MIRA INFORM REPORT

Report Date :

15.09.2014

IDENTIFICATION DETAILS

Name :	NEULAND LABORATORIES LIMITED
Registered Office :	Sanali Info Park, ‘A’ Block, Ground Floor, 8-2-120/113, Road No. 2, Banjara Hills, Hyderabad – 500034, Telangana
Country :	India
Financials (as on) :	31.03.2014
Date of Incorporation :	07.01.1984
Com. Reg. No.:	01-004393
Capital Investment / Paid-up Capital :	Rs. 77.263 Millions
CIN No.: [Company Identification No.]	L85195AP1984PLC004393
TAN No.: [Tax Deduction & Collection Account No.]	HYDN00013G HYDN00131F
PAN No.: [Permanent Account No.]
Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchanges.
Line of Business :	Manufacturing and Selling of Bulk Drugs.
No. of Employees :	753 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

Ba (42)

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

Maximum Credit Limit :	USD 4900000
Status :	Satisfactory
Payment Behaviour :	Usully correct
Litigation :	Exist
Comments :	Subject is an established company having satisfactory track record. General financial position of the company is normal and acceptable for business dealing. Trade relations are reported as fair. Business is active. Payment terms are reported to be usually correct. 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 – June 1, 2014

Country Name	Previous Rating (31.03.2014)	Current Rating (01.06.2014)
India	A1	A1

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

INDIAN ECONOMIC OVERVIEW

N E W S

Verdict Implications : Apex court order may alter coal import dynamics. Traders go slow on talks over coal supply contracts, uncertainty over cancellation of blocks weigh on stocks.

Recent arrest of the Chennai head of the Registrar of Companies, the ministry of corporate affairs arm that ensures that companies file all the information required by the Companies Act is the latest manifestation of a messy fight between a father and his adopted son for the control of Rs 40000 mn business empire. The Central Bureau of Investigation arrested Manumeethi Cholan after he accepted Rs 10 lakhs as bribe from M A M Ramaswamy, a CBI official said.

Central Bureau of Investigation books Electrotherm for cheating Central Bank of Rs 4360 mn.

Infosys maintains revenue guidance. COO Rao says attrition still an area of concern and it would take a few more quarters to bring down levels to 13-15 %.

DHL  to invest Euro 100 mn in India over next 2 years. The firm has chosen India to pilot its e-commerce business model for the Asia-Pacific region.

Blackstone may buy stake in BlueRidge SEZ in line with the fund’s real estate strategy in India.

Kingfisher Airlines Ltd grounded in October 2012 under the weight of heavy debt and accumulated losses, recently approached the Delhi high court for relief in two separate cases. The airline challenged a notice by Punjab & National Bank alleging that It had wilfully defaulted on Rs 7700 mn of loans and sought more time to comply with the requirements under the listing agreements with the Stock Exchanges.

OnMobile likely to sack another 300 employees. The lay-offs follow a spate of senior-level exits over the past two years, starting with of its founder. The overall lay-offs could number around 600 and are driven by the need to cut costs, says a former employee.

EXTERNAL AGENCY RATING

Rating Agency Name	CRISIL
Rating	Long-term rating: “BB+”
Rating Explanation	Moderate risk of default
Date	21.03.2014

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 31-03-2014.

INFORMATION PARTED BY

Name :	Mr. Satyanarayan Rao
Designation :	Senior Manager Accounts
Contact No.:	91-40-26518682
Date :	05.09.2014

LOCATIONS

Registered Office / Corporate Office :	Sanali Info Park, ‘A’ Block, Ground Floor, 8-2-120/113, Road No. 2, Banjara Hills, Hyderabad – 500034, Telangana, India
Tel. No.:	91-40-30211600/ 23551081
Fax No.:	91-40-30211602
E-Mail :	gjagadeesam@neuladlabs.com gvbharadwaj@neulanlabs.com swamyachanta@neulandlabs.com neuland@hd1.vsnl.net.in neuland@eth.net neuland@neulandlabs.com saradab@neulandlabs.com gsnrao@neulandlabs.com
Website :	www.neulandindia.com
Area :	6000 Sq.ft.
Location :	Rented
Manufacturing Facilities :	Unit 1: Village: Bonthapally Mandal: Jinnaram District: Medak, Andhra Pradesh India Unit 2 IDA, Pashamylaram, Isnapur, Patancheru (M) Medak, Dist – 502319, Andhra Pradesh, India Unit 3 Plot No. 92-94, 257-259 Industrial Development Area, Village: Pashamylaram, Mandal: Patancheru, District: Medak, Andhra Pradesh, India
Overseas Office :	US Office 2500, Regency Parkway, Cary, NC 27511. Tel No: +1 (919) 654 6833 Fax No: +1 (919) 654 6834 E-Mail: johnpinna@neulandabs.com martinfrazier@neulandlabs.com Japan Office 2F Maruishi Building Bekkan (Annex), 1-10-1 Kajicho, Chiyoda-ku, Tokyo Tel No: 81-3-3526-5171 Fax No: 81-3-3526-5172 E-Mail: ykizawa@neulandlabs.com
Research and Development:	Bonthapalli (V), Veerabhadraswamy Temple Road, Jinnaram (M), Medak, District – 502313, Andhra Pradesh, India

