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Draft Red Herring ProspectusPlease read Section 60B of the Companies Act, 1956

Dated March 28, 2007(The draft Red Herring Prospectus will be updated andWill become Red Herring Prospectus upon ROC filing)

100% Book Building Issue

VEENA INDUSTRIES LIMITED(Formed as a proprietorship firm on 4th January 1980 as M/s Veena Industries, converted into partnership firm on 4th October 1982 at andwas subsequently converted in to a private limited company under Part IX of the Companies Act, 1956 as M/s Veena Industries PrivateLimited vide Certificate of Incorporation dated October 9, 1996 with its registered office at S-145, MIDC Bhosari, Pune 411 026, Maharashtra.Subsequently the Company was converted into public limited company as “Veena Industries Limited” on February 23, 2007).

Registered & Corporate Office: S- 145, MIDC Bhosari, Pune 411 026, MaharashtraTel No: +91 20 30680825 Fax No: +91 20 30680820

E-mail: [email protected], Website: www.veenaindustries.comContact person/Compliance officer: Ms. Deepika Agarwal, Company Secretary and Compliance Officer

PUBLIC ISSUE OF 45,66,600 EQUITY SHARES OF FACE VALUE RS. 10/- EACH FOR CASH AT A PRICE OF RS. [ ] PER EQUITYSHARE (INCLUDING SHARE PREMIUM OF RS. [ ] PER SHARE) AGGREGATING RS. [ ] LAKHS INCLUDING RESERVATIONFOR ELIGIBLE EMPLOYEES OF 50,000 EQUITY SHARES OF RS. 10 EACH AT A PRICE OF RS. [ ] PER EQUITY SHAREAGGREGATING RS. [ ] LAKHS (EMPLOYEE RESERVATION PORTION). THE NET ISSUE TO PUBLIC OF 45,16,600 EQUITYSHARES WOULD CONSTITUTE 34.97% OF THE FULLY DILUTED POST ISSUE PAID UP CAPITAL OF VEENA INDUSTRIESLIMITED (“COMPANY” OR “ISSUER”).

PRICE BAND: RS. [ ] TO RS. [ ] PER EQUITY SHARE OF FACE VALUE OF RS. 10/- EACHTHE ISSUE PRICE IS [ ] TIMESOF THE FACE VALUE AT THE LOWER END OF THE PRICE BAND AND [ ] TIMES OF THE FACE VALUE AT THE HIGHER

END OF THE PRICE BAND

In case of revision in the Price Band, the Bidding Period will be extended for three additional working days after such revision, subject tothe Bidding Period not exceeding 10 working days. Any revision in the Price Band and the revised Bidding Period, if applicable, will bewidely disseminated by notification to the Bombay Stock Exchange Limited (“BSE”) and the National Stock Exchange of India Limited(“NSE”), by issuing a press release, and also by indicating the change on the website of the Book Running Lead Managers (“BRLMs”)and the terminals of the members of the Syndicate.This Issue is being made through the 100% Book Building Process wherein at least 50% of the Net Issue shall be mandatorily allocated ona proportionate basis to QIBs as specified in the Disclosure and Investor Protection Guidelines, 2000 of the Securities and Exchange Boardof India (“SEBI”). 5% of the QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only. If at least 50% of theNet Issue cannot be allocated to QIB Bidders, then the entire money will be refunded. Further, not less than 15% of the Net Issue shall beavailable for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available forallocation on a proportionate basis to Retail Individual Bidders, subject to valid bids being received at or above the Issue Price.

RISK IN RELATION TO THE FIRST ISSUEThis being the first issue of the Equity Shares of the Company, there has been no formal market for the Equity Shares of the Company.The face value of the Equity Shares is Rs.10/- and the issue price is [ ] times of the face value at the lower end of the Price Band and [ ]times of the face value at the higher end of the Price Band. The Issue Price (as determined and justified by the Company in consultationwith Book Running Lead Manager as stated under paragraph titled “Basis for Issue Price” on Page [ ] of this Red Herring Prospectus onthe basis of assessment of Market Demand for the Equity Shares issued by way of Book Building) should not be taken to be indicativeof the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active or sustainedtrading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.

GENERAL RISKSInvestment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unlessthey can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking aninvestment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and theIssue including the risk involved. The Equity Shares issued in the Issue have not been recommended or approved by the Securities andExchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of the investorsis invited to the statement of Risk Factors beginning on Page [ ] of this Red Herring Prospectus.

ISSUER’S ABSOLUTE RESPONSIBILITYVeena Industries Limited, having made all reasonable enquiries, accepts responsibility for, and confirms that this Red Herring Prospectuscontains all information with regard to the Company and the Issue, which is material in the context of the Issue, that the informationcontained in this Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that theopinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this documentas a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

OUR COMPANY HAS NOT OPTED FOR IPO GRADING

LISTING ARRANGEMENTSThe Equity Shares proposed to be issued through this Red Herring Prospectus are proposed to be listed on Bombay Stock ExchangeLimited (BSE) and National Stock Exchange of India Limited (NSE), Mumbai. The in-principle approval for listing from these stock exchangeshave been received vide letters dated [ ] & [ ] respectively. For purposes of the Issue, BSE shall be the Designated Stock Exchange.

BOOK RUNNING LEAD MANAGER

Aarthi Consultants Pvt Ltd1-2-285, Domalguda,Hyderabad - 500029.Ph: 040-27638111, 27634445Fax: 040-27632184Website: www.aarthiconsultants.comContact Person: Mr. G. Bhaskar

SPA Merchant Bankers Limited10A, 10th Floor, Chandermukhi Building,Nariman Point, Mumbai – 400021.Tel. No. +91 22 22843434Fax No. +91 22 22871192Email: [email protected]: www.spacapital.comContact person: Ms. Ritcha Bhandari

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

ISSUE PROGRAMME

REGISTRAR TO THE ISSUE

TABLE OF CONTENTS

Title Page

DEFINITIONS AND ABBREVIATIONS ............................................................................................................. 1

PRESENTATION OF FINANCIAL AND MARKET DATA ................................................................................ 6

FORWARD- LOOKING STATEMENTS ............................................................................................................. 7

RISK FACTORS ................................................................................................................................................ 8

SUMMARY ................................................................................................................................................ 16

THE ISSUE ................................................................................................................................................ 19

SUMMARY FINANCIAL AND OPERATING INFORMATION........................................................................... 20

GENERAL INFORMATION ................................................................................................................................ 23

CAPITAL STRUCTURE ..................................................................................................................................... 30

OBJECT OF THE ISSUE.................................................................................................................................... 39

BASIC TERMS OF THE ISSUE ......................................................................................................................... 48

ISSUE STRUCTURE .......................................................................................................................................... 50

BASIS FOR ISSUE PRICE................................................................................................................................. 53

STATEMENT OF TAX BENEFITS ..................................................................................................................... 56

INDUSTRY OVERVIEW ..................................................................................................................................... 64

OUR BUSINESS ................................................................................................................................................ 69

HISTORY AND COPORATE STRUCTURE ...................................................................................................... 84

OUR MANAGEMENT ......................................................................................................................................... 87

OUR PROMOTERS ............................................................................................................................................ 98

FINANCIAL STATEMENTS ............................................................................................................................... 107

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS AS REFLECTED IN THE RESTATED FINANCIAL SATEMENTS ......... 133

LEGAL AND OTHER INFORMATION ............................................................................................................... 143

GOVERNMENT AND OTHER APPROVALS .................................................................................................... 146

OTHER REGULATORY AND STATUTORY DISCLOSURES .......................................................................... 148

TERMS OF THE ISSUE ...................................................................................................................................... 156

ISSUE PROCEDURE ......................................................................................................................................... 159

MAIN PROVISIONS OF ARTICLE OF ASSOCIATION OF OUR COMPANY................................................... 188

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ................................................................ 203

DECLARATION ................................................................................................................................................ 204

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DEFINITIONS AND ABBREVIATIONS Conventional / General Terms Term Description Act / Companies Act The Companies Act, 1956, as amended from time to time for the time being in

force Equity Shares The Equity Shares of Face Value of Rs. 10/-each our Company Depository A Company which has been granted a certificate of registration under Sub-section

(1A) of Section 12 of the Securities and Exchange Board of India Act, 1992 read with under the SEBI (Depositories and Participant) Regulations, 1996, as amended from time to time.

Depositories Act The Depositories Act, 1996, as amended from time to time for the time being in force

Depository Participant A depository participant as defined under Section 2(g) of the Depositories Act, 1996

FEMA Foreign Exchange Management Act, 1999, as amended from time to time and the regulations framed there under for the time being in force

Financial Year / FY / Fiscal

Period of twelve months ended March 31st of that particular year

FIs Financial Institutions FII / Foreign Institutional Investor

Foreign Institutional Investor (as defined under SEBI (Foreign Institutional Investors) Regulations, 1995) registered with SEBI under applicable laws in India

FVCIs Foreign Venture Capital Investors, as defined and registered with SEBI under the SEBI (Foreign Venture Capital Investor) Regulations, 2000, as amended from time to time

Indian GAAP Generally Accepted Accounting Principles in India IT Act The Income-Tax Act, 1961, as amended from time to time and for the time being

in force NRI / Non-Resident Indian

A person resident outside India, as defined under FEMA and who is a citizen of India or a Person of Indian Origin under FEMA (Transfer or issue of Security by a Person Resident Outside India) Regulations, 2000.

SCRR Securities Contracts (Regulations) Rules, 1957 as amended from time to time SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992 SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to time

and for the time being in force SEBI Guidelines SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by SEBI on

January 27, 2000, as amended, including instructions and clarifications issued by SEBI from time to time

SEBI MAPIN Regulations

The SEBI (Central Database of Market Participants) Regulations, 2003, as amended from time to time.

VCFs Venture Capital Funds as defined and registered with SEBI under the SEBI (Venture Capital Fund) Regulations, 1996, as amended from time to time

Company / Industry Related Terms Term Description Veena Industries Limited / We / Us / the Company / Our Company/ the Issuer

Unless the context otherwise indicates or implies refers to Veena Industries Limited, a public limited company which manufactures and assembles components for the generator set industry.

ACMA Automotive Component Manufacturer Association of India AOA / Articles / Articles of Association

Articles of Association of Veena Industries LimIted

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ARAI Automotive Research Authority Of India Auditors The statutory auditors of our Company M/s Prakash Shah & Co., Chartered

Accountants Board of Directors The Board of Directors of Veena Industries Limited CPCB Central Pollution Control Board Compliance Officer Compliance Officer of the Company in this case, Ms. Deepika Agarwal, Company

Secretary D. G. Sets Diesel Generator sets Director(s) Director(s) of our Company unless otherwise specified GOEM General Original Equipment Manufacturer GTA Goods Transport Agency MOA / Memorandum / Memorandum of Association

The Memorandum of Association of Veena Industries Limited

MIDC Maharashtra Industrial Development Corporation MIG Metal Inert Gas OEM Original Equipment Manufacturer Promoter(s) Persons whose name have been inserted as promoters as referred on page ___ of this

Prospectus ROC Registrar of Companies, PMT Commercial Building, 3rd Floor Deccan Gymkhana

Pune- 411 004 Registered Office of the Company

Registered office of the Company situated at S- 145, MIDC Bhosari, Pune 411 026, Maharashtra

Issue Related Terms Term Description Allotment / Allot Unless the context otherwise requires, issue of Equity Shares pursuant to this Issue Allottee The successful applicant to whom the Equity Shares are being / or have been

issued or transferred Banker(s) to the Issue The Bank with which the Account for the Public issue will be opened and which

acts as such, in terms of this Prospectus_______________ Bid An indication to make an offer during the Bidding/Issue Period by a prospective

investor to subscribe to or purchase the Company’s Equity Shares at a price within the Price Band, including all revisions and modifications thereto.

Bid Amount The highest value of the optional Bids indicated in the Bid cum Application Form and payable by the Bidder on submission of the Bid in the Issue.

Bid/ Issue Closing Date The date after which the Syndicate will not accept any Bids for the Issue, which shall be notified in an English national newspaper, a Hindi national newspaper and a Marathi newspaper with wide circulation.

Bid cum Application Form

The form in terms of which the Bidder shall make an Issue to subscribe to or purchase the Equity Shares and which will be considered as the application for issue of the Equity Shares pursuant to the terms of this Red Herring Prospectus.

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

Bidding/ Issue Period

The period between the Bid/Issue Opening Date and the Bid/Issue Closing Date inclusive of both days and during which prospective Bidders can submit their Bids.

Bid/ Issue Opening Date

The date on which the Syndicate Members shall start accepting Bids for the Issue, which shall be the date notified in an English national newspaper, a Hindi national newspaper and a Marathi newspaper with wide circulation.

Book Building Process

The book building process as provided in Chapter XI of the SEBI Guidelines, in terms of which the Issue is being made.

BRLMs/ Book Running Book Running Lead Managers to the Issue, in this case being SPA Merchant

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Lead Managers Bankers Limited CAN/ Confirmation of Allocation Note

The note or advice or intimation of allocation of Equity Shares sent to the Bidders who have been allocated Equity Shares after discovery of the Issue Price in accordance with the Book Building Process.

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

Cut-off Price Any price within the Price Band finalised by the Company and the Selling Shareholders in consultation with the BRLMs. A Bid submitted at Cut-off Price is a valid Bid at all price levels within the Price Band.

Designated Date

The date on which the Escrow Collection Banks transfer the funds from the Escrow Account to the Issue Account, after the Prospectus is filed with the RoC, following which the Board shall Allot Equity Shares and the Selling Shareholders shall give delivery instructions for transfer of Equity Shares constituting Offer for Sale to successful Bidders.

Designated Stock Exchange

Bombay Stock Exchange

Draft Red Herring Prospectus

The Draft Red Herring Prospectus dated 28 March 2007, which was filed with SEBI.

Eligible Employees Means Permanent Employees / Executive Director(s) of our Company who are Indian Nationals, are based in India and are physically present in India on the date of submission of the Bid- cum-Application Form. However, our Promoters are not eligible to bid through the Employee Reservation Portion.

Eligible NRI

NRIs from such jurisdiction outside India where it is not unlawful to make an Issue or invitation under the Issue and in relation to whom the Red Herring Prospectus constitutes an offer to sell or an invitation to subscribe to the Equity Shares Allotted herein.

Equity Shares Equity shares of the Company of face value of Rs.10 each, unless otherwise specified in the context thereof.

Escrow Account

An account opened with an Escrow Collection Bank(s) and in whose favour the Bidder will issue cheques or drafts in respect of the Bid Amount when submitting a Bid.

Escrow Agreement Agreement to be entered into among the Company, the Selling Shareholders, the Registrar, the Escrow Collection Bank(s), and the BRLMs and the Syndicate Members for collection of the Bid Amounts and for remitting refunds, if any, of the amounts collected, to the Bidders.

Escrow Collection Bank(s)

The banks, which are clearing members and registered with SEBI as Bankers to the Issue at which the Escrow Account will be opened.

First Bidder The Bidder whose name appears first in the Bid cum Application Form or Revision Form.

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

Indian National As used in the context of the Employee Reservation Portion, a citizen of India as defined under the Indian Citizenship Act, 1955, as amended, who is not an NRI.

Issue Issue of 45,66,600 Equity Shares at the Issue Price comprising the Fresh Issue and the Offer for Sale.

Issue Price The final price at which Equity Shares will be Allotted in the Issue, as determined by the Company and the Selling Shareholders in consultation with the BRLMs, on the Pricing Date.

Margin Amount The amount paid by the Bidder at the time of submission of the Bid, which may be 10% to 100% of the Bid Amount, as applicable.

Mutual Funds Mutual funds registered with SEBI under the SEBI (Mutual Funds) Regulations, 1996.

Mutual Fund Portion 5% of the QIB Portion or 1,12,915 Equity Shares (assuming the QIB Portion is for 50% of the Net Issue size) available for allocation to Mutual Funds only, out of the QIB Portion.

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Net Issue or Net Issue to Public

The Issue of Equity Shares other than the Employee Reservation Portion.

Non Institutional Bidders All Bidders that are not Qualified Institutional Buyers or Retail Individual Bidders and who have bid for an amount more than Rs.100,000.

Non Institutional Portion The portion of the Net Issue being up to 6,77,490 Equity Shares available for allocation to Non Institutional Bidders.

Pay in date The Bid/Issue Closing Date or the last date specified in the CAN sent to the Bidders, as applicable.

Pay in period With respect to Bidders whose Margin Amount is 100% of the Bid Amount, the period commencing on the Bid/Issue Opening Date and extending until the Bid/ Issue Closing Date; and With respect to QIBs whose margin amount is 10% of the Bid Amount, the period commencing on the Bid/ Issue Opening Date and extending until the closure of the Pay-in Date.

Price Band The price band with a minimum price (Floor Price) of Rs. _________ per Equity Share and the maximum price of Rs. ________ per Equity Share (Cap Price).

Pricing Date The date on which the Company in consultation with the BRLMs finalise the Issue Price.

Promoters Mr. Shailendra Nath Agarwal and Mr. Brijendra Nath Agarwal Prospectus The prospectus, filed with the RoC after pricing containing, inter alia, the Issue

Price that is determined at the end of the Book Building Process, the size of the Issue and certain other information.

Public Issue Account Account opened with the Bankers to the Issue to receive money from the Escrow Account for the Issue on the Designated Date.

Qualified Institutional Buyers / QIB

Public financial institutions as specified in Section 4A of the Companies Act, FIIs, scheduled commercial banks, mutual funds registered with SEBI, multilateral and bilateral development financial institutions, venture capital funds registered with SEBI, foreign venture capital investors registered with SEBI, state industrial development corporations, insurance companies registered with the Insurance Regulatory and Development Authority, provident funds with minimum corpus of Rs.250 million and pension funds with a minimum corpus of Rs.250 million.

QIB Margin An amount representing 10% of the Bid Amount that QIBs are required to pay at the time of submitting their Bid.

QIB Portion The portion of the Net Issue being not less than 22,58,300 Equity Shares available for allocation to QIBs.

Refund Account(s) Account(s) opened with an Escrow Collection Banks from which refunds if any, shall be made.

Registrar / Registrar to the Issue

Registrar to the Issue, in this case being Bigshare Services Private Limited

Retail Individual Bidders Bidders who have bid for Equity Shares of an amount less than or equal to Rs.100,000.

Retail Portion The portion of the Net Issue being up to 15,80,810 Equity Shares available for allocation to Retail Individual Bidders.

Revision Form The form used by the Bidders to modify the quantity of Equity Shares or the Bid Price in any of their Bid cum Application Forms or any previous Revision Form(s).

Red Herring Prospectus The red herring prospectus dated [*], 2007 issued in accordance with Section 60B of the Companies Act, which does not have complete particulars of the price at which the Equity Shares are Issued and the size of the Issue. The red herring prospectus will be filed with the RoC at least three days before the Bid/ Issue Opening Date and will become a Prospectus upon filing with the RoC after the Pricing Date.

Stock Exchanges BSE and NSE. Syndicate / Members of the Syndicate

The BRLMs and the Syndicate Members.

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Syndicate Agreement The agreement to be entered into among the Company and the Syndicate Members, in relation to the collection of Bids in this Issue.

Syndicate Members SPA Securities Ltd. TRS or Transaction Registration Slip

The slip or document issued by any of the members of the Syndicate to a Bidder as proof of registration of the Bid.

Underwriters The BRLMs and the Syndicate Members. Underwriting Agreement The agreement among the Underwriters, the Company and the Selling

Shareholders to be entered into on or after the Pricing Date. Abbreviations Term Description AS Accounting Standards as issued by the Institute of Chartered Accountants of India BSE The Bombay Stock Exchange Limited CAGR Compound Annual Growth Rate CDSL Central Depository Services (India) Limited CEO Chief Executive Officer CFO Chief Financial Officer CIN Corporate Identification Number EEFC Exchange Earners Foreign Currency DIN Director Identification Number D/E Ratio Debt Equity Ratio DP Depository Participant EPS Earnings Per Share FCNR Account Foreign Currency Non-Resident Account GIR Number General Index Registry Number HUF Hindu Undivided Family INR / Rs. Indian Rupees NAV Net Asset Value NRE Account Non-Resident External Account NRO Account Non-Resident Ordinary Account NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited p.a Per Annum PAN Permanent Account Number P/E Ratio Price/Earnings Ratio RBI The Reserve Bank of India RoNW Return on Net Worth TAN Tax deduction Account Number UIN Unique Identification Number

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PRESENTATION OF FINANCIAL AND MARKET DATA Unless the context otherwise requires, the financial data in this Red Herring Prospectus is derived from the financial statements prepared and restated in accordance with Indian GAAP, the Companies Act and SEBI Guidelines included elsewhere in this Red Herring Prospectus. The fiscal year commences on April 1 and ends on March 31. In this Red Herring Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding-off. Unless stated otherwise, market data used throughout this Red Herring Prospectus was obtained from internal Company reports, data, websites and industry publications. Industry publication data and website data generally state that the information contained therein has been obtained from sources believed to be reliable, but that their accuracy and completeness and underlying assumptions are not guaranteed and their reliability cannot be assured. Although, we believe market data used in this Red Herring Prospectus is reliable, it has not been independently verified. Similarly, internal Company reports and data, while believed by us to be reliable, have not been verified by any independent source.

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FORWARD LOOKING STATEMENT This Red Herring Prospectus contains certain forward-looking statements. These forward-looking statements generally can be identified by words or phrases like “will”, “aim”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “seek to”, “future”, “objective”, “project”, “should” and similar expressions or variations of such expressions, that are “forward looking statements”. Similarly, the statements that describe our objectives, plans or goals are also forward-looking statements. Actual results may differ materially from those suggested by the forward looking statements due to risks or uncertainties associated with our expectations with respect to, but not limited to, regulatory changes pertaining to the Genset Industry in India and our ability to respond to them, our ability to successfully implement our strategy, our growth and expansion, technological changes, our exposure to market risks, general economic and political conditions in India and our overseas markets which have an impact on our business activities or investments, the monetary and Fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes and changes in competition in our industry in India or Internationally. For further discussion on factors that could cause our actual results to differ, see “Risk Factors” beginning on page __ of this Red Herring Prospectus. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither our Company nor the BRLM, nor any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, our Company & the BRLM will ensure that investors in India are informed of material developments until such time as the grant of trading permission by the Stock Exchange for the Equity Shares allotted pursuant to the Issue.

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RISK FACTORS An investment in the Equity Shares involves a high degree of risk. You should carefully consider all of the information in this Red Herring Prospectus, including the risks and uncertainties described below, before making an investment in our Equity Shares. If any of the following risks actually occur, our business, results of operations and financial condition could suffer, the trading price of our Equity Shares could decline and you may lose some or all of the investment. Materiality The Risk factors have been determined on the basis of their materiality. The following factors have been considered for determining the materiality:

a) Some events may not be material individually but may be found material collectively. b) Some events may have material impact qualitatively instead of quantitatively. c) Some events may not be material at present but may be having material impacts in future. Note: Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify the financial or other implications of any of the risks described in this section.

Internal Risk Factors 1. Our Company, our Promoters and Group Companies is involved the following litigations:

Cases against our Company (i) There is a civil case against our company filed by the Municipal Corporation, Octroi Department,

Pimpri, Pune in 2005 for demand of octroi amount of Rs. 1,95,472/- out of which Rs. 77,000/- has been paid by us and for the balance is the amount in contention.

(ii) M/s Mahalaxmi Enterprises, Pune has filed a civil suit in the Court of Civil Judge, Pune against

seller of the land and Brij Properties, one of our group concern in 2006. The plantiff has made our Company and our promoters as parties. The amount claimed by the plaintiff is Rs. 200 lakhs. The same has been disputed and being contested by our Company and promoters.

The plaintiff in this case is a property broker who, on behalf of landowners, negotiated the deal with our Company falsely stating that the land was industrial. We have already paid the plaintiff a brokerage of Rs. 5 lakh, which we have demanded back in view of the false statement. The plaintiff failed to pay back the said amount. Thereafter, the deal was directly completed by Brij Properties with the land owners.

(iii) Mahindra & Mahindra Limited has filed a complaint against our Company and Managing Director,

Mr. Shailendra Nath Agarwal in September, 2006 in the Court of Metropolitan Magistrate, Mumbai for dishonour of cheques amounting to Rs. 2,37,29,730.30 under Negotiable Instruments Act, 1881. Our company is contending the case as we had issued the post dated cheques for Rs. 2,37,29,730.30 for purchase of diesel engines which were supplied in our gen-sets to clients where the installation and commissioning was the responsibility of the complainant. On the basis of commissioning reports from complainant, the customer was to make payment to us and in turn we were to make payment to the complainant. However failure of the complainant to fulfill their obligations resulted in non-payment by customer. As such our Company was not in a position to accommodate the PDCs given to the complainant.

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Case against Promoters and Group Companies

(i) A summary suit is pending against our Promoter Director, Mr. Shailendra Nath Agarwal in the court of civil judge, Pune amounting to Rs. 8,00,000/- and damages @ 24%. The case has been filed by Mr. Raghunath Alhat alleging non-payment of the said amount. The case is being contested by our promoter.

(ii) M/s Mahalaxmi Enterprises, Pune has filed a civil suit in the Court of Civil Judge, Pune against seller

of the land and Brij Properties, one of our group concern in 2006. The plantiff has made our Company and our promoters as one of the parties. The amount claimed by the plaintiff is Rs. 200 lakhs. The same has been disputed and being contested by our Company and promoters.

The plaintiff in this case is a property broker who, on behalf of land owners, negotiated the deal with our Company falsely stating that the land was industrial. We have already paid the plaintiff a brokerage of Rs. 5 lakh, which we have demanded back in view of the false statement. The plaintiff failed to pay back the said amount. Thereafter, the deal directly completed by Brij Properties with the land owners.

(iii) A case was filed in 1995 against our Group concern M/s Shabri Electricals and Electronics which was

a cable operator, one of the ex-employee, Mr. Popat Shinde and our promoter Mr. Shailendra Nath Agarwal alleging exhibiting an unauthorized video cassette on the cable network in violation of Copyright Act.

The ex-employee, who is the first accused is absconding and not traceable. Our promoter is contesting that the case is not true and was framed by a rival cable operator.

For more information regarding litigation, please refer to the section title “Outstanding Litigations and Defaults” beginning on page [*] of this Draft Red Herring Prospectus.

2. We have not obtained any independent appraisal of our project.

Our funding requirements and the deployment of the proceeds of the Issue are based on management estimates and have not been appraised by any bank or financial institution. We may have to revise our management estimates from time to time and consequently our funding requirements may also change.

3. Our Company has not placed orders for plant and machinery aggregating Rs. 2,078.25 lakhs

Our company has identified the proposed suppliers and have received quotations for all the major plant and machinery and other equipments. The details of the quotations received appear on page [*] of the draft red herring prospectus. By not finalizing terms with some of the vendors, the company may also be faced with situation of seeking new vendors/suppliers where negotiations and discussions need to be started afresh. As a result there may be delay in project implementation which may affect our profitability.

4. The proposed expansion project is mainly funded by the Public Issue. Any delay in raising the funds

from IPO may have an adverse impact on the growth plans of the Company. 5. Our Company has entered into a MOU for purchase of land for the proposed expansion project with

Mr. Brijendra Nath Agarwal, one of the promoters of our Company. The consideration for the said land is Rs. 450 lakhs.

We have entered into a MOU with Mr. Brijendra Nath Agarwal on January 2, 2007 for purchase of Industrial land measuring 3 hectare at a suitable location for our proposed plant. An amount of Rs. 100 lakhs has been paid as advance. Possession of the land will be available to us only after full payment of

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the consideration. The details of MOU are given on page no. [*] of the draft red herring prospectus under the head Object of the Issue.

6. Our Company has taken one of the Industrial shed at Chakan, Pune on lease from M/s SNA

Industries, on of our group firm. For details please refer to section titles “Property” beginning on page no [*] of this draft red herring prospectus.

7. Our Company is promoted by first generation entrepreneurs and the investors will be subjected to all

consequential risks associated with such ventures.

Our Company is promoted by first generation entrepreneurs. The efforts, understanding and technical background of the entrepreneurs provided the required support for the growth of the company. Consequently, the relationships that the company has established with various stakeholders are a product of the efforts of the promoters and carry inherent consequential risk.

8. Any loss of or breakdown of operations at any of our manufacturing facilities may have a material

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

Our manufacturing facilities are subject to operating risks, such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of output or efficiency, obsolescence, labour disputes, natural disasters, industrial accidents and the need to comply with the directives of relevant government authorities. The occurrence of any of these risks could significantly affect our operating results. We are required to carry out planned shutdowns of our plants for maintenance, statutory inspections and testing. Although precautions are taken to minimize the risk of any significant operational issues at our manufacturing facilities, our business, financial condition and results of operations may be adversely affected by any disruption of operations at our facilities, including due to any of the factors mentioned above.

9. Our Company is dependent on external suppliers for key materials and components.

Our Company is dependent on external suppliers for major components of diesel gensets viz diesel engines and alternators. The failure of our suppliers to deliver these materials or components in the necessary quantities or to adhere to delivery schedules or specified quality standards / technical specifications, could adversely affect our business and our ability to deliver on time and at the desired level of quality giving rise to contractual penalties or liability, for failure to perform contracts, and a loss of customers and damage of our reputation, any of which could materially adversely affect our results of operations.

10. We are exposed to volatility in the prices of certain raw materials / components.

Our Company uses various raw materials including steel for manufacture of genset components. Despite the price increase in the past year, we have been able to maintain the profitability in the current year as against previous financial year. To minimize the impact we have entered into contract with direct manufacturers. Additionally, there are periodic price reviews by the customers also wherein increase / decrease in input costs are discussed and factored in price revisions.

11. Restrictive covenants in loan agreements

There are restrictive covenants in the agreements for borrowings from banks, among other things, which require us to obtain the approval of these banks or provide restrictions, namely for, change in capital structure, invest by way of share capital or lend or advance funds to or place deposits with any concern, declaring dividends at any time while the company is in default, change in management set-up. Some of these borrowings also contain financial covenants, which may limit the ability to borrow additional money.

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We have obtained no objection from the Bank of India, Pune, the Lead Bank. 12. We have issued Equity Shares in the last twelve months, which is less than the issue price. For details

of the Equity Shares issued in the last twelve months, please refer to the section titled “Capital Structure” beginning on page [*] of this Draft Red Herring Prospectus.

13. The promoters will control the company as long as they own a majority of the Equity Shares, and the

other shareholders will be unable to affect the outcome of shareholder voting during such time.

After the completion of the Issue, the Promoters will own 60% of the issued Equity Share Capital. So long as the promoters own a majority of the Equity Shares, they will be able to elect the entire board of directors and remove any director, by way of a resolution approved by a simple majority of shareholders in a general meeting. The promoters will be able to control most matters affecting our company, including the appointment and removal of the officers; the business strategy and policies; any decision with respect to mergers and financing. Further, the extent of the promoters’ shareholding in the company may result in delay or prevention of a change of management or control of our company, even if such a transaction may be beneficial to the other shareholders.

14. The failure to keep the technical knowledge confidential could erode the competitive advantage.

We operate in a technologically intensive environment, where we compete with other manufacturers. Technology by its very nature is dynamic and ever changing and we may not be able to keep pace with the rapidly changing technological environment. Any such failure on our part could adversely affect our ability to compete efficiently, our cost-competitiveness, ability to develop new products and the consequential quality of our products, and could also adversely affect our sales and profitability.

15. Our Company is dependent on the management team for the success.

The success is substantially dependent on the expertise and services of the directors and the senior management team and the ability to attract and recruit talented and skilled personnel. The loss of the services of such key members of the management team or the directors or other key managerial personnel or an inability to retain these personnel could have an adverse effect on the business and the results of the operations.

16. We have not appointed all key managerial people required for the project and it may face risk of non

availability of skilled manpower

We are in the process of recruiting skilled manpower required for the proposed project and the same would be recruited in line with progress of the project. The present Directors and key managerial personnel have substantial exposure in setting up of similar units.

17. We do not have any patents or trademarks registered in our name. We use the trademark

“AUTOMECH” for diesel gensets under an agreement with the registered owner of the said trademark. We don not own any patent or trademark in respect of manufacturing of diesel gensets or components of construction, earth moving and mining equipments. We have entered into a trademark use agreement with one of our Group firm, SNA Industries to use their registered trade mark, “AUTOMECH” for our gensets.

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18. We have not provided for certain contingent liabilities

As on October 31, 2007, our Company has not provided for the following contingent liabilities:

Sr. No.

Particulars Amount (Rs. in lakhs)

1. Bank guarantee given 447.95 2. Counter guarantees 48.15 3. Letter of credit opened 742.00 4. Octroi expenses 1.95 5. Bill discounted not received 1,356.98

19. Our ability to pay dividends will depend upon future earnings, financial condition, cash flows, working

capital requirements, capital expenditures and other factors.

The amount of our future dividend payments, if any, will depend upon our future earnings, financial condition, cash flows, working capital requirements, capital expenditures and other factors. There can be no assurance that we shall have distributable funds after we commence commercial operations of the Project.

20. Our full commercial production is intended to begin during February 2008 and we face certain risks

that may result in delay in the implementation of the Project.

As per our schedule of implementation of the Project, the commercial production is scheduled to commence in February 2008. We face certain risks such as delay in getting government / statutory approvals, delay in placing the orders for plant and machinery, labour unrest etc., which could delay the commencement of commercial production of the Project. Timely commencement of commercial production of the Project is must for our growth. Any delay in commencement of commercial production may adversely impact the results of our operations and the subsequent growth of our company.

21. If we fail to comply with environmental laws and regulations or face environmental litigation, our

results of operation may be adversely affected.

Environmental laws and regulations in India have been increasing in stringency and it is possible that they will become significantly more stringent in the future. If, as a result of compliance or non-compliance with any environmental regulations, any of our units or the operations of such units are suspended, we will need to incur costs in complying with regulations, appealing any decision closing our facilities, maintaining production at our existing facilities and continuing to pay labour and other costs which continue even if the facility is closed. As a result, our overall operating expenses will increase and our profits will decrease.

22. Our company is yet to take government / statutory approvals for the proposed expansion project

Our Company will have to take necessary statutory approvals and permissions viz. factory licence, SIA (Secretariat for Industrial Assistance), Pollution Control, etc in relation to the implementation of the proposed project. We will submit the application immediately after possession of the land. The application to Maharashtra State Electricity Board for the proposed project will also be made after obtaining possession of the land. The non approval of any of these permissions, licenses would adversely affect the implementation of the proposed project.

23. Any future equity offerings or issue of options under any employee stock option scheme may lead to

dilution of the shareholding in us.

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Purchasers of Equity Shares in this Issue may experience dilution of their shareholding to the extent the company makes future equity offerings and to the extent additional options that may be issued under our employee stock option scheme. This might adversely affect the market price of the Equity Shares and could impact the ability to raise capital through an offering of the securities.

24. Some of our Promoter Group Companies / Ventures have incurred losses during any of the last three

years

Some of our Promoter group companies / ventures have incurred losses within the last 3 financial years details of which are set forth below:

Sr. No. Name of Company / Venture Financial Year in which

Profit after tax was NIL or negative

1. Kavita Industries Private Limited 2003-04 2. Auto Mech (India) Private Limited 2005-06 3. Kavita Lasers Private Limited 2003-04, 2004-05, 2005-06 4. Shabri Electricals and Electronics 2004-05, 2005-06

For more details please see the section titles “Our Promoter and Promoter Group Companies” beginning on page [*] of the draft red herring prospectus. External Risk Factors 1. Changes in Government Policies and political situation in India may have an adverse impact on the

business and operations of our Company

Since 1991, the Government of India has pursued policies of economic liberalization, including relaxing restrictions on the private sector. We cannot provide any assurance that the process of liberalization will be sustained in future. There could be a slowdown in the pace of economic development. The rate of economic liberalization could change, specific laws and policies, foreign investment, currency exchange rates and other matters affecting investing in our securities could change as well. Any adverse change in Government policies relating to the Genset Industry in general may have an impact on our profitability.

2. Statutory taxes and other levies may affect our margin in the event of our inability to factor such

expense in our selling prices.

Any increase in taxes and/ or levies, or the imposition of new taxes and/ or levies in the future, could increase the cost of production / operating expenses. To the extent, our Company is not able to factor such increase in the selling price; it may have a material adverse impact on our business operations and financial conditions.

3. We are subject to risks arising from foreign exchange rate fluctuations, which could adversely affect

our financial condition

Our Company intends to import some Plant & Machinery. Since the cost of this plant & machinery is denominated in foreign currency, our inability to hedge risk against foreign exchange fluctuations could adversely affect our financial condition and operations.

4. Our Company is subject to risk arising from changes in interest rates and banking policy.

We are dependent on various banks for arranging our working capital requirements, term loans, etc. Accordingly, any change in the existing banking policy or increase in interest rates may have an adverse impact on our Company’s profitability.

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5. Any disruption in supply of power, basic infrastructure facilities, and telecom lines could adversely

affect the business and production process of our Company or subject it to excess cost, which in turn will have an adverse impact on our profitability.

6. Global economic, political and social conditions may harm our ability to do business, increase our

costs and negatively affect our stock price.

External factors such as potential terrorist attacks, acts of war or geopolitical and social turmoil in many parts of the world could constrain our ability to do business, increase our costs and negatively affect our stock price. These geopolitical, social and economic conditions could result in increased volatility in India and worldwide financial markets and economy, and such volatility could constrain our ability to do business, increase our costs and negatively affect our stock price.

7. Natural calamities could have a negative impact on the Indian economy and cause the business to

suffer.

India has experienced natural calamities such as earthquakes, tsunami, floods and drought in the past few years. The extent and severity of these natural disasters has an impact on the Indian economy. Any negative impact of natural disasters on the Indian economy could adversely affect the business and the market price of the Equity Shares.

8. The price of our Equity Shares may be highly volatile, or an active trading market for its equity shares

may not develop.

The price of our Equity Shares on the Indian Stock Exchange may fluctuate as a result of several factors including:

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

sector; - Adverse media reports, if any, on our Company or the Indian packaging industry; - Changes in the estimates of our performance or recommendations by financial analysts; - Significant development in India’s economic liberalization and de-regulation policies; and - Significant development in India’s Fiscal and environmental regulations.

There can be no assurance that an active trading market for company’s equity shares will develop or be sustained after this Issue or the price at which our Equity Shares are initially traded will correspond to the prices at which our Equity Shares will trade in the market subsequent to this Issue. 9. The Issue price of our Equity Shares may not be indicative of the market price of our Equity Shares

after the Issue. The Book Building Process will determine the Issue Price of our Equity Shares. This price will be based on numerous factors (discussed in the section “Basis of Issue Price” on page [*] of this Draft Red Herring Prospectus) and may not be indicative of the market price for our Equity Shares after the Issue. The market price of our Equity Shares could be subject to significant fluctuations after the Issue, and may decline below the Issue Price. We cannot assure you that you will be able to resell your Equity Shares at or above the Issue Price. Among the factors that could affect our share price are:

- Quarterly and other variations in the rate of growth of our financial indicators, such as earnings per share, net income and revenues;

- Changes in revenue or earnings estimates or publication of research reports by analysts;

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- Speculation in the press or investment community; - General market conditions; and - Domestic and international economic, legal and regulatory factors unrelated to our performance.

Notes to Risk Factors: 1. The Net Worth of the Company as on October 31, 2006 as per audited financial statements is Rs.

1,871.70 Lakhs. 2. Issue is of 45,66,600 Equity Shares of Rs. 10/- each at a price of Rs. [ ] per Equity Share for cash

aggregating to Rs. [ ] lakhs. 3. The average cost of acquisition of the Equity Shares by the Promoters is Rs. 3.33 per share. 4. Book value of per equity share of the Company as per Audited Accounts as on October 31, 2006 is Rs.

22.41 5. For details on related party transactions, please refer to the Section titles “Related Party Disclosures”

beginning on page no. [*] of this draft red herring prospectus 6. The Investors are advised to refer to the paragraph on “Basis for Issue Price” on page no. [*] of this Draft

Red Herring Prospectus before making any investment in this Issue and “Basis of Allotment” on page no.[ . ] of this Draft Red Herring Prospectus.

7. The name of our Company was changed from “Veena Industries Private Limited” to “Veena Industries

Limited” on February 23, 2007. The name of the Company was changed pursuant to the conversion of our Company from private to public limited company.

8. In the case of over-subscription in all categories, at least 50% of the Net Issue to Public shall be available

for Allocation on a proportionate basis to Qualified Institutional Buyers, of which 5% shall be available for Allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion would be available for Allocation on a proportionate basis to all QIB Bidders, including Mutual Funds; not less than 15% of the Net Issue to Public shall be available for Allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue to Public shall be available for Allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price.

9. The Investors may contact the Book Running Lead Manager or Syndicate Member or Compliance

Officer to the Issue for any complaint / clarification / information pertaining to the Issue. 10. No part of the Issue proceeds will be paid as consideration to Promoters, Directors, Key Managerial

Personnel, Associate or Promoter Group Companies/ firm except as mentioned in “Interest of Promoters” on page no. [*] of the DRHP or in normal course of business.

11. Trading in equity shares of our company would be in dematerialized form only. 12. Our Company and the BRLM will update the offer document in accordance with the Companies Act and

the SEBI DIP Guidelines and our company and the BRLM will keep the public informed of any material changes relating to our company till the listing of our shares on the Stock Exchanges.

13. Our Company and the BRLM shall make all the information available to the public and the investors at

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

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SUMMARY

This is only a summary and does not contain all the information that you should consider before investing in our Equity Shares. You should read the following summary with the risk factors beginning on page i of this Draft Red Herring Prospectus and the more detailed information about Veena Industries Limited and the financial statements included in this Draft Red Herring Prospectus. INDUSTRY OVERVIEW The overall growth in the economy has created a strong demand for power, better infrastructure and telecom services in the country. Given the over widening gap between the demand and supply of power, which is an important pivot in all the growth spheres of the economy, there is a latent requirement of Gen sets to fill the gap. Gensets are in demand in almost all sectors like manufacturing facilities, hotels, commercial buildings, telecom, shops etc. beside limited residential use. The rapid growth in Telecom Industry has created substantial demand for gensets, which are required to support the unmanned stations, and towers spread all over the country including remote areas. The spurt in the retail segment is further adding to the growing demand of gensets as the retail stores would need to have back up power arrangements. Power Industry

Historically, the power industry has been characterised by peak power and energy shortages. Although power generation capacity has increased substantially in recent years, it has not kept pace with the growth in demand or the growth of the economy generally. As per Ministry of Power, the total Installed Generation Capacity in the country was 1,28,182.47 MW as on 31st January 2007. Of the Installed capacity, Thermo Power Plants powered by coal, gas, diesel accounted for approximately 84,149.84 MW, Hydro Power stations accounted for nearly 33,941.77 MW, Nuclear Power 3,900 MW and others 6,190.86 MW; (65.65%, 26.48%, 3.04% and 4.83% respectively) of the total installed capacity. Recurring power shortages have impacted India’s overall industrial growth (Source: www.powermin.nic.in/generation). According to the Planning Commission’s website, in order for India to maintain a sustained growth of 8% per annum to 2031-32, and to meet the life line energy needs of all citizens, India would need to increase primary energy supply and electricity generation capacity/supply by atleast 3 to 4 times and by 5 to 6 times respectively of their 2003-04 level. By fiscal 2031-32, power generation capacity must increase to nearly 8,00,000 MW from the current capacity of around 1,60,000 MW inclusive of all capital plants. (source: www.planningcommission.nic.in) Telecom One of the major drivers for demand in gensets has been the growth in telecom industry. The reforms envisaged since 1991 in the telecom sector and pursued through National Telecom Policy- 1994 and 1999 have resulted in a rapid growth. The New Telecom Policy of 1999 has set a target of increasing tele-density to 15 per cent by 2010 (source: http://www.ciionline.org/sectors/65/default.html) The growth in telecom industry has steered the growth in the number of towers, which in turn has resulted in increase in demand for gensets. Gen-sets are required in telecom industry to support their unmanned stations and towers spread all over India including remote areas. Retail Industry The organised retail industry has created an upsurge in the demand for Gen sets in recent times. Gen sets are required now by most of the retailers, especially in big shops, malls, food retail, cyber café,

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departmental stores, supermarkets, hypermarkets and specialty stores. India's vast middle class and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets. Real Estate Real estate sector is one of the most demanding sectors for the use of Gen sets. Though existing usage of below 5 KVA portable generating sets are meant for meeting only elementary requirements, the 5 to 15 KVA usage bracket is fast rising that need to meet the essentials with basic affluence comforts like an AC & refrigerator. Construction, Earth Moving & Mining Industry With the expansion in infrastructure sector there is huge requirement of components and sub-assemblies for construction, mining, earth moving equipments and for heavy & medium engineering industries. Earth Moving Equipment and Construction Machinery Industry plays a vital role in the economic development of our country. This industry is closely linked with major development and infrastructural schemes such as coal and mineral, mining, irrigation and power projects, ports, steel, fertilizers etc.

BUSINESS OVERVIEW We are in the business of manufacturing and assembling of silent diesel gensets, manufacturing of canopies, components and sub-assemblies for construction, mining and earth moving equipments. The products being manufactured by the company are as under: • Silent Diesel Gensets (7.5 KVA to 45 KVA) • Under Carriages & Canopies for Compressors and Generators • Components and Sub-assemblies for earth moving & construction equipments • Air cooler assemblies and X-Ray machine equipments

Besides we also manufacture base frames used in various engineering equipments. We also undertake machining of components like bosses and spider shafts for engineering industry. Some of our major buyers of gensets are Bharti Airtel Ltd., Reliance Telecom Ltd., Hutchison Telecom Limited, Essar Telecom Tower & Infrastructure Ltd., Motorola, VSNL and Post & Telegraph department. We supply air cooler assembly and spider shafts to Suzlon Generators Pvt. Ltd., used in windmills. JCB Manufacturing Ltd., India and Atlas Copco (India) Ltd. are our customers for components and sub-assemblies for earth moving, mining and construction equipments. The customer for components for X-Ray machines is Wipro GE Medicals System Ltd. We also export components of earth moving and mining equipments to JCB Group in UK. We manufacture & assemble gensets under the brand name “Automech”. We are ISO 9001:2000 certified and our gensets are approved by ARAI (Automotive Research Association of India) as per Central Pollution Control Board (CPCB) norms.

Currently we are operating from three units; Two in Pune and One at Silvassa. In addition to the above facilities, we are in the process of setting up a genset and components manufacturing facility at Jammu to strengthen our position in North Indian market.

We propose to set up a new unit near Pune for the manufacture/assembly of Desiel Gensets upto the range of 550 KVA in order to increase our capacities. We believe that following are our principal competitive strengths: 1. Strong Customer Base – We have a strong and dedicated marketing department headed by a

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Executive Director who is assisted by support staff. Our customer base comprises of well-known names.

2. Quality and ISO Certification - The silent gensets being manufactured by us carry approval form The

Automative Research Assiciation of India and our Chakan unit of genset is ISO 9001: 2000 certified.

3. Multi Locational, Manufacturing, Sales and Service Network – We have three manufacturing and service centers spread all over country. Our multi location supply units allow us to sustain the cost of high level of services.

4. Qualified technocrat promoters – The founder Promoters are engineering graduates from IIT with wide experience in the industry.

5. Experience in Designing and Product Variety – In silent generator sets, we are able to offer gensets ranging from 7.5-45 K.V.A. Since we offer tailor-made products, the design used in manufacturing of components for construction, mining and earth moving equipments are job specific. This gives our customers to choose the applications as per their requirements.

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THE ISSUE Particulars No. of Equity Shares

Public Issue of Equity Shares

4,566,600 Equity Shares of face value of Rs. 10 each for cash at a premium of Rs. [ ]

Of which, Employee Reservation Portion (1)

50,000 Equity Shares of face value of Rs. 10/- each aggregating Rs. [*] lakhs

Net Issue

45,16,600 Equity Shares of face value of Rs. 10 each for cash at a premium of Rs. [*]

Of which:

Qualified Institutional Buyers Portion*

At least 22,58,300 Equity Shares of Rs. 10 each for cash at a premium of Rs. [*] (allocation on proportionate basis) out of which 5% i.e. 1,12,915 equity shares shall be available for allocation on a proportionate basis to Mutual Funds only.

Non Institutional Portion

Not Less than 6,77,490 Equity Shares of Rs. 10 each for cash at a premium of Rs. [*] (Allocation on a proportionate basis)

Retail Portion

Not Less than 15,80,810 Equity Shares of Rs. 10 each for cash at a premium of Rs. [*] (Allocation on a proportionate basis)

Equity Shares outstanding prior to the Issue

83,50,000 Equity Shares of face value of Rs. 10 each

Equity Shares outstanding after the Issue

1,29,16,600 Equity Shares of face value of Rs. 10 each

Objects of the Issue

Please see the section entitled “Objects of the Issue” on page of this Draft Red Herring Prospectus.

Note: Under-subscription, if any, in any category except in the QIB category would be met with spill over from other categories at our sole discretion, in consultation with the BRLM. If a minimum allotment of 50% of the Net Issue is not made to the QIBs, the entire subscription monies shall be refunded. (1) Means Permanent Employees / Executive Director(s) of our Company and who are based in India and are physically present in India on the date of submission of the Bidcum-Application Form. However, our Promoters are not eligible to bid through the Employee Reservation Portion.

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SUMMARY OF FINANCIAL STATEMENTS

The following summary financial data has been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Guidelines and restated as described in the Auditors’ Report of M/s. Prakash Shah & Co., Chartered Accountants dated 19th March 2007 in the section titled “Financial Statements”. You should read this financial data in conjunction with our financial statements including the Notes thereto and the Reports thereon, which appears on page [*] under the paragraph on “Auditors’ Report” in this Draft Red Herring Prospectus and “Management’s Discussion and Analysis of Financial Condition and Results of Operations as Reflected in the Restated Financial Statements” on page [*] of this Draft Red Herring Prospectus.

STATEMENT OF ASSETS AND LIABILITES, AS RESTATED

(Rupees in Lacs)

AS AT 31st MARCH PARTICULARS 31/03/2002 31/03/2003 31/03/2004 31/03/2005 31/03/2006 31/10/06

1. Fixed Assets a) Gross Block 111.37 120.55 214.10 463.83 1328.60 1679.41b) Less : Depreciation 22.23 27.52 40.71 68.43 139.56 215.01c) Net Block 89.14 93.03 173.40 395.41 1189.03 1464.39d) Capital WIP including capital advances

14.38 79.15 0.00 24.64 123.01 405.13

e) Incidental Expenses pending allocation

- - - - - -

Total 103.52 172.19 173.40 420.05 1312.05 1869.522. Investments - - - - - - 3. Current Assets, Loans and Advances:

a) Inventories 48.42 78.87 91.17 230.35 1022.43 2324.94b) Sundry Debtors 65.48 46.74 85.09 490.10 747.37 1015.56c) Cash and Bank Balances

0.11 0.19 1.42 11.70 20.08 203.78

d) Loans and Advances 12.34 10.34 14.19 83.03 558.46 853.77Total 126.34 136.14 191.88 815.18 2348.34 4398.04Total Assets 230.14 308.53 365.41 1237.52 3662.13 6286.07 4. Liabilities & Provisions:

a) Secured Loans 55.50 104.96 103.49 436.16 1622.87 2347.20b) Unsecured Loans 21.40 64.48 91.25 126.74 95.73 70.50c) Current Liabilities and Provisions

57.72 37.45 57.90 394.60 805.35 1901.39

D) Defered Tax Liability

0.00 21.53 25.38 34.00 57.13 76.78

Total 134.61 228.41 278.02 991.51 2581.08 4395.865. Net Worth (1 + 2 + 3 - 4)

95.25 79.91 87.26 243.73 1079.30 1871.70

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Net Worth represented by

6. Equity Share Capital

75.00 75.00 75.00 150.00 250.00 835.00

7. Share application money

- - - - - -

8. Reserves & Surplus 20.53 5.11 12.40 96.02 831.04 1055.219. Miscellaneous Expenditure (to the extent not written off)

0.27 0.21 0.14 2.29 1.75 18.51

10. Net Worth (6 + 7 + 8 - 9)

95.25 79.91 87.26 243.73 1079.30 1871.70

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STATEMENTS OF PROFIT & LOSS ACCOUNT, AS RESTATED

(Rupees in Lacs)

31-03-2002 31-03-2003 31-03-2004 31-03-2005 31-03-2006 31.10.06SALES (Net of duties & Taxes) 334.32 318.79 424.15 1305.58 5810.45 3820.31Others Income 7.19 8.85 4.94 0.64 4.10 3.39Total 341.51 327.63 429.09 1306.22 5814.55 3823.69 EXPENDITURE Cost of production and distribution 287.68 266.77 348.90 1070.89 4457.17 2610.58Directors remuneration 4.61 5.78 5.86 5.86 57.46 81.50Employee cost 6.79 8.22 9.75 13.46 23.69 15.91Administrative and other expenses 15.18 24.10 24.53 65.28 237.68 346.39Interest 11.27 9.31 13.60 24.25 108.18 163.56Depreciation 4.91 5.29 13.19 27.72 71.14 75.45Total 330.44 319.48 415.84 1207.46 4955.32 3293.40 Profit before Taxation 11.07 8.15 13.25 98.77 859.23 530.30Current tax 2.60 2.04 1.07 8.04 96.83 25.05Deferred Tax (Net) 0.00 0.96 3.85 8.62 23.13 19.64Fringe benefit tax 0.00 0.00 0.00 0.00 4.25 8.01Profit after Tax before restatement adjustment

8.47 5.16 8.33 82.10 735.03 477.59

Adjustments for Taxes paid for Prior period or taxes written back/excess provided

-0.99 0.00 -1.05 -1.52 0.00 8.42

Profit After Tax post restatement adjustment

7.48 5.16 7.28 83.62 735.03 469.17

Surplus brought forward From Last Year

13.05 20.53 5.11 12.40 96.02 831.04

Less : Capitalisation of Reserves (Bonus Issue)

(500.00)

Less : Deferred Tax Adjustment relating to previous year/s

20.57

Reserve Transferred to B/S 20.53 5.11 12.40 96.02 831.04 800.21

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GENERAL INFORMATION

The Company was incorporated as Veena Industries Private Limited on October 9, 1996 under Chapter IX of the Companies Act, 1956 with Registration No. U29299PN1996PTC103190. It was converted into public limited company as “Veena Industries Limited” and the Registrar of Companies, Pune, Maharashtra had issued a fresh certificate of incorporation on 23 February 2007 with CIN U29299PN1996PLC103190.

