MIRA INFORM REPORT

Report Date :

04.07.2011

IDENTIFICATION DETAILS

Name :	ENCUBE ETHICALS PRIVATE LIMITED
Registered Office :	Unit No. 24, Steelmade Industrial Estate, Marol Village, Andheri (East), Mumbai – 400059, Maharashtra
Country :	India
Financials (as on) :	31.03.2010
Date of Incorporation :	07.09.1995
Com. Reg. No.:	11-92485
Capital Investment / Paid-up Capital :	Rs.15.000 Millions
CIN No.: [Company Identification No.]	U24230MH1995PTC092485
TAN No.: [Tax Deduction & Collection Account No.]	MUME02391E
Legal Form :	Private Limited Liability Company
Line of Business :	Manufacturing of Dermatological, Pharmaceutical and Therapeutic Preparation, Patent Medicines, Drugs, etc.
No. of Employees :	180 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

Ba (50)

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

Maximum Credit Limit :	USD 1100000
Status :	Satisfactory
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and a reputed company having satisfactory track. Directors are reported to be experienced and respectable businessmen. Trade relations are reported as fair. Business is active. Payments are reported to be regular and as per commitments. The company can be considered good for normal business dealings at usual trade terms and conditions.

NOTES:

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – April 1, 2010

Country Name	Previous Rating (31.12.2009)	Current Rating (01.04.2010)
India	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

LOCATIONS

Registered Office :	Unit No. 24, Steelmade Industrial Estate, Marol Village, Andheri (East), Mumbai – 400059, Maharashtra, India
Tel. No.:	91-22-56783848 (3 Lines)/ 28503838/ 28504335/ 28508612/ 29204335/ 29204336/ 29203838/ 29204336
Fax No.:	91-22-28504336
E-Mail :	encube@bom3.vsnl.net.in encube.mumbai@encubeethicals.com mehul.shah@encubeethicals.com kirit.v@encubeethicals.com chirag.gandhi@encubeethicals.com
Website :	http://www.encubeethicals.com
Factory :	Plot No. C-1, Madkaim Industrial Estate, Madkaim, Post : Mardol, Ponda, Goa – 403 404
Tel. No.:	91-832-2392223/ 2392314
Fax No.:	91-832-2392225
E-Mail :	encube@sancharnet.in prashant.j@encubeethicals.com

DIRECTORS

(AS ON 30.09.2010)

Name :	Mr. Mehul Shah
Designation :	Managing Director
Address :	52/B/402, Ruby Apartment, JVPD Scheme No.7, Juhu, Mumbai – 400049, Maharashtra, India
Date of Birth/Age :	21.07.1966
Date of Appointment :	07.09.1995
Name :	Mr. Madhusudan N. Shah
Designation :	Director
Address :	52/B/402, Ruby Apartment, JVPD Scheme No.7, Juhu, Mumbai – 400049, Maharashtra, India
Date of Birth/Age :	30.11.1934
Date of Appointment :	07.09.1995
Name :	Mr. Himanshu M Gandhi
Designation :	Director
Address :	B 302 Gokul Gagan Dattani Park, Kandivali [East], Mumbai – 400101, Maharashtra, India
Date of Birth/Age :	23.01.1970
Date of Appointment :	25.11.2005
Name :	Mr. Nilesh N Maniar
Designation :	Director
Address :	1 Ashish 51 C, S V Road, Santacruz West, Mumbai – 400054, Maharashtra, India
Date of Birth/Age :	07.06.1960
Date of Appointment :	25.11.2005

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

(AS ON 30.09.2010)

Names of Shareholders	No. of Shares
Mehul Madhusudan Shah	600000
Madhusudan Shah	600000
Shah G	20
Nilesh Maniar	20
Rupa Maniar	20
Chandramani Maniar	20
Chandra Shah	225000
Himanshu Gandhi	20
Niti Shah	74910
Pinki Gandhi	20
Total	1500030

(AS ON 30.09.2010)

Category	Percentage
Directors or relatives of directors	100.00
Total	100.00

BUSINESS DETAILS

Line of Business :	Manufacturing of Dermatological, Pharmaceutical and Therapeutic Preparation, Patent Medicines, Drugs, etc.
Products :	· Clindac A Gel · Desowen Cream · Desowen Lotion · Perlice Crème Rinse · Permite Cream · Efaderm Cream · Ionax-T Scalp Solution · Cetaphil Cleansing Lotion · Benzac AC Gel 2.5% · Benzac AC Gel 5% · Arcolane Scalp Solution · Eryacne Gel · Cetaphil Moisturising Cream · Cetaphil Moisturising Lotion · Clindac A Solution 1%

