MIRA INFORM REPORT

Report Date :

18.03.2011

IDENTIFICATION DETAILS

Name :	NEOSPARK DRUGS AND CHEMICALS PRIVATE LIMITED
Registered Office :	241, B.L. Bagh, Panjugutta, Hyderabad – 500 082, Andhra Pradesh
Country :	India
Financials (as on) :	31.03.2010
Date of Incorporation :	29.06.1989
Com. Reg. No.:	01-010189
CIN No.: [Company Identification No.]	U24230AP1989PTC010189
Legal Form :	Private Limited Liability Company
Line of Business :	Manufacturer of a wide range of Animal Health and Aquaculture Products.

RATING & COMMENTS

MIRA’s Rating :

Ba (49)

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

Maximum Credit Limit :	USD 387000
Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is a well established company having satisfactory track. Trade relations are reported as fair. Business is active. Payments are reported to be usually correct and as per commitments. The company can be considered normal for 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

INFORMATION DECLINED BY

Name :	Mr. K.S.S. Rao
Designation :	Accounts Department
Date :	17.03.2011

LOCATIONS

Registered Office :	241, B.L. Bagh, Panjugutta, Hyderabad – 500 082, Andhra Pradesh, India
Tel. No.:	91-40-23416725, 23408234
Fax No.:	91-40-23411806
E-Mail :	mail@neospark.com
Website :	http://www.neospark.com

DIRECTORS

As on 18.09.2010

Name :	Mr. Siva Prasad Vemulapalli
Designation :	Chairman cum Managing Director
Address :	444 (36-B), S.R. Nagar, Hyderabad – 500 038, Andhra Pradesh, India
Date of Birth/Age :	05.03.1940
Date of Appointment :	04.06.1990
DIN No.:	00393700
Name :	Mrs. Sobha Vemulapalli
Designation :	Director
Address :	444 (36-B), S.R. Nagar, Hyderabad – 500 038, Andhra Pradesh, India
Date of Birth/Age :	15.06.1945
Date of Appointment :	04.06.1990
DIN No.:	00393656
Name :	Dr. Muppalla Kumara Swamy
Designation :	Director
Address :	MKS Nivas, No.23, Nagathamman Kovil Extension, 12^th Avenue, Ashoknagar, Chennai – 600 083, Tamilnadu, India
Date of Birth/Age :	20.09.1954
Date of Appointment :	17.08.1994
DIN No.:	00393613
Name :	Mr. Ankamma Rao Uyyuru
Designation :	Director
Address :	54-14/1-24A/1, IInd lane, Srinivasa Nagar Bank Colony-3, Vijayawada, Krishna District – 520 008, Andhra Pradesh, India
Date of Birth/Age :	01.06.1955
Date of Appointment :	17.08.1994
DIN No.:	00393842
Name :	Mr. Chandra Sekhar Gannamaneni
Designation :	Director
Address :	Plot No.D-10A, Road No.3, Kakatiya Nagar, Habsiguda, Hyderabad – 500 007, Andhra Pradesh, India
Date of Birth/Age :	01.08.1961
Date of Appointment :	17.08.1994
DIN No.:	02385680

KEY EXECUTIVES

Name :	Mr. K.S.S. Rao
Designation :	Accounts Department

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 18.09.2010

Names of Shareholders	No. of Shares
Vemulapalli Siva Prasad	8277
Vemulapalli Sobha	6150
M. Kumaraswamy	860
M. Sampoorna	2571
U. Ankamma Rao HUF	9221
U.L. Sirisha Kumari	4100
G. Chandrasekhar	13286
G. Indrani	3000
A.L. Sobha Rani	300
D. Ratna Jyothi	400
V.V. Ramana	1200
Vishnuvardhan Raju	300
M. Sankara Raju	200
K. Ramasiddi Raju	200
N. Sambasiva Rao	600
G. Surendranatha Benarji	3400
K. Usha Rani	300
V. Suvarna Kumari	5
T. Anasuya Devi	5
K. Durga Malleswari	5
B. Venkateswariu	5
M. Lakshmi Rajeswari	5
A. Lalitha	5
A.V. Murthy	5
M. Pranesh Kumar	17000
V.M.K. Prasad	300
K.S. Sankar Rao	200
N. Krishna Moorthy	300
V. Shankar	7500
V. Madhavi Latha	7500
V. Hari Krishna	7500
V. Madhuri	7500
U. Ashok	3950
U. Vijay Chand	3850
Total	110000

