The Board of directors of Matrix Laboratories at its meeting held today approved the merger of Vera Laboratories Limited (Vera), Fine Drugs and Chemicals Limited (FDCL), Medikon Laboratories Limited (Medikon) and Calibre Engineering Private Limited (Calibre) with itself. The proposed merger is subject to the approval of Shareholders, Honourable High Court of Andhra Pradesh and other regulatory bodies. The appointed date for the merger is 1st January 2004.

Vera Laboratories Limited

Vera's Manufacturing facilities are spread over 33 acres out of the total available area of 56 acres at G Chodavaram, 65Kms from Visakhapatnam and has been approved by US FDA and EU Regulatory authorities. It has seven production blocks with a total reactor capacity of about 300 KL. It also has a small volume production block to facilitate the manufacturing of low volume high value products. It will be a perfect fit into Matrix's business plans in terms of manufacturing capacity, Product profile and effluent handling facilities.

Vera, which commenced commercial production in January 1995, has developed over 30 products during the last few years. The Company has manufactured Triaprofenic Acid (TPA) and Baclofen for the first time in the country and it is the second company to manufacture Nefazodone. Its customer base from Regulated markets includes Watson Pharmaceuticals, Apotex, Lek Pharmaceuticals etc.

As Vera's manufacturing facility is located in a declared chemical zone with elaborate, safe and huge effluent treatment facility of its own, Matrix will be able to transfer some of its difficult manufacturing processes to this unit. It also helps Matrix in terms of Geographical de-risking as all the manufacturing locations of Matrix are located in and around Hyderabad. Vera for the 18 month Period ended 31st Dec 2003, posted a turnover of Rs. 284.7 Mil with a loss of Rs. 200.2 Mil. The present equity capital of Vera is 47467741 Equity Shares of Rs.10 each aggregating to Rs.474.67 Mil

Fine Drugs and Chemicals Limited

FDCL's plant is located at Kazipally which is adjacent to two of the manufacturing plants of Matrix and exclusively handling conversion jobs for Matrix. FDCL for the nine months period ended 31st Dec 2003 posted a turnover of Rs.92.2 Mil and Profit after Tax of Rs.7.27 Mil. The present Equity Capital of FDCL is 6285981 Equity Shares of Rs.10 each aggregating to Rs.62.85mil. Matrix owns 49% of the total equity of FDCL.

Medikon Laboratories Limited

Medikon, located at ANRICH Industrial estate in Bollaram on the outskirts of the city, has the required infrastructure to manufacture sterile formulations in a small way. Matrix owns 100% of the equity of the company. For the nine months period ended 31st Dec 2003, Medikon posted a turnover of Rs. 7.11 Mil with a profit after tax of Rs.0.07Mil. The preent paid up capital of the company is Rs.10.90 Mil

Calibre Engineering Private Limited

Calibre is a small engineering facility basically catering to the requirements of Matrix and located at Jeedimetla. Matrix together with Medikon owns 89% of the equity of the company. For the nine months period ended 31st Dec 2003, Calibre posted a turnover of Rs.0.54 Mil with a profit after tax of Rs.0.29 Mil. The present paid up capital of the company is Rs.1.5 Mil.

Merger Ratio

The merger ratio has been arrived at by the Rambabu & Co, Statutory Auditors and has been approved by the Boards of directors of the concerned companies. The merger ratio is as follows: