Mukand RI Letter of Offer - Final clean v1...Draft Letter of Offer September 18, 2013 For Eligible Equity Shareholders of our Company only MUKAND LIMITED Mukand Limited (the “Company”

Draft Letter of Offer September 18, 2013

For Eligible Equity Shareholders of our Company only

MUKAND LIMITED

Mukand Limited (the “Company” or the “Issuer”) was incorporated on November 29, 1937 as Mukand Iron & Steel Works Limited under the provisions of Indian Companies Act VII of 1913 in (erstwhile) Bombay. Our Company’s name was changed on March 23, 1989 to Mukand Limited. Our Company had also changed its registered office from Kurla, Mumbai to Bajaj Bhawan, Nariman Point, Mumbai with effect from September 1, 2001. The corporate identification number of our Company is L99999MH1937PLC002726. For further details in respect of our Company, please see the section titled “History and Corporate Structure” beginning on page 74.

Registered Office: Bajaj Bhawan, Jamnalal Bajaj Marg, 226, Nariman Point, Mumbai - 400 021

Telephone: +91-22- 6121 6666 Fax: +91-22- 2202 1174 Contact Person: Mr. K J Mallya, Company Secretary and Compliance Officer

E mail: [email protected], Website: www.mukand.com Promoters: Mr. Rahul Bajaj, Mr. Niraj Bajaj, Mr. Rajesh V Shah and Mr. Suketu V Shah

FOR PRIVATE CIRCULATION TO THE ELIGIBLE EQUITY SHAREHOLDERS OF OUR COMPANY ONLY

ISSUE OF [●] EQUITY SHARES WITH A FACE VALUE OF RS.10/- EACH OF OUR COMPANY (THE “EQUITY SHARES”) FOR CASH AT A PRICE OF RS. [•] PER EQUITY SHARE (INCLUDING A PREMIUM OF RS. [●] PER EQUITY SHARE FOR AN AMOUNT AGGREGATING UP TO RS. 160.00 CRORES ON A RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF OUR COMPANY IN THE RATIO OF [●] EQUITY SHARES FOR EVERY [●] FULLY PAID-UP EQUITY SHARES HELD BY THE EXISTING EQUITY SHAREHOLDERS ON THE RECORD DATE, THAT IS ON [●] (THE “ISSUE”). THE ISSUE PRICE IS [•] TIMES THE FACE VALUE OF THE EQUITY SHARES FOR FURTHER DETAILS, SEE THE SECTION TITLED “TERMS OF THE ISSUE” BEGINNING ON PAGE 122 OF THIS DRAFT LETTER OF OFFER.

GENERAL RISKS Investments in equity and equity related securities involve a degree of risk and Investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in this Issue. For taking an investment decision, Investors must rely on their own examination of the Issuer and the Issue including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this Draft Letter of Offer. Investors are advised to see the section titled “Risk Factors” beginning on page 11 before making an investment in this Issue.

OUR COMPANY’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in the context of this Issue, that the information contained in this Draft Letter of Offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Draft Letter of Offer as a whole or any such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING The existing Equity Shares of our Company are listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). Our Company has received in-principle approvals from BSE and NSE vide their letters dated [●] and [●], respectively, for listing the Equity Shares arising from this Issue. BSE is the Designated Stock Exchange for the purposes of this Issue.

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

ICICI Securities Limited ICICI Centre H.T. Parekh Marg, Churchgate Mumbai 400 020, India Telephone: +91-22-2288 2460 Facsimile: +91-22-2282 6580 Email: [email protected] Investor Grievance Email: [email protected] Website: www.icicisecurities.com Contact Person: Mr. Manvendra Tiwari / Mr. Ayush Jain SEBI Registration No.: INM000011179

Karvy Computershare Private Limited Plot No. 17 – 24, Vittal Rao Nagar Madhapur, Hyderabad 500 081 Telephone: +91-40-4465 5000 Facsimile: +91-40-2343 1551 Toll Free: 1-800-3454001 E-mail: [email protected] Contact Person: Mr. M. Murali Krishna Website: http://karisma.karvy.com SEBI Registration No: INR000000221

ISSUE PROGRAMME ISSUE OPENS ON LAST DATE FOR RECEIVING REQUEST OF

SPLIT APPLICATION FORMS ISSUE CLOSES ON

[●] [●] [●]

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TABLE OF CONTENTS

PARTICULARS PAGE NO. SECTION I – GENERAL 2 DEFINITIONS AND ABBREVIATIONS 2 NOTICE TO OVERSEAS SHAREHOLDERS 7 CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA 8 CURRENCY OF PRESENTATION 9 FORWARD LOOKING STATEMENTS 10 SECTION II – RISK FACTORS 11 INTERNAL RISK FACTORS 11 EXTERNAL RISK FACTORS 22 PROMINENT NOTES 25 SECTION III – INTRODUCTION 27 THE ISSUE 27 SUMMARY OF FINANCIAL INFORMATION 28 GENERAL INFORMATION 34 CAPITAL STRUCTURE 39 OBJECTS OF THE ISSUE 45 STATEMENT OF TAX BENEFITS 49 SECTION IV – ABOUT OUR COMPANY 56 INDUSTRY OVERVIEW 56 OUR BUSINESS 58 HISTORY AND CORPORATE STRUCTURE OF THE COMPANY 74 OUR MANAGEMENT 79 SECTION V – FINANCIAL STATEMENTS 84 FINANCIAL INDEBTEDNESS 84 AUDITORS REPORT 93 STOCK MARKET DATA FOR THE EQUITY SHARES OF OUR COMPANY 94 ACCOUNTING RATIO AND CAPITALISATION STATEMENT 96 CERTAIN OTHER FINANCIAL INFORMATION 98 SECTION VI – LEGAL AND OTHER INFORMATION 99 OUTSTANDING LITIGATIONS AND DEFAULTS 99 MATERIAL DEVELOPMENTS 106 GOVERNMENT AND OTHER STATUTORY APPROVALS 112 SECTION VII - OTHER REGULATORY AND STATUTORY INFORMATION 115 SECTION VIII – OFFERING INFORMATION 122 TERMS OF THE ISSUE 122 SECTION VIII – STATUTORY AND OTHER INFORMATION 144 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 144 DECLARATION 145

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SECTION I - GENERAL DEFINITIONS AND ABBREVIATIONS Unless the context otherwise indicates or requires, the following terms shall have the meanings given below in this Draft Letter of Offer. References to statutes, enactments or regulations shall include any amendments and supplements thereto made from time to time. Issuer and Industry Related Terms

Term Description Articles/Articles of Association/AoA The articles of association of our Company, as amended from time to

time Auditors The statutory auditors of our Company, being Haribhakti & Co.,

Chartered Accountants Board/ Board of Directors/our Board Board of Directors of our Company or a duly constituted committee

thereof, as the context may refer to Directors/our Directors The directors of our Company Equity Shares The equity shares of our Company of face value of Rs.10 each, which are

listed on BSE and NSE Eligible Equity Shareholders The holders of fully paid-up Equity Shares, as on the Record Date i.e.

[●] Group Companies Companies, firms, ventures etc. promoted by the Promoters of our

Company, irrespective of whether such entities are covered under Section 370(1B) of the Companies Act or not

Joint Venture/JV Mukand Vini Mineral Limited Kalwe Plant Plant of our Company located within the local limits of Dighe and Kalwe

at Thane district “Mukand Limited” or “the Company” or “our Company” or “the issuer” or “we” or “us” or “our”

Mukand Ltd., a public limited company incorporated under the provisions of the Indian Companies Act VII of 1913 and therefore, an existing company under the Companies Act

Memorandum/Memorandum of Association The memorandum of association of our Company, as amended from time to time

Promoter Any one of the Promoters referred to individually Promoters The promoters of our Company, being Mr. Rahul Bajaj, Mr. Niraj Bajaj,

Mr. Rajesh V Shah and Mr. Suketu V Shah, referred to collectively Promoter Group Includes the Promoters and Mr. Sanjivnayan Bajaj, Mr. Shekar Bajaj,

Mr. Madhur Bajaj, Mr. Anant Bajaj, Ms. Sunaina Kejriwal, Ms. Suman Jain, Mr. Narendra J Shah, Ms. Anjana Viren Shah (nee Anjana Munsif), Ms. Jyoti Shah, Ms. Bansri Rajesh Shah, Ms. Czaee Sukumar Shah, Ms. Priyaradhika Rajesh Shah, Mr. Kaustubh Rajesh Shah, Bajaj Auto Employees Welfare Fund, Mr. Surendra Bhaichand Jhaveri (Mukand EWF), Akhil Investments and Traders Private Limited, Bachhraj & Company Private Limited, Bachhraj Factories Private Limited, Bajaj Investments and Holdings Limited, Bajaj Sevashram Private Limited, Baroda Industries Private Limited, Jamnalal Sons Private Limited, Jeewan Limited, Mukand Engineers Limited, Niraj Holdings Private Limited, Sidya Investments Limited, Valiant Investments and Traders Private Limited and Bahar Mercantile Limited

Registered Office The registered office of our Company situated at Bajaj Bhawan, Jamnalal Bajaj Marg, 226, Nariman Point, Mumbai 400 021, Maharashtra

Subsidiaries Mukand Global Finance Limited, Vidyavihar Containers Limited, Mukand Vijayanagar Steel Limited, Mukand International Limited, Mukand International FZE and Mukand Sumi Metal Processing Limited

Issue Related Terms and Abbreviations

Term Description Abridged Letter of Offer The abridged letter of offer to be sent to the Eligible Equity

Shareholders, in accordance with the SEBI Regulations Allotment The allotment of Equity Shares pursuant to the Issue Allotment Date The date on which Allotment is made Allottee(s) An Investor who is Allotted Equity Shares pursuant to Allotment

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Application Application made between the Issue Opening Date and the Issue Closing Date, whether submitted by way of CAF or in the form of a plain-paper, in case of Investors to subscribe to the Equity Shares issued pursuant to the Issue at the Issue Price, including applications by way of the ASBA process

Application Money The aggregate amount payable in respect of the Equity Shares applied for in the Issue at the Issue Price

“ASBA” or “Application Supported by Blocked Amount”

Application supported by blocked amount i.e., the Application (whether physical or electronic) used by an ASBA Investor to apply for Equity Shares in the Issue, together with an authorisation to an SCSB to block the Application Money in the ASBA Account

ASBA Account An account maintained by an ASBA Investor with an SCSB, which will be blocked by such SCSB to the extent of the Application Money, as specified in the Applications

ASBA Investor Eligible Equity Shareholders proposing to subscribe to the Issue through the ASBA process and who satisfies the ASBA Investor Eligibility Criteria (as defined in the section titled “Terms of the Issue” on page 122

Bankers to the Issue [●] CAF/ Composite Application Form The application form used by Investors to make an Application for

Allotment Controlling Branches The branches of the SCSBs which coordinate with the Registrar to the

Issue and the Stock Exchanges and a list of which is available at http://www.sebi.gov.in

Consolidated Certificate The certificate issued by our Company in one folio for Equity Shares allotted to any Eligible Equity Shareholder in physical form

Designated Branches Such branches of the SCSBs which shall collect the Application from the ASBA Investors and a list of which is available on ‘http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries’

Demographic Details Demographic details of Eligible Equity Shareholders, including address, bank account details and occupation

Depository A depository registered with the SEBI under the Depository Regulations DP Depository Participant Designated Stock Exchange BSE Draft Letter of Offer This Draft Letter of Offer dated September [●], 2013 issued by our

Company in accordance with the SEBI Regulations and filed with SEBI Investor(s) Eligible Equity Shareholder(s) and Renouncee(s) applying in the Issue Issue/ the Issue/ this Issue Issue of [●] Equity Shares for cash at a price of Rs.[●] per Equity Share

including a premium of Rs.[●] per Equity Share aggregating upto Rs.160 crores by our Company to the Eligible Equity Shareholders on a rights basis of [●] Equity Shares for every [●] Equity Shares held on the Record Date, i.e. [●]

Issue Closing Date [●] Issue Opening Date [●] Issue Price Rs.[●] per Equity Share Issue Proceeds The proceeds raised through the Issue available to our Company Lead Manager ICICI Securities Limited Letter of Offer The Letter of Offer dated [●] filed with the Stock Exchanges after

incorporating the observations received from SEBI on this Draft Letter of Offer

Listing Agreement(s) The agreement(s) entered into between our Company and the Stock Exchanges

Net Proceeds The Issue Proceeds less Issue related expenses Non – ASBA Investor All Investors other than ASBA Investors who intend to apply in the Issue

otherwise than through the ASBA process Non – Institutional Investors An Investor other than Retail Individual Investors and Qualified

Institutional Buyers QIBs/Qualified Institutional Buyers Public financial institutions as defined in Section 4A of the Companies

Act, FIIs and sub-accounts (other than sub-accounts which are foreign corporates or foreign individuals) registered with SEBI, venture capital funds, alternate investment funds, foreign venture capital investors registered with SEBI, Mutual Funds, multilateral and bilateral development financial institutions, scheduled commercial banks, state industrial development corporations, insurance companies registered with the IRDA, provident funds and pension funds with a minimum corpus of Rs.25 crores, the NIF, insurance funds set up and managed by the army, navy or air force of the Union of India and insurance funds set

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up and managed by the Department of Posts, Government of India Record Date [●] Registrar and Transfer Agent The registrar and transfer agent of our Company, being Karvy

Computershare Private Limited Registrar/ Registrar to the Issue Karvy Computershare Private Limited Refund Bank [●] Renouncees Persons, other than ASBA Investors, who have acquired Rights

Entitlements from Eligible Equity Shareholders Retail Individual Investors Individual Investors who have applied for Equity Shares for an amount

less than or equal to Rs. 200,000 in the Issue (including HUFs applying through the karta)

Rights Entitlement [●] Equity Shares that an Equity Shareholder is entitled to under the Issue for every [●] fully paid up Equity Share(s) held as on the Record Date

Self Certified Syndicate Bank or SCSB The banks which are registered with SEBI under the Securities and Exchange Board of India (Bankers to an Issue) Regulations, 1994, and offers services of ASBA, including blocking of bank account and a list of which is available on‘http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries’

Split Application Form(s) The application form(s) used in case of (a) renunciation in part by an Equity Shareholder in favour of one or more Renouncees; or (b) renunciation by an Equity Shareholder in favour of two or more Renouncees

Stock Exchanges BSE and NSE where the Equity Shares are presently listed Conventional/ General Terms and References to other Entities

Term Description Air Act The Air (Prevention and Control of Pollution) Act, 1981 Act/ Companies Act The Companies Act, 1956 CDR Cell A part of the CDR Mechanism in India mandated to assist the CDRSF and the

CDREG in all their functions CESTAT Customs, Excise and Service Tax Appellate Tribunal Competition Act The Competition Act, 2002 Contract Labour Act The Contract Labour (Regulation and Abolition) Act, 1970 Depository Regulations The Securities and Exchange Board of India (Depositories and Participants)

Regulations, 1996 Environment Protection Act The Environment (Protection) Act, 1986 FCNR Account Foreign Currency Non Resident Account FEMA Foreign Exchange Management Act, 1999 FEMA Regulations The Foreign Exchange Management (Transfer or Issue of Security by a Person

Resident Outside India) Regulations, 2000 FII(s) Foreign institutional investors registered with SEBI under the Securities and

Exchange Board of India (Foreign Institutional Investor) Regulations, 1995 Financial Year/ Fiscal/ FY Period of twelve months ended 31 March of that particular year IFRS International Financial Reporting Standards IT Act The Income Tax Act, 1961 Indian GAAP Generally Accepted Accounting Principles in India Insider Trading Regulations The Securities and Exchange Board of India (Prohibition of Insider Trading)

Regulations, 1992 Mutual Fund Mutual fund registered with SEBI under the Mutual Fund Regulations Mutual Fund Regulations The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 NI Act Negotiable Instruments Act, 1881 NRE Account Non Resident External Account NRI Non Resident Indian, is a person resident outside India, as defined under FEMA and

the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000

NRO Account Non Resident Ordinary Account “Non Resident” or “NR” Non-resident or person(s) resident outside India, as defined under the FEMA,

including FIIs and FVCIs OCB A company, partnership, society or other corporate body owned directly or indirectly

to the extent of at least 60% by NRIs including overseas trusts, in which not less than 60% of beneficial interest is irrevocably held by NRIs directly or indirectly as defined under the FEMA Regulations and which was in existence on October 3, 2003 and immediately before such date had taken benefits under the general permission

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granted to OCBs under the FEMA Regulation S Regulation S under the Securities Act “Re.” or “Rs.” or “INR” or “Rupees” Indian Rupees Rs.1 Crore Rs.10 million SEBI Act The Securities and Exchange Board of India Act, 1992 SEBI Regulations The Securities and Exchange Board of India (Issue of Capital and Disclosure

Requirements) Regulations, 2009 Securities Act The United States Securities Act of 1933 of the U.S. Takeover Code The Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeovers) Regulations, 2011 Transfer of Property Act The Transfer of Property Act, 1882 U.S./ USA/ United States United States of America, including the territories or possessions thereof Water Act The Water (Prevention & Control of Pollution) Act, 1974

Abbreviations

Term Description AGM Annual General Meeting

AS Accounting Standards AY Assessment Year

BIFR Board for Industrial and Financial Reconstruction BSE BSE Limited BOF Basic Oxygen Furnace

CAGR Compounded Annual Growth Rate CDR Corporate Debt Restructuring

CDREG Corporate Debt Restructuring Empowered Group CDRSF Corporate Debt Restructuring Standing Forum CDSL Central Depository Services (India) Limited CEO Chief Executive Officer CETP Common Effluent Treatment Plant CFO Chief Financial Officer

CIBIL Credit Information Bureau (India) Limited CHWTSDF Common Hazardous Waste Treatment Storage and Disposal Facility

CPP Captive Power Plant CRAR Capital-to-Risk Asset Ratio CRR Cash Reserve Ratio

DP ID Depository Participant’s Identification EBITDA Earnings Before Interest, Tax, Depreciation and Amortization

EAF Electric Arc Furnace EOF Energy Optimising Furnace EOT Electric Overhead Traveling ECB External Commercial Borrowings ECS Electronic Clearing Service EGM Extraordinary General Meeting ELL Electric Level Luffing FDI Foreign Direct Investment FIR First Information Report

GAAP Generally Accepted Accounting Principles GDP Gross Domestic Product GDR Global Depository Receipts

GoI/ Government Government of India HUF Hindu Undivided Family IMD Industrial Mechinary Division IPC The Indian Penal Code, 1860

IRDA Insurance Regulatory and Development Authority KIADB Karnataka Industrial Area Development Board LIBOR London Interbank Offered Rate MBF Mini Blast Furnace

MIDC Maharashtra Industrial Development Corporation MMT Million Metric Tonnes

MSEDCL Maharashtra State Electricity Distribution Company Ltd. MT Metric Tonnes

MTD Machine Tools Division

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MTPA Metric Tonnnes Per Annum NECS National Electronic Clearing Services NEFT National Electronic Fund Transfer

NH National Highway NHAI National Highways Authority of India NHDP National Highways Development Programme

NIF National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the Government of India published in the Gazette of India

NPA Non Performing Asset NSDL National Securities Depositories Limited NSE National Stock Exchange of India Limited p.a. Per Annum

PAN Permanent Account Number allotted under the IT Act PBDIT Profit before depreciation, interest and taxes

RBI The Reserve Bank of India RTGS Real Time Gross Settlement SEBI The Securities and Exchange Board of India SICA The Sick Industrial Companies Act, 1985 SLR Statutory Liquidity Ratio SMS Steel Melting Shop STT Securities Transaction Tax UHP Ultra High Power VAT Value Added Tax

Notwithstanding the foregoing, capitalized terms and expressions in sections titled “History and Corporate Structure”, “Statement of Tax Benefits”, “Financial Statements”, “Outstanding Litigation and Defaults” and “Terms of the Issue” on pages 74, 49, 84, 99 and 122 respectively, have the meanings given to such terms in these respective sections. Furthermore, words and expressions used but not defined herein shall have the same meaning as is assigned to such terms under the Companies Act, SEBI Act, the Securities Contracts (Regulation) Act, 1956, the Depositories Act and the rules and regulations made thereunder.

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NOTICE TO OVERSEAS SHAREHOLDERS

The distribution of this Draft Letter of Offer and the Issue to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons who come into possession of this Draft Letter of Offer are required to inform themselves about such requirements and observe such restrictions. Our Company is making the Issue to Eligible Equity Shareholders and will dispatch the Abridged Letter of Offer and CAF to only those Eligible Equity Shareholders who have an Indian address. No action has been or will be taken to permit the Issue in any jurisdiction where action would be required for that purpose, except that this Draft Letter of Offer has been filed with SEBI for observations. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and this Draft Letter of Offer or any offering materials or advertisements in connection with the Issue may not be distributed, in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, in those circumstances, this Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the Issue or the Rights Entitlements, distribute or send this Draft Letter of Offer in or into jurisdictions where it would or might contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee/s, they must not seek to subscribe to the Equity Shares or the Rights Entitlements referred to in this Draft Letter of Offer. Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in our Company’s affairs from the date hereof or that the information contained herein is correct as at any time subsequent to this date. NO OFFER IN THE UNITED STATES The Rights Entitlement and the Equity Shares offered in this Issue have not been and will not be registered under the Securities Act or any U.S. state securities laws and may not be offered, sold, resold or otherwise transferred within the United States or to, or for the account or benefit of U.S. persons (as defined in Regulation S), except in a transaction exempt from the registration requirements of the Securities Act. The offering to which this Draft Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any Equity Shares or rights for sale in the United States or as a solicitation therein of an offer to buy any of the said Equity Shares offered in this Issue or Rights Entitlement. Accordingly, this Draft Letter of Offer and the enclosed CAF should not be forwarded to or transmitted in or into the United States at any time. Neither we nor any person acting on behalf of us will accept subscriptions or renunciation from any person, or the agent of any person, who appears to be, or who we or any person acting on behalf of us has reason to believe is, either a U.S. Person or otherwise in the United States when the buy order is made. Envelopes containing a CAF should not be postmarked in the United States or otherwise dispatched from the United States or any other jurisdiction where it would be illegal to make an offer, and all persons subscribing for the Equity Shares in this Issue and wishing to hold such Equity Shares in registered form must provide an address for registration of the Equity Shares in India. We are making the Issue on a rights basis to Eligible Equity Shareholders and the Letter of Offer and CAF will be dispatched only to Eligible Equity Shareholders who have an Indian address. Any person who acquires rights and the Equity Shares offered in this Issue will be deemed to have declared, represented, warranted and agreed, (i) that it is not and that at the time of subscribing for such Equity Shares or the Rights Entitlements, it will not be, in the United States, (ii) it is not a U.S. Person and does not have a registered address (and is not otherwise located) in the United States when the buy order is made, and (iii) it is authorised to acquire the rights and the Equity Shares in compliance with all applicable laws and regulations. We reserve the right to treat any CAF as invalid which: (i) does not include the certification set out in the CAF to the effect that the subscriber is not a U.S. Person and does not have a registered address (and is not otherwise located) in the United States and is authorized to acquire the Equity Shares offered in the Issue or Rights Entitlement in compliance with all applicable laws and regulations; (ii) appears to us or our agents to have been executed in or dispatched from the United States; (iii) appears to us or our agents to have been executed by a U.S. Person; (iv) where a registered Indian address is not provided; or (v) where we believe that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements; and we shall not be bound to allot or issue any Equity Shares or Rights Entitlement in respect of any such CAF.

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CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA

Certain Conventions Unless otherwise specified or the context otherwise requires, all references to “India” in this Draft Letter of Offer are to the Republic of India, together with its territories and possessions. References to the singular also refer to the plural and one gender also refers to any other gender, wherever applicable. Unless otherwise specified, references to installed capacities of our plants refer to manufacturer-rated capacities. Financial Data In this Draft Letter of Offer, we have included our audited financial statements for the FY 2012 and FY 2013 as well as unaudited results subject to limited review of financial statements for the quarter ended June 30, 2013. Unless otherwise specified, all financial numbers in this Draft Letter of Offer have been mentioned in Rs. crores. Our FY commences on April 1st and ends on March 31st of the next year. Unless stated otherwise, reference herein to a particular “financial year” or “fiscal year” or “Fiscal” or “FY” are to the 12-month period ending March 31st of that year. In this Draft Letter of Offer, any discrepancies in any table between the total and the sum of the amounts listed are due to rounding. Industry and Market Data Unless stated otherwise, industry and market data used throughout this Draft Letter of Offer have been derived from industry publications. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe that the industry and market data used in this Draft Letter of Offer is reliable, neither we nor the Lead Manager nor any of its affiliates nor advisors have prepared or verified it independently. The extent to which the market and industry data used in this Draft Letter of Offer is meaningful depends on the reader’s familiarity with and understanding of the methodologies used in compiling such data. Such data involves risks, uncertainties and numerous assumptions and is subject to change based on various factors, including those discussed in the section titled “Risk Factors” beginning on page 11. Accordingly, investment decisions should not be based on such information.

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CURRENCY OF PRESENTATION

All references to “Re.” or “Rs.” or “INR” or “Rupees” refer to Indian Rupees, the lawful currency of India. Any reference to “USD” or “US$” or “$” refers to the United States Dollar, the lawful currency of the United States. All references to “Euro” or “Eur” or “€” are to the single currency of the participating member states in the Third Stage of the European Economic and Monetary Union of the Treaty establishing the European Community. Exchange Rates: The exchange rates of the USD and the Euro as on June 30, 2013, March 31, 2013 and March 31, 2012 are provided below:

Currrency Exchange Rate into INR as on June 30, 2013

Exchange Rate into INR as on March 31, 2013

Exchange Rate into INR as on March 31, 2012

USD 59.6995 54.3893 51.1565 Euro 77.9760 69.5438 68.3403

(Source: www.rbi.org.in) Fluctuations in the exchange rate between the INR and the USD will affect the USD equivalent of the INR price of the Equity Shares on the Stock Exchanges. These fluctuations may also affect the conversion into USD of any cash dividends paid in INR on the Equity Shares.

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FORWARD-LOOKING STATEMENTS We have included statements in this Draft Letter of Offer which contain words or phrases such as “will”, “aim”, “is likely to result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “will pursue” and similar expressions or variations of such expressions, that are “forward – looking statements”. Similarly, statements that describe our objectives, strategies, plans or goals are also forward-looking statements. All forward – looking statements in this Draft Letter of Offer are based on our current plans and expectations and are subject to a number of uncertainties, assumptions and risks that could significantly affect our current plans and expectations, and our future financial condition and results of operations and may differ materially from those contemplated by the relevant forward-looking statement. These factors include, but are not limited to: • volatility in interest rates and other market conditions; • general political, economic and business conditions in India and other countries; • the performance of the Indian and global financial markets; • our ability to successfully implement our strategy, our growth and expansion plans and technological changes; • costs and availability of equipment, materials and fuel; • performance of industrial and automotive sectors in India; • changes in competition in the industries we operate in; • performance of the Indian debt and equity markets; • occurrence of natural calamities or natural disasters affecting the areas in which we have operations; • changes in laws and regulations that apply to companies in India; and • other factors discussed in this Draft Letter of Offer, including in the section titled “Risk Factors” beginning on page 11. For a further discussion of factors that could cause our actual results to differ, see the sections titled “Risk Factors” and “Our Business” on pages 11 and 58, respectively. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither our Company, nor the Lead Manager, or any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with the SEBI and Stock Exchange requirements, our Company will ensure that Investors in India are informed of material developments until the time of the grant of listing and trading permission by the Stock Exchanges.

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SECTION II - RISK FACTORS

An investment in equity shares involves a high degree of risk. Investors should carefully consider all the information in this Draft Letter of Offer, including the risks and uncertainties described below, before making an investment in our Equity Shares. If any of the following risks actually occur, our business, results of operations and financial condition could suffer, the price of our Equity Shares could decline, and you may lose all or part of your investment. The risks and uncertainties described below are not the only risks that we currently face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also have an adverse effect on our business, results of operations and financial condition. The financial and other related implications of risks concerned, wherever quantifiable, have been disclosed in the risk factors mentioned below. However, there are risks where the effect is not quantifiable and hence has not been disclosed in the applicable risk factors. We have numbered the risk factors to facilitate ease of reading and reference. Investment in equity and equity related securities involve a degree of risk and Investors should not invest any funds in this offer unless they can afford to take the risk of losing all or a part of their investment. Investors are advised to read the risk factors described below carefully before making an investment decision in this offering. In making an investment decision, prospective Investors must rely on their own examination of our Company and the terms of the Issue, including the merits and risks involved. To obtain a complete understanding, this section should be read in conjunction with the section “Our Business” beginning on page 58. This Draft Letter of Offer also contains forward-looking statements that involve risks and uncertainties. Our Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including considerations described below and in the chapter entitled “Forward Looking Statements” on page 10. Unless otherwise stated, the financial information used in this section is derived from our audited financial statements for FY 2012 and FY 2013, prepared under Indian GAAP. Internal Risk Factors

1. Our primary business of manufacturing of steel is cyclical in nature and is affected sharply by the macroeconomic cycles

both in India and internationally.

Steel as a commodity has a low price elasticity of both supply and demand, making it strongly pro-cyclical, which means that steel prices move up rapidly during macroeconomic expansions, and fall sharply during macroeconomic contractions. As all economies undergo cyclical expansion and contractions and since steel has strong co-movement at business cycle frequency and coupled with aforementioned low price elasticity, steel output rises and falls more than other economic activities. This also makes investment planning in the industry and therefore in our business difficult. Furthermore, majority of our Company’s output is consumed by the automotive industry, which in turn is highly cyclical in nature and is sensitive to interest rate cycles. The demand for steel products and, thus, the financial condition and results of operations of companies in the steel industry, including us, are generally affected by macroeconomic fluctuations in the world economy and the economies of steel-producing countries, including trends in the automotive industry. The ongoing effects of the global financial and European sovereign debt crises have affected steel prices, demand and volatility internationally including in India. This uncertainty and impact on global economic growth, may adversely affect future demand and prices for our products. The impact of potential longer-term sustained price shifts and shorter-term price volatility creates the risks that our financial and operating results and asset values will be materially and adversely affected by unforeseen declines in the prevailing prices of our steel products.

2. There are certain outstanding litigations against our Subsidiaries and us, which if determined against our Subsidiaries, or us could have a material adverse effect on our financial condition and results of operations.

In the ordinary course of our and our Subsidiaries’ businesses, claims may be brought against us and/or them for alleged defective or incomplete work, liabilities for defective products, personal injuries and deaths, damage to or destruction of property, breaches of warranty, delayed payments to our and/or their suppliers, sub-contractors or tax authorities. Such claims may be raised by way of civil proceedings involving damages or other claims or by way of proceedings under criminal laws. If we and/or our Subsidiaries are found to be liable on any of the claims, we and/or them would have to incur a charge against earnings to the extent a contingent liability reserve had not been established for the matter in our or their accounts, or to the extent the claims were not sufficiently covered by our and their insurance coverage. Both claims brought against us/our Subsidiaries and by us/our Subsidiaries, if not resolved through negotiation, are often subjected to lengthy and expensive litigation and/or arbitration proceedings. Charges associated with claims brought against us and write-downs associated with claims brought by us could have a material adverse impact on our financial condition, results of operations and cash flow. Moreover, legal proceedings resulting in judgments or findings against us may harm our reputation and damage our prospects for future contract awards. Additionally, we are also subject to ongoing examination and proceedings by the relevant tax authorities, should such examinations/proceedings by the tax authorities be determined against us and/or the Subsidiaries, the same may have adverse implications on our profitability and reputation. The brief details of the major outstanding litigations involving our Company and Subsidiaries are as follows:

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Litigation against our Company

Category Number of Proceedings

Amount involved (in Rs. crores)#

Criminal Complaints/Proceedings 1 N.A. Civil Proceedings 6 16.60 Arbitrations 1 8.66 Indirect Tax Proceedings 3 3.42

Total 11 28.68

Litigation by our Company



Criminal Complaints/Proceedings 5 3.34 Civil Proceedings 9 18.46 Arbitrations 1 1.16 Indirect Tax Proceedings 3 6.41

Total 18 29.37 Litigation involving our Subsidiaries



Direct/Indirect Tax Proceedings 9 43.41*

* Out of this Rs. 43.41 crores, Rs. 26.33 crores has already been disclosed as contingent liability for FY 2012-13. Please also refer to Risk Factor No. 36 on page 19 of this Drat Letter of Offer

# To the extent ascertainable For further details of outstanding litigations please see the section titled “Outstanding Litigations and Defaults” beginning on page 99.

3. The Government has notified certain peripheral land including certain portions of the land in which our factory at Ginigera is situated for acquisition.

The Government has vide its notification published in the Gazette of India Part –III, Section – 3, Sub-Section –II under no. SO 2453 (E) dated August 13, 2013, pursuant to the Section 3D(1) of the National Highways Act, 1956 (48 of 1956) with Amendment Act of 1997, acquired lands (identified in the said Gazette) for four laning of National Highway no.63 between Ankola – Hubli – Hospet section from km.0.000 to km 268.700 in the State of Karnataka. On September 05, 2013, a public notice has been issued to the owners/interested persons of the lands to produce the relevant documents within 21 days therefrom. Certain portions of the land in which our Ginigera plant is situated has been identified in the aforestated Gazette and in the public notice and may be acquired by the Government. Whilst we believe that such acquisition may not effect our operations at our plant in Ginigera, we cannot confirm the extent to which such acquisition may, upon its completion, impact the operations of our plant at Ginigera and consequently on our business as a whole.

4. The Hon’ble Supreme Court of India’s directive banning the mining operations in the state of Karnataka in the year

2011 has adversely affected the operations of our plant at Ginigera. Although the Supreme Court has permitted the opening of a few mines in the state of Karnataka, the availability of raw material supply to our plant at Ginigera is still scarce.

Our Company’s plant at Ginigera, Karnataka produces special and alloy steel through the MBF route using iron ore as its major input and is dependent on the mines in Karnataka for its iron ore requirements. The Supreme Court of India’s directive of July - August 2011 banning the mining operations in the state of Karnataka had created severe paucity of iron ore in Karnataka. This has adversely affected the operations in our Ginigera plant, which had to be closed completely for 35 days during the second quarter and partially during the third and fourth quarter of FY 2011-12, thereby hampering our production. Although availability of iron ore has since then been eased vide subsequent orders of the Supreme Court permitting certain specified category mines to re-open, we still face hardships in iron ore procurement. Since the month of September 2011, iron ore is available in Karnataka only through e-auctions conducted by a public sector undertaking and at a much higher price as compared to previous years.

Such restrictive directives in future could make the procurement of our key raw material difficult and expensive and this could in turn have an adverse impact on our production and financial results. Although we attempt to optimize our stocks of raw

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materials, we may not always be able to safeguard against unanticipated interruptions in raw material supply or substantial increases in raw material costs by actions on the part of the government and/or judicial bodies.

5. Raw materials constitutes substantial portion of our cost of production and therefore, volatility in the prices of raw materials such as iron ore may have an adverse impact on our business and make the raw material price management in our business difficult.

We use iron ore, coking coal, nickel, molybdenum and thermal coal etc. as raw materials in our steel production process. While all the raw materials can be indigenously sourced, nickel cannot be sourced within India due to its unavailability. The price of these raw materials are subject to market conditions and foreign exchange fluctuations and other such conditions which are beyond our control such as, interruptions in production by suppliers, suppliers’ allocation of materials to other purchasers, industry trends, logistics, weather and natural disasters. Our operations are therefore exposed to fluctuations in the price of such raw materials since they constitute a substantial portion of the cost of our products, for instance, during FY2013 we consumed Rs. 1,126.04 crores (on consolidated basis) towards raw materials, which stood at 52.67% of our revenues from operations on a consolidated basis whereas in the FY2012 we had consumed Rs. 1,351.45 crores (on consolidated basis) towards raw materials, constituting 52.14% of our revenues from operations for that year on a consolidated basis. Additionally, we do not have a robust hedging strategy in place to hedge against our raw material price fluctuations. The forward contracts that are currently utilized by us in our ordinary course of business may not successfully hedge against future losses arising from price fluctuations in the underlying raw material. There is also no assurance that we will be able to compensate for any future increase in raw material cost by correspondingly raising the prices of our products. Such uncontrolled fluctuations in our raw material prices may adversely affect our production process and have a negative impact on profitability.

6. Uninterrupted and adequate supply of power at a reasonable cost is critical for our operations and the lack of it could adversely affect our business and consequently our financial condition.

Out of our two plants, we produce stainless steel at our Kalwe Plant through the UHP furnace route. This route of production requires continued access to uninterrupted electricity and fuel oil supply. Currently, we do not possess captive power resource and are dependent on the state’s supply of power for our operations. Any interruption to the supply of such utilities may bring our operations at Kalwe Plant to a standstill. Furthermore, we believe that the price at which we purchase such principal utility from the state is competitive in terms of the prevailing average market price of power; however, there is no assurance that such prices would remain competitive and the supply would be uninterrupted on a long-term basis. Any fluctuations both in supply and the prices may adversely affect our business, our operations and the profitability of our Company.

7. Our operations involve certain hazardous processes that can cause personal injury and loss of life, severe damage to and

destruction of property and equipment, as a result of which we could suffer material liabilities, loss of revenues and increased expenses.

Our manufacturing process is industrial in nature and is subject to a variety of potentially severe operating risks associated with the inherently hazardous processes customarily involved in production of steel. Please see the manufacturing processes at our Kalwe Plant and our plant at Ginigera at pages 63 and 64, respectively. Hazards associated with our manufacturing processes include accidents caused by moving machinery, on-site transport, forklifts and overhead cranes, explosions and resulting fires in mini blast furnaces, coke ovens, steam generators and annealing furnaces; fires in control rooms, electrical switch rooms, cable tunnels and vaults, transformers and lubricating oil rooms; fires caused by contact of molten metal in blast furnaces, spills and spattering of molten materials; extreme temperatures, vibration and noise; and exposure to, through inhalation or contact with, hazardous chemicals including acids, ammonia, carbon monoxide and various dusts such as coal dust. In March 1995, a fatal accident occurred at the Kalwe Plant in which two of our employees died. This unfortunate incident led the Factory Inspector to file Criminal Complaint No. 2861/95 with the Chief Judicial Magistrate, Thane, which was later withdrawn in November 1998. Although, we take all necessary precautions to avoid occurrences of such accidents, evident by the fact that no such industrial accident has taken place in the last three years, we cannot assure you that such an event will not occur in the future. Such accidents, if they occur in future, may cause severe damage to and destruction of our property and equipment, may lead to environmental damages and/or personal injury or even fatalities among our personnel. Such events therefore may result in temporary or lengthy interruptions of operations, damage to our business reputation and corporate image and the imposition of civil and criminal liabilities on us. Moreover, due to the heavy-duty nature of our manufacturing process, we carry out planned shutdowns of our facilities for scheduled maintenance, statutory inspections and testing. During our planned shutdowns our production of steel is automatically diminished. Furthermore, as our operations involve a significant degree of integration; our results of operations are dependent on the successful operation of each facility. Although we take precautions to minimize the risk of any significant operational problems at our facilities, our business, financial condition, results of operations and prospects may be adversely affected by any disruption of operations at our facilities.

8. We buy steel scrap from sources in India and abroad for manufacturing refined steel at our plants. Whilst we maintain strict vigilance over the materials purchased by us we cannot have effective control over some extraneous dangerous materials being supplied along with the raw materials purchased from these sources. We use various types of scrap as our raw material and the types of scrap used by us are stainless steel scrap, shredded scrap, ship-breaking scrap, forging scrap cut ends and turnings. While we source majority of our requirement of scrap indigenously we also import some scrap. We have been subjected to criminal proceedings due to dangerous materials found in the scrap imported

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by us like in the year 1994, when while segregating the imported steel scrap some empty bombshells were found in the scrap. Against this, the Deputy Collector of Customs had filed Criminal Complaint No.10/CW/2002 before the Chief Metropolitan Magistrate’s Court, Mumbai under Section 135 (1)(a), (1) (b) read with Section 135(1)(ii) of the Customs Act, 1962 and under Section120-B of the IPC. For further details on this case, please see the section “Outstanding Litigations and Defaults” at page 99. There can be no assurance that such dangerous materials are not found in our scrap or other raw materials imported or purchased locally by us leading to prosecution of our Company and its officials or that accidents arising from the mishandling of such dangerous materials will not occur in the future. Such events may materially affect our operations and subject our Company to penalties and/or other civil and/or criminal liabilities.

9. Our Company has faced severe financial hardships in the past, which had led our Company to default on our repayment obligations towards our lenders. As on June 30, 2013, our Company’s outstanding indebtedness stood at Rs. 2267.80 crores, which included Rs. 872.67 crores towards short-term debt and Rs. 1395.13 crores towards long-term debt on a standalone basis. During the quarter ended June 30, 2013, 10.33% of our Company’s total revenue was utilized towards interest payment to our lenders. As at the end of June 30, 2013 we were in default of our repayment obligations to the extent of Rs. 45.00 crores towards principal and Rs. 17.31 crores towards interest. We have in the past defaulted on our loan related repayment obligations and have also overdrawn on the working capital limits. In the past, some of our then lender banks and financial institutions had even classified the account of our Company as NPA in their respective books. We had also approached our lenders for a financial restructuring package and were referred to the CDR Cell approved under the CDR Mechanism by the CDREG in the year 2003 and subsequently by the respective lenders individually. The restructuring package, inter-alia, included infusion of additional funds by the Promoters, funding of interest, reduction of interest rate, conversion of term loan into equity/ bond, etc. At the request of our Company, CDREG had further modified the CDR package in the year 2009 and once again in the year 2013. For further details regarding the progress made in the CDR package, please see page 92 and the Risk Factor No. 11 titled “Our financing arrangements with our lenders are recorded in agreements executed with them”. We are also subject to the terms of the CDR package of 2003, 2009 and 2013. The terms of the CDR package and the loan agreements contain conditions imposed on us, which could adversely affect our ability to react to changes in our business.” Repeated references to the CDR Cell and defaults in the repayment of loan would affect our ability to arrange for working capital funds and also for short term and long-term funds for our business. Shortage of funds could materially and adversely affect our capital expenditure plans, business, financial condition, results of operations and prospects.

10. Our Company’s current levels of indebtedness have considerable impact on our profitability and may adversely affect

our future strategy and operations. As at June 30, 2013, our Company’s long-term borrowings were approximately Rs. 981.13 crores and the long term debt equity ratio of our Company stood at 2.56:1. An amount of Rs. 215.38 crores equivalent to 10.13% and Rs. 61.65 crores equivalent to 10.33% of our total revenue is utilized to service the borrowings of our Company in FY 2013 and the quarter ended at June 30, 2013, respectively. Even though our Company is substantially leveraged, we may incur additional indebtedness in the future, including by the issuance of debt securities or entering into banking or other loan arrangements. Such levels of indebtedness could have adverse consequences for our Company’s business, including (a) limiting our Company’s ability to satisfy our debt obligations; (b) increasing cost of additional financing; (c) impairing our Company’s ability to obtain additional financing in the future for capital expenditure or general corporate purposes; (d) requiring our Company to dedicate a substantial portion of our cash flow from operations to the payment of its indebtedness, which would reduce the funds available for our operations; (e) limiting our Company’s flexibility in planning for, or reacting to, changes in the business and the industry in which our Company operates; and placing our Company at a competitive disadvantage compared to our competitors that have comparatively lesser debt.

11. Our financing arrangements with our lenders are recorded in agreements executed with them. In addition, we are subjected to the terms of the CDR package of 2003, 2009 and 2013. The terms of the CDR package and the restrictive covenants in the loan agreements contain conditions imposed on us, which could adversely affect our ability to react to changes in our business. We are dependent on debt financing to fund our working capital. As at June 30, 2013 our Company’s outstanding indebtedness stood at Rs. 2267.80 crores, which included Rs. 872.67 crores towards short-term debt and Rs. 1395.13 crores towards long-term debt on a standalone basis. Our loan agreements and the CDR package contain covenants that require us, inter-alia, (a) to dedicate a substantial portion of our cash flow from operations to service our debt; (b) to be continued to be substantially held by our Promoter Group, (c) to have a minimum leverage ratio, (d) to observe certain restrictions on the declaration of dividends and (e) to maintain a certain ratio of liabilities to net worth. Such conditions and more place us at a competitive disadvantage with respect to our competitors who have comparatively lesser exposure to debt in their books. Our failure to comply with these obligations or to seek satisfactory waivers or changes to our obligations to reflect our existing circumstances at the relevant time under our loan agreements and the provisions of our CDR package could result in an event of default under the relevant provisions therein. Additionally, our loan agreements contain cross default provisions, by which a failure to meet payment obligations or any default under any of our loan agreements could trigger a default under our other loan agreements. There can be no assurance that we will not be in breach of our loan and CDR covenants in the future or that any breach will not trigger the cross default and cross acceleration provisions under our other loan agreements. An event of default, if not cured or waived, will

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result in, among others, us incurring immediate payment obligations, which may adversely affect our business and financial condition, as well as our results of operations. Our Company has in the past defaulted in payment of our interest and other repayment obligations to our lenders and have also overdrawn working capital limits. In 2002 and 2003, we were in breach of the financial covenants under our loan agreements with BNP Paribas and HDFC Bank Ltd., respectively. The account of our Company was classified as ‘willful defaulter’ in the year 2002 by BNP Paribas and by HDFC Bank Ltd. in the year 2003. BNP Paribas had also filed a suit for recovery of its dues against our Company in the year 2002, which suit stands settled as on date. Pursuant to the CDR package approved in the year 2003, we had paid Rs. 13.08 crores to BNP Paribas and post the rights issue brought by our Company in the year 2003, an amount of Rs. 16.86 crores were paid to HDFC Bank Ltd. as full and final settlement. We have no liabilities against BNP Paribas and HDFC Bank Ltd. We no longer appear in the RBI’s list of willful defaulter. There can however be no assurance that we will be able to meet with or that our lenders will waive any Convents under the loan agreements and/or the CDR package in future. To the extent we are in breach of any of our covenants and our lenders do not waive compliance with such covenants and any cross default or cross acceleration provision that is triggered under other loan agreements and/or CDR package, we could be required to make unscheduled repayments of debt and be unable to draw down funds under our existing loan agreements or enter into new loan agreements on acceptable terms or at all. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations and may restrict our Company’s ability to arrange for debt funding requirements. For more information, see “Accounting Ratios & Capitalization Statement” and “Financial Statements – Balance Sheet as at March 31, 2013” on pages 96 and F1-F96, respectively.

12. Our commercial counterparties may fail to meet with their obligations, which may negatively impact our results. We commercially engage with a large number of counterparties in our business viz. our customers, distributors, suppliers, and financial institutions. Whilst we have sound credit control mechanisms however it may not be sufficient to prevent losses due to credit exposure to customers especially in the wake of the current slowdown in the Indian and international economic conditions. Additionally, our suppliers, contractors or even business partners and counterparties of our Subsidiaries may fail to perform their contracts. Such events could negatively affect our financial condition and results of operations.

13. Our failure to upgrade and modernize may render our existing plant and machinery and our products less competitive.

Our ability to keep pace with upgradation and modernization of our existing plant and machinery and our products and services are pertinent for our success. Given the fast pace of modernization, we face the risk that our plant and machinery and products and services may become obsolete and less competitive and any upgradation and modernization of our plant and machinery may entail large investments. If we are unable to meet such expenditure requirements, or if we do not keep up with atleast the market prevalent technological levels of manufacturing expertise, our business could be adversely affected. Furthermore, if we make such requisite expenditure for modernization of our plants, we may increase our indebtedness leading to further interest outlays and increased liability, which may adversely affect our financial condition if such expenditure does not bring about the desired results.

14. Breaches in our information technology (IT) security processes may adversely impact the conduct of our business

activities.

We maintain IT and communication networks and applications to support our business activities. These processes may not prevent future malicious actions or frauds by individuals or groups, resulting in the corruption of operating systems, theft of commercially sensitive data, misappropriation of funds and disruptions to our business operations. Such events may cause severe operational roadblocks in our business.

15. If we are not able to renew or maintain the statutory and regulatory permits and approvals required to operate our business it may have a material adverse effect on our business.

We are required to obtain approvals from relevant government authorities to operate our business. We are also required to renew our licences and approvals as they expire and obtain new licences and approvals when required. Please see the section titled “Government and Other Statutory Approvals” beginning on page 112 for more information on the licences and permits obtained by our Company. We cannot assure you that we will be able to successfully renew the licences, approvals or permits necessary for our operations upon expiration. Additionally, if the relevant authorities enact new regulations, we cannot assure you that we will be able to successfully meet with such requirements or that the relevant authorities will issue or renew the licences or approvals we require within the timeframe we anticipate or at all. If our Company fails to obtain the required approvals or renew them in time, we may be subjected to sanctions, such as fines, or be required to shut down a facility. Such failure to obtain or renew, any significant licence or approval that we may require to conduct our business and operations could materially and adversely affect our business, financial condition, results of operations and prospects.

16. Our industry is subject to long gestation periods, which exposes our production of steel to substantial price volatility.

The production of steel is capital intensive, with a high proportion of investment in fixed assets like plant and machinery. Furthermore, setting up of new capacities or expansion of existing capacities requires long lead times. Capacity expansions in the

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overall steel industry, if not matched with a corresponding growth in demand, may result in downward pressure on operating margins in the steel industry, including for our Company. At the same time if additional capacities are not built and if the demand grows then the prices tend to increase as the capacities to meet such demands cannot be built in a short period due to long gestation periods in capacity expansion in the steel industry. If such demand grows strongly then due to this long gestation period of manufacturing the same can lead to substantial price volatility. Accordingly, we may be impacted sometimes negatively by significant volatility in the alloy and stainless or special steel prices, particularly in the event of comparative excess production capacity in the Indian and global steel market.

17. Our Company’s research and development efforts and planned technology upgrades may be unsuccessful.

It is our Company’s constant endeavor to increase the proportion of high margin products in its product portfolio. We rely on our sales officers and research and development team to develop new production methods and processes to improve the quality of our products. However, such efforts require substantial time and capital investment and the benefits of any such investments may not yield immediate tangible benefits. Even if such efforts are successful, our Company may be unable to apply the new technology to the products in ways that are accepted by our existing or new customers. If our Company’s research and development efforts are ineffective, or if the markets do not accept such new products, our Company may fail to generate any returns from such expenditure on research and development and would also be unable to maintain or improve our competitive position leading to a slower growth of our business.

18. Our business requires significant amount of working capital and could be adversely affected if we are unable to maintain

sufficient levels of working capital.

Steel industry is working capital-intensive and is generally known for its low inventory turnover ratio. Like others in the industry, a substantial portion of our working capital is utilized to purchase raw materials such as iron ore from third parties. An increase in the global prices of our raw materials therefore has an adverse affect on our operational costs and accordingly, increases our working capital requirements. In our case, we fund our operations principally through internal cash flows and short or long-term bank loans. As at March 31, 2012 and March 31, 2013 we had cash and cash equivalents of approximately Rs. 26.27 crores and Rs. 21.06 crores on a standalone basis respectively and Rs. 33.48 crores and Rs. 26.13 crores on a consolidated basis, respectively, and the majority of our total borrowings comprised short-term borrowings. In the event that we are unable to obtain or secure sufficient borrowings or generate sufficient revenue from our operations, or if we fail to maintain sufficient cash to meet our operating requirements, we may not have sufficient cash flow to fund our operations and our business and results of operations will be materially and adversely affected.

19. Certain land parcels occupied by our Company are state-owned / allocated land granted to our Company on long term

lease. As a result, the use of these land properties by our Company may be terminated. We occupy certain portion of our factory land at our Kalwe Plant, the entire factory land at Ginigera, Karnataka and Sinnar Maharashtra under leasehold rights from the respective state authorities such as MIDC and KIADB. They have been taken on lease for various periods ranging from 21 years to 95 years. These land properties are subject to strict use and have been leased with transfer restrictions and therefore have limited market value. Violation of any terms of usage or other conditions of lease may lead to imposition of fine and/or cancellation of such leasehold rights. Any of these situations would have a material and severe adverse effect on business, results of operations and financial condition of our Company.

20. Our Company does not own the entire manufacturing facility at Ginigera, Karnataka. The steel plant of our Company at Ginigera, Karnataka is a joint effort of our Company and Kalyani Steels Limited. Under an arrangement, our Company owns an SMS and Kalyani Steels Limited owns a MBF and rolling mills in the Ginigera plant and production therein is shared between our Company and Kalyani Steels Limited in the ratio of 58.62% and 41.38%, respectively. Kalyani Steels Limited makes hot metal in its MBF, whereas our Company converts it into steel bloom/billets in its SMS. The blooms/billet is rolled into rounds at Kalyani Steels Limited’s rolling mills. In case our understanding with Kalyani Steels Limited is terminated or does not continue as per the agreed terms, our production would be adversely affected and this would affect our overall revenue and profitability. Please see page 65 for further details on the arrangement between our Company and Kalyani Steels Limited in respect of production and related matters for Ginigera plant.

21. We are dependent on additional financing to fund our operations and to support our future growth and due to our credit history or due to the prevailing market conditions at the relevant time, our Company may be unable to secure additional funding in the future. Our Company may in future need to obtain additional external financing, which may include bank borrowings or issuance of debt securities to meet our capital expenditure plans. There is no assurance that our Company will be able to raise sufficient financing to fund our future capital requirements or at all. Failure to obtain sufficient financing could cause delay or abandonment of business development plans and can have a material adverse effect on our Company’s results of operations. Our past credit history may make it difficult for us to raise debt or make such funds more expensive for us than the market rate thereby increasing our interest expense, and this will have a material and adverse impact on our business, results of operations and prospects. Certain business opportunities that may increase our revenue or competitive edge may arise from time to time, and we may require additional funds to expand our capabilities and business through acquisitions, investments, joint-ventures and/or strategic partnerships with third parties to take advantage of such opportunities. If we are unable to secure additional financing for this purpose, our ability to expand our facilities or to incur large capital expenditure to meet our requirements may

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be adversely affected. In such event, our future financial performance may be adversely affected. On the other hand if our Company raises additional funds through debt, our interest and repayment obligations will increase, and we may be subject to additional covenants that could limit our ability to access cash flows from operations.

22. We have experienced negative cash flows in our business for the FY2013 and the FY2012 from operating, investing and from financing activities in the past.

We have recently experienced negative cash flows with respect to operating, investing and financing activities, on a consolidated basis as set forth in the table below:

(Rs.in crores) FY 2013 FY2012 Net cash generated from/(used in) operating activities (45.68) 100.98 Net cash generated from/(used in) investing activities (98.54) (104.70) Net cash generated from/(used in) financing activities 151.57 (24.56) Net increase (decrease) in cash and cash equivalents 7.35 (28.28)

Sustained negative cash flows and losses incurred by our Company could have a negative impact on our reputation, on our performance and also on the relationship that we share with our bankers, creditors and customers. Any negative cash flow in the future could also adversely affect our Company’s results of operation and financial condition.

23. We have incurred losses in the past including the last two financial years and may incur losses in the future.

We have incurred a loss of Rs. 224.02 crores (consolidated after consideration of exceptional items) for FY 2013 and Rs. 86.88 crores (consolidated) for the FY2012. We believe that subject to any unforeseen circumstances, taking into account our cash flows from operations, our income from our arrangements with our customers as well as our undrawn committed credit facilities, we will be able to meet our liabilities as and when they fall due. In the past as at March 31, 2003, our Company’s networth had eroded of more than 50% of its peak networth during the then immediately preceding four financial years. Our Company had therefore become a ‘potentially sick industrial company’ under SICA and a report as required under the provisions of SICA had been filed with BIFR pursuant to the approval of the Board in its meeting held on June 30, 2003. Our Company ceased to be a ‘potentially sick company’ as on March 31, 2005 under SICA.

24. Our Company has not paid dividends since the last two years and may not be able to pay dividends in future. Our Company has not paid any dividends to its Equity Shareholders for FY2012 and FY2013. The ability of our Company to pay dividend in the near future cannot be ascertained. We may be prohibited from making any distribution by way of dividends unless the relevant bank or financial institution has determined that such distribution will not affect our ability to repay their loans. Furthermore, our ability to declare dividends in relation to our Equity Shares will also depend on our future financial performance which, in turn, depends on successfully implementing our strategy and on financial, competitive, regulatory, technical and other factors, general economic conditions, and other factors specific to our industry or specific projects, many of which are beyond our control. Non-payment of dividends makes our Equity Shares less attractive to the Investors thereby reducing the volumes of trades in the Stock Exchanges for our Equity Shares.

25. Our statutory auditors have made qualifying statements / laid emphasis in the audited accounts for the year ended March 31, 2013. Our Company’s statutory auditor has qualified the accounts for FY 2013, with the following statements:

(a) As more explained in Note 18(b) to the notes to the financial statements no provision has been made with regard to the realisability of the ‘Exposures’ in Vidyavihar Containers Limited (VCL), a subsidiary company, aggregating Rs. 76.37 crores (net) as at March 31, 2013 (Rs.76.37 crores (net) as at March 31, 2012), due to significant uncertainties in recovering its investment and loans which is dependent on the ultimate realization of the assets of VCL;

They have laid emphasis on the following without qualifying their statement: (b) Note 18(a) to the notes to the financial statements relating to the Exposures in Bombay Forgings

Limited (BFL), aggregating Rs.76.51 crores as at March 31, 2013, (Rs.70.85 crores as March 31, 2012) , where the management has, barring any significant uncertainties in future, relied upon the future earnings from the business activities of BFL.

(c) Note 18(c) to the notes to the financial statements relating to the ‘Exposures’ in Stainless India Limited

(SIL), an associate company, aggregating Rs. 14.11crores (net) as at March 31, 2013 (Rs. 40.28 crores (net) at March 31, 2012), where the networth of SIL has been completely eroded and there is no significant activities being carried out by SIL. The management has, barring any significant uncertainties in future, relied upon the valuation report prepared by the independent valuer for the sale of assets of SIL.

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(d) Note 18(d) to the notes to the financial statements relating to the ‘Exposures’ in Mukand Global Finance Limited (MGFL), a subsidiary Company, aggregating Rs. 26.25 crores as at March 31, 2013 (Rs. 26.25 crores as at March 31, 2012) where the management has barring any significant uncertainties in future relied upon the projected future earnings from the business activities of MGFL. ;

(e) Note 21(b) to the notes to the financial statements relating to the Exposures aggregating Rs. 141.68

crores as at March 31, 2013 (Rs.183.94 crores as at March 31, 2012), in respect of road construction activity and our reliance on the management’s expectation of its realisability.

As a result of such qualifications by our statutory auditor, the financial statements may be less reliable than they would be had we previously addressed the concerns raised by our statutory auditors in a satisfactory manner. For further details regarding the auditors’ qualifications, please see note nos: 18(a) to 18(d) under the section “Financial Statements” on page F28-29.

26. Our Company has not been regularly depositing income tax deducted at source, TCS, cess, professional tax, pension fund and sales tax and that there has been a slight delay in many cases. Our Auditors, in their report for the FY 2013 have stated that our company has not been regularly depositing income tax deducted at source, TCS, cess, professional tax, pension fund and sales tax and that there has been a slight delay in many cases. Such delayed deposition of statutory dues like Income Tax, Profession Tax, Pension Fund and Sales Tax could attract penal action from the statutory authorities and this could in turn have an impact on our revenues and profitability. For further details, please refer to note no. (ix) in the Auditors’ Notes on page F-5.

27. Our Company has a portfolio of multiple businesses, which exposes us to challenges in managing its ancillary business segments. Our Company’s core business of steel production is supplemented by three other business segments housed in different divisions of our Company: (i) Industrial Machinery Division (ii) Power Generation Division and (iii) Road Construction Division. Our Company’s management may experience difficulty ensuring that sufficient attention and support is provided to each of its ancillary businesses, and may also not possess the necessary expertise or be able to focus on what drives each business segment, in terms of factors such as preferred suppliers, operating costs and, the dynamics of the relevant industry. For example, we have sold all the operating assets of the Road Constructions Division, which therefore is now not operational. In addition, it may be difficult for our Company to concentrate on building out on any particular non-core business, which by extension may prevent our Company from retaining its leading position in steel production.

28. Information relating to our order book for IMD may not be representative of our future results.

IMD constitutes 7.51% of our total sales (excluding excise duty) for FY 2013. The order book size of IMD as on June 30, 2013 is Rs. 378.22 crores. Although projects in our order book for IMD represent business that we consider firm, however, defaults or scope adjustments by the customers or other unforeseen delays may occur. Because of these uncertainties, we cannot predict when or if the projects in our order book will be performed and will generate revenue. In addition, even where a project proceeds as scheduled, it is possible that contracting parties may default and fail to pay amounts owed or dispute the amounts owed to us. There is no assurance that we would be able to recover against such defaulting parties. There may also be delays associated with collection of receivables from customers.

29. Some of our Subsidiaries namely, Vidyavihar Containers Limited, Mukand Vijaynagar Steel, Mukand International

Limited and Mukand International FZE have been incurring losses for the last 3 years. In addition, Mukand Vijaynagar Steel Limited, had accumulated losses of Rs. 6.97 crores which was more than 50% of its networth as at the end of FY 2013 and it has incurred cash losses for the FY 2013 and in the previous two FYs. Our Subsidiaries, Vidyavihar Containers Limited, Mukand Vijaynagar Steel and Mukand International Limited have been incurring losses for the last three FYs as per details given hereunder:

(As per audited results) Name FY 2011 FY2012 FY2013

Vidyavihar Containers Limited (Rs. in crores)

(15.13) NA (0.30)

Mukand Vijaynagar Steel Limited (Rs. in crores)

(0.0031) (0.0032) (0.0007)

Mukand International Limited ( IN US$) (5340) (3687) (5682) Mukand International FZE (IN US$) NA NA (79976)

Note: NA denotes that the company made profits during the relevant financial year.

30. Disputes with our Joint Venture or other business partners may adversely affect our business.

In the course of our business, we have formed joint ventures and other strategic relationships with third parties to jointly engage in certain business activities. We may bear joint and several liabilities to the joint venture and strategic partners under the

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relevant joint venture or other agreements. It is possible that the interest and objectives of our JV or other business partners are inconsistent with ours and they may therefore take actions contrary to our instructions or requests or contrary to our policies and objectives. Accordingly, we cannot assure you that we will not have a serious dispute with our JV or other business partners, which may cause the loss of business opportunities or disruption to or termination of the relevant project or business venture. Such dispute may also give rise to arbitration, litigation or other legal proceedings whether commenced by us or against us, in India or in other jurisdictions, which will divert our management attention and other resources. In the event that we encounter any of the foregoing problems, our business, results of operations and financial condition may be materially and/or adversely affected.

31. The interests of our principal shareholders may not be the same as those of our other shareholders. As at June 30, 2013, the Promoter Group controlled voting rights for 39278804 Equity Shares, constituting 53.72% of our total paid up Equity Shares. Our Promoter Group therefore, has significant influence over the conduct of our business including matters relating to any sale of all or substantially all of our assets, the timing and distribution of dividends and the election of Directors. Our Promoter Group, because of its long-term interest, may have views, which, in the short term, may be in conflict with the interests of the other shareholders of our Company.

32. We may continue to be controlled by our Promoter Group, who by virtue of their aggregate shareholding collectively own a substantial portion of our issued Equity Shares, as a result of which, the remaining shareholders may not be able to effect the outcome of shareholder voting. As of June 30, 2013, the Promoter Group’s shareholding in our Company stood at 53.72%. Furthermore, members of the Promoter Group have undertaken to subscribe to the unsubscribed portion in addition to their entitlement in the Issue to ensure that at least 90% of the Issue is subscribed. Consequently, the collective holdings of our Promoter Group may increase above their current holdings. Our Promoter Group will therefore have the ability to exercise a controlling influence over our business, which may cause us to take actions that may conflict with the interests of some of our shareholders.

33. A significant proportion of our Promoter Group shareholding in our Company is encumbered. Enforcement of such encumbrance could have significant effect on the controlling interests and therefore on the voting pattern on corporate actions.

The pre-Issue shareholding of our Promoter Group in our Company as on June 30, 2013 was 53.72%, of which 40.96% was under pledge or encumbrance to secure the respective borrowings of members of the Promoters and Promoter Group (and/or the companies with which such persons are associated) as well as the borrowings of our Company. In the event of enforcement of such encumbrances, such encumbered Equity Shares may be required to be transferred to the holders of such encumbrances, resulting in a change in our Company’s shareholding pattern and in altering our Company’s relationships with our Promoter Group. Such events may render our Promoter Group unable to vote in favor of any corporate actions that would be in our Company’s interest.

34. Our success depends largely on our senior management and our ability to attract and retain our key personnel. Our success is, to a large extent, attributable to the vision, expertise and skills of our Directors and management team. In view of

their experience in and knowledge of the steel and heavy equipment business, their combined involvement is important to our future prospects. Should any of our senior management cease to be involved in our operations, our business, financial condition and results of operations may be adversely affected. We also do not have a key-man insurance policy in place with respect to the senior management and key managerial personnel of our Company. The success of our business will also depend on our ability to identify, attract, hire, train, retain and motivate skilled personnel. If we fail to retain and hire sufficient number of qualified personnel for functions such as manufacturing, technical, finance, marketing and sales, operations and research and development, our business could be adversely affected.

35. Our Company’s insurance coverage may not be sufficient to cover the risks related to its business operations. As of June 30, 2013, our property, plants, equipment and other assets are insured against fire and other casualty losses up to Rs. 2220.21 crores (including mediclaim cover for our employees). For more information, please see section “Our Business – Insurance” on page 73. Additionally, we carry general insurance for vehicles and accident compensation insurance for our employees to the extent we consider appropriate. This however is no guarantee that we will not incur expenditure or losses beyond the insurance coverage of our Company’s insurance policies. Having customary insurance that we have obtained does not preclude any claim, which may not be met by the insurance coverage at all and such instances may have an adverse effect on our business, results of operations and financial condition.

36. Our contingent liabilities may adversely affect our financial condition if they were to materialize.

The table below sets forth our contingent liabilities, as disclosed in our latest audited consolidated financial statements. (Rs.in crores)

Contingent liabilities not provided for

March 31, 2013

March 31, 2012

Income tax 48.12 53.94

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Excise duty, customs duty etc., 3.80 4.53 Sales tax, works contract tax etc., 5.63 4.90 Others 0.24 0.24 Claims against our Company not acknowledged as debts 18.53 21.24 Bills discounted with bankers and others 10.96 9.80 Guarantees and counter guarantees given by our Company 69.90 73.90 Bonds/undertakings given by our Company 35.44 30.68 Share in the contingent liabilities of associates 1.44 1.59

Total 194.06 200.82

Any or all of these contingent liabilities may become actual liabilities. If any or all of these liabilities materialize, there may be an adverse effect on our business, financial condition and results of operations. Please see “Financial Statements” on page 84.

37. We have entered into transactions with related parties in FY 2013, which could potentially involve conflicts of interest with our Company.

We have entered into transactions with related parties in FY 2013, comprising, on a consolidated basis, Rs. 3.02 crores paid towards remuneration and perks, Rs. 49.59 crores paid towards purchase of goods and services, Rs. 15.61 crores received on sale of goods and services. Although we enter into transactions with related parties on arm’s length basis, we cannot assure you that we could not have achieved more favorable terms had such transactions been entered into with unrelated parties. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on our business, prospects, financial condition and results of operations, including because of potential conflicts of interest or otherwise. For more details regarding Related Party Transactions, please see note no.34 under Auditors Reports in the section “Financial Statements” on page F42-F44.

38. Significant portion of our total trade receivables are more than six months old, and our inability to recover these can

severely impact our financial health. As at the end of FY 2013, our total trade receivables on a consolidated basis amounted to Rs. 927.05 crores of which Rs. 499.77 crores were pertaining to receivables, which were more than 6 months old. For the previous FY 2012, our total receivables amounted to Rs. 873.48 crores, of which Rs. 327.98 crores were more than 6 months old, and the recovery process of these could be slow, thereby impacting our operations and consequently our revenue and profitability.

39. We depend primarily on the Indian market for sales of our steel products and, accordingly, adverse economic and financial developments in India may have an adverse effect on our business, financial condition and results of operations.

We focus and depend primarily on the Indian market for sales of our steel products. The proportion of our domestic sales (including excise) in our total sales is as provided in the table below:

(Rs. in crores) For the year ended March 31,

2013

For year ended March 31, 2012

Domestic sales 2128.69 2543.82 Total sales 2280.52 2760.77 Domestic sales as percentage of total sales (%) 93.34 92.14

40. We derive a significant portion of our income from a few customers and a loss of one or more significant customers or a reduction in their demand for our products and services could adversely affect our business, financial condition and results of operations.

Aggregate sales attributable to our Company’s ten largest strategic customers represented 38.43% and 36.34% of our Company’s total revenue for the years ended March 31, 2012 and March 31, 2013, respectively. There can be no assurance that our Company will be able to maintain or improve its relationships with these customers, or that we will be able to continue to supply products to these customers at current levels or at all. Additionally, the term of sales contracts between our Company and most of our major customers is usually less than two years. The renewal of such contracts upon expiration of the term is not automatic but subject to mutual agreement between the relevant customer and our Company. If our Company is not able to maintain the sales contracts with our major customers on terms commercially acceptable to our Company or at all, our Company’s business, financial condition and results of operations may be adversely affected. In addition, demand for our Company’s products is affected by the performance of our customers in the international markets, and any decline in our major customers’ businesses in such markets could lead to a decline in purchase orders from these customers. If any of our Company’s ten largest customers were to substantially reduce the size or value of the orders it places with our Company or were to terminate its business relationship with our Company entirely, there can be no assurance that our Company would be able to obtain orders from other customers to replace any such lost sales on comparable terms or at all. If any of these relationships were to be so altered and our Company is unable to obtain replacement orders, our business, results of operations, financial condition and prospects may be materially and adversely affected.

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41. A significant portion of our production is used by end-users in the automotive industry, which exposes us to downturns in this industry.

A significant portion of our steel products are used by end-users in the automotive industry. The automotive industry is cyclical in nature and economic downturns and resulting pricing pressures experienced by our customers in this industry have in the past resulted in them reducing their capital and operating expenditures. A slowdown in this industry or the occurrence of any event that may adversely affect the industry such as the demand and supply for automobiles will result in a decrease in demand for steel products, and accordingly, our business, profitability and financial performance may be adversely affected. In particular, a significant decline in vehicle sales together with the deterioration in the global economic situation resulted in the postponement or cancellation of certain projects by our customers. Should such postponements of projects be prolonged or if we experience a significant postponement or cancellation of such confirmed projects, our business, profitability and financial performance will be adversely affected.

42. We sell our products in highly competitive markets and our inability to compete effectively may lead to lower market share or reduced operating margins, both of which may adversely affect our results of operations.

The markets in which steel companies operate are highly competitive. Our Company’s larger competitors may use their resources, which may be greater than our Company’s against us in a variety of ways including by making additional acquisitions, investing in the procurement and production of raw materials, investing more aggressively in product development and capacity increases and displacing demand for our Company’s products. There has been a trend towards industry consolidation in the domestic and international steel markets. In the international market, from October 1, 2012, Nippon Steel Corporation and Sumitomo Metal Industries Ltd. have merged to become Nippon Steel & Sumitomo Metal Corporation, which is now the world’s second largest steelmaker by output. Even the largest steel maker of the world, Arcelor Mittal is a result of consolidation of two large steel manufacturers. In the domestic market, the regional consolidation and restructuring has taken pace with the completion of merger of JSW Steel and JSW Ispat Steel on June 1, 2013, making it the second largest steel producer in the country after state-owned Steel Authority of India Limited. Such consolidation allows our consolidating competitors to benefit from greater economies of scale, which may allow them to increase their market share by reduction of price. Such intense competition and consolidation could cause our Company to lose its market share or constrain us to reduce our prices and thereby causing material adverse effect on our Company’s business, financial condition, results of operations and prospects.

43. Competition from substitutes for steel could reduce market prices and demand for steel products and thereby have an

adverse effect on our business, financial condition and results of operations.

Most of our output steel is utilized in the automotive sector. Currently, steel is the primary material in body and chassis structures. Shifts toward its substitutes like aluminum in the automotive industry or to cement, composites, glass, plastic and wood in other industries would significantly impact prices and demand for steel products. Our Company’s revenue and profitability may also be reduced by a decrease in market prices caused by competition from other materials that can substitute for steel and demand for steel products.

44. Regulations relating to environment safety and health evolve over time and stricter rules and regulations may

significantly increase our Company’s cost of compliance. Our Company’s steel manufacturing facilities involve potential environmental consequences, including generation of pollutants and storage and disposal of wastes and other hazardous materials. Our Company’s operations generate significant amounts of pollutants and waste, some of which are hazardous, such as sulphur oxide, organic compounds and multi component sludges containing heavy metals (chrome, copper, nickel and zinc). The discharge, storage and disposal of such hazardous waste are subject to environmental regulations, including some that require the clean-up of contamination. Our Company’s operations are also associated with the emission of carbon dioxide and other ‘greenhouse gases’. Ongoing international negotiations that aim to limit greenhouse gas emissions may result in the introduction of additional regulations in the future and may have an adverse impact on our Company’s operations. Additionally, there is a risk that in India stricter environmental legislation or regulations may be introduced. Continuation of the global trend towards stricter laws and regulations may result in significant increases in the cost of complying with (or failing to comply with) such environmental rules and regulations and could have a material adverse effect on our Company’s business, financial condition, results of operations and future prospects. We are also subject to health and safety laws, regulations and standards. Our Company’s compliance with these environmental, health and safety laws and regulations necessitate a commitment of significant financial resources. These laws and regulations may allow governmental authorities and private parties to initiate litigation based upon damages to property and injury to persons resulting from environmental, health and safety incidents and other impacts of our Company’s past and current operations, all of which could have a material and adverse effect on our Company’s business, financial condition, results of operations and future prospects.

45. Problematic labour relations and/or change in labour or industrial relations laws, as well as increasing costs of skilled labour, could have a material adverse impact on our Company. Our Company has enjoyed congenial labour relations with its employees in the past, a work slowdown or a work stoppage could occur at any of our Company’s facilities or in our Greenfield operations. We currently have one registered trade union viz., Kalwe Mukand Employees Union (“KMEU”) of daily waged workmen. Besides KMEU, there is another union, which belongs to Staff Members – Mukand Staff & Officers’ Association. Staff members are being paid emoluments in terms of an award dated June 30, 2006 by the Industrial Tribunal. Whilst we currently enjoy cordial relationship with the trade union, any work stoppages, disputes with employee unions or other labour related developments or disputes in future could result in a decrease in

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our Company’s production levels and/or an increase in costs, which could have a material adverse effect on our Company’s business, results of operations, financial condition and future prospects. In addition, competition for skilled labour is intense in the steel industry, and labour costs are increasing significantly. The demand for and hence costs associated with employing skilled engineers, construction workers and operators is likely to continue to increase, reflecting the significant demand from other industries and public infrastructure projects. Continued high demand for skilled labour and continuing increases in labour costs could make it difficult for our Company to attract qualified employees at a commercially reasonable cost or at all and such a difficulty could have a material adverse effect on our Company’s business, results of operations, financial condition and future prospects.

46. We are subject to risks arising from currency exchange rate fluctuations, which could adversely affect our business, financial condition and results of operations.

Our total imports and exports for FY2013 totaled Rs. 335.42 crores and Rs. 151.83 crores, respectively. We are therefore exposed to foreign currency risk for our raw material imports and export sales, which may not be fully hedged. Accordingly, we are subject to currency exchange rate risk on account of:

(a) Imports – depreciation in the value of Indian Rupee may result in increase in the cost of raw materials. As at March 31,

2013, out of the total raw material cost of Rs.1121.24 crores, an amount of Rs. 302.94 crores was incurred on import of raw material, on a stand alone basis.

(b) Exports – Appreciation in the value of Indian Rupee may result in reduced sales. As at March 31, 2013, out of the income of

Rs.2347.52 crores from total sale, an income of Rs. 151.83 crores was on account of export, on a stand alone basis.

47. We propose to utilise a part of the Net Proceeds for general corporate purposes and our management will have the discretion to deploy the funds to this end.

We propose to utilise the Net Proceeds for purposes identified in the section titled “Objects of the Issue” on page 45. The manner of deployment and allocation of such funds is entirely at the discretion of our management and our Board, subject to compliance with the necessary provisions of the Companies Act.

EXTERNAL RISK FACTORS 48. The impact of many proposed legislations viz., the Mines and Minerals (Development and Regulation) Bill, 2011 and the

Indian Direct Tax Code Bill, 2010 and recently enacted Companies Act, 2013 are uncertain and may impact our business adversely. The Union Cabinet has approved a new mining legislation titled ‘The Mines and Minerals (Development and Regulation) Bill, 2011’, to replace the existing Mines and Minerals (Development and Regulation) Act, 1957. This new bill was introduced in the Lok Sabha on December 12, 2011 and as on the date of filing of this Draft Letter of Offer, it is still pending its approval. This proposed legislation, in its current form, significantly varies from the legislation of 1957 and introduces benefit-sharing mechanisms for the people affected by the mining operations. In its current form, the Bill proposes sharing of 26% of the profits after tax by the coal miners with the project affected people. For non-coal mining companies, the Bill proposes an amount equal to 100% of the royalty to be shared with local people. Iron ore and coal are the two main raw materials used for making steel and the provisions of this proposed legislation, upon its enactment and implementation is likely to increase the price of both coal and iron ore, thus increasing the cost of production of steel. Whilst it is uncertain as to how the provisions of this proposed legislation, upon its enactment, would be applied in practice, if it were passed in its current form, the provisions thereof may have an adverse impact on the profitability of our Company. Furthermore, the Indian Direct Tax Code Bill, 2010 is in the anvil of being transformed into legislation, however, the same is yet to be enacted. It is uncertain as to how the provisions of the proposed legislation, upon its enactment, would be applied in practice. This Bill upon enactment may have an adverse impact on the operations of our Company. In addition, the new Companies Act, 2013 has been enacted to replace the Companies Act. However, at present, only limited provisions of the said legislation have been notified. We cannot ascertain as to how the provisions of this legislation, upon their notification, would be applied in practice and may require judicial interpretation for effective implementation.

49. The global economic conditions may continue to be sluggish negatively impacting our business. The global economic downturn in recent years reduced worldwide demand for steel products. There can be no assurance that such recovery will continue. Difficulties affecting the U.S. and global financial sectors, adverse conditions and volatility in the U.S. and worldwide credit and financial markets, fluctuations in oil and commodity prices and the general weakness of the U.S. and global economy have increased the uncertainty of global economic prospects in general and have adversely affected the global and Indian economies. The global economic downturn in recent years had a pronounced negative effect on the global demand for steel products and their prices. In response to sluggish demand from our customers in industries adversely impacted by the deteriorating global economic conditions, such as the automotive and construction industries, we may have to reduce our steel production and sales prices. There can be no assurance that a recovery in the global financial markets will be swift, alleviating the production outlook of the global steel industry and global economic conditions in general. Deterioration of market

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conditions may result in changes in assumptions underlying the carrying value of certain assets, which in turn could result in impairment of such assets, including intangible assets such as goodwill. We expect fluctuation in demand for our steel products to continue to prevail at least in the near future, which may adversely affect our business, results of operations or financial condition.

50. The alloy steel industry is highly competitive and our Company may not be able to compete successfully against our competitors. Our Company’s competitors include major national and international steel producers. A number of our Company’s competitors have undertaken modernisation and expansion plans, which may make them more efficient, allow them to develop new products and enable them to decrease their prices. Our Company also faces price-based competition from other alloy and specialty steel manufacturers in other emerging market countries. Competitors may have advantages in terms of location and transportation routes. Moreover, the steel industry as a whole has in the past suffered from production overcapacity. The highly competitive nature of the industry, combined with periodic excess production capacity for some steel products, has exerted, and may in the future continue to exert, downward pressure on the prices of certain of our Company’s products. There can be no assurance that our Company will be able to compete effectively in the future due to these factors. If our Company fails to compete effectively with our competitors then business of our Company, financial condition, results of operations and future prospects could be adversely affected.

51. Wage increases in India may reduce our Company’s profit margins. Wage costs in India have historically been significantly lower than wage costs for similarly skilled employees in more developed markets. Wage costs in India generally have been increasing and if wage costs continue to increase in India, and do so more rapidly in the future, and if our Company is not able to adjust its prices to recover such increases in costs, it could result in a reduction in our Company’s profit margins. Unless our Company is able to continue to increase the efficiency and productivity of our employees, wage increases could have a material adverse effect on our business, results of operations, financial condition and future prospects.

52. Political instability or changes in the economic policies by the GoI could impact our financial results and prospects.

India is a politically stable country. However, India has witnessed a spate of mild civil unrests in various parts mostly targeting the government in the recent past. It is widely believed that such situations have led the government to certain levels of inactions which have delayed major policy initiatives adversely effecting the economic environment of the country. Our Company’s assets and operations are located in India and we are subject to regulatory, economic, and social environment in India. Consequently, our Company’s financial performance is not only correlated with the economic conditions of India but also of its regulatory, social and political situations. For example, recent steep slide in the exchange rate of Rupee vis-à-vis USD, government policies, interest rates, commodity prices, social and civil unrest and other political events, in India have an impact on our business. Such situations also have a direct impact on the securities markets, which may have an adverse affect on the price of our Equity Shares.

53. Indian economy is facing relatively higher inflationary trends, which adversely affects our business. This trend may

continue in future. In the recent period, controlling inflation has been the cornerstone of monetary policy in India with continuing upside risk. Inflation in FY2012 was largely attributed to unsatisfactory monsoon, large upward revision in minimum support prices on the back of cost escalation and exchange rate depreciation. Steel sector has a direct correlation with the inflationary pressures, as it on the one side adversely affects demand, and at the same time it puts upward pressures on the raw material prices. In the first quarter for FY2014, the wholesale price index has been stable {at 171.5 for April 2013 and 171.6 for May 2013 (weight 100, base year 2004-05)} for all commodities, and for iron ore it is seen relatively moderating {at 616.7 for April 2013 and 613.3 for May 2013 (weight in index 0.24001, base year 2004-05, index weight 100)}. We cannot assure you that the economy in India will not be subject to periods of high inflation in the future. If such periods of high inflation occur, our business, financial condition, results of operations and prospects could be materially and adversely affected.

54. India’s physical infrastructure is in poor condition, which on the long run may be lead to more demand for steel products; it may at the same time disrupt the growth of Indian economy and consequently our Company’s growth. The physical infrastructure in India, including rail and road networks, power generation and transmission have not been adequately funded and maintained. Electricity shortages in some regions of India have seriously disrupted the local economies. The poor condition or further deterioration of India’s infrastructure may harm the economy, disrupt access to communications, increase the cost of doing business in India or disrupt business operations, any or all of which could have a material adverse effect on our Company’s business, financial condition, results of operations and future prospects.

55. Excess capacity and oversupply in the steel industry globally may hamper the steel industry’s recovery and prolong the

downward cycle.

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During periods of economic downturn, global steel production capacity exceeds global steel consumption, resulting in manufacturers in certain countries exporting significant amounts of steel and steel products at very low prices. These can result in downward pressure on domestic steel prices in India, which could materially and adversely affect our Company’s business, results of operations, financial condition and cash flows. There can be no assurance that our Company will be able to continue to compete successfully in this economic environment or that production over-capacity will not have a material adverse effect on its business, results of operations and financial condition.

56. Civil unrest, terrorist attacks or a war involving India could adversely affect our business, financial condition and results

of operations. The occurrence of events leading to large-scale violence or its very threats, caused by civil unrest, terrorist attacks or even low

intensity or full-scale war may result in a loss of business confidence, which could potentially lead to economic recession and cause an adverse effect on our business, results of operations, financial condition and cash flows. India has in the past faced armed aggressions from its neighboring countries and has also faced limited civil unrest and regular terrorist attacks. Such events have both direct as well as indirect impact on our business and the environment in which our business is conducted. There is no assurance that such hostilites or acts of violence would not be witnessed in India in the future. If India were to be subjected to such hostilities then the same shall have an adverse effect on our business, financial condition and results of operations.

57. India’s large geographical size makes it susceptible to various kinds of natural disasters. Also, there have been outbreaks

of infectious diseases, all of which could severely disrupt the normal operation of our business.

Due to its geographical expanse, India is subjected to various natural conditions and has witnessed severe natural calamities in the past, which have had their impact on the Indian economy. India has experienced natural disasters such as earthquakes, tsunamis, cyclones, droughts and floods in recent years. Because our operations are located in India, our business and operations could be interrupted or delayed as a result of a natural disaster in India, which could affect our business, financial condition, results of operations and the price of our Equity Shares. Furthermore, outbreak of an infectious disease as a consequences of such natural disasters or otherwise or any other serious public health concern, such as swine influenza, could have a negative impact on the Indian economy, financial markets and business activities, which could adversely affect our business, financial condition, results of operations and the price of our Equity Shares. Although, we have not been adversely affected by such outbreaks in the past, we can give you no assurance that a future outbreak of an infectious disease among humans or animals or any other serious public health concerns will not have a material adverse effect on our business, financial condition, results of operations and the price of our Equity Shares.

58. Depreciation of the value of the Indian Rupee against the Dollar and other major foreign currencies may have a material

adverse effect on the results of our operations and on the price of the Equity Shares. The Indian Rupee has depreciated significantly against major currencies in recent months. The exchange rate for the Indian

Rupee, as announced by the RBI, depreciated from Rs.51.1565 to US$1 as of March 31, 2012 to Rs. 59.6995 to US$1 as of June 30, 2013. Depreciation of the Indian Rupee may materially affect the results of our operations because, among other things, it causes an increase in Rupee terms, the costs of raw materials and equipment that we purchase from overseas sources and all costs, which are denominated primarily in Dollars. As the impact of such sudden and drastic depreciation of Indian Rupee is being felt in the Indian economy, the same may translate into adverse economic conditions for the business at large and for our business leading to a material adverse effect on the results of our operations and on the price of the Equity Shares.

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PROMINENT NOTES • Investors may contact the Lead Manager, i.e. ICICI Securities Ltd., for any complaints, information or clarifications pertaining

to the Issue. • Our net worth (excluding revaluation reserves) was Rs. 456.89 crores and Rs. 417.47 crores as per the audited financial

statements of our Company as on March 31, 2012 and March 31, 2013, respectively, on a standalone basis and Rs. 377.52 crores and Rs.154.23 as on March 31, 2012 and March 31, 2013, respectively, on a consolidated basis as disclosed in the section titled “Financial Statements” beginning on page 84.

• The book value per Equity Share (excluding revaluation reserves) was Rs. 61.72 and Rs. 56.33 as on March 31, 2012 and March

31, 2013 respectively, on a stand-alone basis as included in the section titled “Financial Statements” beginning on page 84. • Issue is of [●] Equity Shares with a face value of Rs. 10 each at an Issue Price of Rs. [●] for an amount aggregating upto Rs. 160

crores on a rights basis to the existing Equity Shareholders of our Company in the ratio of [●] Equity Shares for every [●] fully paid-up Equity Shares held by the existing Equity Shareholders on the record date, that is on [●].

• The details of transactions of our Company with our Group Companies during the period from April 01, 2012 till March 31,

2013, the nature and cumulative value of such transactions, are as provided in the table below: (Rs in crores ) (Standalone basis)

Nature of Transactions Subsidiaries

Companies over which

control exists

JVs KMPs and

their relatives

Others

Total

1 Purchase of goods 28.90 4.02 0 32.92

2 Sales 102.87 15.27 0 118.14

3 Transfer of Fixed Assets

190.49 4.11 194.60

4 Services Received 3.25 45.57 0 48.82

5 Services Rendered 0.16 0.30 0 0.46

6 Remuneration to MDs/ former MD

3.02 3.02

7 Interest/Dividend Paid / Received (Net)

(0.27) (3.26) 4.24 0.71

8 Reimbursement of Expenses – Payment

0.01 0.01

9 Reimbursement of Expenses – receipts

3.35 0.06 0.12 3.53

10 Finance taken including Equity

43.45 43.45

11 Finance given including Equity

118.13 1.49 119.62

12 Bad Debts written off 25.29 25.29

13 Net Balance at the close of the year

25.89 57.91 0.47 (43.63) 40.64

14 Guarantees Given by company

14.78 65.00 4.90 84.68

15 Counter Guarantees Given on behalf of company

6.00 6,00

# For further details please see “Related Party Transactions” as described in note no. 34 of “Notes forming part of the Accounts” of the Auditor’s Report on page F42-F44.

• Any clarification or information relating to the Issue shall be made available by the Lead Manager and our Company to the

Investors at large and no selective or additional information would be available for a section of Investors in any manner whatsoever.

26

• All grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a copy to the relevant SCSB,

along with complete details of the application in the Issue such as name, address of the Applicant, Rights Entitlement, number of Equity Shares applied for, ASBA Account number and the Designated Branch of the SCSB where the application was submitted by the ASBA Investor.

• Our Company satisfies the following conditions as prescribed under Regulation 57(2) (b) of Part E of Schedule VIII of the SEBI

Regulations.

(a) Our Company has been filing periodic reports, statements and information in compliance with the Listing Agreements for the last three years immediately preceding the date of filing this Draft Letter of Offer with the Designated Stock Exchange.

(b) The reports, statements and information referred to sub-clause (a) above are available on the website of BSE and the NSE being two of the recognized stock exchanges with nationwide trading terminals.

(c) Our Company has investor grievance handling mechanism which includes meeting of the Shareholder’s or Investor’s

Grievance Committee at frequent intervals, appropriate delegation of power by the Board as regards share transfer and have clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances.

• The Lead Manager and our Company shall update this Draft Letter of Offer and keep the shareholders / public informed of any

material changes till the listing and trading commencement and our Company shall continue to make all material disclosures as per the terms of the Listing Agreements.

• There has been no financing arrangement whereby the Promoter Group, the Directors and their relatives have financed the

purchase by any other person of our securities other than in the normal course of business of the financing entity during the period of six months immediately preceding the date of filing of this Draft Letter of Offer with SEBI and the RoC.

27

SECTION III - INTRODUCTION

THE ISSUE

Following is a summary of the Issue. This summary should be read in conjunction with and is qualified in its entirety by, more detailed information in the section titled “Terms of the Issue” beginning on page 122.

Equity Shares proposed to be issued by our Company [●] Equity Shares Rights Entitlement [●] Equity Share for every [●] fully paid up Equity Share held on

the Record Date Record Date [●] Face Value per Equity Share Rs. 10 Issue Price per Equity Share Rs. [●] Equity Shares outstanding prior to the Issue 73114129 Equity Shares Issue Size [●] Equity Shares of Rs. 10 each at Rs. [●] each aggregating upto

Rs. 160 crores. Equity Shares outstanding after the Issue (assuming full subscription for and allotment of the Rights Entitlement)

[●] Equity Shares

Use of Issue Proceeds See the section titled “Objects of the Issue” on page 45 Terms of the Issue See the section titled “Terms of The Issue” on page 122 ISIN Code INE304A01026 BSE Scrip Code 500460 NSE Scrip Code Mukandltd

Terms of Payment

On Issue Application Rs. [●] which constitutes 100% of the issue price payable

28

SUMMARY OF FINANCIAL INFORMATION

The following table set forth below indicates a summary of the financial information derived from our financial statements as of and for the years ended March 31, 2013 and March 31, 2012 prepared in accordance with Indian GAAP and the SEBI Regulations, and are presented in the chapter titled “Financial Statements” beginning on page 84. The summary financial information presented below should be read in conjunction with the financial statements and the notes thereto.

STATEMENT OF AUDITED ASSETS AND LIABILITIES (STANDALONE)

(Rs. in crores)

PARTICULARS March 31, 2013 March 31, 2012

I EQUITY AND LIABILITES

1 SHAREHOLDERS FUNDS

(a) Share Capital 78.75 78.75

(b) Reserves 2,003.27 2,047.08

2 NON CURRENT LIABILITIES

(a) Long Term Borrowings 856.72 774.19

(b) Deferred Tax Liabilities ( Net) - -

(c) Other Long Term Liabilities 12.03 12.19

(d) Long Term Provisions 30.05 28.49

3 CURRENT LIABILITIES

(a) Short Term Borrowings 884.61 840.55

(b) Trade Payables 655.85 732.72

(c) Other Current Liabilities 639.31 438.77

(d) Short Term Provisions 2.91 4.53

Total 5,163.50 4,957.27

II ASSETS

1 NON CURRENT ASSETS

(a) Fixed Assets

(i) Tangible Assets 2,407.15 2,389.65

(ii) Intangible Assets 0.38 0.47

(iii) Work In Progress 146.10 104.22

(b) Non Current Investments 227.81 109.67

Deferred tax assets (net) 8.24 -

(c) Long Term Loans and Advances 112.49 122.88

(d) Other Non Current Assets 48.28 48.28

2 CURRENT ASSETS

(a) Inventories 1,034.64 996.31

(b) Trade Receivables 935.26 876.98

(c) Cash and Bank Balances 74.80 78.69

(d) Short Term Loans and Advances 166.42 227.18

(e) Other Current Assets 1.93 2.94

Total 5,163.50 4,957.27

29

SUMMARY STATEMENT OF AUDITED PROFIT AND LOSS (STANDALONE)

(Rs. in crores)

PARTICULARS FY2012-2013 FY2011-2012

INCOME

1 Gross revenue from operations 2,347.52 2,800.42

Less: Excise Duty 221.28 234.46

2 Other Income 10.87 9.89

3 Total Revenue (1)+(2) 2,137.11 2,575.85 EXPENSES

4 Cost of Materials Consumed 1,121.24 1,351.70

5 Changes in inventories of finished goods and work - in - progress (61.13) (19.77)

6 Employee Benefits Expenses 136.53 131.85

7 Finance Costs 215.38 181.87

8 Depreciation and Amortization Expenses 64.15 65.72

9 Other Expenses 832.49 977.28

10 Expenditure transferred to Capital Accounts / Capital Work-in-Progress (15.52) (4.42)

11 Total Expenses (4)+(5)+(6)+(7)+(8)+(9)+(10) 2,293.14 2,684.23

12 PROFIT / (LOSS) BEFORE EXCEPTIONAL ITEMS AND TAX (3) - (11)

(156.03) (108.38)

Exceptional Items 108.33 -

Profit before tax (net) (47.70) (108.38)

13 Tax Expenses

Net Current Tax

Deferred Tax (Charge) / Credit 8.24 14.65

Excess / (Short) provision for tax in respect of earlier years 0.23

14 PROFIT / (LOSS) FOR THE YEAR (12) - (13) (39.46) (93.50)

Weighted average number of Equity Shares outstanding during the year 7,31,14,129 7,31,14,129

Basic and diluted earnings per share (in Rs.) (5.40) (12.79)

Basic and diluted earnings per share excluding Exceptional Items (net of tax) (in Rs.)

(20.21) (12.79)

Nominal Value of the Equity Share (In Rs.) 10 10

30

AUDITED CASH FLOW STATEMENT (STANDALONE)

(Rs. in crores) PARTICULARS FY2012-2013 FY2011-2012

CASH FLOW FROM OPERATING ACTIVITIES

Net Profit/(Loss) before tax and exceptional items (156.03) (108.38) Adjustment for:

Depreciation 64.15 65.72

Interest & Dividend Received (0.74) (0.94)

Interest/Lease charges 201.63 169.39

Other Non-cash Expenditure/(Income) – net (2.88) (2.54)

Suplus/(Loss) on sale of assets 29.73 0.09

Operating profit before working capital changes 76.40 123.34

Adjustment for:

Trade and other receivables (32.13) (114.05)

Inventories (38.33) (71.15)

(Decrease)/Increase in Trade payables (36.26) 155.64

Cash Generated from Operations (30.32) 93.78

Direct taxes refund/ (paid) (6.04) (19.41)

Cash flow from operating activities before exceptional items (36.36) 74.37

Exceptional Items 47.96 -

NET CASH GENERATED FROM OPERATING ACTIVITIES (A) 11.60 74.37

CASH FLOW FROM INVESTING ACTIVITIES Purchases of fixed assets (121.74) (104.62)

Sale of Fixed Assets 41.72 1.78

Purchase of Investments

Sale of Investment 1.01 -

Decrease in Loans to Subsidiaries and Other Companies - 33.39

Capital Work In Progress (Included in Fixed Asset)

Dividends received 0.74 0.94

NET CASH (USED IN)/FROM INVESTING ACTIVITIES (B) (78.27) (68.51)

CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Borrowings 288.53 276.33

Dividend & Tax thereon Paid (8.45)

Redemption of Debentures/Decrease in Term Loans (4.88) (81.48)

Interest/ Lease Charges Paid (211.77) (222.61)

NET CASH FROM/(USED IN) FINANCING ACTIVITIES (C) 71.88 (36.21) Net Increase/(Decrease) in Cash & Cash equivalent (A+B+C) 5.21 (30.35)

Opening Balance - Cash & Cash Equivalents 21.06 51.41

Closing Balance - Cash & Cash Equivalents 26.27 21.06

31

STATEMENT OF AUDITED ASSETS AND LIABILITIES (CONSOLIDATED)

(Rs. in crores) PARTICULARS March 31, 2013 March 31, 2012

I EQUITY AND LIABILITES

1 SHAREHOLDERS FUNDS

(a) Share Capital 78.75 78.75

(b) Reserves 1740.03 1967.71

2 Minority Interest 80.32 -

3 NON CURRENT LIABILITIES

(a) Long Term Borrowings 856.72 774.19

(b) Deferred Tax Liabilities ( Net) -

(c) Other Long Term Liabilities 12.03 12.19

(d) Long Term Provisions 30.12 28.54

4 CURRENT LIABILITIES

(a) Short Term Borrowings 968.58 919.17

(b) Trade Payables 657.00 733.45

(c) Other Current Liabilities 775.54 559.73

(d) Short Term Provisions 3.31 6.59

Total 5202.50 5080.32

II ASSETS

1 NON CURRENT ASSETS

(a) Fixed Assets

(i) Tangible Assets 2416.64 2,389.88

(ii) Intangible Assets 0.38 0.47

(iii) Capital Work In Progress 147.39 105.44

(b) Non Current Investments 53.58 52.22

(c) Deferred tax assets (net) 8.50 -

(d) Long Term Loans and Advances 127.49 137.81

(e) Other Non Current Assets 48.28 48.28

2 CURRENT ASSETS

(a) Inventories 1,034.63 996.28

(b) Trade Receivables 927.05 873.48

(c) Cash and Bank Balances 87.17 89.14

(d) Short Term Loans and Advances 339.37 376.69

(e) Other Current Assets 12.01 10.83

Total 5202.50 5080.32

32

SUMMARY STATEMENT OF AUDITED PROFIT AND LOSS (CONSOLIDATED)


INCOME

1 Gross revenue from operations 2359.29 2826.30

Less: Excise Duty 221.29 234.45

2 Other Income 10.74 10.08

3 Total Revenue (1)+(2) 2148.74 2601.93 EXPENSES

4 Cost of Materials Consumed 1126.04 1351.45

5 Purchases of Stock In Trade 2.78 7.10

6 Changes in inventories of finished goods and work - in - progress (61.13) (19.78)

7 Employee Benefits Expenses 137.28 132.50

8 Finance Costs 226.02 178.02

9 Depreciation and Amortization Expenses 64.52 65.75

10 Other Expenses 844.97 993.56

11 Expenditure transferred to Capital Accounts / Capital Work-in-Progress (15.52) (4.41)

12 Total Expenses (4)+(5)+(6)+(7)+(8)+(9)+(10)+(11) 2324.96 2704.19

13 PROFIT / (LOSS) BEFORE EXCEPTIONAL ITEMS AND TAX (3) - (12)

(176.22) (102.26)

Exceptional Items-Expenditure (57.77) -

Profit before tax (net) (233.99) (102.26)

14 Tax Expenses

Net Current Tax (0.73) (0.41)

Net Deferred Tax Credit 8.49 14.65

Excess / (Short) provision for tax in respect of earlier years 0.66 0.24

15 PROFIT / (LOSS) FOR THE YEAR BEFORE THE SHARE OF PROFITS OF ASSOCIATES ( 13)-(14)

(225.57) (87.78)

16 Less:

Share of Profit in Associates ( Net) 1.34 0.90

Minority Interest 0.21 -

17 PROFIT / (LOSS) FOR THE YEAR (15) - (16) (224.02) (86.88)

Weighted average number of Equity Shares outstanding during the year 7,31,14,129 7,31,14,129

Basic and diluted earnings per share (in Rs.) (30.64) (11.88)

Basic and diluted earnings per share excluding Exceptional Items (net of tax) (in Rs.)

(22.74) (11.88)

Nominal Value of the Equity Share (In Rs.) 10 10

33

AUDITED CASH FLOW STATEMENT (CONSOLIDATED)


CASH FLOW FROM OPERATING ACTIVITIES

Net Profit/(Loss) before tax and exceptional items (176.22) (102.28) Adjustment for:

Depreciation 64.52 65.75

Finance and Lease charges- (Net) 202.57 157.32

Other Non-cash Expenditure/(Income) – net (4.09) 7.34

Suplus/(Loss) on sale of assets- Net (16.21) (0.09)

Investment Income (0.47) (0.71)

Profit on sale of Investments (0.02) -

Operating profit before working capital changes 70.08 127.53

Adjustment for:

Increase in Trade and other receivables (56.44) (131.52)

Increase in Inventories (38.35) (71.03)

(Decrease) in Trade payables (15.05) -

Increase in Trade payables - (199.25)

Direct taxes (paid) (5.92) (23.25)

NET CASH GENERATED FROM OPERATING ACTIVITIES (A) (45.68) 100.98

CASH FLOW FROM INVESTING ACTIVITIES Acquisition of fixed assets (121.81) (104.72)

Increase in Loans to Companies - (2.50)

Sale of Fixed Assets 18.59 1.78

Purchase of Investments

Sale of Investment (Net) 1.01 -

Decrease in Loans to Companies 3.03 -

Interest received on loans to companies 0.17 0.03

Dividends received 0.47 0.71

NET CASH (USED IN)/FROM INVESTING ACTIVITIES (B) (98.54) (104.70)

CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Issue of shares to Minority Shareholders 80.71 -

Increase in Term Lonas - (Net) 26.92 -

Increase in Working Capital Loans from Banks - (Net) 97.97 195.86

Increase in other Uns - (Net) 163.65 80.47

Redemption of Debentures (4.88) (3.13)

Decrease in Term Loans - (Net) - (78.35)

Dividend Paid - (8.45)

Finance and Lease Charges (Net) (212.80) (210.96)

NET CASH FROM/(USED IN) FINANCING ACTIVITIES (C) 151.57 (24.56) Net Increase/(Decrease) in Cash & Cash equivalent (A+B+C) 7.35 (28.28)

Opening Balance - Cash & Cash Equivalents 26.13 54.41

Closing Balance - Cash & Cash Equivalents 33.48 26.13

34

GENERAL INFORMATION

Dear Equity Shareholder(s), Our Company was incorporated as Mukand Iron & Steel Works Limited on November 29, 1937 under the Indian Companies Act, VII of 1913 in (erstwhile) Bombay with the object, inter alia, of acquiring and taking over the business of Late Lala Mukand Lal and his sons, carried on under the name and styles of M/s. Mukand Iron Works, M/s. Mukand Steel Rolling Mills and M/s. Mukand Steel Foundry at Lahore (now in Pakistan) and the business of Hindustan Iron & Steel Products Ltd., at (erstwhile) Bombay. The name of our Company was changed to Mukand Limited on March 23, 1989 and we received a fresh certificate of incorporation dated March 23, 1989 from the RoC, Mumbai, consequent to the change of name. Pursuant to the resolution passed at the meeting of the Board held on June 06, 2013 and the shareholders meeting held on July 15, 2013, it has been decided to make a rights issue of Equity Shares to the Equity Shareholders of our Company with a right to renounce. Registered Office of our Company Bajaj Bhawan Jamnalal Bajaj Marg 226, Nariman Point Mumbai - 400 021 Telephone: +91-22- 6121 6666 Facsimile: +91-22- 2202 1174 E-mail: [email protected] Website: www.mukand.com Registration No: 2726 of 1937-38 CIN: L99999MH1937PLC002726 Registrar of Companies, Mumbai 100, Everest Building, Marine Drive, Mumbai – 400 002, Maharashtra, India. The Equity Shares of our Company are listed on BSE and the NSE. Company Secretary and Compliance Officer Mr. K. J. Mallya Company Secretary Bajaj Bhawan Jamnalal Bajaj Marg 226, Nariman Point Mumbai - 400 021 Telephone: +91-22- 6121 6666 Facsimile: 91-22- 2202 1174 E-mail: [email protected] Note: Investors are advised to contact the Registrar to the Issue/Compliance Officer in case of any pre-Issue / post-Issue related problems such as non-receipt of Letters of Allotment/ Share Certificates/ credit of allotted Equity Shares in the respective beneficiary accounts, refund orders, etc. Auditors of our Company Haribhakti & Co. Chartered Accountants 701 Leela Business Park, Andheri Kurla Road, Andheri (E), Mumbai – 400 059 Telephone: +91-22-6672 9999 Facsimile: +91-22-6672 9777 Lead Manager to the Issue ICICI Securities Limited ICICI Centre H.T. Parekh Marg, Churchgate Mumbai 400 020, India Telephone: +91-22- 2288 2460

35

Facsimile: +91-22- 2282 6580 Email: [email protected] Investor Grievance Email: [email protected] Website: www.icicisecurities.com Contact Person: Mr. Manvendra Tiwari / Mr. Ayush Jain Compliance Officer: Mr. Subir Saha SEBI Registration No.: INM000011179 Registrar to the Issue Karvy Computershare Private Limited Plot No. 17 – 24, Vittal Rao Nagar Madhapur, Hyderabad 500 081 Telephone: +91-40-4465 5000 Facsimile: +91-40-2343 1551 Toll Free: 1-800-3454001 E-mail: [email protected] Contact Person: Mr. M. Murali Krishna Website: http://karisma.karvy.com SEBI Registration No: INR000000221 Investors may contact the Registrar to the Issue/ in case of any pre-Issue/post Issue related problems. Legal Advisor to the Issue PDS & Associates Advocates & Solicitors 93 Sakhar Bhavan Nariman Point Mumbai - 400 021 Telephone: +91-22-22810101/22850909 Facsimile: +91-22-22850504 Email: [email protected] Bankers to our Company Bank of India Branch: 92-93, Free Press House, 9th Floor Free Press Journal Marg, Nariman Point, Mumbai - 400 021 Telephone: +91-22-22041562 Facsimile: +91-22-22041569 E-mail: [email protected] Contact Person: Mr J.Y. Chavan Canara Bank Branch: Leasing Division, SIR Section Recovery Wing, 112, J C Road, Bangalore - 560 002 Telephone: +91-80-22129628 Facsimile: +91-80-22237831 E-mail: [email protected] Contact Person: Mr. M Sridhara Central Bank of India Branch: Chandermukhi, Ground Floor Nariman Point, Mumbai - 400 021 Telephone: +91-22-66361904 Facsimile: +91-22-66361919 E-mail: [email protected] Contact Person: Mr. S.D. Mahurkar Corporation Bank Branch: Corporate Banking Branch, , The Eagle’s Flight Surren Road, Andheri (East) Mumbai - 400 083 Telephone: +91-22-26830478 Facsimile: +91-22-26842450 Contact Person: Mr. S S Anandam Musiniri

36

Dena Bank Branch: Corporate Business Branch Bandra Kurla Complex, Bandra (East), Mumbai - 400 051 Telephone: +91-22-26545003 to 26545005 Facsimile: +91-22-26545017 E-mail: [email protected] Contact Person: Mr. Arun Kumar Paliwal Exim Bank of India Limited Branch: Centre One Building, Floor 21 World Trade Centre, Cuffe Parade, Mumbai - 400 005 Telephone: +91-22-22172600 Facsimile: +91-22-22188076 E-mail: [email protected] Contact Person: Ms Manjiri Balerao HDFC Bank Ltd. Branch: Ramon House, 5th Floor H T Parekh Marg, 169, Churchgate, Mumbai - 400 020 Telephone: +91-22-66316000 Facsimile: +91-22-22811205 ICICI Bank Ltd. Branch: ICICI Bank, Towers 8th Floor Bandra Kurla Complex Mumbai - 400 051 Telephone: +91-22-26531414 Facsimile: +91-22-26531122 E-mail: [email protected] Contact Person: Mr. Ashish Kashive IDBI Bank Limited Branch: IDBI Tower, 9th Floor WEC Complex Cuffe Parade Mumbai - 400 005 Telephone: +91-22-6655 3355/22189111 Facsimile: +91-22-22180411 Contact Person: Mr. Sanat Bairi Union Bank of India Branch: Union Bank Bhavan, Ground Floor 239, Vidhan Bhavan Marg, Mumbai- 400 021 Telephone: +91-22-22851168/22892000 Facsimile: +91-22-22821781 E-mail: [email protected] Contact Person: Mr. C B Jha Vijaya Bank Branch: Maker Chamber IV, Nariman Point, Mumbai - 400 021 Telephone: +91-22-22814898 Facsimile: +91-22-22814753 E-mail: [email protected] Contact Person: Mr. Amber Saxena Yes Bank Limited Branch: India Bulls Finance Centre, 23rd Floor, Tower - 2 Senapati Bapat Marg, Elphinstone Road (W), Mumbai - 400 013 Telephone: +91-22-33669000 Facsimile: +91-22-24214500 Contact Person: Mr. Mitul Shah Bankers to the Issue [●]

37

Branch: [●] Telephone: [●] Facsimile: [●] E-mail: [●] Contact Person: [●] Self-Certified Syndicate Bankers The list of banks that have been notified by SEBI to act as SCSB for the ASBA Process are provided on http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries. For details on designated branches of SCSBs collecting the ASBA Bid cum Application Form, please refer the above-mentioned website. All grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a copy to the SCSB, giving full details such as name, address of the Applicant, number of Equity Shares applied for, amount blocked, ASBA Account number and the Designated Branch of the SCSB where the CAF was submitted by the ASBA Investors. Experts Except for the report of the Auditors provided under “Financial Statements” and the statement of tax benefits provided under “Statement of Possible Tax Benefits available to our Company & Shareholders” on pages 84 and 49 respectively, our Company has not obtained any expert opinions in respect of the Issue. Issue Schedule The subscription will open upon the commencement of the banking hours and will close upon the close of banking hours on the dates mentioned below:

Issue Opening Date [●] Last Date for receiving request for CAF’s [●] Issue Closing Date [●]

The Board or a duly authorized committee thereof may however decide to extend the Issue period, as it may determine from time to time, but not exceeding 30 days from the Issue Opening Date. Statement of Responsibilities of the Lead Manager ICICI Securities Limited is the sole Lead Manager to the Rights Issue and they shall perform matters relating to and coordination and other activities in relation to the Rights Issue. 1. Structuring of the Issue in conformity with the prevailing framework of guidelines issued by SEBI, the Stock Exchanges and the

provisions of Securities Contract (Regulation) Act, 1956 and the Companies Act. 2. Advising on the regulatory norms in securing approvals / exemptions wherever necessary from various regulatory agencies such

as SEBI, RBI, Stock Exchanges etc. 3. Undertaking due diligence activities and preparing this Draft Letter of Offer for filing with SEBI ensuring compliance with

stipulated requirements and formalities of all regulatory authorities including, but not limited to SEBI, Stock Exchanges and RoC and responding promptly the queries, clarifications sought by regulatory authorities.

4. Assisting our Company in appointment of all intermediaries such as legal counsel, Registrar to the Issue, bankers to the Issue, printers and advertising agency etc.

5. Assistance in drafting and finalizing other documents such as CAF, newspaper announcements of the dispatch of Letter of Offer /CAF, advertisements and application to the Stock Exchanges.

6. Following up with Registrar to the Issue to get estimates of collection and advising our Company on the Issue performance. 7. Co-ordinating the printing of Issue related stationery and publishing of statutory and other issue related advertisements. Credit Rating As the Issue is of Equity Shares, credit rating is not required. Grading As the Issue is of Equity Shares on a rights basis, grading is not applicable. Trustees As the Issue is of Equity Shares, the appointment of trustees is not required. Monitoring Agency

38

As per Regulation 16(1) of the SEBI Regulations the requirement of monitoring agency is not mandatory if the Issue size is below Rs.500 crores. Since the Issue size is less than Rs.500 crores, our Company has not appointed any monitoring agency for this Issue. However, as per the Clause 49 of the Listing Agreements to be entered into with the Stock Exchanges upon listing of the Equity Shares and the corporate governance requirements, the audit committee of the Board would be monitoring the utilization of the proceeds of the Issue. Appraising Entity None of the purposes for which the Net Proceeds of the Issue are proposed to be utilised have been appraised by any independent body. All costs and other estimates that form a part of this Draft Letter of Offer are based on management estimates. Minimum Subscription If our Company does not receive the minimum subscription of 90% of the Issue, or the subscription level falls below 90%, after the Issue Closing Date on account of cheques being returned unpaid or withdrawal of applications, our Company shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the subscription amount by more than eight days after our Company becomes liable to pay the subscription amount (i.e. 15 days after the Issue Closing Date), our Company shall pay interest for the delayed period, at the rates prescribed under Section 39 (5) of the Companies Act, 2013. Listing of Securities Our Equity Shares are listed on the BSE and the NSE. We have received in-principle approval from BSE vide its letter no. [●] dated [●] and NSE vide its letter no. [●] dated [●]. For the purpose of this Issue, BSE is the Designated Stock Exchange. Our Company will also apply to the Stock Exchanges for final approval for the listing and trading of the Equity Shares. Standby Underwriting Agreement / Subscription to the Issue by the Promoter & Promoter Group The present Rights Issue is not underwritten. However, certain members of the Promoter Group Mr. Niraj Bajaj, Jamnalal Sons Private Limited and Bachhraj & Company Private Limited have confirmed vide their letter of undertaking dated September 13, 2013 that they intend to subscribe to the full extent of their entitlement in the Issue. These members of the Promoter Group intend to apply for additional Equity Shares in the Issue such that at least 90% of the Issue size is subscribed. As a result of this subscription and consequent allotment, these members of the Promoter Group may acquire Equity Shares over and above their entitlement in the Issue, which may result in their shareholding in our Company being above their current shareholding. These members of the Promoter Group accordingly reserve the right to subscribe for their Rights Entitlement either by themselves and/or through one or more entities controlled by them, including by subscribing for Equity Shares pursuant to any renunciation made by any other member of the Promoter Group to another member of the Promoter Group. They have also undertaken to apply for the Equity Shares in addition to their Rights Entitlement to the extent of any undersubscribed portion of the Issue, subject to obtaining approvals required under applicable law, if any. Such subscription for Equity Shares over and above their Rights Entitlement, if allotted, may result in an increase in their percentage shareholding above their current percentage shareholding. Furthermore, such acquisition by them of additional Equity Shares shall (i) not result in a change of control of the management of our Company; and (ii) shall be subject to the compliance of the conditions stipulated in Regulation 10(4)(a) and 10(4)(b) of the Takeover Code and shall be exempt from the applicability of Regulations 3 and 4 of the Takeover Code. Details of Principal Terms of Loans and Assets Charged as Security For information on the principal terms of our loans and assets charged as security, please see “Financial Statements” and “Objects of the Issue” on pages 84 and 45 respectively.

39

CAPITAL STRUCTURE

Our share capital structure and related information as on the date of filing of this Draft Letter of Offer is set forth below:

(In Rs.) Particulars Nominal Value

Aggregate Value at the Issue Price

A. Authorized Capital 15,30,00,000 Equity Shares of Rs.10/- each 1,53,00,00,000 70,00,000 Preference Shares of Rs.10/- each 7,00,00,000 B. Issued Capital before the Issue 7,31,59,805 Equity shares of Rs.10/- each* 73,15,98,050 [●] 56,26,320 Preference Shares of Rs.10/- each 5,62,63,200 [●] C. Paid Up and Subscribed Capital before the Issue 7,31,14,129 Equity shares of Rs.10/- each 73,11,41,290 [●] 56,26,320 Preference Shares of Rs.10/- each# 5,62,63,200 [●] Add: Forfeited Shares (amounts originally paid up) 1,15,597 1,15,597 D. Rights issue of existing Equity Shareholders in terms of this

Draft Letter of Offer

[●] Equity Shares of Rs.10/- each at Rs. [●] per Equity Share [●] [●] E. Paid-Up Capital after the Rights Issue^ [●] Equity Shares of Rs.10/- each fully paid-up [●] [●] F. Share Premium Account Existing Share Premium Account 225,58,43,154 Share Premium Account after the Issue assuming allotment of all

Equity Shares offered -

* Includes 28,031 Equity Shares which have been kept in abeyance by BSE pursuant to the earlier rights issue in 2003 # The fractional Equity Share of ½ has been issued as one CRPS. ^ Post Issue shareholding is based on the assumption that all shareholders will subscribe in full to their entire Rights Entitlement. Classes of Shares Our Company has only one class of equity shares of Rs. 10/- each. Notes to the Capital Structure: 1. Pursuant to the order of the Hon’ble High Court of Judicature at Bombay dated October 14, 2003, our Company had cancelled

22 ½ Equity Shares issued and unallotted and reduced 20% of the outstanding Equity Shares amounting to 5,626,320 Equity Shares. In lieu of cancelled Equity Shares, our Company had issued 5,626,320 0.01% Cumulative Redeemable Preference Shares (CRPS) of Rs.10/- each entitled for cumulative preference dividend of 0.01% p.a. and redeemable in five equal annual installments starting from September 2019. In the event of liquidation of our Company before redemption, the holders of CRPS will have priority over Equity Shares in the payment of dividend and repayment of capital. The CRPS are listed on the Stock Exchanges.

2. Our Company has forfeited 7637 Equity Shares until 1967 of which 3647 Equity Shares forfeited were annulled. Hence by 1973;

3,990 Equity Shares have been forfeited. Our Company further forfeited 13655 Equity Shares in the year 2001-2002 in view of non payment of call money on the Equity Shares and the amount received on the forfeited Equity Shares amounts to Rs.0.0116 crores, including Rs.8000 for the Equity Shares forfeited until the year 1973.

3. Our Company does not have any outstanding warrants, options, convertible loans, debentures or any other securities convertible

at a later date into Equity Shares, as on the date of this Draft Letter of Offer, which would entitle the holders to acquire further Equity Shares.

4. The Equity Shares of our Company are fully paid up and there are no partly paid up Equity Shares as on the date of this Draft

Letter of Offer. 5. We have no intention to make a further issue of capital by way of issue of bonus shares, preferential allotment, rights issue or

public issue which will affect the equity capital of our Company during the period commencing from the filing of this Draft Letter of Offer with SEBI and the date on which the Equity Shares issued under this Draft Letter of Offer are listed or Application Moneys are refunded on account of the failure of the Issue. We have not issued any Equity Shares during the last one-year.

40

6. The present Issue being a rights issue, as per regulation 34(c) of the SEBI Regulations, the requirement of promoter’s

contribution and lock-in are not applicable. 7. Certain members of the Promoter Group viz. Mr. Niraj Bajaj, Jamnalal Sons Private Limited and Bachhraj & Company Private

Limited have provided undertakings dated September 13, 2013 that they intend to subscribe to the full extent of their entitlement in the Issue. These members of the Promoter Group intend to apply for additional Equity Shares in the Issue such that at least 90% of the Issue size is subscribed. As a result of this subscription and consequent allotment, these members of the Promoter Group may acquire Equity Shares over and above their entitlement in the Issue, which may result in their shareholding in our Company being above their current shareholding. These members of the Promoter Group accordingly reserve the right to subscribe for their Rights Entitlement either by themselves and/or through one or more entities controlled by them, including by subscribing for Equity Shares pursuant to any renunciation made by any other member of the Promoter Group to another member of the Promoter Group. They have also undertaken to apply for the Equity Shares in addition to their Rights Entitlement to the extent of any undersubscribed portion of the Issue, subject to obtaining approvals required under applicable law, if any. Such subscription for Equity Shares over and above their Rights Entitlement, if allotted, may result in an increase in their percentage shareholding above their current percentage shareholding. Furthermore, such acquisition by them of additional Equity Shares shall (i) not result in a change of control of the management of our Company; and (ii) shall be subject to the compliance of the conditions stipulated in Regulation 10(4)(a) and 10(4)(b) of the Takeover Code and shall be exempt from the applicability of Regulations 3 and 4 of the Takeover Code.

As such, other than meeting the requirements indicated in the section titled “Objects of the Issue” on page 45, there is no other intention or purpose for the Issue, including any intention to delist our Company, even if, as a result of any allotment in the Issue to the Promoters and/or members of the Promoter Group, the shareholding of the Promoters and/or Promoter Group in our Company exceeds the current shareholding. The Promoters and/or members of the Promoter Group intend to subscribe for any undersubscribed portion of the Issue as per the provisions of applicable law. Allotment to the Promoters and/or members of the Promoter Group of any undersubscribed portion, over and above their Rights Entitlement, shall be completed in compliance with Clause 40A of the Listing Agreements and other applicable laws prevailing at that time relating to continuous listing requirements prevailing at that time.

8. Shareholding pattern of our Company as filed with BSE as on June 30, 2013 is as under:

Category of Shareholders

No. of Shareholders

No. of Shares

No. of Shares Held in Demat Form

Total Shareholding as a % of Total number of Shares

Shares pledged or otherwise encumbered

As a % of (A+B)

As a % of (A+B+C)

No. of Shares

As a % of total no. of Shares

(A) Shareholding of Promoters and Promoter Group

(1) Indian

Individuals / Hindu Undivided Family 21 12678546 12678546 17.34 17.34

7851545 61.93

Central Government / State Government 0 0 0 0 0

0 0

Bodies Corporate 13 26600258 26600258 36.38 36.38 8238886 30.97

Financial Institutions / Banks 0 0 0 0 0

0 0

Any others (Specify) 0 0 0 0 0 0 0

Sub Total (A)(1) 34 39278804 39278804 53.72 53.72 16090431 40.96

(2) Foreign Individuals(NRIs/ Foreign Individuals)

0 0 0 0 0 0 0

Bodies Corporate 0 0 0 0 0 0 0

Institutions 0 0 0 0 0 0 0

Qualified Foreign Investor 0 0 0 0 0

0 0

Any Other (Please Specify) 0 0 0 0 0

0 0

Sub Total (A)(2) 0 0 0 0 0 0 0

Total shareholding of 34 39278804 39278804 53.72 53.72 16090431 40.96

41

Promoter and Promoter Group (A)

(B) Public Shareholding

(1) Institutions

Mutual Funds / UTI 7 6007 5006 0.01 0.01 0 0

Financial Institutions / Banks 41 101439 96950 0.14 0.14

0 0

Central Government / State Government(s) 0 0 0 0 0 0 0

Venture Captial Funds 0 0 0 0 0 0 0

Insurance Companies 3 7244583 7244583 9.91 9.91 0 0

Foreign Institutional Investors 12 908621 877658 1.24 1.24

0 0

Foreign Venture Capital Investors 0 0 0 0 0 0 0

Qualified Foreign Investor 0 0 0 0 0 0 0

Sub Total (B) (1) 63 8260650 8224197 11.30 11.30 0 0

(2) Non-Institutions

Bodies Corporate 626 8740878 8298198 11.96 11.96 0 0

Individuals

Individual shareholders holding nominal share capital up to Rs.1 lac

45265 10567466 9579832 14.45 14.45 0 0

Individual shareholders holding nominal share capital in excess of Rs.1 lac

157 5887679 5717611 8.05 8.05 0 0

Qualified Foreign Investor 0 0 0 0 0 0 0

Any Others (Specify) 0 0 0 0 0 0 0

Clearing Members 34 19981 19981 0.03 0.03 0 0

Non Resident Indians 233 358671 347426 0.49 0.49 0 0

Sub Total (B)(2) 46315 25574675 23963048 34.98 34.98 0 0

Total Public shareholding (B) 46378 33835325 32187245 46.28 46.28

0 0

Total (A)+(B) 46412 73114129 71466049 100 100 16090431 22.01 (C) Shares held by Custodians and against which Depository Receipts have been issued

0 0 0 0 0 0 0

(1) Promoter and Promoter Group 0 0 0 0 0

0 0

(2) Public 0 0 0 0 0 0 0

Sub Total 0 0 0 0 0 0 0

Total (A)+(B)+(C) 46412 73114129 71466049 100 100 16090431 22.01

42

9. List of shareholders of our Company belonging to the category “Promoters and Promoter Group” as on June 30, 2013 is

as under:

Name of the Shareholder

Details of Shares held Encumbered Shares

Details of Warrants Fully diluted basis#

No. of Shares As a % of Grand Total (A+B+C)

Number of shares

As a %

No. of Warrants

As a % of the total number of warrants of the same class

Rahul Bajaj 101822 0.14 0 0 0 0 0.14 Niraj Bajaj 1843578 2.52 0 0 0 0 2.52 Rajesh V Shah 3644642 4.98 3644642 100 0 0 4.98 Suketu V Shah 3647668 4.99 3063294 83.98 0 0 4.99 Sanjivnayay Bajaj 787 0 0 0 0 0 0 Shekhar Bajaj 33047 0.05 0 0 0 0 0.05 Madhur Bajaj 3100 0 0 0 0 0 0 Late Ruparani Bajaj 200 0 0 0 0 0 0 Anant Bajaj 43200 0.06 0 0 0 0 0.06 SunainaKejriwal 363 0 0 0 0 0 0 Suman Jain 3744 0.01 0 0 0 0 0.01 Smt Anjana Viren Shah 30634 0.04 0 0 0 0 0.04 Narendra J Shah 99605 0.14 0 0 0 0 0.14 Jyoti Shah 21117 0.03 0 0 0 0 0.03 Bansri Rajesh Shah 615586 0.84 615586 100 0 0 0.84 Czaee Sukumar Shah 551882 0.75 0 0 0 0 0.75 Priyaradhika Rajesh Shah 480023 0.66 480023 100 0 0 0.66

Kaustubh Rajesh Shah 48000 0.07 48000 100 0 0 0.07 Bajaj Auto Employees Welfare Funds 1122796 1.54 0 0 0 0 1.54

Shekharkumar Ramkrishnaji Bajaj 60711 0.08 0 0 0 0 0.08

Surendra Bhaichand Jhaveri (Mukand EWF) 326041 0.45 0 0 0 0 0.45

Akhil Investments & Traders Pvt Ltd 260 0 0 0 0 0 0

Bachhraj & Company Pvt.Ltd 1675346 2.29 0 0 0 0 2.29

Bachhraj Factories Pvt Ltd 689084 0.94 0 0 0 0 0.94

Bajaj Holding & Investment Ltd 4056782 5.55 0 0 0 0 5.55

Bajaj SevashramPvt Ltd 1250080 1.71 0 0 0 0 1.71 Baroda Industries Pvt Ltd 3616 0 0 0 0 0 0

Jamnalal Sons Pvt Ltd 13147761 17.98 3869090 29.43 0 0 17.98 Jeewan Ltd 4785369 6.55 3688336 77.08 0 0 6.55 Mukand Engineers Ltd 681200 0.93 681200 100 0 0 0.93 Niraj Holdings Pvt Ltd 500 0 0 0 0 0 0 Sidya Investments Ltd 160000 0.22 0 0 0 0 0.22 Valiant Investments & Traders Pvt Ltd 260 0 260 100 0 0 0

Bahar Mercantile Ltd 150000 0.21 0 0 0 0 0.21 Total 39278804 53.72 16090431 40.96 0 0 53.72

# Total Shares including underlying shares assuming full conversion of warrants and convertible securities as a percentage of diluted share capital

43

10. Our Promoters and Promoter Group entities and directors of our Promoters have not sold / purchased any Equity Shares of our Company during the preceding twelve months from the date of filing of this Draft Letter of Offer with SEBI except for the following:

Promoter Date of Acquisition / Purchase

Number of Shares Purchased

Number of Equity Shares sold

% to capital

Price/ Equity Share (Rs.)

Mode of Acquisition / Sale

Jeewan Ltd. August 30, 2012 537 - 0 25.87 Market Purchase Jeewan Ltd. August 31, 2012 5,289 - 0.01 26.27 Market Purchase Jeewan Ltd. September 3, 2012 5,074 - 0.01 26.24 Market Purchase Jeewan Ltd. September 5, 2012 1,710 - 0 27.03 Market Purchase Jeewan Ltd. September 6, 2012 12,000 - 0.02 27.00 Market Purchase Jeewan Ltd. September 7, 2012 12,800 - 0.02 27.01 Market Purchase Jeewan Ltd. September 8, 2012 280 - 0 27.06 Market Purchase Jeewan Ltd. September 10, 2012 100 - 0 27.06 Market Purchase Jeewan Ltd. September 11, 2012 2,257 - 0 27.06 Market Purchase Jeewan Ltd. September 13, 2012 600 - 0 27.06 Market Purchase Jeewan Ltd. September 14, 2012 100 - 0 27.06 Market Purchase Jeewan Ltd. September 17, 2012 50 - 0 27.06 Market Purchase Bajaj Sevashram Private Limited

September 25, 2012 12,50,000 - 1.71

34.00 Inter-se Transfer

Baroda Industries Private Limited

September 25, 2012 - 12,50,000 1.71

34.00 Inter-se Transfer

Jeewan Ltd. November 22, 2012 5,00,000 - 0.68

24.56 Market Purchase

Niraj Bajaj November 22, 2012 3,00,000 - 0.41

24.56 Market Purchase

Anant Bajaj

February 7, 2013

34,200

-

0.05

-

Transferred by Trustees to Beneficiary on account of dissolution of Anant Trust

Rahulkumar Bajaj

February 7, 2013

34,200

0.05

-

Transferred by Trustees to Beneficiary on account of dissolution of Anant Trust

Jeewan Ltd. February 20, 2013 28,456 - 0.04 27.80 Market Purchase

Jeewan Ltd. February 21, 2013 6,544 - 0.01 27.62 Market Purchase

Jeewan Ltd. March 7, 2013 5,000 - 0.01 28.06 Market Purchase






Niraj Bajaj June 10, 2013 2253 - 0.0031 23.98 Market Purchase


Niraj Bajaj June 12, 2013 12867 - 0.0176 24.05 Market Purchae







44

Total 23,18,438 12,84,200 3.2215*

* includes only the purchases made. The sale aggregates to 1.76%. 11. Details of the Public Shareholders holding more than five percent of the equity share capital of our Company as on June

30, 2013 are as under:

Name(s) of the shareholder(s) and the Persons Acting in Concert (PAC) with them

No. of Shares Shares as % of Total No. of Shares

Total shares (including underlying shares assuming full conversion of warrants and convertible securities) as a % of diluted share capital

Life Insurance Corporation of India 7228076 9.89 9.89 Total 7228076 9.89 9.89

12. Details of the Public Shareholders holding more than one percent of the equity share capital of our Company as on June

30, 2013 are as under:

Name of the shareholder No. of Shares Held

Shares as % of Total No. of Shares

Total shares (including underlying shares assuming full conversion of warrants and convertible securities) as a % of diluted share capital

Life Insurance Corporation of India 7228076 9.89 9.89 Shinano Retail Pvt Ltd 3579056 4.90 4.90 Rakesh Sajjan Gupta 1592592 2.18 2.18 Fusion Investments and Financial Services Pvt Ltd 806180 1.10 1.10

CLSA Mauritius Ltd 796036 1.09 1.09 Total 14001940 19.15 19.15

13. Our Company has duly complied with the following during the last 3 financial years:

(a) Provisions of the Listing Agreement with respect to reporting and compliance under Clause 35, 40A, 41 and 49; (b) Provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, with respect to reporting in

terms of Regulation 8(3) pertaining to disclosure of changes in shareholding and Regulation 8A pertaining to disclosure of pledged shares;

(c) Provisions of Takeover Code, with respect to reporting in terms of Regulation 29, 30 and 31 of the Takeover Code

pertaining to disclosure of changes in shareholding and disclosure of encumbered shares; (d) Provisions of the SEBI (Prohibition of Insider Trading) Regulations, 1992, with respect to reporting in terms of

regulation 13. 14. Our Company does not have any employee stock option scheme as on the date of this Draft Letter of Offer. 15. The ex-rights price of the Equity Shares as per regulation 10(4)(b) of the Takeover Code is Rs.[●].

45

OBJECTS OF THE ISSUE

Our Company intends to use the Net Proceeds of the Issue to finance the fund requirements for: (1). Payment of dues of the secured lenders i.e., banks and financial institutions; (2). Towards working capital requirement of our Company (inventory and debtors); and (3). Towards general corporate purpose. The main objects clause of the Memorandum of Association enables us to utilize the monies raised through the Issue. In addition, the activities we have been carrying out until now are in accordance with the objects clause of the Memorandum of Association. The funding requirements and deployment of the Net Proceeds are based on internal management estimates based on current conditions and have not been apprised by any bank, financial institution or any other external agency. They are based on the current circumstances of our business. We operate in a highly competitive and dynamic market environment. Our funding requirements are subject to changes in external circumstances, our financial condition, business and strategy and we may have to change our funding requirements accordingly. Any such change in our plans may also require rescheduling of our expenditure within the heads indicated in the table below, at the discretion of our Board.

In case of variations in the actual utilization of funds earmarked for the purposes set forth above, increased fund requirements for a particular purpose may be financed by surplus funds, if any, available in respect of other purposes for which funds are being raised in this Issue. Proceeds of the Issue The details of the proceeds of the Issue are as under:

(Rs. in crores) Particulars Estimated Amount

Gross Proceeds to be raised through the Issue 160.00 Less: Issue Related Expenses [●] Net proceeds of the Issue after deducting the Issue related Expenses (“Net Proceeds”)

[●]

Fund Requirements The Fund requirements are as under:

Particulars Amount in Rs. Crores Payment of dues of the secured lenders i.e., banks and financial institutions 70.00 Towards working capital requirement of our Company (inventory and debtors) 75.00 Towards general corporate purposes [●]

Total [●] Details of the Objects 1. Repayment in part of dues of the secured lenders of our Company Our Company has availed facilities from various banks and financial institutions. We intend to utilise an amount of up to Rs. 70.00 crores out of the Net Proceeds to repay a portion of the dues outstanding against such lenders, which will fall for repayment before the end of FY2013-14. We believe that such repayment will help reduce our outstanding indebtedness. Additionally, there is no prepayment penalty payable on these outstanding as they are being paid on their respective due dates. Furthermore, the Issue will also result in an enhanced equity base, assisting us in maintaining a favourable debt equity ratio in the near future, as also mandated by the CDR package entered into by us with our lenders in the years 2003, 2009 and 2013 more particularly described in the section titled “Financial Indebtedness” on page 84. The loans availed by our Company, which we may repay either in part or in full from the proceeds of the Issue are indicated as under:

46

I. Non-Convertible Debentures

Please see page 84 for details of the Non-Convertible Debentures of our Company. II. Secured Long Term Loans Please see page 85 for details of the Secured Long Term Loans of our Company. 2. To meet the working capital requirements of our Company Alloy Steel and Machine Building business are working capital intensive and we fund working capital requirement in the ordinary course of our business from banks, internal accruals and term loans. We need to keep different grades and dimensions of specialized steel to meet varied needs of our customers. Also, the lead-time required for procuring inputs is high. Therefore, we have to maintain sufficient quantity of inputs in inventory to ensure the commitments to our customers. In the present days of cut-throat competition and liquidity problems in the economy, we are required to provide sufficient credit period to our customers. In FY 2013-14, we expect increase in utilization of our production capacity and subsequent increase in our sales compared to FY2012-2013 as the problems of iron ore availability faced by the Company during FY 2012-13 on account of Hon’ble Supreme Court’s Order banning mining of iron ore in Karnataka, has now been lifted with certain pre-conditions. Considering the envisaged growth, the working capital needs of our Company is expected to increase by Rs.562.22 crores during FY 2013-14. We intend to meet our working capital requirements to the extent of Rs. 75.00 crores out of the Net Proceeds of this Issue and the balance will be met from Bank borrowings, term loans and internal accruals as per the requirement. As on date, our working capital lender’s consortium is led by Dena Bank and currently comprises of Dena Bank,, YES Bank, IDBI Bank, Bank of India, Corporation Bank, Union Bank of India and Central Bank of India, The working capital limits sanctioned under the Consortium arrangement is Rs.1,131.00 crores. Justification for Holding Period Levels: Inventories & Sundry Debtors

While we expect increase in our volumes, we propose to improve the holding levels of inventory, debtors by reducing the same as compared to FY 2012-13.

Creditors To ensure smooth supplies from our vendors and at competitive price, we would like to reduce our holding levels of creditors as compared to FY 2012-13.

Estimated working capital requirement and its basis is as under:

FY 2012-13 FY 2013-14 Particulars Holding levels (No. of days)

Rs. in crores

Holding levels (No. of days)

Rs. crores

I CURRENT ASSETS 1 Inventories 182 1,034.64 148 1,352.60 2 Sundry Debtors 150 935.26 94 1,030.48 3 Other Current Assets 243.15 233.94 TOTAL CURRENT ASSETS (A) 2,213.05 2,617.02 II CURRENT LIABILITIES 1 Creditors 115 655.85 64 585.00 2 Other Current Liabilities 837.88 750.48 TOTAL CURRENT LIABILITIES (B) 1,493.73 1,335.48 III WORKING CAPITAL REQUIREMENT

(A)-(B) 719.32 1,281.54

IV FUNDING PATTERN Increase in Working Capital 562.22 - Net Proceeds of the Issue 75.00 - Working Capital Facilities from Banks 179.00 - Loans / Internal Accruals

308.22

47

3. General Corporate Purposes The balance Net Proceeds, aggregating to Rs. [●] crores, will be utilized towards general corporate purposes including, strengthening of our marketing capabilities, entering into joint ventures, meeting exigencies, which our Company in the ordinary course of business may face, or any other purposes as approved by our Board. As on date, we have not earmarked specific amounts from the Net Proceeds to be utilised for any or a combination of the abovementioned general corporate purposes. However, the amount allocated for these general corporate purposes shall not exceed 25% of the amount raised in the Issue. Year wise deployment of funds The entire fund requirements mentioned above shall be utilised in FY 2013-14. Issue related expenses The total expenses of the Issue are estimated to be approximately Rs. [●] crores. The expenses of this Issue include, among others, fees of the Lead Manager, fees of the Registrar to the Issue, legal fees, printing and stationery expenses, advertising, travelling and marketing expenses and other expenses. The estimated Issue expenses are as under:

Particulars Estimated Expenses (Rs. in crores )

% of Estimated Issue Size

% of Estimated Issue Expenses

Fees to Lead Manager, Auditors, Legal Advisor and Registrar to the Issue

[●] [●] [●]

SEBI / NSE / BSE Listing / Regulatory / Filing Fees

[●] [●] [●]

Advertising, traveling and marketing, printing and stationery, distribution and postage expenses

[●] [●] [●]

Expenses in relation to the Depositories

[●] [●] [●]

Other expenses [●] [●] [●]

Total [●] [●] [●]

Appraisal The objects have not been appraised by any banks, financial institutions or agency. Monitoring of Utilization of Funds There is no requirement for a monitoring agency as the Issue size is less than Rs. 500 crores. Our audit committee of the Board shall monitor the utilization of the proceeds of the Issue. We will disclose the utilization of the Net Proceeds, including interim use, under a separate head specifying the purpose for which such proceeds have been utilized along with details, if any, in relation to all such proceeds of the Issue that have not been utilised thereby also indicating investments, if any, of such unutilized proceeds of the Issue in our balance sheet for the relevant financial years commencing from FY2014. We will disclose the details of the utilization of the Net Proceeds of the Issue, including interim use, under a separate head in our financial statements specifying the purpose for which such proceeds have been utilized or otherwise disclosed as per the disclosure requirements of our Listing Agreements with the Stock Exchanges. As per the requirements of Clause 49 of the Listing Agreements, we will disclose to the audit committee of our Board the uses/ applications of funds on a quarterly basis as part of our quarterly declaration of results. Furthermore, on an annual basis, we shall prepare a statement of funds utilized for purposes other than those stated in this Draft Letter of Offer and place it before the audit committee of our Board. The said disclosure shall be made till such time that the full proceeds raised through the Issue have been fully spent. The statement shall be certified by our Auditors. Furthermore, in terms of Clause 43A of the Listing Agreements, we will furnish to the Stock Exchanges on a quarterly basis, a statement indicating material deviations, if any, in the use of proceeds from the objects stated in this Draft Letter of Offer. Additionally, this information shall be furnished to the Stock Exchanges along with the interim or annual financial results submitted under Clause 41 of the Listing Agreements and will be published in the newspapers simultaneously with the interim or annual financial results, after placing it before the audit committee in terms of Clause 49 of the Listing Agreements. Bridge loans We have not raised any bridge loans against the Net Proceeds.

48

Interim Use of Net Proceeds Our Company’s management, in accordance with the policies set up by the Board, will have flexibility in deploying the Net Proceeds. Pending utilization for the purposes described above, we intend to temporarily invest the Net Proceeds in interest-bearing liquid instruments including deposits with banks, mutual funds or temporarily deploy the funds in investment grade interest bearing securities as may be approved by our Board or its committees. Such investments would be in accordance with the investment policies approved by our Board or its committees from time to time. We confirm that pending utilization of the Net Proceeds, we shall not use the funds for any investments in the equity markets. Means of Finance The requirements of the objects detailed above are intended to be funded from the Net Proceeds of the Issue. Accordingly, our Company confirms that there is no requirement to make firm arrangements of finance through verifiable means towards at least 75% of the stated means of finance, excluding the amount to be raised through the Issue. Other confirmations No part of the Net Proceeds will be paid by our Company as consideration to the Promoters, the Directors, Group Companies or members of the Promoter Group.

49

STATEMENT OF TAX BENEFITS

STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE COMPANY AND SHAREHOLDERS

To The Board of Directors, Mukand Limited Dear Sirs, We hereby report that the attached Annexure states the possible tax benefits available to Mukand Limited (‘the Company’) and to the shareholders of the Company under the Income Tax Act, 1961 and Wealth Tax Act, 1957, presently in force in India, subject to the fact that several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on the business imperative, the Company may or may not choose to fulfil. The benefits discussed in the Annexure are not exhaustive. This Statement is only intended to provide general information to the Investors and is neither designed nor intended to be a substitute for the professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participations in the issue. We do not express any opinion or provide any assurance as to whether:

• The Company or its shareholders will continue to obtain these benefits in future; or • The conditions prescribed for availing of these benefits have been/ would be met with.

The contents of this Annexure are based on the information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company and interpretations of the current tax laws. For Haribhakti & Co. Firm registration number: 103525W Chartered Accountants Sumant M. Sakhardande Partner Membership No. 034828 Place: Mumbai Date: July 31, 2013

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ANNEXURE TO THE STATEMENT OF TAX BENEFITS

A. SPECIAL TAX BENEFITS Special Tax Benefits Available to the Shareholders of the Company There are no special tax benefits available to the shareholders of the Company.

B. GENERAL TAX BENEFITS Under the Income Tax Act, 1961 (“the Act”) The following tax benefits shall, interalia, be available to the company and the prospective Shareholders under the Act. General Tax Benefits Available to the Company 1. The corporate tax rate shall be 30% plus surcharge and education cess thereon. Minimum Alternate Tax (‘MAT’) rate is 18.5%

plus surcharge and education cess thereon of book profits. MAT is also applicable on the profits derived by an undertaking of the company, which is entitled to tax holiday benefits under section 80IC of the Act.

2. Subject to compliance of certain conditions laid down in Section 32 of the Act, the Company will be entitled to a deduction for depreciation: -

a. In respect of tangible assets. b. In respect of intangible assets being in the nature of knowhow, patents, copyrights, trademarks, licenses, franchises or any

other business or commercial rights of similar nature acquired after 31st day of March, 1998 at the rates prescribed under Income Tax Rules, 1962.

c. In respect of any new machinery or plant (other than ships and aircraft which has been acquired and installed after 31st March, 2005, a further sum of 20% of the actual cost of such machinery or plant will be allowed as a deduction in the year of installation subject to satisfaction of certain conditions.

d. Unabsorbed depreciation if any, for an Assessment Year can be carried forward & set off against any sources of income in the same year or any subsequent Assessment Years as per section 32(2) of the Act.

3. Under the provisions of section 35(1)(i) of the Act read with clause (iv) of this subsection, the Company shall be eligible for

100% deduction of any expenditure (except capital expenditure for acquisition of land) laid out or expended on scientific research related to the business of the company.

4. Under the provisions of section 35(1)(ii) of the Act, the Company shall be eligible for a weighted deduction of 175% of any sum

paid to certain scientific research association or to a university, college or other institution to be used for scientific research, subject to fulfilment of the prescribed conditions.

5. Under the provisions of section 35(1)(iia) of the Act, the Company shall be eligible for a weighted deduction of 125% of any sum

paid to a company to be used by it for scientific purpose, subject to fulfilment of the prescribed conditions.

6. Under the provisions of section 35(1)(iii) of the Act, the Company shall be eligible for a weighted deduction of 125% of any sum paid to a university, college or other institution to be used by it for research in social science or statistical research, subject to fulfilment of the prescribed conditions.

7. Under the provisions of section 35(2AB) (i) of the Act, the Company shall be eligible for a weighted deduction of 200% of any expenditure (excluding cost of land or building) incurred by the Company on in-house scientific research and development facility approved by the prescribed authority subject to fulfilment of the prescribed conditions.

8. Under the provisions of section 35AC of the Act, the Company shall be entitled to deduction of 100% for payment of any sum to a public sector company or to a local authority or to an association or institution approved by the National Committee for carrying out any eligible project or scheme or for any expenditure directly made by it on the eligible project or scheme subject to fulfilment of the prescribed conditions.

9. Under the provisions of section 35CCA of the Act, the Company shall be entitled to deduction of 100% for payment of any sum to an association or institution which has as its object the undertaking of any programme of rural development or training of persons for implementing such programmes approved by the prescribed authority or to a rural development fund or to the National Urban Poverty Eradication Fund set up and notified by the Central Government in this behalf subject to fulfilment of the prescribed conditions.

10. Under the provisions of section 35CCB of the Act, the Company shall be entitled to deduction for any expenditure by way of payment of any sum to an association or institution which has as its object the undertaking of any programme of conservation of

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natural resources or afforestation or to a fund for afforestation set up and notified by the Central Government subject to fulfilment of the prescribed conditions.

11. Under Section 35D of the Act, the Company is eligible for deduction in respect of specified preliminary expenditure incurred by

the Company in connection with extension of its undertaking or in connection with setting up a new unit for an amount equal to 1/5th of such expenses over 5 successive Assessment Years, subject to the conditions and limits specified in the section.

12. Under the provisions of section 54EC of the Act and subject to the conditions and to the extent specified therein, long term capital gains [not covered under the section 10(38) of the Act] arising on the transfer of long term capital assets by the Company will be exempt from capital gains tax if the capital gain are invested within a period of 6 months from the date of transfer in the bonds redeemable after 3 years and issued by- • National Highway Authority of India constituted under section 3 of National Highways Authority of India Act, 1988 on or

after the 1st day of April 2006. • Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 on or after the

1st day of April, 2006 and notified by the Central Government in the Official Gazette for the purpose of this section.

If only part of the capital gain is so reinvested, the exemption shall be proportionately reduced. The amount so exempted shall be chargeable to tax subsequently, if the specified assets are transferred or converted within three year from the date of their acquisition. However as per 1st Proviso to section 54EC(I), the investments made in the long Terms Specified Asset on or after April 1, 2007 by any assesses during the financial year should not exceed 50 Lakhs rupees.

13. Under section 72(1) of the Act, if the net result of the computation is a loss, such loss can be set off against any other income and

the balance loss, if any, can be carried forward for 8 consecutive years and set off against business income.

14. Under section 80G of the Act, the Company is entitled to deduction either for whole of the sum paid as donation to specified funds or institutions or fifty percent of sums paid, subject to limits and conditions as provided in the section 80 G (5)

15. Under Section 112 of the Act and other relevant provisions of the Act, long term capital gains [not covered under section 10 (38) of the Act] arising on transfer of a long term capital asset, being listed securities, or specified units, and zero coupon bond, if held for a period exceeding 12 months, shall be taxed at a rate of 20% (plus applicable surcharge, educational cess and secondary & higher education cess on income-tax) after indexation as provided in the second proviso to section 48 or at 10% (plus applicable surcharge, educational cess and secondary & higher education cess on income-tax) (without indexation), at the option of the assessee.

16. Minimum Alternate Tax (MAT) is a minimum tax which a company needs to pay when income-tax payable on the total income as computed under this Act is less than 18.5% of its book profit. Credit is allowable for the difference between MAT paid and the tax computed as per the normal provisions of the Act. MAT credit can be utilized to the extent of difference between any tax payable under the normal provisions and MAT payable for the relevant year. MAT credit in respect of MAT paid prior to AY 2006-07 shall be available for set-off upto 5 years succeeding the year in which the MAT credit initially arose. However, MAT credit in respect of MAT paid for AY 2006-07 or thereafter shall be available for set-off upto 7 years succeeding the year in which the MAT credit initially arose. Further, from AY 2010-2011, MAT credit for MAT paid for AY 2010-11 or thereafter shall be available for set-off upto 10 years succeeding the year in which the MAT credit initially arose.

17. In accordance with Section 115 O of the Act, any amount declared, distributed or paid by the company by way of dividends (whether interim or otherwise) on or after 1 April 2003, whether out of current or accumulated profits shall be charged to income tax at the rate of 15% (plus applicable surcharge and education cess), in addition to the income tax chargeable in respect of the total income of a domestic company for any assessment year.

Further section 115-O of the Act provides that, in order to compute the Dividend Distribution Tax (DDT) payable by a domestic holding Company, the amount of dividend paid by it would be reduced by the dividend received by it from its subsidiary company during the financial year, if:

• The subsidiary company has paid DDT @ 15% (plus applicable surcharge and education cess) on such dividend : and • The Domestic Company is itself not a subsidiary of any company. For this purpose, a company would be considered as a

subsidiary if the domestic company holds more than half of its nominal equity capital. General Benefits Available to person other than company (a) Available to Resident Shareholders 1. Under section 10(34) of the Act, income earned by way of dividend from domestic company referred to in section 115-O of the

Act is exempt from income-tax in the hands of the shareholders. However, section 94(7) of the Act provides that the losses arising on account of Sale/transfer of shares purchased up to three months prior to the record date and sold within three months after such date will be disallowed to the extent of dividend on such shares are claimed as tax exempt by the shareholder.

2. Computation of Capital Gains-Capital assets may be categorized into Short Term Capital Assets and Long Term Capital Assets based on the period of holding All capital assets (except shares held in a company or any other listed securities or units of UTI or specified Mutual Fund units) are considered to be long term capital assets if they are held for a period in excess of 36 months. Shares held in a company, any other listed securities, units of UTI and specified Mutual Fund units are considered as long term

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capital assets is these are held for a period exceeding 12 months. Consequently capital gains arising on sale of shares held in a company or any other listed securities, or units of UTI or specified Mutual Fund units held for more than 12 months are considered as “long term capital gains”. Section 48 of the Act, which prescribes the mode of computation of capital gains, provides for deduction of cost of acquisition / improvement and expenses incurred in connection with the transfer of capital asset, from the sale consideration to arrive at the amount of capital gains. However, in respect of long term capital gains, it offers a benefit by permitting a substitution of cost of acquisition / improvement with the indexed cost of acquisition / improvement, which adjust the cost of acquisition / improvement by a cost inflation index as prescribed from time to time.

3. Under the provisions of section 10(38) of the Act, long term capital gain arising to the shareholder from transfer of a long term capital asset being an equity share in the company or unit of an equity oriented Mutual fund (i.e capital asset held for the period of twelve months or more) entered into on a recognized stock exchange in India after October 1, 2004 on which securities transaction tax has been paid, is exempt. However, from Financial Year 2006-2007, income by way of long-term capital gain of a company shall be taken into account in computing the book profit and income-tax payable under section 115JB of the Act.

4. Under section 111A of the Act, capital gains arising to a shareholder from transfer of short term capital assets, being an equity share in the company or unit of an equity oriented Mutual fund, entered into on a recognized stock exchange in India on which securities transaction tax has been paid will be subject to tax at the rate of 15% (plus applicable surcharge, educational cess and Secondary & Higher Education Cess on income tax).

5. Short-terms capital loss on sale of shares can be set off against any capital gain income, long term or short term, in the same assessment year. It should be noted that such loss can be set off only against capital gain income and not against any other head of income. Balance short-term capital loss, if any, can be carried forward up to eight assessments years. In the subsequent year also, it can be set off against any capital gain income.

6. In terms of Section 88E of the Act, the Securities Transaction Tax paid by the shareholder in respect of the taxable securities transactions entered into in the course of the business would be eligible for rebate from the amount of income-tax (as computed in prescribed manner) on the income chargeable under the head ‘Profits and Gains under Business or Profession’ arising from taxable securities transactions. No deduction under this section shall be allowed in, or after, AY 2009-2010. However, in such a case, the said securities transaction tax would be allowed as deduction in computing the profits & gains from business or profession under the provisions of section 36(1)(xv) of the Act.



1st day of April, 2006 and notified by the Central Government in the Official Gazette for the purpose of this section. If only part of the capital gain is so reinvested, the exemption shall be proportionately reduced. The amount so exempted shall be chargeable to tax subsequently, if the specified assets are transferred or converted within three year from the date of their acquisition. However as per 1st Proviso to section 54EC(I), the investments made in the long Terms Specified Asset on or after April 1, 2007 by any assesses during the financial year should not exceed 50 Lakhs rupees.

8. Under Section 54F of the Act, where in the case of an individual or Hindu Undivided Family (‘HUF’) capital gain arise from

transfer of long term assets [other than a residential house and those exempt under section 10(38) of the Act] then such capital gain, subject to the conditions and to the extent specified therein, will be exempt if the net sales consideration from such transfer is utilized for purchase of a residential house property within a period of one year before or two year after the date on which the transfer took place or for construction of a residential house property within a period of three years after the date of transfer. If only a part of the net consideration is so reinvested, the exemption shall be proportionately reduced

(b) Mutual Funds

Under section 10 (23D) of the Act, all Mutual Funds set up by Public Sector Banks or Public Financial Institutions or Mutual Funds registered under the Securities and Exchange Board of India or authorized by the Reserve Bank of India, subject to the conditions specified therein are eligible for exemption from income-tax on all their income, including income from investment in the equity shares of a company. (c) Venture Capital Companies / Funds Under section 10 (23FB) of the Act, all venture capital companies / funds registered with Securities and Exchange Board of India, subject to the conditions specified, are eligible for exemption from income-tax on all their income, including income from sale of shares of the company. Company under the Wealth Tax Act, 1957

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Wealth Tax is applicable if the net wealth (as defined) of a company or an individual or HUF exceeds Rs. 30 Lakhs as on the valuation date (i.e. March 31 of the relevant financial year). Wealth Tax shall be charged in respect of the net wealth of every company or an individual or HUF at the rate of 1% of the amount by which net wealth exceeds Rs. 30 lakhs. Shares of the company held by the shareholders will not treated as an asset within the meaning of Section 2(ea) of the Wealth Tax Act, 1957 and hence Wealth Tax will not be applicable. (d). General Benefits Available to Non Resident Indians/Members other than FIIs and Foreign Venture Capital Investors 1. By virtue of Section 10(34) of the Act, income earned by way of divided income from a domestic company referred to in sect ion

115-O of the Act, is exempt from tax in the hands of the recipients.

2. Under Section 10(38) of Act, long term capital gain arising to the shareholder from transfer of a long term capital asset being an equity share in the company or unit of an equity oriented mutual fund (i.e. capital assets held for the period of twelve months or more) entered into a recognized stock exchange in India after October 1, 2004 on which securities transaction tax has been paid, is exempt. However, from Financial Year 2006-2007, income by way of long-term capital gain, in case of non resident member being a company, shall be taken into account in computing the book profit and income-tax payable under section 115JB of the Act.

3. Under the first proviso to section 48 of the Act, in case of a non resident, in computing the capital gains arising from transfer of shares of the company acquired in convertible foreign exchange (as per exchange control regulations), protection is provided from fluctuations in the value of rupee in terms of foreign currency in which the original investment was made. Cost indexation benefits will not be available in such a case.

4. In terms of Section 88E of the Act, the Securities Transaction Tax paid by the shareholder in respect of the taxable securities transactions entered into in the course of the business would be eligible for rebate from the amount of income-tax (as computed in prescribed manner) on the income chargeable under the head ‘Profits and Gains under Business or Profession’ arising from taxable securities transactions. No deduction under this section shall be allowed in, or after, AY 2009-2010. However, in such a case, the said securities transaction tax would be allowed as deduction in computing the profits & gains from business or profession under the provisions of section 36(1)(xv) of the Act.



1st day of April, 2006 and notified by the Central Government in the Official Gazette for the purpose of this section.

If only part of the capital gain is so reinvested, the exemption shall be proportionately reduced. The amount so exempted shall be chargeable to tax subsequently, if the specified assets are transferred or converted within three year from the date of their acquisition. However as per 1st Proviso to section 54EC(I), the investments made in the long Terms Specified Asset on or after April 1, 2007 by any assesses during the financial year should not exceed 50 Lakhs rupees.

6. Under Section 54F of the Act, where in the case of an individual or Hindu Undivided Family (‘HUF’) capital gain arise from

transfer of long term assets [other than a residential house and those exempt under section 10(38) of the Act] then such capital gain, subject to the conditions and to the extent specified therein, will be exempt if the net sales consideration from such transfer is utilized for purchase of a residential house property within a period of one year before or two year after the date on which the transfer took place or for construction of a residential house property within a period of three years after the date of transfer. If only a part of the net consideration is so reinvested, the exemption shall be proportionately reduced.

7. Under the provisions of section 111A of the Act, capital gains arising to a shareholder from transfer of short terms capital assets,

being an equity share in the company or unit of an equity oriented Mutual fund, entered into in a recognized stock exchange in India on which securities transaction tax has been paid will be subject to tax at the rate of 15% (plus applicable surcharge, education cess and secondary & higher education cess on income-tax).

8. Under the provisions of Section 112 of the Act and other relevant provisions of the Act, long term capital gains [not covered

under Section 10(38) of the Act] arising on transfer of unlisted shares in the Company, if shares are held for a period exceeding 12 months, shall be taxed at @ 20% (plus surcharge and education cess on income-tax) after indexation as provided in the second proviso to section 48 or (w.e.f. FY 2012-13) at 10% (plus applicable surcharge, educational cess and secondary & higher education cess on income-tax) (without indexation), at the option of the assessee.

9. Under the provisions of section 115E of the Act, capital gains arising to the non resident Indian on transfer of shares held for a

period exceeding 12 months shall [in cases not covered under section 10(38) of the Act] be concessionally taxed at a flat rate of 10% (plus applicable surcharge, educational cess and secondary & higher education cess on Income-tax) without indexation benefit but with protection against foreign exchange fluctuation under the first proviso to section 48 of the Act, subject to satisfaction of certain conditions.

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10. Under the provisions of section 115F of the Act, long term capital gains [not covered under section 10 (38) of the Act] arising to a

non-resident Indian from the shares of the company subscribed to in convertible Foreign Exchange shall be exempt from income tax if the net consideration is reinvested in specified assets within six months of the date of transfer. If only part of the net consideration is so reinvested, the exemption shall be proportionately reduced. The amount so exempted shall be chargeable to tax subsequently, if the specified assets are transferred or converted into money within three years from the date of their acquisition.

11. Under the provisions of section 115G of the Act, it shall not be necessary for a non-resident Indian to furnish his return of income

if his only source of income is investment income or long term capital gains or both arising out of specified assets acquired, purchased or subscribed in convertible foreign exchange and tax deductible at source has been deducted therefrom.

12. Under the provisions of section 115H of the Act, a non-resident Indian (i.e. an individual being a citizen of India or person of

India Origin) has an option to be governed by the provision of Chapter XII A of the Act viz. “Special Provisions Relating to certain Income of Non-Resident”, even after the assessee becomes a reseident, if he furnishes to the Assessing Officer a declaration alongwith the return of income under section 139 of the Act.

13. Under the provision of section 115-I of the Act, a non resident Indian may elect not to be governed by the provisions of Chapter

XII-A for any assessment year by furnishing his return of income under section 139 of the Act declaring therein that the provisions of the Chapter shall not apply to him for that assessment year and if he does so the provisions of this Chapter shall not apply to him, instead the other provisions of the Act shall apply.

14. As per the provisions of Section 90(2) of the Act, the provisions of the act would prevails over the provisions of DTAA between

India and the country in which the shareholder has fiscal domicile to the extent they are more beneficial to the non-resident. (e) General Benefits Available to Foreign Institutional Investors (FIIs) 1. By virtue of section 10(34) of the Act, income earned by way of dividend income from a domestic company referred to in section

115-O of the Act, are exempt form tax in the hands of the institutional investor.

2. Under Section 10(38) of the Act, long term capital gain arising to the shareholder from transfer of a long term capital asset being an equity share in the company or unit of an equity oriented mutual fund (i.e. capital asset held for the period of twelve months or more) entered into in a recognized stock exchange in India after October 1, 2004 on which securities transaction tax has been paid, is exempt. However, from Financial Year 2006-2007, the income by way of long- term capital gain of a company shall be taken into account in computing the book profit and income-tax payable under section 115JB of the Act.

3. The provisions of section 36(i)(xv) of the Act allow deduction for STT paid, if the taxable securities transactions are taxable as ‘Business Income’.

4. The income realized by FIIs on sale of shares in the company by way of short term capital gains referred to in Section 111A of the Act would be taxed at the rate of 15% (plus applicable surcharge, education cess and secondary & higher education cess on income tax), on which the securities transaction tax has been paid.

5. Under Section 115AD of the Act, capital gain arising on transfer of short term capital assets, being an equity share in a company

which is not subject to Securities Transaction Tax will be taxable under the Act at the rate of 30% (plus applicable surcharge, if any and education cess).

Further, as per Section 115AD of the Act, capital gain arising on transfer of long term capital assets, being shares in a company [not covered under Section 10(38) of the Act], are taxed at the rate of 10% (plus applicable surcharge, if any and education cess). Such capital gains would be computed without giving effect to the first and second proviso to Section 48 of the Act. In other words, the benefit of indexation, direct or indirect, as mentioned under the two provisos would not be allowed while computing the capital gains.

6. As per the provisions of Section 90(2) of the Act, the provisions of the act would prevails over the provisions of DTAA between

India and the country in which the non-resident has fiscal domicile to the extent they are more beneficial to the non-resident. Applicability of Wealth Tax Act, 1957 Wealth Tax is applicable if the net wealth (as defined) of a company or an individual or HUF exceeds Rs. 30 Lakhs as on the valuation date (i.e. March 31 of the relevant financial year). Wealth Tax shall be charged in respect of the net wealth of every company or an individual or HUF at the rate of 1% of the amount by which net wealth exceeds Rs. 30 lakhs. Shares of the company held by the shareholders will not treated as an asset within the meaning of Section 2(ea) of the Wealth Tax Act, 1957 and hence Wealth Tax will not be applicable. Notes for consideration

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a) In respect of non-residents, taxability of capital gains mentioned above shall be further subject to any benefits available under the DTAA, if any between India and the country in which the non-resident has fiscal domicile or any other qualifying criteria.

b) The above Statement of Possible Direct Tax Benefits sets out the possible tax benefits available to the Company and its shareholders under the current tax laws presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws.

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SECTION IV – ABOUT OUR COMPANY

INDUSTRY OVERVIEW

Unless noted otherwise, the information in this section is derived from industry sources, online as well as offline published material and government publications. Our Company, the Lead Manager nor any other person connected with the Issue has independently verified this information. Industry sources and publications generally state that the information contained therein has been obtained from sources believed to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured. Industry sources and publications are also prepared based on information as of specific dates and may no longer be current or reflect current trends. Industry sources and publications may also base their information on estimates, projections, forecasts and assumptions that may prove to be incorrect. Accordingly, Investors should not place undue reliance on this information. Overview of the Steel Industry Alloy steel is mainly composed of iron, which is one of the most common metals in the earth’s crust and can be found almost everywhere. Other than iron ore, steel is composed of other metallic and or non-metallic elements, most prominent of which is carbon. These other elements such as manganese, chromium, silicon, and oxygen along with carbon are used to manufacture steel; composition of which elements is adjusted to produce different grades of steel. The industries that use steel include construction, automotive, transportation and engineering. Steel is also used in the production of power lines, pipelines, electrical and electronic appliances and containers. Whilst there are various types of steel, it can be broadly divided into two major families based on its composition, alloy and non-alloy steel. Alloy steel is produced using alloying elements like manganese, silicon, nickel, lead, copper, chromium, tungsten, molybdenum, niobium, vanadium etc. whereas non-alloy steel has no alloying component in them except those that are normally present such as carbon. Non-alloying steel is mainly of three types viz. mild steel (containing up to 0.3% carbon), medium carbon steel (contains between 0.3-0.6% carbon) and high carbon steel (contains more than 0.6% carbon). All types of steel other than mild steel are called special steel. It is called so mainly because a special care is taken in order to maintain particular level of chemical composition in such steels. Stainless steel is alloy steel. In India, non-alloy steel constitutes about 90 percent of the total steel production. (Source: Ministry of Steel, http://steel.gov.in/glossary.htm) Steel making is primarily divided into two categories based on their shapes, i.e. flat and long products. Flat products include slabs, hot-rolled coil, cold-rolled coil, coated steel products, tinplate and heavy plate. On the other hand, long products include billets, blooms, rebars, wire rods, sections, rails, sheet piles and drawn wire. Special and alloy steel long products are used in automotive components, engineering, textiles, railways, defense etc. Auto sector is the largest consumer of special and alloy steel, followed by railways, engineering and other sectors. The alloy steel used in auto vehicles is further classified into bearing steel, cold heading quality steel, spring steel, semi or free cutting steels, micro alloy steels and specialty steels and are mainly used for the manufacture of automotive components like transmission, engine, steering and chassis, suspension and braking systems and bearings. Unlike the non-alloy steel industry, the alloy steel long product sector largely comprise of value added tailor made products. Hence, the demand supply dynamics of this sector varies from the rest of the steel industry, which has a chunk of commodity steel products. The main markets for these products are construction, mechanical engineering, energy and automotive. The alloy steel category is further bifurcated as stainless steel and special and alloy steel. The alloy steel with a minimum of 10.5% chromium content is called stainless steel. This steel does not readily corrode, rust or stain with water as ordinary steel does. Stainless steel differs from carbon or other alloy steel by the amount of chromium present. (Source: Ministry of Steel, http://steel.gov.in/glossary.htm) Changes in Global Steel Industry Since 1990, crude steel production has seen different phases - during 1990-95 it has seen a de-growth of 0.5 per cent per annum; during 1995-2000 it has grown by 2.4 per cent per annum; during the next five years 2000-05, it has seen a robust growth of 6.2 per cent per annum; during 2005-10 its growth decelerated to 4.5 per cent; and since 2010 the growth decelerated even further in the wake of post-sub-prime issues and the Euro Zone debt crisis. Due to the decline in steel demand during the global financial crisis, steel producers have sought to cut production. The decline in output was sharper in the developed rather than emerging economies. In contrast, China’s steel production responded rapidly to increased domestic demand following the implementation of the Chinese government’s economic stimulus initiatives. As such, a larger proportion of global steel production shifted from the developed nations to the rapidly growing developing economies, thereby facilitating the product development and production upgrades for steel producers in the emerging markets. After the downturn of 2008, steel demand recovered in the second half of 2009 as steel producers resumed production in idled facilities. Global crude steel production increased from 1,536 million tonnes in 2011 to 1,547 million tonnes in 2012. (Source: World Steel In Figures 2013, World Steel Association)

Steel Sector - India The Indian economy was one of the fastest growing economies in the post 2008 crisis period, however, India’s growth decelerated in 2011-12 after two years of relatively good performance. Various factors, domestic and international, have contributed to this drop. Global macroeconomic and financial uncertainty, inflation, widening twin deficits and falling investment have led to an adverse impact

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on growth. Last two years of high inflation amidst wide fiscal and current account deficits have led to monetary tightening by the RBI, which has in turn led to slow down in the economy to the lowest in the past nine years. Even though inflation moderated later in the year 2012, macro-economic risks increased with slowing growth and rising deficits, which coupled with fiscal slippage, has put heavy pressure on interest rates. In 2011-12, growth decelerated in each successive quarter. On the other hand, average inflation remained high, though it moderated in the last four months of the year. As per the RBI’s Annual Report for the year 2012, the slowdown in overall growth of the economy during 2011-12 is mainly attributable to weak industrial performance, potentially ascribable to both international and domestic factors. (Source: http://www.rbi.org.in) Steel industry was delicensed and decontrolled in 1991 and 1992, respectively, and since then, as in the international markets, so in India, the steel sector has broadly followed the general macro-economic trends. Indian steel industry with its strong forward and backward linkages contributes significantly to overall growth and development of the economy. As per the report of the working group on steel industry for the twelfth five year plan (2012 – 2017) by Ministry of Steel, the steel industry directly contributes to 2% of India’s gross domestic product (GDP) and its weightage in the official Index of Industrial Production (IIP) is 6.2%. Considering its relevance, the greater thrust is given on the growth of the Indian steel industry. From a country with a fledgling status of one million tonnes of capacity at the time of independence, India has today become the world’s 4th largest producer of crude steel preceded only by China, Japan and USA. However, the steel consumption in the country remains well below the world levels on per capita basis. The current low per capita consumption of steel of 59 kg in India compared to the world average of estimated 200 kg is almost 1/3rd of the global average per capita consumption of steel. This indicates that there is a lot of potential for increasing the steel consumption in India. (Source: http://planningcommission.gov.in/aboutus/committee/wrkgrp12/wg_steel2212.pdf, Annual Report 2013 – Ministry of Steel) Production and Consumption of Steel in India The table below shows the trend in production for sale, import, export and real consumption of total finished steel (alloy + non-alloy) in India:

Total Finished Steel (Alloy + Non-Alloy) (million tonnes or mt) Year Production for sale Import Export Real Consumption

2007-08 56.08 7.03 5.08 52.13 2008-09 57.16 5.84 4.44 52.35 2009-10 60.62 7.38 3.25 59.34

2010-11** 68.62 6.66 3.64 66.42 2011-12* 73.42 6.83 4.04 70.92

Apr-Dec2012-13* 56.72 5.79 3.78 53.53

(Source: Annual Report 2013 – Ministry of Steel, GoI, *prov., ** Revised Figures) Alloy Steel and Stainless Steel The table below shows the trend in production for sale for total finished steel (alloy / stainless steel in India) in India:

Total Finished Steel (‘000 tonnes) Year Production for sale

(Non - Alloy) Production for sale

(Alloy / Stainless Steel) Production for sale (Non-Alloy + Alloy)

2008-09 54152 3012 57164 2009-10 57092 3532 60624 2010-11 64251 4370 68621

2011-12* 68930 4486 73416 Apr-Dec2012-13* 53147 3574 56721

(Source: Annual Report 2013 – Ministry of Steel, GoI, *prov.) Automobile Sector is the largest consumer of the alloy steel products. Recently, a slump in sales of major auto vehicle categories was observed due to high interest rates, hikes in petrol and diesel prices. If one considers the underlying factors for recent moderation in auto sector, the growth in the auto sector may be intact over medium to long term. This is also backed by the trends observed in the capex plans announced by many domestic and global auto manufacturers in India. The major global auto manufacturers already have presence in the country and they are expanding capacities in India. Also, many of them are interested in making their Indian manufacturing facilities the export hub for their global operations. Opportunities for growth of Steel in Private Sector The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. As per the Ministry of Steel, Government of India, while the existing units are being modernized / expanded, a large number of new steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies. In the last few years, the rapid and stable growth of the demand side has also prompted domestic entrepreneurs to set up fresh Greenfield projects in different states of the country.

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OUR BUSINESS

The following discussion should be read in conjunction with our audited financial statements for March 31, 2012 and March 31, 2013 and the respective notes to such statements, prepared in accordance with Indian GAAP and included elsewhere in this Draft Letter of Offer. Overview We, one of the Bajaj group companies, are one of the leading manufacturers of alloy and stainless steel long products in India. We produced 2,09,349 MT of billets and blooms at our plant at Ginigera, Karnataka and 2,50,390 MT of specialty steel (alloy and stainless steel) rolled products at our Kalwe Plant in FY2013 and 2,22,705 MT of billets and blooms at Ginigera, Karnataka and 3,01,197 MT of speciality steel (alloy and stainless steel) at our Kalwe Plant in FY2012. We sell our products primarily in the Indian market. Domestic sales accounted for Rs. 1707.71 crores (80.32% of our total revenue) in FY2013 and Rs. 2079.68 crores (81.04% of our total revenue) in FY2012. Our export sales accounted for Rs. 140.37 crores (6.60% of our total revenue) in FY2013 and Rs. 193.20 crores (7.53% of our total revenue) in FY2012. Our major export market is Europe, European Union, South East Asia, Middle East, Far East, Australia and other Asian countries with Italy, Netherlands and Taiwan accounting for 42% of the exports, Turkey and Thailand accounting for 30% and rest of the countries namely, China UAE, Philippines, Malaysia, Vietnam, Ukraine, Iran, Australia, Indonesia, South Korea, Yemen, Singapore, Saudi Arabia and Slovenia accounting for 28% of our total specialty steel (alloy and stainless steel) export sales volume in FY 2013 and Italy, Netherlands and Taiwan accounting for 49%, Turkey and Thailand accounting for 24%, and the rest of the countries (China, Germany, UAE, USA, Iran, Philippines, South Korea, Switzerland, Australia, Malaysia, Hong kong, Ukraine, Vietnam, Mexico, Columbia and Saudi Arabia) 27% of our total specialty steel (alloy and stainless steel) export sales volume in FY 2012. Apart from specialty steel, our Company manufactures cranes, material handling equipment and plant equipment in our IMD. We also have a Power Generation Division and a Road Construction Division. The Steel Division, IMD, Power Generation Division and Road Construction Division contributed 88.55%, 7.68%, 1.06% and 2.71% respectively, of our total revenues for the year ended March 31, 2013 and 89.02%, 10.20%, 0.78% and 0%, respectively, of our total revenues for the year ended March 31, 2012. For the years ended March 31, 2013 and 2012, our loss before tax was Rs. 47.70 crores and Rs. 108.38 crores, respectively on a standalone basis, and our net loss for the year were Rs. 39.46 crores and Rs. 93.50 crores, respectively on a stand alone basis. The Steel Division and IMD are in conformation to the ISO 14001:2004 standard, which relates to the environment management system. The Steel Division is in conformity to the ISO/TS 16949 standard which is specific to steel suppliers for the global automotive industry while IMD conforms to the ISO 9001:2008 quality management system. The quality control laboratories of the Steel Division are ISO/IEC 17025:2005 enabling it to be considered as an accredited system for undertaking any metallurgical analysis of global standards. Subject to obtaining necessary approvals, we intend to set up a manufacturing unit at Sinnar Industrial Area, Nasik District, Maharashtra for manufacture of EOT cranes and other machineries for ferrous and non ferrous industries. We also propose to set up a 4 x 100 TPD sponge iron plant and sponge off-gas based cum dolchar based power plant forming part of 2 MTPA integrated steel plant in the state of Jharkhand. We are in the process of acquisition of land for setting up this plant. Our Strengths Market Leader in Specialty Steel: We have been a market leader in specialty steel long products in India. Out of total production of specialty steel for the year FY2013, in India aggregating to 4.56 MMT, we accounted for 5% (0.2 MMT). Out of total production of stainless steel for the year FY2013, in India aggregating to 0.9 MMT, we accounted for 6% (0.05 MMT) of the total stainless steel production. (Source: JPC flash report March 2013. www.jpcindiansteel.nic.in). Innovation in Manufacturing Processes: We have introduced a number of innovative processes, like billet conditioning, spherodised annealing, automatic ultrasonic inspection, to ensure right quality for customers and have therefore been able to stay ahead of the competition. We have also repeatedly proven our capability for new product development and import substitution for our customers in India and our global customers have us as their first choice. Cordial Industrial Relations: Our Company has maintained good and cordial relations with its workforce for over 25 years. Our Company continues to train and motivate all employees to participate in ‘Total Quality Management’ activities resulting in the recertification of all existing ISO systems. We have 1970 permanent employees on our rolls as at March 31, 2013 and have not had a single industrial dispute since 1984. Faster Deliveries: We have a flexible manufacturing system to cater to the varied, timely and immediate requirement of our customers. In the past two years we have achieved drastic reduction in lead-time with automation in the rolling mill expecially brought about with the quicker change in various sections. Superior Brand Image: We have been a market leader in supplying quality alloy steel for the past more than two decades and by maintaining our quality standards consistently we have become the preferred supplier to customers both in the domestic as well as in

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the global markets. We are also maintaining long-term strategic relationship with our key customers and they have been our customers and long-term partners for the last over two decades and this enable us to earn their goodwill. Fully Integrated Facilities: We are a fully integrated one stop shop providing the widest range of long products available in the steel sector. We provide different grades of steel products and are also capable of changing the diameter size of the products as per the specifications and requirements of the customers. We are also able to take short call orders and execute the same in a short time due to our fully integrated facilities. Total Quality Management (TQM): Our plant continues to conform to ISO / TS 16949 standard which specially applies to a steel supplier for the automotive industry worldwide. Additionally, our IMD is certified with ISO 9001:2008 QMS. Both the steel plant and IMD have continued to confirm to the ISO 14000:2004 i.e. the Environmental regulations of the State and the Central Governments. This TQM approach has enabled us to develop several critical application products in house that were hitherto imported from first world nations. Joint Venture with Sumitomo Corporation: We signed a master agreement with Sumitomo Corporation of Japan on October 29, 2012 for establishing a joint venture to carry on the business of cold finished bars and wires. This business, which was earlier housed within our Company, was transferred to a subsidiary of our Company, Technosys Metal Processing Ltd., which has now been renamed as Mukand Sumi Metal Processing Limited. Our joint venture with Sumitomo Corporation, adds much needed value to our products and with the increase in production capacity, we will be able to increase our market share. Our Business Strategy Initiation of Cost Reduction Strategies: We have simultaneously undertaken several cost reduction projects to the extent of Rs. 175 crores at both our Ginigera facility and Kalwe Plant, such as installation of sinter plant, hot blast stoves, pulverized coal injection system, etc. to enable us to use iron ore fines and lower the consumption of coke. With the expected relative improvement in availability of iron ore in coming months, our Company’s ability to utilize 70% of input of iron ore fines, reduction in coke consumption and other operating costs, it is anticipated that the cost of making steel will reduce considerably. We also continue to explore all areas to reduce our operating costs. Steps are being taken to reduce energy cost, improve productivity, introduce new products, reduce the consumption of energy and water etc. All these steps will have a positive effect on our Company’s performance in the coming years. The first phase of cost reduction project was completed by December 2012 and second phase has been completed by June 2013. Our IMD has also taken a number of cost reduction measures in design and other costs so as to become more competitive in the current market. Cost reduction to the extent of 10% has been achieved through improved designs and better sourcing during the previous financial year. These efforts would also continue rigorously in the future. Introduction of New Value Added Products and Development of new products in the Steel Sector: Our research and development department has developed various measures to introduce value added products like heat-treated, pickled etc., which has helped these products contribute significantly to our sales. We are also in the process of developing high-grade stainless steel and some of the products developed by us are duplex stainless steel, high alloy stainless steel, fastener grades like 302Q and 409 Ti/Nb ferritic grades for exhaust hanger. Direct Dispatch of Products to Customers: We have installed finishing facilities at our Ginigera plant and dispatch the finished rolled products directly to our customers from our Ginigera plant, so as to reduce our transportation cost. This has resulted in a cost reduction of about Rs. 1,650 per MT and we have been able to save costs to the extent of Rs. 3.17 crores in the year ended March 31, 2013. Ensuring Highest Levels of Safety: Zero accidents is our motto and we have taken all steps to improve safety measures in both our plants. Some of the steps taken by us include on the job safety training and training before induction to all our new employees. We also conduct emergency mock drills. The reportable accidents in the year 2011 were 25 and the same has reduced to 7 in the year 2012. Our Corporate Structure Please see next page for the corporate structure of our Company.

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Our Key Management Personnel Mr. S B Jhaveri, Chief Financial Officer, 77 years. He started his career with our Company in 1956 and through his hard work and sheer competence have climbed the corporate ladder handling various responsibilities at various levels. Over the years he received various promotions and was designated as the Chief Financial Officer of our Company in 2010. In his long span of 57 years with our Company he has handled almost all finance related functions viz. accounts, banking, sales tax matters, income tax matters, funds mobilisation, project financing, and commercial negotiations. Mr. A M Kulkarni, Chief Executive, steel plant, 62 years, joined our Company in 1974 as a management trainee. He handled materials management, purchase and logistics function of the Kalwe Plant from 1974 to 1990. He has been handling the sales and marketing function of our Company since 1990 and he is currently responsible for production, quality of steel products at Kalwe Plant and administration/ security of the Kalwe Plant. Mr. R Jagannathan, Chief Executive, IMD, 62 years. He has over 38 years of work experience including a wide variety of experience in the materials function in steel plant, automobiles, electronics and engineering industries for over 15 years. He was previously employed at Rourkela Steel Plant modernisation as an in-charge of all commercial activities, progress and inspection. He has also worked as Chief Executive Officer in Mukand McNally Wellman Ltd an erstwhile joint venture of our Company and McNally Wellman of USA, dealing in bulk material equipment. He has been working as Chief Executive, IMD since 2005. Mr. Sidharth Shah, Chief of Materials Management and Vice President, 65 years. He has over 39 years of work experience in the materials and logistics functions. He joined our Company as a Junior Engineer in 1974. He has worked as section in-charge of major inputs for steel foundry in our Company and for about 13 years he has been responsible for purchase and logistics of metallurgical coke, ferro alloys, and scrap for the Ginigera plant. He is the overall head of material management function. He was promoted to the post in Vice President in 2009. Mr. C H Sharma, Technical Advisor, Steel, and Vice President, 64 years. After graduation, he started his career with our Company in 1972, as a trainee engineer. In his long span with our Company he has handled numerous responsibilities. In the initial 15 years, he was responsible for the production function of steel plant, steel melting and casting of steel. Subsequently, he has handled other responsibilities in the area of quality assurance and quality control of inputs such as raw materials and other inputs as per product manufactured. He was heading the bright bar production and coil finishing departments and was responsible for the product development for Ginigera plant. He is currently a Technical Advisor to Joint Managing Director for Ginigera plant operations. He was promoted to the post of Vice President in 2010. Mr. V M Mashruwala, Head – Marketing, Steel Division, 53 years. He joined our Company in the year 1982 as graduate engineer trainee in IMD. From 1982 to 1990 he worked in various departments of the division, namely, estimation, marketing and planning. From 1990 to 1993 he was executive assistant to the Executive Director of our Company. In 1993 to 1996 he headed the production planning and control department of the Steel Division. From 1996 to 1998 he was transferred to head the bright bar division, which is one of the main profit centres of our Company. He presently looks after the marketing of alloy and stainless steel and is in the cadre of Vice President. Mr. Virendra Kumar Mittal, appointed as Business Development Director in 2011, 65 years. He joined Kalyani Mukand Ltd (a joint venture between our Company and Kalyani Steels Limited) in 1995 as President. Prior to this he worked for Ansal Properties and Industries Ltd as Vice President (International Division) in Russia, General Manager, Engineering & Projects of Hotel Leela Ventures Ltd and Project Manager in Welcome Group – Hotel Division of ITC Ltd. He is handling various projects including mining from inception to commissioning. He also looks into expansion and business opportunities for our Company. He has also worked as head of

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the Road Construction Division of our Company for implementing NHAI Projects. He has with him a total work experience of around 42 years. Our Company’s Divisions Our Company has four internal divisions, Steel Division, IMD, Power Generation and Road Construction Division. Steel Division Manufacturing and selling of specialty steel (alloy and stainless steel) long products is our primary business. It constituted 88.55% of our total revenues for the FY2013. We manufacture specialty steel products at our two plants at Kalwe and Ginigera. Within the Steel Division, we primarily manufacture and sell alloy and stainless steel long products in a variety of grades and sections to meet international specifications like Japanese, German, American and Indian standards. Our current steel making and rolling capacities are as follows: Our Present Capacity (Kalwe)

(In MTPA) Steel Making Capacity Stainless Steel 130,000 Special & Alloy Steel 370,000

Total 500,000

Wire rod mill – Coils (5.5 to 34 mm) 300,000 Bar mill – Rounds (24 to 90 mm) 160,000 Blooming Mill – Rounds (90 to 160 mm) 40,000

Total 500,000

We produce carbon and alloy steel, free cutting steel, semi free cutting steel, leaded free cutting steel, cold heading quality steel including boron steel, austenitic, ferritic and martensitic stainless steel, spring steel including chrome vanadium steel, high carbon steel, electrode quality steel and boiler quality steel. The steel is made and sold as billets, blooms, hot rolled billets/bars/wire rods/bright bars etc.

Size Range of our Company’s Products

Products Dimensions in mm dia Blooms as cast 160 / 200 / 250 mm sq.

240 x 280 mm rectangle Billets as cast 125 square mm

Wire rods 5.5, 6, 6.5, 7, 7.5, 8, 8.5, 9, 10, 11, 12, 13, 14, 15, 16.3, 17.5, 18.3, 19, 20, 21, 22, 23, 24, 26, 28.6

Round bars 24, 25, 26, 27, 28.5, 30.5, 32, 34, 36, 38, 40, 42, 45, 48, 50, 53, 56, 60, 63, 65, 70, 75, 80, 83, 90, 95, 100, 105, 110, 115, 125, 130, 140, 150

Hexagons (mm A/F) 22.5, 23.5, 25.5, 27.5, 28.5, 30.5, 33.5, 38, 43, 48 Round corner squares 63, 75, 80, 90, 95, 100, 110, 120, 125, 130, 140, 150, 160, 182

Bright bars 3mm to 137mm Cold finished wires 3.4 to 22mm

Sales Revenues by Steel Products

FY 2013 FY 2012

Steel Products Sales

(Rs. in crores ) Sales (%)

Sales (Rs. in crores)

Sales (%)

Alloy Steel 1275.18 65.18 1449.12 61.18 Stainless Steel 681.04 34.82 919.63 38.83

Total* 1956.22 100 2368.75 100 *Total reflects the aggregate sales of the Steel Division and % is calculated on the total sales of the Steel Division. Moreover the aforesaid sales revenue also includes excise.

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Sales Volume by Steel Products

FY 2013 FY 2012 Steel Products

Sales (in MT)

Sales (%)

Sales (in MT)

Sales (%)

Alloy Steel 192024 80 225148 77 Stainless Steel 47834 20 68618 23 Total* 239858 100 293766 100

*Total reflects the aggregate sales of the Steel Division and % is calculated on the total sales of the Steel Division. Moreover the aforesaid sales revenue also includes excise

Product Applications The steel products of our Company are used in the manufacture of:

• Transmission components • Engine components • Steering components • Chassis components • Suspension • Braking system • Bearings • Gears, pinions, spokes and forgings for automobiles applications • Seamless tubes, races and rings for bearings • Kitchenware, umbrella ribs, spectacle frame and hairpins, surgical instruments • Stainless steel for industrial applications • Industrial fasteners

Our Company’s steel manufacturing facilities are located at Kalwe in Thane district of Maharashtra and at Ginigera, Koppal district of Karnataka. Carbon, alloy and stainless steel products are manufactured at the Kalwe Plant. The products manufactured at Kalwe are hot rolled blooms, billets, rounds, wire rods, bars, bright bars etc. Carbon steel and alloy steel are manufactured at Ginigera plant, which produces continuous cast blooms and billets of carbon and alloy steel and also rolled products of rounds and round cornered squares. Kalwe Plant The Kalwe Plant was set up in 1965 and received its ISO 9002 certification in 1994. The manufacturing process followed at the plant is EAF route to melt steel scrap to produce steel. Our Company has UHP based EAF complex at its Kalwe Plant, which is equipped with computerized process controls. The UHP furnace has a capacity of 42 MT and operates on a waste heat recovery system. As part of its configuration, it includes a top and bottom blown oxygen converter (capacity: 40MT), a Ladle Refining Furnace (LRF) (capacity: 40mt), vacuum degassing, Vacuum Oxygen Decarburisation (VOD) facilities, a bloom/billet caster, billet conditioning, blooming and bar mill, wire rod mills, heat treatment, finishing facilities, bright bar and wire drawing making facilities.

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Manufacturing Process at the Kalwe Plant

Our Company uses a variety of raw materials for the manufacture of steel at Kalwe Plant. This includes various types of scrap, sponge iron, pig iron, unwrought nickel, moly oxide and a variety of ferro alloys such as ferro chrome, ferro silicon and ferro manganese. Unwrought nickel, moly oxide and certain percentage of scrap is sourced from international companies and other raw materials such as sponge iron, pig iron and ferro alloys are sourced mostly from domestic manufacturers.

Capacity Utilization of the Steel Plant at Kalwe (In MT)

Details FY2013 FY2012 Stainless Steel & Alloy Steel Stainless Steel & Alloy Steel

Installed Capacity 500000 500000 Production 250390 301197 Sales 239858 293766

Product Wise Distribution of the Total Production of Kalwe Plant

FY 2013 FY 2012

Product Net Sales (Rs. in crores)

% Sales (in MT)

%

Net Sales (Rs. in crores )

% Sales (in MT)

%

Alloy Steel 1137.60 65 192024 80.05 1315.51 61 225148 76.64 Stainless Steel 618.91 35 47834 19.95 850.55 39 68618 23.36

Total 1756.52 100 239858 100 2166.05 100 293766 100 Ginigera Plant Our plant at Ginigera, Karnataka is an integrated steel plant set up for the manufacture of alloy steel. Ginigera plant uses an alternate technology for the manufacture of alloy steel making the entire process less dependent on scrap and power by replacing the EAF with a MBF. This technology adopted at Ginigera plant uses iron ore and coke as the main raw materials for the manufacturing process instead of the scrap and power used by EAF.

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Broadly, the steel making process at Ginigera plant is divided into three stages as under:

#The MBF and related utilities and accessories are owned by Kalyani Steels Ltd. ## SMS consisting of energy optimising furnace, ladle refining furnaces, vacuum degassing furnace and bloom and billet caster and related utilities and accessories are owned by our Company. ### The rolling mills and related utilities and accessories are owned by Kalyani Steel Ltd.

Manufacturing Process at the Ginigera Plant

Our Company uses iron ore, metallurgical coke and fluxes such as limestone, dolomite, and manganese ore etc. as the main raw materials at our plant at Ginigera. Iron ore were sourced from two iron ore mines leased from Mysore Minerals Ltd., with whom our Company had entered into an agreement. However, owing to the Supreme Court’s directive (please see risk factor no.4 at page 12 for further details on the Supreme Court’s directive), mining in these two mines have been stopped and our Company now sources iron ore through e-auctions.

Capacity utilization of the steel plant at Ginigera*

FY2013 FY2012 Details Alloy Steel (MT) Alloy Steel (MT)

Installed Capacity 700000 700000 Production 350524 387541 Mukand’s Share 209349 222705

* The Ginigera plant is under a production sharing arrangement with Kalyani Steels Limited.

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Kalyani Steels Limited, Kalyani Ferrous Industries Limited (since merged with Kalyani Steels Limited) and our Company have entered into a strategic alliance to set up an integrated steel plant at Ginigera. The reason for having this arrangement with Kalyani Steels Limited was to have an economically viable annual capacity of 0.32 MMT, now increased to 0.70 MMT. As neither our Company nor Kalyani Steels Limited required significant addition to their existing capacities of manufacturing alloy steel, an alliance in the form of a production sharing agreement was perceived to be the most convenient and economic option to capitalise on their synergies. The production-sharing ratio between our Company and Kalyani Steels Limited is 58.62% and 41.38%, respectively. The total capital investment at Ginigera plant has been shared between our Company and Kalyani Steels Limited on basis of the production-sharing ratio. For the purpose of managing the day-to-day operations at Ginigera, Hospet Steels Ltd. (HSL) - a management company, has been promoted by our Company and Kalyani Steels Limited to manage, supervise and operate the plant, in order to enable the facilities to function as one composite manufacturing unit. HSL has an issued and subscribed share capital of Rs. 0.25 crores held equally between our Company and Kalyani Steels Limited. All manpower and overheads (manufacturing and administrative) necessary in connection with the operation and management of the Ginigera plant are incurred by HSL and are shared between our Company and Kalyani Steels Limited in the production-sharing ratio. As part of this strategy, Kalyani Steels Limited promoted a new company, Kalyani Ferrous Industries Limited (since merged with Kalyani Steels Limited) to set up MBF to manufacture hot metal, which is being entirely supplied to our Company’s steel plant at Ginigera. Our Company processes the hot metal in its steel plant and manufactures the various grades of steel billets and blooms, which are shared in the ratio mentioned above. Methodology of operating the composite manufacturing unit at Ginigera plant Each party is required to procure their raw materials and provide them to Kalyani Steels Limited for executing the production cycles. Accordingly, our Company procures its requirements of coke from the domestic markets and supplies it to Kalyani Steels Limited along with other inputs such as iron ore and limestone, dolomite and others, for the manufacture of hot metal. The entire process of production is executed in three phases: • Manufacture of hot metal in the MBF; • Making of billets and blooms in the SMS; and • Rolling of billets and blooms to rounds and squares in the rolling mills.

Thus, production cycle gives rise to the following transactions with respect to our Company: • Supply of raw materials and other inputs to Kalyani Steels Limited; • Obtaining its share of hot metal by our Company from Kalyani Steels Limited on payment of ‘conversion cost’ as per the

production sharing agreement; • The hot metal relating to Kalyani Steels Limited’s share in the production is transferred by the Kalyani Steels Limited to our

Company for processing in the SMS for which a ‘conversion cost’ is levied by our Company; • Rolling charges payable by our Company to the Kalyani Steels Limited for use of Kalyani Steels Limited’s rolling facilities.

Business of our Steel Division India is our most important market. Domestic sales accounted for Rs. 1707.71 crores (80.32% of our total revenue) in FY2013 and Rs. 2079.68 crores (81.04% of our total revenue) in FY2012. Our export sales accounted for Rs. 140.37 crores 6.60% of our total revenue) in FY2013 and Rs. 193.20 crores (7.53% of our total revenue) in FY2012. The main products comprising the domestic stainless steel market include wire rods, which are sold in coil form in sizes ranging from 5.5 mm diameter to 28.6 mm diameter; and bars, which are sold in straight length sections and billets and blooms. Stainless steel is domestically consumed by: • Direct consumers who convert the stainless steel into components meant for industrial applications such as filters, meshes,

pipefittings and other similar paraphernalia; • Manufacturers who export stainless steel in the form of bright bars and wires after certain secondary processing such as heat

treatment, drawing, grinding, peeling and polishing; and • Traders who retail stainless steel in the domestic market.

The total Indian market for specialty steel (alloy and stainless steel) products amounted to 4.56 MMT in FY2013. Our Company sold a total of 0.2 MMT of specialty steel (alloy and stainless steel) products in India in 2013, maintaining an overall domestic market share of approximately 5% for such period. (Source: JPC flash report March 2013. www.jpcindiansteel.nic.in)

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Zone-wise Sales of our Products in the Domestic Markets

North Zone 1: Haryana, Delhi, Rajasthan, Uttar Pradesh, Uttarakhand, Himachal Pradesh and Punjab North Zone 2: Punjab and Chandigarh West Zone: Maharashtra, Gujarat, Madhya Pradesh, Goa, Jharkhand and West Bengal South Zone1: Tamil Nadu and Kerala South Zone2: Karanataka and Andhra Pradesh

Total sales volume of alloy steel products in India decreased in FY2013 primarily due to the ban imposed by the Supreme Court on mining in Karnataka which impeded the supply of iron ore during such period. This severely affected our production from 2,22,705 MT in FY2012 to 2,09,349 MT in FY2013. Please see risk factor no 4 at page 12 for further details on the Supreme Court’s directive banning mining operations in the state of Karnataka. Our export sales accounted for Rs. 140.37 crores (6.60% of our total revenue) in FY2013 and Rs. 193.20 crores (7.53% of our total revenue) in FY2012. Our major export market is mainly concentrated in Europe, European Union, South East Asia, Middle East, Far East, Australia and other Asian Countries with Italy, Netherlands and Taiwan accounting for 42% of the Exports and Turkey and Thailand accounting for 30% and rest of the countries namely, China UAE, Philippines, Malaysia, Vietnam, Ukraine, Iran, Australia, Indonesia, South Korea, Yemen, Singapore, Saudi Arabia and Slovenia accounting for 28% of our total specialty steel (alloy and stainless steel) export sales volume in FY 2013 and Italy, Netherlands and Taiwan accounting for 49%, Turkey and Thailand accounting for 24%, and the rest of the countries (China, Germany, UAE, USA, Iran, Philippines, South Korea, Switzerland, Austrralia, Malaysia, Hongkong, Ukraine, Vietnam, Mexico, Columbia and Saudi Arabia) 27% of our total specialty steel ( alloy and stainless steel) export sales volume in FY 2012.

Export Sales in terms of Sales Volume of our Company’s Steel Products

(By Geographical Market - Continent wise)

FY 2013 FY 2012 Region MT % MT %

Asia 7522 53 10080 50 USA 35 576 3 EU 6624 47 9320 47

Latin America 0 0 62 0 Africa 0 0 0 0 Total 14181 100 20038 100

Export Sales in terms of Sales Volume of Our Company’s Steel Products

FY 2013 FY 2012 Specialty Steel Products MT % MT % Alloy Steel 175 1 2229 11 Stainless Steel 14006 99 17809 89

Total 14181 100 20038 100

Recent difficulties affecting the global financial sectors, adverse conditions and volatility in the worldwide credit and financial markets, oil and commodity prices and the general weakness of the global economies have increased the uncertainty of global economic prospects in general and have adversely affected the global and Indian economies.

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Raw Materials Our Company uses a variety of raw materials for the manufacture of steel. This includes iron ore, coke and coal, scrap sponge iron, pig iron, unwrought nickel, moly oxide and a variety of ferro alloys such as ferro chrome, ferro silicon and ferro manganese. Unwrought nickel, and a small amount of scrap is sourced from international companies and other raw materials such as iron ore, coke, coal, sponge iron, pig iron and ferro alloys are sourced mostly from domestic sources. The various types of scrap used are stainless steel scrap, shredded scrap, ship breaking scrap, forging scrap, cutends and turnings. Pricing Policy We determine the sales price of our products based on market conditions. In setting prices, we take into account our costs, including those of raw materials, supply and demand in the domestic and international markets and exchange rates. Marketing A Vice President heads the Marketing Department and reports directly to the Co-Chairman & Managing Director of our Company. To bring about a special focus, the Marketing Department is separated for alloy and stainless steel. The Department is further sub-divided for domestic and export sales. The alloy and stainless steel marketing departments are each headed by a General Manager who report to the Vice President. To service our customers effectively and ensure just in time delivery, we have opened stockyards at places where our customers have their manufacturing set up. At present, we have stockyards at Gandhinagar, Faridabad, Jodhpur, Ludhiana, Chennai and Bangalore. We also market our products through consignment agents. Currently, we have consignment agents in the states of Maharashtra (Sholapur), Madhya Pradesh (Indore) and Gujarat (Rajkot). There is a completely separate set up for exports of stainless steel, which is headed by a General Manager who reports to the Vice President. In the international market, our Company markets its products through its wholly owned subsidiary Mukand International FZE. We have entered into a joint venture with Sumitomo Corporation, Japan and this joint venture is expected to increase our market presence in the future. Our Customers Automotive sector is our primary customer consuming 84% of our production of alloy steel.

Sector Wise Sale (Alloy Steel)

We cater mainly to the requirements of automotive sector. Our steel is approved by all OEMs of commercial vehicles, passenger cars and motorcycles and scooters as well as by component manufacturers. Being in the niche segment our steel goes into the making of critical components such as drive axle, transmission gears, timing gears, steering components, suspension springs and other suspension components, fuel injection pumps, braking system, bearings, wheel bolts, engine bolts and many other applications. We sell steel to some of the leading automobile manufacturers. Our major customers include Hi-Tech Gears Limited, Lakshmi Precision Screws Limited, Omega Bright Steel Private Limited, Rajat Wires Private Limited, Right Tight Customers Private Limited, Stump Schuele & Somappa Springs Private Limited and Aurangabad Electricals Limited.

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Opportunities Market for specialty carbon and alloy steel is likely to remain positive in the long run and the automobile sector is expected to continue a good growth rate. The demand projections for the year 2015 and 2020 in the automobile and auto component industry in India are given below.

Source: Automotive Component Manufacturers Association of India

The demand for commercial vehicles is also likely to increase in the coming years due to emphasis on infrastructure segments. Moreover, India is emerging as a major automobile hub for exports of vehicles as well as components. Our strategy to focus on customers who have an appetite for growth, sound financials and leadership in their industry have paid off. The domestic demand for steel is growing very fast. The per capita consumption of steel in India is very low compared to the consumption of steel in the world. Hence, there is tremendous scope for promoting usage of steel in the coming years in India. India is still expected to grow much faster than rest of other economies in the world. This is not achievable unless infrastructure improves and this process has already begun. From power and oil, gas to roads, ports and airports, we expect huge investments in the coming years which will boost the overall demand for steel products and automobiles in India. Direct and indirect export of our special and alloy steel products is likely to remain lower due to sluggish demand in Europe and America. But we hope to increase our exports to Asian countries where most of the countries have set up plants for manufacturing of auto components on account of low cost. Weaknesses and Threats The domestic steel industry is highly dependent on imports of key inputs like coking coal, metallurgical coke, scrap and ferro alloys like nickel and molybdenum. The prices for these inputs are determined by global demand and supply and continue to remain volatile. Many of the existing special and alloy steel plants have expanded their capacity in the last one-year. There are several new entrants who have entered the market. This will lead to over capacity in the short run and is likely to exert pressure on our selling prices and market share. The import duties for special and alloy steels have now been brought down to a very low level of 5%. There is a threat of dumping of cheaper steel from countries like China and Korea due to lower demand in Asian and European countries. Even Japan, Germany and France are increasing their exports of steel to India on account of low demand, both in their own and other European countries. However, if depreciation of Rupee continues, it may reduce the volume of imports. Higher taxes, higher cost of finance, poor logistics, infrastructure, high cost of utilities have resulted into Indian products becoming uncompetitive in global markets when compared with countries like China and Thailand.

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High rate of inflation and higher interest rate may slow down growth of automobile industry in the short-term. But with the Government controls we expect inflation to be brought under control and demand to pick up. Competition In special and alloy steel we face competition mainly from Usha Martin Industries Ltd, Sunflag Iron & Steel Ltd, ISMT Ltd, Mahindra Sanyo Special Steel Pvt Ltd, JSW Ltd, Jayaswals Neco Ltd and Vardhman Special Steels. We face competion also from imports mainly from China – Bao Steel, Korea – POSCO and Germany – Saarstahl. Our Company has been a pioneer and market leader in developing niche products, which can meet customers’ stringent quality requirement for high-end applications. We have captured a major market share through long-term tie-ups with renowned OEMS and auto component manufacturers. With the growth story intact in the auto sector and our strong presence in the niche product segment coupled with implementation of our capex plan to meet stringent quality requirements, we are confident of seeing through competition. IMD Our Company’s IMD located at Kalwe was established in 1967, to manufacture EOT cranes. In 1980, the division expanded its manufacturing activities and diversified into other areas of engineering business. Products of our IMD are used to efficiently and ergonomically move, lift, position or secure objects, machinery and loads. We are the domestic market leader in cranes, our principal line of products, which we believe provides us with a strategic advantage in selling our other products. We have achieved our leadership position through strategic acquisitions, our extensive and well-established distribution channels and our commitment to product innovation and quality. Main products of IMD are: • EOT cranes ranging from 5 MT to 500 MT capacity for various applications • Port equipment, gantry cranes • Bulk material handling equipment • Steel, cement, aluminium and copper process plant equipment • Turnkey projects for steel and non-ferrous industries In the EOT cranes segment, IMD concentrates on the large capacity cranes of 100 MT and above. It has sold cranes of 100 MT and above capacity to many companies in steel, engineering, aluminium and cement industry. IMD is equipped with automatic, semi automatic and computerised equipment for fabrication and machining jobs and assembly of large equipment. As a machine builder, our Company has supplied plant and equipment all over India. IMD is equipped with comprehensive and modern manufacturing facilities and computerized design, planning, procurement and monitoring capabilities and has developed indigenous technology for: • Door extractor-cum-coke guide car • Gear box for rolling mill • Mill stand • Rotating trolley crane • Scrapper reclaimer • Scrap transfer car • Slag car

IMD has developed a large network of ancillary units in Mumbai and outside and its track record in its unique ‘firsts’ for India include: • The largest India-designed and manufactured gantry crane of 80-tonne capacity and 60-metre span, with monobox girder and

underslung trolley • Four girder ladle crane • Computer-controlled crane • Ship loader and ship unloader • A 34-metre long and 4.2-metre dia. rotary dryer, the largest now in use in Asia (for a Petrochemical Unit) • A 40-metre high structure that moves on wheels, weighing about 700 MT, with multi-level folding platforms and remote-

controlled doors for vertical assembly of augmented satellite launch vehicle (ASLV) – a ‘vertical workshop' with an array of electronically controlled equipment at various levels – for a Space Research Organisaion.

Capacity, Production and Sales of the Division

Details FY2013 (In MT) FY2012 (In MT) Installed Capacity 9410 9410 Production 5754 9422 Sales 6187 * 10668 * Net Revenue (Rs. in crores) 160.24^ 260.38^

*Includes sales from Trading of 433 MT and 1246 MT for FY 2013 and FY 2012 respectively ^Includes sales from trading of Rs. 27.13crores and Rs. 37.12 crores for FY 2013 and FY 2012 respectively

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The manufacturing facilities are fully equipped to do fabrication and machining of complex parts and assembly of large equipment. Manufacturing facilities comprise of the following: • Structural fabrication shop with facilities such as welding machines, plate bending machines, hydraulic presses, plate cutting

machines, shot blasting, grinding and non-destructive test facilities. • Heavy machine shop capable of doing machining of large fabrication/castings to very accurate levels. The shop is capable of

handling very large jobs weighing around 100 MT and sizes as high as 10 mtrs*4mtrs. Vertical boring machines, horizontal boring machines, milling machines and drilling machines of various sizes and capacities have been installed in this shop.

• Light machine shop has gear hobbing machines, lathe machines, drilling machines etc. These facilities are being used for the manufacture of smaller components required for assembly of equipment.

• Handling facilities comprise of 27 nos. of EOT cranes to handle jobs up to 150 MT. • Assembly shop is equipped with all jigs and fixtures required for the assembly of material handling equipment and process

equipment being supplied to steel plants, cement plants, aluminium and copper plants. • Heat treatment facilities, which include stress relieving and hardening furnaces, sorbitising facilities etc. • Shot blasting facilities for surface preparation prior to finishing and painting.

IMD obtained the ISO 9001 certification in 1994. IMD employs about 279 workmen (welders, fitters, machine operators) and 290 staff and officers in different functions such as manufacturing, quality control, maintenance, design, marketing, purchase, planning departments. The division has an order position of Rs. 378.22 crores as on June 30, 2013. Please see risk factor no. 28 at page 18 for further details in the order book position of IMD. Some of the equipments engineered, manufactured and supplied by IMD are as follows: • Over 1000 nos. cranes including steel mill duty shop cranes up to 350 MT capacity, 350 MT hot metal ladle crane and 250 MT

hot metal ladle cranes supplied to steel plants are the biggest hot metal handling EOT cranes supplied by any manufacturer in India.

• 500 MT cranes to heavy engineering industries and 400MT plate rolling mill crane to a steel plant are the biggest workshop EOT cranes manufactured by a local manufacturer in the recent years.

• Over 60 nos. gantry cranes upto capacities of 80 MT and span of 60 mtrs to various customers. • Grabbing duty electrical level luffing cranes upto 60 MT capacity to the ports in India. • Continuous barge unloaders of 1250 MT per hour capacity. • Coal stackers upto 4000 MT per hour capacity and coal reclaimers upto 2400 MT per hour capacity. • Bucket wheel reclaimers, wagon tipplers and salt scrapper for steel and cement industries. • Converters, hot metal mixers for steel plants. • Ball mills, grinding tables, rotary kiln etc. for cement plants. • E-mills for power plants. • Slag granulation plant, rotary holding furnaces, anode refining furnace, lance handling system etc. for non-ferrous process plants. • ELL cranes for a port. • 10 MT ELL cranes for a harbour. • Development of fuel carts for a public sector undertaking. • Total package for copper plant for copper mines in Zambia. • 100 MT hammer-head crane for a port.

Power Generation Division We currently have 2 nos. 250M3 and 1 no. 350M3 MBFs at our plant at Ginigera. The Blast Furnace (BF) off-gases of the 2x250M3 MBF were being partly utilized for generating upto 9.4 MW power and some of the unused BF off-gases of these two MBFs were being flared. The CPP has been commissioned to utilize the entire off-gases of the new 350M3 MBF and also add to it, the unused off-gases of the 2x250M3 MBFs. The total quantity of off-gases thus available for the off-gas based CPP would be approximately 60,000 Nm3/hr. The total power generated from this 15MW power plant can be 117,936,000/kwh per annum. The power generated in FY2012-13 was 37,497,000 kwh and in 2011-12 it was 33,662,000 kwh. This has been low on account of under utilization of steel making capacity in these two years due to non-availability of iron ore. The entire power generated from the CPP is used in the steel plant and it reduces the pollution level of the BFs. Road Construction Division During 2001, our Company diversified into road and highways construction business. Our Company undertook the road construction activity with a Russian company specialising in execution of infrastructure projects in roads, highways and airports sector, which was awarded a road construction project by NHAI. The project was a part of the NHDP and was intended for strengthening and four-laning of two sections of NH-2 aggregating to approximately 150 KM. Our Company received ‘Defect Liability Certificate’ for the project from NHAI denoting completion during FY2012. The final bills raised have been submitted to NHAI and an amount of Rs. 34.47 crores has been recovered during FY 2013. Most of the plant and

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machinery procured for execution of these projects have been disposed off in view of the decision of our Company not to bid for further projects in this line of business. Infrastructure Facilities The following table sets forth details of our principal properties:

Facility Address Area Freehold / Leasehold

Period of Lease Other Terms

Registered Office Bajaj Bhawan, 3rd Floor and basement, Jamanalal Bajaj Marg, 226, Nariman Point, Mumbai – 400 021

3054 sq ft. Owned N.A.

Corporate Office Bajaj Bhawan, 2nd Floor Jamanalal Bajaj Marg, 226, Nariman Point, Mumbai – 400 021

685 sq.ft

Leasehold - from Bachhraj & Company Private Limited

33 months from January 01, 2012

Rental of Rs. 1,71,250 per month

Share & Fixed Deposit Department

Bajaj Bhawan, 4th floor Jamanalal Bajaj Marg, 226, Nariman Point, Mumbai – 400 021

659 sq.ft

Rented from Gemdia Company

For a period 3 years from June 1, 2012


Works - Ginigera Ginigera, Taluka Koppal, Dist. – Koppal, Karnataka – 583 228

186 acres

and 10 guntas

Leasehold - from KIADB

21 years from October 17, 1995

Premium: Rs.1.38 crores Yearly rent: Rs. 6,509

Kalwe Thane Belapur Road, Dighe, Thane – 400 605.

55 acres and 150

acres

Leasehold from MIDC - 55 acres and Freehold 150 acres

For 95 years from 1992/1993

Premium: Rs.11.56 crores Cost: Rs. 1.24 crores

Sinnar

A/77,Sinnar Industrial Area, Sinnar Taluka, Nasik District, Maharashtra

44 acres

Leasehold from MIDC

99 years from February 2009

Premium: Rs. 6.29 crores

Ginigera Several parcels of land 62 acres

and 28 guntas

Freehold from several individuals

N.A.

Rs. 2.93 crores

Jharkhand - Sponge Iron Unit

Village Barlanga, Tehsil Gola, Dist. Ramgarh, Jharkhand

152.83 acres

Freehold land from several individuals

N.A. Rs. 5.54 crores

Branch Office:

Facility Address Freehold / Leasehold

Period of Lease Other Terms

Office & Stockyard Sales

Plot no 74, Sector 25, Faridabad 121 004

Leasehold from Belmarks P Limited

Upto March 31, 2018



Plot No 15-A, Industrial Estate, Ambattur – 600058

Leasehold from Modi Steel Wire Manufacturing Co

Upto June 30, 2017



Plot no 70, 1st floor, KIADB Jigani Anekal Estate, Bangalore Rural - 562 105

Leasehold from Essen Tool Suppliers

Upto March 31, 2014

Rental of Rs.4,20,000 per month


D-1/A, 6th Phase SIDCO, Hosur, Tamilnadu - 635126

Leasehold from Logesh Bright Steel

Upto May 31, 2017 Rs.100 per MT


32-A Sanchet Bhawan Bhagat Ki Kothi Extention Scheme, Jodhpur, Rajasthan

Leasehold from Stainless India Limited

Upto February 28, 2014

Rental of Rs. 95,000 per month

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– 342005 Office & Stockyard Sales

Mukand Limited Plot No 3004/3 GIDC, Chattral Taluka Kalol, Gandhinagar - 389729

Leasehold from Ruby Enterprises

Upto March 01, 2014


Office Mukand Limited, Chennai No 1/62-3, First Street, Ravi Colony, St. Thomas Mount, Chennai – 600016

Leasehold from Mrs Lalitha

Upto March 31, 2014


Office 50-20-03, GF -2, TPT Colony Seetammadhara Visakhapatnam - 530013

Leasehold from Mrs K Indrani

Month to Month basis


Office 508, 5th floor, Pragati House, 47-48 Nehru Place, New Delhi – 110019

Leasehold from Mr Simranjeet

Upto October 31, 2016


Office P-593 Purandas Road Kolkata - 700029

Lesehold from Ms. Renu Chatterjee and others

Upto April 30, 2015


Water Our Company’s water requirement at its steel plant at Kalwe is around 2,000 cubic meters per day for the purposes of industrial cooling, boiler, industrial use, civil activities, drinking and sanitary purposes. The requirement is fulfilled by supply of around 1,600 cubic meters from MIDC and around 400 cubic meters of water recovery from affluent treatment plant. For meeting our Company’s water requirement at Ginigera plant it has arrangement for the supply of water from Tungabhadra reservoir, Munirabad, Koppal, Karnataka. Our Company and Kalyani Steels Ltd. can draw water to the extent of 4.8 million gallons per day from the reservoir. Effluent Treatment We have a process effluent treatment plant of a capacity of 40 cubic meters per day at our Kalwe Plant. Treated effluent is sent to CETP at Navi Mumbai for further treatment and disposal. Effluent treatment plant sludge is sent to CHWTSDF at Navi Mumbai. Steel plant at Ginigera generates effluents from its EOF, boiler, softener plant generation and power plants. Our Company has thickener and neutralization tank for treatment of effluents. The effluents are treated and treated water is used for dust suppression. Power

The requirement of power for Kalwe Plant is 45 MVA, which is met by power supply from MSEDCL. The requirement of power for steel plant at Ginigera is about 39.5 MVA. Gulbarga Electricity Supply Company Ltd. (erstwhile, Karnataka Power Transmission Corporation Ltd.) has sanctioned 23 MVA to Kalyani Steels Limited., and 23 MVA to us at Ginigera. Our Company has about 7.5 MVA capacity D.G. sets for emergency power generation. Captive power plants of 8 MW have been established by Kalyani Steels Ltd., and 15 MW has been established by us and the captive power generated by these plants is used by our Ginigera plant. These power plants utilize gas generated from MBFs.

Fuel We purchase furnace oil and light diesel oil from Hindustan Petroleum Corporation Ltd. We procure LPG from Bharat Petroleum Corporation Ltd, which are used in the production processes. Transportation We have yearly arrangements with transport companies for bringing semi-finished steel in the form of billets and blooms from steel plant at Ginigera to Kalwe Plant. As regards arrangements for dispatch of steel to our various stockyards and consignment agents, we have yearly agreements with the transport companies. Similar arrangements are also in place for export of steel from the Kalwe Plant to the port at Nhava Sheva, Navi Mumbai. For the products of IMD, specific contracts are finalized depending on the dimension of the products to be dispatched for each customer of the division. IMD procures orders for delivering the machines at the specified plants of the customers. The relevant freight charges are recovered from customers. Trade Unions The recognized union at the Kalwe Plant is Kalwe Mukand Employees Union of daily waged workmen. The agreement with the said union for emoluments and other conditions of service is valid from November 1, 2010 to June 30, 2015. The second union belongs to Staff Members – Mukand Staff & Officers’ Association. Staff members are being paid emoluments in terms of an award dated June 30, 2006 by Industrial Tribunal.

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Research & Development We have a research and development centre located at both our plants. Our research and development center plays a pivotal role in developing value added products and adding new products/processes. Our research labs have received a national award from Council for Scientific and Industrial Research. We have a laboratory with modern facilities including a scanning electron microscope. Our radiography laboratory has been approved by the Bhabha Atomic Research Centre, Mumbai and we also operate in collaboration with national laboratories and similar institutions in India and abroad. Specific areas in which research and development was carried out by our Company include: • Two varieties of duplex stainless steel for electrode applications successfully developed as import substitution, • Developed low carbon customized ferritic stainless steel with dual stabilization for welding electrode wire application for the

export trade, • Innovative alloying addition and chemistry optimization was done to develop high sub zero impact strength martensitic stainless

steel for special shaft application, • Steel making process improvements in terms of alloying additons and de-oxidation practice has resulted in production of high

fatigue life spring steel grade, • Alloy steel welding grades in seven special types developed for the domestic welding wire industry, • Medium carbon microalloyed grade special steel for crankshaft has been successfully developed, • A new martensitic stainless alloy which offers enhanced (superior) mechanical properties and higher corrosion resistance has

been developed, • Feasibility studies have been carried out on the development of super duplex stainless steels. • High aluminium nitriding steel has been developed for meeting specific requirements of hardness and machinability for the auto

component industry.

Insurance All our assets, production plants are insured against fire, riot, strike and malicious damage risks with various insurers to the extent of Rs. 2220.21 crores (including mediclaim cover for our employees). Insurance policies also cover selected items of machinery for the risk of machinery breakdown. Our policy is to provide cover on reinstatement value of the assets in their present state. We have also insured the permanent employees of our company under Floater Mediclaim – Group Insurance. Personal accident is covered under the Group Accident Insurance Scheme of our Company. We believe that our insurance arrangements are consistent with industry standards for steel manufacturers in India. Our insurance cover is reviewed on a yearly basis. Intellectual Property Rights We believe that the trademarks which are of material importance and significance to our business are those using the words “Mukand”. We have however not registered this trademark. Furthermore, we do not own any other trademark or logo for our business.

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HISTORY AND CORPORATE STRUCTURE

Brief Corporate History of our Company Our Company was incorporated as Mukand Iron & Steel Works Ltd. on November 29, 1937 under the Indian Companies Act VII of 1913 in (erstwhile) Bombay with the object, inter alia, of acquiring and taking over the business of Late Lala Mukand Lal and his sons, carried on under the name and style of M/s. Mukand Iron Works, M/s. Mukand Steel Rolling Mills and M/s. Mukand Steel Foundry at Lahore (now in Pakistan) and the business of Hindustan Iron & Steel Products Ltd., (erstwhile) Bombay. Our Company commenced its operations on February 9, 1938. Subsequent to the partition of the country in 1947, the Government of West Punjab (Pakistan) requisitioned for the Lahore factory of our Company. In exchange for the Lahore factory, our Company received shares of Batala Engineering Company Limited, located at Batala (a municipal council in Gurdaspur district) in the state of Punjab, India, which became a subsidiary of our Company and was renamed as BECO Engineering Company Ltd. (BECO). BECO had machine shop, cast-iron foundry and a small re-rolling mill at Batala, Punjab. BECO had set up another facility for manufacturing machine tools in Ballabhgarh in 1965. The unit at Batala was closed down in 1987. Because of adverse business environment, BECO became a sick unit and was merged with our Company in 1992, pursuant to an order passed by the Appellate Authority for Industrial and Financial Reconstruction and it became a division, Machine Tool Division, of our Company and had facilities for manufacture of machine tools at Ballabhgarh, Haryana. As the machine tool sector continued to remain sluggish, the division was closed in the year 2002, after offering voluntary retirement opportunity to its employees. In 1950, our Company started setting up a modern factory at Kurla, Mumbai for making alloy steel castings. After commencing business in 1953, the Reay Road factory was shifted to Kurla. At that time, its steel foundry was the largest in the private sector. Over a period of time, the foundry was modernised and had the capacity to make alloy steel castings weighing up to 6 MT per piece. It supplied high speed cast steel bogies and couplers to the Indian Railways, steel plants, sugar plants, paper plants, power plants, cement plants, pharmaceuticals plants and oil refineries. Our Company set up another foundry plant at Dighe/Kalwe, Thane, Maharashtra for manufacture of steel and alloy steel castings. In the wake of adverse business conditions since 1999-2000, our Company decided to dispose of Kurla unit, with machinery. IMD was setup in 1967 at Dighe/Kalwe to manufacture EOT cranes. In 1980, the division expanded its products to gantry cranes, port cranes, EOT cranes of 250 MT capacity, equipment for steel, cement, aluminium, copper plants; bulk material handling equipment, turnkey projects for steel and non-ferrous industries. In 1982, our Company embarked on a steel plant modernization programme with an outlay of Rs. 20 crores. The programme was completed in 1983-84. In 1984, our Company established its research and development section focusing on new grades of steel and castings etc. In 1986, research and development introduced ‘Super Steel-60’ bars. The coloured surface layer process was developed for colouring stainless steel and alloy steel components for decorative purposes. In 1987 and 1988, our Company undertook another round of modernisation of steel plants. Our Company’s name was changed on March 23, 1989, to Mukand Limited, as the earlier name was not commensurate with the then activities of our Company. In 1991, IMD manufactured and supplied medium merchant and structural mill to a steel plant. Over time the division has supplied hundreds of cranes of various configurations to several companies and ports. In 1992, our Company undertook modernization of the steel plant at Dighe/Kalwe with an outlay of Rs. 216 crores. Our Company installed annealing furnaces for annealing of cold-headed quality steel for fastener industry, and import substitution products were developed, for catering to markets such as Syria, South Africa, and South East Asian countries. In 1995, our Company realised that the cost of steel scrap and power costs were making its operations uncompetitive due to EAF route, and decided to adopt the iron-ore based coke-fired blast furnace route to manufacture steel. Kalyani Steels Limited of Pune, Maharashtra, which was also engaged in the manufacturing of speciality steels decided to shift from EAF route to blast furnace route for manufacturing steel around the same time. In order to achieve better economies of scale and sharing of investment costs, both Kalyani Steels Limited and our Company joined hands to form a strategic alliance to set up an integrated steel plant of a total capacity of 320,000 MTPA of alloy/carbon steel at Ginigera, Karnataka. Our Company and Kalyani Steels Limited decided to share the production, expenses and returns on investment based on the production sharing ratio of 58.62 % and 41.38 %, respectively. During 2001, our Company diversified into road and highways construction business. It undertook the road construction activity under a separate division - Road Construction Division, with a Russian company specialising in execution of infrastructure projects in roads, highways and airports sector. This division was awarded a road construction project under NHDP on a contract basis by NHAI. We shifted our registered office from Kurla, Mumbai to Bajaj Bhawan, Nariman Point, Mumbai with effect from September 1, 2001. On account of recessionary conditions in the domestic and international markets, cost and time overruns in implementation of the new project at Ginigera and consequently high interest costs, our Company incurred losses during 1998-99, 2000-01, 2001-02, and 2002-03. We reached a stage where we were unable to service our debt obligations and our bank borrowings became irregular. Our

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Company then applied for admission under the CDR Scheme with the request to provide relief, primarily by way of reduction in interest rates and change in the repayment schedule and conversion of bank overdue into a term loan, so that our Company’s routine operations were not constrained and it was able to generate adequate cash accruals to service the debt contracted by it. The CDR Cell vide its letter dated July 22, 2003 approved the financial restructuring package of our Company. However, due to deterioration in the market conditions and non-availability of working capital, the operations deteriorated further and our Company once again approached the lenders for the reduction in interest rates. We were unable to make repayments as per the CDR package, and approached our bankers once again to revise and relook the CDR package sanctioned in the year 2003. The CDR Cell, vide its letter-dated June 25, 2009 modified the earlier Package and once again modified in the year 2013 vide its letter dated June 20, 2013. The brief details of the CDR package are given on page 92. During 2012, our Company, after completion of the highway projects undertaken in 2001, decided to discontinue operations of the Road Construction Division. In the same year our Company entered into a joint venture with Sumitomo Corporation of Japan and incorporated Mukand Sumi Metal Processing Limited as our subsidiary to produce cold finished bars and wires. Our Equity Shares are listed on the BSE and NSE. Our Equity Shares were voluntarily delisted from the Delhi Stock Exchange, Ahmedabad Stock Exchange and the Calcutta Stock Exchange from December 09, 2003, January 07, 2004 and July 06, 2005, respectively. Awards, Certifications and Accreditations We have received the following awards during the last two years: 1. SKFs Supplier Excellence Award 2012 for the quality of the wires and wire rods for tapered roller bearings. 2. Quality Silver Award from Bajaj Auto Limited for the year 2012. 3. An award for quality and delivery from Somic SF Components Limited 4. Our Ginigera Plant at Karnataka received safety awards instituted by the Government of Karnataka. These include first prize for

Best Worker in Large Scale Industry Category for adopting Best Safe Practices in the year 2012. 5. Our plant at Ginigera, Karnataka received the CII- National Energy Management Award - 2010 (Excellent Energy Efficient

Unit) Our Main Objects Our main objects as presently contained in our Memorandum, inter alia, include:

“(1). To produce, manufacture, purchase, refine, prepare, import, export, sell and generally to deal in iron and steel in all forms, and/or bye-products thereof, and in connection therewith:

(a). to acquire and take over the business of L. Mukand Lal and his Sons, carried on under the styles of Messrs. Mukand

Iron Works, Mukand Steel Rolling Mills, and Mukand Steel Foundry and with a view thereto enter into the agreements referred to in Clause (a) of Article 3 of our Company's Articles of Association and to carry the same into effect with or without modification.

(b). to acquire, and take over the business of the Hindustan Iron and Steel Products Ltd., of Bombay, and with a view thereto enter into the agreements referred to in clause (b) of Article 3 of our Company's Articles of Association, and to carry the same into effect, with or without modification.

(c). to entrust the management of our Company to a firm of limited liability company subject to the provisions of the Indian Companies Act.

(2). To carry on the trades or business of iron masters, steel makers, steel converters, rolled steel makers, miners, smelters,

engineers, tinplate makers and iron founders in all their respective branches and manufacturers of all sorts of bars, rods and other sections, sheets and plates, wires and wire products of iron, steel and other metals.

(3). To search for, get, work, make merchantable, sell and deal in iron steel and other metals, old or new, coal, minerals and

substances. (4). To construct, execute, carry out, improve, work, develop, administer, manage or control in India and elsewhere public works

and conveniences of all kinds, which expression, in this memorandum includes railways, tramways, docks, harbours, piers, wharves canals, reservoirs, embankments, irrigation, reclamation, improvement, sewage, drainage, sanitary, water gas, electric light, telephonic, telegraphic, and power supply works and all other works or convenience of public utility.

(5). To apply for, purchase or otherwise, acquire, any contracts, decrees or concessions, for or in relation to the construction,

execution, carrying out, equipment, improvement, management, administration or control of public works and conveniences and to undertake, execute, carry out, dispose of, or otherwise turn to account the same.

(6). To carry on the business of miners, metallurgists, builders and contractors, ship-owners, ship-builders, merchants, importers

and exporters.

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(7). To carry on the business of iron founders, coke manufacturers, mechanical engineers, manufacturers of agricultural implements and other machinery, tool makers, brass-founders, metal workers, boiler-makers, millwrights, machinists, iron and steel converters, smiths, painters, metallurgists, electrical engineers, water supply engineers, manufacturer of brass, copper and other metals and to buy, sell, manufacture, repair, convert, alter, let on hire and deal in machinery, implements, all sorts of metal scrap and hardware and hollow-ware of all kinds.

(8). To carry on any business relating to the mining and working of minerals, the production and working of metals, and

production, manufacture and preparation of any other materials which may be usefully or conveniently combined with the engineering and manufacturing business of our Company or any contracts undertaken by our Company and either for the purpose only of such contracts or as an independent business.”

Amalgamations/ Mergers The details of the subsidiaries and a joint venture of our Company are as under: Subsidiaries Our Company has six subsidiaries, the details of which are given below: 1. Mukand Global Finance Ltd

Financials as on March 31, 2013 & March 31, 2012 (Rs. in crores) Shareholding of our Company in the Subsidiary 100% Date of Incorporation / Date of becoming Subsidiary of our Company

June 23, 1979

Registered office of the Subsidiary Bajaj Bhawan, 3rd Floor, 226, Nariman Point, Mumbai 400021 Business of the Subsidiary Non-banking financial company Net worth of the Subsidiary FY2013 FY2012 41.61 39.33 PAT/Loss of the Subsidiary FY2013 FY2012 2.29 1.43

2. Vidyavihar Containers Limited


July 01, 1971/April 01, 1999

Registered office of the Subsidiary Bajaj Bhawan, 3rd Floor, 226, Nariman Point, Mumbai 400021 Business of the Subsidiary Real estate development Net worth of the Subsidiary FY2013 FY2012 (95.81) (95.56) PAT/Loss of the Subsidiary FY2013 FY2012 (0.30) 1.75

3. Mukand Vijayanagar Steel Limited

Financials as on March 31, 2013 & March 31, 2012 (Rs. in Crores ) Shareholding of our Company in the Subsidiary 100% Date of Incorporation / Date of becoming Subsidiary of our Company

September 08, 1995/ July 14, 2006

Registered office of the Subsidiary Bajaj Bhawan, 3rd Floor, 226, Nariman Point, Mumbai 400021 Business of the Subsidiary To trade in steel products

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Net worth of the Subsidiary FY2013 FY2012 (6.89) (6.90) PAT/Loss of the Subsidiary FY2013 FY2012 (0.0007) (0.0032)

4. Mukand International Limited


January 27, 1997

Registered office of the Subsidiary 23A, Lyttelton Road, Hampstead Garden Suburb, London, N2

ODN Business of the Subsidiary To trade in steel products Net worth of the Subsidiary FY2013 FY2012 0.01 0.04 PAT/Loss of the Subsidiary FY2013 FY2012 (0.03) (0.02)

5. Mukand International FZE


September 21, 2008/ January 09, 2011

Registered office of the Subsidiary P O Box No: 262832, Ground Floor, LOB Jebel Ali Free Zone,

Dubai UAE Business of the Subsidiary To trade in steel products Net worth of the Subsidiary FY2013 FY2012 9.71 9.51 PAT/Loss of the Subsidiary FY2013 FY2012 (0.44) (1.86)

6. Mukand Sumi Metal Processing Limited

Financials as on March 31, 2013 (Rs. in crores) Shareholding of our Company in the Subsidiary 59.50% Date of Incorporation / Date of becoming Subsidiary of our Company

August 01, 2012 / October 29, 2012

Registered office of the Subsidiary Bajaj Bhawan, 3rd Floor, 226, Nariman Point, Mumbai 400021 Business of the Subsidiary To produce cold finished bars and wires Net worth of the Subsidiary FY2013 FY2012 198.33 - PAT/Loss of the Subsidiary FY2013 FY2012 (0.52) -

78

Joint Ventures 1. Mukand Vini Mineral Limited

Financials as on March 31, 2013 & March 31, 2012 (Rs. in crores) Shareholding of our Company in the JV 48.80% JV Partner Vini Iron and Steel Udyog Limited Date of Incorporated of the JV Vide Joint Venture Agreement dated September 01, 2008 Registered office of the JV Bajaj Bhawan, 3rd Floor, 226, Nariman Point, Mumbai 400021 Business of the JV In the Business of captive mining and distribution of coal

pursuant to allotment of Rajhara Coal Block by the Government of India

Net worth of the JV FY2013 FY2012 1.36 1.36 PAT/Loss of the JV FY2013 FY2012 - NA

Shareholders’ Agreement We have no shareholders agreement as on the date of this Draft Letter of Offer. Strategic Partners Kalyani Steels Limited is our strategic partner with regard to our steel plant at Ginigera, Karnataka. We had entered into a strategic alliance agreement with Kalyani Steels Limited and Kalyani Ferrous Industries Limited (since merged with Kalyani Steels Limited) on May 16, 1998. Under the arrangement, our Company and Kalyani Steels Limited had proposed to set up a plant and to promote a company to exclusively manage, supervise and operate the plants with a view to achieve smooth functioning of all plants as one composite manufacturing unit. Kalyani Steels Limited and our Company had also agreed to share the production in the plant at Ginigera in the ratio of 41.38% and 58.62%, respectively. Towards this objective, the partners have formed a company, Hospet Steels Limited (HSL) at Ginigera, which manages the day-to-day operations at Ginigera. HSL, a management company, has been promoted by our Company and Kalyani Steels Limited to manage, supervise and operate the plant, in order to enable the facilities to function as one composite manufacturing unit. HSL has an issued and subscribed share capital of Rs 0.25 crores held equally between our Company / affiliates and Kalyani Steels Limited / affiliates. For further details on the arrangement, please see page 65. Financial Partners We have no financial partners as on the date of this Draft Letter of Offer.

79

OUR MANAGEMENT

Board of Directors Under our Articles of Association, we are required to have not less than five Directors and not more than eighteen Directors. Our Company currently has eleven Directors. The following table sets forth details regarding our Board as on the date of this Draft Letter of Offer: Name and other Particulars DIN Directorships in other companies Mr. Niraj Bajaj Age: 58 Designation: Chairman and Managing Director Occupation: Business Executive Address: Mount Unique, 62-A, Dr. G. Deshmukh Marg, Mumbai 400 026 Term: For a period of 3 years from July 05, 2011

00028261 (1) Bachhraj & Co. Pvt. Ltd.

(2) Bajaj Allianz General Insurance Co. Ltd.

(3) Bajaj Allianz Life Insurance Co. Ltd.

(4) Bajaj Auto Ltd.

(5) Bajaj International Pvt. Ltd.

(6) Bajaj Sevashram Pvt. Ltd.

(7) Baroda Industries Pvt. Ltd.

(8) Bhoopati Shikshan Pratishan

(9) Foundation for Promotion of Sports & Games

(10) Hind Rectifiers Ltd.

(11) Hospet Steels Ltd.

(12) Indian Merchants’ Chamber

(13) Jamnalal Sons Pvt. Ltd.

(14) Jeewan Ltd.

(15) Kalyani Mukand Ltd.

(16) Madhur Securities Pvt. Ltd.

(17) Mahakalp Arogya Pratishan

(18) Mukand Engineers Ltd.

(19) Mukand International FZE (Dubai)

(20) Niraj Holdings Pvt. Ltd.

(21) Rahul Securities Pvt. Ltd.

(22) SanrajNayan Investments Pvt. Ltd.

(23) Shekhar Holdings Pvt. Ltd.

(24) The Hindustan Housing Company Ltd.

(25) Zensar Technologies Ltd.

Mr. Rajesh V Shah Age: 61 Designation: Co- Chairman and Managing Director Occupation: Business Executive Address: Flat No. 31, Apsara CHS Limited, NCPA Complex, Nariman Point, Mumbai 400 021. Term: For a period of 3 years from July 05, 2011

00033371 (1) Akhil Investments & Trades Pvt. Ltd.

(2) Amar Jyoti Agro Co. Pvt. Ltd.

(3) Amivir Agro Co. Pvt. Ltd.

(4) Anant Jeewan Agro Co. Pvt. Ltd.

(5) Bengal Port Pvt. Ltd.

(6) Eastern Gateway Terminals Pvt. Ltd.

(7) Jeewan Ltd.

(8) Jyoti Shah Premises & Investments Pvt. Ltd.

(9) Kalyani Mukand Ltd.

(10) Kshitij Holdings & Engineering Pvt. Ltd.

(11) Kulpi Port Holding Pvt. Ltd.

(12) KVS Energy Pvt. Ltd.

80

(13) MIEL e-Security Private Ltd.



(16) Mukand Sumi Metal Processing Ltd.

(17) Rajpriya Agro Co. Pvt. Ltd.

(18) Rajvi Engineering & Investments Pvt. Ltd.

(19) Ranbaxy Laboratories Ltd.

(20) Sunny days Agro Co. Pvt. Ltd.

Mr. Dhirajlal S Mehta Age: 77 Designation: Independent Non Executive Director Occupation: Business Executive Address: 301/302 Goragandhi Apartment, 3, Laburnam Road, Gamdevi, Mumbai 400 007 Term: Subject to retirement by rotation

00038366 (1) Bajaj Auto Ltd.

(2) Bajaj Finance Ltd.

(3) Bajaj Hindusthan Ltd.

(4) Bhoopati Shikshan Pratishan

(5) Janmabhoomi Newspapers Education Foundation

(6) Mahakalp Arogya Pratishan

(7) Niche Financial Services Pvt. Ltd.

(8) Sikkim Janseva Pratisthan P. Ltd.

(9) The States People Pvt. Ltd.

Mr. Suketu V Shah Age: 58 Designation: Joint Managing Director Occupation: Business Executive Address: A-52, Darshan Apartments, Mount Pleasant Road, Mumbai 400 026 Term: For a period of 3 years from July 05, 2011.

00033407 (1) Adonis Laboratories Pvt. Ltd.

(2) Akhil Investments & Trades Pvt. Ltd.

(3) Akshay Developers (Sion) Pvt. Ltd.

(4) Alloy Steel Producers Association of India

(5) Bharat Serums and Vaccines Ltd.

(6) Hospet Steels Ltd.

(7) Isarnan Steel Private Ltd.

(8) Jeewan Limited

(9) JLS Realty Pvt. Ltd.

(10) Jyoti Shah Premises & Investments Pvt. Ltd.

(11) Kshitij Holdings & Engineering Pvt. Ltd.


(13) Mukand Vini Mineral Ltd.

(14) Rajvi Engineering & Investments Pvt. Ltd.

(15) Shahvir Agro Pvt. Ltd.

Mr. Vinod S Shah

Age: 82

Designation: Non Executive Director

Occupation: Business Executive

Address: 11, Om Surya Vihar Co-op. Housing Society Ltd., Road No. 25-B, Sion- Matunga Scheme No. 6, Sion (West), Mumbai 400 022.

Term: Subject to retirement by rotation

00033327 (1) Hospet Steels Ltd.

(2) Jeewan Ltd.

(3) Sidya Investment Ltd.

Dr N P Jain IFS (retd.)

Age: 82

Designation: Independent Director

Occupation: Diplomat & Economist

Address: E, 50 Saket, Indore - 452 001

00460220 Maheshwar Hydel Power Corporation Ltd.

81

Term: Subject to retirement by rotation

Mr. Narendra J Shah

Age: 84


Occupation: Businessman

Address: 43-B Meher Apartment, Altamount Road, Mumbai -400 026

Term: Subject to retire by rotation

00047403 (1) Safalya Investments & Trades Pvt. Ltd.

(2) Suyojit Investment & Engineering Pvt. Ltd.

Mr. N C Sharma

Age: 70


Occupation: Executive

Address: Flat No.605, Dosti Blossoms, Dosti Acres Complex, Off. S.M. Road, Wadala (East), Mumbai 400 037

Term: Subject to retire by rotation

00054922 (1) Asian Oilfield Services Ltd.

(2) EskayK`n’ IT (India) Ltd.

(3) Reliable Asset Reconstruction Company Ltd.

(4) PSL Limited

Mr. Prakash V Mehta Age:71 Designation: Independent Director Occupation: Solicitor Address: M/s. Malvi Ranchoddas & Co, Yusuf Building, M. G. Road, Fort, Mumbai 400 001 Term: Subject to retire by rotation

0001366 (1) Advani Hotels & Resorts Ltd.

(2) Bharat Bijlee Ltd.

(3) Camphor and Allied Products Ltd.

(4) Credal Advisory Services Pvt. Ltd.

(5) G-corp Lotus Mall Pvt. Ltd.

(6) Hikal Ltd.

(7) India safety Vaults Pvt. Ltd.

(8) Iris Investments Pvt. Ltd.

(9) JBF Industries Ltd.

(10) Lexserve India Pvt. Ltd.

(11) Lotus Shopping Centres Pvt. Ltd.


(13) PCS Technology Ltd.

(14) Pegasus Assets Reconstruction Pvt. Ltd.

(15) Rajasvi Properties Holdings Pvt. Ltd.

(16) Shopping Centre Management Services Pvt. Ltd.

(17) Tulsidas Khimji Pvt. Ltd.

(18) W.H. Brady & Co. Ltd.

Mr. Pradip P Shah Age: 60 Designation: Independent Director Occupation: Financial Advisor Address: 3, Scheherazade, Justice Vyas Road, Colaba, Mumbai 400 005 Term: Subject to retire by rotation

00066242 (1) BASF India Ltd.

(2) C.D. Aviation (India) Pvt. Ltd.

(3) Godrej & Boyce Mfg.Co. Ltd.

(4) Grindwell Norton Ltd.

(5) Hardy Oil & Gas Limited (U.K.)

(6) Helios Green Tech Pvt. Ltd.

(7) IndAsia Fund Advisors Pvt. Ltd.

(8) Kansai Nerolac Paints Ltd.

(9) KSB Pumps Ltd.

82

(10) Panasonic Energy India Co. Ltd.

(11) PangeaEcoNet Assets Pvt. Ltd.

(12) Pfizer Ltd.

(13) Shah Foods Ltd.

(14) Sonata Software Ltd

(15) Supra Advisors (BVI) Ltd. (British Virgin Islands)

(16) Tata Investment Corporation Ltd.

(17) Universal Trustees Pvt. Ltd.

(18) Wyeth Ltd.

Mr. Amit Yadav Age: 59 Designation: Independent Director Occupation: Executive Address: Life Insurance Corporation of India, Yogakshema Building, C.O., 5th Floor, West Wing, Jeevan Bima Marg, Nariman Point, Mumbai 400 021 Term: Subject to retire by rotation

02768784 Nil

All the Directors are Indian residents. Brief Profile of our Directors Mr. Niraj Bajaj, Chairman and Managing Director of our Company is a Commerce Graduate and MBA from Harvard Business School, U.S.A. He was the President of the Indian Merchants’ Chamber for the centenary year 2007-08. He joined the service of our Company in March 1983 as Senior Marketing Manager. Since then he has held positions of General Manager (Marketing), Deputy Chief Executive, Executive Director and Managing Director. He was elevated to the position of Chairman and Managing Director on July 14, 2007. He provides valuable inputs, advice, guidance on matters relating to strategic planning and performance, expansion, diversification, new business decisions of our Company subject to the superintendence, control and directions of the Board of our Company. Mr. Rajesh V Shah, the Co-Chairman and Managing Director of our Company is an M.A. in Mathematics from Cambridge University, U.K. and MBA from University of California at Berkeley, U.S.A. He has completed a Programme for Management Development at Harvard Business School, USA. He was President of Confederation of Indian Industries (CII) for the year 1998-99. He joined the services of our Company in 1977 as Sales Manager (Rolled Products) and since then he has held various positions as Chief Marketing Manager, Deputy Chief executive, Chief Executive, Executive Director and Managing Director. He was elevated to the position of Co-Chairman and Managing Director on July 14, 2007. He provides valuable inputs, advice, guidance on matters relating to strategic planning and performance, expansion, diversification, new business decisions of our Company subject to the superintendence, control and directions of the Board of our Company. Mr. Suketu V Shah, the Joint Managing Director of our Company is B.Com. (Hons.) and holds an MBA from Harvard Business School, U.S.A. He joined the services of our Company in December 1984 as Senior Manager. Since then he has held position of General Manager (Commercial) and Senior Vice- President and President of our Company. He helps in the strategic planning and decision of our Company. He was elected as the Chairman of CII, Western India Region in 2002. He has been the Joint Managing Director of our Company since July 14, 2007. Mr. Vinod Shah, a Commerce Graduate, joined the services of our Company in the year 1953 and since then, has held various positions including that of General Manager, Dy. Chief Executive, Sr. Vice President, Jt. President, Advisor (Special Projects) and presently is a non-executive Director of our Company. He has been on the Board of our Company since 1989. Mr. Dhirajlal S Mehta, is an independent Director of our Company since 1976. He has extensive experience in corporate laws, taxation, finance and investments. Mr. Mehta serves as a Director of Bajaj Auto Ltd., Bajaj Hindusthan Ltd.and Bajaj Finance Ltd. He is a fellow member of the Institute of Chartered Accountants of India and a Fellow Member of Institute of Company Secretaries of India. He is a member of the Shareholders / Investors Grievance Committee of our company. Dr N P Jain (IFS) Retd., is an independent non-executive Director with our Company. Mr. Jain has been Secretary, Ministry of External Affairs, Government of India and Indian Ambassador to the European Union, United Nations, Nepal, Belgium and Mexico. He has represented India at numerous International Conferences and at the UN on political, economic, environmental and spiritual issues. He is the Chairman of the Audit Committee of our Company.

83

Mr. Narendra J Shah, is an Arts Graduate. He joined our Company in the year 1948 as a Management Trainee and has held different managerial positions at different times. He was Assistant Chief Executive when he left our Company in 1969. He has been on the Board of our Company since 1989. Mr. N C Sharma, a post-graduate in English Literature, joined Life Insurance Corporation of India (LIC) in 1965. Mr. Sharma was Managing Director of LIC during the years 2000 – 2002. Before taking over as Managing Director of LIC in November 2000, Mr. Sharma served as Zonal Manager, Western Zone and as Executive Director (Personnel) at the Corporate Office. He retired from LIC in November 2002. After his retirement from LIC, he has worked as Chief Executive Officer and Director of Sahara Life Insurance Co Ltd. He had also earlier served as Director on the Board of Tata Chemicals Ltd., Punjab Tractors Limited and as Public Representative (SEBI Nominee) on the Board of Delhi Stock Exchange Association Ltd. Mr. Sharma writes extensively on subjects related to Life Insurance Industry. He had been on the Board of our Company for the period from June 30, 1998 to January 31, 2004. Mr. Sharma was re-appointed as Director w.e.f. September 7, 2004. He is the Chairman of the Shareholders/ Investors Grievance Committee of the Company Mr. Prakash V Mehta, has been an independent non-executive Director of our Company since September 27, 2007. Mr. Mehta is a Managing Partner at M/s. Malvi Ranchoddas & Co., a law firm in Mumbai. Mr. Mehta has considerable experience in the field of law and has experience in property law, corporate law, joint ventures and foreign collaborations. He was appointed as a notary in 1996. He is a Member of the Maharashtra & Goa Bar Association and also a Member of the Managing Committee of the Bombay Incorporated Law Society. Mr. Mehta obtained a Bachelors Degree in Law from the University of Bombay in 1963 and is a Solicitor since 1966. Mr. Pradip P Shah, B.Com, AICWA, ACA, MBA (Harvard), runs IndAsia, a corporate finance, private equity and investment advisory business. He is also the co-founder of www. Grow-Trees.com a web enabled social initiative and Universal Trustees Private Limited. Mr. Shah served as a consultant at United States Agency for International Development, the World Bank and Asian Development Bank. Mr. Shah served as the founder Managing Director of The Credit Rating Information Services of India Ltd. since 1988. In 1994, he helped establish the Indocean Fund, in association with the Chase Capital Partners and the Soros Fund Management. He assisted in founding the Housing Development Finance Corporation in 1977. He has over thirty eight years of professional experience in the areas of financial consultancy, corporate structuring/restructuring, public issues, private funding, foreign collaborations, management consultancy, taxation, valuation, property matters, accounting, auditing, company law and FEMA matters, etc. Mr. Shah is a member of various prestigious committees/commissions. He is a visiting faculty at Jamnalal Bajaj Institute of Management Studies, Mumbai and a teaching Fellow at Harvard University. Mr. Amit Yadav has been an independent Director of our Company since October 27, 2010. Mr. Yadav has a career spanning 31 years and was associated with Public Health Department of Uttar Pradesh (U.P.) and U.P. State Electricity Board. He has wide and varied experience covering design, planning and project management of power and real estate projects. He joined Life Insurance Corporation of India in 1996 and at present is working as Executive Director (Engineering) at Central Office, Mumbai with overall responsibility for all engineering functions and development of real estate. Mr. Yadav is B.Sc. (Engr.) Civil with honours from Punjab Engineering College, Chandigarh. Mr. Yadav is a Fellow Member of Institution of Engineers (India) and a member of the panel of Arbitrators of Construction Industry Arbitration Council, New Delhi. Relationships between Directors Mr. Rajesh V Shah and Mr. Suketu V Shah are brothers. Mr. Narendra J Shah is the uncle of Mr. Rajesh V Shah and Mr. Suketu V Shah. Except as stated above, none of our Directors is related to each other. Details of Service Contracts There are no service contracts entered into with any of the Directors for provision of benefits or payments of any amount upon termination of employment. Details of current and past directorship(s) in listed companies whose shares have been/ were suspended from being traded on the BSE/ NSE and reasons for suspension. None of our Directors are currently or have in the past five years, been on the board of directors of a listed company whose shares have been or were suspended from being traded on the BSE or NSE. Details of current and past directorship(s) in listed companies, which have been/were delisted from the stock exchange(s) and reasons for delisting. None of our Directors are currently or have been on the board of directors of a public listed company whose shares have been or were delisted from being traded on any stock exchange. Arrangements and Understanding with Major Shareholders, Customers, Suppliers or others. None of our Directors or members of our senior management have been appointed pursuant to any arrangement or understanding with our major shareholders, customers, suppliers or others.

84

SECTION V - FINANCIAL STATEMENTS

FINANCIAL INDEBTEDNESS

Set forth below, is a brief summary of our Company’s outstanding borrowings, as on June 30, 2013, together with a brief description of certain significant terms of such financing arrangements. Non-Convertible Debentures* Bank/ Party

Name Address of bank branch/Party Sanctioned

amount (Rs. in crores)

Date of Sanction letter/ issue of CP/NCDs/ICDs

Rate of interest Security Outstanding Balance as on June 30, 2013 ( Rs in crores)

ICICI Bank ICICI Bank Towers, Bandra - Kurla Complex, Mumbai - 400 051 25.00 August 08, 2000 10.50%#

Industrial land located Plot No. B-2, Trans Thane Creek Industrial Area (TTC Kalwa Industrial Estate), MIDC Dighe, off Thane Belapur Road, Village Dighe, Navi Mumbai, Taluka and District Thane, Maharashtra (“Kalwe Property”) Factory land located at Ginigera / Kanakapura, Taluka Kopal, District Ginigera in the state of Karnataka (“Ginigera Property”)

15.96

Industrial Finance Corporation of India

IDBI Tower, 9th Floor, WTC Complex, Cuffe Parade, Mumbai - 400 005 25.00 April 15, 1998 10.50%# Kalwe and Ginigera Property 15.97

Vijaya Bank IV Maker Chamber, Nariman Point, Mumbai 400 021 8.00 April 02, 1998 10.50%# Kalwe and Ginigera Property 5.11

Total 58.00 37.04 * These are part of CDR package. # Revised rate of interest with effect from April 01, 2013 Secured loans

85

A. Terms Loans

Bank/ Party Name

Address of bank branch/Party

Sanctioned amount

(Rs. in crores)

Date of Sanction letter/ issue of

CP/NCDs/ICDs

Margin Rate of interest Security Outstanding Balance as on June 30, 2013

(Rs. in crores)

Bajaj Finance Ltd.

Bajaj Finserv Corporate Office, 4th Floor, Off Pune – Ahmednagar Road, Viman Nagar, Pune – 411 014

25.00 January 5, 2012 Various 13.75%

First and exclusive charge on industrial land located at plot no. B-2, Trans Thane Creek Industrial Area (TTC Kalwa Industrial Estate), MIDC Dighe, off Thane Belapur Road, Village Dighe, Navi Mumbai, Taluka and District Thane, Maharashtra.

20.33

Bajaj Finance Ltd.

Bajaj Finserv 4th Floor, Off Pune – Ahmednagar Road, Viman Nagar, Pune – 411 014

17.50 July 27, 2011 Various 13.35%

First and exclusive charge on the residential apartment no. 7C, Block 7, on second and third floors, area measuring 1967 sq. ft. situated at 23, Prithiviraj Road, New Delhi.

7.70

Canara Bank

Prime Corporate Branch II, Verma Chambers, 2nd Floor, Homji Street Fort, Mumbai 400 001

39.66

CDR Cell letters dated July 22, 2003 & June 25, 2009

Various 11.50%#

Kalwe and Ginigera property and raw materials, present and future book debts, tangible movable assets including plants and machineries, furniture, articles, office equipment, computers, electrical installations and all other movable properties of lying at the premises/ factories at Kalwe and Ginigera.

18.81

Central Bank of India

Industrial Finance Branch, Nariman Point, Chander Mukhi, Ground Floor, Mumbai - 400 021

100.00 June 4, 2009 - 13.25%


35.00



150.00 November 14, 2009 - 13.25%

All that piece and parcel of land admeasuring about 2,00,000 sq. mtrs/50 acres of land, bearing plot no: B-1, in the (Kalwe) Trans Thane Creek Industrial Area, within the village limits of Dighe and within the limits of Navi Mumbai Municipal Corporation, Taluka and Registration - Sub-District Thane and Registration District Thane. and

75.00

86



125.00 March 24, 2011 - 12.25%

All that piece and parcel of land admeasuring about 2,00,000 sq. mtrs/50 acres of land, bearing plot no: B-1, in the (Kalwe) Trans Thane Creek Industrial Area, within the village limits of Dighe and within the limits of Navi Mumbai Municipal Corporation, Taluka and Registration - Sub-District Thane and Registration District Thane.

125.00

Corporation Bank

Large Corporate Branch, 301-302 The Eagle Flights, Suren Road, Andheri Kurla Road, Andheri (E) Mumbai - 400 093

35.00 October 15, 2010 30.4 14.00%

Plant and machinery and other moveable assets of captive power plant at Ginigera/Kanakapura, District Ginigera in the state of Karnataka.

28.00

Dena Bank

Corporate Business Branch, C-10, G- Block, Bandra Kurla Complex, Bandra, Mumbai 400 051

38.41


Various 11.50%#


9.18

Exim Bank of India

Centre 1 Bldg., Floor 21, World Trade Centre, Cuffe Parade, Mumbai - 400 005

80.00 September 06, 2010 Various 12.30%

Flat no.31 admeasuring 3476 sq.ft. on 3rd floor and flat no.143 admeasuring 2884 sq.ft. on 14th floor, Apsara CHS Ltd., NCPA Complex, Nariman Point, Mumbai-400 021

Flat no. 5A, Suneeta, Malabar Hills, Mumbai Office space admeasuring 6524 sq.ft. on 3rd floor, a storage room admeasuring 1124 sq.ft. and car parking for 7 cars in the basement, Bajaj Bhawan, plot No. 226, Block III, Narmian Point, Mumbai – 400 021

60.76

87

HDFC Ltd

Ramon House, H T Parekh Marg, 160, Backbay Reclamation, Churchgate, Mumbai – 400 020

50.00 September 24, 2012 Various 13.50%


50.00

HDFC Ltd


50.00 July 17, 2012 Various 13.50%


50.00

HDFC Ltd


75.00 May 02, 2013 Various 14.25%


50.00

IDBI

IDBI Tower, 9th Floor, WTC Complex, Cuffe Parade, Mumbai - 400 005

139.66


Various 11.50%#


68.23

IFCI (Assignee of IIBI Ltd.)

IFCI Tower, 63, Nehru Place, New Delhi – 110 019

69.92


Various 11.50%#

Kalwe and Ginigera property and raw materials, present and future book debts, tangible movable assets including plants and machineries, furniture, articles, office equipment, computers, electrical installations and all other movable properties of lying at the premises/

32.94

88

factories at Kalwe and Ginigera.

Mukand Engineers Ltd

Thane Belapur Road, Dighe, Thane 400 605 20.41


Various 11.50%#


10.00

SREI Equipment Finance

51K-51L, Paradise, Bhulabhai Desai Road, Next to Benzer, Breach Candy, Mumbai 400 026

87.00 April 15, 2012 & October 10, 2012 Various 14.50%

Plant and machinery, spares, tools and accessories both present and future, as per deed of hypothecation and asset list.

81.51

ICICI Bank

ICICI Bank Towers, Bandra - Kurla Complex, Mumbai - 400 051

445.42


Various 11.50%#


54.41

Industrial Finance Corporation of India

IDBI Tower, 9th Floor, WTC Complex, Cuffe Parade, Mumbai - 400 005

75.22

April 15, 1998, CDR Cell letters dated July 22, 2003 & June 25, 2009

Various 11.50%#


30.94

Vijaya Bank IV Maker Chamber, Nariman Point, Mumbai 400 021

2.66


Various 11.50%#


0.10

89

GCIL Finance Ltd.

209-210, Arcadia Building, 2nd Floor, 195, Nariman Point, Mumbai 400021

4.00 October 26, 2012 Various 16% Flat A-52, Suneeta Apartment, Malabar Hill CHS, Mumbai 4.00

WINRO Commercial Ltd.

209-210, Arcadia Building, 2nd Floor, 195, Nariman Point, Mumbai 400021

4.00 October 27, 2012 Various 16% Flat A-52, Suneeta Apartment, Malabar Hill CHS, Mumbai 4.00

Total 1633.86 815.91 # Revised rate of interest with effect from April 01, 2013

[This page has been intentionally left blank]

90

B. Working Capital Facilities

Our Company’s Rupee working capital lender’s consortium i.e. Dena Bank Consortium is currently governed by the consortium agreement dated November 27, 2012 and March 05, 2013 between our Company and the Dena Bank Consortium by virtue of which working capital limits of Rs. 1131.00 crores have been sanctioned by the Dena Bank Consortium. Provided below are details of our borrowings from the Dena Bank Consortium. Name of the Lender

Date of Sanction Facility

Amount Outstanding

(Rs.in crores)#

Rate of interest

applicable

Repayment Schedule

Nature of security

Dena Bank January 16, 2012

Working capital facility of Rs. 370 crores divided into fund based working capital limit of Rs. 195 crores and non-fund based working capital limit of Rs. 175 crores

211.22 13.30% with a margin of 10%

Repayable on demand

Yes Bank September 04, 2012

Working capital facility of Rs. 60 crores divided into fund based working capital limit of Rs. 45 crores and non fund based working capital limit of Rs. 15 crores

46.13 13.75% with a margin of 10%

Repayable on demand

IDBI Bank August 17, 2012


119.04 14% with a margin of 10%

Repayable on demand

Bank of India April 23, 2012


28.83 14.75% with a margin of 7.5%

Repayable on demand

Corporation Bank

December 17, 2011


107.49 13.85% with a margin of 7.50%

Repayable on demand

1. First pari passu charge on whole of the current assets of our Company namely stock in trade consisting of raw materials, semi-finished goods and finished goods, stores and spares not relating to plant and machinery, bills receivable and book debts, all outstanding monies receivables, both present and future, situated at premises / factories at Kalwe/Dighe - Maharashtra and Ginigera/Kanakapura - Karnataka (excluding those of Road Construction Division)

2. First pari passu charge on all amounts owning to and received and receivable by our Company, book debts, trade receivables, revenue, all cash flows and receivables and proceeds arising from and all rights, title and interests in contracts, licenses, insurances, approvals, all project document, both present and future.

3. Second pari passu charge on movable assets (excluding those of Road Construction Division) including movable plant and machinery, machinery spares, tools, accessories, equipments, utilities, electrical installations, furniture & fixtures, computers and other movable assets, both present & future lying at factories / premises at Kalwe/Dighe - Maharashtra and Ginigera/Kanakapura - Karnataka excluding:

91

Union Bank of India

April 20, 2012


95.03

13.35% with a margin of 10%

Repayable on demand


December 29, 2011 and June 7, 2012


81.51 13.25% with a margin of 10%

Repayable on demand

(a) fixed assets of Road Construction Division

charged to Dena Bank; (b) movable fixed assets of CPP at Ginigera,

Karnataka charged to CBI; (c) movable fixed assets of Coke Oven Plant

and Power Plant at Ginigera, Karnataka; (d) movable fixed assets of Sinter Plant at

Ginigera, Karnataka

Total 689.25

#As on June 30, 2013 (Rs. in crores)


92

Unsecured Loans and Inter Corporate Deposits We have availed ICDs from Bajaj group companies and other companies. The balance outstanding as on June 30, 2013 is Rs 391.29 crores to the Bajaj group of companies and the other companies to the extent of Rs. 183.43crores. The rate of interest varies from 9% per annum to 17.50% per annum. Restrictive covenants

Some of the material restrictive covenants that our Company is subject to, under the terms and conditions of the aforementioned financing documents are as follows: (a) Ensure that the management control of our Company remains with the Promoters and associates; (b) Ensure that the Promoters and associates continue to hold shares in the Company; (c) Maintain certain financial ratios at certain levels, such as its debt service coverage ratio, its total debt to tangible net worth ratio

and its total debt to EBIDTA; (d) Keep its lenders informed of the happening of any event likely to have a substantial effect on its production, sales, profits, such

as labour problems, power cuts, etc and the remedial steps proposed to be taken in this regard by the Company; (e) Keep its lenders informed of any circumstances adversely affecting the financial position of its group companies, including any

action taken by any creditor against any of the group companies; and (f) Maintain adequate security cover for the assets hypothecated/ pledged/ mortgaged to its lenders. Furthermore, our Company may not, during the pendency of the aforementioned credit facilities: (a) Enter into a single or a series of transactions (whether related or unrelated) to sell, lease, transfer, or otherwise dispose of any

assets (other than in the ordinary course of business), which, individually or in the aggregate, exceeds Rs. 0.5 crore; (b) Declare dividends without the prior approval of the lenders; (c) Undergo any change in its normal course of business; (d) Increase its capital exposure beyond certain limits; (e) Utilize the loan funds:

• For capital markets activities, including for the subscription/ purchase of shares; • To repay dues of its Promoter/ group companies; • To extend loans to associate/ group companies; • For real estate activities; • For any purpose prohibited by the RBI/ FEMA; and • In any speculative businesses.

(f) Invest any funds outside its business; (g) Appoint any directors who are directors, or the near relative of any directors of any banking company which are scheduled

commercial banks; and (h) Induct any director onto the Board, who is on the list of willful defaulters of the RBI/ CIBIL, except for nominee directors. Non-compliance with Credit Facilities We are currently not in compliance with certain financial covenants in our agreements with some of our lenders. These covenants require us to maintain certain financial ratios and certain financial parameters within mutually agreed limits during the pendency of the relevant credit facilities. For further details please see the risk factor no. 11 at page 14. As on the date of filing of this Draft Letter of Offer, our Company has not received any show cause notices from our lenders alleging any breach/ non-compliance by our Company of the terms and conditions of the financial covenants present in our agreements with such lenders, or for enforcing their rights in relation to breach of such covenants provided under the underlying loan agreements. Corporate Debt Restructuring In terms of the Financial Restructuring Package (FRP) approved by the CDR Cell in July 2003, April 2009 and June 2013, the terms of security, redemption and conversion of our loan arrangements have been rescheduled. The terms of the CDR package and the progress made as on date of this Draft Letter of Offer are given below: (i) Promoters/associates have pledged 11,426,514 Equity Shares and 546,652 CRPS out of their shareholding in our Company. (ii) Pledge of the Promoters’ shares of Bajaj Auto Limited to the tune of Rs.10.90 crores. (iii) Our Company will ensure balance realization of non-core assets and investments aggregating to Rs. 82.73 crores (net of amounts

realized till March 31, 2013) over a specified time schedule ending on September 30, 2013. (iv) Lenders shall have a right of recompense upto 12% p.a. in excess of the effective IRR charge / credit in FRP for 8 years

commencing from the date of approval. (v) In the event of default, as defined in the restructuring package, the lenders have the right to cancel, suspend, reduce or modify all

or any of the relief and concessions or vary the terms and conditions thereof.

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AUDITORS REPORT


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STOCK MARKET DATA FOR THE EQUITY SHARES OF OUR COMPANY Our Equity Shares are currently listed on BSE and NSE. Stated below is the stock market data for the Equity Shares for the periods indicated. 1. The high, low and average of the closing prices recorded on BSE and NSE for FY2013, FY2012 and FY2011 and the number

of Equity Shares traded on the days the high and low prices were recorded are stated below:

FY High (in Rs.)

Date of High * Low (in Rs.)

Date of Low ** Average Price for the Year (in Rs.)

BSE

2013 34.90 April 02, 2012 2722 23.85 March 04, 2013 7322 28.90 2012 56.55 April 05, 2011 233886 24.80 December 14, 2011 9697 36.80 2011 81.55 August 25, 2010 2245630 42.15 March 21, 2011 22231 62.69 NSE

2013 34.95 April 02, 2012 5378 24.00 March 04, 2013 14194 28.89 2012 56.30 April 05, 2011 273047 25.15 December 14, 2011 16715 36.78 2011 81.30 August 25, 2010 2835074 42.00 March 21, 2011 5180 62.69 * Volume on date of High (Number of Equity Shares) ** Volume on date of Low (Number of Equity Shares) Source: www.bseindia.com, www.nseindia.com

2. The high, low and average of the closing prices and volume of Equity Shares traded on the respective dates on BSE and NSE

during the last six months is as follows:

Month, Year High (in Rs.)

Date of High * Low (in Rs.)

Date of Low ** Average Price for the Month (in Rs.)

BSE

August 2013 24.35 August 13, 2013 26844 16.40 August 02, 2013 4102 20.95 July 2013 23.00 July 1, 2013 10667 16.85 July 31, 2013 10530 20.96 June 2013 24.35 June 10, 2013 6400 21.55 June 24, 2013 7688 23.01 May 2013 26.50 May 2, 2013 13743 24.40 May 31, 2013 3853 25.63 April 2013 27.55 April 2, 2013 7529 26.05 April 30, 2013 14105 26.74 March 2013 31.70 March 13, 2013 54671 23.85 March 4, 2013 7322 28.74 NSE

August 2013 23.95 August 13, 2013 20578 16.30 August 02, 2013 6720 20.82 July 2013 22.75 July 1, 2013 3880 16.85 July 31, 2013 17349 20.88 June 2013 24.35 June 10, 2013 6984 21.25 June 24, 2013 827 23.00 May 2013 26.30 May 7, 2013 6510 24.35 May 31, 2013 2393 25.62 April 2013 27.50 April 2, 2013 4910 26.05 April 12, 2013 8290 26.74 March 2013 31.65 March 13, 2013 44327 24.00 March 4, 2013 14194 28.69

* Volume on date of High (Number of Equity Shares) **Volume on date of Low (Number of Equity Shares) Source: www.bseindia.com, www.nseindia.com

In the event the high, or low or closing price of the Equity Shares are the same on more than one day, the day on which there has been higher volume of trading has been considered for the purposes of this section.

95

3. The high and low of the closing prices with their respective dates and weekend closing prices on BSE and NSE for last four

weeks are as follows:

BSE

Week Ending Closing (Rs.) High (Rs.) Date of High Low (Rs.) Date of Low Aug 23,2013 21.15 21.70 Aug 22, 2013 21.00 Aug 20, 2013 Aug 30, 2013 20.15 21.90 Aug 26, 2013 19.20 Aug 29, 2013 Sept 06, 2013 22.50 22.50 Sept 06, 2013 20.75 Sept 03, 2013 Sept 13, 2013 23.75 23.75 Sept 13, 2013 22.20 Sept 10, 2013

Source: www.bseindia.com

NSE

Week Ending Closing (Rs.) High (Rs.) Date of High Low (Rs.) Date of Low Aug 23,2013 21.25 21.60 Aug 21, 2013 20.65 Aug 20, 2013 Aug 30, 2013 19.95 21.90 Aug 26, 2013 19.15 Aug 29, 2013 Sept 06, 2013 22.65 22.65 Sept 06, 2013 20.40 Sept 03, 2013 Sept 13, 2013 23.90 23.90 Sept 13, 2013 22.25 Sept 10, 2013

Source: www.nseindia.com

In the event the high and low price of the Equity Shares are the same on more than one day, the day on which there has been higher volume of trading has been considered for the purposes of this section.

4. The market price of the Equity Shares on the BSE and NSE as on September 18, 2013 was Rs. 24.30 and Rs. 23.90 respectively.

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ACCOUNTING RATIOS AND CAPITALIZATION STATEMENT (STANDALONE)

ACCOUNTING RATIOS

Ratio As at 31 March 2013 As at 31 March 2012 Earnings per share (Rs.) (incl. exceptional items)

(5.40) (12.79)

Earnings per share (Rs.) (excl. exceptional items)

(20.21) (12.79)

Return on net worth (%) (9.45) (20.46) Net asset value per share (Rs.) 56.33 61.72

The ratios have been computed as under: Net profit / (loss) after tax attributable to equity shareholders

Basic and diluted earnings per share

Weighted average number of equity share outstanding during the period

Net profit/ (loss) after tax attributable to equity shareholders

Return on networth %

Net worth at the end of the period

Net worth at the end of the period less Pref. Capital Net assets value per share (Rs.) Number of equity share outstanding at the end of the year/

period Networth Share Capital + Reserves and Surplus (excluding

Revaluation Reserve) Capitalization Statement The following table sets forth our Company’s capitalization and total debt as of 31 March 2013 and as adjusted to give effect to the Issue:

Particulars As at 31 March 2013 As adjusted for the Issue* Borrowings Short term borrowings (incl current maturity of long term debt)

1,304.57 [●]

Long term borrowings 856.72 [●] Total borrowings 2,161.29 [●] Equity share capital 78.75 [●] Reserves and surplus (excluding revaluation reserves)

338.72 [●]

Total Shareholders’ Funds 417.47 [●] Total debt/ equity ratio 5.18:1 [●] Long term debt equity ratio 2.05:1 [●] *Note – Assuming full subscription to the extent of [●] Equity Shares at the Issue Price (Rs.[●] per Equity Share). The ratios have been computed as below: Total Debt/ Equity Ratio: (Short term debt + long term debt) / (Equity (i.e., equity share capital + reserves and surplus (excluding revaluation reserves)) Long Term Debt/ Equity Ratio: (Long term debt /Equity (i.e., equity paid up capital + reserves and surplus (excluding revaluation reserves))

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ACCOUNTING RATIOS AND CAPITALIZATION STATEMENT (CONSOLIDATED)

ACCOUNTING RATIOS

Ratio As at 31 March 2013 As at 31 March 2012

Earnings per share (Rs.) (incl. exceptional items)

(30.64) (11.88)

Earnings per share (Rs.) (excl. exceptional items)

(22.74) (11.88)

Return on net worth (%) (145.25)% (23.01)% Net asset value per share (Rs.) 20.32 50.86

The ratios have been computed as under: Net profit / (loss) after tax attributable to equity shareholders

Basic and diluted earnings per share

Weighted average number of equity share outstanding during the period

Net profit/ (loss) after tax attributable to equity shareholders

Return on networth %

Net worth at the end of the period

Net worth at the end of the period less Pref. Capital Net assets value per share (Rs.) Number of equity share outstanding at the end of the year/

period Networth Share Capital + Reserves and Surplus (Excluding

Revaluation Reserve) Capitalization Statement The following table sets forth our Company’s capitalization and total debt as of 31 March 2013 and as adjusted to give effect to the Issue:

(Rs. in crores) Particulars As at 31 March 2013 As adjusted for the Issue* Borrowings Short term borrowings (incl current maturity of long term debt and unclaimed matured deposit)

1,388.54 [●]

Long term borrowings 856.72 [●] Total borrowings 2,245.26 [●]

[●] Equity share capital 78.75 [●] Reserves and surplus (excluding revaluation reserves)

75.48 [●]

Total Shareholders’ Funds 154.23

[●]

Total debt/ equity ratio 14.56:1 [●] Long term debt equity ratio

5.55:1 [●]

*Note – Assuming full subscription to the extent of [●] Equity Shares at the Issue Price (Rs. [●] per Equity Share). The ratios have been computed as below: Total Debt/ Equity Ratio: (Short term debt + long term debt) / (Equity (i.e., equity share capital + reserves and surplus (excluding revaluation reserves)) Long Term Debt/ Equity Ratio: (Long term debt /Equity (i.e., equity paid up capital + reserves and surplus (excluding revaluation reserves))

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CERTAIN OTHER FINANCIAL INFORMATION

In accordance with circular no.F.2/5/SE/76 dated February 5, 1977 issued by the Ministry of Finance, Government of India, as amended by Ministry of Finance, Government of India through its circular dated March 8, 1977, the information relating to the working results for the period between the last date of the financial statements and up to the end of the last but one month preceding the date of the Letter of Offer will be updated in the Letter of Offer to be filed with the Stock Exchanges.

(a). Save as stated elsewhere in this Draft Letter of Offer, there are no material changes and commitments, which are likely to affect the financial position of our Company since March 31, 2013.

(b). The Issue Price has been arrived at in consultation between the Issuer and the Lead Manager.

1. Week-end prices for the last four weeks, current market price and highest and lowest prices of Equity Shares during the

period with the relative dates.

For details in connection with the week-end prices for the last four weeks, current market prices, and highest and lowest prices of our Equity Shares, please see the section titled “Stock Market Data for the Equity Shares of Our Company” beginning on page 94.

3. Our Company filed its audited financial results for the fiscal year ended March 31, 2013 and the unaudited results

subject to Limited Review for the Quarter ended June 30, 2013 with BSE and NSE in accordance with the requirements of the Listing Agreements.

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SECTION VI – LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATION AND DEFAULTS Except as stated below, there are no (i) outstanding litigations, suits, criminal or civil prosecutions, statutory or legal proceedings including those for economic offences, tax liabilities, show cause notices or legal notices pending against our Company, whose outcome could have a materially adverse effect on the business, operations or financial position of our Company, (ii) pending criminal liability, cases involving moral turpitude on the part of our Company, proceedings involving material violations of statutory regulations by our Company or economic offences where proceedings have been initiated against the issuer in the immediately preceding 10 years. A summary of civil, criminal and other litigation and disputes involving potential financial liability of above Rs. 0.75 crores and certain other litigation which we consider material has been disclosed in this Draft Letter of Offer. Unless stated to the contrary, the information provided below is as of the date of this Draft Letter of Offer. I. Cases against our Company A. Criminal Cases

Party Case No. & Court Particulars Amount Claimed & Current Status

Deputy Commissioner of Customs, Bombay

CC No.37/CW/2006 (Old Case No. CC10/CW/2003), Chief Metropolitan Magistrate, Esplanade, Mumbai

Proceedings pursuant to a complaint under Sections 135(1)(a), 135(1)(b), read with 135(1)(ii) of Customs Act, 1962 and under Section 120-B of the Indian Penal Code, 1860 fraudulent evasion of custom duty payable and / or prohibition imposed import of explosives. Our Company has filed an application for discharge / recall of process, which is listed for hearing on October 04, 2013.

Claim is not quantifiable Application for discharge filed by our Company is pending hearing.

B. Civil Cases Party Case No. & Court Particulars Amount Claimed

& Current Status State of Maharashtra

Civil Appeal No.3018/2010 Supreme Court

The State of Maharashtra has granted exemption from the duty leviable under the Bombay Electricity Duty Act, 1958 to CPPs. Subsequently the State Government withdrew the exemption. Our Company challenged the said withdrawal vide Writ Petition No. 2364 of 2007 before the Bombay High Court, which was allowed vide order dated November 7, 2009. State challenged the order of the High Court before the Supreme Court. Supreme Court vide its order dated April 1, 2010 granted leave and SLP was converted to civil appeal.

Amount claimed is Rs. 14.27 crores Case is at the final stage of hearing.

Mysore Minerals Ltd. (MML)

A.S. No.57/2009 City Civil Judge, Banglore

Our Company invoked arbitration seeking declaratory relief that ‘Raising Agreement’ dated May 3, 2003 is still valid and subsisting and that the termination of the agreement by MML was illegal. Award was passed in favour of our Company. MML challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996. Our Company has filed aapplication for permission to recommence raising operation. The application is still pending hearing

Claim amount is not quantifiable Case is at the final stage of hearing.

Subhas Dagadu Jadhav (SDJ)

PIL No.4/2007 Bombay High Court

SDJ is challenging the validity of title of land that was transferred to our Company in the year 1950 under Bomaby Land Revenue Code, 1879. SDJ alleges that the land was not purchased at the prevailing market price and several concessions were granted in favour of our Company at the heavily discounted price. SDJ has also challenged the order dated September 14, 2005 whereby the Minister of Revenue held that our Company is not required to seek prior approval for sale / transfer of the land at Kurla, Mumbai as the land is

Claim amount is not quantifiable Case is at the final stage of hearing.

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held by our Company as Class I occupant. It has been further alleged that such an order has resulted in loss of revenue to the state.

Mumbai International Airport Private Limited (MIAL)

Suit No.516/2010 Bombay High Court

State of Maharashtra vide grant order dated June 22, 1973 granted the suit plot i.e. Kurla – Kirol Hills No.1 and 2 admeasuring 24044 sq. mtrs. to our Company. Subsequently, an agreement in this regard was also executed on January 22, 1991 between the state and our Company. MIAL filed this suit challenging the land grant order dated June 22, 1973 and agreement dated January 22, 1991 claiming that the suit plot was already allotted to the Airport Authority of India, which never released the said plot and is still the owner of the said land. MIAL in the suit has sought declaratory relief that Airport Authority of India is still the owner of the suit plot and that the land grant order dated June 22, 1973 and agreement dated January 22, 1991 be declared null and void and non est.

Claim amount is not quantifiable At the stage of plaintiff’s evidence.

Minicraft Enterprises Pvt Ltd. (MEPL)

Suit No.2826/2006 Bombay High Court

Our Company had appointed MEPL as liasioning consultant for its contract with National Allumininum Company Limited for its Smelter Expansion. MEPL rendered the services and claims that invoices raised by it are still outstanding and accordingly filed this suit against our Company for recovery of outstanding dues.

Claim amount is Rs. 1.32 crores. The case is at the pre - admission stage.

Shakti Equipment Pvt. Ltd.

Suit No.239/2011 Civil Judge, Sr Div. Thane

Our Company issued several work contract to SEPL, some of which were subsequently cancelled on account of poor performance and theft for which an FIR was also registered by our Company against SEPL. SEPL has now filed this suit claiming repayment of outstanding dues towards work contract, loss of profit, reputation and business loss on account of cancellation of contracts.

Claim amount is Rs. 1.01 crores. The issues are being framed in the matter.

C. Arbitration

Party Case No. & Court Particulars Amount Claimed & Current Status

Neyveli Lignite Corporation Ltd. (NLC)

Arbitration Tribunal comprising three arbitrators

NLC placed orders for design, manufacture, supply and commissioning of 40/5MT gantry cranes. Our Company manufactured, supplied and commissioned the said gantry cranes. However, NLC initiated arbitration proceedings claiming damages on account of deficiencies in design, inferior workmanship and improper usage of material in relation to supply, erection and commissioning of the gantry crane. Our Company has also filed counter claim for release of liquidated damages imposed by NLC and default interest totaling to Rs. 2.51 crores.

Claim is Rs. 8.66 crores The case is at the stage of final arguments.

D. Direct & Indirect Tax cases D 1. Indirect Taxes Case No. & Adjudicating

Authority Particulars Duty Involved

& Penalty (In Rs. Crore) E/249/09 Mum. CESTAT

Wrong availed Cenvat Credit on capital goods- structural steels Duty amount is Rs. 1.01. Penalty involved in Rs. 0.09.

E/3089/06 Mum CESTAT

Excess Cenvat Credit availed on billets and blooms received from Ginigera plant

Duty amount is Rs. 0.61. Penalty involved in Rs. 0.29.

CXAL NO.207 OF 2007 CESTAT

8% Reversal on Assessable Value under Rule 57AD(2)(B) AND 6(3)(B)

Duty amount is Rs. 0.71. Penalty involved in Rs. 0.71.

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II. Cases filed by our Company A. Criminal Cases

Party

Case No. & Court Particulars Amount Claimed

& Current Status Asian Alloys Ltd

Criminal Complaint no.7889/SS/2012

Metropolitan Magistrate, 57th Court, Mazgaon

Proceedings initiated under Section 138 of the NI Act, for dishonour of cheque. The cheque was tendered towards repayment of inter-corporate deposit. One accused Mr. Pawan Sachdeva has been declared proclaimed offender, whereas bailable warrant has been issued against the other accused Mr. Subash Sachdeva.

Dispute is in respect of Rs. 1.73 crores Pending for the appearance of the accused.

Rajinder Steel Ltd.

Criminal Complaint no. 1718/SS/2005, 1719/SS/2005, 2948/SS/2005, 3796/SS/2005

Metropolitan Magistrate

Proceedings initiated under Section 138 of the NI Act, for dishonour of four cheques of Rs. 25 lacs each. The cheques were tendered towards payment of goods supplied. Against those complaints, criminal revision application no. 426 to 429 of 2007 was filed by the accused no. 3 with the Sessions Court, which was dismissed. Order of Session court was challenged before the Bombay High Court, which vide its order dated November 21, 2008 set aside the common order of issuance of process. Accused no. 2 has been declared proclaimed offender.

Dispute is in respect of Rs. 1 crore.

Shriram Bearings Ltd. (Now known as SBL Industries Ltd.)

Criminal Application No.740/2008 (Criminal Complaint No.521/S/2000)

Bombay High Court

Initially proceedings initiated under Section 138 of the NI Act for dishonour of cheque against goods supplied before Metropolitan Magistrate. Metropolitan Magistrate vide its order dated December 28, 2007 acquitted the accused no. 2. Accused no.3 is absconding. Our Company challenged the order dated December 28, 2007 before Bombay High Court. The High Court vide its order dated June 14, 2012 directed to take steps to serve the respondent within two weeks, failing which appeal was said to stand dismissed. It is understood now that due to non-availability of current address of the respondent, summons could not be issued.

Dispute is in respect of Rs. 0.23 crore

Rapid Constrictions Co. (RCC)

Criminal Complaint No.1342/SS/04

Metropolitan Magistrate Court

Proceedings initiated under Section 138 of the NI Act, for dishonour of cheque. Bailable warrants have been issued against the accused no. 2, summons have issued against the accused no.1.

Dispute is in respect of Rs. 0.15 crore Pending for appearance of the accused

Supersonic Turners Pvt. Ltd.

Criminal Complaint No.28/SS/2013

Metropolitan Magistrate Court

Proceedings initiated under Section 138 of the NI Act for dishonour of cheque.

Dispute is in respect of Rs.0.22 crore

Process is yet to be issued.

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B. Civil Cases

Party Case No. & Court Particulars Amount Claimed

& Current Status KHSL Industries Ltd.

Company Petition no. 63/1997

Official Liquidator of Allahabad High Court

Winding up petition filed by our Company on account of KHSL failing to pay the amount against the goods supplied by our Company. The Allahabad High Court, vide order dated December 3, 2007 allowed the petition and KHSL was directed to be wound up.

Dispute is in respect of Rs. 2.02 crores

Pending before the Official Liquidator.

Rajinder Steel Ltd.

Company petition no.17/1997 Official Liquidator of Allahabad High Court

Winding up petition filed by our Company on account of Rajinder Steel Limited failing to pay the amount against the goods supplied by our Company. The Allahabad High Court allowed the petition and passed the winding up order. The Official Liqudiator has been appointed. Our Company has filed its claim before the Official Liquidator.

Dispute is in respect of Rs. 1 crore Pending before the Official Liquidator.

Asian Alloys Ltd.

Summary suit no. 50/2001 Bombay High Court

Summary suit against default of re-payment of inter-corporate deposits. Defendants remained unserved. Fresh summons have been issued to be served upon the Defendants.

Dispute is in respect of Rs. 1.60 crores Pending service of summons upon the Defendants.

National Insurance Company Ltd. (NICL)

Civil Appeal No. 2388 of 2008 Supreme Court

Our Company had placed order on a Swiss company for supply of 17000 MT scrap of non-alloy steel. Our Company had also insured the said consignment with NICL. When our Company received the consignment of scrap, there was short supply of scrap. Our Company lodged claim for short supply with the Swiss Company as well as with NICL. As NICL repudiated the claim of our Company, a complaint claiming payment of Rs. 1.06 crores was filed with National Consumer Dispute Redressal Commission, which dismissed the said claim. Accordingly our Company preferred a Special Leave Petition against order of dismissal of our claim by National Consumer Dispute Redressal Commission. Special Leave Petition has been admitted

Dispute is in respect of Rs. 1.06 crores. Pending final hearing.

Board of Trustees of the Port of Visakhapatnam (BTPOT)

AOP 111/2009 District Judge, Visakhapatnam

BTPOT awarded a contract for design, manufacture, supply, erection and commissioning of 4 nos. of 20 MT Wharf Cranes. Our Company supplied the cranes in terms of the contract and raised invoices which also included amounts on account of variation of taxes, duties, excise, service tax as well as work contract tax, foreign exchange variation. However, BTPOT denied its liability to pay the said amount, Accordingly, our Company initiated arbitration proceedings for recovery of Rs. 5.38 crores variation of taxes, duties, excise, service tax as well as work contract tax, foreign exchange variation. Arbitrator awarded a sum of Rs. 0.05 crore only. Arbitrator also directed the respondent to continue to pay annual maintance charges (AMC) every month till the expiry of AMC period. Our Company challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996.


Pending hearing and final disposal.

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Board of Trustees of the Port of Visakhapatnam and Arbitrator

OS 96/2007 District Judge, Visakhapatnam

BTPOT awarded a contract for design, manufacture, supply, erection and commissioning of 4 nos. of 20 MT Wharf Cranes. Our Company supplied the cranes in terms of the contract and raised invoices which also included amounts on account of variation of taxes, duties, excise, service tax as well as work contract tax, foreign exchange variation. Our Company has filed a suit claiming interest on delayed payment on account of variation of taxes, duties, excise, service tax as well as work contract tax, foreign exchange variation and the amount wrongly deducted towards liquidated damages as per the contract terms.


Final arguments.

Overseas Ventures Ltd (OVL)

Suit No.26/2012 Civil Judge, Sr. Division, Thane

Our Company placed order for supply of 500 MT of shredded scrap. However, the scrap supplied OVL was defective and accordingly rejected by our Company and filed a suit claiming damages on account of defective supply of raw material.

Dispute is in respect of Rs. 0.96 crores The case is at the stage of completion of pleadings.

Devidayal Industries Limited (DIL)

Company Petition No.600 of 1997

Bombay High Court

Our Company supplied wire rods to DIL, however, payment for the same remained outstanding despite service of statutory notice. Accordingly our Company filed a winding up petition against OVL.

Dispute is in respect of Rs. 3.24 crores DIL is under liquidation.

Bellary Steel & Alloys Limited (BSAL)

Company petition no.102/2002 Karnataka High Court

Our Company supplied 4 nos. of hot metal ladle and 6 nos. of ladle transporter. However, payment for the same remained outstanding despite service of statutory notice. Accordingly our Company filed a winding up petition against BSAL. BSAL was directed to be wound up vide order dated September 09, 2010 and official liquidator (OL) was appointed.

Dispute is in respect of Rs. 1.98 crores Proceedings are pending before OL.

C. Arbitration:

Party Case No. & Court Particulars Amount Claimed

& Current Status Bharat Heavy Electricals Limited (BHEL)

Sole Arbitrator BHEL placed order for supply of 500 MT EOT cranes. Our Company supplied the cranes however, one crane got damaged during the transit, for which, our Company sought authorization of BHEL to repair / remanufacture. Cranes could not be commissioned as the site was not yet ready, which fact was communicated to BHEL. However, BHEL imposed liquidated damages (LD) in terms of the contract and withheld the amount of LD while releasing the payment to our Company. Accordingly our Company initiated arbitration proceedings claiming amount wrongfully withheld by BHEL towards liquidated damages together with interest.

Claim is Rs. 1.16 crores

The case is at the stage of final arguments.

D. Direct & Indirect Tax cases

D 1. Indirect Taxes

Case No. & Adjudicating

Authority

Particulars Duty Involved & Penalty

E/873/11- Mum. CESTAT

Appeal filed by the Company against the order of Commissioner of Central Excise (Appeals) dated 28.02.2011 confirming demand of

Duty amount is Rs. 1.20 crores.

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duty of Rs. 1.2 crore and penalty of Rs. 0.6 crore. Penalty involved in Rs. 0.6 crore.

E/1112/12- Mum. CESTAT

Appeal filed by the Company against the order of Commissioner of Central Excise (Appeals) dated 19.04.2012 confirming demand of duty of Rs. Rs. 0.52 crore lacs and penalty of Rs. 0.52 crore.

Duty amount is Rs. 0.53 crore. Penalty involved in Rs. 0.53 crore.

RPL/18/2009 Bombay High Court

The Company filed appeal against the order dated 12.12.2006 of CESTAT whereby demand of duty of Rs. 1.83 crore was confirmed and penalty was reduced from 1.72 crores to 0.2 crore. In view of the reduction of penalty as aforesaid the Income Tax Department has also filed an Central Excise Appeal bearing No. 54 of 2008.

Duty amount is Rs. 1.83 crores Penalty involved in Rs. 1.72 crores.

III. Cases involving the Subsidiaries A. Vidyavihar Containers Limited

SR.No.

Assessment Year /

Appeal No.

Adjudicating Authority

Particulars of Dispute Demand Raised (In Rs. crores )

1. 2002 – 2003 ITAT Penalty under Section 271(1)(c) 3.43



4. 2006-2007 ITAT Penalty under Section 271(1)(c) 4.91

5. 2009-2010 CIT (A) Appeal against assessment order 11.40

6. 2010-2011 CIT (A) Appeal against assessment order 2.69

7. Income Tax Appeal No. 414 of 2012

High Court Disallowance of interest payable to holding company, legal & professional

fees.

3.52



fees.

4.00



fees.

5.51

Total 43.41*

* Out of this Rs. 43.41 crores, Rs. 26.33 crores has already been disclosed as contingent liability for FY 2012-13. Please also refer to the table at (IV) below. IV. Contingent Liabilities not provided as of March 31, 2013 as disclosed in our latest audited consolidated financial

statements: (Rs. in crores)

Particulars March 31, 2013 March 31, 2012 Income Tax 48.12 53.94

Excise duty, Customs Duty etc., 3.80 4.53

Sales Tax, Works Contract Tax etc., 5.63 4.90

Others 0.24 0.24

Claims against our Company not acknowledged as debts 18.53 21.24

Bills discounted with bankers and others 10.96 9.80

105

Guarantees and counter guarantees given by our Company 69.90 73.90

Bonds/undertakings given by our Company 35.44 30.68

Share in the contingent liabilities of associates 1.44 1.59

Total 194.06 200.82


106

V. Material Developments There are no material developments after the date of the last financial statements disclosed in this Draft Letter of Offer that is likely to materially and adversely affect or is likely to affect the profitability of our Company or the value of the assets or ability to pay the liabilities of our Company except for the approval by the Board and submission of the unaudited results for the quarter ended June 30, 2013 subject to limited review with the stock exchanges. The Unaudited Results for the quarter ended June 30, 2013 subject to limited review is as under:

MUKAND LIMITED

Regd. Office : Bajaj Bhawan, Jamnalal Bajaj Marg, 226, Nariman Point, Mumbai 400 021

STATEMENT OF UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED JUNE 30,2013

Rs. in lakhs

Three months ended Year ended

Particulars 30-Jun-13 31-Mar-13 30-Jun-12 31-Mar-13

Unaudited Unaudited Unaudited Audited

(1) INCOME FROM OPERATIONS

a) Gross Sales 65,325.25 56,781.84 68,415.80 2,28,052.57

Less : Excise Duty Recovered 6,510.12 5,338.31 6,775.53 22,128.22

Net Sales 58,815.13 51,443.53 61,640.27 2,05,924.35

b) Other Operating Income 885.44 473.47 916.24 6,699.84

Total Income from Operations 59,700.57 51,917.00 62,556.51 2,12,624.19

(2) EXPENSES

a) Cost of materials consumed 30,132.86 25,050.94 36,119.73 1,12,123.18 b) Changes in inventories of finished goods and work-in-

progress -2,503.85 -2,929.28 -2,415.88 -6,113.44

c) Stores, Spares, Components, Tools, etc. consumed 10,229.65 8,573.54 9,671.61 32,315.13 d) Power & Fuel 4,878.87 4,477.25 4,931.82 17,820.10

e) Employee benefits expense 3,483.54 3,392.05 3,538.06 13,653.12

f) Depreciation and Amortisation expenses 1,630.18 1,651.43 1,587.41 6,415.22

g) Other Expenditure 8,657.76 8,569.04 8,109.61 31,626.78

Total Expenses 56,509.01 48,784.97 61,542.36 2,07,840.09

(3) Profit from Operations before Other Income , Finance Costs, Net Unrealised Foreign Exchange Gain / (Loss) & Net Exceptional income/ (Expenditure)

3,191.56 3,132.03 1,014.15 4,784.10

(4) Other Income 295.24 302.38 271.44 1,087.41

(5) Profit from Ordinary Activities before Finance Costs & Net Unrealised Foreign Exchange Gain / (Loss) & Net Exceptional income/ (Expenditure)

3,486.80 3,434.41 1,285.59 5,871.51

(6) Less : Finance Costs (net) 6,164.85 6,259.28 4,965.81 21,538.08

(7) (Loss) from ordinary activities before Net Unrealised Foreign Exchange Gain / (Loss) & Net Exceptional income / (Expenditure)

-2,678.05 -2,824.87 -3,680.22 -15,666.57

(8) Net Unrealised Foreign Exchange Gain / (Loss) -1,679.07 594.56 -1,711.23 63.71

(9) Net Exceptional Income / (Expenditure) [Refer Note 2] 357.80 10,832.63

(10) (Loss) before Tax -3,999.32 -2,230.31 -5,391.45 -4,770.23

(11) Less : Tax Expense (Deferred Tax Credit) -530.00 -1,623.26 -824.08

(12) (Loss) after Tax -3,469.32 -2,230.31 -3,768.19 -3,946.15

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(13) Paid-up Equity Share Capital (Face value Rs 10/- per share) 7,312.57 7,312.57 7,312.57 7,312.57

(14) Reserves (excluding Revaluation Reserve) 33,871.71

(15) Earnings per Share (EPS) - Rs

Basic and Diluted EPS (in Rs.)

- Including exceptional items -4.75 -3.05 -5.15 -5.40

- Excluding exceptional items -5.23 -3.05 -5.15 -20.21

A PARTICULARS OF SHAREHOLDING

(1) Public Shareholding

Number of Shares 3,38,35,325 3,39,29,262 3,22,46,815 3,39,29,262

Percentage of Shareholding 46.28% 46.41% 44.10% 46.41%

(2) Disclosure in respect of pledged shares of Promoters and Promoter Group

Shares held by Promoters & Promoter Group - Nos. (A) 3,92,78,804 3,91,84,867 4,08,67,314 3,91,84,867

Percentage of Total Share Capital 53.72% 53.59% 55.90% 53.59%

Pledged / Encumbered - No. of Shares 1,60,90,431 1,57,05,431 1,83,28,179 1,57,05,431


Percentage of (A) 40.96% 40.08% 44.85% 40.08%

Non Encumbered - No. of Shares 2,31,88,373 2,34,79,436 2,25,39,135 2,34,79,436


Percentage of (A) 59.04% 59.92% 55.15% 59.92%

Quarter ended 30-Jun-13 B INVESTOR COMPLAINTS

Pending at the beginning of the quarter Nil

Received during the quarter 32

Disposed off during the quarter 32

Remaining unresolved at the end of the quarter Nil

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MUKAND LIMITED Rs. in lakhs

Quarter ended Year ended

30-Jun-13 31-Mar-13 30-Jun-12 31-Mar-13

Unaudited Unaudited Unaudited Audited

SEGMENT REVENUE (net of Excise Duty)

1) Steel 55,536.41 44,644.39 54,023.04 1,84,808.03 2) Power Generation 1,085.96 665.15 812.52 2,212.52 3) Industrial Machinery 3,350.90 5,888.48 3,202.50 16,023.52 4) Road Construction 1,207.92 4,444.42 5,652.34 Sub-total 59,973.27 52,405.94 62,482.48 2,08,696.41 Less : Inter Segment Revenue -1,158.14 -962.41 -842.21 -2,772.06

Total Segment Revenue (net of Excise Duty) 58,815.13 51,443.53 61,640.27 2,05,924.35

SEGMENT RESULT 1) Steel 1,498.26 1,782.60 -28.57 266.62 2) Power Generation 964.53 525.40 684.48 1,677.88 3) Industrial Machinery 1,183.21 1,514.03 755.38 2,768.29 4) Road Construction -222.03 -507.75 -177.08 -1,041.68 Less : Inter segment margin -8.13 -44.38 -69.97 Total Segment Result 3,415.84 3,269.90 1,234.21 3,601.14

Add / (Less) : Other net un-allocable : Income 295.25 301.59 366.53 3,485.33 Expenditure 224.29 137.08 315.15 1,214.96 Other net un-allocable (expenditure) / income 70.96 164.51 51.38 2,270.37 Profit before Finance costs 3,486.80 3,434.41 1,285.59 5,871.51 Less : Finance costs (net) 6,164.85 6,259.28 4,965.81 21,538.08 Net Unrealised Foreign Exchange Gain / (Loss) -1,679.07 594.56 -1,711.23 63.71

Net Exceptional - Income / (Expenditure) 357.80 10,832.63

(Loss) before tax -3,999.32 -2,230.31 -5,391.45 -4,770.23

Capital Employed as on 30-Jun-13 31-Mar-13 30-Jun-12 31-Mar-13

1) Steel 3,34,159.88 3,27,250.87 3,17,967.26 3,27,250.87

2) Power Generation 4,722.28 4,838.26 5,014.06 4,838.26

3) Industrial Machinery 46,251.55 42,213.22 40,530.88 42,213.22

4) Road Construction 14,071.07 14,269.77 17,385.00 14,269.77

5) Unallocable (net) -1,95,937.42 -1,80,369.63 -1,73,814.50 -1,80,369.63

Total Net Capital Employed 2,03,267.36 2,08,202.49 2,07,082.70 2,08,202.49

Notes :

1. Management’s response to the qualifications / observations of the auditors on the financial statements for the year ended 31.03.2013 :

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a. Advances due from and investments made in Vidyavihar Containers Limited (VCL), aggregating Rs. 7,637 Lakhs as at 31st March 2013 remains same as at 30th June 2013. The Company, barring unforeseen circumstances, relies upon the estimation of future realizable values of the financial assets of VCL to recover its Exposures;

b. As regards investments made in Mukand Global Finance Limited (MGFL), aggregating Rs.2,625 Lakhs, the recovery is

dependent upon realization of the financial assets that MGFL stands invested into at the close of the year. The management considers the ‘Exposure’ to be ‘Good’ and adequately covered. Any ultimate shortfall if any, in the realization is not determinable at present.

c. The investments in and debts / advances due from Bombay Forgings Limited (BFL), which stood at Rs.7,651 Lakhs as

at 31.03.2013 has increased to Rs.8,303 Lakhs as at 30.06.2013. The management, considering its long term view on the ‘Exposures’ relies upon the valuation of unencumbered fixed assets of BFL as at 31st March, 2013 which is at Rs.7,189 Lakhs, value of current assets and future earnings from the ongoing business of BFL. The management considers the balance ‘Exposures’ to be ‘Good’ at the close of the year and adequately covered and barring unforeseen circumstances expects full realisability of the same in future.

d. Debts / advances recoverable from Stainless India Limited (SIL), which aggregated Rs.1,411 Lakhs as at 31st March

2013, has reduced to Rs.1,078 Lakhs as at 30.06.2013. The management relies upon the realizable values of balance unencumbered assets of SIL (Plant & Machinery), as at 31st March, 2013 out of the sale proceeds from disposal of the said assets by SIL. It also relies upon the valuation of Land and Building of SIL as at 31.03.2013 amounting to Rs.2,350 Lakhs. The management considers the balance ‘Exposures’ to be ‘Good’ at the close of the year and adequately covered and barring unforeseen circumstances expects full realisability of the same in future.

e. The Company in previous years executed road construction projects in the state of Uttar Pradesh with NHAI along with

Centrodorstroy (CDS), Russia. The exposure on this account as at 31.03.2013 aggregated Rs.14,168 Lakhs (represented by contracts in progress Rs. 8,002 Lakhs and trade dues of Rs. 6,166 Lakhs) and is now at Rs.13,909 Lakhs as at 30.06.2013(represented by contracts in progress Rs. 7,713 Lakhs and trade dues of Rs. 6,196 Lakhs). Although the outcome of the Road Construction activity cannot be estimated with reliability at present, it is the opinion of the management that in view of the substantially large claims aggregating Rs.16,433 Lakhs as at 30.06.2013 (amount as at 31.03.2013 Rs.16,433 Lakhs) of CDS for incremental jobs executed, escalations and time over-runs to be settled progressively over a period of 2 to 3 years, losses currently expected are already recognized till the close of the Quarter.

2. Net Exceptional Income of Rs 358 Lakhs represents :

a. Surplus on assignment of leasehold land amounting to Rs.860 Lakhs. b. Adhoc amount and interest revision to CDR Lenders amounting to Rs.502 Lakhs:

During the quarter the Company has arrived at settlement with the Corporate Debt Restructuring members for an adhoc amount of Rs.2,490 Lakhs payable in monthly installments till the maturity of the loans without any further interest thereon. This settlement was arrived at to compensate the Lenders for the lower interest charged by them during the period FY 2002-03 to FY 2011-12. A proportionate charge of Rs.311 Lakhs has been made in the current Quarter. It was also agreed to revise the interest rate from 1st April 2012 from 10.41% p.a. to 11% p.a. An amount of Rs.191 Lakhs being differential interest pertaining to FY 2012-13 is also charged in this Quarter.

3. Figures in respect of previous year / quarter have been regrouped / recast wherever necessary. Figures for the corresponding

Quarter of June 2012 includes business of cold finished bars and wires, which was subsequently transferred to the subsidiary and hence the figures are not compareable.

4. The above results have been reviewed by the Audit Committee and approved by the Board of Directors at their meeting held on 13th August 2013. Statutory Auditors have carried out a “Limited Review” of the financial results shown above.

By Order of the Board of Directors

For Mukand Ltd.,

Niraj Bajaj Rajesh V. Shah Chairman & Managing Director Co-Chairman & Managing Director

Place : Mumbai. Date : 13th August, 2013.

110

Limited Review Report

Review Report to The Board of Directors Mukand Limited

1. We have reviewed the accompanying statement of unaudited financial results of Mukand Limited (‘the Company’) for the quarter ended June 30, 2013 except for the disclosures regarding ‘Public Shareholding’ and ‘Promoter and Promoter Group Shareholding’ which have been traced from disclosures made by the management and have not been audited by us. This statement is the responsibility of the Company's management and has been approved by the Board of Directors/committee of Board of Directors. Our responsibility is to issue a report on these financial statements based on our review.

2. We conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provide less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion.

3. As more explained in Note 1 (a) of the unaudited financial results, no provision has been made with regard to the realisability of the 'Exposures' in Vidyavihar Containers Limited (VCL), a subsidiary company, aggregating Rs. 7,637 lacs (net) as at 30 June, 2013 (Rs. 7,637 lacs (net) as at June 30, 2012), due to significant uncertainties in recovering its investment and loans which is dependent on the ultimate realization of the assets of VCL.

4. Without Qualifying our report, we invite attention to:

(a) Note 1 (b) to the unaudited financial results, relating to the Exposures in Mukand Global Finance Limited (MGFL), a subsidiary company, aggregating Rs. 2,625 lacs as at June 30, 2013 (Rs. 2,625 lacs as at June 30, 2012), where the management has, barring any significant uncertainties in future, relied upon the projected future earnings from the business activities of MGFL.

(b) Note 1 (c) of the unaudited financial results, relating to the Exposures in Bombay Forging Limited (BFL) aggregating Rs.

7,651 lacs as at June 30, 2013 (Rs. 7,492 lacs as at June 30, 2012), where the management has, barring any significant uncertainties in future, relied upon the projected future earnings from the business activities of BFL.

(c) Note 1 (d) to the unaudited financial results, relating to the Exposures in Stainless India Limited (SIL), a associate company,

aggregating Rs. 1,078 lacs as at June 30, 2013 (Rs. 4,028 lacs as at June 30, 2012), where the net worth of SIL has been fully eroded and there is no significant activities being carried out by SIL. The management has, barring any significant uncertainties in future, relied upon the valuation report prepared by the independent valuer for the sale of assets of SIL.

(d) Note 1 (e) to the unaudited financial results, relating to the Exposures aggregating Rs. 13,909 lacs as at June 30, 2013 (Rs.

25,184 lacs as at June 30, 2012), in respect of road construction activity and our reliance on the management’s expectation of its realisibility.

5. Based on our review conducted as above, subject to the effects of our observations given in para 3, nothing has come to our attention that causes us to believe that the accompanying statement of unaudited financial results prepared in accordance with applicable accounting standards [Standards notified pursuant to Companies (Accounting Standards) Rules, 2006 and other recognised accounting practices and policies has not disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreement including the manner in which it is to be disclosed, or that it contains any material misstatement.

111

For Haribhakti & Co. Chartered Accountants Firm Registration No.103523W _________________ Sumant Sakhardande Partner Membership No.: 034828 Mumbai Date: August 13, 2013

112

GOVERNMENT AND OTHER STATUTORY APPROVALS

Our Company has received the necessary consents, licenses, permissions and approvals from the Government and the state governments and various governmental agencies required for us to undertake our current business activities and except as stated below, there are no approvals and renewals required for carrying on our present business which are currently pending. Incorporation Details Our Company was incorporated in the year 1937 and the certificate of incorporation was allotted to our Company bearing no. 2726 of 1937-38 dated November 29, 1937 in the name of Mukand Iron and Steel Works Limited (our erstwhile name). Subsequently the name of our Company was changed to Mukand Limited vide fresh certificate of incorporation dated March 23, 1989 issued by the office of Registrar of Companies, Mumbai, Maharashtra. The corporate identification number of our Company is L99999MH1937PLC002726. Approvals in relation to the Issue Corporate Approvals Our Board, pursuant to a resolution dated June 06, 2013, has authorized the Issue under Section 81 of the Companies Act. Our Shareholders have pursuant to a special resolution passed during the EGM on July 15, 2013 have authorised the Issue under Section 81 of the Companies Act. In-principle approval from BSE and NSE We have received in-principle approvals from BSE and NSE vide their letters dated [●] and [●], respectively, for the listing of the Equity Shares issued pursuant to the Issue. Approvals to carry on our Business Tax Approvals

Name of Registration Number

Permanent Account Number (“PAN”)

AAACM5008R

Tax Deduction Account Number (“TAN”)

MUMM19254E Approvals Received by our Company

Nature of Registration/ License

Issuing Authorities

Registration/Approval/Consent/Code/Reference No.

Date of Registration

Period of Validity, if specified

Department of Factories & boilers, Government of Karnataka (for Ginigera plant)

A/10823 September 08, 1998 December 31, 2013

Factory License Government of Maharashtra (for Kalwe plant)

102382 December 31, 2011 December 31, 2013

Department of Weights & Measures (for Ginigera plant)

April 18, 2013 April 17, 2014

September 20, 2012 September 20,2013 Legal Metrology Act Department of Weights &

Measures (for Kalwe plant)

June 11, 2013 June 11, 2014

Contract Labour Act Office of Deputy Commissioner of Labour

12612200000000014615 February 27, 2013 December 31, 2013

113

Department of Labour, Gulbarga, Karnataka

May 02, 2007

Central Excise Registration (For Ginigera Plant)

Central Excise & Customs, Bellary AAACM5008RXM004 February 02, 2003 -

Central Excise Registration (For Kalwe Plant)

Central Excise & Customs, Belapur AAACM5008RXM002 August 26, 2004

-

Central Sales Tax Sales Tax Department, Maharashtra 27850000014C April 01, 2006 -

Service Tax registration (For Ginigera Plant)

Central Excise & Customs, Bellary AAACM5008RST003 June 13, 2013

-

Service Tax registration (For Kalwe Plant)

Central Excise & Customs, Belapur AAACM5008RST004 August 26, 2008

-

Registration under Employees State Insurance Act, 1948 (Kalwe Plant)

ESIC, Thane 34000060340000699 November 04, 2009

-

Certificate of Importer Exporter Code

Ministry of Commerce & Industry, 0388001151 May 01, 1997

-

Commercial Tax Department, Andhra Pradesh

28710135324

April 01, 2005 _

Commercial Tax Department, Maharashtra 27850000014 V April 01, 2006

_

Commercial Tax Department, Gujarat

24060103398 March 05, 2008

_

Commercial Tax Department, Bihar 10010535025 October 16, 2006

_

Commercial Tax Department, Tamil Nadu 33820961153 January 18, 2007

_

Commercial Tax Department, Karnataka 29930094318 October 01, 2006

_

VAT Registration

Commercial Tax Department, West Bengal 19415498079 August 19, 2009 _

Maharashtra Pollution Control Board (for Kalwe plant)

June 8, 2012 December 31, 2013 Consent for commissioning of the unit under Water (Prevention & Control of Pollution) Act, 1974, (Air (Prevention & Control of Pollution ) Act, 1981 and Hazardous Wastes (Management & Handling) Rules 1989 and Amendment Rules, 2003

Karnataka Pollution Control Board (for Ginigera plant

July 11, 2012

December 31, 2013

1471662 (For Class 7) March 13, 2008 Certificate of Registration of Trade Mark under Trade

Registrar of Trademarks

1471663 (For Class 21) August 22, 2008

-

114

1471664 (For Class 6) March 14, 2008 and Merchandise Act, 1968

1471661 (For Class 16) March 14, 2008

Overseas Direct Investment in a WOS in UAE

Reserve Bank of India Identification No. BYWAZ20100922 January 07, 2011

Setting up of WOS in UK

Ministry of Commerce & Reserve Bank of India

September 22, 1992 & October 23, 1992 respectively

SIA Acknowledgement No. 475/SIA/IMO/97 for Billets / Blooms (Ginigera).

February 10, 1997

SIA Acknowledgement No. 1442/SIA/IMO/2012 for industrial machinery at Sinnar Nashik

June 20, 2012

Acknowledgement in receipt of Industrial Entrepreneur Memorandum for the for the manufacture of Iron and Steel Products

Secretariat for Industrial Assistance, Ministry of Commerce and Industry

SIA Acknowledgement No. 769/SIA/IMO/2013 for Iron & Steel (Barlanga - Jharkhand)

April 11, 2013

Pending approvals in relation to our business A. Pending approvals where applications are yet to be made Nil. B. Pending applications for renewal of existing licenses Nil.

115

SECTION VII - OTHER REGULATORY AND STATUTORY INFORMATION

Authority for the Issue Pursuant to a resolution under Sections 81 and other provisions of the Companies Act passed by our Board of Directors on June 06, 2013 and shareholders resolution on 15 July 2013, it has been decided to make the rights offer to the Eligible Equity Shareholders of our Company with a right to renounce. Prohibition by SEBI, RBI or governmental authorities Our Company, our Directors, our Promoter, our Group Companies and the members of our Promoter Group have not been restrained from buying, selling or dealing in securities under any order or direction passed by SEBI. Our Company, our Directors, our Promoter, the members of our Promoter Group, our Group Companies, the persons in control of our Company, and the companies with which our Directors, Promoter or persons in control are associated as directors or promoters or persons in control have not been prohibited from accessing or operating in the capital markets under any order or direction passed by SEBI. None of our Company, our Group Companies, members of our Promoter Group or ventures with which our Promoter was associated with in the past have been declared as willful defaulters by the RBI or any other governmental authority and there have been no violations of securities laws committed by any of them in the past and no such proceedings are currently pending against them. Association with securities markets None of the Directors of our Company are associated with the securities markets in any manner. Eligibility for the Issue Our Company is an existing listed company registered under the Companies Act whose Equity Shares are listed on BSE, and NSE. It is eligible to make the Issue in terms of Chapter IV of the SEBI Regulations. Compliance with Part E of Schedule VIII of SEBI Regulations Our Company is in compliance with the provisions specified in Clause (1) of Part E of Schedule VIII of the SEBI Regulations as explained below: Our Company has been filing periodic reports, statements and information in compliance with the Listing Agreements for the last three years immediately preceding the date of filing of this Draft Letter of Offer with SEBI; The reports, statements and information referred to in sub-clause (a) above are available on the website of BSE and NSE which are recognised stock exchanges with nationwide trading terminals; and Our Company has an investor grievance-handling mechanism which includes meeting of the Shareholders’ and Investors’ Grievance Committee at frequent intervals, appropriate delegation of power by the Board as regards share transfer and clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances. Furthermore, as on the date of filing of this Draft Letter of Offer, our Company is in compliance with applicable provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 2011, the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 and the Equity Listing Agreement. Disclaimer Clause of SEBI AS REQUIRED, A COPY OF THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THE DRAFT LETTER OF OFFER TO SEBI SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT LETTER OF OFFER. THE LEAD MANAGERS, ICICI SECURITIES LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFT LETTER OF OFFER, THE LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT

116

THE ISSUER DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MANAGER, ICICI SECURITIES LIMITED, HAS FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED SEPTEMBER 18, 2013 IN ACCORDANCE WITH THE SEBI (MERCHANT BANKERS) REGULATIONS, 1992 WHICH READS AS FOLLOWS: 1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE

COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS, ETC., AND OTHER MATERIALS IN CONNECTION WITH THE FINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE SAID ISSUE;

2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE ISSUER, ITS DIRECTORS AND

OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS AND OTHER PAPERS FURNISHED BY THE ISSUER,

WE CONFIRM THAT:

(A) THE DRAFT LETTER OF OFFER FILED WITH SEBI IS IN CONFORMITY WITH THE DOCUMENTS,

MATERIALS AND PAPERS RELEVANT TO THE ISSUE; (B) ALL THE LEGAL REQUIREMENTS RELATING TO THE ISSUE, AS ALSO THE REGULATIONS,

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

(C) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLICABLE LEGAL REQUIREMENTS.

3. WE CONFIRM THAT EXCEPT AS DISCLOSED BELOW, BESIDES OURSELVES, ALL THE INTERMEDIARIES

NAMED IN THE DRAFT LETTER OF OFFER ARE REGISTERED WITH SEBI AND THAT TILL DATE SUCH REGISTRATION IS VALID.

4. WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITER TO FULFIL THEIR

UNDERWRITING COMMITMENTS. – NOT APPLICABLE 5. WE CERTIFY THAT WRITTEN CONSENT FROM THE PROMOTERS HAVE BEEN OBTAINED FOR

INCLUSION OF THEIR EQUITY SHARES AS PART OF THE PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE EQUITY SHARES PROPOSED TO FORM PART OF THE PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN WILL NOT BE DISPOSED OR SOLD OR TRANSFERRED BY THE PROMOTER DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT LETTER OF OFFER WITH SEBI UNTIL THE DATE OF COMMENCEMENT OF THE LOCK-IN PERIOD AS STATED IN THE DRAFT LETTER OF OFFER.- NOT APPLICABLE

6. WE CERTIFY THAT CLAUSE 33 OF THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)

REGULATIONS, 2009, WHICH RELATES TO SECURITIES INELIGIBLE FOR COMPUTATION OF PROMOTERS' CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE CLAUSE HAVE BEEN MADE IN THE DRAFT LETTER OF OFFER/ LETTER OF OFFER.- NOT APPLICABLE

7. WE UNDERTAKE THAT SUB-REGULATION 4 OF REGULATION 32 AND CLAUSE (C) AND (D) OF SUB-

REGULATION (2) OF REGULATION 8 OF THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITOR’S CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE COMPANY ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE. - NOT APPLICABLE

8. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE FUNDS ARE BEING

RAISED IN THE PRESENT ISSUE FALL WITHIN THE ‘MAIN OBJECTS’ LISTED IN THE OBJECT CLAUSE OF

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THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.

9. WE CONFIRM THAT NECESSARY ARRANGEMENTS WILL BE MADE TO ENSURE THAT THE MONEYS

RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SECTION 40(3) OF THE COMPANIES ACT, 2013 AND THAT SUCH MONEYS SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES MENTIONED IN THE LETTER OF OFFER. WE FURTHER CONFIRM THAT THE AGREEMENT TO BE ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION.- NOTED FOR COMPLIANCE

10. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT LETTER OF OFFER THAT THE

INVESTORS SHALL BE GIVEN AN OPTION TO GET THE EQUITY SHARES IN DEMAT OR PHYSICAL MODE. 11. WE CERTIFY THAT ALL APPLICABLE DISCLOSURES MANDATED IN THE SEBI (ISSUE OF CAPITAL AND

DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.

12. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE DRAFT LETTER OF

OFFER:

(A) “AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME THERE SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY SHARES OF THE COMPANY; AND

(B) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY SEBI FROM TIME TO TIME.”

13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO ADVERTISEMENT IN TERMS

OF THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 WHILE MAKING THE ISSUE.

14. WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE HAS BEEN EXERCISED BY

US IN VIEW OF THE NATURE OF CURRENT BUSINESS BACKGROUND OF THE ISSUER, SITUATION AT WHICH THE PROPOSED BUSINESS STANDS, RISK FACTORS, PROMOTERS EXPERIENCE ETC. – COMPLIED WITH.

15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITH THE APPLICABLE

PROVISIONS OF THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE DRAFT LETTER OF OFFER WHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY. – COMPLIED WITH.

16. WE ENCLOSE STATEMENT ON ‘PRICE INFORMATION OF PAST ISSUES HANDLED BY MERCHANT

BANKERS (WHO ARE RESPONSIBLE FOR PRICING THIS ISSUE)’, AS PER THE FORMAT SPECIFIED BY THE BOARD THROUGH CIRCULAR – NOT APPLICABLE

17. WE CERTIFY THAT THE PROFITS FROM RELATED PARTY TRANSACTIONS HAVE ARISEN FROM

LEGITIMATE BUSINESS TRANSACTIONS. 18. THE FILING OF THE DRAFT LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE ISSUER FROM ANY

LIABILITIES UNDER SECTIONS 34, 35, 36 OR 38(1) OF THE COMPANIES ACT, 2013 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY AND OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI, FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MANAGER, ANY IRREGULARITIES OR LAPSES IN THE DRAFT LETTER OF OFFER.

Caution Our Company and the Lead Manager accept no responsibility for statements made other than in this Draft Letter of Offer or in any advertisement or other material issued by our Company or by any other persons at the instance of our Company and anyone placing reliance on any other source of information would be doing so at his own risk.

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Investors, who invest in the Issue, will be deemed to have represented to our Company, the Lead Manager and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares, and are relying on independent advice/ evaluation as to their ability and quantum of investment in the Issue. The Lead Manager and our Company shall make all information available to the Eligible Equity Shareholders and no selective or additional information would be available for a section of the Eligible Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. after filing of this Draft Letter of Offer with SEBI. Disclaimer with respect to jurisdiction This Draft Letter of Offer has been prepared under the provisions of Indian Laws and the applicable rules and regulations thereunder. Any disputes arising out of the Issue will be subject to the jurisdiction of the appropriate court(s) in Mumbai only. Selling restrictions The distribution of this Draft Letter of Offer and the issue of Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession this Draft Letter of Offer may come are required to inform themselves about and observe such restrictions. Our Company is making the Issue to the Eligible Equity Shareholders of our Company and will dispatch the Abridged Letter of Offer and CAF to the Eligible Equity Shareholders who have an Indian address. Any person who acquires Rights Entitlements or Rights Issue Equity Shares will be deemed to have declared, warranted and agreed, by accepting the delivery of this Draft Letter of Offer, that he/it will acquire such Rights Issue Equity Shares in compliance with the Securities Act and the rules and regulations thereunder, and the laws of the jurisdiction in which the person is located. No action has been or will be taken to permit the Issue in any jurisdiction where action would be required for that purpose, except that this Draft Letter of Offer has been filed with SEBI for observations. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be distributed, in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, in those circumstances, this Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the issue of the Equity Shares or the Rights Entitlements, distribute or send this Draft Letter of Offer in any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Equity Shares or the Rights Entitlements referred to in this Draft Letter of Offer. Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in our Company’s affairs from the date hereof or that the information contained herein is correct as at any time subsequent to this date. Filing This Draft Letter of Offer was filed with SEBI at L SEBI, Plot No. C4-A, ‘G’ Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051, for its observations. SEBI has, vide its letter bearing Ref. No. [●] dated [●] 2013 issued its final observations and the Letter of Offer has been filed with the Stock Exchanges as per the provisions of the Companies Act. Consents Consents in writing of our Directors, Company Secretary and Compliance Officer, the Auditors, the Lead Manager, the Legal Advisor, the Registrar to the Issue, Bankers to our Company and experts to act in their respective capacities have been obtained and such consents have not been withdrawn up to the date of this Draft Letter of Offer. Haribhakti & Co., Chartered Accountants, the Auditors of our Company, have given their written consent for the inclusion of their report in the form and content appearing in this Draft Letter of Offer and such consent and report have not been withdrawn up to the date of this Draft Letter of Offer. Expert Opinion Except as stated below, our Company has not obtained any expert opinions: The Company has received consent dated June 24, 2013 from the Auditors namely, Haribhakti & Co., Chartered Accountants to include their name as experts under the Companies Act to the extent and in their capacity as an auditor and in respect of their report dated May 25, 2013 issued by them and included in this Draft Letter of Offer. However, the term “expert” should not be construed to mean an “expert” as defined under the U.S. Securities Act 1933. Designated Stock Exchange The Designated Stock Exchange for the purposes of the Issue will be BSE.

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Disclaimer Clause of the BSE “BSE Limited (“the Exchange”) has given vide its letter dated [●] 2013 permission to our Company to use the Exchange’s name in this Draft Letter of Offer as one of the stock exchanges on which this Company’s securities are proposed to be listed. The Exchange has scrutinised this letter of offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this Company. The Exchange does not, in any manner:

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

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

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

and it should not for any reason be deemed or construed that this Letter of Offer has been cleared or approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.” Disclaimer Clause of the NSE “As required, a copy of this letter of offer has been submitted to National Stock Exchange of India Limited (hereinafter referred to as NSE). NSE has given vide its letter Ref. No. [●] dated [●] permission to the Issuer to use the Exchange’s name in this letter of offer as one of the stock exchanges on which this Issuer’s securities are proposed to be listed. The Exchange has scrutinised this letter of offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this Issuer. It is to be distinctly understood that the aforesaid permission given by NSE should not in any way be deemed or construed that the letter of offer has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this letter of offer; nor does it warrant that this Issuer’s securities will be listed or will continue to be listed on the Exchange; nor does it take any responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of this Issuer. Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or committed to be stated herein or any other reason whatsoever.” Issue Expenses The expenses for this Issue include lead management fees, printing and distribution expenses, legal fees, advertisement expenses, registrar fees, depository charges and listing fees to the Stock Exchanges, among others. The total expenses for this Issue are estimated to be approximately, [●] which is [●] of the issue size. The estimated issue related expenses are as follows:

Nature of Expenses (Rs. in lacs) As on % of Issue Size

As a % of Total Issue Expenses

Fees of Lead Manager, Registrar to the Issue, Legal Advisor, Company Law Consultant etc. [●] [●] [●]

Advertising & Marketing Expenses [●] [●] [●] Printing, stationery, distribution, postage, etc [●] [●] [●] Others (including but not limited to Stock Exchange and SEBI filing fees) [●] [●] [●]

Total Estimated Issue Expenses [●] [●] [●] * The details shall be finalized at the time of filing the Letter of Offer with the Stock Exchange Investor Grievances and Redressal System Our Company has adequate arrangements for redressal of investor complaints. We have been registered with the SEBI Complaints Redress System (SCORES) as required by the SEBI Circular no. CIR/ OIAE/ 2/ 2011 dated 3 June 2011. Consequently, investor grievances are tracked online by our Company. Our Company has a Shareholders’/ Investors’ Grievance Committee which meets as and when required, to deal and monitor redressal of complaints from shareholders. Generally, the investor grievances are dealt within two or three days of the receipt of the complaint. Karvy Computer Share Private Limited is our Registrar and Share Transfer Agent. All investor grievances received by us have been handled by the Registrar and Share Transfer Agent in consultation with the Compliance Officer.

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Status of Shareholders Complaints

A Total Number of complaints received during Fiscal 2012-13 87 B Complaints resolved during the year 87 C Total Number of complaints pending as at the end of the Year 0 D Time normally taken by it for disposal of various types of investor grievances 7 to 8 days

A Total Number of Complaints received during Quarter ended June 30, 2013 32 B Complaints resolved during the Quarter 32 C Total Number of complaints pending as at the end of the Quarter 0 D Time normally taken by it for disposal of various types of investor grievances 7 to 8 days

Investor Grievances arising out of the Issue Any Investor grievances arising out of the Issue will be handled by the Registrar to the Issue. The Registrar to the Issue will have a separate team of personnel handling only our post-Issue correspondence. Our agreement with the Registrar to the Issue provides for retention of records with the Registrar for a period of at least one year from the last date of dispatch of letters of Allotment and refund orders to enable the Registrar to the Issue to redress grievances of Investors. All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details such as folio no., name and address, contact telephone/ cell numbers, email id of the first applicant, number and type of shares applied for, CAF serial number, amount paid on Application and the name of the bank and the branch where the Application was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details of the Renouncee should be furnished. The average time taken by the Registrar to the Issue for attending to routine grievances will be seven working days from the date of receipt. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavour of the Registrar to the Issue to attend to them as expeditiously as possible. We undertake to resolve the investor grievances in a time bound manner. Investors may contact the Registrar to the Issue at: Karvy Computershare Private Limited Plot No. 17 – 24, Vittal Rao Nagar Madhapur, Hyderabad 500 081 Telephone: +91-40-4465 5000 Facsimile: +91-40-2343 1551 Toll Free: 1-800-3454001 E-mail: [email protected] Contact Person: Mr. M. Murali Krishna Website: http://karisma.karvy.com SEBI Registration No: INR000000221 Investors may contact the Compliance Officer at the below mentioned address and/ or Registrar to the Issue at the above mentioned address in case of any pre-Issue/ post -Issue related problems such as non-receipt of allotment advice/share certificates/ demat credit/refund orders etc. Address of our Compliance Officer: Mr. K J Mallya Company Secretary and Compliance Officer Mukand Limited Bajaj Bhawan Jamnalal Bajaj Marg 226, Nariman Point Mumbai - 400 021 Telephone: 91-22- 6121 6666 Facsimile No.: 91-22- 2202 1174 Email: [email protected] IMPORTANT INFORMATION FOR INVESTORS – ELIGIBILITY This Issue and the Equity Shares have not been and will not be registered under the Securities Act or any other applicable law of the United States and, unless so registered, may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act) (“U.S. Persons”) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.

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This Issue and the Equity Shares have not been and will not be registered, listed or otherwise qualified in any jurisdiction outside India and may not be offered or sold, and bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction. Eligible Investors The rights or Equity Shares are being offered and sold only to persons who are outside the United States and are not U.S. Persons, nor persons acquiring for the account or benefit of U.S. Persons, in offshore transactions in reliance on Regulation S under the Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. All persons who acquire the rights or Equity Shares are deemed to have made the representations set forth immediately below. Equity Shares and Rights Offered and Sold in this Issue Each purchaser acquiring the rights or Equity Shares, by its acceptance of this Draft Letter of Offer and of the rights or Equity Shares, will be deemed to have acknowledged, represented to and agreed with us, the Lead Manager that it has received a copy of this Draft Letter of Offer and such other information as it deems necessary to make an informed investment decision and that: 1. the purchaser is authorised to consummate the purchase of the rights or Equity Shares in compliance with all applicable laws and

regulations; 2. the purchaser acknowledges that the rights and Equity Shares have not been and will not be registered under the Securities Act or

with any securities regulatory authority of any state of the United States and, accordingly, may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act;

3. the purchaser is purchasing the rights or Equity Shares in an offshore transaction meeting the requirements of Rule 903 of

Regulation S under the Securities Act; 4. the purchaser and the person, if any, for whose account or benefit the purchaser is acquiring the rights or Equity Shares, is a non-

U.S. Person and was located outside the United States at each time (i) the offer was made to it and (ii) when the buy order for such rights or Equity Shares was originated, and continues to be a non-U.S. Person and located outside the United States and has not purchased such rights or Equity Shares for the account or benefit of any U.S. Person or any person in the United Sates or entered into any arrangement for the transfer of such rights or Equity Shares or any economic interest therein to any U.S. Person or any person in the United States;

5. the purchaser is not an affiliate of our Company or a person acting on behalf of an affiliate; 6. the purchaser agrees that neither the purchaser, nor any of its affiliates, nor any person acting on behalf of the purchaser or any

of its affiliates, will make any “directed selling efforts” as defined in Regulation S under the Securities Act in the United States with respect to the rights or the Equity Shares; and

7. the purchaser acknowledges that our Company, the Lead Manager, their respective affiliates and others will rely upon the truth

and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of such acknowledgements, representations and agreements deemed to have been made by virtue of its purchase of such rights or Equity Shares are no longer accurate, it will promptly notify our Company, and if it is acquiring any of such rights or Equity Shares as a fiduciary or agent for one or more accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of such account.

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SECTION VIII - OFFERING INFORMATION

TERMS OF THE ISSUE The Equity Shares proposed to be issued are subject to the terms and conditions contained in this Draft Letter of Offer, the CAF enclosed with the Letter of Offer, the Memorandum and Articles of Association, the provisions of the Companies Act, FEMA, the SEBI Regulations, any other regulations, guidelines, notifications and regulations for issue of capital and for listing of securities issued by SEBI, RBI, GoI and/ or other statutory authorities and bodies from time to time, and the terms and conditions as stipulated in the Allotment advice or Letters of Allotment or share certificate and rules as may be applicable and introduced from time to time. All rights/ obligations of Equity Shareholders in relation to Applications and refunds pertaining to this Issue shall apply to Renouncees as well. ASBA Investors should note that the ASBA process involves Application procedures that may be different from the procedure applicable to non-ASBA process. ASBA Investors should carefully read the provisions applicable to such Applications before making their Application through the ASBA process. For more information, see the section titled “Applications by ASBA Investors” on page 125. Authority for the Issue This Issue to our Eligible Equity Shareholders with a right to renounce is being made pursuant to a resolution passed by our Board of Directors on June 06, 2013 and by the shareholders on July 15, 2013. Basis for the Issue The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders of our Company whose names appear, as beneficial owners as per the list to be furnished by the Depositories in respect of the Equity Shares held in the electronic form, and on the register of members of our Company in respect of Equity Shares held in the physical form at the close of business hours on the Record Date, i.e, [●], fixed in consultation with the Designated Stock Exchange. Ranking of Equity Shares The Equity Shares shall be subject to the Memorandum and Articles of Association. The Equity Shares allotted in the Issue shall rank pari passu with the existing Equity Shares in all respects, including payment of dividends, provided that voting rights and dividend payable shall be in proportion to the paid-up value of the Equity Shares held. Mode of Payment of Dividend We shall pay dividends (in the event of declaration of such dividends) to our Equity Shareholders as per the provisions of the Companies Act and our Articles of Association. Principal Terms and Conditions of the Issue Face Value Each Equity Share shall have the face value of Rs.10.00 Issue Price Each Equity Share is being offered at a price of Rs.[●] (including a premium of Rs.[●] per Equity Share). Terms of payment Full amount of Rs.[●] shall be payable at the time of making the Application. The payment towards Equity Shares offered will be applied as under: (a) Rs.[●] towards share capital; and (b) Rs.[●] towards securities premium account.

Where an Applicant has applied for additional Equity Shares and is allotted lesser number of Equity Shares than applied for, the excess Application Money paid shall be refunded. The monies would be refunded within 15 days from the Issue Closing Date. In the event that there is a delay of making refunds beyond eight days after our Company becomes liable to make such refunds, i.e. on the expiry of 15 days from the Issue Closing Date, our Company shall pay interest for the delayed period at rates prescribed under sub-sections (2) and (2A) of section 73 of the Companies Act. Rights Entitlement Ratio

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The Equity Shares are being offered on a rights basis to the existing Equity Shareholders of our Company in the ratio of [●] Equity Shares for every [●] Equity Shares held as on the Record Date. As your name appears as a beneficial owner in respect of Equity Shares held in the electronic form or appears in the register of members as an Equity Shareholder of our Company as on the Record Date, you are entitled to the number of Equity Shares as set out in Part A of the CAF enclosed with the Letter of Offer. An Eligible Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an Application to subscribe to the Issue on plain paper. For further details, see the section titled “Application on Plain Paper” on page 137. Fractional Entitlements For Equity Shares being offered on a rights basis under this Issue, if the shareholding of any of the Eligible Equity Shareholders is less than [●] Equity Shares or is not in multiples of [●], the fractional entitlement of such Eligible Equity Shareholders shall be ignored for computation of the Rights Entitlement. However, Eligible Equity Shareholders whose fractional entitlements are being ignored earlier will be given preference in the Allotment of one additional Equity Share each, if such Eligible Equity Shareholders have applied for additional Equity Shares. An illustration stating the rights entitlement for number of Equity Shares is set out below:

Number of Equity Shares held Rights Entitlement [●] [●]

Those Eligible Equity Shareholders holding less than [●] Equity Share and, in terms of the Rights Entitlement Ratio, are entitled to less than [●] Equity Share under this Issue shall be dispatched a CAF with zero entitlement. Such Eligible Equity Shareholders are entitled to apply for additional Equity Shares. However, they cannot renounce the same in favour of any third parties. CAFs with zero entitlement will be non-negotiable/ non-renounceable. The distribution of the Letter of Offer and the issue of the Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. We are making the issue of the Equity Shares on a rights basis to the Equity Shareholders and the Letter of Offer, Abridged Letter of Offer and the CAFs will be dispatched only to those Equity Shareholders who have a registered address in India or who have provided an Indian address. Any person who acquires Rights Entitlements or the Equity Shares will be deemed to have declared, warranted and agreed, by accepting the delivery of the Letter of Offer, that it is not and that at the time of subscribing for the Equity Shares or the Rights Entitlements, it will not be, in the United States and in other restricted jurisdictions. Notices All notices to the Eligible Equity Shareholders required to be given by our Company shall be published in one English national daily newspaper with wide circulation, one Hindi national daily newspaper with wide circulation and one regional language newspaper with wide circulation at the place where our Registered Office is situated and/ or will be sent by ordinary post or registered post or speed post to the registered address of the Equity Shareholders in India as updated with the Depositories/ registered with the Registrar and Transfer Agent from time to time. Listing and trading of the Equity Shares Our Company’s existing Equity Shares are currently traded on the BSE (scrip code 500460) and NSE (symbol Mukandltd). The fully paid-up Equity Shares proposed to be issued pursuant to the Issue shall, in terms of the circular (no. CIR/MRD/DP/21/2012) by SEBI dated 2 August 2012, be Allotted under a temporary ISIN which shall be kept blocked till the receipt of final listing and trading approval from the Stock Exchanges. Upon receipt of such listing and trading approval, the Equity Shares proposed to be issued pursuant to the Issue shall be debited from such temporary ISIN and credited in the existing ISIN of our Company and be available for trading. All steps for the completion of the necessary formalities for listing and commencement of trading of the Equity Shares allotted pursuant to the Issue shall be taken within seven working days of the finalization of the Basis of Allotment. Our Company has made applications to the BSE and the NSE seeking “in-principle” approval for the listing of the Equity Shares proposed to be issued pursuant to the Issue in accordance with Clause 24(a) of the Listing Agreement and BSE and NSE have issued their approvals vide their letters dated [●] and [●] respectively. Our Company will also apply to the Stock Exchanges for final approval for the listing and trading of the Equity Shares. No assurance can be given regarding the active or sustained trading in the Equity Shares or that the price at which the Equity Shares offered under the Issue will trade after listing on the Stock Exchanges. If permissions to list, deal in and for an official quotation of the Equity Shares are not granted by any of the Stock Exchanges, our Company will forthwith repay, without interest, all moneys received from the Applicants in pursuance of this Letter of Offer. If such money is not repaid beyond eight days after our Company becomes liable to repay it, i.e., the date of refusal of an application for such a permission from a Stock Exchange, or on expiry of 15 days from the Issue Closing Date in case no permission is granted, whichever is earlier, then our Company and every Director who is an officer in default shall, on and from such expiry of eight days, be liable to repay the money, with interest as per applicable law.

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Rights of the Equity Shareholder Subject to applicable laws, Equity Shareholders shall have the following rights: (a) Right to receive dividend, if declared; (b) Right to attend general meetings and exercise voting powers, unless prohibited by law; (c) Right to vote on a poll either in person or by proxy; (d) Right to receive offers for rights shares and be allotted bonus shares, if announced; (e) Right to receive surplus on liquidation; (f) Right of free transferability of shares; and (g) Such other rights, as may be available to a shareholder of a listed public company under the Companies Act and the

Memorandum and Articles of Association. GENERAL TERMS AND CONDITIONS OF THE ISSUE FOR ASBA INVESTORS AND NON – ASBA INVESTORS Market Lot The Equity Shares are tradable only in dematerialised form. The market lot for the Equity Shares in dematerialised mode is one Equity Share. In case of physical certificates, our Company would issue one certificate for the Equity Shares allotted to one folio (“Consolidated Certificate”). In respect of Consolidated Certificates, our Company will upon receipt of a request from the respective holder of Equity Shares, split such Consolidated Certificates into smaller denominations. Minimum Subscription If our Company does not receive the minimum subscription of 90% of the Issue, or the subscription falls below 90% after the Issue Closing Date on account of cheques being returned unpaid or withdrawal of Applications, our Company shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of subscription by more than eight days after the date from which our Company becomes liable to pay the amount (i.e. 15 days from the Issue Closing Date), our Company shall pay interest for the delayed period at rates prescribed under Section 39 (5) of the Companies Act, 2013. The above is subject to the terms mentioned under the section titled ‘Basis of Allotment’ on page 139. Joint-Holders Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as joint-holders with benefits of survivorship subject to provisions contained in the Articles of Association. Nomination facility In terms of Section 109A of the Companies Act, nomination facility is available in case of Equity Shares. An applicant can nominate, by filling the relevant details in the CAF in the space provided for this purpose. A sole Eligible Equity Shareholder or first Eligible Equity Shareholder, along with other joint Eligible Equity Shareholders being individual(s) may nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the Equity Shares. A Person, being a nominee, becoming entitled to the Equity Shares by reason of the death of the original Eligible Equity Shareholder(s), shall be entitled to the same advantages to which he would be entitled if he were the registered holder of the Equity Shares. Where the nominee is a minor, the Eligible Equity Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said holder, during the period of minority of the nominee. A nomination shall stand rescinded upon the sale of the Equity Share by the person nominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. When the Equity Share is held by two or more persons, the nominee shall become entitled to receive the amount only on the demise of all the holders. Fresh nominations can be made only in the prescribed form available on request at our Registered and Corporate Office or such other person at such addresses as may be notified by our Company. The Applicant can make the nomination by filling in the relevant portion of the CAF. Only one nomination would be applicable for one folio. Hence, in case the Eligible Equity Shareholder(s) has already registered the nomination with our Company, no further nomination needs to be made for Equity Shares to be allotted in this Issue under the same folio. However, new nominations, if any, by the Eligible Equity Shareholder(s) shall operate in supersession of the previous nomination, if any. In case the Allotment of Equity Shares is in dematerialised form, there is no need to make a separate nomination for the Equity Shares to be allotted in the Issue. Nominations registered with respective DP of the applicant would prevail. If the applicant requires to change the nomination, they are requested to inform their respective DP. Offer to Non Resident Eligible Equity Shareholders/ Applicants

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Applications received from NRs for Allotment shall be inter alia, subject to the conditions imposed from time to time by the RBI under FEMA in the matter of receipt and refund of Application Money, Allotment, issue of letters of Allotment/ Allotment advice/ share certificates, payment of interest, dividends, etc. General permission has been granted to any person resident outside India to purchase shares offered on a rights basis by an Indian company in terms of FEMA and Regulation 6 of notification No. FEMA 20/2000-RB dated 3 May 2000. Our Board of Directors may at its absolute discretion, agree to such terms and conditions as may be stipulated by RBI while approving the Allotment of Equity Shares, payment of dividend etc. to the Non Resident Eligible Equity Shareholders. The Equity Shares purchased on a rights basis by non-residents shall be subject to the same conditions including restrictions in regard to the repatriability as are applicable to the original Equity Shares against which Equity Shares are issued on a right basis. By virtue of Circular No. 14 dated 16 September 2003 issued by the RBI, OCBs have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs) Regulations, 2003. Accordingly, OCBs shall not be eligible to subscribe to the Equity Shares. The RBI has however clarified in its circular, A.P. (DIR Series) Circular No. 44, dated 8 December 2003 that OCBs which are incorporated and are not under the adverse notice of the RBI are permitted to undertake fresh investments as incorporated nonresident entities. The Letter of Offer and CAF shall only be dispatched to Non Resident Eligible Equity Shareholders with registered addresses in India. Option to subscribe Applicants to the Equity Shares issued through this Issue shall be allotted the securities in dematerialised (electronic) form at the option of the applicant. Our Company, along with the Registrar and Transfer Agent, has signed tripartite agreements dated August 8, 2008 and August 4, 2008, with NSDL and CDSL respectively, which enables our Equity Share to be held and traded in a dematerialised form, instead of in the form of physical certificates. Our Company has appointed Karvy Computershare Private Limited as the Registrar to the Issue, which has connectivity with both Depositories, and can therefore, allot the Equity Shares in dematerialised form. How to Apply? Resident Eligible Equity Shareholders Applications should be made only on the CAF enclosed with the Letter of Offer. The CAF should be complete in all respects, as explained in the instructions indicated in the CAF. An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an Application to subscribe to the Issue on plain paper. For further details, see the section titled “Application on Plain Paper" on page 137. Applications will not be accepted by the Lead Manager or by the Registrar to the Issue or by our Company at any offices, except in the case of postal Applications as per instructions given in this Draft Letter of Offer. ASBA Investors shall be required to indicate either in (i) Part A of the CAF, or (ii) a plain paper Application, as to their desire to avail of the ASBA option of payment. Non Resident Eligible Equity Shareholders Non Resident Indian applicants can obtain the CAF from the Registrar to the Issue. Applications received from Non Resident Eligible Equity Shareholders for the Issue shall, inter alia, be subject to the conditions as may be imposed from time to time by the RBI under FEMA, in the matter of receipt and refund of Application Money, Allotment, issue of letters of Allotment/ Allotment advice payment of interest, dividends etc. APPLICATIONS BY ASBA INVESTORS This section is for the information of the ASBA Investors proposing to subscribe to the Issue through the ASBA process. Our Company and the Lead Manager are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of the Letter of Offer. Eligible Equity Shareholders who are eligible to apply under the ASBA process are advised to make their independent investigations and to ensure that the CAF is correctly filled up, specifying the number of the bank account maintained with the Self Certified Syndicate Bank (“SCSB”) in which the Application Money will be blocked by the SCSB. The Lead Manager, our Company, its directors, affiliates, associates and their respective directors and officers and the Registrar to the Issue shall not take any responsibility for acts, mistakes, errors, omissions and commissions etc. in relation to Applications accepted by SCSBs, Applications uploaded by SCSBs, Applications accepted but not uploaded by SCSBs or Applications accepted and uploaded without blocking funds in the ASBA Accounts. It shall be presumed that for Applications uploaded by SCSBs, the amount payable on Application has been blocked in the relevant ASBA Account. Self Certified Syndicate Banks The list of banks, which have been notified by SEBI to act as SCSBs for the ASBA process is provided on http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries. For details on Designated Branches of SCSBs collecting the CAF, please refer the above mentioned SEBI link. Eligible Equity Shareholders who are eligible to apply under the ASBA process

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The option of applying for Equity Shares through the ASBA process is available only to Eligible Equity Shareholders of our Company on the Record Date. In terms of the SEBI circular no. SEBI/CFD/DIL/ASBA/1/2009/30/12 dated 30 December 2009 (“December 2009 Circular”), to qualify as ASBA Investors, Eligible Equity Shareholders: (a) are required to hold Equity Shares in dematerialised form as on the Record Date and apply for (i) their Rights Entitlement or (ii)

their Rights Entitlement and Equity Shares in addition to their Rights Entitlement in dematerialised form; (b) should not have renounced their Right Entitlement in full or in part; (c) should not be Renouncees; {paragraphs (a), (b) and (c) are collectively referred to as the “ASBA Investor Eligibility Criteria”}

and (d) should apply through blocking of funds in bank accounts maintained with SCSBs.

All Applicants who are QIBs and Non – Institutional Investors and who satisfy the ASBA Investor Eligibility Criteria must participate in the Issue only through the ASBA Process. Any Application by such categories of Applicants including plain paper applications by them have to be made through the ASBA process. All Applicants who are QIBs and Non – Institutional Investors and who do not satisfy the ASBA Investor Eligibility Criteria can apply in the Issue only through the non – ASBA process. A Retail Individual Investor applying for a value of up to Rs. 2 lacs in the Issue can participate in the Issue through either the ASBA process or the non – ASBA process. CAF The Registrar will dispatch the CAF to all Eligible Equity Shareholders as per their Rights Entitlement on the Record Date. Those Eligible Equity Shareholders who must apply or who wish to apply through the ASBA process and have complied with the parameters mentioned above will have to select this mechanism in Part A of the CAF and provide necessary details. Application in electronic mode will only be available with such SCSBs who provide such facility. The Eligible Equity Shareholder shall submit the CAF to the SCSB for authorising such SCSB to block an amount equivalent to the amount payable on the Application in the said bank account maintained with the same SCSB. Please note that no more than five Applications (including CAF and plain paper) can be submitted per bank account in the Issue. ASBA Investors are also advised to ensure that the CAF is correctly filled up, stating therein the bank account number maintained with the SCSB in which an amount equivalent to the amount payable on Application as stated in the CAF will be blocked by the SCSB. Acceptance of the Issue ASBA Investors may accept the Issue and apply for the Equity Shares either in full or in part, by filling Part A of the respective CAFs sent by the Registrar, selecting the ASBA process option in Part A of the CAF and submit the same to the SCSB before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors in this regard. Mode of payment An ASBA Investor agrees to block the entire amount payable on Application with the submission of the CAF, by authorising the SCSB to block an amount, equivalent to the amount payable on Application, in a bank account maintained with the SCSB. After verifying that sufficient funds are available in the bank account details of which are provided in the CAF, the SCSB shall block an amount equivalent to the amount payable on Application mentioned in the CAF until it receives instructions from the Registrar to the Issue. Upon receipt of intimation from the Registrar to the Issue, the SCSBs shall transfer such amount as per the Registrar to the Issue’s instruction from the bank account maintained with the SCSB, as mentioned by the Eligible Equity Shareholder in the CAF. This amount will be transferred in terms of the SEBI Regulations, into a separate bank account maintained by our Company as per the provisions of section 40(3) of the Companies Act, 2013. The balance amount remaining after the finalisation of the basis of Allotment shall be unblocked by the SCSBs on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Manager. The ASBA Investor would be required to block the entire amount payable on its Application at the time of the submission of the CAF. The SCSB may reject the Application at the time of acceptance of CAF if the bank account with the SCSB, details of which have been provided by the Eligible Equity Shareholder in the CAF, does not have sufficient funds equivalent to the amount payable on Application mentioned in the CAF. Subsequent to the acceptance of the Application by the SCSB, our Company would have a right to reject the Application only on technical grounds. Options available to the ASBA Investors A summary of options available to Eligible Equity Shareholders is presented below. ASBA Investors may exercise any of the following options with regard to the Equity Shares, using the respective CAFs received from Registrar:

Option Available Action Required

Accept whole or part of your Rights Entitlement without renouncing the balance.

Fill in and sign Part A of the CAF (All joint holders must sign)

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Accept your Rights Entitlement in full and apply for additional Equity Shares

Fill in and sign Part A of the CAF including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)

ASBA Investors will need to select the ASBA process option in the CAF and provide required details. However, in cases where this option is not selected, but the CAF is tendered to the SCSBs with the relevant details required under the ASBA process option and the SCSBs block the requisite amount, then that CAF would be treated as if the Eligible Equity Shareholder has selected to apply through the ASBA process. Additional Equity Shares An ASBA Investor is eligible to apply for additional Equity Shares over and above the number of Equity Shares that it is entitled to, provided that it is eligible to apply for Equity Shares under applicable law and has applied for all the Equity Shares (as the case may be) offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Equity Shares shall be considered and Allotment shall be made at the sole discretion of the Board, in consultation with the Designated Stock Exchange and in the manner prescribed under “Basis of Allotment” on page 139. If you desire to apply for additional Equity Shares please indicate your requirement in the place provided for additional Equity Shares in Part A of the CAF. Renunciation under the ASBA process ASBA Investors can neither be Renouncees, nor can renounce their Rights Entitlements in part. ELIGIBLE EQUITY SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE EQUITY SHARES OF OUR COMPANY UNDER THE ASBA PROCESS CAN BE ALLOTTED ONLY IN DEMATERIALISED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE HELD BY SUCH ASBA INVESTOR ON THE RECORD DATE. Issuance of Intimation Letters Upon approval of the Basis of Allotment by the Designated Stock Exchange, the Registrar to the Issue shall send the controlling branches, a list of the ASBA Investors who have been allocated Equity Shares in the Issue, along with: The number of Equity Shares to be allotted against each successful ASBA Application; The amount to be transferred from the ASBA Account to the separate account opened by our Company for the Issue, for each successful ASBA Application; The date by which the funds referred to in above paragraph, shall be transferred to separate account opened by our Company for Rights Issue; and The details of rejected ASBA Applications, if any, along with reasons for rejection to enable SCSBs to unblock the respective ASBA Accounts. General instructions for ASBA Investors Please read the instructions printed on the CAF carefully. Applications should be made on the printed CAFs and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of the Letter of Offer, Abridged Letter of Offer are liable to be rejected. The CAF must be filled in English. The CAF/ plain paper application in the ASBA process should be submitted at a Designated Branch of the SCSB and whose bank account details are provided in the CAF and not to the Bankers to the Issue (assuming that such Banker to the Issue is not a SCSB), to our Company or Registrar or Lead Manager to the Issue. All applicants, and in the case of Application in joint names, each of the joint applicants, should mention his/ her PAN number allotted under the IT Act, irrespective of the amount of the Application. Except for Applications on behalf of the Central or State Government, the residents of Sikkim and the officials appointed by the courts, CAFs without PAN will be considered incomplete and are liable to be rejected. With effect from 16 August 2010, the demat accounts for Investors for which PAN details have not been verified shall be “suspended for credit” and no Allotment and credit of Equity Shares shall be made into the accounts of such Investors. All payments will be made by blocking the amount in the bank account maintained with the SCSB. Cash payment or payment by cheque/ demand draft/ pay order is not acceptable for ASBA Investors. In case payment is affected in contravention of this, the Application may be deemed invalid and the Application money will be refunded and no interest will be paid thereon.

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Signatures should be either in English or Hindi or in any other language specified in the Eighth Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Eligible Equity Shareholders must sign the CAF as per the specimen signature recorded with our Company and/ or Depositories. In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per the specimen signature(s) recorded with the Depository/ our Company. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant. All communication in connection with Application for the Equity Shares, including any change in address of the Eligible Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of Allotment in the Issue quoting the name of the first/ sole applicant Eligible Equity Shareholder and CAF number. Only the person or persons to whom the Equity Shares have been offered shall be eligible to participate under the ASBA process. Only persons outside restricted jurisdictions and who are eligible to subscribe for Rights Entitlement and Equity Shares under applicable securities laws are eligible to participate. Only the Eligible Equity Shareholders holding shares in demat form, and who comply with all the parameters for being an ASBA Investor, are eligible to participate through ASBA process. SCSBs making ASBA Applications on their own account are required to have a separate ASBA Account in their own name with any other SEBI registered SCSB. Such ASBA Account should be used solely for the purpose of making applications in rights issues and clear demarcated funds should be available in such account for ASBA Applications. Do’s for ASBA Investors: • Ensure that the ASBA process option is selected in part A of the CAF and necessary details are filled in. In case of non-receipt of

the CAF, the Application can be made on plain paper with all necessary details as required under the paragraph “Application on plain paper” on page 137.

• Ensure that the details about your Depository Participant and beneficiary account are correct and the beneficiary account is

activated. • Ensure that the CAFs are submitted with the Designated Branch of the SCSBs and details of the correct bank account have been

provided in the CAF. • Ensure that there are sufficient funds (equal to {number of Equity Shares as the case may be applied for} multiplied by {the

Issue Price, as the case may be}) available in the bank account maintained with the SCSB mentioned in the CAF before submitting the CAF to the respective Designated Branch of the SCSB.

• Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable on Application mentioned

in the CAF, in the bank account maintained with the respective SCSB, of which details are provided in the CAF and have signed the same.

• Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF in physical form. • Except for CAFs submitted on behalf of the Central or State Government, the residents of Sikkim and the officials appointed by

the courts, each applicant should mention their PAN allotted under the IT Act. • Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the beneficiary account is held with the

Depository Participant. In case the CAF is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF.

• Ensure that the Demographic Details are updated, true and correct, in all respects. • Ensure that the account holder in whose bank account the funds are to be blocked has signed authorizing such funds to be

blocked. • Ensure that you apply through the ASBA process if you are a QIB or a Non – Institutional Investor and satisfy the eligibility

requirements for being an ASBA Investor in terms of the December 2009 Circular. • For ASBA Applications by SCSBs on own account, ensure that a separate ASBA Account in its own name is opened with any

other SCSB. Don’ts for ASBA Investors:

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• Do not apply if you are not eligible to participate in the Issue under the securities laws applicable to your jurisdiction. • Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the SCSB. • Do not pay the amount payable on Application in cash, by money order or by postal order. • Do not send your physical CAFs/plain paper applications to the Lead Manager/ Registrar to the Issue/ Bankers to the Issue

(assuming that such Bankers to the Issue is not a SCSB)/ to a branch of the SCSB which is not a Designated Branch of the SCSB/ Bank; instead submit the same to a Designated Branch of the SCSB only.

• Do not submit the GIR number instead of the PAN as the Application is liable to be rejected on this ground. • Do not apply if the ASBA Account has been used for five applicants. • Do not instruct respective banks to release the funds blocked under the ASBA process. Grounds for Technical Rejection under ASBA process: Applications under the ASBA process are liable to be rejected on the following grounds: • Application on a Split Application Form. • Application for Allotment of Rights Entitlements or additional shares which are in physical form. • DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available with the Registrar. • Renouncees applying under the ASBA process. • Sending an ASBA Application on plain paper to the Registrar to the Issue. • Sending CAF to the Lead Manager / the Registrar to the Issue/ the Registrar and Transfer Agent/ a Banker to the Issue (assuming

that such Banker to the Issue is not a SCSB)/ to a branch of a SCSB which is not a Designated Branch of the SCSB/ Bank. • Insufficient funds are available with the SCSB for blocking the amount. • Funds in the bank account with the SCSB whose details are mentioned in the CAF having been frozen pursuant to regulatory

orders. • Account holder not signing the CAF or declaration mentioned therein. • CAFs that do not include the certification set out in the CAF to the effect that the subscriber does not have a registered address

(and is not otherwise located) in restricted jurisdictions and is authorized to acquire the rights and the securities in compliance with all applicable laws and regulations.

• CAFs which have evidence of being executed in/ dispatched from restricted jurisdiction or executed by or for the benefit of a

“U.S. Person” (as defined in Regulation S). • Submitting the GIR number instead of the PAN. • ASBA Applications by SCSBs on their own account, through an ASBA Account maintained in their own name with themselves. Depository account and bank details for ASBA Investors IT IS MANDATORY FOR ALL THE ELIGIBLE EQUITY SHAREHOLDERS WHO COMPLY WITH THE PARAMETERS FOR BEING AN ASBA INVESTOR TO RECEIVE THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL SUCH ELIGIBLE EQUITY SHAREHOLDERS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. SUCH ELIGIBLE EQUITY SHAREHOLDERS MUST ENSURE THAT THE NAME GIVEN IN THE CAF IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE CAF.

