MIRA INFORM REPORT

Report Date :

25.03.2008

IDENTIFICATION DETAILS

Name :	NIRMA LIMITED
Registered Office :	Nirma House, Ashram Road, Ahmedabad – 380 009, Gujarat
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	25.02.1980
Com. Reg. No.:	04-3670
CIN No.: [Company Identification No.]	L24240GJ1980PLC003670
TAN No.: [Tax Deduction & Collection Account No.]	AHMN00409D
PAN No.: [Permanent Account No.]	AAACN5350K
Legal Form :	Subject is a public limited liability company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Engaged in manufacturing and selling of detergents, toilet soaps, glycerine, shampoo, distilled fatty acid, sulphuric acid, alfa olefin sulphonate, linear alkyl benzene.

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 97000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established and reputed Fast Moving Consumer Goods (FMCG) company having fine track. Available information indicates high financial responsibility of the company. Financial position of the company is good. Business is active. Payments are always correct and as per commitments. The company can be considered good for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Nirma House, Ashram Road, Ahmedabad – 380 009, Gujarat, India.
Tel. No.:	91-79-658 6512 – 16, 27546565-74
Fax No.:	91-79-658 9136 / 658 0697, 27546603/05
E-Mail :	nirma_corporate@nirma.co.in ndpat@ad1.vsnl.net.in
Website :	http://www.nirma.co.in
Factory :	Ø Block No. 16/B, Ahmedabad-Mehsana Highway, P.O. Mandali, District Mehsana - 382 732, Gujarat, INDIA, Ø Village : Moraiya P.O. Chaharwadi Vasna, Near Modern Denim, Bavla Road, Taluka : Sanand, District Ahmedabad – 382 213, Gujarat, INDIA. Ø Sector-III, Bagdoon, Pithampur, District Dhar – 454 775, Madhya Pradesh, INDIA, Ø Plot No. B/4, Jainpur Industrial Area, Jainpur, District Kanpur Dhar – 209 101, Uttar Pradesh, INDIA, Ø Alindra Detergent Complex, P. O. Alindra, Taluka Savli. District Baroda-391 775, Gujarat, INDIA. Ø Bhavnagar Chemical Complex, P. O. Kalatalav, District Bhavnagar -364001, Gujarat, INDIA. Ø Wind Farm : Survey No. 691, Village Dhank, Taluka Upleta, District Rajkot – 360 001, Gujarat, INDIA. Ø Survey No. 358-369, Village Sachana, Taluka Viramgam, Dist. Ahmedabad - 382150

DIRECTORS

Name :	Mr. Karsanbhai K. Patel
Designation :	Chairman & Managing Director
Qualification :	B.Sc.
Date of Appointment :	20.02.1988
Name :	Mr. Rakesh K. Patel
Designation :	Director
Name :	Mr. Shrenikbhai K. Lalbhai
Designation :	Director
Name :	Mr. M. R. Shroff
Designation :	Director
Name :	Mr. Rajendra D. Shah
Designation :	Director
Name :	Mr. A. R Sarwan
Designation :	Director
Name :	Mr. Kaushikbhai N. Patel
Designation :	Director
Name :	Mr. Chinubhai R. Shah
Designation :	Director
Name :	Mr. Kalpesh A. Patel
Designation :	Executive Director
Qualification :	B.E. (Chemical Engineering) & M.B.A. (Marketing)
Date of Appointment :	01.04.1994
Name :	Mr. Hiren K. Patel
Designation :	Managing Director

KEY EXECUTIVES

Name :	Mr. Anil C. Shah
Designation :	Dy. Company Secretary

SHAREHOLDING PATTERN

Names of Shareholders (as on 31.03.2007)	No. of Shares	Percentage of Holding
Indian Promoters' holding	61407960	77.35 %
Non-Promoters' holding
a. Mutual Funds	1901960	2.40 %
b. Banks, Financial Institutions, Insurance Companies (Central/State Govt. Institutions / Non-Government Institutions)	185404	0.23 %
Flls	334413	0.42 %
NRIs/OCBs	40215	0.05 %
Private Corporate Bodies	867092	1.09 %
Indian Public	14647640	18.46 %
Total	79384684	100.00 %
a. No. of shares held in physical form	4,06,379	00.51 %
b. No. of shares held in Demat form	7,89,78,305	99.49 %
Total	79384684	100.00 %

BUSINESS DETAILS

Line of Business :

Engaged in manufacturing and selling of detergents, toilet soaps, glycerine, shampoo, distilled fatty acid, sulphuric acid, alfa olefin sulphonate, linear alkyl benzene.

