment Management Inc., A/c Morgan Stanley India Investments Fund Inc.	500000
Morgan Stanley Investment Management Inc., A/c Taj Investments Limited	100000

Equity Shares Breakup (Percentage of Total Equity):

Sr No.	Category	Percentage
1	Foreign holdings (Foreign institutional investors ) foreign companies foreign financial institutions , non residents or Overseas corporate bodies or others	76.84
2	Directors or relative of directors	19.32
3	Other top fifty (50) shareholders	1.02
4	Others	2.82
	Total	100.00

BUSINESS DETAILS

Line of Business :	Manufacturing of Hepatitis B Vaccine, Alpha Interferon, Restriction Enzymes, etc.
Products :	· Hepatitis B Vaccine · Diagnostic Kits · Interferon Alpha 2b injection · Streptokinase Injection · Erythropoietin Pre-filled Syringe · DPT + Hepatitis – B Combination Vaccine.

GENERAL INFORMATION

No. of Employees :	Around 300
Bankers :	· Export Import Bank of India (EXIM Bank) Centre One Building, Floor No. 21, World Trade Centre Complex, Cuffe Parade, Mumbai – 400 005, Maharashtra, India · Karnataka Bank · State Bank of Hyderabad · State Bank of India Address: Overseas Branch, Abids Koti, Hyderabad – 500 001, Andhra Pradesh, India · ICICI Bank Limited · Technology Development Board · Indian Overseas Bank Address: M G Road, Branch, Chandralok Complex, Secunderabad – 500 002, India
Facilities :	The Company enjoys mortgage facilities from Export Import Bank of India dated 16.0.2005

Banking Relations :	Satisfactory
Auditors :
Name 1 :	A V Reddy Chartered Accountants
Address :	206, Srinilaya Estates, Ameerpet, Hyderabad – 500 016, Andhra Pradesh, India
Name 2 :	J B Reddy and Company Chartered Accountant
Address :	Flat No. 206, Srinilaya Estates, Ameerpet, Hyderabad – 500 073, Andhra Pradesh, India
Holding Company:	Shah H
Subsidiaries :	Shantha West INC Shantha Marine Biotechnologies Private Limited (SMBPL)

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
2200000	Equity Shares	Rs.100/- each	Rs. 220.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
14650720	Equity Shares	Rs. 10/- each	Rs. 146.507 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		146.507	146.507	145.000
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		759.163	712.348	646.263
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		905.670	858.855	791.263
LOAN FUNDS
1] Secured Loans		984.379	641.954	540.682
2] Unsecured Loans		112.967	87.358	84.702
TOTAL BORROWING		1097.346	729.312	625.384
DEFERRED TAX LIABILITIES		126.605	115.459	99.776
TOTAL		2129.621	1703.626	1516.423
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		792.123	689.684	418.293
Capital work-in-progress		427.348	139.362	257.340
INVESTMENT		375.430	303.078	263.805
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	166.408	207.326	191.140
	Sundry Debtors	207.680	106.908	163.949
	Cash & Bank Balances	18.064	45.619	126.298
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	299.621	307.383	118.566
Total Current Assets		691.773	667.236	599.953
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	203.879	129.734	128.030
	Provisions	11.499	44.662	30.351
Total Current Liabilities		215.378	174.396	158.381
Net Current Assets		476.395	492.840	441.572
Product Development Expenditure		58.325	78.662	135.413
TOTAL		2129.621	1703.626	1516.423

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2006	31.03.2005
Sales Turnover		898.296	659.057
Other Income		5.042	5.070
Total Income		903.338	664.127
Profit/(Loss) Before Tax		126.429	73.436
Provision for Taxation		27.235	[2.062]
Profit/(Loss) After Tax		99.194	75.498
Import Value		162.599	73.894
Export Value		725.718	463.149
Expenditures :
	Financial Charges	30.103	11.849
	Depreciation	47.715	34.793
	Other Expenditure	612.121	460.089
Total Expenditure		689.939	506.731

