GOA CARBON LIMITED - Securities and Exchange Board of India · The existing Equity Shares of the...

DRAFT LETTER OF OFFER (Private and Confidential)

For Equity Shareholders of the Company Only

GOA CARBON LIMITED

(Registration Number: 24-00076) [Incorporated on June 22, 1967 under the Companies Act, 1956 as ‘Goa Carbon Limited’ vide Certificate of

Incorporation issued by the Registrar of Companies, Goa, Daman and Diu, Panaji - Goa] Registered Office: Dempo House, Campal, Panaji-Goa 403 001

(The Registered Office of the Company was originally located at New Municipal Building, Panaji-Goa and was shifted to Velho’s House, Rua Conde De Toress Novas, Panaji-Goa w.e.f. April 1, 1969. The Registered Office was shifted to

the current address w.e.f. May 1. 1971) Tel: +91-832-244 1300 / 1457; +91-832-222 4453 / 3684; Fax: +91-832-2427192, +91-832- 2225098/ 8588

E-mail: [email protected] Website: http://www.goacarbon.com Contact Person: Mr. P.S. Mantri, Company Secretary and Compliance Officer

LETTER OF OFFER ISSUE OF 46,00,000 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT A PREMIUM OF RS. 70/- PER EQUITY SHARE ON RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF THE COMPANY IN THE RATIO OF 1 EQUITY SHARES FOR EVERY 1 EQUITY SHARE HELD ON RECORD DATE [ ] AGGREGATING RS. 3680 LACS. THE OFFER PRICE IS 8 TIMES OF THE FACE VALUE OF THE EQUITY SHARE

GENERAL RISKS Investment 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 on page no. i to xiv carefully before taking an investment decision in this Offer. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue including the risks involved. The securities offered in the Issue have not been recommended or approved by Securities and Exchange Board of India (SEBI), nor does SEBI guarantee the accuracy or adequacy of this Letter of Offer.

ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Letter of Offer contains all information with regard to Goa Carbon Limited and the Issue, which is material in the context of this Issue, that the information contained in this Letter of Offer is true and correct in all material respects 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 document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

Fortune Financial Services (India) Limited

Intime Spectrum Registry Limited

SEBI Registration No.: INM000000529 K.K. Chambers, 2nd Floor Sir P.T. Marg, Fort Mumbai - 400 001 Tel: +91-22-2207 7931; Fax: +91-22-2207 2948 E-mail: [email protected] Website: http://www.ffsil.com Contact Person: Mr. Ritesh Shroff

SEBI Registration No.: INR000003761 C-13, Pannalal Silk Mills Compound LBS Marg, Bhandup (West) Mumbai - 400 078 Tel: +91-22-5555 5491-94; Fax: +91-22-5555 5499 Email: [email protected] Website: http://www.intimespectrum.com Contact Person: Mr. Vishwas Attavar

ISSUE SCHEDULE Issue Opens On Last Date For Receiving Requests For Split Forms Issue Closes On

LISTING

The existing Equity Shares of the Company are listed on Bombay Stock Exchange Limited, Mumbai (BSE – ‘Designated Stock Exchange’) and The Mangalore Stock Exchange, Mangalore (MgSE). Accordingly the Company proposes to list the equity shares on BSE and MgSE. Applications are being made to these stock exchanges for permission to deal in and for official quotation in respect of the equity shares arising out of the present rights issue. The company has received in principle approvals from BSE and MgSE vide letters dated ____ and ____ respectively.

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Table of Contents I. DEFINITIONS AND ABBREVIATIONS ......................................................................................................................................................... a II. RISK FACTORS .....................................................................................................................................................................................................i

A.) RISK ENVISAGED BY MANAGEMENT AND MANAGEMENT PERCEPTIONS THEREOF ...................................i Risk Factors Internal to the Company...................................................................................................................................... ii Risk Factors External to the Company and beyond the control of the Company.........................................................viii

B.) NOTES TO RISK FACTORS......................................................................................................................................................x III. INTRODUCTION ............................................................................................................................................................................................... 1

A. SUMMARY ...................................................................................................................................................................................1 B. GENERAL INFORMATION ......................................................................................................................................................4 C. CAPITAL STRUCTURE OF THE COMPANY .......................................................................................................................8 D. PARTICULARS OF THE ISSUE..............................................................................................................................................14

a.) Objects of the Issue................................................................................................................................................................14 b.) Cost of Project and Means of Finance................................................................................................................................14

E.) BASIS FOR ISSUE PRICE ........................................................................................................................................................18 F.) TAX BENEFITS..........................................................................................................................................................................22

IV. ABOUT GOA CARBON LIMITED:.............................................................................................................................................................. 27 A.) INDUSTRY OVERVIEW.........................................................................................................................................................27 B). BUSINESS OVERVIEW ...........................................................................................................................................................29 C.) HISTORY, AND CORPORATE STRUCTURE OF THE COMPANY..............................................................................44

a. History and Major Event .......................................................................................................................................................44 b. Main Objects............................................................................................................................................................................44 c. Subsidiaries of the Issuer Company and their business ..................................................................................................47

D.) SHAREHOLDERS’ AGREEMENT........................................................................................................................................48 E.) MANAGEMENT.......................................................................................................................................................................48

a. Board of Directors...................................................................................................................................................................48 b. Compensation of Whole Time Directors ............................................................................................................................52 c. Compliance with Corporate Governance Requirements: ................................................................................................54 d. Shareholding of the Directors ..............................................................................................................................................56 e. Interest of Directors (Other than the Promoter Directors)...............................................................................................56 f. Management Organization Structure ..................................................................................................................................57 g. Key Management Personnel.................................................................................................................................................57 h. Employees................................................................................................................................................................................59 i. Disclosures Regarding Employees Stock Option Scheme / Employees Stock Purchase Scheme.............................60 j. Other Benefits to the Officers of the Issuer Company.......................................................................................................60

F.) PROMOTERS/ PRINCIPAL SHAREHOLDERS.................................................................................................................61 a. Details of Promoters being Individuals ..............................................................................................................................61 b. Details of Promoters being Company.................................................................................................................................61 c. Common Pursuits ...................................................................................................................................................................67 d. Interest of Promoters .............................................................................................................................................................67 e. Payment or benefit to Promoters of the Issuer Company ...............................................................................................67 f. Related Party Transactions as per Financial Statements ..................................................................................................67

G.) CURRENCY OF PRESENTATION .......................................................................................................................................68 H.) DIVIDEND POLICY................................................................................................................................................................68

V: FINANCIAL STATEMENTS............................................................................................................................................................................ 69 A.) STANDALONE FINANCIAL INFORMATION OF THE ISSUER COMPANY...........................................................69 B.) CONSOLIDATED FINANCIAL INFORMATION OF THE ISSUER COMPANY........................................................88 C.) FINANCIAL INFORMATION OF PARADEEP CARBONS LIMITED - SUBSIDIARY ............................................101 D.) FINANCIAL INFORMATION OF THE GROUP COMPANIES ...................................................................................112 E.) CHANGES IN ACCOUNTING POLICIES IN THE LAST THREE YEARS.................................................................118 F.) MANAGEMENT’S DISCUSSION AND ANALYSIS .......................................................................................................118

VI. LEGAL AND OTHER INFORMATION.................................................................................................................................................... 125 A.) OUTSTANDING LITIGATION, DEFAULTS AND MATERIAL DEVELOPMENTS................................................125 B.) GOVERMENT APPROVALS................................................................................................................................................155

VII. OTHER REGULATORY AND STATUTORY DECLARATIONS...................................................................................................... 157 VIII. OFFERING INFORMATION.................................................................................................................................................................... 166 IX. OTHER INFORMATION ....................................................................................................................................................................... 182

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I. DEFINITIONS AND ABBREVIATIONS Conventional / General Terms Act The Companies Act, 1956 and amendments thereto AGM Annual General Meeting AS Accounting Standards as issued by the Institute of Chartered Accountants of India CAGR Compound Annual Growth Rate CY Calendar Year D/E Ratio Debt Equity Ratio EGM Extra-ordinary General Meeting EPS Earnings Per Share FDI Foreign Direct Investment FY/ Financial Year / Fiscal Year

The twelve months ended March 31st of a particular year, unless otherwise stated.

GDP Gross Domestic Product GIR Number General Index Registry Number GoG Government of the State of Goa GoI Government of India HUF Hindu Undivided Family Indian GAAP Generally Accepted Accounting Principles in India IT Act Income Tax Act, 1961 and amendments thereto LC Letters of Credit MOU Memorandum of Understanding NAV Net Assets Value being paid Equity Share Capital plus free reserves (excluding

reserves created out of revaluation) less deferred expenditure not written off) and debit balance of profit and loss account, divided by number of issued equity shares

P/E Ratio Price/ Earnings Ratio PAN Permanent Account Number PAT Profit After Tax PBDT Profit Before Depreciation and Tax PBIDT Profit Before Interest, Depreciation and Tax PBT Profit Before Tax ROI Return on Investment RONW Return on NetWorth Security Certificate Equity Share Certificate Security(ies) Equity Share(s) USD/US$/$ United States Dollar WTO World Trade Organisation Issue Related Terms Advisor to the Issue/ Centrum

Advisor to the Issue i.e. Centrum Capital Limited

Articles Articles of Association of Goa Carbon Limited Auditors The Statutory Auditors of the Company: M/s. Fraser & Ross, Chartered

Accountants, Chennai Bankers to the Issue HDFC Bank Limited/ The Bank in whom the Bank Account for Rights Issue will be

opened and which act as such, in terms of this Letter of Offer Board Board of Directors of Goa Carbon Limited BSE / Designated Stock Exchange

Bombay Stock Exchange Limited, Mumbai

CAF Composite Application Form Compliance Officer Compliance Officer of the Company for the Rights Issue being Mr. P.S. Mantri,

Company Secretary, Goa Carbon Limited Director(s) Directors on the Board of Goa Carbon Limited Equity Shareholders Equity Shareholders of the Company whose names appear as:

- Beneficial Owners as per the list furnished by the depositories in respect of Equity

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Shares held in electronic form and - On the Register of Members of the Company in respect of the Equity Shares held

in physical form Equity Shares Equity Shares of the Company of Rs. 10/- each Face Value Face Value of Equity Shares of the Company being Rs. 10/- each FFSIL/ Lead Manager/ LM Lead Manager to the Issue i.e. Fortune Financial Services (India) Limited Issue / Rights Issue The issue of 46,00,000 Equity Shares of Rs. 10/- each for cash at a premium of Rs.

70/- (Issue Price Rs. 80/-) per Equity Share on rights basis to existing Equity Shareholders of the Company in the ratio of 1 (One) Equity Share for every 1 (One) Equity Shares held on Record Date [ ] aggregating Rs. 3680 lacs as per this Letter of Offer

Issue Closing Date The date on which the issue closes for subscription Issue Opening Date The date on which the issue opens for subscription Issue Period The period between the Issue Opening Date and Issue Closing Date and includes

both these dates Issue Price The price at which the equity shares will be issued by the Company under this

Letter of Offer Issuer / Company / GCL Goa Carbon Limited Letter of Offer /LOF/ Offer Document

This Letter of Offer circulated to the Equity Shareholders and filed with the Stock Exchanges containing inter alia the Issue price and the number of equity shares to be issued, issue price and other incidental information

MgSE Mangalore Stock Exchange Limited Memorandum Memorandum of Association of Goa Carbon Limited OHRC Orissa Human Rights Commission PCL Paraeep Carbons Limited the 100% subsidiary of the Company Promoter(s) Promoters shall have the same meaning as ascribed to it under the SEBI Guidelines

and which has been particularly detailed in the disclosure in this Letter of Offer Record Date [ ] Registered Office of the Company

Registered Office of the Company situated at Dempo House, Campal, Panaji – Goa 403 001.

Registrar Registrar to the Issue, Intime Spectrum Registry Limited Rights Entitlement The number of Equity Shares that an Equity Shareholder is entitled to under this

Letter of Offer in proportion to his/her/its existing shareholding in the Company as on the Record Date [ ]

ROC Registrar of Companies, Goa, Daman and Diu at Company Law Bhavan, Patto, Panaji, Goa 403 001.

VPPL Vishwalakshmi Petro Products Limited Company / Industry Related Terms CPC Calcined Petroleum Coke GPC / RPC Green Petroleum Coke / Raw Petroleum Coke CENVAT Central Value Added Tax DEPB Duty Entitlement Pass Book EPCG Export Promotion Capital Goods EXIM Policy Export-Import Policy ISO International Organization for Standardization PCB Pollution Control Board QA Quality Assurance Abbreviations AY Assessment Year CDSL Central Depository Services (India) Limited CLB Company Law Board DCA Department of Company Affairs Depositories Act The Depositories Act, 1996 as amended from time to time

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Depository A Depository registered with SEBI under the SEBI (Depositories & Participant) Regulations, 1996 as amended from time to time

DP Depository Participant FCNR Account Foreign Currency Non Resident Account FDI Foreign Direct Investment FEMA Foreign Exchange Management Act, 1999 read with rules and regulations there

under and amendments thereto FI Financial Institution FII(s) Foreign Institutional Investors registered with SEBI under applicable laws FIPB Foreign Investment Promotion Board, Department of Economic Affairs, Ministry of

Finance, Government of India INR / Rs. Indian Rupee MP Management Perception NA Not Applicable NR Non Resident NRE Account Non Resident External Account NRI(s) Non-Resident Indian(s) NRO Account Non Resident Ordinary Account NSDL National Securities Depository Limited 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 the beneficial interest is irrevocably held by NRIs directly or indirectly as defined under FEMA (Transfer or Issue of Security by a person resident outside India) Regulations 2000

RBI The Reserve Bank of India SCRR Securities Contracts (Regulation) Rules, 1957 as amended from time to time SE / Stock Exchange (s) BSE and MgSE SEBI Securities and Exchange Board of India SEBI (SAST) Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeovers) Regulations, 1997 SEBI Act Securities and Exchange Board of India Act, 1992 as amended from time to time SEBI Guidelines Means the extant Guidelines for Disclosure and Investor Protection issued by

Securities and Exchange Board of India, constituted under the Securities and Exchange Board of India Act, 1992 (as amended), called Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000

In this Letter of Offer, any discrepancies in any table between total and the sums of the amount listed are due to rounding off. All references to “Rs.” refers to Rupees, the lawful currency of India, “US$” refers to US dollar. References to the singular also refer to the plural and one gender also refers to any other gender whenever applicable.

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II. RISK FACTORS 1. Forward-looking Statements: This Letter of Offer contains certain “forward-looking statements”. These forward looking statements can generally be identified by words or phrases such as “expect”, “estimate”, “intend”, “may”, “plan”, “project”, “shall”, “will” or other words or phrases of similar import. Similarly, statements that describe Company’s objectives, strategy, plans or goals are also forward-looking statements. All forward looking statements are subject to risks, uncertainties and assumptions about the Company that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from the expectations include, among others:

General economic and business conditions; Company’s ability to successfully implement its strategy and its growth and expansion plans; Increasing competition in the CPC industry; Increases in labour costs, raw materials prices, freight rates, prices of plant & machineries and

insurance premia; Manufacturers’ defects or mechanical problems with Company’s plant & machineries; Changes in the value of the Indian rupee and other currencies, in particular, the U.S. Dollar; Cyclical or seasonal fluctuations in the operating results due to prevailing market coditions; Amount that the Company is able to realize from the clients; Changes in laws and regulations that apply to the CPC industry and also in the Petrochemical

Refining Industry and the Aluminium Industry; Changes in fiscal, economic or political conditions in India; Social or civil unrest or hostilities with neighboring countries or acts of international terrorism; Changes in the foreign exchange control regulations, interest rates and tax laws in India.

For further discussion of factors that could cause Company’s actual results to differ, please see the section entitled “Risk Factors” included in this Letter of Offer. In the light of inherent risks and uncertainties, the forward-looking statements, events and circumstances discussed in this Letter of Offer might not occur and are not guarantees of future performance. Neither the Company, its Directors and Officers, any member of the Issue Management Team, any Underwriter nor any of their respective affiliates has any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, for purposes of the Issue, the Company and the Lead Manager to the Issue will ensure that investors in India are informed of material developments relating to the business until such time as the grant of listing and trading permission by the Stock Exchanges. A.) RISK ENVISAGED BY MANAGEMENT AND MANAGEMENT PERCEPTIONS THEREOF An investment in equity shares involves a high degree of risk. The Investor(s) should consider carefully the following risks factors, together with other information contained in this Letter of Offer before making any investment decision. Unless specified or quantified in the relevant risk factors mentioned below, the Company is not in a position to ascertain the financial and other implications of any of the other risks mentioned below. If any of the following risks actually occur, the Company’s business, financial condition and results of operations could suffer, the trading price of the Company’s equity shares could decline and investors may lose all or part of the investment. Market data used throughout this Letter of Offer was obtained primarily from internal company reports. The information contained in this Letter of Offer has been obtained from sources believed to be reliable, but their accuracy and completeness and underlying assumptions are not guaranteed and their reliability cannot be assured. Although, the Company believes that the market data used in this Letter of Offer is reliable, it

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has not been independently verified. Similarly, internal Company reports and data, while believed to be reliable, have not been verified by any independent source. Risk Factors Internal to the Company 1. Criminal charges under IPC

State of Chattisgarh has filed a case against the Occupier and Factory Manager of Bilaspur Plant under Section 304(A) of the I.P.C. alleging negligence in the maintenance of plant and machinery resulting in the death of a contract labourer Lt. Ratan Yadav.

2. Goa Carbon Limited has reported a loss for the 15 month financial period ending on June 30, 2005 Managements Perception: The Company has reported a loss for the 15-month period commencing April 1, 2004 and ending on June 30, 2005 to the tune of Rs. 78.60 Lacs on a standalone basis and a loss of Rs. 841.47 Lacs on a consolidated basis. The reasons for the same being:

FOB Prices of RPC being high as well as high freight costs accompanied with revenues being fixed due to fixed price contracts The Company is under the process of improving realizations by increasing the selling prices and control of expenses. Freight costs have more or less stabilized and the earlier fixed price contracts are being renegotiated.

Under utilization of capacity of PCL during the up gradation of facilities leading to underutilization of capacities. PCLs plant at Paradeep produced a total of 93,454 MT CPC during the 15 month period ended on June 30, 2005 as against the available capacity to produce upto 1,80,000 MT.

Moreover, the customs duty on import of RPC has been reduced from 20% to 10% in the Finance Act, 2005 and the same shall have a positive impact on the margins and profitability of the Company.

3. Goa Carbon derives a substantial portion of its revenues from sales to Aluminium / Smelting Industry and has a single product Calcined Petroleum Coke (CPC) The Company focuses on CPC only and has restricted user industries, predominant ones being aluminum and steel. In fiscal period ending June 30, 2005, GCLs revenues from Aluminium Industry, accounted for around 76.23% of consolidated total income. Managements Perception: The introduction of newer capacities, or alternatively imports /dumping by foreign players, or an increase in the number of suppliers, could each have an adverse impact on the revenue and profits GCL derives from these sales. Also, any factors that directly or indirectly affect the Aluminium Industry could also directly or indirectly impact profitability of GCL. The revenue is dependent upon factors affecting CPC prices, which may not be within GCLs control. However, the company is a reputed source of CPC and is known for the quality standards. Aluminium smelting shall continue to require CPC and it has no substitutes. The demand for aluminium is expected to only increase in times to come and CPC finds usage also as recarburiser in steel industry and is required in making titanium dioxide used in the manufacture of inks. The sales of the company are distributed in these three segments, however aluminium industry continues to be the single largest buyer of CPC.

4. Goa Carbon Limited on a consolidated basis derives 22.44% of its consolidated revenues from Aluminium Pechiney Aluval, France. The Company can be said to be reliant on the orders from top 10 customers. The Top 10 customers contribute almost 74.68% of the Company’s Consolidated Net Turnover. Any disruption in repeat orders or flow of the Customers to competitors could have an impact on the performance and profitability of the Company Managements Perception: The Company operates as a supplier of key raw material for aluminium smelting units for smelting / refining to produce pure aluminium. The Company has been in this business for over three decades. The existing strong relationship and the long-term contracts that the company has with the customers mitigates the risk of being over reliant on a few big customers.

5. Costs of raw materials may fluctuate as they are linked to global crude prices, which are outside GCLs control; Volatility in raw material prices could affect the operations and profitability.

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Green Pet Coke (GPC) the Raw Material required by the Company is subject to price fluctuations and is volatile and price sensitive commodity which could affect the profitability of the company, especially in cases where the selling prices are negotiated in advance. Managements Perception: Raw material costs are dependent on global crude prices, which are outside GCL’s control. GPC the raw material for the Company is a derivative of the refining industry has its prices have some loose correlation with the global crude oil prices. As global crude oil prices increase, GPC costs also increases though not necessarily and never linearly. Further adverse movements in global commodity prices or oil prices would further increase the cost of raw materials and the accompanied hike in transportation / carriage cost may have a material adverse effect on profitability. The movements of commodity/ crude prices are outside GCLs control. The volatility impacts all the manufacturers in the industry and any adverse change in the purchase price would lead to a near corresponding adjustment in the selling price as well. However the Company acknowledges that it is exposed to the fluctuations in the prices of raw materials partially in the short run. However, the long-term contract prices that the company commits shall imitate the price movements in the long run.

6. The Issue is to repay existing term loans and working capital loans. A part of the proceeds of the

current issue shall be used to repay the unsecured working capital loans advanced by the promoter / promoter group. To the extent of this repayment a part of the issue proceeds shall be used for the benefit of the Promoters / Promoter Group. A part of the proceeds of the current issue shall be used to retire the unsecured working capital advances made by the Promoter group companies to Goa Carbon Limited. Delay in Rights Issue / failure of the Rights Issue might have an impact on the growth plans of the company. Managements Perception: The Promoters / Promoter Group companies had advanced the loans to Goa Carbon Limited as and when required. Also the promoters have undertaken to subscribe to the Rights Issue. The loans already advanced to GCL by Promoter / Promoter Group companies shall be adjusted towards the entitlement and application to be made by the promoter group of Goa Carbon Limited. To this extent the promoters may be assumed to be interested in the current issue. In unforeseen circumstances, in case the Rights Issue is delayed the Board of Directors of the Company shall make adequate other arrangements to fund and finance the objects of the Issue.

7. Revenues and profitability are dependent on a number of factors, and may vary significantly from quarter to quarter. Therefore, historical financial results may not be an accurate indicator of future performance. Managements Perception: Growth, both organic and inorganic, has varied from year to year in recent years and may vary significantly in the future from year to year. The Company has incurred losses for the 15-month period ending on June 30, 2005. The annualized sales for the fiscal 2005 was marginally higher then fiscal 2004 sales. However the Company reported a loss of Rupees 78.60 Lacs as against a profit of Rs. 81.46 Lacs and Rs. 419.31 Lacs for fiscal periods 2004 and 2003 respectively. The Company has reported a profit of Rs. 10.42 Lacs (un-audited) for the Quarter Ending on September 30, 2005. Also, the 100% subsidiary of the Company, to be amalgamated w.e.f. July 1, 2005 has also reported a profit of Rs. 197.45 Lacs (un-audited) for the quarter ending September 30, 2005. The management perceives the losses as an event of past. The revenues and profitability are dependent on a number of factors, such as:

Flotation of tenders by the user industries and Company’s ability to be empanelled Introduction of new pricing policies by competitors; Availability of the requisite raw material at competitive prices so as to supply at the desired/

contracted rates to the user industries; Freight rates that affect the landed costs of imported raw materials; GCLs ability to complete mergers and acquisitions and also successfully integrate with such

entities; Ability to respond to changes in laws; The growth rate of the domestic market and competition from Indian and non Indian CPC

producers; Effect of global regulatory / environmental changes on products manufactured; Actions, strikes, lobbying by workers at the user industries; Currency exchange rate fluctuations, particularly of the Indian Rupee against the U.S. Dollar;

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Fluctuations in interest rates; and General economic and political conditions.

As a result of the foregoing uncertainties, the period-to-period comparisons of historical and continuing business results of operations may not be an accurate or meaningful indicator of future performance.

8. Goa Carbon’s business though not being seasonal but is subject to revenue and profit fluctuations from quarter to quarter because of the scheduled plant shut down for maintenance. The revenues and consequently profitability would be affected because of the maintenance shutdown The Company had undertaken last scheduled plant shut down in October, 2004 for Goa Plant, in August, 2005 at Bilaspur plant and November, 2005 at Paradeep Carbons Limited the wholly owned subsidiary of the Company. The results of the shut down may have an effect on the quarterly profits of the Company. Managements Perception: The Company has been regularly undertaking scheduled shutdown for maintenance. The same being required for proper care of the plant. Also the company has other facilities to meet the urgent requirements of the customers at Bilaspur and also through the wholly owned subsidiary Papa deep Carbons Limited. The scheduled plant shut down is undertaken for maintenance and upkeep of the plants and is common to all manufacturing industries in general. The scheduled plant shut down at Goa plant is expected in January 2006. However the production shall be compensated by adequate and additional production at Bilaspur and Paradeep Carbons Limited. On an average the plants in claiming industry work for around 11 months in a year and so there is no affect on revenues and profitability on a yearly basis. The Company takes adequate care of the customer orders being met on time via plants from other locations.

9. Dependence on few suppliers may adversely affect the availability of key input at reasonable prices thus affecting the margins and may have an adverse effect on the business, financial condition and results of operations The main raw material for the manufacture of CPC is GPC/RPC that is a byproduct of petroleum refining process. The Company sources its entire requirement of GPC from reputed gulf vendors and can also source it locally. The material procured by way of imports for 15-month period ending on June 30, 2005 aggregated approximately 71.91% of the total raw material procured by company on a consolidated basis. Discontinuation of production by these companies or a failure of the supplier to adhere to the delivery schedule can hamper production schedule and has the potential to affect the revenues, hamper business and results of operations. This dependence may also adversely affect the availability of key inputs at reasonable prices thus affecting the margins and may have an adverse effect on the business, financial condition and results of operations. Managements Perception: The Vendors from whom GCL sources its raw materials requirements of GPC are established players. The Company has been sourcing its requirements from these players and has well-established business relationships; there has been no past instances to believe that such problems may arise in future. Also, GPC is a commodity that is available in India and they can be sourced in case there is a disruption in supply or shortage of supply from the existing vendors. The Management does not foresee an eventuality that might affect the business adversely.

10. 51.34% of GCLs standalone sales is derived from Exports. Further a significant portion of its expenses

are incurred on import of raw materials denominated in US Dollars. Any adverse change in currency exchange rates will increase the cost of imports and consequently squeeze margins. Managements Perceptions: The changes in foreign exchange rates is a global phenomenon and affects all the units in the industry and economy. The Company is both an importer of raw material and an exporter of CPC, this acts as a natural hedge against any adverse change in foreign exchange rates.

11. Minimizing Production Costs is Critical

The player with lower production costs would be in a position to utilize capacities optimally. Crude prices are hovering around US$55 per barrel and this shall have an effect on the GPC being a product of the Petroleum Industry Managements Perception: GCL enjoys cost advantages, which will enable it to withstand competition. The high crude prices shall have an effect on all the concerned industries and GCL cannot be an exception to it.

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12. The Company intends to repay the Term Loans availed by Paradeep Carbons Limited the 100%

subsidiary of the Company. PCL is to be amalgamated with the company subject to requisite regulatory approvals of the Stock Exchanges and the High Court. The Board of Directors of the Company has decided to amalgamate the 100% subsidiary of the Company Paradeep Carbons Limited with itself. The Amalgamation is to be effective July 1, 2005. The same is subject to the approval of stock exchanges, high court and all other allied regulatory approvals as may be applicable. Managements Perception: Paradeep Carbons Limited is a 100% subsidiary of the Company and the Company does not foresee any major obstacles in getting the requisite approvals. The company shall deploy the proceeds of the issue enumerated towards the repayment of the term loan of subsidiary by way of a loan to PCL towards the specific object of repayment of the term loan availed by PCL as per the terms enumerated under “Objects of the Issue” on Page No. __. The amalgamation shall be subject to the requisite regulatory clearances.

13. Certain Restrictive Covenants of the Lenders as per the Sanction Letters require prior approval of the

Lenders in altering the Capital Structure of the Company. Also, there may be prepayment penalties in case of prepayment of the Loans. The Company has availed credit facilities with the Banks and there are certain restrictive covenants in the sanction letters for term loans and working capital loans, among other things, which require the company to obtain the approval of the lenders or provide restrictions, namely for, permission for expansion, change in capital structure, change in management, disposal of assets, declaring dividends at a time while the company is in default, undertaking material diversification in the business etc. Managements Perception: The Company does not foresee any problem in obtaining the said permissions. The repayment of the loans shall contribute to reduction in interest costs that shall improve the profits available to shareholders of the company.

14. There has been no appraisal for requirement of funds as well as monitoring and the company has not

entered into any definitive agreements to utilise the proceeds of the Issue. Also, a part of the Issue proceeds shall be used for general corporate purposes The requirement of funds has not been appraised. Also, deployment of funds raised through the issue is completely at the discretion of the company and will not be monitored by any independent agency. Further, the management will have significant flexibility in applying the proceeds of the Issue. Managements Perception: The Company intends to raise resources for repayment of the term and working capital unsecured loans that shall that shall augment its long-term resources and net worth. Also, a part of the Issue proceeds shall be used for general corporate purposes for which the company is yet to firm up its plans. The deployment of funds would be judiciously exercised and monitored by the Board of Directors. Pending any use of the proceeds of the Issue, GCL intends to invest the funds in liquid instruments. The management will have significant flexibility in applying the proceeds received from the Issue received towards general corporate purposes.

15. The Company has contingent liabilities to the tune of Rs. 1,107.62 Lacs with regards to Income Tax

Disputes. Some of them might become real and consequently affect the financial position of the Issuer Managements Perception: The Company has litigations with Income Tax department about the applicability or otherwise of 80 HHC of the Income Tax Act. The Company is hopeful of a favourable verdict and has already deposited an amount of Rs. 1,075.34 Lacs (as on November 30, 2005). The company’s claims are based on reasonable grounds and is hopeful of a positive reply.

16. Increases in wages could reduce profit margins, cordial relationship with the workers / employees is

crucial for smooth functioning of operations Any significant increase in wage costs could have an adverse effect on the business, financial condition and results of operations. In the long term, wage increases may make GCL less competitive unless it is able to continue increasing efficiency and productivity, and the prices that it can charge to customers Managements Perception: Historically, wage costs in the Indian industry have been significantly lower than wage costs in the developed countries for comparable skilled technical personnel. However the Company has entered into a wage settlement agreement with workers valid till December 2006. The

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revision of wages is mutually agreed and this helps in containing wage costs and the company is taking effective measures to increase efficiency and productivity. The relationship between the management and employees is harmonious.

17. Failure to manage the integration of the businesses or facilities acquired may cause profitability to

suffer. Managements Perception: GCL has acquired VPPL in recent past that has been merged with the Company, also the company had acquired a Paradeep Carbons Limited and made it a wholly owned subsidiary and the same is proposed to be merged with the Company. GCL has pursued acquisitions and strategic partnerships as part of growth strategy and intends to continue entering into acquisitions and is open to strategic alliances. The acquisitions may not contribute to profitability, and GCL may be required to incur or assume debt, or assume contingent liabilities, as part of any acquisition. Acquisitions may give rise to unforeseen contingent risks or latent liabilities relating to these businesses that may only become apparent after the merger or the acquisition is finalized. Also, there can be operational difficulties in assimilating and retaining the personnel, operations and assets of the acquired company. The loss of any available tax exemptions pursuant to an acquisition could adversely impact results of operations. These difficulties could disrupt ongoing business, distract management and employees and increase expenses and materially affect profits. In the event that an acquisition does not perform as estimated, the operations may be materially adversely affected.

18. Non-payment of Proper Stamp Duty:

The Company had acquired VPPL and initially made a subsidiary and was later merged into the Company. There are certain liabilities amounting to Rs. 32.24 Lacs arising out of the transfer of the subsidiary to the Company. Managements Perception: There is no undisputed stamp duty amount that is payable by the Company. The Stamp duty demanded for the merger of the subsidiary with the Company is being contested in the courts by the Company.

19. The Company has to maintain high inventory levels that has carrying cost and thus have a negative

effect on Return on Net worth and profitability Managements Perception: The Company maintains higher inventory to avoid production losses because of non-availability of raw materials and also to gain by way of the increase in input costs. It imports its raw material that has a considerable time lag from the date of placing the order and is affected by timely availability of specification compliant vessels. The increased inventory is a timely phenomenon based on the price fluctuation and demand and supply of the raw material and is an executive decision based on the understanding of the prevailing market scenario. Due to imports of raw materials,

20. One of the group company of the Issuer namely Hindustan Foods Limited has been suspended from

trading on the Bombay Stock Exchange Limited The Equity shares of Hindustan Food Limited have been suspended and were last traded on November 7, 1996. The Company has reported losses for the immediate preceding years and has a negative net worth. Managements Perception: Hindustan Foods Limited has complied with the requirements of the Listing Agreement. The Company has also reported a profit after tax for the financial year 2004-05. The Company has applied for revocation of the suspension order and is hopeful of being relisted on the Exchanges.

21. Losses by Promoter Companies / Group Company. The following Promoter Companies / Group Companies have reported a loss for the financial year ended on March 31, 2005.

(Rs. in Lacs) Name of the Promoter Company/ Group Company Amount of Loss Motown Investments Private Limited 6.25 Dempo Marketing Company Private Limited 29.99 Aparant Iron and Steel Private Limited 3,885.45

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Besides the above, Sindhudurg Mining Corporation Private Limited has a negative net worth of Rs. 550.17 Lacs and is yet to commence business. Managements Perception: Losses by other group companies would not have any reflection on the performance of Goa Carbon Limited.

22. Litigations

Outstanding Litigations: The following are the material pending litigations and defaults involving the Company. For details of these litigations please refer to section ‘Other Regulatory and Statutory Disclosures” of this Letter of Offer.

a. Outstanding litigations involving the company:

Filed against the Company Criminal Law: As per Risk Factor No. 1. Statutory Disputes including Tax disputes: 3 Cases; Amount Involved: Rs. 1,114.23 Lacs Civil: 1 Case; Amount Involved: Rs. 3.24 Lacs Claims: 1 Claim; Amount Involved: Rs. 194.09 Lacs

Filed by the Company Civil and Arbitration Matters: 5 Cases; Amount Involved: Rs. 1,749. 11 Lacs

b. Outstanding litigations involving the Subsidiary Company:

Filed against the Subsidiary Statutory including Tax Disputes: 3 cases; Amount Involved: Rs. 1.89 Lacs Civil: 2 Cases; Amount Involved: N.A.

c. Outstanding litigations involving the Promoter Companies:

i. V. S. Dempo & Company Private Limited Filed against V. S. Dempo & Company Private Limited Criminal Laws: 1 Case; Amount Involved: N.A. Civil Laws: 7 Cases; Amount Involved: Rs. 43.12 Lacs.

Filed by V. S. Dempo & Company Private Limited Criminal Laws: 1 Case; Amount Involved: N.A. Arbitration Law: 1 Case; Amount Involved: Rs. 4.65 Lacs. Civil Laws: 11 Cases; Amount Involved: Rs. 24.40 Lacs.

ii. Dempo Brothers Private Limited Filed by Dempo Brothers Private Limited Civil Laws: 1 Case; Amount Involved: Rs. 16.00 Lacs.

iii. Marmagoa Shipping and Stevedoring Co Pvt Limited Filed by Marmagoa Shipping and Stevedoring Co Pvt Limited Statutory (including Tax Disputes): 1 Case; Amount Involved: Rs. 0.75 Lacs.

iv. Dempo Industries Limited Filed against Dempo Industries Private Limited: Criminal Laws: 3 Cases; Amount Involved: N.A. Statutory (including Tax Disputes): 1 Case; Amount Involved: Rs. 40.65 Lacs Civil Laws: 3 Cases; Amount Involved: Rs. 52.00 Lacs.

Filed by Dempo Industries Private Limited: Criminal Laws: 1 Case; Amount Involved: Rs. 7.64 Lacs. Civil Laws: 6 Cases; Amount Involved: Rs. 2,112.85 Lacs.

d. Outstanding litigations involving Other Group Companies:

i. Dempo Mining Corporation Private Limited Filed against Dempo Mining Corporation Private Limited Civil and Tenancy Laws: 7 Cases; Amount Involved: Rs. 1.29 Lacs

Filed by Dempo Mining Corporation Private Limited Criminal Laws: 1 Case; Amount Involved: N.A. Civil Laws: 3 Cases; Amount Involved: Rs. 139.26 Lacs.

ii. Dempo Marketing Company Private Limited

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Filed against Dempo Marketing Company Private Limited Civil Laws: 5 Cases; Amount Involved: 19.58 Lacs.

iii. Aparant Iron and Steel Private Limited Filed by Aparant Iron and Steel Private Limited Criminal Laws: 3 Cases; Amount Involved: Rs. 53.39 Lacs. Statutory Laws (including Tax Disputes): 4 cases; Amount Involved: Rs. 3.40 Lacs. Arbitration Laws: 1 Cases; Amount Involved: Rs. 5.96 Lacs.

23. Contingent Liabilities: Contingent Liability not provided for:

Rs. In lakhs As at As at As at As at As at June 30,

2005 March

31, 2004 March

31, 2003 December

31, 2001 March

31, 2001 Demand raised by Collector of Stamps, Bilaspur towards Stamp duty with respect to amalgamation of Viswalakshmi Petro Products Ltd

32.24 - - - -

Bank Guarantee issued on behalf of the Company

- 858.96 1,481.58 8.96 8.96

Corporate guarantees issued to Banks for the facilities availed by the subsidiary Company

4,924.94 5,835.22 3,950.00 800.00 800.00

Custom Duty payable in the event of non-fulfillment of export obligations

247.09 149.48 268.65 183.29 -

Claims against the company not acknowledged as debt.

0.59 0

Income Tax Demands 1,107.62 1,083.98 678.75 483.89 483.89

The Income Tax demands mainly relate to disallowance of claim of the Company for deduction under section 80 HHC of the Income Tax Act, 1961. The Company has been advised by its tax counsel that it has a fairly good case to get the favourable orders from Bombay High Court/ Appellate Authorities.

Risk Factors External to the Company and beyond the control of the Company 1. Globally competitive business environment

The Company operates in a globally competitive business environment. Growing competition may force it to reduce the price of its products which may reduce its revenues and margins and / or decrease its market share, either of which could have a materially adverse effect on its business, financial condition and results of operations. Managements Perception: The Company constantly endeavors to add newer markets and broad base its customer base and capture new markets so as to reduce dependence on any single market. Also to maintain the competitive advantage company constantly attempts at increase its efficiency and productivity.

2. The business of the Company is significantly affected by external factors

The results of the Company have been and may be significantly affected by factors outside our control such as political unrest, cross-border hostilities, civil commotion and acts of terrorism either in India or outside India. Other factors include potential negative changes in environmental regulations, government regulations. The Company is also subject to the risk of loss of revenues and assets due to fire or natural disasters. The occurrence of all such event including natural disasters could interrupt the Company’s business for significant periods. Managements Perception: These are Force Major Conditions that affect every business in general.

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3. Changes in the Government of India policies A significant change in India’s economic liberalization and deregulation policies, including the textile industry, could affect business and economic conditions in India generally and the business of the Company in particular. A significant change in the Indian governments or the state governments economic liberalization and deregulation policies could adversely affect business and economic conditions in India generally and the business and financial condition and prospects in particular of the Company. Managements Perception: The Government of India’s Economic Policies are investor friendly and market oriented, especially government is supporting industry by removing bottlenecks that hinder growth. It is expected that there won’t be any unforeseeable major policy change in future, materially threatening the domestic industry.

4. Risk relating changes laws and regulations

Any change in the laws and regulations governing the industry may adversely affect the business and financial condition of the Company.

5. Future offering resulting in dilution of the shareholding

Any future equity offering made by the Company may lead to dilution of the shareholding or may affect the market price of the Equity Shares of the Company.

6. Perils of Environmental Litigations

Failure to comply with environmental laws and regulations could result in litigation and company’s business may be adversely affected. It may incur substantial expense in complying with environmental laws and regulations. Also, currently unknown environmental problems or conditions may be discovered. The company is subject to significant national and state environmental laws and regulations, which govern the discharge, emission, storage, handling and disposal of a variety of substances that may be used in or result from its operations. Environmental laws and regulations in India have been increasing in stringency and it is possible that they will become significantly more stringent in the future. Managements Perception: Issuer follows the safety, health and an environment policy as laid down by the Indian authorities and all the clearances from concerned departments have been obtained.

7. Economic Slowdown

Any economic slowdown may result in reduced spending generally. It can also put pressures on the realizations, resulting in reduced volumes/margins and may impair the financial results. Managements Perception: The Company is geared up to absorb any minor short-term pressures of this nature.

8. Wars, natural disasters and terrorist attacks may adversely affect the markets, investor confidence,

exchange rates and world economy in general and may result in loss of business and assets. 9. Fluctuation in the foreign exchange rates

Fluctuation in foreign exchange rates may affect the profitability of our Company as we import raw material and export finished product from and to various countries. The Company may face increased exposure to exchange rate fluctuations in its business of exports of goods and services. Managements Perception: The volatility impacts all the manufacturers in the entire industry. Whenever there is a change in the price of raw material, corresponding changes will be there in CPC prices as well.

10. Political instability in India and other countries, can adversely affect the Company’s business. 11. Competition

Competition from existing established companies and future entrants into the industry may affect GCLs performance. Managements Perception: Company with its experience in the industry will adopt appropriate strategies to meet the competition.

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12. Stability Of Policies & Political Situation A significant change in India’s economic liberalization and deregulation policies could affect the business and economic conditions in India, which in turn could have an impact on the Indian companies with a concurrent effect on the market for the Company’s products. Managements Perception: The economic liberalization process is continuing in India and there is a reasonable consistency in the policies inspite of change in the governments and we have a reason to believe that it will continue through the foreseeable future.

13. Regulatory Environment

Changes in regulatory environment may have an impact on the business of the Company. Managements Perception: Such changes may have an impact on the industry as a whole.

14. Volatility In Share Prices

After the Rights Issue, the price of the Equity Shares may be highly volatile and may fluctuate significantly due to many factors, including variations in the operations of the Company and changes in the regulatory environment. The prices of the Equity Shares may fluctuate as a result of several factors, including:

volatility in the Indian and Global Securities market; our results of operations and performance; perceptions about our future performance or the performance of Indian CPC companies

generally; performance of our competitors in the Indian CPC industry and the perception in the market

about investments in Textile sector; adverse media reports on the Company or the Indian CPC Industry; changes in the estimates of our performance or recommendations by financial analysts; significant developments in India’s economic liberalisation and deregulation policies; changes in the applicable tax incentives; significant development in India’s fiscal and environmental regulations. the exchange rate of USD or any other relevant currency; and general political and security environment in the country and across the globe.

15. Force Majeure

In future there might be a natural calamity like earthquake, Tsunami, volcano, etc. or some unforeseen event that is beyond the control of the company like war, terrorist attack etc. that might prevent us from performing our business obligations.

16. Changes In Domestic Tax Laws

Any changes in the tax laws prevailing in India particularly the income tax might lead to increased tax liability of the Company thereby putting pressures on our profitability.

Change in tax laws, particularly income tax, can have an impact on the post-tax profits of the Company B.) NOTES TO RISK FACTORS 1. The investors are advised to refer to ‘Basis of Issue Price’, on page no___ before investing in the Issue. 2. The Net worth of the Company prior to the Issue (as on June 30, 2005) as per the adjusted accounts is

Rs.2360.58 Lacs. The Issue Size is Rs 3680 Lacs. 3. The book value of the Equity shares of the Company as on June 30, 2005 is Rs.51.32 per share. 4. Cost per share of the shareholding of the Promoter as on the date is Rs. 3.08. 5. The Company has made Bonus Issue of Equity Shares in the ratio of 1 equity shares for every 1 equity

shares held on the record date i.e. November 26, 1991 and in the ratio of 1 Equity Share for every 1

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xi

equity share held and allotted the same on December 6, 1997. These bonus Issues were made through capitalization of Reserves Account.

6. During the last six months the Promoters and the Directors have not carried out transactions in equity

shares of the Company. 7. The promoters/directors/key managerial personnel of the Company are interested in the company to

the extent of reimbursement of expenses incurred, normal remuneration or benefits, sitting fees and their respective shareholding in the company. (Please refer interest of Promoters / Directors discussed in this Letter of Offer)

8. The Company has entered into certain related party transactions. The related party transactions cover

the financial transactions carried out in the ordinary course of business and/or discharge of contractual obligations. There are no common pursuits among the group companies and all the transactions are at Arm's length and are subject to Transfer Pricing regulations. The Statutory Auditors certify these transactions, which fall within the norms of Transfer Pricing u/s. 92A of the Income Tax Act, 1961, for the purposes of the Income Tax Return. The details of the transactions as certified by the auditors of the Company are as follows. Related party disclosures, as required by Accounting Standard - AS 18 "Related Party Disclosures" issued by the Institute of Chartered Accountants of India are given below for the financial years ended 31st December 2001 and onwards.

A) Enterprise having ownership, directly and indirectly, of more than 50% of the voting power V.S. Dempo & Co. Private Limited B) Wholly owned subsidiary company Paradeep Carbons Limited C) Enterprise with Common Key Management Personnel Marmagoa Shipping and Stevedoring Co Pvt Limited Aparant Iron & Steel Pvt Ltd Dempo Industries Pvt Ltd Dempo Mining Corporation Pvt Ltd Dempo Brothers Pvt Ltd Dempo Travels Pvt Ltd Motown Investments Pvt Ltd Hindustan Foods Ltd Devarshi Real Estates Developers Vasantrao Dempo Education and Research Foundation D) Key Management Personnel Mr.Shrinivas V.Dempo (Executive Chairman) Dr.A.B.Prasad (Managing Director)

Details of transactions with Enterprise having ownership of more than 50% of voting power

Rs. In lakhs (15 Months) (12 Months) (15 Months) (9 Months)

June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

Loans taken during the period 1,590.00 500.00 456.58 356.56 Loans repaid during the period 400.00 300.00 456.58 - Interest Paid 83.47 14.25 - - Investments - - - - Loans and Advances - - - - Purchase of Assets - - - - Sale of Assets - - - - Purchase of goods - - - - Sale of goods - - - - Receipt of Services 156.81 170.17 139.48 122.03

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June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

Rental Income - - - - Security deposit paid - - - - Donations - - - - Remuneration - - - - Outstanding Balances: Credit Balance 1,432.43 212.60 5.58 - Debit Balance Details of transactions with Wholly owned subsidiary company


June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

Loans taken during the period Loans repaid during the period Interest Paid Investments 3,300.00 - Loans and Advances given 4,705.73 2,423.48 1,651.30 1,308.79 Loans and Advances repaid 2,278.23 2,484.18 1,430.75 Purchase of Assets Sale of Assets Purchase of goods 679.64 557.98 659.09 141.35 Sale of goods 434.92 247.14 - Receiving of Service Rental Income Security deposit paid Donations Remuneration Outstanding Balances: Credit Balance Debit Balance 0.12 872.62 933.32 1,181.44

Details of transactions with Enterprises having Common Key Management Personnel

Rs. In lakhs (15 Months) (12 Months) (15 Months) (9 Months) June 30, 2005 March 31, 2004 March 31, 2003 December

31, 2001

Loans taken during the period 42.32 - 459.74 401.00 Loans repaid during the period - 459.74 Interest Paid 35.29 31.58 Investments Loans and Advances given Loans and Advances repaid 100.00 Purchase of Assets 16.85 Sale of Assets 1.00 Purchase of goods 0.46 1.21 4.46 2.27 Sale of goods 2.68 Receiving of Service 449.99 354.76 423.53 270.96

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31, 2001 Rental Income 0.36 Security deposit paid 0.15 Donations 2.00 3.00 7.50 Remuneration Outstanding Balances: Credit Balance 349.94 300.00 300.00 312.51 Debit Balance 100.00

Details of transactions with Key Management Personnel


June 30, 2005 March 31, 2004 March 31, 2003 December 31, 2001 Remuneration 12.56 15.35 40.00 24.13 Outstanding Balances: Credit Balance - 4.99 26.97 16.37 Debit Balance

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Goa Carbon Limited

1

III. INTRODUCTION A. SUMMARY Summary of the Industry and Business of the Company Industry Calcined Petroleum Coke commonly known as CPC is produced from Raw Petroleum Coke (RPC) also called Green Petroleum Coke (GPC). The result of this calcining process is converting green coke to hard, dense and almost pure carbon with low hydrogen content, good electrical conductivity and a defined structure. These properties along with low metals and ash contents make calcined petroleum coke the best material currently available for making carbon anodes for smelting of alumina to aluminium in the electrolytic smelting process. For every ton of aluminium produced, the aluminium smelters require about 400 Kgs of CPC and, presently, there are no known viable substitutes for CPC. Accordingly, CPC constitutes a key raw material for the aluminium industry. CPC is also used in the manufacture of graphite products, pre baked graphite electrodes, titanium dioxide and in electrometallurgical furnaces. It is also widely used in the steel industry as a recarburiser. Demand of calcined coke from the primary aluminum industry accounts for more than 70% of overall calcined petroleum coke needs. Balance CPC is used in the manufacture of titanium dioxide, steel mills, foundries and for various other uses in chemical industries. Therefore, the growth of CPC industry is intrinsically linked to the growth on the aluminium sector for the manufacture of basic aluminium metal. Business of Goa Carbon Limited Incorporated as a public limited company in the year 1967, Goa Carbons is engaged in the business of manufacturing and marketing Calcined Petroleum Coke (CPC). The original calcination unit was set up with technical assistance from Great Lakes Carbon Corporation, USA. GCL today has firmly established itself as a leading Indian pet coke calciner. It has been supplying pet coke to aluminium smelters, graphite electrode and Titanium dioxide manufacturers as well as other users in the metallurgical and chemical industries. GCL was one of the first Indian manufacturers and exporters of pet coke. In 1999-2000, GCL acquired 100% equity shares of Vishwalakshmi Petro Products Ltd. (VPPL), a calcined petroleum coke manufacturing company, which had become a subsidiary of Goa Carbon Limited. VPPL was subsequently amalgamated with the company, which was approved by Bombay High Court with effect from January 1, 2002. The acquired plant is located at Bilaspur in Madhya Pradesh with a capacity of 40,000 MT per annum. In the September 2001 GCL acquired 80.00% equity share capital of Paradeep Carbons Limited a Calcined Petroleum Coke manufacturer based in Paradeep Orissa, another 3.47 % stake was acquired in the 15 month period ended March 31, 2003. Subsequently, it increased its equity stake to 100% in Paradeep Carbons Limited (PCL) so as to make it a wholly owned subsidiary in the financial year ending March 31, 2004. The Paradeep plant has an installed with a capacity of 1,25,000 MT per annum. GCL has consolidated the operations to realize maximum operational efficiency and to meet the buyers’ requirement of CPC on all India basis.

Calcination unit at Goa with 75,000 MT capacity is based approximately 40 Kms away from Marmagoa Port in Goa. Thus, Total CPC manufacturing capacity is of Goa Carbon Limited is 2,40,000 MT.

Issue Details ISSUE OF 46,00,000 EQUITY SHARES OF RS.10/- EACH AT RS. 80/- PER SHARE (INCLUDING A PREMIUM OF RS. 70/- EACH) AGGREGATING TO RS. 3680 LACS COMPRISING OF: Ratio of Rights Entitlement One Equity Share for One Equity Shares held Record Date [ ] Total Equity Shares under Letter of Offer 46,00,000 Equity Shares of Rs.10/- each Equity Shares outstanding prior to the Issue 46,00 ,000 Equity Shares of Rs. 10/- each Equity Shares outstanding after the Issue* 92,00,000 Equity Shares of Rs. 10/- each Use of Issue proceeds Please see section entitled “Objects of the Issue” on

page no. ___ of this Letter of Offer for additional information.

* Assuming full subscription

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Summary Consolidated Financial, Operating and Other Data i. Consolidated Statement of Assets and Liabilities (As Restated) (Rs in Lacs)

(15 Months) (12 Months) (15

Months) (9

Months) (12 Months)

PARTICULARS June 30, 2005 March 31, 2004

March 31, 2003

December 31, 2001

March 31, 2001

A) Fixed Assets Gross Block 4,923.07 5,175.37 5,546.64 2,901.90 2,902.23 Less: Depreciation and

amortization 2,492.72 2,412.97 2,472.76 1,611.79 1,483.75

Net Block (A) 2,430.35 2,762.40 3,073.88 1,290.11 1,418.48 Add: Capital WIP 33.88 24.56 275.39 3.28 - Net Block after adjustment 2,464.23 2,786.96 3,349.27 1,293.39 1,418.48

B) Goodwill on Consolidation (B)

383.74 383.74 193.82 4.51 4.51

C) Investments : (C) 4.05 4.05 4.05 1,039.01 4.05

D) Current Assets, Loans

and Advances : Inventories 6,961.31 5,771.19 5,190.78 2,530.29 1,560.89 Sundry Debtors 2,415.86 2,769.45 2,180.87 767.68 1,281.67 Cash and Bank Balances 3,357.01 3,061.61 1,183.67 451.62 160.41 Loans and Advances 1,519.66 828.23 672.42 1,440.08 541.47 Total (D) 14,253.84 12,430.48 9,227.74 5,189.67 3,544.44

E) Liabilities and Provisions: Secured Loans 11,522.27 11,971.47 7,042.35 2,572.19 1,539.22 Unsecured Loans 1,758.11 500.00 300.00 300.00 70.00 Net Deferred Tax Liability 100.29 158.83 174.44 57.09 - Current Liabilities 2,957.29 1,294.69 3,095.06 1,965.98 611.81 Provisions 236.05 280.78 404.46 362.95 297.64 Minority Interest 1.00 Total (E) 16,574.01 14,205.77 11,017.31 5,258.21 2,518.67

F) Net Worth (A+B+C+D) 531.85 1,399.46 1,757.57 2,268.37 2,452.81

G) Represented by Share Capital 460.00 460.00 460.00 460.00 460.00 Reserves and Surplus 71.85 939.55 1,299.05 1,809.91 1,994.49 Total 531.85 1,399.55 1,759.05 2,269.91 2,454.49

H) Miscellaneous Expenditure - 0.09 1.48 1.54 1.69 (to the extent not written off)

I) Net Worth (G-H) 531.85 1,399.46 1,757.57 2,268.37 2,452.80

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3

ii. Consolidated Statement of Profits and Losses (As Restated)

Rs. In lakhs (15 Months) (12 Months) (15 Months) (9 Months) (12 Months)

PARTICULARS June 30, 2005 March 31, 2004

March 31, 2003

December 31, 2001

March 31, 2001

Income: Sales 21,958.17 15,943.23 14,146.92 4,371.47 4,471.31 Other Income 499.45 665.19 276.42 47.62 169.53 Increase / (Decrease) in stocks 1,493.60 (576.43) 1,035.71 148.22 (9.35) Total 23,951.22 16,031.99 15,459.05 4,567.31 4,631.49 Expenditure: Cost of raw material consumed 20,471.30 12,776.54 11,894.16 3,229.83 3,054.63 Staff Costs 605.55 449.55 459.97 240.21 260.96 Other manufacturing Expenses 696.54 607.89 577.15 239.32 230.33 Administrative Cost 659.92 560.96 550.46 225.85 186.96 Goodwill written off - - 4.51 - - Preliminary Expenses & share issue Expenses w/off

0.09 1.40 0.34 0.14 0.19

Selling & Distribution Cost 929.29 685.69 739.58 298.61 385.40 23,362.69 15,082.03 14,226.17 4,233.96 4,118.47 Earnings Before Interest, Depreciation & Tax

588.53 949.96 1,232.88 333.35 513.02

Finance Charges 1,030.97 858.87 952.90 190.65 137.83 Depreciation 461.19 386.01 524.78 134.97 188.23 Earnings before Tax and Extra ordinary items

(903.63) (294.92) (244.80) 7.73 186.96

Provision for Taxation Current Tax -- For the Year 3.25 64.10 54.41 60.25 65.50 -- Relating to earlierYears (9.73) 5.75 - - - Deferred Tax (58.54) (15.60) 41.51 (6.26) - Fringe Benefit Tax 2.86 Profit Before Extra Ordinary Items (841.47) (349.17) (340.72) (46.26) 121.46 Minority Interest - - 126.20 - - Extra Ordinary Items - - - - - Adjustment on account of prior Period Items

- - - - -

Adjusted Net Profit (841.47) (349.17) (214.52) (46.26) 121.46

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B. GENERAL INFORMATION Goa Carbon Limited (Registration No.: 24-00076)

[Incorporated on June 22, 1967 under the Companies Act, 1956 as ‘Goa Carbon Limited’ vide Certificate of Incorporation issued by the Registrar of Companies, Goa, Daman and Diu, Panaji - Goa]

Registered Office: Dempo House, Campal, Panaji-Goa 403 001 (The Registered Office of the Company was originally located at New Municipal Building, Panaji-Goa and was shifted to Velho’s House, Rua Conde De Toress Novas, Panaji-Goa w.e.f April 1, 1969. The Registered

Office was shifted to the current address w.e.f. May 1. 1971) Tel: +91-832-244 1300 / 1457; +91-832-222 4453 / 3684; Fax: +91-832-2427192, +91-832- 2225098/ 8588

E-mail: [email protected] Website: http://www.goacarbon.com Contact Person: Mr. P.S. Mantri, Company Secretary and Compliance Officer

Registrar of Companies: Company Law Bhawan, EDC Complex, Plot No. 21, Patto, Panaji, Goa-403 001.