Registered Office & Corporate Office: S- 145, MIDC Bhosari, Pune 411 026, Maharashtra

Tel No: +91 20 30680825 Fax No: +91 20 30680820

E-mail: [email protected], Website: www.veenaindustries.com Contact person/ Compliance Officer: Mr. Deepika Agarwal, Company Secretary and Compliance Officer Registered with Registrar of Companies: Pune PMT Building, 3rd Floor, Deccan Gymkhana Pune – 411004; CIN: U29299PN1996PLC103190 Registration Number: Pursuant to Section 81(1A) of the Companies Act, 1956, the present issue of Equity Shares has been authorized vide Special Resolution passed at the Extra Ordinary General Meeting of the Company held on March 13, 2007. Board of Directors Name Designation Status Mr. Shailendra Nath Agarwal Managing Director Executive Mr. Brijendra Nath Agarwal Chairman Executive Mr. Atin Brijendra. Agarwal Director Executive Mr. Avinash Shailendra Agarwal Director Executive Mr. Brij.Mohan Kataria Director Non Executive and Independent Mr. Pradip Vasant Dubhashi Director Non Executive and Independent Mr. Promode Kumar Govila Director Non Executive and Independent Mr. Jag Mohan Kaul Director Non Executive and Independent Profile of Our Board of Directors Mr. Shailendra Nath Agarwal Mr. Shailendra Nath Agarwal graduated in mechanical engineering from IIT, Kanpur in the year 1969. Thereafter he joined the family business of selling and servicing of tractors for a short period. In 1970, he joined Philips India Limited where he worked for 5 years in the management cadre. He was in-charge for production of one of the components factory at the Pune. In 1974, he left Philips India Limited and started his own business of tractor dealership. In the year 1980, he established M/s Veena Industries at Pune. Over the years he led the company to its present state where the Company has made the presence noticeable in the industry circles. Mr. Brijendra Nath Agarwal Mr. Brijendra Nath Agarwal graduated in mechanical engineering from IIT, Kanpur in 1970. Further, he completed Masters of Science (Mechenical Engineering) from North Dakota State University, USA in 1972. He worked there for about two years in an Aluminium foundry after which he returned to India in 1974. In India, he took up HMT tractor dealership at Agra, which remained operational till 1981He joined as a partner in M/s Veena Industries in 1982. He is currently the Executive Chairman of our Company and manages the overall administration, accounts & infrastructure development.

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Mr. Atin Brijendra Agarwal He graduated in Commerce from Symbiosis College of Arts & Commerce, Pune in 1999. He joined the engineering business of family while completing his graduation. Since then he has been actively involved with the Company and is heading the fabrication, machining and auto component plant. He is fully conversant with installing and running of CNC laser machines. He is currently Director Operations and Business Development in the company. Mr. Avinash Shailendra Agarwal Mr. Avinash Agarwal graduated in 2000 from MIT, Pune in Civil Engineering. Thereafter he joined GE Medical Systems – X- Ray Division for training in six sigma quality management system. He joined our company in 2001 and presently heads Diesel Genset manufacturing and marketing activity. He has been responsib le for the implementation of ISO 9001-2000 quality system in the company’s manufacturing facilities. Mr. Pradip Vasant. Dubhashi He is BE (Electrical) from Pune University and MBA from Xavier Institute. He started his career as Development Officer in SICOM and whereafter worked with Mahindra Group for 15 years in management cadre. He also worked as CEO of Mahindra Composites Ltd. In the 1991, Mr. Dubhashi set up Innoven Business Consultancy, which provides consultancy in the area of Strategy & Research, Business Planning, Investment Analysis, M & A, Competitive Intelligence and Finance. Mr. Brij.Mohan. Kataria Mr Brij M Kataria is an Honours graduate in Metallurgical engineering from IIT Kharagpur and joined Mahindra Sintered Products Ltd as assistant metallurgist in 1963 and rose progressively to head the company in 1979. Mr Kataria was appointed President -Auto Components sector, Mahindra Group in December 1994. Mr. Kataria was also an executive committee member of automotive components manufacturers association of India. He is past president of powder metallurgy association of India, Past chairman – Confederation of Indian Industry, Pune chapter. He has been a member – advisory board of Det Norske Veritas (DNV) and is on the board of Emitec Emissions Controls Pvt Ltd. Mr. Jag. Mohan Kaul Mr. Jag. Mohan. Kaul is B.E Mechanical from Thapar Institute of Engineering & Technology, Post Graduation in Rotating Equipments from Japan and Executive MBA. He joined Kirloskar Pneumatic Co. Ltd. in 1970 in Management cadre. Thereafter from 1978 to 1994, he was with Atlas Copco in various positions in India and Sweden. He was President and MD of Emerson Electric Co from 2001 to 2004. Mr. Kaul was Managing Director of Dresser- Rand’ India Pvt. Ltd from 2004 to 2006. He has wide experience in the industry Major General (Retired) Promode Kumar Govila Mr. Promode Kumar Govila did his Masters in Engineering (Mechanical) from the University of Poona in the year 1984. He has served in varios capacities in Indian Army, including Project manager for Design and Development of various warheads for Pinaka Systems. From 2001 to 2004, he served as Director & Commandant Proof & Experimental Establishment, Chandipur. He is recipient of various awards in Army and has papers published in national and international journals to his credit. Company Secretary & Compliance Officer Ms. Deepika Agarwal, Company Secretary and Compliance Officer S- 145, MIDC Bhosari, Pune 411 026, Maharashtra Tel No: 020 30680821 Fax No: 020 30680820 E-mail: [email protected]

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Registrar to the Issue Aarthi Consultants Pvt Ltd 1-2-285, Domalguda, Hyderabad - 500029 Ph: 040-27638111, 27634445 Fax: 040-27632184 E-mail: [email protected] Website: www.aarthiconsultants.com Contact Person: Mr. G. Bhaskar Book Running Lead Managers (BRLM) SPA Merchant Bankers Ltd. 10A, 10th Floor, Chandermukhi Building Nariman Point. Mumbai – 400021 Tel. No. +91 22– 22843434 Fax No. +91 -22- 22871192 Email: [email protected] Website: www.spacapital.com Contact person: Ms. Ritcha Bhandari Legal Advisors to the Issue JurisPrudent Consulting Partners 1st Floor, Paramount Tower, C-17. Community Centre Janak Puri. New Delhi-58 Tel.: 011 - 32000177 Fax: 011 - 41588441 Mobile: 098100 00177 E-mail: [email protected] Contact Person: Mr Ajay Jain Syndicate Members SPA Securities Ltd. 10th Floor, Chandermukhi Building Nariman Point. Mumbai – 400021 Tel. No. +91 22– 22801240 Fax No. +91 –22 - 22021466 Email: [email protected] Website: www.spacapital.com Contact person: Mr. Ritesh badjatiya E-mail: [email protected] Brokers to the Issue All members of the recognized Stock Exchanges would be eligible to act as Brokers to the Issue. Bankers to the Issue

26

Auditors to the Company M/s. Prakash Shah & Co. Chartered Accountants 1/Suryaphul 882 /B, Bhandarkar Road, Deccan Gymkhana, Pune- 411 004 Maharashtra Tel: 020 25654433 E-Mail: [email protected] Bankers to the Company Bank of India Pune Corporate Banking Branch, University Road, Shivaji Nagar, Pune 411 005. Tel.: 020 5536090-91,96 Fax : 020 553 6134 E-Mail:[email protected] Contact Person: Mr R K Gupta, Chief Manager UTI Bank Sterling Plaza, 1262/B, J M Road, Deccan Gymkhana, Pune 411 004. Tel: 020 66012695,66015723 Fax : 020 25520530, 0531 Email: [email protected] Contact Person: Ms. Ruchi Joshi Credit Rating This being an Issue of Equity Shares, there is no requirement of credit rating for this Issue. IPO Grading We have not opted for grading of this issue Trustees This being an Issue of Equity Shares, the appointment of Trustees is not required. Appraising Entity The Project of our company is not appraised by any bank or financial institution. Monitoring Agency We shall appoint a commercial bank as a Monitoring Agency to monitor the utilization of the proceeds of the issue. Book Building Process Book Building refers to the process of collection of Bids, on the basis of the Draft Red Herring Prospectus. The Issue Price is fixed after the Bid/Issue Closing Date. The principal parties involved in the Book Building Process are: • Our Company; • Book Running Lead Managers; • Syndicate Member(s) who are intermediaries registered with SEBI or registered as brokers with

BSE/NSE and eligible to act as underwriters;

27

• Registrar to the Issue; and • Escrow collection Banks The primary responsibility of building the book shall be that of the lead book runner. The Equity Shares are being offered to the public through the 100% Book Building Process in accordance with the SEBI Guidelines wherein: (i) at least 50% of the Net Issue shall be allocated on a proportionate basis to QIBs, including up to 5% of the QIB Portion that shall be available for allocation on a proportionate basis to Mutual Funds only and the remainder of the QIB Portion shall be available for Allocation on a proportionate basis to all QIB Bidders, including Mutual Funds; (ii) minimum of 15% of the Net Issue shall be available for allocation on a proportionate basis to the Non-Institutional Bidders and (iii) minimum of 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. In accordance with SEBI Guidelines, QIBs are not allowed to withdraw their Bid(s) after the Bid/Issue Closing Date. In addition, as per the recent amendments to the SEBI Guidelines, QIBs are required to pay 10% Margin Amount upon submission of the Bid cum Application Form during the Bidding Period and allocation to QIBs will be on a proportionate basis. For further details see section titled “Issue Structure” on page __ of this Draft Red Herring Prospectus. Our Company shall comply with the SEBI Guidelines and any other ancillary directions issued by SEBI for this Issue. In this regard, our Company has appointed SPA Merchant Bankers Limited as the Book Running Lead Manager to manage the Issue and to procure the subscriptions to the Issue. The process of Book Building under the SEBI Guidelines is relatively new and is subject to change, from time to time. Accordingly, investors are advised to make their own judgment about investment through this process of Book Building prior to making a Bid. Investors should note that Equity Shares would be allotted to all successful Bidders only in dematerialised form. Bidders will not have the option of getting Allotment of the Equity Shares in physical form. The Equity Shares on Allotment shall be traded only in the dematerialised segment of the Stock Exchanges. Illustration of Book Building and Price Discovery Process (Investors should note that the following is solely for the purpose of illustration and is not specific to the Issue) The Bidders can bid at any price within the Price Band. For instance, assume a Price Band of Rs.60 to Rs.72 per Equity Share, Issue size of 5,400 Equity Shares and receipt of five Bids from the Bidders. A graphical representation of the consolidated demand and price would be made available at the website of the BSE (www.bseindia.com) and NSE (www.nseindia.com) during the bidding period. The illustrative book as set forth below shows the demand for the Equity Shares of our Company at various prices and is collated from Bids from various investors. Bid Quantity Bid Price (Rs.) Cumulative Quantity Subsription1,500 3,000 4,500 6,000 7,500

72 69 66 63 60

1,500 4,500 9,000

15,000 22,500

27.78% 83.33%

166.67% 277.78% 416.67%

The price discovery is a function of demand at various prices. The highest price at which our Company is able to issue the desired quantity of Equity Shares is the price at which the book cuts off, i.e., Rs.66 in the above example. Our Company, in consultation with the BRLM will finalize the Issue Price at or below such

28

cut off price, i.e., at or below Rs.66. All Bids at or above this Issue Price and cut-off Bids are valid Bids and are considered for allocation in the respective categories. Steps to be taken for bidding: 1. Check eligibility for bidding (see the section titled “Issue Procedure - Who Can Bid” on page ___ of this

Draft Red Herring Prospectus); 2. Ensure that the Bidder has a demat account and the demat account details are correctly mentioned in the

Bid-cum-Application Form; 3. If your Bid is for Rs. 50,000 or more, ensure that you have mentioned your PAN and attach copies of

your PAN card or PAN allotment letter to the Bid-cum-Application Form (see the section titled “Issue Procedure” on page ___ of this Draft Red Herring Prospectus;

4. Ensure that the Bid-cum-Application Form is duly completed as per instructions given in this Draft Red Herring Prospectus and in the Bid-cum-Application Form.

5. The Bidder should ensure the correctness of his or her Demographic Details (as defined in the section Issue Procedure-Bidder’s Depository Account Details” on page ___ given in the Bid cum Application Form vis-à-vis those with his or her Depository Participant.

WITHDRAWAL OF THE ISSUE We, in consultation with the BRLM, reserve the right not to proceed with the Issue at any time after the Bid/Issue Opening Date but before Allotment, without assigning any reason therefore. BID/ISSUE PROGRAMME BID/ISSUE OPENS ON: BID/ISSUE CLOSES ON:

Bids and any revision in Bids shall be accepted only between 10 a.m. and 3 p.m. (Indian Standard Time) during the Bidding Period as mentioned above at the bidding centres mentioned on the Bid-cum-Application Form except that on the Bid/Issue Closing Date, the Bids shall be accepted only between 10 a.m. and 1 p.m. (Indian Standard Time) and uploaded till such time as permitted by the BSE and the NSE on the Bid/Issue Closing Date. Bidding will not take place on Saturdays, Sundays and Public Holidays. We will decide the Price Band in consultation with the BRLM. The announcement on the Price Band shall also be made available on the websites of the BRLM and at the terminals of the Syndicate. We reserve the right to revise the Price Band during the Bidding Period in accordance with SEBI Guidelines. The cap on the Price Band should not be more than 20% of the floor of the Price Band. Subject to compliance with the immediately preceding sentence, the floor of the Price band can move up or down to the extent of 20% of the floor of the price band. In case of revision in the Price Band, the Bidding/Issue Period will be extended for three working days after revision of Price Band subject to the Bidding/Issue Period not exceeding 10 working days. Any revision in the Price Band and the revised Bidding/Issue Period, if applicable, will be widely disseminated by notification to the BSE and the NSE, by issuing a press release, and also by indicating the change on the web sites of the BRLM and at the terminals of the Syndicate.

Underwriters to the Issue

After the determination of the Issue Price and allocation of the Equity Shares but prior to filing of the Prospectus with the ROC, the Company will enter into an Underwriting Agreement with the Underwriters for the Equity Shares proposed to be offered through this Issue. It is proposed that pursuant to the terms of the Underwriting Agreement, the BRLM shall be responsible for bringing in the amount devolved in the event that their respective Syndicate Members do not fulfill their underwriting obligations.

29

The Underwriters have indicated their intention to underwrite the following number of Equity Shares:

(This portion has been intentionally left blank and will be filled in before filing of the Prospectus with the ROC)

Name and Address of the Underwriters

Indicative Number of

Equity Shares to be

Underwritten

Amount Underwritten

(Rs. in lakhs)

The above-mentioned amount is indicative underwriting and this would be finalized after pricing and actual allocation. The above Underwriting Agreement is dated [*].

In the opinion of the Board of Directors (based on a certificate given by the Underwriters), the resources of all he above mentioned Underwriters are sufficient to enable them to discharge their respective underwriting obligations in full. All the above-mentioned Underwriters are registered with SEBI or registered as brokers with the Stock Exchange(s).

Allocation among Underwriters may not necessarily be in proportion to their underwriting commitments.

Notwithstanding the above table, the Underwriters shall be severally responsible for ensuring payment with respect to Equity Shares allocated to investors procured by them. In the event of any default, the respective Underwriter in addition to other obligations to be defined in the Underwriting Agreement will also be required to procure / subscribe to the extent of the defaulted amount.

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CAPITAL STRUCTURE

The share capital as at date of filing the Prospectus with SEBI (before and after the proposed issue) is set forth below:

(Rs. In Lakhs) Share Capital Nominal

Value Aggregate Value at Issue Price

A. Authorised Capital 1,600.00 1,60,00,000 Equity Shares of Rs 10/- each B. Issued , Subscribed And Paid Up Capital 835.00 83,50,000 Equity Shares of Rs 10/- each fully paid-up C. Present Issue To The Public In Terms Of This Prospectus

• 45,66,600 Equity Shares of Rs 10/- each at an issue price of Rs. [*]/- per share

Out of which, • 50,000 Equity Shares of Rs. 10/- each at a premium of Rs. [*]/- per

share are reserved for allotment to Eligible Employees on a competitive basis.

456.66

0.050

[*]

[*]

D. Net Issue to Public 45,16,600 Equity Shares of Rs. 10/- each at a premium of Rs. [*]/- per share

451.66 [*]

E. Subscribed And Paid Up Capital After The Issue 1,29,16,600 Equity Shares of Rs 10/- Each fully paid up 1291.66 [*] F. Share Premium Amount Before the issue 345.00 [*] After the issue [*] [*]

* The Issue in terms of this Prospectus has been authorised pursuant to a resolution passed at the Extraordinary General Meeting of our Shareholders held on 13th March 2007. Notes to the Capital Structure 1. Details of Increase In Authorised Capital S. No. From (Rs.) Increased by Rs. Total (Rs.) Remarks 1. - 10,000,000 10,000,000 On Conversion of

Partnership into Private Limited Company

2. 10,000,000 10,000,000 20,000,000 Increased in EGM held on 20th November, 2004

3. 20,000,000 80,000,000 100,000,000 Increased in EGM held on 20th March, 2006

4. 100,000,000 60,000,000 160,000,000 Increased in EGM held on 1st December, 2006

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2. Share Capital History of the Company

Date of Allotment

No. of Equity Shares

Face Valu

e (Rs.)

Issue Price (Rs.)

Consideration

Nature of Allotment Cumulative Issued Capital

Cumulative Securities Premium

09/10/1996 500,000 10 10 Cash Subscription to Memorandum & Artciles of Association

5000,000 NIL

28/02/1997 125,000 10 10 Cash Further Allotment made 6,250,000 NIL02/03/2001 125,000 10 10 Cash Further Allotment made 7,500,000 NIL15/09/2004 250,000 10 10 Cash Further Allotment made 10,000,000 NIL21/03/2005 500,000 10 10 Cash Further Allotment made 15,000,000 NIL03/10/2005 500,000 10 10 Cash Further Allotment made 20,000,000 NIL31/03/2006 500,000 10 10 Cash Further Allotment made 25,000,000 NIL18/08/2006 5,000,000 10 10 Bonus Issue of Bonus Equity

Shares* 75,000,000 NIL

24/08/2006 300,000 10 20 Cash Further Allotment made 78,000,000 3,000,00031/08/2006 250,000 10 40 Cash Further Allotment made 80,500,000 10,500,00011/09/2006 300,000 10 90 Cash Further Allotment made 83,500,000 34,500,000Total 8,350,000 * The company has issued bonus shares in the ratio of 2:1, i.e. two equity shares for every one held by the shareholders by way of capitalization of general reserves. 3. Promoters Contribution and Lock -in The promoters of our Company are Mr. Shailendra Nath Agarwal and Mr. Brijendra Nath Agarwal whose names figure in the DRHP as promoters in the paragraph “Our Promoters and their Backgroung” on page no. [*]

Name Date of Allotment/ Transfer

Consideration

Nature of Issue

Number of shares

Face Value (Rs.)

Issue Price (Rs.)

% of post issue capital

Lock in period (Years)

02/03/2001 Cash Allotment 40,000 10 10 0.31 1 year15/09/2004 Cash Allotment 65,000 10 10 0.50 1 year

48,340 10 10 0.37 1 year03/10/2005 Cash Allotment 101,660 10 10 0.79 3 years

Mr. Shailendra Nath Agarwal

18/08/2006 NIL Bonus Issue

510,000 10 - 3.95 3 years

21/03/2005 Cash Allotment 30,000 10 10 0.23 1 yearShailendra Nath Agarwal (HUF)

18/08/2006 NIL Bonus issue

60,000 10 - 0.46 3 years

21/03/2005 Cash Allotment 160,000 10 10 1.24 1 year31/03/2006 Cash Allotment 100,000 10 10 0.77 3 years

Mr. Shailendra Nath Agarwal jointly with Mrs. Veena Agarwal

18/08/2006 NIL Bonus Issue

520,000 10 - 4.03 3 years

32

09/10/1996 Cash Subscriber to Memorandum of Association

195,000 10 10 1.51 1 year

28/02/1997 Cash Allotment 40,000 10 10 0.31 1 year02/03/2001 Cash Allotment 35,000 10 10 0.27 1 year15/09/2004 Cash Allotment 30,000 10 10 0.23 1 year

Mr. Brijendra Nath Agarwal


600,000 10 - 4.65 3 years

28/02/1997 Cash Allotment 7,500 10 10 0.06 1 year15/09/2004 Cash Allotment 22,500 10 10 0.17 1 year21/03/2005 Cash Allotment 100,000 10 10 0.77 1 year

Brijendra Nath Agarwal (HUF)


260,000 10 - 2.01 3 years

21/03/2005 Cash Allotment 60,000 10 10 0.46 1 year18,340 10 10 0.14 1 year31/03/2006 Cash Allotment 91,660 10 10 0.71 3 years

Mr. Brijendra Nath Agarwal jointly with Mrs. Kavita Agarwal


340,000 10 - 2.63 3 years

Total 3,435,000 26.59 4. The shareholding of persons constituting the Promoter Group are:

Name Date of Allotment/ Transfer

Consideration

Nature of Issue

Number of shares

Face Value (Rs.)

Issue Price (Rs.)

% of post issue capital

Lock in period (Years)

09/10/1996

Cash Subscriber to Memorandum of Association

40,000 10 10 0.31 1 year

28/02/1997

Cash Allotment 5,000 10 10 0.04 1 year

02/03/2001


15/09/2004


03/10/2005


31/03/2006

Cash Allotment 100 10 10 0.00 1 year

Mr. Atin Brijendra Agarwal

18/08/2006

NIL Bonus issue 660,200 10 - 5.11 1 year

31/03/2006

Cash Allotment 49,900 10 10 0.39 1 yearMr. Atin Brijendra Agarwal jointly with Mrs. Pooja Atin Agarwal

18/08/2006

NIL Bonus Issue 99,800 10 - 0.77 1 year

33

09/10/1996


15,000 10 10 0.12 1 year

28/02/1997


02/03/2001


15/09/2004


03/10/2005


31/03/2006

Cash Allotment 100 10 10 0.00 1 year

Mr. Avinash Shailendra Agarwal

18/08/2006


31/03/2006

Cash Allotment 29,900 10 10 0.23 1 yearMr. Avinash Shailendra Agarwal jointly with Mrs. Pooja Avinash Agarwal

18/08/2006


09/10/1996


15,000 10 10 0.12 1 year

28/02/1997


02/03/2001


15/09/2004


Mrs. Kavita Brijendra Agarwal

18/08/2006


21/03/2005


31/03/2006


Mrs.Kavita Agarwal jointly with Mr. Brijendra Nath Agarwal 18/08/20

06 NIL Bonus issue 160,000 10 - 1.24 1 year

28/02/1997


02/03/2001

Cash Allotment 5,000 10 10 0.04 1 yearMrs. Paridhi Brijendra Agarwal

18/08/2006


03/10/2005

Cash Allotment 10,000 10 10 0.08 1 yearMrs. Pooja Atin Agarwal 18/08/20

06 NIL Bonus Issue 20,000 10 - 0.15 1 year

Mrs. Pooja Atin Agarwal jointly

21/03/2005


34

with Mr. Atin Brijendra Agarwal

18/08/2006


21/03/2005

Cash Allotment 50,000 10 10 0.39 1 yearMrs. Pooja Avinash Agarwal jointly with Mr. Avinash Shailendra Agarwal

18/08/2006


28/02/1997


02/03/2001

Cash Allotment 5,000 10 10 0.04 1 yearMr. Rahul Shailendra Agarwal

18/08/2006


09/10/1996


235,000 10 10 1.82 1 year

28/02/1997


02/03/2001


15/09/2004


Mrs. Veena Shailendra Agarwal

18/08/2006


21/03/2005


31/03/2006


Mrs. Veena Agarwal jointly with Mr. Shailendra Nath Agarwal 18/08/20

06 NIL Bonus issue 140,000 10 - 1.08 1 year

31/03/2006


18/08/2006

NIL Bonus Issue 240,000 10 - 1.86 1 yearKavita Industries Private Limited

31/08/2006


Total 4,315,000

33.41

20% of the Post Issued Paid up Equity Share Capital, as determined after the book-building process would be locked in for a period of 3 years from the date of allotment in the present issue and the balance Pre-Issue Paid up Equity Share Capital would be locked in for a period of 1 year from the date of allotment.

The promoters of the Company viz Mr. Brijendra Nath Agarwal and Mr. Shailendra Nath Agarwal havegiven their consent for lock in as stated above. The shares acquired last would be locked in first and the lock in period shall commence from the date of allotment of shares in the Public Issue. 5. Equtiy Shares held by persons other than Promoters prior to the Issue may be transferred to any other

person holding shares, subject to continuation of the lock in with the transferee(s) for the remaining period and compliance with SEBI (Substantial Acquisition of Shares & Takeover) Regulations, 1997, as applicable.

35

6. The Equity Shares held by promoter(s) which are locked in, shall not be sold, hypothecated /transferred

during the lock in period, however it may be transferred to and amongst promoter/promoter group or to a new promoter or persons in control of the company, subject to continuation of lock-in, in the hands of transferees for the remaining period and compliance of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997, as applicable. Equity Shares of promoters, comprising promoters’ contribution, locked in may be pledged only with banks or financial institution as collateral security for loans granted by such banks or FIs provided the pledge of shares is one of the terms of sanction of loan.

7. The pre and post issue shareholding pattern of the Company is given below Category Pre Issue Post-Issue Equity Capital No. of Shares % No. of Shares % of Rs. 10/- each holding of Rs. 10/- each Holding Promoters Holding (A) - Promoters 3,435,000 41.14 3,435,000 26.59- Relatives of Promoters 3,705,000 44.37 3,705,000 28.68- Promoter Group Companies 610,000 7.30 610,000 4.73Total Promoters Holding 7,750,000 92.81 7,750,000 60.00Non Promoters Holding (B) Others 600,000 7.19 600,000 4.65Public Issue (including employees) 0 0.00 4,566,600 35.35Total 600,000 7.19 5,166,600 40.00Total (A+B) 8,350,000 100.00 12,916,600 100.00 8. The post issue shareholding pattern may change if any of the pre-issue equity share holders as mentioned

hereinabove are allotted equity shares in the issue. 9. We / Promoters / Directors / BRLM have not entered into buyback or similar arrangements for purchase

of shares issued by the Company. 10. Equity Shares held by top ten Shareholders: a. Top ten shareholders on the date of filing of the Draft Red Hearing Prospectus with the SEBI are as follows: Sr. No. Names of shareholders No. of Equity % of Paid Shares held up Capital 1 Mr. Atin B. Agarwal 990300 11.862 Mr. Brijendra Nath Agarwal 900000 10.783 Mrs. Veena S. Agarwal 900000 10.78

4 Mr. Shailendra Nath Agarwal Jtly with Mrs. Veena Agarwal 780000 9.34

5 Mr. Shailendra Nath Agarwal 765000 9.166 M/s Kavita Industries Private Limited 610000 7.317 Mr. Avinash S. Agarwal 540300 6.478 Mr. Brijendra Nath Agarwal Jtly with Kavita Agarwal 510000 6.119 Mr. Brijendra Nath Agarwal (HUF) 390000 4.6710 M/s Chandra Mauli Impex Private Limited 300000 3.59 Total 6685600 80.07

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b. Top Ten shareholders 10 days prior to the date of filing of the Draft Red Hearing Prospectus with SEBI are as follows.

Sr. No. Names of shareholders No. of Equity % of Paid Shares held up Capital 1 Mr. Atin B. Agarwal 990300 11.862 Mr. Brijendra Nath Agarwal 900000 10.783 Mrs. Veena S. Agarwal 900000 10.78

4 Mr. Shailendra Nath Agarwal Jtly with Mrs. Veena Agarwal 780000 9.34

5 Mr. Shailendra Nath Agarwal 765000 9.166 M/s Kavita Industries Private Limited 610000 7.317 Mr. Avinash S. Agarwal 540300 6.478 Mr. Brijendra Nath Agarwal Jtly with Kavita Agarwal 510000 6.119 Mr. Brijendra Nath Agarwal (HUF) 390000 4.6710 M/s Chandra Mauli Impex Private Limited 300000 3.59 Total 6685600 80.07 c. Top ten shareholders as on two years prior to the date of filing of the Draft Red Hearing Prospectus with the SEBI are as follows: Sr. No. Names of shareholders No. of Equity

Shares held % of Paid up Capital

1 Mr. Brijendra Nath Agarwal 300000 30.00%2 Mrs. Veena S. Agarwal 300000 30.00%3 Mr. Shailendra Nath Agarwal 105000 10.50%4 Mr. Atin B. Agarwal 90000 9.00%5 Mr. Avinash S. Agarwal 80000 8.00%6 Mrs. Kavita B. Agarwal 70000 7.00%7 M/s Brijendra Nath Agarwal (HUF) 30000 3.00%8 Mr. Rahul S. Agarwal 15000 1.50%9 Ms. Paridhi B. Agarwal 10000 1.00%10 - - - Total 1000000 100.00% 11. As on date of filing of Draft Red Hearing Prospectus with SEBI, the issued capital of the company is

fully paid up. 12. On the date of filing the Draft Red Herring Prospectus with SEBI there are no outstanding

warrants, options, rights or convertible debentures or any other financial instruments convertible into equity.

13. No further Issue of capital whether by way of Issue of Bonus shares, preferential allotment, rights

issue or in any other manner will be made by the Company during the period commencing from submission of the Draft Red Herring Prospectus with SEBI till the equity shares referred to in this Draft Red Herring Prospectus have been fully paid up and shares are listed or application money is refunded in case of failure of the Offer.

14. In case of over-subscription in all categories, at least 50% of the issue shall be allotted on proportionate

basis to QIB, of which 5% shall be available for Allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion would be available for Allocation on a proportionate basis to all QIB Bidders, including Mutual Funds; not less than 15% of the issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Issue shall be available

37

for allocation on a proportionate basis to Retail Bidders, subject to valid bids being received at or above the issue price.

15. Only Eligible Employees who are Indian Nationals based in India and are physically present in India on

the date of submission of the Bid-cum-Application Form would be eligible to apply in this Issue under the Employee Reservation Portion on competitive basis. Employees other than those mentioned hereinabove are not eligible to participate under the Employee Reservation Portion. Bid/Application by Eligible Employees can also be made in the “Net Issue to Public” and such Bids shall not be treated as multiple Bids.

16. In case of reserved category, a single applicant in the reserved category can make application for a

number of securities, which exceeds the reservation but not more than the total issue size. 17. Undersubscription, if any, in the Non-Instituional portion and Retail portion would be met with spill over

from other categories at the sole discretion of our Company in consultation with the BRLM. In case of Under-subscription in the Qualified Institutional Buyers Portion (i.e. subscription less than 50% mandatory of the Net Issue), the same shall not be available to other categories and full subscription monies shall be refunded. However, if the aggregate demand by Mutual Funds is less than 5% of QIB Portion, the balance share available for allocation in the Mutual Fund Portion will first be added to the QIB Portion and be allocated proportionately to QIB Bidders.

18. The Company has not issued any Equity Shares out of revaluation reserves or for consideration other than

cash, except the bonus shares issued by capitalization of reserves as given below:

Sr. No. Date of Allotment No. of Shares Ratio 1 18-08-2006 50,00,000 2:1

19. A bidder cannot make a bid for more than the number of Equity Shares being issued through this issue,

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

20. We have not availed any bridge loan against the proceeds of this Issue. 21. The Equity Shares issued through this Issue shall be made fully paid up on allotment. 22. At any given point of time, there shall be only one denomination for the Equity Shares of the Company,

unless otherwise permitted by law. The Company shall comply with such disclosure and accounting norms specified by SEBI from time to time.

23. There would 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 Red Herring Prospectus with SEBI until the Equity Shares issued through the Prospectus are listed or application moneys refunded on account of failure of Issue.

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

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

25. The total numbers of members of our Company are [*] as on the date of filing of Draft Red Herring

Prospectus

38

26. Our company has not granted any Options or issued any shares under any Employee Stock Option or Employee’s Stock Purchase scheme

27. Our Company has not revalued asstes since inception and has not issued any shares out of revaluation

reserve. 28. Restrictive Covenants of Lenders

The company is subject to standard restrictive covenants under the agreement, which it has entered with the lenders. These covenants among other things requires the company to obtain approval of the lending banks to effect any major change in Capital structure, declare dividend for any year except out of profits relating to that year, undertake new project/ scheme of modernization, to invest in the share capital or lend or advance funds or place deposits with any associate/ allied/ sister/ any other concerns, to enter into any borrowing arrangements with any bank/ Financial Institution/ company or to take decision on merger, amalgamation, reconstruction, take over, shifting of premises or to give any corporate/ financial guarantee.

However, the company has obtained the NOC from Lead Bank - Bank of India, Pune for this Public Issue.

29. The Promoters including Promoter Group and Associates and Directors have not purchased /Sold Equity

Shares of the Company, during the period of six months preceding the date on which Red Hearing Prospectus is filed with SEBI.

39

OBJECTS OF THE ISSUE The object of the issue are to raise capital for part financing the funds required for:- 1. Setting up additional manufacturing facilities for silent generator sets at Waki - Pune 2. To augment long term resources for Working Capital Requirement 3. For General Corporate Purpose 4. To meet the Public Issue expenses The main object clause and objects incidental or ancillary to the main objects clause of the Memorandum of Association enables the company to undertake the existing activities and the activities for which the funds are being raised by us, through the present issue. We plan to enhance our capacities to manufacture generator sets by setting up a new plant and as well as increase range of generator sets upto 550 KVA. At present we are manufacturing generator sets` in the range of 7.5 KVA to 45 KVA. The details of the existing capacity and future capacity of generator sets after the proposed expansion are given below:-

Existing After Expansion*

Range Capacity Range Capacity 7.5 KVA to 45 KVA 6000 p.a. 7.5 KVA to 45 KVA

62.5 KVA to 550 KVA 18, 000 p.a. 4, 000 p.a.

* Includes project at Jammu under implementation & the proposed project as per the object The cost of project and means of finance as estimated by our management are given below: Cost of the Project Rs. In Lakhs Sl No. Description Amount

1 Setting up additional manufacturing facility at Waki-Pune manufacture to silent generating sets up to 550 KVA 3868.15

2 To augment long term resources for Working Capital Requirement 883.12 3 General Corporate purposes [ . ] 4 To meet the Public Issue expenses [ . ] Total [ . ]

Sl. No.

Means of Finance Rs. In Lakhs

1 Public Issue of Equity Shares [ . ] 2 Internal Accruals [ . ] Total

Note: Any shortfall in the funding would be funded through loan funds and/or internal accruals.

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1. Setting up plant to manufacture silent generating sets up to 550 KVA.

We propose to setup manufacturing facilities at Waki, an Industrial zone in Pune, for silent generating sets including the acoustic enclosures, base frames, control panels and the assembly work. The detailed break up of the cost of this project is given below:-

(Rs. In. Lakhs) Sl. No Description Amount 1 Land (7.5 Acres) 470.002 Land Development and Internal Roads 170.00

3 Building for Workshop, Assembly shop and offices 1050.00

4 Machinery and equipments 2078.155 Power Connection 45.356 Miscellaneous Fixed Assets 54.65 TOTAL COST 3868.15

a. Land We plan to acquire Industrial Land measuring 3 hectares situated at Gat Nos. 1051 & 1052 of Village Waki Budruk in Taluka Khed of District Pune.We have entered into a MOU with Mr. Brijendra Nath Agarwal, one of the promoter director (having an Agreement to sell on October 17, 2006 with the present owners of the land) on the 2nd day of January 2007 for purchase of land. The total cost of the land is estimated at Rs.450.00 Lakhs plus stamp duty, registration fee, legal fee and other related expenses. We have already paid an advance of Rs. 1,00,00,000 (Rupees One Crore only) to Mr. Brijendra Nath Agarwal. The sale deed would be executed and registered on or before the expiry of 180 (one eighty) days from the date of signing of Memorandum of Understanding (January 2, 2007). b. Land Development, Internal Roads and Compound Wall The cost of development of the proposed land and internal roads as well as compound wall is estimated at Rs. 170 lakhs, as per quotation dated 19/12/2006 of Archicon Associates, 103, Mayfair Towers II, Shivajinagar Pune. c. Construction of building and shed The total cost of construction for the proposed building is estimated at Rs. 1050 lakhs, as per quotation dated 19/12/2006 of Archicon Associates, 103, Mayfair Towers II, Shivajinagar Pune. The factory building will consist of storerooms for raw material and finished goods, production sheds, administration center, security cabins, structural water proofing, water tanks etc. The cost of construction has been estimated by the architect at Rs. 10500/- per sq. mt. for a total building area of 10,000 sq. mts. The construction will be of RCC footings, brick wall of 230 mm thickness in super structure and up to 2500 mm in height, GI pre-coated sheets for roofing & structural steel work for columns. d. Machinery & Equipment- We plan to install 3 new laser cutting machines, a Plasma robotic system, 2 CNC press brakes of high tonnage, 2 Load Banks of 600 KW each for testing & 4 EOT Cranes for our Silent Generator manufacturing Plant. The total cost of machinery and equipment is estimated at Rs.2078.15/- Lacs

i) Laser Cutting Machines

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We propose to install 3 new laser cutting machines which shall be used primarily for manufacture of blanks for silent genset canopies, base frames and Control panels. These machines are high speed, high accuracy and technologically advanced. In case surplus capacity is available, these can also be loaded with other purposes for cutting metal sheets. Following new machines are proposed to be imported for which orders are yet to be placed.

Name of the Supplier: TRUMPF Werkzeugmaschinen GmbH + Co. KG Address: Postfach 1450, D-71252, Ditzigen. Deutschland Date of the Quotation: 20.02.07 of FOB price A. Laser Cutting For TrueLaser 3060

Sr No Particulars

Foreign Currency (Euros/USD in Lakhs) Rs. In Lakhs

1 FOB Price (In Euros @ Rs. 59/EURO) 6.96 410.64 2 Transportation (USD @ Rs. 45/EURO) 0.15 6.75 3 Insurance & Miscellaneous @1% 4.11 CIF 421.50 4 Custom Duty @7.5% of CIF 31.61 5 CVD @ 16.48% 74.67 6 SAD @ 4% 21.11 7 Clearing Charges @ 1.5% 8.23 8 Installation Charges – Estimated 20.00 Total 577.12 B. Laser Cutting For TrueLaser 3040 (2 Machines)

Sr No Particulars

Foreign Currency (EUROS/USD in Lakhs) Rs. In Lakhs

1 FOB Price (In Euros @ 59/Euros), 2 Nos 10.43 615.37

2 Transportation (USD @ 45/USD) – Estimated 0.30 13.50

3 Insurance & Miscellaneous – Estimated 6.15 CIF 635.02 4 Duties Custom Duty @7.5% of CIF 47.63 CVD @ 16.48% 112.50 SAD @ 4% 31.81 Clearing Charges @ 1.5% 12.40 5 Installation Charges – Estimated 20.00 Total 859.36 TOTAL COST (A+B) 1436.48

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ii) Plasma Robotic System We plan to install a plasma robotic system for cutting/beveling of plates, structures and welded assemblies. The Plasma cutting compliments the Laser cutting operations for thicker plates and where beveling is required as edge preparation for welding. Name of the supplier: PLAZMA Technologies Private Limited Address EL-55, M.I.D.C., Bhosari, Pune Date of Quotation: 13/02/2007

Following new machines are proposed to be purchased from domestic suppliers for which orders are yet to be placed: Particulars Rs. In Lakhs

Robo Plazma Cutting System with Accessories 135.00 Other Accessories - Work Table, Job holding fixtures/clamps, Earthing cable/pits, Power Supply Control Panel/ cables, Air Compressor/ Line, UV Light curtains/enclosures, Safety enclosure, Fume extraction System, Work Table, Offline programming PC Workstation or P-IV, Air Compressor 5 hp 20.00 Total 155.00 Excise Duty @16.48% 25.54 Total Cost 180.54 Vat @ 12.5% 22.57 Transportation – Estimated 0.1 Total Cost 203.21

iii) EOT Cranes

We plans to enhance our operational speed by procuring E.O.T cranes which would require an investment of Rs. 111.53 Lakhs. The said cranes are required for shifting the raw material, finished products. Following indigenous equipments is to be purchased for which orders are yet to be purchased: Name of the Supplier: Shri Crane Fab Pvt Ltd Address 19/2, Vithalwadi, Pune- 51 Date of Quotation: 24/12/2006

Particulars Rs. In Lakhs

DG Grider EOT Crane with Electrical wire rope hoist& Motor driven trolley 13.00 L.T.DS.L Shrouded bus bar Type @Rs. 1250/- per mtr.for 50 mtr 0.63 Gantry Girder with Sq Bar/ Rail for above Crane @Rs. 15000/- per mtr for 50 mtr 7.50 Ex Factory Price 21.13 Excise Duty @ 16.48 % 3.48 Sub-Total 24.61 VAT @ 12.5 % 3.08 Transportation – Estimated 0.20 Total Cost of 1 crane 27.88

43

Total Cost of 4 Crane

111.53 iv) Press Brakes These are used for bending the blanks produced by laser cutting and making the panels required for the genset canopies and other sheet metal products. Following imported machinery is to be imported for which orders are yet to be placed Name of the Supplier: Darley Sheet Metal Working Machines Address: 59, Darley Sales B.V., Emmastrat 90.6245, HZ Eijsden, Nederland Date of Quotation: 25/12/2006 (of Darley India)

Particulars CIF (in Lakh Euros)

Rs. In Lakhs

CNC Press brake, EHP230.31/25 CIF Mumbai 1.395

82.31 Duties Custom Duty @ 7.5 of CIF 82.31 6.17 CVD @16.32% 14.44 SAD @ 4% 4.12 Clearing Charges @1.5% 1.61

Sub Total 108.64

Local Transportation Cost – estimated 0.20 Installation Cost – estimated 5.00 Total 113.84 Pressbrake, EHP230.43/37 CIF Mumbai 1.65 97.35 Duties Custom Duty @ 7.5 of CIF 82.31 7.30 CVD @16.48% 17.25 SAD @ 4% 4.88 Clearing Charges @1.5% 1.90

Sub Total 128.68

Local Transportation Cost – estimated 0.20 Installation Cost – estimated 5.00 Total 133.88 Total Cost for both the Machines 299.08

v) Load Banks These are used for testing the gensets before dispatch to the customers The following indigenous equipment is to be purchased for which orders are yet to be placed Name of the supplier: SM Automation System Address: 109-B, Shree Bajrang Krupa Industrial Estate, Survey No. 75/2, Athal, Silvassa Date of Quotation: 19/03/2007

44

Rs. In Lakhs

Particulars Quantity per set No of Sets

Total Load Banks

Unit Price (ex Works) Total

415 Volts, 3 phase, 3 sets of 2*300 KW Load Bank (i.e, 6 units of 300 KW Load bank) 2 3 6 3.75 22.50Vat @12.5% 2.81 Sub total 25.31 Packing, Forwarding & Installation @ 10% 2.53 Total 27.84

vi) Power Connection

The Power requirement for the said factory has been estimated at 1000 KVA. The cost estimated for power connection and electrical installations is estimated at Rs. 45.35 Lakhs, which includes cost of transformer, power temple, MSEDCL charges and other related costs. The cost is estimated by G.V. Lele & Company, as per their quotation dated March 24, 2007. We shall apply for the Power connection in due course immediately after taking possession of the said land.

vii) Miscellaneous assets The following miscellaneous assets will be required for the proposed project for which negotiations are going with prospective suppliers. The estimated cost is as under: Sr. No. Particulars Amount (Rs. in

lakhs) 1. Furniture & Fixtures 28.65 2. Computers, AC, Office Equipments 6.00 3. DG Sets (100 KVA) 8.00 4. Miscellaneous Equipments 12.00

Total 54.65

Research & Development Equipments We are purchasing Load Banks for testing the manufactured gensets as per details given above. Further we have quality control and R&D facility at the existing Genset manufacturing facility at Silvassa which is also proposed to be utilized for the proposed expansion facility. 2. To augment Working Capital Requirement We intend to augment long term resources for our working capital requirement commensurate with the expansion of the business. The company’s working capital requirement arises primarily from inventories, sundry debtors and other current assets. The same is calculated below

45

Rs. In Lakhs Particulars Amount Current Assets Inventory 2436.38Debtors 2013.30Other Current Assets 475.46Total Current Assets 4925.14Current Liabilities Trade Creditors (1667.01)Other Current Liabilities (267.94)Total Current Liabilities (1934.95)Working Capital Required 2990.19Less: Estimated Working Capital for 2006-07 2107.07Additional Working Capital Requirement to be funded through IPO Proceeds 883.12

3. Public Issue Expenses: The expenses for the issue include among others, fees payable to Book Running Lead Manager, Registrar to the Issue, selling commissions, printing and distribution expenses, legal fees, stamp duty, statutory advertising expenses and listing fees payable to the stock exchanges. The estimated Issue expenses are as follows: (Rs. in lakhs) Particulars Amount

Fees to the intermediaries i.e. BRLM, Registrar, Legal Advisor, Auditors, etc

[•]

Underwriting & Selling Commission [•]Advertising & Marketing expenses [•]Printing, Stationary, Dispatch [•]Miscellaneous [•]Total [•] 4. General Corporate Purposes We intend to deploy the balance Issue proceeds aggregating Rs. [•] lakhs for general corporate purposes which include but are not restricted to funding of future working capital requirements, meeting any contingencies on account of escalation cost, sales and marketing expenditure, launch of new products, for entering into strategic alliances, joint ventures and acquisitions, investment in research and technology upgradation, for Brand building and any other business which the Board may approve. Schedule of Implementation

Activity Commencement Completion Remarks For Setting up Factory at Waki Acquisition of land January 2007 July 2007 MOU for purchase of

land has been entered in January 2007

Development of Land & Construction of Compound Wall

July 2007 Oct 2007 -

46

& Internal Roads Construction of Building July 2007 Nov 2007 - Placement of Orders for Plant & Machinery

July 2007 August 2007 Selection of major plant and machinery has been done and quotations from suppliers have been received

Installation of Machinery & Utilities

Nov 2007 Dec 2007 -

Trial Production Dec 2007 Jan 2008 - Commercial Production Feb 2008 - -

Deployment of funds M/s Prakash Shah & Co., the auditor of the company has certified vide his certificate dated March 19th 2007 that an amount of Rs. 117 lacs has been spend on the projects upto March 7th 2007. The above mentioned deployment is from internal accruals. Details of Proposed Fund Deployment The entire issue proceeds are to be utilized within the financial year 2007-08. However the cost of project and the Quarter wise break up of funds is as under:

Rs. In lakhs

SL. No Particulars

Upto March 15 2007

Quarter ended June 07

Quarter ended Sep 07

Quarter ended Dec 07

Quarter ended Mar 07 TOTAL

1 To Set up a generator manufacturing unit at Waki, Pune 100 25 1270 2200 273.15 3868.15

3 To meet Working Capital Requirement - [ . ] 200 300 383.12 883.12

4 To finance the Public Issue expenses 17 20 [ . ] - - [ . ]

5. General Corporate Purpose - - [ . ] [ . ] [ . ] [ . ] TOTAL COST 117 45 [ . ] [ . ] [ . ] [ . ]

No part of the issue proceeds will be paid as consideration to the promoters, directors, key managerial personnel or companies promoted by our promoters except the cost of land of the proposed project which is being purchased from one of the promoters and amount to be paid in the normal course of business. We will disclose the utilization of the Issue proceeds under separate head in our Balance Sheet for the financial year 2007-08. Appraisal The project has not been appraised by any Bank or Financial Institution.

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Interim Use of Funds Pending utilization for the proposed purposes described above, we intend to invest the proceeds of this issue in high quality liquid instruments including money market mutual funds or fixed deposits with Banks for necessary durations. Monitoring of Utilization of Funds We shall appoint one of the Scheduled Commercial Bank as a Monitoring Agency to monitor the utilization of the proceeds of the Issue.

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BASIC TERMS OF THE ISSUE The Equity Shares being offered are subject to the provisions of the Companies Act, SEBI (DIP) Guidelines, our Memorandum and Articles of Association, the terms of this Draft Red Herring Prospectus, Red Herring Prospectus, Prospectus, Bid cum Application Form, the Revision Form, the Confirmation of Allocation Note and other terms and conditions as may be incorporated in the allotment advices and other documents/certificates that may be executed in respect of the Issue. The Equity Shares shall also be subject to laws as applicable, guidelines, notifications and regulations relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, the Government of India, the Stock Exchanges, the RBI, RoC and/or other authorities, as in force on the date of the Issue and to the extent applicable. Ranking of Equity Shares The Equity Shares being offered shall be subject to the provisions of the Companies Act, our Memorandum and Articles of Association and shall rank pari passu in all respects with the existing Equity Shares including in respect of the rights to receive dividend. The allottees will be entitled to dividend, voting rights or any other corporate benefits, if any, declared by us after the date of Allotment. Face Value and Issue Price The Equity Shares having a face value of Rs. 10/- each are being offered in terms of this Draft Red Herring Prospectus at the Price of Rs. [*] per Equity Share. The issue price will be determined by our Company in consultation with the BRLM on the basis of assessment of market demand for the equity shares offered by way of book building. At any given point of time there shall be only one denomination of the Equity Shares of our Company, subject to applicable laws. Rights of the Equity Shareholders Subject to applicable laws, rules, regulations and guidelines and the Articles of Association, the equity shareholders shall have the following rights:

• Right to receive dividend, if declared; • Right to attend general meetings and exercise voting rights, unless prohibited by law; • Right to vote on a poll either in person or by proxy; • Right to receive offer for rights shares and be allotted bonus shares, if announced; • Right to receive surplus on liquidation; • Right of free transferability; and

Such other rights, as may be available to a shareholder of a listed Public Limited Company under the Companies Act, terms of the listing agreements with the Stock Exchanges(s) and the Memorandum and Articles of Association of our Company. For a detailed description of the main provision of the Articles of Association of our Company relating to voting rights, dividend, forfeiture and lien and/or consolidation/splitting, etc., see the section entitled “Main Provisions of Articles of Association” beginning on page ___ of this Draft Red Herring Prospectus. Market Lot and Trading Lot In terms of Section 68B of the Companies Act, the Equity Shares shall be allotted only in dematerialised form. In terms of existing SEBI Guidelines, the trading in the Equity Shares shall only be in dematerialised form for all investors. Since trading of the Equity Shares will be in dematerialised mode, the tradable lot is one Equity Share. Allocation and allotment of Equity Shares through this Offer will be done only in electronic form in multiples of 1 Equity Share subject to a minimum allotment of __ Equity Shares to the successful bidders.

49

Minimum Subscription If our Company does not receive the minimum subscription of 90% of the Net Issue (including allotment of mandatory 50% of the Net Issue to the QIBs) including devolvement of underwriters within 15 days from the Bid/Issue Closing Date, our Company shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after we become liable to pay the amount, our Company and every director of our Company who is an officer in default, becomes liable to repay the amount with interest as per Section 73 of the Companies Act. If atleast 50% of the Net Issue cannot be allotted to QIBs then entire application money will be refunded.

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ISSUE STRUCTURE Issue of 45,66,600 Equity Shares of Rs.10 each aggregating for a price of Rs. [●] per Equity Share aggregating Rs. [●] Lacs including reservation for eligible employees of 50,000 equity shares of Rs. 10 each at a price of Rs. [*] per equity share aggregating Rs. [*] lakhs (Employee Reservation Portion). The net issue to public is 45,16,600 Equity Shares. The Issue is being made through the 100% Book Building process. Details of the Issue structure are tabulated below: Eligible

Employees QIBs

Non-Institutional

Bidders Retail Individual

Bidders Number of Equity Shares*

Up to 50,000 Equity Shares

A minimum of 22,58,300 Equity Shares must be allotted to QIBs.

Not less than 6,77,490 Equity Shares shall be available for allocation.

Not less than 15,80,810 Equity Shares shall be available for allocation.

Percentage of Issue Size available for allocation

About 1.09% of the Issue Size.

At least 50% of the Net Issue (of which 5% shall be available for allocation for Mutual Funds)* Mutual Funds participating in the 5% reservation in the QIB Portion will also be eligible for allocation in the remaining QIB Portion. The unsubscribed portion, if any, in the Mutual Fund reservation will be available to QIBs.

Not less than 15% of the Net Issue. The unsubscribed portion in this category will be available for allocation to QIBs and Retail Individual Bidders*

Not less than 35% of the Net Issue. The unsubscribed portion in this category will be available for allocation to QIBs and Non Institutional Bidders*

Basis of Allocation if r e s p e c t i v e category is oversubscribed

Proportionate

Proportionate as follows: (a) Equity Shares shall be allocated on a proportionate basis to Mutual Funds in the Mutual Funds Portion; (b) Equity Shares shall be allocated on a proportionate basis to all QIBs including Mutual Funds Receiving allocation as per (a) above.

Proportionate Proportionate

Minimum Bid

__ Equity Shares and in multiples of

Such number of Equity Shares that

Such number of Equity Shares that

__ Equity Shares and in multiples of

51

__ Equity Shares thereafter.

the Bid Amount exceeds Rs 1,00,000 and in multiples of __ Equity Shares thereafter.

the Bid Amount exceeds Rs 1,00,000 and in multiples of __ Equity Shares thereafter.