KEY RATIOS

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
PAT / Total Income	(%)	NA	10.98	11.37
Net Profit Margin (PBT/Sales)	(%)	NA	14.07	11.14
Return on Total Assets (PBT/Total Assets}	(%)	NA	8.45	5.76
Return on Investment (ROI) (PBT/Networth)		NA	0.15	0.09
Debt Equity Ratio (Total Liability/Networth)		1.45	1.05	0.99
Current Ratio (Current Asset/Current Liability)		3.21	3.83	3.78

LOCAL AGENCY FURTHER INFORMATION

History

Subject was incorporated on 10.03.1993 at Hyderabad in Andhra Pradesh under the name and style of Shantha Biotechnics Private Limited having Company Registration Number 15470. Consequent to the decision taken by the Shareholders at he Extraordmary General Meeting held on 6^th August 2004, Company's name has been changed and the Company has also become a Public Limited Company with effect from 6^th August 2004. Now the name of Company is SHANTHA BIO-TECHNICS LIMITED.

The genesis of Subject can be traced back to the initiatives of Dr. K I Varaprasad Reddy, the Founder and Managing Director. Dr. Varaprasad, an electronics engineer by profession, established the company in 1993 with the sole purpose of developing efficacious but cost effective vaccines and therapeutics that are within the reach of the common man.

The seeds of this ambitious venture were sown in Geneva at a conference on global programs for immunization. This is where Dr.Varaprasad first realized the pressing need for an affordable Hepatitis-B vaccine for India. At that point in time, the high cost of the imported vaccine rendered it out of reach for most segments of society.

Aware that the price of the vaccine had to be drastically reduced in order for the government of India to include it in the National Immunization Program, Dr. Varaprasad decided to develop the technology in-house rather than importing it at a higher cost. His early years in R and D had given him confidence in indian Scientific talent and he was convinced that given a conducive atmosphere we could put India on the map for Genetic Engineering.

The initial years were tough. Banks and financial institutions viewed the project skeptically and refused to fund the project. The project began modestly as an R and D outfit at the Osmania University under the industry-university interactive programme in 1993 and later at the Center for Cellular and Molecular Biology (CCMB) until an independent RandD facility was built.

The fledgling company received a big boost with the entry of H.E Yusuf Bin Alawi Abdullah, Foreign Minister of Sultanate of Oman, who invested money in his personal capacity along with other friends as co promoters in 1995. H.E also arranged for long term loans from Oman International bank at low rates of interest. The perseverance and hard work finally began to pay off. In 1997, Shantha developed India’s first r- DNA Hepatitis-B vaccine. And there has been no looking back ever since.

Subject (Shantha) has become a part of the Merieux Alliance group after MA acquired the majority shareholding in the company in November, 2006. Merieux Alliance is a France based global organization having presence in all elements of the healthcare chain: prevention, diagnostics, prognosis, treatment and clinical monitoring. The group’s turnover is over US$1.3 billion and has a workforce of more than 9000 people around the globe.

About Subsidiary

Shantha West Inc.

The reports and audited accounts of the subsidiary company along with the statement pursuant to Section 212 of the Companies Act, 1956, are annexed. 

Shantha West Inc. based in San Diego, USA, is carrying out basic research and development of fully human monocional antibodies for vancus cancers. The targeted monoclonal antibodies are to cure non-small cell lung cancer, pancreatic cancer, breast cancer, colon cancer and melanoma. The products are being expressed iii Cho Cells at Gala, USA. The Company is also working on MULTIAB technology with the combination of the monoclonal antibodies. The products are expected to enter into pre clinical trials by end of year 2004. 

Shantha Marine Biotechnologies Private Limited (SMBPL) 

The Company has entered into Memorandum of Compromise on 16th March 2004 with the joint venture partner of SIVIBPL in connection with the affairs of SMBPL and your company has agreed to compensate the subsidiary for its losses in settlement of your Company's obligations and also divest its equity holding in SMBPL. Accordingly SMBPL is ceased to be a subsidiary company. 