As on 18.09.2010

Equity Share Breakup	Percentage of Holding
Category
Directors or relatives of directors	96.24
Other top fifty shareholders	3.76
Total	100.00

BUSINESS DETAILS

Line of Business :	Manufacturer of a wide range of Animal Health and Aquaculture Products.
Products :	Animal Health Products Feed Supplements – Premixes Aquaculture Products Veterinary Pharmaceutical Formulations Speciality Chemicals

PRODUCTION STATUS (AS ON 31.03.2010)

Particulars	Installed Capacity Per 8 Hours Shift	Actual Production In Tons/ K.Lit/ Nos. in Lakhs
1. Animal Health Products Formulations:
a) Powders	180 TPA	31.93
b) Liquids	324000 Lit	53.67
c) Tablets/ Boluses	40 LPA	19.19
d) Injectables	NIL	9.48
2. Biosecurity Products:
a) Powders	1000 TPA	12.44
b) Liquids	3000000 Lit	68.55
3. Feeds, Feed Supplements for Livestock Poultry and Agriculture:
a) Powders	2625 TPA	4653.85
b) Liquids	324000 Lit	402.10
c) Bolus		13.63

GENERAL INFORMATION

No. of Employees :

Information declined by the management

Bankers :

• State Bank of India, Secunderabad Branch, Secunderabad – 500 003, Andhra Pradesh, India
• ICICI Bank Limited

Facilities :

Secured Loans	31.03.2010 Rs. In Millions	31.03.2009 Rs. In Millions
From Andhra Pradesh State Financial Corporation, Hyderabad:
Secured by equitable mortgage of land and building along with hypothecation of all fixed assets of the company, present and future acquisitions and personal guarantees of Directors of the company.
A) Term Loan	11.599	16.849
B) Working Capital Term Loan	14.752	2.688
2. From State Bank of India, Secunderabad
(Against personal guarantees of Directors and Others and second charge over fixed assets of the company financed by Andhra Pradesh State Financial Corporation)
a) Cash Credit (Against Hypothecation of stocks and book debts)	54.882	49.145
b) Export Packing Credit	5.009	5.052
c) Over Draft against Fixed Deposits	0.000	1.612
d) Term Loans	2.759	1.731
3. a. ICICI Limited (Against Hypothecation of Vehicles and personal guarantees of Directors)	0.000	0.019
Total	89.001	77.096

Unsecured Loans	31.03.2010 Rs. In Millions	31.03.2009 Rs. In Millions
From Directors	1.353	1.353
From Others	2.120	2.120
Total	3.473	3.473

Banking Relations :	--
Financial Institutions :	Andhra Pradesh State Financial Corporation, 5-8-342, Chirag Ali Lane, Hyderabad – 500 001, Andhra Pradesh, India
Auditors :
Name :	R.N. Krishna and Associates Chartered Accountants
Address :	Flat No.B-26, Type IV-A, Bharani Apartments, Minister Road, Secunderabad – 500 003, Andhra Pradesh, India

CAPITAL STRUCTURE

As on 31.03.2010

Authorised Capital :

No. of Shares	Type	Value	Amount
150000	Equity Shares	Rs.100/- each	Rs.15.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
110000	Equity Shares	Rs.100/- each	Rs.11.000 millions

