MIRA INFORM REPORT

Report Date :

22.10.2008

IDENTIFICATION DETAILS

Name :	ZUARI INDUSTRIES LIMITED
Registered Office :	Jai Kisaan Bhawan, Zuari Nagar, Goa – 403 726
Country :	India
Financials (as on) :	31.03.2008
Date of Incorporation :	12.05.1967
Com. Reg. No.:	157 (under the name and style of Zuari Agro Chemicals Limited)
CIN No.: [Company Identification No.]	L65921GA1967PLC000157
TAN No.: [Tax Deduction & Collection Account No.]	BLRZ00130E
Legal Form :	Public Limited Liability company The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturers and sellers of Urea, NPK Sampurna Uramphos Samrat.

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 42200000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and reputed company of K. K. Birla Group. Available information indicates high financial responsibility of the company. Their trade relations are fair. Financial position of the company is good. 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 :	Jai Kisaan Bhawan, Zuarinagar, Goa – 403 726, India
Tel. No.:	91-834-2592431/2513815/2555571 – 575
Fax No.:	91-834-2555179/2512231
E-Mail :	1. ryp@zuari.co.in 2. rm@zuari.cc.gw.wiprobt.ems.vsnl.net.in 3. corpcomm@cfert.com
Website :	1. http://www.zuari.co.in 2. http://www.zuari-chambal.com
Factory :	Fertiliser Jai Kisaan Bhawan, Zuarinagar, Goa – 403 726 Furniture G-106, SIDCO Industrial Estate, Kakkalur, Dist. Tiruvallur – 602 003, Tamilnadu

DIRECTORS

Name :	Mr. K. K. Birla
Designation :	Chairman
Name :	Mr. Saroj Kumar Poddar
Designation :	Co-Chairman
Name :	Mr. Shyam Bhartia
Designation :	Director
Name :	Mr. Arun Duggal
Designation :	Director
Name :	Mr. D. B. Engineer
Designation :	Director
Name :	Mr. M. D. Locke
Designation :	Alternate – K.H. Captain
Name :	Mr. S. V. Muzumdar
Designation :	Director
Name :	Mr. Vishwavir Ahuja
Designation :	Alternate – Manjit Singh Lokhmana
Name :	Mr. Marco Wadia
Designation :	Director
Name :	Mr. Manjit Singh Lakhmana
Designation :	Alternate Director
Name :	Mr. H. S. Bawa
Designation :	Managing Director
Age :	71 years
Qualification :	M.S. (Chem. Engg.), U.S.A.
Experience :	46 years
Date of Joining :	16^th April, 1979

KEY EXECUTIVES

Name :	Mr. R. Y. Patil
Designation :	Company Secretary
Name :	Mr. L. M. Chandrasekaran
Designation :	Vice President
Name :	Mr. Naveen Kapoor
Designation :	Vice President
Name :	Mr. V. Vijay Shankar
Designation :	Vice President
Name :	Mr. D. P. Sinha
Designation :	Vice President
Name :	Mr. Binayak Datta
Designation :	Vice President
Name :	Mr. Suresh Krishnan
Designation :	Executive President
Name :	Crawford Bayley and Company, Mumbai Khaitan and Company, Kolkata
Designation :	Legal Advisers

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2006

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters	10138183	34.43
Banks/Financial Institutions and Insurance Companies	3935993	13.37
Foreign Institutional Investors	195883	0.67
Mutual Funds	944573	3.21
NRIs/ OCBs	7990740	27.14
Private Bodies Corporate	1924492	6.54
Public	4310740	14.64
Total	29440604	100.00

BUSINESS DETAILS

Line of Business :

Manufacturers and sellers of Urea, NPK Sampurna Uramphos Samrat.

Products :

Item Code No. (ITC Code)	310210.00
Product Description	Urea
Item Code No. (ITC Code)	310490.00
Product Description	NPK Sampurna Samarth Samrat

PRODUCTION STATUS

Particulars	Unit	Installed Capacity
Ammonia	Tones	660
Urea	Tones	1140
Compounded fertilizers of the grades : N.P.K. 28:28:0 19:19.19 14:35:14 18:46:0	Tones	1100
D.A.P. 18:46:0 20:20:0 10:26:26 19:19:19 17:17:17 12:32:16	Tones	1100
Argon (SM3)	Tones	6600
Pesticides	Ltrs.
	Kgs.