DIRECTORS

As on 31.03.2014

Name :	Dr. Davuluri Rama Mohan Rao
Designation :	Chairman and Managing Director
Date of Birth/ Age :	69 Years
Qualification :	Masters in Science from Andhra University, Post Graduate Diploma in Technology from IIT Kharagpur and a PhD in Organic Chemistry from the University of Notre Dame
Expertise in specific functional areas :	General Management
Date of Appointment :	07.01.1984
Name :	Mr. Davuluri Sucheth Rao
Designation :	Whole-time Director and Chief Executive Officer
Qualification :	Mechanical Engineer by profession and has a MBA in Corporate Finance and Operations Management from University of Notre Dame, USA
Name :	Mr. Davuluri Saharsh Rao
Designation :	Whole-time Director and President-Contract Research
Qualification :	Engineering Graduate and obtained his Masters in MIS from Weatherhhead School of Management, Cleveland, Ohio, USA.
Name :	Mr. G. V. K. Rama Rao
Designation :	Non-Executive Director
Date of Birth/ Age :	82 Years
Qualification :	LLB
Expertise in specific functional areas :	Civil Litigation
Date of Appointment :	07.01.1984
Name :	Mr. Humayun Dhanrajgir
Designation :	Independent Director
Date of Birth/ Age :	77 Years
Qualification :	Tech, MI, CHEM (E)
Expertise in specific functional areas :	General Management and Pharmaceutical industry
Date of Appointment :	23.08.1994
Name :	Mr. Shashi Bhushan Budhiraja*
Designation :	Independent
Qualification :	B. Tech
Name :	Mr. Parampally Vasudeva Maiya
Designation :	Independent Director
Date of Birth/ Age :	75 Years
Qualification :	Master of Arts
Expertise in specific functional areas :	General Management and Finance
Date of Appointment :	24.07.1999
Name :	Dr. William Gordon Mitchell
Designation :	Independent Director
Date of Birth/ Age :	61 Years
Qualification :	PhD from the School of Business Administration of the University of California, Berkeley
Expertise in specific functional areas :	Corporate Strategy and International Business
Date of Appointment :	23.05.2008
Name :	Dr. Christopher M. Cimarusti
Designation :	Non-Executive Director
Qualification :	PhD in Organic Chemistry
Name :	Mr. Nadeem Askari Panjetan
Designation :	Nominee Director
Qualification :	Commerce Graduate and has completed his Post-Graduation in Master of Arts.
Name :	Mrs. Bharati Rao #
Designation :	Independent Director
Date of Birth/ Age :	65
Qualification :	M.A[Econ], CAIIB
Expertise in specific functional areas :	General management and Finance
Date of Appointment :	09.05.2014

NOTE

# Appointed as a Director w.e.f. from May 9, 2014

* Ceased to be a Director w.e.f. from May 9, 2014

KEY EXECUTIVES

Name :	Mr. N.S. Viswanathan
Designation :	Chief Financial Officer
Name :	Ms. Sarada Bhamidipati
Designation :	Company Secretary and Compliance officer
Name :	Mr. Satyanarayan Rao
Designation :	Senior Manager Accounts
AUDIT COMMITTEE :	· Mr. Parampally Vasudeva Maiya Mr. Humayun Dhanrajgir Mr. Shashi Bhushan Budhiraja* Mr. Nadeem Panjetan Mr. D. Sucheth Rao Mrs. Bharati Rao# # Appointed w.e.f. from May 9, 2014 * Ceased to be a Member w.e.f. from May 9, 2014
NOMINATION AND REMUNERATION COMMITTEE :	Mr. Parampally Vasudeva Maiya Mr. Humayun Dhanrajgir Mr. Shashi Bhushan Budhiraja* Mrs. Bharati Rao# # Appointed w.e.f. from May 9, 2014 * Ceased to be a Member w.e.f. from May 9, 2014
STAKEHOLDERS RELATIONSHIP COMMITTEE :	· Mr. Parampally Vasudeva Maiya Dr. Davuluri Rama Mohan Rao Mr. D. Sucheth Rao

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 30.06.2014

Names of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	900	0.01
Bodies Corporate	3831679	50.05
Sub Total	3832579	50.06
(2) Foreign
Individuals (Non-Residents Individuals / Foreign Individuals)	200	0.00
Sub Total	200	0.00
Total shareholding of Promoter and Promoter Group (A)	3832779	50.06
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	38900	0.51
Financial Institutions / Banks	500	0.01
Foreign Institutional Investors	10000	0.13
Sub Total	49400	0.65
(2) Non-Institutions
Bodies Corporate	431741	5.64
Individuals
Individual shareholders holding nominal share capital up to Rs. 0.100 Million	1190357	15.55
Individual shareholders holding nominal share capital in excess of Rs. 0.100 Million	1269725	16.59
Any Others (Specify)	881676	11.52
Clearing Members	42742	0.56
Foreign Corporate Bodies	600000	7.84
NRIs/OCBs	238934	3.12
Sub Total	3773499	49.29
Total Public shareholding (B)	3822899	49.94
Total (A)+(B)	7655678	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued
(1) Promoter and Promoter Group	0	0.00
(2) Public	0	0.00
Sub Total	0	0.00
Total (A)+(B)+(C)	7655678	100.00

BUSINESS DETAILS

Line of Business :	Manufacturing and Selling of Bulk Drugs.
Exports :
Products :	API’s and Inermediates
Countries :	· USA European Countries Asian Countiries
Imports :
Products :	Raw Material
Countries :	China
Terms :
Selling :	Cash, Credit and Open Credit
Purchasing :	Cash, Credit and LC 90%

GENERAL INFORMATION

Supplier :

Binhai Golden, China

Customer :

Wholsalers

· Teva Group

No. of Employees :

753 (Approximately)

Bankers :

