HITACHI HOME & LIFE SOLUTIONS (INDIA) LIMITED Letter of Offer December 13, 2012 For our Equity...

Draft Letter of Offer

December 13, 2012 For our Equity Shareholders only

HITACHI HOME & LIFE SOLUTIONS (INDIA) LIMITED

Our Company was incorporated on December 7, 1984 as Acquest Air-conditioning Systems Private Limited and subsequently our Company was converted into a deemed public limited company on April 18, 1990. On September 14, 1990, the name of our Company was changed to Amtrex Appliances Limited and further to Amtrex Hitachi Appliances Limited on January 25, 1999. On March 12, 2003, the name of our Company was further changed to our present name Hitachi Home & Life Solutions (India) Limited. For details of change of our name, please see the chapter “History and Other Corporate Matters” on page 63.

Registered Office: 9th Floor, Abhijeet-I, Mithakhali Six Roads, Ahmedabad - 380 006, Gujarat, India. Tel: +91 79 3041 4800; Fax: +91 79 3041 4999

Contact Person: Mr. Parag Dave, Company Secretary and Compliance Officer E-mail: [email protected] Website: http://www.hitachi-hli.com

FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF HITACHI HOME & LIFE SOLUTIONS (INDIA) LIMITED

(THE “COMPANY” OR THE “ISSUER”) ONLYISSUE OF [●] FULLY PAID-UP EQUITY SHARES OF FACE VALUE OF ` 10 EACH (“RIGHTS ISSUE EQUITY SHARES”) FOR CASH AT A PRICE OF ` [●] PER EQUITY SHARE INCLUDING A SHARE PREMIUM OF ` [●] PER EQUITY SHARE AGGREGATING UPTO ` 5,500 LAKHS TO OUR EXISTING EQUITY SHAREHOLDERS ON A RIGHTS BASIS IN THE RATIO OF [●] FULLY PAID-UP EQUITY SHARE(S) FOR EVERY [●] FULLY PAID-UP EQUITY SHARE(S) HELD BY THE EXISTING EQUITY SHAREHOLDERS ON THE RECORD DATE, I.E. [●] (“THE ISSUE”). THE ISSUE PRICE FOR THE EQUITY SHARE IS [●] TIMES THE FACE VALUE OF THE EQUITY SHARE. FOR FURTHER DETAILS, PLEASE SEE THE CHAPTER “TERMS OF THE ISSUE” ON PAGE 136.

GENERAL RISKS Investment in equity and equity related securities involve a degree of risk and Investors should not invest any funds in the Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in the Issue. For taking an investment decision, Investors must rely on their own examination of the Issuer and the Issue including the risks involved. The securities being 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 Draft Letter of Offer. Investors are advised to refer to the section “Risk Factors” on page XI before making an investment in this Issue.

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

LISTING The existing Equity Shares are listed on the BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”), (together the “Stock Exchanges”). We have received “in-principle” approvals from BSE and NSE for listing the Rights Issue Equity Shares to be allotted in the Issue vide their letters dated [●] and [●], respectively. For the purposes of the Issue, the Designated Stock Exchange is [●].

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

ICICI Securities Limited ICICI Centre H. T. Parekh Marg Churchgate, Mumbai 400 020 Maharashtra, India Tel: +91 22 2288 2460 Fax: +91 22 2282 6580 Website: www.icicisecurities.com E-mail: [email protected] Investor Grievance E-mail: [email protected] Contact Person: Mr. Sumit Agarwal SEBI Registration No.: INM000011179

Sharepro Services (India) Private Limited 13 AB, Samhita Warehousing Complex Sakinaka Telephone Exchange Lane Off Andheri-Kurla Road, Sakinaka Andheri (East), Mumbai – 400 072 Maharashtra, India. Tel: +91 22 6191 5400 Fax: +91 22 6191 5444 Website: www.shareproservices.com Investor Greivance E-mail: [email protected] Contact Person: Mr. Prakash Khare / Mr. Anand Moolya SEBI Registration No: INR000001476

ISSUE PROGRAMME

ISSUE OPENS ON LAST DATE FOR RECEIPT OF REQUEST FOR SPLIT APPLICATION FORMS ISSUE CLOSES ON

[●] [●] [●]

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TABLE OF CONTENTS

SECTION I – GENERAL ................................................................................................................................. I

DEFINITIONS AND ABBREVIATIONS ................................................................................................. I NOTICE TO OVERSEAS SHAREHOLDERS ........................................................................................ VI CERTAIN CONVENTIONS, USE OF FINANCIAL, INDUSTRY AND MARKET DATA AND CURRENCY OF PRESENTATION .............................................................................................. VII FORWARD LOOKING STATEMENTS .................................................................................................. X

SECTION II - RISK FACTORS .................................................................................................................... XI SECTION III- INTRODUCTION ................................................................................................................ 30

SUMMARY OF THE ISSUE .................................................................................................................. 30 SUMMARY OF FINANCIAL INFORMATION .................................................................................... 31 GENERAL INFORMATION ................................................................................................................... 36 CAPITAL STRUCTURE ......................................................................................................................... 40 OBJECTS OF THE ISSUE ....................................................................................................................... 44

SECTION IV –STATEMENT OF TAX BENEFITS ................................................................................. 49 SECTION V – ABOUT US ............................................................................................................................ 60

OUR BUSINESS ...................................................................................................................................... 60 HISTORY AND OTHER CORPORATE MATTERS ............................................................................. 63 OUR MANAGEMENT ............................................................................................................................ 64

SECTION VI – FINANCIAL INFORMATION ......................................................................................... 72

FINANCIAL STATEMENTS .................................................................................................................. 72 ACCOUNTING RATIOS AND CAPITALISATION STATEMENT .................................................. 111 STOCK MARKET DATA FOR EQUITY SHARES ............................................................................ 113 MATERIAL DEVELOPMENTS ........................................................................................................... 115 FINANCIAL INDEBTEDNESS ............................................................................................................ 116

SECTION VII – LEGAL AND OTHER INFORMATION ..................................................................... 123

OUTSTANDING LITIGATIONS AND DEFAULTS .......................................................................... 123 GOVERNMENT AND OTHER APPROVALS .................................................................................... 126 OTHER REGULATORY AND STATUTORY DISCLOSURES ........................................................ 127

SECTION VIII – OFFERING INFORMATION ..................................................................................... 137

TERMS OF THE ISSUE ......................................................................................................................... 137 SECTION IX – STATUTORY AND OTHER INFORMATION ........................................................... 166

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION .............................................. 166 DECLARATION .................................................................................................................................... 167

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SECTION I – GENERAL

DEFINITIONS AND ABBREVIATIONS

Definitions In this Draft Letter of Offer, unless the context otherwise requires, the terms defined and abbreviations expanded below shall have the same meaning as stated in this section. References to statutes, rules, regulations, guidelines and policies will be deemed to include all amendments and modifications notified thereto. In this Draft Letter of Offer, unless otherwise indicated or the context otherwise requires, all references to “Hitachi Home & Life Solutions (India) Limited”, the/ our “Company”, “Issuer”, “we”, “our” and “us” are to Hitachi Home & Life Solutions (India) Limited and references to “you” are to the prospective investors in the Issue. Conventional and General Terms/ Abbreviations

Term Description

Act/ Companies Act The Companies Act, 1956 AGM Annual General Meeting AS Accounting Standards notified pursuant to the Companies (Accounting

Standards) Rules, 2006, as amended Bps Basis Points BR Base Rate BSE BSE Limited CAGR Compounded Annual Growth Rate CDSL Central Depository Services (India) Limited Depositories Act The Depositories Act, 1996 Depository A depository registered with SEBI under the SEBI (Depositories and

Participant) Regulations, 1996 Depository Participant/ DP

A depository participant as defined under the Depositories Act

DIN Director Identification Number DP ID Depository Participant Identity EGM Extra-Ordinary General Meeting EPS Earnings per Share FDI Foreign Direct Investment FEMA The Foreign Exchange Management Act, 1999, including the regulations

framed thereunder FII Foreign Institutional Investor as defined under the Securities and

Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, registered with SEBI under applicable laws in India

Financial Year/ Fiscal/ FY Period of 12 months ended March 31 of that particular year FIPB Foreign Investment Promotion Board, Ministry of Finance, GoI FVCI Foreign Venture Capital Investors as defined under the Securities and

Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000 registered with SEBI under applicable laws in India

FCNR (B) Foreign Currency Rupee Loan GAAP Generally Accepted Accounting Principles GDP Gross Domestic Product GDR Global Depository Receipts GoI Government of India

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Term Description

HUF Hindu Undivided Family ICAI Institute of Chartered Accountants of India IFRS International Financial Reporting Standards IFSC Indian Financial System Code ISIN International Securities Identification Number IT Act The Income Tax Act, 1961 IT/ ITeS Information Technology/ Information Technology enabled Services Indian GAAP Generally accepted accounting principles followed in India MICR Magnetic Ink Character Recognition Mutual Fund/ MF A mutual fund registered with SEBI under the SEBI (Mutual Funds)

Regulations, 1996 NAV Net Asset Value NECS National Electronic Clearing Services NEFT National Electronic Funds Transfer NR Non-Resident NRI Non-Resident Indian NRE Account Non-Resident External Account NRO Account Non-Resident Ordinary Account NSDL The National Securities Depository Limited NSE The National Stock Exchange of India Limited OCB Overseas Corporate Body p.a Per annum PAN Permanent Account Number under the IT Act PAT Profit After Tax PBT Profit Before Tax PLR Prime Lending Rate RBI Reserve Bank of India Registrar of Companies/ RoC

Registrar of Companies, Ahmedabad, Gujarat

Regulation S Regulation S under the Securities Act Rupees/ INR/ `/ Rs. Indian Rupees RTGS Real Time Gross Settlement SEBI Securities and Exchange Board of India SEBI Act Securities and Exchange Board of India Act, 1992 SEBI ICDR Regulations/ SEBI Regulations

Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended

Securities Act U.S. Securities Act of 1933 Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares

and Takeovers) Regulations, 2011 U.S./ US/ USA United States of America

Issue Related Terms

Term Description

Abridged Letter of Offer The abridged letter of offer to be sent to the Equity Shareholders with respect to the Issue in accordance with the SEBI ICDR Regulations

Allotment Allotment of Rights Issue Equity Shares pursuant to the Issue Allottees Persons to whom our Rights Issue Equity Shares will be allotted pursuant to

the Issue Application

Unless the context otherwise requires, refers to an application for Allotment of Rights Issue Equity Shares in this Issue.

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Term Description

Application Supported by Blocked Amount/ ASBA

The application (whether physical or electronic) used by ASBA Investors to make an application authorizing the SCSB to block the amount payable on application in ASBA Account

ASBA Account Account maintained with a SCSB and specified in the CAF or plain paper application, as the case may be, for blocking the amount mentioned in the CAF, or the plain paper application, as the case may be

ASBA Investor Equity Shareholders proposing to subscribe to the Issue through ASBA process and:

a. Who are holding our Equity Shares in dematerialized form as on the Record Date and have applied for their Rights Entitlements and/ or additional Equity Shares in dematerialized form;

b. Who have not renounced their Rights Entitlements in full or in part; c. Who are not Renouncees; and d. Who are applying through blocking of funds in a bank account

maintained with SCSBs. All QIBs and other Investors whose application value exceeds ` 2 lakhs complying with the above conditions may participate in this Issue through the ASBA process only

Bankers to the Issue [●] Composite Application Form/ CAF

The form used by an Investor to make an application for the Allotment of Rights Issue Equity Shares in the Issue

Consolidated Certificate In case of holding of Equity Shares in physical form, the certificate that we would issue for the Rights Issue Equity Shares Allotted to 1 folio

Controlling Branches of the SCSBs

Such branches of the SCSBs which coordinate with the Lead Manager, the Registrar to the Issue and the Stock Exchanges, a list of which is available on http:// www.sebi.gov.in/ cms/ sebi_data/ attachdocs/ 1325570097787.html

Designated Stock Exchange

[●]

Designated Branches Such branches of the SCSBs which shall collect application forms used by ASBA Investors and a list of which is available on http://www.sebi.gov.in/cms/sebi_data/attachdocs/1355129055836.html

Draft Letter of Offer This draft letter of offer dated December 13, 2012 filed with SEBI for its observations which does not contain complete particulars of the Issue

Equity Shareholders/ Eligible Equity Shareholder(s)

A holder/beneficial owner of our Equity Shares as on the Record Date

Investor(s) The Equity Shareholders(s) on the Record Date, applying in this Issue, and the Renouncees who have submitted an Application to subscribe to the Issue

Issue/ Rights Issue Issue of [●] fully paid-up Equity Shares of face value of ` 10 each for cash at a price of ` [●] per Equity Share including a share premium of ` [●] per Equity Share aggregating up to ` 5,500 lakhs to our existing Equity Shareholders on a rights basis in the ratio of [●] fully paid-up Equity Shares for every [●] fully paid-up Equity Shares held by them on the Record Date (i.e. [●]).

Issue Closing Date [●] Issue Opening Date [●] Issue Price ` [●] per Rights Issue Equity Share Issue Size This Issue of [●] Rights Issue Equity Share aggregating up to ` 5,500 lakhs Issue Proceeds The gross proceeds to be raised through this Issue Lead Manager/ ISEC ICICI Securities Limited Letter of Offer The final letter of offer to be filed with the Stock Exchanges after

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

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Term Description

Listing Agreement The listing agreements entered into between us and the Stock Exchanges Net Proceeds The Issue Proceeds less the Issue related expenses. For further details, please

see the chapter “Objects of the Issue” on page 44. Qualified Foreign Investors/ QFI

Non-resident investors, other than SEBI registered FIIs or sub-accounts or SEBI registered FVCIs, who meet ‘know your client’ requirements prescribed by SEBI and are resident in a country which is (i) a member of Financial Action Task Force or a member of a group which is a member of Financial Action Task Force; and (ii) a signatory to the International Organisation of Securities Commission’s Multilateral Memorandum of Understanding or a signatory of a bilateral memorandum of understanding with SEBI. Provided that such non-resident investor shall not be resident in a country which is listed in the public statements issued by Financial Action Task Force from time to time on: (i) jurisdictions having a strategic anti-money laundering/combating the financing of terrorism deficiencies to which counter measures apply; and (ii) jurisdictions that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the Financial Action Task Force to address the deficiencies.

QIBs or Qualified Institutional Buyers

Public financial institutions as specified in section 4A of the Companies Act, scheduled commercial banks, mutual fund registered with SEBI, FIIs and subaccount registered with SEBI, other than a sub-account which is a foreign corporate or foreign individual, multilateral and bilateral development financial institution, venture capital fund registered with SEBI, foreign venture capital investor registered with SEBI, state industrial development corporation, insurance company registered with the Insurance Regulatory Development Authority, provident fund with minimum corpus of ` 250 million, pension fund with minimum corpus of ` 250 million, National Investment Fund set up by the Government of India and insurance funds set up and managed by the army, navy or air force of the Union of India and insurance funds set up and managed by the Department of Posts, India

Record Date [●] Registrar of Companies The Registrar of Companies, Ahmedabad, Gujarat Registrar to the Issue/ Registrar and Transfer Agent/ RTA

Sharepro Services (India) Private Limited

Renouncee(s) Any person(s) who has/ have acquired Rights Entitlements from Equity Shareholders

Retail Individual Investors

Individual Investors who have applied for Rights Issue Equity Share for an amount not more than ` 2 lakhs (including HUFs applying through their Karta)

Rights Entitlement The number of Rights Issue Equity Share that an Investor is entitled to in proportion to the number of Equity Shares held by the Investor on the Record Date

SAF(s) Split Application Form(s) SCSB(s) A Self Certified Syndicate Bank, registered with SEBI, which acts as a

banker to the Issue and which offers the facility of ASBA. A list of all SCSBs is available at http://www.sebi.gov.in/cms/sebi_data/attachdocs/1354769582471.html

Stock Exchange(s) BSE and NSE, where our Equity Shares are presently listed Company Related Terms

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Term Description

Articles/ AoA/ Articles of Association

Our articles of association, as amended

Auditors Our auditors, S. R. Batliboi & Associates, Chartered Accountants Board of Directors/Board Our board of directors or any duly constituted committees thereof Equity Shares Equity shares of face value of ` 10 each Group Companies Includes those companies, firms and ventures that are promoted by our

Promoter, irrespective of whether these entities are covered under section 370(1) (B) of the Companies Act.

Memorandum/ MoA/ Memorandum of Association

Our memorandum of association, as amended

Promoter and Promoter Group

Hitachi Appliances Inc. and Hitachi India Private Limited

Registered Office Our registered office located at 9th Floor, Abhijeet-I, Mithakhali Six Roads, Ahmedabad 380 006, Gujarat, India

Technical/ Industry Related Terms

Term Description

HP Horse power Tr. Tons of refrigeration VRF Variable refrigerant flow HVAC Heating, Ventilating and Air conditioning NOD No. of Days The words and expressions used but not defined herein shall have the same meaning as is assigned to such terms under the Companies Act, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996 and the rules and regulations made thereunder. Notwithstanding the foregoing, terms defined in the chapters “Statement of Tax Benefits”, “Financial Statements” and “Terms of the Issue” on pages 49, 76 and 132, respectively, shall have the meanings given to such terms in these respective sections.

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NOTICE TO OVERSEAS SHAREHOLDERS The distribution of this Draft Letter of Offer and the issue of Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession this Draft Letter of Offer, Letter of Offer, Abridged Letter of Offer or CAF may come are required to inform themselves about and observe such restrictions. We are making this Issue of Equity Shares on a rights basis to the Equity Shareholders and will dispatch the Letter of Offer/ Abridged Letter of Offer and CAFs to such shareholders who have provided an Indian address. Those overseas shareholders who do not update our records with their Indian address or the address of their duly authorized representative in India, prior to the date on which we propose to dispatch the Letter of Offer / Abridged Letter of Offer and CAFs, shall not be sent this Draft Letter of Offer / Abridged Letter of Offer and CAFs. No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that this Draft Letter of Offer has been filed with SEBI for observations. Accordingly, the rights or Equity Shares may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be distributed in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, under those circumstances, this Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the issue of the rights or Equity Shares, distribute or send the same in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the rights or Equity Shares referred to in this Draft Letter of Offer. Envelopes containing a CAF should not be dispatched from any jurisdiction where it would be illegal to make an offer, and all persons subscribing for the Equity Shares in this Issue must provide an Indian address. Any person who makes an application to acquire rights and the Equity Shares offered in this Issue will be deemed to have declared, represented, warranted and agreed that he is authorised to acquire the rights and the Equity Shares in compliance with all applicable laws and regulations prevailing in his jurisdiction. We, the Registrar, the Lead Manager or any other person acting on behalf of us reserve the right to treat any CAF as invalid where we believe that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements and we shall not be bound to allot or issue any Equity Shares or Rights Entitlement in respect of any such CAF. Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in the Company’s affairs from the date hereof or that the information contained herein is correct as at any time subsequent to the date of this Draft Letter of Offer. The contents of this Draft Letter of Offer should not be construed as legal, tax or investment advice. Prospective investors may be subject to adverse foreign, state or local tax or legal consequences as a result of the offer of Equity Shares. As a result, each investor should consult its own counsel, business advisor and tax advisor as to the legal, business, tax and related matters concerning the offer of Equity Shares. In addition, neither our Company nor the Lead Manager is making any representation to any offeree or purchaser of the Equity Shares regarding the legality of an investment in the Equity Shares by such offeree or purchaser under any applicable laws or regulations.

vii

CERTAIN CONVENTIONS, USE OF FINANCIAL, INDUSTRY AND MARKET DATA AND CURRENCY OF PRESENTATION

Certain Conventions References in this Draft Letter of Offer to “India” are to the Republic of India and the “Government” or the “Central Government” is to the Government of India (“GoI”). Financial Data

Unless stated otherwise, the financial data in this Draft Letter of Offer is derived from our audited financial statements. Our Financial Year commences on April 1 for a year and ends on March 31 of the next year. In this Draft Letter of Offer, the audited financial statements for the FY 2011-12 and the Unaudited statement of assets and liabilities as at September 30, 2012 and unaudited statement of profit & loss for six months ended September 30, 2012, duly limited reviewed by the auditors, have been included. For details of such financial statements, please see the chapter “Financial Statements” on page 72. We publish our financial statements in Indian Rupees. In this Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off, and unless otherwise specified, all financial numbers in parenthesis represent negative figures. Numerical values have been rounded off to two decimal places. Any percentage amounts, as set forth in “Risk Factors”, “Our Business” and elsewhere in this Draft Letter of Offer, unless otherwise indicated, have been calculated on the basis of our audited financial statements prepared in accordance with Indian GAAP. Unless stated otherwise, throughout this Draft Letter of Offer, all figures have been expressed in Rupees in lakhs. For definitions, see the chapter “Definitions and Abbreviations” on page i. Currency of Presentation All references in this Draft Letter of Offer to “Rupees”, “`”, “Rs.”, “Indian Rupees” and “INR” are to Indian Rupees, the official currency of India. All references to “U.S.$”, “U.S. Dollar”, “USD” or “$” are to United States Dollars, the official currency of the United States of America. All references to “Yen” and “¥” are to the Japanese Yen, the official currency of Japan. All references to “Euro” or “€ ” or ”EUR” are to the Euro, the single currency of the participating member states in the third stage of the European Economic and Monetary Union of the Treaty establishing the European Community, as amended Please Note: • One million is equal to 10 Lakhs • One billion is equal to 1,000 million • One Lakh / Lakhs is equal to 100 thousand • One crore is equal to 10 million/100 Lakhs Exchange Rates Fluctuations in the exchange rate between the Rupee and the U.S. Dollar will affect the U.S. Dollar equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also affect the conversion into U.S. Dollars of any cash dividends paid in Rupees on the Equity Shares. The following table sets forth, for the periods indicated, information with respect to the exchange rate between the Rupee, the U.S. Dollar, Japanese Yen and Euro based on the reference rates released by the

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RBI. No representation is made that the Rupee amounts actually represent such amounts in U.S. Dollars, Japanese Yen and Euro or could have been or could be converted into U.S. Dollars, Japanese Yen, Euro at the rates indicated, at any other rates or at all. USD - INR

Year ended March 31 Period End (in `)

Average*(in `)

High* (in `)

Low*(in `)

2012 51.16** 47.95 54.24 43.952011 44.65 45.58 47.57 44.032010 45.14 47.42 50.53 44.94

Month ended Period End

(in `)Average*

(in `)High* (in `)

Low*(in `)

November, 2012 54.53 54.78 55.70 53.66October, 2012 54.12 53.02 54.17 51.62 September, 2012 52.70 54.61 55.97 52.70August, 2012 55.72 55.56 56.08 55.15July, 2012 55.81 55.49 56.38 54.55June, 2012 56.31 56.03 57.22 55.15

1. Source: RBI website at www.rbi.org.in 2. *Note: High, low and average are based on the RBI reference rate 3. ** As on March 30, 2012

100 JPY Yen – INR


Average*(in `)

High* (in `)

Low*(in `)

2012 62.43** 60.81 69.49 51.752011 54.02 53.30 57.14 46.932010 48.44 51.12 54.38 48.12


(in `)Average*

(in `)High* (in `)

Low*(in `)

November, 2012 66.17 67.60 69.13 66.17October, 2012 67.99 67.23 68.22 65.83September, 2012 68.00 69.91 71.39 68.00August, 2012 71.04 70.68 71.68 70.01July, 2012 71.35 70.28 72.12 68.40June, 2012 70.90 70.67 71.93 69.42


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EURO – INR


Average*(in `)

High* (in `)

Low*(in `)

2012 68.34** 65.90 71.08 62.262011 63.24 60.21 63.98 56.072010 60.56 67.08 71.06 60.52


(in `)Average*

(in `)High* (in `)

Low*(in `)

November, 2012 70.89 70.37 72.35 69.24October, 2012 70.15 68.75 70.17 67.17September, 2012 68.15 70.13 71.62 68.15August, 2012 69.66 68.87 69.92 68.03July, 2012 68.45 68.25 70.43 67.15June, 2012 70.91 70.31 71.57 68.86


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FORWARD LOOKING STATEMENTS Certain statements in this Draft Letter of Offer are not historical facts but are “forward-looking” in nature. Forward looking statements appear throughout this Draft Letter of Offer, including, without limitation, under the chapters “Risk Factors” and “Our Business”. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or financial performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, our competitive strengths and weaknesses, our business strategy and the trends we anticipate in the industries and the political and legal environment, and geographical locations, in which we operate, and other information that is not historical information. Words such as “aims”, “anticipate”, “believe”, “could”, “continue”, “estimate”, “expect”, “future”, “goal”, “intend”, “is likely to”, “may”, “plan”, “predict”, “project”, “seek”, “should”, “targets”, “would” and similar expressions, or variations of such expressions, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. By their nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. These risks, uncertainties and other factors include, among other things, those listed under “Risk Factors”, as well as those included elsewhere in this Draft Letter of Offer. Prospective investors should be aware that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited, to:

increase in the interest rates with respect to our borrowings; financial instability in Indian financial markets; significant competition in markets could have a material adverse effect on our business, financial

condition and results of operations; seasonality of the nature of our business; regional hostilities, terrorist attacks or social unrest in India; adverse political, social and economic developments in India. and any adverse outcome in the material legal proceedings in which we are involved.

For a further discussion of factors that could cause our actual results to differ, please see the chapters “Risk Factors” and “Our Business” on pages XI and 60 respectively. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither we nor the Lead Manager nor any of their respective affiliates make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario. Neither we nor the Lead Manager nor any of their respective affiliates or advisors have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI/ Stock Exchanges requirements, we and Lead Manager will ensure that Investors in India are informed of material developments until the time of the grant of listing and trading permissions by the Stock Exchanges for the Equity Shares allotted pursuant to this Issue.

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SECTION II - RISK FACTORS An investment in equity and equity related securities involves a high degree of risk and you should not invest any funds in this offer unless you can afford to take the risk of losing your investment. You should carefully consider all of the information in this Draft Letter of Offer, including the risks and uncertainties described below, before making an investment in the Equity Shares. The financial and other implications of material impact of risks concerned, wherever quantifiable, have been disclosed in the risk factors mentioned below. To obtain a complete understanding, you should read this section in conjunction with the sections titled “Our Business” and the section titled “Financial Information” beginning on page 60 and 72 respectively, as well as the other financial and statistical information contained in this Draft Letter of Offer. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue including the risks involved. The occurrence of any of the following events could have a material adverse effect on our business, results of operations, financial condition and prospects and cause the market price of the Equity Shares to fall significantly, and you may lose all or part of your investment. Additionally, our business operations could also be affected by additional factors that are not presently known to us or that we currently consider as immaterial to our operations. The following factors have been considered for determining the materiality: 1. Some events may not be material individually but may be found material collectively; 2. Some events may have material impact qualitatively instead of quantitatively; 3. Some events may not be material at present but may have material impact in future. RISKS ASSOCIATED WITH OUR BUSINESS 1. We are involved in certain legal and regulatory proceedings that, if determined against us, could have a

material adverse impact on our business, financial conditions and results of operations. There are outstanding material legal proceedings involving our Company, which may adversely affect our business and operations. These legal proceedings are pending at different levels of adjudication before various courts and tribunals. Should any new developments arise, such as a change in law or rulings against us by courts or tribunals, we may need to make provisions in our financial statements, which could adversely impact our reported financial condition and results of operations. Furthermore, if significant claims are determined against us and we are required to pay all or a portion of the disputed amounts, there could be a material adverse effect on our business and profitability.

For further details of the legal proceedings, please see the section “Outstanding Litigations and Defaults” on page 122. 2. The loss or shutdown of operations at any of our manufacturing facilities or any accidents or

damage to our manufacturing equipment, plant and machinery or information technology systems may have a material adverse effect on our business, financial condition and results of operations

We operate two manufacturing facilities for finished products across India at Kadi in Gujarat and in Jammu. These manufacturing facilities are subject to operating risks, such as breakdowns or accidents or failure of equipment, power supply or processes, performance below expected levels of output or efficiency, obsolescence, labour disputes, strikes, lock-outs, natural disasters and industrial accidents. Our manufacturing facilities are also subject to operating risk arising from compliance with the directives of relevant government authorities. Recently, there was a major fire at unit 2 Kadi facility due to which it has become non-operational. The occurrence of any of these risks could significantly affect our operations by causing production to shut down or slow down. Furthermore, we are dependent on our information technology systems for managing key business processes such as product design and development, customer and dealer management, transaction processing, accounting and production. Any failure in our information technology systems may adversely impact our ability to manufacture our products, manage our dealers and provide service to our customers, any of which may have a material adverse effect on our

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reputation, business, financial condition and results of operations. 3. Demand for our products is affected by global and national economic conditions. Any development

which decelerates the demand for our products would have an adverse impact on our Company.

The air conditioning industry in India in general and our business and results of operations in particular are affected by various global and national economic conditions. Changes or a downturn in the global or national economy could add uncertainty to currency inflation or deflation, interest rates, taxation, stock market performance, consumers' confidence and consumers' perception of economic conditions, which in turn may affect the consumers' willingness to purchase our products. As we sell a majority of our products to the domestic market, continued financial weakness amongst corporates or exceptional circumstances like bankruptcy etc. in any large company, would exacerbate the negative trend in market conditions and would result in protracted declines in demand for our products. Any global or national economic distress would cause a material adverse effect on the demand for our products and hence on our business and results of operations. There can be no assurance that the air conditioning industry in India and our Company can sustain growth in business and operations if the global economic conditions continue to be fragile.

4. We face significant competition in the air conditioning industry. Any failure to compete effectively

may have a material adverse effect on our business and operations. The air conditioning industry in India is highly competitive with several other domestic and foreign brands present in the market and we expect that competition will continue to increase with entry of new companies (both domestic and international) in this industry. In such a competitive environment, our brand may face considerable pressure to sustain customer loyalty and brand equity. With number of domestic and international brands entering Indian air conditioning industry, the industry is witnessing substantial change in dynamics. Many of our competitors have access to considerable financial and technological resources with which they are able to compete aggressively, including by funding future growth and expansion and improving on the product quality and in acquisitions. We face a variety of competitive challenges including: • anticipating and quickly responding to changing consumer demands and preferences; • maintaining favourable brand recognition; • developing innovative, high-quality products that appeal to consumers; • pricing our products effectively and achieving customer perception of value; and • providing strong and effective marketing support;

Our competitors may expend financial and other resources to improve their market share to compete more aggressively. With increase in competition, we may inter alia witness lower demand for our products, pressure on pricing, loss in market share, which may impact our business and results of operations. Our inability to withstand competitive pressures and respond to changing business dynamics may have a material adverse effect on our business prospects, financial condition and results of operations. 5. We rely on our distribution network for marketing, sale and distribution of our products and

underperformance of our distribution network may adversely affect our sales and results of operations

Our products are sold and serviced through a network of distribution system consisting of 5 regional offices, 21 branch offices, over 200 exclusive sales and service dealers and over 1,500 sales points and we rely on this network of distribution system for marketing, sale and distribution of our products and providing after sales service. Any failure on the part of our distribution and service network in performing their functions and providing high quality service to customers could adversely affect our reputation, sales and results of operations. If we do not succeed in maintaining the stability of our distribution network and

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expanding our distribution network, our market share may decline, which may affect the results of our operations and financial condition.

6. Our business and results of operations depends on consumer spending patterns could be adversely

affected by the impact of economic conditions in India.

Our business is sensitive to a number of factors that influence the levels of consumer spending, including political and economic conditions such as recessionary environments, the levels of disposable consumer income, consumer debt, interest rates. Declines in consumer spending on air conditioners or home appliances could have an adverse effect on our operating results. Purchases by consumer of our products generally decline during recessionary periods and other periods in which disposable income is adversely affected. While adverse economic and business conditions are harmful to all companies, companies such as ours are particularly sensitive to them, particularly declining levels of disposable consumer income, higher consumer debt, higher interest rates, higher taxation, increase in unemployment because of their direct impact on discretionary consumer spending. Unfavorable changes in business and economic conditions affecting our consumers could result in decrease in demand for our products or lower our profit margins, and have a material adverse effect on our financial condition and results of operations.

7. We are dependent on certain technology collaboration agreements for the technology and

consulting agreements to manufacture our products. Termination or alteration of the terms of these agreements would materially affect our total income and operations.

In the past we have relied upon, and in the future will continue to rely upon, the provision of technology from certain technology collaboration agreements and consulting agreement which we have executed for our manufacturing business with our Promoter. Through these agreements, we have been granted a non-exclusive, non-transferable and non-sub-licensable right and license to design, manufacture, use and/or sell our products in India during the term of such agreements. Most of these agreements are valid for a period of ten years. For the year ending, March 31, 2011 and March 31, 2012, we incurred expenses (towards royalty, technical knowhow, consultancy fee) in foreign currency aggregating to ` 1,902.19 lakhs and ` 2,708.92 lakhs, respectively. While, we try to maintain amicable business relationships with our Promoter to ensure access to future technology and to ensure support from them when needed, we cannot assure you that these agreements will not be terminated or that we will be able to obtain access to such future technologies. If any of these agreements are terminated, we may not be able to manufacture our products or if the terms of the license of these technologies are altered, there can be no assurance that we would be able to comply with all the conditions of the license or we may not be able to manufacture such products in a commercially viable manner. If our ability to use such technology was restricted, our total income and operations would be materially affected. Further, most of our technology collaboration agreements and consulting agreement have not been stamped and hence may face certain deficiencies such as inadequate stamping. The effect of inadequate stamping is that the document is not admissible as evidence in legal proceedings, and parties to that agreement may not be able to legally enforce the same, except after paying a penalty for inadequate stamping. In event, in future there is dispute in relation to brand value agreement, we may not be able to produce the same in legal proceedings without paying penalty which may have a material adverse effect to our business. 8. Significant increases in prices of key raw materials or our inability to continue to procure raw

materials from our suppliers at favourable terms could have an adverse effect on our Company's results of operations and financial position.

We are dependent on external suppliers for the timely supply of raw materials. We purchase compressors, metal like copper, steel, aluminum and plastic material, wooden packaging boxes etc. from third party suppliers, and have to depend on them to procure these raw materials. Accordingly, our profits are sensitive to changes in raw material prices. Volatility in the prices of raw materials, including mismatches between

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trends in prices for raw materials and our products, as well as limitations on or disruptions in the supply of raw materials, could adversely affect our results of operations. Our inability to procure these raw materials terms more favourable, or at all, may constrain our raw material supply, resulting in an adverse effect on our business, financial condition and results of operations. Further, we do not have exclusive arrangements with our suppliers and they can supply raw materials to our competitors, which may increase competition for us and may result in an adverse effect on our financial condition. Further, any substantial delay in supply or non-conformance to quality requirements by our suppliers can impact our ability to meet our customer requirements and thus impact our business and results of operations. In case we fail to correctly analyse our product requirement or non-availability of required raw materials or any other item of production in desired quantity and quality at the right time, it may impact our sales commitments resulting in having adversely effect on our business and results of operations. 9. We do not have long term contracts with our dealers and our revenues are dependent on the sales

made to and orders booked by our dealers. The loss of our major dealers or a decrease in the volume of products they source from us may adversely affect our revenues and results of operations.

As there are no arrangements for sale of a minimum quantity of our products to the distributors, the number of products procured by our dealers varies from month to month. There are a number of factors that impact customer demand from these dealers, which may not be predictable. Our dealers may decide to reduce the quantity of products sourced from us because of changing market conditions and other factors, internal and external, relating to their business. Further, with increased competition, the dealers now have increased choice of entities from whom to source products. Some of our competitors may have advantages that enable them to offer products similar to ours at a lower price, respond more quickly and effectively than we do to specific demands of the dealers, which may lead to dealers entering into tie-ups with our competitors, forcing us to reduce prices and hence lower our margins and limit our growth potential, in which case our business, financial condition and results of operations will be harmed. The loss of any of the major dealers or a decrease in the volume of the products they source from us or reduction of price of our products may adversely affect our revenue and results of operations. 10. We are dependent in part on production we outsource to third parties on non-exclusive basis and

any significant loss or disruption of production from our third party manufacturers for any reasons could adversely affect our business, results of operations and financial conditions.

We outsource manufacture of certain products to third parties with whom we do not have exclusive arrangements. As a result, such vendors may manufacture products similar or identical to ours for our competitors or manufacture entirely for such competitors, which may have an adverse effect on our business and results of operation. Production at facilities of these third party manufacturers are beyond our control and any significant loss or disruption of production at these facilities for any reasons may adversely affect our business, results of operations and financial conditions. 11. Our Company faces exchange rate fluctuation risk, which may adversely affect our business, results

of operations and financial condition. For the year ended March 31, 2011 and March 31, 2012, our consumption of imported raw material was to the extent of 54.80% and 58.75% respectively of our total raw material cost. The fluctuations in foreign

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exchange rates might have an impact on the financial performance of the Company. If the Indian rupee value moves in unfavorable direction it will make an adverse impact on our import cost and may adversely affect our business, results of operations and financial condition. While we use forward exchange contracts to hedge our exposure in foreign currency, as on March 31, 2011, the value of foreign exchange contracts remaining outstanding are USD 197.08 lakhs and JPY 292.63 lakhs and as of March 31, 2012, the value of foreign exchange contracts remaining outstanding are USD 66.92 lakhs. Our inability to hedge this foreign exchange exposure may result in an adverse impact on our financial condition. 12. Our success depends upon our ability to sustain effective implementation of our business and

growth strategy. The success of our business depends greatly on our ability to effectively implement our business and growth strategy. Whilst we believe that we have successfully executed our business strategy in the past, there can be no assurance that we will be able to execute our strategy on time and within the estimated budget, or that we will meet the expectations of targeted customers. We expect our growth strategy to place significant demands on our management, financial and other resources and require us to continue developing and improving our operational, financial and other internal controls. Our inability to manage our business and growth strategy could have a material adverse effect on our business, financial condition and results of operations.

13. Our business is seasonal in nature. Any substantial decrease in our sales during this period can

have a material adverse effect on our financial performance.

The sale of our products is seasonal in nature. This unevenness in seasonal sales is largely due to the buying cycles of the customers and weather cycles of locations to which we cater. The sales of the Company are higher during the summers and festival seasons. Any disturbances/disruptions in production during this period may lead to reduction in sales and have an impact on the financial performance of the Company. 14. Sales and profitability of our business depend on our ability to develop new products that appeal to

consumers, and any failure to do the same could have a material adverse effect on our business.

We compete in home appliance industry characterised by continual change, product introductions, changes in consumer demands and evolving industry standards. While we continually endeavor to cater to the changing preferences of consumers, we cannot guarantee that we will be successful in these efforts. Additionally, lack of innovation in developing new products could adversely affect our business. Our ability to successfully develop new products is also subject to numerous uncertainties, including our ability to anticipate and successfully respond to rapidly changing consumer preferences. Any failure to develop new products which appeal to customers could have a material adverse effect on our business and financial condition. 15. We do not own our logo as mentioned on the cover page of this Draft Letter of Offer and our ability

to use the trademark, name and logo may be impaired. Our trademark, name and logo as mentioned on the cover page of this Draft Letter of Offer do not belong to us. The Hitachi trademark belongs to Hitachi Limited which has licensed it to our Promoter Hitachi Appliances Inc. We have entered into a brand value agreement dated April 01, 2010 with our Promoter under which we have obtained the usage rights to brand Hitachi, logo and trademark for period of five years ending on March 31, 2015. If the Hitachi Limited or our Promoter withdraws, refuses to renew or terminates this arrangement, we will not be able to make use of our trademark, name or logo in connection with our business and consequently, we may be unable to capitalize on the brand recognition associated with the Hitachi Group. Further the brand value agreement executed by us with our Promoter, Hitachi Appliances Inc. has not been stamped and hence may face certain deficiencies such as inadequate stamping. The effect of inadequate stamping is that the document is not admissible as evidence in legal proceedings, and parties to that

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agreement may not be able to legally enforce the same, except after paying a penalty for inadequate stamping. In event, in future there is dispute in relation to brand value agreement, we may not be able to produce the same in legal proceedings without paying penalty which may have a material adverse effect to our business. 16. Our Company has limited ability to protect its intellectual property and may be subject to third party

claims and if we are unable to protect such intellectual property, our business could be adversely affected.

We regard our intellectual property rights such as trademarks, important to our success. Generating and maintaining brand recognition is a significant element of the business strategy of our Company. We may be subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of the trademarks and other intellectual property rights of third parties. In addition, litigation may be necessary in the future to enforce our intellectual property rights, protect trade secrets or to determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business, financial condition and results of operations. Our Company has also applied for the registration of 5 trademarks, but is yet to receive registration for same. For further details regarding applications pending with appropriate authorities, please refer to the section titled “Government and Other Approvals” on page 125. There is no assurance that these applications shall result in us being granted registration in a timely manner or at all or that third parties would not infringe upon our intellectual property, causing damage to our business prospects, reputation and goodwill. Our Company may need to litigate in order to protect our intellectual property or to prevent unauthorized use of the same. Any such litigation could be time consuming and costly and a favourable outcome cannot be guaranteed. In addition, Our Company may not be able to detect any unauthorized use or take appropriate and timely steps to protect our intellectual property rights. Our inability to protect the same could adversely affect our business. We cannot provide any assurance that third parties will not infringe upon our trademark, trade names, logos or brand names and thereby cause damage to our business prospects, reputation or goodwill. 17. We are subject to stringent labour laws and trade union activity or any work stoppage could have an adverse effect on our business, financial condition and results of operations. India has stringent labour legislation that protects the interests of operators, including legislation that sets forth detailed procedures for employee removal and dispute resolution and imposes financial obligations on employers. This makes it difficult for us to maintain flexible human resource policies, discharge employees or downsize, which though not quantifiable, may adversely affect our business and results of operations. We have collective wage settlement with our trade union. Although we consider our relations with our operators to be cordial, most of our operators are unionised and our failure to effectively negotiate with the trade union representing our operators or any union activity could result in work stoppages. Recently there was a strike by fixed term employees and contract workers from June 08, 2012. The main demands of the striking workers were to give permanency to fixed term employees, regularization of contract workers and reinstatement of ten fixed term employees whose contract were not renewed. The Government by notification dated July 09, 2012, prohibited the strike and referred the dispute to the Industrial Court, Ahmedabad. The Industrial Court on October 13, 2012 issued an interim order that the Company is legally bound to provide work to such workers on basis of their seniority and before appointing new workers, Company is to take prior approval of the Industrial Court. Any such work stoppage, though not quantifiable, could have an adverse effect on our business, financial condition and results of operations. 18. We are dependent on our research and development for our success and the failure to keep

developing/ improving products/ processes could adversely affect our business.

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Our success depends on our ability to continue to develop and improve our products and processes for which we make continuous investments in our research and development. For the Fiscal 2012 our research and development expenditure was ` 382.68 lakhs. We cannot assure you whether we will be able to enhance our research and development investments or continue the current level of research and development investments in our business, or that our research and development investments will yield satisfactory results, if at all. The upgradation and development of new processes could be a lengthy and costly affair and there can be no assurance that a new/ improved product or process developed by us will be commercially successful. Further, research undertaken by our competitors may lead to the launch of a competing or improved product or process that may affect the sales of our products and adversely affect our business, results of operations and financial condition. 19. Any negative cash flows in the future could adversely affect our results of operations and financial

condition. Our cash flows as of year ending March 31, 2012 and March 31, 2011 are summarised below:

(Amount in ` lakhs) Particulars Fiscal 2012 Fiscal 2011

Net cash from / (used in) operating activities 2,619.10 (891.61) Net cash from / (used in) investing activities (2,053.43) (3,096.62) Net cash flow from / (used in) financing activities (488.98) 1871.27 Net increase (decrease) in Cash & Cash Equivalents 76.69 (2,116.96) As of year ending March 31, 2011, we had negative net cash from operating activities, if our revenues do not grow as expected or if our expenses and working capital requirements increase at a greater rate than we expect, we may not be able to achieve positive operating cash flow. If we do not maintain positive cash flow, we cannot assure you that we will be able to sustain our growth or achieve profitability in future periods. 20. Our Contingent Liabilities could adversely affect our financial condition. Any crystallization of our

contingent liabilities could materially and adversely affect our business, financial conditions, result of operations and prospects.

