MIRA INFORM REPORT

Report Date :

06.05.2013

IDENTIFICATION DETAILS

Name :	BAL PHARMA LIMITED
Registered Office :	# 21 and 22, Bommasandra, Industrial Area, Hosur Road, Bangalore – 560 099, Karnataka
Country :	India
Financials (as on) :	31.03.2012
Date of Incorporation :	19.05.1987
Com. Reg. No.:	008368
Capital Investment / Paid-up Capital :	Rs.105.736 millions
CIN No.: [Company Identification No.]	L85110KA1987PLC008368
Legal Form :	Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchanges.
Line of Business :	Manufacturing and Marketing of Pharmaceutical Formulations and Active Pharmaceutical Ingredients.
No. of Employees :	Not Available

RATING & COMMENTS

MIRA’s Rating :

B (36)

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Maximum Credit Limit :	USD 1602000
Status :	Moderate
Payment Behaviour :	Slow but correct
Litigation :	Clear
Comments :	Subject is an established company having a moderate track record. The company has recorded modest scale of operation. The financial position seems to be improving. However, trade relations are reported to be fair. Business is active. Payments are slow but correct. The company can be considered for business dealings with some caution.

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 – June 30, 2012

Country Name	Previous Rating (31.03.2012)	Current Rating (30.06.2012)
India	A1	A1

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

EXTERNAL AGENCY RATING

Rating Agency Name	ICRA
Rating	Term Loan: BB
Rating Explanation	Having moderate risk of default regarding timely servicing of financial obligation.
Date	October, 2012

RBI DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available RBI Defaulters’ list.

EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of 31-03-2012.

LOCATIONS

Registered Office/ Factory 1 (Formulations) :	# 21 and 22, Bommasandra, Industrial Area, Hosur Road, Bangalore – 560 099, Karnataka, India
Tel. No.:	91-80-22354057/ 22354058
Fax No.:	91-80-22354057/ 22354058
E-Mail :	secretarial@balpharma.com hr@balpharma.com info@balpharma.com Anti-Diabetic Division: glyduzpmt@balpharma.com International Marketing: intlmktg@balpharma.com Cardiac Division: servetuspmt@balpharma.com Main Division: pmtvibryant@balpharma.com Ayurvedic Division: bvpmt@balpharma.com International Marketing: intlmktg@balpharma.com
Website :	http://www.balpharma.com
Corporate Office :	5^th Floor, Lakshmi Narayan Complex, 10/1, Palace Road, Bangalore – 560 052. Karnataka, India
Tel. No.:	91-80-41379500
Fax No.:	91-80-22354057
Factory 2 (R & D Centre and Bulk Drugs) :	# 61/B, Bommasandra Industrial Area, Hosur Road, Bangalore – 560 099, Karnataka, India
Factory 3 (Parenterals) :	# 7321735, Off. National Highway, No.4, Village Kenjal, District Bhor – 412 217, Maharashtra, India
Factory 4 (Formulations plant at Uttarakhand) :	Plot # 1, 2, 3 and 69, Sector 4, IIE-Pantnagar, Rudrapur – 263 153, Udham Singh Nagar, Uttarakhand, India
Factory 5 (Intermediaries) :	Alp-Thabdewadi, Taluka - Kavathe Mahankal, District - Sangli, Sangli – 416 405, Maharashtra, India