· Export Import Bank of India, Khairatabad, Hyderabad, Andhra Pradesh, India

State Bank of India, Overseas Branch, Jubilee Hills, Hyderabad, Andhra Pradesh, India

Bank Of India, Mid Corporate Branch, Hyderabad, Andhra Pradesh, India

Indian Overseas Bank, Basheerbagh Branch, Hyderabad, Andhra Pradesh, India

SBI Global Factors Limited, Mumbai, Maharashtra, India

Consortium Bank

Facilities :

Fund and Non-Fund based Limits : Rs. 1874.000 Millions (From Consortium Bank)

SECURED LOANS	31.03.2014 (Rs. In Millions)	31.03.2013 (Rs. In Millions)
LONG TERM BORROWINGS
Term loans from banks
Rupee loans	87.719	255.737
Other loans
Hire purchase loans	0.981	5.366
SHORT TERM BORROWINGS
Working capital finance from banks	1365.995	1238.163
Working capital finance from non-banking financial company	0.167	56.494
Total	1454.862	1555.760

Banking Relations :	--
Statutory Auditors :
Name :	K. S. Aiyar and Company Chartered Accountants
Address :	No. F-7 Laxmi Mills, Shakti Mills Lane, (Off Dr. E. Moses Road), Mahalaxmi, Mumbai - 400011, Maharashtra, India
Internal Auditors :
Name :	Ernst and Young LLP Chartered Accountants
Address :	7th Floor, Block III, The Oval Office, 18 I-Labs Center, Madhapur, Hyderabad – 500081, Andhra Pradesh, India
Holding Company w.e.f. December 5, 2012 and Enterprise owned or significantly influenced by Key Management Personnel till such date:	Neuland Health Sciences Private Limited
Fellow Subsidiary :	Neuland Pharma Research Private Limited
Wholly Owned Subsidiary :	· Neuland Laboratories Inc., USA Neuland Laboratories K.K., Japan
Partly Owned Subsidiary :	CATO Research Neuland (India) Private Limited

CAPITAL STRUCTURE

As on 31.03.2014

Authorised Capital :

No. of Shares	Type	Value	Amount
10000000	Equity Shares	Rs.10/- each	Rs.100.00 Millions
300000	Cumulative Redeemable Preference Shares	Rs.100/- each	Rs.30.00 Millions
300000	Cumulative or Non-cumulative and Redeemable Preference Shares	Rs.100/- each	Rs.30.00 Millions
	Total		Rs. 160.000 Millions

Issued, Capital :

No. of Shares	Type	Value	Amount
7849223	Equity Shares	Rs.10/- each	Rs. 78.492 Millions

Subscribed Capital :

No. of Shares	Type	Value	Amount
7758954	Equity Shares	Rs.10/- each	Rs. 77.590 Millions

Paid-up Capital :

No. of Shares	Type	Value	Amount
7655678	Equity Shares	Rs.10/- each	Rs.76.557 Millions
	Add: Forfeited Shares		Rs.0.706 Million
	Total		Rs. 77.263 Millions

NOTE

a. Reconciliation of number of equity shares outstanding at the beginning and at the end of the year

Particulars	As on March 31, 2014
Number of equity shares outstanding at the beginning of the year	7644978
Add: Issued during the year (Refer Note 3(b))	10700
Number of equity shares outstanding at the end of the year	7655678

b. (i) During the current year, the Company had on January 21, 2014, issued and allotted 10,700 fully paid up equity shares of a face value of Rs. 10 each, to eligible employees pursuant to exercise of stock options granted under Employee Stock Option Scheme, 2008.

(ii) During the previous year, the Company had on April 27, 2012, allotted 22,48,523 equity shares of a face value

of Rs. 10 each for cash at a price of Rs. 45 per equity share, including a Share Premium of Rs. 35 per equity share, aggregating to Rs. 101.184 Millions to the existing equity shareholders of the Company on a rights basis in the ratio of 5 shares for every 12 shares held. Expenses incurred by the Company in relation to Rights Issue activity aggregating to Rs. 5.808 Millions were adjusted to the securities premium account.

c. During the year, the Board of Directors of the Company at its meeting held on February 5, 2014 approved the issue of Equity Shares on rights basis up to Rs. 250.000 Millions and the Company has filed the Draft Letter of Offer dated March 26, 2014 with the Securities and Exchange Board of India (SEBI) on March 27, 2014. Subsequently, the Company had received in-principle approval from The National Stock Exchange of India Ltd. and BSE Ltd. in respect of the proposed Rights Issue of the Company.

Proceeds of the proposed Rights issue will be utilized (i) to meet incremental working capital requirement, and (ii)

to meet issue expenses.

The Company has incurred expenses aggregating Rs. 0.636 Million in relation to the proposed Rights Issue which have been disclosed as “Rights Issue Expenses” under “Other Assets”. These expenses will be charged to the securities premium account proposed to be received from the Rights Issue of the equity shares of the Company.

d. Terms / Rights attached to equity shares

The Company has only one class of equity shares having par value of Rs.10 per share. Each shareholder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to prior consent from the Banks and approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of the 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 shareholder.

e. Details of Shareholders holding more than 5% shares in the Company

Name of the Share holder	As on March 31, 2014
	No. Of shares	% Of holding
Equity Shares of Rs. 10 each fully paid up
1 Neuland Health Sciences Private Limited	38,31,679	50.05
2 Unipharm Limited	6,00,000	7.84

f. Employee Stock Option Scheme – 2008

Pursuant to the resolution passed by the Board of directors on July 20, 2007 and members of the Company at the

Annual General Meeting held on July 20, 2007, the Company had introduced Employee Stock Option Scheme (“the scheme”) for permanent employees and directors of the Company and of its subsidiaries, as may be decided by the Compensation Committee/Board. The scheme provides that the total number of options granted there under will be not more than 3% of the paid up capital. Each option, on exercise, is convertible into one equity share of the Company having face value of Rs. 10. Pursuant to a resolution passed by the Remuneration and Compensation Committee vide Circular Resolution dated November 17, 2008, 34,500 options have been granted at an exercise price of Rs. 104, which is the market price as on the date of the grant. Accordingly, the Company has not recognized any expense on account of grant of stock options.