__ Equity Shares.

Maximum Bid

Not exceeding the size of the Issue subject to regulations as applicable to the Bidder.



Such number of Equity Shares so as to ensure that the Bid Amount does not exceed Rs. 1,00,000

Mode of Allotment

Compulsorily in dematerialised form




Trading Lot One Equity Share One Equity Share One Equity Share One Equity Share Who can Apply**

Indian Nationals who are permanent employees or Executive Director(s) of our Company, based in India and are present in India on the date of submission of Bid-cum-A p p l i c a t i o n Form.

Public financial institutions, as specified in Section 4A of the Companies Act, scheduled commercial banks, mutual funds, foreign institutional investor registered with SEBI, multilateral and bilateral development financial institutions, Venture Capital Funds registered with SEBI, foreign Venture capital investors registered with SEBI, State Industrial Development Corporations, insurance companies registered with the Insurance Regulatory and D e v e l o p m e n t Authority, provident funds with minimum corpus of Rs. 2500 Lacs and pension

Resident Indian individuals, HUF (in the name of Karta), companies, corporate bodies, NRIs, societies and trusts

Individuals (including NRIs and HUFs in the name of Karta) applying for Equity Shares such that the Bid Amount does not exceed Rs. 1,00,000 in value.

52

funds with minimum corpus of Rs. 2500 Lacs in accordance with applicable law.

Terms of Payment

Margin Amount applicable to Eligible Employees at the time of submission of Bid-cum-Application Form.

Margin Amount applicable to QIB Bidders at the time of submission of Bid-cum-Application Form.

Margin Amount applicable to Non Institutional Bidders at the time of submission of Bid-cum-Application Form.

Margin Amount applicable to Retail Individual Bidders at the time of submission of Bid-cum-Application Form.

Margin Amount

Full Bid Amount on bidding

At least 10% of the bid amount on bidding.



* Subject to valid bids being received at or above the Issue Price. At least 50% of the Net Issue shall be available for allocation on a proportionate basis to QIB Bidders. 5% of the QIB Portion shall be available to Mutual Funds. Mutual Funds participating in the 5% share in the QIB Portion will also be eligible for allocation in the remaining QIB Portion. Further, at least 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and at least 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. If the aggregate demand by Mutual Funds is less than 1,12,915 Equity Shares, the balance Equity Shares available for allocation in the Mutual Fund reservation will first be added to the QIB Portion and be allocated proportionately to the QIB Bidders in proportion to their Bids. Under-subscription, if any, in any category except in the QIB category would be met with spill over from other categories at our sole discretion, in consultation with the BRLM. If a minimum allotment of 50% of the Issue is not made to the QIBs, the entire subscription monies shall be refunded. ** In case the Bid-cum-Application Form is submitted in joint names, the investors should ensure that the demat account is also held in the same joint names and in the same sequence in which they appear in the Bid-cum-Application Form.

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BASIS FOR ISSUE PRICE

The Issue Price will be determined by our Company in consultation with the BRLM on the basis of assessment of market demand for the equity shares offered by way of book building. Investors should read the following with the Risk Factors included from page number __ to __ and the details about our Company and its financial statements included in this Draft Red Herring Prospectus. The trading price of the equity shares of our Company could decline due to these risks and you may lose all or part of your investments. Qualitative Factors:

1. Strong Customer Base – We have a strong and dedicated marketing department headed by an Executive Director who is assisted by support staff. Our customer base comprises of well-known names like Bharti Airtel Ltd., Reliance Telecom Ltd., Hutchison Telecom Limited, Suzlon Generators Pvt. Ltd. and JCB Manufacturing Ltd.

2. Quality and ISO Certification – The silent gensets being manufactured by us carry approval form

“The Automative Research Assiciation of India” and our Chakan unit of genset is ISO 9001: 2000 certified.

3. Multi Locational, Manufacturing, Sales and Service Network – We have two manufacturing units near Pune and One at Silvassa. One unit at Jammu is under implemation. We have service centers spread all over the country. Our multi location supply units allow us to sustain the cost of high level of services.

4. Qualified technocrat promoters – The founder Promoters are engineering graduates from IIT with wide experience in the industry.

5. Experience in Designing and Product Variety – In silent generator sets, we are able to offer gensets ranging from 7.5-45 K.V.A. Since we offer tailor-made products, the design used in manufacturing of components for construction, mining and earth moving equipments are job specific. This gives our customers to choose the applications as per their requirements.

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Quantitative Factors: 1. Adjusted Earning Per Share (EPS): Year EPS (Rs.) Weightage 12 Months Ended 31st March 2004 0.97 112 Months Ended 31st March 2005 9.31 212 Months Ended 31st March 2006 * 42.12 3Weighted average EPS (Rs) 24.33 * The EPS for the period ended 31st October 2006 (not annualized) is Rs. 10.40 2. Price Earning ratio (P/E ratio) in relation to the Issue Price of Rs [*] per share At the lower

Band of Rs. [*] At the upper Band of Rs. [*]

a) Based on weighted average (EPS) as on 31st March, 2006

[*] [*]

b) PE Multiple - Electric Equipment Industry Highest (High Energy Batteries) 108.90 Lowest (NEPC India) 1.10 Average 25.60 3. Return on Net worth Year PAT Networth RONW (Rs. in Lakhs) (Rs. in lakhs) (%) Weightage 12 Months Ended 31st March 2004 7.28 87.26 8.34 1 12 Months Ended 31st March 2005 83.62 243.73 34.31 2 12 Months Ended 31st March 2006 * 735.03 1079.30 68.10 3 Weighted Average 46.88 Minimum return on total Net worth after issue needed to maintain pre-issue EPS is [*] * The PAT and Networth for seven months ended October 31, 2006 was Rs. 469.17 lakhs and Rs. 1871.71 lakhs respectively 4. Net Asset Value (NAV) per share Year NAV As on March 31st 2006 43.17As on October 31st 2006 22.42After the Issue [*]Issue Price [*]

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5. The accounting ratios of selected companies in the Industry Group Our Company is in the business of manufacturing silent diesel gensets and components and sub-assemblies for construction, mining and earth moving equipments. There are no listed companies which are comparable with us. However in view of nature of our business, we can be classified as under electrical equipment industry. Company EPS (Rs.) P/E Ratio RONW (%) NAV (Rs.) Birla Power Solutions Limited 2.70 9.60 3.70 49.80Veena Industries Limited 42.12 [*] 68.10 43.17Source: Capital Market Vol. XXII/01 dated March 12-25, 2007 The Face Value of our Equity Shares is Rs.10/- per share and the Issue Price is [•] times of the Face Value (at the lower end of the Price Band) and [•] times of the Face Value (at the higher end of the Price Band). The BRLMs believes that the Issue Price of Rs. [•] per share is justified in view of the above qualitative and quantitative parameters. The investors may also peruse the risk factors beginning on Page [•] of this Draft Red Herring Prospectus and our financials as set out in the Auditors’ Report beginning on page [•] of this Draft Red Herring Prospectus to have a more informed view about the investment proposition. The final Issue Price shall be determined on basis of demand from investors. The Issue Price of Rs. [•] has been determined by us in consultation with BRLMs and on the basis of assessment of market demand for the Equity Shares from the investors by way of book building and is justified on the basis of the above factors.

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STATEMENT OF TAX BENEFITS Our Auditors, Prakash S. Shah & Co., have vide their letter dated 19th March 2007 certify that under the current provisions of the Income Tax Act, 1961 and other existing laws for the time being in force the following benefits will be available to us and the members. The said certificate is reproduced hereunder: We, M/s. Prakash S. Shah & Co., Chartered Accountants, do hereby certify that in connection with the proposed public issue by Veena Industries Limited under the current provisions of the Income-Tax Act 1961, (hereinafter referred to as “IT Act”) and other applicable Tax laws for the time being in force. The following Tax benefits and deductions will, interalia, be available, subject to the fulfillment of the respective requirements of the relevant provisions. However, all shareholders are advised to consult their own Tax advisors as to the Tax implications on investment in their individual case.

1. TO THE COMPANY a. In accordance with, and subject to the provisions of section 32 of the income-Tax act, the company

will be entitled to claim the depreciation on tangible and specified intangible assets; b. In accordance with, and subject to compliance of provisions laid down in section 10B of the Income-

Tax Act, the 100% Export Oriented Auto Components manufacturing unit of the company situated at Gat No. 312, Nanekarwadi Chakan, Pune 412501 Maharashtra will be entitled to the 100% deductions in respect of profits derived from the business of the said unit from the total income chargeable to Income-Tax for a maximum period of 10 years but subject to sunset clause as per provisions of Section 10B up to Financial Year ended on 31st March 2010 (i.e., Assessment Year 2010-11) subject to any further change in the provisions of the Income Tax Act, 1961.

c. In accordance with, and subject to compliance of provisions laid down in Section 80IB(vi) of the

Income Tax Act, the Genset and Sheet Metal Manufacturing Unit situated at Samba and Khatua situated in the state of Jammu & Kashmir, will be entitled to deductions in respect of profits derived from the business of the said unit from the total income chargeable to Income Tax for a maximum period of 10 years. (i.e. 100% Deduction for first 5 Years up to Financial Year 2010-11 (Assessment Year 2011-12) & 30% for the subsequent 5 Years up to Financial Year 2015-16 (Assessment Year 2016-17).

d. In accordance with, and subject to compliance of provisions laid down in Section 80IB(vi) of the

Income Tax Act, the Genset manufacturing unit situated at Silvassa, Dadra & Nagar Haveli will be entitled to 100% deduction upto Financial Year 2008-09 (i.e. AY 2009-10) and further 30% deduction for the succeeding 5 years up to Financial Year 2013-14 ( i.e. AY 2014-15) in respect of profits derived from the business of the said unit from the total income chargeable to Income Tax.

e. Dividend income (whether interim or final), in the hands of the company as distributed or paid by

any other Indian Company on or after April 1, 2003 is completely exempt from Tax in the hands of the Company, under section 10(34) of the IT Act.

f. Long-term capital gains would be subject to Tax at the rate of 20% (plus applicable surcharge and

education cess) as per the provisions of section 112(1)(b) of the IT Act. However, as per the proviso to Section 112(1)(b), the long term capital gains resulting on transfer of listed securities or units, [not covered by section 10(36) and 10(38)], would be subject to Tax at the rate of 20% with Indexation benefits or 10% without Indexation benefits (plus applicable surcharge and education cess) as per the option of the assessee.

g. Long term capital gain arising from transfer of an ‘eligible equity share’ in a Company Purchased on or after the 1st day of March, 2003 and before the 1st day of March, 2004 (both days inclusive) and held for a period of 12 months or more is exempt from Tax under section 10(36) of the IT Act.

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h. Long term capital gain arising from the sale of Equity Shares in any company through a recognized

stock exchange or from the sale of units of an equity oriented mutual fund shall be exempt from Income Tax if such sale takes place after 1st of October 2004 and such sale is subject to Securities Transaction Tax, as per the provisions of section 10(38) of the IT Act.

i. Short Term capital gains arising from the transfer of Equity Shares in any company through a

recognized stock exchange or from the sale of units of equity-oriented mutual fund shall be subject to Tax @ 10% provided such a transaction is entered into after the 1st day of October, 2004 and the transaction is subject to Securities Transaction Tax, as per the provisions of section 111A of the IT Act. However such income earned by the company shall not be exempt for the purpose of computing Tax on Book Profit as per the provisions of section 115JB of the Act.

j. In accordance with and subject to the conditions and to the extent specified in Section 54EC of the IT

Act, the Company would be entitled to exemption from Tax on gains arising from transfer of the long term capital asset [not covered by section 10(36) and section 10 (38)] if such capital gain is invested in any of the long-term specified assets in the manner prescribed in the said section. Where the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to Tax as long term capital gains in the year in which the long-term specified asset is transferred or converted into money.

k. In terms of Section 115JAA (1A) of the Act tax credit shall be allowed for any assessment year

commencing on or after April, 01, 2006. Credit eligible for carry forward is the difference between MAT paid and the tax computed as per the normal provisions of the Act. The credit is available for set off only when tax becomes payable under the normal provisions and that tax credit can be utilized to set off any tax payable under the provisions in excess of MAT payable for that relevant year. Such MAT credit shall not be available for set off beyond 5 years succeeding the year in which the MAT credit initially arose.

l. In terms of Clause (iia) of Sub-section (1) of Section 32 of the Act, the Company is entitled to further

deduction of 20% as additional depreciation on new plant & machinery acquired and installed after 31st March, 2005, subject to conditions specified therein.

m. The Company can carry forward and set off the unabsorbed depreciation allowance, if any, against its

income of the future years. The Company is also entitled to carry forward and set off its unabsorbed business losses for a period up to eight subsequent years for set off against its business income.

n. Under Section 35D of the Act, the Company will be entitled to a deduction equal to 1/5th of the

expenditure of the nature specified in the said section, including expenditure incurred on present issue. Such as Brokerage and other charges, by way of amortization over a period of 5 successive years, beginning with the previous year in which the new unit commences production, subject to the stipulated limits.

2. TO THE MEMBERS OF THE COMPANY UNDER THE IT ACT

A. TO RESIDENT SHAREHOLDERS i. Dividend (whether interim or final) declared, distributed or paid by the Company on or after April 1,

2003 is completely exempt from Tax in the hands of the shareholders of the Company as per the provisions of section 10(34) of the IT Act.

ii. Any income of minor children clubbed with the total income of the parent under section 64(1A) of

the IT Act, will be exempt from Tax to the extent of Rs. 1500/- per minor child under section 10(32) of the IT Act.

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iii. As per the provisions of Section 112(1)(b) of the IT Act, long-term capital gains would be subject to

Tax at the rate of 20% (plus applicable surcharge and education cess). However, as per the proviso to Section 112(1)(b), the long term capital gains resulting on transfer of listed securities or units (not covered by sections 10(36) and 10(38), would be subject to Tax at the rate of @ 20% with Indexation benefits or 10% without Indexation benefits (plus applicable surcharge and education cess) as per the option of the assessee.

iv. Long term capital gain arising from the sale of Equity Shares in any company through a recognized

stock exchange or from the sale of units of an equity oriented mutual fund shall be exempt from Income Tax if such sale takes place after 1st of October 2004 and the sale is subject to Securities Transaction Tax, as per the provisions of section 10(38) of the IT Act.

v. Short Term capital gains arising from the transfer of Equity Shares in any company through a

recognized stock exchange or from the sale of units of equity-oriented mutual fund shall be subject to Tax @ 10% provided such a transaction is entered into after the 1st day of October, 2004 and the transaction is subject to Securities Transaction Tax, as per the provisions of section 111A of the IT Act.

vi. As per the provisions of section 88E, where the business income of a resident includes profits and

gains from sale of Taxable securities, a rebate shall be allowed from the amount of income Tax equal to the Securities Transaction Tax paid on such transactions. However the amount of rebate shall be limited to the amount arrived at by applying the average rate of income Tax on such business income.

vii. In accordance with and subject to the conditions and to the extent specified in Section 54EC of the IT

Act, the shareholders would be entitled to exemption from Tax on gains arising on transfer of their shares in the Company (not covered by sections 10(36) and 10(38)), if such capital gain is invested in any of the long term specified assets in the manner prescribed in the said section. Where the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to Tax as long term capital gains in the year in which the long-term specified asset is transferred or converted into money.

viii. In case of a shareholder being an individual or a Hindu Undivided Family, in accordance with and

subject to the conditions and to the extent specified in Section 54F of the IT Act, the shareholder would be entitled to exemption from long term capital gains on the sale of shares in the Company (not covered by sections 10 (36) and 10 (38)), upon investment of net consideration in purchase /construction of a residential house. If part of net consideration is invested within the prescribed period in a residential house, then such gains would not be chargeable to Tax on a proportionate basis. Further, if the residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains shall be charged to Tax as long-term capital gains in the year in which such residential house is transferred.

B. TO NON-RESIDENT INDIAN SHAREHOLDERS

1. Dividend (whether interim or final) declared, distributed or paid by the Company on or after April 1, 2003 is completely exempt from Tax in the hands of the shareholders of the Company as per the provisions of section 10(34) of the IT Act.

2. Any income of minor children clubbed with the total income of the parent under Section 64(1A) of

the IT Act will be exempt from Tax to the extent of Rs.1,500 per minor child per year in accordance with the provisions of section 10(32) of the IT Act.

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3. In the case of shareholder being a non-resident Indian and subscribing to shares in convertible foreign exchange, in accordance with and subject to the conditions and to the extent specified in Section 115D read with Section 115E of the IT Act, long term capital gains arising from the transfer of an Indian company’s shares [not covered by sections 10(36) and 10(38)], will be subject to Tax at the rate of 10% as increased by a surcharge and education cess at an appropriate rate on the Tax so computed, without any Indexation benefit but with protection against foreign exchange fluctuation.

4. In case of a shareholder being a non-resident India, and subscribing to the share in convertible

foreign exchange in accordance with and subject to the conditions and to the extent specified in Section 115F of the IT Act, the nonresident Indian shareholder would be entitled to exemption from long term capital gains [not covered by sections 10(36) and 0(38)] on the transfer of shares in the Company upon investment of net consideration in modes as specified in sub-section (1) of Section 115F.

5. In accordance with the provisions of Section 115G of the IT Act, Non Resident Indians are not

obliged to file a return of income under Section 139(1) of the IT Act, if their only source of income is income from investments or long term capital gains earned on transfer of such investments or both, provided Tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the IT Act.

6. In accordance with the provisions of Section 115H of the IT Act, when a Non Resident Indian

become assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer along with his return of income for that year under Section 139 of the IT Act to the effect that the provisions of Chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money.

7. As per the provisions of section 115 I of the Act, a Non-Resident Indian may elect not to be governed

by the provisions of Chapter XII-A for any assessment year by furnishing his return of income for that year under Section 139 of the IT Act, declaring therein that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income or that assessment year will be computed in accordance with the other provisions of the IT Act.

8. In accordance with and subject to the conditions and to the extent specified in Section 112(1) (b) of

the IT Act, Tax on long term capital gains arising on sale on listed securities or units not covered by sections 10(36) and 10(38) will be, at the option of the concerned shareholder, 10% of capital gains (computed without Indexation benefits) or 20% of capital gains (computed with Indexation benefits) as increased by a surcharge and Education cess at an appropriate rate on the Tax so computed in either case.

9. As per the provisions of section 10(38), long term capital gain arising from the sale of Equity Shares

in any company through a recognised stock exchange or from the sale of units of an equity oriented mutual fund shall be exempt from Income Tax if such sale takes place after 1st of October 2004 and such sale is subject to Securities Transaction Tax.

10. As per the provisions of section 111A, Short Term capital gains arising from the transfer of Equity

Shares in any company through a recognised stock exchange or from the sale of units of equity oriented mutual fund shall be subject to Tax @ 10% provided such a transaction is entered into after the 1st day of October, 2004 and the transaction is subject to Securities Transaction Tax.

11. As per the provisions of section 88E, where the business income of a assessee includes profits and


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12. In accordance with and subject to the conditions and to the extent specified in Section 54EC of the IT Act, the shareholders would be entitled to exemption from Tax on long term capital gains [not covered by sections 10(36) and 10(38)] arising on transfer of their shares in the Company if such capital gain is invested in any of the long term specified assets in the manner prescribed in the said section. Where the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to Tax as long term capital gains in the year in which the specified asset is transferred or converted into money.

13. In case of a shareholder being an individual or a Hindu Undivided Family, in accordance with and

subject to the conditions and to the extent specified in Section 54F of the IT Act, the shareholder would be entitled to exemption from long term capital gains (not covered by sections 10(36) and 10(38)) on the sale of shares in the Company upon investment of net consideration in purchase / construction of a residential house. If part of net consideration is invested within the prescribed period in a residential house, then such gains would not be chargeable to Tax on proportionate basis. Further, if the residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains Tax exempted earlier would become chargeable to Tax as long term capital gains in the year in which such residential house is transferred.

14. As per the provisions of Section 90(2) of the IT Act, the provisions of the IT Act would prevail over

the provisions of the Tax treaty to the extent they are more beneficial to the Non-Resident.

15. Under the first provisions of Section 48 of the Act, in case of a non resident, in computing the capital gains arising from transfer of shares of the Company acquired in convertible foreign exchange (as per exchange control regulations) protection is provided from fluctuations in the value of rupee in terms of foreign currency in which the original investment was made. Cost indexation benefits will not be available in such a case. The capital gains/loss in such a case is computed by converting the cost of acquisition, sales consideration and expenditure incurred wholly and exclusively in connection with such transfer into the same foreign currency, which was utilized in the purchase of the shares. However, the benefit will be available only when the shares are transferred in a manner other than as specified in section 10(38) of Act.

C. TO OTHER NON-RESIDENTS

1. Dividend (whether interim or final) declared, distributed or paid by the Company on or after April 1, 2003 is completely exempt from Tax in the hands of the shareholders of the Company, under section 10(34) of the IT Act.

2. Any income of minor children clubbed with the total income of the parent under Section 64(1A) of

the IT Act will be exempt from Tax to the extent of Rs.1500 per minor child per year, in accordance with the provisions of section 10(32) of the IT Act.

3. In accordance with and subject to the conditions and to the extent specified in Section 112(1) (b) of

the IT Act, Tax on long term capital gains arising on sale on listed securities or units before 1st October 2004 will be, at the option of the concerned shareholder, 10% of capital gains (computed without Indexation benefits) or 20% of capital gains (computed with Indexation benefits) as increased by a surcharge and education cess at an appropriate rate on the Tax so computed in either case.

4. As per the provisions of section 10(38), long term capital gain arising from the sale of Equity Shares in any company through a recognized stock exchange or from the sale of units of an equity oriented mutual fund shall be exempt from Income Tax if such sale takes place after 1st of October 2004 and such sale is subject to Securities Transaction Tax.

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5. As per the provisions of section 111A, Short Term capital gains arising from the transfer of Equity Shares in any company through a recognised stock exchange or from the sale of units of equity-oriented mutual fund shall be subject to Tax @ 10% provided such a transaction is entered into after the 1st day of October, 2004 and the transaction is subject to Securities Transaction Tax.

6. As per the provisions of section 88E, where the business income of an assessee includes profits and


7. In accordance with and subject to the conditions and to the extent specified in Section 54EC of the IT

Act, the shareholders would be entitled to exemption from Tax on gains arising on transfer of their shares in the Company (not covered by sections 10(36) and 10(38)) if such capital gain is invested in any of the long term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to Tax as long term capital gains in the year in which the long-term specified asset is transferred or converted into money.

8. In case of a shareholder being an individual or a Hindu Undivided Family, in accordance with and

subject to the conditions and to the extent specified in Section 54F of the IT Act, the shareholder would be entitled to exemption from long term capital gains (not covered by sections 10(36) and 10(38)) on the sale of shares in the Company upon investment of net consideration in purchase/construction of a residential house. If part of net consideration is invested within the prescribed period in a residential house, then such gains would not be chargeable to Tax on a proportionate basis. Further, if the residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains Tax exempted earlier would become chargeable to Tax as long term capital gains in the year in which such residential house is transferred.

9. As per the provisions of Section 90(2) of the IT Act, the provisions of the IT Act would prevail over

the provisions of the Tax treaty to the extent they are more beneficial to the Non Resident.

C. TO FOREIGN INSTITUTIONAL INVESTORS (FIIs) 1. In accordance with and subject to the conditions and to the extent specified in Section 115AD of the

IT Act, Tax on long term capital gain [not covered by sections 10(36) and 10(38)] will be 10% and on short term capital gain will be 30% as increased by a surcharge and education cess at an appropriate rate on the Tax so computed in either case. However, short term capital gains on sale of Equity Shares of a company through a recognized stock exchange or a unit of an equity oriented mutual fund effected on or after 1st October 2004 and subject to Securities Transaction Tax shall be taxed @ 10% as per the provisions of section 111A. It is to be noted that the benefits of Indexation and foreign currency fluctuation protection as provided by Section 48 of the IT Act are not available to FIIS.

2. As per the provision of Section 90(2) of the IT Act, the provisions of the IT Act would prevail over

the provisions of the Tax treaty to the extent they are more beneficial to the Non Resident.

3. Long term capital gain arising from the sale of Equity Shares in any company through a recognized stock exchange or from the sale of units of an equity oriented mutual fund shall be exempt from Income Tax if such sale takes place after 1st of October 2004 and such sale is subject to Securities Transaction Tax, as per the provisions of section 10(38) of the IT Act.

4. As per the provisions of section 88E, where the business income of an assessee includes profits and

gains from sale of Taxable securities, a rebate shall be allowed from the amount of income Tax equal

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to the Securities Transaction Tax paid on such transactions. However the amount of rebate shall be limited to the amount arrived at by applying the average rate of income Tax on such business income.

5. In accordance with and subject to the conditions and to the extent specified in /section 54EC of the IT

Act, the shareholders would be entitled to exemption from Tax on long term capital gains [not covered by sections 10 (36) and 10(38)] arising on transfer of their shares in the Company if such capital gain is invested in any of the long term specified assets in the manner prescribed in the said section. Where the long term specified assets is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to Tax as long term capital gains in the year in which the long term specified asset is transferred or converted into money.

6. In accordance with and subject to the conditions and to the extent specified in Section 54ED of the IT

Act, the shareholders would be entitled to exemption from long term capital gain Tax not covered by sections 10(36) and 10(38)] on transfer of their assets being listed securities or units to the extent such capital gain is invested in acquiring Equity Shares forming part of an ‘eligible issue of share capital’ in the manner prescribed in the said section.

7. Under Section 10(34) of the Act, Income earned by way of dividend from domestic company referred

to in section 115-O of the Act is exempt from Income-tax in the hands of the Share Holders.

E. TO MUTUAL FUNDS In case of a shareholder being a Mutual fund, as per the provisions of Section 10 (23D) of the IT 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 would be exempt from Income Tax, subject to the conditions as the Central Government may by notification in the Official Gazette specify in this behalf. F. TO VENTURE CAPITAL COMPANIES/ FUNDS

i. In case of a shareholder being a Venture Capital Company / Fund, as per the provisions of Section 10(23FB) of the IT Act, any income of Venture Capital Companies / Funds registered with the Securities and Exchange Board of India, would exempt from Income Tax, subject to the conditions specified.

ii. Venture Capital Fund, operating under the Registered Trust Deed or a venture capital scheme

made by Unit Trust of India, which has been granted a certificate of registration under the Securities and Exchange Board of India Act, 1992 and notified as such in the Official Gazette set up for raising funds for Investment in a Venture Capital Undertaking is exempt from income-Tax.

Benefits under the Wealth Tax Act, 1957 ‘Assets’ as defined under section 2 (ea) of the Wealth Tax Act, 1957 does not include shares in companies and hence, not liable to wealth Tax, Benefits under the Gift Tax Act Gift Tax is not leviable in respect of gifts made on or after 1st October 1998. Therefore any gift of shares will not attract gift Tax.

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Notes:

1. All the above benefits are as per the current Tax laws as amended by the Finance Act, 2006 and will be available only to the sole / first named holder in case the shares are held by joint holders.

2. In respect of non-residents, the Tax rates and the consequent Taxation mentioned above shall be

further subject to any benefits available under the double Taxation avoidance agreements, if any, between India and the country in which the non-resident has fiscal domicile.

For Prakash S. Shah & Co. Chartered Accountants Prakash S. Shah Partner Pune 19th March 2007

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INDUSTRY OVERVIEW

The overall growth in the economy has created a strong demand for power, better infrastructure and telecom services in the country. Given the over widening gap between the demand and supply of power, which is an important pivot in all the growth spheres of the economy, there is a latent requirement of Gen sets to fill the gap. Gensets are in demand in almost all sectors like manufacturing facilities, hotels, commercial buildings, telecom, shops etc. beside limited residential use. The rapid growth in Telecom Industry has created substantial demand for gensets, which are required to support the unmanned stations, and towers spread all over the country including remote areas. The spurt in the retail segment is further adding to the growing demand of gensets, as the retail stores would need to have back up power arrangements.

Power Industry

Historically, the power industry has been characterised by peak power and energy shortages. Although power generation capacity has increased substantially in recent years, it has not kept pace with the growth in demand or the growth of the economy generally. As per Ministry of Power, the total Installed Generation Capacity in the country was 1,28,182.47 MW as on 31st January 2007. Of the Installed capacity, Thermo Power Plants powered by coal, gas, diesel accounted for approximately 84,149.84 MW, Hydro Power stations accounted for nearly 33,941.77 MW, Nuclear Power 3,900 MW and others 6,190.86 MW; (65.65%, 26.48%, 3.04% and 4.83% respectively) of the total installed capacity. Recurring power shortages have impacted India’s overall industrial growth (Source: www.powermin.nic.in/generation). According to CEA (Released dated 23rd November 2006), in spite of impressive addition in power capacity, growth in demand for power has always exceeded the generation capacity augmentation. As of now country is facing energy shortage of 8% and peak deficit of 12.2%. According to the Planning Commission’s website, in order for India to maintain a sustained growth of 8% per annum to 2031-32, and to meet the life line energy needs of all citizens, India would need to increase primary energy supply and electricity generation capacity/supply by atleast 3 to 4 times and by 5 to 6 times respectively of their 2003-04 level. By fiscal 2031-32, power generation capacity must increase to nearly 8,00,000 MW from the current capacity of around 1,60,000 MW inclusive of all capital plants. (Source: www.planningcommission.nic.in) Currently, India pursues all available fuel options and forms of energy, both conventional and non-conventional, as well as new and emerging technologies and energy sources. The following graph presents the gap between requirement and supply of electricity in India from fiscal 1997 to 2006:

Source: Ministry of Power Annual Report, 2005-06, www.powermin.nic.in

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Source: Ministry of Power Annual Report, 2005-06, www.powermin.nic.in

According to UNDP, India has one of the lowest electricity consumption levels in the world, at 594 units per capita in 2003. This contrasts with 1440 units per capita in China, 2246 units per capita in Brazil and 14057 units per capita in the United States, in 2003. The following charts compares per capita electricity consumption in India and other countries.

Source: UNDP, Human Development Indicators 2006.

Telecom One of the major drivers for demand in gensets has been the growth in telecom industry. The reforms envisaged since 1991 in the telecom sector and pursued through National Telecom Policy- 1994 and 1999 have resulted in a rapid growth. The New Telecom Policy of 1999 has set a target of increasing

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tele-density to 15 per cent by 2010 (source: http://www.ciionline.org/sectors/65/default.html) The growth in telecom industry has steered the growth in the number of towers, which in turn has resulted in increase in demand for gensets. Gen-sets are required in telecom industry to support their unmanned stations and towers spread all over India including remote areas. Revenue of Telecom Industry stood at USD 19.50 billion has doubled in last 3 years at a CAGR of 21% from financial year 2002 to 2006. Approximately 5-6 million subscribers are being added every month in the industry reaching to 160 million subscribers (approx.) by August 2006. The number of subscribers grows at a CAGR of 38% from fiscal 2002-2006. The following charts depicts the growth in revenue and number of subscribers: (Source: IBEF: TELECOM; September 2006) (Source: IBEF: TELECOM; September 2006) Government of India has fixed target to provide 250 million telephones by December 2007 and 500 million telephones by 2010. At present approx. 90,000 towers have been commissioned to cater to 136 million wireless subscribers. In order to achieve the target fixed by the Government approximately 1, 35,000 towers will be required by 2007 and 3,30,000 by 2010. (Source: TELECOM REGULATORY AUTHORITY OF INDIA, 29th November 2006, PRESS RELEASE’) Retail Industry The organised retail industry has created an upsurge in the demand for Gen sets in recent times. Gen sets are required now by most of the retailers, especially in big shops, malls, food retail, cyber café, departmental stores, supermarkets, hypermarkets and specialty stores. India's vast middle class and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets. India is currently the ninth largest retail market in the world. The Indian retail market is estimated at US$ 350 billion. But organised retail is estimated at only US$ 8 billion. However, the opportunity is huge – by 2010, organised retail is expected to grow to US$ 22 billion. With the growth of organised retailing estimated at 40 per cent (CAGR) over the next few years Indian retailing is clearly at a tipping point. (Source: http://www.ibef.org/industry/retail.aspx)

By 2007, an estimated 50 million square feet of quality retail space will be available across India. This is in sharp contrast to the situation a decade ago. Today, in Delhi, Mumbai and their suburbs, there are about 100 malls. Of the 700 new malls coming up all over India, 40 per cent are concentrated in the smaller cities. Organised retailing in small-town India is growing at a staggering 50-60 per cent a year compared to 35-40 per cent in the large cities and for all such retail space. (Source: http://www.ibef.org/industry/retail.aspx.)

Real Estate Real estate sector is one of the most demanding sectors for the use of Gen sets. Though existing usage of below 5 KVA portable generating sets are meant for meeting only elementary requirements, the 5 to 15 KVA usage bracket is fast rising that need to meet the essentials with basic affluence comforts like an AC & refrigerator.

Revenue growth20

15

11109

0

5

10

15

20

2002 2003 2004 2005 2006

$ Bi

llion

CAG

Subscriber growth 164

9876

5344

0

60

120

180

2002 2003 2004 2005 Aug-06

CAG

67

India's housing policy started receiving a focused approach from the government only during the last three years. The year 2006 started on a promising note when the Government of India opened the construction and development sector in February 2006, and allowed 100 per cent foreign direct investment (FDI) under the 'automatic route' in order to spur investment in the vital infrastructure sector. (Source: http://www.ibef.org/industry/realestate.aspx) Developments in the real estate sector as a whole are being driven by: • Demand for more housing units in cities and towns because of growing urbanisation of Indian

population, burgeoning middle class, increased disposable income, easy availability of housing finance and tax incentives;

• Demand for office premises by growing IT industry especially BPO; • Demand for hotels/resorts by growing tourism industry. • Demand for multiplexes by evolving entertainment sector. The prime movers that are leading to volume growth in the housing segment are population growth and urbanisation. Further, there is a boom localised to the organised urban housing segment, extending to relatively prosperous rural belts. The census of 2001 indicates an urbanisation rate of 27.78%, which is expected to go up to 41 % in the next 20 years (based on a population of 1350 million) by 2021. (Source: Integrated Databases India Ltd.). The growth in the IT sector will translate into substantially higher demand for commercial space, adding to the overall investment in real estate activities. Further, increasing demand for hotels/resorts across India, is offering another opportunity for real estate development. Another growth booster for real estate activities are growing demand for multiplexes. The growth in multiplexes is being driven by the following factors: • Multiplexes typically have 250-400 seats per screen as against 800-1000 seats in a single screen

theatre, which gives multiplex owners additional flexibility, enabling them to optimise capacity utilisation.

• Non-ticket revenues like food and beverages and the leasing of excess space to retailers provides additional revenues to theatre developers.

Thus, with increasing urbanization, industrial growth and per capita consumption, the gap between the actual demand and supply is likely to increase. Some latent demand for electricity may also surface in the event of wider distribution and increased reliability in power supply. As a result, “GENSETS” are being bought in the thousands by industries, businesses and individuals seeking protection from frequent power cuts. Construction, Earth Moving & Mining Industry With the expansion in infrastructure sector there is huge requirement of components and sub-assemblies for construction, mining, earth moving equipments and for heavy & medium engineering industries. Earth Moving Equipment and Construction Machinery Industry plays a vital role in the economic development of our country. This industry is closely linked with major development and infrastructural schemes such as coal and mineral, mining, irrigation and power projects, ports, steel, fertilizers etc. The Earth Moving, construction and mining equipment sector has a wide range of products. The earth moving equipment currently being manufactured covers Shovels up to 10 cu.m. capacity, Bulldozers up to 770 HP, Dumpers up to 120 HP, Excavators up to 8.5 cu.m. capacity, Scrapper and Motor Graders up to 280 HP and walking Draglines, Mobile cranes etc. The major mining equipments are Longwall Mining Equipments, Road Header, side discharges Loader (SDL), Haulage Winder, Ventilation Fan, Load Haul Dumper (LHD), Coal Cutter, Conveyors, Battery Locos, Pumps, Friction Prop, etc. (Source: http://dhi.nic.in/dhi0506eng.pdf)

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Indigenous production of Earth-moving and Construction Machinery commenced in the 1960s. Today, our country is, by and large, self-sufficient in respect of these items. In fact, during the last decade, the industry has made enormous progress and has grown both in size and diversity. The total capacity available in the Earth Moving & Construction Equipment Industry is around 6000 units. India has over 60 equipment manufacturers in the organized sector besides several medium sized units. Few large manufacturers in each product segment dominate this industry. BEML supplies nearly half of the total market. BEML and Caterpillar lead in dumpers and dozers while L&T, Komatsu and Telecon lead in excavators and Escort JCB in Backhoe loaders. With the Government’s emphasis and priority on the development of infrastructure, this group of industry is expected to grow in the near future. (Source: http://dhi.nic.in/dhi0506eng.pdf)

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OUR BUSINESS

We are in the business of manufacturing and assembling of silent diesel gensets, manufacturing of canopies, components and sub-assemblies for construction, mining and earth moving equipments. The products being manufactured by the company are as under: • Silent Diesel Gensets (7.5 KVA to 45 KVA) • Under Carriages & Canopies for Compressors and Generators • Components and Sub-assemblies for earth moving & construction equipments • Air cooler assemblies and X-Ray machine equipments

Besides we also manufacture base frames used in various engineering equipments. We also undertake machining of components like bosses and spider shafts for engineering industry. Some of our major buyers of gensets are Bharti Airtel Ltd., Reliance Telecom Ltd., Hutchison Telecom Limited Essar Telecom Tower & Infrastructure Ltd., Motorola, VSNL and Post & Telegraph department. We supply air cooler assembly and spider shafts to Suzlon Generators Pvt. Ltd., used in windmills. JCB Manufacturing Ltd., India and Atlas Copco (India) Ltd. are our customers for components and sub-assemblies for earth moving, mining and construction equipments. The customer for components for X-Ray machines is Wipro GE Medicals System Ltd. We also export components of earth moving and mining equipments to JCB Group in UK. We manufacture & assemble gensets under the brand name “Automech”. We are ISO 9001:2000 certified (by Det Norske Veritas Management System Certificate) and our gensets are approved by ARAI (Automotive Research Association of India) as per Central Pollution Control Board (CPCB) norms. Location: Currently we have manufacturing facilities at the following locations: Location Activity

Plot No. S-145, MIDC, Bhosari, Pune –411026.

Manufacturing of undercarriages, base frames for canopies & X-Ray machine equipments.

Gat No. 309 and 312, Nanekarwadi, Chakan, Pune and

Manufacturing of canopies for gensets, control panels, sub-assemblies and components for earth moving, construction and mining equipments, laser cutting and bending job work done.

Survey No. 121, Plot No. 24, 66 KVA Road, Amli Village, Silvassa

Assembling and manufacturing of gensets.

In addition to the above facilities, we are in the process of setting up a genset and components manufacturing facility at Jammu to strengthen our position in North Indian market. We have taken on 20 year long lease industrial shed from J&K Government, Department of Industries at Industrial Estate, Billawar, Kathua on 24th August 2006 and industrial land with a shed at Samba near Jammu for 90 years long lease from J&K State Industrial Development Corporation Ltd. from 23rd February 2007. The facilities at Jammu are being financed by internal accruals and loan from Bank of India and are likely to start operation by June 2007. Gensets Genset business is the principal activity of our company comprising 68% of the revenue for the period ended October 31, 2006. We manufacture some of the essential components of a genset at our own facilities and the rest are sourced from other reputed manufacturers. A genset assembly comprises of four major components:

70

• Engine • Canopy • Control panel • Alternator Engines- Currently we mainly source engines from TAFE Motors and Tractors Ltd. (TMTL) bearing trademark EICHER. According to the agreement entered into with TMTL on 21st February 2006, TMTL has authorized us to assemble gensets in the range of 7.5 to 45 KVA using Eicher engines. The Diesel gensets manufactured/ assembled by us with Eicher engines are marketed under the brand “Automech” with co-branding of Eicher Engines. The institutional sales using Eicher engine is being undertaken jointly on mutually agreed terms and we are authorized to exclusively deal with various telecom companies viz. Hutchison India, Bharti Airtel Limited and others. The agreement has been extended upto 31st March 2007, which would be renewed further. Prior to 2006, we were sourcing diesel engines from Mahindra & Mahindra Ltd. For assembling gensets of higher range upto 550KVA, we have entered into agreement on 1st March 2007 with Greaves Cotton Ltd. (GCL)- the manufacturer of diesel engines for engines in the range 10 HP to 664 HP. As per the agreement M/s Greaves Cotton Ltd., has agreed to supply engines for DG Sets for manufacture of gensets. We have been granted a non-exclusive right to use the Greaves trademark/brand name and the words “Powered by Greaves Engine”, with the gensets to be manufactured by us with engines from Greaves. The agreement is for Western Region including the states of Maharashtra, M.P., Goa, Gujarat and Chattisgarh, Northern region consisting of states of U.P., Rajasthan, Uttaranchal, H.P, Haryana, Punjab, Delhi, J&K and Orissa. We shall be responsible for the warranty of the genset and all its components except engines for which GCL would be responsible. The agreement is valid for three years. In view of the existing relationship, we have decided to continue to source engines of Eicher brand from TMTL for assembling / manufacturing of gensets upto the range of 45 KVA and for higher ranges gensets, the engines from Greaves Cotton Limited. Alternators- Alternators are mainly being sourced from various alternators manufacturers namely Crompton Greaves Limited and Kirloskar Electric Company Limited. Canopies and Control Panels The Canopies are manufactured in-house with the help of CNC laser cutting, bending and welding machines at the Chakan plant. We manufacture canopies compliant to the acoustic norms set by the government. We manufacture Control Panel at our plant, however sometimes we also source the control panels from other manufacturers, as well. All the components, i.e. canopies, control panels, alternators and engine are brought to Silvassa plant and there the assembly, testing and other such required operations are carried out to produce finished product. The gensets are then transported to the demand centers. The manufacturing cycle of gensets is about two weeks.

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Manufacturing Process The production/ manufacturing process of gensets and other components comprises of following steps: A. Control Panels

Using Laser Technology Sheet Metal Blank for Control Panel Box

Bending

Fabrication

Powder Coating

Assembly of components, like meters, relays and electrical contactors in the box

Testing of the Control Panel

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B. Canopy

Blank Cutting on Laser or LPP

Bending

Acoustic Treatment

Powder Coating

Welding & Finishing

Canopy Sheet Metal Parts

Base Frame

Fuel Tank

Bending

Welding & Finishing

Powder Coating

Cutting

Welding

Testing

Other components like silencers, fans, fuel guage, etc.

ASSEMBLE

Cutting

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C. Gensets

Non-gensets The non-genset business of our company can be classified in medium engineering sector. The non-genset products targets towards making components, sub-assemblies & assemblies for construction, earth moving and mining equipment, wind mills, light & medium engineering industries and X-Ray machine components. These components and sub-assemblies are manufactured through various processes involving CNC laser cutting, bending, welding and fabrication besides assembling & testing. The technology here forms the mainplay as it can fetch major clients. Our company is using the laser cutting technology which is a high-speed process used for large capacity. In the laser cutting process, a 0.05 to 0.1 mm laser beam is used to cut sheets upto 20 mm size. Products like undercarriages, drivers cabin, roof tops, bosses, shafts etc are produced and supplied to customers like Atlas Copco (India) Limited, JCB Manufacturing Limited. Canopies are exported to EC Power A/S of Denmark. Our main customer for air-cooling systems and spider shafts is Suzlon Generators Private Limited. We have also started manufacturing components for overhead cranes which are supplied to M/s DeMag Cranes and Components Ltd. The components of X-ray machines are supplied to Wipro GE Medical Systems. Chakan Plant, Pune Chakan plant consists of following divisions:

• Light Plant • Heavy Plant • CNC Machining Plant • Spider Shaft machining Plant • Connecting Rod Plant

Coupling of Alternator with Engine called E-A Assembly

Fitting the E-A Assembly inside the canopy and Electrical wiring

Testing the Genset for sound, vibrations and load

Packing

Dispatch

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Light Plant This plant handles thin sheets of up to 4 mm thickness and is mainly engaged in manufacturing canopies for own silent gensets. This is also used for sheet metal fabrication. The main equipments here are a Linear Punch Press and two laser cutting machines. For bending there is three press brakes and for fabrication about 20 welding stations. Heavy Plant This plant handles plates between 4mm – 20mm thick and mainly manufactures sub-assemblies and sub-assembly components used in backhoe loader/ excavators. The air-cooling system is also manufactured here. The plant comprises of three CNC laser-cutting machines, one CNC press brake, fabrication workstations, welding machine and assembly section. CNC Machining Plant This plant produces components like bosses, pins and shafts for construction and earth moving equipments. Spider Shaft Machining Plant This plant-dedicated line for manufacture of Spider Shafts for windmills has capacity for 2 numbers per day on three-shift basis. The main machines are Submerged arc welding, Deep Hole drilling machine, Angular Hole Drilling machine, and Stress-relieving furnace, Turn Mill Center, Cylindrical Grinding Machine etc. This plant has recently started operations in March 2007. Connecting Rod Plant We are in the process of setting up facilities to manufacture automobile engine connecting rods, which is a critical component of every vehicle that uses an internal combustion engine. The plant is being set up at Gat No. 312/4, Nanekarwadi, Chakan, just opposite our existing plant. The machines are being imported from Germany from KH Maschinenbau GMBH and are used machines. The process includes Laser Crack Technology, which is very new to India. All the technical information, drawings, layout, etc. are to be provided by Daimler Chrysler A.G. The capacity of this plant is to produce up to 5,65,000 connecting rods per annum for internal combustion engines. The cost of machines is EUR 12,96,300 and the total cost of this project is Rs.10 Crores approximately. The cost of project is being financed by suppliers’ credit against LC, loans from banks and internal accruals. The commercial operation of the plant will start from June 2007. The plant is 100% EOU. Daimler Chrysler A. G. Germany, vide its Letter of Intent dated February 13, 2006, has consented to buy up to 1 lakh connecting rods from us to be utilized by them in their cars. As per their Intent Letter, the delivery has to start by middle of 2007. Assembly Plant for Canopies This is a mechanized plant fitted with pneumatic tools and testing equipments for noise, vibration and load. It has capacity to produce more than 1000 canopies every month.The job of Powder Coating on canopies and other sheet metal components is undertaken by SNA Industries, which acts as a dedicated vendor to us. The Powder coating facility of SNA is adjacent to our Light Sheet Metal Plant. The plant also has sufficient free space available for its inventory requirements and other operations. Silvassa Plant - Assembly Shop The assembly shop has working stations specifically dedicated to assemble and manufacture diesel generators. These stations have torque controlled pneumatic impact wrenches for proper tightening of bolts/screws. These torque wrenches ensure that the tightening torque of fasteners is maintained within

75

specified limits. The various assembly stages are marked on the respective stations and the assembling operation performed at that particular stage is done, ensuring the highest quality at all the stages of assembly. The major parameters of generators that are tested are as follows – Frequency of output Voltage at load and no load conditions Current / amperage at load and no load conditions Starting & stopping of generators Working and functioning of oil warning unit Check for abnormal noise Sound Level of generators Vibration level on generators Aesthetics Packing and accessories Quality Control We have strong quality control systems that result in continuous improvements. We also regularly upgrade the skills of workforce to take up new challenges in present competitive environment. Our philosophy of quality envisages achieving highest standard of product quality & further commitment for continuous establishment, adoption of latest technology and techniques in pursuit of customer satisfaction. We are ISO 9001:2000 certified and our gensets are approved by ARAI as per CPCB norms. Company also has well established internal quality systems and procedures which are supported by internal quality checks / audits in all areas of operations. Research & Development Research & Development department of our company is equipped with the latest infrastructure in terms of design, testing & product evaluation. The current product range incorporates latest and advanced technology. Presently a team of qualified and well trained professionals are involved in the areas of new model development, alternate fuels options, higher capacity generators & engine based appliances along with basic R&D functions which include product specifications and changes control, design / drawing records controls, applicable Government approvals and developing models as per special market need.

Collaborations

We have not entered into any collaboration.

Raw Materials The major raw material are structured steel, HR Sheets, CRCA sheets, PU Foam, hardware items, exhaust fans, silencers, anti-vibration mounts, rockwool, relays, electric switch gear, electric wires and components like diesel engines and alternators. Most of the requirement is fulfilled from Indian market and purchases are mainly from reputed, well-known suppliers/manufacturers. The steel items are purchased from ISPAT industries, Essar Steel and TISCO, Diesel engines from TMTL and alternators from Crompton Greaves and Kiloskar Electric Company Limited etc. Infrastructure Facilities A. Utilities: The processes are backed by utilities, which ensure 100% power back with the help of 897.5 KVA generators, bulk storage facility for LPG, oxygen and nitrogen. In addition to this, reverse osmosis and effluent treatment plant ensure pollution free waste disposable management system.

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UNIT Power Consumption per month (HP)

Water Consumption per month (In Kilo Litre)

HSD Consumption per day (In litres)

Back-up DG Set

Bhosari Plant, Pune 60 Municipal Water Supply 300 Two 22.5

KVA Each Chakan Plant, Pune

650

2 Borewells+Water Tankers 750

500 KVA 160 KVA 110 KVA 82.5 KVA

Silvassa Plant 25 Borewell+Water Tankers 200 -

We have regular Power Supply (Continuous Power Supply) from Maharashtra State Electricity Board (MSEB).

Manpower

There are 210 permanent employees in the company as on March 2007. The various units are manned by professionals with requisite experience and expertise in the related areas, especially Engineers who look after manufacturing and other process. The marketing network of the company is looked after by professional people who have several years of experience in selling of related products. Department No. of employees Skilled/Technical Employees: 74 Production & Maintenance 52 Quality Control & R&D 17 Sales & Marketing 37 Accounts, Administration and Others 21 Unskilled 9 Total 210 Additional Manpower Requirements for the Project:

During the implementation of the project, our Company will hire required professionals and increase the workforce both at managerial and plant level accordingly, considering the increase in scope of work. Past Production Figures of the Industry There are no published data available to our company for past production figures, existing installed capacity, past trends and future prospects regarding exports, demand and supply forecasts for diesel genset business. Competition

Our competition consists of

• Manufacturers of diesel gensets of complete range and capacities compliant with Pollution Control Norms set by Government, who also has facilities to manufacture engines as well.

• Players in the unorganized, small-scale sector who do not have the required technology to manufacture gensets as per the environment norms and cannot cater to the requirements of competitive Indian genset industry.

There are many players in the industry catering to the gensets segment, the performance of which is directly linked to demand-supply gap of power and growth in commercial and industrial projects and telecom industry.

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Products Competition

A. Diesel Genset

B. Non-genset Business

• Kirloskar Oil Engines • Mahindra & Mahindra • Birla Power Solutions • Sudhir Gensets Ltd. • Powerica Ltd.

• Rishi Lasers Ltd. Pune • Suttati Engineering

Ltd. • Other Medium size

engineering industries.

• Strong competitors, in-

house capacity to produce engines

• Well known brand • Strong competitors • Assembling gensets with

sourcing engines from others

• New competition expected

as LPG segment grows • Limited number of players

due to entry barrier of capital and technology.

Threat

Crude oil prices may influence the genset industry significantly. The generator runs on various crude oil derivatives such as diesel and LPG. The rise in crude oil prices results into higher prices of derivatives, which means using generator could prove to be costlier than the grid power. Obviously, the demand for generators will go down in that case. Further, if the government is able to meet its target of power supply, then there is a possibility that the demand for gensets might fall. However, going by the past trends, the target might not be achieved.

Marketing Strategy

Marketing of the various products manufactured by the company is an integral and essential part for the growth of the Organization. The company has always focused on meeting the customer’s requirement in the most efficient way by offering them quality products, right price, just in time delivery and product backed up by an efficient after sales support during life cycle time of the product. It tries to achieve customer satisfaction.

The company has two-pronged marketing strategy. The Company genset business, which generates 68% of revenues, has telecom service providers as its main clients. Telecom service industry is distinct in a way that it operates on network circle basis. The network expansion plans of the players are thus geography based depending on the overall strategic objective.

Direct Sales Approach

The company has a model involving direct sales and service offices. There are exclusive sales managers and also service managers looking after sales and service after sales. These managers are placed with small teams in geographically wide locations. The Area Sales Managers are engineers acting as key account

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managers and carry out other functions including customer satisfaction survey. We append below the details of our Sales, Marketing and service network for direct sales:

Location Team size (No)

Delhi 7

Maharashtra 6

Uttar Pradesh 4

West Bengal 2

Punjab 1

Gujarat 1

Rajasthan 2

Andhra Pradesh 1

Orissa 1

Madhya Pradesh 1

Karnataka 1

Silvassa 2

Total 29

For the purpose of effective marketing and sales management, the all India marketing network is divided amongst three regions geographically. Western region consisting of Western India is controlled from Pune office, North and East are served from New Delhi office and Southern region is taken care of from Bangalore. The structure of the marketing division is such that there is a clear-cut responsibility and accountability with each position.

Dealership Approach

The company has large service dealer network of 36 dealers all over India, who also supports our sales team in tapping the customers. The company also markets and sells gensets through Eicher engine dealers as per arrangement with TMTL. This also ensures a specialized service for the engines used in the generators, which is the main cause of any disturbance in operation of gensets.

In view of sales force and service dealer network spread all over the country, we ensure immediate addressal of customer grievances, which helps in further developing and leveraging customer relationships and building up the product brand.

Export Possibility We are currently exporting canopies of gensets to M/s. EC Power A/S, Denmark and components of construction and earth moving equipment to JCB Group, England. We will also start exporting Automobile engine connecting rods to Germany shortly and look to expand our exports to other countries as well. Some of our satisfied customers in India and overseas are large multinationals. We feel that our fruitful relationship with these companies will help us in our foray in the international markets. At present, we have no export obligations.