Most of the contingent liabilities have been incurred during the normal course of business, in the event of there being a crystallization of any of the above liabilities, we may be required to honour the demands raised. This may materially and adversely impact our business, financial conditions, result of operations and prospects. Our contingent liabilities where quantifiable as on March 31, 2012 and March 31, 2011 is as follows:

(Amount in ` lakhs) Particulars As of March 31,

2012 As of March 31, 2011

Legal Matters under dispute: Service Tax 199.57 192.02 Sales Tax 264.77 326.15 Customs Duty 0.92 0.92 Excise Duty 0.50 - Guarantees given by the bankers on behalf of the Company 44.09 24.30 Claims against the Company not acknowledged as debts 59.21 50.35 Total 569.06 593.74 For further information on our contingent liabilities as per AS 29, see the section titled “Financial Information” beginning on page 72.

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21. Our Promoter and members of the Promoter Group will continue jointly to retain majority control over our Company after the Issue, which will allow them to determine the outcome of matters submitted to shareholders for approval.

We are controlled by our Promoter and Promoter Group who, as at November 30, 2012, beneficially owns 69.90% of our Equity Shares. As a result of their interest, our Promoter and Promoter Group has the ability to exert significant influence over our business and certain actions requiring shareholders’ approval, including, but not limited to, the election of directors, the declaration of dividends, the appointment of management and other policy decisions. The interests of our Promoter and Promoter Group could conflict with the interests of our other shareholders. Such a concentration of ownership may also have the effect of delaying, preventing or deterring a change in control of our Company. In addition, our Promoter and Promoter Group will continue to have the ability to cause us to take actions that are not in, or may conflict with, our interests or the interests of some or all of our creditors or minority shareholders, and we cannot assure you that such actions will not have an adverse effect on our future financial performance or the price of our Equity Shares. 22. We are dependent on our senior management team and the loss of key members or failure to attract

skilled personnel may adversely affect our business. Our business depends largely on the efforts, expertise and abilities of our senior management, as well as other skilled personnel which oversees the day-to-day operations, strategy and growth of our business. If one or more members of our key management team are unable or unwilling to continue in their present positions, such persons may be difficult to replace and our business, prospects, financial condition and results of operations could be adversely affected. In addition, our success in expanding our business will also depend, in part, on our ability to attract, retain and motivate appropriately qualified personnel. Our failure to successfully manage our personnel needs could materially adversely affect our business, prospects, financial condition and results of operations. If we are unable to address these risks, our business, financial condition and results of operations could be adversely affected. 23. We have not identified alternate sources for financing the ‘Objects of the Issue’. If we fail to

mobilize the resources as per our plans, our growth plans may be affected. We have not identified any alternate source of funding the cost of acquisition of the plant and machineries proposed to be purchased as part of our objects of this Issue. Any failure or delay on our part to mobilize the required resources or any shortfall in the Issue Proceeds may delay the implementation schedule of our objects of the issue and could adversely affect our growth plans. 24. We have not placed orders for the machinery and equipment, as disclosed in “Objects of the Issue”

and as a result, we may face time and cost overruns. The completion of installation of the plant and machineries is dependent on performance of external agencies and any shortfall in the performance of these external agencies may adversely affect our growth plans.

We are yet to enter into definitive agreements or are yet to place orders for the machinery and equipment proposed to be acquired with the Issue proceeds and as disclosed in “Objects of the Issue” on page 44. The completion of installation of the machineries is dependent on performance of external agencies, which are responsible for supply, installation, commissioning and testing of the machineries. We cannot assure you that the performance of external agencies will meet the required specifications, performance parameters and shall deliver the plant and machineries on time. If the performance of these agencies is inadequate in terms of these requirements, this may result in incremental cost and time overruns, which in turn may adversely affect our growth plans. Further, some of the quotations in foreign currency denominations and the cost of the machineries have been estimated at the prevailing conversion rate. The payment for the machinery has to be made in the currency of the quotation and at the exchange rates prevailing on the date of the actual payment. The respective conversion rates may undergo a change at the time of delivery of the machinery and consequent payment. Such a change in conversion rate may affect the value of the machinery and consequently the estimated cost of the machineries. These factors may increase the overall cost of the machineries and in order to fund such additional expenditure, we may have to raise additional

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funds by way of additional debt or equity placement, which may have an adverse effect on our business and results of operations. 25. In the event there is any delay in the completion of the Issue, there would be a corresponding delay

in the completion of the objects of this Issue which would in turn affect our revenues and results of operations.

The funds that we receive would be utilized for the objects of the Issue as has been stated in the section “Objects of the Issue” on page 44. The proposed schedule of implementation of the objects of the Issue is based on our management’s estimates. If the schedule of implementation is delayed for any other reason whatsoever, including any delay in the completion of the Issue, we may face time and cost overruns and this may affect our revenues and results of operations. 26. The security of our IT systems may fail and adversely affect our business, operations, financial

condition and reputation. Our Company is dependent on the effectiveness of our information security policies, procedures and capabilities to protect our computer and telecommunications systems and the data such systems contain or transmit. Any delay in implementation or disruption of the functioning of our information technology systems could disrupt our ability to track record and analyse work in progress or cause loss of data and disruption to our operations, process financial information or manage creditors/debtors or engage in normal business activities. Our computer systems, software and networks may be vulnerable to unauthorised access, computer viruses or other malicious code and other events that could compromise data integrity and security. Although we maintain procedures and policies to protect our IT systems, such as a data back-up system, disaster recovery and business continuity system, any failure of our IT systems as mentioned above could result in business interruption, material financial loss, initiation of regulatory actions and legal proceedings and harm to our reputation. 27. Our manufacturing facility at Jammu is obtained on leave and license basis. In the event we are

unable to renew the lease agreement, or if such agreement is terminated, we may suffer a disruption in our operations.

Our manufacturing facility at Jammu has been set up on premises that has been acquired on leave and license basis from a third party. The term of this agreement which ends on January 29, 2015 may or may not be renewed. In the event the licensor terminates or does not renew the lease on commercially acceptable terms, or at all, and we are required to vacate the premises, in such an event, we may be compelled to identify alternative premises and enter into a fresh agreement. Such a situation could result in loss of business and may adversely affect our results of operations and profitability. 28. Any inability to manage our growth could disrupt our business and reduce our profitability. The success of our business will depend greatly on our ability to effectively implement our business and growth strategies. We may not be able to execute our strategies in the future. Further, our growth strategies could place significant demand on our management team and other resources and would require us to continuously develop and improve our operational, financial and other controls, none of which can be assured. Any failure on our part to scale up our infrastructure and management could cause disruptions to our business and could be detrimental to our long-term business outlook. 29. Our insurance coverage may not adequately protect us against certain operating hazards and this

may have a material adverse effect on our business. The operation of each of our businesses involves many risks and hazards, including the breakdown, failure or substandard performance of equipment, delay in delivery of equipment or improper installation or operation of equipment, difficulties in upgrading or expanding existing facilities, labour disturbances, fire, natural disasters such as earthquakes, adverse weather conditions or flooding, environmental hazards and industrial accidents. In addition, the insurance coverage for our facilities is subject to periodic renewal.

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Numerous factors outside our control can affect market conditions, which in turn can affect the availability of insurance coverage as well as premium levels for policies. Our insurance coverage is also subject to certain exclusions, limitations and deductibles. If the availability of insurance coverage is reduced significantly, we may become exposed to certain risks for which we are not or could not be insured. Also, if premiums for the insurance coverage required for these facilities increase significantly, we could incur substantially higher costs for such coverage or may decide to reduce the coverage amounts, either of which could have an adverse effect on their financial condition and results of operations. We maintain insurance which we believe is typical in our industry at their respective locations in India and in amounts that we believe to be commercially appropriate. Such insurance, however, may not provide adequate coverage in certain circumstances. We do not carry business interruption insurance with respect to our operations. The occurrence of a significant event for which we are not adequately insured against could materially adversely affect our operations and financial condition. In addition, in the future, some or all of our insurance coverage may become unavailable or may not be available on commercially reasonable terms. There have been instances in the past where we have not been able to recover claims from insurance companies towards claims for damage to our products for reasons such as accidents during transit, theft in transit, damage to goods due to storm and heavy rains and fire in full or in part. We cannot be certain that such rejections of our insurance claims in full or in part, will not be repeated in future and which may have a material adverse effect to our business. 30. We cannot assure you that we will be able to secure adequate financing in the future on acceptable

terms, in time, or at all. To satisfy our capital needs, we may raise additional funds through the incurrence of debt or further equity issuances. We cannot assure you that we will be able to procure such financing on time or at all. Further, any future issuance of Equity Shares by us may dilute your shareholding and adversely affect the trading price of the Equity Shares. Also, we cannot assure you that, for the debt financing secured by us, we will be able to continue servicing the principal amount, interest or both.

We may need to raise additional capital from time to time depending on our business requirements. In addition to the net proceeds of this Issue and our internally generated cash flow, we may need additional sources of funding, which may include entering into new debt facilities with lending institutions or raising additional debt in the capital markets, to meet the business requirements including (i) business growth beyond what the current balance sheet can sustain, (ii) additional capital requirements imposed due to changes in regulatory regime or new guidelines, and (iii) significant depletion in our existing capital base due to unusual operating losses. We cannot assure that we will be able to raise the full amount we believe is necessary to fund our capital expenditure and working capital requirements on time or at all, or that such amounts will be available at costs acceptable to us. If we decide to raise additional funds through the incurrence of debt, our interest obligations will increase, and we may be subject to additional covenants. Such financings could cause our debt to equity ratio to increase or require us to create charges or liens on our assets in favour of lenders. Further, any future issuance of Equity Shares by us may dilute your shareholding in us, adversely affecting the trading price of our Equity Shares and our ability to raise capital through an issue of our securities. In addition, any perception by investors that such issuances or sales might occur could also affect the trading price of our Equity Shares. Additionally the disposal, pledge or encumbrance of Equity Shares by any of our major shareholders, or the perception that such transactions may occur may affect the trading price of the Equity Shares. We are unable to assure you that such shareholders will not dispose of, pledge or encumber their Equity Shares in the future.

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Our failure to obtain sufficient financing in manner beneficial to our Company and the Shareholders could result in the delay or abandonment of any of our business development plans and this may affect our business and future results of operations. 31. We have in the past entered into related party transactions and may continue to do so in the future. We have, in the course of our business, entered into transactions with related parties including entities forming part of our Promoter Group and our key managerial personnel. Such related party transactions may give rise to potential conflicts of interest with respect to dealings between us and the related parties. Furthermore, it is likely that we will continue to enter into related party transactions in the future and such transactions, individually or in the aggregate, will not have an adverse effect on our financial condition and results of operations. For details of related party transactions as per AS 18 entered into by us please refer to the section “Financial Information” beginning on page 72. 32. We are subject to restrictive covenants under our credit facilities that could limit our flexibility in

managing the business.

The agreements governing our existing indebtedness contain restrictions and limitations, such as restriction on, utilization of facility solely for the purpose sanctioned, incurring further indebtedness, creating further encumbrances on our assets, effecting any scheme of amalgamation or restructuring and undertaking guarantee obligations. In addition, some of these borrowings may contain financial covenants, which require us to maintain, among other matters, positive net worth. We cannot assure you that we will be able to comply with these financial or other covenants or that we will be able to obtain the consents necessary to take the actions we believe are necessary to operate and grow our business. Further, under one of our loan agreements, in the event of a default the lender has the right to appoint a nominee director. In any event, an event of default under any debt instrument, if not cured or waived, could have a material adverse effect on us. 33. We have not entered into any definitive agreements to monitor the utilization of the Issue Proceeds. As per the SEBI ICDR Regulation, appointment of monitoring agency is required only for Issue size above ` 50,000 lakhs. Hence we have not appointed any monitoring agency and the deployment of Net Proceeds as stated in the “Objects of the Issue” beginning on page 44 is not subject to monitoring by any independent agency. Further, pending utilization of the Net Proceeds of the Issue, the management of our Company, in accordance with the policies formulated by it from time to time, will have flexibility in deploying the same. Our Company intends to temporarily invest the funds in interest bearing deposits with banks as may be approved by the Board. For further details please refer the section titled “Objects of the Issue” beginning on page 44. 34. Our future success depends on our ability to reduce our cost of production and thereby increase our

operational efficiency. Our inability to manage our cost may adversely impact our business and thereby our results of operations

Reducing our cost of production is essential to our business strategy in a highly competitive market environment. Our cost reduction strategy focuses on, among other things, increasing the levels of localization for our new product introductions, improving raw material and component sourcing and reducing selling, general and administrative costs. Our measures to increase our operational efficiency may not yield results in the future, which may adversely affect our results of operations. The consumer electronic products and household appliances businesses are highly competitive. The markets for consumer electronic products and household appliances are highly competitive and we have experienced pressure on our prices and margins. We expect that technological advances and aggressive pricing strategies developed by our competitors will intensify competition in respect of our products. We have numerous domestic and

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foreign competitors, some of which may have greater financial, technical and other resources than we do.

35. Our manufacturing facilities are located in few geographical areas. Any breakdown of services in such areas could have a material and adverse effect on our results of operations and financial conditions.

Our manufacturing facilities are located in Kadi, Gujarat and Jammu (in Jammu & Kashmir). As a result, we are exposed to risks including any change in policies relating to these states, any localized social unrest, any natural disaster and any event or development which could make our manufacturing facilities in such states less economically beneficial. Any such risk, if materializes, could have material adverse effect on the business, financial position and results of operations of our Company. 36. Non availability of tax benefits in the future may adversely affect our profitability. We receive certain tax benefits at our facility at our Jammu including partial excise exemption under notification 56/2002 and income tax deduction under Section 80IB(4) on profit from our facility at Jammu which are valid up to year 2015. In the event these benefits are no longer available to the Company due to any change in the regulatory framework or Government of India does not increase the validity of such tax benefits, the effective tax rates payable by us will increase and consequently its financial condition may be adversely affected. 37. We do not own our regional offices, branch offices (except our Ahmedabad branch which is owned

by us) and other premises out of which we operate. Any dispute in relation to the lease of our premises would have a material adverse effect on our business and results of operations.

We do not own our regional offices, branch offices (except our Ahmedabad branch which is owned by us) and other premises out of which we operate. We cannot assure you whether the leases for such properties would be renewed in favourable terms or at all. If the owners of any of these premises do not renew the agreements under which we occupy the premises or renew such agreements on terms and conditions that are not favorable to us, we may suffer a disruption in our operations or may have to pay increased rentals which could have an adverse effect on our business and results of operations. 38. As a manufacturing business, our success depends on the efficiently managing the supply chain

logistics. Transportation of our products from our manufacturing facilities to our logistics service provider and finally to our dealers and retailers need to be efficiently managed. Such supply chain logistics are subject to various uncertainties and risks, and delays in delivery may result in rejected or discounted deliveries.

We depend on trucking to deliver our products from our manufacturing facilities to our warehouses of our logistics service provider and finally to our dealers and retailers. Disruptions of transportation services due to heavy rains, storm, theft, inadequacies in road infrastructure; or due to labour problems like strikes, lock-outs; or other events could impair our ability to manage the supplies of our products. There can be no assurance that such disruptions will not occur. Any such disruptions could materially adversely affect our business, financial condition and results of operations. Further, we do not have long term agreements with our logistics service providers. In event such agreements are terminated or such logistics service provider does not renew the agreements on commercially acceptable terms, or at all, we may be compelled to identify alternative logistics service providers and enter into a fresh agreement. Such a situation could result in loss of business and may adversely affect our results of operations and profitability. 39. We are subject to product liability claims in relation to the quality and use of our products. Any

claims arising from such liabilities may harm our reputation and/or have an adverse impact on our business, financial conditions and results of operations.

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Our products are covered under warranty and we are subject to risks and costs associated with product liability, warranty and recall. If any of our products are found to be defective, it may generate adverse publicity and we may be required to undertake corrective actions or recall our products. As a result, our business, results of operations and financial condition may be adversely affected. Further, any defect in our products or after-sales services provided by authorized dealers or third parties could also result in customer claims for damages. Such actions and claims could require us to expend considerable resources in correcting these problems and could adversely affect demand for our products. We have procured consolidated public liability insurance cover up to ` 5,00,00,000 for our operations across India. However, in the event that our insurance does not adequately cover the liability arising from such accidents, our financial performance and results of operations may be adversely affected. Further, due to uncertain nature of claims, adequate insurance cover cannot be availed. For defending any product liability claim, we may have to incur substantial legal costs and may also have to divert our management's attention away from business operations. Further, any judgment/award or findings, against us in such claim, may harm our reputation, and may have an adverse impact on our revenue and profitability. 40. Our business entails high working capital requirements and cash flows and if we are not able to

arrange for the same, in a timely manner or at all, may adversely impact the results of our operations.

Our business demands substantial fund and non-fund based working capital facilities. In case there is insufficient cash flows to meet our working capital requirement or if we are not able to arrange for the same from other sources or due to other factors including delay in disbursement of arranged funds, resulting in our inability to finance our working capital needs when needed or there is any increase in interest rate on our borrowings, it may adversely affect our performance. If we decide to raise additional funds through the incurrence of debt, our interest and debt repayment obligations will increase, and could have a significant effect on our profitability and cash flows and we may be subject to additional covenants, which could limit our ability to access cash flows from operations. If we decide to raise additional funds through the issuance of equity, your shareholding in our Company may be diluted. Our working capital requirements may increase if the payment terms in our agreements include reduced advance payments or longer payment schedules. These factors may result in increases in the amount of our receivables and short-term borrowings. Continued increases in our working capital requirements may have an adverse effect on our business, financial condition and results of operations and we cannot assure that we will be able to raise the full amount we believe is necessary to fund our capital expenditure and working capital requirements, or that such amounts will be available at costs acceptable to us. 41. We are dependent on our Promoter Hitachi Appliances Inc., for their expertise in the air

conditioning business and our separation from our Promoter may adversely affect our business. Hitachi Appliances Inc. as a result of its many years of experience in the air conditioning and home appliance business is one of the leading air conditioning and home appliances manufacturers in Japan. We believe that our association with the Hitachi Appliances Inc. lends strength to the trust and reliability reposed in us and enables us to attract and retain fresh talent. Consequently, our separation from Hitachi Appliances Inc. for any reason whatsoever may adversely affect our business and results of operations. 42. Our ability to pay dividends in the future will depend upon our future earnings, financial condition,

cash flows, working capital requirements, capital expenditures and restrictive covenants in our financing arrangements.

Our revenues are dependent on various factors such as future earnings, financial condition, cash flows, working capital requirements, capital expenditures and restrictive covenants in our financing arrangements.

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Our business is capital intensive and we may plan to make additional capital expenditures for our objects of the Issue or to undertake new projects. Our ability to pay dividends is also restricted under certain financing arrangements that we have entered into and expect to enter into. The combination of these factors may result in variations in our revenues and profits and thereby may impact our ability to pay dividends. Therefore, we believe that period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indicative of our future performance. If in the future our results of operations are below market expectations, the price of our Equity Shares could decline. 43. Our operations are subject to various environmental, employees, health and safety laws and

regulations. Our failure to comply with environmental laws and similar regulations in India, including improper handling of raw materials, may result in significant damages and may have an adverse effect our business, financial condition and results of operations.

Our operations are subject to laws and regulations governing relationships with employees in such areas a minimum wage and maximum working hours, overtime, working conditions, hiring and terminating of employees, contract labour and work permits. Further, our business and prospects are contingent upon, among other things, receipt of all required health and safety permits, and our ability to comply with any conditions specified in such permits and registrations, on a continuous basis. Changes or concessions required by regulatory authorities may involve significant compliance costs and also result in the loss of an existing license, which may adversely affect our business and results of operations. Further, we are subject to various environmental laws and regulations relating to environmental protection in various locations in India. For example, the discharge or emission of chemicals, dust or other pollutants into the air, soil or water that exceed permitted levels and cause damage may give rise to liabilities towards the government, especially the state pollution control boards and third parties, and may result in expenses to remedy any such discharge or emissions and in form of fines and payouts which may have an adverse effect our business, financial condition and results of operations. We have also installed various types of anti-pollution equipment and systems at our manufacturing facilities, which we believe satisfy local regulatory requirements, for the treatment of waste chemicals, gases and liquid effluent and the disposal of solid waste. However, we cannot be certain that no environmental claims will be brought against us in the future or that local or national governments will not increase the applicable environmental standards. Any failure to comply with present or future environmental regulations could result in the imposition of fines against us, or in orders requiring the suspension of production or cessation of operations. In addition, new regulations could require significant capital expenditure on equipment or other expenses that may negatively affect our results of operations. 44. Any failure to obtain required regulatory approvals, licenses, registrations or permits to develop and

operate our business or are unable to renew them in a timely manner, or comply with applicable legislations, could materially and adversely affect our business and our ability to operate.

Being a manufacturing company, we are required to maintain certain necessary licenses, approvals and permits in relation to our business requirements. Our business require us to obtain and renew from time to time, certain approvals, licenses, registrations and permits, some of which have expired and for which we have either made or are in the process of making an application for obtaining the approval or its renewal. Failure to obtain and maintain necessary licenses, approvals and permits in a timely manner or at all and the introduction of new laws or regulations pertaining to licensing requirements, renewal requirements, certification requirements and consumer protection may further restrict our ability to operate and adversely affect our business operations and results of operations. We cannot assure you that we will be able to obtain approvals in respect of such applications or any application made by us in the future. For more information about the licenses required by us, see the section titled “Government and Other Approvals” beginning on page 125. 45. We engage contract labour for carrying out certain of our operations (other than Production) and

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we are responsible for paying the wages of such workers, if the independent contractors through whom such workers are hired default on their obligations, which could have an adverse effect on our results of operations and financial condition.

In order to retain operational efficiencies, we engage independent contractors who in turn engage on-site employees on a contract basis for performance of certain of our ancillary operations. Although we do not engage these employees directly, we are responsible for any wage payments to be made to such employees in the event of default by such independent contractors. Any requirement to fund their wage requirements may have an adverse impact on our results of operations and financial condition. In addition, under the Contract Labour (Regulation and Abolition) Act, 1970, as amended, we may be required to absorb a number of such employees on contractual basis as permanent employees. Thus, any such order from a regulatory body or court may have an adverse effect on our business, financial condition and results of operations. 46. Misconduct or fraud by our employees or failure to comply with laws or regulations by our

distributors could result in reduced revenues and loss of goodwill. Misconduct or fraud by our employees or failure to comply with laws and regulations by our distributors or other improper activities by any of our employees or distributors could have a significant negative impact on our business and reputation. Such misconduct could include the failure to comply with government regulations regarding the protection of classified information, regulations prohibiting bribery and other foreign corrupt practices, regulations regarding the pricing of labour, regulations pertaining to the internal controls over financial reporting, environmental laws, and any other applicable laws or regulations. The precautions we take to prevent and detect these activities may not be effective, and we could face unknown risks or losses. Our failure to comply with applicable laws or regulations or acts of misconduct could subject us to fines and penalties, loss of security clearance could have a material adverse impact on our business, financial condition and results of operations. 47. Taxes and other levies imposed by the central or state Governments, as well as other financial

policies and regulations, may have an adverse effect on our business, results of operations, financial condition and prospects.

We are subject to taxes and other levies imposed by the central or state Governments, including customs duties, excise duties, central sales tax, state sales tax, service tax, income tax, value added tax and other taxes, duties or surcharges introduced on a permanent or temporary basis from time to time. The central and state tax scheme in India is extensive and subject to change from time to time. Any adverse changes in any of the taxes levied by the central or state Governments may adversely affect our competitive position and results of operations. Further, we cannot assure you that tax incentives will continue to be available in the future. Changes in, or elimination of, tax incentives could adversely affect our financial condition and results of operations. 48. Third party statistical and financial data in this Draft Letter of Offer may be incomplete or

unreliable. We have not independently verified the data in this Draft Letter of Offer derived from industry publications and other third party sources and therefore we cannot assure you that they are complete or reliable. Such data may also be produced on different bases from those used in other countries. Therefore, in discussions of matters relating to India, its economy and our industry in this Draft Letter of Offer, the statistical and other data upon which such discussions are based may be incomplete or unreliable. EXTERNAL RISK FACTORS 49. There could be political, economic or other factors that are beyond our control but may have a

material adverse impact on our business and results of operations should they materialize. The following external risks may have a material adverse impact on our business and results of

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operations should any of them materialize: • Political instability, a change in the Government or a change in the economic and deregulation policies

could adversely affect economic conditions in India in general and our business in particular; • A slowdown in economic growth in India could adversely affect our business and results of operations.

The growth of our business and our performance is linked to the performance of the overall Indian economy. We are also impacted by consumer spending levels and businesses such as ours would be particularly affected should Indian consumers in our target segment have reduced access to disposable income;

• Civil unrest, acts of violence, terrorist attacks, regional conflicts or situations or war involving India or

other countries could materially and adversely affect the financial markets which could impact our business. Such incidents could impact economic growth or create a perception that investment in Indian companies involves a higher degree in risk which could reduce the value of our Equity Shares;

• Natural disasters in India may disrupt or adversely affect the Indian economy, the health of which our

business depends on; • Any downgrading of India's sovereign rating by international credit rating agencies may negatively

impact our business and access to capital. In such event, our ability to grow our business and operate profitably would be severely constrained;

• Instances of corruption in India have the potential to discourage investors and derail the growth

prospects of the Indian economy. Corruption creates economic and regulatory uncertainty and could have an adverse effect on our business, profitability and results of operations; and

• The Indian economy has had sustained periods of high inflation. Should inflation continue to increase

sharply, our profitability and results of operations may be adversely impacted. High rates of inflation in India could increase our employee costs, decrease the disposable income available to our customers and decrease our operating margins, which could have an adverse effect on our profitability and results of operations.

50. The proposed adoption of IFRS could result in our financial condition and results of operations appearing materially different than under Indian GAAP.

We may be required to prepare annual and interim financial statements under IFRS in accordance with the roadmap for the adoption of, and convergence with, IFRS announced by the Ministry of Corporate Affairs, GoI in January 2010. The convergence of certain Indian Accounting Standards with IFRS was notified by the Ministry of Corporate Affairs on February 25, 2011. The date of implementing such converged Indian accounting standards has not yet been determined, and will be notified by the Ministry of Corporate Affairs in due course. Our financial condition, results of operations, cash flows or changes in shareholders’ equity may appear materially different under IFRS than under Indian GAAP. This may have a material effect on the amount of income recognised during that period and in the corresponding period in the comparative period. In addition, in our transition to IFRS reporting, we may encounter difficulties in the ongoing process of implementing and enhancing our management information systems. 51. Investors may not be able to enforce a judgment of a foreign court against us. The enforcement by investors in the Equity Shares of civil liabilities, including the ability to affect service of process and to enforce judgments obtained in courts outside of India may be affected adversely by the fact that we are incorporated under the laws of the Republic of India and almost all of our executive officers and directors reside in India. Nearly all of our assets and the assets of our executive officers and directors are also located in India. As a result, it may be difficult to enforce the service of process upon us

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and any of these persons outside of India or to enforce outside of India, judgments obtained against us and these persons in courts outside of India. India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. Recognition and enforcement of foreign judgments are provided for under Section 13 and Section 44A of the Civil Procedure Code respectively. The Government of India has under Section 44A of the Civil Procedure Code notified certain countries as reciprocating countries, as discussed below. Section 13 of the Civil Procedure Code provides that a foreign judgment shall be conclusive regarding any matter directly adjudicated upon except: (i) where the judgment has not been pronounced by a court of competent jurisdiction, (ii) where the judgment has not been given on the merits of the case, (iii) where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognize the law of India in cases in which such law is applicable, (iv) where the proceedings in which the judgment was obtained were opposed to natural justice, (v) where the judgment has been obtained by fraud, or (vi) where the judgment sustains a claim founded on a breach of any law in force in India. Section 44A of the Civil Procedure Code provides that where a foreign judgment has been rendered by a court in any country or territory outside India, which the Government has by notification declared to be a reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in India. However, Section 44A of the Civil Procedure Code is applicable only to monetary decrees not being in the nature of any amounts payable in respect of taxes or other charges of a similar nature or in respect of a fine or other penalties and does not include arbitration awards. The United Kingdom and some other countries have been declared by the Government to be a reciprocating territory for the purposes of Section 44A. However, the United States has not been declared by the Government to be a reciprocating territory for the purposes of Section 44A. A judgment of a court in the United States may be enforced in India only by a suit upon the judgment, subject to Section 13 of the Civil Procedure Code and not by proceedings in execution. The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. Generally, there are considerable delays in the disposal of suits by Indian courts. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount of damages awarded as excessive or inconsistent with public policy in India. A party seeking to enforce a foreign judgment in India is required to obtain prior approval from the RBI under FEMA to repatriate any amount recovered pursuant to execution and any such amount may be subject to income tax in accordance with applicable laws. Any judgment or award in a foreign currency would be converted into Indian Rupees on the date of the judgment or award and not on the date of the payment. Generally, there are considerable delays in the processing of legal actions to enforce a civil liability in India, and therefore it is uncertain whether a suit brought in an Indian court will be disposed off in a timely manner or be subject to considerable delays. 52. Terrorist attacks, civil unrest and other acts of violence or war involving India and other countries

could adversely affect our business and the Indian financial markets. Public places like theaters could and have in the past been targets for terrorist attacks and rioting. Any violence in public places such as theaters could cause damage to life and property, and also impact customer sentiment and their willingness to visit theaters, which would have a material adverse effect on our business and results of operations. Our insurance policies for assets cover, among other things, terrorism, fire and earthquakes. However, our insurance policies may not be adequate to cover the loss arising from these events, which could adversely affect our results of operations and financial condition. India has also witnessed civil disturbances in recent years and it is possible that future civil unrest as well as other adverse social, economic and political events in India could have an adverse impact on us. Regional or international hostilities, terrorist attacks or other acts of violence of war could have a significant adverse impact on international or Indian financial markets or economic conditions or on Government policy. Such incidents could also create a greater perception that investment in Indian

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companies involves a higher degree of risk and could have an adverse impact on our business and the price of the Equity Shares. 53. There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect

your ability to sell, or the price at which you can sell, Equity Shares at a particular point in time. We are subject to a daily “circuit breaker” imposed by all Stock Exchanges in India, which does not allow transactions beyond specified increases or decreases in the price of the Equity Shares. This circuit breaker operates independently of the index-based market-wide circuit breakers generally imposed by SEBI on Indian Stock Exchanges. The percentage limit on our circuit breakers is set by the Stock Exchanges based on the historical volatility in the price and trading volume of our Equity Shares. The Stock Exchanges do not inform us of the percentage limit of the circuit breaker in effect from time to time, and may change it without our knowledge. This circuit breaker limits the upward and downward movements in the price of the Equity Shares. As a result of this circuit breaker, no assurance may be given regarding your ability to sell your Equity Shares or the price at which you may be able to sell your Equity Shares at any particular time.

54. There is no guarantee that the Equity Shares will be listed on the BSE and the NSE in a timely manner or at all, and any trading closures at the BSE and the NSE may adversely affect the trading price of the Equity Shares.

In accordance with Indian law and practice, permission for listing of the Equity Shares will not be granted until after those Equity Shares have been issued and allotted. Approval will require all other relevant documents authorising the issuing of Equity Shares to be submitted. There could be a failure or delay in listing the Equity Shares on the BSE and / or the NSE. Any failure or delay in obtaining the approval would restrict your ability to dispose of your Equity Shares. The regulation and monitoring of Indian securities markets and the activities of investors, brokers and other participants differ, in some cases significantly, from those in Europe and the U.S. Indian Stock Exchanges have in the past experienced problems, including temporary exchange closures, broker defaults, settlements delays and strikes by brokerage firm employees, which, if continuing or recurring, could affect the market price and liquidity of the securities of Indian companies, including the Equity Shares, in both domestic and international markets. A closure of, or trading stoppage on, the BSE and / or the NSE could adversely affect the trading price of the Equity Shares. Historical trading prices, therefore, may not be indicative of the prices at which the Equity Shares will trade in the future. 55. You may be subject to Indian taxes arising out of capital gains. Any gain realised on the sale of

equity shares held for more than 12 months to an Indian resident, which are sold other than on a recognised stock exchange and as result of which no Securities Transaction Tax (STT) has been paid, will be subject to capital gains tax in India.

Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian company are generally taxable in India. Any gain realised on the sale of listed equity shares on a stock exchange held for more than 12 months will not be subject to capital gains tax in India if the STT has been paid on the transaction. The STT will be levied on and collected by a domestic stock exchange on which equity shares are sold. Any gain realised on the sale of equity shares held for more than 12 months to an Indian resident, which are sold other than on a recognised stock exchange and as result of which no STT has been paid, will be subject to capital gains tax in India. Further, any gain realised on the sale of listed equity shares held for a period of 12 months or less will be subject to capital gains tax in India. Capital gains arising from the sale of the Equity Shares will be exempt from tax in India in cases where such exemption is provided under the tax treaty between India and the country of which the seller is a resident. Generally, Indian tax treaties do not limit India’s ability to impose tax on capital gains. As a result, residents of certain countries may be liable for tax in India, as well as in their own jurisdictions on gain upon a sale of the Equity Shares.

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PROMINENT NOTES

1. Issue of [●] fully paid-up Equity Shares of face value of ` 10 each for cash at a price of ` [●] per

Equity Share including a share premium of ` [●] per Equity Share aggregating up to ` 5,500 lakhs to the existing Equity Shareholders on a rights basis in the ratio of [●] fully paid-up Equity Shares for every [●] fully paid-up Equity Shares held by them on the Record Date (i.e. [●]).

2. As on March 31, 2012, our net worth was ` 17,121.63 lakhs (excluding revaluation reserves) as

described in the chapter “Financial Information” on page 72. 3. For details of our transactions with the related parties during FY 2011-12 as per AS 18, the nature

of such transactions and the cumulative value of such transactions, please see the chapter “Financial Information” on page 72.

4. There has been no financing arrangement whereby the Promoter Group, the Directors of our

corporate Promoters, the our Directors and their relatives have financed the purchase by any other person of our securities other than in the normal course of business of the financing entity during the period of six months immediately preceding the date of filing of this Draft Letter of Offer with SEBI.

Investors may contact the Lead Manager for any complaint, clarifications and information pertaining to the Issue. Any clarification or information relating to this Issue shall be made available by the Lead Manager to the public and investors at large and no selective or additional information would be made available only to a section of the investors in any manner. All grievances relating to ASBA process may be addressed to the Registrar to the Issue, with a copy to the relevant SCSBs, giving full details such as name, address of the applicants, application number, number of Equity Shares applied for, Bid Amounts blocked, ASBA Account number and the Designated Branch of the SCSBs where the ASBA Bid-cum-Application Form has been submitted by the ASBA Bidder. For contact details please refer to the section titled “General Information” beginning on page 36.

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SECTION III- INTRODUCTION

SUMMARY OF THE ISSUE

The following is a summary of the Issue. This summary should be read in conjunction with, and is qualified in its entirety by, more detailed information in the chapter “Terms of the Issue” on page 136. This issue of Equity Shares is being made by us as set forth below:

Equity Shares offered in this Issue [●] Equity Shares Rights Entitlement [●] Equity Share(s) for every [●] fully paid-up Equity

Share(s) held on the Record Date. Record Date [●] Face Value per Equity Share ` 10 Issue Price per Equity Share ` [●] Equity Shares outstanding prior to the Issue 22,960,008 Equity Shares Equity Shares outstanding after the Issue (assuming full subscription for and Allotment of the Rights Entitlement)

[●] Equity Shares

Terms of the Issue For more information, please see the chapter “Terms of the Issue” on page 136.

Use of Issue Proceeds For further information, please see the chapter “Objects of the Issue” on page 44.

Terms of Payment

Due Date Amount On the Issue application (i.e. alongwith the CAF) ` [●], which constitutes 100% of the Issue Price payable

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SUMMARY OF FINANCIAL INFORMATION

The following tables set forth the summary financial information derived from our audited financial statements as on and for FY 2011-12 prepared in accordance with Indian GAAP and the Companies Act and the limited reviewed financial results for six months ended September 30, 2012, prepared in accordance with Indian GAAP and the SEBI ICDR Regulations.

Our summary financial information presented below, is in ` in Lakhs and should be read in conjunction with the financial statements and the notes thereto included in the chapter “Financial Statements”, respectively, of this Draft Letter of Offer.

Summary statement of assets and liabilities as at March 31, 2012

` in lakhs As at As at 31st March, 2012 31st March, 2011 Equity and liabilities Shareholders’ funds (a) Share capital 2,296.00 2,296.00 (b) Reserves and surplus 14,825.63 14,899.73 17,121.63 17,195.73 Non-current liabilities (a) Long-term borrowings - 2,502.87 (b) Deferred tax liabilities (net) - 40.75 (c) Other long-term liabilities 4.59 3.53 (d) Long-term provisions 1,032.73 888.70 1,037.32 3,435.85 Current liabilities (a) Short-term borrowings 7,031.36 3,995.11 (b) Trade payables 25,868.81 30,723.54 (c) Other current liabilities 7,723.19 6,262.63 (d) Short-term provisions 729.35 623.77 41,352.71 41,605.05 TOTAL 59,511.66 62,236.63 Assets Non-current assets (a) Fixed assets (i) Tangible assets 11,240.31 11,545.30 (ii) Intangible assets 1,715.81 1,549.00 (iii) Capital work-in-progress 603.74 288.79 (iv) Intangible Asset under development 670.52 280.38 (b) Deferred tax asset (net) 257.82 - (c) Long-term loans and advances 1,660.43 1,396.29 (d) Other non-current assets 0.51 0.99 16,149.14 15,060.75 Current assets (a) Inventories 26,807.37 32,672.98 (b) Trade receivables 14,813.77 12,520.77 (c) Cash and Bank balances 264.05 206.44 (d) Short-term loans and advances 1,436.77 1,726.08 (e) Other current assets 40.56 49.61 43,362.52 47,175.88 TOTAL 59,511.66 62,236.63

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Summary statement of profit and loss for the year ended March 31, 2012 ` Lakhs For the year ended For the year ended 31st March, 2012 31st March, 2011 Income Revenue from operations (gross) 86,731.93 82,988.99 Less : Excise duty recovered 6,923.02 6,588.24 Revenue from operations (net) 79,808.91 76,400.75 Other income 87.41 467.31 Total Revenue 79,896.32 76,868.06 Expenses Cost of raw material and components consumed 43,093.44 50,425.95 Purchase of stock-in-trade 5,715.63 6,561.76 Decrease / (Increase) in inventories of finished goods, work-in-progress and stock-in-trade

3,362.25 (7,172.23)

Employee benefits expense 5,278.50 4,406.50 Finance costs 891.04 737.54 Depreciation and amortization expense 1,831.74 1,605.20 Other expenses 19,444.45 16,309.97 Total Expenses 79,617.05 72,874.69 Profit before tax 279.27 3,993.37 Tax expense Current tax [Including ` 22.97 Lakhs (Previous year: `12.00 Lakhs) pertaining to earlier years]

251.67 1,080.09

Deferred tax (298.57) (19.29) (46.90) 1,060.80 Profit for the year 326.17 2,932.57 Basic and diluted (`) earnings per share 1.42 12.77

[Nominal value of share `10 (Previous year: `10)]

33

Summary statement of cash flow for the year ended March 31, 2012 ` in lakhs For the year ended For the year ended 31st March, 2012 31st March, 2011 A. Cash Flow from Operating Activities Net profit before Tax 279.27 3,993.37 Adjustments For : Profit on sale of assets (net) (7.29) (2.36) Unrealised foreign exchange (gain)/loss (net) 52.81 (101.64) Depreciation and amortisation 1,831.74 1,605.20 Provision for doubtful debts 94.27 14.17 Interest income (30.88) (237.73) Finance Costs 891.04 737.54 Operating profit before working capital changes 3,110.96 6,008.55 Adjustments for : Increase in trade receivables (2,387.27) (2,936.88) Decrease/(Increase) in loans and advances 240.43 (740.26) Decrease/(Increase) in other current assets 8.54 (37.76) Decrease/(Increase) in inventories 5,865.61 (14,632.66) (Decrease)/Increase in current liabilities (4,061.58) 12,081.59 Increase in other provisions 249.60 206.81 Cash from / (used in) operating activities 3,026.29 (50.61) Direct Taxes paid (407.19) (841.00) Net cash from / (used in) operating activities 2,619.10 (891.61) B. Cash flow from investing activities Purchase of tangible assets (1,708.30) (3,105.08) Proceeds from sale of fixed assets 67.47 41.20 Purchase of intangible assets (463.55) (784.17) Decrease in deposits (with maturity more than three months) 19.56 513.37 Interest received 31.39 238.06 Net cash used in investing activities (2,053.43) (3,096.62) C. Cash flow from financing activities Repayment of long-term borrowings (2,502.86) - Proceeds from short term borrowings (net) 3,036.25 2,462.80 Interest paid (626.36) (194.46) Dividend paid (including tax provision thereon) (396.01) (397.07) Net cash flow from / (used in) financing activities (488.98) 1,871.27 Net increase / (decrease) in cash and cash equivalents (A+B+C)

76.69 (2,116.96)

Cash and cash equivalents at the beginning of the year 150.36 2,267.32 Cash and cash equivalents at the end of the year 227.05 150.36 Components of Cash and Cash Equivalents: Cash on hand 6.22 6.23 Bank balance in current accounts 122.39 97.22 Unclaimed dividend account 8.79 4.54 Balance in cash credit accounts 89.65 42.37 Balance in margin Accounts 37.51 57.07 Total 264.56 207.43 Less: Balance in margin accounts 37.51 57.07 Cash and Cash Equivalents 227.05 150.36

34

CONDENSED STATEMENT OF PROFIT AND LOSS FOR SIX MONTHS PERIOD ENDED 30TH SEPTEMBER, 2012

(`in Lakhs) Sr. No.