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		11.000	11.000	11.000
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		85.794	77.687	70.773
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		96.794	88.687	81.773
LOAN FUNDS
1] Secured Loans		89.001	77.096	68.533
2] Unsecured Loans		3.473	3.473	3.473
TOTAL BORROWING		92.474	80.569	72.006
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		189.268	169.256	153.779
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		67.730	53.321	49.692
Capital work-in-progress		0.000	0.000	0.000
INVESTMENT		0.000	0.000	0.000
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	80.504	71.618	78.925
	Sundry Debtors	88.689	77.250	79.903
	Cash & Bank Balances	13.469	12.434	16.467
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	18.782	20.329	15.564
Total Current Assets		201.444	181.631	190.859
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	70.312	55.941	79.914
	Other Current Liabilities	0.417	0.521	0.784
	Provisions	9.263	9.320	6.331
Total Current Liabilities		79.992	65.782	87.029
Net Current Assets		121.452	115.849	103.830
MISCELLANEOUS EXPENSES		0.086	0.086	0.257
TOTAL		189.268	169.256	153.779

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Income	382.961	336.929	293.231
		Other Income
		TOTAL (A)	382.961	336.929	293.231
Less	EXPENSES
		Office Expenses	347.941	304.669	278.595
		Administrative Expenses
		Advertising Expenses
		TOTAL (B)	347.941	304.669	278.595 (Including depreciation and interest)
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		35.020	32.260
Less	INTEREST (D)		11.998	10.868
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		23.022	21.392
Less/ Add	DEPRECIATION/ AMORTISATION (F)		5.379	4.967
	PROFIT BEFORE TAX (E-F) (G)		17.643	16.425	14.636
Less	TAX (H)		6.060	6.117	5.410
	PROFIT AFTER TAX (G-H) (I)		11.583	10.308	9.226
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		77.150	70.236	NA
Less	APPROPRIATIONS
		Proposed Dividend	2.750	2.750	NA
		Corporate Tax on Dividend	0.457	0.467	NA
	BALANCE CARRIED TO THE B/S		85.257	77.150	NA
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	27.243	NA	NA
	TOTAL EARNINGS		27.243	NA	NA
	Earnings Per Share (Rs.)		102.85	93.71	263.58

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	3.02	3.06	3.15
Return on Total Assets (PBT/Total Assets}	(%)	6.55	6.99	6.08
Return on Investment (ROI) (PBT/Networth)		0.18	0.19	0.18
Debt Equity Ratio (Total Liability/Networth)		1.78	1.65	1.94
Current Ratio (Current Asset/Current Liability)		2.52	2.76	2.19

LOCAL AGENCY FURTHER INFORMATION

Details of Sundry Creditors:

Particulars	31.03.2010 (Rs. in millions)	31.03.2009 (Rs. in millions)	31.03.2008 (Rs. in millions)
Sundry Creditors
- For Goods	63.396	48.037	72.370
- For Expenses	6.916	7.904	7.544
	70.312	55.941	79.914

OPERATIONS:

The Company has achieved a net sales turnover of Rs.380.473 millions during the year and made a net profit of Rs.17.643 millions after deducting depreciation of Rs.5.379 millions.

The Company has achieved a positive growth of 13.36% in sales during the current year. This growth is achieved despite the difficult and unfavorable situation during 1^st half of the year in all three business segments of Poultry, Livestock and Agriculture.

India and Animal Health Business:

India has remarkable statistics in the world for production of animal products, namely, milk (1st), fish (2nd), eggs (4th) and broiler meat (5th) which indicates the potential for animal business.

Positive Note on growth rate of different segments:

Certain surveys ranked India as the third best country that will tide over the global economic crisis. The compounded average growth rate of the animal product sectors look impressive - Dairy Industry growing at 3-4% while the global statistics show 1-6%, broiler meat production growing at 10-12%, egg production growing at 6.5%, meat industry growing at 6.3%, freshwater fish production growing at 7-8%. This kind of growth will demand more animal Health Inputs which will enhance the company performance.

Positive Industry Pointers:

Consumption levels of all animal products by the Indian population are far below the average world’s per capita consumption rates. However consumption is expected to increase positively. Milk for instance is currently at240 gm / day / head and is likely to increase to 296 gm by 2015; eggs at 42 / head per year will increase to 60, fish at 9 kg / year likely to increase to 11 kg and broiler meat at 2.5 kg likely to increase to 3.6 kg.

