Shengtai Pharmaceutical, Inc. Reports Unaudited Third Quarter Fiscal 2009 Financial Results

-- Glucose Product Shipments Increased 18% Year-Over-Year to 22,407 Metric Tons

-- Customer Deposits Rise for New Production

WEIFANG, Shandong, China, May 15 /PRNewswire-Asia-FirstCall/ -- Shengtai Pharmaceutical, Inc. (OTC Bulletin Board: SGTI) ("Shengtai" or "the Company"), a leading manufacturer and distributor of high-quality, pharmaceutical grade glucose products in China, today reported unaudited financial results for the third quarter of fiscal 2009 ended March 31, 2009.

"The global economic environment has impacted our operations thus far in fiscal year 2009, as our third quarter financial results generated lower sales volume and lower average selling prices for our cornstarch and other products when compared to the same period last year," said Mr. Qingtai Liu, Shengtai Pharmaceutical's CEO. "However, we are beginning to see higher level of market activities, as unit shipments for these two segments have increased on a sequential basis. Meanwhile, our glucose product unit shipments posted an 18% year-over-year growth in the last quarter. Glucose revenue growth was 6% in the same period. Lastly, we are also seeing a significant increase in customer deposits during the most recent quarter, an early indication of a pick up in sales in the subsequent quarters."

Mr. Liu continued, "The challenging market conditions have prompted us to initiate a number of cost saving measures throughout our operations which we believe will help us maintain near-term competitiveness. As market conditions improve, we are prepared to leverage our new state-of-the-art manufacturing facility to increase our production utilization rate to meet the growing glucose demand of our customers."

Third Quarter and Nine Months Fiscal 2009 Financial Results

Total revenues for the third quarter of fiscal 2009 were $16.3 million, as compared to $20.7 million the same period last year, and $14.8 million reported in the second quarter of fiscal 2009. Total revenues for the nine months ended March 31, 2009 were $49.2 million, as compared to $65 million for the same period last year.

Sales of glucose products totaled $8.4 million during the third quarter, representing 52% of revenues. Cornstarch sales totaled $3.6 million, or 22% of revenues. Sales of other products totaled $4.3 million, or 26% of revenues. Sales of glucose products for the nine months ended March 31, 2009 totaled $25.9 million, representing 53% of revenues. Cornstarch sales totaled $10.8 million, or 22% of revenues. Sales of other products totaled $12.5 million, or 25% of revenues.

Gross profit for the three months ended March 31, 2009, was $1.0 million compared with $4.5 million the same period last year. Gross margin for the quarter was 6.2%, as compared with 21.6% the same period last year. The decline in gross margin was mainly due to the lower overall sales volumes, and lower average selling prices ("ASP"). Gross profits for the nine months ended March 31, 2009 totaled $6.2 million, a decrease of $8.7 million compared to the same period last year. Gross margin for the nine months ended March 31, 2009 was 12.6%, as compared with 23% the same period last year.

Selling, general and administrative (SG&A) expenses during the quarter were $1.3 million, a decline of $281,754 compared with the third quarter last year. The Company implemented a new sales policy requiring some customers to manage their own shipping and handling, this lowered the Company's overall SG&A expense. Non-cash stock option expenses for the quarter were $158,818. Total SG&A expenses for the nine months ended March 31, 2009 totaled $6.1 million, an increase of $959,990 compared to the same period last year. Total non-cash stock option expenses for the nine months ended March 31, 2009 were $476,454, as compared with $158,818 the same period last year. The Company began granting stock options on January 4, 2008.

Operating loss for the quarter was $304,585 compared with a profit of $2.9 million in the same period last year. Operating income for the nine months ended March 31, 2009 totaled $129,436 as compared with $9.8 million the same period last year.

Net loss for the third quarter 2009 was $661,398, or $0.03 per diluted share compared with net income of $1.9 million, or $0.10 per diluted share the same period last year. Net loss for the nine months ended March 31, 2009 was $505,489, or $0.03 per diluted share compared with net income of $7.3 million, or $0.36 per diluted share the same period last year.