FIXED ASSETS:

· Vehicles

· Computers

· Furnitures and Fixtures

· Office Equipment

Bankers Charges Report as per Registry

Name of the Company : Shantha Biotechnics Limited

Presented by : -- Mr. Khalil Ahmed, Executive Director

1. Date and description of the instrument creating or evidencing the charge	Unattested deed of hypothecation dated 29.03.2005 executed by Shantha Biotechnics Limited (therein and hereinafter referred to as “the Borrower”) in favour of Export-Import Bank of India (EXIM Bank) a certified true copy whereof is attached hereto.
2. Amount secured by the charge /amount owing on security of the charge	Loan of USD 1.28 millions, (including any converted rupee amount (s) consequent upon default, in the case of foreign currency loan) together with interest, compound interest, additional interest by way of liquidated damages (in case of default), costs (legal costs on a full indemnity basis), charges, expenses and all other monies payable by the borrower to Exim Bank under the Loan Agreement dated 29.03.2005 made between the borrower and Exim Bank.
3. Short Particular of the property charged. If the property acquired is subject to change date of acquisition of property should be given	The whole of the borrower’s movable fixed assets, both present and future, briefly described in schedule III to the Deed of Hypothecation, including its movable plant and machinery, equipment, appliances, furniture, vehicles, machinery spears and stores, tools and accessories, whether or not installed.
4. Gist of the terms and conditions and extent and operation of the charge.	a) The charge created by the aforesaid Deed of Hypothecation shall operates as a continuing security by way of a first charge for the due repayment by the borrower to Exim Bank of the Loan of USD 1.28 millions (including any converted rupee amount(s) consequent upon default in the case f foreign currency loan) together with payment of interest, compound interest, additional interest by way of liquidated damages (in case of default), costs (legal costs on a full indemnity basis), charges, expenses, and all other monies payable by the borrower to Exim Bank in terms of the said Loan Agreement. b) The said charge shall rank in the order of priority set out in schedule IV to the Deed of Hypothecation.
5. Names, address and description of the persons entitled to charge	Export Import Bank of India Centre One Building, Floor No. 21, World Trade Center Complex, Cuffe Parade, Mumbai – 400 005, Maharashtra, India
6. Date and brief description of instrument modifying the charge	N A
7. Particular of modification specifying the terms and conditions or the extent or operation of the charge in which modification is made and the details of modification	N A

Name of the company

SHANTHA BIOTECHNICS PRIVATE LIMITED

Presented By

Shri N Rajasekar, VP (Finance) and Secretary

1) Date and description of instrument creating the change

The working capital facility of Rs. 124.000 millions (therein and herein referred to as “the loan”) agreed to be lent and advanced by Indian Overseas Bank, (therein and hereinafter referred to as “the Bank”) to the company together with interest, additional interest, cost, charges, expenses and all other moneys payable by the company to the bank in terms of

Letter of hypothecation – open advances – for Rs. 50.000 millions

Letter of Hypothecation for securing Machinery / Vehicles / Goods/ Book debts – for Rs. 52.000 millions

Letter of Hypothecation for securing Machinery / Vehicles / Goods/ Book debts – for Rs. 124.000 millions

Letter of Hypothecation for machinery – Rs. 124.000 millions

all dated 6^th October, 2000

Executed by Shantha Biotechnics Private Limited (therein hereinafter to as “the company”) in favour of Indian Overseas Bank (IOB) (therein and hereinafter referred to as “the bank”)

2) Amount secured by the charge/amount owing on the securities of charge

Nature of Facility	Limit (Rs. in millions)
Open Cash Credit (Hypothecation)	100.000
Sub Limit – Packing Credit	[75.000]
Sub Limit – Demand Bills purchased	[25.000]
Letter of credit (Foreign)	22.000
Letter of Guarantee	52.000
Total	174.000

(therein and hereinafter referred to as “the loan”)

3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given

Hypothecation of Entire current assets of the company including hypothecation of Raw materials , Stock in process, finished goods stored or to be stored in the company premises at Medchal , Hyderabad or at any other premises and Receivables.