Stock options activity under the scheme is as follows:

Description	For the Year ended March 31, 2014
Option Outstanding at the beginning of the year	19,000
Options Granted	--
Options Exercised	10,700
Options Lapsed	1,000
Options Outstanding at the year end	7,300

Pursuant to the Rights Issue during the previous year, the Company revised the exercise price of each stock option to Rs. 95.34 from Rs. 104.00 (pre-rights) under the existing scheme.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS	31.03.2014	31.03.2013	31.03.2012
I. EQUITY AND LIABILITIES
(1)Shareholders' Funds
(a) Share Capital	77.263	77.156	54.670
(b) Reserves & Surplus	1148.719	908.675	696.110
(c) Money received against share warrants	0.000	0.000	0.000
(2) Share Application money pending allotment	0.000	0.000	0.240
Total Shareholders’ Funds (1) + (2)	1225.982	985.831	751.020
(3) Non-Current Liabilities
(a) long-term borrowings	338.700	511.103	559.000
(b) Deferred tax liabilities (Net)	102.635	27.074	0.000
(c) Other long term liabilities	29.300	33.300	10.000
(d) long-term provisions	51.388	47.050	38.490
Total Non-current Liabilities (3)	522.023	618.527	607.490
(4) Current Liabilities
(a) Short term borrowings	1396.162	1324.657	1320.330
(b) Trade payables	796.081	814.867	1106.690
(c) Other current liabilities	590.791	426.241	414.420
(d) Short-term provisions	153.711	76.519	54.350
Total Current Liabilities (4)	2936.745	2642.284	2895.790
TOTAL	4684.750	4246.642	4254.300
II. ASSETS
(1) Non-current assets
(a) Fixed Assets
(i) Tangible assets	1302.879	1351.308	1511.050
(ii) Intangible Assets	5.656	3.926	1.890
(iii) Capital work-in-progress	345.616	356.888	271.490
(iv) Intangible assets under development	0.000	0.000	0.000
(b) Non-current Investments	76.441	76.408	76.670
(c) Deferred tax assets (net)	0.000	0.000	18.500
(d) Long-term Loan and Advances	213.788	111.573	56.810
(e) Other Non-current assets	74.571	80.944	105.910
Total Non-Current Assets	2018.951	1981.047	2042.320
(2) Current assets
(a) Current investments	0.000	0.000	0.000
(b) Inventories	934.174	921.685	924.180
(c) Trade receivables	1165.932	984.950	964.120
(d) Cash and cash equivalents	2.886	2.847	17.820
(e) Short-term loans and advances	350.421	257.981	189.100
(f) Other current assets	212.386	98.132	116.760
Total Current Assets	2665.799	2265.595	2211.980
TOTAL	4684.750	4246.642	4254.300

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2014	31.03.2013	31.03.2012
	SALES
		Income	4656.933	4605.865	4482.340
		Other Income	34.148	33.188	17.000
		TOTAL (A)	4691.081	4639.053	4499.340
Less	EXPENSES
		Cost of Raw Materials Consumed	2464.422	2726.062	2898.630
		(Increase) / Decrease in Inventories of Work in Process and Finished Goods	1.280	-34.496	-51.630
		Employee Benefits Expense	362.551	348.827	307.830
		Manufacturing Expenses	484.224	458.440	384.880
		Other Expenses	650.606	525.736	476.160
		TOTAL (B)	3963.083	4024.569	4015.870
	PROFIT/ (LOSS) BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		727.998	614.484	483.470
Less	FINANCIAL EXPENSES (D)		236.376	313.300	332.740
	PROFIT / (LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		491.622	301.184	150.730
Less/ Add	DEPRECIATION/ AMORTISATION (F)		149.386	146.229	148.910
	PROFIT/ (LOSS) BEFORE TAX (E-F) (G)		342.236	154.955	1.820
Less	TAX (H)		75.561	18.555	(18.500)
	PROFIT/ (LOSS) AFTER TAX (G-H) (I)		266.675	136.400	20.320
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		219.282	82.162	61.84
Add	ADJUSTMENTS TO OPENING RESERVES		0.000	14.791	0.000
Less	APPROPRIATIONS
		Proposed Equity Dividend	22.967	9.174	0.000
		Tax on Proposed Equity Dividend	3.726	1.488	0.000
		Transfer to General Reserve	26.668	3.409	0.000
	BALANCE CARRIED TO THE B/S		432.596	219.282	86.160
	EARNINGS IN FOREIGN CURRENCY
		Export of Goods on FOB basis	3193.308	3331.435	3444.950
	TOTAL EARNINGS		3193.308	3331.435	3444.950
	IMPORTS
		Raw Materials	1096.403	1148.950	1375.050
		Capital Goods	0.000	0.000	18.680
	TOTAL IMPORTS		1096.403	1148.950	1393.730
	Earnings / (Loss) Per Share (Rs.)
	Basic		34.87	17.84	3.36
	Diluted		34.86	17.82	3.35

