MIRA INFORM REPORT

Report Date :

30.07.2008

IDENTIFICATION DETAILS

Name :	SURYA FOODS AND AGRO LIMITED
Registered Office :	D-1, Sector-2, Gautam Budh Nagar, Noida - 201 301, Uttar Pradesh
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	24.11.1992
Com. Reg. No.:	20-14919
CIN No.: [Company Identification No.]	U15201UP1992PLC014919
TAN No.: [Tax Deduction & Collection Account No.]	DELS09444B
PAN No.: [Permanent Account No.]	AAACS3026P
Legal Form :	A Closely held Public Limited Liability Company.
Line of Business :	Manufacturer of Biscuits.

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 3516150
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established and reputed company having satisfactory track. Directors are reported as experienced and respectable businessmen. Trade relations are reported as fair. Business is active. Payments are usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	D-1, Sector-2, Gautam Budh Nagar, Noida - 201 301, Uttar Pradesh, India
Tel. No.:	91-120-2552989 / 2522939
Fax No.:	91-120-2558154
E-Mail :	mbg_fca@hotmail.com mail@priyagold.com investors@priyagold.com upfinco@sancharnet.in
Website :	http://www.priyagold.com
Plant I :	Plot No.1 A, Udyog Vihar, Greater Noida, Uttar Pradesh, India
Plant II:	Plot No. 14, Surajpur Dadri Road, Greater Noida, Uttar Pradesh, India
Plant III :	C – 4, Sarojininagar, Industrial Area, Lucknow, Uttar Pradesh, India
Plant IV :	Plot No. 4311, GIDC, Sachin, Surat, Gujarat, India

DIRECTORS

Name :	Mr. Ballabh Prasad Agarwal
Designation :	Whole Time Director
Address :	B-14, Sector – 14, Gautam Budh Nagar, Noida – 201301, Uttar Pradesh, India
Date of Birth/Age :	14.03.1950
Experience :	35 Years
Date of Appointment :	05.10.2006
Name :	Mr. Manoj Kumar Agarwal
Designation :	Director
Address :	B-14, Sector – 14, Gautam Budh Nagar, Noida – 201301, Uttar Pradesh, India
Date of Birth/Age :	16.03.1968
Qualifications :	Graduate
Experience :	18 Years
Date of Appointment :	20.12.1999
Name :	Mr. Navin Kumar Agarwal
Designation :	Director
Address :	B-14, Sector – 14, Gautam Budh Nagar, Noida – 201301, Uttar Pradesh, India
Date of Birth/Age :	12.04.1972
Qualifications :	Graduate
Experience :	15 Years
Date of Appointment :	20.12.1999
Name :	Mr. Shekhar Agarwal
Designation :	Director
Address :	B-14, Sector – 14, Gautam Budh Nagar, Noida – 201301, Uttar Pradesh, India
Date of Birth/Age :	25.04.1976
Qualifications :	Graduate
Experience :	10 Years
Date of Appointment :	01.05.2003
Name :	Ms. Bina Agarwal
Designation :	Director
Address :	B-14, Sector – 14, Gautam Budh Nagar, Noida – 201301, Uttar Pradesh, India
Date of Birth/Age :	05.12.1969
Date of Appointment :	21.01.2006
Date of Resignation :	01.09.2007
Name :	Ms. Chavi Agarwal
Designation :	Director
Address :	B-14, Sector – 14, Gautam Budh Nagar, Noida – 201301, Uttar Pradesh, India
Date of Birth/Age :	23.08.1973
Date of Appointment :	05.08.2005
Date of Resignation :	01.09.2007
Name :	Ms. Nidhi Agarwal
Designation :	Director
Address :	B-14, Sector – 14, Gautam Budh Nagar, Noida – 201301, Uttar Pradesh, India
Date of Birth/Age :	29.03.1977
Date of Appointment :	05.08.2004
Name :	Mrs. Ushadevi Agarwal
Designation :	Additional Director
Address :	B-14, Sector – 14, Gautam Budh Nagar, Noida – 201301, Uttar Pradesh, India
Date of Birth/Age :	24.10.1952
Date of Resignation :	01.09.2007
Name :	Mr. Pradeep Kumar Jain
Designation :	Director
Name :	Mr. Ram Laxman Prasad Sinha
Designation :	Director
Name :	Mr. Ajay Kumar Ghosh
Designation :	Director
Name :	Mr. Ajay Kumar Raman
Designation :	Director

KEY EXECUTIVES

Name :	Mr. Rajesh Sodhi
Designation :	Company Secretary and Compliance Officer
Address :	D-1, Sector-2, Gautam Budhnagar, Noida - 201 301, Uttar Pradesh, India
Tel No.:	91-120-2552989/ 2522939
Fax No.:	91-120-2558154

MAJOR SHAREHOLDERS

As on 31.03.2007

Names of Shareholders	No. of Shares	Percentage
Promoters:
Mr. Ballabh Prasad Agarwal	3316820	18.44
Mr. Manoj Kumar Agarwal	4328896	24.07
Mr. Navin Kumar Agarwal	2422784	13.47
Mr. Shekhar Agarwal	2711514	15.08
Promoter Group:
Mrs. Ushadevi Agarwal	855894	4.76
Mrs. Bina Agarwal	651300	3.62
Ms. Chhavi Agarwal	1820000	10.12
Ms. Niddhi Agarwal	1877772	10.44
Total	17984980	100.00

Equity share breakup (Percentage of total equity)

As on 31.03.2007

Sr. No.	Category	Percentage
1.	Directors or relatives of directors.	100.00
	Total	100.00

LIST OF ALLOTTES OF EQUITY BONUS SHARES

As on 10.03.2007

Names of Allottees	No. of Shares
Mr. Ballabh Prasad Agarwal	3189250
Mr. Manoj Kumar Agarwal	4162400
Mr. Navin Kumar Agarwal	2329600
Mr. Shekhar Agarwal	2607225
Mrs. Ushadevi Agarwal	822975
Mrs. Bina Agarwal	626250
Ms. Chhavi Agarwal	1750000
Ms. Niddhi Agarwal	1805550
Total	17293250

BUSINESS DETAILS

Line of Business :

Manufacturer of Biscuits.

