MIRA INFORM REPORT

Report Date :

19.06.2008

IDENTIFICATION DETAILS

Name :	KHANDELWAL LABORATORIES PRIVATE LIMITED
Registered Office :	79/87, D. Ladpath, Mumbai, 400033, Maharashtra
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	27.09.1945
Com. Reg. No.:	11-4554
CIN No.: [Company Identification No.]	U74999MH1945PTC004554
TAN No.: [Tax Deduction & Collection Account No.]	MUMK10828G
PAN No.: [Permanent Account No.]	AACK42245E
Legal Form :	Private limited liability company.
Line of Business :	Manufacturer and Seller of Pharmaceuticals, Medicinal Chemicals and Botanical products such as Tablets and Capsules, Injectables, Injection Sterile Powder, Orals including Anti-Biotics, Ointments, Granuals, Powders and Fine Chemicals.

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 1100000
Status :	Very Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established company, controlled and financed by Khandelwal family. Directors are reported as respectable, experienced and resourceful industrialists. Their trade relations are reported as fair. Payments are reported as usually correct and as per commitments. General financial position is satisfactory. The company can be considered normal for business dealings at usual trade terms and conditions.

INFORMATION PARTED BY

Name :	Mr. Jitendra Mehta
Designation :	Accounts Manager
Contact No.:	91-9323864359

LOCATIONS

Registered Office :	79/87, D. Lad Path, Mumbai - 400 033, Maharashtra, INDIA
Tel. No.:	91-22-23718238/46/ 22880156/22829327/23719665
Mobile No :	91- 9323864359
Fax No.:	91-22-23739381/ 23771958
E-Mail :	klab@vsnl.com info@khandelwallab.com it@khandelwallab.com mehta@khandelwal.com sborase@gmail.com gpinto@khandelwallab.com sanjeev@khandelwallab.com
Website :	http://www.khandelwallab.com
Area :	8000 Sq.ft
Factory :	Plot B- 1/90, Wagle Industrial Estate, Thane-400 604, Maharashtra
Location :	Owned
Factory :	Survey - 277/3/6, Dadra (Silvassa)- 396 230, Union Territory

DIRECTORS

Name :	Mr. Sanjeev Khandelwal
Designation :	Chairman
Address :	13, Prem, Niwas, Altamount Road, Mumbai – 400026, Maharashtra, India
Date of Birth/Age :	10/12/1963
Date of Appointment :	20.08.1993
Name :	Mr. Vijay Goel
Designation :	Chairman
Address :	E-348, Greater Kailash – II, New Delhi – 110024, India
Date of Birth/Age :	09/11/1940
Date of Appointment :	18.06.1993
Name :	Mr. R V S Mani
Designation :	Director
Address :	Progressive harmony, Flat No. 26, 2^nd Floor, Plot No- 11, Sector – 44, Kopar Khairane New Mumbai, Maharashtra – 400709, India
Date of Birth/Age :	31/10/1939
Date of Appointment :	25.06.2003
Name :	Mr. Mahesh Prasad Mehrotra
Designation :	Director
Address :	C-561, Defence Colony, New Delhi, 110024, India.
Date of Birth/Age :	26/09/1940
Date of Appointment :	29.09.2007

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 29.09.2007

Names of Shareholders	No. of Shares
Mr. Sanjeev Khandelwal	1499910
Mrs. Sunita Khandelwal	1500000
Mr. Ravindra Khandelwal	90
Total	3000000

Equity Share breakup (Percentage of Total Equity)

As on 31.03.2007

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

BUSINESS DETAILS

Line of Business :

Manufacturer and Seller of Pharmaceuticals, Medicinal Chemicals and Botanical products such as Tablets and Capsules, Injectables, Injection Sterile Powder, Orals including Anti-Biotics, Ointments, Granuals, Powders and Fine Chemicals.

Products :

Item Code No.	Product Description
3003.10	Anafortan (Anti Spasmodic)
3003.10	Cefi (Antibiotics)
3003.10	Ofla (Antibiotics)

Exports :

Countries :

v Ethiopia

v Myanmar

v Nigeria

v Philippines

v Sri Lanka

v Thailand

v Trinidad

v Tobago

v Asian Country

v African Country

Imports :

Products :

Bulk Drug

Countries :

v China

v Japan

v Urguary

v Germany

Terms :

Selling :

Credit (30-60-90 days)

Purchasing :

Credit (30-60-90 days)