Particulars Six month ended on 30.09.2012

Six month ended on 30.09.2011

(Unaudited) (Unaudited)

1 Income from operations Sales/Income from operations 56,201.06 49,004.70

Less : Excise duty recovered 5,036.36 3,931.50

(a) Net Sales/Income from operations (Net of excise duty) 51,164.70 45,073.20

(b) Other Operating Income 428.43 436.60

Total income from operations (net) 51,593.13 45,509.80

2 Expenses

(a) Cost of materials consumed 21,332.05 19,105.64

(b) Purchase of stock-in-trade 7,681.89 2,955.41

(c) Changes in inventories of finished goods, work-in-progress and stock-in-trade

4,942.59 8,312.95

(d) Employee benefits expense 2,719.56 2,429.79

(e) Depreciation and amortisation expense 909.44 903.25

(f) Other expenses 11,924.31 10,590.38

Total expenses (a to f) 49,509.84 44,297.42 3

Profit/(Loss) from operations before other income, finance costs and exceptional items (1-2)

2,083.29 1,212.38

4 Other income 111.77 37.65 5

Profit/(Loss) from ordinary activities before finance cost and exceptional items (3+4)

2,195.06 1,250.03

6 Finance costs 254.94 421.24 7

Profit/(Loss) from ordinary activities after finance cost but before exceptional items (5+6)

1,940.12 828.79

8 Exceptional Items - - 9 Profit/(Loss) from ordinary activities before tax

(7+8) 1,940.12 828.79

10 Tax Expenses

a Current tax (net) 785.84 496.74

b Deferred tax (credit) (235.96) (253.41)

Total (a+b) 549.88 243.33 11 Net Profit/(Loss) from ordinary activities after tax

(9+10) 1,390.24 585.46

12 Extraordinary items - - 13 Net Profit/(Loss) for the period (11+12) 1,390.24 585.46 14

Basic and Diluted Earnings Per Share (of `10 each) (Not annualised) (`)

6.06 2.55

35

CONDENSED STATEMENT OF ASSET AND LIABILITIES AS AT 30TH SEPTEMBER 2012

(` in Lacs)

Particulars As at 30.09.2012

(Unaudited)

As at 31.03.2012 (Audited)

EQUITY AND LIABILITIES

Shareholders’ funds

(a) Share capital 2,296.00 2,296.00

(b) Reserves and surplus 16,215.88 14,825.63

Sub-total - Shareholders' fund 18,511.88 17,121.63

Non-current liabilities

(a) Long-term borrowings 3,167.81 -

(b) Other long-term liabilities 0.30 4.59

(c) Long-term provisions 1,148.17 1,032.73

Sub-total - Non-current liabilities 4,316.28 1,037.32

Current liabilities

(a) Short-term borrowings 2,026.60 7,031.36

(b) Trade payables 20,878.81 25,868.81

(c) Other current liabilities 2,719.29 7,723.19

(d) Short-term provisions 1,046.54 729.35

Sub-total - Current liabilities 26,671.24 41,352.71

TOTAL - EQUITY AND LIABILITIES 49,499.40 59,511.66

ASSETS

Non-current assets

(a) Fixed assets 8,964.36 14,230.38

(b) Deferred tax assets (Net) 493.78 257.82

(c) Long-term loans and advances 3,728.14 1,660.43

(d) Other non-current assets 0.51 0.51

Sub-total Non - Current assets 13,186.79 16,149.14

Current assets

(a) Inventories 14,005.15 26,807.37

(b) Trade receivables 8,485.60 14,813.77

(c) Cash and Bank balances 2,917.37 264.05

(d) Short-term loans and advances 1,145.55 1,436.77

(e) Other current assets 9,758.94 40.56

Sub-total - Current assets 36,312.61 43,362.52

TOTAL - ASSETS 49,499.40 59,511.66

36

GENERAL INFORMATION

Registered Office Hitachi Home & Life Solutions (India) Limited 9th Floor, Abhijeet-I, Mithakhali Six Roads, Ahmedabad - 380 006, Gujarat, India. Tel: +91 79 3041 4800 Fax: +91 79 3041 4999 Website: http://www.hitachi-hli.com Email: [email protected] Corporate Identification Number: L29300GJ1984PLC007470 Address of the Registrar of Companies Registrar of Companies, Ahmedabad, Gujarat RoC Bhavan, Opposite Rupal Park Society, Behind Ankur Bus Stop, Naranpura, Ahmedabad-380013 Gujarat, India. Tel: +91 79 27437597 Fax: +91 79 27438371 Email: [email protected] Company Secretary and Compliance Officer Mr. Parag Dave Hitachi Home & Life Solutions (India) Limited 9th Floor, Abhijeet, Mithakhali Six Roads, Ahmedabad 380006, Gujarat, India. Email: [email protected], [email protected] Tel: +91 79 3041 4800 Fax: +91 79 3041 4999 Investors may contact the Registrar to the Issue or the Company Secretary and Compliance Officer for any pre-Issue/ post-Issue related matter. All grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a copy to the SCSB, giving full details such as name, address of the applicant, number of Equity Shares applied for, Amount blocked, ASBA Account number and the Designated Branch of the SCSB where the CAF was submitted by the ASBA Investors. Lead Manager to the Issue ICICI Securities Limited ICICI Centre H.T. Parekh Marg Churchgate, Mumbai 400020, India Tel: +91 22 2288 2460 Fax: +91 22 2282 6580 Website: www.icicisecurities.com Email: [email protected] Investor Grievance E-mail: [email protected] Contact Person: Mr. Sumit Agarwal SEBI Registration Number: INM000011179

37

Legal Counsel to the Issue Khaitan & Co One Indiabulls Centre, Tower 1, 13th Floor, 841 Senapati Bapat Marg, Mumbai – 400 013, Maharashtra, India. Tel: +91 22 6636 5000 Fax: +91 22 6636 5050 Registrar to the Issue Sharepro Services (India) Private Limited 13 AB, Samhita Warehousing Complex Sakinaka Telephone Exchange Lane Off Andheri-Kurla Road, Sakinaka Andheri (East), Mumbai – 400 072 Maharashtra, India. Tel: +91 22 6191 5400 Fax: +91 22 6191 5444 Website: www.shareproservices.com Investor Greivance E-mail: [email protected] Contact Person: Mr. Prakash A. Khare / Mr. Anand Moolya SEBI Registration No: INR000001476 Auditors S.R. Batliboi & Associates Chartered Accountants, 2nd Floor, Shivalik Ishaan Building, Near C. N. Vidhyalaya, Ambawadi, Ahmedabad – 380 015, India Tel: + 91 79 6608 3800 Fax: +91 79 6608 3900 Firm Registration No.:101049W Email: [email protected] Bankers to the Issue [●] Self Certified Syndicate Banks The list of banks that have been notified by SEBI to act as SCSB for the ASBA process is provided on http://www.sebi.gov.in/cms/sebi_data/attachdocs/1329905803160.htm Credit rating As the Issue is a rights issue of Equity Shares, no credit rating is required. No ratings have been received by us in the past for any issuance of equity shares of the Company. Statement of responsibility of the Lead Manager As there is only one Lead Manager, inter-se allocation of responsibilities is not applicable. However, the list of major responsibilities of ICICI Securities Limited, inter alia, is as follows:

38

S. No Activities1. Capital structuring with relative components and formalities such as type of instruments, etc. 2. Undertaking due diligence documents and together with legal counsels assist in drafting of the Offer

Documents and of advertisement/publicity material including newspaper advertisements and brochure/ memorandum containing salient features of the Offer Document. Compliance with the SEBI Regulations and other stipulated requirements and completion of prescribed formalities with Stock Exchanges and SEBI.

3. Selection of various agencies connected with the Issue, namely Registrars to the Issue, printers, Bankers to the Issue and advertisement agencies.

4. Assisting, together with other advisors and legal counsels in securing all necessary regulatory approvals for the Issue and assisting in filing of the Issue related documents with SEBI, Stock Exchanges or any other regulatory authorities.

5. The post-issue activities will involve essential follow-up steps, which must include finalization of basis of allotment/ weeding out of multiple applications, listing of instruments and dispatch of certificates and refunds, with the various agencies connected with the work such as Registrars to the Issue, Bankers to the Issue, and bank handling refund business. Even if many of these post-issue activities would be handled by other intermediaries, the Lead Manager shall be responsible for ensuring that these agencies fulfill their functions and enable him to discharge this responsibility through suitable agreements with the Issuer.

Listing of Equity Shares The existing Equity Shares are listed on the Stock Exchanges. We have received in-principle approvals for listing of the Equity Shares to be issued pursuant to this Issue from the BSE and the NSE by letters dated [●] and [●], respectively. We will make applications to the Stock Exchanges for final listing and trading approvals in respect of the Equity Shares being offered in terms of this Draft Letter of Offer. If the final listing and trading approvals is not granted for the Equity Shares by the Stock Exchanges, we shall forthwith repay, without interest, all monies received from the Investors pursuant to this Draft Letter of Offer. If such money is not repaid within eight days after we become liable to repay it (i.e. 15 days after Issue Closing Date or the date of refusal by the Stock Exchanges, whichever is earlier), we and every Director 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 Section 73 of the Companies Act. Debenture trustee This being an issue of equity shares, a debenture trustee is not required. Monitoring Agency As the Issue size will be less than ` 50,000 Lakhs, under the SEBI Regulations, we are not required to appoint a monitoring agency. However, the Audit Committee of the Board will monitor the utilization of Issue Proceeds. Appraisal Agency None of the purposes for which the Net Proceeds are proposed to be utilised have been financially appraised by any bank or financial institution. Underwriters and details of Underwriting Agreement This Issue is not underwritten and our Company has not entered into any underwriting arrangement. If our Company does not receive the minimum subscription of 90% of the Issue, or the subscription level falls below 90%, after the Issue Closing Date on account of cheques being returned unpaid or withdrawal of applications, our Company shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the subscription amount by more than eight days after our Company becomes liable to pay the subscription amount (i.e. 15 days after the Issue Closing Date), our Company will pay interest for the delayed period at 15% per annum as prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act.

39

Principal Terms of Loans and Assets charged as security For details of the principal terms of loans and assets charged as security, please see the chapter “Financial Indebtedness” on page 115. Issue Schedule

Issue Opening Date: [●] Last date for receipt of request for SAFs: [●] Issue Closing Date: [●]

The Board of Directors or a duly authorized committee thereof will have the right to extend the Issue period as it may determine from time to time, provided that the Issue will not be kept open in excess of 30 days from the Issue Opening Date.

40

CAPITAL STRUCTURE

Our share capital and related information as on the date of this Draft Letter of Offer, prior to and after the proposed Issue, is set forth below:

(in `) Aggregate

Nominal Value

Aggregate Value at

Issue Price Authorised Share Capital

3,00,00,000 Equity Shares 30,00,00,000 Issued, subscribed and paid up capital before the Issue

2,29,60,008 Equity Shares fully paid-up 22,96,00,080 Present Issue in terms of this Draft Letter of Offer

[●] Equity Shares at an Issue Price of ` [●] per Equity Share (#Note 1) [●] [●] Issued, subscribed and paid up capital after the Issue (assuming full subscription for and allotment of the Rights Entitlement)

[●] Equity Shares (##Note 2) [●] [●] Securities premium account

Securities Premium Account before the Issue 38,76,91,828 Securities Premium Account after the allotment of the Rights Issue Equity Shares (assuming full subscription for and allotment of the Rights Entitlement)

[●]

Note: This Issue has been authorised by the Board of Directors under section 81(1) and other provisions of the Companies Act pursuant to a circular resolution dated October 18, 2012. Present Issue (Note 1) a. The present Issue of equity shares on a rights basis is in the ratio of [●] equity shares of ` 10 each for every [●] equity shares held by our existing equity shareholders on the Record Date i.e. [●]. b. In addition to the present paid up capital of 22,960,008 equity shares, 39,401 equity shares, which have been kept in abeyance on account of earlier right issue are also being considered for determining the number of shares in the Rights Issue. Post Issue (Note 2) The post Issue equity share capital shall also include [●] equity shares to be kept in abeyance, as per the earlier rights issue and rights entitlement on those shares in the Issue. As on the date of this Draft Letter of Offer, the Company does not have any outstanding options or convertible securities. Notes to the Capital Structure 1. Our shareholding pattern as on September 30, 2012 is as follows:

Category code (I)

Category of Shareholder

(II)

Number of Share

holders (III)

Total number of shares

(IV)

Number of shares held in dematerialized

form (V)

Total shareholding as a percentage of total

number of shares

Shares Pledged or otherwise encumbered

As a % of (A+B)

(VI)

As a % of (A+B+C)

(VII)

Number of shares(VIII)

As a % (IX)=(VIII)/ (IV)*100

(A) Shareholding of Promoter and Promoter Group1 Indian (a) Individuals/ Hindu

Undivided Family 0 0 0 0 0 0 0.00

(b) Bodies Corporate 0 0 0 0 0 0 0.00 (c) Any Others(Trust) 0 0 0 0 0 0 0.00 Sub-Total (A)(1) 0 0 0 0 0 0 0.00 2 Foreign (a) Individuals (Non-

Residents Individuals/ Foreign Individuals)

0 0 0 0 0 0 0.00

41

Category code (I)

Category of Shareholder

(II)

Number of Share

holders (III)

Total number of shares

(IV)

Number of shares held in dematerialized

form (V)

Total shareholding as a percentage of total

number of shares

Shares Pledged or otherwise encumbered

As a % of (A+B)

(VI)

As a % of (A+B+C)

(VII)

Number of shares(VIII)

As a % (IX)=(VIII)/ (IV)*100

(b) Bodies Corporate 2 1,60,50,000 1,60,50,000 69.90 69.90 0 0.00 (c) Institutions 0 0 0 0.00 0.00 0 0.00 (d) Any Others (Specify) 0 0.00 0.00 0 0.00 Sub Total(A)(2) 2 1,60,50,000 1,60,50,000 69.90 69.90 0 0.00 Total Shareholding of Promoter and Promoter Group (A)= (A)(1)+(A)(2)

2 1,60,50,000 1,60,50,000 69.90 69.90 0 0.00

(B) Public shareholding B1 Institutions

(a) Mutual Funds/ UTI 7 3,03,600 3,00,000 1.32 1.32 0 0.00 (b) Financial Institutions/

Banks 2 275 175 0.00 0.00 0 0.00

(c) Central Government/ State Government(s)

0 0 0 0.00 0.00 0 0.00

(d) Venture Capital Funds

0 0 0 0.00 0.00 0 0.00

(e) Insurance Companies 1 800 0 0.00 0.00 0 0.00 (f) Foreign Institutional

Investors 3 73,412 72,712 0.32 0.32 0 0.00

(g) Foreign Venture Capital Investors

0 0 0 0.00 0.00 0 0.00

(h) Any Other (specify) 0 0 0 0.00 0.00 0 0.00 Sub-Total (B)(1) 13 3,78,087 3,72,887 1.65 1.65 0 0.00B 2 Non-institutions

(a) Bodies Corporate 547 19,01,671 18,91,270 8.28 8.28 0 0.00(b) Individuals

I Individual shareholders holding nominal share capital up to `1 lakh

16,769 36,70,172 30,75,292 15.99 15.99 0 0.00

II Individual shareholders holding nominal share capital in excess of ` 1lakh.

36 7,68,973 7,68,973 3.35 3.35 0 0.00

(c) Any other (specify) 313 1,91,105 1,90,705 0.83 0.83 0 0.00 Any Other Total 313 1,91,105 1,90,705 0.83 0.83 0 0.00 Sub-Total (B)(2) 17,665 65,31,921 59,26,240 28.45 28.45 0 0.00Total Public Shareholding (B)= (B)(1)+(B)(2) 17,678 69,10,008 62,99,127 30.10 30.10 0 0.00

TOTAL (A)+(B) 17,680 2,29,60,008 2,23,49,127 100.00 100.00 0 0.00Shares held by Custodians and against which Depository Receipts have been issued(C)

0 0 0 NA 0.00 NA NA

1 Promoter Group 0 0 0 0.00 0.00 0 0.00 2 Public Group 0 0 0 0.00 0.00 0 0.00

GRAND TOTAL (A)+(B)+(C) 17,680 2,29,60,008 2,23,49,127 100.00 100.00 0 0.00

The list of Equity Shareholders belonging to the category “Promoter and Promoter Group” as on September 30, 2012 is detailed in the table below:

Name of the shareholder Details of Shares held Encumbered shares

Number of shares held

As a % of total number of shares

No. of Shares

As a %


1 Hitachi Appliances Inc. 1,55,50,000 67.73 0 0.00 0.00 2 Hitachi India Private Limited 5,00,000 2.18 0 0.00 0.00

42

Name of the shareholder Details of Shares held Encumbered shares Number of shares held


No. of Shares

As a %


Total 1,60,50,000 69.90 0 0.00 0.00

Statement showing holding of securities (including shares, warrants, convertible securities) of persons (together with PAC) belonging to the category “public” and holding more than 5% of the total number of shares of the Company as on September 30, 2012 is detailed in the table below: Sr. No.

Name(s) of the shareholder(s) and

the Persons Acting in Concert (PAC) with

them

Number of shares

Shares as a % of total

number of shares

Details of warrants Details of convertible securities

Total shares

as a % of diluted share

capital

No ofwarrants

As a % total

number ofwarrants

of the same class

Number ofconvertiblesecurities

held

% w.r.t total number of convertible securities

of the same class

1 Nil 0 0 0 0 0 0 0

TOTAL 0 0 0 0 0 0 0

The list of Equity Shareholders, other than the Equity Shareholders belonging to the category “Promoters and Promoter Group”, holding more than 1% of our paid-up capital as on September 30, 2012 is detailed in the table below:

Sr. No.

Name of the shareholder

Number of shares

held

Shares as a percentage of total number of shares

Details of Warrants Details of convertible securities

Total Shares as a %

of diluted share

capital*

Number of

warrants held

As a % total

number of warrants

of the same class

Number of convertible securities

held

% w.r.t total number of convertible securities of

the same class

1 Bajaj Alliance Life Insurance Company Limited

8,90,000 3.88 0 0.00 0 0.00 3.88

TOTAL 8,90,000 3.88 0 0.00 0 0.00 3.88 * including underlying shares assuming full conversion of warrants and convertible securities Statement showing details of Depository Receipts as on September 30, 2012 is detailed in the table below:

Sr. No.

Type of outstanding Depository Receipts (ADRs, GDRs, etc.)

Number of outstanding DRs

Number of shares underlying

outstanding DRs

Shares underlying outstanding DRs as a percentage of total number of shares

1 Nil Nil Nil Nil

2. There have been no acquisition of Equity Shares by the Promoters and the members of the Promoter Group within the last one year preceding the date of this Draft Letter of Offer.

3. Our Promoter, Hitachi Appliances Inc., has confirmed vide its letter dated November 01, 2012 that it intends to subscribe to the full extent of its Rights Entitlement in the Issue, in compliance with regulation 10 (4) of Takeover Regulations. Further it has confirmed that it intends to subscribe for (i) additional Right Issue Equity Shares, and (ii) Rights Issue Equity Shares, if any, which remain unsubscribed. Such subscription to additional Rights Issue Equity Shares and the unsubscribed portion, if any, to be made by the it, shall be in accordance with regulation 10 (4) of Takeover Regulations. Further, such subscription shall not result in breach of minimum public shareholding requirement as stipulated in the Listing Agreements.

4. The present Issue being a rights issue, as per regulation 34(c) of the SEBI Regulations, the requirements of promoters’ contribution and lock-in are not applicable.

43

5. The Equity Shares are fully paid-up and as on the date of this Draft Letter of Offer, there are no partly paid-up Equity Shares.

6. There will be no further issue of capital whether by way of issue of bonus shares, preferential

allotment, rights issue or in any other manner during the period commencing from submission of this Draft Letter of Offer with the Stock Exchanges until the Equity Shares to be issued pursuant to the Issue have been listed.

7. The ex-rights price of the Equity Shares as per regulation 10(4) (b) of the Takeover Regulations is `

[●].

44

OBJECTS OF THE ISSUE

We intend to deploy the Net Proceeds of the Issue to: 1. Fund the capital expenditure. 2. Fund working capital requirements. 3. Fund expenditure for general corporate purposes. The main objects set out in our Memorandum of Association enables us to undertake our existing activities and the activities for which the funds are being raised by us through this Issue. Net Proceeds of the Issue

(` in Lakhs) Particulars Amount

Gross proceeds of the Issue 5,500 Issue related expenses* [●] Net Proceeds of the Issue [●] *to be finalized upon determination of the Issue Price Schedule of Implementation and Use of Net Proceeds We intend to utilise the Net Proceeds for financing the objects as set forth below:

(` in Lakhs) Particulars Amount proposed to be financed from Net

Proceeds Fund the capital expenditure# 3,850 Fund working capital requirements# 1,100 General Corporate Purposes* [●]

Total 5,500 *to be finalized upon determination of the Issue Price # As per certificate dated December 12, 2012 issued by Urjit Ravat & Co, Chartered Accountants, no amount has been spent upto December 10, 2012 on stated objects of the issue We intend to utilise the Net Proceeds in FY 14 and in the event of a surplus, we will use such surplus towards general corporate purposes, including meeting future growth requirements. Means of finance The entire requirements of the objects detailed above are intended to be funded from the Net Proceeds of the Issue. Accordingly, we confirm that there is no requirement for us to make firm arrangements of finance through verifiable means towards at least 75% of the stated means of finance, excluding the amount to be raised through the Issue. The fund requirement and deployment are based on internal management estimates and have not been appraised by any bank or financial institution. These are based on current conditions and are subject to change in light of changes in external circumstances or costs, or in our financial condition, business or strategy, as discussed further below. Our management, in response to the competitive and dynamic nature of the industry, will have the discretion to revise its business plan and estimates from time to time and consequently our funding requirements and deployment of funds may also change. This may also include rescheduling the proposed utilization of Net Proceeds and increasing or decreasing expenditure for a particular object vis-à-vis the utilization of Net Proceeds, subject to compliance with applicable law. In case of variations in the actual utilization of funds earmarked for the purposes set forth above, increased fund requirements for a particular purpose may be financed by surplus funds, if any, available in respect of the other purposes for which funds are being raised in this Issue. If surplus funds are unavailable or in case of cost overruns, we expect that the shortfall will be met from internal accruals and/or entering into debt or equity arrangements as required. We may have to revise our expenditure and fund requirements as a result of variations in the cost structure,

45

changes in estimates and external factors, which may not be within the control of our management. This may entail rescheduling, revising or canceling the planned expenditure and fund requirements and increasing or decreasing the expenditure for a particular purpose from its planned expenditure mentioned below at the discretion of our management. In addition, the estimated dates of completion of the installation of the plants and machineries, as described in this section, are based on management’s current expectations and are subject to change due to various factors including those described above, some of which may not be in our control. Accordingly, the net proceeds of the Issue would be used to meet all or any of the uses of the funds described herein. Details of the Objects 1. Capital Expenditure In line with our strategy of increasing our product portfolio, we propose to upgrade, purchase IT infrastructure, tools and moulds for new product line, technical know-how for purchase of new products, setting up of top discharge manufacturing facility and test lab at Kadi facility for new product line of VRF, metal forming press, bending machines and other machinery. We propose to acquire equipment which is ready to use. The break-up of the machinery proposed to be acquired and other incidental expenses is as follows:

Sr. No. Item Particulars Estimated

Cost (` in

Lakhs)

Details of Quotations

1. IT infrastructure

Server, Laptops, Printers, Software License(s)

130.38 Based on: a) quotations dated December 04, 2012 and December

06, 2012 received from Silver Touch Technologies Limited

b) quotation dated December 07, 2012 received from Wipro Limited

c) quotation dated December 05, 2012 from Magic Systems Private Limited

d) quotation dated December 07, 2012 from Megastar Computer Services

2. VRF

Development VRF Testing Labs and machinery for top discharge VRF

2,000.00 Based on: e) quotation dated December 03, 2012 from Essentec

Industries Co. Ltd., Hong Kong f) quotation dated December 01, 2012 received from

Chi Wo Plastic Moulds Fty. Ltd, Hong Kong g) quotation for set free unit dated December 03, 2012

from Mehta Engineers Limited h) quotation dated December 01, 2012 received from

Dawoo Delta Co. Ltd., Korea

3. Other Plant and Machineries

New Models tooling, Pressure Gauge, CNC Tube Bender, Press Machines

1,669.62 Based on: a) quotations dated November 30, 2012 received from

Chi Wo Plastic Moulds Fty. Ltd, Hong Kong b) quotation dated November 14, 2012 received from

Unity Enterprise Corporation, Japan c) quotation dated December 01, 2012 from Aims

Corporation, Japan d) quotation dated December 01, 2012 from

Zhongshan OMS Industrial Co. Ltd., China e) quotation dated November 21, 2012 from Essentec

Industries Co. Ltd., Hong Kong 4. Contingencies 50.00 Towards any contingencies that may arise in the

implementation including increase in cost of equipments/ machinery and other reasons.

Total 3,850.00

46

Some of the above quotations are in foreign currency denominations such as U.S. Dollar and JPY. For the purposes of arriving at the total cost estimate of the above machineries, we have assumed the conversion rates prevailing as at November 30, 2012:

Sr. No. Foreign Currency Conversion Rate* 1. Japanese Yen (JPY) 1 JPY = ` 0.65665 2. United States Dollar (USD) 1 USD = ` 54.275

* Source: Bloomberg Approvals The proposed installation of the machineries at Kadi facility does not require us to take any new approvals or licenses or modification of existing licenses and approvals. The existing approvals under labour laws and environment protection laws allow the installation of the new machineries stated in this section at Kadi facility. Labour We estimate that we would require approximately 20 to 30 additional workers for the planned installation of the machineries at Kadi facility. This addition is within the permitted limits under our factory license. We do not intend to utilize the Net Proceeds of the Issue to procure any second hand equipment/ machinery. The Promoters or the Directors or the Promoter Group entities do not have any interest in the proposed procurement of any equipment/ machinery as stated above or any of the entities from whom we have obtained quotations/ machinery. 2. Working capital requirements Our business is working capital intensive and we fund majority of our working capital requirements in the ordinary course of our business from internal accruals and financing from various banks and financial institutions. As of November 30, 2012, our working capital facility consisted of an aggregate fund based limit of ` 11,850 Lakhs, an aggregate non-fund based limit of ` 24,500 Lakhs (Non-Fund based limit of ` 6,000 Lakhs can be interchangeable to fund based limit) and Buyers credit limit of USD 22,00,000. For further details of the working capital facilities currently availed by us, see “Financial Indebtedness” on page 115. Basis of estimation of working capital requirement and estimated working capital requirement

(` in Lakhs unless otherwise stated) Sr No.

Particulars FY 2011-12 FY 2012-13 Holding levels

(No. of days) (` in

Lakhs)Holding levels (No. of days)

(` in Lakhs)

I Current Assets 1 Inventories 87 26,807.37 87 33,046.63 2 Sundry Debtors 52 14,761.10 50 22,103.93 3 Other Current Assets 3,565.26 4,308.77 Total Current Assets 45,133.73 59,459.33

II Current Liabilities 1 Sundry Creditors 99 18,513.10 85 24,929.05 2 Other Current Liabilities 13,947.90 14,213.01

Total Current Liabilities 32,461.00 39,142.06 III Total Working Capital Requirement 12,672.73 20,317.27 IV Funding Pattern Increase in working capital

7,644.54 - Working capital facilities from Bank 2,997.55 - Internal Accruals 3,546.99 -Net Proceeds of the Issue 1,100.00 Based on internal estimates and projections as reflected above, we would require total working capital to the

47

tune of ` 7,644.54 Lakhs during the financial year 2012-13. We propose to avail additional working capital facility of ` 2,997.55 Lakhs from various banks. We propose to utilise ` 1,100 Lakhs of the Net Proceeds towards working capital requirements for meeting our future business requirements. Justification for holding period levels: Inventories and Sundry Debtors

While we expect an increase in sales and our growth, we propose to maintain the inventory level as per FY 2011-2012. Sundry debtors will get improved by 2 NODs by further improving credit monitoring

Sundry Creditors To ensure smooth supplies from our vendors, we would like to reduce our creditors level from last year

Urjit Ravat & Co, Chartered Accountants, have by a certificate dated December 12, 2012, certified the working capital requirements of the Company. 3. General Corporate purposes We, in accordance with the policies set up by our Board, will have flexibility in utilising the remaining Net Proceeds of this Issue for general corporate purposes to drive our business growth including to meet our branch office renovation / expansion, acquire technical knowhow, strategic initiatives, strengthening our marketing capabilities, brand building exercises as well as meeting exigencies which we may face in the ordinary course of business, or any other purposes as may be approved by the Board of Directors. The Promoters or the Directors or the Promoter Group entities do not have any interest in the proposed utilization of Issue Proceeds from General Corporate Purposes, except towards acquiring technical knowhow in our ordinary course of business. 4. Issue Expenses The Issue related expenses include, among others, fees to various advisors, printing and distribution expenses, advertisement expenses, and registrar and depository fees. The estimated Issue related expenses are as follows:

Activity Expense (in ` Lakhs)*

Expense (% of total expenses)*

Expense (% of Issue Size)*

Fees of bankers to the Issue, legal advisor, for other professional services and statutory fees

[●] [●] [●]

Fees of the Lead Manager [●] [●] [●] Fees of Registrar to the Issue [●] [●] [●] Commission of SCSBs [●] [●] [●] Advertising expenses [●] [●] [●] Listing fees [●] [●] [●] Printing and stationery expenses [●] [●] [●]

Total estimated Issue expenses [●] [●] [●] *Amount will be finalized at the time of filing the Letter of Offer and determination of Issue Price and other details. Interim Use of Funds The management, in accordance with the policies set up by the Board, will have flexibility, in deploying the Net Proceeds. Pending utilization for the purposes described above, we intend to temporarily invest the funds in interest / dividend bearing deposits with banks, for the necessary duration. Our Company confirms that pending utilization of the Net Proceeds it shall not use the funds for any investments in the equity markets. Monitoring of the utilization of funds There is no requirement for a monitoring agency as the Issue size is less than ` 50,000 Lakhs. Our audit committee shall monitor the utilization of the proceeds of the Issue. We will disclose the utilization of the Net Proceeds, including interim use, under a separate head specifying the purpose for which such proceeds have been utilized along with details, if any in relation to all such proceeds of the Issue that have not been utilised thereby also indicating investments, if any, of such unutilized proceeds of the Issue in our annual report.

48

We will disclose the details of the utilization of the Net Proceeds of the Issue, including interim use, under a separate head in our financial statements specifying the purpose for which such proceeds have been utilized or otherwise disclosed as per the disclosure requirements of our listing agreements with the Stock Exchanges. As per the requirements of Clause 49 of the listing agreement, we will disclose to the audit committee the uses/ applications of funds on a quarterly basis as part of our quarterly declaration of results. Further, on an annual basis, we shall prepare a statement of funds utilized for purposes other than those stated in this Draft Letter of Offer and place it before the audit committee. The said disclosure shall be made till such time that the full proceeds raised through the Issue have been fully spent. The statement shall be certified by our Auditors. Further, in terms of Clause 43A of the listing agreement, we will furnish to the Stock Exchanges on a quarterly basis, a statement indicating material deviations, if any, in the use of proceeds from the objects stated in this Draft Letter of Offer. Further, this information shall be furnished to the Stock Exchanges along with the interim or annual financial results submitted under Clause 41 of the listing agreement and be published in the newspapers simultaneously with the interim or annual financial results, after placing it before the audit committee in terms of Clause 49 of the listing agreement. The key industry regulations for the proposed objects of the Issue are not different from our existing business. No part of the Issue Proceeds will be paid by us as consideration to the Promoters, the Directors, our key management personnel or companies promoted by the Promoters, except in the usual course of business. The Promoters or the Directors or the Promoter Group entities do not have any interest in the proposed utilization of Issue Proceeds from General Corporate Purposes, except towards acquiring technical knowhow in our ordinary course of business.

49

SECTION IV –STATEMENT OF TAX BENEFITS

To, The Board of Directors Hitachi Home & Life Solutions Limited 9th Floor, Abhijeet-I, Mithakhali Six Roads, Ahmedabad - 380 006, Gujarat, India Dear Sirs, Sub: Certification of statement of Possible Tax Benefits in connection with Rights Issue by Hitachi

Home and Life Solutions Limited (“the Company”) under Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 (“the Regulations”)

We, the statutory auditors of the Company have been requested by the management of the Company having its registered office at the above mentioned address to certify the statement of tax benefits available to the Company and its shareholders under the provisions of the Income-tax Act, 1961 and Wealth Tax Act, 1957 presently in force in India as of date in connection with the proposed Rights Issue of the Company. The Direct Tax Code (which consolidates the prevalent direct tax laws) is proposed to come into effect from April 1, 2013. However, it may undergo a few more changes by the time it is actually introduced and hence, at the moment, it is unclear what the effect the proposed Direct Tax Code would have on the Company and the investors. The benefits discussed in the enclosed statement are neither exhaustive nor conclusive. The contents stated in the Annexure are based on the information, explanations and representations obtained from the Company. This statement is only intended to provide general information to guide the investors and is neither designed nor intended to be a substitute for professional tax advice. A shareholder is advised to consult his/ her/ their own tax consultant with respect to the tax implications of an investment in the equity shares particularly in view of the fact that certain recently enacted legislations may not have a direct legal precedent or may have a different interpretation on the benefits, which an investor can avail. We do not express any opinion or provide any assurance as to whether: • the Company or its Shareholders will continue to obtain these benefits in future; • the conditions prescribed for availing the benefits have been / would be met with; or the revenue authorities/

courts will concur with the views expressed herein. Our views are based on the existing provisions of law and its interpretations, which are subject to change from time to time. We do not assume responsibility to up-date the views of such changes. This statement is intended solely for your information and for inclusion in the Draft Letter of Offer in connection with the proposed Rights Issue of the Company and is not to be used, referred to or distributed for any other purpose without our prior written consent. For S.R. Batliboi & Associates Firm registration number: 101049W Chartered Accountants

50

per Arpit K. Patel Partner Membership No.: 34032 Place: Ahmedabad Date: December 12, 2012

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ANNEXURE Statement of Special Tax Benefits available to the Company & its shareholders under the Income-tax and other Direct Tax Laws presently in force in India: I. Benefits available to the Company 1. Deduction under Section 35(2AB) of IT Act

The Company's research facility has been granted initial recognition and in principle approval under section 35(2AB) of the Act by Department of Scientific and Industrial Research. Accordingly, the Company is eligible for weighted deduction under section 35(2AB) of the IT Act on the 200% of the expenditure incurred on scientific research (excluding cost of land or building) on approved in-house R&D facility. It may be noted that the said approval is valid upto Assesment Year AY 2013-14.

2. Deduction under Section 80IB of IT Act The Company has a unit at Jammu which is eligible for deduction under Section 80IB of the IT Act at 30% of the profits and gains of the said unit. This benefit will be available upto Assessment Year 2015-16.

II. Benefits available to the Shareholders

NIL

Statement of General Tax Benefits available to the Company & its Shareholders under the IT Act and other Direct Tax Laws presently in force in India: I. Benefits available to the Company 1. Dividends

• As per Section 10(34) of the IT Act, any income by way of dividends referred to in Section 115 -O (i.e. dividends declared, distributed or paid on or after 1st April, 2003 by domestic companies) received on the shares of any company is exempt from tax. However, such income will be subject to the provision of section 14A and section 94 sub-section( 7) and (8) of the IT Act.

• As per Section 10(35) of the IT Act, the following income will be exempt in the hands of the

Company;

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

(b) Income received in respect of units from the Administrator of the specified undertaking; or (c) Income received in respect of units from the specified company.

• However, this exemption does not apply to any income arising from transfer of units of the

Administrator of the specified undertaking or of the specified Company or of a mutual fund, as the case may be. However such income will be subject to the provision of section 14A of the IT Act.

2. Capital Gains

52

• As per section 2(42A) of the Act, shares held in a company or any other security listed in a

recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under section 10(23D) or a zero coupon bonds will be considered as short term capital asset if the period of holding of such security is 12 months or less. If the period of holding is more than 12 months, it will be considered as long term capital assets. In respect of other assets the determinative period of holding is 36 months as against 12 months mentioned above. Further, gain / loss arising from short term capital asset and long term capital asset is regarded as short term capital gain and long term capital gain respectively.

• As per Section 10(38) of the IT Act, long term capital gains arising to the company from the transfer

of long term capital asset being an equity share in a company or a unit of an equity oriented fund where such transaction is chargeable to Securities Transaction Tax (STT) will be exempt in the hands of the Company. However, such income shall be taken into account in computing Minimum Alternative Tax on book profit under section 115JB of the IT Act. For this purpose “Equity Oriented Fund” means a fund:

i. where the investible funds are invested by way of equity shares in domestic companies to

the extent of more than sixty five percent of the total proceeds of such funds; and ii. which has been set up under a scheme of a Mutual Fund specified under Section 10(23D)

of the ITA.

• As per Section 54EC of the IT Act, capital gains up to ` 50 Lakhs per annum, arising from the transfer of a long term capital asset are exempt from capital gains tax provided such capital gains are invested within a period of 6 months after the date of such transfer in specified bonds issued by National Highways Authority of India and Rural Electrification Corporation Ltd.

• As per Section 111A of the IT Act, short term capital gains arising to the Company from the sale of

equity share or a unit of an equity oriented fund transacted through a recognized stock exchange in India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of 15% (plus applicable surcharge and education cess).

• As per Section 112 of the IT Act, long term capital gains which are not exempt in terms of the

provisions of section 10(38) of the IT Act is liable to tax at the rate of 20% (plus applicable surcharge and education cess) with indexation benefits. However, if such tax payable on transfer of listed securities or units or zero coupon bonds exceed 10% (plus applicable surcharge and education cess) of the LTCG (without indexation benefit), the excess tax shall be ignored for the purpose of computing the tax payable by the company. Further, long term capital gains arising on transfer of unlisted securities is liable to tax at the rate of 10% (plus applicable surcharge and education cess) without indexation benefits.

• As per Section 70 read with Section 74 of the IT Act, short term capital loss arising during a year

is allowed to be set-off against short term as well as long term capital gains. Balance loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent 8 assessment years in terms of the provisions of section 74 of the IT Act.

• Long term capital loss arising during a year is allowed to be set-off only against long term capital gains

in terms of section 70 of the IT Act. Balance loss, if any, shall be carried forward and set-off against

53

long term capital gains arising during subsequent 8 assessment years in terms of the provisions of section 74 of the IT Act. Long term capital loss arising on sale of share or units of equity oriented fund subject to STT may not be carried forward for set off.

3. Minimum Alternate Tax MAT

Under Section 115JAA(1A) of the IT Act, credit is allowed in respect of any tax paid under Section 115JB of the IT Act for any assessment year commencing on or after April 1, 2006. Tax credit eligible to be carried forward will be the difference between MAT paid and the tax computed as per the normal provisions of the IT Act for that assessment year. Such MAT credit is allowed to be carried forward for set off purposes for up to 10 Assessment Years immediately succeeding the Assessment Year in which the MAT credit is allowable. MAT credit can be set off in a year when tax is payable under the normal provisions of the IT Act. Tax credit to be allowed shall be the excess between MAT payable and the tax computed as per the normal provisions of the IT Act for that assessment year.

4. Business Losses

Business losses (other than speculative loss), if any, arising during a year can be set off against the income under any other head of income, other than income under the head salaries in terms of the provisions of section 71 of the ITA. Balance business loss can be carried forward and set off against business profits for 8 subsequent years in terms of the provisions of section 72 of the IT Act.

5. Depreciation

The Company is entitled to claim depreciation on specified tangible and intangible assets owned and used by it for the purpose of its business as per provisions of Section 32 of the IT Act. Unabsorbed depreciation, if any, under section 32(2) of the IT Act can be carried forward and set off against any source of income in subsequent years as per provisions of the IT Act.

6. Securities Transaction Tax

Under Section 36(1)(xv) of the IT Act, STT paid in respect of the taxable securities transactions entered into in the course of the business is allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head ‘Profit and gains of business or profession’. Where such deduction is claimed, no further deduction in respect of the said amount is allowed while determining the income chargeable to tax as capital gains.

7. Section 115-O- Tax on distributed profits of domestic companies.

The tax rate is 15% (plus applicable surcharge and education cess). As per sub-section (1A) to section 115O, the domestic company will be allowed to setoff the dividend received from its subsidiary company during the financial year against the dividend distributed by it, while computing the Dividend Distribution Tax (DDT) if:

• the dividend is received from its subsidiary; • the subsidiary has paid the DDT which is payable on the dividend distributed;

Provided that the same amount of dividend shall not be taken into account for reduction more than once. For the purpose of this sub-section, a company shall be a subsidiary of another company, if such other company

54

holds more than half in nominal value of the equity share capital of the company. Further dividend paid to any person for the New Pension System Trust referred to in clause (44) of section 10 of the IT Act will be reduced from the distributed profits of the domestic company.

8. Donations: As per provisions of Section 80G of the Act, the Company is entitled to claim deduction of as specified amount in respect of eligible donations, subject to the fulfillment of the conditions specified in that section.

II. Tax Benefits available to shareholders of the Company under the IT Act

A. Resident shareholders

1. Dividends

Under Section 10(34) of the IT Act, dividends (both interim and final), if any, received by the resident members / shareholders from the Company is exempt from tax. However, such income will be subject to the provision of section 14A and section 94 sub-section (7) and (8) of the IT Act.

2. Minor Children

Under Section 10(32) of the IT Act, any income of minor child who is a shareholder of the Company is clubbed in the total income of the parent under Section 64(1A) of the IT Act. Such income will be exempt from tax to the extent of ` 1,500 per minor child whose income is so included in the income of the parent.

3. Capital Gains

• The long-term capital gains (under section 2(29B) of the IT Act) accruing to the shareholders of the

Company on sale of Company’s shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to Securities Transaction Tax (“STT”), is exempt from tax as per provisions of Section 10(38) of the Act.

• As per Section 111A of the IT Act, short term capital gains arising to the Company from the sale of equity share or a unit of an equity oriented fund transacted through a recognized stock exchange in India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of 15% (plus applicable surcharge and education cess).

• As per Section 112 of the IT Act, LTCG not exempt under Section 10(38) of the IT Act are subject to tax at the rate of 20% (plus applicable surcharge and education cess) with indexation benefits. However, if such tax payable on transfer of listed securities or units or zero coupon bonds exceed 10% (plus applicable surcharge and education cess) of the LTCG (without indexation benefit), the excess tax shall be ignored for the purpose of computing the tax payable by the assessee. Further, long term capital gains arising on transfer of unlisted securities is liable to tax at the rate of 10% (plus applicable surcharge and education cess) without indexation benefits.

• As per Section 54EC of the Act, capital gains up to ` 50 Lakhs, per annum arising from the transfer of a

long term capital asset are exempt from capital gains tax provided such capital gains are invested within a period of 6 months after the date of such transfer in specified bonds issued by NHAI and REC and

55

subject to the conditions specified therein.

• Shareholders that are individuals or Hindu undivided families can avail of an exemption under Section 54F of the IT Act, by utilization of the net consideration arising from the transfer of the Company’s shares held for a period of more than 12 months (which is not exempt under Section 10(38)), for purchase / construction of a residential house within the specified time period and subject to the fulfillment of the conditions specified therein.

• As per Section 70 read with Section 74 of the IT Act, short term capital loss arising during a year is

allowed to be set-off against short term as well as long term capital gains. Balance loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent 8 assessment years. Long term capital loss arising during a year is allowed to be set-off only against long term capital gains. Balance loss, if any, shall be carried forward and set-off against long term capital gains arising during subsequent 8 assessment years. Long term capital loss arising on sale of share or units of equity oriented fund subject to STT may not be carried forward for set off.

• As per provisions of Section 56(2)(vii) of the Act and subject to exception provided in second proviso

therein, where an individual or HUF receives shares and securities without consideration or for a consideration which is less than the aggregate fair market value of the shares and securities by an amount exceeding fifty thousand rupees, the excess of fair market value of such shares and securities over the said consideration is chargeable to tax under the head “income from other sources.”

B. Tax Treaty Benefits

As per provisions of Section 90(2) of the Act, non-resident shareholders can opt to be taxed in India as per the provisions of the Act or the double taxation avoidance agreement entered into by the Government of India with the country of residence of the non-resident shareholder (including Non-Resident Indian) or the Act, whichever is more beneficial.

Any person wanting to claim benefits under any such Tax Treaty will not be able to claim any benefits unless a certificate, containing such particulars as are prescribed of his being a resident in any country outside India or a territory outside India, is obtained by him from the Government of that country or specified territory. The characterization of the gain / losses, arising from sale / transfer of shares as business income or capital gains would depend on the nature of holding and various other factors.

C. Non-resident shareholders other than Foreign Institutional Investors

a. Non-resident Indian

• As per provisions of Section 115E of the IT Act, LTCG arising to a NRI from transfer of specified

foreign exchange assets is taxable at the rate of 10% (plus applicable surcharge and education cess). Also, the income (other than dividend which is exempt under Section 10(34)) from investments and LTCG (other than gain exempt under Section 10(38)) from assets (other than specified foreign exchange assets) arising to a NRI is taxable at the rate of 20% (plus applicable surcharge and education cess). No deduction is allowed from such income in respect of any expenditure or allowance or deductions under Chapter VI-A of the IT Act.