Products :

ITC Code No.	Product Description
1903-3000	Biscuits

Brand Name :

v Priya Gold

v Fresh Fizzy

v Fresh Gold

v Treat

v Marie Gold

v Classic Cream

v Cheese Cracker

v Snacks Zigzag

v Coconut Crunch

v Marie Lite

v Kids Cream

v Butter Lite

v Big Boss

v Magic Gold

v CNC

v Don

v Chat Patta Cashew

GENERAL INFORMATION

No. of Employees :

About 600

Bankers :

v State Bank of India

Overseas Branch, Jawahar Vyapar Bhavan, 1, Tolstoy Marg, New Delhi – 110001, India

v Uttar Oradesh Financial Corporation (UPFC)

14/ 88, Civil Lines, Kanpur – 208 001, Uttar Pradesh, India

Facilities :

Secured Loan	Rs in Millions As on 31.03.2005
Allahabad Bank [the term loan availed by the company from Allahabad Bank is secured by way of first charge All Udyog Greater Nodia, Uttar Pradesh]	1.013
Unsecured Loan
Surya Foods Limited	9.575

Banking Relations :	Satisfactory
Auditors :
Name :	Vinay Aggarwal and Associates Chartered Accountants
Address :	E-67, [LGF], Greater Kailash Part – II, Masjid Moth, New Delhi – 110048, India
Associates/Subsidiaries :	Surya Fresh Foods Limited U15134DL2004PLC129491 Devika Food Products Private Limited U15400GJ2000PTC038312 Surya Processed Food Private Limited L15139DL2006PTC151222

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
30000000	Equity Shares	Rs. 10/- each	Rs. 300.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
17984980	Equity Shares	Rs. 10/- each	Rs. 179.849 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		179.849	6.917	6.917
2] Share Application Money		0.000	0.000	20.028
3] Reserves & Surplus		523.381	668.852	654.837
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		703.230	675.769	681.782
LOAN FUNDS
1] Secured Loans		381.941	36.308	1.013
2] Unsecured Loans		97.209	43.836	9.575
TOTAL BORROWING		479.150	80.144	10.588
DEFERRED TAX LIABILITIES		68.358	63.048	67.392
TOTAL		1250.738	818.961	759.762
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		874.498	500.630	511.240
Capital work-in-progress		54.715	44.422	24.453
INVESTMENT		87.230	72.499	90.362
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	217.117	244.704	209.930
	Sundry Debtors	100.943	69.843	41.490
	Cash & Bank Balances	7.855	17.439	7.261
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	87.611	101.809	85.280
Total Current Assets		413.526	433.797	343.961
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	169.315	216.053	196.808
	Provisions	9.916	16.332	13.632
Total Current Liabilities		179.231	232.385	210.440
Net Current Assets		234.295	201.412	133.521
MISCELLANEOUS EXPENSES		0.000	0.000	0.186
TOTAL		1250.738	818.961	759.762

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		2685.695	2953.644	2598.469
Other Income		8.115	2.665	27.544
Total Income		2693.810	2956.309	2626.013
Profit/(Loss) Before Tax		42.690	12.946	37.630
Provision for Taxation		13.197	(1.642)	17.651
Profit/(Loss) After Tax		29.493	14.588	19.979
Expenditures :
	Raw Material Consumed	1940.916	2075.164	1815.982
	Consumption of stores and spares parts	0.000	0.000	58.171
	Increase/(Decrease) in Finished Goods	(3.646)	3.530	0.000
	Salaries, Wages, Bonus, etc.	37.233	26.485	22.120
	Managerial Remuneration	11.550	14.300	13.452
	Payment to Auditors	0.463	0.283	0.536
	Interest	13.137	2.774	1.309
	Insurance Expenses	1.703	2.336	2.416
	Power & Fuel	151.532	178.100	168.751
	Depreciation & Amortization	42.132	39.353	47.948
	Other Expenditure	456.100	601.038	457.698
Total Expenditure		2651.120	2943.363	2588.383

KEY RATIOS

PARTICULARS	31.03.2007	31.03.2006	31.03.2005
Debt-Equity Ratio	0.41	0.07	0.01
Long Term Debt-Equity Ratio	0.41	0.07	0.01
Current Ratio	1.51	1.27	1.05
TURNOVER RATIOS
Fixed Assets	3.11	4.60	4.77
Inventory	11.63	12.99	17.09
Debtors	31.45	53.03	88.49
Interest Cover Ratio	4.18	5.44	29.31
Operating Profit Margin(%)	3.60	1.83	3.06
Profit Before Interest And Tax Margin(%)	2.04	0.50	1.36
Cash Profit Margin(%)	2.63	1.79	2.38
Adjusted Net Profit Margin(%)	1.06	0.46	0.68
Return On Capital Employed(%)	5.70	2.08	5.89
Return On Net Worth(%)	4.18	2.06	2.98