PRODUCTION STATUS (AS ON 31.03.2010)

Particulars	Unit	Installed Capacity (Single Shift)	Actual Production
Non Sterile Ointments	Tones	2760.00	1844.26

GENERAL INFORMATION

Suppliers :

Customers :

· Galderma (India) Private Limited

· Micro Labs Limited

· Brown and Burk Pharmaceutical Limited

· Aventis Pharma Limited

· Unimark Remedies Limited

· Okasa Private Limited

· Zuventus Healthcare Limited

· Nicholas Piramal Limited

· Sandoz Private Limited

· Sanofi-Synthelabo

· Dr. Reddy’s Labs

· Glenmark

· GSK

· Dr. Scholl

No. of Employees :

180 (Approximately)

Bankers :

· Janakalyan Saharaki Bank Limited,

140, Vivek Darshan, Sindhi Society, Opposite Bhakti Bhavan, Chembur, Mumbai-400071, Maharashtra, India

· Small Industrial Development Bank of India,

New Horizone, 1^st Floor, St. Mary’s Colony, Dayanand Bandodkar Marg, Miramar, Panji – 403001, Goa, India

· ICICI Bank Limited,

1^st Floor, Sagar Avenue, Opposite Shopper Stop, Andheri [West], Mumbai – 400053, Maharashtra, India

Facilities :

Secured Loans	31.03.2010	31.03.2009
	(Rs. In Millions)
Term Loan (Secured against hypothecation of land)	1.480	10.840
Overdraft
Secured against Fixed Deposit	0.826	0.031
Secured against book debts and stocks	10.251	5.465
Secured against property	(0.041)	15.694
Total	12.516	32.030
Unsecured Loans	31.03.2010	31.03.2009
	(Rs. In Millions)
Loan from Others	270.167	210.887
Total	270.167	210.887

Banking Relations :	--
Auditors :
Name :	Shaparia and Mehta Chartered Accountants
Address :	1/74, Krishna Kunj, R. A. Kidwani Road, King Cercle, Mantunga, Mumbai – 400019, Maharashtra, India
Telefax No.:	91-22-24098905/ 06/07/08
E mail:	Sm.ca@vsnl.com
Associates/Subsidiaries :	· Relief Pharmaceuticals Private Limited · Ciens Laboratories Limited · Encube Investments and Testing Private Limited · Pharma Laboratories and Distributors

CAPITAL STRUCTURE

(AS ON 31.03.2010)

Authorised Capital :

No. of Shares	Type	Value	Amount
2500000	Equity Shares	Rs.10/- each	Rs.25.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
1500030	Equity Shares	Rs.10/- each	Rs.15.000 Millions

NOTE:

Of the above 1000000 Equity Shares of Rs.10/- each were allotted as fully paid bonus share by capitalization of General Reserve

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2010	31.03.2009	31.03.2008
SHAREHOLDERS FUNDS
1] Share Capital		15.000	15.000	15.000
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		252.086	186.996	178.928
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		267.086	201.996	193.928
LOAN FUNDS
1] Secured Loans		12.516	32.030	71.958
2] Unsecured Loans		270.167	210.887	150.743
TOTAL BORROWING		282.683	242.917	222.701
DEFERRED TAX LIABILITIES		42.398	35.600	28.022
TOTAL		592.167	480.513	444.651
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		416.288	403.455	371.130
Capital work-in-progress		28.669	0.196	3.306
INVESTMENT		1.231	1.231	1.231
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	44.830	20.035	17.473
	Sundry Debtors	76.190	30.954	37.874
	Cash & Bank Balances	8.755	12.408	36.379
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	173.521	126.936	89.150
Total Current Assets		303.296	190.333	180.876
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditor	73.052	55.608	57.222
	Other Current Liabilities	2.243	2.748	2.725
	Provisions	82.022	56.346	51.945
Total Current Liabilities		157.317	114.702	111.892
Net Current Assets		145.979	75.631	68.984
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		592.167	480.513	444.651