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Business Strategy: After developing the technology of producing soundproof canopies and the control panels, we are planning integration of operations of genset manufacturing. There has been a spurt in demand from the telecom market due to significant expansion by every telecom company to increase its spread throughout the country. With each cellular tower being put, minimum one generator is required. The growth of these towers will continue in future. Our company with vast infrastructure is well poised to be amongst top national level player in diesel gensets. The business strategy to be adopted by our company would include the following: 1. Expansion of existing capacities and manufacture silent gensets upto 550 KVA. 2. To develop LPG gensets upto 5 KVA. 3. To set up a strong nation wide sales and service network. 4. To set up facilities for manufacturing of alternators 5. To diversify into auto equipment component sector. 6. To capture international market and increase exports. 7. Maintain and Expand Long-term Relationships with Clients.

We believe that business is a by-product of relationship. The business model is based on client relationships that are established over period of time rather than a project-based execution approach. We believe that a long-term client relationship with large clients fetches better dividends.

8. Continued Focus on Training and Motivating Our Work Force

We will strongly continue our policy of training work force with adequate product knowledge, market knowledge and above all the application of knowledge to the industry. We will adopt pull mechanism for motivating our employees by rewarding instead of push mechanism by penalizing the employees.

9. Continue to build-up a professional organization

We have a team of professionals and technocrats to look after various stages of production, commercial and marketing divisions of our Company. We believe in transparency, flow of information, and commitment to the work among our work force and with our valuable customers, suppliers, investors, government authorities, banks, financial institutions etc.

10. Enhancing Customer Base

We intend to grow business continuously by adding new customers. We aim to do this by effective leveraging of our marketing skills & relationship and further enhancing customer satisfaction. We plan to increase our customers by meeting orders in hand on time, maintaining our client relationship and renewing our relationship with existing ex- buyers.

11. Maintain Operational Efficiencies and Cost Competitiveness We intend to maintain operational efficiencies to the highest possible level as compared with our peers in the industry. Further, we intend to reduce our operational costs to maintain the competitiveness and offer the quality products at reasonable prices.

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Our overall business strategy shall be to: • Maximize revenue through capacity expansion and increase in efficiency • Reduction in cost of borrowing • Enhancing production efficiency and minimize process losses • Reduce operational costs and be cost competitive • Have a consumer centric approach • Deliver value for money to our clients • Adopt best practices in all functions and processes Future Prospects Our Company by the virtue of the experience of our promoter has a good hold in the genset industry. In view of demand and supply gap in power sector, growth in telecom and retail sector, and the genset industry is likely to witness a promising growth in the near future. We aim to further consolidate & establish our company as a major player in the genset industry with a qualified team of professionals and appropriate understanding of the market. All the various processes will be independent profit making modules when looked in isolation and contribute towards the bottom line when seen in tandem. Licensed and Installed Capacity and Capacity Utilization: A. Diesel Genset Particulars Year Ended 2004-2005

(A) 2005-2006 (A)

2006-2007 (P)

2007-2008 (P)

2008-2009 (P)

Installed Capacity (nos.)

2000 4000 6000 22000 22000

Annualized Capacity Utilization (%)

80% 80% 90% 50% 90%

(A): Actual; (P): Projected Note: The commercial production of the proposed project being funded from the issue is to start from February 2008. B. Non Genset Business In respect of Non Genset Business the Licenced And Installed Capacity canot be ascertained, as we have to manufacture components for equipments of Construction, Mining And Earth Moving industry as per customers specification. Insurance Our Company has insured the immovable and movable properties under various policies.

Property

The details of the properties owned by and taken on lease by us are appended below:

SL. No. Location

Area (In Sq.Ft.)

Related Documents

Purchase Price/ Lease Deposit and Rental Purchased/ Leased from

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1 Industrial Land at GAT No. 309, Nanekarwadi, Chakan. 43560 sq. ft.

Purchase deed dated 20-02-97

Rs. 3.90 Lakhs M/s S.N.A. Industries

2 Industrial Land at GAT No. 309/1, Nanekarwadi, Chakan. 54450 sq. ft.

Purchase deed dated 29-09-2005 Rs. 10 Lakhs

M/s Kavita Industries Pvt. Ltd.

3 Industrial Land at GAT No. 312, Hissa No. 4, Nanekarwadi, Chakan. 28990 sq. ft.

Deed of Conveyance dated 31-05-2006 Rs. 9 Lakhs

Mr. Bhima Kondiba Nanekar and Mrs. Sunita Bhima Nanekar

4

Office Space at 103, Stellar Enclave, Aundh Village, Haveli Taluka, Pune

2128 sq. ft. Plus 450 sq. ft. of space for 3 Nos. Car Parking. (open area)

Deed of Assignment and Transfer dated 04-02-2006 Rs. 90 Lakhs

Mr. John Frank Menezes and Mrs. Rowena C. Menezes

5

Office Space at 104, Stellar Enclave, Aundh Village, Haveli Taluka, Pune

2082 sq. ft. Plus 450 sq. ft. of space for 3 Nos. Car Parking. (open area)

Deed of Assignment and Transfer dated 03-06-2006 Rs. 70 Lakhs

Mr. John Frank Menezes and Mrs. Rowena C. Menezes

6

Industrial Land at S-145, MIDC Bhosari, Pune 411 026 7,320 sq. ft

Deed of Assignment of Lease and Deed of Confirmation Dtd 11-06-97

Premium – Rs. 34,000.00, Rent- Re. 1.00 p.a., plus Differential premium- Rs. 10,000.00

Maharashtra Industrial Development Corporation

7 Industrial Land at Industrial Estate, Dewal, Billawar, Jammu & Kashmir.

81,675 sq.ft. (15 Kanals)

Lease Deed for 20 yrs dated 24-08-2006

Initial Premium- Rs. 10,53,900, Rent- Rs. 41,400 p.a.

District Industries Cetre, Kathua. Jammu & Kashmir

8 Industrial Land at 24, Industrial Growth Centre, Samba Jammu

21,780 sq. ft. (4 Kanals)

Lease Deed for 90 yrs dated 23-11-2006

Security Deposit - Rs. 2,40,000, Rent-Rs. 11,160 p.a.

J&K State Industrial Development Corporation Jammu & Kashmir State

9 Office Space at D-44, Himalaya House, 23, Kasturba Gandhi Marg, New Delhi. 741 sq. ft.

Lease deed dated 18-03-2006 for 36 months

Security Deposit- Rs. 2,40,000.00, Rent- Rs. 40,000 p.a.

Mrs. Mina Balbir Singh and Maj. Gen. P.S. Arora

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10

Industrial Plot at Survey No. 121, Plot No. 24, 66 KVA Road, Amli Village, Silvassa

6,343 sq. ft ground floor

Lease Deed for ground floor dated 26-04-2005 for 36 months from 01-05-05 and expires on 30-04-08

Security Deposit- Rs. 2,40,000.00, Rent- Rs. 40,000 p.m.

M/s Devashri Textiles Private Limited, Mumbai.

11

Survey No. 121, Plot No. 24, 66 KVA Road, Amli Village, Silvassa

6,343 sq. ft first floor

Lease deed dated 10-02-2006 for 36 months from 01-01-06 and expires on 31-12-08

Security Deposit- Rs. 1,80,000.00, Rent- Rs. 30,000 p.m.

M/s Devashri Textiles Private Limited, Mumbai.

12 Industrial shed at Gat No. 309, Nanekarwadi, Chakan, tuluka Khed, Pune- 411 501

(900 Sq. mts) 81000sq.ft.

Lease Deed dated 30-12-2006 for 3 years from 01-01-2007 and expires on 31-12-2009

Lease Rent- Rs. 90,000 p.m. plus taxes M/s SNA Industries, Pune

There has been no transaction(s) relating to the property acquired/taken on lease, in which any person who is, or was at the time of the transaction, a Promoter, or a director had any interest direct or indirect except in the details mentioned above. Except otherwise stated under “Objects of the issue” on page no. of this DRHP, there is no property which we have purchased or acquired or proposed to purchase or acquire, which is to be financed wholly or partly out of the proceeds of the issue or the purchase or the acquisition of which has not been completed on the date of this DRHP.

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KEY INDUSTRY- REGULATIONS

1. Measures for control of noise pollution The Central Pollution Control Board, in association with the Indian Institute of Science, Bangalore, had developed systems for control of noise pollution from diesel generator sets as well as from petrol/kerosene generator sets. Based on this, the noise standards for diesel and petrol/kerosene generator sets have been developed and notified 1. Ambient noise standards were notified in 1989, and amended from time to time which formed the basis

for State Pollution Control Boards to initiate action against violating sources. 2. Noise standards for diesel Genset were prescribed in Dec. 1998. Govt. has been pursuing with State

Pollution Control Boards, generator manufacturing and major users, for implementation of these standards. The Ministry of Environment and Forest (issued notification in May 2002) making it mandatory for all generator manufacturers to provide acoustic enclosure at the manufacturing stage itself. This will have a major impact on noise from DG sets.

3. Every manufacturer or importer of DG sets to which the regulation applies must have valid certificates of

Type Approval and also valid certificates of Conformity of Production for each year for all the product models being manufactured or imported from 1st July 2003 with the nose limit as specified.

As per Environment (Protection) Act, 1986 and the rules laid down there in the Company has received the Test Report and Certificate on Noise Type Approval Testing of Gensets from The Automotive research Association of India dated 15th March 2006.

2. Emissions from new diesel engines up to 800 kW used in generator sets have been regulated by the Ministry of Environment and Forests, Government of India [G.S.R. 371 (E), 17 May 2002]. The emission standards are listed below.

Table 1Emission Standards for Diesel Engines for Generator Sets

CO HC NOx PM Smoke Engine Power (P) Date g/kWh 1/m

2003.7 5.0 1.3 9.2 0.6 0.7 P ≤ 19 kW 2004.7 3.5 1.3 9.2 0.3 0.7 2003.7 5.0 1.3 9.2 0.5 0.7 19 kW < P ≤ 50 kW 2004.7 3.5 1.3 9.2 0.3 0.7

50 kW < P ≤ 260 kW 2003.7 3.5 1.3 9.2 0.3 0.7 260 kW < P ≤ 800 kW 2004.7 3.5 1.3 9.2 0.3 0.7

The regulation imposes type approval certification, production conformity testing and labeling requirements.

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HISTORY AND CORPORATE MATTERS History We started as a proprietary concern of Ms. Veena Agarwal in the name and style of M/s Veena Industries on 04 January, 1980 with principal place of Business at Bhosari, Pune and were engaged in the business of manufacturing and undertaking job works of different kinds of fabrication and manufacturing of material out of ferrous and non-ferrous metals. The proprietory concern was subsequently converted into a partnership firm on 4th October 1982. All the partners were the present promoters and their family members. Our company was converted to a private limited Company under Part IX of the Companies Act, 1956 in the name of M/s Veena Industries Private Limited on October 9, 1996. We are registered with the Registrar of Companies, Pune with registered office situated at S-145, MIDC, Bhosari, Pune. Our company has subsequently been converted into a Public Limited Company on February 23rd, 2007. Our Company has manufacturing and assembling facilities at MIDC -Bhosari, Nanekarwadi- Chakan, Pune and Silvassa. Bhosari plant in Pune houses the registered office of our company. The operation in this plant commenced in 1980. We set up manufacturing facilities at Nanekarwadi, Chakan, Pune in the year 1997. In the year 2000 we decided to manufacture our own gensets and soundproof canopies. In March 2004 we set up a Genset & canopy assembly plant in Silvassa. In the same year Mahindra & Mahindra selected us as one of the OEM. Also our canopies received ARAI (Automotive Research Association of India) approval as per CPCB norms. Our Company got first corporate order from Reliance Infocomm in September 2004. The gensets of the Company are sold under the brand name of “Automech” On 24th January, 2006 we entered into an agreement with TMTL (Tafe Motors and Tractors Limited), manufacturers of EICHER Diesel Engines for supply of diesel engines. The agreement is for the engine from 7.5 to 45 KVA. As per agreement, we are authorized to undertake institutional sales of gensets using Eicher engines on mutually agreed terms. On March 2007, we entered into an agreement with M/s Greeves Cotton Limited for supply of engines of higher range. We are also in the process of setting up a facility for manufacturing Connecting Rods (CONRODS) for internal combustion engines. As per letter of intent from Daimler Chrysler, Germany, they will be sourcing these connecting rods from us for their 4 wheelers. We are ISO 9001:2000 certified and are also affiliated with Maratha Chamber of Commerce, Industries & Agriculture and Engineering Export Promotions Council.

MAJOR EVENTS IN THE HISTORY OF OUR COMPANY

Year Major Events

1997 Sets up manufacturing unit at Nanekarwadi, Chakan, Pune 1999 Manufactures X-ray equipment for GE Medical Systems

2001 Implementation of ISO 9001:2000 2002 Setting up of the first Laser cutting machine at Chakan 2004 Genset & canopy assembly plant in Silvassa commences production 2004 ARAI approval as per CPCB norms.

2004 Expansion of Chakan plant by seting up large capacity Laser Cutting Machine and pressbrake suitable for JCB work at Chakan

2006 Agreement with Tafe Motors and Tractors Limited 2006 Added Suzlon Generators Private Limited as a customer 2006 Starts manufacture of Auto Mains Failure (AMF) Panels

2006 Setting up a separate EOU for manufacture of automobile engine connecting rods – Letter of Intent from Daimler Chrysler A.G.

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Registered Office of our Company The Registered office of our Company is situated at Plot No. S-145, MIDC, Bhosari, Pune - 411 026 Main Objects of our Company

The main objects of our Company as set out in the Memorandum and Articles of Association of the Company are as follows: 2. On conversion of the partnership firm into a company limited by shares under these presents to acquire

by operation of Law under Part IX of the Companies Act, 1956 as going concern and continue the partnership business now being carried on under the name and style of VEENA INDUSTRIES including all its assets, movable and immovable, rights, debts and liabilities in connection therewith

3. To produce, fabricate and manufacture material out of ferrous and non ferrous metal as well as from any

other raw material in accordance with the needs of different industries and fabrication as well as to engage in manufacture of our own items.

4. To carry on the business of food and food products and preparation of any nature or description

whatsoever, to carry on farming, agriculture and horticulture in all their respective forms and branches and to grow, produce, manufacture, process, prepare, refine, extract, manipulate, hydrolyze, deodorize, grind, bleach, hydrogenate, buy, sell or otherwise deal in all kinds of agricultural, horticultural, dairy, poultry and firm produce and products including foodgrains, cereals, seeds, oil seeds, plant, flowers, vegetables, fruits, vegetable and edible oils, meat, fish and eggs.

Changes in the Memorandum of Association

Since incorporation of the Company, the following changes have been made in the Memorandum of Association:

Amendments Date of Amendments

- Increase in the Authorised Share Capital of the Company from Rs. 1 Crores to Rs. 2 Crores

20/11/2004


20/03/2006


- Change in Object Clause in Memorandum of Association by incorporation of new clause

01/12/2006

- Conversion of the Company from Private Limited to Public Limited 03/01/2007

Subsidiaries of the Company Our Company does not have any subsidiary. Shareholders’ Agreement We have not entered into any Shareholders’ Agreement Share Purchase & Sale Agreement We have nocontracts mentioned ot entered into any share sale or purchase agreement

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Other Agreements Except material contracts mentioned on page [*] of this Draft Red Herring Prospectus, there are no other material agreements or contracts, which have been entered into within a period of two years prior to the date of this Draft Red Herring Prospectus, which are subsisting as on date. Strategic Partners We do not have any strategic partners. Financial Partners Presently, we do not have any financial partners.

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OUR MANAGEMENT

Our Company functions under the control of Board of Directors comprising of professionals drawn from various fields. The day-to-day affairs of the company are looked after by qualified key personnel under the supervision of Mr Shailendra Nath Agarwal – Managing Director and Mr. Brijendra Nath Agarwal, Chairman. Board of Directors Name, Age, Designation, Address and Occupation

Date of Appointment Other Directorships

Shailendra Nath Agarwal Managing Director Age: 60 years 9, Balaji Park, Behind Anandpark, Aundh, Pune 411 007 Experience:37 years Occupation: Business Term: 5 years

04/11/1996 Kavita Industries Pvt Ltd. Kavita Lasers Pvt. Ltd. Auto Mech (India) Pvt. Ltd. Mecc Alte India Pvt. Ltd.

Brijendra Nath Agarwal Director (Chairman) Age: 59 Years 3, Camellia Court, Gulmohar Park, Aundh, Pune 411 007 Experience: 36 Years Occupation: Business Term: 5 years

09/10/1996 Kavita Industries Pvt. Ltd. Auto Mech (India) Pvt. Ltd.

Atin Brijendra Agarwal Director Age: 30 Years 3, Camellia Court, Gulmohar Park, Pune 411 007 Experience: 9 Years Occupation: Business Term: 5 years

09/10/1996 Kavita Lasers Pvt. Ltd. Mecc Alte India Pvt. Ltd.

Avinash Shailendra Agarwal Director Age: 29 Years 9, Balaji Park Society, Behind Anandpark,, Aundh, Pune 411 007 Experience: 6 Years Occupation: Business Term: 5 years

01/10/2005 Auto Mech (India) Pvt. Ltd.

Pradip Vasant. Dubhashi Additional Director Age: 59 Years B 29, Abhimanshree Housing Society, Pashan Road, Pune, India 411008. Experience: 35 years

Occupation: Professional

10/03/2007 Onward Technologies Ltd. Prime Securities Ltd.

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Consultant Term: upto next AGM

Brij Mohan Kataria Additional Director Age: 67 Years 7 Mahindra Society, Nagar Road, Pune, India Experience: 43 years Occupation: Retired Professional Term: upto next AGM

10/03/2007 Emitec Emission Control Technologies India Pvt. Limited

Mr. Jag Mohan Kaul Additional Director Age: 59 Years 809, Sind Society, Aundh, Pune. Experience: 37 years Occupation: entrepreneur, independent Business Executive Term: upto next AGM

10/03/2007 -

Maj. Gen. Promode Kumar Govila (Retd.) Additional Director Age: 63 Years 13/4, Shinde Nagar, NDA Bavdhan, Pune- 411021 Experience: 37 years Occupation: Armament Expert on the panel of DRDO

10/03/2007 -

Brief Profile of theDirectors Mr. Shailendra Nath Agarwal Mr. Shailendra Nath Agarwal graduated in mechanical engineering from IIT, Kanpur in the year 1969. Thereafter he joined the family business of selling and servicing of tractors for a short period. In 1970, he joined Philips India Limited where he worked for 5 years in the management cadre. He was in-charge for production of one of the components factory at the Pune. In 1974, he left Philips India Limited and started his own business of tractor dealership. In the year 1980, he established M/s Veena Industries at Pune. Over the years he led the company to its present state where the Company has made the presence noticeable in the industry circles. Mr. Brijendra Nath Agarwal Mr. Brijendra Nath Agarwal graduated in mechanical engineering from IIT, Kanpur in 1970. Further, he completed Masters of Science (Mechenical Engineering) from North Dakota State University, USA in 1972. He worked there for about two years in an Aluminium foundry after which he returned to India in 1974. In India, he took up HMT tractor dealership at Agra, which remained operational till 1981He joined as a partner in M/s Veena Industries in 1982. He is currently the Executive Chairman of our Company and manages the overall administration, accounts & infrastructure development. Mr. Atin Brijendra Agarwal He graduated in Commerce from Symbiosis College of Arts & Commerce, Pune in 1999. He joined the engineering business of family while completing his graduation. Since then he has been actively involved

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with the Company and is heading the fabrication, machining and auto component plant. He is fully conversant with installing and running of CNC laser machines. He is currently Director Operations and Business Development in the company. Mr. Avinash Shailendra Agarwal Mr. Avinash Agarwal graduated in 2000 from MIT, Pune in Civil Engineering. Thereafter he joined GE Medical Systems – X-. Ray Division for training in six sigma quality management system. He joined our company in 2001 and presently heads Diesel Genset manufacturing and marketing activity. He has been responsib le for the implementation of ISO 9001-2000 quality system in the company’s manufacturing facilities. Mr. Pradip Vasant. Dubhashi He is BE (Electrical) from Pune University and MBA from Xavier Institute. He started his career as Development Officer in SICOM and whereafter worked with Mahindra Group for 15 years in management cadre. He also worked as CEO of Mahindra Composites Ltd. In the 1991, Mr. Dubhashi set up Innoven Business Consultancy, which provides consultancy in the area of Strategy & Research, Business Planning, Investment Analysis, M & A, Competitive Intelligence and Finance. Mr. Brij.Mohan. Kataria Mr Brij M Kataria is an Honours graduate in Metallurgical engineering from IIT Kharagpur and joined Mahindra Sintered Products Ltd as assistant metallurgist in 1963 and rose progressively to head the company in 1979. Mr Kataria was appointed President -Auto Components sector, Mahindra Group in December 1994. Mr. Kataria was also an executive committee member of automotive components manufacturers association of India. He is past president of powder metallurgy association of India, Past chairman – Confederation of Indian Industry, Pune chapter. He has been a member – advisory board of Det Norske Veritas (DNV) and is on the board of Emitec Emissions Controls Pvt Ltd. Mr. Jag. Mohan Kaul Mr. Jag. Mohan. Kaul is B.E Mechanical from Thapar Institute of Engineering & Technology, Post Graduation in Rotating Equipments from Japan and Executive MBA. He joined Kirloskar Pneumatic Co. Ltd. in 1970 in Management cadre. Thereafter from 1978 to 1994, he was with Atlas Copco in various positions in India and Sweden. He was President and MD of Emerson Electric Co from 2001 to 2004. Mr. Kaul was Managing Director of Dresser- Rand’ India Pvt. Ltd from 2004 to 2006. He has wide experience in the industry Major General (Retired) Promode Kumar Govila Mr. Promode Kumar Govila did his Masters in Engineering (Mechanical) from the University of Poona in the year 1984. He has served in varios capacities in Indian Army, including Project manager for Design and Development of various warheads for Pinaka Systems. From 2001 to 2004, he served as Director & Commandant Proof & Experimental Establishment, Chandipur. He is recipient of various awards in Army and has papers published in national and international journals to his credit. Relationship between the Directors Mr. Shailendra Nath Agarwal and Mr. Brijendra Nath Agarwal are brothers. Mr. Avinash Agarwal and Mr. Atin Agarwal are sons of Mr. Brijendra Nath Agarwal and Mr. Shailendra Nath Agarwal respectively. Details of the Borrowing Powers The Articles, subject to the provisions of the Act authorise the Board, to raise or borrow or secure the payment of any sum or sums of money for the purposes of the Company. The Members, have pursuant to a resolution passed at the EGM dated March 13, 2007 authorised our Board u/s 293(1)(d) to borrow monies together with monies already borrowed by the company, in excess of the aggregate of the paid up capital of the Company and its free reserves, not exceeding Rs. 100 crores at any time. The Board was also authorized u/s 293(1)(a) to mortgage/ hypothecate or create charge in favour of various Banks, Financial Institutions etc. on all or any of the immovable and movable properties and assets of the Company, in full or in part, wherever

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situated, both present and future or such of them to secure laon upto a limit not exceeding Rs. 100 crores at any time together with interest, commitment charges, costs and other expenses payable by the Company. Compensation of Managing Directors / Whole Time Directors

The remuneration of Managing Director and Executive Directors as per the resolution passed in the extra-ordinary general meeting of the members held on April 14, 2006 is as under:

Promoter Name Designation

Term expires on

Salary Annual Increment

Commissions Perquisities

Mr. Shailendra Nath Agarwal

Managing Director

31/03/2011

Rs. 3,00,000/- per month, inclusive of dearness and all other allowances

not exceeding 15% of the last salary drawn

@ 1% of the net profits of the company.

Mr. Brijendra Nath Agarwal

Chairman

31/03/2011




Mr. Avinash Agarwal

Director - Sales and Marketing

31/03/2011




The Directors are entitled to the following perquisites entitle to the Directors: A. Rent-free furnished accommodation or house rent allowance not exceeding Rs. 50,000/- per month along with benefits of gas, fuel, water, electricity and telephone, fax as also upkeep and maintenance of the residential accommodation the value of such accommodation and its upkeep and maintenance being evaluated in accordance with the provisions of the Income Tax Rules.

B. Conveyance: Company car with chauffeur or alternatively company to maintain the Director’s personal car and provide him with a chauffeur; monetary value for private use to be evaluated in accordance with

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Mr. Atin Agarwal

Director – Operations

31/03/2011




the Income Tax Rules. C. Medical Benefits: Reimbursement of medical expenses for himself and his family actually incurred during the continuance of his employment as per Rules of the Company up to a limit of one month’s salary in a year or three months salary over a period of three years.

D. Leave: 30 working days, in each year, with entitlement to encash the unavailed leave at the end of the tenure.

E. Leave Travel Assistance: Leave travel concession for self and family, once in a year, as per rules of the company.

F. Personal Accident Insurance, premium of which shall not exceed Rs. 10,000/- per annum.

G. Club fees subject to maximum of two clubs. No admission or life membership fees will be paid.

H. Contribution to Provident Fund, Superannuation Fund or Annuity Fund to the extent these singly or put together are not taxable under the Income Tax Act, 1961; gratuity payable at a rate not exceeding half a month salary for each completed year of service and encashment of unavailed leave at the end of tenure shall not be included in the compensation of the ceiling on remuneration in terms of Schedule XIII of the Companies Act, 1956.

Compliance with Corporate Governance Requirements The provisions of the Listing Agreement to be entered into with BSE and NSE with respect to corporate governance and the SEBI Guidelines in respect of corporate governance will be applicable to our Company immediately upon the listing of our Company’s Equity Shares on the Stock Exchanges.

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Our Company has complied with SEBI Guidelines in respect of Corporate Governance specially with respect to broad basing of board, constituting the Committees such as Shareholders/ Investor Relation Committee, Audit Committee and Remuneration Committee. Our Company has complied with the corporate governance requirements as per clause 49 of the listing agreement. In terms of the Clause 49 of the Listing Agreement, our Company has already appointed Independent Directors and constituted the following committees of the Board: Audit Committee Our Company has constituted an Audit Committee on March 10, 2007. The Committee currently comprises of 5 members namely Mr. Pradip Vasant Dubhashi as its Chairman, Mr. Brij Mohan Kataria, Mr. Brijendra Nath Agarwal, Mr. Promode Kumar Govila and Mr. Atin Agarwal as its members of which 3 are independent non-executive Directors. The Company Secretary of the Company shall also act as Secretary to the Committee. The Committee is responsible for effective supervision of the financial operations and ensuring that financial, accounting activities and operating controls are exercised as per the laid down policies and procedures. The terms of reference of the Audit Committee are as per the requirements of Clause 49 of the listing agreement, which will be entered into with the stock exchanges in due course. Remuneration Committee The Remuneration Committee comprises of 4 members Mr. Jag Mohan Kaul. as its Chairman, Mr. Brij Mohan. Kataria, Mr. Pradip Vasant Dubhashi and Mr. General Promode.Kumar.Govila as its members, who all are independent non-executive Directors. The Remuneration Committee determines the Company’s remuneration policy, having regard to the performance sandards and existing industry practice, including in particular the managerial remuneration. The constitution of the Remuneration Committee has been approved by the Board on March 10, 2007. Shareholders / Investors Grievance Committee-

As part of its Corporate Governance initiative, our Board has constituted the Shareholders / Investors Grievance Committee on March 10, 2007. The Shareholders Committee consists of Mr. Brij Mohan Kataria, Chairman, Mr. Shailendra Nath Agarwal and Mr. Brijendra Nath Agarwal as its members. The Committee is formed to specifically look into matters relating to shareholders grievance such as approval of transfer / transmission / demat / remat of shares, issue of duplicate, split-up, consolidation, renewal of share certificate, non-receipt of Annual Report, non- receipt of declared dividends and such other issues. The Company has appointed Ms. Deepika Agarwal, Company Secretary as the “Compliance Officer” who may be contacted for any matter relating to share transfers / transmissions, non-receipt of Annual Reports, Dividend, etc. Statement Showing Shares held by our Directors: The following table detals the shareholding of our Directors in the Company prior to the Issue: Name of the Directors No. of Equity Shares held Mr. Brijendra Nath Agarwal 900000 Mr. Shailendra Nath Agarwal 765000

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Mr. Atin B. Agarwal 990300 Mr. Avinash S. Agarwal 540300 Total 3195600

Interests of Promoters / Directors Except as stated in the “Related Party Disclosures” beginning on page [*] of this Draft Red Herring Prospectus, all our Directors may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of our Board or committees thereof as well as to the extent of remuneration and/or reimbursement of expenses payable to them in accordance with the provisions of the Companies Act and in terms of the Articles. The Directors may also be regarded as interested in the shares, if any, held by them or that may be subscribed by and allotted / transferred to the companies, firms and trusts and other entities in which they are interested as Directors, members, partners and / or trustees or otherwise as also any benefits, monetary or otherwise derived therefrom. All Directors may be deemed to be interested in the contracts, agreements / arrangements entered into or to be entered into by our Company with any Company in which they hold Directorships or any partnership firm in which they are partners as declared in their respective declarations. Our Director, Mr. Brijendra Nath Agarwal may be deemed to be interested to the extent of the consderation payable by the Company in respect of MOU entered with our Company for purchase of land for the project in respect of which the public issue is planned. Our Directors Shailendra Nath Agarwal, Brijendra Nath Agarwal, Avinash Shailendra Agarwal and Atin Brijendra Agarwal may be deemed to be interested to the extent of consideration payable by the Company in respect of lease agreement entered into by our Company with M/s SNA Industries in respect of Industrial shed at Gat No. 309, Nanekarwadi, Chakan, Pune as per purchase deed dated February 20, 1997. Further our Directors Shailendra Nath Agarwal, Brijendra Nath Agarwal, Avinash Shailendra Agarwal and Atin Brijendra Agarwal may be deemed to be interested to the extent of consideration payable by the Company in respect of Industrial land purchased from Kavita Industries Private Limited as pur purchase deed dated September 29, 2005. Changes in the Board of Directors in the last 3 years The following are the changes in the Board of Directors in the last 3 years: Name of Director Date of Change Reason for Change Mrs. Veena Shailendra Agarwal

31/07/2006 Resignation

Mrs. Kavita Brijendra Agarwal

31/07/2006 Resignation

Mr. Avinash Shailendra Agarwal

01/10/2005 Appointment

Mr. Pradip Vasant Dubhashi

10/03/2007 Appointed to broad base the Board

Mr. Brij Mohan Kataria 10/03/2007 Appointed to broad base the Board

Mr. Jag Mohan Kaul 10/03/2007 Appointed to broad base the Board

Mr. Promode Kumar Govila 10/03/2007 Appointed to broad base the Board

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Management Organisation Chart

Key Managerial Personnel The Company’s management team is made up of qualified professionals with experience in management in their respective fields of expertise. The Managing Director is assisted in their day-to-day responsibilities by a team of professionals as under: A Brief Profile of Key Managerial Personnel.

Sr No.

Name Description Age Qualification

Date of Joining

Experience

Previous Employment

1. Mr. Manik B. Daware

General Manager. (Operations)

31 Years

D.M.E. (Mechnical)

March 1, 2006.

10 Years Filtrum Tools and Components Pvt Ltd

2. Mr. Sanjay Arora

Sr. G. M. (Marketing)

42 Years

B. E. (Mechanical)

January 1, 2006

19 Years Mahindra & Mahindra Group

3. Ms. Deepika Agarwal

Company Secretary

30 Years

Company Secretary

November 01, 2006.

1 Year Worked as a Assistant company secretary in a practicing firm Kalias Prajot, Pune

4. Mr. S. Sriniwas Business Manager (Gen sets)

46 Years

B. E. (Mechanical)

June 21, 2006 25 years Atlas Copco as Sales Engineer

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5. Mr. Umakant Morankar

Senior Executive (Punching & Bending)

32 Years

Diploma in Mechanical Engineering

February 01, 2006.

10 Years Monga Packaging Pvt. Ltd.

6. Mr. Sudhir Ganpatrao Salunke

Manager (Marketing & Sales)

40 Years

Diploma in Production Technology

April 23, 2005, promotion on April 1, 2006

20 Years Arth Lasers Works Pvt Ltd..

7. C. S. Keerthivashan

Senior Manager- Service

36 Years

Diploma In Mechanical Engineering

April 1, 2006. 15 Years Mahindra & Mahindra and Elgi Equipments Limited.

8. Mr. Dilip V. Ranade

G. M. (Auto component Division)

52 Years

M. Tech. from IIT, Kharagpur

May 22, 2006 30 Years Trinity Die Forgers Ltd.

9. Mr. Anil Ramchandra Idhate

Assistant Manager (Production-Laser Cutting)

28 Years

Diploma In Mechanical Engineering

November 15, 2004, promoted on April 1, 2006

7 Years Rishi Laser Cutting Ltd.

10. Mr. Sandeep Rana

Manager (Logistic) 31 Years

MCom March 20, 2006.

10 Years Dynamic Logistics Pvt. Ltd.

11. Mr. Someshwar Topagi

Manager (Product Development)

52 Years

B.Tech (Mechanical)

July 22, 2005 28 Years Bajaj Auto Limited

Mr. Manik B.Daware, 31 years, General Manager (Operations) joined us on March 1, 2006. Mr Daware completed his D.M.E (Mechnical) from Govt. poly Aurangbad. Prior to joining Veena Industries he was employed with Filtrum Tools and Components Pvt Ltd between April 2004 to March 06 and was involved in the overall operations of the company. Between Februrary 2000 to April 2004 he was the Operating and Managing Partner in the Fleetguard Filters Pvt Ltd. & Air Flow Systems. His gross compensation in the F/Y 2006-07 is Rs. 9,10,020. Mr, Sanjay Arora, 42, years, Senior General Manager (Marketing) joined us on 01/01/2006. Mr. Arora completed his B.E. (Mechanical) from MS University, Baroda. Prior to joining Veena Industries he was associated with companies like Mahindra & Mahindra Group, Gulf Oil India Ltd and Tata- BP Lubricants India Ltd. His gross remuneration in the F/Y 2006-07 is Rs 14,08,200 Ms. Deepika Agarwal, 30 years, is the Company Secretary and Compliance Officer of the Company. Her annual remuneration is Rs. 3,00,004. She joined us on 01/11/2006 Mr. S Srinivas, 46 years, Business Manager (Gen sets) joined us on 21/05/2005. Mr .Srinivas completed his BE Mechanical in the year 1981. Prior to joining Veena Industries he was associated with companies like Atlas Copco. His gross compensation in the F/Y 2006-07 is Rs. 5,52,000

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Mr. Umakant Morankar, 32 years, Senior Executive (Punching & Bending) joined us on 1/2/2006 as a Senior executive. Mr Morankar completed his Diploma in Mechanical Engineering. Prior to joining Veena Industries he was employed with Monga packaging pvt ltd and ABB ltd. His gross compensation in the F/Y 2006-07 is Rs. 2,39,220. Mr. Sudhir Ganpatrao Salunke, 40 years, Assistant Manager (Marketing & Sales) joined us on April 23’ 2005. Mr. Salunke completed his Diploma in Production Technology in the year 1988. His gross compensation in the F/Y 2006-07 is Rs. 2,69,990 Mr C.S. Keerthivashan, 36 years, Senior Manager – Service joined us on April’ 2006. Mr. Keerthivashan completed his Diploma in Mechanical Engineering (DME) in the year April 1987. Prior to joining Veena Industries he was associated with companies like Mahindra & Mahindra and Elgi Equipments Limited. His gross compensation in the F/Y 2006-07 is Rs. 5,75,000 Mr. Dilip V Ranade, 52 years, General Manager (Auto Component Division) joined us on May’ 2006. Mr. Ranade completed his M Tech. from IIT Kharagpur. Prior to joining Veena Industries he was associated with companies like Trinity Die Forgers Ltd, Ring Plus Aqua Ltd and Manugraph Industries Limited. His gross annual compensation is Rs. 8,39,996 Mr. Anil Ramchandra Idhate, 28 years, Assistant Manager (Production-Laser Cutting), joined us on November 15’ 2004 as Executive (Laser Cutting – Production). Mr. Idhate completed his Diploma in Mechanical Engineering (DME) in the year July 1999. Prior to joining Veena Industries he was associated with companies like Rishi Laser Cutting Ltd., Arth Laser Works Pvt Ltd and Sheetal Industries. His gross compensation in the F/Y 2006-07 was Rs. 2,40,004 Mr. Sandeep Rana, 31 years, Manager (Logistics), joined us on March’ 2006. Mr. Rana apart from M Com has completed his Master Diploma in Business Administration (Finance). Prior to joining Veena Industries he was associated with companies like Road Transport Corporation and Gati Corporation Limited. His gross remuneration in the F/Y was Rs. 2,66,992. Mr. Someshwar Topagi, 52 years, Manager (Product Development) joined us on July’ 2005. Mr. Topogi completed his B Tech (Mechnical) – Production in the year 1977. Prior to joining Veena Industries he was associated with companies like Asea Brown Boveri limited and Bajaj Auto Limited. His gross compensation in the F/Y 2006-07 was Rs. 4,06,200 Shareholding of the Key Managerial Personnel There is no shareholding of key managerial personnel. Bonus or Profit Sharing Plan for the Key Managerial Personnel There is no bonus or profit sharing plan for the key managerial personnel Changes in the Key Managerial Personnel in the Last One Year Name of the Employee Designation Date of Change

Reasons of Change

Mr. Manik B. Daware General Manager (Operations) 1-Mar-06 Appointment Mr, Sanjay Arora Senior General Manager (Marketing) 1-Jan-06 Appointment Ms. Deepika Agarwal Company Secretary 1-Nov-06 Appointment Mr. Umakant Morankar Senior executive 2-Feb-06 Appointment Mr C.S. Keerthivashan Senior Manager April’ 2006. Appointment

Mr. Dilip V Ranade General Manager (Auto Component Division) May’ 2006. Appointment

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Mr. Amit V. Joshi Development Manager October ‘2006. Appointment Mr. Sandeep Rana Manager (Logistics) March’ 2006 Appointment

Employees Stock Option Scheme / Employees Stock Purchase Scheme Presently, we do not ESOP/ESPS Scheme for employees Payment or Benefit to Officers of the Company Except the payment of salaries and perquisites, the Company does not make any payments to its officers.

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OUR PROMOTERS A) Mr. Shailendra Nath Agarwal

Passport No. : F8607325 dated 11th July 2006 Voter ID : Not Available Driving Licence : MH12/03/36304 PAN : AANPA4849A Mr. Shailendra Nath Agarwal graduated in mechanical engineering from IIT, Kanpur in the year 1969. Thereafter he joined the family business of selling and servicing of tractors for a short period. In 1970, he joined Philips India Limited where he worked for 5 years in the management cadre and was in-charge for production of one of the components factory at the Pune. In 1974, he left Philips India Limited and started his own business of tractor dealership. In the year 1980, he established M/s Veena Industries at Pune. Over the years he led the company to its present state where the Company has made the presence noticeable in the industry circles. He is the Managing Director of our Company with the responsibility of growth of existing businesses and addition of new business. B) Mr. Brijendra Nath Agarwal

Passport No. : E3284877 dated 4th September, 2002 Voter ID : Not Available Driving Licence : MH12/02/289608 PAN : AAWPA9005D Mr. Brijendra Nath Agarwal graduated in mechanical engineering from IIT, Kanpur in 1970. Further, he completed Masters of Science (Mechenical Engineering) from North Dakota State University, USA in 1972. He worked there for about two years in an Aluminium foundry after which he returned to India in 1974. In India, he took up HMT tractor dealership at Agra, which remained operational till 1981He joined as a partner in M/s Veena Industries in 1982. He is currently the Executive Chairman of our Company and manages the overall administration, accounts & infrastructure development.

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Common Pursuit Ourpromoters does not have any interest in any venture which is engaged in the manufacturing of similar products as that of our Company resulting in conflict of interest. Other confirmation We confirm that Permanent Account Number, Passport Number and Bank Account Number have been submitted to the Stock Exchanges, on which the shares are proposed to be listed, at the time of filing the Draft Red Herring Prospectus. Further our promoters and promoter group entitites, including relatives of the promoters have confirmed that they have not been declared as willful defaulters by the RBI or any other Government authority and there are no violations of securities laws committed by them in the past or are pending against them. Payment or Benefit to our Promoters For details of payments or benefits paid to our promoters, please refer to paragraph “Statement Showing Shares held by the Directors & Remuneration paid to them”, “Interest of Promoter / Directors” and “Related Party Transactions” beginning on page [*],[*] and [*] respectively of this Draft Red Herring Prospectus. Related Party Transactions For details of related party transactions please refer to Annexure VI of the Financial Statement on page [*] of this Draft Red Herring Prospectus.

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PROMOTER GROUP COMPANIES

I. SNA Industries- Partnership firm

PAN No.: AAXFS9629J Nature of Business: Sheet metal fabrication, business of Powder coating, manufacturing of components of canopies and assembling of canopies of all kinds. Address: Plot No. C-2, Gat No. 309, Nanekarwadi, Chakan, Tal. Khed, Pune 410501.

The partnership firm was initially formed vide Deed of Partnership and reconstituted on 1st April 1984, 1st April 1996, 1st April 2001 and lastly 1st October 2005. At present there are eight partners as per details given below:

Partners and Profit Sharing Ratio

No.

Name Profit Sharing Ratio

1. Mr. Shailendra Nath Agarwal 25%

2. Mrs. Kavita Brijendra Agarwal 25%

3. Mr. Avinash Shailendra Agarwal 10%

4. Mr. Atin Brijendra Agarwal 10%

5. Mr. Brijendra Nath Agarwal 10%

6. Mrs. Veena Shailendra Agarwal 10%

7. Mrs. Pooja Avinash Agarwal 5%

8. Mrs. Pooja Atin Agarwal 5%

SNA set up a powder coating plant for coating sheet metal components in 1997 on industrial land owned by it. It also undertakes acoustic work with foam for canopies. SNA buys components from various suppliers including Veena Industries Limited and after powder coating and value addition it supplies canopies to various generator manufactures and air compressor manufacturers. The trademark “Automech” is registered with SNA Industries and it has given rights to use its trademark “Automech” for generator sets to our company.

(Rs. In Lacs) Particulars 2003 - 2004 2004 - 2005 2005-06

Sales 334.64 475.85

1,838.79

Other Income 9.77 1.06

0.08 Profit After Tax (PAT) 10.59 31.18

45.26

Equity Capital 59.79 100.57

153.85 There are no outstanding litigations against the company. II. Shabri Electricals & Electronics- Partnership Firm PAN No. AAFFS3238R Nature of Activities Cable operator and cable service provider. The partnership firm was created by Deed of partnership dated 18th January 1988 and reconstituted on 1st April

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1992.

The partners are Mr. Shailendra Nath Agarwal and Mr. Brijendra Nath Agarwal with equal profit sharing

Unaudited Financials for the Last Three Years: (Rs. In Lacs) Particulars 2003 - 2004 2004 - 2005 2005-06

Sales 30.03

34.26

34.89

Profit After Tax (PAT) 0.32

(0.39)

(0.99)

Equity Capital 1.54

0.26

1.90 There are no outstanding litigations against the company, except a case filed in 1995 for exhibiting unauthorized video on the cable network, details of which are mentioned under Section- Legal and Other Information on page no. of this DRHP.

III. Kavita Industries Private Limited- 1. Date of Incorporation 9th August, 1996 2. Registration number: 11-101779 (By Registrar of Companies, Maharashtra). 3. PAN No.: AAACK8705D 4. Registered Office: 11, Rajratan Apartments, Aundh, Pune- 411007. 5. Nature of Activities Installation and fitting of Gensets. The company was earlier in assembling and manufacturing of gensets but has discontinued activities since last two years. Directors and Shareholding Pattern

Sr.No. Name of the Shareholder Equity Holdings 1 Mr. Shailendra Nath Agarwal – Director 21.91% 2 Mr. Brijendra Nath Agarwal – Director 20.64% 3 Mrs. Veena Shailendra Agarwal – Director 18.27% 4 Mrs. Kavita Brijendra Agarwal – Director 20.09% 5 Mr. Atin Brijendra Agarwal 9.18% 6 Mr. Avinash Shailendra Agarwal 9.73% 7 Ms. Paridhi Agarwal 0.09% 8 Mr. Rahul Agarwal 0.09%

Financials for the Last Three Years

(Rs. In Lacs) Particulars 2003 - 2004 2004 - 2005 2005-06

Sales 10.62

84.39

-

Other Income 0.15

0.40

4.36

Profit After Tax (PAT) (0.29)

2.45

3.33 Equity Capital 17.00

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11.00 11.00

Reserves (2.95)

0.58 3.92

Net Worth 8.05

11.58 14.92 Earning per Share (EPS) Rs. (-)

2.23 3.03

Book Value per Share Rs. 7.32

10.53 13.56

Kavita Industries Private Limited is not listed at any Stock exchange neither it has any subsidiaries. It has not made any Public/Rights issue in the last three years. It has not become sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995 or is under winding up. There are no outstanding litigations against the company.

IV. Automech (India) Private Limited: 1. Date of Incorporation 24th December, 1992

2. Registration number: 17-07102. 3. PAN No.: AADCA 0148D 4. Registered Office: E-307, Lalkothi Scheme, Jaipur 302015 Directors and Shareholding Pattern Sr.No. Name of the Shareholder Equity Holdings 1 Mr. Shailendra Nath Agarwal – Director 25.00% 2 Mr. Brijendra Nath Agarwal – Director 25.00% 3 Mr. Avinash Shailendra Agarwal – Director - 4 Mrs. Kavita Brijendra Agarwal – Director 25.00% 5 Mrs. Veena Shailendra Agarwal 25.00% The company is engaged in the marketing, installing and providing service after sales of gensets of Veena Industries Limited in the state of Maharashtra. It also provides support to Veena Industries Limited for control panel related faults.

Financials for the Last Three Years (Rs. In Lacs) Particulars 2003 – 2004 2004 - 2005 2005-06 Sales 59.42 37.39 15.28 Other Income 0.49 2.77 - Profit After Tax (PAT) 0.46 0.19 (0.37) Equity Capital 1.00 1.00 1.00 Reserves 0.67 0.85 0.48 Net Worth 1.67 1.85 1.48 Earning per Share (EPS) Rs. 4.60 1.90 (-) Book Value per Share Rs. 0.17 0.18 0.15

Automech India Private Limited is not listed at any Stock exchange neither it has any subsidiaries. It has not made any Public/Rights issue in the last three years. It has not become sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995 or is under winding up. There are no outstanding litigations against the company.

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V. Kavita Lasers Private Limited: 1. Date of Incorporation 27th November 2002 as Kavita Laser Cutting Private Limited. 2 Name changed 24th July, 2003 3. Registration number: U29299PN2002PTC017452

4. PAN No.: AAXFS9629J 5. Registered Office: 3, Camelia Court, Gulmohar Park, Aundh, Pune 411007.

Directors and Shareholding Pattern Sr.No. Name of the Shareholder Equity Holdings 1 Mr. Shailendra Nath Agarwal – Director 16.67% 2 Mr. Atin Brijendra Agarwal – Director 16.67% 3 Mr. Avinash Shailendra Agarwal 16.67% 4 Mr. Brijendra Nath Agarwal 16.67% 5 Mr. Brijendra Nath Agarwal – HUF 16.66% 6 Mr. Shailendra Nath Agarwal – HUF 16.66% Kavita Lasers was providing laser technology for medical and cosmetic purpose. It has since sold the equipment on 2nd April 2006 to a group firm, The Chrysalis Centre. It is no more in operation.

Financials for the Last Three Years (Rs. In Lacs) Particulars 2003 - 2004 2004 - 2005 2005-06

Sales 3.56

9.38

7.24

Other Income -

-

0.05

Profit After Tax (PAT) (2.67)

(0.16)

(6.38)

Equity Capital 6.00

6.00

6.00 Reserves - - - Net Worth 6.00 Earning per Share (EPS) Rs. (-) (-) (-)

Kavita Lasers Private Limited is not listed at any Stock exchange neither it has any subsidiaries. It has not made any Public/Rights issue in the last three years. It has not become sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995 or is under winding up. There are no outstanding litigations against the company. VI. M/s The Chrysalis Centre – Partnership firm

The partnership firm was formed vide Deed of partnership dated 21st March 2006. Nature of Activities: Skin treatment through laser technology Partners Mr. Brijendra Nath Agarwal and Mr. Veena Shailendra Agarwal with equal profit sharing. Registered Office 9,Balaji Park, Baner Road, Pune 411007.

Activity: engaged in medical laser for hair removal and skin treatment.

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No financial statements have been prepared as 2006-07 is the first year of operations. There are no outstanding litigations against the firm. VII. Brij Properties- Partnership firm

The partnership firm was formed vide Deed of partnership dated 8th February 2006.

Nature of Activities Engaged in the trading of real estate, real estate development, builders,

construction activities and landscapping. Registered Office 9,Balaji Park, Behind Anand Park, Pune 411007.

Partners and Profit Sharing Ratio

Name Profit Sharing Ratio 1. Mr. Brijendra Nath Agarwal 50%

2. Mrs. Veena Shailendra Agarwal 50%

No financial statements have been prepared as 2006-07 is the first year of operations. There are no outstanding litigations against the firm, except the case filed by M/s Mahalaxmi Enterprises, details of which are given under Section- Legal and Other Information on page no. of this DRHP

VIII. Mecc Alte India Private Limited:

This is a Joint Venture between Veena Industries Limited and MECC Alte S.P.A, Italy. Veena Industries holds 49% equity and the rest 51% to be held by the foreign partner. 1. Date of Incorporation 13th August 2006 2. Registration number: U31101MH2006PTC164200

3. Registered Office: State Bank Buildings, N.G.N.Vaidya Marg, Mumbai 400023 4. Nature of Business To start Manufacturing of alternators 5. Directors Mr. Sanjay Buch Mr. Kaushik M. Jhaveri Mr. Shailendra Nath Agarwal Mr. Atin Brijendra Agarwal 6. Paid Up Capital: Rs. 336.11 Lakhs There are no outstanding litigations against the firm. IX. Agarwal Communication Equipments (HUF)- Mr. Shailendra Nath Agarwal It provides service to Shabri Electricals & Electronics Limited as well as undertakes sundry activities. For the year ended 31st March 2006, the gross income of the HUF was Rs. 5.46 lakhs with a PAT of Rs. 1.18 lakhs. The capital employed is Rs. 0.41 lakhs. X. Automech Enterprises (HUF) Mr. Brijendra Nath Agarwal It is engaged in the renting of cars. For the year ended 31st March 2006, the gross income of the HUF was Rs. 16.71 lakhs with a PAT of Rs. 3.49 lakhs.

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CURRENCY OF PRESENTATION

In this Draft Red Herring Prospectus, unless the context otherwise required, all references to the word “Lakh” or “Lac”, means “One hndred thousand” and the word “Ten Lacs” and the word “Crore” means “ten million” and the word “billion” means “One thousand million” and the word “Trillion” means “One thousand billion”. In this Draft Red Herring Prospectus, any discrepancies in any table between total and the sum of the amounts listed are due to rounding off.

Throughout this Draft Red Herring Prospectus, all the figures have been expressed in Lacs of Rupees, except when stated otherwise. All references to “Rupees” and “Rs.” in this Draft Red Herring Prospectus are to the legal currency of India.

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DIVIDEND POLICY

The Company has not declared and paid any dividend since incorporation. The declaration and payment of dividends will be recommended by the Board of Directors and the shareholders, in their discretion, and will depend on a number of factors, including but not limited to the earnings, capital requirements and overall financial condition.

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FINANCIAL STATEMENTS The Board of Directors, VEENA INDUSTRIES LIMITED S-145, MIDC, Bhosari, Pune 411026. Dear Sirs,

1. We have examined the financial information of Veena Industries Limited (the company) annexed to this report which have been prepared in accordance with the requirements of:

i. Paragraph B (1) of Part II of Schedule II to the Companies Act, 1956 (‘the Act’); ii. The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines

2000 (‘the Guidelines’) issued by the Securities and Exchange Board of India (‘SEBI’) on January 19, 2000 in pursuance of Section 11 of the Securities and Exchange Board of India Act, 1992; and

iii. The terms of reference received from the Company dated 13.03.2007, requesting us to carry out

work, proposed to be included in the Draft Red Herring Prospectus / Red Herring Prospectus / Prospectus (hereinafter referred to as “Offer Document”) of the Company in connection with its proposed Public Issue (referred to as ‘the Issue’).

2. The Issue will be for a fresh issue by the Company of [.] Equity Shares of Rs. 10/- each at such

premium, by way of book building process, as may be decided by the Board of Directors. The Issue is being made through the 100 per cent book-building scheme.

We report that the restated assets and liabilities of the company as at 31st March 2006, 2005, 2004, 2003 & 2002 and half year ended 31st October 2006 are as set out in Ànnexure 1’ to this report after making such adjustments/restatements and regrouping as in our opinion are appropriate and are subject to the Significant Accounting policies as appearing in Ànnexure 4’ and Notes to the Statements of Assets & Liabilities and Profit and Loss Account appearing in Ànnexure 4’ to this report. We report that the restated profits of the Company for the financial period ended 31st March 2006, 2005, 2004, 2003, 2002 and for the period ended 31st October 2006 are as set out in Annexure 2 to this report. These profits have been arrived at after charging all expenses including depreciation and after making such adjustments/restatements and regroupings as in our opinion are appropriate and are subject to the Significant Accounting Policies as appearing in Annexure 4 and notes to the statements of Assets and Liabilities and profit and loss account appearing in Annexure 4 to this report. Financial Performance of the Company as per audited financial statements

3. We have examined the ‘statement of assets and liabilities – Restated’ (Annexure – 1) of the Company for seven months ended October, 31st 2006 and each of year ended March, 31st, 2006, 2005, 2004, 2003 and 2002 and the ‘statement of profit and loss account – restated’ for each of the period/years ended on those dates (see Annexure - 2), the ‘statement of Cash Flows – restated’ for the period/years ended on those dates (see Annexure – 3), and the related Financial Schedules (Annexure – 5 to 16) as extracted from the audited financial statements of each of the financial years ended on March 31, 2006, 2005,2004 2003 and 2002 and adopted by the members of the Company and for the seven months ended on October 31st 2006 approved by the Board of Directors of the company and after making the necessary and relevant disclosures and adjustments as appropriate and required to be made, in our opinion are in accordance with the provisions of Part II and Schedule II of the

108

Companies Act, 1956 and SEBI Guidelines. Based on our examination of these summary statements, we confirm that;

i. The impact of changes in accounting policies adopted by the Company as at 31st October 2006

and for the year ended March 31st 2006 have been adjusted with retrospective effect in the attached summary statements; Except as otherwise stated in notes and significant accounting policies as per Annexure 4 attached with this report

ii. The prior period items have been adjusted in the summary statements in the years to which they relate;

iii. There are no qualifications in the auditors’ reports, except (as otherwise stated in notes and significant accounting policies as per Annexure 4 attached with this report) which require any adjustments to the summary statements.

4. The summary of significant accounting policies adopted by the Company together with the notes

pertaining to the audited financial statements for the seven months ended October 31st 2006 are enclosed as Annexure 4 to this report.

5. We have examined the following financial information relating to the Company proposed to be

included in the Letter of Offer, approved by the Board of Directors and annexed to this report: i. Details of Segment Reporting (Annexure 5) ii. Details of Related party Disclosure (Annexure 6) iii. Details of Principal Terms & Conditions of Loans Outstanding (Annexure 7) iv. Details of Investments (Annexure 8) v. Details of Sundry debtors (Annexure 9) vi. Details of loans and advances (Annexure 10) vii. Details of secured loan (Annexure 11) viii. Detail of Contingent Liabilities (Annexure 12) ix. Details of Unsecured Loans (Annexure 13) x. Summary of accounting ratios based on the adjusted profits relating the earning per share, net

asset value and return on net worth (Annexure 14) xi. Capitalisation statement of the Company (Annexure 15) xii. Details of other income and operating Revenues (Annexure 16) xiii. Tax Shelter statement (Annexure 17) 6. In our opinion, the ‘financial information as per audited financial statements’ read with the notes to

accounts and other financial information’ as per annexure 4 & 17 have been prepared after making adjustments and regroupings as considered appropriate and in accordance with Part II of Schedule II of the Companies Act 1956 and the SEBI Guidelines.

7. This report is intended solely for the use of Veena Industries Limited for the purpose of inclusion in

the Offer Document in connection with the Public Issue of the Company. This report may not be used or relied upon by or disclosed, referred to or communicated by yourself (in whole or in part) to any third party for any purpose other than the stated use, except with our written consent in each instances, and which consent, may be given, only after full consideration of the circumstances at that time.

For PRAKASH S. SHAH & CO. Chartered Accountants Prakash S. Shah Partner Place: Pune Dated: 19th March 2007

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Annexure I

STATEMENT OF ASSETS AND LIABILITES, AS RESTATED (Rupees in Lacs)

AS AT 31st MARCH PARTICULARS 2002 2003 2004 2005 2006 31-10-2006

1. FIXED ASSETS : a) Gross Block 111.37 120.55 214.10 463.83 1328.60 1679.41b) Less : Depreciation 22.23 27.52 40.71 68.43 139.56 215.01c) Net Block 89.14 93.03 173.40 395.41 1189.03 1464.39d) Capital WIP including capital advances

14.38 79.15 0.00 24.64 123.01 405.13

e) Incidental Expenses pending allocation

- - - - - -

Total 103.52 172.19 173.40 420.05 1312.05 1869.522. INVESTMENTS 3. CURRENT ASSETS, LOANS AND ADVANCES :

a) Inventories 48.42 78.87 91.17 230.35 1022.43 2324.94b) Sundry Debtors 65.48 46.74 85.09 490.10 747.37 1015.56c) Cash and Bank Balances 0.11 0.19 1.42 11.70 20.08 203.78d) Loans and Advances 12.34 10.34 14.19 83.03 558.46 853.77Total 126.34 136.14 191.88 815.18 2348.34 4398.04 Total Assets 230.14 308.53 365.41 1237.52 3662.13 6286.07 4. LIABILITIES & PROVISIONS :

a) Secured Loans 55.50 104.96 103.49 436.16 1622.87 2347.20b) Unsecured Loans 21.40 64.48 91.25 126.74 95.73 70.50c) Current Liabilities and Provisions

57.72 37.45 57.90 394.60 805.35 1901.39

D) Defered Tax Liability 0.00 21.53 25.38 34.00 57.13 76.78Total 134.61 228.41 278.02 991.51 2581.08 4395.865. NET WORTH (1 + 2 + 3 - 4) 95.25 79.91 87.26 243.73 1079.30 1871.70 NET WORTH REPRESENTED BY

6. EQUITY SHARE CAPITAL 75.00 75.00 75.00 150.00 250.00 835.007. SHARE APPLICATION MONEY

- - - - - -

8. RESERVES AND SURPLUS 20.53 5.11 12.40 96.02 831.04 1055.219. Miscellaneous Expenditure (to the extent not written off)

0.27 0.21 0.14 2.29 1.75 18.51

10. NET WORTH (6 + 7 + 8 - 9) 95.25 79.91 87.26 243.73 1079.30 1871.70

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Annexure II

STATEMENTS OF PROFIT & LOSS ACCOUNT (Rupees in Lacs) 31-03-2002 31-03-2003 31-03-2004 31-03-2005 31-03-2006 31-10.2006 SALES (Net of duties & Taxes) 334.32 318.79 424.15 1305.58 5810.45 3820.31 Others Income 7.19 8.85 4.94 0.64 4.10 3.39Total 341.51 327.63 429.09 1306.22 5814.55 3823.69 EXPENDITURE Cost of production and distribution 287.68 266.77 348.90 1070.89 4457.17 2610.58Directors remuneration 4.61 5.78 5.86 5.86 57.46 81.50Employee cost 6.79 8.22 9.75 13.46 23.69 15.91Administrative and other expenses 15.18 24.10 24.53 65.28 237.68 346.39Interest 11.27 9.31 13.60 24.25 108.18 163.56Depreciation 4.91 5.29 13.19 27.72 71.14 75.45Total 330.44 319.48 415.84 1207.46 4955.32 3293.40 Profit before Taxation 11.07 8.15 13.25 98.77 859.23 530.30Current tax 2.60 2.04 1.07 8.04 96.83 25.05Deferred Tax (Net) 0.00 0.96 3.85 8.62 23.13 19.64Fringe benefit tax 0.00 0.00 0.00 0.00 4.25 8.01Profit after Tax before restatement adjustment

8.47 5.16 8.33 82.10 735.03 477.59

Adjustments for Taxes paid for Prior period or taxes written back/excess provided

-0.99 0.00 -1.05 -1.52 0.00 8.42

Profit After Tax post restatement adjustment

7.48 5.16 7.28 83.62 735.03 469.17

Surplus brought forward From Last Year 13.05 20.53 5.11 12.40 96.02 831.04 Less : Capitalisation of Reserves ( Bonus Issue)

(500.00)

Deferred Tax Adjustment relating to previous year/s

20.57

Reserve Transferred to B/S 20.53 5.11 12.40 96.02 831.04 800.21

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Annexure III

STATEMENT OF CASH FLOWS, AS RESTATED

(Rupees in Lacs)

FOR THE YEAR / PERIOD ENDED PARTICULARS

31.03.2002 31.03.2003 31.03.2004 31.03.2005 31.03.2006 31.10.2006A) Cash Flow from Operating Activities Net Profit before tax and extraordinary items 11.07 8.15 13.25 98.77 859.23 530.30 Adjustments for: 1) Depreciation 4.91 5.29 13.19 27.72 71.14 75.45 2) Interest Income 0.00 (0.01) (0.01) (0.30) (0.99) (2.24) 3) Interest Expense 11.27 9.31 13.60 24.25 108.18 163.56 4) Miscellaneous Expenses Written off 0.07 0.07 0.07 0.21 0.54 5) Increase in Miscellaneous Expenses (2.36) (16.76)6) Extra-ordinary Items before tax Cash flows from operations before working capital changes

27.32 22.81 40.11 148.29 1038.10 750.31

1) (Increase) / Decrease in Inventories 5.13 (30.45) (12.31) (141.45) (792.08) (1302.51)2) (Increase)/Decrease in trade receivables 8.01 18.74 (38.35) (405.01) (257.27) (268.19)3) (Increase)/Decrease in loans & advances (4.66) 2.00 (0.45) (69.96) (475.43) (295.31)4) Increase / (Decrease) in current liabilities 4.01 7.92 14.93 332.05 410.75 1096.04 5) Income-tax & Fringe Benefit Tax paid 1.52 (101.08) (41.49)Net cash flow from operating activities [A] 39.81 21.02 3.93 (134.57) (177.00) (61.15) B) Cash flow from Investing Activities: 1) Purchase of Fixed Assets (7.26) (73.95) (14.40) (274.37) (963.13) (632.93) 2) Proceeds on Sale of Fixed Assets 3) Interest received 0.00 0.01 0.01 0.30 0.99 2.24 Net cash used for Investing activities [B] (7.26) (73.94) (14.40) (274.07) (962.14) (630.69) C) Cash flow from Financing Activities: 1) Increase / (Decrease) in Capital incl. Premium 0.00 0.00 0.00 75.00 100.00 340.00 2) Increase / (Decrease) in Borrowings (21.30) 62.32 25.30 368.17 1155.70 699.10 3) Interest Paid (11.27) (9.31) (13.60) (24.25) (108.18) (163.56) Net cash flow from Financing Activities [C] (32.57) 53.00 11.70 418.92 1147.52 875.54 Net Increase/(Decrease) in cash & cash ([A]+[B]+[C])

(0.01) 0.08 1.23 10.28 8.37 183.70

Cash & Cash equivalents at the beginning of the year

0.12 0.11 0.19 1.42 11.70 20.07

Cash & Cash equivalents at the end of the year 0.11 0.19 1.42 11.70 20.07 203.77

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Annexure IV STATEMENT OF ACCOUNTING POLICIES AND CHANGES IN POLICIES DURING THE FINANCIAL YEAR ENDED ON 31ST MARCH, 2002, 2003, 2004, 2005, 2006 AND FOR THE PERIOD ENDED 31ST OCTOBER, 2006 SIGNIFICANT ACCOUNTING POLICIES: A. GENERAL

i) These Financial Statement are prepared on the historical cost basis, in accordance with the Generally Accepted Accounting Principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India (except to the extent otherwise stated herein 2(i) & 2(ii) below) and the provisions of the Companies Act, 1956, and on the accounting principles of a going concern.

ii) Accounting Principles not specifically referred to otherwise are consistent and in consonance with the generally accepted accounting principles.

B. RECOGNITION OF INCOME AND EXPENDITURE Income and expenditure are recognized on accrual basis except benefits on Sales Tax set off, Duty Drawback and all cash incentives, Claims receivable and Government taxes, which have been accounted on cash basis. C. SALES Sales are reported inclusive of Sale of Scrap and wastes and net of trade discounts, returns and rebates, Excise Duty and Sales Tax.

D. FIXED ASSETS Fixed Assets are stated at cost of acquisition or construction inclusive of incidental expenses related there to and includes amount added on revaluation less accumulated depreciation & CENVAT credit. Expenditure related to existing fixed assets is added to the cost of assets where it increases the performance or life of the assets as assessed earlier. Adjustment arising from Foreign exchange rate variations attributable to the fixed assets are capitalized. Advances against Capital Expenditure pending capitalization are shown under the head Loans and Advances E. DEPRECIATION

i) Depreciation on Fixed Assets has been provided on pro-rata basis on the Straight Line Method at the rates specified in schedule XIV, of the Companies Act, 1956 read with the relevant circulars issued by the Department of Company Affairs except in case of Laser Machine Plant.

ii) Depreciation on Laser Machine Plant is provided on written down value method at the rates specified in Schedule XIV to the Companies Act, 1956 read with the relevant circulars issued by the Department of Company Affairs.

iii) Depreciation on additions to assets or on sale/discardment of assets is calculated pro-rata from the month of such addition or up to the month of such sales/discardment, as the case may be.

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F. EXPENDITURE DURING CONSTRUCTION PERIOD Expenditure during construction period is included under Capital Work in Progress and the same is allocated to the respective Fixed Assets on the completion of its construction. G. INVENTORIES

i) Inventories of Raw Materials, Semi-Finished Goods, Raw Material Scrap and Stores Spares and other components, Packing Materials, Fuel and Oil are valued at cost or net realizable value, whichever is lower.

ii) Goods in transit is valued at cost or net realizable value, whichever is lower. iv) Cost comprises of all cost of purchases, cost of conversion and other costs incurred in bringing

the inventory to their present location and conditions. v) Cost is arrived at on FIFO basis.

H. DEFERRED REVENUE EXPENDITURE The expenses disclosed under Miscellaneous Expenditure are amortized as follows: Preliminary expenses have been amortized over a period of 10 years. Preliminary expenses includes cost incurred towards the increase in authorized share capital and other pre-issue expenses. I. RESEARCH & DEVELOPMENT EXPENDITURE Research & Development Expenditure costs of a revenue nature are charged as an expense in the year in which these are incurred. J. FOREIGN EXCHANGE TRANSACTIONS

i) Transactions denominated in foreign currency are normally accounted for at the exchange rate prevailing at the time of transaction.

ii) Gains and losses on foreign exchange transactions other than those relating to Fixed Assets are recognized in respective heads of accounts of Profit and Loss Account.

K. INVESTMENTS Long Term Investments are stated at Cost and provision for diminution in value in the perception of the management will only be considered. L. RETIREMENT BENEFITS

i) The Company makes regular contribution to the Employees’ Provident Fund and Employees’ State Insurance Schemes and these contributions are charged to Profit and Loss Account.

ii) Year-end liabilities on account of Leave encashment’s Benefits to employees are not accounted for on Accrual basis and no provision for actual earned leave accured and provided as per the balance of unclaimed leave at the year end since there is no scheme in the company for leave encashment benefits.

iii) Liabilities in respect of retirement benefits is neither provided nor charged to profit and loss account.

iv) Management has informed that no employees are eligible for gratuity or any other retirement benefit the same has not been provided for.

v) The management in process of employing a planned employment benefit plans as per the information and explanation provided to us.

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N. BORROWING COST Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of the assets upto the date the assets are put to commercial use. Other borrowing costs are charged to the Profit & Loss Account in the year in which they are incurred. O. LEASES Lease rentals in respect of the assets acquired on Lease are charged to Profit and Loss Account. P. TAXATION Provision for current tax is made on the assessable income at the tax rate applicable to the relevant assessment year. Deferred tax resulting from”timing difference “between book and taxable profit is accounted for using the tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet Date. Deferred tax assets are recognized, only to the extent there is a reasonable certainty of its realisation. At each Balance sheet date, the carrying amount of Deferred tax assets are reviewed to reassure realisation. Q. EARNING PER SHARE Basic earning (Loss) per share are calculated by dividing Net Profit after Tax and Prior Period Adjustment with the weighed average number of equity shares outstanding during the year. R. SEGMENT REPORTING The company has chosen primary segment considering the nature of the products, the deferring risk and returns and the internal financial reporting systems. The company is engaged primarily in manufacture and sale of Generator Sets and Sheet Metal Fabrication Work. The company has commences its operations in the manufacturing of Generator Sets during the financial year 2004-05 and hence the segmental reporting is being done from the period 2004-05 onwards. S. IMPAIRMENT OF ASSETS The company has considered its fixed assets at Cost of Acquisition or cost of construction, less Depreciation as per the policies adopted by the Company vide Note No. 1(D), (E) & (F) and none of the Assets has been revalued during the year. Based on the internal and external sources of information available with the Company, recoverable amount of fixed Assets are higher than the carrying amount of Fixed Assets therefore there is no Impairment of Assets. T. CONTINGENT LIABILITIES AND ASSETS Provisions involving substantial degree of estimation in measurement are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

115

2. NOTES TO ACCOUNTS:

i) These interim financial statements have been prepared and adopted by the Board of Directors for the specific purpose of compiling the information required in the offer document of the proposed initial public offering of the company. Accordingly, information that is not required for this purpose but otherwise would have been part of the complete set of financial statements has not been compiled in these interim financial statements.

ii) Sundry Debtors are stated net of Bills Discounted outstanding as at the year end. iii) The Stock of Raw material and Stores & Spares (including Packing material) have been valued at

cost or net realizable value whichever is lower Exclusive of CENVAT and MVAT credit specified by Accounting Standard – 2 (Revised)

iv) Excise duty in respect of finished goods is being accounted at the time of clearance of goods as

per the practice followed by the Company. Such excise duty liability on goods pending clearance, if accounted for shall not affect the profit of those respective years

v) Accounts are not restated for the periods prior to which the Accounting Standard, as Stated

under, became effective:

Accounting Standard Effective date Accounting Standard 28 - Impairment of Assets

Period commencing on or after 1-.4-2004

Accounting Standard 22 – Taxes on Income

Period commencing on or after 1-.4-2002

vi) Short/excess provision for Income-Tax

The profit and loss account of certain years includes amounts paid/provided for or refunded, in respect of shortfall/excess income-tax arising out of assessments, appeals, etc. Since in the opinion of the Company, the impact of the same is not material, no adjustments have been made in respect of this item.

vii) Amount of Rs. 1,60,69,900/- paid to Mecc Alte India Private Limited towards share application money pending allotment.

viii) Amounts of Rs. 64,78,293/- standing against Deferred Sales Tax Liability is towards the loan

advanced by the Western Maharashtra Development Corporation under the Package Scheme of Incentives promoted by the state of Maharashtra towards the development of backward zones is fully unsecured and is payable in seven years effective 1st April 2007 as per the provisions of the scheme.

ix) Securities Premium Account included an amount of Rs.60.00 Lacs due from companies in which

the Directors are interested.

x) This is the first instance when the Company has prepared interim financial statements. In accordance with the transitional provisions specified in the Accounting Standard 25, Interim Financial Reporting (AS 25) the company is not required to give comparative figures for the profit and loss account and related notes and cash flow statements for the half year ended September 2006. As required by AS 25 the comparative figures for all balance sheet items and

116

related notes are those of the last audited financial statements viz. as at 31st March 2006. Previous year’s figures have been regrouped/ reclassified wherever necessary.

xi) The company does not have an internal audit department and as per the information and

explanation provided to us by the management, the company intends to appoint an internal auditor for the company. As such the company does not possess an internal audit and control system as commensurate with the size of the company.

3. CHANGE IN ACCOUNTING POLICIES DURING FINANCIAL YEAR 2002-03 Deferred Tax Liability The company has not been providing for the deferred tax liability pertaining to the previous year/s and also compute the current and deferred tax liability of the current year uto 31st March 2005. However the company has provided for the deferred tax liability for the previous year/s of Rs. 31,79,842/- during the financial year 2005-06. As such the earnings per share for the previous year/s are overstated to that extent. DURING FINANCIAL YEAR 2004-05 There has been a change in the method of valuation of closing stock of raw material and stores & spares (including packing material) from inclusive method of accounting of CENVAT to exclusive method of accounting of CENVAT to bring the same in consonance with the generally accepted accounting polivy. As a result of which the inventories are understated by an amount of Rs. 15,41,749.52 as compared with earlier years. However, there is no impact on the profit of the company because of such change DURING THE FINANCIAL YEAR 2005-06 Deferred Tax Liability The company has not been providing for the deferred tax liability pertaining to the previous year/s and also compute the current and deferred tax liability of the current year uto 31st March 2005. However the company has provided for the deferred tax liability for the previous years of Rs. 31,79,842/- during the financial year 2005-06. As such the earnings per share for the previous year/s are overstated to that extent.

117

Annexure V

DETAILS OF SEGMENTAL REPORTING (As restated) In compliance with AS - 17 "SEGMENT REPORTING", which has become mandatory, the required information as under A) Primary Segment The business segment has been considered as the primary segment for disclosure. The categories included in each of the reported business segments are as follows:- 1) Genset Business 2) Sheet Metal Fabrication Business & Others The above business segments have been identified considering:- 1) The nature of the Product. 2) The deffering Risk & Returns. 3) The interenal financial reporting systems. Revenue and expenses has been accounted for based on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis, have been included under “Unallocable Assets/Liabilities.” Inter segment transfer if any, are accounted for at competitive market prices, charged to unaffiliated customer for similar goods. Rs. Lacs.

Inter Unit

Particulars Genset Business

Sheet Metal Fabrication Business &

Others

Elimination

Unallocable Total Year

SEGEMENT REVENUES Gross Sales 2,595.95 2,008.37 784.01 - 3,820.31 upto 31.10.06 3,321.86 3,156.13 667.55 - 5,810.45 2005-06 760.48 792.91 247.81 - 1,305.58 2004-05 0.90 423.25 - - 424.15 2003-04 SEGMENT RESULTS Profit for the Year Before Interest & Tax 1,509.45 (815.59) - - 693.86 upto 31.10.06 503.41 464.01 - - 967.41 2005-06 53.73 69.29 - - 123.02 2004-05 -0.24 27.10 - 0.00 26.86 2003-04 Less: Interest Expenses 0 163.56 - 0 163.56 upto 31.10.06 0 108.18 - 0 108.18 2005-06 0 24.25 - 0 24.25 2004-05 0 13.60 - 0 13.60 2003-04 Unallocable Expenses Interest to H.O. - upto 31.10.06 Interest to H.O. (29.68) 29.68 - 2005-06

118

Interest to H.O. (5.40) 5.40 0 - 2004-05 Interest to H.O. - 2003-04 Add: Other Income Interest from Silvassa Branch - upto 31.10.06 Interest from Silvassa Branch 29.68 (29.68) - - 2005-06 Interest from Silvassa Branch 5.40 (5.40) - - 2004-05 Interest from Silvassa Branch - 2003-04 Profit Before Taxation 1,509.45 (979.15) - 0 530.30 upto 31.10.06 503.41 355.83 - 0 859.23 2005-06 53.73 45.04 - 0 98.77 2004-05 (0.24) 13.50 - 0 13.25 2003-04 Less: Provision for Taxation - 52.71 - - 52.71 upto 31.10.06 0 124.21 - 0 124.21 2005-06 0 16.66 - 0 16.66 2004-05 - 4.92 - - 4.92 2003-04 Profit for the Year After Tax 1,509.45 (1,031.86) - - 477.59 upto 31.10.06 503.41 231.62 - - 735.03 2005-06 53.73 28.38 - - 82.10 2004-05 (0.24) 8.58 - - 8.33 2003-04

119

Annexure VI DETAILS OF RELATED PARTY TRANSACTIONS DETAILS OF THE LIST OF RELATED PARTIES AND NATURE OF RELATIONSHIPS Particulars Relationship Associates / Group Companies Automech India Private Limited Company in which directors have substantial

interests Automech Enterprises Proprietory concern of HUF of Director Agarwal Communication & Equipments Proprietory concern of HUF of Director

SNA Industries Partnership firm in which Directors have substantial interests

Kavita Industries Private Limited Company in which directors have substantial interests

Kavita Lasers Private Limited Company in which directors have substantial interests

Shabri Electricals & Electronics Partnership firm in which Directors have substantial interests

Brij Properties Partnership firm in which Directors have substantial interests

The Chrysalis Centre Partnership firm in which Directors have substantial interests

Directors Atin Agarwal Director B.N. Agarwal Director S.N. Agarwal Director Avinash Agarwal Director Veena Agarwal Director Kavita Agarwal Director

Relatives & Associates of Directors Paridhi Agarwal Daughter of Director Amit Agarwal Nephew of Director Rahul Agarwal Son of Director Pooja Avinash Agarwal Daughter -in-law of Director Pooja Atin Agarwal Spouse of Director Keisha Atin Agarwal Daughter of Director B.N. Agarwal (HUF) HUF of Director S.N. Agarwal (HUF) HUF of Director Atin Agarwal (HUF) HUF of Director Avinash Agarwal (HUF) HUF of Director

Key Management Personnel Brijendra Agarwal Director Shailendra Agarwal Director

120

DETAILS OF TRANSACTIONS WITH RELATED PARTIES AND DETAILS OF

OUTSTANDING BALANCES (Rupees in Lacs)

Particulars Nature of

Transac-tion

31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.10.06

Details of Transactions with Related Parties Directors Kavita Agarwal Interest 0.29 0.02 0.01 0.38 0.08 0.11 Kavita Agarwal Salary 4.50 3.55 Atin Agarwal Interest 0.18 0.04 0.00 0.12 0.34 (0.22)Atin Agarwal salary 0.91 1.39 1.43 1.43 9.11 12.46 Atin Agarwal Rent 0.00 0.00 0.00 0.00 - 3.00 B.N. Agarwal Interest 0.55 0.21 0.15 0.87 0.45 (1.58)B.N. Agarwal salary 1.00 1.50 1.50 1.50 15.12 18.80 B.N. Agarwal Rent 0.00 0.00 0.00 0.00 - 3.00 S.N. Agarwal Interest 0.04 0.01 0.06 1.04 0.01 (0.36)S.N. Agarwal salary 1.00 1.50 1.50 1.50 15.12 18.80 S.N. Agarwal Rent 0.00 0.00 0.00 0.00 - 3.00 Avinash Agarwal Interest 0.19 0.08 0.13 0.13 0.11 0.12 Avinash Agarwal salary 0.00 0.00 0.00 0.77 4.50 12.46 Avinash Agarwal Rent 0.00 0.00 0.00 0.00 - 3.00 Veena Agarwal Interest 0.24 0.04 0.15 0.10 0.07 0.07 Veena Agarwal salary 0.91 1.39 1.43 1.43 9.11 3.55

Relatives & Associates of Directors B.N. Agarwal (HUF) Interest 0.30 0.22 0.36 0.50 0.02 S.N. Agarwal (HUF) Interest 0.32 0.17 0.27 0.05 0.04 (0.00)Atin Agarwal (HUF) Interest 0.07 0.35 0.27 0.04 Avinash Agarwal (HUF) Interest 0.35 0.02 0.01 Paridhi Agarwal Interest 0.35 0.30 0.36 0.56 0.05 0.01 Paridhi Agarwal Professional

fees 0.26 0.20

Amit Agarwal Interest 0.82 0.75 1.01 0.66 Rahul Agarwal Interest 0.02 0.02 0.02 0.04 0.14 0.03 Pooja Avinash Agarwal Interest 0.04 0.23 0.66 0.38 0.03 0.02 Pooja Atin Agarwal Interest 0.00 0.01 0.17 0.23 0.08 (0.03)Keisha Atin Agarwal Interest 0.00 0.03 0.53 0.60 0.01 0.00

Associates / Group Companies Automech India Private Limited Purchases 1.97 8.06

18.53 Automech India Private Limited Sales 11.62 - Automech Enterprises Sales 11.06 - Automech Enterprises Vehicle

Rent 2.00

5.11

121

Agarwal Communication Vehicle Rent

1.50 5.11

SNA Industries Transport Charges

5.38 7.62 3.68 -

SNA Industries Sales 8.16 17.28 12.88 500.65 SNA Industries Purchases 0.00 10.91 13.85 44.80 341.63

719.80 Kavita Industries Private Limited Sales 40.69 - Kavita Industries Private Limited Purchases 20.19

- Kavita Lasers Private Limited - Details of outstanding balances Associates / Group Companies Automech India Private Limited 6.85 1.24 Automech Enterprises 9.35 0.20 Agarwal Communication SNA Industries 2.13 3.41 2.16 32.47 (109.86)Kavita Industries Private Limited (0.71) (1.15) 0.26 Kavita Lasers Private Limited Directors Kavita Agarwal (1.25) (0.11) (0.05) (1.45) (0.38) (1.30)Atin Agarwal (0.59) (0.62) (0.57) (6.50) (4.14) 17.94 B.N. Agarwal (1.35) (1.25) (2.73) (3.79) (0.96) (13.04)S.N. Agarwal (0.38) (0.91) (0.73) (2.28) (0.70) 19.34 Avinash Agarwal (1.50) (0.03) (0.56) (10.72) (0.89) (8.12)Veena Agarwal (1.29) (1.75) (1.49) (0.29) (12.16) (11.01) Relatives & Associates of Directors B.N. Agarwal (HUF) (2.28) (5.02) (0.63) (1.47) (0.35) 0.74 S.N. Agarwal (HUF) (2.23) (4.05) (0.25) (0.24) 0.03 0.03 Atin Agarwal (HUF) 0.00 0.00 (0.09) (4.38) (0.36) (0.86)Avinash Agarwal (HUF) (4.21) (0.10) (0.10)Paridhi Agarwal (2.59) (3.09) (3.21) (8.59) (0.14) (0.09)Amit Agarwal (6.22) (6.89) (7.63) (8.45) (9.37) (9.37)Rahul Agarwal (0.17) (0.19) (0.21) (0.40) (0.45) (0.45)Pooja Avinash Agarwal (1.60) (5.77) (3.17) (1.25) (0.31) (0.27)Pooja Atin Agarwal 0.00 (2.06) (0.22) (2.39) (0.62) 1.98 Keisha Atin Agarwal 0.00 (2.53) (5.01) (5.56) (0.35) (0.05)

122

Annexure VII

DETAILS OF SECURED LOANS OUTSTANDING AS ON 31 Oct 2006

Amount of Amount Rate of Repayment Securities Particulars Loan taken / sanctioned

Outstanding Interest Terms Offered

(Rs. Lacs) (Rs. Lacs) Term Loans Term Loan I - Bank of India, Laxmi Road Branch, Pune

500 371.88 10.75%Repayment in 50 monthly installments from May '07 - Rs.10 lacs per month;

Term Loan II - Bank of India, Laxmi Road Branch, Pune

450 - 10.75%Repayment in 45 monthly installments from Feb '08 - Rs.10 lacs per month;

Term Loan - UTI, J.M Road Branch, Pune

885 820 11%Repayment from Feb '08 - Rs.10 lacs per month; Repayment period - 36 Months.

First Charge: MORTGAGE OF LAND , BUILDING & PLANT &

MACHNINERY & PERSONAL GUARANTEES OF DIRECTORS.

Second Charge: Current Assets & Book Debts

Working Capital Loans

Cash Credit - Bank of India, Laxmi Road Branch, Pune

400

-

10.75%To be repaid on demand

Bills Discounting - Bank of India, Laxmi Road Branch, Pune

400

307.45

9.75%To be repaid on due date

Cash Credit - UTI, J.M Road Branch, Pune **

600 1134.4 10.75%To be repaid on demand

Bills Discounting - UTI, J.M Road Branch, Pune **

1600 1049.53

10.00%To be repaid on due date

ICICI Bank, Pune 11.06 6.60%Repayment period - 36 months

Tata Motors Ltd., Finance Division, Pune

14.10 20.92

8.67%Repayment period - 36 months

First Charge: Hypothecation and/or pledge of stock of raw materials, semi-

finished and finished goods and consumable stores & spares, Bills

receivables, book debts. Second charge: Fixed assets consisting

of land, building and movable properties other than current assets.

** - Interchangeable with Cash credit limit, i.e., Total limit of Cash credit & Bills discounting from UTI Bank is

123

Rs.2200 lacs Notes: 1) Term Loans are secured by way of first charge on pari passu basis on all immovable properties (both present and future) together with the second charge on all movable assets (both present and future) of the company. The term loans are secured by personal guarantees of Chairman Mr. Briendra Nath Agarwal, Managing Director Mr. Shailendra Nath Agarwal, Executive Directors Mr. Atin Agarwal & Mr. Avinash Agarwal 2) The Working Capital Loans are secured by way of hypothecation (both present and future) of stock of raw materials/components/ spares, stock in process, finished goods and book debts and a second charge on all immovable properties (both present and future) of the Company. The working capital Loans are also secured by personal guarantees of Chairman Mr. Briendra Nath Agarwal, Managing Director Mr. Shailendra Nath Agarwal, Executive Directors Mr. Atin Agarwal & Mr. Avinash Agarwal 3) Vehicle Loans are secured by hypothecation of Vehicles purchased.

Annexure VIII DETAILS OF INVESTMENTS, AS RESTATED (Rupees in Lacs)

AS AT 31st MARCH PARTICULARS 2002 2003 2004 2005 2006 31.10.2006

Unquoted Investments In Subsidiary Companies - - - - - - In Associate / Group Companies - - - - - - Others - - - - - - - Total - - - - - - Less: Provision for diminution in value of investments

- - - - - -

Net Investment - - - - - - Notes: The above amounts are excluding share application money pending allotment with the above companies.

124

Annexure IX DETAILS OF SUNDRY DEBTORS (AGE-WISE ANALYSIS), AS RESTATED (Rupees in Lacs)

AS AT 31st MARCH PARTICULARS 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.10.06

Secured, considered good

- Less than six months - More than six months

Unsecured, considered good

- Less than six months 33.15 44.34 81.02 484.33 544.80 614.61 - More than six months 32.33 2.41 4.07 5.77 202.57 400.95

Notes: Sundry Debtors are stated net of bill discounting facilities already utilised by the company as follows: AS AT 31st MARCH 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 Oct-06 From UTI Bank Limited J M Road - - - - 503.9 1049.53From Bank of India Ganeshkhind Road - - - - - 307.45 Receivables from Related parties

AS AT 31st MARCH PARTICULARS 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 Oct-06

SNA Industries 2.13 3.86 4.05 32.47 67.88 (109.86)Kavita Industries Pvt Ltd. 0.14 3.15 0.26 0.26 Automech Enterprises 9.35 - 0.20 Automech India Pvt Ltd. 6.85 7.40 1.24 S.N.Agarwal (HUF) 0.03 0.03

125

Annexure X

DETAILS OF LOANS AND ADVANCES, AS RESTATED (Rupees in Lacs)

As at As at PARTICULARS 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.10.06

Unsecured, considered good Loans & Advances - to Group Companies - 3.40 - 40.00 - - to Others * 6.56 1.71 9.04 61.94 430.79 583.03 Interest accrued but not due - - - - - - Other Advances / Receivables/ Deposits/with Excise, Income Tax & Sales Tax

3.29 6.26 0.05 19.23 51.13 270.74

Advance income tax/Tax Deducted at Source 2.56 2.37 1.70 1.48 36.50 Pre-paid Expenses 0.38 0.04 As per Balance Sheet 12.42 10.34 14.19 83.03 558.46 853.77 * Loans & Advances to Others include advances for Capital expenditure Loans & Advances given to Related parties Related Parties Beneficiary As at As at 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.10.06 SNA Industries Kavita Industries Pvt Ltd. 3.40 Automech India Pvt Ltd. Brij Properties 40.00 Atin Agarwal B.N.Agarwal (HUF) Pooja Atin Agarwal S.N. Agarwal Top Ten Beneficiaries of Loans & Advances as on 31 Oct 2006 (including advances to related parties) Beneficiary Name

As at 31 Oct '06

Gamma Avionics Distribution Pvt Ltd. 50.00 Mecc Alte India Pvt Ltd. 160.70 Ace Mechatronics 39.83 Pune Land Automation 34.47 Sarj Engineering Works 158.37 Sriram Udhyog 23.72 Maruti Strips & Ferro Alloys 32.19 Note: Share Application Money advance to Joint Venture Company M/s Mecc Alte India Private Limited is shown under Loans and Advances pending allotment of shares. Advances to Suppliers towards Capital Expenditure pending capitalisation or allocation is shown under the head Loans and Advances.

126

Annexure XI DETAILS OF SECURED LOANS, AS RESTATED

(Rupees in Lacs) PARTICULARS 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.10.06 Term Loans/Banks State Bank of India, IF Branch 9.16 37.33 21.99 - - - UTI, J.M Road Branch, Pune - - - 257.81 982.44 820.00 Bank of India, Laxmi Road Branch, Pune

- - - - - 371.88

Other Facilities Vehicle loan from ICICI Bank, Pune

- - - - 8.93 5.33

Vehicle loan from Tata Motors Ltd., Finance Division, Pune

13.94

Working Capital Loans State Bank of India, IF Branch 46.34 67.63 81.49 - - - UTI, J.M Road Branch, Pune - - - 178.35 631.50 1,134.40

127

Annexure XII

DETAILS OF CONTINGENT LIABILITIES, AS RESTATED (Rupees in Lacs)

AS AT 31st MARCH PARTICULARS 2002 2003 2004 2005 2006

As at 31 Oct '06

Corporate Bank guarantee given to promoter concern M/s SNA Industries

180.00 180.00 180.00 180.00 494.00 447.95

Counter Guarantees against Performance of Gensets and to Government Authorities

5.00 5.00 5.00 40.55 40.55 48.15

Contracts to be executed (excluding letter of credits opened) on capital accounts

- - - 31.89 - -

Letter of credit opened for Capital Purchases - - - - - 742.00

Contracts to be executed on revival of plant - - - - - -

Octroi Expenses - - - 1.95 1.95 1.95 Bills Discounted not received - - - - 503.90 1,356.98 Loss on Foreign exchange currency & Interest hedged contracts - - - - 6.01 -

Matters concerning sections 297/ 299 of the companies' Act NA NA NA

Amounts if any, not ascertainable



Notes: 1) Out of Rs.90.00 Lacs receivable towards Share Premium Amount against alloted Shares, Rs. 40.00 Lacs is receivable from Kavita Industries Private Limited ( Company in which directors have substantial interest). This amount has been received before the signing of the this restated financial statements and hence not included under contingent liabilities.

2) The company is in process of implementing defined emloyment benefit plans and policies and hence the company's liabilities towards Gratuity Payments and leave encashment payments are not quantifiable and hence not provided for by the company.

128

Annexure XIII DETAILS OF UNSECURED LOANS, AS RESTATED (Rupees in Lacs)

PARTICULARS 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 Period ending

31 Oct '06 From Promoters, Promoter Group & Group Companies of Promoters

21.40 34.26 26.47 61.96 30.95 5.72

From Other than Promoters, Promoter Group & Group Companies of Promoters

- - 64.78 64.78 64.78 64.78

Rate of Interest 12% 12% 12% 12% 12% 12% Repayment Risk Factors Unsecured Loans from Promoters can be recalled any time during the year Unsecured Loans other than from promoters consist of deferment of sales

tax payments under the Package Scheme of Incentives under the Western Maharashtra Development Corporation Scheme which is repayable over a period of Seven Years as per the scheme

129

Annexure XIV STATEMENT OF ACCOUNTING RATIOS

AS AT 31st MARCH PARTICULARS 2002 2003 2004 2005 2006

As at 31 Oct '06

Net Worth (Rs. In Lacs) 95.25 79.91 87.26 243.73 1079.30 1871.71 Restated Profit after Tax (Rs. In Lacs) 7.48 5.16 7.28 83.62 735.03 469.17 Weighted Average no. of equity shares outstanding during the year / period

750,000 750,000 750,000 898,630 1,745,205 7,736,682

Earnings Per Share (EPS) Rs. 10/- each

Basic & Diluted Earnings per share (Rs.) 1.00 0.69 0.97 9.31 42.12 10.40** Return on Net Worth (%) 8% 6% 8% 34% 68% 43%** No. of Equity Shares outstanding at the end of period

750000 750000 750000 1500000 2500000 8350000

Net Assets Value per share of Rs. 10/- each

12.70 10.65 11.63 16.25 43.17 22.42

** - Figures are annualised Formula: Earning Per Share (Rs.) = Net Profit after Tax / Weighted No. of Equity Shares Net Assets Value (Rs.) = Net Worth / No. of Equity Shares Return on Net Worth (%) = Net Profit after Tax / Net Worth Shares Outstanding at the Beginning of the year (in lacs) 7.5 7.5 7.5 7.5 15 75* Period of holding (days) 365 365 365 Shares Outstanding at the End of the period (in lacs) 7.5 7.5 7.5 15 25 83.5 Period of holding (days) 365 365 365 Weighted average shares outstanding 7.5 7.5 7.5 8.99 17.45 77.37 *Allotment of 50 lac bonus shares on Aug 18. To be considered, that 50 lac shares were allotted at the beginning of the year

130

Annexure XV CAPITALIZATION STATEMENT AS AT 31 Oct, 2006 (Rupees in Lacs) Particulars Pre Issue As at

31.10.2006 Post Issue *

Borrowings Secured Loans 2347.20 Unsecured Loans 70.50 Less: Short Term Debts -1155.32 Total long-term borrowings 1262.38 Shareholders Funds Equity Share Capital 835.00 Reserves & Surplus 1055.21 Less: Miscellaneous Expenditure to the extent not written off

18.51

Total Shareholders' Funds 1871.71 Debt / Equity Ratio 0.67 * Shareholders' funds post issue can be calculated only on the conclusion of the book building process Note: Short Term Debts are debts maturing within next one year The company has further issued 50.00 Lac Equity Shares as Bonus shares by capitalising the reserves and surplus during the period ended 31st October 2006 Our company has also issued 8,50,000/- Equity Shares at premium aggregating Rs.345 Lacs (Ra. 90 Lacs outstanding against premium due but receivable as on 31st October 2006)

131

Annexure XVI

DETAILS OF OTHER INCOME, AS RESTATED

(Rupees in Lacs)

FOR THE YEAR / PERIOD ENDED PARTICULARS 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06

For period ending 31

Oct 06 Consultancy Income Non-Recurring Interest Income Recurring - 0.01 0.01 0.30 0.99 2.24 Interest Income from A & N Administration

Non-recurring

Sale of scrap, waste oil etc./OTHER Recurring 7.19 8.84 4.94 0.34 3.11 1.15 Profit / loss on exchange variation Recurring Profit on Sale of Fixed Assets Non-recurring

132

Annexure XVII

STATEMENT OF TAX SHELTERS

PARTICULARS 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06

For period ending 31

Oct '06 Effective Rate of Income Tax 35.70% 36.75% 35.88% 36.59% 33.66% 33.66% Profit/(Loss) before tax as per Audited Accounts (A) 11.07 8.15 13.25 98.77 859.23 530.30

Tax at Actual Rate on Book Profits 3.95 3.00 4.75 36.14 289.22 178.50Adjustments Permanent Differences Brought Forward Depreciation Losses from Earliers Years 1.09 0 0 0.00 0.00 0

Amount Claimed as deduction from Gross Total Income u/s 80IB 53.23 502.85 397.50

Disallowances under Section 43B -0.47 Total Permanent Differences (B) 1.09 0.00 -0.47 53.23 502.85 397.50 Timing Differences Difference between book depreciation & IT act depreciation 2.7 2.6 10.74 23.57 68.72 58.35

Total Timing Differences (C) 2.70 2.60 10.74 23.57 68.72 58.35 Net Adjustment (B) + (C) 3.79 2.60 10.27 76.80 571.57 455.85 Tax Savings Thereon 1.35 0.96 3.68 28.10 192.39 153.44 Income from Business as Per Tax Returns (D) 7.28 5.55 2.98 21.97 287.66 74.45Tax As per Income Tax Returns (excluding interest/tax impact on capital gains) 2.60 2.04 1.07 8.04 96.83 25.06

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MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS AS REFLECTED IN THE FINANCIAL STATEMENTS

The following discussion of the Company’s financial condition and results of operations should be read

together with the audited financial statements for the period ended March 2002 and for the Financial year

ended 2003, 2004, 2005, 2006 and seven months period ended October 31, 2006 including the Schedules,

Annexure and Notes thereto and the Reports thereon, which appear in this Red Herring Prospectus. These

financial statements are prepared in accordance with Indian GAAP, the Companies Act and the SEBI

Guidelines as described in the Auditor’s Report of Prakash Shah & Co. Chartered Accountants dated 19th

March, 2007 in the section with the title ‘Financial Information of the Company’. The fiscal year ends on

March 31st of each year, so all references to a particular fiscal year are to the 12 month period ended 31st

day of that fiscal year.

OVERVIEW

The Company was originally incorporated as ‘Veena Industries Private Limited’ on 9th October 1996 for

carrying on business to produce, fabricate and manufacture material out of ferrous and non ferrous metal as

well as from other raw material in accordance with the needs of different industries and fabrication as well as

to engage in manufacture of the own items.”

The name of the company was changed to VEENA INDUSTRIES LIMITED. at the Extra Ordinary General

Meeting held on 3rd January 2007. The certificate for change of name as above was issued by the Registrar of

Companies, Maharashtra, Pune on 23rd February, 2007

COMPANY BACKGROUND

Sensing an opportunity in the business of generating sets, the Company decided to foray into it. Given the

technical background of the promoters, our initial focus was on developing canopies for the D.G sets. Over a

period of time the company through its constant research and development efforts improved upon the

products and brought into a stage where companies like Atlas Copco Ltd. were convinced about the quality of

the product being churned out by the company and were willing to buy it. In the year 1996, the company

went full swing into the production of canopies and set up a manufacturing unit at Nanekwadi, Chakan, Pune

to meet the demand for canopies, from Atlas Copco.

The company continued its endeavor to improve on the quality of canopies being manufactured but at the

same time was keen to reduce its dependence on a single supplier without hampering its growth. In the year

1997 the company diversified into manufacture of X-Ray equipments for GE Medical Systems. In year 1999

it started to manufacturing trailers and under carriages for Atlas Copco Compressors, besides base frames and

canopies for them. The company continued with its endeavor in improving its efficiency in its respective

domains with an eye to be a preferred supplier for its clients. The company was constantly eyeing on

becoming a product manufacturer and saw an opportunity in diversifying into manufacture of silent gensets.

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The company commenced its operations of the Gensets & Canopy assembly plant at Silvassa in the year

2000. This was a conventional turn around where it started manufacturing Gensets & Soundproof canopies

under their in-house brand labeled ‘Automech’.

Anticipating the need of its quality conscious customers and in its endeavor to improve its systems, the

company decided to implement ISO 9001: 2000 and by June 2002 all its plants were duly certified The

crucial avenue of high growth opened when Government of India made a mandatory notification of

manufacturing gensets with a sound proof canopy adhering to Euro 2 engine norms, where the expertise

earned by the company in manufacturing of canopies over the years was capitalized by the affirmative

decision entering the bulk genset market. In the year 2004 it made a mark of growth whereby the company

procured its first bulk order from Reliance Infocomm.

The success path followed and in the same year the company got ARAI approval for their canopies as per

CPCB norms and in 2005 it also obtained ARAI approval for silent Gensets. In the year 2006, TAFE

Tractors & Motors Limited, appointed the company as their retail GOEM for 11 states.

While concentrating on the Generating Sets manufacture, the company all these years was also engaged in

production of customized products as per the requirements of its clients for job work and other related jobs

of cutting, bending, welding and fabrication. The company is manufacturing components and sub-

assemblies for heavy engineering, energy, off-road and light & medium engineering industries. Products

like undercarriages, canopies, x-ray machine assemblies, plates and sheets, drivers cabin, roof tops,

bosses, shafts etc are produced and supplied to customers like Atlas Copco, JCB, LNT Tengl, Caterpillar,

Daimler Chrysler, Suzlon. The company has been able to carve a name for itself for the quality product

being churned out by it adhering to the strict quality norms of its clients.

FACTORS AFFECTING FUTURE RESULTS OF OPERATION

● General economic and business conditions in India and other countries

● Regulatory changes relating to the Manufacturing Industry in India and our ability to

respond to them

● The ability to successfully implement the strategy of growth and expansion.

● Changes in the value of the Rupee and other currencies.

● The occurrence of natural disasters or calamities

● Future of Power and Telecom Industry in the country

The company manufactures Gen sets of varied ranges ranging from 7.5 KVA to 45 KVA. The other products

manufactured by the company include Base frame, under carriage of trailers, sound proof canopies,

Components and sub assemblies for portable compressors and generators, components and sub-assemblies of

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earth moving equipments, Air-cooler assembly for Suzlon Generarors, X-ray equipments for GE, Bosses and

shafts for JCB & Mecc Alte

ANALYSIS OF RESULTS OF OPERATIONS

The results of operations during last four years and for seven month period ended 31st October 2006 after

considering the effect of restatement are as under:

31-03-2003 31-03-2004 31-03-2005 31-03-2006 31-10-2006 Particulars Amount % Amount % Amount % Amount % Amount %

Sales 318.79 97.3 424.15 98.8 1305.58 99.95 5810.45 99.93 3820.31 99.91

Other Income 8.85 2.7 4.94 1.2 0.64 0.05 4.1 0.07 3.39 0.1

Total 327.63 100 429.09 100 1306.22 100 5814.55 100 3823.69 100

Expenditure

Cost of

production

and

distribution 266.77 83.5 348.9 83.90 1070.89 88.69 4457.17 89.95 2610.58 79.27

Directors

remuneration 5.78 1.81 5.86 1.41 5.86 0.49 57.46 1.16 81.50 2.47

Employee cost 8.22 2.57 9.75 2.35 13.46 1.11 23.69 0.48 15.91 0.48

Administrative

and other

expenses 24.1 7.54 24.53 5.90 65.28 5.41 237.68 4.8 346.39 10.52

Interest 9.31 2.92 13.6 3.27 24.25 2.01 108.18 2.18 163.56 4.97

Depreciation 5.29 1.65 13.19 3.17 27.72 2.30 71.14 1.44 75.45 2.29

Total 319.48 100 415.84 100 1207.46 100 4955.32 100 3293.40 100

Profit before

Taxation 8.15 13.25 98.77 859.23 530.30

Profit after

Taxation 4.73 5.38 83.85 734.08 469.16

Gross Block

120.55 214.10 463.83

1328.60

1679.41

Debtors 46.74 85.09 490.10 747.37 1015.56

COMPARISON OF PERFORMANCE AND ANALYSIS OF INCOME STATEMENT For seven months

period ended October 31, 2006

The company during the seven months period continued to take strategy decision which would help it

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consolidate the growth it had achieved in the previous financial years. During this period we decided to foray

into direct manufacturing of our brand ‘AUTOMECH’ with a view to establish the same as a ‘brand value’

over the years. With this end in view we decided to discontinue our relationship with Mahindra & Mahindra

for sourcing our engines and instead entered into an understanding with TAFE Motors and Tractors Limited

(TMTL) to source them engines for assembly of Generating Sets. As per the arrangement with TMTL the

DG Sets are being sold under the co-brands of ‘Eicher’ & ‘AUTOMECH’. Such step is likely to help us to

create more visibility of our brand thus creating brand equity for it. As step towards achieving backward and

forward integration we decided to go into and in house production of control panels and entered into a joint

venture agreement with one of the leading manufacturers of alternators in the world for setting up facilities

for the manufacture of alternators. With this facility being set up, the Company would be assured of an

uninterrupted supply of alternator, a key component in the manufacturing/ assembly of DG Sets. We

continued to attract reputed company for our non-gensets business with Suzlon being the latest addition for

supply of Air Cooler used for the production of Wind Mills. We also initiated steps for setting up 100%

EOU for supply of connecting rods to Daimler Chrysler to be used by then in the manufacture of Mercedes

Car.

INCOME

Sales: The current period saw a growth in the top line by approx. 15% as compared to the corresponding

period in the previous year. We continue to achieve the growth in both the segments.

Other Income: We earned interest in the deposits placed by us with the Bank(s) as margin money for the

bank guarantees obtained by us in the normal course of business. The increase under this head reflects an

increase in the overall business of the company.

EXPENSES

Cost of Production: The cost of production during the current period as a percentage of sales was 68.33%as

compared to 76.71% in the previous year. The Company continues to exercise effective control over its

inventories and costs, thereby achieving economics of scale.

Director’s remuneration: The remuneration paid to Directors has increased during the current period as the

remuneration paid was hiked again to bring the same at par with the prevailing compensation package in the

industry.

Administration & other expenses: There has been a quantum jump in the expenditure under this head. We

are trying to attain growth and at the same time aiming to be an employer of choice. The compensation to be

paid to attract and retain professionals has to be at par with the industry resulting in an increase in the

expenditure besides also reflecting an increase in the overall operation of the company.

Employee cost: The increase under this head on a proportionate basis reflects the increase in the activities/

operations of the company.

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Interest: During this period we had spent Rs. 163.56 lacs towards interest as against Rs. 108.18 lacs in the last

year. During this period we had availed term loan facility from our Bankers besides enhancement in our

working capital requirements. The additional funds were borrowed to enhanced capacities to meet the deadline

for deliveries and thereby achieve the growth.

Depreciation: Increase in depreciation is owing to the increase in the gross block of assets in this period.

For year ended 31/03/06 compared to the previous year ended 31/03/2005.

During the financial year, the company had taken key strategic actions, which resulted into manifold top line

growth of more than 200%. Such growth was contributed by factors like increase in production capacity,

acquiring of a unit at Silvassa on lease term basis resulting in doubling the existing manufacturing capacity.

Silvassa continues to be company’s principal hub of the genset manufacturing. During the year, company like

Airtel was included in the company’s high profile customer database. A full fledge marketing office was opened

in Delhi. During the financial year, the company was successful in procuring initial business opportunities from

JCB India for metal sheet component. In January 2006, the company tied up with TMTL whereby it was

appointed as retail OEM for 11 states and Corporate OEM for India.

INCOME

Sales The current period saw a topline growth to Rs. 5810.45 Lakhs as compared to Rs.1305.58 Lakhs in the

previous year. The increase in the revenue was mainly on account of increase in Gensets business and repeat

orders from JCB for fabricated parts.

Other Income: Other income during 2005-06 was Rs. 4.1 Lakhs as against Rs.0.64 Lakhs during the

previous year i.e. 2004-05. The increase is primarily reflects increase in the overall activities of the company

whereby larger sums were placed with the bank as margin for Bank Guarantee earning interest for the

company. Besides the company received discounts from its suppliers for early payments made by it.

EXPENSES

Cost of Production

The production cost typically cover purchases of steel for Cold Roll and Hot Roll sheets, angles, plates,

channels, engine, control panel, alternators, freight, transportation and contract labour charges.

