DRAFT RED HERRING PROSPECTUSDated [ ], 2006

Please read Section 60B of the Companies Act, 1956(The Draft Red Herring Prospectus will be updated upon RoC filing)

100% Book Building Issue

Asiatic Colour-Chem Industries LimitedOur Company was incorporated on January 9, 1995 by the Registrar of Companies, Gujarat, Dadra & Nagar Haveli.

Under the Companies Act, 1956 (No.1 of 1956) vide Registration No. 04-24128 of 1994-95Registered Office: 1503, G. I. D. C., Phase - 1, Naroda, Ahmedabad - 382 330 (India)

Tel: (91 79) 6630 5920, 6630 5940; Fax: (91 79) 6630 5950; Email: info@asiaticcolour.comWebsite: www. asiaticcolour.com; Contact Person: Mr. Dilip Agrawal

PUBLIC ISSUE OF 3,539,000 EQUITY SHARES OF RS. 10 EACH FOR CASH AT A PRICE OF RS. [ ] PER EQUITY SHAREAGGREGATING RS. [ ] MILLION BY ASIATIC COLOUR-CHEM INDUSTRIES LIMITED ('ASIATIC' OR 'THE COMPANY'OR 'THE ISSUER'). THE ISSUE WOULD CONSTITUTE 35% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OFTHE COMPANY.

Price Band: Rs. [ ] To Rs. [ ] Per Equity Share of Face Value of Rs. 10 EachThe Issue Price is [ ] times of the Face Value at the Lower End of the Price Band and [ ] times

of the Face Value at the Higher End of the Price BandIn case of revision in the Price Band, the Bidding Period shall be extended for three additional working days after such revision, subject to theBidding Period not exceeding 10 working days. Any revision in the Price Band, and the revised Bidding Period, if applicable, shall be widelydisseminated by notification to the Bombay Stock Exchange Limited (BSE) and The National Stock Exchange of India Limited (NSE), whoseonline IPO system will be available for bidding, by issuing a press release and by indicating the change on the website of the Book RunningLead Manager ("BRLM") and the terminals of the members of the Syndicate.

This Issue is being made through a 100% Book Building Process wherein up to 50% of the Net Issue to the Public will be allocated to QualifiedInstitutional Buyers (QIBs) on a proportionate basis, subject to valid bids being received at or above the Issue Price. Out of the portion availablefor allocation to the QIBs, 5% will be available for allocation to Mutual Funds. Mutual Fund applicants shall also be eligible for proportionateallocation under the balance available for the QIBs. Further, not less than 15% of the Net Issue shall be available for allocation on a proportionatebasis to Non Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to RetailIndividual Bidders, subject to valid bids being received at or above the Issue Price. We have not opted for grading of this Issue.

RISK IN RELATION TO THE FIRST ISSUEThis being the first public issue of Equity Shares of the Company, there has been no formal market for the Equity Shares of the Company. Theface value of the Equity Shares is Rs.10 per Equity Share and the Issue Price is [ ] times of the face value. The Issue Price (as determined by theCompany, in consultation with the Book Running Lead Managers on the basis of assessment of market demand for the Equity Shares offeredby way of book building) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. Noassurance can be given regarding an active and/or sustained trading in the Equity Shares of the Company or regarding the price at which theEquity Shares will be traded after listing.

GENERAL RISKSInvestments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless theycan afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decisionin this Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue including the risksinvolved. The Equity Shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India("SEBI"), nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specific attention of the investors is invited tothe section titled "Risk Factors" on page [ ] of this Draft Red Herring Prospectus.

ISSUER'S ABSOLUTE RESPONSIBILITYThe Issuer Company having made all reasonable inquiries, accept responsibility for and confirm that this Draft Red Herring Prospectuscontains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information contained inthis Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions andintentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Draft Red Herring Prospectusas a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

ISSUE PROGRAMME BID / ISSUE OPENS ON: [ ] BID / ISSUE CLOSES ON: [ ]

BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUE

Intime Spectrum Registry LimitedC-13, Pannalal Silk Mills Compound,L.B.S. Marg, Bhandup (West), Mumbai - 400 078.Tel No: (022) 2596 0320Fax No: (022) 2596 0329Website: www.intimespectrum.comEmail: asiatic-ipo@intimespectrum.comContact Person: Mr. Salim Shaikh

CANARA BANKMerchant Banking DivisionVarma Chambers, No.11,Homji Street,Fort, Mumbai-400001Ph: 022-2267 7405/406,Fax: 022-2267 7404AMBI Regn No:AMBI/012Email: mbdmcity_asiatic@canbank.co.inWeb Site: www.canbankindia.comContact Person: Mr. P. Sitaram

LISTINGThe Equity Shares offered through this Draft Red Herring Prospectus are proposed to be listed on the BSE and the NSE. We have receivedin-principle approval from BSE and NSE for the listing of our Equity Shares pursuant to letters dated [ ] and [ ], respectively. For purposesof this Issue, the Designated Stock Exchange is [ ].

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TABLE OF CONTENTS

Section I Definitions and Abbreviations

Company related terms

Issue related terms

Conventional and General Terms

Technical/Industry Related Terms

Abbreviations

Section II General

Certain conventions and use of market data

Forward Looking Statements

Section III Risk Factors

Section IV Introduction

Summary

The Issue

Summary of Financial Information

General Information

Capital Structure

Section V Objects of the Issue

Objects of the Issue

Basic Terms of the Issue

Basis for Issue Price

Statement of Tax Benefits

Section VI About Us

Industry Overview

Our Business

Key Industry Regulations and Policies

Our History and certain Corporate matters

Our Management

Promoters and their background

Currency of presentation

Dividend Policy

Section VII Financial Information

Financial Statements of our company

Financials of our Group companies

Management Discussions and Analysis

Section VIII Legal and other Regulatory Information

Outstanding Litigations

Statutory approvals and licenses

Other regulatory and statutory Disclosures

Section IX Issue Related Information

Terms of the Issue

Issue Structure

Issue procedures

Restrictions on Foreign ownership of Indian securities

Section X Description of Equity Shares andTerms of the Articles of Association

Main provisions of Articles of Association

Section XI Other Information

Material Contracts and Documents for inspection

Section XII Declaration

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SECTION I – DEFINITIONS AND ABBREVIATIONS

DEFINITIONS:

Term Description “We”, “us”, “our”, “Issuer”, “the Company” “our Company” “ACCIL” and “Asiatic”.

Unless the context otherwise indicates or implies, refers to Asiatic Colour–Chem Industries Limited.

“Asiatic Group” Unless the context otherwise indicates or implies, refers to Asiatic Colour–Chem Industries Limited and the other Promoter Group companies.

COMPANY RELATED TERMS

Term Description ACCIL Asiatic Colour–Chem Industries Limited Articles Articles of Association of our Company Auditors The statutory auditors of our Company, Ashokkumar. S.Gupta & Co. Board/ Board of Directors Board of Directors of our Company Corporate Office of theCompany

Plot No. 306-A, 1503/4, G. I. D. C., Phase – 1, Naroda, Ahmedabad –382 330 (India)

Directors Directors of our Company, unless otherwise specified Memorandum Memorandum of Association of our Company Project The purpose of the present issue of equity shares as mentioned in the

Section “Objects of the issue on page ( ).

Registered Office of theCompany

Plot No. 1503, G. I. D. C., Phase – 1, Naroda, Ahmedabad – 382 330 (India)

ISSUE RELATED TERMS

Term Description Allocation Allocation relating to shares means determination of the number of shares that

a bidder is entitled to pursuant to his bid application Allotment Unless the context otherwise requires, the acceptance by the our Board

through a Resolution of the offer made by a successful bidder to acquire theshares allocated to him in this issue

Allottee The successful Bidder to whom the Equity Shares are/ have been allotted

Banker(s) to the Issue [•] Bid An indication made by a bidder during the bidding period to make an offer to

subscribe to the Equity Shares of our Company at a price within the Price Band, including all revisions and modifications thereto

Bid / Issue Opening Date The date on which the Syndicate shall start accepting Bids for the Issue, whichshall be the date notified in a widely circulated English national newspaper, a Hindi national newspaper and Gujarati newspaper with wide circulation

Bid / Issue Closing Date The date after which the Syndicate will not accept any Bids for the Issue,which shall be notified in a widely circulated English national newspaper aHindi national newspaper and a Gujarati newspaper with wide circulation

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Term Description Bid Amount The highest value of the optional Bids indicated in the Bid cum Application

Form and payable by the Bidder on submission of the Bid in the Issue Bid cum Application Form The form in terms of which the Bidder shall make an indication to make an

offer to purchase Equity Shares of our Company in terms of the Red HerringProspectus and the Bid cum Application Form

Bidder Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus and the Bid cum Application Form

Bidding / Issue Period The period between the Bid/ Issue Opening Date and the Bid/ Issue ClosingDate inclusive of both days and during which prospective Bidders can submittheir Bids

Book Building Process/Method

Book building route as provided in Chapter XI of the SEBI DIP Guidelines, interms of which this Issue is being made

BRLMs Book Running Lead Managers to the Issue in this case being Canara Bank and UTI Securities Limited

CAN/ Confirmation ofAllocation Note

Means the note or advice or intimation of allocation of Equity Shares sent tothe Bidders who have been allocated Equity Shares after discovery of the IssuePrice in accordance with the Book Building Process

Cap Price The higher end of the Price Band, above which the Issue Price will not befinalized and above which no Bids will be accepted

Cut-off Price The Issue Price finalized by our Company in consultation with the BRLMs Designated Date The date on which funds are transferred from the Escrow Account to the

Public Issue Account after the Prospectus is filed with the ROC, followingwhich the Board of Directors shall allot Equity Shares to successful Bidders towhom allocation has been made.

Designated StockExchange

[•]

Draft Red HerringProspectus

This Draft Red Herring Prospectus issued in accordance with Section 60B ofthe Companies Act, which does not contain complete particulars on the priceat which the Equity Shares are offered and the size (in terms of value) of the Issue

Equity Shares Equity shares of our Company of Rs. 10 each unless otherwise specified in thecontext thereof

Escrow Account Account opened with the Escrow Collection Bank(s) for the Issue and inwhose favour the Bidder will issue cheques or drafts in respect of the Bid Amount when submitting a Bid

Escrow Agreement Agreement to be entered into by our Company, , the Registrar, BRLMs, theSyndicate Member and the Escrow Collection Bank(s) for collection of the BidAmounts and where applicable, refunds of the amounts collected to the Bidders on the terms and conditions thereof

Escrow Collection Bank(s) The banks which are clearing members and registered with SEBI as Banker tothe Issue with whom the Escrow Account will be opened and in this case being [●]

First Bidder The Bidder whose name appears first in the Bid cum Application Form orRevision Form

Floor Price The lower end of the Price Band, below which the Issue Price will not befinalized and below which no Bids will be accepted

Issue The issue of 35,39,000 Equity Shares at a price of Rs. [●] each for cash, aggregating Rs. [●] by the Company under this Draft Red Herring Prospectusand the Prospectus

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Term Description Issue Price The final price at which Equity Shares will be issued and allotted in terms of

the Red Herring Prospectus or the Prospectus. The Issue Price will be decidedby the Company in consultation with the BRLMs on the Pricing Date

Issue Size 35,39,000 Equity Shares to be issued to the Investors at the Issue Price Margin Amount The amount paid by the Bidder at the time of submission of his/her Bid, being

10% to 100% of the Bid Amount Minimum Bid/allotmentlot

[•] Equity shares and in multiples of [•] equity shares thereof

Mutual Funds A mutual fund registered with SEBI under the SEBI (Mutual Funds) Regulations, 1996

Mutual Fund Portion

5% of the QIB Portion available for allocation to Mutual Funds only, out of theQIB Portion

Non Institutional Bidders All Bidders that are not QIBs or Retail Individual Bidders and who have Bid for Equity Shares for an amount more than Rs. 1,00,000

Non Institutional Portion The portion of the Issue available for allocation to Non Institutional Bidders Pay-in Date Bid Closing Date or the last date specified in the CAN sent to Bidders, as

applicable Pay-in-Period (a) With respect to Bidders whose Margin Amount is 100% of the Bid

Amount, the period commencing on the Bid/ Issue Opening Date; andextending until the Bid/ Issue Closing Date; and

(b) With respect to Bidders whose Margin Amount is less than 100% of the Bid Amount, the period commencing on the Bid/ Issue Opening Date andextending until the closure of the Pay-in Date

Price Band Price band of a minimum price (floor of the price band) of Rs. [•] and the maximum price (cap of the price band) of Rs. [•] and includes revisions thereof

Pricing Date The date on which our Company in consultation with the BRLMs finalize theIssue Price

Promoter Mr. Mahesh K. Agrawal Promoter Group Unless the context otherwise requires, refers to those companies/entities

mentioned in the section titled “Our Promoters and Promoter Group” on page[●] of this Draft Red Herring Prospectus

Prospectus The Prospectus to be filed with the ROC in terms of Section 60 and 60B of theCompanies Act, containing, inter alia, the Issue Price that is determined at the end of the Book Building process, the size of the Issue and certain otherinformation

Public Issue Account Account opened with the Bankers to the Issue to receive monies from theEscrow Account on the Designated Date

QIB Margin Amount An amount representing at least 10% of the Bid Amount QIB Portion The portion of the Issue available for allocation to QIBs Qualified InstitutionalBuyers or QIBs

Public financial institutions as specified in Section 4A of the Companies Act, FIIs registered with SEBI, scheduled commercial banks, mutual fundsregistered with SEBI, multilateral and bilateral development financialinstitutions, venture capital funds registered with SEBI, foreign venture capitalinvestors registered with SEBI, state industrial development corporations,insurance companies registered with Insurance Regulatory and DevelopmentAuthority, provident funds (subject to applicable law) with minimum corpusof Rs. 250 million and pension funds with minimum corpus of Rs. 250 million

Refund Account Account opened with the Escrow Collection Bank, from which refunds of thewhole or part of the Bid Amount, if any, shall be made

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Term Description Registrar to the Issue Registrar to the Issue, in this case being Intime Spectrum Registry Limited,

having its registered office as indicated on the cover page Retail Individual Bidder(s) Individual Bidders (including HUFs and NRIs) who have not Bid for Equity

Shares for an amount more than Rs. 100,000 in any of the bidding options inthe Issue

Retail Portion The portion of the Issue available for allocation to Retail Bidder(s) Revision Form The form used by a Bidders to modify the quantity of Equity Shares or the Bid

Price in the Bid cum Application Form or any previous Revision Form(s) RHP or Red HerringProspectus

The Red Herring Prospectus which will be filed with ROC in terms of Section60B of the Companies Act, at least three days before the Bid/ Issue OpeningDate

Stock Exchanges BSE and NSE, referred to as collectively Syndicate The BRLMs and the Syndicate Members Syndicate Agreement Agreement between the Syndicate, the Company in relation to the collection of

Bids in this Issue Syndicate Members Intermediaries registered with SEBI to act as Underwriters and appointed by

BRLMs to be a syndicate member in this issue. TRS/ TransactionRegistration Slip

The slip or document issued by the Syndicate to the Bidder as proof ofregistration of the Bid

Underwriters Members of the syndicate who are signatories to the underwriting agreement. Underwriting Agreement The Agreement between us and the underwriters to be entered into on or after

the Pricing Date

CONVENTIONAL AND GENERAL TERMS

Term Description Act or Companies Act Companies Act, 1956 and amendments thereto Depositories Act Depositories Act, 1996 as amended from time to time DP/ Depository Participant A depository participant as defined under the Depositories Act, 1996

FII(s) Foreign Institutional Investors (as defined under the FEMA (Transfer or Offerof Security by a Person Resident outside India) Regulations, 2000) registeredwith SEBI under applicable laws in India

Indian GAAP Generally Accepted Accounting Principles in India NAV Net Asset Value being paid up equity share capital plus free reserves

(excluding reserves created out of revaluation) less deferred expenditure notwritten off (including miscellaneous expenses not written off) and debitbalance of Profit and Loss account, divided by number of issued equity shares

NRI Non Resident Indian, is a person resident outside India, as defined under FEMA and the FEMA (Transfer or Issue of Security by a Person ResidentOutside India) Regulations, 2000

OCB Means and includes an entity defined in Clause (xi) of Regulation 2 of theForeign Exchange Management (Deposit) Regulations, 2000 and which was in existence on the date of commencement of the Withdrawal of GeneralPermission to Overseas Body Corporate Regulations, 2003 and immediatelyprior to such commencement was eligible to undertake transactions pursuantto the general permission granted under the Foreign Exchange Management(Deposit) Regulations, 2000

SIA Secretariat for Industrial Assistance

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TECHNICAL AND INDUSTRY TERMS

Term Description DMAI The Dyes Manufacturer's Association of India ETP Effluent Treatment Plant CRIS CRISIL Research & Information Services Ltd ICMA The Indian Chemical Manufacturers Association ICC Indian Chemical Council COD Chemically Dissolved Oxygen BOD Biologically Dissolved Oxygen CLRI Central Leather Research Institute SO DYESTUFF Synthetic Organic Dyestuff SOD Synthetic Organic Dyes

ABBREVIATIONS A/c Account AGM Annual General Meeting Amt Amount AS Accounting Standards issued by the Institute of Chartered Accountants of

India AY Assessment Year BSE Bombay Stock Exchange Limited CAGR Compounded Annual Growth Rate CDSL Central Depository Services (India) Limited EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation ECS Electronic Clearing System EGM Extraordinary General Meeting EPS Earnings per share € or Euro Euro FEMA

Foreign Exchange Management Act, 1999 read with rules and regulationsthereunder and amendments thereto

FII(s) Foreign Institutional Investors Financial Year/ Fiscal/ FY Period of twelve months ended March 31 of that particular year FIPB Foreign Investment Promotion Board GDP Gross Domestic Product GoI/Government Government of India HNI High Networth Individual HUF Hindu Undivided Family I.T. Act The Income Tax Act, 1961, as amended from time to time Indian GAAP Generally Accepted Accounting Principles in India IPO Initial Public Offering Mn/mn Million MICR Magnetic Ink Character Recognition NA Not Applicable NEFT National Electronic Fund Transfer NOC No Objection Certificate NR Non-resident

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NRE Account Non Resident External Account NRO Account Non Resident Ordinary Account NSDL National Securities Depository Limited NSE The National Stock Exchange of India Limited P/E Ratio Price/Earnings Ratio PAN Permanent Account Number allotted under the Income Tax Act, 1961 PIO Persons of Indian Origin RBI The Reserve Bank of India ROC Registrar of Companies, Gujarat, Dadra & Nager Haveli RONW Return on Net Worth Rs. Indian Rupees RTGS Real Time Gross Settlement SCRA Securities Contracts (Regulation) Act, 1956, as amended from time to time SCRR Securities Contracts (Regulation) Rules, 1957, as amended from time to time SEBI The Securities and Exchange Board of India constituted under the SEBI Act,

1992 SEBI Act Securities and Exchange Board of India Act 1992, as amended from time to

time SEBI Guidelines SEBI (Disclosure and Investor Protection) Guidelines, 2000 as amended from

time to time Sec. Section US / USA United States of America USD or $ or US $ United States Dollar

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SECTION II: GENERAL

CERTAIN CONVENTIONS AND USE OF INDUSTRY AND MARKET DATA In this Draft Red Herring Prospectus, the terms “we”, “us”, “our”, “the Company”, “our Company”, “Asiatic Colour-Chem”, “Asiatic” unless the context otherwise indicates or implies, refers to Asiatic Colour chem. Industries Ltd. In this Draft Red Herring Prospectus, unless the context otherwise requires, all references to one gender also refers to another gender and the word “Lac” means “one hundred thousand, the word “million (million)” means “ten lac”, the word “Crore” means “ten million” and the word “billion (bn)” means “one hundred crore”. Throughout this Draft Red Herring Prospectus, all figures have been expressed in million. All references to “Rupees” or “Rs.” are to Indian Rupees, the official currency of the Republic of India. All references to “US$” or “U.S. Dollars” are to the United States Dollars, the official currency of the United States of America. Unless stated otherwise, the financial data in this Draft Red Herring Prospectus is derived from our restated financial statements prepared in accordance with Indian GAAP and the SEBI Guidelines included in this Draft Red Herring Prospectus or our audited financial statements. Our Fiscal Year commences on April 1 and ends on March 31 of the next year, so all references to a particular Fiscal Year are to the twelve-month period ended March 31 of that year. In this Draft Red Herring Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off. For definitions and abbreviations used in this DRHP, please read the section titled “Definitions and Abbreviations” on page i of this Draft Red Herring Prospectus. In the section titled “Main Provisions of Articles of Association of “Asiatic Colour-Chem Industries Limited”, defined terms have the meaning given to such terms in the Articles of Association of the Company. The degree to which the Indian GAAP financial statements included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting practice and Indian GAAP. Any reliance by persons not familiar with Indian Accounting practices on the financial disclosures presented in this DRHP should accordingly be limited. Market and industry data used in this Draft Red Herring Prospectus has been obtained or derived from industry publications and sources. These publications generally state that the information contained therein has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured and accordingly, no investment decisions should be made based on such information. Although we believe industry data used in this Draft Red Herring Prospectus is reliable, it has not been verified. Similarly, internal Company reports, while believed by us to be reliable, have not been verified by any independent sources. Further, the extent to which the market and industry data presented in this Draft Red Herring Prospectus is meaningful depends on the reader’s familiarity with and understanding of the methodologies used in compiling such data. There are no standard data gathering methodologies in the industry in which we conduct our business, and methodologies and assumptions may vary widely among different industry sources.

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FORWARD-LOOKING STATEMENTS

This Draft Red Herring Prospectus contains certain “forward-looking statements”. These forward looking statements generally can be identified by words or phrases such as “aim”, “anticipate”, “believe”, “expect”, “estimate”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “will continue”, “will pursue” or other words or phrases of similar import. Similarly, statements that describe our strategies, objectives, plans or goals are also forward-looking statements. All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Actual results may differ materially from those suggested by the forward looking statements due to risks or uncertainties associated with our expectations with respect to, but not limited to, our ability to successfully implement our strategy, our growth and expansion, technological changes, our exposure to market risks, general economic and political conditions in India and our overseas markets which have an impact on our business activities or investments, the monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes and changes in competition in our industry. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the following: General economic and business conditions in India; Our ability to successfully implement our strategy; Changes in the value of the Rupee and other currency changes; Changes in Indian and international interest rates; Allocations of funds in the form of subsidies/grants by the government towards Synthetic

Organic Dyes and Chemical Industries; Changes in laws and regulations that apply to our clients, suppliers, and the Synthetic

Organic Dyes & Intermediates, Leather, Fur, Textiles, Ink, Leather chemicals industries; Increasing competition and the conditions of our clients, suppliers and the Synthetic Organic

Dyes & Chemical industry; and Changes in political conditions in India.

For further discussion of factors that could cause our actual results to differ, see the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” on pages [●] and [●] of this Draft Red Herring Prospectus respectively. Neither our Company, nor the BRLMs, nor any member of the Syndicate nor any of their respective affiliates has any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, our Company and the BRLMs will ensure that investors in India are informed of material developments until the time of the grant of listing and trading permission by the Stock Exchanges.

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SECTION III RISK FACTORS Prospective investors should carefully consider and evaluate the risks and information described below, in addition to the other information contained in this Draft Red Herring Prospectus, before making any investment decision relating to our Equity Shares. The occurrence of any of the following events could have a material adverse effect on our business, results of operation, financial condition and prospects and cause the market price of our Equity Shares to fall significantly and you may lose all or part of your investment. Prior to making an investment decision, prospective investors should carefully consider all of the information contained in this Draft Red Herring Prospectus, including the financial statements. Unless stated otherwise, the financial data in this section is as per our financial statements prepared in accordance with Indian GAAP. In this section, any reference to "we", "us" or "our" refers to Asiatic Colour Chem Industries Ltd.. Note: Unless specified or quantified in the relevant risk factors below, we are not in a position

to quantify the financial or other implication of any risks mentioned herein under: RISK IN RELATION TO OUR PROJECT 1) We have not obtained statutory approvals and have not entered into any definitive

agreements to utilize the net proceeds of the Issue.

We intend to use the net proceeds of the Issue for the purposes described in the section titled “Objects of the Issue” on page [●]. We have identified land for the proposed project and are in advanced stage of negotiation. All the figures included under the section titled “Objects of the Issue” are based on our own estimates which are based on quotations obtained from various vendors. To the extent the orders have not been placed, the project cost may change at the time of placing the final orders.

2) We have not obtained any third party appraisals for our Project.

Our funding requirements and the deployment of the proceeds of the Issue are based on management estimates and have not been appraised by any bank or financial institution. We may have to revise our management estimates from time to time and consequently our funding requirements may also change. Our estimates for the Project may exceed the value that would have been determined by third party appraisals, which may require us to reschedule our Project expenditure and have a bearing on our expected revenues and earning.

3) Our future growth requires additional working capital, which may not be available on

terms acceptable to us.

Our business has high working capital requirements. We intend to pursue a strategy of funding our major working capital requirements from banks and other financial institutions. We may not be successful in obtaining these funds in a timely manner, or on favorable terms or at all.

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RISK IN RELATION TO COMPANY 1) We are in a business where we handle hazardous chemicals

We are in the business of manufacturing Synthetic Organic Dyes (SOD). In view of toxic and corrosive nature of chemicals used in production, hazards exist in storage, loading, unloading, transport. Occurrence of a major fire or accident could damage our assets, personnel, inventories and operating premises and we may suffer disruptions in our operations. In the event of such incidents occurring we will also incur costs to remedy arising from such incidents. In addition we may have to compensate for any losses or damages suffered by third parties as a result of such incidents. Should these costs be significant, our financial performance and reputation may be adversely affected.

2) We are vulnerable to volatility in prices of our raw materials and supply constraints.

The main raw materials used in the manufacture of our SOD products are soda ash and sodium nitrite. The raw material cost accounts for more than 60 percent of the net sales of our Company. The raw material being derived from crude oil and naphtha, the prices of these inputs tend to be volatile and move in line with their feedstock costs. Crude oil prices directly affect the prices of toluene, phenol and numerous other ingredients that are key raw materials in the Synthetic Organic Dyes industry in which we operate. Prices of organic raw materials are expected to remain volatile.

We import raw materials from China and such imports constituted 44.94% of our total raw material requirements during FY 2005-06. The prices of raw materials we purchase from our suppliers may fluctuate due to changes in demand and supply conditions for these raw materials in international markets. In the event of any significant increase in the prices of these raw materials and if we are unable to pass on fully such increase in the prices to our customers, our profitability will be adversely affected. If we are unable to ensure adequate and timely supply of raw materials our production plans would be adversely affected impacting our profitability adversely.

3) About 52% of our export sales were to 6 clients. Client concentration and downward

pricing pressure from our customers may affect our financials.

We have been exporting to these 6 clients for over three years and thus have long standing relationships though there are no marketing contracts or agreements with them. In view of the concerns on environmental pollution, many manufacturers of the products we make, have closed down their units in these countries during the last few years leading to these clients looking for association with suppliers like us. We cannot however assure you that such relationship or association with these clients will continue.

The prices of our SOD products have been relatively volatile during FY 2005 and 2006. Should there be any significant decline in the prices of our products, our sales and profitability may be adversely affected.

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4) Inability to protect our intellectual property may adversely affect our performance. Our ability to compete successfully and achieve future growth will depend in part on our ability to protect our trade secrets or proprietary information relating to our manufacturing processes and/or technical know-how in relation to our products.

We have entered into confidentiality agreements with our Directors, Executive officers ad some our senior technical staff who may come into possession of such trade secrets proprietary information or technical know how in the course of their employment with us to safeguard against disclosure of the same during their employment and for a prescribed period thereafter. However there is no assurance that they will comply with their confidentiality obligations. In the event of disclosure of our trade secrets and proprietary information by any one of them, in breach of their confidentiality obligations to third parties who may be our competitors, our ability to compete against such competitors may be materially affected which would in turn impact adversely on our business and profitability.

As on date, we have applied for brand registration of our product "AERONIL" in India. We cannot assure you that any of our pending applications would be granted registrations or will not be challenged or if granted registration, will not be invalidated or circumvented or will offer us any meaningful protection. Further, the laws of some countries in which we market our products may not protect our intellectual property rights adequately. We are unable to assure you as to the future viability or value of any of our intellectual property or that the steps taken by us to protect the proprietary rights of our company will be adequate.

5) We are susceptible to foreign exchange fluctuations which could result in us incurring

foreign exchange losses.

We are a 100% Export Oriented Unit. Our revenue and costs are denominated in several currencies. Our sales are denominated in US Dollars, and Euros and our purchases are denominated in Indian Rupees and US Dollars. Our operating expenses including manufacturing overheads, labour costs, distribution costs and administrative expenses are denominated in Indian Rupees. Our foreign currency exchange risk arises mainly from the mismatch between the currency of our sales, purchases and operating expenses. To the extent that our sales, purchases and operating expenses are not matched in the same currency we are susceptible to foreign exchange losses. For example any significant adverse fluctuation in the USD and Euros against Rupees will result in foreign exchange losses to us which will adversely impact on our performance.

6) Substantial part (80%) of turnover for FY 2006 caters to the international leather products

industry where fashion and latest trends play a significant role in customer preferences. Our buyers demand regular upgrades to our products requiring us to continuously invest in R&D. We have not earmarked significant amounts towards R&D.

We recognise that our ability to undertake R & D and improve colour combinations, textures and other features of our products will play a major role in our future growth. We have a team of technically qualified, experienced personnel for our R & D Labs. The Labs are equipped with most advanced instruments. However we cannot assure you that our R&D efforts will be successful to cater to growing and sophisticated needs of our customers and we will be able to maintain our marketing strategies that we currently deploy.

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7) We are currently enjoying certain tax incentives which are expiring in the near future Our company currently enjoys tax incentives which are expiring in the near future. In accordance with Section 10B of the Indian Income Tax Act, export profits of an approved 100% export oriented undertaking (EOU) are exempt from income tax for a period of 10 consecutive years commencing from the assessment year in which the EOU commenced its manufacturing of qualifying products for exports, or not more than to financial year ended March 31, 2010, whichever is earlier. We commenced products in the financial year 2000-01 and the tax incentive will be valid till FY 2010. The loss of such tax incentives will adversely impact our profitability.

8) We are exposed to interruptions in the supply of electricity, gas and water:

Currently our production processes at all our SOD plants require a continuous and adequate supply of electricity, gas and water to ensure that the production processes are uninterrupted and smooth running. We rely on the State Electricity Board, Gujarat, for supply of electricity. We also rely on GIDC for supply of water and Adani Energy Limited for supply of gas.

Any shortage or interruption in the future to the supply of electricity gas and water by external parties to our plants for extended periods of time will disrupt our operations or increase our production costs. It will also affect our ability to continue production operations smoothly and may damage our reputation, thereby eroding customer confidence in us which may cause us to lose our existing customers or adversely affect our ability to attract new customers. Our operating results and financial conditions will be adversely affected as a result.

9) Our customers generally do not enter into long term contracts:

Our customers generally do not enter into any long term contracts with us. Our ability to maintain close and satisfactory relationships with our customers and to consistently manufacture products that meet their requirements is therefore important to our business. There is no assurance that these customers will continue to purchase our products from us or that they will not scale down their orders. In the event that they are able to obtain similar products from our competitors at more favourable terms or for any other reason, our financial condition will be adversely affected.

10) The products we manufacture are subject to certain conditions

We manufacture Leather Dyes, Textile Dyes, Ink Dyes, Finishing Dyes, Dye Intermediates, Leather Chemicals etc. which are reserved exclusively for the manufacture by small scale sector undertakings as defined under the Industries (Development and Regulation) Act, 1951. Our company is not a small scale sector undertaking. However since we are 100% EOU we are permitted to manufacture these products. It is necessary for us to continue to be an EOU to continue to manufacture these products.

11) We face competition in India and internationally

We operate in a competitive environment as our principal products, synthetics organics dyestuffs are produced by a large number of other manufacturers in India and abroad. Players in this market generally compete with each other on key attributes such as technical competence, quality of products and services, pricing and track record. We compete with our competitors on the basis of our track record of quality, technical competence, distribution

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channels, logistical facilities and after sales relationships. There is however no assurance that we will continue to compete successfully in future.

12) We are subject to product liability exposure

We are exposed to potential claims in relation to the quality and use of some of our products, in particular the improper use of our dyestuff products which may result in personal injury or death. There is no assurance that product liability claims will not arise owing to the nature of our business. Defending any product liability claim will not only incur substantial legal costs but may also divert our management’s attention away from managing the business. Further any judgment or adverse findings to us on such claim will harm our reputation and will have an adverse impact on our revenue and profitability.

13) We are subject to public liability exposure

We may be exposed to public liability claims as we deal with products which are made from hazardous chemicals. In the event of any accident, we may incur clean up costs or may be liable to pay damages, for inter alia, personal injuries or loss of or damage to property suffered by the public or other third party. Pursuant to statutory requirements set out in the Factories Act and the Public Liability Act we have taken up public liability insurance of upto Rs. 100,000 per accident subject to total limit of Rs. 30 million per year. We regularly review our insurance coverage to ensure that they are sufficient to meet these regulatory requirements and business risk exposure. However, in the event that our insurance does not adequately cover our liability arising from such accidents our financial performance may be adversely affected. Such accidents will also result in an increase in our company’s insurance premiums and will accordingly affect our financial results.

The extent of our insurance may not be sufficient to all risks and we would need to enhance the sum insured under various policy products.

14) Our operations are subject to environmental and health related laws and regulations in

India and the countries to which we export and compliance with such laws and regulations may be expensive

Our production operations are subject to laws and regulations, in particular environmental and health related laws and regulations in India and abroad. Under these laws and regulations we are required to control the use of as well as restrict the discharge or disposal of hazardous or environmentally objectionable by products of our production process.

If we breach or fail to comply with these laws and regulations, penalties or fines may be imposed on us, our directors and officers responsible for such breach or non compliance and may also be subjected to imprisonment. Further our manufacturing licences may be suspended, withdrawn or terminated in the event of such breach or non-compliance thereby disrupting or production operations. Should these penalties or fines be significant or should any of our manufacturing licences be suspended, withdrawn or terminated, our financial performance will be adversely affected.

If there are new regulations or laws imposed we may incur additional expenditure or costs or we may be required to acquire additional equipment in order to comply with such new laws or regulation. Where such expenditure or costs are significant, our profitability will be adversely affected.

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15) Failure to retain services of our key personnel will adversely affect our operations and results

Our success to date has been largely due to the contributions of our key management. Our Chairman and Managing Director Mr. Mahesh K. Agarwal with the support of key managerial personnel is responsible for formulating and implementing our business growth, corporate development and overall business strategies, overseeing marketing and production operations and have been instrumental in our growth and expansion. The loss of services of any of them without timely and suitable replacements and our inability to attract and retain qualified and experienced persons could have an adverse impact on our business.

16) Failure to collect our receivables could impart our profits:

Our trade receivables of approximately Rs. 276.65 millions accounted for approximately 67.80%, 56.38% and 42.87% of our current assets, total assets and turnover respectively for the FY ended 31-3-2006. The average collection period is 140 days. Therefore our financial position, profitability and cash flows are dependent to a large extent on the credit worthiness of our customers and their ability to pay us on a timely basis. Further as our customer base grows, we will be exposed to credit risks from new customers. We are unable to assure you that the risk of default by our customers will not increase in future.

17) Our indebtedness and the conditions and restrictions imposed by our financing

agreements could restrict our ability to conduct our business and operations

There are certain restrictive covenants in the agreements we have entered into with certain banks and financial institutions for short term and long term borrowings and secured and unsecured loans. Most of our loans are secured by way of mortgage of fixed assets and hypothecation of current assets both present and future. In case we are not able to pay our dues in time, the same could adversely impact our operations. In addition to the above our financing arrangements also include restrictive covenants that require us to obtain consents of our lenders prior to carrying out certain activities and entering into certain transactions. Some of these restrictive covenants require the prior consent of the said banks/financial institutions and include, for example, restrictions pertaining to the declaration of dividends, alteration of the capital structure, entrance into any merger/amalgamation, expenditure in new projects, change in key personnel and change in the constitutional documents. Although we have received consent from our lenders for this Issue, these restrictive covenants may also affect some of the rights of our shareholders. Failure to obtain such consents can have significant consequences on our capacity to expand and therefore adversely affect our business and operations.

18) Our failure to obtain and renew regulatory approvals required for our business may

detrimentally affect our business operations

Certain registrations and permits are required by us for carrying on our business operations and if we are unable to obtain these registrations and permits the same may adversely impact our business operations. For the details of the approvals required for our business, which are currently pending, please refer to Page [●] of this Draft Red Herring Prospectus.

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19) There are certain audit qualifications in our auditor report.

Our auditor has made certain audit qualification in its auditor report. We had accepted a total amount of Rs. 9.93 million during the financial year ended March 31, 2006 from certain persons from whom acceptance of such monies is deemed to be accepting public deposits under the provisions of Sections 58A and 58AA of the Companies Act. 1956. Since we had not followed the procedure of issuing an Advertisement prescribed in the Rules to the Companies Act, 1956, our Auditors have viewed that it is as a non-compliance of these Rules. We have filed our Annual reports including the Auditors report with the Registrar of Companies and the ROC has not so far passed any order in this matter. It is possible that our Company and the directors may be faced with penalty proceedings if the ROC or other authorities initiate such action.

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20) We have certain contingent liabilities, which have not been provided for.

As on March 31, 2006 contingent liabilities not provided for, aggregated to Rs. 9.91 million towards letters of credit issued by bank for import of raw material and capital goods and Rs. 60.15 million towards excise duty payable against solvency certificate given by the Managing Director. There are also certain disputed tax liabilities as stated in following risk factors. In the event any of these contingent liabilities gets crystallized, our financial condition may be adversely affected. For further information please see section titled “Financial Statement” on page [●] of this Draft Red Herring Prospectus.

21) There are certain disputes and proceedings –if these are finally determined against us , our

earnings may be materially impacted.

The following amounts have not been deposited on account of dispute: a. Disputed TDS in Rs. millions

A.Y 2001-02 5.689 A.Y.2002-03 2.619 A.Y2003-04 6.931

b. Disputed Income tax Liability in Rs. Millions

AY 1999-00 20.46 AY 2001-02 2.165 AY 2001-02 1.351 AY2003-04 0.563

There was a search conducted by the Directorate of Revenue Intelligence (DRI), Government of India, at our Company’s premises on 20th and 21st September 2006. During the course of the search, the DRI officials have seized certain books and records for investigation. In the meantime, we have paid an amount of Rs. 1.25 cr favouring The Asst Commissioner of Customs, ICD, Sabarmati without any prejudice. We are yet to receive any further communication from DRI in this regard. The implications of the search are not ascertainable at this stage.

22) There are certain claims pending against our Company, which are discussed under the

section titled “Outstanding Litigations” beginning on page no. [●] of this Draft Red Herring Prospectus. Some of these claims, if finally determined against us may affect our earnings and the financial position of our business.

23) One of our associates Orio Shanghai Colour Pvt. Ltd. (spouse of our promoter is a

substantial shareholder in this company) is in the same line of business. This company operates as a separate legal entity and supplies to clients with whom we have no relationship. However, there could be potential conflicts of interests.

Also our promoter Mr. Mahesh Agrawal is the proprietor of 2 firms viz, M/s. Pamasol International and M/s. Shiva International, which are in the same line of business. For further details about these companies/entities please refer to page [•] of this DRHP.

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RISKS ARISING OUT OF EXTERNAL FACTORS 1) Our sales and profitability may be adversely affected by delivery and production

disruptions of our raw materials and supplies and by other adverse conditions.

Delivery disruptions for various reasons including infrastructure bottlenecks at Ports, airports, railways, weather conditions such as typhoons, floods and events such as political turmoil, social unrest and strikes would lead to delayed or lost deliveries of our products or raw materials. A disruption in our raw material supply would affect our production schedule. In the event of any disruption of supply of raw materials and if we are unable to procure an alternative supply on a timely basis or at similar prices, our sales and profitability may be adversely affected. Weather conditions such as typhoons and floods may also affect our delivery to our customers. In the event that we are required to compensate our customers for losses arising from such delay which may be significant our profitability will be adversely affected.

2) We are dependent on the political, economic and social conditions in the countries in

which we operate and in which we intend to expand our business:

We sell our products to customers from various countries in Europe and Asia. As a result our business and future growth is dependent on the political economic, regulatory and social conditions of these countries. Any change in the policies implemented by the Governments of any of these countries which result in currency and interest rate fluctuations, capital restrictions and changes in duties and tax that are detrimental to our business could adversely affect our operations, financial performance and future growth.

3) Any significant change in the Government's economic liberalization and deregulation

policies could disrupt the business and adversely affect the financial performance of our Company.

The Government of India has traditionally exercised and continues to exercise a dominant influence over many aspects of the economy. Its economic policies had and could continue to have a significant effect on public & private sector entities, including our Company, on market conditions, prices of Indian securities, including in the future on our Company's Equity Shares. Any significant change in the Government's policies or any political instability in India could adversely affect the business and economic conditions in India and could also adversely affect the business, future financial performance and the price of our Company's Equity Shares.

4) Sensitivity to the economy and extraneous factors

Our Company's performance is highly correlated to the performance of the economy and the financial markets. The health of the economy and the financial markets in turn depends on the domestic economic growth, state of the global economy and business and consumer confidence, among other factors. Any event disturbing the dynamic balance of these diverse factors would directly or indirectly affect the performance of our Company.

5) The price of our Equity Shares may be volatile.

The Equity Shares of our Company are currently not listed. The price of our Equity Shares on the Indian Stock Exchanges may fluctuate after listing as a result of several factors including -

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Volatility in Indian and global securities market; Our results of operations and performance; Performance of our competitors and perception in the Indian market about investment in

the Dyestuff Industry; Adverse media reports, if any, on our Company or the Dyestuff Industry; Changes in the estimates of our performance or recommendations by financial analysts; Significant development in India’s economic liberalization and de-regulation policies;

and significant development in India’s fiscal and environmental regulations.

There can also be no assurance that the price at which our equity shares are initially traded will correspond to the prices at which our Equity Shares will trade in the market subsequent to this Issue.

6) The Issue price of our Equity Shares may not be indicative of the market price of our

Equity Shares after the Issue.

The Issue Price of our Equity Shares will be determined by the Book Building Process. This price will be based on numerous factors (discussed in the section titled ‘Basis of Issue Price’ beginning from page no. [•] of this Draft Red Herring Prospectus) and may not be indicative of the market price for our Equity Shares after the Issue.

The market price of our Equity Shares could be subject to significant fluctuations after the Issue, and may decline below the Issue Price. We cannot assure the investors that they will be able to resell their Equity Shares at or above the Issue Price. Among the factors that could affect our share price are:

Quarterly and other variations in the rate of growth of our financial indicators, such as

earnings per share, net income and revenues; Changes in revenue or earnings estimates or publication of research reports by analysts; Speculation in the press or investment community; General market conditions; and Domestic and international economic, legal and regulatory factors unrelated to our

performance. 7) Terrorist attacks and other acts of violence or war may affect our business and our

profitability

Terrorist attacks as well as armed conflicts such as the recent wars may negatively affect our operations. They may directly cause damage to the operations of our suppliers and customers. Such terrorist attacks or armed conflicts may also affect the demand for our products, our production capacity and our ability to deliver our products to our customers in a timely manner which could in turn have an adverse impact on our revenue and our business.

Notes to risk factors 1. Public issue of 35,39,000 Equity Shares for cash at a price of Rs. [•] per Equity Share

aggregating Rs. [●] million. The Issue would constitute 35% of the fully diluted post issue paid-up capital of the Company.

2. The average cost of acquisition of Equity Shares by our Promoters is Rs. 0.45 per share.

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3. Our net worth before the Issue (as of March 31, 2006) was Rs. 176.88 million and the book value per Equity Share as of March 31, 2006 was Rs. 546.34 per Equity Share.

4. Our Company has issued the following Equity Shares as bonus shares by capitalization of

free reserves

5. Investors may please note that in the event of over-subscription, allotment shall be made on a

proportionate basis in consultation with the Designated Stock Exchange.

6. Investors may contact the BRLM or the Compliance officer for any compliant/clarification/information pertaining to the issue. For contact details of the BRLM please refer to the front cover page.

7. All information shall be made available by our Company and the BRLM to the public and investors at large and no selective or additional information would be available for a section of the investors in any manner whatsoever.

8. There are no contingent liabilities as on 31st March 2006, except as mentioned in the Auditor’s report.

9. Investors are advised to refer to the paragraph ‘Basis for issue price’ on page [●] before making an investment in this issue.

10. Bidders should note that on the basis of name of the Bidders, Depository Participant’s name, Depository Participant-Identification number and Beneficiary Account Number provided by them in the Bid cum Application Form, the Registrar to the Issue will obtain from the Depository demographic details of the Bidders such as address, bank account details for printing on refund orders and occupation. Hence, Bidders should carefully fill in their Depository Account details in the Bid-cum-Application Form and also update their demographic details with their respective depositary participant.

11. For details of related party transactions, please refer to the Auditors Report on page [●].

12. Other than as disclosed in the ‘Related Party Information’ in this Draft Red Herring Prospectus, the Promoters / directors / key management personnel of the Company have no interest other than reimbursement of expenses incurred or normal remuneration or benefits.

13. No part of the Issue proceeds will be paid as consideration to promoters, directors, key managerial personnel, associate or Group Companies.

14. This Issue is being made through a 100% Book Building Process wherein up to 50% of the Net Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers, of which 5% shall be reserved for Mutual Funds. Further, not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid bids being received at or above the Issue Price.

15. Trading in Equity Shares of our Company for all the investors shall be in dematerialized form only.

Sr. No Date of issue No. of shares issued as bonus

Ratio

i) 21-03-1997 231250 5:2 ii) 11-08-2006 6248375 193:10

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SECTION IV – INTRODUCTION

SUMMARY You should read the following summary together with the risk factors and the more detailed information about us and our financial data included in this Draft Red Herring Prospectus. Note: Unless otherwise indicated, all financial and statistical data relating to the industry in

the following discussion is derived from internal Company reports & data, industry publication and estimates. This data has been reclassified in certain respects for purposes of presentation. For more information, see “Forward Looking Statements and Market Data” on page no. [●] in this DRHP.

Industry The dyestuff sector is one of the most important segments of the chemical industry in India, having forward and backward linkages with a variety of sectors like textiles, leather, paper, polymers, printing ink, medical use, electronics and foodstuffs. From being an importer in the 1950’s, it has now emerged as a global supplier of colourants that includes all types of Dyestuffs and Dye Intermediates particularly for reactive, acid, vat and direct dyes. Indian Scenario The Indian dyestuff industry is valued at approximately US$3 bn. The per capita consumption is still very low (50 gms) as compared to the world average (400 gms). The Indian dyestuff industry is only about 40 years old though a few MNCs set up dyestuff units in the pre independence era. Like the rest of the chemical industry, the dyestuff industry is also highly fragmented. The industry is characterized by the co-existence of a small number of players in the organized sector (around 50 units) and a large number of small manufacturers (around 1,000 units) in the unorganized sector. The distribution of these units is skewed towards with western region (Maharashtra and Gujarat) accounting for 90%. In fact, nearly 80% of the total capacity is in the state of Gujarat, where there are nearly 750 units. India’s share in the world market is estimated at 7%. The Indian Dyestuff industry has emerged as the second largest producer of dyes and dyes intermediates in the Asian Region. Our Business We are in the business of manufacturing Synthetic Organic Dyes mainly for the leather and fur industry. We are the only 100% Export Oriented Unit for this product in India. Synthetic Organic Dyes is a broad term which includes dyes and pigments. A dye is a coloured substance or an organic compound, which when applied in a solution to a fabric, imparts a colour resistant to washing. The Indian Synthetic Organic Dyes Industry growing by over 50 per cent during the last decade, India is now the second largest producer of dyes and dye intermediates in Asia after China. Synthetic Organic Dyes segment of the Indian Chemical Industry has been identified as one of the core growth areas. As India integrates itself with the world market, this segment could play a leading role in shaping the performance of Indian Industry.

