MIRA INFORM REPORT

Report Date :

15.09.2008

IDENTIFICATION DETAILS

Name :	VVS PHARMACEUTICALS AND CHEMICALS PRIVATE LIMITED MERGED WITH VIVIMED LABS LIMITED
Formerly Known As :	VVS PHARMACEUTICALS AND CHEMICALS PRIVATE LIMITED
Registered Office :	Plot No.78- A, Kolhar Industrial Area, Bidar - 585403, Karnataka.
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	22.09.1988
Com. Reg. No.:	009465
CIN No.: [Company Identification No.]	L02411KA1988PLC009465
TAN No.: [Tax Deduction & Collection Account No.]	MRTV00878D
Legal Form :	Public Limited Liability Company. The company share are listed on stock exchange.
Line of Business :	Manufacturer and Exporters of Specialty Chemicals and Allied Products.

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	USD 3441965
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well- established and reputed company having satisfactory track. Trade relations are fair. Business is active. Payments are reported as usually correct and as per commitments. The company can be considered good for normal business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Plot No.78- A, Kolhar Industrial Area, Bidar - 585403, Karnataka, India
E-Mail :	info@vivimedlabs.com
Head Office :	Plot U D-9, Industrial Area, Hardwar – 249401, Uttaranchal, India
Corporate Office :	2^nd Floor, Veeranag Towers, Habsiguda – 500007, Andhra Pradesh, India
Tel. No.:	91-40-27176005
Fax No.:	91-40-27172242
E-Mail :	info@vivimedlabs.com sales@vivimedlabs.com
Wedsite :	http://www.vivimedlabs.com
Factory 2 :	207/E and 207/AA Bonthapally Village, Medak Dist (A.P.)

DIRECTORS

Name :	Mr. Santosh Varalwar
Designation :	Director
Name :	Mr. Subhash Varalwar
Designation :	Director
Name :	R N Dhar
Designation :	Director
Name :	M Bhagvanth Rao
Designation :	Director
Name :	Raj Barathur
Designation :	Director
Name :	Sandeep Varalwar
Designation :	Whole
Name :	S Raghunandan
Designation :	Whole
Name :	R K Dhar
Designation :	Indirect Director
Name :	P V Rathnam
Designation :	Indirect Director
Name :	V Hanumantha Rao
Designation :	Indirect Director
Name :	V Peesapati
Designation :	Indirect Director
Name :	V manohar Rao
Designation :	Director

KEY EXECUTIVES

Name :	Umakanta Barik
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 31.03.2007

Names of Shareholders	No. of Shares	Percentage of Holding
A] Shareholding of Promoter and Promoter Group :
Indian
Individuals/ Hindu Undivided Family	3340189	46.02
Bodies Corporate	41646	0.57
B] Public Shareholding
Institutions
Mutual Funds/ UTI	318299	4.39
Financial Institution/ Banks	20025	0.28
Foreign Institutional Investors	615096	8.47
Non Institutions
Bodies Corporate	881816	12.15
Individual Shareholders holding Nominal Share Capital up to Rs.0.1 Million	1239377	17.08
Individual Shareholders holding Nominal Share Capital excess Rs.0.1 Million	534498	7.36
Non Residents Individuals	162829	2.24
Trusts	61571	0.85
Clearing Members	42783	0.59
Total	7258129	100.00

BUSINESS DETAILS

Line of Business :	Manufacturer and Exporters of Specialty Chemicals.
Products :	· Amino- m- Cresol · Amino- o- Cresol · Avobenzone · Calcium Glycerophosphate · Chlorphenesin · Octocrylene · Octyl methoxycinnamate · Sildenafil citrate · Triclosan · Zinc pyrithione
Exports to :	Worldwide
Products :

AS ON 31.03.2007

PRODUCTION STATUS

a) Licensed Capacity - NA

b) Installed Capacity in Tones per Annum

SI No.	Items	Quantity
1	VIV 20	480 tones
2	AVIS	300 tones
3	COSVAT	100 tones
4	VIVCAL – G	125 tones
5	CINNAMON	100 tones
6	DANTUFF Z (48%)	250 tones
7	DANTUFF C	50 tones
8	BEN – 3	80 tones
9	BEN – 4	95 tones
10	VIVILIDE	55 tones
11	OTHERS	25 tones
12	CAPSULES	180 million
13	OINTMENTS	250 tones
14	LIQUIDS	175 k ltr
15	LOTION	50 k ltr
16	TABLET	30 million