PRODUCTION STATUS

Particulars	Unit	Installed Capacity	Actual Production
Tablets & Capsules	Millions	612	263.437
Injectables	Thousand Litres	26	38.113
Injection Sterile Powder	Thousand Kgs.	117	78.780
Orals Including Antibiotics	Thousand Kgs. /Litres	339	301.74
Granules	Tonnes	18	--
Powders	Tonnes	20	--
Fine Chemicals	Thousand Kgs.	--	1.288
Enzymes	Kgs./ Litres	--	--

GENERAL INFORMATION

Customers :

v SFOLCIEST Clients

v Sole Selling Agents

v Consignees Sales Agent

No. of Employees :

1,200 Employees

Bankers :

v Punjab National Bank

Foreshore Road, 102, Raheja Chambers, Nariman Point, Mumbai -

400 021, Maharashtra, India.

v Axis Bank Limited, P. M. Road, Fort, Mumbai – 400 001, Maharashtra, India.

Facilities :

Secured Loans	31.03.2005
Cash Credit Against hypothecation of stocks and book debts (Against equitable mortgage of fixed assets of the company and guaranted by the Directors)	72.929
From others :-
Against hypothecation of vehicles due within 12 months Rs. 0.781 million (Previous year Rs. 0.616 million)	2.060
Total	74.989
Unsecured Loans
From Shareholder’s and Directors	21.705
Total	21.705

Banking Relations :	Good
Auditors :
Name :	M/s. Warde and Shah, Chartered Accountants
Address :	Regent Chambers, 12^th Floor, Jamnalal Bajaj Marg, 208, Nariman Point, Mumbai – 400 021, Maharashtra, India.
Group Companies :	Ø Lumis Biotech Limited Ø Pinnacle Remedies Private Limited Ø ITX. Com (India) Private Limited Ø Xytech Laboratories Private Limited Ø Radicure Remedies Private Limited Ø Navus Healthcare Private Limited Ø Medicross Healthcare Private Limited Ø Oncure Research Private Limited Ø Khandelwal Brothers Limited Ø Khandelwal Mining & Ores Private Limited Ø Deviprasad Kandelwal & Company Private Limited Ø Kandelwal Ferro Alloys Limited Ø Infinity Optimal Solutions Private Limited Ø Ravisum Agro Investment Private Limited Ø Khandelwal Laboratories Limited – Manufacturing and Marketing of Pharmaceutical Formulations Ø Steller Chemical Laboratories Private Limited – APIs and fine Chemicals Manufacturer Ø ITX Limited – E Business Solutions Ø United Transcription (India) Private Limited – Medical Transcription for the Specialties. Ø S R Khandelwal and Sons Private Limited – Industrial Trading Ø Lumis Biotech Limited – Bio Technology Business Ø Xytech Laboratories Limited – Specialised Pharmaceutical Marketing Ø TSC Value Retail Limited – Retail Identity Promotion Services

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
5,000,000	Equity Shares	Rs. 10/- Each	Rs. 50.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
5,000,000	Equity Shares	Rs. 10/- Each	Rs. 50.000 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2007	31.03.2006	31.03.2005
SHAREHOLDERS FUNDS
1] Share Capital		50.000	30.000	30.000
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		183.509	175.763	159.607
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		233.509	205.763	189.607
LOAN FUNDS
1] Secured Loans		207.996	131.908	74.989
2] Unsecured Loans		85.028	21.543	21.705
TOTAL BORROWING		293.024	153.451	96.694
DEFERRED TAX LIABILITIES		11.019	9.860	7.559
TOTAL		537.553	369.074	293.860
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		213.163	144.262	92.342
Capital work-in-progress		0.000	0.000	0.000
INVESTMENT		0.194	0.174	0.124
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	178.319	130.304	140.737
	Sundry Debtors	217.174	176.291	139.021
	Cash & Bank Balances	12.128	6.848	5.864
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	156.997	106.455	69.163
Total Current Assets		564.617	419.898	354.785
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	244.224	189.374	154.298
	Provisions	1.509	12.112	12.138
Total Current Liabilities		245.733	201.486	166.436
Net Current Assets		318.884	218.412	188.349
MISCELLANEOUS EXPENSES		5.312	6.223	13.043
TOTAL		537.553	369.074	293.860

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover (Including Other Income)		1126.380	948.335	695.729
Total Income		1126.380	948.335	695.729
Profit/(Loss) Before Tax		27.921	38.990	25.925
Provision for Taxation		0.000	0.000	(3.744)
Profit/(Loss) After Tax		27.921	38.990	29.669
Expenditures :
	Interest	18.176	14.484	669.805
	Depreciation & Amortization	10.873	8.818
	Other Expenditure	1069.410	886.043
Total Expenditure		1098.459	909.345	669.805

