The Indian pharmaceutical industry is a success story providing employment for millions and ensuring that essential drugs

at affordable prices are available to the vast population of this sub-continent. Richard Gerster

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Name of the branch and zone Name of the borrower GROUP Name of the promoters

5 6

Activity Location of corporate office/unit/factory

7 8

Dealing with our bank since Last sanction

Sector 17-B,Chandigarh Under [Link] M/s Parabolic Drigs Limited (PAN No. AACCP1419K) NA [Link] Gupta:CMD [Link] Gupta : Whole time director Manufacturing of bulk drugs Regd. Office ;SCO 99-100, Top Floor,Sector 17-B, chandgarh. Factory (i) [Link] Derabassi,Plot no 45,Industrial area,Phase II,panchkula& (ii) Plot no. 280-281,barwala [Link],tehsil-derabassi October 02 29.09.09 by MCB

Brief description of the proposal ; Principle terms of facility proposed

Purpose

Facility & margin Margin/promoters contribution Project term debt 1.56:1 equity Tenor (door to door) 7 years including two years moratorium including construction period ROI Base rate + 3.85% i.e. 12.85% p.a. at present with monthly [Link] case any other bank participatiung in the expansion project charges higher ROI , the said higher rate will also be applicable to our banks loan Security : primary 1st parri passu charge on fixed asset created out of bank finance Security : Collateral In line with the Other FB & NFB Credit limits. COD envisaged In april 2012 Repayment 60 Equal monthly instalments commencing after two years from the date of first disbursement. As per tentative repayment schedule submitted by the company, repayment to start april 2012 . final repayment shall be decided once the company achieves final closure

Two formulation plants i.e. cephslospporin & penicillin at the existing site of the company at derabassi Term loan of 25 crores 39%

Nature of facility Term loan I (for part financing for setting up cephalosporin sterile facility at derabassi involving total project cost to be funded at D/E ration of 1:1 out of total term debt requirement of 30 crore. ) Term loan II: (existing T/L :Taken over from the ICICI bank at their sanctioned level) Term III (for part financing for setting up two formulation plants involving total cost project Rs 86.90 cr )

Existing limit 10.00

Proposed limit 9.16(noting review of the account and permitting continuation at the run down level under multiple banking as per the existing terms and conditions.)

23.10

Nil (permitting prepayment by the company out of IPO proceeds) 25()fresh sanction out of total term debt requirement of rs 53.00under multiple banking as per terms and conditions as contained in the memorandum 36 (renewal at the existing level with realignment of various facilities) Cheque purchases 1.00 1.00(Renewal at the existing level under consortium as per existing terms and conditions ) 48.00(renewal at the existing level under consortium ) 70.16 49.00 119.16

Nil

Working capital fund based 36 (CC/WCDL/BD/cheque (CC:5.00 purchase /EPC) EPC:10.00 BD:20.00) Working capital non fund based 1.00 (BG-PERFORMANCE /FINANCIAL) Working capital non fund based 25.00 (ILC/FLC)DO:adhoc 20.00 Total fund based 68.26 Total non fund based 46.00 Total exposure 114.26

Exposure type classification 1 Rating based performance on

Exposure type-sub classification aggregate/pool Loan against banks own term deposits Staff loans Accounts under UCO securities scheme Gold loans Accounts with aggregate FB and NFB limit upto 25 lacs

Rating model to be used A++ A++ A++

A++ Rating to be assigned-would be advised subsequently with due approval of risk management committee of board Accounts under mid Rating to be market scheme assigned- would be UCO CAR advised UCO CASH subsequently with UCO EDUCATION due approval of risk UCO MEGA CASH management UCO NARI SHAKTI committee of board UCO PENSION SHELTER UCO SHOPPER

Covenants 1) The bank will have rights to examine at all times, the companys books of accounts and to have the companys factories inspected from time to time by the officer(s) of the bank and/ or qualified auditors or concurrent auditors appointed by the bank and/ or technical experts and/ or management consultants or other persons of the Banks choice. Cost of such inspections will be borne by the company. 2) The borrower should furnish an undertaking to the bank that: a) It shall not use short term funds for long term purposes b) It shall not create any further change on its fixed assets without prior consent of the bank. 3) During the currency of the Banks credit facilities, the company will not, without the banks prior permission in writing: a) Effect any change in companys capital structure. b) Formulate any scheme of amalgamation or reconstruction and effecting any M&A. c) Enter into borrowing arrangements, either secured or unsecured, with any other bank, Financial Institution. d) Undertake Guarantee Obligations on behalf of any other company, firm, or person. e) Create any further charge, lien or encumbrance or the asset and properties of the company to be charged to the bank in favour of any other Bank, financial Institution, firm or persons. f) Take up any new projects on large scale expansion or modernisation/ balancing scheme.

4)

5)

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g) Disposing off whole or substantially the whole of the undertaking. h) Making investments or giving loans to its subsidiaries/associate/group/concern or individuals other than its own employee under its welfare scheme. i) Paying dividends other than out of current years profits after making all due provisions. j) Declare dividend for any year except out of profits relating to the year. After making all due necessary provisions and provided further that no default has occurred in any current obligations. k) Implement any scheme of expansion or modernisation/diversification/ renovation or acquire any fixed asset during the accounting year except such scheme which has already been approved by the bank. l) Invest by way of share capital in, or lend or advance funds to, or place deposits with any other concern; normal trade credit or security deposits in the normal course of the business or advance to employees, can, however be extended. m) Monies brought in by principal shareholders/directors/depositors will not be allowed to be withdrawn without the Banks permissions; n) The company should not make any drastic change in their management set up without the Banks permission. o) In addition to the normal insurance cover, the company will arrange for insurance cover in respect of standing charges and loss in the events of any stoppage in production for any reason. p) Effect any change in the remuneration payable to the director either in the form of sitting fees or otherwise. q) Pay guarantee commission to the guarantors whose guarantees have been stipulated/furnished for credit limits sanctioned by the bank; r) Sell, assign, mortgage or otherwise dispose off any of the fixed assets charges to the bank; and s) Undertake any trading activity other than sale of products arising out of its own manufacturing process. The company should keep the bank of the happening of any event likely to have substantial impact on its profits or business. If for instance, the monthly production or sales are less than what had been indicated to the bank, the company should inform to the bank accordingly with the reasons there for and remedial steps taken. The company shall submit to us QMR-1 and HMR-1 return/ MSOD as also its audited financial statements etc., with on the stipulated period of time. The company will be liable to pay penal rate of interest in case of any delay in submission of data in question. He company should undertake to pay statutory liability such as PF, ESI dues regularly in time and authorise the bank to appoint charted accountants to inspect the books of the borrower whenever it feels necessary to obtain a certificate that the borrower is paying such dues regularly in time and debit the cost of obtaining such a certificate in borrowers account. Rate of interest are subject to change from time to time as per RBI directives/ at the discretion of the bank. Penal interest will be levied for excess, irregularity, overdue bills, ABPs, defaulting submission of stock statements/ audited accounts, non compliance of security stipulations etc.. The bank reserves the right to discontinue the facilities/advances/loans, to withhold/stop any disbursement without giving any notice, in case of non-compliance, breech of any terms

9)

10)

11)

12)

13)

