MAWANA SUGAR L-O.P65

For Private Circulation to the Equity Shareholders of the Company only

MAWANA SUGARS LIMITED (Incorporated on 26th December, 2002 under the Companies Act, 1956 as Siel Sugar Limited and then renamed as Mawana Sugars Limited w.e.f. 16th June, 2004. The Sugar business of Siel Limited vested with the Company retrospectively w.e.f. 1st October, 2002 pursuant to the Scheme of Arrangement approved by Hon’ble High Court of Delhi vide Order dated 26th August, 2003 under Sec. 391/394 of the Companies Act, 1956) Regd. Office: 6th Floor, Kirti Mahal, 19, Rajendra Place, New Delhi-110008 Tel. : (011) 25739103 Fax: (011) 25743659 Email: [email protected] Website : sielsugar.com

LETTER OF OFFER ISSUE OF 84,98,976 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT PAR AGGREGATING TO RS. 8,49,89,760 ON RIGHTS BASIS TO THE EQUITY SHAREHOLDERS IN THE RATIO OF ONE EQUITY SHARE FOR EVERY FOUR EQUITY SHARES HELD (1:4) AS ON 13th AUGUST, 2004 (I.E. THE RECORD DATE)

GENERAL RISKS Investments in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue including the risks involved. The Securities have not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. NOTE: The attention of the investors is drawn to the statement of Risk Factors appearing on Page no. i of the Letter of Offer. ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information contained in this Letter of Offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The existing equity shares of the company are listed on The Stock Exchange, Mumbai (BSE). The Company has made an application to the Stock Exchange, Mumbai for its permission to deal in Equity Shares arising from the Issue. In-principle approval from BSE has been received vide its letter dated 2nd July, 2004.

ISSUE PROGRAMME ISSUE OPENS ON LAST DATE FOR RECEIVING ISSUE CLOSES ON REQUESTS FOR SPLIT FORMS

27TH AUGUST, 2004 11TH SEPTEMBER, 2004 27TH SEPTEMBER, 2004

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE Allianz Securities Limited MAS Services Private Ltd. (UIN-100001008) AB-4, Safdarjung Enclave, 2nd Floor, 3 Scindia House, Janpath, New Delhi – 110029 New Delhi-110 001 Phone: 011 - 26104142, 26104326 Tel: 011 – 51514666 Fax : 011- 26181081 Fax: 011 - 51514665 E-Mail: [email protected] E-mail: [email protected] E-Ma TABLE OF CONTENTS S.NO. TOPIC Page No. GLOSSARY OF TERMS/ABBREVIATIONS

RISK FACTORS & MANAGEMENT PERCEPTIONS THEREOF i

I. GENERAL INFORMATION 1

II. CAPITAL STRUCTURE 8 III. TERMS OF THE PRESENT ISSUE 12

IV. TAX BENEFITS 19

V. PARTICULARS OF THE ISSUE 21

VI. COMPANY & MANAGEMENT 22

VII. INDUSTRY, MARKET AND COMPETITIVE ENVIRONMENT 41

VIII. FINANCIAL PERFORMANCE OF THE COMPANY 42 IX. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL INFORMATION 59

X. OUTSTANDING LITIGATIONS & DEFAULTS 61

XI. PROMISES VS PERFORMANCE 88

XII. BASIS OF ISSUE PRICE 90

XIII. STOCK MARKET DATA 90

XIV. DETAILS REGARDING LISTED COMPANIES UNDER THE SAME MANAGEMENT WHICH HAVE MADE CAPITAL ISSUES DURING THE LAST 3 YEARS. 91

XV. NAMES OF THE SMALL SCALE UNDERTAKINGS TO WHOM THE COMPANY OWES A SUM EXCEEDING RS.1 LAKH WHICH IS OUTSTANDING FOR MORE THAN 30 DAYS 91

XVI. UNAUDITED WORKING RESULTS FOR THE LATEST PERIOD 91 XVII. MECHANISM EVOLVED BY THE COMPANY FOR THE REDRESSAL OF INVESTOR

GREIVANCES 92

XVIII. DETAILS OF ADVERSE EVENTS AFFECTING THE COMPANY SINCE THE LAST AUDITED FINANCIAL STATEMENTS 93

XIX. EXPERT OPINION 93 XX. OPTION TO SUBSCRIBE 93

XXI. STATUTORY AND OTHER INFORMATION 104

XXII. MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS 105

XXIII. DECLARATION 106 GLOSSARY OF TERMS / ABBREVIATIONS Act / The Act The Companies Act, 1956 and subsequent amendments thereto Articles/AOA Articles of Association of the Company AS Accounting Standard AY Assessment Year Board / BOD Board of Directors of MSL BSE The Stock Exchange, Mumbai BIFR Board for Industrial & Financial Reconstruction CAF Composite Application Form CDR Corporate Debt Restructuring CDSL Central Depository Services (India) Limited CC Criminal Complaint CIT Commissioner of Income Tax CESTAT Customs, Excise & Service Tax Appellate Tribunal CENVAT Central Value Added Tax CJM Chief Judicial Magistrate CMP Current Market Price Demat Dematerialized (Electronic/Depository – as the context may be) Depositories NSDL and CDSL DGI&R Director General (Investigation & Research) DICGC Deposit Insurance and Credit Guarantee Corporation DLC District Labour Commissioner DP Depository Participant DRT Debt Recovery Tribunal ECGC Export Credit Guarantee Corporation EGM Extra-ordinary General Meeting Employees Employees of the Company EPCG Export Promotion Capital Goods Scheme EPS Earnings Per Share Equity Shareholders Equity Shareholders whose names appear as • beneficial owners as per the list to be furnished by the depositories in respect of the shares held in the electronic form and • on the Register of Members of the Company in respect of the shares held in physical form at the close of business hours on the Record Date i.e., 13th August, 2004, and to whom this issue is being made. Equity Shares 84,98,976 Equity Shares of Rs.10/- each offered through this Letter of Offer FCNR Foreign Currency (Non-Resident) Account FEDAI Foreign Exchange Dealers Association of India FEMA Foreign Exchange Management Act, 1999 FII(s) Foreign Institutional Investors registered with SEBI under applicable laws FIPB Foreign Investment Promotion Board FY Financial Year GoI Government of India Gsm Grams per square meter ICAI Institute of Chartered Accountants of India ID Act Industrial Disputes Act, 1947 IDBI Industrial Development Bank of India Issue / Rights Issue Issue of 84,98,976 Equity Shares of Rs.10/- each for cash at par on rights basis to the existing Equity Shareholders of the Company in the ratio of 1:4 held as on Record Date IT Act Income Tax Act, 1961 ITAT Income Tax Appellate Tribunal ISMA Indian Sugar Mills Association Ktpa Kilo (thousand) tons per annum Lead Managers Allianz Securities Limited LOO/Offer Document Letter of Offer circulated to the Equity Shareholders of the Company MSL Mawana Sugars Limited Members/Shareholders Holders of the equity shares of the Company whose names appear in the Register of Members or Register of Beneficial Shareholders as on the Record Date Memorandum Memorandum & Articles of Association of the Company MOU Memorandum of Understanding MSW Mawana Sugar Works MRTP Monopolies & Restrictive Trade Practices Mn Million MT Metric Ton MW Mega Watt MODVAT Modified Value Added Tax NBFC Non-Banking Financial Company NAV Net Asset Value NI Act The Negotiable Instruments Act, 1881 NPA(s) Non Performing Asset(s) NRE A/c. Non-Resident (External) Rupee Account NRI(s) Non-Resident Indian(s) NRO Non-Resident Ordinary Rupee Account NSDL National Securities Depository Limited OCBs Overseas Corporate Bodies PAN Permanent Account Number PAT Profit After Tax PBIT Profit Before Interest and Tax RBI Reserve Bank of India Record Date The relevant date which is reckoned for determining the Rights entitlement to the Members which is 13th August, 2004 Registrars Registrars to the Issue MAS Services Private Limited Repatriation “Investment on repatriation basis” means an investment the sale proceeds of which are, net of taxes, eligible to be repatriated out of India, and the expression ‘Investment on non- repatriation basis’, shall be construed accordingly. RONW Return on Net Worth SFFI Siel Foods and Fertilizer Industries SRI Shriram Refrigeration Industries SSL Siel Sugar Limited SEBI / The Board Securities and Exchange Board of India Securities Equity Shares issued through this Letter of Offer SLR Statutory Liquidity Ratio The Company / Issuer / MSL Mawana Sugars Limited TSC Titawi Sugar Complex Tpa Tons per annum Tpd Tons per day UTI Unit Trust of India WDV Written Down Value In this Letter of Offer, all references to “Rs.” refers to Rupees, the lawful currency of India, “USD” or “US$” refers to the United States Dollar, the lawful currency of the United States of America. References to the singular also refer to the plural and one gender also refers to any other gender wherever applicable. RISK FACTORS AND MANAGEMENT PERCEPTION THEREOF

The investors should consider the following risk factors together with all other information included in this Letter of Offer carefully, in evaluating the Company and its business before making any investment decision. Any projections, forecasts and estimates contained herein are forward looking statements and are based on certain assumptions that the Company considers reasonable. This Letter of Offer contains forward-looking statements that involve risks and uncertainties. Such statements use forward looking terminology like “may”, “believes”, “will”, “expect”, “anticipate”, “estimate”, “continue”, “plan”, “likely” or such similar words. The Company’s actual results could differ from those anticipated in these forward-looking statements as a result of certain factors including those, which are set forth in the “Risk factors” and elsewhere in this Letter of Offer and general economic and business conditions, our ability to successfully implement our strategy, growth and expansion plans, and increasing competition in sugar industry. Neither the Company nor the Lead Manager or their respective affiliates has any obligation to update, or otherwise revise, any statements, including revisions, if any, to reflect changes in economic conditions or other circumstances arising after the date hereof or to reflect the occurrence of unanticipated events, even if the underlying assumptions do not come to fruition. This Letter of Offer also includes statistical and other data regarding the Sugar Industry. This data was obtained from industry publications, reports and other sources that the Company and the Lead Manager believe to be reliable. Neither the Company nor the Lead Manager has independently verified such data.

INTERNAL RISK FACTORS 1. Criminal Cases filed against the Company / Promoter Group Companies a. Against the Company viz. Mawana Sugars Ltd. Fourteen (14) Criminal cases are pending in various Courts / Authorities by Suppliers / Employees / Clients. For details, investors please refer to “Outstanding Litigations/Defaults” appearing on page no. 61 to 66 of the Letter of Offer. b. Against Directors & Promoter Group Companies (i) 4 petitions u/s 482 of Cr. P.C. filed by the Company challenging the prosecution cases lodged against one Director of the Company. (ii) Siel Ltd. – One criminal case is pending u/s 420 of IPC by Supplier of the Company. For details, investors please refer to “Outstanding Litigations/defaults” appearing on pages no. 66 to 87 of the Letter of Offer. c. Against Promoters of the Company - Mr. Krishna Shriram Authority Particulars of Status Amount Opposite Allegations/Charges the matter Party Supreme Contempt petition Pending. But the com- Rs.8.56 Sankyut The company had agreed with the oppo- Court has been filed pany has deposited the lakhs Kamgar site party to pay compensation to the con- against the company disputed amount with Morcha tract workers and out of the said compen- and Shri Krishna the Labour Court. An- sation 10% was to be given to the Oppo- Shriram, Mr. A. K. other union which also site Party. However, the Opposite Party did Mehra and Mr. P. K. brought forward work- not bring forth all the workers. The com- Bhalla. ers has filed an interim pany only paid 10% to the Opposite Party application for 10% of for the workers actually brought by the the amount paid to Opposite Party. Due to this, the opposite those workers. party has filed the contempt petition.

Management Perception The cases against one of the Directors of the Company arise on account of the allegation that he was the Occupier of Factory premises. The case against Siel Ltd. relates to a contractual dispute between a supplier of the Company and his supplier. The Company has been impleaded as a respondant in this case.

i 3. Siel Ltd., in which the Company is proposing to invest the proceeds of this Issue, has incurred loss to the extent of Rs. 3751.87 lakhs for F.Y. 2003-04. Siel Ltd. also incurred losses in the previous years on account of which it had approached restructuring of its business and debts and its name was in the RBI’s defaulter list. Management Perception Due to losses, Company’s name appeared in RBI’s defaulters list and the Compay in turn approached CDR for restructuring. Consequent upon restructuring of Siel Ltd., as approved by the High Court and with the investment of funds by MSL which would be utilized for increase in the capacity of its Chemical business, performance of Siel Ltd. would improve and its name now doesn’t appear in RBI’s defaulters list. 4. In the final restructuring package approved by CDR Cell, it was not clearly stated that Mawana Sugars Ltd. (erstwhile Siel Sugar Ltd.) should invest in equity of Siel Ltd. to the extent of Rs. 800 lakhs for which this Rights Issue is being planned. However, it was mentioned only in the financial projections submitted to the CDR Cell, who had then considered and approved it alongwith the entire package. Management Perception ICICI Bank Ltd., the Lead Institution, submitted detailed proposal for restructuring alongwith the future projections, which were accepted and then approved by CDR Cell. CDR Cell on behalf of all the Lenders, except UTI who had not become a member in the CDR, had given their consent for raising equity by the Company through Rights Issue to the extent of Rs. 850 lakhs vide their letter dated 16th July, 2004. ICICI Bank Ltd., the Monitoring Agency appointed by the CDR Cell had also given their consent to the same vide their letter dated 11th May, 2004. 5. As per the Restructuring package approved by CDR, Mawana Sugars Ltd. has to bear term liabilities of Rs. 9675 lakhs, which constitutes Rs. 7390 lakhs of Term Loan and Rs. 2285 lakhs of Zero Coupon Debentures. In addition, the Company requires to make an equity investment into Siel Ltd. to the extent of Rs. 800 lakhs according to the projections submitted and approved by CDR Cell. Management Perception The term liabilities allocated to Mawana Sugars Ltd. is based upon the debt servicing capacity of the Sugar business as assessed and approved by the Lenders / CDR Cell. 6. The company has accumulated losses of Rs. 417.45 Lakhs for the period from 1st April, 2003 to 29th February, 2004. Management Perception The carry over losses were because of losses incurred during the period October 1, 2002 to March 31, 2003 by erstwhile Siel Ltd. in its sugar business. The Company however during the period 1st April, 2003 to 29th February, 2004 (11 months) earned a net profit after tax of Rs. 283.49 lakhs. 7. The Company has not declared any dividend during the periods ended 29th February, 2004 and ended 31st March, 2003 Management Perception The Company was incorporated on 26th December, 2002 and has losses for the financial period ended 31st March, 2003. The financial statements for the period 1st April, 2003 to 29th February, 2004 are for the purposes of this issue and have not been placed before the members of the Company. 8. As per CDR terms, out of total investment of Rs.800 Lakhs, Rs. 300 lakhs has to be invested in Siel Ltd. by September, 2005, but the Company is making the issue for the entire requirement of Rs. 800 lakhs. Management Perception As per restructuring package, Rs. 250 lakhs each has to be invested by September 2003 and September 2004 and the balance Rs. 300 Lakhs to be invested by September 2005. The Company is raising Rs. 849.89 lakhs through this Rights Issue and out of this, Rs. 552.43 lakhs in the form of application money and the balance amount of Rs. 297.46 lakhs to be raised through Calls by September, 2005 keeping in view the CDR requirements. 9. No comparable performance data for the previous years are available for comparing the financial performance of the Mawana Sugars Ltd. Management Perception As the sugar business of the company has been vested from 1st October, 2002 through a Scheme of Arrangement of Siel Ltd. which became effective from September 5, 2003, comparable performance data for the previous years are not available. 10. Unit Trust of India, one of the lender of erstwhile Siel Ltd., issued a recall notice due to non-payment of instalments due to them in November, 2002 and later did not consent to the CDR Package or Scheme of Arrangement, approved by the Hon’ble High Court at Delhi in August, 2003 and has filed an appeal against the order of High Court, approving the Scheme, in the Division Bench of Hon’ble High Court. Any adverse decision could have an impact on the financial ability of the Company. Management Perception The Appeal of the UTI has not been admitted by the High Court and there are no restraints on implementation of the Scheme and the same has already been implemented by erstwhile Siel Ltd. The Scheme having been approved by majority of the Creditors and Shareholders and subsequently approved by the High Court is binding on all the Creditors, Shareholders and the Company in terms of Section 391(2) of the Companies Act, 1956. Presently, the other Lenders of Siel Ltd. have agreed to pay sum upto Rs. 1173 lakhs to UTI to be paid out of the surplus realization from the Special Purpose Vehicle viz. ii Shivajimarg Properties Ltd., in which the land of erstwhile Siel Ltd. located at 15, Shivaji Marg, New Delhi has vested pursuant to the Scheme. Siel Ltd. has also filed an application u/s 392 of the Companies Act, seeking a direction from Hon’ble High Court to restrain UTI from creating any impediment and UTI be directed to take all steps to issue necessary no objection required for sale of non-operating assets, as required in terms of the Scheme. The Court has directed UTI to consider the One Time Settlement proposal of the Company and report to the Court so that effective order could be passed by the Court. 11. The Company has not taken any specific approval from each of the Lenders for the said Rights Issue. UTI having not assented to the CDR, may in the worst possible scenario, object against the said Rights Issue.

Management Perception This being a Rights Issue offered to the Shareholders, approval from Shareholders has been taken in their Extra Ordinary General Meeting held on 8th May, 2004. Consequently, no separate approval from any Lender, including UTI, is required for the Rights Issue. Further, this Issue is being made in compliance with the projections submitted to CDR Cell which formed the basis of approval of restructuring package, therefore, CDR Cell on behalf of all its Members/Lenders (except UTI, which is not a member of CDR) has given their specific no objection for the Rights issue vide their letter dated 16th July, 2004.

12. As per the CDR package, the Company shall not declare any dividend if it fails to meet its obligations to pay interest and / or installments and / or other moneys payable to the Lenders, so long as it is in such default. Management Perception This clause is usually stipulated by the CDR Cell to monitor cash outflows in the event of default.

13. One of the terms of CDR package is that the lenders reserve the right to recompense for the sacrifices undertaken by them to the extent of debt transferred under the Scheme of Arrangement. The total debt transferred to the Company under the Scheme of Arrangement were Rs. 9675 lakhs. In the event of exercise of such right, the financial position of the company will be affected to that extent. Management Perception This clause is usually stipulated by the CDR Cell / Lenders in all restructuring. The financial liability, if any, will be determined only if this right is exercised. The Company, however, has not made any arrangement for this liability as this liability, if any, would be ascertained only after the payment of all the existing debts. 14. According to CDR terms, the Lenders may require the Company to prepay the Loan, without a pre-payment premium, on dates earlier than the stipulated repayment schedule. Management Perception As per the CDR terms, lenders may require the Company to prepay the loan, only if the profitability, cash flow and other circumstances so warrant. 15. According to CDR terms, the Lenders reserves the right to review the interest rate on the remaining debt to be serviced by the Company. Management Perception Lenders will exercise this right only if cash-flows and the circumstances so warrant. 16. As per the CDR terms, the Company shall not undertake any new project or expansion or make any investment or acquire any assets on lease / hire-purchase or enter into any joint venture agreement, Merger & Acquisition deal, sale of investments, hiving off of division, etc. without prior approval of the lenders. Management Perception This clause is usually stipulated by the CDR Cell to monitor cash outflows. 17. As per the CDR approved package, the Company has to make an investment in Siel Ltd. to the extent of Rs. 800 lakhs by September, 2005. In case of failure to bring the equity in the present rights issue, company’s cash flows would be affected to that extent. Management Perception The Promoters have undertaken for meeting any shortfall in the total subscription in the issue. 18. The Company needs RBI’s specific approval before making issue & allotment of Shares to OCBs, which is still awaited. Management Perception The Company has applied to Reserve Bank of India vide their letter dated 19th July, 2004 in respect of taking its approval for issue and allotment of Shares to OCBs. The Company has received approval in respect of three OCBs out of total 4 OCBs and the approval in respect of fourth OCB, will be received after furnishing necessary information by them as required by RBI. The Company will make offer and allotment to that OCB only after receipt of specific approval from RBI.

iii 19. Risk of attrition of key personnel and ability to attract and retain talented professionals. Management Perception The Company has identified development of human resources as a critical activity for growth. The Company believes that its Human Resources initiatives will enable it to retain existing talent and attract new talent into its system. 20. Promise v/s Performance a) For the Company – Mawana Sugars Ltd. There was no public / rights issue of securities made by the Company in the last 3 years as the Company came into existence only in December, 2002. b) Promise v/s Performance of Group / Associate Companies There was no public / rights issue of securities made by any listed companies under the Promoter Group / Associate Companies in the last 3 years. However, shortfall in the Promise v/s Performance regarding the last issue made by them, is given in detail on pages no. 88 to 89. 21. The Company has following contingent liabilities, which are not provided for as on 30th June, 2004: Sr. No. Particulars Amount (Rs. lakhs) 1. Claims against the Company not acknowledged as debts 407.41 2. On partly paid shares (# Rs.20) # 3. In respect of a guarantee to be given by the Company to lenders of a subsidiary company for the minimum realisation of principal amount of debts amounting to Rs.3075 lacs transferred to the subsidiary company as on 30.9.2002. The guarantee will come into force after 30.9.2004 in the event of shortfall, if any, in the realisation of the assets of the subsidiary company amounting to Rs.3075 lacs and will be limited to the amounts remaining unpaid. The guarantee will lapse on payment of entire amount of Rs.3075 lacs to lenders of the subsidiary company. During the period, out of the above, the subsidiary has already repaid an amount of Rs.2290.65 lacs (previous period Rs Nil) and the outstanding amount as at June 30, 2004 is Rs.784.35 lacs (As at March 31, 2003 Rs. 3075 lacs).

22. The Crushing license at Titawi Unit is still in the name of Siel Ltd. and the Company is yet to get the approval for changing the same in the name of Mawana Sugars Ltd. The Crushing license at Mawana Unit is still in the name of Mawana Sugar Works (which was earlier unit of DCM Ltd.) and the Company is yet to get the approval for changing the same in the name of Mawana Sugars Ltd Management Perception The Company applied to the concerned authorities on 18th October, 2003 and 17th December, 2003 in case of Titawi & Mawana Units respectively for change in name to Siel Sugar Ltd. and had been expecting approval for the same shortly, but in the meantime, Company got its name changed from Siel Sugar Ltd. to Mawana Sugars Ltd. The Company has now applied for getting the license changed in the name of Mawana Sugars Ltd. vide their letter dated 6th July, 2004 for Mawana Unit but does not foresee any problem in getting converted. Also, the company has intimated the change of name to the authorities in case of Titawi Unit.

Management Perception The Company has already made an application to the concerned authority vide their letter dated 22nd June, 2004, whereas for change in name to Mawana Sugars Ltd., the Company has applied vide their letter dated 22nd July, 2004. The Company does not foresee any problem in getting the required approvals.

24. The Company’s Licences for sale of insecticides at Babri Store, Lalu Kheri Store and Charthawal and Licence for sale of fertilizers at Baghra Store at Titawi Unit are pending for change of name from Siel Sugar Limited to Mawana Sugars Limited. Further, a registration certificate obtained under Central Excise Rules, 1975 is also in the name of Siel Sugar Limited. Management Perception The Company has already made an application to the concerned authorities and does not foresee any problem in getting the required approvals.

iv 25. Out of total land at Mawana, the Company is to surrender 6.251 hectares of land to the State. In addition, State Administra- tion is seeking that 9.815 hectares of land to be reverted back to the State being not actively used by the Company. Management Perception The land admeasuring 6.251 hectares at Barhni is not in direct and active use for more than 50 years and as ordered by Hon’ble Allahabad High Court, the Company is in the process of surrendering the land. In regard to 9.815 hectares of land located at Mawana Mandi, the Company is contesting the State Administration decision in the Courts of Competent Jurisdiction. However, the said land was not used by the Company for their manufacturing activities. 26. The Company’s Land at Mawana & Titawi Units as well as Lands held at other places like Nanglamal and Gurgaon is not in Company’s name i.e. Mawana Sugars Limited. Management Preception Out of total land of 64.739 hectares at Mawana, 46.282 hectares of land has already been mutated in the name of Siel Sugar Ltd. and 3.158 hectares are in the process of changing from Shriram Industrial Enterprises Ltd. to Siel Sugar Ltd. The Company’s land at Barhni admeasuring 6.251 hectares is to be surrendered to the Government and the balance land of 9.048 hectares is under litigation, details of which are mentioned under the head “Land” appearing on page no. 24 & 25. The entire land in Titawi Unit admeasuring 29.076 hectares has been mutated in the name of Siel Sugar Ltd. In regard to land at Nanglamal, 36.427 hectares has already been mutated in the name of Siel Sugar Ltd. and the balance is under process of changing its name to Siel Sugar Ltd. Gurgaon Land is still in the name of Siel Ltd. As the Company’s name has recently been changed from Siel Sugar Ltd. to Mawana Sugars Ltd., the Company will accordingly get the revenue records modified. 27. Sugar cane constitutes around 70% of cost of production for manufacture of sugar and the cane purchase is highly regulated by State / Central Government. Any upward revision in the prices of sugar cane affects the total cost of production and therefore profitability. Management Perception Any increase in the price of sugar cane is expected to be offset by way of increase in sugar prices. 28. Sugar production is dependent on the availability and quality of cane and any drastic changes in climatic conditions may impact sugarcane crop and hence sugar production. Management Perception To some extent, sugar cane is a weather resistant crop and is unaffected by moderately high or low rainfall. The Company has sufficient availability of cane in its command area and does not foresee any material adverse impact on the sugar production in the normal circumstances. 29. Distant location of mills from the ports increases the cost of transportation for exports. Management Perception Considering the present demand-supply scenario in the Sugar Industry, the Country will not be in a position to export sugar. 30. The Company has given a guarantee to the lenders of Siel Holdings Ltd. (SHL - a Subsidiary Company), for the minimum realization of principal amount of debt amounting to Rs. 3075 lakhs. Management Perception Siel Holdings Ltd. has already repaid the principal amount of debts amounting to Rs. 2291 lakhs out of Rs. 3075 lakhs. The balance amount of the debt will be repaid out of the sale proceeds of the investments held by SHL. The company does not foresee any liability crystalising on account of the above guarantee. 31. Nine out of 10 (ten) promoter companies have made losses during F.Y. 2002-03 (last available audited results except mentioned in case of Siel Ltd.). - Siel Ltd - Rs. 3751.87 lakhs (F.Y. 2003-04) - Busneda Commercial Pvt. Ltd. - Rs. 21.34 lakhs - Sandvik Inv. & Leasing Pvt. Ltd. - Rs. 6.94 lakhs - Greenfields Comm. Pvt. Ltd. - Rs. 16.14 lakhs - Minos Trading (I) Pvt. Ltd. - Rs. 11.20 lakhs - CSR J & K Investments Pvt. Ltd. - Rs. 3.27 lakhs - SFSL Securities Pvt. Ltd. - Rs. 0.57 lakhs - Perennial Investments Ltd. - Rs. 91.22 lakhs - Doab Foods & Gen. Industries Ltd. - Rs. 3.88 lakhs

v Management Perception The losses of the Promoter Company in no way impact the profitability of the Company except in case of Siel Limited in which the proceeds of this issue are proposed to be invested in terms of CDR package. In Siel Limited, the company expects improved performance on account of its debt restructuring & reduction in its interest liability. 32. Seven Promoter Group Companies of Mawana Sugars Ltd. viz. Busneda Commercial Pvt. Ltd., Chhaya J&K Investments Pvt. Ltd., Gaiety J&K Investments Pvt. Ltd., KSR J&K Investments Pvt. Ltd., CSR J&K Investments Pvt. Ltd., Greenfields Commercial Pvt. Ltd. & Krishna J&K Investments Pvt. Ltd. had incurred losses and have applied for reduction of capital. 33. Three Promoter Group Companies viz. Busneda Commercial Pvt. Ltd., Greenfields Commercial Pvt. Ltd. and Minos Trading India Pvt. Ltd. entered into the Scheme of Arrangement with its Creditors. Management Perception As a part of consolidation exercise to avail synergies, these Companies have entered into Scheme of Arrangement with their Creditors. 34. Four group companies on account of losses, have accumulated arrears of dividend on Cumulative Preference Shares viz. Jay Engineering Works Ltd., Siel Financial Services Ltd., Siel Ltd. and Transiel India Ltd. 35. Twelve Group Companies, due to accumulated losses, have negative networth as per last available Audited results i.e. during the F.Y. 2002-03 or F.Y. 2003-04, as case may be. 36. One of the Promoter Group Company viz. Jay Engineering Works Ltd. (subsidiary of Siel Holdings Ltd., which is a subsidiary of Mawana Sugars Ltd.) became sick and got registered with the Board of Industrial & Financial Reconstruction (BIFR) in the year 1994. The Company’s name was also in the RBI’s defaulter list. The rehabilitation scheme once sanctioned in November, 1997 was revised due to non-implementation. Management Perception BIFR declared the Company as sick in its hearing held on 8th April, 1994 and appointed IDBI as the Operating Agency for submitting a revival scheme. BIFR sanctioned a rehabilitation scheme vide its order dated 21st November, 1997. The said scheme did not work satisfactorily and BIFR revised the earlier sanctioned scheme vide its order dated 8th April, 2003. IDBI continues as the Operating Agency for revised rehabilitation scheme which is under implementaion. 37. In case of Three (3) Promoter Group Companies viz. Perennial Investments Limited, Doab Foods & General Industries Limited and M.S.R. Enterprises Limited, penalty of Rs. 50,000/- has been imposed by SEBI for violation of SEBI(Substantial Acquisition of Shares & Takeover) Regulations, 1997 in the year 2000-01.

Further, in case of another Group Company viz. SFSL Investments Limited, penalty of Rs. 5,000/- has been imposed by Company Law Board for contravention of Sec. 383A of the Companies Act, 1956. Management Perception The defaults were in as much as the disclosures in the Notice for the preferential allotment of shares of Usha International Ltd. were not found adequate by SEBI. After detailed hearing, a fine of Rs. 50,000/- was imposed on these Companies, which subscribed to preferential allotment. The penalty has already been paid by all these companies. 38. One of the promoters Group Company viz. Siel Financial Services Limited has made the default in the payment of listing fees at Madhya Pradesh Stock Exchange for the F.Y. 2001-02 & 2003-04, at Calcutta Stock Exchange from the financial year 1999-2000 and at Ahmedabad Stock Exchange from the Financial Year 2001-02. 39. The pending litigations / disputes by & against the Company and its Directors are as under: Cases against Mawana Sugars Ltd. Civil Criminal Excise Related IT Related Others No. of Cases 58 26 37 — 151 Amount Rs. 310.41 lakhs Rs. 8.51 lakhs in Rs. 137.39 lakhs — Rs. 134.88 lakhs + Interest involved + interest in 24 11 cases. However, in 7 cases. In addition amount is not cases. However, amount is not ascertainable in 143 cases. amount is not ascertainable in ascertainable balance 15 cases. in remaining 34 cases.

vi I. (A) Against the Company - Mawana Sugars Ltd. a) Criminal Cases S.No Authority Accused Particulars of the matter / Charges Amount Status Judicial Magis- Sh. Bhupinder A case has been filed under Section 406 of the Not The case is 1. trate, Saharanpur Singh and Indian Penal Code alleging that in 1990 the sug- Ascertainable pending for Mr. H.S. Malik arcane was purchased without issuing receipts hearing. Manager and thus the seller could not obtain payment. ] (Cane) Judicial Magis- Sh. Santar Pal, Not The case is 2. Case under Sections 323/427/506 of the Indian trate, Mawana Cane Supervi- Penal Code for causing hurt, mischief and crimi- Ascertainable pending for sor and Mr. D.K. nal intimidation has been registered against em- hearing. Sinha, Deputy ployees for actions taken during the course of their Manager duties. (Cane) & Ors. 3. Chief Judicial Mr. Harbans The erstwhile General Manager prosecuted for Not The Magistrate Singh not opening a new sugarcane purchase center. Ascertainable prosecution Muzaffarnagar has been stayed by Allahabad High Court. 4. Scheduled Smt. Chandra A complaint has been filed against the company Not The Castes & Sched- Kanta alleging discrimination and harassment. Ascertainable investigation uled Tribes Com- has been mission, stayed by the Lucknow Lucknow Bench of the Allahabad High Court in Writ Petition No.5935 of 2000. 5. Human Rights Smt. Chandra A complaint has been filed against the company Not On directions Commission/ Kanta alleging discrimination and harassment Ascertainable of the District SDM, Mawana Magistrate, the SDM Mawana is inquiring into the matter. 6. Judicial Magis- Shri A.K. 8 cases under section 268/ 285/ 237/337/338 IPC Not The case are trate, Mawana Aggarwal, Shri and 34 of Police Act have been filed against the Ascertainable fixed for trial. Joy Mukherjee, employees of the Company and three contractors Shri Sharad alleging that the company dumped burnt fly ash Krishna, Shri around the factory area. Rajeev Mishra & Ors. 7. Chief Judicial Mr. Tajinder A case against the Company for not having the Not The case is Magistrate, Kumar, Dealer superscription on the package “Best before date”. Ascertainable pending for Chandigarh and the com- hearing. pany 8. Judicial Magis- Mr. Satyapal The company has lodged 5 FIR/complaints against Rs. 2.90 Cases are trates, Mawana, Sh. Satyavir Sh. 5 workmen for misappropriation of cane. lakhs pending Meerut and Ramesh Chand Muzaffarnagar Sh. Narendra Sh. Satyapal M/s. Sumit Asso- 9. Judicial Magis- ciates & its part- The company has filed 6 cases under Section 138 Rs.5.61 Non-Bailable trate, Mawana ners Mr. Sumit of the Negotiable Instruments Act. Cases Nos. 699 lakhs Warrants Jain & Mr. Anuj to 704 of 2002. The company had delivered sugar issued against Jain. to accused for which it issued cheques which were the accused. dishonored vii b) Labour Cases Sr. No. Name of the Authority Claim Amount Matter / Status 1. Workmen’s Compensation Rs. 8.64 lakhs + 5 Cases are filed against the Company for compensation Commissioner, Meerut/ Deputy Interest / gratuity / permanency and payment of HRA. Labour Commissioner, Meerut/ 1 case filed by an employee claiming that he was Labour Court, Meerut prematurely retired, as his actual date of birth was later. 127 cases of temporary/regular workmen for reinstatement and/or compensation, dismissal & extra allowance. The 2. cases are pending at Allahabad High Court/Labour Court/Ind. Tribunal, Meerut / Saharanpur. The amount is not ascertainable in all these cases. c) Under The Factories Act. Authority Name of the Disputing Party Particulars of the matter Status Amount Allahabad The Company has filed four criminal writ petitions on Stay has Not High Assistant Director of Factories the ground that Mr. Siddharth Shriram, Chairman & been Ascertainable Court Managing Director, was not the occupier as defined granted. in the Factories Act. (Case No.- Crl. WP Nos.5131 to 5134 of 1993). d) Under Trade Tax Authority Particulars of the Matter Status Amount Supreme Court A Special Leave Petition has been filed by the state of U.P. The matter is pending Rs. 14 Lakhs challenging the order of the Allahabad High Court quashing for further order. the circular of the State of U. P. whereby the exemption on purchase of high speed diesel within UP was withdrawn. Company is also a party in this matter.

Allahabad High The company has filed a writ petition against the order dated The matter is pending Rs. 112.23 Court 25.8.2000 given by the Commissioner, UP Trade Tax pertain- for further order. Lakhs ing to the period of deferment of Trade Tax. e) Excise related Cases S.No Authority Particulars of the matter Status Pending Liability Amt. 1. CESTAT, New Delhi 9 appeals filed by the Company against the Pending Rs. 39.49 lakhs order passed by Commissioner Appeals, hearing. Meerut for wrongful availment of MODVAT Credit. 2. Deputy Commissioner 13 Appeals allowing CENVAT Credit. Cases Pending Rs. 29.16 lakhs Muzaffarnagar/Commis- have been remanded for fact verification to determination sioner Appeal Ghaziabad the Adjudicating officer. of facts

6 appeals filed by the company for Demand Pending Rs. 8.49 lakhs 3. CESTAT, New Delhi/ of excise duty due to shortage/removal of hearing Commissioner Appeal, sugar/molasses grading of molasses by Ghaziabad] consumer. Assessment 4. Assistant Commissioner,. The company has received seven show Rs. 6.78 lakhs Pending Division, Muzaffarnagr / Dy. cause notices for shortage of molasses / Commissioner, sugar. Muzaffarnagar

The applica- 5. Commissioner central Application filed by the company for remis- Rs.5.64 lakhs tion is excise Meerut sion in excise duties. pending

6. Addl. Commissioner, Show cause notice issued to the company Adjudication Rs. 47.83 lakhs Meerut-1 demanding excise duty on sale of Bagasse.

viii f) Under Uttar Pradesh Sugarcane (Regulation of Supply And Purchase) Act, 1953

S. No. Authority Particulars of the Matter Status Opposite Party 1. Allahabad High Court 4 Writ Petitions filed by the company The High Court stayed Collector, challenging the tagging order for the seasons the order of the DM and Muzaffarnagar & 2002-03 & 2003-04. modified the tagging Meerut percentage at 76% & 78% respectively. 2. Civil Judge (Sr. Div.) The company has filed a case challenging Final arguments are to Cooperative Cane Muzaffarnagar the vires of the arbitration proceedings be advanced. The Dev. Society Ltd., before Deputy Cane Commissioner, amount involved is Rs. Muzaffarnagar and Saharanpur. 2.06 Lakhs. Ors.

3. Allahabad High Court 7 Writ Petitions were filed by the Company/ Interim Orders in The matters are against the Company for past seasons favour of the infructuous now since regarding reservation of cane purchase Company. they related to past sea- centres. sons & will have no implication for future. g) Civil Cases S. No. Authority Particulars of the matter Status Amt. 1. Tehsildar (Judicial) 10 Cases filed against the company for Pending. But in 1 Case the Rs. 13.93 Lakhs Sadar, encroachment on Gaon Sabha Land. matter has been sent back Muzaffarnagar, to the Tahsildar for recon- Tehsildar sideration by the Allahabad (Mawana) High Court which has stayed the recovery of damages and demolition of the boundary wall. ]

Addl. Distt. Judge- A revision petition has been filed by a Land The amount 2. For arguments. VII, Meerut Owner against the order of the Civil Judge involved is not dated 18.5.1998 dismissing his suit filed ascertainable. against the company for encroachment on his land at Village Nanglamal. 3. The amount XIII Addl. Dist. Some Land Owners have filed an appeal Final arguments Judge, Meerut against the dismissal of the suit filed for involved is not injunction restraining the company not to ascertainable. disturb them. 4. The amount Delhi High Court The Union of India has filed a letter Patent The matter is pending for involved is not Appeal against the company and three further order. other sugar factories regarding ascertainable. encashment of bank guarantees for differential levy sugar price.

5. Civil Judge (Jr.Div.) Suit for injunction filed against the company The Municipal Board has The amount Mawana regarding school building in Mawana sought impleadment in the involved is not Mandi. matter ascertainable. 6. Board of Revenue The company has filed a revision against The revision was dis- Rs.1.54 lakhs. at Allahabad an order by which a demand of Rs.26,925/ missed in default. However, - was imposed on it on account of addi- the application for restora- tional stamp duty in relation to land pur- tion is pending. chased by the company. A penalty of Rs.1,26,925/- has also been imposed.

7. Allahabad High 3 writ petitions filed by the company for Interim orders passed in The amount court grant of release order for sale of free sale favour of the company. involved is not sugar without any restrictions ascertainable.

ix g) Civil Cases S. No. Authority Particulars of the matter Status Amt. 8. Allahabad High A Writ petition was filed by the company The High Court has passed The amount Court against the collection of toll tax by the PWD an order whereby the toll involved is not authorities at newly constructed bridge, as tax charged from the com- ascertainable. there was no notification by the State Govt. pany would be kept in a separate account subject to the final order of the High Court. 9. District Consumer Complaints against non-refund of the se- For Reply Rs.1.48 lakhs Forum, curity deposit for the electrical connection. Muzaffarnagar

10. Delhi High Court Three writ petitions filed by the Company The matter is pending for The amount through West Central and East UPSMA & further order. involved is not ISMA challenging SMP of cane for season ascertainable. 2002-03 & 2003-04.

11. Addl. Civil Judge, 3 Civil suit filed by company for permanent The matter is pending for The amount Sr.Div. Meerut/ Civil injunction regarding encroachment on further order. involved is not Judge, (Jr.Div.) Mawana Mandi and Nanglamal property. ascertainable. Mawana, Civil Judge Merrut 12. Vth Addl Civil 3 suits of recovery of amount from an em- The matter is pending for Rs. 6.87 Lakhs + judge Meerut, III ployee and two suppliers have been filed further order. interest. Addl. Civil judge by the company Meerut,VII Addl Civil Judge Meerut 13. Civil judge (Jr. 3 execution petitions filed by the company The matter is pending for Rs. 1.15 Lakhs + Div.)Meerut, Civil further order. interest. judge (Sr. Div)Meerut, Civil Judge, Dehradun 14. Supreme Court Two SLPs filed on behalf of the Industry The matter is pending for The amount through WUPSMA challenging Cane price further order. involved is not and Society Commission. ascertainable. 15. Allahabad High The company and some others challenged The matter is pending for The amount Court the acquisition of land by the State of U.P. further order. involved is not Stay was granted. However, during the pen- ascertainable. dency of the petition, the Govt. authorities took possession of the acquired land and a contempt petition has been filed. 16. Allahabad High The company has filed a writ petition chal- The matter is pending for Rs. 100 Lakhs Court lenging the extension of municipal limits to further order. (approx.) include MSW. 17. Allahabad High The company has filed a writ petition chal- The company has depos- The amount Court lenging the demand of the Cane Commis- ited the demanded amount involved is not sioner, Uttar Pradesh for payment of money of Rs.20.00 lakhs and plans ascertainable. on account of differential transport rebate to withdraw the case. on cane purchased during the season 1989-90. 18. Allahabad High The company has filed a writ petition chal- The company’s writ has Rs.42.90 Lakhs Court lenging demand of interest on electricity been connected with an- duty. other writ petition and is pending hearing. 19. Allahabad High The company has filed a petition challeng- The matter is pending for The amount Court ing demand of parking fee from trucks com- further order. involved is not ing from rural area of MSW. ascertainable.

x S. No. Authority Particulars of the matter Status Amt. 20. Allahabad High Writ petition filed on behalf of the company The matter is pending for The amount court through West, central & East UPSMA for final disposal. involved is not 48159/2002 directions to be given to state not to fix cane ascertainable. price for corporate and co-operative factories. 21. Allahabad High Two Writ petitions filed on behalf of the The matter is pending for The amount Court company through West UPSMA challeng- further order. involved is not ing levy price for 1999-2000 & 2000-2001. ascertainable. 22. Allahabad High The company has filed a petition challenging Stay order granted. The pe- The amount Court the order of the District Magistrate, Meerut req- tition is pending. involved is not uisitioning its guest house to use it as tempo- ascertainable. rary jail 23. Delhi High Court The State Trading Corporation of India has As per the orders of the Rs.7.27 Lakhs filed an appeal against an order of the Sin- Delhi High Court, the State gle Judge of the Delhi High Court wherein Trading Corporation has an arbitral award in favour of the company deposited a sum of Rs.7.27 was made rule of court. lakhs and the company has been permitted to withdraw the said amount by furnishing a bank guarantee of an equivalent amount. 24. Delhi High Court The company has filed a writ petition against The petition is listed for fi- Rs. 57 lakhs approx. the Food Corporation of India deducting on nal disposal in August, account of shortages in the quantity of sugar 2004. purchased from the company. 25. National Con- The Mawana Sugar Works Employees Provi- The matter is pending for Rs.25.18 Lakhs sumer Disputes dent Fund Trust had deposited funds with a further order. Redressal Forum, bank under a scheme wherein it was to be Delhi paid interest @ 12% per annum. However, the bank paid interest only @ 4.5% per annum. 26. 3 writ petitions have been filed by the company in Allahabad High Court challenging the orders of Addl. Collector (E), Meerut imposing damages for allegedly encroaching on land belonging to the Gram Sabhas involving an amount of Rs.4.06 Lakhs. 27. 3 writ petitions have been filed by the company in Allahabad High Court challenging the orders of the Board of Revenues wherein the company has been ordered to pay additional stamp duty in connection with land bought by the company. The amount involved in 2 of these petitions is Rs. 45.47 Lakhs. 28. A writ petition has been filed by the company in Allahabad High Court challenging the order of Dy. Director of Consolidation wherein he has set aside an order by which the company had been given 4 bighas and 14 biswas of land. The amount involved is not ascertainable. 29. 5 cases have been filed against the company before Addl. Civil Judges of Muzffarnagar, Meerut and Pathankot demanding injunction. The amount involved in the case with Pathankot Judge is Rs. 3.56 Lakhs though in remaining cases, amount involved is not ascertainable.

xi I. (B) Cases filed by the Company – Labour Authority Particulars of the matter Amount Status Allahabad High Court 13 Writ Petitions filed by the company Rs.29.51 lakhs The workmen were awarded reinstate- against the Awards whereby temporary ment by the labour court/Industrial Tri- workmen were reinstated with back bunal and the Company has chal- wages. lenged the decision. Allahabad High Court 2 Writ Petitions filed by the Company Not Ascertainable The company has challenged the against the order requiring the manage- interim orders of the Labour Court. ment to lead evidence though the onus was on workmen. Additional Labour An appeal filed by the company against Rs.1.98 lakhs + The lower Court ruled in favour of Commissioner, an order under the payment of Gratuity interest the Opposite Party. Kanpur Act, 1972 for giving gratuity to a teacher. Allahabad High Court Writ Petition filed by the Company chal- Rs.2.22 lakhs In pursuance of an interim order passed lenging the order passed by the Com- by the High Court the Company has missioner under the Workmen’s Com- paid Rs.1 lakh to the wife of the de- pensation Act, 1973 granting compen- ceased and the remaining amount of sation to the widow of a employee who Rs.1.22 lacs has been deposited in the had not met with an accident during the Nationalised Bank in the joint name of course of employment. the Commissioner and the wife of the deceased. The appeal is still pending.

Allahabad High Court Writ Petition filed by the Company challeng- Not Ascertainable Further proceedings before the La- ing the order of the Labour Court regarding bour Court have been stayed and reinstatement of a temporary workman. the writ petition is pending. Allahabad High M/s New India Assurance Company has Rs.1.76 lakhs + Judgement has been reserved on Court, Workman filed an appeal against the award under interest the review application. Compensation the Workmen’s Compensation Act, 1923 Commissioner, whereby a sum of Rs.1.76 lakhs has Meerut been awarded to the wife of the deceased. The company has filed application for Review of the award as the company has been ordered to pay interest upon the compensation amount.

II. Against the Directors of the Company a) Mr. Siddharth Shriram - Under Factories Act Authority Particulars of the matter Status Amount Allegations/Charges Chief Judicial 4 criminal complaints filed Proceedings are The amount The Charges in the complaints relate to Magistrate against Sh. Siddharth stayed by order of involved is not violation of provisions of Factories Act Meerut Shriram & B.K.Agarwal the Allahabad ascertainable. like Leave book not given to the work- High Court ers, Fire extinguishing appratus not placed in CO2 pump room, only one door for exit, belt not provided on drive guard etc. Allahabad High 4 petitions under section Stay order in fa- The amount Challenging the prosecution cases Court 482 Cr.PC filed by the vour of the com- involved is not lodged against the Director. company. pany ascertainable.

xii b) Mr. Siddharth Shriram - Criminal Cases Authority Particulars of the matter Status Amount Allegations/Charges Judicial Magis- Ruchi Soya Industries has filed The company has Rs.40.83 Lakhs The company and its officials trate First Class, a case against a supplier of the moved an applica- including Mr. Siddharth Shriram Indore. company under Section 138 of tion for discharge of have conspired with Swarnima the Negotiable Instruments Act itself and its officials. Oil Industries to cheat the and Section 420 of the Indian Opposite party. Penal Code. Case No.2828/ 1999

III. Against Promoters of the Company - Mr. Krishna Shriram Authority Particulars of the matter Status Amount Opposite Party Allegations/Charges Contempt petition has Pending. But the Rs. 8.56 Sankyut Kamgar The company had agreed with Supreme been filed against the com- company has de- lakhs Morcha the opposite party to pay com- Court pany and Shri Krishna posited the dis- pensation to the contract workers Shriram, Mr. A. K. Mehra puted amount with and out of the said compensation and Mr. P. K. Bhalla. the Labour Court. 10% was to be given to the Op- Another union posite Party. However, the Oppo- which also brought site Party did not bring forth all forward workers the workers. The company only has filed an in- paid 10% to the Opposite Party terim application for the workers actually brought for 10% of the by the Opposite Party. Due to this, amount paid to the opposite party has filed the those workers. contempt petition.

40. Outstanding Litigations / disputes, etc. against the Promoter Group Companies For details, please refer to para “Outstanding Litigations & Disputes” on pages no. 66 to 87.

Management Perception The operations of the Company as also the financial performance are not likely to materially adversely affect in any manner on account of the defaults / litigations of the Promoter Group Companies / Associate Companies / JV Companies since the operations of the Company are not dependent on any of the said companies.

EXTERNAL RISK FACTORS 1. Sugar Industry is a controlled industry and the Government controls the sugar cane prices through Statutory Minimum Price Mechanism and State Advised Price Mechanism and also the quantity of sugar to be sold in free markets by release mechanism. As such, the performance of the companies in the Sugar Industry is dependent on Government Policies. 2. The recent judgement pronounced by the Constitution Bench of Hon’ble Supreme Court has upheld the rights of State Govt. to fix the state advised prices. This judgement could result into some demands for the past periods. 3. Availability of Sugar cane, the major raw material, amongst other factors, depends on the monsoon conditions, which affects the production and recovery. To some extent, sugar cane is a weather resistant crop and is unaffected by moderately high or low rainfall. However, any drastic changes in climatic conditions may impact sugarcane yield and hence sugar production. 4. Poor monsoon conditions in North India in the Current Season may affect the Cane production, which would affect the availability of the cane to the sugar mills. 5. Competition from existing established companies and future entrants into the Industry. 6. The performance of the Company may be affected by a number of factors beyond its control including political and economic developments both in India and worldwide. Terrorist attacks and other acts of violence or war may negatively affect the domestic as well as the overseas markets. These acts may also result in a loss of business confidence and make other services more difficult and ultimately affect the Company’s business, financial conditions and results of operations.

xiii 7. Purchase of sugar cane and payment of cane prices is through Co-operative Cane Societies causing inefficiencies in the System. 8. Cane diversion to Khandsari and Gur Manufacturers who are not governed by the government regulations. 9. The business of the Company is subject to the regulations of Government of India and State Govt. A change in the Government’s economic liberalization and deregulation policies could affect business and economic conditions in India and the business of the Company in particular. 10. Import of raw sugar as the international price is comparatively lower. 11. Tight liquidity position of the Industry as a whole due to lower margins and high inventory holding period.

Management Perception These external risk factors are beyond the control of Management.

2. The adjusted net asset value per share as on 29th February 2004 is Rs. 24.21 per share.

3. The cost per share to the Promoter is Rs. 10/-.

4. The promoters of the Company / other companies in the promoter group, apart from normal commercial transactions and their shareholding in the Company, have no other interests in the Company either by itself or through their interests in other companies in the promoter group. The directors of the company, apart from reimbursement of expenses incurred, sitting fees and directors commission and in case of Managing Director, remuneration payable in accordance with the provisions of the Companies Act, 1956 and their shareholding in the company if any, in the normal course of business have no other interest in the company except for the commercial transaction between the company and the companies/firms in which directors are interested.

These commercial transactions are fully disclosed in the register maintained under section 301 of the Act. These transactions are certified by the statutory auditors as being transacted at a price, which are reasonable, having regard to the prevailing market prices of the goods, material or services involved.

5. The related party transactions as per Accounting Standard 18 issued by Institute of Chartered Accountants of India as on 29th February 2004 are as follows:

(i) Names of related parties and description of relationships

Holding company: None (Previous period Siel Limited)

Subsidiaries: Siel Holdings Limited

The Jay Engineering Works Limited (Subsidiary of Siel Holdings Limited).

Key Management Personnel and their relatives:

For full period - Mr. Siddharth Shriram, Mr. Krishna Shriram (relative of Mr. Siddharth Shriram).

For part of the period: a) From September 15, 2003: Mr. P.K. Bhalla, Mrs Asha Bhalla, (relative of Mr. P.K. Bhalla), Mr A.K. Mehra, Mrs Binu Mehra, (relative of Mr. A.K. Mehra) b) From December 16, 2003: Mr. Rajendra Khanna, Mrs Rajni Khanna (relative of Mr Rajendra Khanna) c) Upto September 15, 2003: Mr. Deepak Banerjee and d) Upto September 5, 2003 : Mr Satyendra Gupta. xiv Enterprise over which key management personnel have significant influence : Siel Limited (Rs. in Lacs) Subsidiary Companies Key Management Enterprise Over which Total Personnel and their key management Relatives personnel have Significant Influence * Period Period Period Period Period Period Period Period ended ended ended ended ended ended ended ended February March February March February March February March 29,2004 31,2003 29,2004 31,2003 29,2004 31,2003 29,2004 31,2003 Professional Fee - 4.90 - 4.90 Allotment of equity shares 300.00 - 300.00 - Management fee received 20.00 - 34.00 - 54.00 - Remuneration to key management personnel 72.70 18.02 72.70 18.02 Commission Paid 38.24 22.91 38.24 22.91 Expenses recovered 81.81 - 81.81 - Expenses reimbursed 41.11 - 41.11 - Advances given 0.01 0.77 13.43 - 3.00 1492.56 16.44 1493.33 Guarantees given on behalf of the Company 12347.12 - 12347.12 - Balance outstanding as at the year end: - Receivables 0.78 - 13.10 - 1570.26 1492.56 1584.14 1492.56 - Guarantees given on behalf of the Company 12347.12 - 12347.12 -

6. Outstanding Loans and advances to Key Managerial Personnel as on 29th Feb., 2004 are as follows: Name Designation Amount (in Rs.) Mr. Siddharth Shriram Chairman & Managing Director Nil Mr. P.K. Bhalla Executive Director & Company Secretary 6,98,894 Mr. A.K. Mehra Executive Director (Operations) 2,60,200 Mr. Rajendra Khanna Executive Director (A/cs & Fins.) 3,51,400

xv MAWANA SUGARS LIMITED (Incorporated on 26th December, 2002 under the Companies Act, 1956, as Siel Sugar Limited and then renamed as Mawana Sugars Limited w.e.f. 16th June 2004. The Sugar business of Siel Limited vested with the Company retrospectively w.e.f. 1st October , 2002 pursuant to the Scheme of Arrangement approved by Hon’ble High Court of Delhi vide its Order dated 26th August, 2003 under Sec. 391/394 of the Companies Act, 1956)

Regd. Office: 6th Floor, Kirti Mahal, 19, Rajendra Place, New Delhi-110008 Tel. : (011) 25739103 Fax: (011) 25743659 Email: [email protected] Website : sielsugar.com

Issue Listed : The Stock Exchange, Mumbai Opening Date of the Issue : 27th August, 2004 Closing Date of the Issue : 27th September, 2004

Name & Address of the Lead Manager : Allianz Securities Ltd. (UIN-100001008) 2nd Floor, 3 Scindia House, Janpath, New Delhi – 110 001 Ph.-(011)-51514666, Fax-(011)51514665, [email protected]

Dear Equity Shareholder(s), Pursuant to the resolutions passed by the Board of Directors of the Company at its meeting held on April 5, 2004 and adopted by Shareholders under provisions of Section 81 of the Act at the Extra-ordinary General Meeting held on May 8, 2004, it has been decided to make the following offer to the Ordinary Equity Shareholders of the Company. Issue of 84,98,976 Equity Shares of Rs. 10/- each for cash at par aggregating to Rs. 8,49, 89,760/- to the existing Equity Shareholders on rights basis in the ratio of One Equity Share for every Four equity shares held as on 13th August, 2004 (i.e. the Record Date).