This increase in consumption rates are expected to drive the demand for Animal Health inputs thus Increase the scope for Neospark products and services.

Darker Side of 2008-2009:

There are uncertainties looming aver the animal industry in India. Bird Flu being a frequent threat, has affected India twice during 2005 and is likely to occur in future. In fact the year 2008 began and ended with bird fu Incidents, This epidemic sandwiched anoti5er blow for the industry which has seen steep increases in raw material prices that were never heard in history. To compound this problem, there was a fuel hike and an all time high Inflation.

Broiler Meat Production:

India produced 2.20 million metric tons of broiler meat in 2009, almost 5 times the output in 1992. India now has the world’s fifth-largest broiler sector and it is growing at about 10% each year. The growing economy is allowing more and more Indians to add chicken meat to their diets. It is noticed that the production did not increase significantly between 200$ and 2009 owing to bird flu epidemics and an array of other unfavourabie factors prevalent in the Industry. It is estimated that India would have produced about 2,4 million tones of broiler meat in 2010 and this might increase further in the years to come if there are no disturbances on feed prices, diseases threats and environmental factors, Favorable growth in Broiler Industry will enhance the over all performance of Neospark and its products.

The Layer Industry:

The layer industry is yet another potential business opportunity in India. Eggs are very much sought after because it Is one among the low-cost protein/nutrition source to the Indian population. Incidentally the production cost for an egg in India is the lowest (about $0.05, in February 2010) in the world. India largely sells eggs by number and not by weight. They are also sold as a commodity but of late branding is becoming popular and the branded egg industry is said to be growing at 40-50%. It is forecasted that the current egg production of 52 billion eggs will increase to 70 billion by 2015. The Government of India stated that there will be an opportunity for producing 180 billion eggs if the per capital can be increased to 180 eggs/person/ year from the current 47 eggs. Expected growth in layer industry will aid in improved performance of Neospark and its products in the years to come.

Poultry Products Business of Neospark:

Poultry Products business contributes substantially to the company’s business which is at 74.71%. The company is actively involved in promoting its wide range of Poultry products viz., Veterinary Pharmaceutical Formulations, Feed Supplement Formulations, Premixes, Biotechnology Formulations and Biosecurity Formulations to different customer segments of Poultry industry like Layers, Broilers, Breeders and Poultry Feeds.

The company has to compete with other companies mainly on price resulting in a price war among the companies, leading to drastic reduction of product prices to meet the pricing of competitors. Wherever they had approvals for different products they were force to work with very low margins.

The company has taken up planned promotion of different poultry products through the field force with excellent technical rationale generated by members of technical team to all customers in different segments of the poultry industry with great success. Due to planned promotion of different products, excellent customer service the company could grow at 6% in Poultry Products.

The Poultry products growth would have been more stronger but for several uncertainties in the poultry market like higher feed prices and the severe competition in this area of business with entry of new companies, new products and with increased competition in product pricing with very low prices offered for bulk consumers and the resultant pressure on profit margins.

By strengthening of Technical Team the company could utilize the team members and provide the required services to different poultry customers more effectively for improved sales performance of both Poultry and Biosecurity Products.

All major poultry product groups of the company have shown positive growths viz with Liquid Feed Supplement Formulations growing at 23%, Vitamin, Mineral Feed Supplement Formulations Powders showing stagnant grow, Blosecurity Formulations growing at 22%, Veterinary Pharmaceutical Formulations growing at 32% with Chemical and Antibiotic Feed Supplement Formulations growing at 19%. The company undertakes proper planning quarter by quarter to keep focus on promoting key products. The company is closely monitoring the accounts receivable situation in all major poultry pockets.

Large Animal Products Business:

Dairy Industry:

Though India has a large dairy industry, it is scattered because 80-85% of the industry which is basically household dairy (with 4-5 animals per family) relies on traditional methods of farming.