Second charge on entire block assets of the company (Block Value or Rs. 450.784 millions)

4) Gist of the terms and conditions and extent and operation of the charge.

Margin: 25%

Interest: 7% over RBI rate with a minimum of 15% p.a

Commission:

Foreign Letter of credit : As per FEDAI Rules

5) Name and Address and description of the person entitled to the charge.

Indian Overseas Bank

Address: M G road, Branch, Chandralok Complex, Secunderabad – 500 002, India

6) Date and brief description of instrument modifying the charge

No instrument was executed , but on 27^th February 2004 a mortgage was created in favour of Indian Overseas Bank deposit of title deeds in respect of the company’s immovable properties sisuutae at Village Athvelli, Athvelli Gram Panchayat , Medchal Mandal , Ranga Reddy District in the state of Andhra Pradesh in order to create security thereon as and by way of mortgage by deposit of title deeds for covering the enhanced working capital limits from Rs. 124.000 millions to Rs. 174.000 millions.

7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.

The facility together with all interest thereon at the respective agreed rates, costs, charges and other expenses payable by the company to Indian Overseas Bank in respect thereof secured under the above mentioned Deed of Hypothecation is now also secured, interalia, by the said mortgage by deposit of title deeds in respect of the companies immovable properties situate at Village Athvelli, Athvelli Gram Panchayat , Medchal Mandal, Ranga Reddy District in the state of Andhra Pradesh. Together with all building and structures thereon and all plant and machinery attached to the earth or permanently fastened anything attached to the earth.

Corporation identity number or foreign company registrations number of the company

U24110AP1993PTC015470

Name of the company

SHANTHA BIOTECHNICS LIMITED - ONDD

Address

Plot No. 822-A, Road No. 40, Jubilee Hills, Hyderabad – 500 033, Andhra Pradesh, India

This Form is for

Modification of charge

Type of Charges

· Immovable Property

· Book debts

· Movable Property

Particular of the charge holder

State Bank of India

Address: Overseas Branch

Abids Koti, Hyderabad – 500 001,

Andhra Pradesh, India

Email ID: maddali.s.rao@sbi.co.in

Nature or description of the instrument creating charge

Enhancement of working capital limits

Form C 1, dated 7^th June2007 for Rs. 337.500 millions, Supplemental agreement of loan for increase in the overall limit

Form C – 2A dated 07.06.2007 for Rs. 337.500 millions Supplemental agreement of hypothecation of goods and assets for increase in the overall limit

From C - 5, dated 7^th June, 2007 for Rs. 337.500 millions Letter regarding the grant of individual letter cum guarantee dated 7^th June, 2007.

Date of the instrument creating charge

07.06.2007

Amount Secure by the charge

Rs. 337.500 millions

Brief of the principal terms and conditions and extent and operation of the charge

Rate of interest:

For cash credit Equivalent to SBAR with monthly rests

present effective rate -12.75% p.a However the effective interest rate will be higher of

· Pricing approved by bank or

· Pricing advised by Indian Overseas Bank

For Packing Credit – as per banks instruction from time to time under SBI Exporters Gold Card Scheme.

Terms of repayment:

No change in existing instructions

Margin:

Raw materials	25%
SIP	25%
FC	25%

Receivables (Cover period 90 Days)

Letter of credits	40%
BG	10%
Term Loan – No change in existing instruction	10%

Extent and Operation of the Charge:

Working Capital

Primary – Pari Passu first charge on all current assets along with IOB and Exim Bank

Colletaral – Pari passu second charge along with other working capital bankers, ie. IOB and Exim Bank on fixed assets of the company

Term Loan:

Primary – Pari passu first charge on all fixed assets of the company along with IOB and Exim Bank

Colletaral - Pari passu second charge on current assets of the company along with other working capital bankers, i.e, IOB and Exim Bank.