LOCAL AGENCY FURTHER INFORMATION

Form 8

Name of the company	SURYA FOODS AND AGRO LIMITED
Presented By	State Bank of India, Overseas Branch, Jawahar Vyapar Bhavan, 1, Tolstoy Marg, New Delhi – 110001
1) Date and description of instrument creating the change	Form C4 Deed of guarantee for overall limit dated 24.02.2005 and confirmation letter for equitable mortgage of property dated 24.02.2005 for loan advanced to Surya Fresh Foods Limited by the State Bank of India.
2) Amount secured by the charge/amount owing on the securities of charge	Rs. 2.180 Millions
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	Equitable mortgage of property situated at Khasara No. 420 (M). 421 (M) 422, 423, 424 (M) 425, 426 (M) and 435 (M) at Industrial Estate, Surajpur, measuring 6074.50 mtrs. And plot No.14 at Khasara No. 311 (M), 314, 315 (M), 316 (M), total area 4 Bigha 17 Biswa at village Surajpur in the state UP.
4) Gist of the terms and conditions and extent and operation of the charge.	Rate of Interest 10.25 % p.a.
5) Name and Address and description of the person entitled to the charge.	State Bank of India Overseas Branch, Jawahar Vyapar Bhavan, 1, Tolstoy Marg, New Delhi – 110001

Form 8

This form is for	Creation of charge
Corporation identity number (CIN) or foreign company registrations number of the company	U15201UP1992PLC014919
Name of the company	SURYA FOODS AND AGRO LIMITED
Address	D-1, Sector-2, Gautam Budh Nagar, Noida - 201 301, Uttar Pradesh, India
Type of Charges	v Immovable property
Particular of the charge holder	Name : Uttar Pradesh Financial Corporation (UPFC) Address : 14/88, Civil Lines City : Kanpur State : Uttar Pradesh ISO country code : IN Pin code : 208 001 e-mail ID : upfinco@sancharnet.in
Nature or description of the instrument creating or modifying the charge	Agreement for Interest free loan Affidavit regarding creation of Equitable Mortgage by deposit of title deeds of the properties
Date of the instrument creating charge	03.11.2007
Whether charge created or modified outside India	No
Amount Secure by the charge	Rs. 53.900 millions
Brief particulars of the principal terms and conditions and extent and operation of the charge	Rate of Interest Interest free loan In case of violation of any conditions of loan agreement then entire outstanding loan become due for repayment. In case of default the company liable to pay interest @1.25 p.m. from date of amount so due up to actual payment. In case of default in repayment on due dates, the company liable to pay simple interest @1.25 p.m. on amount in default for default period. Terms of repayment One lump-sum installment just after the expiry of the period of 7 years from date of disbursement of loans of the year 2004-2005, 2005-2006 and 2006-2007. Extent and operation of the charge First charge on properties/assets of the unit situated at Plot No 1 A, Udyog Vihar, Dist. G B Nagar, UP. To secure the sanctioned loan amount Others As per agreement dated 03.11.2007 enclosed.
Short particulars of the Property charged	All the leasehold rights of plot measuring 10.28 acres bearing No. 1 A situated at Udyog Vihar, Greater Noida, Dist. G B Nagar, UP. Together with all building and structure thereon and all plant and machinery attached to earth or permanently fastened to anything attached to earth, both present and future.
Whether any of the property or interest therein under reference is not registered in the name of the company	No

Summary of Restated Statement of Assets and Liabilities

Particulars	30.09.2007 (6 months)
SHAREHOLDERS FUNDS
1] Share Capital	179.850
2] Share Application Money	0.000
3] Reserves & Surplus	527.065
4] (Accumulated Losses)	0.000
NETWORTH	751.915
LOAN FUNDS
1] Secured Loans	336.242
2] Unsecured Loans	112.563
TOTAL BORROWING	448.805
DEFERRED TAX LIABILITIES	68.358
TOTAL	1269.078
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]	875.138
Capital work-in-progress	64.932
INVESTMENT	127.725
DEFERREX TAX ASSETS	0.000
CURRENT ASSETS, LOANS & ADVANCES
Inventories	202.233
Sundry Debtors	202.320
Cash & Bank Balances	16.249
Other Current Assets	0.000
Loans & Advances	79.456
Total Current Assets	500.258
Less : CURRENT LIABILITIES & PROVISIONS
Current Liabilities	256.999
Provisions	41.976
Total Current Liabilities	298.975
Net Current Assets	201.283
MISCELLANEOUS EXPENSES	0.000
TOTAL	1269.078

Summary of Restated Statement of Profit and Losses

Particulars		30.09.2007 (6 months)
Sales Turnover		1741.961
Other Income		0.060
Total Income		1742.021
Profit/(Loss) Before Tax		89.735
Provision for Taxation		30.945
Profit/(Loss) After Tax		58.790
Expenditures :
	Raw Material Consumed	1207.750
	Consumption of stores and spares parts	38.970
	Manufacturing Expenses	154.440
	Increase/(Decrease) in Finished Goods	(0.471)
	Salaries, Wages, Bonus, etc.	29.120
	Managerial Remuneration	192.941
	Interest	6.972
	Depreciation & Amortization	22.564
Total Expenditure		1652.286

Business

They are one of the leading manufacturers of Biscuits in India. They are into the business of manufacturing and selling of Biscuits for the past 15 years. During this period, they have established strong manufacturing capabilities and have invested substantially in developing consumer preference for the products. The Biscuits are sold under a well known brand name “Priyagold”. The trademarks/ brands “Hak Se Maango” and “Priyagold” have emerged as one of the most powerful brands in FMCG sector. They have continued to invest in the front end on Brands, the manufacturing capabilities, deliverables and distribution strength.