Actual Production

SI No.	Items	Quantity
1	Speciality Chemicals	1613241 Kgs
2	Tablets	2.99 Million
3	Liquids	136274 Ltrs
4	Capsules	2.81 Million
5	Lotions	302418 Ltrs
6	Ointments	56479 Kgs

PRODUCT DESCRIPTION

Product	Items Code
Triclosan	3380-34-5
Avis (Avobenzene)	70656-0-1
Cagp	27214-00-2

GENERAL INFORMATION

No. of Employees :

450

Bankers :

· State Bank of Hyderabad

· City Bank

· HDFC Bank Limited

Facilities :

Particular	Amount (Rs. In Millions)	Amount (Rs. In Millions)
	31.03.2007	31.03.2006
A] State bank of Hyderabad
Cash Credit	142.990	12.817
Packing Credit	136.698	32.971
Book Debts	0.000	9.242
FUBD	47.224	0.000
SME Plus	0.001	0.000
B] City Bank N.A.
Cash Credit	9.107	4.982
FUBD	23.089	6.449
Packing Credit (Pari- Pasu charge on company’s existing and future fixed assets, raw materials, stock in process finish goods, consumables, spares, book debt and receivable. Pari pasu equitable mortgage on the properties of the directors and personal guarantee of the directors)	0.000	14.201
C] Term Loans
Term loan against fixed assets (SBH)	81.216	50.646
Term loan against fixed assets (City Bank)	7.267	13.715
Term Loan against hypothecation of vehicles	2.996	2.806
D] HDFC Bank Limited
Loan against hypothecation of property	28.828	0.000
Unsecured Loan
Loan from friend and relative	8.401	0.000
Sales Tax Department
Sales tax deferment	7.411	0.000

Banking Relations :	Satisfactory
Auditors :
Name :	P. Murali and Company Chartered Accountant
Associates/Subsidiaries :	Creative Health Care Public Limited

CAPITAL STRUCTURE

AS ON 31.03.2007

Authorised Capital :

No. of Shares	Type	Value	Amount
15000000	Equity Shares	Rs. 10/- Each	Rs.150.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
7258129	Equity Shares	Rs. 10/- Each	Rs.72.581 Millions
2142857	Equity Share Suspense Account	Rs. 10/- Each	Rs.21.428 Millions
1598000	Warrant Application Money (Preferential Issued)	Rs. 10/- Each	Rs.15.980 Millions
	Total		Rs.109.989 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		109.989	72.581	47.600
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		578.404	406.486	163.700
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		688.393	479.067	211.300
LOAN FUNDS
1] Secured Loans		479.420	147.832	110.600
2] Unsecured Loans		8.401	0.000	0.000
TOTAL BORROWING		487.821	147.832	110.600
DEFERRED TAX LIABILITIES		90.436	53.942	0.000
Sales Tax Deferment		7.411	0.000	0.000
TOTAL		1274.064	680.842	321.900
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		556.243	337.096	206.700
Capital work-in-progress		1.477	10.705	5.600
INVESTMENT		5.000	5.000	0.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	386.721	140.303	110.800
	Sundry Debtors	392.284	178.493	95.800
	Cash & Bank Balances	27.595	4.566	0.400
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	106.017	103.402	16.200
Total Current Assets		912.617	426.764	223.200
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	246.982	115.791	105.700
	Provisions	0.000	0.000	11.100
Total Current Liabilities		246.982	115.791	116.800
Net Current Assets		665.636	310.974	106.400
MISCELLANEOUS EXPENSES		45.706	17.065	3.200
TOTAL		1274.064	680.842	321.900

