OFFERING CIRCULAR DATED 4 JANUARY 2008

BARTRONICS INDIA LIMITED (Incorporated in the Republic of India as limited liability public company under the Companies Act 1956 with Registration No. 01-11721)

US$ 35,000,000

Zero percent Convertible Bonds due 2013 (with an over allotment option for up to an additional US$ 15,000,000 of bonds) Convertible into equity shares of Bartronics India Limited

Issue Price: 100 per cent.

The U.S.$ 35,000,000 zero per cent Convertible Bonds due 2013 (the "Bonds") will be issued by Bartronics India Limited (the "Issuer" or the "Company"). The Bonds will not bear interest. The Lead Manager has been granted an option, exercisable up to and including the date which is 90 calendar days after the Issue Date to increase the issue amount by a further U.S.$ 15,000,000, pursuant to the terms of the Over-allotment Option (as defined in this Offering Circular) in the event of an over-subscription for the Bonds. The issue price of the Bonds is 100% of the principal amount of the Bonds. The Bonds will be issued in registered form in the denomination of U.S.$ 100,000 each and in integral multiples thereof.

The issue of the Bonds was authorised by a resolution of the Board of Directors of the Issuer passed on 30 July 2007 and by a resolution of shareholders passed on 10 September 2007.

The Bonds are convertible at any time on or after 9 January 2008 and up to the close of business on 23 January 2013 into newly issued, equity shares of Rs. 10 each of the Issuer (the "Shares") on the terms described herein at the option of the holders of the Bonds (the “Bondholders”), at an initial. conversion price of Rs. 290 per Share with a fixed rate of exchange on conversion of Rs. 39.57 = U.S.$ 1.00. The conversion price is subject to adjustment in certain circumstances as described herein. For the terms of the conversion rights, see "Terms and Conditions of the Bonds — Conversion". The existing issued Shares of the Issuer are listed on the Bombay Stock Exchange Limited ("BSE") and the National Stock Exchange of India Limited (“NSE”) (hereinafter collectively referred to as the “Indian Stock Exchanges”). The closing price of the Shares on 31 December 2007 on the BSE and NSE was Rs. 247.95 and Rs. 248 per Share respectively.

The Bonds are of a specialist nature and should only be bought and traded by investors who are particularly knowledgeable in investment matters. In making an investment decision, prospective investors must rely on their own examination of the Issuer and the terms of the offer of the Bonds, including the risks involved. For a discussion of certain factors that should be considered in connection with an investment in the Bonds, see "Risk Factors". All statements regarding the Company’s business should be viewed in light of these Risk Factors.

Delivery of the Bonds will be made on or about 4 January 2008 (the "Issue Date"). On the Issue Date investors are required to pay the subscription price in full for each Bond subscribed. The Bonds will upon issue be represented by a single Global Certificate (as defined herein) in registered form, which will be deposited with, and registered in the name of a nominee of, a common depositary for Euroclear Bank S.A./N.V. ("Euroclear"), and Clearstream Banking, société anonymé ("Clearstream, Luxembourg") on or about the Issue Date for the accounts of their respective Accountholders (as defined herein).

Sole Manager

Silverdale Services Limited 32 Queensway London W2 3RX United Kingdom

Tel: +44 20 7221 7080 Email: london@silverdaleservices.com

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The Issuer may redeem the Bonds in whole, but not in part, at any time at the Accreted Principal Amount in the event of certain changes relating to taxation in India, and subject to the receipt of regulatory approval. Unless previously converted, redeemed or repurchased and cancelled, the Bonds will mature on 4 February 2013 at 139.461 per cent. of their principal amount. Subject to the receipt of regulatory approval, the Issuer will, at the option of Bondholders, redeem any outstanding Bonds upon the occurrence of a Delisting (as defined in the "Terms and Conditions of the Bonds") of the Shares from the Indian Stock Exchanges, at the Accreted Principal Amount. See "Terms and Conditions of the Bonds - Redemption, Repurchase and Cancellation – Repurchase of Bonds in the Events of Delisting". The Bonds may, subject to certain conditions relating to the trading price of the Shares, be converted into Shares, at the option of the Company, on or after 4 January 2010, at the prevailing Conversion Price. See "Terms and Conditions of the Bonds - Redemption, Repurchase and Cancellation – Mandatory Conversion Option of the Company".

Prior to this Offering (as defined under “Definitions and Glossary”), there has been no market for the Bonds. Approval-in-principle has been obtained from the Singapore Exchange Securities Trading Limited ("SGX-ST") for approval in respect of the listing and quotation of the Bonds on the Official List of the SGX-ST. Such approval will be granted when the Bonds have been admitted to the Official List of the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions or reports contained in this Offering Circular. Admission of the Bonds to the Official List of the SGX-ST and quotation of the Bonds on the SGX-ST and the above approval-in-principle of the SGX-ST is not to be taken as an indication of the merits of the Issuer, its associated companies or the Bonds. The Bonds will be traded on the SGX-ST in minimum board lot size of U.S.$200,000 as long as any of the Bonds remain listed on the SGX-ST. The Issuer has undertaken to apply to have the Shares issuable upon conversion of the Bonds approved for listing on the Indian Stock Exchanges and shall apply for in-principle approvals from such stock exchanges for the listing of such Shares. The Indian Stock Exchanges do not assume any responsibility for the correctness of any of the statements made or opinions or reports contained in this Offering Circular, nor do they take any responsibility for the financial or other soundness of the Issuer.

These securities have not been approved or disapproved by the United States’ Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission pronounced upon the accuracy or adequacy of this document. Any representation to the contrary is a criminal offence. The Bonds and the Shares issuable upon conversion of the Bonds have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"). The Bonds are being offered and sold in offshore transactions outside the United States in reliance on Regulation S under the Securities Act ("Regulation S"). Subject to certain exceptions, the Bonds and the Shares issuable upon conversion of the Bonds may not be offered, sold or delivered within the United States or to or for the benefit of U.S. persons (as defined in Regulation S). The Bonds may not be offered or sold directly or indirectly in India or to, or for the account or benefit of, any resident of India or to any Ineligible Investor (as defined under "Definitions and Glossary"). This Offering Circular (including its contents) is for distribution in the United Kingdom only to persons of a kind falling within Article 19 of the FSMA 2000 (Financial Promotion) Order 2005. For a description of certain restrictions on offers, sales and transfers of the Bonds and the Shares issuable upon conversion of the Bonds, see "Subscription and Sale".

A copy of this document will be delivered to the Registrar of Companies, Hyderabad, the Reserve Bank of India, the Indian Stock Exchanges and the Securities and Exchange Board of India, for the purpose of record.

The Issuer accepts full responsibility for the information contained in this Offering Circular and, having made all reasonable enquiries, confirms that this Offering Circular contains all information with respect to the Issuer and its subsidiaries (as defined in the "Terms and Conditions of the Bonds" and together, the "Group") the Bonds and the Shares into which the Bonds are convertible which is material in the context of the issue and Offering of the Bonds. The Company further confirms that the statements contained in this Offering Circular relating to the Group, the Bonds and the Shares are in every material respect true and accurate and not misleading, and that the opinions and intentions expressed in this Offering Circular with regard to the Group, the Bonds and the Shares are honestly held, have been reached after considering all relevant circumstances and information presently available to the Issuer and on reasonable assumptions. There are no other facts in relation to the Company, the Bonds or the Shares the omission of which would, in the context of the issue and the Offering of the Bonds, make any statement in this Offering Circular misleading in any material respect. Further, all reasonable enquiries have been made by the Issuer to ascertain such facts and to verify the accuracy of all such information and statements. Where information contained in this Offering Circular includes extracts from, or summaries of publicly admitted information, the Issuer accepts responsibility for accurately reproducing such extracts or summaries but does not make any representation with respect to such extracts or summaries.

This Offering Circular does not constitute an offer of, or an invitation by or on behalf of the Company, the Lead Manager (as defined in this Offering Circular), the Issuer or Deutsche Trustee Company Limited (the "Trustee"),

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the Agents or the Legal Advisors (both as defined in this Offering Circular) or any of their respective officers or advisors or to subscribe for or purchase any of the Bonds in any circumstances or jurisdiction in which such offer or invitation would be unlawful, and this Offering Circular may only be used for the purposes for which it has been published. The distribution of this Offering Circular and the Offering of purchase and sale of the Bonds in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular comes are required by the Issuer and the Lead Manager to inform themselves about and to observe any such restrictions. This Offering Circular may not be used for, or in connection with, any offer to, or solicitation by anyone in any jurisdiction or under any circumstances in which such offer or satisfaction is not authorised or is unlawful. For a description of certain further restrictions on offers and sales of the Bonds, and distribution of this Offering Circular, see "Subscription and Sale".

This Offering Circular has not been and will not be registered as a prospectus with the Monetary Authority of Singapore and the Bonds are offered pursuant to exemptions invoked under Section 274 and/or Section 275 of the Securities and Futures Act (Chapter 289) of Singapore (the "Securities and Futures Act"). Accordingly, this Offering Circular and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Bonds may not be circulated or distributed, nor may the Bonds be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, (ii) to a relevant person, or any person pursuant to Section 275 (1A) of the Securities and Futures Act and in accordance with the conditions specified in Section 275 of the Securities and Futures Act or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the Securities and Futures Act.

Furthermore, this Offering is being made entirely outside India. This Offering Circular may not be distributed directly or indirectly in India or to residents of India and the Bonds are not being offered or sold and may not be offered or sold directly or indirectly in India or to, or for the account or benefit of, any resident of India or to any Ineligible Investor (as defined in "Definitions and Glossary"). This Offering Circular will be filed with the Reserve Bank of India, the Securities and Exchange Board of India, the Indian Stock Exchanges and the Registrar of Companies, Hyderabad, for information purposes only.

The Bonds will be in registered form in the denomination of U.S.$100,000. The Bonds may be held and transferred, and will be offered and sold, in the principal amounts of U.S.$100,000 each and integral multiples thereof. The Bonds will be represented by a global registered bond certificate (the "Global Certificate") registered in the name of a nominee of Deutsche Bank AG, London Branch as common depositary for Euroclear and Clearstream, Luxembourg. Individual bond certificates ("Definitive Certificates") evidencing holdings of Bonds will only be available in certain limited circumstances. See "Global Certificate".

None of the Lead Manager, the Legal Advisors, the Trustee, the Agents nor any of their respective officers or agents have separately verified the information contained in this Offering Circular. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted, by the Lead Manager, the Legal Advisors, the Trustee, the Agents or any of their respective officers or advisors as to the accuracy or completeness of the information contained in this Offering Circular or any other information supplied in connection with the Bonds or the Shares. Each person receiving this Offering Circular acknowledges that such person has not relied on the Lead Manager, the Legal Advisors, the Trustee, the Agents or any of their respective officers or agents nor on any person affiliated with them in connection with its investigation of the accuracy of such information or its investment decision, and each such person must rely on its own examination of the Issuer and the merits and risks involved in investing in the Bonds. None of the Company, the Lead Manager, the Legal Advisors, the Trustee, the Agents or any of their respective affiliates or advisors is making any representation to any purchase of the Bonds regarding the legality of an investment by such purchase under applicable law.

Prospective investors should not construe anything in this Offering Circular as legal, business or tax advice. Each prospective investor should consult its own advisers as needed to make its investment decision and determine whether it is legally able to purchase the Bonds under applicable laws or regulations.

This Offering Circular may only be used for the purpose for which it has been published. No person is authorised to give any information or to make any representation not contained in this Offering Circular and any information or representation not so contained must not be relied upon as having been authorised by or on behalf of the Issuer, the Lead Manager, the Legal Advisors, the Trustee or the Agents. The delivery of this

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Offering Circular at any time does not imply or constitute a representation that the information contained in it is correct as at any time subsequent to its date or that there has been no change in the affairs of the Issuer as at any time subsequent to its date.

Certain monetary amounts in this Offering Circular have been subject to rounding adjustments; accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them. Unless otherwise indicated, all translations in this Offering Circular from Rupees to U.S. dollars have been made at the rate of Rs. 39.52 = U.S.$1.00, the noon buying rate in New York City in Rupees as reported by the Federal Reserve Bank of New York on 30 November 2007. Such translation amounts are unaudited and solely for the convenience of the reader. It should not be construed that the Rupee amounts represent, or have been, or could be, converted into U.S. dollars at that or any other rate or at all.

Market data and certain industry forecasts used throughout this Offering Circular have been obtained from the Issuer based on internal surveys, market research, publicly available information and industry publications. Industry publications generally state that the information that they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of that information is not guaranteed. Similarly, internal surveys, industry forecasts and market research, while believed to be reliable, have not been independently verified, and neither the Issuer, Lead Manager, the Legal Advisors, the Trustee, the Agents or any of their respective officers or agents make any representation as to the accuracy of that information.

In this Offering Circular, unless otherwise specified or the context otherwise requires, all references to the "U.S." and "United States" are references to the United States of America. All references in this Offering Circular to "Rupees", "Rs." and "Re." are to the lawful currency of India, all references to "dollars", "U.S. dollars", "US$" and "U.S.$" are to the lawful currency of the United States and all references to "EUR" are to the single currency introduced at the start of the third stage of the European Economic and Monetary Union pursuant to the treaty establishing the European Community, as amended.

Certain statements in this Offering Circular may constitute "forward-looking statements". Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Issuer, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Issuer's present and future business strategies and the environment in which the Issuer will operate in the future. The important factors that could cause the Issuer's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, the condition of, and changes in, India's political and economic status, government policies, applicable laws, the success of Company’s growth strategies, changes in currency exchange rates, changes in competitive conditions and the Company’s ability to compete under these conditions, changes in Company’s future needs and the availability of financing and capital to fund those needs. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under "Risk Factors" and "Business". Any statements that may be construed as forward-looking statements speak only as of the date of this Offering Circular. The Issuer expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any changes in the Issuer's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The statements contained in this Offering Circular that are not historical facts and based on current expectations, assumptions, projections and estimates about the Company and the Indian Information Technology industry are "forward-looking" statements, which can be identified by the use of forward-looking terminology such as "believes", “intend”, “potential”, “project”, “estimate”, “plan”, "expects", "may", "will", "should" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. In addition, from time to time, the Company or its representatives have made or may make forward-looking statements orally or in writing. Furthermore, such forward-looking statements may be included in, but are not limited to, press releases or oral statements made by or with the approval of an authorised executive officer of the Company.

The management of the Company wishes to caution potential investors that these forward-looking statements, such as the statements regarding the Company's ability to develop and expand its business, its ability to expand in new markets, to reduce costs including staff costs, to enhance productivity, to take advantage of new technologies, the effects of regulation (including tax regulations), changes in overall economic conditions or further appreciation or devaluation of the Rupee, litigation, its anticipated future revenues, capital spending and financial resources and other statements contained in this Offering Circular regarding matters that are not historical facts involve predictions. No assurance can be given that the anticipated results will be achieved. Actual events or results may differ materially as a result of risks and uncertainties facing the Company. Such risks and uncertainties include, but are not limited to, increased competition from other companies, as well as legislative and judicial developments that could cause actual results to vary materially from future results indicated, expressed or implied in such forward-looking statements. The Company does not undertake to amend the result of those forward-looking statements to reflect future events or circumstances. See the section headed "Risk Factors" of this Offering Circular.

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ENFORCEABILITY OF CIVIL LIABILITIES

Bartronics India Limited is a limited liability company incorporated under the laws of India. All of its Directors and executive officers are residents of India who are operating the business and the assets of the Company are located in India. As a result, it may be difficult for investors to effect service of process upon the Company or such persons outside India to enforce judgments obtained against such parties outside India.

Recognition and enforcement of foreign judgments is provided for under Section 13 of the Indian Code of Civil Procedure, 1908 (the "Civil Code'') on a statutory basis. Section 13 of the Civil Code provides that a foreign judgment shall be conclusive regarding any matter directly adjudicated upon except where: (i) the judgment has not been pronounced by a court of competent jurisdiction, (ii) the judgment has not been given on the merits of the case, (iii) it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognise the law of India in cases in which such law is applicable, (iv) the proceedings in which the judgment was obtained were opposed to natural justice, (v) the judgment has been obtained by fraud, and (vi) the judgment sustains a claim founded on a breach of any law in force in India.

India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. However, Section 44A of the Civil Code provides that where a foreign judgment has been rendered by a superior court within the meaning of that section in any country or territory outside India which the Government of India ("Government'') has by notification in the Official Gazette declared to be in a reciprocating territory for the purposes of Section 44A, it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in India. However, Section 44A of the Civil Code is applicable only to monetary decrees or judgments not being in the nature of any amounts payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty and shall in no case include an arbitration award, even if such an award is enforceable as a decree of judgment. For the purposes of this section, foreign judgment means a decree which is defined as a formal expression of an adjudication which, so far as regards the court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit.

The United Kingdom has been declared by the Indian Government to be a reciprocating territory but the United States has not been declared by the Government to be a reciprocating territory. A judgment of a court in a jurisdiction, which is not a reciprocating territory, may be enforced only by a new proceeding initiated in a court in India. The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. Generally, there are considerable delays in the processing of legal actions to enforce a civil liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount of damages awarded as excessive or inconsistent with public policy. A party seeking to enforce a foreign judgment in India is required to obtain approval from the RBI to execute such a judgment or to repatriate any amount recovered outside India.

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TABLE OF CONTENTS DEFINITIONS AND GLOSSARY ............................................................................................................................... 8 PRESENTATION OF FINANCIAL INFORMATION................................................................................................. 11 SUMMARY OF THE OFFERING ............................................................................................................................. 12 RISK FACTORS ....................................................................................................................................................... 17 SUMMARY ............................................................................................................................................................... 31 MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE SHARES ........................ 32 EXCHANGE RATES ................................................................................................................................................ 36 USE OF PROCEEDS ............................................................................................................................................... 38 TERMS AND CONDITIONS OF THE BONDS ........................................................................................................ 39 SUMMARY OF THE TERMS OF THE GLOBAL CERTIFICATE ............................................................................ 82 CAPITALISATION .................................................................................................................................................... 85 SELECTED FINANCIAL INFORMATION ................................................................................................................ 86 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION.............................................................................................................................................................. 88 THE INDUSTRY ....................................................................................................................................................... 91 SUBSIDIARIES & ASSOCIATES........................................................................................................................... 112 DIRECTORS AND MANAGEMENT....................................................................................................................... 114 PRINCIPAL SHAREHOLDERS.............................................................................................................................. 120 CLEARANCE AND SETTLEMENT OF THE BONDS ........................................................................................... 122 DESCRIPTION OF THE SHARES......................................................................................................................... 124 GOVERNMENT OF INDIA APPROVALS.............................................................................................................. 131 TAXATION.............................................................................................................................................................. 132 SUBSCRIPTION AND SALE.................................................................................................................................. 137 GENERAL INFORMATION .................................................................................................................................... 140 SUMMARY OF CERTAIN SIGNIFICANT DIFFERENCES BETWEEN INDIAN GAAP AND IFRS ..................... 142 APPENDIX A: THE SECURITIES MARKET OF INDIA......................................................................................... 177 APPENDIX B: FOREIGN INVESTMENT AND EXCHANGE CONTROLS ........................................................... 183

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DEFINITIONS AND GLOSSARY

Definitions of certain terms used in this Offering Circular

In this Offering Circular, the following expressions have the following meanings, unless the context otherwise requires or unless it is otherwise specifically provided. The following list of defined terms is intended for the convenience of the reader only and is not exhaustive.

"Agents" means collectively the Registrar, the Principal Paying and Conversion

Agent, the Paying and Conversion Agent, the Transfer Agent and

includes their respective successors from time to time

"Articles of Association" or "Articles"

means the articles of association of the Company

"Auditor" means Yaji Associates, Chartered Accountants

"Board" or "Directors" means the board of directors of the Company

" BOLT" means BSE’s online trading facility

"Bondholder" means the registered holders of the Bonds or any of them, for so long

as the Bonds are represented by the Global Certificate, the

Accountholders (as defined under “Summary of the terms of the

Global Certificate”) or any of them

"Bonds" means U.S.$35,000,000 zero coupon unsecured foreign currency

convertible bonds due 2013. The Lead Manager has the option to

increase the issue amount by a further U.S.$15,000,000, pursuant to

the terms of the Over-allotment Option in the event of over-

subscription of the Bonds

"BSE" means the Bombay Stock Exchange Limited

"Business Day” means a day (other than a Saturday or Sunday) on which commercial

banks are open for general banking business in London, Mumbai,

New York City, Hyderabad, Luxembourg, the city where the office of

each relevant Agent is located and in case of surrender of

Certificates, the place where such Certificates are surrendered

"CAGR" means Compounded Annual Growth Rate

" CDSL" means Central Depository Services (India) Limited

"Civil Code" means The Code of Civil Procedure Code, 1908, India, as amended

" CLA" means The Central Listing Authority of India

"Clearing Systems" means Euroclear and Clearstream, Luxembourg

"Clearstream, Luxembourg" means Clearstream Banking, société anonyme

"Common Depositary" means Deutsche Bank AG acting in such capacity through its London

Branch

"Company" or "Issuer" means Bartronics India Limited

"Companies Act" means the Indian Companies Act, 1956, as amended

"Conditions" means the terms and conditions of the Bonds

" Conversion Notice" means a duly completed and signed notice of conversion, in the form

(for the time being current) obtainable from the specified office of any

of the Paying and Conversion Agents

"Depositories Act" means the Indian Depositories Act, 1996, as amended

" ECB Guidelines" means the External Commercial Borrowings Guidelines and

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Notifications dated 31 January 2004, 1 April 2004, 1 October 2004, 1

August 2005 and 5 September 2005, 4 November 2005, 12 May 2006

and 4 December 2006, 30 April 2007, 21 May 2007, 7 August 2007 and

26 September 2007 as amended from time to time

"EOU" means Export Oriented Unit

"EPS" means Earning Per Share

"Euroclear" means Euroclear Bank S.A./N.V.

"Exchange Rate" means fixed rate of exchange of conversion Rs. 39.57 = U.S.$1.00

"FCCB(s) " means Foreign Currency Convertible Bond(s)

"FEMA" means the Indian Foreign Exchange Management Act, 1999, as

amended

"FDI" means Foreign Direct Investment

"FII" means Foreign Institutional Investor as defined in FEMA

"FIIA" means Foreign Investment Implementation Authority

"Financial Year" means the period beginning on 1st April and ending on 31st March of

the year for which the Company prepares its accounts

"FIPB" means Foreign Investment Promotion Board

"FSMA" means the UK Financial Services and Markets Act 2000, as amended

"FY" means Financial Year beginning from April 1 to March 31

"Global Certificate" means the global certificate that will represent the Bonds

"Government" means the Government of India

"IAS" means International Accounting Standards, as amended

"ICAI" means The Institute of Chartered Accountants of India

"IFRS" means International Financial Reporting Standards, as amended

"Income Tax Act" means the Indian Income Tax Act, 1961, as amended

"India" means the Republic of India

"Indian GAAP" means generally accepted accounting principles in India, as amended

"Indian Stock Exchanges" means the BSE, NSE and where the context so admits, any other

stock exchange in India on which the Shares may be listed from time

to time

"Ineligible Investor" Overseas corporate bodies which are not eligible to invest in India

through the portfolio route and entities prohibited to buy, sell or deal in

securities by SEBI

"IPR" means intellectual property rights

"Issue Date" means 4 January 2008

"Issue of Foreign Currency Convertible Bonds and Ordinary Shares Scheme"

means the Indian Issue of Foreign Currency Convertible Bonds and

Ordinary Shares (through Depositary Receipt Mechanism) Scheme,

1993, as amended

"GOI" means Government of India

"Kgs" means Kilograms

"Lead Manager" means Silverdale Services Limited

"Legal Advisors" means APJ-SLG Law Offices, (as to Indian law to the Issuer), Clyde &

Co (as to English law to the Lead Manager) and Lovells Lee & Lee

(as to English law to the Trustee)

"Listing Agent" means Rajah & Tann LLP

"Maturity Date" means 4 February 2013

"MOF" means Ministry of Finance of India

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"Mumbai" means the city of Mumbai, India (previously named Bombay)

"NRIs" means Non Resident Indians, as defined under FEMA

"NSE" means the National Stock Exchange of India Limited

"OECD" means the Organization for Economic Co-operation and Development

"Offering" means the Bonds being offered by the Company to investors outside

the United States in reliance on Regulation S and other applicable

laws. The Bonds are not being offered in India

"Offering Circular" means this document

"Over-allotment Option" means the option granted by the Company to the Lead Manager,

exercisable in one or more tranches, up to and including the date

which is 90 calendar days after the Issue Date, (or, if such day shall

not be a Business Day, on the next Business Day) to procure

subscribers for up to an additional amount of US$ 15,000,000

"PAT" means Profit after tax

"PBT" means Profit before tax

"Principal Paying and Conversion Agent” and “Paying and Conversion Agent"

means Deutsche Bank AG, acting in such capacity, through its

London Branch

"Paying, Conversion and Transfer Agency Agreement"

means the paying, conversion and transfer agency agreement dated 4

January 2008 made between the Company, the Trustee and the

Agents

"RBI" means the Reserve Bank of India

"Record Date" means a date fixed by the Directors or otherwise specified for the

purpose of determining entitlements to dividends or other distributions

to, or rights of, holders of Shares

"Registrar" means Deutsche Bank Luxembourg S.A.

"Regulation S" means Regulation S under the Securities Act, as amended

"SCRA" means Securities Contracts (Regulation) Act, 1956 of India, as

amended

"SEBI" means the Securities and Exchange Board of India

"SEBI Act" means the Securities and Exchange Board of India Act, 1992, as

amended

"Securities Act" means the United States Securities Act of 1933, as amended

"Shareholders" means the registered holders of Shares

"Subscription" means the obligation to pay for and convert the Bonds

"Takeover Code" means SEBI (Substantial Acquisition of Shares and Takeovers)

Regulations, 1997 of India, as amended

"Transfer Agent" means Deutsche Bank AG, acting in such capacity through its London

Branch

"Trust Deed" means the trust deed dated on or about the Issue Date and made

between the Company and the Trustee, constituting the Bonds

"Trustee" means Deutsche Trustee Company Limited in its capacity as trustee

for the holders of the Bonds

"UK" means the United Kingdom of Great Britain and Northern Ireland

"United States" or "U.S." means the United States of America

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PRESENTATION OF FINANCIAL INFORMATION

The Company prepares its financial statements in accordance with generally accepted accounting principles in India ("Indian GAAP"), which differ in certain significant respects from generally accepted accounting principles in other countries, including International Financial and Reporting Standards ("IFRS"). As a result, the audited consolidated and non-consolidated financial statements and reported earnings could be significantly different from those that would be reported under IFRS. Had the financial statements and other financial information been prepared in accordance with IFRS, the results of operations and financial position may have been materially different. A summary of the significant differences between IFRS and Indian GAAP as they apply to the Company is included elsewhere in this Offering Circular; see "Summary of Certain Significant Differences between Indian GAAP and IFRS". Potential investors should consult their own professional advisors for an understanding of the differences between IFRS and Indian GAAP, and how such differences might affect the financial information contained herein.

The Company’s financial statements for the years ended 31 March 2007, 2006 and 2005 were prepared in accordance with Indian GAAP. These financial statements were audited by Yaji Associates, Chartered Accountants, the Company’s independent statutory auditors, whose auditors’ reports appear in this Offering Circular. See “Financial Statements and Auditors’ Reports – Auditors’ Report”.

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SUMMARY OF THE OFFERING

The following is the general summary of the terms of the Bonds. This summary is derived from, and should be read in conjunction with, the full text of the Conditions and the Trust Deed constituting the Bonds, which prevails to the extent of any inconsistency with the terms set out in this section. Capitalised terms used herein and not otherwise defined have the respective meanings given to such terms in the Conditions.

ISSUER Bartronics India Limited a company incorporated and subsisting

under the laws of the Republic of India with limited liability.

ISSUE U.S.$35,000,000 aggregate principal amount of zero coupon unsecured foreign currency convertible bonds due 2013 are being offered by the Company to institutional investors outside India and outside the United States, in accordance with Regulation S. The Lead Manager has the option to increase the issue amount by a further U.S.$15,000,000 pursuant to the terms of the Over-allotment Option in the event of over-subscription.

ISSUE PRICE 100 per cent. of the principal amount of the Bonds.

ISSUE DATE 4 January 2008.

MATURITY DATE AND REDEMPTION AT MATURITY

Unless the Bonds have been previously redeemed, repurchased and cancelled or converted, the Company will redeem the Bonds on 4 February 2013 in cash at 139.461 % of the principal amount of the Bonds being their Accreted Principal Amount based on a yield of 6.65 % compounded semi-annually, calculated on the basis of the number of days elapsed and a 360-day year. See “Terms and Conditions of the Bonds – Redemption, Repurchase and Cancellation – Redemption at Maturity”.

INTEREST The Bonds shall not bear any interest.

CONVERSION PRICE

The Conversion Price will be Rs. 290 per Share subject to adjustment/reset in certain circumstances in the manner provided in the Conditions. The number of Shares issued on Conversion will be calculated by dividing the aggregate number of the principal amount of the Bonds as converted into Indian Rupees (at the exchange rate specified in “Exchange Rate of Conversion” below) by the Conversion Price in effect on the Conversion Date.

CONVERSION PRICE RESET The initial Conversion Price and the Conversion Price then in effect, shall be reset on the Price Reset Dates to be the higher of (a) the volume weighted average closing price of the Shares on the BSE for 30 Trading Days immediately prior to the Price Reset Dates, (b) 80% of the Conversion Price then in effect on the price reset dates, and (c) the minimum Conversion Price, being Rs. 191.25. For the avoidance of doubt, only downward resets from the Conversion Price would be permissible.

PRICE RESET DATES 4 July 2009, the date 18 months from the Issue Date (the "First Price Reset Date"); 4 January 2010 the date 24 months from the Issue Date (the "Second Price Reset Date"); 4 July 2010, the date 30 months from the Issue Date (the "Third Price Reset Date"), and 4 January 2011, the date 36 months from the Issue Date (the "Fourth Price Reset Date"), together the "Reset Dates". If any of the Reset Dates, would otherwise fall on a date which is

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not a Business Day, it will be postponed to the next Business Day.

CONVERSION PRICE ADJUSTMENT Standard adjustment for any dilution will be applied, including:

Free distribution of Shares;

bonus issue of its Shares;

divide its outstanding Shares;

consolidate its outstanding Shares into a smaller number of Shares;

re-classify any of its Shares into other securities of the Company; and

certain other issues resulting in dilution of Shares.

MANDATORY CONVERSION OPTION OF THE COMPANY

The Company has an option to serve a written notice of not less than 45 calendar days’ on the Bondholders (with a copy to the Agents) from 4 January 2010, being the date which is 24 months from the Issue Date, until 23 January 2013, being the date which is seven (7) Business Days before the Maturity Date, requiring mandatory conversion of all of the Bonds then outstanding at the then prevailing Conversion Price, provided that no such Mandatory Conversion Option may be exercised unless the Closing Price of the Shares (translated into US Dollars at the Exchange Rate) for each of the thirty (30) consecutive Trading Days prior to the date upon which the Mandatory Conversion Notice is given, is at least 150 per cent. of the Accreted Principal Amount divided by the Conversion Ratio.

The “Conversion Ratio” being equal to the principal amount of the Bonds divided by the then Conversion Price translated into US Dollars at the Exchange Rate.

The Bonds may also be redeemed, in whole but not in part, at the option of the Company at any time, subject to satisfaction of certain conditions, at their Accreted Principal Amount if less than 10 percent in aggregate principal amount of the Bonds originally issued is outstanding.

EXTRAORDINARY DIVIDEND AND CASH PROTECTION

If the Company shall, by dividend or otherwise, distribute cash (excluding any dividend or distribution that is not an Extraordinary Cash Dividend) to all holders of Shares then, in such case, the Conversion Price shall be adjusted.

An Extraordinary Cash Dividend occurs if, at the effective date, the total amount of:

1. any cash dividends paid or declared by the Company on the Shares, prior to deduction of any withholding tax plus any corporate tax attributable to that dividend; and

2. all other cash dividends paid or declared on the Shares in the 365 consecutive day period prior to the effective date (other than any dividend or portion thereof previously

deemed to be an Extraordinary Cash Dividend) (previous dividends), except that where the date of announcement for dividends for two different fiscal years has occurred in such 365 day period, such dividends relating to the earlier fiscal year will be disregarded for the purpose of determining the previous dividend ((a) and (b) together being the total current dividend) equals or exceeds on a per Share basis 2 per cent. of the Average Closing Price of the Shares during the Relevant Period provided that any dividend paid or declared by the Company will not constitute an Extraordinary Cash Dividend if the amount paid or declared

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by the Company is equal to an amount not greater than 120 per cent. of the dividends paid or declared by the Company in the previous fiscal year. For the avoidance of doubt, all amounts are on a per Share basis.

EXCHANGE RATE ON CONVERSION The exchange rate of U.S. dollars to Rupees will be Rs. 39.57 to

one U.S. dollar, being RBI’s U.S. dollar to Rupee exchange rate on 20 December 2007.

STATUS OF THE BONDS The Bonds constitute direct, unsecured, unsubordinated and unconditional obligations of the Company and will rank equally and without any preference among themselves. The payment obligations of the Company under the Bonds will (except as stated above and subject to any obligations preferred by mandatory provisions of law) at all times rank at least equally with all of its other present and future unsecured, direct and unconditional obligations.

REDEMPTION FOR TAXATION REASONS

The Bonds may be redeemed at the option of the Company in whole, but not in part, at any time at their Accreted Principal Amount, in the event of certain changes affecting taxes in India. See “Terms and Conditions of the Bonds – Redemption, Repurchase and Cancellation – Redemption for Taxation Reasons”.

REPURCHASE OF THE BONDS IN THE EVENT OF DELISTING

To the extent permitted by applicable law (unless the Bonds have been previously redeemed or repurchased and cancelled or converted), if the Shares cease to be listed or admitted to trading on the BSE or the NSE, each Bondholder may, at his option, require the Company to repurchase all (or any portion of the principal amount of U.S.$100,000 or any integral multiple of that amount) which is such Bondholder’s Bonds at a price equal to their Accreted Principal Amount. The date for such repurchase will be set by the Company, and will not be less than 30 days nor more than 60 days following the date the Company delivers written notice to the Bondholders (with a copy to the Trustee) of the Delisting, which notice shall be delivered not more than 10 Business Days after the Delisting. Temporary suspension in accordance with the provisions of the listing agreement shall not be deemed as delisting. See “Terms and Conditions of the Bonds — Redemption, Repurchase and Cancellation — Repurchase of Bonds in the Event of Delisting”.

REPURCHASE OR CONVERSION OF THE BONDS IN THE EVENT OF A CHANGE OF CONTROL

To the extent permitted by applicable law (unless the Bonds have been previously redeemed or repurchased and cancelled or converted) each Bondholder may, at his option, upon the occurrence of a Change of Control (as defined in the Conditions), require the Company to repurchase all (or any portion of the principal amount which is U.S.$100,000 or any integral multiple of that amount) of such Bondholder’s Bonds at a price equal to their Accreted Principal Amount or to convert their Bonds into Shares at the minimum Conversion Price. The date for such repurchase will be set by the Company and will be not less than 30 days nor more than 60 days following the date on which the Company notifies the Bondholders and the Trustee of the Change of Control, which notice shall be delivered not more than 10 Business Days after the Company becomes aware of a Change of Control. See “Terms and Conditions of the Bonds — Redemption, Repurchase and Cancellation — Repurchase or Conversion of Bonds in the Event of Change of Control”.

EVENTS OF DEFAULT For a description of certain events that will permit the Bonds

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immediately to become due and payable at their Accreted Principal Amount see “Terms and Conditions of the Bonds – Events of Default”.

REQUISITE APPROVALS No payments of principal premium, interest (if any), will be made if requisite approvals of RBI have not been obtained or any other applicable Indian laws and restrictions have not been complied with. The Company will use its reasonable endeavors to obtain such requisite approvals but will not be in default if payment is not made in circumstances where such requisite approvals have not been obtained.

NEGATIVE PLEDGE

For so long as any Bond remains outstanding, the Company will not, and will procure that no other person will, create or permit to subsist any mortgage, charge, pledge, lien or other form of encumbrance or security interest to secure certain types of indebtedness and the Company will further procure that no other person will give any guarantee or indemnity in respect of such indebtedness. See “Terms and Conditions of the Bonds – Negative Pledge”.

CROSS DEFAULT PROVISION The Bonds will contain a cross default provision with a threshold of U.S.$ 5,000,000 along with certain events that will cause the Bonds to become due and payable immediately at their Accreted Principal Amount.

USE OF PROCEEDS The Company expects to raise U.S.$ 35,000,000 (excluding the Over-allotment Option US$15,000,000) from this Offering. The net proceeds from this Offering, after deduction of fees and expenses assuming that the Over-allotment Option is not exercised would be approximately U.S.$ 33.95 million and U.S.$ 48.50 million if the Over-allotment Option is exercised, which are intended to be used for capital expenditure, expansion of existing operations, setting up new projects, overseas acquisitions and international investments and for such other purposes as may be permitted from time to time in compliance with the applicable guidelines issued by RBI and/or Government of India. The use of proceeds will be in accordance with the end-use restrictions which may be prescribed from time to time.

SHARES ALREADY ISSUED As at the date of this Offering Circular, there are 19,317,358 Equity Shares of Rs.10 each. The Company has also issued 4,630,000 convertible warrants of Rs. 10 each at a premium of Rs.120 to the promoters and non-promoters.

MARKET FOR SHARES AND BONDS An application has been made to SGX-ST for the Bonds to be admitted to listing on the Official List and trading on the SGX-ST. The Company has received in-principle approval from the Indian Stock Exchanges for listing of the Shares issued on conversion of the Bonds. Upon conversion of the Bonds and issue of the Shares, final approval from the Indian Stock Exchanges will be sought for the listing and the trading of such Shares.

TRANSFER RESTRICTIONS The Bonds have not been registered under the Securities Act 1933 and are subject to certain restrictions on transfer. As regards transfer of the Shares in favour of resident Indians, the RBI has granted general permission to non-residents for such transfer, unless, the activities of the company are not under the "automatic" route or where the Indian company is engaged in the financial services sector or where the acquisition of shares attracts the provisions of the Takeover Code.

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SETTLEMENT The Global Certificate will be registered in the name of a common

depositary for Euroclear and Clearstream, Luxembourg, which have accepted the Bonds for clearance and settlement in their respective systems on a book entry basis.

DIVIDENDS Dividends are only payable on the Shares issued on conversion of the Bonds.

VOTING RIGHTS Bondholders will have no voting rights with respect to the Shares at a general meeting of the Company or otherwise, unless and until the holder elects to receive Shares in accordance with the Trust Deed and the Conditions.

TAXATION The income by way of dividends payable on the Shares arising on conversion will, under the current laws, unless varied, be made without withholding or deduction for or on account of any taxes, duties, assessments or governmental charges in India. There is an exemption from Indian Capital Gains Tax on the transfer of Bonds outside India from one non-resident to another non-resident.

CONTINUING DISCLOSURES A shareholder who acquires shares or voting rights which would entitle him to more than five per cent or ten per cent or fourteen per cent or fifty four per cent or seventy four per cent shares or voting rights in a company must disclose his aggregate shareholding or voting rights to the company and to the stock exchanges where the shares are listed. A shareholder who has acquired shares as above, must disclose any purchase or sale of shares exceeding (in aggregate) 2% of the share capital of the company, along with the aggregate shareholding after such purchase or sale, to the company and to each of the stock exchanges where the shares of the company are listed within two days of (i) the receipt of allotment information or (ii) the sale or acquisition or disposal of shares or voting rights.

RISK FACTORS Investing in the Bonds and the Shares issuable on their conversion involves risks, which are described under the section of this Offering Circular headed “Risk Factors”.

CANCELLATION All Bonds, which are redeemed, purchased or in respect of which Conversion Rights are exercised will be cancelled and may not be reissued or resold. Bonds redeemed or purchased by the Company will be surrendered for cancellation.

COMMON CODE 033249411

ISIN XS0332494110

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RISK FACTORS

The risks described below should be considered carefully before making an investment decision. The risks described below are not the only ones relevant to the Company, the Bonds or the Shares. Additional risks not presently known to the Company or that it currently deems immaterial may also impair the Company's business operations. The Company's business, financial condition or results of operations could be materially adversely affected by any of these risks. The Company’s business financial condition or results of operations could be materially adversely affected by any of these risks. This Offering Circular also contains forward-looking statements that involve risks and uncertainties. The Company’s actual results could differ from those anticipated in these forward-looking statements as a result of certain factors, including the considerations described below and elsewhere in this Offering Circular.

RISKS ASSOCIATED WITH THE BUSINESS 1. The Company does not own any Intellectual Property Rights (IPRs) and all such IPRs are vested with the

Technology providers.

The Company was promoted by first generation entrepreneurs seventeen years ago and the sourcing of

solutions provided by the Company was from third party technology providers. As such, the Company has not

protected its independent intellectual property rights by registering the same. Consequently, in case the

technology providers enter the market directly or in case the relationships that the Company has established

with them are terminated, then the business would carry the inherent consequential risks of being barred from

operating in the said field of business. 2. Failure to successfully conclude the acquisition of 100% stake in company manufacturing smartcards

The Company intends to expand in smart cards business and for the same, the Company entered into share

purchase agreement with Internet Communications Limited (ICL) to acquire its 51% stake and facilitate

purchase of 100% stake in Iris Smartcards Limited (ISL), which was to be facilitated within 18 months from 13

January 2006. Till date, the Company has not acquired any stake in Iris Smartcards Limited (ISL) and ICL has

failed to facilitate the acquisition of ISL within the stipulated period. However, the Company has already paid

an amount of Rs. 30,000,000 to ICL as an advance at the time of signing of the said agreement. In the said

agreement, there are no clauses for termination, refund and waiver. The Company has till date not sought

refund of the advance payment made to ICL or sought to file a suit for specific performance against ICL to

ensure that ICL performs its obligation as required under the terms and conditions of the agreement within the

stipulated period. 3. Immovable Properties

All the offices/branches of the Company through which it operates including the registered office have been

taken on rent/lease through lease/rental/leave and license agreements from third parties. Any adverse impact

on the title/ownership rights/development rights of the third parties from whose premises the Company

operates its offices/branches and/or breach of the contractual terms of such lease/rental/leave and license

agreements and/or any inability to renew the said leases / rental / leave and license agreements may

adversely affect the functioning of the Company’s business operations. 4. Non-performance of the Company’s collaborators or joint venture partners

The Company has entered into certain collaborations and/or joint ventures for its business. Under these

collaborations and joint ventures, the Company is generally jointly and severally liable with its partners for,

among other things, breaches or non-performance of contracts. The inability of a partner to continue with a

project, due to financial or legal difficulties or otherwise, could result in the Company being required to bear

increased and, at times, sole responsibility for the completion of the project and bear a greater share of the

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financial risk of the project. In the event that a claim, arbitration award or judgment is awarded against the

joint-venture, the Company may be responsible for the entire judgment. 5. The Company has taken a long term debt from Bank of Baroda against the security of its movable and

immovable assets, etc.

The Company has taken a long term debt from Bank of Baroda ABN-AMRO Bank and Citi Bank and

approximately Rs.162.6 million was outstanding, as on 30 September 2007, against the security of its plant

and machinery, furniture and fixture, stock in trade, vehicles, etc.

6. Insurance

The Company has taken certain insurance polices for its business, which may not be adequate to protect it

against possible risk of loss. If any or all of the Company's properties / installations are damaged in whole or in

part, or its operations are interrupted for a sustained period, there can be no assurance that the insurance

cover will be adequate to recover the losses that may be incurred. If the loss significantly exceeds the

insurance coverage, the business, financial condition and operations may be adversely affected. 7. Litigation

As on date, the Company is not involved in any legal proceedings which are pending before the courts in

India. However, in its ordinary course of business, the Company may get involved in claims, lawsuits and

Governmental and administrative proceedings, some of which may be significant in nature, which could have a

material adverse effect on the Company’s business, financial condition and results of operations. 8. Dependent on Key Managerial Personnel

The Company depends significantly on the expertise, experience and continued efforts of its key managerial

personnel. The Company’s future performance may be affected by any disruptions in the continued service of

its key managerial personnel(s). The Company has proposed an ESOP scheme, in order to retain its key

managerial resources. However, the loss of one or more of the Company’s key managerial personnel may

impact its ability to maintain and grow its revenues.

9. Labour Laws Compliance

The Company may incur penalty and face prosecution under the provisions of the Payment of Gratuity Act,

1972, the Employee Provident Fund and Miscellaneous Provisions Act, 1952, the Employees State Insurance

Act, 1948 and the Bonus Act, 1965, due to non-compliance with the said statutes, frequent delay in filing of

statutory returns as well as delay in depositing of contribution under the applicable laws by the Company. 10. The Company intends to utilise the funds raised through this FCCB issue for overseas investment and

acquisitions purposes that may or may not be successful

The Company intends to utilise the funds raised through this FCCB issue for overseas investment and

acquisitions purposes as well to enhance its business. It is possible that the Company may not be able to

identify suitable acquisition or strategic investment or if it does identify suitable candidates, it may not be able

to complete those transactions on terms commercially acceptable to it. The inability to identify suitable

acquisition targets or investments or the inability to complete such transactions may affect its competitiveness

and its growth prospects. If the Company acquires another company, it may have difficulty in assimilating the

acquired company’s personnel, operations, technology and software. In addition, the key personnel of the

acquired company may decide not to work for the Company. In some cases, the Company may have difficulty

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in integrating the acquired products, services or technologies into its operations. These difficulties could

disrupt its ongoing business, distract its management and employees and increase its expenses. 11. Conversion of any or all of the share warrants into Shares may result in dilution of shareholding of the

Bondholders

The Company has issued on a preferential basis 4,630,000 convertible warrants of Rs. 10 each at a premium

of Rs. 120 per warrant to the promoters and non-promoters, pursuant to Chapter XIII of the SEBI (Disclosure

and Investor Protection) Guidelines, 2000. These warrants are compulsorily convertible into equity shares

within a period of 18 months from the date of allotment i.e., 8 March 2007. As on date, none of the share

warrants have been converted into the Shares and any conversion of such warrants may dilute the

shareholding of the Bondholders. 12. The Company may be unable to attract and retain skilled professionals in the competitive job market for

IT professionals.

The Company’s ability to attract new customers depends, largely, on its ability to attract, train, motivate and

retain highly skilled personnel. The Company believes that there is significant demand for personnel who

possess the skills needed to perform the services it offers. The Company’s inability to hire and retain additional

qualified personnel would impair its ability to bid for or obtain new projects and to continue to expand its

business. 13. Increases in wages for IT professionals

Historically, wage costs in the Indian IT services industry have been significantly lower than wage costs in

developed countries for comparable skilled technical personnel. However, in recent years, wage costs in the

Indian services industry have been increasing at a faster rate than those in certain developed countries. In the

long term, wage increases may make it less competitive unless the Company is able to continue increasing

the efficiency and productivity of its professionals and the prices the Company can charge for its products and

services. Increases in wages, including an increase in the cash component of the Company’s compensation

expenses, may reduce its cash flows and profit margins. 14. Technology Obsolescence Risk

The Company’s present range of products may, with passage of time, become obsolete, as technology and

customer requirements are changing rapidly, the introduction of new products and up-gradation of existing

ones is a continuous process and AIDC market is characterized by rapid technological change, evolving

industry standards. It is crucial for the Company to make continuous R&D and develop newer technologies to

remain competitive and exist in the market. Thus, any failure to keep abreast with the latest trends in the

industry may adversely affect the cost competitiveness and the business of the Company. 15. The Company’s business is dependent on a continuing relationship with its clients

The Company’s business is dependent on developing and maintaining relationships with certain major clients.

The Company’s business and results of operations will be adversely affected if it is unable to develop and

maintain a continuous relationship with its certain key clients. The loss of a significant client or a number of

significant clients may have a material adverse effect on the Company’s results of operations. 16. Intense competition in the AIDC market

The IT products and services markets are highly competitive. The Company’s competitors include large

consulting firms, large multinational technology firms, IT outsourcing firms; Indian IT services firms, software

firms and in- house IT departments of large corporations The IT industry is experiencing rapid changes that

are affecting the competitive landscape, including recent divestitures and acquisitions that have resulted in

consolidation within the industry. These changes may result in larger competitors with significant resources. In

20

addition, some of the Company’s competitors have added or announced plans to add cost-competitive

offshore capabilities to their service offerings. Many of these competitors are substantially larger than the

Company and have significant experience with international operations, and the Company may face

competition from them in countries in which the Company currently offer its products and services, as well as

in countries in which the Company expects to begin offering its products and services. Growing competition

may force the Company to reduce the prices of its products and services, which may reduce the Company’s

revenues and margins and/or decrease its market share, any of which could have a material adverse effect on

the Company’s business, financial condition and results of operations.

Many of the Company’s competitors have significantly greater financial, technical and marketing resources,

generate greater revenues and have greater name recognition than the Company. The Company cannot be

reasonably certain that it will be able to compete successfully against such competitors, or that the Company

will not lose clients to such competitors. Additionally, the Company believes that its ability to compete also

depends in part on factors outside the Company’s control, such as the price at which its competitors offer

comparable products and services, and the extent of the Company’s competitors’ responsiveness to their

clients’ needs. 17. The Company could become liable to its customers

Any failure or defect in the Company’s products, or services could result in a claim against it for substantial

damages, regardless of the Company’s responsibility for such a failure or defect. Although, the Company

attempt to limit its contractual liability for all damages, including consequential damages, in rendering its

services, the Company cannot be assured that the limitations on liability it provides for in its service contracts

will be enforceable in all cases, or that they will otherwise be sufficient to protect the Company from liability for

damages. 18. The Company is present in several countries through various alliances

The Company is present in several countries such as Singapore, etc., through its alliances with certain

companies. The Company’s future revenue growth depends upon the successful continued expansion of its

sales, marketing support and service teams in various countries around the world where the Company’s

current or potential customers are located. Due to the global nature of the Company’s operations, it is affected

by various factors inherent in international business activities like political stability, economic stability, its

understanding of the local business policies and practices, restrictions on repatriation of earnings, tariffs and

restrictions on trade, multiple or overlapping tax structures, etc. One or more risks could have a material

adverse effect on the Company’s business, financial condition and results of operations. 19. Expansion of Company’s business outside India

The Company’s international marketing experience is limited and there can be no assurance that it will be able

to expand its export activities as planned. The business strategy of expansion into foreign markets would

require the Company to adapt its products and marketing strategy to foreign markets. In many markets, the

Company may have to establish subsidiaries or affiliated companies using local partners or conclude co-

operation agreements with companies who are already established. In the case of such joint ventures and

other cooperation arrangements, there can be no assurance that the Company would be able to negotiate

attractive terms or prevail in a potential disagreement with its business partners.

The Company’s foray into foreign markets will also expose it to risks associated with different legal and

taxation regimes and economic conditions in each country and to different (and potentially more onerous) legal

regimes with respect to product liability and warranty requirements. The Company would also increase its

exposure to risks of fluctuation in foreign currency exchange rates. As a result, the Company’s strategy of

21

expansion into markets outside India could increase its costs of operations and thereby could have an adverse

effect on future prospects, financial condition and results of operations. 20. Implementation of growth strategies

The Company intends to implement its domestic and international growth strategies through opening of

branches in strategic locations. In addition, the Company’s success depends on, among other things, its ability

to secure required finance, assess potential markets, time its capital investments, control input costs, attract

new customers in India and in international markets, maintain and enhance its position with its current

customers both in India and internationally and maintain sufficient operational and financial controls. The

Company’s growth strategy may place significant demands on its management and other resources.

The Company’s growth strategies involve risks and difficulties, many of which are beyond its control and

accordingly there can be no assurance that the Company would be able to complete its plans on schedule or

without incurring additional expenditures or at all. If market conditions change and operations do not generate

sufficient funds or for any other reasons, the Company may decide to delay, modify or forego some aspects of

its growth strategies. The future results of operations may be adversely affected if the Company is unable to

implement its growth strategies successfully.

21. Revenue Risk

The fluctuations in the revenues of the Company may be due to two prime factors, namely, the quantity

demanded in the market and the price realization of its products. The Company could face a risk due to

competition in the industry forcing the players in the market to develop new products and innovate the existing

ones frequently.

Further, rising interest rates could lead to significant Rupee appreciation against the Dollar in the short run,

which may hit the Company’s export earnings and the same, may have direct impact on the revenues of the

Company. 22. The Company is dependent on external suppliers for components.

The Company is dependent on external suppliers for most of the hardware that it sells. The failure of its

suppliers to deliver these materials or components in the necessary quantities or to adhere to delivery

schedules or specified quality standards/technical specifications, could adversely affect its business and its

ability to deliver on time and at the desired level of quality giving rise to contractual penalties or liability, for

failure to perform contracts, and a loss of customers and damage Company’s reputation, any of which could

materially adversely affect its results of operations. 23. High costs have become a major inhibitor to the uptake of the RFID technology

All the hardware for RFID is imported which means that costs are high. RFID tags cost between 5 and 20 US

cents each at bulk rates. Given such high price levels, the tags may not be used for low value items or

perishable goods. Currently, the cost of RFID implementation is definitely high in comparison with traditional

technologies. 24. Privacy Concerns of Individuals

It has been alleged that AIDC technology carries the potential for serious privacy and security violations,

particularly when used on individual consumer items. The key security issues include inter alia protecting the

confidentiality, integrity and availability of the data and information systems. The privacy issues include

notifying consumers; tracking an individual's movements; profiling an individual's habits, tastes and

predilections; and allowing for secondary use of information. As regards India, privacy concerns are governed

22

by statutory decrees and corporate policies. The Company, in undertaking its business activities would need to

take significant efforts so as to adhere to such policies. 25. Smart card usage in India

Over the last few years, the awareness of smart cards and its applications have gradually increased among

the potential users in India. However, the smart card market in India is only spread across a few major

applications and thereby has not yet realized its full potential. 26. Biometrics

Although, the demand in India for biometrics is great, the lack of infrastructure, standardization in the industry,

high costs and duties are the major impediments in the growth of the biometrics industry in India.

RISKS ASSOCIATED WITH INDIA

A) Indian law imposes certain restrictions on the Company's free raising of capital abroad through the issuance of securities Indian law constrains the Company's ability to freely raise capital abroad through the issuance of

equity or convertible debt securities. The Government of India has classified the existing business

sectors into various categories for automatic approval of foreign direct investment up to certain

prescribed percentages.

B) Hostilities with neighboring countries and civil unrest in India may have a material adverse effect on the market for securities in India India has from time to time experienced hostilities with neighboring countries, including Pakistan. In

recent years, military confrontations between India and Pakistan have occurred in Kashmir and along

the India-Pakistan border, although the governments of India and Pakistan have recently engaged in

conciliatory efforts. Military activity or terrorist attacks in the future could impact the Indian economy

by disrupting communications and making travel more difficult. Such political tensions could create a

perception that investments in Indian companies involve a higher degree of risk. Events of this nature

in the future, as well as social and civil unrest, could influence the Indian economy and could have a

material adverse effect on the market for securities of Indian companies, including the Bonds or the

Shares, and on the business of the Group. In addition, India has from time to time experienced

social and civil unrest due to religious strife.

Terrorist attacks and other acts of violence or war involving India, the United States and other

countries could adversely affect the financial markets, result in a loss of business confidence and

adversely affect the Company’s business, results of operations and financial condition.

Terrorist attacks, such as the ones that occurred in New York and Washington, D.C. on 11

September 2001, in New Delhi on 13 December 2001, in Mumbai on 25 August 2003 and in October

2004 in Northeast India, and other acts of violence or war involving India, the United States and other

countries could adversely affect the Indian and other worldwide financial markets, result in a loss of

business confidence and adversely affect the Company’s business, results of operations or financial

condition.

C) Changes in the policies of the Government or political instability could delay the further liberalization of the Indian economy and adversely affect economic conditions in India generally, which could impact the Company’s business and prospects

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Since 1991, successive Indian governments have pursued policies of economic liberalization,

including significantly relaxing restrictions on the private sector. Nevertheless, the role of the Indian

central and state governments in the Indian economy as producers, consumers and regulators has

remained. The current Government, formed in May 2004, has announced policies and taken

initiatives that support the continued economic liberalization policies that have been pursued by

previous governments. However, there is no assurance that these liberalization policies will continue

in the future. The rate of economic liberalization could change, and specific laws and policies

affecting foreign investment, currency exchange and other matters affecting investment in the

Company’s securities could change as well. A significant change in India’s economic liberalization

and deregulation policies could adversely affect business and economic conditions in India generally,

and the Company’s business in particular.

The current Government is a coalition of several parties. The withdrawal of one or more of these

parties could result in political instability. Such instability could delay the reform of the Indian

economy and could have a material adverse effect on the market for securities of Indian companies,

including the Shares and the Bonds, and on the market for the Company’s products.

D) The ability of Bondholders to sell to a resident of India any Shares they received upon Conversion of the Bonds may be subject to RBI restrictions Under certain circumstances, the RBI must approve the sale of equity shares by a person resident

outside India to a person resident in India. Though through recent liberalization, the RBI has given

general permission to effect sales of existing shares or convertible debentures of an Indian company

by a person resident in India to a person resident outside India, subject to certain conditions,

including the price at which the shares may be sold, there is no guarantee that in cases where such

approval is required, it will be obtained in a timely manner or at all. Due to possible delays in

obtaining requisite approvals, investors in the Bonds may be prevented from realizing gains during

periods of price increases or limiting losses during periods of price declines.