DIRECTORS

As on 31.03.2012

Name :	Mr. Shailesh Siroya
Designation :	Managing Director
Name :	Dr. S. Prasanna
Designation :	Whole Time Director
Name :	Mr. Shrenik Siroya
Designation :	Non-Executive Director
Date of Birth/Age :	10.09.1964
Qualification :	B.E (U.K)
Experience/ Expertise :	Mr. Shernik Siroya has got vast experience in managing various enterprises including companies.
Date of Appointment :	30.09.1997
Other Directorships :	· Siroya Exports (Private) Limited-Director · Siroya Developers (Private) Limited-Director · Mokalsor Stone Private Limited -Director · Siroya FM Constructions Private Limited-Director. · Siroya Nabar Hosing Private Limited -Director · Mannath Developers (Private) Limited-Director · Siroya FM infra development Private Limited · Mannath Properties (Private) Limited -Director.
Name :	Dr. G.S.R. Subba Rao
Designation :	Independent Director
Date of Birth/Age :	2I.08.I937
Qualification :	BSC (Honors), Msc, Dsc, Phd, FA. Sc, F.N.A
Experience/ Expertise :	Formerly professor and Dean in Indian Institute of Science (IISC), Bangalore. He is also a consultant to many Indian and Foreign Pharmaceutical Companies on synthesis of drugs, intermediates, natural products and Steroid hormones.
Date of Appointment :	08.07.2000
Name :	Mr. Pramod Kumar S.
Designation :	Independent Director
Name :	Mr. Ajit Kumar
Designation :	Nominee Director

KEY EXECUTIVES

Name :	Mr. V. Murali
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2013

Category of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	3465515	32.78
Bodies Corporate	1310836	12.40
Sub Total	4776351	45.17
(2) Foreign
Bodies Corporate	655187	6.20
Sub Total	655187	6.20
Total shareholding of Promoter and Promoter Group (A)	5431538	51.37
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	200	0.00
Financial Institutions / Banks	1800	0.02
Sub Total	2000	0.02
(2) Non-Institutions
Bodies Corporate	474813	4.49
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 million	2794885	26.43
Individual shareholders holding nominal share capital in excess of Rs.0.100 million	1870388	17.69
Sub Total	5140086	48.61
Total Public shareholding (B)	5142086	48.63
Total (A)+(B)	10573624	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	0	0.00
(1) Promoter and Promoter Group	0	0.00
(2) Public	0	0.00
Sub Total	0	0.00
Total (A)+(B)+(C)	10573624	0.00

BUSINESS DETAILS

Line of Business :

Manufacturing and Marketing of Pharmaceutical Formulations and Active Pharmaceutical Ingredients.

Products :

Item Code No. (ITC Code)	29420029
Product Description	Gliclazide
Item Code No. (ITC Code)	30049063
Product Description	Paracetamol
Item Code No. (ITC Code)	29333990
Product Description	Ebastine

PRODUCTION STATUS (AS ON 31.03.2011)

Installed capacity (as certified by the Management)

Products	Unit	31.03.2011
Tablets	Million Nos.	3770
Capsules	Million Nos.	100
Liquids	Kilo Litres	750
Ointment	Metric Tonne	75
IV-Fluids	Million Nos.	7
Eye/Ear Drops	Million Nos.	19
Bulk Drugs	Metric Tonne	38

Licensed Capacity-- Not Applicable

Notes: Installed capacities are as certified by Management and have not been verified by the auditors as this is a technical matter.

Particulars	Unit	Actual Production
Tablets	000 Nos.	582968
Capsules	000 Nos.	8694
Liquids	Kilo Ltrs.	9212
Ointments	Kgs.	5393
EED	Million	0.307
Bulk Drugs	Kgs.	45912

GENERAL INFORMATION

No. of Employees :

Not Available

Bankers :

• Canara Bank
• Punjab National Bank
• EXIM Bank
• Kotak Mahindra Bank Limited

Facilities :

Secured Loans	31.03.2012 (Rs. in Millions)	31.03.2011 (Rs. in Millions)
LONG-TERM BORROWINGS
Term Loans
- From Banks
State Bank of India	0.000	2.320
Exim Bank	57.383	114.772
Other Loans and Advances
- Vehicle loan	0.687	0.804
SHORT-TERM BORROWINGS
From Banks
- Cash credit	209.797	206.670
- Packing credit	52.691	70.603
- Bills Discounted	77.039	95.550
Total	397.597	490.719

Notes:

LONG TERM BORROWINGS

a. Term Loan from State Bank of India of Rs.23.000 millions obtained during the financial year 2009-10 and repayable in 10 monthly installments of Rs.2.300 millions each. The term is secured by hypothecation of assets of Unit II and Unit III, and Unit IV funded by them. Term loan is further secured by collateral securities and personal guarantees of Directors and carries interest rate @ 16.5%.

b. Term loans obtained from EXIM Bank of Rs.215.500 millions towards establishment of Formulation Plant at Uttaranchal and repayable in quarterly installments. The term loan is secured by first pari passu charge on the entire immovable and Hypothecation of whole of moveable fixed assets, both present and future of the Company including:

i. Moveable plant and machinery, Equipment, Appliances, furniture, vehicles, machinery spares and stores, tools and accessories, whether or not installed.

ii. Related movables in the course of transit or delivery whether now belonging or which may hereafter belong to the Company or which may be held by any person at any place within or outside India to the order or disposition of the company and all document or title including bills of lading, shipping documents, policies of insurance and other instruments and documents relating to such movables together with benefits of all rights thereto. Term loan is further secured by collateral securities and personal guarantees of Directors and carries interest rate @ 12%.

c. The vehicle loans are secured by hypothecation of vehicles taken on loan.

SHORT TERM BORROWINGS

Short term borrowings from banks is secured under a Consortium arrangement with pari passu charge is secured by hypothecation of stock and book debts and second charge on all the movable fixed assets. Cash credit is repayable on demand and carries interest rate @ 14.50% p.a. to 15.25% p.a.

Banking Relations :	--
Financial Institution :	Tata Capital Limited
Statutory Auditors :	TD Jain and Dl Sakria Chartered Accountants
Internal Auditors :	Manjunath S. and Company Chartered Accountants
Cost Auditor :	Mr. M.R. Krishnamurthy Cost Auditor
Erstwhile Subsidiary :	Basav Chem Limited
Enterprises where principal/ promoter shareholders have control or significant influence (Significant interest entities) :	Micro Labs Limited - Enterprise owned by some of the promoter shareholders
Others :	Desa Marketing International - Enterprise owned by the Managing director of the Company Siroya Developers (Private) Limited - Enterprise owned by relatives of Managing director of the company Siroya Constructions - Enterprise over which the Managing director of the company exercises joint control with other partners Siroya Wellness - Enterprise over which the Managing director of the company exercises joint control with other partners

CAPITAL STRUCTURE

As on 31.03.2012

Authorised Capital :

No. of Shares	Type	Value	Amount
11000000	Equity Shares	Rs.10/- each	Rs.110.000 millions
400000	Redeemable Preference Shares	Rs.100/- each	Rs.40.000 millions
	Total		Rs.150.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
10573624	Equity Shares	Rs.10/- each	Rs.105.736 millions

Reconciliation of the equity shares outstanding at the beginning of the reporting period

Particulars	As at 31^st March, 2012
	No. of Shares	Amount (Rs. in millions)
At the beginning of the period	10483224	104.832
Issued during the period - ESOP	90400	0.904
Outstanding at the end of the period	10573624	105.736

Terms/Rights attached to Equity shares

The company has only one class of equity shares having par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting period

Particulars	31.03.2012 (Nos.)
Equity shares allotted as fully paid bonus shares by capitalization of reserves	--
Equity shares allotted as fully paid -up pursuant to contracts for consideration other than cash	--
Equity shares bought back by the company	--

In addition, the company has issued total 127400 shares during the period of five years immediately preceding the reporting date on exercise of options granted under the employee stock option plan (ESOP) wherein part consideration was received in form of employee services.