I. GENERAL INFORMATION IMPORTANT • This Offer is applicable to those Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the shares held in the electronic form and on the Register of Members of the Company at the close of business hours on the record date i.e. 13th August, 2004. • Your attention is drawn to the section on “RISK FACTORS” appearing on page no. (i) of this Letter of Offer. • Please ensure that you have received the CAF(s) with this Letter of Offer. • Please read this Letter of Offer (LOO) and the instructions contained herein and in the Composite Application Form (CAF) carefully before filling in the CAF. The instructions contained in the CAF are an integral part of this LOO and must be carefully followed. Application is liable to be rejected for any non-compliance with the terms of the LOO or the CAF. • All enquiries in connection with this LOO or CAF should be addressed to the Regisrs to the Issue, MAS Services Private Limited quoting the Registered Folio number/ Depository Participant (DP) Number, Client ID number and the CAF numbers as mentioned in the CAF.

ELIGIBILITY FOR THE ISSUE Mawana Sugars Ltd. is an existing company listed on The Stock Exchange, Mumbai. This issue, being a rights issue, is exempt from the eligibility norms in terms of Clause 2.4(iv) of the SEBI (DIP) Guidelines, 2000.

PROHIBITION BY SEBI The Company, its Promoters, its Directors or any of the Company’s associates or group companies and companies with which the Directors of the Company are associated as directors or promoters, or directors of the Promoters or promoter group companies have not been prohibited from accessing the capital market under any order or direction passed by SEBI or any other regulatory authority.

CHANGE OF NAME OF THE COMPANY The Company was incorporated on 26th December, 2002 under the Companies Act, 1956, as Siel Sugar Limited to take over the sugar business of Siel Ltd. pursuant to the Scheme of Arrangement approved by Hon’ble High Court of Delhi passed on 26th August, 2003 under Sec. 391/394 of the Companies Act, 1956. As the sugar business of Siel Ltd. started from the factory ‘Mawana Sugar Works’ which today is the mother unit of the Company and “MAWANA” brand is established in the market. The Company, therefore, in its Extra Ordinary General Meeting held on 8th May, 2004 approved the change of name of the Company from Siel Sugar Ltd. to Mawana Sugars Ltd. Subsequently, the Registrar of Companies, Delhi & Haryana vide fresh Certificate of Incorporation dated 16th June, 2004 has approved the same.

GOVERNMENT APPROVALS The Company has received all the necessary permissions and approvals from the Government and various Government agencies for the existing activities. No further approvals from any Government authority/Reserve Bank of India (RBI) are required by the Company to undertake the existing activities, save and except those approvals, which may be required to be taken in the normal course of business from time to time. As per Notification No. FEMA 20/2000-RB dated 3rd May 2000 and FEMA/76/2002-RB dated 12th November, 2002, the RBI has given its 1 general permission to Indian Companies to issue rights/bonus shares to Non-resident Indians including additional Shares. Hence, the Company does not need an in-principle approval from RBI for the issue of shares to Non-resident Indians, within the sectoral cap prescribed under FEMA, 1999. The Company has applied to Reserve Bank of India vide their letter dated 19th July, 2004 in respect of taking its specific approval for issue and allotment of Shares to OCBs pursuant to its para 6.1 of Master Circular No. 6/2004-05 dated 1st July, 2004. The Company has received approval in respect of three OCBs out of total 4 OCBs and the approval in respect of fourth OCB, will be received only after furnishing necessary information by them to RBI. The Company will make offer and allotment to that OCB only after receipt of specific approval from RBI. The Central Government / RBI accepts no responsibility for the financial soundness or correctness of the statements made in the Letter of Offer. The major approvals / permissions / consents / NOCs from Government and other agencies for conducting its present manufacturing activities at both its plants viz. Titawi and Mawana are as under: DETAILS OF LICENCES FOR MAWANA SUGAR WORKS Sr. No. Licence No. & Date Authority Purpose Validity Remarks 1. Lic. No.27 dt. 1.4.98 Sugar Commissioner, UP Crushing License under the UP One time Applied for change of name Vacuum Pan Sugar Factories from Siel Sugar Ltd. to Mawana Licensing Order, 1966 Sugars Limited vide letter dt. 06.07.2004 2. Regn. No. MRT-47 dt Dy. Director of Factories, License under Factories Act, 1948 31-12-2004 Intimation about the name 26-3-2004 U.P change of Company sent to Authority. 3. Lic. No. 6/II Collector/ Distt Magis- Storage of sulphur 31/12/2004 Intimation about the name dt 11/11/2003 trate, Meerut change of Company sent to Authority. 4. Lic. No. MRT/MWN/ Chief Medical Officer, License under UP Prevention of 31/3/2005 Intimation about the name M-148/ 03-04 dt 15/3/ Meerut Food Adulteration Adhiniyam, change of Company sent to 03, MRT/MWN/R- 1976 for – Manufacture & sale of Authority. 149/03-04 dt 15/3/03, sugar & molasses, Retail sale in MRT/MWN/M-150/ Canteen, Retail sale in FPS 03-04 dt 19/3/04 5. Lic. No. 1067, 1099, Secretary, Krishi Utpadan License for wholesale trader 30/6/2004 Applied for renewal on 1101 dt 19/11/2003 Mandi Samiti, Mawana (FPS), Mill factory 22.06.2004 (Firewood) & retail trader (FPS) under UP Krishi Utpadan Mandi Samiti Adhiniyam, 1964 6. Lic. No. 333991 Adhyaksha, Zila Mfg. Of sugar in Mawana dehat 30/9/2004 Intimation about the name dt 10/1/2003 Panchayat, Meerut change of Company sent to Authority. 7. Lic. No. P-12(17)550/ Joint Chief Explosive Storage of diesel, furnace oil & 31/12/2006 Licence renewed uptil 31/12/ UP-2150 dt 9/4/2001 Controller, Agra petroleum under Petroleum Act, 2006. Intimation about the 1934 name change of Company sent to Authority. 8. Regn. No. 458 dt 19/ Controller of Wts. & Mea- Regn. Certificate for packing of One time Applied for change of name 3/2002 sures, Office of Legal & sugar from Siel Sugar Ltd. to Mawana Metrology Deptt, Sugars Limited vide letter dt. Lucknow 22.07.2004 9. Lic. No. 033/MRT/ Plant Protection Officer, License to sell, stock exhibit for 31/12/2005 Intimation about the name 2002(V) MAWANA dt U.P sale or distribution of insecticides change of Company sent to 31/10/2002- 038 Jani, Authority. 036 Asmabad, 034 Parikshitgarh, 43 Pilona, 042 Chota Mawana, 041 Incholi, 40 Khajuri, 55 Hastinapur 10. Regn. No. 805/79580 District Agricultural Of- License for sale and storage of 31/3/2007 Intimation about the name dt 25/4/01 MAWANA, ficer, Meerut fertilizer change of Company sent to 13451 Hastinapur, Authority. 13448, Parikshitgarh, 13446 Asmabad, 72363 Khajuri, 72364 Pilona, 72362 Behsuma, 79577 Incholi, 7958 Jani

2 CONSENTS/APPROVALS FOR MAWANA SUGAR WORKS

Sr. No. Licence No. & Date Authority Purpose Validity Remarks 1 80C-3/04 dt 27/2/2004 Member Secretary, UP Consent for disposal of water 31/12/2004 Intimation about the name Pollution Control Board, change of Company sent to Lucknow Authority.

2 7263/04 dt 27/2/2004 -do- Consent for emission of smoke -do- Intimation about the name change of Company sent to Authority.

3 G18393/H92/MR-64/02 -do- 24/2/2007 Intimation about the name Authorisation under Rule-5 of change of Company sent to Hazardous Wastes Rules, 1989 Authority.

4 Regn. No.28/MR-Cont. Dy Labour Commis- One time Intimation about the name sioner, Meerut Regn. Under Contract Labour change of Company sent to (Regulation & Abolition) Act Authority.

5. Lic. No. P-09/1-24+15B Engineer, Wireless under Licence for operating wireless 31/12/2004 Intimation about the name dt. 27/01/2004 Indian Telegraph Act under Indian Telegraph Act change of Company sent to Authority.

6. Lic. No. A-87432 dt. Distt. Magistratre, Merut Revolver 31/05/2005 Intimation about the name 31/03/1997 change of Company sent to Lic. No. 46/mawana dt. Gun -do- Authority. 26/03/1987 Lic. No. 47/mawana dt. Gun -do- 26/03/1987 Lic. No. 48/mawana dt. Gun -do- 26/03/1987

7. Consent No. UPERC/ Secy., U.P. Electricity Consent for 4.256 MW Captive/ 15/16-05- Intimation about the name CAP?264/RKG/02-670 Regulatory Commission, Co-Generation Capacity under 2012 change of Company sent to dated 16/17-05-2002 Lucknow U.P. Electricity Authority.

8. U.P.T.T. Asst. Commissioner, Registration under UP Trade Tax One time Name changed in the No.MW0029277 Sales Tax (Mawana) Registration Certificate to w.e.f.5/9/2003 Mawana Sugars Ltd.

9. S.T. No. MW Asst. Commissioner, Registration under Central Wholetime Name changed in the 5009369 Sales Tax (Mawana) Sales Tax Registration Certificate to w.e.f. 5.9.2003 Mawana Sugars Ltd.

10. Regn. No.:- Asst. Commissioner, Registration under Central Onetime Applied for name change to - AAHCS4120RXM001 Customs & Central Excise Act Mawana Sugars Ltd. - AAHC4120RXM002 Excise - AAHC4120RXM005 - AAHC4120RXM006 - AAHC4120RXM007 - AAHC4120RXM008 - AAHC4120RXM009 - AAHC4120RXM0010

11 I.E.C. No. 0503041718 Assitant Director Certificate of Importer Exporter One time Intimation about the name dated 26.09.03. General of Foreign Trade Code change of Company sent to Authority

3 DETAILS OF LICENCES FOR TITAWI SUGAR COMPLEX

Sr. No. Licence No. & Date Authority Purpose Validity Remarks

1 MZR-757 dated Dy. Director of Factories, Licence to work factory 31.12.2004 Intimation about the name 23.09.92 U.P. Meerut Region, change of Company sent to Authority

2 Licence No. 223/93 District Magistrate, Storage of Sulphur 31.12.2004 Intimation about the name dt. 16.12.92 Muzaffarnagar change of Company sent to Authority

3 Cane Crushing Secretary, Sugar To crush sugarcane for One Time Applied for change of name from Licence Industry Deptt. U.P. manufacturing of sugar Siel Ltd. To Siel Sugar Limited No. 29 dt. 17.02.93 Government vide application dated 18/10/ 2003. Intimation about the name change of Company sent to Authority

4 Licence No. U.P. 5752 Chief Controller of For storage of HSD 31.12.2005 Intimation about the name dt. 10.10.2002. Explosive, Govt. of India, change of Company sent to Agra. Authority

5. Licence No. 1085/ Licensing Authority, For sale of insecticides at Babri 31.12.2005 Applied for Change of Name to MNR/TA (N)164 Muzaffarnagar, under Store. Mawna Sugars Limited Insecticide Act, 1968.

6. Licence No. 633/ Licensing Authority, For sale of insecticides at Lalu 31.12.2004 Applied for Change of Name to MNR/SR dt. 01.01.99 Muzaffarnagar, under Kheri Store. Mawna Sugars Limited Insecticide Act, 1968. 7. Licence No. 693/ Licensing Authority, For sale of insecticides at 31.12.2004 Applied for Change of Name to MNR/CH (N)271 dt. Muzaffarnagar, under Charthawal. Mawna Sugars Limited 25.09.99 Insecticide Act, 1968.

CONSENTS/APPROVALS FOR TITAWI SUGAR COMPLEX Sr. No. Licence No. & Date Authority Purpose Validity Remarks

1 F28538/C-3/Vayu U.P. Pollution Control Emission consent for venting 31.12.2004 Intimation about the name Pradushan/ 208/2004 Board, Lucknow, under treated waste air. change of Company sent to dt. 05.03.2004 Air (Prevention & Control Authority of Pollution) Act, 1981

2 F28539/C3/Jal/256/ U.P. Pollution Control Consent for discharge of treated 31.12.2004 Intimation about the name 04 dated 05.03.2004 Board, Lucknow, under water in to drain. change of Company sent to Water (Prevention & Authority Control of Pollution) Act, 1974

3 F17364/C3/ U.P. Pollution Control Authorisation for Collection, 19.06.2008 Intimation about the name Hazardous/MR-23/03 Board, Lucknow, under Reception Treatment, Storage change of Company sent to dt. 23.06.2003 Hazardous waste and Disposal of hazardous Authority Management Rules waste. 1989.

4 UPERC/CAP/202/ U.P. Electricity Consent for generating electricity 07.05.2012 Intimation about the name RKG/02 – 616 dt. Regulatory Commission, for the captive unit. change of Company sent to 08.05.2002 under U.P. Electricity Authority Reform Act, 1999.

5 Registration of Director of Legal Packing of sugar One time Intimation about the name Certificate No. DL Metrology, Deptt. Of Civil change of Company sent to 912/93 dt. 18.06.93. Supplies, Govt. of India, Authority under the Standard of Weights and Measures (Packaged Commodities) Rules 1977.

4 CONSENTS/APPROVALS FOR TITAWI SUGAR COMPLEX Sr. No. Licence No. & Date Authority Purpose Validity Remarks

6 Registration of Asstt. Labour For engagement of Contractor One time Intimation about the name Certificate No. 2327/ Commissioner, labour. change of Company sent to MZN, dt. 24.06.94 Muzaffarnagar, under the Authority U.P. Contract Labour (Regulation & Abolition) Rules 1975.

7 Registration of Dy. Commissioner, Statutory requirement One time Applied for Change of Name to Certificate No. Central Excise, Mawana Sugars Limited AAACS4902QXM004 Muzaffarnagar, under dt. 09.09.2003. Central Excise Rules 2002.

8 Apeda No. 151966 dt. Agricultural & Processed For export of sugar 31.03.2005 Intimation about the name 10.01.2003 Food Products Export change of Company sent to Development Authority. Authority

9 MW0029277 dt. Asstt. Commissioner, To carry business in U.P as per 31.03.2005 Name changed to Mawana 05.09.2003 Trade Tax, Mawana statutory requirement Sugars Limited Circle, Meerut.

10 CSTMW5009369 dt. Asstt. Commissioner, To carry business in U.P as per 31.03.2005 Name changed to Mawana 08.09.03 Trade Tax, Mawana statutory requirement Sugars Limited Circle, Meerut.

11 Registration No. 4043 Distt. Agriculture Officer, For sale of fertilizer at Babri 19.02.2007 Name changed to Mawana dt. 20.02.2004 Muzaffarnagar, under Store. Sugars Limited Fertilizer Control Order 1985.

12 Registration No. 9348 Distt. Agriculture Officer, For sale of fertilizer at Lalu Kheri 19.02.2007 Name changed to Mawana dt. 20.02.2004 Muzaffarnagar, under Store Sugars Limited Fertilizer Control Order 1985.

13 Registration No. 9349 Distt. Agriculture Officer, For sale of fertilizer at 19.02.2007 Name changed to Mawana dt. 20.02.04 Muzaffarnagar, under Charthawal Store. Sugars Limited Fertilizer Control Order 1985.

14 Registration No. 9768 Distt. Agriculture Officer, For sale of fertilizer at Baghra 03.12.2004 Applied for Change of Name to dt. 04.12.2001 Muzaffarnagar, under Store. Mawana Sugars Limited Fertilizer Control Order 1985.

15 I.E.C. No. Joint Director General of Licence to import and export. One time Intimation about the name 0503041718 dated Foreign Trade, Ministry change of Company sent to 26.09.03. of Commerce, Govt. of Authority India.

DISCLAIMER CLAUSE AS REQUIRED, A COPY OF THIS LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF LETTER OF OFFER TO SECURITIES & EXCHANGE BOARD OF INDIA (SEBI) SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE LETTER OF OFFER. THE LEAD MANAGER TO THE ISSUE, ALLIANZ SECURITIES LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE SEBI GUIDELINES FOR DISCLOSURE AND INVESTOR PROTECTION IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPON- SIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE LETTER OF OFFER, THE LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MANAGER, M/S ALLIANZ SECURITIES LIMITED HAS FUR- NISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED 15TH JUNE, 2004 WHICH READS AS FOLLOWS: “1. We have examined various documents including those relating to litigation like commercial disputes, patent disputes, disputes with collaborators etc. and other material in connection with the finalization of the Letter of Offer pertaining to the said Issue. 2. On the basis of such examination and discussions with the Company, its directors and other officers, other agencies, independent 5 verification of statement 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 Letter of Offer forwarded to 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 SEBI, the Government and any other competent authority in this behalf have been duly complied with; and c. The disclosures made in the Letter of Offer are true, fair and adequate to enable the investors to make a well-informed decision as to the investment in the proposed Issue. d. We confirm that besides ourselves, all the intermediaries named in the Letter of Offer are registered with SEBI and till date such registration is valid. e. If underwritten, we shall satisfy ourselves about the worth of the underwriters to fulfill their underwriting commitments” The filing of the Letter of Offer does not, however, absolve the Company from any liabilities under section 63 or 68 of the Companies Act, 1956 or from the requirement of obtaining such statutory or other clearance as may be required for the purpose of the proposed issue. SEBI further reserves the right to take up, at any point of time, with the Lead Manager any irregularities or lapses in the Letter of Offer.

CAUTION The Company and the Lead Managers accept no responsibility for statements made otherwise than in this Letter of Offer or in any advertise- ment or other material issued by the Company or by any other persons at the instance of the Company and that anyone placing reliance on any other source of information would be doing so at his/her/their own risk. All information shall be made available by the Lead Managers and the Issuer to the Shareholders and no selective or additional information would be available for a section of the Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. after filing of the Letter of Offer with SEBI.

DISCLAIMER IN RESPECT OF JURISDICTION This Offer of Equity shares is made in India to the persons resident in India and NRIs/FIIs and OCBs subject to requisite approvals. This Letter of Offer does not, however, constitute an offer to sell or invitation to subscribe to equity shares offered hereby in any other jurisdiction to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose possession this Letter of Offer 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 the appropriate courts in Delhi, India only. The Letter of Offer has been filed with SEBI, Rajendra Bhawan, Rajendra Place, New Delhi – 110 008 for its observations. The Letter of Offer has been filed with the “The Stock Exchange, Mumbai”, Designated Stock Exchange as per the requirement of the Law.

DISCLAIMER CLAUSE OF THE STOCK EXCHANGES Disclaimer Clause of The Stock Exchange, Mumbai (Designated Stock Exchange) “The Stock Exchange, Mumbai (“the Exchange”) has given vide its letter dated 2nd July, 2004 permission to this Company to use the Exchanges ’s name in this Letter of Offer as one of the Stock Exchanges on which the company’s securities are proposed to be listed. The Exchange has scrutinized this Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to the Company. The Exchange does not in any manner:- i) warrant, certify or endorse the correctness or completeness of any of the contents of this Letter of Offer ; or ii) warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; or iii) take any responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or project of this Company. And it should not for any reason be deemed or construed that this Letter Of Offer has been cleared or approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription / acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.”

IMPERSONATION As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of subsection (1) of Section 68A of the Companies Act, 1956 which is reproduced below:

“Any person who- i. makes in a fictitious name an application to a Company for acquiring or subscribing for any shares therein, or ii. 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.”

MINIMUM SUBSCRIPTION If the Company does not receive minimum subscription of 90% of the Issue, the entire subscription shall be refunded to the applicants within forty-two days from the Date of Closure of the Issue. If there is delay in the refund of subscription by more than 8 days after the Company becomes liable to pay the subscription amount (i.e. forty two days after Closure of the Issue), the Company will pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.

LISTING The existing equity shares of the Company are listed on the BSE. The Company has paid the current annual listing fees to the stock exchange where its equity shares are listed. Application has been made to the BSE for permission to deal in and for an official quotation in respect of the securities being offered in terms of this Letter of Offer. The “in-principle” approval for listing from BSE has been received on 2nd July, 2004 6 If the permission to deal in and for an official quotation of the securities is not granted by the Stock Exchange mentioned above, the Company shall forthwith repay, without interest, all monies received from applicants in pursuance of this Letter of Offer. If such money is not paid within eight days after the Company becomes liable to repay it, then the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under sections (2) and (2A) of Section 73 of the Act.

COMPULSORY DEMATERIALISED DEALING The equity shares of the Company have been under compulsorily dematerialized trading for all investors with effect from December 17,2003 (the date of listing of the equity shares with BSE). The Company has an agreement with National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL) and its equity shares bear the ISIN No. INE 255G01019.

ALLOTMENT AND REFUND The Company will issue and dispatch letters of allotment/ securities certificates and/ or letters of regret along with refund order, or credit the allotted securities to the respective beneficiary accounts, if any within a period of six weeks from the Date of Closure of the Issue. If such money is not repaid within 8 days from the day the Company becomes liable to pay it, the Company shall pay that money with interest as stipulated under Section 73 of the Act. Letters of allotment/ securities certificates/ refund orders above the value of Rs.1,500/- will be dispatched by Registered Post/ Speed Post to the sole/ first applicant’s registered address. However, refund orders for value not exceeding Rs.1500/- shall be sent to the applicants under Postal Certificate. Such cheques or pay orders will be payable at par at all the centers where the applications were originally accepted and will be marked “A/c payee” and would be drawn in the name of the sole/ first applicant. Adequate funds would be made available to the Registrars to the Issue for dispatch of the Letters of allotment/Share Certificates/ refund orders. In case the Company issues Letters of allotment, the corresponding Share Certificates will be kept ready within three months from the date of allotment thereof or such extended time as may be approved by the Company Law Board under Section 113 of the Companies Act, 1956 or other applicable provisions, if any. Allottees are requested to preserve such Letters of Allotment, which would be exchanged later for the share Certificates.

ISSUE PROGRAMME The subscription will open at the commencement of the banking hours and will close upon the close of banking hours on the dates mentioned below or on such extended date (subject to a maximum of 60 days) as may be determined by the Board, subject to necessary approval:

ISSUE OPENS ON LAST DATE FOR REQUEST FOR ISSUE CLOSES ON SPLIT APPLICATION FORMS 27TH AUGUST, 2004 11TH SEPTEMBER, 2004 27TH SEPTEMBER, 2004

Lead Manager to the Issue Bankers to the Company Allianz Securities Limited (UIN-100001008) State Bank of India 2nd Floor, 3 Scindia House, Janpath, Industrial Finance Branch New Delhi-110 001 14th Floor, Jawahar Vyapar Bhawan. Tel: 011 – 51514666 1, Tolstoy Marg, New Delhi –110001 Fax: 011 – 51514665 Punjab National Bank E-mail: [email protected] Muzzaffarnagar, Uttar Pradesh

Registrars to the Issue Bankers to the Issue MAS Services Private Ltd. State Bank of India SEBI REGN NO : INR000000049 Main Branch AB-4, Safdurjung Enclave, Post Bag No. 5. New Delhi – 110 029 11, Sansad Marg, New Delhi –110001 Phone: 011 – 26104142, 26104326 Fax : 011 – 26181081 Punjab National Bank E-Mail:[email protected] Share Division Sansad Marg, New Delhi –110001

Auditors to the Company Company Secretary & Compliance Officer M/s A.F. Ferguson & Co. Mr. P.K. Bhalla Chartered Accountants Executive Director & Company Secretary Scindia House, Mawana Sugars Limited New Delhi – 110001 6th Floor, Kirti Mahal, Legal Advisor to the Issue 19, Rajendra Place, New Delhi-110008 M/s Dutt & Menon , Telephone : 011 – 25739103 Advocates Fax : 011 – 25743823 G-24 , Ist Floor, Email –[email protected] Jangpura Extension, New Delhi – 110014

Note : The investors are advised to contact the Registrars to the Issue/Compliance Officer in case of any Pre-issue/ Post-issue related problems such as non-receipt of Letter of Offer/ Letter of Allotment/ share certificates/ Refund orders etc.

7 CREDIT RATING This being an issue of Equity Shares, no credit rating or appointment of a debenture trustee is required.

UNDERWRITING / STANDBY ARRANGEMENTS The present issue is not underwritten with any agency registered with SEBI. However, the promoters of the company have undertaken to subscribe to unsubscribed portion.

UTILIZATION OF ISSUE PROCEEDS The Board of Directors declare that: · The funds received against this Issue will be transferred to a separate bank account other than the bank account referred to sub-section (3) of Section 73 of the Act. · Details of all moneys utilized out of the Issue shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the purpose for which such moneys has been utilized. · Details of all such unutilized moneys out of the Issue, if any, shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the form in which such un utilized moneys have been invested. The funds received against this Rights Issue will be kept in a separate bank account and the Company will not have any access to such funds unless it satisfies The Stock Exchange, Mumbai with suitable documentary evidence that the minimum subscription of 90% of the Issue has been received by the Company.

II. CAPITAL STRUCTURE OF THE COMPANY Amount (Rs.) Face Value Issue Size Authorized Share Capital 5,00,00,000 Equity shares of Rs.10/- each 50,00,00,000 Issued Capital 3,39,95,904 Equity shares of Rs.10/- each 33,99,59,040 Subscribed and Paid-up capital 3,39,95,904 Equity shares of Rs.10/- each 33,99,59,040 Present issue being offered to the Equity Shareholders through this Letter of Offer 84,98,976 Equity Shares of Rs.10/- each at par 8,49,89,760 8,49,89,760 Paid up capital after the Issue 4,24,94,880 Equity shares of Rs.10/- each 42,49,48,800 Share Premium Account Existing Share Premium Account 30,80,09,028 Addition to Share Premium Account on allotment of Equity Shares in this Issue - Share Premium Account after the Present Issue 30,80,09,028

NOTES FORMING PART OF THE CAPITAL STRUCTURE: 1. The Company was incorporated under the Companies Act, 1956 on 26th December 2002 as Siel Sugar Limited (renamed as Mawana Sugars Limited w.e.f.16th June, 2004) to take over the sugar business of Siel Ltd. Siel Ltd., which was earlier in the business of Chlor Alkali & Sugar was bifurcated pursuant to a Scheme of Arrangement approved by the Hon’ble High Court of Delhi vide its order dated 26th August 2003. The paid up equity capital of Rs. 41,26,12,060/- of erstwhile Siel Limited was bifurcated in the ratio of 1:3 between Siel Limited and Mawana Sugars Limited i.e. shareholders holding 4 equity shares in Siel Limited on Record date got 1 equity share of Siel Ltd. and 3 equity shares of Mawana Sugars Ltd.(formerly known as Siel Sugar Limited) The total paid up capital of 412,61,206 Equity Shares of Rs. 10/- each fully paid up was divided into 1,03,15,302 equity shares of Rs. 10/- each fully paid up aggregating to Rs. 1031.53 lakhs (for Siel Limited) and 3,09,45,904 equity shares of Rs. 10/- each fully paid up aggregating to Rs. 3094.59 lakhs (For Mawana Sugars Ltd. ). 2. Capital History of Mawana Sugars Limited (Capital build up w.e.f. 10th January, 2003)

No. of shares Date of allotment Face Value Issue Price Nature of Issue & payment Cumulative allotted (Rs.) (Rs.) no. of shares 50,000 10th January 2003 10/- 10/- Subscription to Memorandum of Association 50,000 30,00,000 27th October 2003 10/- 10/- Preferential allotment to Mr. Krishna Shriram pursuant to Scheme of Arrangement 30,50,000 3,09,45,904 30th October 2003 10/- 10/- Allotted pursuant to the Scheme of Arrangement 3,39,95,904

3. This being a Rights Issue in accordance with clause 4.10.1(c) of the SEBI guidelines, the requirements of promoters’ contribution do not apply. As a consequence none of the equity shares are locked in.

8 4. Shareholding pattern before and after the issue is as under: Existing (As on 05/08/2004) After the Present Issue* Category No. of equity % of pre- No. of shares Percentage shares held issue capital Promoters** Indian Promoters 11051337 32.51 13814171 32.51 Foreign Promoters - - - - Persons Acting in Concert# 3375134 9.93 4218918 9.93 Sub-Total 14426471 42.44 18033089 42.44 Non Promoters Mutual Funds and UTI 1360508 4.00 1700635 4.00 Banks, Financial Institutions & Insurance Cos. 2907129 8.55 3633911 8.55 Foreign Institutional Investors 49999 0.15 62499 0.15 Sub-Total 4317636 12.70 5397045 12.70 Private Corporate Bodies 3862536 11.36 4828170 11.36 Non-resident Indians/ Overseas Corporate Bodies 167690 0.49 209612 0.49 (Including 77566 shares held by Pakistanis) General Public 6867656 20.20 8584570 20.20 Any Other (GDRs Shares) 4353915 12.81 5442394 12.81 Sub-Total 15251797 44.86 19064746 44.86 Grand Total 33995904 100.00 42494880 100.00

* assuming that all the applicants exercise their Rights Entitlement in full. ** As defined in Regulation 2(h) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The promoters group-Individual or Body Corporates. # 1. As defined in Regulation 2(e)(1) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. 2. Persons Acting in concert includes 2 OCBs holding 2249730 shares constituting 6.62% of totally share capital of the company.

5. Details of Shareholding of the Promoters and Promoter Group in the company as on 5th August, 2004 is as follows:

Name No. of shares Percentage (%) Share under Lock-in Individual Promoters Krishna Shriram 3000000 8.82 Till 16th Dec. 2006 Siddharth Shriram 70184 0.21 - Companies Promoted by Promoters Busneda Commercial Pvt. Ltd. 3413834 10.04 2689287(i.e. 7.91%) shares till 16th Dec. 2006 Sandvik Investments & Leasing Pvt. Ltd. 1602089 4.71 - Greenfields Commercial Pvt. Ltd. 909495 2.68 - Minos Trading (I) Pvt. Ltd. 321385 0.95 - C S R J & K Investments Pvt. Ltd. 138896 0.41 - SFSL Securities Pvt. Ltd. 297439 0.88 - Perennial Investments Limited 28515 0.08 - Doab Foods & General Industries Ltd. 609750 1.79 Till 16th Dec. 2006 M S R Enterprises Ltd. 609750 1.79 Till 16th Dec. 2006 Siel Ltd. 50000 0.15 - Other Promoters (Persons acting in concert)* (includes friends, relatives, etc.) 3375134 9.93 - TOTAL 14426471 42.44 -

* As defined in Regulation 2(e)(1) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

9 6. Build up of the shareholding of Promoters & Promoter Group in the company upto 5th August, 2004:- Name No. of Date of Acquisition/ Price Consideration Reasons for Shares Allotment Allotment Siel Ltd. 50000 10.01.2003 10/- Cash Subscribers to the Memorandum Krishna Shriram 3000000 27.10.2003 10/- Cash Pursuant to Scheme of Arrangement (Preferential) Busneda Commercial Pvt. Ltd. 3413834 30.10.2003 10/- Consideration Pursuant to Scheme of other than cash Arrangement Sandvik Investments & 1602089 30.10.2003 10/- Consideration other Pursuant to Scheme of Leasing Pvt. Ltd. than cash Arrangement Greenfields Commercial Pvt. Ltd. 909495 30.10.2003 10/- Consideration other Pursuant to Scheme of than cash Arrangement Minos Trading (I) Pvt. Ltd. 321385 30.10.2003 10/- Consideration Pursuant to Scheme of other than cash Arrangement C S R J & K Investments Pvt. Ltd. 138896 30.10.2003 10/- Consideration Pursuant to Scheme of other than cash Arrangement SFSL Securities Pvt. Ltd. 297439 30.10.2003 10/- Consideration Pursuant to Scheme of other than cash Arrangement Doab Foods & General Industries Ltd. 609750 30.10.2003 10/- Consideration Pursuant to Scheme of other than cash Arrangement M S R Enterprises Ltd. 609750 30.10.2003 10/- Consideration Pursuant to Scheme of other than cash Arrangement Perennial Investments Limited 28515 30.10.2003 10/- Consideration Pursuant to Scheme of other than cash Arrangement Siddharth Shriram 70184 30.10.2003 10/- Consideration Pursuant to Scheme of other than cash Arrangement Other Promoters 3375134 30.10.2003 10/- Consideration Pursuant to Scheme of other than cash Arrangement

7. Shareholding of the Directors of the Promoter Companies in the Company as on 5th August, 2004:

Name of the Promoter Company Name of the Director Shares held in the Company Siel Limited Siddharth Shriram 70184 P.K. Bhalla 456 A.K. Mehra 4818 K.P. Singh Nil Prof. Dinesh Mohan Nil Daviinder Gupta Nil R.K. Ahooja Nil Subrata Lahiri Nil Busneda Commercial Pvt. Ltd. Chhaya Shriram Nil A.K. Gupta Nil Sandvik Investments & Leasing Pvt. Ltd. Chhaya Shriram Nil A.K. Gupta Nil Greenfields Commercial Pvt. Ltd. Chhaya Shriram Nil A.K. Gupta Nil Minos Trading (I) Pvt. Ltd. Chhaya Shriram Nil A.K. Gupta Nil C S R J & K Investments Pvt. Ltd. Chhaya Shriram Nil A.K. Gupta Nil SFSL Securities Pvt. Ltd. Siddharth Shriram 70184 Krishna Shriram 3000000 *Perennial Investments Limited Siddharth Shriram 70184 A. K. Gupta Nil *Doab Foods & General Industries Ltd. Siddharth Shriram 70184 A. K. Gupta Nil *M S R Enterprises Ltd. Siddharth Shriram 70184 A. K. Gupta Nil * These companies are in the process of converting their status from Public Limited companies to Private Limited Companies.

8. The Promoter Group including Directors and their Associates hold 14427326 Equity Shares of face value of Rs. 10/- each as on 5th August, 2004 which constitutes 42.44 % of the aggregate Equity Share Capital of the Company. 9. There has been no purchase/Sale of the shares of the Company by the present promoters in the last 6 months.

10 10. The directors of the Company have not purchased or sold any Equity Shares of the Company during the last six months. The shareholding of the directors of the Company and their relatives in the Company is as under: Name of the Director No. of Shares held as on 5th August, 2004 of the Company % holding Mr. Siddharth Shriram 70184 0.21 Mr. Deepak Banerjee NIL - Mr. Ravi Vira Gupta NIL - Mr. S Lahiri NIL - Mr. N.K. Goila 855 0.00

Name of the Relative No. of Shares held as on 5th August, 2004 of the Company % holding Mr. Krishna Shriram 3000000 8.82 Ms Gauri S. Keeling 1756 0.01 Ms. Roula Shriram 858 0.00 Mr. Deepak C. Shriram 2700 0.01

11. Details regarding Major Shareholders The details of top 10 shareholders of the Company and the number of shares held by them are as under: i. As on date of Letter of Offer i.e. on 5th August, 2004 : Sr. No. Name of Shareholders No. of shares % age 1. The Bank Of New York (GDR Shares) 4353915 12.81 2. Busneda Commercial Pvt Ltd 3413834 10.04 3. Krishna Shriram 3000000 8.82 4. Lindon Investments Ltd. 1639980 4.82 5. Sandvik Investments and Leasing Pvt.Ltd. 1602089 4.71 6. Life Insurance Corporation of India 1538715 4.53 7. Manodeal Investment & Finance Pvt. Ltd 1527780 4.49 8. Unit Trust Of India 1333413 3.92 9. Pradeep Vira as Trustee of Enterprise Trust 1082037 3.18 10. Greenfields Commercial Pvt. Ltd. 909495 2.68

ii. 10 days prior to the date of Letter of Offer i.e. as on 26th July, 2004 Sr. No. Name of Shareholders No. of shares % age 1. The Bank Of New York (GDR Shares) 4353915 12.81 2. Busneda Commercial Pvt Ltd 3413834 10.04 3. Krishna Shriram 3000000 8.82 4. Lindon Investments Ltd. 1639980 4.82 5. Sandvik Investments and Leasing Pvt.Ltd. 1602089 4.71 6. Life Insurance Corporation of India 1538715 4.53 7. Manodeal Investment & Finance Pvt. Ltd 1527780 4.49 8. Unit Trust of India 1333413 3.92 9. Pradeep Vira as Trustee of Enterprise Trust 1082037 3.18 10. Greenfields Commercial Pvt. Ltd. 909495 2.68

iii. Two years prior to the date of Letter of Offer – As the Company was incorporated on 26th December, 2002, the details of top ten shareholders as on 26th December, 2002 was as under : Sr. No. Name of Shareholders No. of shares %age 1. Siel Limited 49994 99.99 2. Siddharth Shriram (Nominees of Siel Limited) 1 0.002 3. Krishna Shriram (Nominees of Siel Limited) 1 0.002 4. P.K. Bhalla (Nominees of Siel Limited) 1 0.002 5. A.K. Mehra (Nominees of Siel Limited) 1 0.002 6. Sunil Malhotra (Nominees of Siel Limited) 1 0.002 7. K.P. Singh (Nominees of Siel Limited) 1 0.002 12. There are no partly paid up Equity Shares as on 5th August, 2004. 13. There are no outstanding warrants, securities convertible into shares, other instruments with a right to convert into shares or outstanding employee stock options. 14. Two Promoter Companies viz. Busneda Commercial Pvt. Ltd and Sandvik Investments & Leasing Pvt. Ltd. and one Individual Promoter viz. Mr. Siddharth Shriram have pledged / agreed to pledge their shareholding by way of colateral security to secure the financial assistance availed from Financial Institutions from time to time. This pledge conforms to the CDR restructuring package. 11 15. No shares have been allotted on firm basis or through private placement in the last two years nor has the Company bought back its equity shares in the last six months. However, preferential allotment was made to Mr. Krishna Shriram for 30 Lakhs equity shares of Rs. 10/- each fully paid up for cash at par through Private Placement pursuant to the Scheme of Arrangement on 27th October, 2003. 16. 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 LOO with SEBI till the equity shares referred to in this LOO have been fully paid up and shares are listed or application money is refunded in case of failure of the Issue. 17. The Company presently does not have any intention or proposal to alter its capital structure within a period of six months from the date of opening of the Issue, by way of split/consolidation of the denominations of shares or further issue of shares whether preferential or otherwise. 18. The Company has 59,455 Equity Shareholders as on 5th August, 2004. 19. At any given point of time there shall be only one denomination for the Equity Shares of the Company and the Issuer shall comply with such disclosure and accounting norms as may be prescribed by SEBI. 20. The Company has not raised any bridge loan against the proceeds of this Issue. 21. Shares offered through this Issue shall be made fully paid up within 12 months from the date of its allotment. 22. The Company has not entered into any buy-back or standby or similar arrangements for the purchase of securities by the Promoters, Directors or the Lead Manager. 23. Promoters have undertaken that they will subscribe to their Rights Entitlement in full and in addition undertaken to apply for additional shares to the extent the issue is under subscribed. As a result of this subscription and consequent allotment, the promoter may acquire shares over and above their entitlement in the Issue, which may result in an increase of the shareholding being above the current shareholding with the rights entitlement under the present offer. This subscription and acquisition of additional shares by Promoters, if any, will not result in change of control of the management of the Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 and will be exempt from the applicability of regulation 11 and 12 of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997. This disclosure is made in terms of the requirement of Regulation 3(1)(b) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997. 24. As such, other than meeting the requirements indicated in Utilisation of funds, there is no other intention / purpose for this issue, including any intention to delist the Company, even if, as a result of allotments to Promoter, in this Issue, the Promoter shareholding in the Company exceeds his current shareholding. However, the Promoters have confirmed that in case the Rights Issue of the Company is completed with the Promoter subscribing to equity shares over and above their entitlement and as a result, if the public shareholding of the Company after the Rights Issue falls below the “permissible minimum level” as specified in the listing condition or listing agreement, they will either individually or jointly with other persons or companies acting in concert either (a) buy out the remaining shareholders or (b) make an offer for sale of his holdings so that the public shareholding is raised to the “permissible minimum level” within a period of 3 months from the date of allotment in the Proposed Issue, as per the requirements of Securities & Exchange Board of India (Delisting of Securities) Guidelines, 2003 or as per any amendment thereto or any other period as may be directed by SEBI or any appropriate authority. 25. Renunciation by non-resident shareholders of the Company in favour of other non-resident shareholder(s) is permitted under Regulation 9(2)(i) of the Foreign Exchange (Transfer or Issue of Security by a Person Residing outside India) Regulations, 2000 for this Rights Issue. Regulation 6 of the Foreign Exchange (Transfer or Issue of Security by a Person Residing outside India) Regulations, 2000 (the “Regulations”) permits an Indian Company to offer to a person resident outside India, equity shares on right basis subject to following conditions: (i) The offer on right basis does not result in increase in the percentage of foreign equity already approved, or permissible under the Foreign Direct Investment Scheme in terms of the Regulations. (ii) The existing shares against which shares are issued by the company on the right basis were acquired and are held by the person resident outside India in accordance with the Regulations. (iii) The offer on rights basis to the persons resident outside India is at a price which is not lower than that at which the offer is made to resident shareholders. Any issue of equity shares to non-resident shareholders and additional equity shares to the existing non-resident shareholders shall be subject to Foreign Investment Promotion Board (FIPB) / Reserve Bank of India (RBI) approval.

III. TERMS OF THE PRESENT ISSUE Authority for the present issue The Rights Issue is being made pursuant to the Board Resolutions dated April 5,2004 and the approval of shareholders in their Extra-ordinary General Meeting held on May 8, 2004.

Basis of offer The Equity Shares are being offered for subscription for cash at par to those existing Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the shares held in the electronic form and on the Register of Members of the Company in respect of shares held in the physical form at the close of business hours on the Record Date i.e. 13th August, 2004 fixed in consultation with the Stock Exchange, Mumbai. The Equity Shares are being offered for subscription in the ratio of One Equity Share for every Four equity shares held by the Equity Shareholders.

Principal Terms of the Issue The Equity Shares, now being issued, are subject to the terms and conditions of this Letter of Offer, the enclosed Composite Application Form (“CAF(s)”), the Memorandum & Articles of Association of the Company, the approvals from the GoI, FIPB and RBI, as applicable, the provisions of the Companies Act, 1956, guidelines issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued

12 by Government of India and/ or other statutory authorities and bodies from time to time, terms and conditions as stipulated in the allotment advise or letter of allotment or share certificate, or any other legislative enactments and rules as may be applicable and introduced from time to time by SEBI, Government of India, RBI and or other authorities.

Rights Entitlement As an Equity Shareholder of the Company on the Record Date i.e. 13th August, 2004 you are entitled to this Rights Issue as shown in part A of the enclosed Composite Application Form. The new Equity Shares are offered in the ratio of One Equity Share for every four equity shares held by the existing Equity Shareholders. Shareholders holding only 1 (one) equity share will be offered one new equity share.

Fractional entitlement The entitlements if fractional, will be rounded off to the next higher integer. The Equity Shares needed for fractional entitlement in case of rounding off and for offering one new share for existing one share will be adjusted first out of the entitlement of shareholders not applying for shares and then from the Promoters’ entitlement at the time of allotment.

Principal Terms and Conditions of the Issue of Equity Shares 1. Face value Each Equity Share shall have the face value of Rs. 10/-. 2. Issue price Each Equity Share is being offered at a price of Rs. 10/- per share. 3. Entitlement Ratio The Equity Shares are being offered on rights basis to the existing Equity Shareholders of the Company in the ratio of One Equity Share for every four Equity Shares held. All fractional entitlement will be rounded off to the next higher integer. All shareholders holding one share shall also be offered one new Equity Share. 4. Market lot The market lot for Equity Shares held in dematerialized mode is one. In case of physical certificates, the Company would issue one certificate for the Equity Shares allotted to one person (“Consolidated Certificate”). In respect of the Consolidated Certificate, the Company will, only upon receipt of a request from the Equity Shareholder, split such Consolidated Certificate into smaller denomination within seven days time from the receipt of the request from the equity shareholders. No fee would be charged by the Company for splitting the Consolidated Certificate, but stamp duty payable if any will be borne by the Equity Shareholder. 5. Terms of payment The amount of Rs. 6.50 per Equity Share shall be payable along with the application and the balance of Rs. 3.50 per share shall be payable as may be decided by the Board in such a manner that the shares are fully paid up in within 12 months from the date of allotment of new shares. 6. Ranking of the Equity Shares The Equity Shares shall be subject to the Memorandum and Articles of Association of the Company and shall rank pari passu in all respects with the existing equity shares of the Company including in respect of dividend, if any, declared by the Company, for the financial year, in which these Equity Shares are allotted.

Nomination The sole equity share holder or first equity share holder, along with other joint equity share holders (being individual(s)) may nominate any person who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the equity shares. Person, being a nominee, becoming entitled to the equity shares by reason of the death of the original equity share holder(s), shall be entitled to the same advantages to which he would be entitled if he were the registered holder of the equity share. Where the nominee is a minor, the equity share holder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the equity share holder(s), in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale of the equity shares by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. When the equity share is held by two or more persons, the nominee shall become entitled to receive the amount only on the demise of all the holders. Fresh nominations can be made only in the prescribed form available on request at the Registered Office of the Company or such other person at such addresses as may be notified by the Company. Applicant can make the nomination by filling in the relevant portion in the CAF.

Acceptance of Offer You may accept the Offer and apply for Equity Shares offered, either in full or in part by filling Block III of Part “A” of the enclosed CAF(s) and submit the same along with the application money payable to the “Bankers to the Issue” or any of the branches as mentioned on the reverse of the CAF(s) before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board or a Committee thereof in this regard. Applicants at Centres not covered by the branches of collecting banks can send their CAF(s) together with the cheque drawn on a local bank at New Delhi/ demand draft for the full application amount (net of demand draft and postal charges) payable at New Delhi to the Registrars to the Issue by registered post. Such applications sent to anyone other than the Registrars to the Issue are liable to be rejected.

ADDITIONAL EQUITY SHARES You are eligible to apply for additional Equity Shares over and above the number of Equity Shares you are entitled to, provided you apply for all the Equity Shares to which you are entitled without renouncing them, in whole or in part, in favour of any other person(s). The Board reserves the sole and absolute right to reject any such application for additional equity shares without assigning any reasons thereof. If you desire to apply for additional Equity Shares, please indicate your requirement in Block IV of Part ‘A’ of the CAF.

RENUNCIATION This Issue shall be deemed to include a right exercisable by you to renounce the Equity Shares offered to you either in full or in part in favour of any other person or persons subject to the approval of the Board. Such renouncees can only be Indian Nationals (including minor through 13 their natural/legal guardian)/limited companies incorporated under and governed by the Act, statutory Corporations/institutions, trusts (registered under the Indian Trust Act), societies (registered under the Societies Registration Act, 1860 or any other applicable laws) provided that such trust/society is authorised under its constitution/bye laws to hold equity shares in a company and cannot be a partnership firm, foreign nationals or nominees of any of them (unless approved by RBI or other relevant authorities) or to any person situated or having jurisdiction where the offering in terms of this LOO could be illegal or require compliance with securities laws of such jurisdiction or any other persons not approved by the Board. Any renunciation from Resident Indian Shareholder(s) to Non-Resident Indian(s) or from Non-Resident Indian Shareholder(s) to Resident Indian(s) is subject to the renouncer(s)/renouncee(s) obtaining the necessary permission of the RBI under the Foreign Exchange Manage- ment Act, 1999 (FEMA) and other applicable laws and such permissions should be attached to the CAF. Applications not accompanied by the aforesaid approval are liable to be rejected. Part A of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. Submission of the enclosed CAF to the Bankers to the Issue / collection centres specified on the reverse of the CAF with the Form of Renunciation (Part B of the CAF) duly filled in shall be conclusive evidence for the Company of the person(s) applying for Equity Shares in Part ‘C’ to receive allotment of such Equity Shares. Renouncee(s) will have the right to apply for additional Equity Shares. Renouncee(s) will have no further right to renounce any Equity Shares in favour of any other person.

PROCEDURE FOR RENUNCIATION (a) To renounce the whole offer: If you wish to renounce this offer in whole, please complete Part B of the CAF. In case of joint holders, all joint holders must sign this part of the CAF. The person in whose favour renunciation has been made should complete and sign Part C of the CAF. In case of joint renouncees, all joint renouncees must sign this part of the CAF. (b) To renounce in part: If you wish to either accept this offer in part and renounce the balance or renounce the entire offer in favour of two or more renouncees, the CAF must be first split by applying to the Registrar to the Issue. Please indicate your requirement for Split Forms in the space provided for this purpose in Part D of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on 11th September, 2004. On receipt of the required number of split forms from the Registrar, the procedure as mentioned in para (a) above shall have to be followed. All the shareholders shall sign the Part “D” of the “CAF”. (c) Change and/or introduction of additional holders: If you wish to apply for Equity Shares jointly with any other person, or persons, not more than 3, who is/are not already joint holders with you, it shall amount to renunciation and the procedure as stated above shall have to be followed. Even a change in the sequence of the joint holders shall amount to renunciation and the procedure, as stated above shall have to be followed. All the Promoters & Promoter Companies have undertaken that it will subscribe to its Rights Entitlement in full and have further under taken to subscribe to unsubscribed portion. SPLITTING OF COMPOSITE APPLICATION FORMS Request for Split Forms should be sent to the Registrar to the Issue namely MAS Services Private Ltd.,AB-4, Safdarjung Enclave, New Delhi – 110029 before the closure of business hours on or before 11th September, 2004 by filling in Part ‘D’ of the CAF along with entire CAF. Split Forms cannot be re-split. The renouncee(s) shall not be entitled to Split Form(s). HOW TO APPLY FOR EQUITY SHARES You may exercise any of the following options with regard to the Equity Shares offered to you, using the enclosed CAF.

OPTION OPTION ACTION REQUIRED

A. Accept your entitlement to all the Equity Shares offered to you Fill and sign ‘Part A’ of the CAF B. Accept your entitlement to all the Equity Shares offered Fill and sign ‘Part A’ of the CAF after to you and apply for additional Shares indicating in Block IV the number of additional Equity Shares applied for C. Accept only a part of your entitlement of the Equity Shares Fill and sign ‘Part A’ of the CAF offered to you (without renouncing the balance) D. Renounce your full entitlement of the Equity Shares offered Fill and sign Part ‘B’ of the CAF indicating the number of Equity Shares to you to one person (Renouncee) (Joint Renouncees renounced. The renouncee must fill and sign Part ‘C’ of the CAF not exceeding three are considered as one Renouncee) E. Accept a part of your entitlement of the Equity Shares Fill and sign ‘Part D’ of the CAF for Split Forms after indicating the offered to you and then renounce the balance to one required number of Split Application Forms and take action as indicated Renouncee below: (i) For the Equity Shares, if any, which you want to accept, fill in and sign ‘Part A’ of one Split Composite Application Form. (ii) For the Equity Shares you want to renounce, fill in and sign ‘Part B’ in the required number of Split Composite Application Forms indicating the number of Equity Shares renounced to each Renouncee. (iii) Each of the renouncee should then fill in and sign ‘Part C’ of the respective Split Composite Application Form for the Equity Shares accepted by the renouncee. F. Renounce your entitlement of the Equity Shares offered Follow the procedures stated in (E) above for obtaining the required to you, to more than one Renouncee. number of Split Composite Application Forms and on receipt of Split Composite Application Forms follow the procedure as stated in (E) (ii) and (iii) above. 14 Applications for Equity Shares should be made only on the CAF, which are provided by the Company. The CAF should be completed in all respects as explained under the head “INSTRUCTIONS” indicated on the reverse of the CAF before submission to the Bankers to the Issue at their collection centers mentioned on the reverse of the CAF on or before the closure of the subscription list. Non-Resident Shareholders/Renouncee should forward their applications to Bankers to the Issue as mentioned in the CAF for Non Resident Equity Shareholders. No part of the CAF should be detached under any circumstances. For applicants residing at places other than designated Bank Collection Centres. Applicants residing at places other than the cities where the bank collection centers have been opened should send their completed CAF by registered post to MAS Services Pvt. Limited, AB-4, Safdarjung Enclave,New Delhi – 110029 (Registrar to the issue) alongwith bank drafts (net of bank charges and registered post charges) payable at New Delhi in favour of “MSL- Rights Issue” and crossed “A/c Payee only”. The Company will not be liable for any postal delays and applications received through mail after the closure of the Issue, are liable to be rejected and returned to the applicants. Applications by mail should not be sent in any other manner except as mentioned above. The CAF alongwith application money must not be sent to the Company or the Lead Managers to the Issue or the Registrar to the Issue except as mentioned above. The applicants are requested to strictly adhere to these instructions. In case the CAF is misplaced or is not received by the applicant, the applicant may request the Registrar to the Issue, MAS Services Pvt. Limited AB-4, Safdarjung Enclave,New Delhi – 110029 for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and their full name and address. In case the original and duplicate CAFs are lodged for subscription, allotment will be made on the basis of the duplicate CAF and the original CAF will be ignored.