14) 15)

and conditions stipulated herein and from time to time as also in the relevant documents or any information, particulars furnished to us found to be incorrect or in case of any development or situation where in the opinion of the bank its interest is likely to be prejudicially effected by such continuation and disbursement. The company should maintain separate books and records which should correctly reflect their financial position and scope of operations and should submit to the bank at regular intervals such statement as may be prescribed by the Bank in term of the RBI instructions issued from time to time. The company shall keep the bank advised of any circumstances adversely effecting the financial position of their subsidiaries / group companies or companies in which it has invested, during any action taken by any creditors against the said companies legally or otherwise. The bank will have a charged on the profits of the company, after provision for taxation, for repayment of instalments under term loan granted/ deferred payment guarantees executed by the bank or other repayment obligations, if any, due from company to the bank. The bank will have an option of appointing its nominee to the board of directors of the company to look after its interests. The directors normal fees and expenses will be defrayed by the company. Such director shall not be required to hold facility granted by the company to the company is outstanding. When the option is exercised by the bank, the company shall submit sufficiently in advance, agenda papers relating to the meetings of the Board of Directors or any committees thereof and forward duly certified copies of the proceedings where the right is exercised, the agenda papers and proceedings should be sent to the bank sufficiently in advance. All other relevant terms and conditions connected with proper monitoring of large borrowal account laid down in the Manual of Instructions/ HO circulars etc. Should be scrupulously complied with. Any other terms and conditions may be stipulated in future at the sole discretion of the Bank. The following clause is to be included in our existing loan document where the borrower is a limited or a Private Company.

The borrower herby undertakes that they should not induct a person who is a Director on the board of a company which has been identified as a Defaulter and in case, such a person steps for the removal of the person from its board. 16) The company should submit stock statement every month failing which the cash credit drawing will attract penal interest as per extant guidelines of the bank.

RATING OF ACCOUNTS (EXCLUDING ACCOUNTS UNDER RETAIL SEGMENT ) WITH EXPOSURE OF MORE THAN 25 LACS

Rating of accounts with exposure of more than Res 25 lacs are to be carried for each account using an appropriate rating model. The rating process involves

A) B) C) D) A.

Selection of appropriate rating model Operational instructions Awarding score in terms of guidelines prescribed Total weighted score and rating

Selection of appropriate rating model It is clarified that credit rating of all the accounts cannot be carried out using a single rating model. Bank has developed various rating models depending upon the size , type and our experience with an account. Accordingly, appropriate rating model has to be selected Size of the exposure Type of the exposure Whether the account is an existing account or a new account or a green field account or a green field project Existing accounts These are borrowal accounts of the business units which are already in existence and are having account with us. The business units would have annual financial statements i.e. balance sheet and profit & loss accounts and would also have the track record with the bank that enables us to assess them on conduct of accounts etc. New accounts These are borrowal accounts of business units which are already in existence but are not having account with [Link] business unit should have financial statements but would not have the track record with the bank. This would make it difficult to assess them on conduct of account including that on non fund based facilities,performance in relation with projections. Green field accounts These are the new business accounts and therefore donot have past financial statements and also have no track record to assess them on conduct of accounts. This makes it difficult to asses them .

Green field projects these are new projects started by a new company or projects of an existing company where investment in the asset of the new project is more thsn 50% of the tangible net worth of the company.

Newly promoted NBFC/INFRASTRUCTURE Development corporation development corporation and financial & development indsitutions

industrial

These are new accounts NBFC /infrastructure development corporation, industrial development corporation and financial & development institutions and therefore donot have past financial statements.

Rating and rating review: Rating all the accounts which are to be sanctionedat head office level wou;d be carried by risk management department .similarly rating of all accounts,which are to be sanctioned at regional offices would be carried out by credit monitoring department at regional [Link] in respect of accounts sanctioned by regional heads credit monitoring department of regional office shall forward necessary details at the head office risk management department for rwview of rating as and when called for .necesaary details would include the following Process note Audited financial statements for the relevant year MCMR in respect of the account Project report

In branches rating would be carried out at the appraisal level and confirmed by the sanctioning [Link] regions credit monitoring department shall review the rating. The branhshall forward necessary details to SPC head of concerned regional office . Rating based action points Review/renewal of accounts: yhis exercise in accounts rated B or below should be carried out every 9 [Link] other accounts annual review/renewal exercise should be carried out. Stock audit Stock audit of accounts shall be carried out in accordance with the extant guidlines of credit monitoring policy Pricing On review of rating by HO risk management department / credit monitoring department at the regional office the pricing may require revision.