Products :

Product Description	ITC Code No.
Synthetic Detergents	34029001
Toilet Soap	34011103
Linear Alkyl Benzene	38171000

Brand Names :

‘Nirma’

PRODUCTION STATUS

Particulars	Installed Capacity	Actual Production
Synthetic Detergents	*	*
Alfa Olefin Sulphonate	10,000	724092
Sulphuric Acid	125,000	--
Toilet Soap	1,70,000	89441
Distilled Fatty Acid	1,35,000	--
Glycerine	18,000	--
Shampoo	2,000	--
Linear Alkyl Benzene	75,000	97295
Soda Ash	650,000	527812
Single Super Phosphate	1,00,000	--
Packaging	13,500	--
Salt	1,800,000	--
Tooth Paste	2000	--

GENERAL INFORMATION

Suppliers :	Alfa Industrial Engineers Altop Industries Limited Ambica Steel Furniture Ami Industrial Corporation Anoopam Adhesives Aplab Limited Ashok Industries Avro Industries B.D. Engineers D.N. Engineers Embee Engineering Works IGP Engineers Private Limited J.J. Engineering Jagruti Rubeer Enterprises Private Limited Mahavir Corporation Precision Equipment Company Shri Ram Filteration & Engineering Company Standard Spring Works Trio Engineering Works and Triveni Equipments Private Limited
No. of Employees :	3630
Bankers :	Bank of Baroda State Bank of India Bank of India HDFC Bank Limited Credit Lyonnais ANZ Grindlays Bank Limited Axis Bank Limited The Kalupur Commercial Cooperative Bank Limited
Banking Relations :	Satisfactory
Auditors :
Name :	Hemanshu Shah & Company Chartered Accountants
Address :	Ahmedabad, Gujarat, India
Subsidiaries :	Nirma Consumer Care Limited Nirma House, Ashram Road, Ahmedabad –380 009 Tel No.: 91-79-2658 6512 – 16 Fax No : 91-79-2658 9136 / 2658 0697
Associates :	Mr. Karsanbhai K Patel Ms. Shantaben K Patel Mr. Rakeshbhai K Patel Mr. Hirenbhai K Patel Mr. Ambubhai M. Patel Kargil Holdings Private Limited Navita Detergents Private Limited Nirma Credit & Capital Limited Nirma Chemical Works Limited Nirma Petrochemicals Limited Nirma Industries Limited Nityakunj Chemicals Company Limited Nirma Education and Research Foundation Krishna Global Trade Limited Mauritius and Nirma Bangladesh Limited, Bangladesh
Joint Venture Companies:	Kirsna Global Trade Limited, Mauritius Nirma Bangladesh Limited, Bangladesh

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
100000000	Equity Shares	Rs.10/- each	Rs. 1000.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
82363991	Equity shares	Rs.10/- each	Rs. 823.640 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		823.600	821.800	821.700
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		23474.200	19658.100	17925.100
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		24297.800	20479.900	18746.800
LOAN FUNDS
1] Secured Loans		2391.500	3443.000	5644.600
2] Unsecured Loans		857.000	37.900	132.400
TOTAL BORROWING		3248.500	3480.900	5777.000
DEFERRED TAX LIABILITIES		0.000	3541.800	3584.800
TOTAL		27546.300	27502.600	28108.600
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		20448.100	17501.300	18906.900
Capital work-in-progress		1132.300	407.800	280.300
INVESTMENT		67.000	74.900	68.200
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	4860.100	3081.400	3066.000
	Sundry Debtors	2333.900	2215.200	1929.300
	Cash & Bank Balances	627.700	2711.700	1945.700
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	5999.600	3199.800	3323.700
Total Current Assets		13821.300	11208.100	10264.700
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	6670.100	917.700	867.400
	Provisions	1252.300	771.800	544.100
Total Current Liabilities		7922.400	1689.500	1411.500
Net Current Assets		5898.900	9518.600	8853.200
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		27546.300	27502.600	28108.600

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		25392.900	19188.000	18388.700
Other Income		522.800	340.200	134.700
Total Income		25915.700	19528.200	18523.400
Profit/(Loss) Before Tax		670.100	3440.200	3528.100
Provision for Taxation		[414.000]	1026.400	781.600
Profit/(Loss) After Tax		1084.100	2413.800	2846.500
Earnings in Foreign Currency :
	Export Earnings	NA	657.500	2199.300
	Other Earnings	NA	3.300
Total Earnings		NA	535.100	660.800
Imports :
	Raw Materials	NA	1735.600
	Stores & Spares	NA	65.800	603.700
Total Imports		NA	1842.600	1801.400
Expenditures :
	Raw Materials	10916.900	9061.600
	Excise Duty	2953.200	3275.500
	Power & Fuel Cost	2562.700	2258.600
	Increase/(Decrease) in Finished Goods	[675.200]	[69.800]	174.400
	Other Manufacturing Expenses	818.400	764.900
	Employee Cost	642.100	434.900	14820.900
	Selling and Administration Expenses	4032.700	1139.100
	Miscellaneous Expenses	1742.000	879.400
	Interest & Financial Charges	177.700	200.800
	Depreciation	2075.100	1564.200
Total Expenditure		25245.600	19509.200	14995.300