APPLICATION ON PLAIN PAPER Shareholder who has neither received the original CAF(s) nor is in a position to obtain the duplicate CAF(s) may make an application to subscribe to the Rights Issue on plain paper, along with an Account Payee Cheque / demand draft payable at New Delhi to be drawn in favour of “MSL – Rights Issue” and send the same by Registered Post directly to the Registrar to the Issue, MAS Services Pvt. Limited AB-4, Safdarjung Enclave,New Delhi – 110029 so as to reach them on or before the closure of the Issue. The envelope should be superscribed “MSL – Rights”. The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recorded with the Company should contain the following particulars: 1. Name of the shareholder including joint-holders 2. Address of sole / first holder 3. Folio No./DP ID Number and Client ID Number 4. Number of shares held as on 13th August, 2004 (Record Date) 5. Certificate numbers and Distinctive numbers, if held in physical form 6. Number of shares to which entitled 7. Number of shares applied for, out of entitlement 8. Number of additional shares applied for, if any 9. Total number of shares applied for 10. Amount payable on application 11. Particulars of Cheque/Draft enclosed 12. Savings/Current Account Number and Name and Address of the Bank 13. PAN/GIR number and Income tax Circle/ward/District of the sole/all the joint applicants where the application is for shares of a value of Rs.50,000/- or more. 14. In case of Non-Resident shareholders, NRE/FCNR/NRO Account No., name and address of the bank and branch. 15. Signature of shareholders in the same order as appearing in the records of the Company. Please note that those who are making the application on plain paper shall not be entitled to renounce their rights and should not utilise the CAF for any purpose including renunciation even if it is received subsequently. If the applicant violates any of these requirements, he/she shall face the risk of rejection of both the applications. The Company shall refund such application amount to the applicant without any interest thereon.

MODE OF PAYMENT For Resident Indian Shareholders and Non-Resident Shareholders on Non-Repatriation basis Payment should be made in cash or by cheque/bank draft drawn on any bank (including a co-operative bank) which is situated at and is a member or a sub-member of the bankers clearing house located at the centre where the CAF is submitted and which is participating in the clearing at the time of submission of the application. Outstation cheques/money orders/postal orders will not be accepted and CAFs accompanied by such cheques/money orders/postal orders are liable to be rejected.

For NRIs holding shares on non-repatriation basis Payment may also be made by way of cheque drawn on Non-Resident Ordinary (NRO) Account maintained in New Delhi or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at New Delhi. In such cases, the allotment of shares will be on non-repatriation basis. If the payment is made by a draft purchased from an NRO account, an Account Debit Certificate from the bank issuing the draft, confirming that the draft has been issued by debiting the NRO account, should be enclosed with the CAF. In the absence of the above, the application shall be considered incomplete and is liable to be rejected. All cheques/bank drafts accompanying the CAFs should be crossed “A/c Payee Only” and made payable to “MSL – Rights Issue”. The CAF duly completed together with the amount payable on application must be deposited with the collecting bank/collection centers, indicated on the reverse of 15 the CAF on or before the close of banking hours on or before the Issue closing date. A separate cheque or bank draft must accompany each CAF. Reference number of CAF should be mentioned on the reverse of the Cheque/Draft.

For Non-Resident Shareholders on repatriation basis Payment by NRIs/OCBs/FIIs/Foreign Investors must be made by demand draft/cheque payable at New Delhi or funds remitted from abroad in any of the following ways: i. By Indian Rupee drafts purchased from abroad and payable at New Delhi or funds remitted from abroad; OR ii. By cheque/draft on a Non-Resident External (NRE) Account or FCNR Account maintained in New Delhi; OR iii. Rupee draft purchased by debit to NRE/FCNR Account maintained elsewhere in India and payable in New Delhi; OR iv. FIIs registered with SEBI must remit funds from special non-resident rupee deposit accounts. All cheque/drafts submitted by NRIs/OCBs/FIIs/Foreign Shareholders should be drawn in favour of “MSL – Rights Issue NR”. The CAF for non- residents applying on repatriation basis duly completed together with the amount payable on application must be deposited with the collecting bank/ collection centers, indicated on the reverse of the CAF on or before the close of banking hours on or before the Issue closing date. A separate cheque or bank draft must accompany each application form. Applicants may note that where payment is made by drafts purchased from NRE/FCNR accounts as the case may be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/FCNR account should be enclosed with the CAF. In the absence of the above the application shall be considered incomplete and is liable to be rejected. In case where repatriation benefit is available, dividend and sales proceeds derived from the investment in shares can be remitted outside India, subject to tax, as applicable according to the Income-tax Act, 1961 and subject to the permission of the RBI, if required. In the case of NR who remit their application money from funds held in FCNR/NRE Accounts, refunds and other disbursements, if any shall be credited to such account details of which should be furnished in the appropriate columns in the CAF. In the case of NRIs who remit their application money through Indian Rupee Drafts from abroad, refunds and other disbursements, if any will be made in US Dollars at the rate of exchange prevailing at such time subject to the permission of RBI. The Company will not be liable for any loss on account of exchange fluctuation for converting the Rupee amount into US Dollars or for collection charges charged by the applicant’s Bankers.

STOCKINVESTS Reserve Bank of India vide its Notification No. DBOD NO.FSC.BC.42/24.47.001/2003-04 dated 5th November, 2003 has withdrawn the Stockinvest scheme. The investors are therefore not allowed to apply through stockinvest.

GENERAL 1. Please read the instructions printed on the enclosed CAF carefully 2. Application should be made on the printed CAF, provided by the Company except as mentioned under the head ‘Application on Plain Paper’ in the LOO and should be complete in all respects. 3. A CAF found incomplete with regard to any of the particulars required to be given therein, and/or which is not completed in conformity with the terms of this LOO is liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any. 4. The CAF must be filled in English and the names of all the applicants, details of occupation, address, father’s/husband’s name must be filled in block letters. 5. Signatures should be either in English or Hindi or the languages specified in the 8th Schedule to the Constitution of India. Signatures other than in the aforesaid languages or thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal. 6. In case of an application under Power of Attorney or by a body corporate or by a society, a certified true copy of the relevant Power of Attorney or relevant resolution or authority to make investment and sign the application along with the copy of the memorandum and articles of association and/or bye laws must be lodged with the Registrars to the Issue giving reference of the serial number of the CAF. In case the above referred documents are already registered with the Company, the same need not be furnished again. However, the serial number of registration or reference of the letter, vide which these papers were lodged with the Company/Registrar must be mentioned just below the signature(s) on the application. In no case should these papers be attached to the application submitted to the Bankers to the Issue. 7. The shareholders must sign the CAF as per the specimen signature recorded with the Company. In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per the specimen signature(s) recorded with the Company. Further, in case of joint applicants who are renounces, the number of applicants should not exceed three. 8. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant at the address given in the CAF. 9. As per Notifiocation No. FEMA 20/2000-RB dated 3rd May, 2000 and FEMA/76/2002-RB dated 12th November, 2002, the RBI has given its general permission to Indian Companies to issue rights/bonus shares to Non-resident Indians (including Pakistanis) including additional Shares. Hence, the Company does not need an in-principle approval from RBI for the issue of shares to Non-resident Indians, within the sectoral cap prescribed under FEMA, 1999. However, the Company vide their letter no. MSL/RBI dated July 03, 2004 applied to Reserve Bank of India in respect of allotment of equity shares in the issue to non-residents. RBI vide letter no.FE.DEL.FID/362/06.04.3645/2004-05 dated July 12,2004 advised as above in respect of allotment to non-residents. 10. In case of Overseas Corporate Bodies (OCB s), RBI vide its Notification No. FEMA 101/2003-RB dated 3rd October, 2003 and Press Release issued by RBI on 18th September, 2003, overseas entities owned by NRIs can enjoy ll the facilities available to foreign investors including automatic route for foreign Direct Investment and accordingly investment by such entities in rights issue would be considered as investment by foreign investors/non-residents. Further, RBI vide its Master Circular No. 6/2004-05 dated 1st July, 2004 para 6.1 clarified that issuing companies would have to seek specific permission from RBI, Central Office, Mumbai for issue of shares on rights basis to erstwhile OCBs. The

16 Company has, therefore, applied to RBI vide their letter No. MSL/RBI dated 19th July, 2004 for taking specific approval for issue of shares to OCBs and approval from RBI. RBI vide its letter no. FE.CO.FID/898/11.01.20(VI)/2004-05 dated 5th August, 2004 has given approval in respect of three OCBs out of total four OCBs. The approval in respect of forth OCB will be received only after furnishing necessary information to RBI by the fourth OCB. Accordingly, the Company will allot shares to the fourth OCB subject to RBI’s specific approval in this regard. 11. Bank Account Details: It is mandatory for the applicant to mention the applicant’s savings bank/current account number and the name of the bank with whom such account is held in the space provided in the CAF, to enable the Registrars to the Issue, to print the said details in the refund orders after the name of the payees. Such applications not containing the above details are liable to be rejected. 12. PAN/GIR Number: Where an application for allotment of shares individually is for a total value of Rs. 50,000/- or more i.e. the total number of shares applied for multiplied by the issue price is Rs. 50,000/- or more, the applicant or in case of applications in joint names, each of the applicants, should mention the applicants Permanent Account Number (PAN) allotted under the Income-Tax Act, 1961 or where the same has not been allotted, the GIR number under the Income tax Circle/Ward/District. In case where neither the PAN nor the GIR number has been allotted, the fact of non-allotment should be mentioned in the CAF. CAF without this information will be considered incomplete and will be liable to be rejected. 13. Payment by cash: Pursuant to Section 269SS of the Income Tax Act, 1961, the payment against the share application should not be effected in cash if the amount to be paid is Rs. 20,000/- or more. In case payment is effected in contravention of this, the application will be deemed invalid and the application money will be refunded and no interest will be paid thereon. 14. All communication in connection with application for the shares, including any change in address of the shareholders should be addressed to the Registrars viz. MAS Services Pvt. Limited AB-4, Safdarjung Enclave, New Delhi – 110029 to the Issue quoting the name of the first/sole applicant shareholder, folio number and CAF number. 15. Split Forms cannot be re-split. 16. Only the person or persons to whom shares have been offered and not renouncee(s) shall be entitled to obtain Split Forms. 17. As per section 109A of the Act, the sole applicant / joint applicants may nominate, in the prescribed manner, a person to whom his share in the Company shall vest in the event of his death.

OPTION TO RECEIVE THE RIGHT EQUITY SHARES IN DEMATERIALISED FORM The Equity Shares of the Company have been under compulsorily Dematerialised trading for all investors, by SEBI, with effect from December 17, 2003 (being the date of listing of equity shares of the Company at BSE). Hence, the equity shareholders who wish to trade on the stock exchanges are advised to opt for receiving these equity shares in D-mat form. The company has depository arrangements with NSDL and CDSL for issue and holding of the equity shares in D-mat form. In this context; a. Two tripartite agreements have been signed dated • December 8, 2003 between MSL, MAS Services Pvt. Limited (Registrar) and NSDL for offering depository option to the investors and • October 30,2003 between MSL, MAS Services Pvt. Limited (Registrar) and CDSL for offering depository option to the investors. The Company will apply to NSDL and CDSL, for approval to admit the Equity Shares offered in terms of this Letter of Offer into their depository system and for completion of other formalities. b. An applicant has the option to seek allotment of Equity Shares in electronic or physical mode, or partly in demat and physical form, in the same application, in the space provide. c. No separate applications for demat and physical shares are to be made. If such application is made, the applications for physical shares will be treated as multiple applications and rejected accordingly. In case of partial allotment, allotment will be first done in demat form, and the balance, if any, will be allotted in physical form. d. An applicant who wishes to apply for Equity Shares in the electronic form must have at least one beneficiary account with any of the Depository Participants (DPs) of NSDL or CDSL prior to making the application. e. The applicant seeking allotment of Equity Shares in the electronic form must necessarily fill in the details (including the beneficiary account number or client ID number) appearing in the CAF under the heading ‘Request for Shares in Electronic Form’. f. Applicants must indicate in the CAF, the number of Equity Shares they wish to receive in electronic form out of the total number of Equity Shares applied for. In case of partial allotment, Equity Shares will first be allotted in electronic form and the balance Equity Shares, if any, will be allotted in physical form. g. Equity Shares allotted to an applicant in the electronic account form will be credited directly to the applicant’s respective beneficiary account(s) with DP. h. Applicants should ensure that the names of the applicants and the order in which they appear in the CAF should be the same as registered with the applicant’s Depository Participant. i. Non-transferable allotment advice/refund orders will be directly sent to the applicant by the Registrar to this Issue. j. If incomplete/incorrect details are given under the heading ‘Request for Shares in Electronic Form’ in the CAF, it will be deemed to be an application for Equity Shares in physical form k. The applicant is responsible for the correctness of their beneficiary account details given in the CAF vis-à-vis those with their DP. In case the information is incorrect or insufficient, the Issuer would not be liable for losses, if any. l. Renouncees can also exercise the option to receive Equity Shares in the demat form by indicating in the relevant block and providing the necessary details about their beneficiary account. m. It may be noted that Equity Shares arising out of this Issue can be received in demat form even if the Existing Equity Shares are held in physical form. Nonetheless, it should be ensured that the DP Account is in the name of the applicant(s) in the same order as per specimen signatures appearing in the records of the DP/Company. 17 n. It may be noted that shares in electronic form can be traded only on the Stock Exchanges having electronic connectivity with NSDL or CDSL. o. Dividend or other benefits with respect to the shares held in D-mat form would be paid to those equity shares holders whose names appear in the list of beneficial owners given by the DP to MSL as on Record date.

LAST DATE FOR SUBMISSION OF COMPOSITE APPLICATION FORM The last date for receipt of the CAF, by the Bankers to the Issue at their Collection Centers, together with the amount payable, is on the close of banking hours, on 27th September, 2004. If the CAF together with the amount payable is not received by the Bankers to the Issue at their Collection Centers on or before the close of banking hours on or before 27th September, 2004 the offer contained in this LOO shall be deemed to have been declined, and the Board shall utilise this entitlement for allotting the Equity Shares as mentioned below under the heading “Basis of Allotment”. No separate receipt will be issued for the application money. However, all the Bankers to the Issue/collection centers receiving the application will acknowledge its receipt by stamping and returning the perforated acknowledgement slip at the bottom of each CAF.

BASIS OF ALLOTMENT The basis of allotment shall be finalised by the Board in consultation with The Stock Exchange, Mumbai (Designated Stock Exchange). The Board will proceed to allot the Equity Shares in the following order of priority: 1. Allotment to Shareholders of their fractional entitlements will be rounded off to the next higher integer. Shareholders holding 1 equity share will be offered one new equity share. The Equity Shares needed for such shares will be adjusted first out of the entitlement of shareholders not applying for shares and then from the Promoters’ entitlement at the time of allotment. 2. Full allotment to the Equity Shareholders who have applied for their Rights Entitlement either in full or in part and also to the renouncees who have applied in full or in part for the Equity Shares renounced in their favour. 3. Allotment to the Equity Shareholders who having applied for their full Rights Entitlement of Equity Shares, have applied for additional Equity Shares, provided there is surplus after making full allotment under 2 above. The allotment of such additional Equity Shares shall be made as far as possible on equitable basis with reference to number of Equity Shares held on 13th August, 2004, i.e. Record Date, within the overall size of Rights Issue at the sole and absolute discretion of the Board in consultation with The Stock Exchange, Mumbai. 4. Allotment to renouncees who having applied for all the Equity Shares renounced in their favour have applied for additional shares, provided there is a surplus remaining after 2 and 3 above. The Company shall retain no oversubscirption. The issue will become undersubscribed after considering the number of shares applied as per entitlement plus additional shares, the undersubscribed portion shall be applied for only after the close of the issue. The promoters shall subscribe to such undersubscribed portion as per relevant provisions of the law. If the promoters of the company desires to subscribe to such undersubscribed portion and if disclosure is made pursuant to SEBI (Substantial Acquisition of Share and Takeover) Regulations, 1997, such allotment of the undersubscribed portion will be governed by the provisions of SEBI (SAST) Regulations, 1997. The unsubscribed portion, if any of the equity shares offered to the shareholders, after considering the applications for Rights/ Renunciation and additional equity shares, as above, shall be disposed off by the board or committee of Directors of the Company authorized in this behalf by the Board of Directors of the Company, in such manner as they think most beneficial to the company and the decision of the Board or Committee of Directors of the company in this regard shall be final and binding. In the event of over subscription, allotment will be made only within the overall size of the Rights Issue. The allotment to the promoters of any unsubscribed portion, over and above their entitlement, would be done in compliance with clause 40A of the Listing Agreement. The Company expects to complete the allotment of Equity Share within a period of 42 days from the date of closure of the Issue in accordance with the listing agreement with BSE.

DISPOSAL OF APPLICATION AND APPLICATION MONEY The Board reserves the right to reject applications in case the application is not made in terms of this LOO. In case an application is rejected in full the whole of the application money received will be refunded to the first named applicant and where an application is rejected in part, the excess application money will be refunded to the first named applicant within 6 weeks from the date of closure of the subscription list in accordance with Section 73 of the Act. If there is delay of refund of application money by more than 8 days after the Company becomes liable to pay (i.e. forty two days after the closure of Issue), the Company will pay interest for the delayed period at the rate prescribed under sub-section (2) and (2A) of Section 73 of the Act. The subscription monies received in respect of this Issue will be kept in a separate bank account and the Company will not have access to nor appropriate the funds until it has satisfied The Stock Exchange, Mumbai with suitable documentary evidence that minimum subscription of 90% of the application money for the Issue has been received.

ALLOTMENT / REFUND The Company will complete allotment of equity shares and issue and credit the allotted Equity Shares to the respective beneficiary account and/or dispatch the letter of allotment/Equity Shares certificate and/or letter of regret, alongwith the refund order, if any within a period of six weeks from the date of closure of Issue. If such monies are not repaid within eight days from the day the company becomes liable to pay it, the Company shall, pay such monies with interest rate as prescribed under sub-section (2) and (2A) of section 73 of the Act. The letter of allotment/ Equity Share certificates/ refund orders exceeding Rs 1,500/- would be dispatched by registered post/ speed post at the sole/first named applicant’s address within six weeks from the date of the closing of the subscription list. Refund orders upto Rs 1,500/- will be dispatched under the Certificate of Posting. Such refund orders would be payable at par at all places where the applications were originally accepted. The same would be marked account payee only and would be drawn in favour of the sole/first applicant. Adequate funds would be made available to the Registrars to the Issue for this purpose. In case the Company issues letters of allotment, the corresponding share certificates will be issued within three months from the date of allotment thereof or such extended time as may be approved by the Company Law Board under Section 113 of the Act or other applicable provisions, if any. Allottees are requested to preserve such letters of allotment which would be exchanged for the share certificates. 18 In case of those shareholders who have opted to receive their Right Entitlement Shares in D-mat form by using electronic credit under the depository system, an advice regarding the credit of the Equity Shares shall be given separately. Refunds will be made by cheques or pay orders drawn on the bank(s) appointed by the Company as refund bankers. Such instruments will be payable at par at the places where applications are accepted. Bank charges, if any, for encashing such cheques or pay orders will be borne by the applicants. Allotment of Equity Shares to non-residents and the issue of letters of allotment/share certificates to Non-residents shall be subject to the approval received from RBI, as mentioned elsewhere in the LOO. For Non Resident Applicants, refunds, if any, will be made as under: 1) Where applications are accompanied by Indian Rupee Drafts purchased abroad and payable at New Delhi, refunds will be made in convertible foreign exchange equivalent to Indian Rupees to be refunded. Indian Rupees will be converted into foreign exchange at the rate of exchange, which is prevailing on the date of refund. The exchange risk on such refunds shall be borne by the concerned applicant and the Company shall not bear any part of the risk. 2) Where the applications made are accompanied by NRE/FCNR/NRO cheques, refunds will be credited to NRE/FCNR/NRO accounts respectively, on which such cheques are drawn and details of which are provided in the CAF.

INTEREST IN CASE OF DELAY IN DESPATCH OF ALLOTMENT LETTERS/REFUND ORDERS • The Company agrees that as far as possible allotment of securities offered to the shareholders shall be made within 7 weeks from the date of closure of the issue. • The Company further agrees that it shall pay interest @ 15% per annum for the delayed period if the allotment has been made and/or allotment letters/the refunds orders have not been dispatched to the applicants within 7 weeks form the date of closure of the issue.

DECLARATION BY THE COMPANY The Company undertakes that: a) The complaints received in respect of the Issue shall be attended to by the Company expeditiously and satisfactorily; b) All steps for completion of the necessary formalities for listing and commencement of trading at all stock exchanges where the securities are to be listed shall be taken within 7 working days of finalisation of Basis of Allotment; c) Funds required for dispatch of refund orders/allotment letters/certificates by registered post shall be made available to the Registrars to the Issue by the Company; d) Certificates of the securities/refund orders to the Non-Resident Indians shall be dispatched within the specified time subject to receipt of approval from RBI; e) No further issue of shares shall be made till the shares offered through this LOO are listed or till the application moneys are refunded on account of non-listing, under-subscription, etc.

IV. TAX BENEFITS The Company has been advised by the Chartered Accountants M/s A.F.Ferguson & Co., Statutory Auditors vide their letter dated 8th June, 2004 that under the existing provisions of the Income Tax, 1961 for the time being inforce, the following tax benefits and deductions will be available to the Company and its members subject to the fulfillment of requirements of the relevant provisions.

A. TAX BENEFITS AVAILABLE TO THE COMPANY UNDER THE INCOME-TAX ACT, 1961 (THE ACT) 1. Under section 32 of the Act, the company is entitled to depreciation on (i) tangible fixed assets, being building, machinery, plant and furniture, and (ii) intangible assets, being know-how, patents, copy rights, trade mark, licences, franchises of other business and rights of similar nature acquired on or after the 1st day of April, 1998 for the use thereof in the company’s business. 2. Under section 35 of the Act and subject to the provision therein, the company would be entitled to deduction in respect of expenditure laid out or expended on scientific research relating to the business. 3. Under section 10(34) of the Act, dividend income referred to in section 115-O are exempt from tax in the hands of the company. 4. Under section 112 and other relevant provisions of the Act, the long term capital gains arising on transfer of long term capital assets shall be taxed at the rate of 20% (plus applicable surcharge) after indexation as provided in the second proviso to section 48. However, in case of listed securities, the long term capital gain can be taxed at 10% (plus surcharge) without indexation, at the option of shareholder.

UNDER THE WEALTH ACT, 1957 The company is eligible to pay wealth tax as per the provisions of Wealth tax Act, 1957 at the rate of 1% in respect of certain assets owned by the company subject to the basic exemption of Rs. 15 lacs.

B. TAX BENEFITS AVAILABLE TO THE MEMBERS UNDER THE INCOME-TAX ACT, 1961 (THE ACT) TO RESIDENT MEMBERS: 1. Under section 10(34) of the Act, dividend income referred to in section 115-O of the Act, are exempt from tax in the hands of the shareholders. 2. Under section 10(23D) of the Act, all Mutual Funds set up by Public Sector Banks or Public Financial Institutions or Mutual Funds registered under the Securities and Exchange Board of India or authorised by the Reserve Bank of India, subject to the conditions specified therein, are eligible for exemption from income-tax on all their income, including income from investment in the shares of the company. 3. Under section 112 and other relevant provisions of the Act, the long term capital gains arising on transfer of long term capital assets shall be taxed at the rate of 20% (plus applicable surcharge) after indexation as provided in the second proviso to section 48. However, in case of listed securities, the long term capital gain can be taxed at 10% (plus surcharge) without indexation, at the option of shareholder.

19 4. In accordance with section 54EC of the Act and subject to the conditions specified therein, long term capital gains arising on the transfer of shares of the company will be exempt from capital gains tax if the entire capital gains are invested within a period of six months after the date of such transfer for a period of 3 years in specified bonds mentioned under the section. 5. In accordance with section 54ED of the Act and subject to the conditions specified therein, long term capital gains arising on transfer of the shares of the company shall be exempt from tax if the entire capital gains are invested within six months from the date of transfer, in the acquisition of specified equity shares mentioned under the section. 6. In accordance with section 54F of the Act and subject to the conditions therein, long term capital gains arising on transfer of shares of the company held by an individual or HUF shall be exempt from tax if the net sale consideration is utilised within a period of one year before or two years after the date of transfer for purchase of a new residential house, or for constructions of a residential house within a period of three years from the date of transfer. 7. In terms of Section 10(32) of the IT Act, any income of minor children clubbed in the total income of the parent under section 64(1A), shall be exempt to the extent such income does not exceed Rs.1500 in respect of each such child, in accordance with, and subject to the provision of the respective sections.

TO NON-RESIDENTS MEMBERS: 1. Under section 10(34) of the Act, dividend income referred to in section 115-O of the Act is exempt from tax in the hands of the shareholders. 2. As per the provisions of section 115A of the Act, in the case of a non resident or a foreign company, the tax payable on dividends other than dividends referred to in section 115-O shall be 20% (plus surcharge as applicable) of such income. It shall not be necessary for such assessee to furnish the Return of Income if their only source of income is investment income and tax has been deducted at source from such income under the provisions of chapter XVII B of the Act. 3. Under the first proviso to section 48 of the Act, in case of a non-resident, in computing the capital gains arising from transfer of shares of the company acquired in convertible foreign exchange (as per exchange control regulations) protection is provided from fluctuation 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. However, the capital gain will be taxed at the rate of 10% under section 112 of the Act. 4. In accordance with section 54EC of the Act and subject to the conditions specified therein, long term capital gains arising on the transfer of shares of the company will be exempt from capital gains tax if the entire capital gains are invested within a period of six months after the date of such transfer for a period of 3 years in specified bonds mentioned under the section. 5. In accordance with section 54ED of the Act and subject to the conditions specified therein, long term capital gains arising on transfer of the shares of the company shall be exempt from tax if the entire capital gains are invested within six months from the date of transfer, in the acquisition of specified equity shares mentioned under the section. 6. In accordance with section 54F of the Act and subject to the conditions therein, long term capital gains arising on transfer of shares of the company held by an individual or HUF shall be exempt from tax if the net sale consideration is utilised within a period of one year before or two years after the date of transfer for purchase of a new residential house, or for constructions of a residential house within a period of three years from the date of transfer. 7. SPECIAL PROVISIONS FOR NON-RESIDENT INDIAN MEMBERS: A Non-Resident Indian (i.e. individual being a citizen of India or person of Indian origin) has the option to be governed by the special provisions of chapter XII-A of the Act, according to which: 7.1. Under section 115E of the Act, where shares in a company are acquired in convertible foreign exchange by a non-resident Indian then income from long term capital gains on transfer of shares shall be charged to tax at the rate 10% (plus surcharge as applicable) without aggregating any other income earned in India which is taxed separately. 7.2. Under section 115F of the Act, the long term capital gains arising from the transfer of shares, where these are acquired in convertible foreign exchange, shall be exempt from tax entirely/proportionately, provided that the net consideration is invested in any specified asset within six months from the date of transfer of the asset. The amount so exempt from tax shall, however, be chargeable to tax, if the new asset is transferred or converted into money within three years from the date of acquisition of the specified new asset. 7.3. Under section 115G of the Act, a non-resident Indian is not obliged to file a Return of Income under section 139(1) of the Act, if his total income consists only of income from investments and/or long term capital gains earned on transfer of such investments and tax has been deducted at source from such income under the provisions of chapter XVII B of the Act. 7.4. Under section 115H of the Act, where a non-resident Indian, becomes assessable to tax in India in relation to any previous year, as a resident in India in respect of his total income of any subsequent year, he may furnish to the assessing officer a declaration in writing along with his return of income under section 139 for the assessment year for which he is so assessable, to the effect that the provisions of chapter XII-A shall continue to apply to him in relation to the investment income derived from any foreign exchange asset, being an asset of the nature referred to in sub clause (ii) to sub clause (v) of clause (f) of section 115C of the Act, in which case the provisions of chapter XII-A shall continue to apply to him in relation to such income for that assessment year and for every subsequent assessment year until the transfer or conversion (otherwise than by transfer) into money of such assets. 7.5. Under section 115 I of the Act, a non-resident Indian has the option of not being governed by the provisions of chapter XII-A for any assessment year by furnishing his return of income under section 139 of the Act declaring therein that the provision of this chapter shall not apply to him for that assessment year. 8. SPECIAL PROVISIONS FOR FOREIGN INSTITUTIONAL INVESTORS: Under section 115AD of the Act Foreign Institutional Investors (FIIs) will be charged to tax at 20% (plus surcharge as applicable) on income other than income by way of dividend referred to in section 115-O from shares (other than units referred to in section 115AB of the Act); at 10% (plus surcharge as applicable) on the long term capital gains arising from transfer of such shares and at 30% (plus surcharge as applicable) on the short term capital gains arising from the transfer of such shares, such income being computed in the manner set out in the said section. 20 TO VENTURE CAPITAL COMPANIES/FUNDS: In terms of section 10(23FB) of the IT Act, all Venture capital companies/funds registered with Securities and Exchange Board of India, subject to the conditions specified, are eligible for exemption from income tax on all their income, including income from sale of shares of the company.

UNDER WEALTH TAX ACT, 1957 AND GIFT TAX 1. Shares are outside the scope of the word ‘Assets’ defined under section 2(ea) of the Wealth Tax Act, 1957 and accordingly are not liable to wealth tax. 2. Gift tax is not leviable in respect of any gift made on or after first day of October 1998. Therefore any gift of the shares will not attract gift tax. Notes: 1. All the above benefits are as per the current tax law as amended by the Finance Act, 2004 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-resident, the tax rate and the consequent taxation mentioned above shall be further subject to any benefits available under the double taxation avoidance agreement, if any, between India and the country in which the non-resident has fiscal domicile. 3. In view of the individual nature of tax consequences, each investor is advised to consult his/her own tax advisor with respect to specific tax consequences of his/her participation in the scheme. This is a summary only and not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of convertible debentures or ordinary shares. The statements made above are based on the laws in force and as interpreted by the relevant taxation authorities as of date. Investors are advised to consult their tax advisors with respect to the tax consequences of their holdings based on their residential status and the relevant double taxation conventions. For further instruction, please read the Composite Application Form carefully.

Important 1. Please read this Letter of Offer carefully before taking any action. The instructions contained in the accompanying Composite Application Form (CAF(s)) are an integral part of the conditions of this Letter of Offer and must be carefully followed; otherwise the application is liable to be rejected. 2. All inquiries in connection with this Letter of Offer or accompanying Composite Application Form and requests for Split Application Forms must be addressed (quoting the Registered Folio Number/ DP and Client ID no., the CAF(s) number and the name of the first Equity Shareholder as mentioned on the CAF(s) and superscribed “MSL – Rights Issue” on the envelope) to the Registrars to the Issue at the following address: MAS Services Private Ltd. AB-4, Safdarjung Enclave, New Delhi -110029 3. It is to be specifically noted that this Issue of Equity Shares is subject to Risk Factors appearing on pages no. i to xv of this Letter of Offer. 4. The Rights Issue will not be kept open for more than 30 days unless extended, in which case it will be kept open for a maximum 60 days.

V. PARTICULARS OF THE ISSUE OBJECTS OF THE ISSUE The present Rights Issue of Equity Shares aggregating to Rs. 849.90 Lakhs is part of the overall Financial Restructuring of the Company as approved by the “Corporate Debt Restructuring Cell”, which is a forum initiated by the Reserve Bank of India and set up by the leading Banks and Financial Institutions.

UTILISATION OF ISSUE PROCEEDS As per the Corporate Debt Restructuring Scheme approved by the “Corporate Debt Restructuring Cell”, the Company is required to raise fresh equity into the Company at the rate of Rs.250 lakhs each for the year ending September 2003 and September 2004 and Rs. 300 lakhs for the year ending September 2005. The CDR approved package also indicates investment by the Company into equity of Siel Limited in the same order. The first tranche of Rs. 250 lakhs of equity could not be raised before September 2003 because of late receipt of order of High Court sanctioning the Scheme. In order to raise the entire amount of equity as per the CDR approved package and the Scheme in single tranche so as to save and economize on the expenses, it is proposed to offer this rights issue. The entire investment is to be made in the form of equity. NOTE: The Size of Rights Issue is Rs. 849.90 Lakhs as against the Rs. 800 lakhs as envisaged in the package, for the purpose of rounding off the Ratio for the Rights Issue. The Funds proposed to be raised through this Rights Issue would be utilized as per the plan submitted to ICICI Bank Ltd., the monitoring agency of CDR Cell, wherein Rs. 800 lakhs (constituting 94.13% of issue size) would be utilized for making an investment in Siel Ltd. and the balance Rs. 49.90 lakhs (constituting 5.87% of issue size) would be utilized for meeting the shortfall in long term working capital requirements. The entire issue expenses are to be borne by the Company. CDR Cell has appointed ICICI Bank as the Monitoring Agency to oversee the implementation of the entire restructuring package approved by CDR Empowered Group vide their letter no. CDR(KS)/623 dated 5th March, 2003. No part of the issue proceeds is to be paid as consideration to Promoters, Directors, Key Managerial Personnel, Associate or Group Companies.

NEED FOR RESTRUCTURING Siel Ltd., which was carrying on the business of Chlor Caustic, Edible Oils and Sugar suffered financial problems on account of closure of all its manufacturing business in Delhi pursuant to the Orders of Hon’ble Supreme Court passed in a public interest litigation whereby major and hazardous industries were ordered to be closed and relocated outside Delhi. The closure of Siel factory in Delhi resulted into defaults by Siel Ltd. in the payment of its debt and interest thereon to Banks / Financial Institutions. In view of the above circumstances, the Board of Siel Ltd. in consultation with its lenders embarked upon to restructure its debts and businesses so as to protect the interest of the stakeholders including shareholders and creditors. 21 Accordingly, the Scheme of Arrangement was formulated whereby the businesses of Siel Ltd. were restructured into two separate Companies and the non-operating assets were transferred to Special Purpose Vehicles (SPVs) for realizing their values to pay off the debts of the lenders as under: • Sugar business vested with Mawana Sugars Ltd. (earlier named as Siel Sugar Ltd.) with term liabilities of Rs. 9675 lakhs. • Land at Delhi vested into Shivajimarg Properties Ltd. with liabilities of Rs. 1042 lakhs of Siel Ltd. and Rs. 5453 lakhs of the Lenders. • Surplus investments vested into Siel Holdings Ltd. with liabilities of Rs. 420 lakhs of Siel Ltd. and Rs. 3075 lakhs of the Lenders. • The Chlor Caustic and Edible Oils business retained in Siel Ltd. with liabilities of the Lenders of Rs. 1537 lakhs. The above restructuring of debts and businesses of the Company were approved by Corporate Debt Restructuring (CDR) Cell of the Financial Institutions vide their letter no. CDR(KS)/623 dated 5th March, 2003. Mawana Sugars Ltd. (earlier named as Siel Sugar Ltd. in the restructuring package) has emerged out of restructuring of Siel Ltd. through a Scheme of Arrangement approved by Hon’ble High Court of Delhi pursuant to which the sugar business of Siel Ltd. alongwith all the properties, rights and power has been vested into the Company. Detailed Terms of CDR as applicable to Mawana Sugars Ltd. (referred to Siel Sugar Ltd. (SSL) in the CDR as the Company has recently changed its name from Siel Sugar Ltd. to Mawana Sugars Ltd. w.e.f. 16th June 2004)

Quote : 1. The term debt allocated to SSL, aggregating to Rs.7390 lacs will carry interest @ ICICI Bank LTPLR-0.5% with effect from October 1, 2002 and will be repayable within seven years from the Cut-off Date (2004-05 – 4%, 2005-06 – 7%, 2006-07 – 25%, 2007-08 – 33% and 2008-09 – 31%). ICICI Bank LTPLR as on date is 12.5% p.a. payable quarterly. 2. The interest on the above term debt, between October 1, 2002 and September 30, 2003, aggregating to Rs. 887 lacs would be funded and converted into a zero coupon FITL. The FITL would be repaid in 2 annual installments in 2008-09 (30%) and 2009-10 (70%). 3. The ZCDs allocated to as SSL, aggregating to Rs.2285 lacs, will be repayable in four years from the cutoff date (2003-04 –15%, 2004- 05 –25%, and 2005-06 – 60%). 4. The loans allocated in SSL by the secured term lenders and the FITL, as detailed above, would be secured by first pari passu charge on fixed assets of SSL only. It will additionally be secured by a second charge on the current assets of SSL only. 5. Working Capital Providers to provide working capital facilities to SSL based on its drawing power. The interest on normal working capital limits shall be agreed between SSL and Working Capital Providers which shall not be higher than the interest payable to term Lenders. 6. The above working capital facility would be secured by first pari passu charge on current assets (book debts and inventories) of SSL only. It will additionally be secured by a second charge on the fixed assets of SSL only. 7. SSL shall not enter into any joint venture agreement, M&A deal, sale of investments, hiving off of divisions or substantial parts of its normal businesses or any such deals of a similar nature without prior written intimation and approval from the lenders. 8. SSL shall undertake that during the currency of the loans, it shall not declare any dividend if it fails to meet its obligations to pay interest and/or installments and/or other moneys payable to the Lenders, so long as it is in such default. 9. SSL shall undertake in the form required by the Lenders whereby it shall take the responsibility for making arrangements satisfactory to the Lenders for meeting the shortfall, if any, in the resources of the company for capital expenditure/working capital. The funds brought in to meet the shortfall in the resources of the company for capital expenditure/working capital shall be in such form and manner and on such terms as may be required by the lenders. 10. If the lenders find that the profitability of SSL, the cash flow and other circumstances so warrant, the Lenders may require SSL to prepay the Loan, without a pre-payment premium, on dates earlier than the stipulated repayment schedule. 11. SSL shall not undertake any new project or expansion or make any investment or acquire any assets on lease/hire-purchase without the prior approval of the lenders during the currency of the assistance, except those considered for projecting the future cash flows of SSL in the scheme. 12. The Lenders shall have the right to appoint nominee directors on the Board of SSL. 13. If the cashflows of SSL and the circumstances so warrant, then the Lenders reserve the right to review the interest rate on the remaining debt to be serviced by the company. 14. The Lenders also reserve the right to recompense for the sacrifices undertaken by them. However, the sacrifices considered will only be on account of the debt transferred under the current scheme to SSL.

Unquote : Pursuant to the Scheme, Mawana Sugars Ltd. has allotted 3 equity shares of Rs. 10/- each fully paid up for every 4 equity shares of Rs. 10/ - each fully paid up aggregating to 3,09,45,904 equity shares held by the shareholders of Siel Ltd. as on 30th October, 2003 – the record date fixed for this purpose.

VI. COMPANY & MANAGEMENT History, Background & Present Activities of The Company Shriram Industrial Enterprises Ltd. (Siel Ltd.) formerly known as Shriram Refrigeration Industries Ltd. and was incorporated on 27th March, 1961. As per the Scheme of Amalgamation approved by Hon’ble High Court of Delhi vide its Order dated 10th April, 1992, with transfer date being 1st April, 1990, Shriram Industrial Enterprises Ltd. had taken over the business of some of the units of erstwhile DCM Ltd. Shriram Industrial Enterprises Ltd. was then engaged in the manufacture and sale of Vanaspati, Refined Oil, Sugar, Caustic Soda, Soap, Hermatic Compressors, Water Coolers, etc. Pursuant to the Hon’ble Supreme Court Order in November, 1996 for relocation of plants from Delhi, Siel’s financial problem started and incurred heavy losses which resulted into large debt burden. This forced the Company to restructure its business. Pursuant to the Scheme of Arrangement (Scheme) under section 391 and 394 of the Companies Act, 1956 of undivided Siel Limited, approved 22 by the High Court of Delhi vide its Order dated August 26, 2003 which became effective on September 5, 2003 on filing of the certified copy of the Order of the High Court of Delhi with the Registrar of Companies, Delhi and Haryana, the sugar business of Siel Ltd. consisting of the undertakings of undivided Siel Limited comprising of Mawana Sugar Works (MSW) and Titawi Sugar Complex (TSC), together with all properties, assets both movable and immovable and liabilities including contingent liabilities have been transferred to and vested in the Company with effect from the appointed date i.e. October 1, 2002. Consequent to the effectuation of the said scheme, MSL allotted three equity shares of Rs.10 each as fully paid up to the shareholders of undivided Siel Limited for every four equity shares of Rs.10 each fully paid up held by them in undivided Siel Limited. The company was incorporated under the Companies Act, 1956 on 26th December 2002 as Siel Sugar Ltd.(SSL) and now being renamed as Mawana Sugars Ltd. (MS) vide fresh Certificate of Incorporation dated 16th June, 2004.

THE MAIN OBJECTS OF THE COMPANY ARE SET OUT IN ITS MEMORANDUM & ARTICLES OF ASSOCIATION: Quote 1. To carry on the business of producing, acquiring and trading in sugarcane and other sugar producing materials and producing all grades and type of sugar and related products from sugarcane and from any other raw material and packing the same in different sizes and forms. 2. To act as consultants for the businesses as referred in the above sub clause 1.

Unquote The main Objects Clause of the Memorandum of Association and Objects incidental or ancillary to attainment of the above main objects enable the Company to undertake the activities for which the funds are being raised from the present Issue and also the activities which the Company has been carrying till date.

MANUFACTURING FACILITIES Present Business The Company has at present two Sugar divisions / units / undertakings viz. (i) at Mawana Sugar Works (MSW) at Mawana, Distt. Meerut and (ii) Titawi Sugar Complex (TSC) at Titawi, Distt. Muzaffarnagar, both in Uttar Pradesh. Both the units are engaged in the business of manufacture and sale of sugar. The Details of the Licensed & Installed capacity and its utilization is given under:- At Mawana Unit Period ended on Capacity Production Capacity Sales Licensed Installed Utilisation TCD TCD MT TCD % Lacs in Rs. 30.09.2001 (12 months) 10000 9000 154059 90.50% 19365.19 31.03.2003 (18 Months) 10000 9000 262659 86.21% 34343.25 29.02.2004 (11 months) 10000 10000 151645 84.7% 17819.07

At Titawi Unit Period ended on Capacity Production Capacity Sales Licensed Installed Utilisation TCD TCD MT TCD % Lacs in Rs. 30.09.2001 (12 months) 5000 5000 93822 93.00% 13969.62 31.03.2003 (18 Months) 5000 5000 156912 97.00% 21215.35 29.02.2004 (11 months) 5000 6000 88749 82.9% 9570.56

DETAILS OF FUTURE CAPACITY UTILISATION FOR NEXT 3 YEARS MAWANA SUGAR WORKS Plantation White Sugar Year Installed Capacity Capacity Utilisation TCD TCD 2004-05 11000 90% 2005-06 11000 90% 2006-07 11000 90%

Co-generation Year Installed Capacity Capacity Utilisation MW MW 2004-05 2.5 90% 2005-06 5.0 90% 2006-07 5.0 90%

23 TITAWI SUGAR COMPLEX Plantation White Sugar Year Installed Capacity Capacity Utilisation TCD TCD 2004-05 6000 90% 2005-06 8500 90% 2006-07 8500 90%

Ethanol Year Installed Capacity Capacity Utilisation KL KL 2004-05 - - 2005-06 - - 2006-07 60 90% Assumption : The above estimation about the capacities both at Mawana & Titawi are done by the Company keeping in view the past track record, increase in capacity in forthcoming years and assuming 180 days of crushing season.

PRODUCTS Statement showing the principle raw materials and end users for the Company’s products:

Product Principal Raw Material Principal End Users Plantation White Sugar Sugarcane • Consumers • Institutional manufacturing buyers like Nestle (India) Ltd., Heinz India Private Ltd., Dabur India Ltd., Hamdard Waqf Laboratories, Perfetti India Ltd. etc. Molasses By-product of sugar • Distilleries • Chemical Units.

MANUFACTURING PROCESS The manufacturing of sugar begins with receiving harvested sugar cane at the factory. The prompt dispatch of cane to factory is an important determinant of the yield – the shorter the time between harvesting to crushing, the higher the yield and vice versa. The cane is weighed at the factory gate on platform type weighbridges. This has the weight recording arrangement linked to a computer system, which records the gross and net weights as well as the price payable to the farmer(s). Cart cane is unloaded directly into the cane carrier and tractor trolley whereas truck cane is unloaded with the help of overhead travelling cranes. The sugarcane is uniformly fed to cane preparing devices so that prepared cane is fed to mills for efficient milling. The prepared cane is then passed through the four / five milling tandem for the initial grinding. The juice extracted is strained and the crushed cane separated from the juice is returned to the mill tandem. Bagasse from the last mill is conveyed to the boilers as fuel by means of a carrier system. The mixed juice from the milling plant is mechanically screened, and then heated to about 70 degrees centigrade in rapid flow vertical juice heater to maintain good co-efficient of heat transfer. The heated juice is limed and sulphised in a continuous juice sulphiter and then heated to 105 degree centigrade and passed through a flash tank for the removal of gas and air before letting it into continuous clarifier, where the settling of mud floc takes place. Accumulated mud from the mud boot is separately withdrawn by gravity flow. Clear juice is withdrawn from the upper regions through the overflow box for further treatment. Clarified juice from the clarifier is further heated to around 15 degree centigrade in a plate heat exchange, before being pumped for thickening. Vapour from the 2nd effect is used to heat the pans. A quintuple effect evaporator is used for the final thickening of the juice into syrup. The syrup at 60-65 degree centigrade is further bleached by passing it through a continuous syrup sulphitation vessel and pumped to pan supply tanks at the pan floor. Intensive exhaustion takes place in the pans before crystallization. Air-cooled crystallisers are used for proper crystalisation. After the mother liquor in the massecuite is exhausted to the optimum limit i.e maximum sugar from the mother liquor has been transferred to sugar crystals, the two constituents are separated in the centrifuges. The sugar is washed thoroughly with super heated wash in stages within the centrifugal baskets. The sugar discharged from the centrifuges is conveyed, dried and cooled by multi tray hoppers. The sugar is then screened in a grader so as to separate fine and lumps. Sugar is thereafter sack filled, stitched and conveyed to sugar warehouses.

TECHNOLOGY White crystal sugar is manufactured by Double Sulphitation process with integrated Clarification System (ICS) for juice, syrup and melt. Refined sugar is manufactured by melting sugar with Integrated Clarification System for the sugar melt.

LAND The Company has 64.7349 hectares of freehold land in its Mawana unit and 29.076 hectares of freehold land in Titawi Unit. Out of 64.7349 hectares in Mawana, 6.251 hectares of land located at Barhni, Distt. Sidharthnagar, U.P., is to be surrendred as per Allahabad High Court Order. In addition, 9.048 hectares of land located at Mawana Mandi has not been in direct and active use by the Company because of which State Adminstration seeks to revert this land back to State. This issue is pending with Courts of Competent Jurisdiction. Out of total 64.73 hectares of land in Mawana, 46.282 hectares of land has already been mutated in the name of Siel Sugar Ltd. and 3.158 hentares of land is at present in the name of M/s Shriram Industrial Enterprises Ltd. in the revenue records (application for name change to Siel Sugar Limited pending). The entire land of 29.076 hectares at Titawai has been mutated in the name of Siel Sugar Ltd. 24 Other Land The Company has 38.03 hectares of land at Nanglamal out of which 1.603 hectares of land is at present in the name of M/s Siel Ltd. in the revenue records (application for name change pending). Further, the application for change of land use from agricultural to industrial filed on 2nd June 2004 is pending for filing of report by the Tehsildar, Meerut. The Company also has 8343.75 sq. mtr of Institutional plot in Sector –32, Gurgaon. The land is at present in the name of Siel Limited. The Company has filed an application for change of name from Siel Limited to Siel Sugar Limited. As the Company has recently changed its name from Siel Sugar Ltd. to Mawana Sugars Ltd., it is taking steps to get the revenue records modified.

RAW MATERIALS Sugar cane is the principal raw material for manufacture of sugar. In the present regulated system each sugar mill has a command area, which presently is the area covered by a radius of 15 KM from the factory. Each sugar mill is required to procure the sugar cane from its command area, which is allocated by the Cane Commissioner, Government of Uttar Pradesh. Sugar cane procured from farmers is supplied to factories in two ways: • At gate: farmers deliver sugar cane at the gate of sugar mill • At Cane Procurement Centers: Sugarcane is delivered by farmers at Cane Procurement Centers set up by the sugar mills. The cane is received by the mills as per their crushing capacity. Balance cane is sold by the farmers for production of Gur / Khandsari. The Company has not foreseen any problem in procurement of sugar cane at both its plants for the last so many years.

POWER, FUEL & UTILITIES POWER Power is used in the plant in the process of manufacture of sugar, street-lighting and for domestic consumption in residential colony in the factory campus. Power requirement is met by captive power generation at both the plants i.e. 15.20 MW (6 Nos. TG Set) at Mawana and 8 MW (3 turbines) at Titawi.

WATER Water is used in the plant for processing, (maceration) industrial cooling and drinking purposes in the factory & colony. Water requirement at Mawana and Titawi is met through tubewells installed at respective plants.

STEAM Steam is generated in boilers and bagasse is used as fuel. Bagasse is produced during crushing of sugarcane as residue of cane after juice extraction at the mills. To meet the process steam requirement, 6 boilers with total steam generation capacity of 230 MT/hour at Mawana and 3 boilers with steam generation capacity of 141 TPH at Titawi have been installed.

EFFLUENT TREATMENT FACILITIES SOLID EFFLUENT The press mud is continuously got removed from the factory through dumpers dumped on the land of the factory / Contractor. The press mud is also used as manure and sold to local farmers. The Boiler fly ash is cooled and sold for briquitte manufacturing or burnt under strict supervision.

Gaseous Emission Boilers are fitted with wet scrubber system for controlling dust concentration in the flue gases as per the norms prescribed by Uttar Pradesh Pollution Control Board. Hence, there is no gaseous effluent.

Liquid Effluent The liquid effluent treatment plants are being operated and maintained in a manner that the treated discharge effluent is conforming to the norms of Uttar Pradesh Pollution Control Board.

HUMAN RESOURCES The total employee strength of the Company as on 5th August, 2004 is 1537, details of which are as follows: Function/Department Employee strength Total Employee strength MSW TSC Operations 546 228 774 Marketing 4 - 4 Materials 18 10 28 Operation Maintenance / Mechanicals / Electrical/ Other Technical 352 154 506 Other Administrative & Finance Functions 169 56 225 TOTAL 1089 448 1537

SWOT Strength • Established factories with economies of scale. • Strong relationship with farmers ensuring continuous cane supply. • ‘Mawana’ brand is established and popular brand in the Sugar Industry. • 50% of total turnover of Company sold to Institutional Buyers, exports and consumer brand, who prefer quality sugar. • Over 50 years of experience of manufacturing sugar. • Experienced and skilled manpower • Long term cane development strategies resulting in high yielding and high sugar crop variety. 25 Weaknesses: • Cane purchase is highly regulated by State / Centre Governments which may affect the cost of sugar cane. • Distant location of mills from the ports which increases the cost of transportation for exports • Purchase of sugar cane and payment of cane prices is through Co-operative Cane Societies causing inefficiencies in the system. • Cane diversion to Khandsari and Gur Manufacturers who are not governed by the government regulations. Opportunities: • Scope of improvement in cane yields / quality • Expansion of existing capacities and diversification into Co-generation and ethanol. • Liberalisation of Sugar Industry will help in improving the financial performance of the Company. Threats: • Impact on Cane cost due to political interference in prices of sugar cane • Import of raw sugar as the international price is comparatively lower • Tight liquidity position of the Industry as a whole • High turnover of skilled manpower • Abrupt reduction in import duty • Competition from other mills expanding / modernizing / diversifying at a fast pace. INSURANCE The Company has insured its assets, the details of which are as under : Rs. in Lakhs

Particulars Gross value of assets Value for which Insurance Name and address of the Insurance Type of risk covered as on 29/02/2004 cover has been taken Company MSW a) National Insurance Company Limited, Standard Fire & special Fixed Assets 10480.79 12479.17 New Delhi Perils b) ICICI Lombard Standard Fire & special Stocks 14100.53 19210.00 General Insurance Company Limited, Perils New Delhi c) New India Assurance Co. Ltd.,UP TSC a) National Insurance Company Limited, Standard Fire & special Fixed Assets 9100.09 9435.24 New Delhi Perils b) ICICI Lombard Standard Fire & special Stocks 9096.86 12935.00 General Insurance Company Limited, Perils New Delhi c) National Insurance Company Limited,UP Total 46516.57 54059.41

PROMOTERS AND THEIR BACKGROUND The Company was incorporated on 26th December, 2002 as Siel Sugar Ltd. (renamed as Mawana Sugars Ltd.) by Siel Ltd. to eventually acquire the Sugar Division of Siel Ltd. There are two core Individual Promoters, in addition to various Promoter Companies. Details of Individual Promoters are as under :

Mr. Siddharth Shriram

Voter ID : Not Available Driving License No. : 02009200115643 Mr. Siddharth Shriram aged 59 years is the Chairman & Managing Director of the Company. He has a Bachelor of Arts (Hons.) degree from St. Stephens College, Delhi University and a M.Sc. (Management) degree from the Massachusetts Institute of Technology, U.S.A. He has been on the Board of Directors of one or the other Company of the Group since 1973 and is at present Chairman and Managing Director of Siel Limited and Chairman of Shivajimarg Properties Ltd., Siel Holdings Ltd., SFSL Securities Pvt. Ltd., Honda Siel Power Products Limited, Ceratizit India Pvt. Ltd., Honda Siel Cars India Ltd., The Jay Engineering Works Ltd., Usha International Ltd. and Daikin Shriram Airconditioning Pvt. Ltd.

Mr. Krishna Shriram Voter ID : Not Available Driving License No. : P02022000111653 Mr. Krishna Shriram aged 34 years has a Bachelor of Arts (Hons.Eng.) Degree from Delhi University. He is the son of Mr. Siddharth Shriram. For more than five years he has been handling the sugar business of Siel Ltd., which has now been vested in Mawana Sugars Ltd. pursuant to the Scheme. He also held the position of Whole Time Director and incharge of sugar business of Siel Ltd. 26 Disclosure The Company hereby confirms that the Permanent Account Number, Bank Account Number and Passport Number of the promoters have been submitted to the Stock Exchanges on which securities are proposed to be listed, at the time of filing of the draft offer document to them.

PROMOTER COMPANIES i. Siel Ltd. ii. Busneda Commercial Pvt. Ltd. iii. Sandvik Investments & Leasing Pvt. Ltd. iv. Greenfields Commercial Pvt. Ltd. v. Minos Trading (I) Pvt. Ltd. vi. C S R J & K Investments Pvt. Ltd. vii. SFSL Securities Pvt. Ltd. viii. Perennial Investments Limited ix. Doab Foods & General Industries Ltd. x. M S R Enterprises Ltd. There is no conflict of interest amongst the above Promoter Companies, which are engaged in the activities of loans and investments. The details of Promoter Companies are disclosed on page no. 31 to 40 of the Letter of Offer.