They notice that the organized dairy is gradually increasing and it is only this segment will substantially support Animal Health business in future. The reason is because commercial dairy invests in good animal breeds that produce relatively higher levels of milk (15-40 litres/day) and investors will have to provide best animal health cover to derive the maximum milk yield potential of the animals. All the factors in the Dairy Industry point out to good demand for better Animal Health Cover and Products. Milk processing and value addition is expected to increase from the current 12% to 30% in 2015, Milk and milk products form a significant part of Indian diet and one can see that there are impressive growth trends among these products.

It is estimated that the total milk production by 2015 will be about 122 million tones (at 3% growth rate). Assuming that 25% of the milk produced is from good breeds, the milk output from that sector will be 31 million tones. All the above good induces of growth will help Neospark and Neospark products grow well in this sector in future.

During the current year Large Animal Products contributed 13.07% to the total sales of the company and have shown a stagnant no growth situation over last year.

The company faced problems of vacant territories in all the new markets that are being operated in the states of Punjab, Haryana, Rajasthan, Bihar and West Bengal during the current year with territories falling vacant frequently,

This was mainly due to newness of their organization for Large Animal Product Business in these areas and lack of established contacts to ensure that they run their sales teams more effectively. Even though the company is successful in operating all major Large Animal Territories planned during the year with positive results, the continued problems related to vacant territories in different teams exists. Vacant territories In large animal team are the result of scarcity of proper talent for the post of Area Sales Executives.

The company has achieved the desired results with regards to quality of the products and sales of parenteral formulations consequent to taking up of contract manufacture of few key parenteral formulations from Safe Pharmaceuticals. The company expect to grow reasonably well in future with these products since the issue of timely availability, quality are no more a problem for these products.

The performance of Large Animal Team would have been still better but for the vacant territories and also the fierce competition that exists in this market Sales base of Large Animal Team continues to be low and every effort is put in this area of activity to generate larger volume of business and the company is taking all necessary steps through planned working to improve the coverage of existing areas, planning to go in for new markets and Introduction of Innovative new products. Even under difficult situations mentioned, the company expects that the Large Animal Team will performance well in the years to come because of its strength of products, people, place of working and prices which are competitive and also the potential available in this sector.

The company has been successful in gaining entry into institutional business of different state governments where it operates and it foresees scope for improvement on the current performance of this team.

Aquaculture Products Business:

The shrimp industry was very lucrative a decade ago. From 2003 till 2008 the shrimp industry is almost In a stagnant state. In 2009-2010 the shrimp Industry started looking up with increase in cultivation of the white shrimp (Penaeus vanameii) in addition to the tiger shrimp (Penaeus monodon). The shrimp industry dynamics is also dictated by competition from other Asian countries, crop fluctuations and trade rules prevailing in the export market. Alternatively freshwater fish is a potential new opportunity in India for about 2 million tones of farmed freshwater fish that has just begun using modern aquaculture inputs.

Aquaculture Products business contributes 9.15% of total company business. Even though there is incidence of disease out breaks especially of viral origin, low prices for shrimp in international markets resulting in low purchase price from the farmer and severe competition from many small companies on the price front continued during the current year which has affected the performance of this business for further growth.

Even under these adverse conditions during the current year, the company has shown a positive growth of 50% over earlier year because of low sales base in the past three to four year. The company continues to maintain a leading position in Aquaculture Industry with regards to its market standing among several major companies operating in the market. This is primarily because of its strength In the products, working methods and strength in their field people.

With strong presence, good reputation and excellent products for Aquaculture market, the company is expected to perform well in future, with a positive turn around expected in the industry as a whole and in the changed culture scenario of fish culture replacing shrimp culture in some of the key culture areas. The company also has plans to introduce new products for fish and shrimp which will improve the overall performance of this group.

Contribution by different product groups:

During the year, the contribution of different group of products is at viz., Drug Formulations: 1134%, Feed Supplement Formulations: 70.55%, Biosecurity Formulations: 3.24%, Injectable Formulations: 2.33% and Aquaculture Products: 10.31% to total company sales.