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		1290.766	790.179	520.900
Other Income		2.156	20.416	3.400
Total Income		1324.152	841.825	524.300
Profit/(Loss) Before Tax		178.622	129.852	75.100
Provision for Taxation		44.138	37.163	27.000
Profit/(Loss) After Tax		134.484	92.689	48.100
Expenditures :
	Manufacturing Expenses	138.975	51.686	31.300
	Administrative Expenses	122.886	74.460	48.900
	Raw Material Consumed	792.117	496.171	326.800
	Financial Charges	43.965	21.119	0.000
	Research and Development	11.219	21.695	0.000
	Increase/(Decrease) in Finished Goods	(80.445)	(25.502)	0.000
	Salaries, Wages, Bonus, etc.	55.481	23.132	0.000
	Preliminary and pre Operational Expenses	5.137	1.825	0.000
	Depreciation & Amortization	24.961	16.153	11.800
	Other Expenditure	31.234	31.234	57.900
Total Expenditure		1145.530	711.973	449.200

QUARTERLY / SUMMARISED RESULTS

PARTICULARS	31.12.2008
Type	Full Year
Sales Turnover	1556.100
Other Income	7.500
Total Income	1563.600
Total Expenditure	1282.300
Operating Profit	281.300
Interest	57.600
Gross Profit	223.700
Depreciation	31.100
Tax	54.000
Reported PAT	138.600
Dividend (%)	100.000

PARTICULARS	31.03.2007	31.03.2006	31.03.2005
Debt-Equity Ratio	0.56	0.37	0.49
Long Term Debt-Equity Ratio	0.21	0.16	0.16
Current Ratio	1.44	1.50	1.19
TURNOVER RATIOS
Fixed Assets	2.48	2.42	2.37
Inventory	4.90	6.29	5.75
Debtors	4.52	5.76	5.62
Interest Cover Ratio	5.06	7.15	5.02
Operating Profit Margin(%)	19.18	21.15	20.27
Profit Before Interest And Tax Margin(%)	17.25	19.10	18.01
Cash Profit Margin(%)	12.36	13.78	11.50
Adjusted Net Profit Margin(%)	10.42	11.73	9.23
Return On Capital Employed(%)	25.86	32.50	33.97
Return On Net Worth(%)	24.02	26.85	25.69

LOCAL AGENCY FURTHER INFORMATION

Industrial Overview

The global market for cosmetics and toiletries sales isaround USD 277 billion currently and is expected to expand with a compound annual growth rate (CAGR) of 3.7 percent to reach USD 325 billion by 2010. The players belonging to the cosmetics and toiletries industry are currently enjoying buoyant sales as consumers are more inclined pay out a greater share of their free cash on products that will improve their image. Additionally, the emergence of new markets for Home and Personal Care (HandPC) products in Russia, Japan, UAE and other Asian countries are likely to provide fresh avenues of growth. According Euromonitor International, value of sales

increased more than 45 percent over the last 6 years, as consumers developed more sophisticated tastes. Further, global cosmetics and toiletries sales reached a five years high in 2006 with sales growing 5.5 percent. Greater growth is expected on account of emerging markets in regions such as Latin America and Eastern Europe.