KEY RATIOS

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
PAT / Total Income	(%)	2.48	4.11	4.26
Net Profit Margin (PBT/Sales)	(%)	2.48	4.11	4.26
Return on Total Assets (PBT/Total Assets}	(%)	2.48	4.11	4.26
Return on Investment (ROI) (PBT/Networth)		0.12	0.19	0.14
Debt Equity Ratio (Total Liability/Networth)		1.05	0.19	0.88
Current Ratio (Current Asset/Current Liability)		2.30	2.08	2.13

LOCAL AGENCY FURTHER INFORMATION

Form 8

Name of the company

KHANDELWAL LABORATORIES LIMITED

Presented By

Punjab National Bank, Foreshore Road, 102, Raheja Chambers, Nariman Point, Mumbai - 400 021

1) Date and description of instrument creating the change

28^th June 2004, Hypothecation of goods and Book-debts. Agreement for Bills.

(All the agreements constitute a single charges)

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

Rs. 85.000 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

All movable plant and machinery and equipments of whatever nature belong to the borrowers, which shall be brought in the premises of the borrowers aforesaid or anywhere 3else (hereinafter referred to as “the hypothecated machinery”) and

Present and future book debts, outstanding decrees, claims, securities, government subsidies, investments, rights and other movables assets excluding bills purchased / discounts by bank and bills against which advance have been made (all of which are hereinafter referred to as “book debts”) which belong to them and which now or hereinafter from time to time during the continuance of this agreement may belong to them (the ‘said gods’ hypothecated machinery and book debts are hereinafter referred to as Hypothecated assets more fully described in schedule hereunder along with the applicable margins as security for payment of all the amount due and becoming due to the Bank by then towards and in respect of the said facilities including all interest and all other monies due hereunder amount costs, charges and expenses by the Bank under the terms of and for the preservation and protection of the securities created hereunder r under any other security document executed by the borrower in favour of the Bank)

Fund Based : A	Rs in Millions
CC (H) Cash credit	55.000
CC (BD)	(10.000)
FCNR (B)	(41.400)
Packing Credit	(4.500)
Documentary Bills	(7.500)
FOBP/FOUBNLC/FOBP /FOBNLC	(6.000)
Non Fund Based (B)
Inland Letter of credit (DP)	10.000
Foreign letter of credit (DA?DP)	17.000
Letter of guarantee	3.000
Total	30.000
Grand total (A+B)	85.000

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

Interest @ 1 % OPLR of Bank / RBI rate subject to change form time to time with presently of 11.75 % p.a.

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

Punjab National Bank

Foreshore Road, 102, Raheja Chambers, Nariman Point, Mumbai - 400 021, Maharashtra, India.

6) Date and brief description of instrument modifying the charge

Dated 9^th July, 2005

i) Hypothecation of goods and book debts and block assets as security to secure all credit facilities.

ii) Term loan agreement

(Both the agreements constitute a single charge)

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.

Original charges created on 28^th June 2004 for Rs. 85.000 millions

First modification dated 12^th April 2005 by which the cash credit limit is enhanced from Rs. 55.000 millions to Rs. 75.000 millions, thereby raising total charge from Rs. 85.000 millions to Rs. 105.000 millions which is registered on 9^th May, 2005 by the present modification the charges on stock, book debts bills, movable plant and machinery situated at

Plot no. B-1 MIDC Thane adm. 2575 Lacs.

At Dadra s. no. 277/3/6

At Wagahdra S. No. 134/2

At Pantnagar, Uttaranchal is enhanced form Rs. 105.000 millions to Rs. 165.000 millions by an additional limit of Rs. 60.000 millions as under:

Fund Based : A	Rs in Millions
Cash credit	75.000
FCNR (B)	(41.400)
Book Debts	(10.000)
Bill discount	(5.000)
Packing Credit	(4.500)
Documentary Bills	(7.500)
FOBP/FOUBNLC/FOBP /FOBNLC	--
Non Fund Based (B)
Inland Letter of credit (DP)	10.000
Foreign letter of credit (DA?DP)	17.000
Letter of guarantee	3.000
Total	30.000
Grand total (A+B)	165.000