E) A slowdown in India's economic growth and other political and economic factors may adversely affect the Group's business and results of operations A major part of the Group's future revenues would be derived from the Indian domestic market. The

Group, and the market price and liquidity of the Bonds or the Shares, may be affected by foreign

exchange rates and controls, interest rates, changes in Government policy, taxation, social and civil

unrest and other political, economic or other developments in or affecting India.

During the past decade, the Government has pursued policies of economic liberalization, including

significantly relaxing restrictions on the private sector. Nevertheless, the role of the central

Government and state governments in the Indian economy in relation to producers, consumers and

regulators has remained significant. The rate of economic liberalization could change, and specific

laws and policies affecting the Group's business, the Group's suppliers, foreign investment, currency

exchange rates and other matters affecting the Group's business are also subject to change.

A significant change in the Government's or Indian state governments' economic liberalization and

deregulation policies could adversely affect business and economic conditions in India generally, and

the Group's business, financial condition or prospects in particular.

F) Exchange rate fluctuations between the Rupee and the U.S. dollar may affect the market value of the Bonds regardless of the Company's operating results

24

The price of the Bonds will be quoted in U.S. dollars. The Shares are quoted in Rupees on the Indian

Stock Exchange. Therefore, depreciation of the Rupee against the U.S. dollar may adversely affect

the price of the Bonds. There can be no assurance that holders of Shares will be able to convert

rupee proceeds into U.S. dollars or any other currency or with respect to the rate at which any such

conversion could occur. Shareholders who seek to convert the rupee proceeds from a sale of Shares

in India into foreign currency and repatriate that foreign currency from India will have to obtain RBI

approval for each transaction unless: (i) the Shares were held by the seller on a repatriation basis; (ii)

either the Shares have been sold on a recognised stock exchange in India through a stock broker at

the ruling market price as determined on the floor of the exchange, or the RBI's approval has been

obtained in other cases for sale of the Shares and remittance of the sale proceeds thereof; and (iii) a

`no objection/tax clearance certificate from the income tax authority has been produced. A delay in

obtaining such approval could adversely affect the rate of exchange available for such conversion.

In the past the Indian economy has experienced severe foreign exchange shortages.

G) There may be less company information available in the Indian securities markets than securities markets in developed countries There may be differences between the level of regulation and monitoring of the Indian securities

markets and the activities of investors, brokers and other participants and that of the markets in other

countries. The SEBI is responsible for approving and improving disclosure and other regulatory

standards for the Indian securities markets. The SEBI has issued regulations and guidelines on

disclosure requirements, insider trading and other matters. There may, however, be less publicly

available information about Indian companies than is regularly made available by public companies in

developed countries.

H) The Indian securities markets are more volatile than certain other securities markets The Indian securities markets are more volatile than the securities markets in certain OECD member

states. The Indian Stock Exchange have, in the past, experienced substantial fluctuations in the

prices of listed securities.

The Indian Stock Exchange has experienced problems which, if such or similar problems were to

continue or recur, could affect the market price and liquidity of the securities of Indian companies.

These problems have included temporary exchange closures, broker defaults, settlement delays and

strikes by brokers. In addition, the governing bodies of the Indian Stock Exchange have from time to

time imposed restrictions on trading in certain securities, limitations on price movements and margin

requirements. Furthermore, from time to time disputes have occurred between listed companies, and

stock exchanges and other regulatory bodies, which in some cases may have had a negative effect

on market sentiment.

There is a lower level of regulation and monitoring of the Indian securities markets and the activities

of investors, brokers and other participants than in certain OECD countries. The SEBI received

statutory powers in 1992 to assist it in carrying out its responsibility for improving disclosure and

other regulatory standards for the Indian securities markets. Subsequently, the SEBI has prescribed

certain regulations and guidelines in relation to disclosure requirements, insider dealing and other

matters relevant to the Indian securities markets. There may, however, be less publicly available

information about Indian companies than is regularly made available by public companies in certain

OECD countries.

I) Investors in the Bonds may not be able to enforce a judgment of a foreign court against the

Company

25

The Company is a limited liability company incorporated under the laws of India. Substantially all of

the Company's Directors and executive officers are residents of India and a substantial portion of the

assets of the Company are located in India. As a result, it may not be possible for investors to effect

service of process upon the Company, or such persons outside India, or to enforce judgments

obtained against such parties outside India.

Recognition and enforcement of foreign judgments is provided for under Section 13 of the Civil Code

on a statutory basis. Section 13 of the Civil Code provides that foreign judgments shall be conclusive

regarding any matter directly adjudicated upon except: (i) where the judgment has not been

pronounced by a court of competent jurisdiction; (ii) where the judgment has not been given on the

merits of the case; (iii) where it appears on the face of the proceedings that the judgment is founded

on an incorrect view of international law or a refusal to recognise the law of India in cases to which

such law is applicable; (iv) where the proceedings in which the judgment was obtained were opposed

to natural justice; (v) where the judgment has been obtained by fraud; and (vi) where the judgment

sustains a claim founded on a breach of any law then in force in India. Under the Civil Code, a court

in India shall, upon the production of any document purporting to be a certified copy of a foreign

judgment, presume that a court of competent jurisdiction pronounced the judgment, unless the

contrary appears on record.

India is not a party to any international treaty in relation to the recognition or enforcement of foreign

judgments. Section 44A (the "Section") of the Civil Code provides that where a foreign judgment has

been rendered by a superior court, within the meaning of the Section, in any country or territory

outside India which the Government has by notification declared to be in a reciprocating territory, it

may be enforced in India by proceedings in execution as if the judgment had been rendered by the

relevant court in India. However, the Section is applicable only to monetary decrees not being in the

same nature of amounts payable in respect of taxes, other charges of a like nature or in respect of a

fine or other penalties.

For the purposes of this section, foreign judgment means a decree which is defined as a formal

expression of an adjudication which, so far as regards the court expressing it, conclusively

determines the rights of the parties with regard to all or any of the matters in controversy in the suit.

The United Kingdom has been declared by the Government to be a reciprocating territory for the

purposes of the Section. A judgment of a court of a country, which is not a reciprocating territory, may

be enforced only by a fresh suit upon the judgment and not by proceedings in execution. Such a suit

has to be filed in India within three years from the date of the judgment in the same manner as any

other suit filed to enforce a civil liability in India. It is unlikely that a court in India would award

damages on the same basis as a foreign court if an action were to be brought in India. Furthermore,

it is unlikely that an Indian court would enforce foreign judgments if that court were of the view that

the amount of damages awarded was excessive or inconsistent with public policy. It is uncertain as to

whether an Indian court would enforce foreign judgments that would contravene or violate Indian law.

Risks Associated with an Investment in the Bonds and Shares

A RBI approval is required for repayment of the Bonds prior to maturity, including upon an event of default

Under the guidelines on policies and procedures for External Commercial Borrowings issued by the

RBI, any prepayment of an external commercial borrowing prior to its stated maturity requires the prior

approval of the RBI. Therefore, any repayment of the Bonds prior to maturity as a result of early

redemption pursuant to Condition 10 (Redemption, Purchase and Cancellation) of the Conditions or

26

acceleration of the Bonds pursuant to Condition 15 (Events of Default) of the Conditions upon an event

of default would require the prior approval of the RBI. There can be no assurance that such approval

would be obtained in a timely manner or at all.

B Rights to receive payment on the Bonds are subordinated to the Company's secured indebtedness

The Company has secured indebtedness of Rs. 165.60 million and unsecured indebtedness of Rs.

1018.30 million as at 30th September 2007. The Bonds will be effectively subordinated to any of the

Company's secured obligations with respect to the assets that secure such obligations.

C There is no existing market for the Bonds and an active market for the Bonds may not develop, which may cause the price of the Bonds to fall

The Bonds are a new issue of securities for which there is currently no trading market. Approval-in-

principle has been obtained from the SGX-ST in respect of the listing and quotation of the Bonds on the

Official List of the SGX-ST. Even if such listing is obtained, no assurance can be given that an active

trading market for the Bonds will develop, or as to the liquidity or sustainability of any such market, the

ability of holders to sell their Bonds or the price at which holders of the Bonds will be able to sell their

Bonds. If an active market for the Bonds fails to develop or be sustained, the trading price of the Bonds

could fall. If an active trading market were to develop, the Bonds could trade at prices that may be

lower than the initial offering price of the Bonds. Whether or not the Bonds will trade at lower prices

depends on many factors, including: (i) prevailing interest rates and the market for similar securities, (ii)

general economic conditions, (iii) the Company's financial condition, financial performance and future

prospects, (iv) the exchange rate between the U.S. dollar and the Rupee, and (v) the market price of

the Shares.

The Lead Manager has no obligation to make a market in the Bonds. In addition, the market for debt

securities in emerging markets has been subject to disruptions that have caused substantial volatility in

the prices of securities similar to the Bonds. There can be no assurance that the markets for the Bonds,

if any, will not be subject to similar disruptions. Any disruptions in these markets may have an adverse

effect on the market price of the Bonds.

D Upon a change of control or delisting of the Shares from the BSE and/or NSE or upon acceleration following an event of default, the Company may not be in a position to redeem or repay the Bonds

Upon a change of control of the Company, or a delisting of the Shares from the BSE and/or NSE,

Bondholders may require the Company to redeem their Bonds. Following acceleration of the Bonds

upon an event of default, the Company would be required to pay all amounts then due under the

Bonds. See "Terms and Conditions of the Bonds - Redemption, Purchase and Cancellation". The

Company may not be able to redeem all or any of such Bonds or pay all amounts due under the Bonds

if (i) the requisite RBI regulatory approval is not received, or (ii) the Company does not have sufficient

cash flow to redeem or repay the Bonds.

E Bondholders will bear the risk of fluctuation in the price of the Shares

The market price of the Bonds is expected to be affected by fluctuations in the market price of the

Shares and it is impossible to predict whether the price of the Shares will rise or fall. Trading prices of

27

the Shares will be influenced by, among other things, the financial position of the Company, the results

of operations and political, economic, financial and other factors. Any decline in the price of the Shares

may have an adverse effect on the market price of the Bonds.

Future issues or sales of the Shares may significantly affect the trading price of the Bonds and the

Shares. The future issue of Shares by the Company or the disposal of Shares by any of the major

shareholders of the Company, or the perception that such issues or sales may occur, may significantly

affect the trading price of the Bonds and the Shares. The Company itself has agreed to certain

restrictions on their ability to issue or dispose of Shares or related securities between the date of the

Subscription Agreement and the date which is 180 days after the issue of the Bonds. Except for such

restrictions, there is no restriction on the Company's ability to issue Shares, and there can be no

assurance that the Company will not issue Shares or that any such substantial shareholder will not

dispose of, encumber, or pledge its Shares or related securities.

F Holders of the Bonds may face uncertainties in their ability to convert Bonds into Shares and any such conversion may be subject to delay

India's restrictions on foreign ownership of Indian companies limit the number of shares that may be

owned by foreign investors and, in certain scenarios, require the Government's approval for foreign

ownership. Investors who convert Bonds into Shares will be subject to Indian regulatory restrictions on

foreign ownership upon such conversion. Similarly, investors who convert Bonds into Shares may be

required to make an open offer (public offer) under the Takeover Code if such Shares, together with the

existing Shares held by that investor together with "persons acting in concert" exceed the prescribed

trigger limits. It is possible that this conversion process may be subject to delays. For a discussion of

the legal restrictions triggered by conversion of the Bonds into Shares, see "Appendix A: The Securities

Market of India" and "Appendix B: Foreign Investment and Exchange Controls".

G Disparity between the date of advice of conversion of the Bonds into Shares and the date of approval granted for the Shares to be listed and traded in the Indian Stock Exchange

There will be a time gap of up to 15 days from the date on which the Bondholder advises the Principal Agent of the intention to convert the Bonds into Shares and the date on which the Indian Stock Exchange grants its final approval for the Shares to be listed and traded. During this time, the price of the Shares may fluctuate and this may have an adverse effect on the price that the Bondholder anticipated to receive for the transfer of Shares. Further, any trade of the Shares will have to be done on a spot delivery basis and the trade will have to be settled within the next settlement cycle (T+2 at present).

H Bondholders will have no voting rights in respect of the Shares

Bondholders will acquire voting rights in respect of the Shares only upon the conversion of the Bonds. However, if the Company is unable to pay interest on the Bonds, the Bondholder (in the capacity of a creditor of the Company) can seek the winding-up of the Company in accordance with the provisions of the Companies Act 1956. This process can take up to four years. In the event of any merger or amalgamation or takeover of the Company, the Bondholder shall have voting rights in any creditor’s meeting, along with any other creditor of the Company, for their class holders, if any, as per the provisions of the Companies Act 1956. Any dues on account of the Bonds shall rank pari passu with unsecured creditors.

Under the terms of the Bonds, holders of Bonds will have no voting rights with respect to the Shares.

I Future issues of securities by the Company or sale by existing Shareholders may depress the market price of the Bonds

28

The market price of the Bonds could decline as a result of sales of a large number of Shares, on an

Indian Stock Exchange or elsewhere, after the Offering of the Bonds, or the perception that such sales

could occur. Such sales also might make it more difficult for the Company to issue Shares in the future

at a time and at a price that it deems appropriate. As of the date of this Offering Circular, the Company

has 17.82 million Shares fully subscribed.

After the Offering of the Bonds, the price of the Shares may be highly volatile, or an active trading

market for the Shares may not develop.

J The prices of the Shares on the Indian Stock Exchange may fluctuate after the Offering of the Bonds as a result of several factors, including:

volatility in the Indian and global securities market;

the Company’s results of operations and performance;

performance of the Company’s competitors;

the perception in the market about investments in the pump sectors;

adverse media reports on the Company;

changes in the Company’s economic and operating environment;

changes in the estimates of the Company’s performance or recommendations by financial analysts;

significant developments in India’s economic liberalisation and deregulation policies; and

significant developments in India’s fiscal and environmental regulations.

These factors and other factors outside the Company’s control may cause volatility in the price of the

Shares and the price changes may be unrelated or disproportionate to the Company’s operating

results. In the past, following periods of volatility in the market price of a public company’s securities,

securities class action litigation has often been instituted against the relevant company. Any such

litigation brought against the Company, even if unsuccessful, could damage its reputation and result in

substantial costs and a diversion of management’s attention and resources.

K If there is a change in tax regulations, the Company’s tax liabilities may increase and thus adversely affect its financial results

Various taxes, duties, cess and other levies are imposed by Government, state governments and other

local authorities in India that affect the Company. An increase in the rates of these taxes, duties, cess

or other levies or the imposition of new taxes, duties, cess or other levies in the future, may have a

material adverse effect on the Company.

The central or state governments in India may in the future increase corporate income tax or other

taxes that they impose. Any such future increases or amendments may affect the overall tax efficiency

of companies operating in India and may result in significant additional taxes becoming payable.

Additional tax exposure could have a material adverse effect on the Company’s business, financial

condition and results of operations.

L A slowdown in economic growth in India or the occurrence of natural calamities could cause the Company’s business to suffer

The performance, quality and growth of the Company’s business are dependant on the health of the

overall Indian economy. The Indian economy has grown significantly over the past few years. However,

there have been periods of slow down in economic growth during the 1990's. The Indian economy is

also largely driven by the performance of the agricultural sector, which depends on the quality of the

monsoon and as such it is difficult to predict. In the past, such economic slowdowns have harmed

29

industries. Although economic growth recovered in the FY2000, any further slowdown in the Indian

economy could harm the Company, its customers and other contractual counter-parties. No assurance

can be given that natural calamities would not cause damage to the Company’s operations.

M Any downgrading of India’s debt rating by an international rating agency could have a negative impact on the business of the Company

Any adverse revisions to India’s credit ratings for domestic and international debt by international rating

agencies may adversely impact the Company's ability to raise additional financing, and the interest

rates and other commercial terms at which such additional financing is available. This could have a

material adverse effect on the business and future financial performance, the Company's ability to

obtain financing for capital expenditures, and the trading price of the Shares.

N There are restrictions on daily movements in the price of the Shares, which may adversely affect a Bondholder's ability to sell, or the price at which it can sell, Shares at a particular point in time

Fluctuations in the price of the Company's Shares on any trading day are subject to limits imposed by

stock exchanges in India, also known as "circuit-breakers". In addition, limits on trading may be

imposed on equity securities in general if certain index-based prices are exceeded. The percentage

limit on the Company's circuit breaker is set by the stock exchanges based on the historical volatility in

the price and trading volume of the Shares.

The stock exchanges do not inform the Company of the percentage limit of the circuit breaker from time

to time, and may change it without the Company's knowledge. This circuit breaker effectively limits the

upward and downward movements in the price of the Shares. As a result of this circuit breaker, there

can be no assurance regarding the ability of shareholders to sell their Shares, or the price at which the

shareholders may be able to sell their Shares at a particular time.

O There may be restrictions on conversion of Bonds, due to the Takeover Code

The provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as it

prevails today, restricts acquisition of 15% or more of the paid-up equity shares of the Company by any

person, who may acquire the shares either singly or jointly with their relatives or persons acting in

concert or in group. Any such acquisition of 15% or more of the paid-up equity shares of the Company

by such person may trigger an obligation on them to make an open offer to acquire further equity

shares of the Company up to at least 20% of the paid-up share capital of the Company, on the terms

and conditions and in the manner laid down under the aforesaid regulations of SEBI.

P Significant differences exist between Indian GAAP used throughout the Company’s financial information and other accounting principles with which investors may be more familiar

The Company’s financial statements are prepared in conformity with Indian GAAP, consistently applied

during the periods stated and no attempt has been made to reconcile any of the information given in

this Offering Circular to any other principles or to base it on any other standards. Indian GAAP and

Indian auditing standards may differ from accounting principles and auditing standards with which

prospective investors may be familiar in other countries. Significant differences exist between Indian

GAAP and IFRS, which may be material to the financial information contained in this Offering Circular.

Indian GAAP does not require quantification of the effect of any of these differences. In making an

30

investment decision, investors must rely upon their own examination of the Company, the terms of the

Offering and the financial information contained in this Offering Circular. See “Summary of Significant

Differences between Indian GAAP and IAS/IFRS”.

Q In order to maintain a listing on any of the Indian Stock Exchange, the Company is obliged to maintain a minimum level of non-promoter shareholding of 25 per cent. of its paid-up equity share capital

The listing agreement executed by the Company with the Indian Stock Exchange requires the

Company to maintain a minimum level of non-promoter (as defined herein) shareholding of 25 per cent.

of its paid-up equity share capital. In the event that the minimum level of non-promoter shareholding

falls below the required level, the provisions of the SEBI (Delisting of Securities) Guidelines, 2003 need

to be complied with, which include, among other things, the need to make a public offer for eventual

delisting. The non-promoter shareholding in the Company's Shares as at 30 September 2007 was

55.67 per cent.. There can be no assurance that the level of non-promoter ownership of the Company's

Shares will remain above the required level and therefore there can be no assurance that the Shares

will remain listed on any of the Indian Stock Exchanges. In the event that the Shares are delisted, the

controlling shareholders will be required to offer to buy the Shares, which they do not already own at a

price designed to equate to the fair market value. Whether they are able to do so will depend on the

financial condition of such parties. In this paragraph, "non-promoter" means any person who is not a

promoter as defined in the Takeover Code.

R There is uncertainty surrounding Ministry of Finance Rules affecting the conversion price of convertible bonds

The Indian Ministry of Finance has, pursuant to a Notification dated 31 August 2005, imposed certain

restrictions affecting the conversion price of convertible bonds whereby the conversion price is required

to be not less than the average closing price of the underlying shares for a defined period prior to the

date of the shareholders' meeting approving the issue of the bonds. There is uncertainty surrounding

the new rules and their application in relation to adjustments to the Conversion Price of the Bonds

following a dilutive event and any further Bonds issued pursuant to the Conditions (including pursuant

to any over-allotment option). In the Conditions, the Company has undertaken not to take any action

that would result in the Conversion Price being reduced below the level permitted by applicable Indian

laws and regulations from time to time. In the absence of clarification from the Ministry of Finance

regarding the new rules, there can be no assurance that these rules will not be applied such that

adjustments to the Conversion Price would be limited in a way that will result in a Bondholder not being

fully protected against the dilutive effect of events triggering the relevant adjustment. If these rules are

applied in this manner, this could have a material adverse effect on the value of the Bonds. The

conversion on the basis of Deemed Value of the Bonds may require approval from the Indian

Authorities which approval may or may not be forthcoming.

S. Conversion of any or all of the bonds into Shares may result in dilution of shareholding of the Bondholders

The Company issued US$25mn zero percent Convertible Bonds due 2012 in June 2007. As of the date

of this Offering Circular, 5,000,000 bonds have been converted into the Shares and 1,498,280 Shares

have been issued. Any further conversion of the bonds into Shares may result in dilution of the

shareholding of the Bondholders.

31

SUMMARY

Introduction Bartronics India Limited (“the Company”) is one of the first Automatic Identification and Data capture (AIDC) solutions company. The Company is pioneer in AIDC technologies like barcoding, Radio Frequency Identification Device (RFID) and smart card which has manifold application in manufacturing, service & retail industry.

The Company provides AIDC solutions in inventory & logistics management, time & attendance and asset tracking systems, inflow logistics of the pilgrims, access control system, etc.

The Company is listed on the BSE and NSE.

Business Model The Company commenced operation as a distributor of barcoding equipment in India, on behalf of its foreign partners. Over the years the Company has moved up the value chain from being only a distributor to a provider of hardware, solution as well as maintenance service for such application. Further from July 2007, the Company has also forayed into manufacturing of smart card. Thus, the Company has dual revenue source – one from solutions and other from smart card. Divisions of the Company

1) AIDC technologies: The Company is pioneer in introducing AIDC technologies like bar coding and its manifold applications in India. The Company also offers a range of smart cards solutions based on a bar-code or proximity that can be used for access control and time and attendance applications.

2) RFID technologies: The Company provides RFID solutions in the form of RFID reader, barcode reader

and software which has to be integrated with the clients existing system.

3) Retail IT: The Company pioneers in providing retail IT solutions to its customers and the Company’s retail IT solutions improve business agility, impact positively on operational efficiency, provide better access to decision-making information, enhance the quality and speed of customer service and control hardware, software and labour costs.

4) Smart Cards: The Company’ smart card manufacturing unit is India’s first smart card manufacturing unit as

of now, having 100% EOU status from Government of India. The Company offers one stop customized smart card based solutions and applications. The Company is manufacturing smart cards, magnetic stripe cards, scratch cards and plain PVC cards.

Future Focus The Company has been actively seeking acquisition opportunities to complement its current business model in the Solutions business. The identified target company addresses the US$2 billion US market in the leisure & entertainment, education, healthcare and government & transportation industry. The acquisition will give a much-needed jump-start to the Company’s foray into the US market. The Company estimates the cost of this acquisition and further build-up of the business at approximately US$20 million. In addition, the Company is keen to expand its operations in the South Asian Region. A budgetary allocation of approximately US$30 million has been made to invest in the market. Strengths

• Only player in the industry to provide comprehensive solutions using all technologies under the AIDC umbrella

• Enviable track record with over 1,000 customers - hence significant traction already in place for newer applications deployment

• Annual Maintenance Contracts signed with most customers after one year after implementation - helps in retaining large customer base

• ISO Certified for Service and Maintenance Activities • Early mover advantage in every technology Area including Smart Cards • India’s first and only Smart Card manufacturer as of now, having 100% EOU status from Government of

India

32

Indian Market The RFID market is expected to grow from US$ 1.4 billion annually to US$ 6.1 billion in 2010. The RFID and biometrics solutions are growing at a CAGR of 50% and are expected to have an exponential growth with retail and manufacturing growth in India. According to Frost & Sullivan report, the Indian smart card market is estimated to grow at a CAGR of 48%. The smart card market in terms of revenues is expected to grow from current US$ 47.5 million to US$ 248 million by 2009. Management Team The majority of the Board of Directors of the Company consists of professional directors. The Managing Director, Mr. Sudhir Rao holds a Post Graduate Diploma in Management (P.G.D.M) from the Indian Institute of Management (1989-1991), Ahmedabad, and a Bachelor’s Degree in Economics and Advanced Accountancy from Osmania University, Hyderabad. He has worked in Tata Consultancy Services from the year 1991 to 1994 as a ‘Senior Systems Analyst’. He has also worked in companies such as Shalina Laboratories Private Limited, Mumbai as Executive Assistant to Managing Director, Core Healthcare limited, Ahmedabad as Vice President -Corporate, and VMF SoftTech Limited, Ahmedabad / Hyderabad as Chief Operating Officer. In the Company, he had previously held the position of ‘Chief Operating Officer’. Summarised Profitability Statement (Rs. in million)

Particulars 2004-05 2005-06 2006-07 Total Income………………….. 181.71 294.73 644.41 Total Expenditure…………….. 135.01 215.99 466.43 EBITDA………………………... 46.70 78.74 177.97 EBITDA margin,%................... 25.70% 26.71% 27.63% Interest………………………… 10.79 7.65 13.43 Depreciation…………………... 8.38 10.00 16.84 Profit before Tax……………… 27.52 61.08 147.71 Profit after Tax………………... 23.97 53.38 134.56 PAT margin,%......................... 13.19% 18.11% 20.88 Earnings per Share…………... 5.47 5.96 9.07

Results for the quarter ended on 30 June (Rs. in million)

Particulars 2006 2007

Total Income………………… 124.29 255.66 Expenditure………………….. 92.93 191.72 EBITDA………………………. 31.36 63.94 Profit before Tax…………….. 23.42 53.81

Results for the quarter ended on 30 September (Rs. in million)

Particulars 2006 2007

Total Income………………… 158.14 679.12 Expenditure………………….. 115.60 231.20 EBITDA………………………. 42.54 159.90 Profit before Tax…………….. 36.43 147.68

33

MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE SHARES

Share Price and Trading Volumes

The Company’s Shares were listed in the BSE and NSE on 12 January 2006.

The following table shows the high and low closing prices and the total trading volume of the Shares on the BSE for the periods indicated.

Bombay Stock Exchange

High

(Rs)

Low

(Rs) Trading Volume (No. Of Shares)

Period

2004 January - December∗…………. NA NA NA

2005 January - December∗…………. NA NA NA 2006 January………………………… 154.90 109.25 46,165,690 February……………………….. 142.95 104.00 8,408,313 March…………………………… 115.90 84.00 3,514,585 April..…………………………… 108.70 83.40 1,516,447 May……………………………... 91.50 64.00 416,435 June…………………………….. 71.70 45.95 391,528 July.…………………………….. 60.40 47.10 312,531 August………………………….. 77.30 56.90 1,115,436 September……………………... 74.00 65.50 320,640 October………………………… 97.30 75.00 1,183,542 November……………………… 120.85 92.90 3,521,784 December……………………… 128.65 92.00 832,722 2007 January………………………… 139.45 119.00 969,769 February……………………….. 137.50 106.00 607,870 March…………………………… 122.00 93.00 641,079 April..…………………………… 132.00 104.10 854,488 May……………………………... 137.40 100.30 1,961,338 June…………………………….. 149.00 119.25 1,477,108 July.…………………………….. 213.10 135.95 6,354,471 August………………………….. 202.73 169.25 1,519,926 September……………………... 287.10 190.10 3,151,650 October ………………………… 264.90 210.10 1,314,562 November……………………… 265.00 195.00 2,133,943 December

(Source: BSE Website) ∗ Shares got listed on the Stock Exchange in January 2006

34

The closing price per Share on the BSE on 31 December 2007 was Rs. 247.95, which at the Rupee/U.S. dollar exchange rate on that date, as quoted by RBI, of Rs. 39.41 = U.S.$1.00, was equivalent to U.S.$ 6.29.

Dividends

Since its inception, the Company has not declared any dividend.

The Company is only permitted to declare any dividend that has been recommended by the Directors. The Directors may pay an interim dividend. No dividend may be paid except out of the profits of the Company pursuant to Section 205 of the Companies Act. See "Description of the Shares - Dividends".

The form, frequency and amount of future dividends on the Shares will depend upon the Company's earnings, cash flow, financial condition and other factors and shall be at the discretion of the Board and subject to approval of the Shareholders of the Company.

For information relating to taxes payable on dividends, see "Taxation". Share Capital

As on date, the Company's authorised share capital is Rs. 600 million consisting of 60 million equity shares of Rs. 10 each of which 19,317,358 equity shares of Rs. 10 each, aggregating to Rs. 193,173,580 are issued and paid up.

As at 31 As at 31 March March 2007 2006

Amount (in Rs. millions)

Authorised 30 million equity shares of Rs.10 each…………………………………………… 300.00 170.00 (Previous year 17 million equity shares of Rs. 10 each)

Issued and Paid-up 17,819,078 equity shares of Rs. 10 each fully paid up ............................................. 178.19 145.69 (Previous year 14,569,078 equity shares of Rs.10 each)

Changes in Issued Equity Share Capital The following table describes the capital history of the Company in detail including the public issue since incorporations to the date of this Offering Circular.

Sl. No.

Date of Allotment/ Splitting /

Consolidation

No. of Shares

Face Value

Cumulative No. of Shares

Issue Price (Rs.)

Consideration Remarks / Allotment

1. At Incorporation 30 500 30 500 15,000 Subscription to MOA

2. 28 August 1992 1,017 500 1,047 500 508,500 Allotted to promoters

3. 28 December 1995

4,953 500 6,000 500 2,476,500 Allotted to promoters

4. 04 July 1995 8 500 6,008 500 4,000 Allotted to promoters

5. 06 July 1995 300,400 10 300,400 -- -- Split 6. 29 September

1995 216,500 10 516,900 10 2,176,500 Allotted to

promoters 7. 18 January 1996 237,000 10 753,900 19 4,503,000 General

Allotment 8. 11 May 1999 225,000 10 978,900 10 2,250,000 General

Allotment 9. 27 August 1999 200,000 10 1,178,900 10 2,200,000 General

Allotment 10. 27 August 1999 630,000 10 1,808,900 10 6,300,000 Allotted to

35

promoters 11. 5 October 1999 110,700 10 1,919,600 10 1,107,000 General

Allotment 12. 29 December 1999 326,000 10 2,245,600 10 3,260,000 Allotted to

promoters 13. 28 January 2000 70,000 10 2,315,600 10 700,000 General

Allotment 14. 30 March 2000 250,000 10 2,565,600 10 2,500,000 General

Allotment 15. 23 March 2001 499,800 10 3,065,400 10 4,998,000 General

Allotment 16. 30 July 2001 850,000 10 3,915,400 10 8,500,000 Allotment to

IDBI 17. 20 February 2002 163,900 10 4,079,300 25 4,097,500 Allotment to

Promoters 18. 15 October 2003 8,158,600 5 8,158,600 -- -- Split 19. 15 October 2003 600,000 5 8,758,600 15 9,000,000 General

Allotment 20. 2 March 2005 4,379,300 10 4,379,300 -- -- Consolidation 21. 2 March 2005 2,189,650 10 6,568,950 10 21,896,500 Bonus Issue 22. 5 September 2005 1,500,000 10 8,068,950 50 75,000,000 Preferential

Allotment 23. 5 January 2006 6,500,000 10 14,569,078 75 487,500,000 Public Issue 24. 2 March 2007 3,250,000 10 17,819,078 110 357,500,000 Private

Placement 25, 17 October 2007 1,498,280 10 19,317,358 At a

conversion price of Rs. 140

209,759,200 Conversion of FCCBs

Issue of Convertible Warrants The Company at its EGM dated 29 January 2007, passed a special resolution under Section 81(1A) of the

Companies Act, 1956, to create, issue, offer and / or allot on a preferential basis 4,630,000 convertible warrants,

convertible at a later date into equity shares, pursuant to Chapter XIII of the SEBI (Disclosure and Investor

Protection) Guidelines, 2000. The Company vide its Board Meeting dated 8 March 2007, has allotted 4,630,000

convertible warrants of Rs. 10 each at a premium of Rs. 120 per warrant to the promoters and non-promoters.

These warrants are compulsorily convertible into equity shares within a period of 18 months from the date of allotment i.e., 8 March 2007.

36

EXCHANGE RATES

The following table sets forth, for the periods indicated, certain information concerning the exchange rates between Rupees

and U.S. dollars since 1998 based on the noon buying rate in New York City on the last Business Day of each month during

the period for cable transfers in Rupees as reported by the Federal Reserve Bank of New York.

In early July 1991, the Government of India adjusted the Rupee downward by an aggregate of approximately 20% against the

U.S. dollars as part of an economic package designed to overcome an external payment crisis. In 1994, the Rupee was

permitted to float fully for the first time. Between 1980 and 2002, the Rupee declined on an average annual basis against the

U.S. dollars. Recently, however, the Rupee has appreciated against the U.S. dollar. The exchange rate as at 30 November

2007, as per the noon buying rate in New York City, was Rs. 39.52 = US$1.00. No representation is made that the Rupee

amounts actually represent such U.S. dollar amounts or could have been, or could be, converted into U.S. dollars at the rates

indicated or at any other rate or at all.

Period end Noon Buying Period Average High Low

2000…………………. 46.75 45.14 46.90 43.65 2001………………….. 48.27 47.28 48.27 46.44 2002………………… 48.00 48.62 49.06 48.00 2003…………………. 45.55 46.53 47.83 45.33 2004………………… 43.27 45.26 46.45 43.27

2005…………………

January…………. 43.60 43.62 43.82 43.35

February………… 43.57 43.57 43.73 43.28

March……………. 43.62 43.58 43.70 43.44

April……………… 43.48 43.64 43.72 43.48

May……………… 43.62 43.41 43.62 43.21

June……………... 43.51 43.52 43.71 43.44

July………………. 43.40 43.43 43.59 43.05

August…………… 44.00 43.55 44.00 43.36

September………. 43.94 43.84 43.98 43.75

October………….. 45.09 44.74 45.11 44.00

November……….. 45.87 45.63 45.87 45.02

December……….. 44.95 45.56 46.26 44.94

2006

January………….. 44.01 44.30 44.92 43.89

February………… 44.21 44.23 44.54 44.10

March……………. 44.48 44.34 44.58 44.09

April……………… 44.86 44.82 45.09 44.39 May……………… 46.22 45.16 46.22 44.69 June……………… 45.87 45.88 46.25 45.50 July………………. 46.49 46.37 46.83 45.84 August…………… 46.43 46.45 46.61 46.32 September………. 45.95 46.01 46.38 45.74

October………….. 44.90 45.36 45.97 44.90

37

November………… 44.59 44.73 45.26 44.46

December………… 44.11 44.48 44.70 44.11

2007

January…………… 44.07 44.21 44.49 44.07

February………….. 44.08 44.02 44.21 43.87

March…………… 43.10 43.79 44.43 42.78

April………………. 41.04 42.02 43.05 40.56

May………………. 40.36 40.57 41.04 40.14

June………………. 40.58 40.59 40.90 40.27

July……………….. 40.18 40.27 40.42 40.12

August……………. 40.63 40.68 41.15 40.25

September………. 39.75 40.15 40.81 39.50

October…………. 39.70 39.36 39.70 38.48

November………. 39.52 39.33 39.11 39.68

December………… 39.39 39.38 39.55 39.29

(Rs. Per US$1.00)

Source: Federal Reserve Bank of New York

Although certain Rupee amounts in this Offering Circular have been translated into U.S. dollars for convenience, this does not

mean the Rupee amounts referred to could have been, or could be, converted into U.S. dollars at any particular rate, the rates

stated above, or at all.

38

USE OF PROCEEDS

The Company expects to raise U.S.$35,000,000 from this Offering (excluding the Over-allotment Option of US$

15,000,000). The net proceeds from this Offering, after deduction of fees and expenses assuming that the Over-allotment

Option is not exercised would be approximately U.S.$ 33.95 million and U.S.$ 48.50 million if the Over-allotment Option is

exercised, which shall be used for capital expenditure, expansion of existing operations, setting up new projects, overseas

acquisitions and international investments and for such other purposes as may be permitted from time to time in

compliance with the applicable guidelines issued by RBI and/or Government of India. The use of proceeds will be in

accordance with the end-use restrictions, which may be prescribed from time to time.

39

TERMS AND CONDITIONS OF THE BONDS

The following are the terms and conditions (the "Conditions") of the Bonds in global form and in definitive form,

substantially as they will appear in the Trust Deed and on the reverse of each of the definitive certificates of the

Bonds constituting the Bonds, subject to amendment.

The following terms and conditions of the Bonds (the Conditions), the Trust Deed (as defined below), the Agency

Agreement (as defined below) and the subscription agreement dated 4 January 2008 entered into between the

Company (as defined below) and the lead manager to the Offering of the Bonds (as defined below) shall govern the

issue, the subscription to the Bonds, the conversion into Shares as well as the transfer of the Bonds. The issue of

the U.S.$ 35,000,000 unsecured foreign currency convertible bonds due 2013 (with an over-allotment of up to an

additional U.S.$ 15,000,000 principal amount of unsecured foreign currency convertible bonds) (the Bonds, which

expression shall, except where otherwise indicated or where the context otherwise requires, include any further

bonds issued in accordance with Condition 17.6 and consolidated and forming a single series therewith) of

Bartronics India Limited (the Company) was authorised pursuant to a resolution of the board of Directors of the

Company passed on 30 July 2007 and pursuant to a resolution in the annual general meeting of the Company

passed on 10 September 2007. The Bonds are constituted by a Trust Deed dated 4 January 2008 (the Trust Deed and the Issue Date respectively) between Deutsche Trustee Company Limited (the Trustee, which term includes

any successor trustee) and the Company and are in registered form. The statements set out in these Conditions

include summaries of, and are subject to, the detailed provisions of the Trust Deed. The holders of the Bonds (the

Bondholders) are entitled to the benefit of, bound by and are deemed to have notice of, all the provisions applicable

to them of the paying and conversion agency agreement dated the Issue Date (the Agency Agreement) between

the Company, the Trustee, Deutsche Bank AG, London Branch (as Principal Paying and Conversion Agent, Paying and Conversion Agent and Transfer Agent) and Deutsche Bank Luxembourg S.A. (as Registrar). The

Principal Paying and Conversion Agent and the Paying and Conversion Agent are together known as the Paying and Conversion Agents. The expressions Registrar, Paying and Conversion Agents and the Transfer Agent shall

include each of their respective successors from time to time, in such capacities, under the Agency Agreement and

are collectively referred to herein as the Agents. Copies of each of the Trust Deed and the Agency Agreement are

available for inspection during usual business hours at the specified office of the Trustee. Capitalised terms used but

not defined herein shall carry the same meanings as defined in the Trust Deed.

1. Form, register and transfer of Bonds

1.1 The Bonds are issued in registered form in the denominations of U.S.$100,000 each or integral

multiples thereof. One certificate will be issued to each Bondholder in respect of its total registered

holding of Bonds (each a Certificate). Each Bond and each Certificate will be numbered serially with an

identifying number which will be recorded on the relevant Certificate and in the Register (as herein

defined) (to be kept in accordance with Condition 1.2). The Bonds will initially be represented by a

global certificate (the Global Certificate) and deposited with a common depositary for Bonds (the

Common Depositary for Bonds), and registered in the name of a nominee for the Common

Depositary for Bonds for, Euroclear Bank S.A./N.V. as operator of the Euroclear system (Euroclear) and Clearstream Banking, société anonyme (Clearstream, Luxembourg) and interests therein will be

credited to the securities clearance accounts of the relevant Bondholders with Euroclear and

Clearstream, Luxembourg. Except in the limited circumstances described in the Global Certificate,

owners of interests in Bonds represented by the Global Certificate will not be entitled to receive

definitive Certificates in respect of their individual holdings of Bonds. The Bonds are not issuable in

bearer form.

1.2 The Company shall at all times keep or cause to be kept at the specified office of the Registrar in

40

accordance with the terms of the Agency Agreement, a register (the Register) showing the nominal

amount of the Bonds, the date of issue and all subsequent transfers and changes of ownership thereof

and the names and addresses of the Bondholders. The Bondholders or any of them and any person

authorised by any such person may at all reasonable times, during normal office hours, inspect the

Register and take copies of or extracts from it at their own cost. The Register may be closed by the

Company for such periods and at such times (not exceeding in whole, thirty (30) calendar days in any

one year) as it may think fit provided that notice should be given to the Bondholders, in accordance with

Condition 17.7, fifteen (15) days prior to the closure of the Register and notice in writing to the Trustee

and Agents twenty-five (25) days prior to such closure.

1.3 Title to the Bonds passes only by transfer and registration in the Register. The registered holder of any

Bond will, (except as otherwise required by law), be treated as the absolute owner for all purposes and

shall not be bound to take notice or see to the execution of any trust, charge or encumbrance whether

express, implied or constructive to which any Bond may be subject and no person shall be liable for so

treating the holder. The receipt of the Bondholder, or in the case of joint Bondholders, the receipt of any

of them, of the interest (if any), from time to time accruing in respect of it or of any other monies payable

on the Bond shall be a good discharge to the Company, notwithstanding any notice it may have,

whether express or otherwise, of the right, title, interest or claim of any other person to or in such Bond,

interest or monies. No notice of any trust, charge, encumbrance or dispute, express, implied or

constructive shall be entered in the Register in respect of any Bond. In these Conditions reference to the

Bondholder (and in relation to a Bond) or “holder” means the person in whose name the Bond is

registered in the Register.

1.4 Every Bondholder will be recognised by the Company as entitled to his Bonds free from any equity, set-

off or counter-claim on the part of the Company against the original or any intermediate holder of a

Bond.

1.5 Subject to the terms of the Agency Agreement and these Conditions, a Bond may be transferred by

delivering the Certificate issued in respect of that Bond, with the form of transfer on the back duly

completed and signed by the Bondholder or his attorney duly authorised in writing, to the specified office

of the Registrar or the Transfer Agent. No transfer of title to any Bond will be effective unless and until

entered in the Register. Transfers of interests in the Bonds evidenced by the Global Certificate will be

effected in accordance with the rules of the relevant clearing systems.

1.6 The Bonds are not transferable to U.S. persons (as defined in the United States Securities Act 1933 (as

amended)) or to persons resident in India or to Ineligible Investors (being any overseas corporate body

not eligible to invest in India through the portfolio route or any entity prohibited from buying, selling or

dealing in securities by the Securities and Exchange Board of India) and the Registrar may refuse to

register any such person as the Bondholder but the Registrar is under no obligation to enquire as to the

residency or tax status of a holder or potential holder and shall not be liable for any failure to do so.

1.7 Every instrument of transfer must be signed by the transferor and, where jointly held, by all joint holders

(or where the transferor is a corporation given under its common seal or signed under a resolution by an

authorised signatory) and the transferor shall be deemed to remain the owner of the Bond to be

transferred until the name of the transferee is entered in the Register in respect of that Bond.

1.8 Every instrument of transfer must be deposited at the specified office of the Registrar, accompanied by

the Certificate for the Bond to be transferred and, if the instrument is executed by some other person on

his behalf, the authority of that person to do so.

1.9 All instruments of transfer which shall be registered will be retained by the Registrar and all records of

transfer shall be maintained by the Registrar.

Delivery of New Certificates

41

1.10 Each new Certificate to be issued upon transfer of the Bonds will, within five (5) Business Days of

receipt by the relevant Transfer Agent of the duly completed form of transfer to be made available

for collection at the specified office of the Transfer Agent or, if so required in the form of transfer,

be mailed by uninsured mail at the cost of the Company and the risk of the holder entitled to the

Bond to the address specified in the form of transfer. For the purpose of these Conditions,

“Business Day” shall mean a day (other than Saturday or Sunday) on which commercial banks are

open for general banking business in New York City, Mumbai, London, Luxembourg, Hyderabad,

the city in which the specified office of each relevant Agent is located and in the case of surrender

of Certificates, the place where such Certificates are surrendered. Where some, but not all the

Bonds, in respect of which a Certificate is issued are to be transferred, converted or repurchased,

a new Certificate in respect of the Bonds not so transferred, converted or repurchased, will within

five (5) Business Days of deposit or surrender of the original Certificate with or to the relevant

Transfer Agent, be mailed by uninsured mail at the cost of the Company and the risk of the

Bondholder not so transferred, converted or repurchased to the address of such holder appearing

in the Register.

Formalities free of charge

1.11 Registration and transfer of the Bonds and issuance of new Certificates will be effected without

charge by or on behalf of the Company or any of the Agents, subject to payment (or the giving of

such indemnity as the Company or any Agent may require) in respect of any tax or other

governmental charges which may be imposed in relation to such transfer.

No transfer periods

1.12 No Bondholder may require the transfer of a Bond to be registered:

1.12.1 during the period of fifteen (15) days ending on (and including) the due date for any

payment of principal on such Bond;

1.12.2 during period of seven (7) days ending on (and including) the dates for redemption

pursuant to Condition 11;

1.12.3 after a Bondholder Purchase Notice as defined in Condition 10.8 in respect of such

Bond has been delivered; or

1.12.4 after the Certificate in respect of such Bond has been deposited for conversion

pursuant to Condition 4.

1.13 The executors or administrators of a deceased Bondholder (not being one of several joint

Bondholders) and, in the case of the death of one or more of several joint holders, the survivor or

survivors of such joint Bondholders, shall be the only persons recognised by the Company as

having any title to such Bond.

1.14 Any person becoming entitled to a Bond in consequence of the death or bankruptcy of the holder

of such Bonds may, on producing such evidence that he sustains the character in respect of which

he proposes to act under this clause or of his title as the Company shall think sufficient, be

registered himself as the holder of such Bond, or subject to the preceding paragraphs, as to

transfer, may transfer such Bonds.

1.15 All transfer of the Bonds and entries in the Register will be made subject to the detailed regulations

concerning transfer of the Bonds set forth in the Agency Agreement. The regulations may be

changed by the Company, with prior written approval of the Trustee and the Registrar. A copy of

the current regulations will be mailed (at the Company's expense) by the Registrar to any

42

Bondholder who asks for one.

2. Status 2.1 The Bonds constitute direct, unsecured unsubordinated and unconditional obligations of the

Company and (subject as aforesaid) rank and will rank pari passu, without any preference among

themselves, with all other outstanding direct, unsecured unsubordinated and unconditional

obligations of the Company, present and future, subject to mandatory provisions of law relating to

creditors’ rights generally.

Interest

2.2 The Bonds do not bear interest. Provided that (subject to Condition 11.7) if the Company fails to

pay any sum in respect of the Bonds when the same becomes due and payable under these

Conditions, interest shall accrue (both before and after judgement) at the rate of LIBOR + 250

basis points from the due date up to but excluding the date on which payment in full of all sums

due in respect of such Bonds are made in accordance with the terms of the Trust Deed.

Whenever it is necessary to compute an amount of interest, interest shall be calculated on the

basis of a 360-day year consisting of 12 months of 30 days each, and in the case of an incomplete

month, the actual number of days elapsed. The Company shall be responsible for calculating such

interest and making such interest payments to the Bondholder.

Neither the Trustee nor the Agents shall be responsible or liable for determining any such interest

amounts or for the payment or non payment of the same by the Company. All payments of interest

pursuant to this Condition 2.2 shall be made directly by the Company to the Bondholders.

3. Negative Pledge

Restriction

3.1 So long as any Bond remains outstanding (as defined in the Trust Deed):

3.1.1 the Company will not, and will procure that none of its Principal Subsidiaries will,

create or permit to subsist or have outstanding any mortgage, charge, pledge, lien

(other than a lien arising by operation of law) or other form of encumbrance or

security interest (Security) upon, or with respect to the whole or any part of its

undertaking, assets business, property, uncalled capital or revenues (including any

right to receive revenues) (Assets) present or future wherever situated to secure

any Relevant Debt, or any guarantee of or indemnity in respect of any Relevant

Debt;

3.1.2 the Company will not, and will procure that no other person, creates or permits to

subsist any Security upon the whole or any part of the Assets present or future of

that other person to secure (x) any of the Company’s or any Principal Subsidiary’s

Relevant Debt, or any guarantee of or indemnity in respect of any of the Company’s

or any Principal Subsidiary’s Relevant Debt, or (y) where the person in question is a

Principal Subsidiary of the Company, any of the Relevant Debt of any person other

than that Principal Subsidiary, or any guarantee of or indemnity in respect of any

such Relevant Debt; and

3.1.3 the Company will procure that no other person gives any guarantee of, or indemnity

in respect of, any of the Company’s or any Principal Subsidiary’s Relevant Debt.

3.2 Unless, at the same time or prior thereto, the Company’s obligations under the Bonds and the

43

Trust Deed:

3.2.1 are secured equally and rateably therewith or benefit from a guarantee or indemnity

in substantially identical terms thereto, as the case may be, in each case to the

satisfaction of the Trustee; or

3.2.2 have the benefit of such other security, guarantee, indemnity or other arrangement

not materially less beneficial to the Bondholders as shall be approved by an

Extraordinary Resolution (as defined in the Trust Deed) of the Bondholders.

3.3 Principal Subsidiaries means any subsidiary of the Company and either:

3.3.1 the revenues of which, as shown by the accounts (consolidated in the case of any

entity which itself has subsidiaries) of such entity upon which the latest audited

consolidated accounts of the Company have been based, are at least 25 per cent. of

the revenues of the Company on a consolidated basis;

3.3.2 the net tangible assets of which, as shown by the aforementioned accounts, are at

least 25 per cent. of the net tangible assets, as applicable, of the Company on a

consolidated basis; or

3.3.3 to which is transferred all or substantially all the assets and undertaking of a

subsidiary which immediately prior to such transfer is a Principal Subsidiary.

Relevant Debt

3.4 For the purposes of this Condition 3, Relevant Debt means any present or future indebtedness of

the Company or a Principal Subsidiary, as the case may be, in the form of, or represented by,

bonds, notes, debentures, or other securities which are for the time being quoted, or are capable

of being quoted, listed or ordinarily dealt in or traded on any stock exchange, over-the-counter or

other securities market, having an original maturity of more than one year from its date of issue

and denominated, payable or optionally payable in a currency other than Rupees or which are

denominated in Rupees, 25 per cent. of the aggregate principal amount of which is initially

distributed outside of India by or with the authority of the Company.

4. Conversion

Conversion Period

4.1 The holder of each Bond that has not been redeemed shall have the right (the Conversion Right)

to convert (the Conversion) such Bond into registered equity shares in the capital of the Company

which at the date hereof is Rs.10 per Share (the Shares), credited, as fully paid, at any time

(subject to any applicable fiscal or other laws or regulations and as hereinafter provided) from (and

including) 9 January 2008, the date which is three (3) Business Days after the Issue Date to the

close of business (at the place where the relevant Certificate is deposited for Conversion of that

Bond) on 23 January 2013 (or, if such day shall not be a Business Day, on the previous Business

Day) (Conversion Period). If such Bond has been called for redemption by the Company prior to

4 February 2013 (Maturity Date), the Conversion Period for that Bond ends at the close of

business (at the place where the Certificate is deposited for conversion of that Bond) on the

seventh Business Day (or if such day is not a Business Day, the next preceding day which is a

Business Day) prior to the date fixed for redemption. Each Bond must be converted at the

Conversion Price (as herein defined) during the Conversion Period. On the Maturity Date, the

Bonds which have not been converted by the Bondholders or otherwise redeemed and cancelled

will be redeemed by the Company.

44

4.2 Conversion Rights may not be exercised in relation to any Bond during the period (Closed Period)

commencing on:

4.2.1 the date falling twenty (20) days prior to the date of the Company’s annual general

shareholders’ meeting and ending on the date of that meeting

4.2.2 the date falling (twenty) 20 days prior to an extraordinary shareholders’ meeting of

the Company and ending on the date of that meeting;

4.2.3 the date that the Company notifies the BSE of the record date for determination of

shareholders entitled to receipt of dividends, subscription of shares due to capital

increase or other benefits, and ending on the record date for the distribution or

allocation of the relevant dividends, rights and benefits; or

4.2.4 on such date and for such period as determined by Indian law applicable from time

to time that the Company is required to close its stock transfer books.

The Company will give notice of such Closed Period in accordance with Condition 17.7 to the Bondholders, the

Trustee and the Principal Paying and Conversion Agent as soon as practicable and in any event at the beginning

of each such period.

4.3 A Conversion Right may only be exercised in respect of a minimum nominal amount of Bonds of

US $100,000 and in integral multiples of U.S.$100,000 of Bonds.

4.4 The number of Shares to be issued on exercise of a Conversion Right shall be determined by

dividing the principal amount of the relevant Bonds as converted into Indian Rupees (as

determined by reference to Conditions 4.6 and 4.7) by the Conversion Price (as defined below) in

effect on the Conversion Date. Fractions of Shares will not be issued on conversion and no cash

adjustment will be made. However, if the Conversion Right in respect of more than one Bond is

exercised at any one time such that Shares to be issued on conversion are to be registered in the

same name, the number of such Shares to be issued in respect thereof shall be calculated on the

basis of the aggregate principal amount of the Bonds being so converted. Shares to be issued on

conversion will be deemed to be registered as of the relevant Conversion Date in the name of the

Bondholder completing the Conversion Notice or his nominee as specified by the Bondholder in

such Conversion Notice.

4.5 Shares means:

4.5.1 shares of the class of share capital of the Company which, at the date of the Trust

Deed, are designated as equity shares of the Company, together with shares of any

class or classes resulting from any sub-division, consolidation or re-classification of

those shares, which as between themselves have no preference in respect of

dividends or of amounts payable in the event of any voluntary or involuntary

liquidation or winding-up of the Company; and

4.5.2 fully-paid shares of any class or classes of the share capital of the Company

authorised after the date of the Trust Deed which have no preference in respect of

dividends or of amounts payable in the event of any voluntary or involuntary

liquidation or winding-up of the Company; provided that, subject to the provisions of

Condition 4.2, shares to be issued on conversion of the Bonds means only Shares

as defined in this Condition 4.5.

Conversion Price

4.6 The initial price at which the Shares will be issued upon conversion (the Conversion Price) will be

Rs. 290 and is subject to adjustments in the manner provided in these Conditions.

45

4.7 For the purpose of this Condition 4, the exchange rate of U.S. Dollars to Rupees will be Rs. 39.57

to one United States Dollar, being the Reserve Bank of India’s (the RBI) U.S. Dollar to Rupee

exchange rate on 20 December 2007.

Procedure for Conversion

4.8 A Conversion Right may be exercised by a Bondholder, at its own expense, by depositing the

relevant Certificate to the specified office of any of the Paying and Conversion Agents between

9:00 a.m. and 3:00 p.m. (local time) on any Business Day in such place during the Conversion

Period, accompanied by a duly completed and signed notice of conversion (the Conversion Notice) in duplicate and in the form (for the time being current) obtainable from the specified office

of any of the Paying and Conversion Agents, together with the Certificate in respect of the Bond(s)

to be converted, certification by the Bondholder, in the form obtainable from any Paying and

Conversion Agent, that it is not a U.S. person or located in the United States (within the meaning

of Regulation S of the United States Securities Act 1933) and any certificates and other documents

as may be required under the laws of the Republic of India or the jurisdiction in which the specified

office of such Paying and Conversion Agent shall be located. Any Bondholder who deposits a

Conversion Notice during a Closed Period will not be permitted to convert the Bonds into Shares

(as specified in the Conversion Notice) until after 9.00 a.m. on the next Business Day after the end

of that Closed Period, which (if all other conditions to conversion have been fulfilled) will be the

Conversion Date for such Bonds.

4.9 A Conversion Notice deposited outside the hours specified above or on a day which is not a

Business Day at the place of the specified office of the relevant Paying and Conversion Agent shall

for all purposes be deemed to have been deposited with that Paying and Conversion Agent

between 9:00 a.m. and 3:00 p.m. local time on the next Business Day following such Business

Day.

4.10 The conversion date in respect of a Bond (the Conversion Date) shall be the Business Day

immediately following the date of such delivery referred to in Condition 4.9. A Conversion Notice

once delivered shall be irrevocable.

4.11 A Bondholder delivering a Bond for conversion must pay any taxes and capital, stamp, issue and

registration duties arising on conversion (other than any taxes or capital duties or stamp duties

payable by the Company in respect of the allotment and issue of Shares on conversion) and such

Bondholder shall pay all, if any, taxes arising by reference to any disposal of a Bond in connection

with such conversion to the relevant authorities. The Bondholder shall provide the relevant Paying

and Conversion Agent with confirmation (as set out in the Conversion Notice) of such payment of

taxes and duties to the relevant authorities as specified in this Condition 4.11.

4.12 None of the Agents nor the Trustee shall be under any obligation to determine whether a

Bondholder or the Company is liable to make any payment (and the amount of any such payment)

under Condition 4.11 or be liable for failure by the Company or any such Bondholder, as the case

may be, to pay any such amounts. None of the Agents or Trustee shall be concerned with, nor

shall any of them be obliged or required to enquire into the sufficiency of any amount paid for this

purpose.

4.13 As soon as practicable, on or after the relevant Conversion Date, and in any event not later than

thirty (30) Business Days after the relevant Conversion Date, the Shares deliverable on conversion

of the relevant Bonds shall be allotted by the Company to the Bondholder (or its nominee) and the

Company shall deliver to the Bondholder a letter certifying such allotment. With effect from the

46

relevant Conversion Date the Company shall treat the Bondholder (or its nominee) as the holder of

record of the number of Shares, which the exercising Bondholder is entitled upon conversion of the

relevant Bonds. Immediately after each Conversion Date the Company will ensure that all

necessary steps are taken for the due issue of the Shares issuable on conversion of the relevant

Bonds. As soon as possible after and in any event, not later than 45 Business Days after the

Conversion Date, the Company will register the Bondholder or its nominee as holder(s) of the

relevant number of Shares to be issued on conversion in the Company’s register of members with

effect from the Conversion Date.