QUARTERLY RESULTS

PARTICULARS	30.06.2007 [1^st Quarter]	30.09.2007 [2^nd Quarter]	31.12.2007 [3^rd Quarter]
Sales Turnover	6091.700	4984.300	5756.100
Other Income	22.100	753.800	188.700
Total Income	6113.800	5738.100	5944.800
Total Expenditure	5010.600	4310.000	4829.100
Operating Profit	1103.200	1428.100	1115.700
Interest	44.800	20.800	-40.700
Gross Profit	1058.400	1407.300	1156.400
Depreciation	512.700	493.100	507.000
Tax	84.800	106.300	7.700
Reported PAT	411.000	807.900	641.700

KEY RATIOS

PARTICULARS	31.03.2007	31.03.2006	31.03.2005
Debt-Equity Ratio	0.15	0.24	0.36
Long Term Debt-Equity Ratio	0.07	0.20	0.30
Current Ratio	1.48	1.86	1.48
TURNOVER RATIOS
Fixed Assets	0.80	0.82	0.79
Inventory	6.39	7.30	6.86
Debtors	11.16	10.83	12.10
Interest Cover Ratio	11.74	18.13	11.38
Operating Profit Margin(%)	16.38	23.19	25.29
Profit Before Interest And Tax Margin(%)	8.21	16.22	18.00
Cash Profit Margin(%)	14.61	17.73	20.54
Adjusted Net Profit Margin(%)	6.43	10.76	13.24
Return On Capital Employed(%)	8.10	15.02	16.23
Return On Net Worth(%)	7.30	12.32	16.23

LOCAL AGENCY FURTHER INFORMATION

FIXED ASSETS

Ø Freehold land

Ø Leasehold land (permanent)

Ø Building

Ø Trademarks

Ø Goodwill

Ø Plant & machinery

Ø Furniture and fittings

Ø Equipments

Ø Vehicles

AMALGAMATION OF SACHANA UNDERTAKING WITH THE COMPANY 

The Composite Scheme of Compromise and Arrangement with Core Healthcare Limited, its Lenders and shareholders (CHL) and the Company and its shareholders ('Scheme') was approved by the Hon'ble High Court of Gujarat vide its Order dated 1st March 2007. The Certified Copy of the Order was received from Hon'ble High Court of Gujarat on 5th March 2007. The Scheme became effective on 7th March 2007. Accordingly the assets and the specified liabilities of Sachana undertaking stood transferred and vested in the Company with effect from the appointed date of Demerger i.e. 1st December 2004. 

Some of the records / information pertaining to accounts is yet to be received by the Company, as well some of the litigations related to the Undertaking are still pending. Necessary adjustments, if required, in the accounts will be made upon receipt of the said document and the conclusion of the litigations. Two minority lenders have preferred an Appeal against the said Order, which is pending before the Division Bench at Hon'ble Gujarat High Court.

SHARE CAPITAL 

Upon the Scheme became effective, the Authorised, Issued, Subscribed and Paid-up equity share capital of the Company has been sub divided and the face value of its equity shares has been restated from Rs.10/- to Rs.5/- per share. Accordingly for every 1 equity share of Rs.10/- fully paid up of the Company, the shareholders have been issued and allotted 2 equity shares of Rs.5/- each fully paid up of the Company as on 22nd March, 2007 being the record date fixed for this purpose. The directors are confident that the split will result into improvement of terms of liquidity in the script of the Company.

Further pursuant to Clause 9 of the Scheme, the Company has allotted on 26th June, 2007, 372914 new equity shares of the Company of the face value of Rs.5/- each, at the ratio of 1 fully paid equity share of Rs.5/- each for every 80 equity shares of Rs.10/- each fully paid of CHL and 1 fully paid equity share of Rs.5/- each for every 235 partly paid equity shares of CHL, as per the Record date of 26th April, 2007 fixed by CHL, for the purpose of ascertaining the shareholders entitled to get new equity shares of the Company. The said new equity shares issued by the Company are ranking pari passu with the existing equity shares of the Company in all respect including dividend for the financial year commencing from 1st April, 2005. 