GENERAL INFORMATION

No. of Employees :

1167

Bankers :

v State Bank of India

v HDFC Bank Limited

v Punjab National Bank

v Corporation Bank

v Canara Bank

v ING Vysya Bank Limited

v The Jammu and Kashmir Bank Limited

v Allahabad Bank Limited

Facilities :

Secured Loans :

	As on 31.03.2008 Rs. in Millions
Cash credits (including working capital demand loans)	365.590
Bills discounted with Banks	1351.956
Buyers’ Credit from bank	1174.260
Term loans from Banks [Due within one year Rs.200.000 Millions (previous year Rs.950.000 Millions)]	1400.000
Total	4291.806

1) Item 1, 2 and 3 are secured by first charge by way of hypothecation of the current assets, both present and future, wherever situated pertaining to the Company and the Company’s present and future book debts outstanding, moneys receivable, claims, bills, contracts, engagements, rights and assets.

2) Item 4 is secured by first charge on fixed assets, both present and future, and hypothecation of all movable machinery, spares, tools and accessories ranking pari passu with other lenders having first charge thereon.

Unsecured Loans :

	As on 31.03.2008 Rs. in Millions
Fixed deposit form director [due within one year Rs. Nil (previous year Rs.3.000 Millions)]	---
Fixed deposits from Public [due within one year Rs.169.271 Millions (previous year Rs.258.618 Millions)]	277.765
Term Loans:
Banks [Due within one year Rs.3800.000 Millions (previous year Rs.4018.543 Millions)]	3800.000
Total	4077.765

Banking Relations :	--
Auditors :	S. R. Batliboi and Company Chartered Accountants Gurgaon
Memberships :	Confederation of Indian Industry
Associates :	v Zuari Maroc Phosphate Limited v Paradeep Phosphates Limited v Simon India Limited v Zuari Investments Limited v Zuari Cement Limited v Gobind Sugar Mills Limited v Style Spa Furniture Limited v Gautier India Limited v Zuari Chambal Insurance Limited (a subsidiary of ZIL)
Subsidiaries	v Indian Furniture Products Limited v Greentech Seeds International Private Limited v Zuari Seeds Limited v Simon India Limtied v Zuari Leasing and Finance Corporation Limited v Paradeep Phosphates Limited v Institute of Field and Vegetable Crops v KOP Investment, Cyprus v Sri Vishnu Cement Limited v Zuari Infrastructure and Developers Limited (erstwhile Zuari SEZ Limited) with effect from 2nd February, 2007 v Zuari Developers Private Limited – Subsidiary of Zuari Infrastructure and Developers Limited (with effect
Joint Ventures of the Company :	v Zuari Indian Oiltanking Limited v Zuari Cement Limited (upto 31st May, 2006) v Zuari Maroc Phosphates Limited v Shree Vishnu Cement Limited (subsidiary of Zuari Cements Limited upto 31st May, 2006) v Paradeep Phosphates Ltd - Subsidiary of Zuari Maroc Phosphates Limited v Zuari Rotem Speciality Fertilizer Limited (with effect from 31st March, 2008)

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type		Value	Amount
35750000		Equity Shares	Rs.10/- each	Rs.357.500 Millions
10000000		Redeemable Cumulative Preference Shares	Rs.100/- each	Rs.1000.000 Millions
		GRAND TOTAL		Rs.1357.500 Millions

Issued Capital :

No. of Shares	Type	Value	Amount
29451168	Equity Shares	Rs.10/- each	Rs.294.512 Millions

Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
29440604	Equity Shares	Rs.10/- each	Rs.294.406 Millions
Add :	Forfeited Shares		Rs.0.005 Million
	GRAND TOTAL		Rs.294.411 Millions