In India, this sector has shown considerable growth, mainly on the account of continuous increase in volume due to constant innovation and development of value added products. People across categories and income groups have been increasingly spending on personal care products as a result of higher disposable incomes. India's rural markets too have seen lot of activity. Future growth is expected from deeper rural penetration and higher consumption. Oral Care Market The size of the global oral care products market was estimated at USD 537 Million in 2004 with a expected growth rate of 5 percent per year. The oral care market, especially toothpastes, remains under-penetrated in India (with penetration levels below 45 percent) due to the lack of hygiene awareness among rural areas. In recent periods increasing launches of oral care products such as toothpaste and mouthwashes is contributing to significant growth of more than 8 percent every year. Sun Care Market Globally, the 2005 sun care market of USD 5.6 billion is forecast to reach USD 7.2 billion by 2010. Innovations in valueadded products are expected to drive growth of 2 percent per year. According to Euromonitor International, growth of the U.S. sun care market, the world's largest market, is expected to be 9 percent over the 2005-2010 period. In addition to sun protection products, there is an increased focus on developing products for after-sun exposure (moisturizing and soothing properties), self-tanning products and a shift in focus from beach-oriented products to daily-use skin care applications. In the Indian sub-continent there is a strong demand for lightening properties in skin care. Sun protection is registering heightened demand from women seeking to maintain pale skin. Therefore, sun protection will continue to be the driver of overall domestic sun care sales. Segmenting to meet the needs of different genders is also likely to be successful as research has illustrated that each sex has different levels of tolerance to the sun. Ski.ti Care Market The skin care segment is expected to be among the fastest growing categories in the market for skin care, cosmetics and beauty care products. The total market for skincare products has been valued at USD 38.3 billion globally, second only to the hair care sector. Comparatively, the Indian skin care and cosmetics market is valued at USD 274 Million. Mintel's global new products database (GNPD) statistics on the number of launches in cosmetics and skincare show that cosmetics clocked 43,758 new launches during 2004-06, the largest of any product category, followed by skincare category with 31,836 launches worldwide. Hair Care Market. The hair care market is one of the fastest developing markets within the image industry. Compared to the USD 56 billion global market, the size of the domestic hair care market is estimated at more than USD 250 Million. Future domestic growth is expected from deeper rural penetration and higher consumption. In the next period, as a result of increased consumer awareness, disposable income and consumption, value and volume growth rates are anticipated to rise in this sector. The growth in the global sun care, skin care and hair care has been driven by the increasing consumption of personal care products by the male segment and the increase in per capital income in developing countries. The Pharmaccurical industry The Indian pharmaceutical industry is on the forefront of science-based industries with wide ranging capabilities in drug manufacture and technology. The industry is estimated to be worth USD 4.5 billion growing at about 8 to 9 percent per annum. The industry plays a key role in promoting and sustaining development in the field of medicines. It boasts quality producers and many units approved by regulatory authorities in the USA and the UK. Highly fragmented with more than 20,000 registered units, the industry has expanded significantly in the last two decades. The leading 250 pharmaceutical companies control 70 percent of the market with the market leader holding approximately a 7 percent market share. The market is subject to severe price competition and government price controls.

Contract Manufacturing

Contract manufacturing plays a significant role within the pharmaceutical industry. Many international pharmaceutical companies use contract manufacturers to manufacture their products. An increasing number of firms, mainly from Europe and Japan, are considering India to be a cost-effective location for manufacturing certain chemicals. Manufacturing outsourcing in the personal care intermediary space is in itsincipient phase. The sector is expected to grow at around 60 to 70 percent.

Specialty Pharmaceuticals

The global market for specialty Pharmaceuticals is worth more than USD 1 billion and growing at 5 percent per year. Specialty Pharmaceuticals cover an innovative range of new products and have shown tremendous acceptability levels, and poised to grow

in global and domestic markets.

Company Overview

Engaged in the specialty chemicals and pharmaceutical segments, Vivimed Laboratories began operations in 1988. Vivimed recently acquired Creative Health Care Private Limited, now a 100 percent subsidiary of the company, for its specialty pharmaceutical

division. The CHC Private Limited facility at Kashipur, Uttaranchal adds to Vivimed's manufacturing capabilities. Originally involved in the manufacture of bulk drugs, Vivimed made the transition to the specialty chemicals market to counter the downturn in prices in the bulk drugs market. Its current portfolio spans a wide range of products - from active pharmaceutical ingredients for the personal, health and industrial care industries and cosmetics industries to chemicals which are supplied to leading global manufacturers of oral care, hair care, skin care and sun care products. Vivimed's contract manufacturing initiatives include specialty chemicals for biocides, plastics and water treatment which find various applications in the cosmetic and industrial segments. Due to its lower cost base, Vivimed provides contract manufacturing facilities at competitive rates compared to companies in Europe or North America. In the specialty Pharmaceuticals segment, Vivimed manufactures niche products catering to ailments such as psoriasis, arthritis, macular disorders, among others. Portfolio Vivimed has been proactive both in focusing on its core business and exploring emerging business trends. It has continuously developed and introduced new, value-added products at regular intervals. Along with product manufacturing, the company offers complete solutions to meet client requirements by providing life cycle management and RandD services. Vivimed's diversified product portfolio with stable margins caters to niche segments of the market. The company's product basket has evolved significantly from only one important product - VIV-20 - to a variety of high value products which include Avis, Vivcal-G, Cosvat and Dantuff Z, among others. Manufacturing facilities Vivimed conducts its manufacturing activities based on the principle of 'right-sizing for right-sourcing". It is well positioned with manufacturing facilities in two strategic locations: Bidar, Karnataka and Bonthapalli, Hyderabad with 250 kl per day and 400 kl per day capacities, respectively. Research and Development Collaborative research is Vivimed's key strength. Vivimed has a well-equipped RandD laboratory to support its manufacturing facilities, located in Hyderabad. The key areas in RandD include synthesis, analysis, microbiology and formulations. Certified as a GLP Laboratory by The Council of Scientific and Industrial Research (CSIR), a Govt. of India undertaking, Vivimed's basic RandD capabilities include strengthening credibility and faster time to market, extricating complex solutions and providing cutting-edge solutions. Awards and Certifications Vivimed has numerous awards and certifications to its credit.