Today there are about 50 units in the organized sector and 1000 units in the small scale, with a total annual production of about 1,30,000 tonnes p.a. or about 7 per cent of the world production. The world market of Dyes, Pigments and Dye Intermediates is estimated at approx value of US $

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23 Billion. Currently, over 80% of dyes are consumed by the Textile Industries. However, in view of new applications in various areas, percentage of consumption by Textile Industries is expected to decrease.

Indian Synthetic Organic Dyes are being exported to East, South and West Asia, Africa, USA, European Countries, of which US alone accounts for almost 20 %. From a meager export of 1.5 million US dollar in 1963-64, export during 1979-80 reached a level of 35 million US dollar and has touched over 1.1 billion US dollar during 2004--2005. The domestic Synthetic Organic Dyess industry plans to target export turnover of $2billion by the year 2010, raising its global market share from 6% to 10%.

Our Competitive Strengths 1) Established player in the Export Market 2) Our ability to source raw materials at competitive prices 3) Geographically Diversified and Longstanding customer base 4) Latest and Environmentally friendly Process and Technology 5) Quality Systems

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THE ISSUE

Equity Shares offered: Fresh Issue by our Company

3,539,000 Equity Shares

Issue Price

Rs. [●] per Equity Share

Net Issue to the Public

3,539,000 Equity Shares

Of which: (A) Qualified Institutional Buyers

portion (QIBs)

1,769,500 Equity Shares (Allocation on a proportionate basis) Of the above 1,769,500 Equity Shares, 88,475 Equity Shares shall be available for allocation to Mutual Funds The balance 1,681,025 Equity Shares shall be available to all QIBs, including Mutual Funds

(B) Non-Institutional Portion

530,850 Equity Shares (Allocation on a proportionate basis)

(C) Retail Portion

1,238,650 Equity Shares (Allocation on a proportionate basis)

Note: Under-subscription, if any, in any of the categories would be allowed to be met with spillover from the other categories, at the sole discretion of our Company and the BRLM. Equity Shares outstanding prior to the Issue

6,572,125 Equity Shares of face value of Rs.10/- each

Equity Shares outstanding after the Issue

10,111,125 Equity Shares of face value of Rs.10/- each

Use of Issue proceeds

Please see section titled “Objects of the Issue” on page no. [•] of this Draft Red Herring Prospectus for additional information.

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SUMMARY OF FINANCIAL INFORMATION The following summary financial information is derived from the restated financial statements of our Company for the Fiscal 2002, 2003, 2004, 2005 and 2006 as described in the Auditors Reports in the section titled “Financial Statement” on page [●] of this Draft Red Herring Prospectus. The financial statements have been prepared in accordance with Indian GAAP, the Companies Act and have been restated in accordance with SEBI Guidelines. The financial summary and operating information presented below should be read in conjunction with the financial statements, including the notes thereto included in “Financial Statements” and the “Management Discussion and Analysis” on pages [●] and [●] respectively of this Draft Red Herring Prospectus. Summary of Profit and loss account as restated:

(Rs. In million)

2006 2005 2004 2003 2002 INCOME Sales 645.89 532.12 510.95 551.58 370.99 Of Products Manufactured by the Co. 639.88 517.36 495.09 525.27 370.99 Of products Traded by the Company 6.02 14.76 15.87 26.30 export benefit - - - - - Increase/(Decrease) in Stocks (0.65) 10.23 (2.59) 7.52 9.86 Other Income 0.05 0.02 0.05 0.15 0.97 Total Income 645.29 542.37 508.41 559.25 381.82 EXPENDITURES Cost of Traded Goods 5.80 14.25 15.29 24.89 - Raw Material Consumed 470.50 383.87 357.77 388.64 280.83 Manufacturing Expenses 70.19 59.84 57.87 55.01 39.88 Employees Emoluments 8.15 7.66 7.80 5.96 5.08 Administrative Expenses 6.27 6.18 6.51 4.97 4.29 Selling & Distribution Exp. 31.38 38.87 37.28 42.74 22.76 Preliminary Exp. W/off - 0.01 0.01 0.01 0.01 Donation - 0.07 - 0.12 0.04 Total 592.29 510.75 482.53 522.34 352.89 Profit before Int.,Dep. and Tax 53.00 31.62 25.88 36.91 28.93 Depreciation 4.14 3.71 3.41 3.15 2.92 Profit before Interest and Tax 48.86 27.90 22.48 33.76 26.01 Financial Expenses 19.07 17.20 13.81 12.98 12.10 Net Profit Before Tax 29.79 10.70 8.67 20.78 13.92 Less :Provision for Taxation Current Tax 2.34 0.06 - 0.82 Deferred Tax 1.46 Less : Income Tax Provision not req. 0.68 0.34 0.01 0.79 Add: Deferred Tax Liab for Pr.Yrs - - 9.02 7.56

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Profit After Tax 26.77 10.31 17.68 10.94 13.13

Less/(Add):Prior Period Adj.(net) 6.32 - - - (0.06)

NPAT after adj. prior period item 33.10 10.31 17.68 10.94 13.07 Summary of Assets and Liabilities as restated:

2006 2005 2004 2003 2002 A) Fixed Assets Gross Block 100.62 87.25 75.25 67.51 62.81 Less : Depreciation 20.89 17.52 13.81 10.58 7.43 Net Block 79.73 69.73 61.45 56.93 55.38 Add: Capital Work in Progress 2.14 4.07 0.49 4.04 2.71 Total (A) 81.87 73.80 61.94 60.97 58.09 B) Investment 0.00 0.00 0.00 0.00 0.00 C) Current Assets, Loans & Advances Inventories 82.59 94.36 73.82 78.02 64.08 Sundry Debtors 276.65 212.80 173.44 164.90 140.73 Cash & Bank Balance 14.76 16.11 38.11 10.69 15.31 Loans & Advances 34.02 48.57 36.78 12.14 15.66 Total (C) 408.02 371.85 322.16 265.76 235.79 D) LIABILITIES & PROVISIONS Secured Loans 195.67 143.84 148.77 127.54 121.85 Unsecured Loans 16.80 13.26 0.55 1.53 2.12 Current Liabilities & Provisions 100.55 144.39 100.57 72.12 64.34 Deferred Tax Liabilities 9.02 Total (D) 313.02 301.50 249.90 210.21 188.31 E) NET WORTH (A+B+C-D) 176.88 144.15 134.20 116.51 105.57 F) REPRESENTED BY: Share Capital (A) 3.24 3.24 3.24 3.24 3.24 Reserve & Surplus 173.64 140.91 130.96 113.28 102.35 Less Revaluation Reserves - - - - - Net Reserve and Surplus (B) 173.64 140.91 130.96 113.28 102.35 Miscellaneous Expenditure ( C) - - 0.01 0.01 0.02 NET WORTH (A+B-C) 176.88 144.15 134.20 116.51 105.57

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GENERAL INFORMATION

Our Company was incorporated on January 9, 1995 by the Registrar of Companies, Gujarat, Dadra & Nagar Haveli. Under the Companies Act, 1956 (No.1 of 1956) vide Registration No. 04-

24128 of 1994-95

Registered Office: 1503, G. I. D. C., Phase – 1, Naroda, Ahmedabad – 382 330 (India) Tel: (91 79) 5530 5920, 5530 5940; Fax: (91 79) 5530 5950; Email: info@asiaticcolour.com

Website: www. asiaticcolour.com; Contact Person: Mr. Mr. Anil Arora Registration Number: AABCA6297RXM001

Registered with the Registrar of Companies, Gujarat, Dadra & Nagar Haveli at: GHB Complex, Opp. Rupal Park, Near Ankur Cross road, Naranpura, Ahmedabad 380013

Factory Unit-I: Asiatic Colour-Chem Industries Ltd Plot No.1503, GIDC, Phase 1 Naroda, Ahmedabad-382330 Gujarat Ph No: 91 79 6630 5941 Fax No: 91 79 6630 5950 Unit -II Asiatic Colour-Chem Industries Ltd Plot No. 1504, GIDC, Phase 1 Naroda, Ahmedabad-382330 Gujarat Ph No: 91 79 6630 5941 Fax No: 91 79 6630 5950 China Office: Asiatic Colour-Chem Industries Ltd Shanghai Representative office RM1013, novel Building, 887 Huaihai Road (M) Shanghai-200020, P.R.China Ph: +0089-21-64673821 Fax: +0086-21-64715502 Board of Directors

Name of Director Designation Mr. Mahesh Kashiram Agrawal Chairman & Managing Director Mr. Ashwani Huzursaran Saini Director Mr. Anil Kumar Arora Non executive and Independent Director Mr. Mehta Bhumit M. Non executive and Independent Director

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For detailed profile of our Directors, please refer to the section titled ‘Our Management’ on page [●] of this Draft Red Herring Prospectus. Issue Management Team Book Running Lead Manager

CANARA BANK Merchant Banking Division AMBI Regn No:AMBI/012 Varma Chambers, No. 11, Homji Street, Fort, Mumbai – 400 001 Ph: 022-2267 7405/406 Fax: 022-2267 7404 E-Mail: mbdmcity_asiatic@canbank.co.in Web Site: www.canbankindia.com Contact Person: Mr. P. Sitaram

UTI Securities Limited (Subsidiary of Securities Trading Corporation of India Limited) AMBI Registration No: AMBI/083 1st Floor, Dheeraj Arma, Anant Kanekar Marg, Station Road Bandra (East), Mumbai – 400 051. Tel: (022) 6751 5805 Fax: (022) 6702 3194 Website: www.utisel.com Email: asiatic.ipo@utisel.com Contact Person: Mr. Abhijit Diwan/ Mr. Saurabh Vijay

Registrar to the Issue

Intime Spectrum Registry Limited C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai – 400 078. Tel No: (022) 2596 0320 Fax No: (022) 2596 0329 Website: www.intimespectrum.com Email: asiatic-ipo@intimespectrum.com Contact Person: Mr. Salim Shaikh Statutory Auditors to the Company M/s. Ashokumar S. Gupta & Co. Chartered Accountants 203, New Cloth Market, 1st Floor Ahmedabad - 380 002. Ph No: 91 79 2212 1039

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Legal Advisor to the Issue S.R. Legal Advocates & Legal Consultants 415, Rex Chambers 17/19, Walchand Hirachand Marg Ballard Estate Mumbai - 400 001. Tel: 91 22 2262 6061/5574 1310 Email: srlegal2002@yahoo.com Bankers to the Company State Bank of India Naroda Ind. Estate Branch, G. I. D. C., Naroda, Ahmedabad – 382330 Tel: (079) 22822241 Fax: (079) 22823470 Email: cm.01045@sbi.co.in Bankers to the Issue and Escrow Collection Banks [●] The Bankers to the Issue and Escrow Collection Banks shall be finalized before filing the

RHP with RoC. Syndicate Member(s) [●] The Syndicate member(s) shall be finalized before filing the RHP with RoC. Brokers to the Issue All members of the recognized Stock Exchanges would be eligible to act as Brokers to the Issue. Company Secretary Mr. Koushal Gupta 1503/4 GIDC Phase I Naroda Ahmedabad 382330 Tel: 00 91-79-66305900 Fax: 00 91-79-22820766 Email: info@asiaticcolour.com Website: www.asiaticcolour.com Compliance Officer Mr. Dilip Agrawal 1503/4 GIDC Phase I Naroda Ahmedabad 382330 Tel: 00 91-79-66305900 Fax: 00 91-79-22820766 Email: info@asiaticcolour.com Website: www.asiaticcolour.com

28

Investors can contact the Compliance Officer or the Registrar in case of any pre-issue or post-issue related problems, such as non-receipt of letters of allocation, credit of allotted Equity Shares in the respective beneficiary accounts or refund orders etc. Credit Rating This being an issue of Equity Shares, credit rating is not required. Trustees This being an issue of Equity Shares, appointment of trustees is not required. Project Appraisal and Monitoring Agency The project is not appraised by any Bank/Financial Institution/Merchant Banker. [•] has been appointed as the monitoring agency to oversee the utilization of Issue proceeds. Grading of Issue The company has not opted for grading of its securities and therefore no credit rating agency has graded the issue. Withdrawal of the Issue Our Company, in consultation with the BRLM, reserves the right not to proceed with the Issue anytime after the Bid/Issue Opening Date without assigning any reason therefor. In the event of withdrawal of the Issue anytime after the Bid/Issue Opening Date, our Company will forthwith repay, without interest, all monies received from the applicants in pursuance of the Draft Red Herring Prospectus. If such money is not repaid within 8 days after our Company become liable to repay it, i.e. from the date of withdrawal, then our Company, and every Director of our Company who is an officer in default shall, on and from such expiry of 8 days, be liable to repay the money, with interest at the rate of 15% per annum on application money. Book Building Process Book building refers to the collection of Bids from investors, which is based on the Price Band, with the Issue Price being finalized after the Bid/Issue Closing Date. The principal parties involved in the Book Building Process are: 1. Our Company 2. The Book Running Lead Manager; and 3. The Syndicate Members who are intermediaries registered with SEBI or registered as brokers

with the Stock Exchange(s) and eligible to act as underwriters. The BRLM appoints the Syndicate Members.

The SEBI DIP Guidelines has permitted an issue of securities to the public through the 100% Book Building Process, wherein up to 50% of the Issue shall be available for allocation to QIBs on a proportionate basis out of which 5% shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the Qualified Institutional Buyers Portion shall be available for allocation on a proportionate basis to all Qualified Institutional Buyers, including

29

Mutual Funds, subject to valid Bids being received at or above Issue price. Further, not less than 15% of the Issue shall be available for allotment to Non Institutional Bidders and not less than 35% of the Issue shall be available for allotment to Retail Individual Bidders on a proportionate basis, subject to valid Bids being received at or above the Issue Price. We will comply with the SEBI DIP Guidelines for this Issue. In this regard, we have appointed the BRLM to procure subscriptions to the Issue. The process of book building, under SEBI DIP Guidelines, is relatively new and the investors are advised to make their own judgment about investment through this process prior to making a Bid in the Issue. Pursuant to recent amendments to SEBI DIP Guidelines, QIBs are not allowed to withdraw their Bid after the Bid/Issue Closing Date. Please refer to the section entitled “Terms of the Issue” on page [●] of this Draft Red Herring Prospectus for more details. Steps to be taken by the Bidders for bidding: 1. Check eligibility for bidding (see the section titled “Issue Procedure - Who Can Bid” on page

[•] of this Draft Red Herring Prospectus); 2. Ensure that the Bidder has a demat account and the demat account details are correctly

mentioned in the Bid-cum-Application Form; 3. Ensure that the Bid-cum-Application Form is duly completed as per instructions given in this

Draft Red Herring Prospectus and in the Bid-cum-Application Form. Bid/Issue Program

Bid/Issue opens on: __________________

Bid/Issue closes on: __________________

Bids and any revision in Bids shall be accepted only between 10 am and 3 pm (Indian Standard Time) during the Bidding Period as mentioned above at the bidding centres mentioned on the Bid cum Application Form except that on the Bid/Issue Closing Date, the Bids shall be accepted only between 10 am and 3 pm (Indian Standard Time) and uploaded till such time as permitted by the BSE and the NSE on the Bid/Issue Closing Date. Investors please note that as per letter no. List/smd/sm/2006 dated 03rd July 2006 and letter no. NSE/IPO/25101-6 dated 06th July 2006 issued by BSE and NSE respectively, bids and any revision in Bids shall not be accepted on Saturdays and holidays as declared by the Exchanges. The Price Band will be decided by us in consultation with the BRLM. The announcement on the Price Band shall also be made available on the websites of the BRLM and at the terminals of the Syndicate. We reserve the right to revise the Price Band during the Bidding Period in accordance with SEBI Guidelines. The cap on the Price Band should not be more than 20% of the floor of the Price Band. Subject to compliance with the immediately preceding sentence, the floor of the Price and can move up or down to the extent of 20%. In case of revision in the Price Band, the Bidding/Issue Period will be extended for three additional days after revision of Price Band subject to the Bidding/Issue Period not exceeding 10 working days. Any revision in the Price Band and the revised Bidding/Issue Period, if applicable, will be widely disseminated by notification to the BSE and the NSE, by issuing a press release, and also by indicating the change on the web sites of the BRLM and at the terminals of the Syndicate.

30

Underwriting Agreement After the determination of the Issue Price and prior to filing of the Prospectus with RoC, we will enter into an Underwriting Agreement with the Underwriters for the Equity Shares proposed to be issued through the Issue. It is proposed that pursuant to the terms of the Underwriting Agreement, the BRLM shall be responsible for bringing in the amount devolved in the event that the Syndicate Members do not fulfill their underwriting obligations. The Underwriters have indicated their intention to underwrite the following number of Equity Shares: (This portion has been intentionally left blank and will be completed prior to filing of the Prospectus with RoC)

Name and Address of the Underwriters

Indicative Number of Equity shares to be Underwritten

Amount Underwritten (Rs. in Lacs)

Canara Bank Merchant Banking Division Varma Chambers, No.11, Homji Street Fort, Mumbai – 400 001 Ph: 022-2267 7405/406 Fax: 022-2267 7404 AMBI Regn No:AMBI/012 Email: mbdmcity_asiatic@canbank.co.in Website: www.canbankindia.com Contact Person: Mr P. Sitaram

[•] [•]

[•] [•] [•] [•] [•] [•]

Total [•] [•] The above-mentioned amount is indicative underwriting and would be finalized after pricing and actual allocation. The above Underwriting Agreement is dated [•]. In the opinion of our Board of Directors (based on a certificate given by the Underwriters), the resources of all the above mentioned Underwriters are sufficient to enable them to discharge their respective underwriting obligations in full. All the above-mentioned Underwriters are registered with SEBI under Section 12(1) of the SEBI Act or registered as brokers with the stock exchange(s). Allocation among Underwriters may not necessarily be in proportion to their underwriting commitments. Notwithstanding the above table, the BRLM and the Syndicate Member(s) shall be responsible for ensuring payment with respect to Equity Shares allocated to investors procured by them. In the event of any default in payment, the respective Underwriter, in addition to other obligations defined in the Underwriting Agreement, will also be required to procure/subscribe to the extent of the defaulted amount as specified in the Underwriting Agreement.

31

Statement of Inter Se Allocation of Responsibilities for the Issue The following table sets forth the distribution of responsibility and coordination for various activities amongst the BRLMs: Sr. No Activities Responsibility Coordinator

1) Capital Structuring with the relative components and formalities such as composition of debt and equity, type of instruments.

Canara Bank Canara Bank

2) Due diligence of the company’s operations/ management/business plans/legal etc.

Canara Bank Canara Bank

3) Drafting & Design of Offer Document and of statutory advertisement including memorandum containing salient features of the Prospectus. The designated Lead Manager shall ensure compliance with stipulated requirements and completion of prescribed formalities with Stock Exchange, Registrar of Companies and SEBI

Canara Bank Canara Bank

4) Drafting and approval of Issue and statutory publicity material, etc.

Canara Bank Canara Bank

5) Drafting and approval of all corporate advertisement, brochure and other publicity material

Canara Bank Canara Bank

6) Appointment of Registrar, Bankers and Ad agency and Printers

Canara Bank Canara Bank

7) Marketing of the Issue, which will cover inter alia, Formulating-marketing strategies, preparation of publicity budget Finalize Media & PR strategy Finalizing centers for holding conferences for brokers, etc. Finalize collection centers Follow-up on distribution of publicity and Issue material including form, prospectus and deciding on the quantum of the Issue material

Canara Bank UTISEL

UTISEL

8) Finalizing the list of QIBs. Divisions of QIBs for one to one meetings, road show related activities and order procurement

Canara Bank UTISEL

UTISEL

9) Managing the Book, Co-ordination with the Stock Exchanges, Finalizing of Pricing & Allocation

UTISEL UTISEL

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10) Post bidding activities including management of Escrow Accounts, co-ordination with Registrar and Banks, Refund to Bidders, etc.

UTISEL UTISEL

11) The Post Issue activities of the Issue will involve essential follow up steps, which must include finalization of basis of allotment / weeding out of multiple applications, listing of instruments and dispatch of certificates and refunds, with the various agencies connected with the work such as Registrars to the Issue, Bankers to the Issue and the bank handling refund business. Lead Manager shall be responsible for ensuring that these agencies fulfill their functions and enable them to discharge this responsibility through suitable agreements with the issuer company.

UTISEL UTISEL

33

CAPITAL STRUCTURE The share capital of our Company as on the date of filing of this Draft Red Herring Prospectus with SEBI is as set forth below:

No. Of Shares Nominal Value (Rs.)

Aggregate Value (Rs.)

A. AUTHORISED CAPITAL 12,000,000 Equity Shares of Rs. 10/- each 120,000,000 B. ISSUED, SUBSCRIBED AND PAID-UP

CAPITAL

6,572,125 Equity shares of Rs. 10/- each 65,721,250 C. ISSUE IN TERMS OF THIS DRAFT RED

HERRING PROSPECTUS

3,539,000 Equity Shares of Rs. 10/- each at a premium of Rs. [●]/- per share

35,390,000 [•]

D. NET ISSUE TO THE PUBLIC 3,539,000 Equity Shares of Rs. 10/- each at a

premium of Rs. [●]/- per share 35,390,000 [•]

E. PAID UP CAPITAL AFTER THE PRESENT

ISSUE

10,111,125 Equity shares of Rs. 10/- each 101,111,250 [•] F. SHARE PREMIUM ACCOUNT Before the issue Nil After the issue [•]

Notes to Capital Structure: 1. Details of Increase in Authorized Capital

Sr. No. Particulars Of Increase Date of Meeting AGM/EGM 1) Rs. 10,000,0000 Incorporation - 2) From Rs. 10,000,000 to Rs. 120,000,000 1st June 2006 EGM

2. Capital Build-up: Our existing Equity Share capital has been subscribed and allotted as

under:

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Date on which Equity Shares were

allotted/ made fully

paid-up

Number of Equity Shares

Cumulative Share Capital

Face Value

(In Rs.)

Issue Price (In Rs.)

Nature of

payment of

consideration

Reason of Allotment

Share premium (In Rs.)

Cumulative Share Premium (In Rs.)

28.12.94 700 7,000 10 10 Cash Subscription to Memorandum of Association

-

29.03.96 91,800 925,000 10 10 Cash Allotted to present Promoters and Promoter Group

- -

21.03.97 231,250 3,237,500 10 - Bonus Bonus @ 5:2 - -

11.08.06 6,248,375 65,721,250 10 10 Bonus Bonus @ 193:10 - - 3. Shares issued for consideration other than cash

Except as mentioned in the table above, we have not issued any shares for consideration, other than cash.

4. Promoters’ Contribution and Lock-in details in respect of Promoters, whose names figure

in the Draft Red Herring Prospectus as Promoters in the paragraph on “Promoters and their Background” is as under:

a. Capital built up of the promoters is detailed below:

Sr. No

Name of Promoter

Date of allotment/

Transfer and made Fully

paid-up

Consideration

No. of Shares Face Value (Rs.)

Issue / Transfer

Price (Rs.)

% of post issue

paid up capital

Lock in

period

28.12.94 Cash (Allotment)

100 10 10 1 year

29.03.96 Cash (Allotment)

40,500 10 10 1 year

21.03.97 Bonus 101,500 10 - 1 year 10.08.98 Cash

(Transfer) 30,000 10 10 1 year

22.06.06 Cash (Transfer)

87,400 10 10 1 year

1 Mr Mahesh K Agrawal

11.08.06 Bonus 5,008,350 10 - * Total 5,267,850

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* Of the total 5,008,350 Equity Shares allotted as bonus shares, 2,022,225 Equity Shares, being 20% of the post issue paid up capital of our Compnay, shall be locked in for 3 years. The balance shares held by the promoter shall be locked in for 1 year. Promoters are not participating in the issue. As per clause 4.13.1 of the SEBI DIP Guidelines the above mentioned shares of the promoters (eligible for lock-in) shall be locked-in on LIFO basis (i.e. shares that have been issued last shall be locked in first) for a period of 3 years from the date of allotment in the public issue: 5. Specific written consents have been received from the above mentioned promoters to lock –

in their shares for a period of 3 years to ensure minimum Promoters’ contribution to the extent of 20% of Post-Issue Paid-up Capital.

Other than the above the entire pre-issue capital of our Company shall be locked in for a period of 1 year from the date of allotment of Equity Shares in the public issue.

The lock-in period shall commence from the date of allotment of Equity Shares in the public issue.

6. For the purpose of calculating Promoters contribution, the same has been considered for the

specified minimum lot of Rs. 25,000/- per application from each individual and Rs. 100,000/- from companies.

7. The Equity Shares forming part of promoter’s contribution do not consist of any private

placement made by solicitation of subscription from unrelated persons, either directly or through any intermediary.

8. The Equity Shares held by persons other than Promoters may be transferred to any other

person holding shares prior to the Issue, subject to continuation of lock-in with transferees for the remaining period and compliance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as applicable.

The Equity Shares to be held by the Promoters under lock-in period shall not be sold/hypothecated/transferred during the lock-in period. However, in terms of Clause 4.16(b) of the SEBI Guidelines the Equity Shares held by Promoters, which are locked in, may be transferred to and among Promoter/Promoter Group or to a new promoter or persons in control of our Company, subject to the continuation of lock-in in the hands of the transferees for the remaining period and compliance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 as applicable. The Promoters may pledge their Equity Shares with banks or financial institutions as additional security for loans whenever availed by them form banks or financial institutions, provided pledge of securities is one of the conditions for the grant of loan..

9. The details of sale/ purchase/ financing of shares by Promoters/Directors of the issuer

company/Directors of promoters/Promoters’ Group:

The Promoters/Directors of the issuer company/Directors of promoters/Promoters’ Group have not purchased and/or sold/financed any securities of our Company during the past 6 months except as listed below:

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Sr. No. Name Date of Transaction

Buy / Sell Number of Shares

Face Value per Share

(In Rs.)

Price per

Share (In Rs.)

a) Mahesh K Agarwal

22.06.06 Buy 87400 10/- 10/-

10. Shareholding Pattern of our Company before and after the Issue is as under:

Pre-Issue Post Issue*

Category No. of Equity Shares

% holding and

corresponding voting rights

No. of Equity Shares

% holding and

corresponding voting rights

Promoters 5,267,850 80.15 5267850 52.10 Promoter Group 1,304,275 19.85 1,304,275 12.90 Public - - 3,539,000 35.00 Grand Total 6,572,125 100.00 10,111,125 100.00 * The above shareholding pattern is indicative, and is based on the fact that all shareholders in their respective categories will subscribe to 100% of the shares offered in their respective categories. The final Post Issue Shareholding pattern will be determined after the Book-Building Process.

11. Particulars of top 10 shareholders: a. 2 years prior to the date of filing this Draft Red Herring Prospectus with SEBI (will be

updated before filing with RoC)

Sr. No. Name of Shareholders Number of Equity Shares 1. Mahesh K. Agrawal 172100 2. Mahesh K. Agrawal HUF 30000 3. K. H. Agrawal 4900 4. K. H. Agrawal HUF 87500 5. Savitridevi Agrawal 350 6. Taru M. Agrawal 28200 7. Vibhor Agrawal 350 8. Baby Ujjwala Agrawal 350 Total 323,750

b. 10 days prior and as on the date of filing this Draft Red Herring Prospectus with SEBI (will be

updated before filing with RoC) Sr. No. Name of Shareholders Number of Equity Shares

1 Mahesh K. Agrawal 5,267,850 2 Mahesh K. Agrawal HUF 609,000 3 K. H. Agrawal 99,470 4 K H Agarwal HUF 2,030 5 Savitridevi Agrawal 7,105 6 Taru M. Agrawal 572,460

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7 Vibhor Agrawal 7,105 8 Baby Ujjwala Agrawal 7,105 Total 6,572,125

c. As on the date of filing this Draft Red Herring Prospectus with SEBI (will be updated before

filing with RoC)

Sr. No. Name of Shareholders Number of Equity Shares 1 Mahesh K. Agrawal 5,267,850 2 Mahesh K. Agrawal HUF 609,000 3 K. H. Agrawal 99,470 4 K H Agarwal HUF 2,030 5 Savitridevi Agrawal 7,105 6 Taru M. Agrawal 572,460 7 Master Vibhor Agrawal 7,105 8 Baby Ujjwala Agrawal 7,105 Total 6,572,125

12. Details of capitalization of reserves by our Company in the past

Company has capitalized its free reserves by way of issuing bonus shares as stated below

Date of Allotment Number of Equity Shares

Face Value Per Share (In Rs.)

Ratio

21-03-1997 231,250 10 5:2 01-06-2006 6,248,375 10 193:10

13. Our Company, our Promoters, Directors and the Book Running Lead Manager to this Issue

have not entered into any buy-back, standby or similar arrangements for purchase of Equity Shares from any person.

14. Our Company has not raised any bridge loan against the proceeds of this Issue. 15. A bidder cannot make a bid for more than the number of Equity Shares offered through this

Issue, subject to the maximum limit of investment prescribed under relevant laws applicable to each category of investor.

16. An over-subscription to the extent of 10% of the Net Issue to public can be retained for the

purpose of rounding off to the nearest integer during finalizing the allotment, subject to minimum allotment being equal to [●] Equity Shares, which is the minimum application size in this issue.

17. In case of over-subscription in all categories, up to 50% of the Net Issue to the Public shall be

available for allocation on a proportionate basis to Qualified Institutional Buyers (including specific allocation of 5% within the category of QIBs for Indian Mutual Funds). Further a minimum of 15% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Non-Institutional Bidders and a minimum of 35% of the Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Under subscription, if any, in any portion would be met with spill over from other categories at the sole discretion of our Company in consultation with the BRLM.

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18. We presently do not have any intention or proposal to alter our capital structure for a period

of six months from the date of opening of this Issue, by way of split/ consolidation of the denomination of Equity Shares or further issue of Equity Shares (including issue of securities convertible into exchangeable, directly or indirectly, for our Equity Shares) whether preferential or otherwise, except that if we enter into acquisitions or joint ventures, we may consider raising additional capital to fund such activity or use Equity Shares as currency for acquisition or participation in such joint ventures.

19. At any given time, there shall be only one denomination for the Equity shares of our

Company and our Company shall comply with such disclosure norms as specified by SEBI from time to time.

20. As on the date of filing of this Draft Red Herring Prospectus, there are no outstanding

warrants, options or rights to convert debentures, loans or other financial instruments into our Equity Shares. The shares locked in by the Promoters are not pledged to any party. The Promoters may pledge the Equity Shares with banks or Financial Institutions as additional security for loan whenever availed by them from banks/Financial Institutions, provided the pledge of shares is one of the terms of sanction of loan.

21. Since the entire money of Rs. [●]/- per share (Rs. 10/- face value + Rs. [●]/- premium) is

being called on application, all the successful applicants will be issued fully paid-up shares. The securities offered through this public issue shall be made fully paid-up or may be forfeited within 12 months from the date of allotment of securities, if not made fully paid-up, in the manner specified in clause 8.6.2 of the SEBI DIP guidelines.

22. The Equity Shares of our Company are fully paid up and there are no partly paid up shares

as on date. 23. No payment, direct or indirect in the nature of discount, commission, and allowance or

otherwise shall be made either by us or our promoters to the persons who receive allotments, if any, in this Issue.

24. We have not revalued our assets since inception. 25. Our Company does not have any ESOS/ESPS scheme for our employees and we do not

intend to allot any shares to our employees under ESOS/ESPS scheme from the proposed issue. As and when, options are granted to our employees under the ESOP scheme, our Company shall comply with the SEBI (Employee Stock Option Scheme and Employees Stock Purchase Plan) Guidelines 1999.

26. The securities which are subject to lock-in shall carry the inscription “non-transferable” and

the non-transferability details shall be informed to the depositories. The details of lock-in shall also be provided to the stock exchanges, where the shares are to be listed, before the listing of the securities.

27. Our Company has 8 members as on the date of filing this Draft Red Herring Prospectus.

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SECTION V: OBJECTS OF THE ISSUE The objects of the Issue are to raise capital for part financing the funds required for: A) Setting up of Leather Chemicals Unit of 2,200 MTPA capacity for the production of

Syntans and Fat Liquors at Changodar, Ahmedabad, Gujarat, India. B) Setting up overseas warehousing facilities in Turkey, China and Italy to accelerate ‘time to

market’ C) Meeting the requirements of long-term working capital margin. D) Meeting the Public Issue Expenses The other objects of the Issue also include creating a public trading market for the Equity Shares of our Company by listing them on Stock Exchanges. We believe that the listing of our Equity Shares will enhance our visibility and brand name and enable us to avail of future growth opportunities. The objects clause of Memorandum of Association of our Company enables us to undertake the existing activities and the activities for which the funds are being raised by us through the present Issue. Further, we confirm that the activities we have been carrying out until now is in accordance with the objects clause of our Memorandum of Association. Cost of Project and Means of Finance The Cost of Project and Means of Finance as estimated by our management is given below: Cost of Project

Sr. No. Particulars Amount

(Rs. in Million) 1 Setting up of Leather Chemicals Unit 143.22 2 Setting up overseas warehousing facilities 30.00 3 Long-term working capital margin. [•] 4 Public Issue Expenses [•] Total [•]

Means of Finance:

Particulars Amount (Rs. in Million)

Public Issue [•] Total [•] Shortfall, if any, will be met out of internal accruals. Any funds raised over and above the above mentioned amount would be used for general corporate purposes including marketing of our existing products.

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DETAILED BREAK-UP OF COST OF PROJECT: A) SETTING UP OF LEATHER CHEMICALS UNIT OF 2,200 MT CAPACITY For the purpose of setting up of Leather Chemicals Unit of 2,200 MT capacity for the production of Syntans and Fat Liquors the following costs are estimated by our management:

Particulars Amount (Rs. in Million)

Land 25.00 Building and Civil Construction 25.00 Plant and Machinery 50.37 Lab Equipments 20.00 Furniture & Fixtures 5.00 Effluent Treatment Plant 3.70 Vehicles 4.00 Contingencies 10.15 Total 143.22 Land We propose to buy 30,000 sq mt. of land for the project at an estimated cost of Rs. 25 Million. This cost will include Land cost, Registration, Stamp duty, Levelling etc. We have identified the land at Changodar, Ahmedabad and are in the advanced stage of negotiations. Building The Company plans to construct two Manufacturing Blocks, one Spray Dryer Block, one Administrative Block, Warehouse for raw material and finished goods with fire proof system, R&D and Quality Control Lab Building, Security Block and Internal Roads at an estimated cost of Rs. 25 million. Plant, Machinery and Lab Equipments All the plant and machinery would be procured indigenously as detailed below:

(Rs. in Million) Sr. No.

Particulars Supplier Qty. Amount (Rs. in Million)

1 Reactors SS Balaji Engineering Services 4 4.00 2 Dosing Vessel SS Welmech Engineering Services 6 2.00 3 Ribbon Blenders D.K. Engineering Company 2 3.20 4 Spray dryers ACMEFIL Engineering Systems Pvt.

Ltd. 1 12.50 5 Storage Tanks FRP/PP Nu Fibro tech 7 1.40 6 Storage Tanks FRP/PP Nu Fibro tech 2 0.30 7 Chilling Plant / Cooling tower Artech Cooling Towers Pvt. Ltd. 1 1.20 8 Thermal fluid 1 1.00 9 Boiler 1 2.20

10 Generator Sudhir Genset 1 1.80 11 Reactors GL Swiss Glass Coat Equipments Ltd. 4 9.80

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Sr. No.

Particulars Supplier Qty. Amount (Rs. in Million)

12 Filter Press Sachin Filtech Pvt. Ltd. 1 2.35 13 Air Compressor Firdos & S. Cambatta Company 1 1.82 14 Weigh Bridge 1 1.80 15 Electrification, Erection,

Commissioning, Insulation, Instrumentation, Pump & Valves, Pipes & Fittings

1 5.00 Total 50.37

## Estimates by Company management The Company does not propose to buy any second hand machinery. The Company has obtained quotations for above Plant & Machinery except mentioned otherwise. The Company would place orders shortly. Lab Equipments

We propose to purchase following lab equipments for our proposed projects:

(Rs. in Million)

Sr. No.

Particulars Supplier Amount

1 Gas Chromatography Spinco Biotech Pvt. Ltd. 4.50 2 HPLC (High Performance Liquid

Chromatography) With Heavy Metal Detector Spinco Biotech Pvt. Ltd 3.50

3 UV Spectrometer With Iron Absorption Data Color 4.50 4 Leather Dyeing Drums Techno Drums 2.40 5 Leather Dyeing Drums Techno Drums 0.60 6 Moisture Analyser Scientific Instruments 0.50 7 Ph Meters With Electrodes Scientific Instruments 0.10 8 Lab Scale Glass Lined Reactors Various Local Suppliers 0.50 9 Lab Scale Mini Spray Dryer Acme Fil 0.60

10 Dessicator (Vaccum) Local Supplier 0.10 11 Drying Oven Industotherm Systems P. Ltd. 0.20 12 Muzzle Furnace Local Supplier 0.20 13 Dustometer Indigenious 0.20 14 Electronic Weighing Scales Apple Instruments Pvt. Ltd. 0.05 15 PIPETTES 10 Ml, 25 Ml, 50 Ml, 100 Ml Scientific Instruments 0.01 16 Buffer Tablets For Ph Meter Scientific Instruments 0.01 17 BURETTE (CLASS A) GRADUATED 25 Ml, 50

Ml & 100 Ml Scientific Instruments 0.01

18 Misc. Glass Wares Scientific Instruments 0.10 19 Misc. Filter Papers And Watmann Papers Various Local Suppliers 0.02 20 Colour Fastness Meter Local Supplier 0.40 21 Rubbing Fastness Meter Local Supplier 0.25 22 Washing Fastness Meter Local Supplier 0.50 23 Solubility Tester On Cold And Hot Basis Indigenous 0.25

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24 Various Standard Reagents And Chemicals Local Supplier 0.50 TOTAL 20.00

Furniture & Fixtures

The Furniture & Fixtures proposed to be purchased include production furniture, fixtures involving production tables, workers’ stools, office Cabinets and racks, executive tables, chairs, office filing cabinets, air conditioning system. Vehicles (4 nos.) will be purchased for facilitating movement of materials and workers.

Sr. No. Particulars Amount

(Rs. in Million) 1 Air-conditioning 1.502 Furniture & Fixtures 3.50 Total 5.00

Effluent Treatment Plant

Sr. No.

Particulars Supplier Amount (Rs. in Million)

1 ETP Tanks 1.2 2 Reverse Osmosis System Aastropure Electro Systems Pvt. Ltd. 2.5 Total 3.70

Vehicles Our Company proposes to buy 4 Buses at the estimated cost of Rs. 4 Million, for the transport of the staff to the new Leather Chemicals Unit. Contingencies: The provision for contingencies is kept approximately at 8% for all major cost in respect of Cost of Land, Building & Civil works, Furniture & Fixtures and Plant and Machineries. B) SETTING UP OVERSEAS WAREHOUSING FACILITIES Our Company plans to keep Rs. 30 Million worth Finished Goods at proposed warehousing facilities at 3 places, one each at China, Turkey and Italy to serve the customers in a timely and efficient manner. At each of the warehouse facilities finished goods aggregating Rs. 10 Million shall be kept. The total cost is the cost of finished goods at the three warehouses. C) LONG-TERM WORKING CAPITAL MARGIN

Particulars Amount (Rs. In Million)

Current Assets Sundry Debtors 375.00 Inventory – RM 100.00 Inventory – FG 70.00 Total Current Assets 545.00 Less: Current Liabilities

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Sundry Creditors 125.00 Net Working Capital Requirement 420.00 Existing W/C limit and LC discounting limit from SBI 200.00 Internal Accruals [•] Long-term working capital requirement to be funded through IPO [•] D) PUBLIC ISSUE EXPENSES We intend to spend Rs. [●] as Issue expenses, details of which are mentioned hereunder:

Sr. No.

Particulars Estimated Total Cost

(Rs. in Lacs) 1 Fees of BRLMs, Registrar, Legal Advisor, Auditors, etc. [•] 2 Underwriting and Selling Commission [•] 3 Advertisement and Marketing Expenses [•] 4 Printing and Stationery, Distribution, Postage, etc. [•] 5 Other Charges [•] Total [•]

DETAILS OF MEANS OF FINANCE:

PUBLIC ISSUE The above fund requirements are proposed to be met through the Public Issue of 3,539,000 Equity Shares of Rs. 10 each at a price of Rs. [•] per Equity Share aggregating Rs. [•] Million through this DRHP. SCHEDULE OF IMPLEMENTATION The implementation schedule of the proposed project is given below: S. No. Activities Commencement Completion

1 Acquisition of Land Negotiations Commenced

November 2006

2 Civil Works December 2006 April 2007 3 Placement of Orders of Plant &

Machinery December 2006 February 2007

4 Erection and Commissioning of Plant & Machinery

February 2007 May 2007

5 Trial runs May 2007 6 Commercial Production June 2007

DEPLOYMENT OF FUNDS IN THE PROJECT We have already deployed Rs. 1.38 million in the Project till 13th September 2006 which has been certified by Ashokkumar S Gupta & Co., Chartered Accountants vide their certificate dated 26th September 2006, details of which are mentioned hereunder:

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Particulars Amount (Rs. in Million)

Public Issue Expenses 1.38 Total 1.38 The above funds already deployed by the Company through internal accruals, shall be recouped from the public issue proceeds. The overall cost of the proposed Project and the proposed year wise break up of deployment of funds are as under:

Objects of the Issue Total Estimated expenses

Already Deployed

till

Oct. to Dec. 2006

Jan. to March 2007

April to June

2007

Setting up of Leather Chemicals Unit

143.22

Land 25 25 Building and Civil Construction

25 2.5 17.5 5

Plant and Machinery 50.37 5.037 25.185 20.148 Lab Equipments 20 10 10 Furniture & Fixtures 5 5 Effluent Treatment Plant 3.7 3.7 Vehicles 4 4 Contingencies 10.15 10.15 Setting up overseas warehousing facilities

30 30

Long-term working capital margin

[•] [•]

Public Issue Expenses [•] 1.38 [•] [•] [•] Total [•] [•] [•] [•]

INTERIM USE OF PROCEEDS: Pending utilization of the proceeds of the issue for the purposes described above, the company will deploy the monies temporarily in deposits with scheduled commercial banks /gild edged government securities/mutual funds or meeting working capital requirements may be decided by the Board of Directors of our company or a duly authorized committee thereof. No part of the proceeds of this issue will be paid as consideration to our promoters, directors, key managerial employees or companies promoted by our promoters.

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Monitoring of utilisation of funds: [●] has consented to act as Monitoring Agency to monitor utilisation of funds to be received from proposed Public Issue. The relevant details of the monitoring agency are mentioned under section titled “General Information” beginning on page [●] of this Draft Red Herring Prospectus. Further, no part of the Issue proceeds will be paid by us as consideration to our Promoter, Directors, key management personnel or companies promoted by our Promoter. We will disclose the utilization of the Issue proceeds under separate head in our balance sheet for the FY 2006-07 & 2007-08 and provide all the details, if any, in relation to all proceeds of the Issue that have not been utilized thereby, also indicating investments, if any, of such unutilized proceeds of the Issue.

BASIC TERMS OF ISSUE

Terms of the Issue The Equity Shares being offered are subject to the provisions of the Companies Act, our Memorandum and Articles of Association, the terms of this Draft Red Herring Prospectus, the Prospectus, Bid cum Application Form, the Revision Form, the Confirmation of Allocation Note and other terms and conditions as may be incorporated in the allotment advices and other documents/certificates that may be executed in respect of the Issue. The Equity Shares shall also be subject to laws as applicable, guidelines, notifications and regulations relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, the Government of India, the Stock Exchanges, the RBI, RoC and/or other authorities, as in force on the date of the Issue and to the extent applicable. Terms of Payment: Applications should be for a minimum of [•] equity shares and in multiples of [•] equity shares thereafter. The entire price of the equity shares of Rs. [•]/- per share (Rs. 10/- face value + Rs. [•]/- premium) is payable on application. In case of allotment of lesser number of equity shares than the number applied, the excess amount paid on application shall be refunded by us to the applicants. Authority for the Issue Pursuant to Section 81 (1A) of the Companies Act, 1956, the present issue of equity shares has been authorized vide a Special Resolution passed at the Extra Ordinary General Meeting of our Company held on June 01, 2006. Ranking of Equity Shares The Equity Shares being offered shall be subject to the provisions of the Companies Act, our Memorandum and Articles of Association and shall rank pari passu in all respects with the existing Equity Shares including in respect of the rights to receive dividend. The allottees will be entitled to dividend, voting rights or any other corporate benefits, if any, declared by us after the date of Allotment.

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Face Value and Issue Price per Share The Equity Shares having a face value of Rs. 10/- each are being offered in terms of this Draft Red Herring Prospectus at a price of Rs. [•]/- per Equity Share. At any given point of time there shall be only one denomination of the Equity Shares of our Company, subject to applicable laws. Market Lot and Trading Lot In terms of Section 68B of the Companies Act, the Equity Shares shall be allotted only in dematerialised form. In terms of existing SEBI Guidelines, the trading in the Equity Shares shall only be in dematerialised form for all investors. Since trading of the Equity Shares will be in dematerialized mode, the tradable lot is one Equity Share. Allocation and allotment of Equity Shares through this Offer will be done only in electronic form in multiples of 1 Equity Share subject to a minimum allotment of [●] Equity Shares to the successful bidders. Minimum Subscription If we do not receive the minimum subscription of 90% of the Net Issue to the Public including devolvement of the members of the Syndicate within 60 days from the Bid Closing Date, we shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after we become liable to pay the amount, we shall pay interest prescribed under Section 73 of the Companies Act 1956.