BOARD OF DIRECTORS OF MAWANA SUGARS LTD. S. No. Name of the Director Executive/Non-Executive Independent/others Representing/Nominee 1. Mr. Siddharth Shriram Executive Non-Independent - 2. Mr. Deepak Banerjee Non-Executive Independent - 3. Mr. Ravi Vira Gupta Non-Executive Independent - 4. Mr. S. Lahiri Non-Executive Independent Nominee of IFCI 5. Mr. N.K. Goila Non-Executive Independent -

Details of other Directorships of Board of Directors Name, Designation and Address of the Director Age (years) Other Directorships Siddharth Shriram 59 CHAIRMAN & MANAGING DIRECTOR Chairman & Managing Director, 1. Siel Ltd. 3A, The Green, CHAIRMAN Opp. Air Force Station, 1. Honda Siel Power Products Limited Rajokari, 2. Ceratizit India Pvt. Ltd. New Delhi-110038 3. Honda Siel Cars India Ltd. 4. The Jay Engineering Works Ltd. 5. Usha International Ltd. 6. Daikin Shriram Airconditioning Pvt. Ltd. 7. Shivajimarg Properties Ltd. 8. Siel Holdings Ltd. 9. SFSL Securities Private Limited DIRECTOR 1. Hongo India Pvt. Ltd. 2. Madan Shree Enterprises Ltd. 3. M.S.R. Enterprises Ltd. 4. Doab Foods & General Industries Ltd. 5. Perennial Investments Limited 6. Covrad Heat Transfers Ltd.(U.K.) 7. Sietal Ltd. (U.K.) 8. Siel SA (Pty) Ltd., South Africa 9. Cyprus Drive (Pty.) Ltd., South Africa 10. Crisp Air (Pty.) Ltd., South Africa 11. Shriram Fuel Injection Industries Ltd. 12. Nanglamal Sugar Ltd. Mr. Deepak Banerjee 52 DIRECTOR Director 1. Siel Industrial Estate Ltd. D-430, Defence Colony, 2. Siel Holdings Ltd. New Delhi-110024 Mr. Ravi Vira Gupta 66 DIRECTOR Director 1. Goodyear India Ltd. 9-B, Anand Lok, 2. SAIL Ltd. New Delhi-110049 3. Spic Ltd. 4. IDBI Ltd. 5. DCM Precision Engineering Ltd. 6. Delhi Safe deposits Co. Ltd. 7. Sesharaya Paper & Board Ltd.

27 Name, Designation and Address of the Director Age (years) Other Directorships Mr. N.K. Goila 56 WHOLE TIME DIRECTOR Director 1. Honda Siel Cars India Ltd. A-65/1, DDA SFS Flats, DIRECTOR Saket, 1. Usha International Ltd. New Delhi-110017 2. Shriram Fuel Injection Industries Ltd. 3. The Jay Engineering Works Ltd. 4. Avro Sales Pvt Ltd. 5. Siel Holdings Ltd. 6. Shivajimarg Properties Ltd. 7. Nanglamal Sugar Ltd. Mr. Subrata Lahiri 54 DIRECTOR Director 1. Shivalik Global Ltd. D-503, IFCI Staff Colony, 2. Siel Ltd. Paschim Vihar, New Delhi-110063

The day-to-day affairs of the Company are being looked after by Mr. Siddharth Shriram, the Managing Director of the Company. Mr. Siddharth Shriram has over 35 years of experience in this industry. All the Directors have confirmed that there are no pending litigation / disputes or criminal / civil prosecution against them, except for those mentioned under litigations on pages no. 61 and 87.

DETAILS OF MANAGING DIRECTOR’S COMPENSATION AND TERM MSL has appointed Mr. Siddharth Shriram as the Managing Director of the company in accordance with the provisions of the Companies Act, 1956 for the period of five years w.e.f. 1st October 2003. His appointment has been approved by the Board of Directors in its meeting held on 17th September 2003, by the remuneration committee in its meeting held on 29th September 2003 and by the Shareholders in their meeting held on 30th September 2003. Though his remuneration was approved for a period of three years, the same has been revised w.e.f 1st June 2004 for his remaining tenure by the Shareholders in their Extra ordinary Meeting held on 8th May 2004.

A. Salary a) Basic Salary : Rs. 3,00,000/- p.m. b) Commission : 1% of the net profits of the company, calculated in accordance with Sec. 349 & 350 of the Compa- nies Act, 1956. c) Minimum Salary : In the event of inadequacy or absence of profits, Mr. Siddharth Shriram shall be entitled to the Salary and perquisites as stated here as minimum salary. B. Perquisites Category ‘A’ a) Housing : The expenditure on leasing unfurnished accommodation upto Rs. 1,00,000/- per month or House Rent Allowance of Rs. 1,00,000 per month in lieu thereof. b) Gas/Electricity/Water : Actual c) Medical Expenses : Expenses incurred for self and family subject to the ceiling of one and half month’s basic salary in a year or upto four & half months basic salary in a block of 3(three) years. d) Leave Travel : One month’s basic salary in a year as per rules of the company. e) Club Fees : Membership of two Clubs. Entry fee & monthly subscription to be borne by the Company. f) Personal Accident Insurance : Premium not exceeding Rs. 10,000/- per annum. g) Entertainment Expenses : Reimbursement of actual entertainment expenses incurred for the business purposes. Category ‘B’ a) Car : Facility of Company car for which all running and maintenance expenses including driver’s salary shall be borne by the Company. A sum of Rs. 1000/- per month will be recovered from Mr. Siddharth Shriram for personal use of car. b) Telephone : Actual Expenses for Telephones at Residence and Mobile Phone. All personal long distance calls shall be paid for by Mr. Siddharth Shriram. Category ‘C’ a) Provident Fund : As per the rules of the Company. b) Superannuation : As per the rules of the Company. c) Gratuity : As per the rules of the Company. d) Earned Leave : One month’s leave for every completed year of service. Encashment of leave accumulated but not availed of Subject to maximum of 90 days will be allowed and governed as per Income Tax Rules, 1962.

28 CORPORATE GOVERNANCE INITIATIVES The Company has complied with SEBI Guidelines in respect of Corporate Governance as applicable to specially with respect to constituting the committees such as Audit Committee, Shareholder/Investor grievance Committee, Remuneration Committee etc. The Details of major initiatives undertaken by each are given below:- Board Of Directors: The Board, comprising five directors, functions either as a full Board or through Committees. The Composition of the Board of Directors is in conformity with the Listing Agreement with stock exchange.25 meetings of the Board of directors were held since incorporation.In compliance of the Corporate Governance norms, the Company has set up three Committees. 1. The Audit Committee, set up on 5th September 2003 and which presently comprises of Mr. Ravi Vira Gupta (Chairman), Mr. Subrata Lahiri (IFCI Nominee), Mr. Deepak Banerjee and Mr. N.K. Goila. Its activities include overseeing of the Company’s financial reporting process and disclosure of its financial information, recommending the appointment and removal of external auditor, fixation of audit fee and reviewing the annual financial statements with the management before submission to the Board. 2. The Remuneration Committee set up on 5th September 2003 and which presently consists of Mr. Ravi Vira Gupta (Chairman), Mr. N.K. Goila and Mr. Subrata Lahiri. It is authorized to determine the Company’s policy on remuneration of Directors including pension rights, compensation payment and other related issues. 3. The Shareholders / Investors’ Grievance/ Share Transfer Committee, formed by the Board of Directors on 5th September 2003 and which presently comprises of Mr. N. K. Goila (Chairman) and Mr. Siddharth Shriram, looks into investor-related issues including transfer of shares, non-receipt of Balance Sheet, non-receipt of dividends, issues relating to Fixed Deposits, etc.

Interest of Directors No Director is interested in the appointment of the Lead Manager or Registrar or any such intermediary registered with SEBI. The Directors of the company, apart from re-imbursement of expenses incurred and normal remuneration/sitting fee from the company and their shareholding in the company, if any, have no other interest in the Company. The Directors are not interested in any loans or advances given by the Company to any person(s)/Companies nor is any beneficiary of such loans or advances related to any of the directors of the company, except as stated under para Related Parties Transactions’ under Notes to Auditors Report at pages no.46 & 55 and at point no. 5 under ‘Notes to Risk factor’ appearing on page no. xiv & xv of the Letter of Offer.

Changes in the Directors The changes in the Board of Directors since incorporation i.e. 26th December 2002 are as below: Name of Director Date of Date of retirement/ Reason Appointment resignation Mr. Siddharth Shriram 26.12.2002 & 1.10.2003* - Appointed as first Director and then as Managing Director Mr. Deepak Banerjee 26.12.2002 - Appointed as First Director Mr. Satyendra Gupta 26.12.2002 5.09.2003 Appointed as First Director Ceased to be a Director- Due to Resignation Mr. N.K. Goila 5.09.2003 25.09.2003 Appointed as Additional Director. Tenure Expired on 27.09.2003 25.09.2003(The Date of AGM) Again Appointed as Additional Director on 27th September 2003 Mr. Ravi Vira Gupta 15.09.2003 25.09.2003 Appointed as Additional Director. Tenure Expired on 27.09.2003 25.09.2003 (The Date of AGM) Again Appointed as Additional Director on 27th September 2003 Mr. N.S. Vishwanathan 26.12.2003 05.04.2004 Appointed as Nominee Director by IFCI. Nomination withdrawn on 5th April 2004. Mr. Subrata Lahiri 05.04.2004 - Appointed as Nominee Director by IFCI

* Appointed as Managing Director w.e.f. 1st October 2003.

Details of Service contract including compensation of Directors, date of appointment and expiration of current terms are as follows : Name of Director Date of expiry of the current term of office Mr. Siddharth Shriram Liable to Retire by Rotation in the 2nd AGM Mr. Deepak Banerjee Liable to Retire by Rotation in the 2nd AGM Mr. N.K. Goila Tenure expires in the 2nd AGM Mr. Ravi Vira Gupta Tenure expires in the 2nd AGM Mr. Subrata Lahiri Non-rotational as nominee of IFCI

29 Key Managerial Personnel The key managerial personnel of the Company as on 5th August, 2004 were as follows: Name Age Designation Qualifications Total Date of Previous Compensation experience joining employment Payable (Rs. in Lakhs per month) Mr. Siddharth Shriram 59 Chairman & BA(Hons), 36 01.10.2003 Managing Director, 1.78* Managing MSc(Mgt.), Siel Ltd. Director MIT (USA) Mr. P.K. Bhalla 52 Executive BSc., LLB., 27 15.09.2003 Whole Time Director, 3.83 Director & FCS Siel Ltd. Company Secretary Mr. A.K. Mehra 54 Executive MSC. 31 15.09.2003 Whole 3.83 Director (Chem. Engg.) Time Director, (Operations) Siel Ltd. Mr. Rajendra Khanna 49 Executive B.Com.(Hons.), 23 16.12.2003 Vice President 2.55 Director CA (Finance)- (A/Cs & Fins.) Birla Home Finance Ltd.

None of the key managerial personnel are relatives of each other. As on 5th August, 2004 all the employees named above were on the rolls of the Company as permanent employees. * Revised w.e.f. 1st June 2004 to be Rs. 6.06 Lakhs per month.

Shareholding of Key Managerial Personnel: The aggregate shareholding of the key managerial personnel of the Company as on 5th August, 2004 is as follows : Name Number of shares Mr. Siddharth Shriram 70184 Mr. P.K. Bhalla 456 Mr. A.K. Mehra 4818 Mr. Rajendra Khanna Nil

The Company does not have any bonus or profit sharing plan for the Key Managerial Personnel except payment of commission to Mr. Siddharth Shriram as per his revised terms of appointment.

Changes in Key Managerial Personnel during the last three years (other than Superannuation) – since incorporation Sr. No. Name of key managerial personnel Designation Date of change Reason 1. Mr. Siddharth Shriram Managing Director 01/10/2003 Transferred from Group Company 3. Mr. P.K. Bhalla Executive Director (Legal & Sectl.) 15/09/2003 Transferred from Group Company 4. Mr. A.K. Mehra Executive Director (Operations) 15/09/2003 Transferred from Group Company 5. Mr. Rajendra Khanna Executive Director 16/12/2003 Appointment (Accounts & Finance)

Note : Mr. D. Banerjee ceased to be a key managerial personnel but continues to be a Non-Executive Director of the Company. Similarly, Mr. Satyendra Gupta earlier Director of the Company resigned from Directorship w.e.f. 5th September, 2003.

30 ORGANISATIONAL CHART

BOARDBOARD OF OF DIRECTGORSDIRECTORS

CHAIRMAN (SIDDHARTH SHRIRAM) SECRETARIAT

ED (A/CS & FIN) ED (OPERATIONS) ED & CO.SECY (RAJENDRA KHANNA) (AK MEHRA) (PK BHALLA) CONTROL & CO-ORDN GROUP RESOURCES OFFICERS-3 OFFICERS -4 OFFICERS-4 ADVISOR-2 LEGAL HEAD (BK AGARWAL) A/CS & FIN HEAD GM (LEGAL) (VIJAY SAJJANHAR) SUGAR SALES HEAD PR & LIAISON HEAD HRD,IR & ADMN.HEAD MATERIALS HEAD R&D HEAD (YK SETHI) DGM (A/CS & FIN) (SATISH KANSAL) (RK LAWANIA) (SHARAD KRISHNA) (SN PANIGRAHI) (DR SS SRIVATSA) ADVISOR ADVISOR (SALES) MANAGER GM(HR) ASSTT GM (MTLS) DGM (R&D) OFFICER-1 UNIT-MSW UNIT-TSC

UNIT-HEAD UNIT-HEAD (KARAN SINGH) (OP SHARMA) GENERAL MANAGER SR.GM TECHNICAL NON-TECHNICAL TECHNICAL NON-TECHNICAL

QC HEAD ENGG. HEAD MFG HEAD PROJECT HEAD CANE HEAD ENGG HEAD LAB HEAD MFG HEAD CANE HEAD (DR SS SRIVATSA) (S GANAPATHY) (SD (R BHARGAVA) (RK KATHURIA) (P KUMAR) (SK YADAV) (AK ARYA) (DP SHARMA) COMMERCIAL* ADDD GM (ENGG) BHATNAGAR) DGM (PROJ) COMMERCIAL# GM (CANE) AGM (ENGG) DM (QC) DM (QC) SR MGR (CANE) DGM (PROD) -UNIT-I HEAD (OP MISHRA) -UNIT-I HEAD OFFICER-7 OFFICER-11 OFFICER-0 OFFICER-5 OFFICER-14 OFFICER-12 OFFICER-1 OFFICER-20 SUPRS -9 CHIEF ENGR. (Y K CHAUHAN) SUPRS -0 SUPRS -2 SUPRS -5 SUPRS -12 SUPRS -9 SUPRS -4 CHIEF CHEMIST SUPRS -7 STAFF –20 STAFF –1 STAFF –0 STAFF –0 STAFF –30 W/MEN -132 STAFF –212 STAFF –0 STAFF –62 W/MEN -23 W/MEN -6 W/MEN -87 W/MEN -2 W/MEN -93 W/MEN -17 W/MEN -85 OFFICER-11 SUPRS -9 OFFICER-6 STAFF –261 SUPRS -5 * Includes A/cs & Fin, IT, HRD, Godown & Excise, W/MEN -17 STAFF –2 # Includes A/cs & Fin, IT, Legal, Materials, Security & W/MEN -126 HRD, Godown & Excise, Sanitation, Safety and Legal, Materials, Security & OFFICER-7 Environment & Welfare SUPRS -13 -UNIT- II HEAD OFFICER-4 Sanitation, Safety and -UNIT- II HEAD STAFF –0 (KS ANAND) SUPRS -3 Environment & Welfare (AJAY PANDEY) W/MEN -37 ASST.GM STAFF –0 (ENGG). DY CHIEF CHEMIST W/MEN -45

NB : The Group Resources Executives have matrix reporting relationship with both the Unit Heads. Unit personnel of the departments shown in Group Rresources are reporting functionally to their respective funcctional head at Group Resource level (excepting Legal & HR. The manpower strength includes only executives and Permanent Seasonal employees.

Details of Subsidiaries /Promoter Companies and Promoter Group Companies of MSL /Other Business Ventures of Promoters DETAILS OF SUBSIDIARY COMPANIES 1. Siel Holdings Ltd. Siel Holdings Ltd. is a 100% subsidiary of MSL

Date of Incorporation 28th January 2003 Nature of Activity To invest, acquire, buy, hold, sell, transfer, hypothecate, deal in and dispose of shares, stocks, bonds, debenture-stock of the Companies; securities, bonds, certificates issued or guaranteed by any government or local authorities by original subscription, purchase, exchange or otherwise. Financial Information (Rs. in lakhs except per share data) For the year ended on 31/03/2003 Total Income - Profit/(Loss) after tax (0.71) Share Capital 5.0 Reserves (excluding revaluation reserve) - Earning per Share (Rs.) (1.42) Book Value per share (Rs.) 8.57 Share Price High/ Low during last six months NA Details of Public/ Rights issue in past three years NA

2. Nanglamal Sugar Limited Nanglamal Sugar Limited has been incorporated on 13th May 2004 as a wholly owned subsidiary of Mawana Sugars Ltd. to carry on the business of manufacturing and trading in sugar.

31 3. Jay Engineering Works Ltd. Jay Engineering Works Ltd. is a subsidiary of Siel Holdings Ltd., thereby making it the subsidiary of Mawana Sugars Ltd. Date of Incorporation 8th November 1935 Nature of Activity Manufacturing of fans, sewing machine & fuel injection equipments Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2002 30/09/2003 31/03/2004 (for 18 months) (for 6 months)* Total Income 15030.99 18704.63 6833.70 Profit/(Loss) after tax (822.07) 6586.65 2329.32 Share Capital 2079.39 2079.39 2079.39 Reserves (excluding revaluation reserve) - - - Earning per Share (Rs.) (6.18) 49.55 17.52 Book Value per share (Rs.) (76.82) (26.73) (9.31) Share Price High/ Low during last six months Shares are infreqeuntly traded and no transactions were reported during the last 6 months. Details of Public/ Rights issue in past three years Nil * These are Audited Results which are yet to be adopted by the Shareholders of the Company at the proposed AGM on 28/8/2004. Note : a) The Share capital includes Preference share capital also.

4. Shriram Fuel Injection Industries Ltd. Shriram Fuel Injection Industries Ltd. is a subsidiary of Jay Engineering Works Ltd., thereby making it the subsidiary of MSL. Shriram Fuel Injection Industries Ltd. has been incorporated on 22nd October 2003 to acquire and take over fuel injection business of its holding company viz. Jay Engineering Works Ltd. carried on at Hyderabad Unit as a going concern as per the scheme sanctioned by Hon’ble BIFR vide its order dt. 8th April 2003. The Company has Share Capital Reserve of Rs. 500 Lakhs as per audited Balance Sheet as on 31st March, 2004 and no profit and loss figures are available this being the first year of the company after incorporation.

DETAILS OF PROMOTER COMPANIES 1. Siel Ltd. Siel Ltd. is the Promoter Company of MSL Date of Incorporation 27th March, 1961 Nature of Activity Manufacture and sale of Caustic Soda, Chlorine, Stable Bleaching Powder and trading of vanaspati and refined oils Financial Information (Rs. in lakhs except per share data) For the year ended 30/09/2001 31/03/2003(for 18 Months) 31/03/2004(for 12 Months)* Total Income 52898.43 79571.86 16438.37 Profit/(Loss) after tax (192.42) (10217.18) (3751.87) Share Capital 5328.73 5389.81 1917.80 Reserves (excluding revaluation reserve) 17754.56 16639.42 16716.78 Earning per Share (Rs.) (0.63) (25.53) (36.37) Book Value per share (Rs.) 53.51 27.57 136.99 Share Price High/ Low during last six months Highest – Rs. 14.95 as on 3rd February, 2004 Lowest – Rs. 6.86 as on 31st March, 2004 Details of Public/ Rights issue in past three years Nil

* These are Audited Results which are yet to be adopted by the Shareholders of the Company at the proposed AGM on 20/8/2004. Note:- a) The company was having the partly paid-up equity share capital in the year 1999-2000. So, in calculating the EPS and Book value per share, the number of shares has been considered prorata (i.e. to the extent paid-up) b) The Share capital includes Preference share capital also.

2. Busneda Commercial Pvt. Ltd. Busneda Commercial Pvt. Ltd. is a Promoter Company of MSL Date of Incorporation 26th March 1985 Nature of Activity Loans, Investments and Business Consultancy Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 257.71 166.26 121.55 Profit/(Loss) after tax (76.41) (27.89) (21.34) Share Capital 2061 2061 2061 Reserves (excluding revaluation reserve) - - 3018.86 Earning per Share (Rs.) (0.51) (0.19) (0.14) Book Value per share (Rs.) (8.95) (9.14) 10.69 Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years Not Applicable Note: a) The Share Capital includes Preference share capital also. 32 3. Sandvik Investments & Leasing Pvt. Ltd. Sandvik Investments & Leasing Pvt. Ltd. is a 100% subsidiary of Busneda Commercial Pvt. Ltd. thereby making it a Promoter Group Company of MSL

Date of Incorporation 9th March 1990 Nature of Activity Loans and Investments Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 24.38 19.50 13.17 Profit/(Loss) after tax (24.74) (7.11) (6.94) Share Capital 151.01 151.01 279.81 Reserves (excluding revaluation reserve) - - - Earning per Share (Rs.) (244.94) (70.41) (0.53) Book Value per share (Rs.) (1679.64) (1750.04) (4.23) Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years Not Applicable Note: a.) The Share Capital includes Preference share capital also.

4. Greenfields Commercial Pvt. Ltd. Greenfields Commercial Pvt. Ltd. is a 100% subsidiary of Busneda Commercial Pvt. Ltd. thereby making it a Promoter Group Company of MSL Date of Incorporation 2nd June 1984 Nature of Activity Loans and Investments Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 61.29 49.13 33.67 Profit/(Loss) after tax (61.16) (12.67) (16.14) Share Capital 361.10 361.10 431.35 Reserves (excluding revaluation reserve) - - 414.68 Earning per Share (Rs.) (199.68) (24.80) (13.30) Book Value per share (Rs.) (1049.78) (1074.58) (66.19) Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years Not Applicable Note: a.) The Share Capital includes Preference share capital also.

5. Minos Trading (I) Pvt. Ltd. Minos Trading (I) Pvt. Ltd. is a subsidiary of KSR J & K Investments Ltd. thereby making it a subsidiary of Busneda Commercial Pvt. Ltd. and in turn a Promoter Group Company of MSL Date of Incorporation 14th February 1967 Nature of Activity Loans and Investments Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 43.86 32.36 22.90 Profit/(Loss) after tax (25.48) (8.27) (11.20) Share Capital 90.02 90.02 206.94 Reserves (excluding revaluation reserve) - - 151.08 Earning per Share (Rs.) (36.40) (11.82) (14.95) Book Value per share (Rs.) (119.40) (131.21) 70.63 Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable

Note: a.) The Share Capital includes Preference share capital also.

33 6. CSR J&K Investments Pvt. Ltd. CSR J&K Investments Pvt. Ltd. is a Promoter Company of MSL. Date of Incorporation 7th June 1991 Nature of Activity Loans and Investments Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 17.78 11.26 8.91 Profit/(Loss) after tax (7.85) (1.93) (3.27) Share Capital 692.50 692.50 692.50 Reserves (excluding revaluation reserve) - - - Earning per Share (Rs.) (7.74) (6.29) (0.77) Book Value per share (Rs.) (2.00) (2.46) (3.23) Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable Note:- a.) The company is having the partly paid-up equity share capital. So, in calculating the EPS and Book value per share, the number of shares has been considered prorata (i.e. to the extent paid-up). b) The Share Capital includes Preference share capital also. 7. SFSL Securities Pvt. Ltd. SFSL Securities Pvt. Ltd.is a Promoter Company of MSL. Date of Incorporation 20th March 1995 Nature of Activity Loans and Investments Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 44.23 5.51 7.41 Profit/(Loss) after tax 16.72 (0.04) (0.57) Share Capital 125.00 125.00 125.00 Reserves (excluding revaluation reserve) 31.24 31.20 30.63 Earning per Share (Rs.) 1.34 (0.00) (0.05) Book Value per share (Rs.) 12.45 12.46 12.43 Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable 8. Perennial Investments Limited Perennial Investments Pvt. Ltd.is a Promoter Company of MSL Date of Incorporation 11th April 1989 Nature of Activity Loans and Investments Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 36.37 36.11 33.05 Profit/(Loss) after tax 30.95 35.93 (91.22) Share Capital 44.04 44.04 44.04 Reserves (excluding revaluation reserve) 110.25 146.18 - Earning per Share (Rs.) 69.70 80.92 (205.00) Book Value per share (Rs.) 348.31 429.24 28.40 Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable 9. Doab Foods & General Industries Ltd. Doab Foods & General Industries Ltd. is a Promoter Company of MSL. Date of Incorporation 25th March 1970 Nature of Activity Loans and Investments Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 8.79 8.79 5.27 Profit/(Loss) after tax 8.24 (66.29) (3.88) Share Capital 25.00 25.00 25.00 Reserves (excluding revaluation reserve) 26.96 - - Earning per Share (Rs.) 32.94 (265.15) (15.52) Book Value per share (Rs.) 207.82 (57.33) (72.85) Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable 34 10. M. S. R Enterprises Ltd. M. S. R Enterprises Ltd.is a Promoter Company of MSL Date of Incorporation 20th January 1958 Nature of Activity Loans and Investments Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 12.84 12.85 7.78 Profit/(Loss) after tax 11.66 (62.22) 1.55 Share Capital 10.00 10.00 10.00 Reserves (excluding revaluation reserve) - - - Earning per Share (Rs.) 116.57 (622.23) 15.47 Book Value per share (Rs.) 492.44 (129.79) (114.32) Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable DETAILS OF PROMOTER GROUP COMPANIES 1. KSR J&K Investments Ltd. KSR J&K Investments Ltd. is a 100% subsidiary of Busneda Commercial Pvt. Ltd. thereby making it a Promoter Group Company of MSL Date of Incorporation 7th June 1991 Nature of Activity Loans and Investments Financial Information (Rs. in lakhs except per share data) For the year ended on 31/03/2001 31/03/2002 31/03/2003 Total Income 0.54 0.23 0.28 Profit/(Loss) after tax (0.06) (0.10) (0.06) Share Capital 693.00 693.00 701.97 Reserves (excluding revaluation reserve) - - - Earning per Share (Rs.) (5.84) (5.79) (0.01) Book Value per share (Rs.) 6.35 6.32 6.95 Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable Note: a.) The Share Capital includes Preference share capital also. 2. Manak Promoters Pvt. Ltd. Manak Promoters Pvt. Ltd. is a 100% subsidiary of Busneda Commercial Pvt. Ltd. thereby making it a Promoter Group Company of MSL Date of Incorporation 13th March 1989 Nature of Activity Investments in real estate and granting loans and advances Financial Information (Rs. in lakhs except per share data) For the year ended on 31/03/2001 31/03/2002 31/03/2003 Total Income 24.10 24.85 20.40 Profit/(Loss) after tax 12.00 12.49 5.22 Share Capital 12.05 12.05 12.05 Reserves (excluding revaluation reserve) 37.85 50.34 65.07 Earning per Share (Rs.) 9.97 10.37 4.34 Book Value per share (Rs.) 41.42 51.79 64.02 Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable 3. Shivajimarg Properties Ltd. Shivajimarg Properties Ltd. is a 100% subsidiary of Siel Ltd. thereby making it a Promoter Group Company of MSL Date of Incorporation 26th Dec. 2002 Nature of Activity To own, sell, manage, build, erect, construct, develop and to deal with all types of immovable properties including residential and commercial properties. Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2003 Total Income - Profit/(Loss) after tax (0.26) Share Capital 5.0 Reserves (excluding revaluation reserve) - Earning per Share (Rs.) (0.53) Book Value per share (Rs.) 9.47 Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years Not Applicable 35 4. Transiel India Ltd. Transiel India Ltd. is a 100% subsidiary of Siel Ltd. thereby making it a Promoter Group Company of MSL Date of Incorporation 23rd Aug. 1994 Nature of Activity To establish, carry on and act as merchants, traders, commission agents, buying agents, selling agents, contractors, importers, exporters of all types of goods, merchandise, commodities, articles and equipments, whether in raw or finished form and whether to be used for industrial, commercial or household purpose, in India and Abroad. Financial Information (Rs. in lakhs except per share data) For the year ended 30/09/2002 31/03/2003(for 6 Months) 31/03/2004 Total Income - 8.25 3.63 Profit/(Loss) after tax (3.49) 0.70 0.94 Share Capital 1500.00 1500.00 1500.00 Reserves (excluding revaluation reserve) - - - Earning per Share (Rs.) (0.07) 0.01 (0.02) Book Value per share (Rs.) (17.13) (17.11) (17.13) Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years Not Applicable Note: a.) The Share capital includes the preference share capital also. 5. Siel Industrial Estate Ltd. Siel Industrial Estate Ltd. is a 100% subsidiary of Siel Ltd. thereby making it a Promoter Group Company of MSL Date of Incorporation 11th Feb. 1994 Nature of Activity To conceive, design, promote, develop, construct, establish, sell, manage, and maintain, the integrated Industrial Estates, Science Parks, Business Parks, Technology Centres, Research and Development Centres, Commercial-Complexes in India and abroad. Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2002(for 9 Months) 31/03/2003 31/03/2004 Total Income 12.74 57.03 5.79 Profit/(Loss) after tax (41.54) 1.08 (503.40) Share Capital 2000.00 2000.00 2000.00 Reserves (excluding revaluation reserve) - - - Earning per Share (Rs.) (0.21) 0.005 (2.51) Book Value per share (Rs.) 9.49 9.51 7.00 Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years Not Applicable 6. Siel Financial Services Ltd. Siel Financial Services Ltd. is subsidiary of Siel thereby making it a Promoter Group Company of MSL Date of Incorporation 12th December 1990 Nature of Activity Corporate Finance, Lease & hire Purchase, Investment Banking Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2002 31/03/2003 31/03/2004* Total Income 181.36 117.90 229.13 Profit/(Loss) after tax 93.59 28.46 143.60 Share Capital 1862.30 1862.30 1862.30 Reserves (excluding revaluation reserve) 10.31 16.00 44.72 Earning per Share (Rs.) 0.47 (0.07) 0.90 Book Value per share (Rs.) (9.31) (9.06) (7.84) Share Price High/ Low during last six months Shares are infrequently traded and there has been no trading during the last 6 months Details of Public/ Rights issue in past three years Nil * These are Audited Results which are yet to be adopted by the Shareholders of the Company at the proposed AGM on 13/8/2004. 7. SFSL Investments Ltd. SFSL Investments Ltd. is a 100% subsidiary of Siel Ltd. thereby making it a Promoter Group Company of MSL Date of Incorporation 25th May, 1993 Nature of Activity Loans and Investments and dealing in shares Financial Information (Rs. in lakhs except per share data) For the year ended 30/09/2002 31/03/2003(6 months) 31/03/2004 Total Income 153.62 144.04 43.36 Profit/(Loss) after tax (89.91) (199.55) 39.88 Share Capital 1500.01 1500.01 1500.01 Reserves (excluding revaluation reserve) - - - Earning per Share (Rs.) (0.60) (1.33) 0.26 Book Value per share (Rs.) (5.74) (7.07) (6.80) Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable 36 8 Usha International Limited Two of the Promoter Companies of MSL hold in excess of 10% of Usha International Limited’s equity capital, making this a Promoter Group-Company. Date of Incorporation 3rd April 1954 Nature of Activity Trading of home appliances Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2002 31/03/2003 31/03/2004 Total Income 27553.66 28967.52 32547.93 Profit/(Loss) after tax 337.77 468.03 582.12 Share Capital 227.60 227.60 227.60 Reserves (excluding revaluation reserve) 3876.74 4267.74 4579.12 Earning per Share (Rs.) 14.80 20.6 25.58 Book Value per share (Rs.) 185.90 202.80 211.20 Share Price High/ Low during last six months Highest – Rs. 119.20 as on 11th May, 2004. Lowest – Rs. 57.00 as on 24th March, 2004 Details of Public/ Rights issue in past three years. Not Applicable 9. Chhaya J&K Investments (P) Ltd. Chhaya J&K Investments (P) Ltd. is holding more than 10% of the share capital of one of the Promoter Companies of MSL thereby making it a Promoter Group Company of MSL. Date of Incorporation 7th June 1991 Nature of Activity Loans & Investments Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 0.00 0.00 0.00 Profit/(Loss) after tax (0.06) (0.05) (0.15) Share Capital 604.01 604.01 604.01 Reserves (excluding revaluation reserve) - - - Earning per Share (Rs.) (413.18) (401.99) (0.38) Book Value per share (Rs.) (4085.33) (4134.68) (288.22) Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable Note: a.) The share capital includes preference share capital also. 10. Krishna J&K Investments (P) Ltd. Krishna J&K Investments (P) Ltd. is holding more than 10% of the share capital of one of the Promoter Companies of MSL thereby making it a Promoter Group Company of MSL. Date of Incorporation 7th June 1991 Nature of Activity Loans & Investments Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 0.00 0.00 0.00 Profit/(Loss) after tax (0.06) (0.05) (0.16) Share Capital 604.01 604.01 604.01 Reserves (excluding revaluation reserve) - - - Earning per Share (Rs.) (413.18) (392.84) (0.39) Book Value per share (Rs.) (4091.80) (4141.15) (298.91) Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable Note: a.) The share capital includes preference share capital also. 11. Gaiety J&K Investments (P) Ltd. Gaiety J&K Investments (P) Ltd. is holding more than 10% of the share capital of one of the Promoter Companies of MSL thereby making it a Promoter Group Company of MSL. Date of Incorporation 7th June 1991 Nature of Activity Loans & Investments Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 0.00 0.00 0.00 Profit/(Loss) after tax (0.06) (0.04) (0.17) Share Capital 604.01 604.01 604.01 Reserves (excluding revaluation reserve) - - - Earning per Share (Rs.) (413.18) (392.84) (0.42) Book Value per share (Rs.) (4088.14) (4128.34) (296.05) Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable Note: a.) The share capital includes preference share capital also. 37 12. Madan Shree Enterprises Ltd. Madan Shree Enterprises Ltd. is holding more than 10% of the share capital of one of the Promoter Companies of MSL thereby making it a Promoter Group Company of MSL. Date of Incorporation 24th January 1980 Nature of Activity Loans and Investments Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 6.03 0.01 2.17 Profit/(Loss) after tax 5.38 (0.05) 1.92 Share Capital 62.00 62.00 62.00 Reserves (excluding revaluation reserve) - - 0.60 Earning per Share (Rs.) 8.68 (0.08) 3.10 Book Value per share (Rs.) 97.95 97.87 100.97 Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable 13. Hurrykrishna Venture Pvt. Ltd. Hurrykrishna Venture Pvt. Ltd. is a Company promoted by Mr. Krishna Shriram. Date of Incorporation 2nd March 1990 Nature of Activity Venture Business Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 0.00 0.00 0.00 Profit/(Loss) after tax (0.05) (0.16) (0.10) Share Capital 15.00 15.00 15.00 Reserves (excluding revaluation reserve) - - - Earning per Share (Rs.) (0.03) (0.10) (0.06) Book Value per share (Rs.) 9.25 9.15 9.08 Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable 14. India Infrastructure Publishing Pvt. Ltd. India Infrastructure Publishing Pvt. Ltd. is a Company promoted by Mr. Krishna Shriram. Date of Incorporation 25th March 1997 Nature of Activity Media Publishing Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 361.05 333.46 336.93 Profit/(Loss) after tax (22.37) (18.79) 15.20 Share Capital 0.10 0.10 3.18 Reserves (excluding revaluation reserve) - - - Earning per Share (Rs.) (2193.14) (1842.16) 47.83 Book Value per share (Rs.) (2183.96) (4026.95) 21.35 Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable DETAILS OF COMPANIES PROMOTED BY PROMOTERS 1. Company promoted by Siel Limited-Shivajimarg Properties Limited Shivajimarg Properties Limited is a company promoted by Siel Limited the details of which are given at point no.3 on page no. 35 under the head “Details of Promoter Group Companies”as it is also a subsidiary of Siel Limited.

DETAILS OF COMPANIES UNDER THE SAME MANAGEMENT 1. Siel Limited-Details are given at point no.1 on page no.32 under the head “Details of Promoter Companies” 2. Siel Holdings Limited-Details are given at point no.1 on page no.31 under the head “Detials of Subsidiary Companies”. 3. Shivajimarg Properties Limited-Details are given at point no.3 on page no.35 under the head “Details of Promoter Group Companes”. 4. Transiel India Limited-Details are given at point no.4 on page no.36 under the head “Details of Promoter Group Companies”. 5. Siel Industrial Estate Limited-Details are given at point no.5 on page no.36 under the head “Details of Promoter Group Companies”. 6. Siel Financial Services Limited-Details are given at point no.6 on page no.36 under the head “Details of Promoter Group Companies”. 7. SFSL Investments Limited-Details are given at point no. 7 on page no.36 under the head “Details of Promoter Group Companies”. 8. Jay Engineering Works Limited-Details are given at point no.3 on page no.32 under the head “Details of Suusidiary Companies”.

38 DETAILS OF OTHER JOINT VENTURE COMAPNIES 1. Honda Siel Power Products Limited Honda Siel Power Products Limited is a Joint Venture of one of the Promoter Companies. Date of Incorporation 19th September 1985 Nature of Activity Manufacturing & marketing of portable gensets, general purpose engines and water pumping sets. Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2002 31/03/2003 31/03/2004* Total Income 19007.03 18764.44 18510.80 Profit/(Loss) after tax 2322.38 2044.07 1031.15 Share Capital 1014.31 1014.31 1014.31 Reserves (excluding revaluation reserve) 11319 12499.46 13073.12 Earning per Share (Rs.) 22.90 20.15 10.17 Book Value per share (Rs.) 122 133 138.89 Share Price High/ Low during last six months Highest - Rs. 126.95 (as on 3rd February, 2004) and Lowest – Rs. 86.00 (12th July, 2004) Details of Public/ Rights issue in past three years. Nil * These are Audited Results which are yet to be adopted by the Shareholders of the Company at the proposed AGM on 29/9/2004. Note:- The Company has made applications for delisting from Calcutta and Chennai Stock Exchanges and the same is pending. 2. Honda Siel Cars India Limited Honda Siel Cars India Limited is a Joint Venture of one of the Promoter Companies. Date of Incorporation 5th December 1995 Nature of Activity Manufacturing and marketing of Motor Cars Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2002 31/03/2003 31/03/2004 Total Income 84874.89 98539.29 13183.51 Profit/(Loss) after tax 2648.12 3295.40 7888.05 Share Capital 36000.00 36000.00 36000 Reserves (excluding revaluation reserve) - - 2503.69 Earning per Share (Rs.) 0.74 0.92 2.14 Book Value per share (Rs.) 6.54 7.45 10.69 Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable 3. Hongo India Pvt. Limited Hongo India Pvt. Limited is a Joint Venture of one of the Promoter Companies. Date of Incorporation 17th December 1997 Nature of Activity Manufacturing and repairing etc. of body building, chassis, parts, spares, accessories, fittings, tools etc. of automobiles and other vehicles and conveyances. Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2002 31/03/2003 31/03/2004* Total Income 5208 5755 7008.88 Profit/(Loss) after tax 408 415 (454.49) Share Capital 2350 2350 2771.85 Reserves (excluding revaluation reserve) 119 482 17.28 Earning per Share (Rs.) 1.74 1.77 (1.74) Book Value per share (Rs.) 10.51 12.05 10.04 Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable * These are Audited Results which are yet to be adopted by the Shareholders of the Company at its forthcoming AGM. 4. Ceratizit India Pvt. Ltd. Ceratizit India Pvt. Ltd. is a Joint Venture of one of the Promoter Companies. Date of Incorporation 22nd January 1996 Nature of Activity Manufacturing & Trading of Tungsten Carbide Tips, Tools and Inserts Financial Information (Rs. in lakhs except per share data) For the year ended 28/02/2002 28/02/2003 29/02/2004 Total Income 1210.40 1561.53 1815.79 Profit/(Loss) after tax (705.23) (197.08) 20.36 Share Capital 2300.00 3500.00 3500.00 Reserves (excluding revaluation reserve) - - Earning per Share (Rs.) (1.53) (0.43) 0.04 Book Value per share (Rs.) 2.17 1.75 1.79 Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable Note:- a) The face value of the shares has been reduced from Rs. 10/- per share to Rs. 5/- per share in the year 2001-02 b) The Share Capital includes Preference share capital also for the year 2002-03. 39 5. Daikin Shriram Airconditioning Pvt. Ltd. Daikin Shriram Airconditioning Pvt. Ltd. is a Joint Venture of one of the Promoter Companies. Date of Incorporation 4th April 2000 Nature of Activity Manufacturing & marketing of Airconditioning, Refrigeration equipments Financial Information (Rs. in lakhs except per share data) For the year ended 31/03/2001 31/03/2002 31/03/2003 Total Income 3113.25 8485.21 9645.98 Profit/(Loss) after tax (354.70) 43.50 (1189.28) Share Capital 1950.00 1950.00 1950.00 Reserves (excluding revaluation reserve) - - - Earning per Share (Rs.) (25.09) 1.69 (41.30) Book Value per share (Rs.) 74.80 59.69 (19.64) Share Price High/ Low during last six months Not Applicable Details of Public/ Rights issue in past three years. Not Applicable

OTHERS VENTURES Name of the Promoter Particulars of Business Ventures Interest Mr. Siddharth Shriram Business of owning and maintenance of race horses Sole Proprietor Mr. Siddharth Shriram/ Enterprises Trust-Discretionary Benefit Trust The entire interest is held by Mr. Siddharth Shriram, Mr. Krishna Shriram Mr. Krishna Shriram and Ms. Chhaya Shriram (daughter of Mr. Siddharth Shriram and sister of Mr. Krishna Shriram) Mr. Siddharth Shriram Chinar Trust-A Private Business Trust The following interest is held by the promoter and his relatives: Mr. Siddharth Shriram-10% Mrs. Roula Shriram-5% Ms. Chayya Shriram-15% Dr. Charat Ram-10% Mr. Deepak Shriram-5% Mrs. Roula Shriram Running a bookshop Sole Proprietor

Details of Companies of The Same Group Referred to BIFR / Under Winding Up / Having Negative Networth Following twelve group companies have negative networth for the year ended 31st March 2003 (except for few companies were last audited available results are for the year 2003-04 as mentioned below: Sr. No. Name of the Company Networth (Rs. in lakhs) F.Y. 2002-03 1. Siel Financial Services Ltd. (154.04) (F.Y. 2003-04) 2. SFSL Investments Ltd. (1020.23) (F.Y. 2003-04) 3. Sandvik Investments & Leasing Pvt. Ltd. (54.90) 4. Greenfields Commercial Pvt. Ltd. (80.32) 5. CSR J&K Investments Pvt. Ltd. (13.71) 6. Doab Foods & General Industries Ltd. (18.21) 7. MSR Enterprises Ltd. (11.43) 8. Chhaya J&K Investments Pvt. Ltd. (0.29) 9. Krishna J&K Investments Pvt. Ltd. (0.30) 10. Gaiety J&K Investments Pvt. Ltd. (0.30) 11. Jay Engineering Works Ltd. (123.47) (F.Y. 2003-04) 12. Diakin Shriram Airconditioning Pvt. Ltd. (382.95)

Out of the above, one Company viz. Jay Engineering Works Ltd. became sick and got registered with the Board of Industrial & Financial Reconstruc- tion (BIFR) in January, 1994. BIFR declared the Company as sick in its hearing held on 8th April, 1994 and appointed IDBI as the Operating Agency for submitting a revival scheme. BIFR sanctioned a rehabilitation scheme vide its order dated 21st November, 1997. The said scheme was declared as failed in its meeting held on 12th July, 2001 due to non-implementation of the scheme and appointed IDBI as Operating Agency for formulation of revised rehabilitation scheme. The revised rehabilitation scheme was sanctioned by BIFR on 8th April, 2003. Companies belonging to the Promoter Group, whose name has been struck off from the Registrar of Companies There are no companies belonging to the Promoter Group, whose name has been struck off from the Registrar of Companies. Companies from which the Promoters disassociated in the last three years: There are no companies from which the Promoters disassociated themselves in the last 3 years. Changes in Auditors since incorporation There has been no change in statutory auditors since incorporation.

40 VII. INDUSTRY, MARKET AND COMPETITIVE ENVIRONMENT Sugar is amongst the largest agro processing industries in India and comprises of 507 established sugar factories. 45 Million farmers and their families besides a large mass of agricultural labour are involved in sugar cane cultivation and its harvesting operations. Over 5 lakhs workmen are directly employed. The industry thus caters to over 7.5 % of rural population. By way of sugar cane price about Rs.16,00,000 lakhs are disbursed amongst farmers directly. Besides, its annual contribution to the Central State exchequers by way of taxes is around Rs.180,000 lakhs. The industry is largely fragmented and total production of 202 lakhs tones was achieved by 453 sugar units in 2002-2003 with a combined installed capacity of 185 lakh tons. The industry does not depend on fossil fuel but generates its own renewable sources of energy. It also generates surplus power through co-generation for use by consumers in interior rural areas. It has the potential to generate 5000 MW surplus power and reduce import bill of petroleum products by 5% by manufacture of ethanol. As against this, the industry has a combined installed capacity of 750 MW of cogenerated power. The power is required to be sold to the state grid and tariffs are also fixed by the State Governments. The Indian sugar industry has been highly regulated by both the Central and State Governments, who control the price of sugarcane, distribution and pricing of sugar and also the by-products (molasses). However, during the last few years there has been a gradual reduction in the regulations and it is expected that the regulations would be further eased in the coming years. In August 1998, the sugar industry was delicensed but it was stipulated that the distance between two sugar mills should be maintained at 15 kms. Thus, the sugar mills are now free to expand their capacities. The Central Government before the onset of crushing season declares a minimum cane price known as the Statutory Minimum Cane Price (SMP) based on estimated cost of production as recommended by Commission on Agricultural Costs and Prices (CACP). In addition, the State Governments announce a State Advisory Price (SAP), which has generally been higher than the SMP. As per current practice the Government has been increasing the SMP and the SAP in every season. The recent judgement pronounced by the Constitution Bench of Supreme Court has upheld the rights of State Govt. to fix the state advised prices. As regards the sale of sugar there exists a dual pricing system whereby a certain percentage of the sugar produced by the sugar mills, known as ‘levy sugar’, is procured by the Government for the Public Distribution System (PDS) at a subsidized price called the ‘levy price’ and the balance sugar production is allowed for free sale in the open market and is known as ‘free sale sugar’. From February 2001 the levy requirement was reduced by the Government to 15% (from 30%) and the levy price increased to Rs.11,357/ - per tonne (from Rs.11,110/- per tonne). In March 2002 the levy was reduced to 10% and the levy price was fixed at Rs.12,131/- per tonne. The present levy price is Rs. 12599/- per tonne. While the price for the free sale sugar is dependent on market forces, the sugar factories can sell sugar in open market in quantities released by the Government every month for each factory and sometimes also pursuant to the orders issued by the Courts. The total offtake of sugar in domestic as well as export markets during last 3 years was as follows: Lac Tonnes Period 1st October – 30th September, 2000-2001 2001-02 2002-03 Domestic Market 162.45 165.21 183.43 Export Market 12.44 10.53 15.00 Source: ISMA website and Statement on production, Dispatches and stock and ISMA Handbook of Sugar Statistics, July 2003.

MARKET AND MARKETING ARRANGEMENTS Transportation cost plays an important role to determine the markets in which sugar from a particular production unit can be sold. The Company sells sugar through a network of agents, who in turn sell to whole sellers. Trade settlements are usually on cash basis. The company sells its sugar in Delhi, Uttar Pradesh, Haryana, Punjab, Rajasthan, Himachal Pradesh, Jammu & Kashmir and Chandigarh. Sugar is sold as per monthly quotas released by the Sugar Directorate, Ministry of Consumer Affairs, Food & Public Distribution and Government of India. The Company sells sugar in consumer pack under the brand name “Mawana”.The Company’s application for registering the brand name is accepted for publication in the Trade Mark Journal under Trade & Merchandising Act and final approval for registration of brand name is awaited. None of the Promoter / Promoter Group Company/ (ies) have any interest in the same. Levy component of sugar [10% of sugar production] is procured by Government Agencies at levy price.

EXPORTS Export of sugar depends on production, international price and domestic demand. The exports of sugar by the Company during previous few years were to the tune of Rs. 3326.79 lakhs. However, there is no export obligation on the part of the Company.

41 VIII. FINANCIAL PERFORMANCE OF THE COMPANY

AUDITOR’S REPORT

The Board of Directors Siel Sugar Limited 6th Floor, Kirti Mahal, 19, Rajendra Place, New Delhi -110 008

Dear Sirs, 1. We have examined the accompanying Statement of Adjusted Profits and Losses of Siel Sugar Limited (the Company) for the financial periods April 1, 2003 to February 29, 2004 and December 26, 2002 to March 31, 2003 (Anexure-I) and the accompanying Statement of Adjusted Assets and Liabilities of the Company as at February 29, 2004 and March 31, 2003 (Annexure-II). These statements, prepared by the Company, reflect the profits and losses and assets and liabilities for each of the relevant periods as extracted from the profit and loss accounts and balance sheets for those periods audited by us after making therein the disclosures and adjustments required to be made in accordance with the provisions of paragraph 6.18.7 of the Securities and Exchange Board of India (Disclosure & Investor Protection) Guidelines 2000.

2. We have also examined the accompanying Statements of Adjusted Profits and Losses of Siel Holdings Limited, a subsidiary of the Company, for the financial periods April 1, 2003 to February 29, 2004 and January 28, 2003 to March 31, 2003 (Annexure – III (a)) and the accompanying Statement of Adjusted Assets and Liabilities as at February 29, 2004 and March 31, 2003 (Annexure-III(b)). These statements, prepared by the Company, reflect the profits and losses and assets and liabilities of the subsidiary for each of the relevant periods as extracted, from the profit and loss accounts and balance sheets for those periods as audited by V. Sahai & Co., auditors of the subsidiary, after making therein the disclosures and adjustments required to be made in accordance with the provisions of paragraph 6.18.7 of the Securities and Exchange Board of India (Disclosure & Investor Protection) Guidelines 2000.

3. We have also examined the accompanying Consolidated Statement of Adjusted Profits and Losses of Siel Sugar Limited (the Company) and its subsidiary, Siel Holdings Limited for the financial periods April 1, 2003 to February 29, 2004 and December 26, 2002 to March 31, 2003 (Anexure- IV(a)) and the accompanying Consolidated Statement of Adjusted Assets and Liabilities of the Company and its subsidiary as at February 29, 2004 and March 31, 2003(Annexure-IV(b)). These statements, prepared by the Company, reflect the consolidated profits and losses and consolidated assets and liabilities for each of the relevant periods as extracted from the consolidated profit and loss accounts and consolidated balance sheets for those periods audited by us after considering the separate audit reports on individual audited financial statements of the Company and its subsidiary and after making therein the disclosures and adjustments required to be made in accordance with the provisions of paragraph 6.18.7 of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000.

4. We did not audit the financial statements of the subsidiary Siel Holdings Limited, the financial statements of which have been audited by V. Sahai & Co., auditors of the subsidiary, whose reports have been furnished to us, and our examination so far as it relates to the amounts included in respect of this subsidiary is based on the report of the other auditor.

5. We further report that as per the books and records produced to us, no dividend has been paid by the Company in respect of each of the financial periods April 1, 2003 to February 29, 2004 and December 26, 2002 to March 31, 2003 on the equity shares of the Company and the Company had no other class of shares during these periods.

6. We have examined the accompanying Statement of Accounting Ratios of the Company for the periods April 1, 2003 to February 29, 2004 and December 26, 2002 to March 31, 2003 (Annexure-V) and report that they have been correctly computed by the Company from the figures as stated in the Statements of Adjusted Profits and Losses and Adjusted Assets and Liabilities of the Company referred to in paragraph 1 above.

7. We have also examined the accompanying Statement of Capitalisation as at February 29, 2004 (Pre issue) and as adjusted for this issue (Post Issue) as prepared by the Company (Annexure-VI) and report that it has been correctly computed by the Company from the figures as stated in the Statements of Adjusted Profits and Losses and Adjusted Assets and Liabilities of the Company referred to in paragraph 1 above subject to reliance being placed on management representation in respect of post issue figures contained in the statement of capitalisation.

Date : 8th June, 2004 For A.F.Ferguson & Co. Place : New Delhi Sd/- Chartered Accountants

42 ANNEXURE : I - STATEMENT OF ADJUSTED PROFITS AND LOSSES (Rs in Lacs) PARTICULARS PERIOD FROM PERIOD FROM DATE OF 1-04-2003 TO 29-02-2004 INCORPORATION i.e. 26/12/2002 to 31/3/2003 Income Sales Products manufactured by the Company 27,389.63 18,286.05 Less : Excise Duty 1,964.60 1,301.26 Net Sales 25,425.03 16,984.79 Other income (refer note 7) 744.44 189.01 Increase/(decrease) in inventories 6,455.40 2,465.83 Total 32,624.87 19,639.63 Expenditure: Raw materials consumed 22,833.37 15,577.69 Stores, Spares and Components 2,500.34 1,177.84 Staff costs 2,089.85 1,113.02 Other Manufacturing Expenses 1,081.77 792.65 Administrative Expenses 909.35 471.41 Selling and Distribution Expenses 160.05 186.96 Interest 1,865.38 902.59 Depreciation 813.57 444.31 Total Expenditure 32,253.68 20,666.47 Profit before tax 371.19 (1,026.84) Provision for taxation (As per tax statement annexed) Current tax - - Deferred tax charge / (benefit) (refer note 12) 87.70 (325.90) Profit after Tax 283.49 (700.94) Brought forward from previous period (700.94) - Balance carried to Statement of Adjusted Assets and Liabiltites (417.45) (700.94) Major accounting policies and notes annexed.