This form is for	Modification of charge
Whether charge is modified in favour of asset reconstruction company (ARC) of assignee	No
Charge Identification (ID) number of the charge to be modified	90241156
Corporation identity number (CIN) or foreign company registrations number of the company	U74999MH1945PTC004554
Name of the company	KHANDELWAL LABORATORIES PRIVATE LIMITED
Address	79/87, D. Ladpath, Mumbai, 400033, Maharashtra, India
Type of Charges	Immovable property
Whether consortium finance is involved	Yes
Whether joint charge involved	Yes
Number of charge holder(s)	2
Particular of the charge holder	Name : Punjab National Bank (as per annexure) Address : Foreshore Road Branch, Raheja Chambers, Nariman Point City : Mumbai State : Maharashtra ISO country Code : IN Pin Code : 400021 e-mail ID : sborase@gmail.com
Nature or description of the instrument creating or modifying the charge	Letter evidencing deposit of title deeds dated 03.03.2008
Date of the instrument creating charge	03.03.2008
Whether charge created or modified outside India	No
Amount Secure by the charge	Rs. 260.000 millions
Brief particulars of the principal terms and conditions and extent and operation of the charge	(a) Rate of Interest BPLR+0.50% (i.e. currently 13.50%) (b) Terms of repayment On Demand (c) Margin N.A. (d) Extent and operation of the charge The mortgage of immovable property is extended to cover the enhanced credit facilities as detailed in Annexure III.
Short particulars of the Property charged	Mortgage of Immovable property as detailed in Annexure II
Whether any of the property or interest therein under reference is not registered in the name of the company	No
Date of latest modification prior to the present modification	16/01/2007
Particulars of the present modification	By present modification, the mortgage extends to cover the enhancement of limits from Rs. 201.500 millions to Rs. 260.000 millions i.e. Punjab National Bank Rs. 160.000 millions and Axis Bank Rs. 100.000 millions as detailed in Annexure III.

Fixed assets

• Land (freehold and leasehold)
• Building, plant and machinery
• Other machinery and equipment
• Furniture, fixtures and equipment
• Vehicles

History

The company was incorporated on 27^th September, 1945 at Mumbai in Maharashtra as a public limited liability company having Company Registration Number 4554.

The company was reconverted as a private limited liability company.

INTERNATIONAL NETWORK

Klab has to its credit 38 registrations s in 8 countries and 380 registration files are under registration in 29 countries.

Countries where their products are registered

ETHIOPIA, MYANMAR, NIGERIA, PHILIPPINES, SRI LANKA, THAILAND, TRINIDAD & TOBAGO, HONG KONG, HAITI, DOMINICAN REPUBLIC, GEORGIA, VIETNAM, HONG KONG

Countries where their products are under registration

Brazil, Cambodia, Costa Rica, Ecuador, Ethiopia, Ghana, Guatemala, Kenya, Mali, Nigeria, Trinidad & Tobago, Ukraine, Uganda, Tanzania, Mozambique. Yemen, Oman, Jordan, Syria, Iraq, Chile, Venezuela, Maldives,

IN INDIA

Klab has 1100 medical sales representatives with 195 first line managers and 51 second line managers.

This sales team meets 125,000 doctors and 75,000 pharmacies physically every month. Special focus is on Gastroenterologists, General Physicians, General Surgeons, Gynaecologists, Orthopedic Surgeons and Pediatricians. Klab s products are distributed nationally through 30 distributors, 1,000 stockiest and 75,000

pharmacies

Oncology Sales Force

Klab has 24 Specialty Sales Representatives who are only focusing on all the oncologists and oncology institutions within India

They have recently started focusing on the markets outside India.

 They are exporting formulations to Ethiopia, Myanmar, Nigeria, Philippines, Sri Lanka, Thailand and Trinidad & Tobago.

Their products are under registration in Brazil, Cambodia, Costa Rica, Ecuador, Ethiopia, Dominican Republic, Georgia, Ghana, Guatemala, Haiti, Hong Kong, Kenya, Mali, Myanmar, Nigeria, Philippines, Sri Lanka, Thailand, Trinidad & Tobago, Ukraine, Vietnam, Yemen and Zambia.

They have supplies their Turnkey API Technology along with documentation to USA and Europe and are also supplying intermediates.

They are focusing on exporting Glycopyrrolate, Doxapram and Cyclophosphamide.

They are under negotiation with US Companies for conducting Clinical Trials in the field of Oncology in India.

They are supplying their niche Oncology Products to several countries as also are under negotiation to manufacture for overseas companies.

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 :

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. 42.90
UK Pound	1	Rs. 83.74
Euro	1	Rs. 66.46

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	8
PAID-UP CAPITAL	1~10	8
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	7
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	8
--CREDIT LINES	1~10	8
--MARGINS	-5~5
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	NO
--PUBLIC LIMITED LIABILITY COMPANY. COMPANY'S SHARES ARE LISTED ON THE STOCK EXCHANGE.	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		72

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

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

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

RATING 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, 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