Of the above, 4813332 Equity Shares have been issued as fully paid-up for consideration other than cash.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2008	31.03.2007	31.03.2006
SHAREHOLDERS FUNDS
1] Share Capital		294.411	294.411	294.400
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		8150.094	7519.313	3670.000
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		8444.505	7813.724	3964.400
LOAN FUNDS
1] Secured Loans		4291.806	4049.317	3689.500
2] Unsecured Loans		4077.765	4525.366	4520.500
TOTAL BORROWING		8369.571	8574.683	8210.000
DEFERRED TAX LIABILITIES		226.198	78.272	0.0000
TOTAL		17040.274	16466.679	12174.400
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1681.137	1731.844	1725.800
Capital work-in-progress		20.904	55.886	119.800
INVESTMENT		6395.599	6743.163	4959.200
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	3595.701	3339.988	2457.400
	Sundry Debtors	4899.977	5626.608	6631.300
	Cash & Bank Balances	1198.105	1837.379	344.600
	Other Current Assets	3059.572	132.139	0.000
	Loans & Advances	1516.894	1599.382	1502.300
Total Current Assets		14270.249	12535.496	10935.600
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	5028.406	4344.278	5410.700
	Provisions	299.209	255.432	213.700
Total Current Liabilities		5327.615	4599.710	5624.400
Net Current Assets		8942.634	7935.786	5311.200
MISCELLANEOUS EXPENSES		0.000	0.000	58.400
TOTAL		17040.274	16466.679	12174.400

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
Sales Turnover		26179.442	23969.592	21806.323
Other Income		287.430	184.107	339.327
Total Income		26466.872	24153.699	22145.650
Profit/(Loss) Before Tax		1148.188	4079.350	347.702
Provision for Taxation		414.075	143.899	86.000
Profit/(Loss) After Tax		734.113	3935.451	261.700
Imports :
	Raw Materials	7608.887	7740.751	7435.116
	Stores & Spares	13.434	23.934	3.468
	Capital Goods	6.693	4.760	0.000
	Others	2765.959	2739.714	2305.907
Total Imports		10394.973	10509.159	9744.491
Expenditures :
	Manufacturing Expenses	21267.203	20094.755	821.000
	Purchases of finished goods for resale	3632.851	3398.329	0.000
	Increase/(Decrease) in Finished Goods	16.890	488.402	(23.704)
	Interest	262.737	411.499	549.300
	Miscellaneous Expenses written off	0.000	23.844	0.000
	Depreciation & Amortization	172.783	173.068	160.200
	Other Expenditure			23.766
Total Expenditure		25318.684	20074.349	1530.562

QUARTERLY RESULTS

PARTICULARS	30.06.2008
Type	1 Quarter
Sales Turnover	11163.000
Other Income	24.300
Total Income	11187.300
Total Expenditure	10561.500
Operating Profit	625.800
Interest	62.600
Gross Profit	563.200
Depreciation	43.600
Tax	246.300
Reported PAT	273.000

KEY RATIOS

PARTICULARS	31.03.2008	31.03.2007	31.03.2006
Debt Equity Ratio	1.04	1.43	1.82
Long Term Debt Equity Ratio	0.76	1.11	1.39
Current Ratio	1.79	1.67	1.33
TURNOVER RATIOS
Fixed Assets	6.77	6.40	6.02
Inventory	7.55	8.27	9.27
Debtors	4.97	3.91	3.99
Interest Cover Ratio	3.02	1.89	1.63
Operating Profit Margin (%)	7.21	5.53	4.85
Profit Before Interest and Tax Margin (%)	6.55	4.80	4.11
Cash Profit Margin (%)	3.46	4.47	1.93
Adjusted Net Profit Margin (%)	2.80	3.75	1.20
Return on Capital Employed (%)	10.33	8.08	8.28
Return on Net Worth (%)	9.03	15.27	6.77

LOCAL AGENCY FURTHER INFORMATION

HISTORY

Subject (formerly Zuari Agro Chemicals), a K K Birla Group company was promoted in 1967 by United Steel Corporation of USA and Birla Group and is into manufacture of Chemical Fertilisers [Urea, DAP and a unique complex fertiliser NPK 19:19:19].

The company has promoted the Chambal Fertilisers and Chemicals Limited in 1987 and in Feb 28, 2002 it has acquired the 74% stake in public sector fertiliser company Paradeep Phosphates Limited through Zuari Moroc Phosphates Private Limited, a 51:49 JV between Zuari Inds and Moroc Phosphore, SA, Morocco. Subject has became the largest producer of fertliser in private sector in India with the acquisition of Paradeep Phospates which owns the second largest integrated DAP plant in India with an total installed capacity of 720000 MTPA. 