• As per Section 115F of the IT Act, LTCG arising to a NRI on transfer of a foreign exchange asset is

56

exempt from tax if the net consideration from such transfer is invested in the specified assets or savings certificates within six months from the date of such transfer, subject to the extent and conditions specified in that section.

• As per provisions of Section 115G of the IT Act, where the total income of a NRI consists only of

income / LTCG from such foreign exchange asset / specified asset and tax thereon has been deducted at source in accordance with the Act, the NRI is not required to file a return of income.

• As per provisions of Section 115H of the IT Act, where a person who is a NRI in any previous year,

becomes assessable as a resident in India in respect of the total income of any subsequent year, he / she may furnish a declaration in writing to the assessing officer, along with his / her return of income under Section 139 of the IT Act for the assessment year in which he / she is first assessable as a resident, to the effect that the provisions of the Chapter XII-A shall continue to apply to him / her in relation to investment income derived from the specified assets for that year and subsequent years until such assets are transferred or converted into money.

• As per provisions of Section 115I of the IT Act, a NRI can opt not to be governed by the provisions of Chapter XII-A for any assessment year by furnishing return of income for that assessment year under Section 139 of the IT Act, declaring therein that the provisions of the chapter shall not apply for that assessment year. In such a situation, the other provisions of the IT Act shall be applicable while determining the taxable income and tax liability arising thereon.

• In accordance with proviso to section 48 of the IT Act, capital gains arising out of transfer of capital

assets being shares in the company acquired in foreign currency, 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.



• As per Section 112 of the IT Act, LTCG not exempt under Section 10(38) of the Act are subject to tax

at the rate of 20% (plus applicable surcharge and education cess) with indexation benefits. However, LTCG arising from the transfer of unlisted securities are subject to tax at the rate of 10% (Plus applicable surcharge and education cess) without indexation benefits and the adjustment with respect to foreign exchange rate fluctuations. Further, if such tax payable on transfer of listed securities or units or zero coupon bonds (where no security transaction tax is paid) exceed 10% (plus applicable surcharge and education cess) of the LTCG (without indexation benefit), the excess tax shall be ignored for the purpose of computing the tax payable by the assessee.

• As per Section 54EC of the IT Act, capital gains arising up to ` 50 Lakhs per annum from the transfer

of a long term capital asset are exempt from capital gains tax. Such capital gains are invested within a period of 6 months after the date of such transfer in specified bonds issued by NHAI and REC and subject to the conditions specified therein.

57

• Shareholders that are individuals or Hindu undivided families can avail of an exemption under Section

54F of the IT Act, by utilization of the net consideration arising from the transfer of the Company’s share held for a period of more than 12 months (which is not exempt under Section 10(38)), for purchase / construction of a residential house within the specified time period and subject to the fulfillment of the conditions specified therein.

• As per Section 71 read with Section 74 of the IT Act, short term capital loss arising during a year is allowed to be set-off against short term as well as long term capital gains. Balance loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent 8 assessment years. Long term capital loss arising during a year is allowed to be set-off only against long term capital gains. Balance loss, if any, shall be carried forward and set-off against long term capital gains arising during subsequent 8 assessment years. Long term capital loss arising on sale of share or units of equity oriented fund subject to STT may not be carried forward for set off.

• Under Section 10(34) of the IT Act, dividends (both interim and final), if any, received by the

members / shareholders from the Company is exempt from tax. However such income will be subject to the provision of section 14A of the IT Act.

b. Non Resident

• Under Section 10(34) of the IT Act, dividends (both interim and final), if any, received by the resident

members / shareholders from the Company is exempt from tax. However such income will be subject to the provision of section 14A and section 94 sub-section( 7) and (8) of the IT Act.

• In accordance with proviso to section 48, capital gains arising out of transfer of capital assets being shares in the company acquired in foreign currency, 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.



• As per Section 112 of the IT Act, LTCG not exempt under Section 10(38) of the Act are subject to tax at the rate of 20% (plus applicable surcharge and education cess) with indexation benefits. However, LTCG arising from the transfer of unlisted securities are subject to tax at the rate of 10% (Plus applicable surcharge and education cess) without indexation benefits and the adjustment with respect to foreign exchange rate fluctuations. Further, if such tax payable on transfer of listed securities or units or zero coupon bonds(where no security transaction tax is paid) exceed 10% (plus applicable surcharge and education cess) of the LTCG (without indexation benefit), the excess tax shall be ignored for the purpose of computing the tax payable by the assessee.

• As per Section 54EC of the IT Act, capital gains not exceeding ` 50 Lakhs per annum arising from the

transfer of a long term capital asset are exempt from capital gains tax. Such capital gains are invested

58

within a period of 6 months after the date of such transfer in specified bonds issued by NHAI and REC and subject to the conditions specified therein.

• As per Section 70 read with Section 74 of the IT Act, short term capital loss arising

during a year is allowed to be set-off against short term as well as long term capital gains. Balance loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent 8 assessment years. Long term capital loss arising during a year is allowed to be set-off only against long term capital gains. Balance loss, if any, shall be carried forward and set-off against long term capital gains arising during subsequent 8 assessment years. Long term capital loss arising on sale of share or units of equity oriented fund subject to STT may not be carried forward for set off.

D. Non-resident shareholders Foreign Institutional Investors

1. Dividend

As per provisions of Section 10(34) of the Act, dividend (both interim and final), if any, received by a shareholder from a domestic Company is exempt from tax. However such income will be subject to the provision of section 14A of the IT Act.

2. Capital gains

• As per provisions of Section 115AD of the Act, income (other than income by way of dividends referred to Section 115-O) received in respect of securities (other than units referred to in Section 115AB) is taxable at the rate of 20% (plus applicable surcharge and education cess and secondary & higher education cess). No deduction is allowed from such income in respect of any expenditure or allowance or deductions under Chapter VI-A of the Act.

• The long-term capital gains accruing to the shareholders of the Company on sale of the Company’s shares in a transaction carried out through recognized stock exchange in India, and where such transaction is chargeable to STT, is exempt from tax as per provisions of Section 10(38).

• The short-term capital gains accruing / arising to the members of the Company on sale of the Company’s equity shares in a transaction carried out through recognized stock exchange in India and where such transaction is chargeable to STT, tax will be chargeable at 15% (plus applicable surcharge and education cess) as per provisions of Section 111A. In other case, i.e. where the transaction is not subjected to STT, as per the provisions of Section 115AD of the Act, the short term capital gains would be chargeable to tax at 30% plus applicable surcharge and education cess.

• As per the provisions of Section 115AD of the Act, long term gains accruing to the shareholders of the Company from the transfer of shares of the Company being listed in recognized stock exchanges and purchased in foreign currency, are chargeable to tax at 10% (plus applicable surcharge and education cess). The benefit of indexation and the adjustment with respect to fluctuation in foreign exchange rate would not be allowed to such shareholders. Long term capital gains arising from sale of shares or units of equity oriented fund which has been subjected to security transaction tax are exempt u/s. 10(38) even in the hands of FII.

• As per Section 54EC of the IT Act, capital gains arising up to ` 50 Lakhs per annum from the transfer of a long term capital asset are exempt from capital gains tax. Such capital gains are invested within a

59

period of 6 months after the date of such transfer in specified bonds issued by NHAI and REC and subject to the conditions specified therein.

• As per section 196D(2) of the Act, no deduction of tax at source will be made in respect of income by

way of capital gain arising from the transfer of securities referred to in section 115AD.

3. Tax Treaty • As per provisions of Section 90(2) of the Act, FIIs can opt to be taxed in India as per the

provisions of the Act or the double taxation avoidance agreement entered into by the Government of India with the country of residence of the FII, whichever is more beneficial.

• Any person wanting to claim benefits under any such Tax Treaty will not be able to claim any benefits unless a certificate, containing such particulars as are prescribed of his being a resident in any country outside India or a territory outside India, is obtained by him from the Government of that country or specified territory.

III. Benefits available to Mutual Funds

• Dividend income : Dividend income, if any, received by the shareholders from the investment of

mutual funds in shares of a domestic Company will be exempt from tax under section 10(34) read with section 115O of the Act.

• As per provisions of Section 10(23D) of the Act, any income of mutual funds registered under the Securities and Exchange Board of India, Act, 1992 or Regulations made there under, mutual funds set up by public sector banks or public financial institutions and mutual funds authorized by the Reserve Bank of India, is exempt from income-tax, subject to the prescribed conditions.

IV. Venture Capital Companies / Funds

In accordance with section 10(23FB) any income of a venture capital company or venture capital fund (registered under the Securities and Exchange Board of India Act, 1992 and regulations made there under and notified in this behalf) from investment in a venture capital undertaking will be exempt from income tax.

V. Benefits available to the shareholders under the Wealth Tax Act, 1957

Wealth tax is chargeable on prescribed assets. Shares in a company, held by a shareholder are not treated as an asset within the meaning of Section 2(ea) of the Wealth Tax Act, 1957 and hence, wealth tax is not applicable on shares held in a company.

VI. Gift Tax Act, 1958

Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Note: All the above benefits are as per the current tax laws and will be available only to the sole / first name holder where the shares are held by joint holders.

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SECTION V – ABOUT US

OUR BUSINESS

Overview We are a subsidiary of Hitachi Appliances Inc., Japan and are engaged in the manufacturing of commercial and residential air-conditioners, commercial and industrial chillers and the trading of refrigerators and VRF systems. Established in 1984 and headquartered in Ahmedabad, we conduct our manufacturing operations from our two units based in Kadi, Gujarat and Jammu with a total installed capacity of 2,30,000 units per year on a single shift basis. We believe that we operate an extensive distribution network in India. Our products are sold and serviced through our own offices and a network of dealers and authorized service centers across India. As of December 1, 2012, we had a nation-wide distribution system consisting of 5 regional offices, 21 branch offices, over 200 exclusive sales and service dealers and over 1,500 sales points. In addition, we also have 33 service centers that are operated by us and 600 other service points across the nation.

Our total revenue from operations for the six months ended September 30, 2012 and the fiscal years 2012, 2011 and 2010 was ` 51,593.13 lakh, ` 79,808.91 lakh, ` 76,400.75 lakh, ` 64,302.99 lakh, respectively. The revenue mix from the sale of our major products for the six months ended September 30, 2012 and the last three fiscal years is as follows:

(` in lakh) Sales of: Six months ended

September 30, 2012

Fiscal year 2012 Fiscal year 2011 Fiscal year 2010

Air Conditioners* 46,257.29 71,988.93 70,576.46 59,979.70 Refrigerators 2,984.25 4,464.47 5,092.46 3,957.13 *includes chillers, spacemakers and VRF systems. Our Products Air Conditioners

We manufacture air conditioners for residential and commercial premises and in 2011, we believe that we launched India’s first five star rated window air conditioner under our ‘Summer’ series of products. While our residential air conditioners comprise of window and split air conditioners, our commercial air conditioners can be classified as follows:

Cassette air conditioners Our cassette air conditioners are easy to install ceiling air conditioners that do not require any ducting and range from 1.5 Tr. To 4 Tr.

Ductable air conditioners We sell our ductable air conditioners under our brand ‘Takumi’ and our units in this series range from 1.5 Tr to 16.5 Tr. Our ductable air conditioners are suited to meet the cooling requirements of larger spaces such as auditoriums, conference rooms and factories.

Refrigerators

We sell two door, three door and four door frost free refrigerators with capacities ranging from 318 litres to 655 litres. In September 2012, we launched six models of inverter refrigerators which use energy efficient inverter compressors.

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Chillers

We started manufacturing water cooled chillers in 2010 in the 40 HP to 180 HP range and we currently sell water cooled, air cooled and heat reclaim chillers which are suited to meet the cooling requirements of malls, industrial plants and hospitals. VRF Systems Our variable refrigerant flow air conditioning systems comprise of different numbers of air handling units which are connected to an external condensing unit. This enables us to vary the refrigerant flow either by using an inverter controlled variable speed compressor or by using more than one compressor resulting in energy efficient systems. Our VRF systems are sold as indoor and outdoor units with capacities ranging from 6 HP to 54 HP and are suited to meet the cooling requirements of residential complexes, villas and large office spaces. Spacemakers This specialized air conditioning system is designed for unmanned telecom shelters / telecom base transceiver station sites. In March 2012, we began the manufacturing of free cooling units which is a non-compressor based product for saving energy. Our spacemaker range is available from 0.9 Tr. To 4.0 Tr. Capacities. Central Airconditioning Projects We also undertake HVAC projects which comprise of design, supply, installation, testing, commissioning and maintenance of central airconditioning plants and contracting services. Such projects are mainly carried out at hotels, malls, hospitals and industries for comfort and process cooling. Quality control Our Kadi manufacturing facility is certified to QMS ISO 9001:2008, EMS ISO 14001 and BS OHSAS 18001:2007 certifications. Design and Development Our focus is on developing existing technologies and product engineering innovation, aimed at improving production efficiency and lowering the cost of production. In our pursuit to create energy efficient products, we have entered into various consulting and technical collaboration agreements with Hitachi Appliances Inc., whereby they provide us with technical information and assistance in manufacturing our products and setting up our manufacturing lines. Environmental Protection In order to comply with Indian laws and regulations in respect of environmental protection, we have taken internal environmental protection control and monitoring measures. We also support the e-waste initiatives taken by the Ministry of Environment and Forests of the Government of India and believe that manufacturers of goods listed as e-waste are responsible for facilitating the eco-friendly disposal of the products after their life span. Our customers can contact us on our help lines in order to recycle our products and we arrange to collect the products from our customers’ locations and recycle them through authorized recycling agencies at no cost to our customers. In December 2011, we were awarded a ‘Certificate of Merit’ at the National Energy Conservation Awards Ceremony by the Bureau of Energy Efficiency (BEE), Ministry of Power Competition We face competition across all our product lines. Our primary competitors include Samsung, Voltas, Panasonic, Daikin, Carrier, Blue Star, LG and Sharp. Insurance

62

We maintain a number of insurance policies in respect of the fixed assets and inventories that we own or operate and that we consider would be exposed to material operational risks. The coverage of the insurance in respect of our facilities and equipment includes various risks including fire and burglary. The insured amount is normally expected to cover the cost that is necessary for replacement of the plants and equipment concerned. We also maintain a public liability insurance policy. Property Our registered office is located at 9th Floor, Abhijeet Mithakhali Six Roads, Ahmedabad, Gujarat 380006 which is owned by us. Our manufacturing unit at Kadi, Gujarat is owned by us while our manufacturing unit at Jammu has been been obtained on lease which is valid till January 29, 2015. Employees As of December 1, 2012, we employed 783 personnel across our Company. Our permanent operators at our Kadi and Jammu facilities have a registered trade union in the name of Hitachi Home and Life Solution Employees Association.

63

HISTORY AND OTHER CORPORATE MATTERS

Our Company was incorporated on December 7, 1984 as Acquest Air-conditioning Systems Private Limited and subsequently our Company was converted into a deemed public limited company on April 18, 1990. On September 14, 1990, the name of our Company was changed to Amtrex Appliances Limited and further to Amtrex Hitachi Appliances Limited on January 25, 1999. On March 12, 2003, the name of our Company was further changed to our present name Hitachi Home & Life solutions (India) Limited. Our Company was initially promoted by the Lalbhai Group in Ahmedabad. In 1991, our Company made a public issue of 5,00,000 Equity Shares of ` 10 each for cash at par and 2,64,000 Debentures of ` 125 each for cash at par. Presently equity shares of our Company are listed at BSE and NSE. Our registered office is situated at 9th Floor, Abhijeet, Mithakhali Six Roads, Ahmedabad 380 006, Gujarat, India. Main Objects The main objects of our Company as set out in our Memorandum of Association are as follows: 1. To carry on business of fabricating, designing, manipulating, die-making, processing, producing, erecting

and manufacturing, manufacture of and dealing in all types, kinds, varieties of air-conditioning, refrigeration plant and temperature control equipments, components and accessories and similar and relevant equipments including central stations, cooling towers, gases for air-conditioning, equipments, compressors and grill and also to carry on the business of importing, exporting, buying, selling, indenting and otherwise dealing in such implements.

2. To carry on the business of buying, selling, manufacturing, servicing, repairing, importing, exporting,

altering and erecting of air conditioners, refrigerators, water coolers, bottle coolers, deep freezers, all types of refrigerations, equipments, industrial and consumer cooling and heating temperature controlling plants, cold storage, fabricating, erecting, repairs.

Major events Year Event 1990 Our Company executed technical collaboration agreement with Hitachi, Japan 1991 Initial Public Issue of our Company 1994 Our Company started a manufacturing facility at Silvassa, Dadra & Nagar Haveli 1994 Rights Issue by our Company

1998 Our Company executed technical collaboration agreement with Hitachi Limited, Japan for various Window and split models

1999 Equity shares were allotted to Hitachi Appliances Inc., Japan on preferential basis 2003 Hitachi Appliances Inc., Japan acquired equity shares from Lalbhai Group and became the Promoter 2003 Manufacturing facility at Silvassa shifted to Kadi manufacturing facility 2004 Rights Issue by our Company 2004 Our Company commissioned a manufacturing plant at Jammu 2009-10

Our Company expanded manufacturing facility at Kadi, Gujarat by increasing installed capacity from 1.50 lakhs to 2.30 lakhs (on single shift basis)

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OUR MANAGEMENT

Board of Directors The Articles of Association provides that we shall not have less than three Directors and not more than twelve Directors. We currently have twelve Directors on our Board of Directors. The following table sets forth details of the Board of Directors as of the date of filing of this Draft Letter of Offer with SEBI:

Name, Designation, Occupation, DIN, Address, Date of appointment

and Term

Nationality Age (Years)

Other Directorships

Mr. Shinichi Iizuka

Designation: Chairman

Occupation: Service DIN: 00266660 Address: 220-9, Nishinoda, Ohira-Machi, Tochigi-shi-Tochigi-ken, Japan: 3294421 Date of appointment: June 21, 2010 Term: Liable to retire by rotation

Japanese 56 -

Mr. Motoo Morimoto

Designation: Managing Director

Occupation: Service DIN: 03033050 Address: B-502, Panchamvrut, Behind Akashneem Bunglows, Vastrapur, Ahmedabad 380 053 Date of appointment: April 1, 2010 Term: Not liable to retire by rotation

Japanese 50 -

Mr. Amit Doshi Designation: Executive Director Occupation: Service DIN: 01603380 Address: B-2,Gulmour Apts., Gulbai Tekra, Ahmedabad 380 015

Indian 52 -

65


and Term


Other Directorships

Date of appointment: June 1, 2007 Term: Liable to retire by rotation Mr. Anil Shah

Designation: Executive Director Occupation: Service DIN: 01603039 Address: 303,Shaswat Apartments, B/H Dhananjay Tower, Satellite, Ahmedabad 380 015 Date of appointment: June 6, 2007 Term: Liable to retire by rotation

Indian 54 -

Mr. Vinay Chauhan Designation: Executive Director Occupation: Service DIN: 00267806 Address: A-12, Kadamb Bungalows, Opp. Sukriti Bungalows, Thaltej-Shilaj Road, Ahmedabad 380 059 Date of appointment: May 15, 2006 Term: Liable to retire by rotation

Indian 53 -

Mr. Ashok Balwani Designation: Non Executive and Independent Director Occupation: Management Consultant DIN: 02292791 Address: 2, Paliputra, 16th Road, Khar West, Mumbai 400 052 Date of appointment: July 28, 2008 Term: Liable to retire by rotation

Indian 61 -

66


and Term


Other Directorships

Dr. Devender Nath Designation: Non Executive and Independent Director Occupation: Management Consultant DIN: 02310301 Address: C6 Metropolitan 12 Pali Hill Rd Bandra W, Nr Dilip Kumar Banglow, Mumbai 400 050 Date of appointment: July 28, 2008 Term: Liable to retire by rotation

Indian 67 -

Mr. L. G. Ramakrishnan Designation: Non Executive Director Occupation: Service DIN: 00106302 Address: Flat C-17,Om Apartments, 33/77 Punjabi Bagh, New Delhi 110 026 Date of appointment: May 20, 2004 Term: Liable to retire by rotation

Indian 62 -

Mr. Mukesh Patel Designation: Non Executive and Independent Director Occupation: International Tax Consultant DIN: 00053892 Address: "Prakruti", 11, Ashwamegh Bunglow, Part- II, Satellite Road, Ahmedabad 380 015 Date of appointment: March 27, 2003 Term: Liable to retire by rotation

Indian 58 1. Desai Brothers Ltd 2. Cadila Healthcare Limited 3. Zydus Pharmaceuticals Limited 4. German Remedies Limited 5. Zydua Wellness Limited 6. Cliantha Research Limited 7. The Sandesh Limited 8. Baap Diagnostics Limited

Mr. R S Mani Indian 62 Partnerships:

67


and Term


Other Directorships

Designation: Non Executive and Independent Director Occupation: Management Consultant DIN: 00645097 Address: 1102, Glen Heights, Hiranandani Gardens, Powai, Mumbai, 400 076 Date of appointment: December 15, 2010 Term: Liable to retire by rotation

1. Bizval Decision Consulting LLP 2. Innovative Ecosolutions LLP

Mr. Ravindra Jain Designation: Non Executive and Independent Director Occupation: Service DIN: 00281279 Address: Flat No 3 Tulsi Villa, 67 Vithal Nagar Society, Road No. 12, JVPD Scheme Juhu, Mumbai 400 049 Date of appointment: May 15, 2006 Term: Liable to retire by rotation

Indian 55 Shree Shubham Logistics Limited

Mr. Vinesh Sadekar Designation: Non Executive and Independent Director Occupation: Management Consultant DIN: 00046815 Address: 501, Shree Yashraj Paranjape Scheme 'A', Road No.3, Vile Parle, Mumbai 400 057 Date of appointment: December 15, 2010 Term: Liable to retire by rotation

Indian 56 KBK Chem-Engineering Private Limited

None of our Directors hold current and/ or past directorship(s) for a period of five years in listed companies whose shares have been or were suspended from being traded on the BSE or the NSE or in listed companies who have been / were delisted from stock exchanges.

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Relationship between Directors None of the Directors are related to each other. Brief Profile of our Directors Mr. Shinichi Iizuka Mr. Shinichi Iizuka, aged 56 years, graduated from Sophia University, Japan in the faculty of Electronics Engineering in 1979. He was deputed to our Company as Chief Operating Officer and has served our Company as its managing director from October 01, 2006 to March 28, 2010. Mr. Motoo Morimoto Mr. Motoo Morimoto, aged 50 years, graduated from Kyoto University, Japan in the faculty of Science in the year 1987. He has been working in the fields of design and production and was appointed as the managing director of our Company in April 01, 2010. Mr. Amit Doshi Mr. Amit Doshi, aged 52 years, graduated from the Maharaja Sayajirao University of Baroda with a B.E. Mechanical in 1983 and obtained a post graduate diploma in business management from Rajendra Prasad Institute of Communication and Management, Bombay in 1985. He has experience in the fields of sales, marketing, logistics and human resources and has been associated with our Company since 1994. Mr. Anil Shah Mr. Anil Shah, aged 54 years, graduated with a B.Com degree from Gujarat University in 1978 and is a member of the Institute of Chartered Accountants of India. He has experience in the fields of finance, accounts, budgeting, costing, legal functions and direct and indirect taxation. He has been associated with the Company since 1984.

Mr. Vinay Chauhan Mr. Vinay Chauhan, aged 53 years, graduated with a B.E. in mechanical engineering from Madras University in 1981 and obtained a post graduate diploma in Industrial Engineering from the National Institute of Industrial Engineering, Mumbai in 1983. He has experience in the field of design and development, quality management, manufacturing and project management. He has been associated with our Company since 1993. Mr. Ashok Balwani Mr. Ashok Balwani, aged 61 years, graduated with a B.E. (Hons) in Electrical Engineering from BITS, Pilani in 1972 and obtained an M.B.A. from the Faculty of Management Studies, University of Delhi in 1974. He has over 30 years of experience in the field of sales and marketing, human resources and general management. He has also served at organisations like Larsen & Toubro Limited, Det Norske Veritas and Man Industries (India) Limited and is currently working as an independent management consultant. Dr. Devender Nath Dr. Devender Nath, aged 67 years, has obtained a Ph.D (Honorary) in 2003 and a B.Tech in Electrical Engineering (Honours) from IIT Kharagpur in 1966. He has more than four decades of experience in the fields of research and development, human resources, technology and strategy. He is presently serving on the advisory boards of ICFAI-Management School at Mumbai and the Institute of Technology and Management, Kharagpur (Deemed University). He was also the President of the Bombay Management Association during 2003-04. Mr. L. G. Ramakrishnan

69

Mr. L.G. Ramakrishnan, aged 62 years, is a graduate in Science Faculty from Delhi University in 1969 and has obtained a Diploma in Electronics Engineering from Madras Institute of Technology, Madras in 1973. He has 37 years of experience in the field of design, engineering, sales, marketing, business planning and corporate communications and has been associated with the Hitachi group since the last 30 years. Prior to joining our Company, he was associated with design and engineering of communication equipments with Bharat Electronics Limited, Ghaziabad.

Mr. Mukesh Patel

Mr. Mukesh Patel, aged 58 years, graduated with an LL.B. degree from Gujarat University in 1977 and has been enrolled with the Bar Council of Gujarat since 1977. He has been associated with our Company since March 2003. Mr. R. S. Mani Mr. R. S. Mani, aged 62 years, is a businessman who graduated with a B.E. in mechanical engineering from Madurai University in 1971 and has 40 years of experience in the fields of manufacturing, logistics, project planning and implementation and business development. He has served corporates such as Kodak India Limited as a managing director, Wendt India Limited as a works manager and Greaves Cotton India Limited as a production manager. Mr. Ravindra Jain Mr. Ravindra Jain, aged 55 years, has an experience of 32 years across the fields of sales, marketing, manufacturing, operations, strategic planning and brand development. He has a post graduate diploma in management from the Indian Institute of Management, Ahmedabad in 1980 and a B. Tech from NIT, Jaipur in 1978. He was formerly the chief operation officer of Calcom Cement and has also served as President of Adani Agrifresh. Mr. Vinesh Sadekar Mr. Vinesh Sadekar, aged 56 years, graduated with a B.E. in chemical engineering from University Department of Chemical Technology (UDCT), Mumbai in 1979 and has 32 years of experience in the fields of production, project management, strategy and business planning. He presently serves as the group head of corporate strategy with Shree Renuka Sugars Limited. Borrowing Powers of the Board The Articles of Association, subject to the provisions of the Companies Act, authorise the Board, at its discretion, to generally raise or borrow or secure the payment of any sum or sums of money for our purposes. However, the Board of Directors shall not without the sanction of the Shareholders exceed the aggregate of our paid up capital and free reserves. The consent of the Shareholders was accorded, vide resolution passed at the Annual General Meeting held on July 23, 2009, authorizing the Board of Directors to borrow at any time amount not exceeding ` 40,000 lakh. Details of Service Contracts We have not entered into any service contracts with the present Board of Directors. Remuneration of the Directors During the Financial Year 2011-12, we have not paid any remuneration and sitting fees to the present Board of Directors except

(` in Lakhs) Name of Director Salary Sitting Fee Total Remuneration

Mr. Motoo Morimoto 46.84 - 46.84

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Mr. Vinay Chauhan 58.57 - 58.57 Mr. Amit Doshi 56.77 - 56.77 Mr. Anil Shah 57.37 - 57.37 Mr. Mukesh Patel - 2.20 2.20 Mr. Ravindra Jain - 1.20 1.20 Mr. Ashok Balwani - 0.80 0.80 Dr. Devender Nath - 1.60 1.60 Mr. Vinesh Sadekar - 0.60 0.60 Mr. R S Mani - 0.80 0.80 ESOP granted to the Directors We have not issued any ESOP. Shareholding of Directors in our Company Except as disclosed below, none of our Directors hold any Equity Shares: Name Number of Equity Shares held Mr. Vinay Chauhan 200 Mr. Mukesh Patel 1000 Payment or benefit to Directors Except as disclosed in the “Related Party Transactions” as per AS 18 under “Financial Information” on page 72, no amount or benefit has been paid or given within the two preceding years or is intended to be paid or given to any of our officers except the normal remuneration for services rendered as Directors, officers or employees. Interest of the Directors All of our Directors may be deemed to be interested to the extent of fees payable to them for attending meetings of the Board or a committee thereof as well as to the extent of other remuneration and reimbursement of expenses payable to them under our Articles of Association, and to the extent of remuneration paid to them for services rendered as our officer or employee. Some of the Directors may be deemed to be interested to the extent of consideration received/paid or any loan or advances provided to anybody corporate including companies and firms and trusts, in which they are interested as directors, members, partners or trustees. There are no service contracts between us and any of the Directors for payment of benefit upon termination of employment. As of the date of this Draft Letter of Offer, except Mr. Shinichi Iizuka, Mr. Motoo Morimoto and Mr. L.G. Ramakrishnan who have been appointed by our Promoter(s), there are no arrangements or understanding with major shareholders, customers, suppliers or others, pursuant to which we appointed any of our Directors. Our Directors may also be regarded as interested in the Equity Shares, if any, held by them or that may be subscribed by and allotted to the companies, firms, and trusts, if any, in which they are interested as directors, members, promoters, and /or trustees pursuant to this Issue. 1. Except as stated in this section “Management” or “Related Party Transactions” under “Financial

Information” on page 72, our Directors do not have any other interest in our business.

2. Our Directors have no interest in any property acquired by us within two years of the date of this Draft Letter of Offer.

3. Our Directors are not interested in the appointment of or acting as Registrar and Bankers to the Issue or any

such intermediaries registered with SEBI. Changes in the Board in the last three years The following changes have occurred in Board of Directors in the last three years:

71

Name Date of Appointment (Re-appointment) / Cessation

Reason for change

Mr. Shinichi Iizuka March 28, 2010 Cessation due to his new assignment at Hitachi Appliances Inc., Japan

Mr. Motoo Morimoto April 01, 2010 Appointed Mr. Kenichi Munakata June 20, 2010 Cessation as Chairman of the Company Mr. Shinichi Iizuka June 21, 2010 Appointed as Chairman of the Company Mr. Anwar Ali June 25, 2010 Cessation on sad demiseMr. Tarun Sheth July 18, 2010 Cessation on sad demise Mr. Vinesh Sadekar December 15, 2010 Appointed as Director of the Company Mr. R S Mani December 15, 2010 Appointed as Director of the Company Mr. Amit Doshi June 1 , 2010 Re-appointment Mr. Anil Shah June 1 , 2010 Re-appointment Mr. Vinay Chauhan May 15, 2012 Re-appointment Loans taken by Directors

None of the Directors have taken loans from us.

72

SECTION VI – FINANCIAL INFORMATION

FINANCIAL STATEMENTS

Limited Review Report on Interim Financial Information

The Board of Directors, Hitachi Home and Life Solutions (India) Limited Introduction We have reviewed the accompanying statement of assets and liabilities of Hitachi Home and Life Solutions (India) Limited (‘the Company’) as at September 30, 2012 and the related unaudited statement of profit and loss for the six months period ended September 30, 2012 (together referred to as “the Statements”), prepared by the management and signed by us for identification and annexed to this report for the purpose of inclusion in the offer document by the Company in connection with its proposed Rights Issue of equity shares (“Rights Issue”). The Statements have been prepared in accordance with recognition and measurement principles of Accounting Standard 25 “Interim Financial Reporting”, [notified pursuant to the Companies (Accounting Standards) Rules, 2006, (as amended)] and other relevant requirements of Clause (5)(X)(A) of Part E of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended. Scope of Review We conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the Statement is free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provide less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion. Conclusion Based on our review conducted as above, nothing has come to our attention that causes us to believe that the accompanying Statements of unaudited financial information have not been prepared in accordance with recognition and measurement of Accounting Standard 25 “Interim Financial Reporting”, [notified pursuant to the Companies (Accounting Standards) Rules, 2006, (as amended)] and other relevant requirements of Clause (5)(X)(A) of Part E of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. Restriction of use This report is intended solely for the use of the Company for filing with Securities and Exchange Board of India, Bombay Stock Exchange and National Stock Exchange and for inclusion in the draft letter of offer in connection with the proposed rights issue of the Company under Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (as amended) and should not be used, referred to or distributed for any other purpose without our prior written consent. For S.R. Batliboi & Associates Firm registration number: 101049W Chartered Accountants per Arpit K. Patel Partner Membership No.: 34032 Place: Ahmedabad Date: December 10, 2012

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UNAUDITED CONDENSED STATEMENT OF PROFIT AND LOSS FOR SIX MONTHS PERIOD ENDED 30TH SEPTEMBER, 2012

(` in Lacs) Sr. No.

Particulars Six month ended on 30.09.2012

Six month ended on 30.09.2011

(Unaudited) (Unaudited) PART - I

1 Income from operations Sales/Income from operations 56,201.06 49,004.70

Less : Excise duty recovered 5,036.36 3,931.50

(a) Net Sales/Income from operations (Net of excise duty) 51,164.70 45,073.20

(b) Other Operating Income 428.43 436.60

Total income from operations (net) 51,593.13 45,509.80

2 Expenses

(a) Cost of materials consumed 21,332.05 19,105.64

(b) Purchase of stock-in-trade 7,681.89 2,955.41

(c) Changes in inventories of finished goods, work-in-progress and stock-in-trade

4,942.59 8,312.95

(d) Employee benefits expense 2,719.56 2,429.79

(e) Depreciation and amortisation expense 909.44 903.25

(f) Other expenses 11,924.31 10,590.38

Total expenses (a to f) 49,509.84 44,297.42 3

Profit/(Loss) from operations before other income, finance costs and exceptional items (1-2)

2,083.29 1,212.38

4 Other income 111.77 37.65 5

Profit/(Loss) from ordinary activities before finance cost and exceptional items (3+4)

2,195.06 1,250.03

6 Finance costs 254.94 421.24 7

Profit/(Loss) from ordinary activities after finance cost but before exceptional items (5+6)

1,940.12 828.79

8 Exceptional Items - - 9 Profit/(Loss) from ordinary activities before tax

(7+8) 1,940.12 828.79

10 Tax Expenses

a Current tax (net) 785.84 496.74

b Deferred tax (credit) (235.96) (253.41)

Total (a+b) 549.88 243.33 11 Net Profit/(Loss) from ordinary activities after tax

(9+10) 1,390.24 585.46

12 Extraordinary items - - 13 Net Profit/(Loss) for the period (11+12) 1,390.24 585.46 14

Basic and Diluted Earnings Per Share (of ` 10 each) (Not annualised) (`)

6.06 2.55

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UNAUDITED CONDENSED STATEMENT OF ASSET AND LIABILITIES AS AT 30TH SEPTEMBER 2012

(` in Lacs)

Particulars As at 30.09.2012

(Unaudited)

As at 31.03.2012 (Audited)

EQUITY AND LIABILITIES

Shareholders’ funds

(a) Share capital 2,296.00 2,296.00

(b) Reserves and surplus 16,215.88 14,825.63

Sub-total - Shareholders' fund 18,511.88 17,121.63

Non-current liabilities

(a) Long-term borrowings 3,167.81 -

(b) Other long-term liabilities 0.30 4.59

(c) Long-term provisions 1,148.17 1,032.73

Sub-total - Non-current liabilities 4,316.28 1,037.32

Current liabilities

(a) Short-term borrowings 2,026.60 7,031.36

(b) Trade payables 20,878.81 25,868.81

(c) Other current liabilities 2,719.29 7,723.19

(d) Short-term provisions 1,046.54 729.35

Sub-total - Current liabilities 26,671.24 41,352.71

TOTAL - EQUITY AND LIABILITIES 49,499.40 59,511.66

ASSETS

Non-current assets

(a) Fixed assets 8,964.36 14,230.38

(b) Deferred tax assets (Net) 493.78 257.82

(c) Long-term loans and advances 3,728.14 1,660.43

(d) Other non-current assets 0.51 0.51

Sub-total Non - Current assets 13,186.79 16,149.14

Current assets

(a) Inventories 14,005.15 26,807.37

(b) Trade receivables 8,485.60 14,813.77

(c) Cash and Bank balances 2,917.37 264.05

(d) Short-term loans and advances 1,145.55 1,436.77

(e) Other current assets 9,758.94 40.56

Sub-total - Current assets 36,312.61 43,362.52

TOTAL - ASSETS 49,499.40 59,511.66

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Notes:

1 The above condensed financial statements have been prepared on the accounting policies applied for the last audited financial statements (i.e. financial for year ended 31st March 2012). There has been no change in the accounting policies during the current six months period ended 30 September 2012.

2 The Company is engaged in the business of manufacturing, trading and other related services of Air Conditioners, Chillers and Refrigerators. Since the Company’s business falls within a single business segment of Cooling Products for comfort and commercial use, disclosures under Accounting Standard (AS) 17 - Segment Reporting are not reported upon separately.

3 There was a major fire on 18th July, 2012 at unit 2 in Kadi plant due to which it has become non-operational. The loss incurred by the Company is adequately covered under insurance claim. The written down value of fixed assets and costs of inventories destroyed / damaged has been appropriately adjusted in the books of accounts. Further, the insurance claim receivable, included in "Other Current assets" above, is net of Rs 5,000 lacs received from the Insurance Company by way of an “on account” payment.

4 The Company predominantly operates in air conditioning business which is seasonal in nature, major sales / income from operations is generated during the first and last quarter of every accounting year and accordingly, results of current six months are not indicative of overall performance of the year.

5 The above condensed interim financial statements have been prepared in accordance with recognition and measurement principles laid down in Accounting Standard 25 “Interim Financial Reporting”, [notified pursuant to the Companies (Accounting Standards) Rules, 2006, (as amended)] and other relevant requirements of Clause (5)(X)(A) of Part E of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (as amended).

For Hitachi Home & Life Solutions (India) Limited Anil Shah, Executive Director (Finance)

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Auditors’ Report To The Members of Hitachi Home and Life Solutions (India) Limited 1. We have audited the attached Balance Sheet of Hitachi Home and Life Solutions (India) Limited (‘the

Company’) as at March 31, 2012 and also the Statement of Profit and Loss and the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those

Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) (‘the Order’) issued by the

Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (‘the Act’), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief

were necessary for the purposes of our audit; (ii) In our opinion, proper books of account as required by law have been kept by the Company so far as

appears from our examination of those books; (iii) The balance sheet, Statement of profit and loss and cash flow statement dealt with by this report are in

agreement with the books of account; (iv) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by

this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act.

(v) On the basis of the written representations received from the directors, as on March 31, 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012; (b) in the case of Statement of Profit and Loss, of the profit for the year ended on that date; and (c) in the case of Cash Flow statement, of the cash flows for the year ended on that date.

For S. R. Batliboi & Associates Firm Registration Number: 101049W Chartered Accountants per Arpit K Patel Partner Membership No.: 34032 Place: Ahmedabad Date: May 24, 2012

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Annexure referred to in paragraph 3 of our report of even date Re: Hitachi Home and Life Solutions (India) Limited (‘the Company’) (i) (a) The Company has maintained proper records showing full particulars, including quantitative

details and situation of fixed assets. (b) Fixed assets are physically verified by the management during the year and no material

discrepancies identified on such verification. (c) There was no disposal of a substantial part of fixed assets during the year. (ii) (a) The management has conducted physical verification of inventory at reasonable intervals during

the year. (b) The procedures of physical verification of inventory followed by the management are reasonable

and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory and no material discrepancies were

noticed on physical verification. (iii) (a) According to the information and explanations given to us, the Company has not granted any

loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4(iii)(a) to (d) of the Order are not applicable to the Company and hence not commented upon.

(e) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4(iii)(e) to (g) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness in the internal control system in respect of these areas.

(v) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(v)(b) of the Order is not applicable to the Company and hence not commented upon.

(vi) The Company has not accepted any deposits from the public. (vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its

business. (viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made

by the Central Government for the maintenance of cost records under section 209(1) (d) of the Act, related to the manufacturing of air conditioners and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-tax, custom duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c)

According to the records of the Company, the dues outstanding of sales tax, service tax, excise duty, custom duty and cess on account of any dispute that have not been deposited, are as follows:

Name of the statute

Nature of dues

Amount (` in lakhs)

Period to which the amount relates

Forum where dispute is pending

Sales Tax Act (Central & States)

Demand raised in assessments at various locations

212.53 1998-99 to 2007-08

Deputy Commissioner Appeals / Joint Commissioner Appeals

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Finance Act, 1994 (Service tax)

Demand raised on advertisement expenses including interest and penalty

110.12 2005-06 to 2010-11

CESTAT, Ahmedabad

Demand raised on Consulting Engineers Services including interest and penalty

48.61 2000-01 to 2003-04

CESTAT, Ahmedabad

Demand raised on Commission including interest and penalty

8.76 2004-05 CESTAT, Ahmedabad

Demand raised for wrong service tax credit including interest and penalty

32.12 2003-04 and 2004-05

CESTAT, Ahmedabad

Central Excise Act, 1944

Interest on delayed payment of excise duty

0.50 2008-09 Commissioner Appeals, Ahmedabad

Customs Act, 1962 Dispute over classification

0.92 2000-01 Deputy Commissioner Appeals

Dispute over classification

171.44 2008-09 CESTAT, Mumbai

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses

in the current and immediately preceding financial year. (xi) Based on our audit procedures and as per the information and explanations given by the management, we

are of the opinion that the Company has not defaulted in repayment of dues to banks. The Company has no outstanding dues to debenture holders and financial institutions.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of Act.

(xix) The Company did not have any outstanding debentures during the year. (xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the

financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during year.