Entitlements

4.14 The Shares issued upon conversion of the Bonds will in all respect, subject to listing, rank pari

passu with the Shares in issue on the relevant Conversion Date (except for any right excluded by

mandatory provisions of applicable law) and such Shares shall be entitled to all rights the record

date for which falls on or after such Conversion Date to the same extent as all other fully paid-up

shares of the Company in issue as if such Shares had been in issue throughout the period to

which such rights relate. A holder of Shares issued on conversion of the Bonds shall not be

entitled to any rights the record date for which precedes the relevant Conversion Date.

5. Adjustment to Conversion Price

The Conversion Price will be subject to adjustment as follows:

Free distribution, bonus issue, division, consolidation and reclassification of Shares:

5.1

Adjustment:

5.1.1 If the Company shall:

1. make a free distribution of Shares;

2. make a bonus issue of its Shares;

3. divide its outstanding Shares;

4. consolidate its outstanding Shares into a smaller number of Shares; or

5. re-classify any of its Shares into other securities of the Company,

then the Conversion Price shall be appropriately adjusted so that the holder of any Bond, the

Conversion Date in respect of which occurs after the coming into effect of the adjustment described

in this Condition 5.1 shall be entitled to receive the number of Shares and/or other securities of the

Company which he would have held or have been entitled to receive after the happening of any of

the events described above had such Bond been converted immediately prior to the happening of

such event (or, if the Company has fixed a prior record date for the determination of shareholders

entitled to receive any such free distribution or bonus issue of Shares or other securities issued upon

any such division, consolidation or reclassification, immediately prior to such record date), but

without prejudice to the effect of any other adjustment to the Conversion Price made with effect from

the date of the happening of such event (or such record date) or any time thereafter.

47

Effective date of adjustment

5.1.2 An adjustment made pursuant to Condition 5.1.1 above shall become effective

immediately on the relevant event referred to above becoming effective or, if a record

date is fixed therefore, immediately after such record date; provided that in the case of a

free distribution or bonus issue of Shares which must, under applicable laws of India, be

submitted for approval to a general meeting of shareholders or be approved by a meeting

of the board of Directors before being legally paid or made, and which is so approved

after the record date fixed for the determination of shareholders entitled to receive such

distribution or issue, such adjustment shall, immediately upon such approval being given

by such meeting, become effective retroactively to immediately after such record date.

Declaration of dividend in Shares

Adjustment

5.2 If the Company shall issue Shares as a dividend in Shares or make a distribution of Shares which

is treated as a capitalisation issue for accounting purposes under International Financial Reporting

Standards (including but not limited to capitalisation of capital reserves and employee stock

bonus), then the Conversion Price in effect when such dividend and/or distribution is declared (or,

if the Company has fixed a prior record date for the determination of shareholders entitled to

receive such dividend and/or distribution, on such record date) shall be adjusted in accordance

with the following formula:

NCP = OCP x [N/(N + n)]

where:

NCP = the Conversion Price after such adjustment.

OCP = the Conversion Price before such adjustment.

N = the number of Shares outstanding, at the time of issuance of such dividend

and/or distribution (or at the close of business in Mumbai on such record date as the case may

be).

n = the number of Shares to be distributed to the shareholders as a dividend and/or

distribution.

Concurrent adjustment events

5.3 If the Company shall declare a dividend in, or make a free distribution or bonus issue of, Shares

which dividend, issue or distribution is to be paid or made to shareholders as of a record date

which is also:

5.3.1 the record date for the issue of any rights or warrants which requires an adjustment

of the Conversion Price pursuant to Conditions 5.5, 5.6 or 5.7;

5.3.2 the day immediately before the date of issue of any securities convertible into or

exchangeable for Shares which requires an adjustment of the Conversion Price

pursuant to Condition 5.9;

5.3.3 the day immediately before the date of issue of any Shares which requires an

adjustment of the Conversion Price pursuant to Condition 5.10 or, if applicable, the

record date for determination of stock dividend entitlement as referred to in

Condition 5.10;

48

5.3.4 the day immediately before the date of issue of any rights, options or warrants which

requires an adjustment of the Conversion Price pursuant to Condition 5.11; or

5.3.5 determined by the Company and notified by the Company to the Trustee in writing to

be the relevant date for an event or circumstance which requires an adjustment to

the Conversion Price pursuant to Condition 5.13;

then (except where such dividend, bonus issue or free distribution gives rise to a retroactive

adjustment of the Conversion Price under Conditions 5.1 and 5.2) no adjustment of the Conversion

Price in respect of such dividend, bonus issue or free distribution shall be made under this

Condition 5.3, but in lieu thereof an adjustment shall be made under Conditions 5.5, 5.6, 5.7, 5.9,

5.10, 5.11 or 5.13 (as the case may require) by including in the denominator of the fraction

described therein the aggregate number of Shares to be issued pursuant to such dividend, bonus

issue or free distribution.

Extraordinary Cash Dividends

5.4

Adjustment

5.4.1 In case the Company shall, by dividend or otherwise, distribute cash excluding any

dividend and distribution that is not an Extraordinary Cash Dividend (as defined

below) to all holders of Shares then, in such case, the Conversion Price (the OCP)

shall be adjusted (with such adjustment to be effective on the record date for the

determination of shareholders entitled to receive such distribution) in accordance

with the following formula:

NCP = OCP x [(M-C)/M]

where:

NCP = the Conversion Price after such adjustment.

OCP = the Conversion Price before such adjustment.

M = the Current Market Price per Share on such record date.

C = the amount of Extraordinary Cash Dividend so distributed (and not excluded as provided for above) applicable to one Share.

If such dividend or distribution is not so paid or made, the Conversion Price shall again be

adjusted to be the Conversion Price which would then be in effect if such dividend or distribution

had not been approved.

For purposes of this Condition 5.4, an Extraordinary Cash Dividend (ECD) occurs if, at the effective date, the total amount of:

(i) any cash dividends paid or declared by the Company on the Shares, prior to deduction of

any withholding tax plus any corporate tax attributable to that dividend; and

(ii) all other cash dividends paid or declared on the Shares in the 365 consecutive day period

prior to the effective date (other than any dividend or portion thereof previously deemed

to be an Extraordinary Cash Dividend) (the previous dividends), except that where the

date of announcement for dividends for two different fiscal years has occurred in such

49

365 day period, such dividends relating to the earlier fiscal year will be disregarded for

the purpose of determining the previous dividend ((a) and (b) together being the total current dividend) equals or exceeds on a per Share basis 2 per cent. of the Average

Closing Price (as defined below) of the Shares during the Relevant Period (as defined

below) provided that any dividend paid or declared by the Company will not constitute an

Extraordinary Cash Dividend if the amount paid or declared by the Company is equal to

an amount not greater than 120 per cent. of the dividends paid or declared by the

Company in the previous fiscal year. For the avoidance of doubt, all amounts are on a per Share basis.

The Company will not declare an Extraordinary Cash Dividend, such that an adjustment

due to such declaration will result in the Conversion Price being reduced to below the

minimum Conversion Price (as defined in Condition 5.19).

If the Company desires to declare an Extraordinary Cash Dividend, which may result in

the Conversion Price being reduced to below the minimum Conversion Price, the

Company will adjust the Conversion Price below the minimum Conversion Price, if

permitted at the time of such adjustment or seek regulatory permissions to adjust the

Conversion Price below the minimum Conversion Price.

If the Company does not receive the regulatory permissions to adjust the Conversion

Price below the minimum Conversion Price, the Company will not, for so long as 10% or

more of the Bonds are outstanding, declare an Extraordinary Cash Dividend which will

result in the Conversion Price being reduced to below the minimum Conversion Price.

If during the term of the Bonds, the Company desires to declare further dividends, which

may be classified as Extraordinary Cash Dividend, the aforesaid Conditions relating to

minimum Conversion Price and regulatory permissions will apply mutatis mutandis.

For the purposes of this Condition, the Conversion Price shall refer to the Conversion

Price at the time of declaration of the Extraordinary Cash Dividend, as adjusted in accordance with Condition 5.

5.4.2 The Average Closing Price is the arithmetic average of the Closing Price per Share for

each Trading Day during the Relevant Period.

5.4.3 The Relevant Period means any financial year of the Company.

Rights Issues to Shareholders and others

5.5 Adjustment

5.5.1 If the Company shall grant, issue or offer to the holders of Shares rights entitling

them to subscribe for or purchase Shares, which expression shall include those

Shares that are required to be offered to persons other than shareholders in connection with such grant, issue or offer:

5.5.1.1 at a consideration per Share receivable by the Company (determined as provided in

Condition 5.16) which is fixed on or prior to the record date for the determination of

shareholders entitled to receive such rights and is less than the Current Market Price per Share at such record date; or

5.5.1.2 at a consideration per Share receivable by the Company (determined as provided in

50

Condition 5.16) which is fixed after the record date mentioned above and is less than

the Current Market Price per Share on the date the Company fixes the said

consideration,

then the Conversion Price in effect (in a case within clause 5.5.1.1) on the record date or (in a

case within clause 5.5.1.2) on the date the Company fixes the said consideration shall be adjusted in accordance with the following formula:

NCP = OCP x [(N + v)/(N + n)]

where:

NCP = the Conversion Price after such adjustment.

OCP = the Conversion Price before such adjustment.

N = the number of Shares outstanding (having regard to Condition 5.17) at

the close of business in India (in a case within clause 5.5.1.1) on such record date or

(in a case within clause 5.5.1.2) on the date the Company fixes the said consideration.

n = the number of Shares initially to be issued upon exercise of such rights

at the said consideration being (aa) the number of Shares which underwriters have

agreed to underwrite as referred to below or, as the case may be, (bb) the number of

Shares for which applications are received from shareholders as referred to below

save to the extent already adjusted for under (aa).

v = the number of Shares which the aggregate consideration receivable by

the Company (determined as provided in Condition 5.16) would purchase at such

Current Market Price per Share specified in Condition 5.5.1.1 or, as the case may

be, 5.5.1.2.

Effective date of adjustment

5.5.2 Subject as provided below, such adjustment shall become effective immediately after

the latest date for the submission of applications for such Shares by shareholders

entitled to the same pursuant to such rights or (if later) immediately after the Company

fixes the said consideration but retroactively to immediately after the record date

mentioned above.

Rights not taken up by Shareholders

5.5.3 If, in connection with a grant, issue or offer to the holders of Shares of rights entitling

them to subscribe for or purchase Shares, any Shares which are not subscribed for

or purchased by the persons entitled thereto are underwritten by other persons prior

to the latest date for the submission of applications for such Shares, an adjustment

shall be made to the Conversion Price in accordance with the above provisions in

Condition 5.5 which shall become effective immediately after the date the

underwriters agree to underwrite the same or (if later) immediately after the

Company fixes the said consideration but retroactively to immediately after the

record date mentioned above.

5.5.4 If, in connection with a grant, issue or offer to the holders of Shares of rights entitling

them to subscribe for or purchase Shares, any such Shares which are not

subscribed for or purchased by the underwriters who have agreed to underwrite as

51

referred to above or by the shareholders entitled thereto (or persons to whom

shareholders have transferred such rights) who have submitted applications for such

Shares as referred to above are offered to and/or subscribed by others, no further

adjustment shall be made to the Conversion Price by reason of such offer and/ or

subscription.

Warrants issued to Shareholders

5.6 Adjustment

5.6.1 If the Company shall grant, issue or offer to the holders of Shares warrants entitling

them to subscribe for or purchase Shares:

5.6.1.1 at a consideration per Share receivable by the Company (determined

as provided in Condition 5.16) which is fixed on or prior to the record date for the

determination of shareholders entitled to receive such warrants and is less than

the Current Market Price per Share at such record date; or

5.6.1.2 at a consideration per Share receivable by the Company (determined

as provided in Condition 5.16) which is fixed after the record date mentioned

above and is less than the Current Market Price per Share on the date the

Company fixes the said consideration,

then the Conversion Price in effect (in a case within 5.6.1.1 above) on the record

date or (in a case within 5.6.1.2) on the date the Company fixes the said

consideration shall be adjusted in accordance with the following formula:

NCP = OCP x [(N + v)/N + n)]

where:

NCP and OCP have the meanings ascribed thereto in Condition 5.2.

N = the number of Shares outstanding (having regard to Condition 5.17) at

the close of business in India (in a case within 5.6.1.1 above) on such

record date or (in a case within 5.6.1.2 above) on the date the Company

fixes the said consideration.

n = the number of Shares to be issued upon exercise of such warrants at

the said consideration which, where no applications by shareholders

entitled to such warrants are required, shall be based on the number of

warrants issued. Where applications by shareholders entitled to such

warrants are required, the number of such Shares shall be calculated based

upon (aa) the number of warrants which underwriters have agreed to

underwrite as referred to below or, as the case may be, (bb) the number of

warrants for which applications are received from shareholders as referred

to below save to the extent already adjusted for under (aa).

v = the number of Shares which the aggregate consideration

receivable by the Company (determined as provided in Condition 5.16)

would purchase at such Current Market Price per Share specified in 5.6.1.1

or, as the case may be, 5.6.1.2 above.

Effective date of adjustment

5.6.2 Subject as provided below, such adjustment shall become effective:

5.6.2.1 where no applications for such warrants are required from

shareholders entitled to the same, upon their issue; and

52

5.6.2.2 where applications by shareholders entitled to the same are required

as aforesaid, immediately after the latest date for the submission of such

applications or (if later) immediately after the Company fixes the said

consideration but in all cases retroactively to immediately after the record date

mentioned above.

Warrants not subscribed for by Shareholders

5.6.3 If, in connection with a grant, issue or offer to the holders of Shares of warrants entitling

them to subscribe for or purchase Shares in the circumstances described in this Condition

5.6, any warrants which are not subscribed for or purchased by the shareholders entitled

thereto are underwritten by others prior to the latest date for the submission of

applications for such warrants, an adjustment shall be made to the Conversion Price in

accordance with the above provisions which shall become effective immediately after the

date the underwriters agree to underwrite the same or (if later) immediately after the

Company fixes the said consideration but retroactively to immediately after the record

date mentioned above.

Warrants not subscribed for by underwriters

5.6.4 If, in connection with a grant, issue or offer to the holders of Shares of warrants entitling

them to subscribe for or purchase Shares, any warrants which are not subscribed for or

purchased by the underwriters who have agreed to underwrite as referred to above or by

the shareholders entitled thereto (or persons to whom shareholders have transferred the

right to purchase such warrants) who have submitted applications for such warrants as

referred to above are offered to and/or subscribed by others, no further adjustment shall

be made to the Conversion Price by reason of such offer and/or subscription.

Issues of rights or warrants for equity related securities to Shareholders

5.7

Adjustment

5.7.1 If the Company shall grant, issue or offer to the holders of Shares rights or warrants

entitling them to subscribe for or purchase any securities convertible into or

exchangeable for Shares:

5.7.1.1 at a consideration per Share receivable by the Company (determined

as provided in Condition 5.16) which is fixed on or prior to the record date for the

determination of shareholders entitled to receive such rights or warrants and is

less than the Current Market Price per Share at such record date; or

5.7.1.2 at a consideration per Share receivable by the Company (determined

as aforesaid) which is fixed after the Record Rate and is less than the Current

Market Price per Share on the date the Company fixes the said consideration,

then the Conversion Price in effect (in a case within Condition 5.7.1.1 above) on the record

date or (in a case within 5.7.1.2 above) on the date the Company fixes the said consideration

shall be adjusted in accordance with the following formula:

NCP = OCP x [(N + v)/(N + n)]

where:

NCP and OCP have the meanings ascribed thereto in Condition 5.2.

53

N = the number of Shares outstanding (having regard to Condition

5.17) at the close of business in India (in a case within 5.7.1.1 above) on such

record date or (in a case within 5.7.1.2 above) on the date the Company fixes the

said consideration.

n = the number of Shares initially to be issued upon exercise of

such rights or warrants and conversion or exchange of such convertible or

exchangeable securities at the said consideration being, in the case of rights:

1. the number of Shares initially to be issued upon conversion or exchange of

the number of such convertible or exchangeable securities which the underwriters

have agreed to underwrite as referred to below or, as the case may be,

2. the number of Shares initially to be issued upon conversion or exchange of

the number of such convertible or exchangeable securities for which applications are

received from shareholders as referred to below save to the extent already adjusted

for under 1 and which, in the case of warrants, where no applications by

shareholders entitled to such warrants are required, shall be based on the number

of warrants issued.

Where applications by shareholders entitled to such warrants are required, the

number of such Shares shall be calculated based upon:

3. the number of warrants which underwriters have agreed to underwrite as

referred to below or, as the case may be

4. the number of warrants for which applications are received from shareholders

as referred to below save to the extent already adjusted for under 1.

v = the number of Shares which the aggregate consideration

receivable by the Company (determined as provided in Condition 5.16) would

purchase at such Current Market Price per Share specified in 5.7.1.1 or, as the case

may be, 5.7.1.2.

Effective date of adjustment

5.7.2 Subject as provided below, such adjustment shall become effective:

1. where no applications for such warrants are required from shareholders

entitled to the same, upon their issue; and

2. where applications by shareholders entitled to the warrants are required as

aforesaid and in the case of convertible or exchangeable securities by shareholders

entitled to the same pursuant to such rights, immediately after the latest date for the

submission of such applications or (if later) immediately after the Company fixes the

said consideration;

but in all cases retroactively to immediately after the record date mentioned above.

Rights or warrants not taken up by Shareholders

5.7.3 If, in connection with a grant, issue or offer to the holders of Shares of rights or

warrants entitling them to subscribe for or purchase securities convertible into or

exchangeable for Shares in the circumstances described in this Condition 5.7, any

convertible or exchangeable securities or warrants which are not subscribed for or

purchased by the shareholders entitled thereto are underwritten by others prior to

the latest date for the submission of applications for such convertible or

exchangeable securities or warrants, an adjustment shall be made to the

54

Conversion Price in accordance with the above provisions which shall become

effective immediately after the date the underwriters agree to underwrite the same or

(if later) immediately after the Company fixes the said consideration but retroactively

to immediately after the record date mentioned above.

Rights or warrants not taken up by underwriters

5.7.4 If, in connection with a grant, issue or offer to the holders of Shares of rights or warrants

entitling them to subscribe for or purchase securities convertible into or exchangeable for

Shares, any convertible or exchangeable securities or warrants which are not subscribed

for or purchased by the underwriters who have agreed to underwrite as referred to above

or by the shareholders entitled thereto (or persons to whom shareholders have

transferred such rights or the right to purchase such warrants) who have submitted

applications for such convertible or exchangeable securities or warrants as referred to

above are offered to and/or subscribed by others, no further adjustment shall be made to

the Conversion Price by reason of such offer and/ or subscription.

Other distributions to Shareholders

5.8

Adjustment

5.8.1 If the Company shall distribute to the holders of Shares evidences of its

indebtedness, or shares of capital stock of the Company (other than Shares), assets

(excluding any dividends in cash) or rights or warrants to subscribe for or purchase

Shares or securities (excluding those rights and warrants referred to in Conditions

5.5, 5.6 and 5.7 above), then the Conversion Price in effect on the record date for

the determination of shareholders entitled to receive such distribution shall be

adjusted in accordance with the following formula:

NCP = OCP x [(CMP – fmv)/(CMP)]

where:

NCP and OCP have the meanings ascribed thereto in Condition 5.2.

CMP = the Current Market Price per Share on the record date for the

determination of shareholders entitled to receive such distribution.

fmv = the fair market value (as determined by the Company and

notified to the Trustee or, if pursuant to applicable law of India such determination is

to be made by application to a court of competent jurisdiction, as determined by

such court or by an appraiser appointed by such court) of the portion of the

evidences of indebtedness, equity share capital shares of capital stock, assets

(including cash), rights or warrants so distributed applicable to one Share less any

consideration payable for the same by the relevant Shareholder.

5.8.2 In making a determination of the fair market value of any such evidences of

indebtedness, shares of capital stock, assets (other than cash), rights or warrants,

the Company shall consult (at its own cost and expense) a leading investment bank

of international repute (acting as an expert) selected by the Company (an

Independent Financial Advisor) and shall take fully into account the advice

received from such Independent Financial Advisor.

55

Effective date of adjustment

5.8.3 Such adjustment shall become effective immediately after the record date for the

determination of shareholders entitled to receive such distribution, provided that:

1. in the case of such a distribution which must, under applicable law of India,

be submitted for approval to a general meeting of shareholders or be approved by a

meeting of the board of Directors before such distribution may legally be made and

is so approved after the record date fixed for the determination of shareholders

entitled to receive such distribution, such adjustment shall, immediately upon such

approval being given by such meeting, become effective retroactively to immediately

after such record date; and

2. if the fair market value of the evidences of indebtedness, shares of capital

stock, assets, rights or warrants so distributed cannot be determined until after the

record date fixed for the determination of shareholders entitled to receive such

distribution, such adjustment shall, immediately upon such fair market value being

determined, become effective retroactively to immediately after such record date.

Issue of convertible or exchangeable securities other than to Shareholders or on

exercise of warrants

5.9

Adjustment

5.9.1 If the Company shall issue any securities convertible into or exchangeable for Shares

(other than the Bonds, or in any of the circumstances described in Condition 5.7 and

Condition 5.11) or grant such rights in respect of any existing securities and the

consideration per Share receivable by the Company (determined as provided in Condition

5.16) shall be less than the Current Market Price per Share on the date in India on which

the Company fixes the said consideration (or, if the issue of such securities is subject to

approval by a general meeting of shareholders, on the date on which the board of

Directors fixes the consideration to be recommended at such meeting), then the

Conversion Price in effect immediately prior to the date of issue of such convertible or

exchangeable securities shall be adjusted in accordance with the following formula:

NCP = OCP x [(N + v)/(N + n)]

where:

NCP and OCP have the meanings ascribed thereto in Condition 5.2.

N = the number of Shares outstanding (having regard to Condition

5.17) at the close of business in India on the day immediately prior to the date of

such issue.

n = the number of Shares to be issued upon conversion or

exchange of such convertible or exchangeable securities at the initial conversion or

exchange price or rate.

v = the number of Shares which the aggregate consideration

receivable by the Company (determined as provided in Condition 5.16) would

purchase at such Current Market Price per Share.

Effective date of adjustment

5.9.2 Such adjustment shall become effective as of the calendar day in India corresponding to

the calendar day at the place of issue on which such convertible or exchangeable

securities are issued.

56

Other issues of Shares

5.10

Adjustment

5.10.1 If the Company shall issue any Shares (other than Shares issued upon conversion or

exchange of any convertible or exchangeable securities (including the Bonds) issued by

the Company or upon exercise of any rights or warrants granted, offered or issued by the

Company or in any of the circumstances described in Conditions 5.1 and 5.2 or issued to

shareholders of any company which merges with the Company in proportion to their

shareholdings in such company immediately prior to such merger, upon such merger but

including Shares issued under any employee dividend or profit-sharing arrangements) for

a consideration per Share receivable by the Company (determined as provided in

Condition 5.16) less than the Current Market Price per Share on the date in India on

which the Company fixes the said consideration (or, if the issue of such Shares is subject

to approval by a general meeting of shareholders, on the date on which the board of

Directors fixes the consideration to be recommended at such meeting), then the

Conversion Price in effect immediately prior to the issue of such additional Shares shall

be adjusted in accordance with the following formula:

NCP = OCP x [(N + v)/(N + n)]

where:

NCP and OCP have the meanings ascribed thereto in Condition 5.2.

N = the number of Shares outstanding (having regard to Condition

5.17) at the close of business in India on the day immediately prior to the date of

issue of such additional Shares.

n = the number of additional Shares issued as aforesaid.

v = the number of Shares which the aggregate consideration

receivable by the Company (determined as provided in Condition 5.16) would

purchase at such Current Market Price per Share.

Effective date of adjustment

5.10.2 Such adjustment shall become effective as of the calendar day in India of the issue

of such additional Shares.

Issue of equity related Securities

5.11

Adjustment

5.11.1 If the Company shall grant, issue or offer options, warrants or rights (excluding those

rights and warrants referred to in Conditions 5.5, 5.6, 5.7 and 5.8) to subscribe for or

purchase Shares or securities convertible into or exchangeable for Shares and the

consideration per Share receivable by the Company (determined as provided in Condition

5.16) shall be less than the Current Market Price per Share on the date in India on which

the Company fixes the said consideration (or, if the offer, grant or issue of such rights,

options or warrants is subject to approval by a general meeting of shareholders, on the

date on which the board of Directors fixes the consideration to be recommended at such

meeting), then the Conversion Price in effect immediately prior to the date of the offer,

grant or issue of such rights, options or warrants shall be adjusted in accordance with the

following formula:

57

NCP = OCP x [(N + v)/(N + n)]

where:

NCP and OCP have the meanings ascribed thereto in Condition 5.2.

N = the number of Shares outstanding (having regard to Condition

5.16) at the close of business in India on the day immediately prior to the date of

such issue.

n = the number of Shares to be issued on exercise of such rights

or warrants and (if applicable) conversion or exchange of such convertible or

exchangeable securities at the said consideration.

v = the number of Shares which the aggregate consideration

receivable by the Company (determined as provided in Condition 5.16) would

purchase at such Current Market Price per Share.

Effective date of adjustment

5.11.2 Such adjustment shall become effective as of the calendar day in India corresponding to

the calendar day at the place of issue on which such rights or warrants are issued.

Tender or Exchange Offer

5.12

5.12.1 In case a tender or exchange offer made by the Company or any subsidiary of the

Company for all or any portion of the Shares shall expire and such tender or

exchange offer shall involve the payment by the Company or such subsidiary of

consideration per Share having a Fair Market Value (as reasonably determined by

the board of Directors, whose determination shall, if supported by the written advice

of the Auditors and passed by a resolution of the board of Directors, be conclusive)

at the last time (the Expiration Date) tenders or exchanges could have been made

pursuant to such tender or exchange offer (as it may have been amended) that

exceeds the Current Market Price per Share, as of the Expiration Date, the

Conversion Price shall be adjusted in accordance with the following formula:

NCP = OCP x [(N x M) / [a+ (N–n) x M])]

where:

NCP and OCP have the meanings ascribed thereto in subsection 5.2 above.

N = the number of Shares outstanding (including any tendered or

exchanged Shares) on the Expiration Date.

M = Current Market Price per Share as of the Expiration Date.

a = the Fair Market Value of the aggregate consideration payable

to the holders of Shares based on the acceptance (up to a maximum specified in

terms of the tender or exchange offer) of all Shares validly tendered or exchanged

and not withdrawn as of the Expiration Date (the Shares deemed so accepted up to

any such maximum, being referred to as the Purchased Shares).

n = the number of Purchased Shares.

5.12.2 Such adjustment to become retroactively effective immediately prior to the opening

of business on the day following the Expiration Date.

5.12.3 If the Company is obligated to purchase Shares pursuant to any such tender or

exchange offer, but the Company is permanently prevented by applicable law from

58

effecting any such purchase or all such purchases are rescinded, the Conversion

Price shall again be adjusted to be the Conversion Price which would then be in

effect if such tender or exchange offer had not been made.

5.12.4 Fair Market Value means the price that could be negotiated in an arm’s length free

market transaction for cash between a willing buyer and a willing seller neither of

which is under pressure or compulsion to complete the transaction or with respect to

any property on any date the fair market value of that property as determined by the

Independent Financial Advisor.

Analogous events and modifications

5.13 If:

5.13.1 the rights of conversion or exchange, purchase or subscription attaching to any

options, rights or warrants to subscribe for or purchase Shares or any securities

convertible into or exchangeable for, or which carry rights to subscribe for or

purchase shares are modified (other than pursuant to and as provided in the terms

and conditions of such options, rights, warrants or securities); or

5.13.2 any other event or circumstance has occurred which has or would have an effect on the

position of the Bondholders as a class compared with the position of the holders of all the

securities (and options and rights relating thereto) of the Company, taken as a class which is

analogous to any of the events referred to in Conditions 5.1 to 5.12,

then, in any such case, the Company shall promptly notify the Trustee thereof in writing and the Company

shall consult the Independent Financial Advisor as to what adjustment, if any, should be made to the

Conversion Price to preserve the value of the Conversion Right of Bondholders and will make any such

adjustment.

Simultaneous issues of different classes of Shares

5.14 In the event of simultaneous issues of two or more classes of share capital comprising Shares or

rights or warrants in respect of, or securities convertible into or exchangeable for, two or more

classes of share capital comprising Shares, then, for the purposes of this Condition, the formula:

NCP = OCP x [(N + v)/(N + n)]

shall be restated as:

NCP = OCP x [(N + v1 + v2 + v3)/(N + n1 + n2 + n3)]

where v1 and n1 shall have the same meanings as ‘‘v’’ and ‘‘n’’ but by reference to one class of

Shares, v2 and n2 shall have the same meanings as ‘‘v’’ and ‘‘n’’ but by reference to a second

class of Shares, v3 and n3 shall have the same meanings as ‘‘v’’ and ‘‘n’’ but by reference to a

third class of Shares and so on.

Current Market Price per Share

5.15

5.15.1 For the purposes of these Conditions, the Current Market Price per Share on any

date means the average of the daily closing prices (as defined below) of the relevant

Shares for the 30 consecutive Trading Days (as defined below) before such date. If

the Company has more than one class of share capital comprising Shares, then the

relevant Current Market Price for Shares shall be the price for that class of Shares

59

the issue of which (or of rights or warrants in respect of, or securities convertible into

or exchangeable for, that class of Shares) gives rise to the adjustment in question.

5.15.2 If during the said 30 Trading Days or any period thereafter up to but excluding the

date as of which the adjustment of the Conversion Price in question shall be

effected, any event (other than the event which requires the adjustment in question)

shall occur which gives rise to a separate adjustment to the Conversion Price under

the provisions of these Conditions, then the Current Market Price as determined

above shall be adjusted in such manner and to such extent as the Independent

Financial Advisor in good faith shall in its reasonable opinion deem appropriate and

fair to compensate for the effect thereof.

5.15.3 For the purposes of these Conditions:

Closing Price of the Shares for each Trading Day shall be the last reported

transaction price of the Shares on the BSE for such day or, if

no transaction takes place on such day, the average of the

closing bid and offered prices of Shares for such day as

furnished by a leading independent securities firm licensed to

trade on the BSE selected from time to time by the Company

for the purpose; and

Trading Day means a day when the BSE is open for business, but does

not include a day when:

1. no such last transaction price or closing bid and

offered prices is/are reported and

2. (if the Shares are not listed or admitted to trading on

such exchange) no such closing bid and offered

prices are furnished as aforesaid.

5.15.4 If the Shares are no longer listed on the BSE and have been listed on another stock

exchange as required by Condition 10.5, references in the above definitions to the BSE

will be taken as references to that stock exchange.

Consideration receivable by the Company

5.16 For the purposes of any calculation of the consideration receivable by the Company pursuant to

Conditions 5.5, 5.6, 5.7, 5.9, 5.10 and 5.11 above, the following provisions shall be applicable:

5.16.1 in the case of the issue of Shares for cash, the consideration shall be the amount of

such cash, provided that in no such case shall any deduction be made for any

commissions or any expenses paid or incurred by the Company for any underwriting

of the issue or otherwise directly in connection therewith;

5.16.2 in the case of the issue of Shares for a consideration in whole or in part other than

cash, the consideration other than cash shall be deemed to be the fair value thereof

as determined by the Company (and in making such determination the Company

shall consult the Independent Financial Advisor and shall be bound by the advice

received from such Independent Financial Advisor) or, if pursuant to applicable law

of India such determination is to be made by application to a court of competent

jurisdiction, as determined by such court or an appraiser appointed by such court,

irrespective of the accounting treatment thereof;

60

5.16.3 in the case of the issue (whether initially or upon the exercise of rights or warrants)

of securities convertible into or exchangeable for Shares, the aggregate

consideration receivable by the Company shall be deemed to be the consideration

received by the Company for such securities and (if applicable) rights or warrants

plus the additional consideration (if any) to be received by the Company upon (and

assuming) the conversion or exchange of such securities at the initial conversion or

exchange price or rate and (if applicable) the exercise of such rights or warrants at

the initial subscription or purchase price (the consideration in each case to be

determined in the same manner as provided in this Condition 5.16) and the

consideration per Share receivable by the Company shall be such aggregate

consideration divided by the number of Shares to be issued upon (and assuming)

such conversion or exchange at the initial conversion or exchange price or rate and

(if applicable) the exercise of such rights or warrants at the initial subscription or

purchase price;

5.16.4 in the case of the issue of rights or warrants to subscribe for or purchase Shares, the

aggregate consideration receivable by the Company shall be deemed to be the

consideration received by the Company for any such rights or warrants plus the

additional consideration to be received by the Company upon (and assuming) the

exercise of such rights or warrants at the initial subscription or purchase price (the

consideration in each case to be determined in the same manner as provided in this

Condition 5.16) and the consideration per Share receivable by the Company shall be

such aggregate consideration divided by the number of Shares to be issued upon

(and assuming) the exercise of such rights or warrants at the initial subscription or

purchase price;

5.16.5 if any of the consideration referred to in any of the preceding paragraphs of this

Condition 5.16 is receivable in a currency other than Rupees, such consideration

shall (in any case where there is a fixed rate of exchange between Rupees and the

relevant currency for the purposes of the issue of the Shares, the conversion or

exchange of such securities or the exercise of such rights or warrants) be translated

into Rupees for the purposes of this Condition 5.16 at such fixed rate of exchange

and shall (in all other cases) be translated into Rupees at the mean of the exchange

rate quotations (being quotations for the cross rate through U.S. dollars if no direct

rate is quoted) by a leading bank in India for buying and selling spot units of the

relevant currency by telegraphic transfer against Rupees on the date as of which the

said consideration is required to be calculated as aforesaid; and

5.16.6 in the case of the issue of Shares (including, without limitation, to employees under

any employee bonus or profit sharing arrangements) credited as fully paid out of

retained earnings or capitalisation of reserves at their par value, the aggregate

consideration receivable by the Company shall be deemed to be zero (and

accordingly the number of Shares which such aggregate consideration receivable by

the Company could purchase at the relevant Current Market Price per Share shall

also be deemed to be zero).

Cumulative adjustments

5.17 If, at the time of computing an adjustment (the later adjustment) of the Conversion Price pursuant

to any of Conditions 5.5, 5.6, 5.7, 5.9, 5.10 and 5.11 above, the Conversion Price already

incorporates an adjustment made (or taken or to be taken into account pursuant to the proviso to

61

Condition 5.18) to reflect an issue of Shares or of securities convertible into or exchangeable for

Shares or of rights or warrants to subscribe for or purchase Shares or securities, to the extent that

the number of such Shares or securities taken into account for the purposes of calculating such

adjustment exceeds the number of such Shares in issue at the time relevant for ascertaining the

number of outstanding Shares for the purposes of computing the later adjustment, such excess

Shares shall be deemed to be outstanding for the purposes of making such computation.

Minor adjustments

5.18 No adjustment of the Conversion Price shall be required if the adjustment would be less than 1 per

cent. of the Conversion Price then in effect; provided that any adjustment which by reason of this

Condition 5.18 is not required to be made shall be carried forward and taken into account (as if

such adjustment had been made at the time when it would have been made but for the provisions

of this Condition 5.18) in any subsequent adjustment, conversion or redemption. All calculations

under this Condition 5 shall be made to the nearest Rs.1. Except as otherwise set out in Condition

5.19, the Conversion Price may be reduced at any time by the Company, to the extent permitted

by the applicable laws.

Minimum Conversion Price

5.19 The Company will not take any action which would reduce the Conversion Price below the par

value of the Shares or below the floor price set for their conversion under Indian regulations, more

particularly in notification GSR No. 553 (E) dated 31 August 2005, being Rs. 191.25, unless, under

applicable law then in effect, the Bonds could (if they were converted into Shares) be converted at

such reduced Conversion Price into legally issued, fully paid and non-assessable Shares at such

reduced price.

Notwithstanding the provisions of this Condition, the Company covenants that Conversion Price

shall not be reduced below the U.S. dollar equivalent of the par value of the Shares (Rs.10 at the

date hereof) as a result of any adjustment made hereunder unless under applicable law then in

effect Bonds may be converted at such reduced Conversion Price into legally issued, fully-paid

and non-assessable Shares. The Company shall promptly notify the Bondholders, Trustee and

Agents in the event of any reduction to the Conversion Price in accordance with this Condition.

Depositary Receipts

5.20 If the Company shall have established a depositary receipt facility programme or facility in respect

of its Shares (a DR Facility), then, subject to the terms and conditions of such DR Facility and to

applicable laws and regulations and to such amendments to these Conditions as the Company

and the Trustee shall consider to be appropriate, each Bondholder will have the right in respect of

the exercise of Conversion Rights to elect (a DR Election) that the Shares to be issued on

conversion be represented by depositary receipts (DRs) and to receive such DRs instead of

Shares. A DR Election shall be made in the relevant Conversion Notice in such form as the

Company may require. The number of DRs to be issued on exercise of Conversion Rights in

respect of which the relevant Bondholder shall have made a DR Election shall be determined by

dividing the principal amount of the relevant Bond to be converted by the Conversion Price in

effect on the relevant Conversion Date and dividing the resulting number by the number of Shares

represented by each DR on such Conversion Date.

62

Fractions of a DR will not be issued and neither will a Share (where at the relevant time a DR

represents more than one Share) or any fraction of a Share be issued and no cash payment or

adjustment will be made in respect thereof. However, if the Conversion Right in respect of more

than one Bond is exercised at any one time such that DRs are to be issued to the same person,

the number of such DRs to be issued in respect thereof shall be calculated on the basis of the

aggregate principal amount of such Bonds being so converted and rounded down to the nearest

whole number of DRs.

Where DRs are to be issued, the Company will, as soon as practicable, and in any event not later

than 30 days after the relevant Conversion Date (i) cause the name of the depositary in respect of

the relevant DR Facility (the DR Depositary), or its custodian, to be registered in the record of the

depositors maintained by the depositary registered under the Depositaries Act, 1996 (Act 22 of

1996 of India) with whom the Company has entered into a depositary agreement and (ii) cause the

relevant number of DRs to be issued by the DR Depositary pursuant to the relevant DR Facility to

the relevant Bondholder or his/their nominee.

DRs will be issued in book-entry form or in certificated form as provided in the terms of the

relevant DR Facility, and may bear such legends and be subject to such restrictions on transfer as

the Company shall determine to be necessary to comply with applicable laws and regulations.

A Bondholder exercising Conversion Rights and making a DR Election must deliver at its expense

to the specified office of any Conversion Agent all and any certificates and other documents as

may be required pursuant to the relevant DR Facility in respect of the deposit of the relevant

Shares pursuant to such DR Facility.

The Company will pay all expenses, charges and fees of the custodian for the DR Depositary and

of the DR Depositary in connection with the deposit of the relevant Shares and issue of the DRs

on conversion.

If a retroactive adjustment shall occur in relation to the exercise of Conversion Rights in relation to

any Bond in respect of which a DR Election shall have been duly made, the Company shall,

conditional upon the relevant adjustment becoming effective, procure that there shall be issued to

the relevant Bondholder (or in accordance with instructions contained in the Conversion Notice)

such additional number of DRs (if any) (the Additional DRs) as, together with the DRs issued or to

be issued on conversion of the relevant Bond, is equal to the number of DRs which would have

been required to be issued on conversion of such Bond (together with any fraction of a DR not so

issued) if the relevant adjustment to the Conversion Price had been made and become effective

on and as of the relevant Conversion Date.

DRs issued upon conversion of the Bonds will in all respects rank pari passu with all other DRs

under the relevant DR Facility then in issue on the relevant Conversion Date, except that the DRs

or, as the case may be, the Additional DRs so issued will not rank for any right where the record

date or other due date for the establishment of entitlement in respect of the Shares represented by

such DRs or, as the case may be, Additional DRs falls prior to the relevant Conversion Date.

If the Company and/or the DR Depositary determines that it would be contrary to applicable laws

or regulations or would be contrary to the terms of the relevant DR Facility (including any

provisions thereof relating to the deposit of Shares) to issue Shares to be represented by DRs

upon conversion of Bonds in respect of which a DR Election shall have been made, such DR

Election shall be ineffective and there shall be issued to such Bondholder (or as specified in the

relevant Conversion Notice) Shares as if such DR Election had not been made.

63

The Company is under no obligation to establish and/or maintain the DR Facility or any other

depositary facility or programme in respect of the Shares or, if it does, to enable the Shares to be

eligible for deposit pursuant thereto. The Company shall be entitled to impose such conditions and

restrictions on the deposit of Shares pursuant to any such facility or programme as it may

determine, and may agree with the Trustee such changes to these Conditions as may be

appropriate in respect of or relating to the deposit of Shares pursuant to any such facility or

programme.

Employee share scheme

5.21 No adjustment shall be required to the Conversion Price where Shares or other securities or

options, rights or warrants for shares or other securities, are issued, offered, allotted, appropriated,

modified or granted to employees (including directors) or former employees of the Company or

persons related to such employees (including directors) or former employees, directly or indirectly,

or employees of any of its subsidiaries, pursuant to any employee share scheme generally or as

required by law.

Reference to fixed

5.22 Any references herein to the date on which a consideration is fixed shall, where the consideration

is originally expressed by reference to a formula which cannot be expressed as an actual cash

amount until a later date, be construed as a reference to the first day on which such actual cash

amount can be ascertained.

Trustee and Agents not obliged to monitor

5.23 The Trustee and Agents shall not be under any duty to monitor whether any event or circumstance

has happened or exists within this Condition 5 and shall assume no such event has occurred until

the Trustee has received express written notice to the contrary from the Company and will not be

responsible to the Bondholders or any other person for any loss arising from any such assumption

or failure to monitor so.

Trustee and Agents not responsible for the Company’s failure

5.24 The Trustee and the Agents shall not be responsible or liable to any person for any failure of the

Company to make such cash payment or to issue, transfer or deliver any Shares or other

securities or property upon the surrender of any Bond for the purposes of conversion; and the

Trustee and the Agents shall not be responsible for or liable to Bondholders or any other person

for any failure of the Company to comply with any of the covenants of the Company in relation to

Conversion as set out in Condition 4 and Condition 5.

Expert certificate binding

5.25 If any Bondholder shall have any doubts as to the appropriate adjustment to the Conversion Price,

the Company shall at its expense and at the request of the Trustee and as soon as practicable,

provide the Trustee with a certificate signed by two Authorised Officers setting out the method by

64

which the adjustment is calculated and a certificate of the Auditors acting as experts, certifying the

appropriate adjustment to the Conversion Price and such a certificate shall be conclusive and

binding on all concerned.

Calculations

5.26 All calculations under these Conditions, the Trust Deed and the Agency Agreement shall be

performed by the Company, its Auditors or any other person so nominated or authorized by the

Company for the purposes of these Conditions, the Agency Agreement or the Trust Deed. Neither

the Trustee nor the Agents shall be liable in any respect for the accuracy or inaccuracy in any

mathematical calculation or formula under these Conditions, the Agency Agreement or the Trust

Deed, whether by the Company, its Auditors or any other person so nominated or authorised by

the Company for the purposes of these Conditions, the Agency Agreement or the Trust Deed.

No adjustment for conversion of the Bonds

5.27 No adjustment of the Conversion Price shall be required as a result of the conversion of (a) any of

the Bonds, or (b) the US$ 20,000,000 zero per cent. convertible bonds due 2012 (with an over

allotment option of an additional US$5,000,000 principal amount) convertible into Shares of the

Company issued on 4 June 2007.

Notice

5.28 The Company will notify the Bondholders, the Agents and the Trustee in accordance with the

provisions of Condition 17.7 promptly if there is any adjustment to the Conversion Price.

Conversion Price Reset

5.29 The applicable Conversion Price will be reset downwards only on the Reset Dates, to be the

higher of (a) the Market Price for the immediately preceding 30 Trading Days (as defined in

Condition 5.15.3) prior to the Reset Dates, b) 80 per cent. of the Conversion Price then if effect on

the Reset Dates, and (c) the minimum Conversion Price, being INR 191.25 as defined in Condition

5.19.

Reset Dates mean 4 July 2009, the date 18 months from the Issue Date (the "First Price Reset Date"); 4 January 2010, the date 24 months from the Issue Date (the "Second Price Reset Date"); 4 July 2010, the date 30 months from the Issue Date (the "Third Price Reset Date"), and

4 January 2011, the date 36 months from the Issue Date (the "Fourth Price Reset Date") (the

Price Reset Dates), together the Reset Dates.

If any of the Reset Dates, would otherwise fall on a date which is not a Business Day, it will be

postponed to the next Business Day.

Market Price means the volume weighted average closing price of the Shares on the BSE.

Each time the Conversion Price is reset, the Bondholders, the Trustee, the Principal Paying and

Conversion Agent and the Singapore Exchange Securities Trading Limited (the SGX-ST) will be

informed in writing by the Company in accordance with Condition 17.7. The Trustee and the

Agents shall not be responsible to monitor whether any reset of the Conversion Price may occur

65

and shall not be liable for (i) any failure to monitor so or (ii) any reset or lack of the Conversion

Price.

6. Shares

Shares allotted on Conversion will be fully paid and will rank pari passu in all respects with the fully paid

Shares in issue on the Conversion Date (except for any right excluded by mandatory provisions of law),

except that the Shares so allotted will not rank for any dividend or other distribution declared or paid or made

by reference to a record date for the payment of a dividend or other distribution with respect to the Shares

prior to such Conversion Date.

7. Purchase by Company of its own Shares

The Articles of Association contains authority for the Company to exercise such rights as it may from time to

time enjoy to purchase its own Shares without the consent of the Bondholders provided that any such

purchase shall have been duly authorised by the Shareholders and shall be in accordance with applicable

laws of India.

8. Cancellation

All Bonds redeemed or converted pursuant to any of the provisions herein will be cancelled forthwith and

may not be reissued or resold and will not be deemed to be outstanding for any of the purposes contained

herein. Certificates in respect of all Bonds cancelled will be forwarded to or to the order of the Principal

Paying and Conversion Agent.

9. Transfer, Consolidation, Amalgamation or Merger

9.1 The Company will not consolidate with, merge or amalgamate into or sell or transfer its properties,

assets and/or liabilities substantially or as an entirety, whether as a consequence of a single transaction

or a series of transactions whether related or not, to any corporate entity or convey or transfer its

properties and assets and/or liabilities substantially or as an entirety, whether as a consequence of a

single transaction or a series of transactions whether related or not, to any person (the consummation of

any such event, a “Merger”), unless:

(i) the Company shall have notified forthwith the Bondholder and the Trustee of such event in

accordance with Condition 17.7, and the corporate entity formed by such Merger or the

person or corporate entity that acquired such properties and assets shall expressly assume,

by a supplemental trust deed, all obligations of the Company under the Trust Deed, the

Agency Agreement and the Bonds and the performance of every covenant and agreement

applicable to it contained therein and to ensure that the holder of each Bond then outstanding

will have the right (during the period when such Bond shall be convertible) to convert such

Bond into the class and amount of shares, cash and other securities and property receivable

upon such consolidation, amalgamation, merger, sale or transfer by a holder of the number of

Shares which would have become liable to be issued upon conversion of such Bond

immediately prior to such consolidation, amalgamation, merger, sale or transfer. Such

supplemental trust deed will provide for the adjustments which will be as nearly equivalent as

may be practicable to the adjustments provided for in the provisions of Condition 5;

66

(ii) immediately after giving effect to any such Merger, no Event of Default shall have occurred or

be continuing or would result there from; and

(iii) the corporate entity formed by such Merger, or the person or corporate entity that acquired

such properties and assets, shall expressly agree, among other things, to indemnify each

holder of a Bond against any tax, assessment or governmental charge payable by withholding

or deduction thereafter imposed on such holder solely as a consequence of such Merger with

respect to the payment of principal and premium on the Bonds.

9.2 The Trustee shall be entitled to require from the Company such certificate signed by two directors of the

Company, opinions, consents, documents and other matters at the expense of the Company in

connection with the foregoing as it may consider appropriate but shall have no responsibility for the

terms of any such consolidations, amalgamations or mergers, sales or transfers or effect thereof upon

the Bondholders or Conversion Right.

9.3 The above provisions of this Condition 9 will apply in the same way to any subsequent consolidations,

amalgamations, mergers, sales or transfers.

10. Redemption, Repurchase and Cancellation Redemption at Maturity

10.1 Unless the Bonds have been previously redeemed or repurchased and cancelled or converted, the

Company will redeem the Bonds on the Maturity Date at their Accreted Principal Amount (as defined

below), or if such day is not a Business Day, the immediately preceding Business Day.

10.2 The Accreted Principal Amount of each authorised denomination of Bonds shall be determined by the

Company so that it represents for the Bondholder thereof a yield-to-maturity of 6.65 per cent. and shall

be calculated in accordance with the following formula rounded (if necessary) to two decimal places

with 0.005 being rounded upwards (provided that if the redemption date is an anniversary date), the

Accreted Principal Amount shall be as set out in the table below in respect of such redemption date. In

the event that the Bonds are redeemed prior to the expiry of one year from the Issue Date, the

Company shall calculate the Accreted Principal Amount, as the case may be, (on the basis of the

number of days elapsed and a 360-day year) and notify the Trustee, the Principal Paying and

Conversion Agent and the Bondholders in accordance with Condition 17.7.

Accreted Principal Amount

= (Previous Accreted Principal Amount) x (1+[(r/2)x(d/p)]) – AI

Previous Accreted Principal Amount = the Accreted Principal Amount on the semi-annual

date immediately preceding the anniversary date using the sample figures set out in the

example table below, to be re-calculated on a semi-annual basis

r = 6.65%

d = number of days from and including the immediately preceding anniversary date

compounded semi-annually, calculated on the basis of the number of days elapsed and a

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360-day year.

P = 180

AI = accrued interest (if any) on the Bonds

By way of example only, the Accreted Principal Amount, on each anniversary date and on the

Maturity Date, in respect of one Bond is set out in the following table:

Anniversary Date Accreted Principal Amount

(U.S.$)

First anniversary 106,760.56

Second anniversary 113,978.16

Third anniversary 121,683.72

Fourth anniversary 129,910.21

Fifth anniversary 138,692.87

Maturity Date 139,461.46

Neither the Trustee, nor the Agents or the Lead Manager to the Offering of the Bonds shall be responsible or

liable with respect to any calculations in relation to the Accreted Principal Amount or the accuracy/inaccuracy

thereof.

Redemption for Taxation Reasons

10.3 At any time the Company may, having given not less than 45 nor more than 60 days’ notice to the

Bondholders (which notice shall be irrevocable) and shall specify the Accreted Principal Amount, in

accordance with Condition 17.7 and written notice to the Trustee, redeem all but not some of the

Bonds at their Accreted Principal Amount to the date fixed for redemption, if the Company provides the

Trustee with an opinion of an independent legal counsel of internationally recognised standing

acceptable to the Trustee or the Auditors immediately prior to the giving of such notice that (i) it has or

will become obliged to pay Additional Amounts (as defined below) as a result of any change in, or

amendment to, the laws or regulations of India or any political subdivision or any authority thereof or

therein having power to tax, or any change in the general application or official interpretation of such

laws or regulations, which change or amendment becomes effective on or after the Issue Date, and (ii)

such obligation cannot be avoided by the Company taking reasonable measures available to it,

provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date

on which the Company would be obliged to pay such Additional Amounts were a payment in respect of

the Bonds then due.

10.4 The Trustee shall be entitled to accept without further enquiry and without liability to any party such

certificate as sufficient and conclusive evidence of the satisfaction of the condition precedent set out in

Condition 10.3 above in which event it shall be conclusive and binding on the Bondholders.

Under current regulations of the RBI applicable to convertible bonds, the Company would require the

prior approval of the RBI before providing notice for or effecting such a redemption prior to the Maturity

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Date.

Repurchase of Bonds in the Event of Delisting

10.5 To the extent permitted by applicable law, in the event that the Shares cease to be listed or admitted to

trading on the Indian Stock Exchanges (the Delisting), the Company shall, within 10 Business Days

after the Delisting, notify the Bondholders in writing (with a copy to the Trustee) of such Delisting, and

each Bondholder shall have the right (the Delisting Repurchase Right), at such Bondholder’s option,

to require the Company to repurchase all (or any portion of the principal amount thereof which is

U.S.$100,000 or any integral multiple thereof) of such Bondholder’s Bonds at their Accreted Principal

Amount on the Delisting Repurchase Date (the Delisting Repurchase Price) on the date set by the

Company for such repurchase (the Delisting Repurchase Date), which shall be not less than 30 days

nor more than 60 days following the date on which the Company notifies the Bondholders in writing

(with a copy to the Trustee) of the Delisting. For avoidance of doubt, any temporary suspension of

trading by the Indian Stock Exchanges to fulfill the requirement of the listing agreement entered into by

the Company, for any corporate restructuring, merger, demerger or any other such arrangement shall

not be tantamount to a Delisting for the purposes of this Condition 10.5.

Repurchase or Conversion of Bonds in the Event of Change of Control

10.6 To the extent permitted by applicable law, if a Change of Control, as defined below, occurs with

respect to the Company, each Bondholder shall have the right (the Change of Control Repurchase Right), at such Bondholder’s option,

10.6.1 to require the Company to repurchase all (or any portion of the principal amount thereof

which is U.S.$100,000 or any integral multiple thereof) of such Bondholder’s Bonds at a price

equal to the Accreted Principal Amount, or

10.6.2 to convert the Bonds into Shares at the minimum Conversion Price as in Condition 5.19

on the date set by the Company for such repurchase (the Change of Control Repurchase Date),

which shall be not less than 30 days nor more than 60 days following the date on which the Company

notifies the Bondholders and the Trustee of the Change of Control which notice shall be delivered not

more than 10 Business Days after the Company becomes aware of a Change of Control.

The definitions of certain terms used in this Condition are listed below:

The term “Control” means the right to appoint and/or remove all or the majority of the members of

the board of Directors or other governing body, whether obtained directly or indirectly, and whether

obtained by ownership of share capital, the possession of voting rights, contract or otherwise.

A Change of Control occurs when:

1. any person or persons (as defined below) acting together acquires Control of the

Company if such person or persons does not or do not have, and would not be deemed

to have, Control of the Company on the Issue Date;

2. the Company consolidates with or merges into or sells or transfers all or substantially all

of the Company’s assets to any other person, unless the consolidation, merger, sale or

transfer will not result in the other person or persons acquiring Control over the Company

or the successor entity; or

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3. one or more other persons acquires the legal or beneficial ownership of more than 2/3 of

the Company’s Voting Stock.

However, a Change of Control will not be deemed to have occurred solely as a result of the

issuance or transfer, with the Company’s co-operation, of any preferred shares in the Company’s

capital.

For the purposes of the Change of Control Repurchase Right, a person includes any individual,

company, corporation, firm, partnership, joint venture, undertaking, association, organisation, trust,

state or agency of a state, in each case whether or not being a separate legal entity. A person

does not include the board of Directors or any other governing board.

For the purposes of these Conditions:

Capital Stock means, with respect to any person, any and all shares, ownership interests,

participation or other equivalents (however designated), including all common or ordinary stock

and all preferred stock, of such person.

Voting Stock means any class or classes of capital stock pursuant to which the holders thereof

have the general voting power under ordinary circumstances to elect members of the board of

Directors, managers or trustees of any person (irrespective of whether or not, at the time, stock of

any other class or classes will have, or might have, voting power by reason of the happening of

any contingency).

The Trustee and Agents shall not be responsible for monitoring whether a Change of Control or

Delisting has occurred and may assume that no such event has occurred until the Trustee

receives express written notice from the Company to the contrary

Repurchase Procedures

10.7 Promptly after becoming aware of, and in any event within 10 Business Days after, a Delisting or a

Change of Control, the Company will deliver to each Bondholder, the Trustee and the Agents, a notice

regarding such Delisting Repurchase Right or Change of Control Repurchase Right, as the case may

be, which notice shall state, as appropriate:

10.7.1 the Delisting Repurchase Date or the Change of Control Repurchase Date, as the case may be

(each, a Purchase Date) which shall not be less than 30 days nor more than 60 days following the

date on which the Company notifies the Bondholders of the Delisting;

10.7.2 in the case of a Delisting, the date of such Delisting and, briefly, the events causing such

Delisting;

10.7.3 in the case of a Change of Control, the date of such Change of Control and, briefly, the events

causing such Change of Control;

10.7.4 the date by which the Bondholder Purchase Notice (as defined below) must be given;

10.7.5 the Delisting Repurchase Price or the Change of Control Repurchase Price, as the case may be,

and the method by which such amount will be paid;

10.7.6 the names and specified offices of all Agents;

10.7.7 the current Conversion Price;

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10.7.8 the procedures that Bondholders must follow and the requirements that Bondholders must satisfy

in order to exercise the Delisting Repurchase Right or Change of Control Repurchase Right, as the

case may be, or the Conversion Right; and

10.7.9 that a Bondholder Purchase Notice, once validly given, may not be withdrawn.

10.8 To exercise its right to require the Company to purchase its Bonds, pursuant to the Delisting

Repurchase Right or the Change of Control Repurchase Right, as the case may be, the Bondholder

must deliver a written irrevocable notice of the exercise of such right (the Bondholder Purchase Notice)

to any Paying and Conversion Agent on any Business Day prior to the close of business at the location

of such Paying and Conversion Agent on such day and which day is not less than twenty (20) Business

Days prior to the Purchase Date.