Subject has start marketing the biophos, an environment-friendly product to enhance efficient use of phosphorus which was manufactured by Ajay Biotech Laboratories Private Limited since 1993. 

The company has came out with an rights issue during the year 1996-97 in the ratio of 1:1. 

Fertiliser Division

This Division is the major revenue generator for the company contributing around 95% of the topline of the company. The company started its operation by setting up a 3,40000 tpa fertiliser plant in Goa with the technical know how obtained from Armour, a division of United Steel Corp, USA. 

The company set up an argon recovery plant on its premises, which commenced commercial production in May '95. To market most of the argon production, the company has entered into an agreement with BOC (India). During the year 1999-2000, the waste Heat Boiler of the Wartsila generator was commissioned and it produces steam for use in NPK/DAP plants. 

Leasing and Finance  

Zuari Leasing and Finance Corporation, which has became the wholly owned subsidiary of the Subject in 1995-96 and in the business of finance, trading, HP, Leasing etc was amalgamated with SUBJECT subsequent to the legal clearance from High Court. The company has restricted the its operations in the field to its group companies only due to unfavourable business environment. 

Subsidiaries and Joint Ventures

Indian Furniture Products Limited (IFPL), which was earlier amalgamated with subject in 1998 was again came into existence with the hive off of subject's Furniture Products division into a separate company effective from April 2002. Consequent to allotment of 23000000 equity shares of Rs.10 each to subject, the IFPL has become a subsidiary of subject. 

IFPL operates an Export Oriented Unit with facilities to manufacture Ready to Assemble (RTA) Furniture at Kakkalur near Chennai in Tamil Nadu. IFPL has entered into technical and Financial collaboration with Messrs. Serbio, France who are one of the pioneers in the RTA furniture in Europe. 

The company launched a range of computer and entertainment furniture in 2000-01 under the brand name of Zuari. It has also forayed into office systems and executing some prestigious orders for Chambal Fertilisers, UNICEF, Ernst and Young, Delhi. etc. 

Zuari Cement, a 50:50 JV between subject and Ciments Francais is incorporated to takeover the cement divison of the subject as per the agreement between the JV partners in year 2000. This hiving of cement business to an JV company was taken to give a better focus and facilitate faster growth. The cement divison of subject has came into existence by the diversification into manufacturing of Cement in the eighties by setting up a 1 TPA cement plant in Mandalgarh. And in 1995 the company took over the cement unit of Texmaco in Andhra Pradesh. In 1998-99, it completed the expansion of cement plant to 17 lac tonnes and commissioned 6 MW DG set.

Simon India Limited, a 50:50 JV company between subject and Simon Carves of UK was promoted with an view to provide EPC and project management services to process industries.  

Zuari Investments Limited, a 50:50 JV between subject and Chambal Fertilisers and Chemicals is providing Depository services, Corporate Advisory Services, Retail Distribution of financial products besides making strategic long-term and shor-term investments. Gautier India Limited is subject's joint venture for marketing furniture products. The company is now has established a network of 36 stores.  

Zuari Moroc Phosphates Private Limited (ZMPPL), a 51:49 JV company between subject and Moroc Phosphates, SA Moracco was incorporated on Jan 24, 2002 for carrying on the business of manfuacture and marketing of fertilisers. It has acquired 74% stake of GOI in Paradeep Phosphates Limited (PPL) through disinvesment process thus making PPL a subsidiary of subject. 

Zuari Seeds Limited, started in 1993 as a JV between Institute of Field and Vegetable Crops (IFVC) and KOP Investments, Cyprus to produce and market hybrid seeds has became the subsidiary of subject consequent to acquisition of holdings of JV partners by subject. 

Greentech Seeds International Private Limited, a Hyderabad based company which is into the business of R and D, Production, Processing and Marketing of seeds was acquired by subject by buying 70% of the stake from the promoters.

DIRECTORS REPORT:

Joint Venture Companies: 

Zuari Investments Limited :

Zuari Investments Limited, a joint venture with Chambal Fertilizers and Chemicals Limited, is a member of both National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) for equity as well as Futures and Option (FandO) trading. It is a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). Besides being empanelled with Association of Mutual Fund of India (AMFI) for distribution of Mutual Fund products, the Company is also a member of Over the Counter Exchange of India (OTCEI) and a Category-II Registrar and Share Transfer Agent registered with Securities and Exchange Board of India (SEBI). The Company is also an Insurance Regulatory and Development Authority (IRDA) licensed Direct Broker for Life and Non-life segment through its wholly owned subsidiary Zuari Chambal Insurance Solutions Limited.