Today, they have 4 plants located in Greater Noida, Lucknow (U.P). and Surat (Gujarat). They also outsource some of the requirements from another plant located in Hyderabad. The capacities have reached 85,000 MT p.a. during this time which along with strong brand building and distribution capabilities have enabled us to command a sizable market share in the Biscuit market despite competition from well established players in the industry.

They have developed a distribution channel through Consignee sales agents / super stockists and distributors throughout the country. Though the concentration is largely in the Northern and Central part of the country, they have penetrated into the other regions considerably. The Brands now have greater availability in rural markets in Northern India and also up markets in major cities across pan India.

After establishing the foothold in Biscuit industry, they have continued to adopt a strategy to identify and commercialize profitable growth opportunities by leveraging established brand and distribution network. Following this strategy, they diversified into manufacturing of fruit juices through the subsidiary Surya Fresh Foods Limited The manufacturing facility is located at Greater Noida, UP. It has a capacity of 130 Kilo Litres/Day and has state of art manufacturing/processing facilities which are ISO 9001:2000 certified.

They have consciously invested in creating markets for fruit juices and have established brands such as “Fresh Gold” and “Treat”. Both the brands are also well established and have penetrated into the fruit juice market aggressively by commanding considerable market share. Recently, they have also forayed into the aerated fruit drink segment with a launch of “Fresh Fizzy” which is launched into two flavours, Apple and Orange.

The sales and marketing team has been working towards innovative and effective marketing tools to remain competitive in a fiercely competitive environment. Recently, they have won a tender for supply of Priyagold Biscuits products and “Fresh gold” and “Treat” brands of fruit juices to catering units on Indian Railway Stations. This tender is awarded by Indian Railway Catering and Tourism Corporation Ltd. (IRCTC) which allows us to set-up food Kiosk for sale of the products at 193 Railway Stations which will translate into approximately 300 food Kiosks spread across various cities in India. They have commenced establishment of these Kiosks by establishing about 30 Kiosks on various Railway Stations and balance would also be functional soon. They will sell the products at Kiosks which will give us enhanced brand visibility and would contribute considerably to the turnover. This initiative has added new dimensions to the marketing and distribution effort recently.

They are also aggressively marketing the products in institutional category directly. Presently the products viz. biscuits and juices are supplied to Air lines, Hotels, Railways and organized retail outlets.

In fiscal 2007, they posted consolidated gross sales of Rs. 2951.302 millions and consolidated profits after taxes stood at Rs. 43.592 millions. In the half year ended 30/09/2007 they have pooled consolidated gross sales of Rs. 1940.266 millions and profit after tax at Rs. 67.165 millions.

The Business Strategy

Expansion and Diversification

There is a general optimism in the market at macro economic as well as industry specific (FMCG and Package Food) levels. The Government of India has recently announced exemption on excise duty on Biscuits up to MRP of Rs. 100/- per KG. The Company is expected to benefit tremendously as the products fall in this category. Though continued inflation in input prices especially wheat, edible oils and dairy products will have a strain on profitability; the exemption in excise duty would support the growth of the Company. With continued best managerial inputs, procurement and distribution policy, the Company is well placed to reap the benefits of duty structure and the buoyant economic conditions in the country as a whole.

They continued to pursue a strategy to identify and commercialize profitable growth opportunities on the strength of established brands. They are proposing to increase the capacities by 64,500 MT p.a. by establishing new manufacturing unit for the Biscuit segment.

They are also diversifying, to establish a “Chocolate plant” and “Condensed milk” plant through the another 100% subsidiary Surya Processed Food Pvt. Ltd. They have procured the required licenses and approvals and have also acquired the land at Haridwar, Uttaranchal where various fiscal benefits are available. The proposed condensed milk plant also has a great synergy to us as almost 50% of the condensed milk products would be utilized by us for biscuits manufacturing. It has twin benefits of backward integration, price and supply competitiveness.

Brand

The strategy of strengthening the brands especially the Umbrella brand “Priyagold” has resulted in creating immense brand recall value. They are continuing with the effort of strengthening the brand with a scientific approach which will result in growth of customer base, price premium, consumer loyalty which is expected to result in increased earning and ultimately enhancing enterprise value of the Company.

They have identified and established in various growth sectors eg. Snacks and Health with launch of various sub brands such as “Butter Bite”, “Classic Cream”, “Kids Cream”, “Butter Lite”, “Big Boss”, “Marie Lite”, “Marie Gold”, “CNC”, “Cheese Cracker”, “Snacks Zigzag”, “DON”, “Coconut Crunch”.

The strategy is continued in fresh juice segment where brands such as “Fresh Gold”, “Treat” have been supplemented with newly launched “Fresh Fizzy” which is available in 3 pack sizes of 1 litre, 500 ml. and 250 ml.

They have till date invested about Rs. 860.000 millions in the brand building exercise and will continue to invest in the front end of brands. They are also proposing to conduct an exercise for benchmarking the value of Company’s brand portfolio with market value to unlock intrinsic value. The strength of the brand will be leveraged for all the new initiatives proposed by the Company.