10.9 Payment of the Delisting Repurchase Price upon exercise of the Delisting Repurchase Right or

payment of the Change of Control Repurchase Price upon exercise of the Change of Control

Repurchase Right, for any Bond for which a Bondholder Purchase Notice has been delivered is

conditional upon:

10.9.1 the Company obtaining all approvals required by applicable law; and

10.9.2 delivery of such Certificate (together with any necessary endorsements) during usual business

hours to the specified office of any Paying and Conversion Agent on any Business Day together

with the delivery of such Bondholder Purchase Notice and will be made promptly following the later

of the Purchase Date and the time of delivery of such Certificate.

10.10 If the Paying and Conversion Agent holds on the Purchase Date sufficient money to pay the Delisting

Repurchase Price or the Change of Control Repurchase Price, as the case may be, of Bonds for which

Bondholder Purchase Notices have been delivered in accordance with the provisions of the Agency

Agreement, then, whether or not such Bonds are delivered to the Paying and Conversion Agent, on

and after such Purchase Date:

10.10.1 such Bonds will cease to be outstanding;

10.10.2 the interest (if any) on such Bonds will cease to accrue;

10.10.3 such Bonds will be deemed paid; and

10.10.4 all other rights of the Bondholder shall terminate (other than the right to receive the Delisting

Repurchase Price or the Change of Control Repurchase Price, as the case may be).

10.11 Payments of principal on the definitive Certificates may be made through the office of any Paying and

Conversion Agent. Distributions of principal on the definitive Certificates will be made to Bondholders in

whose names the definitive Certificates were registered seven Business Days prior to the due date for

redemption. Distributions will be made by wire, transfer or by cheque mailed to the address of such

Bondholder as it appears in the Register. The final payment on any definitive Certificate, however, will

be made only upon presentation, and surrender of such definitive Certificate at the office of a Paying

and Conversion Agent on a payment date that is a Business Day in the place of presentation.

10.12 For so long as the Bonds are listed on the SGX-ST and the rules of such exchange so requires, in the

case of a transfer or exchange of definitive Certificates, a holder hereof may effect such transfer or

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exchange by presenting and surrendering such definitive Certificates at, and obtaining a new definitive

Certificate from the office of the Transfer Agent, in the case of a transfer of only a part of a definitive

Certificate, a new definitive Certificate in respect of the balance of the principal amount of the definitive

Certificate not transferred will be delivered at the office of the Transfer Agent, and in the case of any

lost, stolen, mutilated or destroyed definitive Certificate, a holder thereof may obtain a new definitive

Certificate from the Transfer Agent.

Mandatory Conversion Option of the Company

10.13 The Company has an option to serve a written notice of not less than 45 calendar days (the

Mandatory Conversion Notice) on the Bondholders (with a copy to the Agents) from 4 January 2010,

being the date which is 24 months from the Issue Date, until 23 January 2013, being the date which is

seven (7) Business Days before the Maturity Date, requiring mandatory conversion of all of the Bonds

then outstanding at the then prevailing Conversion Price (the Mandatory Conversion Option), provided

that no such Mandatory Conversion Option may be exercised unless the Closing Price of the Shares

(translated into US Dollars at the Exchange Rate) for each of the thirty (30) consecutive Trading Days

prior to the date upon which the Mandatory Conversion Notice is given, is at least 150 per cent. of the

Accreted Principal Amount divided by the Conversion Ratio.

The “Conversion Ratio” being equal to the principal amount of the Bonds divided by the then

Conversion Price translated into US Dollars at the Exchange Rate.

The Mandatory Conversion Notice shall be in the form set out in the Agency Agreement and shall

specify, inter alia, the number of Bonds to be converted and the corresponding number of Shares to be

issued by the Company as a result of the exercise of the Mandatory Conversion Option.

The provisions of Conditions 4.11 to 4.14 (inclusive), 5 and 6 shall apply in relation to Shares which are

issued and allotted in accordance with the provisions of this Condition 10.13.

10.14 If so notified by a Mandatory Conversion Notice, the Bondholders shall deposit the relevant Bonds in

compliance with the deposit conditions set out at Condition 4.8 to the Principal Paying and Conversion

Agent for conversion of the same into Shares within thirty (30) Business Days of such notice which

date shall be determined by the Company and specified in the Mandatory Conversion Notice. The

Agents shall be entitled to assume without enquiry or liability that any Mandatory Conversion Notice

delivered by the Company accurately specifies the number of Bonds subject to the Mandatory

Conversion Option and the Shares to be issued on conversion thereof. If a Bondholder does not

comply with the deposit conditions in Condition 4.8 within thirty (30) Business Days of the date of the

Mandatory Conversion Notice, the Company shall redeem the Bonds at their Accreted Principal

Amount at the date fixed for such redemption by issuing a notice in accordance with Condition 17.7.

For the avoidance of doubt, no calculations or determinations required under this Condition 10.14 will

be performed by either of the Trustee or the Agents. Notice of any such mandatory conversion or

redemption will be given as soon as practicable to the SGX-ST by the Company (with a copy to the

Agents).

10.15 The Bonds may be redeemed, in whole but not in part, at the option of the Company at any time,

subject to satisfaction of certain conditions, at their Accreted Principal Amount if less than 10 per cent.

in aggregate principal amount of the Bonds originally issued is outstanding.

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Repurchase

10.16 The Company may, if permitted under the laws of India, at any time repurchase Bonds or interests

therein. The Company is required to submit to the Registrar for cancellation any Bonds so purchased.

No Re-issue

10.17 Bonds which have been redeemed or converted or purchased by the Company may not be reissued or

resold and shall be cancelled upon redemption, conversion or purchase. Certificates in respect of all

Bonds cancelled will be forwarded to or to the Registrar.

Redemption Notices

10.18 All notices to Bondholders given by or on behalf of the Company pursuant to this Condition will specify

the date fixed for redemption, the redemption amount, the Conversion Price as at the date of the

relevant notice, the Closing Price of the Shares and the aggregate principal amount of the Bonds

outstanding, in each case, as at the latest practicable date prior to the publication of the notice, all in

accordance with Condition 17.7.

10.19 Neither the Trustee nor the Agents shall be under any duty to monitor whether a Delisting or Change of

Control has occurred or is likely to occur, and shall not be liable to any person for any failure to do so

and may assume that no such event has occurred until they receive written notice from the Company

to the contrary.

11. Payments of Principal and Interest

11.1 Subject to Condition 11.8, payments of principal, premium and interest (if any) on the Bonds will be made to

the Bondholder, details of which appear in the Register at the close of business on the record date which is

seven Business Days prior to the due date for redemption pursuant to Conditions 10.1, on delivery of the

certificate to the Principal Paying and Conversion Agent.

11.2 Each such payment of principal, premium and interest (if any) will be made:

11.2.1 by transfer to the registered account of the Bondholder; or

11.2.2 by U.S. dollar cheque drawn on a bank in New York City mailed to the registered address

of the Bondholder if it does not have a registered account (by ordinary uninsured mail and the risk of

delivery being that of the Bondholder and at the expense of the Company).

Payments will be subject in all cases to any applicable fiscal and other laws and regulations, but without

prejudice to the provisions of Condition 12. Payment of principal, premium and interest (if any) will only be

made after surrender of the relevant Certificate, if applicable, at the specified office of any of the Agents.

11.3 If the amount of principal, premium (if any) and interest (if any) which is due on the Bonds on any date is

not paid in full, the Registrar will annotate the Register and any Certificates surrendered for payment with a

record of the amount or principal, premium or interest (if any) in fact paid and the date of such payment.

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11.4 When making payments to Bondholders fractions of one cent will be rounded down to the nearest whole

cent.

11.5 All payments in respect of the Bonds are subject in all cases to any applicable fiscal or other laws and

regulations, but without prejudice to the provisions of Condition 12. No commissions or expenses shall be

charged to the Bondholders in respect of such payments by the Company or its agents.

11.6 Where payment is to be made by transfer to a registered account, payment instructions (for value the due

date or, if that date is not a Business Day, for value the following Business Day) will be initiated and, where

payment is to be made by cheque, the cheque will be mailed, the Business Day on which the relevant

Certificate is surrendered at the specified office of any of the Agents.

11.7 Bondholders will not be entitled to any interest or other payment for any delay after the due date in

receiving the amount due if the due date is not a Business Day, if the Bondholder is late in surrendering the

Certificate (if required pursuant to these Conditions) or if a cheque mailed in accordance with this Condition

arrives or is cleared after the due date for payment.

11.8 No payments of principal, premium (if any) and interest (if any) by the Company will be made if the requisite

approvals of the RBI have not been obtained or any other applicable Indian laws and restrictions have not

been complied with, which approvals the Company will use reasonable endeavours to obtain but the

Company will not be in default for not making such payments if the requisite approvals have not been

obtained.

11.9 Notwithstanding any other provisions in these Conditions, where a Bondholder is entitled to the payment of

accrued interest, the Company shall be responsible for calculating such amount of interest payable to such

Bondholder and shall arrange for payment of such amount of interest to the Bondholder directly in

accordance with the account details specified in the relevant Conversion Notice. None of the Paying and

Conversion Agents shall be responsible for calculating or arranging for the payment of such amount of

interest.

12. Taxation

12.1 All payments (including of principal, premium (if any) and interest, (if any) in respect of the Bonds by the

Company shall be made without deduction of, or withholding for or on account of, any present or future

taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or in India or

any authority thereof or therein having power to tax, unless such deduction or withholding is required by

law. In such event, the Company shall pay such additional amounts (the Additional Amounts) as may be

necessary in order that the net amounts received by the Bondholders after such deduction or withholding

shall equal the amounts which would have been receivable by them had no such deduction or withholding

been required, except that no Additional Amounts shall be payable in respect of any Bond:

12.1.1 held by a person resident in India for taxation purposes; or

12.1.2 where such withholding or deduction is imposed on a payment to an individual and is required to be made

pursuant to European Directive 2003/48/EC or any other Directive implementing the conclusions of the

ECOFIN Council Meeting of 26-27 November 2000 on the taxation of savings income or any other law

implementing or complying with or introduced in order to, conform to, such Directive).

References in these Conditions to payments (including of principal and interest, if any) in respect of the

Bonds shall be deemed, where applicable, to include references to Additional Amounts.

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If the Company makes any other payment under these Terms and Conditions and such payment is treated

as interest (including, for the avoidance of doubt, any interest paid in accordance with Condition 2.2), such

payment will be made without deduction or withholding in respect of Indian taxation, save to the extent

required by law. Where so required, the Company will gross up the net taxable amount and will be required

to account separately to the Indian tax authorities for any withholding taxes applicable on such amounts.

13. Prescription

Claims in respect of principal and other sums payable in respect of the Bonds will become prescribed unless

made within ten years (in the case of principal and premium) and five years (in the case of other sums) from

the date upon which such payments become due. Neither the Trustee nor the Agents shall have any

responsibility, obligations or liability with respect to any Bondholder for any amounts so prescribed.

14. Undertakings

Whilst any Conversion Right remains exercisable, the Company will:

14.1 issue Shares to Bondholders on the exercise of Conversion Rights in accordance with these Conditions

and at all times keep available for issue free from pre-emptive rights out of its authorised but un-issued

capital such number of Shares as would enable the Conversion Rights and all other rights of subscription

and exchange for and conversion into Shares to be satisfied in full;

14.2 save with the approval of an Extraordinary Resolution of the Bondholders not issue or pay up any

securities, in either case by way of capitalisation of profits or reserves, other than:

14.2.1 by the issue of fully paid Shares to the Shareholders and other holders of Shares in the capital of the

Company which by their terms entitle the holders thereof to receive Shares on a capitalisation of profits or

reserves; or

14.2.2 by the issue of Shares paid up in full out of profits or reserves (in accordance with applicable law) and

issued wholly, ignoring fractional entitlements, in lieu of a cash dividend; or

14.2.3 by the issue of fully paid equity share capital (other than Shares) to the holders of equity share capital of the

same class and other holders of Shares in the capital of the Company which by their terms entitle the

holders thereof to receive equity share capital (other than Shares) on a capitalisation of profits or reserves,

unless, in any such case, the same gives rise (or would, but for the fact that the adjustment would be less

than 1 per cent. of the Conversion Price then in effect, give rise) to an adjustment to the Conversion Price;

14.3 if any offer is made to all (or as nearly as may be practicable all) Shareholders or all (or as nearly as may

be practicable all) Shareholders other than the offeror and/or any associate of the offeror to acquire all or a

majority of the equity share capital of the Company, or if any person proposes a scheme with regard to

such acquisition, give notice in accordance with Condition 17.7 of such offer or scheme to the Bondholders

and the Trustee at the same time as any notice thereof is sent to its Shareholders or as soon as is

practicable thereafter such notice to state that details (provided that such details have been provided to the

Paying and Conversion Agent by the Company) concerning such offer or scheme may be obtained from the

specified offices of the Paying and Conversion Agents and, where such an offer or scheme has been

recommended by the board of Directors of the Company, or where such an offer has become or been

declared unconditional in all respects, use all reasonable endeavours to procure that a like offer or scheme

is extended to the holders of any Shares issued during the period of the offer or scheme arising out of the

exercise of the Conversion Rights and/or to the Bondholders;

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14.4 use its best endeavours to ensure that the Shares issued upon conversion of any Bonds will be admitted to

trading on the Indian Stock Exchanges and will be listed, quoted or dealt in on any other stock exchange or

securities market on which the Shares may then be listed, quoted or dealt in;

14.5 for the above purposes:

Ordinary share capital has the meaning ascribed to it in section 151 of the United

Kingdom Finance Act 1995; and

Equity share capital has the meaning ascribed to it in section 744 of the United

Kingdom Companies Act 1985 (as amended); and

14.6 for so long as the Bonds are listed on the SGX-ST, continue to maintain a paying and conversion agent and

a transfer agent in Singapore for the fulfillment of the relevant terms of the Trust Deed and these

Conditions;

14.7 the Company will not issue any fresh shares or warrants or convertible bonds or any security resulting in

issue of shares to the promoters and promoter group, where the issue price of such securities is at a price

lower than the then prevailing Conversion Price. In such an event, the Conversion Price of the Bonds will

be reset to the issue price of such securities and shall be effective as of the record date for the issue of

such securities;

14.8 Financial Covenants

As long as (i) at least 10 per cent. in aggregate principal amount of the Bonds originally issued are

outstanding, or (ii) the Current Market Price (as defined in Condition 5.15.1) is less than 145 per cent. of the

Conversion Price, the Company undertakes to adhere to the following covenant and such covenant shall

remain effective for each of the financial years respectively:

(a) total debt to EBITDA ratio shall not exceed 6x for the financial year ended March 2008, 4x for the

financial year ended March 2009, and 3x thereafter

The above covenant would be determined on the consolidated financials of the Company at the end of

each financial year.

For avoidance of doubt:

i. this covenant will apply mutatis mutandis on a consolidated basis following any current or future

acquisitions, if any; and

ii. the financial terms, to the extent not defined in the Conditions, shall be as defined as per the IFRS,

as amended.

The Company will notify the Bondholders, the Agents and the Trustee in accordance with the provisions of

Condition 17.7 promptly if the provisions this Condition 14.8. no longer apply to a financial year.

15. Events of Default

15.1 If any of the following events (an Event of Default) occur and is continuing, the Trustee in its discretion may

(but shall not be obliged to) and if so requested in writing by the holders of at least 25% of the principal amount

of the Bonds then outstanding, or if so directed by an Extraordinary Resolution of the Bondholders shall (subject

always to the Trustee having been indemnified and/or provided with security to its satisfaction) give notice to the

Company that the Bonds are, and they shall immediately become, due and payable at their Accreted Principal

Amount (and provided that, in the case of the event specified in Condition 15.1.2, the Trustee has certified that

in its opinion such event is materially prejudicial to the interests of the Bondholders):

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15.1.1 if default is made in the payment of principal, premium or interest (if any) due on the Bonds or any of them

on the due date, whether at maturity or on redemption or otherwise, and such default continues for a period

of 10 Business Days, subject to Condition 11.8;

15.1.2 if the Company fails to perform or observe any of its other material obligations under the Bonds, these

Conditions or the Trust Deed or if any event occurs or any action is taken or fails to be taken which is (or,

but for the provisions of any applicable law, would be) a breach of any of the covenants contained in

Condition 14 and in any such case such failure continues for the period of 30 days next following the

service on the Company by the Trustee of a notice requiring the same to be remedied; or

15.1.3 if any order by a court of competent jurisdiction is made or an effective resolution passed for winding up or

an administration order is made in relation to the Company or any Subsidiary (save for the purpose of

amalgamation, merger, consolidation, reorganisation or other similar arrangements on terms approved by

an Extraordinary Resolution of the Bondholders); or

15.1.4 if the Company stops or threatens to stop payment generally or ceases or threatens to cease to carry on

the whole or substantially the whole of its business; or

15.1.5 if an encumbrancer takes possession or an administrative or other receiver is appointed of the whole or any

material part of the undertaking or assets of the Company or if a distress, execution or any similar

proceeding is levied or enforced upon or sued out against any of the chattels or property of the Company

and in any of the foregoing cases is not discharged within 30 Business Days; or

15.1.6 if the Company or any Principal Subsidiary becomes unable to pay its debts as they fall due or the value of

its assets falls to less than the amount of its liabilities (taking into account for both these purposes its

contingent and prospective liabilities but excluding any liability in respect of the Bonds), or the Company or

any Principal Subsidiary otherwise becomes insolvent, or the Company or any Principal Subsidiary

suspends making payments (whether of principal, premium (if any) or interest, if any) with respect to all or

any class of its debts or announces an intention to do so or proposes or makes any agreement for the

deferral, rescheduling or other readjustment of its debts generally, proposes or makes a general

assignment or an arrangement or compensation with or for the benefit of its creditors; or

15.1.7 if any event occurs which under the laws of any relevant jurisdiction has an analogous effect to any of the

events referred to in any of the foregoing paragraphs; or

15.1.8 (i) if any indebtedness for money borrowed or raised of the Company or any of its Subsidiaries is not paid

when due or (as the case may be) within any applicable grace period;

(ii) if any such indebtedness for money borrowed or raised becomes (or becomes capable of being

declared) due and payable prior to its stated maturity otherwise than at the option of the Company or

(as the case may be) the relevant Subsidiary or any person entitled to such indebtedness for money

borrowed or raised; or

(iii) if any security given by the Company or any Subsidiary for any indebtedness of any person or any

guarantee or indemnity of indebtedness of any person becomes enforceable by reason of default in

relation thereto and steps are taken to enforce such security (save in any such case where there is a

bona fide dispute as to whether the relevant indebtedness or any such guarantee or indemnity as

aforesaid shall be due and payable (following any applicable grace period));

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(iv) if the Company or any of its Subsidiaries fails to pay when due any amount payable by it under any

guarantee of any indebtedness for money borrowed or raised;

provided that the amount of indebtedness referred to in sub-paragraph (i) and/or sub-paragraph (ii) above

and/or sub-paragraph (iii) above and/or the amount payable under any guarantee referred to in sub-

paragraph (iv) above individually or in the aggregate exceeds U.S.$ 5 million (or its equivalent in any other

currency or currencies).

15.2 “Extraordinary Resolution” for the purposes of these Conditions has the definition set out in the Trust Deed.

The Trustee and Agents shall not be responsible for monitoring whether an Event of Default has occurred

and may assume that no such event has occurred until the Trustee receives express written notice from the

Company to the contrary

16. Replacement of Bond Certificates

Should any Certificate be lost, stolen, mutilated, defaced or destroyed it may be replaced at the cost of the

Company at the specified office of the Paying and Conversion Agents or Registrar subject to all applicable

laws and stock exchange requirements upon payment by the claimant of the expenses, taxes and duties

incurred in connection therewith and on such terms as to evidence as to beneficial ownership and indemnity

(with or without security) as the Company and the Paying and Conversion Agents may require. Mutilated or

defaced Certificates must be surrendered before replacements will be issued.

17. Meetings of Bondholders; Modification and Waiver

Meetings of Bondholders 17.1 The Trust Deed contains provisions for convening meetings of Bondholders to consider matters affecting

their interest, including the modification of any of these Conditions or any provisions of the Trust Deed. Any

such modification may be made if sanctioned by an Extraordinary Resolution (as defined in the Trust

Deed). The quorum for any meeting convened to consider an Extraordinary Resolution will be one or more

persons holding or representing over 50 per cent. in principal amount of the Bonds for the time being

outstanding, or at any adjourned meeting one or more persons holding or representing Bondholders

whatever the principal amount of Bonds held or represented, unless the business of such meeting includes

consideration of proposals, inter alia:

17.1.1 to modify the maturity of the Bonds or the dates on which interest, if any, is payable in respect of

the Bonds;

17.1.2 to reduce or cancel the principal amount of or premium or rate of interest (if any) on the Bonds;

17.1.3 to change the currency of payment of the Bonds;

17.1.4 to modify or cancel the Conversion Right or shorten the Conversion Period; or

17.1.5 to modify the provisions concerning the quorum required at any meeting of Bondholders or the

majority required to pass an Extraordinary Resolution,

in which case the necessary quorum will be one or more persons holding or representing not less than two-

thirds, or at any adjourned meeting one or more persons holding or representing not less than one-third, in

principal amount of the Bonds for the time being outstanding.

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17.2 Any Extraordinary Resolution duly passed shall be binding on Bondholders whether or not they were

present at the meeting at which such resolution was passed and will be conclusive and binding on all future

Bondholders. The Trust Deed provides that a written resolution signed by or on behalf of the holders of not

less than three-fourth of the aggregate principal amount of Bonds outstanding shall be as valid and

effective as a duly passed Extraordinary Resolution.

Modification and Waiver

17.3 The Trustee may (but shall not be obliged to) agree, without the consent of the Bondholders, to:

17.3.1 any modification of any of the provisions of the Trust Deed which in the opinion of the Trustee is of

a formal, minor or technical nature or is made to correct a manifest error; or to comply with

mandatory provision of law or regulation; and

17.3.2 any other modification (except as mentioned in the Trust Deed), and any waiver or authorisation of

any breach or proposed breach, of any of the provisions of the Trust Deed, which, is in the opinion

of the Trustee not materially prejudicial to the interests of the Bondholders. Any such modification,

authorisation, waiver shall be binding on the Bondholders and shall be notified to the Bondholders

as soon as practicable in accordance with Condition 17.7. The Trustee's agreement may be

subject to any condition which the Trustee requires, including but not limited to obtaining, at the

sole expense of the Company, an opinion of any investment bank or legal or other expert and

being indemnified and/or secured to its satisfaction.

Modification of Conversion Right

17.4 Notwithstanding Condition 17.3 above, the Trustee may (but shall not be obliged to) agree to, without the

consent of the holders of the Bonds, any modification to the Conversion Right that is not in the Trustee’s

opinion materially prejudicial to the interests of the holders of the Bonds. The Trustee’s agreement may be

subject to any condition that the Trustee requires, including but not limited to the delivery of an opinion (at the

expense of the Company) of a financial or legal or other expert, and shall be binding on the holders of the

Bonds. Unless the Trustee instructs the Company otherwise, any such modification shall be notified by the

Company to the holders of the Bonds as soon as practicable thereafter in accordance with Condition 17.7.

Entitlement of the Trustee

17.5 In connection with the exercise of its functions (including but not limited to those in relation to any proposed

modification, authorisation or waiver) the Trustee shall have regard to the interests of the Bondholders as a

class and shall not have regard to the consequences of such exercise for individual Bondholders (whatever

their number) and, in particular but without limitation, shall not have regard to the consequences of any such

exercise for individual Bondholders and the Trustee shall not be entitled to require, nor shall any Bondholder

be entitled to claim from the Company any indemnification or payment in respect of any tax consequences of

any such individual Bondholders.

Further issues of Bonds

17.6 The Company may from time to time, without the consent of the Bondholders, create and issue further notes,

bonds or debentures either having the same terms and conditions in all respects as the outstanding notes,

bonds or debentures of any series (including the Bonds) (or in all respects except for the first payment of

interest on them) and in line with the prevailing law, rules and regulations at that time, and so that such further

79

notes, bonds or debentures shall be consolidated and form a single series with the outstanding notes, bonds

or debentures of any series (including the Bonds) or upon such terms as to interest, subordination (if any),

premium, conversion, redemption and otherwise as the Company may determine at the time of their issue.

Any further notes, bonds or debentures forming a single series with the outstanding notes, bonds or

debentures of any series (including the Bonds) constituted by the Trust Deed or any deed supplemental to it

shall, and any other notes, bonds or debentures may, be constituted by a deed supplemental to the Trust

Deed. The Trust Deed contains provisions for convening a single meeting of the Bondholders and the holders

of notes, bonds or debentures of other series.

Notices

17.7 All notices to Bondholders shall be validly given if mailed to them, at the Company’s expense, at their

respective addresses in the Register of Bondholders maintained by the Registrar or published in a leading

newspaper having general circulation in Asia and, so long as the Bonds are listed on the Singapore Stock

Exchange and the rules of that exchange so require, published in a leading newspaper having general

circulation in Singapore (which is expected to be The Business Times). Such notices shall be deemed to have

been given on the later of the date of such publications. Any such notice shall be deemed to have been given

on the later of the date of such publication and the seventh day after being so mailed, as the case may be. So

long as the Bonds are represented by the Global Certificate and the Global Certificate is held on behalf of

Euroclear or Clearstream, Luxembourg or the alternative clearing system (as defined in the form of the Global

Certificate), notices to Bondholders shall be given by delivery of the relevant notice to Euroclear or

Clearstream, Luxembourg or the alternative clearing system, for communication by it to entitled

accountholders in substitution for notification as required by these Conditions.

17.8 Any notices or communications or process to be served on the Company in accordance with or pursuant to

these Conditions or the Trust Deed other than Conversion Notices shall be delivered in person, by post or by

fax (where appropriate) to the Company at, 5-9-22/B/404 My Home Sarovar, Secretariat Road Hyderabad -

500 004, India fax number +91 40 2329 8076 for the attention of the Company Secretary.

18. Agents

18.1 The initial Agents and their initial specified offices are listed below. Subject to the terms of the Agency

Agreement, the Company reserves the right at any time with the prior written approval of the Trustee to

vary or terminate the appointment of any Agent and appoint additional or other Agents or a replacement

registrar, provided that it will maintain:

18.1.1 a principal paying and conversion agent;

18.1.2 a registrar outside the United Kingdom;

18.1.3 a paying and conversion agent in a European Union member state that will not be obliged to

deduct tax pursuant to European Union Directive 2003/48/EC or any other Directive implementing

the conclusions of the ECOFIN Council meeting of 26-27 November 2000 on the taxation of

savings or any law implementing or complying with, or introduced in order to conform to, such

Directive; and

18.1.4 a transfer agent and paying and conversion agent having its specified office in Singapore for so

long as the Bonds are listed on the SGX-ST and the rules of such exchange require.

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18.2 Notice of any change in the Agents or their specified offices will promptly be given to the Bondholders in

accordance with Condition 17.7 with a copy to the Trustee. The Trust Deed sets out the circumstances in

which the Trustee may retire or be removed or replaced and notice of any change in the Trustee will be

given to the Bondholders as soon as practicable in accordance with Condition 17.7.

18.3 In acting hereunder and in connection with the Bonds, the Agents (excluding for the avoidance of doubt the

Trustee) shall act solely as the agents of the Company and will not assume any relationship of trust or

agency for any of the Bondholders.

19. Enforcement

At any time after the Bonds become due and payable and amounts in respect thereof remain outstanding, the

Trustee may, at its discretion and without further notice, institute such proceedings against the Company as it

may think fit to enforce the terms of the Trust Deed and the Bonds, but it will not be bound to take any such

proceedings unless:

i. it shall have been so directed by an Extraordinary Resolution or so requested in writing by the

Bondholders holding at least 25 per cent. of the principal amount of the Bonds outstanding; and

ii. it shall have been indemnified and/or secured to its satisfaction. No Bondholder may proceed

directly against the Company unless the Trustee, having become bound to proceed, fails to do so

within a period of sixty (60) Business Days and such failure is continuing and no direction

inconsistent with such written request or Extraordinary Resolution has been given to the Trustee

during such sixty (60) Business Day period by the holders of a majority in principal amount of the

outstanding Bonds.

20. Indemnification of the Trustee

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility

including provisions relieving it from taking certain actions unless indemnified and/or secured to its

satisfaction. The Trustee is entitled to enter into business transactions with the Company and any of its

subsidiaries and affiliated companies without accounting for any profits.

21. Governing law

21.1 These Conditions, the Agency Agreement, the Trust Deed and the Bonds are governed by, and shall be

construed in accordance with, English law. The Company has in the Trust Deed irrevocably agreed for the

benefit of the Trustee and the Bondholders that the courts of England are to have jurisdiction to settle any

disputes which may arise out of or in connection with these Conditions, the Trust Deed or the Bonds and

that accordingly any legal action or proceedings (the Proceedings) arising there from or in connection

therewith may be brought by the Bondholders in the courts of England.

21.2 The Company has in the Trust Deed irrevocably and unconditionally waived and agreed not to raise any

objection which it may have now or subsequently to the laying of the venue of any proceedings in the courts

of England and any claim that any proceedings have been brought in an inconvenient forum and has further

irrevocably and unconditionally agreed that a judgment in any proceedings brought in the courts of England

shall be conclusive and binding upon the Company and may be enforced in the courts of any other

jurisdiction.

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21.3 Nothing in this Condition shall limit any right to take Proceedings against the Company in any other court of

competent jurisdiction, nor shall the taking of proceedings in one or more jurisdictions preclude the taking of

proceedings in any other jurisdiction, whether concurrently or not.

21.4 The Company has in the Trust Deed irrevocably appointed Document Exchange Company LLP of 68 St

Margarets Road, Edgware, Middlesex, HA8 9UU United Kingdom, at its principal office for the time being as

its authorised agent to receive service of process for and on its behalf in any Proceeding in England. Such

service shall be deemed to be completed on delivery to such process agent, whether or not it is forwarded

to, delivered to or received by the Company. During the subsistence of these Conditions, the Trust Deed

and the Bonds, the Company shall ensure that it maintains such process agent (or any other process

agent) in England for the purpose specified herein and failing such appointment within fifteen (15) days

after demand by or on behalf of the Trustee, the Trustee shall be entitled to appoint such person at the

Company’s cost.

22. Contracts (Rights of Third Parties) Act 1999

No person shall have any right to enforce any term or condition of the Bonds under the Contracts (Rights of

Third Parties) Act 1999.

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SUMMARY OF THE TERMS OF THE GLOBAL CERTIFICATE

The Bond will initially be represented by a Global Certificate in registered form. The Global Certificate will be

delivered to, and registered in the name of a common nominee for, and held by the Common Depository for,

Euroclear and Clearstream, Luxembourg on the Issue Date. Except in the limited circumstances described in the

Global Certificate, owners of interests in the Bonds represented by the Global Certificate will not be entitled to

receive definitive Certificates in respect of their individual holdings of the Bonds.

The Global Certificate contains provisions, which apply to the Bonds while they are in global form, some of

which modify the effect of the Conditions set out in this Offering Circular. Terms defined in the Conditions have

the same meaning in the paragraphs below. The following is a summary of certain of those provisions:

Exchange and Registration of Title

Owners of interests in the Bonds in respect of which the Global Certificate is issued will be entitled to have title

to the Bonds registered in their names and to receive individual certificates in definitive form (“Definitive

Certificates”) if either (i) the Common Depositary or any successor to the Common Depositary notifies the

Company in writing that it is at any time unwilling or unable to continue to act as depositary and a successor

depositary is not appointed by the Company within 90 days of the date of such written notification by the

Company or (ii) either Euroclear or Clearstream, Luxembourg (or any other clearing system (an “alternative

clearing system”) as shall have been designated by the Company and approved in writing by the Trustee on

behalf of which the Bonds evidenced by the Global Certificate may be held) is closed for business for a

continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an

intention permanently to cease business or does in fact do so. The issue of Definitive Certificates will be

announced to the SGX-ST (as long as the Bonds are listed on the SGX-ST) and the rules of that exchange so

require, and such announcement will include all material information with respect to the issue and delivery of the

Definitive Certificates, including details of the paying agent in Singapore.

In such circumstances, the Company will at its own expense cause sufficient individual Definitive Certificates to

be executed and delivered to the Registrar for completion, authentication and dispatch to the relevant

Bondholders. A person with an interest in the Bonds in respect of which the Global Certificate is issued must

provide the Registrar with a written order containing instructions and such other information as the Company

and the Registrar may require to complete, execute and deliver such individual Definitive Certificates.

In the case of Definitive Certificates issued in exchange for the Global Certificate, such Definitive Certificates will

bear, and be subject to, such legends, as the Company requires in order to assure compliance with any

applicable law. The holder of such restricted Definitive Certificates may transfer the Bonds represented by such

Definitive Certificates, subject to compliance with the provisions of such legend. Upon the transfer, exchange or

replacement of Definitive Certificates bearing the legend, or upon specific request for removal of the legend on a

Definitive Certificate, the Company will deliver only Definitive Certificates that bear such legend, or will refuse to

remove such legend, as the case may be, unless there is delivered to the Company such satisfactory evidence,

which may include an opinion of counsel, as may reasonably be required by the Company that neither the

legend nor the restrictions on transfer set forth therein are required to ensure compliance with the provisions of

the Securities Act.

The Registrar will not register the exchange of interests in this Global Certificate for individual Definitive

Certificates for a period of 15 calendar days preceding the due date for any payment of principal and premium (if

any) in respect of the Bonds.

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Conversion

Subject to the requirements of Euroclear and Clearstream, Luxembourg (or the alternative clearing system), the Conversion Rights attaching to the Bonds in respect of which the Global Certificate is issued may be

exercised by the presentation thereof to or to the order of the relevant Paying and Conversion Agent of one or

more Conversion Notices (which may be by facsimile while the Bonds are represented by the Global Certificate)

duly completed by or on behalf of a holder of a book-entry interest in such Bonds. Deposit of the Global

Certificate with the relevant Paying and Conversion Agent together with the relevant Conversion Notice(s) shall

not be required. The exercise of the Conversion Right shall be notified by the Conversion Agent to the Registrar

and the holder of the Global Certificate. The provisions of Condition 4 of the Bonds shall otherwise apply.

Bondholder’s Redemption

The Bondholder’s redemption option in Condition 10.6 (Repurchase or Conversion of Bonds in the event of

Change of Control) and Condition 10.5 (Repurchase in the Event of Delisting) may be exercised by the holder of

the Global Certificate giving notice to the Principal Paying and Conversion Agent of the principal amount of the

Bonds in respect of which the option is exercised and presenting the Global Certificate for endorsement or

exercise within the time limits specified in those Conditions.

Cancellation

Cancellation of any Bond by the Company required by the Conditions to be cancelled following its redemption,

conversion or purchase by the Company shall be effected by reduction in the principal amount of the Bonds in

the Register of Bondholders.

Accountholders

For so long as any of the Bonds are represented by the Global Certificate and such Global Certificate is held on

behalf of Euroclear and/or Clearstream, Luxembourg or the alternative clearing system, each person who is for

the time being shown in the records of Euroclear and Clearstream, Luxembourg as the holder of a particular

principal amount of such Bonds (each an "Accountholder") (in which regard any certificate or other document

issued by Euroclear and Clearstream, Luxembourg as to the principal amount of such Bonds standing to the

account of any person shall be conclusive and binding for all purposes) shall be treated as the holder of such

principal amount of such Bonds for all purposes (including for the purposes of any quorum requirements of, or in

the right to demand a poll at, meetings of the Bondholders) other than with respect to the payment of principal

and premium and interest (if any) on such Bonds, the right to which shall be vested, as against the Company

and the Trustee, solely in the holder of the Global Certificate in accordance with and subject to its terms and the

terms of the Trust Deed. Each Accountholder must look solely to Euroclear or Clearstream, Luxembourg, as the

case may be, for its share of each payment made to the holder of the Global Certificate.

Mandatory Conversion Option of the Company

The Mandatory Conversion Option of the Company provided for in Condition 10.13 shall be exercised by the

Company giving notice to the Bondholders within the time limits set out in and containing the information

required by that Condition and Conditions 10.14, 10.15 and 10.18.

Payments

Payments of principal, interest (if any) and premium (if any) in respect of Bonds represented by this Global

Certificate will be made without presentation, and, if no further payment is to be made in respect of the Bonds,

surrender of the Global Certificate to or to the order of the Principal Paying and Conversion Agent or such other

Paying and Conversion Agent as shall have been notified to the Bondholders for such purpose.

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Transfers

Subject to and in accordance with the Agency Agreement, transfers of interests in the Bonds represented by the

Global Certificate will be effected through the records of Euroclear and Clearstream, Luxembourg and their

respective participants in accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg

and their respective direct and indirect participants.

The laws of certain jurisdictions require that certain purchasers of the Bonds take physical delivery of such

Bonds in definitive form. Accordingly, the ability of beneficial owners to own, transfer or pledge beneficial

interests in the Global Certificate may be limited by such laws.

Conversion through participants in Euroclear and Clearstream, Luxembourg will be effected in the ordinary way

in accordance with their respective rules and operating procedures.

None of the Company, the Lead Manager, the Trustee, the Common Depositary, the Registrar, the Principal

Paying and Conversion Agent, the Paying and Conversion Agent, the Transfer Agent, any custodian, any

transfer agent, any registrar or any other agent of the Company will have any responsibility for the performance

by Euroclear or Clearstream, Luxembourg, or their respective participants, indirect participants or account

holders, of their respective obligations under the rules and procedures governing their operations.

Notices

So long as the Bonds are represented by the Global Certificate and the Global Certificate is held on behalf of

Euroclear or Clearstream, Luxembourg or the alternative clearing system, notices to Bondholders may be given

by delivery of the relevant notice to Euroclear or Clearstream, Luxembourg, or the alternative clearing system,

for communication by it to entitled Accountholders in substitution for notification as required by the Conditions.

Such notices shall be deemed to have been given on day after the day on which they are delivered to the

clearing systems for communication to the entitled Accountholders.

The Global Certificate shall not be valid for any purpose until authenticated by or on behalf of the Registrar.

The Global Certificate is governed by, and shall be construed in accordance with, English law.

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CAPITALISATION

The table below sets forth the Company’s capitalisation and indebtedness as at 30 September 2007 which is an extract from the unaudited financial statements of the Company as at 30 September 2007 as it appears in the Offering Circular, as adjusted to account for the issue of the Bonds and excluding the expenses of the Offering. This table should be read in conjunction with the Financial Statements of the Company and related notes appearing in this Offering Circular (see “Financial Statement and Auditors’ Report”):

Particulars

Before FCCB Issue After FCCB Issue

As on 30 September 2007

Rs. in million

USD in million

Rs. in million

USD in million

Short-term debt

Secured debt 165.60 4.14 165.60 4.14 Unsecured debt 1018.25 25.45 1,018.30 25.46 Total long-term debt 1183.85 29.59 1,183.90 29.60 Shareholders’ funds

Issued, Subscribed and Paid up Share capital: 178.19 4.45 178.19 4.45

Reserves and surplus 1087.14 27.18 1,087.14 27.18 Share Warrants 60.19 1.50 60.19 1.50 Proposed Issue of FCCBs∗ 0.00 0.00 1,400.00 35.00 Total shareholders’ funds 1,325.52 33.13 2,725.52 68.13 Total capitalization 2,509.37 62.72 3,909.42 97.73

Rupee amount has been translated into U.S. dollars at the rate of Rs. 40 to US$1.00 solely for the convenience of the reader. Further, the amount in Indian Rupee terms may not be equal to Rs. 1,400 million as the proceeds are likely to be received at a different foreign exchange conversion rate. These translations should not be construed as representations that the India rupee amounts represents such U.S. dollar amount or could be, or could have been, converted into U.S. dollars at the rates indicated, or at all.

∗ without considering the over allotment option up to US$ 15 million

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SELECTED FINANCIAL INFORMATION

The summary financial data below has been extracted from the Company's financial statements for the years ended 31 March 2007, 2006 and 2005 included in the section "Financial Statement and Auditors’ Report " in this Offering Circular.

Indian GAAP differs in certain material respects from IFRS. For a discussion of significant differences between IFRS and Indian GAAP, see "Summary of Certain Significant Differences between Indian GAAP and IFRS". Following is the summarized financial position of the Company: (Rs. in million)

Particulars As at 31 March 2007

As at 31 March 2006

As at 31 March 2005

SOURCE OF FUNDS Share Capital

178.19 145.69 43.79

Share Application Money 60.19 - - Reserves & Surplus 997.84 538.29 51.95 Deferred Tax Liability 17.96 14.23 8.73 Secured Loans 91.19 83.19 74.01 TOTAL 1,345.38 781.40 178.48 APPLICATION OF FUNDS

Fixed Assets Gross Block 165.90 118.61 98.36 Less: Depreciation 49.45 32.61 22.60 Net Block 116.45 86.00 75.75 Capital work In Progress 109.13 161.08 - Current Assets, Loans & Advances 1,516.93 604.55 134.94 Less: Current Liabilities & Provisions 413.26 70.47 32.54 Net Current Assets 1,103.68 534.08 102.40 Miscellaneous Expenditure to the Extent Not Written Off

16.12 0.24 0.33

1,345.38 781.40 178.48

Profit & Loss Account for the year ended 31 March 2007, 2006 and 2005

(Rs. in million)

Particulars As at 31 March, 2007

As at 31 March 2006

As at 31 March 2005

INCOME Sales (net of returns) - Domestic 312.31 163.65 153.41- Exports 322.64 126.09 27.14Other Income 9.45 5.00 1.16TOTAL 644.41 294.74 181.72II EXPENDITURE Cost Of Goods Sold 413.66 187.61 111.76Employees Remuneration & Benefits 24.84 14.67 11.54Administrative, Selling And Other Exps 27.83 13.63 11.62Depreciation 16.84 10.00 8.39Interest & Financial Charges 13.43 7.65 10.79Misc. expenditure Written Off 0.09 0.09 0.09TOTAL 496.70 233.65 154.20Profit Before Tax 147.71 61.08 27.52Provision For Taxation - Current 9.00 2.00 1.45

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- Deferred Tax 3.72 5.50 2.10- Fringe Benefit Tax 0.42 0.20 -Profit After Tax 134.56 53.38 23.97Balance Brought forward from previous year 72.85 41.36 17.38Less: Utilised for Issue of 2,189,650 equity share of Rs.10/- each fully

paid Bonus Shares - (21.90) -Balance carried to Balance Sheet 207.40 72.85 41.36Earnings Per Share - Basic 9.07 3.66 5.47- Diluted 6.91 3.66 5.47

Unaudited results for the half year ended on 30 September 2007 and 2006 (Rs. in million)

Particulars

30 September

2007

30 September

2006 Net Sales 932.68 280.53

Other Income 2.11 1.89

Total Income 934.79 282.43

Expenditure -710.94 -208.53

Operating Profit 223.84 73.91 Interest -8.19 -7.56

Gross Profit 215.65 66.34

Depreciation -14.17 -6.51

Profit before Tax 201.49 59.84 Tax -28.60 -5.15

Profit after Tax 172.89 54.70 Net Profit 172.89 54.70

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

The following section should be read in conjunction with the Audited Financial Statements 1. Industry Structure and developments: The AIDC market has grown at a CAGR of 40% over the past two years. With the advent of new technologies like biometrics & RFID gaining increasing prominence, the Company has positioned itself to leverage its 15 years of experience in this business. The Company is expecting its traditional business lines to continue to grow at a CAGR of 30% to 35% over the next few years with the rapidly growing retail & manufacturing activities in the country. The RFID market is expected to jump from US$1.4 billion annually to US$1.6 billion in 2010. For the Company, RFID technology based solutions continue to be a strong contributor to its sales and profits. The barcode industry continues to be dominated by a large number of small players. Logistics and other companies who are in the supply – chain management areas constitute the major customer base for the industry. The automobile industry including the ancillaries is quickly adopting the latest AIDC technologies to bring in much needed efficiencies in production. A number of application areas provide an opportunity for automation, right from the point of receipt of material into a production facility to the final despatch of finished goods. 2. Review of Annual Operations The year 2006-2007 was a fairly good year for the Company with significant improvement in almost all the parameters. Given below is a snapshot of the financials:

(Rs. In millions.) Particulars 2005-2006 2006-2007 Increase/Decrease

(%) Total Income

29.474

64.441 118.64

Total Expenses other than Interest

22.60

48.326 113.83

Interest

0.765

1.343 75.55

Total Expenses

23.365

49.669 112.57

Profit Before Tax

6.108

14.771 141.81

Provision for Tax

0.770

1.312 70.38

Profit After Tax

5.338

13.455 152.06

Amount Brought Forward

4.135

7.285 76.17

Balance Carried forward

7.285

20.740 184.69

Ratios: The net profit ratio has increased from 18.11% in 2005-06 to 20.88% in the year 2006-07. The gross profit ratio is 27.63% in the year 2006-07 against 26.75% in 2005-06. Capital Structure: During the year 2006-07, the Company has offered 3.25 million equity shares on preferential basis at a price of Rs.110 each and issued 4,630,000 share warrants to the extent of Rs. 60.19 million. The share warrants will be converted into equity shares at Rs.130 each (Face Value of Rs.10 + a premium of Rs.120 per share). The amount raised has been shown as share application money in the Balance Sheet. These warrants will

89

be converted to equity shares at the end of May 2008. Reserves & Surplus: In the year 2006-07, the reserves stand at Rs.997.844 million against Rs. 538.287 million in the year 2005-06. The increase in reserves is Rs. 459.556 million. Out of such increase Rs.134.556 million is from generations and Rs.325.00 million is from share premium account for the year 2006-07. Net Worth: As on 31 March 2007, the net worth of the Company was Rs.1,220.102 million against Rs.683.739 million in 2005–06. There is an increase of about 78.45% over the previous year. The increase in net worth is 50.47% due to the preferential allotment and 28.01% due to 2006-07 generations. Secured Loans: The Company has not availed any term loans. It availed working capital facility from Bank of Baroda and availed hire purchase loans for cars from ABN AMRO Bank and Citi Bank. The secured loans outstanding were Rs. 91.195 million in the year 2006-07 against Rs. 83.1 million in 2005-06. The Company is regular in repayment obligations of the secured loans. Fixed Assets: There is an addition in fixed assets to an extent of Rs.47.394 million, which is mainly for acquiring equipment “R & D Centre” at Hyderabad. The fixed assets turnover ratio has improved from 3.43 in 2005-06 to 5.53 during the year 2006-07. Investments: During the year 2006-07, there has been no change in the investments of the Company. Loans, Advances & Deposits: Loans and advances as on 31 March 2007 were Rs.705.207 million against Rs.12.298 million as on 31 March 2006. Out of the above, advances to suppliers for capital assets account for Rs. 684.032 million for smart card project and deposits to an extent of Rs.11.121 million against Rs.0.773 million & Rs. 9.378 million respectively during the previous year 2005-06. Receivables: The receivables stand at Rs.727.161 million as on 31 March 2007 against Rs.169.889 million as on 31 March 2006. Major part of the receivables was outstanding for less than 6 months. Current Liabilities: The current liabilities as on 31 March 2007 were Rs.413.255 million against Rs.70.474 million as on 31 March 2006. The current liabilities consist of creditors for services, goods and expenses. 3. Opportunities and Threats Opportunities: Keeping in view the growth of the AIDC, RFID and smart card industry, the Company is striving hard to make its mark in the industry. The management is confident of achieving good business in the current year by enhancing the strengths in areas of core-competency. Threats: Technology obsolescence is a threat in any hi-tech industry and the Company has to continuously invest in research to keep abreast with the latest trends in the industry. Growth in customers’ industries like retail, automobiles and manufacturing in general has an impact on the fortunes of the Company. Remedy Significant investment into an R&D and Technology Centre (from the proceeds of the IPO) at the right time has mitigated the threat to a large extent. Moving forward, the Company is keen to strengthen its resources and maintain close relationships with the R&D labs of its principals. 4. Segment wise or product wise performance of the Company The Company’s business falls under a single product segment, i.e. providing solutions using AIDC technologies. However, the revenue generated by the Company can be segmented geographically with 56.48% of the revenues generated from domestic sales and 43.52% of the revenues generated from export

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sales (with 26.29% revenues from Singapore and 11.29% revenues being from Malaysia and remaining 5.94% revenues from other countries). 5. Outlook for the current year The Company during the year 2006-2007 has achieved a turnover of Rs 644.4 million and the EPS of the Company is at Rs.9.08 per share. During the current year, the Company expects its performance to continue to be top-class. In addition, with the investment into a state-of-the-art smart cards manufacturing facility, the revenues and profits of the Company are expected to shoot up significantly. 6. Risks and Concerns 1) The Company is planning to expand its operations and market outside India. This expansion may, in

some fronts, increase costs of operations. 2) The Company is dependent on external suppliers for most of its key materials and hardware components

that the Company deals in. Any failure of such suppliers to deliver these materials in time and in necessary quantities for the purpose of adhering to the delivery schedules could adversely affect the business of the Company.

3) The Company’s geographically diverse business operations and rapid growth have placed constraints on

the Company’s ability to generate financial information in a timely manner. If the Company has difficulty in integrating and upgrading its reporting systems, the Company’s ability to provide its management and investors with financial information, particularly for interim periods, may be adversely affected.

4) The Company has significant planned capital expenditures; its capital expenditure plans may not yield the

benefits intended. The capital expenditure mentioned in the objects of the Issue has not been appraised by any bank or financial institution.

5) The Company may mainly face competition from the new entrants in to the markets, which may affect the

profitability of the Company. 7. Internal Control Systems: The Company has suitable internal control systems and processes in place for the smooth conduct of its business. The Company maintains a system of internal controls designed to provide reasonable assurance regarding the effectiveness and efficiency of operations and for safeguarding the assets of the Company and for ensuring appropriate recording and reporting of financial information for ensuring reliability of financial controls and for ensuring compliance of applicable laws and regulations. The internal audit covers a wide variety of operational matters and ensures compliance with specific standards with regard to availability and suitability of policies and procedures. The internal audit function to evaluate the effectiveness of Management Information Systems (MIS) takes steps for safeguarding the assets of the Company. The audit committee of the Company monitors the performance of internal audit functioning of the Company on a periodical basis through continuous reviewing of the audit plans, audit findings and by ensuring to have corrective measures if any for rectification of any findings. 8. Material Developments in Human Resources / Industrial Relations: The Company has had an excellent track record of very cordial industrial relations right from the inception. The Company has reduced its present staff by forty five employees.

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THE INDUSTRY

The information presented in this section has been extracted from publicly available documents which have not been prepared or independently verified by the Company, the Lead Manager, or any of their respective affiliates or advisors. Automatic Identification and Data Capture AIDC is the industry term, which describes the identification, and/or direct collection of data into a microprocessor controlled device such as a computer system or a programmable logic controller (PLC), without the use of a keyboard. AIDC is a family of technologies for the unique identification of physical objects by automated processes. These technologies have been designed to bridge the gap between entities in the real world and computer databases that describe them. AIDC endows a computer system with a set of eyes that can uniquely identify any object that is appropriately tagged. Computer algorithms designed to improve efficiency can then work with direct and immediate knowledge of the environment, rather than process statistical information collected by hand at a prior date. AIDC technologies support two primary goals of any business sector: • To eliminate errors associated with identification and/or data collection • To accelerate the through-put process (the through-put process is the input to output process) to increase the efficiencies in the management control cycles. AIDC covers important and distinct groups of technologies and services. The same are represented herein below:

In addition to the above, AIDC also encompasses all emerging technologies and the support and supplies systems, which serve various industries, and industry segments.

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A majority of applications of AIDC are based on foundations, which are very generic in nature like • Tracking and Traceability • Transaction and Services Support • Product and Item • Access Control • Automation Support • Sorting of products and services AIDC is now being seen as a radical and revolutionary data carrier and identifier, disciplined with principles and practices that can be applied to virtually every sector of industry, commerce and services where data is handled and there exists a need to track and trace individuals, materials and equipment. AIDC applications have been widespread for decades and encompass such varied, critical and sometimes mundane tasks such as retail check out, warehouse inventory, livestock management, vehicle drivers’ licenses, keyless building entry systems, crowd management, etc. AIDC in effect increases the effectiveness of the processes of various industries and industry segments by creating new systems that reduce the human effort in recognizing objects. By decreasing human interference, applications of AIDC reduce labour costs, accelerate the movement of products, reduce the risk of potential errors, fraud and sabotage. AIDC increases the effectiveness of the data collection and also allows accumulation of large volumes of information. This collection and assimilation of information and data presents a higher value for a number of businesses and has opened newer markets such as data collection and data selling. In effect, AIDC systems offer both direct and indirect benefits to various segments of the society including: • Increased accuracy • Improved responsiveness • Increased speed • Improved quality • Increased productivity • Simplified processes and documentation • Reduced costs • Reduced inventories Data Capture and Carrier Technologies: Bar codes: Invented in the 1950s, bar codes are the oldest of the AIDC technologies. They can be printed easily and inexpensively on any printer. The technology encompasses the symbols that encode data to be optically read, the printing technologies that produce machine-readable symbols, the scanners and decoders that capture visual images of the symbols and convert them to computer-compatible digital data and the verifiers that validate symbol quality. A Bar code is a machine-readable representation of information in a visual format on a surface. Originally bar codes stored data in the widths and spacing of printed parallel lines, but today they also come in patterns of dots, concentric circles, and hidden in images. Bar codes can be read by optical scanners called bar code Readers or scanned from an image by special software used by the particular user industry/industrial unit. Bar codes are widely used to implement AIDC systems that improve the speed and accuracy of computer data entry. Bar codes are designed to provide reliable encodation of limited amounts of data (typically 30 characters maximum). These are used in a variety of applications including item identification in spare parts management, inventory management and super markets check out counters. Barcodes can also be produced easily and inexpensively. They can be printed on most dot matrix, laser, and thermal transfer printers depending on the quality customer’s demand. The bar code segment is estimated at around Rs. 2.50 billion in India and is growing at over 35% per annum. Hardware like printers and scanners contribute equally to 50% of the cost for a customer while the consumables like tags, labels, ribbons etc.-contribute 35% and the services account for the rest.

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Industry Users

• Courier and logistic industries are the active users of bar codes. The auto industry uses bar coding for auto data capture of information about its materials and supplies during receipt, storage, Work In Progress (WIP), dispatch and sales operations. In retail sales of auto parts spares and accessories, this is used to facilitate stock control, track and trace, consumption forecasting, etc.

• Pharmaceuticals and healthcare industries are also large users of bar codes. They are used

effectively to track distribution of the drugs in the market place and to recall them if necessary. They are also used provide quality service by tracking expiry dates of medical supplies, patient identification and billing, hospital stock management and order replenishment, etc.

• The largest growth segment is however, organized retail. The use of bar codes is already well

established in major retail sales institutions. The proliferation of malls and food bazaars is driving the growth in this segment.

• Currently, logistics contributes around 10% of the bar code industry. Retail contributes around 40%

and nearly 50% comes from all other industries like auto, pharmaceuticals, etc. (Source: http://indiaaidcshow.com/industry.htm) Biometrics : Biometric technologies are defined as “automated methods of verifying or recognizing the identity of a living person based on a physiological or behavioral characteristic”. Some of the biometrics technologies used are: fingerprint identification, iris identification, retinal identification, hand geometry, hand, palm, voice identification, facial feature identification, body salinity (salt) identification and ear identification. The need for biometrics is felt in all sectors of the society, governments, military, and corporate. In India biometrics is a Rs. 1.5 billion market and is growing at a CAGR of 70-100% (source: Company RHP – March 07). Electronic Article Surveillance (EAS): EAS is a technology used to identify items as they pass through a gated area. Typically this identification is used to alert someone of the unauthorized removal of items from a store, library, or data center. There are several types of EAS systems and more information is here on those different technologies. In each case, the EAS tag or label is affixed to an item. The tag is then deactivated when the item is purchased (or legally borrowed) at the checkout desk. When the item is moved through the gates (usually at a door to the premises), the gate is able to sense if the tag is active or deactivated and sounds an alarm if necessary. EAS systems are used anywhere that there is a chance of theft from small items to large. By placing an EAS tag on an item, it is not necessary to hide the item behind locked doors and so makes it easier for the consumer to look/feel/touch the product. EAS can be used as a tagging device at source, where the tag is built into the product at the point of manufacture or packaging. This makes the labelling of goods unnecessary, saving time and money at the store. (Source: www.aimglobal.com) Magnetic Cards: A magnetic stripe card is a type of card capable of storing data by modifying the magnetism of tiny iron-based magnetic particles on a band of magnetic material on the card. The magnetic stripe, sometimes called a Magstripe, is read by physical contact and swiping past a reading head. Magnetic stripe cards are commonly used in credit cards, identity cards, transportation tickets and so on. A number of International Organization for Standardization (ISO) standards define the physical properties of

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the card, including size, flexibility, location of the magstripe, and magnetic characteristics. They also provide the standards for financial cards, including the allocation of card number ranges to different card issuing institutions. The black stripe on the back of the magnetic card consists of three tracks of magnetic particles bonded to the card substrate, is the core of a magnetic stripe card. The magnetic stripe cards were introduced as next generation data carrier technologies after bar codes, primarily to: • Store data in a machine-readable form • Minimize paper utilization in financial transaction • Allow for automation However, the major problem with magnetic stripe cards is that data can be easily read and altered by anyone with access to the right kind of equipment. ‘Card skimming’ is the name given to the process of reading data of a valid card and copying it bit for bit on another card. Radio Frequency Identification (RFID): RFID tags are essentially pieces of circuitry available in various formats (embedded in labels or as a wide variety of plastic tags), which contain a database record of information. Readers use RF signals to communicate with the tags. Depending on design, they can be read from and/or written to without the need of line of sight. In general terms, RFID is a means of identifying a person or object using a radio frequency transmission, typically 125 khz, 13.56 mhz, or 800-900 mhz. The significant advantage of all types of RFID systems is the no contact, non-line-of-sight nature of the technology. Tags can be read through a variety of substances such as snow, fog, ice, paint crusted grime, and other visually and environmentally challenging conditions, where barcodes or other optically read technologies would be useless. An RFID system consists of three components, the RFID tag which can store data, an antenna which emits radio signals to activate the tag and read & write data to it, and the reader which decodes the data encoded in the tag’s silicon chip and passes it on to the computer for processing. The AIDC industry is moving rapidly towards the use of RFID in a number of high-value and high-volume market segments. The main application is in tracking products along a supply chain, from the manufacturers at the factory to the inventory trackers at the retail location. World over RFID market is expected to jump from current size of US$ 1.5 billion annually to US$ 6.1 billion by 2010 (source: Data Monitor). In order to reduce time lag taken in input of data, RFID is being used by companies to leverage the success of its past IT investments in Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) and Supply Chain Management (SCM). RFID is increasingly used in a number of high-value and high volume market segments. The factors, which are driving the growth of RFID as an enabling technology include (but are not limited to): • The US Government’s use of RFID to track military shipments (to and from the Persian Gulf, for example) and Wal-Mart’s mandate that has asked 138 of its retail suppliers to be RFID-enable at the case and pallet level. • The development of standards and standards bodies such as EPC (Electronic Product Code), ISO (International Standards Organization) and ongoing work by the Auto ID Center (a Joint Collaboration between the Uniform Code Council and EAN International). • IBM has created a new business unit called Sensors and Actuators that subsumes RFID into a larger strategy that envisions masssive intelligent networks of intelligent devices extending into machinery, household appliances and other equipment. • Dramatic benefits being achieved by leading consumer packaged goods, retail, manufacturing, logistics, transportation and healthcare companies. • Improvements in RFID technology Worldwide, RFID Systems are currently being used for:

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• Intermodal Container Identification • Rail and truck rolling stock identification • Animal (livestock and domestic) identification • Automated livestock feeding stations • Flexible manufacturing (tracking and control) • Cutting tool identification • Asset identification • Laundry tracking • Vehicle identification/access control • Automated debit/credit card • Automated toll collection • Personnel identification/access control Scenario in India: Worldwide, RFID is being driven by an electric mix of researchers and businessmen of Indian origin and provides an unprecedented opportunity for the country to export services and software. The technology whose applications are limited by ones imagination is primarily finding use in fleet management, inventory and asset management, warehouse automation, asset tracking, quality control, packaging, security and access control, hazardous material management, advertising and promotion, delivery and smart card -based payment systems. It has applications in many industry segments but currently the areas of focus are retail and supply chain management. The technology has got a new impetus with the emergence of Electronic Product Code (EPC), a set of standards that weaves basic RFID technology into a numbering scheme as they move across the business supply chain. As the benefits of the RFID-EPC technology become evident, more industries are investing their research effort into product development to lower the cost of RFID tags and weed out the teething problems. With its highly skilled workforce and strong IT base, India is a natural choice for firms engaged in RFID product development. India is also being used as a center for executing RFID implementations for the entire Asia-Pacific region. The country by itself is also a huge market for RFID solutions. Already, the interest in the technology is evident with the Indian pharmaceutical, defence and export sectors being the early birds in exploring its use. As a part of the supply chain for multinational corporations, the Indian companies are also expected to adopt the RFID-EPC technology. Smart cards: In spite of their tremendous popularity, magnetic stripe cards suffer from one crucial weakness i.e., data stored on them can be easily read and modified if accessed with the right kind of equipment. As a result, confidential information like PIN number or a password cannot be stored on them and a transaction host (POS device/ATM etc.) will have to go online to verify the PIN and this is both time consuming and costly. The development of smart cards along with rapid advances in cryptography has resulted in a solution to the above-mentioned problem. Given that the majority of smart card research initially went on in Europe, it is not surprising that Europeans are among the largest users of smart cards. Europe currently accounts for nearly 80% of the smart card market. France and Germany have been leading the world in terms of introducing various applications on smart cards. Smart cards are already being used the world over for a variety of purposes and in future they will become even more pervasive. Smart cards are the youngest members of the plastic card family. A smart card is defined as: “A plastic card, usually similar in size and shape to a credit card, containing a microprocessor and memory (which allows it to store and process data) and complying with ISO 7816 Standard.” In other words, a smart card can be defined as a card with a very tiny computer embedded in it. Smart cards are classified, primarily, based on: a) Card Components b) Card Interface

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c) Card Operating System a) Card Components: Memory Cards: These are the most common and least expensive cards. They contain:

• EEPROM: Electrically Erasable Programmable Read Only Memory. This is like a data storage device where all the application data gets written.

• ROM: Read Only Memory. It stores data that does not change during the card life. For example, it

might hold a card number, cardholder’s name etc. The simple technology of these cards enables them to be made very cheaply. These cards can store data from a few 100 bytes to up to 8 KB. These cards find wide acceptance in the pre paid phone card segment because of their simplicity. Other possible areas where they can be used include vending machines, transport and ticketing, prepaid parking schemes and loyalty programs. Microprocessor/Chip Cards: As the name implies, these are cards that incorporate a microprocessor. They are the ones that technically can be called smart cards. The important components of a chip card are:

• ROM: Read Only Memory—which holds the card’s operating system and is also known as the mask of the card. This is written to only once and cannot be altered.

• EEPROM—which holds the card’s application programs and the application data. This data is not permanent and is often erased and rewritten.

• RAM: Random Access Memory—which is the volatile memory used by the processor to run the desired functions

• CPU: Central Processing Unit—which is the heart of a chip card and is responsible for carrying out various instructions.

Chip Cards are more expensive than memory cards. These cards can house multiple applications and provide robust security. Such cards are used in access control, electronic purses, credit and other financial cards, travel, ticketing and other applications where high security is required. b) Card Interface: Smart cards are also classified on the basis of the method of their communication and data transfer with the reader device. Based on this criterion, the smart cards are classified as contact cards, contactless cards and combi cards. Contact cards have to be inserted into the reader while contact less cards are powered by a Radio Frequency Signal and do not require insertion into a reader. Combi cards, also known as hybrid cards, can be powered by insertion or by a Radio Frequency Signal. Contact less cards are costlier compared to contact cards. But they also have a greater life span and are more reliable. c) Card Operating System: Smart cards are also classified on the basis of their operating system. There are many Smart Card Operating Systems available in the market, the main ones being:

• MultiOS • JavaCard • Cyberflex • StarCOS • MFC

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Smart Card Operating Systems or SCOS as they are commonly called, are placed on the ROM and usually occupy lesser than 16 KB. SCOS handle:

• File Handling and Manipulation • Memory Management • Data transmission Protocols

Advantages of smart cards:

• Smart cards can hold up to 32 KB of data. This allows the card-transaction participants (card company, acquiring bank, issuing bank, retailers etc) to store a lot of additional information on the card.

• Data on a smart card can be protected against unauthorized viewing. As a result of this, confidential data (PIN, Passwords) can be stored on a smart card. This means, merchants do not have to go online every time to authenticate a transaction.

• A single smart card can house multiple applications. Just one card can be used as your license, passport, credit card, ATM card, ID card, etc.

• Life of a smart card is longer. • Smart cards cannot be easily replicated and are, therefore, much more secure than other cards.

Given these advantages, smart cards have really caught on in the telephony segment and are trying to penetrate into the financial card segment, which is monopolized by Magnetic Stripe Card segment. Market for smart card applications: Based on numbers, pre-paid telephone cards seem to be the most common smart card application. Often such applications are reloadable. Value can be added to a card by paying the dealer. This ensures repeated usage of the smart card. Along with conventional telephony, cellular phones also use smart cards. The SIM card that is inserted into a cellular handset is nothing but a smart card. The advent of smart cards is allowing banks to replace their various current cards (ATM, Debit, Credit, Travel, Entertainment etc) with one card. Smart cards are also being used in quite a few countries as electronic purses. Health care is another sector where smart cards are making their mark. Versichertenkarte in Germany and Sesam Vitale in France are examples of schemes using smart cards in Health Insurance Schemes. Given the advantages of smart cards over magnetic stripe cards, there can be no doubt that the future of smart cards is very bright. If the current trends are anything to go by, the smart card market is set for exponential growth in the next few years. The future of smart cards depends mainly on the introduction of multi-application cards and overcoming the simplistic mindset that smart cards are just a method of making a payment. Scenario in India: India has never offered as much business potential as it does today. It is rapidly making strides in Information Technology and the service sector makes the country an integral part of the global economy.The large population of young people being driven towards consumerism is likely to offer a market for any product. The affinity to accept global business practices customized to Indian norms is on a rapid rise. Over the last few years, the awareness of smart cards and its applications have gradually increased among the potential users in India. Significant growth has taken place in wireless cellular applications, retail loyalty applications, healthcare applications and vehicle registration applications. Several pilot projects have also been implemented for multi-application campus cards, banking, ID, automatic fare collection, toll, healthcare, etc. With the smart card market expected to grow from the current base of 40 million cards to 400 million cards in the next few years in India, both Indian as well as foreign smart card companies are showing keen interest in this market. Though, the smart card market in India is spread across a few major applications, two prominent segments amongst these applications are worth mentioning:

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a) Subscriber Identity Module (SIM): India has a predominantly Global System for Mobile (GSM) based mobile network, which requires a SIM. This GSM segment is growing rapidly and has been offering a tremendous potential to the smart card industry in India. Increasing cellular requirements in small cities and rural areas will fuel the growth. The mobile telecom sector has witnessed immense competition, which in turn has increased its penetration in the country. The downward pressure on prices due to competition has helped its expansion in the large segment of price sensitive middle class Indians. At the end of the year 2005, the total tele-density in India was around 10% highlighting the immense potential in the country. Further, the potential market size in rural markets, which is relatively untapped, is very huge. Furthermore, the Removable User Identification Module (RUIM) cards will enable better communication between Code Division Multiple Access (CDMA) and GSM subscribers. The need for roaming and inter- network communication amongst subscribers of both technologies is likely to develop as an important consideration for future. The market for such RUIM cards is expected to grow as CDMA and GSM subscribers are rapidly increasing in India. b) Driving licenses and vehicle registration certificates: India has 28 states and 7 union territories. A few states have aggressively promoted chip-based technology. For example, Gujarat, a state with a population in excess of 50 million and Madhya Pradesh, a central state having a population in excess of 60 million, have initiated the issuance of chip based documents. The Indian government has also been proactive in developing a uniform and interoperable operating system for such applications. Despite a few hurdles in the issuance of these cards, the concept is likely to spread across other states and union territories. A few of them have already initiated the bidding process for the deployment of chip-based infrastructure for these applications. Though, the SIM card market has driven the growth in the last five years, the rate of growth in banking and retail sector is expected to be larger in the coming years. The usage in transport and health care sectors is also expected to increase. The smart card usage in India will grow exponentially with increase of the smart cards by both Central and State Governments for the effective eGovernance Programmes. The proposed National ID project would further spiral the smart card segment growth in the country. A Frost & Sullivan Report on the smart card market in India estimates that the revenues from the smart card would grow at a CAGR of 48%. The reports estimates that smart card market in terms of revenues grow from current US $ 47.5 million to US $248 million by 2009.

Measurement Name Measurement Trend Market age Growth Increasing Base year revenues (2004) $47.5 million Increasing Potential revenues (market size in 2009) $248.0million Increasing

Base year market growth rate (revenues) 35.9% Increasing Forecast period market growth rate (revenues) 39.2% Increasing Base year unit shipments (2004) 43.1 million Increasing Potential units (market size in 2009) 310.0 million Increasing Base year market growth rate (units) 48.2% Increasing Forecast period market growth rate (units) 48.4% Increasing Average price for smart card (base year) $1.1 Decreasing

Source: Frost & Sullivan Similarly, The unit shipment forecasts for the Indian smart card market is expected to grow from 43.1 million units in 2004 to 310.0 million units by 2009 at a CAGR of 48% as shown herein below:

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Total Smart Card Market: Unit Shipment Forecasts (India), 2002-2009 Year Unit (Million) Unit Growth Rate

2002 20.3 --- 2003 29.1 43.8 2004 43.1 48.2 2005 66.6 54.3 2006 100.1 50.3 2007 159.5 59.5 2008 225.9 41.7 2009 310.0 37.2 Compounded Annual Rate (2004-2009): 48.4%

Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan The above estimates are for Indian market only. If one considers the probable export potential due to outsourcing to India the figures may be much more than the above. The Company is ideally positioned to take advantage of the above. The intrinsic demand for these products (which are import substitutes) can be gauged by the fact that our Company has buy back arrangements for most of the proposed production. Also, our Company is in talks with global majors for a probable tie-up for smart card supplies outside India. Future Growth Multi-purpose National Identity Card (MNIC) The central government has planned to implement, MNIC project which is currently in pilot mode in 20 selected sub-districts of 13 states and union territories. If the project is implemented it will last for 5-7 years with more than 700 million cards to be supplied. As the project is of national importance it is expected to be divided among 2-3 players which means each one of them will have to supply approximately 40 million cards per annum. The average realizations here will be much higher than SIM cards. Banking Cards According to Visa and Master card consortium, the existing magnetic swap cards used for banking transaction will be converted into smart cards to facilitate multiple applications and prevent fraud. The process has already started in the western countries and will take some time before it comes to India. The average realizations are around Rs. 100 per card.

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BUSINESS Brief Overview The Company was originally incorporated on 10 September 1990 as a private limited company under the name Super Bartronics Private Limited and converted into a public limited company on 27 July 1995. Thereafter, the Company changed its name to Bartronics India Limited on 1 January 1996.

The Company started its business with AIDC sector, by providing bar coding solutions and today, the Company is also providing solutions based on emerging technologies like RFID. The Company is certified with ISO 9001:2000 for its activities. The Company came out with its Initial Public Offer (IPO) in December 2005 and its equity shares are listed on BSE and NSE. The Company vide its board meeting held on 2 March 2007 has recently allotted 3,250,000 equity shares of Rs. 10 each at a price of Rs. 110 per equity share to the Qualified Institutional Buyers (QIBs) through Qualified Institutional Placement (QIP).

The initial promoters of the Company were Mr. Mehta & Family. During the year 2000, Mr. ABS Reddy & family and Mr. Satish Reddy & family agreed to buy out the shareholding of Mehta family. The Shares were acquired at par by Mr. A.B.S. Reddy, Mr. Satish Reddy, Mrs. Neeta Reddy and Mrs. R. Shobha Rani Reddy.

Evolving Business Model

Inorganic Growth

Retail Solutions

Acquisition of companies for global expansion

Provide retail solutions through tie-up with Intel

Future

2007

2005 till date

1995 till date

Solutions Business

Trading of AIDC Equipment

Smart Cards

80 million smart card manufacturing plant

Provide high-end AIDC solution to

manufacturing industries

• Bar code equipment • Access Control Systems • Label material, printers, verifiers and

allied products

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Since its inception, the Company had presence only in its traditional business viz. bar coding. During the year 2006-07, 65% of the Company’s revenues of Rs. 644.41 million were generated from barcodes, while the rest is split between Annual Maintenance Contract (AMC), RFID, biometrics and consumables. However, since last two years the Company has been able to build a strong business model by focusing on total solution in AIDC space i.e. AIDC technology like RFID and Biometrics. Hence 100% of the sales is through solutions. The Company handles projects primarily in the area of inventory, logistics, time, attendance and asset tracking systems. It provides both hardware and software solutions to its clients in RFID package. The same is integrated in the existing set up of clients and customized to their specific needs. The Company has started production of smart cards from July 2007 after completing the first phase of its 80 million cards manufacturing facility. It can manufacture cards with a memory capacity ranging from 8 kb to 256 kb with minimal incremental variable cost. Currently in India only 16 kb cards are being used. This is soon expected to go up to 128 kb with 3G spectrum. Product Profile The Company has four major divisions, each with the charter of delivering specific and highly specialised solutions in the Company’s four major focus areas, which are as follows: 1. AIDC technologies 2. RFID technologies 3. Retail IT 4. Smart Cards The following is the detailed description of the above divisions of the Company. 1) AIDC technologies The Company has been the pioneer in introducing AIDC technologies like bar coding and its manifold applications in India. The Company’s bar coding solutions aim at ensuring better process control and stock management for manufacturing and retail verticals. The Company also offers a range of smart cards solutions based on a bar-code or proximity that can be used for access control and time and attendance applications. Biometrics The latest in AIDC technologies is biometrics. Biometrics refers to using a biological measurable and within the AIDC spectrum offers spectacularly fool-proof characteristics, as biological parameter in question is usually unique to only one single person and cannot be duplicated or forged. The Company offers a number of biometrics based AIDC services and solutions, usually in conjunction with another technology like bar coding or smart cards. The biological measurable (key identifier) could be a fingerprint, iris mapping, salinity level of sweat, ear identification, etc. Biometrics has tremendous applications in defense, government, information technology enabled services and business process outsourcing and other industrial sectors and verticals where security is paramount. A recent growth area for this technology, identified and innovated by the Company, is the passport and visa sector. 2) RFID technologies RFID is the emerging technology for tracking goods and services worldwide and offers a better and more dynamic alternative to bar coding, as it enables tracking beyond point of sales. As the nomenclature indicates that here the identifier is input, recorded or tracked by the means of radio frequency methods. RFID solutions are equally beneficial to the consumer goods, industrial goods, logistics, retail, healthcare and other verticals. The basic and simplest application of this technology is through the tagging of high value assets like goods in retail, cargo consignments, work-in-progress and even vehicles. The tagged object can therefore be tracked as and when required. A related technology that has similar applications is radio frequency data collection where radio frequency waves instead of wires are used to transmit information, allowing real time portable data collection. The Company provides RFID solutions in the form of RFID reader, barcode reader and software which has to be integrated with the client’s existing system. This generally comprises of hardware and software.

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3) Retail IT The Company pioneers in providing retail IT solutions to its customers and the Company’s retail IT solutions improve business agility, impact positively on operational efficiency, provide better access to decision-making information, enhance the quality and speed of customer service and control hardware, software and labour costs. The Company is the only company to design, develop and manufacture integrated POS system in India. The Company’s retail IT solutions incorporate rugged hardware and are designed to seamlessly fit into retail businesses and also designed to grow with its requirements. 4) Smart Cards Division The Company’ smart card manufacturing unit is India’s first smart card manufacturing unit as of now, having 100% EOU status from Government of India. The Company is ISO 9001 & 2000 certified and all the cards manufactured in the Company’s plant conform to ISO 7816 standards. The Company offers one stop customized smart card based solutions and applications. The Company is manufacturing smart cards, magnetic stripe cards, scratch cards and plain PVC cards. The Company is also the first Indian manufacturing company to produce Smart Card Operating System for Transport Applications (SCOSTA) cards to meet global transport requirements. The Company having a capacity to manufacture 60 million cards per annum has supplied cards to banks, telecom companies and transport department of Government of India. The Company has supplied loyalty, access control, telecom application cards to most of the clients in India and abroad. The retail chain Wal-Mart and the U.S military have pushed their main suppliers to put RFID tags on products this year. As they have become commonplace, RFID systems will uniquely identify the items that they are attached to and by extension, may identify the person holding or wearing them. The push for faster, less labour-intensive, and more convenient retail checkout and inventory control has created the potential for new, hidden forms of surveillance of individuals. RFID holds great potential for increasing transparency, optimizing business processes and helping spotlight new business opportunities. The Company has been a pioneer in introducing this technology in the Indian market. In the past one year, the Company has successfully implemented RFID technology in many organisations. Typically, such technology has been implemented in asset tracking, monitoring movement of goods and personnel, and vehicle tracking. Product Mix over last three years:

YEAR HARDWARE SOLUTION

2005 143.10 21.90 2006 86.20 192.70 2007 86.88 548.08

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Segment Mix:

PRODUCT FY06(%) FY07(%)

AIDC 85 50 RFID 15 50

Further from July 2007, the Company has also forayed into manufacturing of smart cards. Presently, the Company’s products can be categorized into four segments, namely; bar codes, biometrics, RFID and smart card. With the expertise, the Company also offers ‘after sales service’ to the customer which makes it the only integrated player in the industry offering after sales service. Every hardware/ solution contract the Company gets into also involves an AMC, which has tenure of one year. Currently, AMC represents 12% of the Company’s total revenue, which provides the Company with stability and visibility in its revenue stream. During the year FY07, AIDC technology and RFID both contributed 50% each to the total revenue.

Capital Expenditure – Smart Card The Company has drawn a road map for a capex of Rs. 2.7 billion to set up a Greenfield manufacturing base of smart cards in two phases. Phase-1 was completed in July 2007 for manufacturing of smart cards with a capacity of 80 million. The second phase will be completed around December 2007, which is for manufacturing chips to be embedded in the smart cards. MODE OF FUNDING AMOUNT

(RS MN) RATE REMARKS

Warrants promoters 601.90 130 4.7 mn warrants issued to Promoter group in February, 2007

QIP 357.50 110 3.3 mn shares issued in March 07 FCCB (US$ 25 mn)* 1,000.00 140 ~7.1 mn shares Debts 650.00 - Internal accrual 170.00 - TOTAL 2,728.00

* use of FCCB proceeds : PARTICULARS AMOUNT IN US$ MILLION Import of Capital Goods 11.75 Subsidiary 10.20 Local Sourcing and Capital Goods 2.50 TOTAL 24.45 Future Business Plan The Company has embarked on an ambitious plan to invest over Rs. 2,700 million in a state-of-the-art Smart Cards manufacturing unit and an IC Module manufacturing unit. The funds required for this expansion were successfully raised and the first phase of the project is underway. The second phase of the project is targeted to start commercial production by January 2008. These were part of the organic growth plans drawn up by the Company post its maiden-IPO in December 2005. With the increase in its size, the Company is expected to gain efficiencies of scale with more sales and more quality customers. As the sales performance improves, it also gives tremendous competitive advantage in the market in terms of qualifying to bid for higher ticket projects thereby further enhancing the size and image of the Company. In order to exploit the traction that the Company has achieved due to investments into its core business areas, the Company has been actively exploring further opportunities for growth. These opportunities are the inorganic growth possibilities that emerge while scanning the business horizon. Accordingly a separate focus team was allotted the task of identifying profitable opportunities in similar business lines resulting in geographic market expansion or new product / service areas as probable growth drivers for the next 5 year perspective. Inorganic Growth Options Based on the intensive research done by the internal focus group on various options available the team has finalised two growth strategies for immediate implementation over the next 12 months. These are: a. Acquisitions

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The Company has been actively seeking acquisition opportunities to complement its current business model in the Solutions business. The main intention of this initiative has been to seek other geographic markets, which are equally attractive for the Company in terms of sustainable competitive advantage and long-term growth opportunities. Accordingly, opportunities were explored in the Middle East, European, American and South Asian Markets. A few companies were short-listed during the search process as potential acquisition targets. However, during the due diligence process, many of these opportunities fizzled out due to various reasons. One such target has now reached a comfort level where the Company has entered into the final price negotiations stage. The identified target company addresses US$2 billion market in the leisure & entertainment, education, healthcare and government & transportation industry. A 3-year old company, the target company has developed its own products and solutions using cutting-edge RFID technology. It has a strong patent base (5 issued/allowed, 12 pending, 122 disclosed). The products are already being beta-tested in a couple of high-profile customer points. The acquisition will give a much-needed jump-start to the Company’s foray into the US market. Apart from addressing an existing client base, the acquisition will also add significant value to the Company through the ownership of patents already received as well as pending patents. Through the ownership of these assets, the Company intends deploying the solutions in other markets in which it operates globally thereby widening its existing product/service portfolio in the RFID space. The Company estimates the cost of this acquisition and further build-up of the business at approximately US$20 million. Apart from financial funding, the effort will require the Company to deploy permanent manpower to develop and support the operations. Accordingly, the Company has initiated discussions with some identified personnel in the US for taking the business forward over the next 3-5 years. The Company also intends supporting the existing marketing infrastructure of the target company through sustained brand building and capitalising the existing marketing strengths of the Company. In terms of sales performance, the US operations are expected to generate significant revenues by the end of the first 12 months of operations. These are expected to ride on the booming demand for RFID technology products and solutions in a market, which is already exposed to the technology and has moved up beyond the “concept-selling” stage. With the target segments already identified and a dedicated team pursuing the opportunities, the Company’s US operations can quickly scale up to become a fairly large-size business enterprise. b. South Asia Operations The Company has been actively working on various assignments in Malaysia and Singapore over the past 2 years. The initial successes have had a major influence on the Company’s growth strategy for the future. In addition, there is an immediate need to set-up permanent infrastructure in the South Asian region to cater to the after-sales service requirements for the customers served by the Company over the last couple of years. In order to build and run an independent operation for the South Asian Market, the Company has recently incorporated a wholly owned subsidiary Company named Bartronics Asia Pte Ltd. at Singapore. Business plans for this company has been drawn up and with focussed approach, the Company believes that it is possible to scale up operations in the region to the level of current operations of the Company. It is envisaged that the operations will require a financial commitment of upto US$30 million to be spent on building infrastructure, funding the growth expenditure for a period of six months and further on for the purposes of acquisitions of similar companies in the South Asian region. Funds requirement for Inorganic Growth For funding the above activities related to planned inorganic growth of the Company, the Company intends procuring funds upto US$50 million. These will primarily be utilised for the purposes of business development in the two geographic markets identified by the Company, which afford an immediate opportunity. Operational Plan post funding of the growth options The Company’s management believes that the future scaling up of operations will depend largely on the ability of the organisation to manage two kinds of growth – organic and inorganic. As the organic growth plans are on target, the time has now come to focus and convert the inorganic growth plans to reality. In line with this objective, the Company intends securing the funds for funding the inorganic growth strategy before December 2007. The Company intends starting operations in the US by January 2008 to ensure the first full-year of operations (US Calendar – January 08 – December 08) to enable a full-year review at the close of accounting as per US GAAP. Currently, the Company is at the stage of negotiations for the acquisition of the identified target company, which will be followed by identification of suitable manpower and other resources to drive the business. For the South Asia operations, the Company has already short listed potential candidates for managing the operations, which will kick-start as soon as the funding process is completed. For both the markets, the Company believes that it should be able to show positive results within the financial year ending March 2009.

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Details of all branches and offices of the Company 1. Registered Office 5-9-22/B/404 My Home Sarovar Secretariat Road Hyderabad - 500 004, India 2. Corporate Office 5-9-22/B/404 My Home Sarovar Secretariat Road Hyderabad - 500 004, India 3. Manufacturing Unit for manufacturing of Smart cards Survey No. 351, Raj Bollaram Village Medchal Mandal Ranga Reddy District –501 401 4. Branch Offices The Company has its branch offices in Hyderabad, New Delhi, Pune, Jamshedpur, Chennai and Kolkata. Research and Development One of the main strengths of the Company is its ability to absorb the latest technologies in its areas of operations. This has been mainly due to its strong long-standing relationships with its principals. As a result of such a relationship, the Company enjoys access to the fundamental research and development initiatives taken by most of the principals. Consequently, the Company is aware of the technologies in the pipeline for the next 3-4 years. This not only helps the Company to address implications of technology obsolescence well in time but also enables development of applications around emerging technologies. In order to exploit this unique strength of the Company, the Company invested significantly over the last 2 years to set-up an application oriented Research and Development Department and Technology Centre. Engineers are put through a rigorous training programme at this centre to develop their capabilities in hardware and software. Further, the centre takes up the job of “productisation” of the solutions provided to the Company’s customers over the years. This kind of an “application oriented R&D” is helping the Company in cutting down the project gestation period as well as develop prototypes, which helps in the Company’s marketing efforts. The centre differentiates itself from similar centres owned by the Company’s principals by focusing on applications rather than fundamental research. This in-turn helps in minimizing the risks and investments that are usually associated with Research and Development labs. Strengths

• Diversified product portfolio • Strong Brand Value • Enviable Customer Base • Long-term relationship with Principals • Significant Manpower Retention • Strong team for after sales service • High levels of penetration on account of wider distribution network • Quality procedures in line with ISO standards • Technical competence • Application oriented R&D base • Export led future growth

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Key Customers of the Company

SL. NO. NAME OF THE CUSTOMER SALES ( IN%)

1. UNited Industrial Group (Asia) Ltd 30.66 2. Infokall Solutions Sdn Bhd. Malaysia 5.89 3. Infokall Inc., USA 12.84

Insurance The Company has taken an insurance policy for its plant and machinery, electrical equipment, furniture and fixture and raw materials located at Survey no. 351/B, Raj Bollaram (V), Medchal Mandal, RR Dist., Medchal-501401, Andhra Pradesh for an amount of Rs. 95,563,810. The Company has not taken any insurance policy for its employees. Intellectual Property Rights As on date, the Company’s brand name and logo are unregistered. However, the Company has filed the application(s) for the registration of its brand name i.e. ‘BARTRONICS’, under class 9, 35 and 42, which are still pending for registration with the Trade Marks Registry but the Company has not filed any application for registration of its logo in its name. Except as stated above, the Company has not applied/filed for any other intellectual property rights such as patents, designs, etc. Contracts/Agreements SL. NO.

NATURE OF AN AGREEMENT

NAME OF THE OTHER PARTY

DURATION OF

AGREEMENT

PURPOSE

1. Marketing Agreement- Value Added Reseller Agreement

Intellexflex Corporation, Delaware

2 February 2007 to 31 December 2007

To resell the products after value added configuration description.

Technical Collaboration Agreement 2. Memorandum of

Understanding Logiventures Limited, Sri Lanka

One year from 14 September 2006

Collaboration for implementation of projects in Sri Lanka. The same is under process of renewal

3. Memorandum of Understanding

M/s Tera Software Limited, Hyderabad

Two years from 1 March 2007

Association for projects pertaining to smart cards.

4. Mutual Non-Disclosure Agreement

M/s Crensis Software Solution Pvt. Ltd., Hyderabad

For confidential information pertaining to 2D bar-coding technique.

5. Mutual Non-Disclosure Agreement

Wipro Limited, Bangalore

Two Years from 7 March 2007

For confidential information relating to the techniques, schematics, designs, contracts, financial information, sales and marketing plans, business plans, clients, clients data, business affairs, operations, strategies, inventions, methodologies, technologies, employees, subcontractors, pricing, service proposals, procedures, products or services.

6. Strategic Partnership Agreement

Watchdata Technologies Pte. Ltd., Singapore (“Watchdata”)

One year from 28 September 2006

For the appointment of Watchdata on non-exclusive basis, to set up and operate as partner and use the brand name and other permitted facilities, for the smart cards products, metering products, manufacturing services and system integration. The same is under process of renewal

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7. Share Purchase Agreement

Internet Communication Limited

13 January 2006

The Company to enter into the field of manufacturing smartcards, has entered into the said agreement to purchase 100% equity of Iris Smartcards Limited, a unit based near Hyderabad. Internet Communications Limited has agreed to the Company to facilitate the purchase of 100% the said unit in which it holds 51% of the equity and shall also facilitate purchase of 100% equity shares. Internet Communications limited shall complete the process within a period of 18 months. Upon the Company acquiring a 51% stake of 51% or more in Iris Smartcards Limited, the same would become the subsidiary of the Company. Till date, the Company has not acquired any stake in Iris Smartcards Limited.

Employees As on 31 March 2007, the Company has a total strength of 81 employees. Employees Benefits Employees Provident Fund and Miscellaneous Provisions Act, 1952 (“EPF Act”) The provisions of the EPF Act are applicable to the Company and the Company is regular in depositing EPF dues with the appropriate authority. The Employees State Insurance Act, 1948 (“ESI Act”) The provisions of the ESI Act are applicable to the Company and the Company is regular in depositing ESI dues with the appropriate authority. Payment of Gratuity Act, 1972 The provisions of Gratuity Act are applicable to the Company and the Company is regularly contributing gratuity, in accordance with the provisions of the Gratuity Act. Payment of Bonus Act, 1965 (“Bonus Act”) The provisions of the Bonus Act are applicable to the Company and the Company is regularly calculating the bonus, in accordance with the provisions of the Bonus Act. Contingent Liability, as on 30 September 2007 SL.NO. DATE PARTY AMOUNT

MARGIN MONEY DUE DATE

Bank Guarantees (Rs.) (Rs.)

1 24 August 2006 Andhra Pradesh Technology Services 80,000.00 8,000.00 6 October 2006

2 30 August 2006 Ispat Industries Ltd. 145,945.00 15,000.00 30 July 2007

3 27 September 2006

Andhra Pradesh Technology Services 1,000,000.00 100,000.00 19 February 2007

4 23 October 2006 Asst. Commissioner of Central Excise 1,800,000.00 180,000.00 23 November 2011

5 20 February 2007 Andhra Pradesh Technology Services 100,000.00 10,000.00 8 July 2007

6 23 February 2007 National Mineral Development Corporation 1,500,000.00 150,000.00 28 September 2007

Total 4,625,945.00 463,000.00

Letter of Credit

1 16 October 2006

Intra Asia Trading PTE Ltd

USD 375,750

-

16 April 2007

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. Secured and unsecured loans The Company has taken secured loans in the form of working capital loan, term loan and vehicle loans from Bank of Baroda, ABN-AMRO Bank and Citi Bank, against the security of its plant and machinery, furniture and fixture, stock in trade, vehicles, etc., and approximately Rs. 162.6 million was outstanding as on 30 September 2007..The Company has not taken any unsecured loans, from the companies, firms or other parties. ECB facility The Company has availed ECB facility from ABN-AMRO Bank N.V., Singapore, aggregating to US$ 3.5 million, against the security of its plant and machinery, furniture and fixture, stock in trade, etc. Guarantees Mr. A. B. Satyavas Reddy and Mr. R. Satish Reddy, promoters and directors of the Company, have given their personal guarantee(s) in favour of Bank of Baroda, ABN-AMRO Bank and ABN-AMRO Bank N.V., Singapore, with respect to the aforesaid secured loans and ECB facility. Litigation The Company has no pending or threatened litigation in which the Company is involved, may become involved, or has been involved, whether as a claimant, defendant or third party. Assets and Properties The details of the properties on lease/leave/license of the Company are as follows:

SL. NO

.

LOCATION OF PROPERTY

NATURE OF

AGREEMENT

AREA (IN SQ. FT.)

CONSIDERATION (IN RS.)

DURATION PURPOSE

1. 5-9-22/B/404, My Home Sarovar Secretariat Road Hyderabad - 500 004

Registered office

2. M.C.H. No. 5-9-19/14 & 15, First Floor, Green Gates, Saifabad, Secretariat Main Road, Hyderabad, 500 063.

Lease Deed.

1596 sq. ft. Rs. 19,000 per month 11 months commencing from 1 August 2006 to 30 June 2007. The same has been renewed for a further period with 10% increase in rent.

Stores

3. Survey No. 351, Raj Bollaram Village, Medchal Mandal, Ranga Reddy District –501 401.

Lease Deed

1800 sq. ft. Rs. 2,000 per month, with an increase of 10% once in every 2 years.

5 years commencing from 7 April 2006 to 6 April 2011.

Manufacturng Unit fomanufacturng of smarcards.

4. 803, Road No. 36, Jubilee Hills, Hyderabad – 500 004.

Lease Deed.

Rs. 12.50 per sq. ft. from 1 April 2005 to 31 January 2006; Rs. 14.00 per sq. ft. from 1 February 2006 to 31 January 2008; Rs. 15.68 per sq. ft. from 1 February 2008 to 31 January 2010; and Rs. 17.56 per sq. ft. from 1 February 2010 to 31 July 2011.

6 years and 4 months from 1 April 2005 to 31 July 2011.

Branch Office.

5. Flat 10, Herne heaven Bldg - B, Yatindra Co-op

Leave and License Agreement.

1265 sq. ft. Rs. 11,000 33 months commencing from 12 July 2006 to 11 April

Branch Office

109

Society, Mangaldas Road, Pune 411 001.

2009.

6. 4th Floor Flat No. 841, Vijayas Golden Town. Sonari, Jamshedpur-831011.

Agreement for tenancy.

Rs. 6000 per month. 3 years commencing from 10 June 2006 to 10 June 2009.

Branch Office

7. Ground Floor, No. 35, Dr. Ambedkar Street, Arumbakkam, Chennai-600 106.

Rental Agreement.

700 sq. ft. Rs. 5,500 per month. 11 months commencing from 1 October 2006 to 31 August 2007. The same has been renewed for a further period.

Branch Office

8. 2nd Floor, No. 74, Nehru Colony, Kolkata.

- - Rs. 6,000 per month Valid till 1 December 2008

Branch Office

9. Flat No. 629, Sixth Floor, Somdatt Chambers – II, Bhikaji Cama Place, New Delhi – 110066

Lease Agreement

353 sq. ft. Rs, 45,890 per month from 6 November 2007 to 5 November 2008. Rs. 49,332 per month from 6 November 2008 to 5 November 2009. Rs. 53,032 per month from 6 November 2009 to 5 November 2010.

3 years commencing from 6 November 2007

-

10. Flat No. 630, Sixth Floor, Somdatt Chambers – II, Bhikaji Cama Place, New Delhi – 110066

Lease Agreement

324 sq. ft. Rs, 42,120 per month from 6 November 2007 to 5 November 2008. Rs. 45,279 per month from 6 November 2008 to 5 November 2009. Rs. 48,675 per month from 6 November 2009 to 5 November 2010.

3 years commencing from 6 November 2007

-

Agreement for Sale executed between the Company and Crown Castings Private Limited (“Purchaser”) The Company has entered into the said agreement to buy property measuring 10579 sq. yards situated at Municipal No: 7-2 shed No-B-49, Plot Nos. B - 49/1,2 and C - 44, 45 and 46, Sanath Nagar, Industrial Area, Hyderabad to the Purchaser at the rate of Rs. 8,500 per sq. yards aggregating to Rs. 89,921,500. The Purchaser has paid an amount of Rs. 70,000,000 on 16 January 2006 as advance and the balance amount of Rs. 19,921,500 to be paid by the Purchaser to the Company at the time of registration of the property. The Company shall deliver the possession of the said property to the Purchaser after the payment of balance amount to the Company. Licenses, Registrations, Consents, Permits and Approvals SL. NO.

ACT / STATUTE

AUTHORITY NATURE OF REGISTRATION &

NO.

DETAILS STATUS/ REMARKS

1. Foreign Trade Regulation Act, 1953

Deputy Chief Controller of Imports and Exports.

No.: 0991003624

Importer Exporter Code

Issued on 6 January 1992

2. Export Oriented Unit Scheme 2004 -2009

Assistant Development Commissioner

100% Export Oriented Unit No. 598/VSEZ

For manufacture of smart cards, etc.

Valid from 6 June 2006 to 5 June 2011.

3 Software Technology Park Scheme

Assistant Development Commissioner

100% Export Oriented Unit Approval letter no. STPH/IMSC/04-05/1343/19056

Approval for setting up 100% Export Oriented Unit for the development of computer software

-

4. Central Excise Rules, 1992

Assistant Commissioner

Central Excise Registration Certificate.

For its export oriented undertaking at SY No.

Issued on 19 July 2006 and valid till

110

of Central Excise.

No: - AAACB8231FXM001.

351/B, Raj Bollaram Village, Medchal, Ranga Reddy, Andhra Pradesh.

the Company carries on the activity for which the certificate has been issued or surrenders it or till it is revoked or suspended.

5. Customs Act, 1962.

The Assistant Commissioner of Customs and Central Excise.

Private Bonded Warehouse licence. No: 04/2007

The Company has a license to use its premises at 4th Floor, 5-9-22/B/404, My Home Sarovar, Opposite Secretariat, Saifabad, Hyderabad as private bonded warehouse, for the storage of imported customs goods without payment of duty on first importation thereof subject to conditions in the licence.

Issued on 10 January 2007 and valid up to 20 March 2008.

6. Finance Act, 1994 (32 of 1994)

Superintendent (Service Tax), Hyderabad

Certificate of Registration under section 69 of the Finance Act, 1994 (32 of 1994) No.: AAACBS231FST001

Maintenance or repair service.

Issued on 20 September 2003 and valid till the Company carries on the activity for which the certificate has been issued or surrenders it.

7. Central Sales Tax (Registration and Turnover) Rules, 1956.

Commercial Tax Officer

Certificate of Registration

No: PJT/06/1/1996 (Central) 91-92

For manufacturing and selling of barcode equipments, label materials, label printers, electronic instruments.

Valid from 1 November 1991 until cancelled.

8. Andhra Pradesh Central Sales Tax Act, 1957

Commercial Tax Officer

Certificate of Registration No.: PJT/06/1/2745/91-92

- Valid from 1 November 1991 until cancelled.

9. Income Tax Act, 1961

Income Tax Authorities

Permanent Account Number No.: AAACB8231F Tax Payer’s Identification Number No.- 28160212522

- Issued on 10 September 1990 Issued on 1 April 2003

10 Andhra Pradesh VAT Act, 2005

Commercial Tax Officer

No.: 28160212522 - Effective from 1 April 2005

11 Air Prevention & Control of Pollution) Act, 1981 and Water (Prevention and Control of Pollution) Act, 1974

Joint Chief Environmental Engineer

- Consent for Establishment Issued on 10 September 2007

Quality Certification

The Company has Quality Management Certificate bearing number 03311-2006-AQ-BOM-RvA dated 14 December

2002 for maintenance and repair activities of Automatic Identification and Data Collection (AIDC) equipment, System

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integration and marketing of Smart Cards, which has been approved by DET NORSKE VERITAS MANAGEMNT

SYSTEM against the quality management system standard of ISO 9001:2000

The said certificate is valid until 14 December 2008.

The Company has obtained SCOSTA compliance certificate from the Ministry of Communication and Information

Technology for the driving license cards and vehicle registration cards to be manufactured by the Company. The

certificate is valid till 26 august 2008.

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SUBSIDIARIES & ASSOCIATES

The Company has recently established two wholly owned subsidiaries, which are Bartronics Asia Pte Ltd and

Bartronics America Inc. The details of the same are as follows:

Bartronics Asia Pte Ltd

The Company has established the said subsidiary in Singapore to capture Asian market and provide better after sale

services.

The shareholding pattern of Bartronics Asia Pte Ltd as at 1 November 2007 is as follows:

Name of the Shareholder Number of shares held Shareholding (%) Bartronics India Limited 1000 100

Total 1000 100 As at 1 November 2007 the details of Bartronics Asia Pte Ltd are as follows:

Name Bartronics Asia Pte Ltd

Registration Number 200710613N

Registered Office 10, Jalan Besar, 10-12, Sim Lim Towers, Singapore

Authorised Share capital The authorised share capital of Bartronics Asia Pte

Ltd is S$1,000 divided into 1,000 equity shares of S$

1 each

Paid up Capital The paid up capital of Bartronics Asia Pte Ltd is S$

1,000 divided into 1,000 equity shares of S$ 1 each

Proportion of capital held by the Company 100%

Reserves (in Singapore Dollars as at 31 March 2007) company has been incorporated on 14 June 2007

Profit / (Loss) arising from ordinary activities after tax, for the last financial year (2006-2007) company has been incorporated on 14 June 2007

Value at which the Company shows shares held in its accounts (Indian Rupees in million) At Cost

The Directors of Bartronics Asia Pte Ltd as at 1 November 2007 are set out in the table below:

Name Designation

Sri.A.B.S.Reddy Director Sri Mahalingam Venkata Ramani Director

Bartronics America Inc.

The shareholding pattern of Bartronics America Inc. is as follows:

Name of the Shareholder Number of shares held Shareholding (%) Bartronics India Limited 1500 100% Bartronics India Limited 1500 100%

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The details of Bartronics America Inc. are as follows:

Name Bartronics America Inc.

Registration Number 0334318

Registered Office 16192 Coastal Highway, Lewes, DE 19958-9776,

County of Sussex, in the State of Delaware in United

States of America

Authorised Share capital The authorised share capital of Bartronics America

Inc. is US$1,500 divided into 1,500 equity shares of

US$ 1 each

Paid up Capital The paid up capital of Bartronics America Inc. is US$

1,500 divided into 1,500 equity shares of US$ 1 each

Proportion of capital held by the Company 100%

Reserves (in United States Dollars as at 31 March 2007)

company has been incorporated on 16 November 2007

Profit / (Loss) arising from ordinary activities after tax, for the last financial year (2006-2007)

company has been incorporated on 16 November 2007

Value at which the Company shows shares held in its accounts (Indian Rupees in million) At Cost

The Directors of Bartronics America Inc. are set out in the table below:

Name Designation

Mr. A. B. S. Reddy Director Mr. Venkat R Maram Director

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DIRECTORS AND MANAGEMENT

The Directors have ultimate responsibility for the management and administration of the affairs of the Company. The Articles of Association provide that the number of Directors shall not be less than three and more than 12 including additional, alternate, nominee or special directors, subject to the power to increase or decrease the said number in a general meeting. The Directors are not required to hold any shares in the company as qualification shares. At least three of the four core promoter shareholders shall be the directors of the Company provided the latter hold jointly or severally at least 2% of the subscribed capital of the Company between them. Further, at each general meeting of the Company one third of such directors for the time being are liable to retire by rotation or if their number is not three or a multiple of three, then, the number nearest to one-third shall retire from office. A Board of Directors consisting of the following directors presently manage the Company. The following table sets forth information regarding the Directors of the Company as at the date of this Offering Circular:

Name Position

Mr. Sudhir Rao Managing Director

Mr. A.B.S. Reddy Non-Executive Director

Mr. R.Satish Reddy Non Executive Director

Mr. T. Venkateswara Rao Whole Time Director

Mr. B. Narayanswamy Independent – Non Executive Director

Mr. K.N. Dupare Director – IDBI Nominee

Dr. Yenigalla Raghavendra Rao Independent Non-Executive Director

Mr. R. Subramaniam Independent Non-Executive Director

Profile of Directors 1. Mr. Sudhir Rao, Managing Director

Mr. Rao, 40 years, is the Managing Director of the Company. He holds a Post Graduate Diploma in Management (P.G.D.M) from the Indian Institute of Management (1989-91), Ahmedabad, and a Bachelor’s Degree in Economics and Advanced Accountancy from Osmania University, Hyderabad. He worked in Tata Consultancy Services (1991-94) as a ‘Senior Systems Analyst’. He has also worked in companies such as Shalina Laboratories Private Limited, Mumbai (Executive Assistant to Managing Director), Core Healthcare limited, Ahmedabad (Vice President-Corporate), and VMF SoftTech Limited, Ahmedabad / Hyderabad (Chief Operating Officer). In the Company, he had previously held the position of ‘Chief Operating Officer’.

2. Mr. A. B. Satyavas Reddy, Non-Executive Director Mr. Satyavas Reddy, 43 years, holds a Bachelors Degree (B.Tech.) in Mechanical Engineering from Osmania University, Hyderabad. He has more than a decade and a half of work experience through various capacities he has held in the engineering industry. He has worked as Vice-President Operations with M/s Handum Iron and Steel Enterprises Limited. He has worked in Backau Wolf (I) Ltd. (now known as Krupp India Ltd.) as tool room in charge, and Vickers Systems as shift in charge. He was in charge of productions in Saudi Pump Factory, Riyadh, Saudi Arabia and M/s. Spiral Tools Private Limited, Khed Shivapur, Pune. He has in-depth knowledge and experience in engineering industries, especially in the manufacturing activities side. He is also proficient in handling the technical and operational area of the plant’s activities. His work has taken him to many countries, including, Singapore, U.K., Malaysia, Italy, Saudi Arabia and Sri Lanka.

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3. Mr. R. Satish Reddy, Non Executive Director Mr. Satish Reddy, 43 years, holds a Bachelors Degree (B.E.) in Mechanical Engineering (1993-98) from Bangalore University. He held the position of ‘Production In charge’ in M/s. Megaflex Laminations (P) Ltd. Hyderabad, a tool design and heavy presses manufacturing concern. He also holds a Masters Degree in Computer Science from Tennessee State University, U.S.A. After returning to India, he worked with Tata Consultancy Services in the position of ‘Technical Support Professional’. In two years, he grew to be a software developer for engineering product description and development. He was involved in many new technology development and application projects where he also served as the coordinator. digitization conversion and mapping of software development solutions, E.R.P. solutions and electron hardware applications are some of the various areas he has a first hand experience of. 4. Mr. B. Narayanswamy, Independent - Non Executive Director Mr. Narayanswamy, 51 years is a B.Tech from Alagappa Chettiar College of Technology, University of Madras (1971-76), and holds a Masters Degree in Energy Technology (Renewable Sources) from Asian Institute of Technology, Bangkok (1981-82). He has first hand experience in a wide spectrum of industries, in a career span of 25 years. He has held various positions from a ‘Graduate Engineer Trainee’ to the position of ‘Advisor’ during this time. His area of expertise is wide and covers management, marketing, and projects/production and troubleshooting. Corporate and business planning; strategy development; techno- commercial and concept marketing; international trade and marketing, and process and plant optimization in synthetic pharmaceuticals, paper, textiles and garment industries are some specific areas of his expertise. 5. Mr. T. Venkateshwara Rao, Whole Time Director Mr. Venkateshwara Rao, 51 years, started his career working for Corporation Bank, in 1980. He acquired a Masters degree in Business Administration from Jamnalal Institute of Management Studies, in1988. He has had a career spanning 24 years, during which he has held various positions on the way up the corporate ladder. He is also a Certified Associate of the Indian Institute of Bankers (C.A.I.I.B), which is a Post Graduate Diploma in Financial Services awarded by the Indian Institute of Bankers. From September 1998 to July 2004, he worked for IndusInd Bank where he started of as a Branch head and finally became Vice President and Bank head of the Secunderabad branch. He has been honoured with the National award for the research work on behalf of Indian Banks’ Association on “Implementation and efficacy of Turn around Strategy for Sick Units under C.H.Baba Scholarship and Award”. 6. Mr. K N Dupare, Director – IDBI Nominee Mr. Dupare, 54 years, is a Post Graduate Commerce and has a Post Graduate Diploma in Marketing and Management and also a certified Associate of the Indian Institute of Bankers (C.A.I.I.B) awarded by Indian Institute of Bankers. He joined IDBI in 1987 and served in various capacities /departments at IDBI branches in Bhopal, Indore and Ahmedabad and headed the Branches at Indore and Goa. He is working in the capacity of Deputy General Manager in IDBI, at Mumbai. 7. Dr. Yenigalla Raghavendra Rao, Independent- Non Executive Director Dr. Raghavendra Rao, 59 years, is a B.E. and a D.Sc. He has over 35 years of experience in telecommunication, networking and information technology. A lot of this experience has been harboured in at government departments. He is also well experienced in project management in the telecom and software sector. His career spans over three decades beginning in March 1971 with ECIL, a government undertaking and is still going strong as an advisor to SmartBridges Pte Limited, Singapore, Ministry of Shipping, Govt. of India on implementation of software and automation of ports and as a consultant to United Nations Industrial Development Organization (UNIDO) for four countries viz., Malaysia, Singapore, Hong Kong, Indonesia in the field of EMI/EMC for electronic industries. 8. Mr. R. Subramaniam, Independent Non-Executive Director

Mr. Subramaniam is a B. COM graduate from Madras University. He holds the degrees of F.C.A (Institute of Chartered Accountants of India), A.I.C.W.A (Institute of Cost and Works Accountants of India), A.C.S. (Institute of Company Secretaries of India), A.C.I.S. (Institute of Chartered Secretaries, London). He has been conferred the title of SHIROMANI at the hands of Chief Minister of Tamilnadu. He began his career as Senior Finance Executive as a part of top management of a leading group engaged in diversified activities. He has founded the M/s. R. Subramaniam & Company in 1974, which handles assurance assignments of corporate entities engaged in varied lines of activity, large public sector undertakings, Major Commercial

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Banks, Life and General Insurance Companies. His areas of specialization include due diligence feasibility, financial closing of projects and corporate finance, take-over, mergers and acquisitions, etc. He was a Public Trustee and also as Director of “Life Insurance Mutual Fund/ Yogakshema Asset Management Company Ltd.” He has also been nominated by Financial Institution as “Independent Director”.

Directors' Remuneration Compensation of Managing Director/ Non–Executive Directors as on 31 March 2007 is as follows:

Name of the Director Designation Sitting Fee Commission Salary and Perquisites

Mr. Sudhir Rao Managing Director

Rs.2,270,640

Mr. A.B.S.Reddy Director Mr. R.SatishReddy Director Mr. T.Venkateswara Rao Director

Rs.10,000

Mr. B.Narayanswamy Director Rs.4,000 Mr. K.N.Dupare Nominee

Director Rs.8,000

Dr. Yenigalla Raghavendra Rao * Additional Director

Directors' shareholdings

The following table sets out the shareholdings of the Directors and the key management (listed below) in the

Company as at 15 September 2007:

Sr. No Name of the shareholder No.of shares Shareholding as a % of total number of outstanding shares

1 Mr. A. B. S. Reddy 2,292,800 12.87

2 Mr. R. Satish Reddy 1,390,000 7.80

Total 3,682,800 20.67 Related Party Transaction The Company has no related party transactions, as on date.

Organizational Structure and Key Core Personnel

The organizational structure and key management personnel with their responsibilities are as under:

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Name Date of Joining

Age Designation Qualification Current Responsibility

Service in the Company

Previous Experience

Mr. Sudhir Rao

August 1,2001

40 Managing Director

B.com, PGDBM

IIM(A)

Chief Executive

Officer

Five years and six months

Tata Consultancy Services, Core

Healthcare

Mr. C.S. Ravin dran

April 1, 2006

56 Chief Operating

Officer

Chemical Engineering,

PGDP. PGDFT

Chief Operating

Officer

Nine months Tata Group, Machineil and Megar, Kothari Group, Zoom

Group, Iris Smart Cards Limited

Mr. Bhanu

Prakash

April 24 1995

37 Vice President

M.Sc.,MBA Divisional Head

Eleven years and Ten months

Micro land, Arke Tech Services

Mr. Parasa Srinivas

April 1, 2004

51 Vice President

B. Tech (Electronics)

Divisional Head

Two years and eight months

Credit Suisse First Boston, USA

Mr. V.Sanker

April 1, 2005

40 Vice President

PGDM Divisional Head

Five Months Kelvinator India, ITW Signode, Extredge POS

Systems.

Mr. G. Rajesh

August 1, 1996

33 National Sales

Manager

B.Com, PGDBM Head of sales Division

Ten years and six months

First Employment

Mr. K.V.V.S. N Murthy

October 16, 2002

42 Manager Purchase

B.Com, PGDCA Head-Procurement

Four years and six months

Chowgule Enggrs, Harvin Scientific Optics, Kakarla

Electronics

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Mr H.Arun Shourie

May 9, 2005

23 Company Secretary

B.Com, ACS Head-Secretarial

One year and Nine Months

First Employment

Nominee Directors As at the date of this Offering Circular, there is only one nominee director on the Board i.e. Mr. K. N. Dupare. Employee Stock Option Scheme The Company at its EGM held on 29 January 2007 has passed a special resolution under Section 81(1A) of the Companies Act, 1956, for issuing stock options, not exceeding 800,000 stock options to the permanent employees including the Directors of the Company, pursuant to the SEBI Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999. The scheme is implemented. Corporate Governance The Company believes that the fundamental and sound principles of Corporate Governance are transparency in operations with greater accountability and fair dealing by way of providing all the required information to the stakeholders in order to protect their interest. The Company is committed in adhering to good corporate governance practices by providing detailed information on various issues concerning the Company’s business and financial performance to the Shareholders of the Company. The Board is committed towards welfare of shareholders with broad principles of Corporate Governance, which may drive the actions of the Company towards achieving of the Company’s objectives. Board Committees The Board Committees are as follows: Audit Committee: The Audit Committee was constituted during the financial year 2005-06 on 25 April 2005. The terms of the Audit Committee comply with the requirements of Clause 49 of the listing agreement to be entered into with the stock exchange. The Audit Committee consists of only non-executive directors, with the majority being independent directors. The Committee currently comprises of four members namely Mr. R. Subramanian as its Chairman, Mr. A. B. S. Reddy, Mr. B Narayanaswamy, Mr. Y.R. Rao and Mr. K. N. Dupare as its members. The terms of reference of the Audit Committee are as under 1. To oversee our Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. 2. Recommending to the Board, the appointment, re-appointment and, if required, the Replacement or removal of the statutory auditor and the fixation of audit fees. 3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors. 4. Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to: a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of section 217 of the Companies Act, 1956. b. Changes, if any, in accounting policies and practices and reasons for the same. c. Major accounting entries involving estimates based on the exercise of judgment by management. Significant adjustments made in the financial statements arising out of audit findings. e. Compliance with listing and other legal requirements relating to financial statements for disclosure of any related party transactions. g. Qualifications in the draft audit report. 5. Reviewing, with the management, the quarterly financial statements before submission to the board for

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approval. 6. Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the internal control systems. 7. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. 8. Discussion with internal auditors any significant findings and follow up there on. 9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board. 10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern. 11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors. 12. To review the functioning of the Whistle Blower mechanism, in case the same is existing. 13. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. The Audit Committee will also mandatorily review the following information: 1. Management discussion and analysis of financial condition and results of operations; 2. Statement of significant related party transactions (as defined by the audit committee), submitted by management; 3. Management letters / letters of internal control weaknesses issued by the statutory auditors; 4. Internal audit reports relating to internal control weaknesses; and 5. The appointment, removal and terms of remuneration of the Chief Internal Auditor shall be subject to review by Audit Committee. Remuneration Committee: The Remuneration Committee was constituted during the financial year 2005-2006 on 25 April 2005. The Remuneration Committee consists of non-executive directors, with the Chairman being an independent director. The Committee currently comprises of four members namely Mr. R. Subramanian (Chairman), Mr. B. Narayanswamy, Mr. Y.R. Rao and Mr. K. N. Dupare as its members. The Committee has been formed to decide and approve the remuneration package of directors of the Company and other matters related thereto. Shareholders / Investor Grievance Committee: As part of its Corporate Governance initiative, the Company constituted the Shareholders/Investors Grievance Committee during the financial year 2005-06 on 25 April 2005. The Shareholders Grievance Committee consists of Mr. Sudhir Rao, Mr. Satish Reddy, Mr. A. B. S. Reddy and Mr. K. N. Dupare as its members. Mr. A. B. S. Reddy is the Chairman of the Committee. The Committee is formed to specifically look into all the matters relating to Shareholders’ Grievances like non-receipt of balance sheet, non receipt of declared dividends, etc. Share Transfer Committee: The Share Transfer Committee was constituted during the financial year 2003-2004 on 15 September 2003. The committee now comprises of Mr. Sudhir Rao, Mr. Satish Reddy and Mr. K. N. Dupare. Mr. Sudhir Rao is the Chairman of the Committee. The Committee is formed to look into the matters relating to share transfers, rejection of share transfers, consolidation of shares, issue of duplicates etc. During the year 2006-07, the Company received 6 investors’ complaints with respect to transfer, transmission, transposition, dividend, etc., and all of these 6 investors’ complaints were resolved during the year 2006-07 only.