The Company plans to enter into Commodity Broking to expand its bouquet of Financial Services and to become a one stop shop for Stock Broking, Depository Services, Investment Advisory Services, Insurance Broking Services and Commodity Broking Services and is fully poised to benefit from a buoyant capital market.

Zuari Maroc Phosphates Limited (ZMPL) : 

Zuari Maroc Phosphates Limited (ZMPL) is a 50:50 joint venture with Maroc Phosphore S.A., Morocco, which was established as a Special Purpose Vehicle for acquisition of majority stake in Paradeep Phosphates Limited (PPL). ZMPL holds 80.45% of equity stake in PPL thereby making it a subsidiary of ZMPL.

PPL’s sales and operating revenue including subsidy and other income for the year 2007-08 was Rs.25220 Millions (previous year Rs.20640 Millions).

PPL continues to improve its marketing efficiency by increasing the marketing share in the primary markets. The sales of own fertilizers for the year 2007-08 was 1315399 MT as compared to 1318115 MT during the previous year.

Zuari Indian Oil Tanking Limited (ZIOL): 

Zuari Indian Oiltanking Limited (ZIOL) a 50:50 joint venture between subject and Indian Oiltanking Limited (IOTL) has state-of-the-art terminalling facility for petroleum products namely Naphtha, Motor Spirit, High Speed Diesel and Superior Kerosene. The Terminal at Goa with 71000 KL tankage is situated 85 M above sea level with a 14 Km. long piggable pipeline from Mormugao Harbour, Goa.

The Company provides terminalling services to Subject, Hindustan Petroleum and Bharat Petroleum. ZIOL also provides value added services like ethanol blending in petrol to the Oil Companies. In the year 2007-08, the terminal has achieved a throughput of 606,000 KL.

Zuari Rotem Speciality Fertilisers Limited

With a view to meet the demand for Water Soluble Fertilisers (WSF), a Speciality Fertiliser in India, the Company has entered into 50:50 joint venture with Rotem Amfert Negev Limited (Rotem), Israel. Rotem is a subsidiary of ICL Group, Israel, which is a USD 3.0 billion conglomerate and is a world leader in production and sales of speciality fertilizers.

The joint venture Company, namely Zuari Rotem Speciality Fertilisers Limtied (ZRSFL) was incorporated in November, 2007 and is now in the process of obtaining various central and state level clearances for its proposed manufacturing facilities at Baramati, Maharashtra. The Company has acquired about 3 acres of land at Baramati, to build a state-of-the-art batch operating facility incorporating Israeli technology to produce up to 24,000 MT of WSF per annum.

Initially, the plant will manufacture two WSF grades, namely 19:19:19 and 20:20:20. Subsequently, the plant will produce other grades to meet market requirement. The joint venture will utilize the efficient marketing and dealer network of the Company.

MANAGEMENT DISCUSSION AND ANALYSIS: 

The Board of Directors is to present the business analysis and outlook for Subject based on the current Government policies and market conditions. The Company's business is manufacture and sale of fertilisers and trading in agri inputs including pesticides.

Industry Scenario:

The World GDP Growth for the past year stood at around 4.5% with India around 8.7% and China around 9.5%. 

 Crude Prices crossed US $ 100/-per barrel, the Baltic Freight Index was on the rise, Ethanol production was on the rise and World Cereal Productions recorded a flattening trend. 

The World Fertilizer Demand increased around 2.9% and the projected increases are around 2.6% per annum till 2011. 

Viewed in this perspective, the Indian economy continued to expand at a robust pace during 2007-08 for the fifth consecutive year. According to the advance estimates released by Central Statistical Organisation (CSO), the real GDP growth rate was placed at 8.7 per cent in 200708 as compared with 9.6 per cent in 2006-07, reflecting moderation in growth in all the three sectors, viz., agriculture and allied activities, industry and services.

Notwithstanding the moderation, the growth performance was in tune with the high average real GDP growth of 8.7 percent per annum during the five-year period, 2003-04 to 2007-08. 