OPERATIONAL AND FINANCIAL PERFORMANCE 

During the year 2006-07, the margins and the profitability continued to be key areas of consideration for the Company. The turnover was increased from Rs.22441.100 Millions in 2005-06 to Rs.25392.900 Millions during the year under review, registering 13.15% growth over the previous year. Though the sale quantity of detergent was adversely affected, the Company could achieve value growth in this segment marginally higher compared to the previous year. The Company had a steady growth in sale of Soda Ash during the year under review. The continued reduction in the margin of Linear Alkly Benzene, including in the exports sector had a negative effect on the profitability of the Company. Further the sales tax exemption was available to the company till June 2006 as compared to full exemption last year. The profitability was further affected by the loss of Rs.598.400 Millions of Demerged Sachana Undertaking during the year under review. Considering the above factors, coupled with the effect of reduction in production during the year under review, the Company could register net profit of Rs.1091.200 Millions compared to Rs.2413.800 Millions of previous year. 

The Sachana Undertaking is having manufacturing facilities of Small Volume Parenterals(SVP), Large Volume Parenterals (LVP), Medical Devices and Speciality products. The Company during the year, has obtained a licence for manufacturing and marketing the Parenterals Intravenous Drugs i.e. SVP and LVP. After obtaining the licence, Company has started manufacturing and marketing the said products under the brand Nirlife. The gross turnover of Sachana Undertaking during the period was Rs.583.500 Millions. 

The company always managed the investments prudently by deployment of cash surplus in a balanced portfolio of safe and liquid debt market. You will observe that there has been successive decline in overall debt structure. 

REVIEW OF NEW PROJECTS 

During the year, the Pure Water Plant expansion capacity is being increased from 800 TPD to 1600 TPD. The estimated cost to increase the capacity of Plant is Rs.800 Millions. The utility expansion for meeting Pure Water and Caustic Plant project utilities at a total cost of Rs.1100 Millions is taken on grass route. The Caustic Soda plant of 240 TPD at a total cost of Rs.1700 Millions is being put up at Kalatalav Site. The Company has established the total purchase order commitments of Rs.2160 Millions for Pure Water Plant / Utilities Expansion and Caustic Plant during the year under the review. The civil job for Pure Water Plant has been completed to the extent of 95% and is likely to be mechanically completed by September 2007. The Utilities Expansion is likely to be over by March 2008 and Caustic Mechanical Trials by May 2008. 

BACKGROUND 

The country now with sound economic growth entered a virtuous circle of long term economic growth and strong fundamentals. The Indian economy has soared at an average growth of over seven percentage every year in the last decade and at around nine percentage in the last three years. The Investor confidence in the capital markets also revived significantly with BSE sensex jumped to a new height. 

SALES AND OPERATIONAL PERFORMANCE 

During the financial year 2006-07, the Detergent, Soaps, Soda Ash and LAB continued to be a leading products for the Company. During the year under review, Detergent and Soap at Rs.16400 Millions accounted for 64.59% of the gross sales, Soda Ash and Linear Alkyl benzene at Rs.6734.400 Millions accounted for 26.52% of the gross sales. The proportionate shares of Detergent, Soda Ash and LAB in the total gross sales were more or less the same as compared to the previous year. Due to the lower demand of the end product and general sluggish trends in the market, the production of the products portfolio was aversely affected during the year. The effect of change in the pattern of marketing and distribution, which was done through Company's wholly owned subsidiary Nirma Consumer Care Limited prior to April 2006 and now being handled directly by the Company are reflected in the results of the Company. Consequently the realisation on sales could be increased, but simultaneously marketing and a distribution expense which was earlier borne by Nirma Consumer Care Limited was accounted by the Company during the year under review. 

The Company continues to render its customers the best quality at a fair and compatible price. The Company with its experienced and well informed distributors across the country looks after the need of millions of customers. 

FINANCIAL HIGHLIGHTS 

The Composite Scheme of Compromise and Arrangement with Core Healthcare Limited (CHL), its Lenders and Shareholders, provided Sachana undertaking of CHL merged with all its assets and specified liabilities. The net sale of Rs.537.900 Millions of Sachana Undertaking has been included in the net sales of the Company during the year under review. The net loss of Rs.598.400 Millions was charged to the profit and loss account of the Company while loss amounting to Rs.1113.800 Millions pertaining to Sachana Undertaking was brought forward. The Company is confident of consolidating its operations at Sachana Undertaking and aims to be major player in the coming years. 

The Company registered gross sales of Rs.25392.900 Millions for the year ended 31st March, 2007 as against Rs.22441.100 Millions of the previous year registering a growth of 13.15%. 

Total operating expenses, including interest, during the year was Rs.19418 Millions against Rs.14493.600 Millions for the previous year. As percentage of gross sales it was 76.47%, as against 64.59% for the previous year. As already stated, due to the change in the pattern of marketing and distribution of Soaps and Detergent, the expenses pertaining to marketing and distribution had been accounted the Company directly. Consequently cost of freight and transportation expenses, sales tax expenses, discount on sales etc. during the year are not comparable with that of previous year.