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PRINCIPAL SHAREHOLDERS

The Company had a total of 17,819,078 Shares as at 30 September 2007. The following table sets out the

pattern of shareholdings in the Company as of that date:

Category of shareholder Total no. of shares

Total shareholding as a % of total no.

of shares

As a %

of (A+B)

As a % of (A+B+C)

(A) Shareholding of Promoter and Promoter Group

(1) Indian

Individuals / Hindu Undivided Family 5999729 33.67 33.67

Bodies Corporate 625000 3.51 3.51

Financial Institutions / Banks 1275000 7.16 7.16

Sub Total 7899729 44.34 44.34

(2) Foreign

Total shareholding of Promoter and Promoter Group (A) 7899729 44.34 44.34

(B) Public Shareholding

(1) Institutions

Mutual Funds / UTI 490451 2.75 2.75

Financial Institutions / Banks 4000 0.02 0.02

Foreign Institutional Investors 1717997 9.64 9.64

Sub Total 2212448 12.41 12.41

(2) Non-Institutions

Bodies Corporate 1980554 11.11 11.11

Individuals

Individual shareholders holding nominal share capital up to Rs. 1 lakh 4245129 23.82 23.82

Individual shareholders holding nominal share capital in excess of Rs. 1 lakh 1038833 5.83 5.83

Any Others (Specify)

NRIs/OCBs 343758 1.93 1.93

Clearing Members 92877 0.52 0.52

Trusts 5720 0.03 0.03

Sub Total 7706901 43.25 43.25

Total Public shareholding (B) 9919349 55.66 55.66

Total (A)+(B) 17819078 100 100

(C) Shares held by Custodians and against which Depository Receipts have been issued

Total (A)+(B)+(C) 17819078 100 100

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Major Shareholders

The SEBI regulations require the Company to disclose the details of all shareholders holding 1 per cent or more of its equity interests. Statement showing Shareholding of persons belonging to the category "Promoter and Promoter Group" as of 30 September 2007.

Sr. No. Name of the shareholder No. of shares

Shares as a % of total

number of shares

1 A B Satyavas Reddy 2292800 12.87 2 R Satish Reddy 1390000 7.8 3 Industrial Development Bank of India Ltd 1275000 7.15 4 A B Neeta Reddy 1188700 6.67 5 R Shobha Rani Reddy 913350 5.13 6 Bennet Colomen & Company Ltd 600000 3.37 7 Faisal Hawa 130879 0.73 8 Nehar K Oza 39000 0.22 9 Chaitali Vora 10000 0.06

10 Rasvick Apperals Pvt Ltd 25000 0.14 11 P C Doshi HUF 12500 0.07 12 G C Doshi HUF 12500 0.07 13 Pawan Kumar Sachdeva 10000 0.06 Total 7899729 44.34

Statement showing shareholding of persons belonging to the category “Public” and holding more than 1 % of the total number of shares, as on 30 September 2007:

Sr. No.

Name of the shareholder

No. of shares

Shares as a % of total

number of shares

1 DSP Merril Lynch Trustee Co. Pvt Ltd A/C 362,326 2.03

2 Merrill Lynch Capital Markets Espana S.A 288,611 1.62

3 Shinsei UTI India Fund (Mauritius) Limited 461,157 2.58

4 India Emerging Opportunities Fund Ltd 423,657 2.38

5 Planetary Mauritius Ltd 300,000 1.68

6 Ask Investment Managers Pvt Ltd 263,166 1.48

7 Desai Janak Navin 250,000 1.4

TOTAL 2,348,917 13.17

Statement showing details of locked-in shares, as on 30 September 2007:

Sr. No. Name of the shareholder No. of shares Locked-in shares as a % of total number

of shares

1 A B Satyavas Redy 778800 4.36

2 R Satish Reddy 864000 4.84

3 A B Neeta Reddy 815640 4.57

4 R Shobha Rani Reddy 455350 2.55

Total 2913790 16.32

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CLEARANCE AND SETTLEMENT OF THE BONDS

Custodial and depositary links have been established with Euroclear and Clearstream, Luxembourg to facilitate the initial issue of the Bonds and transfers of the Bonds associated with secondary market trading.

The Clearing Systems

Euroclear and Clearstream, Luxembourg

Euroclear and Clearstream, Luxembourg each holds securities for participating organizations and facilitates the clearance and settlement of securities transactions between their respective participants through electronic book-entry of changes in the accounts of their participants. Euroclear and Clearstream, Luxembourg provide their respective participants with, among other things, services for safekeeping, administration, clearance and settlement of internationally-traded securities and securities lending and borrowing. Euroclear and Clearstream, Luxembourg participants are financial institutions throughout the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Indirect access to Euroclear or Clearstream, Luxembourg is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Euroclear or Clearstream, Luxembourg participant, either directly or indirectly.

Distributions of principal and interest with respect to book-entry interests in the Bonds held through Euroclear or Clearstream, Luxembourg will be credited, to the extent received by the Paying Agent, to the cash accounts of Euroclear or Clearstream, Luxembourg participants in accordance with the relevant system's rules and procedures.

Registration and Form

Book-entry interests in the Bonds held through Euroclear and Clearstream, Luxembourg will be evidenced by the Global Certificate, registered in the name of a nominee of the Common Depositary. The Global Certificate will be held by a Common Depositary for Euroclear and Clearstream, Luxembourg. Beneficial ownership in Bonds will be held through financial institutions as direct and indirect participants in Euroclear and Clearstream, Luxembourg.

The aggregate holdings of book-entry interests in the Bonds in Euroclear and Clearstream, Luxembourg will be reflected in the book-entry accounts of each such institution. Euroclear or Clearstream, Luxembourg, as the case may be, and every other intermediate holder in the chain to the beneficial owner of book-entry interests in the Bonds, will be responsible for establishing and maintaining accounts for their participants and customers having interests in the book-entry interest in the Bonds. The Registrar will be responsible for maintaining a record of the aggregate holdings registered in the name of a nominee for the Common Depositary for Euroclear and Clearstream, Luxembourg and Bondholders in definitive registered form. The Paying Agent will be responsible for ensuring that payments received by it from the Issuer for holders of interests in the Bonds holding through Euroclear and Clearstream, Luxembourg are credited to Euroclear or Clearstream, Luxembourg, as the case may be.

The Issuer will not impose any fees in respect of the Bonds; however, holders of book-entry interest in the Bonds may incur fees normally payable in respect of the maintenance and operation of accounts in Euroclear and Clearstream, Luxembourg.

Global Clearance and Settlement Procedures Initial Settlement

Interests in the Bonds will be in uncertificated book-entry form. Purchasers electing to hold book-entry interests in the Bonds through Euroclear and Clearstream, Luxembourg accounts will follow the settlement procedures applicable to conventional eurobonds. Book-entry interests in the Bonds will be credited to Euroclear participant securities clearance accounts on the business day following the Issue Date against payment (for value the Issue Date), and to Clearstream, Luxembourg participant securities custody accounts on the Issue Date against payment in same day funds.

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Secondary Market Trading

Secondary market sales of book-entry interests in the Bonds held through Euroclear or Clearstream, Luxembourg to purchasers of book-entry interests in the Bonds through Euroclear or Clearstream, Luxembourg will be conducted in accordance with the normal rules and operating procedures of Euroclear and Clearstream, Luxembourg and will be settled using the procedures applicable to conventional participants.

General

Although the foregoing sets out the procedures of Euroclear and Clearstream, Luxembourg in order to facilitate the transfers of interests in the Bonds among participants of Euroclear and Clearstream, Luxembourg, neither Euroclear nor Clearstream, Luxembourg is under any obligation to perform or continue to perform such procedures and such procedures may be discontinued at any time.

None of the Issuer and any of its agents will have any responsibility for the performance by Euroclear or Clearstream, Luxembourg or their respective participants of their respective obligations under the rules and procedures governing their operations.

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DESCRIPTION OF THE SHARES

Set forth below is certain information relating to the share capital of the Company including a brief summary of some of the provisions of the Memorandum and Articles of Association of the Company, the Securities Contracts (Regulation) Act, 1956 (as amended) ("SCRA") and the Companies Act and certain related legislation of India, all as currently in effect, relating to the rights attached to the Shares.

General

On the date of this Offering Circular, the Company's authorised share capital is Rs. 600 million consisting of 60 million equity Shares of Rs. 10 each. The issued, subscribed and paid-up capital of the Company is Rs. 193,173,580 consisting of 19,317,358 equity shares of Rs.10 each. The Shares are listed on the Indian Stock Exchanges.

Out of total 19,317,358 issued and outstanding shares of the Company, 17,819,043 shares are in registered electronic (dematerialized) form. As of the date of this Offering Circular, 19,317,358 Shares have been issued, all of which are fully paid.

Dividends

Under the Companies Act, the Board of Directors first recommends the payment of a dividend, which is then declared by shareholders in a general meeting. However, the Board of Directors is not obligated to recommend a dividend. Under the Articles of Association of the Company, the Company in general meeting may declare dividends but no dividend shall exceed the amount recommended by the Board. In India, dividends are generally declared as a percentage of the par value of a company’s equity shares. The dividend recommended by the directors, if any, and subject to the limitations described above, is required to be distributed and paid to shareholders in proportion to the paid up value of their shares, as on the record date that such dividend is payable, within 30 days of the approval by the shareholders at the company’s annual general meeting. Any dividend so declared is required to be deposited in a separate bank account within a period of five days from the date of declaration of such dividend. The amount deposited shall be used for payment of dividends only. Pursuant to the Company’s Articles of Association, the Board may from time to time pay to the members such interim dividends as appear to it to be justified by the profits of the Company.

Under the Companies Act, dividends can only be paid in cash to the registered shareholder on a record date fixed on or prior to the annual general meeting or to his order or his banker’s order. No shareholder is entitled to a dividend while any lien in respect of unpaid calls on any of such shareholder’s shares is outstanding.

The Shares issued upon conversion of the Bonds will rank pari passu, subject to listing, with the existing Shares of the Company in all respects including entitlement in respect of dividend declared, where the record date falls on or after the Conversion Date.

The Companies Act provides that any dividends that remain unpaid or unclaimed after the 30 days period referred to above to any shareholder entitled to the payment of the dividend must be transferred to a special bank account within seven days. The company is required to transfer any dividends that remain unclaimed for seven years from the date of transfer to the special bank account to the Investor Education and Protection Fund (the “Fund”) established by the Government under section 205C of the Companies Act. The proceeds of the Fund are utilised to promote investor awareness and the protection of investors' interests. Following such transfer, such unclaimed dividends cannot be claimed. No claim shall lie against the Fund or the company in respect of the amounts transferred to the Fund in respect of individual amounts that were unclaimed and unpaid for a period of seven years from the dates that they first became due for payment.

Under the Companies Act, dividends may be paid out of the profits of a company in the year in which the dividend is declared or out of the undistributed profits of previous fiscal years, after providing for depreciation in the manner provided for in the Companies Act. Before declaring a dividend greater than 10% of the par value of its shares, the company is required under the Companies Act to transfer to its reserves a minimum percentage of its profits for that year, ranging from 2.5% to 10% depending upon the dividend percentage to be declared in such year and in the manner set forth in the Companies (Transfer of Profits to Reserves) Rules,

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1975. The Companies Act further provides that, in the event of an inadequacy or absence of profits in any year, a dividend may be declared for such year out of the company’s accumulated profits or reserves, and subject to the following conditions set forth in the Companies (Declaration of Dividends out of Reserves) Rules, 1975:

• the rate of dividend to be declared may not exceed 10% of the company’s paid up capital or the average of the rate at which dividends were declared by the company in the prior five years, whichever is less;

• the total amount to be drawn from the accumulated profits earned in the previous years and transferred to the reserves may not exceed an amount equivalent to 10% of its paid up capital and free reserves, and the amount so drawn is to be used first to set off the losses incurred in the fiscal year before any dividends in respect of preference or equity shares are declared; and

• the balance of reserves after withdrawals shall not fall below 15% of its paid up capital.

Capitalisation of Reserves and Issue of Bonus Shares

Any issue of bonus shares would be subject to the guidelines issued by the SEBI. The relevant SEBI guidelines prescribe that no company shall, pending conversion of fully convertible debentures or partly convertible debentures, issue any shares by way of bonus unless a similar benefit is extended to the holders of such fully convertible debentures or partly convertible debentures, through reservation of shares in proportion to such convertible part of the fully convertible debentures or partly convertible debentures. Further, for the issuance of such bonus shares, a company should not have defaulted in the payment of interest or principal in respect of fixed deposits and interest on existing debentures or principal on redemption of such debentures/bonds nor can bonus be declared unless the partly paid-up shares are fully paid-up. The declaration of bonus issue in lieu of a dividend cannot be made. The bonus issue shall be made out of free reserves built out of genuine profits or share premium amount collected in cash only. The reserves created by revaluation of fixed assets cannot be capitalised. Further, a company should have sufficient reason to believe that it has not defaulted in respect of the payment of statutory dues of the employees, such as contribution to provident fund, gratuity, bonus etc.

A company, which has announced the bonus issue after the approval of the board of directors, implemented the proposal within six months from the date of such approval by the board of directors and does not have the option of changing the decision.

Pre-Emptive Rights and Alteration of Share Capital

Subject to the provisions of the Companies Act, the company may increase its share capital by issuing new shares. Such new shares shall be offered to the persons who, at the date of the offer, are the holders of the equity shares of the company, in proportion, as nearly as circumstances permit, to the capital existing shareholders listed on the members’ register on the record date in proportion to the amount paid-up on those shares at that date. The offer shall be made by notice specifying the number of shares offered and the date (being not less than 15 days from the date of the offer) after which the offer, if not accepted, will be deemed to have been declined. After such date, the board may dispose of the shares offered in respect of which no acceptance has been received, in such manner as they think most beneficial to the company. The offer is deemed to include a right exercisable by the person concerned to renounce the shares offered to him/her in favour of any other person provided that the person in whose favour such shares have been renounced is approved by the board in their absolute discretion.

Under the provisions of the Companies Act, new shares may be offered to any persons whether or not those persons include existing shareholders, if a special resolution to that effect is passed by the shareholders of the company in a general meeting. The issuance of the shares upon conversion of the Bonds has been duly approved by a special resolution of the shareholders and such shareholders are deemed to have waived their pre-emptive rights with respect to such Shares.

The company’s issued share capital may be, among other things, increased by the exercise of warrants attached to any securities of the company, or individually issued, entitling the holder to subscribe for the company’s shares or upon the conversion of convertible debentures issued. The issue of any convertible debentures or the taking of any convertible loans, other than from the Government and financial institutions, requires the approval

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of a special resolution of shareholders.

The company can also alter its share capital by way of a reduction of capital or by undertaking a buyback of shares under the prescribed SEBI guidelines.

The Articles of Association of the Company provides that it may by ordinary resolution consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; sub-divide its existing shares or any of them into shares of smaller amount than is fixed by the memorandum, subject nevertheless, to the provisions of clause (d) of sub-section (1) of section 94 of the Companies Act, 1956; and 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.

Preference Shares

Preferences share capital is that part of the paid-up capital of the company which fulfils both the requirements below:

(i) that with respect to dividend, it carries or will carry a preferential right to be paid a fixed amount or an amount calculated at a fixed rate; and

(ii) that with respect to capital, it carries or will carry on a winding-up of the company, a preferential right to be repaid the amount of the capital paid-up or deemed to have been paid-up, subject to the provisions of the Companies Act.

The preference shares do not confer any further rights to participate in the profits or assets of a company. Holders of preference shares are not entitled to vote at any general meetings except where the dividend due on such capital has remained unpaid:

(iii) in the case of cumulative preference shares, in respect of an aggregate period of not less than 2 years preceding the date of commencement of the meeting; and

(iv) in the case of non cumulative preference shares, either in respect of a period of not less than 2 years or in respect of an aggregate period of not less than 3 years comprised in the six years ending with the expiry of the financial year immediately preceding the commencement of the meeting.

Under the Companies Act, the company may issue redeemable preference shares but (i) no such shares shall be redeemed except out of profits of the company which would otherwise be available for dividends or out of the proceeds of a fresh issue of shares made for the purposes of the redemption; (ii) no such shares shall be redeemed unless they are fully paid; (iii) 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 share premium account, before the shares are redeemed; (iv) 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 dividends, 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 (v) the provisions of the Companies Act relating to the reduction of the share capital of a company shall apply as if such reserve account were paid-up share capital of such company. Preference shares must be redeemable before the expiry of a period of 20 years from the date of their issue.

Convertible Securities/Warrants

The company may issue, from time to time, debt instruments that are partly or fully convertible into shares and/or warrants to purchase shares, subject to the provisions of SEBI (Disclosure and Investor Protection) Guidelines, 2000 (“SEBI DIP Guidelines”), as amended. The SEBI DIP guidelines regulate, inter alia the conversion pricing of such convertible instrument issued on preferential basis, lock-in requirements with regard to such instruments, and the tenure of such instruments.

General Meetings of Shareholders

The company must hold its annual general meeting each year within 15 months of the previous annual general meeting and in any event not later than six months after the end of each accounting year, unless extended by the Registrar of Companies, at the company’s request for any special reason, by a period not exceeding three months. The board may convene an extraordinary general meeting of shareholders when

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necessary or at the request of a shareholder or shareholders holding in the aggregate not less than 10 per cent, of the company’s paid-up capital (carrying a right to vote in respect of the relevant matter on the date of the deposit of the requisition).

Written notices convening a meeting setting out the date, place and agenda of the meeting must be given to members at least 21 days prior to the date of the proposed meeting. A general meeting may be called after giving shorter notice if consent is received from all shareholders, in the case of an annual general meeting, and from shareholders holding not less than 95 per cent of the company’s paid-up capital, in the case of any other general meeting. Currently, the Company gives written notices to all members. The quorum for a general meeting of the Company is five members personally present.

A company intending to pass a resolution relating to matters such as, but not limited to, amending the objects clause of the memorandum, issue of shares of differential voting rights as to voting or dividend or otherwise, variation in the rights attached to a class of shares or debentures or other securities, buyback of shares under the Companies Act, giving loans or extending guarantees in excess of limits prescribed under the Companies Act and guidelines issued thereunder or selling or disposing of the whole or substantially the whole of the undertaking of the company, is required to obtain passage of the resolution by means of a postal ballot instead of transacting the business in the general meeting of the company. A notice to all shareholders shall be sent along with a draft resolution explaining the reasons thereof and requesting each shareholder to send his/her assent or dissent in writing on a postal ballot within a period of 30 days from the date of posting the letter. Voting Rights

At a general meeting, upon a show of hands, every member holding shares and entitled to vote and present in person has one vote. Upon a poll, the voting rights of each shareholder entitled to vote and present in person or by proxy, are in the same proportion as the capital paid-up on each share held by such shareholder to the total paid-up capital of the company. Voting is by show of hands, unless a poll is ordered by the chairman of the meeting or demanded by a shareholder or shareholders holding at least 10 per cent, of the voting rights in respect of the resolution or by those holding paid-up capital of at least Rs.50,000.

Ordinary resolutions are adopted at general meetings of shareholders by a simple majority of the shareholders having voting rights present in person or by proxy. However certain resolutions, such as commencement of a new line of business, amendment of the company’s memorandum and articles of association, waiver of pre-emptive rights, issue of further shares to persons other than existing shareholders, reduction of share capital, dissolutions, merger or consolidation of the company, transfer of the whole or a significant part of the business of the company to another company or taking over the whole of the business of any other company (where the shareholdings of public financial institutions and banks exceeds 25%) and appointment of statutory auditors require that votes cast in favour of the resolution, whether by show of hands or poll, are not less than three times the number of votes, if any, cast against the resolution by shareholders so entitled and voting. Under the provisions of Section 42 of the Companies Act, subsidiaries are not permitted to be shareholders of the holding company. Subject to certain exceptions, even if any subsidiary holds shares in its holding company prior to its becoming a subsidiary, the shares held by the subsidiary will not have any voting rights.

A shareholder may exercise his voting rights by proxy to be given in the form required by the Articles. The instrument appointing a proxy is required to be lodged with the company at least 48 hours before the time of the meeting. A shareholder may, by a single power of attorney, grant a general power of representation regarding several general meetings of shareholders. Any shareholder of the company may appoint a proxy. A corporate shareholder is also entitled to nominate a representative to attend and vote on its behalf at general meetings, subject to necessary board resolution passed by the corporate shareholder. A proxy may not vote except on a poll and does not have a right to speak at meetings. A shareholder which is a legal entity may appoint an authorised representative who can vote in all respects as if a member both by show of hands and by poll.

The Companies Act allows a company to issue shares with differential rights as to dividends, voting or otherwise, subject to certain conditions. In this regard, the laws require that, for a company to issue shares with differential voting rights: (i) the company must have had distributable profits (in accordance with the requirements of the Companies Act) for the three financial years preceding the year in which it was decided to issue such shares; (ii) the company must not have defaulted in filing annual accounts and annual returns for the three financial years immediately preceding the financial year of the year in which it was decided to issue such shares; (iii) the articles of association must allow for the issuance of such shares with differential voting

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rights; and (iv) such other conditions set forth in the Companies (Issue of Share Capital with Differential Voting Rights) Rules, 2001.

Register of Members and Record Dates

The Company is obliged to maintain a register of members at its registered office at -5-9-22/B/404, My Home Sarovar, Secretariat Road, Hyderabad - 500 004, India or with the approval of its members by way of a special resolution and with prior intimation to the Registrar of Companies, Hyderabad. The register and index of beneficial owners maintained by a depository under the Depositories Act, 1996 is deemed to be an index of members and register and index of debenture holders. The Company recognises as members only those persons who appear on its register of members and it cannot recognise any person holding any share or part of it upon any trust, express, implied or constructive, except as permitted by law. The Company has appointed Deutsche Bank as its transfer agent and Deutsche Bank as its registrar pursuant to the Paying Conversion and Transfer Agency Agreement dated 4 January 2008.

In the case of shares held in physical form, the company’s registrars and transfer agents register transfers of shares on the register of shareholders upon lodgment of the duly stamped share transfer form executed by or on behalf of the transferor and by or on behalf of the transferee and duly completed in all respects, accompanied by a share certificate or, if there is no certificate, the letter of allotment in respect of shares transferred. In respect of transfer of shares held in the depository form, the transfer of shares is effected by the depository entering the name of the purchaser in its books as the beneficial owner of the shares. In turn, the company enters the name of the depository in its records as the registered owner of the shares. The beneficial owner is entitled to all the rights and benefits, as well as the liabilities, with respect to the shares that are held by the depository. Transfer of beneficial ownership through a depository is exempt from any stamp duty but each depository participant may have its own depository charges. A transfer of shares by way of stock transfer form attracts stamp duty at the rate of 0.25 per cent of the transfer price.

For the purpose of determining the shareholders, the company may, after giving not less than seven days’ previous notice by advertisement in some newspaper circulating in the district where the registered office of the company is situated, close the register of members for periods not exceeding 45 days in any one year and 30 days at any one time. In order to determine the shareholders entitled to dividends, the company keeps the register of shareholders closed for approximately 10 to 15 days in each year. Under the listing regulations of the stock exchanges, the company may, upon at least 15 days’ advance notice to such stock exchanges (or 21 days’ advance notice in the event the company’s shares are traded on the stock exchanges in physical form), set a record date and/or close the register of members in order to ascertain the identity of shareholders. The trading of shares and the delivery of certificates in respect thereof may continue while the register of shareholders is closed.

Under the Companies Act, the company is also required to maintain a register of debenture holders.

Annual Reports and Financial Results

The annual report must be laid before the annual general meeting. This report contains audited financial statements as of the date of the closing of the financial year, auditor’s report and Director’s report and includes certain other financial information, a corporate governance section and management’s discussion and analysis. It is sent to shareholders, and also made available for inspection at the company’s registered office during normal working hours for 21 days prior to the annual general meeting.

Under the Companies Act, the company must file its annual report with the Registrar of Companies within 30 days from the date of the relevant annual general meeting. Under the listing agreement between the Company and the BSE (the “Listing Agreement”), six copies of the annual report and of all notices of general meetings and all periodical and special reports which may be issued by the Company are required to be sent to the stock exchanges on which the Company’s Shares are listed. The Company must also publish its financial results in at least one English language daily newspaper circulating in the whole or substantially the whole of India and also in a newspaper published in the language of the region where the Company’s registered office is situated.

The Company files certain information on-line, including its annual report, quarterly financial statements, the shareholding pattern statement and such other statements, information and reports as may be specified by SEBI from time to time in accordance with the requirements of the Listing Agreement.

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Transfer of Shares

The shares held through depositories are transferred in the form of book entries or in electronic form in accordance with the regulations laid down by the SEBI. These regulations provide for the functioning of the depositories and the participants and set out the manner in which the records are to be kept and maintained and the safeguards to be followed in this system. Transfers of beneficial ownership of shares held through a depository are exempt from stamp duty.

The SEBI requires that for trading and settlement purposes, the company’s shares be in book-entry form for all investors, except for transactions that are not made on a stock exchange and transactions that are not required to be reported to the stock exchange (See “The Securities Market of India – Depositories”). The requirement to hold shares in book-entry form will apply to Bondholders when they acquire shares upon conversion. In order to trade in the Company’s Shares in the Indian market, the converting Bondholder will be required to comply with the procedures above.

Shares are freely transferable, subject only to the provisions of the Companies Act under which, if a transfer of shares contravenes the SEBI provisions or the regulations issued under it, or any other law for the time being in force, the Company Law Board (the quasi-judicial body constituted pursuant to Section 10E of the Companies Act, 1956), may, on an application made by a company, a depositary incorporated in India, an investor, the SEBI or certain other parties, direct a rectification of the register of records. If a company without sufficient cause refuses to register a transfer of shares within two months from the date of which the instrument of transfer is delivered to the company, the transferee may appeal to the Company Law Board seeking to register the transfer of equity shares. The Company Law Board may, in its discretion, issue an interim order suspending the voting rights attached to the relevant equity shares before completing its investigation of the alleged contravention.

Pursuant to the Listing Agreement, in the event the Company has not effected the transfer of Shares within one month or where the Company has failed to communicate to the transferee any valid objection to the transfer within the stipulated time period of one month, it is required to compensate the aggrieved party for the opportunity loss caused during the period of the delay. The Companies Act provides that the shares or debentures of a public listed company (such as the Company) shall be freely transferable.

Power of the Company to purchase its own Shares/buy back of Shares

A company is prohibited from acquiring its own shares unless the consequent reduction of capital is effected by an approval of at least 75 per cent of its shareholders voting on the matter in accordance with the Companies Act and is also sanctioned by the High Court of Judicature at the city where the company’s registered office is situated. Moreover, subject to certain conditions, a company is prohibited from giving whether directly or indirectly and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of or for any shares in the company or its holding company.

However, pursuant to certain amendments to the Companies Act, a company is empowered to purchase its own shares or other specified securities out of its free reserves, the securities premium account or the proceeds of any shares or other specified securities (other than the kind of shares or other specified securities proposed to be bought back), subject to certain conditions, including:

(i) the buyback should be authorised by its articles of association;

(ii) a special resolution should have been passed in a general meeting authorising the buyback;

(iii) the buyback is or less than 25 per cent of the total paid-up capital and free reserves;

(iv) the debt (including all amounts of unsecured and secured debt) owed by the Company is not more than twice the capital and free reserves after such buyback;

(v) all the Shares for buyback are fully paid up; and

(vi) the buyback is in accordance with the Securities and Exchange Board of India (Buyback of Securities) Regulation, 1998.

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The condition mentioned in (ii) above would not be applicable if the buyback is for less than 10 per cent of the total paid-up equity capital and free reserves of the company and provided that such buyback has been authorised by the board of directors of the company. Further, a company buying back its securities is not permitted to buyback any securities for a period of one year from the buyback or to issue the same kind of shares or other securities except by way of bonus issue or in the discharge of subsisting obligation such as conversion of warrants, stock option schemes, sweat equity or conversion of preference shares or debentures into equity shares for six months from the buyback date. The aforesaid restriction relating to the one-year period does not apply to a buyback authorised by a special resolution of the shareholders in general meeting. Every buy back has to be completed within a period of one year from the date of passing of the special resolution or resolution of the Board as the case may be.

A company buying back its securities is required to extinguish and physically destroy the securities so bought back within seven days of the last date of completion of the buyback.

A company is also prohibited from purchasing its own shares or specified securities through any subsidiary company, including its own subsidiary companies or through any investment company (other than a purchase of shares in accordance with a scheme for the purchase of shares by trustees of or for shares to be held by or for the benefit of employees of the company) or if the company is defaulting on the repayment of deposit or interest, redemption of debentures or preference shares or payment of dividend to a shareholder or repayment of any term loan or interest payable thereon to any financial institution or bank, if the company is listed and wishes to buy back its shares or specified securities for the purpose of delisting its shares or specified securities or in the event of non-compliance with certain other provisions of the Companies Act.

The buyback of securities can be from existing security holders on a proportionate basis or from the open market or from odd lots, that is to say, where the lot of securities of a public company, whose shares are listed on a recognised stock exchange, is smaller than such marketable lot, as may be specified by the stock exchange or by purchasing securities issued to the employees of the company pursuant to a scheme of stock option or sweat equity.

Disclosure of Ownership Interest

Section 187C of the Companies Act requires beneficial owners of shares of Indian companies who are not holders of record to declare to the company details of the holder of record and the holder of record to declare details of the beneficial owner. Any person who fails to make the required declaration within 30 days may be liable for a fine of up to Rs. 1,000 for each day the declaration is not made. Any charge, promissory note or other collateral agreement created, executed or entered into with respect to any share by the registered owner thereof, or any hypothecation by the registered owner of any share pursuant to which a declaration is required to be made under Section 187C, shall not be enforceable by the beneficial owner or any person claiming through the beneficial owner if such declaration is not made. Failure to comply with Section 187C will, inter alia, not affect the obligation of the company to register a transfer of shares or to pay any dividends to the registered holder of any shares pursuant to which such declaration has not been made.

Liquidation Rights

Subject to the rights of employees, the requirement to pay statutory dues and the rights of creditors (as contained in Sections 529A and 530 of the Companies Act) and of the holders of any other shares entitled by their terms of issue to preferential repayment over the shares, in the event of the company’s winding-up, the holders of the shares are entitled to be repaid the amounts of capital paid-up or credited as paid up on such shares or in case of shortfall, proportionately. All surplus assets remaining after payments due to employees, statutory dues, the holders of any preference shares and other creditors in accordance with Sections 529A and 530 of the Companies Act belong to the holders of the equity shares in proportion to the amount paid-up or credited as paid-up on such shares, respectively, at the commencement of the winding-up.

Recent Developments

A draft concept paper has been prepared by a committee appointed by the Department of Company Affairs, which has recommended substantial changes to the provisions of the Companies Act. The draft concept paper has been placed on the website of the Ministry of Company Affairs, Government of India vide its Press Note No. 1/2004, dates 4 August 2004. In the event the proposed changes are accepted, it could substantially alter the provisions of the Companies Act stated in this section.

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GOVERNMENT OF INDIA APPROVALS

This Offering is being made entirely outside India. Except as permitted by applicable Indian laws and regulations this Offering Circular may not be distributed directly or indirectly in India or to residents of India or to Ineligible Investors and the Bonds are not being offered or sold and may not be offered or sold directly or indirectly in India or to Ineligible Investors or to, or for the account or benefit of, any resident of India.

The Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993, as amended, the Foreign Exchange Management (Transfer or Issue of Foreign Security) Regulations, 2000, as amended, and the A.P. Dir Series Circular No. 5 dated 1 August 2005, the A.P. Dir Series Circular dated 5 September 2005 and a Master Circular dated 2 July 2007 (read with circulars dated 7 August 2007 and 26 September 2007) issued by the RBI allowed Indian corporations to raise external commercial borrowings of up to U.S.$500 million under the "automatic route" (i.e. without the prior approval of the RBI).

The revised policy provides that FCCBs shall be subject to the foreign direct investment sectoral caps prescribed by the MOF and the RBI’s regulations and notifications issued from time to time. FCCB proceeds up to US$ 20 million for rupee expenditure for permissible end-uses would require prior approval of the Reserve Bank of India under the Approval Route and such proceeds shall be continued o be parked overseas until actual requirement in India. Procceds upto US$ 20 million per borrowing company per financial year would be permitted for foreign currency expenditure for permissible end uses under automatic route. FCCB proceeds more than US$ 20 million per borrower company per financial year would be permitted only for foreign currency expenditure for permissible end-uses of FCCB. Accordingly, more than USD 20 million FCCB proceeds shall be parked overseas for use as foreign currency expenditures for permissible end-uses and shall not be remitted to India. It shall be applicable ECB both under the Automatic Route and under the Approval Route. As per applicable Indian laws and regulations, there are certain sectors where foreign investment will require the prior approval of the Foreign Investment Promotion Board (FIPB). The Issuer is also required to make certain post-issue filings with the RBI. Moreover, as stated in this Offering Circular, in all cases of earlier redemption or repayment, under current regulations of the RBI applicable to convertible bonds, prior approval of the RBI for such earlier redemption or repayment will be necessary. See "Risk Factors - Upon a change of control or delisting of the Shares from the BSE and/or the NSE or upon acceleration following an event of default, the Issuer may not be in a position to redeem or repay the Bonds".

The Issuer has received in-principle approval for the listing of the Shares arising on conversion of the Bonds into equity from the BSE and NSE on 6 November 2007 and 5 November 2007 respectively.

The members of the Company and the Board of Directors of the Company have approved the Offering of the Bonds and no other approval is required under the Companies Act, nor are the provisions of the Companies Act relating to the issue of a prospectus applicable to the Offering of the Bonds. However, a copy of this Offering Circular will be filed with the RBI, the Ministry of Finance, Government of India, the Registrar of Companies, Hyderabad, India, the Indian Stock Exchanges and SEBI for record purposes.

Reporting Requirements

A company issuing bonds is required to furnish a statement in the prescribed form to the RBI within 30 days from the date of closing of the issue.

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TAXATION

The following summary is based on current Indian tax laws. The summary does not purport to deal with all aspects of taxation that may be relevant to particular investors in light of their investment or tax circumstances. Prospective investors should consult their own advisers concerning the tax consequences of an investment in Bonds and Shares. The summary is based on the taxation law in force at the time of this Offering Circular and is subject to change. The summary only addresses the tax consequences for persons who are non-resident (as defined in the Income Tax Act, 1961), who acquire Bonds or share pursuant to this Offering Circular and who hold such bond or share as Capital Asset.

Indian Taxation

The following is a summary of the Indian tax consequences of an investment in Bonds and Shares by investors who are not resident in India. This summary is not a complete guide on the tax consequences under Indian law with respect to the acquisition, ownership or sale of Bonds or of other transactions involving Bonds or of the conversion of the Bonds into Shares or sale of the Shares by non-resident investors. Prior to making a decision to invest, potential investors should, therefore consult their own tax advisers on the tax consequences of such transactions under Indian law, the law of the jurisdiction of their residence and any tax treaty between India and their country of residence.

The Income Tax Act is the law relating to taxes on income in India. The Income Tax Act provides for the taxation of persons resident in India on global income and persons not resident in India on income received, accruing or arising in India or deemed to have been received, accrued or arisen in India. Sections 4, 5, 6 and 9 of the Income Tax Act set forth the circumstances under which persons not resident in India are subject to income tax in India.

Residence for the Purpose of the Income Tax Act

For the purpose of the Income Tax Act, an individual is said to be resident in India if, in any year ended 31 March, the individual: (i) is in India for 182 days or more; or (ii) has been in India for 365 days or more, during the four years preceding that year ended 31 March, and is in India for 60 days or more in that year ended 31 March. However, in the case of an Indian citizen or a person of Indian origin who is not resident in India and who visits India during the fiscal year, or an Indian citizen who leaves India as a member of a crew of an Indian ship or for the purpose of employment outside India during the year ended 31 March, the 60 day period in (ii) above is extended to 182 days.

A company is resident in India in any year ended 31 March if it is an Indian company or if during that year control and management of its affairs is situated wholly in India.

An Indian company means a company formed and registered under the Indian Companies Act, 1956 and includes a company formed and registered under any law relating to companies formerly in force in India, or a corporation established by or under a Central, State or Provincial Act of India, or an institution, association or a body declared by the Central Board of Direct Taxes of India to be a company for the purpose of the Indian Income tax Act; provided that the registered office or, as the case may be, the principal office of the company, corporation, institution, association or body is in India.

A firm or other association of persons and every other person is regarded as resident in India except where, during the year ended 31 March, the control and the management of its affairs is situated wholly outside India.

Taxation of Income from Bonds

Section 115AC of the Income Tax Act (read with other applicable provisions of the Income Tax Act) is a special tax regime for taxes on income from Bonds purchased in foreign currency through an approved intermediary, and capital gains arising from their transfer. The concessional tax treatment provided under section 115AC of the Income Tax Act is applicable only to Bonds falling within the purview of the said section and not in relation to the Shares issued upon conversion of the Bonds. A summary of the concessions available under this section is set forth below.

These tax concessions include:

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For Individuals and Associations of Persons: withholding at the rate of 10 per cent plus an applicable surcharge of 10 per cent (if taxable income exceeds Rs.1 million) on such tax and an additional 3 per cent, education cess.

For Companies: withholding at the rate of 10 per cent plus surcharge of 10 per cent and an additional 3 per cent education cess.

The Indian Government has exempted certain securities transactions, which are conducted on the floor of the stock exchange, from long-term capital gains (investments, being shares held in a company for more than 12 months) and made short-term capital gains subject to tax at 10 per cent (Plus applicable surcharge on income tax and education cess @ 3 per cent). Such exemptions/concessions are however subject to a payment of Securities Transaction Tax ("STT") of 0.125 per cent to 0.25 per cent depending upon the nature of securities. No surcharge or education cess is payable on STT and STT is collected by the relevant stock exchange and is paid to the Government. In case of a company assessee, long-term capital gain will be subject to Minimum Alternate Tax (MAT) under Section 115BB with effect from 1 April 2007 since the long term capital gain are taken into account for computing Book Profit for computation of tax.

Further any long-term gain realized on the sale of share to an Indian Resident whether in India or outside India or to a non-resident in India on which STT is not paid will be subject to Indian Capital Gains Tax at the rate of 10 per cent plus applicable surcharge and education cess at the rate of 3 per cent

Capital Gain realized in respect of share held (calculated in the manner set out in the previous paragraph) for 12 months or less (short term capital gain) on which no STT is paid is liable to income tax at variable rates with maximum rate of 40 per cent plus applicable rate of surcharge and education cess at the rate of 3 per cent The actual rate of tax on short-term capital gain depends on a number of factors, including legal status of the non-resident holder and type of income chargeable in India.

Sale of the Shares, arising on conversion of the Bonds, will attract STT or capital gains tax. STT will depend on the holding period of those Shares by the original holder of the Bonds, and capital gains tax, if any, will be subject to any relevant double taxation treaty arrangements. The conversion of Bonds does not constitute a taxable event for Indian income tax purposes.

Taxation of Interest

Section 115AC of the Indian Income Tax Act provides that payment of interest on the Bonds paid to non-resident holders of the Bonds will be subject to withholding tax at the rate of 10 per cent plus applicable surcharge on the income tax (surcharge is 10 per cent for individual or association of persons where total income exceeds Rs. 1 million and 10 per cent for a company including a body corporate and 2.5 per cent, for company other than domestic company for the current financial year and would vary from year to year) and education cess at the rate of 3 per cent or will be subject to withholding tax at a favorable rate available under tax treaties entered into by India with the country of residence of the relevant Depositary. The Indian Income Tax Act requires such tax to be withheld at source. Where the tax is required to be deducted or withheld, the Company will gross up the taxable amount to the extent set forth under "Terms and Conditions of the Bonds — Taxation" and will be required to account separately to the Indian tax authorities for any withholding taxes applicable on such amounts.

Taxation on Dividend Distributions

Under the current Indian tax laws, dividends are not taxable in the hands of the recipient and hence upon conversion of the Bonds into Shares, dividends to such non-resident holder will not be liable to tax. However the Company will be liable to pay a "dividend distribution tax" currently at the rate of 15 per cent, plus the current applicable surcharge i.e. 10 per cent and the education cess of 3 per cent The effective dividend distribution tax is therefore 16.995 per cent Taxation on Transfer of Bonds

The transfer of Bonds falling within the purview of section 115AC of the Income Tax Act between non-resident investors outside India are to be free from any liability to income tax in India on capital gains therefrom. It is unclear whether capital gains derived from the sale of rights by a non-resident investor to another non-resident investor will be subject to tax liability in India. This would depend on the view taken by Indian tax authorities on

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the position with respect to the status of the rights being offered under the Bonds.

Taxation on Premium on Redemption of Bonds

The premium payable by the Company on redemption of the Bond will be taxed at the concessionary rate of 10 per cent plus applicable surcharge on income tax and education cess at the rate of 3 per cent if the Bonds are long-term capital assets (i.e. they are held for more than 36 months). This is subject to any more favorable rate under any tax treaties entered into by India and the country of residence of Bondholders. If they are half or less than 36 months the premium will be taxed at applicable tax plus applicable surcharge on income and education cess at the rate of 3 per cent The Company will be under an obligation to deduct tax at source from the premium amount at the applicable rate.

Taxation on acquisition of Shares upon conversion of Bonds into Shares

The conversion of the Bonds into Shares by a non-resident investor does not give rise to a taxable event for Indian income tax purposes. Such correction would attract stamp duty as described below under the heading "Stamp Duty" herein below.

Taxation on Sale of Shares

Under section 115AC of the Income Tax Act, any gain realized on the sale of the Bonds, by a nonresident holder to another non-resident holder outside India is not subject to Indian capital gains tax. In respect of transfer of Bonds by a non-resident investor to another non-resident investor outside India, such transfer is not regarded as a transfer for the purpose of capital gains tax and accordingly capital losses arising from such transfer will not be available for set off or carry forward against other capital gains or any other income. Section 115AC does not specify whether capital gains derived from the sale of rights to subscribe by a non-resident holder to another non-resident holder outside India will be subject to Indian capital gains tax.

Under the Income Tax Act, capital gains can be of two types, "long term capital gain" or "short term capital gain". Normally, gain arising on the sale of a capital asset held for more than 36 months is considered as long term capital gain and gain arising on sale of a capital asset held for a period of less than 36 months is considered as short term capital gain.

However, gain arising from the sale of a capital asset, being Shares held in the Company for more than twelve months, (measured from the date of advice by the Depositary to the custodian of the delivery of the Shares in exchange for the corresponding Bonds) is considered as long term capital gain. Gain arising from sale of Shares held for a period of twelve months or less is considered as short-term capital gain.

Subject to any relief provided pursuant to an applicable tax treaty, any gain realized by a non-resident investor on the sale of Shares to an Indian resident or inside India generally will be subject to capital gains tax which is to be withheld at source by the buyer under Sections 195 and 196-C of the Income Tax Act at the rates prevailing at that time.

Any gain realized on the sale of the Shares, if held for a period not exceeding 12 months, to an Indian resident, whether in India or outside India, or to a non-resident investor, will be subject to Indian short-term capital gains tax at the rate of 10 per cent and applicable surcharge and education cess at the rate of 3 per cent Under the Depositary Receipt Scheme (1993), the cost of acquisition of Shares received in exchange for Bonds will be the cost of the Shares underlying the Bonds on the date that the Depositary gives notice to the Custodian of the delivery of the Shares in exchange for the corresponding Bonds. According to the Depositary Receipt Scheme (1993), a non-resident holder's holding period for the purposes of determining the applicable Indian capital gains tax rate in respect of Shares received in exchange for Bonds commences on the date of the notice of the redemption by the Depositary to the custodian.

Taxation on Buyback of Equity Shares

If the Shares held by the non-resident investor are purchased by the issuing company from the nonresident investor, the non-resident investor will be liable to income tax in respect of the capital gains arising on such buyback as per the provisions of the Income tax Act and capital gains tax arising therefrom shall be withheld at source before repatriation of sale proceeds from India. The provisions of the Agreement for Avoidance of Double Taxation entered into by the Government of India with the country of residence of the non-resident

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investor will be applicable to the extent they are more beneficial to the non-resident investor. See "Taxation on Sale of Shares".

Taxation of Payment on Liquidation or Reduction of Capital

If any distribution is made by the Company to its shareholders on its liquidation or on the reduction of its capital, to the extent to which the distribution is attributable to the accumulated profits of the issuing company, the same will be treated as deemed dividend income in the hands of the shareholders and will be subject to income tax in India. However, tax on such deemed dividend will be paid by the Company. Any gains accruing to the shareholder on liquidation or reduction of capital of the issuing company, in excess of such accumulated profits, will be liable to income tax as capital gains in the hands of the shareholder as per the provisions of the Income Tax Act. The provisions of the Agreement for Avoidance of Double Taxation entered into by the Government of India with the country of residence of the non-resident investor will be applicable to the extent they are more beneficial to the non-resident investor. See "Taxation on Sale of Shares".

Taxation of Bonus Shares and Right Shares

The issue of right shares or bonus shares to the shareholders will not give rise to a taxable event for Indian income tax purposes. The shareholders will be subject to capital gains tax liability as per the provisions of the Income Tax Act on the transfer of right shares or bonus shares. The provisions of the Agreement for Avoidance of Double Taxation entered into by the Government of India with the country of residence of the non-resident investor will be applicable to the extent they are more beneficial to the nonresident investor. See "Taxation on Sale of Shares".

Withholding Tax

Capital gains arising to non-resident investors on the transfer of the Shares in India will be subject to a withholding tax at applicable rates. See "Taxation on sale of Shares". However, as per the provisions of section 196D(2) of the Income Tax Act, no withholding tax is required to be deducted from any income by way of capital gains arising to "Foreign Institutional Investors" as defined in section 115AD of the Income Tax Act on the transfer of securities defined in section 115AD of the Income Tax Act. The provisions of the Agreement for Avoidance of Double Taxation entered into by the Government of India with the country of residence of the non-resident investor will be applicable to the extent they are more beneficial to the nonresident investor.

Capital Losses

Neither the Section 115AC nor the Depositary Receipt Scheme deals with the capital losses arising from the transfer of shares in India. In general terms, losses arising from a transfer of a capital asset in India can only be set off against capital gains. Long-term capital losses can be set off only against a long-term capital gain. To the extent that the losses are not absorbed in the year of transfer, they may be carried forward for a period of eight assessment years immediately succeeding the assessment year for which the loss was first determined by the assessing authority and may be set-off against the capital gain assessable for such succeeding assessment year. In order to set-off capital losses as above the non-resident investor would be required to file appropriate and timely tax return in India and undergo usual assessment procedure. Tax Treaties

Currently, dividend income is not subject to tax in India in the hands of the holder of the Shares. If any Shares are held by a non-resident investor following withdrawal thereof from the depositary facility under the Depositary Agreement, any double taxation treaty entered into by India with the country of residence of such non-resident investor will be applicable to taxation of interest, tax credit with respect to any taxes paid by the Company and any tax on capital gain arising from the transfer of such Shares or Bonds.

However, during the period of fiduciary ownership of shares in the hands of depositary, the provisions of any double taxation avoidance agreement entered into by the Government of India with the country of residence of depositary will be applicable in the manner of taxation.

Stamp Duty

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The sale of an equity share in physical form would be subject to Indian stamp duty at the rate of 0.25 per cent of the value of the equity shares on the trade date, and such stamp duty customarily is borne by the transferee, that is, the purchaser. However, since the Company's equity shares are compulsorily deliverable in dematerialized form and no stamp duty payable in India on the acquisition of shares in dematerialized form except that Article 51A of the Bombay Stamp Act, 1953 states, inter alia, that stamp duty is payable upon recording of transactions electronic or otherwise affected by trading number through a stock exchange referred in Section 10B of the Bombay Stamp Act, 1958 relating to the purchase or sale of securities (other than Government Security) as follows:

(i) in the case of delivery of security upon transfer - 0.01 per cent

(ii) in the case of non-delivery upon transfer - 0.002 per cent

Other Taxes

At present, there are no wealth, gift or inheritance taxes, which may apply to the Bonds or the redeemed equity shares.

Service Tax

Brokerage or commissions paid to stockbrokers in connection with the sale or purchase of shares listed on a recognised stock exchange in India are subject to a service tax of 12 percent plus education cess at the rate of 3 percent ad valorem. The stockbroker is responsible for collecting the service tax and paying it to the relevant authority.

EU Directive on the Taxation of Savings Income

The EU has adopted a Directive regarding the taxation of savings income. The Directive requires Member States to provide to the tax authorities of other Member States details of payments of interest and other similar income paid by a person to an individual in another Member State, except that Austria, Belgium and Luxembourg will instead impose a withholding system for a transitional period unless during such period they elect otherwise.

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SUBSCRIPTION AND SALE The Company has entered into a subscription agreement with the Lead Manager dated 4 January 2008 (the "Subscription Agreement"), pursuant to which the Company will indemnify the Lead Manager against certain liabilities in connection with the offer and sale of the Bonds. The Lead Manager has an option to increase the issue amount pursuant to terms of over-allotment option in the event of over-subscription of the Bonds. The Subscription Agreement provides that the obligations of the Lead Manager are subject to certain conditions precedent, and entitles the Lead Manager to terminate it in certain circumstances prior to payment being made to the Company.

As a condition of the Subscription Agreement each promoter of the Company and persons acting in concert with them have undertaken with the Lead Manager that they will not for a period of 180 days from the date of the issue of the Bonds, without the prior written consent of the Lead Manager:

i. issue, offer, sell, contract to issue, offer or sell, transfer, pledge or otherwise dispose of any Shares, whether directly or indirectly, or enter into any agreement to do so;

ii. issue or offer any other securities convertible or exchangeable into or exercisable for Shares of the Company or any warrants or other rights to purchase or subscribe or otherwise acquire Shares (or any interest therein) or enter into any agreement to do so;

iii. enter into any agreement that transfers or might transfer any of the economic consequences of ownership of the Shares (including, but not limited to stock lending, derivative or hedging transactions and shall also cover any security or financial product whose value is determined directly or indirectly by reference to the price of the Shares, including equity swaps, forward sales and options representing the right to receive any Shares, whether any such transaction described above is to be settled by delivery of shares or any other securities, in cash or otherwise); or

iv. publicly announce any intention to do any one or more things described above (except as permitted by the Subscription Agreement).

The foregoing shall not apply to the issue of the Bonds or the issue of Shares pursuant to conversion of the Bonds.

The distribution of this Offering Circular or any Offering material and the Offering, sale or delivery of the Bonds is restricted by law in certain jurisdictions. Therefore, persons who may come into possession of this Offering Circular or any Offering material are advised to consult with their own legal advisers as to what restrictions may be applicable to them and to observe such restrictions. This Offering Circular may not be used for the purpose of an offer or invitation in any circumstances in which such offer or invitation is not authorised.

UNITED STATES

The Bonds, the Shares to be issued upon conversion of the Bonds and any depositary receipts or other scrip evidencing any Bonds to be delivered to a converting Bondholder have not been and will not be registered under the Securities Act. Subject to certain exceptions, Bonds may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons. Each of the Managers has agreed that, except as permitted by the Subscription Agreement, it will not offer or sell the Bonds within the United States or to, or for the account or benefit of, U.S. persons. In addition, until 40 days after commencement of the Offering, an offer or sale of the Bonds within the United States by a dealer whether or not participating in the Offering may violate the registration requirements of the Securities Act.

INDIA

The Lead Manager has represented and agreed that that this Offering Circular has not been and will not be registered as a prospectus with the Registrar of Companies in India and that it has not offered or sold and will not offer or sell any Bonds, nor has it circulated or distributed nor will it circulate or distribute the Offering Circulars or any other Offering document or material relating to the Bonds, directly or indirectly, to the public or any members of the public in India.

In addition, the Bonds may not be subscribed by Overseas Corporate Bodies who are not eligible to invest in India through the portfolio route and entities that are prohibited from buying, selling or dealing in securities by SEBI.

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Investors purchasing Bonds in this Offering will be deemed to have represented, acknowledged and confirmed that (i) they are eligible to subscribe to the Bonds and are not Overseas Corporate Bodies (within the meaning of Indian law) ineligible to invest in India and (ii) that they are not otherwise prohibited from buying, selling or dealing in securities by SEBI.

HONG KONG

The Lead Manager has represented and agreed that (i) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Bonds other than (a) to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the "SFO") and any rules made under the SFO; or (b) in other circumstances which do not result in the document being a "prospectus" as defined in the Companies Ordinance (Cap. 32) of Hong Kong (the "Ordinance") or which do not constitute an offer to the public within the meaning of the Ordinance; and (ii) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Bonds, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Bonds which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" as defined in the SFO and any rules made under the SFO.

UNITED KINGDOM

The Lead Manager has represented and agreed that:

(a) it has not offered or sold and will not offer or sell the Bonds other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Bonds would otherwise constitute a contravention of Section 19 of the FSMA by the Company;

(b) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the Bonds in circumstances in which Section 21(1) of the FSMA does not apply to the Company; and

(c) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Bonds in, from or otherwise involving the United Kingdom.

EUROPEAN ECONOMIC AREA

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), the Lead Manager has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of Bonds to the public in that Relevant Member State, except that it may, with effect from and including the Relevant Implementation Date, make an offer of the Bonds to the public in that Relevant Member State other than:

(a) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or

(c) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the Lead Manager; or

(d) in any other circumstances falling within Article 3(2) of the Prospectus Directive,

(e) Provided that no such offer of Bonds shall result in the requirement for publication by the Company or the

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Lead Manager of a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

For the purposes of this provision, the expression an "offer of Bonds to the public" in relation to any Bonds in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Bonds to be offered so as to enable an investor to decide to purchase or subscribe the Bonds, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

SINGAPORE

The Lead Manager has acknowledged that the Offering Circular has not been and will not be registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the Lead Manager has represented, warranted and agreed that it has not offered or sold any Bonds or caused the Bonds to be made the subject of an invitation for subscription or purchase and will not offer or sell any Bonds or cause the Bonds to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, the Offering Circular or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Bonds, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of Securities and Futures Act, Chapter 289 of Singapore ("SFA"), (ii) to a relevant person, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

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GENERAL INFORMATION

(1) The Issuer was incorporated in the Republic of India under registration number 01-11721. The registered office of the Issuer is located at 5-9-22/B/404, My Home Sarovar, Secretariat Road, Hyderabad - 500 004, India.

(2) The main objects as set out in the Memorandum of Association of the Issuer include:

(a) To manufacture, sell, deal in all types of bar code equipments, systems accessories, attachments, label materials, label printers, label verifiers and allied products.

(b) To enter into technical and / or financial collaborations with foreign companies to

manufacture bar code equipments, systems accessories, attachments, label materials, label printers, label verifiers and allied products.

(c) To carry on business of other automatic identifications, equipments, systems accessories,

attachments and allied products.

(d) To establish and run data processing / computer centers and to offer consultancy and data processing and other computer related services that are normally offered by data processing/ computer centers to industrial, business and other type of customers and to impart training on electronic data processing and others and to provide IT enabled solutions in India and abroad to implement internet technologies with web based applications for e-commerce, e-business, e-trade, multimedia, call center services and networking worldwide.

(3) The issue of the Bonds and the Shares to be issued on conversion of the Bonds was authorised by resolution of the shareholders of the Issuer on 10 September 2007. The terms of the Offering and the issue of the Bonds were approved by a resolution of the Board of Directors passed on 30 July 2007.

(4) Approval-in principle has been obtained from the SGX-ST in respect of the listing and quotation of the Bonds on the Official List of the SGX-ST. So long as the Bonds are listed on the SGX-ST and the rules of the SGX-ST so require, the Issuer shall appoint and maintain a paying agent in Singapore, where the Bonds may be presented or surrendered for payment or redemption, in the event that the Global Certificate is exchanged for Definitive Certificates. In addition, in the event that the Global Certificate is exchanged for Definitive Certificates, announcement of such exchange shall be made through the SGX-ST and such announcement will include all material information with respect to the delivery of the Definitive Certificates, including details of the paying agent in Singapore, so long as the Bonds are listed on the SGX-ST and the rules of the SGX-ST so require.