According to the Third Advance Estimates for 2007-08, the total foodgrains production is slated to each an alltime high at 227.3 million tonnes, recording an increase of 4.6 per cent over the previous year (217.3 million tonnes). The production during 2007-08 would exceed the target set earlier (221.5 million tonnes) by 5.8 million tonnes. 

The Year also marked the smooth commencement of the 11th Five Year Plan. 

However significant improvements are still required in the pace of growth in Agriculture and the per capita annual production of cereals. 

Whilst the performance of the Industry was generally good there were significant challenges in availability of inputs and their prices towards the end of the year. 

Towards the end of the year, Government of India increased the funds allocation for the payment of the Subsidy Bills through additional grants and also notified issuance of tradable Fertilizer Bonds amounting to Rs.75000 Millions, with coupon rates of 7.95% and 8.3% with tenures of 16 to 18 years. 

During the year, the pricing policy for Urea under Stage Ill of New Pricing Scheme was announced with milestone set in for conversion of non-gas based units to natural gas/LNG. The Company has initiated the necessary steps for conversion to gas/LNG and is also in talks with gas suppliers and service providers for gas purchase and transportation. The ammonia and urea manufacturing facility will be ready to use gas when available. 

Toriff Commission completed the cost price study of Complex Fertilizers, DAP and MOP and submitted its recommendations to the Department of Fertilizers. After obtaining the views of the industry, the Department of Fertilizers is in the process of finalizing its policy proposal for 2008-09. 

Going forward, according to estimates Fertiliser Consumption in India is set to rise at the rate of 5.3% per annum between 2005-06 and 2011.

Nutrient Markets are expected to remain tight till end of 2009 at least as demand has expanded more rapidly than was expected. The need for balanced fertilization will favour phosphatic and pottassic nutrient consumption pending the adequate application of secondary and micronutrients. 

However there are steep increases in international prices of all inputs in 2008-09, the industry has to realize substantially higher subsidy from the Government and at the same time raise the working capital to meet the requirements. 

 Long term contracts tying up the inputs have already been signed and the fertilizer industry is optimistic about the Government of India increasing the budgetary allocation for fertilizer subsidies for the year 2008-09. 

Opportunities: 

Government of India has given special thrust to agriculture in the 1 1 1h five year plan that aims to improve agricultural growth from 2% to 4%.

Waiver of loans amounting to Rs.600000 Millions will help debt-ridden farmers to start afresh. Cotton has regained its position as commercial crop following adoption of Bt cotton, which gives higher profits. Acreage under other high fertilizer consuming crops like wheat, paddy and soyabean is increasing in Company's primary market due to good prices. This will lead to further increase in demand for fertilizers in the coming years. 

Threats: 

There is quantum jump in international price of raw material like phosphoric acid due to which capital requirement for operations of fertilizer business has increased manifold. Any delay in getting reimbursement of subsidy claims by government will increase the interest cost very substantially thereby impacting profitability. 

Future Outlook: 

Government of India is planning to adopt nutrient based pricing system from 2008. This may provide flexibility to manufacturing units and ensure fair returns on fertilizer products. 

In peninsular India, Speciality Fertiliser is seen as high growth segment with 20% annual growth. The products are used mainly in fertigation under high-tech agro practices. Company has tied up with Rotem Amfert Negev Limited, Israel, for manufacture of speciality grade 19:19:19. Manufacturing unit is under construction in Baramati area of Maharashtra and production is likely to commence in 2009. With foray in this segment, Company will further strengthen its position in agri input market.

Operating results of the Company: 

Urea production during the year was 395,471 MT while actual dispatches for the year was 399,300 MT, the balance being from opening stock. 

In NPK 'A' Plant, 250,078 MT of Sampurna (19:19:19) and 83,849 MT of Samarth (10:26:26) grade were produced, totalling to 333,927 MT. 

In NPK 'B' Plant, 212,621 MT of Samrat (18:46:0), 95,298 MT of Samarth (10:26:26) and 48,361 MT of Sampatti (12:32:16) grades were produced, totalling to 356,280 MT 

Production in both the NPK Plants was lower than budgeted quantities due to shortage of phosphoric acid in March, 2008. 