Material consumption at Rs.10916.900 Millions during the year increased to 48.64% of Net Sales from 47.23% in the previous year. Profit before Interest Depreciation and Tax at Rs.3859 Millions was less by 22.89% as compared to Rs.5004.400 Millions of the previous year. The depreciation charge was at Rs.2075.100 Millions for the year under review as against Rs.1564.200 Millions in the previous year. The higher depreciation was mainly on account of depreciation charged on addition of fixed assets of Rs. 8710 Millions takenover from Demerged Sachana undertaking. The combined effect of reduction in the sales quantity, margin and also accounting of loss of Sachana undertaking during the year resulted in the reduction in the Net Profit by Rs.1322.600 Millions. To sum up, considering the tough competition, the margins and profitability in this category continued to be a challenge during the year under review. 

OUTLOOK 

The Company presently focussing on consolidating its position in a more open and competitive market. The ultimate goal is to strengthen the foundation and to develop as globally competitive organisation. At local level, the Company continues to leverage cost effectiveness arising from captive consumption of Soda Ash and also LAB. The company has already completed all its backward integration investment into the main line of industry. 

The FMCG industry is seeing a resurgence in growth as demand picks up.

Currently, FMCG products rural market size is estimated at 52% which is projected to reach at 57% and grow by 10% in next 3 years as against 6% growth of semi-urban FMCG demand which might touch 21% level from present level of 19%. However, in Urban India in which FMCG market size is currently estimated at 29% level is likely to come down to 22%, registering a fall of 25%. Within FMCG, Detergent and Soap industry has highest level of penetration in India. Therefore, general industry forecast based on monsoon, disposable income and social development might not give accurate results in case of Detergent and Soap industry. 

The three projects at Kalatalav plants are at the completion stage. The Company is expanding Pure Water Plant capacity from 2240 m3/day to 4480 m3/day. The Pure Water Plant project activity has been taken with the view to meet the extra pure water requirement for utilities and in turn double its edible salt capacity to 1600 MT/day. The estimated cost of this project is Rs. 800 Millions and will be mechanically completed by September, 2007. The company is also setting up a 240 MT/day Caustic Soda plant at Kalatalav at an estimated cost of Rs.1700 Millions. The project is likely to go on stream by March 2008. More than 95% of the civil jobs of Pure water plant hasbeen completed. Over 90% of Pure Water equipments received and 60% of erection completed. The piping electrical and instrumental jobs have been taken up.

The basic and detailed engineering is completed. The Company has also established purchase order worth Rs.700 Millions. 

Soda Ash is a basic input for glass, detergent and other chemicals. With the strong economic development and growth in automobile and housing sector, the demand for Soda Ash likely to grow at a CAGR of 5% in the coming years. 

Intravenous Fluids (I.V. Fluids) are critical life saving pharmaceutical fluids. It plays a vital role in day-to-day treatment of patients. This segment has received tremendous boost in recent times because of the increase in the per capita income, standard of living and consequent demand for healthcare facilities. There is a huge potential for increase in the demand for branded and competitively priced quality healthcare products, including I.V. Fluids, due to rapid growth of health care facilities in India. The Company has a world-class state of art technology and is in process of establishing strong distribution network to penetrate and develop the market, both domestically and internationally. The I.V. Fluid manufacturing facilities at Sachana are one of the largest in Asia and provide leadership position in the domestic market as well as holds considerable export potential. The Company has launched its products under the brand name of nirlife in the domestic I.V. Fluid market, which has been received very well. The Company feels confident of capturing significant market share in the coming years. 

The continuous focus of the company in cost effectiveness including backward integration and captive consumption will practically insulate the Company from price volatility of raw material cost. The management of the company is conscious of the need to find viable investment opportunity for robust cash flows that are generated year after year. The company, with strong foundation, with adoption of innovative measures is hopeful of strengthening itself a globally acceptable organisation. 

AS PER WEBSITE

Business Summary

Incorporated as a private limited company, the company was converted into a deemed public company and then to a public limited one in Nov.'93. Subject is an over Rs. 17 billion brand with a leadership presence in Detergents, Soaps and Personal Care Products, offering employment to over 15,000 people. During 1996-97, Nilnita Chemicals, Nirma Detergents, Nirma Soaps and Detergents, and Shiva Soaps and Detergents were amalgamated with the company. The company created "Nirma Consumer Care Limited" - a wholly owned subsidiary on 22nd Aug.'97, which is the sole licensee of the brand name 'Nirma' within India.To have a greater control on the quality and price of its raw materials, Nirma has undertaken backward integration into manufacture of Industrial Products like Soda Ash, Linear Alkyl Benzene (LAB), Alfa Olefin Sulphonates (AOS), Fatty Acid, Glycerine and Sulphuric Acid.