Details of shareholders holding more than 5% shares in the company

Particulars	As at 31^st March, 2012
	No. of Shares	% holding in the class
Equity shares of Rs.10 each fully paid
Micro Labs Limited	1310836	12.40
Shailesh Siroya	670759	6.34
Anand Surana	--	--

As per of the company, including its register of shareholders/members and other declaration received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2012	31.03.2011	31.03.2010
SHAREHOLDERS FUNDS
1] Share Capital		105.736	104.832	104.832
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		294.822	260.241	255.466
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		400.558	365.073	360.298
LOAN FUNDS
1] Secured Loans		397.597	490.719	544.090
2] Unsecured Loans		108.607	39.688	0.097
TOTAL BORROWING		506.204	530.407	544.187
DEFERRED TAX LIABILITIES		74.176	67.643	61.776
TOTAL		980.938	963.123	966.261
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		528.985	539.259	546.152
Capital work-in-progress		4.114	1.278	0.000
INVESTMENT		0.150	0.550	0.550
DEFERRED TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	336.595	322.144	286.225
	Sundry Debtors	381.858	370.159	319.172
	Cash & Bank Balances	30.267	19.671	16.148
	Other Current Assets	4.709	1.637	0.000
	Loans & Advances	124.960	99.483	76.013
Total Current Assets		878.389	813.094	697.558
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	269.217	262.140	220.280
	Other Current Liabilities	145.938	114.189	48.065
	Provisions	15.545	14.729	9.654
Total Current Liabilities		430.700	391.058	277.999
Net Current Assets		447.689	422.036	419.559
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		980.938	963.123	966.261

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2012	31.03.2011	31.03.2010
	SALES
		Revenue from operations (Net)	1396.866	1144.399	1062.252
		Other Income	10.781	5.422	29.405
		TOTAL (A)	1407.647	1149.821	1091.657
Less	EXPENSES
		Cost of materials consumed	718.464	604.433	1003.491
		Purchase of traded goods	37.524	31.574
		(Increase)/decrease in inventories of finished goods and work-in-progress	12.028	(20.725)
		Employees Benefits Expenses	211.541	181.443
		Other Expenses	269.240	239.920
		TOTAL (B)	1248.797	1036.645	1003.491
Less	PROFIT/ (LOSS) BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		158.850	113.176	88.166
Less	FINANCIAL EXPENSES (D)		72.991	67.913	62.604
	PROFIT/ (LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		85.859	45.263	25.562
Less/ Add	DEPRECIATION/ AMORTISATION (F)		41.308	34.236	33.344
	PROFIT/ (LOSS) BEFORE TAX (E-F) (G)		44.551	11.027	(7.782)
Less	TAX (H)		6.982	6.304	5.626
	PROFIT/ (LOSS) AFTER TAX (G-H) (I)		37.569	4.723	(13.408)
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		85.679	80.956	94.364
	BALANCE CARRIED TO THE B/S		NA	85.679	80.956
	EARNINGS IN FOREIGN CURRENCY
		FOB value of exports	714.161	633.222	538.692
	TOTAL EARNINGS		714.161	633.622	538.692
	IMPORTS
		Raw Materials	281.870	235.269	322.103
		Capital Goods (including spares and components)	0.270	2.812	0.052
	TOTAL IMPORTS		282.140	238.081	322.155
	Earnings/ (Loss) Per Share (Rs.)
	- Basic		3.57	0.45	(1.28)
	- Diluted		3.57	0.45	(1.27)

QUARTERLY RESULTS

PARTICULARS	30.06.2012 (1^st Quarter)	30.09.2012 (2^nd Quarter)	31.12.2012 (3^rd Quarter)
Net Sales	299.900	397.500	353.600
Total Expenditure	270.000	355.900	310.600
PBIDT (Excl OI)	29.900	41.600	43.000
Other Income	1.000	1.300	0.700
Operating Profit	31.000	42.800	43.700
Interest	18.800	21.700	19.200
Exceptional Items	0.000	0.000	0.000
PBDT	12.100	21.200	24.500
Depreciation	9.600	10.000	10.200
Profit Before Tax	2.600	11.200	14.300
Tax	0.600	1.900	3.900
Provisions and contingencies	0.000	0.000	0.000
Profit After Tax	1.900	9.300	10.400
Extraordinary Items	0.000	0.000	0.000
Prior Period Expenses	0.000	0.000	0.000
Other Adjustments	0.000	0.000	0.000
Net Profit	1.900	9.300	10.400