(5) The Issuer has undertaken to have the Shares issuable upon conversion of the Bonds approved for listing on the Indian Stock Exchanges. The Indian Stock Exchanges have given in-principle approvals for listing of the Shares issuable upon conversion of the Bonds. The Indian Stock Exchanges does not in any manner (i) warrant, certify or endorse the correctness or completeness of any of the contents of this Offering Circular; (ii) warrant that the Issuer's securities will be listed or will continue to be listed on the Indian Stock Exchanges; or (iii) take any responsibility for the financial or other soundness of the Issuer, its promoters, its management or any scheme or project of the Issuer. Accordingly, it should not for any reason be deemed or construed that this Offering Circular has been cleared or approved by the Indian Stock Exchanges. Every person who desires to apply for or otherwise acquires any securities of the Issuer should make its own independent inquiry, investigation and analysis and shall not have any claim against the Indian Stock Exchanges 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 for any other reason whatsoever.

(6) Copies of the Memorandum and Articles of Association of the Issuer and copies of the Trust Deed and the Agency Agreement will be available for inspection, and the financial statements for the financial years ended 2007, 2006 and 2005 of the Issuer will be available for collection at the specified office of the Principal Agent during normal business hours, so long as any of the Bonds is outstanding.

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The Ministry of Finance, Department of Economic Affairs and the Exchange Control Department of the RBI will be furnished with full particulars of the issue of the Bonds, including the percentage of foreign shareholding in the Company, within 30 days after the issue of the Bonds. A copy of this document will be delivered to the Registrar of Companies in Hyderabad, India and to SEBI for the purpose of record.

(7) Copies in English of the Issuer's latest audited annual financial statements may be obtained at the specified office of the Principal Agent.

(8) The Bonds have been accepted for clearance through Euroclear and Clearstream, Luxembourg with a Common Code of 033249411. The International Securities Identification Number for the Bonds is XS0332494110.

(9) Other than as otherwise stated in this Offering Circular, the Issuer has obtained all consents, approvals and authorisations in India required to be obtained at this stage in connection with the issue and performance of the Bonds.

(10) Except as disclosed in this Offering Circular, there has been no significant change in the financial or trading position of the Issuer since 31 March 2007 and no material adverse change in the financial position or prospects of the Issuer since 31 March 2007.

(11) Except as disclosed in this document, the Issuer is not involved in any litigation or arbitration proceedings or any regulatory investigations relating to claims or amounts which are material in the context of the issue of the Bonds nor, so far as the Issuer is aware, is any such litigation or arbitration pending or threatened.

(12) The annual financial statements of the Issuer as set out in this Offering Circular have been audited by M/s.Yaji Associates, Chartered Accountants, 10-3-281/1/301, Humayun Nagar, Mehidipatnam, Hyderabad – 500 028, India, who are the statutory auditors of the Company as stated in their reports appearing herein. They have given and have not withdrawn their written consent to the issue of this Offering Circular including their audit reports in the form and context in which they appear.

(13) Subject to the relevant provisions of the Civil Code, (i) submission by the Issuer to the jurisdiction of the English courts, and the appointment of an agent for service of process, are valid and binding under Indian law and (ii) the choice of English law as the governing law of the Bonds, under the laws of India, is a valid choice of law and should be honoured by the courts of India, subject to proof thereof and considerations of public policy.

(14) The Bonds provide for the Trustee to take action on behalf of the Bondholders in certain circumstances, but only if the Trustee is indemnified and/ or secured to its satisfaction. It may not be possible for the Trustee to take certain actions and accordingly in such circumstances the Trustee will be unable to take such actions, notwithstanding the provision of an indemnity and/ or security to it, and it will be for Bondholders to take such actions directly.

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SUMMARY OF CERTAIN SIGNIFICANT DIFFERENCES BETWEEN INDIAN GAAP AND IFRS

The Company’s financial statements appearing in the sections “Selected Financial Information” and “Financial Statements and Auditors’ Reports” in this Offering Circular have been prepared in accordance with Indian GAAP, which differ in certain material respects from International Financial Reporting Standards (IFRS). As a result, the Company’s audited consolidated financial statements and reported earnings could be significantly different from those which would be reported under IFRS. Had the financial statements and other financial information been prepared in accordance with IFRS, the results of operations and financial position may have been materially different.

Significant differences exist between Indian GAAP and IFRS, which might be material to the financial information herein. The Company has made no attempt to quantify the impact of those differences. In making an investment decision, investors must rely upon their own examination of the Company, the terms of the Offering and the financial information contained herein. Potential investors should consult their own professional advisors for an understanding of the differences between Indian GAAP and IFRS, and how such differences might affect the financial information herein.

The following table summarizes significant differences between Indian GAAP and IFRS insofar as they are relevant to the consolidated financial statements of the Company in accordance with Indian GAAP presented in this Offering Circular. The Company is responsible for preparing the summary below. The Company has not prepared financial statements in accordance with IFRS. Accordingly, there can be no assurance that the table below is complete, or that the differences described would give rise to the most material differences between Indian GAAP and IFRS. In addition, the Company cannot presently estimate the net effect of applying IFRS on the results of operations or financial position, which may result in material adjustments when compared to Indian GAAP.

The discussion herein includes various Indian GAAP and IFRS pronouncements issued for which the mandatory application dates is later than the reporting dates in this Offering Circular. Indian GAAP comprise of accounting standards issued by the Institute of Chartered Accountants of India (ICAI) (“Indian Accounting Standards”), certain provisions of the Companies Act, 1956 of India and as amended, and certain provisions of listing agreement with the stock exchanges of India. In certain cases, the Indian GAAP description also refers to Guidance Notes issued by the Institute of Chartered Accountants of India that are recommendatory but not mandatory in nature.

The above, together with standards that are in the process of being developed in each of these jurisdictions, could have a significant impact on future comparisons between Indian GAAP and IFRS.

SUBJECT INDIAN GAAP IFRS 1. Basis of presentation Financial statements must comply with

Indian GAAP. Generally, Indian GAAP comprises of: (i) accounting standards and other pronouncements issued by the ICAI; and (ii) the requirements of the Indian Companies Act. It also includes certain provisions of listing agreements with the stock exchanges of India and accounting requirements as specified by a Court Order in a Scheme of Amalgamation/ Arrangement.

Financial statements must comply with IFRS.

2. Components of financial statements

Single-entity parent company (standalone) two years’ balance sheets, income statements, cash flow statements, and accounting policies and notes. Public listed company: Additionally are required to prepare consolidated financial statements along with the standalone financial statements.

Two years’ consolidated balance sheets, income statements, cash flow statements, changes in equity and accounting policies and notes. In limited circumstances or on a voluntary basis, an entity may present single-entity parent company (standalone) financial statements along with its

143

SUBJECT INDIAN GAAP IFRS consolidated financial statements.

3. Balance sheet Accounting standards do not prescribe a particular format; certain items must be presented on the face of the balance sheet. Formats are prescribed by the Companies Act and other industry regulations like banking, insurance, etc.

Does not prescribe a particular format. A liquidity presentation of assets and liabilities is used, instead of a current/non-current presentation, only when a liquidity presentation provides more relevant and reliable information. Certain minimum items must be presented on the face of the balance sheet.

4. Income statement Does not prescribe a standard format; but certain income and expenditure items are disclosed in accordance with accounting standards and the Companies Act. Industry-specific formats are prescribed by industry regulations.

Does not prescribe a standard format, although expenditure is presented in one of two formats (function or nature). Certain minimum items must be presented on the face of the income statement.

5. Statement of recognised income and expense (SoRIE)

Not required. A SoRIE can be presented as a primary statement, in which case a statement of changes in shareholders’ equity is not presented. Alternatively it may be disclosed separately in the primary statement of changes in shareholders’ equity.

6. Statement of changes in share (stock) holders’ equity

No separate statement is required. Changes in shareholders’ equity are disclosed in separate schedules of ‘Share capital’ and ‘Reserves and surplus’.

Statement shows capital transactions with owners, the movement in accumulated profit and a reconciliation of all other components of equity. The statement is presented as a primary statement except when a SoRIE is presented. In this case, only disclosure in the notes applies.

7. Cash flow statements – format and method

Standard headings, but limited flexibility of contents. Direct or indirect method is used. However, indirect method is required for listed companies.

Similar to Indian GAAP, except no separate requirement for listed companies.

8. Cash flow statements – definition of cash and cash equivalents

Cash includes cash equivalents with short-term maturities (typically less than three months) and excludes bank overdrafts.

Similar to Indian GAAP, except that bank overdrafts may be included.

9. Cash flow statements – classification of specific items

(i) Interest and dividend paid – Financing activities

(ii) Interest and dividend received – Investing activities.

(i) Interest and dividend paid – Operating or financing activities.

(ii) Interest and dividend received – Operating or investing activities.

10. Extraordinary items Defined as events or transactions clearly distinct from the ordinary activities of the entity and are not expected to recur frequently and regularly.

Prohibited.

11. Changes in accounting policy

The effect of change is included in current-year income statement. The impact of change is disclosed.

Comparatives are restated; where the effect of period(s) not presented is adjusted against opening retained earnings.

12. Correction of errors (Prior period items)

Restatement is not required. The effect of correction is included in current-year

Comparatives are restated and, if the error occurred before the

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SUBJECT INDIAN GAAP IFRS income statement with separate disclosure.

earliest prior period presented, the opening balances of assets, liabilities and equity for the earliest prior period presented are restated.

13. Consolidation model Based on voting control or control over the composition of the board of directors or the governing body. Control exists when (a) parent owns, directly or indirectly through subsidiaries, more than one half of an entity's voting power or (b) it controls composition of an entity’s board of directors so as to obtain economic benefits from its activities. The existence of currently exercisable potential voting rights is not taken into consideration.

Based on voting control or power to govern. Control is presumed to exist when parent owns, directly or indirectly through subsidiaries, more than one half of an entity's voting power. Control also exists when the parent owns half or less of the voting power but has legal or contractual rights to control, or de facto control (rare circumstances). The existence of currently exercisable potential voting rights is also taken into consideration. Special purpose entities (SPEs) controlled by an entity are also consolidated.

14. Non-consolidation of subsidiaries

If control, as defined under ‘definition of a subsidiary’ above, does not rest with the entity or the subsidiary is held-for-sale, the entity does not consolidate the subsidiary.

If control, as defined under ‘Consolidation model’, does not rest with the entity or the subsidiary is held-for-sale, the entity does not consolidate the subsidiary.

15. Special purposes entity (SPE)

No specific guidance. Consolidated where the substance of the relationship indicates control.

16. Presentation of associate results

In consolidated financials: equity method is used. Share of post-tax results is shown. In standalone financials: at cost less impairment.

In consolidated financials: Similar to Indian GAAP. In standalone financials: at cost or at fair value in accordance with IAS 39.

17. Disclosures about significant associates

Certain disclosures are required for all associates; however, detailed information on significant associates is not required.

Detailed information on significant associates’ assets, liabilities and results is required.

18. Definition of joint venture

Contractual arrangement whereby two or more parties undertake an economic activity, which is subject to joint control. Exclusion if investment is held-for-sale. Exclusion if it meets the definition of a subsidiary or exemptions similar to non-consolidation of subsidiaries.

Similar to Indian GAAP

19. Presentation of jointly controlled entities (joint ventures)

In consolidated financials: proportional consolidation is used. In standalone financials: at cost less impairment.

In consolidated financials: both proportional consolidation and equity method is permitted. In standalone financials: at cost or at fair value in accordance with IAS 39.

20. Business Combinations

No comprehensive accounting standard on business combinations. All business combinations are acquisition; except uniting of interests method is used in certain amalgamations when all the specified conditions are

All business combinations are acquisitions.

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SUBJECT INDIAN GAAP IFRS met. Accounting would defer for following: • An entity acquired and held as a

subsidiary • An acquisition by way of

amalgamation of entity • A business acquisition (assets &

liabilities only)

21. Purchase method – values on acquisition

For an entity acquired and held as a subsidiary, the assets acquired and liabilities assumed are incorporated at their existing carrying amounts for consolidation purposes. On amalgamation, they may be incorporated at their existing carrying amounts or, alternatively, the consideration is allocated to individual identifiable assets and liabilities at their fair values. However, a court order approving an amalgamation may provide different and/or additional accounting entries. On business acquisition, they may be incorporated at their fair values or value of surrendered assets. No separate restructuring provision is recognised on acquisition.

Assets, liabilities and contingent liabilities of acquired entity are fair valued. If control is obtained in a partial acquisition of a subsidiary, the full fair value of assets, liabilities and contingent liabilities, including portion attributable to the minority (non-controlling) interest, is recorded on consolidated balance sheet. Goodwill is recognised as the residual between the consideration paid and the percentage of the fair value of the business acquired. Liabilities for restructuring activities are recognised only when acquiree has an existing liability at acquisition date. Liabilities for future losses or other costs expected to be incurred as a result of the business combination cannot be recognised.

22. Revenue recognition Similar to IFRS conceptually, although several differences in detail.

Based on several criteria, which require the recognition of revenue when risks and rewards have been transferred and the revenue can be measured reliably.

23. Interest expense Recognised on an accrual basis; practice varies with respect to recognition of discounts and premiums.

Recognised on an accrual basis. Effective yield method is used to amortise non-cash finance charges.

24. Employee benefits: pension costs – defined benefit plans

With the adoption of AS 15 (revised), similar to IFRS, although several differences in detail. Eg, actuarial gains and losses are recognised upfront in the income statement. The Company would be adopting AS 15 (revised) from January 1, 2007. Prior to AS 15 (revised), no method is prescribed for actuarial valuation and limited guidance available on other specific issues.

Projected unit credit method is used to determine benefit obligation and record plan assets at fair value. Actuarial gains and losses can be deferred.

25. Employee benefits: Compensated absences

With the adoption of AS 15 (revised), similar to IFRS. The Company would be adopting AS 15 (revised) from January 1, 2007. Prior to AS 15 (revised) practice varies for accrual of compensated absences other than for leave encashable on

It qualifies as short-term or other long-term employee benefits. The expected cost of accumulating short-term compensated absences is recognised on an accrual basis. Liability for long-term compensated absences is measured using projected credit

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SUBJECT INDIAN GAAP IFRS retirement, which is recognised based on an actuarial valuation.

unit method.

26. Property, plant and equipment (PPE)

Historical cost is used. Revaluations are permitted, however, no requirement on frequency of revaluation. On revaluation, an entire class of assets is revalued, or selection of assets is made on a systematic basis.

Historical cost or revalued amounts are used. Regular valuations of entire classes of assets are required when revaluation option is chosen.

27. Asset retirement obligations

Similar to IFRS, except that discounting is not required. In practice, provisions are measured by using a substantial degree of estimation. No specific guidance on capitalization of asset retirement obligation cost.

A liability for the present value of the costs of dismantling, removal or restoration as a result of a legal or constructive obligation is recognised and the corresponding cost included as part of the related property, plant or equipment (PPE). An entity incurs this obligation as a consequence of installing the item or using the item during a particular period for purposes other than to produce inventories during that period.

28. Capitalisation of borrowing costs

Required. Permitted as a policy choice for all qualifying assets, but not required.

29. Capitalization of preoperative and trial run expenses, net of revenue earned during trial run period

Required. Not permitted, except certain trial run expenses may be capitalized if they are a necessary part of bringing the asset to its working condition.

30. Depreciation and Amortization

The Company provides depreciation under Written Down Value Method at the rates specified in Schedule XIV of the Indian Companies Act, 1956. Leasehold land is amortized over the primary lease period.

Allocated on a systematic basis to each accounting period over the economic useful life of the asset.

31. Investments Long-term investments are carried at cost (with provision for other than temporary diminution in value). Current investments carried at lower of cost or fair value.

Investments in listed securities are classified as held-to-maturity, available-for-sale or trading at acquisition. Investments classified as held-to- maturity are recorded at amortized cost less impairment, if any. Realized gains and losses are reported in earnings. Investments classified as available-for-sale are reported at fair value. Unrealized gains and losses on the change in fair value are reported in equity, less impairment, if any. Investments classified as trading are reported at fair value with unrealized gains and losses included in earnings. Investments in unlisted equity securities are recorded at cost less impairment, if any.

147

SUBJECT INDIAN GAAP IFRS There is an option in IFRS to classify any financial asset ’at fair value through profit or loss’. Changes in fair values in respect of such securities are recognised in the income statement. This is an irrevocable option to classify a financial asset at fair value through profit or loss.

32. Foreign currency transactions

Transactions in foreign currency outstanding at the balance sheet date are accounted for at the contracted rate when covered by forward contracts and exchange rates prevailing on the balance sheet date in case of others. Exchange difference arising on repayment/ restatement of liabilities incurred for the purposes of acquiring fixed assets, is adjusted in the carrying amount of the respective fixed assets. The amounts so adjusted are depreciated over the remaining useful life of the respective fixed assets.

Transactions in foreign currency are accounted for at the exchange rate prevailing on the transaction date. Foreign currency assets and liabilities are restated at the year-end exchange rates.

33. Provisions Record the provisions relating to present obligations from past events if outflow of resources is probable and can be reliably estimated. Discounting is not permitted.

Similar to Indian GAAP, except that discounting is required if effect is material.

34. Contingent liability A contingent liability is a possible obligation whose outcome will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events outside the entity’s control. It can also be a present obligation that is not recognised because it is not probable that there will be an outflow of economic benefits, or the amount of the outflow cannot be reliably measured. Contingent liabilities are disclosed unless the probability of outflows is remote.

Similar to Indian GAAP, except disclosure may be extensive compared to IFRS.

35. Dividends Dividends are recorded as provisions when proposed.

Dividends are recorded as liabilities when declared.

36. Deferred Income taxes

Full provision method is used driven by timing differences arising from taxable and accounting income. Deferred tax assets is recognised if realisation is virtually certain or reasonably certain as applicable for entities with and without tax carryforward losses, respectively. A number of other specific differences.

Full provision method is used (some exceptions) driven by balance sheet temporary differences. Deferred tax assets are recognised if recovery is probable (more likely than not).

37. Fringe Benefits Tax Disclosed as a separate item after ‘profit before tax’ on the face of income statement.

Included as part of related expense (fringe benefit) which gives rise to incurrence of the tax.

38. Measurement of derivative instruments and hedging activities

Derivatives are initially measured at cost. However, there is no comprehensive guidance for derivative accounting.

Derivatives and hedge instruments are measured at fair value; changes in fair value are recognised in income statement except for effective portion of cash flow hedges, where the changes are deferred in equity until effect of underlying

148

SUBJECT INDIAN GAAP IFRS transaction is recognised in income statement. Gains/losses from hedge instruments that are used to hedge forecasted transactions may be included in cost of non-financial asset/liability (basis adjustment).

39. Related-party transactions – disclosures

Similar to IFRS. However, certain explicit exemptions available for disclosures. Exemption for certain SMEs having turnover or borrowings below certain threshold. No exemption for separate financial statements of subsidiaries

Name of the parent entity is disclosed and, if different, the ultimate controlling party, regardless of whether transactions occur. For related-party transactions, nature of relationship (seven categories), amount of transactions, outstanding balances, terms and types of transactions are disclosed. Some exemptions available for separate financial statements of subsidiaries.

40. Post balance sheet events

Similar to IFRS, except non-adjusting events are not required to be disclosed in financial statements but are disclosed in report of approving authority e.g. Directors’ Report.

Financial statements are adjusted for subsequent events, providing evidence of conditions that existed at the balance sheet date and materially affecting amounts in financial statements (adjusting events). Non-adjusting events are disclosed.

41. Interim financial reporting

Not mandatory to prepare interim statements but must use standard if it is prepared. Basis should be consistent with the full-year statements and include comparatives. However, pursuant to the listing agreement, all listed entities in India are required to furnish their quarterly results in the prescribed format. Quarterly results include financial results relating to the working of the Company and certain notes thereon.

Similar to Indian GAAP, except for listing requirement.

149

FINANCIAL STATEMENTS AND AUDITORS’ REPORTS

PARTICULARS PAGE

Auditors’ Report and Annexure to the Auditors’ Report for the years ended 31 March 2007, 2006 and 2005

Balance Sheet for the years ended 31 March 2007, 2006 and 2005

Profit and Loss Account for the years ended 31 March 2007, 2006 and 2005

Cash flow Statement for the years ended 31 March 2007, 2006 and 2005

Schedules forming part of the accounts for the years ended 31 March 2007, 2006 and 2005

Un-audited financial results for the half yearly ended 30 September 2007

149

159

160

161

162

175

150

AUDITORS' REPORT FOR THE YEAR ENDED 31 MARCH 2007

We have audited the attached Balance Sheet of M/s Bartronics India Limited as at March 31, 2007 and also the Profit and Loss Account of the Company for the year ended on that date and Cash Flow statement for the year ended that date annexed thereto. These Financial statements are the responsibility of the company’s management and our responsibility is to express an opinion on these financial statements based on our audit. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting to the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. 1. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India, in terms of Section 227 (4A) of the companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said order. 2. Further to our comments in the annexure referred to above, we report that: a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit: b) In our opinion, proper books of accounts, as required by law, have been kept by the company so far as appears from our examination of those books : c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts: d) In our opinion, these financial statements have been prepared in compliance with the applicable accounting standards referred to in sub-clause 3 © of section 211 of the Companies Act, 1956. e) On the basis of written representations received from the directors as on March 31, 2007 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March, 31 2007 from being appointed as a director in terms of clause (g) of sub section (1) of Section 274 of the Companies Act, 1956; and f) In our opinion and to best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India : i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2007 ii) In the case of Profit & Loss Account, of the profit for the year ended on that date:

for Yaji Associates Chartered Accountant

Place : Hyderabad Date: 18-04-2007 Sd/-

A.P.P. KASIPATI Partner

M.No.19442

151

ANNEXURE TO THE AUDITORS’ REPORT

(REFERRED TO IN PARA 1 OF OUR REPORT OF EVEN DATE) In respect of Companies (Auditors Report) Order, 2003

Para 4(I) of the Order a) The company has maintained accounting records to show particulars including quantitative details and situation of fixed assets. b) As explained to us, there is a regular program of verification of fixed assets, which in our opinion is reasonable having regard to the size of the company and the Nature of its assets. During the year, as explained to us, no material discrepancies were noticed on such verification. c) During the year, the company has not disposed off a substantial part of its fixed assets. Para 4(ii) of the Order a) As explained to us, the stocks of finished goods and raw materials were verified by the management during the year periodically and at the time of annual closing. In our opinion, the frequency of such physical verification is reasonable. b) With regard to the procedures adopted by the management for physical verification of the stocks, we are of the opinion that they are reasonable & adequate in relation to size of the company & the nature of its business. c) The company is maintaining adequate records to record the inward and outward movement of raw materials, intermediaries and products. For all other inventory items, in our opinion, there is a need to systematize & improve the records, as they are basically dependent upon a physical verification carried out from time to time. It is explained to us that no material discrepancies were noticed on physical verification. Para 4(iii) of the Order We are informed that the company has not taken or granted any loans, secured or unsecured, from/to any companies, firms or either parties to be listed in the registers to be maintained under Section 301 of the Companies Act, 1956, and hence the matters regarding the rate of interest, terms & conditions of loans, repayments and overdue amounts more than Rupees one lakh are not applicable. Para 4(iv) of the Order In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company, and the nature of its business for the purchase of stores and consumables, plant & machinery, equipments, and other assets and for the sale of goods and services of the company. While undertaking a detailed review of the internal controls prevailing, no continuing weaknesses have been noticed. Para 4(v) of the Order According to the information and explanations given to us, the purchase of goods and materials & sale of goods and materials and services made in pursuance of contracts of arrangements to be entered in the registers, maintained under Section 301 of the Companies Act, 1956, and aggregating during the year to Rs.5 lacs or more in value in respect of each party, are prima facie reasonable having regard to the prevailing market prices at which transactions for similar goods or services have been made with other parties. Para 4(vi) of the Order In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits falling within the provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975. Para 4(vii) of the Order In our opinion the internal audit functions carried out during the year by Chartered Accountant appointed by the management have been commensurate with the size of the Company and the nature of its business. Para 4(viii) of the Order We are informed that maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 has not been prescribed for the activities carried out by the company. Para 4(ix) of the Order a) The company had generally regularly deposited during the year statutory dues such as provident fund, ESIC, Income Tax, Sales Tax, Wealth Tax, Customs and Excise duty etc., with the appropriate authorities. b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of Income tax, Sales Tax, Wealth Tax, Customs duty and Excise duty as at the Balance Sheet date for a period of more than 6 months from the date they became payable.

152

Para 4(x) of the Order The company does not have accumulated losses and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year. Para 4(xi) of the Order Based upon our review of the accounts and the information & explanations given to us, we are of the opinion that the company has not defaulted in repayment of dues to any financial institution or a bank. Para 4(xii) of the Order We are informed that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Para 4(xiii) of the Order (First part) Is not applicable as the company is not a Chit Fund Company Para 4 (xiii) of the Order (Second Part) Sub clauses (a) to (d) therein are not applicable as the company is not a nidhi, mutual benefit or similar society. Para 4(xiv) of the Order is not applicable as the company is not dealing or trading in shares, securities debenture or other investments. Para 4(xv) of the Order We are informed that the company has not given any guarantee for loans taken by other from banks or financial institutions. Para 4(xvi) of the Order The company has not taken any term loan during the year. Para 4(xvii) of the Order According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, funds raised on short-term basis have prima facie not been used for long-term investments. Para 4(xviii) of the Order The company has made preferential allotment during the year to the tune of 46,30,000 compulsorily convertible warrants of Rs.10/- each at a price of Rs.130/- per warrant – (to be converted into equity at a later date before expiry of 18 months from the date of issue and none of such warrants have been allotted to the parties and companies covered in the Register maintained under Section 301 of the Companies Act 1956. Para 4(xix) of the Order The company has not issued any debentures during the year Para 4(xx) of the Order In the meantime, the Company has raised funds to the tune of Rs.41.76 Crores (by way of Qualified Institutional Placement and from Promoters) for meeting the Capital Expenditure and meeting working capital requirements for Smart Card Project and the same has been spent as under:

1 Advance for Construction of Building 700.00 2 Advance paid for Purchase of Land 575.00 3 Used Towards working Capital 1240.81 4 Payment made to for acquisition of Stake in IRIS Smart Cards 500.00 5 Funds Utilized for acquiring various Misc Assets 183.00 6 Advance paid for Clean Room Drawings Equipment

Refurbishing etc 872.79

7 QIP Expenses 104 Total 4176.00

Para (xxi) of the Order We are informed that no fraud on or by the company has been noticed or reported during the year and during the course of our audit.

For Yaji Associates Chartered Accountants

Sd/-

A.P.P KASIPATI Place : Hyderabad Partner Date : April 18, 2007 M.No.19442

153

AUDITORS' REPORT FOR THE YEAR ENDED 31 MARCH 2006

TO THE MEMBERS OF BARTRONICS INDIA LIMITED We have audited the attached Balance Sheet of M/s Bartronics India Limited as at March 31, 2006 and also the Profit and Loss Account of the Company for the year ended on that date and Cash Flow statement for the year ended that date annexed thereto. These Financial statements are the responsibility of the company’s management and our responsibility is to express an opinion on these financial statements based on our audit. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting to the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. 1. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India, in

terms of Section 227 (4A) of the companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

2. Further to our comments in the annexure referred to above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit:

b) In our opinion, proper books of accounts, as required by law, have been kept by the company so

far as appears from our examination of those books:

c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts:

d) In our opinion, these financial statements have been prepared in compliance with the applicable

accounting standards referred to in sub-clause 3 © of section 211 of the Companies Act, 1956.

e) On the basis of written representations received from the directors as on March 31,2006 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March, 31 2006 from being appointed as a director in terms of clause (g) of sub section (1) of Section 274 of the Companies Act, 1956; and

f) In our opinion and to best of our information and according to the explanations given to us, the said

accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March,

2006.

ii) In the case of Profit & Loss Account, of the profit for the year ended on that date. Place: Hyderabad Date: 10-06-2006

for Yaji Associates Chartered Accountant

Sd/- A.P.P. KASIPATI

Partner M.No.19442

154

ANNEXURE TO AUDITOR'S REPORT FOR THE YEAR ENDED 31 MARCH 2006 In respect of Companies (Auditors Report) Order, 2003 Para 4(I) of the Order a) The company has maintained accounting records to show particulars including quantitative details and

situation of fixed assets. b) As explained to us, there is a regular program of verification of fixed assets, which in our opinion is

reasonable having regard to the size of the company and the Nature of its assets. During the year, as explained to us, no material discrepancies were noticed on such verification.

c) During the year, the company has not disposed off a substantial part of its fixed assets. Para 4(ii) of the Order a) As explained to us, the stocks of finished goods and raw materials were verified by the management during

the year periodically and at the time of annual closing. In our opinion, the frequency of such physical verification is reasonable.

b) With regard to the procedures adopted by the management for physical verification of the stocks, we are of

the opinion that they are reasonable & adequate in relation to size of the company & the nature of its business.

c) The Company is maintaining adequate records to record the inward and outward movement of raw

materials, intermediaries and products. For all other inventory items, in our opinion, there is a need to systematize & improve the records, as they are basically dependent upon a physical verification carried out from time to time. It is explained to us that no material discrepancies were noticed on physical verification.

Para 4(iii) of the Order We are informed that the company has not taken or granted any loans, secured or unsecured, from/to any companies, firms or either parties to be listed in the registers to be maintained under Section 301 of the Companies Act, 1956, and hence the matters regarding the rate of interest, terms & conditions of loans, repayments and overdue amounts more than Rs. 100,000 are not applicable. Para 4(iv) of the Order In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company, and the nature of its business for the purchase of stores and consumables, plant & machinery, equipments, and other assets and for the sale of goods and services of the company. While undertaking a detailed review of the internal controls prevailing, no continuing weaknesses have been noticed. Para 4(v) of the Order According to the information and explanations given to us, the purchase of goods and materials & sale of goods and materials and services made in pursuance of contracts of arrangements to be entered in the registers, maintained under Section 301 of the Companies Act, 1956, and aggregating during the year to Rs.500,000 or more in value in respect of each party, are prima facie reasonable having regard to the prevailing market prices at which transactions for similar goods or services have been made with other parties. Para 4(vi) of the Order In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits falling within the provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975. Para 4(vii) of the Order In our opinion the internal audit functions carried out during the year by Chartered Accountant appointed by the management have been commensurate with the size of the Company and the nature of its business. Para 4(viii) of the Order We are informed that maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 has not been

155

prescribed for the activities carried out by the company. Para 4(ix) of the Order a) The company had generally regularly deposited during the year statutory dues such as provident fund,

ESIC, Income Tax, Sales Tax, Wealth Tax, Customs and Excise duty etc., with the appropriate authorities. b) According to the information and explanations given to us, there are no undisputed amounts payable in

respect of Income tax, Sales Tax, Wealth Tax, Customs duty and Excise duty as at the Balance Sheet date for a period of more than 6 months from the date they became payable.

Para 4(x) of the Order The company does not have accumulated losses and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year. Para 4(xi) of the Order Based upon our review of the accounts and the information & explanations given to us, we are of the opinion that the company has not defaulted in repayment of dues to any financial institution or a bank. Para 4(xii) of the Order We are informed that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Para 4(xiii) of the Order (First part) Is not applicable as the company is not a Chit Fund Company Para 4 (xiii) of the Order (Second Part) Sub clauses (a) to (d) therein are not applicable as the company is not a nidhi, mutual benefit or similar society. Para 4(xiv) of the Order Is not applicable as the company is not dealing or trading in shares, securities debenture or other investments. Para 4(xv) of the Order We are informed that the company has not given any guarantee for loans taken by other from banks or financial institutions. Para 4(xvi) of the Order The company has not taken any term loan during the year. Para 4(xvii) of the Order According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, funds raised on short-term basis have prima facie not been used for long-term investments. Para 4(xviii) of the Order The company has made preferential allotment during the year to the tune of 1,500,000 equity shares of Rs.10 each at a premium of Rs.40 per share and none of such shares have been allotted to the parties and companies covered in the Register maintained under Section 301 of the Companies Act 1956. Para 4(xix) of the Order The company has not issued any debentures during the year Para 4(xx) of the Order During the year under review the Company has raised Rs.487.5 million, through Public Issue of 6,500,128 equity shares of Rs.10 each at a premium of Rs.65 per share. Out of the proceeds of the issue a sum of Rs.202.9 million was utilized towards objects of the issue and the balance amount of Rs.284.6 million remains unutilized which is to be spent in due course towards the issue objects. Management has disclosed the end use of the money raised by public issue and the same has been verified. Para (xxi) of the Order

156

We are informed that no fraud on or by the company has been noticed or reported during the year and during the course of our audit. Place: Hyderabad Date: June 10, 2006

For Yaji Associates Chartered Accountants

Sd/- A.P.P KASIPATI

Partner M.No.19442

157

AUDITORS' REPORT FOR THE YEAR ENDED 31 MARCH 2005 TO THE MEMBERS OF BARTRONICS INDIA LIMITED We have audited the attached Balance Sheet of M/s Bartronics India Limited as at March 31,2005 and also the Profit and Loss Account of the Company for the year ended on that date annexed thereto. These Financial statements are the responsibility of the company’s management and our responsibility is to express an opinion on these financial statements based on our audit. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting to the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. 1. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India, in

terms of Section 227 (4 A) of the companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

2. Further to our comments in the annexure referred to above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit:

b) In our opinion, proper books of accounts, as required by law, have been kept by the company so

far as appears from our examination of those books:

c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts:

d) In our opinion, these financial statements have been prepared in compliance with the applicable

accounting standards referred to in sub-clause 3 (c) of section 211 of the Companies Act, 1956.

e) On the basis of written representations received from the directors as on March 31,2005 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March, 31 2005 from being appointed as a director in terms of clause (g) of sub section (1) of Section 274 of the Companies Act, 1956; and

f) In our opinion and to best of our information and according to the explanations given to us, the said

accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March,

2005. ii) In the case of Profit & Loss Account, of the profit for the year ended on that date.

Place: Hyderabad Date: 25.04.2005

for Yaji Associates Chartered Accountants

Sd/- A.P.P. Kasipati

Partner M.No. 19442 18

158

ANNEXURE TO THE AUDITORS REPORT FOR THE YEAR ENDED 31 MARCH 2005

In respect of Companies (Auditors Report) Order, 2003 Para 4(I) of the Order a) The company has maintained accounting records to show particulars including quantitative details of fixed

assets. b) As explained to us, there is a regular program of verification of fixed assets, which in our opinion is

reasonable having regard to the size of the company and the Nature of its assets. During the year, as explained to us, no material discrepancies were noticed on such verification.

c) During the year, the company has not disposed off a substantial part of its fixed assets. Para 4(ii) of the Order a) As explained to us, the stocks of finished goods and raw materials were verified by the management during

the year periodically and at the time of annual closing. In our opinion, the frequency of such physical verification is reasonable.

b) With regard to the procedures adopted by the management for physical verification of the stocks, we are of

the opinion that they are reasonable & adequate in relation to size of the company & the nature of its business.

c) The company is maintaining adequate records to record the inward and outward movement of raw

materials, intermediaries and products. For all other inventory items, in our opinion, there is a need to systematize & improve the records, as they are basically dependent upon a physical verification carried out from time to time. It is explained to us that no material discrepancies were noticed on physical verification.

Para 4(iii) of the Order We are informed that the company has not taken or granted any loans, secured or unsecured, from/to any companies, firms or either parties to be listed in the registers to be maintained under Section 301 of the Companies Act, 1956, and hence the matters regarding the rate of interest, terms & conditions of loans, repayments and overdue amounts more than Rs. 100,000 are not applicable. Para 4(iv) of the Order In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company, and the nature of its business for the purchase of stores and consumables, plant & machinery, equipments, and other assets and for the sale of goods and services of the company. While undertaking a detailed review of the internal controls prevailing, no continuing weakness have been noticed. Para 4(v) of the Order According to the information and explanations given to us, the purchase of goods and materials & sale of goods and materials and services made in pursuance of contracts of arrangements to be entered in the registers, maintained under Section 301 of the Companies Act, 1956, and aggregating during the year to Rs.500,000 or more in value in respect of each party, are prima facie reasonable having regard to the prevailing market prices at which transactions for similar goods or services have been made with other parties. Para 4(vi) of the Order The company has set up an internal audit system Para 4(viii) of the Order We are informed that maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 has not been prescribed for the activities carried out by the company. Para 4(ix) of the Order a) In general the company has regularly deposited statutory dues such as provident fund, ESIC, Income Tax,

Sales Tax, Wealth Tax, Customs and Excise duty etc., with the appropriate authorities, during the year. b) According to the information and explanations given to us, there are no undisputed amounts payable in

159

respect of Income tax, Sales Tax, Wealth Tax, Customs duty and Excise duty as at the Balance Sheet date for a period of more than 6 months from the date they became payable.

Para 4(x) of the Order The company does not have accumulated losses nor has it incurred cash losses during the financial year covered by our audit and the immediately preceding financial year. Para 4(xi) of the Order Based upon our review of the accounts and the information & explanations given to us, we are of the opinion that the company has not defaulted in repayment of dues to any financial institution or a bank. Para 4(xii) of the Order We are informed that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Para 4(xii) of the Order (First part) Is not applicable as the company is not a Chit Fund Company Para 4 (xiii) of the Order (Second Part) Sub clauses (a) to (d) therein are not applicable as the company is not a nidhi, mutual benefit or similar society. Para 4(xiv) of the Order Is not applicable as the company is not dealing or trading in shares, securities debenture or other investments. Para 4(xv) of the Order We are informed that the company has not given any guarantee for loans taken by others from banks or financial institutions. Para 4(xvi) of the Order The company has not generated any term loan during the year. Para 4(xvii) of the Order The company has not made any preferential allotment of shares during the year Para 4(xix) of the Order The company has not issued any debentures during the year Para 4(xx) of the Order The company has not raised any money by public issue during the year Para (xxi) of the Order We are informed that no fraud on or by the company has been noticed or reported during the year and during the course of our audit. Place: Hyderabad Date: 25.04.2005

for Yaji Associates Chartered Accountants

Sd/- A.P.P. Kasipati

Partner M.No. 19442 20

160

BALANCE SHEET FOR THE YEARS ENDED 31 MARCH 2007, 2006 AND 2005

Particulars Schedule No.

As at 31 March 2007

As at 31 March 2006

As at 31 March 2005

SOURCE OF FUNDS Share Capital

1 178,190,780 145,690,780 43,793,000

Share Application Money 60,190,000 - - Reserves & Surplus 2 997,843,633 538,287,371 51,948,721 Deferred Tax Liability 17,960,000 14,235,000 8,735,000 Secured Loans 3 91,195,268 83,186,310 74,008,345 TOTAL 1,345,379,681 781,399,461 178,485,066 APPLICATION OF FUNDS

Fixed Assets 4 Gross Block 165,905,513 118,611,851 98,357,134 Less: Depreciation 49,452,513 32,607,746 22,603,531 Net Block 116,453,000 86,004,105 75,753,604 Capital work In Progress 109,126,245 161,079,942 - Current Assets, Loans & Advances

5 1,516,933,814 604,549,962 134,941,649

Less: Current Liabilities & Provisions

6 413,255,299 70,473,799 32,538,436

Net Current Assets 1,103,678,516 534,076,163 102,403,212 Miscellaneous Expenditure to the Extent Not Written Off

7 16,121,920 239,250 328,250

1,345,379,681 781,399,460 178,485,066 Significant Accounting Policies & Notes To Accounts

13

161

PROFIT AND LOSS ACCOUNT FOR THE YEARS ENDED 31 MARCH 2007, 2006 AND 2005

PARTICULARS Schedule No.

As at 31 March, 2007

As at 31 March 2006

As at 31 March 2005

INCOME Sales (net of returns) - Domestic 312,312,243 163,646,754 153,414,286 - Exports 322,642,942 126,089,822 27,138,100 Other Income 8 9,450,927 5,003,384 1,165,719 TOTAL 644,406,112 294,739,960 181,718,105 II EXPENDITURE Cost Of Goods Sold 9 413,661,484 187,608,648 111,765,434 Employees Remuneration & Benefits

10 24,838,186 14,668,505 11,543,407

Administrative, Selling And Other Exps

11 27,835,204 13,631,333 11,618,614

Depreciation 4 16,844,767 10,004,215 8,387,673 Interest & Financial Charges 12 13,431,208 7,652,263 10,792,108 Misc. expenditure Written Off 7 89,000 89,000 89,000 TOTAL 496,699,849 233,653,964 154,196,235 Profit Before Tax 147,706,263 61,085,996 27,521,870 Provision For Taxation - Current 9,000,000 2,000,000 1,450,000 - Deferred Tax 3,725,000 5,500,000 2,100,000 - Fringe Benefit Tax 425,000 200,000 - Profit After Tax 134,556,263 53,385,996 23,971,870 Balance Brought forward from previous year

72,846,717 41,357,221 17,385,351

Less: Utilised for Issue of 21,89,650 equity share of Rs.10/- each fully

paid Bonus Shares - (21,896,500) - Balance carried to Balance Sheet 207,402,980 72,846,717 41,357,221 Earnings Per Share - Basic 9.07 3.66 5.47 - Diluted 6.91 3.66 5.47 Significant Accounting Policies & Notes to Accounts

NIL

NIL

162

CASH FLOW STATEMENTS FOR THE YEARS ENDED 31 MARCH 2007, 2006 AND 2005

PARTICULARS For the year ended 31

March 2007

For the year ended 31

March 2006

For the year ended 31 March

2005 Cash Flow From Operations: Net Profit before Tax 147,706,263 61,085,996 27,521,870 Adjustment for Depreciation 16,844,767 10,004,215 8,387,673 Non Cash exps written off 89,000 89,000 89,000 Financial Expenses 13,431,208 7,652,263 10,792,108 Interest Earned & Other income (9,450,927) (5,003,384) (1,165,719) Operating Profit before Working Capital Changes

168,620,310 73,828,090 45,624,932

Adjustments for: Decrease/(Increase) in Inventories (18,339,144) (33,871,640) (13,306,025) Decrease/(Increase) in Debtors (557,271,279) (72,195,175) (27,038,072) Decrease/(Increase) in Loans & advances (692,908,848) (5,421,632) (3,975,066) (Decrease)/Increase in Current Liabilities 333,356,500 35,735,364 11,720,384 Cash generated from Operations (766,542,461) (1,924,993) 13,026,153 Other Income 9,450,927 5,003,384 1,165,719 Cash from Operating activities(I) (757,091,534) 3,078,391 14,191,872 Cash from Financial Activities (Decrease)/ Increase in Share Capital 32,500,000 101,897,780 - (Decrease)/ Increase in Share Application Money

60,190,000

(Decrease)/ Increase in Share Premium 325,000,000 432,952,653 - (Decrease)/ Increase in Working Capital Loans

8,411,702 57,911,472 13,551,967

(Decrease)/ Increase in Long Term Borrowings

(402,744) (48,733,507) (4005073)

Financial Charges (13,431,208) (7,652,263) (10,792,108) Net cash from Financial activities(II) 412,267,750 536,376,135 (1245214) Cash from Investment Activities Decrease/ (Increase) in Fixed Assets-Net (47,293,662) (20,254,717) (16,622,591) Decrease/ (Increase) in Capital Work-in-Progress

51,953,697 (161,079,944) -

Decrease/ (Increase) in Miscellaneous Expenditure

(15,971,670) - (350,000)

11,311,635 (181,334,661) (16,972,591) Cash used in Investment Activities (III) Net Increase in Cash and Cash equivalent (I+II+III)

(356,135,419) 358,119,865 (20,860)

Cash & Cash equivalents at beginning of the year

358,169,327 49,463 70,324

Cash & Cash equivalents at end of the year 2,033,908 358,169,327 49,463

163

SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEARS ENDED 31 MARCH 2007, 2006 AND 2005

Schedule I (Amount in Rupees)

SHARE CAPITAL As at 31 March

2007 As at 31

March 2006 As at 31 March

2005

Authorised Share Capital (31 March 2007: 30,000,000 Equity Shares of Rs.10/- each) 300,000,000 170,000,000 120,000,00031 March 2006: 17,000,000 Equity Shares of Rs.5/- each) Issued, Subscribed & Paid Up Share Capital 178,190,780 145,690,780 43,793,00031 March 2007: 17,819,078 Equity shares of Rs. 10/- each 31 March 2006: 14,569,078 Equity shares of Rs.10/- each

(Previous Years: 8,758,600 Equity shares of Rs.5/- each) of the above 2,189,650 Equity Shares were Issued as fully paid

Bonus Shares by utilisation of Rs. 21,896,500/- from accumulated TOTAL 178,191,780 145,690,780 43,793,000

Schedule 2 (Amount in Rupees)

RESERVES & SURPLUS As at 31

March 2007 As at

31 March 2006

As at 31 March 2005

Profit & Loss A/C 207,402,980 72,846,717 41,357,221Securities Premium Account Opening Balance 465,440,653 10,591,500 10,591,500Add: Securities Premium Collected on Issue of 8,000,128 Equity Shares of Rs. 10/- each 325,000,000 482,508,320 -Less: Utilised towards Issue Management Expenses - 27,659,167 -Total 997,843,633 538,287,370 51,948,721

Schedule 3 (Amount in Rupees)

SECURED LOANS As at 31 March

2007 As at

31 March 2006

As at 31 March 2005

Working Capital Loans from Banks 90,367,656 81,955,954 24,044,482Term Loans from Financial Institutions - - 48,341,307Hire Purchase Finance from Banks 827,612 1,230,356 1,622,556TOTAL 91,195,268 83,186,310 74,008,345

164

Schedule 4: Fixed Assets as on 31 March 2007 (Amount in Rupees)

Particular GROSS BLOCK DEPRECIATION NET BLOCK

Opening Balance as on 01.04.06

Additions Deletions Closing Balance as on 31.03.07

Opening Balance as on 01.04.06

For the year Deletions Closing Balance

as on 31.03.7

Balance as on

31.03.07

Balance as on

31.06.06

Land 1,951,491 - 0 1,951,491 0 0 0 0 1,951,491 1,951,491Buildings 11,006,107 -- 0 11,006,107 553,437 179,400 0 732,836 10,273,271 10,452,671Plant & Machinery 24,575,862 - 0 24,575,862 5,113,135 1,149,256 0 6,262,391 18,313,471 19,462,727Electrical Installation 402,422 -- 0 402,422 141,197 14,538 0 155,736 246,686 261,225Computers 66,649,852 40,426,548 0 107,076,400 21,796,613 14,318,385 0 36,114,997 70,961,403 44,853,239Furniture & Fixtures 9,177,278 -- 0 9,177,278 3,007,357 538,482 0 3,545,838 5,631,440 6,169,921Vehicles 4,848,839 6,867,114 0 11,715,953 1,996,008 644,706 0 2,640,714 9,075,239 2,852,831Total 118,611,851 47,293,662 0 165,905,513 32,607,746 16,844,767 0 49,452,513 116,453,000 86,004,105

Schedule 4: Fixed Assets as on 31 March 2006 (Amount in Rupees)

Particular GROSS BLOCK DEPRECIATION NET BLOCK

Opening Balance as on

01.04.05

Additions Deletions Closing Balance as on 31.03.06

Opening Balance as on 01.04.05

For the year Deletions Closing Balance as on 31.03.6

Balance as on 31.03.06

Balance as on 31.06.05

Land 1,951,491 - 0 1,951,491 0 0 0 0 1,951,491 1,951,491 Buildings 11,006,107 -- 0 11,006,107 374,037 179,400 0 553,437 10,452,671 10,632,071 Plant & Machinery 24,569,862 6,000 0 24,575,862 3,963,486 1,149,649 0 5,113,135 19,462,727 20,606,376 Electrical Installation 402,422 -- 0 402,422 126,659 14,538 0 141,197 261,225 275,763 Computers 46,401,135 20,248,717 0 66,649,852 14,129,555 7,667,058 0 21,796,613 44,853,240 3,227,1581 Furniture & Fixtures 9,177,278 -- 0 9,177,278 2,468,875 538,482 0 3,007,357 6,169,921 6,708,404 Vehicles 4,848,839 -- 0 4,848,839 1,540,920 455,088 0 1,996,008 2,852,831 3,307,919 Total 98,357,134 20,254,717 0 118,611,851 22,603,531 10,004,215 0 32,607,746 86,004,105 75,753,604

165

Schedule 4: Fixed Assets as on 31 March 2005

(Amount in Rupees)

Particular GROSS BLOCK DEPRECIATION NET BLOCK

Opening Balance as on

01.04.04

Additions Deletions Closing Balance as on

31.03.05

Opening Balance as on 01.04.04

For the year

Deletions Closing Balance as on

31.03.05

Balance as on 31.03.05

Balance as on 31.03.04

Land 1,951,491 - 1,951,491 - - - - 1,951,491 1,951,491 Buildings 11,006,107 - 11,006,107 194,637 179,400 - 374,037 10,632,071 10,811,470 Plant & Machinery 23,460,862 1,109,000 - 24,569,862 2,910,038 1,053,448 - 3,963,486 20,606,376 20,550,824 Electrical Installation

402,422 - 402,422 112,121 14,538 - 126,659 275,763 290,301

Computers 32,051,270 14,349,865 - 46,401,135 7,930,721 6,198,834 - 14,129,555 32,271,581 24,120,549 Furniture & Fixtures 8,777,278 400,000 - 9,177,278 1,945,377 523,498 - 2,468,875 6,708,404 6,831,901 Vehicles 4,085,113 763,726 - 4,848,839 1,122,965 417,955 - 1,540,920 3,307,919 2,962,147 Total 81,734,543 16,622,591 - 98,357,134 14,215,858 8,387,673 - 22,603,531 75,753,604 67,518,683

166

Schedule 5 (Amount in Rupees)

CURRENT ASSETS LOANS &

ADVANCES As at

31 March 2007 As at

31 March 2006

As at 31 March 2005

A) CURRENT ASSTES Inventories 82,531,934 64,192,790 30,321,150 Sundry Debtors (Unsecured Considered Goods) Due More Than 6 Months 64,790,443 26,252,952 2,892,545 Others 662,370,307 143,636,519 94,801,751 Cash On Hand 21,478 8,122 17,578 Balance with Scheduled Banks a) Current Accounts 162,321 62,753,244 31,855 b) Deposit Accounts 1,850,110 10,806,248 - c) Unutilised issue proceeds in Deposit Accounts

- 284,601,714 -

TOTAL 811,726,593 592,251,588 128,064,909 B) LOANS & ADVANCES (Unsecured, considered good) Advances To Suppliers 684,032,370 773,469 633,866 Deposits 11,120,884 9,377,609 5,100,498 Advance Tax Including Tax Deducted at Source

2,370,091 1,205,882 473,732

Other Current Assets 7,007,716 528,913 602,577 Prepaid Expenses 676,160 412,500 66,067 TOTAL 705,207,221 12,298,372 6,876,740 GRAND TOTAL 1,516,933,814 604,549,960 134,941,649

Schedule 6 (Amount in Rupees)

CURRENT LIABILITIES &

PROVISIONS As at

31 March 2007 As at

31 March 2006

As at 31 March 2005

A) Sundry Creditors For Goods And Expenses 398,801,624 60,201,762 25,619,108 Others - 5,192,947 4,325,556 TOTAL 398,801,624 65,394,710 29,944,664 B) Provisions Income Tax 12,805,046 3,303,082 2,013,082 Gratuity 923,674 711,102 580,690 Leave Encashment 724,955 1,064,906 - TOTAL 14,453,675 5,079,090 2,593,772 GRAND TOTAL 413,255,299 70,473,800 32,538,436 Schedule 7

(Amount in Rupees)

MISCELLANEOUS EXPENSES As at 31 March 2007

As at 31 March 2006

As at 31 March 2005

A Preliminary Expenses 16,210,920 328,250 67,250 Add: Additions During The Year - 0 350,000 328,250 417,250 Less: Written Off For The Year 89,000 89,000 89,000 TOTAL 16,121,920 239,250 328,250

167

Schedule 8

(Amount in Rupees)

OTHER INCOME As at March 31 2007

As at 31 March 2006

As at 31 March 2005

Exchange Fluctuation 480,291 974,871 - Interest Received 1,434,117 3,408,237 5,650 Commission Received 211,074 620,276 1,160,069 Other Income 7,325,446 - - TOTAL 9,450,927 5,003,384 1,165,719 Schedule 9

(Amount in Rupees)

COST OF GOODS SOLD As at March 31 2007

As at 31 March 2006

As at 31 March 2005

Opening Stock 64,192,790 30,321,150 17,015,125 Add: Purchases 432,000,628 221,480,288 125,071,459 496193418 251,801,438 142,086,584 Less: Closing Stock 82,531,934 64,192,790 30,321,150 TOTAL 413,661,484 187,608,648 111,765,434 Schedule 10

(Amount in Rupees)

EMPLOYEES REMUNERATION & BENEFITS As at March 31

2007 As at 31 March

2006 As at 31 March

2005

Salaries, Wages & Bonus 16,910,677 12,959,362 10,581,829 Contribution To Provident Fund 792,699 787,905 219,780 Directors Remuneration 2,270,640 556,008 556,008 Staff Welfare Expenses 3,940,496 234,818 159,965 Gratuity 923,674 130,412 25,824 TOTAL 24,838,186 14,668,505 11,543,406 Schedule 11 (Amount in Rupees)

ADMINISTRATIVE, SELLING AND OTHER

EXPENSES As at March 31

2007 As at 31 March

2006 As at 31 March

2005

Advertisement 504,324 313,502 42,062 Rent 4,288,229 1,669,093 976,170 Rates & Taxes 1,990,350 409,167 118,897 Printing & Stationery 765,352 213,340 268,385 Postage & Telegrams, Telephones 1,559,859 1,370,911 1,349,861 Insurance 1,201,489 157,392 117,033 Travelling & Conveyance 6,010,258 4,426,932 3,943,891 Electricity Charges 576,408 537,282 473,262 Professional Fee 2,876,148 417,886 349,654 Repairs & Maintenance 691,069 62,553 91,280 Other Expenses 1,704,811 2,464,008 2,464,265 Sales Promotion 2,361,589 677,104 106,314

168

Commission On Sales 4,000 210,349 817,160 Bank Charges 3,301,318 701,814 500,382 TOTAL 27,835,204 13,631,333 11,618,616 Schedule 12 (Amount in Rupees)

INTEREST & FINANCIAL CHARGES As at March 31

2007 As at 31 March

2006 As at 31 March

2005

Interest-term Loan 2,192,348 4,555,250 8,642,052 Interest-cash Credit & Others 10,888,860 2,867,013 2,150,056 Finance Charges 350,000 230,000 - TOTAL 13,431,208 7,652,263 10,792,108

SCHEDULE 13: FOR THE YEAR ENDED 31 MARCH 2007 A) SIGNIFICANT ACCOUNTING POLICIES 1. Accounting Convention:

The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with applicable accounting standards issued by the Institute of Chartered Accountants of India.

2. Fixed Assets

Fixed Assets are stated cost less depreciation. Cost of Fixed Assets are inclusive of freight, duty, taxes and incidental expenses thereto wherever applicable. Depreciation of fixed assets is provided on straight-line method as per the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

3. Inventories

Inventories are valued at cost inclusive of customs duty and other landing costs in respect of imported goods.

4. Miscellaneous Expenditure

Preliminary expenses are amortized over a period of 5 years. 5. Retirement Benefits

The Company contributes to the funds maintained by the Government towards Provident Fund to employees. Gratuity liability and Earned Leave Encashment benefits are accounted on accrual basis.

6. Deferred Tax

Deferred tax is accounted for by computing the tax effect of timing differences, which arise during the year and reverse in subsequent periods.

7. Revenue Recognition

Net Sales are exclusive of VAT, Central Sales Tax and include exchange difference on sales transactions. B) NOTES ON ACCOUNTS

(Forming part of Balance Sheet and Profit & Loss Account) 1. Contingent Liabilities not provided in the books of accounts

(Rs. in million) Particulars 2006-07 2005-06 2004-05a) Bank Guarantees availed from banks 0.49 0.404 4.47b) Letter of Credit 0 0 0.509

2. Secured Loans

169

a) Cash credit facilities availed from Bank of Baroda are secured by hypothecation of stocks, trade receivables, collateral byway of exclusive charge on the fixed assets of the company and personal guarantee of Directors.

b) Hire Purchase Finances from banks are secured by hypothecation of vehicles purchased out of the

said loans.

d) Installments of Loans due within one year

Secured Loans - Rs.0.403 million Unsecured Loans - NIL 3. In the meantime, the company has raised funds to the tune of Rs.41.76 cores (by way of Qualified institutional placement and from promoters) for meeting the capital expenditure And meeting working capital requirements for smart card project and the same has been Spent as under: ( Rs. in lakhs)

01 advanced for constructing of Building 700.00 02 advanced paid for purchase of land 575.00 03 used towards working capital 1240.81 04 payment made to for acquisition of stake in smart 500.00 cards. 05 funds utilised for acquiring various misc Assets 183.00 06 advanced paid for clean Room drawings equipment 872.79 refurbishing etc. 07.Qip Expenses 104.40 Total 4176.00

4. Related parties and nature of relationship

Key Management Personnel

Mr. Sudhir Rao - Managing Director

Relatives of Key Management Personnel – Nil 5. Managerial Remuneration: (in Rs.)