Today, the company sells over 800000 tonnes of detergent products annually, giving it a 35% share of the Indian market, which is the world's second largest fabric wash products markets. This makes Nirma India's largest detergent marketer and one of the world's biggest detergent brands. The Company has acquired Kisan Industries Limited situated at Village Moraiya, Dist. Ahmedabad as a going concern, which was engaged in the business of manufacture of detergents, Single Super Phosphate, fertilizer and printing and packaging.The second stream of the 420000 tpa Soda Ash plant at village Kalatalav, Bhavnagar was commissioned in September 2000. The Company also set up a pure water plant to manufacture 0.280 millions tpa Vaccum-salt in October 2000.Debottlenecking process which was made during 2001-02 by the company resulted in expansion of installed capacity of Soda Ash at Village Kalatalav, from 420000 TPA to 650000 TPA. The total cost of the project is approximately Rs.1100 millions. This project is expected to be completed in September,2002. The company issued Secured NCD aggregating Rs.3600 millions in order to augment its working capital and also to bring-in cost effiency in funding cost.

GENESIS

Subject is one of the few names - which is instantly recognized as a true Indian brand, which took on mighty multinationals and rewrote the marketing rules to win the heart of princess, i.e. the consumer.

The company, the proverbial ‘Rags to Riches’ saga of Dr. Karsanbhai Patel, is a classic example of the success of Indian entrepreneurship in the face of stiff competition. Starting as a one-man operation in 1969, today, it has about 14, 000 employee-base and annual turnover is above Rs. 25000 Millions.

India is a one of the largest consumer economy, with burgeoning middle class pie. In such a widespread, diverse marketplace, subject aptly concentrated all its efforts towards creating and building a strong consumer preference towards its ‘value-for-money’ products.

It was way back in ‘60s and ‘70s, where the domestic detergent market had only premium segment, with very few players and was dominated by MNCs. It was 1969, when Karsanbhai Patel started door-to-door selling of his detergent powder, priced at an astonishing Rs. 3 per kg, when the available cheapest brand in the market was
Rs. 13 per kg. It was really an innovative, quality product – with indigenous process, packaging and low-profiled marketing, which changed the habit of Indian housewives’ for washing their clothes. In a short span, the company created an entirely new market segment in domestic marketplace, which is, eventually the largest consumer pocket and quickly emerged as dominating market player – a position it has never since relinquished. Rewriting the marketing rules, subject became a one of the widely discussed success stories between the four-walls of the B-school classrooms across the world.

The performance of subject during the decade of 1980s has been labelled as ‘Marketing Miracle’ of an era. During this period, the brand surged well ahead its nearest rival – Surf, which was well-established detergent product by Hindustan Lever. It was a severing battering for MNC as it recorded a sharp drop in its market share. The company literally captured the market share by offering value-based marketing mix of four P’s, i.e. a perfect match of product, price, place and promotion.

Now, the year 2004 sees the company annual sales touch 800000 tones, making it one of
the largest volume sales with a single brand name in the world. Looking at the FMCG synergies, the company stepped into toilet soaps relatively late in 1990 but this did not deter it to achieve a volume of 100000 per annum. This makes the company the largest detergent and the second largest toilet soap brand in India with market share of 38% and 20% respectively.

It has been persistent effort of the company to make consumer products available to masses at an affordable price. Hence, it takes utmost care to provide finest products at the most affordable prices. To leverage this effort, The company has gone for massive backward integration along with expansion and modernization of the manufacturing facilities.

The focal objective behind modernisation plan is of up gradation with resource-savvy technology to optimise capabilities. Nirma’s six production facilities, located at different places, are well equipped with state-of-art technologies. To ensure regular supply of major raw materials, the company had opted for backward integration strategies. These strategic moves allowed subject to manage effective and efficient supply-chain.

The company has always been practiced ‘value-for-money’ plank. The company plans to extend the same philosophy in categories as commodity food products, personal care products and packaged food. Distinct market vision and robust infrastructure allowed the company to have cost leadership. Apart from this, lean distribution network, umbrella branding and low profile media promotions allowed it to offer quality products, at affordable prices.

In present scenario, an inspiring 59-year-old persona, Dr. Karsanbhai K. Patel, leads subject, playing role of key strategic decision-maker, whereas his next generation has already skilled management capabilities. Shri Rakesh K Patel – a qualified management graduate, is spearheading the procurement, production and logistic functions, whereas Shri Hiren K Patel – a qualified Chemical engineer and management graduate, heads the marketing and finance functions of the organisation. Shri Kalpesh Patel, Executive Director, leads the professional organisational structure.

The man behind the success of the company phenomenon – Dr. Karsanbhai Patel is a recipient of various awards and accolades. He has been bestowed with various awards like…

· Udyog Ratna by Federation of Association of Small-Scale Industries of Gujarat, New Delhi.