Short particulars of the Property charged

Land of 4 acres and 28 guntas in Survey No274 situated at Athvelli Village, Athvelli Gram Panchayat , Medchal Mandal , Rangareddy District bounded on North by Survey No. 17 south by 30 fts wide road, East by Survey No. 273 and West by Survey No. 16 and 275 and Land of 10 acres and 21 ½ guntas in survey no 18, 18B, 226, 227, 238, 239, 240 and 273 situated

At Athvelli, Athvelli Gramp Panchayat , Medhchal Mandal, Rangareddy District Bounded On North By Sy. No. 19 And 226, South By Sy No. 273, East by Sy. No.241, West b.

Particulars of the present modification

Working capital limits enhanced from Rs. 312.500 millions to Rs. 337.500 millions.

Name of the company

SHANTHA BIOTECHNICS LIMITED

Presented By

Shri N Rajasekar VP (Finance and Secretary)

1) Date and description of instrument creating the change

Form C1-A	Supplemental agreement of loan for increase in the overall limit
Form C2-A	Supplemental agreement of hypothecation of Goods and assets for increase in the overall limit
Form C3-A	Supplemental Agreement of pledge of goods and assets for increase in the overall limit
Form C4	Deed of Guarantee for overall limit for Rs. 150.000 millions
Form C5	Letter regarding grant of divided limit within the overall limit.

all dated 16^th August 2005

Executed by Santha Biotechnics Limited (therein and hereinafter referred to as “the company”) in favour of state Bank of India (SBI) (therein and hereinafter referred to as the Bank”)

2) Amount secured by the charge/amount owing on the securities of charge

Term Loan of Rs. 15.000 millions (therein and hereinafter referred to as “the Loan”)

3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given

First Charge on pari passu basis with Technology Development Board and Export Import Bank of India on all the movable and immovable properties of the company.

Second charge on all current assets of the company on Pari Passu basis with Technology Development Board and Export – Import Bank of India.

4) Gist of the terms and conditions and extent and operation of the charge.

Rate of Interest	1.5% below SBAR with a minimum of 8.75% p.a with monthly rests.
Repayment Schedule	Repayable in 20 Quarterly installments of Rs. 7.500 millions each commencing from March 2007
Extent and Operation	First charge on pari passu basis with Technology Development Board and Export Import Bank of India.

5) Name and Address and description of the person entitled to the charge.

State Bank of India

Address: Overseas Branch

5-9-300, Abids Hyderabad – 500 001, India

6) Date and brief description of instrument modifying the charge

NA

7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.

The loan of Rs. 150.000 millions together with all interest, compound interest, further interest, additional interest, charge and all other expenses payable by the company to State Bank of India in respect of Supplemental Agreement of Hypothecation of goods and assets dated 16^th August 2005 thereof secured under the above mentioned agreement of hypothecation.

As Per Web:

Corporate Overview

A pioneer in the field of biotechnology, Shantha Biotechnics is the first Indian company to develop, manufacture and market a recombinant human healthcare product in India. They are committed to breaking new ground in modern biotechnology to address critical healthcare needs of the developing world.

Shantha is currently focusing its R and D efforts in the development of generic biologicals, novel therapeutic antibodies, proteins and vaccines. Shantha conducts exploratory research in the fields of Oncology, Infectious Diseases and Platform technologies.

SHANVAC- B is the first Indian Hepatitis-B vaccine to be pre-qualified by WHO, Geneva, for supplying to UN agencies globally. Today, Shantha caters to major international markets including Asia-Pacific, Africa, CIS and Latin America in addition to supra nations like UNICEF and PAHO.

To make cutting edge technologies available to the common man Shantha is constantly exploring the possibilities of partnerships to facilitate innovations in research and development.

A deep sense of commitment and a tradition of excellence have characterized Shantha’s journey thus far and have placed it in the forefront of exciting scientific ventures. However, there are still bigger oceans to be crossed and farther shores to be reached.

