October 29, 2012

Mumbai

Kothari Products Limited

Ratings Suspended

(Refer to Annexure 1 for details on facilities)

CRISIL has suspended its ratings on the bank facilities of Kothari Products Limited (KPL). The suspension of ratings is on account of non-cooperation by KPL with CRISIL's efforts to undertake a review of the ratings outstanding. Despite repeated requests by CRISIL, KPL is yet to provide adequate information to enable CRISIL to assess KPL’s ability to service its debt. The suspension reflects CRISIL's inability to maintain a valid rating in the absence of adequate information. CRISIL considers information availability risk as a key credit factor in its rating process and non-sharing of information as a first signal of possible credit distress, as outlined in its criteria ‘Information Availability Risk in Credit Ratings’.

About the Group

CRISIL has combined the business and financial risk profiles of KPL and its six wholly owned subsidiaries, Sukhdham Constructions & Developers Ltd, IMK Hotels Pvt Ltd, M K Web-Tech Pvt Ltd, Arti Web Developers Pvt Ltd, KPL Exports Pvt Ltd and Kothari Products Singapore Pvt Ltd, together referred to as the Kothari group. These entities have significant fungibility of cash flows with each other. KPL has extended financial support to these entities in the form of investments and unsecured loans, and has also provided corporate guarantees for the bank borrowings of some of the entities.

KPL was set up initially as a partnership firm by Mr. M M Kothari and family in August 1973, and manufactured pan masala and gutka under the brand Pan Parag. KPL was reconstituted as a public limited company in 1994. Till 1999, the company’s operations were jointly handled by Mr. M M Kothari and his two sons, Mr. Deepak Kothari and Mr. Vikram Kothari. However, after a family split in 1999 the group companies were divided. Mr. Deepak Kothari and Mr. M M Kothari took over KPL. Currently, Mr. Deepak Kothari handles the day-to-day operations of KPL. After the split, KPL began to increasingly diversify into merchant trading. With effect from November 2008, the pan masala business and all allied manufacturing activities have been demerged into a separate entity, Pan Parag India Ltd, managed by Mr. Deepak Kothari and his son, Mr. Mitesh Kothari.

Annexure 1 - Details of various bank facilities

* Interchangeable to the extent of Rs. 135 million with Post- Shipment Facility

** Includes sub limit of Rs. 110 million of fund based limit.