· Outstanding Industrialist of Eighties by Gujarat Chamber of Commerce and Industry, Ahmedabad (in 1990).

· Gujarat Businessman Award in 1998 by Gujarat Chamber of Commerce and Industry, Ahmedabad.

· Excellence in Corporate Governance Award by Rotary International District 2000.

A and M Hall of Fame, _______.

Shri Karsanbhai has been awarded an Honorary Doctorate by Florida Atlantic University, Florida, USA in the year 2001 in recognition of his exceptional accomplishments as a philanthropist and businessman.

This world has also recognised his ability, acumen and wisdom and in recognition of the services rendered by him in his various capacities. Dr. Karsanbhai Patel has also served as a Chairman for two terms to the Government of India’s Development Council for soaps and detergents, as a Member of Bureau of Indian Standards Committee for Soaps and Detergent Industries and President of Gujarat Detergent Manufacturers Association.

VISION, MISION and PHILOSOPHY

The company is a customer-focused company committed to consistently offer better quality products and services that maximise value to the customer.

This customer-centric philosophy has been well emphasised at the company through:

Ø Continuously exploring and developing new products and processes.

Ø Laying emphasis on cost effectiveness.

Ø Maintaining effective Quality Management System.

Ø Complying with safety, environment and social obligations.

Ø Imparting training to all involved on a continuous basis.

Ø Teamwork and active participation all around.

Ø Demonstrating belongingness and exemplary behaviour towards organisation, its goals and objectives.

The company is a phenomenon and synonymous with Value for Money. The brand transcends the specific dynamic of any particular product category, which is best captured in its above mission statement - a statement of sustained innovation, an unceasing effort to deliver better value to consumers, through better product quality.

CORPORATE SOCIAL RESPONSIBILITY

The company's vision visualises itself as a vibrant, pro-active and widely admired, ethical corporate citizen. The company believes, that exemplary achievements on the business points are not enough in the making of a good corporate citizen. In fulfilment of this role as a responsible part of the society and environment in which one operates, The company has undertaken a host of activities in the educational and social development areas.

Realising the significant role of education - especially technical and managerial in socio-economic development of the nation, the company played a vital role by establishing the Nirma Education and Research Foundation (NERF) in 1994. Recently, this Foundation has been awarded University status. This status gives way to shape up and expand into a body providing education in other courses like medicine, nursing, biotechnology, etc. along with the existing courses under a single roof of Nirma University. Today, this state-of-the art academic infrastructure runs various institution bodies such as Institute of Technology, Institute of Management, Institute of Pharmaceutical Sciences and Institute of Diploma Engineering. These all institutions are located in a disciplined, serene and pleasant environment. The campus blends beautifully with the green landscaping, aesthetic elegance of arches and the vibrant pursuit of knowledge by the young aspirants. The environment gives full scope for group activities, which are plenty, as also to individual pursuits for development on preferred tracks.

Institute of Management is a one of the premier business school, providing quality management education, and nourishing managerial talent. Within a short span, this institution achieved a position in Top-25 B-schools of India. The institute is having state-of-art infrastructure facilities and eminent faculties are sharing and contributing their knowledge to nurture the Indian industry with best managerial skills. Presently, the institution offers a two-year full time programme in business management and managing family business disciplines. Fellowship programme is doctoral level programme for post-graduate scholars in management for those who want to pursue careers in research, consulting, and academics. The programme consists of domain-specific advance courses for skill formation in research, consulting and teaching. To impart management learning to working executive community, Institute of Management is also offering three-years part-time management programme. Management Development Programmes [MDPs] and Executive Diploma Programs [EDPs] are uniquely designed for working executives, managers and entrepreneurs in the fields of Finance, Marketing and Human Resource Management. The programme has been tailored to suit the needs of working executive, managers and entrepreneurs who are seeking an exposure to modern management concept and practices.

Institute of Technology offers degree-engineering courses in Chemical, Instrumentation and Control, Electronics and Communication, Computer Sciences, Civil, Mechanical and Electrical technologies. Again, the well-developed infrastructure, knowledge-based faculties and facilities offered at the institution, gives it a priority choice in student community. The institute also offers Post-graduation, advanced courses in various technology disciplines. Year-around different happenings and seminars keep the environment very lively and provide opportunities to her students to perform brilliantly in their disciplines. Institute is also offering Masters in Computer Application courses.

Institute of Diploma Studies is offering four-year diploma programme. This programme covers sandwich pattern of multi point entry (MPE) and credit system (CS). This methodology helps students to comprehend industrial practices when they are in the institution allowing them opportunity to develop skills in far better way than their counterpart of non co-operative type programme. This institute is recognized by the All India Council for Technical Education (AICTE) and State Government of Gujarat.