Awards

• One Star Export House in 2004

• Ranked by Business Today among the 1000 most valuable companies in India, 2006.

• Frost and Sullivan Award for the Indian Market for Preservatives for the Best Product Line Strategy for 2006.

• Amongst Business World's top 100 fastest growing companies in the mid-segment, July 2007.

• Export Gold Award from Kamataka State for the achievements during 2006

Certifications

• ISO 9001:2000 QMS certification for the Bidar facility

• ISO 14001 certified for Environmental Management System

• United States Environmental Protection Agency (ERA) certification for Triclosan (VTV-20)

• Certification for Bio-Terrorism preparedness from the US FDA (a prerequisite for exports to certain countries)

• Other Regulatory and Environmental clearances and

compliances

• Safety Management System Certification under OHSAS 18001 initiated Corporate Social Responsibility Vivimed believes in giving back to the society. In the areas of safety, health and the environment it aims to anticipate customer requirements, protect the health of employees, contractors, visitors and the community as a whole and avoid or minimize environmental impacts. Human Resource Policies Vivimed has grown from a small team of 15 people to a 450 strong enterprise comprising a management team of top industry professionals, doctorates, engineers and scientists. The wel- being of employees forms an integral part of company policy and has led to the institution of strong HR policies. These encompass workmen, accident and mediclaim policies, annual health checkups and the provision of round the clockmedical support from the Apex Hospital.

Innovation is the key activity determining industry leaders over the next five years. Following this trend, Vivimed is researching new products, which will be offered in the near future and include:

Selling and Administrative Expenses:

The selling and administrative expenses of the company went up from Rs. 91.07 Million in 2005-06 to Rs. 127.64 Million in 2006-07, or by 40.15 percent.

Profits:

The profit before tax has recorded an increase of 30 percent, increasing from Rs. 138.92 Million in the last financial year to Rs. 180.55 Million at present. The profit after tax increased by 42 percent, from Rs. 95.51 Million to Rs. 135.68 Million in 2006-07. Balance Sheet Analysis

SOURCES OF FUNDS

Equity share capital: There has been a change in the equity share capital of the Company during 2006-07 as compared to 2005-06.The equity share capital increased by 2.23 percent from Rs. 107.58 Million toRs. 110 Million.

Reserves and surplus:

Reserves and surplus are the undistributed profits retained over the years. Reserves and surplus increased by 33.13 percent from Rs. 435.35 Million to Rs. 579.60 Million.

Loan Funds:

The secured loans increased from Rs. 269.11 Million to Rs. 557.81 Million. Unsecured loans decreased from Rs. 22.96 Million to Rs. 10.02 Million.

APPLICATION OF FUNDS

Fixed assets:

The company's gross block increased from Rs. 520.13 Million in 2005-06 to Rs. 733.47 Million in 2006-07, representing a growth of 41.01 percent.

Inventories:

Inventories increased from Rs. 157.40 Million in 2005-06 to Rs. 411.10 Million in 2006-07.

Debtors:

The Company's debtors increased from Rs. 221.60 Million to Rs. 417.90 Million, representing an increase of 88.58 percent.