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Income (Sales)	405.355	NA	209.548
Less	EXPENSES
		TOTAL	NA	NA	NA
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION		120.289	39.601	64.062
Less/ Add	DEPRECIATION/ AMORTISATION		21.473	19.678	10.237
	PROFIT BEFORE TAX		98.816	19.923	53.825
Less	TAX		31.103	10.100	22.397
	PROFIT AFTER TAX		67.713	9.823	31.428
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		151.435	143.367	115.265
Less	APPROPRIATIONS
		Transfer to General Reserve	3.386	0.000	1.571
		Dividend	2.250	1.500	1.500
		Tax on Dividend	0.373	0.255	0.255
	BALANCE CARRIED TO THE B/S		213.139	151.435	143.367
	EARNINGS IN FOREIGN CURRENCY
		Stability Testing and Development Charges	23.049	3.779	6.769
		Exports	65.610	0.000	11.694
	TOTAL EARNINGS		88.659	3.779	18.463
	IMPORTS
		Raw Materials	57.289	23.428	17.264
		Capital Goods	36.294	6.697	24.061
	TOTAL IMPORTS		93.583	30.125	41.325
	Earnings Per Share (Rs.)		45.37	6.55	209.48

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
Net Profit Margin (PBT/Sales)	(%)	24.38	NA	25.69
Return on Total Assets (PBT/Total Assets}	(%)	13.73	3.36	9.75
Return on Investment (ROI) (PBT/Networth)		0.37	0.10	0.28
Debt Equity Ratio (Total Liability/Networth)		1.65	1.77	1.73
Current Ratio (Current Asset/Current Liability)		1.93	1.66	1.62

LOCAL AGENCY FURTHER INFORMATION

OPERATIONS/ ACTIVITIES:

The Performance of the company for the year has been satisfactory. The Sales, Profit Before Tax and Profit After Tax for the year were Rs.448.911 Millions Rs.98.816 Millions and Rs.67.713 Millions respectively.

There is increase in Sales by 60.17%. Profit Before Tax increased by 398.95%.Installed capacity of the plant is now stabilized at 2760 tons per annum.

The performance for 2011-2012 is likely to further improve with new prestigious customers like Dr. Reddy’s Laboratories, L’Oreal India, Pigeon India and probable businesses from large multinationals. Company is creating LEED’s certified GREEN Building in Goa. Mr. Peter Chibnell, an architect from New Zealand has been appointed for the said project. Also construction of highly automated warehouse with capacity of 5000 pallets shall be commissioned in Q1 of the year 2011.

CONTINGENT LIABILITIES

Particulars	31.03.2010	31.03.2009
	(RS. IN MILLIONS)
Appeals filed in respect of disputed demands:
Income Tax	23.393	10.173
Central Excise	1.293	1.293
Collateral given by the company on behalf of director and associates concern	1.250	1.000

FORM 8:

Name of the company	ENCUBE ETHICALS PRIVATE LIMITED
Presented By	Mr. Madhusudan M. Shah, Director
1) Date and description of instrument creating the change	Deed of Hypothecated the 10^th day of October, 2005 executed by Encube Ethicals Private Limited [therein and hereinafter referred to as the Borrower in favour of ICICI Bank Limited]
2) Amount secured by the charge/amount owing on the securities of charge	Secured working capital facilities not exceeding Rs. 20.000 Millions
4) Gist of the terms and conditions and extent and operation of the charge.	In Consideration of ICICI having granted / agreed to grant to the borrower the facilities, agreement and declaration by the borrower, inter alia as follows : Covenant by the borrower to comply / to ensure compliance with all the terms and conditions set out in Master facility agreement dated 10^th October 2005 entered between the Borrower and ICICI, as modified amended/ renewed / supplemented from time to time. The borrower shall pay all amount in respect of the facilities and pay interest and all other monies in the manner set out in the agreement and the other Transaction Documents. The assets were thereby hypothecated inter alia to ICICI as and by way of first charge, as security for and be charged with the repayment of the facilities, all interest and other monies payable by the Borrower to ICICI as specified in the agreement and the other Transaction Documents. The Borrower to keep the Assets in marketable and good condition and also insured as provided in the Deed of Hypothecation / the agreement. Power of Entry, power to take charge and / or possession of, seize, recover, receive, appoint receiver of and remove and / or sale by auction or private contract, dispatch for realization or otherwise dispose of or deal with all or any part of the Assets etc. as provided in the Deed of Hypothecation. All other terms and conditions as contained in the Deed of Hypothecation.
5) Name and Address and description of the person entitled to the charge.	ICICI Bank Limited, 1^st Floor, Sagar Avenue, Opposite Shopper Stop, Andheri [West], Mumbai – 400053, Maharashtra, India
6) Date and brief description of instrument modifying the charge	NA
7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.	NA