As of March 31, 2009, Shengtai Pharmaceutical had cash and restricted cash totaled $11.2 million. Net cash generated from operating activities for the three month ended March 31, 2009 was $2.0 million.

Business Outlook

Mr. Liu concluded, "The current economic conditions may slow down the demand growth of our cornstarch and other products sales, nonetheless, I am encouraged that our glucose business remains stable and continues to grow. The long-term outlook for our glucose business remains on track. The recently approved healthcare reform spending is designed to expand the healthcare coverage to many people currently without healthcare. Increased government investment and greater product quality control should translate to additional sales opportunities for our high-quality glucose products. As a leading domestic supplier of pharmaceutical grade glucose, we are dedicated to producing products that meet or exceed the highest quality standards. Our modern new production facilities and added capacity, combined with our ability to produce the highest quality products, are key factors that will separate us from our competitors. We will be prepared to take advantage of any additional sales opportunities, especially glucose, resulting from the healthcare reforms. Our stringent cost controls initiatives are designed to help us to remain competitive in the near-term, as we work to build long-term shareholder value."

Conference Call

The Company will host a conference call and webcast on Friday, May 15, 2009 at 8:30 A.M. Eastern Daylight Time / 8:30 P.M. Beijing Time. A question and answer session will follow management's presentation. Ms. Yiru Melody Shi (Chief Financial Officer) and Ms. Haining Michelle Wang (Investor Relations Manager) will be the primary speakers on the call.

To participate, please call the following numbers ten minutes before the call start time:

Phone Number + 1 (877) 407-9205 (North America)

Phone Number + 1 (201) 689-8054 (International)

A live webcast of the conference call will be available by accessing the below website at the Investor Relations page of Shengtai Pharmaceutical's website at http://www.shengtaipharmaceutical.com . Please visit the website at least 15 minutes early to register for the webcast and download any necessary audio software.

A replay of the call will be available through Thursday, May 21, 2009, at 11:59 P.M. Eastern Daylight Time. For the replay, please call:

Phone Number +1 (877) 660-6853 (North America)

Phone Number +1 (201) 612-7415 (International)

Account Number: 286

Conference ID Number: 323305

About Shengtai Pharmaceutical, Inc.

Shengtai Pharmaceutical, Inc. through its wholly owned subsidiary, Shengtai Holding, Inc. (SHI), and the Chinese operating company of Weifang Shengtai Pharmaceutical Co., Ltd., is a leading manufacturer and supplier of pharmaceutical grade glucose used for medical purposes. It also manufactures and supplies glucose and cornstarch products to the food, beverage and industrial production industries in China. For more information about Shengtai Pharmaceutical, Inc., please visit http://www.shengtaipharmaceutical.com .

Forward-looking Statements

Certain statements made in this news release, may contain forward-looking statements concerning the Company's business and products. These statements include, without limitation, statements regarding our ability to prepare the Company for growth, the Company's planned capacity expansion and predictions and guidance relating to the Company's future financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs, but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These factors may include, but are not limited to, such factors as unanticipated changes in product demand especially in the pharmaceutical industry, pricing and demand trends for the Company's products, changes to government regulations, risk associated with operation of the Company's new facilities, risk associated with large-scale implementation of the Company's business plan, the ability to attract new customers, ability to increase its products' applications, cost of raw materials, downturns in the Chinese economy, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. Investors are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

For more information, please contact:

Shengtai Pharmaceutical, Inc.

Ms. Yiru Melody Shi

Chief Financial Officer

Email: shengtaicfo@hotmail.com

Grayling

Eddie Cheung

Investor Relations

Tel: +1-646-284-9414

Email: eddie.cheung@us.grayling.com

Tables Follow

Shengtai Pharmaceutical, Inc.