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Such Eligible Equity Shareholders should note that on the basis of name of these Eligible Equity Shareholders, Depository Participant’s name and identification number and beneficiary account number provided by them in the CAF, the Registrar to the Issue will obtain from the Depository, the Demographic Details. Hence, Eligible Equity Shareholders should carefully fill in their Depository Account details in the CAF. These Demographic Details would be used for all correspondence with such Eligible Equity Shareholders including mailing of the letters intimating unblocking of bank account of the respective Eligible Equity Shareholder. The Demographic Details given by the Eligible Equity Shareholders in the CAF would not be used for any other purposes by the Registrar to the Issue. Hence, Eligible Equity Shareholders are advised to update their Demographic Details as provided to their Depository Participants. By signing the CAFs/ plain paper ASBA Applications, ASBA Investors would be deemed to have authorised the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records. Letters intimating Allotment and unblocking of funds would be mailed to the address of the ASBA Investors as per the Demographic Details received from the Depositories. The Registrar to the Issue will give instructions to the SCSBs for unblocking funds in the ASBA Account to the extent Equity Shares are not allotted to such shareholders. ASBA Investors may note that delivery of letters intimating unblocking of the funds may get delayed if the same once sent to the address obtained from the Depositories are returned undelivered. In such an event, the address and other details given by the Eligible Equity Shareholder in the CAF would be used only to ensure dispatch of letters intimating unblocking of the funds. Note that any such delay shall be at the sole risk of the ASBA Investors and none of our Company, the SCSBs or the Lead Manager shall be liable to compensate the ASBA Investors for any losses caused due to any such delay or liable to pay any interest for such delay. In case no corresponding record is available with the Depositories that matches three parameters, (a) names of the Eligible Equity Shareholders (including the order of names of joint holders), (b) the DP ID and (c) the beneficiary account number, then such Applications are liable to be rejected. APPLICATIONS BY NON – ASBA INVESTORS Eligible Equity Shareholders who are eligible to apply under the non – ASBA process The option of applying for Equity Shares through the non – ASBA process is available only to Eligible Equity Shareholders of our Company on the Record Date as well as Renouncees. All Applicants who are QIBs and Non – Institutional Investors and who do not satisfy the ASBA Investor Eligibility Criteria can apply in the Issue through the non – ASBA process. Furthermore, a Retail Individual Investor applying for a value of up to Rs.2 lacs in the Issue can participate in the Issue through either the ASBA process or the non – ASBA process. Instructions for options for Non – ASBA Investors The CAF consists of four parts: Part A: Form for accepting the Equity Shares offered and for applying for additional Equity Shares; Part B: Form for renunciation; Part C: Form for Application by Renouncee(s); and Part D: Form for request for Split Application Forms. The summary of options available to the Eligible Equity Shareholder who applies through the non – ASBA process is presented below. You may exercise any of the following options with regard to the Equity Shares offered, using the enclosed CAF:

Option Available Action Required Accept whole or part of your Rights Entitlement without renouncing the balance.

Fill in and sign Part A (all joint holders must sign)

Accept your Rights Entitlement in full and apply for additional Equity Shares

Fill in and sign Part A including ‘Block III’ relating to the acceptance of Rights Entitlement and ‘Block IV’ relating to additional Equity Shares (all joint holders must sign)

Renounce your Rights Entitlement in full to one person, (Joint Renouncees are considered as one).

Fill in and sign Part B (all joint holders must sign) indicating the number of Equity Shares renounced and hand it over to the Renouncee. The Renouncees must fill in and sign Part C (all joint Renouncees must sign)

Accept a part of your Rights Entitlement and renounce the balance to one or more Renouncee(s) OR Renounce your Rights Entitlement to all the Equity Shares offered to you to more than one Renouncee

Fill in and sign Part D (all joint holders must sign) requesting for Split Application Forms. Send the CAF to the Registrar to the Issue so as to reach them on or before the last date for the receipt of requests for Split Application Forms. Splitting will be permitted only once. On receipt of the Split Application Form take action as indicated below. For the Equity Shares you wish to accept, if any, fill in and sign Part

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A. For the Equity Shares you wish to renounce, fill in and sign Part B indicating the number of Equity Shares renounced and hand it over to the Renouncees. Each of the Renouncees should fill in and sign Part C for the Equity Shares accepted by them.

Introduce a joint holder or change the sequence of joint holders

This will be treated as a renunciation. Fill in and sign Part B and the Renouncees must fill in and sign Part C.

Please note that: • Part A of the CAF must not be used by any person(s) other than the Eligible Equity Shareholders. If used, this will render the

Application invalid. • Request for Split Application Form should be made for a minimum of one Equity Share or in multiples thereof and one Split

Application Form for the balance Equity Shares, if any. • Request by the Eligible Equity Shareholder(s) for the Split Application Form should reach the Registrar to the Issue on or before

[●]. • Only the person, to whom the Letter of Offer and/ or Abridged Letter of Offer has been addressed to and not the Renouncee(s)

shall be entitled to renounce and to apply for Split Application Forms. CAF once split cannot be split again. • Eligible Equity Shareholders may not renounce in favour of persons or entities in restricted jurisdictions including the United

States or to or for the account or benefit of U.S. Person (as defined in Regulation S) who would otherwise be prohibited from being offered or subscribing for Equity Shares or Rights Entitlement under applicable securities law.

• While applying for or renouncing their Rights Entitlement, joint Eligible Equity Shareholders must sign the CAF in the same

order and as per specimen signatures recorded with our Company/ the Depositories. • Split Application Forms(s) will be sent to the applicant(s) by post at the applicant’s risk. Acceptance of the offer to participate in the Issue through the non – ASBA process You may accept the offer to participate and apply for the Equity Shares offered through the Issue, either in full or in part by filling of Part A of the CAF and submit the same along with the Application Money payable to the Bankers to the Issue or any of the collection branches as mentioned on the reverse of the CAF before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by our Board thereof in this regard. Non – ASBA Investors located at centers not covered by the branches of collecting banks can send their CAF together with the cheque drawn at par at Hyderabad or demand draft/ pay order payable at Hyderabad to the Registrar to the Issue by registered post. Such Applications sent to anyone other than the Registrar to the Issue are liable to be rejected. Please note that all Applications in the Issue by QIBs and Non-Institutional Investors who satisfy the ASBA Investor Eligibility Criteria are mandatorily required to be made through the ASBA process. An Eligible Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an Application to subscribe to the Issue on plain paper. For further details, see the section titled “Application on Plain Paper” on page 137. Renunciation for Non – ASBA Investors • Any renunciation (i) from a resident Indian Eligible Equity Shareholder to a Non Resident, or (ii) from a Non Resident Eligible

Equity Shareholder to a resident Indian, or (iii) from a Non Resident Eligible Equity Shareholder to a Non Resident is subject to the renouncer (s)/ Renouncee(s) obtaining the necessary approvals, including from RBI under the FEMA and such permissions should be attached to the CAF. Applications not accompanied by the aforesaid approvals are liable to be rejected.

• As an Eligible Equity Shareholder, you have the right to renounce your Rights Entitlement for the Equity Shares in full or in part

in favour of one or more persons. Your attention is drawn to the fact that our Company shall not allot and/ or register any Equity Shares in favour of the following Renouncees:

• More than four persons including joint holders; • Partnership firm(s) or their nominee(s); • Minors (unless it is through their legal guardian);

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• A Hindu Undivided Family (however, you may renounce your Rights Entitlements to the Karta of an Hindu Undivided Family acting in his capacity of a Karta);

• Any trust or society (unless the same is registered under the Societies Registration Act, 1860 or any other applicable trust laws

and is authorised under its constitutions to hold equity shares of a company), not being an existing shareholder of our Company; • Any person or entity in the United States or to, or for the account or benefit of, a “U.S. Person” (as defined in Regulation S); or • Any person situated or subject to jurisdiction where the offering in terms of the Letter of Offer could be illegal or requires

compliance with securities laws. The right of renunciation is subject to the express condition that our Board shall be entitled in its absolute discretion to reject the Application from the Renouncee(s) without assigning any reason thereof. Renouncee(s) shall not be entitled to further renounce the entitlement in favour of any other person. Procedure for renunciation The procedure for renunciation is as follows: To renounce the entire Rights Entitlement in favour of one Renouncee If you wish to renounce the Rights Entitlement indicated in Part A of the CAF, in whole, please complete Part B of the CAF. In case of joint holding, all joint holders must sign Part B of the CAF. The person in whose favour renunciation has been made should complete and sign Part C of the CAF. In case of Renouncees, all joint Renouncees must sign this part of the CAF. To renounce in part/ or renounce the whole to more than one person(s) If you wish to either accept the Rights Entitlement in part and renounce the balance or renounce the entire Rights Entitlement in favour of two or more Renouncees, the CAF must be first split into requisite number of forms. Please indicate your requirement of Split Application Forms in the space provided for this purpose in Part D of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on the last date of receiving requests for Split Application Forms. On receipt of the required number of Split Application Forms from the Registrar to the Issue, the procedure as mentioned in paragraph above shall have to be followed. In case the signature of the Eligible Equity Shareholder(s), who has renounced the Equity Shares, does not agree with the specimen registered with our Company, the Application is liable to be rejected. Renouncee(s) The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part C of the CAF and submit the entire CAF on or before the Issue Closing Date along with the Application Money. Change and/ or introduction of additional holders If you wish to apply for Equity Shares jointly with any other person(s), not exceeding three persons, who is/ are not already a joint holder with you, it shall amount to renunciation and the procedure as stated above for renunciation shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure, as stated above shall have to be followed. However, this right of renunciation is subject to the express condition that our Board of Directors shall be entitled in its absolute discretion to reject the Application from the Renouncee(s) without assigning any reason thereof. Additional Equity Shares You may apply for additional Equity Shares over and above your Rights Entitlement, provided that you have applied for your entire Rights Entitlement without renouncing them in whole or in part in favor of any other person(s). Applications for additional Equity Shares shall be considered and Allotment shall be in the manner prescribed under the section titled “Basis of Allotment” on page 139. If you desire to apply for additional Equity Shares, please indicate your requirements in the place provided for additional Equity Shares in Part A of CAF. Renouncees applying for all the Equity Shares renounced in their favor may also apply for additional Equity Shares by indicating the details of additional Equity Shares applied for in the place provided for additional Equity Shares in Part C of CAF. Where the number of additional Equity Shares applied for exceeds the number available for Allotment, the Allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange.

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Payment options for Non – ASBA Investors Mode of payment for Resident Eligible Equity Shareholders/ Applicants Non – ASBA Investors who are resident in centers with the bank collection centres shall draw cheques/ drafts accompanying the CAF, crossed account payee only and marked “Mukand Rights Issue”. Resident Non – ASBA Investors residing at places other than places where the bank collection centres have been opened by our Company for collecting Applications, are requested to send their Applications together with Demand Draft/ Pay Order net of bank and postal charges, payable at Hyderabad, crossed account payee only and marked “Mukand Rights Issue” directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing Date. Our Company or the Registrar to the Issue or the Lead Manager will not be responsible for postal delays or loss of Applications in transit, if any. Applicable banking and postal charges in this regard shall be borne by our Company. Mode of payment for Non – Resident Eligible Equity Shareholders/ Applicants Payment by Non – Residents must be made by demand draft payable at Hyderabad/cheque payable drawn on a bank account maintained at Hyderabad or funds remitted from abroad in any of the following ways: Application with repatriation benefits By Indian Rupee drafts purchased from abroad and payable at Hyderabad or funds remitted from abroad (submitted along with Foreign Inward Remittance Certificate); or By cheque/ draft on a Non Resident External Account (NRE) or FCNR Account maintained in India; or By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable in Hyderabad; or FIIs registered with SEBI must remit funds from special non resident rupee deposit account. Non Resident Investors applying with repatriation benefits should draw crossed account payee cheques/ drafts in favour of and marked “Mukand Rights Issue - NR” payable at Hyderabad for the full Application Money. In the case of NRIs who remit their Application Money from funds held in FCNR/NRE Accounts, refunds and other disbursements, if any shall be credited to such account, details of which should be furnished in the appropriate columns in the CAF. In the case of NRIs who remit their Application Money through Indian Rupee Drafts from abroad, refunds and other disbursements, if any will be made in U.S. Dollars at the rate of exchange prevailing at such time subject to the permission of RBI. Our Company will not be liable for any loss on account of exchange rate fluctuation for converting the Rupee amount into U.S. Dollar or for collection charges charged by the applicant’s bankers. Application without repatriation benefits As far as Non Residents holding shares on non-repatriation basis are concerned, in addition to the modes specified above, payment may also be made by way of cheque drawn on Non Resident (Ordinary) Account maintained in India or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Hyderabad. In such cases, the Allotment of Equity Shares will be on non-repatriation basis. All cheques/ demand drafts submitted by non-residents applying on a non-repatriation basis should be drawn in favour of, and marked “Mukand Rights Issue” payable at Hyderabad and must be crossed ‘account payee only’ for the full Application Money. The CAF duly completed together with the amount payable on Application must be deposited with the Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF. Applicants may note that where payment is made by drafts purchased from NRE/ FCNR/ NRO accounts as the case may be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/ FCNR/ NRO account should be enclosed with the CAF. Otherwise the Application shall be considered incomplete and is liable to be rejected. New demat account shall be opened for holders who have had a change in status from resident Indian to NRI. Note: • In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the investment in Equity Shares can

be remitted outside India, subject to tax, as applicable according to IT Act.

• In case Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity Shares cannot be remitted outside India.

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• The CAF duly completed together with the amount payable on Application must be deposited with the Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

In case of Applications received from Non Residents, Allotment, refunds and other distribution, if any, will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such Allotment, remittance and subject to necessary approvals. Availability of duplicate CAF In case the original CAF is not received, or is misplaced by an applicant, the Registrar to the Issue will issue a duplicate CAF on the request of the applicant who should furnish the registered folio number/ DP and Client ID number and his/ her full name and address to the Registrar to the Issue. Please note that the request for duplicate CAF should reach the Registrar to the Issue at least seven days prior to the Issue Closing Date. Please note that those who are making the Application in the duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently. If the applicant violates any of these requirements, he/ she shall face the risk of rejection of both the Applications. Neither the Registrar to the Issue nor the Lead Manager or our Company, shall be responsible for postal delays or loss of duplicate CAFs in transit, if any. Duplicate CAFs will also be available at the website of the Registrar to the Issue, a hyper – link to which link will also be provided on the website of our Company. General instructions for Non – ASBA Investors (a) Please read the instructions printed on the enclosed CAF carefully. (b) Application should be made on the printed CAF, provided by our Company or a plain paper Application and should be

completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of this Draft Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any. The CAF must be filled in English and the names of all the applicants, details of occupation, address, father’s/ husband’s name must be filled in block letters.

(c) The CAF together with cheque/ demand draft should be sent to the Bankers to the Issue/ Collecting Bank or dispatched to the

Registrar to the Issue, and not to our Company, the Lead Manager. Resident applicants residing at places other than cities where the branches of the Bankers to the Issue have been authorised by our Company for collecting Applications, will have to make payment by crossed account payee cheques payable at Hyderabad or demand drafts/ pay orders payable at Hyderabad and send their CAFs to the Registrar to the Issue by registered post/ speed post. If any portion of the CAF is/ are detached or separated, such Application is liable to be rejected.

(d) Each of the applicants should mention his/ her PAN allotted under the IT Act along with the Application for the purpose of

verification of the number. Except in case of Applications on behalf of the Central or State Government and the officials appointed by the courts and by Investors residing in Sikkim, CAFs without the PAN details will be considered incomplete and are liable to be rejected.

(e) Investors holding Equity Shares in physical form, are advised to provide information as to their savings/ current account number,

the nine digit MICR number and the name of our Company, branch with whom such account is held in the CAF to enable the Registrar to the Issue to print the said details in the refund orders, if any, after the names of the payees. Applications not containing such details are liable to be rejected.

(f) All payment should be made by cheques/ demand draft only. Cash payment is not acceptable. In case payment is effected in

contravention of this, the Application may be deemed invalid and the Application Money will be refunded and no interest will be paid thereon.

(g) Signatures should be either in English or Hindi or in any other language specified in the Eighth Schedule to the Constitution of

India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Eligible Equity Shareholders must sign the CAF or the plain paper Application as per the specimen signature recorded with our Company.

(h) In case of an Application under a power of attorney or by a body corporate or by a society, a certified true copy of the relevant

power of attorney or relevant resolution or authority to the signatory to make the relevant investment under this Issue and to sign the Application and a certified true copy of the memorandum and articles of association and/ or bye-laws of such body corporate or society must be lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue Closing Date, then the Application is liable to be rejected.

(i) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per the specimen

signature(s) recorded with our Company. Further, in case of joint applicants who are Renouncees, the number of applicants

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should not exceed three. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant.

(j) Application(s) received from Non Residents/ NRIs, or persons of Indian origin residing abroad for Allotment of Equity Shares

shall, inter alia, be subject to conditions, as may be imposed from time to time by the RBI under FEMA in the matter of refund of Application Money, Allotment of Equity Shares, subsequent issue and Allotment of Equity Shares, interest, dispatch of share certificates, etc. In case a Non Resident Eligible Equity Shareholder has specific approval from the RBI, in connection with his shareholding, he should enclose a copy of such approval with the CAF.

(k) All communication in connection with Application for the Equity Shares, including any change in address of the Eligible Equity

Shareholders should be addressed to the Registrar to the Issue prior to the Allotment Date quoting the name of the first/ sole applicant Eligible Equity Shareholder, folio numbers and CAF number. Please note that any intimation for change of address of Eligible Equity Shareholders, after the Allotment Date, should be sent to the Registrar and Share Transfer Agent, in the case of Equity Shares held in physical form and to the respective Depository Participant, in case of Equity Shares held in dematerialised form.

(l) Split Application Forms cannot be re-split. (m) Only the person or persons to whom Equity Shares have been offered and not Renouncee(s) shall be entitled to obtain Split

Application Forms. (n) Applicants must write their CAF number at the back of the cheque/ demand draft. (o) A separate cheque/ demand draft must accompany each CAF. Outstation cheques/ demand drafts or post-dated cheques and

postal/ money orders will not be accepted and Applications accompanied by such cheques/ demand drafts/ money orders or postal orders will be rejected. The Registrar will not accept payment against Application if made in cash. (For payment against Application in cash please refer point (f) above).

(p) No receipt will be issued for Application Money received. The Bankers to the Issue/ Collecting Bank/ Registrar to the Issue will

acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF. (q) Our Company shall not allot and/ or register any Equity Shares in favour of any person situated or subject to any jurisdiction

where the offering in terms of this Draft Letter of Offer could be illegal or requires compliance with applicable securities laws. (r) The distribution of the Letter of Offer and issue of Equity Shares under the Issue and Rights Entitlements to persons in certain

jurisdictions outside India may be restricted by legal requirements in those jurisdictions. Persons in the United States and such other jurisdictions are instructed to disregard the Letter of Offer and not to attempt to subscribe for Rights Issue Equity Shares.

Do’s for Non – ASBA Investors: (a) Check if you are eligible to apply; (b) Read all the instructions carefully and ensure that the cheque/ draft option is selected in part A of the CAF and necessary details

are filled in; (c) In the event you hold Equity Shares in dematerialised form, ensure that the details about your Depository Participant and

beneficiary account are correct and the beneficiary account is activated as the Equity Shares will be allotted in the dematerialised form only;

(d) Ensure that your Indian address is available to our Company and the Registrar and Transfer Agent, in case you hold Equity

Shares in physical form or the depository participant, in case you hold Equity Shares in dematerialised form; (e) Ensure that the value of the cheque/ draft submitted by you is equal to the (number of Equity Shares applied for) X (Issue Price

of Equity Shares, as the case may be) before submission of the CAF; (f) Ensure that you receive an acknowledgement from the collection centres of the collection bank for your submission of the CAF

in physical form; (g) Ensure that you mention your PAN allotted under the IT Act with the CAF, except for Applications on behalf of the Central and

State Governments, residents of Sikkim and officials appointed by the courts; (h) Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the beneficiary account is held with the

Depository Participant. In case the CAF is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF; and

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(i) Ensure that the Demographic Details are updated, true and correct, in all respects.

Dont’s for Non – ASBA Investors: (a) Do not apply on duplicate CAF after you have submitted a CAF to a collection centre of the Bankers to the Issue; (b) Do not pay the amount payable on Application in cash, by money order or by postal order; (c) Do not submit the GIR number instead of the PAN as the Application is liable to be rejected on this ground; (d) Do not submit an Application accompanied with stockinvest; or (e) Do not apply if you are not eligible to participate in the Issue under the securities laws applicable to your jurisdiction. Grounds for Technical Rejections for Non – ASBA Investors Investors are advised to note that Applications are liable to be rejected on technical grounds, including the following: • Amount paid does not tally with the Application Money payable; • Bank account details (for refunds) are not given and the same are not available with the Depository Participant (in the case of

Equity Shares held in dematerialised form) or the Registrar and Transfer Agent (in the case of Equity Shares held in physical form);

• Age of the first applicant not given (in case of Renouncees); • Except in case of Applications on behalf of the Central or State Government and the officials appointed by the courts and by

Investors residing in Sikkim, PAN details not given; • PAN in CAF not matching the PAN in the DP ID; • In case of CAF under power of attorney or by limited companies, corporate, trust, etc., relevant documents are not submitted; • If the signature of the existing shareholder does not match with the one given on the CAF and for Renouncees if the signature

does not match with the records available with their depositories; • If the Applicant desires to have Equity Shares in electronic form, but the CAF does not have the Applicant’s depository account

details; • CAF is not submitted by the applicants within the time prescribed as per the CAF and the Letter of Offer; • CAF not duly signed by the sole/ joint applicants; • CAF by OCBs. • CAF accompanied by stockinvest/ outstation cheques/ post – dated cheques/ outstation money orders/ postal orders/ outstation

demand drafts; • CAFs that do not include the certifications set out in the CAF to the effect that, among other thing, the subscriber is not located

in restricted jurisdictions and is authorized to acquire the Rights Entitlements and Equity Shares under the Issue in compliance with all applicable laws and regulations;

• CAFs which have evidence of being executed in/dispatched from restricted jurisdictions; • In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the

applicants (including the order of names of joint holders), the DP ID and the beneficiary’s identity; • CAFs by ineligible Non Residents (including on account of restriction or prohibition under applicable local laws) and where last

available address in India has not been provided; • Multiple Applications, including where an applicant submits a CAF and a plain paper Application; and Duplicate Applications; • In case the GIR number is submitted instead of the PAN; • Applications by Renouncee(s) who are persons not competent to contract under the Indian Contract Act, 1872, including minors;

and • Non – ASBA Applications made by QIBs and Non – Institutional Investors who satisfy the ASBA Investor Eligibility Criteria. Please read the Letter of Offer and the instructions contained therein and in the CAF carefully before filling in the CAF. The instructions contained in the CAF are an integral part of the Letter of Offer and must be carefully followed. The CAF is liable to be rejected for any non-compliance of the provisions contained in the Letter of Offer or the CAF. Payment of refunds to Non – ASBA Investors Our Company will issue and dispatch refund orders within a period of 15 days from the Issue Closing Date. If such money is not repaid within the stipulated time period, our Company shall pay that money with interest at the rate of 15% p.a. for the delayed period at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act. The payment of refund to Non – ASBA Investors, if any, would be done through any of the following modes:

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1. NECS – Payment of refund would be done through NECS for Investors having an account at any of the centres where such

facility has been made available. This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories/ the records of the Registrar and Transfer Agent. The payment of refunds is mandatory for Investors having a bank account at any centre where NECS facility has been made available by the RBI (subject to availability of all information for crediting the refund through NECS), except where the Investor, being eligible, opts to receive refund through NEFT, direct credit or RTGS.

2. National Electronic Fund Transfer (“NEFT”) – Payment of refund shall be undertaken through NEFT wherever the Investor’s

bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic Ink Character Recognition (MICR), if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the Investors have registered their nine digit MICR number and their bank account number while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the Investors through this method.

3. Direct Credit – Investors having bank accounts with the Refund Bank, in this case being, [●] Limited shall be eligible to receive

refunds through direct credit. Charges, if any, levied by the Refund Bank for the same would be borne by our Company. 4. RTGS – Investors having a bank account at any of the 15 locations where the RBI manages clearing houses for such payments,

namely, Ahmedabad, Bengaluru, Bhubaneshwar, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Kolkata, Mumbai, Nagpur, New Delhi, Thiruvananthapuram and Patna, and whose refund amount exceeds Rs.2 lacs, have the option to receive refund through RTGS. Such eligible Investors who indicate their preference to receive refund through RTGS are required to provide the IFSC code in the CAF. In the event the same is not provided, refund shall be made through ECS. Charges, if any, levied by the Refund Banks for the same would be borne by our Company. Charges, if any, levied by the Investors’ bank receiving the credit would be borne by the Investor.

5. For all other Investors, including those who have not updated their bank particulars with the MICR code, the refund orders will

be dispatched through Speed Post/ Registered Post. Such refunds will be made by cheques, pay orders or demand drafts drawn and will be payable at par.

6. In case of any category of Investors specified by SEBI, crediting of refunds to the Investors in any other electronic manner

permissible under the banking laws of India for the time being in force which is permitted by SEBI from time to time. Option to receive Equity Shares in Dematerialised Form Except for ASBA Investors, Investors shall be Allotted Equity Shares in dematerialised (electronic) form at the option of the Investor. Our Company, along with the Registrar and Transfer Agent, has signed tripartite agreements dated August 8, 2008 and August 4, 2008 with NSDL and CDSL, respectively, which enables the Investors to hold and trade in securities in a dematerialised form, instead of holding the securities in the form of physical certificates. Our Company has appointed Karvy Computershare Private Limited as the Registrar to the Issue, which has connectivity with both Depositories, and can therefore, credit the Equity Shares Allotted in dematerialised form. In this Issue, Allottees who have opted for Equity Shares in dematerialised form will receive their Equity Shares in the form of an electronic credit to their beneficiary account with a Depository Participant. Investors will have to give the relevant particulars for this purpose in the appropriate place in the CAF or the plain paper application, as the case may be. Applications, which do not accurately contain this information, will receive securities in physical form. No separate Applications for securities in physical and/ or dematerialised form should be made. If such Applications are made, the Application for physical securities will be treated as multiple Applications and is liable to be rejected. In case of partial Allotment, Allotment will be done in demat option for the shares sought in demat and balance, if any, may be allotted in physical shares. OTHER GENERAL INSTRUCTIONS Application on plain paper Applications on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recorded with our Company, must reach the office of the Registrar to the Issue before the Issue Closing Date and should contain the following particulars: • Name of Company, being “Mukand Limited”; • Name and address of the Eligible Equity Shareholder including joint holders; • Registered Folio Number/ DP and Client ID No.; • Share certificate numbers and distinctive numbers of Equity Shares (if Equity Shares are held in physical form);

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• Number of Equity Shares held as on Record Date; • Number of Equity Shares entitled as per Rights Entitlement; • Number of Equity Shares applied for as per Rights Entitlement; • Number of additional Equity Shares applied for, if any; • Total number of Equity Shares applied for; • Total amount paid at the rate of Rs.[●] per Equity Share; • Particulars of cheque/ demand draft/ pay order; • Savings/ current account number and name and address of the bank where the Eligible Equity Shareholder will be depositing the

refund order (in case of Equity Shares held by such Eligible Equity Shareholders in physical form). In case of Equity Shares allotted in dematerialised form, the bank account details will be obtained from the information available with the Depositories;

• Details of PAN, except in case of Applications on behalf of the Central or State Government and the officials appointed by the

courts and by Investors residing in Sikkim, irrespective of the total value of the Equity Shares being applied for pursuant to the Issue;

• Signature of Eligible Equity Shareholders to appear in the same sequence and order as they appear in the records of our

Company; • If the payment is made by a draft purchased from NRE/FCNR/NRO account, as the case may be, an account debit certificate

from the bank issuing the draft, confirming that the draft has been issued by debiting the NRE/FCNR/NRO account. • For ASBA Investors, the Application on plain paper should contain details of the ASBA Account such as the account number,

name, address and branch of the relevant SCSB. • Additionally, by subscribing to any Equity Shares offered in the Issue, you are deemed to have represented, warranted,

acknowledged and agreed to us, the Lead Manager, as follows: “If we understand the offering to which this application relates is not, and under no circumstances is to be construed as, an offering of any Equity Shares or Rights Entitlement for sale in the United States, or as a solicitation therein of an offer to buy any of the said Equity Shares or Rights Entitlement in the United States. Accordingly, I/we understand this application should not be forwarded to or transmitted in or to the United States at any time. I/we understand that neither us, nor the Registrar, the Lead Manager or any other person acting on behalf of us will accept subscriptions from any person, or the agent of any person, who appears to be, or who we, the Registrar, the Lead Manager or any other person acting on behalf of us have reason to believe is, a resident of the United States or “U.S. Person” (as defined in Regulation S) or is ineligible to participate in the Issue under the securities laws of their jurisdiction. I/We (i) am/are, and the person, if any, for whose account I/we am/are acquiring such Rights Entitlement and/or the Equity Shares is/are, outside the United States, (ii) am/are not a “U.S. Person” (as defined in Regulation S), and (iii) is/are acquiring the Rights Entitlement and/or the Equity Shares in an offshore transaction meeting the requirements of Regulation S. I/We acknowledge that we, the Lead Manager, its affiliates and others will rely upon the truth and accuracy of the foregoing representations and agreements.” Please note that those who are making the Application otherwise than on original CAF shall not be entitled to renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If an applicant violates any of these requirements, he/ she shall face the risk of rejection of both the Applications. Our Company will refund such Application Money to such applicant without any interest thereon. A Resident Non – ASBA Investor and a Non Resident Non – ASBA Investors applying on non-repatriation basis, who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an Application to subscribe to the Issue on plain paper, along with a crossed account payee cheque payable at Hyderabad or demand draft/ pay order payable at Hyderabad in favour of “Mukand Rights Issue” and send the same by registered post directly to the Registrar to the Issue, so as to reach the Registrar to the Issue on or before the Issue Closing Date. The envelope should be superscribed “Mukand Rights Issue”. Non Resident Non – ASBA Investors applying on repatriation basis who have neither received the original CAF nor are in a position to obtain the duplicate CAF may make an Application to subscribe to the Issue on plain paper, along with a crossed ‘Account Payee Cheque’ payable at Hyderabad or a demand draft/ pay order payable at Hyderabad in favour of “Mukand Rights Issue - NR” and send

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the same by registered post directly to the Registrar to the Issue, so as to reach the Registrar to the Issue on or before the Issue Closing Date. The envelope should be superscribed “Mukand Rights Issue – NR”. Resident and Non Resident ASBA Investors who have neither received the original CAF nor is in a position to obtain the duplicate CAF may make an Application to subscribe to the Issue on plain paper and such ASBA Investors should send the same by registered post/ speed post directly to the relevant SCSB. Applications on plain paper will not be accepted from any address outside India. The envelope should be super-scribed “Mukand Rights Issue” in case of Resident ASBA Investors or Non Resident ASBA Investors applying on non repatriable basis and “Mukand” Rights Issue – NR” in case of Non – ASBA Investors applying on repatriation basis and should be postmarked in India. Applicants are requested to strictly adhere to these instructions. Failure to do so could result in the Application being liable to be rejected without our Company, the Lead Manager and the Registrar to the Issue incurring any liabilities to such applicants for such rejections. Last date of Application The last date for submission of the duly filled in CAF or the plain paper Application is [●]. Our Board or any committee thereof will have the right to extend the said date for such period as it may determine from time to time but not exceeding 30 (thirty) days from the Issue Opening Date. If the CAF, or the plain paper Application together with the amount payable is not received by the Bankers to the Issue/ Registrar to the Issue, on or before the close of banking hours on the aforesaid last date or such date as may be extended by our Board or any committee of our Board, the offer contained in the Letter of Offer shall be deemed to have been declined and our Board or any committee of our Board shall be at liberty to dispose of the Equity Shares hereby offered, as provided under the section titled “Basis of Allotment” on page 139. INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES ISSUED PURSUANT TO THIS ISSUE CAN BE TRADED ON THE STOCK EXCHANGES ONLY IN DEMATERIALISED FORM. Basis of Allotment Subject to the provisions contained in this Draft Letter of Offer, the Abridged Letter of Offer, the CAF, the Articles of Association and the approval of the Designated Stock Exchange, our Board will proceed to allot the Equity Shares in the following order of priority: (a). Full Allotment to those Eligible Equity Shareholders who have applied for their Rights Entitlement either in full or in part and

also to the Renouncee(s), who has/ have applied for Equity Shares renounced in their favour, in full or in part.

(b). If the shareholding of any of the Eligible Equity Shareholders is equal to or less than [●] Equity Shares or is not in multiples of [●], the fractional entitlement of such holders shall be ignored. Shareholders whose fractional entitlements are being ignored would be considered for Allotment of one additional Equity Share each if they apply for additional Equity Share(s). Allotment under this head shall be considered if there are any un-subscribed Equity Shares after Allotment under (a) above. If the number of Equity Shares required for Allotment under this head is more than number of Equity Shares available after Allotment under (a) above, the Allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange. (For further details, see the section titled ‘Fractional Entitlements’ on page 123).

(c). Allotment to Eligible Equity Shareholders, who having applied for the Rights Entitlement in full and have also applied for additional Equity Shares, the Allotment of such additional Equity Shares will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them on the Record Date, provided there is an under-subscribed portion after making Allotment in (a) and (b) above. The Allotment of such Equity Shares will be at the sole discretion of our Board in consultation with the Designated Stock Exchange, as a part of the Issue and not as a preferential Allotment.

(d). Allotment to the Renouncees, who having applied for the Equity Shares renounced in their favour have also applied for additional Equity Shares, provided there is an under-subscribed portion after making full Allotment in (a), (b) and (c) above, the Allotment of such additional Equity Shares will be made on a proportionate basis at the sole discretion of our Board or any committee of our Board but in consultation with the Designated Stock Exchange, as a part of the Issue and not as a preferential allotment.

(e). Allotment to any other person as our Board may in its absolute discretion deem fit provided there is surplus available after making Allotment under (a), (b), (c), and (d) above, and the decision of the Board in this regard shall be final and binding.

(f). In the event of oversubscription, Allotment will be made within the overall size of the Issue.

Intention and extent of participation by the Promoter and the members of the Promoter Group in the Issue Our Promoters, Mr. Rahul Bajaj, Mr. Niraj Bajaj, Mr. Rajesh V Shah and Mr. Suketu V Shah and the members of our promoter group Mr. Sanjivnayan Bajaj, Mr. Shekar Bajaj, Mr. Madhur Bajaj, Mr. Anant Bajaj, Ms. Sunaina Kejriwal, Ms. Suman Jain, Mr. Narendra J

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Shah, Ms. Anjana V Shah (nee Anjana Munsif), Ms. Jyoti Shah, Ms. Bansri Rajesh Shah, Ms. Czaee Sukumar Shah, Ms. Priyaradhika Rajesh Shah, Mr. Kaustubh Rajesh Shah, Bajaj Auto Employees Welfare Fund, Mr. Surendra Bhaichand Jhaveri ( Mukand EWF), Akhil Investments and Traders Private Limited, Bachhraj & Company Private Limited, Bachhraj Factories Private Limited, Bajaj Investments and Holdings Limited, Bajaj Sevashram Private Limited, Baroda Industries Private Limited, Jamnalal Sons Private Limited, Jeewan Limited, Mukand Engineers Limited, Niraj Holdings Private Limited, Sidya Investments Limited, Valiant Investments and Traders Private Limited and Bahar Mercantile Limited holding Equity Shares, have confirmed that they intend to fully subscribe to their Rights Entitlement in the Issue subject to the terms of this Draft Letter of Offer and applicable law. Further, subject to compliance with applicable laws including the Takeover Code, the Promoter and members of our Promoter Group reserve the right to subscribe for additional Equity Shares of our Company. Further, Mr. Niraj Bajaj, Jamnalal Sons Private Limited and Bachhraj & Company Private Limited have provided undertakings dated September 13, 2013 stating that in the event of under-subscription in the Issue, they will apply for Equity Shares, in addition to their Rights Entitlement in the Issue, either directly or through entities/persons belonging to the Promoter Group, to the extent of such undersubscribed portion of the Issue, subject to obtaining any approvals required under applicable law, to ensure that at least 90% of the Issue is subscribed. As a result of the subscription, our Promoters, Mr. Rahul Bajaj, Mr. Niraj Bajaj, Mr. Rajesh V Shah and Mr. Suketu V Shah and the members of our promoter group Mr. Sanjivnayan Bajaj, Mr. Shekar Bajaj, Mr. Madhur Bajaj, Mr. Anant Bajaj, Ms. Sunaina Kejriwal, Ms. Suman Jain, Mr. Narendra J Shah, Ms. Anjana V Shah (nee Anjana Munsif), Ms. Jyoti Shah, Ms. Bansri Rajesh Shah, Ms. Czaee Sukumar Shah, Ms. Priyaradhika Rajesh Shah, Mr. Kaustubh Rajesh Shah, Bajaj Auto Employees Welfare Fund, Mr. Surendra Bhaichand Jhaveri ( Mukand EWF), Akhil Investments and Traders Private Limited, Bachhraj & Company Private Limited, Bachhraj Factories Private Limited, Bajaj Investments and Holdings Limited, Bajaj Sevashram Private Limited, Baroda Industries Private Limited, Jamnalal Sons Private Limited, Jeewan Limited, Mukand Engineers Limited, Niraj Holdings Private Limited, Sidya Investments Limited, Valiant Investments and Traders Private Limited and Bahar Mercantile Limited may acquire Equity Shares over and above their respective entitlements in the Issue, which may result in an increase of their shareholding above the current shareholding along with the Rights Entitlement. Such subscription and acquisition of additional Equity Shares by our Promoter and the members of the Promoter Group through the Issue, if any, shall be made in accordance with applicable laws. As such, other than meeting the requirements indicated in the section titled “Objects of the Issue” on page 45, there is no other intention/purpose for the Issue, including any intention to delist our Company, even if, as a result of any Allotments in the Issue to the Promoter, or the members of the Promoter Group, their shareholding in our Company exceeds their current shareholding. The Promoter, and/or members of the Promoter Group shall subscribe to, and/or make arrangements for the subscription of, such unsubscribed portion as per the relevant provisions of law and in compliance with the Listing Agreement. Our Company expects to complete the Allotment within a period of 15 days from the Issue Closing Date in accordance with the Listing Agreement with the Stock Exchanges. Our Company shall retain no oversubscription. Underwriting The Issue is not underwritten. Allotments Our Company will issue and dispatch letters of Allotment/ Allotment advice/ share certificates/ demat credit and/ or letters of regret or credit the allotted securities to the respective beneficiary accounts, if any, within a period of 15 days from the Issue Closing Date. If such money is not repaid within the stipulated time period, our Company shall pay that money with interest at the rate of 15% p.a. for the delayed period at rates prescribed under Section 39 (5) of the Companies Act, 2013. In case of those Investors, who have opted to receive their Rights Entitlement in dematerialised form using electronic credit under the depository system, shall be given advice regarding their credit of the Equity Shares separately. Investors to whom refunds are made through electronic transfer of funds will be sent a letter through ordinary post intimating them about the mode of credit of refund within 15 days of the Issue Closing Date. In case of those Investors who have opted to receive their Rights Entitlement in physical form and our Company issues letters of Allotment or Allotment advice, the corresponding share certificates will be kept ready within three months from the Allotment Date thereof or such extended time as may be approved by the Company Law Board under Section 113 of the Companies Act or other applicable provisions, if any. Allottees are requested to preserve such letters of Allotment/ Allotment advice, which would be exchanged later for the share certificates. For more information see the section titled ‘Letters of Allotment/ Allotment advice/ Share Certificates/ Demat Credit’ on page 140. The letters of Allotment/ Allotment advice/ refund order would be sent by registered post/ speed post to the sole/ first applicant's registered address. Such refund orders would be payable at par at all locations. The same would be marked ‘Account Payee only’ and would be drawn in favour of the sole/ first applicant. Adequate funds would be made available to the Registrar to the Issue for this purpose. Letters of Allotment/Allotment Advice/ Share Certificates/ Demat Credit

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Letters of Allotment/ Allotment advice/ share certificates/ demat credit or letters of regret will be dispatched to the registered address of the first named applicant or respective beneficiary accounts will be credited within 15 days, from the date of closure of the subscription list. In case our Company issues letters of Allotment/ Allotment advice, the relative share certificates will be dispatched within three months from the Allotment Date. Allottees are requested to preserve such letters of Allotment/ Allotment advice (if any) to be exchanged later for share certificates. Dispatch of letters of Allotment/ Allotment advice (if any)/ share certificates/ demat credit to Non Resident Allottees will be subject to the any applicable approvals of the RBI provided along with the CAF. Our Company has appointed Karvy Computershare Private Limited as the Registrar to the Issue, which has connectivity with both Depositories, and can therefore credit the Equity Shares Allotted in dematerialized form. INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES OF OUR COMPANY CAN BE TRADED ON THE STOCK EXCHANGES ONLY IN DEMATERIALISED FORM. The Equity Shares will be listed on the Stock Exchanges. Procedure for availing the facility for Allotment of Equity Shares in the electronic form is as under: 1. Open a beneficiary account with any DP (care should be taken that the beneficiary account should carry the name of the holder

in the same manner as is registered in the records of our Company. In the case of joint holding, the beneficiary account should be opened carrying the names of the holders in the same order as is registered in the records of our Company). In case of Investors having various folios in our Company with different joint holders, the Investors will have to open separate accounts for such holdings. Those Eligible Equity Shareholders who have already opened such beneficiary account(s) need not adhere to this step.

2. For Eligible Equity Shareholders already holding Equity Shares in dematerialized form as on the Record Date, the beneficial

account number shall be printed on the CAF. For those who open accounts later or those who change their accounts and wish to receive their Equity Shares pursuant to this Issue by way of credit to such account, the necessary details of their beneficiary account should be filled in the space provided in the CAF. It may be noted that the Allotment of Equity Shares arising out of this Issue may be made in dematerialized form even if the original Equity Shares are not dematerialized. Nonetheless, it should be ensured that the depository account is in the name(s) of the Eligible Equity Shareholders and the names are in the same order as in the records of our Company.

Responsibility for correctness of information (including applicant’s age and other details) filled in the CAF vis-à-vis such information with the applicant’s DP, would rest with the applicant. Applicants should ensure that the names of the applicants and the order in which they appear in CAF should be the same as registered with the applicant’s DP. If incomplete/ incorrect details are given under the heading ‘Request for Shares in Electronic Form’ in the CAF, the applicant will get Equity Shares in physical form. Allotment to Investors opting for dematerialised form would be directly credited to the beneficiary account as given in the CAF after verification. Allotment advice or letters of Allotment, refund order (if any) would be sent directly to the applicant by the Registrar to the Issue but the applicant’s DP will provide to him the confirmation of the credit of such Equity Shares to the applicant’s depository account. Renouncees will also have to provide the necessary details about their beneficiary account for Allotment in this Issue. In case these details are incomplete or incorrect, such applications by Renouncees are liable to be rejected. Our Company may also instead decide to allot the Equity Shares in physical form to such Renouncees. Impersonation As a matter of abundant caution, attention of the Investors is specifically drawn to the Section 36 and Section 38(1) of the Companies Act, 2013, which are reproduced below:

36. Any person who, either knowingly or recklessly makes any statement, promise or forecast which is false, deceptive or misleading, or deliberately conceals any material facts, to induce another person to enter into, or to offer to enter into,—

(a) any agreement for, or with a view to, acquiring, disposing of, subscribing for, or underwriting securities; or (b) any agreement, the purpose or the pretended purpose of which is to secure a profit to any of the parties from the yield of securities or by reference to fluctuations in the value of securities; or (c) any agreement for, or with a view to obtaining credit facilities from any bank or financial institution, shall be liable for action under section 447.

“38(1) Any person who—

(a) makes or abets making of an application in a fictitious name to a company for acquiring, or subscribing for, its securities; or (b) makes or abets making of multiple applications to a company in different names or in different combinations of his name or surname for acquiring or subscribing for its securities; or

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(c) otherwise induces directly or indirectly a company to allot, or register any transfer of, securities to him, or to any other person in a fictitious name,

shall be liable for action under section 447.”

Payment by Stockinvest In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003-04 dated 5 November 2003, the stockinvest scheme has been withdrawn with immediate effect. Hence, payment through stockinvest would not be accepted in this Issue. Disposal of Application and Application Money The Bankers to the Issue/ Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. Please note that no such acknowledgment will be issued by our Company. In case an Application is rejected in full, the whole of the Application Money received will be refunded. Wherever an Application is rejected in part, the balance of Application Money, if any, after adjusting any money due on Equity Shares Allotted, will be refunded to the applicant within 15 days from the Issue Closing Date. In the event that there is a delay of making refunds beyond eight days after our Company becomes liable to make such refunds, i.e. on the expiry of 15 days from the Issue Closing Date, our Company shall pay interest for the delayed period at rates prescribed under sub-sections (2) and (2A) of section 73 of the Companies Act. For further instruction, please read the CAF carefully. Utilisation of Issue Proceeds Our Board declares that: (a) The funds received against this Issue will be transferred to a separate bank account. (b) Details of all moneys utilised out of this Issue shall be disclosed under an appropriate separate head in the balance sheet of our

Company indicating the purpose for which such moneys has been utilised. (c) Details of all such un-utilised moneys out of this Issue, if any, shall be disclosed under an appropriate separate head in the

balance sheet of our Company indicating the form in which such un-utilised moneys have been invested.

Our Company shall utilize funds collected in rights issue only after the finalization of the basis of Allotment. Undertakings by our Company Our Company undertakes as follows: (a) The complaints received in respect of this Issue shall be attended to by our Company expeditiously and satisfactorily. (b) All steps for completion of the necessary formalities for listing and commencement of trading at the Stock Exchange where the

Equity Shares are proposed to be listed will be taken within seven working days of finalization of basis of Allotment. (c) The funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed in this Draft Letter of Offer shall

be made available to the Registrar to the Issue by our Company. (d) Where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicants within 15

days of the Issue Closing Date, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund.

(e) The letters of Allotment/ Allotment advice shall be dispatched within the specified time. (f) Adequate arrangements shall be made to collect all ASBA Applications and to consider them similar to non – ASBA

Applications while finalizing the basis of Allotment. (g) No further issue of securities affecting equity capital of our Company shall be made till the securities issued/ offered through this

Draft Letter of Offer Issue are listed or till the Application Money are refunded on account of non-listing, under-subscription etc. (h) At any given time there shall be only one denomination of Equity Shares of our Company. (i) Our Company shall comply with such disclosure and accounting norms specified by SEBI from time to time.

Restriction on Foreign Ownership of Indian Securities Investment by FIIs In accordance with the current regulations, the following restrictions are applicable for investment by FIIs: The Issue of Equity Shares under this Issue to a single FII should not result in such FII holding more than 10% of the post-issue paid up capital of our Company. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts the investment on behalf of each sub-account shall not exceed 5% of the total paid up capital of our Company. Investment by NRIs Investments by NRIs are governed by the Portfolio Investment Scheme under Regulation 5(3)(i) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000.

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Procedure for Applications by Mutual Funds A separate Application can be made in respect of each scheme of an Indian mutual fund registered with the SEBI and such Applications shall not be treated as multiple pplications. The Applications made by asset management companies or custodians of a mutual fund should clearly indicate the name of the concerned scheme for which the Application is being made. Important Please read this Draft Letter of Offer carefully before taking any action. The instructions contained in the accompanying CAF are an integral part of the conditions of the Letter of Offer and must be carefully followed; otherwise the Application is liable to be rejected. It is to be specifically noted that this Issue of Equity Shares is subject to the risk factors mentioned in the section titled “Risk Factors” beginning on page 11. All enquiries in connection with the Letter of Offer or accompanying CAF and requests for Split Application Forms must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and the name of the first Eligible Equity Shareholder as mentioned on the CAF and superscribed “Mukand Rights Issue” in case of Resident Investors or Non-Resident Investors applying on non repatriable basis or “Mukand Rights Issue – NR” in case of non resident shareholders applying on repatriable basis on the envelope) to the Registrar to the Issue at the following address: Karvy Computershare Private Limited Plot No. 17 – 24, Vittal Rao Nagar Madhapur, Hyderabad 500 081 Telephone: +91-40-4465 5000 Facsimile: +91-40-2343 1551 Toll Free: 1-800-3454001 E-mail: [email protected] Contact Person: Mr. M. Murali Krishna Website: http://karisma.karvy.com SEBI Registration No: INR000000221 This Issue will be kept open for a minimum of 15 days unless extended, in which case it will be kept open for a maximum of 30 days from the Issue Opening Date.

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SECTION IX – STATUTORY AND OTHER INFORMATION

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION The following contracts (not being contracts entered into in the ordinary course of business carried on by our Company or entered into more than two years before the date of this Draft Letter of Offer), which are or may be deemed material have been entered or are to be entered into by our Company. Such contracts and documents for inspection as referred in paragraph (A) below, may be inspected at the Registered Office from 11.00 am to 4.00 pm on working days (excluding Saturdays) from the date of the Letter of Offer until the date of closure of the Issue. A. Material Contracts

1. Issue agreement dated September 18, 2013 between our Company and Lead Manager.

2. Agreement dated September 4, 2013 between our Company and Karvy Computershare Private Limited.

3. Bankers to the Issue Agreement dated [●] between our Company, Lead Manager, the Registrar to the Issue and the Bankers

to the Issue.

4. Tripartite Agreement dated August 8, 2008 between our Company, our Registrar and Transfer Agent and NSDL to establish

direct connectivity with the Depository.

5. Tripartite Agreement dated August 4, 2008 between our Company, our Registrar and Transfer Agent and CDSL to establish

direct connectivity with the Depository.

B. Material Documents

1. Memorandum of Association and Articles of Association of our Company.

2. Our certificates of incorporation dated November 23, 1937 and certificate of incorporation consequent upon change in name

of our Company dated March 23 1989.

3. Annual Report of our Company for the Fiscal 2013, Fiscal 2012, Fiscal 2011, Fiscal 2010 and Fiscal 2009.

4. Copy of our Board Resolutions dated June 06, 2013 authorizing the Issue and related matters and copy of our shareholder

Resolution dated July 15, 2013 authorizing the Issue.

5. Consents of the Directors, the Compliance Officer, Auditors, Lead Manager, Legal Counsel to the Issue and the Registrar to

the Issue, to include their names in this Draft Letter of Offer and to act in their respective capacities.

6. The report of Haribhakti & Co., Chartered Accountants dated May 25, 2013 in relation to the financial statements of our

Company for Fiscal 2013, as set out in this Draft Letter of Offer.

7. Statement of tax benefits dated July 31, 2013, issued by Haribhakti & Co, Chartered Accountants, as set out in this Draft

Letter of Offer.

8. Consent of Haribhakti & Co, Chartered Accountants dated September 14, 2013 for inclusion of their report on the financial

statements of our Company for Fiscal 2013 and the statement of tax benefits, in the form and context in which they appear in

this Draft Letter of Offer.

9. Due Diligence Certificate dated September 18, 2013 from the Lead Manager.

10. In-principle listing approvals dated [●] and [●] from BSE and NSE respectively.

11. Letter no. [●] dated [●] from SEBI conveying its final observations on this Draft Letter of Offer.

12. Letter of Offer dated January 9, 2004.

Any of the contracts or documents mentioned in this Draft Letter of Offer may be amended or modified at any time, if so required in the interest of our Company or if required by the other parties, subject to compliance of the provisions contained in the Companies Act and other relevant statutes.

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DECLARATION We hereby certify that no statement made in this Draft Letter of Offer contravenes any of the provisions of the Companies Act, 1956, and the rules made there under. All the legal requirements connected with the Issue as also the guidelines, instructions, etc., issued by SEBI, Government and any other competent authority in this behalf, have been duly complied with. We further certify that all the statements in this Draft Letter of Offer are true and correct.

Mr. Niraj Bajaj { Chairman & Managing Director { Mr. Rajesh V Shah { Co Chairman & Managing Director { Mr. Suketu V Shah { Joint Managing Director { Mr. Dhirajlal S Mehta { Director { Mr. Vinod S Shah { Director { Dr. N P Jain, IFS (Retd.) { Director { Mr. Narendra J Shah { Director { Mr. N C Sharma { Director { Mr. Prakash V Mehta { Director { Mr. Pradip P Shah { Director { Mr. Amit Yadav { Director {

SIGNED BY OUR CHIEF FINANCIAL OFFICER Mr. S. B. Jhaveri { Chief Financial Officer { Place: Mumbai Date: September 18, 2013