Tel. No./ Fax: +91-832-2438617 / 2438618, E-Mail: [email protected], [email protected]

Dear Shareholder(s), Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on July 23, 2005 it has been decided to make the following offer to the Equity Shareholders of the Company: ISSUE OF 46,00,000 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT A PREMIUM OF RS. 70/- PER EQUITY SHARE ON RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF THE COMPANY IN THE RATIO OF 1 EQUITY SHARES FOR EVERY 1 EQUITY SHARE HELD ON RECORD DATE [ ] AGGREGATING RS. 3680 LACS. THE OFFER PRICE IS 8 TIMES OF THE FACE VALUE OF THE EQUITY SHARE Board of Directors of Goa Carbon Limited The Board of Directors as on date are as under:

Name Designation Status Mr. Shrinivas V. Dempo Executive Chairman Executive Director Mr. Soiru V. Dempo Director Non-Executive Director Mr. Dara P. Mehta Director Independent Director Dr. W.R Correa Director Independent Director Mr. P.G. Kakodkar Director Independent Director Mr. Keki M. Elavia Director Independent Director Mr. Alban F. Couto Director Independent Director Dr. A.B.Prasad Managing Director Executive Director

Brief Profile of Executive Directors Mr. Shrinivas V. Dempo, 36 years, has been the Chairman of our Company since 2001. He also heads the Dempo Group having interest among others in Iron Ore mining and exports, Pig Iron, Marine and Industrial Paints, Construction, Publishing, Ship Building, Travel and Trade and is Chairman & Managing Director of V. S. Dempo & Co. Pvt. Ltd. and Chairman of Dempo Mining Corporation Pvt. Ltd., Aparant Iron & Steel Pvt. Ltd. and Paradeep Carbons Limited. He is an MBA from Carnegie Melon University, U.S.A. and is well experienced in corporate management at various levels. He holds many important positions in various economic, social and industrial development organizations. He is the Whole-time Director of the Company with designation ‘Executive Chairman’. Dr. A. B. Prasad, 62 years, has been a Managing Director of our Company since 1995. He is a Chemical Engineer with Masters and Ph. D. Degree and has extensive experience in the operation of Process, plants and project engineering.

Goa Carbon Limited

5

Company Secretary and Compliance Officer Mr. P. S. Mantri Goa Carbon Limited Dempo House, Campal Panaji - Goa 403601. Tel. No.: +91-832-244 1300/ 1457, +91-832-222 4453/3684, Fax No.: +91-832-242 7192, +91-832-222 5098/ 8588 Email: [email protected]

Bankers to the Company

Bank of India Dempo House, Campal Panaji- Goa 403 001 Tel: +91-832-222 6008 Fax: +91-832-222 3845 Email: [email protected]

ICICI Bank Limited 65, Sindur Business Centre Swami Vivekanand Road Panaji-Goa 403 001 Tel: +91-832-2232180, 2232183 Fax: +91-832-22323905

Solicitors to the Company

Little & Co. Central Bank Building, 3rd Floor, Mahatma Gandhi Road, Mumbai – 400 023 Tel: +91-22-22652739 / 2665 / 3511 Fax: +91-22-22659918, +91-22-22670563 Contact person: Mr. Dara P Mehta E-mail: [email protected]

Issue Management Team: Lead Manager to the Issue

Fortune Financial Services (India) Limited K.K. Chambers, 2nd Floor Sir P.T. Marg, Fort Mumbai 400 001 Tel: +91-22-2207 7931 Fax: +91-22-2207 2948 Contact person: Mr. Ritesh Shroff Email: [email protected] Website: http://www.ffsil.com

Registrar to the Issue

Intime Spectrum Registry Limited C-13, Pannalal Silk Mills Compound LBS Marg, Bhandup (West) Mumbai – 400 078. Tel: +91-22-5555 5491-94 Fax: +91-22-5555 5499 Contact Person: Mr. Vishwas Attavar Email: [email protected] Website: http://www.intimespectrum.com

Dempo Group

6

Advisor to the Issue

Centrum Capital Limited 5th Floor, Khetan Bhavan 198, J. Tata Road Churchgate Mumbai 400 020 Tel: +91-22-2202 3838 Fax: +91-22-2204 6096 Contact Person: Ms. Sangeeta Sanghvi

Legal Advisor to the Issue

M/s. Little & Co. Central Bank Building 3rd Floor Mahatma Gandhi Road Mumbai – 400 023 Tel: +91-22-2265 2739 / 2665 / 3511 Fax: +91-22-2265 9918, +91-22-2267 0563 Contact Person: Mr. Dara P Mehta E-mail: [email protected]

Bankers to the Issue

HDFC Bank Limited Manekji Wadi Building Ground floor Nanik Motwane Marg Fort Mumbai- 400 023.

Auditors of the Company: M/s. Fraser & Ross Chartered Accountants 2nd Floor, Temple Tower 672 Anna Salai, Nandanam Chennai – 600 035 Tel: +91-44-52131124 - 28 Fax: +91-44-52131129 E-mail: [email protected]

Credit Rating: As this is an Issue of Equity Shares, there is no requirement of credit rating for this Issue. Debenture Trustees: As this is an Issue of Equity Shares, appointment of Trustees is not required. Underwriting of the Issue: The Issue is proposed to be underwritten to the extent of non-promoters share entitlement as mentioned below: Name & Address of the Underwriter Date of Agreement Amount Underwritten

(in Rs. Lacs) Centrum Capital Limited 5th Floor, Khetan Bhavan 198, J. Tata Road Churchgate Mumbai 400 020

November 29, 2005 1613.312

Goa Carbon Limited

7

Tel: +91-22-2202 3838 Fax: +91-22-2204 6096 Contact Person: Ms. Sangeeta Sanghvi The Company has not entered into any standby arrangements other than a standby underwriting arrangement with Centrum Capital Limited, which has undertaken to subscribe the issue to the extent of Rs. 1613.312 Lacs (20,16,640 Equity Shares) in the event the shareholders or renouncees donot subscribe the shares offered as Rights. Centrum Capital Limited will subscribe to the Equity Shares which are under subscribed and the payment towards the same will be made within 15 days of receipt of communication from the Company. In the opinion of the Board and the Lead Merchant Banker, on the basis of declaration given by the Underwriters, the assets of the above mentioned Underwriter are adequate to meet their underwriting obligations in full. The Underwriter referred above has obtained Certificate of Registration from SEBI under the SEBI (Underwriters) Regulations, 1993 or the SEBI (Stock Broker & Sub- Brokers) Regulations, 1992. The draft of the above underwriting agreement has been approved by the Board at their meeting held on October 21, 2005. Monitoring Agency: No agency has been appointed to monitor the utilization of funds. Investors are advised to contact the Registrars to the Issue / Compliance Office in case of any pre-issue / post-issue related problems such as non-receipt of Letter of Offer or Letter of Allotment or Share Certificates / Refund Orders/ Demat Credit.

Dempo Group

8

C. CAPITAL STRUCTURE OF THE COMPANY

Number of Shares

Nominal Value (Rs.)

Aggregate Value (Rs.)

A. AUTHORISED CAPITAL 2,20,00,000

3,00,000 Equity Shares of Rs. 10/- each Preference Shares of Rs. 100/- each

22,00,00,000 3,00,00,000

22,00,00,000 3,00,00,000

B. ISSUED, SUBSCRIBED AND PAID UP CAPITAL 46,00,000 Equity Shares of Rs. 10/- each fully paid up. 4,60,00,000 4,60,00,000 C. PRESENT RIGHTS ISSUE IN TERMS OF THIS LETTER

OF OFFER

46,00,000 Equity Shares of Rs. 10/- each at a Premium of Rs. 70/- per share on a Rights basis to the existing shareholders of the Company in the ratio of 1 (One) Equity Shares for every 1 (One) Equity Shares held as on the Record date [ ]

4,60,00,000 36,80,00,000

D. SUBSCRIBED CAPITAL AFTER THE RIGHTS ISSUE (assuming full subscription)

92,00,000 Equity Shares of Rs. 10/- each fully paid up 9,20,00,000 414,000,000 E. SHARE PREMIUM ACCOUNT - Before the Rights Issue Nil - After the Rights Issue 32,20,00,000

a.) The equity shareholders do not hold any warrant, option or convertible loan or any debenture, which would entitle them to acquire further equity shares.

b.) All the existing shares are fully paid up. Notes forming part of the Capital Structure: 1. Details of Increase in Authorized Equity Capital divided in Equity Shares of Rs. 10/- each

Sr. No.

Date of Resolution / Meeting AGM/EGM Increase in Authorized Equity Capital (in Rs.)

1 On Incorporation - 10,000,000 2 December 29, 1979 AGM 10,000,000 to 15,000,000 3 August 2, 1991 EGM 15,000,000 to 95,000,000 4 September 27, 1997 EGM 95,000,000 to 220,000,000

2. The existing share capital has been subscribed and allotted as under:

a. Equity Share Capital: Date of Allotment / Date when made fully paid up

No. of Shares

Face Value/ share (Rs)

Issue Price/ share (Rs.)

Consideration

Mode Cumulative No. of Shares

% of Post Issue Capital

September 22, 1967 3,500 10 10 Cash Subscription to M&A

3,500 0.04%

October 21, 1969 98,000 10 10 Cash Allotment to Promoters

101,500 1.07%

September 18, 1973 198,500 10 10 Cash Allotment to Business Associates

300,000 2.16%

February 5, 1974 450,000 10 10 Cash Initial Public Offering

750,000 4.89%

November 14, 1980 400,000 10 10 Cash Allotment to Promoters - Conversion of loan into

1,150,000 4.35%

Goa Carbon Limited

9

Date of Allotment / Date when made fully paid up

No. of Shares


Issue Price/ share (Rs.)

Consideration

Mode Cumulative No. of Shares

% of Post Issue Capital

Equity December 14, 1991 1,150,000 10 Nil Bonus Bonus 1:1 2,300,000 12.50% December 6, 1997 2,300,000 10 Nil Bonus Bonus 1:1 4,600,000 25.00%

b. Preference Share Capital:

Date No of Shares


Issue Price or Redemption Price/ Share (Rs.)

Nature of Issue/Transaction

Cumulative Capital

Consideration

February 5, 1974

25,000 100 100 Initial Public Offering of Preference Shares

25,00,000 Cash

March 12, 1985

25,000 100 100 Redemption of Cumulative Preference Shares

- Cash

In the year 1973-74, the Company made an Initial Public Issue of its Equity and Preference Shares. The post issue public shareholding was approximately 60% of the then paid up capital. In year 1984-85, the Company redeemed 25,000 Cumulative Preference Shares of Rs. 100/- each.

3. Current shareholding pattern of the Company (as on September 30, 2005)

Shareholding pattern of the Company including details of holdings of Promoter Group and the subscription by the Promoters is as follows: Sr. No.

Category Pre-Issue as on September 30, 2005

Post-Issue Holding

No. of Shares

% of holding

New Equity Shares

proposed to be allotted

No. of Shares

% of holding

A. Promoter's Holding 1 Promoters - Indian Promoters 2,580,070 56.09 2,580,070 5,160,140 56.09 - Foreign Promoters Nil Nil Nil Nil Nil 2 Persons Acting in

Concert 3,300 0.07 3,300 6,600 0.07

Sub-Total 2,583,370 56.16 2,583,370 5,166,740 56.16 B. Non-Promoter holding 3 Institutional Investors

a. Mutual Funds 550 0 550 1,100 0.01 b. Banks, Financial

Institutions, Insurance Companies (Central/ State Government Institutions/ Non-government Institutions)

805 0.02 805 1,610 0.02

c. FIIs - - - - - Sub-Total 1,355 0.03 1,355 2,710 0.03

4 Others a. Private Corporate Bodies 176,670 3.84 176,670 353,340 3.84 b. Indian Public 1,815,759 39.47 1,815,759 3,631,518 39.47

Dempo Group

10

Sr. No.

Category Pre-Issue as on September 30, 2005

Post-Issue Holding

No. of Shares

% of holding

New Equity Shares

proposed to be allotted

No. of Shares

% of holding

c. NRIs / OCBs 15,251 0.33 15,251 30,502 0.33 d. Any Other (Clearing

Member) 7,595 0.17 7,595 15,190 0.17

Sub-Total 2,015,275 43.81 2,015,275 4,030,550 43.81 GRAND TOTAL 4,600,000 100.00 4,600,000 9,200,000 100.00 Note: Post Rights Promoters’ shareholding is based on the assumption that all shareholders including promoters will subscribe to their entire Rights entitlement.

4. Details of the equity shares held by the Promoters / Promoter Group as on December 1, 2005 are as follows:

Sr. No.

Name No. of Shares % of Holding

1 Mr. Vasantrao Srinivas Dempo* 27,400 0.60% 2 Mr. Shrinivas V. Dempo 1,000 0.02% 3 V.S. Dempo & Co. Pvt. Ltd. 1,638,800 35.63% 4 Dempo Brothers Private Limited 565,220 12.29% 5 Marmagoa Shipping & Stevedoring Co. Pvt. Ltd. 304,600 6.62% 6 Dempo Industries Private Limited 25,900 0.56% 7 Esmeralda Investments Private Limited 10,150 0.22% 8 Motown Investments Private Limited 7,000 0.15% Total 2,580,070 56.09%

* Since deceased 5. Top Ten Shareholders

a. Top Ten Shareholders of the Company as on December 1, 2005* (being the date of filing of the Letter of Offer with Stock Exchanges)

Sr. No.

Name of the shareholder No. of Equity Shares of face value Rs. 10/-

each

% of holding

1 V.S. Dempo & Co. Private Limited 1,638,800 35.63% 2 Dempo Brothers Private Limited 565,220 12.29% 3 Marmagoa Shipping & Stevedoring Co. Private

Limited 304,600 6.62%

4 Mr. Ramesh Kumar Jain 90,101 1.96% 5 Ms. Sunita Devi 77,300 1.68% 6 Mr. Shymal N. Patel Jtly with Mrs. Neena S. Patel 32,171 0.70% 7 Maco Securities Private Limited 29,351 0.64% 8 Mr. Vasantrao Srinivas Dempo 27,400 0.59% 9 Dempo Industries Private Limited 25,900 0.56% 10 Abbas Y. Jasdanwalla Jtly with Saleem Abbas

Jasdanwala 20,000 0.43%

b. Top Ten Shareholders of the Company as on November 25, 2005* (10 days prior to the filing of

the Letter of Offer with Stock Exchanges) Sr. No.


each

% of holding

1 V.S. Dempo & Co. Private Limited 1,638,800 35.63%

Goa Carbon Limited

11

Sr. No.


each

% of holding

2 Dempo Brothers Private Limited 565,220 12.29% 3 Marmagoa Shipping & Stevedoring Co. Private

Limited 304,600 6.62%

4 Mr. Ramesh Kumar Jain 90,101 1.96% 5 Ms. Sunita Devi 77,300 1.68% 6 Mr. Shymal Patel Jtly with Mrs. Neena S. Patel 32,171 0.70% 7 Maco Securities Private Limited 28,741 0.62% 8 Mr. Vasantrao Srinivas Dempo 27,400 0.59% 9 Dempo Industries Private Limited 25,900 0.56% 10 Abbas Y. Jasdanwalla Jtly with Saleem Abbas

Jasdanwala 20,000 0.43%

c. Top Ten Shareholders of the Company as on December 5, 2003* (two years prior to the date of

the Draft Letter of Offer with Stock Exchanges) Sr. No.


each

% of holding

1 V.S. Dempo & Co. Private Limited 1,638,800 35.63% 2 Dempo Brothers Private Limited 565,220 12.29% 3 Marmagoa Shipping & Stevedoring Co. Private

Limited 304,600 6.62%

4 Mr. Shymal Patel Jtly with Mrs. Neena S. Patel 32,171 0.70% 5 Mr. Vasantrao Srinivas Dempo 27,400 0.60% 6 Navhind Papers and Publications Limited 25,900 0.56% 7 Tata TD Waterhouse Trustee Co. Private Limited 23,035 0.50% 8 JNJ Holdings Private Limited 19,518 0.42% 9 GPL Finance and Investments Limited 14,121 0.31% 10 Datta Manohar Panandikar 11,000 0.24%

* shall be updated at the time of filing the Letter of Offer with Stock Exchange.

6. The present Issue being a Rights Issue, as per clause 4.10.1(c) of extant SEBI guidelines, the requirement of promoters’ contribution is not applicable.

7. All shares issued since the date of incorporation of the Company are fully paid up. 8. There has been no revaluation of assets of the Company in the last 5 FYs 9. Option to utilize interest free unsecured loans from Promoters/ Promoter Group / Persons Acting in

Concert: The Company would have the option to utilize unsecured loans from the promoters / promoter group / Persons Acting in Concert either to the full extent of their entitlement, renounciations to be acquired (if any) and additional shares that they propose to apply or up to the Issue size or in part, such unsecured loans will be adjusted towards Issue of Equity Shares to the promoters / promoter group / persons acting in concert respectively against their rights entitlement, renounciations to be acquired (if any) and additional shares that they propose to apply and any shortfall in the Rights Issue subscription.

10. The Company has not availed of any Bridge Loans to be repaid from the proceeds of the issue.

However, promoters / promoter group and Persons Acting in Concert as on November 30, 2005 (as per

Dempo Group

12

the list below) have given unsecured loans to the tune of Rs. 18,62,57,290 to the company and have requested the Company to adjust the entire amount of loan towards their application money in respect of their rights entitlement, renounciations to be acquired (if any) and additional shares that they propose to apply in the present Rights Issue which the Company has agreed.

(Rs. in Lacs) Particulars Amount V.S. Dempo & Co. Private Limited 1,390.00 Dempo Industries Private Limited 300.00 Dempo Mining Corporation Private Limited 172.57 Total 1,862.57 As Certified by Chartered Accountant M/s. Virendra Prabhudesai & Co. (Membership No. 109461) per Certificate dated December 1, 2005

One of the Objects of the Issue is to repay the abovementioned unsecured working capital loans. The Promoters / Promoter Group entities have assented to utilize the abovementioned loans to be utilized towards there entitlement and application in the current rights issue.

11. The Company has not issued any equity shares out of revaluation reserves or for consideration other

than cash. The Company has made Bonus Issue of Equity Shares in December 1991 and December 1997 as per the capital structure above.

12. There are no buyback, standby or similar arrangement for purchase of Equity Shares offered through

this Letter of Offer by the Promoter Group, directors and the Lead Managers except for the Underwriting arrangements made by the Company. The Company proposes to underwrite an amount of Rs. 1613.312 Lacs (20,16,640 Equity Shares) offered in the Rights issue. Centrum Capital Limited has agreed to underwrite as per the agreement dated November 29, 2005.

13. The total number of shareholders / members of the Company as on December 1, 2005 is 12, 902. 14. The Average cost of Acquisition of Promoters Shares is Rs. 3.08 per share. 15. The terms of Issue to Non-Resident Equity Shareholders/ Applicants have been presented under the

“Terms of the Issue” Section of this Letter of Offer. 16. The Directors, Promoters and Promoter Group of the Company have not entered into any purchase or

sale transactions of the Company’s shares in the last six months. 17. The equity shares allotted / held by the Promoter / Promoter Group are fully paid up and are not under

any lock in. 18. The Shareholders of the Company do not hold any warrant, options, convertible loan or any debenture,

which would entitle them to acquire further Shares of the Company. 19. There shall be only one denomination of the equity shares of the Company unless otherwise permitted

by law. The Company shall comply with disclosure and accounting norms as may be specified by SEBI from time to time.

20. The Company has not granted Equity Options to its employees. 21. No shares have been allotted on firm basis or through private placement in the last three years nor has

the company bought back its equity shares in the last six months. 22. No further issue of capital by way of issue of bonus Equity Shares, Preferential Allotment, Rights Issue

or Public Issue or in any other manner which will affect the capital of the Company, shall be made during the period commencing from the filing of the Letter of Offer with the SEBI till the Equity Shares issued under this Letter of Offer have been listed or application moneys are refunded on account of the failure of the Issue.

Goa Carbon Limited

13

However, If business needs of the Company so require, the Company may alter the capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a Preferential basis or Issue of Bonus or Rights or Public Issue of shares or any other Securities during the period of six months from the date of listing of the Equity Shares issued under this Letter of Offer or from the date the application moneys are refunded on account of failure of the Issue, after seeking and obtaining all the approvals which may be required for such alteration. Also if the Company goes in for Acquisition and Joint Ventures, the Company might consider raising additional capital to fund such activity or use shares as currency for acquisition and/or participation in such Joint Ventures. As on date, the Company does not have any intention to alter the equity capital structure by way of split/ consolidation of the denomination of the shares or a preferential issue or an issue of bonus or rights or public issue of shares or any other securities for a period of six months from the date of opening of the present Issue.

23. The Promoters have confirmed that they intend to subscribe to the full extent of their entitlement in the Issue. The Promoters may intend to apply for additional Equity Shares in the Issue. As a result of this subscription and consequent allotment, the Promoters may acquire Equity Shares over and above their entitlement in the Issue, which may result in their shareholding in the Company being above their current shareholding. This subscription and acquisition of additional Equity Shares by the Promoters / Promoter Group, if any, will not result in change of control of the management of the Company and shall be exempt in terms of provision to Regulation 3(1)(b)(ii) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997. As such, other than meeting the requirements indicated in Objects of the Issue (refer “Particulars of the Issue”), there is no other intention/purpose for this Issue, including any intention to de-list the Company, even if, as a result of allotments to the Promoters / Promoter Group through this Issue, the Promoter / Promoter Groups shareholding in the Company exceeds their current shareholding.

However, the Promoters have confirmed that in case the Rights Issue of the Company is completed with their subscribing to Equity Shares over and above their entitlement and as a result, if the public shareholding in the Company after the Rights Issue falls below the “permissible minimum level” on the basis of which the securities of the Company continue to be listed they will either individually or jointly with other Promoters either (a) buy out the remaining shareholders at the price of the Issue and shall de-list the Company or (b) make an offer for sale of their holdings so that the public shareholding is raised to the “permissible minimum level” within a period of 3 months from the date of allotment in the proposed Issue, as per the requirements of sub-clause 17.1 and 17.2 of SEBI (Delisting of Securities) Guidelines, 2003 or as per any amendment thereto or any other period as may be directed by SEBI or any appropriate authority. In this context, the promoters of Goa Carbon Limited have provided following undertaking:

“We hereby confirm that in case the Right Issue of the Company is completed with our subscribing to Equity Shares over and above the entitlement and as a result, if the public shareholding in the Company after the Rights Issue falls below the “permissible minimum level” on the basis of which the securities of the Company continue to be listed we will either individually or jointly with other Promoters either (a) buy out the remaining shareholders at the price of the Issue and shall delist the Company or (b) make an offer for sale of the holdings so that the public shareholding is raised to the “permissible minimum level” within a period of 3 months from the date of allotment in the proposed Issue, as per the requirements of sub-clause 17.1 and 10.2 of SEBI (Delisting of Securities) Guidelines, 2003 or as per any amendment thereto or any other period as may be directed by SEBI or any appropriate authority.”

Dempo Group

14

D. PARTICULARS OF THE ISSUE a.) Objects of the Issue The Company proposes the present Issue to:

To repay the Long Term Loans availed by Goa Carbon Limited from Bank To repay the Long Term Loans availed from Banks of by Paradeep Carbons Limited, a wholly

owned subsidiary (To be amalgamated w.e.f. July 1, 2005 subject to requisite approvals) To repay the unsecured working capital loans Utilize the funds for general corporate purposes To meet the Expenses of the Issue

b.) Cost of Project and Means of Finance The Cost of project and its means of Finance are as under: Cost of Project

(in Rs. Lacs) Sr. No.

Particulars Amount

1. Repayment of Long-Term Loan of the Company 656.87 2. Repayment of Long Term Loans of 100% Subsidiary 787.56 3. Repayment of Unsecured Working Capital Loans 1,862.57 4. General Corporate Purposes 292.99 5. Expenses of the Issue 80.00

Total 3,680.00 Means of Finance


Particulars Amount

1. Rights Issue 3,680.00 Total 3,680.00

1. To repay the Long Term Loans availed by Goa Carbon Limited from Banks

The Company intends to raise funds to repay the term loans from Banks that shall reduce the interest burden and reduced interest cost shall increase the Profit After Tax. The repayment of term loans from bank shall enhance the profitability of the Company arising chiefly because of the savings in interest cost. The Company has an outstanding term loan from Bank of Rs. 656.87 Lacs (as on November 30, 2005) as against a sanction of Rs. 1,296.25 Lacs. The Company intends to raise funds to repay the said term loans that shall lead to a favourable debt equity ratio of 1.10:1 as against the June 30, 2005 debt equity ratio of 3.54:1 on a standalone basis. The Total limits (including working capital limits) sanctioned and availed by the Company are as under: Schedule of Sanctioned Limits as on June 30, 2005

Working Capital Name of the Bank Term Loan Fund Based Non-Fund Based

Total

Bank of India (FCL) 1,000.00 - 1,000.00 Bank of India (FCL) 296.26 296.25 Bank of India CC 1,560.95 1,560.95 Bank of India CC 639.05 - 639.05 Bank of India (L.C.) - - 3,000.00 3,000.00 Bank of India (B.G.) 800.00 800.00 Total 1,296.26 2,200.00 3,800.00

Goa Carbon Limited

15

Schedule of Outstanding Term Loan as on November 30, 2005

Name of the Bank Total

Bank of India (FCL) 656.87 Total 656.87 As Certified by Management

2. To repay the Long Term Loans availed from Banks of by Paradeep Carbons Limited, a wholly owned

subsidiary (To be amalgamated w.e.f. July 1, 2005 subject to requisite approvals) The Company intends to raise funds to repay the term loans taken by Paradeep Carbons Limited (to be amalgamated w.e.f. July 1, 2005 subject to requisite approvals) from Banks that shall reduce the interest burden that shall increase the consolidated / standalone Profit After Tax of the Company. Goa Carbon Limited intends to raise funds to repay the term loans availed by Paradeep Carbons Limited from Banks that shall reduce the interest burden and shall increase the Profit After Tax post amalgamation. The repayment of term loans from banks shall enhance the profitability arising chiefly because of the savings in interest cost. Paradeep Carbons Limited has an outstanding term loan from Banks of Rs. 841.17 Lacs (as on November 30, 2005) as against a sanction of Rs. 1,350.00 Lacs. The Total limits (including working capital limits) sanctioned and availed by Paradeep Carbons Limited (to be Amalgamated w.e.f. July 1, 2005 subject to requisite approvals) are as under: Schedule of Sanctioned Limits as on June 30, 2005

Working Capital Name of the Bank Term Loan Fund Based Non-Fund Based

Total

Bank of Baroda (FCL) 1,350.00 1,350.00 Bank of India (C.C.-FCL) 1,400.00 1,400.00 Bank of Baroda 390.00 390.00 Bank of India (L.C.) 2,200.00 2,200.00 Bank of India (B.G.) 275.00 275.00 Bank of Baroda (L.C.) 750.00 750.00 Bank of Baroda (B.G.) 90.00 90.00 Total 1,350.00 1,790.00 3,315.00 6,455.00

Schedule of Outstanding Term Loan as on November 30, 2005 Name of the Bank Total

Bank of Baroda (FCL) 841.17 Total 841.17 As Certified by Management

3. To repay the unsecured working capital loans

The Company intends to raise funds to repay the interest bearing unsecured working capital loans taken from the Promoter / Group Companies that shall reduce the interest burden and shall increase the Profit After Tax. The repayment of unsecured working capital loans shall enhance the profitability of the Company arising chiefly because of the savings in interest cost. The Company has an outstanding loan from Promoter group to the tune of Rs. 1,862.57 Lacs. The said loans have been currently used to meet the working capital requirements of the Company. Post the Rights Issue the interest part would not be payable and the Company shall have a reduced interest liability.

The repayment shall be by way of adjustment of the loan liability toward promoter’s contribution to the Rights Issue.

4. Utilize the funds for general corporate purposes

Dempo Group

16

The Company intends to raise funds for general corporate purposes. It is also a key component of GCLs strategy to grow through acquisitions and strategic partnerships. These initiatives will be governed by long term-goals and other business objectives. Accordingly, GCL intends to use a part of the proceeds received from the Issue for strategic investments and acquisitions apart from general corporate purposes. GCL may also spend a portion of the proceeds of the Issue on expansion of its business instead of financing acquisitions or joint ventures with strategic partners. GCL has in the past, grown its business and operations through both organic and inorganic routes. Going forward, GCL believe that strategic investments and acquisitions may act as an enabler to growing business and consolidate its position in the Calcining Industry in India and establish itself as a premium calciner in India. While this would be a component of GCLs strategy, presently GCL do not have any legally binding commitments to enter into any such arrangements. GCL may also pre-pay its other borrowings or use the above money for other business purposes including expansion of operations at any of the existing plants. The Company intends to enhance its position as a leading player in the calcining industry in India. Accordingly, the management will have significant flexibility in applying the proceeds received from the Issue.

5. To meet the Expenses of the Issue

The Issue expenses includes the expenses for the current rights Issue inter-alia including travelling, management fees, printing and distribution expenses, Underwriting fees/ commission, legal fees, statutory advertisement expenses and listing fees payable to the stock exchanges, among others. The total issue expenses are estimated to be approximately 2.17%* of the total proceeds of this rights issue. The total expenses for this Issue are estimated not to exceed Rs. 80.00 Lacs*. A broad breakup of the same is as under:


Nature of Expenses Amount

1. Lead Management-Issue Management fees, Advisory Fee, Underwriting Commission

29.71

2. Legal Counsel charges, Registrars Printers, Postage, Dispatch expenses, Advertisement & publicity expenses

38.00

3. Listing Expenses & Others Expenses 12.29 Total 80.00*

* Assuming no devolvement

The above improvement in the ratios shall help the Company in reducing the cost of borrowed funds. The terms and conditions of the existing loans to be repaid out of the current issue are as under: Bank of India (FCL): Rs. 656.87 Lacs availed by GCL

Secured or Unsecured Secured Rate of Interest LIBOR + 350 bps Duration Repayable in 24 Installments of Rs. 41.67 Lacs

each commencing August 2003 Repayable in 20 Installments of Rs. 18.50 Lacs commencing March 2001.

Security Pledge of 15,000,000 Equity Shares held in the wholly owned subsidiary Paradeep Carbons Limited First Charge on block of assets of Company’s Bilaspur division viz. Mortgage of Land and Buildings and Hypothecation of Plant & Machinery Second charge on all immoveable assets of the subsidiary company, Paradeep Carbons Limited

Bank of Baroda (FCL): Rs. 787.56 Lacs availed by Paradeep Carbons Limited

Secured or Unsecured Secured Rate of Interest LIBOR + 450 bps Duration Repayable in 84 Installments, 83 equal

installments of Rs. 16 Lacs each and last 84th

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17

installment of Rs. 22 Lacs commencing November 2003.

Security Secured on Equitable mortgage on loan & buildings by deposit of title deeds on a first charge basis and hypothecation moveable assets except stock in trade and book debts and guaranteed by the holding company

The Company shall advance the amount raised towards repayment of Term Loans of Paradeep Carbons Limited as a loan to be PCL as per the terms of the contract highlighted below. The company shall advance the proceeds to the tune of Rs. 787.56 Lacs as unsecured loans to the subsidiary so as to allow it to repay the liabilities as enumerated. The brief terms and conditions of the said loan agreement are as under:

Secured or Unsecured Unsecured Rate of Interest Nil Duration 3 years or till amalgamation of the subsidiary

which ever is earlier Collateral Security Nil Sub-Ordination Clause N.A. Whether to subsidiary Yes

Unsecured working capital loans from Promoters

Secured or Unsecured Unsecured Rate of Interest 9% Duration 6 Months with option to renew for another 6

months. Security Nil

Details of the affiliate and related party transactions in respect of utilization of the issue proceeds: One of the objects of the issue is to repay the unsecured working capital loans advanced by promoter group companies. The repayment of the unsecured loans shall be adjusted against the promoter’s contribution to the rights issue. The Objects Clause of the Memorandum and Articles of Association of the Company enables it to undertake the activities for which the funds are to be raised in the present Rights Issue. Further, it is confirmed that the activities, which the company has been carrying out until now is in accordance with the object of Memorandum and Articles of Association of the Company. Appraisal: The funds requirement and funding plans are Company’s own estimates, and have not been appraised by any bank / financial institution. Interim Use of Funds Pending utilization in the project as per the manner as referred to above, the proceeds of the Rights Issue will be deposited in a bank account as stated under the undertaking given for utilization of Issue proceeds on page no. ___ of this Letter of Offer. Basic Terms of the Issue The Equity Shares being offered are subject to the provisions of the Companies Act, the Memorandum and Articles of the Company, the terms of this Letter of Offer and other terms and conditions as may be incorporated in the Allotment Advice, and other documents/certificates that may be executed in respect of the Issue. The Equity Shares shall also be subject to laws as applicable, guidelines, notifications and regulations relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, Government of India, Stock Exchanges, RBI, ROC and / or other authorities, as in force on the date of the Issue and to the extent applicable. Minimum Subscription

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18

If the Company does not receive the minimum subscription of 90 per cent of the Issue (inclusive of devolvement of underwriters and/or from other sources), the entire subscription shall be refunded to the applicants within 42 days from the date of closure of the Issue. If there is any delay in the refund of subscription amount by more than 8 days after the Company becomes liable to pay the subscription amount i.e. forty two days after the closure of the Issue), the Company will pay interest for the delayed period, at rates prescribed under Section 73 of the Act. However applications received after the closure of issue in fulfillment of underwriting obligations to meet the minimum subscription requirement, shall not be entitled for the said interest Ranking of Equity Shares The Equity Shares being offered shall be subject to the provisions of Memorandum and Articles of the Company and shall rank pari-passu with the existing Equity Shares of the Company. Allottees of the Equity Shares under this Issue will be entitled to dividends and other corporate benefits, if any, declared by the Company after the date of allotment. Mode of Payment of Dividend The Company shall pay dividend to its shareholders as per the provisions of the Companies Act, 1956. Face Value and Issue Price The Face Value of the Equity Shares is Rs.10/- per Equity Share and the Issue Price is Rs. 80/- per Equity Share, which is 8 times of the Face Value. Rights of the Equity Shareholders

i. Right to receive dividend, if declared. ii. Right to attend general meetings and exercise voting rights, unless prohibited by law. iii. Right to vote on a poll either personally or by proxy. iv. Right to receive offer for rights shares and be allotted bonus shares, if announced; v. Right to receive surplus on liquidation. vi. Right of free transferability; and vii. Such other rights, as may be available to a shareholder of a Public Limited Company under the

Companies Act, 1956.

Despatch of Refund Orders Refund orders above the value of Rs.1,500 will be dispatched by Registered Post/ Speed Post to the sole/ first applicant’s registered address. However, refund orders for value not exceeding Rs.1,500 shall be sent to the applicants under Postal Certificate. Further, adequate funds would be made available to the Registrar to the Issue for the dispatch of Letters of allotment/ securities certificates and refund orders Interest in Case of Delay in Dispatch of Allotment / Refund Orders The company agrees that:

a. As far as possible allotment of securities offered to the public shall be made within 30 days of the closure of the rights issue.

b. It shall pay interest as prescribed under section 73 of the Companies Act, 1956 if the allotment has not been made and the refund orders have not been dispatched to the investors within 42 days from the date of the closure of the issue.

However applications received after the closure of issue in fulfillment of underwriting obligations to meet the minimum subscription requirement, shall not be entitled for the said interest

Period of Subscription The subscription list for Rights issue shall remain open for at least 30 days and not more than 60 days. Terms of Payment The entire Issue price of Rs. 80/- per share is payable on application only. E.) BASIS FOR ISSUE PRICE The following factors have been considered while arriving at the Issue price of Rs. 80/- per equity share:

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Qualitative Factors:

1. Pioneer Calcined Petroleum Coke manufacturing Company in India and belongs to Dempo Group from Goa.

2. One among the largest producer of Calcined Petroleum Coke in the Country and first Indian Manufacturer/Exporter of Petroleum Coke.

3. Multi location versatile plants. 4. ISO 9001:2000, ISO 14001 Certified. 5. Continuous dividend paying company

Standalone Key Financials for the last five financial periods: (in Rs. Lacs) Year Ended June 30, 2005

(15 months)

March 31, 2004

(12 months)

March 31, 2003

(15 months)

December 31, 2001

(9 months)

March 31, 2001

(12 months) Total Income 13,200.21 9705.73 10868.05 4015.59 4563.66 Net Profit After tax & adjustments (78.60) 81.46 419.31 216.35 193.45

Equity Share Capital 460.00 460.00 460.00 460.00 460.00 Reserves 1,900.58 2,005.41 1,975.96 2,142.13 2,067.33 Dividend per equity share (Rs.) 0.50 1.00 3.50 1.70 1.50

EPS (Rs.) (1.71) 1.77 9.12 4.70 4.21 Book Value (Rs.) 51.32 53.60 52.93 56.57 54.94

Consolidated Key Financials for the last five financial periods:

(in Rs. Lacs) Year Ended June 30, 2005

(15 months)

March 31, 2004

(12 months)

March 31, 2003

(15 months)

December 31, 2001

(9 months)

March 31, 2001

(12 months) Total Income 21,958.17 15,943.23 14,146.92 4,371.47 4,471.31 Net Profit After tax & adjustments (841.47) (349.17) (214.92) (46.26) 121.46

Equity Share Capital 460.00 460.00 460.00 460.00 460.00 Reserves 71.85 939.55 1,299.05 1,809.91 1,994.49 Dividend per equity share (Rs.) 0.50 1.00 3.50 1.70 1.50

EPS (Rs.) (18.29) (7.59) (4.66) (1.01) 2.64 Book Value (Rs.) 11.56 30.42 38.21 49.31 53.32

Quantitative Factors: i. Adjusted Earnings Per Share (EPS) weighted on face value of Rs. 10/- as per Accounting Standard 20

Year EPS (Rs.) (Consolidated)

EPS (Rs.) (Company) Weight

2002-03* (3.73) 7.29 1 2003-04 (7.59) 1.77 2 2004-05* (14.63) (1.37) 3 Weighted Average (10.47) 1.12 - * Annualised

ii. Price Earning Ratio (PE Ratio) in relation to the Issue Price of Rs. 80/- per share

Particulars Consolidated Company Based on Weighted Average EPS of Rs. 1.12 per share N.A. 71.4 Industry P/E# - Highest 64.0

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Particulars Consolidated Company - Lowest 1.5 - Average 21.1

iii. Return on Net Worth

Year RONW Consolidated

(%)

RONW Company

(%)

Weight

2002-03% (12.20) 17.22 1 2003-04 (24.95) 3.30 2 2004-05% (158.22) (3.33) 3 Weighted Average (89.46) 2.31 %15 Month Period

iv. Minimum Return on total Net Worth after Issue needed to maintain Pre-Issue EPS of Rs. (1.37) is N.A.%

at Issue Price of Rs. 80/- per share. v. Net Asset Value (NAV) Per Share

Particulars NAV Consolidated

(Rs.)

NAV Company

(Rs.) As on June 30, 2005 11.56 51.32 Post - Rights Issue (Assuming 100% Subscript ion) 45.78 65.66 Issue Price Rs. 80

vi. Comparison of Financial Ratios with Peer Group

Company Book Value Per Share

RONW (%)

EPS PE Ratio

Goa Carbon Limited 51.3 3.3 - 27.6 Peer Group: Rain Calcining Limited 13.7 7.0 0.9 14.2 (#) Based on “Capital Market” Vol. XX/20 dated December 5-18, 2005 for Chemicals Industry. Financial ratios given in the table above is as per date provided as per the source document and does not reflect the position as on the date of this Letter of Offer.

The Face Value of the Equity Shares is Rs.10/- per Equity Share and the Issue Price is Rs. 80/- each. The Issue Price is 8 times of the Face Value The Lead Manager believes that the Issue Price of Rs. 80/- is justified in view of the above qualitative and quantitative parameters. The investors may want to peruse the risk factors and the financials of the Company including important profitability and return ratios, as set out in the Auditors’ report and forming part of this Letter of Offer to have a more informed view of the investment proposition. Working Results and Other Information Information as required to be given vide Ministry of Finance, Government of India Circular No. F2/SE/76 dated February 5, 1977 as amended vide their circular of even number dated March 8, 1977 is given below:

Working results of the Company (un-audited) for the period from July 1, 2005 to September 30, 2005 as approved by the Board of Director on October 21, 2005.

The working results for the quarter ending September 30, 2005 are as under: Rs. in Lacs Particulars Amount Net Sales 2,864.98 Exchange Gain / (Loss) (49.22)

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21

Rs. in Lacs Particulars Amount Other Income 87.18 Total Income 2,902.94 Total Expenditure 2,716.25 EBITDA 186.69 Interest 142.56 Depreciation 24.22 Profit Before Tax 19.91 Provision for Taxation 9.49 Profit After Tax 10.42

Notes: i. FOB price for RPC continued to be high affecting the operating results ii. The Company’s appeal to the Income Tax Appellate Tribunal against disallowances of deduction

u/s 80 HHC of the Income Tax Act has been decided against the Company. The order of the Tribunal has been challenged by the Company before the Bombay High Court. The Company has been advised by its counsel that it has good case to get the tribunal’s order set aside and accordingly no provision is considered necessary for the estimated liability of Rs. 1,285.53 Lacs on this account.

iii. No provision is considered necessary for diminution in value of investment in wholly owned subsidiary, Paradeep Carbons Limited which is carried at cost of Rs. 4,324.62 Lacs as in the opinion of the management the said diminution is temporary in nature. During the quarter-ended 30.09.2005, Paradeep Carbons Limited has achieved a gross turnover of Rs. 4,085.48 Lacs with a net profit of Rs. 197.45 Lacs.

iv. The Board has recommended dividend of 5% (Rs. 0.50 per Equity Share of Rs. 10/-) for the fifteen months ended June 30, 2005.

v. The above results were reviewed by the Audit Committee at its meeting held on 20.10.2005 and approved by the Board of Directors at its meeting held on 21.10.2005.

vi. The statutory auditors have conducted a limited review of the results for the quarter ended September 30, 2005.

vii. The Company operates only in one segment i.e. manufacture and sale of Calcined petroleum coke and accordingly there is no other segment to be reported on.

viii. The Board of Directors in principle have approved the merger of its wholly owned subsidiary Paradeep Carbons Limited with the Company effective from July 1, 2005 which is subject to all required approvals including approval from Bombay High Court.

ix. The Company did not have any investor complaints pending as on July 1, 2005 or on September 30, 2005. Six complaints were received during the quarter and were duly disposed off.

Save as stated in this letter of offer, there are no material changes and commitments affecting the financial position of the Company since the period ended on June 30, 2005 being the last date up to which audited information is incorporated in the letter of offer. However, the Company has decided to amalgamate with itself the 100% subsidiary namely Paradeep Carbons Limited.

Current Market Price (cum rights) of the equity shares of the Company on BSE during the period Month to Month 2005 were:

Highest : Rs. --.-- on Month --, 2005 Lowest : Rs. --.-- on Month --, 2005 Closing Market price of the Equity Shares on BSE as on Month --, 2005 was Rs. --.-- (Ex Rights).

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22

F.) TAX BENEFITS The Auditors of the Company, M/s. Fraser & Ross, Chartered Accountants have advised the Company vide their letter dated November 16, 2005 that under the current direct tax law, the following tax benefits interalia will be available to the Company and the shareholders of the Company. A shareholder is advised to consider in his own case the tax implication of an investment in the shares. The Statement of tax benefits certificate from the Auditors of the Company is reproduced below: Tax Benefits We refer to our discussions in the above matter. Goa Carbon Limited (“Company”) proposes to issue rights shares to the shareholders of the Company in the ratio of one share for every one share. The shares of the Company are listed in the stock exchanges in Mumbai. As desired by you, given below is the current position of tax benefits available to the Company and to its shareholders as per the provisions of the Income-tax Act, 1961, the Wealth-tax Act, 1957 and the Gift-tax Act, 1958 for inclusion in the Offer Document for the proposed rights issue of shares. The current position of tax benefits available to the Company and to its shareholders is provided for general information purposes only. In view of the individual nature of tax benefits, each investor is advised to consult its own tax consultant with respect to the specific tax implications arising out of its participation in the issue. Unless otherwise specified, sections referred to below are sections of the Income-tax Act, 1961. All the provisions set out below are subject to conditions specified in the respective sections. TAX BENEFITS TO THE COMPANY 1. In accordance with section 10(34), dividend income (referred to in section 115-O) declared, distributed

or paid on or after April 1, 2003 on shares held by the Company will be exempt from tax. 2. In accordance with section 35(1), the Company will be entitled to a deduction of the capital expenditure

(other than on acquisition of land) and revenue expenditure incurred on scientific research related to the business carried on by the Company in the year in which such expenditure is incurred.

3. Initial depreciation at 20% in respect of new machinery or plant will be allowed as deduction. The requirement for new or substantial expansion has been deleted. The depreciation rates in respect of Plant and Machinery has been reduced to 15% from 25%, of Motor Cars reduced to 15% from 20% and furniture and fittings reduced to 10% from 15%.

4. Amount of tax paid under Sec.115JB by the company for any assessment year beginning on or after 1st April 2006 will be available as credit in accordance with the provisions of Sec.115JAA.

TAX BENEFITS TO THE SHAREHOLDERS OF THE COMPANY (I) Under the Income-tax Act (A) Residents

1. In accordance with section 10(34), dividend income declared, distributed or paid by the Company (referred to in section 115-O) on or after April 1, 2003 will be exempt from tax.

2. Shares of the Company held as capital asset for a period of more than twelve months preceding the date of transfer will be treated as a long-term capital asset.

3. In accordance with section 10(38), any income arising from the transfer of a long-term capital asset being an equity share in a Company is not includible in the total income if the transaction is chargeable to securities transaction tax.

4. In accordance with section 112, the tax on capital gains on transfer of listed shares, where the transaction is not chargeable to securities transaction tax, held as long term capital assets will be the lower of: (a) 20 per cent (plus applicable surcharge and additional surcharge called as ‘Education CASs’)

of the capital gains as computed after indexation of the cost. OR

(b) 10 per cent (plus applicable surcharge and additional surcharge called as ‘Education Cess’) of the capital gains as computed without indexation.

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23

5. In accordance with Section 111A capital gains arising from the transfer of a short term asset being an equity share in a Company and such transaction is chargeable to securities transaction tax, the tax payable on the total income shall be the aggregate of:

(i) the amount of income-tax calculated on such short term capital gains at the rate of 10 per cent (plus applicable surcharge and additional surcharge called as ‘Education Cess’) and

(ii) the amount of income-tax payable on the balance amount of the total income as if such balance amount were the total income.

6. In accordance with section 54EC, long-term capital gains arising on transfer of the shares of the Company on which securities transaction tax is not payable, shall be exempt from tax if the gains are invested within six months from the date of transfer in the purchase of a long-term specified asset. If only a part of the capital gain is so invested, the exemption would be limited to the amount of the capital gain so invested. If the specified asset is transferred or converted into money at any time within a period of three years from the date of acquisition, the amount of capital gains on which tax was not charged earlier shall be deemed to be income chargeable under the head “Capital Gains” of the year in which the specified asset is transferred.

7. In accordance with section 54ED, capital gain arising on the transfer of a long-term capital asset being listed securities on which securities transaction tax is not payable, shall be exempt from tax provided the whole of the capital gain is invested within a period of six months in equity shares forming part of an eligible issue of capital. If only a part of the capital gain is so invested, the exemption would be limited to the amount of the capital gain so invested. If the specified equity shares are sold or otherwise transferred within a period of one year from the date of acquisition, the amount of capital gains on which tax was not charged earlier shall be deemed to be income chargeable under the head “Capital Gains” of the year in which the specified equity shares are transferred. The cost of the specified equity shares will not be eligible for deduction under Sec.80C.

8. In accordance with section 54F, long-term capital gains arising on the transfer of the shares of the Company held by an individual or Hindu Undivided Family on which securities transaction tax is not payable, shall be exempt from capital gains\tax if the net consideration is utilised, within a period of one year before, or two years after the date of transfer, in the purchase of a new residential house, or for construction of a residential house within three years. Such benefit will not be available if the individual or Hindu Undivided Family

- owns more than one residential house, other than the new residential house, on the date of transfer of the shares; or

- purchases another residential house within a period of one year after the date of transfer of the shares or constructs another residential house within a period of three years after the date of transfer of the shares;

and - the income from such residential house, other than the one residential house owned on the

date of transfer of the original asset, is chargeable under the head “Income from house property”.

If only a part of the net consideration is so invested, so much of the capital gains as bears to the whole of the; capital gain the same proportion as the cost of the new residential house bears to the net consideration shall be exempt. If the new residential house is transferred within a period of three years from the date of purchase or construction, the amount of capital gains on which tax was not charged earlier, shall be deemed to be income chargeable under the head “Capital Gains” of the year in which the residential house is transferred.

Tax Rates:- 1. Individuals, HUFs and Association of Persons:

(i) The Income tax exemption limit has been raised from Rs.50,000 to Rs.1,00,000. (ii) Women residents of India and below the age of 65 years : The Income tax exemption limit

has been raised from Rs.1,00,000 to Rs.1,35,000 (iii) Individuals residents of India and above the age of 65 years: The Income tax exemption

limit has been raised from Rs.1,00,000 to Rs.1,85,000 (iv) Surcharge at 10% will be payable only in respect of total income exceeding Rs.10,00,000. (v) Educational cess is levied at 2% on total tax liability.

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24

B) I. Non-Residents 1. In accordance with section 10(34), dividend income declared, distributed or paid by the Company

(referred to in section 115-O) on or after April 1, 2003 will be exempt from tax. 2. In accordance with section 48, capital gains arising out of transfer of capital assets being shares in

the Company, and such transaction is not chargeable to securities transaction tax, shall be computed by converting the cost of acquisition, expenditure in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer into the same foreign currency as was initially utilised in the purchase of the shares and the capital gains computed in such foreign currency shall be reconverted into Indian currency, such that the aforesaid manner of computation of capital gains shall be applicable in respect of capital gains accruing/arising from every reinvestment thereafter and sale of shares of an Indian Company including the Company.

3. In accordance with section 10(38), any income arising from the transfer of a long term capital asset being an equity share in a Company is not includible in the total income if the transaction is chargeable to securities transaction tax.

4. In accordance with section 112, the tax on capital gains on transfer of listed shares, where the transaction is not chargeable to securities transaction tax, held as long term capital assets will be at the rate of 20% (plus applicable surcharge and additional surcharge called as ‘Education Cess’). A non-resident will not be eligible for adopting the indexed cost of acquisition and the indexed cost of improvement for the purpose of computation of long-term capital gain on sale of shares.

5. In accordance with Section 111A capital gains arising from the transfer of a short term asset being an equity share in a Company and such transaction is chargeable to securities transaction tax, the tax payable on the total income shall be the aggregate of (i) the amount of income-tax calculated on such short term capital gains at the rate of 10 per cent (plus applicable surcharge and additional surcharge called as ‘Education Cess’) and (ii) the amount of income-tax payable on the balance amount of the total income as if such balance amount were the total income.

6. In accordance with section 54EC, long-term capital gains arising on transfer of the shares of the Company and on which securities transaction tax is not payable, the tax payable on the capital gains shall be exempt from tax if the gains are invested within six months from the date of transfer in the purchase of a long-term specified asset. If only a part of the capital gain is so invested, the exemption would be limited to the amount of the capital gain so invested. If the specified asset is transferred or converted into money at any time within a period of three years from the date of acquisition, the amount of capital gains on which tax was not charged earlier shall be deemed to be income chargeable under the head “Capital Gains” of the year in which the specified asset is transferred.

7. In accordance with section 54ED, capital gain arising on the transfer of a long-term capital asset being a listed security and on which securities transaction tax is not payable, is exempt from tax provided the whole of the capital gain is invested within a period of six months in equity shares forming part of an eligible issue of capital. If only a part of the capital gain is so invested, the exemption would be limited to the amount of the capital gain so invested. If the specified equity shares are sold or otherwise transferred within a period of one year from the date of acquisition, the amount of capital gains on which tax was not charged earlier shall be deemed to be income chargeable under the head “Capital Gains” of the year in which the specified equity shares are transferred.

8. In accordance with section 54F, long-term capital gains arising on the transfer of the shares of the Company held by an individual or Hindu Undivided Family, and on which securities transaction tax is not payable, shall be exempt from capital gains tax if the net consideration is utilised, within a period of one year before, or two years after the date of transfer, in the purchase of a new residential house, or for construction of a residential house within three years. Such benefit will not be available if the individual or Hindu Undivided Family-

a. owns more than one residential house, other than the new residential house, on the date of transfer of the shares; or

b. purchases another residential house within a period of one year after the date of transfer of the shares; or

c. constructs another residential house with in a period of three years after the date of transfer of the shares; and

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d. the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head “Income from house property”.

If only a part of the net consideration is so invested, so much of the capital gains as bears to the whole of the capital gain the same proportion as the cost of the new residential house bears to the net consideration shall be exempt. If the new residential house is transferred within a period of three years from the date of purchase or construction, the amount of capital gains on which tax was not charged earlier, shall be deemed to be income chargeable under the head “Capital Gains” of the year in which the residential house is transferred.

II. Non-Resident Indians

Further, a Non-Resident Indian has the option to be governed by the provisions of Chapter XII-A of the Income-tax Act, according to which: 1. In accordance with section 115E, income from long-term capital gains on transfer of shares of the

Company acquired out of convertible foreign exchange, and on which securities transaction tax is not payable, shall be taxed at the rate of 10% (plus applicable surcharge and additional surcharge called as ‘Education Cess’).

2. In accordance with section 48, capital gains arising out of transfer of capital assets being shares in the Company, and such transaction is not chargeable to securities transaction tax, shall be computed by converting the cost of acquisition, expenditure in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer into the same foreign currency as was initially utilised in the purchase of the shares and the capital gains computed in such foreign currency shall be reconverted into Indian currency, such that the aforesaid manner of computation of capital gains shall be applicable in respect of capital gains accruing/arising from every reinvestment thereafter and sale of shares or debentures of an Indian Company including the Company

3. In accordance with section 115F, subject to the conditions and to the extent specified therein, long-term capital gains arising from transfer of shares of the Company acquired out of convertible foreign exchange, and on which securities transaction tax is not payable, shall be exempt from capital gains tax if the net consideration is invested within six months of the date of transfer in any specified asset.

4. In accordance with section 115G, it is not necessary for a Non-Resident Indian to file a return of income under section 139(1), if his total income consists only of investment income earned on shares of the Company acquired out of convertible foreign exchange or long-term capital gains earned on transfer of shares of the Company acquired out of convertible foreign exchange, and the tax has been deducted at source from such income under the provisions of Chapter XVII-B of the Income-tax Act.

5. In accordance with section 115-I, where a Non-Resident Indian opts not to be governed by the provisions of Chapter XII-A for any assessment year, his total income for that assessment year (including income arising from investment in the Company) will be computed and tax will be charged according to the other provisions of the Income-tax Act.

C) Foreign Institutional Investors (FIIs)

1. In accordance with section 10(34), dividend income declared, distributed or paid by the Company (referred to in section 115-O) on or after April 1, 2003 will be exempt from tax in the hands of Foreign Institutional Investors (FIIs).

2. In accordance with section 115AD, FIIs will be taxed at 30% (plus applicable surcharge and additional surcharge called as ‘Education Cess’) on short-term capital gains, if securities transaction tax is not payable on the transfer of the shares, and at 10% (plus applicable surcharge and additional surcharge called as ‘Education Cess’) on short-term capital gains arising on the sale of the shares of the Company which is subject to securities transaction tax. FIIs will be taxed at the rate of 10% (Plus applicable surcharge and additional surcharge called as ‘Education Cess’) on long term capital gains arising on the sale of shares of the Companies.

3. In accordance with section 10(38), any income arising from the transfer of a long term capital asset being an equity share in a Company is not includible in the total income if the transaction is chargeable to securities transaction tax.

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D) Persons carrying on business or profession in shares and securities. In accordance with Section 88E where the total income includes income chargeable under the head “profits and gains of business or profession” arising from taxable securities transactions, an amount equal to the securities transaction tax paid will be available as deduction from the amount of income tax on such income arising from such transactions subject to the other applicable conditions. E) Mutual Funds In accordance with section 10(23D), any income of: (i) a Mutual Fund registered under the Securities and Exchange Board of India Act 1992 or regulations

made there under; (ii) Such other Mutual Fund set up by a public sector bank or a public financial institution or authorized

by the Reserve Bank of India subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in this behalf,

will be exempt from income-tax. (II) Under the Wealth Tax and Gift Tax Acts

1. ‘Asset’ as defined under section 2(ea) of the Wealth-tax Act, 1957 does not include shares in companies and hence, these are not liable to wealth-tax.

2. Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of shares will not attract gift-tax.

Our views expressed herein are based on the facts and assumptions indicated by you and are based on the existing provisions of law and its interpretation, which are subject to change from time to time. We do not assume responsibility to update the views consequent to such changes. We hereby give our consent to include our above referred opinion regarding the tax benefits available to the Company and to its share holders in the offer document which the Company intends to submit to the Securities and Exchange Board of India, Mumbai. The views shall not, without our prior written consent, be disclosed to any other person. Yours faithfully, For Fraser & Ross Chartered Accountants B.MALA Partner Membership Number 19958

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IV. ABOUT GOA CARBON LIMITED: A.) INDUSTRY OVERVIEW Calcined Petroleum Coke commonly known as CPC is produced from Raw Petroleum Coke (RPC) also called Green Petroleum Coke (GPC). The result of this calcining process is converting green coke to hard, dense and almost pure carbon with low hydrogen content, good electrical conductivity and a defined structure. These properties along with low metals and ash contents make calcined petroleum coke the best material currently available for making carbon anodes for smelting of alumina to aluminium in the electrolytic smelting process. For every ton of aluminium produced, the aluminium smelters require about 400 Kgs of CPC and, presently, there are no known viable substitutes for CPC. Accordingly, CPC constitutes a key raw material for the aluminium industry. CPC is also used in the manufacture of graphite products, pre baked graphite electrodes, titanium dioxide and in electrometallurgical furnaces. It is also widely used in the steel industry as a recarburiser. Demand of calcined coke from the primary aluminum industry accounts for more than 70% of overall calcined petroleum coke needs. Balance CPC is used in the manufacture of titanium dioxide, steel mills, foundries and for various other uses in chemical industries. Therefore, the growth of CPC industry is intrinsically linked to the growth on the aluminium sector for the manufacture of basic aluminium metal. Aluminium & Calcining Industry Aluminium has only been produced commercially for last 146 years and is still a very young metal. The usage of copper, lead and tin is for thousands of years and yet today more aluminium is produced than all other non-ferrous metals combined. Being light weight in nature, strength, durability and weight ration coupled with its alloying properties, resistance to thermal damage, smaller recycling losses and non-corrosive behaviour, aluminium metal is being fast adopted in construction, packaging and automotive industries. World Primary Aluminium Production

In Thousand MT Growth %

2003 2004 2005 03-05 Africa 1400 1700 1800 13.40 Asia 1400 1500 1600 6.90 Western Europe 4100 4300 4400 3.60 Latin America 2300 2300 2400 2.20 Middle East 1200 1400 1700 19.00 North America 5400 5200 5600 1.80 Others 2200 2200 2200 0.00 Sub Total 18000 18600 19700 4.30 China 5500 6400 7400 16.00 CIS 4300 4500 4600 3.40 Total China/CIS 9800 10900 12000 10.2 Total World 27800 29500 31700 6.40

Source: Jacob Consultancy About 0.4 ton of CPC is required to produce 1 ton of basic aluminium metal. Considering the same, 12 million MT of CPC is required to manufacture 30 million MT of aluminium. High power prices have been instrumental in not only putting the European Union’s (EU) primary aluminium production at risk, but is also likely to force other energy intensive industries to migrate to areas

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with cheaper energy sources. Most of such industries are increasingly getting shifted to low cost areas like Asia in general and India in particular. New aluminium smelters are coming up in the Middle East, China and India due to the benefit of lower cost production as the power cost is relatively lesser. India offers greater scope as it has rich bauxite deposits. Power constitutes nearly 60% of the cost of production for manufacturing basic aluminium metal, besides other raw materials such as CPC, bauxite and pitch. Cost of power being high in the US and European countries, the manufacturing base for aluminium smelters is shifting towards the above mentioned regions. Total World Calcining Capacity

The world calcining capacity is estimated to be 16 million MT. However, there is idle capacity available in the industry as also some capacity is not economically viable. These coupled with the capacity not keeping up with the demand is likely to result in the shortfall in the CPC availability by the year 2006. The growth of aluminium industry is expected at between 4-6% in years to come on global basis. It is expected that by 2007 the world aluminium capacity will be over 34 million MT. The additional capacity for aluminium smelters is coming up in the Middle East, China and India. As a result, most calcining capacity built up is taking place in the Middle East, China and India in the Asian region. It is a significant advantage if the calciners are based near the source of raw material that is GPC, as being closer to the raw material source offers significant savings in the freight and thereby cost of production. However, if the calciners can not be located close to the raw material base, they can be closer to the smelters, as it is advantageous for the calciners due to some savings in freight costs. It is estimated that by 2008, additional capacity of 0.6 million MT will come up in the Middle East and India. Source: Jacobs Consultancy The Indian aluminium sector is characterised by large integrated players like Hindalco and National Aluminium Company (Nalco). The other producers of primary aluminium include Indian Aluminium (Indal) - now acquired by Hindalco. Bharat Aluminium (Balco) and Madras Aluminium (Malco) - the erstwhile PSUs that have been acquired by Sterlite Industries Limited. Consequently, In India there are only three primary metal producers in the sector. The per capita consumption of aluminium in India continues to remain abysmally low at under 1 kg as against nearly 20 kgs in the US and Europe, 15 kgs in Japan, 10 kgs in Taiwan and 4 kgs in China. The key consumer industries in India are electrical (power), transportation, consumer durables, packaging and construction. Of this, power is the biggest consumer (over 1/3rd of total) followed by transportation (about 18% of total). However, internationally, the pattern of consumption is in favour of transportation, primarily due to large-scale aluminium consumption by the aviation industry. Source: Equitymaster.com

Calciners- 2004 16 million MT

10%Europe

11%CIS/E.Europe

18%China 3%

Canada

10%Asia

38%United States

5%M. East/ Africa

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During the year 1998-99, CPC demand was stagnant as the aluminium industry was going through a period of Low production growth. The scenario changed in the year 2000, and there was an increase of 4.1% in global demand taking it to approximately 9.5 million MT, due to global economic recovery in most sectors. In 2001, with the power crisis in the US and Canada, several aluminium smelters were forced to shut down their plants and CPC demand fell to approximately 9.2 million MT. In 2002, demand picked up beyond the 2000 levels and for 2003, it further increased to approximately 9.8 million MT. For 2004, demand for CPC is growing at a healthy pace of 4% and it is estimated that CPC demand will continue at these levels into 2006-2007, as several brownfield aluminium smelter expansions in the Middle East, Africa, Europe and India will be completed. Indian production of primary aluminium was 152,296 tons in April – May 2005, up 12.5% on the same period of last year. Indian calcining capacity is estimated to be 1.47 million MT. Majority of the calciners are set up closer to the ports as it offers both ways saving in the freight. Other calciners are based closer to the aluminium smelters and foundries for the proximity to the customers. The demand for and price of CPC is largely determined by the performance of the aluminium sector. CPC prices have recovered from the low levels it touched in 2001, when prices were depressed due to slow economic growth and lower aluminium prices. In 2002, CPC price increased nominally and remained stable and in 2003, CPC prices increased 5-9% globally. This was mainly due to the increase in raw material costs The main drivers for CPC pricing will continue to be green coke prices and growth of the aluminium industry. The information in this section has been extracted from publicly available documents from various sources and has not been independently verified by the Company or the Lead Manager. B). BUSINESS OVERVIEW Incorporated as a public limited company in the year 1967, Goa Carbons is engaged in the business of manufacturing and marketing Calcined Petroleum Coke (CPC). The original calcination unit was set up with technical assistance from Great Lakes Carbon Corporation, USA. GCL today has firmly established itself as a leading Indian pet coke calciner. It has been supplying pet coke to aluminium smelters, graphite electrode and Titanium dioxide manufacturers as well as other users in the metallurgical and chemical industries. GCL was one of the first Indian manufacturers and exporters of pet coke. In 1999-2000, GCL acquired 100% equity shares of Vishwalakshmi Petro Products Ltd. (VPPL), a calcined petroleum coke manufacturing company, which had become a subsidiary of Goa Carbon Limited. VPPL was subsequently amalgamated with the company which was approved by Bombay High Court with effect from January 1, 2002. The acquired plant is located at Bilaspur in Madhya Pradesh with a capacity of 40,000 MT per annum. In the September 2001 GCL acquired 80.00% equity share capital of Paradeep Carbons Limited a Calcined Petroleum Coke manufacturer based in Paradeep Orissa, another 3.47 % stake was acquired in the 15 month period ended March 31, 2003. Subsequently, it increased its equity stake to 100% in Paradeep Carbons Limited (PCL) so as to make it a wholly owned subsidiary in the financial year ending March 31, 2004. The Paradeep plant has an installed with a capacity of 1,25,000 MT per annum. GCL has consolidated the operations to realize maximum operational efficiency and to meet the buyers requirement of CPC on all India basis. Calcination unit at Goa with 75,000 MT capacity is based approximately 40 Kms away from Marmagoa Port in Goa. Thus, Total CPC manufacturing capacity is of Goa Carbon Limited is 2,40,000 MT. Details of the Business of the Issuer a. Location of the Units / Manufacturing facilities

The Company has two manufacturing facilities, one at Goa and the other at Bilaspur.

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1. Goa Plant - St. Jose de Areal, Margao, Goa 403 601. 2. Bilaspur Plant - 34-40, Sector B, Sirigitti Industrial Area, Bilaspur 495 004, Chattisgarh 3. The Wholly owned Subsidiary of the Company Paradeep Carbon Limited (To be amalgamated

w.e.f. July 1, 2005 subject to the approval of the High Court) has its manufacturing facility at - Village Udayabata. Post Office: Paradeep Orissa.

b. Plant, Machinery, Technology, Process, etc.

Plant and Machinery Goa Plant at St. Jose de Areal is equipped with the following machineries:

RPC unloading conveyor belt equipment 100 - 250 MT/hrs RPC storage yard with shed 140 mtr x 40 mtr. RPC storage plots with compound wall RPC silo filling belts & equipment 50 - 100 MT/Hr RPC silo 3 N0s - 150 MT/each silo. Raw feed conveyor belts with equipment - 20 MT/hr. Rotary kiln & cooler process equipment. CPC storage conveyor belt equipment 15 MT/hr. Rotary kiln & cooler stack 30 Mtr height. Plant Automation PID controller 08 Nos & SCADA system & panels. Automation equipment like VFD, Weightometers, Field Instrument transmitters with Panel. Oil heating & circulation system 500 ltrs / hr. Oil heating & circulation system 500 ltrs / hr. 225 KL oil storage tank. Fork lift & wheel loader for material movement. Process water storage tank and water recirculation tank. Process auxiliary equipment like blower, pumps. Process bag filter blower & equipment. Kirloskar diesel / engine set, Diesel generator set 310 KVA. Electrical main transformer, power control center panel with O.C.B & ACB. The motor control center panel and lighting, distribution equipment panel. Computer system equipment with Internet service to all department. CPC handling conveyor system - 25 MT / hr. Sieving and crushing equipment system - 06 Nos. CPC storage bunkers 04 Nos. CPC loading conveyors belts with bucket elevator & storage bunker - 30 MT / hr. Electro mechanical weighbridge 30 MT capacity. Ericssion 50 x 8 lines Intercom distribution system. Consumable stores & store block. Administration block and engineering block. Underground storage tank 450 KL. Laboratory block with R&D section. Laboratory Analytical equipment like Kelvin bridge, Balances, Furnaces, spectrometer, Flame

photometer etc.

GCL’s Plant at Sirigitti Industrial Area, Bilaspur is equipped with the following machineries: Kiln & Cooler Heavy Duty Gyro Motor Gearbox AMS-150 Hydraulic jack Mechanical Work in progress Water Meter Industrial Tubular Pole Micro Ohm Meter Carbon Resisting Testing Machine Newlong Bag Closing Machine Newlong Bag Closing Machine Cooler nos

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KEC Make Invertor MS Bonded Frame SPH Roller Bearing Roller Bearing KEC make Motor Revo Bag Closer Weighing Machine KEC make Static Invertor Panel Borewell 2 nos TEFC Motor Submersible pump Cable Laying Terminal Vibrating Feeder Thermometer Crusher Bag Closer Machine Operating Panel Rotary Power Collect Axial Blower Vibrating Screen TEFC Motor Girth Gear Blower Digital Anometer Universal Anometer Jaw Crusher Double Jaw Crusher Control Panel Matrix Pump Set Elevator Jaw Crusher " Chetak" Fabrication of Cyclone Separator Bucket Elevator Spares Electric Vibrator Electromagnetic Vibrator Bucket Elevator Tertiary Blower Bag Closing Machine Grinder Machine 2.2KW Geared Motor Erection &Fabrication Conveyor Belt Vibroscreen Air Sample machine Electromagnet Vacuum Cleaner Benco -High I Magnet Tempson Pyrometer Portable Stack Monitor Crompton Pump 2 benco Magnetic Hand Pump Support Roller, Shrink Filter Pan Mixture

Paradeep Carbons Limited the 100% subsidiary of the Company (to be amalgamated w.e.f. July 1, 2005, subject to the approval of the High Court) at Paradeep, Orissa is equipped with the following machineries:

Kiln & Cooler (Including major modification)

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Conveyor equipments Water pump, Motors, air Compressor, Centrifugal Blower, etc. Electrically operated power pack machine for 400 tons capacity hydraulic jack Tirfor brand pulling & lifting machines having 3.2 tons lifting & 5.2 tons pulling capacity with

30 mtrs long steel wire rope with handle bearing with ISI mark. 62.5KVA D.G.set (used) ITS accessories switch 200 amp, 63 amp, 32 amp, 400amp Welding Machine (Advani make), cable, 200mtr hose pipe Pressure jet burner "Machinex" D'lux electric bag closing machine complete with accessories Centrifugal Air blower model HBN-12/10 fitted with 10 HP NGEF motor 8" Screening Machine 2.D.P.32 Impact Pulveriser 4.Carbon Resistive Testing Machine Brick Cutting Machine Stack Monitoring Kit Stack Velocity Monitor Stack Monitor Accessories Electronic Vaccum Cleaner Water Meter Flanged Auto Centrifugal cleaner Brake Liner for Oil crusher Diamond Segment Saw (2 nos) Unbalance Motor exciter Universal Digital AVR Jaw Crusher-6*3 Roll Crusher-6*8 Grinding of Tyre & Roller Mech analysis of Kiln & Cooler PBL make Weigh feeder PBL make Belt Weigher Sweeping machine High Precision water bath Pan type Mixture Machine RPC & Kiln feed Hopper PLC System with PLC output moudle & accessories Air Compressor Supply Main PCC Furnace Oil Heating System Electronic Weighing Mach Electric Motor 60HP 1 No. D' Con Burner FR Kiln FIR Electronic Conversion Kit Non-Contact Temp. Pyrometer Multideck Vib. Screening Machine H. Duty Torque Drill Mach. Stitching Machine 9 no Electric Weighing Machine Telemecanique / Schneider Stitching Machine 5 no Marble Cutting Machine

Technology and Calcining Process Petroleum coke calcining is taking anode grade green coke from the oil refining process. CPC is calcined (roasted) at very high temperatures 1200o to 1350o C usually in a gas/ self fired rotary kiln or rotary hearth. CPC is calcined to remove moisture, drive off volatile matter, increase the density of the coke structure, increase physical strength, increase the electrical conductivity of the material.

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The material flows in a counter direction to the temperature controlled hot gases fired from the kiln burner. During the radiation heat transfer process, the material comes across various reactive zones where it de-moisturises, devolatalises and stabilizes with improved crystalline structures. Before taking the calcined coke into godowns, it is cooled by water quenching on red-hot material and is further cooled by natural draft air while it tumbles through length of the cooler.

RF1 - Raw Feed conveyor RF2 - Raw Feed conveyor RC1 - Reclaiming conveyor RC2 - Reclaiming conveyor RC3 - Reclaiming conveyor RC4 - Reclaiming conveyor RC5 - Reclaiming conveyor CC1 - Calcined coke conveyor CC2 - Calcined coke conveyor U1 - Unloading conveyor U2 - Unloading conveyor TU3- TRIPPER unloading conveyor

GCL has procured the Rotary Kiln from McNally Bharat Engineering Company Limited, Kolkata based on design from M/s Kennedy Van Saun. The Kiln was subsequently modified to employ the tertiary air injection technology, thus achieving a significant reduction in the consumption of furnace oil and an increase in the calcining capacity.

c. Collaborations, any performance guarantee or assistance in marketing by the collaborators

The Company does not have any collaboration Agreement as on date. However, in past the Company had Collaboration with Great Lake Corporation, USA. There is no performance guarantee or assistance in marketing by any licensor / know how provider.

d. Infrastructure facilities for raw materials and utilities like water, electricity etc.

Raw Materials The Company is in processing of GPC/RPC and to make CPC. About 90% of the GPC produced is used as feedstock for production of Calcined Petroleum Coke (CPC). Other end uses of RPC are as an alloying element in Steel Industry and Calcined Carbide/Silicon Carbide Manufacturing industries. RPC is a Free Trade Product and is also a decanalised item of import. GPC is a by-product of the refining process. The product usable for calcining comes from tight sweet crudes. As the demand for refined products has continued to grow globally, refiners must turn to heavier, more sour crudes to

Plant Schematic Diagram - Coke Calcination

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meet the demand. The GPC produced from this heavier, sourer crude cannot be used to manufacture CPC. The impact this has on CPC industry is that while demand and production for CPC continues to increase, the supply of GPC has not increased, which forces the industry to look for available product from newer sources. Thus, the availability of GPC will be very critical for any calciner in the world, and calciners will be compelled to use non-traditional green cokes with higher levels of metal impurities (like high sulfur, nickel and vanadium content). In addition, due to changes in motor fuel standards, refineries have to invest heavily in equipment for the removal of sulfur and this will provide an opportunity to CPC manufacturers to reach to sour crude also. The conversion to sour crude is typically more beneficial to a refinery than to just modify the process units to meet the stricter emission fuel standards. GPC is produced in India by the Petroleum Refineries located mainly in the eastern parts of India. The delivered cost of GPC to Goa from Indian refineries is cost prohibitive and the Goa Plant of GCL mainly imports GPC from China, Kuwait or other countries depending on the FOB price and freight rates so as to convert final product, at a competitive price. GCL’s Bilaspur Plant mainly uses GPC available from eastern parts of India and to some extent by importing through Paradeep Port. Paradeep Carbons Limited has an advantage of using GPC from refineries based in eastern parts of India as well as imported from other countries.

Utilities for existing setup

Power Goa Plant Bilaspur Plant Paradeep Carbons

Limited Electrical Contract Demand

230 Kva 230 Kva 475 KVA

Average Monthly Consumption

100 Mwh 45 Kva 310 KVA

Standby Generator Capacity

310 Kva 225 Kva 500 KVA

Kirloskar Alternator RT 8 Mc. No. – 23426A RPM 1000 AC Volt – 420, AC Amps – 426.1, PF – 0.8 CPS – 50, PH – 3, Exc. Volt – 105, Exc. Amps- 4.5 Kirloskar Engine- 312 HP

Kirloskar Alternator M/c No. 00090025 RPM 1500 AC Volt- 415 AC Amps – 313, PF– 0.8 CPS – 50, PH – 3, Exc. Volt – 38, Exc. Amps- 2 Kirloskar Engine – 272 HP

Cummins India Ltd. KvA-500, RPM-1500, 415V AC, 3 phase Frequency-50 Hz, p.f.-0.8, Amp-696 Frame-4AB 355/B2, Amb-40 deg C X cv-85v, A2.5, connection-Y ENGINE Model: VTA 28G Sr. No. 25241946 Cummins

Emergency Generator 25 Kva - 2 X 250 KVA Kirloskar Electric Co. Ltd. Kva-250, RPM-1500, 415V AC, 3 phase Frequency-50 Hz, p.f.-0.8, Amp-349 Frame-4AB 280/L2, Amb-40 deg C X cv-90v, A2.4, connection-Y

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Water Goa Plant The Water requirement at Goa is 5000cm (5000 KL) per month (approx. 165 KL/day) and is supplied by PWD, Works Division IX, Government of Goa as per contract. Besides GCL has 2 opencast wells and 1 bore well within plant premises to complement/supplement Government supplies. It has 1 underground reservoir of about 500KL and surface tanks of around 450KL to ensure that adequate water quantity is available for process and other use (domestic) in case Government supply is temporarily disrupted. Bilaspur Plant The source of water supply within the premises is the water connection from CSIDC Bilaspur C.G. & from bore well. The water consumption for Industrial cooling is 3,000 KL approx. per year & the water consumption for domestic and gardening purpose is 11,000 KL approx. per year. The domestic wastewater is used for greenbelt irrigation inside the factory premises. Paradeep Carbons Limited The main source of water at Paradeep Plant is Taladanda Canal. The company draws water to its sub-canal and then it is pumped for storage in the water reservoir inside the plant premises and over-head tank. After routing it through the filters it is taken for use in plant as process water per requirement. The total storage capacity of water in the reservoir and over-head tank is 330 KL. Manpower The total manpower directly employed by the Company as on November 30, 2005 is 195 personnel. Besides the Company has another 106 Employees on the Rolls of Paradeep Carbons Limited that is being merged with Goa Carbon Limited. Distribution of the manpower is as follows: Summary of Managerial, Administrative, Skilled & Unskilled Personnel Particulars No. of Employees Goa Carbon – Head Office Managerial Personnel 19 Administrative Staff 15 Total 34 Goa Carbon – Plant at St. Jose De Areal Managerial Personnel 23 Administrative Staff 17 Skilled Personnel 34 Unskilled Personnel 51 Total 125 Goa Carbon – Plant at Bilaspur, Chattisgarh Managerial Personnel 17 Administrative Staff 05 Skilled Personnel 14 Total 36 Paradeep Carbons Limited Managerial Personnel 23 Administrative Staff 19 Skilled Personnel 38 Unskilled Personnel 26 Total 106

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Effluent Treatment There are no process effluents as water used for quenching hot calcined petroleum coke turns into

flash steam, which is flared through cooler stack. Effluent treatment is not required, as there is no discharging of any effluent outside the factory premises. Water is used for domestic purpose and discharged through settling tank and soak pits. As there are no industrial effluents no effluent treatment plant is required. The process is a dry process and as such there is no requirement of Effluent Treatment Plant.

e. Products / Services of the Company i. Nature of Products and end users

Calcined Petroleum coke is one of the purest forms of carbon, which is used in the manufacture of all electro metallurgical metals and graphite electrodes, midget electrodes, for dry cell batteries. CPC is used for making anodes for production of basic aluminum metal, as a recarburizer for steel mills and foundries, for production of titanium dioxide and in various chemical industries for miscellaneous uses.

ii. Market including details of the Competition, past production figures for the industry, existing

installed capacity Competition Some of the International Calciners are:

Alba Chicago Carbon Company CII Carbon, LLC Great Lakes Carbon Corporation (GLC) ZCGG

Some of the domestic Calciners Rain Calcining Limited Brahmaputra Carbons Limited India Carbons Ltd Bongaigaon Refineries and Petrochemicals Limited Petro Carbons and Chemicals Limited Guwahati Carbons Limited

Past Production Figures for the Industry The region wise breakup of the World total Calcining Capacity is as under:

The world calcining capacity is estimated to be 16 million MT. However, there is idle capacity available in the industry as also some capacity is not economically viable. These coupled with the

Calciners- 2004 16 million MT

10%Europe

11%CIS/E.Europe

18%China 3%

Canada

10%Asia

38%United States

5%M. East/ Africa

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capacity not keeping up with the demand is likely to result in the shortfall in the CPC availability by the year 2006.

Existing installed capacity The Calcining industry is fragmented and in addition to the established players there are many unorganized players and traders that operate in the industry. A definitive comparable information on competitors operating in the calcining industry is not publicly available. Also, GCL operates in a specified domain with a reputation for maintaining quality standards and produces CPC based on the requirement of customers and the end-use requirement specified, so the data is strictly not comparable because of the unique nature of the product, the permissible ash / impurities contents counts and the process used. There are no published reliable data available to the Company for the past production figures, existing installed capacity, past trends and future prospects regarding exports, demand & supply forecasts.

Production Capacities Plant Licensed capacity Finished Goods Godown capacity Raw Material (RPC) Yard Furnace Oil Capacity

Goa Plant 1,00,000 M.T. p.a. 15,000 M.T. 30,000 M.T. 2,23,000 Ltrs.

Bilaspur Plant 40,000 M.T. p.a 1,400 M.T. 8,000 M.T. 30,000 Ltrs.

Paradeep Carbons Limited 1,44,000 M.T. p.a. 12,000 M.T. 55,000 M.T. 44,000 Ltrs.

iii. Approach to marketing and proposed marketing set-up

About 70 percent of CPC is used by aluminium smelters for anode making for production of basic aluminium metal. The remaining about 30 percent is used for other applications. Therefore, the fortune of CPC industry is closely linked with the fortune of aluminium industry. CPC is globally marketed at most competitive delivered long-term firm price contract basis. Aluminium smelters have different quality requirements, however all the CPC produced worldwide is not interchangeable. Therefore, marketing of CPC is generally focused on the markets on regional basis with geographical proximity – that is to minimize freights for delivery to the consuming industry. Similarly, the raw material - Raw Petroleum Coke (RPC) is also traded on most competitive delivered long-term firm price contract basis to the calciners. Since about 1.4 tonnes of RPC is required to produce 1 tonne of CPC, an optimization is necessary to reduce freights to the extent possible for delivering the RPC to the calciners and CPC to the consuming industry. These two factors mainly decide the operational viability of the calciners. Being a commodity, petroleum coke is a business of volumes and not of margins. Therefore, capacity utilization of the plant plays an equally important role for the successful operation of the calciners. Goa plant is fully utilized for CPC export to ALCAN/ Pechinney and supply to domestic markets in the vicinity like HINDALCO, Belgaum and iron and steel foundries in the neighbouring areas of Goa. As an alternative and business strategy, Goa is also focusing on Dubai as destination of CPC to DUBAL – an aluminium smelter with about 600,000 tonnes/year capacity to increase the margin due to lower freight rates. GCL’s Bilaspur unit is located very close to Bhilai Steel Plant of Steel Authority of India, and Bharat Aluminium Company (BALCO)/Sterlite Group. Both these units are at a distance of less than 120 Kms from the Bilaspur calcining unit. Therefore Bilaspur plant caters to the CPC requirements of these two companies and the balance is being marketed in the neighbouring area to the steel mills and foundries. Capacity of Bilaspur plant is optimally utilized. Paradeep plant is located in the State of Orissa on the east coast. Paradeep plant is about 250 Kms from NALCO (National Aluminium Company Limited) India’s largest single integrated aluminium smelter. Since the inception Paradeep plant is supplying CPC to NALCO, which is under expansion, and the smelter capacity will be expanded to about 450,000 tonnes per annum. Additionally Sterlite and HINDALCO group are planning green field aluminium smelters in the

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State of Orissa, which are expected to be operational by the year 2008. Once these smelters are operational not only Paradeep plant will be fully utilized, there would be requirement for additional capacity at Paradeep, which is quite close to the smelters. Paradeep Port is one of the largest ports in India. It is all weather and well-equipped port on the east cost. It can cater to the export market - aluminium smelters in Australia, Indonesia, Dubai and South Africa. The two green field aluminium smelters in Oman and Qatar are being planned by ALCAN and HYDRO. These smelters are likely to be commissioned in 2009. In addition DUBAL and ALBA are under expansion. The aluminium smelters generally prefer to buy Calcined Petroleum Coke directly from the calciners and discourage purchase of CPC through traders. Prior to finalizing a long term contract for purchase of CPC, aluminium smelters inspect the manufacturing, laboratory, harbour and other infrastructure facilities of the calciners and once they are satisfied with these facilities a trial cargo of about 5,000 tonnes sometimes 15,000 tonnes is purchased followed by finalization of long term contract subject to competitive pricing of CPC if trial cargo has been found successful. Therefore marketing of CPC to aluminium smelters requires direct contact and centralized marketing set up and generally not through agents. In order to facilitate dialogues between calciner and aluminium smelters, TMS (The Minerals, Metals & Materials Society) and Jacob Consultancy of United States yearly organizes Petcoke Conference where representatives of calciners and aluminium smelters meet and discuss long term requirements of CPC on yearly basis. GCL is a participant in such events. Marketing / sale of CPC in the domestic and overseas markets are based on annual tenders released by the buyers / aluminium smelters. In response to the annual tenders, GCL and the other calciners submit their bid for supply for CPC yearly as per tender conditions. Submission of bid in response to tenders are formulated and attended by GCL’s marketing and sales staff consisting of Marketing and Export Manager, Manager Raw Material procurement and Quality Control Staff, and if required the Managing Director. Marketing and sale of CPC is centralized at Head Office. Pricing of CPC is decided in joint consultation with the concerned Executives of Sales/Marketing/Raw materials, Quality Control and Finance at the Head Office. Frequent reviews are carried out at Head Office on sales and marketing targets achieved, and remedial measures are taken, if required.

Main Customers Presently, CPC manufactured from Goa plant is primarily exported as the same is port based at the same time, there are no major customers in the close vicinity. The balance is supplied to nearby smelters and foundries. CPC manufactured at Paradeep plant is supplied to major smelters located in the northeastern region and being port based plant CPC is exported as well. GCL’s plant located at Bilaspur supplies to nearby aluminium smelters as well as recarburiser of steel mills and foundries located in Central part of India. The logistical distribution enables GCL to control freight cost of finished products. Some of GCL’s customers in the aluminium industry are Hindalco, Indal, Nalco, Balco Aluminum Pechiney, France, Tomago Aluminum, Australia. Some of GCL’s clients in the metallurgical and chemical industry are Kalyani Steel; BHEL; Ashok Leyland; Kirloskar Group of Companies; Ahli Steel, Dubai; Amsteel, Malaysia; Bisley & Co, Singapore etc. At present, GCL exports to Australia, Egypt, Dubai, France, Singapore, Kuwait, Iran, Saudi Arabia, Malaysia, Indonesia, Thailand, Russia, UK and South Africa. The Company has wide spread customer base, the top 10 Customers based on Volume on a consolidated basis as on June 30, 2005 are as under:

Sr. No. Name of the Customer 1 Aluminium Pechiney Aluval 2 NALCO 3 BHP Billiton 4 BALCO 5 MALCO 6 INDAL 7 Tata Steel Limited

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Sr. No. Name of the Customer 8 Aluminium De Grease 9 Kerela Minerals and Metals Limited 10 Millenium Inorganic Chemicals 11 Hindalco

Order Book Position: The Company has a consolidated order book position of 146,256 MT by way of long-term contracts as on October 31, 2005.

iv. Export possibilities and export obligations

The share of various industries in the exports made by GCL is as under:

Export Obligations: The Company has imported certain capital equipments at concessional rate of customs duty under “Export Promotion Capital Goods Scheme”. Custom duty payable in the event of non-fulfillment of export obligations as on June 30, 2005 is Rs. 117.57. Paradeep Carbons Limited the 100% subsidiary of the Company: Custom Duty payable in the event of non-fulfillment of export obligations is Rs. 129.52 Lacs. The consolidated liability towards Custom duty payable in the event of non-fulfillment of export obligation as on June 30, 2005 is Rs. 247.09 Lacs.

Export as a percentage of Sales Volume of the Company in the previous years:

0%10%

20%30%40%

50%60%70%

80%

1999 -2000

2000 -2001

2001 -2002

2002 -2003

2003 -2004

2004 -2005

Year

Exports as % of Sales Volume

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Business Strategy GCL’s business strategy is to be a dominant calciner in India with capacities located at strategic location that allows it to source raw materials at cheaper rates and to maintain the standards of the CPC produced. This along with a distributed geographical presence shall contribute to GCL being in a position to supply per requirements of the customers at competitive rates. Also, the focus of GCL is in the large and long-term tender based orders. In order to accompanish this, the Company has acquired facilities and has been on an aggressive lookout for capacities because economies of scale and strategic geographical presence alone can lead to a long term survival and growth in the CPC industry. SWOT Analysis Strengths, Weaknesses, Opportunities and Threats Strengths

GCL has a dedicated management with long standing relationship with customers Cordial industrial relations Manufacturing units of the company and subsidiary are located at strategic locations either at port

centres or near to the market. Second largest player in India with an installed capacity of 2,40,000 MT p.a under its control Introduced blending of coke varieties to achieve buyers specifications First Indian Exporter of CPC. ISO 9001:2000b, ISO:14001 certified

Weaknesses

Single product company Sells on long term contract prices Dependence on few big customers Prices of Raw Materials dependent on international crude prices

Opportunities

Lower operating costs Being a listed, the company is able to raise funds easily Indian Aluminium majors are setting up Greenfield / expanding capacities, that shall enhance

demand The CPC industry is witnessing a consolidation wave

Threats

Internationally competitive business environment Increase in raw material prices consequent to the price movement of crude oil affects margin Increased competition from Refinery integrated calciners Unorganized manufacturers undercutting the prices Erratic Freight / Shipping rates might affect the profitability GCL. Petcoke business is of volumes and not of margins

Quality Assurance GCL’s prime objective is to ensure that the customer gets the quality products and services specified. The management objective is to progressively adopt scientific management techniques in quality control, productivity and cost optimization and in planning of raw material procurement, production, storage and dispatches / shipment. GCL has ISO 9001:2000 and ISO 14001 certified Quality Standards by BVQI for its Goa Plant. The Commitment of the Company towards quality consciousness is total and without any reservation. Wastage Waste generated in the processing of GPC has specific buyers and the waste has specific use in certain user industries like printing etc. The other waste generated is disposed off through waste management organisation recognised by pollution control board as applicable.

Goa Carbon Limited

41

Future Prospects Low metals and ash contents make calcined petroleum coke the best material currently available for making carbon anodes for smelting of alumina to aluminium in the electrolytic smelting process. For every ton of aluminium produced, the aluminium smelters require about 400 Kgs of CPC and, presently, there are no known viable substitutes for CPC. Accordingly, CPC constitutes a key raw material for the aluminium industry. Demand of calcined coke from the primary aluminum industry accounts for more than 70% of overall calcined petroleum coke needs. Balance CPC is used in the manufacture of titanium dioxide, steel mills, foundries and for various other uses in chemical industries. Therefore, the growth of CPC industry is intrinsically linked to the growth on the aluminium sector for the manufacture of basic aluminium metal. Capacity and Capacity Utilisation: The following is the product manufactured by GCL, capacities, production and sales as of June 30, 2005

Sales Closing Stock Product Unit Installed Capacity

Production Quantity Quantity Value (Rs.

in Lacs) Quantity Value (Rs.

in Lacs) Calcined Petroleum Coke (CPC)

MT 1,15,000 p.a.

1,22,294* 1,21,796* 12,103.08* 11,901 1,126.08

* 15 months period

The following is the product manufactured by PCL, capacities, production and sales as of June 30, 2005 Sales Closing Stock Product Unit Installed

Capacity Production Quantity Quantity Value (Rs.

in Lacs) Quantity Value (Rs.

in Lacs) Calcined Petroleum Coke (CPC)

MT 1,44,000 p.a.

99,454* 93,977* 10,487.03* 13,162 1,710.97

* 15 months period Competitive Strengths GCL is one of the established CPC manufacturers in India and has the following primary competitive strengths:

Strategic locations of plants GCL’s plants are strategically located to service various clients within India and outside. This enables it to save on freight cost to a large extent. Proximity to the Middle East, Australia and Indonesia also offer greater scope as the freight cost can be curtailed for the supply of CPC. Among the leading players in the business GCL is amongst the leading players in CPC manufacturing in India. With annual production capacity at 240,000 MT, it is the second largest manufacturer of CPC in India. It has obtained an ISO 9001:2000 conforming to the international Quality Standards. Skilled Manpower GCL has skilled manpower that has grown with the Company. The manpower contributes substantially in enabling the Company to provide products and services to clients as specified.

Insurance All Company’s fixed and current assets are adequately insured covering all major risks. Property - Land and Buildings A summary of our properties is given below: Sr. No.

Location Area Ownership and other details Purpose

Dempo Group

42

Sr. No.


1. St. Jose De Areal Goa

115.944 Sq. Mts.

Free hold properties

Manufacturing Plant

2. Sirgitti Industrial Area, Bilaspur,

1,52,500 Sq. ft. & 1,75,000 Sq. ft.

On lease from M.P. Audyogik Kendra Vikas Nigam (Raipur) Ltd.

Manufacturing Plant

3. Dempo House, Campal, Panaji-Goa

326 Mt.s The Company has entered into a Leave and Licence Agreement with M/s. V. S. Dempo & Co. Pvt. Ltd. to use the corporate office for a period of 11 months with an option to renew the agreement for such further period on the terms and conditions to be mutually decided by the parties.

Registered Office

4. Tonca, Caranzalem-Goa

109.88 Sq. Mts & 128.70 Sq. Mts


Residential properties for use of officers & employees

5. Comba, Margao-Goa.

88 Sq. Mts & 97 Sq. Mts.



6. Aquem, Margao-Goa

93 Sq. Mts. 80 Sq. Mts. & 62 Sq. Mts.



Besides the above the Company has Paradeep Carbons Limited that is to be amalgamated with the Company has the following property: Sr. No.


1. Paradeepgarh 11.24 Acres

Leasehold for a period of 99 years commencing on May 1, 1998

Manufacturing Plant

2. Paradeep Port 10,000 Sq. Mtrs Leasehold for 10 years, lease commencing from November 1, 2003.

Stockyard

3. Paradeepgarh 4.4 Acres Owned building constructed on Leased Land

Factory Building

Purchase of Property Except as stated in this Letter of Offer and save in respect of the property purchased or acquired or to be purchased or acquired in connection with the business or activities contemplated by the objects of the issue (if any), there is no property which the Company has purchased or acquired or proposes to purchase or acquire which is to be paid for wholly or partly out of the proceeds of the present issue or the purchase or acquisition of which has not been completed on the date of this Letter of Offer, other than property in respect of which Contracts for the purchase or acquisitions were entered into in the ordinary course of business and the contracts were not entered into in contemplation of the issue nor is the issue contemplated in consequence of the contracts or the amount of purchase money is not material. Particulars of Transactions in the Last Two Years where Vendor was Promoter / Director The Company has not purchased any property in which any of its promoters and/or directors have direct or indirect interest in any payment made thereof. The Company has no plans, at present, to acquire any running business out of the proceeds of this issue. However, the Company has approved the amalgamation

Goa Carbon Limited

43

of Paradeep Carbons Limited (the wholly owned subsidiary) of the Company w.e.f. July 1, 2005 subject to the approval of High Court. The Company is yet to file an application to the High Court w.r.t. the same. Save in respect of the property purchased or acquired or to be purchased or acquired in connection with the business or activities contemplated by the objects of the issue (if any), there is no property which the Company has purchased or acquired or proposes to purchase or acquire which is to be paid for wholly or partly out of the proceeds of the present issue or the purchase or acquisition of which has not been completed on the date of this Letter of Offer, other than property in respect of which

Contracts for the purchase or acquisitions were entered into in the ordinary course of business and the contracts were not entered into in contemplation of the issue nor is the issue contemplated in consequence of the contracts or

The amount of purchase money is not material. Key Industry Regulation Over the past few years, the Indian government has removed many of the barriers hindering the growth of Indian Industry. The remaining restrictions that perpetuate the lack of scale and poor operational and organizational performance of Indian manufacturers which discourage investment are being re-looked along with an enhanced emphasis being given to infrastructure. However, certain regulations still protect small-scale sector. As a result, Indian calciners typically have less average capacities than its counterparts in other countries. Apart from all the corporate laws, local laws and other related regulations, the following are the key regulations in respect of the calcining industry in India:

1. The Water (Prevention & Control of Pollution) Act, 1974. 2. The Air (Prevention & Control of Pollution) Act, 1981. 3. The Hazardous Wastes (Management of Handling) Rules, 1989.

Indian Environment Regulations: The three major statutes in India that seek to regulate and protect the environment against pollution related activities in India are the Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981 and the Environment Protection Act, 1986. The basic purpose of these statutes is to control, abate and prevent pollution. In order to achieve these objectives, Pollution Control Boards (PCBs) are vested with diverse powers to deal with Water and Air Pollution have been set up in each state. The PCBs are responsible for setting the standards for maintenance of clean air and water, directing the installation of pollution control devises in industries and undertaking investigations to ensure that industries are functioning in compliance with standards prescribed. These authorities also have the power of search, seizure and investigation if the authorities are aware of or suspect pollution. All industries and factories are required to obtain consent orders from PCBs, which are indicative of the fact that the factory or industry in question is functioning in compliance with the pollution control norms laid down. These are required to be renewed annually. The management, storage and disposal of hazardous waste is regulated by the Hazardous waste Management Rules, 1989 made under the Environment Protection Act, 1986. Under these rules, the PCBs are empowered to grant authorization for collection, treatment, storage and disposal of hazardous waste, either to the occupier or the operator of the facility. Others: Besides the above the other Laws affecting the business of the Company are Sales Tax, Excise, Customs duty, Income Tax etc.

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44

C.) HISTORY, AND CORPORATE STRUCTURE OF THE COMPANY a. History and Major Event Goa Carbon Limited (GCL) belongs to the House of Dempos in Goa. Established in 1941, the Group is engaged in a variety of business activities. The Group has presence in Iron Ore mining and exports, Calcined Petroleum Coke, Pig Iron, Marine and Industrial Paints, Construction, Publishing, Ship Building, Travel and Trade. Goa Carbon Limited was incorporated on June 22, 1967 with its registered office at New Municipal Building, Panaji-Goa. The registered office was shifted to Velho’s House, Rua Conde De Toress Novas, Panaji-Goa with effect from April 1, 1969 and to the present address at Dempo House, Campal, Panaji-Goa with effect from May 1, 1971. The Company had a division that was into the manufacture of foundry grade pig-iron, alloy and special steel and the said division in the year 1996-97 was hived off and transferred to Aparant Iron and Steel Private Limited. In 1999-2000, the company has acquired 100% equity shares of Vishwalakshmi Petro Products Ltd., (VPPL), a calcined petroleum coke manufacturing company, which has become a Subsidiary of Goa Carbon Limited. VPPL was amalgamated with the company which was approved by Bombay High Court with effect from January 1, 2002. The CPC plant is Located at Bilaspur in Madhya Pradesh. In the September 2001 GCL acquired 80.00% equity share capital of Paradeep Carbons Limited a Calcined Petroleum Coke manufacturer based in Paradeep Orissa, another 3.47 % stake was acquired in the 15 month period ended March 31, 2003. Subsequently, it increased its equity stake to 100% in Paradeep Carbons Limited (PCL) so as to make it a wholly owned subsidiary in the financial year ending March 31, 2004. PCL has an annual production capacity of 1,25,000 MT and the plant is located at Jagatsinghpur (Orissa). The Board of Directors of Paradeep Carbons Limited and Goa Carbon Limited have consented to the amalgamation of Paradeep Carbons Limited with Goa Carbon Limited. The effective date for the same is proposed at July 1, 2005 subject to requisite regulatory approvals. Milestones

Year Event 1967 Incorporation 1973 Public Issue 1991 1:1 Bonus Issue 1997 1:1 Bonus Issue 1998 Acquisition of VPPL 1999 Hiving Off of Iron and Steel division and transfer to Aparant Iron and Steel Private Limited 2001 Acquisition of controlling stake in Paradeep Carbons Limited 2002 Amalgamation of VPPL with GCL 2005 Proposed Amalgamation of Paradeep Carbons Limited

Focus Areas of Business The Company is engaged in the processing of RPC / manufacture of CPC and is not involved in any other business / segment. However, in past the company has conceived a project for setting up of an iron foundry cum steel plant and the same was later hived off and transferred to Aparant Iron and Steel Private Limited. b. Main Objects The Object Clause of the Memorandum of Association (MoA) of the Company enables it to undertake the activities for which the funds are being raised in the present Issue. Furthermore, the activities the Company has been carrying out until now is in accordance with the objects of the MoA. The main objects of the Company inter-alia are: 1. To manufacture, calcine, refine, process, import, export, buy, sell and deal in petroleum coke, calcined petroleum coke, anthracite coal, coal tar, bauxite and other by-products as may be possible and to utilise waste gases for industrial uses and purposes, carbon, electro carbons, cinema arc carbons, carbon blacks, slabs and rods of various grades such as carbon copper, graphite, electro graphitised carbon, natural

Goa Carbon Limited

45

graphite carbon, metal mixture carbon, amorphous, impervious carbons and graphite products and by-products thereof including artificial graphite electrodes for steel manufacturers, carbon contact blocks, carbon brushes for all types of electrical machines carbon bow collectors and carbon insets for locomotives, trams, trolleys and cranes, graphite anodes for mercury vapours and hot cathode rectifiers and transmitting and ignition valves; graphite anodes for electrolysis and electric furances; carbon piles, carbon rods and powder for spectral analysis, carbon gland rings for turbines, compressors, carbon discs and rings for pile resistance, carbon contacts for switchgear; carbon bodies for glass forming tools; damper pistons for scales and regulators; carbon sliding contacts for potentiometers; carbon for liquid meters, carbon bearings, brush holders for all types of electrical machines; oil retaining bearings ready for installation and carbon bricks and blocks for furnace lining; carbon packing rings, telephone resistors and transmitters, diffusers, filters, prebacked cathodes with petroleum cake base and soderberg mixture, green paste, porus carbon products specroscopic electrodes and powders, welding electrodes, crucible for precious and hard metals; noncorrosive noninfiltrate and self lubricating carbon bearings and bushings, carbon for microphone, carbon registers and heating elements, electrographite, heat exchangers in the tube bundle make, photo engraving and blue printing carbons for enclosed and open arc lamps, graphite anodes and grills for mercury arc rectifiers, electric tube, anodes, carbon for dry batteries, carbon powder for ingot moulds, carboniouscement, carbon copper powders, carbon and graphite lining for chemical purpose, coal, coke, petroleum, natural and synthetic, coal gases and refinery gas. Changes in our Memorandum of Association Since incorporation, the following changes have been made to Memorandum of Association of Goa Carbon Limited: Date of Shareholder approval

Changes

September 27, 1997 Change in authorized share capital from Rs. 10,00,00,000/- divided into 95,00,000 equity shares of Rs. 10/- each and 50,000 preference shares of Rs. 100/- each to Rs. 25,00,00,000/- divided into 2,20,00,000 equity shares of Rs. 10/- each and 3,00,000 preference shares of Rs. 100/- each.

August 2, 1991

Change in authorized share capital from Rs. 2,00,00,000/- divided into 15,00,000 equity shares of Rs. 10/- each and 50,000 preference shares of Rs. 100/- each to Rs. 10,00,00,000/- divided into 95,00,000 equity shares of Rs. 10/- each and 50,000 preference shares of Rs. 100/- each by creation of 80,00,000 more Equity Shares of Rs. 10/- each.

December 30, 1981

The word “Bauxite” was inserted after the words “Coal tar” in the main object clause. The following new clauses were added in the other objects after Clause 57 namely: 58. To purchase, charter, hire or otherwise acquire, sell, exchange and work ships and vessels of any class either in India or in any other country or otherwise deal with ships or vessels and to establish and maintain lines or regular service of ships or other vessels and generally to carry on the business of shipmen and operate transport services by water and land between India and any other country for conveyance of passengers, mails and freight and for any other purpose including the conveyance of troop carriage of munitions of war, live-stock, corn and other produce, bulk and specific cargoes of all kinds including containerised cargo and all merchandise of whatsoever nature or kind between such ports and places in any parts of the world as may seem expedient and also to acquire or obtain any postal and/or other subsidy and generally to enter into contracts for the carriage of mails, passengers, goods and cattle by any means and either by its own vessels and other forms of transportation or by or over vessels and modes of transportation of others. 59. To purchase or otherwise acquire and to carry on the business or businesses of shipowners, smack owners, trawlers, deep-sea fishers, fishers, fish curers, fish salesman, wholesale and retail fish merchants, wholesale and retail game and poultry merchants, ice manufacturers, cold storage keepers, warehousemen, cord liver oil manufacturers, oil merchants and refiners, utilisers of fish refuse, manure manufacturers, anchor and chain makers, wire rope makers, rope makers, mast and

Dempo Group

46

Date of Shareholder approval

Changes

block makers, ship chandlers, marine store-keepers, compass and nautical instrument makers, marine engineers, engineers, boiler makers, ship builders, dry dock-keepers, slip-keepers, boat builders, ships and boat repairers, ship and boat outfitters, ship brokers, ship agents, salvors, wreck removers, wreck raisers, divers, auctioneers, valuers, assessors, stevedores, wharfingers, carriers, forwarding agents and all other branches of business usually or conveniently connected with any such businesses as aforesaid. 60. To build, equip, maintain and work public transport vehicles, motor coaches or other vehicles appropriate for the carriage of passengers or goods and to carry on the business of proprietors and carriers of passengers both in public conveyances and in private vehicles and goods in India and in such other places as may from time to time be thought fit, to carry on the business of carriers by all means of transport by land, sea, inland waterway and to carry on the business of warehousemen and stores of goods, wares and merchandise of every kind and description whatsoever. 61. To carry on the business of hire purchase, leasing, factoring, financing or hire purchase or lease of all kinds of plant and machinery, motor vehicles, motor boats, trawlers, launches, ships, vessels, aircraft or any other machinery, plant or equipment that the Company may think fit and to finance or assist in financing the sale of goods articles or commodities of all and every kind or descriptions by way of hire purchase or deferred payment or similar transactions and to institute, enter into, carry on, subsidise, finance or assist in subsidising of financing the sale and maintenance of any goods, articles or commodities of all and every kind and description upon any terms whatsoever, to acquire and discount hire purchase or other agreements or any rights thereunder (whether proprietary or contractual) and generally to carry on the business of financiers, traders, commission agents or in any other capacity in any part of the world and to import, export, buy, sell, barter, exchange, pledge, make advances upon or otherwise deal in goods, produce, articles and merchandise. 62. To undertake, carry out promote and sponsor rural development including any programme for promoting the social and economic welfare of or the upliftment of the public in any rural area and to incur any expenditure on any programme of rural development and to assist in the execution and promotion thereof either directly or through an independent agency or in any other manner. Without prejudice to the generality of the foregoing, the programme of rural development shall also include any programme for promoting the social and economic welfare or uplift of the public in any rural area which the Directors consider likely to promote and assist rural development and the words "rural area" shall include such areas as may be regarded as rural areas under Section 35cc of the Income Tax Act, 1961 or any other law for the time being in force or as may be regarded by the Directors as rural areas. The Directors may at their discretion in order to implement any of the above mentioned subjects or purposes transfer without consideration or at such fair or concessional value as the Directors may think fit and divest the Company of the ownership of any of its property to or in favour of any public or local body or authority or Central or State Government or any public institutions, societies or public trusts registered or established under any laws for the time being in force or recognised or approved by the Central or State Government or any authority specified in that behalf. 63. To undertake, carry out, promote and sponsor or assist any activity for the promotion and growth of the national economy and for discharging what the Directors may consider to be the social and moral responsibilities of the Company to its workmen, consumers and the public or any section of the public as also any activity which the Directors consider likely to promote national welfare or the social,

Goa Carbon Limited

47

Date of Shareholder approval

Changes

economic or moral uplift of the workmen, consumers and the public or any section of the public and in such manner and by such means as the Directors may think fit, and the Directors may, without prejudice to the generality of the foregoing, undertake, carry out, promote and sponsor any activity for the publication of any books, periodicals or newspaper or for organising lectures or seminars likely to advance these objects or for giving merit awards, scholarships, loans or any other assistance to deserving students or other scholars or persons to enable them to prosecute their studies or academic pursuits or researches and for establishing, conducting or assisting any institution, fund or trust having any one of aforesaid objects as one of its objects by giving donations or otherwise in any other manner; and the Directors may at their discretion in order to implement any of the above mentioned objects or purposes transfer without consideration or at such fair or concessional value as the Directors may think fit and divest the Company of the ownership of its property to or in favour of any public local body or authority or the Central or any State Government or any public institutions or public trust registered or established under any law for the time being in force or recognised or approved by the Central or State Government or any authority specified in that behalf.

January 16, 1980 Change in authorized share capital from Rs. 1,50,00,000/- divided into 10,00,000 equity shares of Rs. 10/- each and 50,000 preference shares of Rs. 100/- each to Rs. 2,00,00,000/- divided into 15,00,000 equity shares of Rs. 10/- each and 50,000 preference shares of Rs. 100/- each by creation of 5,00,000 more equity shares of Rs. 10/- each.

c. Subsidiaries of the Issuer Company and their business Paradeep Carbons Limited: Paradeep Carbons Limited was incorporated on March 25, 1997. The Company was initially incorporated at West Bengal with Registration No. 21-83589. The Registered Office of the Company was shifted to Orissa w.e.f. June 8, 1998 and Registration No. was 15-05368. Goa Carbon Limited acquired controlling stake (80.00%) in Paradeep Carbons Limited in September 2001. It was made a 100% subsidiary during the financial year ended on March 31, 2004. The Registered of the Company was shifted from Orissa to Goa w.e.f. June 1, 2005 with Registration No. 24-004064. The Company is engaged in the manufacture and marketing of Calcined Petroleum Coke (CPC). The Board of Directors of the Company comprises of Mr. Srinivas V. Dempo – Chairman; Mr. Keki M. Elavia, Mr. Sandeep Mehta; Mr. P.K. Das; Dr. T.R. Ramachandran; and Dr. A.B. Prasad- Managing Director. Shareholding Pattern as on June 30, 2005:

Sr. No. Name of shareholders Number of Equity Shares

% of holding

1 Goa Carbon Limited 4,80,00,000 100.00% Total 4,80,00,000 100.00%

The Registered Office of the Company is located at Dempo House, Campal, Panaji, Goa 403 001. The Permanent Account Number of the company is AABCP8152G. Financial Highlights Please refer to Page No. __ of the Letter of Offer under Section Financial Highlights of Subsidiary. The Board of Directors of Goa Carbon and Paradeep Carbons Limited in there respective meetings held on October 21, 2005 and October 20, 2005 respectively have passed a resolution (subject to the order of the High Court) to amalgamate the wholly-owned Subsidiary with the Holding Company. Accordingly, a Petition for amalgamation is to be filed with the Hon’ble High Court, Mumbai, Panaji Bench. The amalgamation is to be effective July 1, 2005.

Dempo Group

48

The company is not a listed Company. The company is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995 nor is under winding up. There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for economic offences against the Company. There are no litigations, disputes towards tax liabilities or criminal / civil prosecution / complaint against the promoters other than as mentioned in this Letter of Offer. D.) SHAREHOLDERS’ AGREEMENT There are no Shareholders’ Agreement existing as on date, however the board of Directors of Goa Carbon Limited and Paradeep Carbon Limited have approved the merger of Paradeep Carbons Limited being 100% owned by Goa Carbon Limited with Goa Carbon Limited w.e.f. July 1, 2005 subject to the approval of the High Court. The assent of the Shareholders of Company is yet to be obtained and shall be as per High Court direction. However, the Company is yet to approach and receive the Stock Exchanges approval to file an scheme of Amalgamation for merger of the its wholly owned subsidiary Paradeep Carbons Limited at the High Court of Bombay at Goa. Other Agreements Except the Contracts / Agreements entered into in the ordinary course of the business carried on or intended to be carried on by the Company, the Company has not entered into any other Agreement / Contract. Financial / Strategic Partners There are no financial or strategic partners. E.) MANAGEMENT a. Board of Directors GCL is a professionally managed organization. The Company functions under the control of a Board consisting of professional Directors. The day-to-day matters are looked after by qualified key personnel, under the supervision of Managing Director.

Name, Age, Address, Designation and Occupation

Date of Appointment and Expiry of Current Term

Qualification Other Directorships Compensation (April 2004 – June 2005)

Mr. Shrinivas Vasudeva Dempo Age: 36 years, Address: Dempo Villa, Altinho, Panaji-Goa – 403 001 Designation: Executive Chairman Occupation: Industrialist

DoA: April 1, 2001 EoCT: March 31, 2006

M.Com, M.B.A. (Carnegie Melon University, U.S.A.)

Chairman & Managing Director

V.S.Dempo & Co. Pvt. Ltd.

Chairman Dempo Mining Corporation Pvt. Ltd.

Aparant Iron & Steel Pvt. Ltd.,

Paradeep Carbons Ltd. Director

Dempo Brothers Pvt. Ltd.

Dempo Shipbuilding & Engineering Pvt. Ltd.

Devashri Investments Pvt. Ltd.

Dempo Travels Pvt. Ltd.

Dempo Industries Pvt. Ltd.

Dempo Shipyard Pvt. Ltd.

Nil

Goa Carbon Limited

49




Sindhudurg Mining Corporation Pvt. Ltd.

Marmagoa Shipping & Stevedoring Co. Pvt. Ltd.

Hindustan Foods Ltd. Esmeralda Investments Pvt. Ltd.

Rupmati Investments Pvt. Ltd.

Leelavati Investments Pvt. Ltd.

Ratnaprabha Investments Pvt. Ltd.

Jaiprabha Investments Pvt. Ltd.

Motown Investments Pvt. Ltd.

Lazio Investments Pvt. Ltd.

Rio Investments Pvt. Ltd.

West Coasts Hotels Pvt. Ltd.

Dempo Marketing Co. Pvt. Ltd.

Economic Development Corporation of Goa Daman & Diu Ltd.

Chairman, Governing Board Mineral Foundation of Goa.

Dr. Asht Bhuja Prasad Age: 62 years Address: III-B, IIIrd Floor, Surekha Building, Altinho, Panaji-Goa – 403 001. Designation: Managing Director Occupation: Company Executive

DoA: December 1 2005 EoCT: November 30, 2006.

B.Sc. (Chemical Engineering), M.Tech (Chemical Engineering), Ph.D. (Chemical Engineering)

Managing Director Paradeep Carbons Ltd.

Director V.S.Dempo & Co. Pvt. Ltd.

Hindustan Foods Ltd.

Rs. 12.56 Lacs

Mr. Dara Phirozeshaw Mehta Age: 72 Address: 10, Southlands, 177, Colaba Road, Mumbai – 400 005 Designation: Director Occupation: Solicitor

DoA: December 26, 1975 EoCT: AGM 2005-06

BA, L.L.B., & LL.M

Director Bloomberg Data Services (India) Pvt. Ltd.

Emerson Electric Co. (India) Pvt. Ltd.

Foseco India Ltd. GKN Driveline (India) Ltd.

Rs. 0.34 Lacs

Dempo Group

50




Grolier International Pvt. Ltd.

Kirloskar Copeland Ltd.

Bloomberg Television Services (India) Pvt. Ltd.

Alternate Director Clancey Precision Components Pvt. Ltd.

DME Company (India) Pvt. Ltd.

Emerson Network Power (India) Pvt. Ltd.

Flowserve India Controls Private Ltd.

Global Dolphin Drilling Co. Pvt. Ltd.

JT International (India) Pvt. Ltd.

Tata BP Solar India Ltd. Member, Board of Governors Indo-French Chamber of Commerce and Industry

Dr. William Raymond Correa Age: 82 Address: Dilkoosha, Altamount Road, Mumbai: 400 026 Designation: Director Occupation: Consultant

DoA: September 8, 1988 EoCT: AGM 2005-06

Ph.D. (Electronic Eng.)

Director Bhansali Engineering Polymers Ltd.

Birla Kennametal Ltd. Member, Board of Governors Breach Candy Hospital Trust

Rs. 0.29 Lacs

Mr. Pandurang Ghanasham Kakodkar Age: 68 Address: 6, Palmgrove, Behind Hotel Goa International, Tonca, Caranzalem-Goa 403 002 Designation: Director Occupation: Banking Consultant


M.A. (Economics) Director Financial Technologies (India) Ltd.

Sesa Industries Ltd. SBI Funds Management Pvt. Ltd.

Mastek Ltd. Hexaware Technologies Ltd.

Fomento Resorts & Hotels Ltd.

Centrum Capital Ltd. Sesa Goa Ltd. Uttam Galva Steel Ltd. Auditime Information Systems (I) P. Ltd.

Rs. 0.37 Lacs

Mr. Soiru Vaikunthrao Dempo Age: 61 years

DoA: September 25, 2000

B.A. (Economics) Whole Time Director V.S.Dempo & Co. Pvt. Ltd.

Rs. 0.55 Lacs

Goa Carbon Limited

51




Address: Dempo House, Santacruz, Goa 403001 Designation: Director Occupation: Industrialist

EoCT: AGM 2007-08

Managing Director Dempo Mining Corporation Pvt. Ltd.

Director Dempo Shipyard Pvt. Ltd.

Hindustan Foods Ltd. Sindhudurg Mining Corporation Pvt. Ltd.

Madhumati Investments Pvt. Ltd.

Celtic Investments Pvt. Ltd.

Ameya Investments Pvt. Ltd.

Jaiprabha Investments Pvt. Ltd.

Suhas Investments Pvt. Ltd.

Madhumalini Investments Pvt. Ltd.

Mr. Keki Manchersha Elavia Age: 59 Years Address: 24, Anand Bhavan, 36th Road, Bandra (West), Mumbai – 400 050. Designation: Director Occupation: Chartered Accountant


B.Com., F.C.A. Director Uni Abex Alloy Products Ltd.

Mazars Business Solutions Pvt. Ltd.

Uni Deritend Ltd. Uni Klinger Ltd. Paradeep Carbons Ltd. Sulzer India Ltd.

Alternate Director NRB Bearings Ltd. Grover Vineyards Ltd.

Member, Governing Council Indo-FrenchChamber of Commerce and Industry

Rs. 0.34 Lacs

Mr. Alban Francis Couto Age: 76 years Address: 1037, Sonetem, Carona, Aldona, Bardez – Goa: 403 523 Designation: Director Occupation: Advisor

DoA: October 30, 2004 EoCT: AGM 2006-07

I.A.S. (Retd.) Nil

Rs. 0.12 Lacs

DoA: Date of Appointment EoCT: Expiry of Current Term

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52

Brief Profile of the non-executive directors of the company is given below: Mr. Dara P. Mehta, 72 years, is Masters in Law and is a leading Solicitor. He is a Senior Partner with M/s. Little & Co. He specializes in Corporate Laws and is on the Board of the Company since December 26, 1975. Dr. W.R. Correa, 82 years, holds a Doctorate in Electronic Engineering. He has been associated with the Company since September 8, 1988. Mr. P.G. Kakodkar, 68 years, holds a Masters degree in Economics and is associated with the Company since September 27, 1999. He has varied experience in the Banking Industry and is former Chairman of State Bank of India.

Mr. Soiru V. Dempo, 61 years, is a Bachelor in Economics. He is as an Industrialist and brings his vide experience in decision-making of the Board. He is also the Managing Director of Dempo Mining Corporation Pvt. Ltd. Mr. Keki M. Elavia, 59 years, is a Chartered Accountant by profession. He is a Partner with M/s. Kalyaniwalla & Mistry, Chartered Accountants. He is associated with the Company since 2001 and provides valuable advice in various matters of concern to the Board of Directors. Mr. Alban F. Couto, 76 years, is a retired IAS Officer. He has a wide experience in various facets of management and has worked in senior capacities in Government of India. Details of the Borrowing Powers Vide a resolution passed at the Annual General Meeting of the Company held on September 27, 1997, consent of the members of the Company was accorded to the Board of Directors of the Company pursuant to Section 293(1)(d) of the Companies Act, 1956 for borrowing from time to time any sum or sums of money which together with the money already borrowed by the Company (apart from temporary loans obtained from the Company’s bankers in the ordinary course of business), shall not exceed in the aggregate at any one time Rs. 10,000 Lacs (Rupees Ten Thousand Lacs only) over and above the paid up capital and free reserves of the company. b. Compensation of Whole Time Directors Name: Mr. Shrinivas V. Dempo Designation: Executive Chairman Tenure of Contract: April 1, 2001 to March 31, 2006 Remuneration: Commission payable to the extent of 5% of the net profits of the Company, with liberty and powers to the Board of Directors (including it committee appointed for the purpose) to alter and vary from time to time, the remuneration by way of commission payable within limits specified in Schedule XIII of the Companies Act, 1956 or any amendments therto. Name: Dr. A.B. Prasad Designation: Managing Director Tenure of Contract: December 1, 2005 to November 30, 2006 The earlier contract with Dr. A.B. Prasad expired on November 30, 2005. The Board of Directors in there meeting held on October 21, 2005 have renewed and revised the terms of service contract with Dr.A.B. Prasad as under, the same is subject to approval of shareholders in the AGM 2004-05.

I. Salary i. Basic: Rs. 72,000/- (Rupees Seventy Two Thousand only) per month. ii. Allowances: Not exceeding Rs. 15,000/- (Rupees Fifteen Thousand) per month. iii. Bonus: As may be declared by the Company for its employees subject to maximum limit of 20%

of salary. II. Perquisites:

In addition to the above salary the Managing Director shall be entitled to the following perquisites: i. Housing I

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53

The Company shall provide suitable furnished, residential accommodation and the expenditure by the Company on hiring such furnished accommodation shall be subject to a ceiling of Rs.12,500/- per month. Housing II In case, no accommodation is provided by the Company, the Managing Director shall be entitled to House Rent/Maintenance Allowance not exceeding Rs. 12,500/- per month.

ii. Medical Reimbursement Medical expenses incurred by the Managing Director for self and family, will be reimbursed by the Company subject to a ceiling of Rs. 72,000/- per annum Over and above the reimbursement of medical expenses as above, the Managing Director shall be entitled for coverage under the hospitalization Mediclaim Scheme of a General Insurance Company for a policy with a premium not exceeding Rs. 5,000/- per annum.

iii. Leave Travel Concession For self and family once in a year, incurred as per rules of the Company, subject to a ceiling of Rs. 72,000/- per annum.

iv. Club Fees The Company shall reimburse actual and reasonable cost of membership during the term hereof in not more than one-private Club in Goa. This facility shall not include admission/life membership fees.

v. Personal Accident Insurance Premium not to exceed Rs. 1,000/- per annum.

vi. Communications Telephone facility at residence for the conduct of the Company’s business.

vii. Car Free use of Company’s car for official purposes and reimbursement of expenditure incurred in connection with the running and maintenance thereof and the salary for the driver as per Rules of the Company.

viii. Leave One month’s leave (30 days) with full pay for every 11 months of service, subject to the condition of leave accumulation/encashment as per the Scheme of the Company.

ix. Provident Fund Company’s contribution to the Provident Fund shall be as per the Scheme of the Company.

x. Pension/Superannuation Company’s contribution to Pension/Superannuation Fund shall be in accordance with the Scheme of the Company. Such contributions together with contribution towards Provident Fund shall not exceed the tax free limit laid down under the Income Tax Act, 1961.

xi. Gratuity Gratuity is payable in accordance with the Scheme of the Company.

xii. Encashment of Leave Unavailed accumulated earned leave encashable at the conclusion of the contract period.

III. The remuneration/perquisites of the Managing Director under this Agreement will be subject to tax applicable under the provisions of the Income-Tax Act, 1961.

IV. Minimum Remuneration: Notwithstanding anything to the contrary herein contained, if in any financial year during the currency of the tenure of the said Managing Director, the Company has no profits or its profits are inadequate, the Company will pay remuneration by way of salary and perquisites and allowance as specified above, subject to the limits specified in Section II Part II of the Schedule XIII to the Companies Act, 1956, and amendments, if any.

V. He will be subject to the other Rules and Regulations of the Company which may be in force from time to time.

VI. He shall not become interested or otherwise concerned directly or through his wife and/or minor children in any selling agency of the Company in future, without the prior approval of the Central Government.

VII. Dr. A. B. Prasad shall subject to the superintendence, control and direction of the Board of Directors of the Company perform the duties of Managing Director with regard to all work and business of the Company and manage and superintend such business and carry out all orders and directions of the Board of Directors subject to the terms of the agreement entered into with him.

VIII. The agreement may be terminated by either party hereto giving to the other, three months notice in writing of its or his intention, as the case may be, so to do.

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Non-Whole time Directors Non-executive Directors are currently paid sitting fees of Rs. 7,500/- for attending each meeting of the Board and Rs. 2,500/- for attending each meeting of the committee thereof. c. Compliance with Corporate Governance Requirements: Good corporate governance is a pre-requisite for enhancing shareholder’s long-term value. The company’s policies and practices are aimed at efficient conduct of business and effectively meeting its obligations to shareholders. GCL has been consistently improving transparency and accountability to all its shareholders. The Company complies with the current requirements relating to corporate governance, under the Listing Agreement entered into with the Stock Exchanges. GCL firmly believes that good corporate practices underscore its drive towards competitive strength and sustained performance. These practices are also powerful tool for building trust and long-term relationship with stakeholders of the Company. Company’s thrust on transparency, integrity, accountability and disclosure has enabled it to accomplish best Corporate Governance practices. I. Composition of the Board of Directors The Board of Directors of the Company consists of eight directors and has an optimum combination of executive and non-executive Directors as envisaged in Clause 49 of the Listing Agreement. Accordingly not less than 50% of the Board of Directors comprises of non-executive and independent Directors. The non-executive directors on the board of the Company are six out of which five are independent directors.

Sr. No.

Name of the Director Status* Date of Expiry of Terms

1. Shrinivas V. Dempo Executive March 31, 2006 2. Dara. P. Mehta Independent Subject to retirement but eligible

for re-appointment. 3. Dr. W. R. Correa Independent Subject to retirement but eligible

for re-appointment. 4. P. G. Kakodkar Independent Subject to retirement but eligible

for re-appointment. 5. Soiru V. Dempo Non-Executive / Non

Independent Subject to retirement but eligible for re-appointment.

6. Keki M. Elavia Independent Subject to retirement but eligible for re-appointment.

7. Alban F. Couto Independent Director – term expires at the AGM 2007-08.

8. Dr. A. B. Prasad Executive November 30, 2006 * As per Clause 49 of the Listing Agreement II. Audit Committee Audit Committee is constituted by Board of Directors consist of 3 directors, all of them are Non-executive independent Directors. The Audit Committee provides directions to and reviews functions of the Audit Department. The Committee evaluates internal audit policies, plans, procedures and performance and reviews the other functions through various internal audit reports and other year-end certificates issued by the statutory auditors. Quarterly and Annual Accounts will be reviewed by the Audit Committee, prior to their presentation to the Board along with the recommendations of the Audit Committee. Besides, Audit Committee will be authorized to exercise all such powers as are required under the amended Clause 49 of the Listing Agreement. Composition of Audit Committee:

Sr. No Name of the Director Designation Nature of Directorship 1. Mr. Dara P. Mehta Chairman Independent Director 2. Mr. Keki M. Elavia Member Independent Director 3. Mr. P. G. Kakodkar Member Independent Director

The Audit Committee met five times during the course of this fiscal period ended on June 30, 2005, on April 24, 2004; July 24, 2004; October 29, 2004; January 24, 2005 and April 18, 2005

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The scope of the Audit Committee in companies is defined under Clause 49 of the Listing Agreement dealing with Corporate Governance and the provisions of the Companies Act, 1956. The Audit Committee of GCL oversees, assesses and reviews the audit functions. The Audit Committee reviews the Company’s financial statements, monitors adequacy and effectiveness of internal controls, oversees the Audit Function and monitors the external auditors’ independence, objectivity and effectiveness. Apart from providing direction to the general audit function, the Committee also oversees the operation of the total audit function in the Company, which includes the organization, operationalisation and quality control of internal audit & inspection within the Company, follow-up on the statutory / external audit of the Company. III. Remuneration of Directors Details of remuneration paid / payable to directors for the period ended June 30, 2005 are as follows:

Rs in Lacs Director Loans and

Advances from the Company

Sitting Fees#

Salary and Perquisites

Commission Total

Shrinivas V. Dempo Nil Nil Nil Nil Nil Dara P. Mehta Nil 0.34 Nil Nil 0.34 Dr. W.R. Correa Nil 0.29 Nil Nil 0.29 P.G. Kakodkar Nil 0.37 Nil Nil 0.37 Soiru V. Dempo Nil 0.55 Nil Nil 0.55 Keki M. Elavia Nil 0.34 Nil Nil 0.34 Alban F. Couto* Nil 0.12 Nil Nil 0.12 Dr. A. B. Pradas Nil Nil 12.56 Nil 12.56 # Includes sitting fees paid for Committee Meetings * Mr. Alban F. Couto was appointed as an Additional Director w.e.f. October 30, 2004; Shareholders approved the appointment 2004-05 AGM on December 10, 2005.

IV. Board Procedures The board of directors met on eight times during the financial period ended on June 30, 2005 namely April 24, 2004; June 10, 2004; July 30, 2004; September 16, 2004; October 30, 2004; January 24, 2005; March 26, 2005; and April 19, 2005. The Company had more than 4 board meeting during the year, with a maximum time gap of four months between two meetings. The Company confirms that all material information has been disclosed to the Board of Directors. Also, the Report of Corporate Governance certifies that the requirement of Board procedures have been complied as per Clause 49 of the Listing Agreement entered into with Stock Exchanges. V. Management The Management Discussion and Analysis report forms part of the annual report to the shareholders. VI. Shareholders The Company has declared the Quarterly results with in the expected time and the same have been reported to the Stock Exchanges as per the Listing Agreement. The Un audited quarterly results were declared on the following dated and published in the national dailies and news papers as per Clause 49 of the Listing Agreement.

April 1, 2004 to June 30, 2004 July 30, 2004 July 1, 2004 to September 30, 2004 October 30, 2004 October 1, 2004 to December 31, 2004 January 24, 2005 January 1, 2005 to March 31, 2005 April 19, 2005. April 1, 2005 to June 30, 2005 July 23, 2005

Investors Grievance Committee The Shareholders/ Investors Grievance Committee constituted by Board of Directors consists of 3 directors, 2 of whom are Non-executive Directors and one Executive Director.

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56

The Committee inter alia, approves the transmission / transfer of shares, issue of new / duplicate share certificates & oversees and reviews all matters connected with the Securities transfer. The Committee also looks into redressing of Shareholders/Investors Complaints / grievances. The Committee met 27 times during the period ended on June 30, 2005. Composition of Shareholders/ Investors Grievance Committee

Sr. No Name of the Director Designation Nature of Directorship 1. Mr. P. G. Kakodkar Chairman Independent Director 2. Mr. Soiru V. Dempo Member Non-Executive Director 3. Dr. A. B. Prasad Member Executive Director

The committee was constituted in terms of the mandatory requirement of Clause 49 of the Listing Agreement to look into the redressal of grievances of investors like non receipt of share certificates, non-receipt of balance sheet, non-receipt of dividend warrants etc. During the last financial year, the Company received 35 complaints from shareholders, all of which stand resolved as on June 30, 2005. VII. Report on Corporate Governance The company has a separate section on Corporate Governance in the annual report, with a detailed compliance report on Corporate Governance and the same forms part of the Annual Report sent to the shareholders. VIII. Compliance The Company has obtained the Compliance Certificate form the Auditors of the Company dated October 21, 2005 certifying compliance of conditions of corporate governance as stipulated in Clause 49 of the Listing Agreement and has been filed along with the Annual return to the Stock Exchanges. Also, the said Compliance certificate forms part of the Annual Report sent to all the shareholders. Compliance with Listing Agreement The Company is, listed on BSE and MgSE and has complied with the requirements under the respective Listing Agreement of the above-mentioned stock exchanges. It has paid the requisite annual listing fee to the Bombay Stock Exchange Limited for the period 2005-2006. Also no disciplinary action has been initiated by the Stock Exchanges or SEBI against Goa Carbon Limited or Directors. It is confirmed that all the issued capital is listed on both the stock exchanges. d. Shareholding of the Directors

Sr. No. Name Relationship No. of Shares

% of Share Capital

1. Mr. Shrinivas V. Dempo Promoter 1,000 0.022 2. Mr. Vera Dara Mehta PAC 2,000 0.040 3. Dr. William R. Correa PAC 700 0.015

PAC= Person Acting in Concert. The Other directors do not hold any Equity Shares in the Company. Qualification Shares required to be held by Directors Directors are not required to hold any qualification shares. e. Interest of Directors (Other than the Promoter Directors) All the directors may be deemed to be interested to the extent of the sitting fees and other remuneration for the services rendered and the reimbursement of expenses, if any, payable to them under the articles. The directors may also be deemed to be interested to the extent of:

a. The shares, if any, held by them or by the relatives or by firms or companies of which any of them is a partner and a director/member respectively. The shares, if any, out of the present issue that may be subscribed for and allotted to them or their relatives or any company in which they are directors/members of, to firms in which they are partners.

b. Remuneration of Managing Director/ Executive Directors / Whole time Directors

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57

The Company has not entered into any contract, agreements or arrangements during the preceding two years from the date of the Draft Letter of Offer in which the directors are interested directly or indirectly and no payments have been made to them in respect of these contracts, agreements or arrangements or are proposed to be made to them other than contracts in the normal course of business and being permitted as per the current rules and regulations governing the same. Changes in the Board of Directors in the last three years The following are the changes in the Board of Directors in the last 3 years and no changes thereafter have taken place:

Name Date of Appointment Date of Cessation Reason Mr. P. S. Angle December 30, 1982 June 22, 2004 Expired Mr. Alban F. Couto October 30, 2004 - Appointed as an Additional

Director f. Management Organization Structure

g. Key Management Personnel

Sr. No

Name Designation Age Qualification

Experience

(Years)

Date of Joining

Functional Responsibili

ty

Compensation paid during FY

2004-05 p.a.

Previously Employed

1 Mr. Shrinivas V Dempo

Executive Chairman

36 M.Com, M.B.A.

10 01.04.2001 Management and Administration

Nil# V.S. Dempo & Co. Pvt. Limited, Goa

2 Dr. A.B. Prasad

Managing Director

62 B.Sc, M.Tech Ph.D (Chem. Engg.)

31 01.12.1995 Management and Administration

12,55,694# V.S. Dempo & Co. Pvt. Limited, Goa

3 Mr. P.S. Mantri

Company Secretary

47 B.Com (Hons), L.L.B, FCS

20 05.07.1997 Corporate Laws and Legal Compliance

6,27,460 MTZ Polyesters Ltd. Mumbai

Board of Directors

Executive Chairman

Managing Director

Company Secretary

General Manager Finance

Sr. General Manager (Works)

General Manager

(Operations)

Manager Marketing

DGM Production

GM Technical

Sr. Commercial

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58

Sr. No

Name Designation Age Qualification

Experience

(Years)

Date of Joining

Functional Responsibili

ty

Compensation paid during FY

2004-05 p.a.

Previously Employed

4 Mr. K. Balaraman

General Manger (Finance)

41 B.Com, A.C.A

16 28.02.2005 Corporate Finance, and Taxation

37,739* Samstar Limited, Kano, Nigeria

5 Mr. Ajit S. Sardesai

Senior General Manager (Works)

59 B.E. (Mech. and Elec. Eng), M.E. (Mech.)

32 01.08.1973 Operations, maintenance and running of CPC unit at Goa

7,34,800 -

6 Mr. M.R. Haldankar

Senior Manager (Commercial)

49 B.Sc. 28 10.09.1979 Commercial 3,67,552 Hind Steels & Hind Sinters & Carbons, Belgaum

7 Mr. C.R. Mundhara

General Manager (Operations)

65 B.E. in Metallurgy

35 07.10.2000 Operations, maintenance and running of CPC unit at Bilaspur

3,19,000 Graphite India Ltd., Durgapur

8. Mr. Conrad Fernandes

Manager (Marketing)

36 B.E. (Chemical) and D.B.M.

14 02.09.2005 Marketing Recently joined

Saudi Arabian Industrial & Trading Establishment

# for the 15 month financial period ended June 30, 2005. *for the part of the year

Brief Profile of Key Managerial Personnel: Brief Profile of remaining Key Managerial Personnel other than directors is as follows: Mr. P.S. Mantri, 47 years, is the Company Secretary and Compliance Officer of the Company. He is a B.Com (Hons.), LL.B and a Fellow Member of the Institute of Company Secretaries of India. He is having a vast experience of more than 20 years in corporate law, Issue Management, legal and corporate administration and has worked with various corporates including multinationals. Prior to joining Goa Carbon, Mr. Mantri was employed with MTZ Polyester s Limited, Mumbai. Mr. K. Balaraman, 41 years, is General Manager (Finance). He is a B.Com and an Associate Member of the Institute of Chartered Accountants of India. He is having to his credit an experience of more than 16 years in corporate finance, accounts and taxation in different capacities in various corporates in India and abroad. Prior to joining Goa Carbon, Mr. Balaraman was employed with Samstar Limited, Kano, Nigeria. Mr. Ajit S. Sardessai, 59 years, is designated as Sr.General Manager (Works) - Goa Plant. He is a Graduate in Mechanical & Electrical Engineering from Walchandnagar College of Engineering, Pune and has done his Masters in Mechanical Engineering from the University of Pennsylvania, U.S.A.. He is a member of the Institute of Engineers of India. He has over 30 years of experience in operations, maintenance and running of coke calcination units including quality control and improvement of process parameters. He is associated with the Company since the days of its inception. Mr.M.R.Haldankar, 49 years, is a Bachelor in Science. He is designated as Senior Manager (Commercial) and looks after commercials of the Company. He has to his credit a valuable experience of more than 25 years in the area. Prior to joining Goa Carbon, he has worked with Hind Steels and Hind Sinters and Carbons, Belgaum.

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Mr. C.R. Mundhara, 65 years, is a B.E. in Metallurgy. He holds the position of General Manager (Operations) – Bilaspur Plant. He has with him an experience of over 30 years in running coke calcination units. He has been associated with various corporates and prior to joining Goa Carbon, was employed with Graphite India Limited, Durgapur Plant. Mr. Conrad D. Fernandes, 36 years, Manager (Marketing) is a Chemical Engineer and has 14 years of experience in marketing with various corporates. He has joined the Company on September 2, 2005. Prior to joining Goa Carbon, he was based in Saudi Arabia working with Saudi Arabian Industrial & Trading Establishment (SAITE) that belongs to Kanoo Group. The persons whose names appear as key management personnel are on the rolls of the Company as permanent employees except Mr.Conrad D. Fernandes who has joined on September 2, 2005 and is on probation. There is no arrangement or understanding with major shareholders, customers, suppliers or others pursuant to which any person was selected as director or member of senior management. None of the key managerial personnel have any relationship with the promoters or directors of the company. Shareholding of the Key Managerial Personnel: Except for Mr. Shrinivas V. Dempo, who holds 1,000 Equity Shares of the Company, none of the Key Managerial Personnel hold any shares of the Company as on September 30, 2005. Bonus or Profit Sharing Plan for the Key Managerial Personnel: Except the payment of salaries and perquisites, the company provides other benefits to the employees that are uniform to all the employees of the company and performance based ex-gratia payments. The Company does not have any profit sharing or stock option plans for any of its employees. Loans to key managerial personnel There are no loans outstanding against key managerial personnel as on June 30, 2005. Changes in the Key Managerial Personnel in the last three years: Except for the following, there have been no changes in the Key Managerial Personnel of the Company in the previous three years:

Sr. No. Name Designation Date of Joining

Date of Leaving

Remarks

1. Mr. R.G. Nayak Vice President (Finance)

March 18, 1996 May 31, 2005 Retirement

2. Mr. J. A. Bothelho Dy. General Manager (Marketing)

10.10.1989 June 21, 2005 Resigned

3. K. Balaraman General Manager Finance

February 28, 2005

N.A. Appointed

4. Mr. Conard D. Fernandes

Manager (Marketing)

September 2, 2005

N.A. Appointed

h. Employees The total manpower directly employed by the Company as on November 30, 2005 is 195 personnel. Besides the Company has another 106 Employees on the Rolls of Paradeep Carbons Limited that is being merged with Goa Carbon Limited. Distribution of the manpower is as follows: Summary of Managerial, Administrative, Skilled & Unskilled Personnel Particulars No. of Employees Goa Carbon – Head Office Managerial Personnel 19 Administrative Staff 15 Total 34

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Goa Carbon – Plant at St. Jose De Areal Managerial Personnel 23 Administrative Staff 17 Skilled Personnel 34 Unskilled Personnel 51 Total 125 Goa Carbon – Plant at Bilaspur, Chattisgarh Managerial Personnel 17 Administrative Staff 05 Skilled Personnel 14 Total 36 Paradeep Carbons Limited Managerial Personnel 23 Administrative Staff 19 Skilled Personnel 38 Unskilled Personnel 26 Total 106 i. Disclosures Regarding Employees Stock Option Scheme / Employees Stock Purchase Scheme The Company has no Employees Stock Option Scheme/ Employee Stock Purchase Scheme. j. Other Benefits to the Officers of the Issuer Company Except the payment of salaries and perquisites, the company provides other benefits to the employees that are uniform to all the employees of the company including subsidised food and transportation facility etc. and performance based ex-gratia payments.

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F.) PROMOTERS/ PRINCIPAL SHAREHOLDERS a. Details of Promoters being Individuals Name: Mr. Shrinivas Vasudeva Dempo Designation: Executive Chairman There are no defaults in meeting any statutory/bank/institutional dues and no proceedings have been initiated for economic offences. There are no litigations, disputes towards tax liabilities or criminal / civil prosecution / complaint against Mr. Shrinivas V. Dempo other than as mentioned in this Letter of Offer. b. Details of Promoters being Company i. V.S. Dempo & Co Pvt. Limited The Company was incorporated on April 22, 1965. The authorised equity share capital of the company is 50,000 equity shares of Rs. 1000 each. The Registration number of the Company is 30G of 1965-66. The company is engaged in the business of mining and is the Promoter of Goa Carbon Limited. The Board of Directors comprises of: Sr. No. Name Designation 1 Mr. Shrinivas V Dempo Director 2 Mr. Soiru V Dempo Director 3 Mrs. Neela V Dempo Director 4 Dr. A.B. Prasad Director

The Registered Office of the Company is located at Dempo House, Campal, Panaji, Goa. The Permanent Account Number of the company is AAACV7160R. The Shareholding structure as on March 31, 2005 is as follows:

Sr. No Name of Shareholder Number of Equity Shares

% of holding

1 Mr. Shrinivas V Dempo 760 6.08% 2 Mrs. Neela V Dempo 100 0.80% 3 Mrs. Savitribai V Dempo 20 0.16% 4 Mr. Soiru V Dempo 25 0.20% 5 Rupmati Investments Pvt Limited 1445 11.56% 6 Leelavati Investments Pvt. Limited 1675 13.40% 7 Ratnaprabha Investments Pvt. Limited 1675 13.40% 8 Jaiprabha Investments Pvt. Limited 2450 19.60% 9 Suhas Investments Pvt. Limited 2450 19.60% 10 Esmeralda Investments Pvt. Limited 1900 15.20% Total 12,500 100.00%

Financial Highlights The Audited financial highlights for the last 3 years are as follows:

in Rs. Lacs For Financial Year Ended March 31,

Permanent Account Number ABTPD0741M Passport Number F3577378 Voter ID Number BKT0116855 Driving License Number GA44888P

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62

Particulars 2005 2004 2003 Share Capital 125.00 125.00 125.00 Reserves (Excluding Revaluation Reserve)

26,061.59 23,553.96 23,823.49

Net Worth 26,186.59 23,678.96 23,948.49 Total Income 36,521.66 23,122.05 17,885.22 PAT 3,899.77 384.76 1,252.28 EPS (Rs.) 31,198.13 3,078.08 10,018.26 NAV Per Share (Rs.) 209,492.69 189,431.66 191,587.88 Face Value Per Share (Rs.) 1,000 1,000 1,000

There has been no change in management of the Company. The company is not a listed Company. The company is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 nor is under winding up. There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for economic offences against the Company. There are no litigations, disputes towards tax liabilities or criminal / civil prosecution / complaint against the promoters other than as mentioned in this Letter of Offer. ii. Dempo Brothers Private Limited The Company was incorporated on January 23, 1950. The authorised capital of the company is 50,00,000 equity shares of Rs. 10 each. The Registration number of the Company is 3429. The company was incorporated with objects of trading is the Promoter of Goa Carbon Limited. The Board of Directors comprises of:

Sr. No Name Designation 1 Mr. Shrinivas V Dempo Director 2 Mr. C.N. Kenkre Director 3 Mr. Vilas Sardesai Director

Shareholding Pattern as on 31st March, 2005:


% of holding

1 M/s V.S. Dempo Holding Pvt. Limited 49,800 99.60%

2 Mr. Shrinivas V. Dempo Jointly with V.S.Dempo & Co. Pvt.Ltd.

100 0.20%

3 Mr. C.N.Kenkre Jointly with V.S.Dempo & Co.Pvt.Ltd. 100 0.20% Total 50,000 100.00%

The Registered Office of the Company is located at Dempo House, Campal, Panaji, Goa. The Permanent Account Number of the company is AAACD2588D. Financial Highlights The Audited financial highlights for the last 3 years are as follows: in Rs. Lacs For Financial Year Ended March 31, Particulars 2005 2004 2003 Share Capital 5.00 5.00 5.00 Reserves (Excluding Revaluation Reserve)

(50.76) (51.34) (53.73)

Net Worth (45.76) (46.34) (48.73) Total Income 29.46 33.99 24.19 PAT 0.66 14.99 11.77 EPS (Rs.) 1.31 29.98 235.45 NAV Per Share (Rs.) (91.52) (92.67) (974.54)

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63

in Rs. Lacs For Financial Year Ended March 31, Particulars 2005 2004 2003 Face Value Per Share (Rs.) 10.00 10.00 100.00

There has been no change in management of the Company. The company is not a listed Company. The company is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 nor is under winding up. There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for economic offences against the Company. There are no litigations, disputes towards tax liabilities or criminal / civil prosecution / complaint against the promoters other than as mentioned in this Letter of Offer. iii. Marmagoa Shipping & Stevedoring Company Private Limited The Company was incorporated on August 16, 1963. The authorised capital of the company is 35,000 equity shares of Rs. 100 each. The Registration number of the Company is 3/G of 1963-64. The company is engaged in the business of Transport and Freight Forwarding Agents and is the Promoter of Goa Carbon Limited. The Board of Directors comprises of:

Sr. No Name Designation 1 Mr. Shrinivas V Dempo Director 2 Mrs. Uma P Virgincar Director 3 Mr. Sudin M Usgaoncar Director 4 Mr. C.N. Kenkre Director

Shareholding Pattern as on March 31, 2005:

Sr No Name of shareholders Number of

Equity Shares % of holding

1 M/s V.S. Dempo Holding Pvt. Limited 24,978 99.9122. Mr. Shrinivas V. Dempo Jointly with V.S.Dempo & Co.Pvt.Ltd. 11 0.0443. Mr. C.N.Kenkre Jointly with V.S.Dempo & Co. Pvt.Ltd. 11 0.044 Total 25,000 100.00The Registered Office of the Company is located at Dempo House, Campal, Panaji, Goa. The Permanent Account Number of the company is AABCM3414G. Financial Highlights The Audited financial highlights for the last 3 years are as follows:

in Rs. Lacs For Financial Year Ended March 31, Particulars 2005 2004 2003 Share Capital 25.00 25.00 25.00 Reserves (Excluding Revaluation Reserve)

166.49 163.42 156.91

Net Worth 191.49 188.42 181.91 Total Income 330.62 322.87 264.40 PAT 31.70 29.02 30.79 EPS (Rs.) 126.80 116.07 123.18 NAV Per Share (Rs.) 765.95 753.67 727.63 Face Value Per Share (Rs.) 100 100 100

There has been no change in management of the Company. The company is not a listed Company. The company is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 nor is under winding up.

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64

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for economic offences against the Company. There are no litigations, disputes towards tax liabilities or criminal / civil prosecution / complaint against the promoters other than as mentioned in this Letter of Offer. iv. Dempo Industries Private Limited The Company was incorporated on December 15, 1987 as Universal Beverages Limited. The Company was renamed as Dempo Industries Limited w.e.f. July 26, 2000 after three-way merger with Navhind Paper & Publications Private Limited and Goa Paints Private Limited. The authorised equity share capital of the company is 65,00,000 equity shares of Rs. 10 each and 4,50,000 preference shares of Rs. 100 each. The Registration number of the Company is 24-00787. The company is engaged in the business of Windmill operations, Newspaper publication; Pepsi bottlers, manufacture of marine; industrial and decorative paints and enamels and is a Promoter of Goa Carbon Limited. The Board of Directors as comprises of:

Sr. No Name Designation 1 Mr. Shrinivas V Dempo Director 2 Mr. Sudhin M Usgaoncar Director 3 Mr. G. Balasubramanian Director


Sr No

Name of shareholders Number of Equity Shares

% of holding

EQUITY SHARE CAPITAL 1. V.S. Dempo & Co. Pvt. Limited 56,49,993 99.99 2. Mr. Shrinivas V. Dempo Jointly with V.S.Dempo & Co. Pvt.Ltd. 1 Negligible

3. Mr. Sudin Usgaoncar Jointly with V.S.Dempo & Co. Pvt.Ltd. 1 Negligible

4. Mr. C.N.Kenkre Jointly with V.S.Dempo & Co.Pvt.Ltd. 1 Negligible

5. Mr. Vilas Sardesai Jointly with V.S.Dempo & Co.Pvt.Ltd. 1 Negligible

6. Mr. Dilip Sardesai Jointly with V.S.Dempo & Co. Pvt.Ltd. 1 Negligible

7. Mr. Prakash Nadkarni Jointly with V.S.Dempo & Co. Pvt.Ltd. 1 Negligible

8. Mr. M.V. Rebelo Jointly with V.S. Dempo & Co. Pvt.Ltd. 1 Negligible

Total 56,50,000 100.00 PREFERENCE SHARE CAPITAL M/s V.S. Dempo Holding Pvt. Limited 1,00,000 100.00 Total 1,00,000 100.00

The Registered Office of the Company is located at Dempo House, Campal, Panaji, Goa. The Permanent Account Number of the company is AAACU1705F. Financial Highlights The Audited financial highlights for the last 3 years are as follows:


Particulars 2005 2004 2003 Equity Share Capital 565.00 565.00 565.00 Preference Share Capital 100.00 100.00 450.00 Reserves (Excluding Revaluation Reserve)

1,884.70 1,442.28 916.44

Net Worth 2,449.70 2,007.28 1,481.44 Total Income 2,378.60 2,248.59 2,028.34 PAT 442.42 525.84 393.14 EPS (Rs.) 7.83 9.31 5.71039115

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65

NAV Per Share (Rs.) 43.36 35.53 26.22 Face Value Per Share (Rs.) 10 10 10

There has been no change in management of the Company. The company is not a listed Company. The company is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 nor is under winding up. There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for economic offences against the Company. There are no litigations, disputes towards tax liabilities or criminal / civil prosecution / complaint against the promoters other than as mentioned in this Letter of Offer. v. Esmeralda Investments Private Limited The Company was incorporated on 29, March, 1984. The authorised equity share capital of the company is 5,000 equity shares of Rs. 100 each and 10,000 preference shares of Rs. 100 each. The Registration number of the Company is 570/G of 1984. The Company is an investment company and is Promoter of Goa Carbon Limited. The Board of Directors comprises of:

Sr. No Name Designation 1 Mr. Shrinivas V Dempo Director 2 Mrs. Neela V. Dempo Director 3 Mr. Manohar S. Usgaonkar Director 4. Mr. G. Balasubramanian Director


Sr No

Name of shareholders Number of Equity Shares

% of holding

1. Mr. Shrinivas V. Dempo 986 98.60 2. Mrs. Pallavi S. Dempo 14 1.40 Total 10,000 100.00

The Registered Office of the Company is located at Dempo House, Campal, Panaji, Goa. The Permanent Account Number of the company is AAACE4220F Financial Highlights The Audited financial highlights for the last 3 years are as follows:



97.61 94.28 84.81

Net Worth 98.61 95.28 85.81 Total Income 31.29 95.86 3.10 PAT 30.63 94.65 0.28 EPS (Rs.) 3,062.82 9,464.64 27.82 NAV Per Share (Rs.) 9,861.47 9,528.02 8,580.74 Face Value Per Share (Rs.) 100 100 100

There has been no change in management of the Company. The company is not a listed Company. The company is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 nor is under winding up.

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66

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for economic offences against the Company. There are no litigations, disputes towards tax liabilities or criminal / civil prosecution / complaint against the promoters other than as mentioned in this Letter of Offer. vi. Motown Investment Pvt. Limited The Company was incorporated on February 24, 1992. The authorised equity share capital of the company is 25,000 equity shares of Rs. 100 each and 8,25,000 non– cumulative redeemable preference shares of Rs. 100 each. The Registration number of the Company is 24-01207. The Company is an investment company and is Promoter of Goa Carbon Limited. The Board of Directors comprises of:

Sr. No. Name Designation 1 Mr. Shrinivas V Dempo Director 2 Mrs. Neela V Dempo Director 3 Mr. G. Balasubramanian Director



% of holding

EQUITY SHARE CAPITAL 1 Mr. Shrinivas V Dempo 11,999 99.992 Mrs. Neela V Dempo 1 0.01 Total 12,000 100.00 PREFERENCE SHARE CAPITAL

M/s V.S. Dempo Holding Pvt. Limited (For and on Behalf ofOceans Investments)

7,59,000 100.00

Total 7,59,000 100.00The Registered Office of the Company is located at Dempo House, Campal, Panaji, Goa. The Permanent Account Number of the company is AABCM4208J Financial Highlights The Audited financial highlights for the last 3 years are as follows:


Particulars 2005 2004 2003 Share Capital 12.00 12.00 12.00 Preference Share Capital 759.00 759.00 759.00 Reserves (Excluding Revaluation Reserve)

(6.20) 0.04 0.94

Net Worth 5.80 12.04 12.94 Total Income 3.33 6.98 5.04 PAT (6.25) (0.94) 1.49 EPS (Rs.) (52.07) (7.81) 3.05 NAV Per Share (Rs.) 48.31 100.37 107.86 Face Value Per Share (Rs.) 100 100 100

There has been no change in management of the Company. The company is not a listed Company. The company is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 nor is under winding up. There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for economic offences against the Company. There are no litigations, disputes towards tax liabilities or

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67

criminal / civil prosecution / complaint against the promoters other than as mentioned in this Letter of Offer. It is confirmed that the Permanent Account Number, Voter ID Number, Bank Account details and Passport Number of Mr. Shrinivas Dempo is being submitted to the Stock Exchanges on which Equity Shares are proposed to be listed, at the time of filing of Draft Letter of Offer with them. In respect of corporate promoters, i.e. V.S.Dempo & Co. Private Limited, Dempo Brothers Private Limited, Marmagoa Shipping & Stevedoring Co, Pvt. Ltd., Dempo Industries Private Limited, Esmeralda Investments Private Limited and Motown Investment Private Limited their respective Permanent Account Number, Bank Account details, Company Registration Number and the addresses of the Registrars of Companies where these companies are registered are being submitted to the Stock Exchanges, on which Equity Shares are proposed to be listed. c. Common Pursuits There are no common pursuits amongst GCL and other group companies since no other entity is engaged in the line of activity in which company is engaged. However the Company’s 100% subsidiary Paradeep Carbons Limited is engaged in the CPC business and is in the process of being amalgamated with Goa Carbon Limited w.e.f. July 1, 2005 subject to the approval of High Court. d. Interest of Promoters All the directors may be deemed to be interested to the extent of the sitting fees and other remuneration for the services rendered and the reimbursement of expenses, if any, payable to them under the articles. The directors may also be deemed to be interested to the extent of:

The shares, if any, held by them or by the relatives or by firms or companies of which any of them is a partner and a director/member respectively.

The shares, if any, out of the present issue that may be subscribed for and allotted to them or their relatives or any company in which they are directors/members of, to firms in which they are partners.

Remuneration of Managing Director/ Executive Director / Whole time Directors Benefits as duly disclosed in this Letter of Offer

However the Company intends to the repay the loans taken from Promoter Group Companies out of the proceeds of the current issue. The same being adjusted towards application money towards promoter’s entitlement. Particulars of nature and extent of the interest of every director in any property acquired within two years of the date of Letter of Offer or proposed to be acquired: Save as stated in this Letter of Offer neither the Promoters nor the firms or companies in which they are members have any interest in the business of the Company, except to the extent of investments made by them and their group / investment companies in GCL and earning returns thereon. None of the Promoters or the firms or companies in which they are members has any interest in any property acquired by the Company within two years of the date of this Draft Letter of Offer or proposed to be acquired by it. The promoters are also interested in the company to the extent of their shareholding, for which they are entitled to receive the dividend declared if any, by the company. The Company proposed to amalgamate its 100% subsidiary Paradeep Carbons Limited with w.e.f July 1, 2005 subject to the approval of High Court. e. Payment or benefit to Promoters of the Issuer Company Other than the salary and remuneration of the Promoter Directors, referred to in the section titled “Compensation to Whole Time Directors” of this Letter of Offer, there are no payment or benefit to promoters of the Company. However a part of the Issue proceeds shall be used to repay the unsecured loans taken from the promoters. Also, the promoters have consented to adjust the unsecured loans advanced towards their entitlement in the Rights Issue. f. Related Party Transactions as per Financial Statements The details of related party transactions please refer to page no. __ of this Letter of Offer.

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68

G.) CURRENCY OF PRESENTATION In this Letter of Offer, all references to “Rupees” “Rs.” are to the legal currency of India, all references to “U.S. Dollars”, and “US$” are to the legal currency of the United States and all references to “Pound Sterling”, and “GBP” are to the legal currency of the United Kingdom. Any percentage amounts, as set forth in “Risk Factors”, “Business”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Letter of Offer, unless otherwise indicated, have been calculated on the basis of our financial statements prepared in accordance with Restated Financial Statements prepared as per Indian GAAP. For the convenience of the Shareholders, as far as possible the reporting unit has been maintained as Rupees in Lacs. (Rupees in Hundred Thousands) H.) DIVIDEND POLICY The declaration and payment of dividends will be recommended by the Board of Directors and approved by the shareholders, at their discretion, and will depend on a number of factors, including but not limited to the earnings, capital requirements and overall financial condition. The Board may also from time to time pay interim dividend. GCL is paying dividend regularly since 1980-81 (except for the year 1985-86 and 1986-87). The Summary of dividends declared by Goa Carbon Limited is as follows: Particulars (15

Months) (12

Months) (15

Months) (9 Months) (12 Months)

June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

March 31, 2001

Equity Shares Number of Shares (In Lacs) 46 46 46 46 46 Face Value (Rs.) 10.00 10.00 10.00 10.00 10.00 Paid - up Value (Rs.in Lacs) 460.00 460.00 460.00 460.00 460.00 Rate of Dividend 5% 10% 35% 17% 15% Total dividend (Rs in Lacs) 23.00 46.00 161.00 78.20 69.00 Corporate dividend tax on above (Rs. In Lacs)

3.23 6.01 20.62 - 7.04

The amounts paid as dividend in past is not indicative of the company’s dividend policy in the future.

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69

V: FINANCIAL STATEMENTS A.) STANDALONE FINANCIAL INFORMATION OF THE ISSUER COMPANY From: Fraser & Ross Chartered Accountants 2nd Floor, Temple Tower 672, Anna Salai Nandanam Chennai – 600 035. November 16, 2005 The Board of Directors, Goa Carbon Limited Panaji Goa Dear Sirs,

1) We have examined the attached Statement of Profits and Losses (Annexure 1) of Goa Carbon Limited (“The Company”) for each of the financial years ended 31st March 2001, 31st December 2001, 31st March 2003, 31st March 2004 and 30th June 2005 and the Statement of Assets and Liabilities (Annexure 2) of the Company as on those dates, together referred to as “Summary Statement”. These statements are the responsibility of the Company’s Management and have been prepared by the Company and audited by us in terms of the requirements of: a) Paragraph B (1) of Part II of Schedule II of the Companies Act, 1956 b) The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines,

2000 (“The Guidelines”) issued by Securities and Exchange Board of India (“SEBI”) on January 19, 2000 in pursuance of Section 11 of the Securities and Exchange Board of India Act 1992 read together with the related clarifications issued by SEBI and

c) The letter dated September 10, 2005 received from the Company, requesting us to issue a report for the purpose of inclusion in the Offer document being issued by the Company in connection with the proposed Rights Issue of equity shares in the Company.

2) We report that the summary statement for the financial years ended 31st March 2001, 31st December 2001, 31st March 2003 and 31st March 2004 has been extracted from the financial statements audited by us and has been approved by the Board of Directors and adopted by the Members of the Company at the respective Annual General Meetings. The summary statement for the financial year ended 30th June, 2005 has been extracted from the financial statement audited by us and has been approved by the Board of Directors of the Company at its meeting held on 21st October, 2005.

3) We have also examined the following financial information relating to the Company, which is proposed to be included in the Offer Document as approved by the authorised Directors, pursuant to the resolution of the Board of Directors of the Company:

a) Summary of Key Accounting Ratios based on the profits relating to earnings per share, net asset value and return on net worth enclosed in Annexure – 3;

b) Capitalisation Statement of the Company enclosed in Annexure – 4; c) Statement of Dividends enclosed in Annexure – 5; d) Statement of Investments enclosed in Annexure – 6; e) Statement of Loans as on 30th June 2005 given in Annexure – 7; f) Statement of Tax Shelter given in Annexure – 8; g) Statement of Cash Flows given in Annexure – 9; h) Statement of Other Income and Contingent Liabilities given in Annexure 10;

In our opinion, the financial information of the Company, as attached to this report and mentioned in 3 above, read with the significant accounting policies of the Company (Annexure – 11) and

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70

related notes to the financial statements (Annexure – 12), have been prepared in accordance with Part II of Schedule II of the Companies Act and ‘Guidelines’, issued by ‘SEBI’.

4) We have issued a report of even date on our examination of the a) Consolidated Statement of Assets and Liabilities of the Company and its subsidiaries as at

31st March 2001, 31st December 2001, 31st March 2003, 31st March 2004 and 30th June 2005, Consolidated Statement of Profits and Losses and Consolidated Statement of Cash Flows for the financial years ended 31st March 2001, 31st December 2001, 31st March 2003, 31st March 2004 and 30th June 2005;

b) Statement of Assets and Liabilities of the Company’s wholly owned subsidiary, Paradeep Carbons Limited, as at 31st March 2003, 31st March 2004 and 30th June 2005 and Statement of Profits and Losses of Paradeep Carbons Limited for the financial years ended 31st March 2003, 31st March 2004 and 30th June 2005 and attached financial information.

5) This report is intended solely for your information and for inclusion in the Offer Document in connection with the proposed Rights Issue of equity shares of the Company and is not to be used, referred to or distributed for any other purpose without our prior written consent.

Yours faithfully, For Fraser & Ross Chartered Accountants M.K.Ananthanarayanan. Partner Membership Number 19521

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71

Annexure -1: Summary Statement of Profit and Loss Rs. In lakhs

(15 Months) (12 Months) (15 Months) (9 Months) (12 Months) June 30, March 31, March 31, December 31, March 31, PARTICULARS 2005 2004 2003 2001 2001 Income: Sales 12,103.08 9,348.15 10,891.20 3,754.29 4,468.67 Other Income 419.10 385.89 227.80 47.33 168.22 Increase / (Decrease) in stocks 678.03 (28.31) (250.95) 213.97 (73.23) Total 13,200.21 9,705.73 10,868.05 4,015.59 4,563.66 Expenditure: Raw Material Consumed 10,372.97 7,577.14 8,060.47 2,704.30 2,983.56 Purchase of Finished Goods 631.94 - - - - Staff Cost 491.25 373.44 409.51 222.63 257.89 Other manufacturing Expenses 347.33 324.60 382.42 185.45 225.33 Administrative Expenses 367.49 344.20 386.94 236.11 173.44 Selling & Distribution Expenses 432.90 408.18 508.35 252.69 377.16 Goodwill on Amalgamation written off

- - 4.58 - -

Preliminary expenses amortized - 1.31 0.23 - - 12,643.88 9,028.87 9,752.50 3,601.18 4017.38 Earnings Before Interest, Depreciation & Tax

556.33 676.86 1,115.55 414.41 546.28

Finance Charges 557.68 418.50 431.33 84.11 116.62 Depreciation 139.89 122.65 168.99 59.96 170.71 Earnings before Tax and Extra ordinary items

(141.24) 135.71 515.23 270.34 258.95

Provision for Taxation Current Tax -- For the Year 3.25 64.10 54.41 60.25 65.50 -- Relating to earlier Years (9.73) 5.75 - - - Deferred Tax (58.54) (15.60) 41.51 (6.26) - Fringe Benefit Tax 2.38 Profit/(Loss) Before Extra Ordinary Items

(78.60) 81.46 419.31 216.35 193.45

Extra Ordinary Items - - - - - Adjustment on account of prior Period Items

- - - - -

Net Profit/ (Loss) after adjustments (78.60) 81.46 419.31 216.35 193.45

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Annexure 2: Summary Statement of Assets and Liabilities

Rs. In lakhs (15 Months) (12 Months) (15 Months) (9 Months) (12 Months) June 30, March 31, March 31, December 31, March 31, PARTICULARS 2005 2004 2003 2001 2001

A) Fixed Assets Gross Block 1,928.13 2,323.79 3,013.24 2,168.56 2,177.07 Less: Depreciation 1,203.19 1,444.48 1,767.63 1,517.77 1,464.66 Net Block 724.94 879.31 1,245.61 650.79 712.41 Add: Capital Work In

progress 6.43 20.62 - 3.28 -

Sub Total (A) 731.37 899.93 1,245.61 654.07 712.41

B) Investments: (B) 4,328.67 1,028.67 880.75 1,452.81 209.46

C) Current Assets, Loans and Advances : Inventories 3,568.28 2,865.26 3,000.35 2,367.07 1,368.94 Sundry Debtors 763.30 1,856.93 1,761.62 409.58 1,281.53 Cash and Bank Balances 1,719.41 1,966.74 659.02 410.77 71.91 Loans and Advances 1,390.27 1,461.21 1,507.34 1,754.98 822.35 Sub Total (C) 7,441.26 8,150.14 6,928.33 4,942.40 3,544.73

D) Liabilities and Provisions: Secured Loans 6,597.33 6,136.25 3,854.13 1,856.10 1,009.85 Unsecured Loans 1,758.11 500.00 300.00 300.00 70.00 Net Deferred Tax Liability 100.29 158.83 174.44 57.09 - Current Liabilities 1,455.52 540.62 1,887.81 1,871.19 561.96 Provisions 229.47 277.63 403.66 362.77 297.46 Sub Total (D) 10,140.72 7,613.33 6,620.04 4,447.15 1,939.27

E) Net Worth (A+B+C-D) : 2,360.58 2,465.41 2,434.65 2,602.13 2,527.33 Represented by Share Capital 460.00 460.00 460.00 460.00 460.00 Reserves and Surplus 1,900.58 2,005.41 1,975.96 2,142.13 2,067.33 Total 2,360.58 2,465.41 2,435.96 2,602.13 2,527.33 Miscellaneous Expenditure to the extent not written

off/adjusted - - 1.31 - -

Net Worth (G-E) 2,360.58 2,465.41 2,434.65 2,602.13 2,527.33

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Annexure 3: Key Accounting Ratios (15 Months) (12 Months) (15 Months) (9 Months) (12 Months) June 30, March 31, March 31, December 31, March 31, PARTICULARS 2005 2004 2003 2001 2001 Earnings per share (Rs.) (1.71) 1.77 9.12 4.70 4.21 Net Asset value per share (Rs.) 51.32 53.60 52.93 56.57 54.94 Return on Net Worth (%) (3.33) 3.30 17.22 8.31 7.65 Weighted average number of equity shares in the period (in Nos.) 4,600,000 4,600,000 4,600,000 4,600,000 4,600,000 Formula: 1.Earnings per share(Rs.) = Net profit/ (loss) After Preference Dividend Weighted average number of equity shares outstanding

during the period 2.Net Asset Value per share (Rs.) = Net Worth (excluding revaluation reserve) Weighted average number of equity shares outstanding

during the period 3.Return on Net Worth (%) = Net profit /(loss) after Extra-Ordinary Items Net Worth (excluding revaluation reserve)

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Annexure 4: Capitalisation Statement Rs. In lakhs

Particulars

Pre-Issue as at June 30,2005

Post Issue (Assuming all Shareholders subscribe

to the right issue)

Borrowings: Short Term Borrowings 7,854.95 6,122.63 * Long Term Borrowings 500.49 500.49 Total Debt 8,355.44 6,623.12 Shareholder's Funds : Equity Share Capital 460.00 920.00 Reserves and Surplus 1,900.58 5,120.58 Total Shareholder's Funds 2,360.58 6,040.58 Long-term Debt/Equity ratio 0.21 0.08 Total Debt/Equity ratio 3.54 1.10

Note:- i. Right Issue of 4.60 million shares at a premium of Rs 70/- per Equity Share has been considered. ii. Short Term Borrowings include Rs.222.18lakhs, being term loans repayable within one year from June

30, 2005. iii. *After considering the proposed part allotment of shares to Promoter Group of Companies against the

unsecured loan of Rs.1,732.32 lakhs obtained from them.

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Annexure 5: Statement on Dividend Particulars (15 Months) (12 Months) (15 Months) (9 Months) (12 Months) June 30, March 31, March 31, December 31, March 31, 2005 2004 2003 2001 2001 Equity Shares Number of Shares (In Lakhs) 46 46 46 46 46 Face Value(Rs.) 10.00 10.00 10.00 10.00 10.00 Paid - up Value (Rs.in Lakhs) 460.00 460.00 460.00 460.00 460.00 Rate of Dividend 5% 10% 35% 17% 15% Total dividend (Rs in Lakhs) 23.00 46.00 161.00 78.20 69.00 Corporate dividend tax on above (Rs.)

3.23 6.01 20.62 - 7.04

Annexure 6: Statement of Investments (15 Months) (12 Months) (15 Months) (9 Months) (12 Months) June 30, March 31, March 31, December 31, March 31, 2005 2004 2003 2001 2001 Long Term Investment Quoted ICICI BANK LTD 4.05 4.05 4.05 4.05 4.05 (13,500 Shares @ face value of Rs 10/- each)

Unquoted Wholly Owned Subsidiary Companies

Paradeep Carbons Ltd 4,324.62 1,024.62 875.38 1,034.96 Vishwalakshmi Petro Products Ltd

404.58 192.28

GCL International Ltd 13.13 13.13 13.13 Less: Provision for Diminution (11.81) (3.91) Total Investments 4,328.67 1,028.67 880.75 1,452.81 209.46

Note: Although there has been substantial erosion in the value of investments in the wholly owned subsidiary, Paradeep Carbons Limited, due to the accumulated losses, no provision is presently considered necessary in view of the intrinsic value of the fixed assets and taking into account the business plans and strategies under consideration.

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Annexure 7 - Details of Secured Loans as on 30th June, 2005 1) FUND BASED

Particulars

Name of Bank

Sanction Amount

Outstanding Amount

Rate of Interest %

Security

Overdues

Repayment Schedule

(A) Term Loan

Bank of India Campal Branch Panaji – goa 403001

1,000.00

665.00

7.34%

a) Pledge of 15,000,000 Equity shares held in then wholly owned subsidiary, M/s Paradeep Carbons Ltd.

-NIL-

a) Repayable in 24 Instalments of Rs. 41.67lakhs each commencing from August, 2003.

296.25

57.67

7.31%

b) First charge on the block assets of Company's Bilaspur division viz.Mortgage of Land and Building and hypothecation of Plant & Machinery.

b) Repayable in 20 Instalments of Rs.18.50lakhs commencing from March,2001.

c) Second charge on all immovable assets of the subsidiary Company, Paradeep Carbons Limited.

Term Loan Total 1,296.25 722.67 * Note :- Rupee Term Loan has been converted into Foreign Currency Loan with Bank of India Vasco at a interest rate of 350 basis point over 6 months LIBOR

Particulars

Name of Bank

Sanction Amount

Outstanding

Amount

Rate of Interest

%

Security

Overdues

Repayment Schedule

(B1) Working Capital Facilities - Cash Credit

Bank of India Campal Branch Panaji - goa 403001

1,560.95

1,783.80

10.75%

The entire working capital limits both fund based as well non- fund based would continue to be secured by hypothecation of Stocks and Book-debts. Besides, the same would also be secured by Second charge on the block assets of the company.

-NIL-

Repaid on the basis of proceeds of funds received from debtors .

- Bills Discounted

2.78

1,560.95 1,786.58

Repaid on the basis of proceeds of funds received from debtors.

*Note: Part of the Working Capital Drawing has been converted into Foreign Currency Loan with Bank of India, Vasco at a interest rate of 350 basis points over 6 months LIBOR.Details are as given below

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77

Particulars

Name of Bank

Sanction Amount

Outstanding Amount

Rate of Interest

%

Security

Overdues

Repayment Schedule

(B2) Working Capital Facilities converted into Foreign Currency Loan


639.05

159.88 44.00

435.18

7.31% 7.31% 7.29%

The entire working capital limits both fund based as well non- fund based would continue to be secured by hypothecation of Stocks and Book-debts. Besides, the same would also be secured by Second charge on the block assets of the company.

-NIL-

Repaid after a period of 6 months from the date of disbursement of loan

639.05 639.05

Particulars

Name of Bank

Sanction Amount

Outstanding

Amount

Rate of Interest

%

Security

Overdues

Repayment Schedule

(B3) Import Finance facility

State Bank of India Singapore Branch 6, Shenton Way #22-08 DBS Building Tower Two Singapore 068809

3,000.00

3,449.00

Libor + 40 BPS point

Refinance availed from State Bank of India, Singapore branch based on the strength of confirmed Letter of Credit opened by Bank of India, Campal Branch, Panaji - Goa.

-NIL-

Repaid after a period of 180 days from the date of disbursement of loan

3,000.00 3,449.00 Note: For the balance amount of 449 lakhs outstanding against Import Finance Facilities the company is holding fixed deposits with Bank of India, Campal

Details of Unsecured Borrowings as on 30.06.2005 Sr. No. Name of

Institution Amount (Rs. Lakhs)

Interest Rate (%)

Period Repayable on

Can it be recalled by lender

1) Inter Corporate Deposit

V.S.Dempo & Co 1,390.00 9% 31.12.2005 -Yes-

Dempo Industries Private Limited

300.00 9% 31.12.2005 -Yes-

Dempo Mining Corporation

42.32 9%

6 Months with option to renew for further 6 months 31.12.2005 -Yes-

1,732.32

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Annexure 8: Statement of taxation Particulars FY:2004-05 FY:2003-04 FY:2002-03 FY:2001-02 FY:2000-01 AY:2005-06 AY:2004-05 AY:2003-04 AY:2002-03 AY:2001-02 Net Profit/(Loss) (182.44) 135.71 413.17 372.40 258.95 Adjustments for :

Export profit - (23.23) (67.60) (145.45) (190.03) Difference between Tax Depreciation and Book Depreciation

63.10 46.52 (42.20) (10.46) 88.99

Other Adjustment 7.61 7.85 2.43 33.48 5.51 Brought forward loss of Amalgamating Co. (ersthwile Vishwalkshmi Petro Product Co.)

- - (171.65) (249.97) -

Net Taxable Income/(Loss) (111.73) 166.85 134.15 - 163.42 Income Tax Including Surcharge - 59.86 49.30 - 64.63 Income Tax U/S 115JB - - - 5.17 -

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Annexure 9 - Summary Statement of Cash Flows Rs. in lakhs (15 Months) (12 Months) (15 Months) (9 Months) (12 Months) PARTICULARS June 30, 2005 March 31,

2004 March 31,

2003 December 31,

2001 March 31,

2001 Cash Flows from Operating Activities Net Profit Before Taxation (141.24) 135.71 515.23 270.34 258.95 Adjustments for: Depreciation 139.89 122.65 168.99 59.96 170.71 Interest Income (121.11) (32.41) (38.56) (12.58) (20.91) Dividend Income (1.01) (1.01) (1.49) (1.49) (1.49) Profit/(Loss) on sale of assets (Net) 0.45 1.59 (0.67) (8.39) (0.69) Bad debts Written off 0.73 2.75 13.65 1.19 3.59 Goodwill written off - - 4.58 - - Investment written off - 0.91 - - - Provision for doubtful debts - - (25.06) 29.70 3.18 Provision for diminution in value of investments

- - 7.90 3.91 -

Preliminary expenses Written off - 1.31 0.23 - - Finance Charges 557.68 418.50 431.33 84.11 116.62 Exchange Gain (25.22) (156.53) Operating Profit before Working Capital Changes

410.17 493.47 1076.13 426.75 529.96

Change in Trade and Other Receivables Change in Inventories (703.02) 135.09 (470.06) (998.13) 213.66 Change in Other Current Assets 505.50 (1477.70) (1242.63) (369.93) (539.62) Change in Current Liabilities 996.37 (1158.53) 155.02 1279.37 22.99 Income- taxes paid 8.53 (28.05) (76.82) (67.52) (61.55) Prior Period Expenditure Net Cash Flow from Operating Activities 1217.55 (2035.72) (558.36) 270.54 165.44 Cash Flow from Investing Activities Purchase of Fixed Assets (68.21) (64.07) (123.92) (10.23) (22.89) Sale of Fixed Assets 3.81 6.15 3.38 17.00 1.96 Interest Received 105.48 31.35 38.56 12.58 20.91 Dividend Received 1.01 1.01 1.49 1.49 1.49 Investments Purchased 0.00 (71.24) (40.42) (1247.26) 0.00 Advances to Subsidiary (2427.50) 60.70 - - - Repayment from Subsidiary - - - - - Net Cash Flow used in Investing Activities (2385.41) (36.10) (120.91) (1226.42) 1.47 Cash Flows from Financing Activities Changes in Borrowings 1720.49 2670.78 1281.95 1076.25 (154.22) Proceeds from Issuance of Capital Miscellaneous Exp incurred Interest Paid (519.28) (403.27) (450.80) (64.69) (115.60) Exchange Gain Dividend Paid (46.22) (157.43) (87.50) (55.66) (90.18) Corporate tax on dividend paid (6.01) (20.62) (7.04) (10.12) Net Cash Flow from Financing Activities 1148.98 2089.46 743.65 948.86 (370.12) Net increase in cash and cash equivalents (18.88) 17.64 64.38 (7.02) (203.21) Cash and Cash Equivalents(Opening Balance)

107.72 90.08 25.70 29.72 232.93

Cash and Cash Equivalents (Closing Balance)

88.84 107.72 90.08 22.70 29.72

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Annexure 10 - Details of Other Income are as follows.

(Rupees in Lakhs) Particulars (15 Months) (12 Months) (15 Months) (9 Months) (12 Months) June 30,

2005 March 31,

2004 March 31,

2003 December 31,

2001 March 31,

2001 Recurring Income from Investments 1.01 1.01 1.49 1.49 1.49 Interest From Banks 107.30 31.89 37.85 11.75 17.87 From Others 13.81 0.52 0.71 0.83 3.04 Rental Income 0.36 - - - - Other Miscellaneous Receipts 43.27 30.42 14.42 14.45 32.66 Non recurring Profit on disposal of assets 0.72 1.23 0.99 8.39 0.69 Profit on sale of raw materials 76.87 30.27 8.87 - - Lease Income 0.56 0.96 1.81 - - Provision no longer required Written back 26.70 - - Exchange difference gain(net) 87.92 289.59 134.96 - 19.90 Commission Income (for arranging the procurement of RPC)

87.28 - - - -

Total 419.10 385.89 227.80 36.91 75.65

Details of Contingent Liabilities are as follows: Contingent Liabilities not provided for 30.06.2005 31.03.2004

I Rs In

Lakhs Rs in Lakhs

a) Demand raised by Collector of stamps, Bilaspur towards stamp duty arising on amalgamation of Viswalakshmi Petro Products Ltd

32.24 -

b) Bank Guarantee issued on behalf of the Company - 218.00 c) Corporate guarantees issued to Banks for the facilities availed by the

wholly owned Subsidiary Company 4,924.94 5,835.22

d) Custom duty payable in the event of non-fulfilment of export obligation 117.57 110.47 II Estimated amount of contracts remaining to be executed on capital

account and not provided for (net of advances) - 6.48

No provision is considered necessary for disputed income-tax demands and interest thereon as given below.

Nature of dues 30.06.2005 31.03.2004 Rs in Lakhs Rs in Lakhs

Period to which

the amount relates

Disputes Pending

with

Income tax demands 1107.62 1083.98 A.Y 1990-91, 1993-94, 1994-95,1997-98 to 2001-02

Bombay High Court/ Income Tax Appellate Tribunal/ CIT (Appeals)

The above demands mainly relate to disallowance of claim of the Company for deduction U/s 80 HHC of the Income Tax Act 1961.

The Company has been advised by the tax counsel that it has a fairly good case to get the favourable orders from Bombay High Court/Appellate Authorities. The amount of Rs 945.08/- lacs (Rs 124.43 lacs) paid against the above demand is included under advances.

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81

Annexure 11 - Accounting Policies Adopted:

1) System of Accounting: Financial statements are prepared on historical cost convention based on accrual basis of accounting and applicable Accounting Standards.

2) Fixed Assets : (i) Fixed Assets are stated at cost less depreciation. (ii) Depreciation:-

a. Depreciation is provided on all assets other than those given on lease on the written down value method at the rates and in the manner specified in Schedule XIV of the Companies Act 1956.

b. Cost of leasehold land is amortised over the period of lease. c. Fixed Assets leased out are depreciated over the primary period of lease on straight line

method.

3) Investments: Long term investments are stated at cost and provision for diminution is made if such diminution is other than temporary in nature.

4) Inventories: Inventories are valued at the lower of cost (net of cenvat where applicable) and net realisable value. Cost includes cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. In respect of raw materials, cost is determined on specific identification method. In respect of stores and spares, cost is determined on First-in First-out basis. In the case of finished goods, cost includes appropriate production overheads and excise duty.

5) Revenue recognition: Revenue from sales is recognised on despatch of goods and includes excise duty where applicable.

6) Insurance claims: Insurance claims are accounted on settlement. 7) Retirement Benefits: Liability in respect of Gratuity to the employees other than the employees of

Bilaspur unit determined by the Life Insurance Corporation of India (LIC) on the basis of actuarial valuation as at the year end is funded with LIC and contribution thereof is absorbed in the accounts. Gratuity liability in respect of employees of Bilaspur unit has been determined as per the Payment of Gratuity Act and provided for. Contribution to Provident Fund, Superannuation and Pension Fund are charged to Profit and Loss Account. Liability to leave encashment, determined on the basis of actuarial valuation as on the Balance Sheet date, is provided for

8) Foreign Currency transactions: i. Foreign currency transactions are recorded at the rate of exchange prevailing on the date of

transaction. The transactions outstanding at the year end are translated at the rate of exchange prevailing at the year end and profit or loss other than that relating to fixed assets is recognised in the Profit and Loss Account.

ii. The foreign currency transactions entered into by the Company under Forward Contracts are recordedat the rate prevailing on the date of transaction and the difference between the forward contract rate and the exchange rate on the date of transactions is recognised in the Profit and Loss Account over the period of contract.

9) Borrowing costs: Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised. All other borrowing cost are charged to revenue.

10) Income tax : Current tax is determined in accordance with Income Tax on the income for the period chargeable to tax. Deferredtax is recognised on all timing differences subject to consideration of prudence.

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82

Annexure 12 - Notes to the Financial Statements 1. Changes in Accounting Policies: No change in the Accounting Policies. 2. Prior period items: Prior period taxation has been considered in Profit & Loss Appropriation account

based on the assessment order received. 3. Capital Commitments:

Rs. In lakhs As at As at As at As at As at

June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

March 31, 2001

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)

- 6.48 - 3.56 -

4. Contingent Liabilities not provided for As at As at As at As at As at

June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

March 31, 2001

a.

Demand raised by Collector of Stamps, Bilaspur towards stamp duty arising on amalgamation of Vishwalakshmi Petro Products Ltd.

32.24 - - - -

b.

Bank Guarantees issued on behalf of the company

- 218.00 394.00 8.96 8.96

c.

Corporate Guarantees issued to Banks for the facilities availed by the subsidiary company

4,924.94 5,835.22 3,950.00 800.00 800.00

d.

Customs duty payable in the event of non-fulfilment of export obligation

117.57 110.47 268.65 183.29 -

e. Income Tax Demands 1,107.62 1,083.98 678.75 483.89 483.89 The Income Tax demands mainly relate to disallowance of claim of the Company for deduction under section 80 HHC of the Income Tax Act, 1961. The Company has been advised by its tax counsel that it has a fairly good case to get the favourable orders from Bombay High Court/ Appellate Authorities.

5. Related Party Disclosures Related party disclosures, as required by Accounting Standard - AS 18 "Related Party Disclosures" issued by the Institute of Chartered Accountants of India are given below for the financial years ended 31st December 2001 and onwards.

A) Enterprise having ownership, directly and indirectly, of more than 50% of the voting power V.S. Dempo & Co. Private Limited B) Wholly owned subsidiary company Paradeep Carbons Limited C) Enterprise with Common Key Management Personnel Marmagoa Shipping and Stevedoring Co Pvt Limited Aparant Iron & Steel Pvt Ltd Dempo Industries Pvt Ltd Dempo Mining Corporation Pvt Ltd Dempo Brothers Pvt Ltd Dempo Travels Pvt Ltd Motown Investments Pvt Ltd Hindustan Foods Ltd Devarshi Real Estates Developers Vasantrao Dempo Education and Research Foundation D) Key Management Personnel Mr.Shrinivas V.Dempo (Executive Chairman) Dr.A.B.Prasad (Managing Director)

Goa Carbon Limited

83

Details of transactions with Enterprise having ownership of more than 50% of voting power Rs. In lakhs

(15 Months) (12 Months) (15 Months) (9 Months) June 30,

2005 March 31,

2004 March 31,

2003 December

31, 2001 Loans taken during the period 1,590.00 500.00 456.58 356.56 Loans repaid during the period 400.00 300.00 456.58 - Interest Paid 83.47 14.25 - - Investments - - - - Loans and Advances - - - - Purchase of Assets - - - - Sale of Assets - - - - Purchase of goods - - - - Sale of goods - - - - Receipt of Services 156.81 170.17 139.48 122.03 Rental Income - - - - Security deposit paid - - - - Donations - - - - Remuneration - - - - Outstanding Balances: Credit Balance 1,432.43 212.60 5.58 - Debit Balance Details of transactions with Wholly owned subsidiary company


June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

Loans taken during the period Loans repaid during the period Interest Paid Investments 3,300.00 - Loans and Advances given 4,705.73 2,423.48 1,651.30 1,308.79 Loans and Advances repaid 2,278.23 2,484.18 1,430.75 Purchase of Assets Sale of Assets Purchase of goods 679.64 557.98 659.09 141.35 Sale of goods 434.92 247.14 - Receiving of Service Rental Income Security deposit paid Donations Remuneration Outstanding Balances: Credit Balance Debit Balance 0.12 872.62 933.32 1,181.44



31, 2001

Loans taken during the period 42.32 - 459.74 401.00

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84


31, 2001 Loans repaid during the period - 459.74 Interest Paid 35.29 31.58 Investments Loans and Advances given Loans and Advances repaid 100.00 Purchase of Assets 16.85 Sale of Assets 1.00 Purchase of goods 0.46 1.21 4.46 2.27 Sale of goods 2.68 Receiving of Service 449.99 354.76 423.53 270.96 Rental Income 0.36 Security deposit paid 0.15 Donations 2.00 3.00 7.50 Remuneration Outstanding Balances: Credit Balance 349.94 300.00 300.00 312.51 Debit Balance 100.00

Details of transactions with Key Management Personnel


June 30, 2005 March 31, 2004 March 31, 2003 December 31, 2001 Remuneration 12.56 15.35 40.00 24.13 Outstanding Balances: Credit Balance - 4.99 26.97 16.37 Debit Balance

6. Details of Investments held


2005 March 31,

2004 March

31, 2003 December

31, 2001 March 31,

2001 Long Term Investment Quoted ICICI BANK LTD 4.05 4.05 4.05 4.05 4.05 (13,500 Shares @ face value of Rs 10/- each)

Unquoted Wholly Owned Subsidiary Companies

Paradeep Carbons Ltd 4,324.62 1,024.62 875.38 1,034.96 Vishwalakshmi Petro ProductsLtd 404.58 192.28 GCL International Ltd 13.13 13.13 13.13 Less: Provision for Diminution (11.81) (3.91) Total Investments 4,328.67 1,028.67 880.75 1,452.81 209.46

Note: Although there has been substantial erosion in the value of investments in the wholly owned subsidiary, Paradeep Carbons Limited, due to the accumulated losses, no provision is presently considered necessary in view of the intrinsic value of fixed assets and taking into account the business plans and strategies under consideration.

Goa Carbon Limited

85

7. Details of Sundry Debtors is as follows


2005 March

31, 2004 March

31, 2003 December

31, 2001 March 31,

2001 1. Over six months Considered good 3.57 0.03 11.01 126.58 14.20 Considered doubtful 7.81 7.81 7.81 32.88 3.18 Total 11.38 7.84 18.82 159.46 17.38 Less: Provision for doubtful debts 7.81 7.81 7.81 32.88 3.18 Total 3.57 0.03 11.01 126.58 14.20 2. Others - Considered good 759.73 1,856.90 1,750.61 283.00 1,267.33 Total 763.30 1,856.93 1,761.62 409.58 1,281.53

8. Details of Loans (Secured & Unsecured ) is as follows:

Rs. In lakhs

As at As at As at As at As at June 30,

2005 March

31, 2004 March

31, 2003 December

31, 2001 March 31,

2001 Secured Loans : Working Capital Advances from Banks (Incl. Packing Credit Loans) 5,874.66 5,130.52 2,696.82 1,856.10 1,009.85 Term Loan From Banks: Rupee Loan 7.24 0.38 32.86 - Term Loan taken over from erstwhile - Vishwalakshmi Petro Products Ltd - - 222.00 - - Dual Currency Swing Loan 715.43 1,003.77 902.45 - Interest accrued and due 1.58 Total 6,597.33 6,136.25 3,854.13 1,856.10 1,009.85 Unsecured Loan Short Term deposits from bodies corporate

1,732.32 500.00 300.00 300.00 70.00

Interest accrued and due 25.79 - - - - Total 1,758.11 500.00 300.00 300.00 70.00

1. Working Capital Advance Facilities The entire working capital limits both fund based as well non- fund based would continue to be secured by hypothecation of Stocks and Book debts. Besides, the same would also be secured by second charge on the block assets of the company. 2 Term Loan Facilities

a) Pledge of 15,000,000 Equity shares held in the -wholly owned subsidiary, M/s Paradeep Carbons Ltd.

b) First charge on the block assets of Company's-Bilaspur division viz. Mortgage of Land and Building and hypothecation of Plant & Machinery.

c) Second charge on all immovable assets of the -subsidiary Company, Paradeep Carbons Limited. 9. Major Components of Deferred Tax Assets / (Deferred Tax Liabilities)

Rs. In lakhs As at As at As at As at June 30,

2005 March 31,

2004 March

31, 2003 December

31, 2001 I) Deferred Tax Liability arising on account of:

Dempo Group

86

Rs. In lakhs As at As at As at As at June 30,

2005 March 31,

2004 March

31, 2003 December

31, 2001 Depreciation (126.53) (167.88) (181.28) (63.71) Preliminary expenses amortised (0.05) II) Deferred Tax Assets arising on account of: Disallowance under section 43B of the Income Tax Act 1961

4.88 4.40 2.62 0.70

Provision for doubtful debts 2.63 2.86 2.80 5.92 Unabsorbed Business Loss 17.67 - - - Others 1.06 1.79 1.47 - Net Deferred Tax Liability (100.29) (158.83) (174.44) (57.09)

10. Reserves & Surplus comprises of:


2005 March

31, 2004 March

31, 2003 December

31, 2001 March

31, 2001 Capital Reserve (Capital Subsidy from Government)

15.00

Less: Transfer to General Reserve (15.00) Investment Allowance Reserve As per last Balance Sheet 8.14 Less: Transfer to General Reserve (8.14) General Reserve (As per Balance Sheet) 1,790.93 1,790.93 2,044.79 1,958.14 1,785.00 Less: Deferred Tax Liability (75.84) (63.35) Accumulated loss of erstwhile subsidiary Vishwalakshmi Petro Products Limited (328.02) Add: Transfer from Profit & Loss Account

150.00 150.00 150.00

Add: Transfer from Capital Reserve 15.00 Add: Transfer from Investment Allowance Reserve

8.14

Surplus as per Profit & Loss Account 109.65 214.48 185.03 97.34 109.19 Total 1,900.58 2,005.41 1,975.96 2,142.13 2,067.33

11. Details of Other Income are as follows.

Rs. In lakhs Particulars (15

Months) (12

Months) (15

Months) (9 Months) (12

Months) June 30,

2005 March

31, 2004 March

31, 2003 December

31, 2001 March 31,

2001 Recurring Income from Investments 1.01 1.01 1.49 1.49 1.49 Interest From Banks 107.30 31.89 37.85 11.75 17.87 From Others 13.81 0.52 0.71 0.83 3.04 Rental Income 0.36 - - - - Other Miscellaneous Receipts 43.27 30.42 14.42 14.45 32.66 Non recurring Profit on disposal of assets 0.72 1.23 0.99 8.39 0.69 Profit on sale of raw materials 76.87 30.27 8.87 - - Lease Income 0.56 0.96 1.81 - -

Goa Carbon Limited

87

Rs. In lakhs Particulars (15

Months) (12

Months) (15


Months) June 30,

2005 March

31, 2004 March

31, 2003 December

31, 2001 March 31,

2001 Provision no longer required Written back

26.70 - -

Exchange difference gain(net) 87.92 289.59 134.96 - 19.90 Commission Income (for arranging the procurement of RPC)

87.28 - - - -

Total 419.10 385.89 227.80 36.91 75.65 12. Segment Reporting: The Company is engaged in manufacture and sale ( both domestic and export) of

Calcined Petroleum Coke which constitutes single business segment. As per management's perspective, the risks and returns from its sales do not materially vary geographically. Accordingly there are no other business / geographical segments to be reported under Accounting Standard (AS) 17 issued by the Institute of Chartered Accountants of India.

13. Note: 1) Amount due to Small Scale Undertakings: -On the basis of information available and provided

by its suppliers, the Company has no outstanding due to any Small scale industries as on 30th June 2005.

2) Material Events None during the financial year ended 30th June, 2005. 3) Subsequent Events:Merger of Paradeep Carbons Limited wholly owned subsidiary with Goa

Carbon Limited The Board of Directors in principle have approved the merger of its wholly owned subsidiary Paradeep Carbons Limited with the Company, effective from 1st July, 2005 which is subject to all required approvals, including approval by the Bombay High Court.

CERTIFICATE

We have examined the books and records maintained by M/s. Goa Carbon Limited in the usual course of their business and based on such examination of books and records and information and explanations given to us, we certify that debtors balances as on 30th June, 2005 considered good and recoverable, as given below, are in agreement with the books of account. Amount (Rs. in Lakhs) Debts outstanding for more than six months 3.57 Debts outstanding for less than six months 759.73 Total Debts 763.30 For FRASER & ROSS

Chartered Accountants

Chennai November 16, 2005

M.K.Ananthanarayanan Partner

Membership No: 19521

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88

B.) CONSOLIDATED FINANCIAL INFORMATION OF THE ISSUER COMPANY From: Fraser & Ross Chartered Accountants 2nd Floor, Temple Tower 672, Anna Salai Nandanam Chennai – 600 035. November 16, 2005 The Board of Directors, Goa Carbon Limited Panaji Goa Dear Sirs,

1) We have examined the attached ‘Consolidated Statement of Profits and Losses’ of Goa Carbon Limited (“The Company”) and its subsidiaries: i. Vishwalakshmi Petro Products Limited and GCL International Limited for the financial years

ended 31st March 2001 and 31st December, 2001; ii. Paradeep Carbons Limited and GCL International Limited for the financial year ended 31st

March 2003 iii. Paradeep Carbons Limited for the financial years ended 31st March 2004 and 30th June, 2005 and the accompanying ‘Consolidated Statement of Assets and Liabilities’ and ‘Consolidated Statement of Cash Flows’ as at those dates enclosed in Annexure 13, Annexure 14 and Annexure 15 respectively. We report that the consolidated financial statements have been prepared by the Company in consideration of and in accordance with the requirements of Accounting Standard 21 issued by the Institute of Chartered Accountants of India and on the basis of separate audited financial statements of the Company and its subsidiaries. These consolidated statements are the responsibility of the Company’s Management and have been prepared by the Company and audited by us and read with the significant accounting policies (Annexure – 16) and related notes to the financial statements (Annexure – 17) have been prepared in accordance with the terms of the requirements of: a) Paragraph B (1) of Part II of Schedule II of the Companies Act, 1956 b) The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines,



2) We report that the consolidated summary statements, set out in Paragraph 1 above, has been extracted from the consolidated financial statements of the Company, its subsidiaries and from audited financial statements of certain subsidiaries that have been audited by their respective auditors, as referred to in paragraph 3 below. Hence our opinion, in so far as it relates to amounts included in respect of certain subsidiaries not audited by us, is based solely on the reports of their respective auditors’.

3) We did not audit the financial statements of the following subsidiary Companies, which were considered for inclusion in the consolidated financial statements of the Company for the respective financial years: i. Vishwalakshmi Petro Products Limited (amalgamated with the Company effective January 1,

2002) for the financial years ended 31st March, 2001 and 31st December, 2001 which reflected

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89

total assets of Rs.978.92lakhs and Rs.1,276.41lakhs, total revenues of Rs.2.24lakhs and Rs.617.10lakhs and total cash flows of (Rs.0.12lakhs) and Rs.35.65lakhs respectively and

ii. GCL International Limited (Liquidated effective March 22, 2004) for the financial years ended 31st March 2001, 31st December, 2001 and 31st March 2003 which reflected total assets of Rs.10.25lakhs, Rs.5.83lakhs and Rs.4.04lakhs, total revenues of Rs.0.40lakhs, Rs.0.08lakhs and Rs.0.01lakhs and total cash flows of (Rs.2.12lakhs), (Rs.4.37lakhs) and (Rs.1.97lakhs) respectively. Since there were no significant transactions recorded during the year ended 31st March 2004 up to the date of liquidation, the same has not been considered for inclusion in the consolidated financial statements for the financial year ended 31st March 2004.

4) This report is intended solely for your information and for inclusion in the Offer Document in

connection with the proposed Rights Issue of equity shares of the Company and is not to be used, referred to or distributed for any other purpose without our prior written consent.

Yours faithfully,

For Fraser & Ross Chartered Accountants

M.K.Ananthanarayanan. Partner Membership Number 19521

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90

Annexure 13: Consolidated Statement of Profit and Loss Rs. In lakhs

(15 Months) (12 Months)

(15 Months)

(9 Months)

(12 Months)

PARTICULARS June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

March 31, 2001

Income : Sales 21,958.17 15,943.23 14,146.92 4,371.47 4,471.31 Other Income 499.45 665.19 276.42 47.62 169.53 Increase / (Decrease) in stocks 1,493.60 (576.43) 1,035.71 148.22 (9.35) Total 23,951.22 16,031.99 15,459.05 4,567.31 4,631.49 Expenditure: Cost of raw material consumed 20,471.30 12,776.54 11,894.16 3,229.83 3,054.63 Staff Costs 605.55 449.55 459.97 240.21 260.96 Other manufacturing Expenses 696.54 607.89 577.15 239.32 230.33 Administrative Cost 659.92 560.96 550.46 225.85 186.96 Goodwill written off - - 4.51 - - Preliminary Expenses & share issue Expenses w/off

0.09 1.40 0.34 0.14 0.19

Selling & Distribution Cost 929.29 685.69 739.58 298.61 385.40 23,362.69 15,082.03 14,226.17 4,233.96 4,118.47 Earnings Before Interest, Depreciation & Tax 588.53 949.96 1,232.88 333.35 513.02 Finance Charges 1,030.97 858.87 952.90 190.65 137.83 Depreciation 461.19 386.01 524.78 134.97 188.23 Earnings before Tax and Extra ordinary items (903.63) (294.92) (244.80) 7.73 186.96 Provision for Taxation Current Tax -- For the Year 3.25 64.10 54.41 60.25 65.50 -- Relating to earlier Years (9.73) 5.75 - - - Deferred Tax (58.54) (15.60) 41.51 (6.26) - Fringe Benefit Tax 2.86 Profit Before Extra Ordinary Items (841.47) (349.17) (340.72) (46.26) 121.46 Minority Interest - - 126.20 - - Extra Ordinary Items - - - - - Adjustment on account of prior Period Items - - - - - Adjusted Net Profit (841.47) (349.17) (214.52) (46.26) 121.46

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91

Annexure 14: Consolidated Statement of Assets and Liabilities

(15 Months) (12

Months) (15


Months) PARTICULARS June 30, 2005 March 31,

2004 March 31,

2003 December

31, 2001 March 31,

2001 A) Fixed Assets

Gross Block 4,923.07 5,175.37 5,546.64 2,901.90 2,902.23 Less: Depreciation and

amortization 2,492.72 2,412.97 2,472.76 1,611.79 1,483.75

Net Block (A) 2,430.35 2,762.40 3,073.88 1,290.11 1,418.48 Add: Capital WIP 33.88 24.56 275.39 3.28 - Net Block after adjustment 2,464.23 2,786.96 3,349.27 1,293.39 1,418.48

B) Goodwill on Consolidation (B) 383.74 383.74 193.82 4.51 4.51

C) Investments : (C) 4.05 4.05 4.05 1,039.01 4.05

D) Current Assets ,Loans and Advances : Inventories 6,961.31 5,771.19 5,190.78 2,530.29 1,560.89 Sundry Debtors 2,415.86 2,769.45 2,180.87 767.68 1,281.67 Cash and Bank Balances 3,357.01 3,061.61 1,183.67 451.62 160.41 Loans and Advances 1,519.66 828.23 672.42 1,440.08 541.47 Total (D) 14,253.84 12,430.48 9,227.74 5,189.67 3,544.44

E) Liabilities and Provisions : Secured Loans 11,522.27 11,971.47 7,042.35 2,572.19 1,539.22 Unsecured Loans 1,758.11 500.00 300.00 300.00 70.00 Net Deferred Tax Liability 100.29 158.83 174.44 57.09 - Current Liabilities 2,957.29 1,294.69 3,095.06 1,965.98 611.81 Provisions 236.05 280.78 404.46 362.95 297.64 Minority Interest 1.00 Total (E) 16,574.01 14,205.77 11,017.31 5,258.21 2,518.67

F) Net Worth (A+B+C+D) 531.85 1,399.46 1,757.57 2,268.37 2,452.81

G) Represented by Share Capital 460.00 460.00 460.00 460.00 460.00 Reserves and Surplus 71.85 939.55 1,299.05 1,809.91 1,994.49 Total 531.85 1,399.55 1,759.05 2,269.91 2,454.49

H) Miscellaneous Expenditure - 0.09 1.48 1.54 1.69 (to the extent not written off)

I) Net Worth (G-H) 531.85 1,399.46 1,757.57 2,268.37 2,452.80

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Annexure 15: Consolidated Cash Flow Statement Rs. in lakhs (15

Months) (12

Months) (15

Months) (9

Months) (12

Months) PARTICULARS June 30,

2005 March

31, 2004 March

31, 2003 December

31, 2001 March 31,

2001 Cash Flows from Operating Activities Net Profit Before Taxation (903.63) (294.92) (244.80) 7.73 186.96 Adjustments for: Depreciation 461.19 386.01 524.78 134.97 188.23 Interest Income (212.50) (63.66) (46.50) (12.87) (22.22) Dividend Income (1.01) (1.01) (1.49) (1.49) (1.49) Profit on sale of assets (0.73) (1.23) (0.99) (8.12) (0.69) Loss on assets sold/scrapped 1.43 2.82 0.32 Bad debts Written off 2.92 2.93 40.30 1.19 3.59 Goodwill written off 4.51 - - Investment written off 0.91 Provision for doubtful debts written back (26.70) 3.18 Provision for doubtful debts 3.98 35.13 Provision for diminution in value of investments

- 3.91

Preliminary expenses Written off 0.09 1.40 0.34 0.14 0.19 Finance Charges 1,030.97 858.87 952.90 190.65 137.83 Exchange Gain (40.62) (321.02) (59.14) Operating Profit before Working 338.11 571.10 1,147.51 351.24 495.58 Capital Changes (Increase)/Decrease in Trade Receivables (637.70) (2,720.17) (1,781.34) (652.92) (458.27) (Increase)/Decrease in Inventories (1,190.12) (580.41) (1,263.58) (969.41) 28.95 (Increase)/Decrease in Current Liabilities 1,750.93 (1,626.63) 837.99 1,324.33 31.76 Income- taxes paid (6.95) (28.05) (78.19) (67.52) (61.55) Prior Period Expenditure Net Cash Flow from Operating Activities 254.27 (4,384.16) (1,137.61) (14.28) 36.47 Cash Flow from Investing Activities Purchase of Fixed Assets (239.83) (110.80) (443.14) (19.37) (178.64) Sale of Fixed Assets 8.05 6.15 3.38 17.61 1.96 Interest Received 175.84 60.91 46.50 12.58 22.21 Dividend Received 1.01 1.01 1.49 1.49 1.49 Investments Purchased (71.24) (40.42) (1,034.96) Net Cash Flow used in Investing Activities (54.93) (113.97) (432.19) (1,022.65) (152.98) Cash Flows from Financing Activities Proceeds from Issue of shares by a subsidiary to its minority shareholders

260.00

Proceeds from long/short term borrowings from Banks

176.60 5,645.17 3,896.16 846.25 179.33

Proceeds from unsecured borrowings 1,632.32 500.00 850.00 984.01 420.00 Repayment of long/short term borrowings from Banks

(582.63) (368.77) (1,174.00) (57.30) (101.19)

Repayment of unsecured borrowings (400.00) (300.00) (850.00) (510.00) (350.00) Finance Charges Paid (997.16) (820.51) (1,232.57) (171.23) (136.81) Dividend Paid (46.22) (157.43) (87.50) (55.66) (90.18) Corporate tax on dividend paid (6.01) (20.62) (7.04) (10.12) Net Cash Flow from Financing Activities (223.10) 4,477.84 1,662.09 1,029.03 (88.97) Net increase in cash and cash equivalents (23.76) (20.29) 92.29 (7.90) (205.48) Cash and Cash Equivalents(Opening Balance) 128.31 148.60 56.31 38.66 244.75 Cash and Cash Equivalents (Closing Balance) 104.55 128.31 148.60 30.76 39.27

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Annexure 16 - ACCOUNTING POLICIES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS A. Principles of Consolidation

1. The Consolidated Financial Statements of Goa Carbon Limited ("the Company") and its wholly owned subsidiary are prepared in accordance with the principles and procedures for the preparation and presentation of consolidated financial statements as laid down under Accounting Standard (AS) 21 " Consolidated Financial Statements" issued by the Institute of Chartered Accountants of India using uniform accounting policies.

2. The excess of cost to the Company of its investment in the subsidiary over the Company's portion of equity of the subsidiary as at the date of its investment is recognised in the financial statements as goodwill.

B. Significant Accounting Policies

1. System of Accounting: The consolidated financial statements of the company and its subsidiary are prepared under the historical cost convention based on the accrual basis of accounting and applicable Accounting Standards issued by the Institute of Chartered Accountants of India.

2. Fixed Assets:

i. Fixed Assets are stated at cost. ii. Depreciation :

a) Depreciation is provided on all assets other than those given on lease on the

written down value method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

b) Cost of Leasehold Land is amortised over the period of lease. c) Fixed Assets leased out are depreciated over the primary period of lease on

straight line method. d) Cost of Construction on land licensed to the company is amortised over the

estimated period of utility. 3. Investments:

Long term investments are stated at cost and provision for diminution is made if such diminution is other than temporary in nature.-

4. Inventories:

Inventories are valued at the lower of cost (net of cenvat where applicable) and net realisable value. Cost includes cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. In respect of raw materials, cost is determined on specific identification method. In respect of spares, cost is determined on First-in-First-out basis. In case of finished goods, cost includes appropriate production overheads and excise duty.

5. Revenue recognition:

Revenue from sales is recognised on despatch of goods and includes excise duty where applicable.

6. Insurance claims: Insurance claims are accounted on settlement.

7. Retirement Benefits: Liability in respect of Gratuity to the employees other than employees of Bilaspur Unit, determined by the Life Insurance Corporation of India (LIC) on the basis of actuarial valuation as at the year end is funded with LIC and contribution thereof is absorbed in the accounts. Gratuity liability in respect of employees of Bilaspur unit has been determined as per the Payment of Gratuity Act and provided for. Contribution to provident fund, Superannuation fund, Pension fund are charged to Profit & Loss Account. Liability to leave encashment, determined on the basis of actuarial valuation on the balance Sheet date, is provided for.

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8. Foreign Currency transactions:

i. Foreign currency transactions are recorded at the rate of exchange prevailing on the date of transaction.The transactions outstanding at the year end are translated at the rate of exchange prevailing at the year end and profit or loss other than that relating to fixed assets is recognised in the Profit & Loss Account.

ii. The foreign currency transactions entered into by the Company under Forward Contracts are recorded at the rate on the date of transaction and the difference between the forward contract rate and the exchange rate on the date of transactions is recognised in the Profit & Loss account over the period of contract.

9. Borrowing costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised. All other borrowing cost are charged to revenue

10. Income tax: Current tax is determined in accordance with Income Tax Act on the income chargeable to tax. Deferred tax is recognised on all timing differences subject to consideration of prudence.

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Annexure 17 - Notes to Consolidated Financial Statements 1. Changes in Accounting Policies: No change in the Accounting Policies. 2. Prior period items: Prior period taxation has been considered in Profit & Loss Appropriation account

based on the assessment orderreceived. 3. Capital Commitments:


2005 March

31, 2004 March

31, 2003 December

31, 2001 March

31, 2001

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)

2.61 9.60 2.28 5.27 0.00

4. Contingent Liability not provided for: Rs. In lakhs As at As at As at As at As at June 30,

2005 March

31, 2004 March

31, 2003 December

31, 2001 March

31, 2001 Demand raised by Collector of Stamps, Bilaspur towards Stamp duty with respect to amalgamation of Viswalakshmi Petro Products Ltd

32.24 - - - -

Bank Guarantee issued on behalf of the Company

- 858.96 1,481.58 8.96 8.96

Corporate guarantees issued to Banks for the facilities availed by the subsidiary Company

4,924.94 5,835.22 3,950.00 800.00 800.00

Custom Duty payable in the event of non-fulfilment of export obligations

247.09 149.48 268.65 183.29 -

Claims against the company not acknowledged as debt.

0.59 0

Income Tax Demands 1,107.62 1,083.98 678.75 483.89 483.89

The Income Tax demands mainly relate to disallowance of claim of the Company for deduction under section 80 HHC of the Income Tax Act, 1961. The Company has been advised by its tax counsel that it has a fairly good case to get the favourable orders from Bombay High Court/ Appellate Authorities.

5. Related Party Disclosures:

Related party disclosures, as required by Accounting Standard - AS 18 "Related Party Disclosures" issued by the Institute of Chartered Accountants of India are given below for the financial years ended 31st March 2001 and onwards, as AS 18 was mandatory for accounting periods commencing on or after 1st April 2001.

A) Enterprise having ownership, directly and indirectly, of more than 50% of the voting power V.S. Dempo & Co. Private Limited B) Enterprise with Common Key Management Personnel Marmagoa Shipping and Stevedoring Co Pvt Limited Aparant Iron & Steel Pvt Ltd Dempo Industries Pvt Ltd Dempo Mining Corporation Pvt Ltd Dempo Brothers Pvt Ltd Dempo Travels Pvt Ltd Motown Investments Pvt Ltd

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Hindustan Foods Ltd Devarshi Real Estates Developers Vasantrao Dempo Education and Research Foundation C) Key Management Personnel Mr.Shrinivas V.Dempo - Executive Chairman Dr.A.B.Prasad - Managing Director

Details of transactions with enterprise having ownership of more than 50% of voting power, are as follows

Rs. In lakhs (15

Months) (12

Months) (15

Months) (9 Months)

June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

Loans Taken during the period 1,590.00 500.00 456.58 356.56 Repaid during the period 400.00 300.00 456.58 - Interest Paid 83.47 14.25 - - Receipt of Services 156.81 170.17 139.48 122.03 Credit Balances 1,432.43 212.60 5.68 -


Rs. In lakhs (15

Months) (12

Months) (15

Months) (9 Months)

June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

Loan Taken during the period 42.32 - 459.74 401.01 Repaid during the period - - 459.74 - Loan Given during the period - - - - Returned during the period - - 100.00 - Interest paid 35.29 31.58 - Purchase of Assets 16.85 - - Sale of Assets 1.00 - - Purchase of Goods 0.46 1.21 4.46 2.27 Sale of Goods 2.68 - - Receipt of Services 450.85 355.36 437.40 270.96 Rental Income 0.36 - - - Security Deposit paid 0.15 - - - Donations 2.00 3.00 7.50 0.00 Credit Balances 350.81 300.00 300.00 312.51 Debit Balances 100.00

Details of transactions with key Management Personnel

Rs. In lakhs (15

Months) (12

Months) (15

Months) (9 Months)

June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

Remuneration 12.76 15.55 40.12 24.13 Credit Balance 0 4.99 26.97 16.37

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7. Details of Investments held


June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

March 31, 2001

Long Term Investment Quoted: ICICI BANK LTD (13,500 Shares @ face value of Rs 10/- each) 4.05 4.05 4.05 4.05 4.05 Market Value 56.91 39.95 18.08 11.87 23.75

8. Details of sundry debtors is as follows


2005 March

31, 2004 March

31, 2003 December

31, 2001 March

31, 2001 Outstanding for a period exceeding six months

Considered good 38.91 0.03 11.02 126.58 14.20 Considered doubtful 7.81 7.81 7.81 32.87 3.18 46.72 7.84 18.83 159.45 17.38 Other debts Considered good 2,376.95 2,769.42 2,169.85 690.38 1,267.33 2,423.67 2,777.26 2,188.68 849.83 1,284.71 Less:- Provisions for Doubtful Debts 7.81 7.81 7.81 32.87 3.18

2,415.86 2,769.45 2,180.87 816.96 1,281.53 9. Details of Loan (Secured & Unsecured) is as follows.


June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

March 31, 2001

Secured Loan Term Loan from bank of India Rupee Loan 7.24 0.38 254.86 366.24 Dual Currency Swing Loan 715.43 1,003.77 902.45 Interest Accrued and Due 1.58 Term Loan from IDBI Interest Accrued and Due Term Loan from Bank of Baroda 835.97 1,150.74 1,364.17 Accrued Interest on Term Loan 5.20 5.88 Working Capital Loan from Bank of India and Bank of Baroda and Import Finance availed from various Banks

9,958.43 9,809.12 4,520.87 2,572.19 1,172.98

Total 11,522.27 11,971.47 7,042.35 2,572.19 1,539.22 Unsecured Loan Short term loan from bodies corporates 1,732.32 500.00 300.00 300.00 70.00 Interest Accrued and due thereon 25.79

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Total 1,758.11 500.00 300.00 300.00 70.00 Notes:

1) Term Loan from bank of India secured by all fixed assets including land and buildings and plant and machinery, pledge of 1,50,00,000 equity shares held in Paradeep Carbons Limited, second charge on pari-passu basis on all immovable assets including land and buildings of Paradeep Carbons Limited and hypothecation of movable and other immovable assets.

2) Term Loan from Bank of Baroda secured by equitable mortgage on Land and Buildings by deposit of title deeds on a first charge basis and hypothecation of all immovable and movable assets except stock-in-trade and book debts and guaranteed the Company.

3) Secured by hypothecation of all tangible movable assets, raw materials, finished goods, stores, spare parts and book debts pledge of fixed deposit receipts , including equitable mortgage on land and buildings on a second charge basis and guarantee of the Company in the case of loan availed by subsidiary Company.

4) Unsecured loan availed from the promoters for working capital requirements of the company. 10. Major Components of Deferred Tax Assets/ (Deferred tax Liabilities) :

Rs. In lakhs As at As at As at As at

June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

Deferred Tax Liability arising on account of; Depreciation 126.53 167.88 181.28 63.71 Preliminary expenses amortised 0.05 0 Deferred tax Assets arising on account of: Disallowance u/s 43B of the Income Tax Act 1961 4.88 4.40 2.62 0.70 Provision for doubtful debts 2.63 2.86 2.8 5.92 Unabsorbed Business Loss 17.67 0.00 0 0 Others 1.06 1.79 1.47 0 Deferred tax Liability (Net) 100.29 158.83 174.44 57.09

11. Reserves & Surplus comprise of


June 30, 2005

March 31, 2004

March 31, 2003

December 31, 2001

March 31,

2001 General Reserve 1,790.93 1,790.93 1,790.93 2,044.79 1,958.14 Surplus/(Deficit) as per Profit & Loss Account

(1,719.08) (851.38) (491.88) (234.88) 36.35

71.85 939.55 1,299.05 1,809.91 1,994.49 12. Details of other income is as follows.

Rs. In lakhs (15

Months) (12

Months) (15

Months) (9

Months) (12

Months) June 30,

2005 March

31, 2004 March

31, 2003 December

31, 2001 March

31, 2001 Recurring Interest from Banks 198.69 62.63 45.79 12.04 19.18 Interest from Others 13.81 1.03 0.71 0.83 3.04 Rental Income 0.36 0 0 Dividend income 1.01 1.01 1.49 1.49 1.49 Other Miscellaneous Receipts 51.83 57.91 25.45 14.45 32.66

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Non Recurring Lease Income 0.56 0.96 1.81 10.42 92.57 Profit on sale of assets 0.73 1.23 0.99 8.39 0.69 Profit on sale of raw materials 78.43 33.22 28.48 Exchange Gain 66.75 507.20 145.00 0 19.90 Provision for doubtful debts written back 0 0 26.70 Commission Income (for arranging the procurement RPC)

87.28 0 0

Total 499.45 665.19 276.42 47.62 169.53 13. Key Accounting Ratios

(15 Months) (12

Months) (15 Months) (9 Months) (12 Months)

June 30, March 31, March 31, December 31, March 31, PARTICULARS 2005 2004 2003 2001 2001 Earnings per share (Rs.) (18.29) (7.59) (4.65) (1.00) 2.64 Net Asset value per share (Rs.) 11.56 30.42 38.21 49.31 53.32 Return on Net Worth (%) (158.21) (24.95) (12.20) (2.03) (4.95) Weighted average number of equity shares in the period (in Nos.)

4,600,000 4,600,000 4,600,000 4,600,000 4,600,000

Formula: 1.Earnings per share(Rs.) = Net profit/ (loss) After Preference Dividend Weighted average number of equity shares

outstanding during the period 2.Net Asset Value per share (Rs.) = Net Worth (excluding revaluation reserve) Weighted average number of equity shares

outstanding during the period 3.Return on Net Worth (%) = Net profit /(loss) after Extra-Ordinary Items Net Worth (excluding revaluation reserve)

14. Capitalisation Statements Rs. In lakhs

Particulars



to the right issue) Borrowings: Short Term Borrowings 12,147.72 10,389.61 Long Term Borrowings 1,132.66 1,132.66 Total Debt 13,280.38 11,522.27 Shareholder's Funds: Equity Share Capital 460.00 920.00 Reserves and Surplus 71.85 3291.85

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Rs. In lakhs

Particulars



to the right issue) Total Shareholder's Funds 531.85 4,211.85 Long-term Debt/Equity ratio 2.13 0.27 Total Debt/Equity ratio 24.97 2.74

Note:- i. Right Issue of 4.60 million shares at a premium of Rs 70/- per Equity Share has been considered. ii. Short Term Borrowings include Rs.431.18 lakhs, being term loans repayable within one year from June

30, 2005. iii. After considering the proposed part allotment of shares to Promoter Group of Companies against the

unsecured loan of Rs.1,732.32 lakhs obtained from them. 15. Segment Reporting:

The Company is engaged in manufacture and sale (both domestic and export) of calcined petroleum coke which constitutes single business segment. As per management's perspective, the risks and return from its sales do not materially vary geographically. Accordingly there are no other business/geographical segments to be reported under Accounting Standard (AS) 17 issued by the Institute of Chartered Accountants of India.

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C.) FINANCIAL INFORMATION OF PARADEEP CARBONS LIMITED - SUBSIDIARY (To be amalgamated w.e.f. July 1, 2005) From: Fraser & Ross Chartered Accountants 2nd Floor, Temple Tower 672, Anna Salai Nandanam Chennai – 600 035. November 16, 2005 The Board of Directors, Goa Carbon Limited Panaji Goa

Dear Sirs,

1) We have examined the attached Statement of Profits and Losses (Annexure 18) of the Company’s subsidiary, Paradeep Carbons Limited, for each of the financial years ended 31st March 2003, 31st March 2004 and 30th June 2005 and the Statement of Assets and Liabilities (Annexure 19) as on those dates. These statements are the responsibility of the Paradeep Carbons Limited’s Management and have been prepared by the subsidiary Company and audited by us in terms of the requirements of:

a) Paragraph B (1) of Part II of Schedule II of the Companies Act, 1956 b) The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines,



2) We report that the statements, set out in Paragraph 1 above, have been extracted from the financial statements audited by us and have been approved by the Board of Directors and adopted by the Members of the Company at the respective Annual General Meetings. The summary statement for the financial year ended 30th June, 2005 has been extracted from the financial statement audited by us and has been approved by the Board of Directors of the Company at its meeting held on 20th October, 2005.

3) We have also examined the following financial information relating to Paradeep Carbons Limited, which is proposed to be included in the Offer Document as approved by the authorised Directors, pursuant to the resolution of the Board of Directors of the Company:

a) Statement of Cash Flows given in Annexure – 20; b) Statement of Loans as on 30th June 2005 given in Annexure – 21;

In our opinion, the financial information of the subsidiary, as attached to this report and mentioned above, read with the significant accounting policies (Annexure – 22) and related notes to the financial statements (Annexure – 23), have been prepared in accordance with Part II of Schedule II of the Companies Act and ‘Guidelines’, issued by ‘SEBI’.

4) This report is intended solely for your information and for inclusion in the Offer Document in connection with the proposed Rights Issue of equity shares of the Company and is not to be used, referred to or distributed for any other purpose without our prior written consent.

Yours faithfully,

For Fraser & Ross Chartered Accountants

M.K.Ananthanarayanan. Partner Membership Number 19521

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Annexure -18: Summary Statement of Profit and Loss Rs. In lakhs

(15 Months) (12 Months) (12 Months) June 30, March 31, March 31,

PARTICULARS 2005 2004 2003 Income : Sales 10,487.03 6,595.07 2,955.87 Other Income 103.91 314.63 42.48 Increase / (Decrease) in stocks 815.57 (548.12) 441.39 Total 11,406.51 6,361.58 3,439.74 Expenditure: Raw Material Consumed 10,125.99 5,226.98 2,986.92 Staff Cost 114.29 76.12 45.71 Other manufacturing Expenses 292.51 217.13 118.35 Administrative Expenses 349.20 283.30 140.05 Selling & Distribution Expenses 496.40 277.50 83.57 Preliminary expenses amortised 0.09 0.09 0.09 11,378.48 6,081.12 3,374.69 Earnings Before Interest, Depreciation & Tax 28.03 280.46 65.05 Finance Charges 473.29 440.37 455.02 Depreciation 174.03 125.31 116.65 Earnings before Tax and Extra ordinary items (619.29) (285.22) (506.62) Provision for Taxation Current Tax -- For the Year -- Relating to earlier Years Deferred Tax Fringe Benefit Tax Profit/(Loss) Before Extra Ordinary Items (619.29) (285.22) (506.62) Extra Ordinary Items - - - Adjustment on account of prior Period Items - - - Net Profit/ (Loss) after adjustments (619.29) (285.22) (506.62)

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Annexure 19: Summary Statement of Assets and Liabilities Rs. In lakhs (15 Months) (12 Months) (12 Months) June 30, March 31, March 31, PARTICULARS 2005 2004 2003 A) Fixed Assets

Gross Block 2,994.92 2,851.56 2,533.38 Less: Depreciation 574.26 400.32 275.01 Net Block 2,420.66 2,451.24 2,258.37 Add: Capital Work In progress 27.45 3.94 275.39 Sub Total (A) 2,448.11 2,455.18 2,533.76

B) Investments : (B) -

C) Current Assets ,Loans and Advances : Inventories 3,396.70 2,913.67 2,190.93 Sundry Debtors 1,652.56 912.51 419.24 Cash and Bank Balances 1,637.60 1,094.88 521.59 Loans and Advances 129.51 239.64 98.41 Sub Total (C) 6,816.37 5,160.70 3,230.17

D) Liabilities and Provisions : Secured Loans 4,924.94 5,835.22 3,188.22 Unsecured Loans 0.12 872.62 933.32 Current Liabilities 1,501.77 754.07 1,206.43 Provisions 6.58 3.15 Sub Total (D) 6,433.41 7,465.06 5,327.97

E) Net Worth (A+B+C-D) : 2,831.07 150.82 435.96 Represented by Share Capital 4,800.00 1,500.00 1,500.00 Profit & Loss Account (1,968.93) (1,349.09) (1,063.87) Total 2,831.07 150.91 436.13 Miscellaneous Expenditure to the extent not written off/adjusted - 0.09 0.17 Net Worth (G-E) 2,831.07 150.82 435.96

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Annexure :20 - Summary Statement of Cash Flows Rs. in lakhs (15 Months) (12 Months) (12 Months) June 30, March 31, March 31, PARTICULARS 2005 2004 2003 Cash Flows from Operating Activities Net Profit Before Taxation (619.36) (285.22) (506.62) Adjustments for: Depreciation 174.03 125.31 116.65 Interest Income (91.39) (31.25) (7.81) Dividend Income Loss on sale of Assets 0.40 Bad debts Written off 2.19 0.18 1.86 Goodwill written off Investment written off Provision for doubtful debts Provision for diminution in value of investments Preliminary expenses Written off 0.09 0.09 0.09 Finance Charges 473.29 440.37 455.02 Exchange Gain (15.41) (164.49) Operating Profit before Working (76.16) 84.99 59.19 Capital Changes Change in Trade and Other Receivables (1143.21) (1241.14) (537.02) Change in Inventories (483.03) (722.74) (825.52) Change in Other Current Assets Change in Current Liabilities 754.57 (466.48) 706.59 Income- taxes paid (15.48) Prior Period Expenditure Net Cash Flow from Operating Activities (963.30) (2345.37) (596.76) Cash Flow from Investing Activities Purchase of Fixed Assets (171.62) (46.73) (317.40) Sale of Fixed Assets 4.26 Interest Received 70.36 29.55 7.81 Dividend Received Investments Purchased Advances to Subsidiary Repayment from Subsidiary Net Cash Flow used in Investing Activities (97.01) (17.18) (309.59) Cash Flows from Financing Activities Changes in Borrowings from Banks (894.19) 2805.61 928.06 Repayment of loan from holding Company 2427.50 (60.70) 297.37 Proceeds from Issuance of Capital 161.60 Miscellaneous Exp incurred Finance charges paid (477.89) (417.22) (453.58) Exchange Gain Dividend Paid Corporate tax on dividend paid Net Cash Flow from Financing Activities 1055.42 2327.69 933.45 Net increase in cash and cash equivalents (4.89) (34.86) 27.10 Cash and Cash Equivalents(Opening Balance) 20.60 55.46 28.36 Cash and Cash Equivalents (Closing Balance) 15.71 20.60 55.46

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Annexure 21 - Details of Secured Loans as on 30th June, 2005 1) FUND BASED Particulars Name of

Bank Sanction Amount

Outstanding Amount

Rate of Interest

%

Security Overdues Repayment Schedule

(A) Term Loan

Bank of Baroda Opp.Azad Maidan , Post Box No.236, Panaji - goa 403001

1,350.00 841.17 7.34% Secured by equitable mortgage on loan & buildings by deposit of title deeds on a first charge basis and hypothecation of Movable assets except stock-in-trade & book debts and guaranteed by the Holding Company

-NIL- a) Repayable in 84 instalments,83 equal instalments of Rs.16 lacs each and last 84th instalments of Rs.22 lac. First Instalment started on 28.11.2003

Term Loan Total 1,350.00 841.17 * Note :- Rupee Term Loan has been converted into Foreign Currency Loan with Bank of Baroda , Panjim at

a rate of Libor + 400-450 bps point spread over a period of 6 months

Particulars Name of Bank

Sanction Amount

Outstanding Amount

Rate of Interest

%




1,400.00 1,356.78 12.75% The entire working capital limits both fund based as well non-fund based would continue to be secured by hypothecation of Stocks and Book-debts. Besides, the same would also be secured by Second charge on the block assets of the company.

-NIL- Repaid on the basis of proceeds of funds received from debtors .

Loan Against Deposit

-do- 510.00 510.00 Fixed Deposit Receipt held with Bank of India

Repaid on Maturity of Deposit

1,910.00 1,866.78

*Note: Part of the Working Capital Drawing has been converted into Foreign Currency Loan with Bank of India, Vasco at a interest rate of 400 basis points over 6 months LIBOR.Details are as given below

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Particulars Name of

Bank Sanction Amount

Outstanding Amount

Rate of Interest

%



Bank of Baroda Opp.Azad Maidan , Post Box No.236, Panaji - goa 403001

390.00 374.45 12.75% The entire working capital limits both fund based as well non- fund based would continue to be secured By hypothecation of Stocks and Book-debts. Besides, the same would also be secured by Second charge on the block assets of the company.

-NIL- Repaid on the basis of proceeds of funds received from debtors .

390.00 374.45 NON FUND BASED

Particulars Name of Bank

Sanction Amount

Outstanding Amount

Rate of Interest

%


(B3) Import Finance facility

State Bank of India Singapore Branch 6, Shenton Way #22-08 DBS Building Tower Two Singapore 068809

2,200.00 1,214.44 Libor + 400 BPS point

Refinance availed from State Bank of India, Singapore branch based on the strength of confirmed Letter of Credit opened by Bank of India, Campal Branch, Panaji - Goa.

-NIL- Repaid after a period of 180 days from the date of disbursement of loan

Bank of

Baroda Brussels Brussels Branch Rue de la loi 28 B-1040 Brussels Belgium

750.00 628.10 Libor + 400 BPS point

Refinance availed from Bank of Baroda, Brussels branch based on the strength of confirmed Letter of Credit opened by Bank of Baroda, Panaji - Goa.

-NIL- Repaid after a period of 180 days from the date of disbursement of loan

2,950.00 1,842.54

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Annexure :22 - Significant Accounting Policies 1) System of Accounting:

Financial statements are prepared on historical cost convention based on accrual basis of accounting and applicable Accounting Standards.

2) Fixed Assets: i. Fixed Assets are stated at cost less depreciation ii. Depreciation:

a) Depreciation is provided on all assets other than leasehold land on straight line method at the rates and in the manner specified in Schedule XIV of the Companies Act 1956.

b) Cost of Leasehold Land is amortised over the period of lease. c) Cost of construction of stock yard on land licensed to the Company is amortised over

the estimated period of utility. 3) Inventories:

Inventories are valued at the lower of cost (net of cenvat where applicable) and net realisable value. Cost includes cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. In respect of raw materials, cost is determined on specific identification method. In respect of stores and spares, cost is determined on First-in First-out basis. In the case of finished goods, cost includes appropriate production overheads and excise duty.

4) Revenue recognition: Revenue from sales is recognised on despatch of goods.

5) Insurance claims: Insurance claims are accounted on settlement.

6) Retirement Benefits : Gratuity liability in respect of employees has been determined as per the Payment of Gratuity Act and provided for. Contribution to Provident Fund and Pension Fund are charged to Profit and Loss account. Liability to leave encashment determined on the basis of actuarial valuation as on the Balance Sheet date is provided for.

7) Foreign Currency transactions : i. Foreign currency transactions are recorded at the rate of exchange prevailing on the date of

transaction. The transactions outstanding at the year end are translated at the rate of exchange prevailing at the year end and profit or loss other than that relating to fixed assets is recognised in the Profit and Loss Account.

ii. The foreign currency transactions entered into by the Company under Forward Contracts are recorded at the rate prevailing on the date of transaction and the difference between the forward contract rate and the exchange rate on the date of transactions is recognised in the Profit and Loss Account over the period of contract.

8) Borrowing costs: Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised. All other borrowing costs are charged to revenue.

9) Preliminary expenses are amortised over a period of five years.

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Annexure 23 - Notes To The Financial Statement 1. Changes in Accounting Policies: There is no change in accounting policies during the period. 2. Prior period items: Prior period taxation has been considered in Profit & Loss Appropriation based on

the assessment order received. 3. Capital Commitments:

Rs. In lakhs As at As at As at June 30, 2005 March 31, 2004 March 31 2003 Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)

2.61 3.12 2.28

4. Contingent Liability not provided for:

Rs. In lakhs As at As at As at

June 30, 2005

March 31, 2004

March 31 2003

a)

Bank Guarantees issued on behalf of the Company.

- 640.96 1,087.58

b)

Customs duty payable in the event of non-fulfilment of export obligations

129.52 39.01 833.90

5. Related Party Disclosures: Related party disclosure, as required by Accounting Standard - AS 18 "

Related Party Disclosure " issued by the Institute of Chartered Accountants of India are given below A] Holding Company Goa Carbon Limited B] Enterprises with Common Key Management Personnel V.S.Dempo & Co. Private Limited Dempo Travels Pvt Ltd C] Key Management Personnel Mr Shrinivas V. Dempo - Chairman Dr. A. B. Prasad - Managing Director

6. Details of Transactions with Related Party are as below.

a) Details of Transactions with Holding Company are as follows: Rs. In lakhs ( 15 Months ) ( 12 Months ) ( 12 Months ) June 30, 2005 March 31, 2004 March 31, 2003 Purchase of goods 434.92 247.14 - Sale of goods 679.64 557.98 659.09 Loans taken during the year 4,705.73 2,423.48 1,651.30 Loans repaid during the year 2,278.23 2,484.18 1,430.75 Issue of shares 3,300.00 - - Credit balance 0.12 872.62 933.32

b) Details of Transactions with Enterprises having Common Key Management Personnel are as below: Rs. In lakhs ( 15 Months ) ( 12 Months ) ( 12 Months )

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109

June 30, 2005 March 31, 2004

March 31, 2003

Receiving Services 0.86 0.60 13.87 Credit balance at the year end 0.86 - 0.10

c) Details of Transactions with Key Management Personnel are as below. Rs. In lakhs ( 15 Months ) ( 12 Months ) ( 12 Months )

June 30, 2005

March 31, 2004

March 31 2003

Remuneration / Sitting Fees 0.20 0.20 0.12 7. Details of Sundry Debtors are as follows:

: Rs. In lakhs As at As at As at June 30, 2005 March 31, 2004 March 31, 2003

I. Over six months Unsecured - considered good 35.34 - - Total 35.34 - - Less: Provision for doubtful debt - - - Total 35.34 - -

II. Others-Considered good Secured - - - Unsecured 1,617.22 912.51 419.24 Total 1,617.22 912.51 419.24 TOTAL 1,652.56 912.51 419.24

8. Details of Loans (Secured & Unsecured ) are as follows:


June 30,

2005 March 31,

2004 March 31

2003 Secured Loans: Working Capital Borrowing from Banks 4,083.77 4,678.60 1,824.05 Term Loans From Banks 835.97 1,150.74 1,364.17 Interest accrued and due on Term Loan 5.20 5.88 - TOTAL 4,924.94 5,835.22 3,188.22 Unsecured Loans: From Holding Company 0.12 872.62 933.32 TOTAL 0.12 872.62 933.32

Note: a) Cash Credit facilities from banks are secured by equitable mortgage on land and building on a

second charge basis and hypothecation of all tangible movable assets, raw materials, finished goods, stores, spares parts and book debts, pledge of fixed deposit receipts and guaranteed by the Holding Company.

b) Term Loan from Banks are secured by equitable mortgage on land & buildings by deposit title deeds on a first charge basis and hypothecation of movable assets except stock-in-trade & book debts and guaranteed by the Holding Company.

9. Reserves & Surplus comprises of :


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110

June 30, 2005

March 31, 2004

March 31 2003

Surplus/ (Deficit) as per Profit & Loss account

(1968.93) (1349.09) (1063.87)

10. Details of Other Income are as follows:

Rs. In lakhs ( 15 Months ) ( 12 Months ) ( 12 Months )

June 30, 2005

March 31, 2004

March 31 2003

Recurring: Interest on Fixed Deposit 91.39 31.25 7.81 Miscellaneous Receipts 8.56 27.49 10.87 Exchange Gain ( net ) (21.17) 217.60 23.80 TOTAL 78.78 276.34 42.48 Non-Recurring: - - - Profit on sale of Raw Material 25.13 38.29 18.14 TOTAL 25.13 38.29 18.14 GRAND TOTAL 103.91 314.63 60.62

11. Segment Reporting: The company is engaged in manufacture and sale (both domestic and export) of

Calcined Petroleum Coke which constitute single business segment. As per management's prospective, the risk and return from its sales do not materially vary geographically. Accordingly there are no other business/ geographical segments to be reported under Accounting Standard AS 17 issued by the Institute of Chartered Accountants of India.

12. Amount due to Small Scale Industrial undertaking: On the basis of information available and provided by its suppliers, the Company has no outstanding due to any small scale industries as on 30.06.2005.

13. Material events: Nil 14. Subsequent Events:

Merger with the Holding Company Ms/Goa Carbon Limited The Board of Directors of the Company have in principle approved merger of the Company, with its Holding Company, Goa Carbon Limited, effective from 1st July, 2005, which is subject to all required approvals, including approval by the Bombay High Court.

15. Important Notes for various years: I For fifteen months ended 30th June 2005

a) During the year 3,30,00,000 equity shares of Rs. 10/- each were allotted to Holding Company ie Goa Carbon Limited.

b) Although the Company's' net worth has been significantly eroded, taking into account of intrinsic value of the fixed assets and business prospects, plans, strategies and the continued assistance from the holding company, the accounts are presented on principles applicable to a going concern.

c) Immovable properties of the Company are mortgaged by way of Second Charge to Bank of India on pari-passu basis against the term loan facility granted to the Holding Company, Goa Carbon Limited.

d) The unabsorbed business loss and depreciation relating to earlier years as well as loss for the period have given rise to Net Deferred tax Asset amounting to Rs 671.39 lakhs as at the end of the financial year, which has not been recognised in the accounts as a prudent policy.

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111

CERTIFICATE We have examined the books and records maintained by M/s. Paradeep Carbons Limited in the usual course of their business and based on such examination of books and records and information and explanations given to us, we certify that debtors balances as on 30th June, 2005 considered good and recoverable, as given below, are in agreement with the books of account. Amount (Rs. in Lakhs) Debts outstanding for more than six months 35.34 Debts outstanding for less than six months 1,617.22 Total Debts 1,652.56 For FRASER & ROSS

Chartered Accountants

Chennai November 16, 2005

M.K.Ananthanarayanan Partner

Membership No: 19521

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D.) FINANCIAL INFORMATION OF THE GROUP COMPANIES GROUP COMPANIES The group companies within the meaning of erstwhile Section 370 (1B) of the Companies Act, 1956 are as enumerated below: Un-Listed Group Companies: i. Dempo Mining Corporation Private Limited The company was incorporated on June 27, 1969. The Company is engaged in the business of mining and presently operating Bicholim Mine. The Board of Directors comprises of Mr. Shrinivas V Dempo, Mr. Soiru V Dempo, Mr. Prakash Nadkarni, and Mr. Shantaram Kundaikar. Shareholding Pattern as on March 31, 2005:

Name of the Shareholder No. of Shares % Holding M/s V.S. Dempo Holding Pvt. Limited 11,49,980 99.998 Shrinivas V. Dempo Jointly with V.S. Dempo & Co. Pvt.Ltd. 10 0.001 C.N. Kenkre Jointly with V.S.Dempo & Co. Pvt.Ltd. 10 0.001 Total 11,50,000 100.00




1527.51 702.56 (289.21)

Net Worth 2677.51 1852.56 860.79 Total Income 7813.67 6075.76 4825.62 PAT 714.47 1162.82 193.27 EPS (Rs.) 62.13 101.11 16.81 NAV Per Share (Rs.) 232.83 161.09 74.85 Face Value Per Share (Rs.) 100 100 100

The Company is not a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 nor is it under winding up. There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for economic offences against the Company. There are no litigations pending by or against the company except as disclosed under section ‘Outstanding Litigation, Defaults and Material Development. ii. Dempo Marketing Company Private Limited The company was incorporated on March 31, 1986. The Company is the Authorised Selling and Service agents for Automobiles & two wheelers. The Board of Directors comprises of Mr. Shrinivas V Dempo, Mr. Subhash V Dempo and Mr. Sudhir M Usgaoncar Shareholding Pattern as on March 31, 2005:

Name of the Shareholder No. of Shares % Holding M/s V.S. Dempo Holding Pvt. Limited 5,62,498 74.99 Shrinivas V. Dempo Jointly with V.S. Dempo & Co. Pvt.Ltd

1 0.005

C.N. Kenkre Jointly with V.S. Dempo & Co. Pvt.Ltd. 1 0.005 Mr. Subhash V Dempo 1,87,500 25.00 Total 7,50,000 100.00

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(130.41) (100.50) (63.24)

Net Worth (55.41) (25.50) 11.76 Total Income 1687.96 1358.46 1525.84 PAT (29.99) (37.26) (22.12) EPS (Rs.) (4.00) (4.97) (2.95) NAV Per Share (Rs.) (7.39) (3.40) 1.57 Face Value Per Share (Rs.) 10 10 10

The Company is not a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 nor is it under winding up. There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for economic offences against the Company. There are no litigations pending by or against the company except as disclosed under section ‘Outstanding Litigation, Defaults and Material Development. iii. Dempo Travels Private Limited The company was incorporated on November 23, 1983. The Company is engaged in the Travel business. The Board of Directors comprises of Mr. Shrinivas V Dempo, Mr. Soiru V Dempo, Mr. Manuel V Rebelo and Mr. Shantaram Kundaikar Shareholding Pattern as on March 31, 2005: Name of the Shareholder No. of

Shares % Holding

M/s V.S. Dempo & Company Pvt. Limited 998 99.8 Shrinivas V. Dempo Jointly with V.S. Dempo & Co. Pvt.Ltd. 1 0.1 C.N. Kenkre Jointly with V.S. Dempo & Co. Pvt.Ltd. 1 0.1 Total 1,000 100.00




(12.43) (15.33) (12.33)

Net Worth (11.43) (14.33) (11.33) Total Income 27.25 37.69 23.40 PAT 2.91 (3.01) (6.99) EPS (Rs.) 290.66 (300.66) (699.33) NAV Per Share (Rs.) (1,142.52) (1,433.18) (1,132.52) Face Value Per Share (Rs.) 100 100 100

The Company is not a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 nor is it under winding up. There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for economic offences against the Company. There are no litigations pending by or against the company except as disclosed under section ‘Outstanding Litigation, Defaults and Material Development.

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114

iv. Dempo Shipyards Private Limited The company was incorporated on December 1, 1999. The Company is engaged in Construction and Maintenance of inland and coastal vessels. The Board of Directors comprises of Mr. Shrinivas V. Dempo, Mr. Soiru V. Dempo, Mr. Chittaranjan N. Kenkre and Mr. Manual Rebelo. Shareholding Pattern as on March 31, 2005: Name of the Shareholder No. of

Shares % Holding

Shrinivas V. Dempo jt. with V. S. Dempo & Co. Pvt. Ltd. 1 0.02% Soiru V. Dempo jt. with V. S. Dempo & Co. Pvt. Ltd. 1 0.02% Manuel Rebelo jt. with V. S. Dempo & Co. Pvt. Ltd. 1 0.02% G. Balasubramanian jt. with V. S. Dempo & Co. Pvt. Ltd. 1 0.02% V. M. Gaitonde jt. with V. S. Dempo & Co. Pvt. Ltd. 1 0.02% Prakash Nadkarni jt. with V. S. Dempo & Co. Pvt. Ltd. 1 0.02% C. N. Kenkre jt. with V. S. Dempo & Co. Pvt. Ltd. 1 0.02% V. S. Dempo & Co. Pvt. Ltd. 1,993 39.86% Dempo Industries Pvt. Ltd. 2,000 40.00% Marmagoa Shipping & Stevedoring Co. Pvt. Ltd. 1,000 20.00% Total 5,000 100.00


in Rs. Lacs For Financial Year Ended March 31, Particulars 2005 2004 2003 Share Capital 5.00 5.00 0.01 Share Application Money 0.00 0.00 5.00 Reserves (Excluding Revaluation Reserve)

(1.17) (13.73) (12.12)

Net Worth 3.83 (8.73) (12.11) Total Income 851.92 0.04 0.11 PAT 12.26 (1.91) (3.03) EPS (Rs.) 245.17 (38.14) (43,351.00) NAV Per Share (Rs.) 76.54 (174.59) (173,045.57) Face Value Per Share (Rs.) 100 100 100


v. Dempo Shipbuilding & Engineering Private Limited The company was incorporated on November 11, 1963. The Company is engaged in Construction and repairs of inland and coastal vessels. The Board of Directors comprises of Mr. Shrinivas V. Dempo, Mr. Chittaranjan N. Kenkre and Mr. Manual Rebelo. Shareholding Pattern as on March 31, 2005: Name of the Shareholder No. of

Shares % Holding

Shrinivas V. Dempo jt. with V. S. Dempo & Co. Pvt. Ltd. 1 Negligible C. N. Kenkre jt. with V. S. Dempo & Co. Pvt. Ltd. 1 Negligible V. S. Dempo & Co. Pvt. Ltd. 215,248 100.00 Total 215,250 100.00

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Financial Highlights The Audited financial highlights for the last 3 years are as follows: in Rs. Lacs For Financial Year Ended March 31, Particulars 2005 2004 2003 Share Capital 215.25 215.25 215.25 Reserves (Excluding Revaluation Reserve)

(10.29) (153.80) (168.50)

Net Worth 204.96 61.45 46.75 Total Income 1923.50 1298.78 458.29 PAT 143.52 14.69 (34.64) EPS (Rs.) 66.67 6.83 (16.09) NAV Per Share (Rs.) 95.22 28.55 21.72 Face Value Per Share (Rs.) 100 100 100


vi. Sindhudurg Mining Corporation Private Limited The company was incorporated on April 4, 1998. The Company is has been incorporated to undertake mining operations. The Board of Directors comprises of Mr. Shrinivas V. Dempo, Mr. M.V. Rebello, Mr. Soiru V. Dempo and Mr. Sudin Usgaonkar Shareholding Pattern as on March 31, 2005:

Sr No

Name of Shareholder Number of Equity Shares

% of holding

1 Mr. Shrinivas V Dempo Jtly with V.S. Dempo & Co. Pvt. Ltd. 10 0.10% 2 Mr. Soiru V. Dempo Jtly with V.S. Dempo & Co. Pvt. Ltd. 10 0.10% 3 Mr. M.V. Rebelo Jtly with V.S. Dempo & Co. Pvt. Ltd. 10 0.10% 4 Mr. Vilas Sirdesai Jtly with V.S. Dempo & Co. Pvt. Ltd. 10 0.10% 5 Mr. Prakash Nadkarni Jtly with V.S. Dempo & Co. Pvt. Ltd. 10 0.10% 6 Mr. S. Srinivasan Jtly with V.S. Dempo & Co. Pvt. Ltd. 10 0.10% 7 Mr. C.N. Kenkre Jtly with V.S. Dempo & Co. Pvt. Ltd. 10 0.10% 8 V.S. Dempo & Co. Private Limited 9930 99.30% Total 10,000 100.00%



(551.17) (338.28) (176.91)

Net Worth (550.17) (337.28) (175.91) Total Income - - - PAT - - - EPS (Rs.) - - - NAV Per Share (Rs.) (5,501.73) (3,372.81) (1,759.08)

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Face Value Per Share (Rs.) 10 10 10 The Company is not a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 nor is it under winding up. There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for economic offences against the Company. There are no litigations pending by or against the company except as disclosed under section ‘Outstanding Litigation, Defaults and Material Development. vii. Aparant Iron and Steel Private Limited The company was incorporated on June 11, 1998. The Company is engaged in the business of manufacture of Pig Iron, etc. The Company was earlier a division of Goa Carbon Limited and was later hived of into a separate entity. The Board of Directors comprises of

Sr. No. Name Designation 1 Mr. Shrinivas V Dempo Chairman 2 Mr. Prakash D. Nadkarni Director 3 Mr. Amit K. Majumdar Director 4 Mr. Vilas V. Sardesai Director 5 Mr. Dileep Kumar Jain IFCI Ltd. Nominee 6 Mr. A.K. Shrivastava Executive Director


Name of the Shareholder No. of Shares

% Holding

Chittaranjan N. Kenkre Jointly with V.S. Dempo & Co. Pvt.Ltd. 10 Negligible Shrinivas V. Dempo Jointly with V.S. Dempo & Co. Pvt.Ltd. 10 Negligible Soiru V. Dempo Jointly with V.S. Dempo & Co. Pvt.Ltd. 10 Negligible Amit Kumar Majumdar Jointly with V.S.Dempo & Co. Pvt.Ltd. 10 Negligible G. Balasubramanian Jointly with V.S.Dempo & Co. Pvt.Ltd. 10 Negligible Vilas V. Sardesai Jointly with V.S.Dempo & Co. Pvt.Ltd. 10 Negligible Purshottam S. Mantri Jointly with V.S.Dempo & Co. Pvt.Ltd. 10 Negligible V.S.Dempo & Co. Pvt.Ltd. 5,49,99,930 99.9998 Total 5,50,00,000 100.00

Financial Highlights The Audited financial highlights for the last 3 years are as follows: In Rs. Lacs For Financial Year Ended March 31, Particulars 2005 2004 2003 Share Capital 5,500.00 4,366.00 4,366.00 Reserves (Excluding Revaluation Reserve)

(1,001.83) (1,544.62) (1,434.14)

Net Worth 4,498.17 2,821.38 2,931.86 Total Income 19,137.99 15,348.88 9,265.22 PAT (3,885.45) (380.37) (251.33) EPS (Rs.) (7.06) (0.87) (0.58) NAV Per Share (Rs.) 8.18 6.46 6.72 Face Value Per Share (Rs.) 10 10 10

The Company is not a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 nor is it under winding up. There are no defaults in meeting any statutory/bank/institutional dues, however OTS has negotiated with IFCI an OTS and the same is under implementation. By way of OTS the company shall settle the entire amount outstanding to IFCI of Rs. 3,991

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Lacs before March 2006. The Company has already made a payment of Rs. 850 Lacs towards this end. No proceedings have been initiated for economic offences against the Company. There are no litigations pending by or against the company except as disclosed under section ‘Outstanding Litigation, Defaults and Material Development. viii. Vasantrao Dempo Education and Research Foundation The company was incorporated on April 2, 1983. It is a public charitable trust and runs Educational Institutions in Goa. The Board of Trustees comprises of Mr. Shrinivas V Dempo, Mrs. Neela V Dempo and Mr. Manohar S Usgaocar Financial Highlights The Audited financial highlights for the last 3 years are as follows:

In Rs. Lacs For Financial Year Ended March 31, Particulars 2005 2004 2003 Corpus 224.05 172.05 152.05 Income & Expenditure Account 8.42 7.93 10.20 Net Worth 232.47 179.98 162.25 Total Income 31.68 14.11 13.44 Excess of Income over Expenditure

0.48 (2.27) (2.24)

No proceedings have been initiated for economic offences against the Company. There are no litigations pending by or against the company except as disclosed under section ‘Outstanding Litigation, Defaults and Material Development. VENTURES WITH WHICH PROMOTERS HAVE DISASSOCIATED IN THE LAST 3 YEARS: The Promoters have not disassociated themselves from any of the companies / firms during preceding three years However the Company’s subsidiary GCL International Limited was dissolved. GCL International Limited The Company had floated Offshore Wholly Owned Subsidiary by incorporating a Company on November 16, 1999 in Mauritius under the name and style GCL International Limited, with an initial paid up share capital of US$ 30000. The Company incurred expenses amounting to US$ 29,013.57 towards management and administrative costs and statutory charges. Since the Company could not generate any business the Company was dissolved on May 5, 2004. The balance amount amounting to US$ 986.49 was transferred to GCL. DETAILS OF OTHER COMPANIES /FIRMS WITH WHICH PROMOTERS ARE ASSOCIATED: As stated above LISTED VENTURES OF THE PROMOTERS: Besides the Issuer the Promoters of the Company have only one listed entity namely: Hindustan Foods Limited The Company was incorporated on December 31, 1984 and was awarded a certificate of commencement of business on August 24, 1987. It approached capital markets with an Initial Public Offering of Equity Shares in the year 1987. The Company currently manufactures on Contract basis for third parties. The Board of Directors comprises of:

Sr. No Name Designation 1 Mr. Shrinivas V. Dempo Chairman 2 Mr. Soiru V. Dempo Director 3 Mr. N. C. Chaudhuri Director 4 Dr. A. B. Prasad Director 5 Adv. Sudin M.Usgaonkar Director

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Shareholding Pattern as on September 30, 2005:

Name of the Shareholder No. of Shares % Holding Promoters 3,721,294 74.426 Mutual Funds & UTI 68,800 1.376 Banks & Financial Institution 7,400 0.148 Private Corporate Bodies 100,150 2.003 Indian Public 1,011,056 20.221 NRIs/ OCBs 1,202,506 1.826 Total 5,000,000 100.00


in Rs. Lacs Particulars For the Financial year Ended March 31st 2005 2004 2003 Share Capital 500.00 500.00 500.00 Reserves (Excluding Revaluation Reserve)

(570.93) (626.67) (624.16)

Net Worth (70.93) (126.67) (124.16) Total Income 237.00 142.50 212.89 PAT 49.03 (2.51) 0.85 EPS (Per Share) (Rs.) 0.98 (0.05) 0.02 NAV Per Share (Rs.) (1.42) (2.53) (2.48) Face Value Per Share (Rs.) 10 10 10

*The Equity shares of the company are listed on Bombay Stock Exchange Limited, but presently trading is suspended. The last traded market price as on November 7, 1996 was Rs. 4.50 per share. Source: http://www.bseindia.com The Company has become a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985. The Company has not made a public/ rights issue in the last 3 years. There are no defaults in meeting any statutory/bank/institutional dues except as mentioned below. No proceedings have been initiated for economic offences against the Company. The company has constituted investor grievance committee and has complied with listing agreement entered into with the Stock Exchanges. There are no litigations pending by or against the company except as disclosed under section ‘Outstanding Litigation, Defaults and Material Development. Other relevant details about the group companies There are no sales or purchase between companies in the Promoters’ group, wherein such sales or purchases exceed in value in the aggregate 10% of the total sales or purchases of the Issuer Company. The material items of income or expenditure arising out of transactions in the Promoters’ group are disclosed under “Related Party Disclosures” on Page No. ___ of this Letter of Offer. E.) CHANGES IN ACCOUNTING POLICIES IN THE LAST THREE YEARS Nil F.) MANAGEMENT’S DISCUSSION AND ANALYSIS Management’s Discussion and Analysis of Financial Condition and Results of Operations as Reflected in the Financial Statements a. Overview of the Business of GCL / Business Outlook: International competitive market environment continues to put pressure on the company’s selling prices of products. Further, in view of the sharp increase in raw material prices consequent upon the price movement

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of crude oil and steep increase in freight rates will affect the margin of the company’s products adversely. The company is making concerted effort to contain overhead cost and improve efficiencies. Key Strengths and Growth Drivers The Company is a well-established and reliable manufacturer of Calcined Petroleum Coke in the market through its sustained efforts and emphasizes on product quality, continuing improvements and competitive pricing. Research and Development is on going process resulting in discovering and implementation of new and improvised methods, concepts so as to improve the product quality, achieves cost effectiveness and optimum utilization of capacity. Although the market environment reminds to be challenging, the Company through its continuous customer centric initiative, is confident of driving growth to maintain its leadership in the industry. Operational efficiency, Cost effectiveness, increase in export market and optimum utilization of production capacity will be major factors for the business growth and profitability for year ahead. Finance and Financial Risks Financial risks could include high foreign currency exposure arising from payment for raw materials vis-à-vis export earnings. The company being a net user of foreign exchange is vulnerable to depreciation in the value of the rupee. As a measure of prudent foreign exchange management and as a matter of policy, the company does not speculate on foreign currencies except booking for forward cover for import payments. Imports on revenue account are paid, as and when due, by market purchase of foreign exchange and also partially out of export earnings. Risks and Concerns The company being manufacturer of Calcined Petroleum Coke has its usual risks associated with hazardous operations. The company endeavors to keep its safety standards at peak level. b. Significant Development Subsequent to Last Financial Period The Directors confirm that there have been no events or circumstances since the date of the last financial statements as disclosed in the Letter of Offer which materially or adversely affect or is likely affect the trading or profitability of the company, or the value of its assets, or its ability to pay liabilities within next twelve months. c. Factors that may affect Results of Operations Except as otherwise stated in this Letter of Offer, the Risk Factors given in this Letter of Offer and the following important factors could cause actual results to differ materially from the expectations include, among others:

General economic and business conditions; Company’s ability to successfully implement its strategy and its growth and expansion

plans; Factors affecting industrial activity; Increasing competition in the industry; Increases in labour costs, raw materials prices, prices of plant & machineries and

insurance premia; Manufacturers’ defects or mechanical problems with Company’s plant & machineries or

incidents caused by human error; Changes in the value of the Indian rupee and other currencies, in particular, the U.S.

Dollar; Cyclical or seasonal fluctuations in the operating results; Amount that the Company is able to realize from the clients; Changes in laws and regulations that apply to the industry; Changes in fiscal, economic or political conditions in India; Social or civil unrest or hostilities with neighboring countries or acts of international

terrorism; Changes in the foreign exchange control regulations, interest rates and tax laws in India.

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d. Discussion on Results of Operations Analysis of Financial Performance Of Goa Carbon Limited The following discussion of our financial condition and results of operations should be read together with the audited financial statements for the 15 month period ended March 31, 2003, 12months period ended March 31, 2004, and 15 months period ended June 30, 2005, including the notes thereto and the reports thereon which appear in the letter of offer. The Audited Financial Statements are prepared in accordance with the Indian Accounting Standards Summary Statement of Profit and Loss Rs. In lakhs

(15 Months) (12 Months) (15 Months) (9 Months) (12 Months) June 30, March 31, March 31, December 31, March 31, PARTICULARS 2005 2004 2003 2001 2001 Income: Sales 12,103.08 9,348.15 10,891.20 3,754.29 4,468.67 Other Income 419.10 385.89 227.80 47.33 168.22 Increase / (Decrease) in stocks 678.03 (28.31) (250.95) 213.97 (73.23) Total 13,200.21 9,705.73 10,868.05 4,015.59 4,563.66 Expenditure: Raw Material Consumed 10,372.97 7,577.14 8,060.47 2,704.30 2,983.56 Purchase of Finished Goods 631.94 - - - - Staff Cost 491.25 373.44 409.51 222.63 257.89 Other manufacturing Expenses 347.33 324.60 382.42 185.45 225.33 Administrative Expenses 367.49 344.20 386.94 236.11 173.44 Selling & Distribution Expenses 432.90 408.18 508.35 252.69 377.16 Goodwill on Amalgamation written off

- - 4.58 - -

Preliminary expenses amortized - 1.31 0.23 - - 12,643.88 9,028.87 9,752.50 3,601.18 4017.38 Earnings Before Interest, Depreciation & Tax

556.33 676.86 1,115.55 414.41 546.28

Finance Charges 557.68 418.50 431.33 84.11 116.62 Depreciation 139.89 122.65 168.99 59.96 170.71 Earnings before Tax and Extra ordinary items

(141.24) 135.71 515.23 270.34 258.95

Provision for Taxation Current Tax -- For the Year 3.25 64.10 54.41 60.25 65.50 -- Relating to earlier Years (9.73) 5.75 - - - Deferred Tax (58.54) (15.60) 41.51 (6.26) - Fringe Benefit Tax 2.38 Profit/(Loss) Before Extra Ordinary Items

(78.60) 81.46 419.31 216.35 193.45

Extra Ordinary Items - - - - - Adjustment on account of prior Period Items

- - - - -

Net Profit/ (Loss) after adjustments (78.60) 81.46 419.31 216.35 193.45 e. Comparison of Recent Financial Years / Periods with Previous Financial Years / Periods

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Financial performance for the 15-month period ended June 30, 2005 vs. Financial Year 2003-04 Revenues The Gross Turnover for the 15 months period ended June 30, 2005 was Rs.13,060.06 Lacs as compared to Rs. 10,104.35 Lacs for the 12 months period ended March 31, 2004.The total quantity sold during the 15 months period ended June 30, 2005 was 121,796 MT as compare to 1,01,431 MT sold for the 12 months period ended March 31, 2004.The Company attained its production targets as well as sales targets. Other Incomes The Other Income for the 15 months period ended June 30, 2005 was Rs.419.10 Lacs as against Rs.385.89 Lacs for the 12 months period ended March 31, 2004.The other income mainly comprises of interest income, profit on sale of raw material and exchange gains. Raw Material Consumed During the 15 months period ended June 30, 2005 the total production of CPC was 1,22,294 MT as compared to 99,200 MT for the 12 months period ended March 31, 2004, The Raw Petroleum Coke consumed was 1,66,320 MT as compared to 1,33,279 MT for the 12 months period ended March 31, 2004. Due to steep increase in raw material price and the freight rates, the Raw Material Cost has gone up by 9.7% over the previous year and the total cost of Raw Material Consumed for the 15 months period ended June 30, 2005 was Rs.10,372.97 Lacs as against Rs.7,577.14 Lacs for the 12 months period ended March 31, 2004. Manufacturing and Other Expenses The total Manufacturing and other expenses which constitutes 13.54% on the net turnover amounting to Rs.1638.97 Lacs for 15 months period ended June 30, 2005 as compared to 15.51% on the net turnover amounting to Rs. 1450.42 lacs for the 12 months period ended March 31, 2004. Interest Interest on Term Loan and Working Capital for 15 months period ended June 30, 2005 was Rs.557.68 Lacs as compared to 418.50 Lacs for the 12 months period ended March 31, 2004. The company has borrowed both Term Loan as well as working capital loan at a very competitive rate. Depreciation Depreciation for 15 months period ended June 30, 2005 was Rs.139.89 Lacs as compared to Rs.122.65 Lacs for the 12 months period ended March 31, 2004. Profitability The basic raw material required for the manufacture of final product Calcined Petroleum Coke is the by-product of refining process and consequent to the increase of crude oil price in International Market the prices of basic Raw Material and freight has gone up considerably for 15 months period ended June 30, 2005. The Raw Material cost for the 15 months period ended June 30, 2005, as a percentage on net turnover was 85.7% as compared to 81.05% for the 12 months period ended March 31, 2004. This has resulted in loss before tax of Rs.141.24 Lacs for 15 months period ended June 30, 2005 as compared to the profit of Rs.135.71 Lacs for the 12 months period ended March 31, 2004. Though the manufacturing and other expenses besides finance charges are under control during the 15 months period ended June 30, 2005 and due to this steep increase in raw material price and freight rates has resulted in loss for15 months period ended June 30, 2005. Resources During the 15 months period ended June 30, 2005, the Company had incurred a capital expenditure of Rs.82.40 Lacs as compared to Rs.43.45 Lacs for the 12 months period ended March 31, 2004. During the 15 months period ended June 30, 2005 the unsecured loan of Rs 3,300 Lacs given to the wholly owned subsidiary Company has been converted into equity shares of the company and consequently the investment has gone up from Rs.1,024.62 Lacs to Rs.4,324.62 Lacs for 15 months period ended June 30, 2005. Due to optimum utilization of credit period given by Raw Material suppliers the net current Assets has Come down to Rs.5,785.75 lakes for the 15 months period ended June 30, 2005 as compared to Rs.7,331.89 lakes 12 months period ended March 31, 2004. Financial performance for the Financial Year 2003-04 vs. 15-month period ended March 31, 2003

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Revenues The Gross Turnover for the 12 months period ended March 31, 2004 was Rs.10, 104.35 Lacs as compared to Rs. 11,814.81 Lacs for the 15 months period ended March 31, 2003.The total quantity sold during the 12 months period ended March 31, 2004 was 101,431 MT as compared to 1,23,569 MT sold for the 15 months period ended March 31, 2003. Sales turnover was higher by 7.29% on an annualized basis. The net selling price of the CPC per ton has gone up by 4.56% over the previous period. Other Incomes The Other Income for the 12 months period ended March 31, 2004 was Rs.385.89 Lacs as against Rs.227.80 Lacs for the 15 months period ended March 31, 2003.The other income mainly comprises of interest income, profit on sale of raw material and exchange gains. The exchange gains for the 12 months period ended March 31, 2004 was Rs 289.59 Lacs as compared to Rs 134.96 Lacs for the 15 months period ended March 31, 2003. Other income was higher by 111.75% on an annualized basis. Raw Material Consumed During the 12 months period ended March 31, 2004 the total production of CPC was 99,200 MT as compared to 118,057 MT for the 15 months period ended March 31, 2005, The raw material consumed was 1,33,279 MT as compared to 1,57,764 MT for the 15 months period ended March 31, 2003. Due to steep increase in raw material price and the freight rates, the Raw Material Cost has gone up by 11.27% over the previous period and the total cost Raw Material Consumed for the 12 months period ended March 31, 2004 was Rs.7,577.14 Lacs as against Rs.8,060.47 Lacs for the 15 months period ended March 31, 2003. Manufacturing and Other Expenses The total Manufacturing and other expenses which constitutes 15.51% on the net turnover amounting to Rs.1450.42 Lacs for 12 months period ended March 31, 2004 as compared to 15.49% on the net turnover amounting to Rs.1687.22 lacs for the 15 months period ended March 31, 2003. Interest Interest on Term Loan and Working Capital for 12 months period ended March 31, 2004 was Rs. 418.50 Lacs as compared to 431.33 Lacs for the 15 months period ended March 31, 2003. The company has borrowed both Term Loan as well as working capital loan at a very competitive rate. Depreciation Depreciation for 12 months period ended March 31, 2004 was Rs.122.65 Lacs as compared to Rs.168.99 Lacs for the 15 months period ended March 31, 2003. Profitability The basic raw material required for the manufacture of final product Calcined Petroleum Coke is the by-product of refining process and consequent to the increase of crude oil price in International Market the prices of basic raw material and freight has gone up considerably. The Raw Material cost for the 12 months period ended March 31, 2004, as a percentage on net turnover was 81.05% as compared to 74.00% for the 15 months period ended March 31, 2003. This has resulted in profit before tax of Rs.135.71 Lacs for 12 months period ended March 31, 2004 as compared to the profit of Rs. 515.23 Lacs for the 15 months period ended March 31, 2003. Though the manufacturing and other expenses besides finance charges are under control during the 12 months period ended March 31, 2004, due to this steep increase in raw material price and freight rates has resulted in a profit of Rs 135.71 Lacs as compared to Rs 515.23 Lacs. Resources During the 12 months period ended March 31, 2004, the Company had incurred a capital expenditure of Rs. 43.45 Lacs as compared to Rs.127.20 Lacs for the 15 months period ended March 31, 2003. The working capital advances availed from the Banks has gone up to Rs 5,130.52 Lacs as compared to Rs 2,696.82 Lacs for the 15 months period ended March 31, 2003. Internal Control and Adequacy

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Company has an adequate internal control system commensurate with its size. Our Company’s systems and control address

Implementation of management policies to ensure that the transactions have been accurately recorded and promptly reported.

Reviews compliance with statues. Operational efficiency

The Internal Audit Department carries out the Audit in the above areas and also Post Audit checks and ensures the adequacy of internal control through reviews. Their reports are submitted to and discussed with the audit Committee of Directors. An analysis of reasons for the changes in significant items of income and expenditure is given hereunder:

1. Unusual or infrequent events or transactions There have been no events, to the best of our knowledge, other than as described in this Letter of Offer, which may be called “unusual” or “infrequent”.

2. Significant economic changes that materially affected or are likely to affect income from continuing operations There have been no significant changes in the laws governing the Calcined Petroleum Coke / Calcining industry in the recent past. The Company’s raw material prices are driven by international crude oil prices or raw materials from local / imports from refineries / international trades. The prices are prone to fluctuations due to change in crude oil prices and foreign exchange fluctuations. Similarly, the prices of finished products of the company Calcined Petroleum Coke are also driven by international prices and import tariff structures. The margins on these products vary widely without any consistency; the revenues of the company will therefore fluctuate from year to year. These economic changes could significantly affect income from continuing operations. However, a lot of aluminuim smelters, green field ventures are proposed to be setup in India, reason being the recent spurt in demand and firm international prices coupled with good quality ore being available in India. The same shall lead to an increased demand for CPC.

3. Known trends or Uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations Uncertainty prevails in availability of continuous supply of raw materials of the Company. Occasionally, few raw materials though available are at uneconomical prices, which result in pressure on margins and values. In addition to above, high foreign currency exposure which is vulnerable to depreciation of Rupee and expected hardening of interest rates may affect company’s operating, margins and profits. Other than as described in this Letter of Offer, to our knowledge, there are no known trends or uncertainties that have or had or are expected to have a materially adverse impact on revenue or income of the Company from continuing operations.

4. Future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known The recent trend in continuous increase in International prices of raw materials compared to the prices of finished products may further shrink margins in future. Following the steep increase in price of crude oil during the past years, the cost of raw material also rose substantially. With reduction of customs duty from 20% to 10% and by entering long-term contract with the raw petroleum coke suppliers for supply of raw material, the reasonable portion of such increase will be curtailed by the Company. On the financial front the company is taking steps towards better working capital management and financial re-structuring for reducing the interest cost. The Company is continuously working to create efficient processes resulting in cost reduction and have a better control over its activities. Other than as described in this Letter of Offer, to our knowledge, there are no known factors, which will affect the future relationship between the costs and income, or which will have a material impact on the operations and finances of the Company.

5. The extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices The increase / decrease in turnover is only on account of increase in sales prices and volume.

6. Total turnover of each major industry segment in which the Company operated The Company is operating only in one segments namely CPC. However, there are no published data available to the Company for total turnover of the Industry.

7. Status of any publicly as announced new products a business segment

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The company has firm plans in place to go in for the projects envisaged under headings Cost of Project. Besides there has been no announcement of any new products or business segment.

8. The extent to which the business is Seasonal The business of the company is not seasonal. However there are significant variations in the quarterly revenues and profits because of various factors like general economic conditions, scheduled plant shut down etc.

9. Dependence on single or few suppliers / customers The company sources all requirements of raw materials from leading refineries and from across the globe including domestic refineries and thus the companies operations are risk prone from supply side, RPC produced from sweet crude being a scarce commodity especially in an era of high crude prices where blending of crude is necessary for enhancing refinery throughput and GRMs. At the same time there is no threat of excessive dependence from any single customer. Most of the raw materials and consumables procured by the company both from domestic and international sources from manufacturers who are dominant suppliers. Domestic supply of Raw Petroleum Coke includes Indian Oil Corporation Baruni and Bongaigaon Refinery and Petrochemicals Limited. The company’s products are sold to a wide group of customers predominantly Aluminium Smelters. However, the Goa plant of the company is supplying major portion of finished product to Aluminium Pechiney, France based on long term contract entered with the company. The company does not foresee business risk arising from the customers.

10. Competitive conditions The Company is in the business of manufacture and sale of Calcined Petroleum Coke. Calcined Petroleum Coke is also manufactured by Rain Calcining Limited, India Carbon Limited and other small regional players. In addition to the above there are three refineries integrated calciners, Barauni, Bongigaon, Numaligarh also manufacturing CPC and it effects the domestic CPC market with its lower price strategy. The competition also comes from imports by traders. The company expects the competition to intensity from other calciners. Being a specialized product company, with expertise in the CPC, strong existing relationships and a strong marketing set up, the company would be able to manage competitive conditions to its advantage.

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VI. LEGAL AND OTHER INFORMATION A.) OUTSTANDING LITIGATION, DEFAULTS AND MATERIAL DEVELOPMENTS The company certifies that except as stated herein, there are no:

Other pending litigations against the company. Outstanding litigations, defaults etc pertaining to matter likely to affect operations and finances of

the company including prosecution under any enactment in respect of Schedule XIII of the Companies Act 1956 (1 of 1956).

Such cases of pending litigations, defaults etc in respect of Companies/firms/ventures with which the promoters were associated in the past but are no longer associated, and their names continue to be associated with particular litigation.

Disciplinary action/ investigation has been taken by Securities and Exchange Board of India(SEBI)/ Stock Exchanges against the Company, its directors , promoters and their other business ventures (irrespective of the fact whether or not they fall under the purview of section 370(1B) of the Companies Act 1956.

Cases against the Company or its Promoters of economic offences in which penalties were imposed on promoters.

Pending litigations, defaults, non payment of Statutory dues, proceedings initiated for economic offences/civil offences, any disciplinary action taken by the Board /Stock Exchanges against the Company/Promoters and their business ventures/Directors other than those mentioned in this Letter of Offer and that no litigations have arisen and the Company and its Directors take full responsibility of the information mentioned in the Letter of Offer.

In the opinion of the Company there have been no material developments after the date of latest balance sheet, which would have an impact on the performance and the prospects of the Company other than what has been set out in this Letter of Offer. a. Outstanding Litigations involving Goa Carbon Limited: Filed against the Company i. Criminal Laws:

Parties to Suit

Subject matter of the Suit/Complaint

Suit No.

Court at which

Suit/Complaint filed

Present status Remarks Amount Involved

(Rs. in Lakhs)

State Vs GCL

Police have filed a case against the Occupier and Factory Manager of Bilaspur Plant under Section 304(A) of the I.P.C. alleging negligence in the maintenance of plant and machinery resulting in the death of a contract labourer Lt. Ratan Yadav.

4292/2002

JMFC, Bilaspur.

The Court yet to fix the date for hearing of this case.

-

ii. Securities Law: Nil iii. Statutory Laws including Tax Disputes:

Income Tax Disputes: The company has Income Tax demands to the sum of Rs. 11,07,62,021 against which the company has made payments to the tune of Rs. 10,75,33,826 (as of November 30, 2005) The Company disputes the entire amount of Rs. 11,07,62,021 for which Appeals have been preferred before the Bombay High Court (Goa Bench) and the said Appeals have been admitted by the Hon’ble Court. The major part of the disputed Income Tax demands in the Appellate proceedings (Rs. 10,80,96,881) are with reference to

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incentive provisions of Sec 80HHC of Income Tax Act, 1961, which the Assessing Authorities had denied allowable on the export profits of the Company for the period F.Y. 1992 to F.Y. 2000-01. Central Excise Law:

Sr. No.

Show Cause Notice No. &

Date

Brief description of the case Status

1.

Show Cause Notice No. F. No. V (CH: 72) 15-194/BIL/JC/ 2003/Adj/19232 dated 10-12-03 received from the Joint Commissioner of Customs and Central Excise, Tik-rapara, Raipur.

Show Cause Notice for the alleged i) Cenvant Credit of Rs.1,16,842/- availed during the period from September 2002 to June 2003. ii) Transfer of Rs. 1,978/- of PLA account and Cenvant Credit of Rs. 1,15,984/- to Co’s account. iii) Credit of Rs. 4,05,765/- wrongly availed and utilized for removable of excisable goods. The Company was asked to show cause to the Joint Commissioner, Central Excise, Tikrapara, Raipur as to why above credit amounts be disallowed and recovered from the Company and penalty be imposed.

The Company has given detailed reply on 03-02-2004 to the show cause notice of the Joint Commissioner, Central Excise, Raipur, refuting the allegations and requested to fix personal hearing in this matter. No date of hearing is fixed so far.

Under Customs Law:

Sr. No.

Show Cause Notice No. & Date

Brief description of the case Status

1.

Show Cause Notice C.No. VIII-Cus-6 (183) PDP/03/3921 dated 23-8-2004 received from the Deputy Commissioner, Custom House, Paradeep.

The Company has imported consignment of 2084 MT. of Raw Petroleum Coke and said consignment was invoiced for 2071.913 MT. after adjusting 12.087 MT. as moisture content at 0.58% which exceeds penalty free percentage of 8% as per agreement. The Department has determined the said moisture content at 0.76% and accordingly issued show cause notice asking why the differential duty of Rs.20,008/- under Section 28 of Customs Act, 1962 with interest should not be recovered from the Company.

In reply to the show cause notice, vide letter dated 09.09.2004, the Company had raised issues about the sustainability of the impugned notice in law and even if the matter is tenable in law, then question of the basis of value for the purpose of duty calculation. The Deputy Commissioner of Customs, Paradeep, was requested to fix, time and date of personal hearing.

iv. Civil Laws and Arbitration Matters:

Sr. No.

Parties to Suit


Suit No.

Court at which


Present status Amount Involved

(Rs. in Lakhs)

1.

Saraswat Co-op. Bank Ltd v/s. Mr.Arun Bandekar & others (GCL is respondent No. 4)

Saraswat Co-op. Bank Ltd. had filed a case against Mr. Arun Bandekar (de-ceased by his legal heirs & representatives) & others. M/s. Goa Carbon Ltd. is opponent No. 4. The Saraswat Co-op. Bank Ltd. alleges

Misc. Appeal No. 29/2003

Before Maharashtra State Appellate Court at Mumbai

In response to the application filed in December, 2000 to challenge jurisdiction of the Court, the Court has passed the Order on 9.7.2002 and ordered to return the plaint to disputant for presentation before

3.24

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Sr. No.

Parties to Suit


Suit No.

Court at which



(Rs. in Lakhs)

that an amount of Rs.3,24,329/- is due and payable from GCL towards various outstanding bills as on 28.02.95 together with interest from 01.03.95 till payment.

the proper forum as Court found that dispute is beyond jurisdiction of Court. Since, Saraswat Co-op. Bank Ltd. is not Society as per the definition of Section 2 of the Multi-State Co-operative Societies Act. Saraswat Co-op. Bank Ltd. have filed the appeal before the Maharashtra State Co-operative Appellate Court at Mumbai against the order of the said Co-operative Court at Mumbai.

Claim against the Company:

Sr. No.

Claimant Description Remarks Amount Involved (Rs. in Lakhs)

1.

Mr. O. P. Maniyar

Letter dated 30.03.2005 received from Mr. O. P. Maniyar regarding alleged unsettled dues amounting to Rs.1,94,09,397/- of "Maniyars" payable by the Company, invoking Clause 9 of the Share Sale and Purchase Agreement dated 07.05.2001 and thereby appointing 'Arbitrator'.

In terms of Clause 9.1 of the 'Share Sale and Purchase Agreement' dated 7th May 2001, prior to arbitration proceedings in the dispute raised by 'Maniyars', a meeting was held for consultations/discussions for resolving the dispute amicably on 8th June 2005.

194.09

v. Others: NIL Filed by the Company 1. Criminal Laws: Nil 2. Securities Laws: Nil 3. Statutory Laws including Tax Disputes: Nil 4. Civil and Arbitration Matters:

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Sr.

No.

Parties to Suit


Suit No.

Court at which


Present status Amount Involved (Rs. in Lakhs)

1.

GCL v/s. Shamb-haji Desai & others

Recovery of hire charges, cost of repairs, and incidental charges being the damages for loss suffered by keeping the Truck No. GA-02-T-5239 (Company has given truck under hire agreement to Mr.Shambhaji Desai. He has defaulted in payment of hire charges. The truck met with an accident and Company repaired the same. The hire charges and cost of repairs amounting to Rs. 1,38,660.36 have not been paid to the Company).

Special Civil Suit No. 67/ 92A

Civil Judge, Sr. Division, Panaji-Goa.

The Civil Judge Sr. Division Panaji –Goa has decreed Special Civil Suit No. 67/92A vide its Judgment dated 17.07.2002. In pursuance of the decree dated 17.07.2002 the GCL has filed Execution Application No. 14/03/A. The Summons in the Execution Application has been published against Shanbhaji Desai & Others on 07.12.2004. The matter is coming up for hearing on 21.01.2006.

1.38

2.

GCL v/s. Priyanka Sardessai

Company has given truck under Hire Agreement to Mrs. Priyanka Sardesai. She has defaulted in payment of hire charges inspite of repeated requests. The truck was also not produced for inspection nor parked at the place where it is required to be parked as per the agreement and is not traceable. A case has been filed for Criminal breach of trust before the Chief Judicial Magistrate, Panaji, on 10.01.95. It was prayed that the accused be tried and punished and pending the hearing and disposal of the Case, the vehicle be seized from the accused. In

Spl. Civil Suit No.: 167/97/B


At the hearing held on 10.01.2002, the case has been adjourned Sine Die.

5.83

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129

Sr.

No.

Parties to Suit


Suit No.

Court at which



pursuance of the Order dated 24.02.1997 passed by the High Court Bench (Panaji) Goa GCL filed Civil Suit on 24.10.1997 for recovery of Rs.5,83,042.19.

3.

GCL v/s. Puneet Advisory Services Pvt. Ltd., Mumbai.

Company had appointed M/s. Puneet Advisory Services Pvt. Ltd., Mumbai as sole arranger & advisors for the private placement of equity shares upto Rs.27 Crores on 14.8.1997. However, they could procure subscription for sum of Rs.273.10 Lacs only and hence failed to fulfill the terms of contract. Company had received notice from Dave Girish & Co., Advocates, Mumbai on behalf of Puneet Advisory Services Pvt. Ltd. Under Section 434 of the Companies Act, 1956 claiming amount of Rs. 37,31,200/-. In reply to the notice Company had filed a suit to recover sum of Rs. 17,29,90,608/- consisting of loan taken by the Company, interest paid and escalation in project cost for non-performance of contract.

87/ 2000


Hearing adjourned to February 4, 2006.

1,729.90 plus Interest

4

GCL v/s. Bellary Steels & Alloys Ltd.

Company had supplied 10 MT. Of Calcined Petroleum Coke to Bellary Steels and Alloys Ltd. vide invoice No. 523 dated

Spl Civil Suit No.: 41/2001/B


At the hearing held on 11.10.2004, the case has been adjourned Sine Die.

10.01

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130

Sr.

No.

Parties to Suit


Suit No.

Court at which



03.03.1999 valued for Rs. 1,00,572/-which was due from 02.04.1999. Party has not made payments inspite of repeated requests/reminders for the last 2 years. The Civil Suit has been filed in Civil Court, Sr. Division, Panaji-Goa, for recovery of Rs. 1,40,800.00 being principle amount of Rs. 1,00,572/- plus interest @ 20% p.a. being Rs. 40,228.80 from 02.04.1999 till 02.04.2001 and further interest @20% p.a. on principle amount from 3.4.2001 till actual payment.

5.

GCL v/s. Mysore Kirloskar Ltd., Yantra-pur.

Company has supplied 20 MT. of Calcined Petroleum Coke to M/s. Mysore Kirloskar Ltd. vide invoice No. 228 dated 17.08.2000 and No. 303 dated 23.09.2000 for total value for Rs.1,99,056/- which was due from 09.10.2000 and 22.11.2000 respectively. Party has not made payments inspite of repeated requests/reminders. The Civil Suit has been filed in Civil Court, Sr.Division, Panaji-Goa, for recovery of Rs. 2,27,587.14 being principle amount of Rs. 1,99,056.00 plus interest @20% p.a on Rs. 99,528.00 from 09.10.2000 till

Spl. Civil Suit No.: 73/2001/B


Pleadings of the parties are completed and the matter is adjourned to February 7, 2006 for recording evidence og GCL witness.

1.99

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131

Sr.

No.

Parties to Suit


Suit No.

Court at which



19.7.2001 and on Rs. 99,528.00 from 22.11.2000 till 19.7.2001 and further interest 20% p.a. till actual payment.

5. Others: Nil Amounts Owed to Small Scale Undertakings None of the persons selling goods and materials and/or rendering services as claimed to be small-scale undertaking. Defaults There are no defaults outstanding in meeting statutory dues, institutional dues and towards instrument holders like debentures, fixed deposits etc. b. Litigations involving Subsidiary Companies: There are 5 pending legal cases involving our wholly owned Subsidiary Company, Paradeep Carbons Limited. The details are as follows: Pertaining to Statutory Laws:

Sr. No.

Name of the Authority

Description Case No. Remarks Showing the Present Status

Amount Involved

(Rs. in Lakhs) 1. The Asstt.

Commissioner of Central Excise & Customs, Cuttack Division

From Non-inclusion of loading and forwarding charges in the transaction value A/c NALCO Excise duty involved Rs. 1,89,248.00

V(27)4/30/ 11/A/CTC/ 2004/6164 dated 21.10.04

Hearing for the matter was completed on 29.11.2005 and the decision is still awaited.

1.89

2. Dy. Commissioner, Central Excise & Customs, Cuttack Division, CTC

Interest on Excise duty as per the Rule-8 of Central Excise Rule-2002 & Para-1 & 2 Part-V of Chapter-7 of CBECS Manual.

IV (1602/Tech/ CTC/2004/ 3292 dt. September 9, 2005

A letter No. C NOIV916)02/ TECH/CTC/2004/ 3292 dated 09.09.05 has been received from Dy. Commissioner, Central Excise & Customs, Cuttack wherein Company has been advised to make the payment on interest without making further delay. The payment is to be made w.e.f. 03.11.2003.

-

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132

3. Sales tax Officer, Jagatsinghpur Circle, Paradeep

Matter related to Entry Tax on Imported RPC.

Payment of entry tax on imported RPC is due w.e.f. April 2002.

GCL has not been paying Entry Tax on imported RPC on the basis of challenge of such levy made by M/s. PPL at the Apex Court, which is in Adjudication.

-

Pertaining to Civil Laws:

Sr. No.

Name of the

Authority


Amount Involved (Rs. in Lakhs)

1. Land dispute with IOC & Others

A part of Company’s land at southern side of raw material yard which also include a water-reservoir developed by the Company is lying under litigation as IOC, IDCO & Others filed a writ petition showing that the same was allotted by the land acquisition officer IDCO to IOC. The Company has filed a case before Hon’ble High Court, Cuttack and a Stay Order has been obtained to maintain the status quo till finalization of the case.

OJC No. 4677 of 2000

Pending at City Civil court

-

2. O.H.R.C A case was lodged under Human Right Commission, based on a Oriya paper news wherein the villagers of the near by village-Bhittargarh had mentioned that they are badly affected by pollution from our factory.

OHRC-758/2004

The different agencies i.e. concerned A.D.M. Tahasildar, Asstt. District Medical Officer and Environmental Engineer from State Pollution Control Board have already inspected the Plant. On receipt of the report from the above authorities, the OHRC will call for hearing and will clear the case. Company has already submitted a detailed report in this regard to both the SPCB and OHRC. SPCB have submitted their report to the Sr. Scientist, Forest &

-

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133

Sr. No.

Name of the

Authority



Environment Department which is in Companys favour. Based on the same Sr. Scientist, Forest& Environment Department will submit their report to OHRC. Further, Company has have obtained consent from OSPCB for the period upto 31.03.2006. Company has modified its Pollution Control System and have installed & commissioned two bag Filters to restrict the SPM in the ambient within the norms of OSPCB

Defaults The Company has not defaulted in meeting any statutory dues, institutional dues or bank dues. The Company has not defaulted in making any payment/refunds for debentures, fixed deposits and interest on debentures and fixed deposits. c. Outstanding Litigations involving Directors / Promoter Companies: i. V. S. Dempo & Co. Private Limited Filed against the Company Criminal Laws: Parties to Suit


Suit No.

Court at which Suit/Complaint filed

Present status


Remarks

S. S. H. Rehman, ITC & others v/s. V. S. Dempo & Co. Pvt. Ltd.

Criminal Appeal filed by the Petitioner against the Order of the Bombay High Court, seeking quashing of the Order of the J. M. F. C., Panaji.

SLP (Crl) No. 3176/2003

Supreme Court Final arguments pending.

- The case is one of the outcomes of ITC case. The trial court had issued a process against which the accused succeeded in getting stay from the High Court, which is challenged in Supreme Court by the Company

Dempo Group

134

Civil Laws: Parties to Suit


Suit No.



(Rs. in Lakhs)

Remarks

Miss Madhavi Laxman Bandekar v/s. V. S. Dempo & Co. Pvt. Ltd. & Ors. AND Rajaram Bandekar Sirigao Mines P. Ltd. v/s. V. S. Dempo & Co. Pvt. Ltd.

The suit was filed for recovery of money. Appeal preferred by the Appellants for dismissing the decree is pending

First Appeal No. 118/2004 AND First Appeal No. 161/2004

High Court

Suit No. 29/94 A was decreed for Rs. 25.91 lakhs with interest Bandekars filed the present appeal against the decree.

25.91

-

Village Panchayat of Surla & Ors. V/s. State of Goa & Ors.

Petition filed by the Village Panchayat of Surla against all mining companies operating in the region praying the desiltation of the Surla Nallah and tributaries and payment of compensation towards the crop loss to the cultivators.

W. P. No. 443/2004

High Court

By its Order the High Court called for assessment of compensation by Zonal Agricultural Officer.

Estimated liability of around Rs. 2.5 Lacs for damage to agricultural properties & removal of silt from watercourses.

-

Narendra Y. Thali v/s. Quarter Enterprises & Ors.

This is a Suit filed by the Plaintiffs against the Defendants wherein the Defendant No. 3 is Dempo Group of Companies under The Specific Relief Act 1963 directing the Defendants to deliver the vacant possession of

C.M.A. No. 40/98/B in S.C.S. No. 34/98/B (PANAJI)

Before the Civil Judge, Sr. Judge at Panaji

The matter is Sine die

Rs.14.49 Lacs to be paid by Defendant No. 1 and 2 if the Plaintiff succeeds in the matter.

-

Goa Carbon Limited

135

Parties to Suit


Suit No.



(Rs. in Lakhs)

Remarks

Flat No. G-5, G-6 and F5-6 n the Building known as `Riverview Residency’ situated at Ribandar, Goa which the Plaintiffs alleges to have purchased the same from the Defendant No. 1 and 2.

Premalata J. Natekar & Ors. V/s. Jaganath V. Manerkar & Ors.

Suit for Declaration & perpetual injunction. The Plaintiffs are the sisters of Defendant No. 1 Manerkar and of Mrs. Pangam, from whom the Company obtained on lease the area of Sinori Loading point & Jetty. The Plaintiffs claim to be one of the legal heirs of Late V. J. Manerkar. The Plaintiffs claim their right for 1/4th of the property which includes the property leased by Mr. Pangam.

S.C.S. No. 31/96/A

Civil Judge, Sr. Divn., Bicholim-Goa.

The matter is for evidence of the Plaintiff.

- -

Shri Datta Naik v/s. Shivrai K. Dessai & Ors. (V. S. Dempo & Co. Pvt. Ltd.

The Petitioner is a tenant claiming compensation against V. S. Dempo & Co. Pvt. Ltd. and Others for causing damages due to

R.C.S. No. 28/2000

Civil Judge, Jr. Divn., Sanguem-Goa.

The matter is for evidence

0.22 -

Dempo Group

136

Parties to Suit


Suit No.



(Rs. in Lakhs)

Remarks

mining activities.

Pia Sociedade Salesiana De Sao Joao Bosco & anr. V/s. Smt. Jai Kishori Sahib & anr.

The above Civil Miscellaneous Application was filed by the Applicant Pia Sociedade Salesiana De Sao Joao Bosco & anr. for setting aside the Consent Terms and Consent Decree dated 31.10.2001.

C.M.A. No. 01/2005 A in R.C.S. No. 152/2000/A

Civil Judge, Sr. Divn., Quepem-Goa.

Fixed for Order on application filed by the applicant for cross-examining the deponent who has sworn in an affidavit supporting the case i.e. its case of respondent no.1

- Suit for Injunction

Kalindi Ramrai Naik Pokle & 2 Ors. V/s. V. S. Dempo & Co. Pvt. Ltd. & 4 Others.

This is a matter for declaration of tenancy u/s. 7 along with an application for temporary injunction u/s. 8A of the Goa, Daman & Diu Tenancy Act 1964 in respect of a property surveyed under S. No. 104/2 & 105/1 of Village Bandora of Ponda Taluka.

Case No. JM-I/TNC/ BAN/14/04

Before the Joint Mamlatdar (I) of Ponda

The matter is fixed for reply on the application made by the Applicants for bringing the legal heirs on record of Respondent No. 4.

- Suit for Injunction

Filed by the Company Criminal Laws: Opposite Parties to Suit


Suit No.


Present status

Amount Involved

(Rs. in Lakhs)

Remarks

I.T.C. Ltd. & 9 Ors.

This is a Private Criminal Case u/s. 120 (B), 406, 409, 420 read with Sec. 34 & 109 of IPC (i.e. dishonesty, cheating and mis-appropriation of funds) filed against ITC Ltd. The

Cri. Case No. 39/2001/C

Judicial Magistrate First Class,Panaji

Warrant issued

- -

Goa Carbon Limited

137

Complainant claims that the Accused have fraudently and dishonestly induced the Complainant to part with a sum of Rs.3.57 crores by making false representation that the funds of the Complainant would be utilized as a financial arrangement to facilitate the reconstruction plans as recommended by the Consultants of the Accused.

Arbitration Matters: Opposite Parties to Suit


Suit No.


Present status

Amount Involved

(Rs. in Lakhs)

Remarks

Sujata Enterprises & Ors.

Arbitral reference has been sought through an application of the High Court of Bombay against Sujata Enterprises which has been allowed by the Hon’ble High Court of Bombay at Panaji and Sri G. D. Kamat, Retd. Chief Justice of Gujarat High Court has been named Arbitrator by the Court.

AAR/11/2004 High Court of Bombay, Panaji Bench.

The Arbitrator is yet to start arbitral proceedings.

Rs. 4.65 Lakhs along with interest @ 12% from the respective dates of resultant loss.

-

Civil Laws:

Opposite Parties to Suit


Suit No.



Remarks

The Board of Trustees of the Port of Marmagoa

This is a First Appeal filed by the Company against the Judgement of the Trial Court whereby the Suit

Appeal No.: 52/2003 with C.M.A. No. 47/2003

High Court of Bombay, Panaji Bench.

The matter is fixed for final hearing in the items listed on the High Court board.

24.40 plus Interest

-

Dempo Group

138



Suit No.



Remarks

of the original Plaintiff is decreed for a principle amount of Rs. 24,39,833/- along with interest @ 6% p.a. from the date of filing till its realization. The original suit was filed by the appellant for recovery of incremental charges for stocking the minerals on the plot allotted by the Board.

The Board of Trustees

The Company was allotted plot at Berth No. 9 of MPT to use for storage. The Company utilized the plot for storage of quantity more than that expected by the Board. Inspite of this, the Board issued a letter amending and reducing the aforesaid allotment of land to the Company. This is a writ petition wherein the Company has prayed for an Order or direction commanding the Respondents to withdraw the communication dated 26/09/2003-bearing No.

W.P. No. 612/2003

High Court of Bombay, Panaji Bench.

The matter is fixed for final hearing in the items listed on the High Court board

- -

Goa Carbon Limited

139



Suit No.



Remarks

TN/507/2003/432 and communication dated 09/10/2003-bearing No. TN/507/2003/520 for the plot finalization.

Administrator of Communidade, North

The Administrator of Communidade by Order dated 06.12.1996 prohibited the Company to carry out any operations including removal of ore stacked in the area of Survey No. 101 of Navelim Village which it holds from Shri. Tukaram & Pundalik Tukaram Gawas of Navelim.

Appeal No. 18/97

Administrative Tribunal, Panaji

Appeal against the said Order is pending for decision.

- -

Shamsundar Naik & Ors.

The defendant interfered in the operation of the Company in Survey No. 182/1 of Sinori, Navelim. Company has filed a suit for perpetual injunction restricting the defendants from obstructing the Company from using the said plot.

R.C.S. No. 31/04/C

Civil Judge, Sr. Division, Bicholim-Goa

Temporary Injunction received. The suit is coming up for evidence on 21.12.2005.

- -

Janu Dadu Zangli & 3 Ors.

Janu D. Zangli & others had entered into an agreement with the Company to shift their

S.C.S No. 18/2005/A

Civil Judge, Sr. Division, Quepem-Goa.

Suit is stated for orders of the temporary mandatory injunction.

- -

Dempo Group

140



Suit No.



Remarks

belongings from Survey No. 38/2 to the alternative area of their choice provided by the Company in Cormonem. The Company provided them the area and paid for 50% of the cost of construction of houses. They assured construction of houses by 31.03.2005, however, they have failed to do so and hand over the possession of the existing houses to the Company. The Company then filed a suit for specific performance of the agreement-dated 31.03.2004.

I.T.C. Ltd., This is a Suit for recovery of money in the sum of Rs.8,97,42,140/- + interest @ 24% p.a. from May 1997 till the date of payment.

(S.C.S. No.46/2000/A)

Civil Judge, Sr. Division, Panaji

Due for evidence of the plaintiff

- -

Ramdas S.Naik

This is a counter-claim filed by the customer.

(S.C.S. No.15/1999)

Civil Judge, Sr. Division, Quepem

Awaited for hearing

- -

Manoj V.S. Dessai

This is a counter-claim filed by the customer.

(S.C.S. No. /1999)

Civil Judge, Sr. Division, Quepem

Awaited for hearing

- -

William Gomes & 2 Ors

This is an application u/s 24-A of The Mines & Minerals (Regulation & Development)

(Case No.1-97/Mining/COMP/AC).

Addl. Collector, Margao

Pending for Orders

- -

Goa Carbon Limited

141



Suit No.



Remarks

Act 1957 r/w Sec. 72(2) & (4) of the Mineral Concession Rules 1960 for determining compensation for disturbance of surface rights belonging to the Respondent. The matter is fixed for written submissions of the Applicant.

Communidade of Navelim

This is an application u/s 24-A of The Mines & Minerals (Regulation & Development) Act 1957 r/w Sec. 72(2) & (4) of the Mineral Concession Rules 1960 in respect of the property surveyed under S.No.136/1 & 137/1 of Village Navelim, Bicholim belonging to the Communidade of Navelim & 41 others

(Case No.MINING/AC/3/97)

Addl. Collector, Panaji

The matter has been referred back to the Administrative Tribunal for getting proper administration Order regarding approval of terms of compromise entered into by and between V S. Dempo & Co. and the Communidade of Navelim.

- -

Union of India & Others

This Special Leave Petition is filed by V.S.D & D.M.C. along with others against the Judgment & Order dated 20/6/1997 passed by the Bombay High Court at Panaji in the matter of abolition of Mining Leases.

SLP No.23827/1997 arising out of W.P. Nos.232/89, 233/89 & 234/89

Supreme Court of India, New Delhi

The matter is for final hearing

- -

Dempo Group

142

ii. Dempo Brothers Private Limited There are no outstanding litigations, disputes, non-payment of statutory dues, over dues to banks / financial institutions, defaults against banks / financial institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued, defaults in creation of full security as per terms of issue, other liabilities, proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (i) of Part I of Schedule XIII of the Companies Act, 1956) against the promoters and director of the company, except the following: Filed against the Company: Nil Filed by the Company Civil Laws: Parties to Suit


Suit No.


Present status


Remarks

Surendra Dempo (Applicant) Vs. Gopika V. Dempo, Vasantrao Dempo (Estate Leaver) and Dempo Brothers Pvt. Ltd. (Intervenor)

A subsisting claim to the tune of Rs. 16 Lakhs filed in the ongoing Inventory proceedings of the property of deceased Mrs. Gopika V. Dempo.

No. 21/2000/B

Civil Judge, Sr. Division, Panaji-Goa

Enquiry on Intervening Application

16.00 -

iii. Marmagoa Shipping and Stevedoring Company Private Limited There are no outstanding litigations, disputes, non-payment of statutory dues, over dues to banks / financial institutions, defaults against banks / financial institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued, defaults in creation of full security as per terms of issue, other liabilities, proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (i) of Part I of Schedule XIII of the Companies Act, 1956) against the promoters and director of the company, except the following case filed by the company: Parties to Suit Subject matter of

the Suit/Complaint

Suit No.


Present status


Remarks

Dy. Commissioner of Central Excise, Panaji – Goa

Service Tax. Challenging Assessment order dated November 25, 2004 which stated that the company cannot take an input credit on cargo handling by

Appeal No.: A-2/CEX/ GOA/ST/2005

Commissioner of Central Excise (Appeals), Goa

Hearing is over. Orders are awaited.

0.75 -

Goa Carbon Limited

143

V.S.Dempo & Co. (agent) since V.S.Dempo & Co is registered as steamer agent.

iv. Dempo Industries Limited There are no outstanding litigations, disputes, non-payment of statutory dues, over dues to banks / financial institutions, defaults against banks / financial institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued, defaults in creation of full security as per terms of issue, other liabilities, proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (i) of Part I of Schedule XIII of the Companies Act, 1956) against the promoters and director of the company, except the following: Filed against the Company Criminal Laws: Parties to Suit


Suit No.


Present status

Amount Involved

(Rs. in Lakhs)

Remarks

Shri Raul Prazares V/s. Rui Ferreira

The Respondent No. 1 i.e. Mr. Rui Ferreira had filed a Suit for damages and compensation in the sum of Rs.50,00,000/- with interest @ 18% p.a. for defamation caused due to publication of some notices in the Newspaper. The Petitioner i.e. Mr. Raul Prazares herein had filed an application for rejection of the plaint holding that the plaint does not disclose any cause of action and the merits of pleading in the plaint has to be decided in evidence before the Trial Court. The said application was rejected by the Trial Court. Hence the Petition.

Civil Revn. Appeal No. 193/2001

Before High Court of Mumbai

Matter subjudice in the High Court. Proceeding yet to commence.

- -

Shri P. L. C. Manu & Ors. V/s. Vilas Sadesai &

This is a Private Criminal case filed wherein the Complainants have prayed that the

Pvt. Cri. Case No. 23/P/2001

Before J.M.F.C., Canacona

The matter is fixed for appearance of the Accused.

- -

Dempo Group

144

Parties to Suit


Suit No.


Present status

Amount Involved

(Rs. in Lakhs)

Remarks

Ors.

Accused be convicted and punished for offence u/s. 499 IPC. The Complainant alleged that an article appeared in Navhind Times defaming his reputation by stating his involvement in transporting raw alcohol in tankers.

Shri. Rui Ferreira V/s. Raul Prazeres & Ors.

This is a Private Criminal Revision filed by the Plaintiff challenging the impugned Judgement & Order dated 05/04/2004 passed by the JMFC in Criminal Case No. 147/2000/C. Facts are same as in above case (Civil Revn. Appeal No. 193/2001)

Cri. Rev. Appeal No. 92/2004

Before Sessions Court, Panaji

The matter is fixed for final arguments.

- -

Statutory Laws: Parties to Suit Subject matter of

the Suit/Complaint

Suit No.


Present status

Amount Involved

(Rs. in Lakhs)

Remarks

Commissioner of Income Tax V/s. Erstwhile, Navhind Papers & Publications Ltd.

This is an Appeal filed against the Order of the Income Tax Appellate Tribunal (I.T.A.T.) whereby assessee claim 100% depreciation on the total value of bottles and crates leased to UBL in the sum of Rs. 40,65,000/- was granted by I.T.A.T.

I.T. Appeal No. 48/2002

Before the High Court of Bombay, Panaji Bench

Proceedings yet to commence.

40.65 -

Civil Laws:

Goa Carbon Limited

145

Parties to Suit


Suit No.


Present status


Remarks

Shri. Rui Ferreira V/s. Arun Sinha & anr.

For defamation due to publication of an article in the newspaper.

Civil Suit No. 41/98/B

Before Civil Judge, Sr. Division, Panaji

Proceedings yet to commence.

50.00 -

M/s. Penguin Alcohols Pvt. Ltd. V/s. Arun Sinha & anr.

This is a Civil Suit filed for damages. It is alleged that an article stating its involvement in transporting raw alcohol in tankers appeared in Navhind Times.

R.C.S. No. 36/2001

Before J.M.F.C., Canacona

The matter is fixed for further evidence of the Plaintiffs.

1.00 along with interest @ 12 % p.a.

-

Rohidas Naik V/s. Navprabha

This Civil Suit has been filed for damages due to alleged defamation by publishing an item in the newspaper. .

S.C.S. No. 46/92/A

Before Civil Judge, Sr. Division, Ponda

The matter is transferred to Fast Track Court, Panaji.

1.00 -

Filed by the Company Criminal Laws: Erstwhile, Universal Beverages Ltd. Opposite Party to Suit


Suit No.


Present status


Remarks

M/s. Perpetual Agencies

This is an Appeal against the Order of the High Court wherein the Applicant has been convicted for an offence u/s 138 of The Negotiable Instruments Act.

Cri. Misc. Appln No. 52/04

Sessions Judge, North Goa

The matter is for final arguments.

7.64 -

Civil Laws: Erstwhile, Navhind Papers & Publications Ltd. Opposite Party to Suit


Suit No.


Present status

Amount Involved

(Rs. in Lakhs)

Remarks

Akshar Enterprises

This is a Civil Suit for recovery of money to the tune of Rs. 4,89,273.90 along with interest @ 18% effective from the respective due dates. Akshar Enterprises was the

S.C.S. No. 101/2003

Civil Judge, Sr. Division, Mapusa-Goa

The matter is fixed for documents and draft issues.

4.89 -

Dempo Group

146

agent of Navhind Times to procure advertisements for it. However, it did not pass on to the Company the fees received from the advertisers. When it paid no heed to the frequent requests and legal notice sent thereafter, the Company filed a suit.

Civil Laws: Erstwhile, Goa Paints & Allied Products Opposite Party to Suit


Suit No.


Present status


Remarks

Auto Body (Bom) Pvt. Ltd., Pune

Suit is for recovery of outstandings from the customer.

R.C.S. No. 127/2001/C


Hearing fixed on 21.12.2005 for settlement of matter.

0.67

-

Hyderabad Cylinders Pvt. Ltd


S.C.S. No. 84/2002/B


Decree copy awaited. Execution proceedings will be initiated thereafter.

0.51

-

Nandi Cylinders Pvt. Ltd.


R.C.S. No. 85/2002/B


Matter fixed for evidence on 20.12.2005.

1.94

-

Sanghvi Cylinders Pvt. Ltd.


S.C.S No. 83/2002/B


Matter fixed for evidence on 20.12.2005.

2.14 -

Civil Laws: Erstwhile, Universal Beverages Ltd. (UBL) Opposite Party to Suit


Suit No.


Present status

Amount Involved (Rs.in Lakhs)

Remarks

Pepsi Foods Ltd.

Pursuant to a Supply Agreement for 10 years with Pepsi Foods, UBL had invested huge amount in land,

- Arbitral Tribunal, Panaji-Goa

The matter is for evidence.

2,102.70 -

Goa Carbon Limited

147

machineries and the whole set up to manufacture, bottle and distribute Pepsi. However, after a period of just 3 years, Pepsi stopped acting under the contract. It is being claimed that as a result UBL has suffered a loss of profit on account of default committed by the Respondent for the unperformed period of Contract aggregating to 7 years. Hence the arbitration proceedings.

v. Esmeralda Investments Private Limited There are no outstanding litigations, disputes, non-payment of statutory dues, over dues to banks / financial institutions, defaults against banks / financial institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued, defaults in creation of full security as per terms of issue, other liabilities, proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (i) of Part I of Schedule XIII of the Companies Act, 1956) against the promoters and director of the company vi. Motown Investments Private Limited There are no outstanding litigations, disputes, non-payment of statutory dues, over dues to banks / financial institutions, defaults against banks / financial institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued, defaults in creation of full security as per terms of issue, other liabilities, proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (i) of Part I of Schedule XIII of the Companies Act, 1956) against the promoters and director of the company d. Outstanding Litigations involving Other Group Companies: i. Dempo Mining Corporation Private Limited Filed against the Company Civil Laws:

Parties to Suit Subject matter of the Suit/Complaint

Suit No.


Present status

Amount Involved

(Rs. in lakhs)

Ramesh S. Gauns & Ors. V/s. State of Goa & Ors.

Environmental issues.

W.P. No. 109/1997

High Court

Expected for hearing in January 2006.

-

M/s. Indira Engineering

An appeal has been filed by the Appellants against

First Appeal

High Court Enlisting the matter on

0.79

Dempo Group

148


Suit No.


Present status

Amount Involved

(Rs. in lakhs)

Works V/s. D.M.C. (P) Ltd.

the Judgement of the Trial Court dated 30.03.2003 wherein the Appellants have been directed to pay to the original defendants i.e. D.M.C., a sum of Rs. 78,980/- along with interest @ 15% p.a. from 01/08/1990 till payment.

No. 118/2003 & C.A. No. 14/2003

High Court board awaited.

Shri. Eknath A. Falkar V/s. D.M.C (P) Ltd

The Company purchased property known as “Kosu” or “Pimplacho gall” or “Primier-Ponos” at Pilgao from Mr. Simmy Antonio alias Roque Rebeiro. The plaintiff alleges that he is the tenant of the said property. Suit is for permanent injunction not to interfere in the said property, restricted to his house, well and cowshed situated in the property. The matter has been referred to the Mamlatdar.

Spl. C.S. No. 21/96/A

Civil Judge, Sr. Division, Bicholim-Goa.

The matter is before the Mamlatdar.It is at the evidence stage.

-

Communidade of Bicholim V/s. D.M.C. (P) Ltd.

The Plaintiff claims to be the owner of property lot No. 24 Arcavoil Borodo at Bicholim, which is surveyed in our name under No. 77/1. Plaintiff request for declaration of sole owner of property No. 77/1, Bicholim.

Spl. C.S. No. 52/97/A


The suit is for evidence of plaintiff.

Suit for declaration, perpetual injunction and damages to the tune of Rs. 0.50 Lacs with interest @ 15% from the date of the suit.

Nirmala V. Kapadi V/s. D.M.C. (P) Ltd.

The Plaintiff is the owner of the property “Zambulichem Molapoiquim” situated in Bicholim falling within the companys Bicholim Mine. In the survey records, the said property is surveyed under No. 77/1 in the name of Company. The Plaintiff pray the Court for declaration as owner of area 34,200 sq. mts of property amalgamated in said Survey No. and for

S.C.S. No. 18/94/A


The suit is partly decreed on 30.03.2005 declaring the Kapadi’s as owners & entitled for partition of property and restraining the Company from interference

-

Goa Carbon Limited

149


Suit No.


Present status

Amount Involved

(Rs. in lakhs)

damages to the tune of Rs. 65,000/-.

in the said property. The Company has filed an appeal with the District Court.

U. N. S. Pilgaonkar V/S D.M.C. (P.) Ltd.

Mandatory injunction and mesne profits. The suit was originally filed against Mr. Satchit Naik & Ors. in respect of property of Survey No. 25/2 which the company has purchased from them.

RCS 60/2000/B

Civil Judge Sr. Division, Bicholim-Goa

The matter is for evidence of the plaintiff.

-

Tenancy Cases:

Parties to Suit


Suit No.


Present status

Amount Involved

(Rs. in Lakhs)

Smt. Kamal Kusta Kurtikar V/s. D.M.C. (P) Ltd.

The Company had purchased property under Survey No. 156/1, Pilgao from Mr. Venkatesh Kamat. The Applicant has filed application for Declaration of Tenancy of the said property.

Case No. 6/96

Before the Mamlatdar of Bicholim.

The matter is for arguments.

-

Narayan V. Kavlekar V/s. D.M.C. (P) Ltd.

Declaration of Tenancy in respect of property “Kosu” of Survey No. 159/1, 159/2 & 162/1 of Pilgao.

JM-I/TNC/9/ 2002

Before the Jt. Mamlatdar of Bicholim.

The matter is for evidence of party.

-

Filed by the Company Criminal Laws:



Suit No.


Present status

Amount Involved

Jamnadas Morarjee Finance Ltd., & 5 Ors.

This is a Private Criminal Case u/s. 406,409,420,120 B read with Section 34 IPC for criminal breach of trust, cheating and criminal conspiracy.

Cri. Case No. 217/2000/C

J.M.F.C, Panaji-Goa

Warrant issued

-

Civil Laws:



Suit No.


Present status


Eknath A. Suit is to hand over the S.C.S No. Civil Judge, Sr. The matter is -

Dempo Group

150

Falkar V/s.

possession of 154 sq. mts., by demolishing the house. Defendant raised issue of mundcarship.

10/98/A

Division, Bicholim-Goa.

before the Mamlatdar, Bicholim.

Jamnadas Morarjee Finance Ltd.

This is a suit for recovery of money in the sum of Rs. 1,39,05,523/- along with interest @ 8% p.a.

S.C.S. No. 140/2001/B


The matter is fixed for evidence.

139.06

Ana Zita D’Sa V/s. D.M.C. (P) Ltd.

The Company in the year 1982-83 decided to extend the loading point area at Sarmanos by acquiring the areas adjoining the Loading Point and in the process touched the road Bicholim-Sarmanos. The Plaintiff’s house & property situated on the other side of the said road filed a suit for declaration of her easementary right to drain water on the other side of the road, injunction from dumping rejects/mud in the area of Survey No. 150, Pilgao and damages to the tune of Rs. 20,000/-. The suit was decreed on 14.09.2001, by which the above prayers were granted. Execution application filed before the Bicholim Court is applied for stay, as the Company filed the appeal against the said decree.

First Appeal No. 137/2001

District Court, Panaji-Goa

Enlisting the matter on High Court board awaited.

0.20

ii. Dempo Marketing Company Private Limited Filed against the Company: Civil Laws: Parties to Suit


Suit No.


Present status Amount Involve

d (Rs. in Lakhs)

Shri Narayan Shabi Agarwadekar V/s. Dempo Marketing Co. (P) Ltd.

The Complainant has prayed for total damages to the tune of the Rs. 1,35,000/-inclusive of Rs. 40,500/- for loss suffered by him for 27 days, Rs. 34,950/- for repairs of the vehicle. The Complainant had purchased a bus from the Company. After servicing the bus with the company, the bus was driven on his request by the Company driver to a private workshop to remove a part thereof. On the way back from the workshop,

Complaint No. 34/2005

Before the Consumer Dispute Redressal Forum, North Goa.

The matter is now fixed for orders

1.35

Goa Carbon Limited

151

Parties to Suit


Suit No.



d (Rs. in Lakhs)

the bus met with an accident. Shri. Arjun Kalangutkar V/s. Telang Motors Pvt. Ltd. & 2 Ors.

The Complainant has purchased a two-wheeler from the Company. Battery of the vehicle was under warranty, however the details on battery and warranty card were mistakenly varied. Case was filed against Telang Motors, the succeeding dealer of vehicle and Company was made a party being the seller of the vehicle. The complainant has prayed for a new scooter and damages in the sum of Rs. 99,000/-.

Complaint No. 65/2005.


The Company has issued letter to the complainant admitting to its mistake. The matter is now fixed for orders.

0.99

Shri. Vinayak Salgaonkar V/s. Dempo Marketing Co. Pvt. Ltd

The Complainant has prayed for replacement of the motorcycle and/or to refund a sum of Rs. 43,468/- paid by the Complainant towards the purchase of the vehicle plus 18% interest on the said amount of Rs. 43,468/- and Rs. 20,000/- as damages. The complainant alleges defects in the two-wheeler, though on examination it is revealed that the complainant failed to disclose that the vehicle had met with an accident.

Complaint No. 67/2005


The matter is now fixed for affidavit and evidence of respondents.

0.63

Mrs. Satyawati A. Dhargalkar & Ors. V/s. Yeshwant Akekar & Ors.

The Claimant has filed Petition u/s. 140 & 166 of the Motor Vehicles Act. The claimant is the wife of the deceased driver of other vehicle involved in accident described in Shri Narayan Shabi Agarwadekar V/s. Dempo Marketing Co. (P) Ltd case above.

Claim Petition No. 12/2005

Before the Motor Accident Claims Tribunal, Mapusa-Goa.

Application u/s. 140 has been disposed off. The Insurance Company has paid a sum of Rs. 50,000/- to the Claimant. The matter u/s. 166 is for further evidence of the Claimant. The total amount claimed u/s. 166 is Rs.16,25,000/-

16.25

M/s. Eicher Motors Ltd. & anr. V/s. Puniraj

The Defendant had purchased a Canter Hi Tech LCD Vehicle upon a deposit of Rs.20,000/- with an undertaking to pay the balance amount of Rs.3,53,265/- within 15 days

Execution Appln. No. 9/2001/B

Before the Court of Civil Judge, Sr. Division, Panaji

This matter is sine die.

0.36

Dempo Group

152

Parties to Suit


Suit No.



d (Rs. in Lakhs)

Enterprises.

from the Invoice date. Defendant claimed that the basic price of the said Vehicle was erroneously represented as Rs.3,59,525/- and together with the temporary registration and transportation charges, the total cost arrived at Rs.3,61,343/-. Plaintiff claimed that the Defendant made the payment but since the amount was erroneously shown Rs.14,000/- short, had raised the demand on the Defendant to pay the same, which the Defendant failed. A suit was thus filed and the Execution Application is the outcome of the said Suit.

Filed by the Company: Nil iii. Dempo Travels Private Limited There are no outstanding litigations involving Dempo Travels Private Limited iv. Dempo Shipyards Private Limited There are no outstanding litigations involving Dempo Shipyards Private Limited v. Dempo Shipbuilding & Engineering Private Limited There are no outstanding litigations involving Dempo Ship building & Engineering Private Limited vi. Sindhudurg Mining Corporation Private Limited There are no outstanding litigations involving Sindhudurg Mining Corporation Private Limited vii. Aparant Iron & Steel Private Limited Filed by the Company: Parties to Suit


Suit No.



(Rs. in Lakhs)

Pratham Castings

Criminal case filed under section 138 of Negotiable Instruments Act, 1881for recovery of outstanding against the cheque-bouncing instance the customer.

Criminal Case no.: 577/04/A

JMFS, Panaji, Goa

Hearing fixed on December 9, 2005.

3.91

Krishna Castings


Criminal Case no.: 388/05/C

JMFS, Panaji, Goa

Hearing fixed on December 12, 2005 Out of total amount of Rs. 27,17,544/-an amount of

27.18

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153

Rs.3,82,075, received by the Company on December 2, 2005

Lokesh Foundries Private Limited


Criminal Case no.: 138/05/A

JMFS, Panaji, Goa

Hearing fixed on February 17, 2006 Matter is in advanced stage of mutual settlement.

22.30

Tax Disputes:

Parties to Suit


Suit No.

Court at which Suit/Complaint

filed


(Rs. in Lakhs)

Commissioner of Customs (Appeals), Marmagoa

The Company had procured metallurgical coke (met coke) under a bond with the term that only a duty of 5% (instead of 10%) shall be levied if it is used for the specified purpose. The loss of met coke while handling was contested by the Customs to be leviable with Customs duty.

No. 12/Jt. Commr/Goa/C.Ex/2004

Commissioner of Customs (Panaji)

CIT (appeals) has passed an Order against the Company. The company is in the process of seeking legal opinion for appeal to the Tribunal.

2.64

Dy. Commissioner of Central Excise (Panaji)

The Company had received show cause notice from the Dy. Commissioner claiming that the furnace slag produced during the manufacture of pig iron is liable for excise duty.

Show Cause Notice dated 05.01.2005

Commissioner of Central

Excise (Panaji)

Hearing already over on September 15, 2005. Orders are awaited.

0.60

Dy. Commissioner of Central Excise (Panaji)

The Company had received show cause notice from the Dy. Commissioner claiming that the Coke Breeze produced during the manufacture of pig iron is liable for excise duty.

Show Cause Notice dated

26.05.2005


Excise (Panaji)


0.11

Dy. Commissio

ner of Central Excise

(Panaji)

The Company had received show cause notice from the Dy. Commissioner claiming that the furnace slag produced during the manufacture of pig iron is liable for excise duty.

Show Cause Notice dated

05.08.2005


Excise (Panaji)


0.05

Arbitration Matters:

Dempo Group

154

Parties to Suit


Suit No.

Court at which



(Rs. in Lakhs)

Mahalakshmi Sales Corporation

Criminal case for cheating/ recovery was filed against one of the agent of the Company. Total amount involved was Rs. 15.95 Lakhs, out of which as per Court Order Rs.10 Lakhs Bank Guarantee was encashed and balance amount pending. Subsequently, Goa bench of High Court appointed an arbitrator but accused brought stay from Chennai High Court

O.S. No. 984/2003

Arbitral Tribunal consisting of Retd. Justice Mr. G. D. Kamat, Sole Arbitrar

Hearing is awaited for vacation of stay

5.96

viii. Hindustan Foods Limited There are no outstanding litigations involving Hindustan Foods Limited e. Litigations post filing of the Draft Offer Document: Shall be updated f. Material Developments since the Last Balance Sheet Date There have been no material developments after the date of last balance sheet i.e. June 30, 2005. In the opinion of the Board of Directors of the Company, there have not arisen, since the date of the last financial statement disclosed in the Letter of Offer, any circumstances that materially and adversely affect or are likely to affect the trading or profitability of the Company or the value of its assets or its ability to pay its liabilities within the next twelve months (as per accounting standard 4 of the ICAI). However, the Board of Directors of the Company in its meeting held on October 21, 2005 has decided to amalgamate Paradeep Carbons Limited w.e.f. July 1, 2005 subject to requisite statutory approvals. In addition to the Lead Manager, the Issuer is also obliged to update the offer document and keep the public informed of any material changes till the listing and trading commencement.

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155

B.) GOVERMENT APPROVALS The Company has received all the necessary licenses, permissions and approvals from the Central and State Governments and other government agencies/certification bodies required for its business and no further approvals are required by the company for carrying on the present business activities of the Company. No further approvals from any Government authority/Reserve Bank of India (RBI) are required by the Company to undertake the existing activities, save and except those approvals, which may be required to be taken in the normal course of business from time to time. The Board of Directors of the Company in its meeting held on October 21, 2005 has decided to amalgamate the 100% subsidiary namely Paradeep Carbons Limited with itself. However, the Company is yet to initiate the process for in-principle approval of the Stock Exchanges and other requisite approvals viz. approval of the High Court for the Amalgamation of Paradeep Carbons Limited, the 100% subsidiary of the Company with itself.

It must, however, be distinctly understood that in granting the above approvals, the Government, RBI and other authorities do not take any responsibility for the financial soundness of the Company or for the correctness of any of the statements or any commitments made or opinions expressed in the Letter of Offer.

The following statement sets out the details of licenses, permissions and approvals taken by the Company under various Central and State Laws for carrying out its business.

Sr. No.

Issuing Authority

Registration/ License No.

Nature of Registration/License

Validity / Date

1. Registrar of Companies, Goa, Diu and Daman

24-00076 Certificate of Incorporation

Dated: June 22, 1967

2. Registrar of Companies, Goa, Diu and Daman

- Certificate of Commencement of Business

Dated: May 13, 1968

3. Labour Inspector, Panaji C/II/1018 Registration Certificate of Establishment

Dated: July 27, 1975 Valid upto: December

31, 2006 4. Chief Inspector of

Factories and Boilers Goa/170 Factory Licence Dated: August 14,

1995 Valid upto: year 2009

5. Superintendent of Central Excise, Margao-Goa

AAACG6842KXM001 Central Excise Registration Certificate

Dated: Dec. 12, 2001

6. Under Secretary to the Government of India

1162/75 Certificate of Registration under Monopolies and Restrictive Trade Practices Act, 1969

Dated: July 17, 1975

7. Panjim Municipal Council T/O/2275 Licence to display the board

Dated: May 24, 2001

8. Reserve Bank of India RG-000013 Code to the exporter Dated: June 23, 1989 9. Deputy Commissioner of

Income Tax (Computers), Bangalore

AAACG6842K Permanent Account Number

10. Assistant Development Officer (Asbestos and Carbon Products), New Delhi

DGTD/R-1180/C-30(iv)/S-35/72

Registration of unit with DGTD for manufacture of Calcined Petroleum Coke

Dated: April 25, 1972

11. Director of Industries and Mines

17/65/89/DIM/RM Registration under EXIM as Manufacturer Exporter

Dated: October 30, 1989

12. Deputy Commissioner, Central Excise, Panji, Goa

AAACG6842KXM001 Central Excise Registration Certificate for St. Jose Areal Plant

Dated: January 10, 2003

13. Joint Director General of Foreign Trade

- Certificate of Recognition as Export House

Dated: August 24, 2004. Validity: March 31, 2007

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156

Sr. No.

Issuing Authority

Registration/ License No.

Nature of Registration/License

Validity / Date

14. Sales Tax Officer, Panji Ward

P/2010 Certificate of Registration under Goa Sales Tax Act, 1964


15. Sales Tax Department, Panji-Goa

P(CST)/746 Certificate of Registration under Central Sales Tax Act


16. Member Secretary, Goa State Pollution Control Board

5/39/88-PCB/2256 Renewal of consent to operate under section 25 of the Water (Prevention and Control of Pollution) Act, 1974

Dated: November 12, 2004 Validity upto: December 31, 2006


Consent Order no.: AIR/736/2004

Renewal of consent to operate under section 21 of the Air (Prevention and Control of Pollution) Act, 1981

Dated: March 30, 2005 Validity: March 31, 2007


10/95/04-PCB/6 of 2004

Authorisation for Occupier or Operator handling Hazardous Waste

Dated: April 13, 2004 Valid upto: April 12, 2006

19. Director of Civil Supplies and Consumer Affairs, Panaji

30/DCS/SOLVENT/73/2004

Licence under the Solvent, Raffinate and Shop Licence

Dated: January 20, 2005 Valid upto: January 27, 2007

20. Deputy Chief Controller of Explosives

- Approval for storage of furnace oil at Bilaspur Plant

Dated: June 16, 2003

21. Foreign Trade Development Officer

1788007425 Certificate of Importer-Exporter Code

Dated: May 7, 1989

22. Assistant commissioner, Central Excise, Bilaspur Division

AAACG6842KX002 Central Excise Registration Certificate for Bilaspur plant


23. Regional Office, EG Enviornment Conservation Board

3046/R.O.T.S./C.E.C.B./2005

Renewal of consent to operate under section 25 of the Water (Prevention and Control of Pollution) Act, 1974

Dated: January 25, 2005 Valid upto: December 31, 2005

24. Regional Office, EG Enviornment Conservation Board

3045/R.O.T.S./C.E.C.B./2005


Dated: January 25, 2005 Valid upto: December 31, 2005

25. State Pollution Control Board, Orissa (Paradeep Carbons Limited)

Consent Order No. 898/WPC

Renewal of consent to operate under section 25 of the Water (Prevention and Control of Pollution) Act, 1974

Dated: November 29, 2005 Valid upto: March 31, 2006

26. State Pollution Control Board, Orissa (Paradeep Carbons Limited)

Consent Order No. APC /898


Dated: November 29, 2005 Valid upto: March 31, 2006

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157

VII. OTHER REGULATORY AND STATUTORY DECLARATIONS A) Authority for the Present Issue The present issue of Equity Shares is being made pursuant to the Resolution passed at the Board of Directors meeting held on July 23, 2005 for approval of the Issue on Rights basis to the existing Equity Shareholders of the Company in the ratio of 1 Equity Share for every 1 Equity Shares held [i.e.1:1] on Record Date i.e.[ ] to offer 46,00,000 Equity Shares of Rs. 10/- each for cash at a premium of Rs. 70/-aggregating to Rs. 36,80,00,000. The Letter of Offer has been approved at the Board meeting held on December 10, 2005. B) Prohibition by SEBI The Company, its Promoters, its Directors or any of the Company’s associates or group companies and companies with which the Directors of the Company are associated as Directors or Promoters, or Directors or Promoters in control of, of the promoting Company, are currently not prohibited from accessing or operating in the capital market under any order or direction passed by SEBI. The listing of any securities of the issuer has never been refused at any time by any of the Stock Exchanges in India or abroad. Further the Promoters, their relatives (as per Act), the Company, group companies, associate companies are not detained as willful defaulters by RBI / Government authorities. C) Eligibility for the Issue Goa Carbon Limited is an existing company under the Act, whose equity shares are listed on BSE and MgSE. It is eligible to offer this Rights Issue in terms of Clause 2.4.1 (iv) of the SEBI (Disclosure and Investor Protection) Guidelines, 2000. The Company, its Promoters, its Directors or any of the Company’s associates or group companies have not been prohibited from accessing the capital market under any order or direction passed by SEBI. None of the Directors of the promoter company, have been prohibited from accessing the capital market under any order or direction passed by SEBI. Further the Promoters, their relatives (as per the Companies Act, 1956), the Company, group companies, associate companies are not detained as willful defaulters by RBI / Government authorities. D) Disclaimer Clause SEBI Disclaimer Clause: AS REQUIRED, A COPY OF THIS LETTER OF OFFER HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI).

“IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF OFFER DOCUMENT TO SEBI SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE OFFER DOCUMENT. LEAD MERCHANT BANKER, FORTUNE FINANCIAL SERVICES (INDIA) LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE OFFER DOCUMENT ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.

IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN OFFER DOCUMENT, THE LEAD MERCHANT BANKER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MERCHANT BANKER FORTUNE FINANCIAL SERVICES (INDIA) LIMITED HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED DECEMBER 10, 2005 IN ACCORDANCE WITH SEBI (MERCHANT BANKERS) REGULATIONS 1992 WHICH READS AS FOLLOWS :

Dempo Group

158

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 OFFER DOCUMENT PERTAINING TO THE SAID ISSUE;

2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY.

WE CONFIRM THAT: a. THE OFFER DOCUMENT FORWARDED TO SEBI IS IN CONFORMITY WITH

THE DOCUMENTS, MATERIALS AND PAPER RELEVANT TO THE ISSUE; b. ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE, AS ALSO THE

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

c. THE DISCLOSURES MADE IN THE OFFER DOCUMENT ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE;

d. BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE LETTER OF OFFER ARE REGISTERED WITH SEBI AND TILL DATE SUCH REGISTRATION IS VALID; AND

e. WE SHALL SATISFY OURSELVES ABOUT THE WORTH OF THE UNDERWRITER(S) TO FULFILL THEIR UNDERWRITING OBLIGATIONS”.

THE FILING OF THE LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 OR 68 OF THE COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI, FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MERCHANT BANKER(S) ANY IRREGULARITIES OR LAPSES IN OFFER DOCUMENT." E) Caution The Issuer Company accepts no responsibility for statements made otherwise than in this Letter of Offer or in any advertisement or other material issued by the Company or by any other persons at the instance of the Company and anyone placing reliance on any other source of information would be doing so at his/her own risk. The Lead Manager and the Company shall make all information available to the Equity Shareholders and no selective or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. after filing of the Letter of Offer with SEBI. The Lead Managers and the Company shall update the Letter of Offer and keep the public informed of any material changes till the listing and trading commences. F) Disclaimer with respect to Jurisdiction This Rights Issue of Equity Shares is made in India subject to Indian Laws. This issue of Equity Shares is being made to persons resident in India and NRIs/ FIIs etc. subject to requisite approvals. No person other than a member as on the Record Date and those in favour of whom the shares offered to such member had been renounced by him shall apply for subscription in the equity shares offered through this document. This Letter of Offer does not, however, constitute an offer to sell or an invitation to subscribe to the equity shares of the Company in any other jurisdiction to any person to whom it is unlawful to make an offer in such jurisdiction. Any person into whose possession this Letter of Offer comes is required to inform himself about and to observe any such restrictions.

Goa Carbon Limited

159

This Letter of Offer has been prepared under the provisions of Indian Laws and the applicable rules and regulations there under. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in Goa, India only. Disclaimer Clause of the Stock Exchange Disclaimer Clause of Bombay Stock Exchange Limited (BSE): “Bombay Stock Exchange Limited (BSE) (hereinafter referred to as “the Exchange”) has given vide its letter dated_______ permission to the Company to use the Exchange’s name in this Letter of Offer as one of the stock exchanges on which this Company’s securities are proposed to be listed. The Exchange has scrutinized 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 MgSE “The Mangalore Stock Exchange (hereinafter referred to as “the Exchange”) has given vide its letter dated-_______ permission to the Company to use the Exchange’s name in this Letter of Offer as one of the stock exchanges on which this Company’s securities are proposed to be listed. The Exchange has scrutinized 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”. G) FILING

i. The Draft Letter of Offer has been filed with SEBI at Mumbai and also with the Stock Exchanges at Mumbai and Mangalore.

ii. A copy of the documents referred to elsewhere in this Letter of Offer has been kept open for inspection at the Registered Office of the Company.

H) LISTING The existing equity shares of the Company are listed on BSE (Designated Stock Exchange) and MgSE. The Equity Shares to be issued through this Issue would also be listed on the Stock Exchanges mentioned above. The Company will make applications to the BSE and MgSE for permission to deal in and for an official quotation in respect of the securities being offered in terms of this Letter of Offer.

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160

The Company has made applications for in-principle approval for listing to the said Stock Exchanges. The in-principle approvals from these stock exchanges are yet to be received for listing of the equity shares.

If the permission to deal in and for an official quotation of the securities is not granted by Designated Stock Exchange mentioned above, within six weeks from the Issue Closing Date, the Company shall forthwith repay, without interest, all monies received from applicants in pursuance of this Letter of Offer. If such money is not paid within eight days after the Company becomes liable to repay it, then the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under the Section 73 of the Act. I) CONSENTS Consents in writing of the Directors, Auditors, Bankers to the Company, Bankers to the Issue, Registrar, Advisors to the Issue, Legal Advisors to the Issue, Lead Managers, Company Secretary to act in their respective capacities have been obtained and filed along with a copy of the Offer Document with SEBI, as required under section 60 of the Act and such consent have not been withdrawn upto time of delivery of the Letter of Offer. M/s Fraser & Ross, Chartered Accountants, Auditors of the Company have also given their consent to the inclusion of their report as appearing hereinafter in the form and context in which appears in this Letter of Offer and also of the tax benefits accruing to the Company and to the members of the Company and such consent and report have not been withdrawn up to the time of signing this Letter of Offer. Except as above and as stated in this Letter of Offer, the Company has not obtained any other expert opinion. J) EXPENSES OF THE ISSUE The expenses for this Issue include issue management fees, underwriting commission, printing and distribution expenses, legal fees, advertisement expenses, depository charges, trustee fee and listing fees to the Stock Exchanges, among others.. The expenses of the Issue payable by the Company inclusive of fees payable to the Lead Managers, other intermediaries to the Issue, underwriting commission, stamp duty, printing, publication, advertising and distribution expenses, bank charges, fees payable to the Registrars to the Issue, listing fees, brokerage and other miscellaneous expenses are estimated to be approximately 2.17%* of the total proceeds of this Issue. The total expenses for this Issue are estimated not to exceed Rs. 80 Lacs. (Assuming no devolvement) A broad breakup of the same is as under:

(in Rs. Lacs) Sr. No. Nature of Expenses Amount 1. Lead Management-Issue Management fees, Advisory Fee, Underwriting

Commission 29.71

2. Legal Counsel charges, Registrars Printers, Postage, Dispatch expenses, Advertisement & publicity expenses

38.00

3. Listing Expenses & Others Expenses 12.29 Total 80.00

* Assuming no devolvement K) DETAILS OF FEE PAYABLE Lead Manager to the Issue The total fees payable to the Lead Managers will be as per the Memorandum of Understanding signed with the Lead Manager, a copy of which is available for inspection at the Registered Office of the Company. The Lead Managers will be reimbursed for all relevant out-of-pocket expenses including such as cost of travel, stationery, postage and communication expenses. Registrar to the Issue The fees payable to the Registrar to the Issue is set out in the relevant document, copies of which are available for inspection at the Registered Office of the Company. The Registrar will be reimbursed for all relevant out-of-pocket expenses including such as cost of travel, stationery, postage, stamp duty,

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161

communication expenses. Adequate funds will be provided to the Registrar to the Issue to enable them to send refund orders or allotment advice by registered post. L) UNDERWRITING COMMISSION, BROKERAGE AND SELLING COMMISSION Terms of the Underwriting Agreement The Issue is partially underwritten to the extent of non-promoter entitlement. Centrum Capital has underwritten the issue to the extent of Rs 1631.31 Lacs. (2016640 Equity Shares). Centrum Capital Limited will subscribe to the Equity Shares, which are under subscribed, and the payment towards the same will be made before allotment. Other than enumerated above, no underwriting commission, brokerage and selling commission will be paid for this Issue. M) PREVIOUS PUBLIC OR RIGHTS ISSUE The Company has not made any public issue of equity/debentures during the previous five years. The details of issue of capital have been outlined in the paragraph on the build up of the share capital under the capital structure. N) PREVIOUS ISSUE OF SHARES OTHERWISE THAN FOR CASH Other than the Bonus shares issued, and Conversion of Loans into Equity, the details of which are appearing under the head ‘Share Capital History of the Company’, it has not issued any shares for consideration other than by cash. O) COMMISSION AND BROKERAGE ON PREVIOUS ISSUES Except as stated in the Offer Document, no sum has been paid or is payable as commission or brokerage for subscribing to or procuring or agreeing to procure subscription for any of the equity shares of the Company since its inception. Also, the company has not made any rights or public issue in the last five years. P) PREVIOUS ISSUE OF CAPITAL DURING LAST THREE YEARS Goa Carbon has not made any capital issue during the last three years. Also though Hindustan Foods Limited is a listed company under the same management within the meaning of erstwhile section 370(1) (B) of the Companies Act, 1956, it has not made any capital issue during the last three years. Q) PROMISE VERSUS PERFORMANCE

1) Issuer Company i.e. Goa Carbon Limited The Company had raised the Equity and Preference capital by way of Public Issue in the year 1973-74, but no projections were made in the Prospectus. However it was stated that the commercial production is expected to start in the year 1976 and the Company shall be in a position to pay minimum 10% dividend by the year 1977. The Cost of Project and Means of Finance were as under:

Rs .in Lakhs Cost of Project Amount Land including Development 6.23 Buildings 58.82 Plant and Machinery 84.20 Other Assets 20.55 Technical Know-how 7.50 Design & Engineering Costs 2.20 Preliminary and Pre-Operational Expenses including Expenditure to be Capitalized 17.50 Expenses of the Issue 6.00 Contingencies 7.00 Margin money for Working Capital 25.00 Total 235.00

Rs .in Lakhs

Means of Finance Amount Equity Capital 75.00 Preference Capital 25.00

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162

Means of Finance Amount Long Term and Medium Term Loans 135.00 Total 235.00

The Company thru the maiden Public Issue had raised Rs. 70.00 Lakhs from the public by way of issuance of 4,50,000 Equity Shares of Rs. 10/- each at par and 25,000 Preference Shares of Rs. 100/- each at par by accessing the capital market in the year 1973. The entire project was completed as per schedule and commercial production started in July 1976.

Projected Performance vis-à-vis Actual Results

The Company has not made any projections in the Prospectus however an assurance of declaration of dividend by the year 1977 was made. The Company declared its first dividend in the year 1980 and has been a continuous dividend paying company since then barring the year 1985 and 1986.

2) Group Company i) Hindustan Foods Limited Hindustan Foods Limited is the Listed Group Company. It raised the capital by way of Public Issue in the year 1987, to finance setting up of a food processing unit in Goa for the manufacture of 5000 MT per annum of Nutrition foods, Cereal Foods and products based on Soya been. The plant was scheduled to be commissioned in January 1988 and commercial production was to be started in the April 1988. The commercial production started in May 1988. No projections were made in the Prospectus. The Cost of Project and Means of Finance were as under:

Rs .in Lakhs Cost of Project Amount Land 10.00 Buildings 85.00 Plant and Machinery 283.00 Other Services 42.00 Preliminary and Pre-Operational Expenses 45.00 Margin money for Working Capital 25.00 Total 490.00

Rs .in Lakhs

Means of Finance Amount Equity - Promoter 40.00 - Financial Supporters 40.00 - Public - Equity Shares 30.00 - Convertible portion of Debentures 90.00 Debt - Nonconvertible portion of Debentures 180.00 - Rupee Term Loan from The British Bank of Middle East 60.00 Unsecured Loans from Promoters / Financial Supporters 25.00 Central / State Government Subsidy 25.00 Total 490.00

The Company thru the maiden Public Issue had raised Rs. 300.00 Lacs from the public by way of issuance of 3,00,000 Equity Shares of Rs. 10/- each at par and 1,80,000 Secured Convertible Debentures of Rs. 150/- each at par by accessing the capital market in the year 1987.

Projected Performance vis-à-vis Actual Results The Company had not made any projections in the Prospectus however a forward looking statement was made that the Directors are confident barring unforeseen circumstances, the company will be able to earn sufficient profit to declare dividend within a reasonable period from the commencement of commercial production. The Company has not declared any dividend.

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ii) National Auto Accessories Limited The Company was incorporated in the year 1983 with Registration No. 553/G of 1983 and came out with a public issue in the year 1988. The company was admitted to BIFR in the year 1994 and since the revival could not be worked out, BIFR had recommended the liquidation of the company. The High Court of Bombay ordered the winding up of the company on September 28, 2001. iii) Dempo Steamship Company Limited The Company was incorporated in the year 1965 with Registration No. 40/G of1965 and came out with a public issue in the year 1967. The company made losses and was liquidated in the year 1987 by way of Bombay High Court order in February 1987.

R) Outstanding Debentures or Bonds and Redeemable Preference Shares and Other Instruments Outstanding Debentures or Bonds and Redeemable Preference Shares and Other Instruments issued by Goa Carbon Limited Outstanding as on the Date of Letter of Offer and Terms of Issue: Goa Carbon Limited has not made any public or rights Issue of Debentures, Redeemable Preference Shares, Public deposits or any other instruments except as disclosed in this Letter of Offer. Specifically, Goa Carbon had issued redeemable preference shares in the year 1973 along with IPO and the same were duly redeemed in the year 1983-84. S) STOCK MARKET DATA The existing Equity shares of the Company are listed on Bombay Stock Exchange (BSE-Designated Stock Exchange) and Mangalore Stock Exchange (MgSE). The high and low closing prices recorded on BSE and MgSE for the preceding three years and the number of shares traded on the days the high and low prices were recorded are stated below:

1. Bombay Stock Exchange Limited (BSE):

Price for the last three years High Low

Year Date Price in Rs

Volume (Nos)

Date Price in Rs

Volume (Nos)

Average Closing Price for the Year

(Rs.) 2002 July 11, 2002 43.00 55,181 January 10, 2002 10.45 5,260 22.16 2003 December 24, 2003 92.90 1,35,946 January 1, 2003 25.55 265 46.85 2004 January 2, 2004 81.20 22,370 June 23, 2004 36.00 4,172 50.39 2005 (till December 8, 2005)

July 18, 2005 171.70 1,22,851 January 17, 2005 49.50 4,831 95.16

Source: http://www.bseindia.com Price for the last six months

Month High Low Date Price in

Rs Volume

(Nos) Date Price in

Rs Volume

(Nos)

Total Volume for the Month

June, 2005 June 8, 2005 124.40 8,880 June 20, 2005 100.05 5,703 132,272 July, 2005 July 18, 2005 171.70 1,22,851 July 1, 2005 106.10 6,145 757,581 August, 2005 August 11, 2005 137.00 22,554 August 24, 2005 116.35 9,627 211,710 September, 2005

September 1, 2005

142.00 28,626 September 30, 2005

106.35 2,540 176,178

October, 2005

October 4, 2005 112.90 3,275 October 21, 2005

77.40 9,491 93,615

November, 2005

November 18, 2005

110.05 2,615 November 1, 2005

91.00 1,060 59,650

Source: http://www.bseindia.com

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The high and low prices of the Company’s shares as quoted on the Stock Exchange, Mumbai (BSE) immediately after the Board of Directors approved the Rights issue at the meeting held on July 23, 2005 was as follows:

Date Volumes High (Rs.) Low (Rs.) July 22, 2005 (Friday) 17,177 160.50 149.00 July 25, 2005 (Monday) 48,350 150.00 135.70

Source: http://www.bseindia.com 2. MANGALORE STOCK EXCHANGE (MgSE): There has been no trading in the equity shares of the Company on MgSE during the last three years, as confirmed by the Company. Compliance with Listing Agreement The Company is, listed on BSE and MgSE and has complied with the requirements under the respective Listing Agreement of the above-mentioned stock exchanges. It has paid the requisite annual listing fee to the Bombay Stock Exchange Limited for the period 2005-2006. Also no disciplinary action has been initiated by the Stock Exchanges or SEBI against Goa Carbon Limited or Directors. T) INVESTOR GRIEVANCES AND REDRESSAL SYSTEM The company has appointed the registrar to the issue, to handle the investor grievances in co-ordination with the Compliance Officer of the Company. All grievances relating to the present issue may be addressed to the Registrar with a copy to the Compliance Officer, giving full details such as name, address of the applicant, number of equity shares applied for, amount paid on application and bank and branch. The company would monitor the work of the registrar to ensure that the investor grievances are settled expeditiously and satisfactorily. The Registrar to the issue, namely, Intime Spectrum Registry Limited will handle investor’s grievances pertaining to the issue. A fortnightly status report of the complaints received and redressed by them would be forwarded to the company. The company would also be co-ordinating with the registrar to the issue in attending to the grievances to the investor. The company assures that the Board of Directors in respect of the complaints, if any, to be received shall adhere to the following schedules:

Sr. No. Nature of complaint Time Table 1. Non-receipt of refund Within 7 days of receipt of complaint subject

to production of satisfactory evidence 2. Non Receipt of Share Certificate Within 7 days of receipt of complaint subject

to production of satisfactory evidence 3. Transfer of Shares Within 30 days 4. Change of Address Notification Within 7 days of receipt of information 5. Any other complaint in relation to Rights issue Within 7 days of receipt of complaint with all

relevant details Redressals of investors’ grievance are given top priority by the Company. The Committee oversees redressal of complaints of shareholders/investors and other important investor related matters. The Company has adequate arrangements for redressal of investor complaints as follows: Share transfer/ dematerialisation/ rematerialisation are handled by well equipped professionally managed Registrar and Transfer Agent, appointed by the Company in terms of SEBI’s direction for appointment of Common Agency for physical as well as demat shares. The Registrars are constantly monitored and supported by qualified and experienced personnel of the Company. Status of Complaints:

Particulars Status No. of Shareholders complaints as of September 30, 2005

Nil

Total number of complaints received and disposed during April 1, 2004 to June 30, 2005

35

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Particulars Status Total number of Investor complaints received and disposed during the current financial period 2005-06 commencing July 1, 2005

6 (as of September 30, 2005)

Status of complaints All complaints received during the last financial period have been resolved

Time normally taken by the Company for disposal of various types of investor grievances

Most of the investor grievances have been attended to within 14 days.

Also there are no other listed companies under the same management within the meaning of erstwhile section 370(1) (B) of the Companies Act, 1956 other than Hindustan Foods Limited under the same management within the meaning of erstwhile section 370(1) (B) of the Companies Act, 1956. The Status of Investors Complaints for Hindustan Foods Limited is as under:

Particulars Status No. of Shareholders complaints as of March 31, 2005

Nil

Total number of complaints received and disposed during April 1, 2004 to March 31, 2005

2

Total number of Investor complaints received and disposed during the current financial period 2005-06

Nil (as of September 30, 2005)

Status of complaints All complaints received during the last financial period have been resolved

Time normally taken by the Company for disposal of various types of investor grievances

Most of the investor grievances have been attended to within 14 days.

U) CHANGES IN AUDITORS There has been no change in the Auditors of the Company during the last three years. V) CAPITALIZATION OF RESERVES OR PROFITS DURING LAST 5 YEARS The Company has not capitalized any reserves during the past 5 years by way of Bonus Issue or otherwise. W) REVALUATION OF ASSETS DURING THE LAST 5 YEARS None of the Assets of the Company have been revalued in the last 5 years. However the Company has merged VPPL a wholly owned subsidiary with itself and the board of directors in the Meeting held on October 21, 2005 have approved the merger of 100% owned subsidiary Paradeep Carbons Limited (subject to the approval of the High Court) with the Company w.e.f. July 1, 2005.

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VIII. OFFERING INFORMATION The Equity Shares, now being issued, are subject to the terms and conditions of this Letter of Offer, the enclosed Composite Application Form (“CAF”), the Memorandum and Articles of Association of the Company, the approvals from the GoI, FIPB and RBI, if applicable, the provisions of the Companies Act, 1956, guidelines issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued by Government of India and/ or other statutory authorities and bodies from time to time, terms and conditions as stipulated in the allotment advice or letter of allotment or Security Certificate and rules as may be applicable and introduced from time to time.

Authority for the Present Issue

The Issue is being made pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on March 14, 2005.

Basis of the Issue

The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders 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 the 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 BSE (the Designated Stock Exchange).

The Equity Shares are being offered for subscription in the ratio of 1 Equity Share for every 1 Equity Shares held by the Equity Shareholders.

Rights Entitlement As your name appears as beneficial owner in respect of shares held in Electronic Form or appears in the Register of Members as an Equity Shareholder of the Company on the Record Date [ ], you are entitled to the number of Equity Shares made under this Offer as shown in part A of the enclosed Composite Application Form Fractional entitlement As the Rights Issue is in the ratio of one Equity Share held on the Record Date [ ] the question of fractional entitlement shall not arise. The eligible Shareholders shall be entitled to the following:

1 (One) Equity Shares for Every 1 (One) Equity Shares held on the Record Date [ ] Notices All notices to the Equity shareholder(s) required to be given by the Company in connection with the Issue shall be published in one English national daily with wide circulation, one Hindi national daily with wide circulation, one regional language daily in Goa being the place where the registered of the Company is situated and/or will be sent by ordinary post to the registered holders of the Equity Share(s) from time to time. Issue of Duplicate Share Certificates If any Equity Share certificate(s) is/are mutilated or defaced or the cages for recording transfers of Equity Shares are fully utilized, the Company against the surrender of such certificate(s) may replace the same, provided that the same will be replaced as aforesaid only if the certificate numbers and the distinctive numbers are legible. If any Equity Share certificate(s) is/are destroyed, stolen, lost or misplaced, then upon production of proof thereof to the satisfaction of the Company and upon furnishing such indemnity/surety and/or such other documents as the Company may deem adequate, duplicate Equity Share certificate(s) shall be issued. Offer to Non-Resident Equity Shareholders/Applicants Applications received from NRIs and other NR shareholders for allotment of Equity Shares shall be inter alia, subject to the conditions imposed from time to time by the RBI under the Foreign Exchange Management Act, 1999 (FEMA) in the matter of refund of application moneys, allotment of Equity Shares, issue of letter of allotment / share certificates, payment of interest, dividends, etc. General permission has

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been granted to any person resident outside India to apply shares offered on rights basis by an Indian Company in terms of FEMA and the rules and regulations there under.

Vide Notification number FEMA 20/2000-RB dated May 3, 2000 and FEMA 76/2002-RB dated November 12, 2002 RBI has given permission to Indian companies to issue rights shares to existing non-resident shareholders. The existing non-resident shareholders may apply for issue of additional Equity Shares and the Company may allot the same subject to the condition that the overall issue of Equity Shares to non-residents in the total paid up capital does not exceed the sectoral cap. In other words, non-residents may subscribe for additional Equity Shares over and above Equity Shares offered on rights basis by the Company and renounce the Equity Shares offered in full or part thereof in favor of a person named by them. Residents may subscribe for additional Equity Share over and above the Equity Shares offered on rights basis by the Company and renounce the Equity Shares offered either in full or part thereof in favor of a person named by them. However, Vide FEMA notification dated October 03, 2003, bearing no. 101/2003-RB this facility would not be available to investors who have been allotted such Equity Shares as OCBs. OCBs may however renounce the Equity Shares offered in full or part thereof in favor of a person named by them other than an OCB. OCBs may however renounce the Equity Shares offered in full or part thereof in favor of a person named by them other than an OCB.

A. Terms of the Issue No statement made in this Letter of Offer shall contravene any of the provisions of the Companies Act, 1956 Ranking of the Equity Shares The Equity Shares being offered shall be subject to the provisions of Memorandum and Articles of the Company and shall rank pari-passu with the existing Equity Shares of the Company. Allottees of the Equity Shares under this Issue will be entitled to dividends and other corporate benefits, if any, declared by the Company after the date of allotment. Mode of Payment of Dividend The Company shall pay dividend to its shareholders as per the provisions of the Companies Act, 1956. Face value and Issue Price The Face Value of the Equity Shares is Rs.10/- per Equity Share and the Issue Price is Rs. 80/- per Equity Share [including Share Premium of Rs. 70/- per equity share] which is 8 times of the Face Value. Rights of the Equity shareholders

i. Right to receive dividend, if declared. ii. Right to attend general meetings and exercise voting rights, unless prohibited by law. iii. Right to vote on a poll either personally or by proxy. iv. Right to receive offer for rights shares and be allotted bonus shares, if announced; v. Right to receive surplus on liquidation. vi. Right of free transferability; and vii. Such other rights, as may be available to a shareholder of a Public Limited Company under the

Companies Act, 1956 and the Memorandum of Association of the Company. Market lot The Equity Shares of the Company are tradable only in dematerialized form. The market lot for the Equity Shares in dematerialized mode is one. In case of physical certificates, the Company would issue one certificate for the Equity Shares allotted to one folio (“Consolidated Certificate”). In respect of the Consolidated Certificate, the Company will upon receipt of a request from the Equity Shareholder, be returning the share certificates issued for the entire holding, duly split as desired by the shareholders. Minimum Subscription If the Company does not receive the minimum subscription of 90 per cent of the Issue (inclusive of devolvement of underwriters and/or from other sources), the entire subscription shall be refunded to the applicants within 42 days from the date of closure of the Issue. If there is any delay in the refund of subscription amount by more than 8 days after the Company becomes liable to pay the subscription amount

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i.e. forty-two days after the closure of the Issue), the Company will pay interest for the delayed period, at rates prescribed under Section 73 of the Act. However applications received after the closure of issue in fulfillment of underwriting obligations to meet the minimum subscription requirement, shall not be entitled for the said interest Also, the Promoters / Promoter Group has confirmed to adjust an amount not exceeding Rs. 1,862.57 Lacs out of the unsecured loans of Rs. 1,862.57 Lacs (as on November 30, 2005) towards there share entitlement and additional application (if any). Nomination facility In terms of Section 109A of the Act, nomination facility is available in case of Equity Shares. The applicant can nominate any person by filling the relevant details in the CAF in the space provided for this purpose. A sole Equity Shareholder or first Equity Shareholder, along with other joint 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 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 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 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 the registered office of the Company or such other person at such addresses as may be notified by the 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 Shareholder(s) has already registered the nomination with the Company, no further nomination needs to be made for Equity Shares to be allotted in this Issue under the same folio. 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 this 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. Joint Holders Where two or more persons are registered as the holders of Equity Shares, they shall be deemed (so far as the Company is concerned) to hold the same as joint-tenants with benefits of survivorship subject to provisions contained in the AoA. Arrangement for Disposal of Odd Lots The Company has not made any arrangements for the disposal of odd lot equity shares arising out of this Issue. The Company will issue certificates of denomination equal to the number of equity shares being allotted to the Equity Shareholder. B. Issue Procedure This Offer is being made to the existing Equity Shareholders of the Company (hereinafter referred to as “shareholders”) 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 the Company at the close of the business hours on the Record date [ ]. Issue of 46,00,000 equity shares of Rs. 10/- each for cash at a premium of Rs. 70/- (Issue Price of Rs. 80/-) per equity share on Rights basis to the existing equity shareholders of the company in the ratio of 1 (one) equity share for every 1 (one) equity shares held on record date [ ] aggregating Rs. 3680 Lacs. The face value of the equity share is Rs.10 per share and the issue price is 8 times the face value. Terms of payment

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Payment should be made in cash / or by cheque / demand draft drawn on any bank (including a co-operative bank) which is situated at and is a member or sub-member of the banker’s clearing house located at the center where application is accepted. A separate cheque / draft must accompany each application form. Outstation cheques / drafts will not be accepted and application(s) accompanied by such cheques / drafts will be rejected. 100% of the issue price per Equity Share shall be payable on application. Where an applicant is allotted lesser number of equity shares than he/she has applied for, the excess amount paid on application, if any remaining thereafter will be refunded to the applicant. Option available to the Equity Shareholders The Composite Application Form clearly indicates the number of Equity Shares that the Equity Shareholder is entitled to. If the Equity Shareholder applies for an investment in Equity Shares, then he / she can:

Apply for his entitlement in part Apply for his entitlement in part and renounce the other part Apply for his entitlement in full Apply for his entitlement in full and also apply for additional Equity Shares

Renouncees for Equity Shares can apply for the Equity Shares renounced to them and also apply for additional Equity Shares. Option to Receive Rights Equity Shares in Dematerialised Form Applicants to the Equity Shares of the Company issued through this Rights Issue shall be allotted the securities in dematerialised (electronic) form at the option of the applicant. The Company and Intime Spectrum Registry Limited, the Registrar to the Company, have signed a tripartite agreement with CDSL on May 3, 2001 and with NSDL on June 1, 2001, 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. The ISIN No. allotted to the Company is INE426D01013. In this Rights Issue, the 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. Investor will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Applications, which do not accurately contain this information, will be given the securities in physical form. No separate applications for securities in physical and 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, will be allotted in physical shares. Procedure for availing this facility for allotment of Equity Shares in this Issue in the electronic form is as under: 1. Open a Beneficiary Account with any Depository Participant (care should be taken that the Beneficiary

Account should carry the name of the holder in the same manner as is exhibited in the records of the Company. In case of joint holding, the Beneficiary Account should be opened carrying the names of the holders in the same order as with the Company). In case of Investors having various folios in the Company with different joint holders, the investors will have to open separate accounts for such holdings. Those Equity Shareholders who have already opened such Beneficiary Account (s) need not adhere to this step.

2. For Equity Shareholders already holding Equity Shares of the Company in dematerialized form as on 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 Rights Equity Shares 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 securities arising out of this Issue may be made in dematerialized form even if the original equity shares of the Company are not dematerialized. Nonetheless, it should be ensured that the Depository Account is in the name(s) of the Equity Shareholders and the names are in the same order as in the records of the Company.

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3. Responsibility for correctness of applicant’s age and other details given in the CAF vis-à-vis those with the applicant’s Depository Participant 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 same as registered with the applicant’s Depository Participant.

4. If incomplete / incorrect Beneficiary Account details are given in the CAF, the applicant will get Equity Shares in physical form.

5. The Rights Equity Shares allotted to investors opting for dematerialized form, would be directly credited to the Beneficiary Account as given in the CAF after verification. Allotment advice, Refund Order (if any) would be sent directly to the applicant by the Registrar to the Issue but the applicant’s) Depository Participant will provide to him the confirmation of the credit of the Rights Equity Shares to the applicant’s Depository Account.

6. Renouncees will also have to provide the necessary details about their Beneficiary Account for allotment of securities in this Issue. In case these details are incomplete or incorrect, the application is liable to be rejected. Dividend or other benefits with respect to the Equity Shares held in dematerialised form would be paid to those shareholders whose names appear in the list of beneficial owners given by the depositories to the Company as on book closure/ record dates.

Option to receive the Rights Equity Shares in Demat form Applicants have the option to subscribe and hold the equity shares either in electronic form or in physical form. Applicants must indicate in the application from the number of shares they wish to receive in dematerialised form and physical form out of the total number of shares applied for. In case of partial allotment, shares will first be allotted in dematerialised form and the balance shares, in excess of the applicants request for equity shares in demat form will be allotted in physical form. Shareholders opting to receive equity shares in physical form will be issued a consolidated shares certificate for all the equity shares allotted to them in this offer. INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY CAN BE TRADED ON THE STOCK EXCHANGES ONLY IN DEMATERIALIZED FORM. How to Apply Resident Equity Shareholders Application should be made only on the enclosed CAF provided by the Company. The enclosed CAF should be completed in all respects, as explained in the instructions indicated in the CAF. Applications will not be accepted by the Lead Managers or by the Registrar to the Issue or by the Company at any offices except in the case of postal applications as per instructions given in the Letter of Offer. Non-resident Equity Shareholders Applications received from the Non-Resident Equity Shareholders for the allotment of Equity Shares shall, inter alia, be subject to the conditions as may be imposed from time to time by the Reserve Bank of India, in the matter of refund of application moneys, allotment of Equity Shares, issue of Letters of Allotment/ certificates/ payment of dividends etc. 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 for renouncees Part D: Form for request for split application forms Acceptance of the Rights Issue You may accept the Offer and apply for Equity Shares offered, either in full or in part by filling Block III of Part “A” of the enclosed CAF and submit the same along with the application money payable to the “Bankers to the Issue” or any of the 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 the Board thereof in this regard. Applicants at centers not covered by the branches of collecting banks can send their CAF together with the cheque drawn on a local bank at Mumbai/demand draft payable at Mumbai to the

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Registrar to the Issue by registered post net of bank and postal charges for obtaining the demand draft / cheque, favouring the Bankers to the Issue. Renunciation As an Equity Shareholder, you have the right to renounce your entitlement for the Equity Shares in full or in part in favour of one or more person(s). Such renounces can only be Indian Nationals / Limited Companies incorporated under and governed by the Act, statutory corporations / institutions, trusts (unless registered under the Indian Trust Act,) minors (through their legal guardians), societies (unless registered under Societies Registration Act, 1860 or any other applicable laws) provided that such trust / society is authorized under its constitution / bye laws to hold equity shares in a company and cannot be a partnership firm, more than three persons including joint-holders, HUF, foreign nationals (unless approved by RBI or other relevant authorities) or to any person situated or having jurisdiction where the offering in terms of the Letter of Offer should be illegal or require compliance with securities law of such jurisdiction or any other person not approved by the Board. Any Renunciation from Resident Indian Shareholder(s) to Non-Resident Indian(s) or from Non-Resident Indian Shareholder(s) to other Non-Resident Indian(s) is subject to the renouncer(s)/ renouncee(s) obtaining the approval of the FIPB and / or necessary permission of RBI under the Foreign Exchange Management Act, 1999 (FEMA) and other applicable laws and such permission should be attached to the CAF. Applications not accompanied by the aforesaid approval are liable to be rejected. By Virtue of Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies (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 OCBs) Regulations, 2003. Accordingly, the existing Equity Shareholders of the Company who do not wish to subscribe to the Equity Shares being offered but wish to renounce the same in favour of renouncees shall not renounce the same (whether for consideration or otherwise) in favour of OCBs. The right of renunciation is subject to the express condition that the Board shall be entitled in its absolute discretion to reject the request for allotment to renouncee(s) without assigning any reason thereof. Procedure for renunciation To renounce the whole offer in favour of one renouncee If you wish to renounce the offer indicated in Part A, 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 joint 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 this offer in part and renounce the balance or renounce the entire offer in favour of two or more renouncees, the CAF must be first split into requisite number of forms. Please indicate your requirement of split 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 forms. On receipt of the required number of split forms from the Registrar, the procedure as mentioned in paragraph above shall have to be followed. In case the signature of the Equity Shareholder(s), who has renounced the Equity Shares, does not agree with the specimen registered with the 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 Application Form and submit the entire Application Form to the Bankers to the Issue 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 or persons, not more than three, who is/are not already joint holder with you, it shall amount to renunciation and the procedure as stated above

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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 the Board of Directors of the Company shall be entitled in its absolute discretion to reject the request for allotment from the renouncee(s) without assigning any reason thereof. Please note that: a. Part A of the CAF must not be used by any person(s) other than those in whose favour this offer has

been made. If used, this will render the application invalid. b. Only the person to whom this Letter of Offer has been addressed to and not the renouncee(s) shall be

entitled to renounce and to apply for Split Application Forms. Forms once split cannot be split again. c. Split form(s) will be sent to the applicant(s) by post at the applicant’s risk. Additional Equity Shares You are eligible to apply for additional Equity Shares over and above the number of Equity Shares you are entitled to, provided that you have applied for all the Equity Shares offered without renouncing them in whole or in part in favour of any other person(s). The application for additional Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board of Directors and in consultation if necessary with the designated stock exchange and also in the manner prescribed in the Letter of Offer under the section “Basis of Allotment”. This allotment of additional Equity Shares will be made on an equitable basis with reference to the number of shares held by the shareholder on the record date. The renouncees applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares. In case of application for additional Equity Shares by non-resident Equity Shareholders, the allotment of additional securities will be subject to the permission of the Reserve Bank of India. 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. The summary of options available to the Equity Shareholder 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

Sr. No.

Option Available Action Required

1. Accept whole or part of your entitlement without renouncing the balance.

Fill in and sign Part A (All joint holders must sign)

2. Accept your entitlement in full and apply for additional Equity Shares

Fill in and sign Part A including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)

3. Renounce your 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)

4. Accept a part of your entitlement and renounce the balance to one or more renouncee(s) OR Renounce your 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 receiving requests for Split Forms. Splitting will be permitted only once. On receipt of the Split Form take action as indicated below: - For the Equity Shares you wish to accept, if any, fill in

and sign Part 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

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Sr. No.

Option Available Action Required

the renounces should fill in and sign Part C for the Equity Shares accepted by them.

5. 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

Availability of duplicate CAF In case the original CAF is not received, or is misplaced by the 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 no. and his / her full name and address to the Registrar to the Issue. 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 as well as forfeiture of amounts remitted along with the applications. Applicants residing at places other than designated collection centers Applicants residing at places other than the cities where the bank collection centers have been opened should send their completed CAF by registered post to the Registrars to the Issue along with bank drafts net of demand draft and postal charges payable at Mumbai in favour of “GCL- Rights Issue” crossed “A/c Payee only” so that the same are received on or before closure of the Issue. The Company shall not be liable for any postal delays and applications received through mail after the closure of the Issue are liable to be rejected and returned to the applicants. Applications by mail should not be sent in any other manner except as mentioned above. All CAFs duly completed together with cash/cheque/demand draft must be submitted before the closure of the Issue to the Bankers to the Issue named herein or to any of its collection centers mentioned on the reverse of the CAF. The CAF along with application money must not be sent to the Company or the Lead Managers to the Issue or the Registrars to the Issue except as mentioned above. The applicants are requested to strictly adhere to these instructions. Failure to do so could result in the applications being liable to be rejected, and the Company, the Lead Managers and the Registrars to the Issue will not have any liability to such applicants. In case the original CAF is not received by the shareholder or is lost, misplaced, he/she may request the Registrars to the issue for a duplicate CAF by furnishing the registered folio number/DP ID/Client ID number and their full name and address. In case the original and duplicate CAFs are lodged for subscription, allotment will be made on the basis of the duplicate CAF and the original CAF will be ignored. Applications under Power of Attorney In case of applications made under a power of attorney or by limited companies or bodies corporate or registered societies or mutual funds or trusts, certified true copy of the relevant power of attorney or relevant resolution or authority to make the investment and sign the application, as the case may be, along with a copy of the memorandum and articles of association and/or bye-laws must be lodged with the Registrar giving reference of the serial number of the CAF after submission of the CAF to the Bankers to the Issue or any of their collection centers, failing which the applications are liable to be rejected. In case the above-referred documents are already registered with the Company, the same need not be furnished again. However, the serial number of registration or reference of the letter, vide which these papers were lodged with the Company/R&T Agents must be mentioned just below the signature(s) on the CAF. In no case should these papers be attached to the application submitted to the Bankers to the Issue or at its collection centers. Application on Plain Paper 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 Rights Issue on plain paper, along with an Account Payee Cheque drawn on a local bank at Mumbai/ Demand Draft payable at Mumbai which should be drawn in

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favour of the Company and send the same by registered post directly to the Registrar to the Issue net of bank and postal charges for obtaining the demand draft / cheque, favouring the Bankers to the Issue. The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recorded with the Company, must reach the office of the Registrar to the Issue before the Date of Closure of the Issue and should contain the following particulars:

- Name of Issuer - Name and address of the Equity Shareholder including joint holders - Registered Folio Number/ DP and Client ID no. - Number of Equity Shares held as on Record Date [ ] - Certificate numbers and Distinctive numbers, if held in Physical form - Number of Rights Equity Shares entitled - Number of Rights Equity Shares applied for out of entitlement - Number of additional Equity Shares applied for, if any - Total number of Equity Shares applied for - Total amount paid @ Rs. 80/ - per Equity Share - Particulars of Cheque/ Draft enclosed - In case of non-resident shareholders, NRE/FCNR/NRO account number, name and address of the

bank and branch - If the payment is made by drafts purchased from NRE/FCNR 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 account.

- If the payment is made by a draft purchased from an NRO account, an account debit certificate from the bank issuing the draft, confirming that the draft has been issued by debiting the NRO account.

- Savings/Current Account Number and name and address of the bank where the Equity Shareholder will be depositing the refund order

- PAN/GIR number and Income Tax Circle/Ward/District where the application is for Equity Shares of a total value of Rs.50,000 or more for the applicant and for each applicant in case of joint names, and

- Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of the Company.

Payments in such cases, should be through a cheque/ demand draft payable at Mumbai be drawn in favour of the Bankers to the Issue marked “A/c Payee” and marked “Name of the Bank – GCL - Rights Issue”.

Please note that those who are making the application otherwise than on 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 the applicant violates any of these requirements, he/she shall face the risk of rejection of both the applications as well as forfeiture of amounts remitted along with the applications. Last date of Application The last date for submission of CAF is _________. The Board/Committee of Directors will have the right to extend the said date for such period as it may determine from time to time but not exceeding sixty days from the date the Issue opens. If the CAF together with the amount payable is not received by the Bankers to the Issue/ Registrar on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board/ Committee of Directors, the offer contained in this Letter of Offer shall be deemed to have been declined and the Board/ Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under the heading “Basis of Allotment”. Printing of Bank Particulars on Refund Orders As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the particulars of the applicant’s bank account are mandatorily required to be provided for printing on the refund orders. Bank account particulars will be printed on the refund orders, which can then

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be deposited only in the account specified. The Company will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud. Impersonation As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of subsection (1) of Section 68A of the Companies Act, 1956 which is reproduced below: “Any person who- (a) Makes in a fictitious name an application to a company for acquiring, or subscribing for, any

shares therein, or (b) Otherwise induces a company to allot, or register any transfer of shares therein to him, or any

other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years” Basis of Allotment 1) Subject to provisions contained in this Letter of Offer, the Articles of Association and approval of the

Designated Stock Exchange, the Board will proceed to allot the Equity Shares in the following order of priority: a. Full allotment to the Equity Shareholders who have applied for their rights entitlement either in full

or in part and also to the renouncees who have applied for Equity Shares renounced in their favour either in full or in part.

b. Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them as rights 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 full allotment in (a) above. The allotment of such Equity Shares will be at the sole discretion of the Board/Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Rights Issue.

c. 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) and (b) above. The allotment of such additional Equity Shares will be made on a proportionate basis at the sole discretion of the Board/ Committee of Directors but in consultation with the Designated Stock Exchange, as a part of the Rights Issue.

d. Allotment to any person as the board may in its absolute discretion deem fit provided there is a surplus available after making full allotment under (a) (b) and (c) above.

2) The Company shall not retain any over subscription. 3) The Issue will become undersubscribed after considering the number of Equity Shares applied as per

entitlement plus additional Equity Shares. The undersubscribed portion shall be applied for only after the close of the issue. In case the minimum subscription is not received, the promoters or any person presently in control of the company may subscribe to such under subscribed portion to achieve minimum subscription. If any person presently in control of the Company desires to subscribe to such undersubscribed portion and if disclosure is made pursuant to SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997, such allotment of the undersubscribed portion will be governed by the provisions of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997.

4) After taking into account the allotments made under 1(a), 1(b) and 1(c) above, if there is still any under subscription, the unsubscribed portion shall be disposed off by the Board or Committee of Directors authorized in this behalf by the Board upon such terms and conditions, through such securities (Equity Shares) and to such person/persons and in such manner as the Board / Committee of Directors may in its absolute discretion deem fit, as part of the rights issue and not preferential allotment.

Allotment / Refund The Company will issue and dispatch letters of allotment/ securities certificates and/ or letters of regret along with refund order or credit the allotted securities to the respective beneficiary accounts, if any within a period of six weeks from the Date of Closure of the Issue. If such money is not repaid within 8 days from the day, the Company becomes liable to pay it, the Company shall pay that money with interest as stipulated under Section 73 of the Act.

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Letters of allotment/ securities certificates/ refund orders above the value of Rs.1,500 will be dispatched by Registered Post/ Speed Post to the sole/ first applicant’s registered address. However, refund orders for value not exceeding Rs.1,500 shall be sent to the applicants under Postal Certificate. Such cheques or pay orders will be payable at par at all the centers where the applications were originally accepted and will be marked “A/c payee” and would be drawn in the name of the sole/ first applicant. Adequate funds would be made available to the Registrar to the Issue for the dispatch of Letters of allotment/ securities certificates and refund orders. In case the Company issues Letters of allotment, the corresponding Security Certificates will be kept ready within three months from the date of allotment thereof or such extended time as may be approved by the Company Law Board under Section 113 of the Companies Act, 1956 or other applicable provisions, if any. Allottees are requested to preserve such Letters of Allotment, which would be exchanged later for the Security Certificates. As regards allotment/ refund to Non-Residents, the following further conditions shall apply In case of Non-Residents, who remit their application monies from funds held in NRE/ FCNR accounts, refunds and/ or payment of interest/ dividend and other disbursement, if any, shall be credited to such accounts, details of which should be furnished in the CAF. Subject to the approval of the RBI, in case of non-residents, who remit their application monies through Indian Rupee draft purchased from abroad, refund and/ or payment of dividend/ interest and any other disbursement, shall be credited to such accounts (details of which should be furnished in the CAF) and will be made net of bank charges/ commission in US Dollars, at the rate of exchange prevailing at such time. The Company will not be responsible for any loss on account of exchange fluctuations for converting the Indian Rupee amount into US Dollars. The Equity Share certificate(s) will be sent by registered post at the Indian address of the non-resident applicant. Letters of Allotment / Equity Share certificates Letter(s) of Allotment/ Equity Share certificates or Letters of Regret and refund orders will be dispatched to the registered address of the first named applicant or respective beneficiary accounts will be credited within six weeks, from the date of closure of the subscription list. In case, the Company issues Letters of Allotment, the relative Equity Share certificates will be dispatched within three months from the date of allotment. Allottees are requested to preserve such Letters of allotment (if any) to be exchanged later for Equity Share certificates. Export of Letters of Allotment (if any)/ Equity Share certificates to non-resident allottees will be subject to the approval of RBI; if necessary. Interest in case of delay on Allotment/ Dispatch The company agrees that:

a. As far as possible allotment of securities offered to the public shall be made within 30 days of the closure of the rights issue.

b. It shall pay interest as prescribed under section 73 of the Companies Act, 1956, if the allotment has not been made and the refund orders have not been dispatched to the investors within 42 days from the date of the closure of the issue.

Underwriting and Standby Arrangement The Present Rights Issue is underwritten to the extent of non-promoters entitlement by Centrum Capital Limited to the tune of Rs. 16,13,31,200. (2016640 number Equity Shares). The promoters have confirmed that they intend to subscribe to the promoters entitlement in full either through self or by renouncing the said holding in favour of other Promoter / Promoter Group Entities as disclosed in this Letter of Offer under the section – ‘Details of Promoter and Promoter Group shareholding’. In case the minimum subscription is not received, the promoters or any person presently in control of the company failing which the underwriters shall subscribe to such under subscribed portion to achieve minimum subscription. The acquisition of additional securities or subscription to the shortfall shall be exempt in terms of proviso to Regulation 3(1) (b) (ii) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. Further this acquisition will not result in change of control of the management of the company. Undertaking by the Company

The complaints received in respect of the captioned Rights Offer shall be attended to by the Company and the Registrars to the Issue expeditiously and satisfactorily.

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The Company will only upon request from the equity shareholders, split and return consolidated certificate into smaller denomination within 7 days time in conformity with clause 3 of the listing agreement. No fee would be charged by the company for splitting the consolidated certificates.

All steps for completion of the necessary formalities for listing and commencement of trading at all stock exchanges where the securities are to be listed will be taken within 7 working days of finalisation of basis of allotment.

That the issuer company shall apply in advance for the listing of equities on the conversion of debentures / bonds, if applicable.

The funds required for despatch of refund orders/ allotment letters/ certificates by registered post shall be made available to the Registrar to the Issue.

The certificates of the securities/ refund orders to the non-resident Indians shall be despatched within the specified time.

No further Issue of securities affecting equity capital of the Company shall be made till the securities issued/ offered through the captioned Rights Issue are listed or till the application moneys are refunded on account of non-listing, under-subscription etc.

The Company, its promoters, any of the Company’s associates of group companies and other Companies with which directors of the Company are associated as directors or promoters have neither been suspended by SEBI or been prohibited form accessing the capital market nor has any disciplinary action been taken by any order or direction passed by SEBI.

At any given time that there shall be only one denominator of the shares of the Company and the company shall comply with such disclosures and accounting norms specified by SEBI from time to time.

All information shall be made available by the Lead Manager and the Issuer to the public and investors at large and no selective or additional information would be available for a section of the investors in any manner whatsoever including at road shows, presentations, in research or sales reports etc.

The Lead Manager and the Issuer shall update the offer document and keep the public informed of any material changes till the listing and trading commences. Utilisation of Offer Proceeds The Board of Directors declares that:

i. The funds received against this Letter of Offer (except the subscription amount of the Promoter’s which has already been received to the extent of Rs. 1,862.57 Lacs as on November 30, 2005) will be transferred to a separate bank account other than the bank account referred to in sub-section (3) of Section 73 of the Act.

ii. Details of all moneys utilised out of the Issue shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the purpose for which such moneys has been utilised.

iii. Details of all such unutilised moneys out of the Issue, if any, shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the form in which such unutilised moneys have been invested.

iv. The funds received against this Rights Issue (except the subscription amount of the Promoter’s which has already been received to the extent of Rs. 1,862.57 Lacs as on November 30, 2005) will be kept in a separate bank account and the Company will not have any access to such funds unless it satisfies the Designated Stock Exchange with suitable documentary evidence (including underwriting devolvement and/or from other sources) that the minimum subscription of 90% of the Offer has been received by the Company.

Restrictions on foreign ownership The FDI limit applicable to the industry in which the company operates is 100% under the automatic route. General instructions for applicants a) Please read the instructions printed on the enclosed CAF carefully. b) Application should be made on the printed CAF, provided by the Company 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 Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and without deduction of bank commission and other charges. The CAF must be filled in English and the

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names of all the applicants, details of occupation, address, and 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 Offer / Collecting

Bank or to the Registrar and not to the Company or Lead Managers to the Issue. Applicants residing at places other than cities where the branches of the Bankers to the Issue have been authorised by the Company for collecting applications, will have to make payment by Demand Draft payable at Mumbai and send their application forms to the Registrar to the Issue by REGISTERED POST net of bank and postal charges for obtaining the demand draft / cheque, favouring the Bankers to the Issue. If any portion of the CAF is / are detached or separated, such application is liable to be rejected.

d) Applications for a total value of Rs. 50,000 or more, i.e. where the total number of securities applied for

multiplied by the Offer price, is Rs. 50,000 or more the applicant or in the case of application in joint names, each of the applicants, should mention his/ her permanent account number allotted under the Income-Tax Act, 1961 or where the same has not been allotted, the GIR number and the Income-Tax Circle / Ward / District. In case where neither the permanent account number nor the GIR number has been allotted, the fact of non-allotment should be mentioned in the CAFs. Forms without this information will be considered incomplete and are liable to be rejected.

e) Applicants are advised to provide information as to their savings/current account number and the

name of the Bank with whom such account is held in the CAF to enable the Registrar to print the said details in the Refund Orders, if any, after the names of the payees. Application not containing such details is liable to be rejected.

f) The payment against the application should not be effected in cash if the amount to be paid is Rs. 20,000

or more. 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. Payment against the application if made in cash, subject to conditions as mentioned above, should be made only to the Bankers to the Offer.

g) Signatures should be either in English or Hindi or in any other language specified in the 8th Schedule of

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 Equity Shareholders must sign the CAF as per the specimen signature recorded with the Company.

h) In case of an application under 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 make investment and sign the application along with a copy of the Memorandum & Articles of Association and / or bye laws must be lodged with the Registrar to the Offer giving reference of the serial number of the CAF. In case these papers are sent to any other entity besides the Registrar to the Offer or are sent after the Offer Closure 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 the Company. Further, in case of joint applicants who are renouncees, the number of applicants 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 offer and allotment of Equity Shares, interest, export of Equity Share certificates, etc. In case a Non-Resident or NRI 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 Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of

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allotment in this Issue quoting the name of the first / sole applicant Equity Shareholder, folio numbers and CAF number. Please note that any intimation for change of address of Equity Shareholders, after the date of allotment, should be sent to the Registrar and Transfer Agents of the Company in the case of equity shares held in physical form and to the respective DP, in case of equity shares held in dematerialised form.

l) Split 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 forms. n) Applicants must write their CAF number at the back of the cheque / demand draft. o) Only one mode of payment per application should be used. The payment must be either in cash or by

cheque / demand draft drawn on any of the banks, including a co-operative bank, which is situated at and is a member or a sub member of the Bankers Clearing House located at the centre indicated on the reverse of the CAF where the application is to be submitted.

p) A separate cheque / 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)

q) No receipt will be offered for application money received. The Bankers to the Issue/ Collecting Bank/

Registrar will acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF.

r) An applicant which is a mutual fund can make a separate application in respect of each scheme of the

fund and such applications shall not be treated as multiple applications. The application made by the asset management company or custodians of a mutual fund shall clearly indicate the name of the concerned scheme for which application is being made.

s) Mode of payment for Resident Equity Shareholders/ Applicants:

All cheques / drafts accompanying the CAF should be drawn in favour of the Collecting Bank (specified on the reverse of the CAF), crossed “A/c Payee only” and marked “Name of the Bank–GCL - Rights Issue” Applicants residing at places other than places where the bank collection centres have been opened by the Company for collecting applications, are requested to send their applications together with Demand Draft for the full application amount net of bank and postal charges for obtaining the demand draft favoring the Bankers to the Issue, crossed “A/c Payee only” and marked “ Name of the Bank – GCL - Rights Issue” payable at Mumbai directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing Date. The Company or the Registrar will not be responsible for postal delays or loss of applications in transit, if any.

t) Mode of payment for Non-Resident Equity Shareholders/ Applicants: As regards the application by non-resident Equity Shareholders, the following further conditions shall apply:

Payment by non-residents must be made by demand draft / cheque payable at Mumbai or funds remitted from abroad in any of the following ways: 1. Application with repatriation benefits

a) By Indian Rupee drafts purchased from abroad and payable at Mumbai or funds remitted from abroad (submitted along with Foreign Inward Remittance Certificate); or

b) By cheque / draft on a Non-Resident External Account (NRE) or FCNR Account maintained in Mumbai; or

c) By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable in Mumbai or

d) FIIs registered with SEBI must remit funds from special non-resident rupee deposit account.

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2. Application without repatriation benefits

As far as non-residents holding shares on non-repatriation basis is 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 Mumbai or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Mumbai. In such cases, the allotment of Equity Shares will be on non-repatriation basis. All cheques/drafts submitted by non-residents should be drawn in favour of the Bankers to the Issue and marked “Name of the Bank-GCL- Rights Issue -NR” payable at Mumbai must be crossed “A/c Payee only” for the amount payable. 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 the Offer 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. Note: i. 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 Income Tax Act, 1961.

ii. In case Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity Shares cannot be remitted outside India.

iii. 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 the aforesaid Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

iv. In case application 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.

Disposal of application and application money No acknowledgment will be issued for the application moneys received by the Company. However, 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. The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in either case without assigning any reason thereto. 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 six weeks from the close of the Issue. For further instructions, please read the Composite Application Form carefully. Important:

1. Subscription received against this issue would be kept in separate bank accounts and the Company would not have access to such funds unless it has received a minimum subscription of 90% of the issue, and the permission of Bombay Stock Exchange Limited, Mumbai (being the Designated Stock Exchange) to use the amount of subscription received. The Company will obtain the permission of The Stock Exchange, Mumbai by producing sufficient documentary evidence of subscription to the extent of 90% after closure of the issue, to utilize the funds collected as per the present issue.

2. The Issue shall be kept open for a minimum period of 30 (thirty) days but not exceeding 60 (sixty) days.

3. Please ensure that CAF is received with this Letter of Offer.

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4. Please read this Letter of Offer and instructions contained in the accompanying Composite Application Form (hereinafter referred as the “CAF”) carefully before filling in the CAF. The instructions contained in the CAF are an integral part of this Letter of Offer and must be followed carefully; otherwise the application is liable to be rejected.

5. It is to be specifically noted that this Issue of Equity Shares is subject to Risk Factors appearing on Page ‘i to xiv’ of this Letter of Offer.

6. All the legal requirements as applicable till the filing of the Draft Letter of Offer with the Designated Stock Exchange shall be complied with

7. All enquiries in connection with this Letter of Offer or accompanying Composite Application Form and requests for Split Application Forms must be addressed (quoting the Registered Folio Number/ DP and Client ID no., the CAF number and the name of the first Equity Shareholder as mentioned on the CAF and superscribed “Goa Carbon Limited – Rights Issue ” in the envelope) to the Registrar to the Issue at the following address: INTIME SPECTRUM REGISTRY LIMITED,

C-13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (West), Mumbai – 400 078 Tel: +91-22-5555 5491-94

Fax: +91-22-5555 5499 Email: [email protected] Contact person: Mr. Vishwas Attavar Under no circumstances should any request be sent to the Lead Manager to the issue or to the Company.

8. In terms of Section 6(3)(b) of the Foreign Exchange Management Act 1999, the RBI has given general permission to Indian Companies to offer securities to a person resident outside India on a rights basis subject to terms and conditions stipulated under Para 6 of the notification no. FEMA 20/2000-RB dated 3rd May 2000.

9. As per the regulation 6(2) of the Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations 2000, framed under the Foreign Exchange Management Act, 1999 general permission has been granted to Indian companies to offer securities on a rights basis to persons resident outside India. Vide Notification number FEMA 20/2000-RB dated May 3, 2000 and FEMA 76/2002-RB dated November 12, 2002 RBI has given permission to Indian companies to issue rights shares to NRIs. Hence company does not need an in-principle approval for the issue of shares to NRIs on repatriation basis within the sectoral cap (if any) prescribed under FEMA

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IX. OTHER INFORMATION MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The following contracts and agreements referred to (not being contracts entered into in the ordinary course of business carried on or intended to be carried on by the Company or contracts entered into more than two years before this Letter of Offer), which are or may be deemed material to be material have been entered into by or on behalf of the Company. Copies of these contracts together with copies of documents referred under Material Documents below all of which have been attached to the copy of this Letter of Offer and have been delivered to the Stock Exchanges and may be inspected at the Registered Office of the Company between 9:30 am to 5:30 pm on any working day from the date of this Draft Letter of Offer until the date of closure of the subscription List. Material contracts 1. Memorandum of Understanding dated December 6, 2005 entered into between the Company and

Fortune Financial Services India Limited. 2. Memorandum of Understanding dated September 20, 2005 entered into between the Company and

Registrar to the Issue. 3. Copy of Tripartite agreement dated May 3, 2001 entered into between the Company, CDSL and

Registrar to the Issue. 4. Copy of Tripartite agreement dated June 1, 2001 entered into between the Company, NSDL and

Registrar to the Issue. 5. Underwriting agreement dated November 29, 2005 between the Company and Centrum Capital Limited Material Documents 1. Memorandum of Association and Articles of Association of the Company. 2. Annual Reports of the Company for the financial years / periods ending on June 30, 2005, March 31

2004, 2003, December 31, 2001 and March 31, 2001. 3. Annual Reports of Paradeep Carbons Limited for the financial year ending on June 30, 2005, March 31

2004, 2003, 2002 and 2001. 4. Resolutions passed by the Board of Directors at their meeting held on July 23, 2005 5. Consents from Directors, Auditors, Bankers to the Issue/ Company, Underwriter, Compliance Officer of

the Company, Lead Manager to the Issue, Advisors to the Issue, Legal Advisor to the Issue and the Registrar to the Issue.

6. Copy of members’ resolution dated September 17, 2001 for appointment and fixation of remuneration of Mr. Shrinivas Dempo as Executive Chairman and for appointment and fixation of remuneration of Dr. A. B. Prasad as Managing Director dated December 10, 2005.

7. Auditors’ report of M/s. Fraser & Ross, Chartered Accountants dated November 16, 2005 giving the financial information, which is enclosed in the Letter of Offer.

8. Auditors’ certificate dated November 16, 2005 regarding tax benefits. 9. Power of Attorney(s) executed by the Directors in favour of Dr. A. B. Prasad for signing and making

correction in the Letter of Offer on their behalf 10. Letters of intent for the subscription to rights entitlement and additional shares, received from the

Promoters. 11. Consent for this Issue obtained from lenders to the Company / Subsidiary i.e. Bank of India and Bank of

Baroda. 12. Application made to BSE and MgSE dated _______ and _____ for listing of shares. 13. In-principle approval dated ______ and ______ from BSE and MgSE for listing of the securities offered

through this Letter of Offer. 14. Resolution of the Board of Directors approving the Draft Letter of Offer on December 10, 2005.

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15. Due diligence Certificate dated December 10, 2005 of Fortune Financial Services (India) Limited, Lead Manager to the Issue.

16. SEBI Observation Letter No. ____________dated _________ issued by the Securities and Exchange Board of India.

17. Legal Clearance Certificate from Legal Advisors to the Issue dated December 20, 2005.

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DECLARATION This is to confirm that all the relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government have been complied with and no statement made in this Letter of Offer is contrary to the provisions of the Companies Act, 1956 and rules made there under. All the legal requirements connected with this said offer as also the guidelines, instructions etc., issued by SEBI, the Government and any other competent authority in this behalf have been duly complied with. Undertaking We the Directors of Goa Carbon Limited, declare and confirm that no information/material likely to have a bearing on the decision of the investor in respect of the equity shares offered in terms of this Letter of Offer have been suppressed/withheld and/or incorporated in a manner that would amount to misstatement/misrepresentation and in the event of it transpiring at any point of time till allotment/refund, as the case may be, that any information/material has been suppressed/withheld and/or amounts to misstatement/misrepresentation, we undertake to refund the entire application moneys to all the subscribers within seven days thereafter, without prejudice to the provisions of Section 63 of the Act. Since the date of last financial statement disclosed in this Letter of Offer, there have been no circumstances that materially and adversely affects or is likely to affect the profitability of the Company or the value of its assets or its ability to pay off its liabilities within a period of next twelve months. The Directors and Mr. K. Balaraman G M (Finance & Accounts) of the company certify that all disclosures made in the Draft Letter of Offer are true and correct. Signed by Mr. Shrinivas Dempo (Executive Chairman) Dr. A. B. Prasad (Managing Director) Mr. Soiru V. Dempo Mr. Dara P. Mehta Dr. W.R Correa Mr. P.G. Kakodkar Mr. Keki M. Elavia Mr. Alban F. Couto Mr. K. Balaraman (G.M. Finance & Accounts) * Signed by constituted Attorney Dr. A.B. Prasad Place: Goa Date:

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