QUARTERLY RESULTS

PARTICULARS	30.06.2014
	1^stQuarter
Net Sales	1034.100
Total Expenditure	890.700
PBIDT (Excl OI)	143.400
Other Income	0.000
Operating Profit	143.400
Interest	56.800
Exceptional Items	0.000
PBDT	86.600
Depreciation	39.000
Profit Before Tax	47.600
Tax	17.400
Provisions and contingencies	0.000
Profit After Tax	30.200
Extraordinary Items	0.000
Prior Period Expenses	0.000
Other Adjustments	0.000
Net Profit	30.200

KEY RATIOS

PARTICULARS		31.03.2014	31.03.2013	31.03.2012
PAT / Total Income	(%)	5.68	2.94	0.45
Net Profit Margin (PBT/Sales)	(%)	7.35	3.36	0.04
Return on Total Assets (PBT/Total Assets}	(%)	8.03	4.06	0.05
Return on Investment (ROI) (PBT/Networth)		0.28	0.16	0.00
Debt Equity Ratio (Total Debt/Networth)		1.42	1.86	2.50
Current Ratio (Current Asset/Current Liability)		0.91	0.86	0.76

FINANCIAL ANALYSIS

[all figures are in Rupees Millions]

DEBT EQUITY RATIO

Particular	31.03.2012	31.03.2013	31.03.2014
	(Rs. In Millions)	(Rs. In Millions)	(Rs. In Millions)
Share Capital	54.670	77.156	77.263
Reserves & Surplus	696.110	908.675	1148.719
Share Application money pending allotment	0.240	0.000	0.000
Net worth	751.020	985.831	1225.982
long-term borrowings	559.000	511.103	338.700
Short term borrowings	1320.330	1324.657	1396.162
Total borrowings	1879.330	1835.760	1734.862
Debt/Equity ratio	2.502	1.862	1.415

YEAR-ON-YEAR GROWTH

Year on Year Growth	31.03.2012	31.03.2013	31.03.2014
	(Rs. In Millions)	(Rs. In Millions)	(Rs. In Millions)
Sales	4482.340	4605.865	4656.933
		2.756	1.109

NET PROFIT MARGIN

Net Profit Margin	31.03.2012	31.03.2013	31.03.2014
	(Rs. In Millions)	(Rs. In Millions)	(Rs. In Millions)
Sales	4482.340	4605.865	4656.933
Profit	20.320	136.400	266.675
	0.45%	2.96%	5.73%

LOCAL AGENCY FURTHER INFORMATION

Sr. No.	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	Yes
5]	Type of Business	Yes
6]	Line of Business	Yes
7]	Promoter's background	Yes
8]	No. of employees	Yes
9]	Name of person contacted	Yes
10]	Designation of contact person	Yes
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	Yes
18]	Major customers	Yes
19]	Payments terms	Yes
20]	Export / Import details (if applicable)	Yes
21]	Market information	-----
22]	Litigations that the firm / promoter involved in	Yes
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

LITIGATION DETAILS

ITTA 89 / 2012

ITTASR 3200 / 2008

CASE IS:PENDING

PETITIONER		RESPONDENT
THE COMMISSIONER OF INCOME TAX-IV	VS	NEULAND LABORATORIES LTD.,
PET.ADV. : PRASAD (SC FOR INCOME TAX)		RESP.ADV. : VIVEK REDDY
SUBJECT: U/Sec. 143 Assessment		DISTRICT:  HYDERABAD

FILING DATE:  22-10-2008	POSTING STAGE :  FOR ADMISSION
REG. DATE    :   18-02-2012	LISTING DATE :  20-06-2012	STATUS   :  ADMIT

HON'BLE JUDGE(S):

GODA RAGHURAM

N.RAVI SHANKAR

INDEX OF CHARGES

S.NO.	CHARGE ID	DATE OF CHARGE CREATION/MODIFICATION	CHARGE AMOUNT SECURED	CHARGE HOLDER	ADDRESS	SERVICE REQUEST NUMBER (SRN)
1	10507513	27/06/2014	200,000,000.00	BANK OF INDIA	HYDERABAD MID CORPORATE BRANCH, 10-1-1199/2, 1ST FLOOR, P.T.I BUILDING, A.C.GUARDS, HYDERABAD, TELANGANA - 500004, INDIA	C10168599
2	10317280	30/06/2014 *	1,874,000,000.00	STATE BANK OF INDIA	OVERSEAS BRANCH, PLOT NO. 241/A, RAJALA CENTRE, ROAD NO.36, JUBILEE HILLS, HYDERABAD, TELANGANA - 500033, INDIA	C10194207
3	10312190	08/07/2013 *	100,000,000.00	EXPORT-IMPORT BANK OF INDIA	FLOOR 21, CENTER ONE BUILDING, WORLD TRADE CENTER, CUFFEE PARADE, MUMBAI, MAHARASHTRA - 400005, INDIA	B81105207
4	10243563	07/01/2014 *	50,000,000.00	SBI GLOBAL FACTORS LIMITED	6TH FLOOR, METROPOLITAN BUILDING, BANDRA-KURLA, COMPLEX, BANDRA(EAST), MUMBAI, MAHARASHTRA - 400051, INDIA	B95077830
5	10199917	23/01/2010	220,000,000.00	STATE BANK OF INDIA	OVERSEAS BRANCH, 5-9-300, ABIDS, HYDERABAD, ANDHR A PRADESH - 500001, INDIA	A78226974
6	10082478	08/07/2013 *	300,000,000.00	EXPORT-IMPORT BANK OF INDIA	FLOOR 21, CENTER ONE BUILDING,, WORLD TRADE CENTE R, CUFFEE PARADE, MUMBAI, MAHARASHTRA - 400005, INDIA	B81101784
7	90135025	07/01/2014 *	1,509,000,000.00	STATE BANK OF INDIA	OVERSEAS BRANCH, PLOT NO. 241/A, RAJALA TOWERS,, ROAD NO.36, JUBILEE HILLS, HYDERABAD, ANDHRA PRADESH - 500033, INDIA	B94788759

* Date of charge modification

UNSECURED LOANS

PARTICULAR	31.03.2014 (Rs. In Millions)	31.03.2013 (Rs. In Millions)
LONG TERM BORROWINGS
Inter corporate deposit	250.000	250.000
SHORT TERM BORROWINGS
Inter corporate deposit from related party	30.000	30.000
Total	280.000	280.000

CORPORATE INFORMATION

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

FINANCIAL RESULTS

For the financial year ended March 31, 2014, while there was a marginal growth in revenues, the EBIDTA grew by 17.16% to reach Rs. 728.000 Millions and Profit after tax (PAT) increased to Rs. 266.700 Millions from Rs. 136.400 Millions in the previous financial year, recording a growth of 95.51%.

BUSINESS REVIEW

The Company continued to take key initiatives on product mix changes, scaling up new processes and improving

manufacturing processes, which enabled the Company to improve the profitability.

The Company has completed all necessary modifications to enable manufacturing and sales as envisaged in the Joint Business arrangement with API Corporation, Japan, which is part of the Mitsubishi Chemical for manufacturing and selling of APIs and Intermediates to Japan, it is anticipated that actual sales would commence by end of Q1 FY2015.

The Company is in the process of taking further systemic improvements, like product mix changes, cost optimization and process improvements, which are expected to have a positive impact on the profit margins, efficiencies and overall profitability. The management is working with a focus to build a sustainable business model which would add value to all stakeholders over the years to come.

During the year under review, the Company also successfully completed inspections by various regulatory authorities including USFDA, EMA (Europe), ANVISA (Brazil) and Cofepris (Mexico).

OUTLOOK

The Company is in a competitive environment, however its portfolio mix provides it with opportunities for growth and the Company is building on that potential by scaling up a further 9 products in the next year which will add to the pipeline and could boost growth prospects.

The Company’s quest for growth has been further aided by the significant custom manufacturing opportunities received by the Company. The research and development work done in the past has helped the Company to become a significant competitor in the custom manufacturing market as the Company has gained a better understanding of its customers’ needs. The Company’s forays in this segment have yielded considerable success in the form of securing contracts for manufacturing commercial compounds as well as clinical development candidates.

The Company has the requisite capabilities to build on its success so far and use the momentum for driving further growth.

MANAGEMENT DISCUSSION AND ANALYSIS

ECONOMIC OVERVIEW

The Global efforts to revive the economy have started showing results in some countries. As per IMF WEO Outlook 2014, Global economy would grow at 3.6% in 2014 and 3.9% in 2015 up from 3.3% in 2013. Advanced economies are expected to grow at ~2.2 % with United States leading the lot. Emerging Economies are expected to grow at 5% in 2014 and a little above 5% in the next year from a 4.7% growth in 2013. The trends suggest that the emerging economies will draw impetus to grow from external demand only mostly from the Developed World. The biggest challenge, therefore for the emerging economies is to maintain the supply – demand ratio. The growth is expected to be modest based on the financial vulnerability of these countries to the developed World.

Indian Economy, alike other Emerging economies, is also faced with the challenges like currency devaluation, inflation and external pressures to demand. India’s GDP grew at a moderate 4.4 % in 2013 which is the lowest growth in the decade for the country. The growth of the country has been majorly affected by the external developments as for other emerging countries apart from lesser domestic demand. Internal issues like pressing Inflation rates and domestic policies have been rendering negative effect on the country’s growth. Delayed investment approvals and implementations, supply bottlenecks, external policies etc all add to the hindrances. As per IMF projections, the growth of ~5.5% can be expected if conditions like stronger global growth, improving export competitiveness, a positive result of recent policy changes come into play.

PHARMACEUTICAL INDUSTRY LANDSCAPE

The Global Pharmaceutical industry is volatile and is undergoing changes at the moment due to aging populations

and expanding market growth. IMS Health, in its latest report, “The Global use of Medicines: Outlook through 2017”, predicts global spending on medicines to reach almost $1.2 trillion in 2017. With medical awareness, emphasis on universal medical coverage, ensured access to medicines and healthcare, the industry is expected to grow over the years to come. IMS health divides market into two parts- Developed market and ‘Pharmerging’. Developed markets include North America, USA and Japan while the Pharmerging market is composed of 7 emerging countries - Brazil, India, Turkey, Mexico, Russia, South Korea, and China. The report also emphasizes a modest growth in the developed markets in the next 5 years, due to economic and healthcare austerity measures. With patent expiry also approaching, availability of reasonably priced generics would also contribute to some realization. The emerging markets on the other hand are predicted to be seeing much higher double digit growth due to impetus on economic growth, demographic changes, and improved urban and socio-economic facilities. In light of innovations in new and conducive medicines, this is viewed as the future of the Pharmaceutical industry.

The Indian pharmaceutical industry is one of the fastest growing the world, and is third in terms of volume in the world. The Indian Pharmaceutical sector is expected to record revenues of $30 Bn in 2015 of which around $10 Bn will be from exports. Over the last decade, the industry has emerged as a major player in generic pharmaceutical production and now supplies around 20% of the global market for generic medicines.

They have seen the pharmaceutical industry across the world go through another phase of consolidation, acquisitions aimed at consolidation of both capabilities as well as markets. Another aspect in which they have seen substantial change is the approach of various national regulatory authorities. Regulations have become tighter and the expectations from manufacturers are higher. Another key trend which has been noted earlier but is worth mentioning is the movement of manufacturing facilities from the developed markets to India and other Pharmerging markets.

The Ministry of Commerce, Government of India, estimates investments of about US$ 6.3 billion will be made in the Indian pharmaceutical industry by 2015. The Indian pharmaceutical industry remains an attractive destination

for foreign investors, usually in the form of acquisition of Indian companies.

It is estimated that in 2015, the trade surplus from pharmaceuticals alone may move up to US$12.8 billion. It is likely that by 2015, the Indian elementary drugs share out of the aggregate supplies from Asia-Pacific may soar to 10%, only behind Japan and China.

COMPANY OVERVIEW

Neuland Laboratories has completed 30 years of existence as an API manufacturer. Neuland has consistently grown its API manufacturing business gaining expertise in different therapy segments. As a company they have been focused on delivering quality on time to their customers, which has seen us perform consistently in a very competitive environment. The Company has a rich basket of products marketed to customers across 85 countries. The Company also offers integrated and versatile manufacturing capabilities capable of handling complex reactions tuned to ensure seamless transfer from small-scale through validation to commercial manufacturing. This integration helps customers to expedite the discovery-to-market timelines.

The Company has two manufacturing facilities located close to Hyderabad which are compliant with health and regulatory agencies cGMP certification standards. The sites have been audited and certified by regulatory authorities time to time from FDA (USA), TGA (Australia), AIFA (Italy), ANSM (France), PMDA (Japan), ANVISA (Brazil), and COFEPRIS (Mexico) among others.

The Company’s strengths are in synthetic chemistry, process development and controlled supply chain coupled with a project management approach built into all its operations and product development programs.

· Neuland has made a successful foray into Custom Manufacturing Solutions building on its strengths of proven expertise in manufacturing at varied scales

· A deep understanding of complex chemistry

· Manufacturing facilities that are compliant with the guidelines of the leading regulatory authorities such as USFDA, EMA, COFEPRIS and ANVISA.

STRATEGIC REVIEW

During the past year the Company has taken a lot of steps to build on its momentum to ensure sustainable growth while enhancing profitability, strengthening the balance sheet and enhancing its credit rating. Through the last year they have taken several strategic steps to ensure that profitability is enhanced, while also ensuring top-line growth in the nearterm and as well as long-term.

Towards this end, the Company has strengthened its Marketing and Business Development capabilities by expanding the team to enable them to serve more markets as well focus better on their customers.

They have also further strengthened their product selection process such that they have a rich pipeline of products under development which will enable growth as well as sustainability in the future.

During the past year they have continued with the emphasis on changing the portfolio mix towards more profitable, lowervolume products. They have actively pursued new customers over the last year and have had orders from over 100 new customers.

They have gone further in their journey of partnership with API Corporation, by getting the infrastructure ready during this fiscal year. This partnership while translating into long-term business gains for both companies will also open more such avenues for the Company.

OUTLOOK

Buoyed by a robust financial performance in FY 2013-14, the Company believes that it can sustain the growth momentum in FY 2014-15. Its strategy to focus on niche, high-margin products with continuous expansion of its product portfolio gives it the ability to yield revenue and profitability growth over coming years. Its foray into contract manufacturing is likely to not only add to its revenues and profitability but flag-off its evolution as a custom manufacturer for many other pharmaceuticals companies. Its alliance with Mitsubishi Chemicals is expected to strengthen the Company’s revenue growth over many years.

As a result of steps taken over the past few years, they believe that Neuland is now on the threshold of a very exciting journey. Considering the steps taken to strengthen the Company in the last year and the continuous evolution of the Company’s portfolio-mix, customers and pipeline, they are positioning ourselves well to take advantage. They believe that this is an opportune time for them to leverage the opportunities opening up to them by strategically investing in their capabilities. As they continue on this trajectory of growth, all these factors in conjunction with the vision of the Company to become a leading player in API market worldwide. They believe that as they continue on their path of growth, the future is Neuland’s to claim.

CONTINGENT LIABILITIES (AS ON 31.03.2014):

(a) Claims against the Company not acknowledged as debts

(i) Andhra Pradesh Gas Power Corporation Limited and its shareholders (including Neuland) have filed writ petition before the Division Bench of High Court of A.P, which has been admitted and favourable interim orders have been granted. The Company has been advised that it has a strong case to succeed in the pending appeal.

(ii) Certain disputes, for unascertained amounts, are pending in the Labour Courts, A.P. As the chances of appellants succeeding in their claims being remote, the Company expects no liability on this account.

(iii) Income Tax department has filed a writ petition before the Hon’ble High Court of Andhra Pradesh to set aside the Income Tax Appellate Tribunal orders for the Assessment Year 2001-2002 and 2002-2003 against the claim on deduction U/sec 80HHC. The Hon’ble High Court of Andhra Pradesh has admitted the appeal and the matter is pending. If there is an adverse ruling against our Company, the estimated financial impact on the Company would be Rs. 0.342 Million and Rs. 1.415 Millions respectively.