KEY RATIOS

PARTICULARS		31.03.2012	31.03.2011	31.03.2010
PAT / Total Income	(%)	2.67	0.41	(1.23)
Net Profit Margin (PBT/Sales)	(%)	3.19	0.96	(0.73)
Return on Total Assets (PBT/Total Assets}	(%)	3.17	0.82	(0.63)
Return on Investment (ROI) (PBT/Networth)		0.11	0.03	(0.02)
Debt Equity Ratio (Total Debt/Networth)		1.26	1.45	1.51
Current Ratio (Current Asset/Current Liability)		2.04	2.08	2.51

LOCAL AGENCY FURTHER INFORMATION

Check List by Info Agents	Available in Report (Yes / No)
1) Year of Establishment	Yes
2) Locality of the firm	Yes
3) Constitutions of the firm	Yes
4) Premises details	No
5) Type of Business	Yes
6) Line of Business	Yes
7) Promoter’s background	Yes
8) No. of employees	No
9) Name of person contacted	No
10) Designation of contact person	No
11) Turnover of firm for last three years	Yes
12) Profitability for last three years	Yes
13) Reasons for variation <> 20%	--
14) Estimation for coming financial year	No
15) Capital in the business	Yes
16) Details of sister concerns	Yes
17) Major suppliers	No
18) Major customers	No
19) Payments terms	No
20) Export / Import details (if applicable)	No
21) Market information	--
22) Litigations that the firm / promoter involved in	--
23) Banking Details	Yes
24) Banking facility details	Yes
25) Conduct of the banking account	--
26) Buyer visit details	--
27) Financials, if provided	Yes
28) Incorporation details, if applicable	Yes
29) Last accounts filed at ROC	Yes
30) Major Shareholders, if available	Yes
31) Date of Birth of Proprietor/Partner/Director, if available	Yes
32) PAN of Proprietor/Partner/Director, if available	No
33) Voter ID No of Proprietor/Partner/Director, if available	No
34) External Agency Rating, if available	Yes

Unsecured Loans	31.03.2012 (Rs. in Millions)	31.03.2011 (Rs. in Millions)
LONG-TERM BORROWINGS
Term Loans
- From Banks
Kotak Mahindra Bank	2.128	0.000
- From Financial institutions
Tata Capital Limited	0.711	0.000
SHORT-TERM BORROWINGS
From Banks
- Buyers credit	102.387	39.688
Interest free loan and advances from directors repayable on demand	3.381	0.000
Total	108.607	39.688

CORPORATE INFORMATION

The company is a Public Limited Company domiciled in India and incorporated under provisions of the Companies Act, 1956. Its shares are listed on two recognized stock exchanges in India. The company is engaged in the manufacturing and selling of pharmaceutical products. The company caters to both domestic and international markets.

MANAGEMENT DISCUSSION AND ANALYSIS

Global Pharmaceutical Industry Challenges

Global spending on medicine reached USD 882 Billion in 2011 with an expected 3-6% CAGR over the next five years. Major global pharmaceutical companies have been strengthening their revenue streams with generic product sales mainly through acquisitions and strategic alliances with generic manufacturers. Many pharmaceutical companies have relied on M&A deals rather than on the organic growth to gain market share in the generic sector. This strategy allows the pharma companies to effectively secure high quality Active Pharmaceutical Ingredients (API), diversify product portfolios, achieve economics of scale and most importantly expand their presence in the emerging markets like India where the growth is driven by generic products. With the market size of USD 320 Billion, United States continues to be the largest pharmaceutical market followed by Japan and Europe. The emerging economies like China and India are expected to show substantial increase in the size of their market and the Company is focusing on capturing additional market share in this region also.