Concessionary rate of interest In permitting concessionary rate of interest the competent authority shall use the rating assignedby risk management department. [Link] In predicting performancve of a business unit , assessment of management quality is a crucial [Link] most important reason for business failure has been attributed toi the inefficient [Link] in efficiency can stem from lackl of integrity and commitment to lack of necessary expertise and inability to raise resources in time of [Link] of management is also difficult as quite a few of the attributes of efficient need qualitative assessment. Management efficiency reflects in the way they maintain their accounts with banks , manage business inventory and the accountiong practices they follow. In predicting the success in managing business these factors have been found to be very relevant. Integrity and commitment This id a qualitative assessment the promoter or top management in case of professionally managed companies. Assessment on this aspect of management should be based on market and bankers report willingness to offer securities to secure banks loan,commitment of the management towards business,managements track record in honouring its commitment in the past.

Selling and distribution network This is qualititative assessment of companys capability to sell what it produces. This aspect of the company is assessed based on its strength to reach its customers and how well it is placed to meet the market [Link] sales network,market plan including advertisement for its advertisement for its products and quality and sales are relevant factors [Link] of sales here refer to the realization of cash within reasonable period from credity sales and relative share of cash sales. Experience of directors and promoters This is an assessment of experience in the line of business of of top management in the case of professionally managed company .normally five years should be good enough for the highest rating . Pending litigations Assessment on this respect is based on the number of cases pending against the [Link] litigations involve reputation of the company ,wheren litigations means no compliance with the requirement of regulatory nature such as tax related issues or environmental or licence related issue or where litigations involve Market reputation

Market is the major source of [Link] record with bank is important so one should look upto the defaulters list with RBI and ECGC list Conduct of bank accounts This iis an objective assessment of a companys behaviour pattern towards his banker and reflects management attitude towards honouring their commitments to the bank. Deviations from promised behaviour are penalized that brings down the rating. Assesment under this area is based on records that records that exist with the bank and therefore very transport assessment can be made. Inventory & recievables This is assessed based on level of inventory maintained in relation tp its sales and an assessment of realisabilty and valuation of inventories based on comments given by banks inspectors / stocks auditors. Assessment under this area is also based records that exist the bank and available in companys accounts and therefore very transparent assessment can be made in this area as well Achievement of net profit projections = actual profit achieved /net profit projected for the year The level of net profit achieved as compared with what was projected indicates managements foresightedness that is so important in keeping their commitments . depending on the value of the ratio this performance area may be assessed on the five point scale and marks may be awarded as given in the rating sheet. Operation in non fund based facilities non fund based facilities include letter of guarantee,letter of credit deffered payment guarantee where L/C and B/G limit taken together is less than 5% of the fund based limit,this may be ignored and need not taken into account in rating a borrower L/C and B/G donot involve extending any fund or money but involve commitment by the banks on behalf of their customers to pay in the event of default by the customers .the borrower is less risky if L/C and B/g donot devolve or invoke or if he arrabges funds ehenever any non fund based limit devolve or invoke. Diversion of funds Fund diversion may affect the companyS liquidation position and [Link] also impacts debt equity [Link] performance area may be assessed on a four point scale. Net profit / net operating cash flow This ratio determines quality of earnings. Its actually the cash that pays interests and instalments. Usually it is less than one indicating net profit after tax as well as positive net profit after tax as well as a positive net operating cash flow. Usually it is less than one indicating net profit at less than net operating cash flow. If the ratio is more than one, then it indicates sales achieved through more than usual receivables. This parameter may be assessed on a four point scale.