Litigation Against Company

Criminal Case

Gatoo Traders (the “Complainant”) v. Mr B. P. Agarwala, Chairman and Mr. Shekhar Agarwal, Directors Surya Food and Agro Limited (the “Accused”)

The case is filed in the court of Hon’ble Judicial Magistrate Munsifs, Pulwama (Jammu and Kashmir) under section 418 read with section 120B of Indian Penal Code, 1960 (IPC). The Complainant was appointed as a dealer for distribution of Priya Gold biscuits for District Pulwama by the accused from 2005 to 2010. The Complainant alleged that a payment of Rs. 0.300 million vide Demand Draft no. 527263 dated 06.11.2006 was made by him, but the Accused failed to supply the goods in trade. The Complainant also alleged criminal intention of cheating the Complainant and usurping the draft amount as well as the earlier balance amount. The Complainant has prayed for criminal proceedings against the accused. The accused was summoned through bailable warrants to the tune of Rs. 10,000/- each.

Ad-interim relief order has been issued by the Sub-Judge temporarily restraining the Accused from causing any sort of interference through any means with the Complainant’s right to run the distribution/dealership of Priya Gold biscuits and juices for Pulwama and Shopian and not to supply the same to any other person, agency, firm other than to the Complainant. The Company has moved to the Hon’ble High Court, Jammu and Kashmir under Section 482 of I.P.C for quashing of complaint case.

Other Cases

The summary of other cases pending against the Company is as follows:

(Rs. in millions)

Sr. No.	Particulars	No. of Cases/ Disputes	Approx. Amount Involved wherever quantifiable
1.	Central and Custom Cases	7	27.418
2.	Service Tax Cases	3	2.312
3.	Civil Cases	4	0.747

For details please refer to page no. 125 of this DRHP.

b) Litigation against the Promoter/Directors

Criminal Cases

Suresh Kumar Bagri, Proprietor (the “Complainant”) v. Shri Shekhar Agarwal, Director, Surya Food and Agro Limited.

Case no. C-1/91/2005 under Section 420/406/506 of the Indian Penal Code (IPC) in the Court of Chief Judicial Magistrate at Jamshedpur.

The Complainant being a businessman was interested for dealership of the products of the Company for the Dhanbad region, within the Jharkhand State in the name of “Mahalaxmi Enterprises”. Complainant deposited a sum of Rs. 0.250 million as security deposit, for the purpose of getting the dealership of the products of the Company, in the Axis Bank Limited Jamshedpur (hereinafter referred to as ‘Bank’) and got a demand draft no. 042994 dated 09.04.2003 drawn on the Bank for delivering the same to the Company for the said purpose. The case of the Complainant is that he was neither awarded the dealership, nor was the deposited amount refunded to him.

The Complainant has alleged criminal breach of trust by the Company claiming that the Company has misappropriated the aforesaid amount in spite of receipt of notice on 20.12.2004.

The conciliation proceedings between the parties are under process for resolving the matter.

Mr. Shekhar Agarwal, Director (Petitioner) Surya Food and Agro Limited v. State of Jharkhand , Suresh Kumar Bagri, Proprietor of M/s S.K. Enterprises.

Case no. A.B.A. No. 44/2007 in the High Court of Jharkhand at Ranchi. The petition was filed on 29/11/2006 for grant of Anticipatory Bail to the petitioner as he was seriously confronted with the risk of being arrested or taken into custody upon his surrender in connection with Case No. C-1 91/2005 registered under Sections 420, 406 and 506 of IPC.

A prayer has been made before the Court for the release of the petitioner in the event of his arrest/ surrender.

M/s Kiri Associates Private Limited (the “Complainant”) v. Mr. B. P. Agarwala, authorized signatory, ISKCON and others (the “Accused”).

The case is filed in the Court of Hon’ble C.J.M Court, Panipat under Section 138 of the Negotiable Instruments Act, 1881.

The Chairman is a member and authorized signatory of the religious institution “ISKCON” which passed the tender of the Complainant and awarded them the work for the construction of the temple cum devotees boarding and lodging facility at A-5, Sector-33, Noida, U.P. Running bills for the construction were given to the Accused on different dates. To discharge their liability, the Accused issued a cheque bearing no. 267227 dated 12/01/2005 drawn on ICICI Bank Limited Noida Branch, G-31 and 32, Sector-18, Noida – 201 301 (U.P.) amounting to Rs. 0.489 million from their bank SBGEN a/c no. 003101061819. The Complainant presented the said cheque in his bank, Bank of India, East of Kailash Branch, New Delhi for encashment on 12.01.2005. The said cheque was dishonored by bankers of the Accused vide memo dated 13.01.2005 on account of “Insufficient Funds” followed by two similar dishonors.

Thereafter, the Complainant sent a legal notice to the Accused through his advocate, demanding the amount due within 15 days. The Complainant prayed that the Accused be directed to make the payment of cheque to the Complainant. The case is pending before Hon’ble Court.

Other Cases

The summary of other cases pending against the the Promoters/Directors are as follows:

(Rs. in millions)

Sr. No.	Particulars	No. of Cases/ Disputes	Approx. Amount Involved wherever quantifiable
1.	Central and Custom Cases	3	9.264
2.	Service Tax Cases	3	0.150
3.	Civil Cases	1	Not Quantifiable

For details please refer to page no. 125 of this DRHP.

Specific to the Project

Out of the total fund requirements about 45% is based on the estimates and is yet to be appraised by the Banker.