ANNEXURE – II : STATEMENT OF ADJUSTED ASSETS AND LIABILITIES (Rs. In lacs) PARTICULARS AS AT 29.02.2004 AS AT 31.03.2003 Application of Funds A. Fixed Assets Gross Block 19,580.88 19,531.01 Less: Depreciation 8,513.12 7,707.10 Net Block 11,067.76 11,823.91 Capital work in progress 271.82 66.98 Total 11,339.58 11,890.89 B. Investments 5.00 5.00 C. Deferred tax assets 238.20 325.90 D. Current assets, Loans and advances Inventories 23,197.40 16,676.19 Sundry Debtors 906.67 1,247.48 Cash and Bank Balances 124.52 235.81 Loans and Advances 2,636.45 2,032.30 Total 26,865.04 20,191.78 E. Liabilities and Provisions Secured Loans 23,672.40 19,875.93 Unsecured Loans 252.72 290.20 Current Liabilities 7,361.17 5,687.31 Provisions 41.67 43.53 Total 31,327.96 25,896.97 F. Net Worth - Total (A + B +C + D - E) 7,119.86 6,516.60 G. Represented By Shareholders’ Fund Equity Capital 3,399.59 5.00 Capital Suspense (refer note 3) - 3,094.59 Reserves and Surplus 4,222.59 4,273.38 Total 7,622.18 7,372.97 Less: Miscellaneous Expenditure to the extent not written off or adjusted 84.87 155.43 : Debit balance of profit and loss account 417.45 700.94 Net Worth 7,119.86 6,516.60 Major accounting policies and notes annexed. 43 MAJOR ACCOUNTING POLICIES AND NOTES 1. MAJOR ACCOUNTING POLICIES (a) Fixed assets: Fixed assets are stated at cost of acquisition/ construction less accumulated depreciation. The cost includes all pre-operative expenses relating to construction period in the case of new projects and expansion of existing factories. (b) Depreciation: (i) The Company follows the straight-line method of depreciation (SLM). (ii) The rates of depreciation charged on all fixed assets are those specified in Schedule XIV to the Companies Act, 1956. (iii) On assets sold/discarded during the year, depreciation is not provided to the date of sale/ discard. (iv) Depreciation is calculated on a pro-rata basis from the month of acquisition/ installation of the asset and in case of assets costing upto Rs.5,000 each such asset is fully depreciated in the year of purchase. (c) Investments: Investments are stated at cost. (d) Inventories: Stores and spares are valued at cost or under. Raw materials, components, work-in-progress and finished goods are valued at lower of cost and net realisable value. Cost of inventory is generally ascertained on the ‘weighted average’ basis. Further, in respect of the manufactured inventories, i.e. process stocks and finished goods, an appropriate share of manufacturing expenses is included on absorption costing basis including excise duty. (e) Revenue recognition: Sale of goods is recognised at the point of despatch of finished goods to customers. Sales are inclusive of excise duty and exclusive of sales tax. (f) Customs duty: Customs duty payable on raw materials, components, stores and spares and machinery is accounted for on clearance of goods from the customs warehouses. (g) Research and development expenditure: Revenue expenditure on research and development is expensed out under the respective heads of account in the year in which it is incurred. (h) Retirement benefits: Pursuant to the Scheme of Arrangement, the Company has presently continued with the various schemes of retirement benefits of undivided Siel Limited such as provident fund, superannuation fund, gratuity fund and leave encashment. The Company’s contribution to these funds recognised by the income-tax authorities and provision for employees’ leave encashment determined on an actuarial basis at the year-end are charged against revenue every year. Contributions to provident fund, superannuation fund and gratuity fund have been made to the trusts of undivided Siel Limited except that contribution to the gratuity fund of Rs 224.90 lacs relating to employees of the Company upto March 31, 2003 and Rs. 123.03 lacs for the eleven months period ended February 29, 2004 though provided for in the books of account have not yet been funded by undivided Siel Limited and the Company respectively. (i) Income-tax: Income-tax is ascertained in accordance with the provisions of the Income-tax Act, 1961. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the differences between taxable income and accounting income that originate in one period and are capable of being reversed in one or more subsequent periods (Refer also to note 12) (j) Foreign exchange transactions: Transactions in foreign currency are recorded at the exchange rates prevailing at the time of the transaction. In the case of liabilities incurred for the acquisition of fixed assets, the loss or gain on conversion (at the rates prevailing at the year end or at the forward cover rates, where forward cover has been taken) is included in the carrying amount of the related fixed assets. Non-monetary items other than fixed assets, which are carried in terms of historical cost denominated in a foreign currency are stated at the exchange rate prevailing at the time of the transaction. Current assets and current liabilities (other than those related to fixed assets) are restated at the rates prevailing at the year end or at the forward cover rates, where forward cover has been taken, and the difference between the forward rate/ year end rate and the exchange rate at the date of the transaction is recognised as income or expense in the profit and loss account. (k) Write-off of miscellaneous expenditure: Deferred revenue expenditure representing amounts paid to employees under voluntary retirement scheme is written off over a period of three years. (l) Preliminary expenses Preliminary expenses have been charged to the profit and loss account in accordance with the Accounting Standard (AS) 26 – ‘Intangible Assets’ issued by The Institute of Chartered Accountants of India. (m) Share issue expenses are written off against share premium account. NOTES 2. The Statement of Adjusted Profits and Losses for the period April 1, 2003 to February 29, 2004 and for the period December 26, 2002 to March 31, 2003 and the Statement of Adjusted Assets and Liabilities as at February 29, 2004 and as at March 31, 2003 reflect the profits and losses and assets and liabilities for each of the relevant periods indicated above. These statements have been prepared by extracting from the profit and loss account and balance sheet for the aforesaid periods after making therein the disclosures and adjustments required to be made in accordance with the provisions of paragraph 6.18.7 of the Securities and Exchange Board of India (Disclosure & Investor Protection) Guide- lines 2000. 44 3. a) Pursuant to the Scheme of Arrangement (Scheme) under section 391 and 394 of the Companies Act, 1956 of undivided Siel Limited, approved by the High Court of Delhi vide its Order dated August 26, 2003 which became effective on September 5, 2003 on filing of the certified copy of the Order of the High Court of Delhi with the Registrar of Companies, Delhi and Haryana, the undertakings of undivided Siel Limited comprising of Mawana Sugar Works (MSW) and Titawi Sugar Complex (TSC), together with all properties, assets both movable and immovable and liabilities including contingent liabilities have been transferred to and vested in the Company at their respective book values with effect from the appointed date i.e. October 1, 2002. b) For giving effect to the Scheme, the following accounting treatment has been followed in the Statement of Adjusted Assets and Liabilities and Statement of Adjusted Profits and Losses for the period December 26, 2002 to March 31, 2003: - i) the assets and liabilities as at October 1, 2002, as detailed below, have been incorporated in these accounts: Rs./Lacs Assets As at 1.10. 02 Fixed assets - Gross block 19519.11 - Less : Accumulated Depreciation upto 31.3.02 6859.75 Depreciation for the period 1.4.02 to 30.9.02 (per contra) 417.00 7276.75 12242.36 Capital work in progress 72.98 - Miscellaneous expenditure (to the extent not written off or adjusted) 79.86 12395.20 Current assets, loans and advances - Inventories 14113.46 - Sundry debtors 756.25 - Cash and bank balances 340.33 - Loans and advances 264.07 Total assets 27869.31 Liabilities - Reserves and surplus 4679.32 Less: Depreciation (per contra) 417.00 4262.32 - Loan funds - Secured 18004.56 - Unsecured 254.84 - Current liabilities and provisions - Current liabilities 2258.66 - Provisions 40.16 Total liabilities 24820.54 Net assets 3048.77

ii) The transactions including income and expenses for the period October 1, 2002 to March 31, 2003 resulting in a loss of Rs.1026.84 lacs in respect of the aforesaid Undertakings, [including for the period October 1, 2002 to December 26, 2002 (the date of incorporation of the Company), when the Undertakings were being run and managed by undivided Siel Limited] have been incorporated. c) Consequent to the effectuation of the said Scheme, the Company has allotted three equity shares of Rs.10 each aggregating 3,09,45,904 equity shares amounting to Rs 3094.59 lacs (including Rs 45.82 lacs being amount received on calls in arrears by undivided Siel Limited during the period ended March 31, 2003) as fully paid up to the shareholders of undivided Siel Limited for every four equity shares of Rs.10 each fully paid up held by them in undivided Siel Limited on the record date of October 30, 2003, fixed by the Board of Directors. However, since the equity shares had not been allotted till March 31, 2003, the aggregate nominal value of such shares amounting to Rs 3094.59 lacs has been included under ‘capital suspense’ under the head ‘shareholders’ funds’ in the Statement of Adjusted Assets and Liabilities as at March 31, 2003. Further, the Company on October 27, 2003, also allotted 3,000,000 equity shares of Rs.10 each for cash at par on preferential basis to its promoters in terms of the Scheme. As at As at 29.02.2004 31.03.2003 Rs. Lacs Rs. Lacs 4. Capital commitments (net of advances) 98.10 23.27 5. Contingent liabilities : (a) Claims against the Company not acknowledged as debts 622.58 444.69 (b) On partly paid shares (# Rs.20) ##

(c) In respect of a guarantee to be given by the Company to lenders of a subsidiary company for the minimum realisation of principal amount of debts amounting to Rs.3075 lacs transferred to the subsidiary company as on 30.9.2002. The guarantee will come into force after 30.9.2004 in the event of shortfall, if any, in the realisation of the assets of the subsidiary company amounting to Rs.3075 lacs and will be limited to the amounts remaining unpaid. The guarantee will lapse on payment of entire amount of Rs.3075 lacs to lenders of the subsidiary company. During the period, out of the above, the subsidiary has repaid an amount of Rs.2290.65 lacs (previous period Rs Nil) and the outstanding amount as at February 29, 2004 is Rs.784.35 lacs (As at March 31, 2003 Rs. 3075 lacs).

45 6. Analysis of outstanding unsecured loans taken by the Company Description Amount outstanding Amount outstanding Interest rate % p.a. Repayment as at February 29, 2004 as at March 31, 2003 Schedule (Rs. Lacs) (Rs. Lacs) Deposits from dealers, 151.85 153.94 Varied On completion of contractors etc. contracts Other loans and advances 100.87 136.26 Nil By April 2006

7. Item included in other income which is in excess of 20 % of the Profit after Tax is export benefits of Rs 227.05 lacs (previous period Rs 25.73 lacs) provided by the Government of India for encouraging exports of sugar. It is of recurring nature and has arisen on account of normal business activity. 8. Research and development expenses amounting to Rs. 21.60 lacs (previous period Rs.11.41 lacs) have been charged to the respective revenue accounts. 9. Sales are net of commission of Rs. 98.00 lacs. (previous period Rs.69.90 lacs) 10. The price of levy sugar sold during the season 1982-83 by one of the unit vested in the Company pursuant to the Scheme of Arrangement is a subject of court cases. Pending decision, interest accrued of Rs. 183.57 lacs (previous period Rs. 183.57 lacs) in terms of Court Orders is included under “sundry creditors”. 11. Related party disclosures under Accounting Standard 18 Name of related party and nature of related party relationship Holding company: None (Previous period Siel Limited) Subsidiaries: Siel Holdings Limited The Jay Engineering Works Limited (Subsidiary of Siel Holdings Limited). Key Management Personnel and their relatives: For full period - Mr. Siddharth Shriram, Mr. Krishna Shriram (relative of Mr. Siddharth Shriram). For part of the period: a) From September 15, 2003 : Mr. P.K. Bhalla, Mrs Asha Bhalla, (relative of Mr. P.K. Bhalla), Mr A.K. Mehra, Mrs Binu Mehra, (relative of Mr. A.K. Mehra) b) From December 16, 2003 : Mr. Rajendra Khanna, Mrs Rajni Khanna (relative of Mr Rajendra Khanna) c) Upto September 15, 2003 : Mr. Deepak Banerjee and d) Upto September 5, 2003 : Mr Satyendra Gupta.

Enterprise over which key management personnel have significant influence : Siel Limited Rs. in Lacs Subsidiary Key Management Enterprise Over which Companies Personnel and their key management Relatives personnel have Significant Influence * Total Period Period Period Period Period Period Period Period ended ended ended ended ended ended ended ended February March February March February March February March 29, 2004 31, 2003 29, 2004 31, 2003 29, 2004 31, 2003 29, 2004 31, 2003 Professional Fee – 4.90 – 4.90 Allotment of equity shares 300.00 - 300.00 - Management fee received 20.00 - 34.00 - 54.00 - Remuneration to key management personnel 72.70 18.02 72.70 18.02 Commission Paid 38.24 22.91 38.24 22.91 Expenses recovered 81.81 - 81.81 - Expenses reimbursed 41.11 - 41.11 - Advances given 0.01 0.77 13.43 - 3.00 1492.56 16.44 1493.33 Guarantees given on behalf of the Company 12347.12 - 12347.12 - Balance outstanding as at the year end: - Receivables 0.78 - 13.10 - 1570.26 1492.56 1584.14 1492.56 - Guarantees given on behalf of the Company 12347.12 - 12347.12 -

* Do not include assets, liabilities vested in the Company pursuant to the Scheme and the assets, liabilities, incomes accrued and expenses incurred prior to incorporation when the undertakings were run and managed by Siel Limited in trust for the Company (also refer to note 3 above) 46 12. The net deferred tax charge of Rs 87.70 lacs for the period April 1, 2003 to February 29, 2004 and net deferred tax benefit of Rs 325.90 lacs for the period October 1, 2002 to March 31, 2003 have been recognized in the Statement of Adjusted Profits and Losses. However, the Company has not recognized the deferred tax benefits in respect of brought forward losses and unabsorbed depreciation as at March 31, 2002, allocated to the Company under section 72A (4) (b) of the Income-tax Act, 1961, from erstwhile undivided Siel Limited, as in the opinion of the management, the virtual certainty of realisation of the aforesaid benefits cannot be determined at this stage. Details of the deferred tax assets / liabilities are given below: Rs. in Lacs As at February 29, 2004 As at March 31, 2003 Deferred tax assets: Unabsorbed depreciation 587.55 398.57 Business loss carried forward 140.35 133.73 Accrued expenses deductible on payment basis 191.79 70.76 Others 14.38 1.77 Sub-total 934.07 604.83 Deferred tax liabilities: Accumulated depreciation 695.87 278.93 Sub-total 695.87 278.93 Net deferred tax asset 238.20 325.90

13. The Company had entered into lease agreements for hiring of plant and machinery and office equipments. As at the end of the period, the Company has commitments under lease agreements of Rs 0.20 lac (previous period Rs 16.46 lacs). Lease rent charged to the profit and loss during the period Rs 16.26 lacs (previous period Rs.11.06 lacs).

14. AGEWISE ANALYSIS OF SUNDRY DEBTORS Rs in lacs Description Amount outstanding Amount outstanding as on February 29, 2004 as on March 31, 2003 Upto 180 days 832.49 1158.37 More than 180 days 84.23 89.55 Less: Provision for doubtful debts 10.05 0.44 Total 906.67 1247.48

15. ANALYSIS OF LOANS AND ADVANCES Rs Lacs Description Amount outstanding Amount outstanding as on February 29, 2004 as on March 31, 2003 Advance to Siel Limited 1570.26 1492.56* Advance to key managerial persons 13.10 - Advance to subsidiary 0.78 0.78 Claims receivable 617.06 265.53 Prepaid expenses 95.30 63.55 Deposits with Government bodies 86.09 91.63 Advance to employees 44.46 12.31 Advance tax 9.99 - Others 199.41 105.94 Total 2636.45 2032.30

* Represents amounts arising consequent to the Scheme of Arrangement (refer note 3)

16. The Company has not declared any dividend during the periods ended February 29, 2004 and ended March 31, 2003. 17. The current financial period is for a period of eleven months from April 1, 2003 to February 29, 2004, whereas the previous period was for a period from December 26, 2002 (the date of incorporation of the Company) to March 31, 2003. Therefore, the figures of the current period are not comparable with those of the previous period. 18. Previous period’s figures have been regrouped wherever necessary.

47 ANNEXURE – III -Financial Performance of Siel Holdings Ltd., a subsidiary of Siel Sugars Ltd. (to be renamed as Mawana Sugars Ltd.) III (a) STATEMENT OF ADJUSTED PROFITS AND LOSSES Rs in lacs

PARTICULARS PERIOD FROM PERIOD FROM DATE OF 1-04-2003 TO 29-02-2004 INCORPORATION i.e. 28/1/2003 to 31/3/2003 Income Sales Products manufactured by the Company -- Less: Excise Duty -- Net Sales -- Profit on sale of long term non-trade investments 123.60 - Dividend on long term non-trade investments 4.06 - Increase/(decrease) in inventories - - Total 127.66 - Expenditure: Administrative Expenses 0.13 0.71 Total Expenditure 0.13 0.71 Profit before tax 127.53 (0.71) Taxation Current 12.75 - Deferred tax ( charge)/benefit -- Profit after Tax 114.78 (0.71) Brought forward from previous period (0.71) - Balance carried to Statement of Assets and Liabilities 114.07 (0.71) Extent of Shareholding % 100.00 100.00 Profits / (Losses) after Tax so far it concerns the members of the Company 114.78 (0.71) Major accounting policies and notes annexed.

III. (b) STATEMENT OF ADJUSTED ASSETS AND LIABILITIES (Rs in Lacs) PARTICULARS AS AT 29.02.2004 AS AT 31.03.2003

Application of Funds A. Fixed Assets Gross Block -- Less: depreciation -- Net Block -- Capital work in progress -- Total -- B. Investments 1,382.95 3,550.00 C. Current assets, Loans and advances Cash and Bank Balances 4.94 5.09 Total 4.94 5.09 D. Liabilities and Provisions Secured Loans 784.35 3,075.00 Unsecured Loans 421.72 425.77 Current Liabilities - 0.03 Provisions (refer note 4) 62.75 50.00 Total 1,268.82 3,550.80 E. Net Worth - Total ( A +B + C - D) 119.07 4.29 F. Represented By Shareholders’ Fund Equity Capital 5.00 5.00 Reserves and Surplus 114.07 - Total 119.07 5.00 Less : Debit balance of profit and loss account - 0.71 Net Worth 119.07 4.29 Extent of Shareholding % 100.00 100.00 Net Worth so far it concerns the members of the Company 119.07 4.29 Major accounting policies and notes annexed.

48 MAJOR ACCOUNTING POLICIES AND NOTES 1. MAJOR ACCOUNTING POLICIES a) Investments Investments vesting in the Company from undivided Siel Ltd. , pursuant to the Scheme of Arrangement have been stated at which they have been transferred and have been grossed up for the expenses to be incurred on their sale, as estimated by the management. b) Revenue recognition Income from investments is recognised on an accrual basis. c) Preliminary expenses Preliminary expenses have been charged to the Profit and Loss account in accordance with the Accounting Standard (AS) 26- ‘Intangible Assets’ issued by the Institute of Chartered Accountants of India. d) Income-tax Income-tax is ascertained in accordance with the provisions of the Income Tax Act, 1961.

NOTES 2. The Statement of Profits and Losses for the period April 1, 2003 to February 29, 2004 and for the period January 28, 2003 to March 31, 2003 and the Statement of Assets and Liabilities as at February 29, 2004 and as at March 31, 2003 reflect the profits and losses and assets and liabilities for each of relevant periods indicated above. These Statements have been prepared by extracting from the profit and loss accounts and balance sheets for the aforesaid periods after making therein the disclosures and adjustments required to be made in accordance with the provisions of paragraph 6.18.7 of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000.

3. a) Pursuant to the Scheme under sections 391 and 394 of the Companies Act, 1956, of the undivided Siel Limited approved by Hon’ble High Court of Delhi vide its Order dated August 26, 2003, which became effective on September 5, 2003 on filing of the certified copy of the Order of the High Court of Delhi with the Registrar of Companies, Delhi and Haryana, certain specified investments of undivided Siel Limited alongwith all rights, privileges, benefits, properties, assets and liabilities comprised therein, term loan liabilities and other liabilities of undivided Siel Limited have been transferred to and vested in the Company with effect from the appointed date i.e. October 1, 2002.

b) For giving effect to the Scheme, the assets, liabilities and expenses etc. as at October 1, 2002 , as detailed below, have been incorporated in the Statement of Assets and Liabilties as at March 31, 2003:

Loans Amount ( Rs.) Secured 307,500,000 Unsecured 42,500,000 Investments 350,000,000 c) Pursuant to the Scheme, as indicated above, the investments in Jay Engineering Works Limited(JEW) have been vested in the Company alongwith the guarantee of Rs.1391 lacs given by the undivided Siel Limited to the bankers of JEW towards the repayment of financial facilities provided by them to JEW. 4. Provisions include provision for contingencies of Rs. 50 lakhs representing expenses to be incurred on the sale of investments, as estimated by the management. 5. Contingent liabilities: Rs. In Lakhs As at February 29,2004 As at March 31,2003 In respect of guarantee vested in the Company pursuant to the Scheme of 1235 1391 Arrangement for repayment of financial facilities provided by undivided Siel Limited to the Bankers of JEW (refer note 3(c) above)

6. The current financial period is for a period of eleven months from April 1, 2003 to February 29, 2004, whereas the previous period was for a period from January 28, 2003 (the date of incorporation of the Company) to March 31, 2003. Therefore, the figures of the current period are not comparable with those of the previous period.

7. Previous period’s figures have been regrouped wherever necessary.

49 ANNEXURE IV – CONSOLIDATED FINANCIAL STATEMENTS IV. (a) CONSOLIDATED STATEMENT OF ADJUSTED PROFITS AND LOSSES (Rs. in lacs) PARTICULARS PERIOD FROM PERIOD FROM DATE OF 1-04-2003 TO 29-02-2004 INCORPORATION i.e. 26/12/2002 to 31/3/2003 Income Sales Products manufactured by the Company 27,389.63 18,286.05 Less: Excise Duty 1,964.60 1,301.26 Net Sales 25,425.03 16,984.79 Other income (refer note 8) 744.44 189.01 Profit on sale of long term non-trade investments 123.60 - Dividend on long term non-trade investments 4.06 - Increase/(decrease) in inventories 6,455.40 2,465.83 Total 32,752.53 19,639.63 Expenditure: Raw materials consumed 22,833.37 15,577.69 Stores, Spares and Components 2,500.34 1,177.84 Staff costs 2,089.85 1,113.02 Other Manufacturing Expenses 1,081.77 792.65 Administrative Expenses 909.48 472.12 Selling and Distribution Expenses 160.05 186.96 Interest 1,865.38 902.59 Depreciation 813.57 444.31 Total Expenditure 32,253.81 20,667.18 Profit before tax 498.72 (1,027.55) Provision for taxation Current tax 12.75 - Deferred tax charge/(benefit )( Refer note 15) 87.70 (325.90) Profit after Tax 398.27 (701.65) Brought forward from previous period (701.65) - Balance carried to Consolidated Statement of Adjusted Assets and Liabilities (303.38) (701.65) Major accounting policies and notes annexed.

IV. (b) CONSOLIDATED STATEMENT OF ADJUSTED ASSETS & LIABILITIES (Rs. In lacs) PARTICULARS AS AT 29.02.2004 AS AT 31.03.2003 Application of Funds A. Fixed Assets Gross Block 19,580.88 19,531.01 Less: depreciation 8,513.12 7,707.10 Net Block 11,067.76 11,823.91 Capital work in progress 271.82 66.98 Total 11,339.58 11,890.89 B. Investments 1,382.95 3,550.00 C. Deferred tax assets 238.20 325.90 D. Current assets, Loans and advances Inventories 23,197.40 16,676.19 Sundry Debtors 906.67 1,247.48 Cash and Bank Balances 129.46 240.90 Loans and Advances 2,635.68 2,031.53 Total 26,869.21 20,196.10 E. Liabilities and Provisions Secured Loans 24,456.75 22,950.93 Unsecured Loans 673.67 715.20 Current Liabilities 7,361.17 5,687.34 Provisions (refer note 16) 104.42 93.53 Total 32,596.01 29,447.00 F. Net Worth - Total ( A +B + C + D - E) 7,233.93 6,515.89 G. Represented By Shareholders’ Fund Equity Capital 3,399.59 5.00 Capital suspense (refer note 4) - 3,094.59 Reserves and Surplus 4,222.59 4,273.38 Total 7,622.18 7,372.97 Less : Miscellaneous Expenditure to the extent not written off 84.87 155.43 Less: : Debit balance of profit and loss account 303.38 701.65 Net Worth 7,233.93 6,515.89 Major accounting policies and notes annexed.

50 MAJOR ACCOUNTING POLICIES AND NOTES

1. BASIS OF CONSOLIDATION Accounting treatment of Investment in subsidiaries / Joint Ventures The Consolidated Statements of Adjusted Assets and Liabilities and Adjusted Profits and Losses have been prepared in accordance with Accounting Standard (AS) 21 “Consolidated Financial Statement“ and AS 27 “Financial Reporting of Interests in Joint Ventures” issued by the Institute of Chartered Accountants of India. The subsidiary (which along with Siel Sugar Limited, the Parent Company, constitute the Group) considered in the preparation of these consolidated financial statements is:

Name Country of Incorporation Percentage of voting power, As at February 29, 2004 As at March 31, 2003 Siel Holdings Limited (SHL) India 100 100

These consolidated financial statements are based, in so far they relate to amounts included in respect of the subsidiary, on the audited financial statements prepared for consolidation in accordance with the requirements of AS 21.

Further, the financial statements of The Jay Engineering Works Limited (JEW), a subsidiary company of SHL, and Diakin Shriram Airconditioning Private Limited (DSAPL), a jointly controlled entity of SHL as per Accounting Standard (AS) 27 have not been considered in preparation of these Consolidated Statements for the reasons stated in note 12 below.

2. MAJOR ACCOUNTING POLICIES (a) Fixed assets: Fixed assets are stated at cost of acquisition/ construction less accumulated depreciation. The cost includes all pre-operative expenses relating to construction period in the case of new projects and expansion of existing factories.

(b) Depreciation: i. The Group follows the straight-line method of depreciation (SLM). ii. The rates of depreciation charged on all fixed assets are those specified in Schedule XIV to the Companies Act, 1956. iii. On assets sold/discarded during the year, depreciation is not provided to the date of sale/ discard. iv. Depreciation is calculated on a pro-rata basis from the month of acquisition/ installation of the asset and in case of assets costing upto Rs.5,000 each such asset is fully depreciated in the year of purchase.

(c) Investments: Investments are stated at cost. In case of SHL, investments vested in the Company from undivided Siel Limited, pursuant to the Scheme of Arrangement, have been stated at cost at which they have been transferred and have been grossed up for the expenses to be incurred on their sale, as estimated by the management.

(d) Inventories: Stores and spares are valued at cost or under. Raw materials, components, work-in-progress and finished goods are valued at lower of cost and net realisable value. Cost of inventory is generally ascertained on the ‘weighted average’ basis. Further, in respect of the manufactured inventories, i.e. process stocks and finished goods, an appropriate share of manufacturing expenses is included on absorption costing basis including excise duty.

(e) Revenue recognition: Sale of goods is recognised at the point of despatch of finished goods to customers. Sales are inclusive of excise duty and exclusive of sales tax. Income from investments is recognised on an accrual basis.

(f) Customs duty: Customs duty payable on raw materials, components, stores and spares and machinery is accounted for on clearance of goods from the customs warehouses.

(g) Research and development expenditure: Revenue expenditure on research and development is expensed out under the respective heads of account in the year in which it is incurred.

51 (h)Retirement benefits: Pursuant to the Scheme of Arrangement, the Group has presently continued with the various schemes of retirement benefits of undivided Siel Limited such as provident fund, superannuation fund, gratuity fund and leave encashment. The Group’s contribution to these funds recognised by the income-tax authorities and provision for employees’ leave encashment determined on an actuarial basis at the year-end are charged against revenue every year. Contributions to provident fund, superannuation fund and gratuity fund have been made to the trusts of undivided Siel Limited except that contribution to the gratuity fund of Rs 224.90 lacs relating to employees of the Group up to March 31, 2003 and Rs. 123.03 lacs for the eleven months period ended February 29, 2004 though provided for in the books of account have not yet been funded by undivided Siel Limited and the Parent Company respectively.

(i) Income-tax: Income-tax is ascertained in accordance with the provisions of the Income-tax Act, 1961. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the differences between taxable income and accounting income that originate in one period and are capable of being reversed in one or more subsequent periods. (Refer also to note 15 below )

(j) Foreign exchange transactions: Transactions in foreign currency are recorded at the exchange rates prevailing at the time of the transaction. In the case of liabilities incurred for the acquisition of fixed assets, the loss or gain on conversion (at the rates prevailing at the year end or at the forward cover rates, where forward cover has been taken) is included in the carrying amount of the related fixed assets. Non-monetary items other than fixed assets, which are carried in terms of historical cost denominated in a foreign currency are stated at the exchange rate prevailing at the time of the transaction. Current assets and current liabilities (other than those related to fixed assets) are restated at the rates prevailing at the year end or at the forward cover rates, where forward cover has been taken, and the difference between the forward rate/ year end rate and the exchange rate at the date of the transaction is recognised as income or expense in the consolidated profit and loss account. (k) Write-off of miscellaneous expenditure: Deferred revenue expenditure representing amounts paid to employees under voluntary retirement scheme is written off over a period of three years. (l) Preliminary expenses Preliminary expenses have been charged to the profit and loss account in accordance with the Accounting Standard (AS) 26 – ‘Intangible Assets’ issued by The Institute of Chartered Accountants of India. (m) Share issue expenses are written off against share premium account.

NOTES

3. The Consolidated Statement of Adjusted Profits and Losses for the period April 1, 2003 to February 29, 2004 and for the period December 26, 2003 to March 31, 2003 and the Consolidated Statement of Assets and Liabilities as at February 29, 2004 and as at March 31, 2003 reflect the profit and losses and assets and liabilities for each of the relevant periods indicated above. These statements have been prepared by extracting from the profit and loss accounts and balance sheets of the Group for the aforesaid periods after making therein the disclosures and adjustments required to be made in accordance with the provisions of paragraph 6.18.7 of the Securities and Exchange Board of India (Disclosure & Investor Protection) Guidelines 2000. 4. a) Pursuant to the Scheme of Arrangement (Scheme) under section 391 and 394 of the Companies Act, 1956 of undivided Siel Limited, approved by the High Court of Delhi vide its Order dated August 26, 2003 which became effective on September 5, 2003 on filing of the certified copy of the Order of the High Court of Delhi with the Registrar of Companies, Delhi and Haryana. i) the undertakings of undivided Siel Limited comprising of Mawana Sugar Works (MSW) and Titawi Sugar Complex (TSC), together with all properties, assets both movable and immovable and liabilities including contingent liabilities have been transferred to and vested in the Parent Company at their respective book values with effect from the appointed date i.e. October 1, 2002, ii) a) certain specified investments of undivided Siel Limited along with all rights, privileges, benefits, properties, assets and liabilities comprised therein, term loan liabilities and other liabilities of undivided Siel Limited have been transferred to and vested in SHL with effect from the appointed date i.e. October 1, 2002 b) Pursuant to the Scheme the investments in Jay Engineering Works Limited (JEW) have been vested in SHL along with the guarantee of Rs. 1391 lacs given by the undivided Siel Limited to the bankers of JEW towards the repayment of financial facilities provided by them to JEW. b) For giving effect to the Scheme, the following accounting treatment has been followed in the Consolidated Statement of Adjusted Assets and Liabilities and Adjusted Profits and Losses for the period December 26, 2002 to March 31, 2003:

52 (i) the assets and liabilities as at October 1, 2002, as detailed below, have been incorporated in the accounts of the Parent Company: Rs./Lacs Assets As at 1.10. 02 Fixed assets - Gross block 19519.11 Less : Accumulated Depreciation upto 31.3.02 6859.75 Depreciation for the period 1.4.02 to 30.9.02 (per contra) 417.00 7276.75 12242.36 Capital work in progress 72.98 - Miscellaneous expenditure (to the extent not written off or adjusted) 79.86 12395.20 Current assets, loans and advances - Inventories 14113.46 - Sundry debtors 756.25 - Cash and bank balances 340.33 - Loans and advances 264.07 Total assets 27869.31 Liabilities - Reserves and surplus 4679.32 Less: Depreciation (per contra) 417.00 4262.32 - Loans Funds - Secured 18004.56 - Unsecured 254.84 - Current liabilities and provisions - Current liabilities 2258.66 - Provisions 40.16 Total liabilities 24820.54 Net assets 3048.77

(ii) The assets and liabilities as at October 1, 2002, as detailed below, have been incorporated in the accounts of SHL: Loans Amount (Rs. lacs) Secured 3075.00 Unsecured 425.00 Investments 3500.00 iii) The transactions including income and expenses for the period October 1, 2002 to March 31, 2003 resulting in a loss of Rs.1026.84 lacs in respect of the aforesaid Undertakings, referred to in note 4 (i) above, [including for the period October 1, 2002 to December 26, 2002 (the date of incorporation of the Parent Company), when the Undertakings were being run and managed by undivided Siel Limited] have been incorporated in the accounts of the Parent Company. c) Consequent to the effectuation of the said Scheme, the Parent Company has allotted three equity shares of Rs.10 each aggregating 3,09,45,904 equity shares amounting to Rs 3094.59 lacs (including Rs 45.82 lacs being amount received on calls in arrears by undivided Siel Limited during the period ended March 31, 2003) as fully paid up to the shareholders of undivided Siel Limited for every four equity shares of Rs.10 each fully paid up held by them in undivided Siel Limited on the record date of October 30, 2003, fixed by the Board of Directors. However, since the equity shares had not been allotted till March 31, 2003, the aggregate nominal value of such shares amounting to Rs 3094.59 lacs has been included under ‘capital suspense’ under the head ‘shareholders’ funds’ in the Consolidated Statement of Adjusted Assets and Liabilities as at March 31, 2003. Further, the Parent Company on October 27, 2003, also allotted 3,000,000 equity shares of Rs.10 each for cash at par on preferential basis to its promoters in terms of the Scheme.

As at As at 29.02.2004 31.03.2003 Rs. Lacs Rs. Lacs

5. Capital commitments (net of advances) 98.10 23.27 6. Contingent liabilities : a) Claims against the Parent Company not 622.58 444.69 acknowledged as debts b) On partly paid shares (# Rs.20) ## (c) In respect of a guarantee to be given by the Parent Company to the lenders of SHL for the minimum realisation of principal amount of debts amounting to Rs.3075 lacs transferred to SHL as on 30.9.2002. The guarantee will come into force after 30.9.2004 in the event of shortfall, if any, in the realisation of the assets of SHL amounting to Rs.3075 lacs and will be limited to the amounts remaining unpaid. The guarantee will lapse on payment of entire amount of Rs.3075 lacs to lenders of SHL. During the period, out of the above, SHL has repaid an amount of Rs.2290.65 lacs (previous period Rs Nil) and the outstanding amount as at February 29, 2004 is Rs.784.35 lacs (As at March 31, 2003 Rs 3075 lacs). (d) Pursuant to the Scheme, as referred to in note 4 above, investments in JEW have been vested in SHL along with the guarantee of Rs. 1235 lacs (previous period Rs 1391 lacs) given by the undivided Siel Limited to the bankers of JEW towards the repayment of financial facilities provided by them to JEW. 53 7. Analysis of outstanding unsecured loans taken by the Group

Description Amount Amount Interest rate Repayment outstanding as outstanding % p.a. Schedule at February as at March 29, 2004 31, 2003 (Rs. Lacs) (Rs. Lacs)

Due to Siel Limited 420.95 425.00 Nil

Deposits from dealers, contractors etc. 151.85 153.94 Varied On completion of contracts

Other loans and advances 100.87 136.26 Nil By April 2006

8. Item included in other income which is in excess of 20 % of the Profit after Tax is export benefits of Rs 227.05 lacs (previous period Rs 25.73 lacs) provided by the Government of India for encouraging exports of sugar. It is of recurring nature and has arisen on account of normal business activity.

9. Research and development expenses amounting to Rs. 21.60 lacs (previous period Rs. 11.41 lacs) have been charged to the respective revenue accounts.

10. Sales are net of commission of Rs. 98.00 lacs. (previous period Rs.69.90 lacs)

11. The price of levy sugar sold during the season 1982-83 by one of the unit vested in the Parent Company pursuant to the Scheme of Arrangement is a subject of court cases. Pending decision, interest accrued of Rs. 183.57 lacs (previous period Rs 183.57 lacs) in terms of Court Orders is included under “sundry creditors”.

12. SHL has an investment of Rs. 716.45 lacs comprising of 91,00,000 equity shares of Rs. 10 each amounting to Rs 404.95 lacs and 7,00,000 preference shares of Rs. 311.50 lacs, representing equity shareholding of 68.45 % in JEW, a subsidiary company and investment in 3,90,000 equity shares of Rs 100 each amounting to Rs.190 lacs in equity shares of DSAPL, a jointly controlled entity, representing equity shareholding of 20 %.

On implementation of the Scheme as referred to in note 4 above, the aforesaid investments in JEW and DSAPL, had with effect from the appointed date i.e. October 1,2002 vested in SHL. As per the Scheme, SHL is a special purpose vehicle to leverage investments and to settle the liabilities of lenders vested in SHL. In view of the above, the present control / interest of SHL on JEW and DSAPL respectively is intended to be temporary only. Therefore, the financial statements of JEW and DSAPL for the periods ended February 29,2004 and March 31, 2003 have not been considered by the management while preparing the Consolidated Statement of Adjusted Assets and Liabilities and Adjusted Profits and Losses.

13. Segment reporting A. Business segments: Based on the guiding principles given in Accounting Standard AS-17 “Segment Reporting” issued by the Institute of Chartered Accoun- tants of India, the Group business segments include: Sugar and others (investment activities of SHL ) B. Geographical segments: Since the Group activities/operations are primarily within the country and considering the nature of product it deals in, the risk and returns are same and as such there is only one geographical segment. C. Segment accounting policies: In addition to the significant accounting policies applicable to the business segments as set out in notes above, the accounting policies in relation to segment accounting are as under: a) Segment revenue and expenses: Segment revenue and expenses are directly attributable to the segments. b) Segment assets and liabilities: Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. c) Inter segment revenues: Inter segment revenues between operating segments are accounted for at market price. These transactions are eliminated in consolidation.

54 D. Information about business segments

PARTICULARS Sugar Others Unallocated Total Current Previous Current Previous Current Previous Current Previous Period Period Period Period Period Period Period Period SEGMENT REVENUE External sales (net) * 25,425.03 16,984.79 - - 25,425.03 16,984.79 Other income 482.55 115.75 127.66 - 610.21 115.75 Total revenue 25,907.58 17,100.54 127.66 - 26,035.24 17,100.54 RESULTS Segment results 1,974.68 (197.51) 127.53 (0.71) 2,102.21 (198.22) Operating profit 1,974.68 (197.51) 127.53 (0.71) 2,102.21 (198.22) Interest expense (1,865.38) (902.59) (1,865.38) (902.59) Interest income 261.89 73.26 261.89 73.26 Income -tax: Current tax (12.75) - (12.75) - Deffered tax (87.70) 325.90 (87.70) 325.90 Net Profit (Loss) 1,974.68 (197.51) 127.53 (0.71) (1,703.94) (503.43) 398.27 (701.65) OTHER INFORMATION A. ASSETS Segment assets 38,193.86 32,081.90 1,387.89 5.09 39,581.75 32,086.99 Profit and loss account 303.38 701.65 303.38 701.65 Unallocated assets 333.06 4,310.26 333.06 4,310.26 Total assets 38,193.86 32,081.90 1,387.89 5.09 636.44 5,011.91 40,218.19 37,098.90 B. LIABILITIES Segment liabilities 7,402.84 5,730.84 50.00 50.03 7,452.84 5,780.87 Share capital and reserves 7,622.18 7,372.97 7,622.18 7,372.97 Secured and unsecured loans 25,130.42 23,666.13 25,130.42 23,666.13 Unallocated liabilities 12.75 278.93 12.75 278.93 Total liabilities 7,402.84 5,730.84 50.00 50.03 32,765.35 31,318.03 40,218.19 37,098.90 C. OTHERS Capital expenditure-Addition 64.71 30.52 - - -WIP 271.82 66.98 - - Depreciation 813.57 444.31 - - Miscellaneous expenditure written off 71.72 34.39 - -

* net of excise duty.

14. Related party disclosures under Accounting Standard 18 Name of related party and nature of related party relationship Subsidiaries : The Jay Engineering Works Limited (Subsidiary of Siel Holdings Limited which is a wholly owned subsidiary of Siel Sugar Limited). (Refer Note 12 above ). Key Management Personnel and their relatives: For full period - Mr. Siddharth Shriram, Mr. Krishna Shriram, (relative of Mr Siddharth Shriram). For part of the period: a) From September 15, 2003: Mr. P.K. Bhalla, Mrs Asha Bhalla, (relative of Mr. P.K. Bhalla), Mr A.K. Mehra, Mrs Binu Mehra, (relative of Mr. A.K. Mehra) b) From December 16, 2003 : Mr. Rajendra Khanna, Mrs Rajni Khanna (relative of Mr Rajendra Khanna) c) Upto September 15, 2003 : Mr. Deepak Banerjee and d) Upto September 5, 2003 : Mr Satyendra Gupta e) Upto January 28, 2003 : Dr Charat Ram (relative of Mr. Siddharth Shriram)

55 Enterprise over which key management personnel have significant influence : Siel Limited Rs. in Lakhs Subsidiary Key Management Enterprise Over which Companies Personnel and their key management Relatives personnel have Significant Influence * Total Period Period Period Period Period Period Period Period ended ended ended ended ended ended ended ended February March February March February March February March 29, 2004 31, 2003 29, 2004 31, 2003 29, 2004 31, 2003 29, 2004 31, 2003 Professional Fee - 4.90 - 4.90 Allotment of equity shares 300.00 - 300.00 - Management fee received 20.00 - 34.00 - 54.00 - Remuneration to key management personnel 72.70 18.02 72.70 18.02 Commission Paid 38.24 22.91 38.24 22.91 Expenses recovered 81.81 - 81.81 - Expenses reimbursed 41.11 - 41.11 - Advances given 13.43 - 3.00 1492.56 16.43 1492.56 Advance received - 1.11 - 1.11 Guarantees given on behalf of the Company 12347.12 - 12347.12 - Balance outstanding as at the period end - Receivables 13.10 - 1570.26 1492.56 1583.36 1492.56 - Sundry Creditors - 1.11 - 1.11 -Guarantees given on behalf of the Company 12347.12 - 12347.12 -

* Do not include assets, liabilities vested in the Parent Company pursuant to the Scheme and the assets, liabilities, incomes accrued and expenses incurred prior to incorporation when the undertakings were run and managed by Siel Limited in trust for the Parent Company (also refer to note 4 above) 15. The net deferred tax charge of Rs 87.70 lacs for the period April 1, 2003 to February 29, 2004 and net deferred tax benefit of Rs 325.90 lacs for the period October 1, 2002 to March 31, 2003 have been recognized in the Consolidated Statement of Adjusted Profits and Losses. However, the Parent Company has not recognized the deferred tax benefits in respect of brought forward losses and unabsorbed depreciation as at March 31 2002, allocated to the Parent Company under section 72A (4)(b) of the Income-tax Act, 1961, from erstwhile undivided Siel Limited, as in the opinion of the management, the virtual certainty with respect to the aforesaid benefits cannot be determined at this stage. Details of the deferred tax assets / liabilities are given below: Rs. in Lakhs As at February 29, 2004 As at March 31, 2003 Deferred tax assets: Unabsorbed depreciation 587.55 398.57 Business loss carried forward 140.35 133.73 Accrued expenses deductible on payment basis 191.79 70.76 Others 14.38 1.77 Sub-total 934.07 604.83 Deferred tax liabilities: Accumulated depreciation 695.87 278.93 Sub-total 695.87 278.93 Net deferred tax asset 238.20 325.90

16. Provisions include provision for contingencies of Rs 50 lacs representing expenses to be incurred on the sale of investments, as estimated by the management. 17. The Parent Company had entered into lease agreements for hiring of plant and machinery and office equipments. As at February 29, 2004, the Parent Company has commitments under lease agreements of Rs. 0.20 Lac (previous period Rs 16.46 lacs). Lease rent charged to the profit and loss during the period Rs 16.26 Lacs (previous period Rs 11.06 lacs).

18. AGEWISE ANALYSIS OF SUNDRY DEBTORS Rs lacs Description Amount outstanding as on Amount outstanding as on February 29, 2004 March 31, 2003 Upto 180 days 832.49 1158.37 More than 180 days 84.23 89.55 Less: Provision for doubtful debts 10.05 0.44 Total 906.67 1247.48

56 19. ANALYSIS OF LOANS AND ADVANCES Rs Lacs Description Amount outstanding as on Amount outstanding as February 29, 2004 on March 31, 2003 Advance to Siel Limited 1570.26 1492.56* Advance to key managerial personnel 13.10 - Claims receivable 617.06 265.53 Prepaid expenses 95.30 63.55 Deposits with Government bodies 86.09 91.63 Advance to employees 44.46 12.31 Advance tax 9.99 - Others 199.42 105.95 Total 2635.68 2031.53 * Represents amounts arising consequent to the Scheme of Arrangement (refer note 3). 20. The Group has not declared any dividend during the periods ended February 29, 2004 and March 31, 2003. 21. The current financial period is for a period of eleven months from April 1, 2003 to February 29, 2004, whereas the previous period was a period from December 26, 2002 (the date of incorporation of the Parent Company) to March 31, 2003. Therefore, the figures of the current period are not comparable with those of the previous period. 22. Previous period’s figures have been regrouped wherever necessary.

ANNEXURE – V ACCOUNTING RATIOS Particulars PERIOD FROM APRIL 1, 2003 FROM DATE OF INCORPORATION TO FEBRUARY 29,2004 PERIOD i.e. 26/12/2002* to 31/3/2003 Earnings per share (Rs.) 0.96 (2.26) Nominal value of a share 10 10 Nat Asset Value per Share (Rs.) 24.21 21.04 Return on Net Worth (%) 3.98 (10.76)

NOTES:- a) Figures for aforesaid periods have not been annualised. b) Definition of ratios

Earnings per Share = Adjusted Profit / (loss) after tax as per Statement of Adjusted Profits and Losses / Weighted average number of Equity Shares * Net Asset Value = Net total Assets as per Statement of Adjusted Assets and Liabilities / Weighted average number of Equity Shares Return on Net Worth = Profit / (loss) after tax as per Statement of Adjusted Profits and Losses / Net Worth

* For computing weighted average number of equity shares for the period ended March 31, 2003 ‘Capital Suspense’ of Rs. 3094.59 lacs, representing 30,945,904 equity shares of Rs. 10 each, though allotted subsequent to March 31, 2003, has also been considered (refer note 3)

ANNEXURE – VI - CAPITALISATION STATEMENT Rs. in lacs Pre-Issue as at February 29, 2004 As Adjusted for the Issue A. Debts Short term Debt 12,599.84 12,599.84 Long Term Debt 11,325.28 11,325.28 Total Debt 23,925.12 23.925.12 B. Shareholders’ Funds Share Capital 3,399.59 4,249.49 Reserves & Surplus 4,222.59 4,222.59 7,622.18 8,472.08 Less: Miscellaneous Expenditure to the extent not written off 84.87 84.87 Profit & Loss Account 417.45 417.45 Total Shareholders funds 7,119.86 7,969.76 C. Total Capitalisation (A+B) 31,044.98 31,894.88 Long term debt / Equity Ratio 1.59 1.42

57 TAX SHELTER STATEMENT OF ADJUSTED PROFIT AND LOSSES (Rs. In lacs) Particulars PERIOD FROM APRIL 1, 2003 PERIOD FROM DECMBER TO FEBRUARY 29,2004 26, 2002 TO MARCH 31, 2003 Net Profit Before Tax 371.19 (1,026.84) Tax Rate 35.875% 35.875% Tax at actual rates on profits 133.17 (368.38) Less: Timing Difference -Deferred revenue expenditure (35.15) (4.95) - Gratuity (138.29) - -Accrued expenses deductible on payment basis (199.07) (197.23) -Difference in book and tax depreciation 1,162.16 777.52 -Other (refer note b) (916.37) (456.92) Total of Adjustments (126.72) 118.42 Tax Savings thereon (45.47) 42.48 Total Tax on adjusted profits* 87.70 (325.90) * Comprising of Current Tax -- Deferred Tax Charge / (benefit) 87.70 (325.90) Note:- a) Pursuant to the Sheme of Arrangement, the brought forward losses and unabsorbed depreciation of undivided Siel Limited have been allocated to the Company, (refer note 12), and as such there are no assessable profits under the Income Tax Act, 1961. However, the Company has not recognized the benefits in respect of aforesaid losses / unabsorbed depreciation as, in the opinion of the management, the certainity of the realisation of the aforesaid benefits can be determined only after the completion of the assessment by the tax authorities. b) Others include the timing differences on account of business losses and unabsorbed depreciation computed under the relevant provisions of the Income- tax Act, 1961 which are allowed to be carried forward and set off against the business profits in the subsequent years within the specified period. Outstanding Loans and advances to Key Managerial Personnel as on 29th Febraury, 2004 are as follows: Name Designation Amount (in Rs.) Mr. Siddharth Shriram Chairman & Managing Director Nil Mr. P.K. Bhalla Company Secretary & Executive Director 6,98,894 Mr. A.K. Mehra Executive Director(Operations) 2,60,200 Mr. Rajendra Khanna Executive Director (A/cs & Finance) 3,51,400

PRINCIPLE TERMS OF LOANS AND ASSETS CHARGED AS SECURITY Description Amount o/s as Repayment schedule Interest Security offered on 29/02/2004 (p.a.) (Rs. in lakhs)

Secured Debentures

Zero Coupon Debentures 2285.00 Three Annual instalments 0.00% First pari-passu charge on the fixed as- (ZCDs) of Rs. 100/- each 15%, 25% & 60% at the sets and second charge on the current end of 2nd, 3rd and 4th year assets of the Company. The Lenders of from 30th September, 2002. Siel Holdings Ltd. (SHL), a Subsidiary of Mawana Sugars Ltd.(formerly known as Siel sugar Ltd.), would have first charge on pari-passu basis on the fixed assets of the Company till the repayment of debts transferred to SHL. The ZCDs will be further secured by the personal guarantee of Mr. Siddharth Shriram and pledge of equity shares of the Company held by promoters.

Term Loans- 7390.00 Twenty quaterly 12.00% First pari-passu charge on fixed assets Financial Institutions instalments as per details and second charge on the current as- below: sets of the Company. The Lenders of Siel -Oct. 04 to Sept. 05-4% Holdings Ltd. (SHL), a Subsidiary of -Oct. 05 to Sept. 06-7% Mawana Sugars Ltd., would have first -Oct. 06 to Sept. 07-25% charge on pari-passu basis on the fixed -Oct. 07 to Sept. 08-33% assets of the Company till the repayment -Oct. 08 to Sept. 09-31% of debts transferred to SHL. The loans will be further secured by the personal guarantee of Mr. Siddharth Shriram and pledge of equity shares of the Company held by promoters. 58 Description Amount o/s as Repayment schedule Interest Security offered on 29/02/2004 (p.a.) (Rs. in lakhs)

Funded Interest Term 886.80 Two annual instalments as 0% First pari-passu charge on fixed assets Loan per details given below and second charge on the current as- -Oct. 08 to Sept. 09-30% sets of the Company. The Lenders of Siel -Oct. 09 to Sept. 10-70% Holdings Ltd. (SHL), a Subsidiary of Mawana Sugars Limted, would have first charge on pari-passu basis on the fixed assets of the Company till the repayment of debts transferred to SHL. The FILT will be further secured by the personal guarantee of Mr. Siddharth Shriram and pledge of equity shares of the Company held by promoters.

Sugar Development 763.48 Repayable in 5 yearly 6% Secured / to be secured by an exclusive Fund instalments commencing second charge on all immovable prop- from September 2010 erties of the Company situated at Mawana Distt. Meerut in the State of Uttar Pradesh together with all buildings and structures thereon and all plant and machinery attached to the earth or per- manently fastened to anything attached to earth, both present and future.

WORKING CAPITAL

Working Capital 300.00 12% First pari-passu charge on current as- demand loans from SBI sets and second charge / third charge & PNB on the fixed assets of the Company. The same is further secured by the Personal Gaurantee of Mr. Siddharth Shriram.

Cash Credit / Over- 12047.12 12% First pari-passu charge on current as- drafts from SBI & PNB sets and second charge / third charge on the fixed assets of the Company. The same will be further secured by the personal guarantee of Mr. Siddharth Shriram.

IX. MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITIONS Financial Information 1. The current financial period is for a period of eleven months from April 1, 2003 to February 29, 2004. The previous period was for a period from December 26, 2002 (the date of incorporation of the Company) to March 31, 2003. However, the previous period includes figures w.e.f. 1.10.2002 to 31.3.2003 (Refer Note 3(b)(i) and 3(b)(ii) to the Notes to Financial Information). Thus data of Current Financial period and previous period is not comparable. However, Comparable financial figures of the Sugar business of Siel Ltd., as extracted from the Accounts of Siel Ltd. are as under: Units September, September, September, September, September, 1998 1999 2000 2001 2002 Production – Sugar MT 205318 197362 204523 248167 249446 Sales Qty – Sugar MT 205733 215409 176875 225869 256516 Sales Value Rs./lakhs 29480 31380 26945 33335 37058 Profit Before Depeciation, Interest & Tax Rs./lakhs 5971 5203 4394 5013 4022 Profit Before Tax Rs./lakhs 1794 1264 762 1239 277 Debts – Secured Rs./lakhs 19455 16227 17767 18977 18005

2. The sales figures during the 6 months ended 31st March, 2003 at Rs. 18286 lakhs (Rs. 36572 lakhs on an annualized basis) were higher as compared to the sales of Rs. 27390 lakhs during the 11 months period ended 29th February, 2004 (Rs. 29880 lakhs on an annualized basis) due to higher sales quantities of sugar sold during 6 months ended 31st March, 2003, pursuant to the Court Order obtained by the Company to sell additional sugar in the free market. The quantity of sugar sold during 6 months ended 31st March, 2003 was 140353 MT as against 196814 MT in the 11 months ended February, 2004.

59 3. The details of Other Income are as under : Sr. No. Particulars Amount (As on 29/2/2004) Amount (As on 31/3/2003) Recurring or Non-recurring (Rs. in Lakhs) (Rs. in lakhs) 1. Rent Received 10.48 9.60 Non-Recurring 2. Export Benefit 218.49 22.73 Non-recurring 3. Scrap Sale 158.91 24.00 Non-recurring 4. Interest received 261.87 73.27 Recurring 5. Management Consultancy Fees 261.87 Nil Recurring 6. Excess Provision / Liabilities no longer required Nil 41.27 Non-recurring 7. Others 42.79 15.14 - TOTAL 744.41 189.01

4. Taxation – Current No provision has been made in the books due to brought forward business losses/ unabsorbed depreciation. Further, as the Company is having a book loss under the provision of 115JB of Income Tax Act 1961, there is no Minimum Alternate Tax Liability. Deferred Tax During the period, the Company has implemented Accounting Standard-22 “Accounting for Taxes on Income” issues by the Institute of Chartered Accountants of India. The Company has not recognized the deferred tax benefits in respect of brought forward losses and unabsorbed depreciation as at March 31, 2002, allocated to the Company under section 72A (4) (b) of the Income-tax Act, 1961, from erstwhile undivided Siel Limited, as in the opinion of the management the virtual certainty with respect to the aforesaid benefits cannot be determined at this stage. The net deferred tax charge of Rs.87.70 lacs for the period April 1, 2003 to February 29, 2004 and net deferred tax benefit of Rs.325.90 lacs for the period October 1, 2002 to March 31, 2003 have been recognized in the profit and loss account.

5. Inventories Sugar being a seasonal industry, the sugar inventory is produced during the period November to April and the sales are made throughout the year. February being middle of the season the inventories are higher.

6. Equity Capital Company has allotted 30,00,000 equity shares of Rs.10 each for cash at par on preferential basis to its promoters in terms of Scheme of Arrangement duly approved by High Court vide its order dated August 26, 2003.