Distribution of products and Consignee Agents operation:

Consignee Agents in different locations and states helped the company establish a strong distribution net work1 which enabled to make their company products available in respective states to meet the demand in time for company products. During the year, all Consignee Agents located in different states have performed well up to expectations in proper distribution of their products to enable the company5how positive performance even under difficult market situations.

The company has built in a good reputation and respect for its distribution set up in different states with timely delivery of products to customers through the consignee agents by adopting best operational processes.

Government Business:

The company is successful in getting approvals for its range of products in Government and Quasi Government Institutions in different states wherever it was operating. During the current year, the company is successful in quoting and obtaining tender approvals in the states of Andhra Pradesh, Jammu and Kashmir, Pondicherry, West Bengal, Rajasthan, Tamilnadu, Andaman and Nicobar, Kerala and several other Quasi Government Institutions like Dairy Development Corporations in different states. All the Government Tender approvals have enabled the company to spread products into interior markets through institutional supplies.

Accounts Receivables:

Regular reviews on the subject of accounts receivables have helped the company to keep accounts receivable situation under control to a major extent.

During the current year the company has taken up a detailed review of all chronic overdue accounts receivable of customers which are old over and above 5 years and all efforts are being made to collect these chronic over-dues.

Apart from the above actions, the company has also taken steps to actively involve all field personnel to ensure that the account receivable situation is kept under control.

The company continues to strictly implement policies to bring down the accounts receivable situation under control during the period. Regular monitoring and review of ”Days Sales Outstanding” by territory’ is being done every month and quarter, to identify chronic overdue accounts and to take corrective actions, Actions were also taken to make supplies of products to selected customers in different territories and areas against orders along with cheques to ensure timely collections1 even though the process is difficult to follow.

New Products:

During the year the company has introduced several new formulations into the market specially Feed Supplement Formulations in Feed Cake Form which has received great acceptance in the market. Apart from these products the company has also introduced few Veterinary Pharmaceutical Formulations, Feed Supplement Formulations with Vitamin Mineral based formulations and a group of Biosecurity Formulations and Aquaculture Formulations.

Biosecurity (Biocide) Formulations:

Biosecurity Formulations of the company have been received well in the market with good response and acceptance. The company expects good growth potential for this group of products in the years to come. The company is also working with major industry segments like Poultry, Dairy sectors to get the company products included in their regimen for continuous use by taking up trails.

Looking into the opportunity available and with the feasibility to manufacture, as planned the company has ventured into manufacture and marketing of home care products specifically for large institutional customers with success. The company is also actively working to secure this contract manufacturing work from other institutional buyers in bulk packs. Necessary plans are underway to make the facility more convenient for manufacture of large number of products and with high volume through acquiring additional machinery and equipment.

Working with ISO 9001-2000 Quality Certification:

Working with ISO 9001-2000 was very beneficial for the organization to work with different processes during the year. All Departments in the organization were exposed to different processes with concurrent internal audits and external audits by DNV to improve the overall performance of the organization in all aspects of working. The company intends to further strengthen the working with different processes more closely and effectively and is working towards process as per ISO 9001:2008 quality certification.

The company has obtained BIS Certification for manufacture of Mineral Feed Supplements for Cattle and Poultry during the current year the company started getting approvals for these products in the tenders quoted to different Government Institutions.

The company has obtained a Cosmetic Product Manufacturing Licence for manufacture of specific Home Care Products from Drug Control Administration during this year.

Exports:

During the current year, the company has exported products worth Rs.28.398 millions to different Countries. The company expects that the export sales will still improve to higher levels in future. There were enquiries from several other countries and the company is taking all steps necessary to add more countries and more products to the list in the times to come.

New product registrations are being done in countries where they presently export. The products exported were very well accepted by the customers based on the feed back and the company is confident of major breakthrough in the export front, during the years to come.

