EXTRANCHECK: POST-SHIPMENT VERIFICATION: HIKAL LTD.,

UNCLAS NEW DELHI 002060 SIPDIS SIPDIS USDOC FOR 532/OEA/M. NICKSON-D/JAY HATFIELD USDOC FOR 3131/USFCS/OIO/ANESA/KREISSL USDOC FOR 4530/MAC/ANESA/OSA ICE HQ FOR STRATEGIC INVESTIGATIONS STATE FOR EB/ESP E.O. 12958: N/A TAGS: ETTC ETRD BEXP IN SUBJECT: EXTRANCHECK: POST-SHIPMENT VERIFICATION: HIKAL LTD., BANGALORE, LICENSE NO. D346099 REF: USDOC 02794 ¶1. Unauthorized disclosure of the information provided below is prohibited by Section 12(c) of the Export Administration Act. ¶2. Export Control Officer (ECO) Paul Cushman, Former ECO Michael Rufe and BIS FSN Prem Narayan conducted a Post-shipment Verification (PSV) at Hikal Ltd. (Hikal),Bangalore, on April 17, 2007. ¶3. BIS requested a PSV at Hikal, a private sector company, located at: 82/A KIADB Industrial Area, Jigani Anekal Taluk, Bangalore 562105, Tel: 91-80-27826351-54, Fax: 080-2782-5377, email: ravi_d@hikal.com. Hiakl was listed as the Ultimate Consignee; Lutz-Pumpen GmbH and Co., Wertheim, Germany as the Foreign Purchaser; and Shanbhag and Asociates (Shanbhag),Mumbai as the Intermediate Consignee for 1 Model 5702-080 one-inch Air operated double diaphragm pump controlled under ECCN 2B350. The license applicant was Lutz-Jesco (Lutz-Jesco) America Corp., Rochester, NY. ¶4. BIS Team met with D. Ravi (Ravi),Vice President (Pharma Manufacturing) and Vijayeendra Katageri (Katageri),Senior Manager - Commercial, Hikal. ¶5. Hikal representatives were aware of the BIS regulations. They have been party to previous BIS export licenses. Former ECO Rufe and BIS FSN conducted a favorable Pre-license Check (PLC) for this transaction on November 17, 2005. Katageri stated that Shanbbag is the exclusive distributor for Lutz-Jesco in India and they dealt with Shanbhag for this transaction. Hikal representatives did not have any documentation pertaining to this shipment. Katageri stated that all Hikal purchases are centralized and processed through the Hikal's headquarters located in Mumbai. He promised that he would obtain a set of documentation and forward to BIS New Delhi. To date, he has not sent the transaction documentation. ¶6. At the time of conducting a PLC for this transaction, Hikal representatives provided a copy of the Lutz-Jesco quotation, Lutz-Jesco Technical Detail, Hikal Purchase Order, and Hikal End-Use Certificate acknowledging that Hikal will abide by the export license conditions. Katageri did not recall receiving final BIS export license conditions either from Lutz-Jesco or Shanbhag. ¶7. Ravi made a presentation on Hikal's business activities. He confirmed the stated end-use of the air-operated pump for unloading/transferring of liquids, mainly hydrochloric acid, from tanks/drums into various processes for manufacturing active pharmaceutical ingredients and bulk drugs. He stated that approximately five Lutz-Jesco air-operated pumps of different sizes are operating at Hikal plant including the pump covered under this license. Earlier, Hikal used the locally made pumps that had a short life span and required "vigorous" maintenance on regular basis. The transfer of chemicals into various manufacturing processes is a zero percent error process. Appropriate steps are required to protect the environment and pump leakage is unacceptable. The air-operated pumps made of kynar and Teflon are sophisticated and have long life spans. These pumps are widely used to prevent corrosion caused by caustic liquids. BIS Team was given a tour of the Hikal plant's Reactor Area where the pump was operating with two other Lutz-Jesco pumps. BIS Team noted the serial numbers of all three pumps. The serial numbers for these pumps are: 123902, 126138, and 123899 and part no. of all three is 5702-080. BIS Team was also shown two stand-by pumps of Lutz-Jesco Model 5702-080, their serial numbers are: 123899 and 123529. The Hikal building is guarded 24 hours a day. ¶8. Established in 1988, Hikal is a public limited company, manufactures agricultural chemicals, intermediate bulk drugs, active pharmaceutical ingredients (APIs) and chemical reactions. Hikal is a 100 percent export-oriented unit and exports its production to manufacturers of capsules, tablets and injectable solutions in developed countries including the United States, Canada, and the U.K. It has expertise in chemical reaction technologies and in handling hazardous chemicals. ¶9. It has manufacturing facilities at 5 locations including two in Maharashtra, two in Bangalore and one in Gujarat. It is a member on the Global Scientific Advisory Board. Hikal has its own R&D center, which employs approximately 76 people. It conducts research and manufactures pharmaceuticals on a contractual basis for its clients. Hikal representatives stated that its state-of-the-art, multipurpose production plants are ISO 9001-2000 compliant. Hikal follows several international standards including the Canadian cGMP (Current Good Manufacturing Practices) standard. The plant at Bangalore is approved by the U.S. Food and Drug Administration (FDA),Australian Therapeutic Goods Administration (TGA) and the World Health Organization. Hikal employs 710 employees at all five locations. Its sales turnover for FY 2005-06 was approximately $55 million. ¶10. Recommendation: Post recommends Hikal Ltd. as a reliable recipient of the controlled U.S. origin commodity. All indications are that the listed commodity is used in accordance with U.S. export control regulations. (PSCUSHMAN/PNARAYAN) Pyatt