Outlook

Innovation is the key activity determining industry leaders over the next five years. Following this trend, Vivimed is researching new products, which will be offered in the near future and include ORAL CARE SUNCAW5 SKIN CARE, HAIR CARE PRESERVATIVES VTV-SPARKLE Teeth whitener EDMPA1A.V-. '.Sunscreen VTVTNOL Powerful skin lightening agent. Lightens acne scars, age spots, discoloration and freckle VTV-REMOVE Stretch mark remover, VTV-SILK Hair remover OXYRES Powerful skin whitening agent DHA Self tanning agent VTvTDINE Regrows hair and prevents hair loss COSVAT 118 Preservative, emollient and wetting agent COS VAT 281 Potent cosmetic preservative, powerful fungicide and a bactericide for shampoo, bar soap, glue, paints

Financial Results

Business Review and Performance

The company has performed well during the year 2006-07 and has recorded a growth of 63.35 % (including 34.30 % on account of the merged Company) in Gross Turnover over previous year resulting in PAT of Rs. 134.49 Million (including Rs 25.06 Million) increase of 45.09 % (including 27.03 % on account of the merged Company) over the previous year

Research and Development

As a progressive Institution, the company has continued the in-house Research and Development initiatives. The Research and Development centre has qualified, experienced professionals with competence in their field of activity. The R and D achievements for the year are commendable as they have established process knowhow and scaling up new products in Hair Care and Skin Care segment.. The Pharmaceutical R and D Team has also excelled in identifying new bulk actives, which will be introduced in the market. The formulation R and D has undertaken new formulations in urinary disorder and psoriasis treatment and the results are very encouraging.

Dividend

The Directors have not recommended dividend for the year, considering the company's need for capital, for funding the growth plans through internal accruals to the maximum. The Directors believe that this would increase shareholders value and eventually lead to a higher return and wealth creation to all the stakeholders.

Expansion/ Diversification

The Company has successfully completed the following projects during the financial year:

1. Completed the Phase II expansion at Bonthapally Plant, creating further manufacturing capacity of about 100KL.

2. Acquired additional manufacturing facilities adjacent to existing plant at Bidar through Karnataka State Financial Corporation.

3. Acquired land admeasuring 23 acres in the outskirts of Hyderabad for the proposed State of the Art R and D Centre and Pilot Plant.

4. Acquired additional area adjacent to the existing plant of Creative Health Care Pvt Limited for future expansion To partly meet cost of expansion of the existing plan and also creation of new manufacturing facilities and for acquisition of companies /businesses engaged in their line of activities, the company raised USD 15 Million through issue of Foreign Currency Convertible Bonds in April/June 2007. Efforts for acquisition are in advanced stage Directors In terms of the provisions of the Companies Act, 1956 and Articles of Association of the company Dr. R. N. Dhar. and Dr. Raj Barathur retire by rotation and being eligible, offer themselves for reappointment at the ensuing Annual General Meeting. Brief resume of the Directors , nature of their expertise in specific functional areas and names of companies in which they hold directorship and membership/ chairmanship of the Board as stipulated by Clause 49 of the listing agreement with the

stock exchange are provided else where in the Annual Report Responsibility Statement Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Director's Responsibility Statement, it is hereby confirmed that, (i) in preparation of the annual accounts, applicable accounting standards have been followed, (ii) Such accounting policies are applied consistently. Reasonable and prudent Judgements and Estimates so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2007 and profit of the Company for the year ended on that date; (iii) Proper and sufficient care is taken for maintenance of adequate accounting records in accordance with provisions of the Companies Act, 1956 for safe guarding assets of the company and for preventing and detecting fraud and other irregularities. (iv) Annual accounts of the company are prepared on going concern basis.

Merger / Amalgamation Of M/S VVS Pharmaceuticals and Chemicals Private Limited, With M/S Vivimed Labs Limited Their Company filed Petitions before Hon'ble High Courts of Andhra Pradesh and Karnataka for approval of Scheme of Amalgamation of M/s. WS Pharmaceuticals and Chemicals Private Limited, with M/s.Vivimed Labs Limited.. The proposed scheme of Amalgamation will be effective from 01-04-2006. Order of approval of Hon'ble High Court of Andhra Pradesh has been received, while that of Hon'ble High Court of Karnataka though pronounced on 22/11/07 certified copy of the Order of approval was received in the second week of December 07. After receipt copy of Order was filed with Registrar of Companies, Karnataka. Board met on 26.12.07 and allotted shares to the Nominees of Shareholders/Shareholders of WS Pharmaceuticals and Chemicals Private Limited and decided to propose adjournment of the Annual General Meeting to 21.01.2008 so that Statements of Accounts of merged entity can be sent to the members and adopt the same in the adjourned Annual General Meeting.

Subsidiary Company

Wholly owned subsidiary namely Creative Health Care Private Limited, Uttaranchal started commercial production during the year and achieved turnover of Rs.77 Million which is expected to go up to Rs.230 Million in the following year.

FIXED ASSETS

· Land

· Building

· Plant and Machinery

· Electricity Equipment

· Furniture and Fixture

· Office Equipment

· Vehicles

· Computer

· Generator

· Borewell

· Civil/ Capital Works

Note And Combined Accounts After Merger

· Combined financial statements are prepaid raking into account the following merged companies

Name of the company	Proportion of Interest
VVS PHARMACEUTICALS AND CHEMICALS PRIVATE LIMITED	Common Director

· Pursuant to the Scheme of Arrangement / Merger of WS PfeaMnaceuticals and Chemicals Private Limited (here in referred as Transferor Company), having Pharmaceutical business suitable to produce Phairma products, merged -with Vivimed Labs Limited (here in referred to as Transferee Company) witto diect Scorn 1st April, 2006. The Company ;has -received the approval of Hon'ble High Court of Andhra Pradesh vide Order Mo. CP 85/2007, dated 22-10-2007 and Hon'ble High court of Karnataka vide Order No. CP 62/2007, dated 07-12-2007 for ate Sdbeme «of Arrangeiaent 7 Merger.

· Pursuant to the Scheme of Arrangement / Merger,

1. The Assets, Liabilities, Rights and obligations of the amalgamated Companies have been recorded at their respective historical value, under the pooling of resources method of accounting for amalgamation as per AS - 14.

2. That all the proceedings now pending by or against the Transferor Company be canataiiued toy or against Ifee lEransferee' Company.

3. 2,142,857 Equity Shares of Rs. 107- each fully paid shall be issued to die shareholders whose names are registered in the register- of the members as on the record date of the amalgamating company. Pending allotment, flie face value of such shares has been shown as "EQUITY SHARES SUSPENSE' Account as on 31st March, 2007.

4. One Equity Share of Vivimed Labs Limited has been issued for every 1.4 Equity shares held in WS Pharmaceuticals and Chemicals Private Limited. Hence an amount of Rs. 8,571,430 forms the Capital Reserve.

SECURED LOAN

a) Term loans from State Bank of Hyderabad and Citi Bank are secured by Parn Passu first charge on the immovable and movable properties of the Company.

b) Term loans from ABN Amro bank, Kotak Mahindra, HDFC Bank and ICICI Bank are secured by hypothecation on vehicles of the Company.

c) Cash credit, packing credit and book debts from State Bank of Hyderabad and Citi Bank are secured by parri passu first charge on company's existing and future fixed assets, raw materials, stock in progress, financial goods, consumables, spares, book dcots and receivables. Parri passu equitable mortgage on the properties of the directors and personal guarantee of the dilector.

d) Secured against first charge on entire fixed assets of the company both present and future including equitable mortgage on Buildings at Haridwar, Uttarakhand, and is further secured by personal guarantee of promoter director .

e) Secured against first charge on entire fixed assets of the company both present and future including equitable mortgage on Buildings at Haridwar, Uttarakhand and.is further secured by a corporate guarantee of Holding company and personal guarantee of promoter director.

f) Secured against first charge on entire current assets of the company both present and future and is further secured by a corporate guarantee of holding company and personal guarantee of promotor director.

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.45.77
UK Pound	1	Rs.80.67
Euro	1	Rs.64.20

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	7
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	6
--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		54

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