Argon Recovery Unit remained under shutdown throughout the year due to unremunerative market conditions. 

Marketing:

Company's marketing areas cover the states of Goa, Karnataka, Maharashtra and parts of Andhra Pradesh and Tamil Nadu. Monsoon during the year was favourable in all parts of the marketing area resulting in Company achieving sales of 1400265 MT. Company's sale of Samrat (18:46:0) at 222683 MT recorded an increase of 16% over previous year. Sale of Sampurna at 281136 MT was 1.5% higher compared to last year. However, sale of 10:26:26 grade (Samarth) at 183179 MT was 18% lower compared to last year owing to constraint of phosphoric acid availability during the last quarter of the year. 

In trading operations, Company achieved sales of 228228 MT of MOP i.e. 36% increase over previous year. Company further consolidated its presence in Tamil Nadu with sales of 73590 MT of fertilizer. There was no import of DAP during the year due to volatility in international prices. Sale of agro chemicals at Rs.1160 Millions is 85% higher compared to previous year. In the category of speciality fertilizers, company has further strengthened its position with total sale of 4441 MT compared to 1 188 MT during the previous year. 

Brief review of subsidiaries and joint ventures of the Company is given herebelow: 

Indian Furniture Products Limited (IFPL): 

IFPL, a wholly owned subsidiary of the Company, is engaged in manufacturing of Ready-To-Assemble (RTA) furniture of international quality through its state-of-the-art plant at Kakkalur near Chennai. The Plant is highly. automated and is CNC (Computer Numeric Control) controlled. The factory has a floor area of 225,000 sq. ft. and has capacity to produce 200,000 units of furniture annually. 

The Company has achieved a turnover of Rs.895.000 Millions during the current financial year, an increase of over 15% as compared to last year. Its mass distribution channel under 'Zuari' brand is doing very well and has an all India reach. The Company is strengthening its business under office system segment and is well poised to take the advantage of the booming economy. 

Zuari Seeds Limited (ZSL): 

ZSL, a subsidiary of the Company, is engaged in R and D, production and marketing of hybrid seeds. The Company has achieved a turnover of Rs.316.500 Millions during the current financial year. The company continues to focus on providing superior quality hybrid seeds to the farming community. The Company's seeds are also exported to Bangladesh and other neighbouring countries. 

The Company has successfully launched Bt. Cotton in the market and sold about 90,000 packets during the year. The Company has plans to sell about 2.5 lakh packets during the year 2008-09. 

Two new maize hybrids developed by the Company have shown encouraging results in mufti-locational trials and are expected to be marketed during the year 2008-09. 

Simon India Limited (SIL): 

SIL, a wholly owned subsidiary of the Company, is engaged in Engineering Procurement and Construction (EPC) activities and has achieved a turnover of Rs.300 Millions during the current financial year. SIL has an order book of Rs.650 Millions and is currently executing several major projects in India and overseas. 

SIL continues to provide the Project Management Consultancy services to Methanol Chemicals, Saudi Arabia. 

SIL has orders for providing detailed Engineering, Procurement Services and Technical Consultancy to Durgapur Chemicals Co., Meghmani Organics Limited, Paradeep Phosphates Limited and Methanol Chemicals Co. 

Zuari Infrastructure and Developers Limited (formerly known as Zuari SEZ Limited): 

Zuari Infrastructure and Developers Limited was originally incorporated as Zuari SEZ Limited on 6th December, 2006 with an objective 1o set up and develop Special Economic Zone (SEZ) for information Technology (IT) and Information Technology Enabled Services (ITES). 

The Company is planning expansion of is business into real estate development activities- Accordingly, the Company has changed its name and suitably amended its object clause to reflect its business activity more prominently. The Company has acquired 100% stake in a Private Limited Company based at Bangalore in Karnataka, which has 73.65 acres of land. The Company is entering into a land development agreement with its subsidiary, Zuari Developers Private Limited, for construction of residential and commercial buildings in the land owned by the said subsidiary. 

Zuari Developers Private Limited (formerly known as Anil Kumar M N Developers Private Limited - a subsidiary of Zuari Infrastructure and Developers Limited): 

Zuari Developers Private Limited, acquired 73.65 acres of Bond at Karnataka. The Company has become 100% subsidiary of Zuari Infrastructure and Developers Limited, effective 12th December, 2007. The Company intends developing the land for commercial/residential purpose and will be entering into a suitable agreement with its holding Company and other agencies. 