The total funds requirement of the Company for the proposed expansion in biscuit manufacturing capacity and investment in the subsidiary for setting up of Condensed Milk Plant and Chocolate plant is estimated at Rs. 1439.075 millions The Banker State Bank of India have appraised the expansion project for biscuit manufacturing to the extent of Rs. 793.808 millions and have also agreed in-principle for sanction of a term loan of Rs. 20.000 millions The balance fund requirement of Rs. 645.267 millions is presently based on the estimate.

Various licenses/approvals required for the proposed new plants of Subsidiary Company Surya Processed Food Private Limited at Haridwar are yet to be obtained.

The Subsidiary Company requires various consents/permissions/licenses/approvals from various Governmental Authorities for the proposed new plants at Haridwar, Uttaranchal. The applications for such licenses/approvals would be made to the respective authorities at various stages of project implementation. There can be no assurance that they will receive the approvals on a timely basis, or at all. If they do not receive the requisite approvals for the new factories or if such approvals are delayed, the operations and proposed project may be adversely affected.

Director’s Profile

Mr. Ballabh Prasad Agarwala, 59 years, Chairman and Managing Director is the founder Director and Promoter of the Company. He is having about 35 years of experience in the business and industry. He is a well known personality in the biscuit manufacturing industry and has received “U.P.Ratan” award for his entrepreneurship. He is responsible for overall working of the Company and is instrumental in making strategic decisions of the Company. Under his leadership, the Company has grown manifold and achieved a “International Quality Crown Award, London 2004” for best quality biscuit manufacturer.

Mr. Manoj Kumar Agarwal, 38 years, Whole-time Director has about 18 years of experience in the business and industry. He is a commerce graduate looking after the manufacturing operations and Quality Control and is instrumental in increasing the overall biscuit manufacturing capacity of the Company.

Mr. Navin Kumar Agarwal, 35 years, Whole-time Director has about 15 years of experience in the business and industry. He is a commerce graduate looking after the manufacturing operations and Quality Control of products of the Company.

Mr. Shekhar Agarwal, 31 years, Whole-time Director has about 10 years of experience in the business and industry. He is a commerce graduate responsible for marketing of products as well as financial matters of the Company. He is instrumental in increasing the overall turnover and profitability of the Company

Industry Overview

The information presented in this section has been obtained from publicly available documents from various sources, including officially prepared materials from the industry websites/publications and company estimates. Industry websites/publications generally state that the information contained in therein has been obtained from sources believed to be reliable but their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although the Company believes industry, market and government data used in this DRHP is reliable, it has not been independently verified. Similarly, internal Company estimates, while believed to be reliable, have not been verified by any independent agencies.

Indian Food Processing Industry

Food processing involves any type of value addition to agricultural or horticultural produce and also includes processes such as grading, sorting, packaging which enhance shelf life of food products. The Industry provides vital linkages and synergies between industry and agriculture.

India has a strong competitive advantage in food processing being blessed with unsurpassed natural advantages. India ranks first in the world in production of cereals. It is among the top five producers of wheat and oilseeds. This gives it the unique advantage and tremendous potential for processing of agriculture produce.

India with arable land of 184 million hectares, produces annually 90 million tonnes of milk (highest in the world), 150 million tonnes of fruits and vegetables (second largest), 204 million tonnes food grain (third largest).

While the industry is large in size, it is still at a nascent stage in terms of development. Of the country’s total agriculture and food produce, only 2% is processed. The share of India’s export of processed food in global trade is only 1.5%.

The Food Processing activity is poised for rapid expansion. The Ministry of Food Processing Industries, Government of India estimates the size of the Processed Food Industry at Rs.1440 billion. The unorganized small players process more than 75% of the industry output in volume terms and 50% in value terms. Average Growth rate of Food Processing Industries during the last five years (upto 2003-04) has been 7.15%

Major Challenges for the Indian Food Processing Industry

Food processing industry is facing constraints like non-availability of adequate critical infrastructural facilities like cold chain, packing and grading centres, etc.lack of adequate quality control and testing infrastructure, inefficient supply chain, lack of processable varieties of farm produce, seasonality of raw material, high inventory carrying cost, high taxation, high packaging cost, affordability and cultural preference of fresh food. Major Challenges for the Indian Food Processing Industry are:

v Consumer education that processed foods can be more nutritious

v Low price-elasticity for processed food products

v Need for distribution network and cold chain

v Backward-forward integration from farm to consumers

v Development of marketing channels

v Development of linkages between industry, government and institutions

v Taxation in line with other nations

v Streamlining of food laws

Economic Survey 2006-07 says:

The increasing trend in gross domestic savings as a proportion of GDP observed since 2001-02 has continued with the savings ratio rising from 26.4 per cent in 2002-03 to 29.7 per cent in 2003-04, 31.1 percent in 2004-05 and 32.4 per cent in 2005-06.

As the savings rate has gone up, private final consumption expenditure (PFCE), at current prices as a proportion of GDP, has shown a declining trend particularly from 2001-02. PFCE as a proportion of GDP declined from 63.1 per cent in 2002-03 to 62.1 per cent in 2003-04, 60.0 per cent in 2004-05, and further to 58.7 per cent in 2005-06. This decline has also been accompanied by substantial changes in the consumption basket in terms of the shares of different commodity groups. In PFCE, the share of food, beverages and tobacco came down from 43.3 per cent in 2002-03 to 39.4 per cent in 2005-06.