79

For S. R. Batliboi & Associates Firm Registration Number: 101049W Chartered Accountants per Arpit K Patel Partner Membership No.: 34032 Place: Ahmedabad Date: May 24, 2012

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Balance sheet as at 31st March, 2012 ` in lakhs As at As at Notes 31st March, 2012 31st March, 2011 Equity and liabilities Shareholders’ funds (a) Share capital 3 2,296.00 2,296.00 (b) Reserves and surplus 4 14,825.63 14,899.73 17,121.63 17,195.73 Non-current liabilities (a) Long-term borrowings 5 - 2,502.87 (b) Deferred tax liabilities (net) 6(b) - 40.75 (c) Other long-term liabilities 7 4.59 3.53 (d) Long-term provisions 8 1,032.73 888.70 1,037.32 3,435.85 Current liabilities (a) Short-term borrowings 9 7,031.36 3,995.11 (b) Trade payables 10 25,868.81 30,723.54 (c) Other current liabilities 11 7,723.19 6,262.63 (d) Short-term provisions 8 729.35 623.77 41,352.71 41,605.05 TOTAL 59,511.66 62,236.63 Assets Non-current assets (a) Fixed assets 12 (i) Tangible assets 11,240.31 11,545.30 (ii) Intangible assets 1,715.81 1,549.00 (iii) Capital work-in-progress 603.74 288.79 (iv) Intangible Asset under development 670.52 280.38 (b) Deferred tax asset (net) 6(b) 257.82 - (c) Long-term loans and advances 13 1,660.43 1,396.29 (d) Other non-current assets 17 0.51 0.99 16,149.14 15,060.75 Current assets (a) Inventories 14 26,807.37 32,672.98 (b) Trade receivables 15 14,813.77 12,520.77 (c) Cash and Bank balances 16 264.05 206.44 (d) Short-term loans and advances 13 1,436.77 1,726.08 (e) Other current assets 17 40.56 49.61 43,362.52 47,175.88 TOTAL 59,511.66 62,236.63 Statement of significant accounting policies

2

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The accompanying notes are an integral part of the financial statements. As per our report of even date For S.R. Batliboi & Associates For and on behalf of the Board of Directors Firm Registration No.101049W Chartered Accountants per Arpit K. Patel Motoo Morimoto Anil Shah Partner Managing Director Executive Director Membership No: 34032 Place: Ahmedabad Parag Dave Place: Ahmedabad Date: 24th May, 2012 Company Secretary Date: 24th May, 2012

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Statement of profit and loss for the year ended 31st March, 2012 ` Lakhs For the year ended For the year ended Notes 31st March, 2012 31st March, 2011 Income Revenue from operations (gross) 18 86,731.93 82,988.99 Less : Excise duty recovered (refer note 42) 6,923.02 6,588.24 Revenue from operations (net) 79,808.91 76,400.75 Other income 19 87.41 467.31 Total Revenue 79,896.32 76,868.06 Expenses Cost of raw material and components consumed 20 43,093.44 50,425.95 Purchase of stock-in-trade 21 5,715.63 6,561.76 Decrease / (Increase) in inventories of finished goods, work-in-progress and stock-in-trade

22 3,362.25 (7,172.23)

Employee benefits expense 23 5,278.50 4,406.50 Finance costs 24 891.04 737.54 Depreciation and amortization expense 12 1,831.74 1,605.20 Other expenses 25 19,444.45 16,309.97 Total Expenses 79,617.05 72,874.69 Profit before tax 279.27 3,993.37 Tax expense Current tax [Including ` 22.97 Lakhs (Previous

year: `12.00 Lakhs) pertaining to earlier years] (refer note 6(a))

251.67 1,080.09

Deferred tax (298.57) (19.29) (46.90) 1,060.80 Profit for the year 326.17 2,932.57 Basic and diluted (`) earnings per share 26 1.42 12.77

[Nominal value of share `10 (Previous year: `10)] Statement of significant accounting policies 2

The accompanying notes are an integral part of the financial statements. As per our report of even date For S.R. Batliboi & Associates For and on behalf of the Board of Directors Firm Registration No.101049W Chartered Accountants per Arpit K. Patel Motoo Morimoto Anil Shah Partner Managing Director Executive Director Membership No: 34032 Place: Ahmedabad Parag Dave Place: Ahmedabad Date: 24th May, 2012 Company Secretary Date: 24th May, 2012

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Cash flow statement for the year ended 31st March, 2012 ` in lakhs For the year ended For the year ended 31st March, 2012 31st March, 2011 A. Cash Flow from Operating Activities Net profit before Tax 279.27 3,993.37 Adjustments For : Profit on sale of assets (net) (7.29) (2.36) Unrealised foreign exchange (gain)/loss (net) 52.81 (101.64) Depreciation and amortisation 1,831.74 1,605.20 Provision for doubtful debts 94.27 14.17 Interest income (30.88) (237.73) Finance Costs 891.04 737.54 Operating profit before working capital changes 3,110.96 6,008.55 Adjustments for : Increase in trade receivables (2,387.27) (2,936.88) Decrease/(Increase) in loans and advances 240.43 (740.26) Decrease/(Increase) in other current assets 8.54 (37.76) Decrease/(Increase) in inventories 5,865.61 (14,632.66) (Decrease)/Increase in current liabilities (4,061.58) 12,081.59 Increase in other provisions 249.60 206.81 Cash from / (used in) operating activities 3,026.29 (50.61) Direct Taxes paid (407.19) (841.00) Net cash from / (used in) operating activities 2,619.10 (891.61) B. Cash flow from investing activities Purchase of tangible assets (1,708.30) (3,105.08) Proceeds from sale of fixed assets 67.47 41.20 Purchase of intangible assets (463.55) (784.17) Decrease in deposits (with maturity more than three months)

19.56 513.37

Interest received 31.39 238.06 Net cash used in investing activities (2,053.43) (3,096.62) C. Cash flow from financing activities Repayment of long-term borrowings (2,502.86) - Proceeds from short term borrowings (net) 3,036.25 2,462.80 Interest paid (626.36) (194.46) Dividend paid (including tax provision thereon) (396.01) (397.07) Net cash flow from / (used in) financing activities (488.98) 1,871.27 Net increase / (decrease) in cash and cash equivalents (A+B+C)

76.69 (2,116.96)

Cash and cash equivalents at the beginning of the year 150.36 2,267.32 Cash and cash equivalents at the end of the year (refer note 2 below)

227.05 150.36

Components of Cash and Cash Equivalents: Cash on hand 6.22 6.23 Bank balance in current accounts 122.39 97.22 Unclaimed dividend account 8.79 4.54 Balance in cash credit accounts 89.65 42.37

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` in lakhs For the year ended For the year ended 31st March, 2012 31st March, 2011 Balance in margin Accounts 37.51 57.07 Total 264.56 207.43 Less: Balance in margin accounts 37.51 57.07 Cash and Cash Equivalents 227.05 150.36

Notes : 1. Cash Flow Statement has been prepared under the indirect method. 2. Includes ` 20.34 Lakhs (Previous year: ` 17.27 Lakhs), being balances with restricted use towards unpaid dividend & employee deposits. As per our report of even date For S.R. Batliboi & Associates For and on behalf of the Board of Directors Firm Registration No.101049W Chartered Accountants per Arpit K. Patel Motoo Morimoto Anil Shah Partner Managing Director Executive Director Membership No: 34032 Place: Ahmedabad Parag Dave Place: Ahmedabad Date: 24th May, 2012 Company Secretary Date: 24th May, 2012

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1. Background

Hitachi Home and Life Solutions (India) Limited (‘the Company’) was incorporated in December 1984 as “Acquest Air conditioning Systems Private Limited” under the provisions of Companies Act, 1956. The Company is engaged in the business of manufacturing, selling and trading of ‘Hitachi’ brand of air conditioners, refrigerators and chillers. Manufacturing facility for air conditioners is set up at Kadi (North Gujarat) and Jammu. The Company performs its marketing activities through eighteen branches and thirty four service centers spread across India. The Company is a subsidiary of Hitachi Appliances Inc., Japan. 2. Statement of Significant Accounting Policies 2.1 Basis of preparation The financial statements have been prepared to comply in all material respects with the notified accounting standards by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The accounting policies applied by the Company are consistent with those used in the previous year, except for change in accounting policy explained in note 2.2. 2.2 Change in accounting policy Presentation and disclosure of financial statements During the year ended 31st March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year. 2.3 Accounting estimates The preparation of the financial statements in accordance with generally accepted accounting principles (‘GAAP’) requires that management makes best estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities as of the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates. Any difference between the actual result and estimates are recognized in the period in which the results are known or materialize. 2.4 Fixed assets and depreciation Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Financing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Machine spares which are specific to a particular item of fixed asset and their use is expected to be irregular have been capitalized. Depreciation is provided on the straight line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 on all assets except for the following assets which are depreciated at the higher rates based on management’s estimate of the useful life: a. Moulds and Tools : 3 years b. Computers : 3 to 4 years c. Furniture & Fittings : 5 to 8 years d. Office Equipments : 3 to 5 years e. Electrical Fittings : 7 years f. Toolkits : 3 years

86

g. Vehicles : 4 to 6 years For the assets added during the financial year under review, depreciation is charged on pro-rata basis from the date of commissioning. Intangible assets are amortised, based on management’s estimate of its useful economic life using straight line method, on pro-rata basis as under: a. Technical Know-how fees : 5 years b. Software : 3 years Depreciation on individual tangible assets costing up to ` 5,000 are provided at the rate of 100% in the month of purchase. Impairment The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal or external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the asset. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. 2.5 Inventories Inventories are valued as follows: 1. Raw materials and stores and spare parts are valued at lower of cost and net realizable value. However,

materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be utilised are expected to be sold at or above cost.

2. Work in progress is valued at lower of cost and net realizable value. Costs include material cost, direct expenses and a proportion of manufacturing overheads.

3. Manufactured finished goods are valued at lower of cost and net realizable value. Cost includes material cost, excise duty, direct expenses and a proportion of manufacturing overheads based on normal operating capacity. Traded finished goods are valued at lower of cost and estimated net realizable value.

4. Goods in transit are valued at lower of cost and net realizable value. Cost is determined on the basis of weighted average method and includes all costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less estimated cost necessary to make the sale. 5. Custom duty on goods where title has passed to the Company and material has reached Indian ports is

included in the value of inventories. 2.6 Revenue recognition Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. (i) Sale of Goods Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are inclusive of freight, octroi and insurance, installation charges in some cases, and net of sales returns, trade discounts and cash discounts. Excise duty deducted from the sales (gross) is the amount that is included in the amount of sales (gross) and not the entire amount of liability arised during the year. (ii) Service Income Revenue from service operations is recognised as and when services are rendered in accordance with the terms of the contract. Maintenance revenue is recognised over the period of respective contracts.

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(iii) Commission Income Commission income is recognized as and when earned, unless there is significant uncertainty regarding realization thereof. (iv) Interest Interest Income is recognised on a time proportion basis taking into account the outstanding amount and the applicable rate. 2.7 Employee benefits

(i) Retirement benefits in the form of Provident and superannuation Fund is a defined contribution scheme

and the contributions are charged to the Statement of profit and loss of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective fund.

(ii) Gratuity liability is defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.

(iii) Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is on projected unit credit method made at the end of each financial year. The bifurcation of compensated absences into Current & Non-current as shown in financial statements is as per actuary certificates.

(iv) Actuarial gains/losses are immediately taken to Statement of profit and loss and are not deferred. 2.8 Foreign currency transactions (i) Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. (ii) Conversion Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. (iii) Exchange Differences Exchange differences arising on account of settlement of monetary items or exchange differences arising on monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise. (iv) Forward Exchange Contracts not intended for trading or speculation purpose The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year. 2.9 Provisions A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. 2.10 Income Taxes

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Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act 1961. Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. If the Company has carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognised only if there is virtual certainty backed by convincing evidence that such deferred tax assets can be realised against future taxable profits. Unrecognised deferred tax assets of earlier years are re-assessed at the balance sheet date and recognised to the extent that it has become reasonably certain that future taxable income will be available against which such deferred tax assets can be realised. 2.11 Earnings Per Share (EPS) Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. 2.12 Leases Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of profit and loss on a straight-line basis over the lease term. 2.13 Cash and Cash equivalents Cash and cash equivalents in the cash flow statement and Balance Sheet comprise cash at bank and in hand and short-term investments with an original maturity of three months or less. 2.14 Segment Reporting Identification of Segment The Company’s operating businesses are organised and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the locations of Customers. 2.15 Capital work in progress & intangible asset under development All expenditure incurred towards tangible assets are accumulated and shown as capital work in progress and not depreciated until such assets are ready for commercial use. Intangible asset under development consists of expenditure towards assets which are not yet operational as on the balance sheet date. 2.16 Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest and any other cost that an entity incurs in connection with the borrowing of funds.

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2.17 Research and Development Costs All revenue expenses pertaining to research and development costs are charged to statement of profit and loss in the year in which they are incurred and development expenditure of a capital nature is capitalized as fixed assets. 3. Share capital ` Lakhs

As at As at 31st March,

2012 31st March,

2011 Authorized shares 30,000,000 (Previous year: 30,000,000) Equity shares of ` 10

each

3,000.00

3,000.00 Issued, subscribed and fully

paid-up shares

22,960,008 (Previous year: 22,960,008) Equity shares of ` 10 each fully paid up

2,296.00

2,296.00

45,671 (Previous year 45,671) Equity shares of ` 10/- each have been kept in abeyance pending final

allotment of right issue. (a) Reconciliation of the Equity shares outstanding at the beginning and at the end of the reporting

period At the beginning of the period 22,960,008 2,296.00 22,960,008 2,296.00 Add : Issued during the period - - - -

Outstanding at the end of the period

22,960,008

2,296.00

22,960,008

2,296.00

(b) Terms / rights attached to Equity shares

The Company has only one class of Equity shares having a face value of `10/- per share. Each holder of Equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend recommended by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting.

During the year ended 31st March, 2012, the amount per share recognised as dividend distributions to Equity shareholders is `1.50 (Previous year: `1.50).

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(c) Shares held by Holding Company and Ultimate holding Company and/or their

subsidiaries/associates

Out of Equity shares issued by the Company, Equity shares held by Holding Company and subsidiary of Ultimate holding Company are as below:

Hitachi Appliances Inc., Japan - Holding Company (formerly known as Hitachi Home & Life Solutions Inc., Japan) 15,550,000 (Previous year: 15,550,000) Equity Shares of `10/-

each fully paid up

1,555.00

1,555.00 Hitachi India Pvt. Ltd. - Subsidiary of Ultimate holding

Company

500,000 (Previous year: 500,000) Equity Shares of `10/- each fully paid up

50.00

50.00

90

` Lakhs


2012 31st March,

2011 (d) Details of shareholders holding more than 5% shares in the

Company

Equity shares of `10 each fully paid (Nos.) Hitachi Appliances Inc., Japan - Holding Company 15,550,000 15,550,000

% holding 67.73% 67.73% 4. Reserves and surplus ` Lakhs


2012 31st March,

2011 Capital Reserve

Balance as per last financial statements 6.66 6.66 Securities Premium account Balance as per last financial statements 3,876.92 3,876.92 General Reserve Balance as per last financial statements 754.66 461.40 Add: Amount transferred from surplus balance in Statement of

profit and loss

32.62

293.26 Closing balance

787.28

754.66 Surplus in Statement of profit and loss Balance as per last financial statements 10,261.49 8,022.45 Profit for the year

326.17

2,932.57 Less: Appropriations Proposed dividend on Equity

shares

(344.40)

(344.40) Tax on dividend (55.87) (55.87) Transferred to general reserve (32.62) (293.26) Net Surplus in Statement of profit and loss 10,154.77 10,261.49

Total Reserves and surplus

14,825.63

14,899.73

5. Long-term borrowings ` Lakhs

As at As at 31st March, 2012 31st March, 2011 Non-current Current Non-current Current External commercial borrowing

(ECB) from the Holding Company (Unsecured)

- 2,885.09

2,502.87

2,502.86

91

Amount disclosed under the head "Other Current Liabilities" (refer note 11)

- (2,885.09)

-

(2,502.86)

- - 2,502.87 - Above ECB, carrying interest @ 1.65% p.a., was availed in financial year 2008-09 and 2009-10 from the

Holding Company. The same was repayable in two equal installments, out of which one has been repaid in financial year 2011-12 and another is repayable in financial year 2012-13.

6. Income Tax (a) Current Tax The Company has taxable earnings. Provision for tax has been computed under normal taxation after claiming deductions under section 80-IB of Income Tax Act, 1961 for Jammu unit. (b) Deferred tax Asset / (Liabilities) (net)

` Lakhs As at As at 31st March,

2012 31st March,

2011 Deferred tax liabilities Differences in depreciation and other differences in block of fixed

assets as per tax books and financial books (221.85) (385.44)

Gross deferred tax liabilities (221.85) (385.44) Deferred tax asset a. Deferment of foreign exchange fluctuation loss under Income

Tax Act 149.14 37.27

b. Expenditure debited in Statement of profit and loss but allowed under Income Tax Act on payment basis in subsequent years

258.88 266.35

c. Provision for doubtful debts 71.65 41.07 Gross deferred tax assets 479.67 344.69

Net deferred tax asset / (liabilities) 257.82 (40.75)

7. Other long-term liabilities

` Lakhs


2012 31st March,

2011 Deposits (from employees) 4.59 3.53 4.59 3.53

92

8. Provisions ` Lakhs As at As at 31st March, 2012 31st March, 2011 Long-term Short-term Long-term Short-term Provision for employee benefits - Compensated absences 210.95 61.28 188.19 41.54 Other provisions - 5 years warranty provision

(refer note 41)

535.37

267.80

460.84

181.96 - VAT related matters (refer note

41)

286.41

-

239.67 -

- Provision for proposed dividend - 344.40

-

344.40

- Provision for tax on proposed dividend

- 55.87

-

55.87

1,032.73 729.35 888.70 623.77

9. Short-term borrowings ` Lakhs As at As at 31st March,

2012 31st March,

2011 Loans repayable on demand

from banks:

-Working capital loan (secured) 1,149.20 220.77 -Working capital loan (unsecured) 2,000.00 - Others: Buyers' credit (secured) 3,882.16 3,774.34 7,031.36 3,995.11 Aggregate amount of secured borrowings 5,031.36 3,995.11 Aggregate amount of unsecured borrowings 2,000.00 - Working capital loan (Rate of Interest ranging from 10.5% to 14% per annum) and Buyers' Credit (Rate of

Interest 1.8% per annum) facilities from banks are secured by hypothecation of inventories, book debts, movable fixed assets and by equitable mortgage of certain immovable fixed assets of the Company.

10. Trade payables ` Lakhs As at As at 31st March,

2012 31st March,

2011 Trade payables (including

Acceptances)

93

- Outstanding dues of micro and small enterprises (refer note 40) -

-

- Outstanding dues of other than micro and small enterprises 25,868.81 30,723.54 25,868.81 30,723.54

11. Other current liabilities ` Lakhs As at As at 31st March,

2012 31st March,

2011 Current maturities of long-term borrowings (refer note 5) 2,885.09 2,502.86 Advance from customers 456.99 400.41 Service income received in advance 308.43 251.72 Interest accrued but not due on borrowings 35.74 32.93 Unclaimed dividends* 8.79 4.54 Others: Deposits (from dealers and others) 178.22 168.72 Forward contracts - 189.15 Payable for capital goods 779.39 442.03 Statutory dues payable 2,811.87 2,008.18 Other payables 258.67 262.09 7,723.19 6,262.63 * Investor education and protection fund shall be credited as and

when due.

12. Tangible and Intangible assets

Particulars

GROSS BLOCK (AT COST) DEPRECIATION AND AMORTISATION NET BLOCK As at Addi-

tions Dedu-ctions

As at As at For the year

Dedu-ctions

As at As at 1st April,

2011 31st

March, 2012

1st April, 2011

31st March,

2012

31st March,

2012

31st March,

2011 Tangible assets:

Freehold Land

2,084.71

-

-

2,084.71

-

-

-

-

2,084.71

2,084.71

Buildings

3,482.58

41.39

-

3,523.97

360.35

114.57

-

474.92

3,049.05

3,122.23

Plant & Machinery

8,714.59

577.08

58.64

9,233.03

3,540.37

904.18

47.69

4,396.86

4,836.17

5,174.22

Computers

720.81

46.63

71.89

695.55

511.23

70.32

65.44

516.11

179.44

209.58

Furniture, fixture

425.17

101.73

4.64

522.26

239.92

47.88

2.18

285.62

236.64

185.25

Office equipments

311.75

67.92

20.92

358.75

167.43

52.17

12.97

206.63

152.12

144.32 Electrical installations

538.06

36.27

574.33

155.65

72.34

227.99

346.34

382.41

Vehicles

461.53

220.21

101.61

580.13

218.95

74.57

69.23

224.29

355.84

242.58

Total Tangible assets

16,739.20

1,091.23

257.70

17,572.7

3

5,193.90

1,336.03

197.51

6,332.42

11,240.3

1

11,545.30

94

Particulars

GROSS BLOCK (AT COST) DEPRECIATION AND AMORTISATION NET BLOCK As at Addi-

tions Dedu-ctions

As at As at For the year

Dedu-ctions

As at As at 1st April,

2011 31st

March, 2012

1st April, 2011

31st March,

2012

31st March,

2012

31st March,

2011

Intangible assets:

Trade mark

210.00

-

-

210.00

210.00

-

-

210.00

-

- Software capitalisation

498.06

6.88

-

504.94

413.26

42.62

-

455.88

49.06

84.80

Technical know how

2,416.00

655.64

-

3,071.64

951.80

453.09

-

1,404.89

1,666.75

1,464.20

Total Intangible assets

3,124.06

662.52

-

3,786.58

1,575.06

495.71

-

2,070.77

1,715.81

1,549.00

TOTAL

19,863.26

1,753.75

257.70

21,359.3

1

6,768.96

1,831.74

197.51

8,403.19

12,956.1

2

13,094.30

Previous year

15,885.55

4,281.21

303.50

19,863.2

6

5,428.42

1,605.20

264.66

6,768.96

13,094.3

0

Capital Work in Progress

603.74

288.79

Intangible assets under development

670.52

280.38

Notes: 1. Plant & Machinery includes testing equipment and moulds and tools with net block of `845.56 Lakhs (Previous year: `1,287.13 Lakhs) gross block ` 3,239.35 Lakhs (Previous year: ` 3,196.29 Lakhs). 2. Buildings include ` 130.36 lakhs (Previous year: ` 130.36 lakhs) in respect of ownership of premises in co-operative housing society and non trading corporations. Shares with face value of ` 1 (Previous year: ` 1) are fully paid up and unquoted.

13. Loans and Advances (Unsecured) ` Lakhs As at As at 31st March, 2012 31st March, 2011 Long-term Short-term Long-term Short-term

Capital advances - Considered good (A) 135.02 - 84.67 - Deposits - Considered good

306.99

43.65 317.36 70.11

- Considered doubtful - - 0.30 - 306.99 43.65 317.66 70.11 Provision for doubtful advances - - (0.30) - (B) 306.99 43.65 317.36 70.11 Advances recoverable in cash

or kind

- Considered good 245.80 1,310.22 324.33 1,115.06 - Considered doubtful 1,144.01 - 901.85 - 1,389.81 1,310.22 1,226.18 1,115.06 Provision for doubtful advances

(refer note 44) (1,144.01) - (901.85) -

95

` Lakhs As at As at 31st March, 2012 31st March, 2011 Long-term Short-term Long-term Short-term

(C) 245.80 1,310.22 324.33 1,115.06 Other loans and advances - Advance income-tax (net of

provision for taxation) 247.37 - 91.85 -

- VAT credit receivable (refer note 43)

725.25 - 578.08 -

- Balances with statutory / government authorities

- 82.90 - 540.91

(D) 972.62 82.90 669.93 540.91

Total (A+B+C+D) 1,660.43 1,436.77 1,396.29 1,726.08

14. Inventories (valued at lower of cost and net realizable value) ` Lakhs As at As at 31st March, 2012 31st March, 2011 Raw material [including goods in transit ` 2719

Lakhs (Previous year ` 5321 Lakhs)] 12,903.31 15,262.88

Work-in-progress (refer note 22) 1,723.09 2,258.32 Finished goods (refer note 22) 9,588.54 11,899.07 Stock-in-trade [including goods in transit ` 503 lakhs (Previous

year ` 555 Lakhs)] (refer note 22) 2,535.58 3,188.60

Stores and spares 56.85 64.11 26,807.37 32,672.98

15. Trade receivables

` Lakhs As at As at 31st March, 2012 31st March, 2011 Debts outstanding for a period

exceeding six months from the date they are due for payment

Unsecured, Considered good 391.56 271.76 Considered doubtful 220.86 126.59 Provision for doubtful debts (220.86) (126.59) (A) 391.56 271.76 Other debts Secured, Considered good 169.75 158.52 Unsecured, Considered good 14,252.46 12,090.49 (B) 14,422.21 12,249.01 Total (A+B) 14,813.77 12,520.77

96

Out of the total provision existing as at March 31, 2011, the management has identified and written off bad debts aggregating to ` Nil (Previous year: ` 63.54 Lakhs) 16. Cash and Bank balances ` Lakhs

As at As at 31st March, 2012 31st March, 2011 Non-current Current Non-current Current Cash and cash equivalents Cash on hand (A) - 6.22 - 6.23 Balances with bank - on current account - 122.39 - 97.22 - on unpaid dividend account - 8.79 - 4.54 - on cash credit account - 89.65 - 42.37 (B) - 220.83 - 144.13 Other bank balances - Margin money deposit 0.51 37.00 0.99 56.08 (C) 0.51 37.00 0.99 56.08 Total (A+B+C) 0.51

264.05 0.99 206.44

Amount disclosed under the

head "Non-current Assets" (refer note 17)

(0.51) - (0.99) -

- 264.05 - 206.44

17. Other assets Lakhs As at As at 31st March, 2012 31st March, 2011 Non-current Current Non-current Current Unamortised premium on

forward contract - 17.86 - 48.80

Interest accrued on margin money deposits

- 0.30 - 0.81

Foreign currency receivable (on forward contract)

- 22.40 - -

Non-current bank balances (refer note 16)

0.51 - 0.99 -

0.51 40.56 0.99 49.61

97

18. Revenue from operations ` Lakhs

For the year ended 31st March, 2012 31st March, 2011 Sale of products 80,616.31 77,966.03 Sale of services 5,162.50 4,277.18 Other operating revenue Scrap sales 730.05 510.26 Commission income 218.15 231.75 Miscellaneous income 4.92 3.77 Revenue from operations (gross) 86,731.93 82,988.99 Details of products sold Air conditioners 71,988.93 70,576.46 Refrigerators 4,464.47 5,092.46 Spares and accessories 3,734.65 1,897.62 Others 428.26 399.49 80,616.31 77,966.03

Details of Services rendered Annual Maintenance Contract service 4,215.34 3,433.10 Repair & Installation service 947.16 844.08 5,162.50 4,277.18 19. Other income ` Lakhs

For the year ended 31st March, 2012 31st March, 2011 Interest income from banks 3.34 204.45 from others 27.54 33.28 Net gain on sale of fixed assets 7.29 2.36 Gain on foreign exchange fluctuations (net) - 138.79 Miscellaneous income 49.24 88.43 87.41 467.31

20. Cost of raw-material and components consumed ` Lakhs

For the year ended 31st March, 2012 31st March, 2011 Cost of raw material and other components

consumed 43,093.44 50,425.95

Details of raw material consumed

98

` Lakhs

For the year ended 31st March, 2012 31st March, 2011 Compressors 11,670.67 11,285.47 Copper 6,297.15 5,243.48 Others (Including packing materials) 25,125.62 33,897.00 43,093.44 50,425.95

21. Purchase of stock-in-trade ` Lakhs For the year ended 31st March, 2012 31st March, 2011 Purchase of stock-in-trade 5,715.63 6,561.76

Details of purchase of stock-in-trade

Refrigerators 2,384.41 4,342.18 Spares and accessories 2,990.25 1,904.39 Others 340.97 315.19 5,715.63 6,561.76

22. Decrease / (Increase) in inventories of finished goods, work-in-progress and stock-in-trade ` Lakhs For the year ended 31st March, 2012 31st March, 2011 Decrease /

(Increase) Inventories at the end of the year Work-in-progress 1,723.09 2,258.32 535.23 Finished goods 9,588.54 11,899.07 2,310.53 Stock-in-trade 2,535.58 3,188.60 653.02 13,847.21 17,345.99 3,498.78 Inventories at the beginning of the

year

Work-in-progress 2,258.32 1,399.44 (858.88) Finished goods 11,899.07 6,274.23 (5,624.84) Stock-in-trade 3,188.60 1,785.86 (1,402.74) 17,345.99 9,459.53 (7,886.46) Excise duty on change in

inventories (136.53) 714.23

3,362.25 (7,172.23) Details of inventories Work-in-progress Coils (Heat exchangers) 759.87 920.79 Others 963.22 1,337.53 1,723.09 2,258.32 Finished goods Air conditioners 9,588.54 11,899.07 Stock-in-trade Refrigerators 858.94 1,633.93

99

` Lakhs For the year ended 31st March, 2012 31st March, 2011 Decrease /

(Increase) Spares and accessories 1,661.90 1,533.28 Others 14.74 21.39 2,535.58 3,188.60 23. Employee benefits expense ` Lakhs

For the year ended 31st March, 2012 31st March, 2011 Salaries, wages and bonus 4,788.24 4,000.62 Contribution to provident and other funds 241.80 208.82 Gratuity expenses (refer note 28) 8.98 17.72 Workmen and staff welfare expenses 239.48 179.34 5,278.50 4,406.50

24. Finance costs ` Lakhs

For the year ended 31st March, 2012 31st March, 2011 Interest 386.97 135.82 Bank charges 63.77 68.83 Exchange difference as an adjustment to

borrowing cost 440.30 532.89

891.04 737.54

25. Other expenses (Refer note 45) ` Lakhs

For the year ended 31st March, 2012 31st March, 2011 Consumption of stores and spares 25.32 25.67 Power and Fuel 287.41 294.20 Rent 1,024.84 744.02 Repairs & Maintenance - Building 14.12 9.19 Repairs & Maintenance - Machinery 197.04 190.59 Repairs & Maintenance - Others 90.92 111.22 Insurance 56.51 58.17 Rates & Taxes 147.52 136.58 Advertisement and sales promotion (net of

recoveries) 4,218.54 2,739.04

Annual Maintenance Contract (AMC) expenses 2,917.46 2,545.96 Freight and forwarding expenses 2,853.71 2,423.78 Legal and professional fees 185.20 237.98 Provision for doubtful debts 94.27 14.17 Contract labour charges 1,149.35 981.25

100

` Lakhs

For the year ended 31st March, 2012 31st March, 2011 Loss on Foreign Exchange Fluctuations (net) 553.71 - Payment to Auditors* 28.59 29.13 Royalty 1,745.12 1,697.20 Warranty expenses 1,009.25 1,426.83 Miscellaneous expenses 2,845.57 2,644.99 19,444.45 16,309.97

*Payment to Auditors As auditor: -Statutory Audit fees 12.50 12.50 -Tax audit fees 4.00 4.00 -Fees for Limited reviews 10.50 10.50 In other capacity: -Certification fees 1.20 1.50 Reimbursement of expenses 0.39 0.63 28.59 29.13

26. Earnings per share (EPS) ` Lakhs

31st March, 2012 31st March, 2011 Net profit after tax for calculation of

basic EPS 326.17 2,932.57

Weighted average number of Equity shares considered

in calculating basic and diluted EPS 22,960,008 22,960,008

Earning per share (Basic and

Diluted) ` 1.42 12.77

27. Segment reporting Business segment: The Company is engaged in the business of manufacturing, trading and other related services of Air Conditioners, Chillers and Refrigerators. Since the Company’s business falls within a single business segment of Cooling Products for comfort and commercial use, disclosures under Accounting Standard (AS) 17 – Segment Reporting are not required. Geographical segment: Secondary segment reporting is based on the geographical areas of operations. The geographical segments have been identified based on revenues within India (sales to customers within India) and revenues outside India (sales to customers located outside India). Since the export market revenue, results and assets constitute less than 10% of the total revenue, results and assets, the same has not been disclosed. 28. Disclosure as per Accounting Standard-15 (Revised) on Employee Benefits Gratuity: The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days' salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation in the form of a qualifying insurance policy.

101

The following tables summarise the components of net benefit expense recognised in the Statement of profit and loss and the funded status and amounts recognised in the balance sheet for the plan. Statement of profit and loss ` Lakhs 31st March, 2012 31st March, 2011 Net employee benefit expense (recognised in

Employee benefits expense)

Current service cost 35.70 36.17 Interest cost on benefit obligation 24.56 20.54 Expected return on plan assets 32.48 24.45 Net actuarial (gain) recognised in the year (18.80) (14.54) Net benefit expense 8.98 17.72 Actual return on plan assets 32.29 26.34

Balance sheet ` Lakhs Benefit asset / liability 31st March, 2012 31st March, 2011 Fair value of plan assets 402.60 330.43 Present value of defined benefit obligation 315.39 297.71 Plan asset 87.21 32.72

Changes in the present value of the defined benefit obligation are as follows ` Lakhs 31st March, 2012 31st March, 2011 Opening defined benefit obligation 297.71 248.94 Interest cost 24.56 20.54 Current service cost 35.70 36.17 Benefits paid 22.04 12.53 Actuarial (gains) / losses on obligation (20.54) 4.59 Closing defined benefit obligation 315.39 297.71

Changes in the fair value of plan assets are as follows

` Lakhs 31st March, 2012 31st March, 2011 Opening fair value of plan assets 330.44 250.23 Expected return 32.48 24.45 Contributions by employer 41.42 36.63 Benefits paid - - Actuarial gains / (losses) (1.74) 19.12 Closing fair value of plan assets 402.60 330.43

The Company expects to contribute ` Nil to gratuity fund in the next Financial year (Previous year: ` Nil).

102

The major categories of plan assets as a percentage of the fair value of total plan assets are as follows: 31st March, 2012 31st March, 2011 Investments with insurer 100% 100%

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. The principle assumption used in determining the gratuity obligations for the Company’s plans are shown below 31st March, 2012 31st March, 2011 Discount rate 8.50% 8.25% Expected rate of return on assets 9.25% 8.50% Increase in Compensation cost 6.00% 7.00%

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Amounts for the current year and last four years are as follows: ` Lakhs

31st March, 2012

31st March, 2011

31st March,

2010

31st March,

2009

31st March,

2008

Defined benefit obligation

315.39

297.71

248.94

163.81

179.89

Plan assets

402.60

330.43

250.23

175.78

126.82

Surplus / (deficit)

87.21

32.72

1.29

11.97

(53.07) Experience adjustments on plan

liabilities

7.12

(11.61)

33.40

(41.90)

33.87 Experience adjustments on plan

assets

1.74

(19.12)

4.28

12.86

(0.35) Defined Contribution Plan: Amount recognised as expense for the period towards contribution to the following funds: ` Lakhs 31st March, 2012 31st March, 2011 Employer’s Contribution to Provident Fund 156.48 133.40 Employer’s Contribution to ESIC 41.04 37.42 Employer’s Contribution to Super Annuation 19.34 18.06 216.86 188.88

29. Leases

Certain premises are obtained on cancellable and non-cancellable operating lease that are renewable either at the option of lessor or lessee or both. Further, there are no subleases nor any restrictions imposed in lease agreements. Lease rentals debited to Statement of profit and loss for the year is ` 1024.84 Lakhs (Previous year ` 744.02 Lakhs). The future minimum lease rentals payable at the balance sheet date in respect of non-cancellable operating leases are as follows:

103

` Lakhs 31st March, 2012 31st March, 2011 Not later than one year 183.83 241.72 Later than one year but not later than five years 386.51 322.94 Later than five years 267.86 -

30. Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as on March 31, 2012: ` 643.68 Lakhs (Previous year: ` 285.16 Lakhs). 31. Contingent Liabilities ` Lakhs

31st March, 2012 31st March, 2011 Legal matters under dispute *: Service tax 199.57 192.02 Sales tax 264.77 326.15 Customs duty 0.92 0.92 Excise duty 0.50 - Guarantees given by the bankers on behalf of the

Company 44.09 24.30

Claims against the Company not acknowledged as debts

59.21 50.35

569.06 593.74 * The company is contesting the demands and the management believe that its position will likely be

upheld in the appellate process. It is not practicable to estimate the timing of cash outflows, if any in respect of legal matters, pending resolution of the proceedings with the appellate authorities.

32. Research & Development Expenditure ` Lakhs

31st March, 2012 31st March, 2011 Revenue expenditure 371.65 335.03 Capital expenditure 11.03 17.78

33. Related Party Disclosures

(a) List of related Parties and Relationship Relation Parties A. Related parties exercising control Hitachi Ltd., Japan, (Ultimate Holding Company)

Hitachi Appliances Inc., Japan (Holding Company) B. Parties under common control (Fellow Subsidiaries)

Hitachi Air Conditioning Products (M) Sdn. Bhd. Hitachi Asia Ltd. – Singapore Hitachi Household Appliances (Wuhu) Co. Ltd. Hitachi Procurement Service Co. Ltd. Hitachi Metglass (India) Private Ltd.

104

Luvata Hitachi Cable (Thailand) Ltd. Shanghai Hitachi Electrical Appliances Co. Ltd. Hitachi Consumer Products (Thailand) Ltd. Hitachi Koki India Ltd. Hitachi Air Conditioning & Refrigerating Products (Guangzhou) Co. Ltd. Hitachi India Private Ltd. Hitachi Lift India Private Ltd. Hitachi Transport System India Private Ltd. Shizuoka Hitachi Co., Ltd Hitachi Consulting Software Services Hitachi Data Systems Hitachi India Trading Private Ltd. Hitachi Hi-rel Power Electronics Private Ltd. (w.e.f. 5th October, 2011)

C. Key Managerial personnel Mr. Motoo Morimoto (Managing Director)

Mr. Vinay Chauhan (Executive Director) Mr. Amit Doshi (Executive Director) Mr. Anil Shah (Executive Director)

(b) Related Party Transactions

(Figures in parenthesis represent previous year numbers)

Sr. No.

Transactions Holding Company Fellow Subsidiaries Key Management Personnel

1 Purchase of raw material Shanghai Hitachi Electrical

Appliances Co. Ltd. - (-) 9,478.07 (9,925.39) - (-)

Hitachi Household Appliances (Wuhu) Co. Ltd.

- (-) 1,710.56 (4,457.25) - (-)

Luvata Hitachi Cable (Thailand) Ltd.

- (-) 4,551.65 (6,029.78) - (-)

Hitachi Appliances Inc. 13.39 (-) - (-) - (-) Others - (-) 393.48 (408.11) - (-) 2 Purchase of stock-in-trade Hitachi Asia Ltd., Singapore - (-) 487.75 (464.86) - (-) Hitachi Consumer Products

(Thailand) Ltd.- (-) 1,632.65 (3,094.79) - (-)

Hitachi Appliances Inc. - (7.92) - (-) - (-) 3 Technical know-how fees

(capitalised)

Hitachi Appliances Inc. 995.99 (60.75) - (-) - (-) 4 Software Charges Hitachi Appliances Inc. -

(14.22) - (-)

- (-)

5 Consultancy fees paid (capitalised)

Hitachi Appliances Inc. 311.48 (276.80) - (-) - (-) 6 Commission income Hitachi Asia Ltd., Singapore - (-) 218.15 (231.75) - (-) 7 Sale of products Hitachi Koki India Ltd. - (-) 8.02 (0.27) - (-) Hitachi India Private Ltd. - (-) 4.08 (-) - (-)

105

Sr. No.


Hitachi Hi-rel Power Electronics Private Ltd.

- (-) 24.37 (-) - (-)

Hitachi Transport System India Private Ltd.

- (-) 1.53 (11.42) - (-)

Others - (-) 1.24 (1.45) - (-) 8 Sale of services Hitachi Metglass (India) Private

Ltd. - (-) 8.61 (-) - (-)

Hitachi India Private Ltd. - (-) - (0.10) Hitachi Transport System India

Private Ltd. - (-) - (0.09)

Others - (-) 6.54 - - (-) 9 Interest expenses on external commercial

borrowings

Hitachi Appliances Inc. 82.09 (80.17) - (-) - (-) 10 Advertisement recovery Hitachi Asia Ltd., Singapore - (-) - (2.69) - (-) Hitachi Consumer Products

(Thailand) Ltd. - (-) 127.36 (182.79) - (-)

11 Remuneration paid Mr. Motoo Morimoto - (-) - (-) 46.84 (44.93) Mr. Vinay Chauhan - (-) - (-) 58.57 (55.81) Mr. Amit Doshi - (-) - (-) 56.77 (54.79) Mr. Anil Shah - (-) - (-) 57.37 (55.32) 12 Royalty paid Hitachi Appliances Inc. 1,702.44 (1,684.43) - (-) - (-) 13 Purchase of capital goods Hitachi Procurement Service

Co. Ltd. - (-) 1.40 (-) - (-)

Shizuoka Hitachi Co., Ltd - (-) 2.55 (-) - (-) Hitachi Appliances Inc. - (225.63) - (-) - (-) 14 Reimbursement paid Hitachi Appliances Inc. 70.93 (50.37) - (-) - (-) 15 Import freight, local freight

and custom clearing expenses

Hitachi Transport Systems India Private Ltd.

- (-) 484.73 (1,240.19) - (-)

16 Repayment of External Commercial Borrowings

Hitachi Appliances Inc. 3,125.11 (-) - (-) - (-) 17 Other Income Hitachi Appliances Inc 0.55 (-) - (-) - (-) 18 Dividend Payment Hitachi Appliances Inc. 233.25 (233.25) - (-) - (-) Hitachi India Private Ltd. - (-) 7.50 (7.50) - (-) 19 External Commercial Borrowings outstanding as at

Balance sheet date

Hitachi Appliances Inc. 2,885.09 (5,005.73) 20 Debit balance outstanding as

at Balance sheet date

Hitachi Asia Ltd. - (-) 12.56 (-) - (-) Others - (-) 7.40 (-) - (-)

106

Sr. No.


21 Credit balance outstanding as at Balance sheet date

Hitachi Appliances Inc. 1,333.16 (121.10) - (-) - (-) Shanghai Hitachi Electrical

Appliances Co. Ltd. - (-) 4,778.40 (5,713.45) - (-)

Luvata Hitachi Cable (Thailand) Ltd.

- (-) 2,092.87 (1,676.89) - (-)

Others - (-) 1,218.78 (2,438.53) - (-) Note: The Company does not have transactions with enterprises over which key management personnel can exercise

significant influence. 34. Derivative instruments and unhedged foreign currency exposure

(a) Particulars of unhedged foreign currency exposure ` Lakhs

Currency 31st March, 2012 31st March, 2011

Trade payables (including acceptances)

USD 133.34 125.35

JPY 21.66 68.28 Equivalent INR 6,798.68 5,628.12 Payables for capital goods USD - 0.01 JPY 1,129.19 - Equivalent INR 700.38 0.53 Buyers' credit USD 57.70 - Equivalent INR 2,935.86 - Loans and Advances (including

Capital Advances) USD 3.60 7.19

JPY - 12.40 EURO 0.38 - Equivalent INR 209.07 327.15 Trade Receivables USD 1.03 0.62 JPY - 5.00 Equivalent INR 52.47 30.26 External Commercial Borrowings JPY 4,650.00 9,300.00 Equivalent INR 2,885.09 5,005.73 ECB Interest (accrued but not due) JPY 23.84 46.54 Equivalent INR 14.79 25.05 Buyers' credit interest USD 0.22 0.18 Equivalent INR 11.24 7.88

(b) Forward Contracts outstanding The company uses forward exchange contracts to hedge its exposure in foreign currency. The information on outstanding forward exchange contracts is given below:

107

` Lakhs Currency 31st March, 2012 31st March, 2011 Trade payables USD 48.32 112.42 JPY - 292.63 Buyers' Credit USD 18.60 84.66

35. Earnings in foreign exchange (accrual basis) ` Lakhs

31st March, 2012 31st March, 2011 Export of trading goods (on FOB basis) 0.02 1.48 Commission income 218.15 231.75 Reimbursement of advertisement and other

expenses 127.92 185.48

346.09 418.71

36. Expenditure in foreign currency (accrual basis) ` Lakhs 31st March, 2012 31st March, 2011 Interest 103.06 88.17 Royalty 1,532.20 1,515.98 Technical know how (capitalised) 896.39 54.67 Salaries 70.93 50.37 Consultancy fees and other expenses

(capitalised) 280.33 331.54

Others 25.33 66.67 2,908.24 2,107.40

37. Value of imports calculated on CIF basis ` Lakhs

31st March, 2012 31st March, 2011 Capital goods 339.39 1,725.83 Raw materials, components & spare parts 22,238.99 29,172.49 Stock-in-trade 2,304.67 3,908.07 24,883.05 34,806.39

38. Net dividend remitted in foreign exchange ` Lakhs 31st March, 2012 31st March, 2011 Amount remitted (in JPY) 393.01 426.26 Number of non-resident shareholders 1.00 1.00 Number of equity shares held on which 15,550,000 15,550,000

108

dividend was due Year to which dividend relates to 2010-11 2009-10

109

39. Imported and indigenous raw material and spare parts consumed ` Lakhs % of total

consumption Value % of total

consumption Value

31st March, 2012 31st March, 2012 31st March, 2011 31st March, 2011 Consumption of

raw materials

Indigenous 41.25% 17,775.59 45.20% 22,792.41 Imported 58.75% 25,317.85 54.80% 27,633.54 100.00% 43,093.44 100.00% 50,425.95 Consumption of

stores and spares

Indigenous 83.85% 21.23 100.00% 25.67 Imported 16.15% 4.09 0.00% - 100.00% 25.32 100.00% 25.67 40. Details of dues to Micro & Small enterprises as defined under MSMED Act, 2006 Based on information available with the Company, there are no suppliers who are registered as micro, small or medium enterprise under “The Micro, Small and Medium Enterprise Development Act, 2006” (Act) till 31st March, 2012. Accordingly, no disclosures are required to be made under said Act. 41. Provisions The movement in the product warranty and other provisions during the year is as under:

(Figures in parenthesis represent previous year numbers) ` Lakhs 31st March,

2011

Provision during

the year

Utilised during the

year

Reversal during the

year

31st March, 2012

Provision for 5 Years Warranty 642.80 366.71 206.34 - 803.17 (501.33) (337.98) (191.56) (4.95) (642.80) Other Provision 239.67 46.74 - - 286.41 (183.97) (55.70) - - (239.67)

Notes: (a) The Company gives 5 years warranty on compressors at the time of sale to purchasers of its products. Product warranty expense is calculated based on past historical data of replacement of compressors and cost incurred thereon and is provided for in the year of sale. It is expected that the most of expenses against the provision will be incurred within next five years. (b) Other provision includes likely claims against the Company in respect of VAT related matters, whose outcome depends on ultimate settlement / conclusion with relevant authorities. 42. The Company is eligible for refund of excise duty paid on goods manufactured and removed from

Jammu unit, other than the amount of duty paid by utilisation of CENVAT credit, in terms of Notification No. 56/2002-CE dated 14-11-2002. Excise duty recovered as disclosed in the Statement of profit and loss is net of such refund of ` 414.44 Lakhs (Previous year ` 525.51 Lakhs)

110

43. The Company avails input tax credit on purchases made by it from the dealers availing VAT Remission Scheme under the Jammu and Kashmir Value Added Tax Act, 2005 (J&K VAT Act) since FY 2005-06. During the year, the Company has accounted input tax credit as per section 21 & 22 of J&K VAT Act of ` 147.15 Lakhs (aggregated till date ` 725.25 Lakhs) net of ` 39.77 Lakhs (aggregated till date ` 420.39 Lakhs), being the amount adjusted against the payment of Central Sales Tax and Value Added Tax liabilities on sales made from Jammu and Kashmir unit (“VAT Set off”). In respect of the said matter, the Company has received a demand of `17.79 Lakhs being the VAT set off claimed in FY 2005-06, which has been challenged by the Company in High Court of Jammu & Kashmir and the matter is subjudise till the date of balance sheet. The Company, based on the external opinion, has considered the entire input tax credit of `725.25 Lakhs (net of VAT setoff claimed of `420.39 Lakhs) as recoverable.