Particulars 2006-07 2005-06 Salaries & Allowances 2,270,640 556,008 Contribution to Provident Fund 9360 9,360 Directors’ Sitting Fee 4000 28,000 Total 2,284,000 593,368

Computation of Net Profit in accordance with Section 309(5) of the Companies Act, 1956

(Rs. in millions) 2006-07 2005-06

Profit before Tax 147.706 61.086

Add: Managerial Remuneration 2.28 0.593

Net Profit as per Sec 309(5) 149.99 61.679

6. Auditors Remuneration:

(Amount in Rupees) Particulars 2006-07 2005-06

Audit Fee 60,000 120,000 For other Certification services 15,000 55,000 Total 75,000 175,000

7. Current Liabilities & Provisions

a) Sundry creditors balances are subject to confirmation.

b) There are no dues outstanding more than Rs.100,000 and more than 30 days to Small Scale

170

Industrial Undertakings. The total outstanding due to Small Scale Industrial undertaking is Nil. 8. Other receivable

The company has undertaken direct overseas sales where in the commission on such sales is recoded as other income. The amounts receivable in this accounts is recorded as other receivable.

9. Segment Reporting

a) The activities of the Company relate to only one business segment i.e., providing AIDC Solutions

b) Information relating to Secondary Segment

(Rs. in millions)

2006-07 2005-06 Revenue-Sales Asset-Debtors Revenue-Sales Asset-Debtors

Singapore 71.40 11.24% 70.77 12.49% 76.184 26.29% 44.807 26.37%

Malaysia 58.57 9.22% 45.62 8.055% 32.706 11.29% 14.952 8.80%

USA 191.12 30.10% 143.60 25.34%

Others 1.5 0.24% 52.52 9.27% 17.198 5.94% 16.251 9.57%

Within India 312.31 49.19% 254.14 44.85% 163.647 56.48% 93.879 55.26%

634.95 100.00% 566.65 100.00% 289.737 100.00% 169.889 100.00%

9. The impact of deferred tax in accordance with AS-22 has been considered while

forming the accounts and necessary provision has been created. Composition of Deferred Tax Liability

(Rs. in millions)

2006-07 2005-06

Net Deferred Tax Liability 17.9.0 14.23

10. Earning Per Shares

(Amount in Rupees) Particulars 2006-07 2005-06

Profit available for Equity Shareholders (Rs.) 134,556,233 53,385,996Total Number of Equity Shares 1,78,19,078 14,569,078Weighted average Number of Equity Shares outstanding Basic 14,827,297 8,955,282 Diluted 19,457,297 8,955,282Earning per share-Face value of Rs. 10 each Basic -

Rs. 9.07 5.96

Diluted -Rs.

6.91 5.96

11. Additional information pursuant to the provisions of Paragraph 3, 4C and 4D of part II of Schedule VI to the

Companies Act.

a) Information on licensed and installed capacity is not furnished since the company is not involved in any manufacturing activity during the year.

b) Turnover, Closing & Opening Stocks

2006-07 2005-06 No. Rs. in millions No. Rs. in million

Turnover Hardware 1523 86.87 1349 86.20

171

Solutions 506 548.08 274 192.78 Consumables 10.75 Total 634.95 289.74 Opening stock Hardware 548 5.64 548 8.34 Solutions 98 58.4 70 21.52 Consumables 0.15 0.46 Total 64.193 30.32 Closing stock Hardware 55 12.02 548 5.64 Solutions 51 70.5 98 58.41 Consumables 0.15 Total 82.53 64.19

c) CIF value of imports: (Rs. in million)

2006-07 2005-2006 Finished Goods & Accessories 245.55 108.14 d) Expenditure in foreign currency: 2005-2006 Travelling 2.45 1.028 e) Earning in Foreign Currency: 2005-2006 FOB Value of Exports 322.64 126.09

Previous year’s figures have been regrouped and reclassified wherever necessary to conform to current year’s classification SCHEDULE 13: FOR THE YEAR ENDED 31 MARCH 2006 A) SIGNIFICANT ACCOUNTING POLICIES 1. Accounting Convention:

The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with applicable accounting standards issued by the Institute of Chartered Accountants of India.

2. Fixed Assets

Fixed Assets are stated cost less depreciation. Cost of Fixed Assets are inclusive of freight, duty, taxes and incidental expenses thereto wherever applicable. Depreciation of fixed assets is provided on straight-line method as per the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

3. Inventories

Inventories are valued at cost inclusive of customs duty and other landing costs in respect of imported goods.

4. Miscellaneous Expenditure

Preliminary expenses are amortized over a period of 5 years. 5. Retirement Benefits

The Company contributes to the funds maintained by the Government towards Provident Fund to employees. Gratuity liability and Earned Leave Encashment benefits are accounted on accrual basis.

6. Deferred Tax

Deferred tax is accounted for by computing the tax effect of timing differences, which arise during the year and reverse in subsequent periods.

7. Revenue Recognition

Net Sales are exclusive of VAT, Central Sales Tax and include exchange difference on sales transactions.

172

B) NOTES ON ACCOUNTS (Forming part of Balance Sheet and Profit & Loss Account)

1. Contingent Liabilities not provided in the books of accounts

(Rs. in million) Particulars 2005-06 2004-05 a) Bank Guarantees availed from banks 0.40 4.47 b) Letter of Credit 0 0.51

2. Secured Loans

a) Cash credit facilities availed from Bank of Baroda are secured by hypothecation of stocks, trade receivables, collateral byway of exclusive charge on the fixed assets of the company and personal guarantee of Directors.

b) Hire Purchase Finances from banks are secured by hypothecation of vehicles purchased out of the

said loans.

c) Venture Capital Loan availed from Industrial Development Bank of India is repaid in full during the year.

d) Installments of Loans due within one year

Secured Loans - Rs.0.40 million Unsecured Loans - NIL

3. Funds raised through Initial Public Offer aggregating to Rs.487.50 million were utilized as under: a) Capital

working progress and advances Rs. 130.30 million, b) Repayment of Term Loan Rs.41.50 million, c) Issue Management Expenditure Rs.29.20 million, d) Marketing & Infrastructure Rs. 1.90 million and the balance of Rs.284.60 million are in deposit accounts with scheduled banks.

4. Related parties and nature of relationship

Key Management Personnel

Mr. Sudhir Rao - Managing Director

Relatives of Key Management Personnel – Nil 5. Managerial Remuneration: (Amount in Rupees)

Particulars 2005-06 2004-05 Salaries & Allowances 556,008 556,008 Contribution to Provident Fund 9,360 - Directors’ Sitting Fee 28,000 3,000 Total 593,368 559,008

Computation of Net Profit in accordance with Section 309(5) of the Companies Act, 1956

(Rs. in million) 2005-06 2004-05

Profit before Tax 61.09 27.52

Add: Managerial Remuneration 0.59 0.56

Net Profit as per Sec 309(5) 61.68 28.08

6. Auditors Remuneration:

(Amount in Rupees) Particulars 2005-06 2004-05

Audit Fee 120,000 60,000 For other Certification services 55,000 15,000 Total 175,000 75,000

7. Current Liabilities & Provisions

a) Sundry creditors balances are subject to confirmation.

b) There are no dues outstanding more than Rs.100,000 and more than 30 days to Small Scale

173

Industrial Undertakings. The total outstanding due to Small Scale Industrial undertaking is Nil. 8. Segment Reporting

a) The activities of the Company relate to only one business segment i.e., providing AIDC Solutions

b) Information relating to Secondary Segment (Rs. in million)

2005-06 2004-05 Revenue-Sales Asset-Debtors Revenue-Sales Asset-Debtors

Singapore 76.18 26.29% 44.81 26.37% 0.00 0.00% 0.00 0.00%

Malaysia 32.71 11.29% 14.95 8.80% 20.32 11.25% 20.32 20.80%

Others 17.20 5.94% 16.25 9.57% 6.82 3.78% 6.82 6.98%

Within India 163.65 56.48% 93.88 55.26% 153.41 84.97% 70.56 72.22%

289.74 100.00% 169.89 100.00% 180.55 100.00% 97.69 100.00%

9. The impact of deferred tax in accordance with AS-22 has been considered while forming the accounts and

necessary provision has been created. Composition of Deferred Tax Liability (Rs. in millions)

2005-06 2004-05 Related to Fixed Assets 15.30 13.88 Deferred Tax Assets 1.06 5.15 Net Deferred Tax Liability 14.23 8.73

10. Earning Per Shares

(Amount in Rupees) Particulars 2005-06 2004-05

Profit available for Equity Shareholders (Rs.) 53,385,996 23,971,870Total Number of Equity Shares 14,569,078 4,379,300Weighted average Number of Equity Shares outstanding Basic 8,955,282 4,379,300 Diluted 8,955,282 4,379,300Earning per share-Face value of Rs. 10 each Basic -

Rs. 5.96 5.47

Diluted -Rs.

5.96 5.47

11. Additional information pursuant to the provisions of Paragraph 3, 4C and 4D of part II of Schedule VI to the

Companies Act.

a) Information on licensed and installed capacity is not furnished since the company is not involved in any manufacturing activity during the year.

b) Turnover, Closing & Opening Stocks

2005-06 2004-05 No. Rs. in million No. Rs. in million

Turnover Hardware 1,349 86.20 2,285 143.15 Solutions 274 192.78 11 21.93 Consumables 10.75 15.47 Total 289.74 180.55 Opening stock Hardware 548 8.34 312 9.51 Solutions 70 21.52 31 7.13 Consumables 0.46 0.37 Total 30.32 17.01 Closing stock Hardware 548 5.64 548 8.34 Solutions 98 58.41 70 21.52 Consumables 0.15 0.46 Total 64.19 30.32

c) CIF value of imports:

174

(Rs. in millions) 2005-2006 2004-2005 Finished Goods & Accessories 108.14 26.53 d) Expenditure in foreign currency: (Rs. in millions) 2005-2006 2004-2005 Travelling 1.03 0.33 e) Earning in Foreign Currency: (Rs. in millions) 2005-2006 2004-2005 FOB Value of Exports 126.09 27.14

Previous year’s figures have been regrouped and reclassified wherever necessary to conform to current year’s classification SCHEDULE 13: FOR THE YEAR ENDED 31 MARCH 2005 A) SIGNIFICANT ACCOUNTING POLICIES 1. METHOD OF ACCOUNTING: 1.1 The financial statements are prepared on a going concern basis with historical costs. 1.2 The company generally recognizes income and expenditure on an accrual basis. 2. FIXED ASSETS 2.1 Fixed Assets are stated cost less depreciation. Cost of Fixed Assets are inclusive of freight, duty, taxes and

incidental expenses thereto wherever applicable. 3. DEPRECIATION 3.1 Straight Line method of depreciation is adopted on all existing assets on the basis and at the rates

prescribed by schedule XIV to the Companies Act, 1956. 3.2 Depreciation is provided on Technology and commercial rights in terms of AS-26. Accordingly, the cost is

written off on straight-line method over a period of 10 years. 4. INVENTORIES 4.1 Inventories are valued at cost inclusive of customs duty and other landing costs in respect of imported

goods. 5. MISCELLANEOUS EXPENDITURE 5.1 Preliminary expenses are amortized over a period of 5 years. B) NOTES ON ACCOUNTS

(Forming part of Balance Sheet and Profit & Loss Account) 1. SECURED LOANS 1.1 Cash credit facilities from Andhra Bank are secured by hypothecation of stocks, Trade receivables, collateral

by way of extension of charge on the fixed assets and personal guarantee of Directors. 1.2 Loan from Citi Bank Maruthi Finance is secured by the hypothecation of Two Maruthi cars purchased out of

the said loan. 1.3 Loan from ABN Amro Bank Ltd., is secured by the hypothecation of the One Honda City Car purchased out

of the said loan. 1.4 Venture Capital Loan availed from Industrial Development Bank of India is secured by all movable &

immovable assets, present and future, of the company except stock and book debts and personal guarantee of the promoters.

2. CURRENT ASSETS, LOANS AND ADVANCES 2.1 Inventory quantities and values as at the period end are as certified by the management. 2.2 Sundry debtor’s balances are subject to confirmation. 3. CURRENT LIABILITIES & PROVISIONS

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3.1 Sundry creditors balances are subject to confirmation. 3.2 There are no dues outstanding more than Rs. 100,000 and more than 30 days to Small Scale Industrial

Undertakings. The total outstanding due to Small Scale Industrial undertaking is Nil. Total outstanding due to creditors other than Small Scale Industrial undertaking is Rs. 15.36 million.

3.3 Contingent Liabilities not provided for in the books of accounts: 3.3.1 Towards Letter of Credit taken from Andhra Bank is Rs. 0.51 million. 3.3.2 Towards Bank Guarantee availed from Andhra Bank is Rs.4.36 million and from UTI Bank Ltd., is Rs. 0.11

million. 4. OTHERS: 4.1 Information on licensed and installed capacity is not furnished since the company is not involved in any

manufacturing activity during the year. 4.2 The impact of deferred tax in accordance with AS-22 has been considered while forming the accounts and

necessary provision has been created. 4.3 Auditors remuneration pertains to payment towards:

Statutory Audit: Rs.35,000 (Previous year Rs.35,000)

Tax Audit-Income tax: Rs.20,000 (Previous year Rs.20,000)

Sales tax: Rs. 5,000 (Previous year Rs. 5,000)

Certification: Rs. 15,000 (Previous Year Rs. 15,000) 4.4 CIF value of imports:

Finished goods & accessories: Rs. 26,534,658.92 4.5 Managerial Remuneration details:

Managing Director: Rs.556,008 4.6 Expenditure in foreign currency.

Time & Attendance System

Accessories, Scanners etc.: Rs. 15,244,340

Travelling: Rs. 32,597,129 4.7 Quantitative Information:

Particulars Opening Stock Purchases Sales Closing Stock Printers 59 421 414 66 Scanners 126 1,234 1065 295 HandHeld Terminals 8 239 204 43 Time & Attendance 95 605 585 115 Others 55 39,942 9,275 30,722 Consumables 0 7440 5,589 1,851

4.8 Previous year’s figures have been regrouped and reclassified wherever necessary.

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UNAUDITED FINANCIAL RESULTS FOR THE HALF YEAR ENDED 30 SEPTEMBER 2007

(Rs. in million)

Particulars

30 September

2007

30 September

2006 Net Sales 932.68 280.53

Other Income 2.11 1.89

Total Income 934.79 282.43

Expenditure -710.94 -208.53

Operating Profit 223.84 73.91 Interest -8.19 -7.56

Gross Profit 215.65 66.34

Depreciation -14.17 -6.51

Profit before Tax 201.49 59.84 Tax -28.60 -5.15

Profit after Tax 172.89 54.70 Net Profit 172.89 54.70

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APPENDIX A: THE SECURITIES MARKET OF INDIA

The information in this section has been extracted from publicly available documents from various sources, including officially

prepared materials from the Securities and Exchange Board of India, the Bombay Stock Exchange Limited and the National Stock

Exchange of India Limited, and has not been prepared or independently verified by the Company or the Lead Manager, or any of the

Issuer's or the Lead Manager’s affiliates or advisers. India has a long history of organized securities trading. In 1875, the first stock

exchange was established in Mumbai.

Stock Exchange Regulation

India's stock exchanges are regulated primarily by the SEBI, as well as by the Government acting through the Ministry of Finance

("MOF"), the Stock Exchange Division, under the Indian Securities Contracts (Regulation) Act, 1956 and the Indian Securities

Contracts (Regulation) Rules, 1957. The Indian Securities Contracts (Regulation) Rules, 1957 along with the rules, byelaws and

regulations of the respective stock exchanges, regulate the recognition of stock exchanges, the qualifications for membership thereof

and the manner in which contracts are entered into and enforced between members.

The Securities and Exchange Board of India Act, 1992 granted the SEBI powers to regulate the business of Indian securities markets,

including stock exchanges and other financial intermediaries, promote and monitor self-regulatory organizations, prohibit fraudulent

and unfair trade practices and insider trading, and regulate substantial acquisitions of shares and takeovers of companies. The SEBI

has also issued guidelines concerning minimum disclosure requirements by public companies, rules and regulations concerning

investor protection, insider trading, substantial acquisitions of shares and takeovers of companies, buybacks of securities, employee

stock option schemes, stockbrokers, merchant bankers, underwriters, mutual funds, foreign institutional investors, debenture trustees,

credit rating agencies and other capital market participants.

The Central Listing Authority of India (the "CLA") has been set up to address the issue of multiple listing of the same security. It also

aims to bring about uniformity in the due diligence process by scrutinising all listing applications on any stock exchange in India.

The functions of the CLA are enumerated in the SEBI (Central Listing Authority) Regulations, 2003 which, amongst other things,

include:

(i) processing the application made by any body corporate, mutual fund or collective investment scheme for the letter of

recommendation to be listed at the stock exchange;

(ii) making recommendations as to listing conditions;

(iii) making suggestions with respect to investor protection, development and regulation of the securities market and disclosure

to be made in offer documents; and

(iv) any other functions that may be specified by the SEBI from time to time. CLA is expected to commence operation in the near

future.

Listing

The listing of securities on recognised Indian stock exchanges is regulated by the Securities Contract (Regulations) Rules, 1957 and

the listing agreement of the respective stock exchange. Under the standard terms of stock exchange listing agreements, the

governing body of each stock exchange is empowered to suspend trading of or dealing in a listed security for breach of the issuer's

obligations under such agreement, subject to the issuer receiving prior notice of the intent of the stock exchange.

The listing agreement executed with the Indian Stock Exchanges and the SEBI Circular No. SEBI/CFD/DIL/LA/2006/13/4 dated April

13, 2006 requires the Company to maintain a minimum level of minimum level of public shareholding at 25% of the total number of

issued shares of a class or kind for the purpose of continuous listing. However, companies listed under (a) and (b) below will be

required to maintain the minimum level of public shareholding at 10% of the total number of issued shares of a class or kind for the

purpose of continuous listing.

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(a) Companies which, at the time of initial listing, had offered less than 25% but not less than 10% of the total number of issued

shares of a class or kind, in terms of Rule 19(2)(b) of Securities Contract (Regulation) Rules 1957 (SCRR) or companies desiring to

list their shares by making an Initial Public Offering (IPO) of at least 10% in terms of Rule 19(2)(b) of SCRR.

(b) Companies which have, irrespective of the percentage of their shares with public at the time of initial listing, reached a size of

twenty million or more in terms of number of listed shares and Rs. 10,000 million or more in terms of market capitalization.

The non-promoter shareholding in the Company was 55.67 percent as at 30 September 2007.

A listed Company can be delisted under the provisions of the SEBI (Delisting of Securities) Guidelines, 2003, which govern voluntary

and compulsory delistings of shares of Indian companies from the stock exchanges.

The Delisting Guidelines provide for voluntary and compulsory delisting of securities where the minimum public shareholding

threshold is breached. The Delisting Guidelines provide that if for any reason the securities of a Company become liable to be

delisted from the relevant Indian Stock Exchange, the Company may within six months, issue new shares to the public or the

promoters of the Company may sell a portion of their shares to the public, such that the minimum level of public shareholding is re-

established.

The Delisting Guidelines also provide that if a Company fails to issue new shares or the promoters fail to sell a portion of their shares

to the public, so as to bring the public shareholding back to the minimum required level, then SEBI may delist that Company (after

giving notice and as per the procedure laid down in the Delisting Guidelines). The procedure essentially requires the promoter to

make an open offer to buy the securities from the public at a fair value (the "fair value" being determined in accordance with the

Takeover Code).

The SEBI has power to amend listing agreements and byelaws of stock exchanges in India. Any amendment of the bye-laws by the

stock exchanges, on their own requires the prior approval of SEBI.

In order to restrict abnormal price volatility in any particular stock, the SEBI has instructed stock exchanges to apply daily circuit

breakers, which do not allow transactions beyond a certain level of price volatility. An index-based market-wide (equity and equity

derivatives) circuit breaker system has been implemented and additionally there are currently in place varying individual scripwise

bands. The Indian Stock Exchanges can also exercise the power to suspend trading during periods of market volatility. Margin

requirements are imposed by stock exchanges that are required to be paid by stockbrokers.

Disclosure under the Companies Act and Securities Regulation

Under the Companies Act, a public offering of securities in India must be made by means of a prospectus, which must contain

information specified in the Companies Act and be filed with the Registrar of Companies having jurisdiction over the place where a

Company's registered office is situated which, in the case of the Company, is currently the Registrar of Companies, Hyderabad.

Additionally, the SEBI has prescribed certain guidelines, which provide for the contents of the prospectus. A Company's directors and

promoters may be subject to civil and criminal liability for misrepresentation in a prospectus. The Companies Act along with certain

guidelines issued by the SEBI also sets forth procedures for the acceptance of subscriptions and the allotment of securities among

subscribers and establishes maximum commission rates for the sale of securities.

Public limited companies are required under the Companies Act to prepare, file with the Registrar of Companies and circulate to their

shareholders audited annual accounts, which comply with the Companies Act's disclosure requirements and regulations governing

their manner of presentation and which include for listed companies, sections pertaining to corporate governance and the

management's discussion and analysis as required under the listing agreement. In addition, a listed Company is subject to continuing

disclosure requirements pursuant to the terms of its listing agreement with the relevant stock exchange.

Companies are also required to publish unaudited financial statements (albeit subject to a limited review by the company's auditors)

on a quarterly basis and are required to inform the applicable stock exchanges immediately regarding any stock-price sensitive

information.

The Companies Act further allows buybacks of securities, issuance of shares for a consideration other than cash in certain

circumstances and mandatory compliance with accounting standards issued by the Institute of Chartered Accountants of India (the

"ICAI").

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The ICAI and the SEBI have implemented changes which require Indian companies to account for deferred taxation, to consolidate

their accounts (subsidiaries only), to provide segment-wise reporting and disclosure of related party transactions from 1 April 2001

and accounting for investments in associated companies and joint ventures in consolidated accounts and interim financial reporting

from 1 April 2002.

As of 1 April 2003, accounting of intangible assets is also regulated by accounting standards set by the ICAI and, as of 1 April 2004,

accounting standards regulate accounting for impairment of assets.

Trading Hours

Trading on the BSE is conducted from Monday to Friday between 9.55 a.m. and 3.30 p.m. The BSE is closed on public holidays. The

closing price of the Shares will be available on www.bseindia.com.

Trading Procedure

Until 1995, brokers and members of the BSE received individual orders from which any cross orders were matched and taken off.

The balance of the orders was transmitted to the trading floor for execution in an open outcry system. The BSE has now introduced

its BOLT online trading system on the exchange. The enhanced transparency in dealings due to implementation of BOLT has

assisted considerably in smothering settlement cycles and improving efficiency in back office work. The BOLT was commissioned on

14 March 1995.

Classification of Shares

On the BSE, shares are classified into inter alia, A, B1, B2, F, G, S and Z groups. All groups settle funds and securities through the

BSE clearing house. The Z group includes those companies that have not fulfilled the listing guidelines or have not paid listing fees.

The F group covers odd lot securities in other groups and rights renunciations. The Company's Shares are currently classified in the

B1 group.

Settlement

All settlements in Shares are currently through the rolling settlement made on a T + 2 basis.

Internet-Based Securities Trading and Services

The SEBI approved internet trading in January 2000. Internet trading takes place through order routing systems, which route client

orders to exchange trading systems for execution. Thus a client sitting in any part of the country would be able to trade using the

Internet as a medium through brokers' Internet trading systems. Stockbrokers interested in providing this service are required to apply

for permission to the relevant stock exchange and also have to comply with certain minimum conditions stipulated by the SEBI. The

Uttar Pradesh Stock Exchange Association Ltd. (UPSE) became the first exchange to grant approval to its members for providing

Internet-based trading services. Internet trading is possible on both the "Equities" as well as the "Derivatives" segments of the UPSE.

Insider Trading Regulations

The SEBI (Prohibition of Insider Trading) Regulations, 1992, or the "Insider Trading Regulations", have been notified by the SEBI to

prohibit and penalize insider trading in India. The Insider Trading Regulations prohibit "insider" dealings in the securities of a

Company when in possession of "unpublished price sensitive information", communication of such information or the counsel or

procurement of any other person to deal in securities on the basis of such information. It further provides that no Company shall deal

in the securities of another Company or associate of that other Company while in possession of any unpublished price sensitive

information. It is to be noted that recently SEBI has amended the Insider Trading Regulations to provide certain defenses to the

prohibition on companies in possession of unpublished price-sensitive information dealing in securities.

The Insider Trading Regulations make it compulsory for listed companies and certain other entities associated with the securities

market to establish an internal code of conduct to prevent insider trading and also to regulate disclosure of unpublished price-

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sensitive information within such entities so as to minimize misuse of such information. To this end, the Insider Trading Regulations

provide a model code of conduct. Further, the Insider Trading Regulations specify a model code of corporate disclosure practices to

prevent insider trading which must be implemented by all listed companies.

The Insider Trading Regulations require any person who holds more than 5 per cent shares or voting rights in any listed Company to

inform the Company of the number of shares or voting rights held by such person, on becoming such holder, within four working days

of:

(i) the receipt of information of allotment of shares; or

(ii) the acquisition of shares or voting rights, as the case may be.

Furthermore, the Insider Trading Regulations require a director or an officer of a listed Company to disclose to the Company the

number of shares or voting rights held by such person within four days of becoming a director or officer of the Company.

Any person who holds more than 5 per cent of the shares or voting rights in any listed Company is required to disclose to the

Company the number of shares or voting rights held by him on a continuing basis, and also a change in shareholding or voting rights,

even if such change results in shareholding falling below 5 per cent Such a person also has to disclose any changes in the

shareholding from the last disclosure made, provided such change exceeds 2 per cent of the total shareholding or voting rights in the

Company. Furthermore, a director or an officer is required to disclose to the Company on a continuing basis, the total number of

shares or voting rights held and change in such disclosure from the last such disclosures, if any such change exceeds Rs. 0.5 million

in value or 25,000 shares or 1 per cent of total shareholdings (whichever is lower). Such disclosures are required to be made within

four working days of:

(i) the receipt of information of allotment of shares; or

(ii) the acquisition or sale of shares or voting rights, as the case may be.

Takeover Code

Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed by the SEBI (Substantial

Acquisition of Shares and Takeover Regulations), 1997 (the "Takeover Code") which prescribe certain thresholds or trigger points

that give rise to these obligations, as applicable. The Takeover Code is under constant review by the SEBI and was last amended by

Notification No, S.O. No. 807(E) dated 26 May 2006.

The salient features of the Takeover Code are as follows:

Any acquirer (meaning a person who, directly or indirectly, acquires or agrees to acquire shares or voting rights in a company, either

by himself or with any person acting in concert) who acquires shares or voting rights that would entitle him to more than 5 per cent, 10

per cent, 14 per cent, 54 per cent or 74 per cent of the shares or voting rights in a company is required to disclose the aggregate of

his shareholding or voting rights in that company to the company and to each of the stock exchanges on which the company's shares

are listed at every stage within two days of

(i) the receipt of allotment information or

(ii) the acquisition of shares or voting rights, as the case may be. The term "shares" is defined under the Takeover Code to mean

"equity shares or any other security which entitles a person to acquire shares with voting rights but shall not include preference

shares." Thus, the Bondholder may on conversion of the Bonds into Shares be required to comply with the above disclosure

requirements.

An acquirer who, along with persons acting in concert within, acquires or intends to acquire 15 per cent or more of the shares or

voting rights in a company is required to make a public announcement (open offer) to acquire further 20 per cent of the shares of the

company.

An acquirer who, together with persons acting in concert with him, holds 15 per cent or more but less than 55 per cent of the shares

or voting rights in a company, cannot acquire additional shares or voting rights that would entitle him to exercise more than 5 per cent

of the voting rights in any financial year unless such acquirer makes a public announcement offering to acquire further 20 per cent of

the shares of the relevant company in accordance with the Takeover Code. Further, such person who holds 55 per cent or more but

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less than 75 per cent of the shares or voting rights cannot acquire additional shares or voting rights unless the acquirer makes a

public announcement to acquire further 20 per cent shares in accordance with the Takeover Code. However, in a case where the

relevant company has obtained listing of its shares by making an offer of at least 10 per cent of the issue size, any acquisition

between 15 per cent and 90 per cent of shares or voting rights shall require an acquirer to make a public announcement.

Promoters or persons holding more than 15 per cent of shares or voting rights in the company are also required to make periodic

disclosure of their holdings in the same manner as above, annually within 21 days of the end of the fiscal year as well as from the

record date for entitlement of dividends.

An acquirer, who together with persons acting in concert with him, holds 55 per cent or more but less than 75 per cent of shares or

voting rights in the relevant company and is desirous of consolidating his holding while ensuring that the public shareholding in the

relevant company does not fall below 25 per cent shall have to make a public announcement in accordance with the Takeover Code.

However, where the target company has obtained listing of its shares by making an offer of at least 10 per cent of issue size to the

public, any consolidation of shareholding in respect of shares held by the acquirer between 55 per cent and 90 per cent shall require

an acquirer to make a public announcement.

In addition, regardless of whether there has been any acquisition of shares or voting rights in a company, an acquirer cannot directly

or indirectly acquire control over a company (for example, by way of acquiring the right to appoint a majority of the directors or to

control the management or the policy decisions of the company) unless such acquirer makes a public announcement offering to

acquire a minimum of 20 per cent of the shares of the company. However the public announcement requirement will not apply to any

change in control, which takes place pursuant to a special resolution passed by way of postal ballot by the shareholders of the

company.

The Takeover Code sets out the contents of the required public announcements as well as the minimum offer price. The minimum

offer price depends on whether the shares of the company are "frequently" or "infrequently" traded (as defined by the Takeover

Code). If the shares are frequently traded, then the minimum offer price would be the highest of:

(i) the negotiated price under the agreement for the acquisition of shares in the company;

(ii) the highest price paid by the acquirer or persons acting in concert with him for acquisitions, including through an allotment in a

public, preferential or rights issue, during the 26-week period prior to the date of public announcement; or

(iii) the average of the weekly high and low of the closing prices of the shares quoted on the stock exchange where the shares of

the company are most frequently traded during the 26 weeks or the average of the daily high and low of the prices of the

shares as quoted on the stock exchange where the shares of the company are most frequently traded during the two weeks

preceding the date of public announcement, whichever is higher.

The Takeover Code permits conditional offers as well as the acquisition and subsequent delisting of all shares of a company and

provides specific guidelines for the gradual acquisition of shares or voting rights. Specific obligations of the acquirer and the board of

directors of the target company in the offer process have also been set out. Acquirers making a public offer are also required to

deposit in an escrow account a percentage of the total consideration, which amount will be forfeited in the event that the acquirer

does not fulfill his obligations. In addition, the Takeover Code introduces the "chain principle" by which indirect acquisition by virtue of

acquisition of companies, whether listed or unlisted, whether in India or abroad, of a company listed in India will oblige the acquirer to

make a public offer to the shareholders of each such company which is indirectly acquired. Pursuant to an open offer, if the

company's public shareholding is reduced to a level below the minimum required under the Listing Agreement for continuous listing,

the acquirer is required to undertake to raise the level of public shareholding to the level specified for continuous listing in the listing

agreement within a period of 12 months from the date of closure of the public offer by the issue of new shares of the company or

divestment through an offer for sale in compliance with the Companies Act and the Delisting Guidelines.

There are separate requirements for "bail-out takeovers" relating to substantial acquisitions of shares of a financially weak company

but not a "sick industrial company" pursuant to a rehabilitation scheme approved by a public financial institution or a scheduled bank.

A "financially weak company" is a company that has at the end of the previous fiscal year accumulated losses that have resulted in

erosion of more than 50 per cent but less than 100 per cent of its net worth at the end of the previous fiscal year. A "sick industrial

company" is a company registered for more than five years, which has at the end of any fiscal year accumulated losses equal to or

exceeding its entire net worth.

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The Takeover Code does not apply, inter alia, to certain specified acquisitions including the acquisition of shares

(i) by allotment in a public and rights issue subject to the fulfillment of certain conditions,

(ii) pursuant to an underwriting agreement,

(iii) by registered stockbrokers in the ordinary course of business on behalf of clients,

(iv) in unlisted companies, except under certain circumstances,

(v) pursuant to a scheme of arrangement or reconstruction including amalgamation or de-merger, under any law or regulation, Indian

or foreign,

(vi) pursuant to a scheme under Section 18 of the Indian Sick Industrial Companies (Special Provisions) Act, 1985 or

(vii) in the ordinary course of business by public financial institutions either on their own account or as a pledge.

In addition, the Takeover Code does not apply to the acquisition of global depositary receipts, so long as they are not converted into

shares carrying voting rights where the issuer is a public listed company. The Takeover Code does not apply to acquisition of shares

in companies whose shares are not listed on any stock exchange.

Depositaries

In August 1996, the Indian Parliament enacted the Indian Depositaries Act, 1996, ("Depositories Act"), which provides a legal

framework for the establishment of depositaries to record ownership details and effect transfers in book-entry form, and the Securities

and Exchange Board of India (Depositories and Participants) Regulations, 1996, which provides for the formation of such

depositaries, the registration of participants as well as the rights and obligations of the depositaries, participants, the beneficial

owners and the issuers. The depositary system has significantly improved the operations of the Indian securities markets.

Trading of securities in book-entry form commenced in December 1996. In January 1998, the SEBI notified scrips of various

companies for compulsory dematerialized trading by certain categories of investors such as high net worth individuals and other

institutional investors and also notified compulsory dematerialized trading in specified scrips for all retail investors. The SEBI

subsequently significantly increased the number of scrips in which dematerialized trading is compulsory for all investors.

Under guidelines issued by the SEBI, a company shall give the option to subscribers/ shareholders to receive the security certificates

and hold securities in dematerialized form with a depositary. However, even in the case of scrips notified for compulsory

dematerialized trading, investors, other than institutional investors, are permitted to trade in physical shares on transactions outside

the stock exchange where there are no requirements of reporting such transactions to the stock exchange, and on transactions on

the stock exchange involving lots of less than 500 securities.

Transfers of shares in book-entry form require both the seller and the purchaser of the equity shares to establish accounts with

depositary participants registered with the depositaries established under the Depositories Act. Charges for opening an account with

a depositary participant, transaction charges for each trade and custodian charges for securities held in each account vary depending

upon the practice of each depositary participant and have to be borne by the accountholder. Upon delivery, the shares shall be

registered in the name of the relevant depositary on the issuer's books and this depositary shall enter the name of the investor in its

records as the beneficial owner. The transfer of beneficial ownership shall be effected through the records of the depositary. The

beneficial owner shall be entitled to all rights and benefits and be subject to all liabilities in respect of his securities held by a

depositary. The Companies Act compulsorily provides that Indian companies making any initial public offerings of securities for or in excess of

Rs. 100 million (U.S.$2.31 million) should issue the securities in dematerialized form. The National Securities Depository Limited and

Central Depositary Services (India) Limited are the two depositaries that provide electronic depositary facility for trading in equity and

debt securities in India.

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APPENDIX B: FOREIGN INVESTMENT AND EXCHANGE CONTROLS

General

With effect from 1 June 2000, foreign investment in Indian securities is regulated by the Indian Foreign Exchange Management Act, 1999 (as amended) (the "FEMA") and the rules, regulations and notifications made under the FEMA. A person resident outside India can transfer any security of an Indian company or any other security to an Indian resident only in accordance with the terms and conditions specified in the FEMA and the rules and regulations made thereunder or is permitted by the RBI.

The transfer and issue of securities by a person resident, including but not limited to corporates- established and incorporated, outside India is also governed by the Foreign Exchange Management (Transfer or Issue of Securities by a Person Resident Outside India) Regulation, 2000 (the "FEM Securities Regulations"), notified by the RBI on 3 May 2000 as amended from time to time. Pursuant to the liberalization policy relating to the FDI, the RBI has issued various notifications and circulars containing the current regulatory provisions that are amended from time to time.

The FEM Securities Regulations provide that an Indian entity may issue securities to a person resident outside India or record in its books any transfer of security from or to such person only in the manner set forth in the FEMA and the rules and regulations made thereunder or as permitted by the RBI.

The RBI has issued the Foreign Exchange Management (Transfer or Issue of any Foreign Security) regulations, 2000, as amended (the "Bond Regulations") which, inter alia, govern and regulate the issue of foreign securities (including foreign currency convertible bonds).

The issue of the Bonds is primarily regulated by the issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Mechanism) Scheme, 1993, as amended (the "FCCB Scheme") and the Bond Regulations.

The RBI, through circular no. 60 dated 31 January 2004 (as supplemented on 23 February 2004 and 1 April 2004, as amended by Master Circular No. 2/2005-6 dated 1 July 2005 and Master Circular No. 7/2006-07), circular No. RBI/2005-06/87 A.P. (Dir Series) No. 5 dated 1 August 2005 a Ministry of Finance Notification dated 31 August 2005 and the Master Circular No. 02/2007-08 dated 2 July 2007 have liberalized the policy for raising of external commercial borrowings ("ECBs") by Indian corporates and has extended the liberalization made to ECBs to the issue of FCCBs in all respects.

Foreign Direct Investment

The Government, pursuant to its liberalization policy, set up the Foreign Investment Promotion Board ("FIPB") to regulate all investment by way of subscription and/or purchase of securities of an Indian company by a non-resident investor, or FDI, into India. Foreign direct investment means investment by way of subscription and/or purchase of securities of an Indian company by a non-resident investor ("Foreign Direct Investment" or "FDI"). As per applicable FEMA laws and regulations for foreign investment in certain sectors is subject to prior approval from the FIPB.:

(i) investments in excess of specified sectoral caps;

(ii) investments by any person who has an existing joint venture or a technical collaboration or a trade mark agreement in the same field to that in which the Indian company whose shares are being acquired is engaged. However, prior FIPB approval will not be required in case of an investment made by a venture capital fund registered with SEBI, or where the investment in the existing joint venture is less than 3 per cent or where the existing joint venture is defunct or a "sick company";

(iii) investment of more than 24 per cent in the equity capital of units manufacturing items reserved for small scale industries;

(iv) investment by an unincorporated entity;

(v) investment in industries for which industrial licensing is compulsory; and

(vi) all proposals relating to the acquisition of shares of an Indian company by a foreign investor (including an individual of Indian nationality or origin residing outside India (a "Non-Resident Indian") and corporates established and incorporated outside India) which are not under "automatic" route under the existing Indian foreign investment policy or where the Indian company is

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engaged in the financial services sector or where the acquisition of shares attracts provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

A person residing outside India (other than a citizen of Pakistan and Bangladesh) or any entity incorporated outside India (other than an entity incorporated in Pakistan or Bangladesh) has general permission to purchase shares, convertible debentures or preference shares of an Indian company, subject to certain terms and conditions.

Currently, subject to certain exceptions, FDI and investment by Non-Resident Indians in Indian companies do not require the prior approval of the FIPB or the RBI. The Government of India has indicated that in all cases where FDI is allowed on an automatic basis without FIPB approval, the RBI would continue to be the primary agency for the purposes of monitoring and regulating foreign investment. In cases where FIPB approval is obtained, no approval of the RBI is required, although a declaration in the prescribed form, detailing the foreign investment, must be filed with the RBI once the foreign investment is made in the Indian company. The foregoing description applies only to an issuance of shares by, and not to a transfer of shares of, Indian companies.

The Government of India has set up the Foreign Investment Implementation Authority (the "FIIA") in the Department of Industrial Policy and Promotion. The FIIA has been mandated to (i) translate foreign direct investment approvals into implementation, (ii) provide a proactive one stop after care service to foreign investors by helping them obtain necessary approvals, (iii) deal with operational problems, and (iv) meet with various Government of India agencies to find solutions to foreign investment problems, and maximize opportunities through a partnership approach.

Pricing

The price of shares of a listed Indian company issued to non-residents on a preferential basis under the FDI scheme on an automatic basis cannot be less than the price calculated in accordance with the guidelines issued by the SEBI. Where the Indian company is not listed on any recognised stock exchange in India the minimum issue price of the shares would be based on a fair valuation of shares done by a chartered accountant in accordance with the guidelines issued by the erstwhile Controller of Capital Issues.

Every Indian company issuing shares or convertible debentures in accordance with the FEM Securities Regulations must submit a report to the RBI within 30 days of receipt of the consideration and another report within 30 days from the date of issue of the shares to the nonresident purchaser.

The above description applies only to a fresh issue of securities by an Indian company.

Investment by Foreign Institutional Investors

In September 1992, the Government of India issued guidelines which enable foreign institutional investors ("FIIs"), including institutions such as pension funds, investment trusts, asset management companies, nominee companies and incorporated/institutional portfolio managers, to make portfolio investments in all securities of listed and unlisted companies in India. Investments by registered FIIs or Non-Resident Indians made through a stock exchange are known as portfolio investments ("Portfolio Investments"). Foreign investors wishing to invest and trade in Indian securities in India under these guidelines are required to register with the SEBI and obtain a general permission from the RBI under the FEMA. However, since the SEBI provides a single window clearance, a single application must be made to the SEBI. Foreign investors are not necessarily required to register with the SEBI as FIIs and may invest in securities of Indian companies pursuant to the FDI route discussed above.

FIIs that are registered with the SEBI must comply with the provisions of the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations 1995 (the "Foreign Institutional Investor Regulations"). A registered FII may, subject to the ownership restrictions discussed below, freely buy and sell securities issued by any Indian company, realize capital gains on investments made through the initial amount invested in India, subscribe to or renounce rights offerings for shares, appoint a domestic custodian for custody of investments made and repatriate the capital, capital gains, dividends, income received by way of interest and any compensation received towards sale or renunciation of rights offerings for shares. An FII may not hold more than 10 per cent of the total issued capital of a company in its own name; a corporate/individual sub-account of the FII may not hold more than 5 per cent of the total issued capital of a company, and a broad-based sub-account may not hold more than 10 per cent of the total issued capital of a company.

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The total holding of all FIIs in a company is subject to a cap of 24 per cent of the company. The 24 per cent limit may be increased to the sectoral cap/statutory limit as applicable to the Indian company concerned, by the Indian company passing a resolution by its Board of Directors followed by passing of a special resolution to that effect by its shareholders.

Regulation 15A of the SEBI (Foreign Institutional Investors) Regulations 1995 provides that an FII or sub-account may issue, deal in or hold, offshore derivative instruments such as participatory notes, equity linked notes or any other similar instruments against underlying securities, listed or proposed to be listed, on any stock exchange in India, only in favour of those entities which are regulated by any relevant regulatory authority in the countries of their incorporation or establishment, subject to compliance with a "know your client" requirement. An FII or sub-account is also to ensure that no further downstream issue or transfer of any offshore derivative instrument is made to any person other than a regulated entity. SEBI has made amendments to the Regulations, by insertion of Regulation 15A, which came into force on 3 February 2004, to incorporate such changes.

SEBI has pursuant to its circular dated 19 February 2004 clarified that the following entities would be deemed to be regulated entities for the purpose of Regulation 15A of the SEBI (Foreign Institutional Investors) Regulations, 1995:

(a) any entity incorporated in a jurisdiction that requires filing of constitutional and/or other documents with a registrar of

companies or comparable regulatory agency or body under the applicable legislation in that jurisdiction;

(b) any entity that is regulated, authorised or supervised by a central bank or any other similar body in any country, state or

authority, provided that the entity must not only be authorised but also be regulated by the aforesaid;

(c) any entity that is regulated, authorised or supervised by a securities or futures commission in any country, state or territory;

(d) any entity that is a member of a self-regulating securities or futures authority or commission within any country, state or

territory, provided that the aforementioned organizations which are in the nature of self-regulating organizations are ultimately

accountable to their respective securities or financial markets regulators; and

(e) any individual or entity (such as a fund, trust, collective investment scheme, investment company or limited partnership) whose

investment advisory function is managed by an entity satisfying the criteria of (a), (b), (c) or (d) above.

Historically, all FIIs issuing offshore derivatives or other financial instruments against underlying Indian securities were obliged to report any issuance, renewal, cancellation or redemption of the aforesaid instruments to SEBI every two weeks. However, in its circular dated 2 April 2004, SEBI advised all FIIs to change the frequency of submission of the report from fortnightly to monthly. SEBI has specified that these submissions should be made by the seventh calendar day of the month following the relevant period. In addition and as a result of the 2 April 2004 circular, FIIs who have not traded and have no outstanding investments in Indian securities during a particular month (or reporting period) are not required to submit "nil" reports for such period.

Under the RBI Notification Number FEMA 20/2000-RB dated 3 May 2000 (as amended from time to time), a registered FII is permitted to purchase shares/convertible debentures of an Indian company through public offer/private placement, subject to the FII limits stipulated therein. An Indian company is permitted to issue such shares or convertible debentures provided that:

(a) in case of a public offer, the price of the shares/convertible debentures to be issued is not less than the price at which the

shares/convertible debentures are issued to residents, and

(b) in case of an issue by private placement, the price of the shares/convertible debentures is not less than the price derived

under the SEBI guidelines or guidelines issued by Controller of Capital Issues, as applicable.

Registered FIIs are generally subject to tax under Section 115AD of the Indian Income Tax Act. The Bonds and the Shares are subject to tax under Section 115AC. There is uncertainty under Indian law as to the tax regime applicable to the FIIs that hold and trade in foreign currency denominated bonds or global depositary receipts. A Bondholder need not be an FII in order to exercise its Conversion Rights.

Foreign investors are not necessarily required to register with SEBI as Foreign Institutional Investors and may invest in securities of Indian companies pursuant to the Foreign Direct Investment route discussed above, in the case of joint ventures or collaborations or wholly owned subsidiaries that such foreign investors may wish to establish in India.

Portfolio Investment by Non-Resident Indians

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A variety of methods for investing in shares of Indian companies are available to Non- Resident Indians. These methods allow Non-Resident Indians to make Portfolio Investments in shares and other securities of Indian companies on a basis not generally available to other foreign investors. The applicable FEMA laws and regulations enable persons resident outside India or persons of Indian origin ("Non-resident Indians" or "NRIs") to make portfolio investments in shares or convertible debentures of an Indian company through a registered broker on a recognised stock exchange in Indian, in accordance with the Regulations. A single NRI's investment in an Indian company must not exceed 5 per cent of the paid-up value of shares issued by such company and the aggregate paid-up value of all shares purchased by all NRIs must not exceed 10 per cent of the paid-up capital of the company. However, this aggregate ceiling of 10 per cent may be increased to 24 per cent if a special resolution to that effect is passed at a general meeting of the company. Under the portfolio investment scheme, NRIs are not permitted to invest in the print media sector. Shares purchased by NRIs on a stock exchange under the portfolio investment scheme cannot be transferred by way of sale under private arrangement of gift to a person resident in India or outside India without the prior approval of the RBI. In addition to portfolio investments in Indian companies, NRIs may also make investments in Indian companies pursuant to the Foreign Direct Investment route discussed above. The overseas corporate bodies, at least 60 per cent of which are owned by the Non-Resident Indians ("Overseas Corporate Bodies" or "OCBs"), were allowed to invest by way of portfolio investment until 2001, when the RBI prohibited such investments. Further, it should be noted that through a circular dated 16 September 2003 and a press release dated 18 September 2003, the RBI has de-recognised the OCBs as an eligible "class of investor" under various routes and schemes available under the foreign exchange regulations.

Transfer of Shares or Convertible Debentures of an Indian Company by a Person Resident Outside India

Subject to the statements below, a person resident outside India may transfer shares held by him in Indian companies in accordance with the Regulations. A person resident outside India (not being a NRI) may transfer, by way of sale, the shares held by him to any other person resident outside India without the prior approval of the RBI. However, FIPB approval is required if the person acquiring the shares has an existing venture or tie-up in India through investment in shares or debentures or a technical collaboration or a trade mark agreement or investment howsoever called in the same field, other than in the information technology field and certain relaxations in the mining sector, to that in which the Indian company whose shares are being transferred is engaged. A NRI may transfer the shares held by him, by way of sale, only to another NRI without the prior approval of the RBI. However, FIPB approval is required if the NRI acquiring the shares has an existing venture or tie-up in India through investment in shares or debentures or a technical collaboration or a trade mark agreement or investment howsoever called in the same field, other than in the information technology field and certain relaxations in the mining sector, to that in which the Indian company whose shares are being transferred is engaged.

Further, persons resident outside India may transfer shares or convertible debentures in Indian companies held by them to a person resident in India by way of gift without prior approval of the RBI. A person resident outside India may sell the share and convertible debentures of an Indian company on a recognised stock exchange in India through a registered broker. General permission of the RBI is also available for transfer of shares or convertible debentures by way of sale under private arrangement by a person resident outside India to a person resident in India, subject to certain conditions.

However, general permission is not available if the purchase of share by a non-resident attracts the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulation, 1997 or if the price at which the purchase takes place is not in accordance with applicable pricing guidelines or the activities of the investee company are not under the automatic route under the applicable FDI policy.

Pursuant to Circular No. 16 dated 4 October 2004 of the RBI, no prior approval of the RBI or the FIPB is required for the transfer (by way of sale) of shares or convertible debentures of an Indian company (other than in Indian company engaged in the financial services sector) by a person resident outside India to a person resident in India, so long as the conditions (including conditions as to the pricing of the shares transferred) and reporting requirements prescribed in the aforesaid Circular No. 16 are complied with.

Any person resident outside India seeking to sell shares received upon conversion of the Bonds, or otherwise transfer such shares to a person resident in India, whether through the BSE, UPSE or any other recognised stock exchange, should seek advice from Indian legal advisers as to the applicable requirements.

Issue of Foreign Currency Convertible Bonds ("FCCBs")

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The MOF, through the Depositary Receipt Scheme and the External Commercial Borrowings ("ECB") Guidelines (manifested in the Master Circular or External Commercial Borrowings and Trade Credits dated 2 July 2007 read with circulars dated 7 August 2007 and 26 September 2007), has allowed Indian corporates to issue FCCBs. The notification relating to FCCBs has been amended from time to time by the MOF, and certain relaxations in the guidelines have also been notified by the RBI. The FEM Securities Regulations provide that an Indian company may issue FCCBs to a person resident outside India subject to the approval of the RBI in certain cases. Any Indian company issuing such bonds must to comply with certain reporting requirements prescribed by the RBI. The relevant regulations further provide or prescribe, inter alia, the following in relation to FCCB issues:

An Indian corporate can raise funds up to U.S.$500 million under the "automatic route" without the approval of the RBI subject to certain conditions, and above any amount of U.S.$500 million with the approval of the RBI. These limits are also available to FCCBs under the ECB Guidelines, and Indian companies may issue FCCBs subject to the following conditions:

(i) FCCBs up to U.S.$20 million are required to have a minimum average maturity period of three years and FCCBs above U.S.$20 million and up to U.S.$500 million are required to have a minimum average maturity of five years;

(ii) the issue of FCCBs shall be subject to the foreign direct investment sectoral caps prescribed by the MOF and the RBI’s regulations and notifications issued from time to time;

(iii) FCCB proceeds more than US$ 20 million per borrower company per financial year would be permitted only for foreign currency expenditure for permissible end-uses of FCCB. Accordingly, more than USD 20 million FCCB proceeds shall be parked overseas for use as foreign currency expenditures for permissible end-uses and shall not be remitted to India. It shall be applicable ECB both under the Automatic Route and under the Approval Route.

(iv) FCCB proceeds up to US$ 20 million for rupee expenditure for permissible end-uses would require prior approval of the Reserve Bank of India under the Approval Route and such proceeds shall be continued to be parked overseas until actual requirement in India. Proceeds upto US$ 20 million per borrowing company per financial year would be permitted for foreign currency expenditure for permissible end uses under automatic route.

(v) public issues of FCCBs must be made through reputable managers;

(vi) the private placement of FCCBs with unrecognised sources is prohibited;

(vii) prepayment of FCCBs up to U.S.$500 million is permitted without prior approval subject to compliance with the minimum average maturity period, as applicable;

(vii) the "all-in cost" ceiling for FCCBs having a minimum average maturity period of three to five years should not exceed six month LIBOR plus 1.50 per cent, and in the case of FCCBs having a minimum average maturity period of more than five years, should not exceed six month LIBOR plus 2.5 per cent;

(viii) FCCB proceeds must be used for investments in areas such as import of capital goods, new projects, modernization/expansion of existing production units and real estate investments (industrial sector, including small and medium enterprises ("SME") and infrastructure sector) in India. Infrastructure sector is defined as (1) power, (2) telecommunication, (3) railways, (4) road including bridges, (5) ports, (6) industrial parks and (7) urban infrastructure (water supply, sanitation and sewage projects). Utilisation of the FCCB proceeds is also permitted in the first stage acquisition of shares in the divestment process and also in the mandatory second stage offer to the public under the Government of India's divestment programme of PSU shares, or for overseas direct investment in joint ventures/wholly-owned subsidiaries, expansion of existing joint ventures or wholly-owned subsidiary operations and overseas mergers and acquisitions. For any use of proceeds, other than as set out above, the prior permission of the RBI would be required;

(ix) FCCB proceeds are not permitted to be used for working capital purposes, general corporate purposes or for repayment of existing Rupee loans;

(x) FCCB proceeds are not permitted to be used for on-lending and investment in capital markets and real estate (other than permitted development of integrated townships) or acquiring a company (or part thereof) in India by a corporate entity;

(xi) proceeds from the issue of the FCCBs after deduction of the amounts equal to commissions, fees and expenses of the arranger (provided that such amounts do not exceed the ceiling as may be approved by the MOF) must be parked overseas until actual requirement in India;

(xii) issue-related expenses shall not exceed 4 per cent of issue size for public issues and 2 per cent, for private placements; and

(xiii) FCCBs cannot be issued with warrants attached.

On 31 January 2004, the RBI issued a revised policy with effect from 1 February 2004 for External Commercial Borrowings, which is also applicable to FCCBs (the "Borrowing Policy"), permitting Indian corporations to raise funds up to U.S.$500 million under the automatic approval route. Borrowings in excess of U.S.$500 million require the approval of the RBI. In terms of the Borrowing Policy, FCCBs up to U.S.$20 million must have a minimum average maturity period of three years and FCCBs above U.S.$20 million and up

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to U.S.$500 million must have a minimum average maturity of five years. Further, the "all-in cost" ceiling for FCCBs having a minimum average maturity period of three to five years should not exceed 150 basis points over six month LIBOR and in the case of FCCBs having a minimum average maturity period of more than five years should not exceed 250 basis points over six month LIBOR. The RBI has yet to amend the Overseas Direct Investment Regulations to give effect to the Borrowing Policy.

Further, on 1 April 2004, the RBI issued a circular stating, inter alia, the following:

(i) end use of FCCBs for working capital, general corporate purpose and repayment of existing Rupee loans is not permitted;

(ii) the maximum amount of FCCBs that may be raised by an eligible borrower under the automatic route is U.S.$500 million or its equivalent during a financial year; and

(iii) the primary responsibility to ensure that FCCB raised/utilized are in conformity with the RBI instructions is that of the concerned borrower and any contravention of the FCCB guidelines will be viewed seriously and may invite penal action.

The Ministry of Finance, Government of India has by a notification dated 31 August 2005, amended the Depositary Receipt Scheme. The following is a summary of the amendments to the Depository Receipt Scheme relevant to this Offering:

(1) ELIGIBILITY OF THE COMPANY

An Indian company which is not eligible to raise funds from the Indian capital market including a company that has been restrained from accessing the securities market by the SEBI will not be eligible to issue FCCBs;

(2) ELIGIBILITY OF THE SUBSCRIBERS

Erstwhile overseas corporate bodies and other entities which are prohibited to buy, sell or deal in securities by SEBI are not eligible to subscribe to FCCBs; and

(3) PRICING

The pricing for the FCCB issue may not be less than the higher of:

(a) the average of the weekly high and low of the closing price of the related shares quoted on the stock exchange during the six month preceding the relevant date; and

(b) the average of the weekly high and low of the closing price of the related shares quoted on the stock exchange during the two weeks preceding the relevant date. For the purpose of computation of the price, the relevant date is the date thirty days prior to the date on which the meeting of the general body of shareholders is held to consider the proposed FCCB issue and the "relevant stock exchange" means the stock exchange on which the relevant shares have been most frequently traded for the period in question.

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THE ISSUER Bartronics India Limited

5-9-22/B/404, My Home Sarovar Secretariat Road

Hyderabad 500 004 India

LEAD MANAGER Silverdale Services Limited

32 Queensway London W2 3RX United Kingdom

PRINCIPAL PAYING AND CONVERSION AGENT Deutsche Bank AG, London Branch

Winchester House 1 Great Winchester Street

London EC2N 2DB United Kingdom

TRUSTEE Deutsche Trustee Company Limited

Winchester House 1 Great Winchester Street

London EC2N 2DB United Kingdom

REGISTRAR, PAYING AND CONVERSION AGENT AND TRANSFER AGENT Deutsche Bank Luxembourg S.A.

2 Boulevard Konrad Adenauer L-1115 Luxembourg

LEGAL ADVISORS

To the Lead Manager as to English Law

Clyde and Co LLP 51 Eastcheap

London EC3M 1JP United Kingdom

To the Issuer as to Indian Law

APJ-SLG Law Offices D-77, Defence Colony

New Delhi 110024 India

To the Trustee as to English Law

Lovells, Lee & Lee 80 Raffles Place

#54-01 UOB Plaza 1 Singapore 048624

SINGAPORE LISTING AGENT Rajah & Tann LLP

4 Battery Road #26-01 Bank of China Building

Singapore 049908

AUDITORS TO THE ISSUER M/s. Yaji Associates

10-3-281/1/301 Humayun Nagar, Mehidipatnam

Hyderabad 500 028 India