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BASIS OF ISSUE PRICE The issue price will be determined by our Company in consultation with the BRLM on the basis of assessment of market demand for the equity shares offered by way of book building. Investors should read the following summary with the Risk Factors included starting from page number [•] and the details about our Company and its financial statements included in the Draft Red Herring Prospectus on page [●]. The trading price of the equity shares of our Company could decline due to these risks and you may lose all or part of your investments. Qualitative Factors 1. We are an existing profit making Company in operations for more than 10 years in Dyestuff

& Pigments industry. Our restated Profit after Tax for last 3 years are given below: Rs. in Millions

March 31, 2004 March 31, 2005 March 31, 2006

Particulars (12 Months) (12 Months) (12 Months) Net Profit after tax 17.68 10.31 33.10

2. Established player in the Export Market 3. Our ability to source raw materials at competitive prices 4. Geographically Diversified and Longstanding customer base 5. Latest and Environmentally friendly Process and Technology 6. Backward Integration 7. Quality Systems 8. Cost efficient process 9. Strong Employer Employee relationship Quantitative Factors Information presented in this section is derived from the Company’s restated, financial statements prepared in accordance with Indian GAAP. Some of the quantitative factors, which form the basis for computing the price, are as follows: 1. Earning per share (EPS)

Year EPS (Rs.) Weight Fiscal 2004 54.61 1 Fiscal 2005 31.84 2 Fiscal 2006 102.23 3 Weighted Average 70.83

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Note: (i) EPS has been calculated as per the following formula: (Net Profit) / (Weighted

average number of Equity Shares) (ii) EPS calculations have been done in accordance with AS 20 – “Earnings per

Share” issued by the ICAI 2. Price to Earning Ratio (P/ E) in relation to Issue Price of Rs. [•]

Based on 31-03-06 EPS of Rs. 102.23 [●] Based on weighted average EPS of Rs. 70.83 [●]

Industry P/E: Dyes & Pigments Industry

i. Highest – Dynamic Industries Limited 13.10 ii. Lowest – Indian Toners 4.30

iii. Average 7.20 Source: Capital Market, Volume XXI/11, July 31 – Aug 13, 2006

3. Return on Net Worth % (RONW)

Year RONW Weight Fiscal 2004 13.18% 1 Fiscal 2005 7.15% 2 Fiscal 2006 18.71% 3 Weighted Average 13.93%

RONW has been calculated as per the following formula: (Net Profit) / (Equity shareholder’s funds outstanding at the end of the year) x 100

4. Minimum Return on the increased Net Worth after the Issue required to maintain the pre-Issue EPS of Rs. is [•]%

5. Net Asset Value (NAV) per Equity Share

NAV As of on 31.03.2006 was Rs 546.34. NAV After the Issue: Rs. [•]

NAV has been calculated as per the following formula: (Shareholders’ equity less miscellaneous expenses)/ (Total number of Equity Shares outstanding at the end of the period)

6. Comparison with Industry Peers

Comparison of key ratios with the companies of comparable size in the same industry group

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Industry: Dyes and Pigments:

Name of the Company

FV (Rs.)

Sales as on 31/03/2006 (Rs. in Cr.)

Equity Rs.cr

EPS

NAV RONW% P/E

Dynamic Industries 10

55.60 3.03 2.6 34.20 9.7 13.1

Atul 10 817.20 29.67 15.1 89.60 20.1 Dynemic Products 10 28.70 11.33 2.0 22.30 14.20 8.5 Indokem 10 69.30 15.30 0.6 25.70 - - Metrochem Inds 1o 171.60 11.43 3.7 74.20 3.2 13.1 Shreyas Intermed 10 51.70 16.11 2.4 11.8 23.0 6.7 Sudarshan Chemicals

10 393.30 6.92 14.1 142.50 10.7 10.4

Ultramarine Pigments

2 63.20 5.84 4.7 20.40 26.50 6.6

Vidhi Synthetic Organic Dyess

1 24.90 5.00 0.2 3.10 15.10 -

Asiatic Colour Chem Industries Ltd

10 64.59 3.24 102.23 546.34 18.71% (. )

(Source: Capital Market – July 31 -August 13, 2006.) 7. We have made the following issuances after 31.03.2006. The Above ratios have been

computed without considering these issuances: Name of Promoter

Date of Allotment

Consideration Number of Equity Shares

Issue Price Rs.

Mr. Mahesh K. Agrawal

June 2006 Bonus 5010280 10

The chapter ‘Basis for Issue Price’ shall be updated at the time of filing the RHP with SEBI/ROC, considering the bonus issue, and also the audited figures of our Company.

The Issue Price of Rs. [•] has been determined by the Company , in consultation with the BRLMs, on the basis of the demand from investors for the Equity Shares through the Book-Building Process and is justified based on the above factors. The face value of our shares is Rs.10/- per share and the Issue Price of Rs. [●]/- is [●] times of the face value of our Equity Shares. The final price would be determined on the basis of the demand from the investors. The Book Running Lead Manager believes that the Issue Price of Rs. [●]/- per share is justified in view of the above qualitative and quantitative parameters. The investors may also want to peruse the risk factors and our financials as set out in the Auditors Report in the Draft Red Herring Prospectus to have a more informed view about the investment proposition.

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STATEMENT OF TAX BENEFITS

STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE COMPANY AND ITS SHAREHOLDERS Tax benefits listed below are the benefits available under the current tax laws in India as advised by our Statutory Auditors M/s Ashok Kumar S Gupta & Co. Under the Income Tax Act, 1961 (“the I.T. Act”) A. Benefits available to the Company 1. Under section 32 of the I.T. Act, the Company is entitled to claim depreciation, subject to the conditions specified therein, at the prescribed rates on its specified assets used for its business. 2. Under section 10(34) of the I.T. Act, dividend income (whether interim or final) referred to in section 115O of the I.T. Act, received by the Company, is exempt from tax in the hands of Company. 3. By virtue of section 10(35) of the I.T. Act, the following income shall be exempt, in the hands of the Company:

a) Income received in respect of the units of a Mutual Fund specified under clause (23D) of section 10; or

b) Income received in respect of units from the Administrator of the specified

undertaking; or

c) Income received in respect of units from the specified company. However, this exemption does not apply to any income arising from transfer of units of the Administrator of the specified undertaking or of the specified company or of a mutual fund, as the case may be. For this purpose (i) “Administrator” means the Administrator as referred to in section 2(a) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 and (ii) “Specified company” means a company as referred to in section 2(h) of the said Act. 4. Capital gain:

a) Capital assets may be categorised into short term capital assets and long-term capital assets based on the period of holding. Shares held in companies or any other securities listed in a recognised stock exchanges in India, units of Mutual Funds and zero coupon bonds, as defined, will be considered as long term capital assets if they are held for a period exceeding 12 months immediately preceding the date of their transfer. Capital gains arising on transfer of these capital assets held for more than 12 months are considered as “long-term capital gains”. Other capital assets held for a period exceeding 36 months immediately preceding the date of transfer will be considered as long term capital assets and capital gains arising on transfer of these capital assets are also considered as long term capital gains. Capital gains arising on transfer of capital assets other than long term capital assets are considered as “short term capital gains”.

51

b) Section 48 of the I.T. Act, which prescribes the mode of computation of capital gains, provides for deduction of cost of acquisition/ improvement and expenses incurred in connection with the transfer of a capital asset, from the sale consideration to arrive at the amount of capital gains. In respect of long-term capital gains, it offers a benefit by permitting substitution of cost of acquisition/ improvement with the indexed cost of acquisition/ improvement, which adjusts the cost of acquisition/ improvement by a cost inflation index as prescribed from time to time.

c) As per the provisions of section 112 of the I.T. Act, long-term capital gains arising to the

Company are subject to tax at the rate of 20% (plus applicable surcharge and education cess). However, as per proviso to that section, the long-term capital gains resulting from transfer of listed securities or units or zero coupon bonds (not covered under section 10(38) of the I.T. Act), are subject to tax at the rate of 20% (plus applicable surcharge and education cess) on long-term capital gains after considering the indexation benefit, which would be restricted to 10% (plus applicable surcharge and education cess) of long term capital gains without considering indexation benefit at the option of the Company. Under section 48 of the I.T. Act, the long term capital gains arising out of sale of capital assets excluding bonds and debentures (except Capital Indexed Bonds issued by the Government) will be computed after indexing the cost of acquisition/ improvement.

As per the provisions of section 111A of the I.T. Act, short-term capital gains arising to the Company from the transfer of equity shares in any other company or units of equity oriented fund transacted through a recognised stock exchange in India are subject to tax @ 10% (plus applicable surcharge and education cess) if such a transaction is subjected to securities transaction tax (“STT”).

For this purpose “Equity Oriented Fund” means a fund –

I. where the investible funds are invested by way of equity shares in domestic companies to the extent of more than fifty per-cent of the total proceeds of such funds; and

II. which has been set up under a scheme of a Mutual Fund specified under section 10(23D)

of the I.T. Act. Exemption of Capital Gain Under section 10(38) of the I.T. Act, the long-term capital gain arising on transfer of equity shares in any other company or units of equity oriented fund, which is chargeable to STT, is exempt from tax in the hands of the Company. Under section 54EC of the I.T. Act and subject to the conditions and to the extent specified therein, long term capital gains (not covered under section 10(38) of the I.T. Act) arising on the transfer of a long term capital asset by the Company will be exempt from tax if the capital gains are invested in notified bonds within a period of six months after the date of such transfer and held for a minimum period of three years. Where only a part of the capital gains is so invested, the exemption is proportionately available. However, if the said bonds are transferred or converted into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money.

III. Under section 54ED of the I.T. Act and subject to the conditions and to the extent

specified therein long term capital gains (not covered under section 10(38) of the I.T. Act) on the transfer of listed securities or specified units by the Company, will be exempt

52

from capital gains tax, if the capital gains are invested in shares of an Indian company forming part of a eligible public issue, within a period of six months after the date of such transfer and held for a period of at least one year. Where only a part of the capital gains is so invested, then the exemption is proportionately available.

5. Rebate under Section 88E : As per the provisions of Section 88E of the I.T. Act, where the business income of the company includes profits and gains from sale of securities liable to STT, a rebate is allowable from the amount of income tax on such business income to the extent of the STT paid on such transactions. The amount of rebate shall, however, be limited to the amount of income tax arrived at by applying the average rate of income tax on such business income. As such, no deduction will be allowed in computing the income chargeable to tax as “capital gains” or under the head “Profits and gains of Business or Profession” for such amount paid on account of STT. 6. Exemption on Export turnover: In terms of Section 10B of the Act, 90% of profit generated on export turnover by 100% Export oriented units is exempt from Income Tax till July 2010. 7. Credit for Minimum Alternate Taxes (“MAT”): In terms of section 115JAA, the company is eligible to claim credit for any tax paid as under Section 115JB or 115JA of the Act against income tax liabilities incurred in subsequent years. MAT credit eligible for carry forward to subsequent years is the difference between MAT paid and the tax computed as per the normal provisions of the Act. B. Benefits available to the Shareholders of the Company I. Benefits available to Resident Shareholders 1. Dividends Under section 10(34) of the I.T. Act, dividend income (whether interim or final) referred to in section 115O of the I.T. Act, received from the Company is exempt from tax in the hands of the resident shareholders. 2. Capital Gains

a) Under section 48 of the I.T. Act, the long term capital gains arising out of sale of capital assets excluding bonds and debentures (except Capital Indexed Bonds issued by the Government) will be computed after indexing the cost of acquisition/ improvement.

b) As per the provisions of section 112 of the I.T. Act, long-term capital gains arising to the resident shareholders are subject to tax at the rate of 20% (plus applicable surcharge and education cess). However, as per proviso to that section, the long-term capital gains resulting from transfer of listed securities or units or zero coupon bonds (not covered under section 10(38) of the I.T. Act), are subject to tax at the rate of 20% (plus applicable surcharge and education cess), on long-term capital gains after considering the indexation benefit which would be restricted to 10% (plus applicable surcharge and education cess) on long-term capital gains without considering the indexation benefit.

c) As per the provisions of section 111A of the I.T. Act, short-term capital gains arising to the resident shareholders from the transfer of equity shares of the company transacted through a recognised stock exchange, are subject to tax @ 10% (plus applicable surcharge and education cess) if such a transaction is subjected to STT.

53

d) Exemption of Capital Gain I. Under section 10(38) of the I.T. Act, the long-term capital gain arising on transfer

of equity shares of the Company, which are chargeable to STT, are exempt from tax in the hands of the resident shareholders.

II. Under Section 54EC of the I.T. Act and subject to the conditions and to the extent specified therein, long term capital gains (not covered under section 10(38) of the I.T. Act) arising on the transfer of shares of the Company will be exempt from capital gains tax if the capital gains are invested in notified bonds within a period of six months after the date of such transfer and held for a minimum period of three years. Where only a part of the capital gains is so invested, the exemption is proportionately available. However, if the said bonds are transferred or converted into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money.

III. Under section 54ED of the I.T. Act and subject to the conditions and to the extent specified therein, long term capital gain (not covered under section 10(38) of the I.T. Act) on the transfer of shares of the Company will be exempt from capital gains tax if the capital gain is invested in shares of an Indian company forming part of a eligible public issue, within a period of six months after the date of such transfer and held for a period of at least one year. Where only a part of the capital gains is so invested, then the exemption is proportionately available.

IV. In case of a shareholder being an individual or a Hindu Undivided Family, in accordance with and subject to the conditions and to the extent provided in section 54F of the I.T. Act, the shareholder is entitled to exemption from long-term capital gains arising from the transfer of shares of the Company (not covered under section 10(38) of the I.T. Act), if the net consideration is invested within a period of one year before, or two years after the date of transfer, for purchase of a residential house, or for construction of a residential house within three years. If part of the net consideration is invested within the prescribed period in a residential house, such gains would be exempt from tax on a proportionate basis. If, however, such new residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains for which the exemption was availed earlier would be taxed as long-term capital gains of the year in which such residential house is transferred.

3. Rebate under section 88E As per the provisions of section 88E of the I.T. Act, where the business income of a shareholder includes profits and gains from sale of shares of the Company liable to STT, a rebate is allowable from the amount of income tax on such business income, to the extent of STT paid on such transaction. The amount of rebate shall, however, be limited to the amount of income tax arrived at by applying the average rate of income tax on such business income. As such, no deduction will be allowed in computing the income chargeable to tax as “capital gains” or under the head “Profits and gains of Business or Profession” for such amount paid on account of STT. II. Mutual Funds

In case of a shareholder being a Mutual fund, as per the provisions of section 10(23D) of the I.T. Act, any income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or Regulations made there under, Mutual Funds set up by public sector banks or public

54

financial institutions and Mutual Funds authorised by the Reserve Bank of India is exempt from income-tax, subject to the conditions notified by Central Government in this regard. III. Venture Capital Companies/ Funds

In case of a shareholder being a Venture Capital Company/ Fund, any income of a Venture Capital Company/ Fund registered with the Securities and Exchange Board of India, is exempt from income-tax, subject to the conditions specified in section 10(23FB) of the I.T. Act. IV. Benefits available to Non-Resident Shareholders/ Non-Resident Indians (Other than FIIs and Venture Capital Companies/ Funds) 1. Dividend Dividend income (both interim and final) referred in section 115O of the I.T. Act received by the Non-Resident shareholders/ Non-Resident Indian shareholders from the Company shall be exempt under section 10(34).

2. Capital Gains a). As per the provisions of section 112 of the I.T. Act, long-term capital gains are subject to tax at the rate of 20% (plus applicable surcharge and education cess). However, as per proviso to that section, the long-term capital gains resulting from transfer of listed securities or units or zero coupon bonds (not covered under section 10(38) of the I.T. Act), are subject to tax at the rate of 20% (plus applicable surcharge and education cess), on long-term capital gains after considering the indexation benefit which would be restricted to 10% (plus applicable surcharge and education cess) on long-term capital gains without considering the indexation benefit. b). As per the provisions of section 111A of the I.T. Act, short-term capital gains arising from the transfer of equity shares of the company transacted through a recognised stock exchange in India are subject to tax @ 10% (plus applicable surcharge and education cess) if such a transaction is subjected to STT. c). As per first proviso to section 48 of the I.T. Act, in case of a non resident shareholder, in computing capital gains arising from transfer of shares of the Company acquired in convertible foreign exchange (as per Exchange Control Regulations), protection is provided from fluctuations in the value of rupee in terms of foreign currency in which original investment was made. Cost Indexation benefit will not be available in such a case. The capital gain/ loss in such a case is computed by converting the cost of acquisition, sales consideration and expenditure incurred wholly and exclusively in connection with such transfer, into the same foreign currency which was utilised in the purchase of shares.

d). Exemption of Capital Gain

I. Under section 10(38) of the I.T. Act, the long-term capital gain arising on transfer of equity shares of the Company, which are chargeable to STT, are exempt from tax in the hands of the non-resident shareholders.

II. Under section 54EC of the I.T. Act and subject to the conditions and to the extent specified therein, long term capital gains (not covered under section 10(38) of the I.T. Act) arising on the transfer of shares of the Company will be exempt from capital gains tax if the capital gains are invested in notified bonds within a period of six months after the date of such transfer and held for a minimum period of three years. Where only a part of the capital gains is so invested, the exemption is proportionately available. However, if the said bonds are transferred or converted into money within a period of three years from the date of their acquisition, the

55

amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money.

III. Under section 54ED of the I.T. Act and subject to the conditions and to the extent

specified therein, long term capital gain (not covered under section 10(38) of the I.T. Act) on the transfer of shares of the Company will be exempt from capital gains tax if the capital gain is invested in shares of an Indian company forming part of a eligible public issue, within a period of six months after the date of such transfer and held for a period of at least one year. Where only a part of the capital gains is so invested, then the exemption is proportionately available. The exemption is available subject to conditions specified in that section.

IV. In case of a shareholder being an individual or a Hindu Undivided Family, in accordance with and subject to the conditions and to the extent provided in section 54F of the I.T. Act, the shareholder is entitled to exemption from long-term capital gains arising from the transfer of shares of the Company (not covered under section 10(38) of the I.T. Act), if the net consideration is invested within a period of one year before, or two years after the date of transfer, for purchase of a residential house, or for construction of a residential house within three years. If part of the net consideration is invested within the prescribed period in a residential house, such gains would be exempt from tax on a proportionate basis. If, however, such new residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains for which the exemption was availed earlier would be taxed as long-term capital gains of the year in which such residential house is transferred.

3. Rebate under section 88E As per the provisions of section 88E of the I.T. Act, where the business income of a shareholder includes profits and gains from sale of shares of the Company liable to STT, a rebate is allowable from the amount of income tax on such business income, to the extent of STT paid on such transaction. The amount of rebate shall, however, be limited to the amount of income tax arrived at by applying the average rate of income tax on such business income. As such, no deduction will be allowed in computing the income chargeable to tax as “capital gains” or under the head “Profits and gains of Business or Profession” for such amount paid on account of STT. 4. Options available under the I.T. Act to Non resident Indians:

A. As per the provisions of section 115D read with section 115E of the I.T. Act and subject to the conditions specified therein, long-term capital gains (in cases not covered under Section 10(38) of the I.T. Act) arising on transfer of Company’s shares, will be subject to tax at the rate of 10 percent (plus applicable surcharge and education cess), without indexation benefit.

B. As per the provisions of section 115F of the I.T. Act and subject to the conditions specified therein, gains arising on transfer of a long-term capital asset (in cases not covered under Section 10(38) of the I.T. Act) being shares of the Company shall not be chargeable to tax if the entire net consideration received on such transfer is invested within the prescribed period of six months in any specified asset or savings certificates referred to in Section 10(4B) of the I.T. Act. If part of such net consideration is invested within the prescribed period of six months in any specified asset or savings certificates referred to in Section 10(4B) of the I.T. Act, then such gains would be exempt from tax on a proportionate basis. For this

56

purpose, net consideration means full value of the consideration received or accrued as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. Further, if the specified asset or savings certificates in which the investment has been made is transferred within a period of three years from the date of investment, the amount of capital gains tax exempted earlier would become chargeable to tax as long-term capital gains in the year in which such specified asset or savings certificates are transferred.

C. As per the provisions of section 115G of the I.T. Act, non-resident Indians are not

obliged to file a return of income under section 139 of the I.T. Act, if their only source of income is income from investments or long-term capital gains earned on transfer of such investments or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the I.T. Act.

D. Under section 115H of the I.T. Act, where the non-resident Indian becomes assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer, along with his return of income for that year under section 139 of the I.T. Act to the effect that the provisions of the Chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money.

E. As per the provisions of section 115I of the I.T. Act, a non-resident Indian may elect not to be governed by the provisions of Chapter XII-A for any assessment year by furnishing his return of income for that assessment year under section 139 of the I.T. Act, declaring therein that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the I.T. Act.

V. Benefits available to Foreign Institutional Investors (FIIs) 1. Dividend Dividend income (both interim and final) referred in section 115O of the I.T. Act received by FII being the shareholder of the Company shall be exempt under Section 10(34). 2. Capital gains

I. As per the provisions of section 111A of the I.T. Act, short-term capital gains arising to FII from the transfer of equity shares of the company transacted through a recognised stock exchange, are subject to tax @ 10% (plus applicable surcharge and education cess) if such a transaction is subjected to STT.

II. Under section 115AD, capital gains arising from transfer of shares of the Company which are not exempt under Section 10(38), shall be taxable as follows:

Capital gains on shares, which are held for the period of more than twelve months, shall be taxable at the rate of 10% (plus applicable surcharge and education cess). Capital gains on other shares shall be taxable at the rate of 30% (plus applicable surcharge and education cess).

III. Exemption of capital gain

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i. Under section 10(38) of the I.T. Act, the long-term capital gain arising on

transfer of equity shares of the Company, which are chargeable to STT, are exempt from tax in the hands of FIIs.

ii. Under Section 54EC of the I.T. Act and subject to the conditions and to the

extent specified therein, long term capital gains (not covered under section 10(38) of the I.T. Act) arising on the transfer of shares of the Company will be exempt from capital gains tax if the capital gains are invested in notified bonds within a period of six months after the date of such transfer and held for a minimum period of three years. Where only a part of the capital gains is so invested, the exemption is proportionately available. However, if the said bonds are transferred or converted into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier could become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money.

iii. Under section 54ED of the I.T. Act and subject to the conditions and to the

extent specified therein, long term capital gain (not covered under section 10(38) of the I.T. Act) on the transfer of shares of the Company will be exempt from capital gains tax if the capital gain is invested in shares of an Indian Company forming part of a eligible public issue, within a period of six months after the date of such transfer and held for a period of at least one year. Where only a part of the capital gains is so invested, then the exemption is proportionately available.

C. Benefits available under the Wealth Tax Act, 1957 ‘Asset’ as defined under section 2(ea) of the Wealth Tax Act, 1957, does not include share in companies. Hence, the shares in the Company are not liable to Wealth Tax. D. Benefits available under the Gift Tax Act, 1958 Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of shares of the Company will not attract gift tax. E. Tax Treaty benefits In accordance with section 90(2) of the I.T. Act, an investor has an option to be governed by the provisions of the I.T. Act or the provisions of a Tax Treaty that India has entered into with another country of which the investor is a tax resident, whichever is more beneficial. Notes: i) All the above benefits are as per the current tax law as amended by the Finance Act, 2006. ii) The stated benefits will be available only to the sole/first named holder in case the share are

held by joint holders; and iii) In respect of non-residents, the tax rates and the consequent taxation mentioned above will

be further subject to any benefits available under the relevant DTAA, if any, between India and the country in which the non-resident has fiscal domicile.

iv) In view of the individual nature of the consequence, each investor is advised to consult his/her own tax adviser with respect to specific tax consequences of his/her participation in the scheme.

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SECTION VI – ABOUT US Industry Overview Disclaimer: Pursuant to the requirements of the SEBI Guidelines, the discussion on the business of our Company in this Draft Red Herring Prospectus consists of disclosures pertaining to industry grouping and classification. The industry grouping and classification is based on our Company's own understanding and perception and such understanding and perception could be substantially different or at variance from the views and understanding of third parties. Our Company acknowledges that certain products described in the Draft Red Herring Prospectus could be trademarks, brand names and/ or generic names of products owned by third parties and the reference to such trademarks, brand names and/or generic names in the Draft Red Herring Prospectus is only for the purpose of describing the products. The industry data has been collated from various industry and / or research publications and from information available from the World Wide Web. The dyestuff sector is one of the most important segments of the chemical industry in India, having forward and backward linkages with a variety of sectors like textiles, leather, paper, polymers, printing ink, medical use, electronics and foodstuffs. From being an importer in the 1950’s, it has now emerged as a global supplier of colourants that includes all types of Dyestuffs and Dye Intermediates particularly for reactive, acid, vat and direct dyes. The Dyestuff industry constitutes three sub-segments, namely dyes, pigments and intermediates. The dye intermediates are petroleum downstream products which are further processed into finished dyes and pigments. These are essential inputs in major industries like textiles, plastics, paints, paper and printing inks. A dye is a coloured substance or an organic compound, which when applied in a solution to a fabric, imparts a colour resistant to washing. They are largely used by the textiles, paper and leather industry, with textiles accounting for over 80% in India. This links the dyestuff industry's fortunes to that of the textile industry. Dyes are soluble and essentially used in textile products. Pigments, on the other hand, are insoluble and are important inputs to products such as paints. Exports of dyes and pigments from India are also directed largely at the textile industry in Europe, South East Asia and Taiwan. Dyes are classified according to various systems. The most commonly used one is the one used by the US International Trade Commission. According to this system, there are 12 types of dyes, as detailed in the following table:

Group Application

Acid Wool, silk, paper, synthetic fibers, leather

Azoic Printing Inks and Pigments

Basic Silk, wool, cotton

Direct Cotton, cellulosic and blended fibers

Disperse dyes Synthetic fibers

Reactive Cellulosic fiber and fabric

Organic pigments Cotton, cellulosic, blended fabric, paper

Sulphur Cotton, cellulosic fiber

Vat dyes Cotton, cellulosic and blended fiber

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With the change in the product profile of the textile industry from the high-cost cotton textiles to the highly durable and versatile synthetic fibres, the consumption pattern of dyes has also been changing. Polyesters are projected to account for a large part of dye consumption in the country. Accordingly, disperse dyes, which find application in polyesters, are projected to grow faster. In addition to textiles, dyestuffs are also used in industries like plastic, paints, printing inks, paper and leather. While these industries account for a very small part of domestic consumption, globally these account for a substantial part of total consumption. Indian Scenario The Indian dyestuff industry is valued at approximately US$3 bn. The per capita consumption is still very low (50 gms) as compared to the world average (400 gms). The Indian dyestuff industry is only about 40 years old though a few MNCs set up dyestuff units in the pre independence era. Like the rest of the chemical industry, the dyestuff industry is also highly fragmented. The industry is characterized by the co-existence of a small number of players in the organized sector (around 50 units) and a large number of small manufacturers (around 1,000 units) in the unorganized sector. The distribution of these units is skewed towards with western region (Maharashtra and Gujarat) accounting for 90%. In fact, nearly 80% of the total capacity is in the state of Gujarat, where there are nearly 750 units. India’s share in the world market is estimated at 7%. The Indian Dyestuff industry has emerged as the second largest producer of dyes and dyes intermediates in the Asian Region. The Indian dyestuff industry has nearly 950 units manufacturing dyes, dyestuffs and pigments, with a capacity of nearly 150,000 tonnes. The dyestuffs industry has forward and backward linkages with a number of industries. Dyes are used in industries such as textiles, leather, paper, printing inks and food processing. The textile and leather processing industries consume over 85% of all dyes manufactured. The industry enjoys the advantages of a large market, availability of key inputs and technology, and competitiveness in the export market. However, it is also highly fragmented, resulting in intense competition. The SSIs are operating at a capacity of 60 -65% and are engaged in the manufacturing of low value items. As around 90% of the total dye and dye intermediates manufacturing units are located in the Western belt from Chiplun to Mehsana in the states of Maharashtra and Gujarat. China is a major exporter of dyestuffs to India. The average investment by small scale unit for low end dyes with a capacity of around 300 MTPA was observed to be Rs. 58 lakh. The annual turnover of the small scale units had also stagnated since 1998-99 to around Rs.3 to 3.5 crore. (Source: www.aiaionline.org) The dyes and pigments sector is expected to grow at a steady rate of 7%, driven by growth in exports. At the same time, decreasing duties will increase imports. The volatile and high input cost is likely to affect margins. The industry is highly fragmented and suffers from low scale of operations. The high cost of pollution control and old technology with small players will make them unviable. As the industry is also witnessing consolidation, only a few large players and foreign players will be able to maintain margins. The exports of dyes and pigments are largely directed at the textile industry in Europe, Southeast Asia and Taiwan. The change in the industry strategy from import substitution to export orientation will lead to higher growth in exports.

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Government Policies In Union Budget 2006-07, the import duty on dyes and pigments has been reduced to 12.5%. The raw material used for dyestuffs such as aniline and PAN (phthalic anhydride) also attracts the same duty. The lack of differential between the intermediates and finished products has led to higher imports of lower end dyes and dyestuffs into the country, particularly from China. Extent of Competition The industry is intensely competitive due to its highly fragmented structure (about 950 players), coupled with competition from international players. The small scale sector concentrates in reactive, acid and direct dyes, with large companies concentrate on vat, disperse and pigment dyes. Stiff competition from the unorganized sector and the threat of lower priced imports have constrained any increase in realizations and put pressure on margins. The high cost of effluent treatment as well as old and outdated technology with the small scale units will make them unviable and lead to closure of such units. The industry also faces stiff competition in the international market from countries such as China and Indonesia, and from cheaper imports in the domestic market. The Indian dyestuff industry has been facing difficult times. Low profitability and demand growth combined with increasing importance for environmental protection have resulted in the exit of many small producers. However these factors have seen the consolidation of major players in the industry. With the closure of many manufacturing bases in the US and Europe, MNCs are shifting to Asian countries like India and China. The share of the MNCs in the domestic production of these two countries has been going up steadily over the last few years. There has been a strong growth in the dyestuff industry during the last decade. This has been made possible because of the Government’s concessions (excise and tax concessions) to small-scale units and export opportunities created by the closure of several units in countries like the USA and Europe (because of the enforcement of strict pollution control norms). The duty concessions offered to small-scale manufacturers had resulted in the large ones becoming uncompetitive to some extent. Price competition was intense in the lower segments of the market. Liberalisation of the economy and large-scale reduction of duties resulted in the reduction of margins for smaller manufacturers. Closure of several small-scale units in Gujarat on environmental reasons also helped the organised sector players. Over six hundred types of dyes and organic pigments are now being manufactured in the country (both by the organised and the unorganised sector). But the per-capita consumption of dyestuffs is lower than the world average. During the past two years, the dyestuff industry was overtaken by a series of fast changing events in the international arena. Indian companies failed to keep pace with the changing trends. The biggest market for dyestuffs has been the textile industry. The dominance of polyester and cotton in the global markets has decisively shaped the demand for certain types of dyestuffs. On the other hand, the demand for polyamides, acrylics, cellulose and wool was more or less stagnant. Differences in the regional growth rates of textile products too affect In Union Budget 2006-07, the import duty on dyes and pigments has been reduced to 12.5%. This gradual reduction in the duty rates blunted the competitive edge of the unorganised sector. The

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organised sector, with better product range, technology and marketing reach, was able to increase its market share and pushed out companies in the unorganised sector. Technology The technology for dyestuff manufacturing varies widely from relatively simple (direct azo) to sophisticated (disperse and vat) dyes. Though technology is locally available, most of it is outdated. The problem is further compounded by the fact that the nature of the process changes from batch to batch and, therefore, controlling the process parameters becomes difficult. The Indian industry has made significant progress in terms of technology and production. The dyestuff industry is one of the heavily polluting industries and this has resulted in the closure of units internationally and shifting of units to the emerging economies. Most of the international manufacturers have transferred the technology to developing nations like China, India, Indonesia, Korea, Taiwan and Thailand. This shift of manufacturing capacities is because the industry is perceived as a high-cost and low return one. The batch processing also makes it a labour- intensive industry. Thus, the competitiveness of developing economies increases. Business Overview Our Company is engaged in the business of manufacturing Synthetic Organic Dyes mainly for the leather and fur industry. We are the 100% Export Oriented Unit. Synthetic Organic Dyes is a broad term, which includes dyes and pigments. A dye is a coloured substance or an organic compound, which when applied in a solution to a fabric, imparts a colour resistant to washing. The Indian Synthetic Organic Dyes Industry has grown by over 50 per cent during the last decade. India is now the second largest producer of dyes and dye intermediates in Asia after China. As India integrates itself with the world market, SOD segment could play a leading role in shaping the performance of Indian Chemical Industry. Our Company was promoted by Mr. Mahesh K. Agrawal on January 1995. Initially, our Company was engaged in the manufacturing of reactive dyes for textiles which was sold in the domestic market to merchant exporters. Initially we started direct exports to USA and obtained the status of Government Recognised Export House. Currently we export to Italy, Turkey, USA, Germany, Switzerland and many other countries. We have obtained ISO 9001 & 9002 certifications for manufacturing of Synthetic Organic Dyes. Our Company over a period has added range of other dyes to cater to the leather, paper, silk, fur, ink, wool, nylon etc. Currently, our business model is focused around production and marketing of Synthetic Organic Dyes & Dyes Intermediates for leather and fur industry by Exporting, Trading & Manufacturing. Our Company started its operations with a modest turnover of Rs. 42.89 million and a PAT of Rs. 5.28 million. Over the years we have gradually scaled up our level of operations and FY 2005-06 our Company has clocked a turnover of Rs. 645.89 million with a PAT of 33.10 million. We started our operations with a capacity of 360 MTPA and currently we have a capacity of 4800 MTPA. Currently we are manufacturing SOD mainly for leather and fur products. We also manufacture reactive dyes for textiles, on specific requests from our clients. In SOD, we manufacture two main types of dyes, i.e. Black & Coloured. Till last year our Company was focussing on black dyes, wherein more than 80% of our revenues were generated from black dyes, which is a high volume low margin business. Our Company realised this and has started to focus on the more profitable business of coloured dyes. In this

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regard our Company has rationalized its product mix and is focusing more on coloured dyes, which are more remunerative. Rationale for the project Our products are used for leather processing. By undertaking this project our Company will set up a leather chemicals unit of 2200 MTPA for production of Syntans and Fat Liquors at Bavla, Ahmedabad, Gujarat. Presently our Company supplies dyes to tanneries, buying agents and large MNCs, which constitute 3-5% of the total volume of chemicals required for leather dyeing. Once our project is on stream, our Company proposes to increase its share of product used in leather dying. The combined volume of dyes, syntans and fat liquors shall be in the range of 35-45%. In terms of value, dyes command around 20% of the cost of processing leather. With the proposed expansion, into syntans and fat liquors, we intend to increase our Company’s share to 70-85% and thereby increase our profitability. We already supply dyes to various tanneries and other buying agents in the export market. We shall be utilising our current distribution set up for selling syntans and fat liquors, as the same are to be used for processing of leather alongwith dyes. This shall help us to build an image as a manufacturer who supplies the main chemicals required for leather processing. The fact that syntans and fat liquors are used by tanneries (directly and through buying agents), who are our customers, is an advantage since they already have an established relationship and comfort in dealing with our Company for dyes. In addition to dyes, our Company shall be in a position to provide them a basket of raw materials like dyes, syntans and fat liquors. Our Products:

Our Company manufactures Synthetic Organic Dyes which includes the following:

Leather Dyes Black Leather Dyes form the major part of our turnover. We manufacture Leather Dyes in Black and also in other colours. These dyes are used for colouring the leather to manufacture various leather products.

Textile Dyes Textile dyes are reactive dyes which include Salt Free Dyes (Reverse Osmosis), Vinyl Sulfone Based Dyes, High Exhaust Dyes & M.E. Series (Bi-functional) Dyes. Textile Dyes are used for colouring the various textile products.

Ink Dyes Ink Dyes are Salt Free (R/O) Synthetic Organic Dyes. Our Company manufactures Crude Ink Dyes which is used for the manufacture of finished inks.

Fur Dyes : Single face and double face Finishing Dyes : are used predominantly in fashion colours Dyes Intermediates : DASA, FC ACID, OAVS, PCVS, BDSA, Sulfanic Acid etc.

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Products form our proposed project: Syntans Syntans are basically tanning materials which help the fixation of dyes on the leather. Chemically speaking they are the sulpho derivatives of Napthelene. As the usage in percentage is more the selling volume of these products are also more. Over and above they help to retain the firmness of the leather. Fat Liquors: These are mainly the liquids derive by sulphonation of castor oil, fish oil. They help to soften the leather which helps in giving the leather a very smooth and soft feel. Fatliquoring influences the physical properties of the leather, such as extensibility, tensile strength, wetting properties, waterproofness and permeability to air and water vapour. Brief details about the project: Location We have manufacturing facilities located at the following places to produce our products: Unit Location Installed Capacity Unit 1 1503/1504, GIDC, Phase –

1, Naroda, Ahmedabad 4,800 MTPA for production of Synthetic Organic Dyes

Unit 2 306/A, GIDC Phase-1, Naroda, Ahmedabad

In unit II, we have a bolier facility which generates steam for use in Unit I. Also, Unit II is used a warehouse to store finished goods

The location for the proposed project will be at Changodar, Ahmedabad. WE have identified the land to be used for the project and are in the advanced stage of negotiations for the same. Plant & Machinery For details about the Plant & Machinery, please refer section titled “Plant & Machinery” beginning on page [●] of this Draft Red Herring Prospectus. Technology and Process: Manufacturing Process Synthetic Organic Dyestuffs are producing hiring a series of chemical reactions under the process control of temperature, pH and pressure. It is normally a Batch Process. Various Organic chemicals are coupled to each other depending on the coupling nature of each other. Different use of raw materials gives different formulations and hence gives colour. The use of raw materials also determines the production of particular category of dyestuffs which in turn depends on substrate on which it needs to be applied. Primarily the manufacturing process consists of diazotization, coupling and thus dye formation in liquid form along with various other impurities. All stages are being described as below:-

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1) DIAZOTISATION: Formation of base liquid, normally it takes place below 0°C temperature. The reaction takes place in open glass lined or rubber lined MS or SS Reaction Vessel. 2) COUPLING: Mixing of various raw materials and secondary liquid is prepared to be mixed with diazotized material. Normally it takes place in Open or Closed Vessel depending on the nature of reaction. 3) pH ADJUSTMENT: pH is being adjusted after the coupling process and continuously stirred liquid is checked constantly using pH meter and adjusted as per norms either by adding alkali or weak acid. 4) FILTRATION (CLARIFICATION) Filtration or clarification is being done using Filter press. It is used to remove the primary impurities and unreacted material to get the desired finished dyestuff. 5) R/O (REVERSE OSMOSIS) The filtered wet cake is redissolved in water and being passed through reverse osmosis equipment until and unless desired TDS of liquid is achieved and all impurities are removed. 6) SPRAY DRYING The permeate of the highly concentrated liquid is sprayed in Spray Dryer to get the powder form of crude dyestuffs. 7) MIXING /BLENDING The Crude dyestuffs is blended to get the uniform material using various kinds of blenders. This stage is also helpful in correction of shade and strength of Dyestuffs against the standard material of customers. 8) PACKING: Packing of the material is done as per requirement of customers. Normally it is being packed in 25 Kgs/50 Kgs MS Drums, Plastic drums. It is also being packed in carton boxes, fibre drums of Woven bags.

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PROCESS FLOW CHART

Collaborations Our Company has not entered into any technical or financial collaboration with any other entity. Infrastructure facilities: Raw Materials: We generally enter into 6 months contracts for supply of essential raw materials like, H-Acid, Para Nitric Acid, Meta Phenylene Diamine etc. These raw materials are generally imported from

pH ADJUSTMENT

COUPLING

DIAZOTISATION

CLEAR DYE SOLUTION

R/O (REVERSE OSMOSIS)

SPRAY DRYER

MIXING / BLENDING

PACKAGING

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China, and are also easily available in local markets. To facilitate the import from China, our Company has a representative office in China. Land Our Company is carrying on its current operations from Plot No. 1503/4 and Plot No. 306A located at Naroda Industrial estate. For our proposed project our Company has identified land and is in advanced stage of negotiations for the proposed land. Our Company does not envisage any problem in acquiring land as the same is available in and around our existing facility. Utilities: Power For our existing facilities at Naroda Industrial Estate we have a high voltage connection from Gujarat State Electricity Board. For our spray drier operations, we use CNG, which is supplied by Adani Energy (Gujarat) Limited. We shall make appropriate arrangements for our proposed project. Water Water is being used for manufacturing as well as general purposes. Our water requirement at all the units is being met in-house. Our Company also has a connection from local Gujarat Water Supply Board. Water is readily available in the industrial area and we do not envisage any problem on this account. Manpower The manufacturing process requires an appropriate mix of skilled, semi-skilled and Un-skilled labour, which is readily available. The Company recruits people from the Industry depending on its requirement. The Company also engages labour on contract basis for doing non-routine type of work as and when required. The Company has maintained good relationship with the employees. There is easy availability of labour around the towns and cities where the factories of the Company exist and the Company does not foresee any problem in hiring more manpower. There are 36 permanent employees as on 31st August 2006. We hire contract labourers on a need basis, and the same are easily available through registered contractor. We will be recruiting the additional manpower (semiskilled & unskilled labourers) for the proposed project for which we do not envisage any difficulty as the same is easily available in and around our plant locations. There is no need for new technical staff for the proposed project. Our Company largely depends upon the calibre and efficiency of our employees. Our human resource policy is targeted towards motivating our employees and developing a congenial work environment. Our recruitment process ensures that the new employees recruited are competent and can add value to our organization. A systematic assessment process is designed which involves technical/non-technical interviews by the heads of the respective departments and evaluation of their work profile to identify the right candidate for the right job profile. An Induction & Orientation process is done to present the history, the current scenario and the future to all new recruits in our Company.

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Environmental Aspects We have also obtained the required consents from the State Pollution Control board regarding our manufacturing process for our existing facilities at Goa. Our company is committed to provide a safe, clean and healthy environment. We adhere to all the requirements to be met in this regard and will continue complying with all local and national environmental laws and regulations, at all the times. Company has designed in-house effluent treatment Plant by doing extensive Research work on Proper usage of Membrane Technology to recover water for reuse and product from mother liquor. Company has used the membrane Technology in an innovative way showing willingness to successfully meet stringent Pollution norms of Gujarat Pollution Control Board. We do not envisage any difficulty in meeting the required parameters to maintain a clean and healthy environment. For our proposed projects application will be made to the concerned authorities at appropriate time. Research and Development There is a major thrust on R&D to improve productivity and drive down manufacturing cost without any compromise on the stringent quality specification. To meet R&D challenges of this industry, we have set up a modern laboratory for support and testing of products at our manufacturing facilities. Property The details of our significant properties are provided below:

Sr. No.

Location Area

Name, address of Vendor Freehold/ Leasehold/

Rental

Activities

1) Plot No. 1504, GIDC, Naroda Industrial Estate, Ahmedabad

1000 sq.mts

Gujarat Industries Development Corporation(GIDC)

Leasehold Industrial Plot leased to M/S Savakas Impex initially and assigned to ACCIL by virtue of Assignment Deed dtd.19.12.2000

2) Plot No. 1503, GIDC, Naroda Industrial Estate, Ahmedabad

3422 sq.mts

Gujarat Industries Development Corporation(GIDC )

Leasehold Industrial Plot

3) Plot No. 306-A, GIDC, Naroda Industrial Estate, Ahmedabad

1079 sq.mts

Gujarat Industries Development Corporation(GIDC)

Leasehold Industrial Plot

Insurance Our Company keeps all critical immovable and movable properties duly insured.

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Pursuant to statutory requirements set out in the Factories Act and the Public Liability Act we have taken up public liability insurance of upto Rs.100,000 per accident subject to total limit of Rs.30 million per year. We regularly review our insurance coverage to ensure that they are sufficient to meet these regulatory requirements and business risk exposure. All our plants are insured under Standard Fire and Special Perils Policy of value Rs. 222.00 Million valid till March, 2007. This policy covers various items including Super Structure, Plant & Machinery, Stocks, Furniture, Fittings and Fixtures etc. We also have a loss of profits policy covering gross profit of Rs.82.5 million in the event of loss of profits due to fire /earth quake of other industrial accidents. Intellectual Property Our Company has the following trademarks/logo registered:

Sr. No. Trademark/Logo Registration Number

Date of grant

1

1103718 10/5/2002

2

1103719 10/5/2002

Capacity and Capacity Utilization The provisions of licensed and installed capacity are not applicable to us. Key Industry Regulations and Policies Laws relating to excise, customs, sales tax, pollution control, factory and labour-related matters etc. are applicable to our Company, as they are applicable to other manufacturing establishments. However, pursuant to our business profile, there are no specific set of legislations and regulations applicable to our Company.

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Our Competitive Strengths 1) Established player in the Export Market

There has been a significant shift in the global Synthetic organic dyes industry in the recent past. Units in US and Europe have closed down due to environmental and cost factors creating a huge opportunity for manufacturers in the Asia region. We are able to capitalize on this trend as we are a 100% Export Oriented Undertaking and a Government recognized Export House. We have received First prize for Excellent performance for 2005-06 in the category of Export of Dyes, instituted by the Synthetic Organic Dyes Manufacturers Association of India.

2) Our ability to source raw materials at competitive prices

Our sourcing ability is one of our major strengths. Substantial part of major raw material used in our manufacturing process is imported from China. We have established our representative office in China to facilitate sourcing of Raw Materials. This raw material, is a downstream product of the petroleum/crude industry, where the prices are volatile. Our longstanding experience in this business has helped us to forsee the price trends in raw materials and enter into forward contracts to ensure continuous supplies at competitive prices.

3) Geographically Diversified and Longstanding customer base

We have been exporting our products directly and through buying agents to 42 countries in the Americas, Europe and Asia Pacific. We have a customer base of more than 60 customers across the globe with whom, we have developed business relations.

Below, is the country wise exports for the last 2 Financial years

COUNTRY WISE EXPORT (Rs. in Crores)

02468

101214161820

ARGENTINA

CHINA

GERMANYITALY

KOREA

SWITZERLAND

TURKIYE

OTHER

2005-062004-05

4) Latest and Environmentally friendly Process and Technology

We have kept ourselves abreast with the latest technology relevant to our business. We are among the few manufactures who use reverse osmosis for processing water which is used in

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manufacture of high concentration salt free dyes. This process ensures that our product is free from the salt and other impurities. The Synthetic Organic Dyes Manufacturers Association of India has awarded us second place for pollution control measures during 2005-06.

5) Backward Integration

To ensure regular and cost efficient supply of ‘Acetanilide’, we have undertaken backward integration to manufacture Acetanilide, which is used in manufacturing of SOD. Acetanilide is a base material used in the production DASA and VS (Parabase). Due to this backward integration we save approx Rs. 10/- per kg of Acetanilide, if imported. On an average we use 150 to 200 MT of Acetanilide per month

6) Quality Systems

We are an ISO 9001–2000 certified company. The official quality recognitions are testimony to our process orientation and the international standard quality of our products. We believe consistency of products could only achieved by process orientation. This process orientation helps us in increasing our efficiency and maintaining our quality. We constantly make efforts to improve our processes through continuous research and development. Our focus on quality has helped us in retaining our clients and adding new ones.

7) Cost efficient process

We use the eco friendly Reverse Osmosis process, which helps us in simplification in manufacturing process, waste reduction resulting in cost effective dye manufacturing. Further we use CNG as a substitute for conventional fuel for the hot air spray process. This cost efficiency has helped us in competing with the players in the global market.

8) Strong Employer Employee relationship

The Philosophy of our Management involves building relationship with our employees as well as business associates and continuous innovation in our products as well as processes. Majority of the key employees have been with the Company since inception.

Our Business Strategy A) Moving up the value chain & to provide Single Window solution to Tanneries for their

Chemical requirement: Our Company is in the business of manufacturing and supply of Black Dyes to leather tanneries, buying agents and large MNCs, which constitute 3-5% of the total volume of chemicals required for leather dyeing. Our Company proposes to increase its share of product used in leather dying. The combined volume of dyes, syntans and fat liquors shall be in the range of 35-45%. In terms of value, dyes command around 20% of the cost of processing leather. With the proposed expansion, into syntans and fat liquors, we intend to increase our Company’s share to 70-85% and thereby increase our profitability. The same is described in the figure mentioned below:

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B) To break into overseas markets through our own setup and have better client relationships

Our Company is gradually expanding its set up of warehouse in critical geographical locations. On this front we have established consignments warehouses in Turkey, China and propose to expand this chain in other crucial markets in the Europe, Asia Pacific and Americas. As of now, we are acting through buying agents and other C&F agents as well as large MNCs. With an intention to serve the client directly, and with more efficiency, we plan to have our own setup in these markets.

