Mumbai, July 12, 2007
CRISIL assigns India's first IPO grading under new SEBI guidelines
CRISIL IPO Grade 2/5 assigned to the IPO of Kiri Dyes and Chemicals Ltd.
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Proposed public issue of 5,000,000 equity shares at a targeted price of Rs 110-120 per share aggregating Rs 550-600 million

CRISIL has assigned India's first IPO grading under the new SEBI guidelines that were announced on April 30, 2007.

A CRISIL IPO Grade "2/5" (pronounced "two on five") has been assigned to the proposed initial public offer of Kiri Dyes and Chemicals Ltd. (KDCL). This grade indicates that the fundamentals of the issue are below average relative to other listed equity securities in India.

This grading reflects the company management's successful track record in setting up a large export-oriented dyes business over the last 10 years, its relationships with global dye companies, and the technical expertise of its founder and Chairman Mr. Pravin Kiri. However, the grading is constrained due to the limited upside in the profit potential of the company's dyes business, the moderately lower than existing returns from the planned deployment of the IPO proceeds, and the low pricing power traditionally witnessed by sulphuric acid manufacturers - the facility that the company is planning to set up with the IPO proceeds. The company plans to mitigate the price risk by focusing on value added products.

About the company
KDCL was incorporated on May 1998 as private limited company. In March 2006, the company was converted into a public limited company. KDCL currently manufactures reactive dyes for exports and the domestic markets. It has two plants - a dye intermediate plant at Padra, Vadodara and dye plant at Vatwa, Ahmedabad. One part of the dye unit became an EOU in December 2004. The dye intermediates plant for manufacturing Vinyl Sulphone and H-acid was set up in 2006-07. The Vinyl sulphone plant commenced production in May 2006 and the H-acid plant commenced production in March 2007. The company has successfully established its presence in more than 16 countries worldwide with its exports.

KDCL plans to set up a plant to manufacture sulphuric acid and its sub-products (Oleum, Chlorosulphonic acid) with a combined capacity of 500 metric tonnes per day. The capital expenditure for this project, along with the normal capital expenditure for dyes/intermediates unit and working capital margin, is estimated at Rs. 505 million by KDCL. The company plans to fund this expansion entirely with proceeds from the proposed IPO.

KDCL's net profit for the year ended March 2007 was Rs 86.3 million on an operating income of Rs 1339.5 million, as compared to net profit of Rs 46 million on an operating income of Rs. 914 million for the year ended March 2006.

About CRISIL IPO Grading
CRISIL IPO (Initial Public Offering) Grading is an opinion on the fundamentals of the graded issue that reflects CRISIL's independence and expertise. This opinion is expressed as a relative assessment in relation to other listed equity securities in India. The assessment is based on a grading exercise carried out by industry specialists from CRISIL Research. A CRISIL IPO Grade 5/5 indicates strong fundamentals and a CRISIL IPO Grade 1/5 indicates poor fundamentals. CRISIL IPO Grading reflects its assessment of the graded company's equity fundamentals as distinct from an assessment of debt fundamentals. A CRISIL IPO Grade should not be construed to mean a comment on the price of the graded security nor is it a recommendation to invest or not to invest in the graded security.

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Disclaimer A CRISIL IPO Grading is a one-time assessment and reflects CRISIL's current opinion on the fundamentals of the graded equity issue in relation to other listed equity securities in India. A CRISIL IPO Grading is neither an audit of the issuer by CRISIL nor is it a credit rating. Every CRISIL IPO Grading is based on the information provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the information on which the grading is based. A CRISIL IPO Grading is not a recommendation to buy / sell or hold the graded instrument; it does not comment on the issue price, future market price or suitability for a particular investor.

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July 12, 2007