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The C-4 hydroxyethyl branch was proposed to be converted from C-4 acetyl branch by an uncharacterized ketoreduction step. Paulomycins (PAUs) are glycosylated antibiotics with potent inhibitory activity against gram positive bacteria and are structurally defined by its unique C-4\u2032 hydroxyethyl branched paulomycose moiety. A novel aldo-keto-reductase, Pau7 was characterized as the enzyme catalyzing the stereospecific ketoreduction of 7\u2032-keto of PAU E (1) to give the C-4\u2032 hydroxyethyl branched paulomycose moiety of PAU F (2). An acyltransferase Pau6 further decorates the C-4\u2032 hydroxyethyl branch of paulomycose moiety of 2 by attaching various fatty acyl chains to 7\u2032-OH to generate diverse PAUs. 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