(iv) Income Tax department has filed a writ petition before the Hon’ble High Court of Andhra Pradesh to set aside the Income Tax Appellate Tribunal order bearing TA No. 842/H/06 dated May 5, 2008 for the Assessment Year 2003-2004 against the allowability of Employee’s contribution towards PF, ESI. The Hon’ble High Court of Andhra Pradesh has admitted the appeal on June 20, 2012 and the matter is pending. If there is an adverse ruling against

our Company, the estimated financial impact on the Company would be Rs. 0.144 Million.

(v) The Company has filed an appeal before Income Tax Appellate Tribunal against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 1998-1999 against the disallowance of Commission paid to Nonresident agents for not deducted at source u/s 40(a)(i) of Income Tax Act, 1961 and the matter is pending. If there is an adverse ruling against our Company, the estimated financial impact on the Company would be Rs. 0.634 Million.

(vi) The Company has filed an appeal before Income Tax Appellate Tribunal against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2008-2009 and 2009-2010 against the disallowance of Commission paid to Non-resident agents and other payments to Non-residents for not deducted at source u/s 40(a)(i) of Income Tax Act, 1961 and the matter is pending. If there is an adverse ruling against our Company, the estimated financial impact on the Company would be Rs. 1.917 Millions and Rs. 1.682 Millions respectively.

(b) Unexpired Letters of Credit opened on behalf of the Company by Bank for the raw material amounting to Rs. 350.147 Millions (March 31, 2013: Rs. 352.130 Millions).

(c) Bank Guarantees given by the Company to Central Excise and Customs and other Government authorities amounting to Rs. 8.000 Millions (March 31, 2013: Rs. 9.500 Millions).

UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED JUNE 30, 2014

(Rs. in Millions)

Sl. No.	Particulars	Quarter Ended 30.06.2014 (Unaudited)
1	Income from operations
	a) Net Sales / Income from operations	1026.745
	b) Other operating income	7.344
	Total income from operations (net)	1034.089
2	Expenses
	a) Consumption of Raw materials	636.823
	b) Changes in inventories of finished goods and work in progress	(92.235)
	c) Employee benefits expense	105.444
	d) Depreciation	38.990
	e) Manufacturing Expenses	124.151
	f) Other Expenses	116.517
	Total Expenses	929.690
3	Profit from operations before Finance Costs (1-2)	104.399
4	Finance costs	56.782
5	Profit/ (Loss) before Tax (3-4)	47.617
6	Tax Expense
	a) Current tax	10.390
	b) Deferred Tax	17.383
	c) MAT Credit entitlement	(10.390)
7	Net Profit/ (Loss) before Tax (5-6)	30.234
8	Paid-up Equity Share Capital (Face Value of Rs. 10 Per Share)	77.263
9	Reserves excluding Revaluation Reserve as per balance sheet of previous accounting year
10	Earnings per share (EPS) in (Rs.)
	(a) Basic	3.95
	(b) Diluted	3.95

PART - II

Sl. No.	Particulars		Quarter Ended 30.06.2014 (Unaudited)
A	PARTICULARS OF SHAREHOLDING
1	Public shareholding
	a.Number of shares		3822899
	b.Percentage of shareholding		49.94%
2	Promoters and promoter group shareholding
	a.	Pledged/Encumbered
	Number of shares		200000
		Percentage of shares (as a % of the total shareholding of promoter and promoter group)	5.22%
		Percentage of shares (as a % of the total share capital of the Company)	2.61%
	b.	Non-encumbered
	Number of shares		3632779
		Percentage of shares (as a % of the total shareholding of promoter and promoter group)	94.78%
		Percentage of shares (as a % of the total share capital of the Company)	47.45%

Particulars	Quarter ended 30.06.2014
B INVESTOR COMPLAINTS (Nos.)
Pending at the beginning of the quarter	0
Received during the quarter	9
Disposed of during the quarter	9
Remaining unresolved at the end of the quarter	0

NOTE

1. The above unaudited financial results have been reviewed by the Audit Committee at their meeting held on July 31, 2014, and approved and taken on record at the Board of Directors meeting held on August 1, 2014.

2. EPS for the quarters is not annualised.

3. The Company’s operations are predominantly related to the manufacture of Active Pharmaceutical Ingredients (API). As such there is only one primary reportable segment as per Accounting Standard - AS 17 "Segment Reporting".

4. The Board had on July 17, 2014, issued and allotted 2,300 fully paid up equity shares of a face value of Rs.10 each, to eligible employees pursuant to exercise of stock options granted under Employee Stock Option Scheme, 2008.

5. In accordance with the requirements to Schedule II of the Companies Act, 2013, the Company has re-assessed the useful lives and residual value of the fixed assets and:

i) An amount of Rs. 9.884 Millions has been adjusted to the opening balance of Reserves a Surplus in respect of those assets where the useful life exhausted as at April 1, 2014

ii) The profit for the quarter has decreased by Rs. 1.199 Millions on account higher depreciation due to application of Schedule II.

6. Previous quarter / year numbers have been regrouped wherever necessary.

FIXED ASSETS

TANGIBLE ASSETS

· Land

Buildings

Plant and Equipment

R&D Equipment

Data Processing Machines

Furniture and Fixtures

Vehicles

INTANGIBLE ASSETS

· Process Development Cost

Computer Software - SAP

CMT REPORT (Corruption, Money Laundering & Terrorism]

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

1] INFORMATION ON DESIGNATED PARTY

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

2] Court Declaration :

No exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.60.84
UK Pound	1	Rs.98.73
Euro	1	Rs.78.64

INFORMATION DETAILS

Information Gathered by :	HNA
Analysis Done by :	DIV
Report Prepared by :	MRI

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	4
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	4
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	5
--CREDIT LINES	1~10	4
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	YES
--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		42

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.