C) Acquisition of Overseas Marketing Chain

With the closure of many manufacturing bases in the US and Europe (because of the enforcement of strict pollution control norms), MNCs are shifting to Asian countries like India and China for sourcing. The fact shall also help that we are already supplying black dyes to these large MNCs, who in turn provide the complete chemical solutions to the tanneries. These MNCs having a large marketing network, supply Chemicals to the tanneries. This network has become redundant of late due to closure of chemical manufacturing operations. To tap this market and service these clients effectively we aim to acquire one of these marketing setups, which shall give us an access to their direct customers, tanneries.

D) To launch the eco-friendly dyes based on “Zr” vis-à-vis “Cr”.

As a conscientious decision to move towards environmentally products, we have taken initiatives to move towards ‘Zr’ based dyes which are eco friendly vis-à-vis ‘Cr’ based dyes. On this front we are working closely with CLRI (Central Leather Research Institute, Chennai) to utilize the new technology and new developments in leather industry.

72

E) To have our own brand and product line We have been exporting unbranded dyes to buying agents and wherever we have been selling directly to our clients, we use the tradename of ‘Aeronil’. We aim to make a brand name synonymous with our Company’s product range and increase our branded sales over the time. As a part of our long term branding exercise, we have a specialized drum packaging imported from Italy having lithographical print, which is used for transporting our products across the globe, which will generate visibility and brand recall.

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OUR BORROWINGS: INDEBTEDNESS A) Details of secured borrowings

Sr. No.

Nature of borrowing/debt

Amounts sanctioned Repayment and Interest Security

1 State Bank of India 1) Foreign Bills discounting-

Limit Rs 140.00 mln 2) Corporate Loan Limit Rs 10.00 mln 3) Export Packing credit - Limit Rs 50.00 mln. 4) Foreign Bills Discounting

CLC Rs 40.00 mln. 5) Standby Line of

Credit Rs 15.00 mln.

6) Import Letter of Credit Rs 50.00 mln. 7) Bank Guarantee Rs 1.00 mln.

Running Limits renewable from time to time Outstanding as at 31 03 2006 Rs.1424,4831/- Rs.10091421/- Rs.4,28,36,986/-

1) Mortgage of factory land and building of the Company bearing Plot No.1503, 1504, GIDC, Naroda Industrial Estate, Ahmedabad, 2) Charge on Raw Material Work In Process,Finished Goods, Packing Material Book Debts & Plant And Machineries And Lien On Term Deposits and Personal Guarantee of Directors.

2 Kotak Mahindra

Primus Ltd. Vehicle Loan Rs 4,00,000.00

Rs.12252/- per month; EMI Outstanding as on 31 03 06 is Rs.296525.37

Hypothecation charge on the vehicle

The material terms and conditions under the Loan Agreements with the above lenders are summarised below; 1. The Company shall not without the bank’s prior consent in writing:

a. effect any change in the Company Capital Structure b. formulate any scheme of amalgamation or reconstitution c. undertake any new project / should not launch new ventures, implement any scheme of

expansion or acquire fixed assets except those in the funds flow statement submitted to the Bank from time to time and approved by the Bank;

d. invest by way of share capital in or lend or advance funds to or place deposits with any other concern (including group concerns); normal trade credit or security deposits in the normal course of business or advances to employees can however, be extended;

e. enter into borrowing arrangement either secured or unsecured with any other bank, financial institutions, Co. / firm or otherwise or accept deposits apart from the arrangement indicated in the funds flow statements submitted to the Bank from time to time and approved by the Bank;

74

f. undertake any guarantee obligations on behalf of any other Co. / firm (including ground concerns)

g. permit withdrawals of profit over and above the percentage indicated in the Funds flow statement for any year; in any case, such withdrawals shall not be made except out of profits relating to that year after making all due and necessary provisions and provided further that no default has occurred in any term repayment obligations and that the Co./ firm are able to maintain adequate working capital margin;

h. create any charge, lien or encumbrance over its undertaking or any part thereof in favour of any financial institution, bank, company, firm or persons;

i. sell, assign, mortgage or otherwise dispose off any of the fixed assets charged to the Bank;

j. enter into any contractual obligation of a long term nature or affecting the company financially to a significant extent;

k. change the practice with regard to remuneration of directors by means of ordinary remuneration or commission, scale of sitting fees, etc.

l. undertake any trading activity other than the sale of products arising out of its own manufacturing operations.

m. permit any transfer of the controlling interest or make any drastic change in the management set-up,

n. withdraw/repay any money in the form of unsecured loans/deposits secured from Promoters / Directors / partners / friends / relatives during the currency of the Bank’s loans and without prior written approval of the Bank. Unsecured Loans/ Deposits should be interest free.

B) Details of Unsecured Loan from Director

Sr. No.

Nature of borrowing/debt

Amounts sanctioned Repayment and Interest

1 Mahesh K. Agrawal Rs.20539469.2 Interest free,

repayable on demand

2 Pamasol International Rs.8564000 Interest free,

repayable on demand

75

SECTION VII: FINANCIAL INFORMATION

Auditor’s Report

The Board of Directors, Asiatic Colour-Chem Industries Ltd. Plot No.1503-04, GIDC Phase-I, Naroda, Ahmedabad. We have examined and found correct the Audited Accounts of M/s. Asiatic Colour-chem Industries Ltd. for the past six financial years ended on March 31 2001, 2002, 2003, 2004, 2005 and 2006 being the last date up to which the accounts of the Company have been made up and audited by us. At the date of singing this report, we are not aware of any material adjustment, which would affect the result shown by these accounts drawn up in accordance with the requirements of Part II of Schedule II to the Companies Act 1956. In accordance with the requirements of Paragraph B (1) of Part II of Schedule II to the Companies Act, 1956 (the Act), and the Securities and Exchange Board of India (Disclosure and investor Protection) Guidelines, 2000 (SEBI Guidelines) for the purpose of the Offering Memorandum as aforesaid, we report that: a. The restated profits of the company for the financial years ended March 31, 2001, 2002, 2003,

2004, 2005 and 2006 are as set out in Annexure I to this report. These profits have been arrived at after charging all expenses including depreciation and after making such adjustment and regroupings as in our opinion are appropriate and more fully described in the Significant Accounting Policies and Notes on Account appearing in Annexure III and IV respectively to this report.

b. The restated assets and liabilities of the company as at March 31, 2001, 2002, 2003, 2004, 2005

and 2006 are as set out in Annexure II to this report after making such adjustments and regroupings as in our opinion are appropriate and more fully described in the Notes on accounts appearing in Annexure IV to this report.

c. We have examined the cash flow statement relating to the company for the year ended March

31, 2005 and 2006 appearing in Annexure V to this report. d. The rates of dividends paid by the company in respect of the financial years ended March 31,

2001, 2002, 2003, 2004, 2005 and 2006 are as shown in Annexure VI to this report. e. We have examined the following financial information relating to the company and as

approved by the Board of Directors for the purpose of inclusion in the Offer document :

1. Statement of Profit & Loss in Annexure I to this report 2. Statement of Assets & Liabilities in Annexure II to this report 3. Notes on significant Accounting Policies in Annexure III to this report. 4. Notes to Account in Annexure IV to this report 5. Cash Flow statement in Annexure V to this report 6. Statement of Dividend paid as per Annexure VI. 7. Details of Performance Ratios in Annexure VII to this report. 8. Capitalisation statement as at March 31, 2006 as appearing in Annexure VIII to this

report. 9. Statement of tax shelters as appearing in Annexure IX to this report.

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10. Details of other income as appearing in Annexure X to this report. 11. Details of sundry debtors as appearing in Annexure XI to this report. 12. Details of loans and advances as appearing in Annexure XII to this report. 13. Details of unsecured loans as appearing in Annexure XIII to this report. 14. Details of secured loans as appearing in Annexure XIV to this report. 15. Details of transactions with related parties as appearing in Annexure XV to this report. 16. Details of aggregate value and market value of quoted investments as appearing in

Annexure XVI to this report. 17. Details of qualifications appearing in the audit report as given in Anneuxre XVII to this

report. 18. Details of changes in Significant Accounting Policies as given in Annexure XVIII to this

report. In our opinion the above financial information of the company read with Significant Accounting Policies and Notes on Account attached in Annexure III & IV respectively to this report, after making adjustments and regroupings as considered appropriate has been prepared in accordance with paragraph B (1) Part II of Schedule II of the Act and the SEBI guidelines. This report is intended solely for your information and for inclusion in the Offer document in connection with the specific Public Offer of equity shares of the company and is not to be used, referred to or distributed for any other purpose without our written consent. PLACE: AHMEDABAD FOR ASHOKKUMAR S. GUPTA & Co. DATE: 27.06.2006 Chartered Accountant Sd/- (ASHOKKUMAR S. GUPTA) PROPRIETOR (M.NO.31630)

77

Annexure I

ASIATIC COLOUR-CHEM INDUSTRIES LIMITED

Statement of Profit & Loss Account Rs. in millions

For the year ended 31st March 2006 2005 2004 2003 2002 2001 INCOME Sales 645.89 532.12 510.95 551.58 370.99 489.26 Of Products Manufactured by the Co. 639.88 517.36 495.09 525.27 370.99 470.40 Of products Traded by the Company 6.02 14.76 15.87 26.30 18.86 Export benefit - - - - - 13.98 Increase/(Decrease) in Stocks (0.65) 10.23 (2.59) 7.52 9.86 15.82 Other Income 0.05 0.02 0.05 0.15 0.97 1.17 Total Income 645.29 542.37 508.41 559.25 381.82 520.22 EXPENDITURES Cost of Traded Goods 5.80 14.25 15.29 24.89 - 15.44 Raw Material Consumed 470.50 383.87 357.77 388.64 280.83 362.26 Manufacturing Expenses 70.19 59.84 57.87 55.01 39.88 51.18 Employees Emoluments 8.15 7.66 7.80 5.96 5.08 4.80 Administrative Expenses 6.27 6.18 6.51 4.97 4.29 4.36 Selling & Distribution Exp. 31.38 38.87 37.28 42.74 22.76 37.74 Preliminary Exp. W/off - 0.01 0.01 0.01 0.01 0.01 Donation - 0.07 - 0.12 0.04 0.38 Total 592.29 510.75 482.53 522.34 352.89 476.16 Profit before Int., Dep. and Tax 53.00 31.62 25.88 36.91 28.93 44.06 Depreciation 4.14 3.71 3.41 3.15 2.92 2.51 Profit before Interest and Tax 48.86 27.90 22.48 33.76 26.01 41.55 Financial Expenses 19.07 17.20 13.81 12.98 12.10 12.76 Net Profit Before Tax 29.79 10.70 8.67 20.78 13.92 28.79 Less :Provision for Taxation Current Tax 2.34 0.06 - 0.82 Deferred Tax 1.46 Less : Income Tax Provision not req. 0.68 0.34 0.01 0.79 0.05 Add: Deferred Tax Liab for Pr. Yrs - - 9.02 7.56 Profit After Tax 26.77 10.31 17.68 10.94 13.13 28.74

Less/(Add):Prior Period Adj.(net) 6.32 - - - (0.06) (0.84)

NPAT after adj. prior period item 33.10 10.31 17.68 10.94 13.07 27.90 Note: To be read together with summary of significant accounting policies (Annexure III) and Notes to statement of restated profit and loss and restated assets and liabilities (Annexure IV).

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Annexure II ASIATIC COLOUR-CHEM INDUSTRIES LIMITED

Statement of Assets & Liabilities

Rs. in millions AS AT 2006 2005 2004 2003 2002 2001 A) Fixed Assets

Gross Block

100.62 87.25

75.25 67.51

62.81 59.91

Less : Depreciation

20.89 17.52

13.81 10.58

7.43 4.51

Net Block

79.73 69.73

61.45 56.93

55.38 55.40

Add: Capital Work in Progress

2.14 4.07

0.49 4.04

2.71

-

Total (A)

81.87 73.80

61.94 60.97 58.09

55.40

B) Investment

0.00 0.00

0.00 0.00

0.00

0.50 C) Current Assets, Loans & Advances

Inventories

82.59 94.36

73.82 78.02

64.08

42.33

Sundry Debtors

276.65 212.80

173.44 164.90

140.73

158.86

Cash & Bank Balance

14.76 16.11

38.11 10.69

15.31

10.14

Loans & Advances

34.02 48.57

36.78 12.14

15.66

25.55

Total (C)

408.02 371.85

322.16 265.76

235.79

236.88 D) LIABILITIES & PROVISIONS

Secured Loans

195.67 143.84 148.77 127.54

121.85

116.81

Unsecured Loans 16.80 13.26

0.55 1.53

2.12

0.30

Current Liabilities & Provisions 100.55 144.39

100.57 72.12

64.34

68.93

Deferred Tax Liabilities 9.02

Total (D) 313.02 301.50

249.90 210.21

188.31

186.04

E) NET WORTH (A+B+C-D) 176.88 144.15

134.20 116.51

105.57

106.74

F) REPRESENTED BY: Share Capital (A) 3.24 3.24

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3.24 3.24 3.24 3.24

Reserve & Surplus 173.64 140.91

130.96 113.28

102.35

103.52

Less Revaluation Reserves - - - - -

-

Net Reserve and Surplus (B) 173.64 140.91

130.96 113.28

102.35

103.52

Miscellaneous Expenditure ( C) - - 0.01 0.01

0.02

0.02

NET WORTH (A+B-C) 176.88 144.15

134.20 116.51

105.57

106.74

Note: To be read together with summary of significant accounting policies (Annexure III) and Notes to statement of restated profit and loss and restated assets and liabilities (Annexure IV).

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ANNEXURE III & IV NOTES TO ACCOUNTS (1) Significant Accounting Policies (A) Method of Accounting The financial Statement are prepared in accordance with the generally accepted accounting standards in India. The company has followed these accounting policies consistently. The financial statements are prepared under accrual basis of accounting. (B) Use of Estimates The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statement and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/ materialized. (C) Fixed Assets Fixed Assets are stated at their acquisition cost including incidental expenses less accumulated Depreciation. (D) Inventories A Raw Material At Cost B Traded Goods At Cost C Finished Goods (Packed) At Cost or Market Value Whichever is Less D Semi Finished Goods(Un Packed) At Cost E Stock in Process At Cost G Stores & Spares At Cost (F) Investments Investments are valued at cost of acquisition. (G) Sales Sales are accounted at realized value and as per date of bill of lading. (H) Depreciation Depreciation has been provided on the straight line method in accordance with provision ofSection205 (2) (b) at the rates prescribed in Schedule XIV of the Companies Act, 1956 on pro ratabasis with respect to the period of use. (I) Foreign Exchange Transactions (a) Monetary Assets and Liabilites related to foreign currency transaction remaining unsettled at the end of the period are translated at period end rates. The difference in translation

81

of monetary assets and liabilites and realised gain or losses on foreign exchange transaction other that those relating to fixed assets aquired from outside India are recognised in the Profit & Loss Account. (b) In respect of transaction covered by forward exchange contracts, the difference between the contract rate and the spot rate on the date of the transaction is charged to profit & loss account over the period of contract. (c) Balance of EEFC A/c.as on Balance Sheet date is recorded at the exchange rate prevailing at the year end rate. (J) Retirement Benefits Company's contribution to provident funds and Employee's State Insurance are charged to profit & loss account. Gratuity and other retirement benefits are being accounted for on cash basis. (K) Revenue recognition Revenue in respect of Insurance, Interest, Commission and other claims etc, is recognized only when it is reasonably certain that the ultimate collection will be made. (L) B-17 Bond (Excise Duty) (a) The excise duty paid in respect of raw material purchased and used for manufacture does notformpart of consumption of raw material to the extent of the Cenvat Credit availed. Such duty isdebited to B-17 Bond Account and adjusted against excise duty payable on the finished goods. (b) The excise duty payable on Stock of finished goods not cleared from excise bonded warehouseis neither included in expenses not in the value of such stock but is accounted for on clearance of goods.However,non-provision of this liability will not effect the profit for the year. (M) Income Tax Provision for Income Tax has been made in the books of account after availing of the exemption u/s 10B of I.T. Act as the company is 100 % Export Oriented Undertaking (EOU) (N) Contingent Liabilities Contingent Liabilities are disclosed by way of notes to the accounts. Provision is made in the accounts in respect of those liabilities which are likely to materials after the year end till the finalization of accounts and have material effect on the position stated in the accounts. (2) No provision has been made for doubtful debts and advances. In the opinion of the management, it will be realised in due course. In the opinion of the Board, the current assets, loans and advances are approximately of the value stated if realized in the ordinary course of business. The provision of all known liabilities are adequate and not in excess of the amount realized necessary. (3) The balance of Sundry Debtors, Sundry Creditors, Loans and Advances are subject to confirmation and reconciliation. Adjustment, provision if any required, will be made on reconciliation. (4) Director Remunaration Paid Rs.12.99 Lacs Paid During the Year (P.Y. 9.42 Lacs) (5) Contingent liabilities:

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[a] Letter of credit issued by the Bank Rs.99.12 Lacs for import of raw material & capital goods.(PY Rs.383.23 Lacs) [b] A bank guarantee for Rs.Nil Lacs (P.Y.Rs.1.00 Lacs) [c] Excise duty payable as per B-17 bond Register of Rs.601.56 Lacs (P.Y. Rs.657.29 Lacs) against Solvency certificate given by Managing Director of the Company for Rs.700.00 Lacs (P.Y.Rs. 700.00 Lacs) to theAppropriate authority. [d] Disputed Income Tax Liability :

A.Y.01-02 Rs. 21.65 Lacs. A.Y.01-02 Rs. 13.51 Lacs. A.Y.03-04 Rs. 5.63 Lacs.

[e] Disputed TDS Liability as under.

A.Y.01-02 Rs. 56.89 Lacs. A.Y.02-03 Rs. 26.19 Lacs. A.Y.03-04 Rs. 69.31 Lacs. (In above, CIT (A) has passed the order in favour of the the Company. However the department has preferred appeal with ITAT.) (6) Auditor's Remuneration (including service tax, as applicable) Rs.in Lacs P a r t i c u l a r s Year ended Year ended 31-03-2006 31-03-2005 1 Fees as Auditor 0.65 0.66 2 For Other Serrvices 0.22 0.35 (7) Estimated amount of contracts remaining to be executed on capital accounts and not provided for Rs. Nil ( Pr. Year Rs.2.00 Lacs ) (8) Related Party Disclosure as per AS-18 A. Related Party and their relatioship Associates Umang Metallurgicals Pvt Ltd Asiatic Industries Adorn Specility Polymers ( P) Ltd Continental Chemicals Pamasol International Orio Shanghai Colours Pvt. Ltd. Shiva International Aastropure Electrosystems Pvt. Ltd. Enterprises in which key management personnel & their relatives are interested

83

B. Transactions during the period with Related Parties are as under :

Rs. In Lacs Name of Related Party/Transaction Related Parties Key Management Personnel 2005-06 2004-05 2005-06 2004-05 Purchase Goods & Materials 224.45 185.19 0.00 0.00 Job Charges 95.99 76.59 0.00 0.00 Fixed Assets 2.97 10.92 0.00 0.00 Sales Goods & Materials 339.29 858.68 0.00 0.00 Fixed Asset 0.00 0.00 5.40 0.00 Expenses Other 12.96 31.36 0.00 0.00 Loan Taken 27.48 168.82 108.85 0.00 Given 40.18 45.50 112.79 0.00 Outstanding 153.18 5.79 1.24 0.00 Note : Related party relationship is as identified by the Management and relied upon by the auditors (9) Additional information pursuant to provisions of para 3, 4C & 4D of part II of Schedule VI to the Companies Act,1956 : A Licensed & Installed capacity as certified by the management : P a r t i c u l a r s 2005-06 2004-05

A Licensed Capacity N.A N.A B Installed Capacity N.A N.A

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B Production. Opening and Closing Stock of Finished Goods : P a r t i c u l a r s 2005-2006 2004-2005 Kgs. Rs. Kgs. Rs.

Opening Stock 138081 15379287 17347 2109323

Production # 5311229 0 4201018 0

Closing Stock 150257 10339283 138081 15379287 # Production includes captive consumption of 520419 Kgs. (P.Y. 140676 Kgs.) C Breakup of Raw Materials Consumed : Material Consumed 2005-06 2004-2005 Kgs. Rs. Kgs. Rs. 6 Nitro 51521 6226578 46836 5450712

1 Diazo 350 54304 12116 1710538

1 PMP 28123 4814823 19767 2312443

4 NAPSA 32760 6589022 21982 3872608

Beta Napthol 39219 2652434 63492 4909451

Caustic Soda Lye/Flacks 164129 2539485 573105 6504817

Cynuric Chloride 27002 1846564 22662 1463379

D.A.S.A 713106 102364818 564028 79179656

H.Acid 813238 115173940 793760 121291925

M.P.D 249357 26888040 236980 28379343

Octonal 14652 638987 11241 502104

P.C.V.S. 3104 1003877 8359 2392984

O.A.V.S. 3529 757952 5000 1010650

P.N.A. 256800 14859397 255164 14332614

Picramic Acid 24999 4620149 9935 1715373

Resorcinol 37541 14646495 15522 3046858

Soda Ash 503446 5433996 338019 3176218

Sodium Nitrtie 611645 10048197 560539 8224006

S.P.M.P 8701 1612358 3057 528725

Vinyl Sulphone 94066 9531364 172874 17341661

Others 0 138192702 0 76527619

Material Consumed 470495482 383873684

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D Consumption of Raw Materials & Stores & Spares : P a r t i c u l a r s 2005-2006 2004-2005 Rs. % Rs. % Raw Materials Imorted 211418614 44.94 277091683 72.18 Indigenous 259093907 55.07 106782002 27.82 Total 470495482 100.00 383873685 100.00

Stores &

Spares Imorted 1066024 42.13 1697572 57.87 Indigenous 1464047 57.87 1235938 42.13 Total 2530071 100.00 2933510 100.00 E Traded Goods Purchases : P a r t i c u l a r s 2005-06 2004-2005 Kgs. Rs. Kgs. Rs. Iron Ore - 598071 10303290 4231762 Highseas 141600 4953530 97286 13057479 Trading 0 0 400 107982 Total 141600 5551601 10400976 17397223 F Breakup of Sales M a n u f a c t u r e d 2005-2006 2004-2005 Kgs. Rs. Kgs. Rs. Direct Export 3770166 516741197 3215898 425110792 Export Through Exporters 762062 93439973 712262 85856465 Local 266617 29695279 43760 6390420 Total (1) 4798845 639876449 3971920 517357677 Traded Kgs. Rs. Kgs. Rs. Iron Ore 2149520 1117252 2578950 1190911 Highseas 141600 4898632 97286 13473229 Trading 0 0 400 99894 Total (2) 2291120 6015884 2676636 14764034 Total (1+2) 7089965 645892333 6648556 532121711

(10) (a) On the basis of the information available with the Company, there is no amount due remaining unpaid to Small Scale Suppliers within the meaning of " The Interest on Delayed Payments to Small Scale & Ancillary Undertakings Act".

(b) The small scale undertakings to which the Company owes amounts outstanding

for more than 30 days are as stated below :

Appex Dyestuff Industries Pashupati Industries A.R. Plastic Industries Pooja Industries Arun Dyestuff Industries R K Industries Bhavin Industries Shah Industries Bholenath Chemicals Shreechem Intermediates

86

Continental Chemicals Shreenath Orgochem Pvt. Ltd. Dev Dye Chem Industries Shyam Industries Eco Safe Containers Solar Chemferts Pvt. Ltd. G.B. Packaging Industries Sun Industries Goodluck Plastic Industries Nutan Dye Chem Hexone Interchem Pvt. Ltd. Supack Industries Pvt. Ltd. Isha Plastic Industries Surya Container Pvt. Ltd. Kemit Chemicals Pvt. Ltd. Swati Industries Mitul Chemicals (Gujarat) Pvt. Ltd. Umang Metallurgicals Pvt. Ltd. Supack Industries Pvt. Ltd. Ushanti Colour Chem Pvt. Ltd. Shree Rasayan Enterprises

(11) Expenditure in foreign currency incurred during the year.(Rs. In Lacs) P a r t i c u l a r s 2005-06 2004-2005

(Rs.) (Rs.) Raw Materials & Stores & Spares 2124.85 1054.72 Foreign Traveling Exp. 18.35 12.68 Foreign Sales Commission 43.10 18.16 Foreign discount/Claim 7.10 9.94 Foreign Bank Charges 10.78 9.32 Others 27.68 29.53 Total 2231.86 1134.35 (12) Earning in Foreign Currency.

P a r t i c u l a r s 2005-2006

(Rs in Lacs) 2004-2005

Direct Export (FOB Value) 5026.02 4118.14 (13) Provision for Deferred Tax Liability. In Accordance with Accounting Standard –22 issue by The Institute of Chartered Accountants of India,in view that the Company is 100% Export Oriented Undertaking and its profitsare exempt u/s 10 B of Income Tax Act. Deferred Tax Provisions has not been made until the profit of companybecame taxable. (14) Prior period items consists a sum of Rs. 63.24 Lac which represents amount of claim of Electricity Duty of earlier years paid to GEB. (15) None of Employee employed through the year and in receipt of remuneration which in aggregate was not less than Rs.24,00,000/- per annum and if employed for the part of the year than not less than Rs.2,00,000/- per month. (P.Y. Rs. Nil) (16) Previous year figures have been regrouped and rearranged to make it comparable with the current year figures. Figures in brackets denotes previous year figures. (17) Schedule ‘A’ to ‘S’ integral part of the accounts.

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(Annexure V - RESTATED CASH FLOW STATEMENTS

Asiatic Colour Chem Ind. Ltd.

Cash Flow Statement for the year ended 31st March,2006

Particulars

Year Ended March 31,06 (Rs. In Lacs)

Year Ended March 31,05 (Rs. In Lacs)

A CASH FLOW FROM OPERATING ACTIVITIES

Profit before Tax 297.91 107.03 Adjustments for Depreciation 41.42 37.14 Misc. expenditure w/off 0.00 0.05 Bad Debts w/off 0.00 1.73 Unrealised exchange loss(net) 3.84 Interest paid 197.60 184.22 Prior Period Adjustment 63.24 -3.36 Income tax prov for earlier years -6.84 Dividend 0.00 0.00 Loss on Sale of Fixed Assets 1.43 0.00 Profits on Sale of Investment 0.00 0.00 Interest Income -7.35 293.35 -12.21 207.57

Operating Profit before Working Capital Changes 591.26 314.60

Adjustments for Change in Working Capital

Trade Receivables (Incl. Export bill purchase/negotiated -638.47 -393.68

Other Receivables 145.48 -127.73 Inventories 117.78 -205.40 Trade Payables -456.40 442.23 -831.61 -4.02 -288.60 Cash Generated From Operations -240.36 26.00 Direct Taxes Paid (Net of Refunds) -3.93 2.15 Cash Flow Before Extraordinary Items -244.28 28.15 Depreciation on Adjustments -41.42 -37.14 Net Cash flow from Operating Activites -285.70 -8.99

B CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (Net of sale proceeds) -130.99 120.03

Proceeds of Sale Investments 0.00 0.00 Proceeds on Sale of Fixed Assets 2.00

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Interest Received 7.35 Dividend Received 0.00 0.00 Net Cash Used in Investing Activities -121.64 120.03

C CASH FLOW FROM FINANCING ACTIVITIES

12.21 Secured Loans 518.29 -49.33 Unsecured Loans 35.36 127.14 Deposit with Banks 10.86 166.07 Dividend Paid -3.24 0.00 Dividend Tax -0.34 Deferred Tax Liability 0.00 0.00 Interest Paid -197.60 -184.22

Net Cash Flow from Financing Activities 363.32 71.87

D NET CASH INCREASE/DECREASE IN

CASH AND CASH EQUIVALENTS (A+B+C) -2.60 220.05

Opening Balance of Cash & Cash Equivalents 14.44 381.14

Closing Balance of Cash & Cash Equivalents 11.84 161.06

Annexure – VI

Statement of dividend paid For the year ended 31st March

Particulars 2006 2005 2004 2003 2002 2001

On Equity Share Capital

Paid up share capital 3.24 3.24 3.24 3.24 3.24 3.24 Face value (Rs.) 10.00 10.00 10.00 10.00 10.00 10.00 Rate of Dividend % 10% 10% - - 400% 200% Amount of Dividend 0.32 0.32 - - 12.95 6.48 Corporate Dividend tax 0.05 0.03 - - 1.30 0.65

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ASIATIC COLOUR-CHEM INDUSTRIES LIMITED

Annexure – VII Performance Ratios: SUMMRY OF ACCOUNTING RATIOS YEAR ENDED MARCH, 31 2006 2005 2004 2003 2002 2001 Basic & diluted EPS (Rs.) 102.23 31.84 54.61 33.78 40.36 86.17 Net Asset Value per Share (Rs.) 546.34 445.26 414.51 359.88 326.08 329.70 Return on net worth ( % ) 18.71% 7.15% 13.18% 9.39% 12.38% 26.13% Weighted average no. of Eq. shares outstanding during 323750 323750 323750 323750 323750 323750 the period/year Number of Eq. Shares outstanding during the period/year 323750 323750 323750 323750 323750 323750 Notes to Accounting Ratios 1. Formula for computing above ration are as follows : Basic & Diluted EPS (Rs.) = Net profit after tax attributable to eq. Shareholders Weighted average no. of eq. shares outstanding during year Net Asset Value per share = Net worth - restated, at the end of the period/year Total no. of Eq. Shares outstanding at the end of year Retunr on Net Worth ( % ) = Net profit after tax Net worth

NPAT 33.10 10.31 17.68 10.94 13.07 27.90 WEIGHT NO. OF EQ.

SHARES 0.32 0.32 0.32 0.32 0.32 0.32

NET WORTH 176.88 144.15 134.20 116.51 105.57 106.74 NO. OF EQ. SHARES 0.32 0.32 0.32 0.32 0.32 0.32

NPAT 33.10 10.31 17.68 10.94 13.07 27.90

NET WORTH 176.88 144.15 134.20 116.51 105.57 106.74 2. Net profit -restated as appearing in the "summry statement of P&L has been considered for computing above ratio 3. Earning per share calculation are done in accordance with accounting standard 20 issued by ICAI 4. Net worth means Eq. Sh. Capital + Reserve Surplus - Miscellaneous exp. Not written off

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Annexure - VIII

Capitalization Statement: Particulars As at March, 31st 2006 2005 Total Debt: Short Term Debt 212.47 157.10 Long Term Debt 0.30 - Shareholders Funds: Share Capital 3.24 3.24 Reserves & surplus 173.64 140.91 Less: Misc. expenditure - - Total Shareholders Funds 176.88 144.15 Long Term Debt/ 0.00 - Shareholders funds

Tax Shelter Statement:

Annexure – IX

For the year ended 31st March Particulars

2006 2005 2004 2003 2002 2001

Profit before current and deferred taxes, as restated (A) 36.11 10.70 8.67 20.78 13.92 28.79 Tax rate, % 33.66 36.59 35.88 36.75 35.70 39.55

Tax impact (A) 12.15 3.92 3.11 7.64 4.97 11.39

Adjustments

Permanent differences Deduction u/s 80HHC of the Income Tax Act - - - - - 5.13 Deduction u/s 80IA of the Income Tax Act - - - - - 2.91 Deduction u/s 10B of the Income Tax Act 29.44 6.53 4.53 14.45 13.92 14.82

Other adjustments (0.44) (0.10) - (0.10) 0.92 (0.38) Total (B) 29.00 6.43 4.53 14.35 14.84 22.48

Temporary differences -

Diff.between book dep.and tax dep. 1.94 3.24 3.97 3.97 3.99 6.19

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Research & Development expenditure - - - - -

Total (C) -

Net Adjustment (B+C) 30.94 9.67 8.51 18.32 18.83 28.67 Tax saving thereon 10.41 3.54 3.05 6.73 6.72 11.34 Net tax payable as per I.T. returns (D=A-B-C) 1.74 0.06 0.06 0.90 - 0.05

Current Tax Under MAT 1.09 0.31 0.32 0.16 - 0.63

Annexure – X

Details of Other income

Rs. in millions

YEAR ENDED MARCH, 31

PARTICULARS 2006 2005 2004 2003 2002 2001

Interest - - 0.05 - 0.68 0.50

Other Misc. Income 0.05 0.02 0.00 0.15 0.29 0.67

Total 0.05 0.02 0.05 0.15 0.97 1.17

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Annexure – XI Rs. Million

ASIATIC COLOUR-CHEM INDUSTRIES LIMITED

AGE WISE DEBTORS ANALYSIS

2006 2005 2004 2003 2002 2001

Debtors

0-180 242.00 189.01 150.54 151.03 118.14 150.09

>180 34.65 23.79 22.89 13.87 22.59 8.77

TOTAL 276.65 212.80 173.44 164.90 140.73 158.86 Rs. Millions

Annexure – XII LOAN & ADVANCE 34.02 48.57 36.78 12.14 15.66 25.55 Adv. Rec. in cash/Kind 9.40 2.81 5.11 4.42 2.08 2.26

Adv. To Suppliers 10.73 33.44 21.69 1.36 6.69 15.00

Bal. With Excise 1.30 0.24 0.00 0.01 0.52 0.01

Export benefit recvb 7.38 7.17 5.29 2.92 3.14 6.36

Deposits 2.71 2.72 2.69 2.19 2.16 1.15

Prepaid Exp. 1.50 1.04 0.05 0.09 0.10 0.06

Adv. Tax/TDS 0.61 1.15 1.95 1.16 0.96 0.70

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Annexure – XIII

ASIATIC COLOUR-CHEM INDUSTRIES LIMITED

UNSECURED LOAN'S BALANCE AS ON

31ST MARCH

2006 2005 2004 2003 2002 2001

UNSECURED LOAN KASHIRAM H. AGRWAL HUF 300000

Pari Mangaldas Shambhudas 508950

Pari Natvarlal Shambhudas 508950

Shraddha Corporation 513425

Ajola Finance Limited 107458

Gupta Screen Print 1628081

Manish Madanlal 1519542

Asiatic Industries 6675000

Dilip G.Agrawal 302000 Hajariprasad Gopiram Agrawal (HUF) 766837 Hajariprasad G Agrawal (HUF) 750000

Kapuriben G.Agrawal 298000

MAHESH K. AGRAWAL 123711 1058305 549760

Kashiram H Agrawal 1000000

Pamasol International 6745297 11204978

TOTAL 16799089 13263283 549760 1531325 2116837 300000

Loan from

Promoters/Directors 6.87 13.26 0.55 - - 0.30

Others 16.80 13.26 0.55 1.53 2.12 0.30

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Annexure – XIV

SECURED LOAN'S BALANCE AS ON

31ST MARCH

Secured Loan 2006 2005 2004 2003 2002 2001

Term Loan 10.39 - - 0.05 0.26 0.44

Working Capital Loan 185.28 143.84 148.77 127.48 121.59 116.37

195.67 143.84 148.77 127.54 121.85 116.81

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Annexure – XV

Related Party Disclosure as per AS-18 A. Related Party and their relatioship Associates Umang Metallurgicals Pvt Ltd Asiatic Industries

Adorn Specility Polymers ( P) Ltd Continental Chemicals Pamasol International Orio Shanghai Colours Pvt. Ltd. Shiva International Aastropure Electrosystems Pvt. Ltd. Enterprises in which key management personnel & their relatives are interested B. Transactions during the period with Related Parties are as under : Rs. In Millions Name of Related Party/Transaction Related Parties 2005-06 2004-05 2003-04 Purchase Goods & Materials 22.45 18.52 18.45 Job Charges 9.60 7.66 4.53 Fixed Assets 0.30 1.09 - Sales Goods & Materials 33.93 85.87 48.73 Fixed Assets - - - Expenses Other 1.30 3.14 0.18 Loan Taken 2.75 16.88 24.55 Given 4.02 4.55 - Outstanding 15.32 0.58 0.04 Note : Related party relationship is as identified by the Management and relied upon by the auditors Related Party Transactions: Name of Related Party Relationship

Aastropure Electrosystems pvt. Ltd. Brother of MD is director Adorn Specility Polymers (P) Ltd. Director (KHA) is director Asiatic Industries Brother of MD is Proprietor Continental Chemicals Brother of MD is partner Orio Shanshai Colours Pvt. Ltd. Spouse of MD is director Pamasol International Proprietorship conecern of Director Shiva International Proprietorship conecern of Director Umang Metallurgicals Pvt. Ltd. Brother of MD is director

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Annexure – XVI Investments: Long Term Investments 31ST MARCH

2006 2005 2004 2003 2002 2001 Trade (Quoted) - - - - - - Trade (Unquoted) - - - - - 0.50 In subsidiary co. - - - - - - Quoted Investment Book value 0 0 0 0 0 0 Market Value 0 0 0 0 0 0 ANNEXURE XVII Qualifications in the audit report are as under In our opinion and according to the information and explanation given to us, the Company has accepted deposits from the public during the period covered by our audit report . The Company has not complied with the provisions of section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal. ANNEXURE XVIII Changes in Significant Accounting Policies There have been no changes in the significant accounting policies during the preceding five years. FINANCIALS OF OUR GROUP CONCERNS For details of the financials of our Group Concerns please refer the section titled “Promoter Group Companies and Entities” beginning on page [●] of this DRHP.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements included in this draft red herring prospectus. You should also read the section titled “Risk Factors” beginning on page [●] of this draft red herring prospectus, which enumerates number of factors and contingencies that could impact our financial condition and results of operations. The following discussion relates to our Company on a standalone basis, and, unless otherwise stated, is based on our restated unconsolidated financial statements, which have been prepared in accordance with Indian GAAP, the accounting standards and other applicable provisions of the Companies Act, 1956, and the SEBI guidelines. Our Fiscal ends on March 31 of each year. OVERVIEW Our Company is engaged in the business of manufacturing Synthetic Organic Dyes mainly for the leather and fur industry. We are the 100% Export Oriented Unit. Synthetic Organic Dyes is a broad term, which includes dyes and pigments. A dye is a coloured substance or an organic compound, which when applied in a solution to a fabric, imparts a colour resistant to washing. The Indian Synthetic Organic Dyes Industry has grown by over 50 per cent during the last decade. India is now the second largest producer of dyes and dye intermediates in Asia after China. As India integrates itself with the world market, SOD segment could play a leading role in shaping the performance of Indian Chemical Industry. Our Company was promoted by Mr. Mahesh K. Agrawal on January 1995. Initially, our Company was engaged in the manufacturing of reactive dyes for textiles which was sold in the domestic market to merchant exporters. Initially we started direct exports to USA and obtained the status of Government Recognised Export House. Currently we export to Italy, Turkey, USA, Germany, Switzerland and many other countries. We have obtained ISO 9001 & 9002 certifications for manufacturing of Synthetic Organic Dyes. Our Company over a period has added range of other dyes to cater to the leather, paper, silk, fur, ink, wool, nylon etc. Currently, our business model is focused around production and marketing of Synthetic Organic Dyes & Dyes Intermediates for leather and fur industry by Exporting, Trading & Manufacturing.

Today there are about 50 units in the organized sector and 1000 units in the small scale, with a total annual production of about 1,30,000 tonnes p.a. or about 7 per cent of the world production. The world market of Dyes, Pigments and Dye Intermediates is estimated at approx value of US $ 23 Billion. Currently, over 80% of dyes are consumed by the Textile Industries. However, in view of new applications in various areas, percentage of consumption by Textile Industries is expected to decrease.

Indian Synthetic Organic Dyes are being exported to East, South and West Asia, Africa, USA, European Countries, of which US alone accounts for almost 20 %. From a meager export of 1.5 million US dollar in 1963-64, export during 1979-80 reached a level of 35 million US dollar and has touched over 1.1 billion US dollar during 2004--2005. The domestic Synthetic Organic Dyess industry plans to target export turnover of $2billion by the year 2010, raising its global market share from 6% to 10%.

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Significant Accounting Policies Preparation of financial statements in accordance with Indian Generally Accepted Accounting Principles, the applicable accounting standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, require our management to make judgements, estimates and assumptions regarding uncertainties that affect the reported amounts of our assets and liabilities, disclosures of contingent liabilities and the reported amounts of revenues and expenses. These judgements, assumptions and estimates are reflected in our accounting policies, which are more fully described in the Auditor’s Report in this DRHP. Certain of our accounting policies are particularly important for the portrayal of our financial position and results of operations and require the application of significant assumptions and estimates of our management. We refer to these accounting policies as our “significant accounting policies”. Our management uses its historical experience and analyses, the terms of existing contracts, historical cost convention, industry trends, information provided by our agents and information available from other outside sources, as appropriate, when forming its assumptions and estimates. However, this task is inexact because our management is making assumptions and providing estimates on matters that are inherently uncertain. While we believe that all aspects of our financial statements should be studied and understood in assessing our current and expected financial condition and results, we believe that there are certain critical accounting policies that warrant additional attention. For details of these accounting policies kindly refer Annexure III of the Auditors’ Report on Page [•] of this DRHP. In dyestuff and Dye intermediate Industries, Asiatic Colour-Chem Industries Ltd. is First Company which has Opened Branch in China. It has successfully completed 3 years of its operation in China. Our Company has a representative office in China and has been granted permission by Shanghai Municipal Government to continue its business operation for next 3 years as well. The company has done proper market survey and study of the world market regarding setting up of warehouse. Company proposes to set up and warehouse its product at bonded warehouse in China, Turkey and Europe. This agreement will help company to negotiate with customer at profitable terms and conditions so that it may boost its sales and will lead to Supply of the material to customer at Just In Time approach, so that company can reduce its carrying cost and it also leads to avoid delays in shipment. This will also help to enter directly to the tanneries with finished product at their Proximity. Overview of our Results of Operations: The Year 2005-06 witnessed the robust growth of Indian Economy with Real GDP crossing barriers to reach at 8.1%, contribution coming at the tune of 9.4% from Manufacturing sector. Thanks to the continuing expansion of the Indian economy and increasing demand from Asia and Europe and major changes in product mix, the company has achieved a remarkable profitability. We have to at times lower the prices of finished goods to compete in the market. Our total income has grown from 542.37 million in FY 05 to 645.29 million in FY 06. The total profit after taxation for FY 06 is Rs. 33.10 million compared with Rs. 10.31 million for FY.05.

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During the year 2005-06 our Turnover was 645.89 million against comparison of last year Turnover which was 532.12 million. Our products are Exported to more 42 countries and we always look forward for expansion in the New international Market. We export to various countries including Argentina, China, Germany, Italy, Korea, Switzerland, Turkey and other countries of Asia Pacific, Americas and Europe. Other Income : Other income is derived from interest received on deposits and debts, income from investments other than trade, gain on foreign exchange fluctuations, liabilities and provisions no longer required and written back in, claims received and other miscellaneous income. Other income as a percentage of total income was a negligible percentage of our total income. Expenditures : Raw materials The raw material consumed as a % to turnover has increased marginally during the past three financial years with slight variations each year. The fact is evident from the table given below: (Rs. in Million)

Particulars 31-Mar-06 31-Mar-05 31-Mar-04 Sales 645.89 532.12 510.95 Raw Material Consumed 470.5 383.87 357.77 %age to sales 72.85% 72.14% 70.02%

The raw material consumed as a % to total operating expenses has increased during the past three financial years with slight variations each year. The fact is evident from the table given below: (Rs. in Million)

Particulars 31-Mar-06 31-Mar-05 31-Mar-04 Operating Expenses 592.29 510.75 482.53 Raw Material Consumed 470.5 383.87 357.77 %age to sales 79.44% 75.16% 74.14%

Manufacturing and other expenses: The details of manufacturing and other expenditure are as under: (Rs. in Million)

Particulars 31-Mar-06 31-Mar-05 31-Mar-04 Sales 645.89 532.12 510.95 Manufacturing Expenses 70.19 59.84 57.87 %age to sales 10.87% 11.25% 11.33% Employees Emoluments 8.15 7.66 7.8

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%age to sales 1.26% 1.44% 1.53% Administrative Expenses 6.27 6.18 6.51 %age to sales 0.97% 1.16% 1.27% Selling & Distribution Exp. 31.38 38.87 37.28 %age to sales 4.86% 7.30% 7.30%

• Manufacturing expenses as a % of sales were about 11.33% during FY04. During FY05

manufacturing expenses have marginally declined to 11.25%. In FY 06 the percentage has again gone down to 10.87%.

• Employees Emoluments as % of sales were at about 1.53% of sales in FY 04 and have gone down to 1.44%. In FY 06 the percentage of Employees Emoluments as a % of sales is 1.26%.

Taxes : Income Taxes are accounted for in accordance with Accoutning Standard –22 issued by the ICAI on “Accounting for Taxes on Income “. taxes comprise current, deferred and fringe benefit taxes. Provision for current taxes is made at the current tax rates after taking into consideration the benefits admissible under the provisions of the Income Tax Act 1961. Please refer to “Statement of Possible Tax Benefits available to the Company and its shareholders” included on page in this Red Herring Prospectus for further details of our tax benefits. Deferred tax is recognised on timing differences (being the difference between the taxable income and the accounting income that originate in one year and are capable of reversal in one or more subsequent years). deferred tax assets and liabilities are computed on the timing differences applying the substantially enacted tax rate. Deferred tax assets arising on account of unabsorbed depreciation or carry forward of tax losses are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax in respect of timing difference which originate and reverse during tax holiday period are not recognised. Changes in Accounting Policies and Estimates There have been no significant changes in the accounting policies for the last five years. Our Results of Operations: Particulars 2006 2005 2004 2003 2002 Sales 645.89 532.12 510.95 551.58 370.99 Of Products Manufactured by the Co. 639.88 517.36 495.09 525.27 370.99 Of products Traded by the Company 6.02 14.76 15.87 26.3 Increase/(Decrease) in Stocks -0.65 10.23 -2.59 7.52 9.86 Other Income 0.05 0.02 0.05 0.15 0.97 Total Income 645.29 542.37 508.41 559.25 381.82

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Raw Material Consumed 470.5 383.87 357.77 388.64 280.83 %to Total Income 72.91% 70.78% 70.37% 69.49% 73.55% Manufacturing Expenses 70.19 59.84 57.87 55.01 39.88 %to Total Income 10.88% 11.03% 11.38% 9.84% 10.44% Employees Emoluments 8.15 7.66 7.8 5.96 5.08 %to Total Income 1.26% 1.41% 1.53% 1.07% 1.33% Administrative Expenses 6.27 6.18 6.51 4.97 4.29 %to Total Income 0.97% 1.14% 1.28% 0.89% 1.12% Selling & Distribution Exp. 31.38 38.87 37.28 42.74 22.76 %to Total Income 4.86% 7.17% 7.33% 7.64% 5.96% Depreciation 4.14 3.71 3.41 3.15 2.92 %to Total Income 0.64% 0.68% 0.67% 0.56% 0.76% Financial Expenses 19.07 17.2 13.81 12.98 12.1 %to Total Income 2.96% 3.17% 2.72% 2.32% 3.17% Net Profit Before Tax 29.79 10.7 8.67 20.78 13.92 %to Total Income 4.62% 1.97% 1.71% 3.72% 3.65% NPAT after adj. prior period item 33.1 10.31 17.68 10.94 13.07 %to Total Income 5.13% 1.90% 3.48% 1.96% 3.42%

Comparison of our financial statements for the year ended March 31, 2006 with the year ended March 31, 2005 Sales and Operating Income : Sales increased from Rs.532.12 Million in 2005 to Rs.645.89 million in 2006, registering an increase of 21.38% mainly due to increase in exports sales, sales after expansion in new international market covering countries like Canada, Iran, Poland, Netherland, Mauritious, Taiwan etc. However, Traded sales declined from Rs.14.76 million to Rs.6.02 million during the year. Similarly Profit before tax increased from Rs.10.70 million to Rs. 29.79 million registering an increase of 237.48% mainly due to reduction in selling and distribution expenses. Other Income : Other Income shown an increase during the year which is mainly from interest received on security deposit with GIDC and loans granted to the staff of our company at very nominal rate. Interest received on Term deposits with Bank has been netted off against interest paid to the Bank on borrowings.