7. Lease Agreements The Company has entered into a lease agreement for purchase of Static Convertor used under manufacturing process with Tata Finance Ltd. for an aggregate value of Rs. 7.52 lakhs, comprising of 0.0004% of the total value of plant & machinery. The tenure of lease is 60 months commencing from 8th April, 1999 and the last payment of lease rental paid on 8th March 2004.. Economic Environment and Company Performance

Industry Analysis Sugar Industry is controlled to a large extent by both the Central and State governments. The government controls the capacity of mills, the price of sugarcane, distribution and pricing of sugar and also the by-products (molasses). However, during the last few years there has been a gradual reduction in the regulations and it is expected that the regulations would be further eased in the coming years. In September 1998, the sugar industry was delicensed. Progressive de-regulation has resulted in the ratio of levy to free sugar to 10:90 as against 40:60 a few years ago. Thus, the production of sugar increased from 182 lac tonnes in 1999-2000 to around 202 lac tonnes in 2002-03. As against this, consumption increased from 155 lac MT in 1999-2000 to 184 lac MT in 2002-03. The demand-supply gap resulted in fall in sugar prices from Rs.1268 per quintal in 2001-2002 to Rs.1119 per quintal during 2002-03. Sugarcane Cane generally constitutes around 65-70% of the total cost of the manufacture of sugar. The price of cane is related to recovery and state administered prices (which vary from state to state). The procurement price of cane by mills is controlled by the Central Government notification on the Statutory Minimum Price (SMP), which is based on minimum recovery of 8.5% with proportionate increase in the prices for higher recovery. For this purpose, the Country is divided in 17 geographical zones. The Central government before the onset of crushing season declares the SMP. In addition, the State Governments announce State Advisory Price (SAP), which has generally been higher than the SMP. As per current practice the government has been increasing the SMP and the SAP in every season. For season 2002-03, SMP was initially fixed at Rs.64.50 per quintal but revised to Rs.69.50 per quintal. SMP for the season 2003-04 has been fixed at Rs.73 per quintal. The area under sugar cane cultivation has increased over last few years due to increase in SAP fixed by State Governments over the period and sugarcane production has increased accordingly. In case of Mawana Sugar Works and Titawi Sugar Complex, SMP was fixed as under:- Factory(Rs.Qtl) Season 2003-04(Rs.Qtl) Season 2002-03(Rs.Qtl) Mawana Sugar Works 87.45 83.44 Titawi Sugar Complex 90.00 87.54

60 Sugar Sales As regards the sale of sugar there exists a dual pricing system whereby a certain percentage of the sugar (at present 10%) produced by the sugar mills, known as ‘levy sugar’, is procured by the Government for the Public Distribution System (PDS) at a subsidized price called the ‘levy price’ and the balance sugar production is allowed to be sold in the open market and is known as ‘free sale sugar’. While the price for the free sale sugar is dependent on market factors, the Government releases ‘free sale quota’ every month to be sold by the mills in open market. In May 2004, the Hon’ble Supreme Court of India has passed a judgement in the case between West U.P. Sugar Mills Association and U.P. Co- operative Cane Unions Federation that the State Government had the power to fix cane price for the farmers supplying cane to the sugar factories within the State. Since both our factories are situated in the State of U.P., the raw material cost is likely to be higher. However, no major impact is expected on the operating results of the Company because of the present demand and supply gap. For the past years there are no liability on the Company since no cane price was fixed by the State of U.P. Industry ex-factory free sale sugar realization (net of excise duty) are as follows: Year (Sugar Season) Average Price (Rs./Quintal) 1998-1999 1320 1999-2000 1338 2000-2001 1316 2001-2002 1268 2002-2003 1119 (Source : ISMA) The decrease in overall realization levels has resulted in a lower profitability of the Company in the past.

Unusual or Infrequent event or Transactions There have been no unusual or infrequent transactions in the period ended 29 February 2004.

Significant Economic Changes The management does not foresee any significant economic changes concerning the sugar industry in the immediate future, which might have an impact on the profitability or operations of the Company, other than the changes in government policies , changes in demand/ supply of sugarcane and such other changes which are in usual course of business.

Known Trends or Uncertainties Sugar is a cyclical business and is dependent to a large extent on the availability of sugarcane. Also, the output of sugar, an agro-based product is influenced by climatic conditions. The Company has consistently increased its crushing capacity.

Future Relationship between Costs and Revenues In sugar industry, costs depend upon sugar cane prices, which account for upto70% of the costs. The revenue depends on Government policies relating to sugarcane pricing as well as free sale quotas, international markets, and availability of sugar. The Company’s future sale prices will be determined by the demand-supply situation, government policies and sugarcane availability and prices.

Seasonality of the business Sugar production is dependent on the availability and quality of cane. To some extent, sugar cane is a weather resistant crop and is unaffected by moderately high or low rainfall. However, any drastic changes in climatic conditions may impact sugarcane crop and hence sugar production.

Competitive conditions MSL is one of the lowest cost producers of sugar in India and is one of the most profitable players in the sugar industry. The company is not dependent on a single or few suppliers or customers.

Statement by the Directors There are no material developments after the date of the latest balance sheet that are likely to materially affect the performance and the prospects of the Company except the recent judgement pronounced by the Constitution bench of Hon’ble Supreme Court which has upheld the rights of State Govt. to fix the state advised prices. This judgement could result into some demands for the past periods which cannot be determined as of now. The Industry is however, proposing to file a review petition against the said judgement before Hon’ble Supreme Court. The Company has neither discontinued any of its existing business nor commenced any new business.

X. OUTSTANDING LITIGATIONS / DISPUTES I. (A) Against the Company - Mawana Sugars Ltd.

Cases against Mawana Sugars Ltd. Civil Criminal Excise Related IT Related Others No. of Cases 58 26 37 - 151 Amount involved Rs. 310.41 lakhs + Rs. 8.51 lakhs in Rs. 137.39 lakhs - Rs. 134.88 lakhs + interest in 24 cases. 11 cases. However, Interest in 7 cases. However, amount is amount is not In addition amount is not ascertainable in ascertainable in not ascertainable in 143 cases. remaining 34 cases. balance 15 cases.

61 a) Criminal Cases S.No Authority Accused Particulars of the matter / Charges Amount Status

1. Judicial Magistrate, Sh. Bhupinder Singh and A case has been filed under Section 406 Not The case is Saharanpur Mr. H.S. Malik Manager of the Indian Penal Code alleging that in Ascertainable pending for hearing. (Cane) 1990 the sugarcane was purchased without issuing receipts and thus the seller could not obtain payment.

2. Judicial Magistrate, Sh. Santar Pal, Cane Case under Sections 323/427/506 of the Not The case is Mawana Supervisor and Mr. D.K. Indian Penal Code for causing hurt, mis- Ascertainable pending for hearing. Sinha, Deputy Manager chief and criminal intimidation has been (Cane) & Ors. registered against employees for actions taken during the course of their duties.

3. Chief Judicial Magistrate Mr. Harbans Singh The erstwhile General Manager pros- Not The prosecution Muzaffarnagar ecuted for not opening a new sugarcane Ascertainable has been stayed by purchase center. Allahabad High Court.

4. Scheduled Castes & Smt. Chandra Kanta A complaint has been filed against the Not The investigation Scheduled Tribes company alleging discrimination and ha- Ascertainable has been stayed by Commission, rassment. the Lucknow Bench Lucknow of the Allahabad High Court in Writ Petition No.5935 of 2000.

5. Human Rights Smt. Chandra Kanta A complaint has been filed against the Not On directions of the Commission/ SDM, company alleging discrimination and ha- Ascertainable District Magistrate, Mawana rassment the SDM Mawana is inquiring into the matter.

6. Judicial Magistrate, Shri A.K. 8 cases under section 268/ 285/ 237/337/ Not The case are fixed Mawana Aggarwal, Shri Joy 338 IPC and 34 of Police Act have been Ascertainable for trial. Mukherjee, Shri Sharad filed against the employees of the Com- Krishna, Shri Rajeev pany and three contractors alleging that Mishra & Ors. the company dumped burnt fly ash around the factory area.

7. Chief Judicial Magistrate, Mr. Tajinder Kumar, A case against the Company for not hav- Not The case is Chandigarh Dealer and the company ing the superscription on the package Ascertainable pending for hearing. “Best before date”.

8. Judicial Magistrates, Mr. Satyapal The company has lodged 5 FIR/com- Rs. 2.90 Cases are pending Mawana, Meerut and Sh. Satyavir plaints against 5 workmen for misappro- lakhs Muzaffarnagar Sh. Ramesh Chand priation of cane. Sh. Narendra Sh. Satyapal

9. Judicial Magistrate, M/s. Sumit Associates & The company has filed 6 cases under Rs.5.61 Non-Bailable Mawana its partners Mr. Sumit Section 138 of the Negotiable Instru- lakhs Warrants issued Jain & Mr. Anuj Jain. ments Act. Cases Nos. 699 to 704 of against the 2002. The company had delivered sugar accused. to accused for which it issued cheques which were dishonored b) Labour Cases Sr. No. Name of the Authority Claim Amount Matter / Status 1. Workmen’s Compensation Commissioner, Meerut/ Rs. 8.64 lakhs + 5 Cases are filed against the Company for compensation / Deputy Labour Commissioner, Meerut/ Interest gratuity / permanency and payment of HRA. Labour Court, Meerut 1 case filed by an employee claiming that he was prematurely retired, as his actual date of birth was later. 2. 127 cases of temporary/regular workmen for reinstatement and/or compensation, dismissal & extra allowance. The cases are pending at Allahabad High Court/Labour Court/Ind. Tribunal, Meerut / Saharanpur. The amount is not ascertainable in all these cases.

62 c) Under The Factories Act. Authority Name of the Disputing Party Particulars of the matter Status Amount Allahabad High Court Assistant Director of Factories The Company has filed four criminal writ peti- Stay has been Not Ascertainable tions on the ground that Mr. Siddharth Shriram, granted. Chairman & Managing Director, was not the occupier as defined in the Factories Act. (Case No.- Crl. WP Nos.5131 to 5134 of 1993). d) Under Trade Tax

Authority Particulars of the Matter Status Amount Supreme Court A Special Leave Petition has been filed by the state of U.P. The matter is pending for further order. Rs. 14 Lakhs challenging the order of the Allahabad High Court quashing the circular of the State of U. P. whereby the exemption on purchase of high speed diesel within UP was withdrawn. Company is also a party in this matter. Allahabad High Court The company has filed a writ petition against the order dated The matter is pending for further order. Rs. 112.23 Lakhs 25.8.2000 given by the Commissioner, UP Trade Tax pertaining to the period of deferment of Trade Tax. e) Excise related Cases S.No Authority Particulars of the matter Status Pending Liability Amt. 1. CESTAT, New Delhi 9 appeals filed by the Company against the or- Pending hearing. Rs. 39.49 lakhs der passed by Commissioner Appeals, Meerut for wrongful availment of MODVAT Credit. 2. Deputy Commissioner 13 Appeals allowing CENVAT Credit. Cases Pending determination of Rs. 29.16 lakhs Muzaffarnagar/ have been remanded for fact verification to the facts Commissioner Appeal Adjudicating officer. Ghaziabad 3. CESTAT, New Delhi/ 6 appeals filed by the company for Demand of Pending hearing Rs. 8.49 lakhs Commissioner Appeal, excise duty due to shortage/removal of sugar/ Ghaziabad molasses grading of molasses by consumer. 4. Assistant Commissioner,. The company has received seven show cause Assessment Pending Rs. 6.78 lakhs Division, Muzaffarnagr / Dy. notices for shortage of molasses / sugar. Commissioner, Muzaffarnagar 5. Commissioner central Application filed by the company for remission The application is pending Rs.5.64 lakhs excise Meerut in excise duties. 6. Addl. Commissioner, Show cause notice issued to the company Adjudication Rs.47.83 lakhs Meerut-1 demanding excise duty on sale of Bagasse.

f) Under Uttar Pradesh Sugarcane (Regulation of Supply And Purchase) Act, 1953 S.No Authority Particulars of the matter Status Opposite Party 1. Allahabad High Court 4 Writ Petitions filed by the company challeng- The High Court stayed the Collector, ing the tagging order for the seasons 2002-03 order of the DM and modi- Muzaffarnagar & & 2003-04. fied the tagging percentage Meerut at 76% & 78% respectively. 2. Civil Judge (Sr. Div.) The company has filed a case challenging the Final arguments are to be Cooperative Cane Muzaffarnagar vires of the arbitration proceedings before advanced. The amount in- Dev. Society Ltd., Deputy Cane Commissioner, Saharanpur. volved is Rs. 2.06 Lakhs. Muzaffarnagar and Ors. 3. Allahabad High Court 7 Writ Petitions were filed by the Company/ Interim Orders in favour of The matters are against the Company for past seasons regarding the Company. infructuous now since reservation of cane purchase centres. they related to past seasons & will have no implication for future.

63 g) Civil Cases S.No. Authority Particulars of the matter Status Amt. 1. Tehsildar (Judicial) Sadar, 10 Cases filed against the company for Pending. But in 1 Case the Rs. 13.93 Lakhs Muzaffarnagar, encroachment on Gaon Sabha Land. matter has been sent back to the Tehsildar (Mawana) Tahsildar for reconsideration by the Allahabad High Court which has stayed the recovery of damages and demolition of the boundary wall. 2. Addl. Distt. Judge-VII, A revision petition has been filed by a Land For arguments. The amount involved is Meerut Owner against the order of the Civil Judge not ascertainable. dated 18.5.1998 dismissing his suit filed against the company for encroachment on his land at Village Nanglamal. 3. XIII Addl. Dist. Judge, Some Land Owners have filed an appeal Final arguments The amount involved is Meerut against the dismissal of the suit filed for not ascertainable. injunction restraining the company not to disturb them. 4. Delhi High Court The Union of India has filed a letter Patent The matter is pending for further The amount involved is Appeal against the company and three other order. not ascertainable. sugar factories regarding encashment of bank guarantees for differential levy sugar price. 5. Civil Judge (Jr.Div.) Suit for injunction filed against the company The Municipal Board has sought The amount involved is Mawana regarding school building in Mawana Mandi. impleadment in the matter not ascertainable. 6. Board of Revenue at The company has filed a revision against an The revision was dismissed in Rs.1.54 lakhs. Allahabad order by which a demand of Rs.26,925/- was default. However, the application imposed on it on account of additional stamp for restoration is pending. duty in relation to land purchased by the company. A penalty of Rs.1,26,925/- has also been imposed. 7. Allahabad High court 3 writ petitions filed by the company for grant Interim orders passed in favour The amount involved is of release order for sale of free sale sugar of the company. not ascertainable. without any restrictions 8. Allahabad High Court A Writ petition was filed by the company The High Court has passed an The amount involved is against the collection of toll tax by the PWD order whereby the toll tax not ascertainable. authorities at newly constructed bridge, as charged from the company there was no notification by the State Govt. would be kept in a separate account subject to the final order of the High Court. 9. District Consumer Forum, Complaints against non-refund of the security For Reply Rs.1.48 lakhs Muzaffarnagar deposit for the electrical connection. 10. Delhi High Court Three writ petitions filed by the Company The matter is pending for further The amount involved is through West Central and East UPSMA & order. not ascertainable. ISMA challenging SMP of cane for season 2002-03 & 2003-04. 11. Addl. Civil Judge, Sr.Div. 3 Civil suit filed by company for permanent The matter is pending for further The amount involved is Meerut/ Civil Judge, injunction regarding encroachment on order. not ascertainable. (Jr.Div.) Mawana, Civil Mawana Mandi and Nanglamal property. Judge Merut 12. Vth Addl Civil judge Meerut, 3 suits of recovery of amount from an The matter is pending for further Rs. 6.87 Lakhs + III Addl. Civil judge employee and two suppliers have been filed order. interest. Meerut,VII Addl Civil Judge by the company Meerut 13. Civil judge (Jr. Div.)Meerut, 3 execution petitions filed by the company The matter is pending for further Rs. 1.15 Lakhs + Civil judge (Sr. Div)Meerut, order. interest. Civil Judge, Dehradun 14. Supreme Court Two SLPs filed on behalf of the Industry The matter is pending for further The amount involved is through WUPSMA challenging Cane price order. not ascertainable. and Society Commission.

64 g) Civil Cases S.No. Authority Particulars of the matter Status Amt. 15. Allahabad High Court The company and some others challenged The matter is pending for further The amount involved is the acquisition of land by the State of U.P. order. not ascertainable. Stay was granted. However, during the pendency of the petition, the Govt. authorities took possession of the acquired land and a contempt petition has been filed. 16. Allahabad High Court The company has filed a writ petition chal- The matter is pending for further Rs. 100 Lakhs (approx.) lenging the extension of municipal limits to order. include MSW. 17. Allahabad High Court The company has filed a writ petition chal- The company has deposited the The amount involved is lenging the demand of the Cane Commis- demanded amount of Rs.20.00 not ascertainable. sioner, Uttar Pradesh for payment of money lakhs and plans to withdraw the on account of differential transport rebate on case. cane purchased during the season 1989-90. 18. Allahabad High Court The company has filed a writ petition chal- The company’s writ has been Rs.42.90 Lakhs lenging demand of interest on electricity duty. connected with another writ petition and is pending hearing. 19. Allahabad High Court The company has filed a petition challeng- The matter is pending for further The amount involved is ing demand of parking fee from trucks com- order. not ascertainable. ing from rural area of MSW. 20. Allahabad High court Writ petition filed on behalf of the company The matter is pending for final The amount involved is 48159/2002 through West, central & East UPSMA for disposal. not ascertainable. directions to be given to state not to fix cane price for corporate and co-operative factories. 21. Allahabad High Court Two Writ petitions filed on behalf of the com- The matter is pending for further The amount involved is pany through West UPSMA challenging levy order. not ascertainable. price for 1999-2000 & 2000-2001. 22. Allahabad High Court The company has filed a petition challenging Stay order granted. The petition The amount involved is the order of the District Magistrate, Meerut is pending. not ascertainable. requisitioning its guest house to use it as temporary jail

23. Delhi High Court The State Trading Corporation of India has As per the orders of the Delhi Rs.7.27 Lakhs filed an appeal against an order of the Single High Court, the State Trading Judge of the Delhi High Court wherein an Corporation has deposited a arbitral award in favour of the company was sum of Rs.7.27 lakhs and the made rule of court. company has been permitted to withdraw the said amount by furnishing a bank guarantee of an equivalent amount. 24. Delhi High Court The company has filed a writ petition against The petition is listed for final Rs. 57 lakhs approx. the Food Corporation of India deducting on disposal in August 2004. account of shortages in the quantity of sugar purchased from the company. 25. National Consumer The Mawana Sugar Works Employees Provi- The matter is pending for further Rs.25.18 Lakhs Disputes Redressal Forum, dent Fund Trust had deposited funds with a order. Delhi bank under a scheme wherein it was to be paid interest @ 12% per annum. However, the bank paid interest only @ 4.5% per annum. 26. 3 writ petitions have been filed by the company in Allahabad High Court challenging the orders of Addl. Collector (E), Meerut imposing damages for allegedly encroaching on land belonging to the Gram Sabhas involving an amount of Rs.4.06 Lakhs. 27. 3 writ petitions have been filed by the company in Allahabad High Court challenging the orders of the Board of Revenues wherein the company has been ordered to pay additional stamp duty in connection with land bought by the company. The amount involved in 2 of these petitions is Rs. 45.47 Lakhs. 28. A writ petition has been filed by the company in Allahabad High Court challenging the order of Dy. Director of Consolidation wherein he has set aside an order by which the company had been given 4 bighas and 14 biswas of land. The amount involved is not ascertainable. 29. 5 cases have been filed against the company before Addl. Civil Judges of Muzffarnagar, Merut and Pathankot demanding injunction. The amount involved in the case with Pathankot Judge is Rs. 3.56 Lakhs though in remaining cases, amount involved is not ascertainable.

65 I. (B) Cases filed by the Company – Labour Authority Particulars of the matter Amount Status Allahabad High Court 13 Writ Petitions filed by the company against Rs.29.51 lakhs The workmen were awarded the Awards whereby temporary workmen were reinstatement by the labour court/ reinstated with back wages. Industrial Tribunal and the Company has challenged the decision. Allahabad High Court 2 Writ Petitions filed by the Company against the Not Ascertainable The company has challenged the interim order requiring the management to lead orders of the Labour Court. evidence though the onus was on workmen. Additional Labour An appeal filed by the company against an order Rs.1.98 lakhs + interest The lower Court ruled in favour of the Commissioner, Kanpur under the payment of Gratuity Act, 1972 for giving Opposite Party. gratuity to a teacher. Allahabad High Court Writ Petition filed by the Company challenging Rs.2.22 lakhs In pursuance of an interim order passed the order passed by the Commissioner under the by the High Court the Company has paid Workmen’s Compensation Act, 1973 granting Rs.1 lakh to the wife of the deceased and compensation to the widow of an employee the remaining amount of Rs.1.22 lacs has who had not met with an accident during the been deposited in the Nationalised Bank course of employment. in the joint name of the Commissioner and the wife of the deceased. The appeal is still pending. Allahabad High Court Writ Petition filed by the Company challenging Not Ascertainable Further proceedings before the Labour the order of the Labour Court regarding Court have been stayed and the writ reinstatement of a temporary workman. petition is pending. Allahabad High Court, M/s New India Assurance Company has filed an Rs.1.76 lakhs + interest Judgement has been reserved on the Workman Compensation appeal against the award under the Workmen’s review application. Commissioner, Meerut Compensation Act, 1923 whereby a sum of Rs.1.76 lakhs has been awarded to the wife of the deceased. The company has filed application for Review of the award as the company has been ordered to pay interest upon the compensation amount.

II. Litigations relating to Promoter/Group/Subsidiary/Associate Companies 1. Siel Limited (A) Cases Against Siel Ltd. a) Excise Cases

Authority Particulars of the matter Status Amt. (in Rs.) CEAST, Delhi The Department had filed an appeal against an order The appeal has been decided and while the Rs.50.00 lakhs wherein a case relating to the company not following company’s right to use the cenvat credit has proper procedures while availing of modvat credit not been disputed, a penalty of Rs.50 lakhs on capital goods was decided in favour of the has been imposed on the company for company. procedural lapses. In an appeal before the Tribunal, stay has been granted and the case has been remanded back to Commissioner (Appeal) Chandigarh for reconsideration of the matter requested for by the respondent in the Cross objections. Commissioner, Central A show cause notice dated 6.11.2001 was issued The case is pending for adjudication. Rs.28.14 lakhs Excise, Chandigarh to the company for non-inclusion of Freight charges in the assessable value. Dy. Commissioner, A show cause notice (SCN) dated 6.11.2001 was The reply to the SCN filed and hearing is Nil Central Excise, Patiala issued to the company for wrongly availing the completed. cenvat credit by the company on water pipeline laid Decision is awaited. down outside the factory. Though the amount was already reversed before the issuance of SCN. Adl. Commissioner, A Show Cause Notice (SCN) has been received on A suitable reply to the SCN is being filed in Rs.5.73 lacs Central Excise, 22.4.2004 alleging that the cylinder discounts consultation with the Company’s Advocate. Chandigarh allowed to the buyer are not as per the provisions of the Central Excise Act and as such the value paid can not be construed to be transaction value/normal price.

66 b) Criminal Cases Authority Particulars of the matter Status Amount Metropolitan Magistrate Prosecution against company’s three officers regarding Fixed for framing the charge. The amount is not Delhi Oleum gas leak. ascertainable.

Judicial Magistrate First The Opposite Party has filed a case against a supplier The company has moved an Rs.40.83 Lakhs Class, Indore. of the company under Section 138 of the Negotiable application for discharge of itself Instruments Act and Section 420 of the Indian Penal Code and its officials. alleging that the company and its officials have connived with a third party to cheat the Opposite party. c) Under Prevention of Food Adulteration Act, 1954 The company is facing prosecution in 28 cases under the act on the allegation that samples of Sunflower oil; Mustard Oil and Vanaspati were found to be adulterated. These cases are pending in the Courts of Chandigarh (1), Indore (1), Barbil (1), Allahabad High Court (3), Balaghat Madhya Pradesh (1), Delhi (9), Jaipur (3), Jammu (1), Udaipur(1), Bikaner (1), Bhilwara (1), Jodhpur (1), Nainital (1), Neem Ka Thana (1), Feerozpur (1) and Chandrapur (1). d) Under Essential Commodities Act Authority Particulars of the matter Status Allahabad The Company has challenged the prosecution for alleged The case is pending and the trial Court proceeding have High Court infringement of the Essential Commodities Act, VOP been stayed (Lucknow Bench) control Order issued by State Government regarding licencing of wholesalers. Patna High Court The company has filed an appeal against an order by The case is pending for further order. which the Trial court refused to drop proceeding in connection with a raid where stock was found in excess of the amount notified. e) Labour Cases Authority Particulars of the matter Status Amount (Rs.) Delhi High Court The Company has filed two writ petitions Writs have been admitted and orders of Not ascertainable challenging the award of reinstatement/reference lower courts stayed. of dispute to labour courts. Delhi High Court An appeal filed by the Company against orders of Appeal listed for admission hearing on Rs.58.65 lacs + interest the E.I. Court upholding demand of ESI towards 9.11.2004. Stay of recovery granted subject arrears of contribution for the years 1968-1979. to Bank Guarantee of Rs.10 lacs. Delhi High Court Two writ petitions filed against the company by the Petitions have been fixed for final hearing. Rs.13.97 Lakhs Regional Provident Fund Commission against the order of the Employees Provident Fund Appellate Tribunal. Controlling Authority A claim of balance gratuity & interest filed against Filing of documents by both parties. Not Ascertainable Gratuity Karampura the company by a workman Delhi Labour Court Delhi 12 Cases filed against the Company by workmen Cases are pending for further proceedings. Not Ascertainable alleging illegal terminations. Supreme Court Case against the company by SFFI Krantikari Amount has been deposited with the Labour Nil Majdoor Union. Commissioner. Labour Court Delhi 3 cases against the company by workmen claiming The cases pending before labour court. Not Ascertainable wage increase and other benefits. Presiding Officer, Case under Section 33 (C)(2) of the Industrial The case is fixed for applicant’s evidence Not Ascertainable Labour Court Patiala Disputes Act, 1947 have been filed by workers for on 18.1.2005. payment of bonus @ 20% as against 8.33% given by the Company.

Civil Judge, Rajpura The union has filed a case against State of Punjab, The case is fixed for further proceedings on Not Ascertainable the company and others. 28/8/2004. Patna High Court Appeal by the company against award of labour The case is pending for further order. Rs. 1.8 Lakhs court, Purnea dated 30.4.2003. Labour Court, An ex-employee of the company has filed a case Admission/ denial of the documents is to be The amount is not Faridabad for his re-instatement with full back wages and carried out by the company. ascertainable. continuity of service at Siel Aircon.

67 f) Civil/Others Cases Authority Particulars of the matter Status Amount City Civil Court, Case for recovery of amount towards The case is pending for further Rs.1.62 lacs Ahemdabad cost of arbitration filed against company. order. Madras High Court Suit for infringement/passing off by M/s The suit was stayed In the The amount involved is not A.V.Thomas, Madras regarding meanwhile the matter was settled ascertainable. Trademark. and the party gave undertaking before the High Court of Delhi that they will not use that mark. The case before the High Court of Madras will come up in due course. Arbitrator appointed by Case for recovery on account of non- The case is fixed for final Rs. 681.13 Lakhs ICA. lifting of material against a contract filed arguments before the arbitrator. against the company. Delhi High Court Appeal against the company for The appeal is pending for further Rs.2.0 lacs damages caused due to oleum gas leak. order. Civil Court Delhi Suit filed against the company seeking The suit is pending for further The amount involved is not injunction restraining it from appointing order. ascertainable. stockist for Gandhinagar and from permitting any other person to supply the product in the area. Civil Court, Delhi. A suit has been filed against the Fixed for plaintiff’s evidence The amount involved is not company for declaration and injunction ascertainable. against a settlement already reached with opposite party. High Court of Delhi. Three suits for recovery filed against the Unconditional Leave to defend has Rs. 60.23 lacs company. been granted to the company. The company has already deposited Rs. 16.40 lakhs High Court of Delhi. A suit for recovery against the company The suit is pending for further Rs.29.35 lakhs (including principal for recovery of amounts on account of order. amount of Rs. 5,47,296/-) work done in 1984. District Court, Delhi 6 Suits against the company for recovery Pending. In one case the The amount involved is not of possession, arrears of rent and mesne company has surrendered the ascertainable. profits. possession. Distt. Court, Delhi 5 cases have been filed against the The cases are pending for further Rs. 5.5 Lakhs company for arrears of maintenance order. charges. g) Under Monopolies and Restrictive Trade Practices Act, 1969

Authority Particulars of the matter Status Adjudicating Authority, Subsequent to preliminary investigation conducted by The Commission vide its order dated 1.3.2002 held that the MRTP Commission. the Director General of Investigation and Registration, a notice of enquiry was not maintainable in respect of charge of notice of enquiry dated 1/12/94 was issued by the Com- cartelisation. It directed modification of charge and continuation mission to various manufacturers of Chlorine & HCL in- of proceedings in respect of charge pertaining to manipulation cluding the company. of conditions of delivery or price. The company has filed its reply to the amended notice. h) Under Companies Act, 1956

Authority Particulars of the Matter Status Amount (in Rs.) Regional Director, (NR) Application filed by Company for Compouding u/s. 209,211 The matter is pending The amount involved Kanpur & 217 of the Companies Act, 1956 for hearing. is not ascertainable. i) Arrears on Preference Shares As on 31st March 2004, the company has arrears of unpaid dividend on 13% Preference Shares for the years ended September 30 1998, 1999, 2000,2001 and for eighteen months ended March 31 2003 and year ended March 2004 amounting to Rs. 0.08 Lakhs. j) Case by Unit Trust of India (UTI) Unit Trust of India, one of the lender, issued recall / winding up notice in November, 2002 to the erstwhile Siel Ltd. on having defaulted on interest payment / principal repayment. In the meantime, the Company approached CDR Cell for restructuring and they approved restructuring package in March, 2003. The restructuring package was then approved by Hon’ble High Court vide its Order dated 26th August, 2003. UTI had

68 not conveyed its consent for the restructuring package and filed an appeal against the order of High Court, approving the aforesaid Scheme, in the Division Bench of Hon’ble High Court. The Appeal of the UTI has not been admitted by the High Court and there are no restraints on implementation of the Scheme and the same has already been implemented by erstwhile Siel Ltd. Presently, the other Lenders of Siel Ltd. have agreed to pay sum upto Rs. 1173 lakhs to UTI against the sum of Rs. 300 lakhs awarded by the High Court to be paid out of the surplus realization from the Special Purpose Vehicle viz. Shivajimarg Properties Ltd., in which the land of erstwhile Siel Ltd. located at 15, Shivaji Marg, New Delhi has vested pursuant to the Scheme. The Company has also filed an application u/s 392 of the Companies Act, seeking a direction from Hon’ble High Court to restrain UTI from creating any impediment and UTI be directed to take all steps to issue necessary no objection required for sale of non-operating assets, as required in terms of the Scheme. The Court has directed UTI to consider the One Time Settlement proposal of the Company and report to the Court so that effective order could be passed by the Court.

(B) Cases By Siel Ltd. a) Excise Cases At Hyderabad Unit (M/s. Tecumseh Products India Ltd. has taken over the unit, but the company continues to be liable for the period prior to 31.3.1997.)

Authority Particulars of the matter Status Pending Liability CESTAT, The company has filed two appeals against Demand stayed on deposit Rs.10.00 lakhs Rs.72.12 lacs Bangalore the order of the Commissioner on and Rs.60,000/- classification of lamination bundles. CESTAT, The company has filed an appeal in the Unconditional stay of demand has been Rs.54.05 lacs Bangalore Tribunal against the order of the granted and case tagged with another Commissioner on allowability of marketing appeal of MRF Ltd. for the same issue. and sales expanses. Commissioner (Appeals) The matter of inclusion of handling charges The case has been decided against the Rs.41.58 Lakhs Hyderabad in assessable value had been remanded company and the company has filed an back by the Tribunal, second time. appeal before the Commissioner (Appeals). Dy. Commissioner, 2 cases for refund filed by the company. Processing of Company’s refund claims are Rs.14.86 Lakhs Hyderabad being done by the Department. Asstt. Refund Commissioner Hyderabad Asstt. Commissioner Excise As per order of the Commissioner Appeals Appeal filed before the Commissioner Rs.50 Lakhs the case was sent back for verification of (Appeals) was allowed subject to certain records. verification of certain records. The records were got verified long ago. However, no formal orders have been passed by the Assistant Commissioner. Dy. Excise and Taxation The company has filed an appeal against Goods released after submitting a bank Rs.12.00 Lakhs Commissioner (Appeals) delivery of goods by Sales Tax Authorities guarantee. Patiala on the ground that these are not accompanied by documents. b) Custom Cases Adjudicating Authority Particulars of the matter Status Amount Commissioner of Appeals, The company has filed three appeals on the The appeals are pending for further Rs.1.56 Lakhs Bombay issue whether the refund granted in company’s orders. favour should be given to it or credited to the Consumer Welfare Fund. Commissioner of Appeals, The company has filed a refund claim for con- The case is pending for further or- Rs. 2.49 Lakhs Bombay signment imported in the year 1980. der.

69 c) Civil/Others Cases Authority Particulars of the matter Status Amount

New Delhi Municipal Reassessment of property tax on Company’s The matter is pending for further order.. Rs.18 Lakhs Corporation immovable property. The case was remanded back to the Assessment Officer, by the District Judge. Civil Judge, Delhi Suit filed by the company for recovery of amount Suits stayed because the opposite party Rs.4.79 lacs + Interest due against supplies. has become sick and made a reference to the BIFR. Delhi High Court Claim filed by the Company against the Railways Appeal admitted on 24.1.2004. Will come Rs.16.0 lacs + Interest for charging excess freight. up for hearing in due course. Board Level Review Appeal has been filed by the Company against The appeal is pending for further order. Rs.51.32 Lakhs Committee an order by which penalty was imposed for having excess installed load. Supreme Court SLP has been filed by Punjab State Electricity The hearing before the Regulatory Rs.409.6 Lakhs Board against the order of High Court by which Commission has been stayed. (Already paid) the company’s appeal against the tariff increased for the year 2002-2003 was accepted. Punjab & Haryana High The company has filed an appeal against the The opposite party has objected to the Rs.355 Lakhs Court decision of the Regulatory Commission to maintainability of the appeal in the High (Already paid) increase the tariff for the year 2003-2004. Court. d) Criminal Cases

Authority Particulars of the matter Status Amount Chief Judicial Magistrate, 11 criminal complaints u/s 138 of the Negotiable Instruments Act have been Pending Rs.120 lakhs Faridabad/ filed by the Company for dishonouring of the cheques issued by the parties Rajpura in payment of their dues towards the cost of material. e) Sales Tax Cases

Court Particulars of the Matter Status Pending Liability Additional Commissioner (Amnesty) Applications filed to reinstate the earlier request filed The applications are pending Rs.21.98 lacs Commercial Tax, Kolkata by the Company for settlement under Amnesty for further orders. Scheme. Appellate Tribunal, Mumbai The company has filed an appeal against levy of The appeal is pending for Rs.32.02 lacs interest on account of delay in deposit of local sales further order and conditional tax. stay granted. Dy. Commissioner, (Appeals) Kolkata The company has filed an appeal against the The appeal is pending for Rs.1.46 Lakhs assessment order. further order. Commissioner of Sales Tax, Delhi. The company has filed eight appeals against the The appeals are pending for Rs.594.80 lacs Dy. Commissioner, Delhi demands of sales tax raised by the Assessing Officer further order. Addl. Commissioner, Delhi for various assessment years on account of non- submission of Forms The Company has filed appeals against the order of the Assessment Officer levying full sales tax on sale of air conditioners and water coolers to Govt. Deptt. Against Form “D” for the Assessment years 1995-96 & 1996-97 The pending liability amounts to Rs.17.21 Lakhs & an amount of Rs.5.96 Lakhs has been paid under the appeals.

High Court of Gujarat, Ahemdabad Sales Tax levied on repair charges of Compressors for The case is pending for Rs. 83.00 Lakhs the assessment years 1995-96, 1996-97 upto Aug 96 further order. Sales Tax Tribunal, Ahemdabad Higher rate of Tax levied by Assessing Officer for as- The case is pending for Rs.1.60 Lakhs sessment year 1995-96 further order. Tamil Nadu Taxation Special Four appeals filed by the company in relation to tax The appeals are pending for Rs.525.96Lakhs Tribunal, Chennai/ levied on repair charges. further order. Bhubaneshwar Deputy Commissioner (A) 4 appeals filed by the company for the assessment The Assessing Officer raised Rs.11.83 lacs Commercial Taxes, Jaipur years1990-91 to 1993-94 & 1994-95. a demand on replacement of defective compressor from floating stock of the company. However the Rajasthan Tax Board in their order dated 02.05.02 has given decision that such transaction cannot be treated as sale. 70 Court Particulars of the Matter Status Pending Liability

Deputy Commissioner (Appeal), The company has filed an appeal. Demand raised by The appeal is pending for Rs.1.13 lakhs Commercial Taxes, Jaipur the Assessing Officer on account of variation in stock further order. and treated as sales turnover. Addl. Commissioner (A) Sales Tax, The company has filed an appeal against an order The appeal is pending for Rs. 1115 Lakhs New Delhi wherein a demand has mainly been raised on account further order. of tax on fixed assets transferred as per the Scheme of Arrangement approved by Hon’ble High Court for the assessment year 1989-90. Assessing Authority, New Delhi Demand had been raised due to non-submission of The demand has been Rs.6.40 lakhs + forms but the matter has now been remanded. The stayed. Rs.6.30 lakhs company has forms covering demand of Rs.7.42 lakhs (interest) for the assessment year 1991-92 Assessing Authority, Sales Tax, The case has been remanded. The demand has been The demand has been Rs.10.09 lakhs + New Delhi raised for non-submission of forms for the year 1996-97 stayed. Rs.4.96 lakhs (interest) Assessing Authority, Sales Tax, The Assessing Officer has passed an order against The company received the Rs.4.09 lakhs. New Delhi the company. Non-submission of forms for the A.Y. order on 26.4.2004 and is 2002-03. going to file an appeal. Note- The company has assessment pending for Chandigarh for the assessment years 1997-98, 1998-99, 1999-2000 and 2000-2001, for Jallandhar for the assessment years 1997-98, 1998-99, 1999-2000 and 2000-2001, for Pondicherry for the assessment years 1999-2000 and 2000-2001 and for Silvassa for the assessment years 1999-2000 and 2000-2001. f) Trade Tax Cases Authority Particulars of the matter Status Amt. (in Rs.) Trade Tax Tribunal, Meerut SRI has filed two appeals under the U.P. The appeals are pending for further Rs.34.00 Lakhs Trade Tax Act. order. approx. Assessing Authority, Trade The Assessing Authority has passed an The order was received on Rs.0.26 lakhs + Tax, Meerut order against the company. 23.4.2004 and the company is going Rs.0.18 lakhs to file an appeal. (interest) g) Income Tax Cases

Authority Particulars of the Matter Status Amount (in Rs.) Income Tax Appellate The company as well as the Income Tax The appeal is pending for The amount has already been set Tribunal Department have filed appeals against the order of further order. off against the company’s losses Commissioner of Income Tax (A) dated 14.6.1999 and so the result of the appeal will confirming part of the disallowance of Rs.18,34,072/ have no direct financial - made by the Assessment Officer on account of consequences. However, the forfeiture of security deposit and repair expenses company may incur liability and double addition of Income. because of penalty proceedings initiated under Section 271(1)(c) of the Income Tax Act. Income Tax Appellate The company has filed an appeal against the order Appeal is pending for further The amount has already been set Tribunal of Commissioner of Income Tax (A) dated 30.3.2004 order. off against the company’s losses allowing the addition of Rs.198 lakhs on account and so the result of the appeal will of commission paid to Usha International Limited have no direct financial for the A.Y. 2000-01. consequences. However, the company may incur liability because of penalty proceedings initiated under Section 271(1)(c) of the Income Tax Act Commissioner of The company has filed an appeal against the order Appeal is pending for further Rs.41.84 lakhs Income Tax (A) of the Assessment Officer for the demand raised order. The company has also (The company may incur higher under Section 234B & 234D of the Income Tax Act filed an application before the liability because of penalty for the A.Y. 2001-02 Assessment Officer to stay the proceedings initiated under Section demand till disposal of the 271(1)(c) of the Income Tax Act). appeal. Another application has also been filed for effecting the order of the Commissioner of Income Tax (A) allowing additional loss in his order for assessment year 2000-01.

71 g) Income Tax Cases

Authority Particulars of the Matter Status Amount (in Rs.) Andhra Pradesh High The company has filed a petition against the The matter is pending for further The pending liability amounts to Court demand on account of disallowance of interest on order. Rs.3.00 Lakhs. royalty for the A.Y. 1994-95. Commissioner of The company has filed two appeals against the The appeals are pending for The pending liability amounts to Income Tax (A), demand of tax raised on account of non-deduction further order. Rs.8.01 Lakhs. Hyderabad of TDS on interest for the assessment years 1996- 97 & 1997-98. Income Tax Appellate The company has filed appeals for various years The appeals are pending for The disputed amount is Rs. Tribunal (ITAT) against disallowances which inter-alia include non further order. 11973.73 Lakhs. compete fee considered as business income expenses on entertainment, foreign travel, technical know-how fee, Interest on disputed cane price, new project expenses Compensation claim(Oleum Gas), interest on investment/advances to Subsidiaries Premium on redemption of debentures, provision for warranty expenses, profit on cancellation of Debentures etc. Commissioner of The company has filed appeals against The appeals are pending for The disputed amount is Rs. Income Tax (Appeals) disallowances which is mainly due to interest on further order. 15838.39 Lakhs. investments/Advances to subsidiaries, Depreciation, Provision for leave encashment, Capital Loss on sale of shares/ Trade Mark, Loss on surrender of Land to DDA. Income Tax Tribunal Income Tax Department has filed appeals against The appeals are pending for The disputed amount is Rs. 585.20 (ITAT) relief allowed by CIT (Appeals) relating to Expenses further order. Lakhs. of Foreign Travel, Issue of NCD, VRS, Molasses Storage fund, interest on excess levy price of Sugar, Provision for leave encashment.

2. Siel Financial Services Ltd. (A) Appeals Against Siel Financial Services Ltd a) Income Tax Cases Authority Particulars of the matter Status Income Tax Appellate The Assessing Officer has filed an appeal (No. 316/Indore/2001) The Appeal is Pending for further Order. The Tribunal, Indore against the order of Commissioner of Income Tax (Appeal), Bhopal Assessing Officer has not granted any relief to whereby a direction was given to the Assessing Officer to compute the company and the company has taken up this interest under Section 234B of the Income Tax Act for A.Y. 1996-97. issue also before the Appellate Tribunal in its own appeal for this assessment year. Thus, there will be no further liability even if this appeal is decided against the company. Income Tax Appellate The Assessing Officer has filed an appeal (934/Indore) for A.Y. 1998- The appeal is pending for further order. Tribunal, Indore 99 against the order of Commissioner of Income Tax (Appeal), Bhopal If the appeal is decided against the company, deleting the addition of Rs.548.51 lakhs made under Section 68 of Rs. 64.87 Lakhs of demand will be payable. the Income Tax Act on account of public deposits held by the Company. b) Excise Cases

Authority Particulars of the matter Status Amount (in Rs.) CESTAT, Delhi The Excise Department has filed an appeal against the The appeal is pending for Rs.10.34 Lakhs company against the order of Commissioner (Appeals), further order. Bhopal. To be listed.

72 c) Civil/ Criminal Cases Authority Particulars of the matter Status Amount (in Rs.) Delhi High Court Prakash Industries Limited, which failed to make payments An interim order has been granted The opposite party has of lease rentals, has filed an appeal for stay of arbitration staying the arbitration proceedings claimed Rs.387.00 proceedings under Section 22(1) of Sick Industrial Compa- and the case has been adjourned lakhs and the nies (Special Provisions) Act. sine die as a similar matter is company has filed a before the Supreme Court. counter claim of Rs.89.25 lakhs. Addl. Distt. Judge, An appeal has been filed against an order by which the suit The appeal is pending for further Rs. 0.92 Lakhs Gondia filed by Rukmani Solvent Pvt. Ltd. has been dismissed. order.

Third Addl. District The company has filed objections under Section 34 of Arbi- The matter is pending for further Rs. 1.00 Lakh Judge, Indore tration and Conciliation Act, 1996 against the award made order. exparte against the company in the matter wherein company contended that there was no contract between it and M/s. R. Veljee & Sons. according to which it had to pay brokerage to the opposite party viz. M/s. R. Veljee & Sons.

(B) Appeals By Siel Financial Services Ltd a) Income Tax Cases

Authority Particulars of the matter Status Pending Liability Income Tax The company has filed two appeals against The appeals are pending for further The company has no direct liabilities, as Appellate Tribunal, orders disallowing printing and stationery order. the Company’s losses were higher. Indore expenses of Rs. 11.62 lakhs and disallowance However, the company may incur liability of freight payable of Rs.33.15 lakhs. These because of penalty proceedings initiated relates to A.Y. 1993-94 & 1998-99 under Section 271(1)(c) of the Income Tax Act. Income Tax The company has filed two appeals against The appeals are pending for further Out of total pending liability of Rs. 155.56 Appellate Tribunal, orders disallowing depreciation on sale and order. In the Delhi case, the lakhs, Rs. 99.67 lakhs have already Indore and Delhi lease back transaction for the A.Y. 1994-95 company has filed an application for been paid & Rs. 55.89 lakhs is still and 1996-97. transfer of the case to ITAT, Indore pending (which has been stayed till and in the Indore case the company 31.7.2004). has also filed a rectification However, the company may incur liability application before the CIT(A), because of penalty proceedings initiated Bhopal. under Section 271(1)(c) of the Income Tax Act Commissioner of The company has filed an appeal against As- The appeal is pending for further Rs.5.41 lakhs However, the company Income Tax sessing Officer’s order under Interest Tax, Act order. may incur liability because of penalty (Appeals) Bhopal. (for A.Y. 1996-97) for addition on account of proceedings initiated under Section 13 interest on transactions not considered as sale of the Interest Tax Act and lease back transaction. Commissioner of The company has filed three appeals against The appeals are pending for further The company has no direct liabilities as Income Tax Assessing Officer’s orders disallowing loss and order. the Company’s income was found to be (Appeals) Bhopal. depreciation amounting to Rs. 631.44 lakhs for Nil (1996-97) or higher than Rs.31.38 the assessment year 1996-97 depreciation for lakhs (2000-2001). the year 1997-98 and interest paid on Term However, the company may incur liability Loan to ICICI, preliminary expenses, deprecia- because of penalty proceedings initiated tion and Sundry creditors amounting to under Section 271(1)(c) of the Income Rs.31.38 lakhs for the A.Y. 2000-01. Tax Act. The Company has already paid a sum of Rs. 2.55 lakhs (A.Y. 1997-98). b) Arrears on Cumulative Preference Shares As on 31st March 2004, there are arrears of dividend amounting to Rs. 226.70 Lakhs on 7% Cumulative Preference Shares held by its holding Company viz. Siel Limited.

3. SFSL Investments Ltd. Under Companies Act, 1956 Authority Date of Penalty imposed Amount Status Company Law Board 19/12/2003 Rs. 5,000/- Contravention of Section 383-A of the Companies Act, 1956 since the Company was not having any Whole Time Company Secretary.

73 4. Siel Industrial Estate Ltd. a) Land Acquisition Cases The Company is facing litigation in regard to enhancement of compensation of the land acquired. The cases are pending in the court of Additional District Judge, Patiala. The case is now fixed for evidence of the Company. b) Income Tax The company has filed an appeal before Income Tax Tribunal in respect of penalty levied u/sec. 271(1)(c) of the Income Tax Act, on interest on funds invested with other companies and reduced from Pre-operative expenditure pending commencement of commercial production but treated as income by the Assessing Officer for the assessment years 1998-99 to 2000-01. The disputed amount is Rs. 40.52 Lakhs.

5. Transiel India Ltd. Authority Particulars of the matter Status Amount (in Rs.) Income Tax Appellate Tribunal, The company and the Income Tax Department The appeal is pending for The company may incur Delhi have filed appeals against the order of the further order. liability because of penalty Commissioner of Income Tax upholding the proceedings initiated under addition made by Assessing Officer on A/c of Section 271(1)(c) of the C&F provision. & short recovery of debts. Income Tax Act. The company has filed an appeal before CIT(A) The appeal is pending for The company may incur Commissioner of Income Tax against the order of the Assessing Officer making further order. liability because of penalty (Appeals) the addition of Bad Debts written off and initiating proceedings initiated under penalty proceeding under section 271(1)(c). Section 271(1)(c) of the Income Tax Act. The company has filed an appeal against a The appeal is pending for Rs.23.60 lacs Sales Tax Appellate Tribunal, demand raised on account of non submission of further order. However the Patna Form IX-C for Tax paid purchases in Bihar. company has now submitted the forms. Arbitration claim filed by the company against The opposite party has been Rs. 52.64 Lakhs + interest Justice Mr. Satpal (Retired), the opposite party for breach of contract. wound up and the assets Sole arbitrator have been taken over by the Official Liquidator. Suit filed by the company for the recovery of sale The suit is pending for Rs.39.22 Lakhs + interest High Court of Delhi price, which the opposite party defaulted to pay further order. towards the material, supplied to them. Criminal complaint filed by the company under Statement of Complainant to Rs.25.89 Lakhs Additional District Judge, New Section 138 of the Negotiable Instruments Act be recorded. Delhi in respect of bouncing of cheque.

Arrears on Preference Shares As on 31st March 2004, there are arrears of dividend amounting to Rs. 11.30 Lakhs on 15% Cumulative Preference Shares.

6. Busneda Commercial Pvt. Ltd. Income Tax Cases Authority Particulars of the Matter Status Pending Liability (in Rs.) Commissioner of Income The company has filed an appeal against the The appeal is The company has no Income Tax liability Tax (Appeal), Jammu Assessing Officer’s order disallowing the loss pending for as the assessed income remains a loss. incurred by the company (A.Y. 1995-96) because the further order. However, the company may incur liability company had treated the loss incurred on purchase because of penalty proceedings initiated & sale of Non Convertible Debentures as deferred under Section 271(1)(c) of the Income revenue expenditure. The loss of the company was Tax Act reduced from Rs. 591.82 lacs to Rs. 317.56 lakhs.

7. Sandvik Investments & Leasing Pvt. Ltd. Income Tax Cases Authority Particulars of the Matter Status Pending Liability (in Rs.) Commissioner of Income The company has filed an appeal against the As- The appeal is The income was found to be Nil. Tax (Appeals), Delhi sessing Officer’s order for the assessment year pending for However, the company may incur liability 1996-97 disallowing the carry over of loss of Rs. further order. because of penalty proceedings initiated 55.12 lakhs incurred by the company. under Section 271(1)(c) of the Income Tax Act

74 8. Greenfields Commercial Pvt. Ltd. Income Tax Cases Authority Particulars of the Matter Status Pending Liability (in Rs.) High Court of Jammu & The Income Tax Department has filed an appeal against The appeal is The company has no income tax liability Kashmir the order of the Income Tax Appellate Tribunal (ITAT) pending for as its assessed income remains a loss. dismissing the order of the commissioner of Income tax further order. passed u/s.263 of the Income tax Act for A.Y.1995-96 because the company had treated the loss incurred on purchase and sale of non convertible debentures as deferred revenue expenditure.

9. Minos Trading (I) Pvt. Ltd. Income Tax Cases Authority Particulars of the Matter Status Pending Liability (in Rs.) Delhi High Court. The Income Tax Department has filed an appeal against The appeal is Rs. 70.05 Lakhs the order of the Income Tax Appellate Tribunal reversing pending for the order of the Commissioner of Income Tax (Appeal) further order. who disallowed depreciation on the compressors leased out to M/s. Shriram Refrigeration Industries Ltd. for A.Y. 1990-91. Income Tax Appellate The company has filed two appeals against the order of The appeals The company has no direct liabilities as Tribunal, Delhi. Commissioner of Income Tax (Appeal) confirming the are pending the Company was still in a loss. However, order of the Assessing Officer disallowing interest ex- for further the company may incur liability because penses for A.Y. 1998-99 and 2001-02. order. of penalty proceedings initiated under Section 271(1)(c) of the Income Tax Act

10. SFSL Securities Pvt. Ltd. Income Tax Cases

Authority Particulars of the Matter Status Pending Liability (in Rs.) Assessing Officer, Delhi The Commissioner of Income Tax (Appeal) has re- The matter is pending for Nil manded the matter back to the Assessing Officer to pass further Order. a speaking order as to whether income from interest on The demand of Rs. 0.62 lakhs loan given by the company constitutes income from fi- has been fully paid. nancial business as money lender (A.Y. 1996-97) Commissioner of Income The company has filed an appeal against the Assess- The appeal is pending for Rs.3.14 Lakhs Tax (Appeal), Delhi ing Officer’s order raising a demand against the com- further order. pany. (A.Y. 2001-02) 11. Perennial Investments Limited Authority Date of Penalty imposed Amount Status SEBI 13/2/2001 Rs. 50,000/- SEBI under SEBI(Substantial Acquisition of Shares & Takeover) Regulations, 1997 imposed the penalty in relation to a preferential allotment of another company for non-adequate disclosure. Penalty already paid and the case is closed. 12. Doab Foods & General Industries Ltd. Authority Date of Penalty imposed Amount Status SEBI 13/2/2001 Rs. 50,000/- SEBI under SEBI (Substantial Acquisition of Shares & Takeover) Regulations, 1997 imposed the penalty in relation to a preferential allotment of another company for non-adequate disclosure. Penalty already paid and the case is closed.

13. M. S. R Enterprises Ltd. Authority Date of Penalty imposed Amount Status SEBI 13/2/2001 Rs. 50,000/- SEBI under SEBI (Substantial Acquisition of Shares & Takeover) Regulations, 1997 imposed the penalty in relation to a preferential allotment of another company for non-adequate disclosure. Penalty already paid and the case is closed.