NOTE: net operating cash = +/ (-) operating profit /(operating loss) before extraordinary items +depreciation -taxes +/ (-) increase / (decrease) in net working capital =net operating cash flow. 2. Accounts with aggregate FB and NFB limit over 5 crores witout term facilities or with term facilities of maturity not exceeding 5 years The credit rating model adopted by the bank for these accounts have taken into consideration all the relevant factors applicable for accounts with aggregate FB and NFB limits over rs 25 lacs and upto 5 crores. In addition the model takes into consideration the industry outlook. Industry outlook Impact of expected industry performance would be taken into [Link] this latest industry scores would be factored into the rating model.

3. Accounts with aggregate FB and NFB limit over 5 crores with term facilities with maturity of more than 5 years. This model takes into consideration the PROJECT RATING INDEX. In case industry critical success factor is desired on any industry that is not covered in the annexure. C project rating index Assessment of management may created out as applicable for accounts with aggregate FB and NFB limit over Rs 25 lacs and up to 5 crores . Similarly assessment of PRI may be carried out in accordance with the guidelines provided in case of accounts with aggregate FB NFB limit over Rs 5 crores with term facilities with maturity of more than 5 years Assessment of factors under project financial evaluation Project debt equity ratio Lenders comfort in project finance comes from owners stake in the project. Where the stake of the owner is higher the comfort level is higher. Higher the ratio comfort lesser is the risk. Timing of capital infusion Where owners bring in the share in the project upfront lenders comfort is more as compared to to the situation where lender brings in funds in equitable positions. The comfort is least where capital contribution of the owner is infused in the project at a later date.

Cash flow from other sources In standalone project financing banker depends primarily on the revenue generated by a single project as a source of repayment and on the collateral value of the projects assets for security. Project finance may take the form of financing of the construction of new capital installation or refinancing of an existing installation with or without improvement. The examples are power plant projects, infrastructure projects etc. Payment of the interest and repayment of principal is out of money generated by the project. For instance, revenue generated from electricity sold by a power plant would provide the source of revenue for repayment of interest and principle lent. However , where a project is not entirely on a standalone basis for instance expansion of an existing capital installation for increased capacity or for the purpose of forward or backward linkages , repayment of interest and principal would also come in addition to the cash flow generated by the project undertaken , from the cash flow generated by the existing installation. To this extent a project stand alone may be more risky than an existing project. Riskiness of latter would depend upon the size of the expansion vis-a-vis the size of the existing project.

6. exposure on accounts of infrastructure development corporation , industrial development corporation and financial & development institutions with FB and NFB limit of 25 lacs and above. The credit rating model adopted by the bank for these accounts are basically same exceptibg that in evaluating operational; performance & financial [Link] outside liabilities/net owned funds has been replaced with total outside liabilities/tangible net [Link] of factors relevant may be carried out as in case of exposure on NBFC with aggregate FB and NFB limit of 25 lacs and above. D. total weight score and rating Final rating of the accounts would be awarded on the basis of total weighted scores arrived at using the above rating modules Note : (i) (ii) The above rating is subject to correlation with and structural changes in the economy As the risk rating efficiency of the model cannot be ascertained at this moment before

It is put to use over a period of time, the above meaning attached to the rating nomenclature is only provisional. Portfolio rating: Portfolio rating is the weighted average of rating wise exposure. Similarly portfolio rating is the average of the rating wise outstanding balances. The rating provides an indication of available risk appetite of the bank and can be used to optimize return on credit portfolio.

UCO BANK CREDIT RATING MODULE

For Existing Accounts with Total Fund and Non Fund Based Exposure of above Rs. 5 crores with or without term Facilities but maturity period of term facilities not exceeding 5 years. Name of Company Group, if any Rating as on Industry category Fund Based limit Of which, term loan Tenor Non Fund Based Limit Existing/New/Green Field Account* Strike out which is not applicable

31st March 2011

Management-Rating & Evaluation A a b Management Evaluation (Rating Guidelines) Integrity/Commitment Excellent-3 Good-2 Average-1 Poor-0 Financial Strength i) Market Value of the shares ( as on the day of rating) of the company to its Nominal Value 10 or more -3 More than 5 but less than 10 -2 More than 2 but less than 5 -1 Less than 2 0 ii) Capacity of internal generation of funds: ROE= Profit after tax/Total Equity(Paid up capital) ROE greater than 100% -3 ROE greater than 50% but less than 100% -2 ROE greater than 25% but less than 50% -1 ROE up to 25% -0 iii) Total Net Worth of Promoters excluding stake in Business More than two times the stake in business -3 1 to 2 times the stake in business -2 0.5 times to less than 1 time the stake in business -1 Less than 0.5 times the stake in business -0 Technical / Finance Knowledge Excellent -3, Good -2, Average -1, Poor -0 Organisational Structure / Succession Plan Excellent -3, Good -2, Average -1, Poor -0 Selling and Distribution Network Excellent -3, Good -2, Average -1, Poor -0 Marks Awarded Existing Account

c d e

2 2 2

Marks Awarded Existing Account f g h Experience of Directors and Promoters Excellent -3, Good -2, Average -1, Poor -0 Litigation Cases pending against Company / Directors Excellent -3, Good -2, Average -1, Poor -0 Market Reputation and past track Record Excellent -3, Good -2, Average -1, Poor -0 Sub-Total- Management Evaluation (max. 30)

Conduct of Bank Accounts Account Operation Accounts Running Regular Accounts remained irregular for 15 days Accounts remained irregular for 16-30 days Accounts remained irregular for 31-45 days Accounts remained irregular for more than 45 days Compliance of the terms/conditions of the sanction All conditions complied Conditions relating to Security creation complied, others not Conditions other security creation complied Conditions have not been complied Discipline in timely submission of data / information Timely submission Delayed submission up to 15 days Delayed submission 16-30 days Delayed submission 31-45 days Delay of more than 45 days Management of inventory & Receivables (Inventory + Receivables)/ Net sales per month <3 months 3-<4 months 4-<5 months 5-<6 months 6 months and above Realizabilty of Receivables & valuation of Inventory Comments given by Bank Inspectors / Stock Auditors Satisfactory Raises some doubt but no shortfall indicated Indicate some shortfall up to 5% Indicative of poor quality of receivables and Inventory Transparency in Accounting statements Accounting practise and Qualification by Auditors No qualification from auditors

Marks Awarded Existing Account -10 -8 -6 -4 -0 -5 -4 -2 -0 -5 -4 -3 -2 -0

-5 -4 -3 -2 -0

-5 -3 -1 -0

-5

Qualifications having no financial implication Qualifications having financial implication Unaudited Balance Sheet Certified by borrower Others Total Marks obtained Max Marks Marks out of 100(%)= (A)

-4 -3 -2 -0 65.00

B 1

Operational performance & financial ratios (rating guidline) Sales/break even sales=(sales variable cost)/fixed cost More than 1.67=15 More than 1.3 but upto 1.67= 12 More than 1.1 but upto 1.3= 8 More than 1.0 but upto 1.1= 4 Less than or equal to 1.0=0 Current ratio= current assets /current liabilities More than 1.33 = 10 More than 1.25 but upto 1.33= 8 More than 1.17 but upto 1.25= 5 More than 1.0 but upto 1.17= 2 Less than or equal to 1.0=0

Based on BS/PL 15

Return on capital employed 10 (PAT+INTEREST)/(net worth +long term borrowings + bank borrowings) More than 15% = 10 More than 13% but upto 15%=8 More than 11% but upto 13% =5 More than 9.0 %but upto 11%= 2 Less than or equal to 9.0 %=0 Debt service coverage ratio 8 (NP+DEP+INTEREST ON TERM LOAN)/(ANNUAL REPAYMENT OF TERM LOAN + INTEREST ON TERM LOAN) More than 3 = 15 More than 2.5 but upto 3 = 12 More than 1.5 but upto 2.5 = 8 More than 1.0 but upto 1.5= 4 Less than or equal to 1.0=0 LONG TERM DEBT / EQUITY RATIO TOTAL LONG TERM DEBT /TANGIBLE NET WORTH More than 2.5 =0 More than 2 but upto 2.5 = 3 More than 1.5 but upto 2 = 6 More than 1.0 but upto 1.5= 8 Less than or equal to 1.0=10 10