44. The Company has paid custom duty under protest of `231.89 Lakhs (Previous year `268.19 Lakhs)

during the year for which provision has been created which is included in the purchase of stock-in-trade.

45. The Company accrues certain sales related expenses on an estimated basis, which are reviewed at the

each period end and any excess or short provisions are reversed or accounted for in respective expense heads. Accordingly, Other Expenses are net of write back of excess provision of earlier years amounting to `788.73 Lakhs (Previous year `704.91 Lakhs).

46. Prior year comparatives Till the year ended 31st March, 2011, the company was using pre-revised Schedule VI to the Companies Act 1956 for preparation and presentation of its financial statements. During the year ended 31st March, 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company. The Company has reclassified previous year figures to conform to this year’s classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance sheet.

As per our report of even date For S.R. Batliboi & Associates For and on behalf of the Board of Directors Firm Registration No.101049W Chartered Accountants per Arpit K. Patel Motoo Morimoto Anil Shah Partner Managing Director Executive Director Membership No: 34032 Place: Ahmedabad Parag Dave Place: Ahmedabad Date: 24th May, 2012 Company Secretary Date: 24th May, 2012

111

ACCOUNTING RATIOS AND CAPITALISATION STATEMENT

Accounting Ratios The following tables present certain accounting and other ratios on basis derived from our audited financial statements as at and for the Fiscal 2011 and Fiscal 2012 and the unaudited condensed financial statements for the six months ended September 30, 2012 included in the chapter “Financial Statements” on page 72.

(` in Lakhs) Particulars Six months ended

September 30, 2012

March 31, 2012 March 31, 2011

Net profit after Tax 1,390.24 326.17 2,932.57Net worth 18,511.88 17,121.63 17,195.73No. of Shares outstanding at the end of the year (Units)

2,29,60,008 2,29,60,008 2,29,60,008

Weighted No. of Equity Shares outstanding at the end of year (Units) as per AS 20:

Basic 2,29,60,008 2,29,60,008 2,29,60,008Diluted 2,29,60,008 2,29,60,008 2,29,60,008Earning per Share – Basic(Face Value ` 10/- per share)

6.06 1.42 12.77

Earning per Share - Diluted (Face Value ` 10/- per share)

6.06 1.42 12.77

Return of Net worth (%) 7.51 1.91 17.05Net Assets Value per Equity Share (`) 80.63 74.57 74.89 The Ratios have been computed as below:

Net worth: Subscribed Equity Share Capital + reserves and surplus (reserves and surplus does not include revaluation reserve)

Earning Per Share (Basic) (`):

Net profit attributable to Equity Shareholders Weighted average number of equity shares outstanding during the year

Earning Per Share (Diluted) (`):

Net profit attributable to equity shareholders Weighted average number of diluted equity shares outstanding during the

year Return On Net worth (%): Net Profits

Net Worth at the end of the year (excluding revaluation reserves, if any) Net Asset Value per Share (`):

Net Worth at the end of the year Number of equity shares outstanding at the end of the year

Capitalisation Statement: The statement on our capitalisation is as set out below:

(` in Lakhs) Particulars Pre-issue as at

March 31, 2012 Post Issue

Borrowing - Short Term Debt 7,031.36 [●]- Long Term Debt 2,885.09 [●]

112

Particulars Pre-issue as at March 31, 2012

Post Issue

Total Borrowing 9,916.45 [●] Shareholders’ funds Equity Share Capital 2,296 [●]Reserves and Surplus 14,825.63 [●]Total Shareholders’ Funds 17,121.63 [●] Long-term Debt/Shareholders funds 0.17 [●]Note: Debts repayable within one year from March 31, 2012 are considered as short term funds.

113

STOCK MARKET DATA FOR EQUITY SHARES

The Equity Shares of the Company are listed on the BSE from June 02, 1991 and the NSE with effect from January 03, 2000. Stock market data for our Equity Shares has been given separately for the BSE and the NSE. As our Equity Shares are actively traded on both BSE and NSE, stock market data has been given separately for each of these Stock Exchanges. The high and low closing prices recorded on the BSE and the NSE for the preceding three Financial Years and the number of Equity Shares traded on the days the high and low prices were recorded are stated below. BSE Year

ending March

31

High (`) Date of High

No. of Shares

traded on date of

high

Total Volume of traded on date of high (` in million)

Low (`) Date of Low

No. of Shares

traded on date of low

Total Volume of traded on date of low

(` in million)

Average price for the year

(`)*

2012 247.70 Apr 18, 2011

76,687 18.68 93.30 Dec 30, 2011

2,957 0.28 159.28

2011 402.00 Jul 27, 2010

21,337 7.27 170.15 Feb 9, 2011

12,451 2.17 268.63

2010 258.90 Mar 25, 2010

208,254 52.65 33.50 Apr 2, 2009

26410 0.93 112.52

(Source: www.bseindia.com) * Average of the daily closing prices. NSE Year

ending March

31

High (`) Date of High

No. of Shares

traded on date of

high

Total Volume of traded on

date of high (` in million)

Low (`) Date of Low

No. of Shares

traded on date of

low

Total Volume of traded on date of low

(` in million)

Average price for the year

(`)*

2012 247.80 Apr 18, 2011

101,293 24.57 93.65 Jan 4, 2012

17,715 1.70 159.53

2011 373.70 Aug 11, 2010

1,346,464 478.92 170.00 Feb 9, 2011

28,704 5.01 268.64

2010 258.90 Mar 25, 2010

255,257 64.605 33.20 Apr 2, 2009

35,465 1.255 112.56

(Source: www.nseindia.com) * Average of the daily closing prices. The high and low prices and volume of the Equity Shares traded on the respective dates during the last six months is as follows: BSE

Month Date of High High (`)

Volume (No. of Shares)

Date of Low Low (`)


Average Price for

the Month (`)

Total Noof

Trading Days

November 2012 Nov 8, 2012 139.80 8,319 Nov 20, 2012 118.50 50,472 128.42 20October 2012 Oct 5, 2012 145.00 256,651 Oct 5, 2012 125.55 256,651 135.31 21

September 2012 Sept 20, 2012 135.25 135,659 Sept 3, 2012 113.40 11,754 122.49 20August 2012 Aug 27, 2012 122.00 5,238 Aug 13, 2012 107.10 4,818 113.62 21

July 2012 Jul 6, 2012 157.95 371,865 Jul 30, 2012 98.00 14,600 127.86 22June 2012 Jun 11, 2012 121.90 5,267 Jun 28, 2012 110.40 3,045 114.80 21

(Source: www.bseindia.com) * Average of the daily closing prices.

114

NSE

Month Date of High High (`)


Date of Low Low (`)


Average Price for

the Month (`)

Total No of

Trading Days

November 2012 Nov 7, 2012 139.50 40,010 Nov 20, 2012 117.95 87,479 128.40 20October 2012 Oct 5, 2012 143.90 402,452 Oct 5, 2012 125.25 402,452 135.23 21

September 2012 Sep 20, 2012 135.40 241,365 Sep 5, 2012 113.05 10,017 122.47 20August 2012 Aug 6, 2012 122.00 19,839 Aug 1, 2012 104.30 5,693 113.63 21

July 2012 July 5, 2012 158.00 1,809,388 July 31, 2012 96.55 12,692 128.81 23June 2012 June 11, 2012 122.15 48,113 June 27, 2012 110.35 11,031 114.74 21

(Source: www.nseindia.com) * Average of the daily closing prices. In the event the high or low or closing price of the Equity Shares are the same on more than one day, the day on which there has been higher volume of trading has been considered for the purposes of this chapter. The closing price of the Equity Shares was ` 139.30 on the BSE on October 19, 2012, the trading day immediately following the day on which Board approved the Issue. The closing price of the Equity Shares was ` 139.25 on NSE on October 19, 2012, the trading day immediately following the day on which Board approved the Issue.

Week end closing prices of the Equity Shares for the last four weeks on the BSE and NSE are as below:

Week Ended on BSE (`) NSE (`) December 7, 2012 128.65 128.40 November 30, 2012 126.90 127.25 November 23, 2012 120.90 120.55 November 16, 2012 126.20 126.00 (Source: www.bseindia.com; www.nseindia.com) Highest and lowest price of the Equity Shares on BSE and NSE for the last four weeks:

Closing Market Price

Highest (`)

Date Closing Market Price

Lowest (`)

Date

BSE 132.80 Nov 13, 2012 120.90 Nov 23, 2012 NSE 132.95 Nov 13, 2012 120.55 Nov 23, 2012 (Source: www.bseindia.com; www.nseindia.com) The closing market price of our Equity Shares as on, December 12, 2012 was `129.40 and `129.85 on the BSE and the NSE, respectively

115

MATERIAL DEVELOPMENTS

In accordance with circular no. F.2/ 5/ SE/ 76 dated February 5, 1977 issued by the Ministry of Finance, Government of India, as amended by Ministry of Finance, Government of India through its circular dated March 8, 1977 and in accordance with sub-item (B) of item X of Part E of the SEBI ICDR Regulations, the following information is provided below: Our working results:

Financial Results for the period between

April 1, 2012 to October 31, 2012 ` in lakhs

Sales/Turnover 58,239.00 Other Income 116.95 Total Income 58,355.95 Gross Profit / loss (excluding depreciation and taxes) 2,771.90 Provision for depreciation 1058.83 Provision for Taxes: Provision for Income Tax 736.43 Provision for Deferred Tax (272.83) Net Effect of Provision for Taxation 463.60 Net profit after tax for the period 1,249.47 Material changes and commitments, if any, affecting our financial position There are no material changes and commitments, other than as disclosed below, which are likely to affect our financial position since March 31, 2012 till date of this Draft Letter of Offer: There was a major fire on July 18, 2012 at unit 2 in Kadi facility due to which it has become non-operational. The loss incurred by the Company is adequately covered under insurance claim. There has been no loss of life or injury to employees or workers. The Unit 2 of Kadi Facility has been re-constructed and plant and machineries are being installed in the plant. In the interim period, Company managed to meet the demand through its Unit 1 in Kadi and Jammu facility. The Company also arranged outsourcing of certain finished goods from other manufacturing facilities of Hitachi Appliances Inc.

116

FINANCIAL INDEBTEDNESS

Set forth below is a brief summary of our current significant outstanding financing arrangements, as on November 30, 2012:

Sr. No.

Agreement with Lender Nature of borrowin

g

Term / Tenure

Sanctioned Amount

Limit utilized as at November

30, 2012

Rate of Interest / Commission /

Charges

Repayment Prepayment Security

1. Addendum to Facility Letter between our Company and Yes Bank dated December 24, 2011

Sublimits:

Letters of Credit

1 year ` 50 crore (inland letter

of credit limited to ` 25 crore)

` 0.96 crore 0.35% p.a payable upfront for import letter of credit and

0.40% p.a. payable upfront

for inland letter of credit

On demand - -

Addendum to Facility Letter between our Company and Yes Bank dated December 24, 2011

Letters of Credit

6 months ` 50 crore (inland letter

of credit limited to ` 25 crore)

Nil 0.35% p.a payable upfront for import letter of credit and

0.40% p.a. payable upfront

for inland letter of credit.

On demand - -


Buyer’s Credit

180 Days ` 50 crore Nil All inclusive 0.45% p.a.

payable upfront

On demand - -

Addendum to Facility Letter between our Company and Yes Bank

Bank guarantee (Performa

24 Months ` 15 crore Nil 0.50% p.a (all inclusive) to be recovered for actual no. of

On demand -

117

Sr. No.


g

Term / Tenure

Sanctioned Amount


30, 2012


Charges


dated December 24, 2011 nce) months guarantee is issued


Purchase Bill

Discounting

Up to 6 Months

` 25 crore Nil To be decided at the time of drawdown

On demand - -


Sales Bills Discountin

g

Up to 4 months

` 25 crore Nil To be decided at the time of drawdown

On demand - -

2. Addendum to Facility Letter between our Company and Yes Bank dated December 24, 2011

Cash Credit

1 year ` 50 lakh Nil To be decided at the time of drawdown

On demand - -

3. Working Capital Credit Facilities Between our Company and Citibank, N.A. dated December 20, 2011

Working capital

` 60 crore ` 13.45 crore At the rate mutually agreed

p.a.

On demand -

4. Renewal of Credit and Market Risk Facilities between our Company and The Bank of Tokyo – Mistubishi UFJ, Limited dated July 19, 2012

Short Term Loan

1 year ` 20 crore Nil Applicable short term rate

Bullet on Maturity of each draw

down

Subject to prior notice of

minimum 3 working days

and break funding cost

and prepayment penalty as

determined by

-

118

Sr. No.


g

Term / Tenure

Sanctioned Amount


30, 2012


Charges


Sublimits:

the bank at the time of

prepayment.

Renewal of Credit and Market Risk Facilities between our Company and The Bank of Tokyo – Mistubishi UFJ, Limited dated July 19, 2012

Overdraft Up to July 31, 2013

` 20 crore Nil Base rate + 5% - - -

Renewal of Credit and Market Risk Facilities between our Company and The Bank of Tokyo – Mistubishi UFJ, Limited dated July 19, 2012

Letter of Credit

Maximum term of

each LC is 6 months

` 10 crore Nil 0.35% p.a. till expiry of LC in case of sight and

0.35% till tenor of LC in case of

usance

- - -

5. Renewal of Credit and Market Risk Facilities between our Company and The Bank of Tokyo – Mistubishi UFJ, Limited dated July 19, 2012

Buyer’s Credit

Upto July 31, 2013

with a maximum

draw down

period of 180 days

and within 360 days from the date of

USD 0.22 crore

USD 0.17 crore LIBOR + Margin Bullet on Maturity on each draw

down

- -

119

Sr. No.


g

Term / Tenure

Sanctioned Amount


30, 2012


Charges


shipment

6. Facility agreement between our Company and and The Bank of Tokyo – Mistubishi UFJ, Limited dated November 14, 2012

Foreign currency term loan

4 years USD 1 crore USD 1 crore USD Libor + 1.25% p.a.

50% at the end of two years from

the first draw down

date and 50% at the end of four years from

the first draw down

date

- -

7. Money Borrowing and Lending Agreement between our Company and Hitachi Appliances Inc. dated November 12, 2008

Long term loan

JPY 93 crore JPY 46.50 crore 1.65% Final repayment

date of November 27, 2013

- -

Set forth below is a brief summary of the Supplemental Working Capital Consortium Agreement between our Company and State Bank of India, Standard Chartered Bank and ICICI Bank dated July 31, 2012:

State Bank of India

A. Nature of facility Sanctioned Limits

(` In Lakh)

Limit utilized as at November 30, 2012 (` In Lakh)

Repayment Security

120

A. Nature of facility Sanctioned Limits

(` In Lakh)

Limit utilized as at November 30, 2012 (` In Lakh)

Repayment Security

1. Cash Credit 1800@ 44 On demand Pari passu first charge by way of extension of hypothecation and/or pledge of the company’s Current Assets, namely Stocks of Raw Materials, Semi – finished and Finished Goods, Stores and Spares not relating to plant and machinery [consumable stores & spares], Bills receivable and book debts and all other movables of the Company/of the Company pertaining to the said division, both present and future, excluding such movables and may be permitted by the said bank from time to time. Also by extension of Mortgage by way of pari Passu first basis in favour of the said Banks ranking after the charges created and/or to be created in favour of the said banks to the Company on the Company’s immovable and movable properties [other than Current Assets] located at ‘Survey No. 176p, Survey No. 182 and Survey No.177p (total admeasuring 9960 Square Meters) of Karananagar (Sim), Taluka Kadi, District Mehesana and Sub District Kadi: and all the movable fixed assets both present and future in a form and manner acceptable to the said Banks.

EPC/PCFC (Within overall CC limit) 1(100) Nil

2. Letter of Credit *4600 611

3. Bank Guarantee *400 8

4. Forward Contract Limit

189 Nil

Total 6989 663

@ One way inter changeability from FB limits to NFB limits up to ` 10.00 crore * 100% interchangeability between LC and BG limit. 1. within overall CC limit Standard Chartered Bank B. Nature of Facility Sanctioned

Limits (` In Lakh)

Limit utilized as at November 30,

2012 (` In Lakhs)

Repayment Security

1. Cash Credit (A) -- On demand Pari passu first charge by way of extension of hypothecation and/or pledge of the company’s current assets, namely Stocks of raw materials, semi – finished and finished goods, stores and spares not relating to plant and machinery [consumable stores & spares], bills receivable and book debts and all other movables of the Company/of the Company pertaining to the said division, both present and future, excluding such movables and may be permitted by the said bank from time to time.

WCDL 6000 Nil EPC/PCFC/PSCFC/PSC/Export Bills

Discounting/Purchase (Within overall WCDL Limit)

1(6000) Nil

Overdraft 1(6000) Nil Letter of credit 1(6000) 2. Letter of Credit (B) 7000

823

121

B. Nature of Facility Sanctioned Limits

(` In Lakh)


2012 (` In Lakhs)

Repayment Security

Bond and Guarantee/ Financial Guarantees/SBLC (Trade)

2(2500) 1 Also by extension of Mortgage by way of Pari Passu first basis in favour of the said Banks ranking after the charges created and/or to be created in favour of the said banks to the Company on the Company’s immovable and movable properties [other than Current Assets] located at ‘Survey No. 176p, Survey No. 182 and Survey No.117p (total admeasuring 9960 Square Meters) of Karananagar (Sim), Taluka Kadi, District Mehesana and Sub District Kadi: and all the movable fixed assets both present and future in a form and manner acceptable to the said Banks.

Bond and Guarantee 2(200) Payment Undertaking -- Import Invoice Financing 2(3000) Local Bills Discounted 2(3000) Import Loan/ Buyer’s Credit -- Financial Guarantees/Standby LC

(trade)/ Payment Undertaking 2(7000) 4,272

Receivables Services 2(3000) Total (A+B) 13000 5,096 1. within Overall WCDL Limit 2. Sub Limit of Letter of Credit ICICI Bank Limited C. Nature of Facility Sanctioned

Limits (` In Lakh)


2012 (` In Lakhs)

Repayment Security

1. Cash Credit (A) 2000 106 On Demand Pari passu first charge by way of extension of hypothecation and/or pledge of the company’s Current Assets, namely Stocks of Raw Materials, Semi – finished and Finished Goods, Stores and Spares not relating to plant and machinery [consumable stores & spares], Bills receivable and book debts and all other movables of the Company/of the Company pertaining to the said division, both present and future, excluding such movables and may be permitted by the said bank from time to time. Also by extension of Mortgage by way of Pari Passu first basis in favour of the said Banks ranking after the charges created and/or to be created in favour of the said banks to the Company on the Company’s immovable and movable properties [other than Current Assets] located at ‘Survey No. 176p, Survey No. 182 and Survey No.117p (total admeasuring 9960 Square

Letter of Credit 1(2000) Nil Import Loan/Buyers’ Credit 3(2000) WCDL 1(2000) Nil EPC/FUBD/PCFC/FBP/IBP/IBD/PS CFC

(Within overall CC limit) 1(2000) Nil

2. Letter of Credit (B) 1500 Nil Bond and Guarantee/Financial

Guarantees/SBLC (Trade) -- Nil

Bank Guarantees 2(1500) 498 Import Loan/Buyers’ Credit 2(1500)

Nil

Buyers’ Credit Nil Total (A+B) 3500.00 604

122

C. Nature of Facility Sanctioned Limits

(` In Lakh)


2012 (` In Lakhs)

Repayment Security

Meters) of Karananagar (Sim), Taluka Kadi, District Mehesana and Sub District Kadi: and all the movable fixed assets both present and future in a form and manner acceptable to the said Banks.

1. Within overall CC Limit 2. Sub Limit of Letter of Credit 3. Sub Limit of Letter of Credit of ` 2000.00 * Both ways interchangeability between LC and BG limit Note: Our Company has entered into a Supplemental Joint Deed of Hypothecation with State Bank of India, Standard Chartered Bank and ICICI Bank dated July 31, 2012.

123

SECTION VII – LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATIONS AND DEFAULTS

Except as described below, there are no outstanding litigations including, suits, criminal or civil prosecutions and taxation related proceedings against us that would have a material adverse effect on our business. Further, there are no defaults, non-payment of statutory dues including, institutional/ bank dues and dues payable to holders of any debentures, bonds and fixed deposits that would have a material adverse effect on our business other than unclaimed liabilities against us as of the date of this Draft Letter of Offer. Further, except as disclosed below, we are not aware of any litigation involving moral turpitude, material violations of statutory regulations and or proceedings relating to economic offences which have arisen in the last ten years. Further, except as disclosed below, we are not subject to: a. Any outstanding litigations which do not impact our future revenues which impact more than 1% of our

networth, for the last completed financial year.

b. Any outstanding litigations which impact our future revenues, which impacts more than 1% of our revenue, for the last completed financial year.

Further from time to time, we have been and continue to be involved in legal proceedings filed by and against us, arising in the ordinary course of our business. These legal proceedings are both in the nature of civil, labour and tax proceedings. We believe that the number of proceedings in which we are/ were involved is not unusual for a company of our size doing business in India. Cases filed against our Company

1. Mr. N. K. Choudhury, Mr. S.K. Choudhury and Financial Management Services Limited (“Plaintiffs”) filed a title suit bearing No. 1810 of 2003 and 1834 of 2003 before City Civil Court, Kolkata for declaration, injunction etc. against the Company, SEBI and Ind Global Corporate Finance Limited, alleging that the Company was not entitled to make the rights issues of equity shares to the equity shares holders until the Company comply with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and/or until the final disposal of show cause notice issued on June 13, 2003 to Promoter(s) of the Company. The Plaintiffs also prayed for a declaration that Hitachi Home & Life Solutions Inc., Japan (now Hitachi Appliances Inc., Japan) was bound to make an open offer to public for acquisition of 20% equity shares of the Company, which was paid to Asman Investments Limited, a company of Lalbhai Group by the Promoters of the Company for acquisition of 19.37% of the paid up equity shares of the Company. The Plaintiffs also moved an application under order 39 rule 1 & 2 read with Section 151 Civil Procedure Code before the City Civil Court, Kolkata for ex-party order/injunction on December 16, 2003, wherein the Court granted an ad-interim order on December 17, 2003 in the form of status quo in terms of prayer of the Plaintiffs and issued a show cause notice to the Company. The Company preferred an appeal against the order dated December 17, 2003 and December 20, 2003 being. F.A.M.T. No. 59 of 2004 and F.A.M.T No. 62 of 2004 before the Calcutta High Court, praying to stay the impugned order dated December 17, 2003 and December 20, 2003. The Calcutta High Court on January 15, 2004 stayed the operation of the order of City Civil Court, Kolkata for a period of 12 weeks from date of the order. The Plaintiffs also moved another application for mandatory injunction before the City Civil Court, Calcutta on October 08, 2004 praying that the Company be directed to allow the Plaintiffs to exercise their rights to under the rights issue and by accepting Plaintiffs application and cheque towards their rights entitlement. Both the suit and appeal at City Civil Court, Kolkata and Calcutta High Court, respectively are pending for hearing.

2. The Assessing Officer, ACIT (OSD), Circle – 4, Ahmedabad issued a notice dated March 28, 2007 to the Company regarding reopening of the assessment for the assessment year 2000 – 2001 under section 148 of Income Tax Act, 1961. The Company vide its letter dated April 9, 2007 requested the copy of reasons recorded for the reopening of the case. The Assessing Officer provided its reasons vide a letter dated August 24, 2007. Post receipt of copy of reasons, the Company filed its detailed submission on September 25, 2007 on the allowing sales and warranty commission and other items as mentioned in the assessment order. The Assessing Officer overruled the objections vide its letter dated December 19, 2007 and directed the Company to comply the direction given by him on very next day i.e. December 20, 2007. Further, the

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said letter was served on the Company only on the December 20, 2007. The Assessing Officer passed order dated December 24, 2007 under Section 144 read with Section 147 of the Income Tax Act, 1961 disallowing various claims of expenses made by the Company and raised demand of ` 5,95,50,824 assessing income at ` 7,77,51,670. Being aggrieved of which the Company filed an appeal bearing No. CIT (A) - VIII/AC – 4/218/2007-08 on January 25, 2008 before the Commissioner of Income Tax, (Appeals) – VIII, Ahmedabad. The Commissioner of Income Tax (Appeals) after hearing the Company passed an order dated March 25, 2008 partly allowing the appeal and directed the concerned Assessing Officer to rework the interest while giving effect to the order of Commissioner of Income Tax (Appeals). The Assessing Officer, ACIT (OSD), Circle – 4, Ahmedabad has filed an appeal bearing No.2361/Ahd/2008 before Income Tax Appellate Tribunal Ahmedabad on June 20, 2008 against the order of Commissioner of Income Tax (Appeals) on grounds that it erred in law and facts of the case and the order dated March 25, 2008 be cancelled and that of Assessing Officer be restored. The next date of hearing on the matter is December 13, 2012.

3. The Assessing Officer, ACIT (OSD), Circle – 4, Ahmedabad issued a notice dated March 28, 2007 to the Company regarding reopening of the assessment for the assessment year 2001 – 2002 under section 148 of the Income Tax Act, 1961 The Company vide its letter dated April 9, 2007 requested the copy of reasons recorded for the reopening of the case. The Assessing Officer provided its reasons vide a letter dated August 24, 2007. Post receipt of copy of reasons, the Company filed its detailed submission on September 25, 2007 on the allowing sales and warranty commission and other items as mentioned in the assessment order. The Assessing Officer overruled the objections vide its letter dated December 19, 2007 and directed the Company to comply the direction given by him on very next day i.e. December 20, 2007. Further, the said letter was served on the Company only on the December 20, 2007. The Assessing Officer passed order dated December 24, 2007 under Section 144 read with Section 147 of the Income Tax Act, 1961 disallowing various claims of expenses made by the Company and raised demand of ` 8,73,37,561 assessing income at ` 11,78,53,474. Being aggrieved of which the Company filed an appeal bearing No. CIT (A) - VIII/AC – 4/219/2007-08 on January 25, 2008 before the Commissioner of Income Tax, (Appeals) – VIII, Ahmedabad. The Commissioner of Income Tax (Appeals) after hearing the Company passed an order dated March 25, 2008 partly allowing the appeal and directed to the concerned assessing officer to allow deduction u/s 80 IA on the revised income and directed to rework the interest while giving effect to the order of Commissioner of Income Tax (Appeals). The Assessing Officer, ACIT (OSD), Circle – 4, Ahmedabad has filed an appeal bearing No.2362/Ahd/2008 before Income Tax Appellate Tribunal Ahmedabad on June 20, 2008 against the order of Commissioner of Income Tax (Appeals) on grounds that it erred in law and facts of the case and the order dated March 25, 2008 be cancelled and that of Assessing Officer be restored. The next date of hearing on the matter is December 13, 2012.

4. The Assessing Authority, Commercial Taxes, Circle – 1, Jammu issued four demand notices dated June 30, 2008 to the Company pursuant to the order under Section 39 (5) of VAT ACT, 2005 for the period 2005 - 2006. The Company had claimed input tax credits on the purchases done during period 2005 – 2006. Pursuant to the notice dated February 08, 2008 the assessing authority had directed the Company to produce the documents or actual payment of tax on the purchases done for the period 2005 – 2006 in support of the claim. It was alleged by the assessing authorities that Section 21 (1) of Jammu & Kashmir VAT Act, 2005 provided that for the purpose of calculating the net tax payable by a registered dealer for any tax period after being registered, an input tax allowed to such registered dealer for the tax paid or payable in respect of all taxable sales other than the sales as may be prescribed or purchases under Section 14 during that period. Since input tax credit claims are on the bills raised by the industries in Jammu registered under Remission Scheme under SRO 91, the VAT charged in these invoices are after allowing an equal amount of price adjustment, the input tax credits claims were disallowed and demand notice issued for the taxes adjusted with such input tax credit claims. Company had produced C forms only for ` 1,71,38,631.46 and as such under SRO 24 dated January 30, 2004, exemption was allowed on the said sales and for remaining sales unsupported with C forms was taxed which were sold after collecting full central sales tax being equal to value added tax amount. The accessing authority vide its order dated June 30, 2008 allowed the exemption under SRO 24 Dated January 30, 2004 and for remaining sales unsupported with C forms were stated to be taxed along with interest. The aggregate demand made in the matter received by the Company is ` 17.79 Lakhs. The Company preferred an appeal bearing No. 140/2009, 958/2008 and 1403/2008 before the High Court of Jammu & Kashmir at Jammu, wherein vide order dated February 25, 2009, the High Court passed an conditional interim stay order effective only after depositing the aggregate amount of demand notices with the Judicial Registrar Jammu & Kashmir High Court for three months in first instant. Since the petition has not yet come up for hearing and the order has not been challenged by the Assessing Authority, the Registrar has not refunded the deposit and the stay is continuing in the matter.

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The Assessing Authority, Sales Tax Circle – 1, Jammu and Kashmir had also issued notice(s) bearing No. 2401/010/1 dated February 01, 2010 for the assessment year 2006 – 2007 under section 39 of the Jammu & Kashmir Value Added Tax Act, 2005 and bearing No. 2404/010/1dated February 01, 2010 under section (a) Sub Sec. (8) (9) and (10) (b) of sub section (18) of section 7 of the Jammu & Kashmir General Sales Tax ACT, 1962 to the Company, directing to appear before the assessing authority on March 02, 2010 along with books of accounts, tax invoices and other documents/ evidence. The Company has filed an original writ petition bearing number 288/2010 before the Jammu & Kashmir High Court on March 19, 2010 alleging that similar issue was challenged by the Company and was stayed by the Jammu & Kashmir High Court by an order dated February 25, 2009 in OWP No. 958/2008 filed by the Company. The Company has prayed that in view of OWP No. 958/2008 being outstanding, the hearing of the notices issued by the department be stayed till the final hearing of the OWP No. 958/2008. The High Court by an order dated March 20, 2010 directed to both the parties to maintain status quo till next date of hearing and issued notice within four weeks. The matter is currently pending for hearing.

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GOVERNMENT AND OTHER APPROVALS

We have received the necessary consents, licenses, permissions and approvals from the Government of India and various governmental agencies required for our present business and to undertake the Issue and no further material approvals are required for carrying on our present activities. In addition, except as mentioned in this chapter “Government and Other Approvals”, as on the date of this Draft Letter of Offer, there are no pending regulatory and government approvals and no pending material renewals of licenses or approvals in relation to the activities undertaken by us or in relation to the Issue.

I. Approvals for the Issue:

1. Board resolution dated October 18, 2012 approving the Issue.

2. In-principle approval from BSE dated [●].

3. In-principle approval from NSE dated [●].

4. RBI approval dated [●] received from RBI in relation to renunciation of rights entitlement by and to persons resident outside India.

II. Approvals for its business:

Except as stated below under the heading “Government Approvals”, we have received the necessary consents, licenses, permissions and approvals from the Government of India and various governmental agencies required for our present business and no further material approvals are required for carrying on our present activities.

III. Pending Approvals and Registrations:

As on date of this Draft Letter of Offer the following applications are pending with respect to our business:

1. Application dated October 09, 2012 addressed to the Inspector of Factories & Boilers, Jammu

Provinance, Jammu (J&K) for renewal of Factory License for the year 2013.

2. Application dated December 10, 2010 addressed to the Registrar of Trademarks for granting registration of trademark i-clean under class 11.

3. Application dated December 20, 2010 addressed to the Registrar of Trademarks for granting registration of trademark Summer QC under class 11.

4. Application dated December 22, 2011 addressed to the Registrar of Trademarks for granting

registration of trademark Kampa under class 11. 5. Application dated April 08, 2011 addressed to the Registrar of Trademarks for granting

registration of trademark Ryoku under class 9.

6. Application dated December 22, 2011 addressed to the Registrar of Trademarks for granting registration of trademark Sugoi under class 11.

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OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for the Issue The Issue of Equity Shares to the Eligible Equity Shareholders is being made in accordance with the resolution passed by our Board of Directors under Sections 81(1) and other provision of the Companies Act, through circular resolution on October 18, 2012. The Board of Directors or Committee thereof in their meeting held on [ ] have determined the Issue Price as ` [ ] per Equity Share and the Rights Entitlement as [ ] Equity Share(s) for every [ ] fully paid up Equity Share(s) held on the Record Date. The Issue Price has been arrived at in consultation with the Lead Manager. Prohibition by SEBI or RBI Neither we, the Promoters, the Promoter Group entities, the Directors nor the persons in control of the corporate Promoters or any other company to which the above persons are associated as promoters, directors or persons in control, have been prohibited from accessing or operating in the capital markets, or restrained from buying, selling or dealing in securities under any order or direction passed by the SEBI. None of the Directors of the Company are associated with the capital markets in any manner. SEBI has not initiated action against any entities with which the Director are associated. Further neither us, the Promoters, the Promoter Group entities, the Group Companies nor the relatives of the Promoters have been declared willful defaulters by the RBI or any other authority and no violations of securities laws have been committed by them in the past and no proceedings in relation to such violations are currently pending against them. Except as stated in the chapter titled “Our Management” on page 64, none of our directors hold current or have held directorships in the last five years in a listed company whose shares have been suspended from trading on BSE or NSE or in a listed company that has been/ was delisted from any stock exchange. Eligibility for the Issue We are an existing company registered under the Companies Act and our Equity Shares are listed on BSE and NSE. We are eligible to undertake the Issue in terms of Chapter IV of the SEBI ICDR Regulations. We are eligible to make disclosures in this Draft Letter of Offer as per clause (5) Part E of Schedule VIII of the SEBI ICDR Regulations as we are in compliance with the following: (a) we have been filing periodic reports, statements and information in compliance with the listing agreement

for the last three years immediately preceding the date of filing this Letter of Offer with SEBI; (b) the reports, statements and information referred to in sub-clause (a) above are available on the website of

the BSE and the NSE which are recognised stock exchange with nationwide trading terminals; (c) we have an investor grievance-handling mechanism which includes meeting of the Shareholders’ or

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

Further, during the financial year immediately preceding the date of the Letter of Offer we have complied with respect to the following: • provisions of the Listing Agreement with respect to reporting and compliance under clauses 35, 40A, 41

and 49;

• provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997/ the Takeover Regulations, especially with respect to reporting pertaining to disclosure of changes in shareholding and

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pertaining to disclosure of pledged shares; and

• provisions of the SEBI (Prohibition of Insider Trading) Regulations, 1992, with respect to reporting in terms of regulation 13.

DISCLAIMER CLAUSE OF SEBI AS REQUIRED, A COPY OF THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THE DRAFT LETTER OF OFFER TO SEBI SHOULD NOT, IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE, OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THIS DRAFT LETTER OF OFFER. THE LEAD MANAGER, ICICI SECURITIES LIMITED, HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THIS DRAFT LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THIS DRAFT LETTER OF OFFER, THE LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE THE LEAD MANAGER, ICICI SECURITIES LIMITED, HAVE FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED DECEMBER 13, 2012 WHICH READS AS FOLLOWS: (1) WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO

LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS, ETC. AND OTHER MATERIAL IN CONNECTION WITH THE FINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE ISSUE;

(2) ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY,

ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, AND INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS AND OTHER PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT:

(a) THE DRAFT LETTER OF OFFER FILED WITH SEBI IS IN CONFORMITY WITH

THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE; (b) ALL THE LEGAL REQUIREMENTS RELATING TO THE ISSUE AS ALSO THE

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

(c) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLICABLE LEGAL REQUIREMENTS.

(3) WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN

THE DRAFT LETTER OF OFFER ARE REGISTERED WITH SEBI AND THAT UNTIL DATE SUCH REGISTRATION IS VALID.

(4) WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITERS

TO FULFIL THEIR UNDERWRITING COMMITMENTS – NOT APPLICABLE

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(5) WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN OBTAINED FOR INCLUSION OF THEIR SPECIFIED SECURITIES AS PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIED SECURITIES PROPOSED TO FORM PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN SHALL NOT BE DISPOSED/ SOLD/ TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS/ RED HERRING PROSPECTUS WITH SEBI TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT RED HERRING PROSPECTUS/ RED HERRING PROSPECTUS – NOT APPLICABLE

(6) WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOARD OF

INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, WHICH RELATES TO SPECIFIED SECURITIES INELIGIBLE FOR COMPUTATION OF PROMOTERS CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE SAID REGULATION HAVE BEEN MADE IN THE DRAFT RED HERRING PROSPECTUS / RED HERRING PROSPECTUS – NOT APPLICABLE

(7) WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE (C)

AND (D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS’ CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO SEBI. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE ISSUER ALONG WITH THE PROCEEDS Of THE PUBLIC ISSUE – NOT APPLICABLE

(8) WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE COMPANY FOR WHICH THE

FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE OBJECTS LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF THE COMPANY AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.

(9) WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE

THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB-SECTION (3) OF SECTION 73 OF THE COMPANIES ACT, 1956 AND THAT SUCH MONEYS SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES MENTIONED IN THE DRAFT LETTER OF OFFER. WE FURTHER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION. – NOTED FOR COMPLIANCE, SUBJECT TO COMPLIANCE WITH REGULATION 56 OF THE SEBI ICDR REGULATIONS

(10) WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT LETTER OF

OFFER THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR PHYSICAL MODE.

(11) WE CERTIFY THAT ALL THE APPLICABLE DISCLOSURES MANDATED IN THE

SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.

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(12) WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE DRAFT LETTER OF OFFER:

(a) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME, THERE

SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY SHARES OF THE COMPANY; AND

(b) AN UNDERTAKING FROM THE COMPANY THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY SEBI FROM TIME TO TIME.

(13) WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO

ADVERTISEMENT IN TERMS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 WHILE MAKING THE ISSUE.

(14) WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE HAS

BEEN EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESS BACKGROUND OR THE ISSUER, SITUATION AT WHICH THE PROPOSED BUSINESS STANDS, THE RISK FACTORS, PROMOTERS EXPERIENCE, ETC.

(15) WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITH

THE APPLICABLE PROVISIONS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE DRAFT LETTER OF OFFER WHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY.

(16) WE ENCLOSE STATEMENT ON ‘PRICE INFORMATION OF PAST ISSUES HANDLED BY

MERCHANT BANKER BELOW (WHO IS RESPONSIBLE FOR PRICING THIS ISSUE)’, AS PER FORMAT SPECIFIED BY SEBI THROUGH THE CIRCULAR DATED SEPTEMBER 27, 2011 – NOT APPLICABLE

(17) WE CERTIFY THAT PROFITS FROM RELATED PARTY TRANSACTIONS HAVE ARISED

FROM LEGITIMATE BUSINESS TRANSACTIONS.

THE FILING OF THIS DRAFT LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE COMPANIES ACT OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCE AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MANAGER ANY IRREGULARITIES OR LAPSES IN THIS DRAFT LETTER OF OFFER. Caution Disclaimer clauses from the Company and the Lead Manager We and the Lead Manager accept no responsibility for statements made otherwise than in this Draft Letter of Offer or in any advertisement or other material issued by us or by any other persons at our instance and anyone placing reliance on any other source of information would be doing so at his own risk. We and the Lead Manager 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 this Draft Letter of Offer with SEBI. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this Draft Letter of Offer. You must not rely on any unauthorized information or representations. This Draft Letter of Offer is an offer to sell only the Equity Shares and rights to purchase the Equity Shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this Draft Letter of Offer is current only as of its date.

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Investors who invest in the Issue will be deemed to have represented to us and Lead Manager and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares, and are relying on independent advice/ evaluation as to their ability and quantum of investment in the Issue. Disclaimer with respect to jurisdiction This Draft Letter of Offer has been prepared under the provisions of Indian laws and the applicable rules and regulations thereunder. Any disputes arising out of the Issue will be subject to the jurisdiction of the appropriate court(s) in Mumbai, India only. Designated Stock Exchange The Designated Stock Exchange for the purpose of the Issue will be [ ]. Disclaimer Clause of BSE As required, a copy of this Draft Letter of Offer has been submitted to the BSE. The Disclaimer Clause as intimated by the BSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offer prior to filing with the Stock Exchanges. Disclaimer Clause of NSE As required, a copy of this Draft Letter of Offer has been submitted to the NSE. The Disclaimer Clause as intimated by the NSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offer prior to filing with the Stock Exchanges. Filing This Draft Letter of Offer has been filed with the Corporation Finance Department of the SEBI, located at Unit No: 002, Ground Floor, Sakar I, Near Gandhigram Railway Station, Opp. Nehru Bridge Ashram Road, Ahmedabad - 380 009, India for its observations. After SEBI gives its observations, the Letter of Offer will be filed with the Designated Stock Exchange as per the provisions of the Companies Act. Selling Restrictions The distribution of this Draft Letter of Offer and the issue of Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by the legal requirements prevailing in those jurisdictions. Persons into whose possession this Draft Letter of Offer may come are required to inform themselves about and observe such restrictions. We are making this Issue of Equity Shares on a rights basis to our Eligible Equity Shareholders and will dispatch the Letter of Offer/ Abridged Letter of Offer and CAFs to the Eligible Equity Shareholders who have provided an Indian address. No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that the Draft Letter of Offer is filed with SEBI for observations. Accordingly, the rights or Equity Shares may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be distributed in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, under those circumstances, this Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the issue of the rights or Equity Shares or rights, distribute or send the same in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Equity Shares or the rights referred to in this Draft Letter of Offer. Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in the Company’s affairs from the date hereof or that the information contained herein is correct as at any time subsequent to this date.