The cost of production during 2005-06 is Rs.4457.17 Lakhs as against Rs.1070.89 Lakhs during 2004- 05.

The increase in cost is mainly due to purchase engines and increase in metal cost. Though the cost in

absolute terms has been increased in the financial year 2005-2006 but the cost of raw material consumed as

percentage of sales has reduced from 82.02% in the year 2004-05 to 76.71% in the current year. The

reduction is on account of Engines purchased from OEM at discounted rate due to bulk buying and the

company had commenced manufacturing of control panel. The reduction in overall cost was due to tighter

control being maintained over the costs.

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Director’s remuneration: During 2005-06 the remuneration paid to directors is Rs 57.46 Lakhs as

compared to Rs 5.86 Lakhs in 2004-05. The number of directors during 2005-06 was increased from four

director to six director. Further there had been a hike in the remuneration paid to the directors to be at par

with the prevailing structure in the industry. The increase in salary was warranted in view of quantum jump in

the overall operations of the company.

Administration & other expenses: During the period the company has incurred Rs 237.68 Lakhs towards

administration and other expenses as compared to Rs 65.28 Lakhs during 2004-05. In its endeavor to stay

competitive and be recognized as a professionally managed company, the company hired professionals to

manage the key operations of the company and the salary paid to them is commensurate with the prevailing

industry norms. Besides, the company had opened an office in New Delhi. The total administration expense

as a percentage of turnover in 2005-06 was 4.09% as compared to 5.00% in the year 2004-05.

Employee cost: During 2005-06 the company incurred Rs 23.69 Lakhs as employee cost as compared to Rs

13.46 Lakhs in 2004-05. The increase in employee cost reflects increase in the production activity.

Depreciation: The depreciation during the year amounted to Rs 71.14 Lakhs as compared to

Rs. 27.72 Lakhs in 2004-05. The increase in Gross Block of Fixed assets resulted in higher depreciation

to be provided for.

Finance cost: During the year the company incurred Rs 108.18 Lakhs as financial charges as compared to

Rs 24.25 Lakhs in 2004-05 owing to term loan availed and enhanced working capital facilities from Banks.

As mentioned earlier the company’s activities saw a manifold increase requiring working capital limits to be

enhanced.

Profit After Tax: Profit after tax has increased from Rs. 83.85 in F.Y 2004-2005 to Rs. 734.08 Lakhs for the

year ended F.Y 2005-2006. During the current year the product mix of the company changed substantially as

the Gensets were being sold by the company directly as against labour charges earned from Mahindra &

Mahindra in the earlier years owing company being a contract manufacturer only. The value of bought out

components was higher during the current year and so were the margins as the company was able to

negotiate better deals with its suppliers for the components bought by it. The company had also kept a tight

leash on its expense.

Gross Block: The gross block of fixed assets as on March 31, 2006 were Rs. 1328.60 lakhs as compared to

Rs. 463.83 lakhs as on March 31, 2005. During the year the company had purchased machines to service

effectively the orders being received from JCB, besides the land purchased at Chakan and office premises at

Oundh.

Sundry Debtors: Sundry debtors have increased to Rs. 747.37 lakhs in 2005-06 from Rs. 490.10 Lakhs in

2004-05 on account of majority of sales being effected in the last month. Besides, the associate company of

Mahindra & Mahindra group had withheld company’s payment as it was severing its business relationship

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with them. However, the cash flows of the company were not negatively affected as the company at its end

had withheld payments of another Mahindra & Mahindra group company who had supplied components to

us.

For year ended 31/03/05 compared to year ended 31/03/2004

During the year, all the Gensets models of the company got the requisite approvals from the ARAI re –

affirming that these models adhere to the CPCB model. In January 2005, Govt of India made it mandatory

that the Gensets shall be sold with Canopy, besides, strictly enforcing the Engine emission norms. The

notification had the effect of marginalizing the unorganized sector and providing an impetus to the organized

sector. The Company was able to negotiate better terms and additional facilities from UTI Bank vis-à-vis its

present Bankers – State Bank of India. The Company was able to successfully launch its own brand –

“AUTOMECH” gen-sets. The company had been approaching Telecom service providers as it could forsee

huge potential in this sector and being an early entrant would give it the edge vis-à-vis competition. It’s

efforts bore fruits and in September 2004 the company got the break through from Reliance Communication

followed by repeated orders.

INCOME

Sales: The sales amounted to Rs.1305.58 Lakhs during 2004-05 as compare to Rs. 424.15 Lakhs during

2003-04. The product mix of sales being effected by the company was changing and sales of Gensets to the

corporate sector went up substantially. As mentioned earlier the focus had shifted to Gen sets business given

the potential it offered owing to boom in Telecom sector.

Other Income: Other income during 2004-05 comprises of Rs. 0.64 Lakhs as against Rs. 4.94 Lakhs during

2003-04. This reduction was mainly on account of transportation charges which was included in selling cost

as against being billed separately earlier.

EXPENSES

Cost of production: The cost of production during 2004-05 amounted to Rs 1070.89 Lakhs as compared to

Rs 348.90 Lakhs. However, the consumption of raw material as a percentage of sales has reduced from

82.26% in 2003-04 to 82.02% in the year 2004-05. As mentioned earlier, the company had started Gen sets

business as a result of which the product mix of the company under went a change. The company was now

buying directly the Engines, Control Panels and alternators. The value of bought out value of components

went up. Further, the metal required for manufacture of canopies was being purchased in large quantities to

be able to adhere to the production plans. During the year, one of the laser cutting machines broke down as a

result the jobs in hand had to be outsourced resulting in higher cost.

Director’s remuneration: During 2003-04 the Directors remuneration stood at Rs.5.86 Lakhs which remain

the same in the year 2004-05.

Administration & other expenses: The Company incurred Rs 65.28 Lakhs as administration and other

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expenses in 2004-05 as compared to Rs 24.53 Lakhs in 2003-04. This is on account of the increase in

administration salaries to be at par with the prevailing industry norms and increased traveling being

undertaken to expense to explore new business avenues and expand business activities. There has been an

increase in Legal Charges owing stamp duty and processing fees paid at the time of change in Bankers from

SBI to UTI Bank.

Employee cost: Employee cost increased in 2004-05 from Rs.9.75 Lakhs in 2003-04 to Rs.13.45 Lakhs

during 2004-05. The manpower strength of the company had gone up commensurating with its operations.

Depreciation: The depreciation charged during 2004-05 is Rs.27.72 Lakhs as against Rs.13.19 Lakhs

during 2003-04. This increase was on account of additional laser cutting machines and expansion of existing

factory at Chakan.

Finance charges: Finance Charges amounted to Rs. 24.25 Lakhs during 2004-05 as compared to Rs. 13.6

Lakhs during 2003-04. The increase was due to increase in the facilities being availed by the company,

commensurate with the growth in overall operations and additional term loan availed from UTI Bank.

Gross Block: The gross block of fixed assets as on March 31, 2005 stood at Rs. 463.83 lakhs as against Rs.

214.10 lakhs during financial year 2003-04. The company during the year added second laser machine and

expanded its existing factory building at Chakan to cater to the expanded operations of the company.

Sundry Debtors: Sundry debtors outstanding as on March 31, 2005 were Rs. 490.10 lakhs as compared

to Rs. 85.09 lakhs in 2003-04. This was mainly due to sale of Gen sets in last quarter which were realized in

the beginning of the next financial year. Mahindra group companies were both suppliers and customer of the

company. As one of the group company was delaying payment, the company at its end held back the money

due to the other group company and later it was decided to square off the same but at one stage both the

receivables and creditors went up.

For year ended 31.03.2004 compared with the year ended 31.03.2003

During the financial year the company had increased its capacity for canopies from 200 to 600 per month.

New Laser cutting machines was added which had the effect of increase in the business of laser cutting which

was earlier being sub-contracted. The confidence of the customers in the capabilities of the company was

increased as reflected in the repeated orders it received from its customers it the subsequent years. The

productivity as well as the profitability of the company saw an upward movement.

INCOME

Sales: The sales amounted to Rs.424.15 Lakhs during 2003-04 as compare to Rs. 318.79 Lakhs during 2002-

03.This increase was mainly on account of laser cutting business being done in house, which was earlier

being sub-contracted. The company has able to garner additional business of laser cutting

Other income: In 2003-04 other income amounted to Rs 4.94 Lakhs as compared to Rs 8.85 Lakhs in

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2002-03. This reduction was mainly on account of transportation charges which was included in selling

cost as against being billed separately earlier.

EXPENSES

Cost of production: The cost of production amounted to Rs 348.90 Lakhs during 2003-04 as compared to

Rs 266.67 Lakhs during 2002-03. This increase was mainly on account of increase in laser cutting activity

and increase in metal cost because of change in product cost mix.

Administration & other expense: The company incurred an expense Rs 24.53 Lakhs during 2003-04 as

compared to Rs 24.10 in 2002-03. Administration & other expense was 5.90% of total expenditure in the year

2003-04 as compared to 7.54% in the year 2002-03. The fall was due to better control over expenditure being

exercised by the management.

Director remuneration: During 2003-04 the remuneration paid to directors is Rs 5.86 Lakhs as compared to

Rs 5.78 Lakhs in 2002-03. The hike in the remuneration paid to the directors is to compensate for the

increased level of activity in the company.

Employee cost: The company incurred a cost of Rs 9.75 Lakhs as employee cost in 2003-04 as compared to

Rs 8.22 in 2002-03. The manpower strength of the company had gone up to commensurate with its

operations.

Depreciation: The depreciation charged during 2003-04 is Rs.13.19 Lakhs as against Rs.5.29 Lakhs during

2002-03.This increase was on account of additional laser cutting machines.

Finance charges: The comapany incurred Rs 13.6 Lakhs towards finance charges during 2003-04 as

compared to Rs 9.31 in 2002-03, which comprised of interest paid by the company on the working capital and

term loan facilities availed by it from the Banks.

Gross Block: The gross block of fixed assets as on March 31, 2004 was Rs. 214.10 lakhs as compared to Rs.

120.55 lakhs as on March 31, 2003. During the year the company added laser cutting machine and built

factory at Chakan.

Sundry Debtors: Sundry debtors outstanding as on March 31, 2004 were Rs. 85.09 lakhs as compared to

Rs. 46.74 in the previous year as the company had affected substantial sales in the last quarter.

Information required as per clause 6.10.5.5(a) of the SEBI Guidelines

a. Unusual or infrequent events or transactions

There have been no unusual or infrequent transactions that have taken place during the last three years.

b. Significant economic changes that materially affected or are likely to affect income from

continuing operations

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Government’s focus on power and telecom sector will have some bearing on the companies involved in

Gensets equipment manufacturing segment. Any major changes in policies of the Government may have

the significant impact on the profitability of the Company

Except the above, there are no significant economics changes that may materially affect or likely to affect

income from continuing operations.

c. Known trends or uncertainties that have had or are expected to have a material adverse impact on

sales, revenue or income from continuing operations.

Apart from the risks as disclosed under heading “RISK FACTORS” appearing on page of this Draft

Offer Document, there are no other known trends or uncertainties that have had or are expected to have a

material adverse impact on revenue or income from continuing operations.

d. Future changes in relationship between costs and revenues

The expansion of the current operations would enable the company to procure raw materials in bulk locally

from the direct manufacturers. This would in turn result in negotiating for competitive prices and help the

company to achieve economies of scales.

e. Increases in net sales or revenue and Introduction of new products or services or increased

sales prices.

The increase in sales volume has considerable impact on the revenues and profitability of the company

g. Dependence on a single or few suppliers or customers

The company has well established vendor base. Similarly, it has large network of Dealers and distributors all

over the country, which helps the country to distribute its products to mass market it is catering to. The

company does depend on single or few suppliers / customers for any of its requirements or product.

h. Competitive conditions

The company has been strengthening its position in the product in which it is operating. The company also

has been expanding its market and customer base in the local market. All these things have been helping the

company to stand against competition.

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LEGAL AND OTHER INFORMATION Except as stated herein, there is no outstanding or pending litigation, suit, criminal or civil prosecution, proceeding initiated for offence (irrespective of whether specified in paragraph (I) of Part I of Schedule XIII of the Companies Act) or litigation for tax liabilities against our Company, our Directors or our Promoter or companies promoted by our Promoter or our subsidiary and there are no defaults to banks / financial institutions, non-payment of or overdue statutory dues, or dues towards holders of any debentures, bonds and fixed deposits and arrears of preference shares, other unclaimed liabilities of our Company and no disciplinary action has been taken by SEBI or any stock exchanges against our Company, our Promoter or Directors. Further, except as stated herein, there are no past cases in which penalties have been imposed on our Company or our Promoter, Directors or companies promoted by the Promoter or our subsidiary by concerned authorities, and there is no outstanding litigation against any other company whose outcome could have a material adverse effect on the position of our Company. Further, except as stated herein, there are no cases of litigations, defaults, etc. in respect of companies/firms/ventures with which the Promoter were associated in the past but are no longer associated, in respect of which the name(s) of the Promoter continues to be associated with those litigation(s). Cases filed by our Company - NIL Cases filed against our Company a. Income tax cases: Nil b. Sales Tax cases: Nil c. Customs Cases: Nil d. Excise & Service Tax Cases: Nil e. Octroi Cases:

Pimpri Chinchwad Municipal Corporation, Octroi Department, Pimpri, Pune 411018 has filed a special civil suit no. 1231 of 2005 against the facility of Octroi account no. 841, allotted to us, and has raised a demand of ourstanding octroi (for Rs. 94,334/-), difference on rate of octroi (for Rs. 90,801/-) and difference of octroi amount (for Rs. 10,337/-) payable by the company for the period from 01/04/1997 to 13/08/2002. We have already paid Rs. 77,000/- on 05/01/2005 and the balance amount of Rs. 1,18,472/- is under contention.

f. Cases under Workmen Compensation Act: Nil g. Cases under securities law: Nil h. Civil Cases:

A special civil suit no. 2053 of 2006 has been filed by Mahalaxmi Enterprises in the Court of Civil Judge (Sr. Division.) Pune against the seller of the land and M/s Brij Properties, one of our group concerns. The plaintiff has made our company and our promoters as parties. The amount claimed by plaintiff is Rs. 200 lakhs, which is being contested by us. The plaintiff in this case is a property broker who, on behalf of landowners, negotiated the deal with our Company falsely stating that the land was industrial. We have already paid the plaintiff a brokerage of Rs. 5 lakh, which we have demanded back in view of the false statement. The plaintiff failed to pay back the said amount. Thereafter, the deal was directly completed by Brij Properties with the landowners. The Landowners had given a mandate to the plaintiff for selling the land at a fixed price. The period for completing the sale transaction was about three months. Based on this mandate the broker negotiated the

144

deal with us claiming that the land was industrial. Thereafter, we signed a MOU with the seller after paying an advance of Rs 25 lacs to the landowner and brokerage of Rs 5 lacs to the plaintiff. The total brokerage payable to the plaintiff on completion of the deal was 2%. Later it was discovered that the land was not an industrial land as claimed, but a residential land. Consequently, we asked the broker to return the money, which the broker failed to comply. Thereafter, the said deal was completed directly between the landowners and Brij Properties, as were spelt out in the aforesaid MOU. The plaintiff is seeking specific performance of the land deal and has claimed damages.

i. Criminal Cases:

Mahindra & Mahindra Limited - Complainant filed a criminal complaint against us under Section 138-141 of the Negotiable Instruments Act, 1881 for dishonour of post dated cheques amounting to Rs. 2,37,29,704.30 against purchase orders raised by us. The said criminal complaint No. 1521 of 2006 has been filed with Court of Metropolitan Magistrate 33rd Court at Ballard Pier, Mumbai. We had issued eighteen postdated cheques (PDCs) amounting to Rs. 2,37,29,704.30 for the BHP engines supplied by the Complainant. The engines procured by us were supplied in gensets to Airtel, the installation and commissioning of which was the responsibility of the Complainant. On the basis of commissioning reports of the Complainant, Airtel had to make the payment to us, and in turn we had to make the payment to the Complainant. However, the Complainant failed to fulfill its obligations towards installation, resulting in to non-payment from Airtel. Consequently, our Bank account got overdrawn and was not in a position to accommodate the PDCs given to the complainant. We accordingly requested the Complainant not to deposit the PDCs.

The Complainant deposited the post dated cheques issued by us on due dates and the same got dishonoured. Consequently, the Complainant issued a legal notice dated 17th August 2006 to us to pay Rs. 2,37,29,704.30 along with interest @ 18% p.a. thereon, which was duly replied by us denying the liability. These PDCs are more in the nature of security than in the nature of claim payable.

j. Cases against the Directors / Promoters: Mr. Vithal Raghunath Alhat, Plaintiff has filed a special summary suit no.2053 of 2006 wiith Court of Civil Judge (Sr. Division.) Pune against our Managing Director, Mr. Shailendra Nath Agarwal, who is also one of the promoter, claiming Rs. 8,00,000/- along with damages @ 24% p.a. Mr. Shailendra Nath Agarwal bought from plaintiff 72,000 sq. mtrs of the land and paid in full and got 7/12 land records in his name. Mr. Shailendra Nath Agarwal gave him a cheque of Rs. 8,00,000/- as security / advance payment for balance land of the plaintiff admeasuring 1000 sq. mtrs. The plaintiff claims that the said cheque was given against cash loan of Rs. 8,00,000/- taken by Mr. Shailendra Nath Agarwal. Mr. Agarwal is contesting the case filed against him.

k. Outstanding litigations, default, etc, against Associate Companies / Firms / Concerns:

1. Against Shabri Electricals and Electronics - a case for voilation of Copyright Act was filed in 1995 with JMFC Court No. 9 (case no.: RCC No.22/95). The main accused in the case is an ex-employee of the Company, Mr. Popat Shinde, with M/s Shabri Electricals and Electronics, a firm of the promoter as the other party, which was carrying on the business as cable operator. The complainant has instituted the case against the Company for exhibiting an unauthorized video cassette on the network in violation of Copyrights Act. One of our promoters, Mr. Shailendra Nath Agarwal has also been made a party. The firm and Mr. Agarwal are contesting that the case is not true and it was framed up by a rival cable operator. Presently the main accused is absconding and is not traceable.

Brij Properties- The details of civil suit filed against Brij Properties by M/s Mahalaxmi Enterprise are given in para h above

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Past cases involving companies forming part of our Promoter Group: Nil Details of past penalties imposed on companies forming part of our Promoter Group: Nil

AMOUNTS OWED TO SMALL SCALE UNDERTAKINGS the names of small scale undertakings to whom our company owes a sum exceeding Rs. 1 lakh which is outstanding more than 30 days as on 31st October 2006 is as under as per certificate dated 19th March 2007 of M/s Prakash S. Shah & Co.- our auditor

Sr. No. Name

Amount Rs.

1 Mahavir Steel Industries Limited 285,381.00 2 Ajinkya Electromelt Private Limited 388,035.00 3 Cotmac Electronics Private Limited 925,965.00 4 Malunjkar Engineering Co. 212,087.00 5 Taruuma Airflow Systems 2,072,540.00 6 Genuine Engineering. 2,494,370.91 7 Parasram Steel Industries 3,305,796.55 8 Aarvin Engineering Industries 4,129,064.00 9 SNA Industries 51,190,878.42

Material developments since the last Balance Sheet Date Except as stated below and progress in implementation of the Project which has been detailed under section titled “Objects of the Issue” beginning on page of this DRHP, there has been no material developments since the last balance sheet dated 31st October 2006. We have entered into an agreement for supply of Diesel engines for manufacture of generator sets with M/s Greaves Cotton Ltd. on 1st March 2007. As per the agreement Greaves Cotton Ltd. has authorized us to use their trademark and words “Powered by Greaves Engines” with the gensets to be manufacturd by us, using engines manufactured by Greaves Cotton only.

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GOVERNMENT AND OTHERS APPROVALS GOVERNMENT APPROVALS / LICENSES / PERMISSIONS As certified by the Legal Advisor to the Issue, we have received all the necessary licenses, permissions and approvals from the Central and State Governments and other government agencies/certification bodies and we can undertake this Issue and our current and proposed business activities. No further major approvals from any governmental or regulatory authority or any other entity are required to undertake the Issue or continue our business activities except as mentioned herein. It must, however, be distinctly understood that in granting the above approvals, the Government and other authorities do not take any responsibility for the financial soundness of our Company or for the correctness of any of the statements or any commitments made or opinions expressed. Our Company has received the following Government approvals / licenses / permissions:

The following statement sets out the details of licenses, permissions and approvals taken by the Company under various Central and State Laws for carrying out its business.

Sr No Issuing Authority

Registration/ Licence No

Nature of Registration/ Licence

Date of Issue Validity

1 Ministry of Commerce 3102008828 Importer-Exporter Code 10/12/2002 Permanent

2 Central Excise AAACV9329EXM002 Central Excise Registration -Bhosari Unit 2/1/2003 Permanent

3 Central Excise AAACV9329EXM001 Central Excise Registration of Chakan Unit 2/1/2003 Permanent

4 Central Excise AAACV9329EXM004 Central Excise Registration of Silvassa Unit 8/3/2006 Permanent

5

Central Excise Commissionerate,

Pune -1

STC/BAS-483/PI/04:STC/GTA-076/PI/04

Registration for payment of service tax on service of Business Auxillary Service and G.T.A 4/11/2004 Permanent

6 Income Tax Department PNE 008216. TAN NUMBER Permanent 7 Income Tax Department AAACV9329E Permanent Account Number 9/10/1996 Permanent

8

Chief Inspector of Factories, Dadra Nagar Haveli, Silvassa

2117

Factory License

9 Central Excise Commissionerate,Pune -1

E.C.C.code: 7171543923(cai) For Installation &

Commissioning 7/7/2004 Permanent

10 Maharashtra Pollution Control Board

ROP/E-25/CC/UB/PUNE/2804/6266/06

Consent to operate under Water, Air, Hazardous Waste(M&H) Act at Chakan Unit, Pune 15/07/2006 14/07/2011

11 Directorate of Industries, Maharashtra

11/19/07839/PMT/SSI Small Scale Industrial Unit’s registration number for Bhosari Unit 11/10/1985 Permanent

12 DNV Management System Certificate

02638-2005-AQ-BOM-NABCB ISO 9001:2000 (Renewed on

12/08/2005) 01/06/2002 01/06/2008.

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13 Ministry of Company Affairs

U29299PN1996PTC103190 Corporate identity number 9/10/1996 Permanent

14 Regional Provident Fund Commisioner

MH/PN/31138 Provident Fund Alloted No 1/7/1994 Permanent

15

Works Contracts Act, 1985( Mahrashtra Sales Tax, Pune)

W-25-F-17 Works Contract in Bhosari for erection and Installation of Generators 13/02/2004

16 Chief Inspectors of Factories & Boilers

2117 Licence for Factory in Slivassa

17

Sales Tax Department, Maharastra Sales Tax Act.

411026/S/1329 Sales Tax No.for Bhosari( Maharashtra Sales Tax) 8/11/1996 Permanent

18

Sales Tax Department, Maharastra Sales Tax Act.

410501/S/505 Sales Tax No.for Chakan( Maharashtra Sales Tax) 21/05/1998 Permanent

19

DY. Commissioner (VAT) Dadra & Nagar Haveli

DNH /CST/M/0733 Sales Tax No. for Silvassa (C.S.T.) 26/03/2004 Permanent

20

DY. Commissioner (VAT) Dadra&Nagar Haveli

26002000732 Value Added Tax

24/03/2004 amended

13/10/2005

21 Central Excise AAACV9329EXM005 Central Excise for EOU at

Chakan. 06/11/2006. Permanent

22 Central Excise PNV/CUS/4/2006

Customs Private Bonded Warehouse for EOU at Chakan (488 sq.mtrs) 8/11/2006 Permanent

23 Directorate of Industries, Dadra &Nagar Haveli 260103129 Small Scale Industrial Unit’s

registration number for Silvassa . 11/10/2006 Permanent

24

Sales Tax Department, Central Sales Tax Act.1956

411026/C/1196 Central Sales tax 8/11/1996 Permanent

Approvals Awaited

Sr No Approval/ Consents Authority Status 1 Power Requirement Maharashtra State New Application for 500 KVA Electricity Board forwarded to MSEDC June 23, 2006 INVESTMENT APPROVALS As per Notification No. FEMA/20/2000-RB of the Reserve Bank of India, dated May 3, 2000, as amended from time to time, our Company is allowed to Issue Equity Shares to NRIs / FIIs with repatriation benefits under automatic route.

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OTHER REGULATORY AND STATUTORY INFORMATION

Authority for the Issue This Issue has been authorised by the resolution of the Board of Directors passed at their meeting held on 10th March 2007, subject to the approval by the shareholders of our company. The shareholders of our company have approved this issue under Section 81(1A) of the Companies Act by a special resolution passed at our Extra General Meeting held on 13th March 2007. Prohibition by SEBI Our Company, our Promoter, our Directors, our subsidiary company and companies with which our directors are associated as directors or Promoter, has not been prohibited from accessing the capital market under any order or directions passed by SEBI. The listing of any securities of our Company has never been refused at anytime by any of the stock exchanges in India. Further, our Company, our Promoter, his relatives, our subsidiary company and our Directors have not been declared as willful defaulters by RBI / government authorities and there are no violations of securities laws committed by them in the past and no proceedings are pending against them. Eligibility for the Issue We are eligible for the Issue as per Clause 2.2.2 of the SEBI Guidelines as explained under: “2.2.2 An unlisted company not complying with any of the conditions specified in Clause 2.2.1 may make an initial public offering (IPO) of equity shares or any other security which may be converted into or exchanged with equity shares at a later date, only if it meets both the conditions (a) and (b) given below: (a) (i) The issue is made through the book-building process, with at least 50% of the issue size being allotted to the Qualified Institutional Buyers (QIBs), failing which the full subscription monies shall be refunded.

OR (a)(ii) The “project” has at least 15% participation by Financial Institutions/ Scheduled Commercial Banks, of which at least 10% comes from the appraiser(s). In addition to this, at least 10% of the issue size shall be allotted to QIBs, failing which the full subscription monies shall be refunded

AND (b) (i) The minimum post-issue face value capital of the company shall be Rs. 10 crores.

OR (b) (ii) There shall be a compulsory market-making for at least 2 years from the date of listing of the shares, subject to the following:

(a) Market makers undertake to offer buy and sell quotes for a minimum depth of 300 shares; (b) Market makers undertake to ensure that the bid-ask spread (difference between quotations for sale and purchase) for their quotes shall not at any time exceed 10%; (c) The inventory of the market makers on each of such stock exchanges, as of the date of allotment of securities, shall be at least 5% of the proposed issue of the company.”

We are an unlisted company not complying with the conditions specified in Clause 2.2.1 of the SEBI Guidelines and are therefore required to meet both the conditions detailed in clause 2.2.2(a) and clause 2.2.2(b) of the SEBI Guidelines. We are complying with Clause 2.2.2(a)(i) of the SEBI (DIP) Guidelines and at least 50% of the Net Issue to Public will be Allotted to QIB Bidders and in the event the company fails to do so, the full subscription monies shall be refunded to the Bidders.

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We are also complying with Clause 2.2.2(b)(i) of the SEBI (DIP) Guidelines and the post-issue face value capital of the Company shall be minimum Rs. 10 crores. Our Company undertakes that the number of allottees in the proposed Issue shall be at least 1,000; otherwise, we shall forthwith refund the entire subscription amount received. In case of delay, if any, in refund, we shall pay interest on the application money at the rate of 15% per annum for the period of delay. DISCLAIMER CLAUSE OF SEBI AS REQUIRED, A COPY OF THIS DRAFT RED HERRING PROSPECTUS (DRHP) HAS BEEN SUBMITTED TO SEBI. “IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF DRHP 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 FOR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRHP. THE LEAD MANAGERS, SPA MERCHANT BANKERS LIMITED HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THE DRHP ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (DISCLOSURES AND INVESTOR PROTECTION) GUIDELINES IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING AN INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT, WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRHP, 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 SPA MERCHANT BANKERS LIMITED HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED 28th MARCH 2007 IN ACCORDANCE WITH THE SEBI (MERCHANT BANKERS) REGULATIONS, 1992, WHICH READS AS FOLLOWS: 1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIALS IN CONNECTION WITH THE FINALISATION OF THE DRHP PERTAINING TO THE SAID ISSUE; 2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY. WE CONFIRM THAT: “A. THE DRAFT RED HERRING PROSPECTUS FORWARDED TO THE SEBI IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE; B. ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE, AS ALSO THE GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY THE SEBI, THE GOVERNMENT AND ANY

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OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND C. THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-INFORMED DECISION AS TO INVESTMENT IN THE PROPOSED ISSUE. D. BESIDE OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT RED HERRING PROSPECTUS ARE REGISTERED WITH SEBI AND THAT SUCH REGISTRATIONS ARE VALID TILL DATE. E. WE SHALL SATISFY OURSELVES ABOUT THE NET WORTH OF THE UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS. WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN OBTAINED FOR INCLUSION OF THEIR SECURITIES AS PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SECURITIES PROPOSED TO FORM PART OF THE PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN WILL NOT BE DISPOSED / SOLD / TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS WITH SEBI TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRHP.” THE FILING OF DRAFT RED HERRING PROSPECTUS DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 OR 68 OF THE COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED PUBLIC ISSUE. SEBI, FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MERCHANT BANKER ANY IRREGULARITIES OR LAPSES IN THE DRHP.” Disclaimer from Our Company & the BRLM Our Company, our Directors, and the BRLM accept no responsibility for statements made otherwise than in this Draft Red Herring Prospectus or in the advertisements or any other material issued by or at instance of the above mentioned entities and anyone placing reliance on any other source of information, including our website, www.duttagroup.in, would be doing so at his or her own risk. Caution The BRLM accept no responsibility, save to the limited extent as provided in the Memorandum of Understanding dated March 22, 2007 entered into between the BRLM and our Company and the Underwriting Agreement to be entered into between the Underwriters and our Company. All information shall be made available by us, the BRLM and the Underwriters to the public and investors at large and no selective or additional information would be available for a section of the investors in any manner whatsoever including at road show presentations, in research or sales reports, at bidding centres or elsewhere. Disclaimer In Respect of Jurisdiction This issue is being made in India to persons resident in India (including Indian nationals resident in India who are majors, HUFs, companies, corporate bodies and societies registered under the applicable laws in India and authorised to invest in shares, Indian mutual funds registered with SEBI, Indian financial institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI permission if any), trust registered under the Societies Registration Act, 1860, as amended from time to time or any other trust law and who are authorised under their constitution to hold and invest in shares), permitted insurance companies,

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pension funds and to NRIs , FIIs, Venture Capital Funds and Foreign Venture Capital Investors registered with SEBI. The DRHP does not, however, constitute an invitation to subscribe to Equity Shares issued hereby in any other jurisdiction to any person to whom it is unlawful to make an issue or invitation in such jurisdiction. Any person into whose possession the DRHP comes is required to inform himself / herself about and to observe any such restrictions. Any disputes arising out of this issue will be subject to the jurisdiction of appropriate courts at Pune Maharashtra, India only. No action has been or will be taken to permit a public offering in any jurisdiction where action would be required for that purpose, except that the DRHP has been submitted to SEBI for its observations and SEBI has given its observation. Accordingly, the Equity Shares represented thereby may not be offered or sold, directly or indirectly, and the DRHP may not be distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of the DRHP nor any sale hereunder shall under any circumstances create any implication that there has been no change in the affairs of the company since the date hereof or that the information contained herein is correct as of any time subsequent to this date. Disclaimer Clause of Bombay Stock Exchange Limited, Mumbai As required, a copy of the DRHP has been submitted to the BSE (the designated stock exchange). “BSE vide its letter dated [*] has given permission to our Company to use the Exchange’s name in this Offer Document as one of the Stock Exchange on which the Companies securities are proposed to be listed. The Exchange has scrutinized the Offer Document for its limited internal purpose of deciding on the matter of granting the aforesaid permission to our Company. BSE does not in any manner- 1. Warrant, certify or endorse the correctness or completeness of any of the contents of the Offer Document; or 2. Warrant that this Company’s securities will be listed or will continue to be listed on BSE; or 3. Take any responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or project of this Company; and it should not for any reason be deemed or construed that this Prospectus has been cleared or approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.” Disclaimer Clause of NSE As required, a copy of this Offer Document has been submitted to NSE. NSE has given vide its letter dated [*] permission to us to use the exchange’s name in this Offer Document as one of the stock exchanges on which our securities are proposed to be listed subject to the Company fulfilling the various criteria for listing including the one related to paid up capital and market capitalization. The NSE has scrutinized this Offer Document for its limited internal purpose of deciding on the matter of granting the aforesaid permission to us. It is to be distinctly understood that the aforesaid permission given by NSE should not in any way be deemed or construed that this Offer Document has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Offer Document nor does it warrant that our securities will be listed or will continue to be listed on the Exchange nor does it take any responsibility for the financial or other soundness of our Company, promoters, management or any scheme or project of this Issuer.

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Every person who desires to apply for or otherwise acquires any of our securities may do so pursuant to independent enquiry, investigation and analysis and shall not have any claim against the NSE whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever. Filing A copy of the DRHP has been filed with the Corporation Finance Department of SEBI at Bandra Kurla Complex Mumbai – 400051. A copy of the Red Herring Prospectus, along with the documents required to be filed under section 60B of the Companies Act would be delivered for registration to the Registrar of Companies, PMT Commercial Building, 3rd Floor, Deccan Gymkhana, Pune – 411 004. Listing Applications have been made to the BSE and NSE for permission to deal in and for an official quotation of our Equity Shares. Our existing Equity shares are not listed on any stock exchange in India. BSE shall be the Designated Stock Exchange with which the basis of allotment will be finalized for the QIB, Non- Institutional portion and Retail portion. If the permissions to deal in and for an official quotation of the Equity Shares are not granted by any of the Stock Exchanges mentioned above, our company shall forthwith repay, without interest all monies received from the applicants in pursuance of this Draft Red Herring Prospectus. If such money is not repaid within 8 days after our company becomes liable to repay it (i.e. from the Date of Refusal or within 15 days from the date of Bid/Issue closing date whichever is earlier), then our Company and every director of our Company who is an officer in default shall, on and from expiry of 8 days, will be jointly and severally liable to repay the money with interest @15% per annum on application money as prescribed under Section 73 of the Companies Act. Our Company together with the assistance of the BRLM shall ensure that all steps for the completion of the necessary requirements for listing and commencement of trading at both the Stock Exchanges mentioned above are taken within seven working days of finalisation and adoption of the basis of allotment for the offer. Consents Consents in writing of our Promoters, Directors, Company Secretary and Compliance Officer, the Auditors, Legal Advisor, Bankers to our Company, Book Running Lead Manager, Registrar to the Issue, Bankers to the Issue and Syndicate Members to act in their respective capacities, have been obtained and would be filed along with a copy of this Red Herring Prospectus with the RoC, Pune as required under Sections 60 and 60B of the Companies Act and such consents have not been withdrawn up to the time of delivery of the Red Herring Prospectus for registration with the RoC, Pune. Consents in writing of the underwriters will be obtained and filed along with the final prospectus and other relevant documents required to be filed under Section 60 of the Companies Act with RoC, Pune. M/s Prakash Shah & Company, Chartered Accountants, our Auditors have also given their written consent to the inclusion of their report in the form and context in which it appears in the Draft Red Herring Prospectus and such consent and report have not been withdrawn up to the time of delivery of a copy of the Red Herring Prospectus for registration with the Registrar of Companies, Pune.

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Expert Opinion Except as stated in the section titled “Financial Statements” beginning on page ___ and the tax benefit certificate obtained from M/s Prakash Shah & Company, Chartered Accountants as stated on page ___ of this DRHP we have not obtained any expert opinions. Expenses of the Issue The expenses of this Issue include, among others, underwriting and management fees, selling commission, printing and distribution expenses, legal fees, statutory advertising expenses and listing fees. The estimated Issue expenses are as follows: Sr. No.

Particulars Amount (Rs. in Lacs)

% of total Issue Expenses

% of total Issue Size

1. 2. 3. 4. 5. 6.

Fees of BRLM (including underwriting commission and selling commission)* Fees of Syndicate Members (including underwriting commission and selling commission)* Fees of Registrar, Legal Advisor & Auditors* Advertisement and Marketing Expenses* Printing and Stationery, Distribution, Postage, etc.* Other Charges* (Includes Traveling, Local Conveyance, Telecommunication Charges, Legal Expenses, etc.)

[●]

[.]

[.]

[.]

[.]

[.]

[●]

[.]

[.]

[.]

[.]

[.]

[●]

[.]

[.]

[.]

[.]

[.]

Total [●] [●] [●] * Will be incorporated after finalisation of the issue price at the time of the Prospectus. Fees Payable to the BRLM The fees payable to the BRLM (including underwriting commission and selling commission) for the Issue will be as per the engagement letter from our Company to the BRLM and the Memorandum of Understanding 22nd March 2007 executed between us and BRLM. Copy of which are available for inspection at our registered office. Fees Payable to the Syndicate Members The fees payable to the Syndicate Members (including underwriting commission and selling commission) for the Issue will be as per the engagement letter from our Company to the Syndicate Members copy of which are available for inspection at our registered office. Fees Payable to the Registrar to the Issue The fees payable to the Registrar to the Issue will be as per the Memorandum of Understanding between Registrar to the Issue and our company dated 28th of March 2007, a copy of which is available for inspection at our Registered Office.

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Adequate funds will be provided to the Registrar to the Issue by our Company to enable them to send refund orders or Allotment advice by registered post / under certificate of posting. Previous Public / Rights Issues Our Company has not made any public or rights issue of Equity Shares/Debentures since incorporation. Issue of Shares otherwise than for Cash Except as stated under “Notes to Capital structure” appearing on page __ of this Draft Red Herring Prospectus, our Company has not issued any Equity Shares for consideration other than cash since incorporation. Commission and Brokerage on Previous Equity Issues No sum has been paid or is payable as commission and brokerage for subscribing to or procuring or agreeing to procure subscription for any of our Equity Shares since our incorporation. Companies under the same Management Except the details given at page no. __ of this DRHP, we don’t have any other company under the same management within the meaning of section 370 (1B) of the Companies Act, 1956. Neither our company, nor any other companies under the same management has made any Capital Issue during the last three years. Promises V/S Performance Since, our Company has not made any public issue in past, Promise vis-à-vis Performance is not applicable to us. Listed Ventures of Promoters Our promoter does not have any listed ventures. Outstanding Debenture or Bond Issues As on the date of filing of this Draft Red Herring Prospectus with SEBI, our Company does not have any outstanding Debentures or Bonds. Outstanding Preference Shares Our company has not issued any preference shares till date whether redeemable or otherwise. Stock Market Data for Our Equity Shares This being an initial public offering of our Company, the Equity Shares are not listed on any stock exchange. Mechanism for Redressal of Investor Grievances The Memorandum of Understanding between the Registrar to the Issue and us provides for retention of records with the Registrar to the Issue for a period of at least one year from the date of closing of this Issue. All grievances relating to the Issue may be addressed to the Registrar to the Issue, giving full details such as name, address of the applicant, application number, number of shares applied for, amount paid on application, depository participant, demat account number and the bank branch or collection centre where the application was submitted. Our Company has constituted a Shareholders/ Investor Relation Committee to look into the redressal of shareholder/ investor complaints such as Issue of duplicate/split/consolidated share certificates, allotment and listing of shares and review of cases for refusal of transfer/transmission of shares and debentures, complaints for non receipt of dividends etc. For further details on this committee, please refer under the head ‘Corporate Governance’ on page __.

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Disposal of Investor Grievances We estimate that the average time required by us or the Registrar to the Issue for the redressal of routine investor grievances shall be 10 days from the date of receipt of the complaint. In case of non-routine complaints and complaints where external agencies are involved, we will seek to redress these complaints as expeditiously as possible. We have appointed Ms. Deepika Agarwal as the Compliance Officer and she may be contacted at the following address in case of any pre-Issue or post-Issue-related problems: Ms. Deepika Agarwal, Company Secretary and Compliance Officer S- 145, MIDC Bhosari, Pune 411 026, Maharashtra Tel No: 020 30680821 Fax No: 020 30680820 E-mail: [email protected] Changes in Auditors during the last five years

Sr. No.

Name of Auditors Date of Appointment Date of Resignation

1. Mehendale and Shah Since Incorporation 30-09-2003

2. Prakash S. Shah & Co. 30-09-2003 ---- Capitalisation of Reserves or Profits We have issued bonus shares on 18th August 2006 in the ratio of 2:1, details of which are mentioned under “Notes to Capital structure” appearing on page __ of this Draft Red Herring Prospectus. Revaluation of Assets There has not been any revaluation of Assets since incorporation.

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TERMS OF THE ISSUE The Equity Shares being offered are subject to the provisions of the Companies Act, SEBI (DIP) Guidelines, our Memorandum and Articles of Association, the terms of the Draft Red Herring Prospectus, Red Herring Prospectus, Prospectus, Bid cum Application Form, the Revision Form, the Confirmation of Allocation Note and other terms and conditions as may be incorporated in the allotment advices and other documents/certificates that may be executed in respect of the Issue. The Equity Shares shall also be subject to laws as applicable, guidelines, notifications and regulations relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, the Government of India, the Stock Exchanges, the RBI, RoC and/or other authorities, as in force on the date of the Issue and to the extent applicable. Ranking of Equity Shares The Equity Shares being offered shall be subject to the provisions of the Companies Act, our Memorandum and Articles of Association and shall rank pari passu in all respects with the existing Equity Shares including in respect of the rights to receive dividend. The allottees will be entitled to dividend, voting rights or any other corporate benefits, if any, declared by us after the date of Allotment. Mode of Payment of Dividend We shall pay dividend to our shareholders as per the provisions of the Companies Act. Face Value and Issue Price The Equity Shares having a face value of Rs. 10/- each are being offered in terms of this Draft Red Herring Prospectus at the Price of Rs. [●] per Equity Share. The issue price will be determined by our Company in consultation with the BRLM on the basis of assessment of market demand for the equity shares offered by way of book building. At any given point of time there shall be only one denomination of the Equity Shares of our Company, subject to applicable laws. Compliance with SEBI Guidelines Our Company shall comply with all disclosure and accounting norms as specified by SEBI from time to time. Rights of the Equity Shareholders Subject to applicable laws the equity shareholders shall have the following rights:

• Right to receive dividend, if declared; • Right to attend general meeting and exercise voting rights unless prohibited by law; • Right to vote on poll either personally or by proxy; • Right to receive offer for rights shares and the allotted bonus shares, if announced; • Right to receive surplus on liquidation; • Right of free transferability; and • Such other rights, as may be available to a shareholder under the Act, terms of the listing agreements

with the Stock Exchanges(s) and the Articles of Association of our Company. For a detailed description of the main provision of the Articles of Association of our Company relating to voting rights, dividend, forfeiture and lien and/or consolidation/splitting, etc., see the section entitled “Main Provisions of Articles of Association” beginning on page ____.

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Market Lot and Trading Lot In terms of section 68B of the Companies Act, the Equity Shares of the Company shall be allotted only in dematerialised form. In terms of existing SEBI Guidelines, the trading in the Equity Shares shall only be in dematerialized form for all investors. Since trading of the Equity Shares will be in dematerialised mode, the tradeable lot is one Equity share. Allocation and allotment of Equity Shares through this issue will be done only in electronic form in multiple of one Equity Share subject to minimum of [*] shares to the successful bidders. Nomination Facility to Investor In accordance with Section 109A of the Companies Act, the sole or first Bidder, along with other joint Bidders, may nominate any one person in whom, in the event of the death of sole Bidder or in case of joint Bidders, death of all the Bidders, as the case may be, the Equity Shares allotted, if any, shall vest. A person, being a nominee, entitled to the Equity Shares by reason of the death of the original holder(s), shall in accordance with Section 109A of the Companies Act, be entitled to the same advantages to which he or she would be entitled if he or she were the registered holder of the equity share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any person to become entitled to equity share(s) in the event of his or her death during the minority. A nomination shall stand rescinded upon a sale of equity share(s) by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh nomination can be made only on the prescribed form available on request at our Registered Office or to the registrar and transfer agents of our Company. In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue of the provisions of Section 109A of the Companies Act, shall upon the production of such evidence as may be required by our Board, elect either: a) to register himself or herself as the holder of the equity shares; or b) to make such transfer of the equity shares, as the deceased holder could have made. Further, our 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 90 days, our Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the equity shares, until the requirements of the notice have been complied with. Since the allotment of Equity Shares in the Issue will be made only in dematerialised mode there is no need to make a separate nomination with our Company. Nominations registered with respective depository participant of the applicant would prevail. If the investor wants to change the nomination, they are requested to inform their respective depository participant. Minimum Subscription If we do not receive the minimum subscription of 90% of the Net Issue including devolvement of the members of the syndicate, if any, within 15 days from the Bid/Issue Closing Date, our Company shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after we become liable to pay the amount, our Company and every director of our Company who is an officer in default, becomes liable to repay the amount with interest as per Section 73 of the Companies Act. If atleast, 50% of the net issue cannot be allotted to QIBs, then the entire application money will be refunded. Arrangements for Disposal of Odd Lots Since, our Equity Shares will be traded in dematerialised form only; the marketable lot is one (1) Equity Share. Therefore, there is no possibility of any odd lots. Restrictions, If Any on Transfer and Transmission of Equity Shares/ Debentures and on their Consolidation/ Splitting

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Except as mentioned under the heading “Transfer and Transmission of Shares” under section titled “Main Provisions of Articles of Association of Our Company” starting on page __ of this Draft Red Herring Prospectus, there are no restrictions on transfer / transmission on our Equity Shares. Withdrawal of Issue Our Company in consultation with the BRLM reserves the right not to proceed with the issue any time after the Bid / Issue opening date but before allotment without assigning any reason thereof. Period of Subscription The subscription list for public issue shall remain open for at least 3 working days and not more than 10 working days.

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ISSUE PROCEDURE Book Building Procedure This Issue is being made through the 100% Book Building Process wherein at least 50% of the Net Issue will be available for allocation on a proportionate basis to QIBs, out of which 5% shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIBs Portion shall be available for allocation on a proportionate basis to all QIBs, including Mutual Funds, subject to valid Bids being received at or above Issue Price. If at least 50% of the Net Issue cannot be allocated to QIBs, then the entire application money will be refunded forthwith. Further, not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to the Retail Individual Bidders and not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non Institutional Bidders, subject to valid Bids being received at or above the Issue Price. Bidders are required to submit their Bids through the members of the Syndicate. Further, QIB bids can be submitted only through the Syndicate Members. We, in consultation with the BRLM, reserve the right to reject any QIB Bid procured by any or all members of the Syndicate, for reasons to be recorded in writing provided that such rejections shall be made at time of acceptance of the Bid and the reasons thereof shall be disclosed to the Bidders. In case of Non-Institutional Bidders and Retail Individual Bidders, our Company would have a right to reject the Bids only on technical grounds. The primary responsibility of building the book shall be that of the lead book runner. Investors should note that Equity Shares would be allotted to all successful Bidders only in dematerialised form. Bidders will not have the option of getting Allotment of the Equity Shares in physical form. The Equity Shares on Allotment shall be traded only in the dematerialised segment of the Stock Exchanges. Bid-cum-Application Form Bidders shall only use the specified Bid-cum-Application Form bearing the stamp of a member of the Syndicate for the purpose of making a Bid in terms of this Draft Red Herring Prospectus. The Bidder shall have the option to make a maximum of three Bids in the Bid-cum-Application Form and such options shall not be considered as multiple Bids. Upon the allotment of Equity Shares, dispatch of the CAN / Allocation Advice and filing of the Prospectus with the RoC, the Bid-cum-Application Form shall be considered as the Application Form. Upon completing and submitting the Bid-cum-Application Form to a member of the Syndicate, the Bidder is deemed to have authorized us to make the necessary changes in this Draft Red Herring Prospectus and the Bid-cum-Application Form as would be required for filing the Prospectus with the RoC and as would be required by the RoC after such filing, without prior or subsequent notice of such changes to the Bidder. The prescribed colour of the Bid-cum-Application Form for various categories is as follows: Category Colour of Bid-cum-Application Form Indian Public including Residing QIBs, Non Institutional Bidders or NRIs applying on a Non-Repatriation basis

White

Non-residents including NRIs, FIIs, Foreign Venture Capital Fund / Multilateral and Bilateral Development Financial Institutions applying on a repatriation basis.

Blue

Permanent Employees of our Company Pink Who Can Bid? 1. Indian nationals resident in India who are majors, in single or joint names (not more than three);

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2. HUFs, in the individual name of the Karta. The Bidder should specify that the Bid is being made in the name of the HUF in the Bid cum Application Form as follows: “Name of Sole or First Bidder: XYZ Hindu Undivided Family applying through XYZ, where XYZ is the name of the Karta”. Bids by HUFs would be considered at par with those from individuals;

3. Companies, Corporate Bodies and Societies registered under the applicable laws in India and authorized to invest in Equity shares;

4. Mutual funds registered with SEBI; 5. Indian financial institutions, scheduled commercial banks, regional rural banks, co-operative banks

(subject to RBI regulations and SEBI Guidelines and Regulations, as applicable); 6. Venture capital funds registered with SEBI; 7. Foreign venture capital investors registered with SEBI; subject to compliance with applicable laws, rules,

regulations, guidelines and approvals in the issue. 8. State Industrial Development Corporations; 9. Insurance companies registered with the Insurance Regulatory and Development Authority; 10. Provident funds with minimum corpus of Rs. 2500 Lacs and who are authorized under their constitution

to invest in Equity Shares; 11. Pension funds with minimum corpus of Rs. 2500 Lacs and who are authorized under their constitution to

invest in Equity Shares; 12. Multilateral and bilateral development financial institutions; 13. Trusts/societies registered under the Societies Registration Act, 1860, as amended, or under any other law

relating to Trusts/Societies and who are authorized under their constitution to hold and invest in equity shares;

14. Eligible Non-residents including NRIs on a repatriation basis / non- repatriation basis subject to compliance with applicable laws, rules, regulations, guidelines and approvals in the issue. FIIs, registered with SEBI on a repatriation basis subject to compliance with applicable laws, rules, regulations, guidelines and approvals in the issue;

15. Scientific and/or industrial research organizations authorized under their constitution to invest in equity shares;

16. Any other QIBs permitted to invest in the issue under applicable law or regulation. As per existing regulations, Overseas Corporate Bodies cannot Bid in this Issue. Note: The BRLM and Syndicate Member(s) shall not be entitled to subscribe to this Issue in any manner except towards fulfilling their underwriting obligation. However, associates and affiliates of the BRLM and Syndicate Members may subscribe for Equity Shares in the Issue, including in the QIB Portion and Non-Institutional Portion where the allocation is on a proportionate basis. Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under the applicable law. Bids by Mutual Funds An eligible Bid by a Mutual Fund shall first be considered for allocation proportionately in the Mutual Funds Portion. In the event that the demand is greater than [*] Equity Shares, Allocation shall be made to Mutual Funds on proportionate basis to the extent of the Mutual Funds Portion. The remaining demand by Mutual Funds shall, as part of the aggregate demand by QIB Bidders, be made available for allocation proportionately out of the remainder of the QIB Portion, after excluding the allocation in the Mutual Funds Portion. The Bids made by the Asset Mangement Companies or Custodian of Mutual Funds shall specifically state the names of the concerned schemes for which the Bids are made. In case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Fund registered with SEBI and such Bids in respect of more than one scheme of the Mutual Fund will not be treated as Multiple Bids provided that the Bids clearly indicate the scheme for which the Bid has been made.

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As per the current regulations, the following restrictions are applicable for investments by mutual funds: No mutual fund scheme shall invest more than 10% of its net asset value in the Equity Shares or equity related instruments of any company provided that the limit of 10% shall not be applicable for investments by index funds or sector or industry specific funds. No mutual fund under all its schemes should own more than 10% of any company’s paid-up capital carrying voting rights. Bids by NRIs Bid cum Application Forms have been made available for NRIs at the registered office of Our Company or from members of the Syndicate or the Registrars to the Issue. NRI applicants may please note that only such applications as are accompanied by payment in free foreign exchange shall be considered for allotment. The NRIs who intend to make payment through Non-Resident Ordinary (NRO) accounts shall use the form meant for Resident Indians (white in colour). All instruments accompanying Bids shall be payable at Mumbai only. As per the current regulations, the following restrictions are applicable for investments by FIIs: The issue of Equity Shares to a single FII should not exceed 10% of the post-issue paid-up capital of our Company (i.e. 10% of ______ Equity Shares). In respect of an FII investing in Equity Shares of our Company on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of our total issued capital or 5% of our total issued capital in case such sub-account is a foreign corporate or an individual. As of now, the aggregate FII holding in our Company cannot exceed 24% of the total issued capital of our Company. With the approval of the Board of Directors and the shareholders by way of a special resolution, the aggregate FII holding can go up to ____. However, as of this date, no such resolution has been recommended for adoption. Bids by SEBI registered Venture Capital Funds and Foreign Venture Capital Investors: The SEBI (Venture Capital) Regulations, 1996 and the SEBI (Foreign Venture Capital Investor) Regulations, 2000 prescribe investment restrictions on venture capital funds and foreign venture capital investors registered with SEBI. Accordingly, the holding by any individual venture capital fund or foreign venture capital investor registered with SEBI should not exceed 33.33% of the corpus of the venture capital fund/ foreign venture capital investor provided not more than 25% of the corpus of an Indian Venture Capital Fund should be invested in one Venture Capital Undertaking. However, the aggregate holdings of venture capital funds and foreign venture capital investors registered with SEBI could go up to 100% of our Company’s paidup equity capital. The SEBI has issued an amendment on October 16, 2006 stating that the shareholding of SEBI registered Venture Capital Funds held in a company prior to making an intial public offering would be exempt from lock-in requirements only if the shares have been held by them for atleast one year prior to the time of filing the draft prospectus with SEBI. The above information is given for the benefit of the Bidders. The Bidders are advised to make to their own enquiries about the limits applicable to them. Our Company and the BRLM do not accept any responsibility for the completeness and accuracy of the information stated hereinabove. Our Company and the BRLM are not liable to inform the investors of any amendments or modification or changes in applicable laws or regulations, which may occur after the date of this Red Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the number of Equity Shares Bid for do not exceed the applicable limits under laws or regulations.