14. Manak Promoters (P) Ltd. Income Tax Case

Authority Particulars of the matter Status Assistant Assessing Officer has initiated penalty proceedings under Section 271 (1) (c) of the Penalty proceedings are pending. Commissioner of Income Tax Act for the Assessment Year 2001-02 on addition made to the income declared Income Tax by the Company

75 15. Jay Engineering Works Ltd. (A) Cases against Jay Engineering Works Ltd. a) Civil/Other Cases

Authority Particulars of the matter Status Amount III Additional City Civil Judge, 3 Cases filed against the company for Proceedings have been stayed Rs. 29.61 Lakhs Secundrabad & II Additional recovery as the interest on delayed under Section 22 of the Sick District Judge, R R District. payments and supplies were not paid for. Industrial Companies (Special Provisions) Act. Andhra Pradesh Facilitation 5 Arbitration claims filed against the company The claims are pending for further Rs. 167 Lakhs Council, Hyderabad for recovery under the Interest of Delayed order. Payments for the supplies made to the company to Small Scale and Ancillary Industrial Undertakings Act,1993. II Senior Civil Judge RR District 4 suits filed against the company for recovery The company has filed applications Rs.58.94 Lakhs Court Hyderabad. as the payment has not been made for the for stay of proceedings under services provided or goods delivered. Section 22 of the Sick Industrial Companies (Special Provisions) Act II Senior Civil Judge RR District 2 appeals filed against orders wherein The appeals are pending for further —- court,Hyderabad, eviction proceedings against the company order. were dismissed. I ADJ, Alipore, 8 Eviction suits filed against the company. The Company has been ordered High Court Kolkatta, to maintain status quo. 5th Asst. Distt. Judge, Alipore. 2 Cases for Agreement entered for sale of Company has filed appeal for stay Rs. 96.80 lakhs land by the party did not fulfill the condition. U/S 22.

Ist Munsif Alipore / 13th Civil 2 Cases seeking injunction filed against the Interim injunction has been granted ——- Court. company. against the company. Andhra Pradesh High Court. Appeal filed by an ex-officer for damages for The appeal is pending for further Rs.0.95 Lakhs Illegal termination. order. Principal, Sub Judge Execution petition filed by the opposite party Petition under section 22 of SICA Rs.14,700 + 12% R.R.District Court, Hyderabad for damages for losses.. filed by the company interest from 01.10.1985 and 6% from 28.08.1995 First Munsif Alipore Suit for declaration filed against the company. The suit is pending for further order. ——— In this case dealership was cancelled but the opposite party has prayed for reinstatement. Ninth Bench City Civil Court Suit for injunction filed against the company The suit is pending for further order. ——- for restraining the company from assigning, transferring and or parting with the possession of the showroom in the ground floor by way of sub-letting and making any addition alteration and structural change. High Court, Kolkata One of the party supply components have Arbitrator has heard both the parties Rs. 31.11 Lakhs prayed for appointment of arbitrator for and the order is pending. adjudication of disputes. b) Labour Cases Authority Particulars of the Matter Status Amount (in Rs.) Industrial Tribunal, Agra, Labour 7 Cases filed against the company by the Pending further hearing Not Ascertainable Court Agra, Additional Labour workmen for reinstatement and other Court Hyderabad benefits. Andhra Pradesh High Court. 3 Writ petitions filed against the company Pending hearing Not Ascertainable by workmen wherein workmen have appealed against the lower court decision to not reinstate them or grant back wages. Industrial Tribunal Case has been filed by an ex-employee of The case was dismissed ex- Rs.0.27 Lakhs the company for reinstatement and service parte and the application for related benefits. setting aside the dismissal order is pending. Second Industrial Tribunal Case for compensation in respect of illegal —— —— lay-off. High Court Internal Tribunal, 10 Cases filed against the company by the Hearing under progress Not ascertainable. Kolkata. workmen. 76 c) Sales Tax Cases Authority Particulars of the Matter Status Amount (in Rs.) Deputy Commissioner, Agra / 2 cases remanded for Joint Commr. ——- Rs. 22.28 Lakhs Appellate Tribunal, Agra Appellate Tribunal, Agra Appeal filed by the Department on stock The appeal has been accepted by the Rs.1.42 Lakhs transfers being treated as sales. Tribunal and company is in process of challenging the order of Tribunal. d) Excise Cases Authority Particulars of the Matter Status Amount (in Rs.) Dy. Commissioner Central Show cause notice issued to the company alleging Order is reserved. Rs.0.49 Lakhs Excise, Agra irregular availment of proforma credit Supreme Court Appeal The department has filed an appeal on the issue The appeal is pending for Rs.711.00 Lakhs relating to manufacturing expenses further order.

e) Income Tax Cases

Authority Particular of the matter Status Amount (in Rs) Income Tax Appellate Appeal filed against the company for The appeals are pending for No demand has been raised against the company Tribunal allowance of Rs.219.14 lakhs. further order. due to huge brought forward losses and unabsorbed depreciation. However, further liability may arise because of penalty proceedings under section 271 (1)(c) which have been initiated against the company.

High Court, Delhi Appeals filed against the company for The appeals are pending for ——- allowance of Rs.362.26 Lakhs further order.

(B) Cases by Jay Engineering Works Ltd. a) Civil/Other Cases Authority Particulars of the matter Status Amonut Junior Civil Judge, R.R.District Execution petition filed by the company to execute injunction The petition is pending for Rs. 25.11 Lakhs Court, Hyderabad order against the opposite party. further order. The Company is paying at the old rate. Pr. Distt. Five separate arbitration claims for recovery of money. The Pending hearing Rs. 4.61 Lakhs Judge, case was filed under the Interest of Delayed Payments to Ranga Reddy Small Scale & Ancillary Industrial Undertakings Act, 1993 Distt. Court and was awarded against the company. The company has At Hyderabad filed Petitions (O.P.) U/sec 34 of Arbitration and Concilia- tion Act, 1996 before IRR. Distt. Court for setting aside the Awards of IFC in above 5 cases. High Court, Kolkata Writ Petition filed by the Company against summons issued Pending Not by Calcutta Municipal Corporation for alleged violation on Ascertainable issue of health license. Metro Rail Tribunal, Kolkata Metro Rail has acquired 2 acres of land at Kolkata. Competent authority has Rs. 167 Lakhs passed an award for Rs. 167 lakhs, for which company has preferred an appeal for award being on lower side. ADGFT, New Delhi. Stay petition filed for imposition of penalty for duty on Pending. Rs. 4.66 Lakhs imports.

77 b) Labour Cases

Authority Particulars of the Matter Status Amount (in Rs.) Andhra Pradesh High Court Writ petition filed by the company. Interim stay has been granted subject The amount involved is to payment of Rs.1,397/- per month. not ascertainable. Andhra Pradesh High Court Writ petition filed by company. Stay against the retrospective The amount involved is operation. not ascertainable. Allahabad High Court The company has filed an appeal against the The appeal is pending for further order. The amount involved is order of the Single Judge setting aside the not ascertainable. closure permission granted by the State Government. EPF Appellate Tribunal, New Appeal filed by the company against the order The appeal is pending for further order. Rs.0.27 Lakhs Delhi dated 31.5.2002 determining the provident fund dues of an employee of the company. High Court, Kolkata A writ petition was filed by the company Stay order was obtained restraining ESI Not Ascertainable against Employee State Insurance Authority. from proceeding for inclusion of itinerant labour under purview of ESI Act c) Sales Tax Cases Authority Particulars of the Matter Status Amount (in Rs.) Appellate Tribunal/Joint Commissioner, 3 appeals filed by the company for non Pending but for the Rs.2.14 Lakhs (Appeals), Agra submission of Form 3 D and other Forms assessment year 1995-96 the in time. Tribunal has confirmed the order of D.C. Appeal but the company will file an appeal. Sales Tax Appellate Tribunal (STAT)/ Non-submission of C/D Forms Pending for further hearing/ Rs.5.98 Lakhs Commercial Tax Officer/ Appellate Order. Deputy Commissioner, R. R. Distt., Hyderabad Dy. Commissioner Sales Tax, Appeals Penalty / interest charged due to delay in Pending for hearing. Rs.14.29 Lakhs - VII/XI/XII, Mumbai. payments/ Disallowance of claims due to non-submission of details/ non-submission of F forms. Asst. Commissioner Assessment Sales Returns, repaired motors, difference The matter is pending for Rs. 2.86 Lakhs Special Circle III, Ernakulam. in Sales Tax for sale of sewing machine hearing. scrap, disallowance of concessional rate - KGST - 1993 – 94. Sales Tax Appellate Tribunal, The single C form exceeds the monetary Appeal is pending for hearing. Rs. 0.38 Lakhs Ernakulam. benefit.CST - 1993-94. Asst. Commissioner Assessment Company filed Rectification petition filed The matter is pending for Rs. 1.88 Lakhs Special Circle III, Ernakulam. before the Assessing Authority.KGST - hearing. 1994-95. Asst. Commissioner Assessment Stock Transfer to Bombay Warehouse Remanded back to Assessing Rs. 1.67 Lakhs Special Circle III, Ernakulam. without CST Certificate.CST - 1994 - 95. Authority for verification. Dy. Commissioner Appeals II, Jaipur. Non-submission of C Forms/ Consignment Pending for hearing. Rs.1.30 Lakhs despatched without road permit. ACTO Ward II, Jaipur. Consignment despatched without filing of Order is in our favour. Applied Rs.2.37 Lakhs details on the Road Permit. for refund. Jt. Commissioner of Commercial Taxes, Non-submission of Customs Certificate/ Pending for hearing. Rs.22.64 Lakhs Appeals, Patna. declarations/other documents. The Dy. Commissioner of Taxes Demand for additional tax @10% on Pending for hearing. Rs.10.15 Lakhs Appeals, Guwahati. turnover and interest charged/ non- availability of signatures and stamps on the C forms. Asst. Commissioner, Sales Tax, Delhi. A demand was raised for Interest for the Appeal filed, the matter is Rs. 0.25 Lakhs year 1986 - 87. pending for hearing. Dy. Commissioner of Sales Tax, Bikri The demand represents credit not given for Appeal filed, the matter is Rs.15.51 Lakhs Kar Bhavan, New Delhi. tax deposited, credit for sales return not pending for hearing. considered, levied of tax on sale of scrap and interest thereon/ Tax on turnover not covered with C & F Forms.

78 c) Sales Tax Cases Authority Particulars of the Matter Status Amount (in Rs.) The Commissioner of Commercial The demand was raised for defects in way Pending for hearing. Rs. 0.27 Lakhks Taxes, Cuttack. bill 1994 - 95. The Dy. Commissioner of Commercial The demand represents on stock transfers Pending for hearing. Rs.6.21 Lakhs Taxes, Bhopal. taken into local sales tax/ Non-submission of F forms/ Non-acceptance of credit notes on replacements. The Superintendent of Taxes, Dimapur. The demand wrongly raised/ raised without Pending for hearing/ revised Rs.3.39 Lakhs details. Order . Supreme Court Special leave filed against the order of the The matter is pending for Rs. 79 Lakhs Andhra Pradesh High Court Charging of further order. sales tax for branch transfers made during the year 1981-82 Andhra Pradesh high court Revision petition filed by the company on The matter is pending for CST AY 1991-92, Rs.5.09 rejection of C Forms further order. Lakhs. CST 1992-93 Rs.3.04 Lakhs Appellate, STAT, Asst. / Dy. Commr. Appeal filed for 10 cases by the Company. Hearing date to be finalized. Rs. 56.73 lakhs. Commercial Taxes, Kolkata d) Excise Cases Authority Particulars of the Matter Status Amount Commissioner (Appeals) Central Two appeals filed by the company on Order reserved. Rs.1.25 Lakhs Excise Kanpur MODAVT taken on invoice copy. Commissioner (Appeals) Central Appeal file by the company. Order is reserved. Rs.0.05 Lakhs Excise Kanpur The Commissioner of Central For availing MODVAT credit depreciation The matter is pending for Rs. 1.00 Lakhs Excise. on capital goods. hearing. The Commissioner of Central Penalty for shortages of Stators & Rotors The matter is pending for Rs. 0.10 Lakhs Excise. at the time of physical verification. hearing. CEGAT, Kolkata Appeal filed against Duty imposed on Pig Appeal under Progress Rs. 81.84 Lakhs Iron captively used for Sewing Machine. CEGAT/Commr. / Dy. Commr., 9 Cases Modvat Credit disallowed. Appeal under Progress Rs. 12.20 Lakhs Kolkata e) Income Tax Cases Authority Particular of the matter Status Amount (in Rs) Income Tax Appellate Tribunal and The company has filed an appeal Tha appeal is pending for No demand has been raised Commissioner of Income Tax against non-allowance of Rs.213.34 further order. against the company due to huge (Appeals) Lakhs and Rs.604.43 Lakhs. brought forward losses and unabsorbed depreciation. However, further liability may arise because of penalty proceedings under section 271 (1)(c) which have been initiated against the company. High Court, Delhi Appeals filed against the orders of the The appeals are pending Not Ascertainable Income Tax Appellate Tribunal disallow- for further order. ing Rs.811.71 Lakhs f) Municipal Tax cases Authority Particular of the matter Status Amount Municipal Authority, Kukatpally Arbitrarily enhanced the property without The matter is pending for hearing. Rs. 26.71 Lakhs Municipality. furnishing the basis (HEI/SFI). CMC, Tribunal Kolkata. Two cases, Company has filed appeal. The matter pending for hearing. Rs. 465 lakhs g) Unpaid Dividend on Cumulative Preference Shares As on 31st March 2004, the company has arrears of preference dividend not paid since 1987-89 amounting to Rs. 488.11 Lakhs.

79 16. Honda Siel Power Products Limited (A) Cases against Honda Siel Power Products Limited a) Under Consumer protection Act

Authority Particulars of the Matter Status Amount (in Rs.) Distt./State Commission Three complaints / appeals have been filed by The complaints/ appeals are pending for Rs.1.51 lacs Delhi/Kolhapur/Prabhani Customers against Company. further order b) Labour Cases

S.No. Authority Particulars Of The Matter Status Amount 1 High Court, Writ petition filed by Abdul Rashid against the de- The restoration application filed by Not ascertainable Lucknow cision of Board of Revenue, Lucknow regarding – the petitioner (Abdul Rashid) is - 0.16 Acres Khasara No. 488/2/2 pending for disposal in the case. - 1.56 Acres Khasara No. 487/2 2 High Court, Nainital The contract labour case filed in Allahabad High Stay order has been obtained in Not ascertainable Court now transferred to Nainital High Court. favour of the Company. The case is pending for admission and counter af- fidavit of the Govt. 3 High Court, Nainital - Zila Parishad, Udham Singh Nagar has sent the - The case is pending for admis- About Rs. 4 Lakhs notice of demand to deposit the license fee Rs. sion at High Court, Allahabad. 1.13 Lakhs for the period 1.4.96 to 31.3.2000. - The commissioner, Nainital has - Zila Parishad, Udham Singh Nagar has again stayed the proceeding of sent the letter No. 344 dated 22.9.99 for depos- realisation of license fee during iting license fees. the pendency of writ petition at - All our surrounding factories are paying the Li- Allahabad. cense Fee. 4 CJM, Udham Singh - The application for releasing the material from - The case is pending before CJM, Not ascertainable Nagar. police custody was filed on 26.9.97. As per de- Udham Singh Nagar. cision of Mr D K Jain, got the application rejected by the court on 10.11.97. Now the time - The next date has been fixed for of appeal against the order dated 10.11.97 has 16.08.2004. also expired. - Material got released on Superdari on 24th January 2001. 5 District Court, Udham Theft case – Carburetor, Drain Cock etc. - Non-bailable warrant has been Not ascertainable Singh Nagar. issued against non-appearance - Carburetor, Drain Cock etc. were stolen from of accused and notice against the factory. surety has been issued by the - FIR was lodged by Company. court. - One accused was caught by police. - Summons were issued by court to two more - The next date has been fixed for accused. 23.08.2004 - Material got released on Superdari on 24th January 2001.

(B) Cases by Honda Siel Power Products Limited a) Under Consumer protection Act Authority Particulars of the Matter Status Amount (in Rs.) State Commission The Company has filed Five appeals against the The appeals are pending - Rs.3 lacs Delhi/Mumbai/Lucknow/Patna order of various Consumer Forums in the for further orders. - Cost of Generator complaint filed by customers. + Rs.1000

80 b) Income Tax Cases S. No. Court Particulars of the matter Status Amount (Rs. in lacs) 1 ITAT Demand raised as additional tax under Section 143(1A) of I T Act. Pending for disposal 9.76 Demand confirmed by CIT (Appeals). The Company has filed second appeal before ITAT.( A.Y. 1990-91). 2 High Court Demand raised as additional tax under section 143(1A) of I T Act. Claim allowed in one case 12.58 Writ petition filed by the Company.( A.Y. 1992-93). 3 ITAT Demand is consequent upon the disposal of ITAT order dated 2.4.2002 Pending for disposal 3.79 for A.Y. 1990-91 & 1991-92, effect order for which is awaited. The Company has filed appeal. (A.Y. 1995-96). 4 ITAT Demand is after disposal of appeal by CIT (Appeals). The company Pending for disposal 50.58 has filed second appeal before ITAT. ( A.Y. 1996-97). 5 ITAT Demand raised in regular assessment under section 143(3) of I.T. Effect Order pending 3.11 Act. The company’s appeal before the CIT (Appeals) was disposed of. The company has filed second appeal to ITAT.(A.Y. 2000-01) 6 CIT (Appeals) Demand raised in regular assessment under section 143(3) of I.T. Pending for disposal 16.29 Act. The company has filed second appeal before CIT (Appeals)(A.Y. 2001-02) c) Excise Cases Authority Particulars Of The Matter Status Amount (Rs. in Lakhs) Assistant 1) Modvat Credit taken on barrel received from - Appeal pending before CEGAT New Duty 0.38 Commissioner, job worker after sixty days. Delhi. Central Excise - CEGAT instructed for partial payment Penalty 0.38 Rampur. of penalty of Rs.15000/- 2) Modvat Credit taken on inputs received from - Commissioner (Appeals) granted Duty 0.66 job worker after sixty days. interim order in stay Penalty 0.66 - Payment of partial penalty of Rs.35000/- 3) Modvat Credit taken on inputs received from - Commissioner (Appeals) granted Duty 0.5 job worker after sixty days. interim order in stay Penalty 0.5 - Payment of partial penalty of Rs.26000/- 4) Seizure of 22 nos gensets Appeal filed before Commissioner Duty 0.25 (Appeals), Ghaziabad. Redemption Fine 0.5 Commissioner Of 5) Duty is paid on sale value of pump set cleared - Order received from the office of 3.61 Central Excise, along with Mahindra Pump from factory & duty Commissioner, Central Excise, Meerut-II is paid @4% alongwith reversal of Cenvat amt. Meerut-II. paid at the time of Clearance Department has disputed the procedure and contended that duty has to be paid on the value of I.C.Engine @16% because no manufacturing activity is taking place on I.E.C Engine cleared along with bought out Pump. (Period April 2002 to Feb. 2003 ) 6) Seizure of 100 gensets cleared for export Order confirmed by Cestat, New Delhi 0.35

81 d) Detail of Sales Tax Cases Authority Particulars of the Matter Status Amount (Rs. in Lakh) Asstt. Commissioner-V, During the Assessment for 1995-96, deptt has raised The case is pending for 0.72 Delhi demand on sale of Furnishing Items . Deptt. has also treated decision. Genset as Electrical Item upto 24/05/95 & raised demand for differential tax @ 5 %. High Court of Kerala, Demand raised due to dispute in Sales Tax Rate applicable The case has been 21.19 Ernakulam on Gensets. ( 8 % or 12 % ). Stay granted by High Court for adjourned till further Three months on 15/3/2003 orders. Trade Tax Tribunal, Material held at Kulesra Check Post by Sales Tax Authorities Fixed for hearing in 2.81 Ghaziabad due to amendments done in Stock Transfer Papers. Demand 3.09.2004 Raised. Asstt. Commissioner, Demand raised due to enhancement of Turnover on The matter is pending with 21.12 Commercial Taxes, South estimated basis & Imposing Purchase Tax on material the department for Circle, Kolkatta received through Branch Transfer during Sales Tax decision. Assessment year 2000-01. Joint Commissioner, Demand raised due to enhancement of Turnover on The matter is pending with 5.23 Commercial Taxes(Appeal), estimated basis & disallowance of Stock Transfer during the the department for Central Div., Patna Assessment year 2000-01. decision. Joint Commissioner, Demand raised due to enhancement of Turnover on The matter is pending with 7.52 Commercial Taxes(Appeal), estimated basis & disallowance of other claims during the the department for Central Div., Patna Assessment year 1999-2000. decision. Joint Commissioner, Demand raised due to enhancement of Turnover on The matter is pending with 1.74 Commercial Taxes(Appeal), estimated basis & disallowance of other claims during the the department for Central Div., Patna Assessment year 2001-02. decision.

17. Honda Siel Cars India Limited Against Honda Siel Cars India Limited a) Labour Cases 3 cases are pending for further order with Labour Court II, Ghaziabad relating to illegal termination. In all these cases, the amount involved is not ascertainable. b) Under Consumer protection Act

Authority Particulars of the matter Status Amount Consumer Forum Consumer case filed against the company The case is pending for further or- Rs.7.51 Lakhs Ahmedabad relating to defect in the car purchased by der. the opposite party. . Dist. Consumer forum, Dadar Consumer case filed against the company. The case is pending for further Replacement of Engine and order Rs. 15,000 p.m.from 4.3.2000 to date of delivery of car plus Rs.5095 as deficiency in service. Distt. Consumer Forum, Consumer case filed against Mita Cars and The case is pending for further Rs. 1 Lakh towards mental Hyderabad the company for refund of money given to order agony + amount due Mita Cars. State Consumer Commission Consumer case against the company. At the stage Evidence Rs.10 Lakhs Rajasthan, Jaipur State Consumer An appeal filed by the consumer against The appeal is pending for further The amount involved is not Commission, Delhi the order of the Dist. Forum. The OP order. The opposite party also filed ascertainable. wanted a Euro – II certificate a criminal complaint and the company filed a petition under S.482 Cr.PC. The matter has now been settled. 11 complaints are pending for further order against the company relating to manufacturing defects before various Dist Consumer forums. Out of these 11 complaints, in 7 complaints amount involved amounts to Rs. 38.03 Lakhs. However, in the remaining complaints, the amount involved is not ascertainable.

82 c) Civil Cases Authority Particulars of the matter Status Amount (in Rs.) Civil judge Pune Suit seeking compensation filed against the The matter is pending for further Rs.0.80 Lakhs company relating to Defective Car. order. Civil Judge Gautam Budh 2 cases involving land matters. The matter is pending for further The amount involved is Nagar. order. not ascertainable. Civil Courts Buland Sahar NA NA Order reversed Tehsildar, Gautam Budh Nagar Notice issued to the company alleging illegal ——— Rs.120 Lakhs possession of four plots of land belonging to Gram Sabha, Kasna. Allahabad High Court Writ petition filed by the company for Stay of Proceedings stayed before The amount involved is recovery proceedings and directing the collector Tehsildar till revision petition de- not ascertainable. to hear the stay application. cided. City Civil Court, Secundarbad Recovery suit filed against Mita Cars and the Framing of issues Rs. 3.58 Lakhs company for refund of money given to Mita Cars., the company is a proforma party. City Civil Court, Secundarbad Recovery suit against Mita Cars and company The matter is pending for further R s.0.70 Lakhs for refund of money given to Mita Cars, the order. company is a proforma party . d) Custom Cases Authority Particulars of the Matter Status Pending Liability Paid Amount (in Rs.)

Delhi High Court Writ petition filed by the Customs challenging the The petition is pending for Rs.32.63 Lakhs final order of the Settlement commission passed further order. ——- in favour of the Company, whereby it has been held that the liability of the company is Rs.32.63 lacs instead of the amount of Rs.77.4 lacs. The company and directors have been granted immunity from prosecution, imposition of interest and penalty.

Settlement Application filed by the company against the order Allowed. The company and Rs.45 Lakhs as simple Rs. 84 Lakhs Commissioner, of the Commissioner of customs imposing a directors have been granted interest. New Delhi penalty of Rs112 million immunity from prosecution and penalty. e) Tax Related Cases Authority Particulars of the matter Status Amount (in Rs.) Assistant The company has filed an appeal against levy of duty. The company The matter is pending for Rs.1.00 Lakhs Commissioner Excise short-paid the duty and got the car cleared under the guise of trial further order. production car. Assistant Commis- A notice issued for the levy of service tax on account of payment The matter is pending for fur- Rs. 576.30 Lakhs sioner made to Honda towards royalty, lumpsum fees, technical guidance ther order. fee during 16.8.2002 to 15.12.2002 Commissioner of The company has filed an appeal against the assessment order. The matter is pending for fur- Rs. 612.40 Lakhs Income Tax (Appeals), The Assessment Officer treated the grant received from GNA as ther order. Ghaziabad revenue receipt and hi-pack software as capital expenditure and land scapping work as capital expenditure. A.Y. 1999-2000 Assessment Officer The Joint Commissioner (Appeals), Trade Tax, Noida remanded The matter is pending for further Rs. 238 lakhs the matter back to the Assessing Officer for recalculation. order, but the appellate tribunal has given an order in favour of the company on the legal issues. Allahabad High Court. The company has filed an appeal. The appeal is pending for fur- Not ascertainable. ther order. However, stay has been granted by the High Court. Assessing Officer A show cause notice has been issued to the company for the Reply has been filed. A.Y. 1999-2000 & 2000-2001 Allahabad High Court. The company has filed an appeal against the sales tax exemption The appeal is pending for fur- Rs.5588.00 Lakhs partially disallowed by the GNA/Tribunal ther order. Supreme Court The U. P. Government has filed an appeal against the order of the The appeal is pending for fur- Rs.47.80 Lakhs High Court wherein the High Court granted stay on the levy of ther order. entry tax on purchase of machinery. 83 f) MRTP Cases

Court Particulars of the Matter Status Amount (in Rs.) MRTP Commission An investigation under Section 11 of the Act has been instituted by The matter is pending The amount involved is the Director General against various automobile manufacturers for further order. not ascertainable. including the company. 18. Hongo India Pvt. Limited 1. 2 cases have been filed in the District Court against the company relating to Labour Disputes involving an amount of Rs. 10 Lakhs. 2. One show cause notice has been issued to the Company by the Service Tax Deptt. involving an amount of Rs 51.07 Lakhs. A reply has been filed by the company to the Dy. Commissioner. 3. An appeal has been filed by the company to the Add. Comm, Income Tax involving an amount of Rs. 101.52 Lakhs. 19. Daikin Shriram Airconditioning Pvt. Ltd. (A)Against Daikin Shriram Airconditioning Pvt. Ltd. 1. One civil case is pending against the company before Additional District & Sessions Judge, Tis Hazari, Delhi involving an amount of Rs.87,852. 2. One Labour case is pending before Labour Commissioner, New Delhi by personal driver of Managing Director for reinstatement as Com- pany employee. (B) By Daikin Shriram Airconditioning Pvt. Ltd. 1. 6 Criminal cases have been filed by the company under Sec. 138 of the Negotiable instruments Act, and Sec. 420 of IPC in relation to bouncing back of the cheques involving an amount of Rs. 8.56 lakhs. 2. An appeal has been filed by the company in The Custom, Excise and Service Tax Appellant Tribunal, New Delhi against the order wherein it has been held that the Technology Transfer Fee of US$ 300,000 and Royalty @ 4% on the air conditioners produced and sold is to be added to the assessable value of imported goods. 20. Usha International Limited Against Usha International Limited a) Cases of Eviction of Rented premises 3 suits have been filed against the company before various authorities on various grounds viz. Sub-tenancy, non payment of rent etc. and the same have been fixed for evidence/written arguments. The amount involved is not ascertainable. 2 eviction petitions have been filed against the company before various authorities on the grounds of bonafide need. b) Money Recovery Cases Authority Particulars of the matter Status Amount (Rs in Lacs) Distt. Judge, Bhopal A matter relating to Claim of security deposit with Interest. Being settled 0.10 Civil Judge, Kanpur A Suit for claim of extra credit by Bank. Fixed for evidence 3.84 Civil Judge, Lucknow A Suit for refund of area security deposit. Fixed for reply 0.22 Distt. Judge, Kanpur A Suit for recovery of sale advance. Fixed for substitution of one 0.34 of the defendants Distt. Judge, Malegaon, A Suit for claim of debit notes. Fixed for evidence 3.00 Maharashtra

High Court, Delhi Claim of decreed amount withdrawn by UIL pursuant to Court Pending for arguments 26.00 Order in its favour 2 suits have been filed against the company for recovery of sales advances before the District Judges of Cuttack and Ludhiana and both are fixed for Rejoinder. The amount involved is Rs. 115 lacs. c) Labour Cases Authority Particulars of the matter Status Amount (Rs. In Lacs) Labour Court, Bhopal A Petition for reinstatement. Fixed for reply - Distt. Judge, Jaipur A matter relating to Claim of Provident fund on Fixed for final arguments 3.00 commission earned. Labour Court, Jaipur Various claims related to services rendered Fixed for filing of documents 6.00 PF Commissioner, A matter relating to Claim of PF amount Fixed for disposal 0.38 Lucknow Labour Court, Ranchi A matter relating to Claim for Reinstatement Fixed for evidence - High Court, Andhra Pradesh A Petition for Reinstatement. Pending for hearing 0.40 d) Consumer Protection Act Authority Particulars of the matter Status Amount (Rs. In Lacs) Consumer Forum, Lucknow Claim for refund of security deposit. Being settled 0.05 2 Complaints alleging defect in Sewing Machines are pending with State Commission, Delhi and Jaipur respectively and are fixed for arguments. The amount involved is Rs.0.20 Lakhs. 2 Complaints alleging defect in Diesel Engines are pending with Consumer Forum, Lucknow and are fixed for arguments. The amount involved is Rs. 0.60 Lakhs.

84 E) Under the Income Tax Act, Sales Tax Laws, FERA, SEBI and Companies Act Authority Particulars of the Status Pending Liability Amount Matter (Rs./Lacs) Sh. Narender Singh Criminal Complaint filed by IT Deptt. u/s 276C of the I.T. Act Applied for compounding 13.65 ACITCC VIII alleging attempt to evade tax against the then Directors and Officers of the Company. (Case No.5158 of 1989) Sh.Gopal Mukherjee ITO- Criminal complaint filed by IT Deptt. u/s 276C of the I.T. Act Applied for compounding 6.65 CC VIII alleging attempt to evade tax against the then Directors and Officers of the Company. (Case No.199 of 1986) Sh. K.N. Sinha Proceedings against the then Directors and Officers Penalty orders stayed Penalty of Rs.5 lac levied on (Deputy Director) of the Company alleging writing off bad debts of foreign Company and 50,000 each on branches over 3 assessment years without general/ 6 the then Directors of the special permission of RBI under the provisions of Company FERA Act, 1973 (Case no. T-4/29-D/90) Mr.V.P.Singhal, Proceedings against the Company under Section 297 Applied for compounding - Department of Company of The Companies Act for not obtaining prior approval Affairs for renewing of Agreement. Company Law Board/ High Proceedings against the Company under Section 111A The matter is pending for - Court, Delhi of The Companies Act for refusal of registration of further orders. shares (24/111 of 1999) Various Sales Tax Authorities Sales Tax Demands under Appeal Pending for disposal 144.54

21. Shriram Fuel Injection Industries Limited a) Labour Cases Authority Particulars of the matter Status Amount High Court, Hyderabad Two Writ petitions filed by the company Orders of the Labour Court has been Rs.1.09 Lakhs against the order of the Labour Court whereby stayed. the company was directed to pay Rs.4520/- in one case and awarding the workman back wages for 3 years in other case High Court, Hyderabad Writ petition filed by the company Challenging Pending but the company has Rs.5.01 Lakhs the order of the Industrial Tribunal, whereby deposited half of the decretal amount the Company was directed to reinstate 14 and is depositing Rs. 11,794/- p.m. casual labor along with back wages.

Industrial Tribunal Hydearbad Petition filed by the Labour Union claiming 20% The company to file counter. —- ex gratia for the year 2001-2002.

High Court, Hyderabad and Additional The company has filed a petition challenging The matter has been stayed Rs.7130/- Labour Court, Hyderabad an award wherein a workman was awarded back benefits. Later on he has filed an additional claim U/ Section 33-C(2) of ID Act. — Additional Labour Court, Hyderabad Claims under the ID Act filed against the The matter is pending for further company by workmen claiming reinstatement order. with back wages and attendant benefits High Court, Hyderabad Writ petition filed by the company challenging The matter is pending for further —— the order of the labour court awarding order. compensation in lieu of back wages and other terminal benefits to the workman. b) Excise Cases Authority Particulars of the matter Status Amount CEGAT Bangalore Appeal filed by the company challenging penalty imposed on the Fixed for orders Rs. 2.50 Lakhs which has company for availing Modvat credit already been reversed by the company. A penalty of Rs. 40,000/- has also been imposed. Commissioner Of Excise appeal filed by the company against alleged avoidance of Pending Rs. 3.65 Lakhs Central Excise excise duty. Commissioner Of Excise appeal filed by the company against alleged non Pending Rs. 3.50 Lakhs which has Central Excise(A) maintainence of separate account in respect of common inputs used already been reversed by the Hyderabad in dutiable as well as duty exempted products. company. A penalty of Rs. 3.60 lacs has also been imposed. Andhra Pradesh Appeal filed by the company against the order of the CEGAT Madras Fixed for orders Rs.1.56 Lakhs High court alleging Availing more credit than prescribed under MODVAT rule. 85 c) Civil Cases Court Particulars of the Matter Status Amount X Asst. Judge C.C.C./ Prl. Sub Judge Four Suits filed by the company for recovery Fixed for execution of Rs.4.24 Lakhs + interest R. R District/ II Additional Sub-Judge against Availing more credit than prescribed decree R.R. District, Hyderabad. under MODVAT rule. 22. Shivajimarg Properties limited There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks / Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities, proceedings initiated for economic / civil / any other offences against the Company. 23. Siel Holdings Limited There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks / Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities, proceedings initiated for economic / civil / any other offences against the Company. 24. Nanglamal Sugar Limited There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overdues to Banks / Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities, proceedings initiated for economic / civil / any other offences against the Company. 25. CSR J&K Investments Pvt. Ltd. There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks / Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities, proceedings initiated for economic / civil / any other offences against the Company. 26. KSR J&K Investments Pvt. Ltd. There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks / Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities, proceedings initiated for economic / civil / any other offences against the Company. 27. Madan Shree Enterprises Limited There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks / Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities, proceedings initiated for economic / civil / any other offences against the Company. 28. Chhaya J&K Investments Pvt. Limited There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks / Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities, proceedings initiated for economic / civil / any other offences against the Company. 29. Krishna J&K Investments Pvt. Limited There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks / Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities, proceedings initiated for economic / civil / any other offences against the Company. 30. Gaiety J&K Investments Pvt. Limited There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks / Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities, proceedings initiated for economic / civil / any other offences against the Company. 31. Hurrykrishna Venture Pvt. Ltd. There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks / Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities, proceedings initiated for economic / civil / any other offences against the Company. 32. India Infrastructure Publishing Pvt. Ltd. There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks / Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities, proceedings initiated for economic / civil / any other offences against the Company. 33. Ceratizit India Pvt. Ltd. There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks / Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities, proceedings initiated for economic / civil / any other offences against the Company. 86 III. OUTSTANDING LITIGATIONS RELATING TO INDIVIDUAL PROMOTERS / DIRECTORS OF THE COMPANY A. Against the Directors and Promoters of the Company i) Mr. Siddharth Shriram - Under Factories Act

Authority Particulars of the matter Status Amount Allegations/Charges Chief Judicial Magistrate 4 criminal complaints filed Proceedings are The amount involved The Chareges in the complaints relate Meerut against Sh. Siddharth stayed by order of the is not ascertainable. to violation of provisions of Factories Shriram & B.K.Agarwal Allahabad High Court Act like Leave book not given to the workers, Fire extinguishing appratus not placed in CO2 pump room, only one door for exit, belt not provided on drive guard etc.

Allahabad High Court 4 petitions under section 482 Stay order in favour of The amount involved Challenging the prosecution cases Cr.PC filed by the company. the company is not ascertainable. lodged against the Director.

ii) Mr. Siddharth Shriram - Criminal Cases Authority Particulars of the matter Status Amount Allegations/Charges Judicial Magistrate First Ruchi Soya Industries has filed The company has moved Rs.40.83 Lakhs The company and its officials Class, Indore. a case against a supplier of the an application for including Mr. Siddharth Shriram company under Section 138 of discharge of itself and its have conspired with Swarnima the Negotiable Instruments Act officials. Oil Industries to cheat the Op- and Section 420 of the Indian posite party. Penal Code. Case No.2828/1999

iii) Against the Promoter - Mr. Krishna Shriram Authority Particulars of the matter Status Amount Opposite Party Allegations/Charges Supreme Court Contempt petition has been Pending. But the company has Rs.8.56 lakhs Sankyut Kamgar The company had agreed filed against the company deposited the disputed Morcha with the opposite party to pay and Shri Krishna Shriram, Mr. amount with the Labour Court. compensation to the contract A. K. Mehra and Mr. P. K. Another union which also workers and out of the said Bhalla. brought forward workers has compensation 10% was to be filed an interim application for given to the Opposite Party. 10% of the amount paid to However, the Opposite Party those workers. did not bring forth all the workers. The company only paid 10% to the Opposite Party for the workers actually brought by the Opposite Party. Due to this, the opposite party has filed the contempt petition.

B. Litigation by the Directors of the Company i) Income Tax Cases

Authority Particulars of the matter Accounting Year Status Paid (in Rs.) ITAT, New Delhi The assesses has filed an appeal against an 1995-96 The matter is pending Rs. 0.59 Lakhs order by which an addition was made of short for further order. term capital gain and carry forward loss was not allowed ii) Under Foreign Exchange Regulation Act (FERA) Authority Particulars of the Matter Status Penalty Appellate Tribunal for Appeal has been filed against the order of Impugned order stayed Penalty of Rs.5 lac levied on Company and Foreign Exchange, Deputy Director of Enforcement, FERA 50,000 each on 6 the then Directors, including New Delhi Mr. Siddharth Shriram, of the Company.

87 • There are no pending litigations other than those mentioned above in which the company/ promoters of the company are involved. • There are no pending litigations, disputes, defaults, non-payment of statutory dues, overdues to Financial Institutions/Banks, dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares by the promoters/promoter companies, companies promoted by the promoters, and the companies/firms co-promoted by the Company and the Companies under the same management, except those mentioned on pages no. 66 to 87 of the offer document. • There are no cases of litigation pending other than those mentioned above against the Company or against any other Company associated with the Company or its promoters whose outcome could have a materially adverse effect on the financial position of the company. • There are no pending litigation other than those mentioned above against the promoters or directors in their personal capacities and also involving violation of statutory regulations or criminal offences as per the declarations received from them. • There are no pending proceedings initiated for economic other than those mentioned above against the directors, Promoters, Companies promoted by promoters, Companies or firms co-promoted by the Company and the Companies under the same management. • There are no Contingent liabilities not provided for and no outstanding litigations, disputes, proceedings initiated for economic offences/Civil/any other offences (including the past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of the Companies Act, 1956) other than those mentioned above. • The Company, its promoters and other companies with which promoters are associated have neither been suspended by SEBI nor any disciplin- ary action has been taken by SEBI except those mentioned above. • There is no prosecution launched by Income Tax Authorities other than those mentioned above and no liability compounded by the promoters/ company/companies/ventures with which the promoters are associated is subsisting. • There are no cases of pending litigation/defaults in respect of the firms/companies with which the promoters were associated in the past but are no longer associated. • The Company, its Promoters, group Companies/associate companies are not detained as willful defaulters by RBI/Government authorities and there have been no violations of securities laws committed by them in the past or pending against them except those mentioned above.

XI. PROMISES VERSUS PERFORMANCE (A) LAST THREE ISSUES MADE BY MAWANA SUGARS LIMITED The Company has not made any Public or Rights Issues since Incorporation. (B) PROMISE V/S PERFORMANCE FOR LISTED VENTURES OF PROMOTER GROUP FOR THE LAST ISSUE (1) Siel Financial Services Ltd. (formerly Shriram Agro-Tech Industries Ltd.) The Company came out with a Public Issue of 26,75,000 Equity Shares of Rs. 10/- each for cash at a premium of Rs. 10/- per share aggregating to Rs. 535 lakhs in February, 1993. The object of the issue is to part finance the project for processing of 500 tonnes per day (TPD) of soyabean oil seeds or 600 TDP of rapeseed oil cakes at Chhota Malsapura, Distt. Dewas, Madhya Pradesh. The actual performance achieved by the Company against the projections mentioned in the Prospectus are as under: (Rs.in Lacs) Year ending 31st March 1993 (3 Months) 1994 1995 1996 1997 Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual 31.03.93 (1.04.93 12 months (1.7.93 to 31.03.95 (1.10.94- 31.3.96 F.Y. 31.03.1997 (1.10.95 to 30.6.93) 31.03.94 30.9.94) for 12 30.9.95) for 12 (Extended for 12 to 15 Months Months 12 Months months to 31.03.97 months 31.3.97) for 18 Months) Installed Capacity 500 500 500 500 500 500 500 500 500 Production (tpd) 300 60 375 76 425 33 425 425 - Capacity Utilisation (%) 60 12 75 15 85 7 85 85 - Total Income 2607 1361 8289 7504 9394 1596 9394 9394 12 Profit before Interest & Depreciation 275 161 754 (162) 858 (107) 858 858 (60) Interest 83 90 366 307 391 214 360 317 211 Depreciation 34 41 137 79 137 63 137 137 165 Profit before tax 158 30 252 (548) 331 (384) 362 405 (436) Tax 14 - 10 - 33 - 45 58 - Profit After Tax 144 30 242 (548) 298 (384) 317 347 (436) Cash Profit 178 71 378 (469) 435 (321) 453 484 (271) Dividend - - 108 - 108 - 135 135 - Dividend (%) - - 20 - 20 - 25 25 - Equity Share Capital 538 528 538 535 538 535 538 538 535 Reserves & Surplus 682 557 816 517 1005 503 1188 1400 481 Net Worth 1220 1014 1354 481 1544 97 1726 1938 (603) Earning Per Share (Rs.) 2.7 0.56 4.5 (10.20) 5.5 (7.14) 5.9 6.4 (8.11) Net Asset Value (Rs.) 22.7 18.87 25.2 8.95 28.7 1.81 32.1 36.0 (11.22)

Note:- The above figures are not comparable as after the said issue the company has changed its Financial Year thrice.

88 (2) Siel Ltd.( Shriram Industrial Enterprises Ltd.) The Company came out with a Rights Issue of 94,32,237 – 13% Non Convertible Debentures of Rs. 100/- each for cash at par with detachable warrants to the equity shareholders aggregating to Rs. 9432.24 lakhs in August, 1994. The object of the issue is to part finance the expansion plan of production capacities from 5000 to 7000 tonnes canes crush per day at Mawana and setting up sugar refinery, distillery at Titawi & new chlor-alkali plant at Rajpura, Punjab. The actual performance achieved by the Company against the projections mentioned in the Letter of Offer are as under: (Rs. In Lac) Year ending 31st March 1995 1996 1997 Projected Year Actual year Projected Year Actual 18 months Projected year Actual 12 months Ended 31.03.95 ended 31.03.95 ended 31.03.96 ending 30.09.96 ended 31.3.97 31.09.97 Sales (Net of excise) 78175 77795 87540 114299 96749 42989 Other Income 992 1307 1099 1819 1226 773 Total Income 79167 79102 88639 116118 97975 43762 Operating Profit 8184 6854 10161 5679 13369 10212 Interest on Working Capital 377 352 96 1708 96 1489 Interest on Term Loan / Debentures 1586 1620 1744 4570 1954 3125 Gross Profit/(Loss) 6221 4882 8321 (599) 11319 (845) Depreciation 709 705 1119 1739 1535 1049 Profit Before Tax 5512 * 4177 7202 (2338) 9784 # 4549 Provision for Tax 1600 500 2700 - 3070 820 Profit After Tax 3912 3677 4502 (2338) 6714 3759 Dividend 889 659 1016 - 1016 1191 Retained Profit 3023 3018 3486 (2338) 5689 2568 Earning Per Share Anualised (Rs.) 12.99 16.76 13.30 (8.64) 19.82 13.89

* Includes extra ordinary income of Rs.673 lacs comprising of amount realized alongwith interest on the price levy sugar sold after Feb 21, 1974, on the basis of Supreme Court Order. # This includes Extra ordinary income of Rs.6442 lakhs on account of Non-competent fee under agreements for restrictive trade covenant in respect of the compressor business The company and Mr. Siddharth Shriram, Chairman and Managing Director of the company have entered in Non- Compete Agreements whereby the company and Mr.Siddharth Shriram and his family have inter alia agreed not to engage, directly or indirectly, in the manufacturing, selling or repairing of the Compressors and parts thereof as would compete with Tecumseh Products Company, TPC Mauritius Holdings, Tecumseh India Private limited and Siel Compressors Limited, in any country of the world for a period of 15 years from the date of Agreements for an aggregate consideration of US $ 18 million i.e. Rs. 6442 lakhs to the company. This has been considered as income of the Company and reflected in the profit and loss account as an “extraordinary item”. Note:- The above figures are not comparable as after the said issue the company has changed its Financial Year. (3) Usha International Ltd. (UIL) The Company came out with a Public Issue of 3,75,200 Equity Shares of Rs. 10/- each for cash at a premium of Rs. 10/- per share aggregating to Rs. 75.04 lakhs in August, 1985 for augmenting long term resources of the Company. The promised future performance of the Company was not presented in the Letter of Offer and hence a comparison of the Company’s actual performance vis-à-vis the projections made in the Letter of Offer is not possible. (4) Shriram Honda Power Equipment Limited (Honda Siel Power Product Limited) The Company came out with a Right Issue of 26,44,000 Equity Shares of Rs. 10/- each for cash at a premium of Rs. 15/- per share aggregating to Rs. 661 lakhs in the ratio of 1:4 in December, 1993 for augmenting long term resources for working capital requirement and for normal capital expenditure. The actual performance achieved by the Company against the projections mentioned in the Letter of Offer are as under:- Rs. in Lakhs st Year ending 31 March 1994 1995 1996 Projected Actual Projected Actual Projected Actual Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended 31.03.1994 31.03.1994 31.03.1995 31.03.1995 31.03.1996 31.03.1996 Share capital 1014 1014 1014 1014 1014 1014 Free Reserves 441 401 724 1162 1026 2225 Share Premium 397 396 397 396 397 396 Net Worth 1838 1824 2124 2587 2429 3654 Net Assets Value per share (Rs.) 18.12 17.99 20.95 25.51 23.95 36.04 Total Income (Gross Sales & other Income) 7329 8007 7854 10339 8432 13650 PBDIT 1001 1083 1019 1805 1043 2141 Depreciation 286 351 295 424 306 324 Interest 330 327 238 122 156 104 PBT 385 $ 405 486 1259 581 1713 PAT 385 405 486 1064 581 1418 EPS 3.80 3.99 4.80 12.42 4.98 13.98 Dividend (%) 15% 20% 20% 30% 20% 35% $ Includes additional depreciation for earlier years aggregation to Rs. 137.43 consequent to technical evaluation of the estimated useful lives of press dies. Die castings, dies and lamination dies.

89 XII. BASIS OF ISSUE PRICE As the Company has been incorporated on 26th December, 2002, the financial results are available only for the period from 26th December, 2002 to 31st March, 2003 (3 months) and for the period 1st April, 2003 to 29th February, 2004 (11 months). Quantitative Factors (figures (not annualized) for the period 1st April, 2003 to 29th February, 2004 – 11 months) i. Earnings per share - Rs. 0.96 ii. Net Asset Value Per Share - Rs. 24.21 iii. Net Asset Value per Share after the Issue - Rs. 16.75 iv. Return on Networth - 3.98% v. Industry P/E* Highest – 16.5 Lowest - 1.9 Average – 8.5 *Source Capital Market (August 2-15, 2004) vi. Minimum Return on increased networth required to maintain pre-issue EPS is 5.12%. vii. Issue Price - Rs. 10/- viii. The Face Value of the Shares is Rs. 10/- and the issue price is 1-Time of the face value being issued at par. ix. Comparison of accounting ratios of the Peer Group Companies are as under :

Name of the Company E.P.S. (Rs.) P/E N.A.V. (Rs.) Year ended Bajaj Hindustan 3.3 8.7 14.0 September, 2003 Dhampur Sugar - 9.4 22.7 September, 2003 KCP Sugar & Industries 16.9 3.4 67.8 March, 2004 Oudh Sugar - 3.8 40.5 June, 2003 Sakthi Sugars - - 113.9 June, 2003 Upper Gang. Sugar - 3.0 78.9 June, 2003 *Source Capital Market (August 2-15, 2004)

Qualitative Factors • Established factories with economies of scale. • Strong relationship with farmers ensuring continuous cane supply. • ‘Mawana’ brand is established and popular brand in the Sugar Industry. • 50% of total turnover of Company sold to Institutional Buyers, exports and consumer brand, who prefer quality sugar. • Over 50 years of experience of manufacturing sugar. • Experienced and skilled manpower • Long term cane development strategies resulting in high yielding and high sugar crop variety

XIII. STOCK MARKET DATA The Equity Shares of the Company are listed on The Stock Exchange, Mumbai since 17th December 2003. The trading permission from BSE received vide their letter dated 17th December, 2003. The details of the share prices on the Stock Exchange, Mumbai during the last 3 years are as follows: Not Applicable since the company is listed on the Stock exchange since 17th December 2003 The details of the share prices on the Stock Exchange during last 6 months (listed on 17th December 2003) are as follows: Month High (Rs.) Date of High Volume on Low Date of Volume on Total Volume Average date of High (Rs.) Low date of Low in the Month Price in the Month*

February 2004 24.60 25.02.2004 197552 15.00 04.02.2004 20625 1602637 19.54 March 2004 25.00 10.03.2004 59125 19.50 18.03.2004 22710 1417514 21.75 April 2004 39.80 23.04.2004 125377 20.90 01.04.2004 10508 2483556 30.89 May 2004 40.55 05.05.2004 777749 18.30 18.05.2004 61885 2841991 26.55 June, 2004 21.90 03.06.2004 37713 15.60 24.06.2004 14213 890063 17.88 July, 2004 26.20 30.07.2004 163611 17.60 28.07.2004 4425 767290 20.83

(Source: bseindia.com) The closing share price on 6th April 2004 on the Stock Exchange, Mumbai being the first day of trading after the Board Meeting approving the Rights Issue was Rs. 24.15.

90 XIV. Details of Issues made by other Listed Group Companies During The Last 3 Years 1. Companies under the same management as per the Companies Act 1956 under section 370 (1B) Following companies are under the same management of Mawana Sugars Ltd.and are listed on Stock Exchanges: Name of the Company Stock Exchanges on which listed Siel Limited The Stock Exchange, Mumbai The Hyderabad Stock Exchange Limited Siel Financial Services Limited Madhya Pradesh Stock Exchange Calcutta Stock Exchange The Stock Exchange, Mumbai Ahemdabad Stock Exchange Delhi Stock Exchange

2. Issues made by other listed group / promoter companies in the past three years There are no such companies which came out with the issue during the past three years

XV. NAMES OF THE SMALL SCALE UNDERTAKING TO WHOM THE COMPANY OWES A SUM EXCEEDING RS.1 LAKH WICH IS OUT- STANDING MORE THAN 30 DAYS 1) Chemical System, 2) Atul Electro Formers Pvt. Ltd., 3)Jord Engineers India Ltd. 4) Tube Sales Private Ltd., 5) Waltech India, 6) Spice Pressure Controls, 7) Technocraft Engineers.

XVI. INFORMATION AS REQUIRED BY GOVERNMENT OF INDIA, MINISTRY OF FINANCE CIRCULAR NO. F2/5/SC/76 DATED FEBRURARY 5, 1997 AS AMENDED VIDE CIRCULAR OF EVEN NO DATED MARCH 8, 1997 1. The working results(unaudited-provisional) of the Company for the period 1st April 2003 to 30th June, 2004(15 months) is as under:- Particulars (Rs. in lakhs) Total sales 46360 Other Income 880 Total Income 47240 Total Expenditure 41094 Profit Before Interst, Depriciation and Tax 6146 Interest 2569 Depriciation 1114 Profit after interest and Depreciation but before Taxes 2463 Provision for Tax (a) Current 155 (b) Deferred 840 Profit after Tax 1468 Profit and Loss account for the period 1.10.2002 to 31.03.2003(refer to the Note) (1027) Deferred tax benefits upto to March 31, 2003 326 Net Profit after above adjustments 767

Note:- a) Pursuant to the Scheme of Arrangement (Scheme) under section 391 and 394 of the Companies Act, 1956 of undivided Siel Limited, approved by the High Court of Delhi vide its Order dated August 26, 2003 which became effective on September 5, 2003 on filing of the certified copy of the Order of the High Court of Delhi with the Registrar of Companies, Delhi and Haryana, the undertakings of undivided Siel Limited comprising of Mawana Sugar Works (MSW) and Titawi Sugar Complex (TSC), together with all properties, assets both movable and immovable and liabilities including contingent liabilities have been transferred to and vested in the Company at their respective book values with effect from the appointed date i.e. October 1, 2002. The figures for the three months and fifteen months ended June 30, 2004 have been determined after giving effect of SOA. b) Upon effectuation of the SOA, assets and liabilities as at October 1, 2002 and the transactions including the income and expenses of Undertak- ings comprising of MSW and TSC for the period October 1, 2002 to March 31, 2003(including for the priod October 1, 2002 to December 26, 2002, the date of Incorporation of the Company, when the undertakings were being run and managed by undivided Siel Limited) has also been transferred to and vested in the Company. Accordingly, loss of the aforesaid Undertakings amounting to Rs. 1027 Lakhs for the six months ended June 30, 2004 have been determined after giving effect of SOA.

2. Save as stated elsewhere in the Letter of Offer, there are no material changes and commitments likely to affect the financial position of the Company since 29th Febraury 2004 i.e. the last date upto which audited information is incorporated in the Letter of Offer.