Consolidated Balance Sheets

As of March 31, 2009 and June 30, 2008

ASSETS

March 31, June 30,

2009 2008

(Unaudited)

CURRENT ASSETS:

Cash $ 2,249,064 $ 3,405,606

Restricted cash 8,992,823 6,763,500

Notes receivable 149,447 458,630

Accounts receivable, net of

allowance for doubtful accounts

of $492,918 and $440,701 as of

March 31, 2009 and June 30,

2008, respectively 6,518,464 7,614,236

Other receivables 249,284 691,215

Inventories 6,929,686 5,039,278

Prepayments 371,267 310,381

Loan to related party 439,500 --

Total current assets 25,899,535 24,282,846

PLANT AND EQUIPMENT, net 71,893,618 69,943,021

OTHER ASSETS:

Investment in Changle Shengshi

Redian Co., Ltd. 3,739,131 3,607,912

Loan to related party - noncurrent -- 437,700

Intangible assets - land use right,

net of accumulated amortization 3,494,976 3,042,183

Total other assets 7,234,107 7,087,795

Total assets $ 105,027,260 $ 101,313,662

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Notes payable - banks $ 13,185,000 $ 10,942,500

Accounts payable 6,289,009 7,669,728

Accounts payable - related parties 637,792 714,776

Short term loans 22,707,500 22,658,270

Accrued liabilities 212,595 261,187

Other payable 2,917,200 2,146,108

Employee loans 841,297 1,382,287

Employee loan - officer 43,549 53,605

Third party loan 192,642 640,228

Customer deposit 1,729,702 804,323

Taxes payable 2,618,424 4,631,252

Current portion of capital lease

obligations 398,862 --

Total current liabilities 51,773,572 51,904,264

LONG TERM LIABILITIES:

Capital lease obligation 4,875,368 --

Other payable - noncurrent 1,424,044 2,653,995

Total long term liabilities 6,299,412 2,653,995

Total liabilities 58,072,984 54,558,259

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:

Preferred stock, $0.001 par value,

5,000,000 shares authorized,

no shares issued and outstanding -- --

Common stock, $0.001 par value,

100,000,000 shares authorized,

19,169,805 and 19,094,805 shares

issued and outstanding as of

December 31, 2008 and June 30,

2008, respectively 19,170 19,095

Paid-in capital 20,464,837 19,987,708

Statutory reserves 3,004,008 2,894,902

Retained earnings 18,521,982 19,136,577

Accumulated other comprehensive

income 4,944,279 4,717,121

Total shareholders' equity 46,954,276 46,755,403

Total liabilities and

shareholders' equity $ 105,027,260 $ 101,313,662

Shengtai Pharmaceutical, Inc.

Consolidated Statements of Income and Other Comprehensive Income

For the three and nine months ended March 31, 2009 and 2008

(Unaudited)

Three months ended Nine months ended

March 31, March 31,

2009 2008 2009 2008

SALES REVENUE $ 16,301,522 $ 20,701,577 $ 49,220,996 $ 65,028,934

COST OF SALES 15,283,929 16,220,665 43,016,707 50,085,971

GROSS PROFIT 1,017,593 4,480,912 6,204,289 14,942,963

SELLING, GENERAL

AND ADMINISTRATIVE

EXPENSES 1,322,178 1,603,932 6,074,853 5,114,863

INCOME (LOSS) FROM

OPERATIONS (304,585) 2,876,980 129,436 9,828,100

OTHER INCOME (EXPENSE):

Earnings on

equity investment 59,524 43,070 92,936 192,826

Other income 60,364 67,451 115,545 177,160

Other expense (4,428) (96,191) (255,540) (300,035)

Interest expense

and other charges (527,987) (738,634) (591,493) (1,674,515)

Interest income 7,548 55,697 104,221 154,101

Other expense,

net (404,979) (668,607) (534,331) (1,450,463)