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Maximum and Minimum Bid size a) For Employees: The Bid must be for minimum [*]Equity Shares and in multiples of [*] Equity Shares thereafter, not exceeding the issue size. b) For Retail Individual Bidders: The Bid must be for minimum [*] Equity Shares and in multiples of [*] Equity Shares thereafter subject to maximum bid amount of Rs. 1,00,000/- In case of revision of Bids, the Retail Individual Bidders have to ensure that the Bid Amount does not exceed Rs. 1,00,000/-. In case the Bid Amount is over Rs. 1, 00,000/- due to revision in bid or revision of the Price Band or on exercise of Cut-off price option, the Bid would be considered for allotment under the Non-Institutional Bidders category. The Cut-off price option is an option given only to the Retail Individual Bidders indicating their agreement to bid and purchase at the final Issue Price as determined at the end of the Book Building Process. c) For Non-Institutional Bidders and QIBs Bidders: The Bid must be for a minimum of such number of Equity Shares and in multiples of [*] Equity Shares such that the Bid Amount exceeds Rs. 1, 00,000/-. A Bid cannot be submitted for more than the size of the Issue. However, the maximum Bid by a QIB investor should not exceed the investment limits prescribed for them under applicable laws. Under existing SEBI guidelines, a QIB Bidder cannot withdraw its Bid after the Bid/Issue Closing Date and is required to pay QIB Margin upon submission of Bid. In case of revision in Bids, the Non-Institutional Bidders who are individuals have to ensure that the Bid Amount is greater than Rs. 1,00,000/-, for being considered for allocation in the Non Institutional Portion. In case the Bid Amount reduces to Rs. 1,00,000/- or less due to a revision in Bids or revision of Price Band, the same would be considered for allocation under the Retail Portion. Non Institutional Bidders and QIB Bidders do not have the option of bidding at ‘Cut-off price’. Information for the Bidders 1. We will file the Red Herring Prospectus with the RoC /Designated Stock Exchange at least 3 (three) days

before the Bid/ Issue Opening Date. 2. The members of the Syndicate will circulate copies of the Red Herring Prospectus and the Bid-cum-

Application Form to their potential investors. 3. Any investor (who is eligible to invest in the Equity Shares) desirous of obtaining a copy of the Draft Red

Herring Prospectus/ Red Herring Prospectus/Bid-cum-Application Form can obtain the same from our Registered Office or from the BRLM or from a member of the Syndicate.

4. Investors who are interested in subscribing for our Company’s Equity Shares should approach the BRLM

or Syndicate Member or their authorized agent(s) to register their Bid. 5. The Bids should be compulsorily submitted on the prescribed Bid-cum-Application Form only. Bid-cum-

Application Forms should bear the stamp of a member of the Syndicate. The Bid-cum-Application Forms, which do not bear the stamp of a member of the Syndicate, will be rejected.

Method and Process of bidding 1. We, with the BRLM shall declare the Bid/Issue Opening Date and Bid/Issue Closing Date in the Red

Herring Prospectus filed with RoC and publish the same in two national newspapers (one each in English and Hindi) and one regional newspaper at the place where our registered office is situated. This advertisement, subject to the provisions of Section 66 of the Companies Act shall be in the format prescribed in Schedule XX–A of the SEBI DIP Guidelines. The members of the Syndicate shall accept Bids from the Bidders during the Issue Period in accordance with the terms of the Syndicate Agreement.

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2. The bidding centres and collection centres shall be at all the places, where the recognised stock exchanges are situated.

3. Investors who are interested in subscribing for our Equity Shares should approach any of the members of

the Syndicate or their authorized agent(s) to register their Bid. 4. The Bidding Period shall be a minimum of 3 (three) working days and not exceeding 7 (seven) working

days. In case the Price Band is revised, the revised Price Band and the Bidding Period will be informed to the Stock Exchanges and published in two national newspapers (one each in English and Hindi) and one regional newspaper and the Bidding Period may be extended, if required, by an additional 3 (three) working days, subject to the total Bidding Period not exceeding 10(ten) working days.

5. The individual as well as QIBs shall place their bids only through the member of syndicate, who shall

have the right to vet the bids. 6. Each Bid cum Application Form will give the Bidder the choice to bid for up to three optional prices (for

details refer to the paragraph entitled “Bids at Different Price Levels” as given below) within the Price Band and specify the demand (i.e., the number of Equity Shares bid for) in each option. The price and demand options submitted by the Bidder in the Bid cum Application Form will be treated as optional demands from the Bidder and will not be cumulated. After determination of the Issue Price, the maximum number of Equity Shares bid for by a Bidder at or above the Issue Price will be considered for allocation and the rest of the Bid(s), irrespective of the Bid price, will become automatically invalid.

7. The Bidder cannot bid on another Bid cum Application Form after Bids on one Bid cum Application

Form have been submitted to any member of the Syndicate. Submission of a second Bid cum Application Form to either the same or to another member of the Syndicate will be treated as multiple bids and is liable to be rejected either before entering the Bid into the electronic bidding system, or at any point of time prior to the allotment of Equity Shares in this Issue. However, the Bidder can revise the Bid through the Revision Form, the procedure for which is detailed in the paragraph “Build up of the Book and Revision of Bids” on page ___ of this Red Herring Prospectus.

8. The members of the Syndicate will enter each bid option into the electronic bidding system as a separate

Bid and generate a Transaction Registration Slip, (“TRS”), for each price and demand option and give the same to the Bidder. Therefore, a Bidder can receive up to three TRSs for each Bid cum application Form. It is the responsibility of the bidder to obtain the TRS from the Syndicate Member.

9. Along with the Bid cum Application Form, all Bidders will make payment in the manner described under

the paragraph “Terms of Payment and Payment into the Escrow Collection Account” on page ___ of this Red Herring Prospectus.

Bids at Different Price Levels 1. The Price Band has been fixed at Rs. ___ to Rs. ___ per Equity Share, Rs. ___ being the floor of the

Price-Band and Rs. ___ being the cap of the Price Band. The Bidders can bid at any price within the price Band, in multiples of Re. ___. The minimum application value shall be within the range of Rs. 5,000 to Rs. 7,000.

2. In accordance with SEBI Guidelines, our Company in consultation with the BRLM in accordance with

this clause, without the prior approval of, or intimation, to the Bidders, can revise the Price Band. The cap on the Price Band should not be more than 20% of the floor of the Price Band. Subject to compliance with the immediately preceding sentence, the floor of the Price Band can move up or down to the extent of 20% of the floor of the Price Band disclosed in the Red Herring Prospectus. In case of a revision in the Price Band, the Issue will be kept open for a further period of three working days after the revision of the Price Band, subject to the total Bidding Period not exceeding ten working days.

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3. Any revision in the Price Band and the revised Bidding Period/Issue Period, if applicable, will be widely disseminated by informing the Stock Exchanges, by issuing a public notice in two national newspapers (one each in English and Hindi) and one regional newspaper, and also indicating the change on the relevant websites of the BRLM and the terminals of the members of the Syndicate.

4. We, in consultation with the BRLM, can finalize the Issue Price within the Price Band without the prior

approval of, or intimation to, the Bidders. 5. The Bidder can bid at any price within the Price Band. The Bidder has to bid for the desired number of

Equity Shares at a specific price. Retail Individual Bidders and Bidders under Employee Reservation Portion applying for a maximum Bid in any of the bidding options not exceeding Rs. 1,00,000/- may bid at “Cut-off”. However, bidding at “Cut-off” is prohibited for QIBs or Non Institutional Bidders and such Bids from QIBs and Non Institutional Bidders shall be rejected.

6. Retail Individual Bidders and Bidders under Employee Reservation Portion who bid at the Cut-off agree

that they shall purchase the Equity Shares at any price within the Price Band. Retail Individual Bidders and Bidders under Employee Reservation Portion bidding at Cut-off shall deposit the Bid Amount based on the Cap Price in the Escrow Account. In the event the Bid Amount is higher than the subscription amount payable by the Retail Individual Bidders and Bidders under Employee Reservation Portion (i.e. the total number of Equity Shares allocated in the Issue multiplied by the Issue Price), Retail Individual Bidders and Bidders under Employee Reservation Portion, who bid at Cut off Price, shall receive the refund of the excess amounts from the Refund Account.

7. In case of an upward revision in the Price Band announced as above, Retail Individual Bidders and

Bidders under Employee Reservation Portion, who had bid at Cut-off could either (i) revise their Bid or (ii) make additional payment based on the cap of the revised Price Band (such that the total amount i.e. original Bid Amount plus additional payment does not exceed Rs. 1,00,000/- if the bidder wants to continue to bid at Cut-off Price), with the member of the Syndicate to whom the original Bid was submitted. In case the total amount (i.e. original Bid Amount plus additional payment) exceeds Rs.1,00,000/- the Bid will be considered for allocation under the Non-Institutional category in terms of this Red Herring Prospectus. If, however, the Bidder does not either revise the Bid or make additional payment and the Issue Price is higher than the cap of the Price Band prior to revision, the number of Equity Shares bid for shall be adjusted downward for the purpose of allocation, such that no additional payment would be required from the Bidder and the Bidders shall be deemed to have approved such revised Bid at Cut-off Price.

8. In case of a downward revision in the Price Band, announced as above, Retail Individual Bidders and

Bidders under Employee Reservation Portion who have bid at Cut-off could either revise their Bid or the excess amount paid at the time of bidding would be refunded from the Refund Account.

9. In the event of any revision in the Price Band, whether upwards or downwards, the Minimum Application

Size will be suitably revised such that the minimum application falls within the range of Rs. 5,000/- to Rs. 7,000/-.

Application in the Issue Equity Shares being offered through this Red Herring Prospectus can be applied for in dematerialised form only. Escrow Mechanism We shall open Escrow Accounts with one or more Escrow Collection Banks in whose favour the Bidders shall make out the cheque or demand draft in respect of his or her Bid and/or revision of the Bid. Cheques or demand drafts received for the full Bid amount from Bidders in a certain category would be deposited in the respective Escrow Account for the Issue. The Escrow Collection Banks will act in terms of the Red Herring Prospectus and Escrow Agreement. The Escrow Collection Bank (s) for and on behalf of the Bidders shall maintain the monies in the Escrow Account of our Company. The Escrow Collection Bank(s) shall not

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exercise any lien whatsoever over the monies deposited therein and shall hold the monies therein in trust for the Bidders. On the Designated Date, the Escrow Collection Banks shall transfer an amount equivalent to Issue proceeds (i.e. Final Issue price multiplied by the number of Equity Shares allotted through this issue) from the Escrow Account to the Public Issue Account with the Bankers to the Issue as per the terms of the Escrow Agreement with our Company and the balance amount shall be transferred to the Refund Account, from where payment of refund to the Bidders shall be made. The Bidders may note that the Escrow Mechanism is not prescribed by SEBI and the same has been established as an arrangement between us, the Syndicate, Escrow Collection Bank(s) and the Registrars to the Issue to facilitate collections from the Bidders. Terms of Payment and Payment into the Escrow Collection Account Each Bidder, shall pay the applicable Margin Amount, with the submission of the Bid-cum-Application Form draw a cheque/ demand draft for the maximum amount of his/ her Bid in favour of the Escrow Account of the Escrow Collection Bank(s) (for details refer to the paragraph “Payment Instructions” on Page No. ___of this Red Herring Prospectus) and submit the same to the member of the Syndicate to whom the Bid is being submitted. Bid-cum-Application Forms accompanied by cash or stockinvest shall not be accepted. The maximum bid price has to be paid at the time of submission of the Bid-cum-Application Form based on the highest bidding option of the Bidder. The members of the Syndicate shall deposit the cheque or demand draft with the Escrow Collection Bank(s), which will hold the monies for the benefit of the Bidders till the Designated Date. On the Designated Date, the Escrow Collection Bank(s) shall transfer the funds from the Escrow Account, as per the terms of the Escrow Agreement, into the Public Issue Account and Refund Account. Not later than 15 days from the Bid / Issue Closing Date, our Company will instruct the Refund Banker to refund all amount payable to unsuccessful Bidders and also the excess amount paid on bidding, if any, after adjustment for allocation to the Bidders. Each category of Bidders (i.e. Eligible Employees, QIBs, Non Institutional Bidders and Retail Individual Bidders) would be required to pay their applicable Margin Amount at the time of the submission of the Bid-cum-Application Form. The Margin Amount payable by each category of Bidders is mentioned under the heading “Issue Structure” on page ___ of this Red Herring Prospectus. Where the Margin Amount applicable to the Bidder is less than 100% of the Bid Amount, any difference between the amount payable by the Bidder for Equity Shares allocated at the Issue Price and the Margin Amount paid at the time of Bidding, shall be payable by the Bidder no later than the Pay-in-Date, which shall be a minimum period of 2 (two) days from the date of communication of the allocation list to the members of the Syndicate by the Registrar to the Issue. If the payment is not made favouring the Escrow Account within the time stipulated above, the Bid of the Bidder is liable to be cancelled. However, if the applicable margin amount for the Bidders is 100%, the full amount of payment has to be made at the time of submission of the Bid-Cum-Application Form. QIB Bidders will be required to deposit a margin of 10% at the time of submitting of their Bids. Where the Bidder has been allocated lesser number of Equity Shares than he or she had Bid for, the excess amount paid on bidding, if any, after adjustment for allocation, will be refunded to such Bidder within 15 days from the Bid Closing Date/Issue Closing Date failing which we shall pay interest at 15% per annum for any delay beyond the periods as mentioned above. Electronic Registration of Bids a. The members of the Syndicate will register the Bids using the on-line facilities of NSE and BSE. There

will be at least one NSE/ BSE on-line connectivity to each city where a Stock Exchange is located in India and the Bids are accepted.

b. NSE and BSE will offer a screen-based facility for registering Bids for the Issue. This facility will be

available on the terminals of the members of the Syndicate and their authorized agents during the Bidding Period. Members of the Syndicate can also set up facilities for off-line electronic registration of Bids subject to the condition that they will subsequently download the off-line data file into the on-line

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facilities for book building on a regular basis. On the Bid / Issue Closing Date, the Syndicate Member shall upload the Bids till such time as may be permitted by NSE and BSE.

c. The aggregate demand and price for Bids registered on their electronic facility of NSE and BSE will be

uploaded on a regular basis and display graphically the consolidated demand at various price levels. This information can be assessed on BSE’s website at www.bseindia.com or on NSE’s website at www.nseindia.com.

d. At the time of registering each Bid, the members of the Syndicate shall enter the following details of the

investor in the online system: • Name of the bidder (Bidders should ensure that the name given in the Bid cum application form

is exactly the same as the Name in which the Depositary Account is held. In case the Bid cum Application Form is submitted in joint names, bidders should ensure that the Depository Account is also held in the same joint names and are in the same sequence in which they appear in the Bid cum Application Form).

• Investor Category – Individual, Corporate, NRI, QIBs, FII, Mutual Fund, etc.

• Numbers of Equity Shares bid for.

• Bid price and applicable Margin Amount.

• Bid-cum-Application Form Number.

• Whether payment is made upon submission of Bid-cum-Application Form.

• Depository Participant Identification Number and Client Identification Number of the Demat

Account of the Bidder. e. A system generated TRS will be given to the Bidder as a proof of the registration of each of the bidding

options. It is the Bidder’s responsibility to obtain the TRS from the members of the Syndicate. The registration of the Bid by the members of the Syndicate does not guarantee that the Equity Shares shall be allocated either by the members of the Syndicate or our Company.

f. Such TRS will be non-negotiable and by itself will not create any obligation of any kind. g. Consequently, all or any of the members of the Syndicate may reject QIB Bids provided the rejection is

at the time of receipt of such Bids and the reason for rejection of the Bid is communicated to the Bidder at the time of such rejection. In case of Bidders under Employee Reservation Portion, Non-Institutional Bidders and Retail Individual Bidders, bids would not be rejected except on the technical grounds listed on Page ___ of this Red Herring Prospectus.

h. It is to be distinctly understood that the permission given by NSE and BSE to use their network and

software of the online IPO system should not in any way be deemed or construed to mean that the compliance with various statutory and other requirements by our Company or BRLM are cleared or approved by NSE and BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the compliance with the statutory and other requirements nor does it take any responsibility for the financial or other soundness of our Company, our Promoter, our Management or any scheme or project of our Company.

i. It is also to be distinctly understood that the approval given by NSE and BSE should not in any way be

deemed or construed that this Red Herring Prospectus has been cleared or approved by the NSE and BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the

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contents of this Red Herring Prospectus; nor does it warrant that the Equity Shares will be listed or will continue to be listed on the NSE and BSE.

j. Only Bids that are uploaded on the Online IPO system of the NSE and BSE shall be considered for

allocation. In case of discrepancy of data between the NSE or the BSE and the members of the syndicate, the decision of the BRLM, based on the physical records of Bid cum Application Form, shall be final and binding in all concerned.

Build Up of the Book and Revision of Bids. a. Bids registered by various Bidders through the members of the Syndicate shall be electronically

transmitted to the NSE or BSE mainframe on on-line basis. Data would be uploaded on a regular basis. b. The book gets build up at various price levels. This information will be available with the BRLM on a

regular basis. c. During the Bidding Period, any Bidder who has registered his or her interest in the Equity Shares at a

particular price level is free to revise his or her Bid within the price band using the printed Revision Form, which is a part of the Bid-cum-Application Form.

d. Revisions can be made in both the desired numbers of Equity Shares and the bid price by using the

Revision Form. Apart from mentioning the revised options in the revision form, the Bidder must also mention the details of all the options in his or her Bid-cum-Application Form or earlier Revision Form. For example, if a Bidder has bid for three options in the Bid-cum-Application Form and he is changing only one of the options in the Revision Form, he must still fill the details of the other two options that are not being changed, in the Revision Form unchanged. Incomplete or inaccurate Revision Forms will not be accepted by the members of the Syndicate.

e. The Bidder can make this revision any number of times during the Bidding Period. However, for any

revision(s) in the Bid, the Bidders will have to use the services of the same member of the Syndicate through whom he or she has placed the original Bid. Bidders are advised to retain copies of the blank Revision Forms and the revised Bid must be made only in such Revision Form or copies thereof.

f. Any revision of the Bid shall be accompanied by payment in the form of cheque or demand draft for the

incremental amount, if any, to be paid on account of the upward revision of the Bid. The excess amount, if any, resulting from downward revision of the Bid would be returned to the Bidder at the time of refund in accordance with the terms of the Red Herring Prospectus. In case of QIBs, the members of the Syndicate may at their sole discretion waive the payment requirement at the time of one or more revisions by the QIB Bidders.

g. When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and get a revised TRS

from the members of the Syndicate. It is the responsibility of the Bidder to request for and obtain the revised TRS, which will act as proof of his or her having revised the previous Bid.

Price Discovery and Allocation a. After the Bid/Issue Closing Date, the BRLM shall analyse the demand generated at various price levels

and discuss pricing strategy with us. b. We, in consultation with the BRLM shall finalize the Issue Price and the number of Equity Shares to be

allotted in each investor category. c. The allocation in the Issue to Non-Institutional Bidders and Retail Individual Bidders of at least 15% and

35% of the Net Issue respectively, and the allocation to QIBs for at least 50% of the Net Issue, would be on proportionate basis, in the manner specified in the SEBI Guidelines and the Red Herring Prospectus, in consultation with Designated Stock Exchange, subject to valid Bids being received at or above the Issue Price.

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d. In case of over-subscription in all categories, at least 50% of the Net Issue shall be available for

allocation on a proportionate basis to QIB Bidders out of which 5% shall be available to Mutual Funds. Mutual Funds participating in the 5% share in the QIB Portion will also be eligible for allocation in the remaining QIB Portion. However, if the aggregate demand by Mutual Funds is less than 5% of the QIB portion the balance Equity Shares from the portion specifically available for allocation to Mutual Funds in the QIB Portion will first be added to the QIB Portion and be allocated proportionately to the QIB Bidders in proportion to their Bids. Further, at least 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and at least 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price.

Under-subscription, if any, in any category except in the QIB category would be met with spill-over from other categories at our sole discretion, in consultation with the BRLM. If a minimum allotment of 50% of the Net Issue is not made to the QIBs, the entire subscription monies shall be refunded.

e. QIB Bidders will be required to deposit the QIB Margin Amount at the time of submitting of their Bids.

After the closure of bidding, the level of subscription in the various categories shall be determined. Based on the level of subscription, additional margin money, if any, shall be called for from the QIB Bidders. The QIB Bidders shall pay such additional margin money within a period of two days from the date of the letter communicating the request for such additional margin money.

f. The BRLM, in consultation with our Company shall notify the Syndicate Members of the Issue Price and

allocations to their respective Bidders, where the full Bid Amount has not been collected from the Bidders.

g. Allocation to NRIs, FIIs registered with SEBI or Mutual Funds or FVCIs registered with SEBI will be

subject to applicable laws, rules, regulations, guidelines and approvals. h. We in consultation with the BRLM reserve the right to cancel the Issue any time after the Bid/Issue

Opening Date but before the Allottment Date without assigning reasons whatsoever. i. In terms of SEBI Guidelines, QIB Bidders shall not be allowed to withdraw their Bid after the Bid /

Issue Closing Date. j. The allotment details shall be put on the website of the Registrar to the Issue. Signing of Underwriting Agreement and RoC Filing (a) We, the BRLM, and the Syndicate Members shall enter into an Underwriting Agreement on finalization of the Issue Price. (b) After signing the Underwriting Agreement, we will update and file the updated Red Herring Prospectus with RoC, which then would be termed ‘Prospectus’. The Prospectus would have details of the Issue Price, Issue Size, underwriting arrangements and would be complete in all material respects. (c) We will file a copy of the Prospectus with RoC, Pune in terms of section 56 and section 60 of the Companies Act. Advertisement regarding Issue Price and Prospectus After filing of the Prospectus with the RoC, a statutory advertisement will be issued by our company in a widely circulated English national newspaper and a Hindi national newspaper of wide circulation. This advertisement, in addition to the information that has to be set out in the statutory advertisement, shall

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indicate the Issue Price. Any material updates between the date of Red Herring Prospectus and the date of Prospectus will be included in such statutory advertisement. Issuance of Intimation Note and Confirmation of Allocation Note to bidders, other than QIBs a) Upon approval of the basis of Allotment by the Designated Stock Exchange, the BRLM or the Registrar to the Issue shall send to the members of the Syndicate a list of their Bidders who have been allocated Equity Shares in the Issue. The approval of the basis of allocation by the Designated Stock Exchange for QIB Bidders may be done simultaneously with or prior to the approval of the basis of allocation for the Retail and Non-Institutional Bidders. The investor should note that our Company shall ensure that the demat credit of the Equity Shares persuant to Allottmeent shall be made on the same date to all the investors in this Issue. b) The BRLM or the members of the Syndicate would then send the CAN to their Bidders who have been allocated Equity Shares in the Issue. The dispatch of a CAN shall be deemed a valid, binding and irrevocable contract for the Bidder to pay the Balance Amount Payable for all the Equity Shares allocated to such Bidder. Those Bidders who have not paid the Bid Amount in full into the Escrow Account at the time of bidding shall pay in full the amount payable into the Escrow Account by the Pay-in Date specified in the CAN. c) Bidders who have been allocated Equity Shares and who have already paid into the Escrow Account at the time of bidding shall directly receive the CAN from the Registrar to the Issue subject, however, to realisation of their cheque or demand draft paid into the Escrow Account. The dispatch of a CAN shall be deemed as a valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for all the Equity Shares to be allotted to such Bidder. Issuance of Intimation Note and Confirmation of Allocation Note to QIB bidders. After the Bid/Issue Closing Date, an electronic book will be prepared by the Registrar on the basis of Bids uploaded on the BSE/ NSE system. This shall be followed by a physical book prepared by the Registrar on the basis of Bid-cum-Application Forms received. Based on the electronic book or the physical book, as the case may be, QIBs may be sent a CAN, indicating the number of Equity Shares that may be allocated to them. This CAN is subject to the basis of final Allotment, which will be approved by the Designated Stock Exchange and reflected in the physical book prepared by the Registrar. Subject to SEBI Guidelines, certain Bid applications may be rejected due to technical reasons, non-receipt of funds, cancellation of cheques, cheque bouncing, incorrect details, etc., and these rejected applications will be reflected in the reconciliation and basis of Allotment as approved by the Designated Stock Exchange. In addition, there are foreign investment limitations applicable to the Company, which may result in a change (including potentially a decrease) in the number of Equity Shares being finally allotted to Non Resident investors (including FIIs). As a result, a revised CAN may be required to be sent to QIBs and the allocation of Equity Shares in such revised CAN may be different from that specified in the earlier CAN. QIBs should note that they may be required to pay additional amounts, if any, by the Pay-in Date specified in the revised CAN, for any increased allocation of Equity Shares. The CAN will constitute the valid, binding and irrevocable contract (subject only to the issue of a revised CAN) for the QIB to pay the entire Issue Price for all the Equity Shares allocated to such QIB. The revised CAN, if issued, will supersede in entirety the earlier CAN. Designated Date, Allotment of Equity Shares and Transfer of Funds to Public Issue Account a) Our Company will ensure that the allotment of Equity Shares is done within 15 days of the Bid/Issue Closing Date. After the funds are transferred from the Escrow Account to the Public Issue Account on the Designated Date, we would allot the Equity Shares to the allottees and would ensure the credit to the successful Bidder’s depository account within two working days from the date of alottment. b) As per SEBI Guidelines, Equity Shares will be issued and Allotment shall be made only in the dematerialised form to the allottees.

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c) After the funds are transferred from the Escrow Accounts to the Issue Account on the Designated Date, our Company will allot the Equity Shares to the Allottees. d) Successful Bidders will have the option to rematerialize the Equity Shares so allotted/transferred if they so desire as per the provisions of the Companies Act and the Depositories Act. Investors are advised to instruct their Depository Participant to accept the Equity Shares that may be allocated to them pursuant to this Issue. LETTERS OF ALLOTMENT OR REFUND ORDERS We shall give credit of Equity Share allotted to the beneficiary account with Depository Participants within 2 (Two) working days from the Date of Allottment. Applicants residing at 15 centres where clearing houses are managed by the Reserve Bank of India (RBI) will get refunds through ECS only (subject to availability of all information for crediting the refund through ECS) except where applicant is otherwise disclosed as eligible to get refunds through direct credit and RTGS. In case of other applicants, our Company shall ensure dispatch of refund orders, if any, of value up to Rs. 1,500 by “Under Certificate of Posting”, and shall dispatch refund orders above Rs. 1,500, if any, by registered post or speed post, except for Bidders who have opted to receive refunds through the ECS facility. Applicants to whom refunds are made through Electronic transfer of funds will be send a letter (Refund Advice) through ordinary post intimating them about the mode of credit of refund within 15 working days of closure of Issue and adequate funds for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue. In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI Guidelines, we further undertake that: ● Allotment of Equity Shares will be made only in dematerialised form within 15 days from the Bid/Issue Closing Date; ● Dispatch of refund orders will be done within 15 days from the Bid/Issue Closing Date; ● We shall pay interest at 15% per annum (for any delay beyond the 15 day time period as mentioned above), if allotment is not made, refund orders are not dispatched and/or demat credits are not made to investors within the prescribed 15 days time. ● We will provide adequate funds required for dispatch of refund orders or allotment advice to the Registrar to the Issue. Save and except refunds effected through the electronic mode i.e. ECS, NEFT, direct credit or RTGS, refunds will be made by cheques, pay-orders or demand drafts drawn on a bank appointed by us, as an Escrow Collection Bank and payable at par at places where Bids are received. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders. General Instructions Do’s: a) Check if you are eligible to apply having regard to applicable laws, rules, regulations, guidelines and approvals and the terms of this Red Herring Prospectus. b) Read all the instructions carefully and complete the Bid-cum-Application Form [(White), (Blue) or (Pink) in colour] as the case may be; c) Ensure that the details about Depository Participant and beneficiary account are correct;

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d) Ensure that the Bids are submitted at the bidding centres only on Bid cum Application forms bearing the stamp of a member of the Syndicate; e) Ensure that you have been given a TRS for all your Bid options; f) Submit Revised Bids to the same member of the Syndicate through whom the original Bid was placed and obtain a revised TRS; g) Ensure that the bid is within the price band; h) Investors must ensure that the name(s) given in the Bid-cum-Application Form is exactly the same as the name(s) in which the Beneficiary Account is held with the Depository Participant. In case, the Bid-cum-Application Form is submitted in joint names, investors should ensure that the beneficiary account is held in the same joint names and in the same sequence as they appear in the Bid-cum- Application Form; i) If your Bid is for Rs. 50,000 or more, ensure that you mention your PAN allotted under the I.T. Act and ensure that you have attached a copy of your PAN card or PAN allotment letter with the Bid-cum-Application Form. In case the PAN has not been allotted, mention “Not Allotted” in the appropriate place. (See section titled “Issue Procedure – PAN” on page ___ of this Red Herring Prospectus). Don’ts: a. Do not Bid for lower than minimum Bid size; b. Do not Bid or revise the Bid Price to less than floor price or higher than the cap price; c. Do not Bid on another Bid cum Application Form after you have submitted a Bid to the members of the

Syndicate; d. Do not pay Bid amount in cash, through Stock Invest, by money order or postal order; e. Do not Bid at cut off price (for QIB Bidders and Non-Institutional Bidders for whom the Bid Amount

exceeds Rs. 1,00,000/-); f. Do not fill up the Bid cum Application Form such that the Equity shares bid for exceeds the investment

limit or maximum number of Equity Shares that can be held by a Bidder under the applicable laws or regulations or maximum amount permissible under the applicable regulations or under the terms of the Red Herring Prospectus;

g. Do not send Bid cum Application Form by post; instead submit the same to a member of the Syndicate

only. h. Do not provide your GIR number instead of PAN number; i. Do not submit the Bid without the QIB Margin Amount, in case of a Bid by a QIB. Bids by Eligible Employees For the purpose of the Employee Reservation Portion, Eligible Employee means Permanent Employees / Executive Director(s) of our Company who are Indian Nationals, are based in India and are physically present in India on the date of submission of the Bid- cum-Application Form. Bids under Employee Reservation Portion by Eligible Employees shall be. • Made only in the prescribed Bid-cum-Application Form or Revision Form (i.e. pink in colour).

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• Eligible Employees, as defined above, should mention the “Employee Number” at the relevant place in the Bid-cum-Application Form, in addition to other details contained therein.

• The sole/ first bidder should be Eligible Employees as defined above. • Only Eligible Employees would be eligible to apply in this Issue under the Employee Reservation

Portion. • Only those Bids by Eligible Employees, which are received at or above the Issue Price, would be

considered for allocation under this category. • Eligible Employees who apply or bid for securities of or for a value of not more than Rs. 100,000 in any

of the bidding options can apply at Cut-Off. This facility is not available to Eligible Employees whose minimum Bid amount exceeds Rs. 100,000.

• The maximum bid in this category by any Eligible Employee cannot exceed the issue size. • Bid/ Application by Eligible Employees can also be made in the “Net Issue to Public” Portion and such

Bids shall not be treated as multiple Bids. If the aggregate demand in this category is less than or equal to 50,000 Equity Shares at or above the Issue Price, full allocation shall be made to the Eligible Employees to the extent of their demand. • The unsubscribed portion, in this category may be added to the other reserved category. Under-

subscription in this category after such inter se adjustment would be added back to the Non-Institutional and Retail Individual Bidders category in the ratio of 50:50. In case of under-subscription in the Net Issue to Public Portion, except for the QIB portion spill over to the extent of under-subscription shall be permitted from the Employee Reservation Portion.

• If the aggregate demand in this category is greater than 50,000 Equity Shares at or above the Issue Price, the allocation shall be made on a proportionate basis. For the method of proportionate basis of allocation, refer to Para “Basis of Allotment or Allocation” on page [•] of this Draft Red Herring Prospectus.

Instructions for Completing the Bid-Cum-Application Form Bidders can obtain Bid-cum-Application Forms and / or Revision Forms from our Registered Office or from the BRLM or from a member of the Syndicate. Bids and Revisions of Bids Bids and revisions of Bids must be: (a) Made only in the prescribed Bid-cum-Application Form or Revision Form, as applicable (white colour for Resident Indians, blue colour for NRI or FII or foreign venture capital fund registered with SEBI applying on repatriation basis and Pink colour marked “Employees” for Employees of our Company). (b) Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the instructions contained herein, in the Bid-cum- Application Form or in the Revision Form. Incomplete Bid-cum-Application Forms or Revision Forms are liable to be rejected. (c) The Bids from the Retail Individual Bidders must be for a minimum of ___ Equity Shares and in multiples of ___ thereafter subject to a maximum of Rs. 1,00,000/-. (d) For Non-institutional and QIB Bidders, Bids must be for a minimum of such number of Equity Shares that the Bid amount exceeds Rs. 1,00,000/- and in multiples of ___ Equity Shares thereafter. Bids cannot be made for more than the size of the Issue. Bidders are advised to ensure that a single bid from them should not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable laws or regulations. (e) In single name or in joint names (not more than three and in the same order as their Depository Participant details).

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(f) Thumb impressions and signatures other than in the languages specified in the Eighth Schedule in the Constitution of India must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate under official seal. Bidder’s Depository Account Details IT IS MANDATORY FOR ALL THE BIDDERS TO GET THEIR EQUITY SHARES IN THE DEMATERIALISED FORM. ALL BIDDERS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT’S IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE BID-CUM-APPLICATION FORM. INVESTORS MUST ENSURE THAT THE NAME GIVEN IN THE BID CUM APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE BID-CUM-APPLICATION FORM IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE BID CUM APPLICATION FORM. Bidders should note that on the basis of name of the Bidders, Depository Participant’s name, Depository Participant-Identification number and Beneficiary Account Number provided by them in the Bid cum Application Form, the Registrar to the Issue will obtain from the Depository demographic details of the Bidders such as address, occupation, bank account details for printing on refund orders / refund advices or for giving refund through any of the mode namely ECS or Direct Credit or RTGS or NEFT (hereinafter referred to as Demographic Details). Hence, Bidders should carefully fill in their Depository Account details in the Bid-cum-Application Form. These Demographic Details would be used for all correspondence with the Bidders including mailing of the refund orders/refund advice / for credit of Refunds through ECS or Direct Credit or RTGS or NEFT for refunds/CANs/Allocation Advice and printing of Bank particulars on the refund order / refund advice and the Registrar would not use the Demographic Details given by Bidders in the Bid-cum-Application Form for these purposes. Hence, Bidders are advised to update their Demographic Details as provided to their Depository Participants. By signing the Bid-cum-Application Form, Bidder would have deemed to authorize the depositories to provide, upon request, to the Registrar to the Issue, the required Demographic details as available on its records. Refund Advice / Refund Orders/ Allocation Advice/ CANs would be mailed at address of the first Bidder as per the Demographic Details received from the Depositories. Bidders may note that delivery of refund orders/ refund advice/ allocation advice/ CANs may get delayed if the same once sent to the address obtained from the depositories are returned undelivered. In such an event, the address and other details given by the Bidders in the Bid cum Application Form would be used only to ensure dispatch of refund orders. Please note that any such delay shall be at the Bidders sole risk and neither our Company nor the BRLM shall be liable to compensate the Bidder for any losses caused to the Bidder 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 match three parameters, namely, names of the Bidders (including the order of names of joint holders), the Depository Participant’s identity (DP ID) and the beneficiary’s identity, then such Bids are liable to be rejected. Bids by non-residents including NRIs, FIIs and Foreign Venture capital Funds registered with SEBI on a repatriation basis. Bids and Revision to Bids must be made:

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1) On the prescribed Bid-cum-Application Form or Revision Form, as applicable (blue in colour) and completed in full in BLOCK LETTERS in ENGLISH in accordance with the instructions contained therein. 2) In a single name or joint names (not more than three) 3) NRIs for a Bid Amount of up to Rs. 1,00,000 would be considered under the Retail Individual Bidders portion for the purposes of allocation and Bids for a Bid amount of more than Rs. 1,00,000 would be considered under the Non-Institutional Bidders portion for the purposes of allocation; by FIIs for a minimum of such number of Equity Shares and in multiples of ___ thereafter that the Bid Amount exceeds Rs. 1,00,000. For further details see “Maximum and Minimum Bid Size” at page ___ of this Red Herring Prospectus. 4) In the names of individuals, or in the names of FIIs but not in the names of minors, OCBs, firms or partnerships, foreign nationals (excluding NRIs) or their nominees. 5) Refunds, dividends and other distributions, if any, will be payable in Indian Rupees only and net of bank charges and / or commission. In case of Bidders who remit money through Indian Rupee drafts purchased abroad, such payments in Indian Rupees will be converted into U.S. Dollars or any other freely convertible currency as may be permitted by the RBI at the rate of exchange prevailing at the time of remittance and will be dispatched by registered post or if the Bidders so desire, will be credited to their NRE accounts, details of which should be furnished in the space provided for this purpose in the Bidcum-Application Form. We will not be responsible for loss, if any, incurred by the Bidder on account of conversion of foreign currency. It is to be distinctly understood that there is no reservation for Non Residents, NRIs, FIIs and Foreign Venture Capital Funds and all Non Residents, NRI, FII and Foreign Venture Capital Fund applicants will be treated on the same basis with other categories for the purpose of allocation. As per the existing policy of the Government of India, OCBs cannot participate in this Issue. Bids under Power of Attorney In case of bids made pursuant to a power of attorney or by limited companies, corporate bodies or registered societies, a certified copy of the Power of Attorney or the relevant resolution or authority, as the case may be, along with a certified copy of the Memorandum & Articles of Association and/or Bye Laws must be lodged along with the Bid-cum-Application Form. Failing this, our company reserves the right to reject such Bids in whole or in part, without assigning any reason therefore. In case of Bids made pursuant to a Power of Attorney by FIIs, VCFs and Mutual Funds, a certified copy of the power of attorney or the relevant resolution or authority, as the case may be, along with a certified copy of their SEBI registration certificate must be submitted with the Bid-cum-Application Form. Failing this, we reserve the right to reject such Bids in whole or in part, without assigning any reason therefore. In case of Bids made by insurance companies registered with Insurance Regulatory and Development Authority, a certified copy of the Certificate of Registration issued by Insurance Regulatory and Development Authority must be submitted with the Bid-cum-Application Form. Failing this, we reserve the right to reject such Bids in whole or in part, without assigning any reason therefore. In case of Bids made by provident fund with the minimum corpus of Rs. 2500 Lacs and pension fund with the minimum corpus of Rs. 2500 Lacs, a certified copy of certificate from a chartered accountant certifying the corpus of the provident fund/ pension fund must be lodged with the Bid-cum-Application Form. Failing this, we reserve the right to reject such Bids in whole or in part, without assigning any reason therefor. We, in our absolute discretion, reserve the right to relax the above condition of simultaneous lodging of the power of attorney along with the Bid-cum-Application Form, subject to such terms and conditions as our Company/BRLM may deem fit.

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Payment Instructions We shall open an Escrow Account of our Company with the Escrow Collection Banks for the collection of the Bid Amounts payable upon submission of the Bid cum Application Form and for amounts payable pursuant to allocation in the Issue. Each Bidder shall draw a cheque or demand draft for the amount payable on the Bid and/or on allocation as per the following terms: Payment into Escrow Account 1. The Bidders shall draw a Payment Instrument for the applicable margin in favor of the Esrow Account with the submission of the Bid-cum-Application Form and submit the same to the members of the Syndicate. For categories other than QIBs, the applicable margin amount is equal to 100%, whereas for QIBs it is 10%. 2. In case the above Margin Amount paid by the Bidders during the Bidding Period is less than the Issue Price multiplied by the Equity Shares allocated to the Bidder, the balance amount shall be paid by the Bidders into the Escrow Account of our Company within the period specified in the Intimation Note / CAN which shall be subject to a minimum period of two days from the date of communication of the allocation list to the members of the Syndicate by the BRLM. 3. The payment instruments for payment into the Escrow Account should be drawn in favour of: a. In case of Resident Bidders: “Escrow Account - VIL - IPO - R” b. In case of Non Resident Bidders (on repatriable basis): “Escrow Account - VIL - IPO - NR” c. In case of Eligible Employees: "Escrow Account - VIL - IPO - Employee" d. In case of resident QIB bidders: “Escrow Account - VIL - IPO – QIB - R” e. In case of non - resident QIB bidders: “Escrow Account - VIL - IPO – QIB - NR” 4. In case of Bids by NRIs applying on repatriation basis, the payments must be made through Indian Rupee drafts purchased abroad or cheques or bank drafts, for the amount payable on application remitted through normal banking channels or out of funds held in Non-Resident External (NRE) Accounts or Foreign Currency Non-Resident (FCNR) accounts, maintained with banks authorised to deal in foreign exchange in India, along with documentary evidence in support of the remittance. Payment will not be accepted out of a Non-Resident Ordinary (NRO) Account of a Non-Resident bidder bidding on a repatriation basis. Payment by drafts should be accompanied by a bank certificate confirming that the draft has been issued by debiting an NRE or FCNR Account. 5. In case of Bids by Eligible NRIs applying on non-repatriation basis, the payments must be made through Indian Rupee Drafts purchased abroad or cheques or bank drafts, for the amount payable on application remitted through normal banking channels or out of funds held in NRE Accounts or FCNR Accounts, maintained with banks authorised to deal in foreign exchange in India, along with documentary evidence in support of the remittance or out of a NRO Account of a Non-Resident Bidder bidding on a non-repatriation basis. Payment by drafts should be accompanied by a bank certificate confirming that the draft has been issued by debiting an NRE or FCNR or NRO Account.

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6. In case of Bids by FIIs, FVCIs registered with SEBI the payment should be made out of funds held in a Special Rupee Account along with documentary evidence in support of the remittance. Payment by drafts should be accompanied by a bank certificate confirming that the draft has been issued by debiting the Special Rupee Account. 7. Where a Bidder has been allocated a lesser number of Equity Shares than what the Bidder has Bid for, the excess amount, if any, paid on bidding, after adjustment towards the balance amount payable on the Equity Shares allocated, will be refunded to the Bidder from the Refund Account. 8. The monies deposited in the Escrow Account will be held for the benefit of the Bidders till the Designated Date. 9. On the Designated Date, the Escrow Collection Banks shall transfer the funds from the Escrow Account as per the terms of the Escrow Agreement into the Public Issue Account with the Bankers to the Issue. 10. On the Designated Date and no later than 15 days from the Bid/Issue Closing Date, the Escrow Collection Bank shall also refund all amounts payable to unsuccessful Bidders and also the excess amount paid on Bidding, if any, after adjusting for allocation to the Bidders. Payments should be made by cheque, or demand draft drawn on any bank (including a Co-operative bank), which is situated at, and is a member of or sub-member of the bankers’ clearing house located at the centre where the Bid-cum-Application Form is submitted. Outstation cheques/bank drafts drawn on banks not participating in the clearing process will not be accepted and applications accompanied by such cheques or bank drafts are liable to be rejected. Cash/ stock invest/money orders/ postal orders will not be accepted. Investors in the QIB category may also make payments by RTGS. Bidders are advice to mention the number of Bid cum Application Form on the reverse of the cheque/demand draft to avoid misuse of instruments submitted along with the Bid cum Application Forms. Payment by Stock invest In terms of Reserve Bank of India Circular No. DBOD No. FSC BC 42/24.47.00/2003-2004 dated November 5, 2003, the option to use the stock invest instrument in lieu of cheques or bank drafts for payment of Bid money has been withdrawn. Hence, payment through stock invest will not be accepted. Submission of Bid-cum-Application Form All Bid-cum-Application Forms or Revision Forms duly completed and accompanied by Account Payee cheques or drafts shall be submitted to the member of the syndicate at the time of submitting the Bid. No separate receipts shall be issued for the money payable on submission of Bid-cum-Application Form or Revision Form. However, the collection centre of the Syndicate Member will acknowledge the receipt of the Bid cum Application Forms or Revision Forms by stamping and returning to the Bidder the acknowledgement slip. This acknowledgement slip will serve as the duplicate of the Bid-cum-Application Form for the records of the Bidder. OTHER INSTRUCTIONS Joint Bids in the case of Individuals Bids may be made in single or joint names (not more than three). In case of joint Bids, all payments will be made out in favour of the Bidder whose name appears first in the Bid cum Application Form or Revision Form. All communication will be addressed to the First Bidder and will be dispatched to his or her address as per the Demographic Details received from the depository.

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Multiple Bids A Bidder should submit only one Bid (and not more than one) for the total number of Equity Shares required. Two or more Bids in single or joint names will be deemed to be multiple bids if the sole and/ or first bidder is one and the same. In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fund registered with SEBI and such Bids in respect of more than one scheme of the mutual fund will not be treated as multiple bids provided that the Bids clearly indicate the scheme concerned for which the Bid has been made. Bids by Eligible Employees can also be made in the Net Issue to Public category and such Bids will not be considered to be multiple bids. We reserve the right to reject, in our absolute discretion, all or any multiple Bids in any or all categories. Permanent Account Number (PAN) Where Bid(s) is/are for Rs.50,000 or more, the Bidder or in the case of a Bid in joint names, each of the Bidders, should mention his/her Permanent Account Number (PAN) allotted under the I.T. Act. The copy of the PAN card or PAN allotment letter is required to be submitted with the application form. Applications without this information and documents will be considered incomplete and are liable to be rejected. It is to be specifically noted that Bidders should not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this ground. In case the Sole/First Bidder and Joint Bidder(s) is/are not required to obtain PAN, each of the Bidder(s) shall mention “Not Applicable” and in the event that the sole Bidder and/or the joint Bidder(s) have applied for PAN which has not yet been allotted, each of the Bidder(s) should mention “Applied for” in the Bidcum-Application Form. Further, where the Bidder(s) has/have mentioned “Applied for” or “Not Applicable”, the Sole/First Bidder and each of the Joint Bidder(s), as the case may be, would be required to submit Form 60 (Form of declaration to be filed by a person who does not have a permanent account number and who enters into any transaction specified in rule 114B) or Form 61 (form of declaration to be filed by a person who has agricultural income and is not in receipt of any other income chargeable to income tax in respect of transactions specified in rule 114B of I.T. Act, 1962), as may be applicable, duly filled along with a copy of any one of the following documents in support of the address: (a)Ration Card (b) Passport (c) Driving License (d) Identity Card issued by any institution (e) Copy of the electricity bill or telephone bill showing residential address (f) Any document or communication issued by any authority of the Central Government, State Government or local bodies showing residential address (g)Any other documentary evidence in support of address given in the declaration. It may be noted that Form 60 and Form 61 have been amended vide a notification issued on December 1, 2004 by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes. All Bidders are requested to furnish, where applicable, the revised Form 60 or 61 as the case may be. Unique Identification Number (UIN) With effect from 01st July 2005, SEBI has decided to suspend all fresh registrations for obtaining Unique Identification Number (MAPIN) and the requirement to quote MAPIN under MAPIN Regulations/Circulars vide its circular MAPIN/Circular-13/2005. However, in a recent press release dated December 30, 2005, SEBI has approved certain policy decisions and has now decided to resume registrations for obtaining UINs in a phased manner. The press release states that the cut off limit for obtaining UIN has been raised from the existing limit of trade order value of Rs.100,000 to Rs.500,000 or more. The limit will be reduced progressively. For trade order value of less than Rs.500,000,

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an option will be available to investors to obtain either the PAN or UIN. These changes are, however, not effective as of the date of the Red Herring Prospectus and SEBI has stated in the press release that the changes will be implemented only after necessary amendments are made to the SEBI MAPIN regulations. Our Right to Reject Bids In case of QIB Bidders, Our Company in consultation with the BRLM may reject Bids provided that the reason for rejecting the same shall be provided to such Bidders in writing. In case of Non-Institutional Bidders and Retail Individual Bidders, we have the right to reject Bids based on technical grounds only. Consequent refunds shall be made by cheque or pay order or draft or ECS or Direct Credit and will be sent to the Bidder’s address at the Bidder’s risk. Grounds for Technical Rejections Bidders are advised to note that Bids are liable to be rejected on technical grounds, including the following:- 1. Amount paid doesn’t tally with the amount payable for the highest value of Equity Shares bid for; 2. Bank account details (for refund) are not given; 3. Age of First Bidder not given; 4. Bids by persons not competent to contract under the Indian Contract Act, 1872, including minors, insane persons; 5. PAN Number not given if Bid is for Rs. 50,000 or more or copy of PAN, Form 60 or Form 61 as applicable and GIR number given instead of PAN; 6. Bids for lower number of Equity Shares than specified for that category of investors; 7. Bids at a price less than the lower end of the Price Band; 8. Bids at a price more than the higher end of the Price Band; 9. Bids at cut-off price by Non-Institutional Bidders and QIB Bidders; 10. Bids for number of Equity Shares, which are not in multiples of ___; 11. Category not ticked; 12. Multiple bids as defined in this Red Herring Prospectus; 13. In case of Bid under power of attorney or by limited companies, corporate, trust etc., relevant documents are not submitted; 14. Bids accompanied by Stock invest/money order/ postal order/ cash; 15. Bids not duly signed by the sole/joint Bidders; 16. Bid-cum-Application Form does not have the stamp of the Syndicate Member(s); 17. Bid-cum-Application Form does not have Bidder’s depository account details;

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18. Bid-cum-Application Forms are not submitted by the Bidders within the time prescribed as per the Bid-cum-Application Form and this Red Herring Prospectus and as per the instructions in this Red Herring Prospectus and the Bid-cum-Application Form; 19. Bids for amounts greater than the maximum permissible amounts prescribed by the relevant regulations; 20. In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Bidders (including the order of names of joint holders), the depository participant’s identity (DP ID) and the beneficiary’s identity; 21. Bids by OCBs; 22. Bids by U.S. persons other than “qualified institutional buyers” as defined in Rule 144A of the Securities Act. 23. Bids by NRIs not disclosing their residential status. 24. Bids where clear funds are not available in the Escrow Account as per the final certificate from the Escrow Collection Bank(s); and 25. Bids by persons prohibited from buying, selling or dealing in shares directly or indirectly by SEBI or any other regulatory authority. Equity Shares in Dematerialised Form with NSDL or CDSL As per the provisions of Section 68B of the Companies Act, the Equity Shares in this Issue shall be allotted only in a dematerialized form, (i.e. not in the form of physical certificates but be fungible and be represented by the statement issued through the electronic mode). In this context, two tripartite agreements have been signed among our Company, the Depositories and the Registrar: 1. An Agreement dated [*] among NSDL, our Company and Registrar to the issue; and 2. An Agreement dated [*] among CDSL, our Company and Registrar to the issue. All bidders can seek allotment only in dematerialised mode. Bids from any Bidder without the following details of his or her depository account are liable to be rejected: 1. A Bidder applying for Equity Shares must have at least one beneficiary account with either of the Depository Participants of NSDL or CDSL prior to making the Bid. 2. The Bidder must necessarily fill in the details (including the beneficiary account number and Depository Participant’s Identification number) appearing in the Bid-cum-Application Form or Revision Form. 3. Equity Shares allotted to a Bidder will be credited in electronic form directly to the beneficiary account (with the Depository Participant) of the Bidder. 4. Names in the Bid-cum-Application Form or Revision Form should be identical to those appearing in the account details in the Depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the depository account of the Bidder(s). 5. If incomplete or incorrect details are given under the heading ‘Bidders Depository Account Details’ in the Bid-cum-Application Form or Revision Form, it is liable to be rejected.