TOTAL OUSTANDING LIABILITIES/TANGIBLE NET WORTH More than 3.5 =0 More than 3 but upto 3.5 = 3 More than 2.5 but upto 3 = 6 More than 2.0 but upto 2.5= 8 Less than or equal to 1.0=10 Effective total outstanding liabilities/effective tangible net worth More than 4 =0 More than 3.5 but upto 4 = 3 More than 2.5 but upto 3.5 = 6 More than 2.0 but upto 2.5= 8 Less than or equal to 2.0=10 Achievement of net sales projections Actual net sales achieved /net sales projected for the year More than 90% = 10 More than 85% but upto 90%=8 More than 80% but upto 85% = 6 More than 75 %but upto 80%= 4 Less than or equal to 75 %=0 Achievement of net profit0 projections Actual net profit achieved /net profit projected for the year More than 90% = 5 More than 85% but upto 90%=4 More than 80% but upto 85% = 3 More than 75 %but upto 80%= 2 Less than or equal to 75 %=0

10

Operations in non fund based loan facilities 10 (where L/C and or B/G limit is less than 5% of fund based limit ) Borrower arranges funds whenever L/C or B/G liability falls due = 10 Borrower arranges funds whenever liabilities devolve but takes max. 15 days in meeting his liabilities = 6 Borrower arranges funds whenever liabilities devolve but delays upto max. 30 days = 4 Borrower arranges funds whenever liabilities devolve but delays more than 30 days = 0 Diversion of funds 10 Company is not diverting any funds = 10 Company has diverted funds maintaining CR and DE ratio within the banks acceptable norms = 7 Company has diverted funds for short term to long term to meet emergent needs in the company itself = 4 Company has diverted funds to its allied associate concerns affecting its CR and DE beyond the banks acceptable norms = 0 Net profit/net operating cash flow 0

11

12

Ratio is less than 0.75 = 10 Ratio is 0.75 or more but less than 0.90 = 7 Ratio is 0.9 or more but less than 1 = 4 Ratio is 1 or more = 0 Net profit is nil or negative = 0 Net operating cash flow is nil or negative =0 Total marks obtained Max marks Marks out of 100%= (B) 65.00 125 52.00

Industry score % =

Total weighted score parameters Management rating Financial rating Industry rating Rating score Score 83.07 52 77.50 weights .34 .33 .33 Weighted score 28.24 17.16 23.58

Significant accounting policies: (i) Accounting conventions: the financial statements have been prepared to com-ply with the accounting standards referred to accounting rules 2006 issued by central government and have been prepared under historical cost convention on accrual basis. Fixed Asset and Appreciation: depreciation on all assets have been provided at the rates in the manner specified in schedule XIV to the companies act 1956 on straight line method.

(ii)

Altman Z-Score
What Does Altman Z-Score Mean? A predictive model created by Edward Altman in the 1960s, who was, at the time, an Assistant Professor of Finance at New York University.. This model combines five different financial ratios to determine the likelihood of bankruptcy amongst companies.