FUTURE OUTLOOK:

There will be an increasing demand for Animal Health inputs by 2015 and beyond and this in turn will support business opportunities. Production methods will improve significantly leading to overall implementation of quality norms on all fronts. India in addition to its well known, positive demographic factors is a great domestic market to rely upon for the company products. The country is deficient of calories and protein so there is a whole big opportunity to cash on pathways that are based on food. As stakeholders in the animal husbandry let them create the future by theirselves!

The company has achieved reasonable results during the current year with the implementation of different actions planned to control accounts receivable, to make the products available on time and to improve sales even under adverse conditions through effective promotion in Animal Health and Aquaculture Industries.

As planned earlier, the company has successfully implemented to measure the performance against targets during the current year and achieved reasonable success in bringing the focus of attention to this area for performance evaluation.

But for unforeseen situations like increase in input costs of Raw Materials1 packing materials which are beyond the company control and with expected good market conditions, focused promotion of products having large potential1 identification to rope in key customers who can provide large volume of sales along with strict implementation of accounts receivable collection and export of products to different countries, the company expects to do well in the years to come;

The Directors recommend a Dividend @ 25% for the year ending 31.03.2010 on the Equity Shares of the company.

FORM 8:

Corporate identity number of the company	U24230AP1989PTC010189
Name of the company	NEOSPARK DRUGS AND CHEMICALS PRIVATE LIMITED
Address of the registered office or of the principal place of business in India of the company	241, B.L. Bagh, Panjugutta, Hyderabad – 500 082, Andhra Pradesh, India E-Mail: mail@neospark.com
This form is for	Creation of charge
Type of charge	Immovable Property Movable Property
Particular of charge holder	Andhra Pradesh State Financial Corporation, 5-8-342, Chirag Ali Lane, Hyderabad – 500 001, Andhra Pradesh, India E-Mail: hyd_apsfcho@sancharnet.in
Nature of description of the instrument creating or modifying the charge	1) Memorandum of deposit of title deeds Dated: 16.11.2010 2) Deed of Hypothecation Dated: 16.11.2010
Date of instrument Creating the charge	16/11/2010
Amount secured by the charge	Rs.60.000 millions
Brief particulars of the principal terms an conditions and extent and operation of the charge	Rate of Interest: Interest @ 16% P.A The special interest rebate @ 3.5% will be allowed as per the rules of the corporation. Penal Interest @ 2% P.A on defaulted extent principal, Interest and other expenses. Terms of Repayment: Repayment of loan shall be in 21 quarterly installments. First installment @ 2.800 millions and the subsequent 20 installments @ 2.860 millions. The first installment of Rs.2.800 millions to be paid after one year from the date of disbursement of any part of the loan amount. Margin: Margin @ 16.8% on building, plant and machinery and erection Extent and Operation of the charge: 1st charge of land ad. measuring 913.36 sq.mts. Building thereon covered by Shed No: D-50, Land ad. measuring 5011 Sq. Yards covered by plot no:64 B. together with buildings constructed thereon situated at Phase I, IDA, Jeedimetla, Rangareddy District.
Short particulars of the property charged	Equitable Mortgage of 1) Shed No: D-50, 913 sq. mtrs 2) plot no: 64 B, 5011 sq.yds both situated at IDA, Jeedimetla, RR District together with the buildings constructed/ to be constructed. Hypothecation of Plant and Machinery acquired and to be acquired as per agreement.

CONTINGENT LIABILITIES NOT PROVIDED FOR: (As on 31.03.2010)

a) Bank Guarantees: Nil

b) Letter of Credits: Rs.1.345 millions

c) Estimated amount of contracts to be executed on capital account and not provided for: Rs.5.419 millions.

FIXED ASSETS:

· Land

· Factory Buildings

· Factory Buildings under construction

· Office Building

· Agriculture Land Building

· Building on Leased Premises

· Plant and Machinery

· Furniture and Fixture

· Electrical Equipments

· Office Equipments

· Bore Well and Motor

· Vehicles

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.45.24
UK Pound	1	Rs.72.57
Euro	1	Rs.63.00

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	5
--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	YES
--AFFILIATION	YES/NO	NO
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		49

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.