The food industry is on a high as Indians continue to have a feast. Fuelled by what can be termed as a perfect ingredient for any industry - large disposable incomes - the food sector has been witnessing a marked change in consumption patterns, especially in terms of food.

Biscuit Manufacturing Industry

The biscuit industry is classified into core and non-core segments. While staples like Glucose, Milk, Marie and Arrowroot Biscuits are classified as core biscuits, Cream, Wafer cream, Salt Crackers and Cookies are non-core biscuits. Broad categorization of the biscuit segment includes Glucose (44%), Marie (13%), Cream (10%), Crackers (13%), Milk (12%) and others (8%). The biscuit industry in India, in the organized sector produces around 60% of the total production in India, the balance 40% being contributed by unorganized bakeries. The ratio of the organized to unorganized sector has moved from 50:50 in 2003-04 to 60:40 currently on account of consumers migrating from unbranded to branded products. In value terms of volume, biscuit production in 2005-06 is estimated at 1.50 million MT, a growth of around 11-13 percent over last year. The high growth attributed to differentiated products, smaller stock keeping units (SKU) and aggressive distribution.

Parle and Britannia are the largest players in the domestic market with shares of 43% and 39% respectively. ITC, a relatively new entrant (2003-04) in the segment has picked up well with a share of around 8%. Priya Gold has a strong presence in the north and has a share of around 7%. The other small players like Cremica, Dukes, Anmol, Sobisco, Horlicks, Real Elite etc have a combined share about 3%. Competition has intensified with ITC reinventing the biscuit market by launching new flavours. This has thus been an increasing pressure to innovate and launch new variants in quick successions.

The biscuit industry derives more than 60% sales from glucose biscuits which is highly price sensitive segment. On the other hand the premium segment enables pricing flexibility but involves high level of product innovation and marketing skills to gain market share. Also the domestic biscuit market has become fiercely competitive due to fuel prices going up along with increase in prices of commodities such as sugar, flour and vanaspati. A ability to pass on raw material price hikes to the customers will influence its margins over the medium term.

Strong brand equity and extensive distribution network are the main competitive factors in the branded biscuit market. The distribution network ensures the availability of the brand at points of sale and also determines a products level of penetration. An efficient network ensures lower response times and reduces the working capital needs of the business. Further, established channels provide opportunities for understanding consumer profiles and changes in consumption habits.

Fruits and Vegetable Processing Industry

The installed capacity of fruits and vegetables processing industry has increased form 11.08 lakh tons on 01.01.1993 to 21.18 lakh tones as on 01.01.2006 and 24.74 lakh tones as on 01.01.2007. The utilization of fruits and vegetables processing is estimated to be around 2.20% of the total production.

Over the last few years, there has been a positive growth in ready to serve beverages, fruit juices and pulps, dehydrated and frozen fruits and vegetable products, tomato products, pickles, convenience vegspice pastes, processed mushrooms and curried vegetables. The domestic consumption of value added fruits and vegetable products is also low compared to the primary processed food in general and fresh fruits and vegetables in particular which is attributed to higher incidence of tax and duties including that on packaging material, lower capacity utilisation, non-adoption of cost effective technology, high cost of finance, infrastructural constraints, inadequate farmers-processors linkage leading to dependence upon intermediaries. The smallness of units and their inability for market promotion is also other main reasons for inadequate expansion of the domestic market. In order to give fresh impetus to processing of Fruit and Vegetables, Government in 2004-05 has allowed under I.T. Act, 100% deduction of profit for first five year and 25% deduction for another five years for new upcoming Fruits and Vegetables Processing units.

Dairy Processing Industry

It is a matter of pride that India is the number one milk producing country in the world, maintaining the top position since 1988, thanks to successful implementation of the operation flood programmes. World milk production is estimated at 613 million tones growing at a CAGR of 1.1%. India ranks first in the world in terms of milk production. Indian production stands at 91million tones growing at a CAGR of 4%. Hence, lndia contributes 4 million tones to the world’s incremental production of 7.5 million tonnes. Despite a higher growth rate, the per capita availability of milk in lndia (229 grams per day) is lower than the world average (285grams per day).Buffalo milk is now estimated to account for 57% of the total milk production in India.

India has a unique pattern of production, processing and marketing/consumption of milk, which is not comparable with any large milk producing country. Approximately 70 million rural households (primarily, small and marginal farmers and landless labourers ) in the country are engaged in milk production. Over 11 million farmer are organized into about 0.1 million village Dairy Cooperative Societies (DCS)(about 110 farmers per DCS). The cumulative milk handled by DCS across the country is about 18 million kg of milk per day. These cooperatives form part of a national milk grid which links the milk producers through out lndia with consumers in more than 700 towns and cities bridging the gaps on account of seasonal and regional variations in the availability of milk.

In India current annual growth rate in Milk production is pegged between 4% to 6%. This is primarily due to the initiatives taken by the Operation flood programmes in the organizing milk producers into cooperatives; building infrastructure for milk procurement, processing and marketing; and providing financial, technical and management inputs by the Ministry of Agriculture and Ministry of Food processing Industries to turn the Dairy sector into viable self-sustaining organized sector. About 35% of milk produced in India is processed. The organized sector (large scale dairy plants) processes about 13 million tones annually, while the unorganized sector (halwaiis and vendors) processes about 22 million tones per annum. In the organized sector, there are 676 dairy plants in the Cooperative, Private and Government sectors registered with the Government of lndia and the state Governments.