Shantha has also obtained WHO-Geneva Pre-qualification for its combination vaccine of DPT+ Hepatitis-B vaccine “ SHANTETRA, enabling supplies to UN Agencies.

Board of Directors

Mr. Georges Hibon – Chairman

Dr. K.I. Varaprasad Reddy - Managing Director

Mr. Khalil Ahmed - Executive Director

Mr. Alain Merieux - Director

Mr. Philippe Sans - Director

Mr. Johannes Burlin - Director

Mr. Abhey Yograj - Director

Mrs. Harsha Bangari - Director (Exim Bank Nominee)

Products

• Shanvac-B
• Shanferon
• Shankinase
• Shanpoietin
• Shantetra
• Cytocrest
• Diagnostic Kits

Shanvac-B (r-DNA Hepatitis B Vaccine) Is India's first recombinant vaccine and is produced in the yeast Pichia pastoris. Hepatitis B vaccine is used for the prevention of the deadly liver infection Hepatitis B which can lead to liver failure or cancer.

Shanvac-B is India’s first WHO-Geneva pre-qualified Hepatitis-B vaccine

Press Releases

News Update as at 15.00 hrs (IST)

Corporate
Merieux picks up 60 pc stake in Shantha Biotecnics

NEW DELHI: French healthcare company Merieux Alliance on Thursday said it has picked up about 60 per cent stake in the Hyderabad-based bio-pharmaceutical firm Shantha Biotechnics Ltd to strengthen its India presence.

"We have picked about 60 per cent stake in Shantha Biotechnics. The stake will help us strengthen our presence within the country, which has strong potential in the field of biology and significant needs in public health," Ms Rekha Khanna, Managing Direc tor, Merieux Alliance India, said.

Merieux bought the stake from Oman-based financial firms, which had invested in Shantha a few years ago. However, she refused to disclose the financial details of the deal.

The investment is part of the international development strategy adopted by Merieux Alliance in Asia, particularly in India. "This alliance is likely to favour synergies in terms of research and clinical development between the group companies. Shantha B iotechnics will also have access to the support provided by Merieux Alliances international network," Mr Alain Merieux, Managing Director, Merieux Alliance, said in a statement. - PTI

Merieux picks up 60% in Shantha Biotecnics

PTI (Thrusday, November 09, 2006 02:10:55 PM)

NEW DELHI: French healthcare company Merieux Alliance on Thursday said it has picked up about 60 per cent stake in Hyderabad-based bio-pharmaceutical firm Shantha Biotechnics Ltd to strengthen its India presence.

"We have picked about 60 per cent stake in Shantha Biotechnics. The stake will help us strengthen our presence within the country, which has strong potential in the field of biology and significant needs in public health," Merieux Alliance India Managing Director Rekha Khanna said.

Merieux bought the stake from Oman-based financial firms, which had invested in Shantha a few years ago.

However, she refused to disclose the financial details of the deal.

The investment is part of the international development strategy adopted by Merieux Alliance in Asia, particularly in India.

"This alliance is likely to favour synergies in terms of research and clinical development between the group companies. Shantha Biotechnics will also have access to the support provided by Merieux Alliances international network," Merieux Alliance Managing Director Alain Merieux said in a statement.

CMT REPORT (Corruption, Money Laundering and Terrorism]

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

1] INFORMATION ON DESIGNATED PARTY

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

2] Court Declaration :

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

3] Asset Declaration :

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

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

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

Charges or investigation registered against subject: None

7] Criminal Records

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

8] Affiliation with Government :

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

9] Compensation Package :

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

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

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

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

CONTRAVENTION

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

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.39.68
UK Pound	1	Rs.77.67
Euro	1	Rs.57.81

SCORE and RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	7
--LEVERAGE	1~10	7
--RESERVES	1~10	7
--CREDIT LINES	1~10	7
--MARGINS	-5~5	----
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		63

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 and 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 and favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

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