3. a) Week end prices of Equity Shares of the Company for the last four weeks on The Stock Exchange, Mumbai is as below : Week ending on Price Per Share(Rs.) 09/07/2004 18.55 16/07/2004 18.90 23/07/2004 21.30 30/07/2004 26.15 (Source: bseindia.com) 91 b) Closing Ex-rights Market Price of Equity Shares of face value of Rs.10/- of the Company on the Stock Exchange, Mumbai as on 5th August, 2004 was Rs. 28.30 (Ex-Right). c) Highest and Lowest Price of the Equity Share of the Company of face value of Rs.10/- each on the Stock Exchange, Mumbai during the period 17th Decmber 2003 to 31st July 2004(for the last year): Price (Rs.) Date as on Highest Price 90.00 17.12.2003 Lowest Price 13.00 23.12.2003 (Source: bseindia.com)

XVII. MECHANISM INVOLVED FOR REDRESSAL OF INVESTOR GRIEVANCES a) In case of Mawana Sugars Limited The Company’s name has not appeared in Press Releases issued by SEBI regarding maximum number of complaints received from the investors Status of complaints received from SEBI As on date, there are no complaints pending with SEBI. Overall status of Investor Grievances The Company has not received any complaints since its listing with the Stock Exchange i.e 17th December 2003. The transfer and other related work is handled by MAS Services Pvt. Ltd., Registrar and Share Transfer agent. The secretarial department of the Company actively interacts with the Registrar for expeditious redressal of investor grievances and takes care of complaints received from statutory bodies such as SEBI, Stock Exchanges, Department of Company Affairs, etc. The name of the Company has never appeared in fortnightly press release on investor complaints of SEBI The average time taken by the Registrars for attending to routine grievances will be 15 days from the date of receipt. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavor of the Registrars to attend to them as expeditiously as possible. The Company undertakes to resolve its investor grievances in time bound manner. The Company’s investor grievances arising out of the Rights Issue will be handled by MAS Services Pvt. Ltd, Registrars to the Issue. Investor grievances are settled expeditiously and satisfactorily by the Company. The agreement between the Company and the Registrars will provide for retention of records with the Registrars for a period of at least one year from the last date of dispatch of Letter of allotments/share certificate/refund order to enable the Registrars to redress grievances of investors. All grievances relating to the Issue may be addressed to the Registrars to the Issue giving full details such as Folio No., name and address of the first applicant, number of shares applied for, Application Form serial number, amount paid on application and the Bank Branch Form serial number where the application was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details of the renouncee should be furnished. The Company has also appointed a Compliance Officer who may be contacted in case of any preissue/ post issue related problems. b) In case of listed Group Companies 1. Siel Limited Status of Investor Grievances Complaints from S.No. Duration SEBI Stock Exchanges & Investors Total Complaints Total complaints Pending Others resolved received as on 1. 1.4.2003 to 31.3.2004 Nil 2 Nil 2 2 Nil 2. 1.4.2004 to till date 9 1 Nil 10 10 Nil

Complaints from S.No. Duration SEBI Stock Exchanges & Investors Total Complaints Total complaints Pending Others resolved received as on 1. 1.4.2003 to 31.3.2004 1 1 Nil 2 2 Nil 2. 1.4.2004 to till date Nil Nil Nil Nil Nil Nil

92 3. Usha International Limited Status of Investor Grievances Complaints from S.No. Duration SEBI Stock Exchanges & Investors Total Complaints Total complaints Pending Others resolved received as on 1. 1.4.2003 to 31.3.2004 Nil Nil 8 8 8 Nil 2. 1.4.2004 to till date 1 Nil 8 9 9 Nil

Manner of resolving The transfer and other related work is handled by MAS Services Pvt. Ltd., Registrar and Share Transfer agent. The secretarial department of the Company actively interacts with the Registrar for expeditious redressal of investor grievances and takes care of complaints received from statutory bodies such as SEBI, Stock Exchanges, Department of Company Affairs, etc. The name of the Company has never appeared in fortnightly press release on investor complaints of SEBI The average time taken by the Registrars for attending to routine grievances will be 15 days from the date of receipt. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavor of the Registrars to attend to them as expeditiously as possible. The Company undertakes to resolve its investor grievances in time bound manner. 4. Jay Engineering Works Limited Status of Investor Grievances The Company has not received any complaints since 1st April 2003. Manner of resolving The transfer and other related work is handled inhouse by the legal & Secretarial Department of the Company for expeditious redressal of investor grievances and to take care of complaints received from statutory bodies such as SEBI, Stock Exchanges, Department of Company Affairs, etc. The Company further undertakes to resolve its investor grievances in time bound manner. 5. Honda Siel Power Products Limited Status of Investor Grievances Complaints from S.No. Duration SEBI Stock Exchanges & Investors Total Complaints Total complaints Pending Others resolved received as on 1. 1.4.2003 to 31.3.2004 Nil Nil 108 108 107 1 (as on date resolved) 2. 1.4.2004 to till date 3 1(ROC) 11 15 16 Nil Manner of resolving The transfer and other related work is handled by MAS Services Pvt. Ltd., Registrar and Share Transfer agent. The secretarial department of the Company actively interacts with the Registrar for expeditious redressal of investor grievances and takes care of complaints received from statutory bodies such as SEBI, Stock Exchanges, Department of Company Affairs, etc. The name of the Company has never appeared in fortnightly press release on investor complaints of SEBI The average time taken by the Registrars for attending to routine grievances will be 15 days from the date of receipt. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavor of the Registrars to attend to them as expeditiously as possible. The Company undertakes to resolve its investor grievances in time bound manner. XVIII. DETAILS OF ADVERSE EVENTS / MATERIAL DEVELOPMENTS AFFECTING THE COMPANY SINCE THE LAST FINANCIAL STATEMENT No circumstances have arisen and no material developments have taken place since the date of the last financial statement that materially or adversely affects or is likely to affect the trading or profitability of the Company or the value of its assets or its ability to pay its liabilities within the next 12 months except the recent judgement pronounced by the Constitution bench of Hon’ble Supreme Court which has upheld the rights of State Govt. to fix the state advised prices. This judgement could result into some demands for the past periods which cannot be determined as of now. The Industry is however, proposing to file a review petition against the said judgement before Hon’ble Supreme Court XIX. EXPERT OPINION Save and except as stated elsewhere in this Letter of Offer, the Company has not obtained any expert opinions. XX. OPTION TO SUBSCRIBE Save as otherwise stated elsewhere in this Letter of Offer, the Company has not given any option to subscribe for any shares of the Company. RISK FACTORS AND MANAGEMENT PERCEPTIONS THEREOF INTERNAL RISK FACTORS 1. Criminal Cases filed against the Company / Promoter Group Companies a. Against the Company viz. Mawana Sugars Ltd. Fourteen (14) Criminal cases are pending in various Courts / Authorities by Suppliers / Employees / Clients. For details, investors please refer to “Outstanding Litigations/Defaults” appearing on page no. 61 to 66 of the Letter of Offer. b. Against Directors & Promoter Group Companies (i) 4 petitions u/s 482 of Cr. P.C. filed by the Company challenging the prosecution cases lodged against one Director of the Company. (ii) Siel Ltd. – One criminal case is pending u/s 420 of IPC by Supplier of the Company. For details, investors please refer to “Outstanding Litigations/defaults” appearing on pages no. 66 to 87 of the Letter of Offer.

93 c. Against Promoters of the Company - Mr. Krishna Shriram

Authority Particulars of the matter Status Amount Opposite Party Allegations/Charges Supreme Contempt petition has been Pending. But the company Rs.8.56 lakhs Sankyut Kamgar The company had agreed with the Court filed against the company has deposited the disputed Morcha opposite party to pay compensation to and Shri Krishna Shriram, amount with the Labour the contract workers and out of the said Mr. A. K. Mehra and Mr. P. Court. Another union which compensation 10% was to be given to K. Bhalla. also brought forward the Opposite Party. However, the Opposite workers has filed an interim Party did not bring forth all the workers. application for 10% of the The company only paid 10% to the amount paid to those Opposite Party for the workers actually workers. brought by the Opposite Party. Due to this, the opposite party has filed the contempt petition. Management Perception The cases against one of the Directors of the Company arise on account of the allegation that he was the Occupier of Factory premises. The case against Siel Ltd. relates to a contractual dispute between a supplier of the Company and his supplier. The Company has been impleaded as a respondant in this case.

2. The Company is not raising funds to finance any specific project and the funds raised from this Rights Issue are being used for making an equity investment in Siel Limited as part of CDR approved package and for meeting shortfall in long term working capital requirements. Management Perception The Company is making the rights issue of Rs. 849.90 lakhs pursuant to the CDR approved package, which requires the Company to invest Rs. 800 lakhs in three trenches of Rs. 250 lakhs, Rs. 250 lakhs and Rs. 300 lakhs by September, 2005. The funds therefore, so raised are proposed to be utilized mainly to invest in Siel Ltd. i.e. to the extent of more than 94% of issue size and the balance around 6% (Rs. 49.90 lakhs) would be utilized for meeting shortfall in long term working capital requirements. ICICI Bank Ltd. has been appointed by CDR Cell as the monitoring agency to oversee the implementation of the restructuring package. 3. Siel Ltd., in which the Company is proposing to invest the proceeds of this Issue, has incurred loss to the extent of Rs. 3751.87 lakhs for F.Y. 2003-04. Siel Ltd. also incurred losses in the previous years on account of which it had approached restructuring of its business and debts and its name was in the RBI’s defaulter list. Management Perception Due to losses, Company’s name appeared in RBI’s defaulters list and the Compay in turn approached CDR for restructuring. Consequent upon restructuring of Siel Ltd., as approved by the High Court and with the investment of funds by MSL which would be utilized for increase in the capacity of its Chemical business, performance of Siel Ltd. would improve and its name now doesn’t appear in RBI’s defaulters list. 4. In the final restructuring package approved by CDR Cell, it was not clearly stated that Mawana Sugars Ltd. (erstwhile Siel Sugar Ltd.) should invest in equity of Siel Ltd. to the extent of Rs. 800 lakhs for which this Rights Issue is being planned. However, it was mentioned only in the financial projections submitted to the CDR Cell, who had then considered and approved it alongwith the entire package. Management Perception ICICI Bank Ltd., the Lead Institution, submitted detailed proposal for restructuring alongwith the future projections, which were accepted and then approved by CDR Cell. CDR Cell on behalf of all the Lenders, except UTI who had not become a member in the CDR, had given their consent for raising equity by the Company through Rights Issue to the extent of Rs. 850 lakhs vide their letter dated 16th July, 2004. ICICI Bank Ltd., the Monitoring Agency appointed by the CDR Cell had also given their consent to the same vide their letter dated 11th May, 2004. 5. As per the Restructuring package approved by CDR, Mawana Sugars Ltd. has to bear term liabilities of Rs. 9675 lakhs, which constitutes Rs. 7390 lakhs of Term Loan and Rs. 2285 lakhs of Zero Coupon Debentures. In addition, the Company requires to make an equity investment into Siel Ltd. to the extent of Rs. 800 lakhs according to the projections submitted and approved by CDR Cell. Management Perception The term liabilities allocated to Mawana Sugars Ltd. is based upon the debt servicing capacity of the Sugar business as assessed and approved by the Lenders / CDR Cell. 6. The company has accumulated losses of Rs. 417.45 Lakhs for the period from 1st April, 2003 to 29th February, 2004. Management Perception The carry over losses were because of losses incurred during the period October 1, 2002 to March 31, 2003 by erstwhile Siel Ltd. in its sugar business. The Company however during the period 1st April, 2003 to 29th February, 2004 (11 months) earned a net profit after tax of Rs. 283.49 lakhs. 7. The Company has not declared any dividend during the periods ended 29th February, 2004 and ended 31st March, 2003 Management Perception The Company was incorporated on 26th December, 2002 and has losses for the financial period ended 31st March, 2003. The financial statements for the period 1st April, 2003 to 29th February, 2004 are for the purposes of this issue and have not been placed before the members of the Company. 8. As per CDR terms, out of total investment of Rs.800 Lakhs, Rs. 300 lakhs has to be invested in Siel Ltd. by September, 2005, but the Company is making the issue for the entire requirement of Rs. 800 lakhs. Management Perception As per restructuring package, Rs. 250 lakhs each has to be invested by September 2003 and September 2004 and the balance Rs. 300 Lakhs to be invested by September 2005. The Company is raising Rs. 849.89 lakhs through this Rights Issue and out of this, Rs. 552.43 lakhs in the form of application money and the balance amount of Rs. 297.46 lakhs to be raised through Calls by September, 2005 keeping in view the CDR requirements. 9. No comparable performance data for the previous years are available for comparing the financial performance of the Mawana Sugars Ltd.

94 Management Perception As the sugar business of the company has been vested from 1st October, 2002 through a Scheme of Arrangement of Siel Ltd. which became effective from September 5, 2003, comparable performance data for the previous years are not available. 10. Unit Trust of India, one of the lender of erstwhile Siel Ltd., issued a recall notice due to non-payment of instalments due to them in November, 2002 and later did not consent to the CDR Package or Scheme of Arrangement, approved by the Hon’ble High Court at Delhi in August, 2003 and has filed an appeal against the order of High Court, approving the Scheme, in the Division Bench of Hon’ble High Court. Any adverse decision could have an impact on the financial ability of the Company. Management Perception The Appeal of the UTI has not been admitted by the High Court and there are no restraints on implementation of the Scheme and the same has already been implemented by erstwhile Siel Ltd. The Scheme having been approved by majority of the Creditors and Shareholders and subsequently approved by the High Court is binding on all the Creditors, Shareholders and the Company in terms of Section 391(2) of the Companies Act, 1956. Presently, the other Lenders of Siel Ltd. have agreed to pay sum upto Rs. 1173 lakhs to UTI to be paid out of the surplus realization from the Special Purpose Vehicle viz. Shivajimarg Properties Ltd., in which the land of erstwhile Siel Ltd. located at 15, Shivaji Marg, New Delhi has vested pursuant to the Scheme. Siel Ltd. has also filed an application u/s 392 of the Companies Act, seeking a direction from Hon’ble High Court to restrain UTI from creating any impediment and UTI be directed to take all steps to issue necessary no objection required for sale of non- operating assets, as required in terms of the Scheme. The Court has directed UTI to consider the One Time Settlement proposal of the Company and report to the Court so that effective order could be passed by the Court. 11. The Company has not taken any specific approval from each of the Lenders for the said Rights Issue. UTI having not assented to the CDR, may in the worst possible scenario, object against the said Rights Issue.

19. Risk of attrition of key personnel and ability to attract and retain talented professionals. Management Perception The Company has identified development of human resources as a critical activity for growth. The Company believes that its Human Resources initiatives will enable it to retain existing talent and attract new talent into its system.

95 20. Promise v/s Performance a) For the Company – Mawana Sugars Ltd. There was no public / rights issue of securities made by the Company in the last 3 years as the Company came into existence only in December, 2002. b) Promise v/s Performance of Group / Associate Companies There was no public / rights issue of securities made by any listed companies under the Promoter Group / Associate Companies in the last 3 years. However, shortfall in the Promise v/s Performance regarding the last issue made by them, is given in detail on pages no. 88 and 89. 21. The Company has following contingent liabilities, which are not provided for as on 30th June, 2004:

Sr. No. Particulars Amount (Rs. lakhs) 1. Claims against the Company not acknowledged as debts 407.41 2. On partly paid shares (# Rs.20) # 3. In respect of a guarantee to be given by the Company to lenders of a subsidiary company for the minimum realisation of principal amount of debts amounting to Rs.3075 lacs transferred to the subsidiary company as on 30.9.2002. The guarantee will come into force after 30.9.2004 in the event of shortfall, if any, in the realisation of the assets of the subsidiary company amounting to Rs.3075 lacs and will be limited to the amounts remaining unpaid. The guarantee will lapse on payment of entire amount of Rs.3075 lacs to lenders of the subsidiary company. During the period, out of the above, the subsidiary has already repaid an amount of Rs.2290.65 lacs (previous period Rs Nil) and the outstanding amount as at June 30, 2004 is Rs.784.35 lacs (As at March 31, 2003 Rs. 3075 lacs).

22. The Crushing license at Titawi Unit is still in the name of Siel Ltd. and the Company is yet to get the approval for changing the same in the name of Mawana Sugars Ltd. The Crushing license at Mawana Unit is still in the name of Mawana Sugar Works (which was earlier unit of DCM Ltd.) and the Company is yet to get the approval for changing the same in the name of Mawana Sugars Ltd Management Perception The Company applied to the concerned authorities on 18th October, 2003 and 17th December, 2003 in case of Titawi & Mawana Units respectively for change in name to Siel Sugar Ltd. and had been expecting approval for the same shortly, but in the meantime, Company got its name changed from Siel Sugar Ltd. to Mawana Sugars Ltd. The Company has now applied for getting the license changed in the name of Mawana Sugars Ltd. vide their letter dated 6th July, 2004 for Mawana Unit but does not foresee any problem in getting converted. Also, the company has intimated the change of name to the authorities in case of Titawi Unit.

23. The Company’s License for wholesale trader (FPS), Mill Factory (Firewood) & Retail Trader (FPS) under UP Krishi Utpadan Mandi Samiti Adhiniyam, 1964 for its Mawana Unit is pending for renewal from the Secretary, Krishi Utpadan Mandi Samiti, Mawana. Another Registration Certificate for packing of sugar and Registration under Central Excise Act is also pending for change in name from Siel Sugar Ltd. to Mawana Sugars Ltd. Management Perception The Company has already made an application to the concerned authority vide their letter dated 22nd June, 2004, whereas for change in name to Mawana Sugars Ltd., the Company has applied vide their letter dated 22nd July, 2004. The Company does not foresee any problem in getting the required approvals.

25. Out of total land at Mawana, the Company is to surrender 6.251 hectares of land to the State. In addition, State Administration is seeking that 9.815 hectares of land to be reverted back to the State being not actively used by the Company. Management Perception The land admeasuring 6.251 hectares at Barhni is not in direct and active use for more than 50 years and as ordered by Hon’ble Allahabad High Court, the Company is in the process of surrendering the land. In regard to 9.815 hectares of land located at Mawana Mandi, the Company is contesting the State Administration decision in the Courts of Competent Jurisdiction. However, the said land was not used by the Company for their manufacturing activities. 26. The Company’s Land at Mawana & Titawi Units as well as Lands held at other places like Nanglamal and Gurgaon is not in Company’s name i.e. Mawana Sugars Limited. Management Preception Out of total land of 64.739 hectares at Mawana, 46.282 hectares of land has already been mutated in the name of Siel Sugar Ltd. and 3.158 hectares are in the process of changing from Shriram Industrial Enterprises Ltd. to Siel Sugar Ltd. The Company’s land at Barhni admeasuring 6.251 hectares is to be surrendered to the Government and the balance land of 9.048 hectares is under litigation, details of which are mentioned under the head “Land” appearing on page no. 24 & 25. The entire land in Titawi Unit admeasuring 29.076 hectares has been mutated in the name of Siel Sugar Ltd. In regard to land at Nanglamal, 36.427 hectares has already been mutated in the name of Siel Sugar Ltd. and the balance is under process of changing its name to Siel Sugar Ltd. Gurgaon Land is still in the name of Siel Ltd. As the Company’s name has recently been changed from Siel Sugar Ltd. to Mawana Sugars Ltd., the Company will accordingly get the revenue records modified. 27. Sugar cane constitutes around 70% of cost of production for manufacture of sugar and the cane purchase is highly regulated by State / Central Government. Any upward revision in the prices of sugar cane affects the total cost of production and therefore profitability. Management Perception Any increase in the price of sugar cane is expected to be offset by way of increase in sugar prices. 96 28. Sugar production is dependent on the availability and quality of cane and any drastic changes in climatic conditions may impact sugarcane crop and hence sugar production. Management Perception To some extent, sugar cane is a weather resistant crop and is unaffected by moderately high or low rainfall. The Company has sufficient availability of cane in its command area and does not foresee any material adverse impact on the sugar production in the normal circumstances. 29. Distant location of mills from the ports increases the cost of transportation for exports. Management Perception Considering the present demand-supply scenario in the Sugar Industry, the Country will not be in a position to export sugar. 30. The Company has given a guarantee to the lenders of Siel Holdings Ltd. (SHL - a Subsidiary Company), for the minimum realization of principal amount of debt amounting to Rs. 3075 lakhs. Management Perception Siel Holdings Ltd. has already repaid the principal amount of debts amounting to Rs. 2291 lakhs out of Rs. 3075 lakhs. The balance amount of the debt will be repaid out of the sale proceeds of the investments held by SHL. The company does not foresee any liability crystalising on account of the above guarantee. 31. Nine out of 10 (ten) promoter companies have made losses during F.Y. 2002-03 (last available audited results except mentioned in case of Siel Ltd.). - Siel Ltd - Rs. 3751.87 lakhs (F.Y. 2003-04) - Busneda Commercial Pvt. Ltd. - Rs. 21.34 lakhs - Sandvik Inv. & Leasing Pvt. Ltd. - Rs. 6.94 lakhs - Greenfields Comm. Pvt. Ltd. - Rs. 16.14 lakhs - Minos Trading (I) Pvt. Ltd. - Rs. 11.20 lakhs - CSR J & K Investments Pvt. Ltd. - Rs. 3.27 lakhs - SFSL Securities Pvt. Ltd. - Rs. 0.57 lakhs - Perennial Investments Ltd. - Rs. 91.22 lakhs - Doab Foods & Gen. Industries Ltd. - Rs. 3.88lakhs Management Perception The losses of the Promoter Company in no way impact the profitability of the Company except in case of Siel Limited in which the proceeds of this issue are proposed to be invested in terms of CDR package. In Siel Limited, the company expects improved performance on account of its debt restructuring & reduction in its interest liability. 32. Seven Promoter Group Companies of Mawana Sugars Ltd. viz. Busneda Commercial Pvt. Ltd., Chhaya J&K Investments Pvt. Ltd., Gaiety J&K Investments Pvt. Ltd., KSR J&K Investments Pvt. Ltd., CSR J&K Investments Pvt. Ltd., Greenfields Commercial Pvt. Ltd. & Krishna J&K Investments Pvt. Ltd. had incurred losses and have applied for reduction of capital. 33. Three Promoter Group Companies viz. Busneda Commercial Pvt. Ltd., Greenfields Commercial Pvt. Ltd. and Minos Trading India Pvt. Ltd. entered into the Scheme of Arrangement with its Creditors. Management Perception As a part of consolidation exercise to avail synergies, these Companies have entered into Scheme of Arrangement with their Creditors. 34. Four group companies on account of losses, have accumulated arrears of dividend on Cumulative Preference Shares viz. Jay Engineering Works Ltd., Siel Financial Services Ltd., Siel Ltd. and Transiel India Ltd. 35. Twelve Group Companies, due to accumulated losses, have negative networth as per last available Audited results i.e. during the F.Y. 2002-03 or F.Y. 2003-04, as case may be. 36. One of the Promoter Group Company viz. Jay Engineering Works Ltd. (subsidiary of Siel Holdings Ltd., which is a subsidiary of Mawana Sugars Ltd.) became sick and got registered with the Board of Industrial & Financial Reconstruction (BIFR) in the year 1994. The Company’s name was also in the RBI’s defaulter list. The rehabilitation scheme once sanctioned in November, 1997 was revised due to non-implementation. Management Perception BIFR declared the Company as sick in its hearing held on 8th April, 1994 and appointed IDBI as the Operating Agency for submitting a revival scheme. BIFR sanctioned a rehabilitation scheme vide its order dated 21st November, 1997. The said scheme did not work satisfactorily and BIFR revised the earlier sanctioned scheme vide its order dated 8th April, 2003. IDBI continues as the Operating Agency for revised rehabilitation scheme which is under implementaion. 37. In case of Three (3) Promoter Group Companies viz. Perennial Investments Limited, Doab Foods & General Industries Limited and M.S.R. Enterprises Limited, penalty of Rs. 50,000/- has been imposed by SEBI for violation of SEBI(Substantial Acquisition of Shares & Takeover) Regulations, 1997 in the year 2000-01. Further, in case of another Group Company viz. SFSL Investments Limited, penalty of Rs. 5,000/- has been imposed by Company Law Board for contravention of Sec. 383A of the Companies Act, 1956. Management Perception The defaults were in as much as the disclosures in the Notice for the preferential allotment of shares of Usha International Ltd. were not found adequate by SEBI. After detailed hearing, a fine of Rs. 50,000/- was imposed on these Companies, which subscribed to preferential allotment. The penalty has already been paid by all these companies. 38. One of the promoters Group Company viz. Siel Financial Services Limited has made the default in the payment of listing fees at Madhya Pradesh Stock Exchange for the F.Y. 2001-02 & 2003-04, at Calcutta Stock Exchange from the financial year 1999-2000 and at Ahmedabad Stock Exchange from the Financial Year 2001-02.

97 39. The pending litigations / disputes by & against the Company and its Directors are as under: Cases against Mawana Sugars Ltd. Civil Criminal Excise Related IT Related Others No. of Cases 58 26 37 - 151 Amount involved Rs. 310.41 lakhs + Rs. 8.51 lakhs in Rs. 137.39 lakhs - Rs. 134.88 lakhs + interest in 24 cases. 11 cases. However, Interest in 7 cases. However, amount is amount is not In addition amount is not ascertainable in ascertainable in not ascertainable in remaining 34 cases. balance 15 cases. - 143 cases. I. (A) Against the Company-Mawana Sugars Ltd. a) Criminal Cases S. No Authority Accused Particulars of the matter / Charges Amount Status

98 b) Labour Cases Sr. No. Name of the Authority Claim Amount Matter / Status 1. Workmen’s Compensation Commissioner, Meerut/ Rs. 8.64 lakhs + 5 Cases are filed against the Company for compensation / Deputy Labour Commissioner, Meerut/ Interest gratuity / permanency and payment of HRA. Labour Court, Meerut 1 case filed by an employee claiming that he was prematurely retired, as his actual date of birth was later. 2. 127 cases of temporary/regular workmen for reinstatement and/or compensation, dismissal & extra allowance. The cases are pending at Allahabad High Court/Labour Court/Ind. Tribunal, Meerut / Saharanpur. The amount is not ascertainable in all these cases. c) Under The Factories Act. Authority Name of the Disputing Party Particulars of the matter Status Amount Allahabad High Court Assistant Director of Factories The Company has filed four criminal writ peti- Stay has been Not Ascertainable tions on the ground that Mr. Siddharth Shriram, granted. Chairman & Managing Director, was not the occupier as defined in the Factories Act. (Case No.- Crl. WP Nos.5131 to 5134 of 1993). d) Under Trade Tax Authority Particulars of the Matter Status Amount Supreme Court A Special Leave Petition has been filed by the state of U.P. The matter is pending for further order. Rs. 14 Lakhs challenging the order of the Allahabad High Court quashing the circular of the State of U. P. whereby the exemption on purchase of high speed diesel within UP was withdrawn. Company is also a party in this matter. Allahabad High Court The company has filed a writ petition against the order dated The matter is pending for further order. Rs. 112.23 Lakhs 25.8.2000 given by the Commissioner, UP Trade Tax pertaining to the period of deferment of Trade Tax. e) Excise related Cases S.No Authority Particulars of the matter Status Pending Liability Amt. 1. CESTAT, New Delhi 9 appeals filed by the Company against the or- Pending hearing. Rs. 39.49 lakhs der passed by Commissioner Appeals, Meerut for wrongful availment of MODVAT Credit. 2. Deputy Commissioner 13 Appeals allowing CENVAT Credit. Cases Pending determination of Rs. 29.16 lakhs Muzaffarnagar/ have been remanded for fact verification to the facts Commissioner Appeal Adjudicating officer. Ghaziabad 3. CESTAT, New Delhi/ 6 appeals filed by the company for Demand of Pending hearing Rs. 8.49 lakhs Commissioner Appeal, excise duty due to shortage/removal of sugar/ Ghaziabad molasses grading of molasses by consumer. 4. Assistant Commissioner,. The company has received seven show cause Assessment Pending Rs. 6.78 lakhs Division, Muzaffarnagr / Dy. notices for shortage of molasses / sugar. Commissioner, Muzaffarnagar 5. Commissioner central Application filed by the company for remission The application is pending Rs.5.64 lakhs excise Meerut in excise duties. 6. Addl. Commissioner, Show cause notice issued to the company Adjudication Rs.47.83 lakhs Meerut-1 demanding excise duty on sale of Bagasse. f) Under Uttar Pradesh Sugarcane (Regulation of Supply And Purchase) Act, 1953 S.No Authority Particulars of the matter Status Opposite Party 1. Authority 4 Writ Petitions filed by the company challeng- The High Court stayed the Collector, Allahabad High Court ing the tagging order for the seasons 2002- order of the DM and modi- Muzaffarnagar & 03 & 2003-04. fied the tagging percentage Meerut at 76% & 78% respectively. 2. Civil Judge (Sr. Div.) The company has filed a case challenging the Final arguments are to be Cooperative Cane Muzaffarnagar vires of the arbitration proceedings before advanced. The amount in- Dev. Society Ltd., Deputy Cane Commissioner, Saharanpur. volved is Rs. 2.06 Lakhs. Muzaffarnagar and Ors. 3. Allahabad High Court 7 Writ Petitions were filed by the Company/ Interim Orders in favour of The matters are against the Company for past seasons regarding the Company. infructuous now since reservation of cane purchase centres. they related to past seasons & will have no implication for future.

99 g) Civil Cases S.No. Authority Particulars of the matter Status Amt. 1. Tehsildar (Judicial) Sadar, 10 Cases filed against the company for Pending. But in 1 Case the Rs. 13.93 Lakhs Muzaffarnagar, encroachment on Gaon Sabha Land. matter has been sent back to the Tehsildar (Mawana) Tahsildar for reconsideration by the Allahabad High Court which has stayed the recovery of damages and demolition of the boundary wall. 2. Addl. Distt. Judge-VII, A revision petition has been filed by a Land For arguments. The amount involved is Meerut Owner against the order of the Civil Judge not ascertainable. dated 18.5.1998 dismissing his suit filed against the company for encroachment on his land at Village Nanglamal. 3. XIII Addl. Dist. Judge, Some Land Owners have filed an appeal Final arguments The amount involved is Meerut against the dismissal of the suit filed for not ascertainable. injunction restraining the company not to disturb them. 4. Delhi High Court The Union of India has filed a letter Patent The matter is pending for further The amount involved is Appeal against the company and three other order. not ascertainable. sugar factories regarding encashment of bank guarantees for differential levy sugar price. 5. Civil Judge (Jr.Div.) Suit for injunction filed against the company The Municipal Board has sought The amount involved is Mawana regarding school building in Mawana Mandi. impleadment in the matter not ascertainable. 6. Board of Revenue at The company has filed a revision against an The revision was dismissed in Rs.1.54 lakhs. Allahabad order by which a demand of Rs.26,925/- was default. However, the application imposed on it on account of additional stamp for restoration is pending. duty in relation to land purchased by the company. A penalty of Rs.1,26,925/- has also been imposed. 7. Allahabad High court 3 writ petitions filed by the company for grant Interim orders passed in favour The amount involved is of release order for sale of free sale sugar of the company. not ascertainable. without any restrictions 8. Allahabad High Court A Writ petition was filed by the company The High Court has passed an The amount involved is against the collection of toll tax by the PWD order whereby the toll tax not ascertainable. authorities at newly constructed bridge, as charged from the company there was no notification by the State Govt. would be kept in a separate account subject to the final order of the High Court. 9. District Consumer Forum, Complaints against non-refund of the security For Reply Rs.1.48 lakhs Muzaffarnagar deposit for the electrical connection. 10. Delhi High Court Three writ petitions filed by the Company The matter is pending for further The amount involved is through West Central and East UPSMA & order. not ascertainable. ISMA challenging SMP of cane for season 2002-03 & 2003-04. 11. Addl. Civil Judge, Sr.Div. 3 Civil suit filed by company for permanent The matter is pending for further The amount involved is Meerut/ Civil Judge, injunction regarding encroachment on order. not ascertainable. (Jr.Div.) Mawana, Civil Mawana Mandi and Nanglamal property. Judge Merut 12. Vth Addl Civil judge Meerut, 3 suits of recovery of amount from an The matter is pending for further Rs. 6.87 Lakhs + III Addl. Civil judge employee and two suppliers have been filed order. interest. Meerut,VII Addl Civil Judge by the company Meerut 13. Civil judge (Jr. Div.)Meerut, 3 execution petitions filed by the company The matter is pending for further Rs. 1.15 Lakhs + Civil judge (Sr. Div)Meerut, order. interest. Civil Judge, Dehradun 14. Supreme Court Two SLPs filed on behalf of the Industry The matter is pending for further The amount involved is through WUPSMA challenging Cane price order. not ascertainable. and Society Commission.

100 g) Civil Cases S.No. Authority Particulars of the matter Status Amt. 15. Allahabad High Court The company and some others challenged The matter is pending for further The amount involved is the acquisition of land by the State of U.P. order. not ascertainable. Stay was granted. However, during the pendency of the petition, the Govt. authorities took possession of the acquired land and a contempt petition has been filed. 16. Allahabad High Court The company has filed a writ petition chal- The matter is pending for further Rs. 100 Lakhs (approx.) lenging the extension of municipal limits to order. include MSW. 17. Allahabad High Court The company has filed a writ petition chal- The company has deposited the The amount involved is lenging the demand of the Cane Commis- demanded amount of Rs.20.00 not ascertainable. sioner, Uttar Pradesh for payment of money lakhs and plans to withdraw the on account of differential transport rebate on case. cane purchased during the season 1989-90. 18. Allahabad High Court The company has filed a writ petition chal- The company’s writ has been Rs.42.90 Lakhs lenging demand of interest on electricity duty. connected with another writ petition and is pending hearing. 19. Allahabad High Court The company has filed a petition challeng- The matter is pending for further The amount involved is ing demand of parking fee from trucks com- order. not ascertainable. ing from rural area of MSW. 20. Allahabad High court Writ petition filed on behalf of the company The matter is pending for final The amount involved is 48159/2002 through West, central & East UPSMA for disposal. not ascertainable. directions to be given to state not to fix cane price for corporate and co-operative factories. 21. Allahabad High Court Two Writ petitions filed on behalf of the com- The matter is pending for further The amount involved is pany through West UPSMA challenging levy order. not ascertainable. price for 1999-2000 & 2000-2001. 22. Allahabad High Court The company has filed a petition challenging Stay order granted. The petition The amount involved is the order of the District Magistrate, Meerut is pending. not ascertainable. requisitioning its guest house to use it as temporary jail 23. Delhi High Court The State Trading Corporation of India has As per the orders of the Delhi Rs.7.27 Lakhs filed an appeal against an order of the Single High Court, the State Trading Judge of the Delhi High Court wherein an Corporation has deposited a arbitral award in favour of the company was sum of Rs.7.27 lakhs and the made rule of court. company has been permitted to withdraw the said amount by furnishing a bank guarantee of an equivalent amount. 24. Delhi High Court The company has filed a writ petition against The petition is listed for final Rs. 57 lakhs approx. the Food Corporation of India deducting on disposal in August 2004. account of shortages in the quantity of sugar purchased from the company. 25. National Consumer The Mawana Sugar Works Employees Provi- The matter is pending for further Rs.25.18 Lakhs Disputes Redressal Forum, dent Fund Trust had deposited funds with a order. Delhi bank under a scheme wherein it was to be paid interest @ 12% per annum. However, the bank paid interest only @ 4.5% per annum. 26. 3 writ petitions have been filed by the company in Allahabad High Court challenging the orders of Addl. Collector (E), Meerut imposing damages for allegedly encroaching on land belonging to the Gram Sabhas involving an amount of Rs.4.06 Lakhs. 27. 3 writ petitions have been filed by the company in Allahabad High Court challenging the orders of the Board of Revenues wherein the company has been ordered to pay additional stamp duty in connection with land bought by the company. The amount involved in 2 of these petitions is Rs. 45.47 Lakhs. 28. A writ petition has been filed by the company in Allahabad High Court challenging the order of Dy. Director of Consolidation wherein he has set aside an order by which the company had been given 4 bighas and 14 biswas of land. The amount involved is not ascertainable. 29. 5 cases have been filed against the company before Addl. Civil Judges of Muzffarnagar, Meerut and Pathankot demanding injunction. The amount involved in the case with Pathankot Judge is Rs. 3.56 Lakhs though in remaining cases, amount involved is not ascertainable.

101 I. (B) Cases filed by the Company – Labour Authority Particulars of the matter Amount Status Allahabad High Court 13 Writ Petitions filed by the company against Rs.29.51 lakhs The workmen were awarded the Awards whereby temporary workmen were reinstatement by the labour court/ reinstated with back wages. Industrial Tribunal and the Company has challenged the decision. Allahabad High Court 2 Writ Petitions filed by the Company against the Not Ascertainable The company has challenged the interim order requiring the management to lead orders of the Labour Court. evidence though the onus was on workmen. Additional Labour An appeal filed by the company against an order Rs.1.98 lakhs + interest The lower Court ruled in favour of the Commissioner, Kanpur under the payment of Gratuity Act, 1972 for giving Opposite Party. gratuity to a teacher. Allahabad High Court Writ Petition filed by the Company challenging Rs.2.22 lakhs In pursuance of an interim order passed the order passed by the Commissioner under the by the High Court the Company has Workmen’s Compensation Act, 1973 granting paid Rs.1 lakh to the wife of the compensation to the widow of a employee who deceased and the remaining amount of had not met with an accident during the course Rs.1.22 lacs has been deposited in the of employment. Nationalised Bank in the joint name of the Commissioner and the wife of the deceased. The appeal is still pending. Allahabad High Court Writ Petition filed by the Company challenging Not Ascertainable Further proceedings before the Labour the order of the Labour Court regarding Court have been stayed and the writ reinstatement of a temporary workman. petition is pending. Allahabad High Court, M/s New India Assurance Company has filed Rs.1.76 lakhs + interest Judgement has been reserved on the Workman Compensation an appeal against the award under the review application. Commissioner, Meerut Workmen’s Compensation Act, 1923 whereby a sum of Rs.1.76 lakhs has been awarded to the wife of the deceased. The company has filed application for Review of the award as the company has been ordered to pay interest upon the compensation amount. II. Against the Directors of the Company a) Mr. Siddharth Shriram - Under Factories Act Authority Particulars of the matter Status Amount Allegations/Charges Chief Judicial 4 criminal complaints filed Proceedings are The amount involved The Charges in the complaints relate to Magistrate against Sh. Siddharth Shriram & stayed by order of is not ascertainable. violation of provisions of Factories Act like Meerut B.K.Agarwal the Allahabad High Leave book not given to the workers, Fire Court extinguishing appratus not placed in CO2 pump room, only one door for exit, belt not provided on drive guard etc. Allahabad High 4 petitions under section 482 Stay order in favour The amount involved Challenging the prosecution cases lodged Court Cr.PC filed by the company. of the company is not ascertainable. against the Director. b) Mr. Siddharth Shriram - Criminal Cases Authority Particulars of the matter Status Amount Allegations/Charges Judicial Magistrate Ruchi Soya Industries has filed a The company has Rs.40.83 Lakhs The company and its officials including First Class, Indore. case against a supplier of the moved an Mr. Siddharth Shriram have conspired company under Section 138 of the application for with Swarnima Oil Industries to cheat Negotiable Instruments Act and discharge of itself the Opposite party. Section 420 of the Indian Penal and its officials. Code. Case No.2828/1999 III. Against Promoters of the Company - Mr. Krishna Shriram Authority Particulars of the matter Status Amount Opposite Party Allegations/Charges Supreme Court Contempt petition has been Pending. But the Rs.8.56 lakhs Sankyut The company had agreed with the filed against the company company has deposited Kamgar Morcha opposite party to pay compensation and Shri Krishna Shriram, the disputed amount to the contract workers and out of Mr. A. K. Mehra and Mr. P. with the Labour Court. the said compensation 10% was K. Bhalla. Another union which to be given to the Opposite Party. also brought forward However, the Opposite Party did workers has filed an not bring forth all the workers. The interim application for company only paid 10% to the 10% of the amount paid Opposite Party for the workers to those workers. actually brought by the Opposite Party. Due to this, the opposite party has filed the contempt petition.

102 40. Outstanding Litigations / disputes, etc. against the Promoter Group Companies For details, please refer to para “Outstanding Litigations & Disputes” on pages no. 66 to 87.

EXTERNAL RISK FACTORS 1. Sugar Industry is a controlled industry and the Government controls the sugar cane prices through Statutory Minimum Price Mechanism and State Advised Price Mechanism and also the quantity of sugar to be sold in free markets by release mechanism. As such, the performance of the companies in the Sugar Industry is dependent on Government Policies. 2. The recent judgement pronounced by the Constitution Bench of Hon’ble Supreme Court has upheld the rights of State Govt. to fix the state advised prices. This judgement could result into some demands for the past periods. 3. Availability of Sugar cane, the major raw material, amongst other factors, depends on the monsoon conditions, which affects the production and recovery. To some extent, sugar cane is a weather resistant crop and is unaffected by moderately high or low rainfall. However, any drastic changes in climatic conditions may impact sugarcane yield and hence sugar production. 4. Poor monsoon conditions in North India in the Current Season may affect the Cane production, which would affect the availability of the cane to the sugar mills. 5. Competition from existing established companies and future entrants into the Industry. 6. The performance of the Company may be affected by a number of factors beyond its control including political and economic developments both in India and worldwide. Terrorist attacks and other acts of violence or war may negatively affect the domestic as well as the overseas markets. These acts may also result in a loss of business confidence and make other services more difficult and ultimately affect the Company’s business, financial conditions and results of operations. 7. Purchase of sugar cane and payment of cane prices is through Co-operative Cane Societies causing inefficiencies in the System. 8. Cane diversion to Khandsari and Gur Manufacturers who are not governed by the government regulations. 9. The business of the Company is subject to the regulations of Government of India and State Govt. A change in the Government’s economic liberalization and deregulation policies could affect business and economic conditions in India and the business of the Company in particular. 10. Import of raw sugar as the international price is comparatively lower. 11. Tight liquidity position of the Industry as a whole due to lower margins and high inventory holding period.

Management Perception These external risk factors are beyond the control of Management.

Notes to the Risk Factors: 1. Net Worth of the Company as on 29th February 2004 is Rs. 7119.86 lakhs (net of miscellaneous expenditure written off) and the size of the current issue is Rs. 849.90 lakhs. 2. The adjusted net asset value per share as on 29th February 2004 is Rs. 24.21 per share. 3. The cost per share to the Promoter is Rs. 10/-. 4. The promoters of the Company / other companies in the promoter group, apart from normal commercial transactions and their shareholding in the Company, have no other interests in the Company either by itself or through their interests in other companies in the promoter group. The directors of the company, apart from reimbursement of expenses incurred, sitting fees and directors commission and in case of Managing Director, remuneration payable in accordance with the provisions of the Companies Act, 1956 and their shareholding in the company if any, in the normal course of business have no other interest in the company except for the commercial transaction between the company and the companies/firms in which directors are interested. These commercial transactions are fully disclosed in the register maintained under section 301 of the Act. These transactions are certified by the statutory auditors as being transacted at a price, which are reasonable, having regard to the prevailing market prices of the goods, material or services involved. 5. The related party transactions as per Accounting Standard 18 issued by Institute of Chartered Accountants of India as on 29th February 2004 are as follows: (i) Names of related parties and description of relationships Holding company: None (Previous period Siel Limited) Subsidiaries: Siel Holdings Limited The Jay Engineering Works Limited (Subsidiary of Siel Holdings Limited). Key Management Personnel and their relatives: For full period - Mr. Siddharth Shriram, Mr. Krishna Shriram (relative of Mr. Siddharth Shriram). For part of the period: a) From September 15, 2003: Mr. P.K. Bhalla, Mrs Asha Bhalla, (relative of Mr. P.K. Bhalla), Mr A.K. Mehra, Mrs Binu Mehra, (relative of Mr. A.K. Mehra) b) From December 16, 2003: Mr. Rajendra Khanna, Mrs Rajni Khanna (relative of Mr Rajendra Khanna) c) Upto September 15, 2003: Mr. Deepak Banerjee and d) Upto September 5, 2003 : Mr Satyendra Gupta.

103 Enterprise over which key management personnel have significant influence: Siel Limited Rs. in Lakhs Subsidiary Key Management Enterprise Over which Total Companies Personnel and their key management Relatives personnel have Significant Influence * Period Period Period Period Period Period Period Period ended ended ended ended ended ended ended ended February March February March February March February March 29, 2004 31, 2003 29, 2004 31, 2003 29, 2004 31, 2003 29, 2004 31, 2003 Professional Fee – 4.90 – 4.90 Allotment of equity shares 300.00 - 300.00 - Management fee received 20.00 - 34.00 - 54.00 - Remuneration to key management personnel 72.70 18.02 72.70 18.02 Commission Paid 38.24 22.91 38.24 22.91 Expenses recovered 81.81 - 81.81 - Expenses reimbursed 41.11 - 41.11 - Advances given 0.01 0.77 13.43 - 3.00 1492.56 16.44 1493.33 Guarantees given on behalf of the Company 12347.12 - 12347.12 - Balance outstanding as at the year end: - Receivables 0.78 - 13.10 - 1570.26 1492.56 1584.14 1492.56 - Guarantees given on behalf of the Company 12347.12 - 12347.12 - ** Do not include assets, liabilities vested in the Company pursuant to the Scheme and the assets, liabilities, incomes accrued and expenses incurred prior to incorporation when the undertakings were run and managed by Siel Limited in trust for the Company (also refer to note 3 above) 6. Outstanding Loans and advances to Key Managerial Personnel as on 29th Feb., 2004 are as follows: Name Designation Amount (in Rs.) Mr. Siddharth Shriram Chairman & Managing Director Nil Mr. P.K. Bhalla Executive Director & Company Secretary 6,98,894 Mr. A.K. Mehra Executive Director (Operations) 2,60,200 Mr. Rajendra Khanna Executive Director (A/cs & Fins.) 3,51,400

XXI. STATUTORY AND OTHER INFORMATION Minimum Subscription If the Company does not receive minimum subscription of 90% of the Issue, the entire subscription shall be refunded to the applicants within forty-two days from the Date of Closure of the Issue. If there is delay in the refund of subscription by more than 8 days after the Company becomes liable to pay the subscription amount (i.e. forty two days after Closure of the Issue), the Company will pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.

Expenses of the Issue The expenses of the Issue payable by the Company are estimated to be around Rs. 85 lakhs (10% of the Issue Size) and include fees to the Lead Managers, Legal Advisors & Solicitors and Auditors to the Issue – around 2%, Registrars to the Issue – 0.60%, Printing & Dispatch – 6%, Advertise- ment & Publicity – 0.60% and and Other Expenses & Contingencies – 0.80%. The entire issue expenses will be borne by the Company.

Underwriting Since the Issue is not being underwritten, no underwriting commission is payable.

Previous Issues for Cash For details of all previous issues for cash, investors may refer to Capital Build-up appearing on page no.10 of the Letter of Offer.

Previous Public/Rights Issues by the Company The Company has not made any public or rights issue during last five years.

Commission or brokerage on previous issue As the Company has not made any public or rights issue, no commission or brokerage was paid.

Issues For Consideration Other Than For Cash The Company has not made any issue for consideration other than cash or out of revaluation reserves except issue of shares made pursuant to the Scheme of Arrangement details of which are given on page no. 12 at point 15 under Notes to Capital Structureof the Letter of Offer.

Debentures and redeemable preference shares and other instruments issued by the Company outstanding There are no outstanding redeemable preference shares and Debentures issued by the Company except for the Zero Coupon Debentures (ZCDs) non-convertible of Rs. 100/- each which are to be redeemed in three annual instalments of 15%, 25% and 60% at the end of 2nd, 3rd and 4th year from 30th September, 2002. The total amount outstanding on these debentures as on 29th February, 2004 is Rs. 2285 lakhs.

104 Option to Subscribe Option To Receive The Rights Equity Shares In Dematerialised Form Applicants have the option to hold the equity shares in electronic form under the depository system. The Company has signed an agreement with National Securities Depository Limited (NSDL) on 8th December 2003 and with Central Depository Services (India) Ltd. (CDSL) on 30th October, 2003, which enables an investor to hold and trade in securities in a dematerialised (electronic/demat) form, instead of holding equity shares in the form of physical certificates. Equity shares being offered through this Rights Issue will be admitted to NSDL and CDSL, when allotted. Applicants may note that they have the option to subscribe to the Rights equity shares in demat or physical form, or partly in demat and physical form, in the same application, in the space provided. No separate applications for demat and physical shares are to be made. If such application is made, the applications for physical shares will be treated as multiple applications and rejected accordingly. In case of partial allotment, allotment will be first done in demat form, and the balance, if any, will be allotted in physical form. The equity shares of the Company have been included in the Compulsory Demat trading with effect from December 17, 2003b (the date of listing of the equity shares with BSE) for all classes of investors. Hence, investors may note that the equity shares of the Company can be traded on the stock exchanges only in demat form.

Purchase of Property There is no property which the Company has purchased or acquired or proposes to purchase or acquire, which is to be paid for, wholly or partly, out of the proceeds of the present Issue or the purchase or acquisition of which has not been completed on the date of issue of this Offer Document, other than: a) the contracts for the purchase or acquisition whereof were entered into, or may be entered into, in the ordinary course of the Company’s business, such contracts not being made in contemplation of the Issue or in consequence of the contract; or b) property in respect of which the amount of the purchase consideration is not material. The Company has not purchased any property in which any of its Directors had or have any direct or indirect interest or in respect of any payment thereof. The Company has no plans, at present, to acquire any running business out of the proceeds of the Issue.

Terms of Appointment of Managing Director The Company has appointed Mr. Siddharth Shriram as the Managing Director of the company in accordance with the provions of the Companies Act, 1956 for the period of five years w.e.f 1st October 2003. The details of his compensation are given on pages no. 28 of the Letter of Offer.

Payment or Benefit to the Directors and Officers of the Company No amount or benefit has been paid or given or is intended to be paid or given to any Director or Officer of the Company except their normal remuneration and/or reimbursement for the services rendered to the Company to which they are entitled or may become entitled to under the provisions of the Companies Act or otherwise in accordance with the Law.

Rights of the Equity Shareholders a) Right to receive dividend, if declared b) Right to attend general meetings and exercise voting powers, unless prohibited by law c) Right to vote either personally or by proxy The details regarding lien on shares, process of modification of rights, forfeiture of shares and transfer of shares are contained in the Memorandum and Articles of Association a copy of which is included in material documents open for inspection.

Capitalisation of Reserves or Profits The Company has not capitalised the reserves or profits since its inception.

Revaluation of Assets The Company has not revalued its assets since inception.

XXII. MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS The following contracts (not being contracts entered into in the ordinary course of business or entered into more than two years before date of this Letter of Offer), which are or may be deemed material have been entered or are to be entered into by the Company. These contracts and also documents for inspection referred to hereunder, may be inspected at the registered office of the company at New Delhi from 11.00 am to 2.00 pm from the date of this Letter of Offer until the date of closure of this Issue.

A) MATERIAL CONTRACTS 1. Mandate dated 7th April 2004 of the Company appointing Allianz Securities Ltd. to act as the Lead Manager to the Issue. 2. Memorandum of Understanding dated 12th May 2004 entered into with the Allianz Securities Ltd., Lead Manager to the Issue. 3. Memorandum of Understanding dated 12th May, 2004 entered into with MAS Services Pvt. Ltd., as Registrars to the Issue. 4. Consent Letter dated 26th April, 2004 and 11th May, 2004 of State Bank of India and Punjab National Bank respectively to act as Banker to the Issue.

B) MATERIAL DOCUMENTS 1. Copy of letter dated 6th April, 2004 from the Registrar of Companies, Delhi & Haryana confirming the availability of the new name ‘Mawana Sugars Limited’. 2. Memorandum and Articles of Association of the Mawana Sugars Ltd. and the Group Companies. 3. Listing Agreement dated 04.12.2003 with The Stock Exchange, Mumbai for listing of the existing shares. 4. Copy of Agreement with National Securities Depository Ltd. (NSDL) dated December 8, 2003. 5. Copy of Agreement with Central Depository Services (India) Ltd. (CDSL) dated October 30, 2003.

105 6. Certified True Copy of the minutes of the Extra Ordinary General Meeting held on 8th May, 2004 approving the Rights Issue. 7. Copies of Form 24AA from the Directors for particulars of Directorship held by them. 8. Copy of Certificate dated 8th June, 2004 from Auditors in respect of Tax benefits. 9. Copies of Annual Reports of Mawana Sugars Ltd. for the period ended 31st March 2003. 10. Copy of Adjusted Balance Sheet and Profit and Loss Accounts for the period ended 31st March 2003 and for the period ended 29th Feb, 2004. 11. Copy of Annual Reports of Promoter Group Companies and other Group Companies for the last three years i.e. 2000-01, 2001-02, 2002- 03. 12. Copies of Consent letters from Auditors, Legal Advisors, Lead Managers, Registrars, Company Secretary and Bankers to the Issue. 13. Copy of approval of CDR Cell vide letter no. CDR (KS)/623 dated 5th March, 2003 approving the ‘scheme of arrangement’. 14. Copy of Letter dated 11.05.2004 from ICICI Bank Ltd., New Delhi, the Monitoring Agency about the approval of Rights Issue. 15. Copy of the Letter of CDR Cell dated 16th July 2004 giving no objection to the Rights Issue. 16. Copies of letters / confirmations received from Promoters in respect of their intention to subscribe to their rights entitlement. 17. Copy of Undertaking from the promoters in respect of meeting any shortfall in the subscription to the Issue. 18. Copies of consent / approvals / licences / NOCs received for Sugar manufacturing plants of the company situated at Mawana & Titawi. 19. Copies of the last offer documents for public/rights issue of Equity Shares/Debentures by Promoter Group Companies viz, Shriram Industrial Enterprises Ltd. (now Siel Ltd.), Usha International Ltd, Shriram Honda Power Equipment Ltd. (now Honda Siel Power Product Ltd.) and Shriram Agro-Tech Industries Ltd.(Siel Financial Services Ltd.) 20. Copy of Certificates for water and Air Pollution for Mawana and Titawi plants. 21. Copy of letter dated 9th June, 2004 by the legal advisor to the Company giving details of the litigations, court cases, disputes, litigations and criminal proceedings against the company and those filed by the company as appearing in the offer document. 22. Copy of the letter by the concerned authority approving the change of name from Siel Limited to Siel Sugar Limited in the revenue records in relation to the land at Mawana and Titawi Units. 23. Letter no. MSL/RBI dated 3rd July 2004 to Reserve Bank of India in respect of allotment of shares to Non-resident Indians and Overseas Body Corporates Letter no. FE.DEL.FID/362/06.04.3645/2004-05 dt. 12th July, 2004 issued by Reserve Bank of India in respect of allotment of shares to Non-resident Indians. Company’s letter No. MSL/RBI dated 19th July, 2004 in respect of specific approval of RBI for issue and allotment to OCBs. RBI’s letter No. FE.CO.FID/898/11.01.20(V()/2004-05 dated 5th August, 2004. 24. Copies of letter filed for in-principle approval from the Stock Exchange, Mumbai and the letter no. Dcs/smg/sdm/sg/vm/04 dated 2nd July 2004 granting the in-principle approval.

XXIII. DECLARATION NO STATEMENT MADE IN THIS LETTER OF OFFER SHALL CONTRAVENE ANY OF THE PROVISIONS OF THE COMPANIES ACT 1956 AND THE RULES MADE THEREUNDER. ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO THE GUIDELINES, INSTRUCTIONS, ETC, ISSUED BY SEBI, GOVERNMENT OR ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH.

Your Faithfully By the order of the Board of Directors of MAWANA SUGARS LIMITED

Mr Siddharth Shriram Mr. Deepak Banerjee Chairman & Managing Director Director

Mr. Ravi Vira Gupta Mr. Subrata Lahiri Director Director

Mr. N.K. Goila Director

Place : New Delhi Date : 5th August, 2004

Encl : Composite Application Form

106