Corporate identity number of the company	U24230MH1995PTC092485
Name of the company	ENCUBE ETHICALS PRIVATE LIMITED
Address of the registered office or of the principal place of business in India of the company	Unit No. 24, Steelmade Industrial Estate, Marol, Andheri (East), Mumbai – 400 059, Maharashtra, India kirit.v@encubeethicals.com
This form is for	Modification of charge
Charge identification number of the charge to be modified	10171735
Type of charge	Book Debts Movable Property Floating property
Particular of charge holder	HDFC Bank Limited HDFC Bank Housesenapati Bapat Marg, Lower Parel West, Mumbai – 400013, Maharashtra, India RBBform8@hdfcbank.com
Nature of description of the instrument creating or modifying the charge	Supplemental Memorandum relating to Hypothecation of Stocks, Book Debts and Machinery.
Date of instrument Creating the charge	04.02.2010
Amount secured by the charge	Rs.45.000 Millions
Brief particulars of the principal terms an conditions and extent and operation of the charge	Rate of Interest : Interest at the rate as may be communicated by the Bank from time to time. Terms of Repayment On Demand Margin As may be stipulated by the Bank from time to time. Extent and operation of the charge : Hypothecation by way of First Charge on Company's Stocks, Book Debts and Machinery etc., to secure as a continuing security as mentioned in Column No.15 below for the repayment of Rs.45.000 Millions together with interest, costs, charges, expenses and other moneys due and payable by the Company to the Bank.
Short particulars of the property charged	Hypothecation first charge over the Stocks, Book Debts and Machinery of the Company.
Particulars of the present modification	The charge shall stand increased from Rs.15.000 Millions to Rs.45.000 Millions (comprising : Cash Credit of Rs.35.000 Millions, Letter of Credit of Rs.10.000 Millions, EPC (Sub Limit of CC of Rs.30.000 Millions), FBD/FBN (Sub Limit of EPC of Rs.30.000), against security of Stocks, Book Debts and Machinery.

FIXED ASSETS

· Leasehold Land at Goa

· Staff Quarters at Goa

· Brands

· Trade Mark

· Factory Building

· Office Building

· Plant & Machinery

· Other Factory Equipments

· Electrical Installations and Fittings

· Spares and Tools

· Ventilation and A.C. Systems

· Xerox Machine

· Office Equipments

· Computer

· Furniture and Fixtures

· Vehicles

AS PER WEBSITE

Subject is a progressive contract manufacturing company dedicated to the topical preparations viz. Creams, Ointments, Gels, Lotions and Solutions.

The state of the art plant of subject was commissioned in Goa in March 1998. The facility is approved by international regulatory health authorities like Health Products and Food Branch Inspectorate (HPFBI)-Canada and TGA- Australia. Also the facility is holding WHO-GMP certificate, ISO 9001: 2000 certification and IDMA Quality Excellence Gold Award for the year 2004.

This is possibly the only facility in India exclusively devoted to Dermatology, manufacturing a range of Products as follows:

· Non Steroidal Anti-inflammatory Agents

· Steroidal Anti-inflammatory Agents

· Antifungals

· Scabicidal Agents

· Antiseptics

· Antibacterials

· Antibiotics

· Antiviral

· Moisturizers

Green land with a variety of trees has a passion that runs parallel to the business growth. They have set up their plant amidst the serene surroundings of picturesque Goa, while their registered office is in Mumbai the financial capital of the nation.

The existing Plant is admeasuring 4300 Sq Mt. of built up area , built on an area of 35000 Sq.Mt of land.

Salient Features of existing plant

• Facility design and construction meets the requirements of international and national cGMP and GLP requirements
• The design of entire 600 kg / 1000 kg manufacturing line is such that all types of Derma Products including Creams, Ointments, Gels and lotions can be produced with highest standards of GMP.
• A separate Flame Proof Zone exists for alcohol-based formulations.
• Segregated manufacturing lines for steroidal and non-steroidal products to rule out possibility of cross-contamination.
• Validated Air Handling system with separate air handling units (11 No.) for all critical areas to avoid air borne contamination with terminal HEPA filters in core areas.
• Validated Purified Water system with 0.2-micron online filter in the loop.
• Computerized temperature-recording system for all core areas of the plant.
• Well-established Quality Control laboratory equipped with highly sophisticated modern instruments. Separate microbiological testing laboratory and packaging material testing facility to monitor the quality standards of starting materials, In-process and Finished Product during all the stages of manufacturing of product.
• A very young team of qualified and experienced personnel ever willing to learn and adapt to newer and emerging process techniques. Average age: 30 years.

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.44.46
UK Pound	1	Rs.71.53
Euro	1	Rs.64.63

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	5
--RESERVES	1~10	6
--CREDIT LINES	1~10	5
--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	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		50

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	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
-	NB	New Business	-

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

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.