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6. The Bidder is responsible for the correctness of his or her demographic details given in the Bid-cum-Application Form visà-vis those with his/her Depository Participant. It may be noted that Equity Shares in electronic form can be traded only on the stock exchanges having electronic connectivity with NSDL or CDSL. BSE and NSE, where Equity Shares are proposed to be listed, are connected to NSDL and CDSL. Non-transferable allotment advice or refund orders will be directly sent to the Bidder by the Registrar to this Issue. Investors are advised to instruct their DP to accept the Equity Shares that may be allocated to them, pursuant to the issue. Communications All future communications in connection with Bids made in this Issue should be addressed to the Registrar to the Issue quoting the full name of the sole or First Bidder, Bid-cum-Application Form number, Bidders Depository Account Details, number of Equity Shares applied for, date of Bid Form, name and address of the member of the Syndicate where the Bid was submitted and cheque or draft number and issuing bank thereof. Pre-Issue and Post Issue Related Problems: We have appointed Ms. Deepika Agarwal, Company Secretary, as the Compliance Officer and she may be contacted in case of any pre-Issue or post-Issue-related problems, at the following address: Ms. Deepika Agarwal, Company Secretary S- 145, MIDC Bhosari, Pune 411 026, Maharashtra Tel No: 020 30680821 Fax No: 020 30680820 E-mail: [email protected] Disposal of Applications and Application Money We shall ensure dispatch of allotment advice and/or refund orders/refund advice (in case refunds made through ECS/ Direct Credit, RTGS, NEFT) as the case may be giving credit to the Beneficiary Account of the bidders with their respective Depository Participant and submission of the allotment and listing documents to the Stock Exchanges within two working days of finalization of the basis of allotment of Equity Shares. We shall give credit of Equity Shares allotted to the beneficiary account with Depositor Participants within 15 working days of the Bid/Issue Closing Date. Applicants residing at 15 centres where clearing houses are managed by the Reserve Bank of India (RBI) will get refunds through ECS (subject to availability of all information for crediting the refund through ECS) except where applicants are otherwise disclose as eligible to get refunds through Direct Credit, NEFT or RTGS. The payment of refund, if any, would be done through various modes as given hereunder: 1. ECS – Payment of refund would be done through ECS for applicants having an account at any of the following fifteen centres: Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthapuram. This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories. 2. Direct Credit – Applicants applying through the web/internet whose service providers opt to have the refund amounts for such applicants being by way of direct disbursment by the service provider through their internal networks, the refund amounts payable to such applicants will be directly handled by the service providers and credited to bank account particulars as registered by the applicant in the demat account being

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maintained witht the service provider. The service provider, based on the information provided by the Registrar, shall carry out the disbursment of the refund amounts to the applicants. 3. RTGS – Applicants having a bank account at any of the abovementioned fifteen centres and whose refund amount exceeds Rs. 1 million, have the option to receive refund through RTGS. Such eligible applicants who indicate their preference to receive refund through RTGS are required to provide the IFSC code in the Bid-cum-application Form. In the event the same is not provided, refund shall be made through ECS. Charges, if any, levied by the Refund Bank(s) for the same would be borne by Our Company. Charges, if any, levied by the applicant’s bank receiving the credit would be borne by the applicant. 4. NEFT (National Electronic Fund Transfer) – Payment of refund shall be undertaken through NEFT wherever the applicants’ bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic Ink Character Recognition (MICR), if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the applicants have registered their nine digit MICR number and their bank account number while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the applicants through this method. The process flow in respect of refunds by way of NEFT is at an evolving stage and hence use of NEFT is subject to operational feasibility, cost and process efficiency. 5. For all other applicants, including those who have not updated their bank particulars with the MICR code, the refund orders will be despatched under certificate of posting for value up to Rs. 1,500 and through Speed Post/ Registered Post for refund orders of Rs. 1,500 and above. Such refunds will be made by cheques, pay orders or demand drafts drawn on the Escrow Collection Banks and payable at par at places where Bids are received. Bank charges, if any, for cashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders. In accordance with the Companies Act, the requirements of the stock exchanges and SEBI Guidelines, our Company, further undertakes that: ● Allotment of Equity Shares shall be made only in dematerialised form within 15 days of the Bid/Issue Closing Date; ● Refunds shall be made within 15 days from the Bid/Issue Closing Date at the sole or first Bidder’s sole risk, except for Biders who have opted to receive refunds through Direct Credit, NEFT, RTGS or ECS; and ● Our Company shall pay interest at 15% per annum (for any delay beyond the 15 day time period as mentioned above), if allotment letters/refund orders are not dispatched or refund instructions have not been given to the clearing system in the manner disclosed above. Our Company will provide adequate funds required to the Registrar to the Issue for refunds to unsuccessful applicants or allotment advice. Where refunds are made through electronic transfer of funds, a suitable communication will be sent to the bidders within 15 days of closure of the issue, giving details of the Bank where refund will be credited along with amount and expected date of electronic credit of refund. The bank account details for ECS/ Direct Credit, RTGS, National Electronic Funds Transfer (NEFT) credit will be directly taken from the depositories’ database and hence bidders are required to ensure that bank details including MICR code maintained at the depository level are updated and correct. We shall use best efforts to ensure that all steps for completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed are taken within seven working days of finalization of the basis of allotment.

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Refunds will be made by Direct Credit, ECS, RTGS cheques, pay orders or demand drafts drawn on a bank appointed by us as a refund banker and payable at par at places where Bids are received. Bank charges, if any, for cashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders. Impersonation Attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68 A of the Companies Act, which is reproduced below: “Any person who: (a) makes in a fictitious name, an application to a company for acquiring or subscribing for, any shares therein, or (b) otherwise induces a company to allot, or register any transfer of shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years.” Basis of Allotment or Allocation 1. For Retail Individual Bidders 1. Bids received from the Retail Individual Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The allocation to all the successful Retail individual Bidders will be made at the Issue Price. 2. Net Issue size less allocation to Non-Institutional Bidders and QIBs shall be available for allocation to Retail Individual Bidders who have bid in the Issue at a price, which is equal to or greater than the Issue Price. 3. If the aggregate demand in this category is less than or equal to [*] Equity Shares at or above the Issue Price, full allocation shall be made to the Retail Individual Bidders to the extent of their demand. 4. If the aggregate demand in this category is greater than[*] Equity Shares at or above the Issue Price, the allocation shall be made on a proportionate basis up to a minimum of [*] Equity Shares or in multiples of one Equity Share. For the method of proportionate basis of allocation, refer below. 2. For Non Institutional Bidders 1. Bids received from Non-Institutional Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The allocation to all successful Non-Institutional Bidders will be made at the Issue Price. 2. The Issue size less allocation to QIBs and Retail Portion shall be available for allocation to Non- Institutional Bidders who have bid in the Issue at a price, which is equal to or greater than the Issue Price. 3. If the aggregate demand in this category is less than or equal to[*] Equity Shares at or above the Issue Price, full allocation shall be made to Non-Institutional Bidders to the extent of their demand. 4. In case the aggregate demand in this category is greater than [*] Equity Shares at or above the Issue Price, allocation shall be made on a proportionate basis up to a minimum of [*] Equity Shares or in multiples of one Equity Share. For the method of proportionate basis of allotment refer below.

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3. For QIB Bidders 1. Bids received from the QIB Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The allocation to all the QIB Bidders will be made at the Issue Price. 2. The QIB Portion shall be available for allocation to QIB Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price. 3. Allotment shall be undertaken in the following manner: (a) In the first instance allocation to Mutual Funds for up to 5% of the QIB Portion shall be determined as follows: (i) In the event that Bids from Mutual Fund exceeds 5% of the QIB Portion, allocation to Mutual Funds shall be done on a proportionate basis for up to 5% of the QIB Portion. (ii) In the event that the aggregate demand from Mutual Funds is less than 5% of the QIB Portion, then all Mutual Funds shall get full allotment to the extent of valid bids received at or above the Issue Price. (iii) Equity Shares remaining unsubscribed, if any, not allocated to Mutual Funds shall be available to all QIB Bidders as set out in (b) below; (b) In the second instance allocation to all QIBs shall be determined as follows: (i) The number of Equity Shares available for this category shall be the QIB Portion less allocation only to Mutual Funds as calculated in (a) above. (ii) The subscription level for this category shall be determined based on the overall subscription in the QIB Portion less allocation only to Mutual Funds as calculated in (a) above. (iii) Based on the above, the level of the subscription shall be determined and proportionate allocation to all QIBs including Mutual Funds in this category shall be made. 4. The aggregate allocation to QIB Bidders shall be at least [*] Equity Shares. 5. In case the aggregate demand in this category is greater than [*]Equity Shares at or above the Issue Price, allocation shall be made on a proportionate basis subject to a minimum of [*] Equity Shares and in multiples of one Equity Share thereafter. For the method of proportionate basis of allocation refer below. 4. For Eligible Employees • Only Eligible Employees may apply under the Employee Reservation Portion. • Bids received from the Eligible Employees at or above the Issue Price shall be grouped together to

determine the total demand under this category. The allocation to all the successful Eligible Employees will be made at the Issue Price.

• If the aggregate demand in this category is less than or equal to 50,000 Equity Shares at or above the Issue Price, full allocation shall be made to the Eligible Employees to the extent of their demand.

• If the aggregate demand in this category is greater than 50,000 Equity Shares at or above the Issue Price, the allocation shall be made on a proportionate basis up to a minimum of [•] Equity Share. For the method of proportionate basis of allocation, refer below.

• Only Eligible Employees during the period commencing from the date of filing the Draft Red Herring Prospectus with RoC and ending with the Bid/Issue Closing Date are eligible to apply.

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Under-subscription, if any, in any category except in the QIB category would be met with spill-over from other categories at our sole discretion, in consultation with the BRLM. The BRLM, Registrar to the Issue and the Designated Stock Exchange shall ensure that the basis of allotment is finalized in a fair and proper manner in accordance with SEBI Guidelines. The drawal of lots (where required) to finalize the basis of allotment, shall be done in the presence of a public representative on the Governing Board of the Designated Stock Exchange. Procedure and Time Schedule for Allotment The Issue will be conducted through a “100% book building process” pursuant to which the Syndicate members will accept bids for the Equity Shares during the Bidding Period. The Bidding Period commenced on [*], and expires on [*]. Following the expiry of the Bidding Period, our Company, in consultation with the BRLM, will determine the issue price, and, in consultation with the BRLM, the basis of allocation and entitlement to allotment based on the bids received and subject to the confirmation by the Stock Exchange. Successful bidders will be provided with a confirmation of their allocation and will be required to pay any unpaid amount for the Equity Shares within a prescribed time. The Prospectus will be filed with Registrar of Companies and SEBI. SEBI Guidelines require our Company to complete the allotment to successful bidders within 15 days from the Bid/Issue Closing Date. The Equity Shares will then be credited and allotted to the investors’ demat accounts maintained with the relevant depository participant. Upon approval by the Stock Exchange, the Equity Shares will be listed and trading will commence. Method of Proportionate Basis of Allotment In the event the Issue is over-subscribed, the basis of allotment shall be finalised by Our Company in consultation with the Designated Stock Exchange. The Executive Director (or any other senior official nominated by them) of the Designated Stock Exchange along with the BRLM and the Registrar to the Issue shall be responsible for ensuring that basis of allotment is finalized in a fair and proper manner. Allotment to Bidders shall be as per the basis of allocation as set out in this Red Herring Prospectus under “Issue Structure”. The allotment shall be made in marketable lots, on a proportional basis as explained below: a) Bidders will be categorized according to the number of Equity Shares applied for by them. b) The total number of Equity Shares to be allotted to each category as a whole shall be arrived at on a proportionate basis, which is the total number of Equity Shares applied for in that category (number of Bidders in the category multiplied by the number of shares applied for) multiplied by the inverse of the over-subscription ratio. The minimum allotment lot shall be the same as the minimum application lot irrespective of any revisions to the Price Band. c) Number of Equity Shares to be allotted to the successful Bidders will be arrived at on a proportionate basis, which is total number of Equity Shares, applied for by each Bidder in that portion multiplied by the inverse of the over-subscription ratio. d) In all Bids where the proportionate allotment is less than __ Equity Shares per Bidder, the allotment shall be made as follows: ● Each successful Bidder shall be allotted a minimum of __ Equity Shares; and ● The successful Bidders out of the total Bidders for a category shall be determined by draw of lots in a manner such that the total number of Equity Shares allotted in that portion is equal to the number of Equity Shares calculated in accordance with (b) above.

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e) If the proportionate allotment to a Bidder works out to a number that is more than __ but is a fraction, the fraction would be rounded off to the higher whole number if that decimal is 0.5 or more. If that decimal is lower than 0.5, it would be rounded off to the lower whole number. Allotment to all Bidders in such categories would be arrived at after such rounding off. f) If the Equity Shares allocated on a proportionate basis to any category are more than the Equity Shares allotted to the Bidders in that category, the remaining Equity Shares available for allotment shall be first adjusted against any other category, where the Equity Shares are not sufficient for proportionate allotment to the successful Bidders in that category. The balance Equity Shares, if any, remaining after such adjustment will be added to the category comprising Bidders applying for minimum number of Equity Shares. Interest in case of delay in Despatch of Allotment Letters/Refund Orders or delay in Refund Instructions: Our Company agrees that allotment of securities offered to the public shall be made not later than 15 days from the Bid/Issue Closing Date. Our Company further agrees that it shall pay interest @15% per annum if the allotment letters/ refund orders have not been despatched to the applicants or if, in a case where the refund or portion thereof is made in electronic manner, the refund instructions have not been given to the clearing system in the disclosed manner within 15 days from the Bid/Issue Closing Date. Despatch of Refund Orders Please refer to the heading ‘Disposal of application and application money’ on page __ of this Red Herring Prospectus. UNDERTAKING BY OUR COMPANY We undertake as follows: a) that the complaints received in respect of the Issue shall be attended to by us expeditiously and satisfactorily; b) that all steps shall be taken for the completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed within seven working days of finalization of the basis of allotment; c) that the funds required for dispatch of refund orders or allotment advice to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue by our Company; d) that where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant within 15 days of closure of the issue, as the case may be, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund. e) that the refund orders or allotment advice to the NRIs or FIIs shall be dispatched within specified time. f) that no further issue of Equity Shares shall be made till the Equity Shares offered through this Red Herring Prospectus are listed or until the Bid monies are refunded on account of non-listing, under-subscription etc. UTILISATION OF ISSUE PROCEEDS Our Board of Directors certifies that:

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a) All monies received out of the Issue of shares shall be transferred to a separate bank account other than the bank account referred to in sub-section (3) of Section 73 of the Companies Act, 1956; b) Our Company shall not have any recourse to the Issue proceeds until the approval for trading the Equity Shares is received from the Stock Exchanges. c) Details of all monies utilized out of the Issue referred above under the sub item (a) shall be disclosed under an appropriate separate head in the balance sheet of our Company indicating the purpose for which such monies have been utilized; d) Details of all unutilized monies out of the Issue of shares, if any, referred above under the sub item (a) shall be disclosed under the appropriate separate head in the balance sheet of our Company indicating the form in which such unutilized monies have been invested. e) The utilization of monies received under reservations shall be disclosed under an appropriate head in the Balance Sheet of our Company indicating the purpose for which such monies have been utilized; and f) Details of all unutilized monies out of reservations shall be disclosed under the appropriate separate head in the balance sheet of our Company indicating the form in which such unutilized monies have been invested. RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES Foreign investment in Indian securities is regulated through the Industrial Policy of the Government of India and FEMA. While the Industrial Policy prescribes the limits and the conditions subject to which foreign investment can be made in different sectors of the Indian economy, FEMA regulates the precise manner in which such investment may be made. Under the Industrial Policy, unless specifically restricted, foreign investment is freely permitted in all sectors of the Indian economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures for making such investment. No person shall make a Bid in pursuance of this Issue unless such person is eligible to acquire Equity Shares of our Company in accordance with applicable laws, rules, regulations, guidelines and approvals. Investors making a bid in response to the Issue will be required to confirm and will be deemed to have represented to our Company, the BRLM, the Underwriters and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to subscribed to the Equity Shares of our Company and will not offer, sell, pledge or transfer the Equity Shares of our Company to any person who is not eligible under applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares of our Company. Our Company, the BRLM, the Underwriters and their respective directors, officers, agents, affiliates and representatives accept no responsibility or liability for advising any investor whether such investor is eligible to subscribe to Equity Shares of our Company. Investment by NRIs / FIIs It is to be distinctly understood that there is no reservation for Non-Residents, NRIs and FIIs and all Non-Resident, NRI and FII applicants will be treated on the same basis as other categories for the purpose of allocation. As per the RBI regulations, OCBs cannot participate in this Issue. The Equity Shares have not been and will not be registered under the Securities Act or any state securities laws in the United States and may not be offered or sold within the United States or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Equity Shares are only being offered and sold (i) in the United States to “qualified institutional buyers”, as defined in Rule 144A of the Securities Act, and (ii) outside the United States to

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certain persons in offshore transactions in compliance with Regulation S under the Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. As per the current regulations, the following restrictions are applicable for investments by FIIs: No single FII can hold more than 10% of the post-Issue paid-up capital of our Company (i.e., 10% of _______ Equity Shares). In respect of an FII investing in our Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of our total issued capital or 5% of total issued capital of our Company in case such sub account is a foreign corporate or an individual. The above information is given for the benefit of the Bidders. The Bidders are advised to make to their own enquiries about the limits applicable to them. Our Company and the BRLM do not accept any responsibility for the completeness and accuracy of the information stated hereinabove. Our Company and the BRLM are not liable to inform the investors of any amendments or modification or changes in applicable laws or regulations, which may occur after the date of the Red Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the number of Equity Shares Bid for do not exceed the applicable limits under laws or regulations.

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MAIN PROVISIONS OF ARTICLES OF ASSOCIATION

Rights of Members Subject to applicable laws the equity shareholders shall have the following rights • Right to receive dividend, if declared; • Right to attend general meeting and exercise voting rights unless prohibited by law; • Right to vote on poll either personally or by proxy; • Right to receive offer for rights shares and the allotted bonus shares, if announced; • Right to receive surplus on liquidation; • Right of free transferability; and Such other rights as may be available to a shareholder of a Public Limited Company under the Companies Act, 1956, listing Agreement with the stock Exchanges and Articles of Association of the Company; For further details on the main provision of the Articles of Association dealing with voting rights, dividends, forfeiture and lien, transfer and transmission and/or consolidating/splitting , please refer to section titled “Main Provision of Articles of Association of the Company” on page No of this Prospectus. MAIN PROVISIONS OF ARTICLES OF ASSOCIATION

Capitalised terms used in this section have the meaning given to such terms in the Articles of the Company.

Pursuant to Schedule II of the Companies Act, 1956 and the SEBI (DIP) Guidelines, the main provisions of the Articles of Association of the Company relating to voting rights, dividend, lien, forfeiture, restrictions on transfer and transmission of equity shares and or their consolidation/splitting are detailed below.

Regulations contained in Table ‘A’ of Schedule I of the Companies Act, 1956, shall apply to this Company in so far only as they are not inconsistent with any of the provisions contained in these Regulations and also those for which no provision has been made in these presents. The Articles of the Company are subject to the provisions of the Companies Act, 1956.

CAPITAL AND INCREASE AND REDUCTION OF CAPITAL AMOUNT OF CAPITAL

Article 3 provides as follows: The Authorised share capital of the company shall be as stated in the Clause No. V of the Memorandum of Association of the Company. The Company subject to the provisions of the Act shall have the right to increase, consolidate, reduce its share Capital for the time being of the Company, divide, sub-divides share into several classes and to attach thereto respectively preferential, deferred, qualified, or special rights, privileges or conditions, as may be determined by or in accordance with regulations of the Company and to vary, modify or abrogate any such rights, privileges or conditions in such manner as may for the time being be provided by the regulations of the company.

The minimum paid up capital of the company shall be Rs.5,00,000

Article 8 provides as follows: The Company in a general meeting may, from time to time, by Ordinary Resolution increase the Capital by the creation of new shares, such increase to be of such aggregate amount and to be divided into shares of such respective amounts as the resolution shall prescribe. The new shares shall be issued upon such terms & conditions, and with such rights and privileges annexed thereto, as the general meeting shall direct and if no direction be given, as the Directors shall determine, and in particular, such shares may be issued with a preferential or qualified right as to dividends and in the distribution of the assets of the Company and with a right of voting at general meetings of the Company.

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The Company may, subject to provisions of the Act and Rules made thereunder as may be in force, from time to time, issue shares and other securities under Employees Stock Options and/or by way of Sweat Equity.

Article 10 provides as follows: (1) The Company may from time to time by Ordinary Resolution in General Meeting, increase the

authorised share capital by such sum to be divided into shares of such amount and with such rights as the resolution shall prescribe.

(2) The new shares shall be subject to the same provisions with reference to the payment of calls, lien, transfer, transmission, forfeiture and otherwise as the shares in the original share capital.

(3) The Company may by Ordinary Resolution: (a) Consolidate and divide all or any of its share capital into shares of larger amount than its existing

shares. (b) Sub-divide the whole or any part of its share capital into shares of smaller amount that is fixed by

the Memorandum of Association subject nevertheless to the provisions of clause (d) of sub-section (1) of Section 94 of the Act.

(c) Cancel any shares which, at the date of passing of the resolution, have not been taken or agreed to be taken by any person.

Article 11 provides as follows: Whenever the capital, by reason of the issue of preference shares or otherwise, is divided into different classes of shares, all or any of the rights and privileges attached to each class (unless otherwise provided by the terms of issue of the shares of that class) may, subject to the provisions of Sections 106 and 107 of the Act and whether or not the Company is being wound up, be varied, modified, commuted, affected or abrogated, or dealt with, with the consent in writing of the holders of at least three-fourths of the issued shares of that class or with the sanction of a Special Resolution passed at a separate meeting of the holders of shares of that class. This Article shall not derogate from any power, which the Company would have if these Articles were omitted. The provisions of these Articles relating to general meeting shall, mutatis mutandis, apply to every such separate meeting.

Article 12 provides as follows: 1) The Company may, (subject to the provisions of the Act) from time to time by a Special

Resolution, reduce its capital and any capital redemption reserve account or share premium account in any manner of the time being authorised by law, and in particular capital may be paid off on the footing that it may be called up again or otherwise.

(2) This Article shall not derogate from any power the Company would have if this Article were omitted.

Article 13 provides as follows:

Subject to the provisions of sections 77A, 77AA and 77B of the Act, the Company may purchase its own shares or other specified securities referred to as buy-back out if its free reserves or the securities premium account or the proceeds of any shares or other specified securities. No buy-back of any kind of shares or other specified securities will be made out of the proceeds of an earlier issue of the same kind of shares or same kind or other specified securities.

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FURTHER ISSUE OF SHARES Article 9 provides as follows:

(1)Where at any time after the expiry of two years the formation of a company or at any time after the expiry of one year from the allotment of shares in that company made for the first time after its formation, whichever is earlier, it is proposed to increase the subscribers capital of the company by allotment of further shares, then:

(a) such further shares shall be offered to the persons who, at the date of the offer, are holders of the equity

shares of the company, in proportion, as nearly as circumstances admit, to the capital paid-up on those shares at that date;

(b) the offer aforesaid shall be made by notice specifying the number of shares offered and limiting a time not

being less than fifteen days from the date of the offer within which the offer, if not accepted, will be deemed to have been declined;

(c) the offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favour of any other person; and the notice referred to in sub-clause (b) shall contain a statement of this right;

(d) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier intimation from the

person to whom such notice is given that he declines to accept the shares offered, the Board of directors may dispose of them in such manner as they think most beneficial to the company.

(2) Notwithstanding anything contained in sub-section (1), the further shares aforesaid may be offered to any

persons [whether or not those persons include the persons referred to in clause (a) of sub-section (1)] in any manner whatsoever-

(a) if a special resolution to that effect is passed by the company in general meeting, or (b) where no such special resolution is passed, if the votes cast (whether on a show of hands, or on a poll, as

the case may be) in favour of the proposal contained in the resolution moved in that general meeting (including the casting vote, if any of the Chairman) by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy, exceed the votes, if any, cast against the proposal by members so entitled and voting and the Central Government is satisfied, on an application made by the Board of directors in this behalf, that the proposal is most beneficial to the company.

(3) Nothing in sub-clause (c) of sub-section (1) shall be deemed- (a) to extend the time within which the offer should be accepted, or (b) to authorise any person to exercise the right of renunciation for a second time, on the ground that the

person in whose favour the renunciation was first made has declined to take the shares comprised in the renunciation.

(4) Nothing in this Article shall apply to the increase of the subscribed capital of the company caused by the

exercise of an option attached to debentures issued or loans raised by the company- (i) to convert such debentures or loans into shares in the company, or (ii) to subscribe for shares in the company. Provided that the terms of issue of such debentures or the terms of such loans include a term providing for

such option and such term- (a) either has been approved by the Central Government before the issue of debentures or the raising of the

loans, or is in conformity with the Rules, if any, made by that Government in this behalf; an

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(b) in the case of debentures or loans other than debentures issued to, or loans obtained from, the Government or any institution specified by the Central Government in this behalf, has also been approved by a special resolution passed by the company in general meeting before the issue of the debentures or the raising of the loans.

(5) Subject to the provision of clause of this Article and subject to the provisions of the Act, the Directors shall have full power and authority to issue further share capital from time to time including to decide as to the manner in which such further capital may be issued, to whom the same may be issued, the issue price or consideration including the terms of payment thereof and whether the same may be issued for cash or for consideration other than cash.

LIEN ON SHARES


The Company shall have a first and paramount lien upon such shares/debentures (other than fully paid-up shares/debentures) registered in the name of each member (whether solely or jointly with others) and upon the proceeds of sale thereof, for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such shares/debentures and no equitable interest in any share shall be created except upon footing and condition that this Article will have full effect and such lien shall extend to all dividends and bonuses from time to time declared in respect of such shares/debentures. Unless otherwise agreed the registration of a transfer of shares/debentures shall operate as a waiver of the company’s lien if any, on such shares/debentures. The Board may, however, at any time, declare any share/debentures to be wholly or partly exempt from the provisions of this Article.


The Company may sell in such manner as the Board thinks fit any shares on which the Company has a lien but no sale shall be made until the expiration of fourteen days after a notice in writing, stating and demanding payment of such amount in respect of which the lien exists has been given to the registered holder for the time being of the share or to the person entitled for the time being of the share or to the person entitled to the share by reason of his death or insolvency. The Board may appoint a person to effect the sale and transfer.


The net proceeds of the sale shall be applied in or towards payment of such part of the amount in respect of which the lien exists as is presently payable. The residue, if any, shall be paid to the person entitled to the shares so sold. The purchaser shall be registered as the holder of the shares and he shall not be bound to see the application of the purchase money nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale.

Article 39 provides as follows: If a member fails to pay any call or installment of a call or any other sum or sums on the shares on the last day appointed for the payment thereof, the Board may at any time thereafter during such time as the call or any part of such call or installment of sums remaining unpaid, serve a notice on him or on the person (if any) entitled to shares by transmission requiring payment of so much of the amount as is unpaid together with any interest which may have accrued thereon. The Board may accept in the name of and for the benefit of the Company and upon such terms and conditions as may be agreed, the surrender of any shares liable to forfeiture and in so far as the law permits, of any other shares.

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Article 40 provides as follows: The notice shall name the place or places on and at which, and a further day(not earlier than the expiration of fourteen days from the date of the notice) on or before which the payment required by the notice is to be made. The notice shall detail the amount which is due and payable on the shares and shall state that in the event of non-payment at or before the time appointed the shares will be liable to be forfeited.

Article 41 provides as follows: If the requirements of any such notice as aforesaid are not complied with, any of the shares in respect of which such notice has been given may, at any time thereafter before payment of all calls or installment, interest and expenses or other money due in respect thereof, be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends and bonus declared in respect of the forfeited shares and not actually paid before the forfeiture.

Article 42 provides as follows: A forfeited or surrendered share shall be deemed to be the property of the Company and may be sold or otherwise disposed off on such terms and in such manner as the Board may think fit and any time before a sale or disposition, the forfeiture may be annulled on such terms as the Board may think fit.

Article 43 provides as follows: Any member whose shares have been forfeited shall, notwithstanding the forfeiture, be liable to pay and shall forthwith pay to the Company, all calls, installments, interest, expenses and other moneys owing upon or in respect of such shares at the time of the forfeiture together with interest thereon from the time of forfeiture until payment, at such rate not exceeding 18 per cent per annum as the Directors may determine, and the Directors may enforce the payment of the whole or a portion thereof if they think fit but shall not be under any obligation, to do so.

Article 44 provides as follows: A duly verified declaration in writing that the declarant is a Director of the Company and that a share in the Company has been duly forfeited on a date stated in the declaration, shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share and that declaration and the receipts of the Company for consideration, if any, given for the shares on the sale or disposal thereof, shall constitute a good title to the share and the person to whom the share is sold, or disposed off shall be registered as the holder of the share and shall not be bound to see to the application of the purchase money (if any) nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share. CALLS FOR UNPAID SHARES Article 25 provides as follows: The Directors may from time to time and subject to Section 91 of the Act make such calls as they think fit upon the members in respect of all moneys unpaid on the shares held by them respectively and not by the conditions of allotment thereof made payable at fixed time and each member shall pay the amount of every call so made on him to the persons and at the times and places appointed by the directors. A call may be made payable by installments. Article 26 provides as follows: A call shall be deemed to have been made at the time when resolution of the Directors authorising such call was passed and may be made payable by members on the Register of Members on a subsequent date to be specified by the Directors.

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Article 27 provides as follows: Thirty days' notice at least shall be given by the Company of every call made payable otherwise than an allotment specifying the time and place of payment: Article 28 provides as follows: Provided that before the time for payment of such call the Directors may by notice in writing to the members, revoke or postpond the same. Article 29 provides as follows: The Directors may from time to time at their, discretion extend the time fixed for the payment of any call, and may extend such time as to all or any of the members. Article 30 provides as follows: If by the terms of issue of any share or otherwise any amount is made payable on allotment at any fixed time or by installments at fixed times, (whether on account of the amount of the share or by way of premium), every such amount or installment shall be payable as if it were a call duly made by the Directors and of which due notice has been given, and all the provisions herein contained in respect of calls shall relate to such amount or installments accordingly. Article 31 provides as follows: If the sum payable in respect of any call or installment is not paid on or before the day appointed for payment thereof by the holder for the time being or allottee of the share in respect of which a call have been made or the installment is due, he shall pay interest for the same at such rate as the Directors shall fix from the day appointed for the payment thereof to the time of actual payment but the Directors may waive payment of such interest wholly or in part. Article 32 provides as follows:

(1) (a) The Board may, if it thinks fit, subject to the provisions of Section 92 of the Act, agree to receive from members, willing to advance the same, whole or any part of the moneys due upon the shares held by him beyond the sums actually called for, and upon the monies so paid or satisfied in advance, or upon so much thereof, from time to time, and at any time thereafter, as exceeds the amount of the calls then made upon and due in respect of the shares on account of which such advances are made, the Company may pay or allow interest, at such rate as the member paying the sum in advance and the Board of Directors agree upon. Provided that any amount paid up in advance of calls on any shares may carry interest but shall not in respect thereof confer a right to dividends or to participate in profits.

(b) The Board of Directors may agree to repay, at any time, any amount so advanced or may, at any time,

repay the same upon giving to the member three months notice in writing.

(2) No member paying any such sum in advance shall be entitled to voting rights in respect of the monies so paid by him until the same would, but for such payment, become presently payable.

(3) The provisions of these Articles shall mutatis apply to the calls on debentures of the company.

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Article 33 provides as follows: Neither a judgement nor a decree in favour of the Company for calls or other moneys due in respect of any shares nor any part payment or satisfaction thereof nor the receipt by the Company of a portion of any money which shall from time to time be due from any member in respect of any shares either by way of principal or interest nor any indulgence granted by the Company in respect of payment of such money shall preclude the forfeiture of such shares as herein provided. Article 34 provides as follows: On the trial or hearing of any action or suit brought by the Company against any member or his legal representative for the recovery of any money claimed to be due to the Company in respect of any shares, it shall be sufficient to prove that the name of the member in respect of whose shares the money is sought to be recovered, appears entered on the Register of Members as the holder or one of the holders, at or subsequently to the date at which the money sought to be recovered is alleged to have become due, on the shares in respect of which such money is sought to be recovered, that the resolution making the call is duly recorded in the Minute Books; and that notice of such call was duly given to the members or his representative so sued in pursuance of these presents; and it shall not be necessary to prove the appointment of the Directors who made such calls nor that a quorum of Directors was present at the Board at which any call was made, nor that the meeting at which any call was made was duly convened or constituted nor any other matters whatsoever, but the proof of the matters aforesaid shall be conclusive evidence of the debt. TRANSMISSION OF SHARES Article 52 provides as follows: In the case of the death of any one or more of the persons named in the Register of Members as the joint-holders of any share, the survivor or survivors shall be the only persons recognised by the Company as having any title to or interest in such share, but nothing herein contained shall be taken to release the estate of a deceased joint-holder from any liability on shares held by him jointly with any other person.

Article 53 provides as follows: The Executors or Administrators or the holder of a succession Certificate of a deceased member shall be the only person whom the Company will be bound to recognise as having any title to the shares registered in the name of such member and the Company shall not be bound to recognise such executors or Administrators or holders of a Succession Certificate unless such Executors or Administrators or holders of a Succession Certificate shall have first obtained Probate or Letters of Administration or a Succession Certificate as the case may be, from a duly constituted competent Court in India; Provided that in any case where the Directors in their absolute discretion think fit the Directors may dispense with the production of Probate or Letters of Administration or a Succession Certificate and under the next Articles register the name of any person who claims to be absolutely entitled to the shares standing in the name of a deceased member, as a member.

Article 56 provides as follows: Any person becoming entitled to shares in consequence of death, insolvency, dissolution, winding-up or liquidation of any member, or by any lawful means other than by a transfer in accordance with these Articles, may, with the consent of the Board (which it shall not be under any obligation to give), upon producing such evidence that he sustains the character in respect of which he proposes to act under this Article or his title, as the Board thinks sufficient, be registered as the holder of the shares or elect to have some person nominated by him and approved by the Board registered as such holder; provided nevertheless, that if such person shall elect to have his nominee registered, he shall testify the election by executing in favour of his nominee an instrument of transfer in accordance with the provisions herein contained, and until he does so, he shall not be freed from any liability in respect of the shares.

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Subject to the provisions of the Act, a person entitled to a share by transmission shall, subject to the right of the Directors to retain such dividends or money as hereinafter provided, be entitled to receive and may give a discharge, for any dividends or other moneys payable in respect of the shares. RIGHTS OF MEMBERS REGARDING VOTING Article 94 provides as follows: No Member shall be entitled to vote for another Member, at any General Meeting or at any Meeting of a class of shareholders, either upon a show of hands, or upon a poll, in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid or in regard to which the Company has, and has exercised, any right of lien.

Article 95 provides as follows: Subject to the provisions of these Articles, and without prejudice to any special privileges or restrictions as to voting, for the time being, attached to any class of shares, for the time being forming part of the capital of the Company every Member, not disqualified by the last preceding Article, shall be entitled to be present, and to speak and vote at such Meeting, and on a show of hands every member present in person shall have one vote and upon a poll every member present in person shall have the right to vote (in proportion to his share of the paid-up equity capital of the Company), in accordance with the provisions of applicable law, provided, however, if any preference shareholders be present at any meeting of the Company, save as provided in the Act, he shall have a right to vote only on Resolutions placed before the meeting which directly affect his rights attached to his preference shares.


On a poll being taken at a meeting of the Company a Member entitled to more than one vote, or his proxy or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses.

Article 98 provides as follows: If there be joint registered holders of any shares, any one of such persons may vote at any meeting or may appoint another person (whether a member or not) as his proxy in respect of such shares, as if he were solely entitled thereto and, if more than one such joint holder be present at any meeting either in person or by proxy, that one of the said persons so present whose name stands higher on the Register of Members shall alone be entitled to speak and to vote in respect of such shares, but the other or others of the joint holders shall be entitled to be present at the meeting. Several executors or administrators of a deceased member in whose names any share stands shall for the purpose of this clause be deemed joint holders thereof.


Subject to the provisions of these Articles votes may be given either personally or by proxy, body corporate being a member may vote either by a proxy or by a representative duly authorized in accordance with section 187 of the Act and such representative shall be entitled to exercise the same rights and powers (including the right to vote by proxy) on behalf of the body corporate which he represents as that body could exercise if it were an individual member.

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Any person entitled to transfer any share may vote at any General Meeting in respect thereof in the same manner as if he were the registered holder of such shares, provided that forty-eight hours at least before the time of holding the meeting or adjourned meting, as the case may be, at which he proposes to vote he shall satisfy the Directors of his right to transfer of such shares and give such indemnity (if any) as the Directors may require or the Directors shall have previously admitted his right to vote at such meeting in respect thereof..


No member not personally present shall be entitled to vote on a show of hands unless such member is a body corporate present by proxy or by a representative duly authorised under Section 187 of the Act, in which case such proxy or representative may vote on a show of hands as if he were a member of the Company.


Every proxy (whether a Member or not) shall be appointed in writing under the hand of the appointer or his attorney, or if such appointer is a body corporate under the common seal or such corporation, or be signed by an officer or any attorney duly authorised by it, and any Committee or guardian may appoint such proxy. The proxy so appointed shall not have any right to speak at the meetings.


A proxy may be appointed by an instrument of proxy either for the purpose of a particular meeting specified in the instrument and any adjournment thereof or may be appointed for the purpose of every meeting of the Company, or of every meeting to be held before a date specified in the instrument and every adjournment of any such meeting.


A Member present by proxy shall be entitled to vote only on a poll.


The instrument appointing a proxy and the power of attorney or other authority (if any), under which it is signed or a notarially certified copy of that power or authority, shall be deposited at the Office not later than forty-eight hours before the time for holding the meeting at which the person named in the instrument proposes to vote and in default the instrument of proxy shall not be treated as valid. No instrument appointing a proxy shall be valid after the expiry of twelve months from the date of its execution.


Every instrument of proxy whether for a specified meeting or otherwise shall, as nearly as circumstances will admit, be in any of the forms set out in Schedule IX of the Act.


A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal, or revocation of the proxy or of any power of attorney under which such proxy was signed, or the transfer of the share in respect of which the vote is given, provided that no intimation in writing of the death or insanity, revocation or transfer shall have been received at the Office before the meeting.


No objection shall be made to the validity of any vote, except at any meeting or poll at which such vote shall be tendered, and every vote whether given personally or by proxy, not disallowed at such meeting or poll

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shall be deemed valid for all purposes of such meeting or poll whatsoever.


The Chairman of any meeting shall be the sole judge of the validity of every vote tendered at such meeting. The Chairman present at the taking of a poll shall be the sole judge of the validity of every vote tendered at such poll. DIVIDENDS

Article 167 provides as follows: The Profits of the Company subject to any special rights relating thereto created or authorized to be created by the Memorandum and Articles and subject to the provisions of the articles shall be divisible among the members in proportion to the amount of capital paid up on the shares held by them respectively.


Company in General Meeting may declare dividends to be paid to Members according to their The respective rights, but no dividends shall exceed the amount recommended by the Board but the Company in General Meeting may declare a smaller dividend.


(1) No dividend shall be declared or paid otherwise than out of profits of the financial year arrived at after providing for depreciation in accordance with the provisions of Section 205 and 205A of the Act or put of the profits of the Company for any previous financial year or years arrived at after providing for depreciation in accordance with these provisions and remaining undistributed or out of both. Provided that :

(a) If the Company has not provided for depreciation for any previous financial year or years it shall, before declaring in or paying a dividend for any financial year, provide for such depreciation out of the profits of the financial year or out of the profits of any other previous financial year or years;

(b) If the Company has incurred any loss in any previous financial year or years the amount of the loss or an amount which is equal to the amount provided for depreciation for that year or those years whichever is less, shall be set off against the profits of the Company for the year for which the dividend is proposed to be declared or paid or against the profits of the Company for any previous financial year or years arrived at in both cases after providing for depreciation in accordance with the provisions of sub-section (2) of Section 205 of the Act or against both.

(2) Notwithstanding anything contained in sub-clause (1) hereof no dividend shall be declared or paid by the Company for any financial year out of the profits of the Company for that year arrived at after providing for depreciation in accordance with the provisions of sub-clause (1) hereof except after the transfer to the reserves of the company of such percentage of its profits for that year not exceeding 10% as may be prescribed.

Provided that nothing in this clause shall be deemed to prohibit the voluntary transfer by a company of a higher percentage of its profits to the reserves in accordance with such rules as may be made by the Central Government in this behalf.

(3) Where owing to inadequacy or absence of profits in any year, the Company proposes to declare dividend out of the accumulated profits earned by the Company in previous years and transferred by it to the reserves, such declaration of dividend shall not be made except in accordance with such rules as may be made by the Central Government in this behalf, and, where any such declaration is not in accordance with such rules, such declaration shall not be made except with the previous approval of the Central Government.

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The Directors may, from time to time pay to the members such interim dividends as in their judgement the position of the Company justifies.


Where Capital is paid in advance of calls, such capital may carry interest but shall not in respect thereof confer a right to dividend or participate in profits.


All dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid on the shares during any portion or portions of the period in respect of which the dividend is paid, but if any share is issued on terms providing that it shall rank for dividends as from a particular date, such share shall rank for dividend accordingly.


Subject to section 206A of the act, the board may retain the dividends payable upon shares in respect of which any person, is, entitled to become a member, or which any person is entitled to transfer, until such person shall become a member, in respect of such share or shares or shall duly transfer the same.


Any one of several persons who are registered as the joint-holders of any share may give effectual receipts for all dividends or bonus and payments on account of dividends or bonus or other payable in respect of such shares.


Subject to the provisions of the Act, no member shall be entitled to receive payment of any interest or dividend in respect of his share or shares whilst any money may be due or owing from him to the Company in respect of such share or shares, either alone or jointly with any other person or persons and the Directors may deduct from the interest or dividend payable to any member, all sums of money so due from him to the Company


A transfer of shares shall not pass the right to any dividend declared thereon before the registration of the transfer.


Unless otherwise directed, any dividend may be paid by cheque or warrant sent through post to the registered address of the member or person entitled or in case of joint holders to that one of them first named in the register in respect of the joint holding. Every such cheque or warrant so went shall be made payable to the order of the person to whom it is sent. The Company shall not be liable or responsible for any cheque or warrant lost in transmission or for any dividend lost to the member or person entitled thereto by the forged endorsement of any cheque or warrant or the fraudulent or improper recovery

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thereof by any other means. No unclaimed or unpaid dividend shall be forfeited by the Board unless the claim thereto becomes barred by law and the Company shall comply with all the provisions of Section 205 A of the Act in respect of unclaimed or unpaid dividend.


Dividends unclaimed will be dealt with according to the provisions of Sections 205A, 205B and 205C of the Companies Act, 1956 other provisions, if any, of the Act as may be applicable from time to time.


Subject to the provisions of the Act, no dividend shall bear interest as against the Company.


Any General meeting declaring a dividend may on the recommendation of the directors make a call on the members of such amount as the meeting fixes, but so that the call on each members shall not exceed the dividend payable to him and so that the call be made payable at the same time as the dividend, and the dividend may, if so arranged between the company and the member, be set off against the call.


Where a dividend has been declared by a company but has not been paid, or the warrant in respect thereof has not been posted, within 30 days from the date of the declaration to any shareholder entitled to the payment of the dividend, the Company shall, within 7 days from the date of expiry of the said period of 30 days, transfer the total amount of dividend which remains unpaid or in relation to which no dividend warrant has been posted within the said period of 30 days to a special account to be opened by the Company in that behalf in any scheduled bank to be called "Unpaid dividend account of Veena Industries Limited". CAPITALISATION


(a) The Company in General Meeting may resolve that any moneys, investments or other assets forming part of the undivided profits of the Company standing to the credit of the Reserve Fund, or any Capital Redemption Reserve Account, or in the hands of the Company and available for dividend (or representing premium received on the issue of shares and standing to the credit of the Share Premium Account) be capitalised and distributed amongst such of the shareholders as would be entitled to receive the same if distributed by way of dividend and in the same proportions on the footing that they become entitled thereto as capital and that all or any part of such capitalised fund be applied on behalf of such shareholders in paying up in full either at par or at such premium as the resolution may provide, any unissued shares or debentures or debenture-stock of the company which shall be distributed accordingly or in or towards payment of the uncalled liability on any issued shares or debentures or debenture-stock and that such distribution or payment shall be accepted by such share holders in full satisfaction of their interest in the said capitalised sum. Provided that a Share Premium Account and a Capital Redemption Reserve Account may, for the purpose of this Article, only be applied in the paying of any unissued shares to be issued to members of the Company as fully paid bonus shares.

b) A General Meeting may resolve that any surplus moneys arising from the realisation of any capital assets of

the Company, or any investments representing the same, or any other undistributed profits of the Company not subject to charge for Income-tax be distributed among the members on the footing that they receive the same as capital.

(c ) For the purpose of giving effect to any resolution under the preceding paragraphs of this Article the Board

may settle any difficulty which may arise in regard to the distribution as it thinks expedient and in particular may issue fractional certificates, and may fix the value for distribution of any specific assets, and

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may determine that such payments shall be made to any members upon the footing of the value so fixed or that fraction of less value than Rs. 10/- may be disregarded in order to adjust the rights of all parties, and may vest any such cash or specific assets in trustees upon such trusts for the person entitled to the dividend or capitalised fund as may seem expedient to the Board. Where requisite a proper contract shall be delivered to the Registrar for registration in accordance with Section 75 of the Companies Act, 1956, and the Board may appoint any person to sign such contract on behalf of the persons entitled to the dividend or capitalised fund, and such appointment shall be effective.

(d) The Company may capitalise its reserves, Issue Bonus Shares from time to time if the profits permit subject to provisions of Companies Act, 1956 and guidelines issued by SEBI and/or such other authorities from time to time. TRANSFER AND TRANSMISSION OF SHARES

Article 47 provides as follows: The instrument of transfer of any share in the Company shall be in writing duly executed by the transferor and the transferee and the transferor shall be deemed to remain holder of the shares until the name of the transferee is entered in the Register of Members in respect thereof. The instrument of transfer shall be presented in the manner prescribed under Section 108 of the Act or any statutory modification thereof. Company shall not charge any transfer fee for registering transfer of shares. Article 48 provides as follows: The Company shall keep a book to be called the "Register of Transfers" and therein shall be fairly and distinctly entered the particulars of every transfer or transmission of any share. Article 49 provides as follows: The Directors may, if they find any transfer prejudicial to the interest of the Company, at their discretion, decline to register or acknowledge any transfer of shares and the right of refusal shall not be affected by the fact that the proposed transferee is already a member of the Company. The registration of a transfer shall be conclusive evidence of the approval by the Directors of the transfer.

(a) Nothing in Section 108, 109 and 110 of the Act shall prejudice this power to refuse to register the transfer of or the transmission by operation of law of the right to, any shares, or interests of a member in, or debentures of the Company.

(b) If, in pursuance of any such power of otherwise, when the Directors refuse to register any such transfer or transmission of right, they shall within one month from the date of which the instrument of transfer or the intimation of such transmission, as the case may be, was delivered to the Company, send notice of the refusal to the Transferee and the Transferor of to the person giving intimation of such transmission as the case may be giving reasons for such refusal. Provided that the registration of transfer of shares shall not be either refused on the ground of the transferor being either alone or jointly with any other person or persons indebted to the Company on any account whatsoever except where the Company has a lien on the shares. Article 50 provides as follows: The instrument of the transfer shall after registration be retained by the Company and shall remain in its custody. All instruments of transfer which the Directors may decline to register shall on demand be returned to the persons depositing the same. The Directors may cause to be destroyed all transfer deeds lying with the Company after such period as they may determine. Article 51 provides as follows:

Every holder of Shares in, or holder of debentures or other securities of the Company may, at any time, nominate in the prescribed form, pursuant to Section 109A of the Act and the Rules made thereunder, any person to whom his shares, debentures or other securities shall vest in the event of his death.

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Any person who becomes a nominee as above, shall, in accordance with and subject to Section 109B of the Act, and upon such evidence as may be required by the Board elect either,

(a) to be registered himself as holder of the share or debenture or other security, as the case may be, or (b) to make such transfer of the share or debenture or other security, as the case may be, as the deceased shareholder, debenture holder or the holder of such other security could have made. Article 52 provides as follows: In the case of the death of any one or more of the persons named in the Register of Members as the joint-holders of any share, the survivor or survivors shall be the only persons recognised by the Company as having any title to or interest in such share, but nothing herein contained shall be taken to release the estate of a deceased joint-holder from any liability on shares held by him jointly with any other person. Articles 53 provides as follows: The Executors or Administrators or the holder of a succession Certificate of a deceased member shall be the only person whom the Company will be bound to recognise as having any title to the shares registered in the name of such member and the Company shall not be bound to recognise such executors or Administrators or holders of a Succession Certificate unless such Executors or Administrators or holders of a Succession Certificate shall have first obtained Probate or Letters of Administration or a Succession Certificate as the case may be, from a duly constituted competent Court in India; Provided that in any case where the Directors in their absolute discretion think fit the Directors may dispense with the production of Probate or Letters of Administration or a Succession Certificate and under the next Articles register the name of any person who claims to be absolutely entitled to the shares standing in the name of a deceased member, as a member. Article 54 provides as follows: No share shall in any circumstances be transferred to any infant, insolvent or person of unsound mind. Article 55 provides as follows: Every transmission of a share shall be verified in such manner as the Directors may require and the Company may refuse to register any such transmission until the same be so verified or until or unless an indemnity be given to the Company with regard to such registration which the Directors at their discretion shall consider sufficient; Provided nevertheless that there shall not be any obligation on the Company or the Directors to accept any indemnity. Article 56 provides as follows: Any person becoming entitled to shares in consequence of death, insolvency, dissolution, winding-up or liquidation of any member, or by any lawful means other than by a transfer in accordance with these Articles, may, with the consent of the Board (which it shall not be under any obligation to give), upon producing such evidence that he sustains the character in respect of which he proposes to act under this Article or his title, as the Board thinks sufficient, be registered as the holder of the shares or elect to have some person nominated by him and approved by the Board registered as such holder; provided nevertheless, that if such person shall elect to have his nominee registered, he shall testify the election by executing in favour of his nominee an instrument of transfer in accordance with the provisions herein contained, and until he does so, he shall not be freed from any liability in respect of the shares. Article 57 provices as follows: The Company shall incur no liability or responsibility whatsoever in consequence of its registering or giving effect to any transfer of shares made or purporting to be made by any apparent legal owner thereof (as shown or appearing in the Register of Members) to the prejudice of persons having or claiming any equitable right, title or interest to or in the said shares, notwithstanding that the Company may have had notice of such equitable right, title or interest or notice prohibiting registration of such transfer, and may have entered such notice, or referred thereto, in any book of the Company, and the Company shall not be bound or required to regard or attend or give effect to any notice which may be given to it of any equitable right, title or interest, or

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be under any liability whatsoever for refusing or neglecting so to do, though it may have been entered or referred to in some book of the Company, but the Company shall nevertheless be at liberty to regard and attend to any such notice and give effect thereto if the Board shall so think fit. Article 58 provides as follows: Subject to the provisions of the Act, a person entitled to a share by transmission shall, subject to the right of the Directors to retain such dividends or money as hereinafter provided, be entitled to receive and may give a discharge, for any dividends or other moneys payable in respect of the shares. Article 59 provides as follows: Transfer/transmission of shares and sub-division/ consolidation of shares into marketable lots will be effected by the Company free of cost and the Directors shall not charge any fees for the same. Article 60 provides as follows: The Board shall have power, on giving seven days previous notice by advertisement in some newspaper circulating at the place where the registered office, for the time being, is situated to close the transfer books, Register of Members and Register of Debenture Holders, at such time or times and for such period or periods, not exceeding thirty days at a time, and not exceeding in the aggregate forty-five days in each year, as to it may seem expedient. Article 61 provides as follows: The provisions of the above Articles shall mutatis mutandis apply to the transfer or transmission by operation of law of debentures of the Company.

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MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The following contracts, not being contracts entered in the ordinary course of business carried on by our Company, which are or may be deemed material have been entered or are to be entered into by our Company. These contracts, copies of which have been attached to the copy of this Draft Red Herring Prospectus delivered to Registrar of Companies, Goa, Pune, Maharashtra for registration and also the documents for inspection referred to hereunder, may be inspected at the registered office situated at S-a45, MIDC Bhosari, Pune-411026, India between 10.00 a.m. to 4.00 p.m. on any working day, excluding Saturday and Sunday, from the date of this Draft Red Herring Prospectus until the Issue Closing Date. MATERIAL CONTRACTS 1. Memorandum of Understanding dated 22th March, 2007 among our Company and SPA Merchant Bankers Limited. 2. Memorandum of Understanding dated 28 March, 2007 between our Company and Aarthi Consultants Private Limited. 3. Letter dated 14th March, 2007 appointing M/s. JurisPrudent Consulting Partners, Advocates and Corporate Legal Advisors, as Legal Advisor to the Issue. 4. Tripartite Agreement dated [*] among our Company, NSDL and Aarthi Consultants Private Limited. 5. Tripartite Agreement dated [*] among our Company, CDSL and Aarthi Consultants Private Limited. 6. Syndicate Agreement dated [*] between our Company, BRLMs, and Syndicate members DOCUMENTS FOR INSPECTION 1. Memorandum and Articles of Association of our Company. 2. Certificate of incorporation dated October 09, 1996 issued by the Registrar of Companies, Maharashtra, issued to Veena Industries Private Limited. Fresh Certificate of Incorporation dated February 23, 2007 issued by the Registrar of Companies, Pune, Maharashtra, consequent upon change of name to Veena Industries Limited. 3. Resolution passed under section 81(1A) of the Act, at the Extra Ordinary General Meeting of our Company held on March 13, 2007. 5. Consent from the Promoter, Directors, Compliance Officer, Auditor, Book Running Lead Managers, Syndicate Members, Registrar to the Issue, Bankers to our Company, Bankers to the Issue, Refund Bankers, Monitoring Agency and Legal Advisor to act in their respective capacities. 6. Certificate dated 19th March 2007 from M/s. Prakash S. Shah & Co., Chartered Accountants and Statutory Auditors of our Company detailing the Tax Benefits. 7. Auditors’ Report dated 19th March 2007 for the period ended 31st October 2007 included in the Draft Red Herring Prospectus and copy of the Balance Sheet as at 31st March, 2006. 8. Copy of the Auditors Certificate dated 19th March 2007 regarding the sources and deployment of funds. 9. Copy of Listing Applications made to BSE dated [*] and NSE dated [*]. 10. Copy of in-principle approvals from BSE dated [*] and NSE dated [*].

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DECLARATION All the relevant provisions of the Companies Act, 1956 and the guidelines issued by the government or the guidelines issued by the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992, as the case may be, have been complied with and no statement made in this Red Herring Prospectus is contrary to the provisions of the Companies Act, 1956 or the Securities and Exchange Board of India Act, 1992 or rules made there under or guidelines issued, as the case may be. We further certify that all statements in this Red Herring Prospectus are true and correct. SIGNED BY Mr. Brijendra Nath Agarwal, Chairman Mr. Shailendra Nath Agarwal, Managing Director Mr. Atin Brijendra Agarwal Whole Time Director Mr. Avinash Shailendra Agarwal Whole Time Director Mr. Brij Mohan Kataria Non-executive Independent Director Mr. Jag Mohan Kaul Non-executive Independent Director Mr. Pradip Vasant Dubhashi Non-executive Independent Director Mr. Promode Kumar Govila Non-executive Independent Director Ms. Deepika Agarwal, Company Secretary and Compliance Officer Place: Pune Date: March 28, 2007

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