Institute of Pharmaceutical Sciences is responsible for preparing students to enter into a career in pharmacy and function as professionals and responsible citizens in changing health care systems. A dynamic, challenging and comprehensive curriculum, includes a foundation in the biological, biomedical, clinical, pharmaceutical and physical sciences, clear focus on application and use of knowledge in practical settings, and a general education in healthcare systems, ethics, management, professional issues, communication and practical skills.

NirmaLabs is another contribution of the company with an objective to nurture, promote and facilitate potential entrepreneurs in their pursuit of knowledge based large-scale wealth generation for stakeholders and society. The prospects will undergo the program of grooming and incubation at NirmaLabs, and will then be supported to build the incubated ventures with appropriate support.

The company has already contributed Rs. 350 million for the development of these institutes, an amount, which is likely to rise further to Rs. 500 million. The infrastructure facilities created here are of international standards and they have already become models for similar institutes. Plans are underway to start Post Graduate and Research Courses in Management and Technology, as well as an IAS training center and a programme in Masters of Computer Applications.

Nirma Memorial Trust and Nirma Foundation - Nirma Memorial Trust looks after deprived women in Gujarat. It builds Ashrams and guesthouses for pilgrims and the elderly. The Nirma Foundation, set up in 1979, contributes towards the running of schools, colleges, temples and social institutions, within the state and outside.

Chanasma Ruppur Gram Vikas Trust in Mehsana of which Mr. K. K. Patel is the founder trustee and President provides education, maintenance of public health and related facilities in rural areas. The trust has started several institutions in Ruppur, including the Arts and Commerce College, and an ITI training institute and a ladies hostel.

MAJOR PLANTS

Soda Ash ::...

Investment of Rs. 11400 millions

Capacity

650,000 TPA

770 m3/hr capacity Sea Water RODM plant

40 MW Captive co-generation plant

10,000 MT solid handling

Energy efficient technology from AKZO, Netherlands

Only Soda Ash plant in the world with full DCS controls

ICMA award for Best Total Water Management Practices in Chemical Industry Category

Linear Alkyl Benzene ::...

Investment of Rs. 6300 millions

75,000 TPA capacity

Only second plant in the world with Eco-friendly Non HF technology from UOP, USA

Bio-degradable product

70 km of integrated pipeline network for feed stock

8,00,000 TPA of Feed Stock

32% market share

DCS controlled fully automatic plant

Packaging ::...

Full range of Packaging facilities

13,500 TPA of packaging material

7,200 TPA of Poly Ethylene film manufacturing

6,000 TPA Paper Wrapper printing

6,000 TPA Laminated Wrappers and Pouch manufacturing

3,600 TPA of Stiffner Boards Poly Coating and Slitting

14,000 TPA Craft Paper manufacturing

12,000 TPA Corrugated Box manufacturing

State of art production facilities

8 colour printing from Cerruti Spa, Italy

2 lines of 3 - Layer Extrusion Plant from Reifenhauser, Germany

Automatic Control from Prestech, U.K. and Eltromet, Germany

Soaps ::...

Investment of Rs. 2000 millions

30,00,000 Soap pieces sold per day

Annual sales of Rs. 5000 millions

20% market share

Second largest soap manufacturer in India

Four lines of 500 soaps per minute

Detergents ::...

50,00,000 pieces sold per day

38% market share

Largest Detergent manufacturer of India

Edible Salt ::...

Asia’s largest salt works

Spread over 30,000 acres

Edible salt capacity of 288,000 tpa

Edible vacuum evaporated salt plant with

Technology from akzo nobel, netherlands

Tripple effect monel cladded evaporator

Fluidized bed dryer

Human contact free process from water to packaging

Industrial Salt ::...

Asia’s largest salt works

Spread over 30,000 acres

Industrial salt capacity of 15,00,000 tpa

Others ::...

AOS ( Alfa Olefin Sulfonate )

Sulfuric Acid

Glycerin

SSP ( Single Super Phosphate )

Consumer Products

Soaps

Detergents

Edible Salt

Scouring Products

INDUSTRIAL PRODUCT

LAB ( Linear Alkyl Benzene )

AOS ( Alfa Olefin Sulfonate )

Sulfuric Acid

Glycerin

Soda Ash

Pure salt

Vacuum Evaporated Iodized Salt

SSP ( Single Super Phosphate )

Sodium Silicate

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 :

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

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

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

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

CONTRAVENTION

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

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.40.12
UK Pound	1	Rs.79.95
Euro	1	Rs.62.41

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	8
--PROFITABILIRY	1~10	9
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	9
--RESERVES	1~10	8
--CREDIT LINES	1~10	9
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	NO
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	NO
TOTAL		75

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, 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