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Operating Expenses : Operating expenses showed an increase of 15.96% in tune with the increase in operations. Administration and Other Expenses : Administration and Other Expenses more or less remain at the same level by imitating necessary steps for reduction of expenditure under every possible head. Interest and Finance Charges : Interest and Finance charges increased by 10.87% they were Rs.19.07 million in the year 2005-06, in the year 2004-05 it was 17.20 million. This increase was due to Term Loans, Working capital limits from SBI, unsecured loans and other charges paid to Banks. PBDIT and PAT Our profit margins have increased in the year 2005-06. This increase was due to the change in the product mix of our company from low margin Black Dyes to Higher margin Coloured Dyes.

(Rs. in Million) Particulars 31-Mar-06 31-Mar-05

Sales 645.89 532.12 PAT 33.10 10.31 %age to sales 5.12% 1.94% PBDIT 53.00 31.62 %age to sales 8.21% 5.94%

Comparison of our financial statements for the year ended March 31, 2005 with the year ended March 31, 2004 : Sales and Operating Income : Sales increased from Rs.510.95 Million in 2004 to Rs. 532.12 million in 2005, registering an increase of 4.14% mainly due to increase in DTA sales. However, traded sales declined from Rs.15.87 million to Rs.14.76 million during the year @ 6.95% reduce from year 2004. Similarly operating profits increased from Rs. 25.88 million to Rs. 31.62 million. Other Income : Other Income shown an reduction of during the year which is mainly from interest received from loans granted to the staff of our company at very nominal rate. Interest received on Term deposits with Bank has been netted off against interest paid to the Bank on borrowings. Operating Expenses : Operating expenses showed an increase of 5.85% in tune with the increase in operations. Administration and Other Expenses : Administration and Other Expenses more or less remain at the same level by imitating necessary steps for reduction of expenditure under every possible head mainly under Professional & Consultancy Charges ,Stationary and Printing Expenses and Telephone expenses. This expense includes expenditure incurred for internal audit which is introduced during the current year.

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Interest and Finance Charges : Interest and Finance charges increased by 24.55% they were Rs. 13.81 million in the year 2003-04, in the year 2004-05 it increased to 17.20. This increase was due to mainly due to Term Loans, Working capital limits from SBI, unsecured loans and Bank Charges. PBDIT and PAT Our Net Profit margins have decreased from 3.46% in the year 2003-04 to 1.94% in the year 2004-05. This was due to the adjustment of deferred tax expenditure. (Rs. in Million)

Particulars 31-Mar-05 31-Mar-04 Sales 532.12 510.95 PAT 10.31 17.68 %age to sales 1.94% 3.46% PBDIT 31.62 25.88 %age to sales 5.94% 5.07%

Factors that may affect the results of the operations: Our business, results of operations and financial condition are affected by a number of factors, including: Factors that may affect the results of the operations: 1. Unusual or infrequent events or transactions:

There have been no unusual or infrequent transactions that have taken place. 2. Significant economic changes that materially affect or are likely to affect income from

continuing operations: Volatility in Foreign exchange rates may have an inflationary effect on cost of import of raw material. However, since we export a substantial proportion of our turnover, any inflationary effect on imports will be more than offset by higher realization on exports. Barring these factors, there are no significant economic changes that materially affect or likely to affect income from continuing operations.

3. Known trends or uncertainties:

Some of the raw materials, which are imported, have shown a volatile trend in the last 3 to 5 years. The cyclical movements in the prices of these materials seem to be on account of the changes in demand and supply position. As a sequel to the volatility in the price of raw materials, the end product prices tend to move up or come down in the same direction if not in the same proportion.

4. Future relationship between costs and revenue:

Other than as described elsewhere in this RHP, particularly in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition & Results of Operations of ACIL based on the Audited Consolidated Financial statements prepared as per Indian GAAP, to our knowledge there are no known factors that might affect the future relationship between costs and revenues.

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5. Seasonability of business: There are no products sold which are seasonal in nature.

6. Over dependence on Single supplier/ Customer:

We source our raw materials from a number of suppliers and do not have excessive dependence on any single supplier. Presently, 52.88% of our Total Sales is accounted through our 8 Clients. i.e. 51.55% of our Total Export Sales is through our 6 Overseas Clients. 57.81% Of Our Total Domestic Sales is derived from Our 2 Domestic Clients . Our customer base will further expand and we will be able to sell more products to more customers across the globe. This in turn would help to reduce the level of market risk to which we are exposed.

7. Competitive conditions:

We operate in a competitive environment as our principal products, synthetics organics dyestuffs are produced by a large number of other manufacturers in India and abroad. Players in this market generally compete with each other on key attributes such as technical competence, quality of products and services, pricing and track record. We compete with our competitors on the basis of our track record of quality, technical competence, distribution channels, logistical facilities and after sales relationships.

8. New products introduced last year:

As a part of the long term strategy and to rationalise our product mix we have started manufacturing the coloured dyes in addition to black dyes for leather products.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR Except as otherwise stated in this Draft Red Herring Prospectus, subsequent to last financial year, our Company has made a Bonus issue of 6,248,375 Equity Shares.

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OUR HISTORY AND BACKGROUND:

Our Company was incorporated on January 9, 1995 with the Registrar of Companies, Gujarat, Dadra & Nagar Haveli under the Companies Act, 1956 (No.1 of 1956) vide Registration No. 04-24128 of 1994-95. We have our registered office at: 1503, G. I. D. C., Phase – 1, Naroda, Ahmedabad – 382 330 (India). Mr. Mahesh Agrawal, our promoter, is a Commerce graduate from the University of Gujarat. He started his career in this line of business since he was 19 years, and has built the Company to its present size and scale of operations. He has significant insights into the functioning and intricacies of the chemical industry and has a knack for adopting new technologies in manufacturing processes. We are in the business of manufacturing Synthetic Organic Dyes mainly for the leather and fur industry. Synthetic Organic Dyes is a broad term which includes dyes and pigments. A dye is a coloured substance or an organic compound, which when applied in a solution to a fabric, imparts a colour resistant to washing. We have obtained ISO 9001 certifications for manufacturing of Synthetic Organic Dyes. Our Company over a period has added range of other dyes to cater to the leather, paper, silk, fur, ink, wool, nylon etc. Currently, our business model is focused around production and marketing of Synthetic Organic Dyes & Dyes Intermediates for leather and fur industry by Exporting, Trading & Manufacturing. We started our operations with a capacity of 360 MTPA and currently we have a capacity of 4800 MTPA. Our Company started its operations with a modest turnover of Rs. 42.89 million and a PAT of Rs. 5.28 million. Over the years we have gradually scaled up our level of operations and FY 2005-06 our Company has clocked a turnover of Rs. 645.89 million with a PAT of 33.10 million. During the year ended 31-3-2006 our products to leather and fur industry contributed to 80% of our turnover. Major Events:

YEAR EVENT

1995

Commenced our business operations by establishing manufacturing facilities for Reactive dyes and started direct exports as well.

1996 We paid the 1st Dividend of 10% during 1996.

1997

Issue of Bonus shares.

Acquisition of land at 1504, Industrial Area, Naroda to set up additional manufacturing capacity of 50 MT.

1998 Erection of 1st Spray drying unit

Introduction of Black Dyes for leather processing

1999 Installed the First Reverse Osmosis plant to produce Salt Free dyes

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2000 Recognized as an Export House

2001 Attained 100% EOU status

2002 Opened its Representative office in Shanghai, China

2003

Acquired ISO 9001:2000 Certification

Received Best Exports awards in the category of its size from GDMAI.

2004

Commencement of Acetanilide for back Integration in order to reduce cost & smooth procurement of raw material, followed by Eco-Friendly Salt Free Dyes.

2005

Introduction of value added dyes like Brown, Blue and widening its range of product offerings

2006

Second Bonus issue

MAIN OBJECTS: The Main objects of our company are as follows: “ To carry on business as manufacturers, produce, refine, process, formulate, mix or prepare, mine or otherwise acquire, exports, imports, buyers and sellers and dealers in all chemicals basis, intermediates or otherwise alkalies, acids, car dials, drugs, dyes, paints. To carry on the business as manufacturers, processors, importers, exporters, dealers, sellers, buyers, consignors, consignees, agents, stockists, suppliers of all classes, kinds, types and nature of chemical, dyes, pigments and auxiliaries, intermediates catalyst including but without limiting the generality of the foregoing, heavy chemicals, fine chemicals, organic and inorganic chemicals, pharmaceuticals, drug and medicinal chemicals, gum, allied chemicals and boiling agents for textiles, paints, cosmetics, pharmaceuticals, paper, processing, leather, metals, food pigments and other industries made from whatever substances, including minerals”. Change in Name and constitution of our Company since inception There has not been any change in the name and constitution of our Company since inception Changes in the Registered Office of our Company There has not been any change in the registered of our Company since inception Subsidiaries of Our Company Our Company does not have any subsidiary Shareholders’ Agreement Our Company does not have any subsisting shareholder’s agreement as on the date of filing this Draft Red Herring Prospectus.

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Other Agreements Save and except for normal Banking arrangements, our Company has not entered into any other agreements except as mentioned on page [•] under the head Collaborations/Tie-up/Association. Strategic Partners Our Company does not have any strategic partners. Financial Partners Our Company does not have any financial partners.

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OUR MANAGEMENT BOARD OF DIRECTORS Our Company is currently managed by our Board of Directors led by Mr. Mahesh K. Agrawal, our Chairman and Managing Director. He is in-charge of the overall management of our Company subject to the supervision and control of the Board. He is ably supported by professional and technically qualified team of executives specified in Operations, Finance, Marketing, Legal and Personnel. The following table sets forth the details regarding our Board of Directors as on the date of filing of this Draft Red Herring Prospectus.

Sr.No. Name, Age, Fathers Name, Designation,

Address & Occupation of Director Other Directorships/Partnerships/Proprietorships

1. Mr. Mahesh K. Agrawal (44) S/o Mr. Kashiram H. Agrawal Chairman and Managing Director A-101, Shilalekh, Shahibaug Nr. Subhash Bridge, Ahmedabad – 380 010. Occupation: Business

Pamasol International Shiva International

2. Mr. Ashwini H. Saini (40) S/o Mr. Huzursaran Saini Director B-29, Devdarshan Bunglows, New CG Road, Chandkhera. Ahmedabad. Occupation: Service

Nil

3. Mr. Mehta Bhumit M (26) S/o Mr. Mahendra Raj Mehta Non Executive & Independent Director 16, Sudarshan, 183 Garodia Nagar, Ghatkopar (E), Mumbai 400 077.

Nil

4. Mr. Anil Kumar Arora (27) S/o Mr. Kailash Arora Non Executive & Independent Director 111, Abode, Near Gandhi Bridge, Hasole, Ahmedabad. Occupation: Professional

Nil

Brief Profile of our Directors: 1) Mr. Mahesh K. Agrawal

Mr. Mahesh K. Agrawal, aged 44 years is our Company’s promoter and its Chairman and Managing Director. Mahesh started his career when he was only 19 years by joining his

109

father’s business of manufacturing dyestuffs and learnt the intricacies involved in this line of business. He oversees the marketing and export sales of our Company.

He kept experimenting with new technologies, unheard of at that point of time. He is among the first ones to use less popular, but advanced technology of reverse osmosis in dyestuffs industry. He recognized the importance of this technology long back and proved highly successful in today’s time in process control and to produce salt free dyestuffs. It not only saves costs for the manufacturer of dyestuffs as well as for the end users.

Mahesh travels extensively to European countries to establish and market his Company’s products to MNCs. He has flair to study the product and find new applications and manufacturing techniques. Our Company has also been recognized for its efforts for effluent treatment technology by DMAI for 2006.

2) Ashwini H. Saini

Mr. Saini, aged 39 years, is a Graduate in Commerce and a Post Graduate Diploma in Business Management. He oversees the functions relating to Central Excise, Customs Dept and liasioning with other government departments. He has been associated with our Company since inception and is on our Board, guiding the business of the Company and providing advice relating to crucial areas.

3) Mr. Mehta Bhumit M.

Mr. Mehta Bhumit M, aged 26 years, is our Non-Executive and Independent director. He is a graduate in Computer Science. He has also working experience of 3 years in Inventture Growth and Securities Ltd.

4) Mr. Anil Kumar Arora

Mr. Anil Kumar Arora, aged 27 years, is our Non-Executive and Independent director. He is as Chartered Accountant by profession. He is a professional consultant and is having over 9 years of experience in Accounts, Finance, Auditing, Taxation and MIS.

Borrowing Powers of the Board: The Board of Directors of our Company has power to borrow upto Rs. 100 crores as per the members’ resolution passed in the EGM of our Company held on 01st June 2006. Compensation to Wholetime Directors Mr. Mahesh K. Agarwal, our Chairman and Managing Director has been appointed for a period of five years with effect from April, 1, 2006 on the following terms.

Particulars Remuneration Basis salary Rs. 80,000 per month Perquisites Fully furnished house of HRA

Expenditure on gas, electricity, water and servants Mediclaim policy, personal accident insurance, LTC and club fees, contribution to PF, Gratuity etc., free use of company car, free telephone facility and reimbursement of expenses incurred

110

Particulars Remuneration by him for the business of the company. Allowances amounting to Rs. 60,000 per month Perquisites shall be valued as per IT Rules

Commission Not exceeding 1% of the profits at the end of each Financial year computed under the Companies Act. Ceiling on such commission is twice the annual basic salary.

Minimum remuneration In case of absence or inadequacy of profits in any financial year, salary, perquisites and allowances subject to the limits specified in para 1B of Section II of Part II of Schedule XIII of the Companies Act shall be payable.

Ashwini H. Saini is paid a gross monthly remuneration of Rs. 36,600/-. Corporate Governance The provisions of the listing agreements to be entered into with the Stock Exchanges with respect to Corporate Governance and the SEBI guidelines in respect of corporate governance becomes applicable to us at the time of seeking in-principle approval of the Stock Exchanges. We believe in adopting the best corporate governance practices based on the following principles in order to maintain transparency, accountability and ethics; 1) recognition of the respective roles and responsibilities of Board and the management 2) independent verification and assured integrity of financial reporting 3) protection of shareholders’ rights and priority for investor relations and 4) timely and accurate disclosure on all material matters concerning operations and

performance of the company. In compliance with the corporate governance statutorily prescribed, we have appointed the following committees of our board. 1. The Audit Committee 2. The Compensation/Remuneration Committee and 3. The Investor’s Grievances Committee. Audit Committee: The terms of reference of the Audit Committee covers the matters specified under Section 292A of the Companies Act, 1956. The Committee is responsible for effective supervision of the financial operations and ensuring that financial, accounting activities and operating controls are exercised as per the laid-down policies and procedures. The terms of reference of the Audit Committee comply with the requirements of Clause 49 of the listing agreement, which will be entered into with the stock exchanges in due course. The composition of the Audit committee is as follows;

Sr. No Name Designation on the committee 1. Anil Kumar Arora Chairman 2. Mahesh K. Agrawal 3. Bhumit Mehta

Compensation Committee: The composition of the Remuneration Committee complies with the requirements of Clause 49 of the listing agreement to be entered into with the Stock Exchanges.

111

The terms of reference of the Committee are: To determine and recommend to the Board of Directors the remuneration package of the

Managing Director and the Whole-time Director. To review and determine the remuneration package of the senior management. To approve in the event of loss or inadequate profits in any year the minimum remuneration

payable to the Managing Director and the Whole-time Directors within the limits and subject to the parameters as prescribed in Schedule XIII of the Companies Act 1956.

Grant of stock options under the Employees Stock Option Scheme and perform other functions of compensation committee as required / recommended by SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme ) Guidelines 1999.

To determine and amend the remuneration package of the key management personnel of the company and to frame policies to attract, motivate and retain personnel.

Other functions of a Remuneration Committee as required / recommended in the Listing Agreement.

The composition of the Remuneration Committee is as follows:

Sr. No Name Designation on the committee 1. Mahesh K Agrawal Chairman 2. Anil Kumar Arora 3. Bhumit M Mehta

Shareholders / Investor Grievance Committee : The composition of the Shareholders/Investor Grievance Committee complies with the requirements of Clause 49 of the listing agreement to be entered into with the Stock Exchanges. The terms of reference of the committee are; Approval of transfers of securities. Approve request for transfer of shares / transmission of shares, Dematerialization of shares,

rematerialization of shares, issue of duplicate shares / Bonds, issue of New certificates on Split / Consolidation / Renewal etc.

Monitoring investor’s complaints like transfer of shares, non receipt of annual reports, non receipt of declared dividends etc. and redress thereof.

Allotment and listing of shares Review of cases for refusal of transfer / transmission of shares. Redressing of complaints pertaining to investors relations complaints and issues related to

non compliance of various statutory compliances to SEBI, Stock Exchanges, ROC, CLB & statutory / regulatory authorities.

Oversee the performance of the Registrar and Transfer Agents and recommend measures for overall improvement in the quality of investor services.

Review the status of pending complaints periodically. To monitor the utilisation of the funds to be raised through proposed issue of Equity Shares. Seek professional advice, delegate authority for share transfers to officer of the company /

share transfer agents and constitute sub committees required to discharge its functions. Other functions of a Shareholders / Investors Grievance Committee as required /

recommended in the Listing Agreement. The composition of this committee is as following

112

Sr. No Name Designation on the committee 1. Mahesh K Agrawal Chairman 2. Ashwini H Saini 3. Bhumit M Mehta

Policy on Disclosures and Internal Procedure for Prevention of Insider Trading We will comply with the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 1992 after listing of our Company’s shares on the stock exchanges. Our Company Secretary and Compliance Officer, is responsible for setting forth policies, procedures, monitoring and adherence to the rules for the prevention of price sensitive information and the implementation of the code of conduct under the overall supervision of the Board. Shareholding of the Directors Our Articles of Association do not require our Directors to hold any qualification Equity Shares. The following table details the shareholding of our Directors in their personal capacity and either as sole or first holder, as at the date of this Draft Red Herring Prospectus.

Name of Director Number of shares held % to pre-issue paid up share capital

Mr. Mahesh K. Agrawal 5267850 80.15 Interest of our Directors All of our Directors may be deemed to be interested to the extent of fees payable to them for attending meetings of the Board or a committee thereof as well as to the extent of other remuneration and reimbursement of expenses payable to them under our Articles of Association, and to the extent of remuneration paid to them for services rendered as an officer or employee of our Company. Our Directors may also be regarded as interested in the Equity Shares, if any, held by them or by the companies/firms/ventures promoted by them or that may be subscribed by or allotted to the companies, firms, trusts, in which they are interested as directors, members, partners, trustees and promoters, pursuant to this Issue. All of our Directors may also be deemed to be interested to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. Except as stated above and otherwise in this Draft Red Herring Prospectus, our Company has not entered into any contracts, agreements or arrangement in which the directors are interested directly or indirectly and no payments have been made to them in respect of these contracts, agreements or arrangement or are proposed to be made. Remuneration of our Executive Directors (for the year ended March 31, 2006)

Rs. in Million

Sr. No Name of Director Sitting Fees per meeting

Salaries / Perquisites Commission Total

1. Mr. Mahesh K. Agrawal -- 0.52 -- 0.52 2. Mr. Kashiram H. Agrawal -- 0.39 -- 0.39

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3. Mr. Ashwini Saini -- 0.38 -- 0.38 Total -- 1.29 -- 1.29 Changes in Our Board of Directors during the last three years The following are the changes in the Board of Directors during the last three years:

Name Date of Appointment/Resignation

Reason

Smt. Tarulata Agrawal 5-8-2004 Resignation from Directorship Mr. Ashwini H Saini 5-8-2004 Appointed as director Mr. Kashiram H. Agrawal 22.09.2006 Resigned Mr. Anil Kumar Arora 22.09.2006 Appointed as Independent

Director Mr. Mehta Bhumit M. 22.09.2006

Appointed as Independent Director

Managerial Organizational Structure

Board of Directors

MAHESH K AGRAWAL CHAIRMAN & MANAGING

DIRECTOR

ASHWANI H SAINI DIRECTOR

VINOD AGRAWAL REP : CHINA OFFICE

R. POTDAR MARKETING MANAGER

V.G. ALUR PRODUCTION MANAGER

DILIP AGRAWAL EXPORT MANAGER /

COMPLIANCE OFFICER

S.D. MISHRA FINANCE & ACCOUNTS

MANAGER

PRAKASH IYER PURCHASE MANAGER

G.K. VEKHARIA Q.C. MANAGER

114

Brief Profile of our Key Managerial Personnel

Our Key Managerial Personnel are as follows: Mr. Vinod Agrawal aged 28 years is a Science graduate and a Post Graduate in Management. He was University topper and Gold Medalist during post graduation. He represents the company’s China Office. He has traveled extensively in China. He has represented Indian Chemical SME Sector in China. He has successfully marched the company’s growth from SSI to SME status.

Mr. Raghvendra Potdar, aged 40 years, is a Graduate in Electronics Engineering, has over 20 years experience in the Synthetic Dyes Industry. He is associated with our company since 2003 and is in charge of International Business (Marketing) of the company. Mr. V.G. Alur, aged 52 years, is a Postgraduate in Organic Chemistry-Synthetic Organic Dyes, has over 20 years experience in the Industry, is associated with our Company since 2000, is the Production Manager and is overall in charge of the entire production of the company. He reports directly to Mr. Kashiram Agrawal, our director, incharge of production. Mr. G.K. Vekharia, aged 44 years is the Q.C. Manager of our Company. He is a Science Graduate. He is having a total experience of 18 years. He has earlier worked with Meghmani as a quality control incharge. Mr. Prakash Iyer, aged 29 years, is having 10 years experience in handling purchases, is associated with Asiatic since 1996. He is overall in charge of the Purchase Department. Mr. S.D. Mishra, aged 36 years, is our Accounts & Finance Manager. He is a CFA by qualification. He is associated with our company since 1998 and has earlier worked with Steller Investment & Financial Service. Mr. Dilip Agrawal, aged 26 years, is our Export Manager. He is also the compliance officer of our Company. He is a Post Graduate in Commerce. He is having more than 4 years experience in Production and Marketing. Shareholding of the Key Managerial Personnel Our Key Managerial Personnel do not hold any Equity Shares in the Company. Bonus or Profit Sharing Plan for the Key Managerial Personnel Our Company does not have any bonus/profit sharing plan for any of the employees, directors, key managerial personnel. Changes in the Key Managerial Personnel during last 3 years There have not been any changes in the KMPs during the last 3 years Notes 1. All the Key Managerial Personnel are permanent employees of our Company. 2. There is no understanding with major shareholders, customers, suppliers or any others pursuant to

which any of the above mentioned personnel have been recruited. 3. The Key Managerial Personnel above are not the same as defined in AS-18, Related Party

Disclosure, issued by the Institute of Chartered Accountants of India.

115

PROMOTERS AND THEIR BACKGROUND Mr. Mahesh K. Agrawal is the promoter of our Company.

MR. MAHESH K. AGRAWAL Mr. Mahesh K. Agrawal, aged 44 years is our Company’s promoter and its Chairman and Managing Director. A commerce graduate from Gujarat University, Mahesh started his career when he was only 19 years by joining his father’s business of manufacturing dyestuffs and learnt the intricacies involved in this line of business. He oversees the marketing and export sales of our Company. He kept experimenting with new technologies, unheard of at that point of time. He is among the first ones to use less popular, but advanced technology of reverse osmosis in dyestuffs industry. He recognized the importance of this technology long back and proved highly successful in today’s time in process control and to produce salt free dyestuffs. It not only saves costs for the manufacturer of dyestuffs as well as for the end users. Mahesh travels extensively to European countries to establish and market his Company’s products to MNCs and end users. He has flair to study the product and find new applications and manufacturing techniques. Our Company has also been recognized for its efforts for effluent treatment technology by DMAI for 2006. As the Chairman and Managing Director, he is actively involved in the day to day operations of our Company specifically overlooking the marketing function. Driving License No: 920585 PAN: AANPA8707H Passport No: B3523904

The Permanent Account Number (“PAN”), Bank Account details and Passport Number of our Promoters have been submitted to Stock Exchange on which our Company proposes to list its Equity Shares at the time of filing of this Draft Red Herring Prospectus. Common Pursuits For details of common pursuits, please refer to the heading ‘Promoter Group Companies and Entities’ on page [•] of this DRHP. Interest of Promoters All our Promoters are interested in the Promotion of our Company and are also interested to the extent of their shareholding, for which they are entitled to receive the dividend declared, if any, by our Company. Our Promoters are also deemed to be interested to the extent of fees, if any,

116

payable to them for attending meetings of the Board or committee thereof as well as to the extent of other remuneration and/or reimbursement of expenses payable to them under the Articles. The Chairman and Wholetime Directors are interested to the extent of remuneration paid to them for services rendered to us. Further, the Promoters are interested to the extent of equity shares that they are holding and or allotted to them out of the present Issue, if any, in terms of the Draft Red Herring Prospectus and also to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. Except as stated otherwise in this Draft Red Herring Prospectus, we have not entered into any contract, agreements or arrangements during the preceding two years from the date of this Draft Red Herring Prospectus in which the Promoters are directly or indirectly interested and no payments have been made to them in respect of these contracts, agreements or arrangements which are proposed to be made to them Payment or Benefit to Our Promoters For details of payments or benefits paid to the promoters, please refer to the paragraph “Compensation to Whole time Directors” in the section titled ‘Our Management’ in this Draft red Herring Prospectus. Sales or Purchase between companies in the Promoter Group There have been no sales or purchases between companies in the Promoter Group of our Company exceeding in value in the aggregate 10% of the total sales or purchases of the Company. Related Party Transactions The details of related party transactions have been disclosed as a part of the Auditors Report. For details, please refer page [●] of this Draft Red Herring Prospectus.

117

Promoter Group Companies and Entities The details of our Promoter Group companies and entities are as below: 1. Orio Shanghai Colour Pvt. Ltd. Orio Shanghai Colour Pvt. Ltd. was incorporated on July 2, 2002. The registered office of the company is situated at Plot No. 306-B, G.I.D.C., Phase-I, Naroda, Ahmedabad 382 330. Orio Shanghai Colour Pvt. Ltd is into Manufacturing & Exporting of Dyestuff & Trading of Dye Intermediates. Shareholding Pattern The Shareholding Pattern of Orio Shanghai Colour Pvt. Ltd. is as follows:

Sr. No. Name of Shareholder Number of Shares % of Shareholding

1 Taru M. Agrawal 220000 99.00% 2 Satish K. Agrawal 1000 0.004% 3 Ujjwala M. Agrawal 500 0.002% 4 Vibhor M. Agrawal 1000 0.004% 5 Mahesh K. Agrawal HUF 100 0.000% Total 222600 100.00%

Board of Directors The Board of Director of Orio Shanghai Colour Pvt. Ltd are:

1. Mrs. T .M. Agrawal 2. Shri S. K. Agrawal

Financial Performance (Rs. In Lac)

As at and for the year ended Particular March 31,2006 (provisional)

March 31,2005 March 31,2004

Sales and Other Income 914.30 1289.70 905.81 PAT 8.57 7.36 3.95 Equity Capital (Face Value of Rs.10 per Share)

22.26 22.26 22.26

EPS (Rs.) 3.85 3.31 1.78 NAV/ Share (Rs.) 26.07 22.22 18.92

2. Pamasol International Pamasol International is a Proprietorship Concern of Chairman Shri Mahesh K. Agrawal. This entity commenced operations from 16th January 1998 and is engaged in the business of trading of dyes and dyes intermediates.

118

Financial Performance (Rs. In Lac)

As at and for the year ended Particular March 31,2006

March 31,2005 March 31,2004

Sales and Other Income 4.17 43.11 329.15 PAT (1.40) 0.37 2.92 Proprietor Capital 28.60 1.65 11.65

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for economic offences against the firm and its proprietor. 3. Shiva International Shiva International Proprietorship Concern of Chairman Shri Mahesh K. Agrawal. This entity commenced operations from 05th February 1998 and is engaged in the business of jobwork and manufacturing of dyes and dyes intermediates. Financial Performance

(Rs. In Lac) As at and for the year ended Particular

March 31,2006

March 31,2005 March 31,2004

Sales and Other Income 3.63 8.73 125.65 PAT (26.47) (22.60) 5.43 Proprietor Capital 0.16 53.16 72.45

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for economic offences against the firm and its proprietor. Conflict of Interest Though the above entities are in the same line of business, there are no business operations carried on by the two proprietorship firms i.e. Shiva International and Pamasol International. The fact that Orio Shanghai Colour Pvt. Ltd. is in the same line of business as our Company is mentioned as a Risk Factor on page [•] of this DRHP.

119

SECTION VII: LEGAL AND OTHER REGULATORY INFORMATION

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS Except as stated herein, there is no outstanding or pending litigation, suit, criminal or civil prosecution, proceeding initiated for offences (irrespective of whether specified in paragraph (I) of Part I of Schedule XIII of the Companies Act) or other litigation involving our Company, its Directors or its Promoters or Companies promoted by its Promoters and there are no defaults, non-payment or overdue of statutory dues, institutional/ bank dues or dues towards holders of any debentures, bonds and fixed deposits and arrears of preference shares, other than unclaimed liabilities of our Company and no disciplinary action has been taken by SEBI or any stock exchanges against our Company, Promoters or Directors. Disputes/Litigation against our Company: 1) Dispute relating to Income Tax Assessment for Assessment Year-1999-2000: Pursuant to Taxation Laws (Amendment) Act,2005 amending 80HHC of the Income Tax Act with retrospective effect from April 1,1998 the Income Tax department has vide its order dated July 31, 2006 raised a demand of income tax of Rs. 20.47 million after disallowing the exemptions earlier allowed under Sections 80HHC of the IT Act. We have filed appeal against the order on 21st August 2006. The matter is pending before Deputy Commissioner of Income Tax (Appeals).

2) Dispute relating to Income Tax Assessment for AssessmentYear-2001-2002: An order dated March 26, 2004 computing our income after disallowing certain expenses and claims passed by the ITO was challenged by us before the Commissioner of Income Tax (Appeals)-V, Ahmedabad. The Appellate authority, vide Order dated 20th January, 2005, partly allowed the appeal by deleting the disallowances of Rs.93,750/- on account of software expenses, and as regards disallowance of claim of deduction under section 80HHC of Rs.35,95,808/-, Assessing Officer was directed to grant deduction with reference to the DEPB incentives as claimed by the Company. Being aggrieved by the aforesaid Order, the Deputy Commissioner has filed an appeal before the Income Tax Appellate Tribunal, Ahmedabad. The appeal is pending consideration before the Income Tax Appellate Tribunal. During the pendency of this appeal, we have received a claim from the assessing officer to pay a sum of Rs. 1,350,559.

3) Dispute relating to Income Tax Assessment for Assessment Years- 2001-2002, 2002-2003,

2003-2004 :

We had filed appeals against the orders of the Assessing officers in connection with TDS amount levied against us. The Appellate authority allowed the appeals in our favour. The IT Department has filed appeals against these orders before the Income Tax Appellate Tribunal, Ahmedabad. The matter is pending before the Tribunal as on date.

4) The Income Tax Officer (OSD) Range – I, Ahmedabad has issued a Demand Notice u/s 156

the Income Tax Act requiring the Company to pay a sum of Rs.5,62,597/- within 30 days of the service of the notice, pursuant to Order dated 24th March, 2006 passed under section 143 (3) of the Income Tax Act. The matter is pending before the tribunal as on date.

120

Note:

There was a search conducted by the Directorate of Revenue Intelligence (DRI), Government of India, at our Company’s premises on 20th and 21st September 2006. During the course of the search, the DRI officials have seized certain books and records for investigation. In the meantime, we have paid an amount of Rs. 1.25 cr favouring The Asst Commissioner of Customs, ICD, Sabarmati without any prejudice. We are yet to receive any further communication from DRI in this regard. The implications of the search are not ascertainable at this stage.

Labour laws, Securities and Economic Offences/Laws

There is no litigation filed by our Company involving labour offences/ securities or economic offences.

Litigation against Promoter/Director: There is no litigation pending against or filed by the Directors/Promoter of our Company involving civil, criminal, labour, securities & economic and statutory law offences. Matters involving Sales Tax, and Provident Fund/statutory dues There are no litigations pending involving Sales Tax, or provident fund. Litigation against Group Company/ Associate Concerns: There is no litigation pending against or filed by the Group companies and by the Directors/Promoters group companies involving civil, criminal, labour, securities & economic and statutory law offences, except as mentioned below: Promoter Group Entities Shiva International (Proprietorship Firm of Promoter) There is a sales tax dispute of Rs. 113,127 in relation to the assessment year 2004-05 pending before the Sales Tax Commission, Ahmedabad. Amounts Owed to Small Scale Undertakings and Other Creditors Appex Dyestuff Industries 6.12 A.R. Plastic Industries 2.26 Arun Dyestuff Industries 1.13 Bhavin Industries 2.56 Bholenath Chemicals 1.05 Pooja Industries 3.23 Dev Dye Chem Industries 1.73 Eco Safe Containers 2.72 R K Industries 7.85 Shreechem Intermediates 2.27 Hexone Interchem Pvt. Ltd. 8.14 Isha Plastic Industries 1.30

121

Shreenath Orgochem Pvt. Ltd 1.01 Solar Chemferts Pvt. Ltd. 3.64 Sun Industries 2.06 Nutan Dye Chem 5.24 Surya Container Pvt. Ltd. 2.47 Swati Industries 2.85 Umang Metallurgicals Pvt. Ltd. 4.89 Ushanti Colour Chem Pvt. Ltd. 1.68 Shree Rasayan Enterprises 4.20 Supack Industries Pvt. Ltd. 7.53 Mitul Chemicals (Gujarat) Pvt. Ltd. 1.32 Shyam Industries 4.24 Material Developments Except as mentioned elsewhere in this DRHP, there have been no material developments after the date of last audited balance sheet i.e. 31st March 2006. Adverse Events There has been no adverse event affecting the operations of our Company occurring within one year prior to the date of filing of this Draft Red Herring Prospectus with the Registrar of Companies. Defaults Our Company has not defaulted in meeting any statutory dues, institutional dues or bank dues. Our Company has not defaulted in making any payment/refunds for debentures, fixed deposits and interest on debentures and fixed deposits.

122

STATUTORY APPROVALS AND LICENCES Our Company has received all the necessary consents, licenses, permissions and approvals form the Government/RBI and various government agencies required for its present business and no further approvals are required for carrying on the present as well as the proposed business of our Company except the pending approvals as mentioned under this heading. We have received the following Government and/or statutory approvals/ licenses/ permissions: Approvals to carry on our Business

Sr. No

Name of Licence / Registration / Authority

Issuing Authority

Purpose Number & Date of Licence / Registration

1 Importer-Exporter

Code

Joint Director of

Foreign

Foreign Ministry No.08/1403/AM-

95/IEC/3749/

dt. 9/2/1995

2 Change in name of

Partner /Director of

the Firm

Joint Director of

Foreign

Foreign Ministry No.AHD/1403/AM-95/IEC

dt. 9/2/1995

3 Certificate of

Importer-Exporter

Code (IEC)

Joint Director of

Foreign

Foreign Ministry No.08/04/130/01296/AM95

/

dt. 9/2/1995

4 Registration-Cum-

Membership

Certificate

a) Manufacturer

Exporter

b) Small Scale

Manufacturer

Exporter

Basic Chemicals

Pharma Cosmetic

Export

Promotion

Council

Export Import

8/3/2000

No.CHEMEXCIL/A-106/99-

2000/9660 &

CHEMEXCIL/A-56/95-

96/9660

31/3/2000

5 Central Excise

Registration

Certificate

Deputy

Commissioner/A

sst.

Commissioner of

Central Excise No.AABCA6297RXM001

Dt. 9/5/2003

123

Central Excise

6 Certificate of

Recognition – Export

House

Ministry of

Commerce

Export – Import No.6821

Dt. 29/9/1999

7 Letter of Intent Asst.

Commissioner of

Industries

Industries

Commissionerate

No.IC/MLI/LOP/644/T-

5/1505

Dt. 16/6/2000

8 Permission LOP

No.KFTZ/100%

Office of the

Development

Commissioner

Export – Import No.IC/MLI/LOP/644/T-

5/1505

20/4/2000

9 Inclusion of

additional Location

in the Lop

Department of

Commerce

Export – Import No.KASEZ/100%EOU/II/72

9/99/5664

Dt. 5/9/2003

10 Permission for Broad

banding of letter of

permission – Dyes

Inter

Ministry of

Commerce &

Industry

Kandla Special Eco

Zone

No.KFTZ/100%EOU/II/729/

99/12689

30/2/2002

31/7/2002

11 Legal Agreement for

Export oriented units

and units in Export

processing Zones

Development

Commission

Export Import

6/6/2000

12 Exempted

Goods/Attestation

Ministry of

Commerce &

Industry

Export Import No.

KASEZ/100%EOU/II/729/9

9/3704

Dt. 16/7/2003

13 Attestation of

Annexure "A"

Office of the

Development

Commissioner

Kandla Free Trade

Zone

No.KFTZ/100%EOU/II/729/

99/5249

Dt. 25/9/2000

14 Extension of Validity

of Letter of

Permission

Ministry of

Commerce &

Industry

Export Import

Kandla Special

Economic Zone

No.KFTZ/100%EOU/II/729/

99/3178

Dt. 26/7/2005

15 Permission to

Manufacture under

Bond

Central Excise &

Custom Division

Central Excise &

Custom Division

No. VIII/48-15/100%EOU-

CUS/2000

Dt. 21/7/2000

124

16 Warehousing Licence Central Excise &

Custom Division

Central Excise &

Custom Division

No. VIII/48-15/100%EOU-

CUS/2000

Dt. 20/7/2000

17 Inclusion of

Additional Location

in the bonded area

Central Excise

Division –1

Central Excise No. VIII/48-

15/Cus/2000/2025

Dt. 26/6/2002

18 Inclusion of

Additional Location

in the bonded area

Central Excise

Division –1

Central Excise No. VIII/48-

13/Cus/2000/2029

1/10/2003

19 Extension of validity

of License

No.03/2000 u/s 58

Central Excise

Division –1

Central Excise &

Custom

No. VIII/48-

15/CUS/2000/1645

Dt. 2/8/2005

20 Renewal of Self

Removal Permission

Central Excise No. VIII/48-

15/Cus/2000/1641

Dt. 29/7/2005

21 B-17 Bond of 5.50

Crore + More

Central Excise

Division –1

Central Excise

24/7/2000

22 B-17 Bond of 1.50

Crore + More

Central Excise

Division –1

Central Excise 7/10/2002

23 B-17 Bond of 3.00

Crore + More

Central Excise

Division –1

Central Excise 16/5/2006

24 Explosive Storage

Licence

Govt. of India

Explosive

Division

Explosive Division No. JOJE/AMD/HOPO/826

Dt. 21/8/2000

25 Service Tax

Registration

Certificate

Commissioner of

Service Tax

Service Tax 12/2/2005

26 Renewal of

Membership with

EPCES –05-06

Ministry of

Commerce and

Industry

Export Promotion

Council

No.KASEZ/P&C/4/116(A)/

03/Vol. IV/4567

Dt. 16/9/2005

27 CRA Audited Report

for the 03-04 & 04-05

Audit Authority Audit Report No.19/05-

06/100%/EOU/396

Dt. 16/8/2005

28 Factory Licence Factory Act Factory No. 010024

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Department 22/10/1990

29 Inclusion of

additional location in

the lop to Plot

No.306-A.

Ministry of

Commerce &

Industry

100% Export No.KFTZ/100%EOU/II/729/

99/

Dt. 14/6/2002

30 Green Card

Certificate

Department of

Central Excise

Central Excise Certified True Copy dated

12/4/2006

31 Stack Emission

Analysis Report

Gujarat Pollution

Control Board

Pollution Control

Board

No. A/209-2006

27/4/2006

32 Physical Chemical

Analysis Report

Gujarat Pollution

Control Board

Pollution Control

Board

No.1051-2006

18/4/2006

33 Boiler Inspection

Certificate

Gujarat Boiler

Inspection

Department

Boiler Inspection

Department

No.GT 3337

Dt. 19/1/2005

Other Registrations: We have also obtained the necessary approvals/registrations statutorily required under the Labour and Tax related legislations of the Central and State Governments and the relevant authorities for carrying on our operations Approvals for which Application has been made but not yet received:

Sr. No Consent/Permission Authority Status 1) Air, Water and Land pollution

consent Gujarat Pollution Control Board

Will be applied in due course of time

2) Sales Tax Registration Gujarat Sales Tax Will be applied in due course of time

3) Customs Registrations Central Customs Department

Will be applied in due course of time

4) Central Excise Registration Central Excise Department

Will be applied in due course of time

5) Registration with Kandla FTZ Developing Officer, Kandla FTZ

Will be applied in due course of time

6) Service Tax Registration Central Service Tax Department

Will be applied in due course of time

Investment Approvals As per Notification No. FEMA/20/2000-RB dated 03rd May 2000, as amended from time to time, under automatic route of the Reserve Bank, our Company is not required to make an application for Issue of Equity Shares to NRIs / FIIs with repatriation benefits. However, the allotment/transfer of the Equity shares to NRIs / FIIs shall be subject to the prevailing RBI Guidelines. Sale proceeds of such investments in equity shares will be allowed to be repatriated

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along with the income thereon subject to the permission of the RBI and subject to the Indian tax laws and regulations and any other applicable laws. Except as stated hereinabove, our Company has received the necessary consents, licenses, permissions and approvals from the Government and various Government agencies required for our present business and no further approvals are required for carrying on the present as well as the proposed business activities. It must however, be distinctly understood that in granting the above consents/licences/permissions/approvals, the Government and other authorities do not take any responsibility for the financial soundness of our Company or for the correctness of any statements or any commitments made or opinions expressed herein.

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OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for the Issue The shareholders of our Company have approved this Issue under section 81 (1A) of the Act by a Special Resolution at our Extra Ordinary General Meeting held on 01st June 2006. Prohibition by SEBI Our Company, our Directors, our Promoters, the Directors of our Promoter Companies or persons in control of our Promoter Companies, the group companies, companies promoted by or Promoters and companies or entities with which our Company’s Directors are associated as directors / promoters / partners have not been prohibited from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI. The listing of any securities of our Company has never been refused at anytime by any of the stock exchanges in India. Our Company, our Promoters, their relatives, group companies and associate companies has, not been detained as willful defaulters by RBI/government authorities and there are no violations of securities laws committed by them in the past or pending against them. Eligibility for the Issue Our Company is eligible for the Issue in accordance with Clause 2.2.1 of the SEBI DIP Guidelines as explained under, with the eligibility criteria calculated in accordance with Restated Financial Statements: a) Our Company has net tangible assets of at least Rs. 3 Crores in each of the preceding 3 full

years (Rs. In Millions)

Particulars 31-03-2006 31-03-2005 31-03-2004 31-03-2003 31-03-2002 Fixed Assets (Net) 79.73 69.73 61.45 56.93 55.38 Capital WIP 2.14 4.07 0.49 4.04 2.71 Current Assets, Loans & Advances 408.02 371.85 322.16 265.76 235.79 Trade Investments 0 0 0 0 0 Less: Current Liabilities & provisions 100.55 144.39 100.57 72.12 64.34 Net Tangible Assets 389.34 301.26 283.53 254.61 229.54 Monetary Assets(Cash and Bank) 14.76 16.11 38.11 10.69 15.31 Monetary Assets as a % of Net tangible Assets 3.79 5.35 13.44 4.20 6.67 Net tangible assets are defined as the sum of fixed assets (including capital work in progress and excluding revaluation reserves, if any), trade investments, current assets (excluding deferred tax assets) less current liabilities (excluding deferred tax liabilities and secured as well as unsecured long term liabilities). Monetary assets include cash on hand and bank balances.

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b) Our Company has a track record of distributable profits in terms of section 205 of the Companies Act, 1956, for at least three (3) out of immediately preceding five (5) years.

(Rs. In Millions)

31-03-2006 31-03-2005 31-03-2004 31-03-2003 31-03-2002 Net Profit after tax 33.1 10.31 17.68 10.94 13.07

c) Our Company has a net worth of at least Rs. 1 Crore in each of the preceding 3 full years (of

12 months each). (Rs. In Millions)

31-03-2006 31-03-2005 31-03-2004 31-03-2003 31-03-2002 Equity Share Capital 3.24 3.24 3.24 3.24 3.24 Share Application Money 0.00 0.00 0.00 0.00 0.00 Reserves & Surplus 173.64 140.91 130.96 113.28 102.35 Less: Revaluation Reserves 0.00 0.00 0.00 0.00 0.00 Less: Misc. Exp 0.00 0.00 0.01 0.01 0.02 Net worth 176.88 144.15 134.19 116.51 105.57

d) Our Company has not changed its name within the last one year. e) Our Company shall ensure that the aggregate of the proposed issue and all previous issues

made in the same financial year in terms of size (i.e. public issue by way of offer document + firm allotment + promoters’ contribution through the offer document) does not exceed five (5) times our pre- issue net worth as per the audited balance sheet of the last financial year.

Further, if the number of allottees in the proposed Issue is less than 1,000 allottees, our Company shall forthwith refund the entire subscription amount received. If there is a delay beyond 15 days after our Company becomes liable to pay the amount, our Company shall pay interest at the rate of 15% per annum for the delayed period. Disclaimer Clauses SEBI Disclaimer Clause “IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THE OFFER DOCUMENT TO SEBI SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE OFFER DOCUMENT. THE BOOK RUNNING LEAD MANAGER, UTI SECURITIES LIMITED, HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE OFFER DOCUMENT ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE SEBI (DISCLOSURES AND INVESTOR PROTECTION) GUIDELINES IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE OFFER DOCUMENT, THE

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BOOK RUNNING LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE BOOK RUNNING LEAD MANAGER, CANARA BANK HAS FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED 28.09.2006 IN ACCORDANCE WITH THE SEBI (MERCHANT BANKERS) REGULATIONS, 1992, WHICH READS AS FOLLOWS:

I. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC., AND OTHER MATERIALS IN CONNECTION WITH THE FINALIZATION OF THE DRAFT RED HERRING PROSPECTUS PERTAINING TO THE SAID ISSUE.

II. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE

COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY,

WE CONFIRM THAT:

A. THE DRAFT RED HERRING PROSPECTUS FORWARDED TO SEBI IS IN

CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;

B. ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE, AS

ALSO THE GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY THE SEBI, THE GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND

C. THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE

TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-INFORMED DECISION AS TO INVESTMENT IN THE PROPOSED ISSUE.

III. BESIDE US, ALL THE INTERMEDIARIES NAMED IN THE DRAFT RED HERRING

PROSPECTUS ARE REGISTERED WITH SEBI AND THAT SUCH REGISTRATIONS ARE VALID TILL DATE.

IV. WE SHALL SATISFY OURSELVES ABOUT THE NET WORTH OF THE

UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS.

V. WE CERTIFY THAT WRITTEN CONSENT FROM SHAREHOLDERS HAS BEEN OBTAINED FOR INCLUSION OF THEIR SECURITIES AS PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SECURITIES PROPOSED TO FORM PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN, WILL NOT BE DISPOSED/SOLD/TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS WITH THE BOARD TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT RED HERRING PROSPECTUS.

THE FILING OF THE DRAFT RED HERRING PROSPECTUS DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 OR 68 OF THE

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COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI, FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE BOOK RUNNING LEAD MANAGER ANY IRREGULARITIES OR LAPSES IN THE OFFER DOCUMENT.” Disclaimer from the Issuer and the Book Running Lead Manager Investors may note that Asiatic Colour–Chem Industries Limited and Canara Bank accept no responsibility for statements made other than in this Draft Red Herring Prospectus or in the advertisement or any other material issued by or at the instance of the Issuer Company or Book Running Lead Manager and that any one, placing reliance on any other source of information would do so at their own risk. The BRLM, Canara Bank, does not accept any responsibility save to the limited extent as provided in terms of the Memorandum of Understanding entered into between our Company and the BRLM and the Underwriting Agreement to be entered into between our Company and the Underwriters. All information will be made available by the Book Running Lead Manager, Underwriters, Syndicate members and our Company to the public and investors at large and no selective or additional information would be available for any section of the investors in any manner whatsoever including at road shows, presentations, in research or sales reports etc. We shall not be liable to the Bidders for any failure in downloading the Bids due to faults in any software/hardware system or otherwise. The BRLM accepts no responsibility, save to the limited extent as provided in the Memorandum of Understanding entered into between the BRLM and our Company and the Underwriting Agreement to be entered into between the Underwriters and our Company. Disclaimer in respect of Jurisdiction This Issue is being made in India to persons resident in India (including Indian nationals resident in India who are majors, HUFs, companies, corporate bodies and societies registered under the applicable laws in India and authorized to invest in shares, Indian mutual funds registered with SEBI, Indian financial institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI permission), Trusts registered under the Societies Registration Act, 1860, as amended from time to time, or any other Trust law and who are authorized under their constitution to hold and invest in shares) and to NRIs, FIIs and Foreign Venture Capital Funds Registered with SEBI. This Draft Red Herring Prospectus does not, however, constitute an invitation to subscribe to shares issued hereby in any other jurisdiction to any person to whom it is unlawful to make an Issue or invitation in such jurisdiction. Any person into whose possession this Draft Red Herring Prospectus comes is required to inform himself or herself about, and to observe any such restrictions. Any dispute arising out of this Issue will be subject to the jurisdiction of appropriate court(s) in Ahmedabad only. No action has been or will be taken to permit a public offering in any jurisdiction where action would be required for that purpose, except that this Draft Red Herring Prospectus has been filed with SEBI. Accordingly, the Equity Shares represented thereby may not be offered or sold, directly or indirectly, and this Draft Red Herring Prospectus may not be distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of this Draft Red Herring Prospectus nor any sale hereunder shall under any

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circumstances create any implication that there has been no change in the affairs of our Company since the date hereof or that the information contained herein is correct as of any time subsequent to this date. Disclaimer Clause of the Bombay Stock Exchange Limited Bombay Stock Exchange Limited (“the Exchange”) has given vide its letter dated [•] 2006 given permission to this Company to use the Exchange's name in this offer document as one of the stock exchanges on which this Company’s securities are proposed to be listed. The Exchange has scrutinized this offer document for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this Company. The Exchange does not in any manner:

i. warrant, certify or endorse the correctness or completeness of any of the contents of this offer document; or

ii. warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; or

iii. take any responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or project of this Company;

And it should not for any reason be deemed or construed to mean that this offer document has been cleared or approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever. Disclaimer Clause of National Stock Exchange of India Limited As required, a copy of the Draft Red Herring Prospectus has been submitted to the National Stock Exchange of India Limited (hereinafter referred to as NSE). NSE has given vide its letter ref: [•] dated [•] 2006 permission to the Issuer to use the Exchange's name in this Offer Document as one of the stock exchanges on which this Issuer's securities are proposed to be listed. The Exchange has scrutinized the Offer Document for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this Issuer. It is to be distinctly understood that the aforesaid permission given by NSE should not in any way be deemed or construed that the Offer Document has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Offer Document; nor does it warrant that Issuer's securities will be listed or will continue to be listed on the Exchange; nor does it take any responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of the Issuer. Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against NSE whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription or acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever. Filing A copy of this Draft Red Herring Prospectus has been filed with the Corporate Finance Department of SEBI at: World Trade Center, 29th floor, Cuffe Parade, Mumbai – 400005. A copy of

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the Red Herring Prospectus along with the documents required to be filed under section 60B of the Companies Act would be delivered for registration to the RoC, Gujarat, Dadra & Nagar Haveli at: GHB Complex, Opp. Rupal Park, Near Ankur Cross road, Naranpura, Ahmedabad 380013 , atleast 3 (three) days before the issue opening date. The final Prospectus would be filed with the Corporate Finance Department of SEBI and the ROC at the respective aforesaid addresses upon closure of the issue and on finalization of the issue price. Listing Application has been made to the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited for permission to deal in and for an official quotation of our Equity Shares. Our existing Equity Shares are not listed on any Stock Exchanges in India. [•] shall be the Designated Stock Exchange with which the basis of allotment will be finalized for the QIB, Non Institutional and Retail portion. If the permission to deal in and for an official quotation of the Equity Shares is not granted by any of the stock exchanges, we shall forthwith repay, without interest, all moneys received from the applicants in pursuance of this Draft Red Herring Prospectus. If such money is not repaid within eight days after we become liable to repay it, i.e., from the date of refusal or within 70 days from the date of Bid/ Issue Closing Date, whichever is earlier, then we and all our directors jointly and severally shall, on and from expiry of eight days, be liable to repay the money, with interest at the rate of 15% per annum on application money, as prescribed under Section 73 of the Companies Act. We shall ensure that all steps for the completion of the necessary formalities for listing and commencement of trading at BSE and NSE are taken within seven working days of finalization of Basis of Allotment for the Issue. Consents Necessary Consents for the issue have been obtained from the following

1. Directors of our Company 2. Promoters of the Company 3. Bankers to our Company 4. Auditors to our Company 5. Book Running Lead Manager to the Issue 6. Legal Advisor to the Issue 7. Registrar to the Issue 8. Company Secretary 9. Compliance Officer 10. Syndicate Members 11. Underwriters 12. Escrow Collection Bankers to the Issue

The said consents would be filed along with a copy of the Red Herring Prospectus with the RoC, Gujarat, Dadra & Nagar Haveli, as required under Sections 60 and 60B of the Companies Act, 1956 and such consents have not been withdrawn up to the time of delivery of the Red Herring Prospectus, for registration with the RoC, Gujarat, Dadra & Nagar Haveli .

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Expert Opinion Except as stated otherwise in this Draft Red Herring Prospectus, we have not obtained any expert opinion. Public Issue Expenses The expenses of this Issue include, among others, underwriting and management fees, selling commission, printing and distribution expenses, legal fees, statutory advertising expenses and listing fees. The estimated Issue expenses are as follows:

Rs. in Millions Sr. No

Particulars Amount % of total Issue

Expenses

% of total Issue size

a) Book Running Lead Manager fees [●] [●] [●] b) Registrars fees [●] [●] [●] c) Underwriting commission @ [●]% [●] [●] [●] d) Legal Advisor’s fees [●] [●] [●] e) Advertisement and Marketing expenses [●] [●] [●] f) Brokerage and selling expenses [●] [●] [●] g) Stock Exchange fees for providing bidding

terminals [●] [●] [●]

h) SEBI and Stock Exchanges fees on filing of Offer Document

[●] [●] [●]

i) Other Miscellaneous expenses [●] [●] [●] Total [●] [●] [●]

Fees Payable to the BRLM The total fees payable to the BRLM will be as per the Memorandum of Understanding signed between us and the BRLM, Canara Bank and UTI Securities Limited, a copy of which is available for inspection at our Registered Office and forms part of Material Contracts & Documents. Fees Payable to the Registrar to the Issue The fees payable to the Registrar to the Issue, Intime Spectrum Registry Limited, will be as per the Memorandum of Understanding signed with our Company, a copy of which is available for inspection at our Registered Office and forms part of Material Contracts & Documents. The Registrar will be reimbursed for all relevant out-of-pocket expenses including such as cost of stationery, postage, stamp duty, communication expenses. Adequate funds will be provided to the Registrar to the Issue to enable them to send refund orders or allocation advice by registered post/ Speed Post. Refund Orders up to Rs. 1,500/- would be send under certificate of posting. Underwriting Commission, Brokerage and Selling Commission An underwriting commission not exceeding [●]% of the total amount underwritten is payable to the underwriters on the offer price of the Equity Shares offered through this Draft Red Herring Prospectus to the public for subscription and underwritten in the manner mentioned in this Draft Red Herring Prospectus.

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Brokerage for the issue will be upto [●]% of the issue price of the Equity Shares, which would be paid by our Company on the basis of the allotments made against the applications bearing the stamp of a member of any recognized Stock Exchange in India in the ‘Broker’ column. Brokerage at the same rate will also be payable to the Bankers to the Issue in respect of the allotments made against applications procured by them provided the respective forms of application bear their respective stamp in the Broker column. In case of tampering or over-stamping of Brokers’/Agents’ codes on the application form, our Company’s decision to pay brokerage in this respect will be final and no further correspondence will be entertained in this matter. Previous Public or Rights Issues in the last 5 years Our Company has not made any public or rights issue of Equity Shares/Debentures in the last 5 years. Previous Issue of Shares otherwise than for Cash Our Company has not issued any Equity Shares for consideration other than cash except as detailed in the section entitled ‘Capital Structure’ in this Draft Red Herring Prospectus. Commission or Brokerage on Previous Issues Since this is the initial public offering of the Equity Shares, no sum has been paid or is payable as commission or brokerage for subscribing to or procuring for, or agreeing to procure subscription for any of the Equity Shares of our Company since its inception. Details of capital issue made during last three years in regard to the issuer company and other listed companies under the same management within the meaning of section 370(1)(B) of the Companies Act, 1956. There have been no capital issues during last 3 years by us. There are no other listed companies under the same management within the meaning of Sec 370(1)(B) of the Act at present or during the last three years. Promise vis-à-vis Performance – Last 3 issues Our Company has not made any Public Issue. Listed ventures of Promoters

There are no listed ventures of our Promoters. Promise vis-à-vis Performance – Last One Issue of Group Companies There are no listed ventures of our Promoters. Outstanding debentures or bonds and redeemable preference shares and other instruments issued and outstanding as on the date of the Draft Red Herring Prospectus and terms of Issue There are no outstanding debentures or bonds or redeemable preference shares and other instruments outstanding as on the date of filing of this Draft Red Herring Prospectus.

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Stock Market Data This being an initial public offering of our Company, the Equity Shares of our Company are not listed on any stock exchange. Mechanism for redressal of Investor’s grievance Our Company has constituted a Shareholders Grievance Committee to look into the redressal of shareholder/ investor complaints such as Issue of duplicate/split/consolidated share certificates, allotment and listing of shares and review of cases for refusal of transfer/transmission of shares and debentures, complaints for non receipt of dividends etc. For further details on this committee, please refer under the head ‘Corporate Governance’ on page [●]of this Draft Red Herring Prospectus. To expedite the process of share transfer, our Company has appointed Intime Spectrum Registry Limited as the Registrar and Share Transfer Agents of our Company. Disposal of Investors’ Grievances and Redressal Mechanism We have appointed Intime Spectrum Registry Limited as the Registrar to the Issue, to handle the investor grievances in co-ordination with our Compliance officer. All grievances relating to the present issue may be addressed to the Registrar with a copy to the Compliance officer, giving full details such as name, address of the applicant, number of equity shares applied for, amount paid on application and bank and Branch. We will monitor the work of the Registrar to ensure that the investor grievances are settled expeditiously and satisfactorily. A fortnightly status report of the complaints received and redressed by the Registrar to the Issue would be forwarded to us. We would also coordinate with the Registrar to the Issue in attending to the investors’ grievances. We assure that any complaints received, shall be disposed off as per the following schedule:

Sr. No Nature of the Complaint Time Taken 1. Non-receipt of the refund Within 7 days of receipt of complaint, subject to

production of satisfactory evidence. 2. Change of Address Within 7 days of receipt of information. 3. Any other complaint in relation

to Public Issue Within 7 days of receipt of complaint with all relevant details.

We have appointed Mr. Dilip Agarwal as the Compliance Officer who would directly liaise with SEBI with respect to implementation/compliance of various laws, rules, regulations and other directives issued by SEBI and matters related to investor complaints. The investors may contact the compliance officer in case of any pre issue/post issue related problems at the following address: Mr. Dilip Agarwal Compliance Officer Asiatic Colour-Chem Industries Limited 1503/4, G. I. D. C., Phase – 1, Naroda, Ahmedabad – 382 330 (India) Tel No: (079) 6630 5941 Fax No: (079) 6630 5950 Email: info@asiaticcolour.com

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Changes in Auditors during the last three years and reasons thereof There has been no change in the auditors in the preceding three years. Capitalization of Reserves or Profits during last five years There has been no capitalization of reserves or profits during the last five years, except as stated in section titled “Capital Structure” on page no. [•] of this Draft Red Herring Prospectus. Revaluation of Assets during the last five years There has not been any revaluation of Assets during the last five years.

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SECTION IX - ISSUE RELATED INFORMATION

TERMS OF THE ISSUE

The Equity Shares being offered are subject to the provisions of the Companies Act, SEBI (DIP) Guidelines, our Memorandum and Articles of Association, the terms of the Draft Red Herring Prospectus, the Red Herring Prospectus, the Prospectus, Bid cum Application Form, the Revision Form, the Confirmation of Allocation Note and other terms and conditions as may be incorporated in the allotment advices and other documents/certificates that may be executed in respect of the Issue. The Equity Shares shall also be subject to laws as applicable, guidelines, notifications and regulations relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, the Government of India, the Stock Exchanges, the RBI, RoC and/or other authorities, as in force on the date of the Issue and to the extent applicable. Ranking of Equity Shares The Equity Shares being offered shall be subject to the provisions of the Companies Act, our Memorandum and Articles of Association and shall rank pari-passu in all respects with the existing Equity Shares including in respect of the rights to receive dividend. The allottees will be entitled to dividend (including dividend), voting rights or any other corporate benefits, if any, declared by us after the date of Allotment. Mode of Payment of Dividend The declaration and payment of dividends will be recommended by our Board of Directors and our shareholders, in their discretion, and will depend on a number of factors, including but not limited to our earnings, capital requirements and overall financial condition. We shall pay dividends in cash. Face Value and Issue Price per Share The Equity Shares having a face value of Rs. 10/- each are being offered in terms of this Draft Red Herring Prospectus at a price of Rs. [•]/- per Equity Share. The issue price will be determined by our Company in consultation with the BRLM on the basis of assessment of market demand for the equity shares offered by way of book building. At any given point of time there shall be only one denomination of the Equity Shares of our Company, subject to applicable laws. Rights of the Equity Shareholders Subject to applicable laws, rules, regulations and guidelines and the Articles of Association, the equity shareholders shall have the following rights: Right to receive dividend, if declared; Right to attend general meetings and exercise voting rights, unless prohibited by law; Right to vote on a poll either in person or by proxy; Right to receive offer for rights shares and be allotted bonus shares, if announced; Right to receive surplus on liquidation; Right of free transferability; and Such other rights, as may be available to a shareholder of a listed Public Limited Company

under the Companies Act, the terms of the listing agreements with the Stock Exchange(s) and the Memorandum and Articles of Association our Company.

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For a detailed description of the main provisions of the Articles of Association of our Company relating to voting rights, dividend, forfeiture and lien and/or consolidation/splitting, etc., see the section entitled ‘Main Provisions of Articles of Association’ beginning on page [●]. Market Lot and Trading Lot In terms of Section 68B of the Companies Act, the Equity Shares shall be allotted only in dematerialized form. In terms of existing SEBI Guidelines, the trading in the Equity Shares shall only be in dematerialized form for all investors. Since trading of the Equity Shares will be in dematerialized mode, the tradable lot is one Equity Share. Allocation and allotment of Equity Shares through this Offer will be done only in electronic form in multiples of 1 Equity Share subject to a minimum allotment of [●] Equity Shares to the successful bidders. Nomination Facility to Investor In accordance with Section 109A of the Companies Act, the sole or first Bidder, along with other joint Bidders, may nominate any one person in whom, in the event of the death of sole Bidder or in case of joint Bidders, death of all the Bidders, as the case may be, the Equity Shares allotted, if any, shall vest. A person, being a nominee, entitled to the Equity Shares by reason of the death of the original holder(s), shall in accordance with Section 109A of the Companies Act, be entitled to the same advantages to which he or she would be entitled if he or she were the registered holder of the equity share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any person to become entitled to equity share(s) in the event of his or her death during the minority. A nomination shall stand rescinded upon a sale of equity share(s) by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh nomination can be made only on the prescribed form available on request at our Registered Office or to the registrar and transfer agents of our Company. In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue of the provisions of Section 109A of the Companies Act, shall upon the production of such evidence as may be required by the Board, elect either:

a) to register himself or herself as the holder of the equity shares; or b) to make such transfer of the equity shares, as the deceased holder could have made.

Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself or herself or to transfer the equity shares, and if the notice is not complied with within a period of ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the equity shares, until the requirements of the notice have been complied with. Since the allotment of Equity Shares in the Issue will be made only in dematerialized mode there is no need to make a separate nomination with our Company. Nominations registered with respective depository participant of the applicant would prevail. If the investor wants to change the nomination, they are requested to inform their respective depository participant.

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Minimum Subscription If our Company does not receive the minimum subscription of 90% of the Net Issue to the Public including devolvement of underwriters, if any, within 60 days from the Bid/Issue Closing Date, we shall forthwith refund the entire subscription amount received. If there is a delay beyond eight days, we and every director of our Company who is an officer in default, becomes liable to repay the amount with interest as per Section 73 of the Companies Act. If the number of allottees in the proposed Issue is less than 1,000 allottees, we shall forthwith refund the entire subscription amount received. If there is a delay beyond 15 days after we become liable to pay the amount, we shall pay interest at the rate of 15% per annum for the delayed period. Arrangements for Disposal of Odd Lots Since, our Equity Shares will be traded in dematerialized form only; the marketable lot is one (1) Equity Share. Therefore, there is no possibility of any odd lots. Restrictions, if any on Transfer and Transmission of Equity Shares The restrictions, if any, on the Transfer and Transmission of our Equity Shares are contained in the section titled ‘Main Provisions of Articles of Association’ beginning on page [•] Compliance with SEBI Guidelines Our Company shall comply with all requirements of the SEBI (Disclosure and Investor Protection) Guidelines, 2000 as amended from time to time. Our Company shall comply with all disclosure norms as specified by SEBI from time to time. Withdrawal of the Issue Our Company in consultation with the BRLM reserves the right not to proceed with the issue any time after the Bid/Issue opening date but before allotment without assigning any reason thereof.

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ISSUE STRUCTURE This Issue is being made through a 100% Book Building Process. The present Issue of 3,539,000 Equity Shares of Rs.10/- each at a price of Rs. [●] for cash aggregating Rs. [●] lacs. The issue comprises of Net Issue to the Public of 3,539,000 Equity Shares aggregating Rs. [●] lacs. The issue would constitute 35% of the fully diluted post issue paid up capital of Asiatic Colour-Chem Industries Limited. The details of the issue structure are as follows:

QIBs Non Institutional Bidders

Retail Individual Bidders

Number of Equity Shares*

Not more than 1,769,500 Equity Shares

Not less than 530850 Equity Shares

Not less than 1,238,650 Equity Shares

Percentage of Issue Size available for allocation

Not more than 50% of the Net Issue to the public (of which 5% shall be reserved for Mutual Funds) or Net Issue to the public less allocation to Non-Institutional Bidders and Retail Individual Bidders.* Mutual Funds participating in the 5% reservation in the QIB Portion will also be eligible for allocation in the remaining QIB Portion. The Unsubscribed portion, if any, in the Mutual Fund reservation will be available to QIBs.

Not less than 15% of the Net issue to the public or Net Issue size less allocation to QIBs and retail individual bidders.*

Not less than 35% of the Net issue to the public or Net Issue size less allocation to QIBs and non institutional bidders.*

Basis of Allocation if respective category is oversubscribed

Proportionate Proportionate Proportionate

Minimum Bid Such number of Equity Shares that the Bid Amount exceeds Rs. 100000/- and in multiples of [●] Equity Shares.

Such number of Equity Shares that the Bid Amount exceeds Rs. 100000/- and in multiples of [●] Equity Shares.

[•] Equity Shares and in multiples of [●] Equity Shares.

Maximum Bid Not exceeding the size of the issue, subject to regulations as applicable to the Bidder

Not exceeding the size of the issue, subject to regulations as applicable to the Bidder

Such number of Equity Shares per retail individual investor so as to ensure that the Bid amount does not exceed Rs. 100000/-

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which has to be in multiples of [•] Equity Shares.

Mode of Allotment

Dematerialized mode Dematerialized mode Dematerialized mode

Trading Lot/Market lot

One (1) Equity Share One (1) Equity Share One (1) Equity Share

Who can apply** Public financial institutions, as specified in Section 4A of the Companies Act, scheduled commercial banks, mutual funds, foreign institutional investor registered with SEBI, multilateral and bilateral development financial institutions, Venture Capital Funds registered with SEBI, foreign Venture capital investors registered with SEBI, State Industrial Development Corporations, insurance companies registered with the Insurance Regulatory and Development Authority, provident funds with minimum corpus of Rs. 2500 lacs and pension funds with minimum corpus of Rs. 2500 lacs in accordance with applicable law.

Companies, Corporate Bodies, Scientific Institutions, Societies, Trusts, Resident Indian individuals, HUF (in the name of Karta), and NRIs (applying for an amount exceeding Rs. 100000/-)

Individuals (including NRIs and HUFs in the name of Karta) applying for Equity Shares such that the Bid Amount does not exceed Rs. 100000 in value.

Terms of payment

Margin Amount applicable to QIB Bidders at the time of submission of Bid cum Application form to the members of the syndicate

Margin Amount applicable to Non Institutional Bidders at the time of submission of Bid cum Application form to the members of the syndicate

Margin Amount applicable to Retail Individual Bidders at the time of submission of Bid cum Application form to the members of the syndicate

Margin Amount 10% of the Bid amount in respect of bids placed by QIB bidder on bidding

Full amount on bidding

Full amount on bidding

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* Subject to valid bids being received at or above the Issue Price. Under-subscription, if any, in any category, would be allowed to be met with spill over inter-se from any other categories, at the discretion of our Company in consultation with the BRLM subject to applicable provisions of SEBI Guidelines.

** In case the Bid Cum Application Form is submitted in joint names, the investors should ensure

that the demat account is also held in the same joint names and in the same sequence in which they appear in the Bid Cum Application Form. Note: Equity Shares being offered through this Draft Red Herring Prospectus can be applied for in dematerialized form only.

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ISSUE PROCEDURE

Book Building Procedure The Issue is being made through the 100% Book Building Process wherein not more than 50% of the Net Issue to the Public shall be available for allocation to Qualified Institutional Buyers on a proportionate basis (of which 5% shall be allocated for Mutual Funds). Further, not less than 15% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid bids being received at or above the Issue Price. Bidders are required to submit their Bids through the Syndicate. We, in consultation with the BRLM, reserve the right to reject any Bid procured from QIBs, by any or all members of the Syndicate, for reasons to be recorded in writing provided that such rejection shall be made at the time of acceptance of the Bid and the reasons therefor shall be disclosed to the bidders. In case of Non-Institutional Bidders and Retail Individual Bidders, our Company would have a right to reject the Bids only on technical grounds. Investors should note that Equity Shares would be allotted to all successful Bidders only in dematerialized form. Bidders will not have the option of getting Allotment of the Equity Shares in physical form. The Equity Shares on Allotment shall be traded only in the dematerialized segment of the Stock Exchanges. Illustration of Book Building and Price Discovery Process (Investors should note that this illustration is solely for the purpose of illustration and is not specific to the Issue) The Bidders can bid at any price within the Price Band. For instance, assume a Price Band of Rs. 60/- to Rs. 72/- per Equity Share, Issue size of 5,400 Equity Shares and receipt of five Bids from the Bidders. A graphical representation of the consolidated demand and price would be made available at the bidding centres during the Bidding/Issue Period. The illustrative book as set forth below shows the demand for the Equity Shares of the Company at various prices and is collated from Bids from various investors. Bid Quantity Bid Price (Rs.) Cumulative Quantity Subscription

1,500 72 1,500 27.78% 3,000 69 4,500 83.33% 4,500 66 9,000 166.67% 6,000 63 15,000 277.78% 7,500 60 22,500 416.67%

The price discovery is a function of demand at various prices. The highest price at which our Company is able to issue the desired quantity of Equity Shares is the price at which the book cuts off, i.e., Rs.66 in the above example. Our Company, in consultation with the BRLM, will finalize the Issue Price at or below such cut off price, i.e., at or below Rs.66. All Bids at or above this Issue Price and cut-off Bids are valid Bids and are considered for allocation in the respective category. Bid-cum-Application Form Bidders shall only use the specified Bid-cum-Application Form bearing the stamp of a member of the Syndicate for the purpose of making a Bid in terms of this Draft Red Herring Prospectus. The

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Bidder shall have the option to make a maximum of three Bids in the Bid-cum-Application Form and such options shall not be considered as multiple Bids. Upon the allotment of Equity Shares, dispatch of the CAN and filing of the Prospectus with the RoC, the Bid-cum-Application Form shall be considered as the Application Form. Upon completing and submitting the Bid-cum-Application Form to a member of the Syndicate, the Bidder is deemed to have authorized us to make the necessary changes in this Draft Red Herring Prospectus and the Bid-cum-Application Form as would be required for filing the Prospectus with the RoC and as would be required by the RoC after such filing, without prior or subsequent notice of such changes to the Bidder. The prescribed colour of the Bid-cum-Application Form for various categories is as follows:

Category Colour of Bid-cum-Application Form

Indian Public including QIBs, Non-Institutional Bidders or NRIs applying on a non-repatriation basis

:

White

Non-residents, NRIs or FIIs applying on a repatriation basis

:

Blue

Who Can Bid? 1. Persons eligible to invest under all applicable laws, rules, regulations and guidelines; 2. Indian nationals resident in India who are majors, in single or joint names (not more than

three); 3. HUFs, in the individual name of the Karta. The Bidder should specify that the Bid is being

made in the name of the HUF in the Bid cum Application Form as follows: “Name of Sole or First Bidder: XYZ Hindu Undivided Family applying through XYZ, where XYZ is the name of the Karta”. Bids by HUFs would be considered at par with those from individuals;

4. Companies, corporate bodies and societies registered under the applicable laws in India and authorized to invest in Equity shares;

5. Indian mutual funds registered with SEBI; 6. Indian financial institutions, commercial banks, regional rural banks, co-operative banks

(subject to RBI regulations and SEBI Guidelines and Regulations, as applicable); 7. Venture capital funds registered with SEBI; 8. Foreign venture capital investors registered with SEBI; 9. State Industrial Development Corporations; 10. Insurance companies registered with the Insurance Regulatory and Development Authority; 11. Provident funds with minimum corpus of Rs. 25 crores and who are authorized under their

constitution to invest in Equity Shares; 12. Pension funds with minimum corpus of Rs. 25 crores and who are authorized under their

constitution to invest in Equity Shares; 13. Multilateral and bilateral development financial institutions; 14. Trusts/Societies registered under the Societies Registration Act, 1860, as amended, or under

any other law relating to Trusts/Societies and who are authorized under their constitution to hold and invest in equity shares;

15. Eligible Non-residents including NRIs and FIIs on a repatriation/non- repatriation basis subject to applicable local laws; and

16. Scientific and/or industrial research organizations authorized under their constitution to invest in equity shares.

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As per existing regulations, Overseas Corporate Bodies (OCBs) cannot bid/participate in this issue. Note: The BRLM and the Syndicate Members shall not be entitled to subscribe to this Issue in any manner except towards fulfilling their underwriting obligation. Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable law, rules, regulations, guidelines and approvals. Application by Mutual Funds In accordance with the current regulations, no mutual fund scheme shall invest more than 10% of its net asset value in the Equity Shares or equity related instruments of any company provided that the limit of 10% shall not be applicable for investments by index funds or sector or industry specific funds. No mutual fund under all its schemes should own more than 10% of any company’s paid-up capital carrying voting rights. In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fund registered with SEBI and such Bids in respect of more than one scheme of the mutual fund will not be treated as multiple Bids provided that the Bids clearly indicate the scheme concerned for which the Bid has been made. Application by FIIs In accordance with the current regulations, the Issue of Equity Shares to a single FII should not exceed 10% of the post-Issue paid- up capital of our Company. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of the total issued capital or 5% of the total issued capital of our Company in case such sub-account is a foreign corporate or an individual. Application by SEBI registered Venture Capital Funds and Foreign Venture Capital Funds The SEBI (Venture Capital Funds) Regulations, 1996 and the SEBI (Foreign Venture Capital Investors) Regulations, 2000 prescribe investment restrictions on venture capital funds and foreign venture capital investors registered with SEBI. Accordingly, the holding by any individual venture capital fund or foreign venture capital investor registered with SEBI should not exceed 33.33% of the corpus of the venture capital fund/foreign venture capital investor. The aggregate holdings of venture capital funds and foreign venture capital investors registered with SEBI could, however, go up to 100% of our Company’s paid-up equity capital. Application by NRI Individual NRI Bidders can obtain the Bid-cum-Application Forms from our registered office

or from members of the Syndicate or the Registrars to the Issue. NRI Bidders may please note that only such Bids as are accompanied by payment in free

foreign exchange shall be considered for allotment. NRIs who intend to make payment through Non-Resident Ordinary (NRO) accounts shall use the Bid cum Application form meant for Resident Indians (white in colour)

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The above information is given for the benefit of the Bidders. The Bidders are advised to make to their own enquiries about the limits applicable to them. Our Company and the BRLM do not accept any responsibility for the completeness and accuracy of the information stated hereinabove. Our Company and the BRLM are not liable for any amendments or modification or changes in applicable laws or regulations, which may happen after the date of the Draft Red Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the number of Equity Shares bid for do not exceed the applicable limits under laws or regulations. Maximum and Minimum Bid size a) For Retail Individual Bidders: The Bid must be for minimum [•] Equity Shares and in

multiples of [•] Equity Shares thereafter subject to maximum bid amount of Rs. 100,000/-. In case of revision of Bids, the Retail Individual Bidders have to ensure that the Bid Amount does not exceed Rs. 100,000/-. In case the Bid Amount is over Rs. 100,000/- due to revision in bid or revision of the Price Band or on exercise of Cut-off option, the Bid would be considered for allotment under the Non-Institutional Bidders category. The Cut-off option is an option given only to the Retail Individual Bidders indicating their agreement to bid and purchase at the final Issue Price as determined at the end of the Book Building Process.

b) For Non-Institutional Bidders and QIB Bidders: The Bid must be for a minimum of such

number of Equity Shares such that the Bid Amount payable by the Bidder exceeds Rs. 100,000/- and in multiples of [•] Equity Shares thereafter. A Bid cannot be submitted for more than the size of the Issue. However, the maximum Bid by a QIB should not exceed the investment limits prescribed for them by applicable laws. Under existing SEBI guidelines, a QIB Bidder cannot withdraw its Bid after the Bid/Issue Closing Date.

In case of revision in Bids, the Non-Institutional Bidders who are individuals have to ensure that the Bid Amount is greater than Rs. 100,000/- for being considered for allocation in the Non Institutional Portion. In case the Bid Amount reduces to Rs. 100,000/- or less due to a revision in Bids or revision of Price Band, the same would be considered for allocation under the Retail Portion. Non Institutional Bidders and QIBs are not allowed to Bid at ‘Cut-off’.

Information for the Bidders 1. We will file the Red Herring Prospectus with the Registrar of Companies, at least 3 (three)

days before the Bid/Issue Opening Date. 2. The members of the Syndicate will circulate copies of the Red Herring Prospectus along with

the Bid-cum-Application Form to their potential investors. 3. Any investor (who is eligible to invest in the Equity Shares) desirous of obtaining a copy of

the Red Herring Prospectus along with the Bid-cum- Application Form can obtain the same from our registered office or from the BRLM, or from a member of the Syndicate.

4. Investors who are interested in subscribing for our Company’s Equity Shares should

approach any of the BRLM or Syndicate Member or their authorized agent(s) to register their Bid.

5. The Bids should be submitted on the prescribed Bid-cum-Application Form only. Bid-cum-

Application Forms should bear the stamp of the members of the Syndicate. Bid-cum-

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Application Forms, which do not bear the stamp of the members of the Syndicate, will be rejected.

Method and Process of bidding a) We, with the BRLM, shall declare the Bid/Issue Opening Date, Bid/Issue Closing Date and

the Price Band at the time of filing of the Red Herring Prospectus with RoC and also publish the same in three widely circulated newspapers (one each in English, Hindi, and Gujarati which is the regional newspaper). This advertisement, subject to the provisions of Section 66 of the Companies Act shall be in the format prescribed in Schedule XX–A of the SEBI DIP Guidelines, as amended vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated 25th January 2005. The Members of the Syndicate shall accept Bids from the Bidders during the Issue Period in accordance with the terms of the Syndicate Agreement.

b) Investors who are interested in subscribing for our Equity Shares should approach any of the

members of the Syndicate or their authorized agent(s) to register their Bid.

c) The Bidding Period shall be a minimum of 3 working (three) days and not exceed 7 working (seven) days. In case the Price Band is revised, the revised Price Band and the Bidding Period will be informed to the Stock Exchanges and published in two national newspapers (one each in English and Hindi) and one regional newspaper and the Bidding Period may be extended, if required, by an additional 3 working (three) days, subject to the total Bidding Period not exceeding 10 working (ten) days.

d) During the Bidding Period, the Bidders may approach the Syndicate to submit their Bid.

Every member of the Syndicate shall accept Bids from all clients/investors who place orders through them and shall have the right to vet the Bids.

e) Each Bid cum Application Form will give the Bidder the choice to bid for up to three optional

prices (for details refer to the paragraph entitled ‘Bids at Different Price Levels’ on page [•]) within the Price Band and specify the demand (i.e., the number of Equity Shares bid for) in each option. The price and demand options submitted by the Bidder in the Bid cum Application Form will be treated as optional demands from the Bidder and will not be cumulated. After determination of the Issue Price, the maximum number of Equity Shares bid for by a Bidder at or above the Issue Price will be considered for allocation and the rest of the Bid(s), irrespective of the Bid price, will become automatically invalid.

f) The Bidder cannot bid on another Bid cum Application Form after Bids on one Bid cum

Application Form have been submitted to any member of the Syndicate. Submission of a second Bid cum Application Form to either the same or to another member of the Syndicate will be treated as multiple bidding and is liable to be rejected either before entering the Bid into the electronic bidding system, or at any point of time prior to the allotment of Equity Shares in this Issue. However, the Bidder can revise the Bid through the Revision Form, the procedure for which is detailed in the paragraph ’Build up of the Book and Revision of Bids’ on page [•].

g) The members of the Syndicate will enter each option into the electronic bidding system as a

separate Bid and generate a Transaction Registration Slip, (“TRS”), for each price and demand option and give the same to the Bidder. Therefore, a Bidder can receive up to three TRS’s for each Bid cum application Form. It is the responsibility of the bidder to obtain the TRS from the Syndicate Member.

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h) Along with the Bid cum Application Form, all Bidders will make payment in the manner

described under the paragraph ’Terms of Payment and Payment into the Escrow Collection Account’ on page [•].

Bids at Different Price Levels a) The Price Band has been fixed at Rs. [●] to Rs. [●] per Equity Share of Rs. 10 each, Rs. [●]

being the Floor Price and Rs. [●] being the Cap Price. The Bidders can bid at any price with in the Price Band, in multiples of Re 1.

b) In accordance with SEBI Guidelines, our Company in consultation with the BRLM in

accordance with this clause, without the prior approval of, or intimation, to the Bidders, can revise the Price Band. The cap on the Price Band should not be more than 20% of the floor of the Price Band. Subject to compliance with the immediately preceding sentence, the floor of the Price Band can move up or down to the extent of 20% of the floor of the Price Band. In case of a revision in the Price Band, the Issue will be kept open for a further period of three working days after the revision of the Price Band, subject to the total Bidding Period not exceeding ten working days.

c) In the event of any revision in the Price Band, whether upwards or downwards, the

minimum application size shall be suitable revised, if necessary such that the minimum application is in the range of Rs. 5,000/- to Rs. 7,000/-.

d) Any revision in the Price Band and the revised Bidding Period/Issue Period, if applicable,

will be widely disseminated by informing the Stock Exchanges, by issuing a public notice in two national newspapers (one each in English and Hindi) and one regional newspaper (Gujarati in this case), and also indicating the change on the relevant websites of the BRLM and the terminals of the members of the Syndicate.

e) We, in consultation with the BRLM, can finalize the Issue Price within the Price Band without

the prior approval of, or intimation to, the Bidders. f) The Bidders can bid at any price within the Price Band. The Bidder has to bid for the desired

number of Equity Shares at a specific price. Retail Individual Bidders applying for a maximum bid in any of the bidding options not exceeding Rs. 100,000/- may bid at ‘Cut-off’. However, bidding at ‘Cut-off’ is prohibited for QIB or Non Institutional Bidders and such Bids from QIBs and Non-Institutional Bidders shall be rejected.

g) Retail Individual Bidders, who bid at the ‘Cut-Off’ agree that they shall purchase the Equity

Shares at any price within the Price Band. Retail Individual Bidders bidding at ‘cut-off’ shall deposit the Bid Amount based on the Cap Price in the Escrow Account. In the event the Bid Amount is higher than the subscription amount payable by the Retail Individual Bidders (i.e. the total number of Equity Shares allocated in the Issue multiplied by the Issue Price), Retail Individual Bidders shall receive the refund of the excess amounts from the Refund Account.

h) In case of an upward revision in the Price Band announced as above, Retail Individual

Bidders, who had bid at ‘cut-off’ Price could either

i) revise their Bid

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ii) make additional payment based on the cap of the revised Price Band, with the members of the Syndicate to whom the original Bid was submitted. In case the total amount (i.e. original Bid Amount plus additional payment) exceeds Rs. 100,000/-, the Bid will be considered for allocation under the Non Institutional category in terms of this Draft Red Herring Prospectus. If, however, the Bidder does not either revise the Bid or make additional payment and the Issue Price is higher than the cap of the Price Band prior to revision, the number of Equity Shares bid for shall be adjusted for the purpose of allocation, such that no additional payment would be required from the Bidder and the Bidder is deemed to have approved such revised Bid at Cut off.

i) In case of a downward revision in the Price Band, announced as above, Retail Individual

Bidders who have bid at Cut Off price could either revise their Bid or the excess amount paid at the time of bidding would be refunded from the Refund Account.

Option to Subscribe Equity Shares being offered through the Draft Red Herring Prospectus can be applied for in dematerialized form only. Escrow Mechanism Our Company and members of the Syndicate shall open Escrow Accounts with one or more Escrow Collection Banks in whose favour the Bidders shall make out the cheque or demand draft in respect of his or her Bid and/or revision of the bid. Cheques or demand drafts received for the full Bid amount from Bidders in a certain category would be deposited in the Escrow Account for the Issue. The Escrow Collection Banks will act in terms of the Draft Red Herring Prospectus and an Escrow Agreement. The monies in the Escrow Account of our Company shall be maintained by the Escrow Collection Bank(s) for and on behalf of the Bidders. The Escrow Collection Bank(s) shall not exercise any lien whatsoever over the monies deposited therein and shall hold the monies therein in trust for the Bidders. On the Designated Date, the Escrow Collection Banks shall transfer an amount equivalent to Issue proceeds (Final Issue price multiplied by the number of Equity Shares allotted through this issue) from the Escrow Account to the Public Issue Account with the Bankers to the Issue as per the terms of the Escrow Agreement with our Company and the balance amount shall be transferred to the Refund Account, from where payment of refund to the Bidders shall be made. The Bidders may note that the Escrow Mechanism is not prescribed by SEBI and the same has been established as an arrangement between our Company, the Syndicate, Escrow Collection Bank(s) and the Registrars to the Issue to facilitate collections from the Bidders. Terms of Payment and Payment into the Escrow Collection Account In case of Non-institutional Bidders and Retail Individual Bidders, each Bidder shall, with the submission of the Bid-cum- Application Form draw a cheque or demand draft for the maximum amount of his/ her Bid in favour of the Escrow Account of the Escrow Collection Bank(s) (For further details, see ’Issue Procedure - Payment Instructions’ on page [●]) and submit the same to the members of the Syndicate to whom the Bid is being submitted. In case of QIB Bidders, the Margin Amount has to be submitted along with the Bid to the members of the Syndicate. Bid-cum-Application Forms accompanied by cash and stock invests shall not be accepted. The

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maximum Bid price has to be paid at the time of submission of the Bid-cum-Application Form based on the highest bidding option of the Bidder. The members of the Syndicate shall deposit the cheque or demand draft with the Escrow Collection Bank(s), which will hold the monies for the benefit of the Bidders till the Designated Date. On the Designated Date, the Escrow Collection Bank(s) shall transfer the funds from the Escrow Account, as per the terms of the Escrow Agreement, into the Public Issue Account and Refund Account. Not later than 15 days from the Bid/Issue Closing Date, our Company will instruct the Refund Banker to refund all amount payable to unsuccessful Bidders and also the excess amount paid on bidding, if any, after adjustment for allocation to the Bidders, failing which our Company shall pay interest @15% per annum for any delay beyond the period mentioned above. Each category of Bidders i.e. QIBs, Non-Institutional Bidders and Retail Individual Bidders would be required to pay their Margin Amount at the time of the submission of the Bid-cum-Application Form. The Margin Amount payable by each category of Bidders is mentioned under the heading ’Issue Structure’ on page [●] and shall be uniform across all the bidders in the same category. Where the Margin Amount applicable to the Bidder is less than 100% of the Bid Amount, any difference between the amount payable by the Bidder for Equity Shares allocated at the Issue Price and the Margin amount paid at the time of Bidding, shall be payable by the Bidder no later than the Pay-in-Date, which shall be a minimum period of two days from the date of communication of the allocation list to the members of the Syndicate by the Registrar to the Issue. If the payment is not made favouring the Escrow Account within the time stipulated above, the Bid of the Bidder is liable to be cancelled. However, if the members of the Syndicate do not waive such payment, the full amount of payment has to be made at the time of submission of the Bid-Cum-Application Form. Electronic Registration of Bids a) The members of the Syndicate will register the Bids using the on-line facilities of NSE and

BSE. There will be at least one BSE / NSE on-line connectivity to each city where a Stock Exchange is located in India and the Bids are accepted.

b) NSE and BSE will offer a screen-based facility for registering Bids for the Issue. This facility

will be available on the terminals of the members of the Syndicate and their authorized agents during the Bidding Period. Members of the Syndicate can also set up facilities for off-line electronic registration of Bids subject to the condition that they will subsequently download the off-line data file into the on-line facilities for book building on a regular basis. On the Bid/Issue Closing Date, the Syndicate Member shall upload the Bids till such time as may be permitted by the BSE and NSE.

c) BSE and NSE will aggregate demand and price for Bids registered on their electronic facilities

on a regular basis and display graphically the consolidated demand at various price levels. This information can be assessed on BSE’s website at www.bseindia.com or on NSE’s website at www.nseindia.com.

d) At the time of registering each Bid, the members of the Syndicate shall enter the following

details of the investor in the on-line system: Name of the investor (Investors should ensure that the name given in the bid cum

application form is exactly the same as the Name in which the Depositary Account is held. In case the Bid cum Application Form is submitted in joint names, investors should

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ensure that the Depository Account is also held in the same joint names and are in the same sequence in which they appear in the Bid cum Application Form.)

Investor Category – Individual, Corporate, NRI, FII, Mutual Fund, etc Numbers of Equity Shares bid for Bid price Bid Amount Bid-cum-Application Form number Whether payment is made upon submission of Bid-cum-Application Form Margin Amount and Depository Participant Identification Number and Client Identification Number of the

demat account of the Bidder. e) A system generated TRS will be given to the Bidder as a proof of the registration of each of

the bidding options. It is the Bidder’s responsibility to obtain the TRS from the members of the Syndicate. The registration of the Bid by the members of the Syndicate does not guarantee that the Equity Shares shall be allocated either by the members of the Syndicate or our Company.

f) Such TRS will be non-negotiable and by itself will not create any obligation of any kind. g) Consequently, all or any of the members of the Syndicate may reject QIB Bids provided the

rejection is at the time of receipt of such Bids and the reason for rejection of the Bid is communicated to the Bidder at the time of such rejection. In case of Non-Institutional Bidders and Retail Individual Bidders, Bids would not be rejected except on the technical grounds listed on Page [●].

h) It is to be distinctly understood that the permission given by BSE and NSE to use their

network and software of the online IPO system should not in any way be deemed or construed to mean that the compliance with various statutory and other requirements by our Company or BRLM are cleared or approved by BSE and NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the compliance with the statutory and other requirements nor does it take any responsibility for the financial or other soundness of our Company, its promoters, its management or any scheme or project of our Company.

i) It is also to be distinctly understood that the approval given by BSE and NSE for the use of

their online IPO system should not in any way be deemed or construed that this Draft Red Herring Prospectus has been cleared or approved by the BSE and NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Red Herring Prospectus; nor does it warrant that the Equity Shares will be listed or will continue to be listed on the BSE and NSE.

Build Up of the Book and Revision of Bids a) Bids registered by various Bidders through the members of the Syndicate shall be

electronically transmitted to the NSE or BSE mainframe on a regular basis.

b) The book gets build up at various price levels. This information will be available with the BRLM on a regular basis.

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c) During the Bidding Period, any Bidder who has registered his or her interest in the Equity Shares at a particular price level is free to revise his or her Bid within the price band using the printed Revision Form, which is a part of the Bid-cum-Application Form.

d) Revisions can be made in both the desired numbers of Equity Shares and the bid price by

using the Revision Form. Apart from mentioning the revised options in the revision form, the Bidder must also mention the details of all the options in his or her Bid-cum-Application Form or earlier Revision Form. For example, if a Bidder has bid for three options in the Bid-cum-Application Form and he is changing only one of the options in the Revision Form, he must still fill the details of the other two options that are not being changed, in the Revision Form unchanged. Incomplete or inaccurate Revision Forms will not be accepted by the members of the Syndicate.

e) The Bidder can make this revision any number of times during the Bidding Period. However,

for any revision(s) of the Bid, the Bidders will have to use the services of the same members of the Syndicate through whom he or she had placed the original Bid. Bidders are advised to retain copies of the blank Revision Form and the revised Bid must be made only in such Revision Form or copies thereof.

f) Any revision of the Bid shall be accompanied by payment in the form of cheque or demand

draft for the incremental amount, if any, to be paid on account of the upward revision of the Bid. The excess amount, if any, resulting from downward revision of the Bid would be returned to the Bidder at the time of refund in accordance with the terms of this Draft Red Herring Prospectus. In case of QIBs, the members of the Syndicate shall collect the payments in the form of cheque or demand draft for the incremental amount in the QIB Margin Amount, if any, to be paid on account of the upward revision of the Bid at the time of one or more revisions by the QIB Bidders.

g) When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and get a revised TRS from the members of the Syndicate. It is the responsibility of the Bidder to request for and obtain the revised TRS, which will act as proof of his or her having revised the previous Bid.

h) Only Bids that are uploaded on the online IPO system of the NSE and BSE shall be

considered for allocation/allotment. In case of discrepancy of data between NSE or BSE and members of the Syndicate, the decision of the BRLM based on the physical records of Bid cum Application forms shall be final and binding to all concerned.

Price Discovery and Allocation a) After the Bid/Issue Closing Date, the BRLM will analyze the demand generated at various

price levels and discuss pricing strategy with us. b) Our Company, in consultation with the BRLM shall finalise the “Issue Price”, the number of

Equity Shares to be allotted in each category of Bidders. c) The allocation for QIBs for up to 50% of the Net Issue to public, of which 5% shall be reserved

for Mutual Funds, would be on a proportionate basis, subject to valid bids being received at or above the Issue Price in the manner as described in the section titled ’Basis of Allotment’. The allocation to Non-Institutional Bidders and Retail Individual Bidders of not less than 15% and 35% of the Net Issue to public, respectively, would be on proportionate basis, in the

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manner specified in the SEBI Guidelines, in consultation with Designated Stock Exchange, subject to valid Bids being received at or above the Issue Price.

d) Under subscription, if any, in QIBs, Non-Institutional and Retail categories would be allowed

to be met with spill over from any of the other categories at the discretion of our Company and the BRLM. However, if the aggregate demand by Mutual Funds is less than [•] Equity Shares, the balance Equity Shares from the portion specifically available for allocation to Mutual Funds in the QIB Portion will first be added to the QIB Portion and be allocated proportionately to the QIB Bidders in proportion to their Bids.

e) Allocation to NRIs, FIIs, Foreign Venture Capital Funds registered with SEBI applying on

repatriation basis will be subject to the terms and conditions stipulated by the FIPB and RBI while granting permission for Issue/Allocation of Equity Shares to them.

f) The BRLM, in consultation with us, shall notify the Syndicate Members of the Issue Price and

allocations to their respective Bidders, where the full Bid Amount has not been collected from the Bidders.

g) Our Company in consultation with the BRLM, reserves the right to cancel the Issue any

time after the Bid/Issue Opening Date but before allocation, without assigning reasons whatsoever.

h) In terms of SEBI Guidelines, QIB Bidders shall not be allowed to withdraw their Bid after

Bid/Issue closing date. i) The allotment details shall be uploaded on the website of the Registrar to the Issue. Signing of Underwriting Agreement and RoC Filing 1. Our Company, the BRLM and the Syndicate Members shall enter into an Underwriting

Agreement on finalization of the Issue Price and allocation(s) to the Bidders. 2. After signing the Underwriting Agreement, we will update and file the updated Red Herring

Prospectus with RoC, which then would be termed ‘Prospectus’. The Prospectus would have details of the Issue Price, Issue Size, underwriting arrangements and would be complete in all material respects.

Filing of the Prospectus with the RoC A copy of the Red Herring Prospectus, along with the documents required to be filed under Section 60B of the Companies Act, would be delivered for registration to the RoC, Gujarat, Dadra & Nagar Haveli. A copy of the Prospectus required to be filed under Section 60 of the Companies Act would be delivered for registration with RoC, Gujarat, Dadra & Nagar Haveli. Announcement of Pre-Issue Advertisement Subject to Section 66 of the Companies Act, our Company shall after receiving final observations, if any, on the Draft Red Herring Prospectus from SEBI, publish an advertisement, in the form prescribed by the SEBI DIP Guidelines in an English national daily with wide circulation, one Hindi National newspaper, and a regional language newspaper in Gujarati with wide circulation in Gujarat.

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Advertisement regarding Issue Price and Prospectus We will issue a statutory advertisement at the time of/after filing of Prospectus with RoC. This advertisement, in addition to the information that has to be set out in the statutory advertisement, shall indicate the Issue Price. Any material updates between the date of Red Herring Prospectus and the date of Prospectus will be included in such statutory advertisement. Issuance of Intimation Note and Confirmation of Allocation Note to bidders, other than QIBs The Registrar to the Issue shall send Confirmation of Allocation Note/Allotment Advice-cum-Refund Orders to all the Bidders intimating the number of shares allotted and the amount refunded. Issuance of Intimation Note and Confirmation of Allocation Note to QIB bidders After the Bid/Issue Closing Date, an electronic book will be prepared by the Registrar on the basis of Bids uploaded on the BSE/ NSE system. Based on the electronic book, if so required, QIBs may be sent an Intimation Note, indicating the number of Equity Shares that may be allocated to them and the additional margin required which shall be payable by the QIBs within the pay-in date specified therein. This Intimation Note is subject to the Basis of Allotment, which will be approved by the Designated Stock Exchange and reflected in the reconciled book prepared by the Registrar. Subject to SEBI Guidelines, certain Bid applications may be rejected due to technical reasons, non-receipt of funds, cancellation of cheques, cheque bouncing, incorrect details, etc., and these rejected applications will be reflected in the reconciled book and basis of allotment as approved by the Designated Stock Exchange. In addition, there are foreign investment limitations applicable to our Company, which may result in a change (including a potential decrease) in the number of Equity Shares being finally allotted to non-resident investors (including FIIs). As a result, a CAN may be sent to QIBs and the allocation of Equity Shares in such CAN, may be different from that specified in the earlier Intimation Note. QIBs should note that they may be required to pay additional amounts, if any, by the Pay-in Date specified in the CAN, for any increased allocation of Equity Shares. The CAN will constitute the valid, binding and irrevocable contract for the QIB for all the Equity Shares allocated to such QIB Designated Date and Transfer of Funds to Public Issue Account a) Our Company will ensure that the allotment of Equity Shares is done within 15 days of the

Bid/Issue Closing Date. After the funds are transferred from the Escrow Account to the Public Issue Account on the Designated Date, we would allot the Equity Shares to the allottees and would ensure the credit to the successful Bidders depository account within two working days from the date of finalization of the basis of allotment with the Designated Stock Exchange. In case, our Company fails to make allotment or transfer within 15 days of the Bid/Issue Closing Date, interest would be paid to the investors at the rate of 15% per annum.

b) In accordance with the SEBI DIP Guidelines, Equity Shares will be issued and allotment shall

be made only in the dematerialized form to the allottees. Allottees will have the option to re-materialize the Equity Shares, if they so desire, as per the provisions of the Companies Act and the Depositories Act.

Investors are advised to instruct their Depository Participant to accept the Equity Shares that may be allocated to them pursuant to this Issue.

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General Instructions Do’s: a) Check if you are eligible to apply; b) Complete the bid-cum-application form after reading all the instructions carefully; c) Ensure that the details about Depository Participant and beneficiary account are correct as

Equity Shares will be allotted in the dematerialized form only; d) Ensure that the Demographic Details (as defined herein below) are updated, true and correct

in all respects. e) Ensure that the Bids are submitted at the Bidding Centres only on forms bearing stamp of the

Syndicate Member; f) Ensure that you have been given a TRS for all your Bid options; g) Submit Revised Bids to the same Syndicate Member through whom the original Bid was

placed and obtain a revised TRS; h) Ensure that the Bid is within the Price Band; i) Investors must ensure that the name given in the bid cum application form is exactly the

same as the name in which the Depository Account is held. In case, the Bid cum Application Form is submitted in joint names, investors should ensure that the Depository Account is also held in the same joint names and are in the same sequence in which they appear in the Bid cum Application Form.

j) Ensure that you mention your Permanent Account Number (PAN) allotted under the I.T. Act

where the maximum Bid for Equity Shares by a Bidder is for a total value of Rs. 50,000/- or more The copy of the PAN card or the PAN allotment letter should be submitted with the application form; and

k) If you have mentioned “Applied For” or “Not Applicable” in the Bid cum Application Form

in the section dealing with PAN number, ensure that you submit Form 60 or 61, as the case may be, together with permissible documents as address proof.

Don'ts: a) Do not Bid if you are prohibited from doing so under the law of your local

jurisdiction; b) Do not Bid for lower than minimum Bid size; c) Do not Bid or revise the Bid to less than the lower end of the Price Band or higher than the

higher end of the Price Band; d) Do not Bid on another Bid cum Application Form after you have submitted a Bid to the

members of the Syndicate;

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e) Do not pay bid amount in cash, through stock invest, by money order or by

postal order. f) Do not provide your GIR number instead of PAN number; g) Do not Bid at cut off price (for QIB Bidders and Non-Institutional Bidders for whom the Bid

Amount exceeds Rs. 100,000/-); h) Do not fill up the Bid cum Application Form for an amount that exceeds the investment limit

or maximum number of Equity Shares that can be held by a Bidder under the applicable law. i) Do not send Bid cum Application Form by post; instead submit the same to a member of the

Syndicate only. j) Do not submit the Bid without the QIB Margin Amount, in case of a Bid by a QIB. Instructions for completing the Bid-Cum-Application Form Bidders can obtain Bid-cum-Application Forms and / or Revision Forms from our corporate office, or from the Syndicate Members or from the BRLM. Bids and Revisions of Bids Bids and revisions of Bids must be: (a) Made only in the prescribed Bid-cum-Application Form or Revision Form, as applicable

(white colour for Resident Indians and blue colour for NRI or FII or foreign venture capital fund registered with SEBI applying on repatriation basis).

(b) Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the

instructions contained herein, in the Bid-cum-Application Form or in the Revision Form. Incomplete Bid-cum-Application Forms or Revision Forms are liable to be rejected.

(c) The Bids from the Retail Individual Bidders must be for a minimum of [•] Equity Shares

and in multiples of [•] thereafter subject to a maximum of Rs. 100,000/-. (d) For non-institutional and QIB Bidders, Bids must be for a minimum of such number of

Equity Shares that the Bid amount exceeds Rs. 100,000/- and in multiples of [•] Equity Shares thereafter. Bids cannot be made for more than the size of the Issue. Bidders are advised to ensure that a single bid from them should not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable laws or regulations.

(e) In single name or in joint names (not more than three and in the same order as their

Depository Participant details). (f) Thumb impressions and signatures other than in the languages specified in the Eighth

Schedule in the Constitution of India must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate under official seal.

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Bidder's Bank Account Details Bidders should note that on the basis of name of the Bidders, Depository Participants Name, Depository Participants Identification Number and Beneficiary Account Number provided by them in the Bid cum Application Form, the Registrar to the Issue will obtain from the Depository, the Bidder’s bank account details. These bank account details would be printed on the Refund Orders/Refund Advices, if any, to be sent to the Bidders and for giving refund through any of the mode namely ECS or Direct Credit or RTGS or NEFT. Hence, Bidders are advised to immediately update their bank account details as appearing on the records of the Depository Participant. Please note that failure to do so could result in delays in credit of refunds to Bidders at the Bidder’s sole risk and neither the BRLM nor our Company shall have any responsibility and undertake any liability for the same. Bidder’s Depository Account Details IT IS MANDATORY FOR ALL THE BIDDERS TO GET THEIR EQUITY SHARES IN THE DEMATERIALISED FORM. ALL BIDDERS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT'S NAME, DEPOSITORY PARTICIPANT'S IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE BID-CUM-APPLICATION FORM. INVESTORS MUST ENSURE THAT THE NAME GIVEN IN THE BID CUM APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE BID-CUM-APPLICATION FORM IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE BID CUM APPLICATION FORM. Bidders should note that on the basis of name of the Bidders, Depository Participant’s name, Depository Participant-Identification number and Beneficiary Account Number provided by them in the Bid cum Application Form, the Registrar to the Issue will obtain from the Depository demographic details of the Bidders such as address, occupation, bank account details for printing on refund orders / refund advices or and for giving refund through any of the mode namely ECS or Direct Credit or RTGS or NEFT (hereinafter referred to as Demographic Details). Hence, Bidders should carefully fill in their Depository Account details in the Bid-cum-Application Form. These Demographic Details would be used for all correspondence with the Bidders including mailing of the refund orders/ refund advice / ECS credit for refunds/ Direct Credit of refund/CANs/Allocation Advice and printing of Bank particulars on the refund order / refund advice, and the Registrar would not use the Demographic Details given by Bidders in the Bid-cum-Application Form for these purposes. Hence, Bidders are advised to update their Demographic Details as provided to their Depository Participants. By signing the Bid-cum-Application Form, Bidder would have deemed to authorize the depositories to provide, upon request, to the Registrar to the Issue, the required Demographic details as available on its records. Refund Advice / Refund Orders/ Allocation Advice/ CANs would be mailed at address of the first Bidder as per the Demographic Details received from the Depositories. Bidders may note that delivery of refund orders/ refund advice/ allocation advice/ CANs may get delayed if the same once sent to the address obtained from the depositories are returned undelivered. In such

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an event, the address and other details given by the Bidders in the Bid cum Application Form would be used only to ensure dispatch of refund orders. Please note that any such delay shall be at the Bidders sole risk. In case no corresponding record is available with the Depositories that match three parameters, namely, names of the Bidders (including the order of names of joint holders), the Depository Participant’s identity (DP ID) and the beneficiary’s identity, then such Bids are liable to be rejected. Investors should note that the refund cheques/allocation advice/refund advice would be overprinted with details of bank account as per the details received from the depository. Bids under Power of Attorney In case of bids made pursuant to a power of attorney or by limited companies, corporate bodies, registered societies, a certified copy of the Power of Attorney or the relevant resolution or authority, as the case may be, along with a certified copy of the Memorandum & Article of Association and/or Bye Laws must be lodged along with the Bid cum Application Form. Failing this, our Company reserves the right to accept or reject any bid in whole or in part. In case of Bids made pursuant to a Power of Attorney by FIIs, a certified copy of the power of attorney or the relevant resolution or authority, as the case may be, along with a certified copy of their SEBI registration certificate must be submitted with the Bid-cum-Application Form. Failing this, our Company reserves the right to accept or reject any Bid in whole or in part. In case of Bids made by mutual fund registered with SEBI, Venture Capital Fund registered with SEBI and Foreign Venture Capital investor registered with SEBI, a certified copy of their SEBI registration certificate must be submitted with the Bid cum Application Form. Failing this, our Company reserves the right to accept or reject any Bid in whole or in part. Bids by Insurance Companies In case of Bids made by insurance companies registered with Insurance Regulatory and Development Authority, a certified copy of the certificate of registration issued by Insurance Regulatory and Development Authority must be submitted with the Bid-cum-Application Form. Failing this, our Company reserves the right to accept or reject any Bid in whole or in part. Bids by Provident Funds In case of Bids made by provident fund with the minimum corpus of Rs. 2,500 lacs and pension fund with the minimum corpus of Rs. 2,500 lacs, a certified copy of certificate from a chartered accountant certifying the corpus of the provident fund/ pension fund must be lodged with the Bid-cum-Application Form. Failing this, our Company reserves the right to accept or reject any Bid in whole or in part. We, in our absolute discretion, reserve the right to relax the above condition of simultaneous lodging of the power of attorney along with the Bid-cum-Application Form, subject to such terms and conditions as our Company/BRLM may deem fit. Bids by NRIs, FIIs, Foreign Venture Capital Funds registered with SEBI on a repatriation basis NRI, FIIs and Foreign Venture Capital funds Bidders to comply with the following:

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Individual NRI Bidders can obtain the Bid-cum-Application Forms from our registered office or from members of the Syndicate or the Registrars to the Issue.

NRI Bidders may please note that only such Bids as are accompanied by payment in free

foreign exchange shall be considered for allotment. NRIs who intend to make payment through Non-Resident Ordinary (NRO) accounts shall use the Bid cum Application form meant for Resident Indians (white in colour).

Bids and Revision to Bids must be made: On the Bid cum Application Form or Revision Form, as applicable and completed in full in

BLOCK LETTERS in ENGLISH in accordance with the instructions contained therein. In a single name or joint names (not more than three)

By NRIs: For a minimum of [•] Equity Shares and in multiples of [•] thereafter subject to a

maximum Bid amount of Rs. 100,000/- for the Bid to be considered as part of the Retail Portion. Bids for Bid Amount more than Rs. 100,000/- would be considered under Non Institutional Category for the purposes of allocation. For further details see ’Maximum and Minimum Bid Size’ on page [•].

By FIIs: For a minimum of [•] Equity Shares and in multiples of [•] Equity Shares thereafter

so that the Bid Amount exceeds Rs. 100,000/-. For further details see section titled ’Maximum and Minimum Bid Size’ on page [•].

In the names of individuals, or in the names of FIIs but not in the names of minors, OCBs,

firms or partnerships, foreign nationals (excluding NRIs) or their nominees. Refunds, dividends and other distributions, if any, will be payable in Indian Rupees only and

net of bank charges and/or commission. In case of Bidders who remit money through Indian Rupee drafts purchased abroad, such payments in Indian Rupees will be converted into U.S. Dollars or any other freely convertible currency as may be permitted by the RBI at the rate of exchange prevailing at the time of remittance and will be dispatched by registered post/speed post or if the Bidders so desire, will be credited to their NRE accounts, details of which should be furnished in the space provided for this purpose in the Bid-cum-Application Form. We will not be responsible for loss, if any, incurred by the Bidder on account of conversion of foreign currency.

It is to be distinctly understood that there is no reservation for Non Residents, NRIs, FIIs and Foreign Venture Capital Funds and all Non Residents, NRI, FII and Foreign Venture Capital Funds applicants will be treated on the same basis with other categories for the purpose of allocation. Payment Instructions We along with BRLM and Syndicate Member(s) shall open an Escrow Account of our Company with the Escrow Collection Banks for the collection of the Bid Amounts payable upon submission of the Bid cum Application Form and for amounts payable pursuant to allocation in the Issue. Each Bidder shall draw a cheque or demand draft for the amount payable on the Bid and/or on allocation as per the following terms:

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Payment into Escrow Account to the Issue 1. The applicable Margin Amount for Non Institutional Bidders and Retail Individual Bidders is

equal to 100% whereas for QIBs it is 10% and while submitting the Bid cum Application Form, shall be drawn as a payment instrument for the Bid Amount in favour of the Escrow Account and submitted to the members of the Syndicate.

2. In case the above Margin Amount paid by the Bidders during the Bidding Period is less than

the Issue Price multiplied by the Equity Shares allocated to the Bidder, the balance amount shall be paid by the Bidders into the Escrow Account of our Company within the period specified in the Intimation Note/CAN which shall be subject to a minimum period of two days from the date of communication of the allocation list to the members of the Syndicate by the BRLM.

3. The payment instruments for payment into the Escrow Account of our Company should be

drawn in favour of: i. In case of Resident Bidders

: Escrow Account – Asiatic Public Issue

ii. In case of Non Resident Bidders : Escrow Account – Asiatic Public Issue – NR In case of Resident QIB Bidders : Escrow Account – Asiatic Public Issue – QIB – R iii. In case of Non Resident QIB Bidders : Escrow Account –Asiatic Public Issue – QIB – NR

4. In case of Bids by NRIs applying on repatriation basis, the payments must be made through

Indian Rupee drafts purchased abroad or cheques or bank drafts, for the amount payable on application remitted through normal banking channels or out of funds held in Non-Resident External (NRE) Accounts or Foreign Currency Non-Resident (FCNR) accounts, maintained with banks authorized to deal in foreign exchange in India, along with documentary evidence in support of the remittance. Payment will not be accepted out of a Non-Resident Ordinary (NRO) Account of a Non-Resident bidder bidding on a repatriation basis. Payment by drafts should be accompanied by a bank certificate confirming that the draft has been issued by debiting an NRE or FCNR Account.

5. Payment will not be accepted out of a Non Resident Ordinary (NRO) Account of a Non

Resident bidder bidding on a repatriation basis. 6. In case of Bids by FIIs, the payment should be made out of funds held in a Special Rupee

Account along with documentary evidence in support of the remittance. Payment by drafts should be accompanied by a bank certificate confirming that the draft has been issued by debiting the Special Rupee Account.

7. Where a Bidder has been allocated a lesser number of Equity Shares than what the Bidder has

Bid for, the excess amount, if any, paid on bidding, after adjustment towards the balance amount payable on the Equity Shares allocated, will be refunded to the Bidder from the Refund Account of our Company.

8. The monies deposited in the Escrow Account of our Company will be held for the benefit of

the Bidders till the Designated Date. 9. On the Designated Date, the Escrow Collection Banks shall transfer the funds from the

Escrow Account of our Company as per the terms of the Escrow Agreement into the Public Issue Account with the Bankers to the Issue and Refund Account with the Refund Bankers.

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10. On the Designated Date and no later than 15 days from the Bid/Issue Closing Date, the

Refund Banker shall also refund all amounts payable to unsuccessful Bidders and also the excess amount paid on Bidding, if any, after adjusting for allocation to the Bidders.

Payments should be made by cheque, or demand drafts drawn on any Bank (including a Co-operative Bank), which is situated at, and is a member of or sub-member of the bankers’ clearing house located at the centre where the Bid cum Application Form is submitted. Outstation cheque/bank drafts drawn on banks not participating in the clearing process will not be accepted and applications accompanied by such cheques or bank drafts are liable to be rejected. Cash / Stockinvest / Money Orders / Postal Orders will not be accepted. Payment by Stockinvest In terms of Reserve Bank of India Circular No. DBOD No. FSC BC 42/24.47.00/2003-2004 dated 05th November , 2003, the option to use the stockinvest instrument in lieu of cheques or bank drafts for payment of Bid money has been withdrawn. Hence, payment through stockinvest will not be accepted. Submission of Bid-cum-Application Form All Bid-cum-Application Forms or Revision Forms duly completed and accompanied by account payee cheques or drafts shall be submitted to the members of the Syndicate at the time of submission of the Bid. Each member of the Syndicate may at its sole discretion waive the requirement of payment at the time of submission of the Bid-cum-Application Form and Revision Form. However, for QIB Bidders, the members of the Syndicate member shall collect the Margin Amount. No separate receipts shall be issued for the money payable on the submission of Bid-cum-Application Form or Revision Form. However, the collection centre of the members of the Syndicate will acknowledge the receipt of the Bid cum Application Forms or Revision Forms by stamping and returning to the Bidder the acknowledgement slip. This acknowledgement slip will serve as the duplicate of the Bid-cum-Application Form for the records of the Bidder. Other Instructions Joint Bids in the case of Individuals Bids may be made in single or joint names (not more than three). In the case of joint Bids, all payments will be made out in favour of the Bidder whose name appears first in the Bid-cum-Application Form or Revision Form (“First Bidder”). All communications will be addressed to the First Bidder and will be dispatched to his or her address. Multiple Bids A Bidder should submit only one Bid (and not more than one) for the total number of Equity Shares required. Two or more Bids will be deemed to be multiple Bids if the sole or First Bidder is one and the same. In this regard, the procedures which would be followed by the Registrar to the Issue to detect multiple applications are given below:

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i. All applications with the same name and age will be accumulated and taken to a separate

process file which would serve as a multiple master. ii. In this master, a check will be carried out for the same PAN. In cases where the PAN is

different, the same will be deleted from this master. iii. The Registrar will obtain, from the depositories, details of the applicant’s address based

on the DP ID and Beneficiary Account Number provided in the Bid-cum-Application Form and create an address master.

iv. The addresses of all the applications in the multiple master will be strung from the

address master. This involves putting the addresses in a single line after deleting non-alpha and non-numeric characters i.e. commas, full stops, hash etc. Sometimes, the name, the first line of address and pin code will be converted into a string for each application received and a photo match will be carried out amongst all the applications processed. A print-out of the addresses will be taken to check for common names. The applications with same name and same address will be treated as multiple applications.

v. The applications will be scrutinized for DP ID and Beneficiary Account Numbers. In case

applications bear the same DP ID and Beneficiary Account Numbers, these will be treated as multiple applications.

vi. Subsequent to the aforesaid procedures, a print out of the multiple master will be taken

and the applications physically verified to tally signatures as also father’s/ husband’s names. On completion of this, the applications will be identified as multiple applications.

In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fund registered with SEBI and such Bids in respect of more than one scheme of the mutual fund will not be treated as multiple bids provided that the Bids clearly indicate the scheme concerned for which the Bid has been made. The applications made by the asset management companies or custodians of a Mutual Fund shall clearly indicate the name of the concerned scheme for which application is being made. We reserve the right to reject, in their absolute discretion, all or any multiple Bids in any or all categories. Permanent Account Number (PAN) Where Bid(s) is/are for Rs. 50,000 or more, the Bidder or in the case of a Bid in joint names, each of the Bidders, should mention his/her Permanent Account Number (PAN) allotted under the I.T. Act. The copy of the PAN card or PAN allotment letter is required to be submitted with the application form. Applications without this information and documents will be considered incomplete and are liable to be rejected. It is to be specifically noted that Bidders should not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this ground. In case the Sole/First Bidder and Joint Bidder(s) is/are not required to obtain PAN, each of the Bidder(s) shall mention “Not Applicable” and in the event that the sole Bidder and/or the joint Bidder(s) have applied for PAN which has not yet been allotted each of the Bidder(s) should mention “Applied for” in the Bid cum Application Form. Further, where the Bidder(s) has mentioned “Applied for” or “Not Applicable”, the Sole/First Bidder and each of the Joint Bidder(s), as the case may be, would be required to submit Form 60 (Form of declaration to be

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filed by a person of declaration to be filed by a person who does not have a permanent account number and who enters into any transaction specified in rule 114B), or, Form 61 (form of declaration to be filed by a person who has agricultural income and is not in receipt of any other income chargeable to income tax in respect of transactions specified in rule 114B), as may be applicable, duly filled along with a copy of any one of the following documents in support of the address: (a) Ration Card (b) Passport (c) Driving License (d) Identity Card issued by any institution (e) Copy of the electricity bill or telephone bill showing residential address (f) Any document or communication issued by any authority of the Central Government, State Government or local bodies showing residential address (g)Any other documentary evidence in support of address given in the declaration. It may be noted that Form 60 and Form 61 have been amended vide a notification issued on 01st December 2004 by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes. All Bidders are requested to furnish, where applicable, the revised Form 60 or 61 as the case may be. Unique Identification Number – MAPIN With effect from 01st July 2005, SEBI has decided to suspend all fresh registrations for obtaining Unique Identification Number (MAPIN) and the requirement to quote MAPIN under MAPIN Regulations/Circulars vide its circular MAPIN/Circular-13/2005. However, in a recent press release dated 30th December 2005, SEBI has approved certain policy decisions and has now decided to resume registrations for obtaining UINs in a phased manner. The press release states that the cut off limit for obtaining UIN has been raised from the existing limit of trade order value of Rs. 100,000/- to Rs. 500,000/- or more. The limit will be reduced progressively. For trade order value of less than Rs. 500,000/- an option will be available to investors to obtain either the PAN or UIN. These changes are, however, not effective as of the date of the Red Herring Prospectus as SEBI has stated in the press release that the changes will be implemented only after necessary amendments are made to the SEBI MAPIN regulations. Right to Reject Bids Our Company, in consultation with the BRLM, reserves the right to reject any Bid procured from QIBs, by any or all members of the Syndicate for reasons to be recorded in writing provided that such rejection shall be made at the time of acceptance of the Bid and the reasons therefor shall be disclosed to the Bidders. In case of Non-Institutional Bidders and Retail Individual Bidders our Company, we would have a right to reject the Bids only on technical grounds. Consequent refunds shall be made by Cheque/Pay Order/Demand Draft/ECS/Direct Credit/RTGS/NEFT, as the case may be, and will be sent to the bidder’s address at the bidder’s risk. Grounds for Technical Rejections Bidders are advised to note that Bids are liable to be rejected on technical grounds, including the following:- 1. Amount paid doesn’t tally with the amount payable for the highest value of Equity Shares

bid for; 2. Age of First Bidder not given; 3. In case of partnership firms Equity Shares may be registered in the names of the individual

partners and no firm as such shall be entitled to apply;

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4. Bids by persons not competent to contract under the Indian Contract Act, 1872, including minors, insane persons

5. PAN photocopy/PAN communication/ Form 60 or Form 61 declaration along with documentary evidence in support of address given in the declaration, not given if Bid is for Rs. 50,000 or more;

6. GIR Number given instead of PAN Number; 7. Bids for lower number of Equity Shares than specified for that category of investors; 8. Bids at a price less than the lower end of the Price Band; 9. Bids at a price more than the higher end of the Price Band; 10. Bids at cut-off price by Non-Institutional and QIB Bidders; 11. Bids for number of Equity Shares, which are not in multiples of [•]; 12. Category not ticked; 13. Multiple bids as defined in this Draft Red Herring Prospectus; 14. In case of Bid under power of attorney or by limited companies, corporate, trust etc., relevant

documents are not submitted; 15. Bids accompanied by Stockinvest/money order/ postal order/ cash; 16. Bids not duly signed by the sole /joint Bidders; 17. Bid-cum-Application Form does not have the stamp of the BRLM/Syndicate Member; 18. Bid-cum-Application Form does not have Bidder’s depository account details; 19. Bid-cum-Application Forms are not submitted by the Bidders within the time prescribed as

per the Bid-cum-Application Form, Bid/Issue Opening Date advertisement and this Draft Red Herring Prospectus and as per the instructions in this Draft Red Herring Prospectus and the Bid-cum-Application Form; or

20. Bids for amounts greater than the maximum permissible amounts prescribed by the regulations;

21. In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Bidders (including the order of names of joint holders), the depository participant’s identity (DP ID) and the beneficiary’s identity;

22. Bids by OCBs; 23. Bids by US persons other than “qualified institutional buyers” as defined in Rule 144A of the

Securities Act; 24. Bids by NRIs not disclosing their residential status; 25. Any other reason which the BRLM or our Company deem necessary. Equity Shares in Dematerialized Form with NSDL or CDSL As per the provisions of Section 68B of the Companies Act, the Equity Shares in this Issue shall be allotted only in a dematerialized form, (i.e. not in the form of physical certificates but be fungible and be represented by the statement issued through the electronic mode).

In this context, two tripartite agreements have been signed among our Company, the Depositories and the Registrar: 1. An Agreement dated [•] among NSDL, our Company and Intime Spectrum Registry Limited; 2. An Agreement dated [•] among CDSL, our Company and Intime Spectrum Registry Limited

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All bidders can seek allotment only in dematerialized mode. Bids from any investor without relevant details of his or her depository account are liable to be rejected. All Bids from any Bidder without the following details of his or her depository account are liable to be rejected: 1. A Bidder applying for Equity Shares must have at least one beneficiary account with either of

the Depository Participants of NSDL or CDSL prior to making the Bid.

2. The Bidder must necessarily fill in the details (including the beneficiary account number and Depository Participant’s Identification number) appearing in the Bid cum Application Form or Revision Form.

3. Equity Shares allotted to a Bidder will be credited in electronic form directly to the

beneficiary account (with the Depository Participant) of the Bidder. 4. Names in the Bid-cum-Application Form or Revision Form should be identical to those

appearing in the account details in the Depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the depository account of the Bidder(s).

5. Non-transferable allocation advice or refund orders will be directly sent to the Bidder by the

Registrar to the Issue. 6. If incomplete or incorrect details are given under the heading ‘Bidders Depository Account

Details’ in the Bid-cum-Application Form or Revision Form, it is liable to be rejected. 7. The Bidder is responsible for the correctness of his or her demographic details given in the

Bid-cum-Application Form vis-à-vis those with his/her Depository Participant. 8. Equity Shares in electronic form can be traded only on the stock exchanges having electronic

connectivity with NSDL or CDSL. BSE and NSE, where Equity Shares are proposed to be listed are connected to NSDL and CDSL.

9. The trading of our Equity Shares would only be in dematerialized form for all investors in

the demat segment of BSE and NSE. 10. Investors are advised to instruct their Depository Participants to accept the Equity Shares that

may be allocated to them, pursuant to the issue. Communications All future communications in connection with Bids made in this Issue should be addressed to the Registrar to the Issue quoting the full name of the sole or First Bidder, Bid-cum-Application Form number, Bidders Depository account details, number of Equity Shares applied for, date of Bid-cum-Application Form, name and address of the member of the Syndicate where the Bid was submitted and cheque or draft number and issuing bank thereof. Our Company has appointed Mr. Dilip Agarwal as the Compliance Officer for the purpose of this IPO. The Compliance Officer can be contacted at Asiatic Colour – Chem Industries Limited, 1503/4 GIDC Phase I Naroda, Ahmedabad 382330 Gujatrat, India. Tel No: (079) 66305900; Fax No: (079) 22820766; Email: info@asiaticcolour.com The Investors can contact the Compliance Officer or the Registrar to the Issue in case of any pre-Issue or post-Issue related problems such as non-receipt of letters of allotment, credit of allotted shares in the respective beneficiary account, refund orders, etc.

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Disposal of Applications and Application Money We shall ensure dispatch of allotment advice and/or refund orders/refund advice (in case refunds made through ECS/ Direct Credit, RTGS, NEFT) as the case may be giving credit to the Beneficiary Account of the bidders with their respective Depository Participant and submission of the allotment and listing documents to the Stock Exchanges within two working days of finalization of the basis of allotment of Equity Shares. The mode of dispatch of refunds shall be as under: a) In case of applicants residing at any of the centers specified by SEBI viz. Ahmedabad,

Bangalore, Bhuvaneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna and Thiruvanathapuram – refunds shall be credited through electronic transfer of funds by using ECS (Electronic Clearing Service), Direct Credit, RTGS (Real Time Gross Settlement) or NEFT (National Electronic Funds Transfer;

b) In case of applicants residing at places other than those specified in (a) above and where the

value of refund order is Rs.1500/- or more, refund orders will be dispatched to the applicants by registered post or speed post and where the value is less than Rs. 1500/- refund orders will be dispatched under certificate of posting at the sole or First Bidder’s sole risk(subject however to postal rules);

c) In case of any category of applicants specified by the SEBI – crediting of refunds to the

applicants in any other electronic manner permissible under the banking laws for the time being in force which is permitted by the Board from time to time.

We shall use our best efforts to ensure that all steps for completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges, where the Equity Shares are proposed to be listed are taken within seven working days of finalization of the basis of allotment. In accordance with the Companies Act, the requirements of the stock exchanges and SEBI Guidelines, our Company, further undertakes that: Allotment of Equity Shares shall be made only in dematerialized form within 15 days of the

Bid/Issue Closing Date; Our Company shall, within 15 days of the Bid/Issue Closing Date, ensure giving instruction

in respect of refunds to the clearing system or dispatch the refund orders as the case may be; and

Our Company shall pay interest at 15% per annum (for any delay beyond the 15 day time

period as mentioned above), if allotment/transfer is not made, refund orders are not dispatched or refund instructions have not been given to the clearing system in the manner disclosed above and/or demat credits are not made to bidders within the 15 day time prescribed above.

Our Company will provide adequate funds required to the Registrar to the Issue for refunds to unsuccessful applicants or allotment advice. Refunds if, not made by ECS, Direct Credit, RTGS, NEFT will be made through cheques, pay orders or demand drafts drawn on a bank appointed

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by us as a refund banker and payable at par at places where Bids are received. Bank charges, if any, for cashing such cheques, pay orders or demand drafts at other centers will be payable by the Bidders. Where refunds are made through electronic transfer of funds, a suitable communication will be sent to the bidders within 15 days of closure of the issue, giving details of the Bank where refund will be credited along with amount and expected date of electronic credit of refund. The bank account details for ECS, Direct Credit, RTGS, National Electronic Funds Transfer (NEFT) credit will be directly taken from the depositories’ database and hence bidders are required to ensure that bank details including the nine digit MICR code (Magnetic Ink Character Recognition) maintained at the depository level are updated and correct. Impersonation Attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68(A) of the Companies Act, 1956, which is reproduced below: "Any person who: a) makes in a fictitious name, an application to a Company for acquiring or subscribing for,

any shares therein, or b) otherwise induces a Company to allot, or register any transfer of shares therein to him, or

any other person in a fictitious name; shall be punishable with imprisonment for a term which may extend to five years."

Interest on Refund of Excess Bid Amount We shall pay interest at the rate of 15% per annum on the excess Bid Amount received by us if refund orders are not dispatched within 15 days from the Bid/Issue Closing Date as per the Guidelines issued by the Government of India, Ministry of Finance pursuant to their letter No. F/8/S/79 dated 31st July 1983, as amended by their letter No. F/14/SE/85 dated 27th September 1985, addressed to the stock exchanges, and as further modified by SEBI’s Clarification XXI dated 27th October 1997, with respect to the SEBI Guidelines. BASIS OF ALLOTMENT

I) For Retail Individual Bidders

Bids received from the Retail Individual Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The allocation to all the successful Retail individual Bidders will be made at the Issue Price.

The Net Issue size less allocation to Non-Institutional Bidders and QIBs shall be

available for allocation to Retail Individual Bidders who have bid in the Issue at a price, which is equal to or greater than the Issue Price.

If the aggregate demand in this category is less than or equal to 1,238,650 Equity Shares

at or above the Issue Price, full allocation shall be made to the Retail Individual Bidders to the extent of their demand.

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If the aggregate demand in this category is greater than 1,238,650 Equity Shares at or above the Issue Price, the allocation shall be made on a proportionate basis up to a minimum of [•] Equity Shares (being the minimum bid quantity) or in multiples of one Equity Share. For the method of proportionate basis of allocation, refer below.

II) For Non Institutional Bidders

Bids received from Non-Institutional Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The allocation to all successful Non-Institutional Bidders will be made at the Issue Price.

The Net Issue size less allocation to QIBs and Retail Portion shall be available for

allocation to Non-Institutional Bidders who have bid in the Issue at a price, which is equal to or greater than the Issue Price.

If the aggregate demand in this category is less than or equal to 530,,850 Equity Shares at

or above the Issue Price, full allocation shall be made to Non-Institutional Bidders to the extent of their demand.

In case the aggregate demand in this category is greater than 530,850 Equity Shares at or

above the Issue Price, allocation shall be made on a proportionate basis up to a minimum of [•] Equity Shares (being the minimum bid quantity) or in multiples of one Equity Share. For the method of proportionate basis of allotment refer below.

III) For QIB Bidders

Bids received from the QIB bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The allocation to all the QIB Bidders will be made at the issue price.

The QIB portion shall be available for allocation to QIB bidders who have bid in the

Issue at a price that is equal to or greater than the Issue Price. Allotment shall be undertaken in the following manner:

(a) In the first instance allocation to Mutual Funds for 5% of the QIB Portion shall be

determined as follows: i. In the event that Mutual Fund Bids exceed 5% of the QIB portion, allocation to

Mutual Funds shall be done on a proportionate basis for 5% of the QIB portion. ii. In the event that the aggregate demand for Mutual Funds is less than 5% of the

QIB portion then all Mutual Funds shall get full allotment to the extent of valid bids received above the Issue Price.

iii. Equity shares remaining unsubscribed, if any, not allocated to Mutual Funds shall be available to all QIB Bidders as set out in (b) below;

(b) In the second instance allocation to all QIB’s shall be determined as follows:

i. In the event that the oversubscription in the QIB portion, all QIB bidders who have submitted bids above the Issue Price shall be allotted Equity Shares on a proportionate basis for up to 95% of the QIB portion.

ii. Mutual Funds, who have received allocation as per (a) above, for less than the number of Equity Shares Bid for by them, are eligible to receive Equity Share on a proportionate basis along with other QIB Bidders.

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iii. Under-subscription below 5% of the QIB portion, if any, from Mutual Funds, would be included for allocation to the remaining QIB bidders on a proportionate basis.

(c) The aggregate allocation to QIB Bidders shall be up to 1,769,500 Equity Shares.

Procedure and Time Schedule for Allotment and Issue of Certificates

The Issue will be conducted through a “100% book building process” pursuant to which the Underwriters will accept bids for the Equity Shares during the Bidding Period. The Bidding Period will commence on [●] and expire on [●]. Following the expiration of the Bidding Period, our Company, in consultation with the BRLM, will determine the issue price, and, in consultation with the BRLM, the basis of allocation and entitlement to allotment based on the bids received and subject to the confirmation by the Stock Exchanges. Successful bidders will be provided with a confirmation of their allocation and will be required to pay any unpaid amount for the Equity Shares within a prescribed time. The Prospectus will be filed with Registrar of Companies, Gujarat, Dadra & Nagar Haveli and with SEBI, Mumbai. SEBI Guidelines require our Company to complete the allotment to successful bidders within 15 days from the Bid/Issue Closing Date. The Equity Shares will then be credited and allotted to the investors’ demat accounts maintained with the relevant depository participant. Upon approval by the Stock Exchanges, the Equity Shares will be listed and traded on BSE and NSE. Method of Proportionate Allotment In the event of the Issue being over-subscribed, we shall finalize the basis of allotment to Retail Individual Bidders and Non-Institutional Bidders and QIBs in consultation with the Designated Stock Exchange. The Executive Director/Managing Director of the Designated Stock Exchange along with the post Issue Lead Merchant Banker and the Registrars to the Issue shall be responsible to ensure that the basis of allotment is finalized in a fair and proper manner. The allotment shall be made in marketable lots, on a proportional basis as explained below: (a) Bidders will be categorized according to the number of Equity Shares applied for, (b) The total number of Equity Shares to be allotted to each category as a whole shall be arrived

at on a proportionate basis, which is the total number of Equity Shares applied for in that category (number of Bidders in the category multiplied by the number of Equity Shares applied for) multiplied by the inverse of the over-subscription ratio.

(c) Number of Equity Shares to be Allotted to the successful Bidders will be arrived at on a

proportionate basis, which is total number of Equity Shares applied for by each Bidder in that category multiplied by the inverse of the over-subscription ratio, in that category subject to a minimum allotment of [•] Equity Shares. The allotment lot shall be the same as the minimum application lot irrespective of any revisions to the price band.

(d) In all Bids where the proportionate allotment is less than [•] Equity Shares per Bidder, the

Allotment shall be made as follows:

Each successful Bidder shall be allotted a minimum of [•] Equity Shares; and

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The successful Bidders out of the total Bidders for a category shall be determined by draw of lots in a manner such that the total number of Equity Shares allotted in that category is equal to the number of Equity Shares calculated in accordance with (b) above.

(e) If the proportionate Allotment to a Bidder is a number that is more than [•] but is not a

multiple of one (which is the marketable lot), the decimal would be rounded off to the higher whole number if that decimal is 0.5 or higher. If the decimal is less than 0.5, it would be rounded off to the lower whole number. All Bidders in such categories would be allotted Equity Shares arrived at after such rounding off.

(f) If the Equity Shares allocated on a proportionate basis to any category are more than the

Equity Shares allotted to the Bidders in that category, the remaining Equity Shares available for allotment shall be first adjusted against any other category, where the allotted Equity Shares are not sufficient for proportionate allotment to the successful Bidders in that category. The balance Equity Shares, if any, remaining after such adjustment will be added to the category comprising Bidders applying for minimum number of Equity Shares.

Letters of Allotment or Refund Orders We shall give credit to the beneficiary account with Depositary Participants and submit the documents pertaining to the allotment to the Stock Exchanges within two working days of finalization of the basis of allotment of Equity Shares. Applicants residing at 15 centers where clearing houses are managed by the Reserve Bank of India (RBI) will get refunds through Direct Credit or RTGS or NEFT, or ECS as applicable (subject to availability of all information for crediting through electronic mode). In case of other applicants, the Bank shall ensure dispatch of refund orders, if any, of value up to Rs. 1,500/- by ‘Under Certificate of Posting’, and shall dispatch refund orders above Rs. 1,500/-, if any, by registered post or speed post, except for Bidders who have opted to receive refunds through the electronic facility. Applicants to whom refunds are made through Electronic transfer of funds will be send a letter through ordinary post intimating them about the mode of credit of refund within 15 working days of closure of Issue. We shall ensure dispatch of refund orders, if any, by ’Under Certificate of Posting’ or registered post or speed post or Electronic Clearing Service or Direct Credit or RTGS or NEFT, as applicable, only at the sole or First Bidder’s sole risk within 15 days of the Bid Closing Date/Issue Closing Date, and adequate funds for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue by the issuer. In accordance with the Companies Act, the requirements of the Stock Exchange and the SEBI DIP Guidelines, we undertake that: Allotment of Equity Shares will be made only in dematerialized form within 15 days from the

Bid/Issue Closing Date; Dispatch of refund orders will be done within 15 days from the Bid/Issue Closing Date;

We shall pay interest at 15% per annum (for any delay beyond the 15 day time period as

mentioned above), if allotment is not made, refund orders are not despatched and/or demat credits are not made to investors within the 15 day time prescribed above as per the guidelines issued by the Government of India, Ministry of Finance pursuant to their letter No.F/8/S/79 dated July 31, 1983, as amended by their letter No.F/14/SE/85 dated September 27, 1985, addressed to the Stock Exchanges and as further modified by SEBI‘s clarification XXI dated October 27, 1997, with respect to the SEBI DIP Guidelines.

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We will provide adequate funds required for dispatch of refund orders or allotment advice to the Registrar to the Issue. Refunds will be made by cheques, pay-orders or demand drafts drawn on a bank appointed by us, as a Refund Bank and payable at par at places where Bids are received, except for Bidders who have opted to receive refunds through the Direct Credit/RTGS/NEFT/ECS facility. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders. Dispatch of Refund Orders The payment of refund, if any, would be done through various modes as given hereunder: 1. ECS – Payment of refund would be done through ECS for applicants having an account at

any of the following fifteen centres: Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthapuram. This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories. The payment of refunds is mandatory for applicants having a bank account at any of the abovementioned fifteen centres, except where the applicant, being eligible, opts to receive refund through NEFT, direct credit or RTGS.

2. Direct Credit – Applicants having bank accounts with the Refund Banker(s), as mentioned in

the Bid cum Application Form, shall be eligible to receive refunds through direct credit. Charges, if any, levied by the Refund Bank(s) for the same would be borne by the Company.

3. RTGS – Applicants having a bank account at any of the abovementioned fifteen centres and

whose refund amount exceeds Rs. 1 million, have the option to receive refund through RTGS. Such eligible applicants who indicate their preference to receive refund through RTGS are required to provide the IFSC code in the Bid-cum-application Form. In the event the same is not provided, refund shall be made through ECS. Charges, if any, levied by the Refund Bank(s) for the same would be borne by the Company. Charges, if any, levied by the applicant’s bank receiving the credit would be borne by the applicant.

4. NEFT (National Electronic Fund Transfer) – Payment of refund shall be undertaken through

NEFT wherever the applicants’ bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic Ink Character Recognition (MICR), if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the applicants have registered their nine digit MICR number and their bank account number while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the applicants through this method. The process flow in respect of refunds by way of NEFT is at an evolving stage and hence use of NEFT is subject to operational feasibility, cost and process efficiency.

5. For all other applicants, including those who have not updated their bank particulars with

the MICR code, the refund orders will be despatched under certificate of posting for value up to Rs. 1,500 and through Speed Post/ Registered Post for refund orders of Rs. 1,500 and above. Such refunds will be made by cheques, pay orders or demand drafts drawn on the Escrow Collection Banks and payable at par at places where Bids are received. Bank charges, if any, for cashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders.