The Ministry of food Processing Industries is promoting organized Dairy processing sector to accomplish upcoming demands of processed dairy products and helping to identify various areas of research for future product development and quality improvement to revamp the Indian dairy export by way of providing financial assistance to the dairy processing units. 32 Units have been sanctioned financial assistance (Rs. 59.100 millions) under the plan scheme of the Ministry during the year 2006-07.

Infrastructure facilities for raw materials and utilities like water, electricity etc.

Raw Materials

The major raw material required by us is wheat, sugar and Edible Refined Hydrogenated Vegetable Oils (Palm Oil/ Soya Bean Oil/ Cotton Seed Oil and Sesame Oil) for manufacturing of buscuits. Presently they are procuring these basic raw materials from local market. They are proposing to enter into forward contracts for supply of raw materials with different agents to ensure negate to the impact of price fluctuation in commodity market.

Besides this they need, Sweetened Condensed Milk, Butter, Invert Syrup, Liquid Glucose, Iodized Salt, Leavening Agents (Ammonium Bi-Carbonate and Sodium Bi-Carbonate), Processed Cheese, Mono Acid Calcium Phosphate, Dough Conditioners, Skim Milk Powder, Permitted Emulsifiers, Soya Lecithin, Permitted Synthetic Food Color , Cocoa Powder, Yeast, Protease Enzymes, Dessicated Coconut Powder, Added Flavours etc. Some of these raw materials are imported and some are procured from local market.

Utilities

Power: All the plants are connected with sufficient power supply. The details of sanctioned load to all these plants are as follows:

Unit	Sanction Load
Surajpur	400 K.V
Lucknow	250 K.V
Surat	180 K.V. The Plant is Running on L.P.G which is Supplied by Gujarat Gas Company Limited
Greater Noida	Running by Diesel Generator Set of Total Load Capacity of 1.5 Megawatt.

Water: They have installed borewell machines in all the plants for supply of water for industrial use. The required water is transferred to water treatment plant and then supplied directly to production process and cooling plant after processing.

Effluent Treatment: They are in compliance with all existing environmental and other regulations applicable to the business. They have effluent treatment plants in all the manufacturing facilities namely; NOIDA, Lucknow and Surat.

Manpower: The total manpower directly employed by us as on date is 1200 personnel. Distribution of the manpower is as follows:

Location	Factory	Office	Total
Unit I and II	1059	29	1088
Lucknow	81	07	88
Surat	17	02	19
Hyderabad	Nil	03	03
Mumbai	Nil	02	02
Total	1157	43	1200

The total requirement of manpower for the proposed plant will be 730 persons comprising of skilled, semi-skilled, unskilled workers, supervisory and administrative staff. The Company will have a combination of permanent employees and contract workers.

As per website Details

The wondrous magical journey of their company Surya Food and Agro Limited began in Oct. 1993 and since then they have been one of the leading manufacturers of biscuits in northern India. Their brand “PRIYAGOLD” has been a perennial household favorite since then. On a profound level spread in to western as well as southern India, the inevitable cycle of distribution network has helped them to spread into western India as well. Their obsession is to make the finest quality biscuits available to the consumers and their constant endeavor is to provide their consumers, a palate to look forward to a taste and flavor that is uniquely “PRIYAGOLD”.

They are operating in the new age, ruled by the dizzying pace of technology, poised to pace up with emerging trends thus improving quality standards every time. Their fully automated ovens bake the biscuits round the clock and then they find their way to the automatic packing units at the company’s plant in Surajpur, Greater Noida (U.P.), catering the ever growing demand of “PRIYAGOLD” biscuits. This is reflected through their brand’s positioning which says “Haq Se Maango”, a positioning that was formulated keeping in mind that everyone has the right to good taste and the right to ask for it. They feel that the means to finding the future lies in believing in their selves. Their over the period created trust and confidence, can never be destroyed, just like the eternal force of nature. They adhere to ensure that “PRIYAGOLD” continue moving forward towards achieve best quality for total consumer’s satisfaction.

News

Swatantra Vaarthha April 4th 2007

Chandigarh

Subject manufacturers of Priyagold brand of biscuits, became the first and the only Indian company to win the prestigious ‘International Quality Crown Award 2004. The company is aiming to be market leader in biscuit manufacturing within next three years and has set the target to be largest biscuit manufacturing unit in India by 2007.

New Delhi, Dec. 31 2007

Subject the makers of Priyagold biscuits, recently won bids for setting up kiosks at several railway stations under the Central Railway, including Nagpur and Bhusawal divisions.

Fixed Assets

Ø Land

Ø Building

Ø Plant and Machinery

Ø Motor Vehicles

Ø Office Equipments

Ø Furniture and Fixture

Ø Electrical Equipments

Ø Computer

Ø Computer Software

Ø Dies and Tools

Ø Cycle

Ø Air Conditioner

Ø Fire Safety Equipments

Ø Motor Cycle

Ø Fire Safety Equipments

Ø Lab Equipments

CMT REPORT (Corruption, Money Laundering & Terrorism]

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

1] INFORMATION ON DESIGNATED PARTY

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

2] Court Declaration :

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

3] Asset Declaration :

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

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

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

Charges or investigation registered against subject: None

7] Criminal Records

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

8] Affiliation with Government :

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

9] Compensation Package :

The 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.

The 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. 42.47
UK Pound	1	Rs. 84.00
Euro	1	Rs. 66.14

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--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		61

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

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

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

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, they 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