Altman Z-Score Generally speaking, the lower the score, the higher the odds of bankruptcy. Companies with Z-Scores above 3 are considered to be healthy and, therefore, unlikely to enter bankruptcy. Scores in between 1.8 and 3 lie in a grey area. This is a relatively accurate model -- real world application of the Z-Score successfully predicted 72% of corporate bankruptcies two years prior to these companies filing for Chapter 7. In subsequent testing, it was found to be 80-90% accurate within one year with a 15-20% false positive error rate. In other words, if a company fails this test, you are treading way over your head, unless bankruptcy is your desired outcome, in which case you may have found a good shorting opportunity. The Altman z-score is a measure of a company's financial strength that uses a weighted sum of several factors. Although it is sometimes referred to simply as z-score, this is can be ambiguous. It was devised by Edward I. Altman. Although many measures of financial strength exist the z-score is different to most in that it combines multiple factors, and has been proved to be successful as a predictor of bankruptcy. The weightings used for each factor have changed significantly since they were first estimated in 1968. The original model was: Z = 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + X5 where: X1 is working capital total assets X2 is retained earnings (profit) total assets X3 is EBIT total assets X4 is market value of equity book value of debt X5 is sales total assets Altman found that the ratio profile for the bankrupt group fell at -0.25 average, and for the non-bankrupt group at +4.48 avg. The Interpretation of Altman Z-Score: Z-SCORE ABOVE 3.0 The Company is considered Safe based on the financial figures only.

Z-SCORE BETWEEN 2.7 AND 2.99- ON ALERT: This zone is an area where one should Exercise Caution. Z-SCORE BETWEEN 1.8 and 2.7 Good chance of the company going bankrupt within 2 years of operations from the date of financial figures given. Z-SCORE BELOW 1.80- Probability of Financial Catastrophe is Very High. If the Altman Z-Score is close to or below 3, then it would be as well to do some serious due diligence on the company in question before even considering investing. This is slightly different from the z-score as it appears in Altman's original paper because it uses fractions rather than percentages for each number: e.g. 0.2 rather than 20 for a ratio that is usually expressed as a percentage. The spurious accuracy of multiplying X 5 by 0.999 instead of leaving it at one has also been omitted. A more recent estimate by Altman (in 2000) is significantly different: Z = 0.72X1 + 0.85X2 + 3.1X3 + 0.42X4 + X5 Once again, this has been rounded to two significant figures. Estimation of the formula The Z-score is a linear combination of four or five common business ratios, weighted by coefficients. The coefficients were estimated by identifying a set of firms which had declared bankruptcy and then collecting a matched sample of firms which had survived, with matching by industry and approximate size (assets). Altman applied the statistical method of discriminant analysis to a dataset of publicly held manufacturers. The estimation was originally based on data from publicly held manufacturers, but has since been re-estimated based on other datasets for private manufacturing, non-manufacturing and service companies. The original data sample consisted of 66 firms, half of which had filed for bankruptcy under Chapter 7. All businesses in the database were manufacturers and small firms with assets of <$1 million were eliminated.

Accuracy and effectiveness In its initial test, the Altman Z-Score was found to be 72% accurate in predicting bankruptcy two years prior to the event, with a Type II error (false positives) of 6% (Altman, 1968). In a series of subsequent tests covering three different time periods over the next 31 years (up until 1999), the model was found to be approximately 80-90% accurate in predicting bankruptcy one year prior to the event, with a Type II error (classifying the firm as bankrupt when it does not go bankrupt) of approximately 15-20% (Altman, 2000). From about 1985 onwards, the Z-scores gained wide acceptance by auditors, management accountants, courts, and database systems used for loan evaluation (Eidleman). The formula's approach has been used in a variety of contexts and countries, although it was designed originally for publicly held manufacturing companies with assets of more than $1 million. Later variations by Altman were designed to be applicable to privately held companies (the Altman Z'-Score) and non-manufacturing companies (the Altman Z"-Score). Neither the Altman models nor other balance sheet-based models are recommended for use with financial companies. This is because of the opacity of financial companies' balance sheets, and their frequent use of off-balance sheet items. There are market-based formulas used to predict the default of financial firms (such as the Merton Model), but these have limited predictive value because they rely on market data (fluctuations of share and options prices to imply fluctuations in asset values) to predict a market event (default, i.e., the decline in asset values below the value of a firm's liabilities).