Contingent liabilities not provided for :

	Rs. in Millions As on 31.03.2008
A. (1) Demand Notices received from Sales Tax authorities *
i) Demand of Andhra Pradesh Sales Tax Authorities on second sale of pesticide (trade mark sales under section 5AA) considered sales as firm and not considered for tax concession enjoyed by first manufacturer. The Company has filed an appeal in the High Court of Hyderabad. Consequent to the disposal of appeal during the year by the High Court against the Company, the Company has paid the amount.	0.000
ii) Demand of Rajasthan Sales Tax Authorities under self declared assessment scheme towards penalty and interest.	0.003
iii) Demand of Sales Tax Authorities on refunds of tax on subsidy. The Company has filed an appeal before the Appellate Tribunal. During the year, the Appellate Tribunal has decided the appeal in favour of the Company.	--
iv) Demand of Karnataka Sales Tax Authorities to levy Professional Tax on each branch and godown. Writ petition filed in the High Court of Karnataka.	2.280
v) Demand from Commercial Tax Department, Bangalore. Appeal filed before the Appellate Tribunal to set aside the penalty imposed u/s 124(1A) as reduced by the Joint Commissioner of Commercial Taxes (Appeals). During the year, the Appellate Tribunal has decided the appeal in favour of the Company.	--

FIXED ASSETS:

• Land (Freehold)
• Buildings
• Railway Siding
• Plant and Machinery
• Vehicles
• Furniture, Fittings and Office Equipment
• Computer Software

AS PER WEBSITE

Fertiliser Division

Zuari Agro Chemicals Limited was incorporated in 1967 in financial and technical collaboration with US Steel Corporation to manufacture urea. In 1973, Zuari Agro Chemicals Limited set up Goa's first mega industrial undertaking. In 1998 Zuari Agro Chemicals Limited was rechristened Subject.

The Fertilizer Division lies at the core of the company's operations and accounts for the major share of its business. The first large industrial undertaking in the state of Goa, Zuari's Fertilizer plant has an annual installed capacity of 946,200 metric tonnes of fertilizers. It comprises a single stream ammonia plant, a urea plant, an NPK plant and a DAP plant along with related on-site and off-site facilities for handling raw materials end products as well as the generation of steam and captive power.

Business Empires: The Birlas

Zuari Industries

Subject (formerly Zuari Agro Chemicals), a K K Birla Group company was incorporated in 1967 by United Steel Corporation of USA and the Birla Group and is into manufacture of Chemical Fertilizers [Urea, DAP and NPK 19:19:19].

In 1973, Zuari Agro Chemicals Limited set up Goa's first mega industrial undertaking. In 1998, Zuari Agro Chemicals Limited was renamed Subject. The company has promoted the Chambal Fertilizers and Chemicals Limited in 1987 and in Feb 28, 2002 it has acquired the 74% stake in public sector fertiliser company Paradeep Phosphates Limited. Through Zuari Moroc Phosphates Private Limited, a 51:49 JV between Zuari Inds and Moroc Phosphore, SA, Morocco.

Subject has became the largest producer of fertilizer in private sector in India with the acquisition of Paradeep Phospates.

NEWS:

Buy Zuari Industries,target Rs 510: HDFC Securities

HDFC Securities has maintained its buy rating on Zuari Industries with a target price of Rs.510 in its September 8, 2008 research report. "We believe, Zuari’s inherent strength of being a strong player in the fertilizer sector and its 40% stake in Paradeep Phosphates have been unnoticed due to unrelated diversification. While we expect strong performance for its other businesses, the turnaround in Paradeep Phosphate’s performance, would be key to Zuari’s earnings going forward. With an excellent 38% CAGR in profits, undemanding valuations at 5.5x FY09E and 0.5x EV/Sales FY09E, the stock is worth a look. Based on the Sum-of-the-parts method, we value Zuari’s target price at Rs 510, offering 65% upside from current levels. We maintain “BUY”," says HDFC Securities' research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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 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.48.83
UK Pound	1	Rs.85.12
Euro	1	Rs.65.86

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	YES
--LISTED	YES/NO	YES
--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, 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