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IMPORTANT INFORMATION FOR INVESTORS – ELIGIBILITY AND TRANSFER RESTRICTIONS

As described more fully below, there are certain restrictions regarding the rights and Equity Shares that affect potential investors. These restrictions are restrictions on the ownership of Equity Shares by such persons following the offer. The rights and the Equity Shares have not been and will not be registered under the Securities Act or any other applicable law of the United States and, unless so registered, may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act) (“U.S. Persons”) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The rights and the Equity Shares have not been and will not be registered, listed or otherwise qualified in any jurisdiction outside India and may not be offered or sold, and bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction. Until the expiry of 40 days after the commencement of the Issue, an offer or sale of rights or Equity Shares within the United States by a dealer (whether or not it is participating in the Issue) may violate the registration requirements of the Securities Act. Eligible Investors The rights or Equity Shares are being offered and sold only to persons who are outside the United States and are not U.S. Persons, nor persons acquiring for the account or benefit of U.S. Persons, in offshore transactions in reliance on Regulation S under the Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. All persons who acquire the rights or Equity Shares are deemed to have made the representations set forth immediately below. Equity Shares and Rights Offered and Sold in this Issue Each purchaser acquiring the rights or Equity Shares, by its acceptance of this Draft Letter of Offer and of the rights or Equity Shares, will be deemed to have acknowledged, represented to and agreed with us and the Lead Manager that it has received a copy of this Draft Letter of Offer and such other information as it deems necessary to make an informed investment decision and that: (1) the purchaser is authorized to consummate the purchase of the rights or Equity Shares in compliance with

all applicable laws and regulations; (2) the purchaser acknowledges that the rights and Equity Shares have not been and will not be registered

under the Securities Act or with any securities regulatory authority of any state of the United States and, accordingly, may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act;

(3) the purchaser is purchasing the rights or Equity Shares in an offshore transaction meeting the

requirements of Rule 903 of Regulation S under the Securities Act; (4) the purchaser and the person, if any, for whose account or benefit the purchaser is acquiring the rights or

Equity Shares, is a non-U.S. Person and was located outside the United States at each time (i) the offer was made to it and (ii) when the buy order for such rights or Equity Shares was originated, and continues to be a non-U.S. Person and located outside the United States and has not purchased such rights or Equity Shares for the account or benefit of any U.S. Person or any person in the United Sates or entered into any arrangement for the transfer of such rights or Equity Shares or any economic interest therein to any U.S. Person or any person in the United States;

(5) the purchaser is not an affiliate of the Company or a person acting on behalf of an affiliate; (6) if, in the future, the purchaser decides to offer, resell, pledge or otherwise transfer such rights or Equity

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Shares, or any economic interest therein, such rights or Equity Shares or any economic interest therein may be offered, sold, pledged or otherwise transferred only (A) outside the United States in an offshore transaction complying with Rule 903 or Rule 904 of Regulation S under the Securities Act and (B) in accordance with all applicable laws, including the securities laws of the states of the United States. The purchaser understands that the transfer restrictions will remain in effect until the Company determines, in its sole discretion, to remove them, and confirms that the proposed transfer of the rights or Equity Shares is not part of a plan or scheme to evade the registration requirements of the Securities Act;

(7) the purchaser agrees that neither the purchaser, nor any of its affiliates, nor any person acting on behalf of

the purchaser or any of its affiliates, will make any “directed selling efforts” as defined in Regulation S under the Securities Act in the United States with respect to the rights or the Equity Shares;

(8) the purchaser understands that such rights or Equity Shares (to the extent they are in certificated form),

unless the Company determine otherwise in accordance with applicable law, will bear a legend substantially to the following effect:

THE EQUITY SHARES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. (9) the purchaser agrees, upon a proposed transfer of the rights or the Equity Shares, to notify any purchaser

of such rights or Equity Shares or the executing broker, as applicable, of any transfer restrictions that are applicable to the rights or Equity Shares being sold;

(10) the Company will not recognize any offer, sale, pledge or other transfer of such rights or Equity Shares

made other than in compliance with the above-stated restrictions; and (11) the purchaser acknowledges that the Company, the Lead Manager, their respective affiliates and others

will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of such acknowledgements, representations and agreements deemed to have been made by virtue of its purchase of such rights or Equity Shares are no longer accurate, it will promptly notify the Company, and if it is acquiring any of such rights or Equity Shares as a fiduciary or agent for one or more accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of such account.

Each person in a Member State of the EEA which has implemented the Prospectus Directive (each, a “Relevant Member State) who receives any communication in respect of, or who acquires any rights or Equity Shares under, the offers contemplated in this Draft Letter of Offer will be deemed to have represented, warranted and agreed to and with each Lead Manager and the Company that in the case of any rights or Equity Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive: (i) the rights or Equity Shares acquired by it in the placement have not been acquired on behalf of, nor have

they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior consent of the Lead Manager has been given to the offer or resale; or

(ii) where rights or Equity Shares have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those rights or Equity Shares to it is not treated under the Prospectus Directive as having been made to such persons.

For the purposes of this provision, the expression an “offer of Equity Shares to the public” in relation to any of the rights or Equity Shares in any Relevant Member States means the communication in any form and by any means of sufficient information on the terms of the offer and the rights or Equity Shares to be offered so as to enable an investor to decide to purchase or subscribe for the rights or Equity Shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member

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State. Listing The existing Equity Shares are listed on the BSE and the NSE. We have made applications to the BSE and the NSE for obtaining in-principle approval in respect of the Rights Issue Equity Shares. We will apply to the BSE and the NSE for listing and trading of the Rights Issue Equity Shares. If the permission to deal in and for an official quotation of the securities is not granted by any of the Stock Exchanges mentioned above, we shall forthwith repay, without interest, all monies received from applicants in pursuance of the Letter of Offer. We will issue and dispatch Allotment advice/ share certificates/demat credit and/or letters of regret along with refund order or credit the Allotted Equity Shares to the respective beneficiary accounts, if any, within a period of 15 days from the Issue Closing Date. If in either of the above cases money is not repaid within eight days from the day we become liable to repay it, (i.e. 15 days after the Issue Closing Date or the date of the refusal by the Stock Exchange(s), whichever is earlier), we and every Director who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to pay the money with interest as prescribed under Section 73 of the Companies Act. Consents Consents in writing of the Directors, the Auditor, the Lead Manager, the Legal Counsel, the Registrar to the Issue and the Bankers to the Company to act in their respective capacities have been obtained and such consents have not been withdrawn up to the date of this Draft Letter of Offer. S.R. Batliboi & Associates, our Auditors, have given their written consent for the inclusion of their report appearing in this Draft Letter of Offer and such consent and report have not been withdrawn up to the date of this Draft Letter of Offer. Expert Except as stated below, our Company has not obtained any expert opinions: Our Company has received written consent from the Auditor namely, S.R. Batliboi & Associates, Chartered Accountants to include its name as an expert under Section 58 of the Companies Act in this Draft Letter of Offer in relation to the report of the Auditor dated May 24, 2012 and December 10, 2012, statement of tax benefits dated December 12, 2012 included in this Draft letter of Offer and such consent has not been withdrawn as of the date of this Draft Letter of Offer. However, the term “expert” shall not be construed to mean an “expert”" as defined under the Securities Act. Issue Related Expenses The Issue related expenses include, inter alia, Lead Managers’ fee, printing and distribution expenses, advertisement and marketing expenses and Registrar, legal and depository fees and other expenses and are estimated at ` [ ] (approximately [ ] % of the total Issue size) and will be met out of the proceeds of the Issue.

Activity Expense (in ` Lakhs)*

Expense (% of total expenses)*

Expense (% of Issue Size)*

Fees of bankers to the Issue, legal advisor, for other professional services and statutory fees

[●] [●] [●]

Fees of the Lead Manager [●] [●] [●] Fees of Registrar to the Issue [●] [●] [●] Commission of SCSBs [●] [●] [●] Advertising expenses [●] [●] [●] Listing fees [●] [●] [●] Printing and stationery expenses [●] [●] [●]

Total estimated Issue expenses [●] [●] [●]

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*Amount will be finalized at the time of filing the Letter of Offer and determination of Issue Price and other details. Previous Issues The Company has not made a public issue or rights issue of equity shares in the last 5 years. The Company has no listed group companies, subsidiaries and/or associates in India which have made any capital issuance in the last 3 years. Investor Grievances and Redressal System We have adequate arrangements for the redressal of investor complaints in compliance with the corporate governance requirements under the Listing Agreements. Additionally, we have been registered with the SEBI Complaints Redress System (“SCORES”) as required by the SEBI Circular no. CIR/ OIAE/ 2/ 2011 dated June 3, 2011. The share transfer and dematerialization for us is being handled by Sharepro Services (India) Private Limited, Registrar and Share Transfer Agent, which is also the Registrar to the Issue. Letters are filed category wise after being attended to. All investor grievances received by us have been handled by the Registrar and Share Transfer agent in consultation with the compliance officer. Our Shareholders/ Investors’ Grievance Committee comprises Mr. L G Ramakrishnan and Mr. Motoo Morimoto, Mr. Mukesh Patel and Mr. Anil Shah. Our Shareholders’/ Investors’ Grievance Committee oversees the reports received from the Registrar and Share Transfer agent and facilitates the prompt and effective resolution of complaints from our shareholders and investors Investor Grievances arising out of the Issue The investor grievances arising out of the Issue will be handled by Sharepro Services (India) Private Limited, the Registrar to the Issue. The Registrar will have a separate team of personnel handling post-Issue correspondences only. The agreement between us and the Registrar provides for retention of records with the Registrar for a period of at least one year from the last date of dispatch of Allotment Advice/ share certificate/ demat credit/ refund order to enable the Registrar to redress grievances of Investors. All grievances relating to the Issue may be addressed to the Registrar to the Issue or the SCSB in case of ASBA Applicants giving full details such as folio no. / demat account no., name and address, contact telephone/ cell numbers, email id of the first applicant, number of Equity Shares applied for, CAF serial number, amount paid on application and the name of the bank/ SCSB and the branch where the CAF was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details of the Renouncee should be furnished. The Company is registered with the SEBI Complaints Redress System (“SCORES”) as required by the SEBI Circular no. CIR/ OIAE/ 2/ 2011 dated June 3, 2011. Consequently, investor grievances are tracked online by us. The average time taken by the Registrar for attending to routine grievances will be within 30 days from the date of receipt of complaints. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavour of the Registrar to attend to them as expeditiously as possible. We undertake to resolve the Investor grievances in a time bound manner. Registrar to the Issue Sharepro Services (India) Private Limited 13 AB, Samhita Warehousing Complex, Sakinaka Telephone Exchange Lane, Off Andheri-Kurla Road, Sakinaka, Andheri (East), Mumbai – 400 072, Maharashtra, India

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Tel: +91 22 6191 5400 Fax: +91 22 6191 5444 Website: www.shareproservices.com Email: [email protected] Contact Person: Mr. Prakash A. Khare / Anand Moolya SEBI Registration No: INR000001476 Investors may contact the Compliance Officer in case of any pre-Issue/ post -Issue related problems such as non-receipt of Allotment advice/ share certificates/ demat credit/ refund orders etc. The contact details of the Compliance Officer are as follows: Mr. Parag Dave Company Secretary and Compliance Officer 9th Floor, Abhijeet-I, Mithakhali Six Roads, Ahmedabad - 380 006 Tel: +91 79 30414800 Fax: +91 79 30414999 Email: [email protected], [email protected] Website: http://www.hitachi-hli.com Status of Complaints a. Total number of complaints received during Fiscal 2010: 2 Complaints b. Total number of complaints received during Fiscal 2011: 11 Complaints c. Total number of complaints received during Fiscal 2012: 7 Complaints

d. Time normally taken for disposal of various types of investor complaints:

Share transfer process: Within 15 days Share transmission process: Within 15 days Other Complaints: Within 10 to 15 days from the receipt of the Complaint

Status of outstanding investor complaints As on November 30, 2012, there were no outstanding investor complaints. Changes in Auditors during the last three years There has been no change in Auditors during last three years. Minimum Subscription If we do not receive the minimum subscription of 90% of the Issue, we shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the subscription amount by more than eight days after we become liable to pay the subscription amount (i.e.15 days after the Issue Closing Date), we and every Director of the Company who is an officer in default shall be jointly and severally liable to pay interest for the delayed period, as prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act.

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SECTION VIII – OFFERING INFORMATION

TERMS OF THE ISSUE The Rights Issue Equity Shares proposed to be issued are subject to the terms and conditions contained in this Draft Letter of Offer, the Letter of Offer, the Abridged Letter of Offer, including the CAF, the Memorandum of Association and Articles of Association, the provisions of the Companies Act, the terms and conditions as may be incorporated in the FEMA, applicable guidelines and regulations issued by SEBI and RBI, or other statutory authorities and bodies from time to time, the Listing Agreements entered into by us, terms and conditions as stipulated in the allotment advice or security certificate and rules as may be applicable and introduced from time to time. All rights/ obligations of Equity Shareholders in relation to application and refunds pertaining to this Issue shall apply to the Renouncee(s) as well. Please note that, in terms of SEBI circular CIR/CFD/DIL/1/ 2011 dated April 29, 2011, all QIB applicants, Non-Institutional Investors and other applicants whose application amount exceeds ` 200,000 complying with the eligibilty conditions of SEBI circular dated December 30, 2009 can participate in the Issue only through the ASBA process. The Investors who are not (i) QIBs, (ii) Non-Institutional Investors or (iii) investors whose application amount is more than ` 200,000, can participate in the Issue either through the ASBA process or the non ASBA process. ASBA Investors should note that the ASBA process involves application procedures that may be different from the procedure applicable to non ASBA process. ASBA Investors should carefully read the provisions applicable to such applications before making their application through the ASBA process. For details, please refer to “Procedure for Application through the Applications Supported by Blocked Amount (“ASBA”) Process” on page 145. Basis for the Issue The Rights Issue 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 for the purpose of this Rights Issue in respect of the Equity Shares held in the electronic form and on the Register of Members in respect of the Equity Shares held in physical form at the close of business hours on the Record Date, fixed in consultation with the Designated Stock Exchange. Rights Entitlement As your name appears as a beneficial owner in respect of the Equity Shares held in the electronic form or appears in the register of members as an Equity Shareholder as on the Record Date, i.e., [ ], you are entitled to the number of Equity Shares as set out in Part A of the CAFs. The distribution of this Draft Letter of Offer and the issue of the Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. We are making the issue of the Equity Shares on a rights basis to the Equity Shareholders and the Letter of Offer, the Abridged Letter of Offer and the CAFs will be dispatched only to those Equity Shareholders who have a registered address in India or who have provided an Indian address. Any person who acquires Rights Entitlements or the Rights Issue Equity Shares will be deemed to have declared, warranted and agreed, by accepting the delivery of the Letter of Offer, the Abridged Letter of Offer and the CAFs, that it is not and that at the time of subscribing for the Equity Shares or the Rights Entitlements, it will not be, in the United States and in other restricted jurisdictions. PRINCIPAL TERMS OF THE EQUITY SHARES ISSUED UNDER THIS ISSUE Face Value Each Equity Share will have the face value of ` 10. Issue Price Each Rights Issue Equity Share shall be offered at an Issue Price of ` [ ] for cash at a premium of ` [ ] per Rights Issue Equity Share. The Issue Price has been arrived at by us in consultation with the Lead Manager. Rights Entitlement Ratio

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The Rights Issue Equity Shares are being offered on a rights basis to the Equity Shareholders in the ratio of [ ] Rights Issue Equity Shares for every [ ] Equity Shares held on the Record Date. Terms of Payment The full amount of ` [ ] per Equity Share is payable on application. Fractional Entitlements The Equity Shares are being offered on a rights basis to the existing Equity Shareholders in the ratio of [ ] Equity Shares for every [ ] Equity Shares held as on the Record Date. For Equity Shares being offered on a rights basis under this Issue, if the shareholding of any of the Equity Shareholders is less than [ ] Equity Shares or is not in a multiple of [ ] Equity Shares, the fractional entitlement of such Equity Shareholders shall be ignored for computation of the Rights Entitlement. However, Equity Shareholders whose fractional entitlements are being ignored will be given preference in the allotment of one additional Equity Share each, if such Equity Shareholders have applied for additional Equity Shares over and above their Rights Entitlement. For example, if an Equity Shareholder holds [ ] Equity Shares, he will be entitled to [ ] Equity Shares on a rights basis. He will also be given a preferential consideration for the Allotment of one additional Equity Share if he has applied for the same. Also, those Equity Shareholders holding less than [ ] Equity Shares and therefore entitled to ‘Zero’ Rights Issue Equity Shares under this Issue shall be despatched a CAF with ‘Zero’ entitlement. Such Equity Shareholders are entitled to apply for additional Rights Issue Equity Shares and would be given preference in the allotment of one additional Rights Issue Equity Share each to the additional Rights Issue Equity Shares, such Equity Shareholders have applied for. However, they cannot renounce the same to third parties. Ranking The Equity Shares being issued shall be subject to the provisions of our Memorandum of Association and Articles of Association. The Equity Shares issued under this Issue shall rank pari passu, in all respects including dividend, with our existing Equity Shares. Mode of payment of dividend In the event of declaration of dividend, we shall pay dividend to Equity Shareholders as per the provisions of the Companies Act and the provisions of our Articles of Association. Listing and trading of Equity Shares proposed to be issued Our existing Equity Shares are currently listed and traded on BSE (Scrip Code: 523398 under the ISIN – INE782A01015) and the NSE (Scrip Code: HITACHIHOM under the ISIN – INE782A01015). The listing and trading of the Equity Shares shall be based on the current regulatory framework applicable thereto. Accordingly, any change in the regulatory regime would affect the schedule. Upon Allotment the Equity Shares shall be traded on Stock Exchanges in the demat segment only. We have made an application for “in-principle” approval for listing of the Equity Shares to the BSE and the NSE and have received such approval from the BSE and the NSE pursuant to the letter numbers [●] and [●], dated [●] and [●] respectively. We will apply to the BSE and the NSE for final approval for the listing and trading of the Equity Shares. All steps for the completion of the necessary formalities for listing and commencement of trading of the Equity Shares to be allotted pursuant to the Issue shall be taken as soon as possible from the finalisation of the basis of allotment but not later than 7 working days of finalization of basis of allotment. The fully paid up Equity Shares proposed to be issued on a rights basis shall be listed and admitted for trading on the BSE and the NSE under the existing ISIN for fully paid up Equity Shares. Rights of the Equity Shareholder Subject to applicable laws, the Equity Shareholders shall have the following rights:

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Right to receive dividend, if declared; Right to attend general meetings and exercise voting powers, unless prohibited by law; Right to vote in person or by proxy; Right to receive offers for rights shares and be allotted bonus shares, if announced; Right to receive surplus on liquidation; Right to free transferability of Equity Shares; and Such other rights as may be available to a shareholder of a listed public company under the Companies

Act and Memorandum of Association and Articles of Association. General Terms of the Issue Market Lot The market lot for the Equity Shares in dematerialised mode is one Equity Share. In case an Equity Shareholder holds Equity Shares in physical form, we would issue to the allottees one certificate for the Equity Shares allotted to each folio (“Consolidated Certificate”). In respect of Consolidated Certificates, we will upon receipt of a request from the respective Equity Shareholders, split such Consolidated Certificates into smaller denominations within one week’s time from the receipt of the request in respect thereof. We shall not charge a fee for splitting any of the Consolidated Certificates. Joint Holders Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as joint tenants with the benefit of survivorship subject to the provisions contained in the Articles of Association. Nomination In terms of Section 109A of the Companies Act, nomination facility is available in respect of the Equity Shares. An Investor can nominate any person by filling the relevant details in the CAF in the space provided for this purpose. In case of Equity Shareholders who are individuals, a sole Equity Shareholder or the first named Equity Shareholder, along with other joint Equity Shareholders, if any, 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 Shares by the person nominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. Fresh nominations can be made only in the prescribed form available on request at our Registered Office or such other person at such addresses as may be notified by us. The Investor can make the nomination by filling in the relevant portion of the CAF. In terms of Section 109B of the Companies Act, any person who becomes a nominee by virtue of the provisions of Section 109A of the Companies Act, shall upon the production of such evidence as may be required by the Board, elect either:

to register himself or herself as the holder of the Equity Shares; or to make such transfer of the Equity Shares, as the deceased holder could have made.

Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself or herself or to transfer the Equity Shares, and if the notice is not complied with within a period of ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the Equity Shares, until the requirements of the notice have been complied with. Only one nomination would be applicable for one folio. Hence, in case the Equity Shareholder(s) has already registered the nomination with us, no further nomination needs to be made for Equity Shares that may be allotted in this Issue under the same folio.

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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 Depositary Participant (“DP”) of the investor would prevail. Any investor desirous of changing the existing nomination is requested to inform their respective DP. Notices All notices to the Equity Shareholder(s) required to be given by us shall be published in one English national daily with wide circulation, one Hindi national daily with wide circulation and one regional language daily newspaper with wide circulation in the state where our registered office is located and/ or will be sent by ordinary post/ registered post/ speed post to the registered address of the Equity Shareholders in India or the Indian address provided by the Equity Shareholders, from time to time. Subscription by the Promoter and Promoter Group Our Promoter, Hitachi Appliances Inc., has confirmed vide its letter dated November 01, 2012 that it intends to subscribe to the full extent of its Rights Entitlement in the Issue, in compliance with regulation 10 (4) of Takeover Regulations. Further it has confirmed that it intends to subscribe for (i) additional Right Issue Equity Shares, and (ii) Rights Issue Equity Shares, if any, which remain unsubscribed. Such subscription to additional Rights Issue Equity Shares and the unsubscribed portion, if any, to be made by the it, shall be in accordance with regulation 10 (4) of Takeover Regulations. Further, such subscription shall not result in breach of minimum public shareholding requirement as stipulated in the Listing Agreements. For details, please refer to the chapter “Terms of the Issue - Basis of Allotment” on page 152. Procedure for Application The CAF for Rights Issue Equity Shares offered as a part of the Issue would be printed for all Eligible Equity Shareholders. In case the original CAFs are not received by the Eligible Equity Shareholders or is misplaced by the Eligible Equity Shareholders, the Eligible Equity Shareholders may request the Registrar to the Issue, for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and their full name and address. In case the signature of the Eligible Equity Shareholder(s) does not match with the specimen registered with us, the application is liable to be rejected. Please note that neither the Company nor the Registrar shall be responsible for delay in the receipt of the CAF/ duplicate CAF attributable to postal delays or if the CAF/ duplicate CAF are misplaced in the transit. Please note that QIB applicants, Non-Institutional Investors and other applicants whose application amount exceeds ` 200,000 can participate in the Issue only through the ASBA process. The Investors who are not (i) QIBs, (ii) Non-Institutional Investors or (iii) investors whose application amount is more than ` 200,000, can participate in the Issue either through the ASBA process or the non ASBA process. Please also note that by virtue of the 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 Overseas Corporate Bodies (OCBs) Regulations, 2003. Any Equity Shareholder being an OCB is required to obtain prior approval from RBI for applying to this Issue. The CAF consists of four parts:

Part A: Form for accepting the Equity Shares offered as a part of this Issue, in full or in part, and for applying for additional Equity Shares;

Part B: Form for renunciation of Equity Shares; Part C: Form for application for renunciation of Equity Shares by Renouncee(s); Part D: Form for request for split Application forms.

Option available to the Equity Shareholders The CAFs will clearly indicate the number of Rights Issue Equity Shares that the Shareholder is entitled to.

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If the Eligible Equity Shareholder applies for an investment in the Rights Issue Equity Shares, then he can:

Apply for his Rights Entitlement of Rights Issue Equity Shares in full; Apply for his Rights Entitlement of Rights Issue Equity Shares in part; Apply for his Rights Entitlement of Rights Issue Equity Shares in part and renounce the other part of

the Equity Shares; Apply for his Rights Entitlement in full and apply for additional Rights Issue Equity Shares; Renounce his Rights Entitlement in full.

Acceptance of the Issue You may accept the offer to participate and apply for the Rights Issue Equity Shares, either in full or in part without renouncing the balance by filling Part A of the CAFs and submit the same along with the application money payable to the collection branches of the Bankers to the Issue as mentioned on the reverse of the CAFs before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors in this regard. Investors at centres not covered by the branches of Bankers to the Issue can send their CAFs together with the cheque drawn at par on a local bank at Mumbai/ demand draft payable at Mumbai to the Registrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to the Issue are liable to be rejected. For further details on the mode of payment, please refer to the headings “Mode of Payment for Resident Equity Shareholders/ Investors” and “Mode of Payment for Non-Resident Equity Shareholders/ Investors” on page 159. Additional Equity Shares You are eligible to apply for additional Rights Issue Equity Shares over and above your Rights Entitlement, provided that you are eligible to apply under applicable law and have applied for all the Rights Issue Equity Shares offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Rights Issue Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board, subject to sectoral caps and in consultation if necessary with the Designated Stock Exchange and in the manner prescribed under “Terms of the Issue - Basis of Allotment” on page 152. If you desire to apply for additional Rights Issue Equity Shares, please indicate your requirement in the place provided for additional Equity Shares in Part A of the CAF. The Renouncees applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares. Where the number of additional Rights Issue 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. Renunciation This Issue includes a right exercisable by you to renounce the Rights Issue Equity Shares offered to you either in full or in part in favour of any other person or persons. Your attention is drawn to the fact that we shall not Allot and/ or register and Rights Issue Equity Shares in favour of more than three persons (including joint holders), partnership firm(s) or their nominee(s), minors, HUF, any trust or society (unless the same is registered under the Societies Registration Act, 1860 or the Indian Trust Act, 1882 or any other applicable law relating to societies or trusts and is authorized under its constitution or bye-laws to hold equity shares, as the case may be). Additionally, existing Equity Shareholders may not renounce in favour of persons or entities in the United States, or to, or for the account or benefit of a “U.S. Person” (as defined in Regulation S), or who would otherwise be prohibited from being offered or subscribing for Equity Shares or Rights Entitlement under applicable securities laws. We are in the process of making an application to RBI, to seek approval to allow renunciation of Rights Issue Equity Shares from a resident Equity Shareholder to a non-resident (other than OCB), from non-resident Equity Shareholder (other than OCB) to resident and from non-resident Equity Shareholder (other than OCB) to another non-resident. If RBI does not grant such approval, Investors may independently make an application to RBI seeking such approval and Rights Issue Equity Shares will be allotted to such Investors only if a copy of such approval is attached along with the CAF. Irrespective of whether we receive such approval from RBI, Investors may independently make an application to RBI seeking such approval.

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By virtue of the 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 Overseas Corporate Bodies (OCBs)) Regulations, 2003. Accordingly, the existing Equity Shareholders who do not wish to subscribe to the Equity Shares being offered but wish to renounce the same in favour of Renouncee shall not renounce the same (whether for consideration or otherwise) in favour of OCB(s). The RBI has however clarified in its circular, A.P. (DIR Series) Circular No. 44, dated December 8, 2003 that OCBs which are incorporated and are not under the adverse notice of the RBI are permitted to undertake fresh investments as incorporated non-resident entities in terms of Regulation 5(1) of RBI Notification No.20/ 2000-RB dated May 3, 2000 under FDI Scheme with the prior approval of Government if the investment is through Government Route and with the prior approval of RBI if the investment is through Automatic Route on case by case basis. Shareholders renouncing their rights in favour of OCBs may do so provided such Renouncee obtains a prior approval from the RBI. On submission of such approval to us at our Registered Office, the OCB shall receive the Abridged Letter of Offer and the CAF. 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. Submission of the CAF to the Banker to the Issue at its collecting branches specified on the reverse of the CAF with the form of renunciation (Part ‘B’ of the CAF) duly filled in shall be conclusive evidence for us of the person(s) applying for Equity Shares in Part ‘C’ of the CAF to receive Allotment of such Equity Shares. Part ‘A’ of the CAF must not be used by the Renouncee(s) as this will render the application invalid. Renouncee(s) will have no further right to renounce any Equity Shares in favour of any other person. Procedure for renunciation To renounce all the Equity Shares offered to an Equity Shareholder 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 Part ‘C’ 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 under this Issue in favour of two or more Renouncees, the CAF must be first split into requisite number of SAFs. Please indicate your requirement of SAFs 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 SAFs. On receipt of the required number of SAFs 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 match with the specimen registered with us/ Depositories, the application is liable to be rejected. Renouncee(s) The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part ‘C’ of the CAF and submit the entire CAF to the Bankers to the Issue or to any of the collection branches of the Bankers to the Issue as mentioned in the reverse of the CAF on or before the Issue Closing Date along with the application money in full. The Renouncee cannot further renounce. Change and/ or introduction of additional holders If you wish to apply for the Rights Issue Equity Shares jointly with any other person(s), not more than three (including you), who is/ are not already a joint holder with you, it shall amount to renunciation and the procedure as stated above for renunciation shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure, as stated above shall have to be followed. However, this right of renunciation is subject to the express condition that the Board of Directors shall be

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entitled in its absolute discretion to reject the request for Allotment from the Renouncee(s) without assigning any reason thereof. Instructions for Options The summary of options available to the Eligible Equity Shareholder is presented below. You may exercise any of the following options with regard to the Rights Issue Equity Shares offered, using the CAF:

Option Available Action Required i. Accept whole or part of your Rights

Entitlement without renouncing the balance.

Fill in and sign Part A (All joint holders must sign)

ii. Accept your Rights Entitlement in full and apply for additional Rights Issue 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)

iii. Accept a part of your Rights Entitlement and renounce the balance to one or more Renouncee(s) OR Renounce your Rights Entitlement of all the Rights Issue Equity Shares offered to you to more than one Renouncee

Fill in and sign Part D (all joint holders must sign) requesting for SAFs. Send the CAF to the Registrar to the Issue so as to reach them on or before the last date for receiving requests for SAFs. Splitting will be permitted only once. On receipt of the SAF take action as indicated below. For the Equity Shares you wish to accept, if any, fill in and sign Part A. For the Rights Issue 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 Renouncee. Each of the Renouncee should fill in and sign Part C for the Equity Shares accepted by them.

iv. Renounce your Rights Entitlement in full to one person (Joint Renouncees are considered as one)

Fill in and sign Part B (all joint holders must sign) indicating the number of Equity Shares renounced and hand it over to the Renouncee. The Renouncee must fill in and sign Part C (All joint Renouncees must sign)

v. 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 Renouncee must fill in and sign Part C.

Please note that:

Part ‘A’ of the CAF must not be used by any person(s) other than the Eligible Equity Shareholder to whom the Letter of Offer has been addressed. If used, this will render the application invalid.

Request for Split Application Forms/ SAF should be made for a minimum of one Equity Share or, in either case, in multiples thereof, and one SAF for the balance Equity Shares, if any.

Request by the Equity Shareholder for the SAFs should reach the Registrar on or before [ ]. Only the Equity Shareholder to whom the Letter of Offer has been addressed shall be entitled to

renounce and to apply for SAFs. Forms once split cannot be split further. SAFs will be sent to the Equity Shareholder(s) by post at the applicant’s risk. Equity Shareholders may not renounce in favour of persons or entities in the United States or to or for

the account or benefit of a “U.S. Person” (as defined in Regulation S), or who would otherwise be prohibited from being offered or subscribing for Equity Shares or Rights Entitlement under applicable securities laws.

While applying for or renouncing their Rights Entitlement, joint Equity Shareholders must sign the CAF in the same order as per specimen signatures recorded with us or the Depositories.

Non-resident Equity Shareholders: Application(s) received from Non-Resident/ NRIs, or persons of Indian origin residing abroad for allotment of Equity Shares alloted as a part of this Issue shall, inter alia, be subject to conditions, as may be imposed from time to time by the RBI under FEMA in the matter of refund of application money, allotment of equity shares, subsequent issue and allotment of equity shares, interest, export of share certificates, etc. In case a Non-Resident or NRI Eligible Equity

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Shareholder has specific approval from the RBI, in connection with his shareholding, he should enclose a copy of such approval with the CAF.

Availability of duplicate CAF In case the original CAF is not received, or is misplaced by the Equity Shares, the Registrar to the Issue will issue a duplicate CAF on the request of the Eligible Equity Shareholder who should furnish the registered folio number/ DP and Client ID number and his/ her full name and address to the Registrar to the Issue. Please note that the request for duplicate CAF should reach the Registrar to the Issue at least 7 days prior to the Issue Closing Date. Please note that those who are making the application in the duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently. If the Eligible Equity Shareholder violates such requirements, he/ she shall face the risk of rejection of both the applications. Neither the Registrar nor the Lead Manager or our Company, shall be responsible for postal delays or loss of duplicate CAFs in transit, if any. 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 Issue on plain paper, along with demand draft (after deducting banking and postal charges) payable at Mumbai which should be drawn in favour of “Hitachi Home & Life Solutions (India) Limited – Rights Issue - R” in case of resident shareholders and non-resident shareholders applying on non-repatriable basis and in favour of “Hitachi Home & Life Solutions (India) Limited – Rights Issue – NR” in case of non-resident shareholders applying on repatriable basis and send the same by registered post directly to the Registrar to the Issue so as to reach Registrar to the Issue on or before the Issue Closing Date. The envelope should be superscribed “Hitachi Home & Life Solutions (India) Limited – Rights Issue - R” in case of resident shareholders and Non-resident shareholders applying on non-repatriable basis, and “Hitachi Home & Life Solutions (India) Limited – Rights Issue – NR” in case of non-resident shareholders applying on repatriable basis. The application on plain paper, duly signed by the applicant(s) including joint holders, in the same order as per specimen recorded with us or the Depositories, must reach the office of the Registrar to the Issue before the Issue Closing Date and should contain the following particulars:

Name of Issuer, being Hitachi Home & Life Solutions (India) Limited; 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; Number of Equity Shares entitled to; Number of Equity Shares applied for; Number of additional Equity Shares applied for, if any; Total number of Equity Shares applied for; Total amount paid at the rate of ` [ ] per Equity Share; Particulars of cheque/ demand draft; Savings/ Current Account Number and name and address of the bank where the Equity Shareholder

will be depositing the refund order. In case of Equity Shares allotted in demat form, the bank account details will be obtained from the information available with the Depositories;

Except for applications on behalf of the Central or State Government, the residents of Sikkim and the officials appointed by the courts, PAN number of the Investor and for each Investor in case of joint names, irrespective of the total value of the Equity Shares applied for pursuant to the Issue;

Share certificate numbers and distinctive numbers of Equity Shares, if held in physical form; Allotment option preferred - physical or demat form, if held in physical form; If the payment is made by a draft purchased from NRE/ FCNR/ NRO account, as the case may be, an

account debit certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/ FCNR/ NRO account;

Signature of the Equity Shareholders to appear in the same sequence and order as they appear in the our records; and

Additionally, all such applicants are deemed to have accepted the following: “I/ We understand that neither the Rights Entitlement nor the Equity Shares have been, and will be, registered

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under the United States Securities Act of 1933 (the “US Securities Act”) or any United States state securities laws, and may not be offered, sold, resold or otherwise transferred within the United States or to the territories or possessions thereof (the “United States”) or to, or for the account or benefit of a “U.S. Person” as defined in Regulation S of the US Securities Act (“Regulation S”). I/ we understand the Equity Shares referred to in this application are being offered in India but not in the United States. I/ we understand the offering to which this application relates is not, and under no circumstances is to be construed as, an offering of any Equity Shares or Rights Entitlement for sale in the United States, or as a solicitation therein of an offer to buy any of the said Equity Shares or Rights Entitlement in the United States. Accordingly, I/ we understand this application should not be forwarded to or transmitted in or to the United States at any time. I/ we understand that neither us, nor the Registrar, the Lead Manager or any other person acting on behalf of us will accept subscriptions from any person, or the agent of any person, who appears to be, or who we, the Registrar, the Lead Manager or any other person acting on behalf of us have reason to believe is, a resident of the United States or a “U.S. Person” (as defined in Regulation S) or is ineligible to participate in the Issue under the securities laws of their jurisdiction. I/ We will not offer, sell or otherwise transfer any of the Equity Shares which may be acquired by us in any jurisdiction or under any circumstances in which such offer or sale is not authorized or to any person to whom it is unlawful to make such offer, sale or invitation except under circumstances that will result in compliance with any applicable laws or regulations. We satisfy, and each account for which we are acting satisfies, all suitability standards for investors in investments of the type subscribed for herein imposed by the jurisdiction of our residence. I/ We understand and agree that the Rights Entitlement and Equity Shares may not be reoffered, resold, pledged or otherwise transferred except in an offshore transaction in compliance with Regulation S, or otherwise pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. I/ We (i) am/ are, and the person, if any, for whose account I/ we am/ are acquiring such Rights Entitlement and/ or the Equity Shares is/ are, outside the United States, (ii) am/ are not a “U.S. Person” as defined in Regulation S, and (iii) is/ are acquiring the Rights Entitlement and/ or the Equity Shares in an offshore transaction meeting the requirements of Regulation S. I/ We acknowledge that we, the Lead Manager, their affiliates and others will rely upon the truth and accuracy of the foregoing representations and agreements.” Please note that those who are making the application otherwise than on original CAF shall not be entitled to renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the Investor violates such requirements, he/ she shall face the risk of rejection of both the applications. We shall refund such application amount to the Investor without any interest thereon. Last date for Application The last date for submission of the duly filled in CAF is [ ]. If the CAF together with the amount payable is not received by the Banker to the Issue/ Registrar to the Issue on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board or any authorised committee thereof, the invitation to offer contained in the Letter of Offer shall be deemed to have been declined and the Board or any authorised committee thereof shall be at liberty to dispose of the Equity Shares hereby offered, as provided under the chapter “Terms of the Issue – Basis of Allotment” on page 152. PROCEDURE FOR APPLICATION THROUGH THE APPLICATIONS SUPPORTED BY BLOCKED AMOUNT (“ASBA”) PROCESS This section is for the information of the ASBA Investors proposing to subscribe to the Issue through the ASBA Process. The Lead Manager and we are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of the Letter of Offer. Investors who are eligible to apply under the ASBA Process are advised to make their independent investigations and to ensure that the CAF is correctly filled up. The Lead Manager, we, our directors, affiliates, associates and their respective directors and officers and the Registrar to the Issue shall not take any responsibility for acts, mistakes, errors, omissions and commissions etc.

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in relation to applications accepted by SCSBs, applications uploaded by SCSBs, applications accepted but not uploaded by SCSBs or applications accepted and uploaded without blocking funds in the ASBA Accounts. It shall be presumed that for applications uploaded by SCSBs, the amount payable on application has been blocked in the relevant ASBA Account. Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number CIR/CFD/DIL/1/ 2011 dated April 29, 2011, all applicants who are (i) QIBs, (ii) Non-Institutional Investors or (iii) other applicants whose application amount exceeds ` 200,000 can participate in the Issue only through the ASBA process, subject to them complying with the requirements of SEBI Circular dated December 30, 2009. The Investors who are not (i) QIBs, (ii) Non-Institutional Investors or (iii) investors whose application amount is more than ` 200,000, can participate in the Issue either through the ASBA process or the non ASBA process. The list of banks which have been notified by SEBI to act as SCSBs for the ASBA Process is provided on http://www.sebi.gov.in/cms/sebi_data/attachdocs/1350298477356.html. For details on Designated Branches of SCSBs collecting the CAF, please refer the above mentioned SEBI link. Equity Shareholders who are eligible to apply under the ASBA Process The option of applying for Rights Issue Equity Shares through the ASBA Process is available only to the Equity Shareholders on the Record Date. To qualify as ASBA Applicants, Eligible Equity Shareholders:

are required to hold Equity Shares in dematerialized form as on the Record Date and apply for (i) their Rights Entitlement or (ii) their Rights Entitlement and Equity Shares in addition to their Rights Entitlement in dematerialized form;

should not have renounced their Right Entitlement in full or in part; should not have split the CAF; should not be Renouncees; should apply through blocking of funds in bank accounts maintained with SCSBs; and are eligible under applicable securities laws to subscribe for the Rights Entitlement and the Rights Issue

Equity Shares in the Issue. CAF The Registrar will dispatch the CAF to all Eligible Equity Shareholders as per their Rights Entitlement on the Record Date for the Issue. Those Eligible Equity Shareholders who must apply or who wish to apply through the ASBA will have to select for this ASBA mechanism in Part A of the CAF and provide necessary details. Eligible Equity Shareholders desiring to use the ASBA Process are required to submit their applications by selecting the ASBA Option in Part A of the CAF. Application in electronic mode will only be available with such SCSBs who provide such facility. The Eligible Equity Shareholder shall submit the CAF to the Designated Branch of the SCSB for authorising such SCSB to block an amount equivalent to the amount payable on the application in the ASBA Account. More than one ASBA Investor may apply using the same ASBA Account, provided that SCSBs will not accept a total of more than five CAFs with respect to any single ASBA Account as provided for under SEBI Circular dated December 30, 2009. Acceptance of the Issue You may accept the Issue and apply for the Rights Issue Equity Shares either in full or in part, by filling Part A of the respective CAFs sent by the Registrar, selecting the ASBA Mechanism in Part A of the CAF and submit the same to the Designated Branch of the SCSB before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors or any committee thereof in this regard. Mode of payment The Eligible Equity Shareholder applying under the ASBA Process agrees to block the entire amount payable on

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application with the submission of the CAF, by authorizing the SCSB to block an amount, equivalent to the amount payable on application, in an ASBA Account. After verifying that sufficient funds are available in the in an ASBA Account details of which are provided in the CAF, the SCSB shall block an amount equivalent to the amount payable on application mentioned in the CAF until it receives instructions from the Registrar. Upon receipt of intimation from the Registrar, the SCSBs shall transfer such amount as per the Registrar’s instruction from the ASBA Account. This amount will be transferred in terms of the SEBI ICDR Regulations, into the separate bank account maintained by us as per the provisions of section 73(3) of the Companies Act. The balance amount remaining after the finalisation of the Basis of Allotment shall be unblocked by the SCSBs on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Manager to the respective SCSB. The Equity Shareholders applying under the ASBA Process would be required to give instructions to the respective SCSBs to block the entire amount payable on their application at the time of the submission of the CAF. The SCSB may reject the application at the time of acceptance of CAF if the ASBA Account with the SCSB details of which have been provided by the Equity Shareholder in the CAF does not have sufficient funds equivalent to the amount payable on application mentioned in the CAF. Subsequent to the acceptance of the application by the SCSB, we would have a right to reject the application only on technical grounds. Options available to the Eligible Equity Shareholders applying under the ASBA Process The summary of options available to the Equity Shareholders is presented below. You may exercise any of the following options with regard to the Equity Shares, using the respective CAFs received from Registrar:

Option Available Action Required 1. Accept whole or part of your Rights Entitlement

without renouncing the balance. Fill in and sign Part A of the CAF (All joint holders must sign)

2. Accept your Rights Entitlement in full and apply for additional Equity Shares

Fill in and sign Part A of the CAF including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)

The Eligible Equity Shareholders applying under the ASBA Process will need to select the ASBA process option in the CAF and provide required necessary details. However, in cases where this option is not selected, but the CAF is tendered to the designated branch of the SCSBs with the relevant details required under the ASBA process option and the SCSBs block the requisite amount, then that CAF would be treated as if the Equity Shareholder has selected to apply through the ASBA process option. Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number CIR/CFD/DIL/1/ 2011 dated April 29, 2011, all applicants who are QIBs, Non-Institutional Investors or other applicants whose application amount exceeds ` 200,000 can participate in the Issue only through the ASBA process. The Investors who are not (i) QIBs, (ii) Non-Institutional Investors or (iii) investors whose application amount is more than ` 200,000, can participate in the Issue either through the ASBA process or the non ASBA process, subject to them complying with the requirements of SEBI Circular dated December 30, 2009. Additional Rights Issue Equity Shares You are eligible to apply for additional Rights Issue Equity Shares over and above the number of Rights Issue Equity Shares that you are entitled to, provided that you are eligible to apply for the Rights Issue Equity Shares under applicable law and you have applied for all the Rights Issue Equity Shares (as the case may be) offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Rights Issue Equity Shares shall be considered and Allotment shall be made at the sole discretion of the Board, in consultation with the Designated Stock Exchange and in the manner prescribed under “Terms of the Issue - Basis of Allotment” on page 152. If you desire to apply for additional Equity Shares please indicate your requirement in the place provided for additional Equity Shares in Part A of the CAF. The Renouncee applying for all the Equity Shares renounced in

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their favour may also apply for additional Equity Shares. Renunciation under the ASBA Process Renouncees are not eligible to participate in this Issue through the ASBA Process. Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF and who is applying under the ASBA Process may make an application to subscribe to the Issue on plain paper. The Equity Shareholder shall submit the plain paper application to the SCSB for authorising such SCSB to block an amount equivalent to the amount payable on the application in the said bank account maintained with the same SCSB. The envelope should be superscribed “Hitachi Home & Life Solutions (India) Limited – Rights Issue- R” or “Hitachi Home & Life Solutions (India) Limited – Rights Issue- NR”, as the case may be. The application on plain paper, duly signed by the Investors including joint holders, in the same order as per the specimen recorded with us or the Depositories, must reach the Designated Branch of the SCSBs before the Issue Closing Date and should contain the following particulars:

Name of Issuer, being Hitachi Home & Life Solutions (India) Limited; 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; Number of Equity Shares entitled to; Number of Equity Shares applied for; Number of additional Equity Shares applied for, if any; Total number of Equity Shares applied for; Total amount to be blocked at the rate of ` [ ] per Equity Share; Details of the ASBA Account such as the account number, name, address and branch of the relevant

SCSB; In case of non-resident investors, details of the NRE/ FCNR/ NRO account such as the account

number, name, address and branch of the SCSB with which the account is maintained; Except for applications on behalf of the Central or State Government, residents of Sikkim and the

officials appointed by the courts, PAN number of the Investor and for each Investor in case of joint names, irrespective of the total value of the Equity Shares applied for pursuant to the Issue; and

Signature of the Equity Shareholders to appear in the same sequence and order as they appear in our records.