(LOSS) INCOME BEFORE

PROVISION FOR INCOME

TAXES (709,564) 2,208,373 (404,895) 8,377,637

PROVISION FOR

INCOME TAXES (48,166) 321,220 100,594 1,108,388

NET (LOSS) INCOME (661,398) 1,887,153 (505,489) 7,269,249

OTHER COMPREHENSIVE

INCOME:

Foreign

currency

translation

adjustments (60,568) 1,554,258 227,158 2,966,909

COMPREHENSIVE

(LOSS) INCOME $ (721,966)$ 3,441,411 $ (278,331)$ 10,236,158

(LOSS) EARNINGS

PER SHARE

Basic $ (0.03)$ 0.10 $ (0.03)$ 0.38

Diluted $ (0.03)$ 0.10 $ (0.03)$ 0.36

WEIGHTED AVERAGE

NUMBER OF SHARES

Basic 19,169,805 19,069,805 19,129,146 18,967,857

Diluted 19,169,805 19,845,195 19,129,146 19,959,689

Shengtai Pharmaceutical, Inc.

Consolidated Statements of Cash Flows

For the nine months ended March 31, 2009 and 2008

(Unaudited)

2009 2008

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income $ (505,489) $ 7,269,249

Adjustments to reconcile net income to

cash provided by operating activities:

Depreciation 3,612,903 2,076,992

Amortization 40,225 38,263

Allowance for bad debts 50,387 16,558

Stock based employee compensation 476,454 158,818

Loss (Gain) on equipment disposal 159,269 (91,480)

Gain on disposal of land use right -- (24,783)

Earnings on equity investment (92,936) (192,826)

Amortization of discount on capital

lease obligation 146,681 --

Change in operating assets and

liabilities:

Accounts receivable 1,076,312 (1,108,695)

Notes receivable 310,963 380,411

Other receivables 444,622 1,987,660

Inventories (1,869,045) (1,404,996)

Prepayments (471,355) (620,451)

Accounts payable (1,614,791) (595,474)

Accounts payable - related party (79,896) (1,252,106)

Accrued liabilities (49,430) (568,922)

Accrued liabilities - related party -- 482,160

Other payable 596,396 362,035

Customer deposit 921,757 297,543

Taxes payable (2,031,181) 2,261,984

Net cash provided by operating

activities 1,121,846 9,471,940

CASH FLOWS FROM INVESTING ACTIVITIES:

Other receivables - related party -- 2,570,100

Purchase plant and equipment (9,679) (154,262)

Proceeds from equipment disposal 5,125,750 35,266

Additions to construction in progress (4,810,511) (7,725,153)

Acquisition of land use right (480,356) (324,031)

Purchase of software program -- (5,426)

Advances on plant and equipment

purchase -- (9,876,385)

Loan repayment from related party -- 678,200

Proceed from land use right disposal -- 30,826

Net cash used in investing

activities (174,796) (14,770,865)

CASH FLOWS FROM FINANCING ACTIVITIES:

Decrease in restricted cash (2,201,573) 3,407,360

Borrowings on notes payable - banks 16,607,430 5,425,600

Payments on notes payable - banks (14,410,680) (10,579,920)

Borrowings on short term loans 13,722,365 12,750,160

Payments on short term loans (13,766,300) (11,380,196)

Borrowings on employee loans 392,147 1,412,554

Payments on employee loans (938,635) (459,082)

Borrowings on employee loan - officer -- 45,187

Other receivables - shareholder (10,252) 1,273,495

Borrowings on third party loan 113,650 2,898,529

Payments on third party loan (563,715) (2,826,195)

Payment on other payable - equipment

purchase (1,033,127) (614,633)

Cash proceeds from warrants exercised 750 506,493

Net cash (used in) provided by

financing activities (2,087,940) 1,859,352

EFFECTS OF EXCHANGE RATE CHANGE IN CASH (15,652) 248,470

DECREASE IN CASH (1,156,542) (3,191,103)

CASH, beginning of period 3,405,606 6,420,439

CASH, end of period $ 2,249,064 $ 3,229,336