Indian Pharmaceutical Scenario:

Currently, the Indian pharmaceutical industry is ranked fourth in terms of volume and fourteen in terms of value in the global pharmaceutical market. According to the IMS report Indian pharmaceutical industry has grown by 16.3% as against the global growth rate of 7% during the financial year 2011.12. Indian Pharma has contributed INR 659626.000 millions revenue to the Indian economy during 2011.12. As indicated by IMS publication, the following are the key drivers to the industry growth. a) Increased penetration of pharmaceutical into urban and rural areas b) Rise in chronic and age-related diseases in India, c) Increase in patients covered by the private heath care sector d) rise in the population who have health insurance cover.

In 2011, countries across the globe witnessed economic slowdown if not turbulence. USA and Middle East have their own cup of woes in the form of spiralling debt, rising unemployment etc., Political turmoil in Middle East has hampered the crude oil supply to the world. Asia also has faced its worst financial crisis during the year. But the Indian Pharmaceutical industry, especially the generic manufacturers by and large have not been affected much by the global slow down, largely due to cost advantages in production of medicine and tie-up of long term contracts with confirmed orders.

The raise in the middle and upper middle class population in India are leading to higher spend in better health facilities and wider coverage of the heath insurance. In addition, spreading of awareness by Government and Non - Government organisations in dealing with major aliments all have resulted in better prospects of growth for the Indian pharma industry.

BUSINESS OPERATIONS:

During the financial year 2011-12, the Company has achieved a total turnover of Rs.1422.500 millions as against Rs.1166.500 millions achieved during the previous year 2010-11, thus registering a growth of 21.95%.

With this increase in turnover, the net profit after tax of the Company during 2011-12 has increased substantially to Rs.37.600 millions as against the net profit of Rs.4.700 millions achieved in the previous year, 2010-11.

The bulk drug business continues to dominate, as the total sales on this segment has increased from Rs.462.000 millions in 2010-11 to Rs.530.100 millions during the year 2011-12. The products mix during the year 2011-12 improved with higher sale of high value items in addition to their regular API.

Exports of Bulk Drugs has registered a growth of 16.05% during the year with a turnover of Rs.64.400 millions as against Rs.314.000 millions achieved during the previous financial year.

The export formulations division registered a growth of 6.71% by increasing its turnover from Rs.369.400 millions in the previous year to Rs.394.200 millions during the year. The Company expanded its presence in many new global markets such as Latin America, many African countries, South East Asia etc.

The Company's branded formulations Divisions mainly consisting of 'Diabetic' and 'Cardiac' Products made a net sale of Rs.240.900 millions during 2011.12 as against Rs.195.800 millions during the previous year, thereby strengthening the Company's presence in the domestic market.

The overall exports of the Company during the year has increased to Rs.758.500 millions from Rs.664.800 millions achieved during the previous year.

Supplies to Government Institutional business registered a turnover of Rs.81.400 millions during the year, as against Rs.64.400 millions during the previous year and the Ayurvedic products Division has achieved a turnover of Rs.17.300 millions, during the year as against Rs.19.400 millions achieved during the previous financial year.

The Company has also won the Best Exporter award from the Sri Lankan Government for the Year 2011-12 for supply of drugs and medical equipments to Sri Lanka Pharmaceutical Corporation, a Government of Sri Lanka enterprise.

SUBSIDIARYCOMPANIES:

The Amalgamation proceedings of Basav Chem limited, with Bal Pharma Limited was approved by Honourable High Court of Karnataka vide COP No 90/2010 and 89/2010. As on 31.03.2012 the Company has no subsidiaries, either wholly owned or otherwise. Hence, the financial results of the Company for the year and the results pertaining to the previous year, are not entirely comparable.

ACCOUNTING FOR AMALGAMATION

The Honorable High Court of Karnataka, on 26 August 2011, sanctioned a scheme of amalgamation (the scheme) under sections 391 to 394 of the Companies Act, 1956. In accordance with the scheme, Basav Chem Limited (transferor company) merges with the company with retrospective effect from 1^st April 2009. However, since the sanction to the scheme was given during the year, the assets and liabilities of the transferor company stands transferred to and vested in the company with effect from 1^st April 2011. The transferor company was engaged in the business of manufacture of pharmaceutical products. The amalgamation is expected to channelize synergies and lead to better utilization of available resources and result in greater economies of scale.

The accounting treatment has been given as per the scheme as sanctioned by the Honorable High court of judicature of Karnataka and accordingly the assets, liabilities and reserves of Basav Chem Limited., as at 1^st April 2011 have been accounted under the pooling of interest method.

The company's investment in the equity share capital of Basav Chem Limited, aggregating to Rs. Rs.500,000/- stands cancelled on amalgamation and the excess of net assets of transferor company over the cost of investment amounting to Rs.500,000 has been adjusted to reserves as per the order of Karnataka High Court.

As a result of above, figures in respect of current financial year are not comparable with those of previous financial year.

DISCLOSURE AS REQUIRED UNDER ACCOUNTING STANDARD '4 - ACCOUNTING FOR AMALGAMATION:

· Name of the Amalgamating company: Basav Chem Limited

· Nature of its business: Manufacture of pharmaceutical products

· Effective date of amalgamation for accounting purposes: 01^st April, 2011

· Method of accounting used to reflect amalgamation: The pooling of interest method

· Particulars of scheme sanctioned: Scheme sanctioned by the Honorable High Court of Karnataka, Bangalore through order dated 26 August, 2011.

· Description and number of shares issued, together with the percentage of company's equity shares exchanged to effect the amalgamation : Not applicable

· The amount of any difference between the consideration and the value of net identifiable assets acquired and treatment thereof: Not applicable

CONTINGENT LIABILITIES NOT PROVIDED FOR (AS ON 31.03.2012):

· Guarantees issued by Company's bankers Rs.13.672 millions

· Letter of credit Rs.137.440 millions

· Estimated value of contracts remaining to be executed on capital account and not provided for Rs.4.491 millions

· The claim of duty and penalty of Rs.0.868 million for the period May 2000 to November 2001 by Central Excise in respect of Unit III is being contested and under the directions of CESTAT, Mumbai a pre-deposit of Rs.0.030 million has been made. The same is still pending decision.

· A Sales Tax claim of 0.750 million on treating stock transfer as sales in Ernakulam by the Commercial Taxes, Special Circle I, KGST is being contested and a deposit of Rs.0.254 million has been made. The application is being heard by the Deputy Commissioner, Ernakulam and is still pending decision.

· The Company is also involved in other lawsuits, claims, investigations and proceedings including patent and commercial matters, which arise in the ordinary course of business, however, there are no such matters pending that the company expects to be material in relation to its business.

FIXED ASSETS:

Tangible Assets:

· Land

· Building

· Plant and Machinery

· Utilities

· Furniture and Fixtures

· Office Equipments

· Vehicles

Intangible Assets:

· Software

· R & D Expenses

· Market Development Expenditure

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No 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.53.95
UK Pound	1	Rs.83.80
Euro	1	Rs.70.50

INFORMATION DETAILS

Report Prepared by :

SMN

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	4
PAID-UP CAPITAL	1~10	4
OPERATING SCALE	1~10	4
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	4
--PROFITABILIRY	1~10	4
--LIQUIDITY	1~10	4
--LEVERAGE	1~10	4
--RESERVES	1~10	4
--CREDIT LINES	1~10	4
--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	YES
--OTHER MERIT FACTORS	YES/NO	YES
DEFAULTER
--RBI	YES/NO	NO
--EPF	YES/NO	NO
TOTAL		36

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.