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Interest in case of delay in Dispatch of Allotment Letters/Refund Orders or delay in Refund instructions Our Company agrees that allotment of securities offered to the public shall be made not later than 15 days of the closure of public issue. Our Company further agrees that it shall pay interest @15% per annum if the allotment letters/ refund orders have not been dispatched to the applicants or if, in a case where the refund or portion thereof is made in electronic manner, the refund instructions have not been given to the clearing system in the disclosed manner within 15 days from the Bid/Issue closing date. Bid/Issue Program

Bid/Issue opens on: __________________

Bid/Issue closes on: __________________

Bids and any revision in Bids shall be accepted only between 10.00 a.m. and 3.00 p.m. (Indian Standard Time) during the Bidding Period as mentioned above at the bidding centres mentioned on the Bid cum Application Form except that on the Bid/Issue Closing Date, the Bids shall be accepted only between 10 a.m. and 1 p.m. (Indian Standard Time) or such time as may extended by us in consultation with BRLM and uploaded till such time as permitted by the BSE and the NSE on the Bid/Issue Closing Date. Investors please note that as per letter no. List/smd/sm/2006 dated 03rd July 2006 and letter no. NSE/IPO/25101-6 dated 06th July 2006 issued by BSE and NSE respectively, bids and any revision in Bids shall not be accepted on Saturdays and holidays as declared by the Exchanges. We reserve the right to revise the Price Band during the Bidding Period in accordance with SEBI Guidelines. The cap on the Price Band should not be more than 20% of the floor of the Price Band. Subject to compliance with the immediately preceding sentence, the floor of the Price and can move up or down to the extent of 20% of the floor of the price band. In case of revision in the Price Band, the Bidding/Issue Period will be extended for three additional days after revision of Price Band subject to the Bidding/Issue Period not exceeding 10 working days. Any revision in the Price Band and the revised Bidding/Issue Period, if applicable, will be widely disseminated by notification to the BSE and the NSE, by issuing a public notice in two national newspapers one in English and other in Hindi, and also in Gujarati, being the regional newspaper and also by indicating the change on the web sites and at the terminals of the members of the Syndicate. Undertaking by our Company We undertake as follows: 1. That the complaints received in respect of the Issue shall be attended to by our Company

expeditiously and satisfactorily; 2. That all steps for completion of the necessary formalities for listing and commencement of

trading at all stock exchanges where the Equity Shares are to be listed are taken within 7 working days of finalization of the basis of allotment;

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3. That funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the issue by our Company.

a. that where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant within 15 days of closure of the issue, as the case may be, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund.)

4. that the promoters’ contribution in full, wherever required, shall be brought in advance

before the Issue opens for public subscription and the balance, if any, shall be brought in pro rata basis before the calls are made on public.

5. that the certificates of the securities/ refund orders to the non-resident Indians shall be

despatched within specified time. 6. that no further issue of securities shall be made till the securities offered through this

prospectus are listed or till the application moneys are refunded on account of non-listing, under subscription, etc.

Utilization of Issue Proceeds The Board of Directors of our Company certifies that: a. All monies received out of this issue of shares to public shall be transferred to a separate bank

account other than the bank account referred to in sub-section (3) of section 73 of the Act; b. Details of all monies utilized out of the issue referred to in sub-item (a) shall be disclosed

under an appropriate separate head in the Balance Sheet of our Company indicating the purpose for which such monies had been utilized;

c. Details of all unutilized monies out of the issue of shares, if any, referred to in sub-item (a)

shall be disclosed under an appropriate separate head in the Balance Sheet of our Company indicating the form in which such unutilized monies have been invested;

d. The utilization of monies received from reservations shall be disclosed under an appropriate

head in the Balance Sheet of our Company indicating the purpose for which such monies have been utilized; and

e. The details of all unutilized monies, out of the funds received from reservations, shall be

disclosed under a separate head in the Balance Sheet of our Company indicating the manner in which such unutilized monies have been invested.

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RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES Foreign investment in Indian securities is regulated through the industrial policy of Government of India, or the Industrial Policy and FEMA. While the Industrial Policy prescribes the limits and the conditions subject to which foreign investment can be made in different sectors of the Indian economy, FEMA regulates the precise manner in which such investment may be made. Under the Industrial Policy, unless specifically restricted, foreign investment is freely permitted in all sectors of Indian economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures for making such investment. The government bodies responsible for granting foreign investment approvals are the Foreign Investment Promotion Board of Government of India (FIPB) and the RBI. RBI, vide its circular A.P.(DIR Series) Circular No. 53 dated 17th December 2003, permitted FIIs to subscribe to shares of an Indian Company in the public issue without prior approval of RBI, so long as the price of equity shares to be issued is not less than the price at which the equity shares are issued to residents. Investment by Non-Resident Indians A variety of special facilities for making investments in India in shares of Indian Companies is available to individuals of Indian nationality or origin residing outside India (“NRIs”). These facilities permit NRIs to make portfolio investments in shares and other securities of Indian companies on a basis not generally available to other foreign investors. Under the portfolio investment scheme, NRIs are permitted to purchase and sell equity shares of our Company through a registered broker on the stock exchanges. NRIs collectively should not own more than 10% of the post-issue paid up capital of our Company. No single NRI may own more than 5% of the post- issue paid up capital of our Company. NRI investment in foreign exchange is now fully repatriable whereas investments made in Indian Rupees through rupee accounts remains non repatriable. Investment by Foreign Institutional Investors Foreign Institutional Investors (“FIIs”) including institutions such as pension funds, investment trusts, asset management companies, nominee companies and incorporated, institutional portfolio managers can invest in all the securities traded on the primary and secondary markets in India. FIIs are required to obtain an initial registration from the SEBI and a general permission from the RBI to engage in transactions regulated under FEMA. FIIs must also comply with the provisions of the SEBI (Foreign Institutional Investors) Regulations, 1995, as amended from time to time. The initial registration and the RBI’s general permission together enable the registered FII to buy (subject to the ownership restrictions discussed below) and sell freely securities issued by Indian companies, to realise capital gains or investments made through the initial amount invested in India, to subscribe or renounce rights issues for shares, to appoint a domestic custodian for custody of investments held and to repatriate the capital, capital gains, dividends, income received by way of interest and any compensation received towards sale or renunciation of rights issues of shares. Ownership restrictions of FIIs Under the portfolio investment scheme, the overall issue of equity shares to FIIs on a repatriation basis should not exceed 24% of post-issue paid-up capital of our Company. However, the limit of 24% can be raised up to the permitted sectoral cap for that Company after approval of the board

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of directors and shareholders of our Company. The issue of equity shares to a single FII should not exceed 10% of the post-issue paid-up capital of our Company. In respect of an FII investing in equity shares of a Company on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of the total issued capital of that Company. Registration of Equity Shares under US Laws The Equity Shares have not been and will not be registered under the U.S. Securities Act 1933, as amended or any state securities laws in the United States and may not be offered or sold within the United States or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S of the U.S. Securities Act, 1933), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Equity Shares will be offered and sold only (i) in the United States to “qualified institutional buyers”, as defined in Rule 144A of the Securities Act, and (ii) outside the United States in compliance with Regulation S and the applicable laws of the jurisdiction where those offers and sales occur. The above information is given for the benefit of the Bidders and neither our Company nor the BRLM are liable for any changes in the regulations after the date of this Draft Red Herring Prospectus.

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SECTION - X. DESCRIPTION OF EQUITY SHARES AND TERMS OF THE ARTICLES OF ASSOCIATION

MAIN PROVISIONS OF ARTICLES OF ASSOCIATION

Capitalized terms used in this section have the meaning that has been given to such terms in the Articles of Association of the Company

The regulations contained in Table ‘A’ of Schedule I to the Companies Act shall apply only in

so far as the same are not provided for or are not inconsistent with these Articles and the regulations for the management of the Company and for observance of the members thereof and their representatives shall, subject to any exercise of the statutory powers of the Company with reference to repeal or alteration of or addition to, its regulations by Special Resolution, as prescribed by the Companies Act, be such as are contained in these Articles. Pursuant to Schedule II of the Companies Act and the SEBI Guidelines, the main provisions relating to Rights of members regarding voting, dividend, lien on shares and the process for modification of such rights and forfeiture of shares.and the provisions of the Articles of Association of the Company are detailed below: 170. The following Articles were adopted as the Articles of Association of the Company in substitution for and to the exclusion of the previous Articles of the Company in pursuance of a special resolution passed at the Extra Ordinary General meeting of the Company held on June 1, 2006.

CAPITAL 3. The Authorised Share Capital of the Company shall be as per Paragraph V of the Memorandum

of Association of the Company with rights to alter the same in whatever way as deemed fit by the Company. The Company may increase the Authorised Capital which may consist of Equity and/or Preference Shares as the company in General Meeting may determine in accordance with the law for the time being in force relating to Companies with power to increase or reduce such capital from time to time, in accordance with the law for the time being in force relatin to companies with power to increase or reduce such capital from time to time, in accordance with the Regulations of the company and the legislative provisions for the time being in force in this behalf and with power to divide the shares in the Capital for the time being into Equity Share Capital or Preference Share Capital for the time being into Equity Share Capital or Preference share Capital and to attach thereto respectively any preferential, qualified or special rights, privileges or conditions and to vary modify and abrogate the same in such manner as may be determined by or in accordance with these presents.

Increase of Capital by the Company; how carried into effect 4. The Company may in General Meeting, from time to time by ordinary resolution, increase its

capital by creation of new shares which may be unclassified and may be classified at the time of issue in one or more classes and of such amount or amounts as may be deemed expedient. The new shares shall be issued upon such terms and conditions with such rights and privileges annexed thereto as the resolution shall be prescribe and in particular, such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets of the Company and with a right of voting at General Meeting of the Company in confirmity with Sections 87 and 88 of Act. Whenever the Capital of the Company has been increased under the provisions of this Article, the Directors shall comply with the provisions of Section 97 of the Act.

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New Capital same as existing capital 5. Except in so far as otherwise provided by the conditions of issue or by these Articles, any capital

raised by the creation of new shares, shall be considered as part of the existing capital and shall be subject to the provisions herein contained with reference to the payment of calls and instalments, forfeiture, lien, surrender, transfer and transmission, voting and otherwise.

Redeemable Preference Shares 6. Subject to the provisions of Section 80 of the Act, the Company shall have the power to issue

preference shares which are or at the option of the Company are liable to be redeemed in accordance with Section 80A of the Act and the resolution authorising such issue shall prescribe the manner, terms and conditions of redemption.

Provisions to apply on issue of Redeemable Preference Shares 7. On the issue of redeemable preference shares under the provisions of Article 6 hereof, the

following provisions shall take effect.

(a) No such shares shall be redeemed except out of profits of the Company which would otherwise be available for dividend or out of proceeds of a fresh issue of shares made for the purposes of the redemption.

(b) No such shares shall be redeemed unless they are fully paid.

(c) The premium, if any, payable on redemption shall have been provided for out of the profits of the Company or out of the Company’s Shares Premium Account, before the shares are redeemed.

(d) Where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall, out of profits, which would otherwise have been available for dividend, be transferred to a reserve fund, to be called “the Capital Redemption Reserve Account”, a sum equal to the nominal amount of the shares redeemed and the provisions of the Act, relating to the reduction of the share captial of the Company shall, except as provided in Section 80 of the Act, apply as if the Capital Redemption Reserve Account were paid-up share capital of the Company.

(e) Subject to the provisions of Sections 80 and 80A of the Act, the redemption of preference shares hereunder may be effected in accordance with the terms and conditions of their issue and in the absence of any specific terms and conditions in that behalf, in such manner as the Directors may think fit.

Reduction of Capital 8. The Company may (Subject to the provisions of Sections 78, 80 and 100 to 105, both inclusive and

other applicable provisions, if any of Act) from time to time by special resolution reduce (a) the share capital (b) any capital redemption reserve account or (c) any share premium account in any manner for the time being, authorised by law and in particular capital may be paid off on the footing that it may be called up again or otherwise. This Article is not to derogate from any power Company would have, if it were omitted.

Consolidation division, sub-division and cancellation of Shares 9. Subject to the provisions of Section 94 of the Act, the Company in General Meeting may from

time to time by an ordinary resolution alter the conditions of its Memorandum as follows:

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(a) Consolidate and divide all or any of its share capital into shares of large amount than its existing shares.

(b) Sub-divide its shares or any of them into shares of smaller amount than fixed by the Memorandum, so however, that in the sub-division the proportion between the amount paid and the amount, if any, unpaid on such reduce share shall be the same as it was in the case of the share from which the reduced share is derived.

(c) Cancel any shares which at the date of the passing of the resolution have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled. A cancellation of shares in pursuance of this sub-clause shall not be deemed to be reduction of share capital within the meaning of the Act.

Whenever the Company shall do any one or more of the things provided for in the foregoing sub-

clauses (a), (b) and (c), the Company shall within thirty days thereafter give notice thereof to the Registrar as required by Section 95 of the Act, specifying, as the case may be the shares, consolidated, divided, sub-divided or cancelled.

FORFEITURE OF SHARES If money payable on share not paid notice to be given 44. If any member fails to pay the whole or any part of any call or any instalment of a call on or

before the day appointed for the payment of the same or any such extension thereof, the Board of Directors may, at any time thereafter, during such time as the call for instalment remains unpaid, give notice to his requiring him to pay the same together with any interest that may have accrued and all expenses that may have been incurred by the Company by reason of such non-payment.

Sum payable on allotment to be deemed a call 45. For the purposes of the provisions of these presents relating to forfeiture of shares the sum

payable upon allotment in respect of a share shall be deemed to be a call payable upon such share on the day of allotment.

Form of Notice 46. The notice shall name a day (not being less than one month from the day of the notice) and a

place or places on and at which such call or instalment and such interest thereon at such rate not exceeding eighteen per cent per annum as the Directors may determine and expenses as aforesaid are to be paid. The notice shall also state that in the event of the non-payment at or before the time and at the place appointed, shares in respect of which the call was made or instalment is payable will be liable to be forfeited.

In default of payment shares to be forfeited 47. If the requirements of any such notice as aforesaid are not complied with any share or shares in

respect of which such notice has been given may at any time thereafter before payment of all calls or instalments, interests and expenses due in respect thereof, be forfeited by a resolution of the Board of Directors to that effect. Such forfeiture shall include all dividends declared or any other moneys payable in repect of the forfeited shares and not actually paid before the forfeiture.

Notice of forfeiture to a member 48. When any share shall have been so forfeited, notice of the forfeiture shall be given to the member

in whose name it stood immediately prior to the forfeiture and an entry of the forfeiture, with the date thereof, shall forthwith be made in the Register of Members, but no forfeiture shall be in any

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manner invalidated by any ommission or neglect to give such notice or to make any such entry as aforesaid.

Forfeited share to be the property of the Company and may be sold etc. 49. Any share so forfeited, shall be deemed to be the property of the Company and may be sold, re-

allotted or otherwise disposed off, either to the original holder or to any other person upon such terms and in such manner as the Board of Directors shall think fit.

Member still liable to pay money owing at the time of forfeiture and interest 50. Any member whose shares have been forfeited shall notwithstanding the forfeiture be liable to

pay and shall forthwith pay to the Company on demand all calls, instalments, interest and expenses owing upon or in respect of such shares at the time of the forfeiture together with interest thereon from the time of the forfeiture until payment, at such rate not exceeding eighteen per cent per annum as the Board of Directors may determine and the Board of Directors may enforce the payment of such moneys or any part thereof, if it thinks fit, but shall not be under any obligation to do so.

Effect of forfeiture 51. The forfeiture of a share shall involve the extinction at the time of the forfeiture of all interest in

and all claims and demand against the Company in respect of the share and all other rights incidental to the share, except only such to those rights as by these Articles are expressly saved.

Power to annul forfeiture 52. The Board of Directors may at any time before any share so forfeited shall have been sold, re-

allotted or otherwise disposed off, annual the forfeiture thereof upon such conditions as it thinks fit.

Declaration of forfeiture 53. (a) A duly verified declaration in writing that the declarant is a Director, the Managing Director or the Manager or the Secretary of the Company and that a share in the Company has been duly forfeited in accordance with these Articles, on a date stated in the declaration, shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share.

(b) The Company may receive the consideration, if any, given for the share on any sale, re-alloment or other disposal thereof and may execute a transfer of the share in favour of the person to whom the share is sold or disposed off.

(c) The person whom such share is sold, re-allotted or disposed off shall thereupon be registered as the holder of the share.

(d) Any such purchaser or allottee shall not (unless by express agreement) be liable to pay any calls, amounts, instalments, interest and expenses owing to the Company prior to such purchase or allotment nor shall be entitled (unless by express agreement) to any of the dividends, interests or bonuses accrued or which might have accrued upon the share before the time of completing such purchase or before such allottment.

(e) Such purchaser or allottee shall not be bound to see to the application of the irregularity or invalidity in the proceedings in reference to the forfeiture, sale, re-allotment or other disposal of the shares.

Provisions of these Articles as to forfeiture to apply in case of non payment of any sum

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54. The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any such which by the terms of issue of a share becomes payable at a fixed time, whether on account of the nominal value of a share or by way of premium, as if the same had been payable by virtue of a call duly made and notified.

Cancellation of share certificate in respect of forfeited shares 55 Upon sale, re-allotment or other disposal, under the provisions of these Articles, the certificate or

certificates originally issued in respect of the relative shares shall (unless the same shall on demand by the Company have been previously surrendered to it by the defaulting member) stand cancelled and become null and void and of no effect and the Directors shall be entitled to issue a new certificate or certificates in respect of the said shares to the person or persons entitled thereto.

Power to Borrow 82. Subject to the provisions of Sections 58A, 292 and 293 of the Act and of these Article, the Board of

Directors may, from time to time at its discretion by a resolution passed at a meeting of the Board, borrow, accept, deposits from members either in advance of calls or otherwise and generally raise or borrow or secure the payment of any such sum or sums of money for the purpose of the Company from any source. PROVIDED THAT, where the moneys to be borrowed together with the moneys already borrowed (apart from temporary loans obtained from the Company’s bankers in the ordinary course of business) exceeds the aggregate of the paid up capital of the Company and its free reserves (not being reserves set apart for any specific purpose) the Board of Directors shall not borrow such money without the sanction of the Company in general meeting No debt incurred by the Company in excess of the limit imposed by this Article shall be valid or effectual unless the lender proves that he advanced the loan in good faith and without knowledge that the limit imposed by this Article had been exceeded.

The payment or repayment of money borrowed 83. The payment or repayment of moneys borrowed as aforesaid may be secured in such manner

and upon such terms and conditions in all respects as the Board of Directors may think fit and in particular in pursuance of a resolution passed at a meeting of the Board (and not by circular Resolution) by the issue of bonds, debentures or debenture-stock of the Company, charged upon all or any part of the property of the Company, (both present and future), including its uncalled capital for the time being and the debentures and the debenture-stock and other securities may be made assignable free from any equities between the Company and the person to whom the same may be issued.

Term of issue of debenture 84. Any debentures, debenture-stock or other securities may be issued at a discount, premium or

otherwise and may be issued on condition that they shall be convertible into shares of any denomination and with any privileges and conditions as to redemption, surrender, drawing, allotment of shares, attending (but not voting) at General Meeting, appointment of Directors and otherwise, debentures with the right to conversion into or allotment of shares shall be issued only with the consent of the Company in General Meeting by a Special Resolution.

MANAGING DIRECTOR, WHOLE-TIME DIRECTOR

Board may appoint Managing Director or Managing Directors or Whole-time Directors 159. Subject to the provisions of the Act and these Articles, the Directors shall have power to appoint

from time to time one or more of their body to be Managing Director or Managing Directors or Whole-time Director or Whole-time Directors of the Company for such term not exceeding five years at a time as they may think fit to manage the affairs and business of the Company and may

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from time to time (subject to the provisions of any contract between him and the Company) remove or dismiss him or them from office and appoint another or others in his or their place or places.

What provisions they will be subject to 160 Subject to the provisions of the Act and these Articles, the Managing Director or Whole-time

Director shall not while he continues to hold that office, be subject to retirement by rotation under Article 150 but he shall be subject to the same provisions as to the resignation and removal as the other Directors of the Company and he shall ipso facto and immediately cease to be Managing Director or Whole-time Director if he chooses to hold office of Director for any cause provided that if at any time the number of Directors (including Managing Director or Whole-time Director) as are not subject to retirement by rotation shall exceed one-third of the total number of the Directors for the time being, then such of the Managing Director or Whole-time Director or two or more of them as the Directors may from time to time determine shall be liable to retirement by rotation in accordance with the Article 150 to the extent that the number of Directors not liable to retirement by rotation shall not exceed one-third of the total number of Directors for the time being.

Remuneration of Managing or Whole-time Director(s) 161. The remuneration of the Managing Director or Whole-time Director shall (subject to Section 309

and other applicable provisions of the Act, including Schedule XIII of the Act and of these Articles and of any contract between him and the Company) be fixed by the Directors, from time to time and may be by way of fixed salary and/or perquisites or commission on profits of the Company or by participation in such profits or by any other mode not expressly prohibited by the Act.

Powers and duties of Managing and/or Whole-time Director(s) 162. Subject to the superintendence, control and direction of the Board the day to day management of

the Company shall be in the hands of the Managing Director(s) or Whole-time Director(s) appointed under Article 159 with power to the Board to distribute such day to day management functions among such Director(s) in any manner as deemed fit by the Board and subject to the provisions of the Act and these Articles the Board may by resolution vest any such Managing Director or Managing Directors or Whole-time Director or Whole-time Directors with such of the powers as may be made exercisable for such periods and upon such conditions and subject to the such restrictions as it may determine and they may subject to the provisions of the Act and these Articles confer such power either collaterally with or to the exclusion of or in substitution for all or any of the powers of the Director in that behalf and may from time to time revoke withdraw, alter or vary all or any of such powers.

Directors may appoint committee 171. The Board of Directors may subject to the provisions of Section 292 and other relevant provisions

of the Act and of these Articles, delegate any of the powers other than the powers to make calls and to issue debentures to such committee or committees and may from time to time revoke and discharge any such committee of the Board either wholly or in part and either as to the persons or purposes, but every committee of the Board so formed shall in exercise of the powers so delegated conform to any regulation that may from time to time be imposed on it by the Board of Directors. All acts done by any such committee of the Board in conformity with such regulations and in fulfilment of the purpose of their appointments, but not otherwise, shall have the like force and effect, as if done by the Board.

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General powers of Management vested in Directors 174. The business of the Company shall be managed by the Directors who may exercise all such

powers of the Company and do all such acts and things as are not by the Act or any other Act or by the Memorandum or by the Articles of Company required to be exercised by the Company in General Meeting, subject nevertheless to any regulation of these Articles or the provisions of the Act or any other Act and to such regulation being not inconsistent with the aforesaid regulations or provisions as may be prescribed by the Company in General Meeting but no regulations made by the Company in General Meeting shall invalidate any prior act of the Directors which would have been valid if that regulation had not been made.

Certain powers to be exercised by the Board only at meetings 175. (1) Without derogating from the powers vested in the Board of Directors under these Articles, the Board shall exercise the following powers on behalf of the Company and they shall do so only by means of resolutions passed at the meeting of the Board:

(a) The power to make calls on shareholders in respect of moneys unpaid on their shares;

(b) The power to issue debentures; (c) The power to borrow moneys otherwise than on debentures; (d) The power to invest the funds of the Company; and (e) The power to make loans. Provided that the Board may, by resolution passed at a meeting, delegate to any committee of Directors, the Managing Director or any other principal officer of the Company, the powers specified in sub-clauses (c) (d) and (e) to the extent specified below.

(2) Every resolution delegating the power referred to in sub-clause (1) (c) shall specify the total amount outstanding at any one time, upto which moneys may be borrowed by the delegate.

(3) Every resolution delegating the power referred to in sub-clause (1) (d) shall specify the total amount upto which the funds of the Company may be invested and the nature of the investments which may be made by the delegate.

(4) Every resolution, delegating the power referred to in sub-clause (1) (e) shall specify the total amount upto which loans may be made by the delegate, the purpose for which the loans may be made and the maximum amount of loans which may be made for each such purpose in individual cases.

Certain powers of the Board 176. Without prejudice to the general powers conferred by the last preceeding Article and so as not in

any way to limit or restrict those powers and without prejudice to the other powers conferred by these Articles but subject to the restrictions contained in the last preceeding Articles, it is hereby declared that the Directors shall have the following powers, that is to say, power:

(1) To pay the costs, charges and expenses preliminary and incidental to the formation, promotion, establishment and registration of the Company.

(2) To pay and charge to the Capital Account of the Company any commission or interest, lawfully payable thereout under the provisions of Sections 76 and 208 of the Act.

(3) Subject to Sections 292 and 297 and other applicable provisions of the Act, to purchase or otherwise acquire for the Company any property, rights or privileges which the Company is authorised to acquire at or for such price or consideration and generally on such terms and

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conditions as they may think fit in any such purchase or other acquisition, accept such title as the Director may believe or may be advised to be reasonably satisfactory.

(4) At their discretion and subject to the provisions of the Act, to pay for any property, rights or privileges by or services rendered to the Company, either wholly or partially in cash or in shares, bonds, debentures, mortgages or other securities of the Company and any such shares may be issued either as fully paid up or with such amount credited as paid up thereon as may be agreed upon and any such bonds, debentures, mortgages or other securities as may be either specifically charged upon all or any part of the property of the Company and its uncalled capital or not so charged.

(5) To secure the fulfilment of any contracts or engagements entered into by the Company by mortgage or charge of all or any of the property of the Company and its uncalled capital for the time being or in such manner as they may think fit.

(6) To accept from any member, so far as may be permissible by law, a surrender of his shares or any part thereof, on such terms and conditions as shall be agreed.

(7) To appoint any person to accept and hold in trust for the Company property belonging to the Company or in which it is interested or for any other purposes and to execute and to do all such deeds and things as may be required in relation to any such trust and to provide for the remuneration of such trustee or trustees.

(8) To institute, conduct, defend, compound or abandon any legal proceedings by or against the Company or its officer or otherwise concerning the affairs of the Company and also to compound and allow time for payment on satisfaction of any debts due and of any claim or demands by or against the Company and to refer any difference to arbitration and observe the terms of any awards made therein either according to Indian Law or according to Foreign Law and either in India or abroad and observe and peform or challenge any award made therein.

(9) To act on behalf of the Company in all matters relating to bankruptcy, insolvency, winding up and liquidation of Companies.

(10) To make and give receipts, release and other discharge for moneys payable to the Company and for the claims and demands of the Company.

(11) Subject to the provisions of Sections 291(1), 295, 370 and 372 and other applicable provisions of the Act and these Articles, to invest and deal with any moneys of the Company not immediately required for the purposes thereof, upon such security (not being the shares of this Company) or without security and in such manner as they may think fit and from time to vary or realise such investment. Save as provided in Section 49 of the Act, all investments shall be made and held in the Company’s own name.

(12) To execute in the name and on behalf of the Company in favour of any Director or other person who may incur or be about to incur any personal liability whether as principal or surety, for the benefit of the Company, such mortgage of the Company’s property (present and future) as they think fit and any such mortgage may contain a power of sale and other powers, provisions, convenants and agreements as shall be agreed upon.

(13) To open bank accounts and to determine from time to time who shall be entitled to sign, on the Company’s behalf, bills, notes, receipt, acceptances, endorsements, cheques, dividend

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warrants, release, contracts and documents and to give the necessary authority for such purposes.

(14) To distribute by way of bonus amongst the staff of the Company a share or shares in the profits of the Company and do give to any Director, officer or other person employed by the Company a commission on the profits of any particular business and or transaction and to charge such bonus or commission as part of working expenses of the Company.

(15) To provide for the welfare of Directors or Ex-Directors or employees or ex-employees of the Company and the wives, widows and families of the dependents or connections of such persons by building or contributing to the building of houses, dwellings or chawls or by grants of money, pension, gratuities, allowances, bonus or other payments or by creating and from time to time, subscribing or contributing to provident and other associations, institutions and by providing or subscribing or contributing towards places of instructions and recreation, hospitals, dispensaries, medical and other attendance and other assistance as the Board shall think fit and subject to the provisions of Secton 293(1) (e) of the Act, to subscribe or contribute or otherwise to assist or to gurantee money to charitable, benevolent, religious, scientific, national or other institutions or objects which shall have any moral or other claim to support or aid by the Company either by reason of locality of operation or the public and general utility or otherwise.

(16) Before recommending any dividend, to set aside, out of the profits of the Company, such sums as they may think proper for depreciation or the depreciation fund or to an insurance fund or as a reserve fund or sinking fund or any special or other fund or funds or account or accounts to meet contingencies or to repay redeemable preference shares, debentures or debenture-stock or for special dividends or for equalising dividends for repairing, improving, extending and maintaining any part of the property of the Company and such other purposes (including the pruposes referred to in the preceeding clause) as the Board may, in their absolute discretion think conducive to the interest of the Company and subject to Section 292 of the Act, to invest the several sums so set aside or so much thereof as required to be invested, upon such investments (other than share of this Company) as they may think fit and from time to time to deal with and vary such investments and dispose off and apply and expend all or any part thereof for the benefit of the Company, in such manner and for such purposes as the Board in their absoluted discretion think conducive to the interest of the Company notwithstanding that the matters to which the Board apply or upon which they expend the same or any part thereof or upon which the capital moneys of the Company might rightly be applied or expended and to divide the General Reserve or Reserve Fund into such special funds as the Board may think fit with full power to transfer the whole or any portion of a Reserve Fund or division of a Reserve Fund to another Reserve Fund and/or division of a Reserve Fund and with full power to employ the assets constituting all or any of the above funds including the depreciation fund in the business of the Company or in purchase or repayment of redeemable preference shares, debentures or debenture-stock and without being bound to keep the same separate from the other assets and without being bound to pay interest on the same with power however to the Board at their discretion to pay or allow to the credit of such funds interest at such rate as the Board may think proper.

(17) To appoint and at their discretion remove or suspend such general managers, managers, secretaries, assistants, supervisors, scientists, technicians, engineers, consultants, legal, medical or economic advisers, research workers, labourers, clerks, agents and servants for permanent, temporary or special services as they may from time to time think fit and to determine their powers and duties and to fix their salaries or emoluments or remuneration and acquire security in such instances and to such amounts as they may think fit and also from time to time provide

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for the management and transactions of the affairs of the company in any specified locality in India or elsewhere in such manner as they think fit.

(18) From time to time and at any time to establish any local Board for managing of the affairs of the Company in any specified locality in India or elsewhere and to appoint any person to be members of such local Board or managers or agencies and to fix their remuneration.

(19) Subject to Section 292 of the Act, from time to time and at any time, to delegate to any persons so appointed any of the powers, authorities and discretions for the time being vested in the Board, other than their powers to make calls or to make loans or borrow moneys and to authorise the members for the time being of such local Board or any of them to fill up any vacancies therein and to act notwithstanding vacancies and such appointment or delegation may be made on such terms subject to such conditions as the Board may think fit and the Board may at any time remove any person so appointed and may annul or vary any such delegation.

(20) At any time and from time to time by power of Attorney under the Seal of the Company, to appoint any person or persons to be the Attorney or Attorneys of the Company, for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board under these presents and excluding the power to make calls and excluding also, except in their limits authorised by the Board, the power to make loans and borrow moneys) and for such period and subject to such conditions as the Board may from time to time think fit and any such appointments may (if the Board thinks fit) be made in favour of the members of any local Board established as aforesaid or in favour of any Company or the shareholders, Directors, Nominees or Managers of any Company or firm or otherwise in favour of any fluctuating body of persons whether nominated directly or indirectly by the Board and any such power of Attorney may contain such powers for the protection of convenience of persons dealing with such Attorneys as the Board may think fit and may contain powers enabling any such delegated Attorneys as aforesaid to sub-delegate all or any of the powers, authorities and discretion for the time being vested in them.

(21) Subject to Sections 294, 297, 300 and other applicable provisions of the Act, for or in relation to any of the matters aforesaid or otherwise for the purposes of the Company, to enter into all such negotiations and contracts and rescind and vary all such contracts and execute and do all such acts, deeds and things in the name and on behalf of the Company as they may consider expedient.

(22) From time to time make, vary and repeal bye-laws for the regulations of the business of the Company, its officers and servants.

(23) To purchase or otherwise acquire any lands, buildings, machinery, premises, hereditaments, property, effects, assets, rights, credits, royalties, business and goodwill of any Joint Stock Company carrying on the business which the Company is authorised to carry on in any part of India.

(24) To purchase, take on lease for any term or terms of years or otherwise acquire any factories, or any land or lands, with or without buildings and out-houses thereon, situate in any part of India, at such price or rent and under and subject to such terms and conditions as the Directors may think fit and in any such purchase, lease or other acquisition to accept such title as the Directors may believe or may be advised to be reasonably satisfactory.

(25) To insure and keep insured against loss or damage by fire or otherwise for such period and to such extent as it may think proper all or any part of the buildings, machinery, goods,

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stores, produce and other movable property of the Company, either separately or co-jointly, also to insure all or any portion of the goods, produce, machinery and other articles imported or exported by the Company and to sell, assign, surrender or discontinue any policies of assurance effected in pursuance of this power.

(26) To purchase or otherwise acquire or obtain licence for the use of and to sell, exchange or grant licence for the use of any trade mark, patent, invention or technical know-how.

(27) To sell from time to time any articles, materials, machinery, plants, stores and other articles and things belonging to the Company as the Board may think proper and to manufacture, prepare and sell waste and bye-products.

(28) From time to time to extend the business and undertaking of the Company by adding, altering or enlarging all or any of the buildings, factories, workshops, premises, plant and machinery, for the time being the property of or in the possession of the Company or by erecting new or additional building and to expend such sum of money for the purpose aforesaid or any of them as may be thought necessary or expedient.

(29) To undertake on behalf of the Company any payment of all rents and the performance of the convenants, conditions and agreements contained in or reserved by any lease that may be granted or assigned to or otherwise acquired by the Company and to purchase the reversion or reversions and otherwise to acquire the free hold simple of all or any of the hands of the Company for the time being held under lease or for an estate less than free hold estate.

(30) To improve, manage, develop, exchange, lease, sell, resell and repurchase, dispose off, deal or otherwise turn to account, any property (movable or immovable) or any rights or privileges belonging to or at the disposal of the Company or in which the Company is interested.

(31) To let, sell or otherwise dispose off, subject to the provisions of Section 293 of the Act and of the other Articles, any property of the Company, either absolutely to conditionally and in such manner and upon such terms and conditions in all respects as it thinks fit and to accept payment of satisfaction for the same in cash or otherwise as it thinks fit.

DIVIDEND 182.(a) Subject to the rights of persons, if any, entitled to shares with special rights as to dividends, all dividends shall be declared and paid according to the amounts paid or credited as paid on the shares in respect whereof the dividend is paid but if and so long as nothing is paid upon any shares in the Company, dividends may be declared and paid according to the amounts of the shares.

(b) No amount paid or credited as paid on a share in advance of calls shall be treated for the

purpose of this regulation as paid on the shares.

The Company in Annual General Meeting may declare dividends 183. The Company in Annual General Meeting may declare dividends, to be paid to members

according to their respective rights and interest in the profits and may fix the time for payment and the Company shall comply with the provisions of Section 207 of the Act, but no dividends shall exceed the amount recommended by the Board of Directors but the Company may declare a smaller dividend in Annual General Meeting.

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Dividend out of profits only 184. No dividend shall be payable except out of profits of the Company arrived at in the manner

provided for in Section 205 of the Act. Interim Dividend 185. The Board of Directors may from time to time pay to the members such interim dividends as in

their judgement the position of the Company justifies.

Debts may be deducted 186. (a) The Directors may retain any dividends on which the Company has a lien and may apply

the same in or towards the satisfaction of the debts, liabilities or engagements in respect of which the lien exists.

Company may retain dividends (b) The Board of Directors may retain the dividend payable upon shares in respect of which

any person is under the transmission Article entitled to become a member or which any person under that Article is entitled to transfer until such person shall become a member or shall duly transfer the same.

Capital paid up in advance at interest not to earn dividend 187. Where the capital is paid in advance of the calls upon the footing that the same shall carry

interest, such capital shall not, whilst carrying interest, confer a right to dividend or to participate in profits.

Dividends in proportion to amount paid up 188. All dividends shall be apportioned and paid proportionately to the amounts paid or credited as

paid on the shares during any portion or portions of the period in respect of which the dividend is paid but if any share is issued on terms, providing that it shall rank for dividends as from a particular date, such share shall rank for dividend accordingly.

No member to receive dividend whilst indebted to the Company and the Company’s right of

reimbursement thereof 189. No member shall be entitled to receive payment of any interest or dividend or bonus in respect of

his share or shares, whilst any money may be due or owing from him to the Company in respect of such share or shares (or otherwise however either alone or jointly with any other person or persons) and the Board of Directors may deduct from the interest or dividend to any member, all such sums of money so due from him to the Company.

Effect of Transfer of shares 190. A transfer of shares shall not pass the right to any dividend declared therein before the

registration of the transfer. Dividend to joint holders 191. Any one of several persons who are registered as joint holders of any share may give effectual

receipts for all dividends or bonus and payments on account of dividends in respect of such shares.

Dividend how remitted 192. The dividend payable in cash may be paid by cheque or warrant sent through post direct to

registered address of the shareholder entitled to the payment of the dividend or in case of joint holders, to the registered address of that one of the joint holders which is first named on the

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register of members or to such person and to such address as the holders or the joint holder may in writing direct. The Company shall not be liable or responsible for any cheque or warrant or pay slip or receipt lost in transit or for any dividend lost to the member or person entitled thereto by forged endorsement of any cheque or warrant or forged signature on any pay slip or receipt or the fraudulent recovery of the dividend by any other means.

Notice of dividend 193. Notice of the declaration of any dividend whether interim or otherwise shall be given to the

registered holder of share in the manner herein provided. Reserves 194. The Directors may, before recommending or declaring any dividend set aside out of the profits of

the Company such sums as they think proper as a reserve or reserves which shall, at the discretion of the Directors be applicable for meeting contingencies or for any other purpose to which the profits of the Company may be properly applied and pending such application may, at the like discretion either be employed in the business of the Company or be invested in such investments (other than shares of the Company) as the Directors may from time to time think fit.

Dividend to be paid within forty two days 195. The Company shall pay the dividend or send the warrant in respect thereof to shareholders

entitled to the payment of dividend, within forty-two days from the date of the declaration unless : (a) Where the dividend could not be paid by reason of the operation of any law.

(b) Where a shareholder has given directions regarding the payment of the dividend and

those directions cannot be complied with.

(c) Where there is a dispute regarding the right to receive the dividend.

(d) Where the dividend has been lawfully adjusted by the Company against any sum due to it from shareholder; or

(e) Where for any other reason, the failure to pay the dividend or to post the warrant within

the period aforesaid was not due to any default on the part of the Company. Unclaimed dividend 196. No unpaid/unclaimed dividend shall be forfeited by the Board and the Directors shall comply

with the provisions of Section 205A(1) of the Companies Act, 1956, as regard unclaimed dividends.

Set-off of call against dividend 197. Any General Meeting declaring a dividend may on the recommendation of the Directors make a

call on the members of such amount as the meeting fixes but so that the call on each member shall not exceed the dividend payable to him and so that the call be made payable at the same time as the dividend and the dividend may, if so arranged between the Company and the members, be set off against the calls.

Dividends in cash 198. No dividend shall be payable except in cash, provided that nothing in this Article shall be

deemed to prohibit the capitalisation of the profits or reserves of the Company for the purpose of issuing duly paid up bonus shares or paying up any amount for the time being unpaid on any shares held by members of the Company.

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Dividend right shares and bonus shares to be held in abeyance 199. Where any instrument of transfer of shares has been delivered to any company for registration

and the transfer of such shares has not been registered by the Company, it shall, notwithstanding any this contained in any other provision of this Act:

(a) Transfer the dividend in relation to such shares to the special account referred to in Section 205A

unless the Company is authorised by the registered holder of such share in writing to pay such dividend to the transferee specified in such instrument of transfer; and

(b) Keep in abeyance in relation to such shares any offer of right shares under clause (a) of sub-

section (1) of Section 81 and any issue of fully paid-up bonus shares in pursuance of sub-section (8) of Section 205.

CAPITALISATION

200. (1) The Company in General Meeting may, upon the recommendation of the Board, resolve :

(a) that it is desirable to capitalise any part of the amount for the time being standing to the credit of

the Company’s reserve accounts or to the credit of the profit and loss account or otherwise available for distribution; and

(b) that such sum be accordingly set free for distribution in the manner specified in clause (2)

amongst the members who would have been entitled thereto, if distributed by way of dividend and in the same proportions.

(2) The sum aforesaid shall not be paid in cash but shall be applied, subject to the provision contained in clause (3) either in or towards.

(i) paying up any amount for the time being unpaid on any shares held by such members

respectively.

(ii) paying up in full unissued shares of the Company to be allocated and distributed, credited as fully paid up to and amongst members in the proportions aforesaid; or

(iii) partly in the way specified in such clause (i) and partly in that specified in sub-cluase (ii).

(3) A share premium account and a capital redemption reserve account may, for the purpose of this regulation, only be applied in the paying up of unissued shares to be issued to members of the Company as fully paid bonus shares.

(4) The Board shall give effect to the resolution passed by the Company in pursuance of this regulation.

Fractional certificates 201. (1) Whenever such a resolution as aforesaid shall have been passed, the Board shall

(a) make all appropriations and applications of the undivided profits resolved to be capitalised thereby and all allotments and issues of fully paid shares and

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(b) generally do all acts and things required to give effect thereto

(2) The Board shall have full power : (a) to make such provisions, by the issue of fractional cash certificate or by payment in cash or

otherwise as it think fit, in the case of shares becoming distributable in fractions, also

(b) to authorise any person to enter, on behalf of all the members entitled thereto, into an agreement with the Company providing for the allotment to them respectively credited as fully paid up, of any further shares to which they may be entitled upon such capitalisation or (as the case may require) for the payment by the Company on their behalf, by the application thereof of either respective proportions of the profits resolved to be capitalised of the amounts remaining unpaid on their existing shares.

(3) Any agreement made under such authority shall be effective and binding on all such members.

(4) That for the purpose of giving effect to any resolution, under the preceeding paragraph of this Article, the Directors may give such directions as may be necessary and settle any question of difficulties that may arise in regard to any issue including distribution of new equity shares and fractional certificates as they think fit.

WINDING UP Distribution of Assets

216. If the Company shall be wound up and the assets available for distribution among the members as such shall be insufficient to repay the whole of the paid up capital, such assets shall be distributed so that as nearly as may be the losses shall be borne by the members in the proportion to the capital paid up or which ought to have been paid up at the commencement of winding up on the shares held by them respectively and if in the winding up, the assets available for distribution among the members shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the execess shall be distributed amongst members in proportion to the capital at the commencement of the winding up, paid up or which ought to have been paid up on the shares held by them respectively. But this Article is to be without prejudice to the rights of the holders of shares issued upon special terms and conditions. Distribution in specie or kind

217. (a) If the Company shall be wound up, whether voluntarily or otherwise, the liquidator may, with the sanction of a special resolution, divide amongst the contributories in specie or kind, any part of the assets of the Company and may with the like sanction vest any part of the assets of the Company in Trustees upon such trusts for the benefit of the contributories or any of them as the Liquidator, with the like sanction, shall think fit.

(b) If thought expendient any such division may subject to the provisions of the Act be otherwise

than in accordance with the legal rights of the contributories (except where unalterably fixed by the Memorandum of Association) and in particular any class may be given preferential or special rights or may be excluded altogether or in part but in case any division otherwise than in accordance with the legal rights of the contributories, shall be determined on any contributory who would be prejudicial thereby shall have a right to dissent and ancillary rights as if such determination were a special resolution passed pursuant to Section 494 of the Act.

(c) In case any shares to be divided as aforesaid involve a liability to calls or otherwise, any person

entitled under such division to any of the said shares may within ten days after the passing of the

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special resolution by notice in writing direct the liquidator to sell his proportion and pay him the net proceeds and the liquidator shall, if practicable, act accordingly.

Right of shareholders in case of sale

A special resolution sanctioning a sale to any other company duly passed pursuant to Section 494 of the Act may, subject to the provisions of the Act, in like manner as aforesaid determine that any shares or other consideration receivable by the Liquidator be distributed against the members otherwise than in accordance with their existing rights and any such determination shall be binding upon all the members subject to the rights of dissent and consequential right conferred by the said sanction.

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SECTION XI - OTHER INFORMATION

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The following Contracts (not being contracts entered into in the ordinary course of business carried on by our Company or entered into more than two years before the date of this Draft Red Herring Prospectus) which are or may be deemed material have been entered or to be entered into by our Company. These Contracts, copies of which will be attached to the copy of the Red Herring Prospectus, delivered to the RoC for registration and also the documents for inspection referred to hereunder, may be inspected at the corporate office of our Company situated ‘1503/4, G. I. D. C., Phase – 1, Naroda, Ahmedabad – 382 330, India from 11.00 hours to 15.00 hours on any working day, excluding Saturday and Sunday from the date of this Draft Red Herring Prospectus until the Bid/Offer closing date. Material Contracts 1. Memorandum of Understanding dated 28.09.2006 with Canara Bank and UTI Securities

Limited, appointing them as the Book Running Lead Managers to this Issue. 2. Memorandum of Understanding dated 23rd August 2006 signed with Intime Spectrum

Registry Limited, appointing them as Registrars to the Issue. 3. Letter of Appointment dated 04.06.2006 appointing M/s. S.R. Legal as Legal Advisor to the

Issue. 4. Tripartite Agreement dated [●] between our Company, Intime Spectrum Registry Limited

and NSDL. 5. Tripartite Agreement dated [●] between our Company, Intime Spectrum Registry Limited

and CDSL. Documents for Inspection 1. Our Memorandum and Articles of Association as amended from time to time. 2. Certificate of Incorporation No. 04-024128 of 1994-95 in the name of Asiatic Colour-Chem

Industries Limited dated 09th January 1995 issued by the Registrar of Companies, Gujarat, Dadra & Nagar Haveli.

3. Certificate of Commencement of Business No. 04-024128 to Asiatic Colour-Chem Industries

Limited dated 13th January 1995 issued by the Registrar of Companies, Gujarat, Dadra & Nagar Haveli.

4. Resolution passed under Section 81 (1A) of the Act, at the Extra Ordinary General Meeting of

our Company held on 01st June 2006. 5. Consent from the Directors, Compliance Officer, Auditor, Book Running Lead Managers,

Registrar to the Issue, Bankers to the Issue, Bankers to our Company, Underwriters, Legal Advisor to act in their respective capacities.

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6. Certificate dated 28th August 2006 from the statutory auditors, M/s Ashok Kumar S Gupta & Co. Chartered Accountants, detailing the tax benefits.

7. Audit report by the statutory auditor, M/s Ashok Kumar S Gupta & Co., Chartered

Accountants dated 27th June 2006 included in the Draft Red Herring Prospectus and copies of the Balance Sheet referred in the said report.

8. Copy of the Certificate from the statutory auditors, M/s Ashok Kumar S Gupta & Co.,

Chartered Accountants, dated 26th September 2006 regarding the sources and deployment of funds as on 13th September 2006.

9. Copies of Initial Listing Application made to the Bombay Stock Exchange Limited and

National Stock Exchange of India Limited. 10. Copy of in-principal approval received from the Bombay Stock Exchange Limited and

National Stock Exchange of India Limited dated [●] and [●] respectively. 11. SEBI observation letter no. [•] dated [•]. Any of the contracts or documents mentioned in this Draft Red Herring Prospectus may be amended or modified at any time if so required in the interest of our Company or if required by the other parties, without reference to the shareholders subject to compliance of the provisions contained in the Companies Act and other relevant statutes.

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SECTION XII - DECLARATION

We, hereby declare that all the relevant provisions of the Companies Act, 1956 and the guidelines issued by the government or the guidelines issued by the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992, as the case may be, have been complied with and no statement made in this Draft Red Herring Prospectus is contrary to the provisions of the Companies Act, 1956 or the Securities and Exchange Board of India Act, 1992 or rules made there under or guidelines issued, as the case may be. We further certify that all statements in this Draft Red Herring Prospectus are true and correct. SIGNED BY THE DIRECTORS Mr. Mahesh K. Agrawal Sd/- Mr. Ashwini H. Saini Sd/- Mr. Mehta Bhumit M Sd/- Mr. Anil Kumar Arora Sd/- SIGNED BY THE MANAGER (FINANCE) Mr. Som Dutt Mishra Sd/- SIGNED BY THE COMPLIANCE OFFICER Mr. Dilip Agrawal Sd/- SIGNED BY THE COMPANY SECRETARY Mr. Koushal Gupta Sd/- Date : 28TH September, 2006 Place: Ahmedabad

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