Additionally, all such applicants are deemed to have accepted the following:

“I/ We understand that neither the Rights Entitlement nor the Equity Shares have been, and will be, registered under the United States Securities Act of 1933 (the “US Securities Act”) or any United States state securities laws, and may not be offered, sold, resold or otherwise transferred within the United States or to the territories or possessions thereof (the “United States” or to or for the account or benefit of a “U.S. Person” as defined in Regulation S of the US Securities Act (“Regulation S”). I/ we understand the Equity Shares referred to in this application are being offered in India but not in the United States. I/ we understand the offering to which this application relates is not, and under no circumstances is to be construed as, an offering of any Equity Shares or Rights Entitlement for sale in the United States, or as a solicitation therein of an offer to buy any of the said Equity Shares or Rights Entitlement in the United States. Accordingly, I/ we understand this application should not be forwarded to or transmitted in or to the United States at any time. I/ we understand that none of we, the Registrar, the Lead Manager or any other person acting on behalf of us will accept subscriptions from any person, or the agent of any person, who appears to be, or who, we, the Registrar, the Lead Manager or any other person acting on behalf of we have reason to believe is, a resident of the United States or a “U.S. Person” as defined in Regulation S, or is ineligible to participate in the Issue under the securities laws of their jurisdiction.

I/ We will not offer, sell or otherwise transfer any of the Equity Shares which may be acquired by us in any jurisdiction or under any circumstances in which such offer or sale is not authorized or to any person to whom it is unlawful to make such offer, sale or invitation except under circumstances that will result in compliance with any applicable laws or regulations. We satisfy, and each account for which we are acting

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satisfies, all suitability standards for investors in investments of the type subscribed for herein imposed by the jurisdiction of our residence.

I/ We understand and agree that the Rights Entitlement and Equity Shares may not be reoffered, resold, pledged or otherwise transferred except in an offshore transaction in compliance with Regulation S, or otherwise pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act.

I/ We (i) am/ are, and the person, if any, for whose account I/ we am/ are acquiring such Rights Entitlement and/ or the Equity Shares is/ are, outside the United States, (ii) am/ are not a “U.S. Person” as defined in (“Regulation S”), and (iii) is/ are acquiring the Rights Entitlement and/ or the Equity Shares in an offshore transaction meeting the requirements of Regulation S.

I/ We acknowledge that we, the Lead Manager, their affiliates and others will rely upon the truth and accuracy of the foregoing representations and agreements.”

Option to receive Equity Shares in Dematerialized Form EQUITY SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE EQUITY SHARES UNDER THE ASBA PROCESS CAN BE ALLOTTED ONLY IN DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE HELD BY SUCH ASBA APPLICANT ON THE RECORD DATE. General instructions for Equity Shareholders applying under the ASBA Process

Please read the instructions printed on the CAF carefully.

Application should be made on the printed CAF only and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of the Letter of Offer, Abridged Letter of Offer are liable to be rejected. The CAF must be filled in English.

The CAF in the ASBA Process should be submitted at a Designated Branch of the SCSB and whose

ASBA Account/ bank account details are provided in the CAF and not to the Bankers to the Issue/ Collecting Banks (assuming that such Collecting Bank is not a SCSB), to us or Registrar or Lead Manager to the Issue.

All applicants, and in the case of application in joint names, each of the joint applicants, should

mention his/ her PAN number allotted under the IT Act, irrespective of the amount of the application. Except for applications on behalf of the Central or State Government, the residents of Sikkim and the officials appointed by the courts, CAFs without PAN will be considered incomplete and are liable to be rejected. With effect from August 16, 2010, the demat accounts for Investors for which PAN details have not been verified shall be “suspended for credit” and no allotment and credit of Equity Shares shall be made into the accounts of such Investors.

All payments will be made by blocking the amount in the ASBA Account. Cash payment or payment

by cheque/ demand draft/ pay order is not acceptable. In case payment is affected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.

Signatures should be either in English or Hindi or in any other language specified in the Eighth

Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with us and/ or Depositories.

In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as

per the specimen signature(s) recorded with the depository/ us. 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.

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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 Allotment in this Issue quoting the name of the first/ sole applicant Equity Shareholder, folio numbers and CAF number.

Only the person or persons to whom the Equity Shares have been offered shall be eligible to participate

under the ASBA Process.

Only persons outside restricted jurisdictions and who are eligible to subscribe for Rights Entitlement and Equity Shares under applicable securities laws are eligible to participate.

Only the Equity Shareholders holding shares in demat are eligible to participate through ASBA

process.

Equity shareholders who have renounced their entitlement in part/ full are not entitled to apply using ASBA process.

Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing

number CIR/CFD/DIL/1/ 2011 dated April 29, 2011, all applicants who are QIBs, Non-Institutional Investors and other applicants whose application amount exceeds ` 200,000 can participate in the Issue only through the ASBA process. The Investors who are not (i) QIBs, (ii) Non-Institutional Investors or (iii) investors whose application amount is more than ` 200,000, can participate in the Issue either through the ASBA process or the non ASBA process.

In case of non – receipt of CAF, application can be made on plain paper mentioning all necessary

details as mentioned under the heading “Application on Plain Paper” on page 143. Do’s:

Ensure that the ASBA Process option is selected in part A of the CAF and necessary details are filled in.

Ensure that the details about your Depository Participant and beneficiary account are correct and the

beneficiary account is activated as Equity Shares will be allotted in the dematerialized form only.

Ensure that the CAFs are submitted with the Designated Branch of the SCSBs and details of the correct bank account have been provided in the CAF.

Ensure that there are sufficient funds (equal to {number of Equity Shares as the case may be applied

for} X {Issue Price of Equity Shares, as the case may be}) available in the ASBA Account mentioned in the CAF before submitting the CAF to the respective Designated Branch of the SCSB.

Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable on

application mentioned in the CAF, in the ASBA Account, of which details are provided in the CAF and have signed the same.

Ensure that you receive an acknowledgement from the Designated Branch of the SCSB for your

submission of the CAF in physical form.

Except for CAFs submitted on behalf of the Central or State Government, the residents of Sikkim and the officials appointed by the courts, each applicant should mention their PAN allotted under the I T Act.

Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the beneficiary

account is held with the Depository Participant. In case the CAF is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF.

Ensure that the Demographic Details are updated, true and correct, in all respects.

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Ensure that the account holder in whose bank account the funds are to be blocked has signed

authorising such funds to be blocked.

Apply under ASBA process only of you fall under the definition of an ASBA Investor. Don’ts:

Do not apply if you are not eligible to participate in the Issue under the securities laws applicable to your jurisdiction.

Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the SCSB.

Do not pay the amount payable on application in cash, by money order, by pay order or by postal order.

Do not send your physical CAFs to the Lead Manager to Issue/ Registrar/ Collecting Banks (assuming

that such Collecting Bank is not a SCSB)/ to a branch of the SCSB which is not a Designated Branch of the SCSB/ Company; instead submit the same to a Designated Branch of the SCSB only.

Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this

ground.

Do not apply if the ASBA account has been used for five applicants.

Do not apply through the ASBA Process if you are not an ASBA Investor.

Do not instruct the SCSBs to release the funds blocked under the ASBA Process. Grounds for Technical Rejection under the ASBA Process In addition to the grounds listed under “Grounds for Technical Rejection for non-ASBA Investors” on page 150, applications under the ABSA Process are liable to be rejected on the following grounds:

Application on a SAF.

Application for allotment of Rights Entitlements or additional shares which are in physical form.

DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available with the Registrar.

Sending CAF to a Lead Manager/ Registrar/ Collecting Bank (assuming that such Collecting Bank is

not a SCSB)/ to a branch of a SCSB which is not a Designated Branch of the SCSB/ Company.

Insufficient funds are available with the SCSB for blocking the amount.

Funds in the ASBA Account having been frozen pursuant to regulatory order.

ASBA Account holder not signing the CAF or declaration mentioned therein.

CAFs that do not include the certification set out in the CAF to the effect that the subscriber is not a “U.S. Person” (as defined under Regulation S) and does not have a registered address (and is not otherwise located) in the United States or restricted jurisdictions and is authorized to acquire the rights and the securities in compliance with all applicable laws and regulations.

CAFs which have evidence of being executed in/ dispatched from a restricted jurisdiction or executed

by or for the account or benefit of a U.S. Person (as defined in Regulation S).

Renouncees applying under the ASBA Process.

Submission of more than five CAFs per ASBA Account.

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QIBs, Non-Institutional Investors and other Equity Shareholders applying for Equity Shares in this

Issue for value of more than ` 200,000 who holds Equity Shares in dematerialised form and is not a Renouncer or a Renouncee not applying through the ASBA process.

The application by an Equity Shareholder whose cumulative value of Equity Shares applied for is more

than ` 200,000 but has applied separately through split CAFs of less than ` 200,000 and has not done so through the ASBA process.

Multiple CAFs, including cases where an Investor submits CAFs along with a plain paper application.

Submitting the GIR instead of the PAN.

An Equity Shareholder, who is not complying with any or all of the conditions for being an ASBA

Investor, applies under the ASBA process. Depository account and bank details for Equity Shareholders applying under the ASBA Process ALL EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS MUST ENSURE THAT THE NAME GIVEN IN THE CAF IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE CAF. Equity Shareholders applying under the ASBA Process should note that on the basis of name of these Equity Shareholders, Depository Participant’s name and identification number and beneficiary account number provided by them in the CAF, the Registrar to the Issue will obtain from the Depository demographic details of these Equity Shareholders such as address, bank account details for printing on refund orders and occupation (“Demographic Details”). Hence, Equity Shareholders applying under the ASBA Process should carefully fill in their Depository Account details in the CAF. These Demographic Details would be used for all correspondence with such Equity Shareholders including mailing of the letters intimating unblocking of their respective ASBA Accounts. The Demographic Details given by the Equity Shareholders in the CAF would not be used for any other purposes by the Registrar. Hence, Equity Shareholders are advised to update their Demographic Details as provided to their Depository Participants. By signing the CAFs, the Equity Shareholders applying under the ASBA Process would be deemed to have authorised the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records. Letters intimating Allotment and unblocking the funds would be mailed at the address of the Equity Shareholder applying under the ASBA Process as per the Demographic Details received from the Depositories. The Registrar to the Issue will give instructions to the SCSBs for unblocking funds in the ASBA Account to the extent equity shares are not allotted to such Equity Shareholders. Equity Shareholders applying under the ASBA Process may note that delivery of letters intimating unblocking of the funds may get delayed if the same once sent to the address obtained from the Depositories are returned undelivered. In such an event, the address and other details given by the Equity Shareholder in the CAF would be used only to ensure dispatch of letters intimating unblocking of the ASBA Accounts. Note that any such delay shall be at the sole risk of the Equity Shareholders applying under the ASBA Process and none of us, the SCSBs or the Lead Manager shall be liable to compensate the Equity Shareholder applying under the ASBA Process for any losses caused due to any such delay or liable to pay any interest for such delay. In case no corresponding record is available with the Depositories that matches three parameters, (a) names of the Equity Shareholders (including the order of names of joint holders), (b) the DP ID and (c) the beneficiary account number, then such applications are liable to be rejected.

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Issue Schedule

Issue Opening Date: [ ] Last date for receiving requests for SAFs: [ ] Issue Closing Date: [ ]

The Board may however decide to extend the Issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date. Basis of Allotment Subject to the provisions contained in the Letter of Offer, the Articles of Association and the approval of the Designated Stock Exchange, the Board will proceed to Allot the Equity Shares in the following order of priority:

i. Full Allotment to those Equity Shareholders who have applied for their Rights Entitlement either in full or in part and also to the Renouncee(s) who has/ have applied for Equity Shares renounced in their favour, in full or in part.

ii. Allotment pertaining to fractional entitlements in case of any shareholding other than in multiples of

[ ]. Investors whose fractional entitlements are being ignored would be given preference in allotment of one additional Equity Share each if they apply for additional Equity Share. Allotment under this head shall be considered if there are any unsubscribed Equity Shares after allotment under (a) above. If number of Equity Shares required for allotment under for this head are more than number of Equity Shares available after allotment under (a) above, the Allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange, as a part of Issue and will not be a preferential allotment.

iii. Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them as

part of the Issue 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) and (b) 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 Issue and will not be a preferential Allotment.

iv. Allotment to Renouncees who having applied for all the Equity Shares renounced in their favour, have

applied for additional Equity Shares provided there is surplus available after making full Allotment under (a), (b) and (c) 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 Issue and not preferential Allotment.

v. Allotment to any other person that the Board of Directors in their absolute discretion decide. Our Promoter, Hitachi Appliances Inc., has confirmed vide its letter dated November 01, 2012 that it intends to subscribe to the full extent of its Rights Entitlement in the Issue, in compliance with regulation 10 (4) of Takeover Regulations. Further it has confirmed that it intends to subscribe for (i) additional Right Issue Equity Shares, and (ii) Rights Issue Equity Shares, if any, which remain unsubscribed. Such subscription to additional Rights Issue Equity Shares and the unsubscribed portion, if any, to be made by the it, shall be in accordance with regulation 10 (4) of Takeover Regulations. Further, such subscription shall not result in breach of minimum public shareholding requirement as stipulated in the Listing Agreements. Underwriting The Issue shall not be underwritten. Allotment Advices/ Refund Orders We will issue and dispatch Allotment advice/ share certificates/ demat credit and/ or letters of regret along with refund order or credit the allotted Equity Shares to the respective beneficiary accounts, if any, within a period of

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15 days from the Issue Closing Date. If such money is not repaid within eight days from the day we become liable to repay it, we and every Director who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to pay the money with interest as prescribed under Section 73 of the Companies Act. Investors residing at centers where clearing houses are managed by the RBI will get refunds through National Electronic Clearing Service (“NECS”) except where Investors have not provided the details required to send electronic refunds. In case of those Investors who have opted to receive their Rights Entitlement in dematerialized form using electronic credit under the depository system, advice regarding their credit of the Equity Shares shall be given separately. Investors to whom refunds are made through electronic transfer of funds will be sent a letter through ordinary post intimating them about the mode of credit of refund within 15 days of the Issue Closing Date. In case of those Investors who have opted to receive their Rights Entitlement in physical form and we issue letter of allotment, the corresponding share 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 or other applicable provisions, if any. Investors are requested to preserve such letters of allotment, which would be exchanged later for the share certificates. For more information, please refer to the chapter “Terms of the Issue” on page 136. The letter of allotment/ refund order would be sent by registered post/ speed post to the sole/ first Investor’s registered address in India or the Indian address provided by the Equity Shareholders from time to time. Such refund orders would be payable at par at all places where the applications were originally accepted. The same would be marked ‘Account Payee only’ and would be drawn in favour of the sole/ first Investor. Adequate funds would be made available to the Registrar to the Issue for this purpose. Payment of Refund Mode of making refunds The payment of refund, if any, would be done through any of the following modes:

i. NECS – Payment of refund would be done through NECS for Investors having an account at any of the 68 centres where such facility has been made available. This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories/ the records of the Registrar. The payment of refunds is mandatory for Investors having a bank account at any centre where NECS facility has been made available (subject to availability of all information for crediting the refund through NECS).

ii. NEFT – Payment of refund shall be undertaken through NEFT wherever the Investors’ bank has been

assigned the Indian Financial System Code (IFSC), which can be linked to a MICR, allotted to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the Investors have registered their nine digit MICR number and their bank account number with the Registrar or with the depository participant while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the Investors through this method.

iii. RTGS – If the refund amount exceeds ` 200,000, the Investors have the option to receive refund

through RTGS. Such eligible Investors who indicate their preference to receive refund through RTGS are required to provide the IFSC code in the CAF. In the event the same is not provided, refund shall be made through NECS or any other eligible mode. Charges, if any, levied by the refund bank(s) for the same would be borne by the Company. Charges, if any, levied by the Investor’s bank receiving the credit would be borne by the Investor.

iv. Direct Credit – Investors having bank accounts with the Bankers to the Issue shall be eligible to

receive refunds through direct credit. Charges, if any, levied by the relevant bank(s) for the same would be borne by us.

v. For all other Investors the refund orders will be despatched through Speed Post/ Registered Post. Such

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refunds will be made by cheques, pay orders or demand drafts drawn in favour of the sole/ first Investor and payable at par.

vi. Credit of refunds to Investors in any other electronic manner permissible under the banking laws,

which are in force and are permitted by the SEBI from time to time. 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 Investor’s bank account are mandatorily required to be given for printing on the refund orders. Bank account particulars, where available, will be printed on the refund orders/ refund warrants which can then be deposited only in the account specified. We will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud. Allotment advice/ Share Certificates/ Demat Credit Allotment advice/ share certificates/ demat credit or letters of regret will be dispatched to the registered address of the first named Investor or respective beneficiary accounts will be credited within 15 days, from the Issue Closing Date. Allottees are requested to preserve such allotment advice (if any) to be exchanged later for share certificates. Option to receive Equity Shares in Dematerialized Form Investors shall be allotted the Equity Shares in dematerialized (electronic) form at the option of the Investor. We have signed a tripartite agreement with NSDL and the Registrar to the Issue on April 14, 2010 which enables the Investors to hold and trade in Equity Shares in a dematerialized form, instead of holding the Equity Shares in the form of physical certificates. We have also signed a tripartite agreement with CDSL and the Registrar to the Issue on April 06, 2010 which enables the Investors to hold and trade in Equity Shares in a dematerialized form, instead of holding the Equity Shares in the form of physical certificates. In this Issue, the allottees who have opted for Equity Shares in dematerialized form will receive their Equity Shares in the form of an electronic credit to their beneficiary account as given in the CAF, after verification with a depository participant. Investor will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Allotment advice, refund order (if any) would be sent directly to the Investor by the Registrar to the Issue but the Investor’s depository participant will provide to him the confirmation of the credit of such Equity Shares to the Investor’s depository account. CAFs, which do not accurately contain this information, will be given the Equity Shares in physical form. No separate CAFs for Equity Shares in physical and/ or dematerialized form should be made. INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES CAN BE TRADED ON THE STOCK EXCHANGE ONLY IN DEMATERIALIZED FORM. The procedure for availing the facility for Allotment of Equity Shares in this Issue in the electronic form is as under:

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 registered in our records. In the case of joint holding, the beneficiary account should be opened carrying the names of the holders in the same order as registered in our records). In case of Investors having various folios 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.

For Equity Shareholders already holding Equity Shares in dematerialized form as on the Record Date,

the beneficial account number shall be printed on the CAF. For those who open accounts later or those who change their accounts and wish to receive their Equity Shares by way of credit to such account, the necessary details of their beneficiary account should be filled in the space provided in the CAF. It may be noted that the Allotment of Equity Shares arising out of this Issue may be made in dematerialized form even if the original Equity Shares are not dematerialized. Nonetheless, it should be ensured that the depository account is in the name(s) of the Equity Shareholders and the names are in the same order as in our records.

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The responsibility for correctness of information (including Investor’s age and other details) filled in

the CAF vis-à-vis such information with the Investor’s depository participant, would rest with the Investor. Investors should ensure that the names of the Investors and the order in which they appear in CAF should be the same as registered with the Investor’s depository participant.

If incomplete/ incorrect beneficiary account details are given in the CAF, then such shares will be

credited to a demat suspense a/c which shall be opened by the Company as specified in the SEBI circular no. SEBI/CFD/DIL/LA/1/2009/24/04 dated April 24, 2009.

The Equity Shares allotted to applicants opting for issue in 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 the applicant the confirmation of the credit of such Equity Shares to the applicant’s depository account.

Renouncees will also have to provide the necessary details about their beneficiary account for

Allotment of Equity Shares in this Issue. In case these details are incomplete or incorrect, the application is liable to be rejected.

General instructions for non-ASBA Investors

i. Please read the instructions printed on the CAF carefully.

ii. Application should be made on the printed CAF, provided by us except as mentioned under the head “Application on Plain Paper” on page 143 and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of the Letter of Offer or Abridged Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any. The CAF must be filled in English and the names of all the Investors, details of occupation, address, father’s/ husband’s name must be filled in block letters.

iii. The CAF together with the cheque/ demand draft should be sent to the Bankers to the Issue/ Collecting

Bank or to the Registrar to the Issue and not to us or Lead Manager to the Issue. Investors residing at places other than cities where the branches of the Bankers to the Issue have been authorised by us for collecting applications, will have to make payment by demand draft payable at Mumbai of an amount net of bank and postal charges and send their CAFs to the Registrar to the Issue by registered post. If any portion of the CAF is/ are detached or separated, such application is liable to be rejected. CAF’s receiving after banking hours on closure day will be liable for rejection.

iv. Applications where separate cheques/ demand drafts are not attached for amounts to be paid for Equity

Shares are liable to be rejected.

v. Except for applications on behalf of the Central and State Government, the residents of Sikkim and the officials appointed by the courts, all Investors, and in the case of application in joint names, each of the joint Investors, should mention his/ her PAN number allotted under the I.T. Act, irrespective of the amount of the application. CAFs without PAN will be considered incomplete and are liable to be rejected.

vi. Investors, holding Equity Shares in physical form, are advised that it is mandatory 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 the Issue 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.

vii. All payment should be made by cheque/ demand draft only. Application through the ASBA process as

mentioned above is acceptable. Cash payment is not acceptable. In case payment is effected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.

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viii. Signatures should be either in English or Hindi or in any other language specified in the Eighth

Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with us/ Depositories.

ix. 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 the signatory to make the relevant investment under this Issue and to sign the application and certified true a copy of the Memorandum and Articles of Association and/ or bye laws of such body corporate or society must be lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case the above referred documents are already registered with us, the same need not be a furnished again. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue Closing Date, then the application is liable to be rejected. In no case should these papers be attached to the application submitted to the Bankers to the Issue.

x. 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 us or the Depositories. Further, in case of joint Investors who are Renouncees, the number of Investors should not exceed three. In case of joint Investors, reference, if any, will be made in the first Investor’s name and all communication will be addressed to the first Investor.

xi. Application(s) received from NRs/ 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, including regulations relating to QFI’s, in the matter of refund of application money, Allotment of Equity Shares, subsequent issue and Allotment of Equity Shares, interest, export of share certificates, etc. In case a NR 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. Additionally, applications will not be accepted from NRs/ NRIs in the United States or its territories and possessions, or any other jurisdiction where the offer or sale of the Rights Entitlements and Equity Shares may be restricted by applicable securities laws.

xii. 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 Allotment in this Issue quoting the name of the first/ sole Investor, 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 our Registrar and Transfer Agent, in the case of Equity Shares held in physical form and to the respective depository participant, in case of Equity Shares held in dematerialized form.

xiii. SAFs cannot be re-split. xiv. Only the Equity Shareholder(s) and not Renouncee(s) shall be entitled to obtain SAFs.

xv. Investors must write their CAF number at the back of the cheque/ demand draft.

xvi. Only one mode of payment per application should be used. The payment must be 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.

xvii. 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 outstation cheques/ outstation demand drafts/ money orders or postal orders will be rejected.

xviii. No receipt will be issued 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.

xix. The distribution of the Letter of Offer and issue of Equity Shares and Rights Entitlements to persons in

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certain jurisdictions outside India may be restricted by legal requirements in those jurisdictions. Persons in such jurisdictions are instructed to disregard the Letter of Offer and not to attempt to subscribe for Equity Shares.

Do’s for non-ASBA Investors: • Check if you are eligible to apply i.e. you are an Equity Shareholder on the Record Date; • Read all the instructions carefully and ensure that the cheque/ draft option is selected in part A of the CAF

and necessary details are filled in; • In the event you hold Equity Shares in dematerialised form, ensure that the details about your Depository

Participant and beneficiary account are correct and the beneficiary account is activated as the Equity Shares will be allotted in the dematerialized form only;

• Ensure that your Indian address is available to us and the Registrar, in case you hold Equity Shares in

physical form or the depository participant, in case you hold Equity Shares in dematerialised form; • Ensure that the value of the cheque/ draft submitted by you is equal to the (number of Equity Shares applied

for) X (Issue Price of Equity Shares, as the case may be) before submission of the CAF; • Ensure that you receive an acknowledgement from the collection branch of the Banker to the Issue for your

submission of the CAF in physical form; • Ensure that you mention your PAN allotted under the I.T. Act with the CAF, except for Applications on

behalf of the Central and State Governments, residents of the state of Sikkim and officials appointed by the courts;

• Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the beneficiary

account is held with the Depository Participant. In case the CAF is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF;

• Ensure that the demographic details are updated, true and correct, in all respects. Don’ts for non-ASBA Investors: • Do not apply if you are not eligible to participate in the Issue the securities laws applicable to your

jurisdiction; • Do not apply on duplicate CAF after you have submitted a CAF to a collection branch of the Banker to the

Issue; • Do not pay the amount payable on application in cash, by money order or by postal order; • Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this ground; • Do not submit Application accompanied with Stock invest; Grounds for Technical Rejections for non-ASBA Investors. Investors are advised to note that applications are liable to be rejected on technical grounds, including the following: • Amount paid does not tally with the amount payable; • Bank account details (for refund) are not given and the same are not available with the DP (in the case of

dematerialized holdings) or the Registrar (in the case of physical holdings);

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• Age of Investor(s) not given (in case of Renouncees); • Except for CAFs on behalf of the Central or State Government, the residents of Sikkim and the officials

appointed by the courts, PAN number not given for application of any value; • In case of CAF under power of attorney or by limited companies, corporate, trust, relevant documents are

not submitted; • If the signature of the Equity Shareholder does not match with the one given on the CAF and for

Renouncee(s) if the signature does not match with the records available with their Depositories; • CAFs are not submitted by the Investors within the time prescribed as per the CAF and the Letter of Offer; • CAFs not duly signed by the sole/ joint Investors; • CAFs/ SAFs by OCBs not accompanied by a copy of an RBI approval to apply in this Issue; • CAFs accompanied by Stockinvest/ outstation cheques/ post-dated cheques/ money order/ postal order/

outstation demand draft; • In case no corresponding record is available with the Depositories that matches three parameters, namely,

names of the Investors (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and the beneficiary’s identity;

• CAFs that do not include the certifications set out in the CAF to the effect that the subscriber is not a “U.S.

Person” (as defined in Regulation S) and does not have a registered address (and is not otherwise located) in the United States or other restricted jurisdictions and is authorized to acquire the Rights Entitlements and Equity Shares in compliance with all applicable laws and regulations;

• CAFs which have evidence of being executed in/ dispatched from restricted jurisdictions; • CAFs by ineligible non-residents (including on account of restriction or prohibition under applicable local

laws) and where the registered addressed in India has not been provided; • CAFs where we believe that CAF is incomplete or acceptance of such CAF may infringe applicable legal or

regulatory requirements; • In case the GIR number is submitted instead of the PAN; • CAFs submitted by Renouncees where Part B of the CAF is incomplete or is unsigned. In case of joint

holding, all joint holders must sign Part ‘B’ of the CAF; • Applications by Renouncees who are persons not competent to contract under the Indian Contract Act,

1872, including minors; • Multiple CAFs, including cases where an Investor submits CAFs along with a plain paper application; and • Applications from QIBs, Non-Institutional Investors or Investors applying in this Issue for Equity Shares

for an amount exceeding ` 200,000, not through ASBA process. Please read the Letter of Offer or Abridged Letter of Offer and the instructions contained therein and in the CAF carefully before filling in the CAF. The instructions contained in the CAF are an integral part of the Letter of Offer and must be carefully followed. The CAF is liable to be rejected for any non-compliance of the provisions contained in the Letter of Offer or the CAF. Investment by FIIs In accordance with the current regulations, the following restrictions are applicable for investment by FIIs:

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No single FII can hold more that 10% of our post-Issue paid-up share capital. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 5% of our total paid-up share capital. Applications will not be accepted from FIIs in restricted jurisdictions. Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number CIR/ CFD/ DIL/ 1/ 2011 dated April 29, 2011, all applicants who are QIBs, Non-Institutional Investors or are other Equity Shareholders applying in this Issue for Equity Shares for an amount exceeding ` 200,000 shall mandatorily make use of ASBA facility. Investment by NRIs Investments by NRIs are governed by the Portfolio Investment Scheme under Regulation 5(3)(i) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. Applications will not be accepted from NRIs in restricted jurisdictions. Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number CIR/ CFD/ DIL/ 1/ 2011 dated April 29, 2011, all applicants who are QIBs, Non-Institutional Investors or are applying in this Issue for Equity Shares for an amount exceeding ` 200,000 shall mandatorily make use of ASBA facility. Procedure for Applications by Mutual Funds A separate application can be made in respect of each scheme of an Indian mutual fund registered with the SEBI and such applications shall not be treated as multiple applications. The applications made by asset management companies or custodians of a mutual fund should clearly indicate the name of the concerned scheme for which the application is being made. Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number CIR/ CFD/ DIL/ 1/ 2011 dated April 29, 2011, all applicants who are QIBs, Non-Institutional Investors or are applying in this Issue for Equity Shares for an amount exceeding ` 200,000 shall mandatorily make use of ASBA facility. Investment by QFIs In terms of circulars dated January 13, 2012, SEBI and RBI have permitted investment by QFIs in Indian equity issues, including in rights issues. A QFI can invest in the Issue through its depository participant with whom it has opened a demat account. No single QFI can hold more than five percent of paid up equity capital of the company at any point of time (includes investment made as a QFI and FDI). Further, aggregate shareholding of all QFIs shall not exceed ten percent of the paid up equity capital of the Company at any point of time. Applications will not be accepted from QFIs in restricted jurisdictions QFI applicants which are QIBs, Non-Institutional Investors or whose application amount exceeds ` 200,000 can participate in the Issue only through the ASBA process. Mode of payment for Resident Equity Shareholders/ Investors

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 “Hitachi Home & Life Solutions (India) Limited – Rights Issue - R”;

Investors residing at places other than places where the bank collection centres have been opened by us

for collecting applications, are requested to send their CAFs together with Demand Draft for the full application amount, net of bank and postal charges favouring the Bankers to the Issue, crossed ‘A/c Payee only’ and marked “Hitachi Home & Life Solutions (India) Limited – Rights Issue - R” 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. We or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any.

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Mode of payment for Non-Resident Equity Shareholders/ Investors

As regards the application by non-resident Equity Shareholders/ Investors, the following conditions shall apply:

Individual non-resident Indian applicants who are permitted to subscribe for Equity Shares by

applicable local securities laws can also obtain application forms from the following address:

Sharepro Services (India) Private Limited 13 AB, Samhita Warehousing Complex, Sakinaka Telephone Exchange Lane, Off Andheri-Kurla Road, Sakinaka, Andheri (East), Mumbai – 400 072, Maharashtra, India Tel: +91 22 6191 5400 Fax: +91 22 6191 5444 Website: www.shareproservices.com Email: [email protected] Contact Person: Mr. Prakash A. Khare / Anand Moolya SEBI Registration No: INR000001476

Note: the Letter of Offer/ Abridged Letter of Offer and CAFs to NRIs shall be sent only to their Indian address, if provided

Applications will not be accepted from non-resident from any jurisdiction where the offer or sale of the

Rights Entitlements and Equity Shares may be restricted by applicable securities laws.

All non-resident investors should draw the cheques/ demand drafts in favour of “Hitachi Home & Life Solutions (India) Limited – Rights Issue – NR”, crossed “A/c Payee only” for the full application amount, net of bank and postal charges and which should be submitted along with the CAF to the Bankers to the Issue/ collection centres or to the Registrar to the Issue.

Non-resident investors applying from places other than places where the bank collection centres have

been opened by the Company for collecting applications, are requested to send their CAFs together with Demand Draft for the full application amount, net of bank and postal charges drawn in favour of Bankers to the Issue, crossed “A/c Payee only” and marked “Hitachi Home & Life Solutions (India) Limited – Rights Issue – NR” 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 to the Issue will not be responsible for postal delays or loss of applications in transit, if any.

Payment by non-residents must be made by demand draft payable at Mumbai / cheque payable drawn

on a bank account maintained at Mumbai or funds remitted from abroad in any of the following ways: Application with repatriation benefits

i. By Indian Rupee drafts purchased from abroad and payable at Mumbai or funds remitted from abroad (submitted along with Foreign Inward Remittance Certificate);

ii. By cheque/ draft on a Non-Resident External Account (NRE) or FCNR Account maintained in India;

iii. By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable

in Mumbai;

iv. FIIs registered with SEBI must remit funds from special non-resident rupee deposit account; or

v. Non-resident investors applying with repatriation benefits should draw cheques/ drafts in favour of ‘Hitachi Home & Life Solutions (India) Limited – Rights Issue - NR’ and must be crossed ‘account

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payee only’ for the full application amount.

vi. Investors may note that where 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 should be enclosed with the CAF. Otherwise the application shall be considered incomplete and is liable to be rejected.

Application without repatriation benefits

i. As far as non-residents holding Equity Shares on non-repatriation basis are concerned, in addition to the modes specified above, payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained in India or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Mumbai. In such cases, the Allotment of Equity Shares will be on non-repatriation basis.

ii. All cheques/ drafts submitted by non-residents applying on a non-repatriation basis should be drawn in

favour of ‘Hitachi Home & Life Solutions (India) Limited – Rights Issue – R’ and must be crossed ‘account payee only’ for the full application amount. The CAFs duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

iii. Investors 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.

iv. New demat account shall be opened for holders who have had a change in status from resident Indian

to NRI. Any application from a demat account which does not reflect the accurate status of the Applicant are liable to be rejected.

Notes:

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 the I.T. Act.

In case Equity Shares are allotted on a non-repatriation basis, the dividend and sale proceeds of the

Equity Shares cannot be remitted outside India.

The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

In case of an 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.

Impersonation As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of sub-section (1) of section 68A of the Companies Act which is reproduced below: “Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein, or 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”. Payment by Stockinvest

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In terms of RBI Circular DBOD No. FSC BC 42/ 24.47.00/ 2003-04 dated November 5, 2003, the Stockinvest Scheme has been withdrawn. Hence, payment through Stockinvest would not be accepted in this Issue. Disposal of application and application money No acknowledgment will be issued for the application moneys received by us. However, the Bankers to the Issue/ Registrar to the Issue/ Designated Branch of the SCSBs 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 Investor within a period of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day we become liable to repay it, we and every Director 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 Section 73 of the Companies Act. For further instructions, please read the CAF carefully. Utilisation of Issue Proceeds The Board of Directors declares that:

i. All monies received out of this Issue shall be transferred to a separate bank account referred to sub-section (3) of Section 73 of the Companies Act;

ii. Details of all monies utilized out of the Issue shall be disclosed under an appropriate separate head in

our balance sheet indicating the purpose for which such monies have been utilized till the time any of the Issue Proceeds remained unutilised;

iii. Details of all unutilized monies out of the Issue, if any, shall be disclosed under an appropriate separate

head in our balance sheet indicating the form in which such unutilized monies have been invested; and

iv. We may utilize the funds collected in the Issue only after finalisation of the Basis of Allotment. Undertakings by us We undertake the following:

i. The complaints received in respect of the Issue shall be attended to by us expeditiously and satisfactorily.

ii. All steps for completion of the necessary formalities for listing and commencement of trading at all

Stock Exchange where the Equity Shares are to be listed will be taken within 15 days of the Issue Closing Date / 7 days from the finalization of the Basis of Allotment.

iii. The funds required for making refunds to unsuccessful applicants as per the modes disclosed shall be

made available to the Registrar to the Issue by us.

iv. We undertake that where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the Investor within seven working days of finalisation of Basis of Allotment, giving details of the banks where refunds shall be credited along with amount and expected date of electronic credit of refund.

v. Adequate arrangements shall be made to collect all ASBA applications and to consider them similar to

non-ASBA applications while finalising the basis of Allotment.

vi. The certificates of the securities/ refund orders to the non-resident Indians shall be dispatched within

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the specified time. vii. No further issue of securities affecting our equity capital shall be made till the securities issued/ offered

through the Letter of Offer Issue are listed or till the application money are refunded on account of non-listing, under-subscription etc.

viii. At any given time there shall be only one denomination of our Equity Shares.

ix. We accept full responsibility for the accuracy of information given in the Letter of Offer and confirm that to the best of our knowledge and belief, there are no other facts the omission of which makes any statement made in the Letter of Offer misleading and further confirms that we have made all reasonable enquiries to ascertain such facts.

x. All information shall be made available by the Lead Manager and the Issuer to the 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.

xi. We shall comply with such disclosure and accounting norms specified by SEBI from time to time.

Minimum Subscription If we do not receive minimum subscription of 90% of the Issue including subscription to any undersubscribed portion of the Issue by the Promoter and the Promoter Group, the entire subscription shall be refunded to the Applicants within 15 days from the Issue Closing Date. If there is delay in the refund of subscription by more than 8 days after we become liable to pay the subscription amount (i.e., 15 days after the Issue Closing Date or the date of refusal by the Stock Exchanges to grant listing permission to us for the listing of the Equity Shares Allotted in this Issue, whichever is earlier), the Company and every Director of the Company who is an officer in default will be liable to pay interest for the delayed period, at prescribed rates in sub-sections (2) and (2A) of Section 73 of the Companies Act. Important

Please read the Letter of Offer carefully before taking any action. The instructions contained in the accompanying CAF are an integral part of the conditions and must be carefully followed; otherwise the application is liable to be rejected.

All enquiries in connection with the Letter of Offer or accompanying CAF and requests for SAFs must

be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and the name of the first Equity Shareholder as mentioned on the CAF and super scribed ‘Hitachi Home & Life Solutions (India) Limited - Rights Issue’ on the envelope and postmarked in India) to the Registrar to the Issue at the following address:

Sharepro Services (India) Private Limited 13 AB, Samhita Warehousing Complex, Sakinaka Telephone Exchange Lane, Off Andheri-Kurla Road, Sakinaka, Andheri (East), Mumbai – 400 072, Maharashtra, India Tel: +91 22 6191 5400 Fax: +91 22 6191 5444 Website: www.shareproservices.com Email: [email protected] Contact Person: Mr. Prakash A. Khare / Anand Moolya SEBI Registration No: INR000001476

It is to be specifically noted that this Issue of Equity Shares is subject to the risk factors mentioned in the chapter titled “Risk Factors” on page XI.

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The Issue will remain open for a minimum 15 days. However, the Board will have the right to extend the Issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date.

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SECTION IX – STATUTORY AND OTHER INFORMATION

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION The following contracts (not being contracts entered into in the ordinary course of business carried on by us or entered into more than two years before the date of this Draft Letter of Offer) which are or may be deemed material have been entered or are to be entered into by us. These contracts and also the documents for inspection referred to hereunder, may be inspected at our registered office situated at 9th Floor, Abhijeet-I, Mithakhali Six Roads, Ahmedabad - 380 006, Gujarat, India., from 11.00 a.m. to 5.00 p.m. on working days from the date of filing of this Draft Letter of Offer with SEBI until the Issue Closing Date. (A) MATERIAL CONTRACTS 1. Agreement dated December 12, 2012 entered into between us and the Lead Manager to the Issue.

2. Agreement dated December 01, 2012 entered into between us and the Registrar to the Issue.

3. Tripartite Agreement dated April 14, 2010 between us, Sharepro Services (India) Private Limited and the

NSDL to establish direct connectivity with the Depository

4. Tripartite Agreement dated April 06, 2010 between us, Sharepro Services (India) Private Limited and the CDSL to establish direct connectivity with the Depository.

(B) DOCUMENTS 1. Our Memorandum and Articles of Association. 2. Our certificates of incorporation dated December 7, 1984 and fresh certificates of incorporation dated April

18, 1990, September 14, 1990, January 25, 1999 and March 12, 2003. 3. Consents of the Directors, Company Secretary and Compliance Officer, Auditors, Lead Manager to the

Issue, Bankers to the Issue, Legal Counsel and the Registrar to the Issue to include their names in this Draft Letter of Offer to act in their respective capacities.

4. Copy of the resolution of the Board of Directors dated October 18, 2012 authorising the Issue and related

matters. 5. The Report of the Auditors being, S. R. Batliboi & Associates, as set out herein dated December 10, 2012 in

relation to financial results subjected to limited review for the six months ended September 30, 2012.

6. A report by the Auditors being, S. R. Batliboi & Associates on Statement of tax benefit available to us and prospective shareholders dated December 12, 2012.

7. Copy of the letter of offer for our last rights issue dated November 18, 2003.

8. Our Annual Reports for the last five financial years. 9. In-principle listing approvals dated [●] and [●] from BSE and NSE respectively. 10. Due Diligence Certificate dated December 13, 2012 from ICICI Securities Limited. 11. Letter no. [●] dated [●] issued by the SEBI for the Issue.

Any of the contracts or documents mentioned in this Draft Letter of Offer may be amended or modified at any time if so required in the interest of the Company or if required by the other parties, without reference to the Equity Shareholders, subject to compliance with applicable law.

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DECLARATION

We hereby certify that no statement made in this Draft Letter of Offer contravenes any of the provisions of the Companies Act, 1956 and the rules made thereunder. We further certify that all the legal requirements connected with the Issue as also the guidelines, instructions, etc., issued by SEBI, the Government of India and any other competent authority in this behalf, have been duly complied with. We further certify that all disclosures made in this Draft Letter of Offer are true and correct.

Shinichi Iizuka Chairman

Motoo Morimoto Managing Director

Amit Doshi Executive Director

Anil Shah Executive Director (Finance)

Vinay Chauhan Executive Director

L G Ramakrishnan Non - Executive Director

Devender Nath Non - Executive &Independent Director

Ashok Balwani Non - Executive &Independent Director

Mukesh Patel Non - Executive &Independent Director

RS Mani Non - Executive &Independent Director

Ravindra Jain Non - Executive &Independent Director

Vinesh Sadekar Non - Executive &Independent Director

Date: December 13, 2012 Place: Ahmedabad

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